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| 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 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMET.
RNS Number : 0025B
Establishment Inv. Trust PLC (The)
04 June 2019
THE ESTABLISHMENT INVESTMENT TRUST PLC
Announcement of Financial Results for the year ended 31 March 2019
LEI: 213800I9IT25LOQ1UW49
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.
Hot Features
Premium
-- The Company may borrow up to a maximum of 50% of net assets.
Financial Highlights for the Year
Performance for the year ended 31
March 2019
At 31 March Total return*
2019
-------------------------------- -------------- --------------- ----------------
Share price(mid market)** 205.00p +3.7%
Net asset value per share** 227.25p -2.9%
FTSE UK Private Investor Balanced
Index*** +7.3%
MSCI UK Equity*** +7.6%
MSCI AC World Index*** +10.8%
MSCI AC Asia ex Japan
Equity*** +2.4%
* Source: Bloomberg
** Alternative Performance Measures ('APMs')
*** These percentages are total returns in sterling
Alternative Performance Measures
('APMs')
The disclosures, as indicated by footnote ** above, are considered
to represent the Company's APMs. In addition to the above APMs,
other performance measures have been used by the Company to
assess its performance. Those can be found in the key performance
indicators section of the annual report.
The APMs are not calculated under Generally Accepted Accounting
Principles ('GAAP') nor are they intended to substitute for
measures under GAAP.
Dividends per Ordinary Share payable
31 March 31 March
2018 2019 Change
------------------------------------- ---------- --------- ----------------- ---------------
Interim and final dividends 6.00p 4.75p -20.8%
Special dividend 4.30p - n/a
Total dividend 10.30p 4.75p -53.9%
Revenue highlights
31 March 31 March
2018 2019
GBP'000 GBP'000 Change
------------------------------------- ---------- --------- ----------------- ---------------
Income from investments 1,731 1,562 -9.8%
Revenue return for the financial
year 1,220 1,117 -8.4%
Revenue return per Ordinary
Share 6.10p 5.59p -8.4%
Chairman's Statement
Future of the Company
On 20 November 2018, the Board announced it would not be recommending Shareholders to vote in favour of continuation of the Company in its current form when the continuation vote is put forward at the forthcoming Annual General Meeting in July 2019.
While the Company has achieved respectable returns for Shareholders since listing in 2002, the Board together with the Investment Manager concluded that continuing in its current form is no longer an attractive option for Shareholders. The small size of the Company, limited liquidity, a perennial and persistent discount, the increasing regulatory and governance obligations and increased costs all present mounting and significant challenges.
Accordingly, proposals were invited to determine an attractive solution and exit for Shareholders. A total of 17 submissions were received through our brokers, Stockdale, now Shore Capital, and the independent directors, operating through the Management Engagement Committee, undertook an extensive review and met with a short list of investment managers offering credible options.
Subsequently, on 12 April 2019, the Board announced that it intended to put forward proposals (the "Proposals") that would put the Company into voluntary liquidation and offer Shareholders the choice of electing for any of, or any combination of, the following options:
-- the default option of rolling some or all of their investment into new shares at formula asset value ("FAV") to be issued by Henderson International Income Trust plc ("HINT"), and/or
-- rolling some or all of their investment into shares to be issued by VT Garraway Asian Centric Global Growth Fund (the "Garraway Fund"); and/or
-- receiving cash at net asset value ("NAV") less costs.
HINT is a closed-ended investment trust that seeks to provide Shareholders with a growing total annual dividend, paid quarterly, as well as capital appreciation. It is designed to help UK investors diversify their equity income streams by investing in a focused and internationally diversified portfolio of 50-80 companies outside the UK. HINT invests in undervalued companies that are out of favour which pay investors a dividend income whilst they wait for value to be realised.
The Garraway Fund is a new open-ended investment fund which aims to provide shareholders with capital growth and income over the longer term. It will invest in a diversified global portfolio of equities, combining both developed and Asian markets; along with the flexibility to invest in government bonds and precious metal ETFs. Quarterly distributions will be paid. Henry Thornton, the Company's outgoing investment manager will be joining Garraway Capital Management as a fund manager, responsible for Asian equities.
The Board are pleased that members of the Thornton family, and trustees of Thornton family trusts, whose holdings, in aggregate, amount to 7,581,964 ordinary shares in EIT - equivalent to 37.9 per cent. of the Company's issued share capital - have indicated their support for the Proposals.
Full details of the Proposals are included in a Circular that will be sent separately to Shareholders.
The Board strongly recommends that Shareholders vote against continuation at the Annual General Meeting on 10 July 2019.
Assuming Shareholders vote against continuation, a General Meeting will be held immediately after the Annual General Meeting of the Company to consider and approve the Proposals and, if approved, a further General Meeting will be held on 18 July 2019 to appoint a liquidator to wind up the Company.
Shareholders should note that those who do not make an election will be deemed to have elected to receive their entitlements in new shares to be issued by HINT.
The proposals provide that Shareholders taking up the rollover options into HINT and the Garraway fund should be deemed to not constitute a disposal for the purposes of the UK taxation of chargeable gains.
Results for the year
For the year ended 31 March 2019, including the 10.3p of dividends paid during the year, the Company delivered share price and NAV total returns of +3.7% (2018: 8.9%) and -2.9% (2018: -2.5%) respectively.
Markets suffered from volatility during the last financial year, primarily dictated by the US Federal Reserve's changes in monetary policy and interest rate expectations. Global markets sold off sharply during the latter half of 2018 as the Fed attempted Quantitative Tightening "QT" by selling bonds off their balance sheet and talking up potential interest rate increases. However, some slowing of the US economy, a global growth scare and deteriorating trade flows compelled the Fed to perform a "volte face" restoring confidence in a more benign monetary and interest rate outlook; hence providing the catalyst for a sharp rebound in markets in the first calendar quarter of 2019. Market sentiment has also been badly affected by US / China relations, the tit-for-tat imposition of trade tariffs and a general slide towards protectionism and regulation, threatening the landscape of free trade and the benefits of globalisation.
Dividends
The Board has declared a second interim dividend for the year ended 31 March 2019 of 1.75p per Ordinary Share, which will be paid on 4 July 2019 to Shareholders on the register as at 14 June 2019 in lieu of a final dividend for the year. The dividend has been declared as an interim dividend so that it can be paid ahead of the calculation date of the Formula Asset Value ("FAV") required for the rollover option into HINT. In addition, the Board has declared an interim dividend in respect of the period from 1 April 2019 to 31 May 2019 of 1.25p per Ordinary Share, which will also be paid on 4 July 2019 to Shareholders on the register as at 14 June 2019. The reason for the additional interim dividend is to ensure that the Company meets the investment trust distribution requirement in the period to commencement of liquidation. Therefore, the aggregate amount which Shareholders will receive equates to 3.0p per Ordinary Share.
