Annual Financial Report Announcement
MURRAY INTERNATIONAL TRUST PLC
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2010
1. CHAIRMAN'S STATEMENT
Highlights
· Net Asset Value Total Return of 24.7%
· Benchmark Total Return of 14.9%
· Total dividends (excluding special interim) increased by 18.5% compared with 2009
· Special one-off interim dividend of 2.5p declared
· Shares trading at a premium to net asset value per Ordinary share for the whole year
· £67m 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 +24.7%, ahead of the return on the benchmark index of +14.9%. The share price total return was +27.2% reflecting a slight expansion of the premium. The Investment Manager's Review in this Report contains an attribution analysis which shows the factors affecting net asset performance. As last year, key positive influences were significant overweights in Asia ex Japan and Latin America. The large underweighting in the United Kingdom contributed positively to relative outperformance, while continuing strong stock selection across the board enhanced capital returns.
Background
In terms of the level of economic activity the split between the performance of the developed nations and the developing nations remained as wide as ever in 2010. It is true that the former showed some recovery, particularly Germany, but, as a whole, they continued to be weighed down by heavy debts and the attempts of their governments to bring these under control without causing a sharp recession. Individual governments took different measures in attempting to find the right balance with some countries such as the USA emphasising the need to stimulate so as to reduce unemployment while others such as the United Kingdom paid more attention to deficit reduction. It is still uncertain as to which approach is likely to be more successful but the task of reducing government deficits has only just begun and is likely to bear down on economic growth for some time yet. Sovereign solvency issues in a number of European countries threatened to permanently destabilise the whole region. In the event the European Union survived, but many structural problems remain unresolved. The developing nations themselves were not without their problems as fast growth and pressure on World natural resources led to higher inflation in many, particularly China. Governments in many of these nations raised interest rates to moderate growth and some introduced capital controls to deter the influx of foreign funds. The Trust continued to emphasise those companies that were truly global in outlook and those able to take advantage of the above conditions.
Dividends
In 2010 we were able to increase the level of each of the three interim dividends that were paid to 6.8p (2009 - 5.6p). Your Board is now recommending a final dividend of 11.6p (2009 - 10.2p) which, subject to the approval of shareholders at the Annual General Meeting, will be paid on 16 May 2011 to shareholders on the register on 8 April 2011. Subject to the approval of the final dividend, the total Ordinary dividend (excluding the special dividend) for the year will amount to 32p, an increase of 18.5% from last year (2009 - 27p). The Company has also declared a special interim dividend (refer to Repayment of VAT paragraph below) of 2.5p (2009 - nil) which will be paid on 16 May 2011 to shareholders on the register on 8 April 2011. 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 16 May 2011 with new B Ordinary shares equivalent in Net Asset Value to the recommended final and special dividends for the year just ended.
Gearing
In May 2010 we entered into a new Yen 8.4 billion facility with The Royal Bank of Scotland plc at an all-in fixed rate of 3.17% until 13 May 2015 replacing an expiring facility for a similar amount. The currency risk arising from the loan has been largely eliminated by hedging the Yen exposure in the forward markets. At the year end the total of all borrowings was £161.8 million being 16.7% of net assets. The proportion of the latter invested in equities was 104% (2009 - 104%).
Publication of Prospectus and Issue of New Shares
At the Annual General Meeting held in April 2010 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 we have continued to see a steady and strong demand for the Company's shares resulting in the issue of 7.9 million new Ordinary shares representing 8.4% of the Ordinary shares in issue at the start of the year. The Financial Service Authority's Prospectus Rules provide that where a company issues in a twelve month period new shares representing 10 per cent or more of the Company's issued share capital which are already admitted to trading on a regulated market, then the company concerned is required to issue a prospectus. In order to ensure that the Company retains the maximum flexibility to operate the premium control policy and to meet demand for the Ordinary shares, the Board published a Prospectus on 21 December 2010. Copies of the Prospectus are available for downloading from the Company's website via the following link http://www.murray-intl.co.uk/doc.nsf/Lit/ProspectusUKClosedMINT.
Given the continuing demand for the Company's shares the Board will be seeking approval from shareholders to renew the authority to issue new shares for cash in 2011. 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
It is with sadness that I will be retiring at the AGM having served on the Board since 2000 and been Chairman since 2002. I would like to thank the Board for all the support they have given me during what has been an exciting time for the Trust. The team at Aberdeen, with whom the Board has worked, has been a strong one. The respect in which Bruce Stout and his team is held by investors is evidenced by the move in the share price from a discount to net asset value, at which investment trust shares normally stand, to a premium. I would like to thank Bruce for his excellent contribution and Charles Mearns, for his company secretarial work during my time as Chairman.
I am delighted that the Board has elected Kevin Carter to succeed me as Chairman at the conclusion of the AGM. His knowledge of the investment world will be of great benefit to the Trust and I wish him and the rest of the team every success in the future.
Repayment of VAT on Management Fees
During the year the Company received a repayment of £2.465 million from Aberdeen, representing the return of outstanding VAT charged on management fees for the periods 1990 to 1996 and 2001 to 2007. This sum has been allocated to the revenue and capital accounts in accordance with the accounting policy in place when the VAT was originally charged. The Company is shortly due to receive £1.6 million representing the simple interest due on the total repayment of VAT. This interest payment has been allocated to the revenue account in accordance with the Association of Investment Companies' Statement of Recommended Practice. As a result of the one-off nature of the above sums, the Board has decided to recommend the payment of a special dividend of 2.5p per Ordinary share which will cost £2.6m and equates to the enhancement to the revenue account from the VAT repayments. The investment company industry is taking various steps to seek to recover VAT in respect of the period 1997 to 2000 and is also seeking compound interest on all VAT repaid. These initiatives have been resisted by HMRC and it is not possible to predict whether the Company will be entitled to any further VAT or interest repayments in the future. Consequently no credit has been taken in these accounts for any further repayments.
Overseas Tax Reclaims
In recent years, there have been a number of European cases, hearings and opinions that support the argument that the withholding tax ("WHT") rules of many European Union countries discriminate against non-resident European beneficial owners of investments by offering a different tax rate to the equivalent domestic investment vehicle. The Company has engaged Ernst & Young to advise in connection with the filing of protective claims in France, Germany and the Netherlands in accordance with certain statutory deadlines imposed by each country for domestic taxpayers. If successful, the claims may result in the recovery of up to 900,000 Euros, less costs, representing excess WHT paid on dividends received in prior years. Your Board will update shareholders on progress in connection with this matter when there is further news to report.
Annual General Meeting
This year's Annual General Meeting will be held in Glasgow on Thursday 28 April 2011 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.
Outlook
In times such as these it is extremely difficult to forecast accurately macro economic developments in different regions of the World and to then judge how much stock prices discount these developments. For many years now your Trust has benefited from identifying good quality companies strategically focused on growth markets around the world. This has served the investment objective well both in rising and falling equity markets. With equity markets performing so well over the past two years, valuations have moved higher, but not uniformly. Attractive opportunities still exist to merit maintaining the current strategy for the foreseeable future.
John Trott
Chairman
22 February 2011
2. MANAGER'S REVIEW
Background
Another year of above average returns from global equity markets over the past twelve months might imply all was well with the world in 2010. How wrong that would be. If anything, the global economic system faced much tougher challenges than any experienced since the credit crisis of 2007-09. The enormous cost of avoiding systemic collapse during that period could no longer be ignored. Unfortunately, when it came to payback time, many creditors were found to be seriously short of funds. The world's largest debtor nation, the United States, blatantly ignored calls for fiscal restraint. Faced with stubbornly high unemployment, declining house prices, falling credit demand and contracting real incomes, policymakers opted for popularism over prudence. Billions of additional US dollars were printed, causing further deterioration to an already chronic fiscal deficit. Recognising frighteningly similar circumstances in the UK, the newly elected coalition government talked tough on the need for frugality. In the event no progress was made on reducing the mountainous public and private sector debt burden built up through years of unconstrained excess. Europe was not as fortunate in its attempts at procrastination. Global fixed income investors ran out of patience with highly indebted peripheral European nations such as Greece, Spain, Portugal and Ireland. Rising risk aversion and escalating uncertainty caused widespread financial panic throughout associated sovereign debt markets. It took a sizeable European Union support package and public intervention from Germany to restore some fragile semblance of order towards year end. Meanwhile, Japan, the world's second largest debtor, watched quietly from the sidelines. Mired in deflation for the past twenty years, the West's woes were all too familiar for policymakers in Tokyo. Against such a backdrop of economic negativity the only bright spots were Asia and Latin America. Demonstrating further economic decoupling from the developed world, domestic economic growth in nations such as Brazil, India, China and Taiwan, surpassed expectations. Ironically, at times, emerging market growth threatened to be too strong. In response, prompted by capacity constraints and rising inflationary pressures, monetary authorities acted prudently to tighten policy to alleviate any overheating. How the West envied such normal business cycle growing pains and the simplicity of solutions to address them.
As befits the diversity of macro-economic conditions, returns from stockmarkets were extremely varied. Most European markets struggled to make much progress as sovereign debt concerns deflated investor sentiment. North America and the UK ignored prevailing negative fundamentals, focusing instead on positive corporate profit momentum. Consequently solid returns of +19.1% and +12.2% were recorded respectively. Although the Japanese market declined in local terms, strength of the Yen resulted in a very respectable +19.0% return in Sterling terms. Indeed the overall influence of Sterling positively enhanced returns, the only exception being its 4% rise against the Euro. The pound depreciated against all other exposure currencies in the portfolio over the period. Not for the first time in recent years it was left to the Emerging world to provide notable contributions. Asia and Latin America returned +24.4% and +20.6% respectively, with extremely strong 40% plus returns in Sterling terms from markets such as Thailand, Indonesia and Malaysia.
Performance
The Net Asset Value Total Return for the year to 31 December 2010 with net dividends reinvested was 24.7% compared with a return on the benchmark of 14.9%. A full attribution analysis is given on page 20 which details the various influences on portfolio performance. In summary, of the 1030 basis points (before expenses) of performance above the index, asset allocation contributed 300 basis points and stock selection 540 basis points. Structural effects relating to the fixed income portfolio, net of borrowing and hedging costs, added a further 190 basis points of positive relative performance. Within the equity asset allocation, positive contributions came from underweighting the UK and overweighting towards Asia and Latin America. Superior stock selection in five of the six regional areas also enhanced performance.
