SANDITON INVESTMENT TRUST PLC - Final Results

SANDITON INVESTMENT TRUST PLC

Annual Results for the year ended to 30 June 2016

Performance Highlights

	As at	As at
	30 June 2016	30 June 2015
Share price	106.40p	106.50p
Premium to net asset value per share	1.0%	3.4%
Dividends per ordinary share	1.10p	0.45p
Ongoing charges	1.27%	1.20%

   

		Period since launch
	Year ended	on 27 June 2014
Total Return Performance	30 June 2016	to 30 June 2015
NAV per ordinary share (including dividend)	+2.7%	+3.0%
Share price	-0.1%	+6.5%
Hurdle rate (RPIX + 2%)	+3.7%	+3.1%
FTSE All-Share Index (Total Return)	+2.2%	+2.5%
RPIX	+1.7%	+1.1%

Commenting on the results, the Chairman, Rupert Barclay said:

“After a poor first six months of your Company’s financial year, I am pleased to report that your Company finished the year with a Net Asset Value (“NAV”) of 105.3p including the first uplift in valuation for the Company’s holding in Sanditon Asset Management Limited (“SAM”) which I discuss below. Combined with the dividend paid in December of 0.45p, this represented a return of 2.7% for the year.

The Company’s primary objective is to preserve the real value of your capital, which so far it has achieved, but also to try to grow it by 2% above the Retail Price Index excluding mortgage interest payments (“RPIX”). June 2016 RPIX was 1.7% per annum, so your Company is just behind its minimum objective since launch, with a total return of 5.8% against its minimum benchmark return of 6.9%. Its secondary objective is to provide low correlation with traditional equity portfolios and the correlation of the Company’s share price to the FTSE All Share index remains an encouragingly low 0.19x since launch.

Your Company’s share price finished the year at 106.4p, a modest premium to NAV, but it should be noted that the stake in SAM was revalued on the last day of your Company’s financial year and reported to the market on 1 July. The shares have traded at a modest premium throughout the year and due to the broadly market neutral structure of the portfolio have exhibited materially lower volatility than the European and UK equity markets.

The investment manager gives a thorough review of performance in his report that follows.

Stake in Sanditon Asset Management

The Board have agreed the valuation methodology for the Company’s holding in SAM which it believes to be straightforward, conservative and fair. The Board has decided to use a simple average of 1% of SAM’s year end assets under management (“AUM”) and 5x after tax profits (adjusted to exclude any performance fees earned and any associated staff bonuses paid – SAM’s policy is to pay out a maximum of 50% of performance fees earned to staff).

SAM finished its financial year (31/03/16) with AUM of just over £595m and adjusted after tax profits of £1.515m. This resulted in the Directors approving an uplift in your Company’s holding in SAM from the book cost of £200,000 to £1,353,000. Whilst SAM has had an encouraging first two years, evidenced by dividends received from SAM to your Company amounting to 85% of the initial capital deployed, the last six months have been more challenging and have seen assets under management fall from a peak of over £630m to £568m at 30 June 2016. 2016 has been a very challenging period for the investment industry with the Brexit referendum acting as a constraint on buying UK funds in particular. Time will tell, now the referendum is out of the way, whether conditions get any easier.

The Directors plan to keep the valuation methodology constant but we will annually review the multiples used to ensure that they remain appropriate.

Charges and fees

Our total ongoing charges at 30 June 2016 were 1.27% per annum. Performance fees are only accrued if the lower of NAV or the share price exceeds the hurdle rate of RPIX +2%. No performance fees were accrued as at 30 June 2016.

Share buy back

As the shares have traded for most of the year at a modest premium to NAV, the Board will not be asking shareholders for permission to buy back shares this year. The Board will continue to review this decision annually.

Dividends

The yield of your Company’s long book has continued to trade at a significant premium to the yield of the short book, so despite a broadly market neutral structure through the year, the portfolio has generated a useful income surplus of 1.19p per share and the Board is pleased to recommend an annual dividend of 1.10p per share, which is a 144.4% increase on last year. The £150,000 dividend received from your Company’s holding in SAM represented about 15% of total income. Your Company also benefitted from some special dividends which may not be repeated next year.

Providing an income is not an objective for your Company and there remains no assurance that your Company will always generate surplus income to allow a dividend to be paid.

