Schroder Global Real Estate Securities
Limited
Annual Results Announcement
Schroder Global Real Estate Securities Limited (formerly
Investors in Global Real Estate Limited) (“the Company”) hereby
submits its Annual Report and Accounts for the year ended
31 December 2015 as required by the
UK Listing Authority's Disclosure and Transparency Rule 6.3.5.
The Company's Annual Report and Accounts for the year ended
31 December 2015 are also being
published in hard copy format and an electronic copy will shortly
be available to download from the Company's website
www.schroderglobalrealestatesecurities.com
The Company has submitted its Annual Report and Accounts to the
National Storage Mechanism and it will shortly be available for
inspection at www.morningstar.co.uk/uk/NSM.
The financial information set out in this announcement does not
constitute the Company's statutory accounts for the year ended
31 December 2015. All figures are
based on the audited financial statements for the year ended
31 December 2015.
The financial information for the year ended 31 December 2015 is derived from the financial
statements delivered to the UK Listing Authority. The Auditors
reported on those accounts, their report was unqualified and did
not contain a statement under Section 263(2) and 263(3) of the
Companies (Guernsey) Law, 2008.
The announcement is prepared on the same basis as will be set
out in the Report and Accounts for the year ended
31 December 2015.
Investment Objective, Directors and
Alternative Investment Fund Managers (“AIFM”) Directive
Investment Objective
Schroder Global Real Estate Securities Limited’s (the “Company”)
investment objective is to provide investors with an attractive
total return, through investing in listed global real estate
securities with strong fundamentals, offering sustainable income
and a progressive dividend potential. For additional information
refer to the Strategic Report.
Directors
Crispian
Collins (Chairman), aged 68
Mr. Collins was formerly Vice Chairman, UBS Global Asset
Management and a member of the Group Managing Board of UBS AG. On
leaving Oxford University in 1969, Mr.
Collins joined Phillips & Drew, London, which culminated in his appointment as
Chief Executive in 1998 and Executive Chairman in 1999. He was a
founding sponsor of the Phillips & Drew property team. Mr
Collins was appointed to the Board on 25
April 2006.
Christopher
Legge, aged 60*
Mr. Legge is Guernsey resident and has over 25 years' experience
in the financial services industry. Mr. Legge was appointed as an
independent non-executive director of the Company and Chairman of
the Audit Committee with effect from 1
January 2015. He qualified as a Chartered Accountant in
London in 1980 with Pannell Kerr Forster and subsequently moved to
Guernsey in 1983 to work for Ernst & Young, progressing from
Audit Manager to Managing Partner in the Channel Islands. Mr. Legge retired from Ernst
& Young in 2003 and currently holds a number of directorships
in the financial sector. Mr. Legge is a Fellow of the Institute of
Chartered Accountants in England
and Wales and holds a BA (Hons) in
Economics from the University of Manchester.
Richard
Sutton, aged 80
Mr. Sutton is formerly a partner of the Delaware law firm Morris, Nichols, Arsht &
Tunnell. He is a member of the bar of the US Supreme Court and of
the American Law Institute. He is an independent trustee of the
CBRE Clarion Global Real Estate Income Fund and the Unidel
Foundation. He is a graduate of the University
of Delaware and of Yale Law School. Mr Sutton was appointed
to the Board on 25 April 2006.
Robert
Houston, aged 65**
Mr. Houston is a chartered surveyor and has been active in the
institutional property investment management industry for over 40
years. In 1980, he founded Rowe & Pitman Property Services
which four years later, became Baring, Houston & Saunders. The
firm became part of the ING Group in 1995. In 2008 he was appointed
the Global Chairman and Chief Executive of ING Real Estate
Investment Management, one of the world's largest property
investment managers with more than $80
billion of assets worldwide and operating in 22 countries.
In 2009, he established the St. Bride's Business Alliance, a
network of real estate businesses which now has offices in
London, Madrid, Sydney and the US. He has written / edited
over 250 published research bulletins and articles on the real
estate market.
Richard
Saunders, aged 61***
Mr. Saunders is a Member of Core Plus Properties LLC, a private
real estate investment company which currently owns and manages
property in the North East and Mid-Atlantic regions of the United States. Mr. Saunders focuses on the
Company’s capital markets activities with responsibility for
acquisitions and finance. From 1980 to 1995, Mr. Saunders was with
Baring, Houston & Saunders, now ING Real Estate Investment
Management. He moved to the United States
of America in 1993 and his subsequent roles have included
working for ING Realty Partners LLC and as Chief Investment Officer
of Healey & Baker Investment Advisors. Mr. Saunders has
significant international experience having advised investors and
companies across Europe,
North America, South America and Asia. Mr Saunders was appointed to the Board
on 25 April 2006.
* Mr. Legge was appointed as a Director on 1 January 2015 and is Chairman of the Audit
Committee.
** Mr. Houston was appointed as a Director on 1 July 2015.
*** Mr. Saunders retired on 30 September
2015.
Alternative Investment Fund Managers
("AIFM") Directive
Certain pre-sale, regular and periodic disclosures required by
the Directive may be found either in this Annual Report and
Accounts (the “Financial Statements”) or on the website at
www.schroders.co.uk/its.
Financial Highlights
|
|
2015 |
|
2014 |
|
|
Total
returns (including dividends reinvested) for the year ended 31
December |
|
|
|
|
Net asset
value ("NAV") per share total return1 |
7.3 |
% |
21.8 |
% |
|
Share
price total return 1 |
11.6 |
% |
14.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
%
Change |
Shareholders' funds, NAV per share, share price and share
price |
|
|
|
|
discount at 31 December |
|
|
|
|
|
Shareholders' funds (£'000) |
65,481 |
|
62,143 |
|
+5.4 |
Shares in
issue excluding Treasury Shares |
48,785,327 |
|
48,785,327 |
|
+0.0 |
NAV per
share |
134.22 |
p |
127.38 |
p |
+5.4 |
Share
price |
127.00 |
p |
115.25 |
p |
+10.2 |
Share
price discount to NAV per share |
5.4 |
% |
9.5 |
% |
|
|
|
|
|
|
|
|
Profit,
earnings per share and dividends for the year ended 31
December |
|
|
|
|
Profit
after taxation including the movement in realised |
|
|
|
|
|
and
unrealised gains and losses on investments (£'000) |
4,070 |
|
11,380 |
|
(64.2) |
Earnings
per share |
8.35 |
p |
22.62 |
p |
(63.1) |
Dividends
per share |
1.50 |
p |
2.85 |
p |
(47.4) |
|
|
|
|
|
|
|
Net
cash 2 |
(1.7) |
% |
(0.6) |
% |
|
Ongoing
Charges 3 |
1.46 |
% |
2.10 |
% |
|
1 Source: Morningstar.
2 Borrowings used for investment purposes, less cash,
expressed as a percentage of net assets. At the current and
comparative year end, cash exceeded borrowings (the Company had no
borrowings) and this is shown as a negative “Net Cash” position. If
borrowings were to exceed cash, this would be shown as
“Gearing”.
3 Ongoing Charges represents the management fee and
all other operating expenses excluding finance costs, expressed as
a percentage of the average daily net asset values during the
year. Ongoing Charges is calculated in accordance with the
recommended methodology issued by the Association of Investment
Companies.
Financial Record Since Launch
|
|
At
launch |
|
|
|
|
|
|
|
|
|
|
|
|
on 31
May |
|
|
|
|
|
|
|
|
|
|
At 31
December |
2006 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
Shareholders funds (£'000) |
97,500 |
113,208 |
105,813 |
71,981 |
88,315 |
103,303 |
97,079 |
86,504 |
60,373 |
62,143 |
65,481 |
NAV per
share (pence) |
97.50 |
113.21 |
105.87 |
72.16 |
88.54 |
103.56 |
101.92 |
111.40 |
107.92 |
127.38 |
134.22 |
Share
price (pence) |
100.00 |
116.75 |
83.00 |
31.75 |
69.75 |
85.75 |
81.50 |
107.00 |
104.00 |
115.25 |
127.00 |
Share
price premium/(discount) to NAV per share (%) |
2.6 |
3.1 |
(21.6) |
(56.0) |
(21.2) |
(17.2) |
(20.0) |
(3.9) |
(3.6) |
(9.5) |
(5.4) |
Gearing/(net cash) (%)1 |
- |
20.7 |
5.6 |
(14.2) |
(0.7) |
(0.8) |
7.2 |
1.1 |
10.2 |
(0.6) |
(1.7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings, dividends and ongoing charges for the year ended 31
December |
|
20062 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
Profit/(loss) after taxation including the movement in realised and
unrealised gains (£'000) |
|
17,765 |
(2,680) |
(31,454) |
17,716 |
18,217 |
1,282 |
10,810 |
1,199 |
11,380 |
4,070 |
Earnings/(loss) per share (pence) |
|
17.76 |
(2.68) |
(31.48) |
17.76 |
18.26 |
1.33 |
12.02 |
1.84 |
22.62 |
8.35 |
Dividends
per share (pence) |
|
2.63 |
4.50 |
4.16 |
3.15 |
3.33 |
3.85 |
4.20 |
4.20 |
2.85 |
1.50 |
Ongoing
Charges (%)3 |
|
2.01 |
1.63 |
1.77 |
1.63 |
1.46 |
1.58 |
1.60 |
1.72 |
2.10 |
1.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
launch |
|
|
|
|
|
|
|
|
|
|
|
|
on 31
May |
|
|
|
|
|
|
|
|
|
|
Performance4 |
2006 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
NAV total
return 5 |
100.0 |
116.5 |
109.7 |
94.9 |
104.0 |
125.9 |
128.5 |
146.0 |
146.6 |
178.5 |
191.5 |
Share
price total return |
100.0 |
118.3 |
87.7 |
35.9 |
84.0 |
107.9 |
107.1 |
146.9 |
148.1 |
169.5 |
189.2 |
1 Borrowings used for investment purposes, less cash,
expressed as a percentage of net assets. If the amount so
calculated is negative, this is shown as "Net cash".
2 Represents the period from 31 May 2006, which is the date the Company began
investing, to 31 December 2006.
3 Ongoing Charges represents the management fee and
all other operating expenses excluding finance costs, transaction
costs and any performance fee payable, expressed as a percentage of
the average daily net asset values during the year. The figures for
2011 and prior years represent the expenses calculated as above,
expressed as a percentage of the average asset values at the
beginning and end the year. The figure for 2006 has been adjusted
to an annualised basis.
4 Source: Morningstar. Rebased to 100 at 31 May 2006.
5 Calculated using capital net asset values plus
income reinvested for the period to 31
December 2008 and cum income net asset values plus income
reinvested for the period thereafter.
Chairman’s Statement
Future of the Company
During 2015, the Board continued to seek ways of growing the
Company. To this end, the Company appointed a new broker and
further investigated ways of building the shareholder base. Despite
good investment performance and a number of initiatives to identify
potential new long-term holders for the Company, our best efforts
were not successful and we therefore concluded that a longer-term
appraisal of the Company’s future was appropriate.
Thus, at the end of 2015, the Directors reviewed both the
strategy and long-term future of the Company. Since the appointment
of Schroder Real Estate Investment Management Limited (“SREIM”) as
the Company’s Investment Manager and the adoption of a new
investment strategy in September
2014, the Company had performed well both in absolute and
relative terms and we continued to believe in the investment
proposition. However, we also recognise the difficulties of
attracting long term demand for a closed-ended vehicle which is
perceived to lack sufficient critical mass, which impacts liquidity
in the Company’s shares and the discount at which they
trade. Notwithstanding extensive marketing efforts, we
concluded that our aspirations to grow the Company significantly
were not realisable in prevailing conditions.
Accordingly, a scheme for liquidation was put forward for the
approval of shareholders and was approved. The scheme provides an
opportunity for shareholders to retain their exposure to the same
asset class through one or more open-ended vehicles managed by
SREIM, or to receive cash.
A circular was published in the first quarter of 2016 which gave
details of the proposed scheme, including the proposed roll-over
vehicle or vehicles, and convened a general meeting at which
shareholders voted in favour of all the proposals.
Appointment of New Broker
Panmure Gordon was appointed as the Company’s Corporate Broker
with effect from 28 May 2015. The
appointment was made after an extensive review process and was
undertaken to bring a fresh approach and heightened activity
levels.
Edison Research
In an effort to provide improved clarity on the Company and its
investment objective, we commissioned Edison Research to prepare a
detailed report on the Company, management team, investment
strategy and performance. Edison is an investment intelligence firm
and is authorised and regulated by the Financial Conduct Authority.
The first market research paper was issued on 22 June 2015 and was circulated amongst the
investor community in the UK and internationally.
Board Changes
During 2015, Trevor Ash and
Richard Saunders retired as
directors of the Company. The Board greatly appreciates the
experience and support Trevor and Richard have contributed to the
development of the Company.
Christopher Legge joined the
Board as an independent non-executive director of the Company with
effect from 1 January 2015. Christopher also took on the role
of Chairman of the Audit Committee. Christopher is Guernsey
resident and has over 25 years experience in the financial services
industry.
Robert Houston was appointed as
an independent non-executive director of the Company with effect
from 1 July 2015. Robert also joined
the Audit Committee. Robert is a chartered surveyor and has been
active in the institutional property investment management industry
for over 40 years. He has written/edited over 250 published
research bulletins and articles on the real estate market. Robert
is resident in the UK.
Performance
The Company delivered a strong performance during the year,
providing a net asset value total return of 7.3% (2014: 21.8%) and
a share price total return of 11.6% (2014: 14.5%). The Investment
Manager’s Review provides a more detailed analysis of performance,
market background and investment outlook for the Company.
Dividends
Following the change in strategy in October 2014, following the appointment of
Schroder Real Estate Investment Management Limited (“SREIM”), the
quarterly dividend level was set at 0.375
pence per share (previously 1.05
pence per share) and this rate has been maintained
throughout 2015. However, the Board announced on 16 February 2016 that in light of the proposed
scheme for liquidation announced by the Company in December 2015, the fourth interim dividend of
0.375 pence per share for the year
ended 31 December 2015 ordinarily
payable in the first quarter of 2016 would not be paid.
Annual General Meeting
As shareholders approved the scheme for liquidation referred to
earlier in this Statement, no Annual General Meeting (“AGM”) will
be required.
Crispian Collins
Chairman
28 April 2016
Investment Manager’s Review
The Company continued to perform strongly with a NAV total
return of 7.3% over the course of the year.
We are wedded to the view that the prototype real estate company
must exhibit three characteristics – an ability to grow revenue, a
strong balance sheet and a strong management team.
The analogy of a reliable sports car is a good one. We have
exposure to real estate markets with exceptionally high barriers
where rental growth is evident. This acts as a powerful driver of
growth. Ally an ability to grow revenues with low financial
leverage, a management team with a quantifiable track record and we
see the probability of strong financial returns to shareholders
markedly increasing. The reliability of balance sheet and
management is paramount. Over-levered balance sheets cause huge
instability and can be value destructive. Similarly, management
teams that move away from their area of expertise or operate in
conflicted structures can also weigh on long-term performance.
A persistently volatile economic backdrop was the overriding
theme for 2015. We always communicate to shareholders that the
decision making process is not influenced by macro factors.
Volatile markets can provide opportunity. When prices of securities
become sufficiently disconnected from fundamentals, we find better
entry points into companies for Shareholder’s capital.