USA
Macro-economic trends in the United States showed virtually no improvement throughout 2010. Devoid of policy options and pragmatic solutions, US policymakers and politicians intensified their preaching of securing growth with fiscal restraint. Unfortunately, as always with such unbridled optimism, it was simple to say but difficult to deliver. Unperturbed by evolving reality, the hope was for a normal recovery, where bank lending, consumption, employment and income all recover in a healthy fashion. Unfortunately, with the starting point characterised by grossly over-indebted public and private sectors, deflationary forces were more likely to prevail. In the event, this is indeed what happened. Bank lending and credit growth remained negative throughout the period. Contracting real incomes kept consumption constrained and there was virtually no new generation of private sector jobs. Probably the most accurate description of the US economy in 2010 was one of stagnation. In an attempt to plug the public financing gap, taxes were reluctantly raised, but it became evident very quickly that US policymakers had no stomach for the protracted pain of public sector spending cuts. Deficit reduction plans were quietly shelved. Unconcerned by accusations of gambling with free market capitalism and the credibility of the US dollar, the Authorities resorted to another extensive stimulus programme by printing more money. Despite all evidence to the contrary, policymakers clung to a misguided belief that by reflating capital markets and asset prices, inflation could be generated, thereby reducing overall debt burdens. Rational analysis tended to disagree. Caught in a liquidity trap, where neither low interest rates nor printing money can stimulate borrowing because consumer demand is non-existent, such irresponsible policy actions reflected escalating desperation. For a country increasingly dependent on foreign capital to finance its bloated budget, such an act of economic vandalism may ultimately burden future generations with a very high price to pay. From an investment perspective, the rising US stockmarket was used as an opportunity to reduce net exposure. Positions in Intel and Procter & Gamble were sold outright, leaving the residual portfolio defensively positioned.
UK
The disconnect between economic rhetoric and economic reality in the UK remained as prominent as ever during the period. With the ink barely dry on the marriage certificate of the new Coalition government, politicians and policymakers immediately came face to face with the extremely limited policy options available when elected on an austerity mandate. On paper, policy objectives seemed straightforward. Balance the books of the public and private sector through fiscal rectitude and a return to thrift and abstinence. In practice, policy objectives proved punitive to implement due to prevailing economic fragilities. As usual, the UK housing market was at the core of economic dislocations. Having failed dismally to address massive mortgage lending excesses witnessed in Britain during the credit boom, newly introduced national regulatory initiatives arguably picked the worst possible time to restrict the supply of credit. The sector remained depressed. With average UK house prices still over six times the average salary, the affordability of property did not improve. Unfortunately, historical experience tells us that boom-bust property cycles take a long time to redress imbalances. This journey in the UK has only just begun. Consequently, confidence stayed subdued, with consumers reluctant to spend. Credit growth remained virtually non-existent, real incomes declined as inflation spiked higher, savings reached the highest level for over fifteen years and job insecurity reached record levels as the Sword of Damocles hung menacingly over the public sector. The national reality of living within its means was never going to be pleasant after twenty years of credit induced intemperance. Just how unpleasant the UK populace has still to find out. Given such prevailing economic uncertainty, very few attractive domestic investment opportunities were identified in the UK market last year. The portfolio continued to add to existing positions in overseas earners such as Royal Dutch Shell and British American Tobacco, but overall asset exposure remained essentially unchanged.
Europe
Extremely high levels of sovereign indebtedness plagued the economic landscape in Europe and threatened the very existence of the European Union. Solvency concerns over future fiscal financing requirements in Greece, Portugal, Ireland and Spain escalated as it became clear that public sector budget deficits were spiralling out of control. As rising bond yields threatened default for those worse affected, severe austerity measures were demanded by financial markets. The draconian nature of proposed initiatives temporarily placated fixed income investors, but were clearly impossible to achieve and incompatible with the reality of long term social democracy. In response, more pragmatic proposals were introduced. Backed by strong intent from Germany to maintain the euro currency and address structural issues, a €750m bailout fund was established. This immediately relieved liquidity problems - in effect, buying time. Realistic deficit reduction plans were put in place across the board, providing specific targets and time scales for those involved. The deleveraging of debt-infested Europe moved from talk of fiscal rectitude to the pain of fiscal rectitude. Sentiment remained depressed throughout as unemployment moved relentlessly higher. Policymakers looked for leadership, with repeated calls for a reluctant Germany to impose discipline on Euroland's fiscal targets and give the euro more credibility. Caught between public resistance and political posturing, Germany politely declined, but there can be no doubt that in the ever-evolving European landscape, the pendulum of economic power is swinging back. Compromises made today come with tougher conditions attached for tomorrow. For those highly indebted countries in peripheral Europe the next few years will witness just how tough those conditions are likely to be. In contrast to persistent macro-economic challenges, European companies demonstrated superior capital discipline in the face of adversity. Widespread market weakness was used as an opportunity to add to existing holdings and establish new positions in Nestle, a multinational packaged food company, and Novartis, a diversified manufacturer of pharmaceuticals and healthcare products. Both companies are based in Switzerland.
Latin America
Undaunted and unconstrained by deflationary forces resonating throughout the developed world, Latin America continued to prosper in 2010. Currency stability, Central Bank independence and vibrant export sectors in Brazil and Mexico, provided a stable backdrop for growth. Indeed Brazil's exports to China have risen ten fold over the past ten years, emphasising the growth in intra-emerging market trade and the decline in developed market dependency. Strong investment in natural resources, manufacturing and oil production continued to broaden the income base throughout the region. Signs of emerging economic maturity were also evident as inflationary pressures, which often accompany rapid growth, threatened to escalate. Pre-emptive interest rate hikes in Brazil reduced consumption to more sustainable levels by reducing credit demand. Such restraining measures were welcomed by most long-term investors. Ongoing strength of Latin American currencies against the US Dollar and Sterling proved less welcome for domestic exporters but enhanced investment returns from the portfolio. Supported by strong balance sheets and substantial free cash flows, earnings and dividend growth from holdings such as Souza Cruz, Kimberly Clark de Mexico and Vale again surpassed expectations. Two new holdings were initiated during the period, both of which are domiciled in Brazil: Wilson & Sons, a domestic operator of port terminals, towage and maritime logistics for international trade transportation; and Banco Bradesco, one of the countries leading financial services providers. Following a long period of strong outperformance, the large position in Petrobras was significantly reduced, thereby providing additional funds for new opportunities. Given the solid macro-economic backdrop and attractiveness of selective investments in the Region, current levels of exposure are likely to be maintained.
Japan and Asia
If definitive evidence was required as to why greater fiscal stimulus is no answer to the developed world's debt problems, then economists should look no further than Japan. Persistent fiscal deficits for the past twenty years constantly diverted financial resources away from the private sector, thereby constraining domestic GDP growth. Now one of the most highly indebted countries in the world, Japan's plight became a global concern in 2010. With domestic savings dwindling and a rapidly aging population, future debt-financing fears intensified. Such a demographic time-bomb suggests a lifetime of repayments for the next generation, which from an investment perspective, could significantly constrain economic activity for many years to come. Selective exposure in the Trust will continue to focus on successful companies that prosper despite the prevailing deflationary environment.
Elsewhere in Asia, policymakers were confronted with more orthodox economic issues. Well above average growth rates raised concerns over capacity constraints. Top of the agenda was staying ahead of inflationary pressures, prompting monetary authorities in Australia, Malaysia, India and China to further increase interest rates. Persistently rising imported food and commodity prices proved difficult to suppress, especially in countries where demand remained staunchly inelastic. Historical evidence suggests that Central Banks throughout the region will succeed in stemming excesses, but the current restrictive environment may prevail for some time. Not surprisingly, as policy tightened, growth concerns intensified, unfortunately losing some perspective along the way. Fears over declining growth rates in Asia appear premature. Long term structural positives of rising real incomes, surplus savings, low consumption and manufacturing competitiveness remain unchanged. Squeezing some temporary inflation problems out of the system is not likely to derail the freight train. Periods of stockmarket weakness throughout the year were used to increase exposure. Existing holdings in companies such as China Mobile, Taiwan Semiconductor, QBE Insurance, Taiwan Mobile, Hindustan Unilever and Singapore Telecom were all increased. At current valuations relative to realistic earnings and dividend prospects, many Asian companies remain attractive investments for the long term.
Outlook
If only politicians could manage countries as well as people can manage companies. A slightly facetious observation, it might be said, given the differing social/profit objectives between the macro economic and micro-economic economy, but one which dominated investment reality in 2010 never-the-less. Failure on the part of politicians to deliver on previous promises of fiscal rectitude, policy reforms and credible legislation in the heavily indebted developed world fuelled the ongoing erosion of confidence in sovereign leadership. Amongst the most memorable toothless responses to previous declarations of defiance were the return to printing money in the United States, the reluctance to legislate in the UK Banking sector and widespread denial by peripheral Europe to acknowledge and address the enormous structural debt liabilities that exist. It may have been politically fashionable for politicians and policymakers to talk about putting the house in order but in practice there were few signs of its actually happening. Given the denial and short-termism that prevails, we expect macro-economic uncertainty to feature prominently throughout 2011.
More encouragingly, it was reassuring to witness another good year for corporate profitability and dividend growth last year, at least for those well managed companies with solid business models. Strong capital management and extensive cost reduction in 2009 provided the platform for expanding margins throughout 2010, but for many companies revenue growth also surprised on the upside. Irrespective of where companies were domiciled, the trend toward globalisation of the past five years undoubtedly enhanced results. The key questions are how sustainable these trends are and what price is currently being asked for such exposure. We acknowledge that in terms of momentum, overall corporate profit comparisons year-on-year are going to be tough in 2011. Companies exposed to truly growth markets should fair better than average but undoubtedly the positive surprise factor is largely in the past. On price, valuations have crept higher, but for Murray International's portfolio they are not excessive relative to growth prospects. We remain comfortable favouring equities over bonds and maintaining strategic exposure in quality companies exposed to growth markets. Tactically the trend towards reducing cyclicality and increasing defensive exposure will continue when relative pricing is deemed appropriate.
Bruce Stout
Aberdeen Asset Managers Limited
Investment Manager
22 February 2011
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.
The current Directors are Messrs J F H Trott, J D Best, K J Carter, A C Shedden and Lady Balfour of Burleigh and these were the only Directors who served during the year.
The Company does not make political donations or expenditures and has not made any donations for charitable purposes during the year and, in common with most investment trusts, the Company has no employees.
Principal Activity and Status
The Company is an investment company in accordance with Section 833 of the Companies Act 2006 and carries on business as an investment trust. The Company is registered in Scotland with number SC6705. In the opinion of the Directors of the Company, its affairs have been conducted in a manner to satisfy the conditions to enable it to continue to obtain approval as an investment trust under s1158 of the Corporation Tax Act 2010 (formerly s842 ICTA). HM Revenue & Customs will grant s842 or s1158 status, if requested, provided that the Company's affairs have been conducted in such a manner as to satisfy the conditions of that section. Approval for such status has been given by HM Revenue & Customs for the year ended 31 December 2009.
Results and Dividends
The total gain attributable to equity shareholders for the year amounted to £188.2 million.
A final dividend for the year ended 31 December 2009 of 10.2p per Ordinary share was paid on 14 May 2010. Interim dividends of 6.8p each were paid on 16 August 2010, 15 November 2010 and 17 February 2011 making a total distribution to Ordinary shareholders of £30.8 million. The Directors have declared a special interim dividend of 2.5p per Ordinary share and recommend a final dividend for the year ended 31 December 2010 of 11.6p both payable on 16 May 2011 to holders of Ordinary shares on the register at close of business on 8 April 2011.
Whenever a cash dividend is paid on the Ordinary shares, a bonus issue of B Ordinary shares is made to the holders of B Ordinary shares. In connection with the final and special dividends the Directors will make a corresponding capitalisation issue of B Ordinary shares credited as fully paid. This capitalisation issue will be equivalent in asset value to the final and special dividends now recommended on the Ordinary shares but excluding any tax credit thereon. Subject to the approval of shareholders of the final and special dividends, definitive certificates in respect of the capitalisation issue will be posted on 16 May 2011. Fractional entitlements will be sold for the benefit of shareholders. The new B Ordinary shares will rank equally with the existing B Ordinary shares.
