TIDMABNY
RNS Number : 6423M
Albany Investment Trust PLC
02 February 2009
Albany Investment Trust PLC
2 February 2009
Albany Investment Trust Plc (the "Company")
Final Results
The annual financial report was published on 6 June 2008 and submitted to the
UKLA Document Viewing Facility. It has however come to the board's attention
that the Company's annual financial report was erroneously not released via RNS
in accordance with the UKLA's Disclosure and Transparency Rules. Accordingly the
Company is today releasing its annual financial statement in full for the year
ended 29 February 2008 in order to comply with paragraph 4.1.3 of the UKLA's
Disclosure and Transparency Rules.
Chairman's Statement
After the award winning successes of the year to end of February 2007, it set a
high watermark for us to follow. The market proved somewhat less favourable this
year with the FT All-Share down 5.8%. Albany's shareholders' funds fell to
GBP36.29m resulting in a NAV performance down 7.8%. The figures alone, however,
do not tell the full story. The dichotomy of performance between commodity
related stocks and the rest of the market has been significant. Mining and Oil
sectors, which now dominate the FTSE 100, have risen c50% and 15% respectively.
The board is aware of the underperformance but would draw investors' attention
to the typically low yields available from the mining sector, which has
restricted the managers' ability to invest up to the market weighting in this
area.
At the interim stage the Directors announced a dividend of 3.85p and despite the
market turbulence the income remained stable allowing the recommendation of a
final dividend of 5.90p, taking the total for the year to 9.75p.
In my statement last year I commented that the UK market had performed well,
primarily due to the surge of activity in the private equity and merger and
acquisition space. In the first half of the year the credit crunch that we have
all, no doubt, heard about began and with it bringing the merger and
acquisition-fuelled rise to an end. The availability of credit has greatly
reduced and it is difficult to see this not affecting the 'real' economy. The
second half of the year was characterised by volatility brought about by the
worsening of the US housing market and the knock-on effect this had into the
financial sector. Despite continuing inflation concerns I see the UK interest
rate falling over the coming year and as greater clarity in the capital markets
is obtained, I hope to see equities recover.
I hope I am able to offer greater insight at the interim statement in October
and hope to see as many of you as possible at the Annual General Meeting at
2:00pm on 10th July where you will be able to meet the board, the investment
manager and advisers.
P T Furlong
Chairman
Investment Managers' Report
The last 12 months have seen some interesting developments in financial markets.
There has been extensive media coverage on the sub-prime issue in the
Untied States as well as the global supply of cheap credit. The abundant
availability of cheap credit had fuelled consumer demand and rising house prices
had further added to the wealth effect and thus, global growth. The innovation
in financial product offerings seemed to offer the perfect solution;
distribution of risk to those that were best equipped and most willing to take
it. However, the assumptions made in the models and the parameters used to
construct such products were not properly stress-tested and as such when
delinquencies started to rise, the value of these, as it turned out to be,
illiquid assets tumbled. The knock-on effect has been substantial. The major
investment banks, in the US and UK alike, have written off billions of $/GBPs
resulting from these problems and lending terms and costs have risen markedly.
As a result the merger and acquisition, leveraged buyout and op co./prop co.
activity has disappeared; a key factor for the market performance last year.
Inflation is a central issue for all economies, however it has become even more
so since concern emerged that the 'credit crisis' could slow global growth. In
times of a slowing economy price pressures tend to alleviate, allowing monetary
policy to be loosened to soften the downward effect of slowing growth. The
problem central banks are now facing is the threat of slower GDP growth but with
heightened risk of inflation. Oil has recently reached $126 per barrel, metals
and base materials have also been rising rapidly and rice, wheat and other
grains have been compounding the inflation problem through food price inflation.
The different approach of the US, UK and EU central banks has been stark. The
Federal Reserve has cut rates aggressively by 300 basis points since September,
whereas the Monetary Policy Committee (MPC) has reduced the UK rate 75 basis
points since December and the European Central Bank (ECB) have kept rates on
hold at 4%. The ECB, as a relatively new institution, is trying to forge a
credible reputation for keeping inflation under control and as such have
remained very hawkish on inflation, as has the MPC although to a lesser extent.
The remit of these two central banks is to keep inflation around defined target
levels while in contrast the Fed has a market stability target as well.
Therefore they have to consider the slowing economy as an equally important
agenda item, hence their more proactive response.
A glimmer of hope has been coming from Asia and other emerging economies such as
India, where growth seems to be continuing unabated. The mass urbanisation and
infrastructure development has been using raw materials at an enormous rate. GDP
growth is double digit in China, however the question still remains as to
whether this can continue without the external demand source of the West. Due to
this uncertainty the trust has been pursuing themes that have exposure to either
the domestic demand-led or infrastructure-led investments. The performance of
Aggreko, 3i Infrastructure and HSBC, which all have exposure in this area, has
aided the portfolio, with Nokia also added to benefit from the increasing
individual wealth of consumers in the region. Defence has again proved to be a
sound sector of investment with Chemring in particular performing well.
Offsetting this were weaker inputs from Financials, Housing and Consumer
sectors.
The fund has suffered from the inability to achieve an equivalent market
weighting to the oil, gas and basic materials sectors as the yield returns are
too low. Despite having some exposure to the mining and basics sectors through
BHP Billiton, the disparity of returns between this sector and the rest of the
market has led to underperformance over the year. By way of illustration the
FTSE 350 Mining Index rose 37% over the year, while the FTSE 350 Banks Index
fell 27%; a 64% relative performance gap.
The outlook for the coming year is less sanguine than we have seen in recent
times. The need for clarity is paramount and slowly but surely the banking
sector is revealing the extent of the credit crisis on theirs and others balance
sheets. However, for companies with sound balance sheets, low or well covered
gearing and good prospects for continued growth, this sometimes indiscriminate
sell off, has produced opportunities. We expect interest rates to fall further
which should support equity markets, but this will be a tougher year than the
preceding era of cheap, easy credit.
Rathbone Investment Management
Report of the directors
The directors submit to the shareholders the annual report and financial
statements for the year ended 29th February 2008.
Accounts and Dividends
Details of revenue are contained in the Income Statement on Page 10. An Interim
dividend of 3.85 pence per Ordinary share was paid to shareholders on 14th
November 2007. The directors recommend payment of a final dividend of 5.90p per
Ordinary share in respect of the year ended 29th February 2008. Subject to
approval at the Annual General Meeting, the dividend will be paid on 10th July
2008.
Activities of the Company
The company carries on the normal business of an investment trust as defined by
Section 266, Companies Act 1985. The annual report adheres to the principles and
recommendations in the AITC code.
Business Review
A review of the business and future prospects is contained in the Chairman's
Statement on page two and the Investment Managers' Report on page three. Key
Performance Indicators are set out on page one.
Personal Equity Plans and ISAs
The affairs of the company have been conducted in such a way as to comply with
the qualifying equity rule as defined in the Personal Equity Plan and ISA
Regulations. It is the current intention of the directors that the company will
continue to conduct its affairs to satisfy this requirement.
Directors
Mr R A Morris, Mr J R A Nottingham and Mr P T Furlong retire under the terms of
the Articles of Association and being eligible offer themselves for re-election.
The company's procedures regarding the appointment of directors are contained in
the Corporate Governance report on page six. Qualifying third party indemnity
provisions are in place for the benefit of the directors.
Directors' Interests
The interests of each director in the company's Ordinary 20p shares at 1st March
2007 and 29th February 2008 are shown on page five. There were no changes in
these shareholdings between 29th February 2008 and 31st May 2008. The directors
do not have the right to subscribe for any further shares via share option
schemes.
Net Asset Value
Particulars appear in the summary of results on page one.
Capital Structure
Details of the company's capital structure are set out in note 13 to the
financial statements. There were no substantial shareholdings as at 31st May
2008.
Inland Revenue Approval
The company, which is an Investment Company within the meaning of Section 266
Companies Act 1985, has received approval as an Investment Trust from the Inland
Revenue under Section 842 of the Income and Corporation Taxes Act 1988 in
respect of the year ended 28th February 2007 and has subsequently directed its
affairs to enable it to continue to seek such approval.
