REG - Aberdeen New Dawn IT - Annual Financial Report <Origin Href="QuoteRef">ABD.L</Origin> - Part 3
20/06/2017 07:05
- Part 3: For the preceding part double click ID:nRST5229Ib
Net return before finance costs and taxation 82,261 (41,976)
Adjustment for:
(Gains)/losses on investments (80,202) 45,629
Currency losses 2,477 959
Decrease in accrued dividend income 244 619
Decrease/(increase) in other debtors 16 (7)
Increase/(decrease) in other creditors 160 (261)
Stock dividends included in investment income (871) (521)
Overseas withholding tax (271) (205)
_______ _______
Net cash flow from operating activities 3,814 4,237
Investing activities
Purchases of investments (40,574) (16,549)
Sales of investments 48,026 23,078
_______ _______
Net cash from investing activities 7,452 6,529
Financing activities
Equity dividends paid 8 (4,645) (4,692)
Interest paid (509) (453)
Buy back of Ordinary shares for treasury 13 (6,821) (5,807)
_______ _______
Net cash used in financing activities (11,975) (10,952)
_______ _______
Decrease in cash (709) (186)
_______ _______
Analysis of changes in cash during the year
Opening balance 2,369 2,614
Effect of exchange rate fluctuations on cash held 59 (59)
Decrease in cash as above (709) (186)
_______ _______
Closing balances 1,719 2,369
_______ _______
The accompanying notes are an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS:
For the year ended 30 April 2016
1. Principal activity
The Company is a closed-end investment company, registered in England & Wales No 02377879, with its Ordinary shares being listed on the London Stock Exchange.
2. Accounting policies
(a) Basis of accounting
The financial statements have been prepared in accordance with Financial Reporting Standard 102 and with the Statement of Recommended Practice 'Financial Statements of
Investment Trust Companies and Venture Capital Trusts' issued in November 2014 and updated in January 2017 with consequential amendments. The financial statements are
prepared in sterling which is the functional currency of the Company and rounded to the nearest £'000. They have also been prepared on a going concern basis and on the
assumption that approval as an investment trust will continue to be granted.
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company has adequate resources to continue in operational
existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.
(b) Valuation of investments
Listed investments have been designated upon initial recognition as fair value through profit or loss. Investments are recognised and de-recognised on the trade date at
cost. Subsequent to initial recognition, investments are valued at fair value which for listed investments is deemed to be bid market prices. Gains and losses arising
from changes in fair value are included as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the capital reserve.
(c) Income
Dividends, including taxes deducted at source, are included in revenue by reference to the date on which the investment is quoted ex-dividend. Special dividends are
reviewed on a case-by-case basis and may be credited to capital, if circumstances dictate. Dividends receivable on equity shares where no ex-dividend date is quoted are
brought into account when the Company's right to receive payment is established. Fixed returns on non-equity shares are recognised on a time apportioned basis so as to
reflect the effective yield on shares. Other returns on non-equity shares are recognised when the right to return is established. Where the Company has elected to receive
its dividends in the form of additional shares rather than cash, the amount of the scrip dividend is recognised as income. Any excess in the value of the shares received
over the amount of the cash dividend is recognised in capital reserves. Interest receivable on bank balances is dealt with on an accruals basis.
(d) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Statement of Comprehensive Income except as follows:
- expenses directly relating to the acquisition or disposal of an investment, in which case, they are added to the cost of the investment or deducted from the sale
proceeds. Such transaction costs are disclosed in accordance with the SORP. These expenses are charged to the capital column of the Statement of Comprehensive Income and
are separately identified and disclosed in note 9; and
- the Company charges 50% of investment management fees and finance costs to the capital column of the Statement of Comprehensive Income, in accordance with the
Board's expected long term return in the form of capital gains and income respectively from the investment portfolio of the Company.
(e) Taxation
The tax payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because it
excludes items of income or expenditure that are taxable or deductible in other years and it further excludes items that are never taxable or deductible (see note 7 for a
more detailed explanation). The Company has no liability for current tax.
Deferred taxation is provided on all timing differences, that have originated but not reversed at the Statement of Financial Position date, where transactions or events
that result in an obligation to pay more or a right to pay less tax in future have occurred at the Statement of Financial Position date, measured on an undiscounted basis
and based on enacted tax rates. This is subject to deferred tax assets only being 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. Timing differences are differences arising between the Company's taxable profits and
its results as stated in the accounts which are capable of reversal in one or more subsequent periods. Due to the Company's status as an investment trust company, and the
intention to continue to meet the conditions required to obtain approval for the foreseeable future, the Company has not provided deferred tax on any capital gains and
losses arising on the revaluation or disposal of investments.