Principal Risks and Uncertainties
General
An investment in the shares is only suitable for investors who are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses which may arise therefrom (which may be equal to the whole amount invested). Such an investment should be seen as long term in nature and complementary to existing investments in a range of other financial assets.
Changes in economic conditions (including, for example, interest rates and rates of inflation), industry conditions, competition, changes in the law, political and diplomatic events and trends, tax laws and other factors can substantially and adversely affect the value of investments and therefore the Company's performance and prospects.
Past performance of the Company, and of investments managed by the Manager, are not necessarily indicative of future performance.
The Shares
The market value of, and the income derived from, the shares can fluctuate and, notwithstanding the Board's discount and premium control policy, may not always reflect the Net Asset Value per share. There can be no guarantee that any appreciation in the value of the Company's investments will occur and investors may not get back the full value of their investment. No assurance can be given that any sale of the Company's investments would realise proceeds which would be sufficient to repay any borrowings or provide funds for any capital repayment to shareholders. Shareholders will bear the rewards and risks of the success or otherwise of the Company's investments.
The market value of the shares, as well as being affected by their Net Asset Value, also takes into account their dividend yield and prevailing interest rates, supply and demand for the shares, market conditions and general investor sentiment.
Borrowings
The Company may incur borrowings for investment purposes. Whilst the use of borrowings should enhance the total return on the shares where the return on the Company's underlying assets is rising and exceeds the cost of borrowing, it will have the opposite effect where the underlying return is falling, further reducing the total return on the shares. As a result, the use of borrowings by the Company may increase the volatility of the Net Asset Value and market price per share.
There is no guarantee that any borrowings of the Company would be refinanced on their maturity either at all or on terms that are acceptable to the Company.
Dividends
The Company will only pay dividends on the Ordinary shares (and a capitalisation issue for B Ordinary shares) to the extent that it has profits (including available reserves) available for that purpose, which will largely depend on the amount of income which the Company receives on its investments and the timing of such receipt. The amount of dividends payable by the Company may fluctuate.
If under UK law or accounting rules and standards applicable to the Company, there were to be a change to the basis on which dividends could be paid by companies, this could have a negative effect on the Company's ability to pay dividends.
Investment Objective and Strategy
There is no guarantee that the Company's investment objective will be achieved.
The Company may from time to time invest in other listed investment companies. As a consequence of these investments, the Company may itself be indirectly exposed to gearing through the borrowings from time to time of these other investment companies. The Company has a policy of not investing more than 15 per cent of its gross assets in other listed investment companies. The Net Asset Value, which is a factor in determining the market value of the shares, will be linked to the underlying share price performance of any such other investment companies.
Debt Instruments
The Company invests in fixed interest investments issued by corporate bodies and sovereign issuers. Bonds are subject to credit, liquidity and interest rate risks and in the event of a default there is a risk that the Net Asset Value may be adversely affected. Adverse changes in the financial position of an issuer of bonds or in general economic conditions may impair the ability of the issuer to make payments of principal and interest or may cause the liquidation or insolvency of an issuer. There can be no assurance as to the levels of default and/or recoveries that may be experienced with respect to bonds. Debt instruments held by the Company may be affected by changes in market sentiment or changes in interest rates that will, in turn, result in increases and decreases in the market value of those instruments. When interest rates decline, the value of the Company's investments in fixed rate debt obligations can be expected to rise and, when interest rates rise or are expected to rise, the value of those investments can be expected to decline.
To the extent that the Company invests in sub-investment grade securities, the Company may realise a higher yield than the yield offered by investment grade securities, but investment in such securities involves a greater volatility of price and a greater risk of default by the issuers of such securities, with potential loss of interest payment and principal. Sub-investment grade securities will be subject, in the judgment of a ratings agency, to uncertainties in terms of their performance in adverse conditions and will be speculative with respect to an issuer's capacity to meet interest payments and repay principal in accordance with its obligations. There can be no assurance that an issuer will not default or that the Company will be able to recover its investments in defaulted fixed interest debt instruments.
As bond investments of the Company mature, it may be difficult for the Company to obtain replacement investments having similar financial characteristics.
Market Price Risk
The fair value of equity and other financial securities held in the Company's portfolio fluctuates with changes in market prices. Prices are themselves affected by movements in currencies and interest rates and by other financial issues including the market perception of future risks.
Foreign Currency Risks
The Company's investments are principally in overseas securities. The Company accounts for its activities and reports its results in pounds sterling. The Company currently hedges most of the foreign currency exposure in respect of the liabilities attached to its borrowings. Where the Company does not hedge its currency exposure, which is currently the case with the investment portfolio, the movement of exchange rates may have a favourable or unfavourable effect on the gains and losses experienced on investments which are made or realised in currencies other than pounds sterling.
Charges to Capital
The Company currently deducts part of the management charge from capital. This increases distributable income at the expense of capital growth, which will either be eroded or constrained. The maintenance of a high level of dividend may also diminish capital values.
Discount and Premium Control Policy
The Company operates a discount and premium control policy. The operation of the discount control element of this policy could lead to a significant reduction in the size of the Company over time, which would increase the Company's total expense ratio and prejudice the ability of the Company to pay satisfactory levels of dividend to shareholders. While the Company intends to issue new shares and to resell shares held in treasury at a small premium to the Net Asset Value per share where demand exceeds supply, this will be dependent upon the Company being able to issue new shares and to resell shares held in treasury at a premium, on market conditions generally at the relevant time, upon shareholders in general meeting conferring appropriate authorities on the Board to issue further shares and, where required under the Prospectus Rules, upon a prospectus having been approved by the Financial Services Authority and published. The ability of the Company to operate the discount control policy will depend on the Company being able to purchase its own shares, which will be dependent upon shareholders in general meeting conferring authority on the Board to purchase its own shares. The Directors will seek renewal of this authority from shareholders annually and at other times should this prove necessary. However, there can be no guarantee that requisite shareholder approvals will be obtained.
In accordance with the Listing Rules, the extent of each buy-back authority which will be sought by the Company from shareholders in general meeting will be limited to 14.99 per cent, of the Company's issued share capital as at the date on which such authority is granted. In order to continue purchasing its own shares once any such authority has been exhausted, the Company would be required to seek a renewal of such authority from shareholders in general meeting.
The ability of the Company to purchase its own shares will be subject to the Act and all other applicable legislation, rules and regulations of any government, regulatory body or market applicable to the Directors or the Company and, in particular, will be dependent on the availability of distributable reserves.
Cessation of Investment Trust Status
The Company attempts to conduct its business so as to satisfy the conditions for approval as an investment trust under Part 24 Chapter 4 of the Corporation Tax Act 2010. In respect of each accounting period for which approval is granted, the Company will be exempt from United Kingdom taxation on its capital gains. Any breach of the tests that a company must meet to obtain approval as an investment trust company could lead to the Company being subject to tax on capital gains.
Tax and Accounting
Any change in the Company's tax status or in taxation legislation or accounting practice could affect the value of the investments held by the Company, affect the Company's ability to provide returns to shareholders or alter the post-tax returns to shareholders. Representations in this document concerning the taxation of investors are based upon current tax law and practice which are subject to change.
Any change in accounting standards may adversely affect the value of the Company's assets in its books of account or restrict the ability of the Company to pay dividends.
Regulatory
It is expected that the recently agreed Alternative Investment Fund Managers Directive will enter into force in 2013. The Directive may have significant consequences for the Company (and all similar investment companies) which might materially increase compliance and regulatory costs. The Directive is subject to further implementation measures, and the Board will continue to monitor the progress and likely implications of the Directive.
The performance of the Company is dependent upon the Manager's expertise in pursuing the investment policy and upon the Manager's key personnel
The ability of the Company to successfully pursue its investment policy is significantly dependent upon the expertise of the Manager and the principal members of its management team. The Company does not currently have employees or own any facilities and depends on the Manager for the day to day management and operation of its business. The loss of any of the Manager's management team could reduce the Company's ability to pursue successfully its planned investment policy.
The Company has no employees and is reliant on the performance of third party service providers
The Company has no employees and the Directors have all been appointed on a non executive basis. The Company is therefore reliant upon the performance of third party service providers for its executive function. In particular, the Manager and the Secretary will be performing services which are integral to the operation of the Company. The failure by any service provider to carry out its obligations to the Company in accordance with the terms of its appointment could have a materially detrimental impact on the operation of the Company and could affect the ability of the Company to pursue successfully its investment policy.
The Company may experience fluctuations in its operating results
The Company may experience fluctuations in its operating results from period to period due to a number of factors, including changes in the values of investments made by the Company, changes in the amount of distributions, dividends or interest paid in respect of investments in the portfolio, changes in the Company's operating expenses, and general economic and market conditions. Such variability may lead to volatility in the market price of the shares and cause the Company's results for a particular period not to be indicative of its performance in a future period.
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; and,
- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements.
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.