Principal risks and uncertainties
The principal risks facing the company relate to the company's investment
activities. An explanation of these risks and how they are managed is contained
in note 11 to the accounts. In addition, breach of section 842 of the Income and
Corporation Taxes Act 1998 could lead to the company being subject to capital
gains tax. The Investment Managers monitor investment movements to ensure the
provisions of section 842 are not breached.
Payment policy and practice
It is the company's policy to settle the terms of payment with suppliers when
agreeing the terms of the transaction, to ensure that suppliers are aware of
these terms and to abide by them. At 29th February 2008 the company had no trade
creditors (2007: Nil).
International Financial Reporting Standards (IFRS)
The directors have decided not to voluntarily adopt IFRS. IFRS are mandatory
only for consolidated financial statements. Auditors Grant Thornton UK LLP offer
themselves for reappointment in accordance with Section 385 of the Companies Act
1985.
Corporate Governance
Albany Investment Trust plc
The company is committed to applying the highest principles of corporate
governance commensurate with its size and nature. The Board is accountable to
the company's shareholders for good corporate governance. This report and the
Directors' Remuneration Report describe how it complies with the provisions of
the Combined Code (2006).
Compliance
The Company has complied throughout the year with the Code provisions set out in
Section 1 of the Combined Code except as follows:
A.3.3: A senior independent director has not been nominated.
A.4.1: A nomination committee has not been set up.
B.1: Directors are paid only a basic salary.
B.2: A remuneration committee has not been set up.
C.3.1: An audit committee has not been set up.
The Board do not believe that the above committees would benefit the company at
this time, as the work normally undertaken by such committees is carried out by
the Board as a whole. Further, the Board do not believe that the nomination of a
senior independent director, nor the payment of performance related remuneration
to the directors, would be of benefit to the company given the size of the
Board.
Application of the Principles
Directors
The company supports the concept of an effective Board leading and controlling
the company. The Board met seven times during the year (P T Furlong and R A
Morris attended seven meetings, J R A Nottingham attended six and Sir David
Henshaw four) and is responsible for approving company policy and strategy,
reviewing investment performance, financial reporting and communication. The
Board is supplied with appropriate and timely information and the directors are
free to seek any further information they consider necessary. All directors have
access to advice from the company secretary and independent professionals at the
company's expense. Training is available from the appropriate sources for
directors as necessary.
The Board comprises the Chairman and three non-executive directors, two of whom
are independent (J R A Nottingham and Sir David Henshaw). The directors consider
that J R A Nottingham remains independent despite his period of service
exceeding nine years. This provides a balance whereby the Board's decision
making cannot be dominated by any individual. All directors take decisions
objectively in the interests of the company.
The Chairman of the Board is P T Furlong. The Chairman is responsible for
leadership of the Board, ensuring its effectiveness on all aspects of its role,
and setting its agenda. The Board confirms the appointment of the Chairman
annually.
The Board members are described on pages 4 and 5. All independent directors are
subject to re-election every three years up to the age of 70 or nine years'
service and annually thereafter, and, on appointment, at the first AGM after
appointment. Non-independent directors are re-elected annually.
Appointments of new directors are made on merit. Care is taken to ensure that
appointees have sufficient time available to devote to the job.
Individual director's performance and the performance of the Board as a whole
are evaluated annually.
Relations with Shareholders
The company values the views of its shareholders and recognises their interest
in the company's strategy and performance, Board membership and quality of
management. The Chairman ensures that the views of shareholders are communicated
to the Board as a whole.
The AGM, which is normally attended by all Board members, is used to communicate
with private investors and they are encouraged to participate. Separate
resolutions are proposed on each issue so that they can be given proper
consideration and there is a resolution to adopt the annual report and accounts
and a resolution to approve the Directors' Remuneration Report. The company
counts all proxy votes and will indicate the level of proxies lodged on each
resolution, after it has been dealt with by a show of hands. The company
arranges for notices of the AGM and related papers to be sent to shareholders at
least 20 working days before the meeting.
The share price discount, in absolute terms and relative to other similar
investment trust companies, and the composition of the share register is
discussed at every Board meeting. While there is no discount target, the Board
is aware that discount volatility is unwelcome to many shareholders and that
share price performance is the measure used by most investors. The Board
oversees the company's stockbroker's activities which are designed to stimulate
demand for the company's shares and provide effective communication to existing
and potential shareholders.
Accountability and Audit
The Board presents a balanced and understandable assessment of the company's
position and prospects in all interim and price-sensitive reports and reports to
regulators as well as in the information required to be presented by statutory
requirements. The responsibilities of the directors as regards the accounts are
described on page eight, and those of the auditors on page nine.
The Board has formal and transparent arrangements for considering how it applies
the financial reporting and internal control procedures and for maintaining an
appropriate relationship with the company's auditors.
The Board reviews the nature and extent of non-audit services supplied by the
external auditors, seeking to balance objectivity and value for money. The
directors review annually the level and nature of non-audit services provided by
the external auditors.
Internal Control
The Board is responsible for maintaining a sound system of internal control to
safeguard shareholders' investment and the company's assets and for reviewing
its effectiveness. Such a system is designed to manage rather than eliminate the
risk of failure to achieve business objectives and can only provide reasonable
and not absolute assurance against material misstatement or loss.
The Board conducts a review annually of the company's system of internal
controls. All material controls are covered, including financial, operational
and compliance controls and systems to manage risks.
The company has established a system for identifying, evaluating and managing
the company's key risks. Strategic risks are regularly reviewed by the Board and
it has determined that the Risk Register which it has established will be
monitored by the Board and reviewed formally at Board meetings, at least
annually. The latest review was completed in December 2007.
The key risks reviewed cover the areas of:
- Strategy and management
- Independence
- Outsourcing arrangements
-
Reputational risk
- Reliability of investment manager
- Fraud
- Legislative requirements
- Insurance
The key features of the company's system of internal financial control are as
follows:
The directors have delegated day-to-day investment decisions to Rathbone
Investment Management Limited. The Investment Manager operates within the
investment guidelines set out by the Board. Compliance with the investment
policy is monitored on a daily basis by Rathbone Investment Management Limited
and reviewed by the Board monthly. The portfolio management is at the discretion
of the Investment Manager. The board of directors have however laid down the
following guidelines.
The trust must remain a general UK trust with up to 25% invested overseas,
seeking to achieve a balance between capital growth and income. Investments may
comprise UK listed companies, overseas listed companies, unit and investment
trusts, fixed interest securities and cash. No more than 15% can be invested in
any one company or held in cash. Unless with the express authority of the Board
the fund manager will not invest in deriviatives such as warrants and futures.
Rathbone Investment Management Limited, under instruction from the Board, also
provides administration services for Albany Investment Trust plc. A management
fee is payable for investment and administration services. Rathbone Investment
Management Limited is regulated by the Financial Services Authority and has a
banking licence under the Financial Services Market Act 2000. This provides a
high level of control over the procedures of Albany Investment Trust plc. The
directors receive a report from the internal audit department of Rathbone
Investment Management Limited in respect of internal procedures and controls on
an annual basis.
The Board has considered the need for an internal audit function but has decided
the size of the company does not justify it at present. However, it will keep
the decision under annual review.
Going Concern
After making enquiries, the directors have a reasonable expectation that the
company has adequate resources to continue in operational existence for the
foreseeable future. For this reason they continue to adopt the going concern
basis in preparing the financial statements.
ON BEHALF OF THE BOARD
P T Furlong 6th June 2008
Statement of Directors' Responsibilities
Albany Investment Trust plc
The directors are responsible for preparing the Annual Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law, the directors have elected to prepare financial
statements in accordance with United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice). The financial statements are
required by law to give a true and fair view of the state of affairs of the
company and of its return for that period.
In preparing those 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;
- 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 enable them to ensure that the financial statements comply with the
Companies Act 1985. They are also responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
To the best of the directors' knowledge:
- the financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit of the company, and
- the annual report 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 they face.
In so far as the directors are aware;
- there is no relevant audit information of which the auditors are unaware; and
- the directors have taken all steps that they ought to have taken to make
themselves aware of any relevant audit information, and to establish that the
auditors are aware of that information.
Directors' Remuneration Report
The Board recognises that directors' remuneration is of legitimate concern to
the shareholders.
