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RNS

Annual Financial Report

Released 07:00 13-Jun-2018

RNS Number : 1904R
Establishment Inv. Trust PLC (The)
13 June 2018
 

THE ESTABLISHMENT INVESTMENT TRUST PLC

Announcement of Financial Results for the year ended 31 March 2018

 

LEI: 213800I9IT25LOQ1UW49

 

Objective of the Company

 

The investment objective of the Company is to achieve long-term capital growth from a managed international portfolio of securities. The preservation of capital is of primary importance to the investment objective.

 

The Company aims to achieve absolute returns and is not managed by reference to any equity or bond index or benchmark.

 

Investment policy

 

•     To invest primarily in equities issued by companies listed on regulated markets. With the prior approval of the Board, the Company may invest in unlisted securities.

 

•     Up to 30% of net assets may be invested in investment products managed by the Company's Investment Manager. The Company may also hold positions in investment products managed by third parties.

 

•     Up to a maximum of 15% of net assets (at cost at the date of investment) may be invested in any one security.

 

•     The Company may borrow up to a maximum of 50% of net assets.

 

Financial Highlights for the Year

 

Performance for the year ended 31 March 2018


At 31 March 2018

Total return (%)*

Share price

208.00p

+8.92

Net asset value per share**

246.58p

-2.53

FTSE UK Private Investor Balanced Index***


+1.78

MSCI UK Equity***


-0.24

MSCI AC World Index***


+2.64

MSCI AC Asia ex Japan Equity***


+12.44

* Source: Bloomberg

** This is considered to be an alternative performance measure ('APM')

*** These percentages are total returns in GBP sterling.

 





Dividends per share payable





31 March 

31 March

 Change


2017

2018

(%)

Interim and final

5.70p

6.00p

+5.3

Special dividend

4.30p

4.30p

0.0

Total dividends

10.0p

10.3p

+3.0

 

Revenue highlights





31 March

31 March



2017

2018

Change 


£'000

£'000

 (%)

Income from investments

1,442

1,731

+20.0

Revenue return for the financial year

1,050

1,220

+16.2

Revenue return per Ordinary Share

5.25p

6.10p

+16.2

 

Chairman's Statement

Performance

 

I am pleased to present the Annual Report and Accounts for the year ended 31 March 2018.  Measured by total return, including the 10.5p of dividends paid during the year, the share price rose by 8.9%, although the net asset value (NAV) fell by 2.5%. Excluding dividends, the share price increased by 3.9% while the NAV fell by 6.3%. Since the Company listed as an investment trust in 2002, the share price total return has been 7.3% per annum while the NAV has returned 8.1% per annum.

 

The Company's mandate is global and the majority of assets remain invested throughout Asia. In previous years, the weakness of sterling has been something of a tailwind to performance but the recovery of sterling, which rose 11.9% against the US dollar during the year, detracted from results. Asian markets performed strongly until correcting sharply during February and March 2018. Global markets sold off on fears of resurgent inflation as a corollary of world economic recovery and on concerns that USA/China tit-for-tat tariffs would develop into a full blown trade war. A feature of Asian stock markets has been the narrow concentration of gains in predominantly technology stocks reflecting not only their growth potential but also the pursuit of index heavyweights by the large amount of money now managed by passive ETF strategies.

 

The Company's UK exposure has provided useful income even though the strength of sterling proved unhelpful given that our investments are predominantly in overseas concerns. The Investment Manager continues to find interesting new investment ideas although two more recent purchases have severely disappointed, as explained in the Investment Manager's report.

 

Outlook

 

While the strength of global recovery has led to encouraging corporate earnings revisions in Asia, supporting higher equity valuations, the outlook remains dominated by the actions of the US Federal Reserve in determining monetary policy and interest rates.  Liquidity plays a major role in determining the level of equity markets and, if the Fed attempts to normalise policy after a decade of unprecedented monetary expansion in a way that miscalculates the strength of the recovery, this will exert inevitable pressure on asset prices.  The intention appears to be to increase interest rates by three or four times during 2018 with a reduction in the Federal Reserve's balance sheet by about US$1 trillion over the next two years. If this proves excessive, we can expect a radical about turn; a sort of 'Grand Old Duke of York' policy of marching up to the top of hill and marching down again. A stronger US dollar and higher interest rates tend to unsettle Asian markets and to exacerbate the credit issues of weaker, emerging market, off shore corporates and Governments, as evidenced by recent developments in Argentina.