We remain convinced that focusing on a select group of companies
that conform to our view of excellence, provides a far happier
hunting ground. Our detailed understanding of a group of companies
that we are happy to own means we can then use our valuation
overlay to identify which companies are disconnected from their
intrinsic value. This method requires a degree of honesty. We are
certain to miss share prices that are over-sold but not of
sufficient quality. That does not concern us. Over a long-term time
horizon, the companies we like consistently provide returns to
shareholders over their cost of debt and equity finance (cost of
capital). This yardstick is imperative; it shows if a company is
making a return over its financing costs.
Our methodology ties in other facets of investing that have a
positive impact on shareholders. In backing these identified
companies, the added benefit is the avoidance of high turnover
which is a malignant - but under-discussed - drag on shareholders
returns.
As we move closer to the date for liquidation of the Company it
is important to make one important statement. The investment
philosophy of the two funds, which shareholders can transfer into,
is exactly the same as this Company. Our strategy remains the
same today as it was yesterday and we believe that this will
benefit investors over the long term.
Conclusion
We retain the view that our expertise is in identifying
companies that, on a long-term basis, will provide stable and
growing cash flow to shareholders. Market gyrations can cause
irrational behavior and slavishly following newsfeeds does not, in
our view, result in constructive decisions.
Our intent is to own high quality businesses at the right price.
As markets continue to see-saw from China concerns, oil price falls and suspected
bank instability, we stick to our process and philosophy.
Schroder Real Estate Investment Management Limited
28 April 2016
Investment Portfolio
|
|
|
Fair
value
of holding |
|
% of total equity shareholders' funds |
Company |
Country |
Real estate sub
sector |
£'000 |
|
|
|
|
|
|
|
Simon Property
Group |
United States |
Shopping malls |
4,543 |
|
6.94 |
Public Storage |
United States |
Storage |
2,974 |
|
4.54 |
Equity
Residential |
United States |
Apartments |
2,952 |
|
4.51 |
Prologis |
United States |
Warehouse and
industrial |
2,401 |
|
3.67 |
Welltower |
United States |
Healthcare |
2,243 |
|
3.43 |
Boston Properties |
United States |
Offices |
2,220 |
|
3.39 |
Westfield |
Australia |
Shopping malls |
2,171 |
|
3.32 |
Mitsubishi Estate |
Japan |
Diversified |
2,092 |
|
3.20 |
Land Securities
Group |
United Kingdom |
Diversified |
2,077 |
|
3.17 |
Essex Property
Trust |
United States |
Apartments |
2,068 |
|
3.16 |
Mitsui Fudosan |
Japan |
Diversified |
2,051 |
|
3.13 |
Link Real Estate
Investment Trust |
Hong Kong |
Shopping malls |
2,006 |
|
3.06 |
AvalonBay
Communities |
United States |
Apartments |
1,757 |
|
2.68 |
General Growth
Properties |
United States |
Shopping malls |
1,756 |
|
2.68 |
Unibail-Rodamco |
France |
Shopping malls |
1,641 |
|
2.51 |
Federal Realty
Investment Trust |
United States |
Shopping malls |
1,570 |
|
2.40 |
Sun Hung Kai
Properties |
Hong Kong |
Diversified |
1,459 |
|
2.23 |
UNITE Group |
United Kingdom |
Student
accommodation |
1,436 |
|
2.19 |
Vornado Realty
Trust |
United States |
Diversified |
1,403 |
|
2.14 |
Macerich |
United States |
Shopping malls |
1,310 |
|
2.00 |
Twenty largest
investments |
|
|
42,130 |
|
64.35 |
|
|
|
|
|
|
Mirvac Group |
Australia |
Diversified |
1,255 |
|
1.92 |
Hufvudstaden |
Sweden |
Offices |
1,227 |
|
1.87 |
Deutsche Wohnen |
Germany |
Residential |
1,189 |
|
1.82 |
DDR |
United States |
Shopping malls |
1,164 |
|
1.78 |
Stockland |
Australia |
Diversified |
1,074 |
|
1.64 |
Empire State Realty
Trust |
United States |
Offices |
1,061 |
|
1.62 |
RioCan Real Estate
Investment Trust |
Canada |
Shopping malls |
1,050 |
|
1.60 |
Douglas Emmett |
United States |
Offices |
1,017 |
|
1.55 |
Pebblebrook Hotel |
United States |
Hotels |
1,008 |
|
1.54 |
Hammerson |
United Kingdom |
Shopping malls |
956 |
|
1.46 |
DCT Industrial
Trust |
United States |
Warehouse and
industrial |
933 |
|
1.43 |
Hysan Development |
Hong Kong |
Diversified |
910 |
|
1.39 |
Great Portland
Estates |
United Kingdom |
Offices |
899 |
|
1.37 |
Hulic Co |
Japan |
Diversified |
888 |
|
1.36 |
Rexford Industrial
Realty |
United States |
Warehouse and
industrial |
867 |
|
1.32 |
Derwent London |
United Kingdom |
Offices |
859 |
|
1.31 |
LaSalle Hotel
Properties |
United States |
Hotels |
854 |
|
1.30 |
Workspace Group |
United Kingdom |
Offices |
809 |
|
1.24 |
Big Yellow Group |
United Kingdom |
Storage |
804 |
|
1.23 |
Kerry Properties |
Hong Kong |
Diversified |
713 |
|
1.09 |
CapitaLand |
Singapore |
Diversified |
700 |
|
1.07 |
CubeSmart |
United States |
Storage |
636 |
|
0.97 |
Equity LifeStyle
Properties |
United States |
Home communities |
604 |
|
0.92 |
Swire Properties |
Hong Kong |
Diversified |
585 |
|
0.89 |
Sunstone Hotel
Investors |
United States |
Hotels |
579 |
|
0.88 |
|
|
|
|
|
|
Total
investments |
|
|
64,771 |
|
98.92 |
Net current
assets |
|
|
710 |
|
1.08 |
Total equity
shareholders' funds |
|
|
65,481 |
|
100.00 |
At 31 December 2014, the twenty
largest investments represented 58.91% of shareholders' funds.
Strategic Report
Company Structure
Schroder Global Real Estate Securities Limited (the "Company")
was incorporated on 25 April 2006 and
is registered in Guernsey as an Authorised Closed-Ended Investment
Company. The Company is listed on the London Stock Exchange. The
Company carries on the business of an investment company and
invests in global real estate securities.
Key performance indicators
The Board measures the development and success of the Company's
business through achievement of the Company's investment objective
which is considered to be the most significant key performance
indicator of the Company.
The Board continues to review the Company's Ongoing Charges to
ensure that the total costs incurred by shareholders in the running
of the Company remain competitive. An analysis of the
Company's costs, including the investment management fee,
Director's fees and other administrative expenses, is submitted to
each Board meeting and the investment management fee is reviewed at
least annually. The Board will continue to review the Company’s
Ongoing Charges up to the date of the Company’s liquidation.
Role and Composition of the Board
The Board is the Company’s governing body and has overall
responsibility for maximising the Company’s success by directing
and supervising the affairs of the business and meeting the
appropriate interests of shareholders and relevant stakeholders,
while enhancing the value of the Company and also ensuring
protection of investors. A summary of the Board’s responsibilities
is as follows:
- statutory obligations and public disclosure;
- strategic matters and financial reporting;
- risk assessment and management including reporting compliance,
governance, monitoring and control; and
- other matters having a material effect on the Company.
The Board’s responsibilities for the Annual Report are set out
in the Statement of Directors’ Responsibilities.
As at 31 December 2015, the Board
comprised four Directors all of whom the Company considers to be
independent. All Directors are non-executive and all
Directors are independent as prescribed by the Listing Rules. Mr
Sutton was not considered to be independent prior to 2 July 2014 as he is an independent trustee of
the CBRE Clarion Global Real Estate Income Fund, a vehicle managed
by CBRE Clarion Securities LLC, the Investment Manager until
2 July 2014. The Board’s approach to
diversity is that candidates for Board vacancies are selected based
on their skills and experience, which are matched against the
balance of skills and experience of the overall Board, taking into
account the specific criteria for the role being offered.
Candidates are not specifically selected on the grounds of their
gender but this is taken into account when the Board examines its
overall balance, skill set and experience. The Board is currently
considering its composition and refreshment. For additional
information refer to the Chairman's Statement.
Mr Ash retired as a Director and Mr Legge was appointed as a
Director on 1 January 2015.
Mr Houston was appointed as a Director on 1 July 2015.
Mr Saunders retired as a Director on 30
September 2015.
Management
The Investment Manager is authorised and regulated by the
Financial Conduct Authority (“FCA”) and provides portfolio
management and risk management services to the Company under the
terms of an Alternative Investment Fund Managers agreement. The
Investment Manager also provides general marketing support for the
Company and manages relationships with key investors, in
conjunction with the Chairman, other Board members or the corporate
broker as appropriate. Northern Trust International Fund
Administration Services (Guernsey) Limited provides company
secretarial, administration and accounting services, and Northern
Trust (Guernsey) Limited provide depositary services.
The Investment Manager has in place appropriate professional
indemnity cover.
The Schroders Group manages £313 billion as at 31 December 2015 (2014: £300 billion) on behalf
of institutional and retail investors, financial institutions and
high net worth clients from around the world, invested in a broad
range of asset classes across equities, fixed income, multi-asset
and alternatives.
Investment Objective
The Company's investment objective is to provide investors with
an attractive total return, through investing in listed global real
estate securities with strong fundamentals, offering sustainable
income and a progressive dividend potential.
Investment Strategy
The Board has delegated management of the Company’s portfolio to
the Investment Manager. The Investment Manager manages the
portfolio with the aim of helping the Company to achieve its
investment objective. Details of the Investment Manager’s strategy,
and other factors that have affected performance during the year,
are set out in the Investment Manager’s Review.
Investment Policy
The Company’s investment policy is flexible enabling it to
invest in a wide variety of listed securities including equities,
preference shares, debt, convertible securities, warrants,
interests in collective investment schemes (including limited
partnerships and unit trusts) and other securities issued by
companies which derive a significant proportion of their revenues
or profits from real estate.
There will be no material change to the investment objective or
policy described above unless previously sanctioned by shareholders
in a general meeting.
The Investment Manager seeks to reduce portfolio risk by
limiting investment concentration in any individual security,
having exposure to many different property sectors, and also many
different geographic regions. In addition, the Investment Manager
undertakes a listed securities portfolio liquidity screen to ensure
relatively liquid positions in the Company’s portfolio.
Gearing
The Company has power under its Articles to borrow up to an
amount equal to 25% of its net assets at the time of the drawdown.
The Board's policy is to limit gearing to 25%. Gearing for this
purpose is defined as Borrowings used for investment purposes, less
cash, expressed as a percentage of net assets. If the figure so
calculated is negative, this is described as "net cash".
At the year end the net cash position was 1.7% (2014: net cash
position of 0.6%).
The Company cancelled its credit facility with Northern Trust
(Guernsey) Limited on 27 May
2015.
Leverage
The AIFM (“Alternative Investment Fund Managers”) Directive
requires the Investment Manager to set maximum leverage ratio
limits as defined in the AIFM Directive. Accordingly the limits
have been set at 2.25 for both the Gross and Commitment calculation
methods. At 31 December 2015, the
Company’s gross leverage ratio and its Commitment leverage ratio
both stood at 1.0.
Investment Philosophy and Process
The investment philosophy of the Investment Manager stems from
an inescapable truth: real estate companies in supply constrained
markets with strong management teams and low gearing, outperform.
In simple terms, we like to hold companies that own buildings that
high quality tenants want to occupy. It is equally important that
these companies do not borrow too heavily against the value of
these buildings. The result is reliable and growing income from a
stable capital base. We remain unimpressed by companies that do the
opposite of this. The folly of a ‘quick buck’ strategy has been
repeated through multiple economic cycles: too much supply and too
much debt results in wholesale value destruction. We do not believe
that investing in companies where equity capital is put at risk,
offsets the potential returns on offer.
Unsurprisingly, our investment process quantifies the risk and
valuation of a company based on this philosophy. This
quantification of risk means that we explicitly measure how good a
company is. If we ally the risk score to the valuation of that
business, we can build a portfolio of companies based on solid
foundations. These companies are better able to weather broader
economic storms.
This disciplined approach means longer holding periods and
better returns for shareholders. Your Investment Manager remains
committed to providing that.
Stock Research
Proprietary research is conducted by a team of analysts in
Asia, North America and Europe. This ensures breadth and depth of
coverage and, importantly, it helps identify unique
opportunities.
The research process has four components. These components
ensure analytical rigour, open communication and tie the team into
constructing a global portfolio of property securities.
- Stock coverage - All analysts are expected to cover stocks in
their home markets. In addition, there is a system of secondary
coverage in place. The team is encouraged to travel to different
regions in order to broaden their knowledge of companies and
markets. This increases the knowledge of the global portfolio. It
is critical that team members view the portfolio in its global
context, understanding the total return that the whole portfolio
will generate. This increases the scrutiny of each investment
decision;
- Flexible process - The process relies on the local analysts
appraising opportunities using local knowledge. This is vital as
global property markets are not homogenous, with no single way of
valuing companies. The two-step process means that analysts are
challenged on their assumptions;
- Team communication - The team formally communicates on a call
once a week with a fixed agenda in place. The primary reason for
this call is to consider changes to the portfolio. Analysts have
the opportunity to present their investment case to the team for
questioning. In addition to the weekly call, team members
have regional meetings and communication on secondary stocks on a
frequent basis; and
- Company and market knowledge - Meeting management and
understanding real estate markets is the backbone to the research
process. Analysts are encouraged to spend time with management
teams and visiting assets. This aligns with the fundamental
approach of the investment process.
Stock Selection/Portfolio
Construction
The investment process and subsequent portfolio construction is
team-based. Every team member has the ability to shape the
portfolio. However, the ultimate stock selection and portfolio
construction rests with the co-managers.
Consistent with our investment process the portfolio
construction is largely driven by bottom-up stock selection. We do
not seek to target specific weightings to sectors, countries or
regions. The risk analysis and investment process ensures
that the team is constantly aware of excessive or unintended
concentrations.
The decision to invest in a company is primarily driven by an
analyst’s conviction that a stock is fundamentally undervalued and
there are catalysts that will narrow the gap between the currently
traded price and Schroders’ fair value assessment, leading to
outperformance.
Investment Restrictions and Spread of
Investment Risk
Risk in relation to the Company’s investments is spread as a
result of the Investment Manager monitoring the Company’s portfolio
with a view to ensuring that the portfolio retains an appropriate
balance to meet the Company’s investment objective.
In order to comply with the Listing Rules, the Company will not
invest more than 10%, in aggregate, of the value of its total
assets (calculated at the time of any relevant investment) in other
investment companies or investment trusts which are listed on the
Official List (save to the extent that those investment companies
or investment trusts have stated investment policies to invest no
more than 15% of their gross assets in other investments).
The Company’s investment restrictions are as follows:
(a) distributable income will be principally derived
from investment;
(b) not more than 20% of total assets to be lent to
or invested in the securities of any one company or group at the
time when the investment or loan is made; for this purpose any
existing holding in the company concerned will be aggregated with
the proposed new investment;
(c) not more than 10% of total assets will be
invested in any one security;
(d) the Company shall at all times have a minimum
portfolio exposure to at least four of the following listed real
estate markets:
· The
United States of America;
· Canada;
· Asia (including Hong
Kong, Japan; Singapore;
· The United Kingdom;
· Continental Europe;
· Australia and New
Zealand;
· Other
(e) not more than 65% of total assets will be
invested at the time of investment in any one of the listed real
estate markets referred to in (d) above;
(f) dividends will not be paid unless they are
substantially covered by income received from underlying
investments;
(g) the Company will be a passive investor and will
not seek to control, or be actively involved in the management of
any companies or businesses in which it invests; and
(h) the Company will not be a dealer in
investments.
