TIDMATY
RNS Number : 9408N
Athelney Trust PLC
01 August 2014
Embargoed 7am Friday 1 August 2014
ATHELNEY TRUST plc: INTERIM RESULTS
Athelney Trust plc, the investment company focussed on small
companies and junior markets, announces its unaudited results for
the six months ended 30 June 2014.
Main points:
-- Unaudited Net Asset Value ("NAV") up 35.2 per cent at 224.8p (2013: 166.2p)
-- Gross revenue up 23.25 per cent at GBP101,530 (2013: GBP82,384)
-- Revenue return per ordinary share rose 27.3 per cent to 4.2p (2013: 3.3p)
-- Final dividend of 5.5p per share paid in April 2014
Chairman Hugo Deschampsneufs said: "The market is exhibiting an
eerie calm, Zen like stillness I find unnerving. Look around the
world at Syria/Iraq, Israel/Palestine, Somalia/Kenya Russia/Ukraine
and Nigeria. Now China has laid claim to the whole of the South
China Sea and is already in dispute with Japan, the Philipines,
Vietnam and just about everyone else.
"Then there is the slowing Chinese economy with 107 million tons
of iron ore on various docksides. QE has finished in the UK and
will do so in America later this year. We have the Scottish
referendum and the General Election is now just months away.
"And to make sure your cup runneth over the Chinese property
boom is the most important factor in the global economy. In the
past few years predictions that the sector is about to explode have
not been borne out but it really could happen this time.
"Against that can be set that every investor is seemingly
searching the world for dividend yield and the world is awash with
liquidity - so that's all right then!
"Britain must seem like a Treasure Island in a sea of troubles.
Nevertheless there is a problem. Either central banks are right to
be worried about the economy so wish to keep interest rates low or
they are wrong and will be forced to raise interest rates faster
than the market expects.
"Either way seems likely to lead to more uncertainty and
volatility. Until the outlook becomes clearer investors will not
want to give up on what has been a winning strategy of holding
equities for capital growth and increasing income. Equity investors
are reluctant 'bulls' but there seems no alternative. Hold".
-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 announce the unaudited results for the six months to 30 June
2014. The salient points are as follows:
-- Unaudited Net Asset Value (NAV) is 224.8p per share (31
December 2013: 219.3p, 30 June 2013: 166.2p), an increase of 2.5
per cent for the half year and an increase of 35.2 per cent over
the past year.
-- Gross Revenue increased by 23.25 per cent to GBP101,530
compared with the half year ended 30 June 2013 of GBP82,384 (full
year to 31 December 2013 GBP155,571).
-- Revenue return per ordinary share was 4.2p, an increase of
27.3 per cent from the previous half year to 30 June 2013 (31
December 2013: 6.1p, 30 June 2013: 3.3p).
-- A final dividend of 5.5p was paid in April 2014 (2013: final dividend 5p).
Review of 1 January 2014 to 30 June 2014
When management with a reputation for brilliance tackles a
business with a reputation for poor fundamentals, it is the
reputation of the business which remains intact - Warren
Buffett
If Hitler invaded Hell, I would make at least a favourable
reference to the Devil in the House of Commons - Winston
Churchill.
The opera started at 8. At midnight I looked at my watch. It
said 8.15. The observation by Hollywood producer Billy Wilder on
watching Wagner's Ring Cycle.
He is a complete professional and the best of his type by a
million miles - Andy Coulson, then editor of News of the World,
gave a glowing endorsement for the cover of now disgraced public
relations consultant Max Clifford's autobiography Read All About It
in 2006.
The market is exhibiting an eerie, calm, Zen-like stillness that
I find quite unnerving. Look around the world at Syria/Iraq,
Israel/Palestine, Somalia/Kenya, Russia/Ukraine and Nigeria: now
China has laid claim to the whole of the South China Sea and is
already in dispute with Japan, the Philippines, Vietnam and just
about everyone else. Then there is the slowing Chinese economy with
107 million tons of iron-ore on various dock-sides. QE has finished
in the UK and will do so in America later this year. We have the
Scottish referendum to look forward to (not) and the General
Election is now just months away.
