Annual Financial Report Annou
MURRAY INTERNATIONAL TRUST PLC
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2009
1. CHAIRMAN' STATEMENT
Highlights
- Net Asset Value Total Return of 28.6%
- Benchmark Total Return of 22.5%
- Total proposed dividend increased by 16.4% versus 2008
- Shares trading at a premium to net asset value per Ordinary share for most of the year
- £33m of new shares issued at a premium during the year
Performance
I am pleased to report that the total return on net asset value during the year was +28.6%, ahead of the return on the benchmark index of +22.5%. The share price total return was +35.2% reflecting a tightening in the discount. The Investment Manager's Review in the Annual Report contains an attribution analysis which shows the factors affecting net asset performance. Key positive influences were significant overweights in Asia ex Japan and Latin America. The large underweighting in the United States contributed positively to relative outperformance, while strong stock selection in the UK enhanced capital returns.
Background
2009 proved to be an exceptionally eventful year for global financial markets. Patience, resolve and steady nerves were required in abundance as Governments and Global Central Banks were faced with serious macro-economic imbalances. Unprecedented measures were taken particularly in the monetary field the most notable of which was the increase in the money in circulation through quantitative easing. With the global financial system very fragile and many leading economies in recession, such measures were justified as being essential for survival. Deteriorating budget deficits were a constant feature throughout the year as the Bank of England ensured that additional liquidity was put into the financial system. Bank balance sheets were repaired, bad debts began to be restructured, and confidence was restored. But at what future cost? Little regard was paid to the enormous expense of this exercise, but it is clear those countries worst effected will be paying the price for many years to come. The journey back to fiscal rectitude could prove long and painful. Such longer term reality was of no concern to stock markets, however. Equity investors welcomed the additional liquidity and the implicit guarantees Governments bestowed on highly leveraged institutions. Investors' risk appetite returned in a major way, sending stock markets higher from oversold levels in March. Whilst high double-digit returns from the United States and the UK sat uncomfortably with deteriorating fiscal fundamentals, the same could not be said of the Emerging World. Certain Latin American and Asian equity markets produced spectacular returns. Fortified by surplus savings, healthy banking systems and recovering economic growth, equity investors had good reason to feel comfortable with evolving fundamentals. Given the consistent corporate earnings and dividend growth produced in these regions, market recoveries were not unexpected, although the magnitude of individual returns was surprisingly strong. Global diversification and emphasis on strong corporate fundamentals enabled the Trust to fulfil its investment objectives of capital and income growth, which was satisfying considering the generally hostile corporate environment which prevailed.
Dividends
The wide geographical spread of the portfolio has also contributed to strong revenue growth which would not have been the case had the portfolio been concentrated in the UK where dividends overall fell, particularly in the financial sector. We were able to increase the level of the three interim dividends that have been paid to 5.6p (2008: 4.8p). Your Board is now recommending a final dividend of 10.2p (2008: 8.8p) which, subject to the approval of shareholders at the Annual General Meeting, will be paid on 14 May 2010 to shareholders on the register on 9 April 2010. Subject to the approval of the final dividend, the total dividend for the year will amount to 27p, an increase of 16.4% from last year (2008: 23.2p). B Ordinary shares will receive their capitalisation issue of B Ordinary shares at the same time as each dividend is paid. Accordingly, subject to approval at the Annual General Meeting, B Ordinary shareholders will be issued on 14 May 2010 with new B Ordinary shares equivalent in Net Asset Value to the recommended final dividend for the year just ended.
Gearing
In the Half Yearly Report I mentioned that we had increased the proportion of net assets invested in equities to 106% from 97% at the beginning of the year. We were using our gearing to support investment in both bonds and equities with our cash reduced to just over 3%. Following the rise in markets, we reduced the effective gearing somewhat so that at 31 December 2009 the proportion invested in equities had come down to 104% with cash rising to 4%.
For some time your Board has been considering the options in regard to the loan of approximately £55.9 million which forms part of our gearing and which expires next month. An announcement will be made as soon as a course of action has been decided upon.
Issue of New Shares
At the Annual General Meeting held in April 2009 shareholders authorised Directors to issue up to 10% of the Company's issued share capital for cash at a premium to the prevailing asset value at the time of each issue. During the year 5 million new Ordinary shares or approximately 5.6% of our capital were issued under this authority. The weighted average premium of all the shares issued during the year is approximately 2.1%, resulting in a modest enhancement to net asset value for existing shareholders. Given the continuing demand for the Company's shares the Board will be seeking approval from shareholders to renew this authority for 2010. As in previous years, new shares will only be issued at a premium to net asset value in order to avoid diluting the asset values of existing shareholders. Resolutions to this effect will be proposed at the Annual General Meeting and the Directors strongly encourage shareholders to support this proposal.
Directorate
As I advised shareholders in the Half Yearly Report, following the retirement of David Benson at the last AGM, the Board was very pleased to appoint Dr Kevin Carter as an independent non-executive Director of the Company in April 2009. Dr Carter has had a very successful career in investment both within asset management and as an adviser to pension funds and has brought valuable expertise to the Board. A resolution to approve Dr Carter's election to the Board will be submitted to shareholders at the Annual General Meeting.
Annual General Meeting
This year's Annual General Meeting will be held in Glasgow on Friday 30 April 2010 at 12.30 p.m. in the Strathclyde Suite of the Glasgow Royal Concert Hall. As at previous AGMs, there will be a presentation from the Manager and an opportunity to meet the Directors and Manager and ask questions. I would be grateful if you would confirm your attendance by completing the notice that will accompany the Annual Report and returning it together with an indication of any particular questions that you would like to ask.
Circular
This year the Directors are proposing to make further amendments to the Company's Articles of Association to reflect the final changes required as a result of the staged implementation of the Companies Act 2006 and the introduction of the Shareholders' Rights Directive. Accompanying the Annual Report and Accounts shareholders will receive a circular which incorporates the Notice of Annual General Meeting and the resolutions to be proposed at that meeting and at separate Class Meetings of the Ordinary and B Ordinary shareholders. The proposed changes to the Articles will be described in greater detail in the circular.
Outlook
Investment decisions taken in late 2008 and early 2009 ensured that the Trust's portfolio has been heavily exposed to equities during the past twelve months of rising markets. This proved very beneficial for relative performance and outright capital gains. The issue now is whether current equity valuations can be sustained by rising earnings and dividends or whether expectations have become unrealistic. There can be no denying that structural imbalances in the US and UK will likely restrain growth for some considerable period. Against this backdrop profits and dividends may struggle to support current valuations. Conversely, many companies exposed to emerging markets continue to prosper because the countries in which they operate remain genuine growth economies. Here valuations relative to prospects are not stretched and offer good potential investment returns. Whilst the overall case for equities may not be as compelling as it was before the recent rise in markets, sufficient opportunities still exist to justify maintaining current equity exposure over the medium term.
J F H Trott
Chairman
22 February 2010
2. MANAGER'S REVIEW
Background
Global equity markets produced some surprisingly strong returns over the past twelve months in Sterling terms. These were secured against a fragile economic backdrop that witnessed the introduction of numerous unorthodox policies and relentlessly rising fiscal indebtedness. Faced with widespread imbalances from ongoing credit contraction, Governments in the Western World gambled on policy initiatives designed to bolster confidence and rekindle growth. The net result was the largest transfer of private liabilities on to the public sector balance sheet in history. The positive response of equity markets and corporate bonds suggest the majority of investors welcomed such actions. Well above average returns in both asset classes are testimony to this. Unfortunately sovereign bond markets were not so sanguine about evolving fundamentals. Recognising the enormous future liabilities associated with sharply deteriorating fiscal deficits, UK Gilts and US Treasuries endured their worst twelve month performance for over thirty years. Seldom in financial history have such polar opposites of investors' perception prevailed: equity markets enthusiastically embracing widespread economic bailouts whilst sovereign bond markets fearfully fretting over future financing obligations. It remains to be seen which view best reflects reality, but we remain steadfastly with the cautious synopsis. We expect the heavily indebted economies of the UK and US to remain hostage to foreign capital inflows, burdened with structurally higher unemployment and resigned to long periods of below-trend growth. Getting back to living within your means is a long, painful process for all involved. Thankfully, not all nations suffered from the economic woes of the West. In Asia and Latin America positive fundamentals prevailed. Flush with surplus savings from prudent monetary and fiscal discipline, numerous developing countries experienced steady economic recovery following last year's cyclical downturn. No longer overly dependent on exports, it was very encouraging to witness the positive effects favourable demographics and rising real incomes are beginning to have on such emerging economies.
The spectrum of stockmarket returns that prevailed over the year was one of the largest ever recorded. At the extremes, Brazil returned +106%, whilst Japan declined -6%, in Sterling terms. Other notable positive contributions included huge returns from Korea, Taiwan and Thailand, all three of which delivered 50% plus in Sterling. On a regional basis the spread was not so pronounced, with Europe, North America and the UK up +20%, +15% and +28% respectively. For the seventh time in the past decade Latin America produced the strongest returns, up 84% in Sterling terms. The influence of Sterling was mildly restrictive on total returns. The Pound appreciated in the range of 5-15% against the Yen, US Dollar and Euro, but declined the same amount against the Canadian, Australian and New Zealand dollar. Below average returns were recorded in the USA for the eighth time over the past ten years.
Performance
The Net Asset Value Total Return for the year to 31 December 2009 with net dividends reinvested was 28.6% compared with a return on the benchmark of 22.5%. A full attribution analysis is given in the Annual Report which details the various influences on portfolio performance. In summary, of the 960 basis points (before expenses) of performance above the index, asset allocation contributed 840 basis points and stock selection -460 basis points. Structural effects relating to the fixed income portfolio, net of borrowing and hedging costs, added a further 580 basis points of positive relative performance, a reflection of the outperformance of equities relative to bonds. Within the equity asset allocation, positive contributions came from underweighting the United States and overweighting towards Asia and Latin America. Superior stock selection in the UK also enhanced overall performance.
USA
The underlying economic health of the United States was of constant concern throughout 2009. Statistically the economy recovered from one of the longest and deepest recessions on record, but statistics rarely tell the whole truth. Beneath the surface deep rooted problems persisted. Property owners remained burdened with negative equity. Unemployment reached its highest level for twenty years and mountainous levels of private and public sector debt continued to fester on the American household and Government balance sheet. Somewhat reluctantly consumers began to pay back debt. Perhaps provoked more by Hobson's choice than free will, it nevertheless was a step in the right direction. Conversely, the Government lurched completely in the opposite way. With all orthodox monetary and fiscal policy options exhausted, the Authorities ramped up spending through enormous liquidity creation. In doing so, economic growth was rekindled, but at what price to future generations? An unhealthy reliance on government for growth was the predominant feature in 2009, but it cannot last. Financial markets are well aware that fiscal over-indebtedness is a chronic condition that must ultimately be treated by a long, slow, protracted withdrawal from government dependency. Failure to do so could have serious repercussions on the US dollar and bond market. Against this backdrop, our long term view remains unchanged. A protracted deleveraging cycle leading to a structurally higher savings rate is likely in America. This would translate into a painful period of anaemic economic growth during which imbalances are redressed and where headwinds against corporate profit and dividend growth remain intense. In short, a relatively unattractive investment environment for equities. Consequently the portfolio exposure to the United States remains very defensive in its nature. The only notable investment activity over the period was a new position in Schlumberger, a leading global oil services company.
UK
The beleaguered UK economy showed virtually no signs of life throughout the period. Enduring slumps in services, manufacturing and construction kept the economy mired in its longest recession on record and even the consumer's decade long love affair with credit began to show signs of cooling. Burdened by crippling debt servicing obligations and fearful of rising unemployment, consumers paid back more than they borrowed in 2009 for the first time since records began. Given the dominance of consumer credit within UK economic policy this was remarkable. Unfortunately the year witnessed numerous record breaking events, most of them negative. The nation amassed the largest budget imbalance of any OECD country. Base rates fell to historical lows, yet sovereign bond yields spiked sharply higher on very material gilt issuance. The deficit funding gap was stretched beyond all recognition, widening out to its worst level since the Bank of England was first established in 1694. With the banking system effectively paralysed by poor asset quality and capital constraints, the Central Bank arguably had no choice but to dramatically increase liquidity. Eloquently referred to as quantitative easing, in reality it meant printing money. Such desperate actions had negligible impact, except to attract the attention of sovereign rating agencies. The outlook on Britain's debt rating moved from stable to negative, a definite sign of growing international concerns. The main issue going forward is the desperate need for a credible plan to restore fiscal stability whilst simultaneously avoiding an economic depression. Accomplishing such a feat will be very difficult indeed given the structural economic imbalances that persist. Not surprisingly, the outlook for domestic UK corporate profits and dividends remains opaque and of concern to us. High market expectations appear unrealistic relative to prevailing fundamentals. The current exposure in the portfolio remains skewed towards overseas earners, such as Rio Tinto, Standard Chartered and BAT, and this strategy will continue over the medium term.
