REG - Personal Assets Tst. - Final Results
19/06/2024 07:00
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RNS Number : 9588S Personal Assets Trust PLC 19 June 2024
To: RNS
From: Personal Assets Trust plc
LEI: 213800Z7ABM7RLQ41516
Date: 19 June 2024
Results for the year ended 30 April 2024
The Directors of Personal Assets Trust plc ("PAT" or "the Company") are
pleased to announce the Company's results for the year ended 30 April 2024.
The key points are as follows:
· PAT's investment policy is to protect and increase (in that order)
the value of shareholders' funds per share over the long term.
· Over the year to 30 April 2024 PAT's net asset value per share
("NAV") rose by 1.2%. This compares to a rise of 3.4% in the FTSE All-Share
Index. PAT's share price rose by 2.00p during the year and at 30 April 2024
was 483.00p. An analysis of performance is provided in the Chairman's
Statement and Investment Manager's Report below.
· Percentage changes to 30 April 2024:
Percentage Changes
1 Year 3 years 5 Years 10 Years Since 1990 ((1))
Share Price 0.4 2.5 18.4 45.5 1,122.8
NAV per Share ((2)) 1.2 4.7 20.3 45.9 759.5
FTSE All-Share Index 3.4 11.2 8.9 22.4 324.7
Share Price Relative to FTSE All-Share (2.9) (7.8) 8.7 18.9 187.9
Share Price Total Return((2)) 2.1 7.0 26.7 67.9 2,247.0
NAV per Share Total Return((2)) 1.3 9.2 28.7 68.3 1,441.4
Retail Price Index (RPI) 3.3 27.9 33.6 50.6 207.8
Consumer Price Index (CPI) 2.4 21.3 24.1 33.4 142.1
FTSE All-Share Total Return 7.5 23.9 30.1 75.8 1,298.8
Share Price Total Return relative to FTSE All-Share Total Return (5.0) (13.6) (2.6) (4.5) 67.8
Share Price Total Return relative to RPI (1.2) (16.3) (5.2) 11.5 662.5
Share Price Total Return relative to CPI (0.3) (11.8) 2.1 25.9 869.4
(1) The Company became self-managed in 1990.
(2) Alternative Performance Measure. Please see pages 64 and 65 of the
Annual Report for a glossary of terms and definitions.
· During the year the Company's shares continued to trade close to NAV.
The Company did not issue any Ordinary shares and bought back 49,244,828
Ordinary shares during the year.
· During the year, PAT continued to maintain a high level of liquidity.
At 30 April 2024, liquidity was 72.5%. This included 11.8% in UK Gilts, UK
index-linked bonds, UK cash, overseas cash, and net current assets and 60.6%
in various classes of non-equity risk assets: 36.5% in US TIPS, 11.6% in US
Treasuries and 12.5% in Gold Bullion. This compared to holdings as at 30 April
2023 of 17.7% in UK Gilts, UK cash, overseas cash, and net current liabilities
and 58.2% in various classes of non-equity risk assets: 33.9% in US TIPS,
14.8% in US Treasuries and 9.5% in Gold Bullion.
The Chairman, Iain Ferguson, said:
We continue to live in a world of great uncertainty and increasing volatility
with little expectation for improvement in the immediate future. We still have
a war raging in Europe, particularly poignant as we commemorate the 80th
anniversary of 'D-Day', and we now have a very intractable conflict in the
Middle East. There are obvious growing international tensions across the globe
and the outcome of the election in the United States will have literally
'world changing' ramifications. In the UK we are now in the General Election
process and by the time of our AGM in July we will know the outcome. Most
pundits are predicting a change of government. This is the challenging context
in which we seek to deliver our core investment proposition, which is to
protect and increase (in that order) the value of shareholders' funds per
share (also known as net asset value ('NAV') per share) over the long term.
The Directors and our Investment Managers at Troy Asset Management Limited
('Troy'), Sebastian Lyon and Charlotte Yonge, are shareholders in the Company.
As such, we are all strongly aligned and are advocates for this investment
proposition. As Directors, we work closely with the Troy team, bringing our
collective experience to complement, inform, challenge and support. This close
but independent relationship is particularly important when we are seeking to
navigate uncertain and turbulent markets together.
We track the performance of the Company from 1990. Since then, the NAV has
grown at an annual compound rate of +6.5% compared to +3.4% for the UK Retail
Price Index and +4.3% for the FTSE All-Share Index, our two main comparators.
