Final Results

RNS Number : 2843G

Personal Assets Trust PLC

05 June 2013

 

To:                   RNS

From:              Personal Assets Trust plc

Date:               5 June 2013

Results for the year ended 30 April 2013

The Directors of Personal Assets Trust ("PAT") are pleased to announce the Group's results for the year ended 30 April 2013.

The key points are as follows:

·      PAT is run expressly for private investors. Its investment policy is to protect and increase (in that order) the value of shareholders' funds per share over the long term.

·      Over the year to 30 April 2013 PAT's net asset value per share ("NAV") rose by 4.8%.  This compares to a rise of 13.6% in the Company's comparator, the FTSE All-Share Index.  PAT's share price rose by £16.30 during the year and at 30 April 2013 was £357.00.  An analysis of performance is provided in the Chairman's Statement and Investment Adviser's Report below.

·     Since PAT became independently managed in 1990 its NAV has increased by 520.9% compared to the FTSE All-Share's 225.0% and the RPI's 99.4%.

Capital returns to 30 April 2013:

	5 Years	10 Years	15 Years	Since 1990
NAV	36.7%	88.9%	95.3%	520.9%
FTSE All-Share	9.4%	79.2%	21.6%	225.0%
RPI	16.6%	37.7%	53.4%	99.4%

·     The Company has continued to experience a strong demand for its shares.  During the year the Company issued 305,242 Ordinary shares, raising £106.9 million of net new capital.

·      During the year, PAT continued to maintain a high level of effective liquidity. At 30 April 2013, liquidity was 56.5% (includes 12.2% in Gold) compared to 50.0% (included 12.4% in Gold) at 30 April 2012.

·      Dividends are paid in July, October, January and April of each year. The first interim dividend of £1.40 per Ordinary share will be paid to shareholders on 19 July 2013. Three further interim dividends of £1.40 per Ordinary share are expected to be paid to shareholders in the year ending 30 April 2014, totalling £5.60 for the year.

The Chairman, Hamish Buchan, said:

 "Shareholders will remember that last year we undertook a review of our investment policy in order to help us pursue our stated investment objectives as straightforwardly and efficiently as possible. The Board's recommendations following the review were overwhelmingly approved by shareholders at an Extraordinary General Meeting ("EGM") held on 21 December 2012 and the updated descriptions of our investment and dividend policies are to be found in the Business Review on pages 9 and 11 of the Annual Report.

Over the three years to 30 April 2013 (our traditional time span for measuring performance) our share price rose by 23.3%, outperforming our comparator, the FTSE All-Share Index ("All-Share"), by 4.1%. However, we no longer single this out as our headline reporting period but instead look at a range of periods, including the one, three, five and ten years shown in the Key Features on page 2 of the Annual Report.

Our policy review has had two other consequences for how we view performance, both of which differentiate us from many other investment trusts. Firstly, since our investment policy is to protect and increase (in that order) the value of shareholders' funds per share over the long term, we focus on capital performance rather than on total return and it is on capital performance that we judge ourselves. Second, our definition of 'risk' differs fundamentally from that commonly used by other global growth investment trusts and the industry at large, ours being 'risk of losing money' rather than merely 'volatility of returns relative to an index'. While we use the All-Share as our comparator for monitoring performance and risk, its composition has no influence on the structure of our portfolio.

Our success in preventing serious capital loss is seen in the second chart on page 3 of the Annual Report, which shows how, since April 2000, our net asset value ("NAV") has risen in nine financial years out of thirteen compared to the All-Share's seven, and also how, when it did fall, it did so in each case by significantly less than the All-Share. Between 30 April 2000 and 30 April 2013 (admittedly an arbitrary period, but nevertheless a lengthy one) our NAV rose by 76.1%compared to the All-Share's 12.9%, so our investment style succeeded not only in reducing risk but also in increasing long-term reward.