Valete: Vestigia Nulla Retrorsum
The Establishment Trust was originally created by Richard Thornton as a Luxembourg SICAV and then relaunched as an investment trust listing on the London Stock Exchange in March 2002 with a market capitalisation of GBP20 million. As many Shareholders know, Richard was a legendary investor, intrepid early mover and convert to the potential of Asian and Japanese markets, co-founder of GT Management and founder of Thornton & Co and to quote Tom Griffin, his partner at GT had "an uncanny sixth sense about markets". Richard was a great proponent of investment trusts, believed that they should hold a stake in their investment manager, use gearing as a valuable weapon and that the investment manager should be represented on the board; the latter being less compatible with modern governance. He insisted on portfolio discipline especially taking losses early before accidents became disasters; run your winners, cut your losses. His great mantra was that money times confidence sets the level of any market.
Since launch and over the 17 years of the Company's life, the portfolio has been managed by Richard's son, Henry Thornton, first at BDT Invest and then at Blackfriars Asset Management. On behalf of Shareholders, I would like to thank Henry for his efforts in achieving solid NAV total returns of 7.4% per annum since launch until 31 March 2019 and wish him well with his new venture at VT Garraway.
I would like to thank Shareholders for their support to the Company since its inception. I would also like to thank my fellow directors and our Company Secretary, PraxisIFM Fund Services (UK) Limited, Broker, Shore Capital and our legal advisers, Stephenson Harwood for their unstinting efforts in constructing a scheme and proposals designed in the best interests of Shareholders, which facilitates an attractive rollover choice between closed and open end funds or a cash exit.
Harry Wells
Chairman
3 June 2019
Investment Manager's Report
For the financial year to 31 March 2019 the share price fell 1.4% while the Net Asset Value declined by 7.8%. Including dividends totalling 10.3p paid during the year, the total returns of the share price and the net asset value were 3.7% and -2.9% respectively. For comparative purposes, the MSCI AC Asia ex Japan Index rose 2.4%, the MSCI AC World Index gained 10.8% and the FTSE UK Private Investor Balanced Index advanced 7.3%. At year end, the discount stood at 9.8%.
Since launch in March 2002, the share price and net asset value have compounded at 7.1% and 7.4% respectively in total return terms. This is net of costs which have averaged 1.5% per annum over the past decade. For comparative purposes, the MSCI AC Asia ex Japan Index has compounded at 9.8%, the MSCI AC World Index at 7.1% and the FTSE UK Private Investor Balanced Index at 6.3%. Dividend growth (excluding recent special dividends) has compounded at 9% since launch.
Over the life of the Company, your Investment Manager has always maintained a heavy commitment to Asia ex Japan equities but has also invested in Japanese equities, gold bullion ETFs, a variety of hedge funds, a number of investment trusts and more recently has held a number of high yielding UK equities.
Voluntary Liquidation
On 20 November 2018, the Board and the Investment Manager announced that they would not recommend that Shareholders vote in favour of continuation of the Company at the forthcoming AGM in July 2019.
On 12 April 2019 the Board announced that it intends to put forward proposals to put the company into voluntary liquidation. Three options, or any combination of them, are available for Shareholders:
1. Receiving shares in VT Garraway Asian Centric Global Growth Fund (Garraway fund). This is a newly established open-ended vehicle which aims to provide capital growth and income over the longer term. It will invest in both developed equity markets and Asian equities. The Garraway Fund will also invest in market neutral products and has the ability to purchase gold bullion ETFs and hold government bonds if the investment manager considers this appropriate, for example due to excessive equity valuations. Equity exposure will always be a minimum of 65%. Henry Thornton, who has managed the Company's portfolio since launch, is joining the growing investment team at Garraway and will be managing the Asian portfolio and sitting on the investment committee steering overall asset allocation.
2. Receiving shares in Henderson International Income Trust plc (HINT). This closed-ended investment trust seeks to provide Shareholders with a growing total annual dividend, paid quarterly, as well as capital appreciation. It is designed to help UK investors diversify their equity income streams by investing in a focused and internationally diversified portfolio of 50-80 companies outside the UK. Henderson International Income Trust plc invests in undervalued companies that are out of favour which pay investors a dividend income whilst they wait for value to be realised. Ben Lofthouse is the lead fund manager.
3. Receiving cash at net asset value less costs of liquidation. This option constitutes a disposal for capital gains tax purposes.
The Board has signed heads of terms with the boards of both HINT and the Garraway Fund. The Proposals have been agreed in principle and will be effected by way of a scheme of reconstruction of EIT under section 110 of the Insolvency Act 1986, resulting in the voluntary liquidation of EIT and a tax efficient rollover of assets of EIT into either HINT or the Garraway Fund. The transaction will be subject to, inter alia, regulatory consent and approval from Shareholders of EIT and HINT.
Shareholders who do not make an election will be deemed to have elected to receive their entitlements in new shares to be issued by HINT.
Neither the option to roll into HINT nor into the Garraway Fund is subject to a minimum rollover amount and neither option should constitute a disposal for capital gains tax purposes.
Financial Results
The portfolio generated gross income of GBP1,562,000 during the year, a 10% decrease from the GBP1,731,000 generated in the preceding year. Excluding fees payable to the Investment Manager, expenses amounted to GBP279,000, a decrease of 13.1% relative to the previous year. The total fees payable to the Investment Manager (excluding research costs) decreased 5.5% to GBP342,000 (of which 80% are charged to capital). The Company recorded a revenue return on ordinary activities after tax of GBP1,117,000 (2018: GBP1,220,000). The Company made a capital loss after tax of GBP2,923,000 (2018: GBP2,437,000). Therefore the total loss after tax for the Company was GBP1,806,000 (2018: GBP1,217,000).
Blackfriars Asset Management Limited
Investment Manager
3 June 2019
Other Information
Results and dividend
The revenue return for the financial year ended 31 March 2019 after taxation amounted to GBP1,117,000 (2018: GBP1,220,000). The Company made a capital loss after tax for the financial year ended 31 March 2019 of GBP2,923,000 (2018: capital loss of GBP2,437,000). Therefore, the total loss after tax for the Company for the financial year ended 31 March 2019 was GBP1,806,000 (2018: loss of GBP1,217,000).
