TIDMSDP
RNS Number : 6127Y
Schroder AsiaPacific Fund PLC
07 December 2017
7 December 2017
ANNUAL REPORT AND ACCOUNTS
Schroder AsiaPacific Fund plc (the "Company") hereby submits its
Annual Report for the year ended 30 September 2017 as required by
the UK Listing Authority's Disclosure Guidance and Transparency
Rule 4.1.
The Company's Annual Report and Accounts for the year ended 30
September 2017 are also being published in hard copy format and an
electronic copy will shortly be available to download from the
Company's website http://www.schroders.co.uk/asiapacific. Please
click on the following link to view the document:
http://www.rns-pdf.londonstockexchange.com/rns/6127Y_-2017-12-6.pdf
The Company has submitted its Annual Report and Accounts to the
National Storage Mechanism and it will shortly be available for
inspection at www.morningstar.co.uk/uk/NSM.
Enquiries:
Benjamin Hanley
Schroder Investment Management Limited
Tel: 020 7658 3847
Chairman's Statement
Performance
The year to 30 September 2017 was another exceptional year for
the Company. The net asset value ("NAV") produced a total return of
23.2% following strong performance in 2016 (40.9%). In addition to
strong returns from regional markets, the NAV also outperformed the
benchmark by 4.4% driven by stock selection. This performance
continues the Company's excellent long-term record and it remains
well ahead of the benchmark over three, five and 10 years.
A more detailed comment on performance and investment policy may
be found in the Manager's Review on page 6 of the 2017 Annual
Report.
Final Dividend
The Directors recommend the payment of a final dividend of 5.60
pence per share for the year ended 30 September 2017, an increase
of 17.9% over the 4.75 pence paid in respect of the previous
financial year. Net revenue after taxation has increased by 18.6%
from GBP8,040,000 to GBP9,537,000, due to the increase in
investment income receivable. A similar percentage increase in the
dividend from that paid to shareholders in respect of the previous
financial year is proposed in line with the Company's policy of
distributing substantially all its revenue after tax. If the
resolution proposed at the Annual General Meeting to pay a final
dividend is passed, it will be paid on 6 February 2018 to
shareholders on the Register on 29 December 2017.
Ongoing Charges
The Ongoing Charges of the Company have fallen during the year
from 1.10% to 0.99%. Following a restructuring of the investment
management fee earlier this year and the growth of the NAV, a
greater proportion than hitherto of the fee is now charged at a
rate of 0.75%.
We also expect a reduction in the dealing commission rates
charged to the Company when the portfolio trades, following our
Manager's decision not to pass on certain external research costs
in the dealing commission from 1 January next year.
Gearing
During the year, the Company's level of gearing has remained
relatively modest, starting at 0.4% at the commencement of the year
and closing at 4.4%. The Company's gearing continues to operate
within pre-agreed limits so that net effective gearing does not
represent more than 20% of shareholders' funds.
Discount management
Over the last year, the target maximum discount level was again
set at approximately 10%, with the average level being 11.8% over
the year. 225,000 shares were bought back in that period.
The Board continues to believe that it is not necessarily in the
best interests of shareholders as a whole to adopt a rigid discount
control mechanism that seeks to target a defined maximum discount
level regardless of market conditions. Instead the Board continues
to follow a more flexible strategy that takes into account the
level of discount at which the Company's peer group trades as well
as the absolute level of its own discount, prevailing market
conditions and the views of its major shareholders.
At the Company's last Annual General Meeting, the Company was
given the authority to purchase up to 14.99% of its issued share
capital. It therefore proposes that share buy back authorities be
renewed at the forthcoming Annual General Meeting. Any shares so
purchased would be cancelled or held in treasury for potential
reissue.
Board succession
As I set out last year. Anthony Fenn will retire from the Board
at the Annual General Meeting and will not seek re-election as a
Director of the Company. On behalf of the Board, I thank Anthony
for his distinguished long service. On his retirement, Rosemary
Morgan will become Senior Independent Director and James Williams
Chairman of the Management Engagement Committee.
An additional non-executive director, Martin Porter, was
appointed with effect from 2 October 2017. His long experience in
the industry will be very valuable to us and his biographical
details can be found on page 17 of the Annual Report. In accordance
with the Company's Articles of Association, a resolution to elect
him as a Director of the Company will be proposed at the
forthcoming Annual General Meeting.
