TIDMATY
RNS Number : 8733E
Athelney Trust PLC
16 February 2018
ATHELNEY TRUST plc
FINAL RESULTS
Legal Entity Identifier:
213800ON67TJC7F4DL05
Athelney Trust plc, the investor in small companies and junior
markets announces its final results for the 12 months ended 31
December 2017.
Chairman's Statement and Business Review
I announce the results for the year ended 31 December 2017. The
salient points are as follows:
-- The total return, which is the increase in NAV plus the
dividend, is 16.8 per cent (31 December 2016: 5.7 per cent)
-- Audited Net Asset Value ("NAV") was 284.8p per share (31
December 2016: 251.1p) an increase of 13.4 per cent.
-- Revenue return per ordinary share was 9.6p (31 December 2016: 10p).
-- Recommended final dividend of 8.9p per share (2016: 8.6p), an increase of 3.5 per cent.
Review of 2017
The Treasury predicted I would become the most unpopular man in
Britain. This was the only correct forecast that the Treasury made
in the several years that I was chancellor. Former Chancellor of
the Exchequer Norman, now Lord, Lamont.
Get your facts right, then you can distort them as you please.
Mark Twain.
If you put the...government in charge of the Sahara Desert, in
five years there would be a shortage of sand. Professor Milton
Friedman.
If 2016 was the year of shock and surprise, then 2017 was the
year of disruption. A blizzard of tweets followed President Trump's
inauguration (my nuclear button is bigger than yours - all grown-up
stuff, of course), answered by bots from the likes of Russia, China
and North Korea. Prime Minister (strong and stable leadership) May
turned a cast-iron majority into something much more precarious
depending on the goodwill of the DUP and the Scottish
Conservatives. The general election campaign was a superb example
of ineptitude. As far as Brexit was concerned, Britain gave way
completely on the Irish border, the rights of EU workers and the
divorce settlement so was allowed to prepare for trade talks this
year. Let us see how easy they turn out to be! Syria spent its
sixth year in civil war and Yemen was not far behind in terms of
danger to life. The rise of the populist parties continued in
Europe and brought with it an exceptionally unwelcome increase in
anti-Semitism, particularly in Hungary and Poland. President Maduro
of Venezuela continued with his quest to destroy what at one time
had been the strongest economy in Latin America. Tanks rolling down
the streets of Harare eventually persuaded autocratic President
Mugabe to resign while, at the same time, the Generals were
claiming no, there is no coup.
For the most part, though, global markets continued their serene
progress and thus improved on my hope that we could hang on to our
gains of the first half. Major markets did very well with New York,
Tokyo, Shanghai and London improving by 26.1, 19.1, 8.6 and 7.4 per
cent respectively. Turkey, Hong Kong and Austria did particularly
well in smaller markets with rises of 48.5, 38.9 and 33.2 per cent
respectively whereas Saudi Arabia, with a fall of 0.2 per cent, and
Russia and Sweden underperformed with small rises of 2.7 and 4.6
per cent. Russia is often touted as a recovery situation but four
sets of sanctions have always put me off, resulting from: the
arrest and murder of Sergei Magnitsy, the invasion of eastern
Ukraine and the Crimea, the shooting down by pro-Moscow fighters of
Malaysian Airlines flight number 17 and interference in the U.S.
general election. A better recovery proposition might be battered
and bashed retailers and shopping malls. Westfield is being bought
by Unibail-Rodamco, Hammerson has bid for Intu and Brookfield is
trying to buy out GGP. Hedge funds are heavily short and therefore
vulnerable. The same comment applies, in my opinion, to underrated
brewery groups such as Greene King and Marston's.
For the record, the Athelney Trust total return for 2017 was
16.8 per cent whereas the FTSE Small Cap., Fledgling and AIM
All-share indices rose by 14.9, 23 and 24.1 per cent respectively,
which just goes to underline the point that 2017 was about growth
strategies while those based on value and income did well enough
without matching the strong performance of Fledgling and AIM.
Ryanair boss Michael O'Leary only proposed getting rid of the
co-pilot. But now Airbus has gone one better: pilotless 'planes.
Soon, everyone will be baffled by flight attendant Elaine Dickinson
of the Airplane! film, who memorably said There's no reason to
become alarmed and we hope that you enjoy the rest of your flight.
By the way, is there anyone on board who can fly a 'plane?
