REG - Athelney Trust plc - Annual Financial Report <Origin Href="QuoteRef">ATTR.L</Origin> - Part 1

Athelney TrustAnnouncement

04/03/2016 07:11

RNS Number : 8408Q
Athelney Trust PLC
04 March 2016
Embargoed 7am March 4 2016
ATHELNEY TRUST plc: FINAL RESULTS
Athelney Trust plc, the investor in small companies and junior markets announces its final results for the 12 months ended 31 December 2015.
Highlights:
 Total return, increase in NAV plus dividend, is 10.4 per cent (2014: 6.5 per cent)
 Audited Net Asset Value ("NAV") up 7.5 per cent at 245p per share (2014: 228p)
 Revenue return per ordinary share was 9.3p (2014: 7.8p) a rise of 16 per cent
 Recommended final dividend of 7.9p per share (2014: 6.7p) up of 17.9 per cent.
Chairman Dr Manny Pohl said: "The year 2015 had better be dubbed the year of shocks and surprises. The upshot in stock market terms was surprisingly good with one major exception. London, with its index crammed with oil, gas, mining and bank shares, fell by 3.8 per cent.
"The FTSE Small Cap, Fledgling and AIM All-share indices rose by 6.2, 12.7 and 4.7 per cent respectively whereas the NAV of Athelney Trust moved ahead by a decent 10.4 per cent in terms of total return (i.e. growth in NAV plus dividend).
"Over the past year, China has put its mark on the world economy as never before. Not only did its economic slowdown inflict pain on energy and commodities markets, it acted as a serious restraint on the rest of the developing world and held back global economic growth.
"Three of the most obvious risks to 2016 are, first: low interest rates have created credit bubbles in emerging markets that could now deflate; second, asset managers have been buying longer-term bonds with greater credit risk to increase income. Rising interest rates could cause substantial losses for such managers and their clients.
"Third, before the crisis, asset managers and banks placed spare cash in money market funds but, recently, this money has flooded onto the balance sheets of banks and the Fed itself. Rising interest rates could cause this flood to reverse with completely unpredictable results. As far as equities are concerned, it would be no great surprise to see small caps outperforming blue-chips again and, in doing so, register another unspectacular but acceptable rise".
Ends
For further information:
Robin Boyle, Managing Director
Athelney Trust plc 020 7628 7937
Paul Quade  07947 186694
CityRoad Communications 020 7248 8010
STRATEGIC REPORT
CHAIRMAN'S STATEMEN T & BUSINESS REVIEW
I announce the results for the year ended 31 December 2015. The salient points are as follows:
 The total return, which is the increase in NAV plus the dividend, is 10.4 per cent (31 December 2014: 6.5 per cent)
 Audited Net Asset Value ("NAV") was 245p per share (31 December 2014: 228p) an increase of 7.5 per cent.
 Revenue return per ordinary share was 9.3p (31 December 2014: 7.8p).
 Recommended final dividend of 7.9p per share (2014: 6.7p), an increase of 17.9 per cent.
Review of 2015
Live long and prosper. - Dr Spock, played by Leonard Nimoy (1931-2015).
When someone says that it is not about the money, it's about the money. - H. L. Mencken
If a second chamber dissents from the first, it is mischievous. If it agrees, it is superfluous - Abb Sieys (1748-1836).
The problem with Barack Obama is that all too frequently he is totally immersed in his ownproduction of Hamlet - heard on BBC World Service.
The year 2015 had better be dubbed the year of shocks and surprises - in no particular order:-
The British steel crisis, partly self-inflicted by the failure to diversify into stainless and other special steels (as in Sweden) and sheet steel (Germany) and partly because of slab steel being dumped on international markets by Russia, China and Belarus.
 The Volkswagen emissions scandal.
 China slowing down.
 The crash in Shanghai and Shenzhen stock markets.
 Greece, at one point, on the verge of being ejected from the euro.
 Brent crude oil slipping to below $40 per barrel.
 Base metals plunging by 20-35%.
 An emerging markets debt problem following the credit binge (in U.S. dollars).
 The migration crisis.
 Three terrorist attacks in Paris (how I hate the BBC using the word militant instead of terrorist).
