SANDITON INVESTMENT TRUST PLC
Annual Results for the year ended to
30 June 2018
Financial Highlights
|
As at
30 June 2018 |
As at
30 June 2017 |
Total shareholders’ funds
(£000) |
£45,981 |
£50,242 |
NAV per ordinary share (cum
income) |
91.96p |
100.48p |
Share price |
82.00p |
97.40p |
Discount to net asset value per
share |
-10.8% |
-3.1% |
Dividends per ordinary share |
0.50p |
0.90p |
Ongoing charges |
1.29% |
1.21% |
Performance Highlights
Total Return Performance |
Year ended
30 June 2018 |
Year ended
30 June 2017 |
NAV per ordinary share (including
dividend) |
-7.6% |
-3.6% |
Share price |
-15.8% |
-8.5% |
Hurdle rate (RPIX + 2%) |
+5.4% |
+5.8% |
FTSE All-Share Index (Total
Return) |
+9.0% |
+18.1% |
RPIX |
+3.4% |
+3.8% |
Commenting on the results, the
Chairman, Rupert Barclay said:
Performance
This has not been a successful financial year for your Company.
Most of the damage was done in the first half of the financial year
when your Company lost 7% and whilst it looked like we were
recovering some lost ground up until April as the market succumbed
to profit taking, the sharp equity rally throughout the second
quarter of 2018 brought that recovery to a halt. Your Company’s net
asset value (NAV) lost a further 0.55% in the last six months to
finish the year down 8.5%, (7.6% including the dividend of 0.9p
paid in December 2017). Your
Company’s share price fared slightly worse closing the financial
year at 82p, to leave the shares trading at a 10.8% discount to
NAV. Although performance has been disappointing, the Company does
continue to meet its objective of being an asset diversifier, with
a correlation of less than 0.1x to the FTSE All-Share Index since
launch.
The investment manager’s bearishness has, for some time, been
reflected in a portfolio with low or negative net market exposure
and with a portfolio biased towards defensive over cyclical assets
and value over growth stocks. The manager has finished the period
with the most extreme net short position your Company has run with.
If the manager is right that tightening monetary conditions in the
US and slowing Chinese growth will put pressure on the earnings
backdrop for corporates, we hope that his patience is rewarded with
improved returns.
The portfolio’s bias to value companies has ensured there is
surplus income to distribute despite the portfolio running with a
net short position for the majority of the year. The Board is
pleased to recommend a dividend of 0.50p per share to be paid to
shareholders on the register at the ex-dividend date of
November 22nd.
Stake in Sanditon Asset Management
At the end of June 2018 Sanditon
Asset Management (SAM) had assets under management (AUM) of £579
million, a decrease of just under 1% since the end of 2017, but 1%
higher than the end of March 2018
(SAM’s financial year end). I highlighted last time that the Board
would review the valuation methodology we use to value your
Company’s stake in SAM knowing that SAM’s profits for the year to
March 2019 were going to be affected
by increased MiFID II costs.
In the event, we have decided to stick with our valuation
formula of a simple average of 1% of AUM and 5x after tax profits,
as we deem it to be a fairly conservative valuation approach. This
resulted in a diminution in value of nearly 6% in the carrying
value of SIT’s 20% stake in SAM to £1.46m (giving an overall value
for SAM of £7.31m) and impacted SIT’s NAV by a modest 0.1% after
offsetting the annual dividend received from SAM of £40,000.
On current forecasts, as a result of lower average AUM and
increased MiFID II costs, the next valuation is likely to lead to a
further diminution in value, unless SAM’s AUM picks up either
because of market performance or an improvement in investor flows.
SAM’s cash position at its financial year end (31 March 2018) of £4.55m gives solid backing to
the valuation in SIT’s books.
Charges and fees
Our total ongoing charges at 30 June
2018 were 1.3% per annum. No performance fees have been paid
or accrued.
Share buy back
The Board, having considered the merits of instituting a share
buy back, continue to believe that it would not be in the interests
of all shareholders. Therefore we will not be seeking permission to
buy back shares at the AGM. Shareholders are reminded that your
Company has a continuation vote in December
2020.