We also track the degree of risk experienced in achieving our financial
performance. The results are tabulated in the Key Features section on page 2
of the Annual Report and the volatility experienced is indicated on the chart
on page 11 of the Annual Report. This shows that over the last 24 years the
Company has been less volatile than equities in general and also less volatile
than the AIC Flexible Investment Sector. Whilst this combination of above
comparator financial performance and below-sector volatility is the outcome of
a focus on capital preservation, these metrics are by no means a target. The
Investment Manager's focus remains on the avoidance of permanent capital loss
(our preferred definition of risk) and on growing the real value of the
Company's capital over the long run. In his report on pages 6 and 7 of the
Annual Report, Sebastian Lyon, our Investment Manager, provides further
details of our investment performance and describes the particular challenges
of the last year.
The Company aims to pay as consistent and sustainable a dividend as is
compatible with protecting and increasing the value of its shareholders' funds
and maintaining its investment flexibility. The Board remains committed to
paying an annual dividend of 5.60p per share in line with this policy. High
levels of inflation during the year, particularly in the United States, mean
that the Company has again this year earned significantly more income on its
holding of US TIPS than in previous years. Accordingly, in order to meet the
investment trust distribution requirements, the Board has resolved to pay an
additional special dividend for the year to 30 April 2024 of 1.60p per share.
This dividend will be paid to shareholders in July 2024 alongside the first
interim dividend of 1.40p per share for the year to 30 April 2025.
During the year we bought back 49,244,828 Ordinary shares into Treasury under
the Company's discount control policy, for a net outflow of £232 million. As
at 30 April 2024 we had 342,325,372 Ordinary shares in issue, with 50,479,828
Ordinary shares in Treasury. It is the policy of the Company to aim to ensure
that, in normal market conditions, its Ordinary shares always trade at or
close to NAV and this policy is enshrined in the Articles of Association. It
is reassuring to report that since November 1999, when investment trusts were
empowered to use capital to buy back shares and hence control the discount to
NAV at which their shares trade, the Company's share price has closely tracked
the NAV both through periods of significant issuance and as demonstrated in
the last year through a period of sustained buy back. Given the persistence of
discounts for investment trusts generally, buyback activity throughout the
year has been pronounced across the industry more widely. For the Company, the
year ending 30 April 2024 will be the first since 2007 when the number of
shares in issue has declined year on year.
The Board membership has enjoyed a further year of stability and I am grateful
for the continuing commitment and wise counsel of my colleagues. We appointed
Jennifer Thomas to the Board with effect from 1 May 2024. She brings more than
25 years of experience in leading communications in several international
companies and we look forward to her contribution to our work. During 2022
Board Level Partners conducted an independent review of the performance of the
Board and its Committees. Whilst this did not highlight any material
weaknesses or concerns, it did identify some areas for further focus. These
include planning for Board member succession, development of shareholder
communications and closer monitoring of our relationships with our key service
providers, Troy and Juniper Partners Limited ('Juniper'). During 2023 and 2024
we conducted internal reviews, and it is pleasing to record that we have made
significant progress in each of the focus areas. Further detail can be found
on page 29 of the Annual Report.
As part of our oversight of our key service providers, we introduced a more
formal annual review process with Troy in 2023 and this has been repeated in
2024. The review process is led by Mandy Clements and includes open
discussions with all the Directors and several members of the senior team at
Troy. We have all found this to be a positive and helpful exercise. In
summary, our relationship with Troy continues to be excellent and we are
increasingly benefitting from access to the shared resources and focused
support from the wider Troy team. We now hold two Board meetings each year in
the Troy offices in London which is helping us to get to know more members of
the Troy team and to deepen our relationship on a broader base. As our
shareholder funds continue to be above £1.5 billion, we are benefitting from
the revised fee structure agreed in 2021. Details of the fee structure are
shown on page 15 of the Annual Report. We also pay particular attention to
ensuring the competitiveness of our ongoing charges ratio, which was 0.65% for
the year ended 30 April 2024, having reduced from 0.89% in 2013 and remains in
line with last year's figure.