SECTION 1: Information not subject to audit
The remuneration committee
A Remuneration Committee has not been set up, directors' remuneration being
agreed by the Board as a whole.
Policy on directors' remuneration
The remuneration of the non-executive directors is determined by the Board.
Letters of appointment are now in place for a fixed period of three years for
Sir David Henshaw and for one year for Messrs Furlong, Morris and Nottingham. No
compensation payments are due on termination.
The non-executive directors' remuneration consists entirely of a basic annual
salary which is reviewed annually. Directors' salaries were last reviewed in
December 2007 and will next be reviewed in December 2008.
SECTION 2: Information subject to audit
Directors' emoluments
Directors do not receive bonuses or share options. Pension contributions are not
paid by the company on behalf of the directors.
Approval
This report was approved by the Board of Directors on 6th June 2008 and signed
on its behalf by: P T Furlong.
Report of the Independent Auditors
to the members of Albany Investment Trust plc
We have audited the financial statements of Albany Investment Trust Plc for the
year ended 29th February 2008 ("the financial statements") which comprise the
income statement, the balance sheet, the cash flow statement, the
reconcilliation of movements in shareholders' funds and notes 1 to 18. These
financial statements have been prepared under the accounting policies set out
therein. We have also audited the information in the directors' remuneration
report that is described as having been audited.
This report is made solely to the company's members, as a body, in accordance
with Section 235 of the Companies Act 1985. 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 auditors' 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.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the annual report, the directors'
remuneration report and the financial statements in accordance with United
Kingdom law and accounting standards (United Kingdom Generally Accepted
Accounting Practice) are set out in the statement of directors'
responsibilities.
Our responsibility is to audit the financial statements and the part of the
directors' remuneration report to be audited in accordance with relevant legal
and regulatory requirements and International Standards on Auditing (UK and
Ireland). We report to you our opinion as to whether the financial statements
give a true and fair view and whether the financial statements and the part of
the directors' remuneration report to be audited have been properly prepared in
accordance with the Companies Act 1985. We also report to you whether in our
opinion the information given in the report of the directors is consistent with
the financial statements. This information includes that specific information
presented in the Chairman's statement and Investment Managers' Report that is
cross-referenced from the Business Review section of the report of the
directors. In addition, we report to you if, in our opinion, the company has not
kept proper accounting records, if we have not received all the information and
explanations we require for our audit, or if information specified by law
regarding directors' remuneration and other transactions is not disclosed.
We review whether the Corporate Governance statement reflects the company's
compliance with the nine provisions of the 2006 Combined Code specified for our
review by the Listing Rules of the Financial Services Authority and we report if
it does not. We are not required to consider whether the board's statements on
internal control cover all risks and controls, or form an opinion on the
effectiveness of the company's corporate governance procedures or its risks and
control procedures.We read other information contained in the annual report and
consider whether it is consistent with the audited financial statements. This
other information comprises only the report of the directors, the unaudited part
of the directors' remuneration report, the summary of results, the recent
trends, the Chairman's statement, the Investment Managers' report, the corporate
governance statement, the analysis of investment funds and the ten year
historical record. We consider the implications for our report if we become
aware of any apparent misstatements or material inconsistencies with the
financial statements. Our responsibilities do not extend to any other
information.
Basis of Opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements and the part of the directors'
remuneration report to be audited. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
and the part of the directors' remuneration report to be audited are free from
material misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion, we also evaluated the overall adequacy of the
presentation of information in the financial statements and the part of the
directors' remuneration report to be audited.
Opinion
In our opinion:
- The financial statements give a true and fair view in accordance with United
Kingdom Generally Accepted Accounting Practice of the state of the company's
affairs as at 29th February 2008 and of its return for the year then ended;
- The financial statements and the part of the directors' remuneration report
to be audited have been properly prepared in accordance with the Companies Act
1985; and
- The information given in the report of the directors is consistent with the
financial statements.
GRANTTHORNTON UK LLP Chartered Accountants, Registered Auditors.
Liverpool, 6th June 2008
Income statement
for the year ended 29th February 2008
+----------------------------------------+--------------+----------+---------+--------------+----------+----------+---------+------+
| | | | 2008 | | | 2007 | | |
+----------------------------------------+--------------+----------+---------+--------------+----------+----------+---------+------+
| | Notes | Revenue | Capital | Total | Revenue | Capital | Total | |
+----------------------------------------+--------------+----------+---------+--------------+----------+----------+---------+------+
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | |
+----------------------------------------+--------------+----------+---------+--------------+----------+----------+---------+------+
| (Losses)/Gains on investments | 8 | - | (3,079) | (3,079) | - | 5,337 | 5,337 | |
+----------------------------------------+--------------+----------+---------+--------------+----------+----------+---------+------+
| Income | 2 | 1,362 | - | 1,362 | 1,176 | - | 1,176 | |
+----------------------------------------+--------------+----------+---------+--------------+----------+----------+---------+------+
| Expenses | 3 | (221) | (182) | (403) | (195) | (175) | (370) | |
+----------------------------------------+--------------+----------+---------+--------------+----------+----------+---------+------+
| | | | | | | | | |
+----------------------------------------+--------------+----------+---------+--------------+----------+----------+---------+------+
| Return on ordinary activities | | 1,141 | (3,261) | (2,120) | 981 | 5,162 | 6,143 | |
+----------------------------------------+--------------+----------+---------+--------------+----------+----------+---------+------+
| before taxation | | | | | | | | |
+----------------------------------------+--------------+----------+---------+--------------+----------+----------+---------+------+
| | | | | | | | | |
+----------------------------------------+--------------+----------+---------+--------------+----------+----------+---------+------+
| Taxation on ordinary activities | 5 | - | - | - | - | - | - | |
+----------------------------------------+--------------+----------+---------+--------------+----------+----------+---------+------+
| | | | | | | | | |
+----------------------------------------+--------------+----------+---------+--------------+----------+----------+---------+------+
| Return on ordinary activities | 12 | 1,141 | (3,261) | (2,120) | 981 | 5,162 | 6,143 | |
| after taxation for the financial year | | | | | | | | |
+----------------------------------------+--------------+----------+---------+--------------+----------+----------+---------+------+
| | | | | | | | | |
+----------------------------------------+--------------+----------+---------+--------------+----------+----------+---------+------+
| Return per ordinary share: Basic | 7 | 11.4p | -32.5p | -21.1p | 9.79p | 51.5p | 61.29p | |
+----------------------------------------+--------------+----------+---------+--------------+----------+----------+---------+------+
Reconciliation of movements in shareholders' funds
+---------------------------------+-------+-------+-------+------------+---------+-------+---------+
| | | | | | 2008 | | 2007 |
+---------------------------------+-------+-------+-------+------------+---------+-------+---------+
| | | | | | GBP'000 | | GBP'000 |
+---------------------------------+-------+-------+-------+------------+---------+-------+---------+
| At beginning of year | | | | | 39,367 | | 34,166 |
+---------------------------------+-------+-------+-------+------------+---------+-------+---------+
| Total gains and losses | | | | | (2,120) | | 6,143 |
| recognised since last financial | | | | | | | |
| statements | | | | | | | |
+---------------------------------+-------+-------+-------+------------+---------+-------+---------+
| Dividends paid | | | | | (957) | | (942) |
+---------------------------------+-------+-------+-------+------------+---------+-------+---------+
| At end of year | | | | | 36,290 | | 39,367 |
+---------------------------------+-------+-------+-------+------------+---------+-------+---------+
The accompanying notes are an integral part of the financial statements.
All revenue and capital items in the above statement derive from continuing
operations.
The total column represents the company's profit and loss account, the revenue
and capital columns represent supplementary information.
No operations were acquired or discontinued in the year.
There were no recognised gains and losses other than as included in the income
statement.