Let me start this paragraph with a quote: The single greatest
edge an investor can have is a long-term orientation. So said the
shrewd Seth Klarman in his book (Margin of Safety, Risk Averse
Investing Strategies for the Thoughtful Investor) written over 25
years ago and still a great read. Private investors think
themselves at a great disadvantage compared with the professional
fund manager, who has access to considerable resources as well as
by-the-second information about companies and markets. But many
fund managers are incapable of thinking beyond a year and some not
even beyond a quarter. This hands a great advantage to the
thoughtful investor who, ideally, should do as little as possible
whereas the majority of fund managers are incentivised to do things
to show their bosses and clients that they are doing their job and
deserve to keep it. There is a saying that time in the market,
rather than timing the market, leads to a satisfactory end result.
The less you chop and change your investments, the fewer mistakes
you are likely to make. By following the simple rule of doing as
little as possible, the private investor will tend, over the long
term, to avoid many pitfalls that damage those unable to sit still.
Remember, while you may be doing nothing with your money, that does
not mean that your money is not doing anything for you.
The world's central banks now own a fifth of their respective
countries' national debt after years of quantitative easing. The
central banks are owned by the states whose paper they are holding
so the ultimate owners of all the government debt are the
governments themselves. If you owe something to yourself, in what
sense do you owe it? Answers on a postcard to Mark Carney, c/o Bank
of England, EC2R 8AH.
With all the problems that face us as a country, it would be
good to report that the underlying economy was doing well -
unfortunately, that is not the case; in fact, the short-term
economic performance is already disappointing. Consensus forecasts
cluster around GDP growth of around 1.5 per cent for 2018, lower
than just about anything in the developed world except for Japan
and Italy. So what is going wrong? The aftermath of the financial
crisis has been devastating, the recovery from which has been the
weakest since the war. Real household incomes are just five per
cent higher than in 2007. Between 2007 and 2016, real wages grew by
10.6 in Germany and 6.4 per cent on average in Organisation for
Economic Co-operation and Development members. Those of us aged
22-39 experienced a 10 per cent fall in real earnings between 2007
and 2017 and were particularly hard hit by the jump in house prices
from 3.6 times average annual earnings 20 years ago to 7.6 times
today.
The UK economy remains the most regionally divided: inner London
is the richest in Europe but there are some areas of high
deprivation. Part-time employment is relatively high and zero-hours
work has increased from 0.7 per cent in 2007 to 2.8 per cent today.
Productivity is poor and very close to that of Italy. This dire
record partly reflects the long (and growing) tail of poor
performers. Last, but not least, UK investment on capital
equipment, research and development is exceptionally weak. Some
argue that perverse incentives reward management for an increase in
share prices rather than any improvement in the long-term
performance of companies. This is not a description of a healthy
economy well able to withstand the severe shock of worse access to
its most important market - it is absurd to claim otherwise. The
Brexit shock, coupled with the UK's underlying weaknesses, is
likely to make the rising disappointment for the many who voted to
Leave all the more severe. The collective sigh of relief which
greeted the agreement on a two-year period of transition was wholly
misplaced - all we have succeeded in doing is moving the cliff-edge
from 2019 to 2021.
Some 47 per cent of Sports Direct's independent shareholders
voted to remove chairman Keith Hellawell at September's AGM,
believing him unable to impose corporate governance discipline on
chief executive and majority shareholder Mike Ashley. So it was
good of Mr. Ashley to show how seriously he now takes such matters.
He didn't turn up.
The average Briton must find nearly eight times his or her
salary to buy the average British house. Not in the Persimmon
boardroom. The GBP232m notional profit on share options split
between three executive Directors would be enough to purchase 300
such homes. Startling arithmetic like this comes with a few
caveats. The three men in question, the CEO, FD and MD, could sell
only 40 per cent of their options at the end of 2017. Obviously,
the remainder could produce less or more when ultimately sold and
the profits are likely to be taxed at rates approaching 50 per
cent. The irony is that the long-term investment plan aimed to
recognise good performance over a decade rather than just three or
five years. It was also spread amongst 140 senior managers, though
the top three received a third of the total awards. What the
remuneration committee did not anticipate was the soaring share
price. When shareholders approved the plan in 2012 (with some
dissent), the shares were priced at 657p but were 2738p five years
later. Ministers, trying
to sound tough on inequality, will be embarrassed. So they
should be. The main factor driving the increase in house-building
shares has been the government's own interventions in the housing
market which have fuelled demand without increasing supply. Quite
rightly, the Chairman of the board and the Chair of the
remuneration committee have now gone.
More proof of the railways' insatiable demand for money. One
rail operator has come up with its third cash-call in three years.
Anyone would think that Hornby operated real trains.........