Again in line with making capital protection our priority, shareholders at the EGM overwhelmingly supported the Board's proposal to remove any specific commitment to maintain or grow the dividend. We are, however, mindful of the importance to some shareholders of dividend payouts during this time of transition, and I am glad to be able to report that we expect, without compromising the way we invest, to be able to maintain the dividend for the year to 30 April 2014 at four quarterly payments of £1.40 each, totalling £5.60 for the year. Thereafter, the Board will review the level of dividend from year to year in the light of the investment conditions prevailing at the time.

For those shareholders who wish to draw a cash income from their investment in Personal Assets through the quarterly sale of a portion of their holding we have simplified the Cash Income Option in our Investment Plan. The minimum quarterly withdrawal has been reduced from £1,000 to £500 and, rather than specifying a percentage return, all that Planholders need do is specify the quarterly sum they want to withdraw. This facility is also available to holders of Personal Assets ISAs.

During the year we issued 305,242 new shares, raising £107 million of new capital. For those who find the ratio useful, this helped our ongoing charges (formerly known as the Total Expense Ratio, or "TER") to fall to 0.89% of shareholders' funds compared to 0.95% last year. Also contributing to our cost efficiency has been our subsidiary, Personal Assets Trust Administration Company ("PATAC"), which continues to see its business grow. On the subject of costs, the Board, along with its advisers, has spent much time during the year considering the implications of the Alternative Investment Fund Managers Directive ("AIFMD") and we touch on this unhelpful piece of legislation in Quarterly N^o. 68.

Finally, Martin Hamilton-Sharp will be retiring from the Board at the end of the AGM after 23 years of service to the Company. His energy, commitment and willingness to challenge accepted notions have made him an ideal independent non-executive Director. He has been a valued friend and colleague to us all and we wish him a long and happy retirement."

The Investment Adviser, Sebastian Lyon, said:

"As demonstrated by the chart on page 3 of the Annual Report to which the Chairman refers, Personal Assets' investment style tends to lead us to outperform in falling markets and lag in sharply rising ones, and the last year has been no exception. Over the year to 30 April 2013 our net asset value per share ("NAV") rose by 4.8%, while our comparator, the FTSE All-Share Index, rose by 13.6%.

Stock markets are riding high on a wave of momentum buying. Weary of earning nothing on their money, savers are herding further up the risk curve in search of any sort of return. Since government bonds offer negative real yields, investors are being lured into junk bonds, emerging market debt and equities. If the benchmark for risk-free assets (i.e. high-grade sovereign debt) is bid up to levels at which future nominal returns are next to nothing, riskier assets will be bid up too. It is the failing of the financial industry that too much is made of relative rather than absolute value. We have now reached the point at which few assets have the ability to protect investors from the opposing threats of deflation (leading to default risk) or inflation (which should lead to higher interest rates).

Financial memories are short. Valuations are now not dissimilar to those that prevailed at the previous peak, in the summer of 2007. At less than 5%, junk bonds offer their lowest yield in history ("High Yield", the alternative description of these bonds, no longer seems appropriate). The list of countries recently tapping international capital markets at similar, unprecedentedly low, yields reads like a list of Foreign Office travel advisory no-go areas, including Albania, Bolivia, Mongolia and even Rwanda. Bond fund managers are also straying 'off-piste'. According to the Wall Street Journal, funds that usually invest exclusively in bonds have the highest exposure to stocks for 18 years. Alas, bond investors moving into equities can be like bridge players trying their luck at roulette. Calling time on this 'yield bubble', reminiscent of 2006 and 2007, is tricky; but such a search for yield almost always ends in tears.