 

Against this, inter Asian trade and consumption trends appear robust, and the Chinese Government's agenda to tackle credit problems and overcapacity, while rolling out sizeable infrastructure programmes, remains on track. Geopolitically, a rapprochement with North Korea is a potentially ground breaking development. Conversely, the Middle East is a still a cauldron, which could boil over to further boost strengthening oil prices.

 

The portfolio remains largely invested in companies which offer strong sustainable, as opposed to cyclical, growth. This strategy should continue to deliver solid total returns over time, potentially with less market volatility. Indeed, market sell-offs usually throw up opportunities to buy into attractive businesses.

 

Regulation

 

The MiFID II and PRIIPS regulations came into force in January 2018. The Company entered into a Research Purchasing Agreement with the Investment Manager to underwrite the cost of procuring third party sell side research under the MiFID II rules which was considered appropriate in relation to our Investment Manager's overall scale of operations. Agreements have been revised with service providers and the IMA has been amended to come into line with the General Data Protection Regulations ("GDPR") which came into force on 25 May 2018. A privacy notice has been posted on the Investment Manager's website. The Board spends an increasing amount of time ensuring that the Company meets onerous, complex regulatory and compliance requirements while trying to control costs.

 

Dividend

 

The Board is keen to improve the profile of the Company and the discount to NAV should be attractive to investors looking for long term capital growth.  Without the power to buy back shares, the Board believes that a progressive dividend policy is an appropriate way to improve the share price discount to net asset value, which has narrowed from 23.9% to 15.6% during the financial year.

 

The Board proposes a final dividend of 3.0p, which, taking into account the increase in the interim dividend from 2.5p to 3.0p, will lift the total dividend to 6.0p for the financial year.  The Board also proposes an unchanged special dividend of 4.3p per share funded from capital reserves.  This will lift the total distribution for the year to 10.3p, an increase of 3% over last year.

Harry Wells

 

Chairman

 

 

12 June 2018

 

Investment Manager's Report

 

For the financial year to 31 March 2018 the share price rose 3.9% while the net asset value declined by 6.3%. Including dividends totalling 10.5p paid during the year, the total returns of the share price and the net asset value were +8.9% and -2.5% respectively. For comparative purposes the MSCI AC Asia ex Japan Index rose 12.4%, the MSCI AC World Index gained 2.6% and the FTSE UK Private Investor Balanced Index advanced 1.8%.The share price Discount to NAV stood at 15.6% at year end.

 

During the second half of the financial year the share price declined by 3.6% whilst the net asset value slipped 5.7%.  Including the interim dividend of 3.0p paid to shareholders during the period, the total return of the share price and the net asset value were -2.3% and -4.5% respectively.  This compares to the 0.1% decline in the FTSE UK Private Investor Balanced Index in sterling terms.

 

Longer term performance is shown graphically in the Annual Report, which tracks the net asset value and share price against the FTSE UK Private Investor Balanced Index since the formation of the Company.

 

United Kingdom portfolio

 

In the fourth quarter of 2014, we took the decision to sell the gold bullion position and reallocate some 20% of the Company's assets in a small number of UK listed blue chips.  The investment objectives were twofold; firstly, to place the income generating ability of the Company on a stronger footing and secondly, to reduce somewhat the beta, or risk, of the overall portfolio.

 

This strategy has been working reasonably well but, during the last financial year, not only did the UK equity market substantially underperform Asian equities, but also our UK holdings underperformed the UK broader market by some margin. These holdings are principally large, consumer orientated multinational companies and your Investment Manager believes the recent underperformance is due to two factors; the increased strength of sterling, which has pressured revenues and profitability and the rise in longer term Government bond yields since the summer of 2016, which has led to selling pressure on so called 'bond proxies'.

