TIDMATY
RNS Number : 7165G
Athelney Trust PLC
06 March 2015
Embargoed 7am March 6 2015
ATHELNEY TRUST - FINAL RESULTS
Athelney Trust plc, the investor in small companies and junior
markets, announces its preliminary results for the year ended 31
December 2014.
Highlights:
-- Audited Net Asset Value ("NAV") up 4 per cent at 228p per share (2013: 219.3p)
-- Overall return (capital plus dividend) of 6.5 per cent
-- Revenue return per ordinary share rose 27 per cent to 7.8p (2013: 6.1p)
-- Recommended final dividend of 6.7p per share (2013: 5.5p) up 21.8 per cent.
Chairman Hugo Deschampsneufs said: "Squeezing out a modest
overall return proved more difficult than expected in 2014,
although Athelney NAV increased by four per cent so the overall
return (i.e. capital plus dividend) was 6.5 per cent. The Fledgling
saw an increase of 6.2 per cent with the FTSE Small Cap showing a
decrease of 1.5 per cent and the AIM All-share indices falling by
17.4 per cent.
"There were three key messages from the Autumn Statement:
economic output of 'only' 2-2.5 per cent is the new norm; there is
still a long way to go before control over public spending is
re-established; tax reform rather than tax reduction should be at
the heart of the next Parliament.
"The chancellor taking over after the General Election in May
will find a red box full of goodies: economic output should be
rising, employment strong and inflation near to five year lows.
"Yet 2015 looks like being a tricky year. My opinion, for what
it is worth, is that smaller companies are better value than blue
chips and that, with a decent tail wind, a modest uplift in asset
prices of equities and commercial property is the most likely
outcome".
-ends-
Fior further information:
Robin Boyle, Managing Director
Athelney Trust plc 020 7628 7937
Paul Quade 07947 186694
CityRoad Communications 020 7248 8010
CHAIRMAN'S STATEMENT AND BUSINESS REVIEW
I announce the results for the year ended 31 December 2014. The
salient points are as follows:
-- Audited Net Asset Value ("NAV") was 228p per share (31
December 2013: 219.3p) an increase of 4 per cent.
-- Revenue return per ordinary share was 7.8p, (31 December 2013: 6.1p).
-- Recommended final dividend of 6.7p per share (2013: 5.5p), an increase of 21.8 per cent.
Review of 2014
The inherent vice of capitalism is the unequal sharing of
blessings: the inherent virtue of socialism is the equal sharing of
miseries. - Winston Churchill
Capitalism is great when you're young, healthy and don't have
kids. As soon as you have kids, you need to move to Sweden, believe
me. - Cormac O'Brien.
My dear boy, as long as you don't invade Afghanistan you'll be
fine. - advice from MacMillan to Douglas-Hume on the latter taking
over as P.M.
Lose money for my firm and I will be understanding. Lose a shred
of reputation and I will be ruthless.- Warren Buffett.
Squeezing out a modest overall return proved more difficult than
expected in 2014. Mind you, some of the news-flow was not terribly
helpful: the tragedies of the three Malaysian airliners; the spread
of Ebola; Scotland's referendum; the rise of UKIP; Russia's
annexation of Crimea and invasion of East Ukraine; trouble in Gaza
and NATO's withdrawal from Afghanistan. More specifically, here are
my Top Ten stories which affected stock markets in the year:-
January: Signs of slowing economic growth in China led to a
sell-off in mining shares and all sorts of commodities. Prices for
such things were depressed all year.
March: Russia's military invasion of Ukraine triggered a global
flight from risky shares.
April: Big sell-off in tech shares on Wall Street.
June: Markets recovered, aided by news of a bid approach for
Shire, a London-quoted pharma.
August: The U.S. started its air campaign against Islamic State
(IS).
September: Investors sold, spooked by a single opinion poll
giving the Yes campaign a lead.
October: Markets were unimpressed by the ECB's failure to
introduce QE.
Investors bought back again on Japan's new inflationary
package.
December: Oil prices collapsed, hurt by OPEC's decision in
November not to reduce production and further signs that demand was
flagging.
Tesco issued another profit warning and worries about Greece
flared up again.
The Santa rally finally arrived on 18 December - the Fed, having
quit QE at the end of October, said that it would be patient about
raising U.S. interest rates. The plunging rouble started to
stabilize.
In major markets, New York and Tokyo rose by 3 per cent and 2.8
per cent but London, with quite a few mining and oil shares in its
index, fell by 6.2 per cent.
