Annual Financial Report

RNS Number : 8692W

Schroder AsiaPacific Fund PLC

16 December 2019

 

16 December 2019

ANNUAL REPORT AND ACCOUNTS

Schroder AsiaPacific Fund plc (the "Company") hereby submits its annual report for the year ended 30 September 2019 as required by the UK Listing Authority's Disclosure Guidance and Transparency Rule 4.1. 

The Company's annual report and accounts for the year ended 30 September 2019 are also being published in hard copy format and an electronic copy will shortly be available to download from the Company's website http://www.schroders.co.uk/asiapacific.  Please click on the following link to view the document:

http://www.rns-pdf.londonstockexchange.com/rns/8692W_1-2019-12-13.pdf

The Company has submitted its annual report and accounts to the National Storage Mechanism and it will shortly be available for inspection at www.morningstar.co.uk/uk/NSM.

Enquiries:

Benjamin Hanley

Schroder Investment Management Limited                      

Tel: [phone]

Chairman's Statement

Performance

During the year to 30 September 2019, the Company's NAV produced a positive total return of 1.8%, slightly lagging the Benchmark's total return of 2.2%. In local currency terms, market performance was slightly negative but the weakness of the pound converted this to a gain overall. The Company's share price also produced a positive total return, of 3.6%. The Company continues to maintain its excellent record of outperforming the Benchmark over the longer term.

A more detailed comment on performance and investment policy may be found in the Manager's Review.

Revenue and dividend

Net revenue after taxation has decreased by 1.7% from £16,885,000 to £16,590,000. The directors recommend the payment of a final dividend of 9.70 pence per share for the year ended 30 September 2019. This represents a slight increase of 2.1% over the 9.50 pence paid in respect of the previous financial year.

This dividend will be paid on 5 February 2020 to shareholders on the register on 3 January 2020 subject to approval by shareholders at the Annual General Meeting ("AGM") on 30 January 2020.

Gearing

During the year, the Company reduced its gearing. Gearing was at 2.6% at the start of the year and we ended the year ungeared, with net cash of 2.4%.

Discount management

The board continues to follow a flexible strategy towards discount management. The average level of discount during the year under review was 10.2% in line with our long-term discount target. We believe that it is not necessarily in the best interests of shareholders as a whole to adopt a rigid discount control mechanism that seeks to target a defined maximum discount level regardless of market conditions. Our policy takes account of the level of discount at which the Company's peer group trades, prevailing market conditions and activity within our sector.

We bought back 100,000 shares during the year under review, as well as regularly reviewing both the discount level and the possible use of buy backs.

At the Company's last AGM, the Company was given the authority to purchase up to 14.99% of its issued share capital. We propose that share buyback authorities be renewed at the forthcoming AGM and that any shares so purchased be cancelled or held in treasury for potential reissue.

Board succession

During the year, Vivien Gould joined the board, following work undertaken by the nomination committee to identify the best candidate to join the board. The board welcomes Vivien's depth of experience and knowledge of the investment company sector.

In line with the board's agreed succession plans, I will be retiring at the AGM in January 2021. An announcement relating to my successor will be made in 2020. The selection process will be led by Rosemary Morgan, the Company's senior independent director. The board believes that it is important for appropriate new skills to be brought to the board and will continue to look to refresh one director every two to three years. A director will serve for a period of more than nine years only in exceptional circumstances. All directors will be subject to re-election each year at the AGM.

Outlook

Last year I commented on my optimism for the region's underlying prospects. This year, politics in the region have been highly visible globally. The China/US trade negotiations and political unrest in Hong Kong - the common theme being dissatisfaction with China - together with the worsening relations between Korea and Japan, have all weighed against stock performance. Economic conditions were more challenging than expected but, on the positive side, the weakness in sterling has worked to the Company's performance advantage.

The pace of absolute growth in economies in China, South Korea and Taiwan is becoming less pronounced. Newer developing markets, such as India, are still growing quickly. These markets are providing an increasing new tier of investee companies to add to those growing companies in the mature economies. On a recent visit to Asia, your board was struck by the number of companies, whether large or small, that are thriving by adapting and flexing existing business models. In a very short space of time, many have broadened their supply chains to reduce dependence on China as a manufacturing base.

As we move into our twenty fifth year, the rationale for investing in the Company remains unchanged: to benefit from the region's growth while adding value through the superior stock selection of your Manager. My optimism as to the region's prospects is unchanged.