And to make sure that your cup runneth over, Chinese property is
the most important factor in the global economy. In the past few
years, predictions that the sector was about to explode have not
been borne out, but it really could happen this time (more below).
Against that can be set that every investor is seemingly searching
the world for dividend yield and the world is awash with liquidity
- so that's all right then.
For the six months ended 30 June 2014, New York and London edged
up by 2.4 per cent and 1 per cent respectively but other major
markets did less well with Tokyo down by 5.7 per cent and Shanghai
by 2.6 per cent. In smaller markets, Argentina, India and Denmark
improved by 51.3 per cent, 22.1 per cent and 20.2 per cent
respectively. Venezuela, on the other hand, fell by 22.3 per cent.
Returning to London, the Athelney Trust unaudited net asset value
rose by 2.5 per cent (or 5 per cent with income reinvested) and the
FTSE Small Cap, Fledgling and AIM All-share indices improved by 0.3
per cent, 1.8 per cent and 0.8 per cent respectively.
I am indebted to Private Eye and its Brazil correspondent Rio de
Ferdinand for the following.
When the England team flew into Brazil and began to acclimatize
to the very different conditions in the developing world, there was
a real sense of shock at this first impression. I couldn't believe
how poor they were said one Brazilian eye witness. In this day and
age it is difficult to believe that they are allowed to get in this
state. The poverty of their defence is genuinely shocking and as
for their forwards, well, it beggars belief. Another Brazilian
observer admitted to feeling guilty when confronted by the England
squad. You have to feel sorry for them. It's a pitiful sight but
we've been told not to give them any goals because that sort of
charity doesn't work.
The year 2014 is a momentous one: it is the 100th anniversary of
the start of the Great War, the 70th anniversary of D-Day and the
25th anniversaries of the collapse of the Soviet empire and the
savage crackdown in Tiananmen Square. One hundred years ago,
Europe's fragile order fell apart. Seventy years ago, the
democracies launched an assault on Fascist Europe. Twenty-five
years ago, Europe became whole and free, while China chose a
strange combination of market economics and the party state.
In 1913, Western Europe was the economic and political centre of
the world with European empires controlling vast colonies. This
world was torn apart by the Great War to be replaced by America,
which became the world's largest creditor.
The post-second World war division of Europe was a tragedy,
though an inevitable one - America was never going to fight the
Soviet Union immediately after its alliance with it. But the U.S.
did protect Western Europe through NATO, the Marshall Plan, the
OECD and the General Agreement on Tariffs and Trade (GATT).
We have now lived for a quarter of a century in an era of global
capitalism driven by the acceptance of the market economy and the
digital revolution. This happened under the EU and global
institutions such as the International Monetary Fund and the World
Trade Organization. However, the pressures of our times are
becoming clearer. The Great Recession, like the Great Depression
before it, has damaged globalization. Russia is now revanchist
(seeking to recover lost territory) and China (see above) is
increasingly assertive.
If there is one lesson to be drawn from this brief history, it
is that we must learn to co-operate, yet we remain tribal. If John
Maynard Keynes were alive today, he would sigh at the risks of this
economic and political nationalism.
Black cab drivers protested in June against Uber, a web-based
minicab company. They did so by driving slowly around London,
causing traffic jams. But I thought that's what they did
anyway...............
Chinese property is the most important sector in the global
economy. It has been essential to the country's economic
development and has sucked in commodity imports from all over the
world. But property activity has been falling from mid-2013 and a
simple downturn now threatens to turn into a bust. There are risks
in the so-called shadow banking sector (i.e. any lending
organization which is not a bank) and the rapid rise in local
government debt. Property investment has grown to about 13 per cent
of GDP (roughly double the situation in the U.S. at the height of
the property bubble) and 16 per cent if one includes steel, cement,
construction materials and machinery and accounts for about 25 per
cent of all capital investment. It also accounts for about 20 per
cent of all commercial bank loans but is used as security in 40 per
cent of all lending. Now the position is that the overhang of
unsold properties in the Tier 2 cities has risen to about 15
months' supply and 24 months in Tier 3 and Tier 4 cities. Beijing's
resolve not to respond to weakening prices and activity is unlikely
to hold: we should expect extra spending on infrastructure and
environmental programmes, faster urbanization, relaxation on
home-buying restraints and mortgage deposits and, perhaps later,
more monetary easing.