 Unpredicted General Election results in the U.K. and Spain.
 More than enough tornadoes, hurricanes, fires and floods to shake a stick at.
The upshot in stock market terms was surprisingly good with one major exception, as you will see. In major markets, Tokyo and Shanghai rose by 8.8 and 10.1 per cent respectively, New York was unchanged but London, with its index crammed with oil, gas, mining and bank shares, fell by 3.8 per cent. Among smaller markets, Hungary, Argentina and Denmark went up by 44.4, 36.4 and 34.2 per cent respectively whereas Columbia, Greece and Egypt fell by 26.7, 25.3 and 23.9 per cent. 
The interesting thing about New York is that, if you had failed to buy the FANGs (Facebook, Amazon, Netflix and Google) then your performance would be much the poorer for it. Back to London, with small companies yet again outperforming blue chips. The FTSE Small Cap, Fledgling and AIM All-share indices rose by 6.2, 12.7 and 4.7 per cent respectively whereas the NAV of Athelney Trust moved ahead by a decent 10.4 per cent in terms of total return (i.e. growth in NAV plus dividend). 
The Scottish government has rejected an attempt by Donald Trump to defeat the installation of a wind farm because, he says, it would have spoiled the view from his Aberdeenshire golf course. Edinburgh must now move ahead with all speed to enrich his horizons with, say, a Mexican restaurant and, er, a mosque.
So the Federal Reserve Bank finally achieved lift-off with a 0.25 per cent increase at the last possible moment in 2015. Three months before that, it declined the opportunity to raise rates because recent global developments and financial developments may restrain economic activity. And yet the world since September did not become any more peaceful. Commodity prices tumbled: iron ore fell below $40 per metric ton, an all-time low, and Brent crude oil ended the year near a seven-year low.
The reason to raise rates lay with the real economy. US unemployment fell consistently, close to full employment at 5 per cent. Core inflation hit 2 per cent, bang in line with the Fed's target. Big companies like Pfizer and Du Pont still felt confident enough to pursue transformational deals. Let the market bicker about whether asset prices are too high, about right or still cheap: the Federal Reserve has spoken.
October's meeting of the Public Administration Select Committee had as its guest the kaleidoscopically flamboyant Camila Batmanghelidjh, the former CEO of Kids Company, who looked more than ever like a pile of Aladdin's laundry. For over three hours, she seemed incapable of giving a straight answer to the charges that the charity was financially mismanaged and that there had been allegations of sexual abuse. This time Bernard Jenkin MP had gone too far, On what basis have you decided that this was a failing charity she inquired? It's gone bust, was the reply.
More shocks and surprises (see above) in the foreign exchange (FX) market: January's de-pegging of the Swiss franc, August's renminbi devaluation and December's euro correction were all the result of central bank action, which left currency traders exhausted and distinctly out of pocket. The Swiss National Bank set the tone by abandoning the floor set for the Swiss exchange rate against the euro only three days after calling it the cornerstone of its policy. Result: swings of up to 40 per cent against the franc's main currency rivals: second result, the local economy has stalled as have exports.
If the SND chose surprise, the People's Bank of China appears to have stumbled into its August currency shock. Days before the move, investors had digested unexpectedly soft trade data which raised questions about a possible hard landing for China's economy. Arguably, this move (only 3 per cent, it is true) was more important in that it hit global markets and stopped the US raising interest rates in September. December's euro correction showed again the effects of poor central bank communication. Investors had expected more QE and bet against the euro: when the ECB did not deliver, the euro rose by 4.5 per cent. Every little word in central bank texts is pored over for meaning which is not at all a healthy state of affairs.
The Bank of Japan is giving its employees a pay rise of 0.2 per cent. It has been so long since the last rise that some long-term employees had to ask what the term in Japanese was - they had never heard it before
From Chile to China, the sense that an once-in-a-lifetime raw materials boom has come to an end is haunting global commodities markets. On 9 December, the shares of mining and oil giants took a further battering as iron ore and oil fell below 40 per ton and barrel respectively. On the same day, Anglo-American said it would shed up to 85,000 jobs, shrink its business by 60 per cent and scrap the dividend until at least the end of 2016.
