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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 Apr 2019 to Apr 2024
TIDMET.
RNS Number : 1187I
Establishment Inv. Trust PLC (The)
21 November 2018
THE ESTABLISHMENT INVESTMENT TRUST PLC (the 'Company')
LEI: 213800I9IT25LOQ1UW49
Half-year financial report for the six months ended 30 September 2018
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 2018
Hot Features
Premium
At
At 30 September Total return
31 March 2018 2018 (%)(*)
----------------------------------- --------------- -------------- -------------
Share price(**) 208.00p 189.00p -5.8
Net asset value per Ordinary
Share(**) 246.58p 231.30p -2.6
FTSE UK Private Investor Balanced
Index(***) +7.1
MSCI UK Equity(***) +8.9
MSCI AC World Equity(***) +12.8
MSCI AC Asia ex Japan Equity(***) +0.2
----------------------------------- --------------- -------------- -------------
(*) Source: Bloomberg
(**) Definitions of these Alternative Performance Measures ('APMs') together with how they have been calculated can be found below.
(***) These percentages are total returns in sterling.
Dividend per Ordinary Share 30 September 30 September Change payable 2017 2018 (%)(*) ----------------------------- ------------- ------------- -------- Interim 3.0p 3.0p 0 ----------------------------- ------------- ------------- --------
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 2018 (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 fell 9.1% while the Net Asset Value declined 6.2%. Measured by total return, including the payment of last year's final and special dividend, the share price fell 5.8% while the Net Asset Value declined 2.6%. For comparison, in sterling terms, the MSCI AC Asia ex Japan Index rose by 0.2%, the MSCI AC World Index gained 12.8% and the FTSE UK Private Investor Balanced Index rose by 7.1%.
The majority of the Company's assets continue to be invested throughout Asia, while some balance is provided by multinationals listed in London, representing approximately 15% of the portfolio. A further 4.9% is held in cash.
The Manager's report highlights multiple headwinds for Asia's equity markets. After a decade of unprecedented levels of monetary expansion, the pace of interest rate increases initiated by the US Federal Reserve and the paring back of central banks' balance sheets is creating more challenging liquidity conditions with significant impact on pricing and valuation of asset classes. Equally, protectionism threatens the integrity and benefits of globalisation leading to consequential disruption of well established supply chains which will perhaps eventually result in the creation of regional trade blocks. President Trump's policy of challenging China appears to go well beyond just trade relations. Still, exports represent just 20% of China's GDP and Asia , as a whole, should be a long term winner given rising per capita incomes coupled with attractive demographics creating secular growth in domestic demand besides rising inter regional trade.
Since, the half year end, Asian markets have been subject to further heavy selling which has seen a further 4.6% decline in the Net Asset Value. Although equity markets may be at levels reflecting below average valuations on a historical basis, further volatility can be expected in the short term. Questions over the growth of the Chinese economy may be offset by Chinese Government fiscal and monetary measures to implement stimulus. The direction of regional corporate earnings guidance is also critical to restoring a level of market confidence.
While the Company has returned 7.2% per annum in Net Asset Value total returns from listing in 2002 to 31 October 2018, the Board has considered that continuing in its current form is not an attractive option for shareholders. The small size of the Company, perennial and persistent discount besides the increasing regulatory and governance obligations and increased costs all present mounting and significant challenges. Therefore, the Board and Investment Manager have announced that they will not recommend that shareholders vote in favour of continuation of the Company in its current form when the next continuation vote is put forward at the Annual General Meeting in July 2019. In advance of that AGM the Board will invite and consider alternative plans for the Company's future, including the opportunity for a cash realisation, and will put forward proposals at the AGM for shareholders' approval, assuming the continuation vote is not passed.
The Board has declared an interim dividend of 3.0p, unchanged from last year's interim payment. This will be paid on 21 December 2018 to shareholders on the register as at 30 November 2018.