As previously disclosed the Board believes that it is important
for appropriate new skills to be brought to the Board and will look
to refresh one Director every two to three years. A Director will
serve for a period of more than nine years only in exceptional
circumstances. All Directors will be subject to re-election each
year at the Annual General Meeting.
Outlook
The 2017 accounts focus on what has been another successful 12
months for the Company, but I have also found it instructive to
compare the Company today with a few years ago. It has not just
been the scale of the assets that has changed (the NAV is nearly
double that of five years ago); it has also been the variety of
opportunities.
Nearly two thirds of the portfolio today is in different
companies than five years ago, in particular with a new generation
of technology-based industries in and around China. The region is
changing, and it is exciting to see the potential for new growth.
It underpins my confidence that a well-managed portfolio of
attractively-valued Asian shares can offer considerable long-term
appeal.
Annual General Meeting
The Annual General Meeting will be held on Tuesday, 30 January
2018 at 12.00 noon and shareholders are encouraged to attend. As in
previous years, Matthew Dobbs, on behalf of the Manager, will give
a presentation on the prospects for Asia and the Company's
investment strategy.
Nicholas Smith
Chairman
6 December 2017
Manager's Review
The NAV per share of the Company recorded a total return of
+23.2% over the twelve months to end September 2017. This was ahead
of the performance of the benchmark, the MSCI All Country Asia ex
Japan Index, which was up +18.8% over the same period.
It was another strong year for Asian stock markets, registering
a rise of almost one fifth. There was understandable uncertainty
for the region in the wake of Mr Trump's victory in the US
presidential election last November. However, the consequent fears
over greater protectionism and heightened geopolitical tension
proved to have only a brief impact on the region. From the
beginning of 2017, a number of more positive developments came into
play. These included increasing evidence of a co-ordinated recovery
in the global economy, with leading indicators in the overwhelming
majority of developed economies moving into positive territory,
mirrored also by similar developments across Asia itself. After a
number of years of stagnation, global trade flows have responded,
with total trade in dollar terms reaching record highs.
Supported by the benign environment, earnings estimates for
Asian companies have been rising consistently over the year, with
expectations for 2017 rising from around 10% growth to over 20%
relative to 2016. This has been in contrast to the pattern of the
previous three years, and has clearly been very supportive for
investor sentiment. Free cash flow has also been rising sharply
across the region as capital spending remains generally
disciplined, underpinning healthy dividend growth.
Obviously, the period saw a number of potentially troubling
geo-political developments, most notably the increasingly
belligerent stance of the Democratic People's Republic of Korea,
further threatening to destabilize the always delicate relationship
between China and the US. Investors have, thus far, been remarkably
calm; indeed the market with arguably the greatest proximity to the
epicentre, that of South Korea, ended the financial year within 5%
of its all-time highs.
China remained an important determinant of sentiment. Although
the external environment was supportive to trade growth, the
economy has not shown the same pick up in momentum evident
elsewhere. To an extent, this has been a deliberate thrust of
policy on the part of the Beijing authorities, reflecting
confidence that the stimulus measures taken in late 2015 could be
withdrawn without undue threat to all important "stability".
Consequently, monetary conditions gradually tightened through the
summer, augmented by policies to rein in the residential property
market and greater regulatory scrutiny of unorthodox financing
vehicles and off balance sheet exposures in the banking sector.
In the event, the gentle tightening in China has done no harm to
local market returns, although a large measure of the
outperformance has been thanks to a strong showing from a
relatively small number of large capitalization internet stocks.
Taiwan and Korea have been the other strong performers, with the
higher export exposure favouring returns. In contrast, more
domestically oriented markets such as the emerging ASEAN markets
did not perform well.
Performance and portfolio activity
The Company's total return of 23.2% was significantly ahead of
the 18.8% return recorded by the benchmark. The main contribution
to value added has been stock selection in China, Indonesia, Hong
Kong, Korea and Taiwan. The only significant market where stock
selection lagged was in India. At a sector level, stock selection
was particularly helpful in consumer discretionary, industrial and
information technology sectors. Country allocation was of little
impact, with the added value from the underweighting in Malaysia
offset by the overweight position in Hong Kong.