In the event of any breach of the investment restrictions
applicable to the Company, shareholders will be informed of the
actions to be taken by the Investment Manager by notice sent to the
registered addresses of the shareholders in accordance with the
Articles or by an announcement issued through a regulatory
information service approved by the FCA.
No breaches of these investment restrictions took place during
the year ended 31 December 2015.
The Investment Portfolio and the Investment Manager’s Review
demonstrate that, as at 31 December
2015, the portfolio was invested in 10 countries and in 12
different industry sectors within such countries. There were 45
equity holdings in the portfolio at the year end. The Board
therefore believes that the objective of spreading investment risk
has been achieved in this way.
Performance
An outline of performance, market background, investment
activity and portfolio strategy during the year under review, as
well as outlook, is provided in the Chairman’s Statement and the
Investment Manager’s Review.
Principal Risks and Uncertainties
The Board is responsible for the Company’s system of internal
controls and for reviewing its effectiveness. The Board is
satisfied that by using the Company’s risk matrix in establishing
the Company’s system of internal controls while monitoring the
Company’s investment objective and policy that the Board has
carried out a robust assessment of the principal risks and
uncertainties facing the Company. These fall into the following
broad categories:
- Investment Risks: The Company is exposed to the risk that its
portfolio fails to perform in line with the Company's objectives if
it is inappropriately invested or markets move adversely. The Board
reviews reports from the Investment Manager at each quarterly Board
meeting, paying particular attention to the diversification of the
portfolio and to the performance and volatility of underlying
investments. Further details on Investment Risks are discussed in
the Investment Manager’s Review;
- Strategic Risk: Over time investment vehicles and asset classes
can become out of favour with investors or may fail to meet their
investment objectives. This may be reflected in a wide discount of
the share price to underlying net asset value. The Directors
periodically review whether the Company’s investment remit remains
appropriate and continually monitor the success of the Company in
meeting its stated objectives;
- Operational Risks: The Company is exposed to the risks arising
from any failure of systems and controls in the operations of the
Investment Manager or the Administrator. The Board receives reports
annually from the Investment Manager and Administrator on their
internal controls and reviews pricing reports covering the
valuations of underlying investments at each quarterly Board
meeting;
- Accounting, Legal and Regulatory Risks: The Company is exposed
to risk if it fails to comply with the regulations of the UK
Listing Authority or if it fails to maintain accurate accounting
records. The Administrator provides the Board with regular reports
on changes in regulations and accounting requirements; and
- Financial Risks: The financial risks faced by the Company,
include market, credit and liquidity risk. These risks and the
controls in place to mitigate them are reviewed at each quarterly
Board meeting. Further details on Financial Risks are discussed in
Note 20.
Going Concern and Viability
Statement
In accordance with provision C.2.2 of the UK Corporate
Governance Code, published by the Financial Reporting Council (the
"FRC") in September 2014 (the
“Code”), the Directors have assessed the prospects of the Company
and wish to make the following statement:
A plan to liquidate the Company during Q2 2016 is set out in the
Chairman’s Statement. Accordingly, the Financial Statements for the
year ended 31 December 2015 are
prepared on a basis other than going concern reflecting this
intention. The going concern basis of accounting is no longer
considered to be appropriate. The Company’s investments are valued
at bid market prices as at 31 December
2015, with no adjustments made as a result of the impending
liquidation. All other assets are also included in the
Financial Statements at the amounts they would expect to realise on
liquidation. A provision for all the costs of winding up the
Company has been included in the Financial Statements.
Corporate Social and Environment
Policy
As an investment company, the Company has no direct social,
environmental or human rights responsibilities; its policy is
focused on ensuring that its portfolio is properly managed and
invested.
Future Developments
The future of the Company is set out in the Chairman’s
Statement.
By Order of the Board
Crispian
Collins
Christopher Legge
Chairman
Director
28 April 2016
Report of the Directors
The Directors of the Company present their Annual Report and the
audited Accounts of the Company for the year ended 31 December 2015.
Dividend Policy
The Company’s dividend policy is to declare dividends at levels
which are expected over the medium term to be sustainable based on
the income receivable from investments and which will all for
potential growth. Dividends are paid on a quarterly basis in
February, May, September and December.
Having already paid interim dividends amounting to 1.125 pence per share, the Board has decided, in
light of the scheme for liquidation announced by the Company in
December 2015, the fourth interim
dividend of 0.375 pence per share for the year ended
31 December 2015 ordinarily payable
in the first quarter of 2016 will not be paid.
Directors and their Interests
The Directors of the Company and their biographical details can
be found in the Directors section. Mr Ash retired on
1 January 2015, Mr Legge was
appointed on 1 January 2015, Mr
Houston was appointed on 1 July 2015
and Mr Saunders retired on 30 September
2015. All the other Directors held office throughout the
year under review and up to the date of signing this Annual
Report.
As shareholders approved the scheme to put the Company into
liquidation as set out in the Chairman’s Statement, no AGM will be
required, and hence the Directors will resign upon the placement of
the Company into liquidation, with the exception of Christopher Legge who will remain as a Director
of the Company.
Each of the Directors has signed a letter of appointment with
the Company setting out the terms of their appointment.
None of the Directors had a service contract with the Company
during the year and accordingly a Director is not entitled to a
minimum period of notice or compensation in the event of their
removal as a Director. Details of Directors’ remuneration are
disclosed in the Directors’ Remuneration Report.
The Directors’ beneficial interests in the shares of the Company
as at 31 December 2015 are set out
below:
|
|
|
|
|
|
|
|
% of
issued |
|
|
|
|
Unclassified Shares |
|
|
|
share
capital |
Crispian
Collins |
|
|
200,000 |
|
|
|
0.41% |
Christopher Legge |
|
|
- |
|
|
|
- |
Richard
Sutton |
|
|
80,000 |
|
|
|
0.16% |
Robert
Houston |
|
|
- |
|
|
|
- |
Christopher Legge was appointed
as a Director on 1 January 2015 and
Robert Houston was appointed as a
Director on 1 July 2015. They have no
beneficial interests in the Shares of the Company.
Prior to Mr Houston’s appointment to the Board, St. Bride’s
Managers were paid a fee by the Company for consultancy services
provided by Mr Houston of £17,734 (2014: £23,116).
There have been no changes in the interest of the above
Directors in the past year.
Going Concern and Viability
Statement
The going concern and viability statement is set out in the
Strategic Report.
Share Capital
As at the date of this Annual Report, the Company had 48,785,327
ordinary shares of no par value in issue. A total of 5,123,995
shares were held in Treasury. Accordingly, the total number of
voting rights in the Company at the date of this Report is
48,785,327.
During the year no shares were repurchased into Treasury and no
shares held in Treasury were cancelled. Full details of
changes in the Company's share capital during the year are given in
Note 13 to the accounts.
Discount control policy
The Board has renewed the authority to make share repurchases of
up to 14.99% of the Company's issued share capital during the year
ended 31 December 2015. The Board retains the option to buy
back shares at their discretion, for cancellation or to hold in
Treasury, in an effort to reduce the quantum or volatility of the
share price discount to NAV per share.
Shareholders approved a resolution that shares would only be
reissued from Treasury at a price which is equal to or exceeds the
prevailing NAV per share.
Substantial Share Interests
As at the date of this Report, the Company has received
notifications of the following interests in 3% or more of the
voting rights attaching to the Company’s issued shares.
|
|
|
|
|
|
|
% of
issued |
|
|
|
|
|
Shares
held |
|
share
capital |
The Bank
of New York (Nominees) Limited |
|
15,618,058 |
|
32.01% |
Ferlim
Nominees Limited |
|
|
6,683,007 |
|
13.70% |
Hero
Nominees Limited |
|
|
4,725,695 |
|
9.69% |
Brewin
Nominees Limited |
|
|
3,540,298 |
|
7.26% |
Nortrust
Nominees Limited |
|
|
2,722,600 |
|
5.58% |
Smith
& Williamson Nominees Limited |
|
1,734,525 |
|
3.56% |
Rock
(Nominees) Limited |
|
|
1,716,450 |
|
3.52% |
Luna
Nominees Limited |
|
|
1,537,090 |
|
3.15% |
Investment Manager
CBRE Clarion Securities LLC was the Investment Manager up to
28 July 2014 and was entitled to an
investment management fee of 1% of the Company's NAV per annum
payable quarterly in arrears.
In addition CBRE Clarion Securities LLC was entitled to receive
a performance fee payable annually based on 10% of the Company's
total returns in excess of a hurdle rate of 8% per annum.
Schroder Property Investment Management Limited was appointed as
the new Investment Manager and Alternative Investment Fund Manager
on 2 July 2014, following the
shareholders' approval for the continuation of the Company in its
current form at the EGM held on 3 April
2014. On 24 November 2014,
Schroder Property Investment Management Limited changed its name to
Schroder Real Estate Investment Management Limited (the "Investment
Manager"). The Investment Manager is entitled to receive a
management fee of 0.85% of the Company’s NAV per annum payable
quarterly in arrears, subject to a minimum investment management
fee of £550,000 for the 12 month period from 2 July 2014. The
performance fee arrangement ceased on the appointment of the new
Investment Manager.
The Board has reviewed the performance of the Investment Manager
during the period since its appointment and considers that it
provides the Company with considerable investment management
resource and experience, thereby enhancing the ability of the
Company to achieve its investment objective. The Board therefore
considers that the Investment Manager's continued appointment up to
the date of the liquidation under the terms of the Management
Agreement, is in the best interests of shareholders.
Administration and Secretary
The Company's Administrator is Northern Trust International Fund
Administration Services (Guernsey) Limited (the
"Administrator").
Custodian
The Company's Custodian is Northern Trust (Guernsey) Limited
(the "Custodian").
Depositary
The Company entered into an agreement with Northern Trust
(Guernsey) Limited (the "Depositary") for the provision of
depository services with effect from 2 July
2014. Depositary fees are payable to Northern Trust
(Guernsey) Limited monthly in arrears at a rate of 0.03% of the Net
Asset Value of the Company below £100 million and 0.015% on Net
Assets in excess of £100 million as at the last business day of the
month subject to a minimum fee of £30,000 per annum.
Broker
Panmure Gordon & Co was appointed as the Company’s Corporate
Broker with effect from 28 May 2015,
replacing Numis Securities Limited. The appointment was made after
an extensive review process and undertaken to bring a fresh
approach and heightened activity levels required to grow the
Company. By increasing the investor base, we believe we will be
able to improve liquidity which, in turn, will make the Company
increasingly attractive to a wider range of investors.
Registrar
The Company has appointed Computershare Investor Services
(Guernsey) Limited (the "Registrar") to act as its Registrar. The
services provided in their capacity as Registrar include share
register maintenance, including the cancellation and allotment of
shares as required, handling shareholder queries and
correspondence, arranging for the payment of dividends, maintenance
and reconciliation of associated bank accounts, meeting management
for Company meetings including registering of proxy votes and
scrutineer services as and when required, and Corporate Action
services.
Greenhouse Gas Emissions
As the Company outsources its operations to third parties, it
has no greenhouse gas emissions to report.
Foreign Account Tax Compliance Act
For purposes of the US Foreign Accounts Tax Compliance Act, the
Company registered with the US Internal Revenue Service (“IRS”) as
a Guernsey reporting Foreign Financial Institution (“FFI”),
received a Global Intermediary Identification Number
(52F6YC.99999.SL.831), and can be found on the IRS FFI list under
the link http://apps.irs.gov/app/fatcaFfiList/flu.jsf. The
responsible officer is Christopher
Legge.
The Company is subject to Guernsey regulations and guidance
based on reciprocal information sharing inter-governmental
agreements which Guernsey has entered into with the United Kingdom and the United States of America. The Board will
take the necessary actions to ensure that the Company is compliant
with Guernsey regulations and guidance in this regard.
Disclosure of Information to the
Independent Auditor
Due to pending liquidation of the Company, the auditor will
resign with effect from when the Company goes into liquidation and
therefore will not be reappointed.
Each of the persons who is a Director at the date of approval of
the Financial Statements confirms that:
(1) so far as each Director is aware, there is no
relevant audit information of which the Company's auditor is
unaware; and
(2) each Director has taken all steps he ought to
have taken as a Director to make himself aware of any relevant
audit information and to establish that the Company's auditor is
aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of Section 249 of The Companies
(Guernsey) Law, 2008.
Statement of Directors'
Responsibilities
The Directors are responsible for preparing the Financial
Statements in accordance with applicable law and regulations. The
Directors believe that the Financial Statements and all reports
therein reflect a fair, balanced and understandable statement of
the Company’s affairs.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the Company financial statements in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union. Under company law the Directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that period.
In preparing these financial statements, International Accounting
Standard 1 requires that directors:
- properly select and apply accounting policies;
- present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;
- provide additional disclosures when compliance with the
specific requirements in IFRS are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
- make an assessment of the Company's ability to continue as a
going concern. As set out in Note 1, basis of preparation, the
Board do not believe that it is appropriate to prepare these
Financial Statements on a going concern basis.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the Financial Statements comply with The Companies (Guernsey) Law,
2008.
The Directors are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website. Legislation in Guernsey governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Each of the Directors, whose names are set out on the inside
front cover of this report, confirms that to the best of their
knowledge that:
- these Financial Statements have been prepared in conformity
with IFRS as adopted by the European Union, give a true and fair
view of the assets, liabilities, financial position and profit of
the Company as required by DTR 4.1.12;
- the Annual Report, taken as a whole, is fair, balanced and
understandable and provide the information necessary for the
shareholders to assess the Company’s performance, business model
and strategy; and
- the Annual Report includes information detailed in the
Chairman's Statement, the Report of the Directors, the Investment
Manager's Review and the notes to the accounts, which includes a
fair view 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, as required
by:
(a) DTR 4.1.8 of the Disclosure and Transparency Rules, being a
fair review of the Company business and a description of the
principal risks and uncertainties facing the Company; and
(b) DTR 4.1.11 of the Disclosure
and Transparency Rules, being an indication of important events
that have occurred since the end of the financial year and the
likely future development of the Company.
By Order of the Board
Crispian
Collins
Christopher Legge
Chairman
Director
28 April 2016
Corporate Governance Report
The Board is committed to high standards of corporate governance
and has implemented a framework for corporate governance which it
considers to be appropriate for an investment company in order to
comply with the principles of the UK Corporate Governance Code (the
"UK Code"). The Company is also required to comply with the Code of
Corporate Governance (the “GFSC Code”) issued by the Guernsey
Financial Services Commission.
The FRC issued a revised Code in September 2012, for reporting periods beginning
on or after 1 October 2014. The AIC
updated the AIC Code of Corporate Governance (the “AIC Code")
(including the Guernsey edition) and its Guide to Corporate
Governance (the “AIC Guide") to reflect the relevant changes to the
FRC document in February 2015. The
Board has adopted the revised code.
Compliance Statement
The UK Listing Authority requires all UK listed premium
companies to disclose how they have complied with the provisions of
the UK Code. This Corporate Governance Report, together with the
Going Concern and Viability Statement and the Statement of
Directors’ Responsibilities, indicates how the Company has complied
with the principles of good governance of the Code and its
requirements on Internal Control.
The Company is a member of the Association of Investment
Companies (the "AIC") and by complying with the AIC Code is deemed
to comply with both the UK Code and the GFSC Code.
The Board has considered the principles and recommendations of
the AIC Code, by reference to the guidance notes provided by the
AIC (the “AIC Guide”), and considers that reporting against
these will provide better information to shareholders. To ensure
ongoing compliance with these principles the Board receives a
report from the Company Secretary, at each quarterly meeting,
identifying how the Company is in compliance and identifying any
changes that might be
necessary.