(f) Foreign currencies
Assets and liabilities in foreign currencies are translated at the rates of exchange ruling on the Statement of Financial Position date. Transactions involving foreign
currencies are converted at the rate ruling on the date of the transaction. Gains and losses on the realisation of foreign currencies are recognised in the Statement of
Comprehensive Income and are then transferred to the capital reserve.
The Company's investments and borrowings are made in a number of currencies, however the Board considers the Company's functional currency to be Sterling. In arriving at
this conclusion, the Board considered that the shares of the Company are listed on the London Stock Exchange, it is regulated in the United Kingdom, principally having
its shareholder base in the United Kingdom, pays dividends and expenses in Sterling. Consequently, the Board also considers the Company's presentational currency to be
Sterling.
(g) Dividends payable
Dividends are recognised from the date on which they are declared and approved by shareholders. Interim dividends are recognised when paid.
(h) Nature and purpose of reserves
Called up share capital
The Ordinary share capital on the Statement of Financial Position relates to the number of shares in issue and in treasury. Only when the shares are cancelled, either
from treasury or directly, is a transfer made to the capital redemption reserve.
Share premium account
The balance classified as share premium includes the premium above nominal value from the proceeds on issue of any equity share capital comprising ordinary shares of 5p.
Special reserve
The special reserve arose following Court approval in 1999 to transfer £50m from the share premium account. This reserve was distributable and has been extinguished to
fund share buy backs to be held in treasury by the Company.
Capital redemption reserve
The capital redemption reserve is used to record the amount equivalent to the nominal value of any of the Company's own shares purchased and cancelled in order to
maintain the Company's capital.
Capital reserve
Gains or losses on disposal of investments and changes in fair values of investments are transferred to the capital reserve. The capital element of the management fee and
relevant finance costs are charged to this reserve. Any associated tax relief is also credited to this reserve. During the year the costs of share buybacks to be held in
treasury have also been deducted from this reserve as the special reserve has now been extinguished.
Revenue reserve
This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income. The revenue reserve represents the amount
of the Company's reserves distributable by way of dividend.
2017 2016
3. Income £'000 £'000
Income from investments
UK dividend income 877 1,434
UK investment income 8 16
Overseas dividends 5,164 5,029
Scrip dividends 871 521
_______ _______
6,920 7,000
_______ _______
Other income
Deposit interest 2 4
_______ _______
Total income 6,922 7,004
_______ _______
2017 2016
Revenue Capital Total Revenue Capital Total
4. Management fee £'000 £'000 £'000 £'000 £'000 £'000
Management fee 810 810 1,620 829 829 1,658
_______ _______ _______ _______ _______ _______
Management and secretarial services are provided by Aberdeen Fund Managers Limited ("AFML").
With effect from 1 July 2016, the Board and the Manager agreed a new rate for calculating the Company's management fees payable to AFML. The management fee is payable monthly in arrears based on an annual rate of 0.85%, previously 1%, of the net asset value of the Company valued monthly, with the following provisions for commonly managed funds:
- the Company's investments in Aberdeen Global - Indian Equity Fund, Aberdeen Asian Smaller Companies Investment Trust PLC and Aberdeen New India Investment Trust PLC are excluded from the calculation of the investment management fee. The total value of such commonly managed funds, on a bid price basis (basis on which management fee is calculated), at the year end was £47,681,000 (2016 - bid basis - £31,481,000).
- the Company receives a rebate from the Manager for the amount of fees in excess of 0.85%, previously 1%, of net assets charged by the Manager for any commonly managed fund.
The balance due to AFML at the year end, net of any rebates was £278,000 (2016 - £138,000).
The agreement is terminable by either party on not less than twelve months' notice to the other.In the event of termination by the Company on less than the agreed notice period, compensation is payable to the Manager in lieu of the unexpired notice period.
2017 2016
5. Administrative expenses £'000 £'000
Promotional activities 158 158
Directors' fees 131 136
Safe custody fees 130 111
Auditor's remuneration:
- fees payable to the Company's auditor for the audit of the Company's annual accounts 15 15
- fees payable to the Company's auditor for the review of the Company's half yearly accounts 4 4
Other administration expenses 328 310
_______ _______
766 734
_______ _______
The Company has an agreement with AFML for the provision of promotional activities. The total fees payable during the year were £158,000 (2016 - £158,000) and the sum due to AFML at the year end was £53,000 (2016 - £13,000).