An interim dividend of 3.0p per Ordinary Share was paid on 21 December 2018 to Shareholders on the register at the close of business on 30 November 2018. A second interim dividend of 1.75p per ordinary share has been declared and will be payable on 4 July 2019 to Shareholders on the register on 14 June 2019.
In aggregate dividends of 4.75p (2018: 10.3p) have been paid and declared in respect of the year ended 31 March 2019.
Risks and uncertainties
The review of the year is presented in the Chairman's Statement and the Investment Manager's Report. The financial instruments disclosures are set out in note 17 to the Financial Statements, which, together with the information below, provide details of the principal risks and uncertainties facing the Company.
Investment risk
The Company is predominantly a vehicle for overseas equity investment with the attendant risks relating to strategy, country, industrial sector and stock selection applicable to any international or regional equity portfolio.
The prime risk of investing in the Company is a fall in equity prices and adverse movements in foreign currency exchange rates, as currency movements can have a significant impact on capital values. Whilst foreign currency exposures against sterling are reviewed on a regular basis, these are inherent in investing in overseas securities. At present the Company has no currency hedging contracts in place nor plans to arrange them. The Investment Manager will take into account the possibility of currency gain or loss when evaluating investments for the Company.
Risk Management
Equity markets are subject to fluctuation and, as such, investment in equities is inherently risky. The Investment Manager is experienced and employs its expertise in selecting the stocks in which the Company invests. The Investment Manager spreads the investment risk over a wide portfolio of investments.
Regulatory risk
Breaches of Section 1158 of the Corporation Tax Act could result in loss of investment trust status. Loss of investment trust status would lead to the Company being subject to tax on any gains on the disposal of its investments. Breaches of the FCA's rules applicable to listed entities could result in financial penalties or suspension of trading of the Company's shares on the London Stock Exchange. Breaches of the Companies Act 2006, The Financial Services and Markets Act, Accounting Standards, The Listing Rules, Disclosure Guidance and Transparency Rules or Prospectus Rules could result in financial penalties or legal proceedings against the Company or its Directors. Failure of the Investment Manager to meet its regulatory obligations could have adverse consequences for the Company.
Risk Management
The Company has contracted out relevant services to appropriately qualified third party professionals. The Investment Manager reports on regulatory matters to the Board on a quarterly basis. The assessment of regulatory risks forms part of the Board's risk assessment programme.
Counterparty risk
The Company bears the risk of settlement default by clearing houses and exchanges and the risk of delayed repossession or disputed title of the Company's assets in the event of failure of the Custodian, together with operational and regulatory risks, and the risk of errors and omissions.
Risk Management
The Investment Manager undertakes transactions only with brokers pre-approved by the Investment Manager and on the basis of delivery against payment.
Additional risks are set out in note 17 to the Financial Statements, which covers interest rate risk, equity price risk, liquidity risk and credit risk.
Role of the Board
The Board monitors the critical risks and uncertainties faced by the Company through regular review of a matrix of risks, key controls and mitigating factors.
As part of the review of operational risks, the Board satisfies itself that the Investment Manager has processes in place to ensure limits are not breached. Performance and risk controls are the focus of Boardroom discussion with the Investment Manager. The Board reviews the management of the portfolio and monitors the Investment Manager's adherence to the investment mandate. This is achieved by comparing the absolute return generated by the portfolio with comparable investments and various indices, the breakdown of the portfolio into equities, investment funds, bonds, cash and examination of the level of concentration within the equity portfolio by sector and geography.
Statement of Directors' Responsibilities in respect of the Annual Report, the Directors' Remuneration Report and Financial Statements
The Directors are responsible for preparing the Annual Report, the Directors' Remuneration Policy and Implementation Reports and the Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare Financial Statements for each financial year. In conformity with the law, the Directors have elected to prepare Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the 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 net return of the Company for that period. In preparing these Financial Statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently; -- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Financial Statements;
-- prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and
-- in compliance with the Companies Act 2006, prepare a Directors' Report, a Strategic Report and a Directors' Remuneration Report.
The Directors are responsible for keeping adequate accounting records, sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable the Directors to ensure that the Financial Statements and Directors' Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Financial Statements are published on www.blackfriarsam.com, which is a website maintained by the Company's Investment Manager. The Directors are responsible for the maintenance and integrity of the Company's information that is available on the website. The Directors do not take responsibility for the maintenance of the Investment Manager's website. Legislation in the United Kingdom governing the preparation and dissemination of the Financial Statements may differ from legislation in other jurisdictions.
Directors' confirmation statement
Each of the Directors, (Harry Wells (Chairman), Jim Ryall, Gregory Shenkman, Susan Thornton and Tom Waring), confirms that, to the best of the knowledge of that Director:
-- the Financial Statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and net return of the Company; and
-- the Annual Report, including the Strategic Report, includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.
Having taken advice from the Audit and Risk Committee, the Directors consider that the Annual Report and Financial Statements taken as a whole are fair, balanced and understandable and provide information necessary for Shareholders to assess the Company's position and performance, business model and strategy.
Income Statement
For the year ended 31
March
2019 2018
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- --------- -------- ------------ ----------- ------------ ----------- ----------
Losses on investments
held at fair value
through
profit or loss 11 - (2,661) (2,661) - (1,854) (1,854)
Gains/(losses) on foreign
exchange movements - 43 43 - (267) (267)
Income 3 1,562 - 1,562 1,731 - 1,731
Investment management
fees 4 (69) (273) (342) (72) (290) (362)
Other expenses 5 (279) (32) (311) (321) (26) (347)
--------------------------- --------- -------- ------------ ----------- ------------ ----------- ----------
Return/(loss) before
tax 1,214 (2,923) (1,709) 1,338 (2,437) (1,099)
Taxation for the year 8 (97) - (97) (118) - (118)
--------------------------- --------- -------- ------------ ----------- ------------ ----------- ----------
Return/(loss) for the
financial year 1,117 (2,923) (1,806) 1,220 (2,437) (1,217)
--------------------------- --------- -------- ------------ ----------- ------------ ----------- ----------
Return/(loss) per Ordinary
Share 10 5.59p (14.62)p (9.03)p 6.10p (12.19)p (6.09)p
--------------------------- --------- -------- ------------ ----------- ------------ ----------- ----------
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 year is also the
total comprehensive income for the year.