Europe
Of greatest concern to European politicians, policymakers and the public in 2009 was the alarming divergence of economic conditions throughout the region. What separated the good from bad was predominantly down to credit culture. The collapse in worldwide demand badly affected export dependent economies such as Germany, but such difficulties proved cyclical rather than structural. Characterised by double digit savings rates, few property market excesses and low levels of consumer credit, many countries in core Europe and Scandinavia avoided economic slumps. Indeed, most witnessed recoveries in economic growth by late summer, albeit at a slow pace. Conversely, for peripheral European countries carrying huge debt obligations, deep-rooted structural imbalances prevented any respite from economic recessions. Spain suffered a spectacular property crash as excessive leverage was unwound. The negative wealth effect decimated the economy with a human cost of 18% unemployment and rising. Ireland struggled to finance its economy as credit conditions tightened, causing widespread contraction of all economic sectors. Worst of all, persistent fiscal over-spending in Greece merited a sovereign debt downgrade and uncomfortable intervention from the International Monetary Fund. Considering the wide spectrum of economic conditions experienced in Europe, the European Central Bank showed remarkable resilience with policy decisions. Without resorting to the desperate measures deployed by the US Federal Reserve and Bank of England, namely quantitative easing, the ECB diligently delivered on responsible directives. Consequently Continental Europe has credible deficit reduction plans in place, and a solid platform for future growth. At the corporate level, European companies delivered decent returns. Core holdings such as Nordea Bank in Sweden, industrial equipment manufacturer Schneider in France, German retailer Metro and Portugal Telecom all performed well, exceeding both capital return and income expectations. A new position in leading global pharmaceutical company, Roche, was established, emphasising our future confidence and commitment to interesting investment opportunities still prevailing in Europe.
Japan
Contracting demand, declining property prices, effectively zero interest rates, debt-deflation, deep economic recession, negative real incomes and insolvent banks. Whilst such harsh economic reality was new to much of the Developed World in 2009, it was all too bitterly familiar to Japan. Having collapsed into deflation in the mid 1990's, many believed economic conditions in Japan could not get any worse. Unfortunately they did. The economy's reliance upon and vulnerability towards exports was cruelly exposed by declining global demand. The almost total wipe-out of machine tool and industrial exports contributed to a severe contraction in annualised growth. More worryingly negative pricing prevailed and unemployment spiked sharply upwards. In the face of such adversity, the Japanese authorities were powerless to respond. Fifteen years of zero interest rate policy and three enormous fiscal packages over the same period had delivered nothing. There were simply no policy options left to try. Left in a state of economic paralysis, the Bank of Japan has no option but to passively observe and hope reviving global economic activity will lead to export recovery at some point. Policymakers in the UK and US who have recently followed the path of zero interest rates and over-spending ignore the Japanese experience at their peril. Against this economic backdrop it proved very difficult to make money. The portfolio of quality companies with solid balance sheets and decent dividend returns held up relatively well, but not enough to add value. In a period of such strong global market returns having any exposure to Japan was arguably too much. Through overall gross asset appreciation and divestment of Toyota, Orix and Bank of Yokohama earlier in the year, total Japanese exposure declined to 6.4% by year end. Expect this to fall further if better investment opportunities continue to surface elsewhere.
Asia and Emerging Markets
It was with welcome relief that not all geographical regions spent the past year struggling to stay in business. Asia and the Emerging World showed strong resilience throughout. Unburdened by insolvent banking systems and fortified with hard-earned savings, countries such as China, India and Brazil demonstrated emerging economic maturity. Years of prudent monetary and fiscal policy provided the platform to withstand the cyclical global economic downturn and prosper from others misfortune. Although China and India witnessed growth rate declines to 8%, in a global context such performance was rock-solid. Unable to stomach the shift of economic power from West to East, the Developed World sneered and criticised stimulative fiscal initiatives deployed in both countries. This failed to recognise the positive ripple effects such actions had throughout the world. More importantly, both countries could comfortably afford it. More export oriented economies, such as Taiwan and Korea coped admirably with the downturn in demand. Well financed, relatively debt-free manufacturing companies located in both countries provided a text-book response on managing assets through adversity. If/when the global recovery gains traction, we expect a sharp rebound in industrial output. Another standout in the Emerging World was Brazil. Commodity markets may have stalled in 2009 but domestic consumption in Brazil hardly missed a beat. Fuelled by favourable demographics and rising real-income growth, consumers in the largest economy in South America kept spending. With a World Cup in 2014 and the Olympics in 2016 on the longer term horizon, domestic prospects in Brazil look well supported for several years to come.
Stockmarket weakness during the first quarter of the year provided excellent opportunities to increase exposure to Asia and Emerging markets. Asia received the lion's share of this. New positions were established in Petrochina and China Mobile, both dominant players in their respective industries. In addition, further investment was added to existing positions in Taiwan Semiconductor and Taiwan Mobile, two cash rich companies with solid dividend prospects. In Brazil, a new holding was introduced in Vale, one of the world's largest commodity companies. Specific stock opportunities also arose in Mexican Airport operator, Grupo Asur and Argentine steel pipe manufacturer, Tenaris. Both received additional investment over the period. Although emerging market performance was exceptionally strong in 2009, this followed an exceptionally weak year in 2008. The key to the future lies in valuation. At current levels, the asset class does not appear expensive. Corporate earnings and dividends are rising, which should be supportive this year. In a world where growth is scarce, this is likely to increasingly attract the attention of growth hungry global investors.
Outlook
What is normal? A simple question without a simple answer. Economists, politicians and policymakers constantly extol the virtues of returning to economic normality, but without defining exactly what it is. For decades now the Pavlovian response of policymakers to every credit crisis has been identical. Cut interest rates, increase government spending, create a further wave of leverage and thereby stimulate a new economic cycle. For the architects of policy this process is normal purely because of its historical success rate. For them it creates a normal business cycle, based on debt and credit. For the heavily indebted Western World, we have persistently argued that such actions will no longer prove effective. There is simply too much debt already outstanding. The financial tsunami that caused havoc throughout the world over the past twenty four months brought with it irrevocable change. The normality that emerges in its wake will bear little resemblance to the so called normality of the past. Psychological scars run deep, past mistakes are proving very costly to rectify and structural vulnerabilities are being exposed. In the post-credit crisis world, deteriorating pension deficits, structurally higher unemployment, anaemic income growth, onerous debt repayment and weak consumption will characterise normality. An insatiable demand for savings will limit productive investment, consigning countries such as the UK and US to below trend growth whilst imbalances are painfully redressed.
Compounding an already problematic position is the need to restore fiscal and monetary credibility. Many countries resorted to unorthodox policies and emergency initiatives to combat credit contraction. These now need to be unwound. The rise in sovereign bond yields is indicative of concerns over future financing and sustainability of current policy. An end to quantitative easing, and potential raising of interest rates may seem premature at present, but we make no apologies for raising concerns. The risks associated with these are rising. It remains to be seen just how and when Central Banks engineer this, but for those countries worst affected it is unlikely to be pleasant. In anticipation, the portfolio has become more diversified and defensive of late. Based on strong corporate fundamentals, exposure to Asia and Emerging Market remains high, but solid profit and dividend growth of incumbent companies justifies such positioning. Exposure to the UK and the United States will stay relatively low, the emphasis being on global companies with overseas earnings. Europe will continue to be well represented, bringing valuable sector and geographical diversification to the overall portfolio. Overall, equity valuations are nowhere near as attractive as this time last year, but we believe potentially decent investment returns still exist for focused international investors.
Bruce Stout
Aberdeen Asset Managers Limited
Investment Manager
22 February 2010
3. BUSINESS REVIEW
A review of the Company's operations is given in the Chairman's Statement and the Manager's Report. This includes a review of the business of the Company and its principal activities, likely future developments of the business, recommended final dividend and details of the issue of new shares during the year by the Company. The major risks associated with the Company are detailed below and in note 19 to the financial statements. Further details on how the portfolio is managed to achieve the risk management policies and objectives are disclosed in the Annual Report. The Key Performance Indicators for the Company including NAV and share price information are detailed below under Financial Highlights.
Principal Risks and Uncertainties
Many of the stocks in which the Company invests are exposed to the risk of political change, exchange controls, tax or other regulations which may affect their value and marketability. Currency fluctuations may also affect the value of the Company's investments and the income derived therefrom. Companies in emerging markets are not always subject to the equivalent accounting, auditing and financial standards of those in the United Kingdom. There may therefore be less supervision and regulation in this respect. Currently 70% of the investment management fee and finance costs and 100% of the performance fee are taken out of capital. This increases distributable income at the expense of capital growth, which will either be eroded or constrained. Maintaining a high level of dividend may also diminish capital value. In common with most investment trusts, Murray International Trust is able to borrow for investment purposes. The use of gearing is likely to lead to volatility in the Net Asset Value ('NAV'), meaning that a relatively small movement either down or up in value of the Company's total assets will result in a magnified movement in the same direction of that NAV. There is no guarantee that the market price of shares in investment trusts will fully reflect their
underlying NAV.
The market prices of fixed interest stocks and, to a lesser extent, convertibles may be affected by changes in interest rates.
Further details in respect of the risks associated with investment in the Company are detailed in note 19 to the financial statements.
4. STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the 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 profit or loss 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 judgments 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
The Directors are responsible for keeping adequate 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 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.
Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Statement of Corporate Governance that comply with that law and those regulations.
The financial statements are published on www.murray-intl.co.uk which is a website maintained by the Company's Manager. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors confirm that to the best of our knowledge:
- the financial statements, prepared in accordance with the applicable UK Accounting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
- the Directors' 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 the Company faces.