Harry Wells
Chairman
21 November 2018
Portfolio Holdings at 30 September 2018
(All Equity Shares unless otherwise stated)
Percentage
(%) of
net assets
Percentage (portfolio
(%) of look
Fair value net through
Holding Company GBP'000 assets basis)
----------- ------------------------------------ -------------------- -------------------- ------------
Blackfriars Oriental Focus
362,500 Fund 'B' * 6,457 14.0 -
53,500 British American Tobacco 1,918 4.1 4.2
55,350 Samsung Electronics 1,775 3.8 4.5
42,000 Unilever 1,771 3.8 3.8
254,000 Taiwan Semiconductor Manufacturing 1,670 3.6 4.3
55,000 Imperial Brands 1,469 3.2 3.2
708,596 Uni-President Enterprise 1,415 3.1 3.7
92,000 GlaxoSmithKline 1,414 3.1 3.1
492,700 Samsonite International 1,400 3.0 3.6
5,150,000 Land & Houses 1,393 3.0 3.6
233,217 Siam City Cement 1,378 3.0 3.5
Housing Development Finance
72,526 Corporation 1,341 2.9 3.5
40,811 Shinhan Financial 1,267 2.7 3.3
33,900 KB Financial Group 1,266 2.7 3.0
6,310 SK Telecom 1,229 2.7 3.1
Industrial & Commercial Bank
2,010,000 of China 1,127 2.5 2.9
352,000 Minth Group 1,112 2.4 3.1
501,000 Johnson Electric Holdings 1,068 2.3 2.8
304,800 Sands China 1,057 2.3 2.8
334,763 ITC 1,057 2.3 2.7
767,000 JNBY Design 1,033 2.2 2.6
424,000 China Overseas Land and Investments 1,018 2.2 2.5
1,737,700 Ayala Land 987 2.1 2.5
73,070 Ayala Corporation 963 2.1 2.6
455,000 Haier Electronics Group 945 2.0 2.3
1,350,000 China Construction Bank Corporation 903 2.0 2.1
193,533 Zee Entertainment 900 1.9 2.4
2,300,000 Astra International 869 1.9 2.3
49,500 Larsen & Toubro 667 1.5 1.7
Sunny Optical Technology
75,000 Group 664 1.4 1.7
1,913,000 IJM Corporation 634 1.4 1.7
19,600 Tencent Holdings 621 1.3 1.8
78,000 eMemory Technology 563 1.2 1.5
28,371,274 Silver Heritage 315 0.7 0.9
4,500,000 Access Engineering 284 0.6 0.8
485,000 Finetex EnE 44 0.1 0.1
- Other investments** - - 0.6
Total investments 43,994 95.1 94.8
Net current assets 2,266 4.9 5.2
----------- ------------------------------------ -------------------- -------------------- ------------
Net assets 46,260 100.0 100.0
----------- ------------------------------------ -------------------- -------------------- ------------
* Blackfriars Asset Management Irish domiciled and listed fund.
** 'Other investments' are investments held by Blackfriars Oriental
Focus Fund 'B' and not directly by the Company.
Analysis of Investment Portfolio at 30 September 2018
Percentage
(%) of
net assets
Percentage (portfolio
(%) of look
Fair value net through
Sector analysis GBP'000 assets basis)
------------------------------ ------------------ ------------------- -------------------
Financials 9,247 20.0 23.5
Consumer Discretionary 7,631 16.5 20.0
Consumer Staples 7,630 16.5 17.6
Investment Companies 6,457 14.0 -
Information Technology 4,066 8.8 10.9
Industrials 2,413 5.2 6.3
Health Care 1,414 3.0 3.1
Materials 1,378 3.0 3.5
Telecommunication Services 1,229 2.7 3.1
Technology 1,227 2.6 3.2
Real Estate 1,018 2.2 2.5
Construction & Engineering 284 0.6 1.1
Total investments 43,994 95.1 94.8
Net current assets 2,266 4.9 5.2
------------------------------ ------------------ ------------------- -------------------
Net assets 46,260 100.0 100.0
------------------------------ ------------------ ------------------- -------------------
Percentage
(%) of
net assets
Percentage (portfolio
(%) of look
Geographical analysis (based Fair value net through
on listing or domicile) GBP'000 assets basis)
------------------------------ ------------------ ------------------- -------------------
Hong Kong 6,955 15.0 18.4
United Kingdom 6,572 14.2 14.3
Ireland* 6,457 13.9 -
Korea 5,581 12.1 10.3
China 3,993 8.6 14.0
India 3,965 8.6 9.5
Taiwan 3,648 7.9 7.1
Thailand 2,771 6.0 10.1
Philippines 1,950 4.2 5.1
Indonesia 869 1.9 1.7
Malaysia 634 1.4 2.3
Australia 315 0.7 0.9
Sri Lanka 284 0.6 0.8
Vietnam - - 0.3
Total investments 43,994 95.1 94.8
Net current assets 2,266 4.9 5.2
------------------------------ ------------------ ------------------- -------------------
Net assets 46,260 100.0 100.0
------------------------------ ------------------ ------------------- -------------------
* 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.
