REG - Athelney Trust plc - Half-year Report
26/07/2022 12:45
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RNS Number : 7938T Athelney Trust PLC 26 July 2022
Athelney Trust PLC
Legal Entity Identifier:
213800ON67TJC7F4DL05
26 July 2022
Half Yearly Financial Report for the Period ended 30 June 2022
Athelney Trust PLC (LSE: ATY) is a company making investments in the equity
securities of quoted United Kingdom companies including smaller companies.
Investment Objective
The investment objective of the Trust is to provide long-term growth in
dividends and capital, 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 profits and dividends 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.
Chairman's Statement
Dear Shareholder
I am pleased to present the Interim Financial Report for the half year to 30
June 2022.
Period Highlights
• Investment performance trailed the FTSE 250 index by 4.2% - unaudited Net
Asset Value (NAV) declined to 233.7p, a drop of 24.7% for the half year
compared to a FTSE 250 drop of 20.5%. Over the past 12 months, our portfolio
beat the same index by 1.4%
• Against global market performance, the Company's share price has been
remarkably resilient, only falling 4% since 31 December 2021
• The Trust now tops the AIC's 'Next Generation of Dividend Heroes' table
published in March with a dividend yield at that time of 4.42%, after 19 years
of dividend growth
• Total return to shareholders decreased by 22.3% in this six-month period,
calculated as the change in net asset value (NAV) during the half year,
including dividend paid
• Gross revenue has increased to £102,311, a welcome increase of 24.3%
compared to the same period last year (£82,309)
• Revenue return per ordinary share was 3.9p (31 December 2021: 7.0p, 30 Jun
2021: 3.0p)
• A final dividend of 7.5p was paid in April 2022 (April 2021: 7.7p) and an
interim dividend of 2.0p was paid in September 2021 (September 2020:
1.7p) making the total dividend 9.5p (2021: 9.4p)
• The interim dividend will be 2.1p (2021: 2.0p).
Performance
I am pleased to report the Company has produced solid investment performance
in comparative terms over these six months for its shareholders; the board is
very pleased with our Managing Director and Fund Manager's focus and
resilience over a period of increasing uncertainty in the global economy and
the UK market.
The NAV return for the half year was -24.7% compared to -20.5% for the FTSE
250 Index, an underperformance of 4.2% (but in contrast to 1.4% outperformance
against the same index for the 12 months ending 30 June 2022). Further
information on portfolio activity and the drivers behind the portfolio's
performance is contained in the Managing Director's Report below. We
believe the relatively short term, market-related issues of NAV return should
be viewed in the context of the longer term benefits of investment trust
status, and our ability to return value over time.
In a period that ended with indices across the world in rapid decline, I am
very pleased by the resilience of the Company's share price which only dropped
4.4% to 215p from 225p on 31 December 2021. As a result, it is now trading
at a modest discount to NAV of around 8% compared to the AIC UK Smaller
Companies investment trust sector average of just over 13%. The board believes
this reflects the value of our not pursuing a geared approach to investment,
where market falls will often exacerbate the negative impact for trusts using
gearing.
Dividends
The balance of influence for the UK market has now passed from one-off special
payment dividends that characterised 2021, to underlying dividends that
increased 13% in Q1 2022 (according to the Link Group). There are dividend
increases in all sectors but especially for oil-, gas- and metals-related
companies that benefit from supply-demand mismatches as we release from
lockdowns, and the price increases resulting from the Russian invasion of
Ukraine.
We are therefore very pleased to see how income from your Company's portfolio
of UK companies, has steadily been returning to levels more usually associated
with pre-COVID years. Gross revenue has increased by more than 24% over the
comparative period last year to £102,311 (£82,309).
We are delighted to head the league table of trusts in the AIC's 'Next
Generation Dividend Heroes' published in March each year. This year is the
nineteenth consecutive year of dividend growth. I would like to pay tribute
to Manny Pohl's wisdom and experience in finely balancing the portfolio's need
to generate income as well as spot the growth companies that will provide
superior shareholder returns over the long term.
I am delighted to report your board has decided to pay an interim dividend of
2.1p per share on 23 September 2022 to all shareholders on the register of
members at close of business on 9 September 2022.
