TIDMAIF TIDMAIFZ
Acorn Income Fund Limited
Half-yearly Condensed Financial Report (unaudited)
For the six months ended 30 June 2015
The Company has today, in accordance with DTR 6.3.5, released its Half-yearly
Condensed Financial Report (unaudited) for the six months ended 30 June 2015.
The Report will shortly be available via the Investment Manager's website
https://www.premierfunds.co.uk/media/712498/
acorn-income-fund-interim-report-2015.pdf and will also be available for
inspection online at www.morningstar.co.uk/uk/NSM website.
Investment Objectives and Policy
Investment Policy
The investment objective and policy of Acorn Income Fund Limited (the
"Company") is to provide Shareholders with high income and also the opportunity
for capital growth.
The Company's investments are held in two portfolios. The Company's assets
comprise investments in equities and fixed interest securities in order to
achieve its investment objective. Approximately 70% to 80% of the Company's
assets are invested in smaller capitalised United Kingdom companies, admitted
to the Official List of the Financial Conduct Authority (the "FCA") and traded
on the London Stock Exchange (the "LSE") or traded on the Alternative
Investment Market ("AIM") at the time of investment. The Company also aims to
enhance income for Ordinary Shareholders by investing approximately 20% to 30%
of the Company's assets in high yielding instruments which are predominantly
fixed interest securities but may include up to 15% of the Company's overall
portfolio (measured at the time of acquisition) in high yielding investment
company shares.
The proportion of the overall portfolio held in the Smaller Companies Portfolio
and the Income Portfolio varies from day to day as the market prices of
investments move. The Directors retain discretion to transfer funds from one
portfolio to the other and generally expect between 70% to 80% of the
investments to be held in the Smaller Companies' Portfolio.
While the Company's investment policy is to spread risk by maintaining
diversified portfolios, there are no restrictions on the proportions of either
of the portfolios which may be invested in any one geographical area, asset
class or industry sector. However, not more than 7.5% of the Company's gross
assets may be invested in securities issued by any one company as at the time
of investment, save that (i) in respect of the Income Portfolio only,
investments may be made in other investment funds subject only to the
restriction set out in paragraph (c) of the section headed "Investment
Restrictions" below; and (ii) in respect of the Smaller Companies Portfolio
only, provided that not more than 10% of the Company's gross assets are
invested in securities issued by any one company at any time, the 7.5% limit
may be exceeded on a short term basis, with Board approval, where a company
whose securities form part of the Smaller Companies Portfolio issues new
securities (for example by way of a rights issue).
The Company's capital structure is such that the underlying value of assets
attributable to the Ordinary Shares is geared relative to the rising capital
entitlements of the ZDP Shares. The Company's gearing policy is not to employ
any further gearing through long-term bank borrowing. Save with the prior
sanction of ZDP Shareholders, the Company will incur no indebtedness other than
short term borrowings in the normal course of business such as to settle share
trades or borrowings to finance the redemption of the ZDP Shares.
Investment Restrictions
For so long as required by the Listing Rules in relation to closed-ended
investment companies, the Company has adopted the following investment and
other restrictions:
a. the Company will at all times invest and manage its assets in a way which
is consistent with its object of spreading investment risk and in
accordance with its published investment policy;
b. the Company will not conduct any significant trading activity; and
c. not more than 10% in aggregate of the value of the total assets of the
Company at the time the investment is made will be invested in other listed
closed-ended investment funds. The Listing Rules provide an exception to
this restriction to the extent that those investment funds have stated
investment policies to invest no more than 15% of their total assets in
other listed closed-ended investment companies.
Derivatives
The Company may invest in derivatives, money market instruments and currency
instruments including contracts for difference, futures, forwards and options.
These investments may be used for hedging positions against movements in, for
example; equity markets, currencies and interest rates. In addition, these
instruments will only be used for efficient portfolio management purposes. The
Company will not use such instruments to engage in trading transactions. The
Company will not maintain derivative positions should the total underlying
exposure of these positions exceed one times adjusted total capital reserves.
Performance Summary
for the six months ended 30 June 2015
30/06/2015 31/12/2014 % change
Total Return Performance*
Total Return on Gross Assets* ## - - 11.92%
Numis Small Company (ex Investment Companies) 17,352.59 15,524.80 11.77%
Index
FTSE All Share Index 5,613.54 5,449.09 3.02%
FTSE Small Cap (ex Investment Companies) Index 5,984.26 5,349.78 11.86%
Share Price and NAV Returns
Ordinary Shares
Share Price 350.00p 305.75p 14.47%
NAV** 384.33p 336.59p 14.18%
IFRS NAV# 382.83p 334.52p 14.44%
Total return on Net Assets* - - 16.28%
Ordinary Share Price Total Return - - 16.80%
Discount (-) Premium (+) to NAV on Ordinary -8.93% -9.16% -
Shares
ZDP Shares
Share Price 131.88p 129.25p 2.03%
NAV** 124.87p 121.01p 3.19%
IFRS NAV 125.25p 121.60p 3.00%
Discount (-) Premium (+) to NAV on ZDP Shares +5.61% +6.81% -
Cover on ZDP Shares 2.80:1 2.66:1 -
Package discount (-) Premium (+) to
NAV Combined Ordinary and ZDP Shares -5.52% -3.96% -
6 months to 6 months to % change
30/6/2015 30/6/2014
Dividends and Earnings
Revenue return per ordinary share 8.14p 7.59p 7.25%
Dividends declared per ordinary share 6.75p 6.25p 8.00%
* assumes dividends reinvested
**NAV calculated in accordance with the Articles
# NAV calculated in accordance with International Financial Reporting
Standards
## adjusted for the issue and buyback of new Ordinary and ZDP Shares
Company Summary
Capital Structure
Bank Loan As at 30 June 2015, the Company had no bank
loans outstanding.
Zero Dividend Preference Shares (1p 20,763,386 (excluding treasury shares).
each)
The ZDP Shares will have a final capital
entitlement of 138 pence per ZDP Share on 31
January 2017 subject to there being
sufficient capital in the Company. The ZDP
Shares are not entitled to any dividends. ZDP
shareholders rank ahead of the ordinary
shareholders in regards to rights as to
capital. The ZDP shareholders have the right
to receive notice of all general meetings of
the Company, but do not have the right to
attend or vote unless the business of the
meeting involves an alteration of the rights
attached to the ZDP Shares, in which case the
holders of ZDP Shares can attend and vote.
Ordinary Shares (1p each) 15,468,332 (excluding treasury shares).
The Ordinary Shares, excluding treasury
shares, are entitled to participate in all
dividends and distributions of the Company.