We had adopted a similar annual review process with Juniper in 2022 and have
now completed our third review cycle. As with Troy, this process is led by
Mandy Clements. Our relationship with Juniper, which provides our
administrative, company secretarial, AIFM and discount control services,
continues to be excellent with a very open and supportive culture. Juniper
provides a first-class service to the Company and works in close association
with Troy to provide a seamless service to the PAT Board and shareholders.
We recognise the continuing evolution of the Company's shareholder base and
the increasing number of investors holding shares through retail platforms who
may not have direct access to communications with the Company. This is a
challenge which is often discussed by the Board as we seek to improve
communication and interaction with investors. We hope that our website
(www.patplc.co.uk), our Quarterlies, our Annual and Interim Reports and our
monthly Factsheet are providing investors with easy and effective access to
information about PAT and we will continue to seek innovative ways of
improving our dialogue with shareholders and with potential shareholders.
We are looking forward to holding the AGM on Friday 19 July 2024 at The
Kimpton Charlotte Square Hotel in Edinburgh. The Investment Manager's
presentation will also be made available on our website following the AGM for
those who cannot attend in person. I would encourage all shareholders to
submit any questions for the AGM to our Company Secretary by email in advance
of the meeting at cosec@junipartners.com by Tuesday, 16 July 2024. In the
meantime, I wish you all good health and thank you for entrusting your
investment to PAT.
Iain Ferguson CBE
Chariman
18 June 2024
The Investment Manager, Sebastian Lyon, said:
Over the year to 30 April 2024, the net asset value per share ('NAV') of
Personal Assets Trust (the 'Company') rose by 1.2% while our traditional
comparator, the FTSE All-Share Index rose by 3.4%. The UK Retail Price Index
('RPI'), which we also use as a comparator (see the inside front cover of this
Report and Key Features and Record 1990-2024 on pages 2 and 3 of the Annual
Report respectively), rose by 3.3%. Over the past five years the NAV (total
return) per share rose by 28.7% compared to FTSE All-Share return which rose
by 30.1% and RPI which rose by 33.6%. The Company's NAV and share price
(thanks to the discount control policy) continued to demonstrate below average
volatility compared to peers and the stock market.
A year ago, we wrote about the burgeoning effects of rising interest rates and
our expectation of slower economic growth combined with the risks of a
recession. Signs of stress in the banking sector abated following the collapse
of Silicon Valley Bank and Credit Suisse. The sting of tighter monetary policy
has, thus far, largely been offset by aggressive fiscal stimulus, especially
in the United States. Nevertheless, monetary policy always works with a lag,
usually of 12 to 24 months, so with interest rates having peaked as recently
as the summer of 2023, we are unlikely to have experienced their full effect.
In the meantime, equity markets have been buoyed by the excitement surrounding
generative Artificial Intelligence ('AI') and large language models such as
ChatGPT-4. We have been taken aback by investors' willingness to speculate so
soon after the profitless tech boom of 2020/21, which quickly turned to bust.
Whether history will repeat itself is open to question. However, the scale of
investment in capacity is reminiscent of the investment made in fibre during
the dotcom boom. How sustainable this is, and whether such investment
ultimately earns an economic return, remains to be seen but benefits are
likely to accrue to more sustainable and recurring business models, such as
Microsoft and Alphabet, which the Company continues to have exposure to.
Despite renewed speculation in some parts of the equity market, bond markets
have continued to disappoint. The secular bear market in bonds, which began in
2020 when yields troughed during the pandemic, has continued with rising
yields (and falling prices). It is becoming clear that we have entered a new
era of upward yield pressure and a commensurate rising cost of capital. While
western bond markets have performed poorly, this may take time to be reflected
in equity valuations, which remain high by historic levels. This new regime is
the reverse of the 2010s, when benign inflation and low growth meant rate hike
expectations were continuously dashed and bond yields ground ever lower. At
the beginning of 2024, the consensus forecast was for no less than six
interest rate cuts over the coming year from the US Federal Reserve and the
Bank of England. Yet four months on, interest rate cuts have not been
forthcoming. Fewer cuts, when they eventually arrive, may imply interest rates
bottom at a higher level than many expect, with further implications for
long-dated bonds and equities. As a result, we continue to keep duration risk
low, which served us well in 2022 where we avoided material drawdowns from
rising yields. We suspect there is a need to acclimatise to this new
environment. Despite easy comparisons from price levels of a year ago,
inflation has remained stickier than expected with core levels still
stubbornly above targets in the US and the UK. This plays into our preference
for holding inflation-linked bonds, which offer positive real yields.