David Rosenberg, an economist and strategist at Gluskin Sheff & Associates, claims that government and central bank action accounts for at least 500 points of the S&P 500 index's 1600 points. We would hesitate to be so specific, but there can be no doubt that the result of quantitative easing has been a huge disconnect between markets and the wider economy and a feeling that there is no longer any downside in markets. But since when have stocks been a one way bet? 1987? 1999? 2007? Barron's, the US financial newspaper, published its 'Big Money Survey' on 22 April which found that 74% of large portfolio managers were bullish - the highest percentage ever, exceeding previous peaks in 2000 and 2007. Unlike us, these are people who view themselves as managing 'other people's money', not their own. Even if they see the risks, they are not positioned accordingly. We may not be at a peak just yet, but we are getting closer. While high quality equities were safe havens a few years ago when prices and valuations were much lower, today they offer an ever shrinking margin of safety. Complacency is hiding in plain view.

Our portfolio continues to have four 'pillars': blue chip stocks, index linked bonds, gold bullion (including gold mining shares) and cash. Over the past year we made very few changes to the portfolio. Turnover was characteristically low at 6.4% as we further reduced exposure to equities, selling holdings in Centrica and Vodafone and cutting back Diageo, and adding to Becton Dickinson, Imperial Oil, Microsoft, Sage Group and our gold mining exposure. The last of these is, we believe, our most contrarian investment, but it has yet to pay off satisfactorily. Following the recent fall in the price of gold we also added to the Company's holding of gold bullion. Our liquidity has risen to 56.5%.

Markets today favour the brave (or the foolish) but they do not favour Personal Assets' shareholders as they seek to preserve their capital. These are uncomfortable times for investors with an eye on value. It is periods like these, when investment seems so easy and obvious to all and sundry, that are the most challenging for us and during which our performance may suffer in relative terms. We have sympathy with Jean-Marie Eveillard, legendary Wall Street fund manager, who said, 'I would rather lose half of my shareholders than half of my shareholders' money.'"

For further information contact:

Robin Angus

Executive Director

Tel:  [phone]

Sebastian Lyon

Investment Adviser

Tel:  [phone]

Steven Davidson

Company Secretary

Tel:  [phone]

The Group's Income Statement, Group and Company Statements of Financial Position, Group and Company Statements of Changes in Equity and Group and Company Cash Flow Statements follow.

Group Income Statement

	Year ended 30 April 2013
	Revenue	Capital	Total
	£'000	£'000	£'000
Income
Investment income	11,695	-	11,695
Other operating income	309	-	309
	12,004	-	12,004
Gains on investments held at fair value through profit or loss	-	31,804	31,804
Foreign exchange losses	-	(6,629)	(6,629)
Total income	12,004	25,175	37,179
Expenses	(2,612)	(2,448)	(5,060)
Profit before taxation	9,392	22,727	32,119
Taxation	(590)	-	(590)
Profit for the year	8,802	22,727	31,529
Earnings per share	£5.69	£14.70	£20.39
The Group does not have any income or expenses that are not included in the profit for the year other than expenses of £43,000 (2012: £226,000) charged directly to the Share Premium account in respect of the issue of the Company's shares. Accordingly, the "Profit for the Year" is also the "Total Comprehensive Income for the Year", as defined in IAS1 (revised) and no separate Statement of Comprehensive Income has been presented. The "Total" column of this statement represents the Group's Income Statement, prepared in accordance with International Financial Reporting Standards ("IFRS").  The revenue and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations.
Dividend Information
Dividends per share	£5.60
Dividends paid	£'000
First interim dividend of £1.40 per share	1,994
Second interim dividend of £1.40 per share	2,113
Third interim dividend of £1.40 per share	2,228
Fourth interim dividend of £1.40 per share	2,296
	8,631

Group Income Statement

	Year ended 30 April 2012
	Restated	Restated	Restated
	Revenue	Capital	Total
	£'000	£'000	£'000
Income
Investment income	10,683	-	10,683
Other operating income	247	-	247
	10,930	-	10,930
Gains on investments held at fair value through profit or loss	-	22,745	22,745
Foreign exchange losses	-	(1,543)	(1,543)
Total income	10,930	21,202	32,132
Expenses	(2,129)	(1,762)	(3,891)
Profit before taxation	8,801	19,440	28,241
Taxation	(338)	-	(338)
Profit for the year	8,463	19,440	27,903
Earnings per share	£7.23	£16.60	£23.83