Iron ore is certainly a problem area with the world having a third more steel-making capacity than is actually needed. China produces roughly half of global annual output of 1.6 billion tons a year with the largest 100 firms in that country having lost an estimated $11 billion during the first ten months of 2015. Unwanted product is finding its way onto global markets, even at a loss to the producer. China exported 200 million tons in the first 10 months of the year, which is more than the total production of any country save Japan.
Excess supply on this scale will not disappear overnight and yet, and yet.. Forced liquidation by exchange traded funds (a sophisticated version of tracker unit trusts) and hedge funds having sold huge quantities of commodities which they do not own have massively distorted market prices. China's volume of copper and iron ore imports actually rose in November and copper inventories were down to only 13 days' supply in Chinese warehouses. Recovery beckons although only contrarians will be taking note and seeking to buy into undervalued mining and oil shares.
Best TV interview of the year?
Andrew Neil
Given Labour's response to the issue of national security and Syria, do you have confidence in Jeremy Corbyn?
John Mann, Labour MP
I have total confidence in Hilary Benn.
Andrew Neil
So you have confidence in your foreign affairs spokesman Hilary Benn but not in your leader Jeremy Corbyn?
John Mann
Jeremy has confidence in Hilary as well.
Andrew Neil
But you can't bring yourself to say you have confidence in Jeremy Corbyn.
John Mann
I have huge confidence in Jeremy allowing Hilary to lead on Syria.
You couldn't make it up, could you?
Over the past year, China has put its mark on the world economy as never before. Not only did its economic slowdown inflict pain on energy and commodities markets, it acted as a serious restraint on the rest of the developing world and held back global economic growth. The renminbi spent the early part of the year pegged to the rocketing dollar at the same time as Japan was deliberately devaluing its yen and other Far East currencies were sliding. China's effective exchange rate has risen by 30 per cent since 2012.
At the same time, wages have been rising fast as China runs out of cheap labour from the villages. The effect has been a huge squeeze on profit margins with corporate profits falling month by month. The carnage has been terrible with East Heavy Industry and Mingde Heavy Industry (both shipbuilding) going bust and state giant Sinosteel defaulting.
It is not all bad news, though, with the services sector increasing from 44 per cent of GDP in 2010 to 51 per cent now so that the new economy is doing well as the country abandons its obsolete model and shifts up the development ladder. Figures for GDP are, at best, opaque but a decent guess would be that economic growth is running at about 5 per cent at the moment. Rumours abound about the state of politics with Premier Li Keqiang promoting economic reform so as to centralize power in his hands while the old guard still controls much of the Central Committee. Let us all hope that he is not shoved aside by the old guard: the stability of the renminbi and global markets rests on such thin ice.
De La Rue's foreign banknotes are collected all over the world but, shame, the venerable security printer's shares are not, having fallen by 50 per cent over the past two years or so and slipped 7 per cent on the interim results published in December. The Company has won Banknote of the Year for seven out of the last eight years and stands a good chance this year with its jolly 'parrot and president' 100 dalasi note for Gambia, a serious Queen on the Canada $20 note and the Argentina 50 peso note with the inscription next to a map of the Falklands, Islas Malvinas. Perhaps a left-field (baseball) off-the-wall (squash) suggestion for 2016.
Brent crude was $115 per barrel in July, 2014 and $55.60 at the end of that year: it has now closed 2015 at an amazing $36.69. How much lower can it go? No idea, but I cannot leave the subject without mentioning World Oil Outlook published by OPEC towards the end of the year. World demand for oil and gas will continue to rise, says the document, for another 25 years so that fossil fuels will make up 78 per cent of global energy in 2040, barely less than today.
There will be no meaningful advances in technology with rival fuels disappointing after costing a great deal of money to develop so that the old energy order will be preserved. Emissions of CO will carry on rising as if nothing had been agreed in a solemn and binding accord by 190 countries at the Paris climate summit. Global demand for oil will rise by 18m barrels a day to 110m in 2040.
The document swats aside electric vehicles with impatience. The world's fleet of cars will rise from 1bn to 2.1bn over the next 25 years but 94 per cent will still run on petrol and diesel. This is a brave call with Apple, Google, Ford, VW, Tesla and Toyota all developing new technologies involving electric, hydrogen or hybrid cars. In Norway, for instance, electric vehicles already account for over 16 per cent of all cars sold.
