TIDMATY
RNS Number : 7398B
Athelney Trust PLC
07 March 2014
Embargoed 7am March 7 2014
ATHELNEY TRUST PLC: FINAL RESULTS
Athelney Trust PLC, the investor in junior markets and small
companies, announces its audited results for the 12 months ended
December 31 2013.
Highlights:
-- Net Asset Value ("NAV") up 47 per cent at 219.3p per share (2012: 149.1p)
-- Revenue return per Ordinary Share rose 13 per cent to 6.1p (2012: 5.4p)
-- Recommended increased dividend of 5.5p per share (2012: 5p)
-- Revenue up 13.8 per cent at GBP121,884 (2012: GBP107,956)
-- Unaudited NAV at 28 February 2014 was 230.9p per share
Chairman Hugo Deschampsneuf said: "Small companies had a
wonderful year with the Athelney audited NAV being up 47 per cent
and the Small Cap, Fledgling and AIM indices following on with 29.6
per cent, 26.8 per cent and 20.2 per cent rises respectively.
"Naturally, there are legitimate concerns about the strength of
the recovery but most are not about consumption but, for example,
Britain's enduring trade deficit says less about spending than
about the ability of the economy to supply the goods that
Britishers want. The only alternative to increased household
spending would have been worse: stagnation, higher unemployment,
lower incomes and deteriorating public finances - just have a look
at France if you are not convinced.
"What can we say about 2014? Central banks have been pulling out
all the stops in monetary policy terms, not just in the form of QE
but in the low level of interest rates. In the first three
centuries of its existence which included deflation, depression and
world wars, the Bank of England never felt the need to push
interest rates as low as they are now.
"Markets will have to learn how to cope with threats to taper,
tighten, unwind QE and increase interest rates. This may take some
time so we probably need a period of consolidation before asset
prices can start to move ahead again.
"There again, it is likely that markets have got ahead of
themselves in recent weeks. What we need are plenty of good company
results and dividends and further good news on employment, steady
inflation and increasing economic activity. A decent year for asset
prices may eventually result".
-ends-
For further information:
Robin Boyle, Managing Director
Athelney Trust 020 7628 7937
Paul Quade 07947 186694
CityRoad Communications 020 7248 8010
CHAIRMAN'S STATEMENT AND BUSINESS REVIEW
I present the results for the year ended 31 December 2013. The
salient points are as follows:
-- Audited Net Asset Value ("NAV") was 219.3p per share (31
December 2012: 149.1p) an increase of 47 per cent.
-- Revenue return per ordinary share was 6.1p, (31 December 2012: 5.4p).
-- Recommended final dividend of 5.5p per share (2012: 5p), an increase of 10 per cent.
Review of 2013
I had an out-of-body experience when a banker complained to me
that a GBP4million pay packet was not enough.- Sir Philip Hammond,
Chairman of Royal Bank of Scotland (apparently, someone the banker
knew was earning GBP6m at a rival bank).
I can calculate the motion of the planets but not the madness of
people.- Sir Isaac Newton, having lost all his money in the South
Sea Bubble.
I do say that it would be a nice thing if we could raise enuff
Hemp [marijuana] to pay our rates. - John Adams, (1763) before
becoming a founding father of the United States.
In God we trust: everyone else bring data. - Mike Bloomberg,
mayor of New York 2001-13.
The year 2013 might be remembered for what didn't happen rather
than what did. The Eurozone managed to avoid a collapse with all
the inmates of the intensive care ward showing signs of recovery,
particularly plucky Ireland. The possible meltdown as a result of
the US defaulting on its debt was avoided yet again. There were no
oil shocks or signs of financial distress, with the possible
exception of China where bad debts seem to be escalating fast.
So, a pretty dull year then? Well, er, no actually! All the
major markets rose, New York by 26.5 per cent, Tokyo by an
astonishing 56.7 per cent and London, burdened with a large
proportion of commodity shares, by just 14.4 per cent. Shanghai,
partly for the above reason, actually fell by 6.8 per cent. In
smaller markets, Argentina rose by 88.9 per cent and Pakistan and
Greece by 49.4 per cent and 28.1 per cent respectively. As for the
fallers, the list was led by Brazil 15.5 per cent, Chile 13.5 per
cent and Turkey 13.3 per cent.
Back to London, where small companies had a wonderful year with
the Athelney Trust NAV being up by 47 per cent and the Small Cap,
Fledgling and AIM indices following on with 29.6 per cent, 26.8 per
cent and 20.2 per cent rises respectively.
