RNS Announcements

Dexion Commodities Limited (the "Company")

 

Portfolio re-profile Update

 

As at 1 February 2010 approximately 99% (excluding cash) of the Dexion Commodities Limited portfolio was invested in commodities and environmental investments. This is in line with the previously announced intention to refocus the Company as a multi-manager, multi-strategy portfolio of commodities themed hedge funds. The Company's Portfolio is managed on a day to day basis by MAN Investments (CH) AG - Guernsey branch (formerly RMF Investment Management - Nassau branch).

 

January Net Asset Values

 

Ordinary Shares

 

The net asset values of the Company's Ordinary Shares as of 29 January 2010 are as follows:-

 

Share Class	NAV	January Performance	YTD Performance
£ Shares	97.34 pence	-0.19%	-0.19%
EUR Shares	EUR 1.1749	-0.30%	-0.30%
US$ Shares	US$ 1.6584	-0.20%	-0.20%

 

Redeemed Shares

 

The net asset value of the Company's Redemption Portfolio was US$8.41M. This was attributed between Redeemed Share classes as follows:-

 

Share Class	NAV per Redeemed Share*
£ Shares	US$ 0.2238
EUR Shares	US$ 0.2308
US$ Shares	US$ 0.2291

 

*As adjusted for the payment to Redeeming Shareholders of approximately 4.87 per cent of the total redemption monies currently due to them on 12 February 2010.

 

These valuations, which have been prepared in good faith by the Company's administrator, are for information purposes only and are based on the unaudited estimated valuations supplied to the Company's investment adviser by the administrators or managers of the Company's underlying investments and such valuations may not be considered independent or may be subject to potential conflicts of interest. Both weekly manager estimates and monthly valuations may be produced as at valuation dates which do not co-incide with valuation dates for the Company, may be based on valuations provided as of a significantly earlier date, may differ materially from the actual value of the Company's portfolio and are unaudited or may be subject to little verification or other due diligence and may not comply with generally accepted accounting practices or other generally accepted valuation principles. The Company's investment adviser, investment manager and administrator may not have sufficient information to confirm or review the completeness or accuracy of information provided by those managers or administrators of the Company's investments. In addition, those entities may not provide estimates of the value of the underlying funds in which the Company invests on a regular or timely basis or at all with the result that the values of such investments may be estimated by the investment manager. In the case of 2 of the Company's 34 investments, where no such formal valuation has been received by today's date, an estimated valuation prepared by the Company's investment adviser or by the manager or administrator of the underlying funds has been used. Certain other risk factors which may be relevant to these valuations are set out in the Company's prospectus dated 10 March 2006.

 

Net asset values for Redeemed Shares include only those costs and expenses attributable to Redeemed Shares which have been accrued as at the relevant NAV date.

 

Monthly Portfolio Review

 

Investment Adviser Portfolio Outlook

 

January was a challenging month for commodity strategies as a combination of China tightening, Obama's attack on bank proprietary trading and ongoing sovereign debt concerns caused sharp price falls across the commodity sector. Long-only strategies struggled in this environment, as demonstrated by the 7-8% declines in long-only commodity indices. Given the dominance of macro events, the portfolio was only marginally impacted and despite the declines in commodity prices, was able to achieve modest gains across a number of sectors. The agricultural and livestock sector was the best source of profits, which was not surprising given the greater influence of fundamentals in these markets. These gains, however, were offset by losses in the environmental sector, where negative policy announcements caused solar and water utility stocks to decline considerably.

 

Market Overview

 

Commodity Strategies:

 

Base Metals: -0.80%

Multi-strategy: -0.43%

Energy & Transportation: +0.56%          

Agriculture & Livestock: +2.62%

 

Positive performance was driven by profits in grains and softs. Short positions in corn and soybeans reaped significant gains after a bearish USDA crop report caused corn prices to drop considerably.

 

Within the sugar sector prices rose by 10% given the expectations of a 2010 deficit. A number of Multi-strategy managers were well positioned to capitalise on the rally and despite the increased activity in long sugar trading, the risk of further supply disruptions has kept many managers in the trade. Cocoa sold off in January, however expectation of accelerating demand growth in 2010 saw some re-building of long positions throughout the month.

 

On the negative side, spread trading in base metals proved detrimental. Given expected index selling of near-term contracts, there was a short bias to forward contracts with long positions held further out the curve. Unfortunately, the back of the curve underperformed significantly.

 

Additional losses were experienced by a manager trading Nordic and German power markets. As with base metal spread trades, short front-end / long back-end curve positions in German power contracts proved damaging after back-end prices fell more than near-term contracts.

 

Environmental Strategies: -1.36%. Some managers posted losses as negative policy developments in solar and water utility sectors proved detrimental to returns. Within the solar sector, negative guidance by the German government regarding future subsidies prompted widespread selling. Many of the leading solar stocks declined over 30% peak-to-trough before recovering towards the end of the month. Exposure to the sector had been reduced following a strong H2 2009, however the remaining long positions were hit hard by the announcement.

 

Water and waste management performed better, although they still posted negative results. A core long position in a Brazilian water utility was hit after the stock tumbled following news that water tariffs could only be raised by 3% versus the 9% expectation. The water utility sector in Asia was strong and allowed one manager to secure a gain despite weaknesses in Asian equity markets. Short books proved beneficial as a sharp fall in speculative, high beta names contributed positively to performance. Short positions in battery names linked to electric cars and solar companies also contributed to positive returns along with managers' exposure to carbon.

 

Other Strategies*: +3.87%

 

Asian Opportunities: 0.00%

Healthcare Opportunities: +5.33%

Special Situations: +5.32%

Emerging Markets Macro: +2.94%

 

*Remaining strategies that are being wound down following the decision to re-profile the Company in July 2009.

 

Strategy	Allocation as of 1 February %	Number of Funds as of 1 February	Performance by Strategy %
			January	YTD
Base Metals	10.2	2	-0.80	-0.80
Multi-strategy	31.4	7	-0.43	-0.43
Energy & Transportation	32.6	12	0.56	0.56
Agriculture & Livestock	7.3	2	2.62	2.62
Environmental Strategies	17.3	6	-1.36	-1.36
Other Strategies*	1.2	6	3.87	3.87
Total	100	35

 

Strategy returns are in US$ (except where annotated) and net of underlying manager fees only, and not inclusive of Dexion Commodities' fees and expenses.

 

* Remaining strategies that are being wound down following the decision to re-profile the Company in July 2009.

 

Voting Rights and Capital

 

The Company's share capital consists of 42,277,873 £ shares (excluding treasury shares) with voting rights, 6,203,090 € Shares (excluding treasury shares) and 1,084,009 US$ Shares (excluding treasury shares) with voting rights. All Shareholders have equal voting rights based on the number of Shares held. Accordingly, the total number of voting rights in the Company is 49,564,972 and this figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company under the FSA's Disclosure and Transparency Rules.

 

Supplementary Information

 

Click on, or paste the following link into your web browser, to view a full review of the Dexion Commodities Limited portfolio.

 

http://www.rns-pdf.londonstockexchange.com/rns/9432H_-2010-3-2.pdf