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CMA Global Hedge (CMAE)

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Tuesday 31 August, 2010

CMA Global Hedge

Half Yearly Report

RNS Number : 8078R
CMA Global Hedge PCC Ltd
31 August 2010
 



CMA GLOBAL HEDGE PCC LIMITED

(the "Company")

(Registered Number: 44929) 

 

STOCK EXCHANGE ANNOUNCEMENT

 

 

31 August 2010

 

HALF YEARLY REPORT

 

The Company has today, in accordance with DTR 6.3.5, released its Half Yearly Report for the period ending 30th June 2010. The Report is available from the Company's website www.cmaglobalhedge.com and will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility, which is located at:

 

Financial Services Authority

25 The North Colonnade

Canary Wharf

London E14 5HS

 

CHAIRMAN'S STATEMENT

 

The Directors of CMA Global Hedge PCC Limited announce the following results for the period ended 30th June 2010:

 


US Dollar class

Euro class

Sterling class

As at 30 June 2010

US$

£

Total net assets

11,770,775

9,805,668

6,454,240

Net Asset Value per share

7.65

8.39

7.89

Total earnings per share

(0.48)

(0.49)

(0.49)





As at 31 December 2009




Total net assets

12,514,802

8,932,074

6,356,037

Net Asset Value per share

8.13

7.64

7.77

Total earnings per share

0.20

(0.01)

0.94





 

Commenting on the results the Chairman has made the following statement:

 

I would like to take this opportunity to thank all of our shareholders for their understanding and support over the last few years and give you an overview of the Company's progress during the first half of 2010.

 

Developments and changes in the Company during the year

 

The first half of 2010 was negative in terms of performance for the USD Class of the Company while the investment manager continued to raise liquidity across the portfolio. The Company's USD NAV was negative 5.87% for the period. We are pleased however that the Company managed to raise cash of around 13m USD or nearly 35% of the NAV during this period. As the USD appreciated significantly in this six-month period, particularly versus the EUR, the EUR and GBP un-hedged classes performed much better than the USD class. The EUR class was positive 9.75% while the GBP class was positive 1.53% for the period.

 

With regard to leverage, I would like to reiterate that as a result of aggressive cash raising in the portfolio, leverage was successfully eliminated in mid-March 2009, 2 months ahead of schedule. The Company had no outstanding leverage as of mid-March 2009 and this remains the case today.

 

Future Direction of the Company

 

On 3 September 2009 the Company's discontinuation vote passed with 88.93% of shareholders voting in favour. This led the Board to propose two options, at an EGM held on 15 December 2009, by which Shareholders could realize their investment in the Company, with Shareholders able to elect for the option which best suited their circumstances.

 

As of December 15th, the Company has been operating as a listed run-off vehicle, with the sole objective of raising cash in the portfolio for future distributions to shareholders.

 

I am pleased to report that over 73% of the Company's NAV, at the time of the EGM in December 2009, has already been distributed in cash to shareholders and the investment manager has continued to realise assets since this date.

 

As mentioned above, since the beginning of 2010 the Company has raised approximately 35% of its NAV in cash. The remaining portfolio is significantly more illiquid and is expected to take at least 3 years to generate significant further liquidity. In light of this liquidity outlook, the current size of the Company and the ongoing fixed costs, the Directors of the Company, following discussions with its investment manager and its advisors, have decided to recommend to Shareholders that the Company be placed into liquidation and a circular will be posted to Shareholders in due course containing further details and a resolution to wind-up the Company.  In addition, the directors have asked the investment manager to explore the opportunities in the secondary market for illiquid assets, with a view of generating liquidity at a faster pace for shareholders.

 

Chris Fish

Chairman

 

 

 

 

 

 

 

 

 

RESPONSIBILITY STATEMENT

 

We confirm that to the best of our knowledge:

 

-     the condensed set of financial statements has been prepared in accordance with International Accounting Standards IAS 34 "Interim Financial Reporting" ("IAS 34");

 

-     the interim management report includes a fair review of the information required by:

(a)

DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and



(b)

DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

 

Signed on behalf of the Board of Directors on 27th August 2010.

