Annual Financial Report
TROY INCOME & GROWTH TRUST PLC
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2014
1. CHAIRMAN'S STATEMENT
The objective of the Company is to provide an attractive income yield and the prospect of income and capital growth through investing in a portfolio of predominantly UK equities.
Performance
The performance for the year to 30 September 2014 shows a NAV total return per share of +10.1% and a share price total return of +10.0%. This compares favourably with the total return from the FTSE All-Share Index of +6.1%. The total dividends declared for the year were 2.225p, an increase of 4.7% over the previous year. The Manager's Review which follows gives a more detailed analysis of the performance.
The year's performance was encouraging although the Board is predominantly focused on long term performance. Over the three years to 30 September 2014 the NAV total return per share was +43.0% and the share price total return was +44.3% compared with the FTSE All-Share Index total return of +47.9%. As we have often pointed out, given the conservative and low volatility style of the portfolio, we expect to lag somewhat in strongly rising markets but to fare relatively better in less bullish markets. The three years have included spells of both, although markets have risen strongly overall. The end of July 2014 marked the fifth anniversary of the appointment of Troy Asset Management Ltd ("Troy") as Manager and so we are now able to report that their investment approach has produced a five year NAV total return per share to 30 September 2014 of +77.0% and a share price total return of +85.3%, both of which compare most favourably with the FTSE All-Share Index total return of +59.1%. These returns have been achieved whilst exposing investors to significantly lower volatility than that of the market as illustrated in more detail in the Manager's report.
Economic Background
The Federal Reserve's long drawn out exit from Quantitative Easing coincided with a much more sedate period for equity markets. The start of this normalisation process was marked by the "taper tantrum" of June 2013 and we highlighted the ensuing change in market behaviour in our interim report. As monetary policy, extraordinary or otherwise, played a reduced role in the performance of asset prices, and equities in particular, the links between share prices and the underlying economy started to reassert themselves. The ability of equities to withstand these pressures was significantly reduced by the above average price-to-earnings multiple of 15.9x at which the FTSE All-Share Index traded a year ago. Since that time listed company earnings have been notably weaker with many indicating lower earnings in 2015 than had been previously anticipated. It comes as no surprise therefore that we have not seen a repeat of the outstanding equity returns that marked the year to 30 September 2013.
Discount Control Mechanism
Our discount and premium control policy, which is managed through the repurchase and issuance of the Company's shares, continues to provide liquidity to shareholders and ensures that the shares trade around their underlying NAV with minimal rating volatility. Any increase in the size of the Company through the issuance of new shares helps improve our cost ratio and on-going charges now represent 1.05% of shareholders' funds. During the year to 30 September 2014 the Company repurchased 11.4m shares and issued 8.8m shares and at the year-end held 2,569,000 shares in treasury. Since the year end, all the remaining shares in treasury have been re-issued as well as additional new shares being issued.
AIFMD
In July 2014 we announced our compliance arrangements for the requirements of the EU Alternative Investment Fund Managers Directive ("AIFMD") and greater detail appears in the Strategic and Directors Report extracts which follow. So far, we can confirm these arrangements have worked well, although complying with these new regulations has added both cost and administrative burdens for the Company, while any benefits of these arrangements for investment trusts are less evident than for other areas of the investment industry.
Gearing
The Board, AIFM and Manager will continue to assume a disciplined and conservative approach to the use of gearing but shareholders can rest assured that, as and when appropriate stock market conditions arise, the Company will take the opportunity to make use of borrowed funds to enhance performance.
Dividends
The total dividends declared for the year were 2.225p, an increase of 4.7% over the previous year. UK equity market dividend growth, which is partially tied to currently sluggish earnings growth, is expected to remain in mid-single figures. There is a possibility of more robust increases if the tail wind of a stronger dollar persists. The Company's current quarterly dividend rate is 0.575p per share and it is the Board's intention, barring unforeseen circumstances, at least to maintain that dividend rate for the full year to 30 September 2015.
Investment Policy
Although there are no pre-defined maximum or minimum exposure levels for asset classes, guidelines have been set and these exposures are reported to, and monitored by, the Board in order to ensure that adequate diversification is achieved. Some relatively minor changes in the exposure guidelines have been agreed by the Board, largely reflecting changes to the composition of the UK stock market. In addition, the Company has been permitted to hold up to 15% of its gross assets in non-UK investments, and, in consultation with the Manager and the AIFM, the Board has decided to increase this limit to 20%, consistent with others in the same AIC category and to provide some additional investment flexibility.
Board Changes
This is my first Chairman's Statement since taking office at the Annual General Meeting in January 2014 and I would again like to thank Ronnie Hanna who served as a Director for eighteen years, seventeen as Chairman, for his guidance of the Company over that time. Roger White, Chief Executive of A.G. Barr plc joined the Board in April 2014 and we look forward to continuing to benefit from his insights.
Outlook
The process of "normalising" monetary policy is far from over and as policy makers and central bankers continue to strive to balance the rate of recovery with the withdrawal of monetary support it remains likely that equity market fragility will persist. This has become particularly evident in recent weeks when a slew of weaker data and the re-emergence of deflationary concerns caused a sharp pull back in markets, which stabilised only when the Bank of England's Chief Economist once again allayed concerns by pushing the date for any potential interest rate rise further out into 2015. In an environment of greater uncertainty and less ebullient markets the Manager's focus on income and quality should serve investors well.
D Warnock
Chairman
26 November 2014
2. MANAGER'S REVIEW
Background
When we reported to shareholders twelve months ago, equity markets had enjoyed a strong period of performance. The last twelve months have been less ebullient. Whilst the UK All-Share index is in positive territory for the year with a total return of 6.1%, investors' confidence has been challenged at various stages.
At the beginning of 2014, escalation of geopolitical tensions between Russia and Ukraine tested markets' nerves. These tensions have continued to rumble throughout the year, joined by unrest in the Middle East which escalated to worrying levels in the summer months. It is perhaps surprising therefore that we have ended the year with an oil price apparently in free fall. However, a combination of overcapacity and lacklustre demand has led to many other commodity prices weakening and the companies that produce them being forced to operate at uneconomic levels. The year in review has ended on a decidedly disinflationary note.
The headline performance figure of the FTSE All-Share somewhat conceals the cracks beneath the surface. In the nine months to September 2014 more than 10% of companies in the FTSE All-Share declined in price by over 20%. Many of these have issued profit warnings, driven in large part by the aforementioned supply/demand mismatch as well as currency headwinds from a stronger sterling. Strains on global growth find their roots in the struggling economies of the Eurozone, which saw a contraction in the second quarter, as well as several emerging markets, many of which have suffered from a stronger dollar inflating the local value of dollar-denominated debts.
It is against this backdrop that the Federal Reserve asset purchasing programme has come to an end. Whilst the end of QE3 has been anticipated since May 2013, the reality of this dawns as we reach the last of the Bank's asset purchases in October. The withdrawal of this support, combined with earnings disappointment from various corners of the market, is already leading to a de-rating in the valuation of shares.
Performance & Investment Strategy
Your Company delivered a Net Asset Value (NAV) total return of +10.1% and a share price total return of +10.0% over the year. This compares with the FTSE All-Share return of +6.1%. The Company's NAV performance over twelve months places it seventh in its twenty strong peer group and since Troy's appointment in 2009 it is ranked thirteenth out of nineteen. We are not only concerned with the magnitude of returns but also with the volatility of that growth and we would emphasise that the Company is the least volatile in the sector since the appointment of Troy as managers at the end of July 2009. The chart on page 6 of the Annual Report shows a plot of return versus volatility for all the Companies in the sector as well as the sector average and the market.
The full year dividend of 2.225p represented a 4.7% increase on the previous annual dividend which continues our track record of growing the dividend in real terms since the portfolio was restructured following Troy's appointment as Manager in August 2009. It is our intention to continue to invest in a portfolio of stocks that will deliver a growing and dependable stream of equity income.
In last year's report, we reminded investors of the risk that our strategy causes us to underperform in relative terms in strong markets. Many of the defensive stocks that lagged in 2013 have now become market leaders in 2014 and have proved more robust amidst fears over the global recovery.
We also expressed concern that various parts of the market had been re-rated ahead of earnings growth, creating a dislocation between stock prices and fundamentals. In what was generally a more speculative market in 2013, our more predictable companies lost out. However, these short term fluctuations in market appetite for risk do not prompt us to change our preference for stocks with sustainable franchises and excellent track records of generating returns. Companies such as Reckitt Benckiser and Nestlé have proved more resilient this year, appreciating by 22% and 15% respectively.
Our holdings in the financial sector contributed strongly to performance. Rathbones, which has produced considerable growth in its assets under management, generated a total return for shareholders of 26% over the twelve months. The company is able to leverage its fixed cost infrastructure to grow both organically and by acquisition at a time when the smallest players are struggling to deal with regulatory burdens.
Portfolio Changes
Although our strategy and asset allocation for the Company have remained constant we continually reassess our holdings and make necessary changes to the individual stocks within the portfolio.