China was the outstanding market of the year, being up by 42.9
per cent on hopes of lower interest rates and easier lending
conditions and, to my mind, totally ignoring the collapse in Tier
2,3 and 4 city residential property prices and the massive
over-production of everything from cement and steel to ships and
solar panels. Argentina and Venezuela (rises of 42.3 per cent and
39.8 per cent respectively) were spooked by hyper-inflation, masked
by authoritarian governments fiddling the figures. On the less
positive side Greece, Columbia and Saudi Arabia fell by 28.2, 19.8
and 14.1 per cent respectively.
Returning to London, and small caps in particular, the Athelney
Trust NAV increased by 4 per cent so the overall return for the
year (i.e. capital plus dividend) was 6.5 per cent. The Fledgling
saw an increase of 6.2 per cent with the FTSE Small Cap showing a
decrease of 1.5 per cent and the AIM All-share indices falling by
17.4 per cent.
September saw the NATO summit in Wales. This is how it was
previewed in Pravda. Like an ageing drag queen who can no longer
make a living from dressing up in skirts and parading onstage in
disguise, today no amount of make-up can hide what NATO is, and
always has been: a wolf in sheep's clothing...For many years, NATO
has been looking for something to do, like an odd-job man living in
a deserted ghost town, like a skilled factory worker in a robot
factory, like an ageing and unemployable drag queen who has gone to
seed and whose pot belly turns her into the subject of ridicule
when she tries to stuff it into her skirt, these days playing to
bawling audiences of drunks. What can Pravda mean?
Every now and then, the spivs and get-rich-quick merchants come
out of the woodwork to defend their right to sell aggressively
shares that they do not own or have borrowed specially for the
occasion, so-called hedge funds come particularly to mind. They
usually make a plausible case until it is given a sharp tap, at
which point it tends to fall to bits. So it was in November when
the short sellers said that the practice provides liquidity (how?)
and can question perceived views on over-valued shares (fair
enough).
However, their leading weapon is often a sophisticated strategy
to weaken share prices by spreading information or, to be blunt,
disinformation. This last, where it occurs, is disseminated through
co-ordinated attacks via bulletin boards and leaks to the media.
Growing doubts about a company are expressed by a number of
apparently independent commentators who are, in reality, in
collusion. If a business relies on public deposits like a retail
bank or is at an early stage of its development and so is spending
cash without much to show for it by way of profit, it can become a
sitting duck for this strategy. Short sellers must declare their
every trade, even if it is carried out in so-called secret dark
pools.
Congratulations to the designers of the eight postage stamps
introduced in October, celebrating prime ministers gazing towards
us beginning with William Pitt the Younger. However, there are two
incredible omissions: Benjamin Disraeli and David Lloyd George. Was
Harold Wilson really in the same league?
The concept of shareholder value or to run the company for the
shareholder's benefit sounds as sensible as anything else in the
financial world and to suggest otherwise is wholly heretical. Yet I
think that an American, with his typical way of phrasing things,
might well be tempted to call it the world's dumbest idea. Why so?
I believe that companies which put its customers first have done
better than those that have tried to prioritize its shareholders or
staff (examples, supermarkets and investment banks respectively)
whereas customers are often cattle merely to be milked for profit.
The focus on shareholder value has also led companies into actions
which, while flattering short-term performance ratios and keeping
shareholders temporarily flush with cash, do nothing to help
develop better products and services over the long term - financial
engineering, share buy-backs, capital underinvestment and
over-aggressive cost-cutting do not keep customers happy. My view
is that only by focusing on being a good business which loves its
customers can decent returns be delivered to shareholders over the
long term. Is this a truth universally acknowledged? Our
hypothetical American friend might say Like heck it is!
I suppose that John (now Lord, what is the country coming to?)
Prescott probably ranks as my third un-favourite Labour politician
but even I was amazed when he said in November that his party had a
problem communicating. My goodness, when you get a lecture from him
on the English language then you are in trouble, said David
Cameron. In Prescott's defence, I would say: Frankfully, to be so
irrespective of a former deputy prize milliner was unsusceptible.
Let's not mince about the bush: it was below the bolt.
December saw George Osborne's final Autumn Statement before the
General Election in May. He was able to take the credit for some
politically popular measures such as the modest reform of Stamp
Duty, a further rise in the personal income tax allowance,
reductions in Air Passenger Duty for families and help for smaller
businesses and the U.K. regions. How much more rewarding it would
have been, though, if he had embarked on some simple reforms so
that the burden of tax was distributed more fairly and
rationally.