The AIC Code and the AIC Guide are available on the AIC’s
website, www.theaic.co.uk. The UK Code is available in the
Financial Reporting Council’s website, www.frc.org.uk.
Throughout the year ended 31 December
2015, the Company has complied with the recommendations of
the AIC Code and thus the relevant provisions of the UK Code,
except as set out below.
The UK Code includes provisions relating to:
- the role of the Chief Executive;
- the Executive Directors’ remuneration;
- the need for an internal audit function; and
- the whistle blowing policy
For the reasons set out in the AIC Guide, and as explained in
the UK Code, the Board considers that these provisions are not
relevant to the position of the Company as it is an externally
managed investment company. The Company has therefore not reported
further in respect of these provisions.
The Directors are non-executive and the Company does not have
employees, hence no Chief Executive or whistle-blowing policy is
required. The Board is satisfied that any relevant issues can be
properly considered by the Board.
There have been no other instances of non-compliance, other than
those noted above. However the Directors have satisfied themselves
that the Company's service providers have appropriate
whistle-blowing policies and procedures and have received
confirmation from the service providers that nothing has arisen
under those policies and procedures which should be brought to the
attention of the Board. Details of compliance are noted
below. The absence of an internal audit function is discussed in
the Audit Committee Report.
Operation and Composition of the
Board
Composition
The composition of the Board is set out in the Strategic
Report.
The Board does not consider it appropriate to appoint a Senior
Independent Director because they are all deemed to be independent
by the Company. The Board considers it has appropriate balance of
diverse skills and experience, independence and knowledge of the
Company and the wider sector, to enable it to discharge its duties
and responsibilities effectively and that no individual or group of
individuals dominates decision making. The Chairman is responsible
for leadership of the Board and ensuring its effectiveness.
There are provisions in the Company’s Articles of Incorporation
which requires Directors to seek re-election on a periodic basis.
There is no limit on length of service, nor is there any upper age
restriction on Directors.
The Board considers that there is significant benefit to the
Company arising from continuity and experience among directors, and
accordingly does not intend to introduce restrictions based on age
or tenure. It does, however, believe that shareholders should be
given the opportunity to review membership of the Board on a
regular basis.
Chairman
The Chairman is Mr Collins. The Chairman of the Board must be
independent for the purposes of Chapter 15 of the Listing Rules. Mr
Crispian Collins is considered
independent because he:
- has no current or historical employment with the Investment
Manager; and
- has no current directorships in any other investment funds
managed by the Investment Manager.
Role of the Board
The role of the Board is set out in the Strategic Report.
The Board has contractually delegated responsibility for the
management of its investment portfolio, the arrangement of
custodial and depositary services and the provision of accounting
and company secretarial services.
The Board needs to ensure that the Annual Report, taken as a
whole, is fair, balanced and understandable and provide the
information necessary for Shareholders to assess the Company’s
performance, business model and strategy. In seeking to achieve
this, the Directors have set out the Company’s investment objective
and policy and have explained how the Board and its delegated
Committees operate and how the Directors review the risk
environment within which the Company operates and set appropriate
risk controls. Furthermore, throughout the Annual Report the Board
has sought to provide further information to enable Shareholders to
have a fair, balanced and understandable view.
Training and Development
On appointment, Directors receive a full, formal and tailored
induction. Directors are also provided on a regular basis with key
information on the Company’s policies, regulatory and statutory
requirements and internal controls. Changes affecting Directors’
responsibilities are advised to the Board as they arise. Directors
may also attend training and industry seminars and training and
development needs are included as part of the evaluation process
and are agreed with the Chairman.
Conflicts of Interest
The Board has approved a policy on Directors’ conflicts of
interest. Under this policy, Directors are required to disclose all
actual and potential conflicts of interest to the Board as they
arise for consideration and approval. The Board may impose
restrictions or refuse to authorise such conflicts if deemed
appropriate.
Board Evaluation
The AIC Code requires external evaluation of Board performance
every three years. The Board undertook an externally facilitated
evaluation during 2013 by Trust Associates, having commissioned the
report the previous year. The report of the evaluation confirmed
that the Company observes a high standard of Corporate Governance
and, accordingly, the Board has conducted self-appraisals in
2015.
The Directors consider how the Board functions as a whole taking
balance of skills, experience and length of service into
consideration and also reviews the individual performance of its
members.
This process is conducted by the Chairman reviewing with all the
Directors their performance, contribution and commitment to the
Company. The performance of the Chairman is evaluated by the
other independent Directors.
During a Board Meeting held on 21 April
2015 the Chairman and Directors reviewed the board
performance. The Chairman was satisfied that the Directors
complemented each other and worked well as a Board.
Directors' Liability Insurance and
Indemnity
Directors' and Officers’ liability insurance cover is maintained
by the Company on behalf of the Directors.
Election of Directors
The election of Directors is set out in the Report of the
Directors.
Directors' Attendance at Meetings
The Company holds a minimum of four Board meetings per year to
discuss general management, structure, finance, corporate
governance, marketing, risk management, compliance, asset
allocation and gearing, contracts and performance. The quarterly
Board meetings are the principal source of regular information for
the Board enabling it to determine policy and to monitor
performance, compliance and controls but these meetings are
supplemented by communication and discussions throughout the
year.
A representative of the Investment Manager, Administrator and
Depositary attends each Board meeting either in person or by
telephone thus enabling the Board to fully discuss and review the
Company’s operation and performance. Each Director has direct
access to the Investment Manager and Company Secretary and may, at
the expense of the Company, seek independent professional advice on
any matter.
The table below sets out the number of Board and Audit Committee
meetings held during the year ended
31 December 2015 and, where
appropriate, the number of such meetings attended by each
Director.
|
|
|
|
Number
of |
Crispian |
Christopher |
Richard |
Richard |
Robert |
|
|
|
|
Meetings held |
Collins |
Legge |
Saunders |
Sutton |
Houston |
Board
Meetings |
|
|
5 |
5 |
5 |
3 |
5 |
3 |
Audit
Committee Meetings |
2 |
2 |
2 |
2 |
2 |
1 |
Adhoc
Meetings |
|
|
2 |
2 |
2 |
1 |
2 |
1 |
Mr Ash retired as a Director and Mr Legge was appointed as a
Director on 1 January 2015. Mr
Houston was appointed as a Director on 1
July 2015. Mr Saunders retired as a Director on 30 September 2015.
The Chairman’s commitments have not changed during the year.
Refer to the Directors section.
Directors’ interests
Directors’ interests are set out in the Report of the Directors
section.
Board Committees and their
Activities
Terms of Reference
All Terms of Reference of Committees are available from the
Company Secretary upon request.
Audit Committee
The Company has established an Audit Committee with formal
duties and responsibilities. This Committee meets formally at least
twice a year and each meeting is attended by the independent
auditor and Administrator. The Company's Audit Committee is
comprised of the entire Board. During the year ended 31 December 2015 the Audit Committee was chaired
by Mr Legge.
A report of the Audit Committee detailing its responsibilities
and its key activities is presented in the Audit Committee
Report.
Remuneration, Management Engagement
and Nominations Committees
The Board does not have a separate remuneration, management
engagement or nomination committees because these functions are
carried out as part of the regular Board business. It was not
necessary for this Company to appoint a Remuneration Committee as
there were no Executive Directors. A Remuneration Report prepared
by the Board is presented in the Directors’ Remuneration Report.
Directors’ remuneration is considered on an annual basis.
Relations with Shareholders
The Board welcomes shareholders’ views and places great
importance on communication with its shareholders. The Board
receives regular reports on the views of its shareholders from the
Company’s broker, Panmure Gordon & Co. and from the Investment
Manager.
The Chairman and other Directors are available to meet
shareholders if required.
In addition, the Company maintains a website which contains
comprehensive information, including regulatory announcements,
share price information, financial reports, investment objectives
and strategy, investor contracts and information on the Board.
The Investment Manager provides a monthly newsletter which is
available on the Company’s website.
Anti-Bribery Policy
The Company continues to be committed to carrying out its
business fairly, honestly and openly and continues to operate an
anti-bribery policy.
Internal Control and Risk Management
Systems
The Board is ultimately responsible for establishing and
maintaining the Company’s system of internal controls and for
maintaining and reviewing its effectiveness. The Company’s risk
matrix continues to be the basis of the Company’s risk management
process in establishing the Company’s system of internal financial
and reporting control. The risk matrix is prepared and maintained
by the Board which initially identifies the risks facing the
Company and then collectively assesses the likelihood of each risk,
the impact of those risks and the strength of the controls
operating over each risk. The system of internal controls is
designed to manage rather than to eliminate the risk of failure to
achieve business objectives and by their nature can only provide
reasonable and not absolute assurance against misstatement and
loss. These controls aim to ensure that assets of the Company are
safeguarded, proper accounting records are maintained and the
financial information for publication is reliable. The Board uses a
formal risk assessment matrix to identify and monitor business
risks. These arrangements will continue to the date of the
Company’s liquidation.
The Board has delegated the management of the Company’s
investment portfolio and the administration, registrar and
corporate secretarial functions including the independent
calculation of the Company’s NAV and the production of the Annual
Report which are independently audited. Whilst the Board delegates
responsibility, it retains accountability for the functions it
delegates and is responsible for the systems of internal control.
Formal contractual agreements have been put in place between the
Company and providers of these services. On an ongoing basis board
reports are provided at each quarterly board meeting from the
Investment Manager, Administrator, Registrar and Company Secretary;
and a representative from the Investment Manager is asked to attend
these meetings. These arrangements will continue to the date of the
Company’s liquidation.
In accordance with Listing Rule 15.6.2 (2) R and having formally
appraised the performance and resources of the Investment Manager,
in the opinion of the Directors their continuing appointment of the
Investment Manager on their terms agreed is in the interests of the
Company and the Shareholders.
In common with most investment companies, the Company does not
have an internal audit function. All of the Company’s management
functions are delegated to the Investment Manager, Administrator,
Registrar and Company Secretary which have their own internal audit
and risk assessment functions.
In compliance with provision C.2.1 of the UK Corporate
Governance Code, the board confirms that it has undertaken a robust
assessment of the principal risks facing the Company, including
those that would threaten its business model, future performance,
solvency or liquidity. However, in making this statement, the
Board also draws attention to the plan for the liquidation of the
Company during Q2 2016 referred to in the Chairman’s Statement and
in the Strategic Report. In addition, the board
regularly reviews the effectiveness of the Company's risk
management and internal control systems. The board's monitoring
covers all material controls, including financial, operational and
compliance controls. It is based principally on reviewing reports
from management to consider whether significant risks are
identified, evaluated, managed and controlled and whether any
significant weaknesses are promptly remedied and indicate a need
for more extensive monitoring. The board has also performed a
specific assessment for the purpose of this annual report. This
assessment considers all significant aspects of risk management and
internal control arising during the period covered by the report
including the work of internal audit. The audit committee
assists the board in discharging its review responsibilities.
During the course of its review of the risk management and
internal control systems, the board has not identified nor been
advised of any failings or weaknesses which it has determined to be
significant. Therefore a confirmation in respect of necessary
actions has not been considered appropriate.
Principal risks and uncertainties are set out in the Strategic
Report.
By Order of the Board
Crispian
Collins
Christopher Legge
Chairman
Director
28 April 2016
Audit Committee Report
Below, we present the Audit Committee Report for 2015, setting
out the responsibilities of the Audit Committee and its key
activities in 2015. As in previous years, the Audit Committee has
reviewed the Company's financial reporting, the independence and
effectiveness of the independent auditor and the internal control
and risk management systems of service providers. The Audit
Committee considered whether the Annual Report is fair, balanced
and understandable and whether they provided the necessary
information for shareholders to assess the Company’s performance,
business model and strategy before recommending them to the Board
for approval. In order to assist the Audit Committee in discharging
these responsibilities, regular reports are received from the
Investment Manager, Administrator and independent auditor. The
Auditor will resign upon the Company going into liquidation.
A member of the Audit Committee has been available at each AGM
to respond to any shareholder questions on the activities of the
Audit Committee. However, as shareholders approved the scheme for
liquidation as set out in the Chairman’s Statement, no AGM will be
required in 2016.
Responsibilities
The Audit Committee reviews and recommends to the Board, the
Financial Statements of the Company and is the forum through which
the independent auditor reports to the Board of Directors. The
independent auditor and the Audit Committee will meet together
without representatives of either the Administrator or Investment
Manager being present if either considers this to be necessary.
The role of the Audit Committee includes:
- monitoring the integrity of the Financial Statements of the
Company and any formal announcements relating to the Company’s
financial performance, and reviewing significant financial
reporting judgements;
- reviewing and reporting to the Board on the significant issues
and judgements made in the preparation of the Company's published
Financial Statements, (having regard to matters communicated by the
independent auditor) preliminary announcement, significant
financial returns to regulators and other financial
information;
- considering the appropriateness of accounting policies and
practices including critical judgement areas;
- reviewing and considering the UK Code, AIC Code, FRC Guidance
on Audit Committees;
- monitoring and reviewing the quality and effectiveness of the
independent auditor and their independence. This includes meeting
regularly with the independent auditor to discuss the audit plan,
the subsequent audit report and considering the level of fees for
both audit and non-audit work, and monitoring and reviewing the
auditor independence, objectivity, expertise, resources and
qualifications;
- considering and making recommendations to the Board on the
appointment, reappointment, replacement and remuneration to the
Company's independent auditor;
- reviewing the Company's procedures for prevention, detection
and reporting of fraud, bribery and corruption; and
- monitoring and reviewing the internal control and risk
management systems of the service providers together with the need
for an Internal Audit function.
The Audit Committee's full terms of reference can be obtained by
contacting the Company Secretary.
Financial Reporting
The Audit Committee's review of the Half Yearly Financial Report
and Audited Annual focused on the valuation and ownership of
investments.
Valuation of Investments
The Company’s investments had a fair value of £64,771,000 as at
31 December 2015 (2014: £61,859,000)
and represented the majority of the net assets of the Company. The
investments are all listed and the valuation of the investments is
in accordance with the requirements of IFRS as adopted by the
European Union. The Audit Committee considered the fair value of
the investments held by the Company as at 31
December 2015 to be reasonable based on information provided
by the Investment Manager and Administrator. All prices are
confirmed to independent pricing sources as at 31 December 2015 by the Administrator and are
subject to review process by the Administrator and oversight by the
Investment Manager.
Ownership of Investments
The Company’s investment holdings are reconciled to independent
reports from the Custodian by the Administrator with any
discrepancies being fully investigated and reconciled by the
Administrator. The Audit Committee therefore consider the ownership
of the investments held by the Company as at 31 December 2015 to be reasonable based on
a review of information provided by the Investment Manager,
Custodian and Administrator.
The Independent Auditor has confirmed to the Audit Committee
that no material misstatements were found in the course of its
work. Furthermore, the Investment Manager and Administrator
confirmed to the Committee that they were not aware of any material
misstatements including matters relating to presentation.
The Audit Committee confirms that it is satisfied that the
independent auditor has fulfilled its responsibilities with
diligence and professional scepticism.
The Audit Committee advised the Board that, to the best of their
knowledge, this Financial Statements, taken as a whole, is fair,
balanced and understandable.
