TIDMABNY
RNS Number : 3461H
Albany Investment Trust PLC
26 May 2011
Albany Investment Trust Plc (the "Company")
Final Results
Summary of results
Capital 28th February 2011 28th February 2010 % Change
----------------------- ------------------- ------------------- ---------
Total assets less
current liabilities GBP33,775,000 GBP30,113,000 +12.2
----------------------- ------------------- ------------------- ---------
Net asset value
per 20p share 336.95p 300.42p +12.2
----------------------- ------------------- ------------------- ---------
FT All-Share Index 3,106.58 2,736.80 +13.5
----------------------- ------------------- ------------------- ---------
FTSE 100 Index 5,994.01 5,354.52 +11.9
----------------------- ------------------- ------------------- ---------
Revenue 28th February 2011 28th February 2010 % Change
----------------------- ------------------- ------------------- ---------
Net revenue after
tax GBP769,000 GBP910,000 -15.5
----------------------- ------------------- ------------------- ---------
Total rate of interim
and final dividends
- net pence per
share 10.2p 10.1p +1.0
----------------------- ------------------- ------------------- ---------
Revenue return per
share 7.67p 9.08p -15.5
----------------------- ------------------- ------------------- ---------
Chairman's Statement
At the start of last year, more normal market conditions
returned and the financial crises seemed to have been put behind
us. Whilst significant challenges continued to lie ahead in the UK
and the Eurozone given the significant reductions needed in the
levels of government debt, optimism seemed to be returning to the
US, Asia and the Emerging markets. Markets performed relatively
strongly with the FTSE AllShare up 13.5% and the MSCI World up
18.5%.
Unfortunately since the end of our financial year the mood in
the markets has been tempered to some extent by the upheaval in
Egypt, Tunisia and some of the Arab states also, not least through
the impact on the price of oil. The full implication of these
events remains uncertain and the market has also had to factor in
the impact of the horrific earthquake and tsunami in Japan which
has implications not only domestically but also for global supply
chain issues.
Albany performed in line with the FTSE All Share index with a
rise of over 12% during the year - a very creditable performance
given the impact of BP both in terms of dividend and capital falls,
and the strong rise in Mining and Industrials sectors which offer
little by way of yield and so are restrictive in the extent to
which Albany can participate.
As we said at the time of the interim report we held the interim
dividend at 3.9p and explained that we were reviewing the
investment strategy for the fund. We remain very proud of Albany's
dividend history and see it as a key strength of the trust. We aim
to continue to reward our shareholders with a growing dividend and
in this vein are pleased to announce a final dividend of 6.30p.
While we are cogniscent of the need for capital growth to maintain
the sustainability of the dividend, we aim to continue to seek a
balance of capital growth and income as a total return goal over
time. Our strong revenue reserve position will give us flexibility
in this regard.
With regard to the report and accounts, we are, in order to
manage our cost base efficiently, no longer printing and
distributing interim accounts. These will be available via our
website, www.albanyinvestmenttrust.com and through the London Stock
Exchange Regulatory News Service.
As you know Trevor Furlong retired as Chairman at 31st December
2010 after being in the role for 10 years. I would like to thank
him for his strong stewardship through some turbulent times and we
wish him well for the future.
Finally, I do hope to see as many of you as possible at the AGM
at 2.30pm on 13th July where you will have a chance to meet the
Board, the investment managers and advisers.
M Wolstenholme
Chairman,
Investment Managers' Report
The strong rise in world equity markets in 2009 continued into
the start of 2010. Despite major environmental, economic and
political turbulence markets made significant progress.
Environmentally, the Icelandic ash cloud which caused disruption
to travel and tour operators was closely followed by the BP Macondo
well 'blow-out' in the Gulf of Mexico. This event sent BP shares
plummeting and dragged oil majors and service companies with it.
This not only affected capital values but also dividend income as
BP, a major part of the UK dividend paying capacity, cancelled its
2010 payout.
Economically, the European sovereign debt crisis rocked credit
markets, and wider recovery hopes, as Greece was revealed to be in
a very precarious position. The fear of contagion across the region
through the interwoven network of debt held by Europe's already
distressed banking system forced the European Central Bank into
action, announcing a huge financial support programme. This
initially calmed market fears but the deterioration and subsequent
'bail out' of Ireland sparked fears up again and has led investors
to remain wary of the continued fragility of peripheral European
nations.
Politically, the UK coalition government, although perhaps not
ideal, appears to have established some credibility and having
taken early control of budget excess, has stabilised the UK debt
rating concern and funding levels. This has been aided by
quantitative easing and low base rates.
Inflation continues to be a hotly debated topic. The
deflationist camp seems to be losing the battle as globally nations
struggle to cope with inflationary pressures of high commodity
prices. China is trying to cool their economy, the UK inflation
rate has been climbing and the ECB are increasingly nervous about
rising cost pressures. However, given that growth remains fragile
and there are sensible counter arguments to each of the
inflationist positions, it would seem that on balance the start of
the process of normalisation of interest rates is not likely to be
before Q3 2011.
The report last year highlighted that cash was a relatively
unattractive asset class given the accommodative monetary policy
stance, not just in the UK but across the world. Cash has been
maintained at low levels throughout the year, except for short term
tactical reasons, in order to work the Trust assets
effectively.
Reviewing the trust progress over the year, an overweight stance
on consumer staples and utilities held back performance, but this
was offset by a positive contribution from an underweight position
in banks and good selections in the oil and gas sector.
Specifically, BG has been very strong, and in the same sector, so
has Afren. Despite being underweight in mining, the investments in
BHP, Rio Tinto and Anglo American, held at various points performed
well. Defensive sectors have been among the weaker performing
sectors but investments in Vodafone and British American Tobacco
have provided a positive contribution. Finally, the overseas
element to the portfolio has been increasing over the year as
opportunities have arisen. This is achieved mainly via the USA but
with some Asian and European exposure. The portfolio includes
Monsanto and Potash Corp providing exposure to the agricultural
sectors; an example of themes that cannot necessarily be accessed
by UK investments.
The existing strategy will continue. The focus will be on
reasonable value stocks in sound financial health and where there
are catalysts for value realisation. The level of volatility we
have seen recently will cause some short term pain for a number of
the holdings but will also provide opportunities to buy into good
stocks on more attractive valuations. Growth in the Asian region
has a structural nature to it and so companies that are well placed
to benefit from this trend will continue to attract our attention.