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Balance | | | | | | |
| sheet | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| as at 29th | | | | | | |
| February | | | | | | |
| 2008 | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | Notes | | 2008 | | 2007 | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | GBP'000 | | GBP'000 | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Fixed | | | | | | |
| assets | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Investments | 8 | | 34,206 | | 38,775 | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Current | | | | | | |
| assets | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Debtors | 9 | | 52 | | 47 | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Cash at | | | 2,071 | | 578 | |
| bank and in | | | | | | |
| hand | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | 2,123 | | 625 | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Creditors: | | | | | | |
| amounts | | | | | | |
| falling | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| due within | 10 | | (39) | | (33) | |
| one year | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Net current | | | 2,084 | | 592 | |
| assets | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Total | | | 36,290 | | 39,367 | |
| assets less | | | | | | |
| current | | | | | | |
| liabilities | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Capital and | | | | | | |
| reserves | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Called up | 13 | | 2,005 | | 2,005 | |
| share | | | | | | |
| capital | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Capital | 12 | | 32,526 | | 23,157 | |
| reserve - | | | | | | |
| realised | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Capital | 12 | | 86 | | 12,716 | |
| reserve - | | | | | | |
| unrealised | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Revenue | 13 | | 1,673 | | 1,489 | |
| reserve | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Total | | | 36,290 | | 39,367 | |
| shareholders' | | | | | | |
| funds | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Net asset | 14 | | 362.04p | | 392.75p | |
| value per | | | | | | |
| ordinary | | | | | | |
| share: | | | | | | |
| Basic | | | | | | |
+---------------+-------------+-------------+-------------+-------------+-------------+-------------+
The financial statements were approved by the Board of directors on 6th June
2008 and were signed on its behalf by:
P T Furlong Chairman
The accompanying notes are an integral part of the financial statements.
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Cash flow | | | | | | |
| statement | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| for the | | | | | | |
| year ended | | | | | | |
| 29th | | | | | | |
| February | | | | | | |
| 2008 | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | Notes | | 2008 | | 2007 | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | GBP'000 | | GBP'000 | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Operating | | | | | | |
| activities | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Investment | | | 1,331 | | 1,237 | |
| income | | | | | | |
| received | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Bank | | | 49 | | 28 | |
| interest | | | | | | |
| received | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Expenses | | | (397) | | (389) | |
| paid | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Net cash | 16 | | 983 | | 876 | |
| inflow from | | | | | | |
| operating | | | | | | |
| activities | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Financial | | | | | | |
| investment | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Purchase of | | | (10,252) | | (9,225) | |
| investments | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Disposals | | | 11,719 | | 9,687 | |
| of | | | | | | |
| investments | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Cash inflow | | | 1467 | | 462 | |
| from | | | | | | |
| financial | | | | | | |
| investment | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Equity | | | (957) | | (942) | |
| dividends | | | | | | |
| paid | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
| Increase in | 15 | | 1,493 | | 396 | |
| cash | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+-------------+
The accompanying notes are an integral part of the financial statements.
Notes to the financial statements
1. Accounting policies
A summary of the principal accounting policies is set out below which, with the
exception of the adoption of FRS29: Financial Instruments: Disclosures and the
treatment of realised profits, have remained unchanged from the preceding year.
Realised profits
Following additional guidance from the ICAEW (Tech 01/08) the company has
treated gains on its investments held on an active market as realised as they
can be readily converted into cash. Previously such gains were treated as
unrealised. The result is that a transfer between reserves has been made of
GBP7,157,000. Further details are provided in note 12.
Financial instruments
The disclosure aspects of FRS25 Financial Instruments Presentation have been
replaced by FRS29: Financial Instruments: Disclosures. This change has increased
the disclosures in Note 11, but has had no impact on the income for the year or
the net asset value.
a) Basis of accounting
The financial statements are prepared under the historical cost convention,
except for the measurement at fair value of investments. The financial
statements have been prepared in accordance with applicable accounting standards
and with the Statement of Recommended Practice: 'Financial Statements of
Investment Trust Companies' (revised December 2005).
b) Dividends
Dividends declared during the year to the holders of the equity instruments are
recognised in the financial statements.Dividends declared to the holders of the
equity instruments after the balance sheet date, are not recognised as a
liability. The aggregate amount of equity dividends proposed before approval of
the financial statements, which have not been shown as liabilities at the
balance sheet date, are disclosed in the notes to the financial statements.
Dividends are charged direct to equity.
c) Valuation of investments
Investments are classified at fair value through profit and loss upon initial
recognition. Subsequent to initial recognition, investments are measured at fair
value with changes in fair value recognised in the income statement. Quoted
investments are valued at bid prices, as reported by the UK Listing Authority.
Where trading in the securities of a company is suspended, the investment is
valued at the Board's estimate of its fair value. Unquoted investments are
valued by the Board, at the Board's estimate of fair value, by reference to the
following valuation guidelines: Asset values, earnings, dividends and other
relevant factors. Realised surpluses or deficits on the disposal of investments
and permanent impairments in the value of investments are taken to capital
reserve - realised, surpluses on revaluation of investments held on a recognised
active market are taken to capital reserves - realised and unrealised surpluses
and deficits on the revaluation of investments with no active market are taken
to capital reserve - unrealised, as explained in note 1(h) below. Year end
exchange rates are used to translate the value of investments which are
denominated in foreign currencies.
d) Income
Dividends receivable on quoted equity shares are brought into account on the
ex-dividend date. Dividends receivable on equity shares where no ex-dividend
date is quoted are brought into account when the company's right to receive
payment is established. Fixed returns on non-equity shares are recognised on a
time apportionment basis so as to reflect the effective yield on the shares.
Other returns on non-equity shares are recognised when the right to return is
established. The fixed return on a debt security is recognised on a time
apportionment basis so as to reflect the effective yield on the debt security.
Where the company has elected to receive its dividends in the form of additional
shares rather than in cash, the amount of the cash dividend is recognised as
income. Any excess in the value of the shares received over the amount of the
cash dividend is recognised in capital reserves.
e) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged
through the revenue account except as follows:
- Expenses which are incidental to the acquisition of an investment are included
within the initial cost of the investment.
- Expenses which are incidental to the disposal of an investment are deducted
from the disposal proceeds of the investment.
- Expenses relating to investment management are allocated between capital and
revenue in accordance with the Board's expected long-term split of returns, in
the form of capital gains and income respectively, from the entire investment
portfolio.
f) Taxation
Investment income is shown excluding the related tax credit.
The company has not provided deferred taxation on any capital gains and losses
arising on the revaluation or disposal of investments due to the company's
status as an Investment Trust Company.
g) Foreign Currency
Transactions denominated in foreign currencies are recorded in the local
currency at actual exchange rates as at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the year end are
reported at the rates of exchange prevailing at the year end. Any gain or loss
arising from a change in exchange rates subsequent to the date of the
transaction is included as an exchange gain or loss in the profit and loss
account, allocated to the capital reserve or the revenue reserve depending on
whether the gain or loss is of a capital or revenue nature respectively.
h) Capital Reserves
Capital Reserve - Realised
The following are accounted for in this reserve:
- Gains and losses on the realisation of investments. - Realised exchange
differences of a capital nature. - A proportion of the expenses relating to
investment management as set out above. - Permanent impairments in the value of
investments below cost. - Distributions received deemed to be capital in nature.
- Increases and decreases in the valuation of investments held on an active
market at the year end.
Capital Reserve - Unrealised
The following are accounted for in this reserve:
- Increases and decreases in the valuation of investments held outside an active
market at the year end.
- Unrealised exchange differences of a capital nature.
i) Financial instruments
Financial liabilities
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the entity
after deducting all of its financial liabilities. Where the contractual
obligations of financial instruments (including share capital) are equivalent to
a similar debt instrument, those financial instruments are classed as financial
liabilities. Where the contractual terms of share capital do not have any terms
meeting the definition of a financial liability then this is classed as an
equity instrument and is disclosed as called up share capital. Dividends and
distributions relating to equity instruments are debited direct to equity.
Debtors
Debtors in respect of investment income are recognised and carried forward at
cost in accordance with accounting policy (d) above.
Cash
Cash is included in the balance sheet at cost. Cash comprises cash at bank and
in hand and short term deposits with an original maturity of three months or
less.
Creditors
Sundry creditors and accruals are included in the balance sheet at cost.