On a winding-up holders of Ordinary Shares
are entitled to participate in the
distribution and the holders of Ordinary
Shares are entitled to receive notice of and
attend and vote at all general meetings of
the Company.
As at 30 June 2015 there were 1,718,333
Treasury Shares Ordinary and 2,306,546 ZDP Shares held in
treasury.
Shareholder Funds GBP59.22 million as at 30 June 2015.
(calculated in accordance with IFRS)
Market Capitalisation of the Ordinary GBP54.14 million as at 30 June 2015.
Shares
The Board consists of three independent non
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The Board executive directors, Helen Green (Chairman),
Nigel Ward and David Warr (the"Directors").
Premier Asset Management (Guernsey) Limited
("PAMG Ltd"), is a subsidiary of Premier
Asset Management Limited ("PAM Ltd"). PAM Ltd
had approximately GBP3.93 billion of funds
Investment Manager under management as at 30 June 2015. PAMG Ltd
is licensed under the provisions of the
Protection of Investors (Bailiwick of
Guernsey) Law, 1987, as amended, by the
Guernsey Financial Services Commission to
carry on controlled investment business.
Premier Fund Managers Limited ("PFM Ltd") -
Investment Advisers the Company's Income Portfolio is managed by
Paul Smith and Nigel Sidebottom.
Unicorn Asset Management Limited ("Unicorn
Ltd") - the Company's Smaller Companies
Portfolio is managed by Simon Moon and Fraser
Mackersie.
Northern Trust International Fund
Secretary Administration Services (Guernsey) Limited
provide the Company's secretarial and
administrative services.
0.7% per annum (Total Assets) charged 75% to
Management Fee capital and 25% to revenue, plus performance
fee. Minimum annual management fee
GBP100,000.00
Financial Calendar
Company's year end 31 December
Annual results announced April
Annual General Meeting 25 August 2015
Company's half year end 30 June
Half year results announced August
Dividend payments At the end of March, June, September and December
Chairman's Statement and Interim Management Report
30 June 2015
Dear Shareholder,
The final nine months of 2014 had not favoured Acorn as UK small cap stocks
consistently underperformed larger companies. Poor sentiment towards the small
cap sector was reflected in twelve successive months of net outflow from UK
small cap open-ended funds (from April 2014).
2015 has seen a sharp and welcome reversal in this trend which commenced at the
end of the first quarter. Over the first six months of the year small caps
outperformed the broader market by a considerable margin. In the 6 months to
30 June 2015 the FTSE 100 Index (total return) returned just 1.36%. The broader
FTSE All Share Index (total return) generated 3.02% whilst the FTSE Small Cap
(ex Investment Companies) total return Index returned 11.86% and the Numis
Small cap (ex Investment Companies ) total return Index 11.77%.
Investment Commentary
Acorn performed fractionally ahead of the small cap sector indices* despite the
potential drag of the income portfolio against a strongly rising market. Total
return on gross assets over the six months to 30 June 2015 was 11.92%
reflecting excellent relative performance from the Smaller Companies
Portfolio. The leverage on the ordinary shares arising from the zero dividend
preference share capital served to further enhance returns for ordinary
shareholders. NAV total return was 16.28%. A slight narrowing in discount to
net asset value generated a share price total return for ordinary shareholders
of 16.80%. The income portfolio returned approximately 2% and outperformed the
Merrill Lynch Sterling Non Gilts Index which declined 0.76% over the half
year. It is to be expected that against a background of such strong equity
performance the income portfolio will lag returns from the Smaller Companies
Portfolio. The income portfolio fulfilled its function of reducing volatility
and providing a defensive buffer for Acorn.
During the half year the allocation to the Smaller Companies Portfolio was
increased from 75% to 77.5%.
This change in asset allocation reflected our investment advisers' cautious
approach to bond markets given the expectation that interest rates would
eventually be increased and also their belief that the small cap stocks within
Acorn's portfolio represented good value relative to the broader market and had
sound prospects for providing a rising dividend income stream.
Our advisers were more sanguine about the outlook for larger companies which
they considered were fully valued and vulnerable to a correction and with this
in mind we put in place a strategy to provide some protection against a fall in
the broader UK equity market. Protection was taken through a put spread on the
FTSE 100 Index. This enabled Acorn to remain fully exposed to the Smaller
Companies Portfolio whilst neutralising some of the gearing that would be
damaging to net asset value performance in the event of a setback. Acorn
bought a put option on the FTSE 100 Index at an Index level of 7000 (the level
at which the Index was trading at that time) and sold a put option at an Index
level of 6000. Selling the put reduced the cost of the overall transaction but
also limits the return the strategy will generate in a falling market. The
options were taken against GBP7m notional of FTSE 100 exposure at a net cost of GBP
385,000. At the half year end the FTSE 100 Index was trading at around 6600 and
the put spread was in profit. The impact on NAV returns has been relatively
modest but the strategy has served to reduce risk for Acorn investors.
The Zero Dividend Preference (ZDP) shares appreciated in value by 2.03% over
the period and final capital cover on the shares improved.
*FTSE Small cap ex investment companies total return Index and the Numis
Smaller Companies ex investment companies total return Index
Share issuance and buy backs
In the early part of the year while sentiment towards small cap stocks was
still weak Acorn was trading at a discount to asset value and experienced some
selling pressure. During January and February the Company bought back 150,000
ordinary shares and 201,348 ZDPs at a package discount (the discount taking the
ordinary shares and the ZDP shares together). The ordinary shares were bought
at prices ranging from 283p to 306p per share. These buy backs served to help
stabilise the ordinary share price and were enhancing to net asset value for
ordinary shareholders.
As the half year progressed demand for Acorn shares picked up and the ordinary
share discount narrowed. The package discount at 30 June was slightly wider
than at the start of the year due a reduction in the premium to asset value at
which the ZDP shares traded.
Post the period end the Company was able to raise GBP713,000 through a tap issue
of Ordinary Shares and ZDP Shares at a premium to asset value.
Dividends
A first interim dividend of 3.25p was paid on 27 March 2015. The second
interim, paid on 26 June 2015, was increased by 7.7% to 3.50p per ordinary
share. Revenue earnings per share for the half year were 8.14p (7.59p in 2014).
The Alternative Investment Fund Managers Directive (AIFMD)
In January 2015 the Company notified the Financial Conduct Authority that it
was revoking the Article 42 notification that enabled it to market its shares
in the UK under the National Private Placement Regime. As the Company's shares
were trading at a discount to asset value at that time and it was unlikely that
the Company would issue new shares in the immediate future revoking the Article
42 notification saved the additional costs of complying with the reporting
obligations of the regime. In early August 2015 Acorn was trading at asset
value and we were in a position to issue shares again in response to market
demand. We therefore re-submitted an Article 42 notification to the Financial
Conduct Authority.