Prospects for dividend growth across the market looks promising and
so income generation, and growth, will also be a feature of our
investment focus. After a tricky period for investors, we are
pleased to have kept better pace with the market in the year to
February 2011 and look to the year to February 2012 with high hopes
of performance that rewards our shareholders continuing
support.
Rathbone Investment Management
Report of the Directors
The directors submit to the shareholders the annual report and
financial statements for the year ended 28th February 2011
Accounts and dividends
Details of revenue are contained in the Income Statement set out
below. An Interim dividend of 3.9 pence per Ordinary share was paid
to shareholders on 26th November 2010.
The directors recommend payment of a final dividend of 6.3 pence
per Ordinary share in respect of the year ended 28th February 2011.
Subject to approval at the Annual General Meeting, the dividend
will be paid on 19th July 2011.
Activities of the company
The company carries on the normal business of an investment
trust as defined by Section 833, Companies Act 2006. 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 above and the Investment Managers'
Report below.
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 ISA
Regulations. It is the current intention of the directors that the
company will continue to conduct its affairs to satisfy this
requirement.
Directors
P T Furlong retired as a director on 31st December 2010. Mr R A
Morris and Mr J R A Nottingham 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 below.
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 2010 and 28th February 2011 are shown on below.
There were no changes in these shareholdings between 28th February
2011 and 13th May 2011. 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 above.
Capital structure
Details of the company's capital structure and voting rights are
set out in note 13 to the financial statements.
Significant shareholdings
At 28th February 2011 the following shareholders owned more than
3% of the Companies Ordinary Shares: Giltspur Nominees Limited
6%
HM Revenue & Customs (HMRC) approval
The company, which is an Investment Company within the meaning
of Section 833 Companies Act 2006, has received approval as an
Investment Trust from the HMRC under Section 842 of the Income and
Corporation Taxes Act 1988 in respect of the year ended 28th
February 2010 and has subsequently directed its affairs to enable
it to continue to seek such approval.
Principal risks, uncertainties and future performance
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 1988
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
28th February 2011 the company had no trade creditors (2010:
Nil).
Other policies
As the company does not have any employees or premises, it does
not have any policies in respect of environmental matters,
employees or social and community issues.
Contractual arrangements
Details of arrangements with Rathbone Investment Management are
set out in note 18.
International Financial Reporting Standards (IFRS)
The directors have decided not to voluntarily adopt IFRS. IFRS
are currently mandatory only for consolidated financial
statements.
Auditors
Grant Thornton UK LLP offer themselves for reappointment in
accordance with Section 489 of the Companies Act 2006.
Port of Liverpool Building, Pier Head, Liverpool L3 1NW.
BY ORDER OF THE BOARD
T W EVANS Secretary,
Board of Directors
Manjit Wolstenholme
Aged 46
Appointed 1st September 2010. Currently Non Executive Director
of Provident Financial, Capital & Regional plc, Future plc and
Non Executive Governor of Manchester Academic Health and Science
Centre. Prior to this 13 years at Dresdner Kleinwort and Partner at
Gleacher Shacklock.
R A Morris CBE, DL
Aged 69
Joined the Board in January 1987 after being Secretary since
June 1979. He is Chairman of the Park Prepayments Trustee Company
Limited and Mace & Jones.
Non-Executive Director of Liverpool Women's Hospital. He has
served as Deputy Lieutenant of Merseyside and as High Sheriff of
Merseyside.
J R A Nottingham FCA
Aged 69
Joined the Board in July 1995. Nearly 50 years investment
experience working with a number of leading investment institutions
covering the whole range of investment areas including Investment
Trusts, both in the UK and overseas.
Sir David Henshaw BA, MSocSci, FCMI,
Aged 62
Joined the Board in June 2004. Former Chief Executive of
Liverpool City Council until March 2006 and Chief Executive of
Liverpool Capital of Culture. He recently completed a redesign of
the UK Child Support system. He is Chairman of Alder Hey Children's
Hospital Foundation Trust and has a number of other private and
public interests.
Directors' Shareholding
Beneficial Non-beneficial
------------------- ---------------- -----------------
2011 2010 2011 2010
------------------- ------- ------- -------- -------
R A Morris 10,030 10,030 27,500 40,694
------------------- ------- ------- -------- -------
J R A Nottingham 6,000 6,000 - -
------------------- ------- ------- -------- -------
P T Furlong - 2,500 - -
------------------- ------- ------- -------- -------
Sir David Henshaw - - - -
------------------- ------- ------- -------- -------
M Wolstenholme - -
------------------- ------- ------- -------- -------
Corporate Governance
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 (2008).
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 (Sir David Henshaw and
R A Morris attended seven meetings, J R A Nottingham six, P T
Furlong five and M Wolstenholme 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 as his actions, advice and contributions at board meetings
consistently display decision making in the best interests of the
shareholders and as his personal shareholding is not significant.
The Board composition 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.
M Wolstenholme was appointed Chairman on 1st January 2011, after
being proposed and seconded by members of the Board and the
decision being agreed by the Board as a whole, following the
retirement of P T Furlong. The Chairman is responsible for
leadership of the Board, ensuring its effectiveness in all aspects
of its role, and setting its agenda. The Board confirms the
appointment of the Chairman annually.
The Board members are described on above.
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 by the Chairman, taking
into account issues such as attendance and contribution quality and
noting how this feeds into the company's overall performance.
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 and those
of the auditors are described below. 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.
Grant Thornton UK LLP remain as the company's auditor. The Board
are aware of other providers of such services and regularly
consider the competitiveness of the current provider against market
rates.
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 Board ensures that any necessary actions are
taken to remedy significant failings or weaknesses as
identified.
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 2010.
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. Management fees are 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 is of the view that the company has established
procedures in place to identify, evaluate and manage the
significant financial reporting risks faced by the company. Key
elements of the company's internal control procedures include:
-- Well established budget functions that are regularly
monitored throughout the year
-- Detailed management information is received by the Board on a
monthly basis
The Board has also reviewed the operation and effectiveness of
the company's systems of internal financial control and 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, and its assets
consist mainly of securities that are readily realisable. For this
reason they continue to adopt the going concern basis in preparing
the financial statements.