 

Bond proxies or not, the Company's UK portfolio yields circa 5.5% and we reiterate the comment in the interim report; "we remain more suspicious of sterling's outlook than the longer term future of these companies".  Three of the holdings have increased their annual dividend by over 35% over the last four years while the other two have maintained dividend levels and paid special dividends to shareholders on top. The yield premium on the FTSE over 10 year Gilts is at the highest level since the Second World War reflecting the current level of uncertainty in the UK.

 

Monetary policy and global growth

 

The recently appointed Chairman of the Federal Reserve, Jerome Powell, appears keen to dispel any notion that he is just another dove.  While the US Dollar has drifted lower over the past year there are justifiable fears that overzealous monetary tightening by the Federal Reserve may derail growth in the United States and elsewhere.  Multiple interest rate rises by the Federal Reserve would place pressure on the weaker currencies in the Asian region, especially within ASEAN and in India.  This may - in turn - explain why holdings such as Astra International, IJM Group and ITC have suffered something of a derating of late.  Philippine equities in particular have been sold off aggressively with the Central Bank perceived - correctly in our view - to be some way behind the curve as domestic demand booms, the trade deficit rises and inflation ticks higher.

 

The Trump administration has finally turned its guns toward trade imbalances and, unsurprisingly, the opening salvos have focused on China, which continues to have a substantial trade surplus with the United States.  All commentators acknowledge that there are no winners in any trade war and one hopes that both sides will work towards an agreement.  However, markets tend to shoot first and ask questions later, so the share prices of portfolio holdings such as Minth Group and Johnson Electric, both of which are suppliers to the global auto industry, have had an uncomfortable ride in 2018.  The ongoing elevation of President Xi and the abandonment of the two term leadership limit may have disheartened many, but a key shorter term positive is the increased certainty, or visibility, of China's economic policy.  The shadow banking sector will continue to be squeezed, supply side reform is ongoing and the promotion of domestic consumption continues.  Importantly the cautious, but progressive, opening of previously protected domestic sectors can only help defuse the current trade tensions.

 

The longer term Asian story - that of rising consumption and a region increasingly driven by domestic demand - remains intact and the Company's portfolio continues to reflect your Investment Manager's confidence in this development.  Asia remains in rude health and after a year of admittedly indifferent returns, your Investment Manager is optimistic of making good progress in the year ahead.

 

Portfolio performance

 

We had a few successes during the year.  JNBY, a Chinese clothing designer, rose nearly 50% after our purchase last November while longer term holdings such as Tencent, Alibaba, ICBC and TSMC also performed strongly.  At the other end of the spectrum, the UK holdings and the performance of some ASEAN and Indian positions detracted from performance.

 

More unhelpful were Silver Heritage and Finetex.  Silver Heritage fell 38% in sterling terms.  We supported their rights issue last summer and the Tiger Palace Resort opened for business earlier this year.  It will take some time for this unique complex to breakeven but recently released monthly revenue numbers are encouraging.  Much less encouraging was the news from recent purchase Finetex, a Korean manufacturer of nanofibres.  We purchased the holding in December 2017 after a very upbeat meeting with management on a European road show and, initially at least, the stock performed strongly.  Unfortunately the year-end audit threw up a number of irregularities and a qualified audit opinion.  The KOSDAQ stock exchange suspended the stock in March and the investment was written off in two stages, in late March and when further information became available in early April.  While we have some hope that the situation is retrievable, it is best to plan for the worst.  Accounting irregularities rarely end well.

 

Financial results

 

The portfolio generated gross income of £1,731,000 during the year, a 20% increase from the £1,442,000 generated in the preceding year thanks in part to the receipt of underwriting commission which should be considered one off in nature.  Excluding fees payable to the Investment Manager, expenses amounted to £321,000, an increase of 13.8% relative to the previous year.  The total fees payable to the Investment Manager rose 19.8% to £362,000 (of which 80% are charged to capital).  In consequence, the Company recorded revenue on ordinary activities after tax of £1,220,000, a 16.2% increase compared to the previous financial year.