AGM

The AGM will be held on Thursday, 30 January 2020 at 12.00 noon. As in previous years, Matthew Dobbs, on behalf of the Manager, will give a presentation on the prospects for Asia and the Company's investment strategy. The board looks forward to meeting as many shareholders as are able to attend.

Nicholas Smith

Chairman

13 December 2019

Manager's Review

The NAV per share of the Company recorded a total return of 1.8% over the year ended 30 September 2019. This was modestly behind the performance of the Benchmark, which was up 2.2% over the same period. (Source: Morningstar).

In sterling terms, regional markets ended the year in positive territory. This was entirely thanks to the weakness of the pound in the last four months of the year amid rising speculation over a no deal UK exit from the European Union. The underlying reality is better represented by performance in US dollar terms in the chart on page 6 of the 2019 annual report. Regional markets staged a strong rally early in 2019 from the depressed levels of December, spurred by a more accommodative stance from the US Federal Reserve. Since then, they have lacked more tangible sources of support. Outside the United States, global economic expectations continued to soften, global trade stagnated and corporate earnings revisions remained in negative territory across the region.

Politics also weighed on sentiment. The Sino-US disagreements have dominated the headlines, with concomitant impact on corporate confidence and investment. The varying perceptions of trade progress (or lack of it) caused significant volatility through the year. In addition, the street protests in Hong Kong have materially impacted the domestic economy there with retail sales and tourist arrivals falling sharply as the summer progressed. Less prominently but not helpful, Korea/Japanese relations have cooled due to a dispute over reparations for actions during World War II.

With the notable exception of Malaysia, ASEAN markets along with India were leading performers. They were seen as less sensitive to trade and benefiting from increased scope to ease monetary conditions given quiescent inflation and relatively high real interest rates. Korea suffered as its key exports fell sharply and the administration has pursued a populist agenda, while Malaysia weakened as initial optimism surrounding the end of five decades of UMNO leadership faded. Mainland China and Hong Kong (SAR) were both modestly down in local currency terms. Tepid credit growth and slowing economic activity impacted Mainland China while political unrest rattled Hong Kong (SAR).

Performance and portfolio activity

The Company's total return of 1.8% was slightly behind the Benchmark which rose 2.2%. Key positives were stock selection in Taiwan and Korea, while non-index exposures to Australia and the Netherlands also added value. Stock selection in India was also strong, partly offset by our underweighting. In country allocation terms, added value from the nil weight in Malaysia and the overweight in Hong Kong (SAR) were partly offset by the underweight in Indonesia which outperformed.

Over the period we made a substantial reduction in Korean exposure, moving firmly underweight. We also scaled back the overweighting in Thailand given relatively strong performance in currency adjusted terms. We made more modest reductions in Mainland China. Areas of addition included Singapore, India (although remaining underweight) and selected stocks listed outside the region but with significant exposure to Asian growth.

Outlook and Policy

It is difficult to regard global macro and political developments over the summer as having been supportive of either equity markets or investor sentiment. Political developments have dominated the front pages in Asia, but have scarcely been absent closer to home. The broad threads to these tensions could be viewed as the nexus between populism and resentment at perceived widening of wealth disparities. Whether related or not, economic trends have softened, with retracement in global PMIs, soft private capital spending in a number of markets, and contraction in global trade.

The growth scare has been given further credence by the flattening/inversion of yield curves worldwide. The historic evidence linking this to inevitable recession is somewhat ambivalent, but increasingly desperate measures from Central Banks (at least outside the US) to support growth smack of panic that may do more harm than good. Albeit circumspectly, we do not sit in the recession camp, and indeed are inclined to feel that many cyclical growth sectors and stocks offer the most attractive medium-term prospects. In contrast, defensives and bond proxies seem inordinately rewarded for income generation and their perceived stability.

Softening global PMIs, sluggish trade volumes, and supply chain disruption are obvious impediments for Asian markets. Aside from the political noise, it would also be true to say that more domestic stimulus attempts have been pretty half-hearted. Mainland China remains notably disciplined despite excitements surrounding the recent National People's Congress meetings, and activity elsewhere is far short (mercifully?) of European-style policy panic. Short-term numbers are undoubtedly being distorted by inventory build ups/drawdowns surrounding tariff increases (and indeed cancellation/deferment thereof). It is also undoubtedly affecting investment decisions; bad news short-term, but it suggests that there is strong pent-up demand in industrial investment and related areas.

