REG - Athelney Trust plc - Annual Financial Report
12/02/2024 16:00
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RNS Number : 8683C Athelney Trust PLC 12 February 2024
Athelney Trust PLC
Legal Entity Identifier:
213800ON67TJC7F4DL05
NON- STATUTORY ACCOUNTS
Athelney Trust plc, the investor in small companies and junior markets
announces its final results for the 12 months ended 31 December 2023.
The financial information set out below does not constitute the Company's
statutory accounts for the years ended 31 December 2023 and 2022 but is
derived from those accounts. Statutory accounts for 2022 have been delivered
to the Registrar of Companies, and those for 2023 will be delivered in due
course. The auditors have reported on those accounts; their report was (i)
unqualified, (ii) did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under Section 498 (2) or (3) of the
Companies Act 2006. The text of the Auditor's report can be found in the
Company's full Annual Report and Accounts on the Company website:
www.athelneytrust.co.uk
Chair's Statement and Business Review
Dear Shareholder
I am pleased to present the Annual Financial Report for the year to 31
December 2023.
The Strategic Report section of this Annual Report has been prepared to help
all Shareholders understand the drivers of performance in the past year, how
the Company operates and to assess its performance.
Financial Summary and Overview
The key performance indicators are as follows:
Year ended Year ended % Change
31 December 2023 31 December 2022
NAV total return (4.4)% (26.2)% n/a
Revenue return per ordinary share 7.7p 6.9p 11.4%
Total return per share (0.6)p (81.3)p n/a
Share price 185.0p 210.0p (11.9)%
Net asset value per ordinary share 209.1p 219.4p (4.7)%
Discount to NAV per ordinary share 11.5% 4.3% n/a
Cumulative value of shareholder investment (net asset value plus cumulative
dividends per ordinary share)
218.8p 229.0p (4.4)%
Shareholders' funds £4,512m £4,734m (4.7)%
218.8p
229.0p
(4.4)%
Shareholders' funds
£4,512m
£4,734m
(4.7)%
· The Trust's Investment performance over 12 months as measured by
NAV total return, which is the change in NAV plus the dividend paid, was minus
4.4% (2022: minus 26.2%).
· The interim dividend of 2.2p per share was paid on 22 September
2023.
· Your Board recommends a final dividend of 7.6p per share increasing
a total dividend payable for the year to 9.8p (2022: 9.6p) an increase of
2.0%.
· This is the 21st successive year of progressive dividends and
importantly returns the Trust to the "Dividend Heroes" list maintained by the
AIC, a list of investment companies that have consistently increased their
dividends for 20 or more years in a row.
Performance
The year under review was disappointing. Equity markets were under pressure
throughout with several headwinds, and investment trusts were unable to
attract investors away from the lure of gilts and passive funds. The Company
suffered negative absolute returns and has underperformed compared to the FTSE
250 largely because of ongoing negative sentiment for UK smaller companies and
comparatively high UK interest rates through the year.
In the financial year to 31 December 2023 and on a total return basis, the
Company's net asset value (NAV) fell by 4.7%, the share price fell by 11.9%
compared to a fall of 8.2% in the AIM All-Share index.
The last 12 months created further surprises and uncertainty for UK investors,
as inflation dropped more slowly than in other G7 countries and the resulting
medicine of frequent interest rate rises added to geo-political stressors.
For a higher rate UK taxpayer, the resulting yield on gilts translated to some
unusually high potential returns, and without the equity risk premium, in
general bonds became a more attractive investment. High quality small
company stocks generally lost ground to larger, liquid stocks and after wider
market 'poor returns' of the past few years, investors were generally less
interested in investment trusts. Discounts to share price widened for many
investment trusts and remain, on average, in double-digit territory at 10.0%
for UK Smaller Company investment trusts on 31 December 2023.
Over a 5 year period we have outperformed the FTSE 250 by 3.6% points, (per
annum and before management fees, expenses and dividends) and maintain that
compounded investment into our portfolio still provides attractive returns
compared to alternatives. Further details on the portfolio are under the
Fund Manager comments later in this report and historical figures in Table 1
on page 7.
On the positive side, the UK and world economy in general for 2023 have proved
to be more resilient than expected as we recover from the impact of Covid; the
widely feared deep recession has not materialised (although we may be in a UK
technical recession after the late December downward revision of Q3 to a
contraction of 0.1% by the ONS) and there are signs that peak interest rates
may have been reached in European, UK and US economies.
We believe there is now a strong case for investment in UK equities such as
those held by the Trust, which offer great value for money. Our quality
portfolio, plus the discount, translate into a strong upside, if undervalued
UK stocks get the investment attention they deserve based on fundamentals, and
the general discount shrinks. This would be a double benefit for those
considering further or a new investment in our investment trust.
Dividend and Earnings
I am pleased to report the total revenue earned from the Company's portfolio
rose 19.6% to £219,366 from £183,273 last year which is the highest total
since 2019. Our earnings per share rose to 7.7p from 6.9p, an increase of
11.6%. This improved performance is a welcome return to more normal,
pre-COVID figures and further evidences the quality of the portfolio companies
and their commitment to shareholder value.
The board is pleased to recommend an increased final dividend of 7.6p, which,
subject to shareholder approval at the next AGM, will be paid on 11 April 2024
to those shareholders on the register at 10 March 2024. Once added to the
interim dividend, this brings the full dividend for 2023 to 9.8p a 2.0%
increase on the full dividend for 2022.
I am delighted this would maintain our progressive dividend performance for
the 21(st) year and maintain our highlighted 'Dividend Hero' status as
conferred by the AIC.
Board and Company Developments
The Board places significant importance on corporate governance and compliance
with the AIC and UK Corporate Governance Codes. Full details are set out in
the Corporate Governance section on pages 16 to 19.
We note the Financial Conduct Authority's Policy Statement PS22/3 of April
2022 to comply or explain in relation to board diversity and inclusion, with
changes to the Listing Rules commencing in 2023 for the Trust. As a small,
low-cost fund, your Board continues to assess how best to structure and plan
for a board that meets shareholder and regulatory needs, has continuity,
stability and reflects prudent management of costs.
In terms of controllable costs, I confirm a continued freeze on the
non-executive director's fee (£10,500) with no premium for Chair positions,
which is comparable to the NED fee of other, similarly sized funds.
Our Ongoing Charges Figure (OCF, calculated using the AIC recommended Ongoing
Charges methodology, taking annualised costs that would reasonably be incurred
if there was no trading of the investee shares, divided by the average of
published monthly NAV) is 3.84% (2022: 2.89%).
