TIDMATY
RNS Number : 6010C
Athelney Trust PLC
23 February 2022
Athelney Trust PLC
Legal Entity Identifier:
213800ON67TJC7F4DL05
NON- STATUTORY ACCOUNTS
Athelney Trust plc, the investor in small companies and junior markets
announces its final results for the 12 months ended 31 December 2021.
The financial information set out below does not constitute the Company's
statutory accounts for the years ended 31 December 2021 and 2020 but
is derived from those accounts. Statutory accounts for 2020 have been
delivered to the Registrar of Companies, and those for 2021 will be
delivered in due course. The auditors have reported on those accounts;
their report was (i) unqualified, (ii) did not include a reference
to any matters to which the auditors drew attention by way of emphasis
without qualifying their report and (iii) did not contain a statement
under Section 498 (2) or (3) of the Companies Act 2006. The text of
the Auditor's report can be found in the Company's full Annual Report
and Accounts on the Company website: www.athelneytrust.co.uk
Chairman's Statement and Business Review
Dear Shareholder
I am pleased to present the Annual Financial Report for the year
to 31 December 2021.
The Strategic Report section of this Annual Report has been
prepared to help all Shareholders understand the drivers of
performance in the past year, how the Company operates and to
assess its performance .
Overview
Athelney Trust plc (the 'Company' or 'Trust') experienced a year
of different conditions to 2020 as the global pandemic transitions
little by little to an endemic and economies deal more with the
results of disruption rather than just the health crisis
itself.
Your company performed extremely well in this context, and the
key performance points are as follows:
-- At 31 December 2021, audited Net Asset Value (NAV) was 310.3p
per share (2020: 255.3p), an increase of 21.5% over the year as
compared to a 14.6% increase in the FTSE 250 and a 14.3% increase
in the FTSE 100.
-- The Trust's investment performance over 12 months as measured
by NAV total return, which is the change in NAV plus the dividend
paid, was 25.2% (2020: -0.22%).
-- The 12-month revenue return per ordinary share was 7.0p (2020: 5.9p), an increase of 18.6%.
-- The interim dividend of 2.0p per share was paid on 24 September 2021.
-- Your Board recommends a final dividend of 7.5p per share
increasing a total dividend payable for the year to 9.5p (2020:
9.4p) an increase of 1.1%. UK inflation for 2021 was 4.8% (Office
for National Statistics)
-- This is the 19th successive year of progressive dividend and
importantly returns the Trust to a high position in the dividend
yield league table for Investment Companies. It also keeps us in
the Next Generation of Dividend Heroes list maintained by the
AIC.
Board and Governance
The Board places significant importance on corporate governance
and compliance with the AIC and UK Corporate Governance Codes. Full
details are set out in the Corporate Governance section on pages 15
to 18.
An Independent Board
The Directors in place at the time of signing these accounts
are:
-- Myself, Frank Ashton - Non-Executive Chairman
-- Simon Moore - Non-Executive Director, Chair of Audit
Committee, Chair of Remuneration Committee
-- Dr Manny Pohl - Managing Director, Fund Manager
We currently have three directors who together make up an
independent Board under the AIC Code of Governance 2021.
Capital Gains
During the year the Company realised capital profits before
expenses arising on the sale of investments in the sum of
GBP354,843 (2020: GBP223,957).
Portfolio Review
Additional Holdings Purchased
Additional holdings of Abcam, Clinigen, Fevertree, JD Sports,
LXI REIT, Rightmove, Target Healthcare and Treatt were
acquired.
Holdings Sold or Trimmed
AEW UK, Belvoir Group, Churchill China, Games Workshop,
Liontrust Asset Management, Mountview Estates and National
Grid.
Dividend
During the year the Company paid an interim dividend of 2.0p on
24 September 2021.
The Board recommends a final dividend of 7.5p per ordinary share
making an increased dividend this year of 9.5p (2020: 9.4p).
Subject to shareholder approval at the Annual General Meeting on 5
April 2022, the dividend will be paid on 13 April 2022 to
shareholders on the register on 11 March 2022 .
Review
Geo-political uncertainties grew during 2021, from more
extremely polarised US politics and questions on that country's
future role in conflict areas, to the end-game for Taiwan and
Ukraine. Who can forget the mob scenes at the US Capitol or the
chaos at Kabul airport as the rapid withdrawal from Afghanistan
unfolded? It seems in retrospect that 2021 will be seen by history
as a major year of change and development as the usual suspects
reposition on the world stage.
Economies recovered, some faster than expected, thanks to the
remarkably rapid vaccination development and deployment. Shortages
of a wide variety of products occurred as supply struggled to keep
pace with demand. We dined out less, but bought more goods leading
to container port blockages for example. Common items such as
microchips were in such short supply that delivery on a wide range
of items - from cars to handheld tablets - were delayed. Apple,
which navigated the shortages better than others, estimated the
impact to be a loss of $6 billion to 2021 sales. The IMF estimates
that globally 1% of 2021 GDP was lost as a result, however stock
markets reached record highs.
A year on from Brexit it is hard to quantify and isolate the
impact from that of COVID, however most agree that so far it has
been negative: The UK's GDP continues to under-perform the Euro
zone which may be partly due to a loss of EU nationals previously
employed in the UK, increased controls at the border reducing
trade, and the long term effects of the uncertainty created by the
referendum result in 2016. The next few years need to produce
clearer benefits to evidence a net gain; in the meantime UK stocks
continue to be under-valued as investors prefer alternatives and
continue to present us, your company with investment
opportunities.
The impact of the new Omicron variant added to the list of
uncertainties in the last quarter of 2021 including how much more
interventionist European governments will become, for example on
mandating vaccinations or on when and how quickly the 'free money'
and easy lending from central bank intervention will end, or
monetary policy tightens to combat rising interest rates.
I am delighted therefore to report that your company's NAV
outperformed both the FTSE 100 and 250 markets over the year by 7.2
and 6.9 percentage points respectively. We are seeing the benefit
that Manny Pohl brings in the three years since he became fund
manager with greater conviction, focus and efficiency resulting in
a smaller portfolio that is outperforming comparators. The Board is
very grateful for his concentrated efforts to identify the right
investments and timing to invest or divest, and to continue to
provide returns for shareholders against the backdrop of greater
than usual uncertainties.
As 2021 drew to a close, Apple continued its relentless rise,
tripling its share price since early 2020 when Covid first struck.
On the first day of trading in 2022, it became the first company to
realise $3 trillion market capitalisation, reflecting the
importance of technology for work, education, entertainment and
staying connected.
In the wider market a concerted lift to global markets began in
April, benefiting stocks to cryptocurrencies, with a rush into US
equities by retail investors at the heart of that lift. All three
major US indices set record highs in October. As the Federal
Reserve retreated from its stimulus program, however, the bubble
burst for Spacs and cryptos, the newest, frothiest assets.