Statement of Financial Position
At 31 March
2019 2018
Note GBP'000 GBP'000
---------------------------------------------------- -------- ------------------------- --------------------
Fixed assets
Investments at fair value through
profit or loss 11 42,223 47,130
Current assets
Debtors 12 209 136
Cash at bank 3,129 2,118
---------------------------------------------------- -------- ------------------------- --------------------
3,338 2,254
Payables: amounts falling due within
one year 13 (112) (69)
---------------------------------------------------- -------- ------------------------- --------------------
Net current assets 3,226 2,185
---------------------------------------------------- -------- ------------------------- --------------------
Net assets 45,449 49,315
---------------------------------------------------- -------- ------------------------- --------------------
Capital and reserves
Called up share capital 14 5,000 5,000
Share premium 14,701 14,701
Capital reserve 15 24,947 28,730
Revenue reserve 801 884
---------------------------------------------------- -------- ------------------------- --------------------
Equity Shareholders' funds 45,449 49,315
---------------------------------------------------- -------- ------------------------- --------------------
Net asset value per Ordinary Share 16 227.25p 246.58p
Statement of Changes in Equity
For the year ended 31
March 2019
Share Share Capital Revenue
capital premium reserve reserve Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ----- ------------ ------------ ------------ ------------- --------------
At 31 March 2018 5,000 14,701 28,730 884 49,315
Return/(loss) for the
financial year - - (2,923) 1,117 (1,806)
Dividends paid in the
year 9 - - (860) (1,200) (2,060)
At 31 March 2019 5,000 14,701 24,947 801 45,449
------------------------------- ----- ------------ ------------ ------------ ------------- --------------
For the year ended 31
March 2018
Share Share Capital Revenue
capital premium reserve reserve Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ----- ------------ ------------ ------------ ------------- --------------
At 31 March 2017 5,000 14,701 32,027 904 52,632
Return/(loss) for the
financial year - - (2,437) 1,220 (1,217)
Dividends paid in the
year 9 - - (860) (1,240) (2,100)
At 31 March 2018 5,000 14,701 28,730 884 49,315
------------------------------- ----- ------------ ------------ ------------ ------------- --------------
Statement of Cash Flows
For the year ended 31 March
2019 2018
Notes GBP'000 GBP'000
---------------------------------------------------- -------- ------------------------- --------------------
Cash flows from operating activities
Return for the financial year* (1,806) (1,217)
Adjustments for:
Taxation 97 118
Losses on investments held at fair
value through profit or loss 2,693 1,880
(Gains)/losses on exchange movements (43) 267
(Increase)/decrease in trade debtors (41) 43
Increase/(decrease) in trade creditors 43 (29)
---------------------------------------------------- -------- ------------------------- --------------------
Cash inflow from operations 943 1,062
Taxation (97) (118)
---------------------------------------------------- --------
Net cash generated from operating
activities 846 944
---------------------------------------------------- -------- ------------------------- --------------------
Cash flows from investing activities
Purchase of investments (13,455) (21,449)
Sale of investments 15,669 21,833
Research costs** (32) (26)
----------------------------------------------------
Net cash generated from investing
activities 2,182 358
---------------------------------------------------- -------- ------------------------- --------------------
Cash flows from financing activities
Equity dividends paid 9 (2,060) (2,100)
Net cash used for financing activities (2,060) (2,100)
---------------------------------------------------- -------- ------------------------- --------------------
Net increase/(decrease) in cash and
cash equivalents 968 (798)
Foreign exchange movements 43 (267)
Cash and cash equivalents at beginning
of year 2,118 3,183
Cash and cash equivalents at end
of year 3,129 2,118
---------------------------------------------------- -------- ------------------------- --------------------
* Cash inflow from dividends was GBP1,522,000
(2018: GBP1,756,000).
** See note 5 and 7
Notes to the Financial Statements
1. Accounting policies
The Company is incorporated in England and is an investment company
within the meaning of Section 833 of the Companies Act 2006. The
Company's registered office is Mermaid House, 2 Puddle Dock, London,
EC4V 3DB.
A summary of the principal accounting policies, all of which have
been applied consistently throughout the year, is set out below:
(a) Basis of accounting
The accounts are prepared on the historical cost basis of accounting,
except for the measurement at fair value of investments. The Financial
Statements have been prepared in accordance with applicable United
Kingdom accounting practices, including Financial Reporting Standard
102 - 'The Financial Reporting Standard applicable in the United
Kingdom and Republic of Ireland' ('FRS 102') and with the AIC Statement
of Recommended Practice 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' issued in November 2014,
and updated in February 2018.
All of the Company's operations are of a continuing nature.
The policies applied in these financial statements are consistent
with those applied in the preceding year.
(b) Valuation of investments
When a purchase or sale is made under a contract, the terms of
which require delivery within the time frame of the relevant market,
the investments concerned are recognised or derecognised on the
trade date.
The Company's investments are recognised on the trade date and
are initially measured at fair value. Investments are measured
at subsequent reporting dates at fair value, and changes in fair
value are included in the 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.
Any investments which are suspended from trading are measured by
the Directors at estimated fair value, taking into account the
relevant circumstances.
Unquoted investments are valued by the Directors at fair value.
The Company held no unquoted investments at the year end.
The Company held all its investments as part of the investment
portfolio and measured at fair value.