 

Christopher Fish                                                                        Emmanuel Gavaudan

Director                                                                                    Director

 

 

 

 

 

  

CONDENSED UNAUDITED STATEMENT OF COMPREHENSIVE INCOME

For the six month period ended 30 June 2010



CMA Global

Hedge 1 Cell

US$


Non-cellular

US$


Company

Total

US$








Interest income


 1,121


-


 1,121

Other investment income


 3,444


-


 3,444

Net changes in value of investments and derivative financial instruments


(3,957,049)


-


(3,957,049)

Net changes in value of Cash Pool and Entitlement Pool liabilities


 2,132,318


-


 2,132,318

Foreign currency gains


 9,104


-


 9,104








Total net investment loss


(1,811,062)


-


(1,811,062)








Expenses


(304,685)


-


(304,685)








Loss for the period


(2,115,747)


-


(2,115,747)






















Basic and diluted earnings per US Dollar Share


US$(0.48)





Basic and diluted earnings per Euro Share


€(0.49)





Basic and diluted earnings per Sterling Share


£(0.49)





 

 

CONDENSED UNAUDITED STATEMENT OF CHANGES IN EQUITY

For the six month period ended 30 June 2010



CMA Global Hedge 1 Cell

Non-cellular





 Share

Premium

Retained

Earnings

 Total

Share

Capital


Company Total 



US$

US$

US$

US$


US$ 

Equity at 1 January 2010    

116,478,039

(80,890,432)

 35,587,607

 2


 35,587,609









Loss for the period


-

(2,115,747)

(2,115,747)

-


(2,115,747)









Equity at 30 June 2010


116,478,039

(83,006,179)

 33,471,860

 2


 33,471,862









Equity at 1 January 2009

336,302,043

(88,716,669)

 247,585,374

 2


 247,585,376









Profit for the period


-

 7,308,627

 7,308,627

-


 7,308,627

Redemption of equity shares


(89,354,343)

-

(89,354,343)

-


(89,354,343)

Equity at 30 June 2009


246,947,700

(81,408,042)

 165,539,658

 2


 165,539,660

 

 

CONDENSED UNAUDITED STATEMENT OF FINANCIAL POSITION

As at 30 June 2010



CMA Global

Hedge 1 Cell

US$


Non-cellular

US$


Company

Total

US$

ASSETS







Investments


46,187,812


-


46,187,812

Receivables and prepayments


457,998


2


458,000

Cash and cash equivalents


17,003,338


-


17,003,338








TOTAL ASSETS


    63,649,148


2


63,649,150








EQUITY







Called up share capital


-


2


2

Share premium


116,478,039


-


116,478,039

Retained earnings


(83,006,179)


-


(83,006,179)








TOTAL EQUITY


33,471,860


2


33,471,862








LIABILITIES







Payables and accrued expenses


30,177,288


-


30,177,288








TOTAL LIABILITIES


      30,177,288


-


   30,177,288








TOTAL EQUITY AND LIABILITIES


63,649,148


2


63,649,150






















Net Asset Value per US Dollar Share


US$7.65





Net Asset Value per Euro Share


€8.39





Net Asset Value per Sterling Share


₤7.89





 

 

 

CONDENSED UNAUDITED STATEMENT OF CASH FLOWS

For the six month period ended 30 June 2010




CMA Global Hedge 1 Cell      


and Company






30 June 2010

US$


30 June 2009

US$

CASH FLOWS FROM OPERATING ACTIVITIES




(Loss)/profit for the period

(2,115,747)


 7,308,627





Adjustments for:




Net changes in value of investments and derivative financial instruments

 3,957,049


(10,205,909)

Net changes in value of Cash Pool and Entitlement Pool liabilities

(2,132,318)


Interest income

(1,121)


(1,260)


(292,137)


(2,898,542)





Changes in other receivables and payables

 1,739,591


 72,878,666

Purchases of investments

(4,523,179)


(11,301,165)

Proceeds from sales of investments

 27,378,517


 378,716,918

Realised (losses)/gains on forward foreign currency contracts

(136)


 2,173,969


 24,302,656


 439,569,846

Interest received

 1,884


 1,260

NET CASH GENERATED FROM OPERATING ACTIVITIES

 24,304,540


 439,571,106





CASH FLOWS FROM FINANCING ACTIVITIES




Loans drawn down


(332,009,385)

Equity shares redeemed

(23,789,035)


(62,295,863)