For Murray International Trust PLC
J F H Trott
Chairman
22 February 2010
5. INCOME STATEMENT
For the year ended 31 December 2009
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Year ended 31 December 2009 |
Year ended 31 December 2008 |
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|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
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|||
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|||
|
Gains/(losses) on investments |
10 |
- |
142,123 |
142,123 |
- |
(93,840) |
(93,840) |
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|||
|
Income |
2 |
36,571 |
- |
36,571 |
32,242 |
8 |
32,250 |
|
|||
|
Investment management fees |
3 |
(1,052) |
(2,454) |
(3,506) |
(1,018) |
(2,374) |
(3,392) |
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|||
|
Performance fees |
4 |
- |
(2,707) |
(2,707) |
- |
(2,269) |
(2,269) |
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|||
|
VAT recoverable on investment management and performance fees |
21 |
|
- |
- |
310 |
1,027 |
1,337 |
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|||
|
Currency losses |
|
|
(1,523) |
(1,523) |
- |
(2,200) |
(2,200) |
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|||
|
Other expenses |
5 |
(1,485) |
- |
(1,485) |
(1,469) |
- |
(1,469) |
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|||
|
|
________ |
_______ |
________ |
_______ |
_______ |
_______ |
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Net return/(loss) before finance costs and taxation |
34,034 |
135,439 |
169,473 |
30,065 |
(99,648) |
(69,583) |
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||||
|
|
|
|
|
|
|
|
|
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Finance costs |
6 |
(1,106) |
(1,989) |
(3,095) |
(885) |
(2,066) |
(2,951) |
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|||
|
|
|
________ |
_______ |
________ |
_______ |
_______ |
_______ |
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Return/(loss) on ordinary activities before tax |
|
32,928 |
133,450 |
166,378 |
29,180 |
(101,714) |
(72,534) |
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|
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|
|
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|
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Tax on ordinary activities |
7 |
(5,638) |
2,027 |
(3,611) |
(7,282) |
1,619 |
(5,663) |
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|
|
________ |
_______ |
________ |
_______ |
_______ |
_______ |
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Return/(loss) attributable to equity shareholders |
|
27,290 |
135,477 |
162,767 |
21,898 |
(100,095) |
(78,197) |
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________ |
_______ |
________ |
_______ |
_______ |
_______ |
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|
|
|
|
|
|
|
|
|
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Return/(loss) per Ordinary share (pence) |
9 |
29.5 |
146.6 |
176.1 |
25.0 |
(114.4) |
(89.4) |
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________ |
_______ |
________ |
_______ |
_______ |
_______ |
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Return/(loss) per Ordinary share assuming full conversion of the B Ordinary shares (pence) |
9 |
29.2 |
144.8 |
174.0 |
24.7 |
(113.0) |
(88.3) |
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________ |
_______ |
________ |
_______ |
_______ |
_______ |
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The total column of this statement represents the profit and loss account of the Company. |
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A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement. |
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All revenue and capital items in the above statement derive from continuing operations. |
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No operations were acquired or discontinued in the year. |
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The accompanying notes are an integral part of these financial statements. |
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Ordinary dividends on equity shares (£'000) |
8 |
22,566 |
- |
22,566 |
19,148 |
- |
19,148 |
||||
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________ |
_______ |
________ |
_______ |
_______ |
_______ |
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The above dividend information does not form part of the Income Statement. |
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6. BALANCE SHEET
As at 31 December 2009
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|
As at |
As at |
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|
31 December 2009 |
31 December 2008 |
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Notes |
£'000 |
£'000 |
£'000 |
£'000 |
|
Non-current assets |
|
|
|
|
|
|
Investments listed at fair value through profit or loss |
10 |
|
860,106 |
|
618,212 |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Debtors |
11 |
3,691 |
|
22,202 |
|
|
Cash and short term deposits |
|
28,255 |
|
99,301 |
|
|
|
|
_______ |
|
_______ |
|
|
|
|
31,946 |
|
121,503 |
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|
|
Creditors: amounts falling due within one year |
|
|
|
|
|
|
Bank loans |
12/13 |
(55,875) |
|
- |
|
|
Other creditors |
12 |
(9,761) |
|
(8,233) |
|
|
|
|
_______ |
|
_______ |
|
|
|
|
(65,636) |
|
(8,233) |
|
|
Net current (liabilities)/assets |
|
|
(33,690) |
|
113,270 |
|
|
|
|
_______ |
|
_______ |
|
Total assets less current liabilities |
|
|
826,416 |
|
731,482 |
|
|
|
|
|
|
|
|
Creditors: amounts falling due after more than one year |
|
|
|
|
|
|
Bank loans and debentures |
12/13 |
(80,806) |
|
(159,107) |
|
|
Other creditors |
12 |
(3,797) |
|
(3,548) |
|
|
|
|
_______ |
|
_______ |
|
|
|
|
|
(84,603) |
|
(162,655) |
|
|
|
|
_______ |
|
_______ |
|
Net assets |
|
|
741,813 |
|
568,827 |
|
|
|
|
_______ |
|
_______ |
|
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
|
Called-up share capital |
14 |
|
23,996 |
|
22,725 |
|
Share premium account |
|
|
50,693 |
|
19,167 |
|
Capital redemption reserve |
|
|
8,230 |
|
8,230 |
|
Capital reserve |
15 |
|
613,396 |
|
477,931 |
|
Revenue reserve |
|
|
45,498 |
|
40,774 |
|
|
|
|
_______ |
|
_______ |
|
Equity shareholders' funds |
|
|
741,813 |
|
568,827 |
|
|
|
|
_______ |
|
_______ |
|
|
|
|
|
|
|
|
Net Asset Value per Ordinary and B Ordinary share (pence) |
16 |
|
772.9 |
|
625.8 |
|
|
|
|
_______ |
|
_______ |
7 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the year ended 31 December 2009
|
For the year ended 31 December 2009 |
|
|
|
|
|
|
|
|
|
|
|
Share |
Capital |
|
|
|
|
|
|
Share |
Premium |
Redemption |
Capital |
Revenue |
|
|
|
|
Capital |
Account |
Reserve |
Reserve |
Reserve |
Total |
|
|
Note |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 31 December 2008 |
|
22,725 |
19,167 |
8,230 |
477,931 |
40,774 |
568,827 |
|
Return on ordinary activities after taxation |
|
- |
- |
- |
135,477 |
27,290 |
162,767 |
|
Dividends paid |
8 |
|
- |
- |
- |
(22,566) |
(22,566) |
|
Issue of new shares |
|
1,271 |
31,526 |
- |
(12) |
- |
32,785 |
|
|
|
________ |
______ |
______ |
______ |
______ |
______ |
|
Balance at 31 December 2009 |
|
23,996 |
50,693 |
8,230 |
613,396 |
45,498 |
741,813 |
|
|
|
________ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
For the year ended 31 December 2008 |
|
||||||
|
|
|
|
Share |
Capital |
|
|
|
|
|
|
Share |
Premium |
Redemption |
Capital |
Revenue |
|
|
|
|
Capital |
Account |
Reserve |
Reserve |
Reserve |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 31 December 2007 |
|
21,926 |
22 |
8,230 |
578,035 |
38,024 |
646,237 |
|
Return on ordinary activities after taxation |
|
- |
- |
- |
(100,095) |
21,898 |
(78,197) |
|
Dividends paid |
8 |
- |
- |
- |
- |
(19,148) |
(19,148) |
|
Issue of new shares |
|
799 |
19,145 |
- |
(9) |
- |
19,935 |
|
|
|
________ |
______ |
______ |
______ |
______ |
______ |
|
Balance at 31 December 2008 |
|
22,725 |
19,167 |
8,230 |
477,931 |
40,774 |
568,827 |
|
|
|
________ |
______ |
______ |
______ |
______ |
______ |
8 CASH FLOW STATEMENT
For the year ended 31 December 2009
|
|
|
Year ended |
Year ended |
||
|
|
|
31 December 2009 |
31 December 2008 |
||
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
|
Net cash inflow from operating activities |
17 |
|
28,539 |
|
24,172 |
|
|
|
|
|
|
|
|
Returns on investments and servicing of finance |
|
|
|
|
|
|
Interest paid |
|
(3,642) |
|
(2,646) |
|
|
|
|
________ |
|
________ |
|
|
Net cash outflow from servicing of finance |
|
|
(3,642) |
|
(2,646) |
|
|
|
|
|
|
|
|
Corporation tax paid |
|
|
(3,173) |
|
(1,751) |
|
|
|
|
|
|
|
|
Financial investment |
|
|
|
|
|
|
Purchases of investments |
10 |
(165,960) |
|
(202,651) |
|
|
Sales of investments |
10 |
66,719 |
|
169,789 |
|
|
|
|
________ |
|
________ |
|
|
Net cash outflow from financial investment |
|
|
(99,241) |
|
(32,862) |
|
|
|
|
|
|
|
|
Equity dividends paid |
|
|
(22,566) |
|
(19,148) |
|
|
|
|
________ |
|
________ |
|
Net cash outflow before financing |
|
|
(100,083) |
|
(32,235) |
|
|
|
|
|
|
|
|
Financing |
|
|
|
|
|
|
Share issue |
14 |
32,792 |
|
19,935 |
|
|
Debenture stock bought back |
13 |
(882) |
|
- |
|
|
Loans repaid |
|
- |
|
(19,850) |
|
|
Loans drawn down |
|
- |
|
38,915 |
|
|
|
|
________ |
|
________ |
|
|
Net cash inflow from financing |
|
|
31,910 |
|
39,000 |
|
|
|
|
________ |
|
________ |
|
(Decrease)/increase in cash |
18 |
|
(68,173) |
|
6,765 |
|
|
|
|
________ |
|
________ |
9 NOTES TO THE FINANCIAL STATEMENTS
|
For the year ended 31 December 2009 |
||
|
|
||
|
1. |
Accounting policies |
|
|
|
(a) |
Basis of preparation |
|
|
|
The financial statements have been prepared in accordance with applicable UK Law and Accounting Standards (UK Generally Accepted Accounting Practice) and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (issued in January 2009). They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The financial statements have been prepared on a going concern basis. |
|
|
|
|
|
|
(b) |
Income |
|
|
|
Dividends receivable on equity shares (other than special dividends) are treated as revenue for the year on an ex-dividend basis. Where no ex-dividend date is available dividends are recognised on their due date. Provision is made for any dividends not expected to be received. Special dividends are credited to capital or revenue, according to their circumstances. |
|
|
|
|
|
|
|
The fixed returns on debt securities are recognised on a time apportionment basis so as to reflect the effective yield on the debt securities and shares. |
|
|
|
|
|
|
|
Interest receivable from cash and short-term deposits and interest payable is accrued to the end of the year. |
|
|
|
|
|
|
(c) |
Expenses |
|
|
|
All expenses are accounted for on an accruals basis and are charged to the Income Statement. Expenses are charged against revenue except as follows: |
|
|
|
- transaction costs on the acquisition or disposal of investments are charged to the capital account in the Income Statement; |
|
|
|
- expenses are charged to realised capital reserves where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect the investment management fee has been allocated 30 per cent to revenue and 70 per cent to realised capital reserves to reflect the Company's investment policy and prospective income and capital growth. The performance fee has been charged 100% to realised capital reserves, as the fee will have arisen wholly or predominantly by virtue of the capital performance of the investments. |
|
|
|
|
|
|
(d) |
Taxation |
|
|
|
Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the Balance Sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the Balance Sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the financial statements which are capable of reversal in one or more subsequent periods. Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws enacted or substantively enacted at the Balance Sheet date. |
|
|
|
|
|
|
|
Due to the Company's status as an investment trust company and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments. |
|
|
|
The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue within the Income Statement on the same basis as the particular item to which it relates using the Company's effective rate of tax for the year, based on the marginal basis. |
|
|
|
|
|
|
(e) |
Investments |
|
|
|
All investments have been designated upon initial recognition as fair value through profit or loss. This is done because all investments are considered to form part of a group of financial assets which is evaluated on a fair value basis, in accordance with the Company's documented investment strategy, and information about the grouping is provided internally on that basis. |
|
|
|
|
|
|
|
Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are measured initially at fair value. Subsequent to initial recognition, investments are valued at fair value through profit or loss. For listed investments, this is deemed to be bid market prices or closing prices for SETS (London Stock Exchange's electronic trading service) stocks sourced from the London Stock Exchange. |
|
|
|
|
|
|
|
Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the Income Statement and are ultimately recognised in the capital reserve. |
|
|
|
|
|
|
(f) |
Borrowings |
|
|
|
Monies borrowed to finance the investment objectives of the Company are stated at the amount of the net proceeds immediately after issue plus cumulative finance costs less cumulative payments made in respect of the debt. The finance costs of such borrowings are allocated to years over the term of the debt at a constant rate on the carrying amount and are charged 30 per cent to revenue and 70 per cent to realised capital reserves to reflect the Company's investment policy and prospective income and capital growth. |
|
|
|
|
|
|
(g) |
Exchange rates |
|
|
|
Transactions involving foreign currencies are converted at the rate ruling at the date of the transaction. |
|
|
|
|
|
|
|