Outlook
Your portfolio has proved itself to be inversely correlated with
the UK equity market in the last 18 months and given its current
bearish positioning, it should continue to be. Increasing trade
tensions, a strong US dollar pressuring emerging markets and a
slowing Chinese economy which has helped push the Chinese market
into bear market territory, let alone the uncertainties surrounding
Brexit, certainly give grounds for caution.
Principal risks associated with the
Company (also see note 18 on pages 38 to 44 of the Annual
Report).
Investment and strategy risk
The Board regularly reviews the investment mandate and long-term
investment strategy in relation to the market and economic
conditions. The Board also regularly monitors the Company’s
investment performance against the objective to deliver at least 2%
return above inflation, and monitors its compliance with the
investment guidelines.
Accounting, legal and regulatory
risk
In order to qualify as an investment trust, the Company must
comply with the provisions contained in Section 1158 of the
Corporation Taxes Act 2010. A breach of Section 1158 in an
accounting period could lead to the Company being subject to
corporation tax on gains realised in that accounting period.
Section 1158 qualification criteria are monitored by the Investment
Manager and any adverse results reported to the Board at its
regular meetings. The Company must also comply with the Companies
Act and the UKLA Listing Rules. The Board relies on the services of
the administrator, Northern Trust Global Services PLC and its
professional advisers to ensure compliance with the Companies Act
and the UKLA Listing Rules.
Loss of investment team or Investment
Manager (SAM)
A sudden departure of the lead Investment manager or several
members of the investment management team or a change in Investment
Manager could result in a deterioration in investment performance.
The Investment Manager reports to the Board on developments at SAM
including succession and business continuity plans.
Discount
A disproportionate widening of the discount relative to the
Company’s peers could result in loss of value for shareholders.
The Board undertakes a regular review of the level of
premium/discount and consideration is given to ways in which share
price performance may be enhanced, including the effectiveness of
marketing.
Operational risk
Like most other investment trust companies, the Company has no
employees and therefore relies upon the services provided by third
parties and is dependent on the control systems of the Investment
Manager, the Custodian, the Administrator and the Company’s other
service providers. The security, for example, of the Company’s
assets, dealing procedures, accounting records and maintenance of
regulatory and legal requirements, depend on the effective
operation of these systems. The Custodian and the Administrator
produce reports on their internal controls which are reviewed by
their auditors and give assurance regarding the effective operation
of controls. These reports are reviewed by the Board. Details of
material contracts entered into by the Company can be found on
pages 15 and 16 of the Annual Report.
Financial risk
The financial risks faced by the Company are disclosed in note
18 on pages 38 to 44 of the Annual Report.
The Board considers these risks to have remained unchanged
throughout the year under review.
Statement under the Disclosure &
Transparency Rules 4.1.12
The Directors each confirm to the best of their knowledge
that:
a) the financial statements, prepared in accordance with
applicable accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Company; and
b) the Strategic Report contained in the Annual Report includes
a fair review of the development and performance of the business
and the position of the Company, together with a description of the
principal risks and uncertainties that it faces.
The 2016 UK Corporate Governance Code also requires Directors to
ensure that the Annual Report and financial statements are fair,
balanced and understandable. In order to reach a conclusion on this
matter, the Board has requested that the Audit Committee advise on
whether it considers that the Annual Report and financial
statements fulfil these requirements. The process by which the
Committee has reached these conclusions are set out in the Audit
Committee’s report on pages 19 and 20 of the Annual Report. As a
result, the Board has concluded that the Annual Report and
financial statements for the year ended 30
June 2018, taken as a whole, are fair, balanced and
understandable, and provide the information necessary for
shareholders to assess the Company’s performance, business model
and strategy.