I thought that we had all learned our lesson from the financial
crisis not to deal in stuff that we didn't understand so was rather
surprised to see Goldman Sachs, a well-known bank, flogging
Autocallable Contingent Coupon Buffered Equity-Linked Medium-term
Notes. But just to remind everyone, if you don't understand it,
don't invest.
A worrying puritanical streak has entered the economic debate
and I confess to have been as guilty as anyone. Celebration of our
unexpected recovery tends to be followed soon after by complaints
that Britain has the wrong sort of growth, fuelled by household
debt and consumption. This mood may be strong but I am beginning to
believe that it is wrong: consumption is the whole purpose of
economic activity and allows us to meet all our material aims and
ambitions in the pursuit of happiness.
It is also deeply patronising for those of us in comfortable
circumstances to worry that hoi polloi are consuming too much for
their own good or for that of the economy as a whole. True,
Britain's household liabilities as a proportion of GDP rose from 70
per cent in 1998 to 106 per cent in 2007 but that was not to buy
frivolous nonsense but was extra borrowing taken on by young people
to buy increasingly expensive houses.
Naturally, there are legitimate concerns about the strength of
the recovery but most are not about consumption but, for example,
Britain's enduring trade deficit says less about spending than
about the ability of the economy to supply the goods that
Britishers want. The only alternative to increased household
spending would have been worse: stagnation, higher unemployment,
lower incomes and deteriorating public finances - just have a look
at France if you are not convinced.
The release of Grand Theft Auto V shows that computer games have
matured from a cottage industry into big business so that the
development cost of GBP170m rivals that of a Hollywood film. Sales
will be helped by the outrage about a game which allows a young,
single, keyboard-bound nerd to imagine himself a career criminal
but older gentlemen seeking relaxation are an untapped market, so
Athelney Games Inc. is proud to launch Robin B, Semi-retired
Stockbroker. Immerse yourself in his world of taking a stroll to a
country pub, braving midges and cow-pats on the way. Take a trip
with him to buy a new suit. Travel with him to the City to have a
liquid lunch with an old colleague. Can he stay awake going home?
Can't fail, surely?
Plans for airports and other infrastructure projects are back to
front. The saga of the Channel tunnel and the railway connecting it
to London took a couple of decades. High Speed 2 looks like another
20 years. Fourteen years elapsed between the decision to build the
last nuclear power station and its completion, the current nuclear
renaissance started in 2006 and will not produce an outcome before
2022.
The search for a lasting solution to increasing airport capacity
in the south-east has taken half a century so far. As long as we
treat every project in isolation, delays are inevitable as the
process gets bogged down in the battles between winners and losers,
the latter worried about house prices and back gardens.
What is missing is the bigger picture of our needs, in other
words a national infrastructure plan. West Londoners would probably
be losers from a new Heathrow runway. As long as the question is
narrowly phrased, they have every reason to complain yet they would
most likely gain from all the other infrastructure projects
proposed as part of a broader, long-term development plan including
easier access to the north via HS2 and more power stations. So,
decisions about new railway lines and airports should be taken
together rather than on a case-by-case basis. Or is that too much
to ask?
A story about fracking? The residents of Balcombe in West Sussex
were not amused when a team of diggers arrived to start poking
around under the North Downs. Just think about the possible damage
to the water supply and what about earthquakes? No, the year is
1841 and the result was a tunnel for the London to Brighton Railway
plus a handsome new viaduct and the villagers were given a free
railway station. This time I'm sure that they are in line for cheap
fracked gas.
Rarely has an ugliness competition between banks been so fierce.
In November, we were all treated (if that is the right word) to
tales of alleged rent-boys and drugs about Paul Flowers, the former
chairman of the Co-operative Bank.
Then it emerged that the Serious Fraud Office was looking into
allegations that the Royal Bank of Scotland had defrauded small
business customers of the bank by pushing them into bankruptcy then
grabbing their assets. What is absolutely certain is that RBS has
failed to support its small business customers.
If RBS were a smallish bank, it would probably not matter very
much that its treatment of customers was so shabby but this badly
run giant dominates the market. On the eve of the financial crisis,
its share of loans to small business was about 40 per cent: despite
the taxpayers' bail-out, that share has now fallen to 33 per cent.
It makes one doubt whether the bail-out was such a good idea after
all.
In describing Paul Flowers as a latter-day Falstaff, surely the
Financial Times made an enormous mistake. Yes, Falstaff slept with
prostitutes and drank enormous quantities of sherris wine but in
doing so he certainly never intended to pay for either since he was
permanently broke. He was the philosopher of the Boar's Head in
Eastcheap, a lovable rogue who not only made us laugh at him and
with him but also at ourselves. He is to England what Don Quixote
is to Spain and delights each new generation that discovers him: I
am not only witty in myself but the cause that wit is in other men.