Temporary relief, perhaps, but these measures may undermine the
essential strategy of rebalancing the economy towards consumer
spending and the negative effects would be larger and last longer.
China is different from a western economy in so many different ways
but the real results of a burst bubble are the same the world over.
Beijing will have to cope with them in the coming years but the
rest of us will worry about the deflationary consequences in a
still fragile global economic recovery.
I was sad to see the report of the early death of comic actor
Rik Mayall. I well remember his wonderful portrayal of Alan
Beresford B'Stard, Thatcherite MP, and his quote, "The really great
thing about a fudged coalition is that neither of us need to carry
out a single promise of our election manifestoes."
For most of the 20th century ICI was Britain's leading
industrial company. It was formed in 1926 through the merger of
four chemical companies - Brunner Mond, Nobel Explosives, United
Alkali and British Dyestuffs. After the war, the ICI board decided
that the new frontier of chemistry was pharmaceuticals (pharma).
James Black, a young physiologist, was recruited for the new team:
despite the high quality of its research chemists, the pharma
division lost money for nearly twenty years. In the 1960s, Black
discovered beta-blockers, the first effective drug for treating
high blood pressure.
Other products followed and the division became the fastest
growing part of ICI. Black moved on to SmithKline, where he
discovered Tagamet, which relieved many from the misery of stomach
ulcers. Glaxo later discovered Zantac and Astra of Sweden the
proton pump inhibitor, both treatments for ulcers.
In 1991, ICI was under threat of a take-over so spun off pharma
(now called Zeneca) which subsequently merged with Astra. The rump
chemicals business of ICI started its long decline into oblivion.
But the world of pharma was changing: Pfizer was the company that
many admired - cutting costs and filling gaps in its range via
acquisitions were to be preferred to, for instance, Merck's great
research history.
But business built to last is about people and products, not
corporate adventures and tax advantages. Sir James Black, I am
sure, created more shareholder value than any financier or
deal-maker in the history of British business. For that reason,
Astra Zeneca's board and most of its shareholders were quite right
to turn down the Pfizer take-over offer.
Is London's new issue market turning into a racket? Prospectuses
are frequently published only after conditional dealings have
started, hard-bitten investment analysts are brought on board, thus
stifling criticism while any potential investor asking awkward
questions is likely to be left out altogether. Tempted by the
latest one? Perhaps you should go and lie on a hot beach until the
feeling goes away.
In 1931, Hugh Macmillan, a Scottish judge, wrote in his report
that British engineering and shipbuilding businesses were doing
badly compared with their German and American competitors because
of the lack of finance, the so-called Macmillan gap. It can come as
no surprise that the gap is still there 83 years later. If
anything, things are getting worse - bank lending to SMEs (small
and medium enterprises) has been falling for four years and by a
quarter to all businesses. SMEs have been the ugly duckling of the
banking world, representing only 2 per cent of bank assets. SME
lending officers seem to have disappeared off the map: where once
we had banks that liked to say yes now we have computers programmed
to say no.
One idea to improve matters is to create a high quality
data-base on companies' credit history and revenues making it
freely available to prospective lenders, both old and new. Why
would one do this? Because about 80 per cent of SMEs' banking
relationships are with the big four banks: data is not shared at
present which makes life hard for new entrants to get a foot in the
SME door. Measures proposed by the Government last year might help
but it would be good to go further and create a one-stop-shop for
information on companies available to all lenders. This would be
called a credit register.
Lowering barriers to entry would boost competition in the SME
lending market, reducing costs and improving access to credit. For
the U.K., it would be a big step but, as usual, we are behind
everyone else. Almost 100 countries already have a credit register,
including over half of the countries in the EU. The Macmillan gap
has probably existed for about a century - let us close it once and
for all.