NET CASH USED IN FINANCING ACTIVITIES

(23,789,035)


(394,305,248)





Net increase in cash and cash equivalents

 515,505


 45,265,858

Cash and cash equivalents at beginning of the period

 16,487,833


 16,587,005





Cash and cash equivalents at end of the period

 17,003,338


 61,852,863

 

  

Notes

THE COMPANY

CMA Global Hedge PCC Limited (the "Company") is a Guernsey, closed-ended, investment protected cell company listed on the London Stock Exchange established with one cell, the CMA Global Hedge 1 (the "Cell") on 13 June 2006 to invest in a portfolio of hedge funds, that is managed by C.M. Advisors Limited, a Bermuda-based exempt company offering investment management and advisory services to funds of hedge funds as well as hedge fund related products. The Cell currently has three share classes, a US Dollar Class, a Euro Class and a Sterling Class.

 

Following the Extraordinary General Meeting ("EGM") on 17 December 2008, the Board implemented the following proposals approved at the meeting, in order to reduce the imbalance between supply and demand for the shares in the market and thereby seek to reduce the discount to Net Asset Value at which the shares of the Company have been trading:

 

-     Redemption offers in December 2008 and March 2009 of up to 20 per cent each of the Company's issued share capital as at the December 2008 Record Date (15 December 2008) and the March 2009 Record Date (24 March 2009). A redemption fee is payable to the Investment Manager equal to 4 per cent of the actual aggregate amount of cash owing to a redeeming shareholder following the redemption of their shares (the "Actual Cash Proceeds").

 

-     The creation of an on-going Redemption Facility, whereby the Company may offer, at the discretion of the Directors, to redeem up to 20 per cent of the Company's issued share capital on a half yearly basis. Redemption fees payable to the Investment Manager are 4 per cent, 3 per cent, and 2 per cent of the Actual Cash Proceeds received by redeeming shareholders in 2009, 2010 and 2011 respectively.

 

The Board of Directors of the Company subsequently resolved on 12 May 2009 to exercise their discretion to offer shareholders in the Company the opportunity to participate in a Redemption Facility Offer in June 2009 in respect of up to 20 per cent of the Company's issued share capital as at June 2009 Record Rate (23 June 2009) with a redemption fee of 4 per cent of each shareholder's Actual Cash Proceeds payable to the Investment Manager.

 

Following the Annual General Meeting ("AGM") on 8 July 2009, the Board communicated its intention to offer its shareholders the opportunity to determine the future direction of the Company through a vote at an EGM. The Board considered that the discontinuation of the Company would be in the best interests of the Company's Shareholders as a whole. At an EGM of the Company duly convened and held on 3 September 2009, the resolution for the discontinuation of the Company was passed and approved as an Ordinary Resolution of the Company. Further to this business development, the Company shares are no longer offered for subscription to potential and current investments. In addition, the following wind-down proposals have been passed and approved by the shareholders at the 15 December 2009 EGM:

 

-     introduction of two options to realise shareholders' investments in the Company, with shareholders able to elect for the option which best suits their circumstances (the Redemption Option or the Cash Option);

-     amendment of the Company's Investment Objective and Policy in order to become a listed run-off vehicle;

-     amendment of the Company's Articles of Incorporation in a manner consistent with converting to a listed run-off vehicle and with offering shareholders the Redemption Option or the Cash Option.

 

Details of the two options mentioned above follow:

-     Redemption Option: to retain an interest in a listed vehicle and receive realisation distributions (on dates at the Directors' sole discretion) until the Company is formally wound up, including initial cash distribution as soon as practicable representing a pro rata share of available cash at the time; or

-     Cash Option: to receive a cash payment or cash payments (the "Cash Distribution") equivalent to the immediately realisable value of the proportion of the Portfolio attributable to shareholding in the Company.

 

The approval of these Options caused the division of the Company's portfolio into a Redemption Pool and a Cash Pool.  Net assets attributable to Redemption Option Shareholders is represented by the total net assets of CMA Global Hedge 1 Cell.

 

The Company will be managed with the intention of realising all remaining assets in the portfolio so as to maximise the orderly return of capital to shareholders.

 

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

a) Statement of compliance and basis of preparation

The financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") on a non-going concern basis and applicable legal and regulatory requirements of The Companies (Guernsey) Law, 2008. The financial statements give a true and fair view and are in compliance with The Companies (Guernsey) Law, 2008.