The situation in Hong Kong (SAR) is obviously of concern as it remains a substantial exposure for the Company, with real estate and financials particularly vulnerable should confidence in stability be permanently impaired. While we respect the political motivations behind the protests, there is also an economic angle as the squeezed middle classes articulate their dissatisfaction. The Hong Kong SAR administration has considerable fiscal fire power should it elect to use it, while strong corporate balance sheets should provide some reassurance as to shareholder returns.

As we have said before, Asian company valuations are generally well supported given strong cash flows, conservative capital spending intentions and strong balance sheets. More doubt surrounds the likely level of growth. Markets have, probably correctly, written off 2019, but earnings growth expectations look too sanguine for 2020, and this will feed through to dividend out-turns. Many pieces of the jigsaw for recovery might fall into place (trade truce, recovery in Western economies, re-stocking, a return of corporate confidence) but these are not our central expectation.

Schroder Investment Management Limited

13 December 2019

Principal risks and uncertainties

The board is responsible for the Company's system of risk management and internal control and for reviewing its effectiveness. The board has adopted a detailed matrix of principal risks affecting the Company's business as an investment trust and has established associated policies and processes designed to manage and, where possible, mitigate those risks, which are monitored by the audit and risk committee on an ongoing basis. This system assists the board in determining the nature and extent of the risks it is willing to take in achieving the Company's strategic objectives. Both the principal risks and the monitoring system are also subject to robust review at least annually. The last review took place in November 2019.

Although the board believes that it has a robust framework of internal controls in place this can provide only reasonable, and not absolute, assurance against material financial misstatement or loss and is designed to manage, not eliminate, risk.

Actions taken by the board and, where appropriate, its committees, to manage and mitigate the Company's principal risks and uncertainties are set out in the table below.

Emerging risks and uncertainties

During the year, the board also discussed and monitored a number of risks that could potentially impact the Company's ability to meet its strategic objectives. These were political risk and climate change risk. The board has determined they are not currently material for the Company.

Political risk includes Brexit, trade wars and regional tensions. The board continues to monitor developments for the UK's departure from the European Union and to assess the potential consequences for the Company's future activities. The board believes that the Company's portfolio of equities in the Asia Pacific region shields the Company from Brexit related risks. However, currency rates and borrowings drawn down by the Company may be affected by geopolitical developments. The board is also mindful that changes to public policy in the UK, or in the Asia Pacific region, could impact the Company in the future.

Climate change risk includes how climate change could affect the Company's investments, and potentially shareholder returns.

Risk	Mitigation and management
Strategic The requirements of investors change or develop in such a way as to diverge from the Company's investment objectives, resulting in a wide discount of the share price to NAV per share.	The appropriateness of the Company's investment remit is periodically reviewed and the success of the Company in meeting its stated objectives is monitored. The share price relative to NAV per share is monitored and the use of buy back authorities is considered on a regular basis. The marketing and distribution activity is actively reviewed. The Company engages proactively with investors.
The Company's cost base could become uncompetitive, particularly in light of open ended alternatives.	The ongoing competitiveness of all service provider fees is subject to periodic benchmarking against their competitors. Annual consideration of management fee levels is undertaken.
Investment management The Manager's investment strategy, if inappropriate, may result in the Company underperforming the market and/or peer group companies, leading to the Company and its objectives becoming unattractive to investors.	Review of: the Manager's compliance with its agreed investment restrictions, investment performance and risk against investment objectives and strategy; relative performance; the portfolio's risk profile; and whether appropriate strategies are employed to mitigate any negative impact of substantial changes in markets. Annual review of the ongoing suitability of the Manager. Regular meetings with major shareholders to seek their views with respect to company matters, including the five-yearly continuation vote.
Financial and currency The Company is exposed to the effect of market fluctuations due to the nature of its business. A significant fall in regional equity markets or a substantial currency fluctuation could have an adverse impact on the market value of the Company's investments.	The risk profile of the portfolio is considered and appropriate strategies to mitigate any negative impact of substantial changes in markets or currency are discussed with the Manager. The Company has no formal policy of hedging currency risk but may use foreign currency borrowings or forward foreign currency contracts to limit exposure.
Custody Safe custody of the Company's assets may be compromised through control failures by the depositary, including cyber hacking.	The depositary reports on the safe custody of the Company's assets, including cash and portfolio holdings which are independently reconciled with the Manager's records. The review of audited internal controls reports covering custodial arrangements is undertaken. An annual report from the depositary on its activities, including matters arising from custody operations is received.
Gearing and leverage The Company utilises credit facilities. These arrangements increase the funds available for investment through borrowing. While this has the potential to enhance investment returns in rising markets, in falling markets the impact could be detrimental to performance.	Gearing is monitored and strict restrictions on borrowings are imposed: gearing continues to operate within pre-agreed limits so as not to exceed 20% of shareholders' funds.
Accounting, legal and regulatory In order to continue to qualify as an investment trust, the Company must comply with the requirements of Section 1158 of the Corporation Tax Act 2010. Breaches of the UK Listing Rules, the Companies Act or other regulations with which the Company is required to comply, could lead to a number of detrimental outcomes.	The confirmation of compliance with relevant laws and regulations by key service providers is reviewed. Shareholder documents and announcements, including the annual report, are subject to stringent review processes. Procedures are established to safeguard against the disclosure of inside information.
Service provider The Company has no employees and has delegated certain functions to a number of service providers. Failure of controls, including as a result of cyber hacking, and poor performance of any service provider, could lead to disruption, reputational damage or loss.	Service providers are appointed subject to due diligence processes and with clearly documented contractual arrangements detailing service expectations. Regular reports are provided by key service providers and the quality of their services is monitored. Review of annual audited internal controls reports from key service providers, including confirmation of business continuity arrangements and IT controls is undertaken.
Cyber The Company's service providers are all exposed to the risk of cyber attacks. Cyber attacks could lead to loss of personal or confidential information or disrupt operations.	Service providers report on cyber risk mitigation and management at least annually, which includes confirmation of business continuity capability in the event of a cyber attack.

