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ET. Establishment Investment Trust Plc

217.00
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Establishment Investment Trust Plc LSE:ET. London Ordinary Share GB0031336919 ORD 25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 217.00 212.00 222.00 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Establishment Inv. Trust PLC (The) Half-year Report (3733X)

23/11/2017 12:35pm

UK Regulatory


Establishment Investment (LSE:ET.)
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TIDMET.

RNS Number : 3733X

Establishment Inv. Trust PLC (The)

23 November 2017

THE ESTABLISHMENT INVESTMENT TRUST PLC

(the 'Company')

LEI: 213800I9IT25LOQ1UW49

Replacement announcement

Update of registered auditor.

Half-year financial report for the six months ended 30 September 2017

Objective of the Company

The investment objective of the Company is to achieve long term capital growth from a managed international portfolio of securities. The preservation of capital is of primary importance to the investment objective.

The Company aims to achieve absolute returns and is not managed by reference to any equity or bond index or benchmark.

Investment Policy

-- To invest primarily in equities issued by companies listed on regulated markets. With the prior approval of the Board, the Company may invest in unlisted securities.

-- Up to 30% of net assets may be invested in investment products managed by the Company's Investment Manager. The Company may also hold positions in investment products managed by third parties.

-- Up to a maximum of 15% of net assets (at cost at the date of investment) may be invested in any one security.

   --    The Company may borrow up to a maximum of 50% of net assets. 

Financial Highlights

Performance for the six months ended 30 September 2017

 
                                        At 30 September 
                                                   2017   Total return 
-------------------------------------  ----------------  ------------- 
 Share price                                    215.75p         +11.5% 
 Net asset value per Ordinary Share             261.38p          +2.2% 
 FTSE UK Private Investor Balanced 
  Index *                                                        +1.9% 
 MSCI UK Equity *                                                +2.6% 
 MSCI AC World Equity *                                          +2.7% 
 MSCI AC Asia ex Japan Equity *                                  +8.1% 
-------------------------------------  ----------------  ------------- 
 
   * The above percentages are total 
   returns in sterling 
 

Share Price performance relative to the Net Asset Value and FTSE UK Private Investor Balanced Index since inception on 18 March 2002 to 30 September 2017 (total return)

Chart - see Half year report on website

Chairman's Statement

During the first half of the Company's financial year, the share price rose 7.7% while the Net Asset Value (NAV) slipped 0.7%. Including the final and special dividends paid in July 2017, the total returns were 11.5% and 2.2% respectively. The majority of the Company's assets continue to be invested throughout Asia while multinationals listed in London represent approximately a sixth of the portfolio. Although Asian markets continued to perform well, a recovery in sterling adversely affected our base currency performance over the period.

At long last and after a decade of aggressive monetary expansion through the co-ordinated action of Central Banks, we appear to be seeing a synchronised global economic recovery. From February 2018, the US Federal Reserve will be led by Jerome Powell, believed likely to follow the "dovish" policies set by the present Governor, Janet Yellen. Powell may now contemplate trimming the Fed's balance sheet and moving to raise interest rates gradually. However, inflation appears to be contained for the time being, although important supply side reforms executed by China have seen cuts in industrial capacity and a rebound in commodity prices, which could start to unwind the exporting of deflation to Western economies. There is a risk that a pickup in inflation could accelerate tightening of policy and hence, liquidity. Nevertheless, our manager is confident that the outlook for Asian economies remains bright. The rise in disposable incomes in the region is creating secular domestic demand while infrastructure programmes and inter regional trade are all pointing to sustained future growth. Asian corporate earnings are forecast to grow in the current year and the next. Regional valuations are still undemanding, particularly when compared to the US stock market.

The revenue account continues to improve increasing by some 40% compared to the first half of the previous financial year. The Board has declared an interim dividend of 3.0p representing a 20% increase over last year's interim payment. The shares will be quoted ex-dividend on 30th November 2017 and the dividend will be paid on 22nd December 2017 to shareholders on the register at the close of business on 1st December 2017.

The advent of MiFID II and PRIIPs in January 2018 are largely unwelcome pieces of legislation to which the Company will need to comply with.

It is encouraging to see that that the share price discount to NAV has narrowed significantly from 23.9% to 17.5% responding to the improved performance and the payment of an increased full year dividend, including a special dividend repeated for the second year in a row, together with the appointment of Stockdale Securities as corporate brokers. The Board have no authority to buy back shares. It is the Board's view that the shares are undervalued and represent an opportunity to buy into a strategy that has compounded total return at a growth rate of 8.7% per annum since the Company listed in 2002, while the progressive dividend policy has delivered income.