Outlook
We remain positive with regard to the outlook for UK smaller companies but
cautious with regard to the FTSE 100 index. A strategy of maintaining our
exposure to UK small caps whilst taking a modest short position on the FTSE 100
index was a correct call and contributed to the Ordinary Share NAV rising to
an all time high. Our income portfolio investment adviser remains cautious
regarding the outlook for fixed interest securities and will continue to use
derivatives to shorten duration whilst placing a greater focus on absolute
return investments.
Helen Green
Chairman
25 August 2015
Responsibility Statement
for the period from 1 January 2015 to 30 June 2015
We confirm that to the best of our knowledge:
* the condensed set of financial statements has been prepared in accordance
with International Accounting Standard 34 Interim Financial Reporting;
* the interim management report includes a fair review of the information
required by:
a. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for
the remaining six months of the year; and
b. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the
related party transactions described in the last annual report that could
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do so.
Signed on behalf of the Board by.
Helen Green
Chairman
25 August 2015
Investment Advisers' Reports
The Smaller Companies Portfolio
During the six months to 30th June 2015 the Smaller Companies portfolio
returned 14.5% outperforming the benchmark index, the NSCI (ex IC), which
returned 11.8%.
The Smaller Companies Portfolio initiated positions in five new holdings and
exited seven existing holdings in full during the period under review. In
contrast to prior periods the initial public offerings (IPO) market was subdued
and no new investments were made through IPOs.
It is pleasing to report that after a subdued period of performance during
2014, smaller companies have performed well in the first six months of the year
and valuations are now beginning to catch up with larger quoted peers. The
prospects for the type of companies in which we tend to invest, those offering
a combination of both dividend income and earnings growth, remain highly
compelling.
The new positions initiated during the period have collectively made a positive
impact on performance. These new investments were: FDM Group, an international
provider of trained IT personnel; Palace Capital, a real estate investment
company focussed on UK assets outside of London; Sprue Aegis, a developer of
smoke and carbon monoxide alarms; Jarvis Securities, a retail stockbroking
service provider and Braemar Shipping Services, a provider of ship broking,
technical and logistical services to the marine and energy industries.
Positions in Lookers, Electrocomponents, Premier Farnell, Interserve,
Berendsen, Air Partner, and John Menzies were exited in full. These changes to
the portfolio have also had the desired effect of lowering the average market
capitalisation of the equity portfolio to just over GBP300m.
The strongest contributors to performance during the period came from Acal, the
specialist electrical components distributor, which ended the period 29%
higher; Epwin, the manufacturer of PVC products for the construction industry,
which was up 35%; and Alumasc, the supplier and manufacturer of aluminium
building products, which saw a rise of 37%. It was especially pleasing to see
the portfolio as a whole performing well, with 20 holdings posting double digit
returns.
The largest and only meaningful negative contribution to performance came from
Telecom Plus, which fell by 11% during the period. The group was affected by
lower energy usage during a period of warmer weather, lower energy prices
reducing the rate of customer acquisition, and theft and leakage from the gas
distribution network running at a level higher than previously anticipated.
Following a sharp fall in the share price in April this position was increased
significantly at a share price well below current levels. In our view the long
term prospects for Telecom Plus remain compelling and whilst the current period
of share price performance was disappointing we believe the issues outlined
above are largely short term in nature. From an income perspective it was
reassuring to see the company deliver 14% growth in the dividend for the year
ended 31 March 2015 and maintain guidance of 15% dividend growth for the
following year.
The Smaller Companies Portfolio has continued to selectively increase exposure
to the domestic recovery whilst retaining a meaningful weighting towards high
quality international earners. The closed-ended structure and size of the
Company allows the Portfolio to invest in genuine smaller companies which we
feel are better positioned to provide both dividend income and earnings
growth. This has been an area of specific focus over the period.
Simon Moon and Fraser Mackersie
Unicorn Asset Management Limited
Income Portfolio
The remarkable bond market strength of 2014 initially continued as European
governments cut rates and fears of deflation crossing the channel crept into
the market's psyche, compounded by energy and food price deflation. The ten
year benchmark gilt yield declined to a record low of less than 1.4% and the
iTraxx Europe Index fell to less than 50 during the first quarter of 2015;
strong returns were experienced across corporate bond markets. However, the
second quarter unveiled a different picture with the ten year gilt yield rising
sharply to over 2% and as we anticipated credit markets were also unable to
maintain the tight spreads and liquidity concerns exacerbated. During these
difficult times for bond investors it is pleasing to report that the portfolio
delivered an attractive return of c.2% with lower risk than the increasingly
choppy bond markets where losses proved unavoidable.
Activity in the portfolio continues and we are still able to position the
portfolio as desired notwithstanding broader market liquidity concerns. Early
additions included Tesco Property Finance as mixed opinions among the rating
agencies created forced sellers despite the added security provided by the
underlying property portfolio. Further purchases of real-estate convertibles
were made before share prices rallied sharply to asset values and subsequently
profits were taken on a number of the positions. We added a holding in AB
InBev, the world's largest brewer continuing to like the strong brands,
industry-leading margins and strong cash generation, and extended our positon
in Bakkavor benefiting from improved operating performance and refinancing. We
took part in very few new issues although we added the senior debt from
specialist bank, Investec, which was subsequently upgraded by Moody's to
investment grade.
There were periodic rebalances between the Small Companies Portfolio and the
Income Portfolio during the six months in order to maintain the desired
portfolio split and to make the most efficient use of cash balances. In
addition, there was a change in the allocation during May when the Income
Portfolio was reduced to a 22.5% weighting at the same time the Company put in
place a strategy to provide some protection against a fall in the broader UK
equity market. The sales made to finance purchases and rebalances included
real-estate convertibles, Volta Finance, Tritax Big Box, a reduction in the
long-dated University of Cambridge, and towards the end of the period a
reduction in bank risk, specifically AT1 risk.
We are pessimistic on the outlook for bond markets overall and believe it is
necessary to take various protective measures and maintain liquidity in order
to continue to deliver positive returns. It is for this reason that the Income
Portfolio is currently a smaller weighting in the overall Company. However, a
small, nimble bond portfolio is likely to be able to produce good outcomes for
investors, with a greater dispersion of bonds to choose from, an ability to
manage duration more actively and a greater focus on absolute returns.