Each of the Directors confirms that to the best of his or her 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
John Trott
Chairman
22 February 2011
5. INCOME STATEMENT
For the year ended 31 December 2010
|
|
|
Year ended |
Year ended |
|||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Gains on investments |
10 |
- |
157,813 |
157,813 |
- |
142,123 |
142,123 |
|
|
Income |
2 |
46,607 |
- |
46,607 |
36,571 |
- |
36,571 |
|
|
Investment management fees |
3 |
(1,294) |
(3,018) |
(4,312) |
(1,052) |
(2,454) |
(3,506) |
|
|
Performance fees |
4 |
- |
(3,945) |
(3,945) |
- |
(2,707) |
(2,707) |
|
|
VAT recoverable on investment management and performance fees |
3 |
1,007 |
1,458 |
2,465 |
- |
- |
- |
|
|
Currency losses |
|
- |
(1,681) |
(1,681) |
- |
(1,523) |
(1,523) |
|
|
Other expenses |
5 |
(1,645) |
- |
(1,645) |
(1,485) |
- |
(1,485) |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
Net return before finance costs and taxation |
|
44,675 |
150,627 |
195,302 |
34,034 |
135,439 |
169,473 |
|
|
|
|
|
|
|
|
|
|
|
|
Finance costs |
6 |
(1,286) |
(3,002) |
(4,288) |
(1,106) |
(1,989) |
(3,095) |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
Return on ordinary activities before tax |
|
43,389 |
147,625 |
191,014 |
32,928 |
133,450 |
166,378 |
|
|
|
|
|
|
|
|
|
|
|
|
Tax on ordinary activities |
7 |
(4,881) |
2,019 |
(2,862) |
(5,638) |
2,027 |
(3,611) |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
Return attributable to equity shareholders |
|
38,508 |
149,644 |
188,152 |
27,290 |
135,477 |
162,767 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
Return per Ordinary share (pence) |
9 |
38.6 |
150.0 |
188.6 |
29.5 |
146.6 |
176.1 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
Return per Ordinary share assuming full conversion of the B Ordinary shares (pence) |
9 |
38.2 |
148.5 |
186.7 |
29.2 |
144.8 |
174.0 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
The total column of this statement represents the profit and loss account of the Company. |
||||||||
|
A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement. |
||||||||
|
All revenue and capital items in the above statement derive from continuing operations. |
||||||||
|
No operations were acquired or discontinued in the year. |
||||||||
|
The accompanying notes are an integral part of these financial statements. |
||||||||
|
|
|
|
|
|
|
|
|
|
|
Ordinary dividends on equity shares (£'000) |
8 |
29,062 |
- |
29,062 |
22,566 |
- |
22,566 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
||||||||
|
The above dividend information does not form part of the Income Statement. |
||||||||
6. BALANCE SHEET
As at 31 December 2010
|
|
|
As at |
As at |
||
|
|
|
31 December 2010 |
31 December 2009 |
||
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
|
Non-current assets |
|
|
|
|
|
|
Investments listed at fair value through profit or loss |
10 |
|
1,119,500 |
|
860,106 |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Debtors |
11 |
10,659 |
|
3,691 |
|
|
Cash and short term deposits |
|
10,765 |
|
28,255 |
|
|
|
|
_______ |
|
_______ |
|
|
|
|
21,424 |
|
31,946 |
|
|
|
|
_______ |
|
_______ |
|
|
Creditors: amounts falling due within one year |
|
|
|
|
|
|
Bank loans |
12/13 |
- |
|
(55,875) |
|
|
Other creditors |
12 |
(6,577) |
|
(9,761) |
|
|
|
|
_______ |
|
_______ |
|
|
|
|
(6,577) |
|
(65,636) |
|
|
|
|
_______ |
|
_______ |
|
|
Net current assets/(liabilities) |
|
|
14,847 |
|
(33,690) |
|
|
|
|
_______ |
|
_______ |
|
Total assets less current liabilities |
|
|
1,134,347 |
|
826,416 |
|
|
|
|
|
|
|
|
Creditors: amounts falling due after more than one year |
|
|
|
|
|
|
Bank loans and Debentures |
12/13 |
(161,792) |
|
(80,806) |
|
|
Other creditors |
12 |
(4,879) |
|
(3,797) |
|
|
|
|
_______ |
|
_______ |
|
|
|
|
|
(166,671) |
|
(84,603) |
|
|
|
|
_______ |
|
_______ |
|
Net assets |
|
|
967,676 |
|
741,813 |
|
|
|
|
_______ |
|
_______ |
|
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
|
Called-up share capital |
14 |
|
25,999 |
|
23,996 |
|
Share premium account |
|
|
115,472 |
|
50,693 |
|
Capital redemption reserve |
|
|
8,230 |
|
8,230 |
|
Capital reserve |
15 |
|
763,031 |
|
613,396 |
|
Revenue reserve |
|
|
54,944 |
|
45,498 |
|
|
|
|
_______ |
|
_______ |
|
Equity shareholders' funds |
|
|
967,676 |
|
741,813 |
|
|
|
|
_______ |
|
_______ |
|
|
|
|
|
|
|
|
Net Asset Value per Ordinary and B Ordinary share (pence) |
16 |
|
930.5 |
|
772.9 |
|
|
|
|
_______ |
|
_______ |
7 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
|
For the year ended |
|
|
|
|
|
|
|
|
|
|
|
Share |
Capital |
|
|
|
|
|
|
Share |
premium |
redemption |
Capital |
Revenue |
|
|
|
|
capital |
account |
reserve |
reserve |
reserve |
Total |
|
|
Note |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 31 December 2009 |
|
23,996 |
50,693 |
8,230 |
613,396 |
45,498 |
741,813 |
|
Return on ordinary activities after taxation |
|
- |
- |
- |
149,644 |
38,508 |
188,152 |
|
Dividends paid |
8 |
- |
- |
- |
- |
(29,062) |
(29,062) |
|
Issue of new shares |
|
2,003 |
64,779 |
- |
(9) |
- |
66,773 |
|
|
|
_______ |
______ |
______ |
______ |
______ |
______ |
|
Balance at 31 December 2010 |
|
25,999 |
115,472 |
8,230 |
763,031 |
54,944 |
967,676 |
|
|
|
_______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
For the year ended |
|
|
|||||
|
|
|
|
Share |
Capital |
|
|
|
|
|
|
Share |
premium |
redemption |
Capital |
Revenue |
|
|
|
|
capital |
account |
reserve |
reserve |
reserve |
Total |
|
|
|
£'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 |
|
|
|
_______ |
______ |
______ |
______ |
______ |
______ |
8 CASH FLOW STATEMENT
For the year ended 31 December 2010
|
|
|
Year ended |
Year ended |
||
|
|
|
31 December 2010 |
31 December 2009 |
||
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
|
Net cash inflow from operating activities |
17 |
|
33,968 |
|
28,539 |
|
|
|
|
|
|
|
|
Returns on investments and servicing of finance |
|
|
|
|
|
|
Interest paid |
|
(4,506) |
|
(3,642) |
|
|
|
|
________ |
|
________ |
|
|
Net cash outflow from servicing of finance |
|
|
(4,506) |
|
(3,642) |
|
|
|
|
|
|
|
|
Corporation tax paid |
|
|
(712) |
|
(3,173) |
|
|
|
|
|
|
|
|
Financial investment |
|
|
|
|
|
|
Purchases of investments |
|
(211,140) |
|
(165,960) |
|
|
Sales of investments |
|
110,637 |
|
66,719 |
|
|
|
|
________ |
|
________ |
|
|
Net cash outflow from financial investment |
|
|
(100,503) |
|
(99,241) |
|
|
|
|
|
|
|
|
Equity dividends paid |
|
|
(29,062) |
|
(22,566) |
|
|
|
|
________ |
|
________ |
|
Net cash outflow before financing |
|
|
(100,815) |
|
(100,083) |
|
|
|
|
|
|
|
|
Financing |
|
|
|
|
|
|
Share issue |
14 |
66,773 |
|
32,792 |
|
|
Debenture stock bought back |
|
- |
|
(882) |
|
|
|
|
________ |
|
________ |
|
|
Net cash inflow from financing |
|
|
66,773 |
|
31,910 |
|
|
|
|
________ |
|
________ |
|
Decrease in cash |
18 |
|
(34,042) |
|
(68,173) |
|
|
|
|
________ |
|
________ |
9 NOTES TO THE FINANCIAL STATEMENTS
|
For the year ended 31 December 2010 |
|||
|
|
|||
|
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 accounted for on an accruals basis using the effective interest rate method 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 based on an appropriate model. 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. |
|
|
|
|
2010 |
2009 |
|
2. |
Income |
£'000 |
£'000 |
|
|
Income from investments: |
|
|
|
|
UK dividends |
5,990 |
4,699 |
|
|
UK unfranked investment income |
1,351 |
1,419 |
|
|
Overseas dividends |
31,525 |
25,036 |
|
|
Overseas interest |
6,115 |
4,933 |
|
|
Stock dividends |
- |
9 |
|
|
|
________ |
________ |
|
|
|
44,981 |
36,096 |
|
|
|
________ |
________ |
|
|
Interest: |
|
|
|
|
Deposit interest |
13 |
292 |
|
|
Interest from HMRC (see note 3) |
1,613 |
- |
|
|
Money market interest |
- |
183 |
|
|
|
________ |
________ |
|
|
|
1,626 |
475 |
|
|
|
________ |
________ |
|
|
Total income |
46,607 |
36,571 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
2010 |
2009 |
|
|
Income from investments comprises: |
£'000 |
£'000 |
|
|
Listed UK |
7,341 |
6,118 |
|
|
Listed overseas |
37,640 |
29,978 |
|
|
|
________ |
________ |
|
|
|
44,981 |
36,096 |
|
|
|
________ |
________ |
|
|
|
2010 |
2009 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
3. |
Investment management fees |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Investment management fees |
1,294 |
3,018 |
4,312 |
1,052 |
2,454 |
3,506 |
|
|
|
________ |
_______ |
_____ |
________ |
_______ |
_____ |
|
|
|
|
|
|
|||
|
|
|
||||||
|
|
On 5 November 2007, the European Court of Justice ruled that management fees should be exempt from VAT. HMRC has announced its intention not to appeal against this case to the UK VAT Tribunal and therefore protective claims which have been made in relation to the Company have now been processed by HMRC. |
||||||
|
|
|
||||||
|
|
The VAT charged on the investment management fees has been refunded in stages. An amount of £1,337,000 relating to the period 1 January 2004 to 30 September 2007 was recognised in the financial statements for the year ended 31 December 2008. Further amounts of £1,643,000 and £822,000 have been recognised in these financial statements which represent the VAT charged on investment management fees for the periods 1 January 1990 to 3 December 1996 and 1 January 2001 to 31 December 2003, respectively. The 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. |
||||||
|
|
|
||||||
|
|
Within these financial statements we have also made an accrual of £1,613,000 in relation to the interest due by HMRC on the principal VAT repaid. This sum has been allocated to revenue. |
||||||
|
|
|
2010 |
2009 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
4. |