National Insurance is now a much bigger burden on low earners
than is income tax - raising the threshold for NI should have been
a greater priority than increasing income tax allowances. Value
Added Tax is riddled with anomalies and inconsistencies. Books are
taxed at 20 per cent if listened to or read on computer or tablet
yet there is no VAT on hardback or software books. Caviar and other
high-value foods attract zero VAT while shoes and basic clothing
attract 20 per cent tax - I could go on and on but it just gets
boring. There were three key messages from the Autumn Statement:
economic output of 'only' 2-2.5 per cent is the new norm; there is
still a long way to go before control over public spending is
re-established; tax reform rather than tax reductions should be at
the heart of the next parliament.
Vladimir Putin, in a speech to the Kremlin in December, said:
Hitler tried to destroy Russia......Just remember how that ended.
We do, Herr Putin, it ended with Germany as a democracy and Europe
becoming a safer place.
Capital investment in the global oil industry will fall sharply
in 2015 and onwards, thus following the price of crude oil down.
OPEC's decision not to cut output in November marked the end of
four years of remarkably stable oil prices. With OPEC temporarily
abdicating the role of price stabilizer, the market has now taken
over that role - little comfort to an industry with high capital
costs and a long delay before investments become profitable. The
past 150 years have been marked by frequent boom and bust cycles,
with each low squeezing investment and creating the base for the
next boom. There are new features to the current cycle, though,
with fracking and the growth of U.S. shale oil created by a $100
oil price and how the industry will react to a $70 or even $60 oil
price is yet to be seen. Shale oil is expensive to drill but, once
tapped, produces prodigious amounts of cash. If skilled workers are
laid off and capital investment cut back as in the past, the ride
upward in the oil price might be just as wild as the fall in
2014.
Rupert Soames, the grandson of Sir Winston Churchill, took over
as CEO of troubled outsourcer Serco in June and started (as is
traditional) a review of the business. It had previously emerged
that Serco had been over-charging the Government on contracts to
tag criminals. We've gone up the street saying bring out your dead
and lots of bodies started flying out of the windows, said
Soames.
What does Brazilian billionaire Joseph Safra's purchase of the
Gherkin office block in the City and Qatar's offer for chunks of
Canary Wharf tell us? At the risk of stating the obvious, overseas
investors still find that commercial property in this country is
highly attractive even though the statistics are not particularly
exciting: since 1981, the average total annual return on City
offices has been 8.1 per cent of which three-quarters has come from
income. The picture of West End property is admittedly better, at
10.2 per cent of which 60 per cent was income. The fact is that
billionaires and sovereign wealth funds often are more concerned
about capital preservation rather than income or growth (just for
the record, the Gherkin was bought on a yield of only 3.7 per
cent). It is when we look at the country as a whole that the
argument for investment in commercial property becomes
compelling.
The current average yield on all properties across the country
is reckoned to be about 6.4 per cent, compared with a negative
yield on index-linked government debt and 1.8 per cent on 10-year
gilts. Even the FTSE index, stuffed full of high-yielding mining,
oil and bank shares, only offers 3.6 per cent. After the big run-up
in property over the last 18 months, there is bound to be some
reluctance to buy now. Yet the cushion in that 6.4 per cent is very
wide by past standards. Property is surely less vulnerable to a
market set-back than blue-chips or government or corporate bonds.
NB Your company finished the year with 20 per cent of its portfolio
in commercial and residential property shares.
According to The Economist, the business world is divided in
two: those companies that have been hacked and those that do not
know that they have been hacked.
The source of the GBP260 million discrepancy in the Tesco
accounts is as old as book-keeping itself: the premature
recognition of revenue. Suppliers make payments to supermarkets
that meet certain sales targets for their products, run promotions
or place goods in eye-catching positions such as the end of aisles.
Tesco managers appear to have been too optimistic in forecasting
these rebates and may also have under-reported the costs of stolen
or out-of-date produce. Working out how much and when to book
revenue can be a matter of fine judgement. The complexity of
Tesco's deals with suppliers may also have left too much room for
discretion but the risks of accounting for such payments are hardly
new. The auditors of several big retailers have amplified their
warnings in recent years as rebates have taken up a greater
proportion of so-called profit. In the most recent report in May,
PWC warned of the risk of manipulation.
Even if there was no fraudulent intent (and we do not know this
yet) and the problems merely stem from a misunderstanding of the
rules rather than a cynical manipulation, the huge scale of the
error suggests that Tesco's internal controls were not up to the
job.