For and on behalf of the Board
Rupert Barclay
Chairman
21 September 2018
Portfolio as at 30 June
2018
Country Breakdown (% of
NAV)* |
Long |
Short |
Net |
Gross |
France |
0.0 |
-2.7 |
-2.7 |
2.7 |
Germany |
0.0 |
-2.9 |
-2.9 |
2.9 |
Italy |
0.0 |
-4.6 |
-4.6 |
4.6 |
Netherlands |
5.5 |
0.0 |
5.5 |
5.5 |
United Kingdom |
31.8 |
-55.4 |
-23.6 |
87.2 |
Total |
______
37.3
====== |
______
-65.6
====== |
______
-28.3
====== |
______
102.9
====== |
Business Cycle Groupings (% of
NAV)* |
Long |
Short |
Net |
Gross |
Commodity Cyclical |
1.1 |
0.0 |
1.1 |
1.1 |
Consumer Cyclical |
6.2 |
-2.9 |
3.3 |
9.1 |
Industrial Cyclical |
1.5 |
-13.1 |
-11.6 |
14.6 |
Growth |
0.0 |
-23.6 |
-23.6 |
23.6 |
Financial |
6.1 |
0.0 |
6.1 |
6.1 |
Growth Defensive |
9.9 |
-6.1 |
3.8 |
16.0 |
Value Defensive |
12.5 |
0.0 |
12.5 |
12.5 |
FTSE 100 Future |
0.0 |
-19.9 |
-19.9 |
19.9 |
Total |
______
37.3
====== |
______
-65.6
====== |
______
-28.3
====== |
______
102.9
====== |
Long Positions (% of
NAV)** |
% |
TM Sanditon UK Select Fund |
10.1 |
RELX |
5.4 |
ITV |
5.1 |
Babcock International |
4.4 |
Diageo |
4.4 |
Vodafone |
3.7 |
Sanditon Asset Management |
3.2 |
Aviva |
2.7 |
HSBC |
2.6 |
J Sainsbury |
1.7 |
Melrose Industries |
1.5 |
Capita |
1.4 |
BT |
1.2 |
Greene King |
1.1 |
Ophir Energy |
1.0 |
Man Group |
0.8 |
Total |
________
50.3***
======== |
|
|
Total number of positions (long
and short)** |
33 |
* Excluding holdings in Sanditon Asset Management and TM
Sanditon UK Select Fund
** Including holdings in Sanditon Asset Management and TM
Sanditon UK Select Fund
*** The long positions are presented based on the notional value
of CFD holdings and the actual value of equity holdings
Income Statement
for the year ended 30 June 2018
|
|
Year
ended
30 June 2018 |
Year
ended
30 June 2018 |
Year
ended
30 June 2018 |
Year
ended
30 June 2017 |
Year
ended
30 June 2017 |
Year
ended
30 June 2017 |
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
Notes |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
Losses on investments held at fair
value through profit or loss |
|
– |
(3,895) |
(3,895) |
– |
(2,116) |
(2,116) |
Income |
2 |
682 |
– |
682 |
874 |
– |
874 |
Management fee |
3 |
(88) |
(263) |
(351) |
(96) |
(291) |
(387) |
Other expenses |
4 |
(253) |
– |
(253) |
(235) |
– |
(235) |
Return on ordinary activities
before taxation |
|
341 |
(4,158) |
(3,817) |
543 |
(2,407) |
(1,864) |
Taxation on ordinary activities |
|
(24) |
30 |
6 |
(45) |
40 |
(5) |
Return for the year |
|
______
317
====== |
______
(4,128)
====== |
______
(3,811)
====== |
______
498
====== |
______
(2,367)
====== |
______
(1,869)
====== |
|
|
|
|
|
|
|
|
Return per Ordinary Share
(pence): |
8 |
0.63 |
(8.26) |
(7.63) |
0.99 |
(4.73) |
(3.74) |
The total column of this statement is the profit and loss
account of the Company. All the revenue and capital items in the
above statement derive from continuing operations.
The supplementary revenue and capital columns are both prepared
under guidance from the Association of Investment Companies.
There is no other comprehensive income and therefore the return
for the year is also the total comprehensive income for the
year.