Risk assessment and internal controls

Risk assessment includes consideration of the scope and quality of the systems of internal control operating within key service providers, and ensures regular communication of the results of monitoring by such providers to the audit and risk committee, including the incidence of significant control failings or weaknesses that have been identified at any time and the extent to which they have resulted in unforeseen outcomes or contingencies that may have a material impact on the Company's performance or condition. No significant control failings or weaknesses were identified from the audit and risk committee's ongoing risk assessment which has been in place throughout the financial year and up to the date of this report.

A full analysis of the financial risks facing the Company is set out in note 19 on pages 46 to 51 of the 2019 annual report.

Viability statement

The directors have assessed the viability of the Company over a five year period, taking into account the Company's position at 30 September 2019 and the potential impacts of the principal risks and uncertainties it faces for the review period.

This period has been chosen as the board believes that this reflects a suitable time horizon for strategic planning, taking into account the investment policy, liquidity of investments, potential impact of economic cycles, nature of operating costs, dividends and availability of funding.

In its assessment of the viability of the Company, the directors have considered each of the Company's principal risks and uncertainties detailed on pages  13 and 14 of the 2019 annual report and in particular the impact of a significant fall in regional equity markets on the value of the Company's investment portfolio.  The directors have also considered the Company's income and expenditure projections. The Company's investments comprise readily realisable securities which can be sold to meet funding requirements if necessary.

Based on the Company's processes for monitoring operating costs, the board's view that the Manager has the appropriate depth and quality of resource to achieve superior returns in the longer term, the portfolio risk profile, limits imposed on gearing, counterparty exposure, liquidity risk and financial controls, the directors have concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five year period of their assessment.

Going concern

Having assessed the principal risks and the other matters discussed in connection with the viability statement set out above, and the "Guidance on Risk Management, Internal Control and Related Financial and Business Reporting" published by the Financial Reporting Council in 2014, the directors consider it appropriate to adopt the going concern basis in preparing the accounts.

Statement of Directors' Responsibilities in respect of the Annual Report and Accounts

The directors are responsible for preparing the annual 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 prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising Financial Reporting Standard (FRS) 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" 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 return 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 judgements and accounting estimates that are reasonable and prudent;

-        state whether applicable UK Accounting Standards, comprising FRS 102, have been followed, subject to any material departures disclosed and explained in the financial statements;

-        notify the Company's shareholders in writing about the use of disclosure exemptions in FRS 102, used in the preparation of the financial statements; and

-        prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

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

The Manager is responsible for the maintenance and integrity of the webpage dedicated to the Company. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the directors, whose names and functions are listed on pages 16 and 17 of the 2019 annual report, confirm that to the best of their knowledge:

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

-        the Strategic Report contained in the report and accounts includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces; and