+--------------------------------+--------+-------+---------+-----------+---------+
| 2. Income | | | 2008 | | 2007 |
+--------------------------------+--------+-------+---------+-----------+---------+
| Income from investments | | | GBP'000 | | GBP'000 |
+--------------------------------+--------+-------+---------+-----------+---------+
| Franked investment income | | | 1,214 | | 1,000 |
+--------------------------------+--------+-------+---------+-----------+---------+
| UK unfranked investment income | | | - | | 42 |
+--------------------------------+--------+-------+---------+-----------+---------+
| Overseas dividends | | | 98 | | 106 |
+--------------------------------+--------+-------+---------+-----------+---------+
| | | | | | |
+--------------------------------+--------+-------+---------+-----------+---------+
| | | | 1,312 | | 1,148 |
+--------------------------------+--------+-------+---------+-----------+---------+
| Other income | | | | | |
+--------------------------------+--------+-------+---------+-----------+---------+
| Bank interest | | | 50 | | 28 |
+--------------------------------+--------+-------+---------+-----------+---------+
| | | | | | |
+--------------------------------+--------+-------+---------+-----------+---------+
| Total income | | | 1,362 | | 1,176 |
+--------------------------------+--------+-------+---------+-----------+---------+
| | | | | | |
+--------------------------------+--------+-------+---------+-----------+---------+
| Total income comprises: | | | | | |
+--------------------------------+--------+-------+---------+-----------+---------+
| Dividends | | | 1,312 | | 1,106 |
+--------------------------------+--------+-------+---------+-----------+---------+
| Interest | | | 50 | | 70 |
+--------------------------------+--------+-------+---------+-----------+---------+
| | | | 1,362 | | 1,176 |
+--------------------------------+--------+-------+---------+-----------+---------+
| Income from investments: | | | | | |
+--------------------------------+--------+-------+---------+-----------+---------+
| Listed UK | | | 1,210 | | 996 |
+--------------------------------+--------+-------+---------+-----------+---------+
| Listed overseas | | | 98 | | 106 |
+--------------------------------+--------+-------+---------+-----------+---------+
| Unlisted | | | 4 | | 4 |
+--------------------------------+--------+-------+---------+-----------+---------+
| UK unfranked investment income | | | - | | 42 |
+--------------------------------+--------+-------+---------+-----------+---------+
| | | | 1,312 | | 1,148 |
+--------------------------------+--------+-------+---------+-----------+---------+
+--------------------------------+--------+-------+---------+-----------+---------+-------+
| | | | 2008 | | 2007 | |
+--------------------------------+--------+-------+---------+-----------+---------+-------+
| 3. Expenses | | | GBP'000 | | GBP'000 | |
+--------------------------------+--------+-------+---------+-----------+---------+-------+
| Secretarial and other services | | | 110 | | 90 | |
+--------------------------------+--------+-------+---------+-----------+---------+-------+
| Directors' remuneration (Note | | | 46 | | 43 | |
| 4) | | | | | | |
+--------------------------------+--------+-------+---------+-----------+---------+-------+
| Investment management fees | | | 185 | | 181 | |
+--------------------------------+--------+-------+---------+-----------+---------+-------+
| Other professional fees | | | 29 | | 25 | |
+--------------------------------+--------+-------+---------+-----------+---------+-------+
| Auditors' remuneration (net of | | | | | | |
| VAT) for | | | | | | |
+--------------------------------+--------+-------+---------+-----------+---------+-------+
| - audit | | | 28 | | 28 | |
+--------------------------------+--------+-------+---------+-----------+---------+-------+
| - other services persuant to | | | 4 | | 2 | |
| such legislation | | | | | | |
+--------------------------------+--------+-------+---------+-----------+---------+-------+
| - taxation | | | 1 | | 1 | |
+--------------------------------+--------+-------+---------+-----------+---------+-------+
| | | | 403 | | 370 | |
+--------------------------------+--------+-------+---------+-----------+---------+-------+
4. Directors' remuneration
The remuneration of the highest paid director amounted to GBP16,000 (2007:
GBP15,000). Further details are set out on page 8 and details of related party
transactions are provided in note 18. During the year, there were no employees
other than the directors.
+--------------------------------+--------+---------+---------+-----------+---------+---------+---------+
| | | | 2008 | | | 2007 | |
+--------------------------------+--------+---------+---------+-----------+---------+---------+---------+
| | | Revenue | Capital | Total | Revenue | Capital | Total |
+--------------------------------+--------+---------+---------+-----------+---------+---------+---------+
| 5. Taxation on ordinary | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| activities | | | | | | | |
+--------------------------------+--------+---------+---------+-----------+---------+---------+---------+
| | | | | | | | |
+--------------------------------+--------+---------+---------+-----------+---------+---------+---------+
| Current taxation | | - | - | - | - | - | - |
+--------------------------------+--------+---------+---------+-----------+---------+---------+---------+
The tax assessed for the period is lower than the standard rate of corporation
tax in the UK of 20% (2007: 19%).
The differences are explained as follows:
+--------------------------------+--------+-------+-------+-----------+--------+---------+---------+
| | | | | 2008 | | 2007 | |
+--------------------------------+--------+-------+-------+-----------+--------+---------+---------+
| | | | | GBP'000 | | GBP'000 | |
+--------------------------------+--------+-------+-------+-----------+--------+---------+---------+
| Revenue return on ordinary | | | | 1,141 | | 981 | |
| activities before tax | | | | | | | |
+--------------------------------+--------+-------+-------+-----------+--------+---------+---------+
| Revenue return on ordinary | | | | | | | |
| activities multiplied by | | | | | | | |
| standard | | | | | | | |
+--------------------------------+--------+-------+-------+-----------+--------+---------+---------+
| rate of corporation tax in the | | | | 228 | | 186 | |
| UK of 20% | | | | | | | |
+--------------------------------+--------+-------+-------+-----------+--------+---------+---------+
| | | | | | | | |
+--------------------------------+--------+-------+-------+-----------+--------+---------+---------+
| Effect of: | | | | | | | |
+--------------------------------+--------+-------+-------+-----------+--------+---------+---------+
| Franked investment income | | | | (242) | | (190) | |
| being exempt from taxation | | | | | | | |
+--------------------------------+--------+-------+-------+-----------+--------+---------+---------+
| Tax relief on expenses | | | | (36) | | (33) | |
| allocated to capital | | | | | | | |
+--------------------------------+--------+-------+-------+-----------+--------+---------+---------+
| Non-recognition of tax losses | | | | 50 | | 37 | |
+--------------------------------+--------+-------+-------+-----------+--------+---------+---------+
| Current tax charge for the | | | | - | | - | |
| year | | | | | | | |
+--------------------------------+--------+-------+-------+-----------+--------+---------+---------+
At 29 February 2008 the Company had a potential deferred tax asset of GBP233,000
(2007: GBP177,000) in respect of taxable losses which are available to be
carried forward and offset against future taxable profits. A deferred tax asset
has not been provided on these losses as it is considered unlikely that the
Company will make suitable taxable revenue profits in excess of deductible
expenses in future periods. As an investment trust, the Company's capital gains
are not taxable and therefore the note above which reconciles the tax charge to
the net return on ordinary activities does not include capital items. The
potential deferred tax asset has been calculated using a corporation tax rate of
20% (2007: 19%).