By the end of the year some assets had lost a third to one half
of their value in just over a month.
Meanwhile your company continues to invest for the long term in
the UK market which has de-rated strongly since 2016 and is now
trading at the lowest price to earnings level against global peers
for 30 years: Its value is attractive on a relative and absolute
basis. The UK market continues to offer the highest dividend yield
globally, with high levels of dividend cover.
In the UK, expectations were that dividends would grow just 8%
in 2021, best case (Link Group), however actual underlying growth
(excluding special dividends) was much better at nearly 22% with
most sectors contributing, especially banking (restoring
distributions) and industrials. Mid-caps (+40.1%) rebounded and
grew faster than the top 100 on an underlying basis.
Dividend growth amongst smaller companies was faster still and
this is one of the reasons we focus on small companies; resilience
from the right companies and their management team in times of
adversity. However despite this growth, mid-cap dividends only
ended the year at the same level as 2007/2008. The headlines were
taken in 2021 by mining companies delivering a record GBP16.9bn of
special dividends, three quarters of this from Rio Tinto and BHP
alone.
Your company's revenue return improved by 19% to 7p per share
(2020: 5.9p) still below the 9.1p of 2019. NAV total return was a
very healthy 25.2% (2020: -0.2%) improving on the pre-Covid figure
of 22.2%.
Against this backdrop I am pleased to tell you that your Board
recommends a final dividend payment of 7.5p (total 9.5p). This
reflects the better performance and total return for the year,
subject to approval at the AGM. At a share price of 310p on 31
December, this represents a dividend yield of 3.1%, better than the
average 2021 yield from FTSE 250 companies of 1.91% (and comparable
to the FTSE All-Share yield of 3.07%).
Non-executive Director's fees remain at GBP10,500 each and your
board continues to exercise a tight grip on costs. Our ongoing
charges figure has fallen again, from 2.45% last year to 2.38%.
Your board understands that while we remain a small fund, reducing
this will continue to be a challenge, however every effort is made
to do this, while maintaining appropriate attention on controls and
governance.
Outlook
There are a number of ongoing uncertainties that may slow the
return to foreign investment in UK stocks, starting with the
obvious potential for another Covid variant prolonging the progress
towards endemicity. Being able to 'live with the virus' depends on
social norms for what is 'acceptable', the possible occurrence of a
more severe variant and the effectiveness of global
vaccinations.
Secondly the risk of conflict or at least lower levels of
cooperation and trade between major nations is higher at the
moment, in the case of Russia, Ukraine and NATO countries, and also
between China, Taiwan and America. Globalisation and trade between
major countries and regions means that local shocks now have a much
larger impact on national economies and in some cases global
outlook than perhaps ever before.
Covid has not encouraged the wider country-country cooperation
or action that was hoped; in fact we see more of the opposite as
politicians act 'in the national interest', and countries have to
look after themselves.
Thirdly there will be unrest as we experience an uncomfortable
financial squeeze. Interest rates will rise to combat inflation. In
the case of the Fed, which many commentators feel has lost its
direction in this matter and dithered too long, it appears likely
there will be an abrupt tightening in response to 7% inflation and
a 5% increase in wages and salaries in America over 2021. Globally,
inflation is running at 6% and here in Europe, central banks are
preparing the markets for two or more interest rate rises in 2022.
In the short term, the UK is going to see a rapid rise in household
bills, mostly driven by huge energy price rises; this has already
resulted in calls from the Governor of the Bank of England for wage
restraint to avoid entrenchment of inflation longer term. To make
the challenge bigger, the jobs market is "extraordinarily tight"
according to Governor Andrew Bailey.
At the same time, uncertainty grows for Boris Johnson's
premiership, as 'Partygate' gains momentum with a possible fixed
penalty notice for him and senior No 10 staff a possible result.
This would certainly trigger a no-confidence vote by his Tory MPs
and a damaging pause to any possible progress after Brexit while a
new leader is selected. All await the outcome of the Metropolitan
Police investigations and the Sue Grey report.
Together these elements raise concern: History tells us the
fight against inflation normally results in a recession and short
term, the UK
is apparently short of governmental leadership that inspires
trust and confidence through challenging times.
In the UK, record mining special dividends of 2021 are likely to
not be repeated in 2022. However B&M and Next already have
distributed such dividends to provide a catch-up and to reflect
extra revenue from lockdown, online pent-up demand and little
competition for the wallet from international travel. There is also
some optimism that underlying dividends for the top 100 will grow
by about 5% overall this year (Link Group): This is likely to be a
stronger number for smaller companies than for the Top 100.
Good companies at fair prices are still overlooked by house
analysts. Those with commitment to a proven system, prepared to
analyse fully and act on conviction, will come out on top in the
long run. Our Managing Director and Fund Manager has many years'
experience relevant to operating successfully in the conditions of
2021 - this continues to bode well for your Trust as we recently
passed his 3 year anniversary in taking on the Fund Management
role.
Our AGM in 2021 was again held virtually, with no shareholders
present, as movement restrictions and the safety of our investors
and colleagues were uppermost in our minds. We plan to hold a
meeting in person for the AGM this year on 5 April 2022 at 12.00
noon. Shareholder engagement and opinion is very important to us,
so there are plans in place to give you the opportunity to engage
with the Board. Details of the proposed AGM can be found in the
separate Notice to the AGM publication.
Manny Pohl, as Fund Manager, will provide a short presentation
on his investment approach for all attendees of the AGM.
I and my colleagues on the board look forward to the chance of
meeting you in person once more. We wish you well in the
meantime.
Frank Ashton
Non-Executive Chairman
23 February 2022
Fund Manager's Review
The Global Scene
The past year has been very unusual characterised by isolation,
distance, and virtuality and one which most of us will be keen to
forget. While 2020 imposed a strange new world upon us, 2021 became
the year of the 'new-normal'. For most of us, this past year has
seen our social circles dwindle dramatically and our online,
virtual lives came to fruition. For me, this year has been most
challenging due to the restrictions on travelling and not seeing
loved ones and long-standing friends. As for everyone, we have had
to adjust, be resilient and find new and alternative ways to move
forward and improve.
Over the past year, we have been teased with our freedoms,
gradually emerging from blanket lockdowns and then focusing on
implementing ongoing regional lockdowns. Many of the rescheduled
2020 sporting events were hosted in 2021, albeit in most cases
without the public in attendance.
For the world community, being resilient in these testing times
is the only attribute that has kept us all going. Sadly, as the
world gradually opened, the reported deaths continued to climb,
reaching five million in November 2021. On a positive note, the
vaccines administered worldwide exceeded 1 billion in June 2021.
While world health officials were focused on combatting different
variants of the virus, businesses were struggling to survive, and
consumers were fearful of disrupted supply chains, low inventories,
and rising inflation.