Percentage
(%) of
net assets
Percentage (portfolio
(%) of look
Fair value net through
Classification of assets GBP'000 assets basis)
------------------------------ ------------------ ------------------- -------------------
Equities 43,994 95.1 94.8
Net current assets 2,266 4.9 5.2
------------------------------ ------------------ ------------------- -------------------
Net assets 46,260 100.0 100.0
------------------------------ ------------------ ------------------- -------------------
Investment Manager's Report
During the first half of the Company's financial year the share price fell 9.1% while the Net Asset Value declined 6.2%. In total return terms, including the final and special dividend, the share price fell 5.8% while the Net Asset Value declined 2.6%. In comparison, the MSCI AC Asia ex Japan Index rose 0.2%, the MSCI AC World Index gained 12.8% and the FTSE UK Private Investor Balanced Index rose 7.1%.
The discount of the share price to the net asset value widened from 15.4% to 18.3% during the period under review, reflecting perhaps increasingly negative sentiment towards emerging market equities. Conditions in Asian equity markets deteriorated further in October 2018 as the United States, and other developed markets, declined sharply.
Performance and Portfolio Review
The poor performance of Asian and other emerging markets relative to the United States and other developed markets over the past six months has reversed all of last year's outperformance. India (+4.5%) and Hong Kong (+5.3%) were the best performers during the period under review with China (-4.0%), Indonesia (-4.1%) and the Philippines (-3.6%) the laggards. By sector, Energy (+22.2%) was a clear outperformer while Consumer Discretionary (-11.2%), a sector dominated by auto companies, suffered as the US/China trade issues deepened and China's auto market cooled.
Three of the four UK investments performed creditably in the first half, however the share price of British America Tobacco (-13.2%) continues to struggle. The stock is now down by over one third from last year's highs. While there have been some issues with the roll out of NGP (new generation products), the future for NGP remains positive while the unfashionable, traditional cigarette business continues to generate cash at a prodigious rate. Valuations, as measured by either the price earnings ratio (circa 11x current year) or yield (almost 6.0%), have returned to the Global Financial Crisis lows. We continue to value the income stream from all these investments highly.
In Asia, the second and final write down of Finetex in April (discussed in the Annual Report) proved, unfortunately, to be the right decision while Nepalese casino and hotel operator, Silver Heritage, continues to test our patience. The astounding victory of Dr Mahathir and his Pakatan Harapan coalition in the May 2018 general election caused havoc in the Malaysian construction sector where a number of infrastructure projects have been either cancelled or deferred. Portfolio holding IJM (-32.9%) was not spared. Elsewhere, Zee Entertainment (-25.9%), Tencent (-14.6%) and Johnson Electric (-17.8%) also posted poor returns although these disappointments were largely offset by the strong returns generated by the likes of SK Telecom, Uni-President, TSMC and Land & House.
Economic Headwinds
The Asian region continues to face particular headwinds. The Federal Reserve continues to tighten monetary policy with four interest rate increases of 25bps in the past twelve months and to shrink its balance sheet. Further tightening is forecast as a corollary of a strong American economy. This has placed pressure on most Asian currencies with the Bloomberg-JPMorgan Asian Dollar Index declining 7% since March 2018. The index is approaching the lows seen in early 2009 and 2016. Within Asia, it is those countries with weaker balance of payment positions that have felt the most pressure on their currencies, notably the Philippines, Indonesia and India.
The imposition by the United States of 10% tariffs on $250 billion of Chinese exports, which may increase to 25% in January 2019, along with the threat of tariffs on a further $270 billion of exports, continues to weigh on sentiment not only in China but across the entire trade orientated Asian region.
The imposition of sanctions on Iran by the United States has led to heightened concerns on the potential supply and demand imbalance in the oil markets. These sanctions come into place at a time of limited exploration activity by global oil majors and production issues in Venezuela and Libya. Brent Oil prices rose by 25% to over $80 per barrel during the period under review. Asia is energy deficient and rising oil prices place stress on the trade accounts and inflation profiles of the regional economies.
Forthcoming national elections in India, Indonesia and Thailand pose some a degree of political uncertainty.
