TIDMDIL2
RNS Number : 1779F
Damille Investments II Limited
16 February 2018
DAMILLE INVESTMENTS II LIMITED
(LSE:DIL2) (the "Company")
PUBLICATION OF ANNUAL FINANCIAL REPORT AND NOTICE OF ANNUAL
GENERAL MEETING
The Board of directors of the Company announces its results for
the year ended 30 November, 2017. To view the Company's annual
financial report please visit the Company's website
www.damilleinv.com.
In addition, to comply with Disclosure Guidance and Transparency
Rule ("DGTR") 6.3.5, please find below the full text of the annual
financial report.
Annual General Meeting
The Annual General Meeting (the "AGM") of the members of the
Company will be held at Ground Floor, Dorey Court, Admiral Park, St
Peter Port, Guernsey on Wednesday, 7 March, 2018 at 9.30 a.m. and
the notice of the AGM will be posted to all shareholders and
uploaded to the Company's website on Tuesday, 20 February,
2018.
Enquiries:
For further information, please contact:
For administrative and company information:
JTC Fund Solutions (Guernsey) Limited
+44 (0) 1481 702400
For shareholder information:
Nimrod Capital LLP
Richard Bolchover
Marc Gordon
+44 (0) 20 7382 4565
E&OE - in transmission
Damille Investments II Limited
Annual Financial Report
For the year ended 30 November, 2017
SUMMARY INFORMATION
Company Overview
Damille Investments II Limited (LSE:DIL2) (the "Company") is a
Guernsey-incorporated company formed as a registered closed-ended
investment company. It was incorporated on 3 November, 2011 and
operates under The Companies (Guernsey) Law, 2008, as amended (the
"Law"), The Protection of Investors (Bailiwick of Guernsey) Law,
1987, as amended, the Registered Collective Investment Scheme Rules
2015 issued by the Guernsey Financial Services Commission (the
"GFSC") and the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority (the "FCA").
The ordinary shares of no par value (the "Shares") of the
Company were admitted to trading on the Specialist Fund Segment
(the "SFS") (formerly the Specialist Fund Market) of the London
Stock Exchange's Main Market for Listed Securities on 9 November,
2011 ("Admission").
Investment Objective and Policy
The Company's investment objective was to realise significant
capital returns for its shareholders with low volatility, by
investing in a concentrated portfolio of primarily equity
securities. In the opinion of the Company, many but not all of
these companies would have benefited from implementing certain
measures to optimise their balance sheets and align management and
shareholder interests. Such issuers were expected to be, but were
not limited to, closed-ended investment funds, investment companies
and other corporate entities, such as real estate companies or
natural resource companies.
At the Company's annual general meeting held on 4 May, 2016 a
resolution put to the shareholders that, in accordance with Article
172 of the Company's Articles of Incorporation (the "Articles"),
the Company continue its business as a closed-ended investment
company, was not passed. Therefore, on 23 June, 2016 the Company
announced that the directors proposed to commence an orderly
realisation of the Company's assets, which process was expected to
take approximately 18 months. Shareholders' capital was intended to
be returned to them by way of periodic distributions.
In order to permit the cost-effective return of capital to
shareholders, at an extraordinary general meeting held on 5
September, 2016, the shareholders voted to adopt new articles of
incorporation (the "New Articles") in substitution for and to the
exclusion of the previous Articles. The New Articles include
provisions permitting the directors at their discretion to
compulsorily redeem any issued Shares in the Company.
The directors intend to continue to realise as much of the
Company's investment portfolio as possible for cash and to return
such cash to shareholders by means of a final compulsory redemption
of a portion of each shareholder's Shares pro rata to their then
percentage holding in the Company. The directors also intend,
subject to shareholders' approval at the Company's next annual
general meeting, to distribute two of the Company's remaining
holdings to the Company's shareholders in specie. The directors
expect all investments to have been realised or distributed in
specie by the end of March, 2018, when the voluntary liquidation of
the Company will be proposed to shareholders. Further information
on these final steps is given in the report of the directors.
Capital and Income Distribution Policy
The Company previously aimed to provide shareholders with an
attractive total return, comprising primarily capital growth,
although there was also the potential for distributions of income
to be made. Because the Company has made periodic returns of
capital to shareholders via compulsory redemptions of Shares and
the Board intends to return all remaining cash held by the Company,
less a provision for final expenses, via a final compulsory
redemption of Shares in March, 2018, there is no current intention
to declare any further dividends.
As the Company has been granted "reporting fund" status by H.M.
Revenue & Customs, United Kingdom resident or ordinarily
resident shareholders, or any shareholders who carry on a trade in
the United Kingdom through a branch, agency of permanent
establishment, will be subject to UK income tax or corporation tax
(as appropriate) on their share of the excess of the Company's
"reportable income" for any period of account over any amounts
actually distributed, in addition to such tax on amounts actually
distributed.
Compulsory Redemptions of Shares
Since the adoption of the New Articles on 5 September, 2016, the
directors have made the following compulsory redemptions of
Shares:
Redemption Date Number of Shares Redemption Price
---------------- ----------------- -----------------
9 September, 11,802,243 110.92 pence
2016
---------------- ----------------- -----------------
18 October, 5,352,389 118.30 pence
2016
---------------- ----------------- -----------------
14 December, 5,199,671 119.90 pence
2016
---------------- ----------------- -----------------
15 February, 3,864,177 131.54 pence
2017
---------------- ----------------- -----------------
15 June, 2017 2,189,707 100.62 pence
---------------- ----------------- -----------------
15 September, 8,671,159 95.89 pence
2017
---------------- ----------------- -----------------
The returns of capital via a compulsory redemption of Shares
triggered, in some instances, the payment of a performance fee to
Damille Partners Limited ("Damille"), a 15% portion of which was
payable to Nimrod Capital LLP ("Nimrod") under the Services
Agreement with Damille and the Corporate and Shareholder Advisory
Agreement between the Company and Nimrod Capital LLP. The
performance fees were settled by the sale out of treasury to
Damille and Nimrod of Shares at their prevailing net asset value.
All such sales of Shares are disclosed in note 10 and 14 to the
financial statements.
Discount Control
At the annual general meeting held on 18 May, 2017, the
shareholders granted the directors authority to make market
purchases of up to 3,782,231 Shares within specified parameters,
with a view to addressing any imbalance between the supply of and
demand for Shares. During the financial year ended 30 November,
2017 the Company repurchased and cancelled 167,623 Shares. At the
year end, the Company held 2,562,790 Shares in treasury. No further
repurchases of shares are now envisaged.
Voluntary Redemption Offer
Under both the previous Articles and the New Articles, the
directors had and continue to have the ability in each year
following the second anniversary of Admission to offer at their
absolute discretion to each holder of Shares an option to redeem up
to 15% of their shareholding, subject to any legal or regulatory
requirements and, in particular, the Law (the "Redemption
Offer").
Following the adoption by the shareholders of the New Articles
and the empowerment of the directors at their discretion to
compulsorily redeem Shares, no Redemption Offers were made since
February, 2016 and the directors do not intend to incur the
additional expense of making any further Redemption Offers.
CHAIRMAN'S STATEMENT
I have pleasure in presenting the audited annual report and
financial statements of the Company for the year ended 30 November,
2017.
The Company's audited net asset value per Share (the "NAV") as
at 30 November, 2017 was 97.15 pence. The NAV as at 1 December,
2016 was 121.21 pence per Share.
During the year, the Company bought back 167,623 Shares, 799,931
Shares were sold out of treasury in satisfaction of performance
fees payable to Damille and Nimrod and 167,623 Shares were
cancelled, so that the Company held 2,562,790 Shares in treasury at
the year end.
As the Continuation Resolution put to shareholders at the
Company's annual general meeting held on 4 May, 2016 was not
passed, on 23 June, 2016 the Company announced that the directors
proposed to commence an orderly realisation of the Company's assets
and this has now been substantially completed. Pursuant to this
process, the Company has continued returning its capital to
shareholders and during the year undertook four compulsory
redemptions of Shares, whereby a total of 19,924,714 Shares were
redeemed for GBP21.8 million.
It should be noted that since inception (when the Company raised
GBP70.7 million net of expenses) the Company has returned GBP68.5
million to shareholders through redemption offers, share buy backs
and compulsory redemptions.
At the Board meeting held on 29 January, 2018, the Board
resolved to make further proposals to shareholders in general
meetings, pursuant to which, subject to shareholders' approval, the
Company's final investment assets will be either realised or
distributed to shareholders in specie, with a final distribution
via a compulsory redemption of a portion of each shareholder's
shares being made in late March, 2018, after which shareholders
will be asked to vote the Company into members' voluntary
liquidation at the end of March, 2018.
I refer you also to the Directors' Report on pages 8 to 15 for
further information on the proposed steps to enable the return of
investments and cash to shareholders and the subsequent liquidation
of the Company together with information on pending corporate
actions.
Richard Prosser
Chairman
INVESTMENT REPORT
During the year, the Company's NAV per Share decreased by
19.85%. Since launch on 3 November, 2011 until 30 November, 2017,
the Company's NAV decreased by 2.85%.
At the year end, the Company was invested with weightings of
approximately 91.24% in equities and 8.76% in cash and net working
capital. However, shareholders should note that, as the Company is
in realisation mode, equities have been sold and cash returned to
shareholders. As at 30 November 2017, the Company had returned
GBP68.5 million to shareholders through redemption offers, share
buy backs and compulsory redemptions.
At the year end, the Company held three investments, of which
two accounted for 89.1% of the NAV.
At the annual general meeting held on 4 May, 2016, the
resolution put to the Company's shareholders that, in accordance
with Article 172 of the Company's Articles, the Company continue
its business as a closed-ended investment company, was not passed.
Accordingly, and as announced on 23 June, 2016, the Company is now
in an orderly realisation and that process had now been
substantially completed.
We set out below a summary of the Company's portfolio
composition as at the year end. Where any particular holdings
required notification under the Financial Conduct Authority's
Disclosure Guidance and Transparency Rules (the "DGTRs"), these are
detailed as in previous years. However, where investments are not
notifiable under the DGTRs we do not disclose names, so as not to
prejudice our ability to further deal in those investments and
realise these holdings.
Overview of Investments
The Company's two key remaining investments at the year end
were:
The Local Shopping REIT plc ("LSR")
The Company holds 22.2% of LSR. LSR is a UK Real Estate
Investment Trust with an established portfolio of local shops in
urban and suburban areas throughout the United Kingdom. LSR is in a
realisation phase whereby it is seeking buyers for its properties
with a view to returning cash to shareholders. The Company has a
representative on the board of directors of LSR.