The Markets and Our Portfolio
Despite this frantic and dramatic backdrop, equity markets and
our portfolio have delivered a remarkable return with the FTSE 100
up by 7.5% in the final quarter of the year and our portfolio up by
29.1%. This compared favourably with other major stock markets and
better than the NASDAQ's 4.1% rise. The NASDAQ, which is home to
many technology companies, has outperformed strongly over the last
two years, but more recently, the share prices of older, more
traditional companies have started to increase. The FTSE 100 is
home to many such companies, including BP, Royal Dutch Shell as
well as Utility companies. It hit a record high of 7457.1 on 29
December 2021 before declining to close at 7384.5 at year-end. I
have been managing the portfolio for the past three years, and I am
very pleased with the performance.
Despite this excellent stock market performance, the Begbies
Traynor's "Red Flag Alert", which has monitored the financial
health of British companies for the past 15 years, now paints a
particularly worrying picture for UK businesses with increasing
numbers falling victim to pressures that have been building up over
the past two years as a result of the COVID-19 pandemic. Therefore,
it is essential in this environment that the portfolio comprises
quality businesses with demonstrated resilience against such a
headwind, enabling the portfolio to outperform.
Any successful business owner makes decisions for the betterment
of their long-term business. Having sustainable practices and a
long-term mindset is vital for any operator in this modern, rapidly
changing world. Sustainability has long been part of our investment
process, and since we see ourselves as business owners (and not
share traders), we invest along similar principles where
sustainability and competitiveness are central to any investment
analysis.
While most of the stocks in the portfolio contributed to the
outperformance of the portfolio versus the market, a handful of
names performed exceptionally well, which included Liontrust Asset
Management (LSE: LIO), Tritax Big Box (LSE: BBOX) and AEW UK Reit
(LSE: AEWU). After an impressive performance in 2020, Games
Workshop (LSE: GAW) detracted from the portfolio return over the
year, as did HomeServe (LSE: HSV). At an aggregate level, all of
our alpha was generated through stock selection, as opposed to
sector selection and this is consistent with our style as a
bottom-up, benchmark unaware, high conviction manager.
Liontrust Asset Management (LSE: LIO)
The company was launched in 1995 and listed on the London Stock
Exchange in 1999. LIO currently has approximately GBP37.2 billion
in assets under management and advice as at the 31 December 2021,
which increased 20% over the financial year. It is a well-run,
fairly vanilla active investment manager which offers traditional
products such as Unit Trusts, Offshore funds, Segregated Mandates,
and Discretionary Portfolio Management Services. Each fund
management team applies distinct and rigorous investment processes
to manage funds and portfolios that ensure portfolio management is
predictable and repeatable. It markets its fund internationally to
institutional investors, wealth managers, financial advisers,
private investors, and wholesale markets such as family offices,
private banks, wealth managers, and multi-managers. The company's
geographical segments are the United Kingdom, Europe (excluding the
UK), Canada, and Australia.
Tritax Big Box (LSE: BBOX)
Tritax Big Box owns and operates big box stores which serve as
the breakdown point for bulk palleted deliveries and are often
port-centric in their location focus. It is a UK-based real estate
investment trust with the focus on the acquisition and management
of large-scale logistics real estate let to institutional-grade
tenants on long-term leases. The company has benefited from
implementing a strategy that anticipated long-term, structural
changes, particularly the growth in e-commerce. The company has
witnessed the most robust first half performance to date with a
12.5% total return to June 2021 reflecting an increasingly acute
imbalance between increasing demand and highly constrained supply,
in a market with clear barriers to entry.
AEW UK REIT (LSE: AEWU)
AEW UK is a conservatively geared REIT with a current loan to
NAV ratio of 29.84%. The company's investment objective is the
attractive total return to shareholders from primarily investing in
a portfolio of smaller commercial properties in the UK.
Geographically, it operates only in the United Kingdom and the
company derives revenue from rental income and other property
income which has been retained in the portfolio because of its
attractive yield.
A genuine long-term approach
Our process aims to find high-quality businesses that we own for
the very long-term, our portfolio turnover remains low. We continue
to have investments that we have held for over ten years; however,
this doesn't mean we aren't always looking for new investments. The
focus this year has been to monitor the individual business
performance in a highly stressful environment of our existing
holdings as opposed to the share price performance to ensure that
they have the sustainable and resilient characteristics mentioned
previously. Few changes have been made to the portfolio with our
exposure to property trusts retained to recognise the need to
maintain the dividend paid to shareholders within a growth style
portfolio.
Investment management is more than merely generating alpha in
excess of a benchmark. While that is a core part of our mandate,
other fundamental qualitative issues are central to what we do. For
example, we recognise that capital allocation is a vehicle to drive
change. We have the opportunity to demand specific standards of
corporate governance, decide whether specific social and ethical
issues are acceptable and, if they are not, we vote with our
feet.
For us, the integrity and credibility of any management team is
a founding principle in our investment process. We need to trust
that management has the best interests for all stakeholders at
heart. We have faith that they will make sound strategic decisions
and have substantial experience and capabilities in their chosen
field. As custodians of our capital, we must ensure that we are
doing whatever we can to preserve capital and grow it over time. We
allocate capital to investments that we believe are sustainable in
the long term. Finding trustworthy, values-based management teams
that align with our core values and beliefs will ensure
above-average economic portfolio returns. Sustainability of
investment performance and the improvement of societal wellbeing
hinges upon ethical, transparent, and honest leadership. In cases
where we feel we can add something to the conversation, we engage
with the company.
Investment Philosophy
As far as portfolio investments are concerned, our investment
philosophy is clear:
I. The economics of a business drives long-term investment returns; and
II. Investing in high quality, growth businesses that have the
ability to generate predictable, above-average economic returns
will produce superior investment performance over the
long-term.
In essence, this means that in assessing potential investments
we:
1. Value long-term potential, not just performance
2. Choose high-quality, growing businesses; and
3. Ignore temporary market turbulence.
The key attributes that will define our investments are:
-- Organic Sales Growth: Quality franchises organically growing
sales above GDP growth that can do so (sustainably) because they
have a large, growing market opportunity and compelling competitive
advantage which will drive ongoing market share gains are
attractive.
-- A Proven Track Record: This encompasses both the management's
capability and the strength of the business' model. Generally, a
firm that consistently delivers a Return on Equity of greater than
15% indicates a Quality Franchise for us. Our investment philosophy
is built on the belief that a stock's long-term return to
shareholders is driven by the return on capital of the underlying
business.
-- Company's Future Profits: In essence we are backing a proven
management team and a successful business model. Management are the
key decision makers regarding the company's strategy and its
competitive position in the marketplace. It is critical that we
have confidence in the company's ability to sustainably execute its
strategy and grow earnings, even in a tough environment like the
current and Brexit conundrum.