The modern Greek state has spent more than half its existence in
default on its debt. Even before its historic restructuring in
2012, Greece had defaulted five times since the 1820s - in 1826,
1843, 1860, 1893 and 1932. Yet in April, investors were desperate
for the chance to buy new Greek debt despite growth rates too
sluggish to make a serious dent in the country's steep debt pile.
Alexander Pope's Hope springs eternal comes to mind...........
Anyone who enjoys the sight of economists eating their hat is in
for a treat soon. When the U.K. adopts new international standards
for national income accounting, three great truths are likely to be
shown up as being wrong. Some of the changes have been flagged for
years. The level of gross domestic product (GDP) will rise because
things like research and development, the manufacture of weapons
systems and intangibles like prostitution and drug dealing will be
included for the first time. If that was it, the overall effect
would be small (somewhere between 2.5 and 5 per cent) but there is
another much more important change.
Now you must read carefully because I shall be asking questions
later! We are moving from cash to accruals accounting principles
for funded pension schemes. There, I knew it - you've fallen
asleep! The three great truths are: households do not save;
companies are sitting on huge piles of cash and household incomes
have stopped rising with GDP. None are true. Including funded
pension schemes will increase household saving from 5.5 per cent of
disposable income to about 11 per cent. British households will
ditch their reputation for profligacy overnight.
Correspondingly, the savings of the corporate sector will
decline. Since incomes will appear higher, much of the puzzle of
why households did not appear to benefit from recent rises to GDP
will disappear. We should go further and include central
government's unfunded final salary schemes in the same way, which
would make the U.K.'s public financed look even uglier than they
are.
The last time Britain attempted to control bank lending by
administrative fiat, Spandau Ballet were in the charts, the
Conservative government had just given council house tenants the
right to buy their properties and Margaret Thatcher was still to
make her not for turning speech. Did it work last time? No, don't
think that it did........
A new smartphone app will be popular with manufacturers keen to
make money from energy ministers' inability to plan. The app will
tell industrialists when the power distributor will pay them for
not making things so that the domestic householder can continue to
brew tea while ignoring the TV ads. It reminds me of Joseph
Heller's great novel Catch 22. Discovering that the U.S government
paid subsidies to reduce alfalfa production, he worked without rest
at not growing alfalfa.....and soon was not growing more alfalfa
than any man in the country.
National Grid implies that there is a danger of the lights going
out in 2015/16. That winter, it expects to have recruited
sufficient manufacturers to reduce demand by 1,800 megawatts at any
point if needed. They will receive GBP10,000 for each MW they
forswear regardless of whether National Grid actually calls on them
plus another up to GBP15,000 per MW hour for power actually
forfeited. At a time when we are desperate to encourage
manufacturing industry, you couldn't make it up, could you?
Results
Gross revenue increased to GBP101,530 compared to the same
period last year of GBP82,384.
Number
Companies paying dividends 71
Companies purchased (therefore no true comparison) 5
Increased total dividends in the half year 38
Reduced total dividends in the half year 9
No change in dividend 19
Dividends accrued 17
Portfolio Review
Holdings of Games Workshop, UK Commercial Property Trust, Novae
Group, McColls Retail Group, Hiscox, Brit, Beazley and Andrews
Sykes Group were all purchased for the first time. Additional
holdings of Vianet, Amlin, Catlin, Schroder Real Estate Investment
Trust, Lancashire Holdings, Londonmetric, M & C Saatchi and
Picton Property Income were also acquired. Arbuthnot Banking Group,
H & T Group and Macfarlane Group, were sold, Abbey Protection
was taken over. In addition a total of 15 holdings were top-sliced
to provide capital for new purchases.
Dividend
As is the Board's practice, consideration of a dividend will be
left until the final results are known.
Risks
The Company's assets consist mainly of listed securities and its
principal risks are therefore market-related. The Company is also
exposed to currency risk in respect of a small number of
investments held in overseas markets.
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.
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.