The Audit Committee has assessed the appropriateness of the
accounting policies and practices adopted by the Company together
with the clarity of disclosures included in the Financial
Statements. Following a review of the presentations and reports
from the Administrator and consulting where necessary with the
independent auditor, the Audit Committee is satisfied that the
Financial Statements appropriately address the critical judgements
and key estimates (both in respect to the amounts reported and the
disclosures). The Audit Committee is also satisfied that the
significant assumptions used for determining the value of assets
and liabilities have been appropriately scrutinised, challenged and
are sufficiently robust.
Risk Management
The Audit Committee continued to consider the process for
managing the risk of the Company and its service providers. Risk
management procedures for the Company, as detailed in the Company's
risk assessment matrix, were reviewed and approved by the Audit
Committee. Regular reports are received from the Investment Manager
and Administrator on the Company’s risk evaluation process and
reviews.
Fraud, Bribery and Corruption
The Audit Committee continues to monitor the fraud, bribery and
corruption policies of the Company. The Board receives a
confirmation from all service providers that there have been no
instances of fraud, bribery or corruption.
The Independent Auditor
Deloitte LLP has been the Independent Auditor from the date of
the initial listing on the London Stock Exchange. The recent
revisions to the UK Code introduced a recommendation that the
external audit be put out to tender every ten years. However, this
will not be applicable due the approved proposal to liquidate the
Company.
Independence, Objectivity and Fees
The independence and objectivity of the independent auditor is
reviewed by the Audit Committee which also reviews the terms under
which the independent auditor is appointed to perform non-audit
services. The Audit Committee has established pre-approval
policies and procedures for the engagement of Deloitte LLP to
provide audit, assurance and tax services. These are that the
independent auditor may not provide a service which:
- places them in a position to audit their own work;
- creates a mutuality of interest;
- results in the independent auditor developing close
relationships with service providers of the Company;
- results in the independent auditor functioning as a manager or
employee of the Company; or
- puts the independent auditor in the role of advocate of the
Company.
As a general rule, the Company does not utilise independent
auditors for internal audit purposes, secondments or valuation
advice. Services which are in the nature of audit, such as tax
compliance, tax structuring, private letter rulings, accounting
advice, quarterly reviews and disclosure advice are normally
permitted but must be pre-approved where fees are likely to be
above £25,000.
The following table summarises the remuneration paid to Deloitte
LLP for audit and non-audit services during the years ended
31 December 2015 and 31 December 2014:
|
|
|
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
|
|
|
£000's |
£000's |
Statutory
Audit |
|
|
|
|
|
|
28 |
30 |
|
|
|
|
|
|
|
|
|
|
Total
audit fees |
|
|
|
|
|
|
28 |
30 |
|
|
|
|
|
|
|
|
|
|
Interim
review |
|
|
|
|
|
|
14 |
14 |
Foreign
Account Tax Compliance Act |
|
|
|
|
- |
3 |
|
|
|
|
|
|
|
|
|
|
Total
non-audit related fees |
|
|
|
|
14 |
17 |
|
|
|
|
|
|
|
|
|
|
Total
fees |
|
|
|
|
|
|
42 |
47 |
In line with the policies and procedures above, the Audit
Committee does not consider that the provision of these non-audit
services, which comprised of independent review of the Half Yearly
Financial Report, Foreign Account Tax Compliance Act ("FATCA")
advice, and withholding tax claims to be a threat to the
objectivity and independence of the independent auditor.
Deloitte LLP also have safeguards in place to ensure objectivity
and independence. These include:
- Tax work is carried out by teams independent of the audit team
and ethical walls ensure that no employee works in both teams;
and
- Review and challenge of key decisions by the Engagement Quality
Review Partner and engagement quality control review by a member of
the Independent Professional Standards Review Team.
When considering the effectiveness and independence of the
Independent Auditor, the Audit Committee also takes account of
factors such as:
- The audit plan presented to them before each audit;
- The post audit report including variations from the original
plan;
- Changes in audit personnel;
- The Independent Auditor's own internal procedures to identify
threats to independence; and
- Feedback from both the Investment Manager and Administrator
evaluating the performance of the team.
The Audit Committee has examined the scope and results of the
audit, its cost effectiveness and the independence and objectivity
of the independent auditor, with particular regard to non-audit
fees, and is satisfied that an effective audit has been completed,
that the scope of the audit was appropriate and significant
judgements have been challenged robustly. It also considers
Deloitte LLP, as independent auditor, to be independent of the
Company.
Reappointment of the Independent
Auditor
Due to pending liquidation of the Company, the auditor will
resign with effect from when the Company goes into liquidation and
therefore will not be reappointed.
Internal Control and Risk Management
Systems
The Audit Committee, after consultation with the Investment
Manager and independent auditor, considers the key risk of
misstatement in its Financial Statements to be the override of
controls by its service providers, the Investment Manager or the
Administrator.
The Audit Committee reviews and examines externally prepared
assessments of the control environment in place at the Investment
Manager and the Administrator. No significant failings or
weaknesses were identified in these reports.
The Audit Committee has also reviewed the need for an internal
audit function. The Audit Committee has decided that the systems
and procedures employed by the Investment Manager and the
Administrator, including their internal audit functions, provide
sufficient assurance that a sound system of internal control, which
safeguards the Company’s assets, is maintained. An internal audit
function specific to the Company is therefore considered
unnecessary.
For any questions on the activities of the Audit Committee not
addressed in the foregoing, a member of the Audit Committee remains
available to attend each AGM to respond to such questions. However,
as shareholders approved the scheme for liquidation as set out in
the Chairman’s Statement, no AGM will be required.
Christopher Legge
Chairman, Audit Committee
28 April 2016
Directors’ Remuneration Report
Introduction
As shareholders approved the scheme for liquidation as set out
in the Chairman’s Statement, there will be no AGM and therefore no
ordinary resolution for the approval of the annual remuneration
report will be put to the shareholders.
Policy on Remuneration of Directors
All Directors are non-executive and a Remuneration Committee has
not been established. The Board as a whole considers matters
relating to the Directors’ remuneration. No advice or services were
provided by any external person in respect of its consideration of
the Directors’ remuneration.
The Company’s policy is that the fees payable to the Directors
should reflect the time spent by the Directors on the Company’s
affairs and the responsibilities borne by the Directors and be
sufficient to attract, retain and motivate directors of a quality
required to run the Company successfully. The Chairman of the Board
is paid a higher fee in recognition of his additional
responsibilities, as is the Chairman of the Audit Committee. The
policy is to review fee rates periodically, although such a review
will not necessarily result in any changes to the rates, and
account is taken of fees paid to directors of comparable
companies.
There are no long term incentive schemes provided by the Company
and no performance fees are paid to Directors.
No Director has a service contract with the Company but each
Director is appointed by a letter of appointment which sets out the
main terms of their appointment. Directors hold office until they
retire by rotation or cease to be a director in accordance with the
Articles of Incorporation, by operation of law or until they
resign.
Component Parts of the Directors’
Remuneration
The Directors of the Company are remunerated for their services
at such a rate as the Directors determine provided that the
aggregate amount of such fees does not exceed £150,000
(31 December 2014: £150,000) per
annum.
Directors are remunerated in the form of fees, payable quarterly
in arrears, to the Director personally. No Directors have been paid
additional remuneration outside their normal Directors’ fees and
expenses. Directors fees have not increased during the year (2014:
no increase during the year).
Fees Paid to Directors
For the years ended 31 December
2015 and 31 December 2014
Directors’ fees paid were:
|
|
|
|
|
|
|
2015 |
|
2014 |
Crispian
Collins |
|
|
|
|
|
£35,000 |
|
£35,000 |
Chris
Legge |
|
|
|
|
|
£30,000 |
|
£0 |
Richard
Sutton |
|
|
|
|
|
£27,500 |
|
£27,500 |
Richard
Saunders |
|
|
|
|
£20,625 |
|
£27,500 |
Robert
Houston |
|
|
|
|
|
£13,750 |
|
£0 |
Trevor
Ash |
|
|
|
|
|
£0 |
|
£30,000 |
Mr Ash retired as a Director on 1 January
2015.
Mr Legge was appointed as a Director on 1
January 2015 and receives £30,000 per annum as a Director
and Chairman of the Audit Committee.
Mr Houston was appointed as a Director on 1 July 2015 and receives £27,500 per annum as a
Director.
Mr Saunders retired as a Director on 30
September 2015.
By Order of the Board
Crispian
Collins
Christopher Legge
Chairman
Director
28 April 2016
Report of the Depositary to the
Members of Schroder Global Real Estate Securities Limited
Northern Trust (Guernsey) Limited has been appointed as
Depositary to Schroder Global Real Estate Securities Limited (the
“Company”) in accordance with the requirements of Article 36 and
Articles 21(7), (8) and (9) of the Directive 2011/61/EU of the
European Parliament and of the Council of 8
June 2011 on Alternative Investment Fund Managers and
amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC)
No 1060/2009 and (EU) No 1095/2010 (the “AIFM Directive”).
We have enquired into the conduct of Schroder Real Estate
Investment Management Ltd (the “AIFM”) and the Company for the
financial year ending 31 December
2015, in our capacity as Depositary to the Company.
This report including the review provided below has been
prepared for and solely for the Shareholders in the Company. We do
not, in giving this report, accept or assume responsibility for any
other purpose or to any other person to whom this report is
shown.
Our obligations as Depositary are stipulated in the relevant
provisions of the AIFM Directive and the relevant sections of
Commission Delegated Regulation (EU) No 231/2013 (collectively the
“AIFMD legislation”).
Amongst these obligations is the requirement to enquire into the
conduct of the AIFM and the Company and their delegates in each
annual accounting period. We have therefore enquired into the
conduct of the AIFM for the period ending 31
December 2015 in our capacity as Depositary to the
Company.
Our report shall state whether, in our view, the Company has
been managed in that period in accordance with the AIFMD
legislation. It is the overall responsibility of the AIFM and the
Company to comply with these provisions. If the AIFM, the Company
or their delegates have not so complied, we as the Depositary will
state why this is the case and outline the steps which we have
taken to rectify the situation.
Basis of Depositary Review
The Depositary conducts such reviews as it, in its reasonable
discretion, considers necessary in order to comply with its
obligations and to ensure that, in all material respects, the
Company has been managed (i) in accordance with the limitations
imposed on its investment and borrowing powers by the provisions of
its constitutional documentation and the appropriate regulations
and (ii) otherwise in accordance with the constitutional
documentation and the appropriate regulations. Such reviews
vary based on the type of the Company, the assets in which the
Company invests and the processes used, or experts required, in
order to value such assets.
Review
In our view, the Company has been managed during the period, in
all material respects:
(i)
in accordance with the limitations imposed on the investment and
borrowing powers of the Company by the constitutional document; and
by the AIFMD legislation; and
(ii)
otherwise in accordance with the provisions of the constitutional
document; and the AIFMD legislation.
For and on behalf of
Northern Trust (Guernsey) Limited
28 April 2016
Independent Auditor’s Report to the
Members of Schroder Global Real Estate Securities Limited
Opinion on Financial Statements
of Schroder Global Real Estate Securities Limited (the
“Company”) |
In our opinion the
Financial Statements:
· give a true and fair view of the
state of the Company’s affairs as at 31 December 2015 and of its
profit for the year then ended;
· have been properly prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union; and
· have been prepared in accordance
with the requirements of the Companies (Guernsey) Law,
2008.
The Financial Statements comprise the Statement of Comprehensive
Income, the Statement of Financial Position, the Cash Flow
Statement, the Statement of Changes in Equity and the related Notes
1 to 22. The financial reporting framework that has been
applied in their preparation is applicable law and IFRSs as adopted
by the European Union. |
Emphasis of matter - Financial statements prepared other than on
a going concern basis |
We have considered the adequacy of the disclosure made in Note 1 to
the financial statements, which explains that the financial
statements have been prepared on a basis other than that of a going
concern. As described in Note 1 to the financial statements, the
shareholders have approved the scheme for liquidation. Our opinion
is not modified in respect of this matter. |
Going concern and the directors’
assessment of the principal risks that would threaten the solvency
or liquidity of the Company |
We have reviewed the
directors’ statement regarding the appropriateness of the going
concern basis of accounting contained within Note 1 to the
Financial Statements.
Aside from the matter disclosed in the emphasis of matter paragraph
above, we have nothing material to add or draw attention to in
relation to:
• the
directors' confirmation in the Strategic Report that they have
carried out a robust assessment of the principal risks facing the
Company, including those that would threaten its business model,
future performance, solvency or liquidity;
• the
disclosures in the Corporate Governance Report that describe those
risks and explain how they are being managed or mitigated;
• the
directors’ statement in note 1 to the financial statements about
whether they considered appropriate to adopt the going concern
basis of accounting in preparing them. |
Independence |
We are required to
comply with the Financial Reporting Council’s Ethical Standards for
Auditors and we confirm that we are independent of the company and
we have fulfilled our other ethical responsibilities in accordance
with those standards. We also confirm we have not provided any of
the prohibited non-audit services referred to in those
standards. |
Our assessment of risks of
material misstatement |
The assessed risks of material
misstatement described below are those that had the greatest effect
on our audit strategy, the allocation of resources in the audit and
directing the efforts of the engagement team: |
Risk |
How the scope of our audit
responded to the risk |
Valuation of the
Company’s investments
Investments of £64.8 million (2014: £61.9 million) are classified
as Level 1 investments at year end as disclosed in Note 19. There
is a risk that the Company’s pricing methodology does not
accurately reflect the potential exit price at the year-end date.
This risk is heightened when current market conditions may impair
the liquidity of the investment portfolio as an element of judgment
may need to be incorporated into the valuation. |
We evaluated the design and implementation of controls around the
valuation of investments.
We tested 100% of the year-end prices to prices obtained
independently from reliable third party sources. In addition, the
liquidity of the portfolio was considered as at the year-end date
to assess whether any adjustment was required to the valuation for
illiquid or otherwise suspended from trading equities.
Further, we considered whether the impending liquidation of the
Company had any material impact on the valuation of the investments
as at the statement of financial position date. |
Ownership of the
Company’s investments
There is a risk that the Company has not retained the rights and
obligations of its investment portfolio, or that the investment
portfolio is not recognised on a trade date basis which may result
in gains and losses on investments being recognised in the
incorrect period. |
We evaluated the design and implementation of controls around the
ownership of investments.
We tested ownership by confirming all positions with the custodian
on both a trade date and settlement date basis, and reconciled the
trade date basis to the Company’s records in order to test for the
recognition of gains and losses in the correct period. |
The description of risks above should be read in conjunction
with the significant issues considered by the Audit Committee
discussed in the Audit Committee Report.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Our application of
materiality |
We define materiality
as the magnitude of misstatement in the financial statements that
makes it probable that the economic decisions of a reasonably
knowledgeable person would be changed or influenced. We use
materiality both in planning the scope of our audit work and in
evaluating the results of our work.
We determined materiality for the Company to be £0.66 million
(2014: £0.62 million), which is approximately 1% (2014: 1%) of
equity. As the investment objective of the Company is primarily to
invest for capital appreciation, we consider the net asset value of
the Company to be a key performance indicator for shareholders.
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of £13,100 (2014:
£12,400), as well as differences below that threshold that, in our
view, warranted reporting on qualitative grounds. We also
report to the Audit Committee on disclosure matters that we
identified when assessing the overall presentation of the financial
statements. |
An overview of the scope of our
audit |
Our audit was scoped by
obtaining an understanding of the Company and its environment,
including internal control, and assessing the risks of material
misstatement. Audit work to respond to the risks of material
misstatement was performed directly by the audit engagement
team.