-- Low Leverage: We require investments to operate with low
levels of debt, which ensures that they have sufficient resources
to execute on their strategy. An Interest Coverage above 4x
provides sufficient bandwidth in times of economic trouble. As a
long-term investor, capital preservation is the highest priority.
There is nothing that changes a management team's focus toward the
short term quicker than impending debt refinancing when market
conditions suddenly change for the worse. We need to be comfortable
that this will not happen and that the company has a strong enough
balance sheet so that it will retain optionality and can quickly
and efficiently execute its strategy over the long-term.
Looking Forward
The portfolio outperformance over the past twelve months was due
to a considerable increase in both the earnings and the dividends
declared by our companies and a substantial re-rating of these
businesses by the market. The world economy had the wind at its
back in 2021 with generous fiscal policy and accommodative central
bankers. However, inflation and supply chains have been identified
as the key obstacles to earnings growth, with central banks now
focusing on dealing with the former. In the US, the Fed is expected
to increase interest rates four times during 2022, and with
inflation rising in the UK to 5.4% in December, the BoE hiked its
policy rate by 25 bps to 0.5% at its February meeting. In Europe,
recent data has confirmed an economic soft patch with the Eurozone
January services PMI index declining by more than expected and the
corresponding index in the UK also declining in January.
The net effect of the expected tightening in monetary policy has
placed pressure on the high PE valuations of the market, in
particular growth stocks as future earnings are discounted at a
higher rate. While this will put pressure on our portfolio in the
short term, our investment philosophy is based on the belief that
the long-term economics of a business drives long-term investment
returns. Our companies have strong business models with capable and
experienced management teams. The long-term financial metrics of
our portfolio companies, including organic sales growth, earnings,
and dividend growth, should provide the impetus for an improvement
in valuations or at least be supportive of the current valuations
in the future.
The Athelney dividend is supported in the short-term by the
reserves we have built up through our investment performance as
well as by the ongoing distributions from the high yielding
property trusts. For many of the companies in the portfolio, our
estimates and forecasts for earnings and dividends remain
promising. Over time we expect that dividends from the high growth
quality companies in the portfolio will increase sufficiently so
that other high growth quality companies can replace the property
trusts without jeopardising our AIC dividend hero status.
Update
The unaudited NAV on 31 January 2022 was 282p per share - down
by 9.1% from 31 December 2021, The share price on the same day was
235p (trading at a discount of 16.5%). Further updates can be found
at www.athelneytrust.co.uk
Dr Manny Pohl AM
Fund Manager
23 February 2022
Strategic Report
Section 172(1) Statement
The Directors of the Company are required to promote the success
of the Company for the benefit of the Members and Shareholders as a
whole. Section 172(1) of the Companies Act (2006) expands this duty
and requires the Directors to consider a broader range of
interested parties when considering the promotion of the Company.
This wider group of stakeholders will include employees, if any,
suppliers, customers and others, and the Board will look to
understand and take into account the needs of each stakeholder,
although recognising that different stakeholders may have
conflicting priorities and not all decisions made will be to the
benefit of all stakeholder groups.
When making decisions the Board should consider the
following:
-- the likely consequences of any decisions in the long-term;
-- the interests of the Company's employees (if applicable);
-- the impact of the Company's operations on the environment and the community;
-- the need to foster the Company's business relationships with
suppliers, customers and others;
-- the need to act fairly for all members of the Company, and
-- the desirability of the Company maintaining a reputation for
high standards of business conduct.
In line with similar small Investment Trusts and Investment
Companies, Athelney Trust plc does not have any customers and
relies on a number of third-party providers of services such as
Company Administrator, the Custodian and the Registrar to maintain
its operations. The Company takes into account the regulations of
the market in which it operates and has regard to the environment
and the wider community in which it operates.
At every Board meeting the Directors review the performance of
the Company towards meeting the Company's Investment Objective
through its strategy. Manny Pohl is the fund manager and reports to
other Board members and answers any questions raised. The
compliance with existing regulatory and legal requirements are
reviewed, together with any new regulations that are due to be
introduced or are being proposed that may affect the Company.
The Board recognises the importance of, and is committed to,
understanding the views of Shareholders and maintaining
communication with its Shareholders in the most appropriate
manner.
This is undertaken through:
Annual General Meeting
The Company, in normal circumstances encourages all Shareholders
to attend and participate at its Annual General Meeting ("AGM").
Whilst the formal business of the meeting is the primary purpose of
the meeting, members of the Board are available to answer questions
directly from Shareholders, to provide an update to the meeting and
to offer Shareholders an insight into the business.
The AGM held in March 2021 was subject to government COVID-19
restrictions and the Board reluctantly held the meeting behind
closed doors and Shareholders were requested not to attend. Voting
was poll based and Shareholders were requested to email any
questions to the Directors. The Board plan to hold the 2022 AGM in
person on 5 April 2022 at 12.00 noon. Further details regarding the
2022 AGM are contained in the Notice of the Annual General Meeting
published in a separate notification.
Published Reports
The Company produces Annual and Half Yearly Reports and monthly
fact sheets are all available from the Company's website and paper
copies are available on request from the registered office. The
publication of these reports is considered to be the primary method
of communication to Shareholders and other readers of the reports
and provides detailed information on the portfolio, performance
over the period and an assessment of the outlook for the
Company.
The Annual Report also contains details regarding the Company's
corporate governance and the Board seek to ensure that the Report
is readable and is mindful that it should be fair, balanced and
understandable.
Shareholder enquiries
Shareholders can contact the Company or any of its Directors
through the Company Secretary or through their company email
address. Alternatively, letters can be sent to the registered
office address. Although the Directors are not available full time,
with the assistance of the Company Secretary they seek to maintain
open communication to all Shareholders.
Suppliers
The Company Secretary Deborah Warburton and Administrator GW
& Co. Limited are often the main contact point for advisors and
stakeholders in the Company. Regular communication is maintained
between the Company Secretary and the Directors advising them of
all matters concerning the Company. The Company also relies on the
provision of services from outside parties to operate and gives
consideration to the needs and objectives of those providers and
recognises that their success will often assist the Company in
achieving its objectives.
Regulators
The Company operates in an environment that is governed by legal
and regulatory requirements. The Board recognises that these
requirements are there to protect stakeholders, including the
government.
Environment and Community
As the Company does not have any direct employees nor any
physical office environment of its own it has little direct impact
on the community or the environment. The Company seeks to reduce
its impact on the environment in encouraging Shareholders to
receive Reports electronically rather than through printed hard
copies. When paper copies are requested FSC paper is used. The
Board also engage through electronic means where possible rather
than hold excessive face to face meetings.
Other Statutory Information
As explained within the Report of the Directors on pages 19 to
20, the Company carries on business as an investment trust.
Investment trusts are collective closed-ended public limited
companies.