Our equity selection made a positive contribution to returns despite our
modest exposure. Alphabet, American Express, Microsoft and Visa performed
well. In contrast, consumer staples Diageo and Nestlé detracted. We continue
to have confidence in the long-term prospects for these companies, which have
a track record of providing strong returns to their shareholders over time.
Portfolio activity was relatively modest, as is our natural proclivity, but we
did add to the Company's holdings in Diageo, following its profit warning in
November.
During the year we acquired a new holding in Heineken. Heineken's shares have
been weak, and the valuation now sits around the same level as its 2020 low.
This follows difficult macroeconomic conditions in some of the company's
emerging markets, particularly Vietnam. We have been following Heineken for
several years and are enthusiastic about its prospects. Heineken operates in
the growing premium segment of the attractive beer category, with a strong
portfolio of brands distributed over a diversified range of geographic
exposures. Around 70% of its profits come from fast-growing emerging markets.
Current management are still in the early stages of their tenure and are
bringing renewed dynamism to the company's productivity, pricing and
digitisation efforts. This combines with the company's long-term approach to
capital allocation, supported by an ongoing history of family ownership, and
should lead to attractive value creation over the long run.
Since 2017, the Company has been invested in Franco-Nevada, a gold-focused
royalty and streaming company. Franco-Nevada had an excellent track record in
allocating capital to mining projects without the complexity, or capital,
required to run the mining operation, providing its shareholders with geared
exposure to the price of gold. This model worked well when Franco-Nevada was
smaller but as the company has grown it has become harder to find investments
that 'move the needle'. This has resulted in increased concentration across a
handful of larger investments, most notably in the Panamanian gold and copper
mine Cobre Panama, which comprises just under 20% of Franco-Nevada's assets.
Growing social pressures in Panama led the government to question the
constitutionality of the mine's concession agreement and to suspend its
operations. We reduced our holding in December 2022 when these pressures first
reared their head. After an apparent resolution in early 2023, the issue
resurfaced, and we sold the remainder of our shares in November 2023.
Franco-Nevada generated good returns and provided helpful diversification for
the Company over the life of the investment. We sold the shares at an average
price of $130, versus an average entry price of $65 in 2017. Its sale from the
portfolio reflects a change in the facts and highlights our approach to
managing stock-specific risk.
Despite the sale of Franco-Nevada, gold remains essential portfolio insurance
and provides diversification for the Company. During the financial year, the
price of the yellow metal rose by +15% to $2,295oz. (+16% in Sterling). This
strength has caught many investors by surprise as higher interest rates
implied a higher opportunity cost for holding a zero-yielding asset like gold.
Yet gold has outperformed the S&P 500 US equity index this century,
demonstrating its substance and scarcity in an increasingly febrile and
financialised world. Heightened geopolitical tensions and the gradual reversal
of globalisation explain the continued attraction of an asset that is no one's
liability, as well as sustained demand from central banks seeking to diversify
their reserve assets away from western currencies, a process described as
'de-dollarisation'. Savers may also be seeking protection from sticky and
stubborn inflation. Those with long memories will recall that higher interest
rates and bond yields did not stop the price of gold rising in the 1970s. With
ballooning deficits, in a post-Covid world, politicians have long forgotten
fiscal rectitude. The US government debt situation no longer looks sustainable
and yet warnings are being ignored by both presidential candidates. It is not
entirely surprising that international investors are seeking to diversify into
the longest standing reserve asset.
The Chairman's Statement highlights the continued share buybacks, which began
in March 2023, following a prolonged period of share issuance. We retain an
intentionally liquid portfolio, which we can liquidate in a few days in normal
market conditions. During a difficult period for the investment trust sector,
which has witnessed a material widening of trust discounts to net asset values
(NAV), our shareholders continue to be protected from PAT's discount widening.
The Company's cautious asset allocation has not rewarded shareholders over the
last year, but ample liquidity and the portfolio's defensive positioning
provide a solid platform if we enter more challenging times. Grounds for
caution remain. There is evidence of retail investor speculation including
participation in cryptocurrencies and 'meme' stocks. Meanwhile the most recent
Bank of America global fund manager survey highlights that fund managers are
at their most bullish since the last equity market peak in November 2021. This
is a time for patience and prudence, not ebullience.