 

Blackfriars Asset Management Limited

 

Investment Manager

 

 

12 June 2018

 

 

Other Information

 

Results and dividend

The revenue return for the financial year ended 31 March 2018 after taxation amounted to £1,220,000 (2017: £1,050,000). The Company made a capital loss after tax for the financial year ended 31 March 2018 of £2,437,000 (2017: capital gain of £10,711,000). Therefore the net loss after tax for the Company for the financial year ended 31 March 2018 was £1,217,000 (2017: profit of £11,761,000).

 

An interim dividend of 3.0p per Ordinary Share was paid on 22 December 2017 to shareholders on the register at the close of business on 1 December 2017.

 

The Board proposes the following dividends in respect of the year ended 31 March 2018:

 

(i) A final dividend of 3.0p (2017: 3.2p) per Ordinary Share.

(ii) A special dividend of 4.3p (2017: 4.3p) per Ordinary Share.

 

Subject to approval by shareholders, the above dividends will be paid on 13 August 2018 to shareholders whose names appear on the register at the close of business on 20 July 2018.

 

Risks and uncertainties

The review of the year and commentary on the future outlook are presented in the Chairman's Statement, the Investment Manager's Report and the financial instruments disclosures set out in note 8 to the Financial Statements, which, together with the information below, provide details of the principal risks and uncertainties facing the Company.

 

Investment risk

The Company is predominantly a vehicle for overseas equity investment with the attendant risks applicable to any international or regional equity portfolio relating to strategy, country, industrial sector and stock selection.

 

The prime risk of investing in the Company is a fall in equity prices and adverse movements in foreign currency exchange rates as currency movements can have a significant impact on capital values. Whilst foreign currency exposures against sterling are reviewed on a regular basis, these are inherent in investing in overseas securities and at present the Company has no currency hedging contracts in place nor plans to arrange them. The Investment Manager will take into account the possibility of currency gain or loss when evaluating investments for the Company.

 

Risk Management

Equity markets are subject to fluctuation and as such investment in equities has inherent risk. The Investment Manager is experienced and employs its expertise in selecting the stocks in which the Company invests. The Investment Manager spreads the investment risk over a wide portfolio of investments.

 

Regulatory risk

Risk Management

 

Counterparty risk

The Company bears the risk of settlement default by clearing houses and exchanges and the risk of delayed repossession or disputed title of the Company's assets in the event of failure of the Custodian, together with operational and regulatory risks, and the risk of errors and omissions.

 

Risk Management

The Investment Manager undertakes transactions only with brokers pre-approved by the Investment Manager and on the basis of delivery against payment. 

 

Additional risks are set out in note 8 to the Financial Statements, which covers interest rate risk, equity price risk, liquidity risk and credit risk.

 

Role of the Board

The Board monitors the critical risks and uncertainties faced by the Company through regular review of a matrix of risks, key controls and mitigating factors.

 

As part of the review of operational risks, the Board satisfies itself that the Investment Manager has processes in place to ensure that limits are not breached. Performance and risk controls are the focus of Boardroom discussion with the Investment Manager. The Board reviews the management of the portfolio and monitors the Investment Manager's adherence to the investment mandate. This is achieved by comparing the absolute return generated by the portfolio, the breakdown of the portfolio into equities, investment funds, bonds and cash and the level of concentration within the equity portfolio by sector and geography.

 

The Board seeks to assess and contain risk by understanding and monitoring the Investment Manager's investment style, investment process and long-term performance record. Stock specific risk is reduced through adequate diversification and the Investment Manager is required to ask the Board for approval prior to the purchase of any other products managed by the Investment Manager which may not exceed 30% of the portfolio.

 

The Board reviews the performance of certain equity indices and peer group competitors to evaluate whether the Investment Manager is generating competitive returns in differing market conditions. In assessing performance at its regular meetings, the Board requires a clear, consistent expression of strategy.

 

As the Company's objective is to achieve long-term capital growth whilst preserving capital, performance is not measured against any specific equity or bond index but on the absolute return achieved. The Company shows its performance against the FTSE UK Private Investor Balanced Index in the chart in the Annual Report.