In keeping with our concerns over the re-rating of various stocks, we have sold those companies which we believed to be running ahead of their earnings power. AB Foods was one such holding. Having appreciated to a forward price/earnings multiple of 30x, AB Foods was sold out of the portfolio in January on the grounds of an excessively rich valuation. Microsoft was sold on a similar rationale in December 2013 after the price had risen 40% in the year. Diageo, a long term holding within the Company was sold in December, again on valuation grounds. We do not fall in love with our investments, even when they possess franchises as strong as that of Diageo. Finally, we exited our position in Greggs in July 2014, after the operational gearing benefits from the cost-cutting implemented during the recession combined with an improvement in sales seemed to be reflected in the share price.
Share price weakness towards the Company's year end gave us the opportunity to add some new holdings to the portfolio at reasonable valuations. We initiated a position in Royal Mail Group in August. After its IPO late last year, the share price enjoyed a strong rally only to retrace its steps a few months later towards the level at which it had begun trading. This was on the grounds of headwinds that we believe to be overstated and we took advantage of the weakness to invest in a unique asset with a near 5% dividend yield.
We also added to our position in Land Securities which we believe has demonstrated good discipline in its capital allocation and should profit from its portfolio of early cycle development projects now nearing completion.
Discount Control Mechanism
As highlighted in the Chairman's report the Discount Control Mechanism continues to ensure the Company's shares trade at only a small premium or discount to NAV. The overall enhancement to your company's NAV by repurchasing shares at a discount and issuing at a premium has been over £570,000 net of costs which equates to over 1% of the NAV when Troy became manager of the Company. The Company's commitment to this process of issuing and buying back shares to meet fluctuations in demand means the Company's shares enjoy much greater liquidity than other closed ended vehicles of a similar size. The number of shares in issue has almost doubled to 239 million since the discount control mechanism was activated in January 2010 giving a further boost to liquidity and reducing on-going charges from over 1.5% of NAV to 1.05% at the end of September. The chart on page 8 of the Annual Report shows the movement in shares in issue since the activation of the DCM.
Investment Outlook
With a stuttering global economy and inflation below 2% in many developed markets, central bankers seem to have been granted a pretext for a continuation of loose monetary conditions. Interest rates have been at historical lows for over five years. During this time the balance sheets of both the Bank of England and the US Federal Reserve have also increased five-fold. As we have often written such a monetary experiment is without precedent and extrication from its clutches will be easier said than done.
The deflationary implications of tighter monetary policy at a time when economic growth is not strong enough to withstand it are neither politically nor economically palatable. Falling prices result in profitability declines, deferred consumption and higher unemployment. Central bankers seem committed to avoiding such an outcome. Federal Reserve Chair Janet Yellen cites the lowest inflation measure available to support her argument: the latest ex-shelter CPI measure in the United States was 0.9%. This is perilously close to the deflationary knife's edge. Many Eurozone countries are already close to deflation and the currency bloc's overall rate of consumer price inflation was a mere 0.3% for the year to September 2014. Central Bank President Mario Draghi used this figure to support his rationale for Quantitative Easing.
The prospect of deflation is particularly detrimental to highly indebted companies: the fixed amount due for repayment can come to dwarf the declining profitability from lower priced goods and services. We tend to avoid companies carrying a high level of debt on their balance sheets. You can be sure that such companies will be the first to cut their dividends when times get tough.
With policymakers intensely focused on the avoidance of a deflationary outcome, future inflation seems the inevitable reverse of the coin. The timing of this is, however, highly uncertain. Most of the companies we hold in the portfolio are stewards of powerfully branded goods and services that will have the ability to raise prices should inflation start to bite. Moreover, many of these companies enjoy high margins and returns on investment thanks to capital-light business models. This is not accidental. We believe that these companies have the strength to withstand difficult economic conditions whilst maintaining a commitment to regular dividend payments. Your Company in turn will strive to deliver the same.
Troy Asset Management Limited
26 November 2014
3. RESULTS & DIVIDENDS
|
Financial Highlights |
||
|
|
2014 |
2013 |
|
Net asset value total return |
+10.1% |
+12.4% |
|
Share price total return |
+10.0% |
+11.2% |
|
FTSE All-Share Index total return |
+6.1% |
+18.9% |
|
Increase in dividends per share |
+4.7% |
+4.9% |
|
Dividend yield* |
3.5% |
3.5% |
|
FTSE All-Share Index yield |
3.3% |
3.4% |
|
Dividends per share+ |
2.225p |
2.125p |
|
Ongoing Charges++ |
1.05% |
1.06% |
|
* Dividends per share as a percentage of share price at 30 September +Dividends per share reflect the years in which they were earned ++ Excludes non-recurring credit of £4,500 (2013 - credit £42,000) |
||
|
|
Performance - total return (for the periods to 30 September 2014) |
||
|
|
One Year |
Three Years |
Five years |
|
Share price |
+10.0% |
+44.3% |
+77.0% |
|
Net asset value per share |
+10.1% |
+43.0% |
+85.3% |
|
FTSE All-Share Index |
+6.1% |
+47.9% |
+59.1% |
|
Distribution of Assets and Liabilities |
|||||||
|
|
|||||||
|
|
Valuation at |
|
|
|
Valuation at |
||
|
|
30 September |
|
|
Appreciation/ |
30 September |
||
|
|
2013 |
Purchases |
Sales |
(depreciation) |
2014 |
||
|
|
£'000 |
% |
£'000 |
£'000 |
£'000 |
£'000 |
% |
|
Listed investments |
|
|
|
|
|
|
|
|
Ordinary shares |
140,861 |
96.6 |
25,625 |
(25,365) |
9,535 |
150,656 |
98.2 |
|
Other fixed interest |
378 |
0.3 |
- |
(428) |
50 |
- |
- |
|
|
______ |
_____ |
________ |
_______ |
________ |
______ |
_____ |
|
|
141,239 |
96.9 |
25,625 |
(25,793) |
9,585 |
150,656 |
98.2 |
|
|
______ |
_____ |
________ |
_______ |
________ |
______ |
_____ |
|
Current assets |
4,927 |
3.4 |
|
|
|
4,182 |
2.7 |
|
Current liabilities |
(388) |
(0.3) |
|
|
|
(1,447) |
(0.9) |
|
|
______ |
_____ |
|
|
|
______ |
_____ |
|
Net assets |
145,778 |
100.0 |
|
|
|
153,391 |
100.0 |
|
|
______ |
_____ |
|
|
|
______ |
_____ |
|
Net asset value per share |
60.22p |
|
|
|
|
64.05p |
|
|
|
______ |
|
|
|
|
______ |
|
4. STRATEGIC & DIRECTORS' REPORT EXTRACTS
Performance and Future Development
A review of the business performance, market background, investment activity and portfolio during the year under review, together with the investment outlook, is provided in the Chairman's Statement and the Manager's Review.
Risk Management
The Directors are responsible for supervising the overall management of the Company, whilst the day-to-day management of the Company's assets has been delegated to the Manager (see Management Arrangements, below). Portfolio exposure has been limited by the guidelines which are detailed within the Investment Strategy section of the annual report.
The principal risks facing the Company relate to the Company's investment activities and these risks include the following:
• performance risk
• market risk
• resource and operational risk.
An explanation of these principal risks and how they are managed is set out below, with disclosures of financial risk set out in note 15 to the financial statements.
• Performance risk - The Board is responsible for deciding the investment strategy to fulfil the Company's objective and monitoring the performance of the Manager. An inappropriate strategy or poor execution of strategy may lead to underperformance against the appropriate benchmark and its peer group. To manage this risk the Manager provides an explanation of significant stock selection decisions and the rationale for the composition of the investment portfolio. The Board also receives and reviews regular reports showing an analysis of the Company's performance against the FTSE All-Share Index (total return) and its peer group.
• Market risk - Market risk arises from uncertainty about the future prices of the Company's investments. The Board monitors and maintains an adequate spread of investments in order to minimise the risks or factors specific to a particular investment or sectors, based on the diversification requirements inherent in the Company's investment policy. The guidelines which limit the portfolio exposure are set out in the Investment Strategy on page 15 of the Annual Report.
• Resource and operational risk - Like most other investment trusts, the Company has no employees. The Company therefore relies on services provided by third parties and their control systems. These service providers include, in particular, the Alternative Investment Fund Manager ("AIFM") and the Manager, to whom responsibility for the management of the Company has been delegated under an investment management agreement and an investment management delegation agreement (the "Agreements") (further details of which are set out in Management Arrangements, below). The terms of these Agreements cover the necessary duties and conditions expected of the AIFM and Manager. The Board reviews the performance of the AIFM and Manager on a regular basis and their compliance with the Agreements on an annual basis.
Other risks faced by the Company include the following:
• breach of regulatory rules which could lead to the suspension of the Company's London Stock Exchange listing, financial penalties or a qualified audit report.
• breach of Section 1159 of the Corporation Tax Act 2010 which could lead to the Company being subject to tax on capital gains.