-        the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

Income Statement

for the year ended 30 September 2019

		2019			2018
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments held at fair value through profit or loss	-	(738)	(738)	-	26,589	26,589
Gains on derivative contracts	-	2,137	2,137	-	-	-
Net foreign currency gains/(losses)	-	48	48	-	(2,644)	(2,644)
Income from investments	20,471	971	21,442	21,092	293	21,385
Other interest receivable and similar income	138	-	138	42	-	42
Gross return	20,609	2,418	23,027	21,134	24,238	45,372
Investment management fee	(1,596)	(4,789)	(6,385)	(1,748)	(5,243)	(6,991)
Administrative expenses	(1,069)	-	(1,069)	(1,022)	-	(1,022)
Net return/(loss) before finance costs and taxation	17,944	(2,371)	15,573	18,364	18,995	37,359
Finance costs	(78)	(232)	(310)	(289)	(867)	(1,156)
Net return/(loss) on ordinary activities before taxation	17,866	(2,603)	15,263	18,075	18,128	36,203
Taxation on ordinary activities	(1,276)	(525)	(1,801)	(1,190)	(529)	(1,719)
Net return/(loss) on ordinary activities after taxation	16,590	(3,128)	13,462	16,885	17,599	34,484
Return/(loss) per share	9.90p	(1.87)p	8.03p	10.08p	10.50p	20.58p

The "Total" column of this statement is the profit and loss account of the Company. The "Revenue" and "Capital" columns represent supplementary information prepared under guidance issued by The Association of Investment Companies. The Company has no other items of other comprehensive income, and therefore the net return on ordinary activities after taxation is also the total comprehensive income for the year.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year.

Statement of Changes in Equity

for the year ended 30 September 2019

	Called-up share capital £'000	Share premium £'000	Capital redemption reserve £'000	Warrant exercise reserve £'000	Share purchase reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total £'000
At 30 September 2017	16,757	100,956	3,387	8,704	31,575	628,822	9,741	799,942
Net return on ordinary activities	-	-	-	-	-	17,599	16,885	34,484
Dividend paid in the year	-	-	-	-	-	-	(9,384)	(9,384)
At 30 September 2018	16,757	100,956	3,387	8,704	31,575	646,421	17,242	825,042
Repurchase and cancellation of the Company's own shares	(10)	-	10	-	(412)	-	-	(412)
Net (loss)/return on ordinary activities	-	-	-	-	-	(3,128)	16,590	13,462
Dividend paid in the year	-	-	-	-	-	-	(15,910)	(15,910)
At 30 September 2019	16,747	100,956	3,397	8,704	31,163	643,293	17,922	822,182

Statement of Financial Position

at 30 September 2019

	2019 £'000	2018 £'000
Fixed assets
Investments held at fair value through profit or loss	799,703	851,031
Current assets
Debtors	4,325	2,128
Cash at bank and in hand	19,438	20,439
Derivative financial instrument held at fair value through profit or loss	1,085	-
	24,848	22,567
Current liabilities
Creditors: amounts falling due within one year	(2,316)	(48,556)
Derivative financial instrument held at fair value through profit or loss	(53)	-
Net current assets/(liabilities)	22,479	(25,989)
Total assets less current liabilities	822,182	825,042
Net assets	822,182	825,042
Capital and reserves
Called-up share capital	16,747	16,757
Share premium	100,956	100,956
Capital redemption reserve	3,397	3,387
Warrant exercise reserve	8,704	8,704
Share purchase reserve	31,163	31,575
Capital reserves	643,293	646,421
Revenue reserve	17,922	17,242
Total equity shareholders' funds	822,182	825,042
Net asset value per share	490.94p	492.35p

Notes to the Accounts

1.       Accounting policies

Basis of accounting

Schroder AsiaPacific Fund plc ("the Company") is registered in England and Wales as a public company limited by shares. The Company's registered office is 1 London Wall Place, London EC2Y 5AU.

The accounts are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ("UK GAAP"), in particular in accordance with Financial Reporting Standard (FRS) 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", and with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" (the "SORP") issued by the Association of Investment Companies in November 2014 and updated in February 2018. All of the Company's operations are of a continuing nature.

The accounts have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of investments held at fair value through profit or loss.

The Company has not presented a statement of cash flows, as it is not required for an investment trust which meets certain conditions.

The accounts are presented in sterling and amounts have been rounded to the nearest thousand.

The accounting policies applied to these accounts are consistent with those applied in the accounts for the year ended 30 September 2018.