We will review the case for a final dividend in Q1 2023.
Shareholder Relations
The Board held the AGM on 5 April 2022 and was delighted to be able to do this
in person, for the first time since 2019. The AGM for the current financial
year will be held in London on 16 March 2023.
Outlook
I wrote in our Annual Report in February 2022 that there were a number of
ongoing uncertainties that could slow the rate of recovery and delay a return
to growth post-pandemic.
Firstly, there has been a steady relaxation of COVID restriction in many
countries over the past six months; we seem to be transitioning to 'living
with the virus' however we continue to deal with the supply side challenges
and this has now, driven by increased energy prices and the Russia-Ukraine
war, translated into the dark cloud of persistent inflation, imminent
recession and possible wage-price spirals in at least some of the G7 nations.
Secondly, the fallout from the now likely very long-term Russia-Ukraine
conflict inevitably has wide-ranging regional even global impacts for some
commodity prices. There is a clear destabilising effect on market confidence
and risk premiums as the conflict could somehow result in catastrophic
'unintended consequences'. There are no short-term answers palatable to
either side. Cooperation has increased for western nations ranged against
Putin with one very clear positive result: Substantial acceleration of and
increased targets for the race to Net Zero in Europe as it weans off Russian
fossil fuels. This will drive more gross value added (GVA - defined as
output minus consumption) from highly skilled jobs, services and products,
subject to further regulatory support from governments.
Thirdly Boris Johnson's era has finally come to an end as he resigned on 7
July. Able to cut through to the voting public with his personal brand,
convince like so few other politicians that he was the one to 'get the job
done', Johnson has wasted the opportunity provided by a huge government
majority. Ultimately, he demonstrated why self-awareness and good judgment
of others are two basic requirements for any leader. We now await
confirmation of Rishi Sunak or Liz Truss as his replacement on 5(th)
September. Who would envy them the job, given the challenges of increasing
industrial unrest as UK inflation is forecast to top 11%, a looming European
winter energy crisis, the need to stimulate UK growth and productivity, even
as some economies assess the need for a 100 basis point increase in interest
rates? It is time for a 'new broom'; the UK economy, any long term success
of Brexit, even perhaps the Union itself depend on it sweeping clean, and
quickly too.
In the meantime, your board continues to relentlessly focus on the conditions
that translate into stability and benefit for you as existing and potential
shareholders, in as far as market conditions allow.
We know that investors are and will remain attracted by the risk
diversification inherent in our portfolio, where both income and capital
growth is possible across a wide range of sectors and companies. Most
understand that for all but a few stocks in the current climate, there will be
a degree of share price volatility for a while and that our investment trust
status will help smooth the impact of such volatility.
Overall, the board remains confident the Company remains well-positioned to
meet its objectives, as well as to take advantage of opportunities to identify
and capture value where possible, within the remit of the investment mandate.
Frank Ashton
Chairman
26 July 2022
Other Matters
The important events that have occurred during the period under review and the
key factors influencing the financial statements are set out above.
Directors' Responsibility Statement
The Directors are responsible for preparing the Half Yearly Financial Report
in accordance with applicable laws and regulations. The Directors confirm that
to the best of their knowledge:
· The condensed set of Financial Statements for the
six months to 30 June 2022 have been prepared in accordance with FRS 104
"Interim Financial Reporting", gives a fair view of the assets, liabilities,
financial position and profit of the Company.
· The Half Yearly Financial Report includes a fair
review of the information required by:
a) rule 4.2.7R of the Disclosure Guidance and
Transparency Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact on the
condensed set of financial statements and a description of the principal risks
and uncertainties for the remaining six months of the year; and
b) rule 4.2.8R of the Disclosure Guidance and
Transparency Rules, being related party transactions that have taken place in
the first six months of the financial year and that have materially affected
the financial position or performance of the Company during that period; and
any changes in the related party transactions described in the last Annual
Report that could do so.
The Half Yearly Financial Report for the six months ended 30 June 2022
comprises an Interim Management Report, in the form of the Chairman's
Statement and Other Matters, the Managing Director's Report, Portfolio
Information and a set of Financial Statements which have not been reviewed or
audited by the Company's Auditor.