+-----------------------------------------------------------------------------------------------------------------------+
| 6. Dividends 2008 |
| 2007 |
+-----------------------------------------------------------------------------------------------------------------------+
| Revenue Capital Total Revenue |
| Capital Total |
+-----------------------------------------------------------------------------------------------------------------------+
| Dividends on equity shares paid in the year: GBP'000 GBP'000 GBP'000 GBP'000 |
| GBP'000 GBP'000 |
+-----------------------------------------------------------------------------------------------------------------------+
| - |
| ordinary - interim 2008 dividend of 3.85p |
+-----------------------------------------------------------------------------------------------------------------------+
| per share (2007: 3.50p) 386 - 386 351 |
| - 351 |
+-----------------------------------------------------------------------------------------------------------------------+
| - ordinary - final 2007 dividend of 5.70p |
+-----------------------------------------------------------------------------------------------------------------------+
| per share (2006: 5.90p) 571 - 571 591 |
| - 591 |
+-----------------------------------------------------------------------------------------------------------------------+
| 957 - 957 942 - 942 |
+-----------------------------------------------------------------------------------------------------------------------+
+--------------------------------+--------+---------+---------+-----------+---------+---------+---------+
| | | | 2008 | | | 2007 | |
+--------------------------------+--------+---------+---------+-----------+---------+---------+---------+
| | | Revenue | Capital | Total | Revenue | Capital | Total |
+--------------------------------+--------+---------+---------+-----------+---------+---------+---------+
| Dividends paid and proposed in | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| the year: | | | | | | | |
+--------------------------------+--------+---------+---------+-----------+---------+---------+---------+
| Interim - paid in the year | | 386 | - | 386 | 351 | - | 351 |
| (3.85p, 2007: 3.50p) | | | | | | | |
+--------------------------------+--------+---------+---------+-----------+---------+---------+---------+
| Final - proposed (5.90p, 2007: | | 591 | - | 591 | 571 | - | 571 |
| 5.70p) | | | | | | | |
+--------------------------------+--------+---------+---------+-----------+---------+---------+---------+
| | | 977 | - | 977 | 922 | - | 922 |
+--------------------------------+--------+---------+---------+-----------+---------+---------+---------+
7. Return per ordinary share
Basic revenue return per ordinary share is based on the revenue return on
ordinary activities after taxation, and on 10,023,750 (2007: 10,023,750)
ordinary shares. Basic capital return per ordinary share is based on capital
return on ordinary activities after taxation, and on 10,023,750 (2007:
10,023,750) ordinary shares. Basic total return per ordinary share is based on
the sum of revenue return and capital return as defined above, and on 10,023,750
(2007: 10,023,750) ordinary shares. Diluted returns are not applicable as there
are no share options or other potentially dilutive ordinary shares.
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| | | | | | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| | | | 2008 | | 2007 | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| 8. Investments | | | GBP'000 | | GBP'000 | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| Investments listed on a | | | 34,118 | | 38,690 | |
| recognised investment | | | | | | |
| exchange | | | | | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| Unlisted investments | | | 88 | | 85 | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| | | | 34,206 | | 38,775 | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| | | | | | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| | | | | | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| | | | Listed | Listed | | |
| | | | | | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| | | | Equities | Equities | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| | | | - UK | - | Unlisted | Total |
| | | | | Overseas | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| | | | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| Opening book cost | | | 21,740 | 4,317 | 2 | 26,059 |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| Opening fair value | | | 12,634 | (1) | 83 | 12,716 |
| adjustment | | | | | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| | | | | | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| Opening valuation | | | 34,374 | 4,316 | 85 | 38,775 |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| | | | | | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| Movements in the year: | | | | | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| Purchases at cost | | | 10,169 | 83 | - | 10,252 |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| Sales | | | | | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| - proceeds | | | (10,164) | (1,555) | - | (11,719) |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| - realised gains/(losses) | | | 2,384 | (13) | - | 2,371 |
| on sales | | | | | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| (Decrease)/Increase in fair | | | (5,584) | 108 | 3 | (5,473) |
| value | | | | | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| | | | | | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| Closing valuation | | | 31,179 | 2,939 | 88 | 34,206 |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| | | | | | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| Closing book cost | | | 24,129 | 2,832 | 2 | 26,963 |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| Closing fair value | | | 7,050 | 107 | 86 | 7,243 |
| adjustment | | | | | | |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
| | | | 31,179 | 2,939 | 88 | 34,206 |
+------------------------------+----------+-------+----------+-----------+----------+---------------+
+------------------------------+----------+-------+---------+-----------+---------+
| | | | 2008 | | 2007 |
+------------------------------+----------+-------+---------+-----------+---------+
| | | | GBP'000 | | GBP'000 |
+------------------------------+----------+-------+---------+-----------+---------+
| Realised gains on sale of | | | 2,371 | | 1,610 |
| investments | | | | | |
+------------------------------+----------+-------+---------+-----------+---------+
| Capital distributions | | | 23 | | - |
| received | | | | | |
+------------------------------+----------+-------+---------+-----------+---------+
| (Decrease)/Increase in fair | | | (5,473) | | 3,727 |
| value | | | | | |
+------------------------------+----------+-------+---------+-----------+---------+
| | | | | | |
+------------------------------+----------+-------+---------+-----------+---------+
| (Losses)/Gains on | | | (3,079) | | 5,337 |
| investments | | | | | |
+------------------------------+----------+-------+---------+-----------+---------+
| | | | | | |
+------------------------------+----------+-------+---------+-----------+---------+
| | | | 2008 | | 2007 |
+------------------------------+----------+-------+---------+-----------+---------+
| 9. Debtors | | | GBP'000 | | GBP'000 |
+------------------------------+----------+-------+---------+-----------+---------+
| Dividends due | | | 50 | | 46 |
+------------------------------+----------+-------+---------+-----------+---------+
| Interest due | | | 2 | | 1 |
+------------------------------+----------+-------+---------+-----------+---------+
| | | | 52 | | 47 |
+------------------------------+----------+-------+---------+-----------+---------+
In June 2007 the European Court of Justice ruled that investment trust
management fees should be exempt from VAT and this decision has now been
accepted by HM Revenue and Customs. The result of this decision is that future
management fees will not be subject to VAT and the Company will be able to
recover some of the VAT incurred on past management fees. The directors are
currently negotiating the amount to be recovered.
+------------------------------+----------+-------+---------+-----------+---------+
| 10. Creditors: amounts | | | 2008 | | 2007 |
| falling | | | | | |
+------------------------------+----------+-------+---------+-----------+---------+
| due within one year | | | GBP'000 | | GBP'000 |
+------------------------------+----------+-------+---------+-----------+---------+
| Sundry creditors and | | | 39 | | 33 |
| accruals | | | | | |
+------------------------------+----------+-------+---------+-----------+---------+
11. Financial instruments
The holding of investments involves certain inherent risks. Events may occur
that would result in either a reduction in the company's net assets or a
reduction of revenue returns. Set out below are the principal risks inherent to
the company's activities and the actions taken to manage those risks. The major
risks arising from the company's financial instruments is market price risk. The
Board reviews and agrees policies for reviewing these risks and these are
summarised below. The policies are unchanged from previous years.
(i) Market price risk arises mainly from uncertainty about future prices of the
financial instruments used in the company's business. It represents the
potential loss the company might suffer through holding market positions in the
face of price movements and movements in exchange rates. The risk is monitored
by the Board on a monthly basis and on a daily basis by the Investment Manager.
A full list of the company's investments is shown on pages 19 and 20. 94% of the
company's net assets are invested in quoted equities. A 3% increase in quoted
equity valuations at 29 February 2008 would have increased total assets and
total return by GBP1,024,000 (2007: GBP1,160,000).
A decrease of 3% would have had an equal but opposite effect.
(ii) Liquidity risk - the company seeks to manage financial risk, to ensure
sufficient liquidity is available to meet foreseeable needs and to invest cash
assets safely and profitably. Liquidity is ensured by the accumulation of
investment income and controls over the timing of investment purchases and
sales.
(iii) Interest rate risk - the company reviews the location and duration of its
bank deposits to reduce the impact of interest rate fluctuations.
(iv) Currency risk - the company does not hedge its exposure of foreign
investments held in foreign currencies as the risk is not considered to be
material.
(v) Credit risk - the main credit risk arises from investment transactions with
the company's investment manager. Such transactions are normally settled within
three days.
+------------------------------+----------+----------+-------+------------+--------+---------+
| | | Capital | | Capital | | Revenue |
| | | reserve | | reserve | | |
+------------------------------+----------+----------+-------+------------+--------+---------+
| | | - | | - | | reserve |
| | | realised | | unrealised | | |
+------------------------------+----------+----------+-------+------------+--------+---------+
| 12. Reserves | | GBP'000 | | GBP'000 | | GBP'000 |
+------------------------------+----------+----------+-------+------------+--------+---------+
| At beginning of year | | 23,157 | | 12,716 | | 1,489 |
+------------------------------+----------+----------+-------+------------+--------+---------+
| Net gain on realisation of | | 2,371 | | - | | - |
| investments | | | | | | |
+------------------------------+----------+----------+-------+------------+--------+---------+
| Expenses allocated to | | (182) | | - | | - |
| capital reserve | | | | | | |
+------------------------------+----------+----------+-------+------------+--------+---------+
| Capital distributions | | 23 | | - | | - |
| received | | | | | | |
+------------------------------+----------+----------+-------+------------+--------+---------+
| Decrease in fair value | | - | | (5,473) | | - |
+------------------------------+----------+----------+-------+------------+--------+---------+
| Transfer between reserves | | 7,157 | | (7,157) | | - |
+------------------------------+----------+----------+-------+------------+--------+---------+
| Net revenue for the year | | - | | - | | 1,141 |
| after tax | | | | | | |
+------------------------------+----------+----------+-------+------------+--------+---------+
| Dividends paid in the year | | - | | - | | (957) |
+------------------------------+----------+----------+-------+------------+--------+---------+
| At end of year | | 32,526 | | 86 | | 1,673 |
+------------------------------+----------+----------+-------+------------+--------+---------+
The balance on the revenue reserve represents the company's distributable
reserves. The directors have proposed a final dividend for the year of
GBP591,000.