 

The Board also discusses the extent to which the Company might gear up its portfolio with debt or increase liquidity in difficult markets. Strategic decisions, such as the level of borrowing, can have a significant impact on performance. The Company's policy is to limit gearing to a maximum of 50% of net assets, although, at present, the Company has no gearing. Ultimately, the positioning of the portfolio is decided by the Investment Manager, which operates within the investment guidelines established by the Board.

 

Income Statement

 

For the year ended 31 March











2018


2017



Revenue

Capital

Total


Revenue

Capital

Total



£'000

£'000

£'000


£'000

£'000

£'000

(Losses)/gains on investments


-

(1,854)

(1,854)


-

10,358

10,358

Foreign exchange (losses)/gains


-

(267)

(267)


-

595

595

Income


1,731

-

1,731


1,442

-

1,442

Investment management fees


(72)

(290)

(362)


(60)

(242)

(302)

Other expenses


(321)

(26)

(347)


(282)

-

(282)

Return before tax


1,338

(2,437)

(1,099)


1,100

10,711

11,811

Taxation for the year


(118)

-

(118)


(50)

-

(50)

Return for the financial year


1,220

(2,437)

(1,217)


1,050

10,711

11,761

Return per Ordinary Share


6.10p

(12.19)p

(6.09)p


5.25p

53.56p

58.81p










All revenue and capital items in the above statement derive from continuing operations.










The total columns in this statement represent the Income Statement of the Company. The revenue and capital columns are supplementary to this and are prepared under the guidance published by the Association of Investment Companies.










As all the gains and losses of the Company have been reflected in the above statement, the return for the financial year is also the total comprehensive income for the year.










 

Statement of Financial Position

 

At 31 March

 




2018



2017



£'000

£'000


£'000

£'000

Fixed assets







Investments held at fair value through profit or loss



47,130



50,077

Current assets







Debtors


136



813


Cash at bank


2,118



3,183




2,254



3,996


Payables: amounts falling due within one year


 

(69)



 

(1,441)


Net current assets



2,185



2,555

Net assets



49,315



52,632















Capital and reserves







Called up share capital



5,000



5,000

Share premium



14,701



14,701




19,701



19,701

Capital reserve



28,730



32,027

Revenue reserve



884



904

Equity shareholders' funds



49,315



52,632








Net asset value per Ordinary Share



246.58p



263.16p

 

Statement of Changes in Equity

For the year ended 31 March 2018 














Share


Share


Capital


Revenue



 



capital


premium


reserve


reserve


Total

 



£'000


£'000


£'000


£'000


£'000

 

At 31 March 2017


5,000


14,701


32,027


904


52,632

 

Return for the financial year


-


-


(2,437)


1,220


(1,217)

 

Dividends paid


-


-


(860)


(1,240)


(2,100)

 

At 31 March 2018


5,000


14,701


28,730


884


49,315

 












 

For the year ended 31 March 2017









 












 



Share


Share


Capital


Revenue



 



capital


premium


reserve


reserve


Total

 



£'000


£'000


£'000


£'000


£'000

 

At 31 March 2016


5,000


14,701


22,096


994


42,791

 

Return for the financial year


-


-


10,711


1,050


11,761

 

Dividends paid


-


-


(780)


(1,140)


(1,920)

 

At 31 March 2017


5,000


14,701


32,027


904


52,632

 






Statement of Cash Flows

For the year ended 31 March















2018


2017




£'000


£'000

Cash flows from operating activities






Return for the financial year*



(1,217)


11,761

Adjustments for:






Taxation



118


50

Losses/(gains) on investments held at fair value



1,880


(10,358)

Losses/(gains) on exchange movements



267


(595)

Research costs



(26)


-

Decrease in trade debtors



43


36

(Decrease)/increase in trade creditors



(29)


11

Cash from operations



1,036


905

Taxation



(118)


(50)

Net cash generated from operating activities



918


855

Cash flows from investing activities






Purchase of investments



(21,449)


(17,263)

Sale of investments



21,833


18,992

Net cash generated from investing activities



384


1,729

Cash flows from financing activities






Equity dividends paid



(2,100)


(1,920)

Net cash used for financing activities



(2,100)


(1,920)







Net (decrease)/increase in cash and cash equivalents



(798)


664

Foreign exchange movements



(267)


595

Cash and cash equivalents at beginning of year



3,183


1,924

Cash and cash equivalents at end of year



2,118


3,183

* Cash inflow from dividends was £1,756,000.