None of this can be said for Mr Flowers: liken him to Cloten or
Caliban but not to Valiant Jack Falstaff.
It is disappointing that Alex Salmond wants to keep the pound
rather than bring back the bawbee and the groat. There are obvious
reasons to retain sterling although should anyone really want the
thing? Before the Great War, the pound bought almost $5, now it is
about $1.67. The loss of empire and the cost of two world wars did
not help, although this performance is comparable to the disastrous
fall in Scotland's currency against England's the last time each
were independent of each other.
In the two centuries up to the fixing of the exchange rate in
1603, sterling rose 12 times against the Scots equivalent (the
bawbee was sixpence). Anyone tempted to suggest that Scotland have
its own currency so that devaluation could boost exports should,
er, go away tae think again. In the long run, the competitive
advantage would be wiped out by higher inflation. Still, Scottish
banknotes could probably feature lurid pictures of patriotic
Highlanders slaughtering Englishmen at Bannockburn.
Shares in Tweeter, a bankrupt electronics retailer, briefly
soared 1,800 per cent in October as some investors mistook the
ticker symbol TWTRQ for TWTR, the latter chosen by Twitter ahead of
its stock-market flotation. Trading was halted but not before
investors realized that the early bird does not always get the
worm.
Yes, Billy Boy Ben Bernanke has made a real difference in his
relatively short spell (2006-14) as Chairman of the US Federal
Reserve and deserves to be counted amongst those economists such as
John Maynard Keynes who have made a massive contribution in their
specialist field. The history books will no doubt record the US
Fed's role in the great financial upheavals of the age: it
underestimated the impact of the housing bubble on the economy but
its reaction to the financial panic of 2006-08 was exemplary; its
role in cleaning up the US banking system in 2009 was far-sighted
and its balance sheet expansion (QE) from 2010 onwards was more
aggressive than most other central banks.
Essentially from the new Keynesian school of economics, he
believed that there was a major role for the Fed in a time of deep
recession and scolded Congress for tightening tax/spend policies in
2010-13. What is clear, though, is that he won the intellectual
debate for an active monetary policy whereas many Republicans were
extremely dubious about its effectiveness. Thank goodness that he
did so!
More recently, he has been an advocate of forward guidance
alongside our own Mark Carney - this is quite a controversial area
but my own belief is that it has helped to ease monetary
conditions. So what was his unique contribution? Some would say
that he saved the world (probably Gordon Brown would not agree) by
flooding markets with liquidity in the autumn of 2008. I would
prefer to say that he fixed the US banking system in 2009 and
designed innovative monetary policies thereafter. A really tough
act to follow.
I was interested to read in the FT that the most lavish event
for the retiring Sir Mervyn King, the former governor of the Bank
of England, cost GBP4,672 or about GBP13.35 per head. Lavish? - try
getting into Stamford Bridge or Old Trafford with that sort of
money and see how you get on!
At a time of economic growth, the greatest concern in financial
markets is, naturally, that inflationary pressures would force
central banks to start raising interest rates ahead of the
time-table that they had outlined.
At the close of Athelney's year-end, inflationary expectations
in the US reached as much as 2.3 per cent for the next ten-year
period. There is always one problem with this particular view and
that is the evidence of deflationary pressures: all the developed
world's central banks target 2 per cent inflation, which even the
UK has hit and the US and Europe are now well below.
December's meeting of the US Fed resulted in a document of 8,000
words and included plenty about tapering the amount of stimulus it
has been providing to markets but not a single use of the word
deflation. Maybe that was entirely correct but what about Japan
where prime minister Shinzo Abe's campaign to lift inflation has
resulted in a huge fall in the yen against all competitors? As the
price of Japanese exports fall, so other countries suffer
deflation.
Falling commodity prices also suggest that world economic growth
remains feeble: metal prices have fallen by about 40 per cent from
their 2011 'high.' Here, the source of deflation is China - as
economic growth in that country slows and its communist leadership
tries to shift from business investment to household consumption
(i.e. the exact opposite of what has been happening here at home),
so demand for commodities falls. Lower commodity prices results in
lower inflation.
Why should deflation be such a problem? Usually inflation, which
makes it harder for households to make ends meet, is regarded as
far more dangerous. The problem with deflation, though, is that it
makes any debt that much more expensive to pay off in real terms.