The border between accounting scandal and fraud is marked by the
bars of a jail. Steinhoff, a South African-based, Dutch-registered,
Frankfurt-listed retail group (containing Poundland) is under
investigation by prosecutors in Germany over suspected inflated
revenue numbers [which] made their way into the accounts and in
December the Company said that it was considering the validity and
recoverability of EUR60 billion of assets. Further back, the year
2002 was a classic of its type. Multibillion-dollar frauds at
WorldCom and Tyco landed executives in jail but only three years
later. Global Crossing filed for bankruptcy protection after it
said that profits were inflated. Xerox admitted to over-stating
revenues. Six years passed from 2009 before the chairman of Indian
software group Satyam was sentenced. Let's Gowex of Spain collapsed
in 2014: its CEO said that the accounts were untrustworthy and that
he was responsible. The case continues. London-listed Globo failed
in 2015: the CEO and CFO resigned, telling the board about
falsification of data and misrepresentation of the Company's
financial situation. Investigations continue. Justice should be as
swift and as painful as possible - surely the authorities can do
better than this!
Maybe Stephen Haddrill's 25-page speech on Lessons from the
Financial Crisis was meant to be satire. The head of the Financial
Reporting Council (FRC) opened up with the news that the business
had cost us GBP11 trillion in financial support for UK banks
without mentioning that the FRC had cleared all accountancy firms
of inadequate audits. He did admit, though, that one of the big
four firms only produced a 'satisfactory' FTSE-350 audit 65 per
cent of the time. KPMG, as it happens.
In October, John McDonnell, the shadow chancellor, reaffirmed
the commitments in the Labour manifesto to bring Royal Mail, rail,
water and the energy sector into public ownership. This raises not
a few questions, of which possibly the least interesting is how
much it will all cost. After all, if I borrow GBP200,000 to buy a
house worth GBP200,000 then I do not become GBP200,000 worse off at
the point of purchase. Similarly, to the extent that the government
pays what the assets are worth, then overall the public sector
would be no better or no worse off. Nevertheless, the printed media
seems determined to concentrate on this area. The second question,
in my view more important, is how much to pay for these assets.
Forcibly buying assets at below market value smacks of
expropriation and it would be crucial to the stability of the
British economy that any compensation payment is seen to be
reasonable. What is certain is that, if investors believe that they
are at risk of being expropriated in the future, they will not
invest, to the detriment of the whole country: that would be a
disaster. The third and most important question is what benefit, if
any, we might gain from spending an enormous amount of time, effort
and disruption on renationalising these industries. It is important
to remember that sectors of the economy such as energy and water
are already highly regulated in terms of prices that can be charged
and the amount of capital investment which must be undertaken.
Broadly speaking, the regulatory framework is trying to ensure that
these companies act in the public interest while the profit motive
pushes them to be as efficient as possible. Labour government
ministers should not be allowed a free hand to run these utilities
any more than should private shareholders. It is not at all clear
that from the inglorious past that such ministers are likely to be
either more competent or more trustworthy than our present system
of regulatory bodies.
Ah, those far-off days when trains, gas, electricity and water
were all in public hands and there were no fat-cat oligarchs
gouging deep profits out of our services - or so the young plus Jez
Corbyn appear to believe. Those with longer memories might remember
terrible trains, trying to get a telephone (and then sharing the
line with one's next-door neighbour), sewage in the river and at
sea, with state-owned industries run for the benefit of their
employees. Estimated losses from 1948 to 1970 - GBP105 billion in
today's money. Of course, it will be different next time.....
The price of Bitcoin rose from about $1,000 at the beginning of
the year to $14,129 at the end but, for the life of me, I cannot
see that there is any point to the thing apart from representing a
mad, wild speculation. In The Hitchhiker's Guide to the Galaxy,
Douglas Adams wrote about similarly useless money. The exchange
rate of eight Ningis to one Pu is simple enough but since the Ningi
is a triangular rubber coin 6,800 miles along each side, no-one has
ever collected enough to own one Pu. Ningis are not negotiable
currency because Galactibanks refuses to deal in fiddling small
change. Back to Bitcoin, where a chap on the staff of the Wall
Street Journal set out to buy lunch in December, paid $76.16 for a
$10 pizza and ended up lunching on an ice cream instead. Apart from
the $9.47 in fees, the problem was that the seller had not up-dated
the pizza price to reflect price changes in the Bitcoin. The buyer
gave up after waiting 30 minutes for the order to be confirmed and
settled for a $5 ice cream sandwich (?) instead, for which he paid
$17.50 including $9.62 in fees. He finally got his pizza four hours
later but, alas, by which time he had lost his appetite.
I am often asked, Gentle Reader, is Britcoin a real currency and
can I lose money if I hold onto it? The answer is, of course, that
the pound, or Britcoin as it is sometimes referred to in the media,
is an unstable and unpredictable currency often used by speculators
in shady deals or in money-laundering operations and is not
advisable for use by ordinary consumers. In recent years, Britcoin
has been talked up but then crashed spectacularly with huge losses
to investors. At present, the Britcoin remains fragile and ordinary
punters are advised to stick to better regulated and more reliable
currencies such as the Venezuelan Maduro or Zimbabwean
Bling-bling.