 

Notes to the Financial Statements

1. Accounting policies

The Company is incorporated in England and is an investment company within the meaning of Section 833 of the Companies Act 2006. The Company's registered office is Mermaid House, 2 Puddle Dock, London, EC4V 3DB.

 

A summary of the principal accounting policies, all of which have been applied consistently throughout the year, is set out below:

 

(a) Basis of accounting

The accounts are prepared on the historical cost basis of accounting, except for the measurement at fair value of investments. The Financial Statements have been prepared in accordance with applicable United Kingdom accounting practices, including Financial Reporting Standard 102 - 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland' ('FRS 102') and with the AIC Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in November 2014.

 

All of the Company's operations are of a continuing nature.

 

(b) Valuation of investments

When a purchase or sale is made under a contract, the terms of which require delivery within the time frame of the relevant market, the investments concerned are recognised or derecognised on the trade date.

 

The Company's investments are recognised on the trade date and are initially measured at fair value. Investments are measured at subsequent reporting dates at fair value, and changes in fair value are included in the Income Statement as a capital item. For listed investments, fair value is deemed to be either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted.

 

Any investments which are suspended from trading are measured by the Directors at estimated fair value, taking into account the relevant circumstances.

 

Unquoted investments are valued by the Directors at fair value. The Company held no unquoted investments at the year end.

 

The Company held all its investments as part of the investment portfolio and measured at fair value.

 

(c) Reporting currency

The accounts are presented in GBP sterling, which is the functional currency of the Company. Sterling is the reference currency for this UK registered and listed company.

 

(d) Income

Dividends are credited to the revenue account on an ex-dividend basis or, if later, as soon as entitlement has been established. The Company owns no fixed interest investments.

 

Bank and deposit interest is accounted for on an accruals basis.

 

(e) Dividends

Dividends paid by the Company are accounted for in the Financial Statements in respect of the period in which they are paid, in the case of interim dividends, or when they are approved by shareholders for final dividends.

 

(f) Expenses

 

(g) Taxation

(h) Foreign currency

(i) Capital and revenue reserves

(j) Distributable reserves

(k) Going concern

(l) Estimates and assumptions

(m) Segmental reporting

2. Income





2018


2017


£'000


£'000

Income from investments:




Overseas dividends

1,359


1,055

UK dividends

360


387

Other income

12


-

Total

1,731


1,442

3. Investment management fees


 2018


 2017


Revenue

Capital

Total


Revenue

Capital

Total


 £'000

 £'000

 £'000


 £'000

 £'000

 £'000

Investment management fees

86

345

431


72

289

361

 Less management fee rebates

(14)

(55)

(69)


(12)

(47)

(59)

Total

72

290

362


60

242

302









To avoid double charging investment management fees, the Investment Manager has agreed to rebate any periodic management fee that it receives from the Company by the amount of fees receivable by it from Blackfriars Asset Management Limited managed products ("Blackfriars products") in respect of the Company's investments in those funds. The Investment Manager has agreed that any performance fees that it earns from Blackfriars products in respect of the Company's investment in those funds will be rebated to the Company.


As at 31 March 2018 the Company had investments in the following Blackfriars products:


377,500 shares in Blackfriars Oriental Focus Fund 'B' at a total cost of £4,517,000 and a valuation at 31 March 2018 of £7,071,000.