Saudi Arabia and the Gulf states are lucky: they have 25 years to plan a new future that will require far less oil. If they have any sense, they will work to move prices back up to $60 then, over a period, slot oil into the $70 to $80 range then keep it there. Sheik Ahmed Yamani, the former Saudi oil minister, warned 15 years ago that this moment of reckoning was coming, Thirty years from now there will be a huge amount of oil and no buyers. Oil will be left in the ground. The Stone Age came to an end not because we had a lack of stones. Not sure that OPEC was listening then - or now.
To absent friends, including the remarkable Jim Slater and Cynthia Payne. The former was one of the best share-tippers of my generation yet, when he was asked what he would like to be remembered for, he rattled off his sponsorship of the British chess championship, his support for Birthright and wild salmon, his happy marriage and his books. And Slater Walker? I'm not particularly proud of that, it failed after all but I'm not ashamed of it either. Cynthia Payne, hostess, opened the door to a police raid in 1978: detectives found 53 men in various stages of undress. Newspapers had enormous fun - one cartoon showed a vicar in bed with a young lady and confronted by a policeman: I demand to see my solicitor who is in the next bedroom says the vicar. Afterwards, when released from Holloway prison, Mrs Sin was asked why she wouldn't name any of her customers. Well, me morals is low but me ethics is high. Two remarkable people
A boom, perhaps, just coming to an end is buy-to-let here in the UK. I am indebted to asset manager Brewin Dolphin for a rather scary worked example of a landlord with an 80 per cent loan-to-value (LTV) mortgage receiving 10,000 in rent and paying 8,000 in interest. On his 2,000 profit, he currently pays 40 per cent (800) in tax leaving him with a net gain of 1,200. However, come 2020, his tax bill will be calculated on his turnover minus a 20 per cent tax credit: 40 per cent of 10,000 is 4,000. The relief comes to 20 per cent of the interest (8,000 at 20% = 1,600). The result is a 2,400 tax bill. Add that to his mortgage interest and his annual profit turns into a loss of 400 - Ouch!
The Daily Telegraph ran an article in December looking at a higher-rate taxpayer with a 240,000 mortgage on a 300,000 property. He has a five-year interest-only fixed-rate mortgage at 3.99 per cent. That costs 800 a month. He then receives 1,000 in rental income giving him a current annual profit of 1,440. However, his profit falls to nil in 2019 and becomes a loss of 480 in 2020.
According to a recent survey, a large part of the UK population still doesn't think that any of this matters and that buy-to-let is a great investment. I am not so sure - getting into buy-to-let now with borrowed money just doesn't seem to be worth the risk.
Britain's biggest buy-to-let landlords, Fergus and Judith Wilson, have sold their 1,000-dwelling Kent property empire. Mr Wilson is also the author of Larry the Liger (a Liger is a cross between a lion and tiger) and a former maths teacher, as was his wife. The Wilsons had no capital and expanded using debt. The era of easy money has long gone so perhaps they are right to get out now. That will please those who have criticised the Wilsons for throwing out 200 tenants on housing benefit and zero hours contracts in favour of eastern Europeans.
So much for buy-to-let residential property but what about prospects for commercial property with Athelney Trust's portfolio having a 24.4 per cent per cent interest in the sector? On the face of it rather problematic in that pension funds, traditionally significant investors, are now paying out a large proportion of annual cash flow in pensions, which makes illiquid property less attractive relative to bonds and equities. At the same time, insurance companies, also big investors, face regulatory obstacles in buying any illiquid asset in that they have often faced a capital penalty since the financial crisis.
Yet despite these headwinds the commercial property market has been enormously helped by globalisation. Before the financial crisis, excess savings in Asia and elsewhere tended towards US Treasuries, German Bunds or similar. Since 2008, sovereign wealth funds have poured money into real estate in the search for a higher income and better growth prospects. The first stage is over with trophy assets now fully priced but the gap between government bond yields and the income available on non-trophy assets very wide indeed. So far from becoming the Cinderella of capital markets, commercial property will continue to attract big money and the shares of regional property companies remain highly attractive.