The increase is due to the decrease in NAV through 2023, and also £24,507 net
increase in Ongoing Charges in 2023 compared to 2022. While we remain a
small fund, reducing the OCF will continue to be a challenge, however every
effort is made to do this, while applying appropriate time and resources to
growth and good governance.
As we continue to explore ways to grow the fund, the Company is now using the
specialist marketing services of Colchester-based Equity Development Ltd. We
look forward to the impact this will make in the coming year and continue to
take opportunities for the Fund Manager to explain his investment approach,
including use of Goodacre Events such as the UK Smaller Companies Conferences
which can be joined online.
I regret the sudden resignation of Hazlewood's LLP as our auditor on the 9(th)
October 2023 because of FRC-driven increased regulatory costs and staff impact
for their public interest entity (PIE) audits. Along with some other smaller
auditors, Hazlewood's withdrew its PIE registration at very short notice.
We are delighted to report that after an appropriate, shortened process to
review a number of alternative auditors, the Board has accepted the
recommendation of the Audit Committee and appointed Moore Kingston Smith LLP
as auditor for this financial year on 20 October 2023.
We welcome general audit reform, after recent, surprising company failures
however believe there has been insufficient assessment of the net effect of
these new regulations: Other companies like us had to replace auditors after
abrupt resignations in recent months and also found there is less choice and
capacity than might be expected.
Our audit fee will quadruple in this transition mainly due to the extra PIE
costs and implications for our auditor; the audit approach itself is largely
the same as before. We hope that shareholders and investors in general see
benefits as the regulatory changes continue to take effect.
Environmental, Human Rights, Employee, Social and Community Issues
The Board consists entirely of two Non-Executive Directors and one Managing
Director who was the sole employee. The Company has no direct impact on the
community or the environment, and as such has no environmental, human rights,
social or community policies. In carrying out its investment activities and in
relationships with suppliers, the Company aims to conduct itself responsibly,
ethically and fairly.
Environmental, Social and Governance factors are considered as part of the
commercial evaluation of investee companies.
Annual General Meeting (AGM)
We are pleased to invite shareholders to our AGM at the offices of Druces LLP,
Salisbury House, London Wall, London EC2M 5PS on 21 March 2024 at 12.00
noon. We encourage attendance in order to meet the board and hear from the
Fund Manager Dr Manny Pohl.
There will be an opportunity to ask questions during the AGM and also
afterwards in a less formal environment.
We encourage all shareholders to vote on the resolutions, all of which the
board endorses ahead of the deadline at 12 noon on 19 March 2024. Details on
how to vote and also on the AGM, and its resolutions are in the Notice of AGM,
which is delivered with this Annual Report. Further copies are available on
our website, or from the Company Secretary.
An Independent Board
The Directors in place at the time of signing these accounts are:
· Myself, Frank Ashton - Non-Executive Chair
· Simon Moore - Non-Executive Director, Chair of Audit Committee, Chair of
Remuneration Committee
· Dr Manny Pohl - Managing Director, Fund Manager
· Jason Pohl - Alternate for Dr Manny Pohl
We currently have three directors who together make up an independent Board
under the AIC Code of Governance 2022.
Capital Gains
During the year the Company realised capital profits before expenses
arising on the sale of investments in the sum of £50,853 (2022: £382,704).
Portfolio Review
Additional Holdings Purchased
Additional and new holdings of AEW UK REIT, Alpha Group International, Cake
Box Holdings, Fevertree Drinks, Impax Asset Management, NWF Group, Paypoint,
Spirax-Sarco Engineering and Treatt were acquired.
Holdings Sold or Trimmed
Clarke (T), Games Workshop, Liontrust Asset Management, Londonmetric Property,
Rightmove, Smart Metering and Target Healthcare REIT.
Outlook
This has been a difficult year, however there is evidence of a change in the
investment landscape in particular the likely reduction of interest rates,
that I believe will bring multiple benefits. We remain cautious and yet also
have confidence in our Managing Director and Fund Manager, Manny Pohl and his
team in providing for the needs of the Company and its shareholders.
Last year I referred to Charlie Munger and just one of his many quotations as
a champion investor and Vice Chair of Berkshire Hathaway. It is sad to hear
of his death at 99 years but also a chance to remember that he was no stranger
to personal tragedy. Talking about hardship recently he said "you can cry
alright. But you can't quit". Similar things might be said about
investing; there can be disappointments and frustrations, often due to
circumstances outside our control, however we will not quit on fundamentals
and commitment to value. Over the long term you will win; this next year
should see improved performance.
Thank you for your continued support of the Company.
Frank Ashton
Non-Executive Chair
12 February 2024
Fund Manager's Review
Reflecting on 2023
As we reflect on the past year, the investment climate has been marked by
significant events and trends shaping investments and the general economic
outlook. The ongoing geopolitical tensions, notably the Russian invasion of
Ukraine and the escalated conflict between Israel and Hamas have contributed
to a climate of political uncertainty.
These events have had far-reaching economic impacts, further complicating the
investment environment.
The required equity risk premium remained high throughout the year, reflecting
the market's sensitivity to these global events and amidst these challenges,
we've seen global inflationary pressures prompt aggressive interest rate
responses from central banks through time. Recently, the rhetoric from central
banks has softened, suggesting that while further rate hikes are possible,
rates might stabilise near current levels for the foreseeable future.
The macro factors affecting the markets and our performance are covered in the
Chair's statement and our portfolio has performed well when compared to the
small company indices as shown in Table 1.
However, the NAV has been negatively affected by rising costs, predominantly
audit fees and our large dividend payout (DY:5.2%) as compared to the FTSE
250(DY:3.6%) in particular.
While macro/political events have dominated the media, technological
advancements have been transformative with Generative Artificial Intelligence
(AI) models emerging as a dominant theme in business discussions worldwide.
While analysts and researchers have used algorithms to analyse and use data
sets to make predictions for decades, it was the release of NVIDIA's CUDA
(compute unified device architecture) software for developers in 2006 which
enabled scientists to apply parallel processing in complex simulations and
data analysis. Parallel processing utilises two or more processors (CPUs or
GPUs) to handle separate parts of an overall task, laying the foundation for
machine learning. Within this context, even OpenAI would take 300 years to
train ChatGPT 3.5 on the fastest single GPU, but with parallel processing and
using 1024 GPUs, it can be done in 34 days. The resultant development of
large language models like ChatGPT, is revolutionising industries. These
developments highlight the importance of investing in businesses that can
harness these technologies to enhance their competitive advantage and growth
potential.