This is particularly true in the Euro-zone. There, thanks to the
sovereign debt crisis, the countries of Europe have made little or
no progress in clearing their outstanding piles of debt so the risk
of deflation is acute. Investors who have been worrying about
inflation should realize that they have, in fact, been engaged in a
bout of wishful thinking.
Your Chairman has failed to get to grips with the Twitter
revolution - I simply could not think of anything misogynistic
enough to say in 140 characters or less.
Is it really possible, as averred by the Centre for Economics
and Business Research (CEBR), that the UK could overtake Germany
and France to become Europe's biggest economy by 2030? Or is it
that the CEBR is fond of a good headline and who will remember a
forecast like this in 16 years anyway?
I have been banging on for years about our problems such as the
chronic shortage of skills, too much investment in real estate,
that our manufacturing sector is very good but too small, our
productivity is poor and we have a modest record of taking
innovation out of the lab/workshop and turning it into commercial
success. But maybe France and Germany will also have problems over
the next 16 years?
Italy and Spain may well continue to struggle with debt,
joblessness, weak government and lack of social cohesion for the
foreseeable future so we can concentrate on Germany and our
neighbour across the Channel. Germany will be top dog for many
years yet but it is not immune to low confidence in the rest of the
euro-zone. Furthermore, its demographics look really bad: the
population is both ageing and set to decline in size. After two
generations of incredibly hard-working, frugal workers it would be
a miracle to find the next one working even harder.
The French, meanwhile, believe themselves capable of overtaking
Germany about the year 2040 but France is being dragged in the
wrong direction by a bloated public sector, high tax rates and its
citizens' sense of entitlement to a vast range of welfare benefits.
The CEBR forecasts that the UK will overtake France in about five
years' time.
So what are the factors which could work in our favour? Well,
not being in the euro gives us a competitive exchange rate when
needed, the flexibility of our labour markets gives our companies
the chance to be more efficient, we attract foreign business
investment and are reducing welfare costs. Furthermore, our
attractive rates of tax have persuaded hundreds of thousands of
French people to make their careers and businesses here. So, with
our good demographics it really could happen, couldn't it?
I am indebted to the Private Eye magazine for the text in full
of a recent speech by Lord (Neil) Kinnock:-
'I am totally, utterly and utterly, totally appalled, disgusted
and outraged by the suggestion I see being made on every side that
Ed Miliband is proving to be a totally, utter disaster as leader of
the Labour Party. There are even those who are idiotic enough to be
suggesting that Mr Miliband is the worst leader that Labour ever
had. This, in my view, is utterly, totally, totally, utterly and
utterly, totally wrong.
As everyone who has made the most casual, cursory and
superficial study of British politics would know, there is only one
man whose grasp of political issues, whose sense of strategy and
whose interminable oratorical wind-bagging have given him the
undisputed claim to have been the most utterly, utterly and
totally, totally useless leader of the Labour Party or, indeed,
possibly any other party at any time in history. And that man, I
can state without undue modesty and without fear of contradiction,
is myself.'
Do you want to know how to have a tax holiday as a giant
American multinational? First, set up two companies in Ireland: the
first, which is generally resident in that country, pays royalties
to use intellectual property which generates expenses that reduce
the amount of tax paid in Ireland. The other company, which
collects the royalties in a tax-haven like the Caymans, is
incorporated in Ireland but not tax resident there so avoiding
Irish tax. Simples!
Results
Number
Companies paying dividends 80
Companies sold (therefore no true comparison) 13
Companies purchased (therefore no true comparison) 14
Increased total dividends in the year 36
Reduced total dividends in the year 5
No change in dividend 12
Capital Gains
During the year the Company realised capital profits arising on
the sale of investments in the sum of GBP297,801
(31 December 2012: GBP183,707).
Portfolio Review
Holdings of Amlin, Catlin, Costain, F&C UK Real Estate, GLI
Finance, Hydrogen, Juridica, Lancashire Holdings, LondonMetric
Property, Palace Finance, Picton Property Income, PLUS500,
Redefine, Schroder REIT, Sprue Aegis, Standard Life Property Income
Trust and Tritax Big Box were all purchased for the first time.
Additional holdings of H & T Group and NewRiver Retail were
also acquired. Albermarle & Bond, Consort Medical, Haynes
Publishing Group, Local Shopping REIT, McKay Securities, Mucklow
Group, Office 2 Office, Paypoint, Personal Group Holdings, Phoenix
IT and Sweett Group were sold. In addition, a total of seventeen
holdings were top-sliced to provide capital for the new
purchases.