It is a notable sign of current reality that the markets of Hong
Kong, China, Taiwan and Korea comprise four fifths of the Company's
assets and only slightly less of the benchmark. Over half the
portfolio is in Hong Kong/China, and we have continued to identify
a flow of attractive stocks across a range of sectors, including a
steady addition to Chinese A shares through the HK Connect which
allows us to access these stocks. ASEAN markets have become small
parts of the portfolio, but we continue to seek opportunities,
retaining the overweight in Thailand and adding to Singapore. We
reduced India somewhat over the year primarily on valuation
grounds, although the long-term potential of this market remains
impressive.
Outlook and policy
Over the last 12 months, investors have taken a relatively
sanguine view of global equity markets. The stance has been
rewarded and Asian equities have more than participated in this
strength. The scale and extent of returns naturally raises the
question of whether enough is enough, and at least a pause for
breath, or a correction, is imminent.
Perhaps the first point to make is that many fundamental
supports to markets remain in force. Purchasing managers' data
('PMIs') paints a picture of an impressively co-ordinated upturn in
global growth, with 80% of countries solidly in expansion
territory. Equity valuations relative to bonds remain in extremely
attractive territory, and there have been few of the usual signals
that surround a market peak such as narrowing market breadth,
widening credit spreads or excess investment by corporates. This
suggests that the outlook for the region's exporters remains
relatively sound, although the pace of expansion is likely to
moderate over coming quarters as comparisons get more
demanding.
As regards the external environment for Asia, the extent of any
tapering following on from recent US Federal Reserve and European
Central Bank announcements must be taken seriously. However, the
$300bn projected withdrawal by the Federal Reserve over the next
twelve months must be seen against a total central bank balance
sheet expansion globally of $11trn since 2009, and in aggregate
central bank balance sheets are likely to still grow until the
fourth quarter of next year. The key will remain inflation
expectations, and the risks here surround tightening labour markets
(including a surge in European companies reporting labour
shortages) and the impact of supply curtailments in China.
As regards domestic conditions in Asia, the impact of the
self-induced (and hopefully controlled) slowdown in Chinese growth
will need to be closely monitored. Our calculation is that this can
be smoothly managed, aided by the broadly helpful global
environment in terms of liquidity (helped by a gently weaker US
dollar) and robust trade flows. The October political transition in
China has seen a smooth entrenchment of President Xi, but
accompanied by the departure of a number of more pro-reform cadres.
In all probability, the prospect of real reform has receded, with
the exception of supply curtailments in a number of basic
industries driven by the pressing need to tackle pollution. Credit
growth will remain a key lever of State economic control. Although
there must be an eventual end to the process, we believe it is too
early to incorporate the serious long-term consequences of the debt
build up given that China continues to enjoy a strong external
balance and growth is gradually shifting towards services and the
consumer.
As we reported at the half way stage, we also take heart from
the fact that the corporate sector around the region is generally
in robust health. Outside sectors and companies whose investment
patterns are determined by state and government led priorities,
capital spending discipline remains impressive, resulting in a
strong expansion in underlying cash flows and stronger balance
sheets. Valuations remain somewhat below historic averages,
suggesting that, barring a reversal in global growth, regional
markets can make further progress in the year ahead.
Schroder Investment Management Limited
6 December 2017
Principal risks and uncertainties
The Board is responsible for the Company's system of risk
management and internal control and for reviewing its
effectiveness. The Board has adopted a detailed matrix of principal
risks affecting the Company's business as an investment trust and
has established associated policies and processes designed to
manage and, where possible, mitigate those risks, which are
monitored by the Audit Committee on an ongoing basis. This system
assists the Board in determining the nature and extent of the risks
it is willing to take in achieving the Company's strategic
objectives. Both the principal risks and the monitoring system are
also subject to robust review at least annually. The last review
took place in November 2017.
Although the Board believes that it has a robust framework of
internal controls in place this can provide only reasonable, and
not absolute, assurance against material financial misstatement or
loss and is designed to manage, not eliminate, risk.
The principal risks and uncertainties faced by the Company have
remained unchanged throughout the year under review, except in
respect of cyber risk relating to the Company's service providers,
which has now been extended beyond the custodian. Cyber risk
relating to all of the Company's key service providers is
considered an increased threat in light of the rising propensity
and impact of cyber attacks on businesses and institutions. To
address the risk, the Board is seeking enhanced reporting on cyber
risk mitigation and management from its key service providers to
ensure that it is managed and mitigated appropriately.