Principal Risks and Uncertainties
The Board considers that the principal risks and uncertainties facing the
Company, other than as set out below, remain the same as those disclosed in
the Annual Report for the year ended 31 December 2021 on pages 13 and 14 and
page 36. These risks include, but are not limited to, market risk, investment
and strategic risk, regulatory risk, operational risk, financial risk and
liquidity risk.
Global Pandemic
The global pandemic COVID-19 declared by WHO on 11 March 2020 has emerged as a
significant risk which has impacted global commercial activities. The board
has been monitoring the development of the pandemic and has considered the
impact it has had to date and assessed the impact it may have in the future.
The Chairman's Statement and Managing Director's Report cover this in more
detail.
On behalf of the Board
Frank Ashton
Chairman
26 July 2022
Managing Directors Report
"Time is the friend of the wonderful business, the enemy of the mediocre."
Warren Buffett - Letter to Shareholders 1989
"When America sneezes, the rest of the world catches a cold" Circa 1920
After the turmoil of recent years, many had hoped that 2022 would see a return
to a more normal environment. However, the year so far has been punctuated
by macro events such as the crisis in Ukraine and interest rate rises. In the
US, investors are clearly fearful of inflationary pressures and the resulting
US Federal Reserve's (The Fed) policy response. Accordingly, the US equity
market recorded its worst first half period in 60 years, shifting the market
into bear territory and, unfortunately the Fed has signalled more rate hikes
are to come, noting the difficulty of bringing down inflation without
triggering a recession. Despite the economy slowing with early signs of a
recession evident, the US labour market continues to remain strong with
unemployment holding steady at 3.6%. Wage growth has not kept up with
inflationary pressures with US inflation rising +8.6% compared to a year ago.
Similarly to what occurred in the 1920's and the 1950's the beginning of the
tightening cycle by the Fed is also impacting the equity markets globally,
which have had a volatile start to the year. The S&P500 declined by
20.6%, with the Nasdaq materially worse, declining by 29.5% over the past six
months. In Europe, specifically the ongoing Ukraine conflict continued to
drive declines in Eurozone equities as concerns relating to gas shortages
continue to rise. Ongoing disruptions saw Germany shift into phase two of its
emergency plan, with the next steps being to ration gas supplies. High
inflation and the increasing cost of living are affecting consumer confidence
in an environment when the Central Banks are expected to raise rates in the
coming month.
In the UK, while the Bank of England increased its official rate by a combined
50 bps, the FTSE100 performed relatively well due to its number of large cap,
defensive stocks declining by only 2.9%. While the FTSE100 posted this
moderate decline, the FTSE 250 posted a decline of 20.5%, the CAC -17.2%, and
the DAX -19.5%.
I have purposely focused on world macro events because the primary driver of
the portfolio decline over the past six months has been compression of the PE
multiple on the back of these expectations of inflationary and interest rate
increases and not a decline in business metrics. It is important to note that
the idiosyncratic portion of the portfolio return - that return of the
portfolio that is related to the underlying operations of the companies that
we invest in - has been positive and growing through time.
We expect that these fundamental drivers of return will continue to be
positive despite the factor headwinds remaining for a while. What this means
is that we have an opportunity now to allocate capital to businesses which are
growing strongly and whose share prices are trading at significantly cheaper
prices than their valuations suggest they should be. Once we see these
headwinds ease up, we expect that there will be a significant unlocking of
value throughout the portfolio.
After a substantial improvement in the second half of last year, the UK market
was down by 9.88% in the first quarter of this financial year as can be seen
from the table below. By comparison, our portfolio underperformed even after
making an adjustment for the 3.9p dividend in March, but did outperform in the
second quarter with the NAV down by 11.44% as compared to the FTSE250 which
declined by 11.78%.