Board
The Board of Directors is responsible for the overall
stewardship of the Company, including investment and dividend
policies, corporate and gearing strategy, corporate governance
procedures and risk management. Biographical details of the three
male Directors, can be found on pages 2 and 3.
One of the Directors is the Company's only employee (2020: one
employee).
Investment Objective
The investment objective of the Trust is to provide shareholders
with prospects of long-term capital growth with the risks inherent
in small cap investment minimised through a spread of holdings in
quality small cap companies that operate in various industries and
sectors. The Fund Manager also considers that it is important to
maintain a progressive dividend record.
Investment Policy
The assets of the Trust are allocated predominantly to companies
with either a full listing on the London Stock Exchange or a
trading facility on AIM or AQSE. The assets of the Trust have been
allocated in two main ways: first, to the shares of those companies
which have grown steadily over the years in terms of revenue and
profits but, despite this progress are undervalued by the market
when compared to future earnings and dividends; second, those
companies whose shares are undervalued by the market when compared
with the value of land, buildings, other assets or cash on their
balance sheet.
Investment Strategy
The investment strategy employed by the Fund Manager in meeting
the investment objective focuses on active stock selection. The
selection of individual holdings is based on analysis of, amongst
other things, market positioning, competitive advantage, future
growth, financial strength and cash flows. The weighting of
individual investments reflects the Fund Manager's conviction in
the expected future returns from those holdings.
Investment of Assets
At each Board meeting, the Board considers compliance with the
Company's investment policy and other investment restrictions
during the reporting period. An analysis of the portfolio on 31
December 2021 can be found on pages 10 and 11 of this report.
Responsible Ownership
The Fund Manager takes a particular interest in corporate
governance and social responsibility investment policy. As stated
within the Corporate Governance Statement on pages 15 to 18, the
Fund Manager's current policy is available on the Trust's website
www.athelneytrust.co.uk. The Board supports the Fund Manager on his
voting policy and his stance towards environmental, social and
governance issues.
Review of Performance and Outlook
Reviews of the Company's returns during the financial year, the
position of the Company at the year end, and the outlook for the
coming year are contained in the Chairman's Statement on pages 4 to
6 and the Fund Manager's review on pages 7 to 9 which form part of
the Strategic Report.
Principal Risks and Uncertainties and Risk Management
As stated within the Corporate Governance Statement on pages 15
to 18, the Board applies the principles detailed in the internal
control guidance issued by the Financial Reporting Council, and has
established a continuing process designed to meet the particular
needs of the Company in managing the risks and uncertainties to
which it is exposed.
The principal risks and uncertainties faced by the Company are
described below and in note 12 which provides detailed explanations
of the risks associated with the Company's financial
instruments.
-- Market - the Company's fixed assets consist almost entirely
of listed securities and it is therefore exposed to movements in
the prices of individual securities and the market generally.
-- Investment and strategic - incorrect investment strategy,
asset allocation, stock selection and the use of gearing could all
lead to poor returns for shareholders.
-- Regulatory - Relevant legislation and regulations which apply
to the Company include the Companies Act 2006, the Corporation Tax
Act 2010 ("CTA") and the Listing Rules of the Financial Conduct
Authority ("FCA"). The Company has noted the recommendations of the
UK Corporate Governance Code and its statement of compliance
appears on pages 15 to 18. A breach of the CTA could result in the
Company losing its status as an investment company and becoming
subject to capital gains tax, whilst a breach of the Listing Rules
might result in censure by the FCA. At each Board meeting the
status of the Company is considered and discussed, so as to ensure
that all regulations are being adhered to by the Company and its
service providers.
-- Operational - failure of the accounting systems or disruption
to its business, or that of other third-party service providers,
could lead to an inability to provide accurate reporting and
monitoring, leading to a loss of shareholders' confidence.
-- Financial - inadequate controls by the Fund Manager or other
third-party service providers could lead to misappropriation of
assets. Inappropriate accounting policies or failure to comply with
accounting standards could lead to misreporting or breaches of
regulations.
-- Liquidity - the Company may have difficulty in meeting
obligations associated with financial liabilities.
-- Trading - ATY is a small trust and its shares can be
illiquid, which means that investors may have difficulty in dealing
in larger amounts of shares.
The Company has complied with the MiFID ll and KID legislation
and the deadlines to ensure that shares in the Company were still
able to be traded. A copy of the Company's KID can be found on the
website http://www.athelneytrust.co.uk
The Board is not aware of any breaches of laws or regulations
during the period under review and up to the date of this
report.
The Board seeks to mitigate and manage these risks through
continual review, policy setting and enforcement of contractual
obligations. It also regularly monitors the investment environment
and the management of the Company's investment portfolio.
Investment risk is spread through holding a wide range of
securities in different industrial sectors.
Statement Regarding Annual Report and Financial Statements
Following a detailed review of the Annual Report and Financial
Statements by the Audit Committee, the Directors consider that
taken as a whole it is fair, balanced and understandable and
provides the information necessary for shareholders to assess the
Company's performance, business model and strategy.
Environment Emissions
#The Company does not have any physical assets, property, or
operations of its own and as such does not generate any greenhouse
gas or other emissions.
Social, Community and Human Rights issues
The Company has one employee and, as far as the Board is aware,
no issues exist in respect of social, community or human rights
issues.
Alternative Investment Fund Manager's Directive ("AIFMD")
The Company is registered as its own AIFM with the FCA under the
AIFMD and confirms that all required returns have been completed
and filed.
On behalf of the Board
Dr Manny Pohl AM
Managing Director
23 February 2022
Income Statement
For the Year Ended 31 December 2021
2021 2020
Note Revenue Capital Total Revenue Capital Total
GBP GBP GBP GBP GBP GBP
Gains/(losses)
on investments
held at fair
value 8 - 1,359,219 1,359,219 - (30,695) (30,695)
Income from
investments 2 186,393 - 186,393 160,876 - 160,876
Investment
management
expenses 3 (4,488) (40,692) (45,180) (3,781) (34,221) (38,002)
Other expenses 3 (30,645) (72,964) (103,609) (29,820) (75,688) (105,508)
--------- ---------- ----------- --------- ---------- ----------
Net return
on ordinary
activities
before taxation 151,260 1,245,563 1,396,823 127,275 (140,604) (13,329)
Taxation 5 - - - - - -
--------- ---------- ----------- --------- ---------- ----------
Net return
on ordinary
activities
after taxation 6 151,260 1,245,563 1,396,823 127,275 (140,604) (13,329)
========= ========== =========== ========= ========== ==========
Net return
per ordinary
share 6 7.0p 57.7p 64.7p 5.9p (6.5p) (0.6p)
Dividend per
ordinary share
paid during
the year 7 9.7p 11p
All revenue and capital items in the above statement derive from
continuing operations.
No operations were acquired or discontinued during the year.