ON BEHALF OF THE BOARD
M Wolstenholme Chairman
Statement of Directors' Responsibilities
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). Under company law the directors must
not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
company and of the profit or loss of the company for that
period.
In preparing these financial statements, the directors are
required to:
-- select suitable accounting policies and then apply them
consistently
-- make judgements and estimates that are reasonable and
prudent;
-- state whether applicable UK 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 adequate accounting
records that are sufficient to show and explain the company's
transactions and 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 2006. 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.
In so far as each of the directors are aware:
-- there is no relevant audit information of which the company's
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.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
To the best of my 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.
ON BEHALF OF THE BOARD M Wolstenholme Chairman,
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 in place for a fixed period
of three years for Sir David Henshaw and Mrs M Wolstenholme and for
one year for Messrs 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 2010 and will next be reviewed in
December 2011.
Total Shareholder return
Year Albany FT Allshare
----- ------- ------------
2006 100.00 100.00
----- ------- ------------
2007 117.98 111.63
----- ------- ------------
2008 111.63 108.66
----- ------- ------------
2009 76.54 72.82
----- ------- ------------
2010 99.64 107.30
----- ------- ------------
2011 115.10 125.56
----- ------- ------------
The graph above shows the company's Total Shareholder Return
compared to the FT All Share Total Return Index, which the
directors believe to be the most appropriate index for this
purpose.
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.
2011 2010
GBP GBP
------------------- ------- -------
P T Furlong 13,950 16,750
------------------- ------- -------
M Wolstenholme 6,458 -
------------------- ------- -------
R A Morris 11,000 11,000
------------------- ------- -------
J R A Nottingham 11,000 11,000
------------------- ------- -------
Sir David Henshaw 11,000 11,000
------------------- ------- -------
53,408 49,750
------------------- ------- -------
Approval
This report was approved by the Board of Directors on 20th May
2011 and is signed on its behalf by: M Wolstenholme.
Independent Auditor's Report
As at 28(th) February 2011
We have audited the financial statements of Albany Investment
Trust plc for the year ended 28th February 2011 which comprise the
income statement, the reconciliation of movements in shareholders'
funds, the balance sheet, the cash flow statement and the related
notes. The financial reporting framework that has been applied in
their preparation is applicable law and United Kingdom Accounting
Standards (United Kingdom Generally Accepted Accounting
Practice).
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors' Responsibilities
Statement set out above, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view. Our responsibility is to audit
and express an opinion on the financial statements in accordance
with applicable law and International Standards on Auditing (UK and
Ireland). Those standards require us to comply with the Auditing
Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the APB's website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the company's
affairs as at 28th February 2011 and of its profit for the year
then ended;
-- have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
-- have been prepared in accordance with the requirements of the
Companies Act 2006.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion:
-- the information given in the Report of the Directors for the
financial year for which the financial statements are prepared is
consistent with the financial statements; and
-- the information given in the Corporate Governance Statement
set out above and in the notes to the financial statements with
respect to internal control and risk management systems in relation
to financial reporting processes and about share capital structures
is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the financial statements and the part of the Directors'
Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
-- certain disclosures of directors' remuneration specified by
law are not made; or
-- we have not received all the information and explanations we
require for our audit; or
-- a Corporate Governance Statement has not been prepared by the
Company.
Under the Listing Rules, we are required to review:
-- the directors' statement, set out above in relation to going
concern; and
-- the part of the Corporate Governance Statement relating to
the company's compliance with the nine provisions of the June 2008
Combined code specified for our review
-- certain elements of the report to the shareholders by the
Board on directors' remuneration
Kevin Engel
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Liverpool
Income Statement
For the year ended 28th February 2011 (incorporating Profit
& Loss Account)
2011 2010
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ ------ -------- -------- -------- -------- -------- --------
Investment
holding
gain 8 - 4,092 4,092 - 6,477 6,477
------------ ------ -------- -------- -------- -------- -------- --------
Income 2 1,050 - 1,050 1,139 - 1,139
------------ ------ -------- -------- -------- -------- -------- --------
Expenses 3 (281) (187) (468) (229) (172) (401)
------------ ------ -------- -------- -------- -------- -------- --------
Return on
ordinary
activities
before
taxation 769 3,905 4,674 910 6,305 7,215
------------ ------ -------- -------- -------- -------- -------- --------
Taxation on
ordinary
activities 5 - - - - - -
------------ ------ -------- -------- -------- -------- -------- --------
Return on
ordinary
activities
after
taxation
for the
financial
year 12 769 3,905 4,674 910 6,305 7,215
------------ ------ -------- -------- -------- -------- -------- --------
Return per 7 7.67p 38.96p 46.63p 9.08p 62.90p 71.98p
ordinary
share:
Basic and
diluted
------------ ------ -------- -------- -------- -------- -------- --------
Reconciliation of movements in Shareholders' funds
2011 2010
GBP'000 GBP'000
-------------------------------------------------------- --------- ---------
At the beginning of the year 30,113 23,905
-------------------------------------------------------- --------- ---------
Total gains and losses recognised since last financial
statements 4,674 7,215
-------------------------------------------------------- --------- ---------
Dividends paid (1,012) (1,007)
-------------------------------------------------------- --------- ---------
At the end of the year 33,775 30,113
-------------------------------------------------------- --------- ---------
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 returns shown in the supplementary revenue and capital
columns are prepared under guidance published by the Association of
Investment Companies.