(c) Reporting currency
The accounts are presented in Sterling which is the functional currency of the Company. Sterling is the reference currency for this UK registered and listed company. (d) Income Dividends are credited to the revenue account on an ex-dividend basis or, if later, as soon as entitlement has been established. The Company owns no fixed interest investments. Bank and deposit interest is accounted for on an accruals basis. (e) Dividends Dividends paid by the Company are accounted for in the Financial Statements in respect of the year in which they are paid, in the case of interim dividends, or when they are approved by Shareholders in the final dividends. (f) Expenses All expenses are accounted for on an accruals basis. Expenses are recognised through the Income Statement as revenue items except as follows: - the investment management fee has been allocated 80% to capital reserve and 20% to the revenue account within the Income Statement reflecting the Board's expected long-term split of returns in the form of capital gains and income respectively from the investment portfolio; - expenses which are incidental to the sale of an investment are deducted from the proceeds of the sale of that investment; - research costs and any other expenses incurred in connection with the acquisition or disposal of an investment are allocated to capital reserve - through the Income Statement; - finance costs are accounted for on an accruals basis using the effective interest method; and - finance costs of debt in so far as they relate to the financing of the Company's investments have been allocated 80% to the capital reserve and 20% to the revenue account within the Income Statement. (g) Taxation Irrecoverable withholding tax on overseas dividends is recognised on an accrual basis in the Income Statement. Deferred taxation is provided on all differences, which have originated but not reversed by the Statement of Financial Position date, calculated at the rate at which it is anticipated the timing differences will reverse. Deferred tax assets are recognised only when, based on available evidence, it is more likely than not that there will be taxable profits in the future against which the deferred tax asset can be offset. Tax payable is based on the taxable profit for the year. Taxable profit may differ from net profit as reported in the Income statement because it excludes items of income or expenditure that are taxable or deductible in other periods and it further excludes items that are not taxable or deductible. (h) Foreign currency Transactions and investment income denominated in foreign currencies are recorded in Sterling at actual exchange rates at the date of the transaction or receipt. Monetary assets and liabilities denominated in foreign currencies at the year end are recorded in Sterling at the rates of exchange prevailing at the year end. Any gain or loss arising from a change in exchange rates, subsequent to the date of the transaction, is included as an exchange gain or loss in the capital or revenue column of the Income Statement, depending on whether the gain or loss is of a capital or revenue nature . The value of investments in foreign currencies is expressed in Sterling at the rates of exchange prevailing at the year end. Surpluses and deficits arising from conversion at this rate of exchange are included as an exchange gain or loss in the capital column of the Income Statement and taken to the capital reserve. (i) Reserve The following are taken to capital reserve: Investment holding gains: - Increase and decrease in the valuation of investments held at the year end Other: - Gains and losses on the disposal of investments; - Exchange differences of a capital nature; - Expenses, together with the related taxation effect, allocated to this reserve in accordance with the above policies. The following are taken to revenue reserve: - the net revenue for the year is transferred to the revenue reserve and the final dividends are funded from this reserve. (j) Distributable reserves Distributable reserves comprise revenue reserves and the realised capital reserve. (k) Going concern The financial statements have been prepared on a going concern basis. As discussed further in the Directors' Report, on 20 November 2018, the Directors of the Company and the Investment Manager announced that they would not recommend that Shareholders vote in favour of continuation of the Company it its current form when the continuation vote is put forward at the next Annual General Meeting. Given that the Company has significant financial resources and that the continuation vote and the Proposals are yet to be voted on by Shareholders, the Directors consider it appropriate for the Company to prepare the accounts on a going concern basis. The material uncertainty over continuation casts doubt on the likelihood that the Company will continue as a going concern. The financial statements do not include any adjustments that would result, if the Company's accounts were not prepared on a going concern basis. (l) Estimates and assumptions The preparation of the Financial Statements requires the directors to make estimates and assumptions that affect items reported in the Statement of Financial Position and Income Statement. Although these estimates are based on management's best knowledge of current facts, circumstances and, to some extent, future events and actions, the Company's actual results may ultimately differ from those estimates, possibly significantly. (m) Segmental reporting The Directors are of the opinion that the Company is engaged in a single segment of business being the investment business.
2. Significant accounting judgements, estimates and assumptions
The preparation of the Company's financial statements requires the Directors to make judgements, estimates and assumptions that affect the reported amounts in the primary financial statements and the accompanying disclosures. These assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in the current and future periods, depending on circumstance.
The Directors do not believe that any significant accounting judgements or estimates have been applied to this set of financial statements that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities.
3. Income
2019 2018
GBP'000 GBP'000
-------------------------- -------- --------
Income from investments:
Overseas dividends 1,164 1,359
UK dividends 380 360
Other income 18 12
1,562 1,731
-------------------------- -------- --------
4. Investment management fees
2019 2018
------------------------------- -------------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ --------- --------- --------- --------- --------- ---------
Investment management
fees 81 321 402 86 345 431
Less management fee
rebates (12) (48) (60) (14) (55) (69)
Total 69 273 342 72 290 362
------------------------ --------- --------- --------- --------- --------- ---------
To avoid double charging investment management fees, the Investment
Manager has agreed to rebate any periodic management fee that it
receives from the Company by the amount of fees receivable by it
from Blackfriars Asset Management Limited managed products ("Blackfriars
products") in respect of the Company's investments in those funds.
The Investment Manager has agreed that any performance fees that
it earns from Blackfriars' products in respect of the Company's
investment in those funds will be rebated to the Company.
As at 31 March 2019 the Company had investments in the following
Blackfriars products:
362,500 shares in Blackfriars Oriental Focus Fund 'B' at a total
cost of GBP4,337,087 and a valuation at 31 March 2019 of GBP6,187,664.
Details of the investment management agreement are disclosed in
note 7.
5. Other expenses
2019 2018
GBP'000 GBP'000
------------------------------------------ -------- --------
Revenue expenses:
Administration and secretarial services 72 73
Directors' fees (see note 6) 74 74
Directors' national insurance 3 3
Auditor's remuneration - statutory 17 17
UK taxation compliance services 8 8
Overseas tax compliance services 7 17
Custodian fees 37 30
Registrar fees 16 21
Broker fees 31 31
Other expenses 14 47
Total revenue expenses 279 321
------------------------------------------ -------- --------
Capital expenses:
Research costs 32 26
Total capital expenses 32 26
------------------------------------------ -------- --------
Total other expenses 311 347 ------------------------------------------ -------- --------
No other non-audit services were performed during the year.
6. Directors' emoluments
2019 2018
GBP'000 GBP'000
-------------------------------------------- -------------- -------------
Directors' fees 74 74
The Chairman and Directors received emoluments of GBP22,000 and
GBP16,500 (2018: GBP22,000 and GBP16,500) per annum respectively,
and the Chairman of the Audit Committee receives a further GBP2,750
(2018: GBP2,750) per annum. Tom Waring waived his entitlement to
Directors' fees equivalent to GBP16,500 (2018: GBP16,500).
7. Disclosure of interests
Investment management
In accordance with an investment management agreement between the
Company and Blackfriars Asset Management Limited ("Blackfriars")
dated 8 July 2014 Blackfriars has provided investment management
services to the Company with effect from 15 July 2014 for which
Blackfriars receives an annual fee of 1% of the Adjusted Market
Capitalisation of the Company calculated on the last business day
of each calendar month and payable in arrears in respect of each
calendar month. The Adjusted Market Capitalisation per Share on
the last business day of any calendar month is the average of the
mid-market prices of a Share on each business day in such calendar
month. The Adjusted Market Capitalisation of the Company on the
last business day of any calendar month is the Adjusted Market
Capitalisation per Share on that day multiplied by the number of
Shares in issue on that day.
The Company has entered into a Research Purchasing Agreement with
the Investment Manager to meet the cost of sell side research.
Research costs incurred by the Company in the year are disclosed
in note 5.
No performance fee is in place in the investment management agreement
with Blackfriars.
Blackfriars' appointment as Investment Manager is subject to termination
by the Company on six months' notice, such notice has been served
and will expire on 18 July 2019.