Paul Smith
Premier Fund Managers Limited
Schedule of Principal Investments
as at 30 June 2015
Market Value Percentage Percentage
Position Company GBP'000 of of
Portfolio Total Assets
Smaller Companies Portfolio
1 Acal plc 3,045,350 4.74 3.56%
2 Macfarlane Group plc 2,520,000 3.92 2.95%
3 Primary Health Properties plc 2,429,678 3.78 2.84%
4 Hill & Smith Holdings plc 2,418,083 3.76 2.83%
5 Secure Trust Bank plc 2,388,219 3.72 2.79%
6 Clipper Logistics Group plc 2,089,978 3.25 2.45%
7 Epwin Group plc 2,064,000 3.21 2.41%
8 Alumasc Group plc 2,053,415 3.20 2.40%
9 Safestyle UK plc 2,030,000 3.16 2.38%
10 James Halstead plc 2,005,000 3.12 2.35%
11 UK Mail Group plc 2,002,000 3.12 2.34%
12 Somero Enterprises 1,982,875 3.09 2.32%
13 Tyman plc 1,921,500 2.99 2.25%
14 British Polythene Industries plc 1,899,813 2.96 2.22%
15 Castings plc 1,886,270 2.94 2.21%
16 Harvey Nash Group plc 1,846,200 2.87 2.16%
17 Conviviality Retail plc 1,778,700 2.77 2.08%
18 Park Group plc 1,754,594 2.73 2.05%
19 Brewin Dolphin Holdings plc 1,751,400 2.73 2.05%
20 Cineworld Group plc 1,613,150 2.51 1.89%
41,480,225 64.57 48.53%
Income Portfolio
1 Real Estate Credit Investment PCC 725,920 4.16 0.85%
2 Ecofin Water & Pwr Opportunities CULS 649,219 3.72 0.76%
6% 2016
3 GE Capital Funding 8.00% 2039 573,698 3.29 0.67%
4 Credit Suisse Group G F2V 2041 531,851 3.05 0.62%
5 Helical Bar Jersey 2016 Convertible 414,000 2.37 0.48%
6 Rolls Royce 3.375% 2026 406,585 2.33 0.48%
7 UBS F2V 401,494 2.30 0.47%
8 Vib Vermoegen AG 4.00% 2016 Convertible 389,655 2.24 0.46%
9 Apple 3.85% 2043 347,242 1.99 0.41%
10 HSBC 6.00% 2040 339,217 1.95 0.40%
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11 Societe Generale F2V 8.25% 333,360 1.91 0.39%
12 British Telecoms 2016 329,190 1.89 0.39%
13 F&C Global Smaller Companies 3.50% 2019 320,600 1.84 0.38%
14 St Modwen Prop Securities 2.875% 2019 318,030 1.82 0.37%
15 British Sky Broad 3.125% 309,375 1.77 0.36%
16 Electricite de France 6.125% 2034 306,304 1.76 0.36%
17 Debenhams plc 5.25% 2021 295,442 1.69 0.35%
18 BAA Funding 7.075% 2028 268,078 1.54 0.31%
19 F&C Finance plc 9.00% 2016 267,172 1.53 0.31%
20 Cooperatieve Centrale Raiffeisen F2V 265,753 1.52 0.31%
TOTAL 7,792,185 44.67 9.13%
Schedule of Principal Investments
as at 31 December 2014
Market Percentage Percentage
Position Company Value of of
GBP'000 Portfolio Total Assets
2014
Smaller Companies Portfolio
1 Acal plc 2,350,000 4.16 3.01
2 Secure Trust Bank plc 2,312,631 4.09 2.97
3 Primary Health Properties plc 2,298,513 4.07 2.95
4 Hill & Smith Holdings plc 2,138,843 3.78 2.74
5 Brewin Dolphin Holdings plc 2,016,339 3.57 2.59
6 Berendsen plc 1,980,000 3.50 2.54
7 Tyman plc 1,876,500 3.32 2.41
8 Safestyle UK plc 1,872,750 3.31 2.40
9 Cineworld Group plc 1,867,950 3.30 2.39
10 British Polythene Industries plc 1,851,788 3.28 2.37
11 Epwin Group plc 1,779,067 3.15 2.28
12 Castings plc 1,775,115 3.14 2.28
13 UK Mail Group plc 1,757,025 3.11 2.25
14 Diploma plc 1,753,750 3.10 2.25
15 Interserve plc 1,682,389 2.98 2.16
16 Park Group plc 1,627,245 2.88 2.09
17 Conviviality Retail plc 1,576,200 2.79 2.02
18 James Halstead plc 1,533,148 2.71 1.97
19 Alumasc Group plc 1,516,022 2.68 1.94
20 Numis Corporation plc 1,393,500 2.46 1.79
36,958,775 65.38 47.40
Income Portfolio
1 Credit Suisse 7.875% CoCo 2041 681,697 3.48 0.87
2 Societe Generale 8.25% Perp -18 658,021 3.36 0.84
3 Ecofin Wtr & Pwr Opportunities CULS 6% 656,250 3.35 0.84
2016
4 Real Estate Credit 8% 2017 NPV 654,150 3.34 0.84
5 F&C Global Smaller Companies CULS 3y 2% 645,000 3.29 0.83
2019
6 GE Capital Funding 8% 2039 590,748 3.01 0.76
7 University of Cambridge 3.75% 2052 474,588 2.42 0.61
8 Rolls Royce 3.375% 2026 417,644 2.13 0.54
9 Grainger plc 5% 2020 406,356 2.07 0.52
10 Helical Bar Jersey 4% 2019 Convertible 401,132 2.05 0.51
11 Vib Vermoegen AG 4% 2016 Convertible 388,319 1.98 0.50
12 Apple Inc 3.85% 2043 380,850 1.94 0.49
13 HSBC 6% 2040 357,201 1.82 0.46
14 EDF 6.125% 2034 329,908 1.68 0.42
15 BAT Intl Finance plc 2026 329,334 1.68 0.42
16 Sky 3 1/8% 2022 315,080 1.61 0.40
17 St Mowden Prop Securities 2.875% 2014 298,182 1.52 0.38
Convertible
18 Nationwide Building Society 6.875% Perp - 292,911 1.49 0.38
18
19 Debenhams plc 5.25% 2021 289,644 1.48 0.37
20 Rabobank Nederland 8.375% Perp - 16 275,406 1.40 0.35
TOTAL 8,842,421 45.10 11.33
Condensed Statement of Comprehensive Income (unaudited)
for the period ended 30 June 2015
Period
Period ended ended
30 June 2015 30 June
2014
Revenue Capital Total Total
Notes GBP GBP GBP GBP
Net gains on financial assets
designated as at fair value through 8 - 7,910,502 7,910,502 509,443
profit or loss
Gains on derivative financial - 279,012 279,012 216,548
instruments
Investment income 3 1,607,747 - 1,607,747 1,577,625
Total income and gains 1,607,747 8,189,514 9,797,261 2,303,616
Expenses 4 (346,981) (222,555) (569,536) (618,838)
Return on ordinary activities before 1,260,766 7,966,959 9,227,725 1,684,778
finance costs and taxation
Interest payable and similar charges 5 - (776,786) (776,786) (736,042)
Return on ordinary activities before 1,260,766 7,190,173 8,450,939 948,736
taxation
Taxation on ordinary activities - - - -
Other comprehensive income - - - -
Total comprehensive Income for the
period attributable to Ordinary 1,260,766 7,190,173 8,450,939 948,736
Shareholders
Pence Pence Pence Pence
Return per Ordinary share 7 8.14 46.41 54.55 5.88
Dividend per Ordinary Share 6 6.75 0.00 6.75 6.25
Return per ZDP Share 7 - 3.74 3.74 3.40
The supplementary revenue return and capital return columns have been prepared
in accordance with the Statement of Recommended Practice ("SORP") issued by the
Association of Investment Companies ("AIC").