 

The financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority.

 

As the financial statements have been prepared on a non-going concern basis:

-     investments and other net assets are stated at their net realisable values; and

-     a provision for future wind up costs of the Company has been included in the financial statements.

 

These condensed unaudited interim financial statements for the six month period ended 30 June 2010 has been prepared in accordance with IAS 34.  The condensed unaudited interim financial statements should be read in conjunction with the annual audited financial statements for the year ended 31 December 2009, which have been prepared in accordance with IFRSs. The accounting polices applied by the Company in these condensed interim financial statements are the same as those applied by the Company in its financial statements as at and for the year ended 31 December 2009.

 

b) Applicable new standards and interpretations not yet effective

A number of new standards, amendments to standards and interpretations in issue are not yet effective for the six month period ended 30 June 2010, and have not been applied in preparing these financial statements.  None of these will have an effect on the financial statements of the Company, with the exception of IFRS 9 "Financial Instruments", published on 12 November 2009 as part of phase 1 of the IASB's comprehensive project to replace IAS 39.

 

IFRS 9 deals with classification and measurement of financial assets and its requirements represent a significant change from the existing requirements in IAS 39 in respect of financial assets.  The standard contains two primary measurement categories for financial assets:  amortised cost and fair value.  A financial asset would be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, and the asset's contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding.  All other financial assets would be measured at fair value.  The standard eliminates the existing IAS 39 categories of held to maturity, available for sale and loans and receivables

 

For an investment in an equity instrument which is not held for trading, the standard permits an irrevocable election, on initial recognition, on an individual share-by-share basis, to present all fair value changes from the investment in other comprehensive income.  No amount recognised in other comprehensive income would ever be reclassified to profit or loss.  However, dividends on such investments are recognised in profit or loss, rather than other comprehensive income unless they clearly represent a partial recovery of the cost of the investment.  Investments in equity instruments in respect of which an entity does not elect to present fair value changes in other comprehensive income would be measured at fair value with changes in fair value recognised in profit or loss.

 

The standard requires that derivatives embedded in contracts with a host that is a financial asset within the scope of the standard are not separated; instead the hybrid financial instrument is assessed in its entirety as to whether it should be measured at amortised cost or fair value.

 

The standard is effective for annual periods beginning on or after 1 January 2013.  Earlier application is permitted.

 

The Company is currently in the process of evaluating the potential effect of this standard with particular focus on the non-going concern basis of preparation required for all future financial statements of the Company.

 

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of financial statements in conformity with IFRS may require management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses.  The estimates and associated assumptions are based on the historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying value of asset and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are addressed below:

 

If trading volumes or liquidity in the Company's investments are considered by the Investment Manager to be insufficient to provide evidence of an active market, the Investment Manager estimates net realisable value/fair value by reference to other information sources namely index movements or changes in prices of related funds as required by IAS 39 "Financial Instruments: Recognition and Measurement". Estimate prices from underlying administrators are checked by the Investment Manager. However, these estimates may be adjusted when the final prices become available and are deemed materially different. This policy also applies to the less liquid investments contained in the Entitlement Pools, Redemption Pool and Cash Pool.

 

The Directors do not feel it is appropriate to prepare the financial statements of the Company on the going concern basis as the Company is formally following its objective to realise its investments and manage an orderly exit for its investors.  The Directors have considered the costs of break-up and are of the opinion that a sufficient provision has been made in the valuation of all investor pools to account for all liquidation costs of the Company.

 

SIGNIFICANT AGREEMENTS AND RELATED PARTIES

 

a) The Investment Manager

The Investment Manager was entitled to a fee of 1.00 per cent. per annum of the total assets of the Company calculated and accrued on a monthly basis and payable quarterly in arrears. The fee for the period is shown in Note 6 as "Management fees". The amount outstanding at the period end is US$21,504 (31 December 2009: US$340,120).

 

In addition, a performance fee of 5 per cent of the amount (if any) by which the Net Asset Value of the Company at the end of any accounting period (ending on 31 December) exceeded the Net Asset Value at launch or at the start of any such accounting period (or, if higher, the highest previous Net Asset Value in respect of which a performance fee was paid) was payable. This performance fee was therefore subject to a so-called ''high watermark'' test. The calculation of the total amount of any performance fee would be adjusted for the repurchase or issue of shares in any given accounting period. There was no performance fee payable during six month period ended 30 June 2010 and 30 June 2009.