In this regard, the U.S. and China are leading the AI development race, with
significant investments pouring into this technology, while Europe appears to
be a laggard. This rapid growth has prompted governments, particularly the
U.S., to develop regulations to ensure the safe and trustworthy evolution of
these technologies, with many trying to get to grips with the inherent risks
associated with the use of the technology, particularly in the areas of cyber
security and privacy.
The recent executive order by US President Joe Biden has been designed to
impose national rules on the fast-moving technology to ensure "safe, secure
and trustworthy" development. More importantly, this will enable businesses to
understand the ground rules and legitimately organise and obtain data without
breaching data privacy regulations.
In 2023, ChatGPT consumerised these AI developments that had previously been
happening behind closed doors, enabling text, language, speech, and image
recognition to cross over human capability. The net result is significant
reinvestment in technology, showing up in GPU demand from the Big 5 Tech
companies, the owners of proprietary hardware (e.g., NVIDIA) and
large-language models (e.g., Microsoft, Google, Amazon, Meta).
Of particular interest for business are "Large Language Models" (LLM), which
can train on billions of parameters to develop refined algorithms for new use
cases. Clearly, it is also of the utmost importance to ensure that the
businesses in which we invest need to utilise these emerging technologies and
harness them effectively to expand their economic footprint and enhance
investment value.
To this end, our investment process is centred on assessing businesses'
Dynamic Capability (DC). DCs are pivotal, change-oriented capabilities that
empower firms to adapt and reconfigure their resources in response to evolving
customer demands and competitive landscapes. This includes a firm's agility in
R&D, its ability to enter new markets with nimble operational structures,
the consolidation of central support functions following acquisitions, and the
replication of successful processes or systems in new geographical or business
sectors.
The impact of early adoption of AI cannot be overstated; the potential
economic unlock will be meaningful. AI's potential to transform economic
landscapes is immense, as it enables the efficient reading and structuring of
vast amounts of corporate data coupled with powerful workflow automation tools
(think a far more powerful Excel macro). This combination is set to
revolutionise business processes, much like the advent of computer mainframes
in the 1980s, significantly reducing manual accounting work.
By investing in quality companies that are early (effective) adopters of AI,
investors can position themselves at the forefront of this transformative
wave, ready to reap the economic benefits. As we navigate this new AI era, we
focus on meticulously evaluating companies' business models, financials, and
growth plans. This approach helps us identify quality growth stocks poised for
long-term success, leveraging AI to capitalise on market trends and demand.
In addition, we continue to explore the advancements in AI that present
potential for substantial long-term returns. Identifying and investing in
companies leading these innovations position portfolios to benefit from future
market transformations.
In this regard, while we are certainly pleased to book a handsome profit on
our investment in Smart Metering as a result of the takeover bid, this was a
company which most certainly could have benefitted from future developments in
AI. The continued takeover of small companies in the UK market is a worrying
feature as our process aims to find high-quality businesses that we would like
to own for the very long-term. However, it does confirm that valuations are
very favourable at present.
During the past year, we increased our exposure to the AEW UK REIT at the
expense of the Target Healthcare REIT, maintaining our overall exposure to the
Property Trusts in recognition of the need to maintain the dividend paid to
shareholders within a growth style portfolio. In the past twelve months we
added two new names to the portfolio:
Alpha Group: (LSE: ALPH)
Alpha is a leading non-bank provider of financial solutions to corporates and
institutions operating internationally across three continents. Alpha has two
operating divisions, the FX Risk Management division which focuses on
supporting corporate and institutional clients who need to buy or sell
currency to match commercial transactions involving either the buying and/or
selling of goods and services overseas; and the Alternative Banking Solutions
division which provides multi location banking services at more than 50
countries to alternative investment managers for purposes such as asset sales,
purchases, or distributions. Using cutting-edge technologies to provide an
enhanced alternative to traditional banks, Alpha should be able to deliver
superior shareholder returns over the medium to long-term.
Cake Box Holdings (LSE: CBOX)
Cake Box Holdings listed on the London Stock Exchange's AIM Market in 2018 and
has expanded to more than 230 stores throughout the UK. It is the market
leader in premium celebration products that exclude egg, meat products and
alcohol to consumers including those who have dietary or religious
restrictions. The company has adopted an e-commerce, data-driven approach to
drive future growth and aims to optimise their store rollout based on customer
data to both improve new store performance as well as refine their franchisee
and property strategy. With a target of doubling to 400 stores, CBOX should be
able to deliver superior shareholder returns over the medium to long-term.
Looking ahead
In the evolving technological landscape, it's become increasingly clear how
pivotal AI will be in shaping future strategies. While short-term applications
of AI, such as customer service chatbots and co-pilot productivity tools, are
becoming more commonplace, the broader vision of leveraging AI to
revolutionise corporate strategy is still unfolding. This transition,
particularly in the context of leveraging vast corporate data, may be gradual
due to inherent corporate risk aversion.
During my recent flight to attend the Global Federation of Competitiveness
Councils meeting, the following Socrates (470 BC) quote came to my attention:
"The secret of change is to focus all of your energy not on fighting the old,
but on building the new." This sentiment encapsulates the transformative
journey corporations must undertake in the AI era.
For investors, the tangible benefits for companies that effectively integrate
AI can be broadly categorised into three areas:
Productivity Enhancement: AI can significantly augment people-centric
processes within organisations, unlocking new levels of efficiency and
workflow optimisation.
Creation of New Revenue Streams: Leveraging AI for personalised marketing and
data-driven insights allows for novel revenue generation strategies,
transforming how businesses interact with customers.
Sustaining Competitive Advantages: AI enables the development of unique
customer solutions that are challenging to replicate without access to
extensive historical data. This creates a formidable competitive edge.
As we step into this burgeoning AI-driven era, our focus remains on evaluating
the business models, financial health, and growth strategies of potential
investments in a careful, considered and committed way.
A thorough approach lets us pinpoint those quality growth stocks poised for
long-term success. Their agility, ability to swiftly capitalise on emerging
opportunities and adeptness at applying AI to harness market trends and
demands are critical factors in their continued success and the creation of
substantial long-term value for our investors.
Companies with a sustainable competitive advantage are especially
well-positioned to reap the economic benefits of AI. Their resilience to
market disruptions (i.e., business model disruption or price-led competition)
and the high barriers to entry for competitors needing similar data assets
make these quality companies well-positioned to capture and retain the
economic benefits of AI while maintaining their competitive excellence.