Statement of Financial Position
as at 30 June
2018
|
|
30 June
2018 |
30 June
2017 |
|
Notes |
£000 |
£000 |
Fixed assets |
|
|
|
Investments held at fair value
through profit or loss |
|
10,314 |
15,899 |
|
|
|
|
Current assets |
|
|
|
Debtors |
|
189 |
165 |
Amounts due in respect of contracts
for difference |
|
1,239 |
1,907 |
Collateral paid in respect of
contracts for difference |
|
10,006 |
9,633 |
UK Treasury Bills |
|
21,122 |
18,988 |
Cash at bank |
|
9,247 |
8,981 |
Total current assets |
|
41,803 |
39,674 |
|
|
|
|
Current liabilities |
|
|
|
Creditors |
|
(2,102) |
(114) |
Amounts payable in respect of
contracts for difference |
|
(4,034) |
(5,217) |
Total current
liabilities |
|
(6,136) |
(5,331) |
Net current assets |
|
35,667 |
34,343 |
|
|
|
|
Total assets less current
liabilities |
|
45,981 |
50,242 |
Net assets |
|
45,981 |
50,242 |
|
|
|
|
Capital and reserves |
|
|
|
Share capital |
6 |
500 |
500 |
Share premium |
|
48,872 |
48,872 |
Capital reserve |
|
(3,823) |
305 |
Revenue reserve |
|
432 |
565 |
Total shareholders’
funds |
|
______
45,981
====== |
______
50,242
====== |
|
|
|
|
Net asset value per share –
Ordinary Share (pence) |
|
91.96 |
100.48 |
Statement of Changes in Equity
for the year ended 30 June 2018
|
|
Share
Capital |
Share
Premium
Account |
Capital
Reserve |
Revenue
Reserve |
Total |
For the year ended 30 June
2018 |
Notes |
£000 |
£000 |
£000 |
£000 |
£000 |
Balance at 1 July 2017 |
|
500 |
48,872 |
305 |
565 |
50,242 |
Return for the year |
|
– |
– |
(4,128) |
317 |
(3,811) |
Dividends paid |
5 |
– |
– |
– |
(450) |
(450) |
Balance at 30 June 2018 |
|
______
500
====== |
______
48,872
====== |
______
(3,823)
====== |
______
432
====== |
______
45,981
====== |
|
|
Share
Capital |
Share
Premium
Account |
Capital
Reserve |
Revenue
Reserve |
Total |
For the year ended 30 June 2017 |
|
£000 |
£000 |
£000 |
£000 |
£000 |
Balance at 1 July 2016 |
|
500 |
48,872 |
2,672 |
617 |
52,661 |
Return for the year |
|
– |
– |
(2,367) |
498 |
(1,869) |
Dividends paid |
|
– |
– |
– |
(550) |
(550) |
|
|
|
|
|
|
|
Balance at 30 June 2017 |
|
______
500
====== |
______
48,872
====== |
______
305
====== |
______
565
====== |
______
50,242
====== |
Cash Flow Statement
for the year ended 30 June 2018
|
Year
ended
30 June
2018 |
Year
ended
to 30 June
2017 |
|
£000 |
£000 |
Return on ordinary activities
before taxation* |
(3,817) |
(1,864) |
Capital return before finance costs
and taxation |
4,158 |
2,407 |
Increase in debtors |
(24) |
(66) |
Increase/(decrease) in other
creditors |
1,988 |
(33) |
Investment management fee
capitalised |
(263) |
(291) |
Net movement in collateral pledged
to broker |
(373) |
673 |
Losses on futures and CFDs realised
during the period |
(3,130) |
(3,867) |
Decrease in amounts due in respect
of CFDs |
668 |
559 |
(Decrease)/increase in amounts
payable in respect of CFDs |
(1,183) |
1,509 |
Overseas tax recovered/(paid) |
6 |
(5) |
Net cash outflow from operating
activities |
______
(1,970)
====== |
______
(978)
====== |
|
|
|
Cashflow from investing
activities |
|
|
Purchases of investments |
(1,734) |
(5,941) |
Sales of investments |
6,554 |
4,048 |
Net cashflow provided by/(used
in) investing activities |
4,820 |
(1,893) |
Net cash inflow/(outflow) before
financing activities |
______
4,820
====== |
______
(1,893)
====== |
|
|
|
Cashflow from financing
activities |
|
|
Equity dividends paid |
(450) |
(550) |
Net cash outflow from financing
activities |
(450) |
(550) |
Increase/(decrease) in cash and
cash equivalents |
______
2,400
====== |
______
(3,421)
====== |
|
|
|
Cash and cash equivalents at the
start of the year |
27,969 |
31,390 |
Cash and cash equivalents at the end
of the year |
30,369 |
27,969 |
|
|
|
Comprised of: |
|
|
UK Treasury Bills |
21,122 |
18,988 |
Cash at bank |
9,247 |
8,981 |
Cash and cash equivalents at the
end of the year |
______
30,369
====== |
______
27,969
====== |
*Cash inflow from dividends was £617,000 (2017: £772,000) and
cash inflow from interest was £68,000 (2017: £60,000).