Performance fees |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Performance fees |
- |
3,945 |
3,945 |
- |
2,707 |
2,707 |
|
|
|
________ |
_______ |
_____ |
________ |
_______ |
_____ |
|
|
|
|
|
|
|
|
|
|
|
|
2010 |
2009 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
5. |
Other expenses |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Shareholders' services{A} |
740 |
- |
740 |
644 |
- |
644 |
|
|
Directors' remuneration |
122 |
- |
122 |
111 |
- |
111 |
|
|
Irrecoverable VAT |
90 |
- |
90 |
96 |
- |
96 |
|
|
Secretarial fees |
100 |
- |
100 |
100 |
- |
100 |
|
|
Auditors' fees: |
|
|
|
|
|
|
|
|
- fees payable to the Company's auditors for the audit of the annual accounts |
22 |
- |
22 |
24 |
- |
24 |
|
|
- fees payable to the Company's auditors for agreed upon procedures in connection with the half yearly report |
4 |
- |
4 |
4 |
- |
4 |
|
|
- fees payable to the Company's auditors for other services |
77 |
- |
77 |
2 |
- |
2 |
|
|
Other expenses |
490 |
- |
490 |
504 |
- |
504 |
|
|
|
________ |
_______ |
_____ |
________ |
_______ |
_____ |
|
|
|
1,645 |
- |
1,645 |
1,485 |
- |
1,485 |
|
|
|
________ |
_______ |
_____ |
________ |
_______ |
_____ |
|
|
|
||||||
|
|
{A} Includes registration, savings scheme and other wrapper administration and promotion expenses, of which £579,000 (2009 - £559,000) 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 (2009 - £nil). |
||||||
|
|
|
||||||
|
|
During the year an additional amount of £10,000 (2009 - nil) was paid to Ernst & Young for services relating to the issue of the Prospectus on 21 December 2010 (see Chairman's Statement). This figure is reflected within the issue of own shares in the Reconciliation of Movements in Shareholders' Funds. |
||||||
|
|
|
2010 |
2009 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
6. |
Finance costs |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Bank loans and overdrafts |
1,284 |
2,998 |
4,282 |
1,089 |
2,537 |
3,626 |
|
|
Debenture Stock |
2 |
4 |
6 |
17 |
(548) |
(531) |
|
|
|
________ |
_______ |
_____ |
________ |
_______ |
_____ |
|
|
|
1,286 |
3,002 |
4,288 |
1,106 |
1,989 |
3,095 |
|
|
|
________ |
_______ |
_____ |
________ |
_______ |
_____ |
|
|
|
2010 |
2009 |
|||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
7. |
Taxation |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
(a) |
Tax charge |
|
|
|
|
|
|
|
|
|
The tax charge comprises: |
|
|
|
|
|
|
|
|
|
Current UK tax |
2,677 |
(2,019) |
658 |
5,080 |
(2,027) |
3,053 |
|
|
|
Overseas tax |
2,696 |
- |
2,696 |
2,041 |
- |
2,041 |
|
|
|
Double taxation relief |
(656) |
- |
(656) |
(1,186) |
- |
(1,186) |
|
|
|
Prior year adjustment |
164 |
- |
164 |
- |
- |
- |
|
|
|
|
________ |
_______ |
_____ |
________ |
_______ |
_____ |
|
|
|
Current tax charge |
4,881 |
(2,019) |
2,862 |
5,935 |
(2,027) |
3,908 |
|
|
|
Deferred tax |
- |
- |
- |
(297) |
- |
(297) |
|
|
|
|
________ |
_______ |
_____ |
________ |
_______ |
_____ |
|
|
|
Total tax |
4,881 |
(2,019) |
2,862 |
5,638 |
(2,027) |
3,611 |
|
|
|
|
________ |
_______ |
_____ |
________ |
_______ |
_____ |
|
|
|
|
|
|
|
|
|
|
|
|
(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% (2009 - 28%). The differences are explained below: |
||||||
|
|
|
|
||||||
|
|
|
|
2010 |
2009 |
||||
|
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Return on ordinary activities before taxation |
43,389 |
147,625 |
191,014 |
32,928 |
132,862 |
165,790 |
|
|
|
|
________ |
_______ |
_____ |
________ |
_______ |
_____ |
|
|
|
Tax thereon at 28% (2009 - 28%) |
12,149 |
41,335 |
53,484 |
9,220 |
37,201 |
46,421 |
|
|
|
Effects of: |
|
|
|
|
|
|
|
|
|
Non taxable UK dividends |
(1,677) |
- |
(1,677) |
(1,316) |
- |
(1,316) |
|
|
|
Gains on investments not taxable |
- |
(44,188) |
(44,188) |
- |
(39,794) |
(39,794) |
|
|
|
Currency losses not taxable |
- |
471 |
471 |
- |
426 |
426 |
|
|
|
Overseas stock dividends |
- |
- |
- |
- |
140 |
140 |
|
|
|
Non taxable overseas dividends |
(7,795) |
- |
(7,795) |
(3,154) |
- |
(3,154) |
|
|
|
Double taxation relief |
(656) |
- |
(656) |
(1,271) |
- |
(1,271) |
|
|
|
Overseas tax reclaimable |
(740) |
- |
(740) |
- |
- |
- |
|
|
|
Irrecoverable overseas tax suffered |
3,436 |
- |
3,436 |
2,041 |
- |
2,041 |
|
|
|
Unutilised excess management expenses carried forward |
- |
363 |
363 |
- |
- |
- |
|
|
|
Movement in overseas income accruals |
- |
- |
- |
415 |
- |
415 |
|
|
|
Prior year adjustment |
164 |
- |
164 |
- |
- |
- |
|
|
|
|
________ |
_______ |
_____ |
________ |
_______ |
_____ |
|
|
|
|
4,881 |
(2,019) |
2,862 |
5,935 |
(2,027) |
3,908 |
|
|
|
|
________ |
_______ |
_____ |
________ |
_______ |
_____ |
|
|
|
|
|
|
|
|
|
|
|
|
|
No provision for deferred tax has been made in the current or prior accounting period. |
||||||
|
|
|
|
||||||
|
|
|
The Company has not provided for deferred tax on capital gains or losses arising on the revaluation or disposal of investments as it is exempt from tax on these items because of its status as an investment trust company. |
||||||
|
|
|
|
||||||
|
|
|
The Company has no recognised deferred tax assets (2009 - £nil) arising as a result of unutilised management expenses and loan relationship deficits. Any excess management expenses will be utilised against any taxable income that may arise. |
||||||
|
|
|
2010 |
2009 |
|
8. |
Ordinary dividends on equity shares |
£'000 |
£'000 |
|
|
Third interim for 2009 of 5.60p (2008 - 4.80p) |
5,314 |
4,310 |
|
|
Final dividend for 2009 of 10.20p (2008 - 8.80p) |
9,990 |
7,985 |
|
|
First interim for 2010 of 6.80p (2009 - 5.60p) |
6,832 |
5,165 |
|
|
Second interim for 2010 of 6.80p (2009 - 5.60p) |
6,934 |
5,251 |
|
|
Refund of unclaimed dividends |
(8) |
(145) |
|
|
|
_________ |
_________ |
|
|
|
29,062 |
22,566 |
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
In accordance with UK GAAP the third interim dividend, proposed final dividend and the special interim dividend for 2010 have not been included as liabilities in these financial statements. The proposed final dividend for 2010 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 Sections 1158-1159 of the Corporation Tax Act 2010 (formerly 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 £38,508,000 (2009 - £27,290,000). |
||
|
|
|
|
|
|
|
|
2010 |
2009 |
|
|
|
£'000 |
£'000 |
|
|
Three interim dividends for 2010 of 6.80p (2009 - 5.60p) |
20,781 |
15,730 |
|
|
Proposed final dividend for 2010 of 11.6p (2009 - 10.20p) |
12,085 |
9,752 |
|
|
Special interim dividend for 2010 of 2.5p (2009 - nil) |
2,605 |
- |
|
|
|
_________ |
_________ |
|
|
|
35,471 |
25,482 |
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
Subsequent to the year end the Company has issued a further 1,018,973 Ordinary shares; therefore the amounts reflected above for the cost of the proposed final dividend and the special interim dividend for 2010 are based on 104,181,829 Ordinary shares in issue, being the number of Ordinary shares in issue at the date of this Report |
||
|
9. |
Returns per share |
2010 |
2009 |
|
|
Returns have been based on the following figures: |
|
|
|
|
Weighted average number of Ordinary shares |
99,783,138 |
92,419,042 |
|
|
Weighted average number of B Ordinary shares |
967,842 |
1,099,660 |
|
|
|
___________ |
_________ |
|
|
Weighted average number of Ordinary shares assuming conversion of B Ordinary shares |
100,750,980 |
93,518,702 |
|
|
|
___________ |
_________ |
|
|
|
|
|
|
|
|
£'000 |
£'000 |
|
|
Revenue return attributable to equity shareholders |
38,508 |
27,290 |
|
|
Capital return attributable to equity shareholders |
149,644 |
135,477 |
|
|
|
___________ |
_________ |
|
|
Total return attributable to equity shareholders |
188,152 |
162,767 |
|
|
|
___________ |
_________ |
|
|
|
2010 |
2009 |
||
|
10. |
Investments listed at fair value through profit or loss |
£'000 |
£'000 |
||
|
|
Opening valuation |
860,106 |
618,212 |
||
|
|
Opening investment holdings gains |
(246,835) |
(78,446) |
||
|
|
|
_________ |
_________ |
||
|
|
Opening book cost |
613,271 |
539,766 |
||
|
|
Movements during the year: |
|
|
||
|
|
Purchases |
211,140 |
165,960 |
||
|
|
Sales |
- proceeds |
(110,637) |
(66,719) |
|
|
|
|
- realised gains/(losses) |
20,546 |
(26,266) |
|
|
|
Amortisation of fixed income book cost |
1,078 |
530 |
||
|
|
|
_________ |
_________ |
||
|
|
Closing book cost |
735,398 |
613,271 |
||
|
|
Closing investment holdings gains |
384,102 |
246,835 |
||
|
|
|
_________ |
_________ |
||
|
|
Closing valuation |
1,119,500 |
860,106 |
||
|
|
|
_________ |
_________ |
||
|
|
|
|
|
||
|
|
|
2010 |
2009 |
||
|
|
The portfolio valuation |
£'000 |
£'000 |
||
|
|
Listed on stock exchanges at bid valuation: |
|
|
||
|
|
United Kingdom: |
|
|
||
|
|
- |
equities |
160,020 |
122,138 |
|
|
|
- |
fixed income |
37,833 |
36,775 |
|
|
|
Overseas: |
|
|
||
|
|
- |
equities |
868,298 |
648,939 |
|
|
|
- |
fixed income |
53,349 |
52,254 |
|
|
|
|
_________ |
_________ |
||
|
|
Total |
1,119,500 |
860,106 |
||
|
|
|
_________ |
_________ |
||
|
|
|
|
|
||
|
|
|
2010 |
2009 |
||
|
|
Gains on investments |
£'000 |
£'000 |
||
|
|
Realised gains/(losses) based on book cost |
20,546 |
(26,266) |
||
|
|
Net movement in investment holdings gains |
137,267 |
168,389 |
||
|
|
|
_________ |
_________ |
||
|
|
|
157,813 |
142,123 |
||
|
|
|
_________ |
_________ |
||
|
|
|
|
|
||
|
|
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 on investments in the Income Statement. The total costs were as follows: |
||||
|
|
|
|
|
||
|
|
|
2010 |
2009 |
||
|
|
|
£'000 |
£'000 |
||
|
|
Purchases |
358 |
348 |
||
|
|
Sales |
112 |
81 |
||
|
|
|
_________ |
_________ |
||
|
|
|
470 |
429 |
||
|
|
|
_________ |
_________ |
||
|
|
|
2010 |
2009 |
|
11. |
Debtors: amounts falling due within one year |
£'000 |