Oh, and another thing! Sir Terry Leahy, ex-CEO and doyen of the
supermarket trade, is shocked at the way that Tesco has lost sight
of its customers. It is true that fewer can be seen in the stores
three years after he stepped down. It is shocking that billions of
shareholders' funds were destroyed in search of Fresh & Easy in
California; the build-out of mega-stores in the UK, many of which
are now white elephants; the push for growth in Asia and shocking
that the return on capital during his reign slumped while declared
earnings rose. Yes, we are all shocked Sir Terry!
A joke which went round the foreign exchange market early in the
year:
Q. What do the rouble and Vladimir Putin have in common?
A. 62.
This prediction was correct on both counts - Putin had his
62(nd) birthday on 7 October and the rouble hit 62 to the dollar in
frenzied trading several weeks later.
Even as Britain enters the sixth year of recovery, economists
find excuses to be dismal. Every silver lining has a cloud, high
consumer confidence is stoking a large trade deficit and housing
boom. Normality will only be reached, they say, when interest rates
lift off the floor but this could push householders over the edge.
Economic growth is failing to generate much needed tax revenues.
Yet the chancellor taking over after the General Election in May
will find a red box full of goodies: economic output should be
rising, employment strong and inflation near to five-year lows.
Looking further ahead, the sort of economy to prosper will be
flexible and open. Britain has a head start while continental
rivals argue about structural reform. The U.K. has clear advantages
- the English language, an adaptable labour market which is quick
to switch workers between industries and is attractive to skilled
people from all over the world. While U.K. manufacturing has been
in relative decline, what is left is highly productive. It can
remain that way thanks to a strong science base and every big city
has its own Silicon quarter. Politics, though, poses the greatest
threat to economic prosperity. A dysfunctional planning system,
held hostage by local politics, has resulted in chronic housing
shortages. Major projects like high speed rail or a new airport
runway take decades to complete. Politicians love to rail against
the imagined weaknesses in the immigration laws. By the 2050s
(sorry to say that I will not be there), Britain's deep strengths
could propel it towards being Europe's largest and most prosperous
economy - we have nothing to fear but our politicians.
Deflation is bad for you, ergo cheaper oil is bad for the EU.
Assuming that the average crude oil price is $70 for 2015, this
would save the Eurozone the handy sum of $145 billion, or 0.9 per
cent of economic output even before knock-on effects. Maybe Europe
should be our contrarian bet for 2015?
Capital Gains
During the year the Company realised capital profits arising on
the sale of investments in the sum of GBP478,743
(31 December 2013: GBP297,801).
Portfolio Review
Holdings of Andrews Sykes, Beazley, Brit, Capital &
Regional, DX Group, Epwin Group, Games Workshop, Hiscox, John
Menzies, McColls Retail, Novae Group and UK Commercial were all
purchased for the first time. Additional holdings of Amlin, Catlin,
Costain, Lancashire Holdings, Londonmetric, Picton Property Income,
Treatt, and Vianet, were also acquired. Arbuthnot Banking Group, H
& T Group andMacfarlane Group, were sold. In addition, a total
of twenty holdings were top-sliced to provide capital for the new
purchases.
Corporate Activity
Holdings of Abbey Protection and ACM Shipping were taken over in
the year with Abbey Protection having a profit as a percentage of
cost of 27.2 percent. Connect Group undertook a rights issue which
was fully taken up.
Dividend
The Board is pleased to recommend an increased annual dividend
of 6.7p per ordinary share (2013: 5.5p). This represents an
increase of 21.8 per cent over the previous year. Subject to
shareholder approval at the Annual General Meeting on 9 April 2015,
the dividend will be paid on 16 April 2015 to shareholders on the
register on 20 March 2015.
For those patient investors who subscribed for Athelney Trust
shares in the IPO of 1994, the annual return has now risen to 13.4
per cent net of basic rate tax on the capital originally
invested.
Update
The unaudited NAV at 28 February 2015 was 237.2p whereas the
share price on the same day stood at 195p. Further updates can be
found on www.athelneytrust.co.uk
Post Balance Sheet Date
On 30 January 2015 David Horner resigned as a Director having
held the position for 12 years. The Board as a whole express their
sincere thanks to David for all his input during his time with the
Company.