Results and Dividends
The financial statements for the year ended 30 September 2014 appear below. Dividends in respect of the year amounted to 2.225p per share (2013 - 2.125p). The fourth interim dividend of 0.575p per share announced on 2 October 2014 (2013 - fourth interim 0.55p) will be accounted for in the financial year ending on 30 September 2015.
Share Capital
At the Annual General Meeting ("AGM") held on 23 January 2014, shareholders approved the renewal of the authority permitting the Company to make market purchases of its own Ordinary shares. This authority (which, unless renewed, will expire at the conclusion of the Company's forthcoming AGM) is limited to Ordinary shares with a maximum aggregate nominal value of £8,796,448 (being equal to approximately 14.99% of the Ordinary shares in issue as at 23 January 2014). It is proposed that this authority will be renewed at the Company's forthcoming AGM. During the year ended 30 September 2014 there were 11,359,000 Ordinary shares of 25p each purchased (being 4.7% of the issues share capital) and 8,790,000 Ordinary shares of 25p each re-issued. The issued share capital at 30 September 2014 consisted of 242,057,445 Ordinary shares of 25p each of which 2,569,000 were held in treasury. As at the date of this report the issued share capital consisted of 244,282,445 Ordinary shares of 25p each and no shares were held in treasury. Each holder of Ordinary shares, excluding treasury shares, is entitled to one vote on a show of hands and, on a poll, to one vote for every Ordinary share held.
Management Arrangements
In order to comply with the Alternative Investment Fund Managers Directive ("AIFMD"), the Company has appointed Personal Assets Trust Administration Company Ltd ("PATAC"), as its Alternative Investment Fund Manager ("AIFM") from 22 July 2014. The investment management agreement with Troy Asset Management Ltd ("Troy") was terminated on 22 July 2014 and the Company has entered into a new AIFMD compliant management agreement with the AIFM. With effect from 22 July 2014, however, the AIFM has delegated the portfolio management activities relating to the Company back to Troy pursuant to a delegation agreement and Troy continues to provide portfolio management services to the Company as before. The delegation agreement between the Company, the AIFM and Troy is on the same commercial terms as the previous investment management agreement between the Company and Troy. These arrangements that have been put in place are fully compliant with the AIFMD.
The AIFM services are provided to the Company by PATAC for £60,000 per annum but Troy have reduced their investment management fee by an equal amount so that there is no overall change to the basis of the management fee incurred by the Company.
Investment Management Delegation Agreement
With effect from 1 August 2009, investment management services are provided to the Company by Troy Asset Management Limited. From 1 October 2012 the fee is at an annual rate of 0.75% of the Company's net assets up to £175 million and at an annual rate of 0.65% of the Company's net assets at or above £175 million.
Company Secretary
On 1 July 2010 Personal Assets Trust Administration Company Ltd ('PATAC') was appointed to provide Company Secretarial, accounting and administrative services, for an annual fee of £95,000 payable quarterly in advance. The appointment is terminable on three months' notice. This fee is adjusted annually by the higher of the increase in the Retail Price Index or the Consumer Price index and is currently £108,681 per annum.
Depositary
The AIFMD requires the AIFM to appoint a depositary for each Authorised Investment Fund it manages and J P Morgan Europe Ltd were appointed depositary for the Company with effect from 22 July 2014. The Depositary's responsibilities include cash monitoring, safe keeping of the Company's financial instruments and monitoring the Company's compliance with investment limits and leverage requirements. The Depositary has delegated the custody function to J.P. Morgan Chase Bank N.A.
Auditor
The current Auditors, Ernst & Young LLP were first appointed in the year to 30 September 2006. The Audit Partner rotates every five years in accordance with ethical guidance and 2014 is the fourth year of the current partner. It is the Board's intention to put the audit out for tender during 2015 with the audit appointment to be effective for the financial year ending 30 September 2016.
Going Concern
The Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the financial statements as the assets of the Company consist mainly of securities which are readily realisable and, accordingly, the Company has adequate financial resources to continue in operational existence for the foreseeable future. In reaching this view, the Directors reviewed the level of expenditure of the Company against the cash and asset liquidity within the portfolio.
Discount Policy
The Company's discount policy is to ensure that the Ordinary shares trade at close to net asset value through a combination of share buy-backs and the issue of new Ordinary shares at a premium to net asset value where demand exceeds supply.
This discount control mechanism is operated for a fee of £30,000 per annum (excluding VAT) and this has been charged to the share premium account.
The Directors will continue to seek the renewal of the Company's authority to buy back Ordinary shares annually and at other times should this prove necessary. From the authority granted at the January 2014 AGM, the Company, at 30 September 2014, had the remaining authority to buy-back 31,705,793 Ordinary 25p shares. Any buy-back of Ordinary shares will be made subject to the Companies Act 2006 and within guidelines established from time to time by the Board and the making and timing of any buy-backs will be at the absolute discretion of the Board. The Directors will be authorised to cancel any Ordinary shares purchased under such authority or to hold them in treasury. Purchases of Ordinary shares will only be made through the market for cash at prices below the prevailing net asset value of the Ordinary shares. Such purchases will also be made only in accordance with the rules of the UK Listing Authority which provide that the price to be paid must not be less than the nominal value of an Ordinary share nor more than the higher of (a) 5% above the average of the middle market quotations for the Ordinary shares for the five business days before the purchase is made and (b) the higher of the price of the last independent trade and the highest current independent bid relating to an Ordinary share on the trading venue where the purchase is carried out.
It is the intention of the Directors that the share buy-back authority is used to purchase Ordinary shares if the middle market price for a Share is below the net asset value per Ordinary share of the Company (taking into account any rights to which the Ordinary shares are trading "ex"). However, nothing in this discount policy will require the Directors to take any steps that would require the Company to make a tender offer for its shares or to publish a prospectus. Notwithstanding this discount policy, there is no guarantee that the Ordinary shares will trade at close to the net asset value per Ordinary share. Shareholders should note that this discount policy could lead to a reduction in the size of the Company over time.
Capital Reserves and Share Premium Account
At the Annual General Meeting ("AGM") of the Company held on 23 January 2014, the shareholders approved, subject to the consent of the Court of Session in Scotland, the cancellation of the share premium account and the creation of a distributable capital reserve. The Court of Session consent was received on 29 August 2014 and the cancellation of the share premium account and the creation of the distributable capital reserve has been reflected in the year to 30 September 2014. The distributable capital reserve can be used to fund share buy-backs and make capital distributions. The Court of Session also approved the use of the special capital reserve for similar purposes. Following these approvals the deficit on the realised capital reserve has been eliminated.
At the AGM shareholders also approved the removal of the restriction which prevented the distribution of any surplus from the realisation of any investment. The Board believes that as a result of these actions the Company has greater flexibility in the long term as it can make distributions from any surplus arising from the realisation of any investments.
By Order of the Board
Steven Cowie C.A.
Secretary
26 November 2014
5. STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing this Annual Financial Report, the Annual Report & Accounts and the Directors Remuneration Report, in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year and these have been prepared in accordance with IFRSs as adopted by the EU.
Under Company law, the Directors must not approve the financial statements unless they are satisfied they present fairly the financial position, financial performance and cash flows for that period.
In preparing the financial statements, the Directors are required to:
- select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;
- present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
- provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the company's financial position and performance;
- make judgements and estimates that are reasonable and prudent; and
- state whether they have been prepared in accordance with IFRSs as adopted by the EU subject to any material departures disclosed and explained in the Notes to the Financial Statements.
The Directors consider that the Annual Report and Accounts, taken as a whole, are fair, balanced and understandable, and provide the information necessary for shareholders to assess the Company's performance, business model and strategy. In reaching this conclusion the Directors have assumed that the reader of the Annual Report and Accounts would have a reasonable level of knowledge of the investment industry and of investment trusts in particular.
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 its 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 Strategic Report, a Directors' Report, a Corporate Governance Statement and a Directors' Remuneration Report that comply with that law and those regulations.
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.
Statement under Disclosure and Transparency Rules
Each of the Directors confirms that to the best of his or her knowledge:
- the financial statements, prepared in accordance with IFRSs, as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
- the Strategic Report and the Directors' Report (incorporating the other sections which are referred to in them) include 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.