Outlook

Negative interest rates, elevated asset prices and anaemic global growth remain a significant hurdle for all investors. The United Kingdom’s decision to vote to leave the EU at the end of the period has created another layer of uncertainty which is likely to create extra volatility as governments and investors work out the implications. We can but hope that common sense prevails and this vote does not usher in a period of protectionism but as the Investment Manager discusses in his report, Brexit or no Brexit, these are very challenging times for all investors. We all have to get used to an era of low (or no) returns.

The U.K. equity market has gyrated in a 10% range since your Company launched in 2014, with the FTSE All Share Index at year end down 2.5% since launch. Against this backdrop, your Board is encouraged that your Company has delivered modest positive returns with low correlation to the market and believes that your Company has the structure to adapt to different market conditions.”

Principal risks associated with the Company (also see note 18 on pages 36 to 42 of the Annual report).

Investment and strategy risk

The Board regularly reviews the investment mandate and long-term investment strategy in relation to the market and economic conditions. The Board also regularly monitors the Company’s investment performance against the objective to deliver at least 2% return above inflation, and monitors its compliance with the investment guidelines.

Accounting, legal and regulatory risk

In order to qualify as an investment trust, the Company must comply with the provisions contained in Section 1158 of the Corporation Taxes Act 2010. A breach of Section 1158 in an accounting period could lead to the Company being subject to corporation tax on gains realised in that accounting period. Section 1158 qualification criteria are monitored by the Investment Manager and any adverse results reported to the Board at its regular meetings. The Company must also comply with the Companies Act and the UKLA Listing Rules. The Board relies on the services of the administrator, Northern Trust Global Services Limited and its professional advisers to ensure compliance with the Companies Act and the UKLA Listing Rules.

Loss of investment team or Investment Manager SAM

A sudden departure of the Investment Manager or several members of the investment management team could result in a deterioration in investment performance.

Discount

A disproportionate widening of the discount relative to the Company’s peers could result in loss of value for shareholders.

Operational risk

Like most other investment trust companies, the Company has no employees and therefore relies upon the services provided by third parties and is dependent on the control systems of the Investment Manager, the Custodian, the Administrator and the Company’s other service providers. The security, for example, of the Company’s assets, dealing procedures, accounting records and maintenance of regulatory and legal requirements, depend on the effective operation of these systems. The Custodian and the Administrator produce reports on their internal controls which are reviewed by their auditors and give assurance regarding the effective operation of controls. These reports are reviewed by the Board. Details of material contracts entered into by the Company can be found on pages 14 and 15 of the Annual Report.

Financial risk

The financial risks faced by the Company are disclosed in note 18 on pages 36 to 42 of the Annual Report.

The Board considers these risks to have remained unchanged throughout the year under review.

Statement under the Disclosure & Transparency Rules 4.1.12

The Directors each confirm to the best of their knowledge that:

a) the financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

b) the Strategic Report contained in the Annual 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.

The 2014 UK Corporate Governance Code also requires Directors to ensure that the Annual Report and financial statements are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has requested that the Audit Committee advise on whether it considers that the Annual Report and financial statements fulfil these requirements. The process by which the Committee has reached these conclusions are set out in the Audit Committee’s report on pages 18 and 19 of the Annual Report. As a result, the Board has concluded that the Annual Report and financial statements for the year ended 30 June 2016, taken as a whole, are fair, balanced and understandable, and provide the information necessary for shareholders to assess the Company’s performance, business model and strategy.

For and on behalf of the Board

Rupert Barclay

Chairman

21 September 2016

Portfolio as at 30 June 2016

Country Breakdown (% of NAV)*	Long	Short	Net	Gross
United Kingdom	39.1	-30.9	8.2	70.0
Denmark	1.2	0.0	1.2	1.2
France	0.0	-3.9	-3.9	3.9
Germany	0.0	-2.0	-2.0	2.0
Italy	1.1	-2.2	-1.1	3.3
Netherlands	4.8	0.0	4.8	4.8
Total	____ 46.2 ====	____ -39.0 ====	____ 7.2 ====	____ 85.2 ====

   

Business Cycle Groupings (% of NAV)*	Long	Short	Net	Gross
Commodity Cyclical	5.5	-2.8	2.7	8.3
Consumer Cyclical	6.3	-2.0	4.3	8.3
Industrial Cyclical	5.2	-10.1	-4.9	15.3
Growth	1.5	-17.1	-15.6	18.6
Financial	7.6	-1.0	6.6	8.6
Growth Defensive	14.6	-3.6	11.0	18.2
Value Defensive	5.5	-2.4	3.1	7.9
Total	____ 46.2 ====	____ -39.0 ====	____ 7.2 ====	____ 85.2 ====