Harry Wells

Chairman

22 November 2017

Investment Manager's Report

During the first half of the Company's financial year the share price rose 7.7% while the Net Asset Value slipped 0.7%. Including the final and special dividends paid in July 2017, the total returns were 11.5% and 2.2% respectively. For comparative purposes, the MSCI AC Asia ex Japan Index rose 8.1%, the MSCI AC World Index advanced 2.7% and the FTSE UK Private Investor Balanced Index gained 1.9%.

The discount of the share price to the net asset value narrowed from 23.9% to 17.5% during the period under review.

Performance and Portfolio Review

In the UK equity portfolio, both the tobacco holdings (BATS (-10.8%) and Imperial Brands (-16.4%)) underperformed significantly. GlaxoSmithKline (-8.1%) and National Grid (-6.6%) also had a barren period with only Unilever (+11.3%) performing strongly, thanks to interest from Mr Buffett et alia. Four of these five holdings are multinational corporations with significant overseas earnings so the recent recovery of sterling has proved something of a headwind.

The 6% average absolute decline of these UK equity holdings (which account for approximately one sixth of the portfolio) has been a drag on overall performance. These are large blue chip companies with strong long term records and, after the recent setback, yield an average of almost 5%. We remain more suspicious of sterling's outlook than the longer term future of these companies.

In Asia, there have been two standout performers over the past six months. By country, MSCI China (+18.7%) and by sector, MSCI Information Technology (+20.4%) have outperformed significantly. They also happen to be the biggest country and sector constituents in the regional index. While the Company has retained decent exposure to both Chinese equities and Information Technology stocks (circa 20% and 10% respectively over the period), this has simply not been enough in a relative sense.

Bright spots in the portfolio included Tencent (+40.9%), Voltronics (+30.6%), Minth (+24.3%), Ayala Land (+22.3%) and Johnson Electric (+21.3%). The more disappointing performers in Asia have been almost all exclusively consumer-orientated companies; an area where the Company retains significant exposure.

Economic and Market Outlook

In America, the good news is that the tried and tested checks and balances enshrined in the American constitution are working. Simply put, President Trump has been unable to deliver on the vast majority of his isolationist economic policies and so the global economy led by China rolls on.

Over the past five years, General Secretary Xi Jinping has reversed or eliminated the majority of the disastrous economic policies of his predecessor. Specific supply side reforms and tighter control of the capital account have both been actioned very efficiently while Xi's new slogan "Beautiful China" suggests further substantial efforts to curb pollution. Economic growth has slowed but the quality of this growth, driven more by rising consumption levels than investment, has improved significantly. More importantly, Xi has restored the credibility of the Communist Party in the eyes of the Chinese people with his five year long anti-corruption agenda and is set to stay in power for a considerable period. Markets love certainty. A stable Chinese economy lies at the heart of Asia's future.

Meanwhile, in India, Prime Minister Modi continues to impress. Demonetisation and the recent introduction of a nationwide General Sales Tax have presented corporate India with significant challenges over the past year. Despite these severe disruptions, the economy has continued to expand, driven primarily by rising consumption, itself supported by India's outstanding demographic profile. The lack of a recovery in the investment cycle has worried many observers, including ourselves. The availability of credit in recent years has been compromised by the poor financial health of the public sector banks which, collectively, account for roughly two thirds of the banking sector. The recent announcement, therefore, by the Modi administration of a US$32bn recapitalisation of the public sector banks is significant. A recapitalised banking system will, in time, fund a new investment cycle which will power India's growth for years to come.

While the solid performance of regional markets over the past eighteen months means that valuations are no longer at bargain basement levels, your Investment Manager continues to strive to identify excellent investments and remains optimistic of further solid long term gains.

Blackfriars Asset Management Limited

Investment Manager

22 November 2017

Interim Management Report

The Directors are required to provide an Interim Management Report in accordance with the UK Listing Authority's Disclosure Guidance and Transparency Rules. They consider that the Chairman's Statement and the Investment Manager's Report, the following statement on related party transactions and the Directors' Responsibility Statement below, together constitute the Interim Management Report for the Company for the six months ended 30 September 2017.

The principal risks to the Company are in respect of foreign currency, interest rates, market prices, liquidity and credit risks. A detailed explanation of these risks and uncertainties can be found in the Company's Annual Report for the year ended 31 March 2017. The risks and uncertainties facing the Company remain unchanged from those disclosed in the Annual Report.