Sebastian Lyon
Investment Manager, Troy Asset Management
18 June 2024
For further information, please contact:
Sebastian Lyon
Investment Manager
Tel: 0207 499 4030
Carron Dobson
Juniper Partners, Company Secretary
Tel: 0131 378 0500
Income Statement
Year ended 30 April 2024
Revenue Capital
return return Total
£'000 £'000 £'000
Investment income
Calculated using the effective interest rate method 17,456 - 17,456
Other investment income 27,410 - 27,410
Other operating income 991 - 991
Gains on investments held at fair value through profit or loss - 20,816 20,816
Foreign exchange losses - (4,132) (4,132)
Total income 45,857 16,684 62,541
Expenses (5,047) (6,242) (11,289)
Return before taxation 40,810 10,442 51,252
Taxation (8,552) 1,560 (6,992)
Return for the year 32,258 12,002 44,260
Return per share 8.77p 3.26p 12.03p
The 'Return for the Year' is also the 'Total Comprehensive Income for the
Year', as defined in IAS1 (revised), and no separate Statement of
Comprehensive Income has been presented.
The "Total" column of this statement represents the Company's Income
Statement, prepared in accordance with International Financial Reporting
Standards.
The Revenue and Capital return columns are supplementary to this and are
prepared under guidance published by the Association of Investment Companies.
Return per share (both basic and diluted) is calculated on 367,849,279 (2023:
386,416,856) shares, being the weighted average number in issue (excluding
Treasury shares) during the year.
All items in the above statement derive from continuing operations.
Dividend Information 2024 2023
Dividends paid £'000 £'000
First interim dividend of 1.40p per share (2023: 1.40p per share) paid on 28 5,431 5,278
July 2023
Special dividend of 2.10p per share (2023: 1.40p per share) paid on 28 July 8,146 5,278
2023
Second interim dividend of 1.40p per share (2023: 1.40p per share) paid on 6 5,290 5,416
October 2023
Third interim dividend of 1.40p per share (2023: 1.40p per share) paid on 24 5,064 5,448
January 2024
Fourth interim dividend of 1.40p per share (2023: 1.40p per share) paid on 16 4,881 5,499
April 2024
28,812 26,919
Income Statement
Year ended 30 April 2023
Revenue Capital
return return Total
£'000 £'000 £'000
Investment income
Calculated using the effective interest rate method 27,819 - 27,819
Other investment income 20,455 - 20,455
Other operating income 1,107 - 1,107
Losses on investments held at fair value - (54,976) (54,976)
through profit or loss
Foreign exchange gains - 9,419 9,419
Total income/(loss) 49,381 (45,557) 3,824
Expenses (5,304) (6,660) (11,964)
Return before taxation 44,077 (52,217) (8,140)
Taxation (7,436) 1,290 (6,146)
Return for the year 36,641 (50,927) (14,286)
Return per share 9.48p (13.18p) (3.70p)
Statement of Financial Position
As at As at
30 April 2024 30 April 2023
£'000 £'000
Non-current assets
Investments held at fair value though profit or loss 1,640,632 1,805,933
Property 1,730 1,730
Total non-current assets 1,642,362 1,807,663
Current assets
Receivables 6,209 6,159
Corporation tax receivable 1,069 -
Financial assets held at fair value though profit or loss - 24,070
Cash and cash equivalents 29,475 50,014
Total current assets 36,753 80,243
Total assets 1,679,115 1,887,906
Current liabilities
Financial liabilities held at fair value though profit or loss (8,733) -
Corporation tax payable - (692)
Other payables (3,101) (2,862)
Total liabilities (11,834) (3,554)
Net assets 1,667,281 1,884,352
Capital and reserves
Ordinary share capital 49,100 49,100
Share premium - 1,349,680
Capital redemption reserve 219 219
Special reserve 1,372,145 22,517
Treasury share reserve (238,314) (5,847)
Capital reserve - unrealised 198,806 202,745
Capital reserve - realised 262,501 246,560
Revenue reserve 22,824 19,378
Total equity 1,667,281 1,884,352
Shares in issue at year end 342,325,372 391,570,200
Net asset value per Ordinary share 487.05p 481.23p
Statement of Changes in Equity
Distributable reserves
For the year ended Ordinary share capital Share premium Capital redemption reserve Special reserve Capital reserve realised Revenue reserve
30 April 2024 Capital reserve unrealised Treasury share reserve
Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
£'000
Balance at 1 May 2023 49,100 1,349,680 219 202,745 (5,847) 22,517 246,560 19,378 1,884,352
Return for the year - - - (3,939) - - 15,941 32,258 44,260
Dividends paid - - - - - - - (28,812) (28,812)
Share buybacks - - - - (232,467) - - - (232,467)
Reduction and reclassification of Share premium account * - (1,349,680) - - - 1,349,680 - - -
Cost of reduction and reclassification of Share premium account - - - - - (52) - - (52)
Balance at 30 April 2024 49,100 - 219 198,806 (238,314) 1,372,145 262,501 22,824 1,667,281
Distributable reserves