£'000 |
|
|
Current taxation |
621 |
519 |
|
|
Other debtors |
72 |
9 |
|
|
Forward contracts |
3,984 |
- |
|
|
Prepayments and accrued income |
5,982 |
3,163 |
|
|
|
_________ |
_________ |
|
|
|
10,659 |
3,691 |
|
|
|
_________ |
_________ |
|
|
None of the above amounts is overdue. |
|
|
|
|
|
2010 |
2009 |
|
12. |
Creditors |
£'000 |
£'000 |
|
|
Amounts falling due within one year: |
|
|
|
|
Bank loans (note 13) |
- |
55,875 |
|
|
Swap contracts |
1,804 |
1,850 |
|
|
Forward contracts |
- |
2,848 |
|
|
Corporation tax payable |
- |
713 |
|
|
Accruals |
4,773 |
4,350 |
|
|
|
_________ |
_________ |
|
|
|
6,577 |
65,636 |
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
|
2010 |
2009 |
|
|
Amounts falling due after more than one year: |
£'000 |
£'000 |
|
|
Bank loans and Debentures (note 13) |
161,792 |
80,806 |
|
|
Accruals |
4,879 |
3,797 |
|
|
|
_________ |
_________ |
|
|
|
166,671 |
84,603 |
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
Management fees of £1,189,000 were outstanding at the year end to the Manager (2009 - £917,000). |
||
|
|
|
||
|
|
A performance fee of £7,740,000 was outstanding at the year end to the Manager (2009 - £6,255,000). Of this amount £4,879,000 (2009 - £3,797,000) falls due after more than one year. |
||
|
|
|
||
|
|
All financial liabilities are included at amortised cost or at fair value for swap and forward contracts. |
||
|
|
|
2010 |
2009 |
|
|
13. |
Bank loans and Debentures |
£'000 |
£'000 |
|
|
|
Secured by floating charge and repayable other than by instalments or at the Company's option: |
|
|
|
|
|
- |
4% Debenture Stock |
150 |
150 |
|
|
|
|
|
|
|
|
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 1,900,000,000 at 0.8725% - 4 June 2013 |
14,899 |
12,642 |
|
|
- |
Yen 6,325,600,000 at 0.8725% - 4 June 2013 |
49,879 |
42,073 |
|
|
- |
Yen 2,300,000,000 at 2.03% - 16 February 2014 |
18,113 |
15,299 |
|
|
- |
Yen 8,400,000,000 at 3.17% - 14 May 2015 |
66,151 |
- |
|
|
|
|
|
|
|
|
in more than five years |
|
|
|
|
|
- |
Yen 1,600,000,000 at 2.82% - 15 May 2016 |
12,600 |
10,642 |
|
|
|
_________ |
_________ |
|
|
|
|
161,792 |
136,681 |
|
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
|
|
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 2010 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 14 May 2015. The full JPY8,400,000,000 facility (approx £66,151,000) has been drawn down. |
|||
|
|
|
|||
|
|
Financial covenants contained within the relevant loan agreements provide, inter alia, that borrowings shall at no time exceed 40% of net assets and that the net assets must exceed £400 million. The net assets were £967.7 million at 31 December 2010. |
|||
|
|
|
2010 |
2009 |
||
|
14. |
Share capital |
Number |
£'000 |
Number |
£'000 |
|
|
Allotted, called up and fully paid: |
|
|
|
|
|
|
Ordinary shares of 25p each |
103,162,856 |
25,791 |
94,896,624 |
23,724 |
|
|
B Ordinary shares of 25p each |
833,912 |
208 |
1,087,392 |
272 |
|
|
|
__________ |
________ |
__________ |
________ |
|
|
|
103,996,768 |
25,999 |
95,984,016 |
23,996 |
|
|
|
|
|
|
|
|
|
Unissued: |
|
|
|
|
|
|
Unclassified shares of 25p each |
40,129,232 |
10,032 |
48,141,984 |
12,035 |
|
|
|
__________ |
________ |
__________ |
________ |
|
|
Authorised |
144,126,000 |
36,031 |
144,126,000 |
36,031 |
|
|
|
__________ |
________ |
__________ |
________ |
|
|
|
|
|
|
|
|
|
During the year 7,975,500 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 754p to 954p and raised a total of £66,773,000, 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, 8,344 B Ordinary shares, 14,872 B Ordinary shares, 6,728 B Ordinary shares, and 7,308 B Ordinary shares were allotted by way of capitalisation of reserves on 16 February, 14 May, 16 August and 15 November 2010 respectively. |
||||
|
|
|
||||
|
|
On 30 June 2010, 11,611 and on 9 July 2010, 279,121, 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 dates of 30 June 2010 and 9 July 2010 were 786.5 and 813.0 pence per share, respectively. |
||||
|
|
|
||||
|
|
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 2009. |
||||
|
|
|
||||
|
|
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. |
||||
|
|
|
2010 |
2009 |
|
15. |
Capital reserve |
£'000 |
£'000 |
|
|
At 31 December 2009 |
613,396 |
477,931 |
|
|
Movement in fair value gains |
157,813 |
142,123 |
|
|
Capitalised expenses |
(7,946) |
(5,711) |
|
|
VAT on investment management and performance fees recoverable |
1,458 |
- |
|
|
Issue of shares |
(9) |
(12) |
|
|
Buyback of Debenture stock |
- |
588 |
|
|
Currency losses |
(1,681) |
(1,523) |
|
|
|
_________ |
_________ |
|
|
At 31 December 2010 |
763,031 |
613,396 |
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
Included in the total above are investment holdings gains at the year end of £384,102,000 (2009 - £246,835,000). |
||
|
16. |
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 |
||
|
|
|
2010 |
2009 |
2010 |
2009 |
|
|
|
p |
p |
£'000 |
£'000 |
|
|
Basic |
|
|
|
|
|
|
Ordinary and B Ordinary shares (note 14) |
930.5 |
772.9 |
967,676 |
741,813 |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
Diluted |
|
|
|
|
|
|
Ordinary and B Ordinary shares (note 14) |
930.5 |
772.9 |
967,676 |
741,813 |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
17. |
Reconciliation of net return before finance costs and |
2010 |
2009 |
|
|
taxation to net cash inflow from operating activities |
£'000 |
£'000 |
|
|
Net return before finance costs and taxation |
195,302 |
169,473 |
|
|
Add: gains on investments |
(157,813) |
(142,123) |
|
|
Add: currency losses |
1,681 |
1,523 |
|
|
Amortisation of fixed income book cost |
(1,078) |
(530) |
|
|
(Increase)/decrease in accrued income |
(2,819) |
760 |
|
|
Decrease in other debtors |
1,419 |
958 |
|
|
Increase in accruals |
239 |
484 |
|
|
Tax on unfranked income - overseas |
(2,963) |
(2,006) |
|
|
|
_______ |
_______ |
|
|
|
33,968 |
28,539 |
|
|
|
_______ |
_______ |
|
|
|
At |
|
|
|
At |
|
|
|
31 December |
|
|
|
31 December |
|
|
|
2009 |
differences |
flows |
movements |
2010 |
|
18. |
Analysis of changes in net debt |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Cash and short term deposits |
28,255 |
16,552 |
(34,042) |
- |
10,765 |
|
|
Forward contracts |
(2,848) |
6,832 |
- |
- |
3,984 |
|
|
Swap |
(1,850) |
46 |
- |
- |
(1,804) |
|
|
Debt due within one year |
(55,875) |
(6,853) |
- |
62,728 |
- |
|
|
Debt due after more than one year |
(80,806) |
(18,258) |
- |
(62,728) |
(161,792) |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
(113,124) |
(1,681) |
(34,042) |
- |
(148,847) |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
At |
|
|
|
At |
|
|
|
31 December |
|
|
|
31 December |
|
|
|
2008 |
differences |
flows |
movements |
2009 |
|
|
|
£'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) |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|||||
|
|
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 instrument |
||||||||||||||||||||
|
|
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 explained in the Annual Report 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 bank covenant guidelines state that the total borrowings will not exceed 40 per cent of the adjusted net tangible 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 2010 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 |
Weighted |
|
|
Non- |
||||||||||||||
|
|
|
|
which |
average |
Fixed |
Floating |
interest |
||||||||||||||
|
|
|
|
rate is fixed |
interest rate |
rate |
rate |
bearing |
||||||||||||||
|
|
|
At 31 December 2010 |
Years |
% |
£'000 |
£'000 |
£'000 |
||||||||||||||
|
|
|
Assets |
|
|
|
|
|
||||||||||||||
|
|
|
Sterling |
6.50 |
5.44 |
25,174 |
10,638 |
160,020 |
||||||||||||||
|
|
|
US Dollar |
13.97 |
7.59 |
36,329 |
1 |
218,482 |
||||||||||||||
|
|
|
Euro |
14.47 |
4.50 |
11,980 |
- |
112,159 |
||||||||||||||
|
|
|
Other |
9.92 |
10.00 |
17,699 |
126 |
537,657 |
||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
||||||||||||||
|
|
|
Total assets |
- |
- |
91,182 |
10,765 |
1,028,318 |
||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
||||||||||||||
|
|
|
Liabilities |
|
|
|
|
|
||||||||||||||
|
|
|
Bank loans - Japanese Yen |
3.53 |
2.09 |
(161,642) |
- |
- |
||||||||||||||
|
|
|
Debenture Stock{A} |
- |
- |
(150) |
- |
- |
||||||||||||||
|
|
|
Accruals |
- |
- |
- |
- |
(4,879) |
||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
||||||||||||||
|
|
|
Total liabilities |
- |
- |
(161,792) |
- |
(4,879) |
||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
Weighted |
|
|
|
|
||||||||||||||
|
|
|
|
average |
|
|
|
|
||||||||||||||
|
|
|
|
period for |
Weighted |
|
|
Non- |
||||||||||||||
|
|
|
|
which |
average |
Fixed |
Floating |
interest |
||||||||||||||
|
|
|
|
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 |
122,138 |
||||||||||||||
|
|
|
US Dollar |
20.63 |
7.50 |
42,791 |
- |
172,292 |
||||||||||||||
|
|
|
Euro |
15.47 |
4.50 |
8,708 |
240 |
131,567 |
||||||||||||||
|
|
|
Other |
0.83 |
11.91 |
12,317 |
75 |
345,080 |
||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
||||||||||||||
|
|
|
Total assets |
- |
- |
89,029 |
28,255 |
771,077 |
||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
||||||||||||||
|
|
|
Liabilities |
|
|
|
|
|
||||||||||||||
|
|
|
Bank loans - Japanese Yen |
2.47 |
2.17 |
(136,531) |
- |
- |
||||||||||||||
|
|
|
Debenture Stock{A} |
- |
- |
(150) |
- |
- |
||||||||||||||
|
|
|
Accruals |
- |
- |
- |
- |
(3,797) |
||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
||||||||||||||
|
|
|
Total liabilities |
- |
- |
(136,681) |
- |
(3,797) |
||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
||||||||||||||
|
|
|
{A} The Debenture Stock is perpetual and has therefore been disclosed as maturing after more than 5 years.