The Directors confirm that no related party transactions were undertaken by the Company in the first six months of the current financial year other than as disclosed in note 10 of this Half-yearly financial report. There have been no significant changes to the related party transactions described in the Annual Report of the Company for the year ended 31 March 2017.

Directors' Responsibility Statement

Each of the Directors confirms that, to the best of the knowledge of that Director:

a) the condensed set of Financial Statements contained within the Half-yearly financial report has been prepared in accordance with FRS 104 Interim Financial Reporting;

b) the Interim Management Report includes a fair review; as required by Disclosure Guidance and Transparency Rule 4.2.7 R; of important events that have occurred during the first six months of the financial year, their impact on the condensed set of Financial Statements and a description of the principal risks and perceived uncertainties for the remaining six months of the financial year; and

c) the Interim Management Report includes a fair review of the information concerning related parties transactions as required by Disclosure Guidance and Transparency Rule 4.2.8 R.

The half-year financial report for the six months ended 30 September 2017 and the above Directors' Responsibility Statement were approved by the Board on 22 November 2017.

Harry Wells

Chairman

Portfolio Holdings at 30 September 2017

(All Equity Shares unless otherwise stated)

 
                                                                                     % of net 
                                                                                       assets 
                                                                                   (portfolio 
                                                      Fair value   % of net              look 
 Holding       Company                                   GBP'000     assets    through basis) 
------------  -----------------------------------  -------------  ---------  ---------------- 
               Blackfriars Oriental Focus 
     390,000    Fund 'B'*                                  7,628       14.6                 - 
      53,500   British American Tobacco                    2,500        4.8               4.8 
       1,252   Samsung Electronics                         2,092        4.0               4.7 
   8,750,000   Land & Houses                               1,942        3.7               4.0 
     250,000   China Mobile                                1,891        3.6               3.6 
      42,000   Unilever                                    1,814        3.5               3.5 
     297,933   Zee Entertainment                           1,770        3.4               4.1 
      55,000   Imperial Brands                             1,751        3.3               3.3 
               Housing Development Finance 
      86,426    Corporation                                1,705        3.3               4.0 
   2,537,700   Ayala Land                                  1,617        3.1               3.8 
     492,700   Samsonite International                     1,575        3.0               3.7 
     294,000   Taiwan Semiconductor Manufacturing          1,566        3.0               3.7 
     233,217   Siam City Cement                            1,474        2.8               3.4 
     501,000   Johnson Electric Holdings                   1,427        2.7               3.4 
     352,000   Minth Group                                 1,376        2.6               3.4 
      92,000   GlaxoSmithKline                             1,369        2.6               2.6 
     431,263   ITC                                         1,272        2.4               2.9 
     813,596   Uni-President Enterprise                    1,267        2.4               3.1 
     134,750   National Grid                               1,245        2.4               2.4 
     304,800   Sands China                                 1,184        2.3               2.8 
               Industrial & Commercial Bank 
   2,010,000    of China                                   1,112        2.1               2.6 
   1,546,000   Sun Art Retail Group                        1,070        2.1               2.6 
      73,070   Ayala Corporation                           1,040        2.0               2.5 
   2,300,000   Astra International                         1,007        1.9               2.4 
   1,026,000   China Communications                          956        1.8               2.2 
       5,750   SK Telecom                                    956        1.8               2.4 
      28,911   Shinhan Financial                             946        1.8               2.4 
   1,613,000   IJM Corporation                               938        1.8               2.2 
  14,185,637   Silver Heritage                               830        1.6               1.8 
   3,420,000   Singer Sri Lanka                              769        1.5               1.8 
       5,700   Alibaba Group                                 735        1.5               1.8 
       6,700   Hanssem                                       659        1.3               1.5 
      19,600   Tencent Holdings                              630        1.2               1.5 
               Voltronic Power Technology 
      40,000    Corporation                                  534        1.0               1.3 
         810   LG Household & Healthcare                     494        0.9               1.2 
           -   Other investments**                             -          -               0.1 
               Total investments                          51,141       97.8              97.5 
               Net current assets                          1,135        2.2               2.5 
------------  -----------------------------------  -------------  ---------  ---------------- 
               Net assets                                 52,276      100.0             100.0 
------------  -----------------------------------  -------------  ---------  ---------------- 
 * Blackfriars Asset Management Irish domiciled 
  and listed fund 
 ** 'Other investments' are investments held 
  by Blackfriars Oriental Focus Fund 'B' which 
  are not held by the Company 
 
 