Market Outlook
As always, the question is how many of these 'headwinds' are now priced into markets. Your manager believes that the majority of the bad news is now 'in the price' with regional equities trading on circa 11x 2018 earnings and at 1.3x 2018 book value. Economic growth across the region may slow somewhat but the strong secular drivers of growth remain in place and we remain optimistic of the longer term prospects of the investments in the portfolio.
Blackfriars Asset Management Limited
Investment Manager
21 November 2018
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 2018.
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 2018. 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-year 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 2018.
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-year 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 2018 and the above Directors' Responsibility Statement were approved by the Board on 21 November 2018.
Harry Wells
Chairman
Condensed Income Statement
Six months ended Six months ended
30 September 30 September
2018 2017
(unaudited) (unaudited)
----------------------------- ----------------------------
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ------ -------- --------- -------- -------- -------- --------
(Losses)/gains on investments - (2,112) (2,112) - 474 474
Foreign exchange gains/(losses) - 8 8 - (117) (117)
Income 5 970 - 970 1,185 - 1,185
Investment management
fees (36) (142) (178) (37) (147) (184)
Other expenses (165) (55) (220) (125) - (125)
--------------------------------- ------ -------- --------- -------- -------- -------- --------
Return before tax 769 (2,301) (1,532) 1,023 210 1,233
Taxation for the period 7 (63) - (63) (89) - (89)
--------------------------------- ------ -------- --------- -------- -------- -------- --------
Return for the financial
period 706 (2,301) (1,595) 934 210 1,144
--------------------------------- ------ -------- --------- -------- -------- -------- --------
Return per Ordinary
Share 8 3.53p (11.51)p (7.98)p 4.67p 1.05p 5.72p
--------------------------------- ------ -------- --------- -------- -------- -------- --------
Year ended
31 March
2018
(audited)
-----------------------------
Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000
-------------------------- ------ -------- --------- --------
Losses on investments - (1,854) (1,854)
Foreign exchange losses - (267) (267)
Income 5 1,731 - 1,731
Investment management
fees (72) (290) (362)
Other expenses (321) (26) (347)
-------------------------- ------ -------- --------- --------
Return before tax 1,338 (2,437) (1,099)
Taxation for the period 7 (118) - (118)
-------------------------- ------ -------- --------- --------
Return for the financial
year 1,220 (2437) (1,217)
-------------------------- ------ -------- --------- --------
Return per Ordinary
Share 8 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 period is also the total comprehensive income for the period.
Condensed Statement of Financial Position
30 September 30 September 31 March
2018 2017 2018
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
------------------------------------ ----- ------------- ------------- ----------
Fixed assets
Investments at fair value through
profit or loss 43,994 51,141 47,130
Current assets
Debtors 52 30 136
Cash at bank 2,321 1,136 2,118
------------------------------------ ----- ------------- ------------- ----------
2,373 1,166 2,254
Payables: amounts falling due
within one year (107) (31) (69)
------------------------------------ ----- ------------- ------------- ----------
Net current assets 2,266 1,135 2,185
------------------------------------ ----- ------------- ------------- ----------
Net assets 46,260 52,276 49,315
------------------------------------ ----- ------------- ------------- ----------
Capital and reserves
Called up share capital 5,000 5,000 5,000
Share premium 14,701 14,701 14,701
Capital reserve 25,569 31,377 28,730
Revenue reserve 990 1,198 884
------------------------------------ ----- ------------- ------------- ----------
Equity Shareholders' funds 46,260 52,276 49,315
------------------------------------ ----- ------------- ------------- ----------
Net asset value per Ordinary Share 6 231.30p 261.38p 246.58p
------------------------------------ ----- ------------- ------------- ----------
The financial statements were approved by the Board and signed on its behalf by:
Harry Wells
Chairman
21 November 2018
Registered in England No. 4355437
Condensed Statement of Changes in Equity
For the six months ended 30 September 2018 (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 2018 5,000 14,701 28,730 884 49,315
Return for the financial
period - - (2,301) 706 (1,595)
Dividends paid - - (860) (600) (1,460)
At 30 September 2018 5,000 14,701 25,569 990 46,260
--------------------------- ----------- --------- --------- --------- ---------
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 year ended 31 March
2018 (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 2017 5,000 14,701 32,027 904 52,632
Return for the financial
year - - (2,437) 1,220 (1,217)
Dividends paid - - (860) (1,240) (2,100)
At 31 March 2018 5,000 14,701 28,730 884 49,315
--------------------------- ----------- --------- --------- --------- ---------
Condensed Statement of Cash Flows
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2018 2017 2018
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
-------------------------------------- ------------- ------------- -----------
Cash flows from operating activities
Return for the financial period (1,595) 1,144 (1,217)
Adjustments for:
Taxation 63 89 118
Losses/(gains) on investments
held at fair value 2,112 (474) 1,880