Month NAV Pence per Share Month on Month Movement Three-month movement Six-month movement FTSE 250 Movement Three-month movement Six-month movement
Dec 2021 310.3
Jan 2022 282.0 -9.12% -1.27%
Feb 2022 270.1 -4.22% 3.37%
Mar 2022 263.9 -2.30% -14.95% 2.91% -9.88%
Apr 2022 260.0 -1.48% 4.55%
May 2022 253.3 -2.58% 0.83%
Jun 2022 233.7 -7.74% -11.44% -24.69% -1.36% -11.78% -20.50%
As reflected in the Financial Statements, dividend revenue in the current
financial year increased by 24.3% as compared to same period last year which
is a welcome sign of business conditions continuing to normalise. As
detailed elsewhere in this report, mergers, acquisitions and our assessment of
underlying business resilience has resulted in a further reduction in the
number of stocks in the portfolio to the current holding of 24 stocks with the
intention of using the proceeds to acquire a few new names as soon as market
volatility wanes. Consequently, the Company realised capital profits before
expenses arising from the sale of investments during the period in the amount
of £304,722 (30 June 2021: £149,653).
The continued increase in the dividend income that we receive from our
investments, as well as the current level of retained earnings and realised
capital reserves, should provide shareholders comfort that even in the current
environment when share prices are under pressure, we are in the enviable
position of being able to continue to pay dividends to our loyal shareholders
for the foreseeable future.
As this market uncertainty continues, it is more important than ever that one
has a strict investment process. It is vital not to get caught up in the hype
and noise of the daily market movements, and instead invest with a long-term
approach. A sound investment philosophy sets out a number of 'rules' or
'procedures' that we fall back on when the market noise gets too loud.
Companies that have a sustainable competitive advantage will always be
well-placed to withstand short-term headwinds, regardless of market
conditions, maintain market share and ultimately find new ways to grow.
It can be challenging to recognise the potential in companies, particularly
those that are in the growth stage of their life cycle. It can also be
difficult to evaluate the 'narratives' that some companies are telling about
themselves. To invest in a company in the growth stage of their life cycle
it is important to balance the company's narrative alongside its numbers.
By drilling down into a company's financials and growth plans in a careful,
considered and committed way, it is possible to identify the quality growth
stocks that will prosper over the long-term. Their ability to be flexible, to
move quickly to take advantage of opportunities as they arise, and to
capitalise on market trends and demand, will continue to support the ongoing
success of such businesses and provide significant long-term opportunities for
their investors.
Sustainable Investing
Athelney Trust Plc is committed to responsible investment and we believe that
Environmental, Social and Governance (ESG) factors have a material impact on
long-term investment outcomes. The consideration of ESG factors is an integral
part of our decision-making process and is fully integrated through asset
selection and portfolio management procedures. ESG issues are central to
understanding and framing the contextual, systematic and idiosyncratic
elements of the business and to this end we have adopted a Quality Franchise
framework comprising six distinct pillars into our research process. This
framework ensures that companies are analysed in a systematic way to ensure
they are sustainable over the long-terms as well as able to improve
shareholder returns. Furthermore, through the application of this six-pillar
framework, our investment process aims to mitigate our portfolio against ESG
and sustainability risks through placing a material emphasis on Sustainability
and Management by being two of the six distinct pillars:
• The sustainability pillar focuses on areas of a business where there may
be risk to the predictability of business operations through time. This
assists our mitigation of default risk and uncertainty of business expansion.
• The management pillar focuses on the trustworthiness of management. This
assists our mitigation of uncertainty by reducing the risk of managerial
conduct or failure of business strategy execution.
The other pillars are the Industry, the Business, the Competition and the
Financials.
Our investment philosophy and corporate values steer us away from companies
that have the potential to harm society, and moreover, help us avoid companies
where there is a risk to the sustainability of their business operations. It
is also important to note that we also exclude a number of industries
including weapons, tobacco, gambling, thermal coal, petroleum, old-forest
logging, palm oil, and pesticides - a list that is reviewed annually.
Investment Philosophy
As far as portfolio investments are concerned, our investment philosophy is
clear:
I. The economics of a business drives long-term investment returns;
and
II. Investing in high quality, growth businesses' that have the
ability to generate predictable, above-average economic returns will produce
superior investment performance over the long-term.