The total column of this statement is the Statement of Total
Comprehensive Income of the Company prepared in accordance with
applicable Financial Reporting Standards ("FRS"). The supplementary
revenue return and capital return columns are prepared in
accordance with the Statement of Recommended Practice ("AIC SORP")
issued in April 2021 by the Association of Investment
Companies.
The notes on pages 33 to 37 form part of these financial
statements.
Statement of Changes in Equity
For the Year Ended 31 December 2021
Called-up Capital Capital Total
Share Share reserve reserve Revenue Shareholders'
Capital Premium realised unrealised reserve Funds
GBP GBP GBP GBP GBP GBP
Balance brought
forward at 1 January
2020 539,470 881,087 1,916,502 1,982,060 439,598 5,758,717
Net profits on
realization
of investments - - 223,957 - - 223,957
Decrease in unrealized
Appreciation - - - (254,652) - (254,652)
Expenses allocated
to
Capital - - (109,909) - - (109,909)
Profit for the
year - - - - 127,275 127,275
Dividend paid
in year - - - - (237,367) (237,367)
Shareholders'
Funds at 31 December
2020 539,470 881,087 2,030,550 1,727,408 329,506 5,508,021
========== ======== ========== =========== ========== ==============
Balance brought
forward at 1 January
2021 539,470 881,087 2,030,550 1,727,408 329,506 5,508,021
Net profits on
realization
of investments - - 354,843 - - 354,843
Increase in unrealized
Appreciation - - - 1,004,376 - 1,004,376
Expenses allocated
to
Capital - - (113,656) - - (113,656)
Profit for the
year - - - - 151,260 151,260
Dividend paid
in year - - - - (209,314) (209,314)
Shareholders'
Funds at 31 December
2021 539,470 881,087 2,271,737 2,731,784 271,452 6,695,530
======== ======== ========== ========== ========== ==========
The notes on pages 33 to 37 form part of these financial
statements.
Statement of Financial Position As at 31 December 2021
Company Number: 02933559
Note 2021 2020
GBP GBP
Fixed assets
Investments held at fair
value through profit and
loss 8 6,436,820 5,310,661
---------- --------------------
Current assets
Debtors 9 245,163 142,136
Cash at bank and in hand 30,676 72,601
275,839 214,737
Creditors: amounts falling
due within one year 10 (17,129) (17,377)
---------- --------------------
Net current assets 258,710 197,360
---------- --------------------
Total assets less current liabilities 6,695,530 5,508,021
Net assets 6,695,530 5,508,021
========== ====================
Capital and reserves
Called up share capital 11 539,470 539,470
Share premium account 881,087 881,087
Other reserves (non distributable)
Capital reserve - realised 2,271,737 2,030,550
Capital reserve - unrealised 2,731,784 1,727,408
Revenue reserve (distributable) 271,452 329,506
Shareholders' funds - all
equity 6,695,530 5,508,021
========== ====================
Net Asset Value per share 13 310.3p 255.3p
These financial statements were approved and authorised for
issue by the Board of Directors on 23 February 2022 and signed on
their behalf by
Dr Manny Pohl AM
Managing Director
The notes on pages 33 to 37 form part of these financial
statements.
Statement of Cash Flows
For the Year Ended 31 December 2021
2021 2020
GBP GBP
Cash flows used in operating
activities
Net revenue return 151,260 127,275
Adjustment for:
Expenses charged to capital (113,656) (109,909)
Decrease in creditors (248) (4,732)
(Increase)/decrease in debtors (103,027) 81,597
Cash (used)/generated from
operations (65,671) 94,231
-------------- ---------------------
Cash flows from investing
activities
Purchase of investments (545,379) (1,137,856)
Proceeds from sales of investments 778,439 1,262,691
-------------- ---------------------
Net cash received in investing
activities 233,060 124,835
-------------- ---------------------
Equity dividends paid (209,314) (237,367)
Net decrease in cash (41,925) (18,301)
Cash at the beginning of the
year 72,601 90,902
-------------- ---------------------
Cash at the end of the year 30,676 72,601
============== =====================
As the company does not have any loans, overdrafts or hire
purchase arrangements, net debt is equal to cash and therefore no
reconciliation of net debt has been disclosed.
The notes on pages 33 to 37 form part of these financial
statements.
Notes to the Financial Statements
For the Year Ended 31 December 2021
1. Accounting Policies
1.1 Statement of Compliance and Basis of Preparation of
Financial Statements
The financial statements are prepared in accordance with
applicable United Kingdom accounting standards, including Financial
Reporting Standard 102 ("FRS 102"), the Companies Act 2006 and with
the AIC Statement of Recommended Practice ("SORP") issued in April
2021, regarding the Financial Statements of Investment Trust
Companies and Venture Capital Trusts. All the Company's activities
are continuing.
The presentation currency of the financial statements is pounds
sterling, being the functional currency of the primary economic
environment in which the company operates. Monetary amounts in
these financial statements are rounded to the nearest pound.
1.2 Income
Income from investments including taxes deducted at source is
recognised when the right to the return is established (normally
the ex-dividend date). UK dividend income is reported net of tax
credits in accordance with FRS 102 "Income Tax". Interest is dealt
with on an accruals basis.
1.3 Investment Management Expenses
All three Directors are involved in investment management, 10%
of their salaries or fees have been charged to revenue and the
other 90% to capital. All other investment management expenses have
been charged to capital. The Board propose continuing this basis
for future years.
1.4 Other Expenses
Expenses (including VAT) and interest payable are dealt with on
an accruals basis and charged through the Revenue and Capital
Accounts in an allocation that the Board consider to be a fair
distribution of the costs incurred.
1.5 Investments
Listed investments comprise those listed on the Official List of
the London Stock Exchange. Unlisted investments are traded on AIM.
Profits or losses on sales of investments are taken to realised
capital reserve. Any unrealised appreciation or depreciation is
taken to unrealised capital reserve.
Investments have been classified as "fair value through profit
and loss" upon initial recognition.
Subsequent to initial recognition, investments are measured at
fair value with changes in fair value recognised in the Income
Statement.
Securities of companies quoted on a recognised stock exchange
are valued by reference to their quoted bid prices at the close of
the year, similarly, AIM-traded investments are valued using the
closing bid price on 31 December.
1.6 Taxation
The tax effect of different items of income and expenses is
allocated between capital and revenue on the same basis as the
particular item to which it relates, using the Company's effective
rate of tax for the year.
1.7 Judgements and estimates
The Directors confirm that no judgements or significant
estimates have been made in the process of applying the Company's
accounting policies.
1.8 Deferred Taxation
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed by the balance sheet date.
Deferred tax liabilities are recognised for all taxable timing
differences but deferred tax assets are only recognised if it is
considered more likely than not that there will be suitable profits
from which the future reversal of the underlying timing differences
can be deducted. Deferred tax assets and liabilities are calculated
at the tax rates expected to be effective at the time the timing
differences are expected to reverse. Deferred tax assets and
liabilities are not discounted.