(Gains)/losses on exchange
movements (8) 117 267
Research costs - - (26)
Decrease in trade debtors 84 149 43
Increase/(decrease) in trade
creditors 38 (63) (29)
-------------------------------------- ------------- ------------- -----------
Cash from operations 694 962 1,036
Taxation (63) (89) (118)
Net cash generated from operating
activities 631 873 918
-------------------------------------- ------------- ------------- -----------
Cash flows from investing activities
Purchase of investments (7,920) (15,928) (21,449)
Sale of investments 8,944 14,625 21,833
--------------------------------------
Net cash generated from/(used
in) investing activities 1,024 (1,303) 384
-------------------------------------- ------------- ------------- -----------
Cash flows from financing activities
Equity dividends paid (1,460) (1,500) (2,100)
Net cash used for financing
activities (1,460) (1,500) (2,100)
-------------------------------------- ------------- ------------- -----------
Net increase/(decrease) in
cash and cash equivalents 195 (1,930) (798)
Foreign exchange movements 8 (117) (267)
Cash and cash equivalents at
beginning of period 2,118 3,183 3,183
Cash and cash equivalents at
end of period 2,321 1,136 2,118
-------------------------------------- ------------- ------------- -----------
Notes to the Financial Statements
1. Accounting policies
The half-yearly financial report for the six months ended 30 September 2018 (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 2018. The accounting policies and presentation in the Report are consistent with those applied in the Annual Report for the year ended 31 March 2018.
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 2019.
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 2018 included in the Report has been extracted from the Company's audited annual accounts for the year to 31 March 2018, 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.
Whilst the Directors consider it appropriate to prepare the financial statements on a going concern basis, they draw your attention to the following material uncertainty, in relation to the Company continuing as a going concern, after the next continuation vote.
The Board and Investment Manager have announced that they will not recommend that shareholders vote in favour of continuation of the Company in its current form when the next continuation vote is put forward at the Annual General Meeting in July 2019. In advance of that AGM the Board will invite and consider alternative plans for the Company's future, including the opportunity for a cash realisation, and will put forward proposals at the AGM for shareholders' approval, assuming the continuation vote is not passed.
4. Valuation of investments
The Company held all its investments at fair value through profit or loss. Investments are initially measured at cost, being the fair value on purchase and this value is recognised on the trade date. 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, if unavailable, 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 Year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
-------------------------- ------------- ------------- ----------
Income from investments:
Overseas dividends 795 1,026 1,359
UK dividends 162 159 360
Other income 13 - 12
970 1,185 1,731
-------------------------- ------------- ------------- ----------
6. Net asset value per Ordinary Share
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2018 2017 2018
(unaudited) (unaudited) (audited)
------------------------------ -------------- -------------- --------------
Net assets attributable GBP46,260,000 GBP52,276,000 GBP49,315,000
Ordinary Shares in issue 20,000,000 20,000,000 20,000,000
Net asset value per Ordinary
Share 231.30p 261.38p 246.58p
------------------------------ -------------- -------------- --------------
7. Taxation
The tax charge relates to overseas withholding tax incurred on income received/receivable.
8. Return per Ordinary Share
Six months ended 30 September 2018 (unaudited)
Revenue Capital Total
-------------------------------------------------- ------------------ ----------------- -----------------
Return after tax GBP706,000 (GBP2,301,000) (GBP1,595,000)
Weighted average number of Ordinary Shares
in issue during the period 20,000,000 20,000,000 20,000,000
-------------------------------------------------- ------------------ ----------------- -----------------
Return per Ordinary Share 3.53p (11.51)p (7.98)p
Six months ended 30 September 2017 (unaudited)
Revenue Capital Total
-------------------------------------------------- ------------------ ----------------- -----------------
Return after tax GBP934,000 GBP210,000 GBP1,144,000
Weighted average number of Ordinary Shares
in issue during the period 20,000,000 20,000,000 20,000,000
-------------------------------------------------- ------------------ ----------------- -----------------
Return per Ordinary Share 4.67p 1.05p 5.72p
Year ended 31 March 2018 (audited)
Revenue Capital Total
-------------------------------------------------- ------------------ ----------------- -----------------
Return after tax GBP1,220,000 (GBP2,437,000) (GBP1,217,000)
Weighted average number of Ordinary Shares
in issue during the year 20,000,000 20,000,000 20,000,000
Return per Ordinary Share 6.10p (12.19)p (6.09)p
-------------------------------------------------- ------------------ ----------------- -----------------
9. Dividend
The Directors have declared an interim dividend of 3.0p per Ordinary Share in respect of the year ending 31 March 2019. The shares will be quoted ex-dividend on 29 November 2018 and the dividend will be paid on 21 December 2018, to Ordinary Shareholders on the register at the close of business on 30 November 2018.