Analysis of Investment Portfolio at 30 September 2017

 
                                                                % of net 
                                                                  assets 
                                                              (portfolio 
                                 Fair value   % of net              look 
 Sector Analysis                    GBP'000     assets    through basis) 
------------------------------  -----------  ---------  ---------------- 
 Consumer Staples                    10,168       19.4              21.4 
 Consumer Discretionary               9,170       17.6              21.5 
 Financials                           8,362       16.0              19.4 
 Investment Companies                 7,628       14.6                 - 
 Industrials                          5,100        9.7              11.5 
 Information Technology               5,023        9.7              11.7 
 Telecommunication Services           2,847        5.4               6.0 
 Materials                            1,474        2.8               3.4 
 Health Care                          1,369        2.6               2.6 
 Total investments                   51,141       97.8              97.5 
 Net current assets                   1,135        2.2               2.5 
------------------------------  -----------  ---------  ---------------- 
 Net assets                          52,276      100.0             100.0 
------------------------------  -----------  ---------  ---------------- 
 
                                                                % of net 
                                                                  assets 
                                                              (portfolio 
 Geographical Analysis (based    Fair value   % of net              look 
  on listing or domicile)           GBP'000     assets    through basis) 
------------------------------  -----------  ---------  ---------------- 
 United Kingdom                       8,679       16.6              16.6 
 Ireland *                            7,628       14.6                 - 
 Hong Kong                            7,262       13.9              17.4 
 Korea                                5,147        9.8              12.2 
 India                                4,747        9.1              11.0 
 China                                4,694        9.0              10.2 
 Thailand                             3,416        6.5               7.4 
 Taiwan                               3,367        6.4               8.1 
 Philippines                          2,657        5.1               6.3 
 Indonesia                            1,007        1.9               2.4 
 Malaysia                               938        1.8               2.2 
 Australia                              830        1.6               1.8 
 Sri Lanka                              769        1.5               1.8 
 Vietnam                                  -          -               0.1 
 Total investments                   51,141       97.8              97.5 
 Net current assets                   1,135        2.2               2.5 
------------------------------  -----------  ---------  ---------------- 
 Net assets                          52,276      100.0             100.0 
------------------------------  -----------  ---------  ---------------- 
 
                                                                % of net 
                                                                  assets 
                                                              (portfolio 
                                 Fair value   % of net              look 
 Classification of Assets           GBP'000     assets    through basis) 
------------------------------  -----------  ---------  ---------------- 
 Equities                            51,141       97.8              97.5 
 Net current assets                   1,135        2.2               2.5 
------------------------------  -----------  ---------  ---------------- 
 Net assets                          52,276      100.0             100.0 
------------------------------  -----------  ---------  ---------------- 
 * Blackfriars Asset Management Irish domiciled and listed fund. 
  This represents the investment in Blackfriars Oriental Focus 
  Fund 'B' which is invested in Asia (ex Japan) equities. 
 

Condensed Income Statement

 
                                            Six months ended 30               Six months ended 30 
                                         September 2017 (unaudited)        September 2016 (unaudited) 
                                     --------------------------------  -------------------------------- 
                              Notes     Revenue    Capital      Total     Revenue    Capital      Total 
                                        GBP'000    GBP'000    GBP'000     GBP'000    GBP'000    GBP'000 
---------------------------  ------  ----------  ---------  ---------  ----------  ---------  --------- 
 Gains on investments                         -        474        474           -      7,128      7,128 
 Exchange (losses) / gains 
  on currency balances                        -      (117)      (117)           -        469        469 
 Income                           5       1,185          -      1,185         889          -        889 
 Investment management 
  fees                                     (37)      (147)      (184)        (28)      (111)      (139) 
 Other expenses                           (125)          -      (125)       (159)          -      (159) 
 
 Return before tax                        1,023        210      1,233         702      7,486      8,188 
 Tax on return for the 
  period                          7        (89)          -       (89)        (38)          -       (38) 
 
 Return for the financial 
  period                                    934        210      1,144         664      7,486      8,150 
 Return per Ordinary Share        8       4.67p      1.05p      5.72p       3.32p     37.43p     40.75p 
---------------------------  ------  ----------  ---------  ---------  ----------  ---------  --------- 
 
 
                                            Year ended 31 March 
                                               2017 (audited) 
                                      ------------------------------- 
                               Notes    Revenue    Capital      Total 
                                        GBP'000    GBP'000    GBP'000 
----------------------------  ------  ---------  ---------  --------- 
 Gains on investments                         -     10,358     10,358 
 Exchange gains on currency 
  balances                                    -        595        595 
 Income                            5      1,442          -      1,442 
 Investment management 
  fees                                     (60)      (242)      (302) 
 Other expenses                           (282)          -      (282) 
 
 Return before tax                        1,100     10,711     11,811 
 Tax on return for the 
  year                             7       (50)          -       (50) 
 
 Return for the financial 
  year                                    1,050     10,711     11,761 
 Return per Ordinary Share         8      5.25p     53.56p     58.81p 
----------------------------  ------  ---------  ---------  --------- 
 

All revenue and capital items in the above statement derive from continuing operations.