Corporate Activity
A cash offer for Fiberweb was received and accepted, resulting
in a 96.5 per cent profit.
Dividend
The Board is pleased to recommend an increased annual dividend
of 5.5p per ordinary share (2012:5p). This represents an increase
of 10 per cent over the previous year. Subject to shareholder
approval at the Annual General Meeting on 9 April 2014, the
dividend will be paid on 14 April 2014 to shareholders on the
register on 21 March 2014.
For those patient investors who subscribed for Athelney Trust
shares in the IPO of 1994, the
annual return has now risen to 11 per cent net of basic rate tax
on the capital originally invested.
Update
The unaudited NAV at 28 February 2014 was 230.9p whereas the
share price on the same day stood at 210p. Further updates can be
found on www.athelneytrust.co.uk
Prospects
What can we say about 2014? Central banks have been pulling out
all the stops in monetary policy terms, not just in the form of QE
but in the low level of interest rates. In the first three
centuries of its existence which included deflation, depression and
world wars, the Bank of England never felt the need to push
interest rates as low as they are now.
Markets will have to learn how to cope with threats to taper,
tighten, unwind QE and increase interest rates. This may take some
time so we probably need a period of consolidation before asset
prices can start to move ahead again.
There again, it is likely that markets have got ahead of
themselves in recent weeks: what we need are plenty of good company
results and dividends and further good news on employment, steady
inflation and increasing economic activity. A decent year for asset
prices may eventually result.
H.B. Deschampsneufs
Chairman
5 March 2014
INCOME STATEMENT
(INCORPORATING THE REVENUE ACCOUNT)
For the For the
Year Year
Ended Ended
31 31
December December
2013 2012
Note Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
Gains
on
investments
held
at fair
value 8 - 1,466,773 1,466,773 - 601,046 601,046
Income
from
investments 2 155,571 - 155,571 141,049 - 141,049
Investment
Management
expenses 3 (5,765) (53,034) (58,799) (5,774) (52,847) (58,621)
Other
expenses 3 (27,922) (42,804) (70,726) (27,319) (39,658) (66,977)
Net return on
ordinary 121,884 1,370,935 1,492,819 107,956 508,541 616,497
activities before
taxation
Taxation 5 - - - - - -
Net return on
ordinary activities
after taxation
6 121,884 1,370,935 1,492,819 107,956 508,541 616,497
Net
return
per
ordinary
share 6 6.1p 69.1p 75.3p 5.4p 25.6p 31.1p
Dividend per
ordinary share
paid during the
year 7 5.0p 4.95p
The total column of this statement is the profit and loss
account for the Company.
All revenue and capital items in the above statement derive from
continuing operations.
No operations were acquired or discontinued during the above
financial years.
A statement of movements of reserves is given in note 12.
A Statement of Total Recognised Gains and Losses is not required
as all gains and losses of the Company have been reflected in the
above Statement.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Called-up Capital Capital Total
Share Share reserve reserve Revenue Shareholders'
Capital Premium realised unrealised reserve Funds
GBP GBP GBP GBP GBP GBP
Balance brought
forward at
1 January
2012 495,770 545,281 660,826 522,543 213,273 2,437,693
Net profits
on realisation
of investments - - 183,707 - - 183,707
Increase in
unrealised
appreciation - - - 417,339 - 417,339
Expenses allocated
to
capital - - (92,505) - - (92,505)
Profit for
the year - - - - 107,956 107,956
Dividend paid
in year - - - - (98,162) (98,162)
Shareholders'
Funds at 31
December 2012 495,770 545,281 752,028 939,882 223,067 2,956,028
========== ======== ========= =========== ========= ==============
Balance brought
forward at
1 January
2013 495,770 545,281 752,028 939,882 223,067 2,956,028
Net profits
on realisation
of investments - - 297,801 - - 297,801
Increase in
unrealised
appreciation - - - 1,168,972 - 1,168,972
Expenses allocated
to
capital - - (95,838) - - (95,838)
Profit for
the year - - - - 121,884 121,884
Dividend paid
in year - - - - (99,154) (99,154)
Shareholders'
Funds at 31
December 2013 495,770 545,281 953,991 2,108,854 245,797 4,349,693
======== ======== ========= ========== ========= ==========
BALANCE SHEET AS AT 31 DECEMBER 2013
Company Number: 02933559
Note 2013 2012
GBP GBP
Fixed assets
Investments held at
fair value through
profit and loss 8 4,298,919 2,859,671
---------- ----------
Current assets
Debtors 9 41,782 90,209
Cash at bank and in
hand 24,709 21,369
66,491 111,578
Creditors: amounts
falling due within
one year 10 (15,717) (15,221)
---------- ----------
Net current
assets 50,774 96,357
--------- ---------
Total assets
less current
liabilities 4,349,693 2,956,028
Provisions for liabilities
and charges - -
Net assets 4,349,693 2,956,028
========= =========
Capital
and reserves
Called up share capital 11 495,770 495,770
Share premium account 12 545,281 545,281
Other reserves
(non distributable)
Capital reserve -
realised 12 953,991 752,028
Capital reserve -
unrealised 12 2,108,854 939,882
Revenue reserve (distributable) 12 245,797 223,067
Shareholders' funds
- all equity 4,349,693 2,956,028
========== ==========
Net Asset Value per
share 14 219.3p 149.1p
Approved and authorised for issue by the Board of Directors on 5
March 2014.