   

Top 20 Long Positions (% of NAV)**	%
TM Sanditon UK Select Fund	9.9
Babcock International	6.0
Reed Elsevier NV	4.8
Diageo	3.0
ITV	2.7
Sanditon Asset Management	2.6
Ashmore	2.5
Laird	2.4
Man Group	2.2
J Sainsbury	2.0
BHP Billiton	2.0
BT Group	1.8
HSBC	1.8
Mothercare	1.7
Glaxosmithkline	1.7
GKN	1.6
Inmarsat	1.5
Ophir Energy	1.5
AP Moeller-Maersk ‘B’	1.2
Halfords	1.2
Total	________ 54.1*** ========

   

Total number of positions (long and short)**

50

*   Excluding holdings in Sanditon Asset Management and TM Sanditon UK Select Fund

**  Including holdings in Sanditon Asset Management and TM Sanditon UK Select Fund

*** The top 20 long positions are presented based on the notional value of CFD holdings and the actual value of equity holdings

Income Statement

for the year ended 30 June 2016

		Year ended	Year ended	Year ended	Period from	Period from	Period from
		30 June 2016	30 June 2016	30 June 2016	14 May 2014 to 30 June 2015	14 May 2014 to 30 June 2015	14 May 2014 to 30 June 2015
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£000	£000	£000	£000	£000	£000
Gains on investments held at fair value
through profit or loss		–	1,038	1,038	–	2,177	2,177
Income	2	993	–	993	571	–	571
Management fee	3	(96)	(287)	(383)	(95)	(286)	(381)
Other expenses	4	(268)	–	(268)	(220)	–	(220)
Return on ordinary activities
before taxation		629	751	1,380	256	1,891	2,147
Taxation on ordinary activities		(32)	30	(2)	(11)	–	(11)
Return for the year/period		____ 597	____ 781	_____ 1,378	____ 245	____ 1,891	_____ 2,136
		====	====	====	====	====	====
Return per Ordinary Share (pence):	8	1.19	1.57	2.76	0.49	3.78	4.27

The total column of this statement is the profit and loss account of the Company. All the revenue and capital items in the above statement derive from continuing operations.

The supplementary revenue and capital columns are both prepared under guidance from the Association of Investment Companies.

There is no other comprehensive income and therefore the return for the year is also the total comprehensive income for the year.

Statement of Financial Position

as at 30 June 2016

		30 June	30 June
		2016	2015
	Notes	£000	£000
Fixed assets
Investments held at fair value through profit or loss		12,255	12,772
Current assets
Debtors		99	25
Amounts due in respect of contracts for difference		2,466	1,157
Collateral paid in respect of contracts for difference		10,306	11,844
UK Treasury Bills		22,969	21,481
Cash and short term deposits		8,421	8,457
Total current assets		44,261	42,964
Current liabilities
Creditors		(147)	(133)
Amounts payable in respect of contracts for difference		(3,708)	(4,095)
Total current liabilities		(3,855)	(4,228)
Net current assets		40,406	38,736
Total assets less current liabilities		52,661	51,508
Net assets		______ 52,661 ======	______ 51,508 ======
Capital and reserves
Share capital	6	500	500
Share premium		48,872	48,872
Capital reserve		2,672	1,891
Revenue reserve		617	245
Total shareholders’ funds		______ 52,661 ======	______ 51,508 ======
Net asset value per share – Ordinary Share (pence)		105.32	103.02

Statement of Changes in Equity

for the year ended 30 June 2016

		Share
	Share	Premium	Capital	Revenue
	Capital	Account	Reserve	Reserve	Total
For the year ended 30 June 2016	£000	£000	£000	£000	£000
Balance at 1 July 2015	500	48,872	1,891	245	51,508
Return for the year	–	–	781	597	1,378
Dividends paid	–	–	–	(225)	(225)
Balance at 30 June 2016	______ 500 ======	______ 48,872 ======	______ 2,672 ======	______ 617 ======	______ 52,661 ======

   

