REG - Athelney Trust plc - Half-year Report
25/07/2023 11:45
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RNS Number : 1287H Athelney Trust PLC 25 July 2023
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 2023.
Period Highlights
•At 30 June 2023, unaudited Net Asset Value (NAV) had declined to 208.87p,
(minus 4.8%) for the half year
•The share price fell by 7.1% to 195.0p from 210.0p at 31 December 2022
•The discount to NAV over the first six months of the year increased to 6.6%
from 4.3%
•The Trust ranked fourth out of 25 investment trusts in the AIC's comparison
of dividend yields for the UK Smaller Companies' segment with a yield of 4.92%
•Share price total return decreased by 8.3% 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 by 19.6% for the half year to £122,408 (30 Jun
2022: £102,311)
•Revenue return per ordinary share was 4.9p (31 Dec 2022: 6.9p, 30 Jun
2022: 3.9p)
•A final dividend of 7.5p was paid in April 2023 (April 2021: 7.5p) and an
interim dividend of 2.1p was paid in September 2022 (September 2021: 2.0p)
making the total dividend paid for the financial year 9.6p (2022: 9.5p)
•The interim dividend will be 2.2p (2022: 2.1p).
Performance
The Company has produced solid investment performance over these six months
for its shareholders by comparison with the UK Smaller Companies segment of
Investment Trusts reported by the Association of Investment Companies. The
board continues to be pleased with our Managing Director and Fund Manager's
results during a period where the world economy's growth expectations have
declined and the UK market is still recovering from serious headwinds.
Continuing headwinds include sticky and high inflation, market uncertainties
raised by weak global economic growth, the expectation of a protracted
Ukraine-Russia war and in the US a mini banking crisis, followed by national
debt default concerns.
In addition, the UK has seen considerable labour market tightening and
increasing unrest, resulting in many days lost to public sector strikes. The
new Sunak/Hunt partnership continues to battle with the result of
COVID-related poor growth figures (compared to other advanced economies), the
need to find more money for higher wage settlements (now averaging over 6%)
from departmental budgets, and the snail-paced return to confidence for their
government after the debacle of the Truss mini-budget.
Is inflation becoming embedded in the UK in the meantime? Interest rate
rises have so far had much less effect here than in the US where inflation in
June returned to a two-year low of 3%. There was downwards movement in the UK
June figures for annual and core inflation which dropped to 7.9% and 6.9%.
both lower than expected.
Further information on portfolio activity and the drivers behind the
portfolio's performance is contained in the Managing Director's Report
below.
Given these headwinds and the greater impact they might be expected to have on
smaller companies, I am pleased by the Company's share price performance which
declined just over 7% to 195p in the first half of our financial year. It is
now trading at a modest discount to NAV of around 7% compared to the current
AIC UK Smaller Companies investment trust sector discount average of just
below 13%. We thank shareholders for their support and continued interest in
the company.
Dividends
We are very pleased to see the continuing recovery of your Company's income
from dividends, as UK markets, alongside the rest of the world return to more
normal conditions, post-pandemic. Our gross revenue has increased by almost
20% over the comparative period last year to £122,408 (30 Jun 2022:
£102,311).
UK smaller companies should benefit from a general return to higher trading
levels, and in some cases better margins also. The current outlook is that
FTSE Small Cap companies will deliver a yield of 3.8% and FTSE 250 3.4%
(compared to the forecast for FTSE 100 companies of 3.9% - figures from
Octopus Investments).
We therefore have more confidence that companies in the UK are currently
well-placed to deliver much better yields in 2023 than in the last two
years.
Against this background I am delighted to report your board has decided to pay
an interim dividend of 2.2p per share on 22 September 2023 to all shareholders
on the register of members at close of business on 8 September 2023.
As usual, we will review the case for a final dividend in Q1 2024.
Shareholder Relations
The Board held an AGM on 16 March 2023 and was very pleased to take questions
from attendees, as well as have some further conversations over refreshments
and a light lunch. There was ample opportunity to discuss the company's
performance as well as the future. We encourage more shareholders to take
advantage of the time and access offered by attending the AGM for this
financial year which will be held in London on 21 March 2024.
Outlook
Thankfully we have transitioned to more usual business and market dynamics
after the many COVID challenges of 2021 and 2022: The need for immediate
personal, governmental, or global action to combat the pandemic and its
impacts is now replaced with the slow, delayed effects of interest rate rises
or seeing, at long last, increased availability of product or services as
capacity rises at production facilities or in supply chains.