In arriving at the results for the financial period, all amounts above relate
to continuing operations.
No operations were acquired or discontinued in the period.
The notes form an integral part of these financial statements.
Condensed Statement of Financial Position (unaudited)
as at 30 June 2015
30 Jun 2015 31 Dec 2014
GBP GBP
Notes (Unaudited) (Audited)
NON-CURRENT ASSETS
Financial assets designated as at fair value 8 81,698,385 76,150,876
through profit or loss
CURRENT ASSETS
Receivables 9 611,846 848,723
Cash and cash equivalents 3,041,871 961,105
Derivative financial instruments 113,989 36,740
3,767,706 1,846,568
TOTAL ASSETS 85,466,091 77,997,444
CURRENT LIABILITIES
Derivative financial instruments 7,999 43,660
Payables - due within one year 10 233,814 214,111
Spot contracts payable 10 381 -
242,194 257,771
NON-CURRENT LIABILITIES
ZDP Shares 11 26,006,827 25,493,555
TOTAL LIABILITIES 26,249,021 25,751,326
NET ASSETS 59,217,070 52,246,118
EQUITY
Share capital 12 172,033 173,533
Share premium 27,435,856 27,870,231
Treasury shares 13 (6,297,145) (6,297,145)
Revenue reserve 1,212,798 996,144
Special reserve 10,000,000 10,000,000
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Capital reserve 26,693,528 19,503,355
TOTAL EQUITY 59,217,070 52,246,118
Pence Pence
Net asset value per Ordinary Share (per 384.33 336.59
Articles)
Net asset value per Ordinary Share (per IFRS) 382.83 334.52
Net asset value per ZDP Share (per Articles) 124.87 121.01
Net asset value per ZDP Share (per IFRS) 125.25 121.60
The financial statements were approved by the Board of Directors and authorised
for issue on 25 August 2015 and signed on its behalf by:
Helen Green David Warr
Director Director
The notes form an integral part of these financial statements.
Condensed Statement of Cash Flows (unaudited)
for the period ended 30 June 2015
Period ended Period ended
30 Jun 2015 30 Jun 2014
Notes GBP GBP
Operating activities
Return on ordinary activities before taxation 8,450,939 948,736
Net gains on financial assets designated as at fair 8 (7,910,502) (509,443)
value through profit or loss
Investment income 3 (1,607,747) (1,577,625)
Interest expense 5 776,786 736,042
Increase in derivative financial assets (77,249) (20,632)
(Decrease)/increase in derivative financial (35,661) -
liabilities
Increase/(decrease) in payables and appropriations 10 20,084 (207,576)
Decrease/(increase) in receivables excluding accrued 9 198,757 (917)
investment income
Net cash flow used in operating activities before (184,593) (631,415)
Investment Income
Investment income received 1,645,867 1,424,850
Net cash flow from operating activities before 1,461,274 793,435
taxation
Tax paid - -
Net cash from operating activities after taxation 1,461,274 793,435
Investing activities
Purchase of financial assets 8 (15,226,998) (34,160,093)
Sale of financial assets 8 17,589,991 28,828,795
Net cash flow from/(used in) investing activities 2,362,993 (5,331,298)
Financing activities
Equity dividends paid 6 (1,044,112) (1,019,258)
Proceeds from issue of Shares (435,875) 3,656,322
Cost of issue of Ordinary Shares - (229,014)
Proceeds from issue of ZDP Shares (18,406) 1,565,609
Cost of issue of ZDP Shares (245,108) (9,537)
Net cash flow (used in)/from financing activities (1,743,501) 3,964,122
Increase/(decrease) in cash and cash equivalents 2,080,766 (573,741)
Cash and cash equivalents at beginning of period 961,105 2,458,412
Cash and cash equivalents at end of period 3,041,871 1,884,671
The notes form an integral part of these financial statements.
Condensed Statement of Changes in Equity (unaudited)
as at 30 June 2015
Share Share Treasury Revenue Special Capital
Capital Premium Reserve Reserve Reserve Reserve Total
30 Jun 30 Jun 2015 30 Jun 2015 30 Jun 2015 30 Jun 2015 30 Jun 2015 30 Jun 2015
2015
GBP GBP GBP GBP GBP GBP GBP
Balances as at 1 173,533 27,870,231 (6,297,145) 996,144 10,000,000 19,503,355 52,246,118
January 2015
Total comprehensive
income for the - - - 1,260,766 - 7,190,173 8,450,939
period attributable
to shareholders
Dividends - - - (1,044,112) - - (1,044,112)
Buyback of Ordinary - - (435,875) - - - (435,875)
Shares
Cancellation of (1,500) (434,375) 435,875 - - - -
Ordinary Shares
Balances as at
30 June 2015 172,033 27,435,856 (6,297,145) 1,212,798 10,000,000 26,693,528 59,217,070
The notes form an integral part of the financial statements
Condensed Statement of Changes in Equity (unaudited)
as at 31 December 2014
Share Share Treasury Revenue Special Capital
Capital Premium Reserve Reserve Reserve Reserve Total
31 Dec 31 Dec 2014 31 Dec 2014 31 Dec 2014 31 Dec 2014 31 Dec 2014 31 Dec 2014
2014
GBP GBP GBP GBP GBP GBP GBP
Balances as at 1 153,781 20,411,044 - 447,558 10,000,000 23,834,893 54,847,276
January 2014
Total comprehensive
income for the year - - - 2,590,349 - (4,331,538) (1,741,189)
attributable to
shareholders
Dividends - - - (2,041,763) - - (2,041,763)
Treasury shares - - (6,411,998) - - - (6,411,998)
acquired
Treasury shares sold - - 1,448,433 - - - 1,448,433
Buyback of Ordinary - - (2,985,955) - - - (2,985,955)
Shares
Transfer between - - - - - - -
reserves
Issue of Ordinary 25,002 9,258,714 - - - - 9,283,716
Shares
Ordinary Share issue - (152,402) - - - - (152,402)
costs
Cancellation of (5,250) (1,647,125) 1,652,375 - - - -
Ordinary Shares
Balances as at
31 December 2014 173,533 27,870,231 (6,297,145) 996,144 10,000,000 19,503,355 52,246,118
The notes form an integral part of the financial statements
Notes to the Condensed Financial Statements (unaudited)
for the period ended 30 June 2015
1 ACCOUNTING POLICIES
(a) Basis of preparation
The financial statements for the six months ended 30 June 2015 have been
prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by
the European Union, the AIC's SORP (as revised in February 2015) and
applicable legal and regulatory requirements of the Companies (Guernsey) Law,
2008.