For and on behalf of Troy Income & Growth Trust plc
J Brown
Chairman of the Audit Committee
26 November 2014
TROY INCOME & GROWTH TRUST PLC
STATEMENT OF COMPREHENSIVE INCOME
|
|
|
Year ended 30 September 2014 |
Year ended 30 September 2013 |
||||
|
|
|
Revenue |
Capital |
|
Revenue |
Capital |
|
|
|
Note |
return |
return |
Total |
return |
return |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Profits on investments held at fair value |
9 |
- |
9,585 |
9,585 |
- |
11,157 |
11,157 |
|
Currency (losses)/gains |
|
- |
(4) |
(4) |
- |
1 |
1 |
|
Revenue |
2 |
|
|
|
|
|
|
|
Income from listed investments |
|
6,193 |
- |
6,193 |
5,999 |
- |
5,999 |
|
Other income |
|
1 |
- |
1 |
2 |
- |
2 |
|
|
|
______ |
_______ |
______ |
______ |
_______ |
______ |
|
|
|
6,194 |
9,581 |
15,775 |
6,001 |
11,158 |
17,159 |
|
|
|
______ |
_______ |
______ |
______ |
_______ |
______ |
|
Expenses |
|
|
|
|
|
|
|
|
Investment management fees |
3 |
(392) |
(728) |
(1,120) |
(364) |
(677) |
(1,041) |
|
Other administrative expenses |
4 |
(403) |
- |
(403) |
(343) |
- |
(343) |
|
Finance costs of borrowing |
5 |
(5) |
(10) |
(15) |
(5) |
(10) |
(15) |
|
|
|
______ |
_______ |
______ |
______ |
_______ |
______ |
|
Profit before taxation |
|
5,394 |
8,843 |
14,237 |
5,289 |
10,471 |
15,760 |
|
Taxation |
6 |
(86) |
- |
(86) |
(95) |
- |
(95) |
|
|
|
______ |
_______ |
______ |
______ |
_______ |
______ |
|
Profit for the year |
|
5,308 |
8,843 |
14,151 |
5,194 |
10,471 |
15,665 |
|
|
|
______ |
_______ |
______ |
______ |
_______ |
______ |
|
Earnings per Ordinary share (pence) |
8 |
2.25 |
3.75 |
6.00 |
2.21 |
4.45 |
6.66 |
|
|
|
______ |
_______ |
______ |
______ |
_______ |
______ |
The "Profit for the Year" is also the Total Comprehensive Income for the year as defined in IAS1 (revised).
The total column of this statement represents the Statement of Comprehensive Income, prepared in accordance with IFRS, as adopted by the European Union. The supplementary revenue return and capital return columns are both prepared as explained in the accounting policies. All items in the above statement derive from continuing operations.
No operations were acquired or discontinued during the year.
The Directors are of the opinion that the Company is engaged in a single segment of business, being investment in predominantly UK equities.
The accompanying notes are an integral part of these financial statements.
TROY INCOME & GROWTH TRUST PLC
BALANCE SHEET
|
|
|||||
|
|
|
|
|
As at |
As at |
|
|
|
|
|
30 September |
30 September |
|
|
|
|
|
2014 |
2013 |
|
|
Notes |
|
|
£'000 |
£'000 |
|
Non-current assets |
|
|
|
|
|
|
Ordinary shares |
|
|
|
150,656 |
140,861 |
|
Other fixed interest |
|
|
|
- |
378 |
|
|
|
|
|
______ |
______ |
|
Investments held at fair value through profit or loss |
9 |
|
|
150,656 |
141,239 |
|
|
|
|
|
______ |
______ |
|
Current assets |
|
|
|
|
|
|
Accrued income and prepayments |
|
|
|
690 |
684 |
|
Trade and other receivables |
|
|
|
737 |
- |
|
Cash and cash equivalents |
|
|
|
2,755 |
4,243 |
|
|
|
|
|
______ |
______ |
|
Total current assets |
|
|
|
4,182 |
4,927 |
|
|
|
|
|
______ |
______ |
|
Total assets |
|
|
|
154,838 |
146,166 |
|
Current liabilities |
|
|
|
|
|
|
Trade and other payables |
|
|
|
(1,447) |
(388) |
|
|
|
|
|
______ |
______ |
|
Total current liabilities |
|
|
|
(1,447) |
(388) |
|
|
|
|
|
______ |
______ |
|
Net assets |
|
|
|
153,391 |
145,778 |
|
|
|
|
|
______ |
______ |
|
Issued capital and reserves attributable to equity holders |
|||||
|
Called-up share capital |
10 |
|
|
60,514 |
56,421 |
|
Share premium account |
11 |
|
|
86 |
36,432 |
|
Special reserve |
12 |
|
|
61,924 |
58,163 |
|
Capital reserve |
13 |
|
|
27,186 |
(12,900) |
|
Revenue reserve |
14 |
|
|
3,681 |
3,569 |
|
|
|
|
|
______ |
______ |
|
Equity shareholders' funds |
|
|
|
153,391 |
145,778 |
|
|
|
|
|
______ |
______ |
|
Net asset value per Ordinary share (pence) |
8 |
|
|
64.05 |
60.22 |
|
|
|
|
|
______ |
______ |
TROY INCOME & GROWTH TRUST PLC
STATEMENT OF CHANGES IN EQUITY
|
|
||||||
|
For year ended 30 September 2014 |
|
|
|
|
|
|
|
|
|
Share |
|
|
|
|
|
|
Share |
premium |
Special |
Capital |
Revenue |
|
|
|
capital |
account |
reserves |
reserve |
reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 30 September 2013 |
60,514 |
36,432 |
58,163 |
(12,900) |
3,569 |
145,778 |
|
Total comprehensive income for the year |
- |
- |
- |
8,843 |
5,308 |
14,151 |
|
Equity dividends |
- |
- |
- |
- |
(5,196) |
(5,196) |
|
Cancellation of share premium account |
- |
(36,621) |
36,621 |
- |
- |
- |
|
Transfer to Capital Reserve |
- |
- |
(31,243) |
(31,243) |
- |
- |
|
Costs of cancellation of share premium account |
- |
- |
(31) |
- |
- |
(31) |
|
Shares bought back into treasury |
- |
- |
(7,002) |
- |
- |
(7,002) |
|
Discount control costs |
- |
(36) |
- |
- |
- |
(36) |
|
Shares issued from treasury |
- |
311 |
5,416 |
- |
- |
5,727 |
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
Balance at 30 September 2014 |
60,514 |
86 |
61,924 |
27,186 |
3,681 |
153,391 |
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
For year ended 30 September 2013 |
|
|
|
|
|
|
|
Balance at 30 September 2012 |
56,421 |
30,941 |
58,163 |
(23,371) |
2,371 |
124,525 |
|
Total comprehensive income for the year |
- |
- |
- |
10,471 |
5,194 |
15,665 |
|
Equity dividends |
- |
- |
- |
- |
(3,996) |
(3,996) |
|
Costs incurred on the issue of new shares |
- |
1 |
- |
- |
- |
1 |
|
Contribution to costs incurred on issue of new shares |
- |
(3) |
- |
- |
- |
(3) |
|
Discount control costs |
- |
(36) |
- |
- |
- |
(36) |
|
New shares issued |
4,093 |
5,529 |
- |
- |
- |
9,622 |
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
Balance at 30 September 2013 |
60,514 |
36,432 |
58,163 |
(12,900) |
3,569 |
145,778 |
|
|
______ |
______ |
______ |
______ |
______ |
______ |
TROY INCOME & GROWTH TRUST PLC
CASH FLOW STATEMENT
|
|
Year ended |
Year ended |
||
|
|
30 September 2014 |
30 September 2013 |
||
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Cash flows from operating activities |
|
|
|
|
|
Investment income received |
6,198 |
|
5,929 |
|
|
Deposit interest received |
1 |
|
2 |
|
|
Administrative expenses paid |
(1,537) |
|
(1,401) |
|
|
|
________ |
|
________ |
|
|
Cash generated from operations (note 19 (a)) |
|
4,662 |
|
4,530 |
|
Finance costs paid |
|
(15) |
|
(15) |
|
Taxation |
|
(94) |
|
(97) |
|
|
|
________ |
|
________ |
|
Net cash inflows from operating activities |
|
4,553 |
|
4,418 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Purchases of investments |
(24,582) |
|
(21,615) |
|
|
Sales of investments |
25,057 |
|
9,973 |
|
|
|
________ |
|
________ |
|
|
Net cash inflow/(outflow) from investing activities |
|
475 |
|
(11,642) |
|
|
|
________ |
|
________ |
|
Net cash inflow/(outflow) before financing |
|
5,028 |
|
(7,224) |
|
Financing activities |
|
|
|
|
|
Proceeds of issue of shares |
5,727 |
|
9,622 |
|
|
Costs of share buy backs |
(7,002) |
|
- |
|
|
Dividends paid |
(5,196) |
|
(4,728) |
|
|
Costs incurred on cancellation of share premium account and on issue of new shares |
(41) |
|
(25) |
|
|
|
________ |
|
________ |
|
|
Net cash (outflow)/inflow from financing activities |
|
(6,512) |
|
4,869 |
|
|
|
________ |
|
________ |
|
Net decrease in cash and short term deposits (note 19(b)) |
|
(1,484) |
|
(2,355) |
|
Cash and cash equivalents at the start of the year |
|
4,243 |
|
6,596 |
|
Effect of foreign exchange rate changes |
|
(4) |
|
2 |
|
|
|
________ |
|
________ |
|
Cash and cash equivalents at the end of the year |
|
2,755 |
|
4,243 |
|
|
|
________ |
|
________ |
TROY INCOME & GROWTH TRUST PLC
YEAR ENDED 30 SEPTEMBER 2014
|
1. |
Accounting Policies |
||
|
|
(a) |
Basis of accounting |
|
|
|
|
The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards ("IFRS") which comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), and International Accounting Standards and Standing Interpretations Committee interpretations approved by the International Accounting Standards Committee ("IASC") that remain in effect, and to the extent that they have been adopted by the European Union. |
|
|
|
|
The financial statements are presented in Sterling which is regarded as the functional currency and all values are rounded to the nearest thousand pounds (£'000) except where otherwise indicated. |
|
|
|
|