Notes to the Financial Statements
for the year ended 30 June 2018
1. ACCOUNTING POLICIES
A summary of the principal accounting policies is set out
below:
(a) Basis of accounting
The financial statements have been prepared under the historical
cost convention as modified to include the revaluation of
investments and in accordance with applicable UK Accounting
Standards and with the Statement of Recommended Practice “Financial
Statements of Investment Trust Companies and Venture Capital
Trusts” issued by the Association of Investment Companies (issued
November 2014 and updated in
February 2018).
The financial statements have been prepared in accordance with
FRS 102 (“the Financial Reporting Standard applicable in the UK and
Republic of Ireland” issued by the Financial Reporting
Council).
They have also been prepared on the assumption that approval as
an investment trust will continue to be granted. The Directors
consider that the Company has adequate resources to enable it to
continue in operational existence for the foreseeable future.
Accordingly, the Directors believe that it is appropriate to adopt
the going concern basis in preparing the Company’s financial
statements.
2. INCOME
|
Year
ended
30 June 2018 |
Year
ended
30 June 2017 |
|
£000 |
£000 |
Income from investments |
|
|
UK franked dividends |
183 |
328 |
UK treasury bills interest |
50 |
46 |
Income from contracts for
difference |
411 |
458 |
Other income |
38 |
42 |
|
_____
682
===== |
_____
874
===== |
3. INVESTMENT MANAGEMENT FEE
|
Year
ended
30 June 2018 |
Year
ended
30 June 2017 |
|
£000 |
£000 |
Basic fee: |
|
|
25% charged to revenue |
88 |
96 |
75% charged to capital |
263 |
291 |
|
____
351
==== |
____
387
==== |
|
|
|
Performance fee charged 100% to
capital: |
|
|
Performance fee accrual |
– |
– |
|
____
–
==== |
____
–
==== |
The Company’s investment manager is Sanditon Asset Management
Limited (the “Manager”). The Manager shall be entitled to receive
from the Company in respect of its services provided under the
Management Agreement, a management fee accrued daily and payable
monthly in arrears calculated at the rate of one-twelfth of 0.75
per cent per calendar month of the Company’s Net Asset Value. In
accordance with the Directors’ policy on the allocation of expenses
between income and capital, in each financial period 75 per cent of
the management fee payable is expected to be charged to capital and
the remaining 25 per cent to revenue.
The Manager is also entitled to a performance fee which equals
15 per cent of the amount by which the Reference Amount at the end
of a Performance Period exceeds the higher of (a) the Hurdle (the
“Hurdle” means the Initial Gross Proceeds adjusted for the total
amount of any dividends paid or payable) increased by RPIX plus 2
per cent per annum, compounded annually (on a pro-rata basis where
applicable) and (b) the High Watermark (the “High Watermark” means,
as at the end of the relevant Performance Period, the highest of
(i) the Reference Amount of the previous Performance Period, (ii)
the Reference Amount of the most recent Performance Period in
respect of which a performance fee was paid; and (iii) the Initial
Gross Proceeds; and in each case adjusted for any repurchases by
the Company of Ordinary Shares or any dividends paid or payable
during the relevant Performance Period be multiplied by the time
weighted average of the total number of Shares in issue during that
Performance Period).
The first “Performance Period” is the period from 27 June 2014 (the date of Admission to the London
Stock Exchange) to the end of the Company’s third accounting period
and each subsequent Performance Period begins immediately after the
previous Performance Period and ends at the end of the Company’s
third accounting period thereafter; provided that where the
Management Agreement is terminated the date of such termination
shall be the end of the then current Performance Period.
The Company may invest in other funds operated by the Manager
and where it does the management fee is credited back to the
Company by the Manager and any gain on the funds is excluded from
the performance fee calculation. At 30 June
2018 £35,000 (2017: £42,000) was included within Other
Income (note 2).