|
|||||||||||||||||||
|
|
|
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 |
3-4 years |
4-5 years |
5 |
|
||||||||||||
|
|
|
At 31 December 2010 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||||||||||||
|
|
|
Bank loans |
- |
- |
64,778 |
18,113 |
66,151 |
12,600 |
161,642 |
||||||||||||
|
|
|
Debenture Stock |
- |
- |
- |
- |
- |
150 |
150 |
||||||||||||
|
|
|
Interest cash flows on bank loans and Debenture Stock |
4,059 |
4,060 |
3,432 |
2,622 |
1,837 |
413 |
16,423 |
||||||||||||
|
|
|
Interest cash flows on swaps |
714 |
714 |
357 |
- |
- |
- |
1,785 |
||||||||||||
|
|
|
Cash flows on other creditors |
4,740 |
2,230 |
1,662 |
985 |
- |
- |
9,617 |
||||||||||||
|
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
||||||||||||
|
|
|
|
9,513 |
7,004 |
70,229 |
21,720 |
67,988 |
13,163 |
189,617 |
||||||||||||
|
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
More |
|
||||||||||||
|
|
|
|
Within |
Within |
Within |
Within |
Within |
than |
|
||||||||||||
|
|
|
|
1 |
1-2 years |
2-3 |
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 |
||||||||||||
|
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
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: |
|||||||||||||||||||
|
|
|
- revenue return for the year ended 31 December 2010 would increase/decrease by £108,000 (2009 - increase/decrease by £283,000). 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 £4,587,000 (2009 - increase/decrease by £2,229,000). 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 2010. 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 2010 the Company had a foreign currency contract, details of which are listed below. During the year a gain of £14,552,000 (2009 - loss of £724,000) 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 2010 |
31 December 2009 |
|||||||||||||||||
|
|
|
|
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 |
218,482 |
1 |
218,483 |
172,292 |
- |
172,292 |
|||||||||||||
|
|
|
Sterling |
160,020 |
10,638 |
170,658 |
122,138 |
27,940 |
150,078 |
|||||||||||||
|
|
|
Euro |
112,159 |
- |
112,159 |
131,567 |
240 |
131,807 |
|||||||||||||
|
|
|
Hong Kong Dollar |
87,764 |
- |
87,764 |
59,356 |
- |
59,356 |
|||||||||||||
|
|
|
Japanese Yen |
68,105 |
- |
68,105 |
52,734 |
(55,875) |
(3,141) |
|||||||||||||
|
|
|
Swiss Franc |
65,247 |
- |
65,247 |
24,012 |
- |
24,012 |
|||||||||||||
|
|
|
Taiwan Dollar |
43,600 |
126 |
43,726 |
28,296 |
72 |
28,368 |
|||||||||||||
|
|
|
Brazilian Real |
38,828 |
- |
38,828 |
21,955 |
- |
21,955 |
|||||||||||||
|
|
|
Singapore Dollar |
37,803 |
- |
37,803 |
15,231 |
- |
15,231 |
|||||||||||||
|
|
|
Indonesian Rupiah |
37,316 |
- |
37,316 |
23,201 |
- |
23,201 |
|||||||||||||
|
|
|
Malaysian Ringgit |
36,507 |
- |
36,507 |
24,398 |
- |
24,398 |
|||||||||||||
|
|
|
Mexican Peso |
24,886 |
- |
24,886 |
16,884 |
- |
16,884 |
|||||||||||||
|
|
|
Thailand Baht |
24,843 |
- |
24,843 |
19,112 |
- |
19,112 |
|||||||||||||
|
|
|
Swedish Krone |
22,934 |
- |
22,934 |
18,620 |
- |
18,620 |
|||||||||||||
|
|
|
Australian Dollar |
19,327 |
- |
19,327 |
18,178 |
- |
18,178 |
|||||||||||||
|
|
|
Indian Rupee |
15,576 |
- |
15,576 |
10,219 |
- |
10,219 |
|||||||||||||
|
|
|
Canadian Dollar |
12,178 |
- |
12,178 |
10,053 |
- |
10,053 |
|||||||||||||
|
|
|
New Zealand Dollar |
2,743 |
- |
2,743 |
2,831 |
- |
2,831 |
|||||||||||||
|
|
|
Norwegian Krone |
- |
- |
- |
- |
3 |
3 |
|||||||||||||
|
|
|
|
__________ |
_______ |
________ |
_________ |
________ |
_______ |
|||||||||||||
|
|
|
Total |
1,028,318 |
10,765 |
1,039,083 |
771,077 |
(27,620) |
743,457 |
|||||||||||||
|
|
|
|
__________ |
_______ |
________ |
________ |
________ |
_______ |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
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. |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
2010 |
2010 |
2009 |
2009 |
|||||||||||||||
|
|
|
|
Revenue |
Equity{A} |
Revenue |
Equity{A} |
|||||||||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||||||
|
|
|
US Dollar |
853 |
21,848 |
470 |
17,229 |
|||||||||||||||
|
|
|
Euro |
584 |
11,216 |
340 |
13,157 |
|||||||||||||||
|
|
|
Hong Kong Dollar |
219 |
8,776 |
148 |
5,936 |
|||||||||||||||
|
|
|
Japanese Yen |
184 |
6,811 |
160 |
5,273 |
|||||||||||||||
|
|
|
Swiss Franc |
106 |
6,525 |
53 |
2,401 |
|||||||||||||||
|
|
|
|
___________ |
___________ |
___________ |
___________ |
|||||||||||||||
|
|
|
Total |
1,946 |
55,176 |
1,171 |
43,996 |
|||||||||||||||
|
|
|
|
___________ |
___________ |
___________ |
___________ |
|||||||||||||||
|
|
|
|
|||||||||||||||||||
|
|
|
{A} represents equity exposures to the relevant currencies |
|||||||||||||||||||
|
|
|
|
|||||||||||||||||||
|
|
|
Foreign exchange contracts |
|||||||||||||||||||
|
|
|
The following Japanese Yen forward contracts were outstanding at the Balance Sheet date: |
|||||||||||||||||||
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
Unrealised profit at |
|||||||||||||||
|
|
|
|
|
Amount |
|
31 December |
|||||||||||||||
|
|
|
|
Settlement |
JPY |
Contracted |
2010 |
|||||||||||||||
|
|
|
Date of contract |
date |
'000 |
rate |
£'000 |
|||||||||||||||
|
|
|
10 December 2010 |
11 March 2011 |
20,000,000 |
126.82 |
3,984 |
|||||||||||||||
|
|
|
|
|
___________ |
___________ |
___________ |
|||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
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 2010 would have increased/decreased by £111,950,000 (2009 - increase/decrease of £86,011,000) 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 2010 was as follows: |
|||||||||||||||||||
|
|
|
|
|||||||||||||||||||
|
|
|
|
2010 |
2009 |
|||||||||||||||||
|
|
|
|
Balance |
Maximum |
Balance |
Maximum |
|||||||||||||||
|
|
|
|
Sheet |
exposure |
Sheet |
exposure |
|||||||||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||||||
|
|
|
Non-current assets |
|
|
|
|
|||||||||||||||
|
|
|
Securities at fair value through profit or loss |
1,119,500 |
1,119,500 |
860,106 |
860,106 |
|||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
Current assets |
|
|
|
|
|||||||||||||||
|
|
|
Current taxation |
621 |
621 |
519 |
519 |
|||||||||||||||
|
|
|
Other debtors |
72 |
72 |
9 |
9 |
|||||||||||||||
|
|
|
Forward contracts |
3,984 |
3,984 |
- |
- |
|||||||||||||||
|
|
|
Accrued income |
5,982 |
5,982 |
3,119 |
3,119 |
|||||||||||||||
|
|
|
|
_________ |
________ |
________ |
_________ |
|||||||||||||||
|
|
|
|
1,130,159 |
1,130,159 |
863,753 |
863,753 |
|||||||||||||||
|
|
|
|
_________ |
________ |
________ |
_________ |
|||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
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 £171,396,000 as at 31 December 2010 (2009 - £141,569,000) compared to an accounts value in the financial statements of £161,792,000 (2009 - £136,681,000) (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 2010 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) |
1,028,318 |
- |
- |
1,028,318 |
|
|
|
Quoted bonds |
b) |
91,182 |
- |
- |
91,182 |
|
|
|
Foreign exchange forward contracts |
c) |
- |
3,984 |
- |
3,984 |
|
|
|
|
|
________ |
________ |
________ |
________ |
|
|
|
Total |
|
1,119,500 |
3,984 |
- |
1,123,484 |
|
|
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
|
Note |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Financial liabilities at fair value through profit or loss |
|
|
|
|
|
|
|
|
Derivatives |
d) |
- |
(1,804) |
- |
(1,804) |
|
|
|
|
|
________ |
________ |
________ |
________ |
|
|
|
Total |
|
- |
(1,804) |
- |
(1,804) |
|
|
|
|
|
________ |
________ |
________ |
________ |
|
|
|
Net fair value |
|
1,119,500 |
2,180 |
- |
1,121,680 |
|
|
|
|
|
________ |
________ |
________ |
________ |
|
|
|
a) |
Quoted equities |
|
|
|
|
|
|
|
|
The fair value of the Company's investments in quoted equities has been determined by reference to their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on recognised stock exchanges. |
|||||
|
|
|
|
|||||
|
|
b) |
Quoted bonds |
|||||
|
|
|
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) |
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. |
|||||
|
|
|
|
|||||
|
|
d) |
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. |
|||||
The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 31 December 2010 are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The 2009 and 2010 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 2009 is derived from the statutory accounts for 2008 which have been delivered to the Registrar of Companies. The 2010 accounts will be filed with the Registrar of Companies in due course.
The Annual Report will be posted to shareholders in March 2011 and additional copies will be available from the registered office of the Company and on the Company's website, http://www.murray-intl.co.uk/doc.nsf/Lit/ReportUKClosedMINTAnnual.
The Annual General Meeting will be held on 28 April 2011 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.
Neither the content of the Company's website nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.