We also seem to be transitioning from the expectation of deep recession to a
mild recession or possibly no recession at all in both the US and UK. The
Bank of England's forecast at the start of 2023 perhaps underestimated the
likely persistence of UK inflation at a high level, currently 8.7%. After
seeing that it has stuck in the high single digits, alongside negative core
inflation, wage growth and employment signals, the Bank has returned to 50
basis point interest rate increases; the market is also resigned to more
'medicine' to bring inflation down to about 5% by the end of 2023 and to the
Bank's target of 2% a year later.
Meanwhile companies and the public alike are still transitioning mentally to
the new environment of higher costs for everything from basic supplies to
financial services; it now seems this is going to be a sustained period of
fiscal challenge.
More normal business conditions have allowed UK company dividends to return to
more familiar patterns and amounts which is a recent positive potential trend
for the future. On the other hand, wage and raw materials inflation
threatens margins, and for those companies who are growing, there are
struggles to recruit; it is reported there is a 1m-plus labour shortage.
Similar labour problems exist in other European countries; many took a break
during COVID and have not returned to full employment. Pre-tax profits were
under pressure in energy-intensive businesses over the past 12 months as
wholesale gas prices peaked at €340/MWh last summer and as gas prices are
now decreasing, should ease one of the current constraints to business and
consumer confidence.
Your board continues to actively assess opportunities and threats, in order to
provide stability and benefit for shareholders. We remain confident the
Company remains well-positioned to meet its objectives, and to take advantage
of opportunities to capture value.
Frank Ashton
Chairman
25 July 2023
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 2023 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 2023
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 2022 on pages 14 and 15 and
page 37. These risks include, but are not limited to, market risk, investment
and strategic risk, regulatory risk, operational risk, financial risk and
liquidity risk.
Global Issues
The global pandemic COVID-19 declared by WHO on 11 March 2020 and the war in
Ukraine have emerged as significant risks which have impacted global
commercial activities. The board have been monitoring the development of these
risks and have considered the impact they have had to date and assessed the
impact they may have in the future. The Chairman's Statement and Managing
Director's Report cover these in more detail.
On behalf of the Board
Frank Ashton
Chairman
25 July 2023
Managing Director's Report
Portfolio Commentary
The Chairman's summary of the macro environment provides a pretty bleak
picture, not to mention the recurring news of significant employee layoffs in
some of the best-known brands and global tech giants and this has been
reflected in the stock market with the FTSE 250 declining by 2.7% over the
past six months. This decline occurred predominantly over the last quarter,
with energy and basic materials groups being the main detractors due to weak
commodity prices and concerns about the Chinese economy.
Month NAV Pence Month on Month Movement Three-month movement Six-month movement FTSE 250 Movement Three-month movement Six-month movement
per Share
Dec 2022 219.4
Jan 2023 229.4 4.56% 5.31%
Feb 2023 226.4 -1.31% 0.25%
Mar 2023 211.7 -6.49% -3.51% -4.90% 0.40%
Apr 2023 219.0 3.45% 2.62%
May 2023 214.4 -2.10% -3.62%
Jun 2023 208.8 -2.61% -1.37% -4.83% -1.64% -2.70% -2.31%
While the portfolio has under-performed the broader market, as the year of
normalisation progresses, many of our companies are proactively cutting
unnecessary expenditures, discarding unprofitable ventures, targeting
high-value customers, establishing efficient operations, and honing a clear
value proposition to bolster competitive strength. At the core, efficiency
is pivotal to business resilience and growth and by boosting overall
efficiency and productivity, businesses are well placed to make market share
gains and expedited growth in upcoming years once the macro-environmental
factors stabilise. Implementing Enterprise Resource Planning (ERP) systems
and addressing procurement challenges are among the initiatives that have been
used to improve outcomes and spur margin expansion. However, it is pleasing to
note that the challenges within supply chains are gradually ameliorating and
freight rates are decreasing, though they remain higher than 2019 levels.
Additionally, the prices of raw materials are starting to normalise, sometimes
even showing deflation. Our companies are reaping the benefits of these
positive shifts slowly. Adjustments to inventory levels and operations are
releasing working capital and mitigating lingering accounting effects. In this
journey, quality businesses stay dedicated to delivering value to their
customers, strengthening resilience, and securing market positions amidst
economic uncertainties.
An example of this is FeverTree Drinks (LSE: FEVR) which is experiencing the
gradual unwinding of significant supply chain issues. Over the coming year, as
the company releases inventory, the effects of these accounting issues,
particularly energy and glass costs, will gradually subside, driving margin
expansion.