Actions taken by the Board and, where appropriate, its
Committees, to manage and mitigate the Company's principal risks
and uncertainties are set out in the table below.
Risk Mitigation and management
Strategic
The Company's investment objectives Appropriateness of the Company's
may become out of line with investment remit periodically reviewed
the requirements of investors, and success of the Company in meeting
resulting in a wide discount its stated objectives is monitored.
of the share price to underlying
NAV per share. Share price relative to NAV per
share monitored and use of buy
back authorities considered on
a regular basis.
Marketing and distribution activity
is actively reviewed.
The Company's cost base could Ongoing competitiveness of all
become uncompetitive, particularly service provider fees subject to
in light of open ended alternatives. periodic benchmarking against competitors.
Annual consideration of management
fee levels.
Investment management
Review of: the Manager's compliance
The Manager's investment strategy, with agreed investment restrictions,
if inappropriate, may result investment performance and risk
in the Company underperforming against investment objectives and
the market and/or peer group strategy; relative performance;
companies, leading to the Company the portfolio's risk profile; and
and its objectives becoming appropriate strategies employed
unattractive to investors. to mitigate any negative impact
of substantial changes in markets.
Annual review of the ongoing suitability
of the Manager.
Regular meetings with major shareholders
to seek their views with respect
to company matters, including the
five-yearly continuation vote.
Financial and currency
The Company is exposed to the Risk profile of the portfolio considered
effect of market fluctuations and appropriate strategies to mitigate
due to the nature of its business. any negative impact of substantial
A significant fall in regional changes in markets or currency
equity markets or a substantial discussed with the Manager.
currency fluctuation could have
an adverse impact on the market The Company has no formal policy
value of the Company's investments. of hedging currency risk but may
use foreign currency borrowings
or forward foreign currency contracts
to limit exposure.
Custody
Safe custody of the Company's Depositary reports on safe custody
assets may be compromised through of the Company's assets, including
control failures by the Depositary, cash and portfolio holdings, independently
including cyber hacking. reconciled with the Manager's records.
Review of audited internal controls
reports covering custodial arrangements.
Annual report from the Depositary
on its activities, including matters
arising from custody operations.
Gearing and leverage
The Company utilises credit Gearing is monitored and strict
facilities. These arrangements restrictions on borrowings imposed:
increase the funds available gearing continues to operate within
for investment through borrowing. pre-agreed limits so as not to
While this has the potential exceed 20% of shareholders' funds.
to enhance investment returns
in rising markets, in falling
markets the impact could be
detrimental to performance.
Accounting, legal and regulatory
In order to continue to qualify Confirmation of compliance with
as an investment trust, the relevant laws and regulations by
Company must comply with the key service providers.
requirements of Section 1158
of the Corporation Tax Act 2010. Shareholder documents and announcements,
including the Company's published
Breaches of the UK Listing Rules, Annual Report, subject to stringent
the Companies Act or other regulations review processes.
with which the Company is required
to comply, could lead to a number Procedures established to safeguard
of detrimental outcomes. against disclosure of inside information.
Service provider
The Company has no employees Service providers appointed subject
and has delegated certain functions to due diligence processes and
to a number of service providers. with clearly-documented contractual
Failure of controls, including arrangements detailing service
as a result of cyber hacking, expectations.
and poor performance of any
service provider, could lead Regular reporting by key service
to disruption, reputational providers and monitoring of the
damage or loss. quality of services provided.
Review of annual audited internal
controls reports from key service
providers, including confirmation
of business continuity arrangements
and IT controls.
Risk assessment and internal controls
Risk assessment includes consideration of the scope and quality
of the systems of internal control operating within key service
providers, and ensures regular communication of the results of
monitoring by such providers to the Audit Committee, including the
incidence of significant control failings or weaknesses that have
been identified at any time and the extent to which they have
resulted in unforeseen outcomes or contingencies that may have a
material impact on the Company's performance or condition. No
significant control failings or weaknesses were identified from the
Audit Committee's ongoing risk assessment which has been in place
throughout the financial year and up to the date of the 2017 Annual
Report.
A full analysis of the financial risks facing the Company is set
out in note 19 on pages 42 to 47 of the 2017 Annual Report.
Viability statement
The Directors have assessed the viability of the Company over a
five year period, taking into account the Company's position at 30
September 2017 and the potential impacts of the principal risks and
uncertainties it faces for the review period.