Over the past few years, our industry and society have evolved more broadly
with heightened expectations of corporate responsibility. Being a
compassionate corporate citizen, committed to people, the planet, and the
community, is no longer optional but essential.
At ECP, we proudly embrace these values, as evidenced by our third annual
Sustainability Report which will be available in February 2024. We are
committed to ensuring that our business employs best practices to position our
organisation so that we can continue to sustainably grow through time.
We appreciate our role in the investment community, and we will continue to
focus on growing our clients' financial wealth, but our commitment extends
beyond financial growth to include contributing to the societal well-being of
future generations.
Turning to our portfolio, we're encouraged by the notable uptick in our
companies' price-to-earnings (P/E) ratios, rebounding from previous lows.
This, combined with robust short-term financial indicators - including organic
sales growth, solid earnings, and increasing dividends - fortifies our
confidence in the future. This positive trend suggests a promising trajectory
for valuation enhancements across our investments.
Given the current market landscape, we see a prime opportunity to invest in
high-quality franchises. These market conditions are ideal for investors
seeking resilient, growth-oriented investments, positioning them well for
long-term outperformance.
Our primary focus is investing in quality businesses within the growth phase
of their lifecycle. For investors, the material derate of equity valuations,
particularly for growth-oriented stocks, and the expected ongoing volatility
present an opportunity for those investing in resilient, Quality Franchises -
it's time to step in and invest.
Update
The unaudited NAV on 31 January 2024 was 204.7p per share - down by 2.1% from
31 December 2023. The share price on the same day was 175p (trading at a
discount of 14.5%). Further updates can be found at www.athelneytrust.co.uk
(http://www.athelneytrust.co.uk)
Dr Manny Pohl AM
Fund Manager
12 February 2024
Section 172(1) Statement
The Directors of the Company are required to promote the success of the
Company for the benefit of the Members and Shareholders as a whole. Section
172(1) of the Companies Act (2006) expands this duty and requires the
Directors to consider a broader range of interested parties when considering
the promotion of the Company. This wider group of stakeholders will include
employees, if any, suppliers, customers and others, and the Board will look to
understand and take into account the needs of each stakeholder, although
recognising that different stakeholders may have conflicting priorities and
not all decisions made will be to the benefit of all stakeholder groups.
When making decisions the Board should consider the following:
· the likely consequences of any decisions in the long-term;
· the interests of the Company's employees (if applicable);
· the impact of the Company's operations on the environment and the
community;
· the need to foster the Company's business relationships with
suppliers, customers and others;
· the need to act fairly for all members of the Company, and
· the desirability of the Company maintaining a reputation for high
standards of business conduct.
In line with similar small Investment Trusts and Investment Companies,
Athelney Trust plc does not have any customers and relies on a number of
third-party providers of services such as Company Administrator, the Custodian
and the Registrar to maintain its operations. The Company takes into account
the regulations of the market in which it operates and has regard to the
environment and the wider community in which it operates.
At every Board meeting the Directors review the performance of the Company
towards meeting the Company's Investment Objective through its strategy. Manny
Pohl is the fund manager, reports to other Board members and answers any
questions raised. Compliance with existing regulatory and legal requirements
is reviewed, together with any new regulations that are due to be introduced
or are being proposed that may affect the Company.
The Board recognises the importance of, and is committed to, understanding the
views of Shareholders and maintaining communication with its Shareholders in
the most appropriate manner.
This is undertaken through:
Annual General Meeting
The Company, in normal circumstances encourages all Shareholders to attend and
participate at its Annual General Meeting ("AGM"). Whilst the formal business
of the meeting is the primary purpose of the meeting, members of the Board are
available to answer questions directly from Shareholders, to provide an update
to the meeting and to offer Shareholders an insight into the business.
The Board plan to hold the 2024 AGM on 21 March 2024 at 12.00 noon. Further
details regarding the 2024 AGM are contained in the Notice of the Annual
General Meeting published in a separate notification.
Published Reports
The Company produces Annual and Half Yearly Reports and monthly fact sheets
are all available from the Company's website and paper copies are available on
request from the registered office. The publication of these reports is
considered to be the primary method of communication to Shareholders and other
readers of the reports and provides detailed information on the portfolio,
performance over the period and an assessment of the outlook for the Company.
The Annual Report also contains details regarding the Company's corporate
governance and the Board seek to ensure that the Report is readable and is
mindful that it should be fair, balanced and understandable.
Shareholder enquiries
Shareholders can contact the Company or any of its Directors through the
Company Secretary or through their company email address. Alternatively,
letters can be sent to the registered office address. Although the Directors
are not available full time, with the assistance of the Company Secretary they
seek to maintain open communication to all Shareholders.
Suppliers
The Company Secretary, Deborah Warburton and Administrator GW & Co.
Limited, are often the main contact point for advisors and stakeholders in the
Company. Regular communication is maintained between the Company Secretary and
the Directors advising them of all matters concerning the Company. The Company
also relies on the provision of services from outside parties to operate and
gives consideration to the needs and objectives of those providers and
recognises that their success will often assist the Company in achieving its
objectives.
Regulators
The Company operates in an environment that is governed by legal and
regulatory requirements. The Board recognises that these requirements are
there to protect stakeholders, including the government.
Environment and Community
As the Company does not have any direct employees nor any physical office
environment of its own it has little direct impact on the community or the
environment. The Company seeks to reduce its impact on the environment in
encouraging Shareholders to receive Reports electronically rather than through
printed hard copies. When paper copies are requested FSC paper is used. The
Board also engage through electronic means where possible rather than hold
excessive face to face meetings.
Other Statutory Information
As explained within the Report of the Directors on pages 20 to 22, the Company
carries on business as an investment trust. Investment trusts are collective
closed-ended public limited companies.
Board
The Board of Directors is responsible for the overall stewardship of the
Company, including investment and dividend policies, corporate and gearing
strategy, corporate governance procedures and risk management. Biographical
details of the three male Directors, can be found on pages 2 and 3.
One of the Directors is the Company's only employee (2022: one employee).
Investment Objective
The investment objective of the Trust is to provide shareholders with
prospects of long-term capital growth with the risks inherent in small cap
investment minimised through a spread of holdings in quality small cap
companies that operate in various industries and sectors. The Fund Manager
also considers that it is important to maintain a progressive dividend record.
Investment Policy
The assets of the Trust are allocated predominantly to companies with either a
full listing on the London Stock Exchange or a trading facility on AIM or
AQSE. The assets of the Trust have been allocated in two main ways: first, to
the shares of those companies which have grown steadily over the years in
terms of revenue and profits but, despite this progress are undervalued by the
market when compared to future earnings and dividends; second, those companies
whose shares are undervalued by the market when compared with the value of
land, buildings, other assets or cash on their balance sheet.