4. OTHER EXPENSES
|
Year
ended
30 June 2018 |
Year
ended
30 June 2017 |
|
£000 |
£000 |
Secretarial services and fund
administration fees |
55 |
56 |
Other administration expenses |
24 |
21 |
Registrar’s fees |
14 |
11 |
Printing and postage |
5 |
4 |
Custody fees |
12 |
17 |
Subscription and listing fees |
17 |
17 |
Auditor’s remuneration |
22 |
22 |
Directors’ fees |
94 |
77 |
Irrecoverable VAT |
10 |
10 |
|
____
253
==== |
____
235
==== |
5. DIVIDEND
The dividend relating to the year ended 30 June 2018 which is the basis on which the
requirements of Section 1159 of the Corporation Tax Act 2010 are
considered is detailed below:
|
Year ended
30 June 2018 |
Year ended
30 June 2018 |
Year ended
30 June 2017 |
Year ended
30 June 2017 |
|
Pence
Per
Ordinary Share |
£000 |
Pence
Per
Ordinary Share |
£000 |
Annual dividend – payable on 18
December 2017* |
– |
– |
0.90p |
450 |
Annual dividend – payable on 19
December 2018** |
0.50p |
250 |
– |
– |
*Not included as a liability in the year ended 30 June 2017 accounts.
**Not included as a liability in the year ended 30 June 2018 accounts.
The annual dividend will be paid on 19
December 2018 to members on the register at the close of
business on 23 November 2018. The
shares will be marked ex-dividend on 22
November 2018.
6. SHARE CAPITAL
|
Year ended
30 June 2018 |
Year ended
30 June 2018 |
Year ended
30 June 2017 |
Year ended
30 June 2017 |
|
Number of
Shares |
£000 |
Number of Shares |
£000 |
Allotted, issued & fully
paid: |
|
|
|
|
Opening balance Ordinary Shares of
£0.01 |
50,000,000 |
500 |
50,000,000 |
500 |
|
__________
50,000,000
========== |
____
500
==== |
__________
50,000,000
========== |
____
500
==== |
7. FINANCIAL COMMITMENTS
At 30 June 2018 there were no
commitments in respect of unpaid calls and underwritings (2017:
none).
8. RETURN PER SHARE – BASIC
Total return per Ordinary Share is based on the return for the
year after taxation of £(3,811,000) (year to 30 June 2017: £(1,869,000)).
These calculations are based on the 50,000,000 Ordinary Shares
in issue during the year to 30 June
2018 (year to 30 June 2017:
50,000,000 Ordinary Shares).
The return per Ordinary Share can be further analysed between
revenue and capital as below:
|
Year ended
30 June 2018 |
Year ended
30 June 2018 |
Year ended
30 June 2017 |
Year ended
30 June 2017 |
|
Pence
per share |
£000 |
Pence
per share |
£000 |
Net revenue return |
0.63p |
317 |
0.99p |
498 |
Net capital return |
(8.26)p |
(4,128) |
(4.73)p |
(2,367) |
Net total return |
(7.63)p |
(3,811) |
(3.74)p |
(1,869) |
9.?RELATED PARTY TRANSACTIONS AND
TRANSACTIONS WITH THE INVESTMENT MANAGER
Details of the investment management fee charged by Sanditon
Asset Management Limited is set out in note 3. At 30 June 2018 £11,060 (2017: £11,549) of this fee
remained outstanding after taking into account the £17,216 (2017:
£19,002) to be credited to the Company from Sanditon Asset
Management Limited in relation to the management fee on the
Company’s investment in TM Sanditon UK Select Fund.
Fees paid to the Directors are disclosed in note 4 above. No
fees were outstanding to be paid to the Directors at the year
end.
The Company has an investment in TM Sanditon UK Select Fund of
£4,646,565 at 30 June 2018
(£4,999,500 at 30 June 2017).
The Company has a 20% holding in the Investment Manager,
Sanditon Asset Management Limited.
10. FAIR VALUE MEASUREMENTS OF
FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The financial assets and liabilities are either carried in the
balance sheet at their fair value, or the balance sheet amount is a
reasonable approximation of fair value (due from brokers, dividends
receivable, accrued income, due to brokers, accruals and cash and
cash equivalents).
The valuation techniques used by the Company are explained in
the accounting policies note 1 (b) on page 30 of the Annual
Report.