The Unaudited Condensed Interim Financial Statements do not include all the
information and disclosures in the Annual Financial Statements and should be
read in conjunction with the Company's Annual Report and Audited Financial
Statements for the year ended 31 December 2014.
The accounting policies and methods of computation followed in this Interim
Unaudited Condensed set of Financial Statements are consistent with those of
the latest Annual Audited Financial Statement for the year ended 31 December
2014 which were prepared in accordance with International Financial Reporting
Standards as adopted by the European Union, except for the adoption of the new
standards and interpretations effective as of 1 January 2015, as listed below,
which had no impact on the financial position or performance of the Company.
IFRS 8 - Operating Segments - (effective 1 July 2014).
IFRS 13 - Fair value measurement - (effective 1 July 2014).
IAS 24 - Related Party Disclosure - (effective 1 July 2014).
Presentation of information
The Unaudited Condensed Interim Financial Statements have been prepared on a
going concern basis under the historical cost convention adjusted to take
account of the revaluation of the Company's investments at fair value.
In order to better reflect the activities of an Investment Company and in
accordance with the guidance issued by the Association of the Investment
Companies, supplementary information which analyses the Statement of
Comprehensive Income between items of capital and revenue nature has been
presented within the Statement of Comprehensive Income.
2 OPERATING SEGMENTS
The Company has two reportable segments, being the Income Portfolio and the
Smaller Companies Portfolio. Each of these portfolios is managed separately as
they entail different investment objectives and strategies and contain
investments in different products.
For each of the portfolios, the Board reviews internal management reports on a
quarterly basis. The objectives and principal investment products of the
respective reportable segments are as follows:
Segment Investment objectives and principal investments
products
To maximise income through investments in sterling
denominated fixed interestsecurities including
Income Portfolio corporate bonds, preference and permanent interest
bearing shares, convertibles, reverse convertibles,
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debentures and other similar securities.
Smaller Companies Portfolio To maximise income and capital growth through
investments in smaller capitalised UK companies.
Information regarding the results of each reportable segment follows.
Performance is measured based on the increase in value of each portfolio, as
included in the internal management reports that are reviewed by the Board.
Segmental information is measured on the same basis as that used in the
preparation of the Company's financial statements.
Income Smaller
Portfolio Companies Unallocated Total
Portfolio
GBP GBP GBP GBP
30 June 2015
External revenues:
Net (losses)/gains on financial assets designated
as at fair value
through profit or (183,390) 8,093,892 - 7,910,502
loss
Gains on derivative financial instruments 279,012 - - 279,012
Investment income:
Bank interest - - 187 187
Dividend income 68,554 1,109,695 - 1,178,249
Bond income 429,311 - - 429,311
Total income and 593,487 9,203,587 187 9,797,261
gains
Expenses - - (569,536) (569,536)
Interest payable and similar - - (776,786) (776,786)
charges
Total comprehensive income for the period
attributable
to shareholders 593,487 9,203,587 (1,346,135) 8,450,939
Income Smaller
Portfolio Companies Unallocated Total
Portfolio
GBP GBP GBP GBP
30 June 2015
Financial assets designated as at fair value
through
profit or loss 17,410,624 64,287,761 - 81,698,385
Receivables 245,881 362,746 3,219 611,846
Derivative financial 113,989 - - 113,989
instruments
Cash and cash equivalents 1,469,319 1,572,552 - 3,041,871
Total 19,239,813 66,223,059 3,219 85,466,091
assets
Derivative financial 7,999 - - 7,999
instruments
Payables - 381 233,814 234,195
Total liabilities 7,999 381 233,814 242,194
Income Smaller
Portfolio Companies Unallocated Total
Portfolio
GBP GBP GBP GBP
31 December 2014
External revenues:
Net gains/(losses) on financial assets designated
as at fair value
through profit or 527,111 (2,777,785) - (2,250,674)
loss
Losses on derivative financial instruments (25,734) - - (25,734)
Investment income: -
Bank interest - - 138 138
Dividend income 117,199 2,054,439 - 2,171,638
Bond income 995,510 - - 995,510
Sundry Income - 13,484 - 13,484
Total income and 1,614,086 (709,862) 138 904,362
gains
Expenses - - (1,147,605) (1,147,605)
Interest payable and similar - - (1,497,946) (1,497,946)
charges
Total comprehensive income for the year
attributable
to shareholders 1,614,086 (709,862) (2,645,413) (1,741,189)
Income Smaller
Portfolio Companies Unallocated Total
Portfolio
GBP GBP GBP GBP
31 December 2014
Financial assets designated as at fair value
through
profit or loss 19,612,634 56,538,242 - 76,150,876
Receivables 560,998 268,451 19,274 848,723
Derivative financial 36,740 - - 36,740
instruments
Cash and cash equivalents 670,603 16,463 274,039 961,105
Total 20,880,975 56,823,156 293,313 77,997,444
assets
Derivative financial 43,660 - - 43,660
instruments
Payables - - 214,111 214,111
Total liabilities 43,660 - 214,111 257,771
Geographical information
In presenting information on the basis of geographical segments, segment
revenue and segment assets are based on the domicile countries of the investees
and counterparties to derivative transactions.
Other Rest of
UK Guernsey Jersey Europe the world Total
GBP GBP GBP GBP GBP GBP
30 June 2015
External
revenues
Total Revenue 1,331,369 66,304 702 148,658 60,527 1,607,560
Other Rest of
UK Guernsey Jersey Europe the world Total
GBP GBP GBP GBP GBP GBP
31 December 2014
External
revenues
Total Revenue 2,524,828 224,413 147,586 198,480 71,841 3,167,148
The Company did not hold any non-current assets during the period other than
financial instruments (December 2014:GBP Nil).
Major customers
The Company regards its shareholders as customers. There were no shareholders
with a holding greater than 10% at the period end.