Translation of all other foreign currency balances including foreign assets and foreign liabilities is at the middle rates of exchange at the year end. Differences arising from translation are treated as capital gain or loss to capital or revenue within the Income Statement depending upon the nature of the gain or loss. |
|
|
|
|
|
|
(h) |
Derivative financial instruments |
|
|
|
Financial derivatives are measured at fair value. Changes in the fair value of derivative financial instruments are recognised in the Income Statement. If capital in nature, the associated change in value is presented as a capital item in the Income Statement. |
|
|
|
2009 |
2008 |
|
2. |
Income |
£'000 |
£'000 |
|
|
Income from investments: |
|
|
|
|
UK dividends |
4,699 |
3,982 |
|
|
UK unfranked investment income |
1,419 |
1,879 |
|
|
Overseas dividends |
25,036 |
20,695 |
|
|
Overseas interest |
4,933 |
2,966 |
|
|
Stock dividends |
9 |
- |
|
|
|
___________ |
___________ |
|
|
|
36,096 |
29,522 |
|
|
Interest: |
___________ |
___________ |
|
|
Deposit interest |
292 |
1,208 |
|
|
Money market interest |
183 |
1,512 |
|
|
|
___________ |
___________ |
|
|
|
475 |
2,720 |
|
|
|
___________ |
___________ |
|
|
Total income |
36,571 |
32,242 |
|
|
|
___________ |
___________ |
|
|
Income from investments comprises: |
|
|
|
|
Listed UK |
6,118 |
5,861 |
|
|
Listed overseas |
25,036 |
20,695 |
|
|
|
___________ |
___________ |
|
|
|
31,154 |
26,556 |
|
|
|
___________ |
___________ |
|
|
|
2009 |
2008 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
3. |
Investment management fees |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Investment management fees |
1,052 |
2,454 |
3,506 |
1,018 |
2,374 |
3,392 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
||||||
|
|
|
||||||
|
|
|
2009 |
2008 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
4. |
Performance fees |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Performance fees |
- |
2,707 |
2,707 |
- |
2,269 |
2,269 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
||||||
|
|
|
||||||
|
|
|
2009 |
2008 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
5. |
Other expenses |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Shareholders' services{A} |
644 |
- |
644 |
668 |
- |
668 |
|
|
Directors' remuneration |
111 |
- |
111 |
111 |
- |
111 |
|
|
Irrecoverable VAT |
96 |
- |
96 |
102 |
- |
102 |
|
|
Secretarial fees |
100 |
- |
100 |
100 |
- |
100 |
|
|
Auditors' fees: |
|
|
|
|
|
- |
|
|
- fees payable to the Company's auditors for the audit of the annual accounts |
24 |
- |
24 |
21 |
- |
21 |
|
|
- fees payable to the Company's auditors for the review of the interim accounts |
- |
- |
- |
8 |
- |
8 |
|
|
- fees payable to the Company's auditors for other services |
6 |
- |
6 |
2 |
- |
2 |
|
|
Other expenses |
504 |
- |
504 |
457 |
- |
457 |
|
|
|
_______ |
_______ |
_____ |
_______ |
_______ |
_______ |
|
|
|
1,485 |
- |
1,485 |
1,469 |
- |
1,469 |
|
|
|
_______ |
_______ |
_____ |
_______ |
_______ |
_______ |
|
|
|
||||||
|
|
{A} Includes registration, savings scheme and other wrapper administration and promotion expenses, of which £559,000 (2008 - £518,000) was paid to Aberdeen Asset Managers Limited (AAM) to cover marketing activities during the year. There were no sums due to AAM at the year end (2008 - £nil). |
||||||
|
|
|
2009 |
2008 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
6. |
Finance costs |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Bank loans and overdrafts |
1,089 |
2,537 |
3,626 |
866 |
2,020 |
2,886 |
|
|
Debenture Stock |
17 |
(548) |
(531) |
19 |
46 |
65 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
1,106 |
1,989 |
3,095 |
885 |
2,066 |
2,951 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
2009 |
2008 |
|||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
7. |
Taxation |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
(a) |
Tax charge |
|
|
|
|
|
|
|
|
|
The tax charge comprises: |
|
|
|
|
|
|
|
|
|
Current UK tax |
5,080 |
(2,027) |
3,053 |
7,039 |
(1,619) |
5,420 |
|
|
|
Overseas tax |
2,041 |
- |
2,041 |
1,813 |
- |
1,813 |
|
|
|
Double taxation relief |
(1,186) |
- |
(1,186) |
(1,669) |
- |
(1,669) |
|
|
|
Prior year adjustment |
- |
- |
- |
19 |
- |
19 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
Current tax charge |
5,935 |
(2,027) |
3,908 |
7,202 |
(1,619) |
5,583 |
|
|
|
Deferred tax |
(297) |
- |
(297) |
80 |
- |
80 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
Total tax |
5,638 |
(2,027) |
3,611 |
7,282 |
(1,619) |
5,663 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
||||||
|
|
(b) |
Factors affecting the tax charge for the year |
||||||
|
|
|
The tax assessed for the year is lower than the rate of corporation tax rate of 28% (2008 - effective rate of 28.5%). The effective rate for 2008 was calculated using a rate of 30% until 31 March 2008 and 28% from 1 April 2008. The differences are explained below: |
||||||
|
|
|
|
2009 |
2008 |
||||
|
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Return on ordinary activities before taxation |
32,928 |
132,862 |
165,790 |
29,180 |
(101,714) |
(72,534) |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
Return on ordinary activities multiplied by the applicable rate of corporation tax of 28% (2008 -effective rate of 28.5%) |
9,220 |
37,201 |
46,421 |
8,316 |
(28,988) |
(20,672) |
|
|
|
Effects of: |
|
|
|
|
|
|
|
|
|
Non taxable UK dividends |
(1,316) |
- |
(1,316) |
(1,135) |
- |
(1,135) |
|
|
|
(Gains)/losses on investments not taxable |
- |
(39,794) |
(39,794) |
- |
26,744 |
26,744 |
|
|
|
Currency losses not taxable |
- |
426 |
426 |
- |
627 |
627 |
|
|
|
Overseas stock dividends |
- |
140 |
140 |
- |
- |
- |
|
|
|
Non taxable overseas dividends |
(3,154) |
- |
(3,154) |
- |
- |
- |
|
|
|
Double taxation relief |
(1,271) |
- |
(1,271) |
(1,669) |
- |
(1,669) |
|
|
|
Irrecoverable overseas tax suffered |
2,041 |
- |
2,041 |
1,813 |
- |
1,813 |
|
|
|
Movement in overseas income accruals |
415 |
- |
415 |
(142) |
- |
(142) |
|
|
|
Scrip dividend receipts not chargeable to corporation tax |
- |
- |
- |
- |
(2) |
(2) |
|
|
|
Prior year adjustment |
- |
- |
- |
19 |
- |
19 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
Current tax charge |
5,935 |
(2,027) |
3,908 |
7,202 |
(1,619) |
5,583 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
2009 |
2008 |
|
8. |
Ordinary dividends on equity shares |
£'000 |
£'000 |
|
|
Third interim for 2008 of 4.80p (2007 - 4.30p) |
4,310 |
3,724 |
|
|
Final dividend for 2008 of 8.80p (2007 - 8.10p) |
7,985 |
7,016 |
|
|
First interim for 2009 of 5.60p (2008 - 4.80p) |
5,165 |
4,173 |
|
|
Second interim for 2009 of 5.60p (2008 - 4.80p) |
5,251 |
4,235 |
|
|
Refund of unclaimed dividends |
(145) |
- |
|
|
|
____________ |
____________ |
|
|
|
22,566 |
19,148 |
|
|
|
____________ |
____________ |
|
|
|
|
|
|
|
In accordance with UK GAAP the third interim and proposed final dividend for 2009 have not been included as liabilities in these financial statements. The proposed final dividend for 2009 is subject to approval by shareholders at the Annual General Meeting. |
||
|
|
|
||
|
|
We set out below the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Section 842 of the Income and Corporation Taxes Act 1988 are considered. The revenue available for distribution by way of dividend for the year is £27,290,000 (2008 - £21,898,000). |
||
|
|
|
||
|
|
|
2009 |
2008 |
|
|
|
£'000 |
£'000 |
|
|
Three interim dividends for 2009 of 5.60p (2008 - 4.80p) |
15,730 |
12,718 |
|
|
Proposed final dividend for 2009 of 10.20p (2008 - 8.80p) |
9,752 |
7,901 |
|
|
|
____________ |
____________ |
|
|
|
25,482 |
20,619 |
|
|
|
____________ |
____________ |
|
9. |
Returns per share |
2009 |
2008 |
|
|
Returns have been based on the following figures: |
|
|
|
|
Weighted average number of Ordinary shares |
92,419,042 |
87,497,567 |
|
|
Weighted average number of B Ordinary shares |
1,099,660 |
1,101,541 |
|
|
|
____________ |
____________ |
|
|
Weighted average number of Ordinary shares assuming conversion of B Ordinary shares |
93,518,702 |
88,599,108 |
|
|
|
____________ |
____________ |
|
|
|
|
|
|
|
|
£'000 |
£'000 |
|
|
Revenue return attributable to equity shareholders |
27,290 |
21,898 |
|
|
Capital return attributable to equity shareholders |
135,477 |
(100,095) |
|
|
|
____________ |
____________ |
|
|
Total return attributable to equity shareholders |
162,767 |
(78,197) |
|
|
|
____________ |
____________ |
|
|
|
2009 |
2008 |
|
|
10. |
Investments listed at fair value through profit or loss |
£'000 |
£'000 |
|
|
|
Opening valuation |
618,212 |
679,577 |
|
|
|
Opening investment holdings gains |
(78,446) |
(195,023) |
|
|
|
|
____________ |
____________ |
|
|
|
Opening book cost |
539,766 |
484,554 |
|
|
|
Movements during the year: |
|
|
|
|
|
Purchases |
165,960 |
202,651 |
|
|
|
Sales |
- proceeds |
(66,719) |
(169,789) |
|
|
|
- realised (losses)/ gains |
(26,266) |
22,737 |
|
|
Amortisation of fixed income book cost |
530 |
(387) |
|
|
|
|
____________ |
____________ |
|
|
|
Closing book cost |
613,271 |
539,766 |
|
|
|
Closing investment holdings gains |
246,835 |
78,446 |
|
|
|
|
____________ |
____________ |
|
|
|
Closing valuation |
860,106 |
618,212 |
|
|
|
|
____________ |
____________ |
|
|
|
|
|
|
|
|
|
|
2009 |
2008 |
|
|
|
The portfolio valuation |
£'000 |
£'000 |
|
|
|
Listed on stock exchanges at bid valuation: |
|
|
|
|
|
United Kingdom: |
|
|
|
|
|
- equities |
122,138 |
78,075 |
|
|
|
- fixed income |
36,775 |
31,384 |
|
|
|
Overseas: |
|
|
|
|
|
- equities |
648,939 |
472,976 |
|
|
|
- fixed income |
52,254 |
35,777 |
|
|
|
|
____________ |
____________ |
|
|
|
Total |
860,106 |
618,212 |
|
|
|
|
____________ |
____________ |
|
|
|
|
|
|
|
|
|
|
2009 |
2008 |
|
|
|
Gains/(losses) on investments |
£'000 |
£'000 |
|
|
|
Realised (losses)/gains based on book cost |
(26,266) |
22,737 |
|
|
|
Net movement in investment holdings gains |
168,389 |
(116,577) |
|
|
|
|
____________ |
____________ |
|
|
|
|
142,123 |
(93,840) |
|
|
|
|
____________ |
____________ |
|
|
|
|
|
|
|
|
|
All investments are categorised as held at fair value through profit and loss and were designated as such upon initial recognition. |
|||
|
|
|
|||
|
|
Transaction Costs |
|||
|
|
During the year expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains/(losses) on investments in the Income Statement. The total costs were as follows: |
|||
|
|
|
|
|
|
|
|
|
2009 |
2008 |
|
|
|
|
£'000 |
£'000 |
|
|
|
Purchases |
348 |
344 |
|
|
|
Sales |
81 |
99 |
|
|
|
|
____________ |
____________ |
|
|
|
|
429 |
443 |
|
|
|
|
____________ |
____________ |
|
|
|
|
2009 |
2008 |
|
11. |
Debtors: amounts falling due within one year |
£'000 |
£'000 |
|
|
Current taxation |
519 |
335 |
|
|
Other debtors |
9 |
- |
|
|
Forward contracts |
- |
16,619 |
|
|
VAT recoverable (see note 21){A} |
- |
1,325 |
|
|
Prepayments and accrued income |
3,163 |
3,923 |
|
|
|
____________ |
____________ |
|
|
|
3,691 |
22,202 |
|
|
{A} Net of irrecoverable VAT of £12,000. |
____________ |
____________ |
|
|
|
|
|
|
|
None of the above amounts is overdue. |
|
|
|
|
|
2009 |
2008 |
|
12. |
Creditors |
£'000 |
£'000 |
|
|
Amounts falling due within one year: |
|
|
|
|
Bank loans (note 13) |
55,875 |
- |
|
|
Other creditors |
- |
8 |
|
|
Swap contracts |
1,850 |
1,711 |
|
|
Forward contracts |
2,848 |
- |
|
|
Corporation tax payable |
713 |
2,019 |
|
|
Provision for deferred tax |
- |
297 |
|
|
Accruals |
4,350 |
4,198 |
|
|
|
____________ |
____________ |
|
|
|
65,636 |
8,233 |
|
|
|
____________ |
____________ |
|
|
|
|
|
|
|
|
2009 |
2008 |
|
|
|
£'000 |
£'000 |
|
|
Amounts falling due after more than one year: |
|
|
|
|
Bank loans and Debentures (note 13) |
80,806 |
159,107 |
|
|
Accruals |
3,797 |
3,548 |
|
|
|
____________ |
____________ |
|
|
|
84,603 |
162,655 |
|
|
|
____________ |
____________ |
|
|
|
|
|
|
|
Management fees of £917,000 were outstanding at the year end to the Manager (2008 - £861,000). |
||
|
|
|
||
|
|
A performance fee of £6,255,000 was outstanding at the year end to the Manager (2008 - £5,865,000). Of this amount £3,797,000 (2008 - £3,548,000) falls due after more than one year. |
||
|
|
|
||
|
|
All financial liabilities are included at amortised cost or in at fair value for swap and forward contracts. |
||
|
|
|
2009 |
2008 |
|
13. |
Bank loans and Debentures |
£'000 |
£'000 |
|
|
Secured by floating charge and repayable other than by instalments within five years or at the Company's option: |
|
|
|
|
- 4% Debenture Stock |
150 |
1,620 |
|
|
|
|
|
|
|
Unsecured bank loans repayable: |
|
|
|
|
within one year |
|
|
|
|
- Yen 8,400,000,000 at 2.97% - 10 March 2010 |
55,875 |
- |
|
|
|
|
|
|
|
in more than one year but no more than five years |
|
|
|
|
- Yen 8,400,000,000 at 2.97% - 10 March 2010 |
- |
64,451 |
|
|
- Yen 1,900,000,000 at 1.54% - 4 June 2013 |
12,642 |
14,578 |
|
|
- Yen 6,325,000,000 at 1.55% - 4 June 2013 |
42,073 |
48,535 |
|
|
- Yen 2,300,000,000 at 2.03% - 16 February 2014 |
15,299 |
- |
|
|
|
|
|
|
|
in more than five years |
|
|
|
|
- Yen 2,300,000,000 at 2.03% - 16 February 2014 |
- |
17,647 |
|
|
- Yen 1,600,000,000 at 2.82% - 15 May 2016 |
10,642 |
12,276 |
|
|
|
____________ |
____________ |
|
|
|
136,681 |
159,107 |
|
|
|
____________ |
____________ |
|
|
|
||
|
|
During the year the year a redemption of the Debenture Stock was made, reducing the balance outstanding from £1,620,000 to £150,000. The amount attributable to this redemption was £882,000, giving rise to a tax charge of £164,000. |
||
|
|
|
||
|
|
The terms of these loans permit early repayment at the borrower's option which may give rise to additional amounts being either payable or repayable in respect of fluctuations in interest rates since drawdown. Since the Directors, currently, have no intention of repaying the loans early, they have been included in the accounts to 31 December 2009 at their principal amounts. |
||
|
|
|
||
|
|
The Company currently has a fixed rate term loan facility with ING Bank N.V., which is fully drawn down and has a maturity date of 15 May 2016. |
||
|
|
|
||
|
|