		Share
	Share	Premium	Capital	Revenue
	Capital	Account	Reserve	Reserve	Total
For the period from 14 May 2014 to 30 June 2015	£000	£000	£000	£000	£000
Balance at 14 May 2014	–	–	–	–	–
Return for the period	–	–	1,891	245	2,136
Issue of Ordinary Shares	500	49,500	–	–	50,000
Launch costs	–	(628)	–	–	(628)
Balance at 30 June 2015	______ 500 ======	______ 48,872 ======	______ 1,891 ======	______ 245 ======	______ 51,508 ======

Cash Flow Statement

for the year ended 30 June 2016

		Period from
	Year ended	14 May 2014
	30 June	to 30 June
	2016	2015
	£000	£000
Return on ordinary activities before taxation*	1,380	2,147
Capital return before finance costs and taxation	(751)	(1,891)
Increase in accrued income and prepayments	(74)	(25)
Increase in other creditors	14	133
Investment management fee capitalised	(287)	(286)
Net movement in collateral pledged to broker	1,538	(11,844)
Gains on futures and CFDs realised during the period	667	695
Increase in amounts due in respect of CFDs	(1,309)	(1,157)
(Increase)/decrease in amounts payable in respect of CFDs	(387)	4,095
Tax paid	(2)	(11)
Net cash inflow/(outflow) from operating activities	______ 789 ======	______  (8,144) ======
Cashflow from investing activities
Purchases of investments	(7,190)	(23,634)
Sales of investments	8,078	12,344
Net cashflow provided by/(used in) investing activity	888	(11,290)
Net cash inflow/(outflow) before financing activities	______ 888 ======	______  (11,290) ======
Cashflow from financing activities
Issue of Ordinary Shares	–	50,000
Payment of issue costs	–	(628)
Equity dividends paid	(225)	–
Net cash (outflow)/inflow from financing activities	(225)	49,372
Increase in cash and cash equivalents	______ 1,452 ======	______ 29,938 ======
Cash and cash equivalents at the start of the year	29,938	–
Cash and cash equivalents at the end of the year	31,390	29,938
Comprised of:
UK Treasury Bills	22,969	21,481
Cash and cash equivalents	8,421	8,457
Cash and cash equivalents	______ 31,390 ======	______ 29,938 ======

   

*Cash inflow from dividends was £783,000 (2015: £437,000) and cash inflow from interest was £130,000 (2015: £109,000).

Notes to the Financial Statements

for the year ended 30 June 2016

1. ACCOUNTING POLICIES

(a) Basis of accounting

The financial statements have been prepared under the historical convention as modified to include the revaluation of investments and in accordance with applicable UK Accounting Standards and with the Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital Trusts” (issued in November 2014).

The financial statements have been prepared for the first time in accordance with FRS 102 (“the Financial Reporting Standard applicable in the UK and Republic of Ireland” issued by the Financial Reporting Council). Previously, the financial statements were prepared in accordance with previously extant UK Generally Accepted Accounting Practice (“UK GAAP”). The transition to FRS 102 did not result in any significant changes to the accounting policies. Restatement of opening balances relating to equity values, assets and liabilities and profits and losses of the Company between previously extant UK GAAP as previously reported and under FRS 102 as restated have not been presented as there have been no required changes to the reported amounts. Therefore restatement tables have not been prepared for any of the primary statements.

The Company’s cashflow statement reflects the presentational requirements of FRS 102, which are different from those of FRS 1.

They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The financial statements have been prepared on a going concern basis.

2. INCOME

	Year ended	Period ended
	30 June 2016	30 June 2015
	£000	£000
Income from investments
UK franked dividends	803	437
UK treasury bills interest	96	82
Overseas dividends	54	25
Other income	40	27
	_____ 993 =====	_____ 571 =====

3. INVESTMENT MANAGEMENT FEE

	Year ended	Period ended
	30 June 2016	30 June 2015
	£000	£000
Basic fee:
25% charged to revenue	96	95
75% charged to capital	287	286
	____ 383 ====	____ 381 ====
Performance fee charged 100% to capital:
Performance fee accrual	–	–
	____ – ====	____ – ====

The Company’s investment manager is Sanditon Asset Management Limited (the “Manager”). The Manager shall be entitled to receive from the Company in respect of its services provided under the Management Agreement, a management fee accrued daily and payable monthly in arrears calculated at the rate of one-twelfth of 0.75 per cent per calendar month of the Company’s Net Asset Value. In accordance with the Directors’ policy on the allocation of expenses between income and capital, in each financial period 75 per cent of the management fee payable is expected to be charged to capital and the remaining 25 per cent to revenue.