4. Other expenses




 


2018


2017

 


£'000


£'000

 

Revenue expenses:




 

Administration and secretarial services

73


61

 

Directors' fees

74


68

 

Directors' national insurance

3


5

 

Auditor's remuneration

17


24

 

UK taxation compliance services

8


8

 

Overseas tax compliance services

17


17

 

Custodian fees

30


25

 

Registrar fees

21


18

 

Broker fees

31


11

 

Other expenses

47


45

 

Total revenue expenses

321


282

 





 

Capital expenses:




 

Research costs

26


-

 

Total capital expenses

26


-

 





 

Total other expenses

347

282

 

5. Dividends

 


 

(i) Paid during the financial year

 


2018 

 

2017  

 


£'000

£'000

 

Final dividend for the year ended 31 March 2017 of 3.2p per Ordinary Share (2016:  3.2p)

             640 

           640

 

Interim dividend for the year ended 31 March 2018 of 3.0p per Ordinary Share (2017:  2.5p)

             600

           500

 

Special dividend for the year ended 31 March 2017 of 4.3p per Ordinary Share (2016:  3.9p)

             860

           780

 


         2,100

        1,920

 









(ii) Payable in respect of the financial year

 







 

The total dividends payable in respect of the financial year, which form the basis for complying with section 1159 of the Corporation Tax Act 2010 are set out below:

 


 2018


 2017

 


 Revenue

 Capital

 Total


 Revenue

 Capital

 Total

 


 £'000

 £'000

 £'000


 £'000

 £'000

 £'000

 

Interim dividend for the year ended 31 March 2018 of 3.0p per Ordinary Share (2017:  2.5p)

             600

                 -

           600


           500

                 -

           500

 

Proposed final dividend for the year ended 31 March 2018 of 3.0p per Ordinary Share (2017:  3.2p)

600

                 -

600


           640

                 -

           640

 

Proposed special dividend for the year ended 31 March 2018 of 4.3p per Ordinary Share (2017:  4.3p)

-

860

860


                 -

           860

           860

 


1,200

860

2,060


        1,140

           860

        2,000

 

6. Return per Ordinary Share

 




2018


 2017

 


Revenue

Capital

Total


Revenue

Capital

Total

 

Return after tax

1,220,000

(2,437,000)

(1,217,000)


£1,050,000

£10,711,000

£11,761,000

 

Weighted average number of shares in issue

20,000,000

20,000,000

20,000,000


20,000,000

20,000,000

20,000,000

 

Return per

6.10p

(12.19)p

(6.09)p


5.25p

53.56p

58.81p

 

Ordinary Share

 

7. Net asset value per share


Net asset value per share


Net asset value


2018

2017


2018

2017


pence

pence


£'000

£'000


246.58

263.16


49,315

52,632












8. Financial instruments and capital disclosures

Risk management policies and procedures                 

Currency exposure at 31 March 2018









US

HK

GB Pounds

Indian

Korean

Taiwan

Philippine

Thai




Dollar

Dollar

Sterling

Rupee

Won

Dollar

Peso

Bhat

Other

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Debtors

-

-

50

3

79

-

4

-

-

136

Cash at bank

1,536

-

63

-

4

506

-

-

9

2,118

Creditors

-

-

(69)

-

-

-

-

-

-

(69)

Foreign currency exposure on net monetary items

1,536

-

44

3

83

506

4

-

9

2,185

Equities held at fair value through profit or loss

7,817

10,719

7,568

4,919

4,878

3,790

1,917

2,740

2,782

47,130

Total net foreign currency exposure

9,353

10,719

7,612

4,922

4,961

4,296

1,921

2,740

2,791

49,315

Currency exposure at 31 March 2017 










US

HK

GB Pounds

Indian

Korean

Taiwan

Philippine

Thai




Dollar

Dollar

Sterling

Rupee

Won

Dollar

Peso

Bhat

Other

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Debtors

-

-

813

-

-

-

-

-

-

813

Cash at bank

2,386

-

87

-

-

710

-

-

-

3,183

Creditors

-

-

(1,441)

-

-

-

-

-

-

(1,441)

Foreign currency exposure on net monetary items

2,386

-

(541)