The total columns in this statement represent the Income Statement of the Company. The revenue and capital columns are supplementary to this and are prepared under the guidance published by the Association of Investment Companies.

As all the gains and losses of the Company have been reflected in the above statement, the return for the financial period is also the total comprehensive income for the period.

Condensed Statement of Financial Position

 
                                                   30 September        30 September          31 March 
                                               2017 (unaudited)    2016 (unaudited)    2017 (audited) 
                                       Note             GBP'000             GBP'000           GBP'000 
------------------------------------  -----  ------------------  ------------------  ---------------- 
 Fixed assets 
 Investments held at fair value 
  through profit or loss                                 51,141              46,857            50,077 
------------------------------------  -----  ------------------  ------------------  ---------------- 
 Current assets 
 Debtors                                                     30                  38               813 
 Cash at bank                                             1,136               2,704             3,183 
------------------------------------  -----  ------------------  ------------------  ---------------- 
                                                          1,166               2,742             3,996 
 
 Payables: amounts falling due 
  within one year                                          (31)                (78)           (1,441) 
------------------------------------  -----  ------------------  ------------------  ---------------- 
 
 Net current assets                                       1,135               2,664             2,555 
 
 Net assets                                              52,276              49,521            52,632 
------------------------------------  -----  ------------------  ------------------  ---------------- 
 
 Capital and reserves 
 Called up share capital                                  5,000               5,000             5,000 
 Share premium                                           14,701              14,701            14,701 
------------------------------------  -----  ------------------  ------------------  ---------------- 
                                                         19,701              19,701            19,701 
 Capital reserve                                         31,377              28,802            32,027 
 Revenue reserve                                          1,198               1,018               904 
------------------------------------  -----  ------------------  ------------------  ---------------- 
 Equity shareholders' funds                              52,276              49,521            52,632 
------------------------------------  -----  ------------------  ------------------  ---------------- 
 
 Net asset value per Ordinary Share       6             261.38p             247.61p           263.16p 
 

The financial statements were approved by the Board and signed on its behalf by:

Harry Wells

Chairman

22 November 2017

Registered in England No. 4355437

Condensed Statement of Changes in Equity

 
 For the six months ended 30 September 2017 
  (unaudited) 
                                     Called 
                                   up share            Share    Capital    Revenue 
                                    capital          premium    reserve    reserve      Total 
                                    GBP'000          GBP'000    GBP'000    GBP'000    GBP'000 
--------------------------  ---------------  ---------------  ---------  ---------  --------- 
 At 31 March 2017                     5,000           14,701     32,027        904     52,632 
 Return for the financial 
  period                                  -                -        210        934      1,144 
 Dividends paid                           -                -      (860)      (640)    (1,500) 
--------------------------  ---------------  ---------------  ---------  ---------  --------- 
 At 30 September 2017                 5,000           14,701     31,377      1,198     52,276 
--------------------------  ---------------  ---------------  ---------  ---------  --------- 
 
 
 For the six months ended 30 September 2016 
  (unaudited) 
                                     Called 
                                   up share            Share    Capital    Revenue 
                                    capital          premium    reserve    reserve      Total 
                                    GBP'000          GBP'000    GBP'000    GBP'000    GBP'000 
--------------------------  ---------------  ---------------  ---------  ---------  --------- 
 At 31 March 2016                     5,000           14,701     22,096        994     42,791 
 Return for the financial 
  period                                  -                -      7,486        664      8,150 
 Dividends paid                           -                -      (780)      (640)    (1,420) 
--------------------------  ---------------  ---------------  ---------  ---------  --------- 
 At 30 September 2016                 5,000           14,701     28,802      1,018     49,521 
--------------------------  ---------------  ---------------  ---------  ---------  --------- 
 
 
 For the year ended 31 March 2017 (audited) 
                                     Called 
                                   up share            Share    Capital    Revenue 
                                    capital          premium    reserve    reserve      Total 
                                    GBP'000          GBP'000    GBP'000    GBP'000    GBP'000 
--------------------------  ---------------  ---------------  ---------  ---------  --------- 
 At 31 March 2016                     5,000           14,701     22,096        994     42,791 
 Return for the financial 
  year                                    -                -     10,711      1,050     11,761 
 Dividends paid                           -                -      (780)    (1,140)    (1,920) 
--------------------------  ---------------  ---------------  ---------  ---------  --------- 
 At 31 March 2017                     5,000           14,701     32,027        904     52,632 
--------------------------  ---------------  ---------------  ---------  ---------  --------- 
 