Prospects
It looks like being another tricky year. I defy anyone
(including the respective heads of the central banks which have
dominated markets since 2008/9) to know the answers to: will
Vladimir Putin succeed in dragging America into a proxy war in
Ukraine, how will the coalition dislodge IS from the towns of Iraq
and Syria, will the problem of Greece be fixed, will China
deliberately devalue the reminbi thus exporting even more
deflation, will quantitative easing in the euro zone and Japan be
enough to counteract any tightening or threat of tightening (i.e.
raising interest rates) in America and Britain? What will happen to
commodity prices such as oil, gas, iron ore and gold and what
effect will that have on investor confidence? How will all these
various factors impact on equity markets? My opinion, for what it
is worth, is that smaller companies are better value than blue
chips and that, with a decent tail-wind, a modest uplift in asset
prices of equities and commercial property is the most likely
outcome.
H.B. Deschampsneufs
Chairman
4 March 2015
INCOME STATEMENT
(INCORPORATING THE REVENUE ACCOUNT)
For the Year Ended
For the Year Ended 31 December
31 December 2014 2013
Note Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
Gains on
investments
held at fair
value 8 - 221,717 221,717 - 1,466,773 1,466,773
Income from
investments 2 189,458 - 189,458 155,571 - 155,571
Investment
Management
expenses 3 (5,661) (51,644) (57,305) (5,765) (53,034) (58,799)
Other expenses 3 (28,668) (44,156) (72,824) (27,922) (42,804) (70,726)
Net return on
ordinary 155,129 125,917 281,046 121,884 1,370,935 1,492,819
activities before
taxation
Taxation 5 - - - - - -
Net return on
ordinary
activities
after taxation
6 155,129 125,917 281,046 121,884 1,370,935 1,492,819
Net return
per ordinary
share 6 7.8p 6.3p 14.1p 6.1p 69.1p 75.3p
Dividend per
ordinary share
paid during
the year 7 5.5p 5.0p
The total column of this statement is the profit and loss
account for the Company.
All revenue and capital items in the above statement derive from
continuing operations.
No operations were acquired or discontinued during the above
financial years.
A statement of movements of reserves is given in note 12.
A Statement of Total Recognised Gains and Losses is not required
as all gains and losses of the Company have been reflected in the
above Statement.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Called-up Capital Capital Total
Share Share reserve reserve Revenue Shareholders'
Capital Premium realised unrealised reserve Funds
GBP GBP GBP GBP GBP GBP
Balance brought
forward at
1 January
2013 495,770 545,281 752,028 939,882 223,067 2,956,028
Net profits
on realisation
of investments - - 297,801 - - 297,801
Increase in
unrealised
Appreciation - - - 1,168,972 - 1,168,972
Expenses allocated
to
Capital - - (95,838) - - (95,838)
Profit for
the year - - - - 121,884 121,884
Dividend paid
in year - - - - (99,154) (99,154)
Shareholders'
Funds at 31
December 2013 495,770 545,281 953,991 2,108,854 245,797 4,349,693
========== ======== ========= =========== ========= ==============
Balance brought
forward at
1 January
2014 495,770 545,281 953,991 2,108,854 245,797 4,349,693
Net profits
on realisation
of investments - - 478,743 - - 478,743
(Decrease)/Increase
in
Unrealised
appreciation - - - (257,026) - (257,026)
Expenses allocated
to
Capital - - (95,800) - - (95,800)
Profit for
the year - - - - 155,129 155,129
Dividend paid
in year - - - - (109,069) (109,069)
Shareholders'
Funds at 31
December 2014 495,770 545,281 1,336,934 1,851,828 291,857 4,521,670
======== ======== ========== ========== ========== ==========
BALANCE SHEET AS AT 31 DECEMBER 2014
Company Number: 02933559
Note 2014 2013
GBP GBP
Fixed assets
Investments held at
fair value through
profit and loss 8 4,432,113 4,298,919
---------- ----------
Current assets
Debtors 9 87,246 41,782
Cash at bank and in
hand 18,137 24,709
105,383 66,491
Creditors: amounts
falling due within
one year 10 (15,826) (15,717)
---------- ----------
Net current assets 89,557 50,774
---------- ----------
Total assets less current
liabilities 4,521,670 4,349,693
Provisions for liabilities
and charges - -
Net assets 4,521,670 4,349,693
========== ==========
Capital and reserves
Called up share capital 11 495,770 495,770
Share premium account 12 545,281 545,281
Other reserves (non
distributable)
Capital reserve -
realised 12 1,336,934 953,991
Capital reserve -
unrealised 12 1,851,828 2,108,854
Revenue reserve (distributable) 12 291,857 245,797
Shareholders' funds
- all equity 4,521,670 4,349,693
========== ==========
Net Asset Value per
share 14 228.0p 219.3p
Approved and authorised for issue by the Board of Directors on 4
March 2015.