For the year ended Ordinary share capital Share premium Capital redemption reserve Special reserve Capital reserve realised Revenue reserve
30 April 2023 Capital reserve unrealised Treasury share reserve
Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
£'000
Balance at 1 May 2022 46,100 1,235,636 219 324,095 22,517 176,137 9,656 1,814,360
-
Return for the year - - - (121,350) - - 70,423 36,641 (14,286)
Dividends paid - - - - - - (26,919) (26,919)
-
Issue of Ordinary shares 3,000 114,044 - - - - - 121,384
4,340
Share buybacks - - - - (10,187) - - - (10,187)
Balance at 30 April 2023 49,100 1,349,680 219 202,745 22,517 246,560 19,378 1,884,352
(5,847)
*On 24 April 2024 the Court of Session in Scotland (the 'Court') approved the
reduction of the Company's share premium account and the crediting of an
equivalent amount to the Company's distributable reserves. The Order of the
Court approving the reduction became effective on 26 April 2024 when it was
registered with the Registrar of Companies.
Share premium. The share premium represents the difference between the nominal
value of new Ordinary shares issued and the consideration the Company receives
for these shares.
Capital redemption reserve. The capital redemption reserve represents the
nominal value of Ordinary shares bought back for cancellation since authority
to do this was first obtained at a General Meeting in April 1999.
Special reserve. The cost of any shares bought back for cancellation is
deducted from the special reserve, which was created from the share premium,
following General Meetings in April 1999 and in January 2024 and the
subsequent Court approvals.
Treasury share reserve. The net cost of any shares bought back and held in
treasury.
Capital reserve unrealised. Increases and decreases in the valuation of
investments held at the year end and unrealised exchange differences of a
capital nature are accounted for in this Reserve.
Capital reserve realised. Gains and losses on the realisation of investments,
realised exchange differences of a capital nature and returns of capital are
accounted for in this Reserve.
Revenue reserve. Any surplus/deficit arising from the revenue return for the
year is taken to/from this Reserve.
Cash Flow Statement
Year ended Year ended Year ended
30 April 30 April 30 April
2024 2023 2022
£'000 £'000 £'000
Cash flows from operating activities
Return before taxation 51,252 (8,140) 108,630
Income calculated using the effective interest rate method (17,456) (27,819) (25,942)
(Gains)/losses on investments (20,816) 54,976 (129,897)
Foreign exchange losses/(gains) 4,132 (9,419) 49,813
Operating cash flow before movements in working capital 17,112 9,598 2,604
Increase in accrued income, prepayments and other receivables (51) (4,792) (222)
Decrease in other payables (244) (38) 577
Net cash from operating activities before taxation 16,817 4,768 2,959
Taxation (8,752) (6,914) (1,064)
Net cash inflow/(outflow) from operating activities 8,065 (2,146) 1,895
Cash flows from investing activities
Purchase of investments - equity shares (45,766) (15,793) (61,064)
Purchase of investments - fixed interest and other investments (355,442) (1,251,794) (835,033)
Disposal of investments - equity shares 22,785 260,144 126,691
Disposal of investments - fixed interest and other investments 581,996 965,581 579,399
Settled forward foreign exchange gains/(losses) 28,571 (39,670) (23,807)
Net cash inflow/(outflow) from investing activities 232,144 (81,532) (226,126)
Cash flows from financing activities
Equity dividends paid (28,812) (26,919) (19,254)
Issue of Ordinary shares - 120,090 220,618
Cost of share buybacks (231,984) (10,187) -
Cost of share premium cancellation (52) -
Issue of shares from Treasury - 4,340 -
Net cash (outflow)/inflow from financing activities (260,848) 87,324 201,364
(Decrease)/increase in cash and cash equivalents (20,639) 3,646 (22,867)
Cash and cash equivalents at the start of the year 50,014 47,944 70,907
Effect of exchange rate changes 100 (1,576) (96)
Cash and cash equivalents at the year end 29,475 50,014 47,944
Net cash inflow from operating activities includes the following:
Dividends received 8,050 10,831 9,474
Interest received 20,199 9,974 4,262
Principal Risks and Risk Management
The Board has carried out a careful assessment of the principal risks facing
the Company, including the ongoing current geopolitical risks and the ongoing
impacts of inflation levels and heightened interest rates. The Board has
established and maintains, with the assistance of the Company Secretary, a
risk matrix which identifies the key risks to the Company. This register is
formally reviewed on a regular basis. Emerging risks that could impact the
Company are considered and discussed at each Board meeting, or on an ad hoc
basis as required, along with any proposed mitigating actions.