Condensed Statement of Cash Flows

 
                                                   Six months          Six months 
                                                     ended 30            ended 30        Year ended 
                                                    September           September          31 March 
                                             2017 (unaudited)    2016 (unaudited)    2017 (audited) 
                                                      GBP'000             GBP'000           GBP'000 
----------------------------------------   ------------------  ------------------  ---------------- 
 Cash flows from operating activities 
 Return for the financial period                        1,144               8,150            11,761 
 Adjustments for: 
  Taxation                                                 89                  38                50 
  Gains on investments held at 
   fair value                                           (474)             (7,128)          (10,358) 
  Losses / (gains) on exchange 
   movements                                              117               (469)             (595) 
  Decrease in trade debtors                               149                 176                36 
  (Decrease) / increase in trade 
   creditors                                             (63)                 (9)                11 
-----------------------------------------  ------------------  ------------------  ---------------- 
 Cash from operations                                     962                 758               905 
 Taxation                                                (89)                (38)              (50) 
-----------------------------------------  ------------------  ------------------  ---------------- 
 Net cash generated from operating 
  activities                                              873                 720               855 
-----------------------------------------  ------------------  ------------------  ---------------- 
 Cash flows from investing activities 
 Purchase of investments                             (15,928)            (10,252)          (17,263) 
 Sale of investments                                   14,625              11,261            18,992 
-----------------------------------------  ------------------  ------------------  ---------------- 
 Net cash (used for) / generated 
  from investing activities                           (1,303)               1,009             1,729 
-----------------------------------------  ------------------  ------------------  ---------------- 
 Cash flows from financing activities 
 Equity dividends paid                                (1,500)             (1,420)           (1,920) 
-----------------------------------------  ------------------  ------------------  ---------------- 
 Net cash used for financing activities               (1,500)             (1,420)           (1,920) 
-----------------------------------------  ------------------  ------------------  ---------------- 
 
 Net (decrease) / increase in 
  cash and cash equivalents                           (1,930)                 309               664 
 Foreign exchange movements                             (117)                 471               595 
 Cash and cash equivalents at 
  beginning of period                                   3,183               1,924             1,924 
-----------------------------------------  ------------------  ------------------  ---------------- 
 Cash and cash equivalents at 
  end of period                                         1,136               2,704             3,183 
-----------------------------------------  ------------------  ------------------  ---------------- 
 

Notes to the Financial Statements

   1.   Accounting policies 

The half-yearly financial report for the six months ended 30 September 2017 (the "Report") has been prepared in accordance with FRS 104 Interim Financial Reporting and the Statement of Recommended Practice "Financial statements of investment trust companies" issued by the Association of Investment Companies in November 2014 and updated in January 2017 with consequential amendments.

The Report is unaudited and does not include all of the information required for full annual financial statements. The Report should be read in conjunction with the annual report and financial statements of the Company for the year ended 31 March 2017. The accounting policies and presentation in the Report are consistent with those applied in the Annual Report for the year ended 31 March 2017.

The Company conducts its affairs in a manner intended to meet the requirements for approval as an investment trust under section 1158 of the Corporation Tax Act 2010.

These financial statements have been prepared in accordance with the requirements of section 838 of the Companies Act 2006 and constitute the Company's interim accounts for the purpose of justifying the payment of an interim dividend for the year ending 31 March 2018.

   2.   Status of the Report 

The Report does not represent the Company's statutory accounts for the purposes of section 434 of the Companies Act 2006. The Report will be sent to shareholders and copies will be made available to the public at the registered office of the Company and will be available on the investment manager's website (www.blackfriarsam.com).

The financial information for the year ended 31 March 2017 included in the Report has been extracted from the Company's audited annual accounts for the year to 31 March 2017, which contained an unqualified audit report and did not include statements under Sections 498(2) or 498(3) of the Companies Act 2006. Those accounts have been filed with the Registrar of Companies.

   3.   Going concern 

These financial statements have been prepared on a going concern basis. The following is a summary of the Directors' assessment of the going concern status of the Company.

The majority of the net assets of the Company are securities which are traded on recognised stock exchanges. After considering the Company's current financial resources, the Directors are satisfied that its resources are adequate for continuing in business for the foreseeable future.