No significant judgements, estimates or assumptions have been required in the preparation of the accounts for the current or preceding financial years.

2.         Taxation on ordinary activities

The Company's effective corporation tax rate is nil, as deductible expenses exceed taxable income. The tax charge comprises irrecoverable overseas withholding tax on dividends receivable, and overseas capital gains tax.

3.       Return/(loss) per share

	2019	2018
	£'000	£'000
Revenue return	16,590	16,885
Capital (loss)/return	(3,128)	17,599
Total return	13,462	34,484
Weighted average number of shares in issue during the year	167,491,812	167,570,716
Revenue return per share	9.90p	10.08p
Capital (loss)/return per share	(1.87)p	10.50p
Total return per share	8.03p	20.58p

4.       Dividends

Dividends paid and proposed

	2019	2018
	£'000	£'000
2018 final dividend of 9.50p (2017: 5.60p) paid out of revenue profits1	15,910	9,384

	2019	2018
	£'000	£'000
2019 final dividend proposed of 9.70p (2018: 9.50p) to be paid out of revenue profits	16,245	15,919

¹The 2018 final dividend amounted to £15,919,000. However the amount actually paid was £15,910,000 as shares were repurchased and cancelled after the accounting date but prior to the dividend Record Date.

The proposed final dividend amounting to £16,245,000 (2018: £15,919,000) is the amount used for the basis of determining whether the Company has satisfied the distribution requirements of section 1158 of the Corporation Tax Act 2010. The revenue available for distribution for the year is £16,590,000 (2018: £16,885,000).

5.       Called-up share capital

	2019	2018
	£'000	£'000
Ordinary shares allotted, called up and fully paid:
Ordinary shares of 10p each:
Opening balance of 167,570,716 (2018: 167,570,716) shares	16,757	16,757
Repurchase and cancellation of 100,000 (2018: nil) shares	(10)	-
Closing balance of 167,470,716 (2018: 167,570,716) shares	16,747	16,757

During the year, the Company made market purchases of 100,000 of its own shares, nominal value £10,000, for cancellation, representing 0.06% of the shares outstanding at the beginning of the year. The total consideration paid for these shares amounted to £412,000. The reason for these purchases was to seek to manage the volatility of the share price discount to NAV per share.

6.       Net asset value per share

	2019	2018
	£'000	£'000
Net assets attributable to shareholders (£'000)	822,182	825,042
Shares in issue at the year end	167,470,716	167,570,716
Net asset value per share	490.94p	492.35p

7.       Disclosures regarding financial instruments measured at fair value

The Company's financial instruments within the scope of FRS 102 that are held at fair value comprise its investment portfolio and derivative financial instruments.

FRS 102 requires that financial instruments held at fair value are categorised into a hierarchy consisting of the three levels below. A fair value measurement is categorised in its entirety on the basis of the lowest level input that is significant to the fair value measurement.

Level 1 - valued using unadjusted quoted prices in active markets for identical assets.

Level 2 - valued using observable inputs other than quoted prices included within Level 1.

Level 3 - valued using inputs that are unobservable.

Details of the Company's policy for valuing investments and derivative instruments are given in note 1(b) on page 38 and 1(g) on page 39 of the 2019 annual report.

At 30 September 2019, the Company's investment portfolio and derivative financial instruments were categorised as follows:

		2019
	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Investments in equities and equity linked securities	799,703	-	-	799,703
Derivative financial instruments - forward currency contracts	-	1,032	-	1,032
Total	799,703	1,032	-	800,735

		2018
	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Investments in equities and equity linked securities	851,031	-	-	851,031
Total	851,031	-	-	851,031

There have been no transfers between Levels 1, 2 or 3 during the year (2018: nil).

8. Status of announcement

2018 Financial Information

The figures and financial information for 2018 are extracted from the published annual report and accounts for the year ended 30 September 2018 and do not constitute the statutory accounts for that year. The 2018 annual report and accounts have been delivered to the Registrar of Companies and included the Report of the Independent Auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

2019 Financial Information

The figures and financial information for 2019 are extracted from the annual report and accounts for the year ended 30 September 2019 and do not constitute the statutory accounts for the year. The 2019 annual report and accounts include the Report of the Independent Auditors which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The 2019 annual report and accounts will be delivered to the Registrar of Companies in due course.

Neither the contents of the Company's webpages nor the contents of any website accessible from hyperlinks on the Company's webpages (or any other website) is incorporated into, or forms part of, this announcement.

 

END

 

 

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