Sensible taxes transfer money to the government in a
straightforward way but stupid taxes are the ones which encourage
stupid behaviour in the population. Stamp duty, for example,
discourages older couples from downsizing and so forces them to
live on in a house which is too big for them. Inheritance tax falls
mainly on the less well off since the rich can gift their assets
before they die, whereas the moderately off have only their house
to bequeath. Mind you, the wallpaper tax of 1712 was not much
better: the rich simply bought plain, untaxed wallpaper, then had
it stencilled by hand. The idea of the window tax of 1696 was that
the more windows you had the richer you were likely to be. You can
still see the result in buildings of the period: surplus windows
were merely bricked up. Hat and wig taxes were introduced in the
late 18(th) Century: result, endless bickering about exactly what
was a hat and the terminal decline of the wig industry. A tax on
gin was introduced on the craze that peaked in 1742: result, the
rise of the bootleggers who often mixed the rough product with
turpentine and sulphuric acid. Blindness was a common side effect
of this particularly stupid tax.
How to claim compensation from Tesco for its accounting scandal:
submit claim to KPMG via web portal with evidence of share deals;
wait for assessment at 24.5p per share plus 4 per cent interest;
download Notice of Acceptance and Release form, sign and upload to
portal; wait 35 days for payment. How to claim a refund on a dodgy
packet of sprouts: return to store; show receipt; receive cash.
Should do better!
When was the last time that the UK exported more goods than it
imported for a decent period - say five years or so? The short
answer is never. Over the past 200 years, this great trading nation
has had a surplus in manufactured goods for fewer years than you,
Gentle Reader, has fingers. Even during the Empire in all its pomp
and the industrial revolution, the UK invariably sucked in more
goods than it pumped out. It's not that we don't make anything - in
fact the UK remains one of the world's biggest manufacturers. But
we have never been truly self-sufficient in such goods: indeed, the
only thing preventing Britain's balance of payments looking truly
horrendous is the services we have sold abroad - financial, legal,
consultancy, administration, retail and so on. In all but two
peacetime years over the past two centuries, the UK exported far
more services than it imported. How to square this with the
political debate about Brexit? Listening to strong and stable
leader Theresa May banging on about securing tariff-free access to
European markets, you might be forgiven for believing that all we
need is a replacement for the customs union, a quick trade deal
and, hey presto, British lorries and containers will still be able
to cross the Channel. Unfortunately, this catastrophically misses
the point. As it happens, those lorries already face the lowest
tariffs in history: these days the problems come from non-tariff
barriers such as product standards (does the product conform to our
rules), rules on immigration (no consulting work in the EU without
permission) and qualifications (a legal degree or medical
qualifications may not work in the EU). Which brings us to the
single market, which is everything to do with non-tariff barriers
policed by the Tories hate figure, the European Court of
Justice.
It works very well in goods but not so in services: architects
can work well throughout Europe but it is much harder for
accountants to do so.
What we need is a series of deep, complex deals with Europe and
the world that harmonise regulation. Such deals are fiendishly
difficult to negotiate: for instance I would expect the UK
government to protect the NHS from overseas competition and farmers
from those with lower standards on the use of hormones in meat and
GM food. Striking such complex deals would invariably involve a
loss of sovereignty - will the government explain to Leave voters
that, having taken back control, Britain will have to give it up
again?
An historic moment. One of the world's largest companies has
changed its name. Wal-Mart Stores has found a way of better
reflecting our company's path to win the future of retail. Yes,
from now on it's to be called, er, Walmart.
Capital Gains
During the year the Company realised capital profits before
expenses arising on the sale of investments in the sum of
GBP296,629 (31 December 2016: GBP294,251).
Portfolio Review
Holdings of Biffa, Countrywide, Crest Nicholson, Debenhams,
Greene King, Hostelworld, Ibstock, Marstons, Murgitroyds, NWF, The
PRS REIT and Safecharge were all purchased for the first time.
Additional holdings of Air Partner, M&C Saatchi and Record were
also acquired. Beasley, Hiscox, Lancashire Holdings and Novae were
sold. In addition, eleven holdings were top-sliced to provide
capital for the new purchases.
Corporate Activity
The holdings of Lavendon and Cape were taken over at a capital
profit of 99.1 and 19.8 percent respectively.
Dividend
The Board is pleased to recommend an increased annual dividend
of 8.9p per ordinary share (2016: 8.6p). This represents an
increase of 3.5 per cent over the previous year. Subject to
shareholder approval at the Annual General Meeting on 21 March
2018, the dividend will be paid on 6 April 2018 to shareholders on
the register on 2 March 2018.