Eurovestech PLC ("EVT")
The Company holds 31,953,496 shares in EVT. Our investment case
was predicated on successive returns of capital ("RoCs") and during
its lifetime EVT has made five RoCs, although recent progress on
realising its investments has been slower than expected.
Investment Allocation
As at 30 November, 2017, the Company's net assets were allocated
in the following proportions (% net assets):
Notifiable shareholdings: 56.5%
(18,300,000 shares in LSR: 52.9% & 31,953,496 shares in EVT:
3.6%)
Non-Notifiable shareholdings: 34.7%
Cash (incl. net working capital): 8.8%
Outlook
The Company is working on realising or distributing its
remaining holdings to shareholders.
Brett Miller Rhys Davies
Executive Director Executive Director
DIRECTORS
Richard Prosser: Chairman (independent non-executive)
Richard Prosser is a Chartered Accountant. Richard is a
shareholder of Estera Trust (Jersey) Limited, a corporate and
fiduciary administrator authorised to conduct trust company
business in Jersey and is a director of a number of companies
quoted in London and elsewhere, including property companies, hedge
funds and investment management companies. Richard is Chairman of
Threadneedle Investments (C.I.) Limited, manager of the
Threadneedle Property Unit Trust. He is also Chairman of the
Aberdeen Latin American Income Fund, listed on the CISE and the
London Stock Exchange.
David Copperwaite: Director (independent non-executive)
David Copperwaite retired as the Managing Director of Lloyds
Bank Fund Managers (Guernsey) Limited on 31 December, 1997. He is
based in Guernsey and provides consultancy and advisory services to
offshore fund management groups. He is the director of a number of
regional, global, private equity and emerging market investment
funds, including Aberdeen Private Equity Fund Limited which is
listed on The International Stock Exchange and the London Stock
Exchange. David has considerable experience in the management and
administration of offshore funds.
Martin Tolcher: Director (independent non-executive)
Martin Tolcher is a Chartered Fellow of the Chartered Institute
for Securities and Investment (Chartered FCSI) and has been
involved within the fund administration industry in Guernsey for
over 25 years. He has worked at a senior level for three fund
administration subsidiaries of Bermudan and Canadian international
banks, gaining considerable experience in a wide variety of funds
and private equity structures. Martin joined Legis Group in 2005 as
a director of Legis Fund Services Limited and became Managing
Director of that company at the beginning of 2007, a role he had
until 31 December, 2010 (he remained as a director until 30
September, 2011). Martin is a non-executive director of a number of
open and closed-ended Guernsey domiciled funds and associated
management companies.
Brett Miller: Director (executive)
Brett Miller is an executive director of the Company. Brett
presently serves as a non-executive Director of M&L Property
& Assets plc, Manchester and London Investment Trust plc and
The Local Shopping REIT plc. Brett graduated from the University of
Witwatersrand (South Africa) with a bachelor's degree majoring in
law and economics and additionally holds a law degree from the
London School of Economics (after having relocated to the United
Kingdom in 1988). He qualified as a solicitor and practised until
December 1997.
Rhys Davies: Director (executive)
Rhys Davies is an executive director of the Company. Rhys also
presently serves as the non-executive Chairman of EIH plc, an AIM
quoted Isle of Man registered investment company. Rhys holds
degrees from the University of Wales, Cardiff and Imperial College,
London, as well as the CFA designation.
MANAGER, ADMINISTRATOR AND SECRETARY
Management and Administration
The directors, whose details are set out in above, are
responsible for managing the business affairs of the Company in
accordance with its New Articles and have overall responsibility
for the Company's activities, including the review of investment
activity and performance. Rhys Davies and Brett Miller act in an
executive capacity, while each of the other directors are
non-executive. The directors have delegated certain functions to
other parties, such as the Consultancy Services Provider, the
Administrator and Secretary and the Registrar.
Consultancy Services Provider
Damille Partners Limited, a company incorporated in the British
Virgin Islands and controlled by the respective family interests of
the executive directors, provides investment support to the
directors and the Company. Pursuant to the Services Agreement
between the Company and Damille Partners Limited dated 4 November,
2011, as amended, Damille Partners Limited provides the Company
with the services of the executive directors, together with certain
support services, including the delivery of research and reports on
investments and monitoring and analysing the Company's
investments.
Administrator and Secretary
Pursuant to an Administration and Secretarial Agreement between
the Company and JTC Fund Solutions (Guernsey) Limited ("JTCFSL")
dated 4 November, 2011, JTCFSL was appointed to act as the
Company's Administrator and Secretary. JTCFSL carries out the
general secretarial functions required by the Law and supports the
Company's compliance with its continuing obligations as a company
traded on the SFS. JTCFSL also carries out the Company's general
administrative functions, such as the calculation and publication
of the NAV, calculating the performance of the Company's
investments and the maintenance of accounting records.
Registrar
Pursuant to a Registrars Agreement dated 4 November, 2011
between the Company and Anson Registrars Limited ("ARL"), ARL was
appointed to act as the Company's Registrar. ARL maintains the
Company's register of members and also acts as paying agent.
The Board keeps under review the performance of all service
providers and the powers delegated to them. In the opinion of the
Board, the continuing appointment of the current service providers
is in the best interests of the Company and its shareholders as a
whole.
MANAGEMENT REPORT
A description of important events that have occurred during the
financial year, their impact on the financial statements and a
description of the principal risks and uncertainties facing the
Company, together with an indication of important events that have
occurred since the end of the financial year and are likely to
affect the Company's likely future development are included in the
Chairman's Statement, the Investment Report, the Directors' Report
and the notes to the financial statements. They are considered to
be incorporated here by reference.
There were no events or changes in the related parties during
the financial year which had or could have had a material impact on
the financial position of the Company, other than those disclosed
in the Directors' Report and the notes to the financial
statements.
Responsibility Statement
The directors jointly and severally confirm that, to the best of
their knowledge:
(a) the financial statements, prepared in accordance with
International Financial Reporting Standards as adopted by the
European Union, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company;
and
(b) this management report (including the information
incorporated by reference) includes a fair review of the
development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties that the Company faces.
Signed on behalf of the Board of directors on 16 February,
2018.
David Copperwaite
Director
DIRECTORS' REPORT
The directors present their annual report and the audited
financial statements of the Company for the year ended 30 November,
2017.
Principal Activities and Business Review
The principal activity of the Company is to carry on business as
an investment company. Since the continuation vote was not passed
in May, 2016, the directors have been realising the Company's
investment portfolio for cash and returning such cash to
shareholders periodically by means of compulsory redemptions of a
portion of each shareholder's Shares pro rata to their then
percentage holding in the Company. The directors expect all
investments to have been realised or distributed in specie by the
end of March, 2018, when the voluntary liquidation of the Company
will be proposed to shareholders. A description of the activities
of the Company in the year under review is given in the Investment
Report.
Guernsey Tax Exemption
The Company's management and administration takes place in
Guernsey and the Company has been granted exemption from income tax
in Guernsey by the Administrator of Income Tax under the Income Tax
(Exempt Bodies) (Guernsey) Ordinance, 1989. It is the intention of
the directors to continue to operate the Company so that this
exemption is renewed for this calendar year.
Results
The results of the Company for the year are set out on the
Statement of Comprehensive Income on page 23.
Directors
The directors in office are shown on page 5. Further details of
the directors' responsibilities are provided below.
The following interests in Shares of the Company are held by
persons discharging managerial responsibility and their persons
closely associated:
Number of Shares Number of Shares
held as at 30 held as at the date
November, 2017 of this report
Richard Prosser 2,931 2,931
Damille Partners
Limited 624,769 624,769
Brett Miller and Rhys Davies are directors of Damille Partners
Limited, the Company's Consultancy Services Provider. Damille
Partners Limited is owned equally by the respective family
interests of Brett Miller and Rhys Davies.
Other than the above shareholdings as well as the investment
advisory fee and performance fee as disclosed in note 14, none of
the directors nor any persons connected with them had a material
interest in any of the Company's transactions, arrangements or
agreements during the year and none of the directors has or has had
any interest in any transaction which is or was unusual in its
nature or conditions or significant to the business of the Company
and which was effected by the Company during the reporting
year.
As at the year end and as at the date of this report, there were
no outstanding loans or guarantees between the Company and any
director.
Substantial Shareholdings
As at the date of this report, the following shareholders had
notified the Company that they held or controlled 5% or more of the
total voting rights of the Company in issue:
Name % of Voting Number of Voting
Rights Rights
Nortrust Nominees Limited 32.45% 4,412,708
Damille Investments II
Limited 18.85% 2,562,790
The Bank of New York
(Nominees) Limited 9.89% 1,345,373
Net Asset Value ("NAV")
The NAV of the Company's Shares as at 30 November, 2017, as
calculated in accordance with the New Articles, was 97.15 pence per
Share.
Principal Risks and Uncertainties
The Board has identified the key risks to the Company and these
are set out below, including the mitigating actions taken to manage
those risks:
-- Investment Risks: The success of the Company depends on the
executive directors' ability to advise on and realise investments
in accordance with the Company's investment objective and to
realise the assets of the Company in an optimal way. The Board
reviews reports from the executive directors, paying particular
attention to the portfolio, the performance of underlying
investments and the executive directors' compliance with the
Company's policies.
-- Control environment at service providers: The Company is
exposed to risks arising from failures of systems and controls in
the operations of its service providers. The Remuneration and
Management Engagement Committee reviews each of the Company's
service providers and considers their systems of internal
controls.
-- Regulatory Risk: The Company is required to comply with the
Law, together with the DGTR of the FCA, The Protection of Investors
(Bailiwick of Guernsey) Law, 1987, as amended, the Registered
Collective Investment Scheme Rules 2015 issued by the GFSC and
various EU regulations and directives, as implemented by EU member
states. The Secretary monitors the Company's compliance with
applicable laws and regulations and will notify the Board
immediately if it identifies or is notified of any breach of
applicable law or regulations.
Corporate Governance
Statement regarding Compliance with The UK Corporate Governance
Code (as published in April, 2016) (the "Code")
The Company previously committed to complying with the corporate
governance obligations which apply to Guernsey registered
companies. As a Guernsey incorporated company and under the DGTR,
the Company was not, for the year under review, required to comply
with the Code. However, the directors place a high degree of
importance on ensuring that high standards of corporate governance
are maintained and have therefore chosen voluntarily to comply with
the provisions of the Code to the extent that they are considered
suitable for the Company in light of its current circumstances and
anticipated future events.