R.G. Boyle
Director
CASHFLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2013
2013 2012
GBP GBP GBP GBP
Net cash inflow/(outflow)
from operating
activities 74,969 (17,319)
Taxation
Corporation
tax paid - -
Capital Expenditure
and Financial
Investment
Purchases of
investments (722,310) (308,880)
Sales of investments 749,835 425,776
Net cash inflow
from Capital
Expenditure
and Financial
Investment 27,525 116,896
Equity dividends
paid (99,154) (98,162)
Increase in
cash in the
year 3,340 1,415
========= =========
Reconciliation
of operating
net revenue
to
net cash outflow
from operating
activities GBP GBP
Revenue on
ordinary activities
before taxation 121,884 107,956
Decrease/(increase)
in debtors 48,427 (32,860)
Increase in
creditors 496 90
Investment
management
expenses charged
to
capital (53,034) (52,847)
Other expenses
charged to
capital (42,804) (39,658)
Net cash inflow/(outflow)
from operating
activities 74,969 (17,319)
========= =========
Reconciliation
of net cashflow
to movement
in net funds
Net funds Net funds
at at
31.12.2012 Cashflow 31.12.2013
GBP GBP GBP
Cash at bank and in
hand 21,369 3,340 24,709
=========== ========= ===========
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
1. Accounting Policies
1.1 Basis of Preparation of Financial Statements
The financial statements are prepared on a going concern basis
under the historical cost convention as modified by the revaluation
of investments held at fair value.
The financial statements are prepared in accordance with the
Companies Act 2006, applicable UK accounting standards and the
provisions of the Statement of Recommended Practice "Financial
Statements of Investment Trust Companies and Venture Capital
Trusts" (SORP) issued by the A.I.C. in January 2009.
The financial statements have been prepared on the assumption
that approval as an investment trust will continue to be granted.
The financial statements, and the net asset value per share
figures, have been prepared in accordance with UK Generally
Accepted Accounting Practice (UK GAAP).
1.2 Income
Income from investments including taxes deducted at source is
recognised when the right to the return is established (normally
the ex-dividend date). UK dividend income is reported net of tax
credits in accordance with FRS 16 "Current Tax". Interest is dealt
with on an accruals basis.
1.3 Investment Management Expenses
Of the two directors involved in investment management, 10% of
their salaries have been charged to revenue and the other 90% to
capital. All other investment management expenses have been charged
to capital. The Board propose continuing this basis for future
years.
1.4 Other Expenses
Expenses (including VAT) and interest payable are dealt with on
an accruals basis and charged through the Revenue and Capital
Accounts in an allocation that the Board consider to be a fair
distribution of the costs incurred.
1.5 Investments
Listed investments comprise those listed on the Official List of
the London Stock Exchange. Profits or losses on sales of
investments are taken to realised capital reserve. Any unrealised
appreciation or depreciation is taken to unrealised capital
reserve.
Investments have been classified as "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.
Securities of companies quoted on a recognised stock exchange
are valued by reference to their quoted bid prices at the close of
the year.
1.6 Taxation
The tax effect of different items of income and expenses is
allocated between capital and revenue on the same basis as the
particular item to which it relates, using the Company's effective
rate of tax for the year.
1. Accounting Policies (continued)
1.7 Deferred Taxation
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed by the balance sheet date.
Deferred tax liabilities are recognised for all taxable timing
differences but deferred tax assets are only recognised if it is
considered more likely than not that there will be suitable profits
from which the future reversal of the underlying timing differences
can be deducted. Deferred tax assets and liabilities are calculated
at the tax rates expected to be effective at the time the timing
differences are expected to reverse. Deferred tax assets and
liabilities are not discounted.