John McDonnell, shadow chancellor of the exchequer, responded to George Osborne's November Autumn Statement in a wholly singular way by reaching into his trouser pocket and saying, To assist Comrade Osborne in his dealings with his newfound friends [from China] I've brought along Mao's Little Red Book! Deputy leader Watson could not believe his ears: there was his colleague, flicking casually through the selected musings of one of the most prolifically murderous Communists in history. Mr Osborne rose and picked up the book which Mr McDonnell had tossed in his direction, Oh look, it's his personal signed copy! Obviously, John was just joking said a staffer afterwards and, indeed, the joke went down very well albeit with the wrong side. Beyond parody, is it not?
Capital Gains
During the year the Company realised capital profits before expenses arising on the sale of investments in the sum of 332,648 (31 December 2014: 478,743).
Portfolio Review
Holdings of AEW UK REIT, Harworth Group, Heath (Samuel) & Sons, Low & Bonar, Premier Farnell, Record, Regional REIT Ltd, River & Mercantile Group, Safestyle UK and Trinity Mirror were all purchased for the first time. Additional holdings of Begbies Traynor, Capital & Regional, DX Group, Games Workshop, Goodwin, Juridica Investments, Picton Property Income, Quarto Group Inc Com and UK Commercial Property Trust were also acquired. Brit plc, Chime Communications, GLI Finance, Hydrogen, ISG, Nationwide Accident Repair, NewRiver Retail, Plus 500, Redefine, Renew Holdings and RWS Holdings were sold.In addition, a total of nine holdings were top-sliced to provide capital for the new purchases and Japan Residential was bought and sold in the year.
Corporate Activity
The holding of Catlin was taken over at a capital profit of 21.5 percent.
Dividend
The Board is pleased to recommend an increased annual dividend of 7.9p per ordinary share (2014: 6.7p). This represents an increase of 17.9 per cent over the previous year. Subject to shareholder approval at the Annual General Meeting on 7 April 2016, the dividend will be paid on 14 April 2016 to shareholders on the register on 18 March 2016.
For those patient investors who subscribed for Athelney Trust shares in the IPO of 1994, the annual return has now risen to 15.8 per cent net of basic rate tax on the capital originally invested.
Update
The unaudited NAV at 31 January 2016 was 235.8p whereas the share price on the same day stood at 215p. Further updates can be found on www.athelneytrust.co.uk
Prospects
Three of the most obvious risks to 2016 are, first: low interest rates have created credit bubbles in emerging markets that could now deflate; second, asset managers have been buying longer-term bonds with greater credit risk to increase income. Rising interest rates could cause substantial losses for such managers and their clients. Third, before the crisis, asset managers and banks placed spare cash in money market funds but, recently, this money has flooded onto the balance sheets of banks and the Fed itself. Rising interest rates could cause this flood to reverse with completely unpredictable results. As far as equities are concerned, it would be no great surprise to see small caps outperforming blue-chips again and, in doing so, register another unspectacular but acceptable rise.
Dr. E C Pohl
Chairman
2 March 2016
Income Statement
For the Year Ended 31 December 2015
For the Year Ended 31 December
2014
Note
Revenue
Capital
Total
Revenue
Capital
Total
Gains on investments held at fair value
8
-
391,473
391,473
-
221,717
221,717
Income from investments
2
218,309
-
218,309
189,458
-
189,458
Investment Management expenses
3
 (5,149)
(46,910)
(52,059)
(5,661)
(51,644)
(57,305)
Other expenses
3
(28,782)
(59,514)
(88,296)
(28,668)
(44,156)
(72,824)
Net return on ordinary
184,378
285,049
469,427
155,129
125,917
281,046
activities before taxation
Taxation
5
-
-
-
-
 -
 -
Net return on ordinary activities after taxation 6
184,378
285,049
469,427
155,129
125,917
281,046
Net return per ordinary share
6
9.3p
14.4p
23.7 p
7.8p
6.3p
14.1p
Dividend per ordinary share paid during the year 7
6.7p
5.5p
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 overleaf.
A Statement of Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above Statement.