The Company is committed to the highest standards of corporate
governance, and, having reviewed the Code, considers that it has
maintained procedures during the year to ensure that it has
complied with the Code, other than the exceptions explained
below:
-- There is no chief executive position within the Company,
which is not in accordance with Provision A.1.2 of the Code. The
Company is a self managed investment company and so has no
requirement for a chief executive. The Company has two executive
directors and three non-executive directors, who each share
responsibilities for running the Company's business.
-- There is no Senior Independent Director, which position is
recommended in Provision A.4.1 of the Code. Taking into account the
size and nature of the Company and the fact there are three
independent non-executive directors on the Board, this position is
not seen as necessary.
-- The Chairman did not hold meetings with the non-executive
directors without the executives present, nor did the non-executive
directors meet without the Chairman present to appraise the
Chairman's performance, which is not in accordance with Provisions
A.4.2 or B.6.3 of the Code. This was deemed to be unnecessary for
the year under review, as no change to the composition of the Board
or the roles of individual directors was expected.
-- A performance evaluation of the Board, its committees and its
individual directors has not been conducted, which is not in
accordance with Provision B.6.2 of the Code. This was deemed to be
unnecessary for the year under review as the Company is expected to
be voted into members' voluntary liquidation shortly and there
would be no benefit to the Company or its shareholders in seeking
to remove or replace any directors, nor would any suitable director
be likely to be willing to act on such a short term basis.
-- Since the annual general meeting held on 4 May, 2016, at
which the continuation resolution was not passed, the directors
have been realising the Company's assets in an orderly manner and
returning shareholders' capital to them by way of periodic
compulsory redemptions of a portion of each shareholder's Shares
pro rata to their then percentage holding in the Company. The Board
anticipates that by the end of March, 2018 all of the Company's
investments will have been realised or distributed in specie to
shareholders, all remaining cash held by the Company, less a
provision for final expenses, will have been returned to
shareholders via a final compulsory redemption of Shares to be made
in March, 2018 and shareholders will have voted the Company into
members' voluntary liquidation. Therefore, the Board does not
consider that it is necessary or appropriate to comment on the
continued viability of the Company, as is recommended by Provision
C.2.2 of the Code.
-- There is no internal audit function in the Company. Under
Provision C.3.6 of the Code the Audit Committee considers that, as
all of the Company's administrative functions have been delegated
to independent third parties, there is no need for the Company to
have an internal audit facility.
Subject to the areas of non-compliance explained above, the
Company complied with the other recommendations of the Code during
the year. The Code is available on the UK Financial Reporting
Council's website: www.frc.org.uk.
The Company is also required to have regard to the Finance
Sector Code of Corporate Governance (the "Guernsey Code") published
by the GFSC. As the Company reports against the Code it is deemed
to meet the requirements of the Guernsey Code.
Board Responsibilities
The Board comprises five directors, who meet periodically to
consider the affairs of the Company. Biographies of the directors
appear on page 5, demonstrating the wide range of skills and
experience they bring to the Board. Rhys Davies and Brett Miller
act in an executive capacity and all the other directors are
independent and non-executive, with Richard Prosser acting as
Chairman.
During the year under review, each of the non-executive
directors was paid a fee of GBP20,000 per annum and the Chairman
was paid a fee of GBP25,000 per annum. The Chairman of the Audit
Committee, David Copperwaite, was paid an additional GBP3,500 for
his services in this role. The executive directors, Rhys Davies and
Brett Miller, received a fee of GBP50,000 per annum each in respect
of their services in that capacity and were subject to a Service
Agreement dated 4 November, 2011, as amended.
With effect from 23 December, 2017, the fees of the
non-executive directors and the Chairman were reduced. Each of the
non-executive directors is now paid a fee of GBP16,000 per annum
and the Chairman is now paid a fee of GBP20,000 per annum. Mr
Copperwaite is paid an additional GBP2,800 per annum for his
services as Chairman of the Audit Committee. The fees paid to the
executive directors were not reduced.
The Board meets periodically to consider the business and
affairs of the Company and the future outlook, at which meetings
the directors review the Company's investments and all other
important issues to ensure that control is maintained.
The directors may, in the furtherance of their duties, take
independent professional advice at the Company's expense. The
directors also have access to the advice and services of the
Corporate and Shareholder Advisory Agent and the Secretary through
their respective appointed representatives, who are responsible for
providing guidance to the Board on their procedures and adherence
thereto, as well as compliance with applicable laws, rules and
regulations. To enable the Board to function effectively and allow
directors to discharge their responsibilities, full and timely
access is given to all relevant information.
The other significant commitments of the current Chairman are
detailed in his biography on page 5. The Board was satisfied during
the year and remains satisfied that the Chairman's other
commitments do not interfere with his day-to-day performance of his
duties to the Company and that he has the commitment and time to
make himself available at short notice, should the need arise.
As stated in the Investment Report, Mr Miller also acts as a
non-executive director of LSR. Mr Miller had ceded to the Company
his fees for acting in such capacity.
During the year, the number of Board meetings and Audit
Committee meetings, as well as ad hoc committee meetings to approve
specific transactions, attended by the directors were as
follows:
Directors Board Meetings Audit Committee Ad hoc Committee
Meetings Meetings
Richard Prosser 3 of 3 2 of 2 2 of 4
------------------ --------------- ---------------- -----------------
David Copperwaite 3 of 3 2 of 2 4 of 4
------------------ --------------- ---------------- -----------------
Martin Tolcher 3 of 3 2 of 2 3 of 4
------------------ --------------- ---------------- -----------------
Brett Miller 3 of 3 N/A 2 of 4
------------------ --------------- ---------------- -----------------
Rhys Davies 3 of 3 N/A 4 of 4
------------------ --------------- ---------------- -----------------
There is a range of matters reserved for the Board, which
includes strategic decisions, performance and risk oversight and
shareholder relations. Day to day management, which includes
investment and divestment decisions, has been delegated to the
Company's executive directors, who report directly to the Board as
a whole.
Board Committees
Audit Committee
Richard Prosser, David Copperwaite and Martin Tolcher are
members of the Audit Committee, with David Copperwaite acting as
Chairman. The Audit Committee meets at least twice a year and the
principal duties of the Audit Committee are to review the annual
and half-yearly financial reports, to consider the appointment of
the external auditor, to discuss and agree with the auditor the
nature and scope of the audit, to keep under review the scope,
results and cost effectiveness of the audit and the independence
and objectivity of the auditor, to review the auditor's letter of
engagement and reports to management and to analyse the key
financial reporting procedures adopted by the Company's service
providers.
The Audit Committee also considers the nature, scope and results
of the auditor's work and reviews, develops and implements policy
on the supply of any non-audit services that are to be provided by
the auditor. It receives and reviews reports from the executive
directors for inclusion in financial reports. The Audit Committee
focuses particularly on compliance with legal and regulatory
requirements and financial reporting standards and ensures that an
effective system of internal financial and non-financial controls
is maintained. The ultimate responsibility for reviewing and
approving the annual financial report remains with the Board of
directors.
During the year the Audit Committee met to consider the annual
financial report for the year ended 30 November, 2016 and the
half-yearly financial report for the period ended 31 May, 2017.
Remuneration and Management Engagement Committee
Richard Prosser, David Copperwaite and Martin Tolcher are
members of the Remuneration and Management Engagement Committee,
with Martin Tolcher acting as Chairman. The Remuneration and
Management Engagement Committee previously met formally at least
annually. The principal duties of the Remuneration and Management
Engagement Committee were to review the appointment and
remuneration of the executive directors and Damille, to review the
fees payable to the other directors and to review the fees of the
Company's other main service providers.
The remuneration of the Board was reviewed on at least an annual
basis and compared with the level of remuneration for directors of
other similar investment companies. All directors receive the fixed
fees disclosed earlier in this report and there are no share
options or other performance related benefits available to them,
save that Damille Partners Limited, which is owned by the
respective family interests of the executive directors, receives a
performance fee, payable in Shares, based on NAV performance.
As stated earlier in this Directors' Report, the remuneration of
the non-executive directors was reduced with effect from 23
December, 2017. Also with effect from 23 December, 2017, the
advisory fee payable to Damille was reduced from 1.45 per cent. of
NAV to 1.00 per cent of NAV. With effect from 1 April, 2017, the
corporate and shareholder advisory fee paid to Nimrod was amended
such that there was no minimum fee to be applied. It is currently
envisaged that the appointments of all service providers will be
terminated at the end of March, 2017 (see further details later in
this Directors' Report).
Nomination Committee
All directors of the Company are members of the Nomination
Committee, with Martin Tolcher acting as Chairman. The Nomination
Committee met as and when it was deemed appropriate to review,
inter alia, the structure, size and composition of the Board and to
identify, nominate and recommend for approval of the Board
candidates to fill Board vacancies as and when they arose.
Internal Controls and Financial Reporting
The Board is responsible for establishing and maintaining the
Company's system of risk management and internal controls, which is
reviewed for effectiveness on an annual basis. Internal controls
are designed to meet the particular needs of the Company and the
risks to which it is exposed and by their very nature provide
reasonable, but not absolute, assurance against material
misstatement or loss.
The key procedures which have been established to provide
effective internal controls are as follows:
-- The Company is a self-managed investment Company with no
separate Investment Manager. The Board is responsible for setting
the overall investment policy.
-- The Board is responsible for the Company's systems of risk
management and internal controls and for reviewing their
effectiveness. The Board confirms that there is an on-going process
for identifying, evaluating and monitoring the significant risks
faced by the Company. The internal controls are designed to meet
the Company's particular needs and the risks to which it is
exposed.
-- Administration and secretarial services are provided to the
Company by JTC Fund Solutions (Guernsey) Limited.
-- The assets of the Company are held through segregated
brokerage and bank accounts established in the name of the
Company.
-- The duties of investment management, accounting and the
custody of assets are segregated. The procedures of the individual
parties are designed to complement one another.
-- The directors clearly define the duties and responsibilities
of their agents and advisers. The appointment of agents and
advisers is conducted by the Board after consideration of the
quality of the parties involved and the Board monitors their
on-going performance and contractual arrangements.
-- The directors regularly review the performance of and
contractual arrangements with the Company's agents and
advisers.
-- The directors review financial information produced by the
Administrator on a regular basis.
-- Investment transactions and expense payments are approved by
specified directors in accordance with delegated authorities
approved in advance by the Board.