In essence, this means that in assessing potential investments we:
a) Value long-term potential, not just performance
b) Choose sustainable, growing businesses; and
c) Ignore temporary market turbulence
The key attributes that will define our investments are:
(1) Organic Sales Growth: Quality franchises organically growing sales
above GDP growth that can do so (sustainably) because they have a large,
growing market opportunity and compelling competitive advantage which will
drive ongoing market share gains are attractive.
(2) A Proven Track Record: This encompasses both the management's
capability and the strength of the business' model. Generally, a firm that
consistently delivers a Return on Equity of greater than 15% indicates a
Quality Franchise for us. Our investment philosophy is built on the belief
that a stock's long-term return to shareholders is driven by the return on
capital of the underlying business.
(3) Company's future profits: In essence we are backing a proven
management team and a successful business model. Management are the key
decision makers regarding the company's strategy and its competitive position
in the marketplace and it is critical that we have confidence in the company's
ability to sustainably execute its strategy and grow their earnings, even in a
tough environment like the current Covid-19 and Brexit conundrum.
(4) Low Leverage: We require investments to operate with low levels of
debt, which ensure that they have sufficient resources to execute on their
strategy. An Interest Coverage above 4x provides sufficient bandwidth in times
of economic trouble. As a long-term investor, capital preservation is the
highest priority. There is nothing that changes a management team's focus
toward the short term quicker than impending debt refinancing when market
conditions suddenly change for the worse. We need to be comfortable that this
will not happen and that the company has a strong enough balance sheet so that
it will retain optionality and can quickly and efficiently execute its
strategy over the long-term.
Dr Manny Pohl AM
Managing Director
26 July 2022
Investment Portfolio at 30 June 2022
Top 20 Holdings
Holding Value %
£ of portfolio
AEW UK REIT 385,000 440,442 10.1
Tritax Big Box 180,000 326,520 7.5
Target Healthcare REIT 245,000 265,090 6.1
Jarvis Securities 116,000 261,000 6.0
Liontrust Asset Management 27,000 246,240 5.7
Games Workshop 3,500 233,625 5.4
LondonMetric Property 100,000 228,200 5.2
Treatt 30,000 227,400 5.2
Clarke T 145,000 221,125 5.1
Close Brothers 20,000 204,800 4.7
Fevertree 15,000 182,850 4.2
Rightmove 30,000 170,460 3.9
Gamma Communications 15,000 161,100 3.7
Abcam 13,000 153,010 3.5
National Grid 14,000 147,210 3.4
Begbies Traynor 95,000 134,900 3.1
S & U 6,000 121,200 2.8
4Imprint 5,000 115,750 2.7
XP Power Ltd 4,000 113,800 2.6
LXI REIT 70,000 99,540 2.3
Income Statement
For the Six Months Ended 30 June 2022
Audited
Year ended
Unaudited Unaudited 31 December
6 months ended 30 June 2022 6 months ended 30 June 2021 2021
Notes Revenue Capital Total Revenue Capital Total Total
£ £ £ £ £ £ £
Gains on investments held at fair value - 304,722 304,722 - 149,653 149,653 1,359,219
Income from investments 102,311 - 102,311 82,309 - 82,309 186,393
Investment Management expenses (2,211) (20,042) (22,253) (2,120) (19,230) (21,350) (45,180)
Other expenses (15,552) (39,294) (54,846) (15,545) (35,734) (51,279) (103,609)
Net return on ordinary
activities before taxation 84,548 245,386 329,934 64,644 94,689 159,333 1,396,823
Taxation 2 - - - - - - -
Net return on ordinary
activities after taxation 84,548 245,386 329,934 64,644 94,689 159,333 1,396,823
Dividends Paid:
Dividend (161,841) - (161,841) (166,157) - (166,157) (209,314)
Transferred to reserves (77,293) 245,386 168,093 (101,513) 94,689 (6,824) 1,187,509
Return per ordinary share 3 3.9p 11.4p 15.3p 3p 4.4p 7.4p 64.7p
The total column of this statement is the statement of comprehensive income of
the Company prepared in accordance with Financial Reporting Standards ("FRS").