The principal accounting policies adopted are set out below. These policies have been applied consistently throughout the current and prior year. Where presentational guidance set out in the Statement of Recommended Practice ("SORP") 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (issued in January 2009) is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP. |
|
|
|
|
In order better to reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. Additionally, the net revenue of the Company is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 1159 of the Corporation Tax Act 2010. |
|
|
|
|
At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective: |
|
|
|
|
|
|
|
|
|
- |
Amendments to IAS 24 - Related Party Disclosures - Entities providing key management personnel (effective for annual periods beginning on or after 1 July 2014). |
|
|
|
- |
Amendment to IAS 27- Reissued as IAS 27 - Separate Financial Statements (2011) (effective for annual periods beginning on or after 1 January 2014). |
|
|
|
- |
Amendments to IAS 32 - Offsetting Financial Assets and Financial Liabilities (effective for annual periods beginning on or after 1 January 2014). |
|
|
|
- |
Amendment to IFRS 10, IFRS 12 and IAS 27 - investment entity exception (effective for annual periods beginning on or after 1 January 2014). |
|
|
|
- |
IFRS 9 - Financial Instruments - Classification and Measurement (effective for annual periods beginning on or after 1 January 2018). |
|
|
|
- |
IFRS 10 - Consolidated Financial Statements (effective for annual periods beginning on or after 1 January 2014). |
|
|
|
- |
IFRS 12 - Disclosures of Interests in Other Entities (effective for annual periods beginning on or after 1 January 2014). |
|
|
|
- |
IFRS 15 - Revenue from Contracts with Customers (effective for annual periods beginning on or after 1 January 2017). |
|
|
|
The Directors do not anticipate that the adoption of these Standards and Interpretations in future periods will materially impact the financial results in the period of initial application. The Company intends to adopt the standards in the reporting period when they become effective. |
|
|
|
(b) |
Investments - Securities held at Fair Value |
|
|
|
|
Investments are recognised or derecognised on the 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 initially measured at fair value. |
|
|
|
|
As the Company's business is investing in financial assets with a view to profiting from their total return in the form of interest, dividends or increases in fair value, listed equities and fixed interest securities are designated as fair value through profit or loss on initial recognition. All investments designated upon initial recognition as held at fair value through profit or loss are measured at subsequent reporting dates at their fair value, which is the bid price as at close of business on the Balance Sheet date. |
|
|
|
|
Gains and losses arising from the changes in fair value are included in net profit or loss for the period as a capital item. Expenses which are incidental to the acquisition and disposal of investments are treated as capital costs. |
|
|
|
(c) |
Income |
|
|
|
|
Dividend income from equity investments including preference shares which have a discretionary dividend is recognised when the shareholders' rights to receive payment has been established, normally the ex-dividend date. |
|
|
|
(d) |
Expenses |
|
|
|
|
All expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital items presented within the Income Statement, all expenses have been presented as revenue items except those where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated. Accordingly the investment management fee and finance costs have been allocated 35% to revenue and 65% to capital. |
|
|
|
(e) |
Bank borrowings |
|
|
|
|
Interest-bearing bank loans and overdrafts are initially recognised at cost, being the fair value of the consideration received, net of any issue expenses. After initial recognition, all interest bearing loans and overdrafts are subsequently measured at amortised cost using the effective interest rate method. Amortised cost is calculated by taking into account any arrangement costs and any discount or premium on settlement. |
|
|
|
(f) |
Taxation |
|
|
|
|
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Balance Sheet date. |
|
|
|
|
The allocation method used to calculate tax relief on expenses presented against capital returns is the 'marginal basis'. Under this basis if taxable income is not capable of being offset entirely by expenses presented in revenue then unutilised expenses arising in capital will be set against income with an amount based on current tax rates charged against income and credited to capital. |
|
|
|
|
Deferred tax is provided in full on temporary differences which result in an obligation at the Balance Sheet date to pay more tax, or a right to pay less tax, at a future date at rates expected to apply when they crystallise, based on current tax rates and law. Temporary differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. |
|
|
|
(g) |
Foreign currency |
|
|
|
|
Transactions denominated in foreign currencies are recorded at the actual exchange rate as at the date of the transaction. Assets and liabilities denominated in foreign currencies at the year end are reported at fair value by using the rate of exchange prevailing at the year end. The currencies to which the Company was exposed were Swiss Francs and US Dollars. |
|
|
|
|
Any gain or loss arising from a movement in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the income statement as a revenue or capital item depending on the nature of the gain or loss. |
|
|
|
(h) |
Cash and cash equivalents |
|
|
|
|
Cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. |
|
|
|
(i) |
Use of estimates |
|
|
|
|
The preparation of financial statements require the Company to make estimates and assumptions that affect items reported in the Balance Sheet and Statement of Comprehensive Income and the disclosure of contingent assets and liabilities at the date of the financial instruments. Although these estimates are based on the Directors' best knowledge of current facts, circumstances and, to some extent, future events and actions, the Company's actual results may ultimately differ from those estimates. There were no material accounting estimates in the current period. |
|
|
|
|
2014 |
2013 |
|
2. |
Income |
£'000 |
£'000 |
|
|
Income from listed investments |
|
|
|
|
UK dividend income |
5,618 |
5,365 |
|
|
Income from overseas investments |
575 |
634 |
|
|
|
________ |
________ |
|
|
|
6,193 |
5,999 |
|
|
|
________ |
________ |
|
|
Other income from investment activity |
|
|
|
|
Deposit interest |
1 |
2 |
|
|
|
________ |
________ |
|
|
Total income |
6,194 |
6,001 |
|
|
|
________ |
________ |
|
3. |
Investment management fees |
|
|
On 31 July 2009, Troy Asset Management Limited ("Troy") became the Investment Manager. From 1 October 2012 the investment management fee has been paid at an annual rate of 0.75% of the Company's net assets up to £175 million and at an annual rate of 0.65% of the Company's net assets at or above £175 million. The fee is calculated monthly and paid quarterly. As explained in Section 4 PATAC were appointed to act as the Company's AIFM with effect from 22 July 2014. From the same date the portfolio management activities were delegated to Troy. The commercial terms of the delegation agreement are the same as the previous investment management agreement except that the investment management fee is reduced by the fees incurred for the services of the AIFM. The fee is allocated 35% to revenue and 65% to capital. |
|
|
|
2014 |
2013 |
||||
|
|
|
Revenue |
Capital |
|
Revenue |
Capital |
|
|
|
|
return |
return |
Total |
return |
return |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Investment management fees paid to Troy |
389 |
721 |
1,110 |
364 |
677 |
1,041 |
|
|
AIFM fee paid to PATAC |
3 |
7 |
10 |
- |
- |
- |
|
|
|
_______ |
______ |
______ |
_______ |
______ |
______ |
|
|
Total Investment management fee |
392 |
728 |
1,120 |
364 |
677 |
1,041 |
|
|
|
_______ |
______ |
______ |
_______ |
______ |
______ |
|
|
|
||||||
|
|
|
||
|
|
|
2014 |
2013 |
|
4. |
Other administrative expenses |
£'000 |
£'000 |
|
|
Directors' remuneration - fees as Directors |