Dialogue with Shareholders
All shareholders have the right to receive notice of, and
attend, general meetings of the Company, at which the directors are
available to discuss issues affecting the Company.
The primary responsibility for shareholder relations lies with
the Company's Corporate and Shareholder Advisory Agent. However,
the directors are always available to enter into dialogue with
shareholders and the Chairman is always willing to meet major
shareholders, as the Company believes such communications to be
important. The directors can be contacted via correspondence sent
to the Company's registered office.
Going Concern
The Company's principal activities are set out in the Investment
Report above. The financial position of the Company is set out
below. In addition, the Summary Information above and note 13 to
the financial statements include the Company's investment
objectives, policies and processes for managing its capital; its
financial risk management objectives and its exposures to credit
risk and liquidity risk.
Following the annual general meeting held on 4 May, 2016, at
which the continuation resolution was not passed, the directors are
realising the Company's assets in an orderly manner and returning
shareholders' capital to them, which process is expected to be
completed by the end of March, 2018. Therefore, the Company is not
a going concern.
However, the directors believe that the Company has adequate
resources to continue in operational existence until its
anticipated liquidation, which is expected to commence at the end
of March, 2018. Further information on that anticipated event is
given at the end of this Directors' Report.
Statement of Directors' Responsibilities
The directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations. The Law requires the directors to prepare
financial statements for each financial year. Under the Law they
have elected to prepare the financial statements in accordance with
the International Financial Reporting Standards ("IFRS") as adopted
by the European Union.
The financial statements are required by the Law to give a true
and fair view of the state of affairs of the Company and of the
profit or loss of the Company for that year.
In preparing these financial statements, the directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that
the financial statements comply with the Law. They have general
responsibility for taking such steps as are reasonably open to them
to safeguard the assets of the company and to prevent and detect
fraud and other irregularities.
The directors consider that this annual financial report, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for the members of the Company to assess the
Company's position and performance, business model and
strategy.
Disclosure of information to auditor
The directors who held office at the date of approval of this
Directors' Report confirm in accordance with the provisions of
Section 249 of the Law that, so far as they are each aware, there
is no relevant audit information of which the Company's auditor are
unaware; and each director has taken all the steps that he ought to
have taken as a director to make himself aware of any relevant
audit information and to establish that the Company's auditor is
aware of that information.
Auditor
Grant Thornton Limited has expressed its willingness to continue
in office as auditor. A resolution proposing its reappointment will
be submitted at the forthcoming annual general meeting to be held
pursuant to section 199 of the Law.
Annual and Extraordinary General Meetings and Ancillary
Steps
Enclosed within this annual financial report is a notice of the
Company's next annual general meeting (the "AGM"). In addition to
the usual business to be proposed at the AGM, the Board will be
proposing a resolution authorising the directors to distribute to
shareholders the Company's holdings of shares in EVT and LSR (the
"In Specie Resolution"). The In Specie Resolution is being proposed
due to the limited liquidity of these two holdings, which has
resulted in the Company being unable to date to realise these
holdings for a value close to that which the executive directors
believe to be their true realisable value, although it is expected
that it will be possible for the investments to be realised for
their true value over the longer term. The directors believe it
would be in shareholders best interests to distribute those assets
in specie to the Company's shareholders, in order to avoid
continuing to incur significant costs in operating the Company
pending the realisation of EVT and LSR for cash and to enable the
shareholders to realise these investments for their true value in
due course.
Subject to the passing of the In Specie Resolution at the AGM,
the directors intend to resolve to make a final compulsory
redemption of Shares in approximately mid March, 2018 and to
resolve to distribute the holdings of EVT and LSR in specie. The
Board will also convene an extraordinary general meeting (the
"EGM") to be held at the end of March, 2018, at which EGM
shareholders will be asked to vote the Company into voluntary
liquidation. Upon the appointment of the liquidator, 4 directors
will resign because the Law requires the Company to have at least
one director, although his remuneration will cease upon the
appointment of the liquidator. The directors also intend to apply
for the suspension of Admission with effect from 29 March, 2018 and
cancellation of Admission and withdrawal of the Company's Shares
from admission to settlement through CREST with effect from 3
April, 2018.
Although the Code recommends that the notice of the AGM be sent
to shareholders no less than 20 working days prior to the date of
the relevant meeting, the Board is giving less notice of the AGM,
because it is considered to be in shareholders' best interests to
hold the AGM, followed by the EGM as soon as reasonably
practicable, in order to reduce the ongoing operating expenses
incurred by the Company.
Signed on behalf of the Board on 16 February, 2018.
David Copperwaite
Director
AUDIT COMMITTEE REPORT
The Company has established an Audit Committee with formally
delegated duties and responsibilities within written terms of
reference (a copy of which is available from the Company' Secretary
on request). The membership of the Audit Committee and its terms of
reference are kept under regular review.
Role and Responsibilities of the Audit Committee
The Audit Committee acknowledges and embraces its role of
protecting the interests of the Company's shareholders as regards
the integrity of published financial information by the Company and
the effectiveness of the audit of the Company.
Audit Committee responsibilities include:
- overseeing the Company's financial reporting process;
- reviewing and maintaining the integrity of the Company's
financial statements, including its annual and half-yearly
financial reports and any other formal announcement relating to its
financial performance and monitoring compliance with statutory,
regulatory and other financial reporting requirements;
- reviewing and reporting to the Board on significant financial reporting judgements;
- advising the Board on whether it believes the annual report
and accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Company's position and performance,
business model and strategy;
- reporting to the Board on the appropriateness of the Company's
accounting policies and practices, including critical accounting
policies and practices;
- making recommendations to the Board for it to put to the
shareholders in general meeting in relation to the appointment,
re-appointment and removal of the external auditor of the Company,
as applicable;
- overseeing the relationship and maintaining active dialogue with the external auditor;
- monitoring the accounting and internal control systems
operated by the Company and by the Company's principal service
providers; and
- reviewing and monitoring the external auditor's independence
and objectivity and the effectiveness of the audit process.
Summary of Audit Committee meetings held during the Year
The Audit Committee met twice during the year, with the
Secretary in attendance at both meetings. The auditor also attended
one of those meetings.
At its two meetings during the year, the Audit Committee focused
on the matters set out below.
Financial reporting
The Audit Committee reviewed the half-yearly and annual
financial statements, particularly, but not limited to, the
existence and valuations of the Company's assets and the clarity
and completeness of the financial reports. To inform its review,
the Audit Committee considered reports prepared by external service
providers and a report from the external auditor on the outcome of
their annual audit. There were no significant issues relating to
these financial statements identified by the auditor during the
course of their audit which needed to be brought to the attention
of the Audit Committee.
Internal Controls
The Audit Committee considered the risks to which the Company
was exposed and the mitigating measures and controls implemented by
the Board and its advisers and satisfied itself that such measures
and controls were adequate and properly implemented.
The Audit Committee also reported to the Board on its activities
and matters of particular relevance to the Board considered in the
conduct of its work.
Internal audit
The Company has no employees and no physical systems of its own,
relying instead on the employees and systems of its external
service providers. The Audit Committee does not believe that it
would be of any benefit to the Company to appoint an internal
auditor. The Audit Committee has reviewed this decision annually
and reported to the Board on its conclusions.
External audit
The current external auditor, Grant Thornton Limited, was
reappointed as auditor at the annual general meeting held on 18
May, 2017. This is Grant Thornton Limited's sixth year in harness
as the Company's auditor.
The effectiveness of the external audit process is dependent on
appropriate audit risk identification at the start of the audit
cycle. The Audit Committee receives from the auditor a detailed
audit plan, identifying their assessment of any high risk areas of
the audit. For the year under review, the primary risks identified
were in relation to revenue recognition, financial asset valuation
and the possibility of management's override of controls. These
risks were tracked through the year and the Audit Committee
challenged the work performed by the auditor in these high risk
areas.
The Audit Committee assess the effectiveness of the audit
process through the reporting it receives from the auditor. In
addition the Audit Committee also seeks feedback from the Company's
administrator on the effectiveness of the audit process. During the
year under review, the Audit Committee met with both the
administrator and the auditor and received regular reports on the
annual financial reporting process. The Audit Committee also
reviewed and commented upon several drafts of the annual financial
report. The Audit Committee was satisfied that there had been
appropriate focus and challenge on the high risk areas identified
at the start of the audit cycle and concluded that the quality of
the audit process was satisfactory.
Although no future audits of the Company's financial statements
are expected to be required, the Law requires that an auditor be
appointed for the current financial year. Therefore, having
considered the Company's position, the Audit Committee has
recommended to the Board that Grant Thornton Limited be reappointed
as auditor for the current financial year. Accordingly a resolution
proposing the reappointment of Grant Thornton Limited as auditor
will be put to the Company's shareholders at the forthcoming annual
general meeting.
Any non-audit services provided by the auditor would be required
to be approved in advance by the Audit Committee, subject to their
satisfaction that relevant safeguards were in place to protect the
auditor's independence and objectivity.
There were no non-audit services provided for the year ended 30
November, 2017.
There are no restrictions on the Audit Committee's and Board's
choice of external auditor.
David Copperwaite
Chairman of the Audit Committee
INDEPENT AUDITOR'S REPORT
To the members of Damille Investments II Limited
Opinion
Our opinion on the financial statements is unmodified
We have audited the financial statements of Damille Investments
II Limited (the 'Company') for the year ended 30 November 2017,
which comprise the Statement of Comprehensive Income, the Statement
of Financial Position, the Statement of Cash Flows, the Statement
of Changes in Equity and notes to the financial statements,
including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 30 November 2017 and of the loss for the year then
ended;
-- are in accordance with IFRSs as adopted by the European Union; and
-- comply with The Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those
standards are further described in the 'Auditor's responsibilities
for the audit of the financial statements' section of our report.
We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in Guernsey, including the FRC's Ethical Standard as
applied to public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
opinion.
Who we are reporting to
This report is made solely to the Company's members, as a body,
in accordance with Section 262 of The Companies (Guernsey) Law,
2008. Our audit work has been undertaken so that we might state to
the Company's members those matters we are required to state to
them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's
members as a body, for our audit work, for this report, or for the
opinions we have formed.
Emphasis of matter
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosure made in
Note 2(c) to the financial statements concerning the basis of
preparation of the financial statements. As described in that note,
the directors have prepared the financial statements on a non-going
concern basis.