The Company currently has a loan facility with Barclays Bank, which is fully drawn down and has a maturity date of 4 June 2013. The rates for these loans drawn down have been fixed for 5 years through a swap. The swap is separate from the loan and under this the borrower either pays or receives the difference between LIBOR and the swap rate so that the actual rate paid is always the same. The interest charged on the loan is at LIBOR plus the margin. For Yen the LIBOR is re-set every 6 months and the LIBOR rate under the loan and as reset under the swap should be identical to each other at every 6 month interval to preserve the "fixed" nature of the overall interest costs. |
||
|
|
|
||
|
|
The Company currently has a fixed rate term loan facility with The Royal Bank of Scotland plc, which is fully drawn down and has a maturity date of 16 February 2014. |
||
|
|
|
||
|
|
The Company also has an additional JPY8,400,000,000 term loan facility with The Royal Bank of Scotland plc which expires on 10 March 2010. The full JPY8,400,000,000 facility (approx £55,875,000) has been drawn down. |
||
|
|
|
||
|
|
Financial covenants contained within the relevant loan agreements provide, inter alia, that borrowings shall at no time exceed 50% of net assets and that the net assets must exceed £250 million. The net assets were £741.8 million at 31 December 2009. |
||
|
|
|
2009 |
2008 |
||
|
14. |
Share capital |
Number |
£'000 |
Number |
£'000 |
|
|
Allotted, called up and fully paid: |
|
|
|
|
|
|
Ordinary shares of 25p each |
94,896,624 |
23,724 |
89,788,992 |
22,447 |
|
|
B Ordinary shares of 25p each |
1,087,392 |
272 |
1,111,928 |
278 |
|
|
|
_________ |
_________ |
_________ |
_________ |
|
|
|
95,984,016 |
23,996 |
90,900,920 |
22,725 |
|
|
|
|
|
|
|
|
|
Unissued: |
|
|
|
|
|
|
Unclassified shares of 25p each |
48,141,984 |
12,035 |
53,225,080 |
13,306 |
|
|
|
_________ |
_________ |
_________ |
_________ |
|
|
Authorised |
144,126,000 |
36,031 |
144,126,000 |
36,031 |
|
|
|
_________ |
_________ |
_________ |
_________ |
|
|
During the year 5,037,000 Ordinary shares were issued pursuant to the Company's block listing facility. All of these shares were issued at a premium to net asset value, enhancing net assets per share for existing shareholders. The issue prices ranged from 524p to 769p and raised a total of £32,785,000, net of expenses. These expenses have been offset against the share premium account |
||||
|
|
|
||||
|
|
In accordance with Article 131 of the Company's Articles of Association, 8,660 B Ordinary shares, 16,280 B Ordinary shares, 11,040 B Ordinary shares, and 10,116 B Ordinary shares were allotted by way of capitalisation of reserves on 16 February, 15 May, 14 August and 13 November 2009 respectively. |
||||
|
|
|
||||
|
|
On 30 June 2009, 70,632 B Ordinary shares were converted into a like number of Ordinary shares of 25p in accordance with Article 47 of the Company's Articles of Association. When the nominal value of the allotted and fully paid B Ordinary shares is less than £100,000 the Directors may, under the terms of Article 47(B), require the conversion of such shares into Ordinary shares. The net asset value at the conversion date of 30 June 2009 was 607.2 pence per share. |
||||
|
|
|
||||
|
|
On a winding up of the Company, any surplus assets available after payment of all debts and satisfaction of all liabilities of the Company shall be applied in repaying the Ordinary and B Ordinary shareholders the amounts paid up on such shares. Any surplus shall be divided among the holders of Ordinary and B Ordinary shares pari passu according to the amount paid up on such shares respectively. |
||||
|
|
|
||||
|
|
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. |
||||
|
|
|
||||
|
|
The capital structure of the Company consists of debt, cash and cash equivalents and equity, comprising issued capital, reserves and retained earnings. |
||||
|
|
|
||||
|
|
The Board reviews the capital structure annually. As part of this review the committee considers the cost of capital and the risks associated with each class of capital. Based on recommendations of the committee the Company will balance its overall capital structure through the payment of dividends, new share issues and share buy-backs as well as the issue of new debt or the redemption of existing debt. |
||||
|
|
|
||||
|
|
The Company's overall strategy remains unchanged from 2008. |
||||
|
|
|
||||
|
|
Voting rights |
||||
|
|
In accordance with the Articles of Association of the Company, on a show of hands, every member (or duly appointed proxy) present at a general meeting of the Company has one vote; and, on a poll, every member present in person or by proxy shall have 89 votes for every 25p nominal amount of Ordinary or B Ordinary shares held. |
||||
|
|
|
2009 |
2008 |
|
15. |
Capital reserve |
£'000 |
£'000 |
|
|
At 31 December 2008 |
477,931 |
578,035 |
|
|
Movement in fair value gains |
142,123 |
(93,840) |
|
|
Capitalised expenses |
(5,711) |
(5,090) |
|
|
VAT on investment management and performance fees recoverable |
- |
1,027 |
|
|
Issue of shares |
(12) |
(9) |
|
|
Buyback of debenture stock |
588 |
- |
|
|
Stock dividends |
- |
8 |
|
|
Currency losses |
(1,523) |
(2,200) |
|
|
|
____________ |
____________ |
|
|
At 31 December 2009 |
613,396 |
477,931 |
|
|
|
____________ |
____________ |
|
|
|
||
|
|
Included in the total above are investment holdings gains at the year end of £246,835,000 (2008 - £78,446,000). |
||
|
16. |
Diluted net asset value per share |
||||
|
|
The diluted net asset value per share and the net asset value attributable to the Ordinary shares (including conversion of the B Ordinary shares), at the year end calculated in accordance with the Articles of Association were as follows: |
||||
|
|
|
|
|
||
|
|
|
Net asset value |
Net asset value |
||
|
|
|
per share |
attributable |
||
|
|
|
2009 |
2008 |
2009 |
2008 |
|
|
|
p |
P |
£'000 |
£'000 |
|
|
Basic |
|
|
|
|
|
|
Ordinary and B Ordinary shares (note 14) |
772.9 |
625.8 |
741,813 |
568,827 |
|
|
Diluted |
|
|
|
|
|
|
Ordinary and B Ordinary shares (note 14) |
772.9 |
625.8 |
741,813 |
568,827 |
|
17. |
Reconciliation of net return before finance costs and |
2009 |
2008 |
|
|
taxation to net cash inflow from operating activities |
£'000 |
£'000 |
|
|
Net return/(loss) before finance costs and taxation |
169,473 |
(69,583) |
|
|
Add: (gains)/losses on investments |
(142,123) |
93,840 |
|
|
Add: currency losses |
1,523 |
2,200 |
|
|
Amortisation of fixed income book cost |
(530) |
387 |
|
|
Decrease/(increase) in accrued income |
760 |
(368) |
|
|
Decrease/(increase) in other debtors |
958 |
(1,184) |
|
|
Increase in accruals |
484 |
857 |
|
|
Tax on unfranked income - overseas |
(2,006) |
(1,977) |
|
|
|
28,539 |
24,172 |
|
|
|
At 31 |
|
|
|
At 31 December |
|
|
|
2008 |
Differences |
flows |
movements |
2009 |
|
18. |
Analysis of changes in net debt |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Cash and short term deposits |
99,301 |
(2,873) |
(68,173) |
- |
28,255 |
|
|
Forward contracts |
16,619 |
(19,467) |
- |
- |
(2,848) |
|
|
Swap |
(1,711) |
(139) |
- |
- |
(1,850) |
|
|
Debt due within one year |
- |
8,576 |
- |
(64,451) |
(55,875) |
|
|
Debt due after more than one year |
(159,107) |
12,380 |
882 |
65,039 |
(80,806) |
|
|
|
________ |
________ |
________ |
________ |
________ |
|
|
|
(44,898) |
(1,523) |
(67,291) |
588 |
(113,124) |
|
|
|
________ |
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
|
At 31 December |
|
|
|
At 31 December |
|
|
|
2007 |
Differences |
flows |
movements |
2008 |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Cash and short term deposits |
44,687 |
47,849 |
6,765 |
- |
99,301 |
|
|
Forward contracts |
508 |
16,111 |
- |
- |
16,619 |
|
|
Swap |
- |
(1,711) |
- |
- |
(1,711) |
|
|
Debt due within one year |
(18,662) |
(1,188) |
19,850 |
- |
- |
|
|
Debt due after more than one year |
(56,931) |
(63,261) |
(38,915) |
- |
(159,107) |
|
|
|
________ |
________ |
________ |
________ |
________ |
|
|
|
(30,398) |
(2,200) |
(12,300) |
- |
(44,898) |
|
|
|
________ |
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
A statement reconciling the movement in net funds to the net cash flow has not been presented as there are no differences from the above analysis. |
|||||
|
19. |
Derivatives and other financial instruments |
||||||||||||||||||||||
|
|
Risk management |
||||||||||||||||||||||
|
|
The Company's financial instruments, other than derivatives, comprise securities and other investments, cash balances, loans and debentures and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income. The Company also has the ability to enter into derivative transactions in the form of forward foreign currency contracts, futures and options, for the purpose of managing currency and market risks arising from the Company's activities. |
||||||||||||||||||||||
|
|
|
||||||||||||||||||||||
|
|
The Manager has a dedicated investment management process, which ensures that the investment policy is achieved. Stock selection procedures are in place based on the active portfolio management and identification of stocks. The portfolio is reviewed on a periodic basis by a Senior Investment Manager and also by the Manager's Investment Committee. |
||||||||||||||||||||||
|
|
|
||||||||||||||||||||||
|
|
The Company's Manager has an independent Investment Risk department for reviewing the investment risk parameters of all core equity, fixed income and alternative asset classes on a regular basis. The department reports to the Manager's Performance Review Committee which is chaired by the Manager's Chief Investment Officer. The department's responsibility is to review and monitor ex-ante (predicted) portfolio risk and style characteristics using best practice, industry standard multi-factor models. |
||||||||||||||||||||||
|
|
|
||||||||||||||||||||||
|
|
Additionally, the Manager's Compliance department continually monitors the trust's investment and borrowing powers and reports to the Manager's Risk Management Committee. |
||||||||||||||||||||||
|
|
|
||||||||||||||||||||||
|
|
The main risks the Company faces from its financial instruments are (i) market price risk (comprising interest rate risk, currency risk and other price risk), (ii) liquidity risk and (iii) credit risk. |
||||||||||||||||||||||
|
|
|
||||||||||||||||||||||
|
|
The Board regularly reviews and agrees policies for managing each of these risks. The Manager's policies for managing these risks are summarised below and have been applied throughout the year. The numerical disclosures exclude short-term debtors and creditors, other than for currency disclosures. |
||||||||||||||||||||||
|
|
|
||||||||||||||||||||||
|
|
(i) |
Market price risk |
|||||||||||||||||||||
|
|
|
The fair value or 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 - interest rate risk, currency risk and other price risk. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Interest rate risk |
|||||||||||||||||||||
|
|
|
Interest rate movements may affect:
|
|||||||||||||||||||||
|
|
|
- the fair value of the investments in fixed interest rate securities; |
|||||||||||||||||||||
|
|
|
- the level of income receivable on cash deposits; |
|||||||||||||||||||||
|
|
|
- interest payable on the Company's variable rate borrowings. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
The Board reviews on a regular basis the values of the fixed interest rate securities. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Borrowings comprise fixed rate, revolving, and uncommitted facilities. The fixed rate Yen facilities are used to finance opportunities at low rates and, the revolving and uncommitted facilities to provide flexibility in the short-term. Current guidelines state that the total borrowings will not exceed 50 per cent of the net assets of the Company. The Company currently has two loan facilities with Barclays Bank, which are fully drawn down and have maturity dates of 4 June 2013. The rates for these loans have been fixed for 5 years through a swap. The swap is separate from the loan and under this the borrower either pays or receives the difference between LIBOR and the swap rate so that the actual rate paid is always the same. The interest charged on the loan is at LIBOR plus the margin. For JPY, the LIBOR is re-set every 6 months and the LIBOR rate under the loan and as reset under the swap should be identical to each other at every 6 month interval to preserve the "fixed" nature of the overall interest costs. Details of borrowings at 31 December 2009 are shown in note 13. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Interest risk profile |
|||||||||||||||||||||
|
|
|
The interest rate risk profile of the portfolio of financial assets and liabilities at the Balance Sheet date was as follows: |
|||||||||||||||||||||
|
|
|
|
Weighted |
|
|
|
|
||||||||||||||||
|
|
|
|
average |
|
|
|
|
||||||||||||||||
|
|
|
|
period for which |
Weighted |
|
|
Non |
||||||||||||||||
|
|
|
|
rate is fixed |
interest rate |
rate |
rate |
bearing |
||||||||||||||||
|
|
|
At 31 December 2009 |
Years |
% |
£'000 |
£'000 |
£'000 |
||||||||||||||||
|
|
|
Assets |
|
|
|
|
|
||||||||||||||||
|
|
|
Sterling |
5.44 |
7.52 |
25,213 |
27,940 |
52,734 |
||||||||||||||||
|
|
|
US Dollar |
20.63 |
7.50 |
42,791 |
- |
172,292 |
||||||||||||||||
|
|
|
Euro |
15.47 |
4.50 |
8,708 |
240 |
122,138 |
||||||||||||||||
|
|
|
Other |
0.83 |
11.91 |
12,317 |
75 |
423,913 |
||||||||||||||||
|
|
|
|
________ |
________ |
_______ |
________ |
________ |
||||||||||||||||
|
|
|
Total assets |
- |
- |
89,029 |
28,255 |
771,077 |
||||||||||||||||
|
|
|
|
________ |
________ |
_______ |
________ |
________ |
||||||||||||||||
|
|
|
Liabilities |
|
|
|
|
|
||||||||||||||||
|
|
|
Bank loans - Japanese Yen |
2.47 |
2.17 |
(136,531) |
- |
- |
||||||||||||||||
|
|
|
Debenture Stock |
- |
- |
(150) |
- |
- |
||||||||||||||||
|
|
|
Accruals |
- |
- |
- |
- |
(3,797) |
||||||||||||||||
|
|
|
|
________ |
________ |
_______ |
________ |
________ |
||||||||||||||||
|
|
|
Total liabilities |
- |
- |
(136,681) |
- |
(3,797) |
||||||||||||||||
|
|
|
|
________ |
________ |
_______ |
________ |
________ |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
Weighted |
|
|
|
|
||||||||||||||||
|
|
|
|
average |
|
|
|
|
||||||||||||||||
|
|
|
|
period for which |
Weighted |
|
|
Non |
||||||||||||||||
|
|
|
|
rate is fixed |
interest rate |