The administrator maintains the books and records of the Company
including accounting and financial reporting services. Our audit
therefore included obtaining an understanding of this service
organisation and its relationship with the Company. |
Matters on which we
are required to report by exception |
|
Adequacy of explanations received
and accounting records |
Under the Companies
(Guernsey) Law, 2008 we are required to report to you if, in our
opinion:
· we have not received all the
information and explanations we require for our audit; or
· proper accounting records have not
been kept; or
· the financial statements are not in
agreement with the accounting records.
We have nothing to report in respect of these matters. |
Corporate Governance
Statement |
Under the Listing Rules
we are also required to review the part of the Corporate Governance
Statement relating to the Company’s compliance with certain
provisions of the UK Corporate Governance Code. We have nothing to
report arising from our review. |
Our duty to read other
information in the Annual Report |
Under International
Standards on Auditing (UK and Ireland), we are required to report
to you if, in our opinion, information in the annual report is:
· materially inconsistent with the
information in the audited financial statements; or
· apparently materially incorrect
based on, or materially inconsistent with, our knowledge of the
Company acquired in the course of performing our audit; or
· otherwise misleading.
In particular, we are required to consider whether we have
identified any inconsistencies between our knowledge acquired
during the audit and the directors’ statement that they consider
the annual report is fair, balanced and understandable and whether
the annual report appropriately discloses those matters that we
communicated to the audit committee which we consider should have
been disclosed. We confirm that we have not identified any such
inconsistencies or misleading statements. |
Respective responsibilities of
directors and auditor |
As explained more fully
in the Statement of Directors’ Responsibilities, the directors are
responsible for the preparation of the financial statements and for
being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). We also comply with
International Standard on Quality Control 1 (UK and Ireland). Our
audit methodology and tools aim to ensure that our quality control
procedures are effective, understood and applied. Our quality
controls and systems include our dedicated professional standards
review team and independent partner reviews.
This report is made solely to the Company’s members, as a body, in
accordance with Section 262 of the Companies (Guernsey) Law,
2008. Our audit work has been undertaken so that we might
state to the Company’s members those matters we are required to
state to them in an auditor’s report and/or those further matters
we have expressly agreed to report to them on in our engagement
letter and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as a body,
for our audit work, for this report, or for the opinions we have
formed. |
Scope of the audit of the
financial statements |
An audit involves obtaining evidence
about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by
fraud or error. This includes an assessment of: whether the
accounting policies are appropriate to the Company’s circumstances
and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the
directors; and the overall presentation of the financial
statements. In addition, we read all the financial and
non-financial information in the annual report to identify material
inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge acquired
by us in the course of performing the audit. If we become
aware of any apparent material misstatements or inconsistencies we
consider the implications for our report. |
Nicola Sarah Paul FCA
for and on behalf of Deloitte LLP
Chartered Accountants and Recognised Auditor
Guernsey
28 April,
2016
Statement of Comprehensive Income
For the year ended 31 December
2015
|
|
2015 |
|
2014 |
|
|
Revenue |
Capital |
Total |
|
Revenue |
Capital |
Total |
|
Notes |
£'000 |
£'000 |
£'000 |
|
£'000 |
£'000 |
£'000 |
Gains on investments
designated at fair value through profit or loss |
2 |
- |
3,978 |
3,978 |
|
- |
11,903 |
11,903 |
Net foreign currency
gains/(losses) |
|
- |
3 |
3 |
|
- |
(679) |
(679) |
Income from
investments |
3 |
2,110 |
- |
2,110 |
|
2,412 |
- |
2,412 |
Total
income |
|
2,110 |
3,981 |
6,091 |
|
2,412 |
11,224 |
13,636 |
Investment management
fee |
4 |
(166) |
(387) |
(553) |
|
(182) |
(426) |
(608) |
Other administrative
expenses |
5 |
(1,032) |
- |
(1,032) |
|
(1,026) |
- |
(1,026) |
Profit before
finance costs |
|
|
|
|
|
|
|
|
and
taxation |
|
912 |
3,594 |
4,506 |
|
1,204 |
10,798 |
12,002 |
Finance costs |
6 |
- |
- |
- |
|
(11) |
(25) |
(36) |
Profit before
taxation |
|
912 |
3,594 |
4,506 |
|
1,193 |
10,773 |
11,966 |
Taxation |
7 |
(436) |
- |
(436) |
|
(586) |
- |
(586) |
Net profit and
total comprehensive income |
|
476 |
3,594 |
4,070 |
|
607 |
10,773 |
11,380 |
Earnings per
share |
9 |
0.98p |
7.37p |
8.35p |
|
1.21p |
21.41p |
22.62p |
The "Total" column of this statement represents the Company’s
Statement of Comprehensive Income, prepared in accordance with IFRS
as adopted by the European Union. The "Revenue and Capital" columns
represent supplementary information prepared under guidance issued
by the Association of Investment Companies.
All income is attributable to equity holders of the Company.
There are no minority interests.
All revenue and capital items in the above statement derive from
discontinuing operations.
The Notes form an integral part of these Financial
Statements.
Statement of Changes in Equity
For the year ended 31 December
2015
|
|
Share |
Other |
Capital |
Revenue |
|
|
|
capital |
reserve |
reserves |
reserve |
Total |
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
At 31 December
2013 |
|
- |
64,155 |
(7,043) |
3,261 |
60,373 |
Repurchase and
cancellation of ordinary shares |
14 |
- |
(7,819) |
- |
- |
(7,819) |
Net (loss)/profit |
|
- |
(1,130) |
11,903 |
607 |
11,380 |
Dividends paid in the
year |
8 |
- |
- |
- |
(1,791) |
(1,791) |
At 31 December
2014 |
|
- |
55,206 |
4,860 |
2,077 |
62,143 |
Net (loss)/profit |
|
- |
(384) |
3,978 |
476 |
4,070 |
Dividends paid in the
year |
8 |
- |
- |
- |
(732) |
(732) |
At 31 December
2015 |
|
- |
54,822 |
8,838 |
1,821 |
65,481 |
Under The Companies (Guernsey) Law, 2008, the Company may pay
dividends out of capital and revenue reserves, subject to a
solvency test.
The Notes form an integral part of these Financial
Statements.
Statement of Financial Position
As at 31 December 2015
|
|
|
2015 |
|
2014 |
|
|
Notes |
£'000 |
|
£'000 |
Non current
assets |
|
|
|
|
|
Investments at fair value through profit or loss |
10 |
- |
|
61,859 |
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
Investments |
|
10 |
64,771 |
|
- |
Receivables |
|
12 |
285 |
|
247 |
Cash and cash
equivalents |
|
|
1,144 |
|
379 |
|
|
|
66,200 |
|
626 |
|
|
|
|
|
|
Total
assets |
|
|
66,200 |
|
62,485 |
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Payables |
|
13 |
(719) |
|
(342) |
Total current
liabilities |
|
|
(719) |
|
(342) |
Total assets less
current liabilities |
|
|
65,481 |
|
62,143 |
Net assets |
|
|
65,481 |
|
62,143 |
|
|
|
|
|
|
Equity attributable
to equity holders |
|
|
|
|
|
Share capital |
|
14 |
- |
|
- |
Other reserve |
|
15 |
54,822 |
|
55,206 |
Capital reserves |
|
15 |
8,838 |
|
4,860 |
Revenue reserve |
|
15 |
1,821 |
|
2,077 |
Total equity
shareholders' funds |
|
|
65,481 |
|
62,143 |
|
|
|
|
|
|
Net asset value per
share |
|
16 |
134.22p |
|
127.38p |
These Financial Statements were approved and authorised for
issue by the Board of Directors on 28 April
2016 and signed on its behalf by:
Crispian
Collins
Christopher Legge
Chairman
Director
The Notes form an integral part of these Financial
Statements.
Registered in Guernsey
Company registration
number:
44714
Cash Flow Statement
For the year ended 31 December
2015
|
|
|
|
|
|
|
2015 |
|
2014 |
|
|
|
|
|
|
|
£'000 |
|
£'000 |
Operating activities |
|
|
|
|
|
|
|
|
Profit
before finance costs and taxation |
|
|
|
4,506 |
|
12,002 |
Gains on
investments at fair value through profit or loss |
|
|
(3,981) |
|
(11,224) |
Net sales
of investments at fair value through profit or loss |
|
1,109 |
|
15,755 |
(Increase)/decrease in receivables |
|
|
|
(84) |
|
228 |
Increase
in payables |
|
|
|
|
|
383 |
|
3 |
Overseas
taxation paid |
|
|
|
|
(436) |
|
(586) |
Net
cash inflow from operating activities before interest |
|
1,497 |
|
16,178 |
Interest
paid |
|
|
|
|
|
- |
|
(36) |
Net
cash inflow from operating activities |
|
|
|
1,497 |
|
16,142 |
Financing activities |
|
|
|
|
|
|
|
|
Repurchase
of shares into Treasury |
|
|
|
- |
|
(7,819) |
Dividends
paid |
|
|
|
|
|
(732) |
|
(1,791) |
Net
cash outflow from financing activities |
|
|
|
(732) |
|
(9,610) |
Increase in cash and cash equivalents |
|
|
|
765 |
|
6,532 |
Cash and
cash equivalents at the start of the year |
|
|
379 |
|
(6,153) |
Cash
and cash equivalents at the end of the year |
|
|
1,144 |
|
379 |
|
|
|
|
|
|
|
|
|
|
|
|
The Notes form an integral part of these Financial
Statements.
Notes to the Accounts
1. Accounting Policies
(a) Basis of accounting
The Financial Statements have been prepared in accordance with
the Companies (Guernsey) Law 2008 and International Financial
Reporting Standards (“IFRS”) as adopted by the European Union,
which comprise standards and interpretations approved by the
International Accounting Standards Board (“IASB”), together with
interpretations of the International Accounting Standards and
Standing Interpretations Committee approved by the International
Accounting Standards Committee (“IASC”), that remain in effect and
to the extent that they have been adopted by the European
Union.
Where consistent with the requirements of IFRS, the Directors
have sought to prepare the Financial Statements on a basis
compliant with presentational guidance set out in the Statement of
Recommended Practice for investment trust companies (the "SORP")
issued by the Association of Investment Companies in November 2014.
A scheme to liquidate the Company is set out in the Chairman’s
Statement. Accordingly, the Financial Statements for the year ended
31 December 2015 have been prepared
on a basis other than going concern reflecting this intention. The
going concern basis of accounting is no longer considered to be
appropriate. The Company’s investments are valued at bid market
prices at the statement of financial position date, with no
adjustments made as a result of the impending liquidation. All
other assets are also included in the Financial Statements at the
amounts they would expect to realise on liquidation. The Financial
Statements include an accrual for the expected costs of
liquidation.
The Company’s share capital is denominated in sterling and this
is the currency in which its shareholders operate and expenses are
generally paid. The Board has therefore determined that sterling is
the functional currency and the currency in which the Financial
Statements are presented.
The principal accounting policies adopted are set out below.
No critical accounting judgements have been made in the process
of applying the Company's accounting policies.
(b) Presentation of the Statement of
Comprehensive Income
In order better to reflect the activities of an investment
company and in accordance with the recommendations of the SORP,
supplementary information has been presented which analyses items
in the Statement of Comprehensive Income between those which are
income in nature and those which are capital in nature.
(c) Presentation of the Cash Flow
Statement
The Cash Flow Statement has been presented in accordance with
the “indirect method” detailed in IAS 7: “Statement of cash flows”.
Cash payments and receipts from purchases and sales of investments
have been reclassified from investment activities to operating
activities in the comparative statement. The Directors are of the
opinion that this presentation is more relevant and better reflects
the activities of an investment trust.
(d) Valuation of Investments
All of the Company’s investments continue to be designated as
“Investments at fair value through profit or loss” and are included
at bid market prices in active markets at the statement of
financial position date. In light of the scheme to liquidate the
Company, the Directors are of the opinion that if all the
investments were sold, they would realise the amounts shown in the
Statement of Financial Position.
(e) Reserves
Gains and losses on sales of investments, including the related
foreign exchange gains and losses, are included in the Statement of
Comprehensive Income and in capital reserves within “Gains and
losses on sales of investments”. Increases and decreases in the
valuation of investments held at the year end, including the
related foreign exchange gains and losses, are included in the
Statement of Comprehensive Income and in capital reserves within
“Holding gains and losses on investments”.
Management fee and finance costs allocated to capital and
foreign currency gains and losses are included in the Statement of
Comprehensive Income and in “Other reserve”.
The consideration payable for the repurchase of shares for
cancellation or to hold in Treasury is charged to “Other
reserve”.
(f) Income
Dividends receivable from equity shares are included in revenue
on an ex-dividend basis except where, in the opinion of the Board,
the dividend is capital in nature, in which case it is included in
capital.
Deposit interest outstanding at the year end is calculated and
accrued on a time apportionment basis using market rates of
interest.
(g) Expenses
An accrual for liquidation costs has been included, and
allocated wholly to revenue.
All expenses are accounted for on an accruals basis. Expenses
are allocated wholly to revenue with the following exceptions:
The management fee is allocated 30% to revenue and 70% to
capital in line with the Board's expected long term split of
revenue and capital return from the Company's investment
portfolio.
(h) Finance costs
Finance costs, including any premiums payable on settlement or
redemption and direct issue costs, are accounted for on an accruals
basis in profit or loss using the effective interest method.
Finance costs are allocated 30% to revenue and 70% to capital in
line with the Board's expected long term split of revenue and
capital return from the Company's investment portfolio.
(i) Financial Instruments
Investments are designated as “Investments at fair value through
profit or loss” as detailed in part (d) above. Cash and cash
equivalents may comprise cash and demand deposits which are readily
convertible to a known amount of cash and are subject to
insignificant risk of changes in value. Other receivables are non
interest bearing, short term in nature and are accordingly stated
at nominal value as reduced by appropriate allowances for estimated
irrecoverable amounts.
(j) Taxation
The taxation charge in the Statement of Comprehensive Income
comprises irrecoverable overseas tax deducted from dividends
receivable.
(k) Foreign currency
The results and financial position are expressed in sterling
which is the Company's functional currency and presentational
currency. Transactions in currencies other than sterling are
recorded at the rates of exchange prevailing on the dates of the
transactions. Monetary assets, liabilities and equity investments
held at fair value denominated in foreign currencies are translated
at the rates of exchange prevailing at the year end. Foreign
exchange differences arising on conversion of the monetary items
are recognised in the Statement of Comprehensive Income.
(l) Adoption of new and revised Standards
During the year, the Company has adopted all relevant standards
which became effective from both 1 July
2014 and 1 January 2015. These
standards have had no material impact on the financial statements.
The Directors are aware that there are a number of standards which
become effective on or after 1 January
2016, however, given the impending liquidation these will
have no impact on the Company and no further disclosures are
provided in this respect.
(m) Segmental reporting
The Directors are of the opinion that the Company is engaged in
a single segment of business, being investment in real estate
securities.
2. Gains on investments at fair value
through profit or loss
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
£'000 |
£'000 |
Realised
gains on sales of investments based on historic cost |
|
|
3,566 |
12,974 |
Realised
losses on sales of investments based on historic cost |
|
|
(895) |
(3,662) |
Movement
in unrealised investment holding gains |
|
|
|
4,928 |
8,526 |
Movement
in unrealised investment holding losses |
|
|
|
(3,621) |
(5,935) |
Gains on
investments held at fair value through profit or loss |
|
|
3,978 |
11,903 |
3. Income
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
£'000 |
£'000 |
Income from
investments: |
|
|
|
|
|
|
Dividends
from investments at fair value through profit or loss |
|
|
2,110 |
2,412 |
Total income |
|
|
|
|
2,110 |
2,412 |
4. Investment Management Fee
|
2015 |
2014 |
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
Management fee |
166 |
387 |
553 |
182 |
426 |
608 |
The basis for calculating the investment management fee is set
out in the Director’s Report.