Conclusions relating to principal risks, going concern and
viability statement
We have nothing to report in respect of the following
information in the annual report, in
relation to which the ISAs (UK) require us to report to you
whether we have anything material to add or draw attention to:
-- the disclosures in the annual financial report set out on
page 9 that describe the principal risks and explain how they are
being managed or mitigated;
-- the directors' statement, set out on page 13 of the annual
financial report, about whether the directors considered it
appropriate to adopt the going concern basis of accounting in
preparing the financial statements and the directors'
identification of any material uncertainties to the Company's
ability to continue to do so over a period of at least twelve
months from the date of approval of the financial statements;
-- the directors' explanation set out on page 15 of the annual
financial report as to how they have assessed the prospects of the
Company, over what period they have done so and why they consider
that period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Company will be able to
continue to realise its assets for distribution to its shareholders
and meet its liabilities as they fall due over the period of their
assessment, including any related disclosures drawing attention to
any necessary qualifications or assumptions.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those that had
the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
Key Audit Matter How the matter was addressed
in the audit
--------------------------------- -----------------------------------------------------------------
Valuation of investments Our audit work included,
at fair value through but was not restricted to:
profit or loss * understanding the Board's process to value quoted
investments and the process to value unquoted
The investment objective investments;
of the Company is to
realise significant
capital returns for * agreeing the valuation of 100% of quoted investments
its shareholders with to an independent source of market prices;
low volatility, by
investing in a concentrated
portfolio of primarily * obtaining trading volumes of quoted investments to
equity securities. determine whether they were actively traded and
As described in the correctly classified as 'Level 1' under IFRS 13's
Directors' Report under fair value hierarchy; and
'Principal Risks and
Uncertainties', the
ability to realise * for unquoted investments, assessing and challenging
these in an optimal management's estimates where no observable inputs are
way is important to available, including assessment of whether the
that objective. valuations were made in accordance with published
Accordingly, we have guidance and corroborating key assumptions made by
identified the investment management by reference to both supporting
portfolio a significant documentation and our own data, forming a conclusion
risk, which was one on the reasonabless of valuation methods used.
of the most significant
assessed risks of material
misstatement.
The Company's accounting
policy and other disclosures
on financial assets designated
at fair value through profit
or loss are included in
Notes 2(j) and 7 to the
financial statements.
Key observations
From the results of of work,
we conclude that investment
valuations are materially
correct as at 30 November
2017.
--------------------------------- -----------------------------------------------------------------
Revenue recognition Our audit work included,
The Company measures but was not restricted to:
performance through * assessing whether the Company's accounting policy for
the realisation of revenue recognition was in accordance with
its investments and International Accounting Standard (IAS) 18 'Revenue';
investment and dividend
income.
* obtaining an understanding of the Company's process
As described in Note for recognising revenue in accordance with the stated
1 to the financial accounting policy; and
statements, the ability
to realise significant
capital returns for * for a sample of investments held in the year,
its shareholders is obtaining the ex-dividend dates and rates for
key to the success dividends declared during the year from an
of the Company, especially independent source and agreeing the expected dividend
since the continuation entitlements to those recognised in the general
vote put to shareholders ledger.
at the Company's Annual
General Meeting held
on 4 May 2016 was not
passed and the assets The Company's accounting
are now being realised policy on income is shown
in an orderly manner. in Notes 2(f) (dividend
income) and 2(g) (bank interest
We have identified and other income) and related
both investment and disclosures are included
dividend income as in Note 3.
significant risks,
which were one of the Key observations
most significant assessed From the results of our
risks of material misstatement. work, we conclude that the
Company's revenue is properly
recognised for the year
ended 30 November 2017.
--------------------------------- -----------------------------------------------------------------
Our application of materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality in determining the nature, timing
and extent of our audit work and in evaluating the results of that
work.
We determined materiality for the audit of the financial
statements as a whole to be GBP521,000, which is 2% of the
Company's change in net asset value (NAV) between 1 December 2016
and 30 November 2017. This benchmark is considered the most
appropriate because the Company has seen a material change in its
NAV due to the continuing realisation of the Company's assets for
distribution to shareholders.
We use a different level of materiality, performance
materiality, to drive the extent of our testing and this was set at
75% of financial statement materiality for the audit of the
financial statements. We also determine a lower level of specific
materiality for certain areas such as directors' remuneration and
related party transactions.
We determined the threshold at which we will communicate
misstatements to the audit committee to be GBP26,050, being 5% of
materiality. In addition we will communicate misstatements below
that threshold that, in our view, warrant reporting on qualitative
grounds.
An overview of the scope of our audit
Our audit approach was based on a thorough understanding of the
Company's business and is risk-based. The day-to-day management of
the Company's investment portfolio, the custody of its investments
and the maintenance of the Company's accounting records are
outsourced to third-party service providers. Accordingly, our audit
work is focussed on obtaining an understanding of, and evaluating,
internal controls at the Company and the third-party service
providers, and inspecting records and documents held by those
third-party service providers. We undertook substantive testing on
significant transactions, balances and disclosures, the extent of
which was based on various factors such as our overall assessment
of the control environment, the effectiveness of controls over
individual systems and the management of specific risks.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report set out on pages 1 to 17, other than the financial
statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon. In
connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
In this context, we also have nothing to report in regard to our
responsibility to specifically address the following items in the
other information and to report as uncorrected material
misstatements of the other information where we conclude that those
items meet the following conditions:
-- Fair, balanced and understandable set out on page 14 - the
statement given by the directors that they consider the annual
report and financial statements taken as a whole is fair, balanced
and understandable and provides the information necessary for
shareholders to assess the Company's performance, business model
and strategy, is materially inconsistent with our knowledge
obtained in the audit; or
-- Audit committee reporting set out on page 16 - the section
describing the work of the audit committee does not appropriately
address matters communicated by us to the audit committee; or
-- Directors' statement of compliance with the UK Corporate
Governance Code set out on page 10 - the parts of the directors'
statement relating to the Company's compliance with the UK
Corporate Governance Code containing provisions specified for
review by the auditor do not properly disclose a departure from a
relevant provision of the UK Corporate Governance Code.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in
relation to which The Companies (Guernsey) Law, 2008 requires us to
report to you if, in our opinion:
-- proper accounting records have not been kept by the Company; or
-- the financial statements are not in agreement with the accounting records; or
-- we have not obtained all the information and explanations,
which to the best of our knowledge and belief, are necessary for
the purposes of our audit.
Responsibilities of directors for the financial statements
As explained more fully in the directors' responsibilities
statement set out on page 14, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view in accordance with IFRSs, and
for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors intend to liquidate the Company or to cease operations,
or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these financial statements.
We are responsible for obtaining reasonable assurance that the
financial statements taken as a whole are free from material
misstatement, whether caused by fraud or error. Owing to the
inherent limitations of an audit, there is an unavoidable risk that
material misstatements of the financial statements may not be
detected, even though the audit is properly planned and performed
in accordance with the ISAs (UK). Our audit approach is a
risk-based approach and is explained more fully in the 'An overview
of the scope of our audit' section of our audit report.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Other matters which we are required to address
Following the recommendation of the audit committee, we were
appointed by the board of directors on 4 November 2011 to audit the
financial statements for the period ending 30 November 2012 and
subsequent financial periods.
The period of total uninterrupted engagement is 6 years,
covering the years ended 30 November 2012 to 30 November 2017.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the Company and we remain independent of the
Company in conducting our audit. No non-audit services were
provided to the Company for the year ended 30 November 2017.
Our audit opinion is consistent with the additional report to
the audit committee.
Cyril Swale
For and on behalf of Grant Thornton Limited
Chartered Accountants
St Peter Port
Guernsey
Date: 16 February 2018
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 November 2017
Year ended Year ended
30 Nov 30 Nov
2017 2016
Notes GBP GBP
Net unrealised (losses)/
gains on financial assets
designated at fair value
through profit or loss 7 (4,552,341) 6,494,214
Realised gain on financial
assets designated at
fair value through profit
or loss 7 47,623 1,617,516
------------ ----------------------
Net (loss)/ gain on financial
assets designated at
fair value through profit
or loss (4,504,718) 8,111,730
Operating income 3 961,073 1,430,092
Operating expenses 4 (1,467,492) (2,353,291)
Net (loss) /profit before
tax (5,011,137) 7,188,531
Withholding taxes (35,461) (113,694)
(Loss) / Profit and Total
Comprehensive (Loss)
/ Income for the year
attributable to Shareholders (5,046,598) 7,074,837
------------ ----------------------
Pence Pence
(Losses)/ earnings per
share for the year -
Basic and Diluted 6 (27.09) 22.29
------------ ----------------------
A non-going concern basis (refer to note 2(c)) has been adopted
in arriving at the results for the year.
The notes on pages 27 to 40 form an integral part of these
financial statements.
STATEMENT OF FINANCIAL POSITION
as at 30 November 2017
30 Nov 30 Nov
2017 2016
Notes GBP GBP
CURRENT ASSETS
Financial assets designated
as at fair value through
profit or loss 7 9,782,126 31,692,067
Trade and other receivables 8 7,806 292,879
Cash and cash equivalents 978,549 5,188,861
----------- ------------------
10,768,481 37,173,807
TOTAL ASSETS 10,768,481 37,173,807
----------- ------------------
CURRENT LIABILITIES
Trade and other payables 9 47,530 414,264
----------- ------------------
NET ASSETS 10,720,951 36,759,543
----------- ------------------
EQUITY
Share capital 10, 11 4,382,082 25,374,076
Accumulated reserves 6,338,869 11,385,467
TOTAL EQUITY 10,720,951 36,759,543
----------- ------------------
Pence Pence
Net asset value per Ordinary
share based on 11,035,963
(2016: 30,328,369) shares
in issue 97.15 121.21
----------- ------------------
The financial statements were approved by the Board of directors
and authorised for issue on 16 February, 2018 and are signed on its
behalf by:
David Copperwaite
Director
The notes pages 27 to 40 form an integral part of these
financial statements.