This period has been chosen as the Board believes that this
reflects a suitable time horizon for strategic planning, taking
into account the investment policy, liquidity of investments,
potential impact of economic cycles, nature of operating costs,
dividends and availability of funding.
In its assessment of the viability of the Company, the Directors
have considered each of the Company's principal risks and
uncertainties detailed on pages 13 and 14 of the 2017 Annual Report
and in particular the impact of a significant fall in regional
equity markets on the value of the Company's investment portfolio.
The Directors have also considered the Company's income and
expenditure projections and the fact that the Company's investments
comprise readily realisable securities which can be sold to meet
funding requirements if necessary and on that basis consider that
five years is an appropriate time period.
Based on the Company's processes for monitoring operating costs,
the Board's view that the Manager has the appropriate depth and
quality of resource to achieve superior returns in the longer term,
the portfolio risk profile, limits imposed on gearing, counterparty
exposure, liquidity risk and financial controls, the Directors have
concluded that there is a reasonable expectation that the Company
will be able to continue in operation and meet its liabilities as
they fall due over the five year period of their assessment.
Going concern
Having assessed the principal risks and the other matters
discussed in connection with the viability statement set out above,
and the "Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting" published by the Financial
Reporting Council in 2014, the Directors consider it appropriate to
adopt the going concern basis in preparing the accounts.
By Order of the Board
Schroder Investment Management Limited
Company Secretary
6 December 2017
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report,
the Strategic Report, the Report of the Directors, the Corporate
Governance Statement, the Remuneration Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising Financial Reporting Standard (FRS)
102 "The Financial Reporting Standard applicable in the UK and
Republic of Ireland" and applicable law). Under company law the
Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Company and of the return or loss of the Company for
that period. In preparing these financial statements, the Directors
are required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and accounting estimates that are reasonable and prudent;
- state whether applicable UK Accounting Standards, comprising
FRS 102, have been followed, subject to any material departures
disclosed and explained in the financial statements;
- notify the Company's shareholders in writing about the use of
disclosure exemptions in FRS 102, used in the preparation of the
financial statements; and
- prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements and the Remuneration Report comply with
the Companies Act 2006. They are also responsible for safeguarding
the assets of the Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Manager is responsible for the maintenance and integrity of
the webpage dedicated to the Company. Legislation in the United
Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Each of the Directors, whose names and functions are listed on
pages 16 and 17 of the 2017 Annual Report, confirm that to the best
of their knowledge:
- the financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable law),
give a true and fair view of the assets, liabilities, financial
position and net return of the Company;
- the Strategic Report contained in the Report and Accounts
includes a fair review of the development and performance of the
business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces;
and
- the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Company's position and performance,
business model and strategy.
On behalf of the Board
Nicholas Smith
Chairman
6 December 2017
Income Statement
for the year ended 30 September 2017
2017 2016
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------- -------- --------- --------- ------- --------- ---------
Gains on investments held at fair value through
profit or loss - 139,076 139,076 - 186,860 186,860
Gains on derivative contracts - - - - 163 163
Net foreign currency gains/(losses) - 1,714 1,714 - (3,664) (3,664)
Income from investments 18,464 86 18,550 15,232 220 15,452
Other interest receivable and similar income 15 - 15 1 - 1
------------------------------------------------- -------- --------- --------- ------- --------- ---------
Gross return 18,479 140,876 159,355 15,233 183,579 198,812
Investment management fee (6,320) - (6,320) (5,006) - (5,006)
Administrative expenses (878) - (878) (855) - (855)
------------------------------------------------- -------- --------- --------- ------- --------- ---------
Net return before finance costs
and taxation 11,281 140,876 152,157 9,372 183,579 192,951
Finance costs (545) - (545) (304) - (304)
------------------------------------------------- -------- --------- --------- ------- --------- ---------
Net return on ordinary activities
before taxation 10,736 140,876 151,612 9,068 183,579 192,647
Taxation on ordinary activities (1,199) (11) (1,210) (1,028) (162) (1,190)
------------------------------------------------- -------- --------- --------- ------- --------- ---------
Net return on ordinary activities after taxation 9,537 140,865 150,402 8,040 183,417 191,457
------------------------------------------------- -------- --------- --------- ------- --------- ---------
Return per share 5.69p 84.06p 89.75p 4.77p 108.78p 113.55p
The "Total" column of this statement is the profit and loss
account of the Company. The "Revenue" and "Capital" columns
represent supplementary information prepared under guidance issued
by The Association of Investment Companies. The Company has no
recognised gains and losses other than those included in the Income
Statement and Statement of Changes in Equity.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
in the year.