.....................................
R.G. Boyle
Director
CASHFLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2014
2014 2013
GBP GBP GBP GBP
Net cash inflow from
operating activities 13,974 74,969
Taxation
Corporation tax paid - -
Capital Expenditure
and Financial Investment
Purchases of investments (679,659) (722,310)
Sales of investments 768,182 749,835
Net cash inflow from
Capital Expenditure
and Financial Investment 88,523 27,525
Equity dividends paid (109,069) (99,154)
(Decrease)/Increase
in cash in the year (6,572) 3,340
=========== ===========
Reconciliation of operating
net revenue to
net cash outflow from
operating activities GBP GBP
Revenue on ordinary
activities before taxation 155,129 121,884
(Increase)/decrease
in debtors (45,464) 48,427
Increase in creditors 109 496
Investment management
expenses charged to
capital (51,644) (53,034)
Other expenses charged
to capital (44,156) (42,804)
Net cash inflow from
operating activities 13,974 74,969
=========== ===========
Reconciliation of net
cash flow to movement
in net funds
Net funds Net funds
at at
Cash
31.12.2013 flow 31.12.2014
GBP GBP GBP
Cash at bank and in
hand 24,709 (6,572) 18,137
=========== ========== ===========
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
1. Accounting Policies
1.1 Basis of Preparation of Financial Statements
The financial statements are prepared on a going concern basis
under the historical cost convention as modified by the revaluation
of investments held at fair value.
The financial statements are prepared in accordance with the
Companies Act 2006, applicable UK accounting standards and the
provisions of the Statement of Recommended Practice "Financial
Statements of Investment Trust Companies and Venture Capital
Trusts" (SORP) issued by the A.I.C. in January 2009.
The financial statements have been prepared on the assumption
that approval as an investment trust will continue to be granted.
The financial statements, and the net asset value per share
figures, have been prepared in accordance with UK Generally
Accepted Accounting Practice (UK GAAP).
1.2 Income
Income from investments including taxes deducted at source is
recognised when the right to the return is established (normally
the ex-dividend date). UK dividend income is reported net of tax
credits in accordance with FRS 16 "Current Tax". Interest is dealt
with on an accruals basis.
1.3 Investment Management Expenses
Of the two directors involved in investment management, 10% of
their salaries have been charged to revenue and the other 90% to
capital. All other investment management expenses have been charged
to capital. The Board propose continuing this basis for future
years.
1.4 Other Expenses
Expenses (including VAT) and interest payable are dealt with on
an accruals basis and charged through the Revenue and Capital
Accounts in an allocation that the Board consider to be a fair
distribution of the costs incurred.
1.5 Investments
Listed investments comprise those listed on the Official List of
the London Stock Exchange. Profits or losses on sales of
investments are taken to realised capital reserve. Any unrealised
appreciation or depreciation is taken to unrealised capital
reserve.
Investments have been classified as "fair value through profit
and loss" upon initial recognition.
Subsequent to initial recognition, investments are measured at
fair value with changes in fair value recognised in the Income
Statement.
Securities of companies quoted on a recognised stock exchange
are valued by reference to their quoted bid prices at the close of
the year.
1.6 Taxation
The tax effect of different items of income and expenses is
allocated between capital and revenue on the same basis as the
particular item to which it relates, using the Company's effective
rate of tax for the year.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
1. Accounting Policies (continued)
1.7 Deferred Taxation
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed by the balance sheet date.
Deferred tax liabilities are recognised for all taxable timing
differences but deferred tax assets are only recognised if it is
considered more likely than not that there will be suitable profits
from which the future reversal of the underlying timing differences
can be deducted. Deferred tax assets and liabilities are calculated
at the tax rates expected to be effective at the time the timing
differences are expected to reverse. Deferred tax assets and
liabilities are not discounted.
1.8 Capital Reserves
Capital Reserve - Realised
Gains and losses on realisation of fixed asset investments are
dealt with in this reserve.
Capital Reserve - Unrealised
Increases and decreases in the valuations of fixed asset
investments are dealt with in this reserve.
1.9 Dividends
In accordance with FRS 21 "Events after the Balance Sheet Date",
dividends are included in the financial statements in the year in
which they are paid.