STATEMENT OF CASH FLOWS
as at 30 November 2017
Year ended Year ended
30 Nov
30 Nov 2017 2016
Notes GBP GBP
OPERATING ACTIVITIES
(Loss) / Profit and Total
Comprehensive (Loss)/
Income for the year attributable
to Shareholders (5,046,598) 7,074,837
Adjustments for:
Net unrealised (losses)/
gains on financial assets
designated at fair value
through profit or loss 7 4,552,341 (6,494,214)
Treasury shares issued 10,11 1,026,974 826,465
Bond income 3 (107,850) (40,831)
Dividend income 3 (832,309) (1,389,261)
(407,422) (23,004)
(Decrease) / increase
in payables 9 (366,734) 294,727
Decrease in receivables 8 3,761 2,470
Realised gain on financial
assets designated at
fair value through profit
or loss 7 (47,623) (1,617,516)
(818,038) (1,343,323)
Bond interest received - (31,266)
Dividends received from
investments 855,769 1,501,282
Purchase of investments - (75,000)
Proceeds from sale of
investments 17,770,925 23,250,194
NET CASH FLOW USED IN
OPERATIONS 17,808,656 23,301,887
------------- -------------------
FINANCING ACTIVITIES
Costs of redemption of
Ordinary shares 10 (21,835,400) (27,226,508)
Ordinary shares purchased
and cancelled 10 (183,568) (2,090)
NET CASH FLOW USED IN
FINANCING ACTIVITIES (22,018,968) (27,228,598)
------------- -------------------
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 5,188,861 9,115,572
Decrease in cash and
cash equivalents (4,210,312) (3,926,711)
CASH AND CASH EQUIVALENTS
AT OF YEAR 978,549 5,188,861
------------- -------------------
The notes pages 27 to 40 form an integral part of these
financial statements.
STATEMENT OF CHANGES IN EQUITY
as at 30 November 2017
Share Accumulated
Capital Reserves Total
Notes GBP GBP GBP
Balance as at 1 December
2016 25,374,076 11,385,467 36,759,543
Loss and total comprehensive
loss for the year - (5,046,598) (5,046,598)
Treasury shares issued
in lieu of Performance
Fees 10,11 1,026,974 - 1,026,974
Share redemptions during
the year 10 (21,835,400) - (21,835,400)
Ordinary shares cancelled
during the year 10 (183,568) - (183,568)
Transactions with owners (20,991,994) - (20,991,994)
Balance as at 30 November
2017 4,382,082 6,338,869 10,720,951
------------------ ---------------------- ----------------------
Share Accumulated
Capital Reserves Total
GBP GBP GBP
Balance as at 1 December
2015 51,776,209 4,310,630 56,086,839
Profit and total comprehensive
income for the year - 7,074,837 7,074,837
Treasury shares issued
in lieu of Performance
Fees 11 826,465 - 826,465
Share redemptions during
the year 10 (27,226,508) - (27,226,508)
Treasury shares acquired
during the year 11 (2,090) - (2,090)
Transactions with owners (26,402,133) - (26,402,133)
Balance as at 30 November
2016 25,374,076 11,385,467 36,759,543
------------------ ---------------------- ----------------------
The notes pages 27 to 40 form an integral part of these
financial statements.
NOTES TO THE FINANCIAL STATEMENTS
as at 30 November 2017
1. GENERAL INFORMATION
Damille Investments II Limited is a closed-ended investment
company incorporated in Guernsey on 3 November, 2011 whose Shares
were admitted to trading on the Specialist Fund Segment ("SFS") of
the London Stock Exchange's Main Market on 9 November, 2011.
The principal activity of the Company was to realise capital
growth from a portfolio of equities and to generate a significant
capital return to Shareholders.
The Company's investment objective was to realise significant
capital returns for its Shareholders with low volatility, by
investing in a concentrated portfolio of primarily equity
securities. In the opinion of the Company, many but not all of
these companies would have benefited from implementing certain
measures to optimise their financial position and align management
and Shareholder interests. Such issuers were expected to be, but
were not limited to, closed-ended investment funds, investment
companies and other corporate entities, such as real estate
companies or natural resource companies.
2. ACCOUNTING POLICIES
The significant accounting policies adopted by the Company are
as follows:
a) Basis of Preparation
The financial statements have been prepared in conformity with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union on a non-going concern basis (refer to note 2
(c)) which comprise standards and interpretations approved by the
International Accounting Standards Board ("IASB") and International
Financial Reporting Interpretations Committee ("IFRIC") that were
endorsed by the EU, together with applicable Guernsey law. The
financial statements have been prepared on an break-up basis except
for the measurement at fair value of certain financial
instruments.
Changes in Standards and Interpretations
The following Standards or Interpretations have been issued by
the IASB and endorsed by the EU but not yet adopted by the
Company:
IFRS 15, 'Revenue from contracts with customers' - IFRS 15,
'Revenue from contracts with customers' deals with revenue
recognition and establishes principles for reporting useful
information about the nature, amount, timing and uncertainty of
revenue and cash flows. Revenue is recognised when a customer
obtains control of a good or service and thus has the ability to
direct the use and obtain the benefits from the good or service.
This standard is effective for annual periods beginning on or after
1 January, 2018.
IFRS 7 Financial Instruments: Disclosures - Deferral of
mandatory effective date of IFRS 9 and amendments relating to
additional hedge accounting disclosures (and consequential
amendments). Applies only when IFRS 9 is adopted, which is
effective for annual periods beginning on or after 1 January,
2018.
IFRS 9 Financial Instruments - Classification and measurement of
financial assets, effective for annual periods beginning on or
after 1 January, 2018.
IFRS 9 Financial Instruments - Accounting for financial
liabilities and derecognition, effective for annual periods
beginning on or after 1 January, 2018.
The directors have considered the above and are of the opinion
that the above Standards and Interpretations are not expected to
have a material impact on the Company's financial statements except
for the presentation of additional disclosures and changes to the
presentation of components of the financial statements. If the
Company continues in existence for longer than currently expected,
these Standards and Interpretations will be applied in the first
financial period for which they are required.
b) Use of estimates and judgements
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected. The preparation of the Company's financial statements
requires the directors to make judgements, estimates and
assumptions that affect the reported amounts recognised in the
financial statements and disclosures. However, uncertainty about
these assumptions and estimates could result in outcomes that could
require material adjustment to the carrying amount of the assets or
liabilities in future periods.
Information about significant areas of estimation, uncertainty
and critical judgements in applying accounting policies that have
the most significant effect on the amount recognised in the
financial statements are disclosed below. The directors consider
that the most significant estimate is the valuation of Level 3
investments as shown in Note 7.
c) Non-going concern
The Continuation Resolution put to shareholders at the Company's
annual general meeting held on 4 May, 2016 was not passed. The
directors are realising the Company's assets in an orderly manner
and returning their invested capital to Shareholders via periodic
compulsory redemptions. Therefore, the directors believe it is
appropriate to adopt a non-going concern basis in preparing the
financial statements, as they consider that the Company will be
voluntarily liquidated within the next 3 months from the date of
this report. The directors believe that the Company will be able to
realise or distribute its remaining investments in an orderly
manner and therefore do not consider there to be a material
difference in the value of the Company's assets, and liabilities,
compared to if the financial statements had been prepared on a
going concern basis. This has also not resulted in changes in the
principal accounting policies and valuation methodology for
investments. Non-current assets have been reclassified to current
as a result of the financial statements being prepared on a
non-going concern basis. The cost of winding up the Company is
estimated to be GBP6,000.
d) Taxation
States of Guernsey Income Tax has granted the Company exemption
from Guernsey income tax under the Income Tax (Exempt Bodies)
(Guernsey) Ordinance, 1989 and the income of the Company may be
distributed or accumulated without deduction of Guernsey Income
Tax. Exemption under the above mentioned ordinance entails payment
by the Company of an annual fee of GBP1,200 for each year in which
the exemption is granted. It should be noted however, that interest
and dividend income accruing from the Company's investments may be
subject to withholding tax in the country of origin. With effect
from 1 January, 2008, the standard rate of income tax for most
companies in Guernsey became 0%. Tax exemption continues to be
available and the Company has been granted this status for 2017.
The directors intend to conduct the Company's affairs so that it
continues to remain eligible for exemption from Guernsey income tax
for the current calendar year.
e) Expenses
All expenses are accounted for on an accruals basis.
f) Dividend income
Dividend income is recognised when the right to payment is
established.
g) Bank interest and other income
Bank interest income and other income is included in the
financial statements on time apportioned basis using the effective
interest rate method.
h) Cash and Cash equivalents
Cash and cash equivalents in the Statement of Financial Position
comprise of cash at bank, call deposits, short term deposits, short
term cash with original maturities of three months or less and
highly liquid investments readily convertible to known amounts of
cash and subject to insignificant risk of changes in value. For the
purposes of the Statement of Cash Flows, cash and cash equivalents
consist of cash and cash equivalents defined above.
i) Share issue costs
The share issue costs borne by the Company are recognised in the
Statement of Changes in Equity, as the Company's Ordinary shares
are classified as equity under paragraphs 16C and 16D of IAS 32
Financial Instruments: Presentation.
j) Financial assets designated as at fair value through profit or loss
All investments have been designated as financial assets "at
fair value through profit or loss". Investments are initially
recognised on the date of purchase at cost, being the fair value of
the consideration given, excluding transaction costs associated
with the investment. After initial recognition, investments are
measured at fair value, with unrealised gains and losses on
investments recognised in the Statement of Comprehensive
Income.
Investments are derecognised when the rights to cash flows from
the investments have expired or substantially all risks and rewards
of ownership have been transferred. Upon derecognition any
previously recognised unrealised gain or loss is reversed in the
current period's "net movement in unrealised depreciation on
investments" and recognised in the "realised gain on investments"
along with any additional gain or loss recognised for the year. In
accordance with IFRS the "net gains on investments" shows the total
gain or loss recognised in the current year.
Commissions paid on the sale or purchase of investments are
recognised in the Statement of Comprehensive Income as
incurred.
IFRS 13 Fair value measurement defines fair value as a price
that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date. Fair value also reflects the credit quality
of the issuers of the financial instruments.
For investments actively traded in organised financial markets,
fair value is determined by reference to stock exchange quoted
market bid prices as at the close of business on the reporting
date. If no quoted market bid price is available at the close of
business on the reporting date, the last available market bid price
is used.
Where no quoted market prices are available, the valuation of
the investment is based on the quarterly NAV provided to the
Company, adjusted for any subsequent distributions received.
Warrants held by the Company are valued using an option pricing
model which uses directly observable market inputs.
k) Trade Date Accounting
All "regular way" purchases and sales of financial assets are
recognised on the "trade date", i.e. the date that the entity
commits to purchase or sell the asset. Regular way purchases or
sales are purchases or sales of financial assets that require
delivery of the asset within the time frame generally established
by regulations or convention in the market place.
l) Segmental Reporting
The directors are of the opinion that the Company is engaged in
a single segment of business, being investment business and
operates solely from Guernsey. Therefore, no segmental reporting
has been provided based on operating segments. Geographical
information is based on the location of the Company's investments.