Outlook
Britain (and America, come to think of it) must seem like a
Treasure Island in a sea of troubles. Nevertheless, there is a
problem: either central banks are right to be worried about the
economy so wish to keep interest rates low or they are wrong and
will be forced to raise rates faster than markets expect. Either
way seems likely to lead to more uncertainty and volatility. Until
the outlook becomes clear, investors will not want to give up on
what has been a winning strategy of holding equities for capital
growth and an increasing income. Equity investors are reluctant
'bulls' but there seems no alternative. Hold.
H.B. Deschampsneufs
31 July 2014
HALF YEARLY INCOME STATEMENT
(INCORPORATING THE REVENUE ACCOUNT)
Audited
Year ended
Unaudited Unaudited 31 December
6 months ended 30 June 6 months ended 30 June
2014 2013 2013
Revenue Capital Total Revenue Capital Total Total
GBP GBP GBP GBP GBP GBP GBP
Gains on investments
held at fair
value - 309,890 309,890 - 104,470 104,470 1,466,773
Income from
investments 101,530 - 101,530 82,384 - 82,384 155,571
Investment
Management
expenses (2,780) (25,432) (28,212) (2,829) (25,913) (28,742) (58,799)
Other expenses (14,441) (21,056) (35,497) (14,309) (22,356) (36,665) (70,726)
Net return
on ordinary
activities
before taxation 84,309 263,402 347,711 65,246 56,201 121,447 1,492,819
Taxation - - - - - - -
Net return
on ordinary
activities
after taxation 84,309 263,402 347,711 65,246 56,201 121,447 1,492,819
Dividends Paid:
Dividend (109,069) - (109,069) (99,154) - (99,154) (99,154)
Transferred
to reserves (24,760) 263,402 238,642 (33,908) 56,201 22,293 1,393,665
========== ============ ========== ========= =========== ========= ============
Return per
ordinary share 4.2p 13.3p 17.5p 3.3p 2.8p 6.1p 75.3p
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 periods.
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.
HALF-YEARLY RECONCILIATION OF SHAREHOLDERS' FUNDS
For the Six Months Ended 30 June 2014 (Unaudited)
Called-up Capital Capital Total
Share Share reserve reserve Revenue Shareholders'
Capital Premium realised unrealised Reserve Funds
GBP GBP GBP GBP GBP GBP
Balance at 1 January
2014 495,770 545,281 953,991 2,108,854 245,797 4,349,693
Net gains on realisation
of investments - - 309,890 - - 309,890
Decrease in unrealised
Appreciation - - - (129,917) - (129,917)
Expenses allocated
to
Capital - - (46,488) - - (46,488)
Profit for the
period - - - - 84,309 84,309
Dividend paid in
year - - - - (109,069) (109,069)
Shareholders' Funds
at 30 June 2014 495,770 545,281 1,217,393 1,978,937 221,037 4,458,418
========== ======== ========== =========== ========== ==============
HALF YEARLY BALANCE SHEET AS AT 30 JUNE 2014
Audited
Unaudited Unaudited 31 December
30 June 30 June
2014 2013 2013
GBP GBP GBP
Fixed assets
Investments held at
fair value through
profit and loss 4,372,861 3,256,734 4,298,919
---------- ---------- ------------
Current assets
Debtors 50,399 34,526 41,782
Cash at bank and in
hand 47,410 17,971 24,709
97,809 52,497 66,491
Creditors: amounts falling
due within one year (12,252) (12,847) (15,717)
---------- ---------- ------------
Net current assets 85,557 39,650 50,774
---------- ---------- ------------
Total assets less current
liabilities 4,458,418 3,296,384 4,349,693
Provisions for liabilities
and charges - - -
Net assets 4,458,418 3,296,384 4,349,693
========== ========== ============
Capital and reserves
Called up share capital 495,770 495,770 495,770
Share premium account 545,281 545,281 545,281
Other reserves (non
distributable)
Capital reserve - realised 1,217,393 808,229 953,991
Capital reserve - unrealised 1,978,937 1,257,945 2,108,854
Revenue reserve 221,037 189,159 245,797
Shareholders' funds
- all equity 4,458,418 3,296,384 4,349,693
========== ========== ============
Net Asset Value per
share 224.8p 166.2p 219.3p
Number of shares in