75 |
76 |
|
|
Secretarial fees |
107 |
103 |
|
|
Fees payable to auditor |
|
|
|
|
- fees payable to the Company's auditor for the audit of the annual accounts {a} |
22 |
22 |
|
|
- fees payable to the Company's auditor for taxation compliance services |
8 |
8 |
|
|
Other management expenses {b} |
191 |
134 |
|
|
|
_______ |
_______ |
|
|
|
403 |
343 |
|
|
|
_______ |
_______ |
|
|
{a} Includes irrecoverable VAT of £3,700 (2013 - £3,700). |
||
|
|
{b} Includes non-recurring credit of £4,500 (2013 - credit £42,000). |
||
|
|
The Company had no employees during the year (2013 - nil). No pension contributions were paid for Directors (2013 - £nil). |
||
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
2013 |
||||
|
|
|
Revenue |
Capital |
|
Revenue |
Capital |
|
|
|
|
return |
return |
Total |
return |
return |
Total |
|
5. |
Finance costs of borrowings |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Bank loans and overdrafts repayable within one year |
5 |
10 |
15 |
5 |
10 |
15 |
|
|
|
______ |
_____ |
_____ |
_____ |
_____ |
_____ |
|
|
Interest on bank overdrafts is at floating rates related to the lenders' UK base rates. |
||||||
|
|
. |
|
|
|
|
|
|
|
|
|
2014 |
2013 |
||||
|
|
|
Revenue |
Capital |
|
Revenue |
Capital |
|
|
|
|
return |
return |
Total |
return |
return |
Total |
|
6. |
Taxation |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Irrecoverable overseas tax |
86 |
- |
86 |
95 |
- |
95 |
|
|
|
_______ |
______ |
______ |
_______ |
______ |
______ |
|
|
The following table is a reconciliation of the total taxation charge to the charges or credits which would arise if all ordinary activities were taxed at the standard UK corporation tax rate of 22% (2013 - 23.5%): |
||||||
|
|
|
2014 |
2013 |
||||
|
|
|
Revenue |
Capital |
|
Revenue |
Capital |
|
|
|
|
return |
return |
Total |
return |
return |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Profit on ordinary activities before taxation |
5,394 |
8,843 |
14,237 |
5,289 |
10,471 |
15,760 |
|
|
|
_______ |
______ |
______ |
_______ |
______ |
______ |
|
|
Taxation of return on ordinary activities at the standard rate of corporation tax |
1,187 |
1,946 |
3,133 |
1,243 |
2,461 |
3,704 |
|
|
Effects of: |
|
|
|
|
|
|
|
|
UK dividend income not liable to further tax |
(1,170) |
- |
(1,170) |
(1,195) |
- |
(1,195) |
|
|
Overseas dividend income not liable to further tax |
(127) |
- |
(127) |
(149) |
- |
(149) |
|
|
Capital profits not taxable |
- |
(2,108) |
(2,108) |
- |
(2,622) |
(2,622) |
|
|
Movement in unutilised management expenses |
110 |
162 |
272 |
101 |
161 |
262 |
|
|
Overseas withholding tax suffered |
86 |
- |
86 |
95 |
- |
95 |
|
|
|
_______ |
______ |
______ |
_______ |
______ |
______ |
|
|
Total taxation charge for the year |
86 |
- |
86 |
95 |
- |
95 |
|
|
|
_______ |
______ |
______ |
_______ |
______ |
______ |
|
|
At 30 September 2014, the Company had surplus management expenses of £4,717,000 (2013 - £3,846,000) with a tax value of £943,000 (2013 - £769,000) to carry forward. No deferred tax asset has been recognised in the current or prior period because it is considered too uncertain that there will be suitable taxable profits from which the future reversal of the deferred tax asset could be deducted. |
||||||
|
|
|
|
|
|
|
|
2014 |
2013 |
|
7. |
Dividends on equity shares |
£'000 |
£'000 |
|
|
Amounts recognised as distributions to equity shareholders in the year: |
|
|
|
|
Fifth interim dividend for the year ended 30 September 2012 of 0.125p per share |
- |
282 |
|
|
Fourth interim dividend for the year ended 30 September 2013 of 0.55p per share |
1,331 |
- |
|
|
Three interim dividends for the year ended 30 September 2014 totalling 1.65p (2013 - three interims totalling 1.575p) per share |
3,865 |
3,714 |
|
|
|
________ |
________ |
|
|
|
5,196 |
3,996 |
|
|
|
________ |
________ |
|
|
The fourth interim dividend of 0.575p per share, declared on 2 October 2014 and paid on 31 October 2014, has not been included as a liability in these financial statements. |
||
|
|
|
||
|
|
We also set out below the total dividend payable in respect of the financial year, which is the basis on which the requirements of Section 1159 of the Corporation Tax Act 2010 are considered. |
||
|
|
|
2014 |
2013 |
|
|
|
£'000 |
£'000 |
|
|
Three interim dividends for the year ended 30 September 2014 totalling 1.65p (2013 - three interim dividends totaling1.575p) per share |
3,865 |
3,714 |
|
|
Fourth interim dividend for the year ended 30 September 2014 of 0.575p (2013 - fourth interim dividend 0.55p) per share |
1,380 |
1,331 |
|
|
|
________ |
________ |
|
|
|
5,245 |
5,045 |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
|
2014 |
2013 |
|
8. |
Return and net asset value per share |
£'000 |
£'000 |
|
|
The returns per share are based on the following figures: |
|
|
|
|
Revenue return |
5,308 |
5,194 |
|
|
Capital return |
8,843 |
10,471 |
|
|
|
________ |
________ |
|
|
Total |
14,151 |
15,665 |
|
|
|
________ |
________ |
|
|
Weighted average number of Ordinary shares |
235,820,922 |
235,342,418 |
|
|
|
__________ |
__________ |
|
|
The net asset value per share is based on net assets attributable to shareholders of £153,391,000 (2013 - £145,778,000) and on 239,488,445 (2013 - 242,057,445) Ordinary shares in issue at the year end. |
||
|
|
|
|
|
|
|
|
2014 |
2013 |
|
9. |
Investments held at fair value through profit or loss |
£'000 |
£'000 |
|
|
Listed on recognised stock exchanges: |
|
|
|
|
United Kingdom |
135,111 |
126,396 |
|
|
Overseas |
15,545 |
14,843 |
|
|
|
________ |
________ |
|
|
|
150,656 |
141,239 |
|
|
|
________ |
________ |
|
|
|
2014 |
2013 |
|
|
|
£'000 |
£'000 |
|
|
Opening book cost |
117,940 |
104,084 |
|
|
Opening fair value gains on investments held |
23,299 |
14,356 |
|
|
|
________ |
________ |
|
|
Opening fair value |
141,239 |
118,440 |
|
|
Purchases for cash |
25,625 |
21,615 |
|
|
Sales - proceeds |
(25,793) |
(9,973) |
|
|
Sales - net gains on sales |
4,964 |
2,214 |
|
|
Movement in fair value during the year |
4,621 |
8,943 |
|
|
|
________ |
________ |
|
|
Closing fair value |
150,656 |
141,239 |
|
|
|
________ |
________ |
|
|
Closing book cost |
122,736 |
117,940 |
|
|
Closing fair value gains on investments held |
27,920 |
23,299 |
|
|
|
________ |
________ |
|
|
Closing fair value |
150,656 |
141,239 |
|
|
|
________ |
________ |
|
|
All investments are categorised as held at fair value through profit or loss, and were designated as such upon initial recognition. |
||
|
|
The total transaction costs on purchases was £105,000 (2013 - £120,000) and on sales £20,000 (2013 - £16,000). |
||
|
|
|
|
|
|
|
|
2014 |
2013 |
|
|
Gains on investments held at fair value |
£'000 |
£'000 |
|
|
Net gains on sales |
4,964 |
2,214 |
|
|
Gains in investment holdings |
4,621 |
8,943 |
|
|
|
________ |
________ |
|
|
|
9,585 |
11,157 |
|
|
|
________ |
________ |
|
|
|
Ordinary shares of 25p each |
|
|
10. |
Called-up share capital |
Number |
£'000 |
|
|
Allotted, called up and fully paid |
|
|
|
|
At 30 September 2014 |
239,488,445 |
59,872 |
|
|
Held in treasury |
2,569,000 |
642 |
|
|
|
__________ |
________ |
|
|
|
242,057,445 |
60,514 |
|
|
|
__________ |
________ |
|
|
Allotted, called up and fully paid |
|
|
|
|
At 30 September 2013 |
242,057,445 |
60,514 |
|
|
Held in treasury |
- |
- |
|
|
|
__________ |
________ |
|
|
|
242,057,445 |
60,514 |
|
|
|
__________ |
________ |
|
|
During the year to 30 September 2014 there were 11,359,000 Ordinary shares of 25p each repurchased by the Company (being 4.7% of the Company's issued share capital), at a total cost (including transaction costs) of £7,002,081 and placed in treasury.
During the year to 30 September 2014 the Company re-issued 8,790,000 Ordinary shares of 25p each from treasury for proceeds totalling £5,727,205.
There were no shares repurchased by the Company nor were any shares re-issued from treasury during the year ended 30 September 2013.
|
||
|
|
During the year to 30 September 2014 there were no new Ordinary shares issued by the Company. During the year to 30 September 2013 there were 16,373,000 new Ordinary shares of 25p each issued by the Company for cash proceeds totalling £9,621,817.
|
||
|
|
No shares were purchased for cancellation during the year (2013 - nil) and at the year end 2,569,000 shares were held in treasury (2013- nil).