The table below sets out fair value measurements using fair
value hierarchy.
|
Level 1 |
Level 2 |
Level 3 |
Total |
Financial assets at fair value
through profit or loss at 30 June 2018 |
£000 |
£000 |
£000 |
£000 |
Assets: |
|
|
|
|
Equity investments |
4,207 |
– |
1,461 |
5,668 |
TM Sanditon UK Select
Fund |
– |
4,646 |
– |
4,646 |
Contracts for difference – fair
value gains |
– |
1,239 |
– |
1,239 |
Liabilities: |
|
|
|
|
Contracts for difference – fair
value losses |
– |
(4,034) |
– |
(4,034) |
Total |
______
4,207
====== |
______
1,851
====== |
______
1,461
====== |
______
7,519
====== |
|
Level 1 |
Level 2 |
Level 3 |
Total |
Financial assets at fair value
through profit or loss at 30 June 2017 |
£000 |
£000 |
£000 |
£000 |
Assets: |
|
|
|
|
Equity investments |
9,351 |
– |
1,549 |
10,900 |
TM Sanditon UK Select Fund |
– |
4,999 |
– |
4,999 |
Contracts for difference – fair
value gains |
– |
1,907 |
– |
1,907 |
Liabilities: |
|
|
|
|
Contracts for difference – fair
value losses |
– |
(5,217) |
– |
(5,217) |
Total |
______
9,351
====== |
______
1,689
====== |
______
1,549
====== |
______
12,589
====== |
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 as follows:
Level 1 – valued using quoted prices in active markets for
identical assets.
Level 2 – valued by reference to valuation techniques using
observable inputs including quoted prices.
Level 3 – valued by reference to valuation techniques using
inputs that are not based on observable market data.
Level 3 fair values are determined by the Directors using
valuation methodologies in accordance with the IPEVC Guidelines and
as detailed in note 1(b) of the Annual Report. Significant inputs
include investment cost, the value of the most recent capital
raising, the adjusted net asset value of funds and the Pricing
Committee’s valuations. In accordance with IPEVC Guidelines, new
investments are carried at cost, the price of the most recent
investment being a good indication of fair value. Thereafter, fair
value is the amount deemed to be the price that would be received
upon sale of an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. At
30 June 2018 and at 30 June 2017, the Company’s Level 3 investments
relates to the investment in Sanditon Asset Management Limited. The
Board have agreed the valuation methodology for the Company’s
holding in SAM which it believes to be straightforward,
conservative and fair. The Board has decided to use a simple
average of 1% of SAM’s year end assets under management (“AUM”) and
5x after tax profits (adjusted to exclude any performance fees
earned and any associated staff bonuses paid – SAM pay out a
maximum of 50% of performance fees earned to staff). This resulted
in the Directors approving a reduction in your Company’s holding in
SAM from £1,549,000 to £1,461,151.
A reconciliation of fair value measurements in Level 3 is set
out below.
Level 3 financial
assets at fair value through profit or loss |
As at
30 June 2018
Investments |
|
£000 |
Opening fair value |
1,549 |
Decrease in fair value of investment
in Sanditon Asset Management Limited |
(88) |
Closing fair value |
______
1,461
====== |
Level 3 financial assets at fair
value through profit or loss |
|
|
As
at
30 June 2017
Investments |
|
£000 |
Opening fair value |
1,353 |
Increase in fair value of investment
in Sanditon Asset Management Limited |
196 |
Closing fair value |
______
1,549
====== |
11. PUBLICATION OF NON-STATUTORY
ACCOUNTS
The financial information contained in this announcement does
not constitute statutory accounts as defined in the Companies Act
2006. The 2018 annual report and financial statements will be filed
with the Registrar of Companies shortly.
The report of the Auditor for the year ended 30 June 2018 contains no qualification or
statement under section 498(2) or (3) of the Companies Act 2006.
This announcement was approved by the Board of Directors on
21 September 2018.
12. ANNUAL RESULTS
Copies of the annual report will be sent to members shortly and
will be available from Northern Trust Global Services PLC, 50 Bank
Street, Canary Wharf, London E14
5NT.
13. ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be held at the
offices of Northern Trust, 50 Bank Street, Canary Wharf,
London E14 5NT on Thursday
6 December 2018, at 12:00 p.m.