-

-

710

-

-

-

2,555

Equities held at fair value through profit or loss

9,101

9,596

9,633

5,796

5,036

3,848

2,412

2,303

2,352

50,077

Total net foreign currency exposure

11,487

9,596

9,092

5,796

5,036

4,558

2,412

2,303

2,352

52,632

Interest rate risk                                                                                    

Equity price risk                                                                                   

Liquidity risk                                                                            

Credit risk                                                                                

Valuation of financial instruments                                                                     


31 March 2018


31 March 2017


Level 1

Level 2

Level 3

Total


Level 1

Level 2

Level 3

Total


£'000

£'000

£'000

£'000


£'000

£'000

£'000

£'000

Investments

     46,547

                 -

              583

     47,130


     48,806

               836

           435

     50,077











Capital management policies and procedures

9. Distributable reserves

10. Post balance sheet event

11. Directors' interests

31 March 2018

31 March 2017

3,415

3,415

3,550,269

1,744,728

3,891

-

30,000

30,000

-

-

Statement of Directors' Responsibilities in respect of the Annual Report, the Directors' Remuneration Report and Financial Statements

 

 

The Directors are responsible for preparing the Annual Report, the Directors' Remuneration Policy and Implementation Reports and the Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare Financial Statements for each financial year. In conformity with the law, the Directors have elected to prepare Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the net return of the Company for that period. In preparing these Financial Statements, the Directors are required to:

 

•    select suitable accounting policies and then apply them consistently;

 

•    make judgements and accounting estimates that are reasonable and prudent;

 

•    state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Financial Statements;

 

•    prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and

 

•    in compliance with the Companies Act 2006, prepare a Directors' Report, a Strategic Report and a Directors' Remuneration Report

 

 

The Directors are responsible for keeping adequate accounting records, sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable the Directors to ensure that the Financial Statements and Directors' Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

The Financial Statements are published on www.blackfriarsam.com, which is a website maintained by the Company's Investment Manager. The Directors are responsible for the maintenance and integrity of the Company's information that is available on the website. The Directors do not take responsibility for the maintenance of the Investment Manager's website. Legislation in the United Kingdom governing the preparation and dissemination of the Financial Statements may differ from legislation in other jurisdictions.

 

Directors' confirmation statement

 

Each of the Directors, (Harry Wells (Chairman), Jim Ryall, Gregory Shenkman, Susan Thornton and Tom Waring), confirms that, to the best of the knowledge of that Director:

 

·    the Financial Statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and net return of the Company; and

 

·    the Annual Report, including the Strategic Report, includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

 

Having taken advice from the Audit and Risk Committee, the Directors consider that the Annual Report and Financial Statements taken as a whole are fair, balanced and understandable and provide information necessary for shareholders to assess the Company's position and performance, business model and strategy.

 

Financial Information

This announcement does not constitute the Company's statutory accounts.  The financial information for 2018 is derived from the statutory accounts for 2018, which will be delivered to the registrar of companies following the Company's Annual General Meeting.  The statutory accounts for 2017 have been delivered to the registrar of companies.  The auditors have reported on the 2018 and 2017 accounts; their reports were unqualified and did not include a statement under Section 498(2) or (3) of the Companies Act 2006.

 

Printed copies of the Annual Report and Financial Statements for the year ended 31 March 2018 will be posted to shareholders in due course and can be requested from the Registered Office of the Company. A pdf copy can be viewed or downloaded from the Investment Manager's website www.blackfriarsam.com. Neither the contents of the Investment Manager's website nor the contents of any website accessible from hyperlinks on the Investment Manager's website (or any other website) is incorporated into or forms part of this announcement.

 

The Annual Report will be submitted to the National Storage Mechanism and will shortly be available for inspection at: http://www.morningstar.co.uk/uk/NSM

 

Annual General Meeting

The Annual General Meeting of the Company will be held at the offices of Blackfriars Asset Management Limited, 9 Cloak Lane, London, EC4R 2RU on 12 July 2018 at 12 noon.  The notice of AGM is contained in the Annual Report for the year ended 31 March 2018.

 

12 June 2018

 

Secretary and registered office:

PraxisIFM Fund Services (UK) Limited

Mermaid House,

2 Puddle Dock,

London EC4V 3DB

 

For further information contact:

Anthony Lee / Ciara McKillop

PraxisIFM Fund Services (UK) Limited

Tel: 020 7653 9690

 

 

 

 

 END

 


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Annual Financial Report - RNS