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 2018, the fee accrual outstanding to Blackfriars was GBP26,489 (30 September 2017: GBP30,029).
Up to 30% of net assets may be invested in investment products managed by the Company's investment manager. At 30 September 2018, the aggregate amount invested in investment products managed by Blackfriars represented 14.0% of the Company's net assets. Blackfriars rebates management fees in respect of amounts invested in Blackfriars' investment products back to the Company.
The Company has also entered into a Research Purchasing Agreement with Blackfriars to meet the cost of sell side research. The amount accrued in the period in respect of these research costs was GBP55,000 (2017: nil).
Fees payable to the Directors for the six months ended 30 September 2018 were GBP37,000 (six months ended 30 September 2017: GBP37,000). 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 Directors' interests in the Ordinary Shares of the Company were as follows:
Ordinary Shares of 25p each
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2018 (unaudited) 2017 (unaudited) 2018 (audited)
GBP'000 GBP'000 GBP'000
-------------------- -------------------- -------------------- --------------------
Harry Wells (a) 30,000 30,000 30,000
Jim Ryall - - -
Gregory Shenkman 3,415 3,415 3,415
Susan Thornton (b) 3,550,269 1,744,728 3,550,269
Tom Waring (a) 3,891 3,891 3,891
-------------------- -------------------- -------------------- --------------------
(a) Held in SIPP.
(b) Susan Thornton has a direct interest in 1,805,541 Ordinary Shares and, in addition, has an interest in 1,744,728 Ordinary Shares, held as a Trustee of The Thornton Foundation. Susan Thornton is a trustee of RC Thornton Will Trust, which holds an interest in 1,805,542 Ordinary Shares in the Company.
No changes in the above interests have been notified to the Company between 30 September 2018 and the date of this Report.
11. Valuation of financial instruments
FRS 102 requires that the different classifications of financial instruments be valued by reference to the source of inputs used to derive the fair value. The fair value hierarchy 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:
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2018 (unaudited) 2017 (unaudited) 2018 (audited)
GBP'000 GBP'000 GBP'000
--------- ------------------ ------------------ ----------------
Level 1 43,994 51,141 46,547
Level 2 - - -
Level 3 - - 583
--------- ------------------ ------------------ ----------------
Total 43,994 51,141 47,130
--------- ------------------ ------------------ ----------------
There were no investments classified as Level 2 during all three periods tabled above.
There were no investments classified as Level 3 during the period (31 March 2018: Finetex EnE). Finetex was requoted in the period and subsequently sold after the period end for GBP37,000.
12. Distributable reserves
The Company's distributable reserves consist of the capital reserve attributable to realised profits and revenue reserve. Dividends may be paid from either of these reserves.
Alternative Performance Measures ('APMs')
Discount
The amount, expressed as a percentage, by which the share price is
less than the Net Asset Value ('NAV') per Ordinary Share.
As at
30 September
2018
-------------------------------------------- -------------- ------- --------------
NAV per Ordinary Share a 231.30
Share price b 189.00
Discount (b÷a)-1 -18.29%
-------------------------------------------- --------------- ------- --------------
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
For the period ended 30 September 2018 NAV price
-------------------------------------------- -------------- ------- --------------
Opening at 1 April 2018 a 246.58 208.00
Closing at 30 September 2018 b 231.30 189.00
Dividend adjustment factor c 1.0379 1.0369
Adjusted closing (d = b x c) d 240.07 195.97
Total return (d÷a)-1 -2.64% -5.78%
-------------------------------------------- --------------- ------- --------------
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
The Registry 55 Baker Street
34 Beckenham Road London W1U 7EU
Beckenham
Kent BR3 4TU
Broker Custodian
Stockdale Securities Limited 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.
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.
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