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 28th February 2011
2011 2010
Notes GBP'000 GBP'000
----------------------------------------------- ------ --------- ---------
Fixed assets:
----------------------------------------------- ------ --------- ---------
Investments 8 33,012 29,652
----------------------------------------------- ------ --------- ---------
Current assets:
----------------------------------------------- ------ --------- ---------
Debtors 9 57 62
----------------------------------------------- ------ --------- ---------
Cash at bank and in hand 762 451
----------------------------------------------- ------ --------- ---------
819 513
----------------------------------------------- ------ --------- ---------
Creditors amounts falling due within one year 10 (56) (52)
----------------------------------------------- ------ --------- ---------
Net current assets 763 461
----------------------------------------------- ------ --------- ---------
Total assets less current liabilities 33,775 30,113
----------------------------------------------- ------ --------- ---------
Capital and reserves:
----------------------------------------------- ------ --------- ---------
Called up share capital 13 2,005 2,005
----------------------------------------------- ------ --------- ---------
Capital reserve - realised 12 30,170 26,259
----------------------------------------------- ------ --------- ---------
Capital reserve - unrealised 12 75 81
----------------------------------------------- ------ --------- ---------
Revenue reserve 12 1,525 1,768
----------------------------------------------- ------ --------- ---------
Total shareholders' funds 33,775 30,113
----------------------------------------------- ------ --------- ---------
Net asset value per ordinary share: Basic 14 336.95p 300.42p
----------------------------------------------- ------ --------- ---------
The financial statements were approved by the Board of directors
on 20th May 2011 and were signed on its behalf by:
M Wolstenholme Chairman
The accompanying notes are an integral part of the financial
statements.
Company number: 429589
Cash Flow Statement
For the year ended 28th February 2011
2011 2010
Notes GBP'000 GBP'000
------------------------------------------------ ------ --------- ---------
Operating activities
------------------------------------------------ ------ --------- ---------
Investment income received 1,095 1,126
------------------------------------------------ ------ --------- ---------
Bank interest received 44 39
------------------------------------------------ ------ --------- ---------
Expenses paid (464) (393)
------------------------------------------------ ------ --------- ---------
Net cash inflow from operating activities 16 675 772
------------------------------------------------ ------ --------- ---------
Financial investment
------------------------------------------------ ------ --------- ---------
Purchase of investments (18,826) (10,861)
------------------------------------------------ ------ --------- ---------
Disposal of investments 19,474 10,496
------------------------------------------------ ------ --------- ---------
Cash inflow / (outflow) from financial
investments 648 (365)
------------------------------------------------ ------ --------- ---------
Equity dividends paid (1,012) (1,007)
------------------------------------------------ ------ --------- ---------
Increase / (decrease) in cash 15 311 (600)
------------------------------------------------ ------ --------- ---------
The accompanying notes are an integral part of the financial
statements.
Notes to the Financial Statements
1. Principal Accounting policies
A summary of the principal accounting policies is set out below
which have remained unchanged from the preceding year.
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 the Companies Act 2006 and applicable United
Kingdom accounting standards (United Kingdom Generally Accepted
Accounting Practice) and with the Statement of Recommended
Practice: 'Financial Statements of Investment Trust Companies'
(revised January 2009).
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
The investment portfolio is managed and its performance is
evaluated on a fair value basis, in accordance with a documented
investment strategy, and information about the investments is
provided internally on that basis to the directors. Accordingly,
investments are designated on initial recognition at fair value
through profit or loss. 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.
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.
e) Expenses
All expenses are accounted for on an accruals basis.
-- 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 transferred in
part to capital reserve 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 income statement.
h) Capital reserves
Capital reserve - realised
The following are transferred to 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
-- 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 transferred to 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.
A financial liability exists where there is a contractual
obligation to deliver cash or another financial asset to another
entity, or to exchange financial assets or liabilities under
potentially unfavourable conditions. Shares containing such
obligations would be classified as financial liabilities. An equity
instrument is any contract that evidences a residual interest in
the assets of the entity after deducting all of its financial
liabilities. Dividends and distributions relating to equity
instruments are debited direct to equity.
Financial liabilities are obligations to pay cash or other
financial assets and are recognised when the company becomes a
party to the contractual provisions of the instrument. All
financial liabilities are recorded initially at fair value, net of
direct issue costs. Subsequently they are accounted for at
amortised cost via the effective interest rate method.
Financial assets
Financial assets are divided into the following categories:
loans and receivables and financial assets at fair value through
profit or loss. Financial assets are assigned to the different
categories by management on initial recognition, depending on the
purpose for which they were acquired. The designation of financial
assets is re-evaluated at every reporting date at which a choice of
classification or accounting treatment is available.
All financial assets are recognised when the company becomes a
party to the contractual provisions of the instrument. Financial
assets other than those categorised as at fair value through profit
or loss are recognised at fair value plus transaction costs.
Financial assets categorised as at fair value through profit or
loss are recognised initially at fair value with transaction costs
expensed through the income statement.
Financial assets at fair value through profit or loss represent
investments designated by the entity as at fair value through
profit or loss upon initial recognition. Subsequent to initial
recognition, the financial assets included in this category are
measured at fair value with changes in fair value recognised in the
income statement. Financial assets originally designated as
financial assets at fair value through profit or loss may not be
reclassified subsequently.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. Debtors and cash are classified as loans and receivables.
Loans and receivables are measured subsequent to initial
recognition at amortised cost using the effective interest method.
Any change in their value through impairment or reversal of
impairment is recognised in the income statement.
-An assessment for impairment is undertaken at least at each
balance sheet date.
2. Income
2011 2010
Income from investments GBP'000 GBP'000
--------------------------- --------- ---------
Franked investment income 967 1,012
--------------------------- --------- ---------
Overseas dividends 39 92
--------------------------- --------- ---------
1,006 1,104
--------------------------- --------- ---------
Other income:
--------------------------- --------- ---------
Bank interest 44 35
--------------------------- --------- ---------
Total income 1,050 1,139
--------------------------- --------- ---------
Total income comprises:
--------------------------- --------- ---------
Dividends 1,006 1,104
--------------------------- --------- ---------
Interest 44 35
--------------------------- --------- ---------
1,050 1,139
--------------------------- --------- ---------
Income from investments:
--------------------------- --------- ---------
Listed UK 962 1,007
--------------------------- --------- ---------
Listed overseas 39 92
--------------------------- --------- ---------
Unlisted 5 5
--------------------------- --------- ---------
1,006 1,104
--------------------------- --------- ---------
3. Expenses
2011 2010
GBP'000 GBP'000
----------------------------------------------- --------- ---------
Secretarial and other services 77 78
----------------------------------------------- --------- ---------
Directors' remuneration (see note 4) 53 50
----------------------------------------------- --------- ---------
Investment management fees 190 174
----------------------------------------------- --------- ---------
Investment manager's administration fee 30 29
----------------------------------------------- --------- ---------
Other professional fees 68 34
----------------------------------------------- --------- ---------
Foreign exchange losses 15 -
----------------------------------------------- --------- ---------
Auditors' remuneration (net of VAT) for
----------------------------------------------- --------- ---------
- audit 30 32
----------------------------------------------- --------- ---------
- other services persuant to such legislation 4 3
----------------------------------------------- --------- ---------
- taxation 1 1
----------------------------------------------- --------- ---------
468 401
----------------------------------------------- --------- ---------
4. Directors' remuneration
The remuneration of the highest paid director amounted to
GBP13,950 (2010: GBP16,750). Further details are set out above and
details of related party transactions are provided in note 18.