Group Statement of Financial Position

			As at 30 April 2013			Restated as at 30 April 2012
			£'000			£'000
Non-current assets
Investments held at fair value			576,744			451,826
Current assets
Financial assets			6,426			4,951
Receivables			1,956			2,213
Cash and cash equivalents			9,306			5,535
Total Assets			594,432			464,525
Current liabilities
Payables			(1,187)			(1,052)
Total liabilities			(1,187)			(1,052)
Net assets			593,245			463,473
Capital and reserves
Ordinary share capital			21,074			17,258
Share premium			383,380			280,322
Capital redemption reserve			219			219
Special reserve			22,517			22,517
Capital reserve			160,568			137,841
Revenue reserve			5,487			5,316
Total equity			593,245			463,473
Net asset value per Ordinary share			£351.89			£335.69

Company Statement of Financial Position

			As at 30 April 2013			Restated as at 30 April 2012
			£'000			£'000
Non-current assets
Investments held at fair value			576,775			451,850
Current assets
Financial assets			6,426			4,951
Receivables			1,947			2,208
Cash and cash equivalents			9,246			5,496
Total Assets			594,394			464,505
Current liabilities
Payables			(1,149)			(1,032)
Total liabilities			(1,149)			(1,032)
Net assets			593,245			463,473
Capital and reserves
Ordinary share capital			21,074			17,258
Share premium			383,380			280,322
Capital redemption reserve			219			219
Special reserve			22,517			22,517
Capital reserve			160,589			137,855
Revenue reserve			5,466			5,302
Total equity			593,245			463,473
Net asset value per Ordinary share			£351.89			£335.69

Group Statement of Changes in Equity

For the year ended 30 April 2013	Share Capital	Share Premium	Capital Redemption Reserve	Special Reserve	Capital Reserve	Revenue Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 30 April 2012	17,258	280,322	219	22,517	137,841	5,316	463,473
Profit for the year	-	-	-	-	22,727	8,802	31,529
Issue of new ordinary shares	3,816	103,058	-	-	-	-	106,874
Dividends paid	-	-	-	-	-	(8,631)	(8,631)
Balance as at 30 April 2013	21,074	383,380	219	22,517	160,568	5,487	593,245
Restated for the year ended 30 April 2012	Share Capital	Share Premium	Capital Redemption Reserve	Special Reserve	Capital Reserve	Revenue Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 30 April 2011	12,310	153,230	219	22,517	118,401	3,323	310,000
Profit for the year	-	-	-	-	19,440	8,463	27,903
Issue of new ordinary shares	4,948	127,092	-	-	-	-	132,040
Dividends paid	-	-	-	-	-	(6,470)	(6,470)
Balance as at 30 April 2012	17,258	280,322	219	22,517	137,841	5,316	463,473

Company Statement of Changes in Equity

For the year ended 30 April 2013	Share Capital	Share Premium	Capital Redemption Reserve	Special Reserve	Capital Reserve	Revenue Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 30 April 2012	17,258	280,322	219	22,517	137,855	5,302	463,473
Profit for the year	-	-	-	-	22,734	8,795	31,529
Issue of new ordinary shares	3,816	103,058	-	-	-	-	106,874
Dividends paid	-	-	-	-	-	(8,631)	(8,631)
Balance as at 30 April 2013	21,074	383,380	219	22,517	160,589	5,466	593,245
Restated for the year ended 30 April 2012	Share Capital	Share Premium	Capital Redemption Reserve	Special Reserve	Capital Reserve	Revenue Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 30 April 2011	12,310	153,230	219	22,517	118,411	3,313	310,000
Profit for the year	-	-	-	-	19,444	8,459	27,903
Issue of new ordinary shares	4,948	127,092	-	-	-	-	132,040
Dividends paid	-	-	-	-	-	(6,470)	(6,470)
Balance as at 30 April 2012	17,258	280,322	219	22,517	137,855	5,302	463,473