The principal risks and uncertainties facing the Company, together with a
summary of the mitigating action the Board takes to manage these risks and how
these risks have changed over the period, are set out below.
The arrows denote if the relevant risk has increased, decreased or remained
the same during the year after considering the mitigating actions.
Emerging
Risk
The conflicts in Ukraine and the Middle East continue to bring risk to
economic growth and investors' risk appetites and consequently can impact the
valuation of companies in the portfolio. There is also an increasing awareness
of the challenges and emerging risks posed by climate change as well as the
impact and pace of technological developments on the companies in the
investment universe.
Mitigation
The Board seeks to mitigate these emerging risks through maintaining a broadly
diversified global equity portfolio and appropriate asset and geographical
allocation. In respect of climate change risks, the investment process
considers ESG factors, as set out in the Strategic Review. Overall the
specific potential effects of climate change and developing technology are
difficult, if not impossible, to predict and the Board and Investment Manager
will continue to monitor developments in this area. The Board is in regular
communication with the Investment Manager on emerging matters which may impact
on the portfolio.
↑ Increased risk
Economic
Risk
The Board believes that the principal risk to shareholders and the Company's
investments are events or developments, including the emerging risks noted
above, which can affect the general level of share prices and other securities
within the portfolio. These include for instance, inflation or deflation,
economic recessions and movement in interest rates and currencies which could
cause losses within the portfolio.
Mitigation
The Board regularly monitors the investment environment and the management of
the Company's investment portfolio, and applies the principles detailed in the
guidance provided by the Financial Reporting Council. Further details on the
Company's financial risks are contained in the Notes to the Accounts on pages
47 to 59 of the Annual Report.
The Company's strategy is reviewed formally on at least an annual basis
considering investment performance, market developments and shareholder
communication. The Board receives regular updates on the composition of the
Company's portfolio. Investment performance and the portfolio composition has
been monitored specifically in the light of the emerging risks noted above.
↑ Increased risk
Operational
Risk
The Company is reliant on service providers including Troy as Investment
Manager, Juniper as AIFM, Company Secretary, Administrator and discount and
premium control provider, J.P. Morgan as Depositary and Custodian and Equiniti
as Registrar. Failure of the internal control systems of these parties,
including in relation to cybersecurity measures, could result in losses to the
Company.
Mitigation
The Board formally reviews the Company's service providers on an annual basis,
including reports on their internal controls where available. As part of the
annual review the Board considers the business continuity plans in place with
each of its key suppliers and the measures taken to mitigate cyber threats.
The Company's internal controls are described in more detail on pages 33 and
34 of the Annual Report.
→ Risk remains relatively unchanged.
Legal and Regulatory
Risk
Breach of legal and regulatory rules could lead to the suspension of the
Company's Stock Exchange listing, financial penalties, or a qualified audit
report. Breach of Section 1158 of the Corporation Tax Act 2010 could lead to
the Company being subject to tax on realised capital gains.
Mitigation
Compliance with the Company's regulatory obligations is monitored on an
ongoing basis by the AIFM, the Investment Manager and other professional
advisers as required who report to the Board regularly.
→ Risk remains relatively unchanged.
Discount and Premium Control
Risk
The share price could be impacted by a number of external factors which could
cause significant discount and premium fluctuations.
Mitigation
The Company's discount and premium control policy, which is enshrined in the
Articles of Association, is to ensure that shares always trade at close to net
asset value. The level of share buybacks or issuance under the policy is
reported via an RIS on an ongoing basis.