rate |
rate |
bearing |
||||||||||||||||
|
|
|
At 31 December 2008 |
Years |
% |
£'000 |
£'000 |
£'000 |
||||||||||||||||
|
|
|
Assets |
|
|
|
|
|
||||||||||||||||
|
|
|
Sterling |
6.17 |
5.52 |
31,384 |
54,667 |
78,075 |
||||||||||||||||
|
|
|
US Dollar |
30.62 |
8.72 |
14,532 |
- |
122,422 |
||||||||||||||||
|
|
|
Euro |
- |
- |
- |
24,170 |
107,114 |
||||||||||||||||
|
|
|
Other |
4.99 |
9.66 |
21,245 |
20,464 |
243,440 |
||||||||||||||||
|
|
|
|
________ |
________ |
_______ |
________ |
________ |
||||||||||||||||
|
|
|
Total assets |
- |
- |
67,161 |
99,301 |
551,051 |
||||||||||||||||
|
|
|
|
________ |
________ |
_______ |
________ |
________ |
||||||||||||||||
|
|
|
Liabilities |
|
|
|
|
|
||||||||||||||||
|
|
|
Bank loans - Japanese Yen |
3.41 |
2.28 |
(157,487) |
- |
- |
||||||||||||||||
|
|
|
Debenture Stock |
- |
- |
(1,620) |
- |
- |
||||||||||||||||
|
|
|
Accruals |
- |
- |
- |
- |
(3,548) |
||||||||||||||||
|
|
|
|
________ |
________ |
_______ |
________ |
________ |
||||||||||||||||
|
|
|
Total liabilities |
- |
- |
(159,107) |
- |
(3,548) |
||||||||||||||||
|
|
|
|
________ |
________ |
_______ |
________ |
________ |
||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The weighted average interest rate on bank loans is based on the interest rate payable, weighted by the total value of the loans. The maturity dates of the Company's loans are shown in note 13 to the financial statements. |
|||||||||||||||||||||
|
|
|
The floating rate assets consist of cash deposits on call earning interest at prevailing market rates. |
|||||||||||||||||||||
|
|
|
The non-interest bearing assets represent the equity element of the portfolio. |
|||||||||||||||||||||
|
|
|
Short-term debtors and creditors have been excluded from the above tables. |
|||||||||||||||||||||
|
|
|
All financial liabilities are measured at amortised cost. |
|||||||||||||||||||||
|
|
|
Maturity profile |
|||||||||||||||||||||
|
|
|
The table below shows the timing of cash outflows to settle the Company's financial liabilities at the Balance Sheet date. |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
More |
|
||||||||||||||
|
|
|
|
Within |
Within |
Within |
Within |
Within |
than |
|
||||||||||||||
|
|
|
|
1 |
1-2 years |
2-3 years |
3-4 years |
4-5 years |
5 |
|
||||||||||||||
|
|
|
At 31 December 2009 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||||||||||||||
|
|
|
Bank loans |
55,875 |
- |
- |
54,715 |
15,299 |
10,642 |
136,531 |
||||||||||||||
|
|
|
Debenture Stock |
- |
- |
- |
- |
- |
150 |
150 |
||||||||||||||
|
|
|
Interest cash flows on bank loans and Debenture Stock |
3,124 |
2,295 |
2,296 |
1,458 |
467 |
689 |
10,329 |
||||||||||||||
|
|
|
Interest cash flows on swaps |
376 |
376 |
376 |
188 |
- |
- |
1,316 |
||||||||||||||
|
|
|
Cash flows on other creditors |
3,669 |
1,875 |
1,244 |
677 |
- |
- |
7,465 |
||||||||||||||
|
|
|
|
_____ |
_______ |
_______ |
_______ |
_______ |
_____ |
_______ |
||||||||||||||
|
|
|
|
63,044 |
4,546 |
3,916 |
57,038 |
15,766 |
11,481 |
155,791 |
||||||||||||||
|
|
|
|
_____ |
_______ |
_______ |
_______ |
_______ |
_____ |
_______ |
||||||||||||||
|
|
|
|
|
|
|
|
|
More |
|
||||||||||||||
|
|
|
|
Within |
Within |
Within |
Within |
Within |
than |
|
||||||||||||||
|
|
|
|
1 |
1-2 years |
2-3 years |
3-4 years |
4-5 years |
5 years |
Total |
||||||||||||||
|
|
|
At 31 December 2008 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||||||||||||||
|
|
|
Bank loans |
- |
64,451 |
- |
- |
63,113 |
29,923 |
157,487 |
||||||||||||||
|
|
|
Debenture Stock |
- |
- |
- |
- |
- |
1,620 |
1,620 |
||||||||||||||
|
|
|
Interest cash flows on bank loans and Debenture Stock |
3,294 |
1,742 |
1,380 |
1,380 |
1,029 |
1,063 |
9,888 |
||||||||||||||
|
|
|
Interest cash flows on swaps |
355 |
355 |
355 |
355 |
151 |
- |
1,571 |
||||||||||||||
|
|
|
Cash flows on other creditors |
3,431 |
1,784 |
1,198 |
567 |
- |
- |
6,980 |
||||||||||||||
|
|
|
|
_____ |
_______ |
_______ |
_______ |
_______ |
_____ |
_______ |
||||||||||||||
|
|
|
|
7,080 |
68,332 |
2,933 |
2,302 |
64,293 |
32,606 |
177,546 |
||||||||||||||
|
|
|
|
_____ |
_______ |
_______ |
_______ |
_______ |
_____ |
_______ |
||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Interest rate sensitivity |
|||||||||||||||||||||
|
|
|
The sensitivity analyses below have been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the Balance Sheet date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
If interest rates had been 100 basis points higher or lower (based on current parameter used by Manager's Investment Risk Department on risk assessment) and all other variables were held constant, the Company's: |
|||||||||||||||||||||
|
|
|
- profit for the year ended 31 December 2009 would increase/decrease by £283,000 (2008 - increase/decrease by £993,000). This is mainly attributable to the Company's exposure to interest rates on its floating rate cash balances. These figures have been calculated based on cash positions at each year end. |
|||||||||||||||||||||
|
|
|
- equity reserves would increase/decrease by £2,229,000 (2008 - increase/decrease by £1,107,000). This is also mainly attributable to the Company's exposure to interest rates on cash balances and its fixed interest portfolio. These figures have been calculated based on cash and fixed interest portfolio positions at each year end. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as part of the interest rate risk management process used to meet the Company's objectives. The risk parameters used will also fluctuate depending on the current market perception. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Foreign currency risk |
|||||||||||||||||||||
|
|
|
A significant proportion of the Company's investment portfolio is invested in overseas securities and the Balance Sheet can be significantly affected by movements in foreign exchange rates. It is not the Company's policy to hedge this risk on a continuing basis but the Company may, from time to time, match specific overseas investment with foreign currency borrowings. A significant proportion of the Company's borrowings, as detailed in note 13, are in foreign currency as at 31 December 2009. The Manager seeks, when deemed appropriate, to manage exposure to currency movements on borrowings by using forward foreign currency contracts as a hedge against potential foreign currency movements. At 31 December 2009 the Company had a foreign currency contract, details of which are listed below. During the year a loss of £724,000 (2008 - gain of £42,509,000) was realised. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
The revenue account is subject to currency fluctuation arising on overseas income. The Company does not hedge this currency risk. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Foreign currency risk exposure by currency of denomination: |
|||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
31 December 2009 |
31 December 2008 |
|||||||||||||||||||
|
|
|
|
UK and |
|
|
UK and |
|
|
|||||||||||||||
|
|
|
|
Overseas |
Net |
Total |
overseas |
Net |
Total |
|||||||||||||||
|
|
|
|
Equity |
Monetary |
currency |
equity |
monetary |
currency |
|||||||||||||||
|
|
|
|
Investments |
Assets |
exposure |
investments |
assets |
exposure |
|||||||||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||||||
|
|
|
US Dollar |
172,292 |
- |
172,292 |
122,422 |
- |
122,422 |
|||||||||||||||
|
|
|
Sterling |
122,138 |
27,940 |
150,078 |
78,075 |
135,797 |
213,872 |
|||||||||||||||
|
|
|
Euro |
131,567 |
240 |
131,807 |
107,114 |
24,170 |
131,284 |
|||||||||||||||
|
|
|
Hong Kong Dollar |
59,356 |
- |
59,356 |
26,932 |
- |
26,932 |
|||||||||||||||
|
|
|
Taiwan Dollar |
28,296 |
72 |
28,368 |
20,351 |
63 |
20,414 |
|||||||||||||||
|
|
|
Malaysian Ringgit |
24,398 |
- |
24,398 |
19,503 |
- |
19,503 |
|||||||||||||||
|
|
|
Swiss Franc |
24,012 |
- |
24,012 |
11,412 |
- |
11,412 |
|||||||||||||||
|
|
|
Indonesian Rupiah |
23,201 |
- |
23,201 |
15,927 |
- |
15,927 |
|||||||||||||||
|
|
|
Brazilian Real |
21,955 |
- |
21,955 |
14,074 |
- |
14,074 |
|||||||||||||||
|
|
|
Thailand Baht |
19,112 |
- |
19,112 |
12,840 |
- |
12,840 |
|||||||||||||||
|
|
|
Swedish Krone |
18,620 |
- |
18,620 |
7,938 |
- |
7,938 |
|||||||||||||||
|
|
|
Australian Dollar |
18,178 |
- |
18,178 |
14,304 |
- |
14,304 |
|||||||||||||||
|
|
|
Mexican Peso |
16,884 |
- |
16,884 |
12,287 |
- |
12,287 |
|||||||||||||||
|
|
|
Singapore Dollar |
15,231 |
- |
15,231 |
9,759 |
- |
9,759 |
|||||||||||||||
|
|
|
Indian Rupee |
10,219 |
- |
10,219 |
- |
- |
- |
|||||||||||||||
|
|
|
Canadian Dollar |
10,053 |
- |
10,053 |
- |
- |
- |
|||||||||||||||
|
|
|
New Zealand Dollar |
2,831 |
- |
2,831 |
2,358 |
- |
2,358 |
|||||||||||||||
|
|
|
Norwegian Krone |
- |
3 |
3 |
- |
20,401 |
20,401 |
|||||||||||||||
|
|
|
Korean Won |
- |
- |
- |
3,562 |
- |
3,562 |
|||||||||||||||
|
|
|
Japanese Yen |
52,734 |
(55,875) |
(3,141) |
72,193 |
- |
72,193 |
|||||||||||||||
|
|
|
|
_________ |
_________ |
_________ |
_________ |
_________ |
_________ |
|||||||||||||||
|
|
|
Total |
771,077 |
(27,620) |
743,457 |
551,051 |
180,431 |
731,482 |
|||||||||||||||
|
|
|
|
_________ |
_________ |
_________ |
_________ |
_________ |
_________ |
|||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
The asset allocation between specific markets can vary from time to time based on the Manager's opinion of the attractiveness of the individual markets. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Foreign currency sensitivity |
|||||||||||||||||||||
|
|
|
The following table details the Company's sensitivity to a 10% increase and decrease in sterling against the major foreign currencies in which the Company has exposure (based on exposure >5% of total exposure). The sensitivity analysis includes foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
2009 |
2009 |
2008 |
2008 |
|||||||||||||||||
|
|
|
|
Revenue |
Equity* |
Revenue |
Equity* |
|||||||||||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||||||||
|
|
|
US Dollar |
470 |
17,229 |
173 |
12,243 |
|||||||||||||||||
|
|
|
Japanese Yen |
160 |
5,273 |
182 |
7,219 |
|||||||||||||||||
|
|
|
Euro |
340 |
13,157 |
631 |
10,711 |
|||||||||||||||||
|
|
|
|
_________ |
_________ |
_________ |
_________ |
|||||||||||||||||
|
|
|
Total |
970 |
35,659 |
986 |
30,173 |
|||||||||||||||||
|
|
|
|
_________ |
_________ |
_________ |
_________ |
|||||||||||||||||
|
|
|
*represents equity exposure to the underlying currency |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Foreign exchange contracts |
|
|
|
|
|||||||||||||||||
|
|
|
The following Japanese Yen forward contracts were outstanding at the Balance Sheet date: |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
Unrealised loss |
|||||||||||||||||
|
|
|
|
|
Amount |
|
at 31 December |
|||||||||||||||||
|
|
|
|
Settlement |
JPY |
Contracted |
2009 |
|||||||||||||||||
|
|
|
Date of contract |
date |
'000 |
rate |
£'000 |
|||||||||||||||||
|
|
|
11 December 2009 |
12 March 2010 |
20,000,000 |
150.22 |
2,848 |
|||||||||||||||||
|
|
|
|
_________ |
_________ |
_________ |
_________ |
|||||||||||||||||
|
|
|
The fair value of forward foreign currency contracts is based on forward exchange rates at the Balance Sheet date. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Other price risk |
|||||||||||||||||||||
|
|
|
Other price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular country or sector. The allocation of assets to international markets and the stock selection process, as detailed in the Annual Report, both act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on various stock exchanges worldwide. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Other price risk sensitivity |
|||||||||||||||||||||
|
|
|
If market prices at the Balance Sheet date had been 10% higher or lower while all other variables remained constant, the return attributable to ordinary shareholders for the year ended 31 December 2009 would have increased/decreased by £86,011,000 (2008 - increase/decrease of £61,821,000) and equity reserves would have increased/decreased by the same amount |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
(ii) |
Liquidity risk |
|||||||||||||||||||||
|
|
|
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Liquidity risk is not considered to be significant as the Company's assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of loan and overdraft facilities (note 13). |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
(iii) |
Credit risk |
|||||||||||||||||||||
|
|
|
This is failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
The risk is not significant, and is managed as follows:
|
|||||||||||||||||||||
|
|
|
- where the Manager makes an investment in a bond, corporate or otherwise, the credit rating of the issuer is taken into account so as to minimise the risk to the Company of default; |
|||||||||||||||||||||
|
|
|
- investments in quoted bonds are made across a variety of industry sectors and geographic markets so as to avoid concentrations of credit risk; |
|||||||||||||||||||||
|
|
|
- transactions involving derivatives are entered into only with investment banks, the credit rating of which is taken into account so as to minimise the risk to the Company of default; |
|||||||||||||||||||||
|
|
|
- investment transactions are carried out with a large number of brokers, whose credit-standing is reviewed periodically by the Manager, and limits are set on the amount that may be due from any one broker; |
|||||||||||||||||||||
|
|
|
- the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the review of failed trade reports on a monthly basis. In addition, the custodian carries out a stock reconciliation to third party administrators' records on a monthly basis to ensure discrepancies are picked up on a timely basis. The Manager's Compliance department carries out periodic reviews of the custodian's operations and reports its finding to the Manager's Risk Management Committee. |
|||||||||||||||||||||
|
|
|
- cash is held only with reputable banks with acceptable credit quality. It is the Manager's policy to trade only with A- and above (Long Term rated) and A-1/P-1 (Short Term rated) counterparties.