The amount charged for investment management fees during the year
is shown in note 4 and GBP55,662 (2018: GBP30,791) of the fee for
the current year was outstanding as a creditor as at the Statement
of Financial Position date.
Company Secretary and Administrator
With effect from 1 June 2017, the Company Secretary and Administrator
received a fee payable monthly at a rate of one twelfth of GBP37,500
plus one twelfth of 0.085% of the Company's Market Capitalisation
at the end of each month subject to a minimum monthly fee of GBP6,000
plus applicable VAT.
8. Taxation
2019 2018
------------------------------- -------------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ --------- --------- --------- --------- --------- ---------
Overseas tax suffered 97 - 97 118 - 118
------------------------ --------- --------- --------- --------- --------- ---------
The current taxation charge for the year is different from the standard
rate of corporation tax in the UK of 19% (2018: 19%). The differences
are explained below.
2019 2018
GBP'000 GBP'000
------------------------ --------- --------- ---------
Net return before
tax (1,709) (1,099)
------------------------ --------- --------- --------- --------- --------- ---------
Theoretical tax at UK corporation tax rate
of 19% (2018: 19%) (325) (209)
Effects of:
Capital gains not subject
to corporation tax 503 408
UK dividends which are not
taxable (72) (68)
Overseas dividends which are
not taxable (221) (258)
Irrecoverable overseas
tax 97 118
Movement in excess
expenses 115 127
Actual tax charge 97 118
------------------------ --------- --------- --------- --------- --------- ---------
The Company is an Investment Trust and, whilst it obtains exemption
under section 1159 of the Corporation Tax Act 2010, is not subject
to UK taxation on capital gains.
In the opinion of the Directors the Company has complied with the
requirements of section 1159 of the Corporation Tax Act 2010.
Factors that may affect future tax charges
The Company has not recognised a deferred tax asset of GBP1,058,000
(2018: GBP836,000) based on a tax rate of 17% (2018: 17%) and unutilised
expenses. These expenses could only be utilised to offset against
taxable profits, if the Company were to generate taxable profits
in the future.
9. Dividends
(i) Dividends paid during
the financial year
2019 2018
GBP'000 GBP'000
------------------------------ --------- --------- --------- --------- --------- ---------
Final dividend for the year ended 31 March 2018
of 3.0p per Ordinary Share (2017: 3.2p) 600 640
Interim dividend for the year ended 31 March
2019 of 3.0p per Ordinary Share (2018: 3.0p) 600 600
Special dividend for the year ended 31 March
2018 of 4.3p per Ordinary Share (2017: 4.3p) 860 860
--------- --------- ---------
2,060 2,100
------------------------------ --------- --------- --------- --------- --------- ---------
(ii) Dividends declared
in respect of the financial
year
The total dividends payable in respect of the financial year, which
form the basis for complying with section 1159 of the Corporation
Tax Act 2010 are set out below:
2019 2018
------------------------------- -------------------------------
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Interim dividend paid for
the year ended 31 March
2019 of 3.0p per Ordinary
Share (2018: 3.0p) 600 - 600 600 - 600
Special dividend for the
year ended 31 March 2019
of nil per Ordinary Share
(2018: 4.3p) - - - - 860 860
Second interim dividend
payable for the year ended
31 March 2019 of 1.75p per
Ordinary Share (2018: nil) 350 - 350 - - -
Proposed final dividend
for the year ended 31 March
2019 of nil per Ordinary
Share (2018: 3.0p) - - - 600 - 600
------------------------------ --------- --------- --------- --------- --------- ---------
950 - 950 1,200 860 2,060
------------------------------ --------- --------- --------- --------- --------- ---------
10. Return per Ordinary
Share
2019 2018
--------------------------------------------------------------- ----------------------------------------------------------
Revenue Capital Total Revenue Capital Total
---------------- -------------------- ----------------- ---------------------- ---------------------- --------------- -----------------
Return after
tax GBP1,117,000 (GBP2,923,000) (GBP1,806,000) GBP1,220,000 (GBP2,437,000) (GBP1,217,000)
Weighted
average
number of
Ordinary
Shares in
issue 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000
Return per
Ordinary
Share 5.59p (14.62)p (9.03)p 6.10p (12.19)p (6.09)p
---------------- -------------------- ----------------- ---------------------- ---------------------- --------------- -----------------
11. Investments held at fair value through profit or loss
2019 2018
GBP'000 GBP'000
------------------------------------------------- ------------------------- -------------------------------------------
Investments listed on a recognised
investment exchange 42,223 47,130
------------------------------------------------- ------------------------- -------------------------------------------
Opening book cost 38,287 35,937
Opening unrealised gains on
investments 8,843 14,140
------------------------------------------------- ------------------------- -------------------------------------------
Opening valuation 47,130 50,077
Movements in year:
Purchases at cost 13,455 20,106
Sales of investments - cost (15,781) (17,756)
Movement in unrealised gains
on investments (2,581) (5,297)
------------------------------------------------- ------------------------- -------------------------------------------
Closing valuation 42,223 47,130
------------------------------------------------- ------------------------- -------------------------------------------
Closing book cost 35,961 38,287
Closing unrealised gains on
investments 6,262 8,843
Total investments held at fair
value through profit or loss 42,223 47,130
------------------------------------------------- ------------------------- -------------------------------------------
Investment transaction costs on purchases and sales of investments
during the year to 31 March 2019 amounted to GBP17,000 and GBP38,000
respectively (2018: GBP65,000 and GBP76,000 respectively).
Losses on investments in year per
Income Statement
2019 2018
GBP'000 GBP'000
---------------------------------------------------------------- ---------- -------------------
(Losses)/gains on disposal of investments (80) 3,314
Capital distributions received - 129
Movement in unrealised gains of investments
held (2,581) (5,297)
---------------------------------------------------------------- ---------- -------------------
Balance at 31 March (2,661) (1,854)
---------------------------------------------------------------- ---------- -------------------
Significant holdings
Included in the above are the following investments in investment
funds in which the Company has an interest of 10% or more of the
nominal value of the shares of that class in the investee company
as at 31 March 2019.
Country of
registration Class % of % of
Investment and listing of capital class held fund held
-------------------------- ------------------------------------------ ----------------- ------------------------------ ------------
Blackfriars Oriental
Focus Fund Republic of Ireland 'B' US Dollar 55.37% 34.98%
-------------------------- ------------------------------------------ ----------------- ------------------------------ ------------
The Company has arrangements in place with the Investment Manager
to avoid double charging of fees and expenses on investments made
in other products managed by the Investment Manager (see note 4).