1.9 Capital Reserves
Capital Reserve - Realised
Gains and losses on realisation of fixed asset investments are
dealt with in this reserve.
Capital Reserve - Unrealised
Increases and decreases in the valuations of fixed asset
investments are dealt with in this reserve. Unrealised capital
reserves cannot be distributed by way of dividends or similar.
1.10 Dividends
In accordance with FRS 102 "Events after the end of the
Reporting Period", dividends are included in the financial
statements in the year in which they go ex-div.
1.11 Share Issue Expenses
The costs associated with issuing shares are written off against
any premium arising on the issue of Share Capital.
1.12 Financial Instruments
Short term debtors and creditors are held at cost.
2. Income
Income from investments
2021 2020
GBP GBP
UK dividend income 117,516 95,482
Foreign dividend income 11,752 17,834
UK Property REITs 57,078 47,480
Bank interest 47 80
Total income 186,393 160,876
UK dividend income
2021 2020
GBP GBP
UK Main Market listed investments 74,755 65,476
UK AIM-traded shares 42,741 30,006
117,496 95,482
3. Return on Ordinary Activities before Taxation
The following amounts (inclusive of VAT) are included within
investment management and other expenses:
2021 2020
GBP GBP
Directors' remuneration:
Services as a director 21,000 23,625
Otherwise in connection
with management 44,877 37,807
Auditor's remuneration:
Audit Services - Statutory
audit 11,964 9,250
Miscellaneous expenses:
Other wages and salaries - -
Management services 32,472 32,472
PR and communications 4,101 2,310
Stock exchange subscription 10,020 11,540
Sundry investment
management and other
expenses 23.215 24,044
Legal fees 1,140 2,460
148,789 143,508
4. Employees and Directors' Remuneration
2021 2020
GBP GBP
Costs in respect of Directors:
Non-executive Directors' fees 21,000 23,625
Wages and salaries 44,877 37,807
65,877 61,432
Average number of employees:
Chairman - -
Investment 1 1
Administration - -
1 1
5. Taxation
(i) On the basis of these financial statements no provision has
been made for corporation tax (2020: Nil).
(ii) Factors affecting the tax charge for the year.
The tax charge for the period is lower than (2020: higher than)
the average small company rate of corporation
tax in the UK of 19 per cent. The differences are explained below:
2021 2020
GBP GBP
Total return on ordinary
activities before
tax 1,396,823 (13,329)
Total return on ordinary
activities multiplied
by the average small
company rate of corporation
tax 19% (2020: 19%) 265,396 (2,532)
Effects of:
UK dividend income
not taxable (22,328) (18,142)
Revaluation of shares
not taxable (190,831) 48,384
Capital gains not
taxable (67,420) (42,552)
Unrelieved management
expenses 15,183 14,842
Current tax charge - -
for the year
The Company has unrelieved excess revenue management expenses of
GBP595,482 at 31 December 2021 (2020: GBP401,358) and GBP102,597
(2020: GBP102,597) of capital losses for Corporation Tax purposes
and which are available to be carried forward to future years. It
is unlikely that the Company will generate sufficient taxable
profits in the future to utilise these expenses and therefore no
deferred tax asset has been recognised.
For the year ended 31 December 2020, the Company received
approval from HM Revenue and Customs under Section 1158 of the
Corporation Tax Act 2010, therefore the Company was not liable to
Corporation Tax on any realised investment gains for 2020. The
Directors intend to continue to meet the conditions required to
obtain approval and therefore no deferred tax has been provided on
any capital gains or losses arising on the revaluation or disposal
of investments.
6. Return per Ordinary Share
The calculation of earnings per share has been performed in
accordance with FRS 102.
2021
GBP GBP GBP
Revenue Capital Total
Attributable return on ordinary activities
after taxation 151,260 1,245,563 1,396,823
Weighted average number of shares 2,157,881
Return per ordinary share 7.0p 57.7p 64.7p
2020
GBP GBP GBP
Revenue Capital Total
Attributable return on ordinary activities
after taxation 127,275 (140,604) (13,329)
Weighted average number of shares 2,157,881
Return per ordinary share 5.9p (6.5p) (0.6p)
7. Dividend
2021 2020
GBP GBP
Final dividend in respect of 2020 of 7.7p (2020:
a final dividend of 9.3p was paid in respect
of 2019) per share 166,157 200,683
Interim dividend in respect of 2021 of 2.0p
(2020: an interim dividend of 1.7p was paid
in respect of 2020) per share 43,157 36,684
209,314 196,367
Set out below is the total dividend payable in respect of the
financial year, which is the basis on which the requirements of
Section 1158 of the Corporation Tax Act 2010 are considered.
It is recommended that a final dividend of 7.5p (2020: 7.7p) per
ordinary share be paid out of revenue profits amounting to a total
of GBP161,841. An interim dividend of 2p per ordinary share was
paid on 24 September 2021 amounting to GBP43,157 making the total
dividend payable in the year GBP204,998.
For the year 2020, a final dividend of 7.7p was paid on 6 April
2021 amounting to a total of GBP166,157. An interim dividend of
1.7p per ordinary share was paid on 24 September 2020 amounting to
GBP36,684 making the total dividend paid in the year
GBP202,841.
Summary of dividends paid for the last 10 financial years
Ex-div Dividend Amount Financial
date Type Year
10/3/2022 Proposed 7.5p 2021
09/9/2021 Interim 2.0p 2021
11/3/2021 Final 7.7p 2020
10/9/2020 Interim 1.7p 2020
19/3/2020 Final 9.3p 2019
20/3/2019 Final 9.1p 2018
01/3/2018 Final 8.9p 2017
09/3/2017 Final 8.6p 2016
17/3/2016 Final 7.9p 2015
19/3/2015 Final 6.7p 2014
19/3/2014 Final 5.5p 2013
20/3/2013 Final 5.0p 2012
21/3/2012 Final 4.95p 2011
2021 2020
GBP GBP
Revenue available for distribution 151,260 127,275
Interim dividend paid (43,157) (36,684)
Final dividend in respect of financial year
ended 31 December 2021 (161,841) (166,157)
Undistributed revenue reserves (53,738) (75,566)
8. Investments
Movements in year 2021 2020
GBP GBP
Valuation at beginning of year 5,310,661 5,466,191
Purchases at cost 545,379 1,137,856
Sales - proceeds (778,439) (1,262,691)
- realised gains on sales 354,843 223,957
Increase/(decrease) in unrealised appreciation 1,004,376 (254,652)
Valuation at end of year 6,436,820 5,310,661
Book cost at end of year 3,705,034 3,583,255
Unrealised appreciation at the end of the
year 2,731,786 1,727,406
6,436,820 5,310,661
UK Main Market listed investments 5,014,560 3,791,591
UK AIM-traded shares 1,422,260 1,519,070
6,436,820 5,310,661
Gains on investments
2021 2020
GBP GBP
Realised gains on sales 354,843 223,957
Increase/(decrease) in unrealised appreciation 1,004,376 (254,652)
1,359,219 (30,695)
The purchase costs and sales proceeds above include transaction
costs of GBP3,515 (2020: GBP7,910) and GBP3,302 (2020: GBP5,056)
respectively.