   4.   Valuation of investments 

The Company's investments have been designated at fair value through profit or loss, and are recognised on the trade date and are initially measured at cost being the fair value. Investments are measured at subsequent reporting dates at fair value, and changes in fair value are included in the Condensed Income Statement as a capital item. For listed investments, fair value is deemed to be either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted.

Unquoted investments would also be valued by the Directors at fair value. The Company held no unquoted investments at the period end.

   5.   Income 
 
                                    Six months          Six months 
                                      ended 30            ended 30        Year ended 
                                     September           September          31 March 
                              2017 (unaudited)    2016 (unaudited)    2017 (audited) 
                                       GBP'000             GBP'000           GBP'000 
--------------------------  ------------------  ------------------  ---------------- 
 Income from investments: 
 Overseas dividends                      1,026                 711             1,055 
 UK dividends                              159                 178               387 
--------------------------  ------------------  ------------------  ---------------- 
                                         1,185                 889             1,442 
--------------------------  ------------------  ------------------  ---------------- 
 
   6.   Net asset value per Ordinary Share 
 
                                        Six months          Six months 
                                          ended 30            ended 30        Year ended 
                                         September           September          31 March 
                                  2017 (unaudited)    2016 (unaudited)    2017 (audited) 
------------------------------  ------------------  ------------------  ---------------- 
 Net assets attributable             GBP52,276,000       GBP49,521,000     GBP52,632,000 
 Ordinary Shares in issue               20,000,000          20,000,000        20,000,000 
------------------------------  ------------------  ------------------  ---------------- 
 Net asset value per Ordinary 
  Share                                    261.38p             247.61p           263.16p 
------------------------------  ------------------  ------------------  ---------------- 
 
   7.   Taxation 

The tax charge relates to overseas withholding tax incurred on income received/receivable.

   8.   Return per Ordinary Share 
 
                                     Six months          Six months 
                                       ended 30            ended 30        Year ended 
                                      September           September          31 March 
                               2017 (unaudited)    2016 (unaudited)    2017 (audited) 
---------------------------  ------------------  ------------------  ---------------- 
 Total return per Ordinary 
  Share 
 Total return                      GBP1,144,000        GBP8,150,000     GBP11,761,000 
 Weighted average number 
  of Ordinary 
 Shares in issue during 
  the period                         20,000,000          20,000,000        20,000,000 
---------------------------  ------------------  ------------------  ---------------- 
 Total return per Ordinary 
  Share                                   5.72p              40.75p            58.81p 
---------------------------  ------------------  ------------------  ---------------- 
 

The total return per Ordinary Share detailed above can be further analysed between revenue and capital, as below:

 
                                       Six months          Six months 
                                         ended 30            ended 30        Year ended 
                                        September           September          31 March 
                                 2017 (unaudited)    2016 (unaudited)    2017 (audited) 
-----------------------------  ------------------  ------------------  ---------------- 
 Revenue return per Ordinary 
  Share 
 Revenue return                        GBP934,000          GBP664,000      GBP1,050,000 
 Weighted average number 
  of Ordinary 
 Shares in issue during 
  the period                           20,000,000          20,000,000        20,000,000 
-----------------------------  ------------------  ------------------  ---------------- 
 Revenue return per Ordinary 
  Share                                     4.67p               3.32p             5.25p 
-----------------------------  ------------------  ------------------  ---------------- 
 Capital return per Ordinary 
  Share 
 Capital return                        GBP210,000        GBP7,486,000     GBP10,711,000 
 Weighted average number 
  of Ordinary 
 Shares in issue during 
  the period                           20,000,000          20,000,000        20,000,000 
-----------------------------  ------------------  ------------------  ---------------- 
 Capital return per Ordinary 
  Share                                     1.05p              37.43p            53.56p 
-----------------------------  ------------------  ------------------  ---------------- 
 
   9.   Interim dividend 

The Directors have declared an interim dividend of 3.0p per Ordinary Share in respect of the year ending 31 March 2018. The shares will be quoted ex-dividend on 30(th) November 2017 and the dividend will be paid on 22(nd) December 2017 to Shareholders on the register at the close of business on 1(st) December 2017.

10. Related party transactions

Fees payable to the Company's investment manager, Blackfriars Asset Management Limited ("Blackfriars") are shown in the Condensed Income Statement. At 30 September 2017, the fee accrual outstanding to Blackfriars was GBP30,029 (30 September 2016: GBP25,413).

Up to 30% of net assets may be invested in investment products managed by the Company's investment manager. At 30 September 2017, the aggregate amount invested in investment products managed by Blackfriars represented 14.6% of the Company's net assets. Blackfriars rebates management fees in respect of amounts invested in Blackfriars' investment products back to the Company.