Investment Strategy
The investment strategy employed by the Fund Manager in meeting the investment
objective focuses on active stock selection. The selection of individual
holdings is based on analysis of, amongst other things, market positioning,
competitive advantage, future growth, financial strength and cash flows. The
weighting of individual investments reflects the Fund Manager's conviction in
the expected future returns from those holdings.
Investment of Assets
At each Board meeting, the Board considers compliance with the Company's
investment policy and other investment restrictions during the reporting
period. An analysis of the portfolio on 31 December 2023 can be found on pages
11 and 12 of this report.
Responsible Ownership
The Fund Manager takes a particular interest in corporate governance and
social responsibility investment policy. As stated within the Corporate
Governance Statement on pages 16 to 19, the Fund Manager's current policy is
available on the Trust's website www.athelneytrust.co.uk. The Board supports
the Fund Manager on his voting policy and his stance towards environmental,
social and governance issues.
Review of Performance and Outlook
Reviews of the Company's returns during the financial year, the position of
the Company at the year end, and the outlook for the coming year are contained
in the Chair's Statement on pages 4 to 6 and the Fund Manager's review on
pages 7 to 10 which form part of the Strategic Report.
Principal Risks and Uncertainties and Risk Management
As stated within the Corporate Governance Statement on pages 16 to 19, the
Board applies the principles detailed in the internal control guidance issued
by the Financial Reporting Council, and has established a continuing process
designed to meet the particular needs of the Company in managing the risks and
uncertainties to which it is exposed.
The principal risks and uncertainties faced by the Company are described below
and in note 12 which provides detailed explanations of the risks associated
with the Company's financial instruments.
· Global conflict - The continuing war between Russia and Ukraine
has had a significant impact, inter alia, on inflation and, in conjunction
with affairs in China, an impact on supply chains and globalisation. Investee
companies will vary as to the impact on them and their ability to adapt.
· Inflationary pressure - Inflation has escalated sharply in the
last 12 months and the Bank of England has raised interest rates on several
occasions in an attempt to reduce the level of inflation. Not all investee
companies are well-placed to pass on cost pressures to their customers.
· Market - the Company's fixed assets consist almost entirely of
listed securities and it is therefore exposed to movements in the prices of
individual securities and the market generally.
· Investment and strategic - incorrect investment strategy, asset
allocation, stock selection and the use of gearing could all lead to poor
returns for shareholders.
· Regulatory - Relevant legislation and regulations which apply
to the Company include the Companies Act 2006, the Corporation Tax Act 2010
("CTA") and the Listing Rules of the Financial Conduct Authority ("FCA"). The
Company has noted the recommendations of the UK Corporate Governance Code and
its statement of compliance appears on pages 16 to 19. A breach of the CTA
could result in the Company losing its status as an investment company and
becoming subject to capital gains tax, whilst a breach of the Listing Rules
might result in censure by the FCA. At each Board meeting the status of the
Company is considered and discussed, so as to ensure that all regulations are
being adhered to by the Company and its service providers.
· Operational - failure of the accounting systems or disruption to its
business, or that of other third-party service providers, could lead to an
inability to provide accurate reporting and monitoring, leading to a loss of
shareholders' confidence.
· Financial - inadequate controls by the Fund Manager or other
third-party service providers could lead to misappropriation of assets.
Inappropriate accounting policies or failure to comply with accounting
standards could lead to misreporting or breaches of regulations.
· Liquidity - the Company may have difficulty in meeting obligations
associated with financial liabilities.
· Interest rate risk - this is not considered to be a direct risk to
the Company other than through its effect on investee companies.
· Trading - the Company is a small trust and its shares can be
illiquid, which means that investors may have difficulty in dealing in larger
amounts of shares.
The Company has complied with the MiFID ll and KID legislation and the
deadlines to ensure that shares in the Company were still able to be traded. A
copy of the Company's KID can be found on the website
http://www.athelneytrust.co.uk
The Board is not aware of any breaches of laws or regulations during the
period under review and up to the date of this report.
The Board seeks to mitigate and manage these risks through continual review,
policy setting and enforcement of contractual obligations. It also regularly
monitors the investment environment and the management of the Company's
investment portfolio. Investment risk is spread through holding a wide range
of securities in different industrial sectors.
Statement Regarding Annual Report and Financial Statements
Following a detailed review of the Annual Report and Financial Statements by
the Audit Committee, the Directors consider that taken as a whole it is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the Company's performance, business model and strategy.
The Directors have adopted best practices as described by the AIC's Statement
of Recommended Practice on financial statements dated July 2022.
Greenhouse Gas Emissions
As an investment company with its activities outsourced to third parties or
self managed by the Non-Executive Directors, the Company's own direct
environmental impact is minimal. The Company has no greenhouse gas emissions
to report from its operations, nor does it have responsibility for any other
emissions producing sources under the Companies Act 2006 (Strategic Report and
Directors' Reports) Regulations 2013. Furthermore, the Company considers
itself to be a low energy user under the Streamlined Energy & Carbon
Reporting regulations and therefore is not required to disclose energy and
carbon information.
Social, Community and Human Rights issues
The Company has one employee and, as far as the Board is aware, no issues
exist in respect of social, community or human rights issues.
Alternative Investment Fund Manager's Directive ("AIFMD")
The Company is registered as its own AIFM with the FCA under the AIFMD and
confirms that all required returns have been completed and filed.
Going Concern
In assessing the going concern basis of accounting, the Directors have had
regard to the guidance issued by the Financial Reporting Council. They have
considered the current cash position of the Company, and forecast revenues for
the current financial year. The Directors have also taken into account the
Company's investment policy, which is described on page 14 is subject to
regular Board monitoring processes, and is designed to ensure that the Company
is invested in listed securities and those traded on AIM or AQSE.
The Company retains title to all assets held by its Custodian. Note 12 to the
financial statements sets out the financial risk profile of the Company and
indicates the effect on its assets and liabilities of falls and rises in the
value of securities, market rates of interest and changes in exchange rates.
The assets of the Company consist mainly of marketable securities, the
directors are of the opinion that at the time of approving the accounts, the
Company has adequate resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the going concern
basis in preparing the accounts.