|
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Credit risk exposure |
|||||||||||||||||||||
|
|
|
In summary, compared to the amounts in the Balance Sheet, the maximum exposure to credit risk at 31 December 2009 was as follows: |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
|
2009 |
2008 |
|||||||||||||||||||
|
|
|
|
Balance |
Maximum |
Balance |
Maximum |
|||||||||||||||||
|
|
|
|
Sheet |
exposure |
Sheet |
exposure |
|||||||||||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||||||||
|
|
|
Non-current assets |
|
|
|
|
|||||||||||||||||
|
|
|
Securities at fair value through profit or loss |
89,029 |
89,029 |
67,161 |
67,161 |
|||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
|
|
|
Current assets |
|
|
|
|
|||||||||||||||||
|
|
|
Current taxation |
519 |
519 |
335 |
335 |
|||||||||||||||||
|
|
|
Other debtors |
9 |
9 |
- |
- |
|||||||||||||||||
|
|
|
Forward contracts |
- |
- |
16,619 |
16,619 |
|||||||||||||||||
|
|
|
VAT recoverable (see note 21) |
- |
- |
1,325 |
1,325 |
|||||||||||||||||
|
|
|
Accrued income |
3,119 |
3,119 |
3,879 |
3,879 |
|||||||||||||||||
|
|
|
|
_________ |
_________ |
_________ |
_________ |
|||||||||||||||||
|
|
|
|
92,676 |
92,676 |
89,319 |
89,319 |
|||||||||||||||||
|
|
|
|
_________ |
_________ |
_________ |
_________ |
|||||||||||||||||
|
|
|
None of the Company's financial assets is secured by collateral or other credit enhancements. |
|||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
|
|
|
Fair values of financial assets and financial liabilities |
|||||||||||||||||||||
|
|
|
The fair value of borrowings has been calculated at £141,569,000 as at 31 December 2009 (2008 - £167,570,000) compared to an accounts value in the financial statements of £136,681,000 (2008 - £159,107,000) (note 13). The fair value of each loan is determined by aggregating the expected future cash flows for that loan discounted at a rate comprising the borrower's margin plus an average of market rates applicable to loans of a similar period of time and currency. All other assets and liabilities of the Company are included in the Balance Sheet at fair value. |
|||||||||||||||||||||
|
20. |
Fair value hierarchy |
||||||
|
|
The Company adopted the amendments to FRS 29 'Financial Instruments: Disclosures' effective from 1 January 2009. These amendments require an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the following levels: |
||||||
|
|
|
||||||
|
|
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; |
||||||
|
|
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (ie as prices) or indirectly (ie derived from prices); and |
||||||
|
|
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). |
||||||
|
|
|
||||||
|
|
The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy at 31 December 2009 as follows: |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
|
Note |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Financial assets at fair value through profit or loss |
||||||
|
|
Quoted equities |
a) |
771,077 |
- |
- |
771,077 |
|
|
|
Quoted bonds |
b) |
89,029 |
- |
- |
89,029 |
|
|
|
|
|
_______ |
______ |
_________ |
_________ |
|
|
|
Total |
|
860,106 |
- |
- |
860,106 |
|
|
|
|
|
_______ |
______ |
_________ |
_________ |
|
|
|
Financial liabilities at fair value through profit or loss |
||||||
|
|
Derivatives |
c) |
- |
(1,850) |
- |
(1,850) |
|
|
|
Foreign exchange forward contracts |
d) |
- |
(2,848) |
- |
(2,848) |
|
|
|
|
|
_______ |
______ |
_________ |
_________ |
|
|
|
Total |
|
- |
(4,698) |
- |
(4,698) |
|
|
|
|
|
_______ |
______ |
_________ |
_________ |
|
|
|
Net fair value |
|
860,106 |
(4,698) |
- |
855,408 |
|
|
|
|
|
|
_______ |
______ |
_________ |
_________ |
|
|
a) |
Quoted equities |
|
|
|
|
|
|
|
|
The fair value of the Company's investments in quoted equites has been determined by reference to their quoted bid prices at the reporting date. Quoted equites included in Fair Value Level 1 are actively traded on recognised stock exchanges. |
|||||
|
|
|
|
|||||
|
|
b) |
Quoted bond |
|||||
|
|
|
The fair value of the Company's investments in quoted bonds has been determined by reference to their quoted bid prices at the reporting date. Bonds included in Fair Value Level 1 include Government Bonds and Corporate Bonds. |
|||||
|
|
|
|
|||||
|
|
c) |
Derivatives |
|||||
|
|
|
The fair value of the Company's investment in derivatives has been determined in relation to models using observable market inputs and hence are categorised in Fair Value Level 2. |
|||||
|
|
|
|
|||||
|
|
d) |
Foreign exchange forward contracts |
|||||
|
|
|
The fair value of the Company's investment in foreign exchange forward contracts has been determined in relation to models using observable market inputs and hence are categorised in Fair Value Level 2. |
|||||
|
21. |
Contingent assets |
|
|
On 5 November 2007, the European Court of Justice ruled that management fees on investment trusts should be exempt from VAT. HMRC has announced its intention not to appeal against this ruling to the UK VAT Tribunal and therefore protective claims which have been made in relation to the Company will be processed by HMRC in due course. The Company has not been charged VAT on its investment management fees from 1 October 2007. |
|
|
|
|
|
The Manager has refunded £1,337,190 to the Company for VAT charged on investment management fees for the period 1 January 2004 to 30 September 2007 and this was included in the financial statements in the year ended 31 December 2008. This repayment was allocated to revenue and capital in line with the accounting policy of the Company for the periods in which the VAT was charged. The reclaim for previous periods and the timescale for receipt are at present uncertain and the Company has taken no account in these financial statements of any such repayment. |
The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 31 December 2009 are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The 2008 and 2009 statutory accounts received unqualified reports from the Company's auditors and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying the reports, and did not contain a statement under s.498 of the Companies Act 2006. The financial information for 2008 is derived from the statutory accounts for 2008 which have been delivered to the Registrar of Companies. The 2009 accounts will be filed with the Registrar of Companies in due course.
The Annual Report will be posted to shareholders in March 2010 and additional copies will be available from the registered office of the Company and on the Company's website, www.murray-intl.co.uk.
The Annual General Meeting will be held on 30 April 2010 at The Glasgow Royal Concert Hall, 2 Sauchiehall Street, Glasgow G2 3NY.
Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements. Investors may not get back the amount they originally invested.