Transfer between reserves
Following additional guidance from the ICAEW the company has treated its
investments held on an active market as realised as they can be readily
converted into cash. The result is that a transfer between reserves has been
made of GBP7,157,000.
+------------------------------+----------+-------+---------+-----------+---------+
| 13. Called-up share capital | | | 2008 | | 2007 |
+------------------------------+----------+-------+---------+-----------+---------+
| Authorised: | | | GBP'000 | | GBP'000 |
+------------------------------+----------+-------+---------+-----------+---------+
| 10,500,000 ordinary shares | | | 2,100 | | 2,100 |
| of 20p each | | | | | |
+------------------------------+----------+-------+---------+-----------+---------+
| Allotted, called-up and | | | | | |
| fully-paid: | | | | | |
+------------------------------+----------+-------+---------+-----------+---------+
| 10,023,750 ordinary shares | | | 2,005 | | 2,005 |
| of 20p each | | | | | |
+------------------------------+----------+-------+---------+-----------+---------+
| | | | | | |
+------------------------------+----------+-------+---------+-----------+---------+
Dividends - The ordinary shares carry a right to receive dividends. Interim
dividends are determined by the Directors, whereas the proposed final dividend
is subject to shareholder approval.
Capital entitlement - On winding up, after meeting the liabilities of the
Company, the surplus assets will be paid to ordinary shareholders in proportion
to their shareholdings.
Voting - on a show of hands, every ordinary shareholder present in person or by
proxy has one vote and on a poll every ordinary shareholder present in person
has one vote for every share he/she holds and a proxy has one vote for every
share in respect of which he/she is appointed.
14. Net asset value per share
The net asset value per share and the net asset values attributable to each
class of share at the year end calculated in accordance with the Articles of
Association were as follows:
+------------------------------+-------------------+----------+---------+----+----------+---------+
| | | Net asset value | | Net asset value |
+------------------------------+-------------------+--------------------+----+--------------------+
| | | per share | | attributable |
| | | attributable | | |
+------------------------------+-------------------+--------------------+----+--------------------+
| | | 2008 | 2007 | | 2008 | 2007 |
+------------------------------+-------------------+----------+---------+----+----------+---------+
| | | | | | GBP'000 | GBP'000 |
+------------------------------+-------------------+----------+---------+----+----------+---------+
| Ordinary shares (basic) | | 362.04p | 392.75p | | 36,290 | 39,367 |
+------------------------------+-------------------+----------+---------+----+----------+---------+
Basic net asset value per ordinary share is based on net assets and on
10,023,750 (2007: 10,023,750) ordinary shares.
+------------------------------+----------+-------+---------+-----------+---------+
| 15. Analysis of changes in | | | 2008 | | 2007 |
| net funds | | | | | |
+------------------------------+----------+-------+---------+-----------+---------+
| during the year | | | GBP'000 | | GBP'000 |
+------------------------------+----------+-------+---------+-----------+---------+
| Beginning of year | | | 578 | | 182 |
+------------------------------+----------+-------+---------+-----------+---------+
| Net cash inflow | | | 1,493 | | 396 |
+------------------------------+----------+-------+---------+-----------+---------+
| | | | | | |
+------------------------------+----------+-------+---------+-----------+---------+
| End of year | | | 2,071 | | 578 |
+------------------------------+----------+-------+---------+-----------+---------+
| | | | | | |
+------------------------------+----------+-------+---------+-----------+---------+
| Analysis of balances: | | | | | |
+------------------------------+----------+-------+---------+-----------+---------+
| Cash at bank and in hand | | | 2,071 | | 578 |
+------------------------------+----------+-------+---------+-----------+---------+
16. Reconciliation of net total return on ordinary activities before
taxation to net cash inflow from operating activities
+-----------------------+----+----+--------+---------+--------+---------+----+----+----+
| | | | | 2008 | | 2007 | | | |
+-----------------------+----+----+--------+---------+--------+---------+----+----+----+
| | | | | GBP'000 | | GBP'000 | | | |
+-----------------------+----+----+--------+---------+--------+---------+----+----+----+
| Net total return | | | | (2,120) | | 6,143 | | | |
| on ordinary | | | | | | | | | |
| activities before | | | | | | | | | |
| taxation | | | | | | | | | |
+-----------------------+----+----+--------+---------+--------+---------+----+----+----+
| Less: Realised | | | | (2,371) | | (1,610) | | | |
| gains on sale of | | | | | | | | | |
| investments | | | | | | | | | |
+-----------------------+----+----+--------+---------+--------+---------+----+----+----+
| Add/less Fair | | | | 5,473 | | (3,727) | | | |
| value movements | | | | | | | | | |
+-----------------------+----+----+--------+---------+--------+---------+----+----+----+
| (Increase)/Decrease | | | | (5) | | 89 | | | |
| in debtors | | | | | | | | | |
+-----------------------+----+----+--------+---------+--------+---------+----+----+----+
| Increase/(Decrease)in | | | | 6 | | (19) | | | |
| sundry creditors and | | | | | | | | | |
| accruals | | | | | | | | | |
+-----------------------+----+----+--------+---------+--------+---------+----+----+----+
| | | | | | | | | | |
+-----------------------+----+----+--------+---------+--------+---------+----+----+----+
| Net cash inflow | | | | 983 | | 876 | | | |
| from operating | | | | | | | | | |
| activities | | | | | | | | | |
+-----------------------+----+----+--------+---------+--------+---------+----+----+----+
17. Contingent liabilities
The company did not have any contingent liabilities at 29th February 2008 or
28th February 2007.
18. Related party transactions
The directors have delegated day-to-day investment decisions to Rathbone
Investment Management Limited (RIM). The appointment is for an indefinite
period, subject to six months' notice by either party. RIM also provide
administration services for the company. A management fee is payable of 0.5% per
annum on the first GBP35m of the total value of investments and cash held within
the portfolio and 0.4% thereafter, as well as a commission of 0.5% charged on
acquisitions and disposals of investments. This fee includes investment and
administration services.
R A Morris is a non-executive director of Rathbones plc.