In addition, the Directors have regard to ongoing investor interest in the
sustainability of the Company's business model and in the continuation of the
Company, specifically being interested in feedback from meetings and
conversations with Shareholders. In addition to considering the principal
risks on pages 14 and 15 and the financial position of the Company as
described above, the Board has also considered the following further factors:
· the Board continues to adopt a long-term view when making
investments
· regulations will not increase to a level that makes the running
of the Company uneconomical; and
· the performance of the Company will be satisfactory and should
performance be less than the Board deem acceptable it has the powers to take
appropriate action.
Viability Statement
The Directors have assessed the prospects of the Company for a period of three
years. The Board believes this time period is appropriate having consideration
for the Company's principal risks and uncertainties (outlined on pages 14 and
15), its portfolio of listed equity investments and cash balances, and its
ability to achieve the stated dividend policy. The Directors have assessed the
ability of the Company to continue as a going concern as outlined above.
In making this assessment, the Directors have considered detailed information
provided at Board meetings which includes the Company's balance sheet,
investment portfolio and income and operating expenses.
Based on the above, the Board has a reasonable expectation that the Company
fully expects it will be able to continue in operation and meet its
liabilities as they fall due over the three-year period of this assessment.
Board Diversity
When recruiting a new Director, the Board's policy is to appoint individuals
on merit matched against the skill requirements identified by the Board.
The Board believes diversity is important in bringing an appropriate range of
skills, knowledge and experience to the Board and gives this consideration
when recruiting new Directors and has also noted the requirements of Listing
Rule 9.8.6R (9) following the Parker Report on increasing the diversity on the
boards of public companies.
As at 31 December 2023, there were three male Directors on the Board. All
Directors identified themselves as Caucasian by ethnic background.
When making appointments in the future the Board will continue to operate an
open-minded approach to recruitment without restrictions against any perceived
group or individual. The Board will take into consideration the diversity
targets set by Listing Rule 9.8.6R (9) when making future appointments,
however due to the size of the Board meeting a target of 40% of Directors
being women with one being a senior Board position, and one individual being
from a minority ethnic background may not be reached in the immediate future.
The Company does not have any employees other than the Managing Director and,
as a result, the Board does not consider it necessary to establish means for
employee engagement with the Board as required by the latest version of the UK
Corporate Governance Code.
Dr Manny Pohl AM
Managing Director
12 February 2024
Statement of Directors' responsibilities
The Directors state that to the best of their knowledge:
• the Financial Statements, prepared in accordance
with UK Generally Accepted Accounting Practice, give a true and fair view of
the assets, liabilities, financial position and net return of the Company;
• consider the Annual Report and accounts, taken
as a whole, are fair, balanced and understandable and provide the necessary
information for shareholders to assess the Company's position and performance,
business model and strategy; and
• the Chair's Statement and Report of the
Directors include a fair review of the development and performance of the
business and the position of the Company together with a description of the
principal risks and uncertainties that it faces.
On behalf of the Board
Dr Manny Pohl AM
Managing Director
12 February 2024
Income Statement
For the Year Ended 31 December 2023
Note Revenue Capital 2023 Revenue Capital 2022
Total Total
£ £ £ £ £ £
Losses on investments held at fair value 8 - (57,725) (57,725) - (1,787,296) (1,787,296)
Income from investments 2 219,366 - 219,366 183,273 - 183,273
Investment management expenses 3 (3,419) (31,019) (34,438) (4,008) (36,327) (40,335)
Other expenses 3 (48,254) (91,604) (139,858) (30,734) (78,720) (109,454)
Net return on ordinary activities before taxation 167,693 (180,348) (12,655) 148,531 (1,902,343) (1,753,812)
Taxation 5 (623) - (623) - - -
Net return (negative return) on ordinary activities after taxation 6 167,070 (180,348) (13,278) 148,531 (1,902,343) (1,753,812)
Net return per ordinary share 6 7.7p (8.3p) (0.6p) 6.9p (88.2p) (81.3p)
Dividend per ordinary share paid during the year 7 9.7p 9.6p
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued during the year.
The total column of this statement is the Statement of Total Comprehensive
Income of the Company prepared in accordance with applicable Financial
Reporting Standards ("FRS"). The supplementary revenue return and capital
return columns are prepared in accordance with the Statement of Recommended
Practice ("AIC SORP") issued in July 2022 by the Association of Investment
Companies.
The notes below form part of these financial statements.
Statement of Financial Position
As at 31 December 2023
Company Number: 02933559
2023 2022
Note
£ £
Fixed assets
Investments held at fair value through profit and loss 8 4,374,302 4,180,985
Current assets
Debtors 9 137,709 543,301
Cash at bank and in hand 40,347 27,361
178,056 570,662
Creditors: amounts falling due within one year 10 (40,388) (17,085)
Net current assets 137,668 553,577
Total assets less current liabilities 4,511,970 4,734,562
Net assets 4,511,970 4,734,562
Capital and reserves
Called up share capital 11 539,470 539,470
Share premium account 881,087 881,087
Other reserves (non distributable)
Capital reserve - realised 2,467,624 2,539,394
Capital reserve - unrealised 453,206 561,784
Revenue reserve (distributable) 170,583 212,827
Shareholders' funds - all equity 4,511,970 4,734,562
Net Asset Value per share 13 209.1p 219.4p
These financial statements were approved and authorised for issue by the Board
of Directors on 12 February 2024 and signed on their behalf by
Dr Manny Pohl AM
Managing Director
The notes below form part of these financial statements.
Statement of Changes in Equity
For the Year Ended 31 December 2023
Called-up Capital Capital Total
Share Share reserve reserve Revenue Shareholders'
Capital Premium realised unrealised reserve Funds
£ £ £ £ £ £
Balance brought forward at 1 January 2022 539,470 881,087 2,271,737 2,731,784 271,452 6,695,530
Net profits on realisation
of investments - - 382,704 - - 382,704
Decrease in unrealised
Appreciation - - - (2,170,000) - (2,170,000)
Expenses allocated to
Capital - - (115,047) - - (115,047)
Profit for the year - - - - 148,531 148,531
Dividend paid in year - - - - (207,156) (207,156)
Shareholders' Funds at 31 December 2022 539,470 881,087 2,539,394 561,784 212,827 4,734,562
Balance brought forward at 1 January 2023 539,470 881,087 2,539,394 561,784 212,827 4,734,562
Net profits on realisation
of investments - - 50,853 - - 50,853
Decrease in unrealised
Appreciation - - - (108,578) - (108,578)
Expenses allocated to
Capital - - (122,623) - - (122,623)
Profit for the year - - - - 167,070 167,070
Dividend paid in year - - - - (209,314) (209,314)
Shareholders' Funds at 31 December 2023 539,470 881,087 2,467,624 453,206 170,583 4,511,970
The notes below form part of these financial statements.