For those patient investors who subscribed for Athelney Trust
shares in the IPO of 1994, the annual return has now risen to 17.8
per cent net of basic rate tax on the capital originally
invested.
Update
The unaudited NAV at 31 January 2018 was 279.4p whereas the
share price on the same day stood at 262p. Further updates can be
found on www.athelneytrust.co.uk
Prospects
The Federal Reserve has raised rates three times since the end
of 2016 and, in September 2017, announced a reduction in its $4.5
trillion balance sheet. Despite the Fed's gradual removal of
monetary accommodation, monetary conditions have not tightened: I
would argue that they have in fact become looser. Long-term
interest rates have hardly changed, markets keep going up and the
dollar has not appreciated markedly. The most plausible reason for
this apparent paradox is that the European Central Bank, the Bank
of Japan and the Bank of England are still pursuing policies of
extreme monetary accommodation. So, in theory at least, global
markets may have a decent-enough year. As I said at this time last
year, much could go wrong (geopolitical risks, trade protectionism,
higher oil prices for instance) but monetary policy is unlikely to
be unhelpful and so I would hope for a modest 5-7 per cent rise in
net asset value in 2018 plus a further 3 per cent from dividends,
all being well.
Dr. E C Pohl
Chairman
14 February 2018
Income Statement
For the Year Ended 31
For the Year Ended December
31 December 2017 2016
Note Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
Gains on
investments
held at fair
value 8 - 835,709 835,709 - 236,357 236,357
Income from
investments 2 238,832 - 238,832 242,157 - 242,157
Investment
Management
expenses 3 (6,128) (56,042) (62,170) (5,210) (46,933) (52,143)
Other expenses 3 (26,527) (73,817) (100,344) (25,519) (63,393) (88,912)
Net return on
ordinary 206,177 705,850 912,027 211,428 126,031 337,459
activities before
taxation
Taxation 5 - - - - - -
Net return on
ordinary
activities after
taxation 6 206,177 705,850 912,027 211,428 126,031 337,459
Net return per
ordinary
share 6 9.6p 32.7p 42.3p 10p 6p 16p
Dividend per
ordinary
share paid during
the year 7 8.6p 7.9p
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 overleaf.
A Statement of Comprehensive Income is not required as all gains
and losses of the Company have been reflected in the above
Statement.
Statement of Changes in Equity for the Year Ended
31 December 2017
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
2016 495,770 545,281 1,563,158 1,910,653 343,369 4,858,231
Net profits on
realisation
of investments - - 294,251 - - 294,251
Decrease in unrealised
Appreciation - - - (57,894) - (57,894)
Expenses allocated
to
Capital - (28,127) (110,326) - - (138,453)
Profit for the
year - - - - 211,428 211,428
Dividend paid
in year - - - - (156,663) (156,663)
Shares issued
in the year 43,700 363,933 - - - 407,633
Shareholders'
Funds at 31 December
2016 539,470 881,087 1,747,083 1,852,759 398,134 5,418,533
========== ========= ========== =========== ========== ==============
Balance brought
forward at 1 January
2017 539,470 881,087 1,747,083 1,852,759 398,134 5,418,533
Net profits on
realisation
of investments - - 296,629 - - 296,629
Increase in unrealised
Appreciation - - - 539,080 - 539,080
Expenses allocated
to
Capital - - (129,859) - - (129,859)
Profit for the
year - - - - 206,177 206,177
Dividend paid
in year - - - - (185,036) (185,036)
Shareholders'
Funds at 31 December
2017 539,470 881,087 1,913,853 2,391,839 419,275 6,145,524
======== ======== ========== ========== ========== ==========
Statement of the Financial Position as at
31 December 2017
Company Number: 02933559
Note 2017 2016
GBP GBP
Fixed assets
Investments held at fair
value through profit and
loss 8 5,966,679 5,117,268
---------- ----------
Current assets
Debtors 9 156,798 256,964
Cash at bank and in hand 45,289 59,133
202,087 316,097
Creditors: amounts falling
due within one year 10 (23,242) (14,832)
---------- ----------
Net current assets 178,845 301,265
---------- ----------
Total assets less current liabilities 6,145,524 5,418,533
Provisions for liabilities
and charges - -
Net assets 6,145,524 5,418,533
========== ==========
Capital and reserves
Called up share capital 11 539,470 539,470
Share premium account 881,087 881,087
Other reserves (non distributable)
Capital reserve - realised 1,913,853 1,747,083
Capital reserve - unrealised 2,391,839 1,852,759
Revenue reserve (distributable) 419,275 398,134
Shareholders' funds - all
equity 6,145,524 5,418,533
========== ==========
Net Asset Value per share 13 284.8 p 251.1p
Statement of Cash flows for the Year Ended
31 December 2017
2017 2016
GBP GBP
Cash flows from operating
activities
Net revenue return 206,177 211,428