1.8 Capital Reserves
Capital Reserve - Realised
Gains and losses on realisation of fixed asset investments are
dealt with in this reserve.
Capital Reserve - Unrealised
Increases and decreases in the valuations of fixed asset
investments are dealt with in this reserve.
1.9 Dividends
In accordance with FRS 21 "Events after the Balance Sheet Date",
dividends are included in the financial statements in the year in
which they are paid.
1.10 Share Issue Expenses
The costs associated with issuing shares are written off against
any premium arising on the issue of Share Capital.
2. Income
Income from investments
2013 2012
GBP GBP
UK dividend income 155,543 141,018
Bank interest 28 31
Total income 155,571 141,049
======== ========
UK dividend income
2013 2012
GBP GBP
UK Main Market listed investments 94,552 94,597
UK AIM traded shares 60,991 46,421
155,543 141,018
======== ========
3. Return on Ordinary Activities Before Taxation
2013 2012
GBP GBP
The following amounts (inclusive
of VAT) are included
within investment management
and other expenses:
Directors' remuneration:
- Services as a director 17,500 17,500
- Otherwise in connection
with management 45,000 45,000
Auditors' remuneration:
- Audit Services - Statutory
audit 10,260 10,260
- Audit Services - Statutory
audit movement on accruals
from - 100
previous years
- Audit Services - Audit
related regulatory reporting 1,050 1,050
Miscellaneous expenses:
- Other wages and salaries 32,035 31,307
- PR and communications 6,065 5,847
- Stock Exchange subscription 8,241 7,638
- Sundry investment management
and other expenses 9,374 6,896
129,525 125,598
======== ========
4. Employees
2013 2012
GBP GBP
Costs in respect of Directors:
Wages and salaries 62,500 62,500
Social security costs 5,495 5,583
67,995 68,083
======= =======
Costs in respect of administrator:
Wages and salaries 24,250 23,500
Social security costs 2,290 2,224
26,540 25,724
======= =======
Total:
Wages and salaries 86,750 86,000
Social security costs 7,785 7,807
94,535 93,807
------- -------
Average number of employees:
Chairman 1 1
Investment 2 2
Administration 1 1
4 4
======= =======
5. Taxation
(i) On the basis of these financial statements no provision has
been made for corporation tax (2012: Nil).
(ii) Factors
affecting the
tax charge for
the year
The tax charge
for the period
is lower than
(2012: lower
than) the average
small company
rate of corporation
tax in the UK
20 per cent.
The differences
are explained
below:
2013 2012
GBP GBP
Total return
on ordinary
activities before
tax 1,492,819 616,497
--------- -------
Total return
on ordinary
activities multiplied
by the average
small company
rate of corporation
tax 20% (2012:
20%) 298,564 123,299
Effects of:
UK dividend income
not taxable (27,412) (24,072)
Revaluation of shares
not taxable (233,794) (83,468)
Capital gains not
taxable (59,560) (36,741)
Unrelieved management
expenses 22,202 20,982
Current tax charge
for the year - -
========== =========
The Company has unrelieved excess revenue management expenses of
GBP82,300 at 31 December 2013 (2012: GBP67,123) and GBP102,597
(2012: GBP102,597) of capital losses for Corporation Tax purposes
and which are available to be carried forward to future years. It
is unlikely that the Company will generate sufficient taxable
profits in the future to utilise these expenses and therefore no
deferred tax asset has been recognised.
For the year ended 31 December 2012, the Company received
approval from HM Revenue and Customs under Section 1158 of the
Corporation Tax Act 2010, therefore the Company was not liable to
Corporation Tax on any realised investment gains for 2012. The
Directors intend to continue to meet the conditions required to
obtain approval and therefore no deferred tax has been provided on
any capital gains or losses arising on the revaluation or disposal
of investments.
6. Return per Ordinary Share
The calculation
of earnings
per share
has been performed
in accordance
with FRS 22
"Earnings
Per Share".
2013 2012
GBP GBP GBP GBP GBP GBP
Revenue Capital Total Revenue Capital Total
Attributable
return on
ordinary activities
after taxation 121,884 1,370,935 1,492,819 107,956 508,541 616,497
Weighted average
number of
shares 1,983,081 1,983,081
Return per
ordinary share 6.1p 69.1p 75.3p 5.4p 25.6p 31.1p
7. Dividend
2013 2012
GBP GBP
Final dividend in respect
of 2012 of 5p (2012: a
final dividend of 4.95p
was paid in respect of
2011) per share 99,154 98,162
======= =======
Set out below is the total dividend payable in respect of the
financial year, which is the basis on which the requirements of
Section 1158 of the Corporation Tax Act 2010 are considered.