Statement of Cash Flows
For the Year Ended 31 December 2023
2023 2022
£ £
Cash flows used in operating activities
Net revenue return 167,070 148,531
Adjustment for:
Expenses charged to capital (122,623) (115,047)
Increase/(decrease) in creditors 23,303 (44)
Decrease/(increase) in debtors 405,592 (298,138)
Cash received/(used) in operations 473,342 (264,698)
Cash flows from investing activities
Purchase of investments (906,775) (1,003,583)
Proceeds from sales of investments 655,733 1,472,122
Net cash (used)/received from investing activities (251,042) 468,539
Equity dividends paid (209,314) (207,156)
Net increase/(decrease) in cash 12,986 (3,315)
Cash at the beginning of the year 27,361 30,676
40,347 27,361
Cash at the end of the year
As the company does not have any loans, overdrafts or hire purchase
arrangements, net debt is equal to cash and therefore no reconciliation of net
debt has been disclosed.
The notes below form part of these financial statements.
Notes to the Financial Statements
For the Year Ended 31 December 2023
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 July 2022, regarding the Financial Statements of
Investment Trust Companies and Venture Capital Trusts. All the Company's
activities are continuing.
The presentation currency of the financial statements is pounds sterling,
being the functional currency of the primary economic environment in which the
company operates. Monetary amounts in these financial statements are rounded
to the nearest pound.
1.2 Going concern
The Directors have made an assessment of the Company's ability to continue as
a going concern. This has included consideration of portfolio liquidity, the
financial position in respect of its cashflows, the working arrangements of
key service providers, the continued eligibility to be approved as an
investment trust company, the impact of the current economic environment and
the current conflicts in the Ukraine and the Middle East. In addition the
Directors are not aware of any material uncertainties that may cast
significant doubt upon the Company's ability to continue as a going concern.
The Directors are satisfied that the Company has sufficient resources to
continue in business for the foreseeable future being a period of at least 12
months from the date these financial statements were approved. Therefore, the
financial statements have been prepared on the going concern basis.
1.3 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
section 23 "Revenue". Interest is dealt with on an accruals basis.
1.4 Investment Management Expenses
All three Directors are involved in investment management, 10% of their
salaries or fees 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.
1.5 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.
1.6 Investments
Listed investments comprise those listed on the Official List of the London
Stock Exchange. Unlisted investments are traded on AIM or AQSE. 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 on 31 December.
1.7 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.
1.8 Judgements and estimates
The Directors confirm that no judgements or significant estimates have been
made in the process of applying the Company's accounting policies.
1.9 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.
1.10 Capital Reserves
Capital Reserve - Realised
Gains and losses on realisation of fixed asset investments are dealt with in
this reserve. As per the company articles the reserve is not readily
distributable.
Capital Reserve - Unrealised
Increases and decreases in the valuations of fixed asset investments are dealt
with in this reserve. Unrealised capital reserves cannot be distributed by way
of dividends or similar.
1.11 Dividends
In accordance with FRS 102 Section 32"Events after the end of the Reporting
Period", dividends are included in the financial statements in the year in
which they go ex-div.
1.12 Share Issue Expenses
The costs associated with issuing shares are written off against any premium
arising on the issue of Share Capital.
1.13 Financial Instruments
Short term debtors and creditors are held at cost.
2. Income
Income from investments
2023 2022
£ £
UK dividend income 140,588 108,179
Foreign dividend income 2,160 3,760
UK Property REITs 73,339 71,308
Bank interest 3,279 26
Total income 219,366 183,273
UK dividend income
2023 2022
£ £
UK Main Market listed investments 105,608 79,926
UK AIM-traded shares 34,980 28,253
140,588 108,179
3. Return on Ordinary Activities before Taxation
The following amounts (inclusive of VAT) are included within investment
management and other expenses:
2023 2022
£ £
Directors' remuneration:
Services as a director 21,000 21,000
Otherwise in connection with management 34,193 40,077
Auditor's remuneration:
Audit Services - Statutory audit 46,140 11,984
Miscellaneous expenses:
Management services 32,472 32,472
PR and communications 2,225 6,687
Stock exchange subscription 12,000 10,500
Sundry investment management and other expenses 24,826 23,276
Legal fees 1,440 3,793
174,296 149,789
4. Employees and Directors' Remuneration
2023 2022
£ £
Costs in respect of Directors:
Non-executive Directors' fees 21,000 21,000
Wages and salaries 34,193 40,077
55,193 61,077
Average number of employees:
Chair - -
Investment 1 1
Administration - -
1 1
5. Taxation
(i) On the basis of these financial statements no provision has been made
for corporation tax (2022: Nil).
(ii) Factors affecting the tax charge for the year.
The tax charge for the period is lower than (2022: higher than) the average
small company rate of corporation tax in the UK of 19 per cent. The
differences are explained below:
£ £
2023 2022 1,396,823 (13,329)
£ £
Total return on ordinary activities before tax (12,655) (1,753,812)
Total return on ordinary activities multiplied by the average small company (2,404) (333,223)
rate of corporation tax 19% (2020: 19%)
Effects of:
UK dividend income not taxable (26,686) (20,739)
Revaluation of shares not taxable 20,630 412,299
Capital gains not taxable (9,662) (72,714)
Unrelieved management expenses 18,745 14,377
Current tax charge for the year 623 -
265,396 (2,532)
1,396,823
(13,329)
265,396
(2,532)
The Company has unrelieved excess revenue management expenses of £780,914 at
31 December 2023 (2022: £671,156) and £102,597 (2022: £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.
Historically the Company has received approval from HM Revenue and Customs
under Section 1158 of the Corporation Tax Act 2010, as a result of this
approval the Company was not liable to Corporation Tax on any realised
investment gains for 2023 or the preceding years. 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.
The Directors are fully aware that the Company is not a close company and of
the rules associated with this status. The Company holds its Investment
Trust status under the S446 Companies Act 2010 exemption because more than 35%
of the company's shares are held by the public and have been actively traded
in the past 12 months on the London Stock Exchange and this is regularly
reviewed by the Directors.
6. Return per Ordinary Share
Returns per share are based on the weighted average number of shares in issue
during the year.