1.10 Share Issue Expenses
The costs associated with issuing shares are written off against
any premium arising on the issue of Share Capital.
2. Income
Income from investments
2014 2013
GBP GBP
UK dividend income 189,403 155,543
Bank interest 55 28
Total income 189,458 155,571
======== ========
UK dividend income
2014 2013
GBP GBP
UK Main Market listed investments 121,081 94,552
UK AIM traded shares 68,322 60,991
189,403 155,543
======== ========
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
3. Return on Ordinary Activities before Taxation
2014 2013
GBP GBP
The following amounts (inclusive
of VAT) are included
within investment management
and other expenses:
Directors' remuneration:
- Services as a director 17,500 17,500
- Otherwise in connection
with management 45,000 45,000
Auditors' remuneration:
- Audit Services - Statutory
audit 10,500 10,260
- Audit Services - Statutory 200 -
audit movement on accruals
from
previous years
- Audit Services - Audit
related regulatory reporting 1,050 1,050
Miscellaneous expenses:
- Other wages and salaries 31,074 32,035
- PR and communications 7,098 6,065
- Stock Exchange subscription 6,844 8,241
- Sundry investment management
and other expenses 10,863 9,374
130,129 129,525
======== ========
4. Employees
2014 2013
GBP GBP
Costs in respect of Directors:
Wages and salaries 62,500 62,500
Social security costs 4,424 5,495
66,924 67,995
======= =======
Costs in respect of administrator:
Wages and salaries 25,250 24,250
Social security costs 1,400 2,290
26,650 26,540
======= =======
Total:
Wages and salaries 87,750 86,750
Social security costs 5,824 7,785
93,574 94,535
------- -------
Average number of employees:
Chairman 1 1
Investment 2 2
Administration 1 1
4 4
======= ========
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
5. Taxation
(i) On the basis of these financial statements no provision has
been made for corporation tax (2013: Nil).
(ii) Factors affecting
the tax charge for the
year
The tax charge for the period is lower than
(2013: lower than) the average small company
rate of corporation tax in the UK of 20 per
cent. The differences are explained below:
2014 2013
GBP GBP
Total return on ordinary
activities before tax 281,046 1,492,819
---------- --------------------
Total return on ordinary
activities multiplied by
the average small company
rate of corporation tax 20%
(2013: 20%) 56,209 298,564
Effects of:
UK dividend income
not taxable (27,662) (27,412)
Revaluation of shares
not taxable 51,405 (233,794)
Capital gains not
taxable (95,749) (59,560)
Unrelieved management
expenses 15,797 22,202
Current tax charge
for the year - -
========== ====================
The Company has unrelieved excess revenue management expenses of
GBP65,539 at 31 December 2014 (2013: GBP82,300) and GBP102,597
(2013: GBP102,597) of capital losses for Corporation Tax purposes
and which are available to be carried forward to future years. It
is unlikely that the Company will generate sufficient taxable
profits in the future to utilise these expenses and therefore no
deferred tax asset has been recognised.
For the year ended 31 December 2013, the Company received
approval from HM Revenue and Customs under Section 1158 of the
Corporation Tax Act 2010, therefore the Company was not liable to
Corporation Tax on any realised investment gains for 2013. The
Directors intend to continue to meet the conditions required to
obtain approval and therefore no deferred tax has been provided on
any capital gains or losses arising on the revaluation or disposal
of investments.
6. Return per Ordinary Share
The calculation of earnings per share has been
performed in accordance with FRS 22 "Earnings
Per Share".
2014 2013
GBP GBP GBP GBP GBP GBP
Revenue Capital Total Revenue Capital Total
Attributable
return on
ordinary activities
after taxation 155,129 125,917 281,046 121,884 1,370,935 1,492,819
Weighted average
number of shares 1,983,081 1,983,081
Return per
ordinary share 7.8p 6.3p 14.1p 6.1p 69.1p 75.3p
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
7. Dividend
2014 2013
GBP GBP
Final dividend in respect
of 2013 of 5.5p (2013: a
final dividend of 5p was
paid in respect of 2012)
per share 109,069 99,154
======== =======
Set out below is the total dividend payable in respect of the
financial year, which is the basis on which the requirements of
Section 1158 of the Corporation Tax Act 2010 are considered.
It is recommended that a final dividend of 6.7 p (2013: 5.5p)
per ordinary share be paid amounting to a total of GBP132,866. For
the year 2013, a final dividend of 5.5p was paid on 12 April 2014
amounting to a total of GBP109,069.