The supplementary revenue return and capital return columns are prepared in
accordance with the Statement of Recommended Practice issued in April 2021 by
the Association of Investment Companies ("AIC SORP").
All revenue and capital items in the above statement derive from continuing
operations.
The revenue column of the Income statement includes all income and expenses.
The capital column includes the realised and unrealised profit or loss on
investments
Statement of Changes in Equity
For the Six Months Ended 30 June 2022
For the Six Months Ended 30 June 2022 (Unaudited)
Called-up Capital Capital Total
Share Share Reserve Reserve Retained Shareholders'
Capital Premium Realised Unrealised Earnings Funds
£ £ £ £ £ £
Balance 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 - - 304,722 - - 304,722
Decrease in unrealised
appreciation - - - (1,821,553) - (1,821,553)
Expenses allocated to
capital - - (59,336) - - (59,336)
Profit for the period - - - - 84,548 84,548
Dividend paid in period - - - - (161,841) (161,841)
Shareholders' Funds at 30 June 2022 539,470 881,087 2,517,123 910,231 194,159 5,042,070
For the Six Months Ended 30 June 2021 (Unaudited)
Called-up Capital Capital Total
Share Share Reserve Reserve Retained Shareholders'
Capital Premium Realised Unrealised Earnings Funds
£ £ £ £ £ £
Balance at 1 January 2021 539,470 881,087 2,030,550 1,727,408 329,506 5,508,021
Net profits on realisation - - 149,653 - - 149,653
of investments
Increase in unrealised - - - 494,478 - 494,478
appreciation
Expenses allocated to - - (54,964) - - (54,964)
capital
Profit for the period - - - - 64,644 64,644
Dividend paid in period - - - - (166,157) (166,157)
Shareholders' Funds at 30 June 2021 539,470 881,087 2,125,239 2,221,886 227,993 5,995,675
For the Year Ended 31 December 2021 (Audited)
Called-up Capital Capital Total
Share Share Reserve Reserve Retained Shareholders'
Capital Premium Realised Unrealised Earnings Funds
£ £ £ £ £ £
Balance at 1 January 2021 539,470 881,087 2,030,550 1,727,408 329,506 5,508,021
Net profits on realisation
of investments - - 354,843 - - 354,843
Increase in unrealised
appreciation - - - 1,004,376 - 1,004,376
Expenses allocated to
Capital - - (113,656) - - (113,656)
Profit for the year - - - - 151,260 151,260
Dividend paid in year - - - - (209,314) (209,314)
Shareholders' Funds at 31 December 2021 539,470 881,087 2,271,737 2,731,784 271,452 6,695,530
Statement of Financial Position As at 30 June 2022
Audited
Notes Unaudited Unaudited 31 December
30 June 2022 30 June 2021 2021
£ £ £
Fixed assets
Investments held at fair value through profit and loss 4,350,682 5,844,023 6,436,820
Current assets
Trade receivables 666,199 124,709 245,163
Cash at bank and in hand 36,599 36,912 30,676
702,798 161,621 275,839
Creditors: amounts falling due within one year (11,410) (9,969) (17,129)
Net current assets 691,388 151,652 258,710
Total assets less current liabilities 5,042,070 5,995,675 6,695,530
Provisions for liabilities and charges - - -
Net assets 5,042,070 5,995,675 6,695,530
Capital and reserves
Called up share capital 539,470 539,470 539,470
Share premium account 881,087 881,087 881,087
Other reserves (non distributable)
Capital reserve - realised 2,517,123 2,125,239 2,271,737
Capital reserve - unrealised 910,231 2,221,886 2,731,784
Revenue reserves (distributable) 194,159 227,993 271,452
Shareholders' funds - all equity 5,042,070 5,995,675 6,695,530
Net Asset Value per share 4 233.7P 277.8p 310.3P
Number of shares in issue 2,157,881 2,157,881 2,157,881
Approved and authorised for issue by the Board of Directors on 26 July
2022.