It is recommended that a final dividend of 5.5p (2012: 5p) per
ordinary share be paid amounting to a total of GBP109,069. For the
year 2012, a final dividend of 5p was paid on 12 April 2013
amounting to a total of GBP99,154.
2013 2012
GBP GBP
Revenue available for
distribution 121,884 107,956
Final dividend in respect
of financial year ended
31 December 2013 (109,069) (99,154)
---------- ---------
Undistributed Revenue
Reserve 12,815 8,802
========== =========
8. Investments
2013 2012
GBP GBP
Movements
in year
Valuation
at beginning
of year 2,859,671 2,375,521
Purchases
at cost 722,310 308,880
Sales - proceeds (749,835) (425,776)
- realised
gains
on sales 297,801 183,707
Increase
in unrealised
appreciation 1,168,972 417,339
Valuation
at end of
year 4,298,919 2,859,671
========== ==========
Book cost
at end of
year 2,190,065 1,919,789
Unrealised
appreciation
at the
end of
the year 2,108,854 939,882
4,298,919 2,859,671
========== ==========
UK Main Market
listed investments 2,679,736 1,754,504
UK AIM traded
shares 1,619,183 1,105,167
4,298,919 2,859,671
========== ==========
Gains on investments
2013 2012
GBP GBP
Realised gains
on sales 297,801 183,707
Increase
in unrealised
appreciation 1,168,972 417,339
1,466,773 601,046
========== ==========
The purchase costs and sales proceeds above include transaction
costs of GBP4,496 (2012: GBP2,305) and GBP3,615 (2012: GBP1,719)
respectively.
9. Debtors
2013 2012
GBP GBP
Investment transaction
debtors 37,105 76,299
Other debtors 4,677 13,910
41,782 90,209
======= =======
10. Creditors: amounts falling due within one year
2013 2012
GBP GBP
Social security
and other taxes 3,198 2,975
Other creditors 172 172
Accruals and
deferred income 12,347 12,074
15,717 15,221
======= =======
11. Called Up Share Capital
2013 2012
GBP GBP
Authorised
10,000,000 Ordinary Shares
of 25p 2,500,000 2,500,000
========= =========
Allotted, called up and fully
paid
1,983,081 Ordinary Shares
of 25p 495,770 495,770
========= =========
(2012: 1,983,081 Ordinary
Shares of 25p)
12. Reserves
2013
Share Capital Capital
premium reserve reserve Revenue
account realised unrealised reserve
GBP GBP GBP GBP
Balance at 1 January
2013 545,281 752,028 939,882 223,067
Net gains on realisation
of investments - 297,801 - -
Increase in unrealised
appreciation - - 1,168,972 -
Expenses allocated
to capital - (95,838) - -
Profit for the year - - - 121,884
Dividend paid in
year - - - (99,154)
Balance at 31 December
2013 545,281 953,991 2,108,854 245,797
======== ========= =========== =========
13. Financial Instruments
The Company's financial instruments comprise equity investments,
cash balances and debtors and creditors that arise directly from
its operations, for example, in respect of sales and purchases
awaiting settlement. Short term debtors and creditors are excluded
from disclosure.
Fixed asset investments (see note 8) are valued at market bid
price where available which equates to their fair values. The fair
values of all other assets and liabilities are represented by their
carrying values in the balance sheet.
The major risks associated with the Company are market and
liquidity risk. The Company has established a framework for
managing these risks. The directors have guidelines for the
management of investments and financial instruments.
Market Risk
Market risk arises from changes in interest rates, valuations
awarded to equities, movements in prices and the liquidity of
financial instruments.
At the end of the year the Company's portfolio was invested in
UK securities with the exception of 2.76 per cent, which was
invested in overseas securities.
Liquidity Risk
Liquidity Risk is the risk that the Company may have difficulty
in meeting obligations associated with financial liabilities. The
Company has no borrowings; therefore there is no exposure to
interest rate changes.
The company is able to reposition its investment portfolio when
required so as to accommodate liquidity needs.
14. Net Asset Value Per Share
The net asset value per share is based on net assets of
GBP4,349,693 (2012: GBP2,956,028) divided by 1,983,081 (2012:
1,983,081) ordinary shares in issue at the year end.
2013 2012
Net asset value 219.3p 149.1p
======= =======
This information is provided by RNS
The company news service from the London Stock Exchange
END
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