The changing landscape has triggered a power struggle among stakeholders in
the value chain (consumers, employees, suppliers, distributors, etc.), which
is squarely focused on who is delivering value. The ongoing tug-of-war
incites changes in business models, drives industry consolidation, and other
competitive measures, all aimed at preserving margins and fostering growth.
Gamma Communications (LSE: Gamma) observed channel partner consolidation,
while Rightmove (LSE: RMV) noted agent consolidation, which only enhances
supplier power.
We are no longer seeing growth for growth's sake, with the economic pie being
redistributed between varying stakeholders. An observable shift is that more
profitable brands are moving towards direct-to-consumer models as fragmented
industries offer opportunities to those willing and capable of focusing on
bringing alternative strategies to the market. These changing power dynamics
bring into focus the economics of consumer value - who has acted responsibly
or who has reached the limits of their pricing power. Companies are honing
their customer-centric strategies to guarantee long-term competitive success.
By focusing on their most lucrative customers and core demographics, they
enhance customer experience and generate robust free cash flows. A succinct
and coherent value proposition is vital in the current environment. Businesses
that effectively convey unique selling points distinguish themselves from
rivals, build brand recognition, and attract and retain customers - fuelling
growth.
Cake Box, a recent addition to the portfolio, has been successful as a
franchise retailer promoting cakes that are completely egg free allowing the
group to service a much larger potential market which includes those customers
who are unable to eat eggs for dietary or religious reasons. The first concept
store opened in East London in 2008. The business expanded to a franchise
estate of 91 stores by June 2018 when it was listed on AIM and has since grown
to 205 stores by the end of March 2023.
We continue to focus on the group's franchisee growth, the empowering of the
franchisees utilising a data-driven approach and their multi-channel expansion
rather than press reports on issues with the clearing of protected trees on
one of the CEO's properties.
While ensuring greater value is provided to a more specific set of customers,
companies seek to drive sustained growth and double down on their competitive
advantage in the market. The most noticeable shift toward customer-centricity
is that companies, broadly across sectors, are now focusing on strategies to
increase product value and service quality. The previous approach of growth
for growth's sake has been replaced by a more targeted approach.
Rightmove (LSE: RMV) prioritises product development to provide increased
value to agents and enhance the customer experience, expecting to reap the
benefits in the upcoming year.
Dividend revenue in the current financial year increased by 19.9% as compared
to same period last year which is a welcome sign of business conditions
continuing to normalise. We have continued to reduce our exposure
to the property trusts as dividend growth negates the need to hold these high
yielding low growth assets.
Consequently, the Company realised capital profits before expenses arising
from the sale of investments during the period in the amount of £12,885 (30
June 2022: £304,722).
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.
When investing 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 appropriately 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.
(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
25 July 2023
Investment Portfolio at 30 June 2023
Top 20 Holdings
Holding Value %
£ of portfolio
AEW UK 550,000 509,300 11.3
Games Workshop 3,000 327,300 7.3
Impax Asset Management 44,000 249,920 5.6
Tritax Big Box 200,000 249,800 5.6
4Imprint 5,000 239,500 5.3
Treatt 35,000 218,400 4.9
Fevertree Drinks 17,000 207,060 4.6
Clarke T 145,000 203,725 4.5
Close Brothers 20,000 176,200 3.9
Gamma Communications 15,000 171,000 3.8
NWF Group 56,000 148,400 3.3
National Grid 14,000 145,600 3.2
Liontrust Asset Management 20,000 143,100 3.2
Londonmetric Property 84,000 138,852 3.1
S & U 6,000 135,600 3.0
Cerillion 10,000 129,500 2.9
Begbies Traynor 95,000 124,688 2.8
Rightmove 23,000 120,290 2.7
Cake Box holdings 82,000 116,440 2.6
Paypoint 24,000 115,680 2.6
Income Statement
For the Six Months Ended 30 June 2023
Audited
Year ended
Unaudited Unaudited 31 December
6 months ended 30 June 2023 6 months ended 30 June 2022 2022
Notes Revenue Capital Total Revenue Capital Total Total
£ £ £ £ £ £ £
Gains on investments held at fair value - 12,885 12,885 - 304,722 304,722 (1,787,296)
Income from investments 122,634 - 122,634 102,311 - 102,311 183,273
Investment Management expenses (1,781) (16,141) (17,922) (2,211) (20,042) (22,253) (40,335)
Other expenses (15,728) (38,500) (54,228) (15,552) (39,294) (54,846) (109,454)
Net return on ordinary
activities before taxation 105,125 (41,756) 63,369 84,548 245,386 329,934 (1,753,812)