Geographical locations are determined based on the country of
primary listing for listed investments and the country of
incorporation for unlisted investments. All dividend income as
detailed in note 3 was primarily received from investments with a
country of incorporation or primary listing in Europe, with less
than 2% of the income being derived from investments incorporated
or listed in the rest of the world.
m) Foreign Currencies
The financial statements are expressed in Pounds Sterling
('GBP'), which is the functional and presentation currency of the
Company.
Transactions denominated in foreign currencies are translated
into GBP at the rate of exchange ruling at the date of the
transaction.
Monetary assets and liabilities denominated in foreign
currencies at the reporting date are translated to the functional
currency at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in the
Statement of Comprehensive Income.
Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated to GBP at
the rate of exchange ruling at the dates the values were
determined.
3. OPERATING INCOME
Year
ended Year ended
30 Nov 30 Nov
2017 2016
GBP GBP
Bond income 107,850 40,831
Dividend income 832,309 1,389,261
Director's fee income* 20,914 -
961,073 1,430,092
-------- ------------
*A director, Brett Miller, sits as a non-executive director on
the board of one of the Company's investments: LSR. The director's
fee income shown above is earned from this position and paid over
to the Company.
4. OPERATING EXPENSES
Year
ended Year ended
30 Nov 30 Nov
2017 2016
GBP GBP
Investment advisory
fees 14 318,316 702,244
Performance fees 14 699,198 1,154,235
Directors' fees 168,461 168,378
Corporate and shareholder
advisory fees 36,750 90,090
Brokerage 37,999 34,908
Custody fees 36,710 45,868
Administrator's fee 47,907 49,321
Annual fees 14,402 13,049
Audit fees 14,000 14,845
Directors' and Officers'
insurance 7,825 8,135
Public Offering of
Securities Insurance 2,079 2,257
Legal and professional
fees 36,637 11,267
Sundry costs 5,913 34,958
Registrar's fee 11,890 9,832
Bank interest and
charges 61 389
Loss on foreign exchange 29,344 13,515
Net operating expenses for
the year 1,467,492 2,353,291
---------- ------------------
5. DIRECTORS' REMUNERATION
During the year under review, the non-executive directors were
paid GBP20,000 per annum (2016: GBP20,000 per annum). David
Copperwaite received an additional fee of GBP3,500 (2016: GBP3,500)
as Chairman of the audit committee and Richard Prosser received an
additional fee of GBP5,000 (2016: GBP5,000) as Chairman of the
Company. With effect from 23 December, 2017 the fees of the
non-executive directors and the Chairman were reduced, each of the
non-executive directors is now paid a fee of GBP16,000 per annum
and the Chairman is now paid a fee of GBP20,000 per annum. Mr
Copperwaite is paid an additional GBP2,800 per annum for his
services as Chairman of the Audit Committee. The executive
directors are each paid GBP50,000 per annum (2016: GBP50,000 per
annum).
6. LOSS PER SHARE
Loss per share is calculated by dividing the loss for the year
attributable to Shareholders of GBP5,046,598 (2016: earnings of
GBP7,074,837) by the weighted average number of ordinary shares in
issue during the year 18,626,032 (2016: 31,744,653). There are no
dilutive instruments and therefore basic and diluted earnings per
ordinary share are identical.
7. FINANCIAL ASSETS DESIGNATED AS AT FAIR VALUE THROUGH PROFIT OR LOSS
30 Nov
30 Nov 2017 2016
GBP GBP
Opening valuation 31,692,067 44,942,965
Additions - cost - 75,000
Proceeds from sales (17,513,072) (21,509,725)
Realised gain on investments 47,623 1,617,516
Accrued amortisation 107,849 72,097
Movement in unrealised gain/(loss)
on investments (4,552,341) 6,494,214
Closing valuation 9,782,126 31,692,067
------------- ---------------
Closing portfolio cost 8,416,696 25,882,145
------------- ---------------
Unrealised profit on valuation
carried forward 1,365,430 5,809,922
------------- ---------------
IFRS 13 requires the fair value of investments to be disclosed
by the source of inputs, using a three-level hierarchy as detailed
below:
-- Quoted prices (unadjusted) in active markets for identical
assets or liabilities (Level 1);
-- Inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (as prices)
or indirectly (derived from prices) (Level 2);
-- Inputs for the asset or liability that are not based on
observable market data (unobservable inputs) (Level 3).
As at 30 November Level Level Level
2017 1 2 3 Total
---------- ------ ---------- ----------
GBP GBP GBP GBP
Equity securities 5,627,250 7,780 - 5,635,030
Investment funds - - 4,147,096 4,147,096
5,627,250 7,780 4,147,096 9,782,126
========== ====== ========== ==========
As at 30 November Level Level Level
2016 1 2 3 Total
----------------- ----------------- ------------------ -----------
GBP GBP GBP GBP
Equity securities 26,471,625 387,989 - 26,859,613
Investment funds - - 4,832,454 4,832,454
26,471,625 387,989 4,832,454 31,692,067
================= ================= ================== ===========
Investments held by the Company have been classified as Level 1,
for those investments that are quoted and are valued using quoted
market bid prices.
The Company invests in warrants which are valued using an option
pricing model using observable market inputs and are therefore
classified as Level 2. Where the Net Asset Value (NAV) or current
market price per share is below the warrants' exercise price the
warrants are being valued at the directors' best estimate of fair
value, considering the likelihood of the warrants being exercised,
and are therefore classified as Level 3.
The Company also invests in managed funds which are not quoted
in an active market and which may be subject to restrictions on
redemptions. Investments in those funds are valued based on the Net
Asset Value (NAV) per share published by the administrator of those
funds adjusted for any distributions. The Company classifies the
fair value of these investments as Level 3. The value of these
investments as at 30 November, 2017 was GBP4,147,096 (2016:
GBP4,832,454). If the NAV of these investments was to increase/
decrease by 10%, this would result in an increase/ decrease in the
fair value as at 30 November 2017 of GBP414,710 (2016:
GBP483,245).
The following table shows a reconciliation of all movements in
the fair value of financial instruments categorised within Level 3
between the beginning and the end of the reporting period:
30 Nov 30 Nov
2017 2016
GBP GBP
Opening valuation 4,832,454 4,980,105
Movement in unrealised depreciation
on valuation (685,358) (147,651)
Closing valuation 4,147,096 4,832,454
------------- -------------
8. TRADE AND OTHER RECEIVABLES
30 Nov 30 Nov
2017 2016
GBP GBP
Prepayments and
accrued income 7,806 35,026
Broker debtors - 257,853
7,806 292,879
------- -------------
The above carrying value of receivables is equivalent to its
fair value.
9. TRADE AND OTHER PAYABLES
30 Nov 30 Nov
2017 2016
GBP GBP
Accrued expenses 47,530 414,264
47,530 414,264
------------- --------------
The above carrying value of payables is equivalent to its fair
value.
10. SHARE CAPITAL
The Company is authorised to issue an unlimited number of
ordinary shares of no par value.
30 Nov 2017 30 Nov 2016
SHARES GBP SHARES GBP
Shares of no par
value
Issued shares at
the start of the
year 30,328,369 25,374,076 54,905,479 51,776,209
Shares issued in
lieu of Performance
Fees 799,931 1,026,974 719,278 826,465
Redemption of shares (19,924,714) (21,835,400) (25,294,388) (27,226,508)
Ordinary shares
cancelled during
the year (167,623) (183,568) - -
Purchase of shares
into Treasury - - (2,000) (2,090)
Shares in issue
at the end of the
year 11,035,963 4,382,082 30,328,369 25,374,076
------------- ------------- --------------- --------------
Shareholders are entitled to receive, and participate in any
dividends out of income, other distributions of the Company
available for such purposes and resolved to be distributed in
respect of any accounting period, or other income or right to
participate therein.
On a winding up, Shareholders are entitled to the surplus assets
remaining after payment of all the creditors of the Company.
Shareholders also have the right to receive notice of and to
attend, speak and vote at general meetings of the Company and each
shareholder being present in person or by proxy or by a duly
authorised representative at a meeting shall upon a show of hands
have one vote and upon a poll each such holder present in person or
by proxy or by a duly authorised representative shall have one vote
in respect of every ordinary share held by him (or her).
11. TREASURY SHARES
30 Nov 2017 30 Nov 2016
SHARES GBP SHARES GBP
Shares held in
Treasury
Opening balance 3,362,721 3,104,322 4,389,999 3,928,697
Purchase of shares
into Treasury - - 2,000 2,090
Treasury shares
issued in lieu
of Performance
Fees (799,931) (1,026,974) (719,278) (826,465)
Treasury shares
cancelled during
the year - - (310,000) -
Shares in Treasury
at the end of the
year 2,562,790 2,077,347 3,362,721 3,104,322
------------- ------------- --------------- -------------
The treasury shares represent 2,562,790 (2016: 3,362,721) Shares
purchased in the market at various prices per share ranging from
GBP1.21 to GBP1.33 and held by the Company in treasury. No
cancellations of treasury shares took place during the period.
12. FINANCIAL INSTRUMENTS
The Company's main financial instruments comprise:
a) Cash and cash equivalents that arise directly from the Company's operations; and
b) Quoted investment securities;
c) Unquoted investment securities;
d) Trade and other receivables; and
e) Trade and other payables.
13. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The main risks arising from the Company's financial instruments
are market price risk, credit risk, liquidity risk, interest rate
risk, and capital management risk. The Board regularly reviews and
agrees policies for managing each of these risks and these are
summarised below:
a) Market Price Risk
Market price risk arises mainly from uncertainty about future
prices of financial instruments held. It represents the potential
loss the Company might suffer through holding market positions in
the face of price movements. The executive directors actively
monitor market prices and report to the Board as to the
appropriateness of the prices used for valuation purposes.
If the value of the Company's investment portfolio were to
increase by 30%, it would represent a gain of GBP2,934,638 (2016:
GBP9,507,620) and this would cause the net asset value of the
Company to rise by 27.37% (2016: 25.86%).
If the value of the Company's investment portfolio were to
decrease by 30%, it would represent a loss of GBP2,934,638 (2016:
GBP9,507,620) and this would cause the net asset value of the
Company to fall by 27.37% (2016: 25.86%).