The Manager is also entitled to a performance fee which equals 15 per cent of the amount by which the Reference Amount at the end of a Performance Period exceeds the higher of (a) the Hurdle (the “Hurdle” means the Initial Gross Proceeds adjusted for the total amount of any dividends paid or payable) increased by RPIX plus 2 per cent per annum, compounded annually (on a pro-rata basis where applicable) and (b) the High Watermark (the “High Watermark” means, as at the end of the relevant Performance Period, the highest of (i) the Reference Amount of the previous Performance Period, (ii) the Reference Amount of the most recent Performance Period in respect of which a performance fee was paid; and (iii) the Initial Gross Proceeds; and in each case adjusted for any repurchases by the Company of Ordinary Shares or any dividends paid or payable during the relevant Performance Period be multiplied by the time weighted average of the total number of Shares in issue during that Performance Period).

The first “Performance Period” is the period from 27 June 2014 (the date of Admission to the London Stock Exchange) to the end of the Company’s third accounting period and each subsequent Performance Period begins immediately after the previous Performance Period and ends at the end of the Company’s third accounting period thereafter; provided that where the Management Agreement is terminated the date of such termination shall be the end of the then current Performance Period.

The Company may invest in other funds operated by the Manager and where it does the management fee is credited back to the Company by the Manager and any gain on the funds is excluded from the performance fee calculation. At 30 June 2016 £40,000 (2015: £18,000) was due to be credited back and is included within Other Income (note 2).

4. OTHER EXPENSES

	Year ended	Period ended
	30 June 2016	30 June 2015
	£000	£000
Secretarial services and fund administration fees	55	56
Other administration expenses	18	14
Registrar’s fees	13	8
Printing and postage	6	10
Custody fees	49	8
Subscription and listing fees	17	11
Auditor’s remuneration – audit services	23	18
– tax compliance services	8	7
Directors’ fees	69	78
Irrecoverable VAT	10	10
	____ 268 ====	____ 220 ====

5. DIVIDEND

The dividend relating to the year ended 30 June 2016 which is the basis on which the requirements of Section 1159 of the Corporation Tax Act 2010 are considered is detailed below:

	Year ended 30 June 2016	Year ended 30 June 2016	Period ended 30 June 2015	Period ended 30 June 2015
	Pence Per		Pence Per
	Ordinary Share	£000	Ordinary Share	£000
Annual dividend – payable on 19 December 2016*	1.10p	550	0.45p	225

   

*Not included as a liability in the year ended 30 June 2016 accounts.

The annual dividend will be paid on 19 December 2016 to members on the register at the close of business on 18 November 2016. The shares will be marked ex-dividend on 17 November 2016.

6. SHARE CAPITAL

	Year ended 30 June 2016	Year ended 30 June 2016	Period ended 30 June 2015	Period ended 30 June 2015
	Number of Shares	£000	Number of Shares	£000
Allotted, issued & fully paid:
Opening balance Ordinary Shares of £0.01	50,000,000	500	50,000,000	500
	__________ 50,000,000 ==========	____ 500 ====	__________ 50,000,000 ==========	____ 500 ====

7. FINANCIAL COMMITMENTS

At 30 June 2016 there were no commitments in respect of unpaid calls and underwritings (2015: none).

8. RETURN PER SHARE – BASIC

Total return per Ordinary Share is based on the total comprehensive income for the year after taxation of £1,378,000 (period to 30 June 2015: £2,136,000).

These calculations are based on the 50,000,000 Ordinary Shares in issue during the year to 30 June 2016 (period to 30 June 2015: 50,000,000 Ordinary Shares).

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

	Year ended 30 June 2016	Year ended 30 June 2016	Period ended 30 June 2015	Period ended 30 June 2015
	Pence		Pence
	per share	£000	per share	£000
Net revenue return	1.19p	597	0.49p	245
Net capital return	1.57p	781	3.78p	1,891
Net total return	2.76p	1,378	4.27p	2,136

9.?RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH THE INVESTMENT MANAGER

Details of the investment management fee charged by Sanditon Asset Management Limited is set out in note 3. At 30 June 2016 £12,138 (2015: £13,790) of this fee remained outstanding after taking into account the £19,564 (2015: £18,000) to be credited to the Company from Sanditon Asset Management Limited in relation to the management fee on the Company’s investment in TM Sanditon UK Select Fund.