issue 1,983,081 1,983,081 1,983,081
HALF YEARLY CASHFLOW STATEMENT FOR THE SIX MONTHS ENDING
30 JUNE 2014
Unaudited Unaudited Audited
Year ended
6 months ended 6 months ended 31 December
30 June 2014 30 June 2013 2013
GBP GBP GBP GBP GBP
Net cash inflow from
operating activities 25,738 70,286 74,969
Taxation
Corporation tax
paid - - -
Financial Investment
Purchases of investments (426,702) (189,204) (722,310)
Sales of investments 532,734 214,674 749,835
Net cash inflow from
Financial Investment 106,032 25,470 27,525
Dividends paid (109,069) (99,154) (99,154)
Financing
Issue of ordinary
share capital - - -
Share issue costs
----------
Decrease in cash in
the year 22,701 (3,398) 3,340
========== ========= =============
Reconciliation of operating
net revenue to
net cash inflow/ (outflow)
from operating activities GBP GBP GBP
Revenue return on ordinary
activities before taxation 84,309 65,246 121,884
Increase/(decrease) in
debtors (8,618) 55,683 48,427
Decrease in creditors (3,465) (2,374) 496
Investment management expenses
charged
to capital (25,432) (25,913) (53,034)
Other expenses charged to
capital (21,056) (22,356) (42,804)
25,738 70,286 74,969
========== ========= =============
Reconciliation of net cashflow to
movement in net fund
Net funds at 31/12/13 Cashflow Net fund at 30/6/14
GBP GBP
GBP
Cash at bank and
in hand 24,709 22,701 47,410
NOTES TO THE HALF YEARLY FINANCIAL STATEMENTS
1. The financial information contained in these Half Yearly
Financial Statements comprises non-statutory accounts as defined in
Sections 434 to 436 of the Companies Act 2006. The financial
information for the year ended 31 December 2013 has been extracted
from the statutory accounts which have been filed with the
Registrar of Companies and which contain an unqualified Auditors'
Report and do not contain a statement under Sections 498(2) or
498(3) of the Companies Act 2006.
2. The condensed financial statements for the period ended 30
June 2014 have been prepared on the basis of the same accounting
policies adopted as set out in the Annual Report for the year ended
31 December 2013 and in accordance with the Financial Reporting
Council's Statement "Half Yearly Financial Reports". They have not
been audited or reviewed by the auditors pursuant to the Auditing
Practices Board Guidance on "Review of Interim Financial
Information
3. To the best of our knowledge and belief there are no related
party transactions within the meaning required by the Disclosure
and Transparency Rules 4.2.8R (disclosure of related party
transactions and changes therein).
4. The calculation of earnings per share for the six months
ended 30 June 2014 is based on the attributable return on ordinary
activities after taxation and on the weighted average number of
shares in issue during the period.
6 months ended 30 June 6 months ended 30 June
2014 (Unaudited) 2013 (Unaudited)
Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
Attributable return
on
ordinary activities
after taxation 84,309 263,402 347,711 65,246 56,201 121,447
Weighted average
number of shares 1,983,081 1,983,081
Return per ordinary
share 4.2p 13.3p 17.5p 3.3p 2.8p 6.1p
12 months ended 31 December
2013 (Audited)
Revenue Capital Total
GBP GBP GBP
Attributable return
on
ordinary activities
after taxation 121,884 1,370,935 1,492,819
Weighted average
number of shares 1,983,081
Return per ordinary
share 6.1p 69.1p 75.3p
5. Net Asset Value (NAV) per share is calculated by dividing
shareholders' funds by the weighted average number of shares in
issue at 30 June 2014 of 1,983,081 (30 June 2013: 1,983,081 and 31
December 2013: 1,983,081).
6. Copies of the Half Yearly Financial Statements for the six
months ended 30 June 2014 will be available on the Company's
website www.athelneytrust.co.uk as soon as practicable.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BUGDRXXXBGSB
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