A substantial proportion of the Company's investments is in
closed-ended funds or companies sharing similar characteristics to
closed-ended funds and is subject to the risk of concentrating its
investments in this asset class. The directors attempt to minimise
this market risk by undertaking a detailed analysis of the
risk/reward relationship prior to any investment being made. In
addition, the Company have invested in equity securities reducing
the concentration of assets to one type of asset class. No further
investments are being made as the Company is in the process of
realising its assets.
b) Credit Risk
Credit risk is the risk that an issuer or counterparty will be
unable or unwilling to meet a commitment that it has entered into
with the Company. The directors receive financial information on a
regular basis which is used to identify and monitor risk.
It is Company policy not to invest more than 20% of the NAV of
the Company as at the date of admission in the securities of any
one company or group at the time the investment is made. No further
investments are currently being made as the Company is in the
process of realising its assets.
Investors should be aware that the prospective returns to
Shareholders mirror the returns under the investments held or
entered into by the Company and that any default by an issuer of
any such investment held by the Company would have a consequential
adverse effect on the ability of the Company to pay some or all of
the entitlement to Shareholders. Such a default might, for example,
arise on the insolvency of an issuer of an investment.
The Company's financial assets exposed to credit risk are as
follows:
30 Nov 30 Nov
2017 2016
GBP GBP
Cash and cash equivalents 978,549 5,188,861
Broker debtors and
accrued income - 281,314
978,549 5,470,175
-------- -------------------
The Company is exposed to credit risk in respect of its cash and
cash equivalents, arising from possible default of the relevant
counterparty, with a maximum exposure equal to the carrying value
of those assets. The credit risk on liquid funds is limited because
the counterparties are banks with high credit ratings assigned by
international credit-rating agencies. The Company monitors the
placement of cash balances on an on-going basis.
At the year end the cash was held in an account with Barclays,
which has a credit rating of BBB, as rated by Standard &
Poor's. No cash is held in Broker custody at year end.
The investments of the Company are held in custody by Tilney
Investment Management Limited and Redmayne Bentley. Bankruptcy or
insolvency of the Brokers may cause the Company's rights with
respect to investments held by the Brokers to be delayed.
Investments held with Tilney Investment Management Limited and
Redmayne Bentley are ring fenced and will be protected should the
Brokers become bankrupt or insolvent.
c) Liquidity Risk
Liquidity risk is the risk that the Company will encounter
difficulty in realising assets or otherwise raising funds to meet
financial commitments. The Company's main financial commitment is
its ongoing operating expenses.
The directors ensure that the Company has sufficient liquid
resources available to meet its financial obligations as they fall
due.
The table below details the residual contractual maturities of
financial liabilities:
As at 30 November Over
2017 1-3 months 1 year
GBP GBP
Accrued expenses 47,530 -
47,530 -
---------------- -------------------
As at 30 November Over
2016 1-3 months 1 year
GBP GBP
Accrued expenses 414,264 -
414,264 -
---------------- -------------------
d) Interest Rate Risk
At the year end the Company held cash with Barclays, the returns
on which are subject to fluctuations in market interest rates.
The following table details the Company's exposure to interest
rate risks:
As at 30 November
2017:
Floating Fixed Fixed
Less 1-3 months Greater Non-interest Total
than than bearing
1 month 3 months
GBP GBP GBP GBP GBP
Assets
Designated as at fair value through profit
or loss on initial recognition:
Investments - - - 9,782,126 9,782,126
Loans and
receivables:
Trade and
other receivables - - - 7,806 7,806
Cash and
cash equivalents 978,549 - - - 978,549
------------------- ------------------- ------------------- ------------------- ------------
Total Assets 978,549 - - 9,789,932 10,768,481
------------------- ------------------- ------------------- ------------------- ------------
Liabilities
Financial liabilities measured at amortised
cost:
Accrued expenses - - - 47,530 47,530
---------------- ------------------ ----------------- ---------- -----------
Total Liabilities - - - 47,530 47,530
---------------- ------------------ ----------------- ---------- -----------
Total interest
sensitivity
gap 978,549
----------------
As at 30 November
2016:
Floating Fixed Fixed
Less 1-3 months Greater Non-interest Total
than than bearing
1 month 3 months
GBP GBP GBP GBP GBP
Assets
Designated as at fair value through profit
or loss on initial recognition:
Investments - - - 31,692,067 31,692,067
Loans and
receivables:
Trade and
other
receivables - - - 292,879 292,879
Cash and
cash
equivalents 5,188,861 - - - 5,188,861
------------------- ------------------- ------------------- ------------------- ------------------
Total Assets 5,188,861 - - 31,984,946 37,173,807
------------------- ------------------- ------------------- ------------------- ------------------
Liabilities
Financial liabilities measured at amortised
cost:
Accrued
expenses - - - 414,264 414,264
Broker
creditors - - - - -
------------------- ------------------- ------------------- ------------------- ------------------
Total
Liabilities - - - 414,264 414,264
------------------- ------------------- ------------------- ------------------- ------------------
Total
interest
sensitivity
gap 5,188,861
-------------------
Interest rate sensitivity
If interest rates had been 25 basis points higher and all other
variables were held constant, the Company's net gain attributable
to Shareholders for the year ended 30 November, 2017 would have
increased by approximately GBP 2,446 (2016: GBP12,972) or 0.02%
(2016: 0.04%) of Net Assets due to an increase in the amount of
interest receivable on the bank balances at the year end.
If interest rates had been 25 basis points lower and all other
variables were held constant, the Company's net gain attributable
to Shareholders for the year ended 30 November, 2017 would have
decreased by approximately GBP 2,446 (2016: GBP12,972) or 0.02%
(2016: 0.04%) of Net Assets due to an decrease in the amount of
interest receivable on the bank balances at the year end.
e) Foreign Exchange Risk
The Company does not have significant monetary assets and
liabilities denominated in currencies other than GBP at the end of
the reporting period. GBP216,817 (2016: GBP13,883,107) of the
Company's portfolio is invested in securities priced in foreign
currencies. The Company does not normally hedge against foreign
currency movements affecting the value of the investment portfolio,
but takes account of this risk when making decisions.
If the value of the Company's investment portfolio priced in
foreign currencies were to increase by 10%, it would represent a
gain of GBP21,682 (2016: GBP1,388,311) and this would cause the net
asset value of the Company to rise by 0.20% (2016: 3.78%).
If the value of the Company's investment portfolio priced in
foreign currencies were to decrease by 10%, it would represent a
loss of GBP21,682 (2016: GBP1,388,311) and this would cause the net
asset value of the Company to fall by 0.20% (2016: 3.78%).
f) Capital Management Risk
The investment objective of the Company was to provide
Shareholders with attractive long term returns, expected to be in
the form of capital, through a diversified portfolio.
As the Company's Ordinary shares are traded on the SFS, the
Ordinary shares may trade at a discount to their NAV per Share on
occasion. However, in structuring the Company, the directors have
given detailed consideration to the discount risk and how this may
be managed.
The Company monitors capital on the basis of the carrying amount
of equity as presented on the face of the statement of financial
position.
There are no external requirements for the Company to maintain a
minimum level of capital.
14. RELATED PARTY TRANSACTIONS AND DIRECTORS' BENEFICIAL
INTERESTS
The Company is provided with investment advice by Damille (the
"Service Provider"), which owns 556,393 Ordinary Shares (5.04%) in
the Company. Brett Miller and Rhys Davies are directors of both the
Service Provider and the Company.
During the year under review, under the Services Agreement,
Damille was entitled to receive fees of 1.45% per annum of the
Company's NAV per annum on a monthly basis. During the year the
Company incurred GBP318,316 (2016: GBP702,244) of fees, of which
GBP12,794 (2016: GBP43,898) was outstanding as at the year end and
is shown as part of accrued expenses. Subsequent to the financial
year end, the advisory fee payable to Damille was reduced from 1.45
per cent. of NAV to 1.00 per cent of NAV with effect from 23
December, 2017.
The Service Provider and Nimrod shall be entitled to receive a
Performance Fee from the Company payable in certain circumstances.
The details of the fee can be found in the Company's prospectus
which is available from the Company's website. The performance fee
accrued for the year amounted to GBP699,198 (2016: GBP1,154,235) of
which GBPnil was outstanding at year end (2016: GBP327,776).
There have been no related party transactions with the directors
during the year (other than those disclosed in Note 5).
There is no one entity with ultimate control over the
Company.
15. SIGNIFICANT AGREEMENTS
Nimrod is the Company's Corporate and Shareholder Advisory Agent
and is entitled to receive fees of 0.20% of the Company's NAV per
annum. During the year the Company incurred GBP36,750 (2016:
GBP90,090) of costs of which GBP3,639 (2016: GBP12,410) was
outstanding at the year end as shown as part of accrued expenses.
Subsequent to the financial year end, Nimrod agreed with the
Company to waive the minimal annual total fee with effect from 1
April, 2017, such that the fee has since that date accrued and been
payable at a flat rate of 0.20 per cent. of the Company's NAV.
16. SUBSEQUENT EVENTS
No significant events were noted since the year end other than
those reductions in fees disclosed above.
KEY ADVISERS AND CONTACT INFORMATION
Key Information
Exchange: Specialist Fund Segment
of the LSE's Main Market
Mnemonic: for Listed Securities
Admitted to trading on: DIL2
Financial year end: 9 November, 2011
Base currency: 30 November
ISIN: Pounds Sterling
SEDOL: GG00BD9GK654
LEI: BD9GK654
Country of Incorporation 213800JRBFZCWQYX1176
and registered number: Guernsey - Registered
Website: number 54192
www.damilleinv.com
Management and Administration
Registered Office Secretary and Administrator
Ground Floor JTC Fund Solutions (Guernsey)
Dorey Court Limited
Admiral Park Ground Floor
St Peter Port Dorey Court
Guernsey GY1 2HT Admiral Park
St Peter Port
Guernsey GY1 2HT
Consultancy Service Provider Registrar
Damille Partners Limited Anson Registrars Limited
Blenheim Trust (BVI) Limited PO Box 426
PO Box 3483 Anson House
Road Town Havilland Street
Tortola St Peter Port
British Virgin Islands Guernsey GY1 3WX
Placing and Corporate Auditor
and Shareholder Advisory
Agent
Nimrod Capital LLP Grant Thornton Limited
3 St Helen's Place PO Box 313
London EC3A 6AB Lefebvre House
Lefebvre Street
St Peter Port
Guernsey GY1 3TF
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UNRVRWWAUAAR
(END) Dow Jones Newswires
February 16, 2018 10:12 ET (15:12 GMT)
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