12. Debtors
2019 2018
GBP'000 GBP'000
---------------------------------------------------------------- --------------------------------------- ----------------------------
VAT recoverable 18 -
Prepayments and accrued income 159 136
Sales for future settlement 32 -
209 136
---------------------------------------------------------------- --------------------------------------- ----------------------------
13. Creditors: amounts falling due within one year
2019 2018
GBP'000 GBP'000
------------------------------------ ---------------- --------
Accrued expenses 112 69
112 69
------------------------------------ ---------------- --------
14. Share capital
Number
Number of of
shares 2019 shares 2018
000's GBP'000 000's GBP'000
--------------------------------- ----------- --------- ------- ---------
Authorised: Ordinary Shares of
25p each 30,000 7,500 30,000 7,500
Issued and fully paid: Ordinary
Shares of 25p each 20,000 5,000 20,000 5,000
--------------------------------- ----------- --------- ------- ---------
15. Capital reserve
Capital expenditure and other gains/(losses)
2019 2018
GBP'000 GBP'000
---------------------------------------------- -------- --------
Opening balance 19,887 17,887
(Losses)/gains on disposal of investments (80) 3,314
Capital distributions received - 129
Net foreign exchange gains/(losses) 43 (267)
Research costs (32) (26)
Investment management fees charged
to capital (273) (290)
Dividends paid in year (860) (860)
Balance at 31 March 18,685 19,887
---------------------------------------------- -------- --------
Investments held
2019 2018
GBP'000 GBP'000
---------------------------------------------- -------- --------
Opening balance 8,843 14,140
Movement in unrealised gains on investments (2,581) (5,297)
---------------------------------------------- -------- --------
Balance at 31 March 6,262 8,843
Capital reserve 24,947 28,730
---------------------------------------------- -------- --------
16. Net asset value per share
2019 2018
Net assets attributable GBP45,449,000 GBP49,315,000
Ordinary Shares in issue 20,000,000 20,000,000
------------------------------------ -------------- --------------
Net asset value per ordinary share 227.25p 246.58p
------------------------------------ -------------- --------------
17. Financial instruments and capital disclosures
Risk management policies and procedures
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. In pursuit
of this objective, the Company may be exposed to various forms of risk,
as described below.
The Board has policies on diversification of investment, gearing (bank borrowing),
dividends and risk management, which it reviews in accordance with prevailing
market conditions. Current policies are set out in the Strategic Report.
The Company's assets are managed so as to diversify both the market risk
(including price risk) and liquidity risk that occurs in any equity portfolio
and the Board monitors this process (see Strategic Report).
The Board and its Investment Manager consider and review the risks inherent
in managing the Company's assets which are detailed below:
Currency risk
The majority of the Company's assets are denominated in a currency other
than sterling. Changes in the exchange rate between sterling and other currencies
may lead to a depreciation of the value of the Company's assets as expressed
in sterling and may reduce the returns to the Company from its investments
and, therefore, negatively impact sterling the level of dividends paid to
shareholders.
Currency exposure at 31
March 2019
GB
US HK Pounds Indian Korean Taiwan Phillippine Thai
Dollar Dollar Sterling Rupee Won Dollar Peso Baht Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ---------- ---------- --------- ---------- --------------- ------------ ---------------- -------- ---------- --------
Debtors - - 69 - 108 - - - 32 209
Cash at bank 2,962 - 142 - - 1 - - 24 3,129
Creditors - - (112) - - - - - - (112)
--------------------- ---------- ---------- --------- ---------- --------------- ------------ ---------------- -------- ---------- --------
Foreign currency
exposure on
net monetary
items 2,962 - 99 - 108 1 - - 56 3,226
Equities held
at fair value
through profit
or loss 6,865 10,625 6,467 4,372 4,179 3,141 1,927 2,508 2,139 42,223
--------------------- ---------- ---------- --------- ---------- --------------- ------------ ---------------- -------- ---------- --------
Total net foreign
currency exposure 9,827 10,625 6,566 4,372 4,287 3,142 1,927 2,508 2,195 45,449
--------------------- ---------- ---------- --------- ---------- --------------- ------------ ---------------- -------- ---------- --------
Currency exposure at 31
March 2018
GB
US HK Pounds Indian Korean Taiwan Phillippine Thai
Dollar Dollar Sterling Rupee Won Dollar Peso Baht Other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ---------- ---------- --------- ---------- --------------- ------------ ---------------- -------- ---------- --------
Debtors - - 50 3 79 - 4 - - 136
Cash at bank 1,536 - 63 - 4 506 - - 9 2,118
Creditors - - (69) - - - - - - (69)
--------------------- ---------- ---------- --------- ---------- --------------- ------------ ---------------- -------- ---------- --------
Foreign currency
exposure on
net monetary
items 1,536 - 44 3 83 506 4 - 9 2,185
Equities held
at fair value
through profit
or loss 7,817 10,719 7,568 4,919 4,878 3,790 1,917 2,740 2,782 47,130
--------------------- ---------- ---------- --------- ---------- --------------- ------------ ---------------- -------- ---------- --------
Total net foreign
currency exposure 9,353 10,719 7,612 4,922 4,961 4,296 1,921 2,740 2,791 49,315
--------------------- ---------- ---------- --------- ---------- --------------- ------------ ---------------- -------- ---------- --------
Over the year, sterling weakened against the US dollar by 7.42% (2018: strengthened
11.90%), weakened against the Hong Kong dollar by 7.40% (2018: strengthened
13.02%), weakened against the Indian Rupee by 1.72% (2018: strengthened
12.84%), weakened against the Korean Won by 0.78% (2018: strengthened 6.25%)
and weakened against the Thai baht by 5.69% (2018: strengthened 1.65%).
A 5% rise or decline of sterling against foreign currency denominated (i.e.
non sterling) assets held at the year end would have decreased/increased
the net asset value by GBP1,944,000 or 4.28% of net asset value (2018: GBP2,085,000
or 4.23% of net asset value). It is not practical to estimate the impact
on the income statement since the profit and loss is the net result of all
the transactions in the portfolio throughout the year.
Interest rate
risk
The Company is exposed to a very low level of interest rate risk through
its cash deposits with The Northern Trust Company. The Company had no borrowings
at the year end (2018: nil) and therefore sensitivity analysis to changes
in LIBOR are not applicable.
Equity price
risk
If the fair value of the Company's investments at the year end increased/decreased
by 10% then it would have the effect of GBP4,222,000 or 21.11 pence per
Ordinary Share (2018: GBP4,713,000 or 23.57 pence per Ordinary Share) on
the capital return.