Taxation 2 - - - - - - -
Net return on ordinary
activities after taxation 105,125 (41,756) 63,369 84,548 245,386 329,934 (1,753,812)
Dividends Paid:
Dividend (161,841) - (161,841) (161,841) - (161,841) (207,156)
Transferred to reserves (56,716) (41,756) (98,472) (77,293) 245,386 168,513 (1,960,968)
Return per ordinary share 3 4.9p (1.9)p 3.0p 3.9p 11.4p 15.3p (81.3)p
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 July 2022 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 2023
For the Six Months Ended 30 June 2023(Unaudited)
Called-up Capital Capital Total
Share Share Reserve Reserve Retained Shareholders'
Capital Premium Realised Unrealised Earnings Funds
£ £ £ £ £ £
Balance at 1 January 2023 539,470 881,087 2,539,394 561,784 212,827 4,734,562
Net profits on realisation
of investments - - 12,885 - - 12,885
Decrease in unrealised
appreciation - - - (130,651) - (130,651)
Expenses allocated to
capital - - (54,641) - - (54,641)
Profit for the period - - - - 105,125 105,125
Dividend paid in period - - - - (161,841) (161,841)
Shareholders' Funds at 30 June 2023 539,470 881,087 2,497,638 431,133 156,111 4,505,439
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 - - - (1,821,553) - (1,821,553)
appreciation
Expenses allocated to - - (59,336) - - (59,336)
capital
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 Year Ended 31 December 2022 (Audited)
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 - - 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
Statement of Financial Position As at 30 June 2023
Audited
Notes Unaudited Unaudited 31 December
30 June 2023 30 June 2022 2022
£ £ £
Fixed assets
Investments held at fair value through profit and loss 4,318,342 4,350,682 4,180,985
Current assets
Trade receivables 135,114 666,199 543,301
Cash at bank and in hand 74,366 36,599 27,361
209,480 702,798 570,662
Creditors: amounts falling due within one year (22,383) (11,410) (17,085)
Net current assets 187,097 691,388 553,577
Total assets less current liabilities 4,505,439 5,042,070 4,734,562
Provisions for liabilities and charges - - -
Net assets 4,505,439 5,042,070 4,734,562
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 2,497,638 2,517,123 2,539,394
Capital reserve - unrealised 431,133 910,231 561,784
Revenue reserves (distributable) 156,111 194,159 212,827
Shareholders' funds - all equity 4,505,439 5,042,070 4,734,562
Net Asset Value per share 4 208.8p 233.7P 219.4P
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 25 July
2023.
Dr Manny Pohl AM
Managing Director
Statement of Cash Flows
For the Six Months Ended 30 June 2023
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 June 2023 30 June 2022 31 December 2022
£ £ £
Cash flows from operating activities
Net revenue return 105,125 84,548 148,531
Adjustments for:
Expenses charged to capital (54,641) (59,336) (115,047)
Increase/(decrease) in creditors 5,298 (5,719) (44)
Decrease/(increase) in debtors 408,186 (421,036) (298,138)
Cash from/(used) in operations 463,968 (401,543) (264,698)
Cash flows from investing activities (669,737) (504,660) (1,003,583)
Purchase of investments
Proceeds from sales of investments 414,615 1,073,967 1,472,122
Net cash from investing activities (255,122) 569,037 468,539
Equity dividends paid (161,841) (161,841) (207,156)
Net Increase/(decrease) 47,005 5,923 (3,315)
Cash at the beginning of the period 27,361 30,676 30,676
Cash at the end of the period 74,366 36,599 27,361
Notes to the Financial Statements
For the Six Months Ended 30 June 2023
1. Accounting Policies
a) Statement of Compliance
The Company's Financial Statements for the period ended 30 June 2023 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 2022 ('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
2022.
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 2023 and 30 June 2022 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 2022 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 and the war in Ukraine.
2. Taxation
The tax charge for the six months to 30 June 2023 is nil (year to 31 December
2022: nil; six months to 30 June 2022: nil).
The Company has an effective tax rate of 0% for the year
ending 31 December 2022. 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 2023
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 2023
Revenue Capital Total
£ £ £
Attributable return on ordinary activities after taxation 105,125 (41,756) 63,369
Weighted average number of shares 2,157,881
Return per ordinary share 4.9p (1.9p) 3.0p
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
12 months ended 31 December 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)
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
(2022: 86,000) shares and Astuce Group held 550,000 (2022: 550,000) shares in
the Company as at 30 June 2023.
Copies of the Half Yearly Financial Statements for the six months ended 30
June 2023 will be available on the Company's website www.athelneytrust.co.uk
as soon as practicable.
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