Social security costs amounted to GBP3,676 (2010: GBP3,447).
During the year, there were no employees other than the
directors.
5. Taxation on ordinary activities
RevenueGBP'000 2011 Total Revenue 2010 Total
Capital GBP'000 GBP'000 Capital GBP'000
GBP'000 GBP'000
--------- --------------- -------- -------- -------- --------- ---------
Current - - - - - -
taxation
--------- --------------- -------- -------- -------- --------- ---------
The tax assessed for the period is lower than the standard rate
of corporation tax in the UK of 21% (2010: 21%). The differences
are explained as follows:
2011 2010
GBP'000 GBP'000
------------------------------------------------------ --------- ---------
Return on ordinary activities before tax 4,674 7,215
------------------------------------------------------ --------- ---------
Return on ordinary activities multiplied by standard
rate of corporation tax in the UK of 21% 982 1,515
------------------------------------------------------ --------- ---------
Effect of:
------------------------------------------------------ --------- ---------
Capital reserve movements (820) (1,324)
------------------------------------------------------ --------- ---------
Franked investment income being exempt from taxation (172) (204)
------------------------------------------------------ --------- ---------
Tax relief on expenses allocated to capital (39) (36)
------------------------------------------------------ --------- ---------
Non-recognition of tax losses 49 49
------------------------------------------------------ --------- ---------
Current tax charge for the year - -
------------------------------------------------------ --------- ---------
At 28th February 2011 the Company had a potential deferred tax
asset of GBP298,000 (2010: GBP265,000) 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. The potential deferred tax asset has
been calculated using a corporation tax rate of 21% (2010:
21%).
6. Dividends
2011 2010
Dividends on equity shares Revenue Total Revenue Total
paid in the year: GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- --------- --------- ---------
- ordinary - interim 2011
dividend of 3.9p per share
(2010: 3.90p) 391 391 391 391
---------------------------------- --------- --------- --------- ---------
- ordinary - final 2010 dividend
of 6.20p per share (2009: 6.15p) 621 621 616 616
---------------------------------- --------- --------- --------- ---------
1,012 1,012 1,007 1,007
---------------------------------- --------- --------- --------- ---------
Dividends paid and proposed
in the year:
---------------------------------- --------- --------- --------- ---------
Interim - paid in the year
(3.9p, 2010: 3.9p) 391 391 391 391
---------------------------------- --------- --------- --------- ---------
Final - proposed (6.30p, 2010:
6.20p) 631 631 621 621
---------------------------------- --------- --------- --------- ---------
1,022 1,022 1,012 1,012
---------------------------------- --------- --------- --------- ---------
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
(2010: 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 (2010: 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 (2010: 10,023,750) ordinary shares. Diluted returns
equate to basic returns as there are no share options or other
potentially dilutive ordinary shares.
8. Investments
2011 2010
GBP'000 GBP'000
----------------------------------------------- --------- ---------
Investments listed on a recognised investment
exchange 32,935 29,569
----------------------------------------------- --------- ---------
Unlisted investments 77 83
----------------------------------------------- --------- ---------
33,012 29,652
----------------------------------------------- --------- ---------
UK Fixed Listed Listed
Interest Equities Equities
Securities - UK - Overseas Unlisted Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------ ---------- ------------ --------- ---------
Opening book
cost 511 21,047 4,074 2 25,634
---------------- ------------ ---------- ------------ --------- ---------
Opening fair
value
adjustment (22) 4,320 (361) 81 4,018
---------------- ------------ ---------- ------------ --------- ---------
Opening
valuation 489 25,367 3,713 83 29,652
---------------- ------------ ---------- ------------ --------- ---------
Movements in
the year:
---------------- ------------ ---------- ------------ --------- ---------
Purchases at
cost _ 16,443 2,383 - 18,826
---------------- ------------ ---------- ------------ --------- ---------
Sales:
---------------- ------------ ---------- ------------ --------- ---------
- proceeds _ (16,686) (2,788) - (19,474)
---------------- ------------ ---------- ------------ --------- ---------
- realised
profits /
(losses) on
sales - 2,650 (323) - 2,327
---------------- ------------ ---------- ------------ --------- ---------
Increase /
(decrease) in
fair value 84 998 605 (6) 1,681
---------------- ------------ ---------- ------------ --------- ---------
Closing
valuation 573 28,772 3,590 77 33,012
---------------- ------------ ---------- ------------ --------- ---------
Closing book
cost 511 23,454 3,346 2 27,313
---------------- ------------ ---------- ------------ --------- ---------
Closing fair
value
adjustment 62 5,318 244 75 5,699
---------------- ------------ ---------- ------------ --------- ---------
Closing
valuation 573 28,772 3,590 77 33,012
---------------- ------------ ---------- ------------ --------- ---------
2011 2010
GBP'000 GBP'000
---------------------------------------------------- --------- ---------
Realised profits / (losses) on sale of investments 2,327 (819)
---------------------------------------------------- --------- ---------
Capital distributions received 84 16
---------------------------------------------------- --------- ---------
Increase in fair value 1,681 7,280
---------------------------------------------------- --------- ---------
Investment Holding gain 4,092 6,477
---------------------------------------------------- --------- ---------
9. Debtors
2011 2010
GBP'000 GBP'000
--------------- --------- ---------
Dividends due 57 62
--------------- --------- ---------
10. Creditors: amounts falling due within one year
2011 2010
GBP'000 GBP'000
------------------------------- --------- ---------
Sundry creditors and accruals 56 52
------------------------------- --------- ---------
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 risk 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 carrying value of the Company's investments, debtors, cash
at bank and current liabilities is considered to be a fair
approximation of their fair value.
The Company had no defaults during the period in respect of
borrowings.