Group Cash Flow Statement

	Year Ended 30 April	Restated Year Ended 30 April
	2013	2012
	£'000	£'000
Cash flows from operating activities
Profit before taxation	32,119	28,241
Gains on investments	(34,474)	(25,557)
Foreign exchange differences at fair value through profit or loss	6,629	1,543
Operating cash flows before movements in working capital	4,274	4,227
Decrease/ (increase) in other receivables	416	(123)
Increase in other payables	243	265
Net cash from operating activities before taxation	4,933	4,369
Taxation	(600)	(369)
Net cash inflow from operating activities	4,333	4,000
Investing activities
Purchases of investments	(740,567)	(570,669)
Sales of investments	650,123	435,998
Net cash outflow from investing activities	(90,444)	(134,671)
Financing activities
Equity dividends paid	(8,631)	(6,470)
Issue of Ordinary shares	106,768	133,798
Cost of issue of Ordinary shares	(151)	(178)
Net cash inflow from financing activities	97,986	127,150
Net increase/(decrease) in cash and cash equivalents	11,875	(3,521)
Cash and cash equivalents at the start of the year	5,535	11,399
Effect of foreign exchange rate changes	(8,104)	(2,343)
Cash and cash equivalents at the end of the year	9,306	5,535

Company Cash Flow Statement

	Year Ended 30 April	Restated Year Ended 30 April
	2013	2012
	£'000	£'000
Cash flows from operating activities
Profit before taxation	32,112	28,237
Gains on investments	(34,474)	(25,557)
Foreign exchange differences at fair value through profit or loss	6,629	1,543
Operating cash flows before movements in working capital	4,267	4,223
Decrease/(increase) in other receivables	420	(56)
Increase in other payables	225	265
Net cash from operating activities before taxation	4,912	4,432
Taxation	(600)	(369)
Net cash inflow from operating activities	4,312	4,063
Investing activities
Purchases of investments	(740,567)	(570,669)
Sales of investments	650,123	435,998
Net cash outflow from investing activities	(90,444)	(134,671)
Financing activities
Equity dividends paid	(8,631)	(6,470)
Issue of Ordinary shares	106,768	133,798
Cost of issue of Ordinary shares	(151)	(178)
Net cash inflow from financing activities	97,986	127,150
Net increase/(decrease) in cash and cash equivalents	11,854	(3,458)
Cash and cash equivalents at the start of the year	5,496	11,297
Effect of foreign exchange rate changes	(8,104)	(2,343)
Cash and cash equivalents at the end of the year	9,246	5,496

Principal Risks and Risk Management

The Board believes that the principal risks to shareholders, which it seeks to mitigate through continual review of its investments and through shareholder communication, are events or developments which can affect the general level of share prices, including, for instance, inflation or deflation, economic recessions and movements in interest rates.

Other risks faced by the Company include breach of regulatory rules which could lead to suspension of the Company's Stock Exchange listing, financial penalties, or a qualified audit report. Breach of Section 1158 of the Corporation Taxes Act 2010 could lead to the Company being subject to tax on capital gains.

In the mitigation and management of these risks, the Board regularly monitors the investment environment and the management of the Company's investment portfolio, and applies the principles detailed in the guidance provided by the Financial Reporting Council.

Statement of Directors' Responsibilities in Respect of the Annual Financial Report

In accordance with the Disclosure and Transparency Rules, we confirm that to the best of our knowledge:

·      The financial statements contained within the Annual Report for the year ended 30 April 2013, of which this statement of results is an extract, have been prepared in accordance with applicable International Financial Reporting Standards, on a going concern basis, and give a true and fair view of the assets, liabilities, financial position and return of the Company and the undertakings included in the consolidation taken as a whole;

·      The Chairman's Statement and Investment Adviser's Report include a fair review of the important events that have occurred during the financial year and their impact on the financial statements;

·      'Principal Risks and Risk Management' includes a description of the Company's principal risks and uncertainties; and

·      The Annual Report includes details of related party transactions, if any, that have taken place during the financial year.