Fees of GBP290,575 (2007: GBP303,360) were payable to RIM during the year and
are made up as follows:
+------------------------------+----------+-------+---------+-----------+---------+-------+
| | | | 2008 | | 2007 | |
+------------------------------+----------+-------+---------+-----------+---------+-------+
| | | | GBP'000 | | GBP'000 | |
+------------------------------+----------+-------+---------+-----------+---------+-------+
| Investment management fees | | | 185 | | 181 | |
+------------------------------+----------+-------+---------+-----------+---------+-------+
| Administration fees | | | 32 | | 32 | |
+------------------------------+----------+-------+---------+-----------+---------+-------+
| Dealing commission - sales | | | 40 | | 44 | |
+------------------------------+----------+-------+---------+-----------+---------+-------+
| - purchases | | | 34 | | 46 | |
+------------------------------+----------+-------+---------+-----------+---------+-------+
| | | | 291 | | 303 | |
+------------------------------+----------+-------+---------+-----------+---------+-------+
Analysis of investment funds
based on valuation as shown on the balance sheet
Market Value
Resources Holding
29 February 2008
Mining
GBP
BHP Billiton Plc 90,000
US$0.50 Ordinary shares 1,466,100
Oil & Gas
BP Plc 200,000
US$0.25 shares 1,091,000
Royal Dutch Shell Plc 70,000 B
shares 1,246,000
Basic Industries
Aerospace & Defence
Chemring Group Plc 50,000 5p
Ordinary shares 1,226,000
Meggitt Plc 350,000
5p Ordinary shares 977,375
Smiths Group Plc 100,000 25p
Ordinary shares 993,000
Non-cyclical Consumer Goods
Tobacco
British American Tobacco Plc 70,000 25p
Ordinary shares 1,325,800
Cyclical Services
General Retailers
Findel Plc 150,000
5p Ordinary shares 772,500
Leisure, Entertainment & Hotels
Greene King Plc 100,000 12
1/2p Ordinary shares 652,000
Marston's Plc 25,000
7.375p Ordinary shares 602,500
Industrial Transportation
Forth Ports Plc 50,000
50p Ordinary shares 979,500
Northgate Plc 90,000
5p Ordinary shares 598,050
Wincanton Plc
180,000 10p Ordinary shares
651,600
Support Services
SIG Plc 100,000
10p Ordinary shares 834,000
Aggreko Plc 180,000
10p Ordinary shares 1,060,200
Speedy Hire Plc 70,000 5p
Ordinary shares 555,100
Non-cyclical Services
Food and Drink retailers
Diageo plc 100,000
28 101/108p Ordinary shares 1,033,000
Restaurant Group Plc 400,000
28.125p Ordinary shares 578,000
Tesco Plc 200,000
5p Ordinary shares 800,500
Telecommunication services
BT Group Plc 450,000 5p
Ordinary shares 1,020,375
Pharmaceutical & Biotechnology
Dechra Pharmaceuticals Plc 394,782 1p
Ordinary shares 1,522,872
Utilities
Electricity
Centrica Plc 300,000
6 14/81p Ordinary shares 968,250
National Grid 150,000
11.395p Ordinary shares 1,099,500
Water
Northumbrian Water Group Plc 400,000 10p
Ordinary shares 1,402,000
Financials
Banks
HSBC Holdings Plc 100,000
US$0.50 Ordinary shares 765,500
Royal Bank of Scotland GP Plc 180,000 25p
Ordinary shares 692,550
Insurance
Highway Insurance Holdings Plc 1,000,000 20p Ordinary
shares 752,500
Analysis of investment funds
based on valuation as shown on the balance sheet
+-------------------+----------------------+-----------------+------------------+
| | | | Market Value |
+-------------------+----------------------+-----------------+------------------+
| Financials | Holding | | 29 February 2008 |
+-------------------+----------------------+-----------------+------------------+
| Life Assurance | | | GBP |
+-------------------+----------------------+-----------------+------------------+
| Legal & General | 900,000 | 2 1/2p Ordinary | 1,120,500 |
| Group Plc | | shares | |
+-------------------+----------------------+-----------------+------------------+
| Real Estate | | | |
+-------------------+----------------------+-----------------+------------------+
| Assura Group Plc | 500,000 | 10p Ordinary | 796,250 |
| | | shares | |
+-------------------+----------------------+-----------------+------------------+
| Speciality & | | | |
| other finance | | | |
+-------------------+----------------------+-----------------+------------------+
| Intermediate | 73,333 | 20p Ordinary | 1,102,928 |
| Capital Group Plc | | shares | |
+-------------------+----------------------+-----------------+------------------+
| Man Group | 148,750 | US$ 3.5c | 824,819 |
| | | Ordinary shares | |
+-------------------+----------------------+-----------------+------------------+
| Investment | | | |
| Companies | | | |
+-------------------+----------------------+-----------------+------------------+
| 3i Infrastructure | 900,000 | NPV Ordinary | 1,005,750 |
| Ltd | | shares | |
+-------------------+----------------------+-----------------+------------------+
| Unclassified | | | |
| Investments | | | |
+-------------------+----------------------+-----------------+------------------+
| Tennents | 6,528 | 15% GBP1 | 10,771 |
| Consolidated | | Preference | |
| | | shares | |
+-------------------+----------------------+-----------------+------------------+
| Tennents | 8,219 | 25p A Ordinary | 39,616 |
| Consolidated | | shares | |
+-------------------+----------------------+-----------------+------------------+
| Tennents | 7,468 | 25p Ordinary | 37,340 |
| Consolidated | | shares | |
+-------------------+----------------------+-----------------+------------------+
| European | | | |
| Investments | | | |
+-------------------+----------------------+-----------------+------------------+
| ENISpa | 55,000 | EUR 1 | 962,027 |
+-------------------+----------------------+-----------------+------------------+
| Statoilhydro ASA | 75,000 | NOK2.5 Shares | 1,163,009 |
+-------------------+----------------------+-----------------+------------------+
| Property Funds | | | |
+-------------------+----------------------+-----------------+------------------+
| UK Commercial | 850,000 | NPV Ordinary | 663,000 |
| Property Trust | | shares | |
+-------------------+----------------------+-----------------+------------------+
| Asia Pacific | | | |
| Investments | | | |
+-------------------+----------------------+-----------------+------------------+
| National | 60,000 | NPV Ordinary | 813,994 |
| Australia Bank | | shares | |
| Plc | | | |
+-------------------+----------------------+-----------------+------------------+
| | | | 34,205,776 |
+-------------------+----------------------+-----------------+------------------+
Ten-year historical record
+------------+-----------+-----------------+--------------+------------+----------+---------------+
| Year Ended | Issued | Net Assets | Net Asset | Net | Revenue | Dividends |
| | | Available | Value | | | |
+------------+-----------+-----------------+--------------+------------+----------+---------------+
| 28th | Capital | for Ordinary | Per Share | Revenue | Return | Per Share |
| February | | Capital | | | | |
+------------+-----------+-----------------+--------------+------------+----------+---------------+
| | | | | | Per | |
| | | | | | Share | |
+------------+-----------+-----------------+--------------+------------+----------+---------------+
| | GBP | GBP | p | GBP | p | p |
+------------+-----------+-----------------+--------------+------------+----------+---------------+
| 1999 | 2,004,750 | 25,225,616 | 251.66 | 632,576(B) | 6.31 | 5.95 |
+------------+-----------+-----------------+--------------+------------+----------+---------------+
| 2000 | 2,004,750 | 25,145,000 | 250.85 | 819,000(C) | 8.17 | 6.50 |
+------------+-----------+-----------------+--------------+------------+----------+---------------+
| 2001 | 2,004,750 | 26,977,000 | 269.13 | 705,000(D) | 7.03 | 6.85 |
+------------+-----------+-----------------+--------------+------------+----------+---------------+
| 2002 | 2,004,750 | 24,627,000 | 245.69 | 784,000(E) | 7.82 | 7.00 |
+------------+-----------+-----------------+--------------+------------+----------+---------------+
| 2003 | 2,004,750 | 20,062,000 | 200.15 | 847,000 | 8.45 | 7.50 |
+------------+-----------+-----------------+--------------+------------+----------+---------------+
| 2004 | 2,004,750 | 24,340,000 | 242.82 | 599,000 | 5.98 | 7.75 |
+------------+-----------+-----------------+--------------+------------+----------+---------------+
| 2005 | 2,004,750 | 28,083,000 | 280.16 | 960,000 | 9.58 | 8.15 |
| | | | | (A) | | |
+------------+-----------+-----------------+--------------+------------+----------+---------------+
| 2006 | 2,004,750 | 34,166,000 | 340.85 | 906,000 | 9.04 | 8.45 |
+------------+-----------+-----------------+--------------+------------+----------+---------------+
| 2007 | 2,004,750 | 39,367,000 | 392.75 | 981,000 | 9.79 | 9.20 |
+------------+-----------+-----------------+--------------+------------+----------+---------------+
| 2008 | 2,004,750 | 36,290,000 | 362.04 | 1,141,000 | 11.4 | 9.75 |
+------------+-----------+-----------------+--------------+------------+----------+---------------+
(A) Enhanced by special dividends amounting to GBP176,000
(B) Enhanced by special dividends amounting to GBP27,970 (C) Enhanced by special
dividends amounting to GBP147,000
(D) Enhanced by special dividends amounting to GBP47,640 (E) Enhanced by special
dividends amounting to GBP130,000
The figures for 2005 only have been amended to reflect the prior year adjustment
in respect of the provision for dividends payable.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR TTMJTMMTMBIL
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