Financial risk management
(i) Market risk analysis
Market price risk arises mainly from uncertainty about the
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, in
accordance with the investment policy set out above. A full list of
the company's investments is shown below. 98% of the company's net
assets are invested in quoted equities. The net result for the year
and shareholders' funds are sensitive to a reasonably possible
change in quoted equity valuations of +10% and -10%. The net result
for the year and shareholders' funds would increase or decrease by
GBP3,293,000 (2010: GBP2,957,000) as a result of the above
movements.
(ii) Credit risk analysis
The Company's management considers that all the above financial
assets are not impaired for each of the reporting dates under
review and are of good credit quality and no amounts are past due.
The Company's financial assets are not secured by collateral or
other credit enhancements.
(iii) Currency risk
The company is exposed to translation foreign exchange risk as
noted above under market risk. At the year end overseas investments
amounted to GBP3,590,000, 11% of the investment holding. The net
result for the year and shareholders' funds are sensitive to a
reasonably possible change in exchange rates of +5% and -5%. The
net result for the year and shareholders' funds would increase or
decrease by GBP179,000 (2010: GBP186,000) as a result of the above
movements.
(iv) Interest rate risk
The company reviews the location and duration of its bank
deposits to reduce the impact of interest rate fluctuations.
(v) Credit risk
The main credit risk arises from investment transactions with
the companys' investment manager. Such transactions are normally
settled within three days.
(vi) Liquidity risk analysis
The Company seeks to manage financial risk, to ensure sufficient
liquidity is available to meet foreseeable needs and to invest cash
assets safely and profitability. Liquidity is ensured by the
accumulation of investment income and controls over the timing of
investment purchase and sales.
The Company manages its liquidity needs by carefully monitoring
the investment markets and disinvesting where necessary. Liquidity
needs are monitored in various time bands, on a day to day and week
to week basis, as well as on the basis of a rolling 30 day
projection. Long-term liquidity needs for a 180 day and a 360 day
lookout period are identified monthly.
The Company maintains cash to meet its liquidity requirements
for up to 30 day periods. Funding in regards to long term liquidity
needs is additionally secured by realising investments. At the year
end the Company was exposed to liquidity risk of GBP56,000 (2010;
GBP52,000), in respect of non-derivative financial liabilities. All
of these amounts are due within 30 days of the year end.
The Company holds bank deposits with a limited number of
financial institutions.
The carrying amount of the company's financial assets and
liabilities as recognised at the balance sheet date may also be
categorized as follows:
Financial
assets at
fair value
Loans and through profit
Assets at receivables or loss Total
28th February 2011 GBP'000 GBP'000 GBP'000
-------------------------- ------------- ---------------- ---------
Investments - 33,012 33,012
-------------------------- ------------- ---------------- ---------
Debtors 57 - 57
-------------------------- ------------- ---------------- ---------
Cash at bank and in hand 762 - 762
-------------------------- ------------- ---------------- ---------
819 33,012 33,831
-------------------------- ------------- ---------------- ---------
Financial
assets at
fair value
Loans and through profit
Assets at receivables or loss Total
28th February 2010 GBP'000 GBP'000 GBP'000
-------------------------- ------------- ---------------- ---------
Investments - 29,652 29,652
-------------------------- ------------- ---------------- ---------
Debtors 62 - 62
-------------------------- ------------- ---------------- ---------
Cash at bank and in hand 451 - 451
-------------------------- ------------- ---------------- ---------
513 29,652 30,165
-------------------------- ------------- ---------------- ---------
Financial liabilities are classified as other financial
liabilities carried at amortised cost.
At 28th February 2011, the Company's liabilities have
contractual maturities which are summarised below:
Current within Current within
6 months 6 months
2011 2010
GBP'000 GBP'000
------------------ --------------- ---------------
Accrued expenses 56 52
------------------ --------------- ---------------
The above contractual maturities reflect the gross undiscounted
cash flows, which are equivalent to the carrying values of the
liabilities at the balance sheet date.
The following table presents financial assets measured at fair
value in the balance sheet in accordance with the fair value
hierarchy. The hierarchy groups financial assets and liabilities
into three levels based on the significance of the inputs used in
measuring the fair value of the financial asset or liability. The
fair value hierarchy has the following levels:
Level 1 - quoted prices (unadjusted) in active markets for
identifiable assets or liabilities
Level 2 - inputs other than quoted prices included in level 1
that are observable for the asset or liability, either directly or
indirectly; and
Level 3 - inputs for the asset or liability that are not based
on observable market data (unobservable inputs)
The level within which the financial asset is classified is
determined based on the lowest level of significant input to the
fair value measurement.
The financial assets and liabilities measured at fair value in
the balance sheet are grouped into the fair value hierarchy as
follows:
2011 2010
Level 1 GBP'000 GBP'000
--------------------------------------------------- --------- ---------
Equity Investments and Fixed Interest Investments
- Listed 33,012 29,652
--------------------------------------------------- --------- ---------
Significant accounting policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised, in respect of each class of financial asset, financial
liability and equity instrument are disclosed in the accounting
policies.
12. Reserves
Capital Capital
reserve reserve Revenue
- realised - unrealised reserve
GBP'000 GBP'000 GBP'000
-------------------------------- ------------ -------------- ---------
At beginning of year 26,259 81 1,768
-------------------------------- ------------ -------------- ---------
Net gain on realisation of
investments 2,327 - -
-------------------------------- ------------ -------------- ---------
Expenses allocated to capital
reserve (187) - -
-------------------------------- ------------ -------------- ---------
Capital distributions received 84 - -
-------------------------------- ------------ -------------- ---------
Increase / (Decrease) in fair
value 1,687 (6) -
-------------------------------- ------------ -------------- ---------
Net revenue for the year after
tax - - 769
-------------------------------- ------------ -------------- ---------
Dividends paid in the year - - (1,012)
-------------------------------- ------------ -------------- ---------
At end of year 30,170 75 1,525
-------------------------------- ------------ -------------- ---------
The balance on the revenue reserve represents the company's
distributable reserves. The directors have proposed a final
dividend for the year of GBP631,000.