Statement of Changes in Equity
for the year ended 30 September 2017
Called-up Capital Warrant Share
share Share redemption exercise purchase Capital Revenue
capital premium reserve reserve reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- -------- ----------- --------- --------- --------- -------- --------
At 30 September 2015 16,923 100,956 3,221 8,704 36,301 304,540 7,225 477,870
Repurchase and cancellation
of
the Company's own
shares (143) - 143 - (3,905) - - (3,905)
Net return on ordinary
activities - - - - - 183,417 8,040 191,457
Dividend paid in the
year - - - - - - (7,101) (7,101)
---------------------------- --------- -------- ----------- --------- --------- --------- -------- --------
At 30 September 2016 16,780 100,956 3,364 8,704 32,396 487,957 8,164 658,321
Repurchase and cancellation
of
the Company's own
shares (23) - 23 - (821) - - (821)
Net return on ordinary
activities - - - - - 140,865 9,537 150,402
Dividend paid in the
year - - - - - - (7,960) (7,960)
---------------------------- --------- -------- ----------- --------- --------- --------- -------- --------
At 30 September 2017 16,757 100,956 3,387 8,704 31,575 628,822 9,741 799,942
---------------------------- --------- -------- ----------- --------- --------- --------- -------- --------
Statement of Financial Position
at 30 September 2017
2017 2016
GBP'000 GBP'000
Fixed assets
Investments held at fair value through profit or loss 836,358 661,405
Current assets
Debtors 1,009 1,654
Cash at bank and in hand 7,213 18,196
------------------------------------------------------ -------- --------
8,222 19,850
------------------------------------------------------ -------- --------
Current liabilities
Creditors: amounts falling due within one year (44,638) (22,934)
------------------------------------------------------ -------- --------
Net current liabilities (36,416) (3,084)
------------------------------------------------------ -------- --------
Total assets less current liabilities 799,942 658,321
------------------------------------------------------ -------- --------
Net assets 799,942 658,321
------------------------------------------------------ -------- --------
Capital and reserves
Called-up share capital 16,757 16,780
Share premium 100,956 100,956
Capital redemption reserve 3,387 3,364
Warrant exercise reserve 8,704 8,704
Share purchase reserve 31,575 32,396
Capital reserves 628,822 487,957
Revenue reserve 9,741 8,164
------------------------------------------------------ -------- --------
Total equity shareholders' funds 799,942 658,321
------------------------------------------------------ -------- --------
Net asset value per share 477.38p 392.33p
These accounts were approved and authorised for issue by the
Board of Directors on 6 December 2017 and signed on its behalf
by:
Nicholas Smith
Chairman
Notes to the Accounts
1. Accounting policies
Basis of accounting
The accounts are prepared in accordance with the Companies Act
2006, United Kingdom Generally Accepted Accounting Practice ("UK
GAAP"), in particular in accordance with Financial Reporting
Standard (FRS) 102 "The Financial Reporting Standard applicable in
the UK and Republic of Ireland", and with the Statement of
Recommended Practice "Financial Statements of Investment Trust
Companies and Venture Capital Trusts" (the "SORP") issued by the
Association of Investment Companies in November 2014 and updated in
January 2017. All of the Company's operations are of a continuing
nature. The accounts have been prepared on a going concern basis
under the historical cost convention, as modified by the
revaluation of investments held at fair value through profit or
loss. The accounts are presented in sterling and amounts have been
rounded to the nearest thousand. The accounting policies applied to
the 2017 accounts are consistent with those applied in the accounts
for the year ended 30 September 2016.