2014 2013
GBP GBP
Revenue available for
distribution 155,129 121,884
Final dividend in respect
of financial year ended
31 December 2014 (132,866) (109,069)
---------- ----------
Undistributed Revenue
Reserve 22,263 12,815
========== ==========
8. Investments
2014 2013
GBP GBP
Movements
in year
Valuation at beginning
of year 4,298,919 2,859,671
Purchases
at cost 679,659 722,310
Sales - proceeds (768,182) (749,835)
- realised gains
on sales 478,743 297,801
(Decrease)/Increase in unrealised
appreciation (257,026) 1,168,972
Valuation
at end of
year 4,432,113 4,298,919
========== ==========
Book cost
at end of
year 2,580,285 2,190,065
Unrealised appreciation at
the end of the year 1,851,828 2,108,854
4,432,113 4,298,919
========== ==========
UK Main Market
listed investments 2,852,033 2,679,736
UK AIM traded
shares 1,580,080 1,619,183
4,432,113 4,298,919
========== ==========
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
8. Investments (continued)
Gains on investments
2014 2013
GBP GBP
Realised gains
on sales 478,743 297,801
(Decrease)/Increase in unrealised
appreciation (257,026) 1,168,972
221,717 1,466,773
========== ==========
The purchase costs and sales proceeds above include transaction
costs of GBP3,484 (2013: GBP4,496) and GBP3,527 (2013: GBP3,615)
respectively.
9. Debtors
2014 2013
GBP GBP
Investment transaction
debtors 82,794 37,105
Other debtors 4,452 4,677
87,246 41,782
======= =======
10. Creditors: amounts falling due within one year
2014 2013
GBP GBP
Social security
and other taxes 3,238 3,198
Other creditors 172 172
Accruals and
deferred income 12,416 12,347
15,826 15,717
======= =======
11. Called Up Share Capital
2014 2013
GBP GBP
Authorised
10,000,000 Ordinary Shares
of 25p 2,500,000 2,500,000
========== ==========
Allotted, called up and fully
paid
1,983,081 Ordinary Shares
of 25p 495,770 495,770
========== ==========
(2013: 1,983,081 Ordinary
Shares of 25p)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
12. Reserves
2014
Share Capital Capital
premium reserve reserve Revenue
account realised unrealised reserve
GBP GBP GBP GBP
Balance at 1 January
2014 545,281 953,991 2,108,854 245,797
Net profits on realisation
of investments - 478,743 - -
(Decrease)/Increase
in unrealised appreciation - - (257,026) -
Expenses allocated
to capital - (95,800) - -
Profit for the year - - - 155,129
Dividend paid in
year - - - (109,069)
Balance at 31 December
2014 545,281 1,336,934 1,851,828 291,857
======== ========== =========== ==========
13. Financial Instruments
The Company's financial instruments comprise equity investments,
cash balances and debtors and creditors that arise directly from
its operations, for example, in respect of sales and purchases
awaiting settlement. Short term debtors and creditors are excluded
from disclosure.
Fixed asset investments (see note 8) are valued at market bid
price where available which equates to their fair values. The fair
values of all other assets and liabilities are represented by their
carrying values in the balance sheet.
The major risks associated with the Company are market and
liquidity risk. The Company has established a framework for
managing these risks. The directors have guidelines for the
management of investments and financial instruments.
Market Risk
Market risk arises from changes in interest rates, valuations
awarded to equities, movements in prices and the liquidity of
financial instruments.
At the end of the year the Company's portfolio was invested in
UK securities with the exception of 14.16 per cent, which was
invested in overseas securities.
Liquidity Risk
Liquidity Risk is the risk that the Company may have difficulty
in meeting obligations associated with financial liabilities. The
Company has no borrowings; therefore there is no exposure to
interest rate changes.
The company is able to reposition its investment portfolio when
required so as to accommodate liquidity needs.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
14. Net Asset Value per Share
The net asset value per share is based on net assets of
GBP4,521,672 (2013: GBP4,349,693) divided by 1,983,081 (2013:
1,983,081) ordinary shares in issue at the year end.
2014 2013
Net asset value 228.0p 219.3p
======= =======
15. Related Parties
During the year the following dividends were paid to the
directors of the company as a result of their total
shareholding:
Mr Robin Boyle GBP23,550
Mr Hugo Deschampsneufs GBP4,292
Mr David Horner GBP1,100
This information is provided by RNS
The company news service from the London Stock Exchange
END
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