5. Other administrative expenses
|
|
|
|
2015 |
2015 |
2014 |
|
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
Provision
for reconstruction and winding-up costs: |
|
|
|
|
|
Broker fees |
|
|
|
160 |
|
- |
Legal fees |
|
|
|
120 |
|
- |
Liquidator fees |
|
|
|
30 |
|
- |
Manager's notice period of 4 weeks |
|
|
|
45 |
|
- |
Other costs |
|
|
|
95 |
|
- |
|
|
|
|
|
450 |
- |
Directors' fees |
|
|
|
|
127 |
120 |
Sundry expenses |
|
|
|
|
108 |
300 |
Administration
Fees |
|
|
|
|
100 |
100 |
Transaction costs on purchase and sale of investments |
|
|
84 |
205 |
Broker Fees |
|
|
|
|
40 |
35 |
Professional fees |
|
|
|
|
37 |
191 |
Depositary Fees |
|
|
|
|
30 |
13 |
Auditor's remuneration
for audit services |
|
|
|
|
28 |
30 |
Auditor's
remuneration for other services1 |
|
|
|
14 |
17 |
Custodian Fees |
|
|
|
|
12 |
12 |
Foreign exchange loss
on income |
|
|
|
|
2 |
3 |
|
|
|
|
|
1,032 |
1,026 |
1 Comprises £14,400 payable to the auditor in respect
of the interim review (2014: £14,000 in respect of the interim
review and £3,000 in respect of Foreign Account Tax Compliance Act
advice).
6. Finance Costs
|
2015 |
2014 |
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
Interest on bank
overdraft |
- |
- |
- |
11 |
25 |
36 |
7. Taxation
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
£'000 |
£'000 |
|
|
|
|
|
|
|
Irrecoverable withholding tax deducted from dividends
receivable |
|
436 |
586 |
The Company has been granted an exemption from Guernsey
taxation, under the Income Tax (Exempt Bodies) Guernsey Ordinance
1989 for which it was charged an annual exemption fee of £1,200
(2014: £600).
8. Dividends
The
Company paid and declared the following dividends during the
year: |
|
2015 |
2014 |
|
|
|
|
|
£'000 |
£'000 |
|
|
|
|
|
|
|
2014
Fourth interim dividend of 0.375p (2013: 1.05p) |
|
|
|
183 |
584 |
2015 First
interim dividend of 0.375p (2014: 1.05p) |
|
|
|
183 |
512 |
2015
Second interim dividend of 0.375p (2014: 1.05p) |
|
|
183 |
512 |
2015 Third
interim dividend of 0.375p (2014: 0.375p) |
|
|
|
183 |
183 |
Total dividends paid
in the year |
|
|
|
|
732 |
1,791 |
The Board has decided, in light of the proposed scheme for
liquidation announced by the Company in December 2015, the fourth interim dividend of
0.375p per share for the year ended 31
December 2015 ordinarily payable in the first quarter of
2016 will not be paid.
9. Earnings per share
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
£'000 |
£'000 |
Net revenue
profit |
|
|
|
|
476 |
607 |
Net capital
profit |
|
|
|
|
3,594 |
10,773 |
Net total profit |
|
|
|
|
4,070 |
11,380 |
|
|
|
|
|
|
|
Weighted
average number of Ordinary shares in issue during the year |
48,785,327 |
50,311,643 |
Revenue
earnings per share |
|
|
|
0.98p |
1.21p |
Capital earnings per
share |
|
|
|
|
7.37p |
21.41p |
Total earnings per
share |
|
|
|
|
8.35p |
22.62p |
10. Investments at fair value through
profit or loss
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
£'000 |
£'000 |
Opening valuation |
|
|
|
|
61,859 |
66,274 |
Opening
investment holding gains |
|
|
|
(7,769) |
(5,178) |
Opening book cost |
|
|
|
|
54,090 |
61,096 |
Purchases at cost |
|
|
|
|
24,245 |
61,876 |
Sales at cost |
|
|
|
|
(22,640) |
(68,882) |
Closing book cost |
|
|
|
|
55,695 |
54,090 |
Closing
investment holding gains |
|
|
|
9,076 |
7,769 |
Total
investments at fair value through profit or loss |
|
64,771 |
61,859 |
On the Statement of Financial Position, the investments at fair
value through profit or loss have been reclassified in 2015 from
non-current assets to current assets as a result of the decision to
wind up the Company within the next twelve months.
11. Receivables
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
£'000 |
£'000 |
Dividends
and interest receivable |
|
|
|
246 |
152 |
Securities
sold awaiting settlement |
|
|
|
22 |
68 |
Other debtors |
|
|
|
|
17 |
27 |
|
|
|
|
|
285 |
247 |
The Directors consider that the carrying amount of receivables
approximated to their fair value.
12. Payables
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
£'000 |
£'000 |
Provision
for reconstruction and winding-up costs (Note 5) |
|
450 |
- |
Other
creditors and accruals |
|
|
|
269 |
342 |
|
|
|
|
|
719 |
342 |
The Directors consider that the carrying amount of payables
approximates to their fair value.
13. Share Capital
|
|
|
|
|
2015 |
2014 |
Unclassified shares of no par value: |
|
|
|
|
|
Opening
balance excluding shares held in Treasury |
|
48,785,327 |
55,943,548 |
Repurchase
of shares into Treasury |
|
|
|
- |
(7,158,221) |
Closing
balance excluding shares held in Treasury |
|
48,785,327 |
48,785,327 |
Shares held in
Treasury |
|
|
|
|
5,123,995 |
5,123,995 |
Closing
balance including shares held in Treasury |
|
53,909,322 |
53,909,322 |
Unclassified shares of no par
value
The Company has a single class of shares which were issued by
means of an initial public offering on 31
May 2006, at 100p per share. The shares carry the right to
vote at general meetings of the Company and to receive dividends
and, in a winding-up will participate in any surplus assets
remaining after settlement of any outstanding liabilities of the
Company.
During the year, zero (2014: 7,158,221) shares of no par value
were repurchased into Treasury for a total consideration of £Nil
(2014: £7,819,000). The reason for the share repurchases was to
seek to reduce the volatility of the discount of the share price to
net asset value per share.
There were no (2014: 8,245,000) shares held in Treasury
cancelled during the year.
Details of the Company's discount control policy are given in
the Report of the Directors.
14. Reserves
|
|
|
|
Capital reserves |
|
|
|
|
|
Gains and |
Investment |
|
|
|
|
|
losses on |
holding |
|
|
|
|
|
sales of |
gains and |
Revenue |
|
|
|
Other reserve |
investments |
losses |
reserve |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
At 31 December
2013 |
|
|
64,155 |
(12,221) |
5,178 |
3,261 |
Gains
on sales of investments |
|
- |
9,312 |
- |
- |
Movement in investment holding gains and losses |
- |
- |
2,591 |
- |
Realised exchange losses on cash and cash equivalents |
(679) |
- |
- |
- |
Repurchase of shares for cancellation |
|
(7,819) |
- |
- |
- |
Management fee and finance costs charged to capital |
(451) |
- |
- |
- |
Dividends paid in
the year |
|
|
- |
- |
- |
(1,791) |
Net
revenue profit for the year |
|
- |
- |
- |
607 |
At 31 December
2014 |
|
|
55,206 |
(2,909) |
7,769 |
2,077 |
|
|
|
|
|
|
|
|
|
|
|
Capital reserves |
|
|
|
|
|
Gains
and |
Investment |
|
|
|
|
|
losses
on |
holding |
|
|
|
|
|
sales of |
gains
and |
Revenue |
|
|
|
Other
reserve |
investments |
losses |
reserve |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
At 31 December
2014 |
|
|
55,206 |
(2,909) |
7,769 |
2,077 |
Gains on
sales of investments |
|
- |
2,671 |
- |
- |
Movement
in investment holding gains and losses |
- |
- |
1,307 |
- |
Realised
exchange gains on cash and cash equivalents |
3 |
- |
- |
- |
Management
fee and finance costs charged to capital |
(387) |
- |
- |
- |
Dividends paid in the
year |
|
|
- |
- |
- |
(732) |
Net
revenue profit for the year |
|
- |
- |
- |
476 |
At 31 December
2015 |
|
|
54,822 |
(238) |
9,076 |
1,821 |
15. Net asset value per share
|
|
|
|
|
2015 |
2014 |
Net assets
attributable to shareholders (£'000) |
|
|
65,481 |
62,143 |
Shares in
issue at the year end excluding shares held in Treasury |
|
48,785,327 |
48,785,327 |
Net asset value per
share |
|
|
|
|
134.22p |
127.38p |
16. Transactions with the Investment
Manager
During the period to 28 July 2014,
investment management services were provided by CBRE Clarion
Securities LLC. The Management fee payable in respect of the period
1 January to 28 July 2014 amounted to
£332,000. Under the terms of the agreement there was also a
performance fee arrangement in place. However, no performance fee
was payable for the period 1 January
2014 to 28 July 2014.
On 2 July 2014, the Company
appointed Schroder Property Investment Management Limited (the
"Investment Manager"), a wholly owned subsidiary of Schroders plc
to provide investment management services. On 24 November 2014, the Investment Manager changed
its name to Schroder Real Estate Investment Management
Limited. Details of the AIFM Agreement are given in the
Report of the Directors. Only with the prior consent of the Board
may the Company invest in funds managed or advised by the
Investment Manager or any of its associated companies, and the
Investment Manager is entitled to receive its fee on these
investments. There have been no such investments since the
Investment Manager's appointment. The management fee payable in
respect of the year amounted to £553,000 (2014: £276,000) of which
£152,000 (2014: £157,000) was outstanding at the year end. There is
no performance fee arrangement in place.
17. Related party transactions
Details of remuneration payable to Directors are given in the
Remuneration Report and details of Directors' transactions in the
Company's shares are given in the Report of the Directors. The
Company had no other transactions with Directors.
Prior to Mr Houston’s appointment to the Board, St. Bride’s
Managers were paid a fee by the Company for consultancy services
provided by Mr Houston of £17,734 (2014: £23,116).
18. Contingent liabilities and capital
commitments
There were no contingent liabilities or capital commitments at
the statement of financial position date (2014: none).
19. Disclosures regarding financial
instruments measured at fair value
The Company’s financial instruments within the scope of IFRS 7
that are held at fair value comprise its investment portfolio. The
investments are categorised into a hierarchy consisting of the
following three levels:
Level 1 - valued using quoted prices in active markets.
Level 2 - valued by reference to valuation techniques using
observable inputs other than quoted market prices included within
Level 1.
Level 3 - valued by reference to valuation techniques using
inputs that are not based on observable market data.
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.
Details of the valuation techniques used by the Company are
given in Note 1(d).
At 31 December 2015, the Company's
investment portfolio comprised entirely Level 1 investments (2014:
same).
There have been no transfers between Levels 1, 2 or 3 during the
year (2014: Nil).
20. Financial Instruments’ exposure to
risk and risk management policies
The Company's investment objective is to provide investors with
an attractive total return, through investing in listed global real
estate securities with strong fundamentals, offering sustainable
income and a progressive dividend potential. The Company's
investment policy will be flexible, enabling it to invest in a wide
variety of listed securities including equities, preference shares,
debt, convertible securities, warrants, interests in collective
investment schemes (including limited partnerships and unit trusts)
and other securities, issued by companies which derive a
significant proportion of their revenues or profits from real
estate. In pursuing this objective, the Company is exposed to a
variety of risks which could result in a reduction in the Company's
net assets. These risks include market risk (comprising currency
risk, interest rate risk and market price risk), liquidity risk and
credit risk. The Directors' policy for managing these risks is
below. The Board coordinates the Company's risk management
policy.
The objectives, policies and processes for managing the risks
and the methods used to measure the risks that are set out below,
have not changed from those applying in the comparative year.
The Company’s classes of financial instruments may comprise the
following:
- investments in a variety of securities issued by companies
which derive a significant proportion of their revenues or profits
from real estate and which are held in accordance with the
Company's investment objective; and
- short term cash, receivables and payables arising directly from
its operations.
(a) Market risk
The fair value of future cash flows of a financial instrument
held by the Company may fluctuate because of changes in market
prices. This market risk comprises three elements – currency risk,
interest rate risk and market price risk. Information to enable an
evaluation of the nature and extent of these three elements of
market risk is given in parts (i) to (iii) of this note, together
with sensitivity analyses where appropriate. The Board reviews and
agrees policies for managing these risks and these policies have
remained unchanged from those applying in the comparative year. The
Investment Manager assesses the exposure to market risk when making
each investment decision and monitors the overall level of market
risk on the whole of the investment portfolio on an ongoing
basis.
Given the investments comprise solely listed investments which
are freely tradeable, the Directors do not consider there to be any
impact on the valuation of the investments given the impending
liquidation.
(i) Currency risk
Certain of the Company's assets, liabilities and income are
denominated in currencies other than sterling, which is the
Company's functional currency and the presentational currency of
the Financial Statements. As a result, movements in exchange rates
will affect the sterling value of those items.
Management of currency risk
The Investment Manager monitors the Company’s exposure to
foreign currencies and reports to the Board, which meets on at
least four occasions each year. The Investment Manager measures the
risk to the Company of the foreign currency exposure by considering
the effect on the Company’s net asset value and income of a
movement in the rates of exchange to which the Company's assets,
liabilities, income and expenses are exposed. The Company may use
foreign currency borrowings or forward foreign currency contracts
to limit the exposure to anticipated changes in exchange rates
which might otherwise adversely affect the value of the portfolio
of investments. Income denominated in foreign currencies is
converted into sterling on receipt.
Foreign currency exposure
The fair value of the Company’s monetary items that have foreign
currency exposure at 31 December are shown below. The Company’s
investments (which are not monetary items) have been included
separately in the analysis so as to show the overall level of
exposure.
|
2015 |
|
AUD |
CAD |
EUR |
CHF |
HKD |
JPY |
SEK |
SGD |
USD |
Total |
|
£’000 |
£’000 |
£’000 |
£'000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Current assets |
47 |
4 |
- |
- |
- |
6 |
- |
- |
222 |
279 |
Current
liabilities |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Foreign currency
exposure on net monetary items |
47 |
4 |
- |
- |
- |
6 |
- |
- |
222 |
279 |
Investments at fair
value through profit or loss that are equities |
4,500 |
1,050 |
2,830 |
- |
5,673 |
5,031 |
1,227 |
700 |
35,920 |
56,931 |
Total foreign currency
exposure |
4,547 |
1,054 |
2,830 |
- |
5,673 |
5,037 |
1,227 |
700 |
36,142 |
57,210 |
|
2014 |
|
AUD |
CAD |
EUR |
CHF |
HKD |
JPY |
SEK |
SGD |
USD |
Total |
|
£’000 |
£’000 |
£’000 |
£'000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Current
assets |
30 |
3 |
- |
- |
- |
12 |
- |
- |
293 |
338 |
Current
liabilities |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Foreign currency
exposure on net monetary items |
30 |
3 |
- |
- |
- |
12 |
- |
- |
293 |
338 |
Investments at fair
value through profit or loss that are equities |
4,813 |
949 |
3,073 |
986 |
4,335 |
6,518 |
1,421 |
2,117 |
32,583 |
56,795 |
Total foreign
currency exposure |
4,843 |
952 |
3,073 |
986 |
4,335 |
6,530 |
1,421 |
2,117 |
32,876 |
57,133 |
The above year end amounts are broadly representative of the
exposure to foreign currency risk during the current and
comparative year.