9. Debtors
2021 2020
GBP GBP
Investment transaction debtors 236,912 133,210
Other debtors 8,251 8,926
245,163 142,136
10. Creditors: amounts falling due within one year
2021 2020
GBP GBP
Social security and other taxes 719 -
Other creditors 2,850 2,850
Accruals and deferred income 13,560 14,527
17,129 17,377
11. Called Up Share Capital
2021 2020
GBP GBP
Authorised
10,000,000 Ordinary Shares of 25p 2,500,00000 2,500,000
Allotted, called up and fully paid
2,157,881 Ordinary Shares of 25p 539,470 539,470
12. Financial Instruments
The Company's financial instruments comprise equity investments,
cash balances and debtors and creditors that arise directly from
its operations, for example, in respect of sales and purchases
awaiting settlement.
The major risks associated with the Company are market, credit
and liquidity risk. The Company has established a framework for
managing these risks. The Directors have guidelines for the
management of investments and financial instruments.
Market Risk
Market price risk arises mainly from uncertainty about future
prices of financial investments used in the Company's business. It
represents the potential loss the Company might suffer through
holding market positions by way of price movements other than
movements in exchange rates and interest rates.
The Company's investment portfolio is exposed to market price
fluctuations which are monitored by the Fund Manager who gives
timely reports of relevant information to the Directors.
Adherence to the investment objectives and the internal controls
on investments set by the Company mitigates the risk of excessive
exposure to any one particular type of security or issuer.
The Company's exposure to other changes in market prices at 31
December on its investments is as follows:
A 20% decrease in the market value of investments at 31 December
2021 would have decreased net assets attributable shareholders by
60 pence per share (2020: 49 pence per share). An increase of the
same percentage would have an equal but opposite effect on net
assets available to shareholders.
Market risk also arises from changes in interest rates and
exchange risk. All of the Company's assets are in sterling and
accordingly the Company has limited currency exposure. The majority
of the Company's financial assets are non-interest bearing, as a
result, the Company's financial assets are not subject to
significant risk due to fluctuations in the prevailing levels of
market interest rates.
The carrying amounts of financial assets best represent the
maximum credit risk exposure at the balance sheet date. Bankruptcy
or insolvency of the custodian may cause the Company's rights with
respect to securities held with the custodian to be delayed.
Liquidity Risk
Liquidity Risk is the risk that the Company may have difficulty
in meeting obligations associated with financial liabilities. The
Company is able to reposition its investment portfolio when
required so as to accommodate liquidity needs. However, it may be
difficult to realise its investment portfolio in adverse market
conditions.
Maturity Analysis of Financial Liabilities
The Company's financial liabilities consist of creditors as
disclosed in note 10. All items are due within one year.
Capital management policies and procedures
The Company's capital management objectives are:
-- to ensure the Company's ability to continue as a going
concern;
-- to provide an adequate return to shareholders;
-- to support the Company's stability and growth;
-- to provide capital for the purpose of further
investments.
The Company actively and regularly reviews and manages its
capital structure to ensure an optimal capital structure, taking
into consideration the future capital requirements of the Company
and capital efficiency, projected operating cash flows and
projected strategic investment opportunities. The management
regards capital as total equity and reserves, for capital
management purposes.
Fair values of financial assets and financial liabilities
Fixed asset investments (see note 8) are valued at market bid
price where available which equates to their fair values. The fair
values of all other assets and liabilities are represented by their
carrying values in the balance sheet.
2021 2020
GBP GBP
Fair value through profit or loss investments 6,436,820 5,310,661
Financial instruments by category
The financial instruments of the Company fall into the following
categories
31 December 2021
At Amortised Assets Total
Cost at fair
value
through
profit
or loss
Assets as per balance sheet GBP GBP GBP
Investments - 6,436,820 6,436,820
Debtors 245,163 - 245,163
Cash at bank 30,676 - 30,676
Total 275,839 6,436,820 6,712,659
Liabilities as per the balance sheet
Creditors 17,129 - 17,129
Total 17,129 - 17,129
31 December 2020
At Amortised Assets Total
Cost at fair
value
through
profit
or loss
Assets as per balance sheet GBP GBP GBP
Investments - 5,310,661 5,310,661
Debtors 142,136 - 142,136
Cash at bank 72,601 - 72,601
Total 214,737 5,310,661 5,525,398
Liabilities as per the balance sheet
Creditors 17,377 - 17,377
Total 17,377 - 17,377
Fair value hierarchy
In accordance with FRS 102, the Company must disclose the fair
value hierarchy of financial instruments.
The fair value hierarchy consists of the following three
classifications:
Classification A - Quoted prices in active markets for identical
assets or liabilities.
Quoted in an active market in this context means quoted prices
are readily and regularly available and those prices represent
actual and regularly occurring market transactions on an arm's
length basis.
Classification B - The price of a recent transaction for an
identical asset, where quoted prices are unavailable.
The price of a recent transaction for an identical asset
provides evidence of fair value as long as there has not been a
significant change in economic circumstances or a significant lapse
of time since the transaction took place. If it can be demonstrated
that the last transaction price is not a good estimate of fair
value (e.g. because it reflects the amount that an entity would
receive or pay in a forced transaction, involuntary liquidation or
distress sale), that price is adjusted.
Classification C - Inputs for the asset or liability that are
based on observable market data and unobservable market data, to
estimate what the transaction price would have been on the
measurement data in an arm's length exchange motivated by normal
business considerations.
The Company only holds classification A investments (2020:
classification A investments only).
13. Net Asset Value per Share
The net asset value per share is based on net assets of
GBP6,695,530 (2020: GBP5,508,021) divided by 2,157,881 (2020:
2,157,881) ordinary shares in issue at the year end.
2021 2020
GBP GBP
Net asset value per share 310.3p 255.3p
14. Dividends paid to Directors
During the year the following dividends were paid to the
Directors of the Company as a result of their total
shareholding:
Dr Manny Pohl AM GBP48,112(1)
Simon Moore GBP 6,548
Frank Ashton GBP 217
Notes:
1. Manny Pohl's relationship with Global Masters Fund Limited is
described in Note 1 to the table of Directors' interests on page
25. During the year dividends amounting to GBP48,112 were paid to
Global Masters Fund Limited and EC Pohl & Co Pty Ltd.
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