Statement of Changes in Equity for the Year Ended
31 December 2015
Called-up
Capital
Capital
Total
Share
Share
reserve
reserve
Revenue
Shareholders'
Capital
Premium
realised
unrealised
reserve
Funds
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 brought forward at 1 January 2015
495,770
545,281
1,336,934
1,851,828
291,857
4,521,670
Net profits on realisation
 of investments
-
-
332,648
-
-
332,648
(Decrease)/Increase in
 Unrealised appreciation
-
-
-
58,825
-
58,825
Expenses allocated to 
 Capital
-
-
(106,424)
-
-
(106,424)
Profit for the year
-
-
-
-
184,378
184,378
Dividend paid in year
-
-
-
-
(132,866)
(132,866)
Shareholders' Funds at 31 December 2015
495,770
545,281
1,563,158
1,910,653
343,369
4,858,231
Statement of the Financial Position as at
31 December 2015
Company Number: 02933559
 Note 
2015
2014
Fixed assets
Investments held at fair value through profit and loss
8
4,709,749
4,432,113
Current assets
Debtors
9
124,368
87,246
Cash at bank and in hand
39,493
18,137
163,861
105,383
Creditors: amounts falling due within one year
10
(15,379)
(15,826)
Net current assets
148,482
89,557
Total assets less current liabilities
4,858,231
4,521,670
Provisions for liabilities and charges
- 
-
Net assets
4,858,231
4,521,670
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
1,563,158
1,336,934
 Capital reserve - unrealised
12
1,910,653
1,851,828
Revenue reserve (distributable)
12
343,369
291,857
Shareholders' funds - all equity
4,858,231
4,521,670
Net Asset Value per share
14
245.0p
228.0p
Statement of Cash flows for the Year Ended
31 December 2015
2015
2014
Cash flows from operating activities
Net revenue return
184,378
155,129
Adjustment for:
Expenses charged to capital
 
(106,424)
(95,800)
(Decrease)/Increase in creditors
 (447)
 109
Increase in debtors
 (37,122) 
(45,464)
Cash from operations
 40,385
 13,974
Cash flows from investing activities
Purchase of investments
(755,023)
(679,659)
Proceeds from sales of investments
868,860
768,182
Net cash from investing activities
113,837
 88,523
Equity dividends paid
(132,866)
(109,069)
Net Increase/(decrease)
 21,356
 (6,572)
Cash at the beginning of the year
 18,137
 24,709
Cash at the end of the year
 39,493
 18,137
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
1. Accounting Policies
1.1 Statement of Compliance and Basis of Preparation of Financial Statements
The financial statements are prepared in accordance with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 ("FRS 102"), the Companies Act 2006 and with the AIC Statement of Recommended Practice ("SORP") issued in November 2014, regarding the Financial Statements of Investment Trust Companies and Venture Capital Trusts. All the Company's activities are continuing.
This is the first year in which the financial statements have been prepared under FRS 102. There have been no transitional adjustments needed to the financial statements.
 
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 102 "Income 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.
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 102 "Events after the end of the Reporting Period", 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
2015
2014
UK dividend income
218,248
189,403
Bank interest
61
55
Total income
218,309
189,458
UK dividend income
2015
2014
UK Main Market listed investments
160,651
121,081
UK AIM traded shares
57,597
68,322
218,248
189,403
3. Return on Ordinary Activities before Taxation
2015
2014
The following amounts (inclusive of VAT) are included
within investment management and other expenses:
Directors' remuneration:
 - Services as a director
17,291
17,500
 - Otherwise in connection with management
47,372
45,000
Auditors' remuneration:
 - Audit Services - Statutory audit
10,500
10,500
 - Audit Services - Statutory audit movement on accruals from 
200
 previous years
- 
 
 - Audit Services - Audit related regulatory reporting
-
1,050
Miscellaneous expenses:
- Other wages and salaries
31,233
31,074
- PR and communications
11,935
7,098
- Stock Exchange subscription
6,180
6,844
- Sundry investment management and other expenses
15,844
10,863
140,355
130,129
4. Employees
2015
2014
Costs in respect of Directors:
 Wages and salaries
64,663
62,500
 Social security costs
4,402
4,424
69,065
66,924
Costs in respect of administrator:
 Wages and salaries
25,250
25,250
 Social security costs
1,581
1,400
26,831
26,650
Total:
 Wages and salaries
 89,913
87,750
 Social security costs
5,983
5,824
95,896
93,574
Average number of employees:
 Chairman
1
1
 Investment
2
2
 Administration
1
1
4
4
5. Taxation
(i) On the basis of these financial statements no provision has been made for corporation tax (2014: Nil).