Dr Manny Pohl AM
Managing Director
Statement of Cash Flows
For the Six Months Ended 30 June 2022
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 2022 30 June 2021 31 December 2021
£ £ £
Cash flows from operating activities
Net revenue return 84,548 64,644 151,260
Adjustments for:
Expenses charged to capital (59,336) (54,964) (113,656)
Decrease in creditors (5,719) (7,408) (248)
(Increase)/Decrease in debtors (421,036) 17,427 (103,027)
Cash from operations (401,543) 19,699 (65,.671)
Cash flows from investing activities (504,660) (344,385) (545,379)
Purchase of investments
Proceeds from sales of investments 1,073,967 455,154 778,439
Net cash from investing activities 569,307 110,769 233,060
Equity dividends paid (161,841) (166,157) (209,314)
Net Decrease 5,923 (35,689) (41,925)
Cash at the beginning of the period 30,676 72,601 72,601
Cash at the end of the period 36,599 36,912 30,676
Notes to the Financial Statements
For the Six Months Ended 30 June 2022
1. Accounting Policies
a) Statement of Compliance
The Company's Financial Statements for the period ended 30 June 2022 have been
prepared under UK Generally Accepted Accounting Practice (UK GAAP) and the
Statement of Recommended Practice, 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' issued in April 2021 ('the SORP') issued
by the Association of Investment Companies.
The financial statements have been prepared in accordance with the accounting
policies set out in the statutory accounts for the year ended 31 December
2021.
b) Financial information
The financial information contained in this report does not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006. The
financial information for the period ended 30 June 2022 and 30 June 2021 have
not been audited or reviewed by the Company's Auditor pursuant to the Auditing
Practices Board guidance on such reviews. The information for the year to 31
December 2021 has been extracted from the latest published Annual Report and
Financial Statements, which have been lodged with the Registrar of Companies,
contained an unqualified auditor's report and did not contain a statement
required under Section 498(2) or (3) of the Companies Act 2006.
c) Going concern
The Company's assets consist mainly of equity shares in companies listed on a
recognised stock exchange which, in most circumstances, are realisable within
a short timescale under normal market conditions. The Directors believe that
the Company has adequate resources to continue in operational existence for
the foreseeable future. Accordingly, they continue to adopt the going concern
basis in preparing the financial statements. In assessing the Company's
ability to continue as a going concern, the Board has fully considered the
impact of COVID-19.
2. Taxation
The tax charge for the six months to 30 June 2022 is nil (year to 31 December
2021: nil; six months to 30 June 2021: nil).
The Company has an effective tax rate of 0% for the year ending 31 December
2021. The estimated effective tax rate is 0% as investment gains are exempt
from tax owing to the Company's status as an Investment Trust and there is
expected to be an excess of management expenses over taxable income.
3. The calculation of earnings per share for the six months ended 30 June 2022
is based on the attributable return on ordinary activities after taxation and
on the weighted average number of shares in issue during the period.
6 months ended 30 June 2022
Revenue Capital Total
£ £ £
Attributable return on ordinary activities after taxation 84,548 245,386 329,934
Weighted average number of shares 2,157,881
Return per ordinary share 3.9p 11.4p 15.3p
6 months ended 30 June 2021
Revenue Capital Total
£ £ £
Attributable return on ordinary activities after taxation 64,644 94,689 159,333
Weighted average number of shares 2,157,881
Return per ordinary share 3.0p 4.4p 7.4p
12 months ended 31 December 2021
Revenue Capital Total
£ £ £
Attributable return on ordinary activities after taxation 151,260 1,245,563 1,396,823
Weighted average number of shares 2,157,881
Return per ordinary share 7.0p 57.7p 64.7p
4. Net Asset Value per share is calculated by dividing the net assets by
the weighted average number of shares in issue 2,157,881.
5. Financial Instruments
Fair value hierarchy
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 (2021: classification A
investments only).
6. Related Party Transactions
Dr. E. C. Pohl is the sole beneficial owner of E C Pohl & Co Pty Limited
and a Director of Astuce Group. E C Pohl & Co Pty Limited held 86,000
(2021: 496,000) shares and Astuce Group held 550,000 (2021: 140,000) shares in
the Company as at 30 June 2022.
Copies of the Half Yearly Financial Statements for the six months ended 30
June 2022 will be available on the Company's website www.athelneytrust.co.uk
as soon as practicable.
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