For Murray International Trust PLC
Aberdeen Asset Management PLC, Secretaries
22 February 2011
10 SUMMARY OF INVESTMENT CHANGES
|
|
Valuation |
Appreciation/ |
|
Valuation |
||
|
|
31 December 2010 |
(depreciation) |
Transactions |
31 December 2009 |
||
|
|
£'000 |
% |
£'000 |
£'000 |
£'000 |
% |
|
Equities |
|
|
|
|
|
|
|
United Kingdom |
160,020 |
14.1 |
29,689 |
8,193 |
122,138 |
13.8 |
|
North America |
83,880 |
7.4 |
16,345 |
(14,160) |
81,695 |
9.3 |
|
Europe ex UK |
200,339 |
17.6 |
(6,753) |
32,894 |
174,198 |
19.7 |
|
Japan |
68,105 |
5.9 |
14,883 |
488 |
52,734 |
6.0 |
|
Asia Pacific ex Japan |
305,479 |
27.1 |
57,784 |
46,872 |
200,823 |
22.8 |
|
Latin America |
210,495 |
18.6 |
37,930 |
33,076 |
139,489 |
15.8 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
|
1,028,318 |
90.7 |
149,878 |
107,363 |
771,077 |
87.4 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
Fixed income |
|
|
|
|
|
|
|
United Kingdom |
37,833 |
3.3 |
519 |
539 |
36,775 |
4.2 |
|
Europe ex UK |
11,980 |
1.1 |
3,220 |
52 |
8,708 |
1.0 |
|
Asia Pacific ex Japan |
11,651 |
1.0 |
1,661 |
3,447 |
6,543 |
0.7 |
|
Latin America |
29,718 |
2.6 |
2,535 |
(9,820) |
37,003 |
4.2 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
|
91,182 |
8.0 |
7,935 |
(5,782) |
89,029 |
10.1 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
Other net assets{A} |
14,847 |
1.3 |
(7,338) |
- |
22,185 |
2.5 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
Total assets |
1,134,347 |
100.0 |
150,475 |
101,581 |
882,291 |
100.0 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
|
|
|
|
|||
|
{A} Figure for 2010 has £nil (2009 - £55,875,000) of bank loans which is shown as a current liability. |
||||||
11 TWENTY LARGEST INVESTMENTS
As at 31 December 2010
|
|
|
Valuation |
Total |
Valuation |
||
|
|
|
2010 |
assets |
2009 |
||
|
Company |
Country |
£'000 |
% |
£'000 |
||
|
1 (2) |
British American Tobacco{A} |
|
|
|
|
|
|
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 |
39,858 |
3.5 |
27,471 |
||
|
2 (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 |
38,828 |
3.4 |
21,955 |
||
|
3 (5) |
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 |
37,316 |
3.3 |
23,201 |
||
|
4 (3) |
Rio Tinto{B} |
|
|
|
|
|
|
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 |
33,297 |
2.9 |
27,158 |
||
|
5 (4) |
Vale do Rio Doce{C} |
|
|
|
|
|
|
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 |
32,033 |
2.8 |
26,323 |
||
|
6 (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 |
28,156 |
2.5 |
21,129 |
||
|
7 (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 |
27,008 |
2.4 |
19,146 |
||
|
8 (7) |
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 |
26,681 |
2.4 |
21,648 |
||
|
9 (1) |
Petrobras ADR{D} |
|
|
|
|
|
|
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 |
25,675 |
2.3 |
32,479 |
||
|
10 (11) |
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 |
24,843 |
2.2 |
19,113 |
||
|
Top ten investments |
|
313,695 |
27.7 |
|
||
|
|
||||||
|
{A} Holding comprises UK and Malaysia securities split £22,172,000 (2009 - £17,176,000) and £17,686,000 (2009 - £10,295,000). |
||||||
|
{B} Holding comprises equity and fixed income securities split £20,638,000 (2009 - £15,594,000) and £12,659,000 (2009 - £11,564,000). |
||||||
|
{C} Holding comprises equity and fixed income securities split £22,197,000 (2009 - £17,661,000) and £9,836,000 (2009 - £8,662,000). |
||||||
|
{D} Holding comprises equity and fixed income securities split £21,791,000 (2009 - £28,814,000) and £3,884,000 (2009 - £3,665,000). |
||||||
|
|
|
|
|
|
|
|
|
11 (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 |
22,934 |
2.0 |
18,620 |
||
|
12 (-) |
Wing Hang Bank |
|
|
|
|
|
|
Wing Hang Bank Limited, based in Hong Kong, provides corporate banking, retail banking, foreign exchange and treasury services. The bank also provides brokerage, insurance broking and nominee sevices for a broad range of clients. |
Hong Kong |
22,143 |
2.0 |
12,712 |
||
|
13 (14) |
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 |
22,140 |
2.0 |
15,706 |
||
|
14 (-) |
Weir Group |
|
|
|
|
|
|
Weir Group, based in Glasgow, Scotland, is a leading global manufacturer and supplier of engineering products and services. The group produces valve pumps, compressors, turbines and gearboxes for various industrial uses. |
UK |
21,790 |
1.9 |
8,783 |
||
|
15 (-) |
Taiwan Semiconductor Manufacturing |
|
|
|
|
|
|
Taiwan Semicondutor Manufacturing Company is one of the largest integrated circuit manufacturers in the world. The company is involved in component design, wafer manufacturing, assembly, testing and mask production of integrated circuits which are used in the computer, communication and electronics industries. |
Taiwan |
21,460 |
1.9 |
12,590 |
||
|
16 (-) |
Kimberly Clark de Mexico |
|
|
|
|
|
|
Kimberly Clark de Mexico manufautures, markets and distributes consumer, industrial and institutional hygiene products. The company produces diapers, facial tissues, writing paper and cigarette paper under brand names such as Kleenex, KleenBebe and Scribe. Its products are sold throughout Mexico. |
Mexico |
21,358 |
1.9 |
12,999 |
||
|
17 (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 |
19,917 |
1.8 |
13,383 |
||
|
18 (13) |
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 |
19,327 |
1.7 |
18,178 |
||
|
19 (-) |
Casino |
|
|
|
|
|
|
Casino Guichard-Perrachon operates hypermarkets, supermarkets and convenience stores under the Geant, Casino Supermarche, Franprix, Leader Price and Petit Casino names. The company also has extensive operations overseas in Vietnam, Colombia and Brazil. |
France |
19,189 |
1.7 |
13,052 |
||
|
20 (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 |
18,821 |
1.6 |
14,103 |
||
|
Top twenty investments |
|
522,774 |
46.2 |
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
The value of the 20 largest investments represents 46.2% (2009 - 45.2%) 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 |
|
|
|
2010 |
assets |
2009 |
|
Company |
Country |
£'000 |
% |
£'000 |
|
Philip Morris International |
USA |
18,691 |
1.6 |
13,114 |
|
Schlumberger |
USA |
18,666 |
1.6 |
14,108 |
|
Royal Dutch Shell |
UK |
18,295 |
1.6 |
9,058 |
|
Zurich Financial Services |
Switzerland |
18,091 |
1.6 |
10,855 |
|
Telecomunicacoes de Sao Paulo |
Brazil |
18,086 |
1.6 |
13,900 |
|
Banco Bradesco |
Brazil |
17,366 |
1.5 |
- |
|
Centrica |
UK |
17,243 |
1.5 |
11,209 |
|
Canon |
Japan |
17,220 |
1.5 |
9,080 |
|
Swire Pacific B |
Hong Kong |
17,082 |
1.5 |
12,219 |
|
Kraft Foods |
USA |
16,502 |
1.5 |
10,263 |
|
Top thirty investments |
|
700,016 |
61.7 |
|
|
Roche Holdings |
Switzerland |
15,960 |
1.4 |
13,157 |
|
Total |
France |
15,798 |
1.4 |
13,995 |
|
Nestle |
Switzerland |
15,758 |
1.4 |
- |
|
Hindustan Unilever |
India |
15,576 |
1.4 |
10,219 |
|
Novartis |
Switzerland |
15,439 |
1.4 |
- |
|
Metro |
Germany |
15,425 |
1.4 |
12,606 |
|
Johnson & Johnson |
USA |
15,404 |
1.4 |
11,154 |
|
ENI |
Italy |
14,926 |
1.3 |
13,113 |
|
Telus |
Canada |
14,614 |
1.3 |
10,053 |
|
Singapore Telecommunications |
Singapore |
14,598 |
1.3 |
- |
|
Top forty investments |
|
853,514 |
75.4 |
|
|
CLP Holdings |
Hong Kong |
14,505 |
1.3 |
11,740 |
|
China Mobile |
China |
14,118 |
1.2 |
9,302 |
|
Daito Trust Construction |
Japan |
14,011 |
1.2 |
9,366 |
|
Belgacom |
Belgium |
13,671 |
1.2 |
10,686 |
|
Astellas Pharmaceutical |
Japan |
12,897 |
1.1 |
7,480 |
|
AstraZeneca |
UK |
12,857 |
1.1 |
12,806 |
|
Amada |
Japan |
12,493 |
1.1 |
9,275 |
|
Oversea-Chinese Bank |
Singapore |
12,315 |
1.1 |
10,023 |
|
Wilson & Sons |
Brazil |
12,178 |
1.1 |
- |
|
Portugal Telecom 4.5% 16/06/2025{E} |
Portugal |
11,980 |
1.1 |
20,820 |
|
Top fifty investments |
|
984,539 |
86.9 |
|
|
Mapfre |
Spain |
11,752 |
1.0 |
12,506 |
|
Takeda Chemical |
Japan |
11,483 |
1.0 |
9,275 |
|
National Grid |
UK |
11,060 |
1.0 |
10,185 |
|
E.ON |
Germany |
11,048 |
1.0 |
12,656 |
|
United Overseas Bank |
Singapore |
10,889 |
1.0 |
5,208 |
|
GDF Suez |
France |
10,349 |
0.9 |
- |
|
Telefonica Emisiones 5.375% 02/02/2018 |
UK |
10,170 |
0.9 |
10,163 |
|
Imperial Tobacco 5.5% 22/11/2016 |
UK |
10,101 |
0.9 |
9,510 |
|
Vodafone Group |
UK |
9,285 |
0.8 |
8,047 |
|
Republic of Venezuela 8.5% 08/10/2014 |
USA |
6,515 |
0.6 |
5,815 |
|
Mexico (Government of) 10.5% 14/07/2011 |
Mexico |
6,049 |
0.5 |
5,775 |
|
Republic of Indonesia 9.5% 15/07/2023 |
Indonesia |
5,959 |
0.5 |
- |
|
Republic of Indonesia 10% 15/02/2028 |
Indonesia |
5,692 |
0.5 |
- |
|
Consorcio Ara |
Mexico |
3,528 |
0.3 |
3,885 |
|
Federal Republic of Brazil 11% 17/08/2040 |
USA |
3,435 |
0.3 |
3,303 |
|
Telecom Corp of New Zealand |
New Zealand |
2,743 |
0.2 |
2,830 |
|
General Accident 7.875% Cum Irrd Pref |
UK |
2,728 |
0.2 |
2,782 |
|
Santander 10.375% Non Cum Pref |
UK |
2,175 |
0.2 |
2,757 |
|
Total investments |
|
1,119,500 |
98.7 |
|
|
Net current assets before short term borrowings |
|
14,847 |
1.3 |
|
|
Total assets |
|
1,134,347 |
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
{E} Holding represents fixed income stock (2009 holding comprised of equity and fixed income securities split £12,112,000 and £8,708,000). |
||||
12 FINANCIAL HIGHLIGHTS
|
|
31 December 2010 |
31 December 2009 |
% change |
|
Total assets less current liabilities (before deducting prior charges) |
£1,134,347,000 |
£882,291,000 |
|
|
Equity shareholders' funds (Net Assets) |
£967,676,000 |
£741,813,000 |
|
|
Share price - Ordinary share (mid market) |
941.0p |
765.5p |
+22.9 |
|
Share price - B Ordinary share (mid market) |
835.0p |
717.5p |
+16.4 |
|
Net Asset Value per Ordinary and B Ordinary share |
930.5p |
772.9p |
+20.4 |
|
Premium/(discount) to Net Asset Value on Ordinary shares |
1.1% |
(1.0%) |
|
|
|
|
|
|
|
Gearing (ratio of borrowing to shareholders' funds) |
|
|
|
|
Actual gearing ratio (net of cash) |
15.6% |
14.6% |
|
|
|
|
|
|
|
Dividends and earnings per Ordinary share |
|
|
|
|
Revenue return per share |
38.6p |
29.5p |
+30.7 |
|
Dividends per share{A} |
32.0p |
27.0p |
+18.5 |
|
Special interim dividend{A} |
2.5p |
- |
|
|
Dividend cover (including proposed final and the special interim dividend) |
1.12 |
1.09 |
|
|
Revenue reserves{B} |
£54,944,000 |
£45,498,000 |
|
|
|
|
|
|
|
Operating costs |
|
|
|
|
Total expense ratio - excluding performance fee |
0.71% |
0.81% |
|
|
Total expense ratio - including performance fee |
1.18% |
1.25% |
|
|
|
|||
|
{A} The figure for dividends per share reflects the years in which they were earned (see note 8). |
|||
|
{B} The revenue reserve figure does not take account of the third interim, final and special interim dividends amounting to £7,015,000, £12,085,000 and £2,605,000 respectively (2009 - £5,314,000 third interim; £9,990,000 final). |
|||
Performance (total return)
|
1 year |
3 year |
5 year |
10 year |
|||||
|
% return |
% return |
% return |
% return |
|||||
|
Share price {A} |
+27.2 |
+58.0 |
+97.8 |
+173.8 |
||||
|
Net asset value per Ordinary and B Ordinary share |
+24.7 |
+40.6 |
+83.7 |
+127.7 |
||||
|
Benchmark |
+14.9 |
+10.3 |
+31.0 |
+36.8 |
||||
|
Total return represents the capital return plus dividends reinvested. |
||||||||
|
{A} Mid to mid. |
||||||||
This information is provided by RNS