(ii) Factors affecting the tax charge for the year
The tax charge for the period is lower than (2014: lower than) the average small company rate of corporation tax in the UK of 20 per cent. The differences are explained below:
 2015
2014
 
Total return on ordinary activities before tax
468,071
281,046
Total return on ordinary activities multiplied by the average small company rate of corporation tax 20% (2014: 20%)
93,614
56,209
Effects of:
UK dividend income not taxable
(36,876)
(27,662)
Revaluation of shares not taxable
(11,765)
51,405
Capital gains not taxable
(66,530)
(95,749)
Unrelieved management expenses
21,285
15,797
Capital redemption
272
-
Current tax charge for the year
- 
- 
The Company has unrelieved excess revenue management expenses of 57,814 at 31 December 2015 (2014: 65,539) and 102,597 (2014: 102,597) 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 2014, 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 2014. 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".
2015
2014
Revenue
Capital
Total
Revenue
Capital
Total
Attributable return on 
ordinary activities after taxation
184,378
285,049
469,427
155,129
125,917
281,046
Weighted average number of shares
1,983,081
1,983,081
Return per ordinary share
9.3p
14.4p
23.7p
7.8p
6.3p
14.1p
7. Dividend
2015
2014
Final dividend in respect of 2014 of 6.7p (2014: a final dividend of 5.5p was paid in respect of 2013) per share
132,866
109,069
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 7.9 p (2014: 6.7p) per ordinary share be paid amounting to a total of 156,663. For the year 2014, a final dividend of 6.7p was paid on 12 April 2015 amounting to a total of 132,866. 
2015
2014
Revenue available for distribution
184,378
155,129
Final dividend in respect of financial year ended
 31 December 2015
(156,663)
(132,866)
Undistributed Revenue Reserve
27,715
22,263
8. Investments
2015
2014
Movements in year
Valuation at beginning of year
4,432,113 
4,298,919
Purchases at cost
755,023 
679,659
Sales - proceeds
(868,860)
(768,182)
 - realised gains on sales
332,648 
478,743
Increase/(Decrease) in unrealised appreciation
58,825
(257,026)
Valuation at end of year
4,709,749
4,432,113
Book cost at end of year
2,799,089
2,580,285
Unrealised appreciation at the end of the year
1,910,660
1,851,828
4,709,749
4,432,113
UK Main Market listed investments
4,089,885
2,852,033
UK AIM traded shares
619,864
1,580,080
4,709,749
4,432,113
Gains on investments
2015
2014
Realised gains on sales
332,648 
478,743
Increase/(Decrease) in unrealised appreciation
58,825
(257,026)
391,473
221,717
The purchase costs and sales proceeds above include transaction costs of 5,796 (2014: 3,484) and 3,605 (2014: 3,527) respectively.
9. Debtors
2015
2014
Investment transaction debtors
119,311
82,794
Other debtors
5,057
4,452
124,368
87,246
10. Creditors: amounts falling due within one year
2015
2014
Social security and other taxes
3,056
3,238
Other creditors
172
172
Accruals and deferred income
12,151
12,416
15,379
15,826
11. Called Up Share Capital
2015
2014
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
(2014: 1,983,081 Ordinary Shares of 25p)
12. 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.
The major risks associated with the Company are market, credit 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 price risk arises mainly from uncertainty about future prices of financial investments used in the Company's business. It represents the potential loss the Company might suffer through holding market positions by way of price movements other than movements in exchange rates and interest rates. 
The Company's investment portfolio is exposed to market price fluctuations which are monitored by the Investment Manager who gives timely reports of relevant information to the Directors.
Adherence to the investment objectives and the internal controls on investments set by the Company mitigates the risk of excessive exposure to any one particular type of security or issuer.