Notes:

1.         The financial statements of the Group, which are the responsibility of, and were approved by, the Board on 4 June 2013, have been prepared in accordance with International Financial Reporting Standards ("IFRS"). These comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), together with such interpretations by the International Accounting Standards and Standing Interpretations Committee as have been approved by the IASB and still remain in effect, to the extent that these have been adopted by the European Union.

Where the presentational guidance set out in the Statement of Recommended Practice (the "SORP") for investment trusts issued by the Association of Investment Companies (the "AIC") in January 2010 is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendation of the SORP.

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (its subsidiaries) made up to 30 April each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

A number of new standards have been issued but are not effective for this accounting period. These have not been adopted early and the Group does not consider that the future adoption of any new standards, in the form currently available, will have any material impact on the financial statements as presented.

Prior year adjustment

The Company has restated its calculation of effective yield on its index-linked bonds in the year ended 30 April 2012 as it had not applied the correct rate of inflation during that period as well as in the years ended 30 April 2009, 2010 and 2011. There is no impact on the current year's numbers or the restated net asset value of the Company for any prior periods: the effect is simply a transfer to capital and revenue reserves. The impact to the financial statements in the year ended 30 April 2012 can be seen in the table below:

Group Income Statement

	Previously reported			Restated
	Year ended 30 April 2012			Year ended 30 April 2012
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Total income	8,695	23,437	32,132	10,930	21,202	32,132
Profit before taxation	6,566	21,675	28,241	8,801	19,440	28,241
Profit for the year	6,228	21,675	27,903	8,463	19,440	27,903
Earnings per share	£5.32	£18.51	£23.83	£7.23	£16.60	£23.83

            Statement of Financial Position

	Previously reported		Restated
	Year ended 30 April 2012		Year ended 30 April 2012
	Group	Company	Group	Company
	£'000	£'000	£'000	£'000
Capital reserve	140,132	140,146	137,841	137,855
Revenue reserve	3,025	3,011	5,316	5,302

The overall impact to the financial statements is to reduce the unrealised capital gains on the Company's index-linked bonds and transfer those gains to the Company's revenue account. The amount transferred to the revenue account in the year ended 30 April 2012 was £2,235,000. In the year ended 30 April 2009 there was a transfer from revenue reserves to unrealised capital gains of £2,848,000 while in the years ended 30 April 2010 and 2011 there were transfers to revenue reserves of £1,455,000 and £1,449,000 respectively.

2.         Return per ordinary share is based on a weighted average of 1,546,313 ordinary shares in issue during the year (2012 - 1,171,099).

3.         Net asset value per ordinary share is based on the 1,685,901 ordinary shares in issue as at 30 April 2013 (2012 - 1,380,659).

4.         During the year the Directors issued 305,242 shares for net proceeds of £106,874,000.

5.         At 30 April 2013 the sterling value of the US Treasury stocks and part of the US equities were protected by a forward currency contract.

6.         Financial Instruments

The Group holds investments in listed companies and fixed interest securities, holds cash balances and has receivables and payables. It may from time to time also invest in FTSE 100 Futures and enter into forward currency contracts. Cash balances are held for future investment and forward currency contracts are used to manage the exchange risk of holding foreign investments.

The fair value of the financial assets and liabilities of the Group at 30 April 2013 is not different from their carrying value in the financial statements.

The Group is exposed to various types of risk that are associated with financial instruments. The most important types are credit risk, liquidity risk, interest rate risk, market price risk and foreign currency risk.

The Board reviews and agrees policies for managing its risk exposures. These policies are summarised below and have remained unchanged for the year under review.

Credit Risk

Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with the Group.

The Group's principal financial assets are investments, cash balances and other receivables, which represent the Group's maximum exposure to credit risk in relation to financial assets. The Group did not have any exposure to any financial assets which were passed due or impaired at the year end (2012: none).