2023
£ £ £
Revenue Capital Total
Attributable return on ordinary activities after taxation
167,070 (180,348) (13,278)
Weighted average number of shares 2,157,881
Return per ordinary share 7.7p (8.3p) (0.6p)
2022
£ £ £
Revenue Capital Total
Attributable return on ordinary activities after taxation
148,531 (1,902,343) (1,753,812)
Weighted average number of shares 2,157,881
Return per ordinary share 6.9p (88.2p) (81.3p)
7. Dividend
2023 2022
£ £
Final dividend in respect of 2022 of 7.5p (2022: a final dividend of 7.5p was 161,841 161,841
paid in respect of 2021) per share
Interim dividend in respect of 2023 of 2.2p (2022: an interim dividend of 2.1p 47,473 45,315
was paid in respect of 2022) per share
209,314 207,156
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 7.6p (2022: 7.5p) per ordinary
share be paid out of revenue profits amounting to a total of £167,070. An
interim dividend of 2.2p per ordinary share was paid on 22 September 2023
amounting to £47,473 making the total dividend payable in the year £211,472.
For the year 2022, a final dividend of 7.6p was paid on 6 April 2023 amounting
to a total of £163,999. An interim dividend of 2.1p per ordinary share was
paid on 23 September 2022 amounting to £45,315 making the total dividend paid
in the year £207,156.
Summary of dividends paid for the last 10 financial years
Ex-div date Dividend Type Amount Financial Year
08/03/2024 Proposed 7.6p 2023
07/09/2023 Interim 2.2p 2023
6/04/2023 Final 7.5p 2022
08/09/2022 Interim 2.1p 2022
10/3/2022 Final 7.5p 2021
09/9/2021 Interim 2.0p 2021
11/3/2021 Final 7.7p 2020
10/9/2020 Interim 1.7p 2020
19/3/2020 Final 9.3p 2019
20/3/2019 Final 9.1p 2018
01/3/2018 Final 8.9p 2017
09/3/2017 Final 8.6p 2016
17/3/2016 Final 7.9p 2015
19/3/2015 Final 6.7p 2014
19/3/2014 Final 5.5p 2013
2023 2022
£ £
Revenue available for distribution 167,070 148,531
Interim dividend paid (47,473) (45,315)
Final dividend in respect of financial year end (163,999) (161,841)
Distribution of prior year reserves (44,402) (58,625)
2023 2022
£ £
Revenue available for distribution 167,070 148,531
Interim dividend paid (47,473) (45,315)
Final dividend in respect of financial year end (163,999) (161,841)
Distribution of prior year reserves (44,402) (58,625)
8. Investments
Movements in year 2023 2022
£ £
Valuation at beginning of year 4,180,985 6,436,820
Purchases at cost 906,775 1,003,583
Sales - (655,733) (1,472,122)
proceeds
- realised gains on sales 50,853 382,704
Decrease in unrealised appreciation (108,578) (2,170,000)
Valuation at end of year 4,374,302 4,180,985
Book cost at end of year 3,921,097 3,619,201
Unrealised appreciation at the end of the year 453,205 561,784
4,374,302 4,180,985
UK Main Market listed investments 2,886,362 3,070,365
UK AIM-traded shares 1,487,940 1,110,620
4,374,302 4,180,985
Gains on
investments
2023 2022
£ £
Realised gains on sales 50,853 382,704
Decrease in unrealised appreciation (108,578) (2,170,000)
(57,725) (1,787,296)
The purchase costs and sales proceeds above include transaction costs of
£5,429 (2022: £3,515) and £2,795 (2022: £3,302) respectively.
9. Debtors
2023 2022
£ £
Investment transaction debtors 104,128 513,597
Other debtors 33,581 29,704
137,709 543,301
10. Creditors: amounts falling due within one year
2023 2022
£ £
Social security and other taxes 700 700
Other creditors 2,880 2,850
Accruals and deferred income 36,808 13,535
40,388 17,085
11. Called Up Share Capital
2023 2022
£ £
Authorised
10,000,000 Ordinary Shares of 25p 2,500,00000 2,500,000
Allotted, called up and fully paid
2,157,881 Ordinary Shares of 25p 539,470 539,470
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 Fund 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 2023 would
have decreased net assets attributable shareholders by 47 pence per share
(2022: 39 pence per share). An increase of the same percentage would have an
equal but opposite effect on net assets attributable to shareholders.
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 consist 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 an optimal capital structure, taking into consideration the future
capital requirements of the Company and capital efficiency, projected
operating cash flows and projected strategic investment 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.
2023 2022
£ £
Fair value through profit or loss investments 4,374,302 4,180,985
Financial instruments by category
The financial instruments of the Company fall into the following categories
31 December 2023
At Amortised Cost Assets at fair value through profit or loss Total
Assets as per balance sheet £ £ £
Investments - 4,374,302 4,374,302
Debtors 137,709 - 137,709
Cash at bank 40,347 - 40,347
Total 178,056 4,374,302 4,552,358
Liabilities as per the balance sheet
Creditors 39,688 - 39,688
Total 39,688 - 39,688
31 December 2022
At Amortised Cost Assets at fair value through profit or loss Total
Assets as per balance sheet £ £ £
Investments - 4,180,985 4,180,985
Debtors 543,301 - 543,301
Cash at bank 27,361 - 27,361
Total 570,662 4,180,985 4,751,647
Liabilities as per the balance sheet
Creditors 16,385 - 16,385
Total 16,385 - 16,385
Fair value hierarchy
In accordance with FRS 102, the Company must disclose the fair value hierarchy
of financial instruments.
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 an 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 (2022: classification A
investments only).
13. Net Asset Value per Share
The net asset value per share is based on net assets of £4,511,970 (2022:
£4,734,562) divided by 2,157,881 (2022: 2,157,881) ordinary shares in issue
at the year end.
2023 2022
£ £
Net asset value per share 209.1p 219.4p
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:
Dr Manny Pohl AM £8,342¹
Simon Moore £6,499
Frank Ashton £ 226
Notes:
1. Manny Pohl's relationship with EC Pohl & Co Pty Ltd is
described in Note 1 to the table of Directors' interests on page 25. During
the year dividends amounting to £8,342 were paid to EC Pohl & Co Pty Ltd.
FURTHER INFORMATION
The Annual General Meeting of the Company will be held on 21 March 2024 at 12
noon at the offices of Druces LLP, Salisbury House, London Wall, London EC2M
5PS
A copy of the Annual Report will be submitted to the National Storage
Mechanism and will shortly be available for inspection
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) . This document
will also be available on the Company's website at
https://www.athelneytrust.co.uk/reports-accounts/
(https://www.athelneytrust.co.uk/reports-accounts/)
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