3 INVESTMENT INCOME
Period ended Period ended
30 Jun 2015 30 Jun 2014
GBP GBP
Bank interest 187 79
Dividend 1,178,249 1,127,526
income
Bond income 429,311 450,020
1,607,747 1,577,625
4 EXPENSES
Period ended 30 Jun 2015
Revenue Capital Total
GBP GBP GBP
Manager's fee* 70,972 212,502 283,474
Performance fee* - - -
Administrator's fee 48,838 - 48,838
Registrar's fee 10,437 - 10,437
Directors' fees 37,458 - 37,458
Custody fees 29,663 - 29,663
Audit fee 14,023 - 14,023
Directors' and Officers' 3,517 - 3,517
insurance
Annual fees 12,125 - 12,125
Bank charges 241
- 241
Commission paid - 10,053 10,053
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Legal and professional fees 2,128 - 2,128
Broker fees 16,123 - 16,123
Sundry costs 10,397 - 10,397
Loss on foreign exchange 91,059 - 91,059
346,981 222,555 569,536
*The Company has entered into a Management Agreement with Premier Asset
Management (Guernsey) Limited, a wholly-owned, Guernsey incorporated subsidiary
of Premier Asset Management Limited. The Manager receives a management fee of
0.7% per annum of total assets (subject to a minimum fee of GBP100,000)
calculated monthly and payable quarterly in arrears, out of which it pays fees
to the Investment Advisers. The Manager is also paid a shareholder
communication and support fee, currently GBP3,100 for the twelve months from 1
April 2015 to 31 March 2016. The Manager is also potentially entitled to a
performance fee of 15% of any excess of the NAV per Ordinary Share (together
with any dividends paid by reference to the relevant period) over the higher of
the first benchmark or the second benchmark. The first benchmark is calculated
as the NAV per Ordinary Share immediately following completion of the tender
offer, in January 2007, compounded at a rate of 10% per annum up to the
relevant calculation day. The second benchmark being the higher NAV on the last
day in the prior period is used if a performance fee was paid in that prior
period. The Management Agreement may be terminated by either party on 12
months' written notice.
Under the terms of their appointment, each Director is paid a fee of GBP20,000
per annum by the Company. In addition the Chairman receives GBP7,500 per annum
(in total remuneration GBP27,500) and both the Chairman of the Audit Committee
and the Remuneration and Management Engagement Committee and Risk Committee
each receive an additional GBP5,000, (total remuneration for each post being GBP
25,000).
Period ended 30 Jun 2014
Revenue Capital Total
GBP GBP GBP
Manager's fee 73,843 221,528 295,371
Performance fee - - -
Administrator's fee 58,158 - 58,158
Registrar's fee 9,578 - 9,578
Directors' fees 38,609 - 38,609
Custody fees 22,607 - 22,607
Audit fee 20,929 - 20,929
Directors' and Officers' 3,771 - 3,771
insurance
Annual fees 6,781 - 6,781
Bank charges 1,288 - 1,288
Commission paid - 44,805 44,805
Legal and professional fees 10,767 - 10,767
Broker fees 18,515 - 18,515
Sundry costs 16,930 - 16,930
Loss on foreign exchange 70,729 - 70,729
352,505 266,333 618,838
5 INTEREST PAYABLE AND SIMILAR CHARGES
Period ended 30 Jun 2015 Period ended 30 Jun 2014
Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
Appropriation in respect of
ZDP shares - 729,777 729,777 - 689,186 689,186
Amortisation of ZDP issue - 47,009 47,009 - 46,856 46,856
costs
- 776,786 776,786 - 736,042 736,042
6 DIVIDENDS IN RESPECT OF ORDINARY SHARES
Period ended
30 Jun 2015
Pence
GBP per share
First Interim 502,721 3.25
payment
Second interim payment 541,391 3.50
1,044,112 6.75
Year ended
31 Dec 2014
Pence
GBP per share
First Interim 481,600 3.00
payment
Second interim 537,658 3.25
payment
Third interim 513,283 3.25
payment
Fourth interim 509,221 3.25
payment
2,041,762 12.75
7 EARNINGS PER SHARE
Ordinary Shares
The total return per Ordinary Share (per IFRS) is based on the total return on
ordinary activities for the period attributable to Ordinary shareholders of GBP
8,450,939 (Jun 2014: GBP948,736) and on 15,493,885 (Jun 2014: 16,143,911) shares,
being the weighted average number of shares in issue during the period. There
are no dilutive instruments and therefore basic and diluted gain per share is
identical.
The revenue return per Ordinary Share (per IFRS) is based on the revenue return
on activities for the period attributable to Ordinary shareholders of GBP
1,261,202 (Jun 2014: GBP1,225,120) and on 15,493,885 (Jun 2014: 16,143,911)
shares, being the weighted average number of shares in issue during the period.
There are no dilutive instruments and therefore basic and diluted gain per
share are identical.
The capital return per Ordinary Share (per IFRS) is based on the capital loss
on ordinary activities for the period attributable to Ordinary shareholders of
GBP7,190,173 (Jun 2014: gain of GBP276,384) and on 15,493,885 (Jun 2014:
16,143,911) shares, being the weighted average number of shares in issue during
the period. There are no dilutive instruments and therefore basic and diluted
gain per share are identical.
ZDP shares
The return per ZDP Share (per IFRS) is based on the appropriation in respect of
ZDP Shares and the amortisation of ZDP Share issue costs totaling GBP776,786 (Jun
2014: GBP736,042) and on 20,795,832 (Jun 2014: 21,670,227) shares, being the
weighted average number of ZDP Shares in issue during the period.
8 FINANCIAL ASSETS DESIGNATED AS AT FAIR VALUE THOUGH PROFIT OR LOSS
30 Jun 2015 31 Dec 2014
GBP GBP
INVESTMENTS
Opening portfolio 62,431,660 52,881,014
cost
Unrealised appreciation on valuation brought 13,719,216 23,095,363
forward
Opening valuation 76,150,876 75,976,377
Movements in the period/year
Purchases at cost 15,226,998 72,813,768
Sales
- (17,589,991) (70,388,595)
proceeds
- realised gains on 3,160,017 8,158,452
sales
- realised losses (1,724,634) (1,032,980)
on sales
Unrealised appreciation on valuation for the 6,764,431 4,053,076
period/year
Unrealised depreciation on valuation for the (289,312) (13,429,222)
period/year
Fair value of investments at 30 June 81,698,385 76,150,876
2015
Closing book cost 61,505,285 62,431,660
Closing unrealised 20,193,100 13,719,216
appreciation
81,698,385 76,150,876
Realised gains on 1,435,383 7,125,473
sales
Increase/(decrease) in unrealised 6,475,119 (9,376,147)
appreciation
Net gains/(loss) on financial assets designated as at fair 7,910,502 (2,250,674)
value through profit or loss
As at 30 June 2015, the closing fair value of investments comprises GBP
64,265,095 (Dec 2014: GBP57,956,148) of equity shares, GBP17,410,624 (Dec 2014: GBP
18,252,746) of fixed income securities and GBP22,666 (Dec 2014: (58,018)) in
respect of long gilts held.