Fees paid to the Directors are disclosed in note 4 above. There have been no material transactions between the Company and its Directors during the year and the only amounts paid to them were in respect of Directors’ remuneration.

The Company has an investment in TM Sanditon UK Select Fund of £5,227,200 at 30 June 2016 (£5,259,000 at 30 June 2015).

The Company has a 20% holding in the Investment Manager, Sanditon Asset Management Limited.

10. Fair Value Measurements of Financial Assets and Financial Liabilities

The financial assets and liabilities are either carried in the balance sheet at their fair value, or the balance sheet amount is a reasonable approximation of fair value (due from brokers, dividends receivable, accrued income, due to brokers, accruals and cash and cash equivalents).

The valuation techniques used by the Company are explained in the accounting policies note 1(b) on page 28 of the Annual Report.

The table below sets out fair value measurements using fair value hierarchy.

Financial assets at fair value through profit or loss	Level 1	Level 2	Level 3	Total
at 30 June 2016	£000	£000	£000	£000
Assets:
Equity investments	10,902	–	1,353	12,255
Contracts for difference – fair value gains	–	2,466	–	2,466
Liabilities:
Contracts for difference – fair value losses	–	(3,708)	–	(3,708)
Total	______ 10,902 ======	______  (1,242) ======	______ 1,353 ======	______ 11,013 ======

   

Financial assets at fair value through profit or loss	Level 1	Level 2	Level 3	Total
at 30 June 2015	£000	£000	£000	£000
Assets:
Equity investments	12,572	–	200	12,772
Contracts for difference – fair value gains	–	1,157	–	1,157
Liabilities:
Contracts for difference – fair value losses	–	(4,095)	–	(4,095)
Total	______ 12,572 ======	______ (2,938) ======	____ 200 ====	_____ 9,834 ======

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows:

Level 1 – valued using quoted prices in active markets for identical assets.

Level 2 – valued by reference to valuation techniques using observable inputs including quoted prices.

Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data.

In preparing these financial statements the Company has early adopted “Amendments to FRS 102: fair value hierarchy disclosure (March 2016)” published by the FRC.

Level 3 fair values are determined by the Directors using valuation methodologies in accordance with the IPEVC Guidelines and as detailed in note 1 (b) of the Annual Report. Significant inputs include investment cost, the value of the most recent capital raising, the adjusted net asset value of funds and the Pricing Committee’s valuations. In accordance with IPEVC Guidelines, new investments are carried at cost, the price of the most recent investment being a good indication of fair value. Thereafter, fair value is the amount deemed to be the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. At 30 June 2016 and at 30 June 2015, the Company’s Level 3 investments relates to the investment in Sanditon Asset Management Limited. The Board have agreed the valuation methodology for the Company’s holding in SAM which it believes to be straightforward, conservative and fair. The Board has decided to use a simple average of 1% of SAM’s year end assets under management (“AUM”) and 5x after tax profits (adjusted to exclude any performance fees earned and any associated staff bonuses paid – SAM pay out a maximum of 50% of performance fees earned to staff). This resulted in the Directors approving an uplift in your Company’s holding in SAM from the book cost of £200,000 to £1,353,000.

A reconciliation of fair value measurements in Level 3 is set out below.

Level 3 financial assets at fair value through profit or loss

	As at
	30 June 2016
	Investments
	£000
Opening fair value	200
Increase in fair value of investment in Sanditon Asset Management Limited	1,153
Closing fair value	1,353

Level 3 financial assets at fair value through profit or loss

	As at
	30 June 2015
	Investments
	£000
Opening fair value	–
Investment in Sanditon Asset Management Limited	200
Closing fair value	200

11. Publication of non-statutory accounts

The financial information contained in this announcement does not constitute statutory accounts as defined in the Companies Act 2006.  The 2016 annual report and financial statements will be filed with the Registrar of Companies shortly.

The report of the Auditor for the year ended 30 June 2016 contains no qualification or statement under section 498(2) or (3) of the Companies Act 2006. This announcement was approved by the Board of Directors on 21 September 2016.

12. Annual results

Copies of the annual report will be sent to members shortly and will be available from the registered office, c/o Northern Trust Global Services Limited, 50 Bank Street, Canary Wharf, London E14 5NT.

13. Annual General Meeting

The Annual General Meeting of the Company will be held at the offices of Northern Trust, 50 Bank Street, Canary Wharf, London E14 5NT on Monday 5 December 2016, at 12:00 noon.

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