Adjustment for:
Expenses charged to capital (129,859) (110,326)
Increase/(decrease) in creditors 8,410 (547)
Decrease/(increase) in debtors 100,166 (132,596)
Cash from/(used) operations 184,894 (32,041)
---------- ----------
Cash flows from investing
activities
Purchase of investments (674,520) (741,319)
Proceeds from sales of investments 660,818 570,157
---------- ----------
Net cash used in investing
activities (13,702) (171,162)
---------- ----------
Financing activities
Share issue - 379,506
---------- ----------
Net cash used in financing
activities - 379,506
---------- ----------
Equity dividends paid (185,036) (156,663)
Net (decrease)/increase in
cash (13,844) 19,640
Cash at the beginning of the
year 59,133 39,493
---------- ----------
Cash at the end of the year 45,289 59,133
========== ==========
Notes to the Financial Statements
For the Year Ended 31 December 2017
1. Accounting Policies
1.1 Statement of Compliance and Basis of Preparation of Financial Statements
The financial statements are prepared in accordance with
applicable United Kingdom accounting standards, including Financial
Reporting Standard 102 ("FRS 102"), the Companies Act 2006 and with
the AIC Statement of Recommended Practice ("SORP") issued in
November 2014 (amended January 2017), regarding the Financial
Statements of Investment Trust Companies and Venture Capital
Trusts. All the Company's activities are continuing.
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 102 "Income Tax". Interest is dealt
with on an accruals basis.
1.3 Investment Management Expenses
All three Directors are involved in investment management, 10%
of their salaries or fees 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. Unlisted investments are traded on AIM.
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, similarly, AIM-traded investments are valued using the
closing bid price on 31 December.
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.
1.7 Judgements
The Directors confirm that no judgements have been made in the
process of applying the Company's accounting policies.
1. Accounting Policies (continued)
1.8 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.
1.9 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. Unrealised capital
reserves cannot be distributed by way of dividends or similar.
1.10 Dividends
In accordance with FRS 102 "Events after the end of the
Reporting Period", dividends are included in the financial
statements in the year in which they go ex-div.
1.11 Share Issue Expenses
The costs associated with issuing shares are written off against
any premium arising on the issue of Share Capital.
1.12 Financial Instruments
Short term debtors and creditors are held at cost.
2. Income
Income from investments
2017 2016
GBP GBP
UK dividend income 154,547 175,503
Foreign dividend income 43,876 46,439
UK Property REITs 40,334 20,210
Bank interest 75 5
Total income 238,832 242,157
======== ========
UK dividend income
2017 2016
GBP GBP
UK Main Market listed investments 101,879 115,086
UK AIM-traded shares 52,668 60,417
154,547 175,503
======== ========
3. Return on Ordinary Activities before Taxation
2017 2016
GBP GBP
The following amounts (inclusive of
VAT) are included
within investment management and other
expenses:
Directors' remuneration:
- Services as a director 21,000 21,000
- Otherwise in connection with management 57,474 49,401
Auditors' remuneration:
- Audit Services - Statutory audit 10,500 10,500
Miscellaneous expenses:
- Other wages and salaries 4,134 10,300
- Management services 30,996 22,140
- PR and communications 3,891 9,662
- Stock exchange subscription 7,920 6,420
- Sundry investment management and
other expenses 26,599 11,632
162,514 141,055
======== ========
On 1 April 2016 the Company entered into a contract with J
Girdlestone to provide management services at an annual cost of
GBP24,600 plus VAT. An increase of 10% was agreed in July 2017
making the annual fee GBP27,060 plus VAT.
4. Employees and Directors' Remuneration
2017 2016
GBP GBP
Costs in respect of Directors:
Non-executive directors' fees 21,000 21,000
Wages and salaries 57,474 49,401
Social security costs 4,134 2,971
82,608 73,372
======= =======
Costs in respect of administrator:
Wages and salaries - 6,687
Social security costs - 642
- 7,329
==== ======
Total:
Non-executive directors' fees 21,000 21,000
Wages and salaries 57,474 49,401
Social security costs 4,134 3,613
82,608 80,701
----------------- -------
Average number of employees:
Chairman - -
Investment 1 1
Administration - -
1 1
================= ===========
5. Taxation
(i) On the basis of these financial statements no provision has
been made for corporation tax (2016: Nil).
(ii) Factors affecting the tax charge for the year.