Foreign currency sensitivity
The following tables illustrate the sensitivity of net profit
for the year and net assets with regard to the Company’s monetary
financial assets and financial liabilities and exchange rates. The
sensitivity analysis is based on the Company’s monetary currency
financial instruments held at each balance sheet date and assumes a
10% (2014: 10%) appreciation or depreciation in sterling against
the currencies to which the Company is exposed, which is considered
to be a reasonable illustration based on the volatility of exchange
rates during the year.
If sterling had weakened by 10% this would have had the
following effect:
|
|
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
|
|
£’000 |
£’000 |
Statement of
Comprehensive Income – net profit |
|
|
|
|
|
|
|
|
Net
revenue profit |
|
|
|
|
|
167 |
183 |
Net capital
profit |
|
|
|
|
|
|
28 |
34 |
Net total
profit and net assets |
|
|
|
|
195 |
217 |
Conversely if sterling had strengthened by 10% this would have
had the following effect:
|
|
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
|
|
£’000 |
£’000 |
Statement of
Comprehensive Income – net profit |
|
|
|
|
|
|
|
|
Net
revenue profit |
|
|
|
|
|
(167) |
(183) |
Net capital
profit |
|
|
|
|
|
|
(28) |
(34) |
Net total
profit and net assets |
|
|
|
|
(195) |
(217) |
In the opinion of the Directors, the above sensitivity analysis
with respect to monetary financial assets and liabilities is
broadly representative of the whole of the current and comparative
year. The sensitivity of the Company's investments to changes in
foreign currency exchange rates is subsumed into market price risk
sensitivity.
(ii) Interest rate risk
Interest rate movements may affect the level of income
receivable on cash balances.
Management of interest rate risk
Liquidity is managed with the aim of increasing returns to
shareholders.
Interest rate exposure
The exposure of financial assets to floating interest rates,
giving cash flow interest rate risk when rates are re-set, is shown
below:
|
|
|
|
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
|
|
|
|
£'000 |
£'000 |
Exposure
to floating interest rates: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
|
|
|
|
1,144 |
379 |
Interest receivable on cash balances is at a margin below or
above LIBOR respectively (2014: same).
Interest rate sensitivity
The following table illustrates the sensitivity of the return
after taxation for the year and net assets to a 0.5%
(2014: 0.5%) increase or decrease in interest rates.
|
|
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
|
|
0.5% |
0.5% |
0.5% |
0.5% |
|
|
|
|
|
|
|
increase |
decrease |
increase |
decrease |
|
|
|
|
|
|
|
in
rate |
in
rate |
in
rate |
in
rate |
|
|
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
Statement
of Comprehensive Income – net profit |
|
|
|
|
|
|
Net
revenue profit |
|
|
|
|
|
6 |
(6) |
2 |
(2) |
Net capital
profit |
|
|
|
|
|
|
- |
- |
- |
- |
Net total
profit and net assets |
|
|
|
|
6 |
(6) |
2 |
(2) |
In the opinion of the Directors, this sensitivity analysis may
not be representative of the Company’s future exposure to interest
rate changes due to fluctuations in the level of cash balances.
(iii) Market price risk
Market price risk includes changes in market prices, other than
those arising from interest rate risk, which may affect the value
of equity investments.
Management of market price risk
The Board meets on at least four occasions each year to consider
the asset allocation of the portfolio and the risk associated with
particular industry sectors. The investment management team has
responsibility for monitoring the portfolio, which is selected in
accordance with the Company’s investment objective and seeks to
ensure that individual stocks meet an acceptable risk/reward
profile.
Market price risk exposure
The Company’s total exposure to changes in market prices at 31
December comprised the following:
|
|
|
|
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
|
|
|
|
£'000 |
£'000 |
Investments at fair value through profit or loss |
|
|
|
|
64,771 |
61,859 |
The above data is broadly representative of the exposure to
market price risk during the year.
Concentration of exposure to market
price risk
An analysis of the Company’s investments is given. This shows
that the portfolio comprises listed securities of real estate
companies in a spread of countries and property sectors. Thus there
is no concentration of exposure to market price risk worthy of
note.
Market price risk sensitivity
The following table illustrates the sensitivity of the net
profit for the year and net assets to an increase or decrease of
25% (2014: 25%) in the fair values of the Company’s equities. This
level of change is considered to be a reasonable illustration based
on observation of current market conditions. The sensitivity
analysis is based on the Company’s equities, adjusting for changes
in the management fee, but with all other variables held
constant.
|
|
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
|
|
25% |
25% |
25% |
25% |
|
|
|
|
|
|
|
increase |
decrease |
increase |
decrease |
|
|
|
|
|
|
|
in
fair |
in
fair |
in
fair |
in
fair |
|
|
|
|
|
|
|
value |
value |
value |
value |
|
|
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
Statement
of Comprehensive Income – net profit |
|
|
|
|
|
|
Net
revenue profit |
|
|
|
|
|
(41) |
41 |
(39) |
39 |
Net capital
profit |
|
|
|
|
|
|
16,096 |
(16,096) |
15,373 |
(15,373) |
Net total
profit for the year and net assets |
|
|
|
16,055 |
(16,055) |
15,334 |
(15,334) |
|
|
|
|
|
|
|
|
|
|
|
|
(b) Liquidity risk
This is the risk that the Company will encounter difficulty in
meeting its obligations associated with financial liabilities that
are settled by delivering cash or another financial asset.
Management of the risk
Liquidity risk is not significant as the Company’s assets
comprise mainly readily realisable securities, which can be sold to
meet funding requirements if necessary.
Liquidity risk exposure
Contractual maturities of financial liabilities, based on the
earliest date on which payment can be required are as follows:
|
|
|
|
|
|
|
|
|
Three |
Three |
|
|
|
|
|
|
|
|
|
months |
months |
|
|
|
|
|
|
|
|
|
or
less |
or
less |
|
|
|
|
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
|
|
|
|
£'000 |
£'000 |
Payables |
|
|
|
|
|
|
|
|
|
|
Liquidation costs (Note 5) |
|
|
|
|
|
|
|
450 |
- |
Other
creditors and accruals |
|
|
|
|
|
|
269 |
342 |
|
|
|
|
|
|
|
|
|
719 |
342 |
(c) Credit risk
Credit risk is the risk that the failure of the counterparty to
a transaction to discharge its obligations under that transaction
could result in loss to the Company.
Management of credit risk
This risk is managed as follows:
Portfolio dealing
The Company invests in markets that operate a "Delivery Versus
Payment" settlement process which mitigates the risk of losing the
principal of a trade during settlement. The Investment Manager
continuously monitors dealing activity to ensure best execution,
which involves measuring various indicators including the quality
of trade settlement and incidence of failed trades. Counterparties
must be pre-approved by the Investment Manager's credit
committee.
Exposure to the Custodian
The Company's Custodian is Northern Trust (Guernsey) Limited, a
wholly owned subsidiary of The Northern Trust Corporation which has
a credit rating of A+ from Standard & Poors and A2 from
Moody's. The Company's investments are held in accounts which are
segregated from the Custodian's own trading assets. If the
Custodian were to become insolvent, the Company's right of
ownership is clear and they are therefore protected. However the
Company's cash balances are all deposited with the Custodian as
banker and held on the Custodian’s Statement of Financial Position.
Accordingly, in accordance with usual banking practice, the Company
will rank as a general creditor to the Custodian in respect of cash
balances.
Credit risk exposure
The following amounts shown in the Statement of Financial
Position represent the maximum exposure to credit risk at the
current and comparative year end.
|
|
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
|
|
Balance |
Maximum |
Balance |
Maximum |
|
|
|
|
|
|
|
sheet |
exposure |
sheet |
exposure |
|
|
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
Receivables - dividends and interest receivable, securities |
|
|
|
|
|
sold
awaiting settlement and other debtors |
|
|
|
285 |
285 |
247 |
247 |
Cash and
cash equivalents |
|
|
|
|
1,144 |
1,144 |
379 |
379 |
|
|
|
|
|
|
|
1,429 |
1,429 |
626 |
626 |
No items included in “Receivables” are past their due date and
none have been provided for.
(d) Fair values of financial
assets and financial liabilities
All financial assets and liabilities are either carried in the
Statement of Financial Position at fair value or the carrying
amount if that is a reasonable approximation of fair value.
21. Capital management policies and
procedures
The Company’s capital structure comprises the following:
|
|
|
|
|
|
|
|
|
2015 |
2014 |
|
|
|
|
|
|
|
|
|
£'000 |
£'000 |
Equity |
|
|
|
|
|
|
|
|
|
|
Share
capital and reserves |
|
|
|
|
|
|
65,481 |
62,143 |
Total
debt and equity |
|
|
|
|
|
|
|
65,481 |
62,143 |
As detailed in Note 1 (a), the Board has put forward a scheme to
liquidate the Company following approval by shareholders.
22. Material events after the
Statement of Financial Position date
These Financial Statements were approved for issuance by the
Board on 28 April 2016. Subsequent
events have been evaluated until this date.
Since the year end, a scheme for liquidation of the Company has
been approved by shareholders. Further details are given in the
Chairman’s Statement.
A circular was published in the first quarter of 2016 which gave
details of the proposed scheme, including the proposed roll-over
vehicle or vehicles, and convened a general meeting at which
shareholders voted in favour of all the proposals.
The Board announced on 16 February
2016 that in light of the proposed scheme for liquidation
announced by the Company in December
2015, the fourth interim dividend of 0.375p per share for
the year ended 31 December 2015
ordinarily payable in the first quarter of 2016 will not be
paid.
Company Summary and Shareholder
Information
The Company
The Company was incorporated on 25 April
2006 and is registered in Guernsey as an Authorised
Closed-Ended Investment Company. It is listed on the London Stock
Exchange. The Company carries on the business of an investment
company and invests in global real estate securities.
On 14 July 2014, the Board
announced the closure of the placing programme established in the
Company’s prospectus as the resolution proposed to authorise the
issue of shares on a non pre-emptive basis was not approved by
shareholders at the AGM held on 26 June
2014.
At an EGM held on 14 October 2014,
shareholders resolved to amend the Company's investment objective.
The Company's new investment objective is to provide investors with
an attractive total return, through investing in listed global real
estate securities with strong fundamentals, offering sustainable
income and a progressive dividend potential.
At an EGM held on 14 October 2014,
shareholders resolved to change the Company's name to Schroder
Global Real Estate Securities Limited. The "Ticker" code for the
Company's shares was also changed to “SGRE”.
At an EGM held on 14 October 2014,
shareholders approved the disapplication of pre-emption rights
under the Articles in respect of the issue of up to 4,829,747
Ordinary Shares, representing 9.9% of the Company’s issued share
capital as at the date of the EGM Circular, together with the grant
of the authority to allot the same number of Ordinary Shares. New
Ordinary Shares will only be issued on a basis that would not be
dilutive to the net asset value per existing Ordinary Share.
On 21 December 2015, the Board
announced proposals for the future of the Company. The proposals
are referred to in the Chairman’s Statement.
A circular was published in the first quarter of 2016 which gave
details of the proposed scheme, including the proposed roll-over
vehicle or vehicles, and convened a general meeting at which
shareholders voted in favour of all the proposals.
As at 31 December 2015, the
Company had 53,909,322 (31 December
2014: 53,909,322) shares in issue, of which 5,123,995
(31 December 2014: 5,123,995) shares
were held in Treasury. For additional information refer to Note 13
to the accounts.
On 3 March 2016, the Company
issued a circular detailing a scheme to put the Company into
liquidation, which can be found at www.londonstockexchange.com.
The Company’s assets are managed by Schroder Real Estate
Investment Management Limited and it is administered by Northern
Trust International Fund Administration Services (Guernsey)
Limited.
Website and Share Price
Information
The Company has a dedicated web page, which may be found at
www.schroderglobalrealestatesecurities.com which contains
comprehensive information, including regulatory announcements,
share price information, financial reports, investment objectives
and strategy, investor contracts and information on the Board.
The Investment Manager provides a monthly newsletter which is
available on the Company’s website.
Registrar Services
Communications with shareholders are mailed to the address held
on the register. Any notifications and enquiries relating to
shareholdings, including a change of address or other amendment
should be directed to Computershare Investor Services (Guernsey)
Limited, 3rd Floor, Natwest House, Le
Truchot, St Peter Port, Guernsey GY1 1WD.
Dealing Codes
The dealing codes for the Company's shares are as follows:
ISIN: GB00B132SB63
SEDOL: B132SB6
Ticker: SGRE
Alternative Investment Fund Managers
Directive – Periodic Disclosure
Preferential Treatment of
Investors
The Company’s investors purchase shares on the open market and
therefore the Company is not in a position to influence the
treatment of investors. No investor receives preferential
treatment.
Liquidity Risk Management
The Company’s shares are traded on the London Stock Exchange
through market intermediaries. There are no special rights to
redemption.
Periodic and Regular Disclosure under
the Directive
(a) none of the Company’s assets are subject to special
arrangements arising from their illiquid nature;
(b) there are no new arrangements for managing the liquidity of
the Company including, but not limited to, any material changes to
the liquidity management systems and procedures employed by the
Manager in place. Shareholders will be notified immediately where
the issue, cancellation, sale and redemption of shares is
suspended, when redemptions are suspended or where other similar
special arrangements are activated;
(c) the current risk profile of the Company and the risk
management systems employed by the Manager to manage those risks
can be found in the Strategic Report; and
(d) the total amount of leverage employed by the Company may be
found in the Strategic Report.
Any changes to the following information will be provided
through a regulatory news service without undue delay and in
accordance with the Directive:
(a) any changes to the maximum level of leverage which the
Manager may employ on behalf of the Company; and
(b) any changes to the right of re-use of collateral of any
changes to any guarantee granted under any leveraging
arrangement.
AIFM employee remuneration
disclosure
The following disclosures are required under the Alternative
Investment Fund Managers Directive (AIFMD).
These disclosures should be read in conjunction with the
Schroders Remuneration Report of the 2015 Annual Report &
Accounts (available on the Group’s website – www.schroders.com/ir),
which provides more information on the activities of our
Remuneration Committee and our remuneration principles and
policies.
Details of the AIFM Remuneration Code can be found at
www.fca.org.uk, in the Senior Management Arrangements, Systems and
Controls Sourcebook (SYSC 19B).
The Remuneration Committee of Schroders plc has established an
AIFM Remuneration Policy to ensure the requirements of the AIFM
Remuneration Code are met proportionately for all AIFM Remuneration
Code Staff. You can get details of the latest remuneration policy
at www.schroders.com/Remuneration-disclosures.
The total amount of remuneration paid by SREIM to its staff is
nil as SREIM has no employees. AIFM Remuneration Code Staff of
SREIM are employed and paid by other Schroders group companies.
Those who serve as Directors of SREIM receive no additional fees in
respect of their role on the Board of SREIM.
SREIM manages a total of £3,670 million assets under management,
£520 million of which are in Alternative Investment Funds
(AIFs).
SREIM’s Code Staff are individuals in roles which can materially
affect the risk of SREIM or any AIF it manages. These individuals
are employed by and provide services to other companies in, and
clients of, the Schroders Group. As a result, only a portion of
remuneration for those individuals is included in the aggregate
remuneration figures that follow, based on an objective
apportionment to reflect the balance of each. The aggregate total
remuneration paid to the 33 AIFM Remuneration Code Staff of SREIM
in respect of the financial year ending 31
December 2015, and attributed to SREIM and the AIFs it
manages, is £832,524, of which £148,593 is paid to Senior
Management and £683,931 is paid to other AIFM Remuneration Code
Staff.