The Group is exposed to potential failure by counterparties to deliver securities for which the Group has paid, or to pay for securities which the Group has delivered. A list of pre-approved counterparties used in such transactions is maintained, and regularly reviewed by the Group, and transactions must be settled on a basis of delivery against payment. Broker counterparties are selected based on a combination of criteria, including credit rating, balance sheet strength and membership of a relevant regulatory body. Risk relating to unsettled transactions is considered to be small because of the short settlement period involved and the credit quality of the brokers used.

All of the assets of the Group, other than cash deposits and receivables, are held by JPMorgan Chase Bank, the Group's custodian. Bankruptcy or insolvency of the custodian might cause the Group's rights with respect to the securities held by the custodian to be delayed or limited. The Board monitors the Group's risk by reviewing the custodian's internal control reports on a regular basis.

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings, rated A or higher, assigned by international credit rating agencies. Bankruptcy or insolvency of such financial institution might cause the Group's ability to access cash placed on deposit to be delayed or limited. The Group has no concentration of credit risk and exposure is spread over a large number of counterparties.

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. The Board sets policies for managing this risk and meets regularly to review full, timely and relevant information on investment performance and financial results. The management of market price risk is part of the fund management process and is fundamental to equity investment. The portfolio is managed with an awareness of the effects of adverse price movements in equity markets with an objective of maximising overall returns to shareholders.

The Company continued to use forward currency contracts during the year.

Liquidity Risk

Liquidity risk is the risk that the Group will encounter in realising assets or otherwise raising funds to meet financial commitments. The risk of the Group not having sufficient liquidity at any time is not considered by the Board to be significant, given the liquid nature of the portfolio of investments and the level of cash and cash equivalents ordinarily held. The Board reviews liquidity exposure at each meeting.

All of the Company's financial liabilities at 30 April 2013 had a maturity period of less than three months and were repayable at the date shown on the Statement of Financial Position.

Interest Rate Risk

Some of the financial instruments held by the Group are interest bearing. As such, the Group is exposed to interest rate risk due to fluctuations in the prevailing market rate.

Floating Rate

When the Group holds cash balances, such balances are held on overnight deposit accounts and call deposit accounts. The benchmark rate which determines the interest payments received on cash balances is the bank base rate, which at 30 April 2013 was 0.50% in the UK (2012: 0.50%).

Foreign Currency Risk

The Company invests in overseas securities.

	2013	2012
Currency exposure at 30 April:	£'000	£'000
Australian Dollars Canadian Dollars Singapore Dollars Swiss Francs US Dollars (1)	7,781 20,725 47,548 21,749 335,886	5,877 17,090 31,122 17,846 262,642

(1)  At 30 April 2013 the Sterling cost of a portion of the US Dollar denominated assets (including the US Treasury Inflation Protected Securities ("TIPS") and US equities) was protected by a forward currency contract. The fair value of £6,426,000 (2012: fair value of £4,951,000) on the US$252,000,000 (2012: US$222,000,000) sold forward against £168,731,000 (2012: £141,763,000) is included in other receivables (2012: other receivables). All foreign exchange contracts in place at 30 April 2013 were due to mature within two months. The exposure to US Dollars as shown above also includes Gold Bullion. At 30 April 2013 the net exposure to US Dollars was £173,581,000 (2012: £125,830,000) including Gold Bullion and £101,089,000 (2012: £68,370,000) excluding Gold Bullion.

7.         These are not statutory accounts in terms of Section 434 of the Companies Act 2006.  Full audited accounts for the year to 30 April 2013 will be sent to shareholders in June 2013 and will be available for inspection at 10 St Colme Street, Edinburgh, the registered office of the Company. The full annual report and accounts will be available on the Company's website www.patplc.co.uk.

8.         The audited accounts for the year ended 30 April 2013 will be lodged with the Registrar of Companies.

 

END

 

 

FR SSWFLLFDSEIM