The tax charge for the period is lower than (2016: lower than)
the average small company rate of corporation tax in the UK of 19
per cent. The differences are explained below:
2017 2016
GBP GBP
Total return on ordinary activities
before tax 912,027 337,459
---------- -----------------
Total return on ordinary activities
multiplied by the average small company
rate of corporation tax 19.25% (2016:
20%) 175,565 67,492
Effects of:
UK dividend income not
taxable (29,750) (34,430)
Revaluation of shares
not taxable (103,773) 11,578
Capital gains not taxable (57,101) (58,850)
Unrelieved management
expenses 15,059 14,210
Current tax charge for
the year - -
========== =================
The Company has unrelieved excess revenue management expenses of
GBP127,919 at 31 December 2017 (2016: GBP92,354) and GBP102,597
(2016: 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 2016, 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 2016. 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 102.
2017 2016
GBP GBP GBP GBP GBP GBP
Revenue Capital Total Revenue Capital Total
Attributable return
on
ordinary activities
after taxation 206,177 705,850 912,027 211,428 126,031 337,459
Weighted average
number of shares 2,157,881 2,104,868
Return per ordinary
share 9.6p 32.7p 42.3p 10p 6p 16p
7. Dividend
2017 2016
GBP GBP
Final dividend in respect of 2016
of 8.6p (2016: a final dividend
of 7.9p was paid in respect of
2015) per share 185,036 156,663
======== ========
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 8.9p (2016: 8.6p) per
ordinary share be paid out of revenue profits amounting to a total
of GBP192,051. For the year 2016, a final dividend of 8.6p was paid
on 6 April 2017 amounting to a total of GBP185,036.
2017 2016
GBP GBP
Revenue available for distribution 206,177 211,428
Final dividend in respect of
financial year ended
31 December 2017 (192,051) (185,036)
Undistributed Revenue Reserve 14,126 26,392
========== ==========
8. Investments
2017 2016
GBP GBP
Movements in year
Valuation at beginning
of year 5,117,268 4,709,749
Purchases at cost 674,520 741,319
Sales - proceeds (660,818) (570,157)
- realised gains on
sales 296,629 294,251
Increase/(decrease) in unrealised
appreciation 539,080 (57,894)
Valuation at end
of year 5,966,679 5,117,268
========== ==========
Book cost at end
of year 3,574,834 3,264,509
Unrealised appreciation at the end
of the year 2,391,845 1,852,759
5,966,679 5,117,268
========== ==========
UK Main Market listed
investments 4,618,263 4,109,077
UK AIM-traded shares 1,348,416 1,008,191
5,966,679 5,117,268
========== ==========
8. Investments (continued)
Gains on investments
2017 2016
GBP GBP
Realised gains on
sales 296,629 294,251
Increase/(decrease) in unrealised
appreciation 539,080 (57,894)
835,709 236,357
======== =========
The purchase costs and sales proceeds above include transaction
costs of GBP5,711 (2016: GBP3,695) and GBP2,401 (2016: GBP1,344)
respectively.
9. Debtors
2017 2016
GBP GBP
Investment transaction
debtors 148,483 249,295
Other debtors 8,315 7,669
156,798 256,964
======== ========
10. Creditors: amounts falling due within one year
2017 2016
GBP GBP
Social security and
other taxes 2,959 2,623
Other creditors 8,628 172
Accruals and deferred
income 11,655 12,037
23,242 14,832
======= =======
11. Called Up Share Capital
2017 2016
GBP GBP
Authorised
10,000,000 Ordinary Shares of 25p 2,500,000 2,500,000
========== ==========
Allotted, called up and fully paid
2,157,881 Ordinary Shares of 25p 539,470 539,470
========== ==========
(2016: 2,157,881 Ordinary Shares of
25p)
12. 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.
The major risks associated with the Company are market, credit
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 price risk arises mainly from uncertainty about future
prices of financial investments used in the Company's business. It
represents the potential loss the Company might suffer through
holding market positions by way of price movements other than
movements in exchange rates and interest rates.
The Company's investment portfolio is exposed to market price
fluctuations which are monitored by the Fund Manager who gives
timely reports of relevant information to the Directors.
Adherence to the investment objectives and the internal controls
on investments set by the Company mitigates the risk of excessive
exposure to any one particular type of security or issuer.
The Company's exposure to other changes in market prices at 31
December on its investments is as follows:
A 20% decrease in the market value of investments at 31 December
2017 would have decreased net assets attributable to shareholders
by 55.3 pence per share (2016: 47.4 pence per share). An increase
of the same percentage would have an equal but opposite effect on
net assets available to shareholders.
2017 2016
GBP GBP
Fair value through profit or loss investments 5,966,679 5,117,268
Market risk also arises from changes in interest rates and
exchange risk. All of the Company's assets are in sterling and
accordingly the Company has limited currency exposure. The majority
of the Company's financial assets are non-interest bearing, as a
result the Company's financial assets are not subject to
significant risk due to fluctuations in the prevailing levels of
market interest rates.