Fees payable to the Directors for the six months ended 30 September 2017 were GBP37,000 (six months ended 30 September 2016: GBP33,750). Fees are payable at an annual rate of GBP22,000 to the Chairman, GBP19,250 to the Chairman of the Audit and Risk Committee and GBP16,500 to the other Directors. Tom Waring has waived his Director's fee since the appointment of Blackfriars as investment manager to the Company.

The interests of the Directors in the Ordinary Shares of the Company on the dates shown were as follows:

 
                                         Ordinary Shares of 25p each 
                                Six months            Six months 
                                  ended 30              ended 30            Year ended 
                                 September             September              31 March 
                          2017 (unaudited)      2016 (unaudited)        2017 (audited) 
                                   GBP'000               GBP'000               GBP'000 
--------------------  --------------------  --------------------  -------------------- 
 Harry Wells (b)                    30,000                26,000                30,000 
 Harry Wells (c)                         -                 4,000                     - 
 Jim Ryall                               -                     -                     - 
 Gregory Shenkman                    3,415                 3,415                 3,415 
 Susan Thornton (a)              1,744,728             1,744,728             1,744,728 
 Tom Waring (b)                      3,891                     -                     - 
--------------------  --------------------  --------------------  -------------------- 
 

(a) As a Trustee of The Thornton Foundation

(b) Held in SIPP

(c) As a Trustee of The Pauline Lamb Grandchildren's Trust

Susan Thornton also has an interest as a beneficiary of The Estate of Richard Thornton, which at the date of this report held 3,611,083 Ordinary Shares in the Company.

No changes in the above interests have been notified to the Company between 30 September 2017 and the date of this Report.

11. Classification of financial instruments

FRS 102, as amended for fair value hierarchy disclosures (March 2016), sets out three fair value levels. These are:

Level 1

The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.

Level 2

Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly.

Level 3

Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.

The classification of the Company's investments held at fair value is detailed in the table below:

 
                   Six months          Six months 
                     ended 30            ended 30        Year ended 
                    September           September          31 March 
             2017 (unaudited)    2016 (unaudited)    2017 (audited) 
                      GBP'000             GBP'000           GBP'000 
---------  ------------------  ------------------  ---------------- 
 Level 1               51,141              46,857            48,806 
 Level 2                    -                   -               836 
 Level 3                    -                   -               435 
---------  ------------------  ------------------  ---------------- 
 Total                 51,141              46,857            50,077 
---------  ------------------  ------------------  ---------------- 
 

12. Distributable reserves

The Company's distributable reserves consist of the capital reserve and revenue reserve. Dividends may be paid from either of these reserves.

Company Information

 
 Directors                                 Investment Manager 
 Harry Wells (Chairman)                    Blackfriars Asset Management 
                                            Limited 
 Jim Ryall                                 9 Cloak Lane 
 Gregory Shenkman                          London EC4R 2RU 
 Susan Thornton                            Tel: 020 7332 2270 
 Tom Waring                                www.blackfriarsam.com 
 
 Corporate Secretary and Registered        Solicitors 
  Office 
 PraxisIFM Fund Services (UK)              Stephenson Harwood 
  Limited 
 Mermaid House                             1 Finsbury Circus 
 2 Puddle Dock                             London EC2M 7SH 
 London EC4V 3DB 
 
 Registrars                                Registered Auditor 
 Link Asset Services                       BDO LLP 
 (formerly trading as Capita Registrars)   55 Baker Street 
 The Registry                              London 
 34 Beckenham Road                         W1U 7EU 
 Beckenham 
 Kent BR3 4TU 
 
 
 Broker                                    Custodian 
 Stockdale Securities                      The Northern Trust Company 
 Beaufort House                            50 Bank Street 
 15 St Botolph Street                      Canary Wharf 
 London EC3A 7BB                           London E14 5NT 
 

The Company's web pages can be accessed on the Investment Manager's website at www.blackfriarsam.com.

Individual Savings Account ('ISA')

The Company's shares are eligible to be held in an ISA account subject to HM Revenue & Customs' limits.

Registered in England No. 4355437

Enquiries:

 
 Anthony Lee / Ciara McKillop    020 7653 9690 
 PraxisIFM Fund Services (UK) 
  Limited 
 Company Secretary 
 

The Half-yearly financial report will be submitted to the National Storage Mechanism and will shortly be available for inspection at: http://www.morningstar.co.uk/uk/NSM.

END

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR BDBDBBXDBGRX

(END) Dow Jones Newswires

November 23, 2017 07:35 ET (12:35 GMT)

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