The Company's exposure to other changes in market prices at 31 December on its investments is as follows: 
A 20% decrease in the market value of investments at 31 December 2015 would have decreased net assets attributable to shareholders by 1.9 pence per share (2014: 1.8 pence per share). An increase of the same percentage would have an equal but opposite effect on net assets available to shareholders.
2015
2014
Fair value through profit or loss investments 
4,709,749
4,432,113
Market risk also arises from changes in interest rates and exchange risk. All of the Company's assets are in sterling and accordingly the Company has limited currency exposure. The majority of the Company's financial assets are non-interest bearing, as a result the Company's financial assets are not subject to significant risk due to fluctuations in the prevailing levels of market interest rates.
The carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date. Bankruptcy or insolvency of the custodian may cause the Company's rights with respect to securities held with the custodian to be delayed.
Liquidity Risk 
Liquidity Risk is the risk that the Company may have difficulty in meeting obligations associated with financial liabilities. The company is able to reposition its investment portfolio when required so as to accommodate liquidity needs. However it may be difficult to realise its investment portfolio in adverse market conditions.
Maturity Analysis of Financial Liabilities
The Company's financial liabilities comprise of creditors as disclosed in note 10. All items are due within one year.
Capital management policies and procedures 
The Company's capital management objectives are: 
 to ensure the company's ability to continue as a going concern; 
 to provide an adequate return to shareholders; 
 to support the company's stability and growth; 
 to provide capital for the purpose of further investments. 
The company actively and regularly reviews and manages its capital structure to ensure and optimal capital structure, taking into consideration the future capital requirements of the company and capital efficiency, projected operating cash flows and projected strategic investments opportunities. The management regards capital as total equity and reserves, for capital management purposes.
Fair values of financial assets and financial liabilities
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. 
Financial instruments by category
The financial instruments of the Company fall into the following categories
31 December 2015
At Amortised Cost
Assets at fair value through profit or loss
Total
Assets as per the balance sheet
Investments
-
4,709,749
4,709,749
Debtors
124,368
-
124,368
Cash at bank
39,493
-
39,493
Total
163,861
4,709,749
487,610
Liabilities as per the balance sheet
Creditors
15,379
-
15,379
Total
15,379
-
15,379
31 December 2014
At Amortised Cost
Assets at fair value through profit or loss
Total
Assets as per the balance sheet
Investments
-
4,432,113
4,432,113
Debtors
87,246
-
87,246
Cash at bank
18,137
-
18,137
Total
105,383
4,432,113
4,537,496
Liabilities as per the balance sheet
Creditors
15,826
-
15,826
Total
15,826
-
15,826
Fair value hierarchy 
In accordance with FRS 102, the Company must disclose the fair value hierarchy of financial instruments.
This classification has changed from previous disclosures under Financial Reporting Standard 29. 
The fair value hierarchy consists of the following three classifications: 
Classification A - Quoted prices in active markets for identical assets or liabilities. 
Quoted in an active market in this context means quoted prices are readily and regularly available and those prices represent actual and regularly occurring market transactions on and arm's length basis.
Classification B - The price of a recent transaction for an identical asset, where quoted prices are unavailable. 
The price of a recent transaction for an identical asset provides evidence of fair value as long as there has not been a significant change in economic circumstances or a significant lapse of time since the transaction took place. If it can be demonstrated that the last transaction price is not a good estimate of fair value (e.g. because it reflects the amount that an entity would receive or pay in a forced transaction, involuntary liquidation or distress sale), that price is adjusted.
Classification C - Inputs for the asset or liability that are based on observable market data and unobservable market data, to estimate what the transaction price would have been on the measurement data in an arm's length exchange motivated by normal business considerations.
The Company only holds classification A investments (2014: classification A investments only).
13. Net Asset Value per Share
The net asset value per share is based on net assets of 4,858,239 (2014: 4,521,670) divided by 1,983,081 (2014: 1,983,081) ordinary shares in issue at the year end.
2015
2014
Net asset value
245.0p 
228.0p 
14. Dividends paid to directors
During the year the following dividends were paid to the directors of the company as a result of their total shareholding:
Mr Robin Boyle 27,551
Mr Hugo Deschampsneufs5,228
Mr David Horner  Nil

This information is provided by RNS
The company news service from the London Stock Exchange
  END
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