 

Following approval by the Shareholders at an EGM dated 15 December 2009, the management fee payable to the Investment Manager was reduced to 0.25 per cent of the Company's Net Asset Value. In addition, the requirement for the Company to pay a performance fee to the Investment Manager was removed.

 

With the Redemption Offer and Redemption Facility introduced by the Directors, the Investment Manager will be entitled to receive all redemption fees paid by the redeeming shareholders in the December 2008 and March 2009 Redemption Offers, the June 2009 Redemption Facility Offer and any Redemption Facility Offers introduced by the Company in 2009, 2010 and 2011. The redemption fee payable by Shareholders for the December 2008 and March 2009 Redemption Offers will be equivalent to 4 per cent of each shareholder's actual cash proceeds. The redemption fee payable by Shareholders for the June 2009 Redemption Facility Offer will be equivalent to 4 per cent of each shareholder's actual cash proceeds received as a result of the redemption of their shares. For the six month period ended 30 June 2010, redemption fees of US$296,000 (30 June 2009: US$nil) were incurred and paid by Shareholders of the December 2008 Redemption Offer, redemption fees of US$252,000 (30 June 2009: US$nil) were incurred and paid by Shareholders of the March 2009 Redemption Offer and redemption fees of US$280,000 (30 June 2009: US$nil) were incurred and paid by Shareholders of the June 2009 Redemption Offer to the Investment Manager.

 

The Management Agreement may be terminated by either the Investment Manager or the Company giving to the other not less than 18 months' notice in writing, such notice not to expire before the second anniversary of Admission.  The Company shall not serve notice to terminate the agreement on notice unless this course of action has been unanimously agreed to by the independent Directors.

 

b) Custodian fees

The Custodian was entitled to an annual fee equivalent to 0.04 per cent per annum of the Net Asset Value up to US$500 million and 0.03 per cent per annum where the Net Asset Value exceeds US$500 million. This was subject to a minimum fee of US$150,000 per annum per Cell of the Company.  Effective 1 January 2010, an annual fee of £31,250 will be charged. The fee for the period is shown in Note 6 as "Custodian fees". The amount outstanding at the period end is US$7,818 (31 December 2009: US$42,472).

 

c) Directors' fees and expenses

Each of the Directors, (executive and non-executive) is entitled to receive a fee of £20,000 per annum (£35,000 for the Chairman). James Lee agreed to waive his fee during the continuance of his appointment as Director. Markos Kamchis (known as Marcos Camhis) has agreed to waive his fee during his appointment as Director. The Chairman of the Audit Committee will receive an additional £5,000 per annum.  The aggregate of all Directors fees shall not exceed £150,000. The fee for the period is shown in Note 6 as "Directors' fees and expenses". The amount outstanding at the period end is US$nil (31 December 2009: US$28,170).

 

d) Administration fees

The Administrator was entitled to an annual fee equivalent to 0.075 per cent per annum of the Net Asset Value up to US$600 million and 0.05 per cent per annum where the Net Asset Value exceeds US$600 million.  This was subject to a minimum fee of US$250,000 per annum. The fee for the period is shown in Note 6 as "Administration fees". Effective 1 January 2010, an annual fee of £62,500 will be charged.  The amount outstanding at the period end is US$22,631 (31 December 2009: US$183,631).

 

e) Other related party transactions

The Investment Manager, C.M. Advisors Limited, is a wholly owned subsidiary of EFG International. For its services in connection with the placing, EFG International received placing fees. EFG International also holds 161,088 Sterling shares (31 December 2009: 610,399 Sterling shares) in the Cell at 30 June 2010.

 

These are not the full statutory accounts.  The full condensed unaudited half yearly account for the period ending 30th June 2010 will be sent to shareholders and will be for inspection at the registered office: Arnold House, St. Julian's Avenue, St. Peter Port, Guernsey, GY1 3NF.

 

For CMA Global Hedge PCC Limited

HSBC Securities Services (Guernsey) Limited, Secretary

 

31st August 2010

 

END


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