IFRS 13 requires the fair value of investments to be disclosed by the source of
inputs using a three-level hierarchy as detailed below:
Quoted prices (unadjusted) in active markets for identical assets or
liabilities (Level 1);
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Inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (as prices) or indirectly (derived from
prices) (Level 2);
Inputs for the asset or liability that are not based on observable market data
(unobservable inputs) (Level 3).
The Investments held by the Company have been classified as Level 1. This is in
accordance with the fair value hierarchy.
Details of the value of each classification are listed in the table below.
Values are based on the market value of the investments as at the reporting
date:
Financial assets designated as at fair value through profit or loss
30 Jun 2015 30 Jun 2015 31 Dec 2014 31 Dec 2014
Market Market Market Market
value value value value
% GBP % GBP
Level 1 99.67 81,430,196 100 76,150,876
Level 3 0.33 268,189 - -
Total 100 81,698,385 100 76,150,876
Level 3 investments comprise tow investments valued at cost. As there is not an
active market for these investments the investment manager and directors
consider the cost to be an appropriate fair value at 30 June 2015.
Derivative financial assets and liabilities designated as at fair value through
profit or loss
30 Jun 2015 30 Jun 2015 31 Dec 2014 31 Dec 2014
Market Market Market Market
value value value value
% GBP % GBP
Level 2 derivative financial 100 113,989 100 36,740
assets
Level 2 derivative financial 100 7,999 100 43,660
liabilities
There have been no transfers between levels of the fair value hierarchy during
the period under review. It is the Company's policy to recognise all the
transfers into the levels and transfers out of the levels at the end of the
reporting period. Transfers into each level shall be disclosed and discussed
separately from transfer out of each level.
The derivative financial instruments held by the Company have been classified
as Level 2. This is in accordance with the fair value hierarchy. The Company
uses widely recognised valuation models for determining fair value of
derivative financial instruments that use only observable market data and
require little management judgement and estimation.
9 RECEIVABLES
30 Jun 2015 31 Dec
2014
GBP GBP
Prepayments 29,671 19,274
Accrued 578,956 617,076
income
Sundry receivables 3,219 212,373
611,846 848,723
10 PAYABLES
(amounts falling due within one year)
30 Jun 2015 31 Dec
2014
GBP GBP
Accrued expenses 88,313 53,773
Spot contracts 381 -
payable
Trade 145,501 160,338
creditors
234,195 214,111
11 ZDP SHARES
30 Jun 2015 31 Dec 2014
GBP GBP
ZDP Share entitlement 26,006,827 25,493,555
The above entitlement comprises the following:
27,032,008 ZDP Shares issued to date up to 31 December 22,471,543 -
2014
201,348 Buyback of ZDP Shares during the period (263,514) -
20,642,306 ZDP Shares issued 31 December 2013 - 22,147,580
3,356,065 ZDP Shares issued during the year to 31 Dec - 3,899,340
2014
523,504 ZDP shares sold out of treasury during the year - 643,617
to 31 Dec 2014
3,557,141 Buyback of ZDP Shares during the year to 31 - (4,218,994)
Dec 2014
ZDP Premium (232,343) (323,895)
Appropriation in respect of ZDP Shares 3,951,554 3,221,777
ZDP value (calculated in accordance with the Articles) 25,927,240 25,369,424
ZDP issue (199,765) (294,823)
costs
Issue costs amortised 47,009 95,059
Add back ZDP Premium 232,343 323,895
ZDP value (calculated in accordance 26,006,827 25,493,555
with IFRS)
The fair value of the ZDP Shares is considered to be the same as the value
calculated in accordance with IFRS.
ZDP Shares carry no entitlement to income distributions to be made by the
Company. The ZDP Shares will not pay dividends but have a final capital
entitlement at the end of their life on 31 January 2017 of 138 pence. It should
be noted that the predetermined capital entitlement of a ZDP Share is not
guaranteed and is dependent upon the Company's gross assets being sufficient on
31 January 2017 to meet the final capital entitlement of ZDP Shares. If the
Company had been wound up on 30 June 2015, the ZDP Shares would have had an
entitlement of 124.87 pence each. The ZDP Shares have the right to receive
notice of and attend, but shall not have the right to vote at, any general
meeting.
Under the Articles of Incorporation, the Company is obliged to redeem all of
the ZDP Shares on 31 January 2017 (if such redemption has not already been
effected).
The number of authorised ZDP Shares is 50,000,000. The number of issued ZDP
Shares is 20,763,386 (Dec 2014: 20,964,734). The non-amortisation of the ZDP
Shares in line with the Articles has the effect of increasing the NAV per
Ordinary Share by 1.50 pence.
12 SHARE CAPITAL
Authorised GBP
Ordinary Shares of 1p each unlimited
Issued Number of
Shares
The issue of Ordinary Shares took place as
follows:
Ordinary Shares 11 Feb 1999 29,600,002
Tender offer 17 Jan 2007 (20,660,212)
Purchase of treasury shares - Year ended 31 (215,000)
December 2011
Placing - Year ended 31 December 2013 6,438,339
Purchase of treasury shares - Year ended 31 (1,756,000)
December 2013
Shares sold out of Treasury - Year ended 31 1,971,000
December 2013
Issue of Shares during the 2,500,205
year
Buyback of Ordinary Shares - Year ended 31 (2,650,000)
December 2014
Shares sold out of Treasury - Year ended 31 390,000
December 2014
Number of shares in issue at 31 December 15,618,334
2014
Issue from treasury shares during the
period -
Buyback of Ordinary Shares during the (150,002)
period
Shares sold out of Treasury during the
period -
Number of shares in issue at 30 June 15,468,332
2015
GBP
Issued and fully paid capital as at 30 172,033
June 2015
The Ordinary Shares (excluding treasury shares) are entitled to participate in
all dividends and distributions of the Company. On a winding-up holders of
Ordinary Shares are entitled to participate in the distribution and the holders
of Ordinary Shares are entitled to receive notice of and attend and vote at all
general meetings of the Company.
13 TREASURY RESERVES
30 Jun 2015 31 Dec 2014
GBP GBP
Balance as at 1 January 2015 (6,297,145) -
Acquired during the period/ - (6,411,998)
year
Treasury shares sold during the period/year - 1,448,433
Buyback of Ordinary Shares during the period/year - (2,985,955)
Cancellation of Treasury Shares during the period/ - 1,652,375
year
Balance as at 30 June 2015 (6,297,145) (6,297,145)
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