The costs of the operation of the discount control mechanism of £36,000 (including VAT) have been charged against the premium on shares issued. |
||
|
|
|
|
|
|
|
|
2014 |
2013 |
|
11. |
Share premium account |
£'000 |
£'000 |
|
|
At 1 October |
36,432 |
30,941 |
|
|
Premium on issue of new shares |
311 |
5,529 |
|
|
Costs incurred on issue of new shares |
- |
1 |
|
|
Contributions to costs incurred on issue of new shares |
- |
(3) |
|
|
Discount control costs (note 10) |
(36) |
(36) |
|
|
Cancellation of share premium account (note 12) |
(36,621) |
- |
|
|
|
________ |
________ |
|
|
At 30 September |
86 |
36,432 |
|
|
|
________ |
________ |
|
|
|
||
|
12. |
Special Reserves |
Distributable |
|
Total |
|
|
|
|
Capital |
Special |
Special |
Special |
|
|
|
Reserve |
Reserve |
Reserves |
Reserve |
|
|
|
2014 |
2014 |
2014 |
2013 |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
At 1 October |
- |
58,163 |
58,163 |
58,163 |
|
|
Cancellation of Share Premium (note 11) |
36,621 |
- |
36,621 |
- |
|
|
Transfer to Capital Reserve (note 13) |
(31,243) |
- |
(31,243) |
- |
|
|
Costs of cancellation of Share Premium |
(31) |
- |
(31) |
- |
|
|
Shares bought back during year into treasury |
- |
(7,002) |
(7,002) |
- |
|
|
Shares issued during the year from treasury |
- |
5,416 |
5,416 |
- |
|
|
|
________ |
________ |
________ |
________ |
|
|
At 30 September |
5,347 |
56,577 |
61,924 |
58,163 |
|
|
|
________ |
________ |
________ |
________ |
|
|
On 29 August 2014, following the Special Resolution passed at the Annual General Meeting held on 23 January 2014, the Court of Session in Scotland approved the cancellation of the Share Premium Account and the creation of a Distributable Capital Reserve from the balance of the Share Premium Account. The Special Reserve was created on 1 October 2010 by a similar court process. The purpose of the Distributable Capital Reserve and the Special Reserve are to fund market purchases by the Company of its own shares, to make bonus issues of shares and to make distributions in accordance with the Companies Act. |
||||
.
|
|
|
|
|
|
|
|
2014 |
2013 |
|
13. |
Capital reserve |
£'000 |
£'000 |
|
|
At 1 October |
(36,200) |
(37,727) |
|
|
Net gains on sales of investments during the year |
4,964 |
2,214 |
|
|
Finance costs of borrowings |
(10) |
(10) |
|
|
Investment management fee |
(728) |
(677) |
|
|
Currency losses |
(4) |
- |
|
|
Transfer from Special Reserve (note 12) |
31,243 |
- |
|
|
|
________ |
________ |
|
|
At 30 September |
(735) |
(36,200) |
|
|
|
________ |
________ |
|
|
|
|
|
|
|
Investment holdings gains |
|
|
|
|
At 30 September |
23,300 |
14,356 |
|
|
Investment gains |
4,621 |
8,943 |
|
|
Unrealised currency gains |
- |
1 |
|
|
|
________ |
________ |
|
|
|
27,921 |
23,300 |
|
|
|
________ |
________ |
|
|
Total capital reserve |
27,186 |
(12,900) |
|
|
|
________ |
________ |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
2013 |
|
14. |
Revenue reserve |
|
|
£'000 |
£'000 |
|
|
At 1 October |
|
|
3,569 |
2,371 |
|
|
Transfer to revenue account net of dividends |
|
|
112 |
1,198 |
|
|
|
|
|
______ |
______ |
|
|
At 30 September |
|
|
3,681 |
3,569 |
|
|
|
|
|
______ |
______ |
|
15. |
Risk management, financial assets and liabilities |
|||||||||||||||||||
|
|
Risk management |
|||||||||||||||||||
|
|
With effect from 17 September 2009, the Company's objective changed to that of providing shareholders with an attractive income yield and the prospect of income and capital growth through investing in a portfolio of predominately UK equities. |
|||||||||||||||||||
|
|
In pursuit of the Company's objective, the Company's investment policy is to invest in a portfolio of predominately UK equities. Equities are selected for their inclusion within the portfolio solely on the basis of the strength of the investment case with the focus being on long term income growth along with capital preservation. |
|||||||||||||||||||
|
|
Asset classes other than equities will be purchased from time to time and will vary as opportunities are identified and will include convertibles, preference shares, fixed income securities and corporate bonds. Such investments will be made when prospective returns appear to be superior to those from equity markets or are considered likely to exceed the Company's borrowing costs. However, non-equity securities will not constitute the majority of the portfolio. The Company may also use derivatives for the purpose of efficient portfolio management (including reducing, transferring or eliminating investment risk in its investments and protection against currency risk), to exploit an investment opportunity and to achieve capital growth. During the current and prior year no derivatives were utilised. |
|||||||||||||||||||
|
|
The management of the portfolio is conducted according to investment guidelines, established by the Board after discussion with the Manager, which specify the limits within which the Manager is authorised to act. |
|||||||||||||||||||
|
|
Financial assets and liabilities |
|||||||||||||||||||
|
|
The Company's financial assets include investments, cash at bank and short-term debtors. Financial liabilities consist of short-term creditors and bank overdraft. |
|||||||||||||||||||
|
|
The main risks the Company faces from its financial instruments are (i) market risk (comprising interest rate risk, foreign currency risk and other price risk), (ii) liquidity risk and (iii) credit risk. |
|||||||||||||||||||
|
|
(i) |
Market 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, foreign currency risk and other price risk. |
||||||||||||||||||
|
|
|
Interest rate risk |
|
|
|
|
|
|
||||||||||||
|
|
|
The Company is subject to interest rate risk because the value of fixed interest rate securities is linked to underlying bank rates or equivalents, and its short-term borrowings and cash resources carry interest at floating rates. The interest rate profile is managed as part of the overall investment strategy of the Company. |
||||||||||||||||||
|
|
|
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. |
||||||||||||||||||
|
|
|
Interest rate profile |
||||||||||||||||||
|
|
|
The interest rate risk profile of the portfolio of financial assets at the Balance Sheet date was as follows (there were no interest bearing financial liabilities at the Balance Sheet dates): |
||||||||||||||||||
|
|
|
|
|
|
Weighted |
|
|
|||||||||||||
|
|
|
|
|
|
average |
|
|
|||||||||||||
|
|
|
|
|
|
interest |
Fixed |
Floating |
|||||||||||||
|
|
|
|
|
|
rate |
rate |
rate |
|||||||||||||
|
|
|
As at 30 September 2014 |
|
|
% |
£'000 |
£'000 |
|||||||||||||
|
|
|
Assets |
|
|
|
|
|
|||||||||||||
|
|
|
Cash |
|
|
- |
- |
2,755 |
|||||||||||||
|
|
|
|
|
|
________ |
______ |
________ |
|||||||||||||
|
|
|
Total assets |
|
|
- |
- |
2,755 |
|||||||||||||
|
|
|
|
|
|
________ |
______ |
________ |
|||||||||||||
|
|
|
|
|
|
Weighted |
|
|
|||||||||||||
|
|
|
|
|
|
average |
|
|
|||||||||||||
|
|
|
|
|
|
interest |
Fixed |
Floating |
|||||||||||||
|
|
|
|
|
|
rate |
rate |
rate |
|||||||||||||
|
|
|
As at 30 September 2013 |
|
|
% |
£'000 |
£'000 |
|||||||||||||
|
|
|
Assets |
|
|
|
|
|
|||||||||||||
|
|
|
UK preference shares |
|
|
- |
378 |
- |
|||||||||||||
|
|
|
Cash |
|
|
- |
- |
4,243 |
|||||||||||||
|
|
|
|
|
|
________ |
______ |
________ |
|||||||||||||
|
|
|
Total assets |
|
|
- |
378 |
4,243 |
|||||||||||||
|
|
|
|
|
|
________ |
______ |
________ |
|||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The cash assets consist of cash deposits on call earning interest at prevailing market rates. Short-term debtors and creditors have been excluded from the above tables. |
||||||||||||||||||
|
|
|
Maturity profile |
|
|
|
|
|
|
||||||||||||
|
|
|
The maturity profile of the Company's financial assets and liabilities at the Balance Sheet date was as follows: |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
Within |
Within |
Within |
Within |
Within |
More than |
||||||||||||
|
|
|
|
1 year |
1-2 years |
2-3 years |
3-4 years |
4-5 years |
5 years |
||||||||||||
|
|
|
At 30 September 2014 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||||||||||||
|
|
|
Fixed rate |
|
|
|
|
|
|
||||||||||||
|
|
|
UK preference shares |
- |
- |
- |
- |
- |
- |
||||||||||||
|
|
|
|
________ |
_____ |
______ |
________ |
______ |
________ |
||||||||||||
|
|
|
Floating rate |
|
|
|
|
|
|
||||||||||||
|
|
|
Cash |
2,755 |
- |
- |
- |
- |
- |
||||||||||||
|
|
|
|
________ |
_____ |
______ |
________ |
______ |
________ |
||||||||||||
|
|
|
Total |
2,755 |
- |
- |
- |
- |
- |
||||||||||||
|
|
|
|
________ |
_____ |
______ |
________ |
______ |
________ |
||||||||||||
|
|
|
|
Within |
Within |
Within |
Within |
Within |
More than |
||||||||||||
|
|
|
|
1 year |
1-2 years |
2-3 years |
3-4 years |
4-5 years |
5 years |
||||||||||||
|
|
|
At 30 September 2013 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||||||||||||
|
|
|
Fixed rate |
|
|
|
|
|
|
||||||||||||
|
|
|
UK preference shares |
- |
- |
- |
- |
- |
378 |
||||||||||||
|
|
|
|
________ |
_____ |
______ |
________ |
______ |
________ |
||||||||||||
|
|
|
Floating rate |
|
|
|
|
|
|
||||||||||||
|
|
|
Cash |
4,243 |
- |
- |
- |
- |
- |