For Murray International Trust PLC
Aberdeen Asset Management PLC, Secretaries
22 February 2009
10 SUMMARY OF INVESTMENT CHANGES
|
|
Valuation |
Appreciation/ |
|
Valuation |
||
|
|
31 December 2009 |
(depreciation) |
Transactions |
31 December 2008 |
||
|
|
£'000 |
% |
£'000 |
£'000 |
£'000 |
% |
|
Equities |
|
|
|
|
|
|
|
United Kingdom |
122,138 |
13.8 |
27,898 |
16,165 |
78,075 |
10.7 |
|
North America |
81,695 |
9.3 |
2,738 |
10,333 |
68,624 |
9.3 |
|
Europe ex UK |
174,198 |
19.7 |
22,537 |
25,198 |
126,463 |
17.3 |
|
Japan |
52,734 |
6.0 |
(9,013) |
(10,447) |
72,194 |
9.9 |
|
Asia Pacific ex Japan |
200,823 |
22.8 |
37,912 |
37,377 |
125,534 |
17.2 |
|
Latin America |
139,489 |
15.8 |
53,194 |
6,134 |
80,161 |
10.9 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
|
771,077 |
87.4 |
135,266 |
84,760 |
551,051 |
75.3 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
Fixed income |
|
|
|
|
|
|
|
United Kingdom |
36,775 |
4.2 |
5,629 |
(8,906) |
40,052 |
5.5 |
|
Europe ex UK |
8,708 |
1.0 |
(107) |
8,815 |
- |
- |
|
Asia Pacific ex Japan |
6,543 |
0.7 |
312 |
(148) |
6,379 |
0.9 |
|
Latin America |
37,003 |
4.2 |
1,023 |
15,250 |
20,730 |
2.8 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
|
89,029 |
10.1 |
6,857 |
15,011 |
67,161 |
9.2 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
Other net assets/(liabilities){A} |
22,185 |
2.5 |
(91,085) |
- |
113,270 |
15.5 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
Total assets |
882,291 |
100.0 |
51,038 |
99,771 |
731,482 |
100.0 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
|
||||||
|
{A} Figure for 2009 has £55,875,000 (2008 - nil) of bank loans which is shown as a current liability. |
||||||
|
|
||||||
11 TWENTY LARGEST INVESTMENTS
As at 31 December 2009
|
|
|
Valuation |
Total |
Valuation |
|
|
|
|
2009 |
assets |
2008 |
|
|
Company |
Country |
£'000 |
% |
£'000 |
|
|
1 (1) |
Petrobras ADR{A} |
|
|
|
|
|
Petrobras, Brazil's leading energy group, produces oil and gas from extensive reserves throughout the country. It also produces a wide range of derivative products, petrochemicals and fuel alcohol. |
Brazil |
32,479 |
3.7 |
22,168 |
|
|
2 (2) |
British American Tobacco{B} |
|
|
|
|
|
British American Tobacco is the holding company for a group of companies that manufacture, market and sell cigarettes and other tobacco products. The group sells over 300 brands in approximately 180 markets around the world. |
UK & Malaysia |
27,471 |
3.1 |
21,664 |
|
|
3 (4) |
Rio Tinto{C} |
|
|
|
|
|
Rio Tinto is an international mining company. The company has interests in a broad range of mineral assets including aluminium, coal, copper, gold, silver, lead and iron-ore. The company's mining operations are located throughout the world. |
UK & USA |
27,158 |
3.1 |
14,331 |
|
|
4 (-) |
Vale do Rio Doce{D} |
|
|
|
|
|
Vale is one of the worlds' largest, fully-integrated, natural resources companies. Based in Brazil, the company produces iron-ore, manganese, alloys, gold, nickel, copper aluminum, potash and numerous other minerals. In addition to its mining assets, Vale also owns and operates railways and maritime terminals |
Brazil & USA |
26,323 |
3.0 |
- |
|
|
5 (3) |
Unilever Indonesia |
|
|
|
|
|
Unilever Indonesia, the majority owned subsidiary of Unilever NV, manufactures soaps, detergents, margarine, oil and cosmetics. The company also produces dairy based foods, ice cream and tea beverages. |
Indonesia |
23,201 |
2.6 |
15,927 |
|
|
6 (6) |
Souza Cruz |
|
|
|
|
|
Souza Cruz produces and sells cigarettes and other tobacco products in Latin America. Brand names include Lucky Strike, Carlton, Derby, and Hollywood. The company also manufactures paper for cigarettes and packaging. |
Brazil |
21,955 |
2.5 |
14,074 |
|
|
7 (11) |
Standard Chartered |
|
|
|
|
|
Standard Chartered is an international banking group operating principally in Asia, Africa, Latin America and the Middle East. The company offers its products and services to a wide range of customers in over fifty countries worldwide. |
UK |
21,648 |
2.5 |
12,026 |
|
|
8 (8) |
Tenaris ADR |
|
|
|
|
|
Tenaris manufactures, markets and distributes welded and seamless pipe. The company produces casing, tubing, pipeline and mechanical tubes for the oil and gas and energy industries and for mechanical applications and distributes its products worldwide. |
Mexico |
21,129 |
2.4 |
13,114 |
|
|
9 (-) |
Portugal Telecom{E} |
|
|
|
|
|
In addition to being the dominant provider of domestic telecommunication services in Portugal, the company also offers communication services in Brazil, Africa and Asia. Internet access, data communication services and internet television are also services the company provides. |
Portugal |
20,820 |
2.4 |
9,382 |
|
|
10 (-) |
Aeroportuario del Sureste ADS |
|
|
|
|
|
Grupo Aeroporto del Sureste operates airports in Mexico. The company holds long-term concessions to manage airports in leading tourist resorts such as Cancun and Cozumel, plus cities such as Oaxaca, Veracruz and Merida. |
Mexico |
19,146 |
2.2 |
10,400 |
|
|
Top ten investments |
|
241,330 |
27.5 |
|
|
|
|
|
|
|||
|
{A} Holding comprises equity and fixed income securities split £28,814,000 (2008 - £18,455,000) and £3,665,000 (2008 - £3,713,000). |
|||||
|
{B} Holding comprises UK and Malaysia securities split £17,176,000 (2008 - £9,900,000) and £10,295,000 (2008 - £11,764,000). |
|||||
|
{C} Holding comprises equity and fixed income securities split £15,594,000 (2008 - £5,662,000) and £11,564,000 (2008 - £8,669,000). |
|||||
|
{D} Holding comprises equity and fixed income securities split £17,661,000 (2008 - nil) and £8,662,000 (2008 - nil). |
|||||
|
{E} Holding comprises equity and fixed income securities split £12,112,000 (2008 - 9,382,000) and £8,708,000 (2008 - nil). |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11 (10) |
PTT Exploration and Production |
|
|
|
|
|
PTT Exploration is a subsidiary of the Petroleum Authority of Thailand. The company produces oil and natural gas, and also explores and develops new crude oil and gas prospects. |
Thailand |
19,113 |
2.2 |
12,839 |
|
|
12 (-) |
Nordea |
|
|
|
|
|
Nordea Bank is a financial services group based in Sweden. The company provides deposit and credit services to both business and private individuals, plus a range of products in investment banking, securities trading and insurance. Nordea offers services throughout Scandinavia and the Baltic region. |
Sweden |
18,620 |
2.1 |
7,938 |
|
|
13 (5) |
QBE Insurance Group |
|
|
|
|
|
QBE Insurance Group is an Australian based insurance company which underwrites most types of commercial and industrial insurance policies. The company provides its services both domestically and internationally. |
Australia |
18,178 |
2.1 |
14,304 |
|
|
14 (12) |
Taiwan Mobile |
|
|
|
|
|
Taiwan Mobile is the leading provider of cellular telecommunications services in Taiwan. Although predominantly a wireless network operator, the company also sells and leases cellular telephony equipment. |
Taiwan |
15,706 |
1.8 |
11,838 |
|
|
15 (-) |
Schneider Electric |
|
|
|
|
|
Schneider Electric manufactures power distribution and automation services. The company produces circuit breakers, process controls, remote installation management solutions and operating control-boards. Schneider's products are sold under the names Merlin Gerin, Modicon, Square D and Telemecanique. |
France |
14,479 |
1.6 |
10,248 |
|
|
16 (-) |
Schlumberger |
|
|
|
|
|
Schlumberger is one of the largest oil-services companies in the world. Through it subsidiaries the company provides a wide range of services including project management, information technology and development solutions to the petroleum industry. |
USA |
14,108 |
1.6 |
- |
|
|
17 (-) |
Public Bank |
|
|
|
|
|
Public Bank provides a range of banking and financial services which include leasing, factoring plus equity and futures broking. The group's overseas operations include branches in Hong Kong, Sri Lanka, Laos, Cambodia and Vietnam. |
Malaysia |
14,103 |
1.6 |
7,739 |
|
|
18 (15) |
Total |
|
|
|
|
|
Total is a fully integrated global energy company. In addition to exploring for, producing, refining and marketing oil and natural gas, the company also operates a chemical division which produces polyethylene, polyotyrene, paint, adhesives and resins. |
France |
13,995 |
1.6 |
11,662 |
|
|
19 (13) |
Telecomunicacoes de Sao Paulo |
|
|
|
|
|
Telesp provides local telecommunication services throughout the Brazilian State of Sao Paolo. The company provides voice, data, broadband and digital video to consumers, business and government entities. |
Brazil |
13,900 |
1.6 |
11,831 |
|
|
20 (-) |
Petrochina |
|
|
|
|
|
Petrochina explores, develops and produces crude oil and natural gas. The company also refines, transports and distributes crude oil and petroleum products, produces and sells chemicals, and transmits, markets and sells natural gas. |
China |
13,383 |
1.5 |
- |
|
|
Top twenty investments |
|
396,915 |
45.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
The value of the 20 largest investments represents 45.2% (2008 - 37.0%) of total assets. The figures in brackets denote the position at the previous year end. (-) denotes not previously in 20 largest investments. |
|||||
Portfolio of Investments - Other Investments
|
|
|
Valuation |
Total |
Valuation |
|
|
|
2009 |
assets{F} |
2008 |
|
Company |
Country |
£'000 |
% |
£'000 |
|
Roche Holdings |
Switzerland |
13,157 |
1.5 |
- |
|
Philip Morris International |
USA |
13,114 |
1.5 |
11,800 |
|
ENI |
Italy |
13,113 |
1.5 |
13,192 |
|
Casino |
France |
13,052 |
1.5 |
5,211 |
|
Kimberly Clark de Mexico |
Mexico |
12,999 |
1.4 |
9,914 |
|
AstraZeneca |
UK |
12,806 |
1.4 |
9,544 |
|
Wing Hang Bank |
Hong Kong |
12,712 |
1.4 |
8,786 |
|
E.ON |
Germany |
12,656 |
1.4 |
11,519 |
|
Metro |
Germany |
12,606 |
1.4 |
4,725 |
|
Taiwan Semiconductor Manufacturing |
Taiwan |
12,590 |
1.4 |
8,513 |
|
Top thirty investments |
|
525,720 |
59.6 |
|
|
Mapfre |
Spain |
12,506 |
1.4 |
9,005 |
|
Swire Pacific B |
Hong Kong |
12,219 |
1.4 |
8,271 |
|
CLP Holdings |
Hong Kong |
11,740 |
1.3 |
9,875 |
|
Procter & Gamble |
USA |
11,633 |
1.3 |
12,895 |
|
Intel |
USA |
11,369 |
1.3 |
8,163 |
|
Centrica |
UK |
11,209 |
1.3 |
10,607 |
|
Johnson & Johnson |
USA |
11,154 |
1.3 |
10,395 |
|
Zurich Financial Services |
Switzerland |
10,855 |
1.2 |
11,412 |
|
Belgacom |
Belgium |
10,686 |
1.2 |
10,833 |
|
Kraft Foods |
USA |
10,263 |
1.2 |
10,260 |
|
Top forty investments |
|
639,354 |
72.5 |
|
|
Hindustan Unilever |
India |
10,219 |
1.2 |
- |
|
National Grid Transco |
UK |
10,185 |
1.2 |
3,001 |
|
Telefonica Emisiones 5.375% 02/02/18 |
UK |
10,163 |
1.1 |
8,963 |
|
Telus |
Canada |
10,053 |
1.1 |
- |
|
Oversea-Chinese Bank |
Singapore |
10,023 |
1.1 |
6,022 |
|
Pemex Project Funding Master 7.75% 29/09/2049 |
USA |
9,784 |
1.1 |
7,188 |
|
Intesa Sanpaolo |
Italy |
9,765 |
1.1 |
6,911 |
|
Imperial Tobacco 5.5% 22/11/2016 |
UK |
9,510 |
1.1 |
8,041 |
|
Daito Trust Construction |
Japan |
9,366 |
1.1 |
7,866 |
|
China Mobile |
China |
9,302 |
1.1 |
- |
|
Top fifty investments |
|
737,724 |
83.7 |
|
|
Amada |
Japan |
9,275 |
1.1 |
7,918 |
|
Takeda Chemical |
Japan |
9,275 |
1.1 |
10,634 |
|
Canon |
Japan |
9,080 |
1.0 |
7,385 |
|
Royal Dutch Shell |
UK |
9,058 |
1.0 |
- |
|
Weir Group |
UK |
8,783 |
1.0 |
3,795 |
|
Parco |
Japan |
8,259 |
0.9 |
9,693 |
|
Vodafone Group |
UK |
8,047 |
0.9 |
7,784 |
|
Astellas Pharmaceutical |
Japan |
7,480 |
0.8 |
9,027 |
|
Deutsche Post |
Germany |
6,597 |
0.7 |
6,290 |
|
Indonesia Recapital Bond 13.15% 15/03/2010 |
Indonesia |
6,543 |
0.7 |
6,379 |
|
Republic of Venezuela 8.5% 08/10/2014 |
USA |
5,815 |
0.7 |
- |
|
Mexico (Government of) 10.5% 14/07/2011 |
Mexico |
5,775 |
0.7 |
6,197 |
|
United Overseas Bank |
Singapore |
5,208 |
0.6 |
3,736 |
|
Scottish & Southern Energy |
UK |
4,296 |
0.5 |
- |
|
Consorcio Ara |
Mexico |
3,885 |
0.4 |
2,373 |
|
Aviva |
UK |
3,334 |
0.4 |
3,268 |
|
Federal Republic of Brazil 11% 17/08/2040 |
USA |
3,303 |
0.4 |
3,631 |
|
Telecom Corp of New Zealand |
New Zealand |
2,830 |
0.3 |
2,358 |
|
General Accident 7.875% Cum Irrd Pref |
UK |
2,782 |
0.3 |
2,645 |
|
Abbey National 10.375% Non Cum Pref |
UK |
2,757 |
0.3 |
2,414 |
|
Total investments |
|
860,106 |
97.5 |
|
|
Net current assets before short term borrowings |
|
22,185 |
2.5 |
|
|
Total assets |
|
882,291 |
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
12 FINANCIAL HIGHLIGHTS
|
|
31 December 2009 |
31 December 2008 |
% change |
|
Total assets less current liabilities (before deducting prior charges) |
£882,291,000 |
£731,482,000 |
|
|
Equity shareholders' funds (Net Assets) |
£741,813,000 |
£568,827,000 |
|
|
Share price - Ordinary share (mid market) |
765.5p |
589.0p |
+30.0 |
|
Share price - B Ordinary share (mid market) |
717.5p |
527.0p |
+36.1 |
|
Net Asset Value per Ordinary and B Ordinary share |
772.9p |
625.8p |
+23.5 |
|
Discount to Net Asset Value on Ordinary shares |
1.0% |
5.9% |
|
|
|
|
|
|
|
Gearing (ratio of borrowing to shareholders' funds) |
|
|
|
|
Actual gearing ratio (net of cash) |
15.1% |
11.1% |
|
|
|
|
|
|
|
Dividends and earnings per Ordinary share |
|
|
|
|
Revenue return per share |
29.5p |
25.0p |
+18.0 |
|
Dividends per share{A} |
27.0p |
23.2p |
+16.4 |
|
Dividend cover (including proposed final dividend) |
1.09 |
1.08 |
|
|
Revenue reserves{B} |
£45,498,000 |
£40,774,000 |
|
|
|
|
|
|
|
Operating costs |
|
|
|
|
Total expense ratio |
0.81% |
0.82% |
|
|
|
|||
|
{A} The figure for dividends per share reflect the years in which they were earned (see note 8). |
|||
|
{B} The revenue reserve figure does not take account of the proposed third interim and final dividends amounting to £5,314,000 and £9,752,000 respectively (2008 - £4,310,000 and £7,985,000). |
|||
This information is provided by RNS
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