13. Called-up share capital
2011 2010
GBP'000 GBP'000
------------------------------------------------ --------- ---------
Authorised: 10,500,000 ordinary shares of 20p
each 2,100 2,100
------------------------------------------------ --------- ---------
Allotted, called-up and fully-paid: 10,023,750
ordinary shares of 20p each 2,005 2,005
------------------------------------------------ --------- ---------
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 per
share attributable Net asset value attributable
----------------- ---------------------- -------------------------------
2011 2010 2011 2010
----------------- ---------- ---------- --------------- --------------
Ordinary shares
(basic) 336.95p 300.42p 33,775 30,113
----------------- ---------- ---------- --------------- --------------
Basic net asset value per ordinary share is based on net assets
and on 10,023,750 (2010: 10,023,750) ordinary shares.
15. Analysis of changes in net funds during the year
2011 2010
GBP'000 GBP'000
----------------------------- --------- ---------
Beginning of year 451 1,051
----------------------------- --------- ---------
Net cash inflow / (outflow) 311 (600)
----------------------------- --------- ---------
End of year 762 451
----------------------------- --------- ---------
Analysis of balances:
----------------------------- --------- ---------
Cash at bank and in hand 762 451
----------------------------- --------- ---------
16. Reconciliation of net total return on ordinary activities
before taxation to net cash inflow from operating activities
2011 2010
GBP'000 GBP'000
------------------------------------------------ --------- ---------
Net total return on ordinary activities before
taxation 4,674 7,215
------------------------------------------------ --------- ---------
Less: Realised (profits) / losses on sale
of investments (2,327) 815
------------------------------------------------ --------- ---------
Less: Fair value movements (1,681) (7,280)
------------------------------------------------ --------- ---------
Decrease in debtors 5 10
------------------------------------------------ --------- ---------
Increase in sundry creditors and accruals 4 8
------------------------------------------------ --------- ---------
675 772
------------------------------------------------ --------- ---------
17. Contingent liabilities
The company did not have any contingent liabilities at 28th
February 2011 or 28th February 2010.
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 0.7% per
annum on the first GBP33m of the total value of investments and
cash held within the portfolio and 0.5% thereafter, as well as a
commission of GBP10 charged on acquisitions and disposals of
investments. RIM is a wholly-owned subsidiary of Rathbone Bros plc,
a listed FTSE 250 company, specialising in investment management
for companies, private clients, trusts and pensions. Rathbone is
regulated by the FSA and more details can be found on its website
www.rathbones.com.
A proportion (85%: 2010: 85%) of Investment management fees are
transferred to the capital reserve.
Fees of GBP219,845 (2010: GBP202,881) were payable to RIM during
the year and are made up as follows:
2011 2010
GBP'000 GBP'000
---------------------------- --------- ---------
Investment management fees 190 174
---------------------------- --------- ---------
Administration fees 30 29
---------------------------- --------- ---------
220 203
---------------------------- --------- ---------
19. Capital management policies and procedures
The company's capital management objectives are:
-- To ensure the company's ability to continue as a going
concern
-- To provide an adequate return to shareholders by investing in
an appropriate portfolio of listed entities
The company's equity base is largely fixed and therefore capital
is sourced through retained earnings and investment disposals.
Capital is considered to be the Company's ordinary share capital as
per note 13.
Analysis of Investment Funds
based on valuation as shown on the balance sheet
Market Value
28th February
Holding 2011
--------------------- ---------- --------------------- --------------------
UK Fixed Interest
--------------------- ---------- --------------------- --------------------
Nationwide Building
Society 700,000 6.024% Floating Rate 572,993
--------------------- ---------- --------------------- --------------------
Resources
--------------------- ---------- --------------------- --------------------
Mining
--------------------- ---------- --------------------- --------------------
US $0.54 Ordinary
Anglo American plc 31,500 shares 1,049,895
--------------------- ---------- --------------------- --------------------
Rio Tinto plc 28,200 10p Ordinary shares 1,215,138
--------------------- ---------- --------------------- --------------------
Oil & Gas
--------------------- ---------- --------------------- --------------------
BG Group plc 90,000 10p Ordinary shares 1,346,400
--------------------- ---------- --------------------- --------------------
BP plc 21,250 US$0.25 shares 1,051,131
--------------------- ---------- --------------------- --------------------
Royal Dutch Shell
plc 64,000 EUR0.7 B shares 1,406,720
--------------------- ---------- --------------------- --------------------
0.6154p Ordinary
Cairn Energy plc 125,000 shares 533,750
--------------------- ---------- --------------------- --------------------
Oil Equipment
Services &
Distribution
--------------------- ---------- --------------------- --------------------
Afren plc 448,146 1p Ordinary shares 717,034
--------------------- ---------- --------------------- --------------------
Basic Industries
--------------------- ---------- --------------------- --------------------
Electronic and
Electrical
Equipment
--------------------- ---------- --------------------- --------------------
28 1/8p Ordinary
Laird plc 455,000 shares 728,455
--------------------- ---------- --------------------- --------------------
Non-cyclical
Consumer Goods
--------------------- ---------- --------------------- --------------------
Tobacco
--------------------- ---------- --------------------- --------------------
British American
Tobacco plc 57,000 25p Ordinary shares 1,403,055
--------------------- ---------- --------------------- --------------------
Leisure Goods
--------------------- ---------- --------------------- --------------------
Pace plc 320,000 5p Ordinary shares 687,360
--------------------- ---------- --------------------- --------------------
Travel and Leisure
--------------------- ---------- --------------------- --------------------
Betfair Group 37,000 0.1p Ordinary shares 320,975
--------------------- ---------- --------------------- --------------------
Media
--------------------- ---------- --------------------- --------------------
Pearson plc 86,800 25p Ordinary shares 910,532
--------------------- ---------- --------------------- --------------------
WPP plc 141,000 10p Ordinary shares 1,192,860
--------------------- ---------- --------------------- --------------------
Software & Computer
Services
--------------------- ---------- --------------------- --------------------
Playtech Ltd 116,000 NPV Ordinary shares 429,200
--------------------- ---------- --------------------- --------------------
Non-cyclical
Services
--------------------- ---------- --------------------- --------------------