2. Taxation on ordinary activities
Analysis of tax charge for the year
2017 2016
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ------- ------- ------- ------- ------- -------
Irrecoverable overseas withholding
tax 1,199 - 1,199 1,028 - 1,028
Overseas capital gains tax - 11 11 - 162 162
----------------------------------- ------- ------- ------- ------- ------- -------
Taxation on ordinary activities 1,199 11 1,210 1,028 162 1,190
----------------------------------- ------- ------- ------- ------- ------- -------
The Company has no corporation tax liability for the year ended
30 September 2017 (2016: nil).
3. Dividends
2017 2016
GBP'000 GBP'000
--------------------------------------------------------------- ------- -------
2016 final dividend of 4.75p (2015: 4.20p) paid out of revenue
profits 7,960 7,101
--------------------------------------------------------------- ------- -------
2017 2016
GBP'000 GBP'000
--------------------------------------------------------------- ------- -------
2017 final dividend proposed of 5.60p (2016: 4.75p) to be paid
out of revenue profits 9,384 7,970
--------------------------------------------------------------- ------- -------
4. Return per share
2017 2016
GBP'000 GBP'000
------------------------------------- ----------- -----------
Revenue return 9,537 8,040
Capital return 140,865 183,417
------------------------------------- ----------- -----------
Total return 150,402 191,457
------------------------------------- ----------- -----------
Weighted average number of shares in
issue during the year 167,581,798 168,605,440
Revenue return per share 5.69 p 4.77 p
Capital return per share 84.06 p 108.78 p
------------------------------------- ----------- -----------
Total return per share 89.75 p 113.55 p
------------------------------------- ----------- -----------
5. Called-up share capital
2017 2016
GBP'000 GBP'000
--------------------------------------------------- ------- -------
Ordinary share allotted, called up and fully
paid:
Ordinary shares of 10p each:
Opening balance of 167,795,716 (2016:169,225,719)
shares 16,780 16,923
Repurchase and cancellation of 225,000 (2016:
1,430,000) shares (23) (143)
--------------------------------------------------- ------- -------
Closing balance of 167,570,716 (2016: 167,795,716)
shares 16,757 16,780
--------------------------------------------------- ------- -------
6. Net asset value per share
2017 2016
-------------------------------------------- ----------- -----------
Net assets attributable to the shareholders
(GBP'000) 799,942 658,321
Shares in issue at the year end 167,570,716 167,795,716
-------------------------------------------- ----------- -----------
Net asset value per share 477.38 p 392.33 p
-------------------------------------------- ----------- -----------
7. Disclosures regarding financial instruments measured at fair value
The Company's financial instruments within the scope of FRS 102
that are held at fair value comprise its investment portfolio.
No derivative financial instruments were held at the year end
(2016: nil).
FRS 102 requires financial instruments to be categorised into a
hierarchy consisting of the three levels below. Note that the
criteria used to categorise investments include an amendment to
paragraph 34.22 of FRS 102, issued by the Financial Reporting
Council in March 2016, and which the Company has early adopted.
Level 1 - valued using quoted prices in active markets.
Level 2 - valued by reference to valuation techniques using
observable inputs other than quoted market prices included within
Level 1.
Level 3 - valued by reference to valuation techniques using
inputs that are not based on observable market data.
Categorisation within the hierarchy has been determined on the
basis of the lowest level input that is significant to the fair
value measurement of the relevant asset.
Details of the valuation techniques used by the Company are
given in note 1(b) on page 35 of the 2017 Annual Report.
At 30 September 2017, the Company's investments were all
categorised in Level 1 (2016: same).
There have been no transfers between Levels 1, 2 or 3 during the
year (2016: nil).
8. Status of announcement
2016 Financial Information
The figures and financial information for 2016 are extracted
from the published Annual Report and Accounts for the year ended 30
September 2016 and do not constitute the statutory accounts for
that year. The 2016 Annual Report and Accounts have been delivered
to the Registrar of Companies and included the Report of the
Independent Auditors which was unqualified and did not contain a
statement under either section 498(2) or section 498(3) of the
Companies Act 2006.
2017 Financial Information
The figures and financial information for 2017 are extracted
from the Annual Report and Accounts for the year ended 30 September
2017 and do not constitute the statutory accounts for the year. The
2017 Annual Report and Accounts include the Report of the
Independent Auditors which is unqualified and does not contain a
statement under either section 498(2) or section 498(3) of the
Companies Act 2006. The 2017 Annual Report and Accounts will be
delivered to the Registrar of Companies in due course.
Neither the contents of the Company's webpages nor the contents
of any website accessible from hyperlinks on the Company's webpages
(or any other website) is incorporated into, or forms part of, this
announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FSEFMMFWSEIE
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December 07, 2017 02:00 ET (07:00 GMT)
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