Liquidity risk
Liquidity risk is generally not significant in normal market conditions
as the majority of the Company's investments are listed on recognised stock
exchanges and for the most part readily realisable securities which can
be sold easily to meet funding commitments if necessary. Short-term flexibility
may be achieved by the use of bank overdrafts.
Credit risk is mitigated by diversifying the counterparties through whom
the Investment Manager conducts investment transactions. The credit-standing
of all counterparties is reviewed periodically with limits set on amounts
due from any one broker.
Cash is only held at banks and in money market funds that have been identified
by the Board as reputable and of high credit quality. Northern Trust has
a short-term deposit rating of P-1 with Moody's and A-1+ with S&P. No cash
was held in money market funds during the years ended 31 March 2019 and
31 March 2018.
Substantially all of the assets of the Company at the year end were held
by the Custodian or its sub-custodians. Bankruptcy or insolvency of the
Custodian or its sub-custodians may cause the Company's rights with respect
to securities held by the Custodian to be delayed or limited. The Custodian
segregates the Company's assets from its own assets and only uses sub-custodians
on its approved list of sub-custodians. At the year end, the Custodian held
GBP42,223,000 (2018: GBP47,130,000) in respect of quoted investments.
The total credit exposure (representing current assets) of the Company at
the year end as shown on the Statement of Financial Position was GBP3,338,000
(2018: GBP2,254,000).
Valuation of financial
instruments
FRS 102 (see note 1) requires that the classification of financial instruments
be valued by reference to the source of inputs used to derive the fair value.
The Company has adopted the fair value hierarchy disclosures as set out
in the March 2016 amendment to FRS 102 classifications and their descriptions
are below:
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:
31 March 2019 31 March 2018
-------------------------------------------------- -----------------------------------------------------------
Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ---------- ---------- -------------- ---------- ---------- ----------------- ----------- ---------------
Investments 42,223 - - 42,223 46,547 - 583 47,130
--------------------- ---------- ---------- -------------- ---------- ---------- ----------------- ----------- ---------------
The investment in Silver Heritage is classified as Level 3 at the year end
and is valued at nil (2018: holding in Finetex EnE).
The valuation techniques used by the Company are explained in the accounting
policies note 1(b).
Reconciliation of the Level 3 classification is shown below:
31 March 2019
-------------------------------
GBP'000
Balance as at the beginning of the year 583
Sales proceeds (37)
Realised loss on investments (546)
Balance as at
31 March -
--------------- --------------
Capital management policies and
procedures
The capital managed by the Company represents only the Equity
Shareholders' funds of GBP45,449,000 (2018: GBP49,315,000).
The Company currently has no borrowings.
The Company's objectives, policies and procedures for managing
capital are set out in the share capital section of the Directors'
Report.
The use of distributable reserves is disclosed in note 20.
18. Guarantees, financial commitments and contingent liabilities
There were no financial commitments outstanding at the year
end (2018: none).
There were no contingent liabilities outstanding at the year
end (2018: none).
19. Related party disclosure
Blackfriars Asset Management Limited ("Blackfriars") acts as Investment
Manager to the Company and provides investment management services.
The fees paid to Blackfriars are disclosed in note 4 and further
details of the relationship between the Company and Blackfriars
are set out in note 7.
20. Distributable reserves
The Company's distributable reserves consist of realised capital
reserves attributable to realised profits and revenue reserves.
Dividends may be paid from either of these reserves.
21. Post balance sheet event
There are no post balance sheet events to be disclosed.
Alternative Performance Measures ('APMs')
Discount
The amount, expressed as a percentage, by which the share price
is less than the NAV per share.
As at 31
March 2019
---------------------------------- -------------- -------------- ------- --------------
NAV per Ordinary Share a 227.25
Share price(mid market) b 205.00
Discount (b÷a)-1 -9.79%
-------------------------------------------------- ------------- ------- --------------
Ongoing charges
A measure, expressed as a percentage of average NAV, of the regular,
recurring annual costs of running an investment company.
-------------------------------------------------------------------------------------------
As at 31
March 2019
GBP'000
---------------------------------- -------------- -------------- ------- --------------
Average NAV a 45,972
Annualised expenses b 653
Ongoing charges b÷a 1.42%
-------------------------------------------------- ------------- ------- --------------
Total return
A measure of performance that includes both income and capital
returns. This takes into account capital gains and reinvestment
of dividends paid out by the Company into its Ordinary Shares on
the ex-dividend date.
-------------------------------------------------------------------------------------------
Share price
For the year ended 31 March 2019 NAV (mid market)
---------------------------------- -------------- -------------- ------- --------------
Opening at 1 April 2018 a 246.58 208.00
Closing at 31 March 2019 b 227.25 205.00
Dividend adjustment factor c 1.0532 1.0522
Adjusted closing (d = b x c) d 239.34 215.70
Total return (d÷a)-1 -2.94% 3.70%
---------------------------------- ------------------------------ ------- --------------
Financial Information
This announcement does not constitute the Company's statutory accounts. The financial information for 2019 is derived from the statutory accounts for 2019, which will be delivered to the registrar of companies. The statutory accounts for 2018 have been delivered to the registrar of companies. The auditors have reported on the 2019 and 2018 accounts; their reports were unqualified and did not include a statement under Section 498(2) or (3) of the Companies Act 2006.
Printed copies of the Annual Report and Financial Statements for the year ended 31 March 2019 will be posted to shareholders in due course and can be requested from the Registered Office of the Company. A pdf copy can be viewed or downloaded from the Investment Manager's website www.blackfriarsam.com. Neither the contents of the Investment Manager's website nor the contents of any website accessible from hyperlinks on the Investment Manager's website (or any other website) is incorporated into or forms part of this announcement.
The Annual Report will be submitted to the National Storage Mechanism and will shortly be available for inspection at: http://www.morningstar.co.uk/uk/NSM
Annual General Meeting
The Annual General Meeting of the Company will be held at the offices of Stephenson Harwood LLP, 1 Finsbury Circus, London, EC2M 7SH on 10 July 2019 at 12 noon. The notice of AGM is contained in the Annual Report for the year ended 31 March 2019.
4 June 2019
Secretary and registered office:
PraxisIFM Fund Services (UK) Limited
Mermaid House,
2 Puddle Dock,
London EC4V 3DB
For further information contact:
Anthony Lee / Ciara McKillop
PraxisIFM Fund Services (UK) Limited
Tel: 020 7653 9690
Registered in England No. 4355437
END
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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