Food and Drink
--------------------- ---------- --------------------- --------------------
28 101/108p Ordinary
Diageo plc 72,800 shares 874,328
--------------------- ---------- --------------------- --------------------
Tesco plc 105,000 5p Ordinary shares 424,358
--------------------- ---------- --------------------- --------------------
Morrison (WM)
Supermarkets plc 255,000 10p Ordinary shares 705,585
--------------------- ---------- --------------------- --------------------
3 1/9p Ordinary
Unilever plc 45,000 shares 820,350
--------------------- ---------- --------------------- --------------------
General Retail
--------------------- ---------- --------------------- --------------------
Halfords Group plc 532,784 1p Ordinary shares 464,880
--------------------- ---------- --------------------- --------------------
Mobile
Telecommunication
Services
--------------------- ---------- --------------------- --------------------
US$ 0.114 Ordinary
Vodafone Group plc 750,000 shares 1,306,875
--------------------- ---------- --------------------- --------------------
Support Services
--------------------- ---------- --------------------- --------------------
Shanks Group plc 750,000 10p Ordinary shares 861,750
--------------------- ---------- --------------------- --------------------
Interserve plc 325,000 10p Ordinary shares 778,375
--------------------- ---------- --------------------- --------------------
Pharmaceutical &
Biotechnology
--------------------- ---------- --------------------- --------------------
US$ 0.25 Ordinary
AstraZeneca plc 32,000 shares 958,560
--------------------- ---------- --------------------- --------------------
Glaxosmithkline plc 83,000 25p Ordinary shares 979,815
--------------------- ---------- --------------------- --------------------
Utilities
--------------------- ---------- --------------------- --------------------
Electricity
--------------------- ---------- --------------------- --------------------
6 14/81p Ordinary
Centrica plc 317,400 shares 1,079,160
--------------------- ---------- --------------------- --------------------
Scottish & Southern
Energy plc 70,000 50p Ordinary shares 866,600
--------------------- ---------- --------------------- --------------------
Financials
--------------------- ---------- --------------------- --------------------
Banks
--------------------- ---------- --------------------- --------------------
US$0.50 Ordinary
HSBC Holdings plc 140,000 shares 949,060
--------------------- ---------- --------------------- --------------------
Barclays plc 185,000 25p Ordinary shares 591,630
--------------------- ---------- --------------------- --------------------
Lloyds Banking Group
plc 600,000 10p Ordinary shares 371,700
--------------------- ---------- --------------------- --------------------
Subtotal 25,598,524
--------------------- ---------- --------------------- --------------------
Market Value
28th February
Holding 2011
--------------------- ---------- --------------------- --------------------
Financials
(continued)
--------------------- ---------- --------------------- --------------------
Insurance
--------------------- ---------- --------------------- --------------------
Aviva plc 160,000 25p Ordinary shares 746,080
--------------------- ---------- --------------------- --------------------
Lancashire Holdings US$0.50 Common
Ltd 96,000 shares 576,000
--------------------- ---------- --------------------- --------------------
Real Estate
--------------------- ---------- --------------------- --------------------
London & Stamford
Property Ltd 335,000 10p Ordinary shares 420,090
--------------------- ---------- --------------------- --------------------
Speciality & other
finance
--------------------- ---------- --------------------- --------------------
US$ 3.5c Ordinary
Man Group 763,518 shares 766,824
--------------------- ---------- --------------------- --------------------
Investment Companies
--------------------- ---------- --------------------- --------------------
3i Infrastructure
plc 1,038,461 NPV Ordinary shares 1,237,846
--------------------- ---------- --------------------- --------------------
Unclassified
Investments
--------------------- ---------- --------------------- --------------------
Tennents 15% GBP1 Preference
Consolidated 6,528 shares 10,445
--------------------- ---------- --------------------- --------------------
Tennents 25p A Ordinary
Consolidated 8,219 shares 32,876
--------------------- ---------- --------------------- --------------------
Tennents
Consolidated 7,468 25p Ordinary shares 33,606
--------------------- ---------- --------------------- --------------------
Total UK Investments 29,422,291
--------------------- ---------- --------------------- --------------------
European Investments
--------------------- ---------- --------------------- --------------------
ABB Ltd 43,500 CHF2.02 (regd) 653,781
--------------------- ---------- --------------------- --------------------
North American
Investments
--------------------- ---------- --------------------- --------------------
Goldman Sachs Group 5,000 US$0.01 Common Stock 503,474
--------------------- ---------- --------------------- --------------------
Monsanto Co 12,600 US$0.01 Common Stock 556,910
--------------------- ---------- --------------------- --------------------
Potash Corp of
Saskatchewan 12,900 NPV Common Stock 488,558
--------------------- ---------- --------------------- --------------------
Spon ADR Each Rep 1
Ensco plc 7,500 Cls A Ordinary 258,684
--------------------- ---------- --------------------- --------------------
Microsoft Corp 39,800 NPV Common Stock 650,405
--------------------- ---------- --------------------- --------------------
Asia Pacific
Investments
--------------------- ---------- --------------------- --------------------
SG$0.01 Ordinary
Singapore Exchange 125,000 shares 477,734
--------------------- ---------- --------------------- --------------------
33,011,837
--------------------- ---------- --------------------- --------------------
10 year historical record
Net Assets Net
Year Available Asset Revenue
ended for Value Return Dividends
28th Issued Ordinary Per Net Per Per
February Capital Capital Share Revenue Share Share
--------- ---------- ----------- -------- ---------- -------- ----------
GBP GBP p GBP p p
--------- ---------- ----------- -------- ---------- -------- ----------
784,000
2002 2,004,750 24,627,000 245.69 (B) 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
--------- ---------- ----------- -------- ---------- -------- ----------
960,000
2005 2,004,750 28,083,000 280.16 (A) 9.58 8.15
--------- ---------- ----------- -------- ---------- -------- ----------
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
--------- ---------- ----------- -------- ---------- -------- ----------
2009 2,004,750 23,905,000 238.48 1,169,000 11.7 10.00
--------- ---------- ----------- -------- ---------- -------- ----------
2010 2,004,750 30,113,000 300.42 910,000 9.08 10.10
--------- ---------- ----------- -------- ---------- -------- ----------
2011 2,004,750 33,775,000 336.95 769,000 7.67 10.20
--------- ---------- ----------- -------- ---------- -------- ----------
(A) Enhanced by special dividends amounting to GBP176,000
(B) 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
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