No pension contributions were made in respect of any of the Directors.
The Company does not have any employees.
2017 2016
Revenue Capital Total Revenue Capital Total
6. Interest payable and similar charges £'000 £'000 £'000 £'000 £'000 £'000
On bank loans 257 257 514 227 227 454
_______ _______ _______ _______ _______ _______
2017 2016
Revenue Capital Total Revenue Capital Total
7. Taxation £'000 £'000 £'000 £'000 £'000 £'000
(a) Analysis of charge for the year
Overseas tax 339 - 339 278 - 278
Overseas tax reclaimable (60) - (60) (52) - (52)
Total tax charge for the year 279 - 279 226 - 226
(b) Factors affecting the tax charge for the year
The tax assessed for the year is lower than the current standard rate of corporation tax in the UK.
2017 2016
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Net return on ordinary activities before taxation 5,089 76,658 81,747 5,214 (47,644) (42,430)
_______ _______ ______ _______ _______ ______
Net return on ordinary activities multiplied by effective standard rate of corporation tax in the UK of 19.92% (2016 - 20%) 1,014 15,270 16,284 1,043 (9,529) (8,486)
Effects of:
Non-taxable UK dividend income (253) - (253) (290) - (290)
Non-taxable overseas dividends (1,103) - (1,103) (1,066) - (1,066)
Overseas tax suffered 279 - 279 226 - 226
Surplus management expenses and loan relationship deficits not relieved 342 213 555 313 211 524
Non-taxable exchange losses - 493 493 - 192 192
Non-taxable (gains)/losses on investments - (15,976) (15,976) - 9,126 9,126
_______ _______ ______ _______ _______ _______
Total tax charge 279 - 279 226 - 226
_______ _______ ______ _______ _______ _______
(c) Provision for deferred taxation
No provision for deferred taxation has been made in the current year or in the prior year.
The Company has not provided for deferred tax on capital gains or losses arising on the revaluation or disposal of investments as it is exempt from tax on these items because of its status as an investment trust company.
(d) Factors that may affect future tax charges
At the year end, the Company has an unrecognised deferred tax asset of £3,429,000 (2016 - £3,392,000) arising as a result of excess management expenses and non-trade loan relationship deficits. These expenses will only be utilised if the Company has profits chargeable to corporation tax in the future.
2017 2016
8. Dividends £'000 £'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for 2016 - 2.9p (2015 - 2.8p) 3,464 3,469
Interim dividend for 2017 - 1.0p (2016 - 1.0p) 1,181 1,223
_______ _______
4,645 4,692
_______ _______
The proposed final dividend in respect of the year ended 30 April 2017 is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.
The table below sets out the proposed final dividend, together with the interim dividend paid, 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. The revenue available for distribution by way of dividend for the year is £4,810,000 (2016 - £4,988,000).
2017 2016
£'000 £'000
Interim dividend for 2017 - 1.0p (2016 - 1.0p) 1,181 1,223
Proposed final dividend for 2017 - 3.0p (2016 - 2.9p) 3,489 3,475
_______ _______
4,670 4,698
_______ _______
Subsequent to the year end the Company has purchased for treasury a further 565,000 Ordinary shares. Therefore the amounts reflected above for the cost of the proposed final dividend for 2017 are based on 116,297,098 Ordinary shares in issue, being the number of Ordinary shares in issue at the date of this Report.
2017 2016
9. Return per Ordinary share £'000 p £'000 p
Revenue return 4,810 4.05 4,988 4.06
Capital return 76,658 64.61 (47,644) (38.78)
_______ _______ _______ _______
Total return 81,468 68.66 (42,656) (34.72)
_______ _______ _______ _______
Weighted average number of Ordinary shares in issue A 118,657,145 122,842,641
A Calculated excluding shares held in treasury. __________ __________
Listed Listed
overseas in UK Total
10. Investments £'000 £'000 £'000
Fair value through profit or loss:
Opening book cost 119,708 30,165 149,873
Opening fair value gains/(losses) on investments held 93,074 (3,038) 90,036
_______ _______ _______
Opening valuation 212,782 27,127 239,909
Movements in the year:
Purchases at cost 39,592 1,853 41,445
Sales - proceeds (40,271) (7,755) (48,026)
Sales - realised gains/(losses) 14,743 (602) 14,141
Current year fair value gains on investments held 55,442 10,619 66,061
_______ _______ _______
Closing valuation 282,288 31,242 313,530
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