→ Risk remains relatively unchanged.
Directors' Responsibility Statement
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the directors have prepared the financial
statements in accordance with UK-adopted international accounting standards.
Under company law, Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the Company and of the profit or loss of the Company for that period. In
preparing the financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable UK-adopted international accounting standards
have been followed, subject to any material departures disclosed and explained
in the financial statements;
• make judgements and accounting estimates that are reasonable and prudent;
and
• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
Going Concern
The Directors believe, in the light of the controls and review processes
reported in the Report of the Audit and Risk Committee on pages 33 and 34 of
the Annual Report and bearing in mind the nature of the Company's business and
assets, which are considered to be readily realisable if required, that the
Company has adequate resources to continue operating for at least twelve
months from the date of approval of the financial statements. For this reason,
they continue to adopt the going concern basis in preparing the accounts.
As part of the going concern assessment a sensitivity analysis was performed.
If the market had dropped by 25% and no dividend income became available the
Company would be able to continue operating for the foreseeable future.
Related Party Transactions
Investment management services are provided by Troy Asset Management Limited.
The fee for the year ended 30 April 2024 was £9,603,000 (2023: £10,246,000).
An amount of £2,359,000 was outstanding to the Investment Manager at 30 April
2024 (2023: £2,610,000).
Directors of the Company received fees for their services. An amount of
£19,000 was outstanding to the Directors at 30 April 2024 (2023: £18,000).
Further details are provided in the Directors' Remuneration Report on pages 30
to 32 of the Annual Report. The Directors' shareholdings are also detailed on
pages 12, 13 and 26 of the Annual Report.
Notes:
1. The financial statements of the Company have been prepared in
accordance with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies reporting
under those standards. This change constitutes a change in accounting
framework. However, there is no impact on recognition or disclosure in the
period reported as a result of the change in framework.
The financial statements have been prepared on a going concern basis.
The financial statements are presented in Sterling and all values are rounded
to the nearest thousand pounds (£'000) except where otherwise indicated.
The financial statements have been prepared on the historical cost basis,
modified by revaluation of financial assets and financial liabilities held at
fair value. The material accounting policies adopted are set out in pages 47
to 49 of the Annual Report. These have been applied consistently, other than
where new policies have been adopted. Where the presentational guidance set
out in the Statement of Recommended Practice (the ''SORP'') for investment
trusts issued by the Association of Investment Companies (the ''AIC'') in July
2022 is consistent with the requirements of IFRSs, the Directors have sought
to prepare the financial statements on a basis compliant with the
recommendation of the SORP.
2. During the year the Company bought back 49,244,828 Ordinary shares
which were held in Treasury at a cost of £232,467,000.
3. At 30 April 2024 the sterling value of the US Treasury stocks and
part of the US equities were protected by a forward currency contract.
4. The Company held the following categories of financial instruments as
at 30 April 2024:
Level 1 Level 2 Level 3 £'000 Total
£'000 £'000 £'000
Investments 1,640,632 - - 1,640,632
Financial liabilities - (8,733) - (8,733)
Total 1,640,632 (8,733) - 1,631,899
Level 1 reflects financial instruments quoted in an active market. The
Company's investment in Gold Bullion has been included in this level.
Level 2 reflects financial instruments the fair value of which is evidenced by
comparison with other observable current market transactions in the same
instrument or based on a valuation technique the variables of which include
only data from observable markets. The Company's forward currency contract has
been included in this level as fair value is achieved using the foreign
exchange spot rate and forward points which vary depending on the duration of
the contract.
Level 3 reflects financial instruments the fair value of which is determined
in whole or in part using a valuation technique based on assumptions that are
not supported by prices from observable market transactions in the same
instrument and not based on available observable market data.
There have been no changes to valuation technique over the year.
5. These are not statutory accounts in terms of Section 434 of the
Companies Act 2006. Full audited accounts for the year to 30 April 2024 will
be sent to shareholders in June 2024 and will be available for inspection at
28 Walker Street, Edinburgh EH3 7HR, the registered office of the Company. The
full Annual Report will be available on the Company's website www.patplc.co.uk
(http://www.patplc.co.uk) .
6. The audited accounts for the year ended 30 April 2024 will be lodged
with the Registrar of Companies.
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