The carrying amounts of financial assets best represent the
maximum credit risk exposure at the balance sheet date. Bankruptcy
or insolvency of the custodian may cause the Company's rights with
respect to securities held with the custodian to be delayed.
Liquidity Risk
Liquidity Risk is the risk that the Company may have difficulty
in meeting obligations associated with financial liabilities. The
Company is able to reposition its investment portfolio when
required so as to accommodate liquidity needs. However it may be
difficult to realise its investment portfolio in adverse market
conditions.
Maturity Analysis of Financial Liabilities
The Company's financial liabilities consist of creditors as
disclosed in note 10. All items are due within one year.
12. Financial Instruments (continued)
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;
-- to support the Company's stability and growth;
-- to provide capital for the purpose of further investments.
The Company actively and regularly reviews and manages its
capital structure to ensure an optimal capital structure, taking
into consideration the future capital requirements of the Company
and capital efficiency, projected operating cash flows and
projected strategic investment opportunities. The management
regards capital as total equity and reserves, for capital
management purposes.
Fair values of financial assets and financial liabilities
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.
Financial instruments by category
The financial instruments of the Company fall into the following
categories
31 December 2017 Assets at
fair value
At Amortised through profit
Cost or loss Total
GBP GBP GBP
Assets as per the
balance
sheet
Investments - 5,966,679 5,966,679
Debtors 156,798 - 156,798
Cash at bank 45,289 - 45,289
------------------------- ---------------------------- -----------------------
Total 202,087 5,966,679 6,168,766
========================= ============================ =======================
Liabilities as per
the balance
sheet
Creditors 23,242 - 23,242
------------------------- ---------------------------- -----------------------
Total 23,242 - 23,242
========================= ============================ =======================
31 December 2016 Assets at fair
At Amortised value through
Cost profit or loss Total
GBP GBP GBP
Assets as per the
balance
sheet
Investments - 5,117,268 5,117,268
Debtors 256,964 - 256,964
Cash at bank 59,133 - 59,133
------------------------- ---------------------------- -------------------------
Total 316,097 5,117,268 5,433,365
========================= ============================ =========================
Liabilities as per
the balance
sheet
Creditors 14,832 - 14,832
------------------------- ---------------------------- -------------------------
Total 14,832 - 14,832
========================= ============================ =========================
12. Financial Instruments (continued)
Fair value hierarchy
In accordance with FRS 102, the Company must disclose the fair
value hierarchy of financial instruments.
The fair value hierarchy consists of the following three
classifications:
Classification A - Quoted prices in active markets for identical
assets or liabilities.
Quoted in an active market in this context means quoted prices
are readily and regularly available and those prices represent
actual and regularly occurring market transactions on an arm's
length basis.
Classification B - The price of a recent transaction for an
identical asset, where quoted prices are unavailable.
The price of a recent transaction for an identical asset
provides evidence of fair value as long as there has not been a
significant change in economic circumstances or a significant lapse
of time since the transaction took place. If it can be demonstrated
that the last transaction price is not a good estimate of fair
value (e.g. because it reflects the amount that an entity would
receive or pay in a forced transaction, involuntary liquidation or
distress sale), that price is adjusted.
Classification C - Inputs for the asset or liability that are
based on observable market data and unobservable market data, to
estimate what the transaction price would have been on the
measurement data in an arm's length exchange motivated by normal
business considerations.
The Company only holds classification A investments (2016:
classification A investments only).
13. Net Asset Value per Share
The net asset value per share is based on net assets of
GBP6,145,524 (2016: GBP5,418,533) divided by 2,157,881 (2016:
2,157,881) ordinary shares in issue at the year end.
2017 2016
Net asset value per
share 284.8p 251.1p
======= =======
14. Dividends paid to Directors
During the year the following dividends were paid to the
Directors of the Company as a result of their total
shareholding:
Mr Robin Boyle GBP38,619(2)
Dr. Manny Pohl GBP25,573(1)
Mr Simon Moore GBP2,752
Notes:
1. Dr Manny Pohl's relationship with Global Masters Fund Limited
is described in Note 1 to the table of Directors' interests on page
31. During the year a dividend of GBP25,573 was paid to Global
Masters Fund Limited.
2. This figure includes GBP33,678 paid to Trehellas House
Limited. Mr Robin Boyle's interest in Trehellas House Limited is
described in Note 2 to the table of Directors' interests on page
31.
For further information:
Robin Boyle, Managing Director
Athelney Trust plc
020 7628 7937
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR USORRWOAUAAR
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February 16, 2018 02:00 ET (07:00 GMT)
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