||||||||||||
|
|
|
|
________ |
_____ |
______ |
________ |
______ |
________ |
||||||||||||
|
|
|
Total |
4,243 |
- |
- |
- |
- |
378 |
||||||||||||
|
|
|
|
________ |
_____ |
______ |
________ |
______ |
________ |
||||||||||||
|
|
|
Interest rate sensitivity |
||||||||||||||||||
|
|
|
The sensitivity analysis below has been determined based on the exposure to interest rates 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 50 basis points higher or lower and all other variables were held constant, the Company's: |
||||||||||||||||||
|
|
|
- |
profit before tax for the year ended 30 September 2014 would increase/decrease by £14,000 (2013 - increase/decrease by £21,000) given 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. |
|||||||||||||||||
|
|
|
- |
profit before tax for the year ended 30 September 2014 would decrease by £0 (2013 - decrease by £8,000), increase by £0 (2013 - increase by £9,000) given the Company's exposure to interest rates on its fixed interest securities. |
|||||||||||||||||
|
|
|
- |
net assets at 30 September 2014 would increase by £14,000 (2013 - increase by £13,000), decrease by £14,000 (2013 - decrease by £12,000) as a result of the combined effect on its floating rate cash balances and its fixed interest securities. |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
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 proportion of the Company's investment portfolio is invested in overseas securities and the income and capital value can be affected by movements in exchange rates. Exchange gains or losses may arise as a result of the movement in the exchange rate between the date of the transaction denominated in a currency other than sterling and its settlement. |
||||||||||||||||||
|
|
|
An analysis of the Company's currency exposure is detailed below: |
||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
30 September 2014 |
30 September 2013 |
||||||||||||||||
|
|
|
|
|
Net |
|
Net |
||||||||||||||
|
|
|
|
Overseas |
monetary |
Overseas |
monetary |
||||||||||||||
|
|
|
|
investments |
assets |
investments |
assets |
||||||||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
||||||||||||||
|
|
|
US Dollar |
12,598 |
132 |
12,469 |
147 |
||||||||||||||
|
|
|
Swiss Franc |
2,947 |
- |
2,374 |
- |
||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
||||||||||||||
|
|
|
Total |
15,545 |
132 |
14,843 |
147 |
||||||||||||||
|
|
|
|
_______ |
_______ |
_______ |
_______ |
||||||||||||||
|
|
|
Foreign currency sensitivity |
||||||||||||||||||
|
|
|
There is no sensitivity analysis included, as the Company's significant foreign currency financial instruments are in the form of equity investments, which have been included within the other price risk sensitivity analysis so as to show the overall level of exposure. |
||||||||||||||||||
|
|
|
Other price risk |
||||||||||||||||||
|
|
|
Other price risks (i.e. changes in market prices other than those arising from interest rate 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 sector. The allocation of assets to specific sectors and the stock selection process 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 all listed on recognised investment exchanges. |
||||||||||||||||||
|
|
|
Other price sensitivity |
||||||||||||||||||
|
|
|
If market prices at the Balance Sheet date had been 10% higher or lower on a sterling basis while all other variables remained constant, the return attributable to Ordinary shareholders and equity reserves for the year ended 30 September 2014 would have increased/decreased by £15,066,000 (2013 - increase/decrease of £14,086,000). This is based on the Company's equity portfolio held at each year end. |
||||||||||||||||||
|
|
(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 overdraft facilities. Liabilities at the balance sheet date are payable within three months. |
||||||||||||||||||
|
|
(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: |
||||||||||||||||||
|
|
|
- |
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. Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company's custodian bank ensures that the counterparty to any transaction entered into by the Company has delivered on its obligations before any transfer of cash or securities away from the Company is completed; |
|||||||||||||||||
|
|
|
- |
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 Administrator carries out a stock reconciliation to the Custodian's records on a monthly basis to ensure discrepancies are picked up on a timely basis; |
|||||||||||||||||
|
|
|
- |
cash is held only with reputable banks and financial institutions with high quality external credit ratings. None of the Company's financial assets is secured by collateral or other credit enhancements. |
|||||||||||||||||
|
|
|
Credit risk exposure |
||||||||||||||||||
|
|
|
In summary, compared to the amounts in the Balance Sheet, the maximum exposure to credit risk at 30 September was as follows: |
||||||||||||||||||
|
|
|
|
2014 |
2013 |
||||||||||||||||
|
|
|
|
Balance |
Maximum |
Balance |
Maximum |
||||||||||||||
|
|
|
|
Sheet |
exposure |
Sheet |
exposure |
||||||||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
||||||||||||||
|
Non-current assets |
|
|
|
|
||||||||||||||||
|
Securities at fair value through profit or loss |
- |
- |
- |
- |
||||||||||||||||
|
Current assets |
|
|
|
|
||||||||||||||||
|
Accrued income |
690 |
690 |
684 |
684 |
||||||||||||||||
|
Other debtors |
737 |
737 |
- |
- |
||||||||||||||||
|
Cash and short term deposits |
2,755 |
2,755 |
4,243 |
4,243 |
||||||||||||||||
|
|
|
|
________ |
________ |
________ |
________ |
||||||||||||||
|
|
|
|
4,182 |
4,182 |
4,927 |
4,927 |
||||||||||||||
|
|
|
|
________ |
________ |
________ |
________ |
||||||||||||||
|
None of the Company's financial assets is past due or impaired. |
||||||||||||||||||||
|
Fair value of financial assets and liabilities |
||||||||||||||||||||
|
The book value of cash at bank included in these financial statements approximates to fair value because of the short-term maturity. The carrying value of fixed asset investments are stated at their fair values, which have been determined with reference to quoted market prices. For all other short-term debtors and creditors, their book values approximate to fair value because of their short-term maturity. |
||||||||||||||||||||
|
Gearing |
||||||||||||||||||||
|
The Company has in place arrangements which would enable it to augment finance by obtaining short term credit facilities. |
||||||||||||||||||||
|
The Company had no outstanding gearing at the year end. The profile of financing costs is managed as part of overall investment strategy. The employment of gearing magnifies the impact on net assets of both positive and negative changes in the value of the Company's portfolio of investments. |
||||||||||||||||||||
|
16. |
Capital management policies and procedures |
||||
|
|
The Company's capital management objectives are: |
||||
|
|
- |
to ensure that the Company will be able to continue as a going concern; and |
|||
|
|
- |
to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital and debt. |
|||
|
|
The Company's capital at 30 September comprised: |
||||
|
|
|
2014 |
2013 |
||
|
|
|
£'000 |
£'000 |
||
|
|
Equity share capital |
60,514 |
60,514 |
||
|
|
Retained earnings and other reserves |
92,877 |
85,264 |
||
|
|
|
________ |
________ |
||
|
|
|
153,391 |
145,778 |
||
|
|
|
________ |
________ |
||
|
|
The Board, with the assistance of the Manager and the AIFM, monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes: |
||||
|
|
- |
the planned level of gearing, which takes account of the Manager's views on the market; |
|||
|
|
- |
the need to buy back equity shares for cancellation or to hold in treasury, which takes account of the difference between the net asset value per share and the share price (i.e. the level of share price discount or premium); |
|||
|
|
- |
the need for new issues of equity shares; and |
|||
|
|
- |
the extent to which revenue in excess of that which is required to be distributed should be retained. |
|||
|
|
The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period.
|
||||
|
|
The Company had no gearing at the year end (2013 - nil). |
||||
|
17. |
Commitments and contingencies |
|
|
At 30 September 2014 there were no contingent liabilities in respect of outstanding underwriting commitments or uncalled capital (2013 - £nil). |
|
18. |
Financial instruments measured at Fair Value |
||||||||
|
|
|
|
|
|
2014 |
|
|
|
2013 |
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Investments |
150,656 |
- |
- |
150,656 |
141,239 |
- |
- |
141,239 |
|
|
Cash and cash equivalents |
2,755 |
- |
- |
2,755 |
4,243 |
- |
- |
4,243 |
|
|
|
______ |
_____ |
______ |
______ |
______ |
_____ |
______ |
______ |
|
|
|
153,411 |
- |
- |
153,411 |
145,482 |
- |
- |
145,482 |
|
|
|
______ |
_____ |
______ |
______ |
______ |
_____ |
______ |
______ |
|
|
Level 1 reflects financial instruments quoted in an active market. |
||||||||
|
|
Level 2 reflects financial instruments the fair value of which is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables includes only data from observable markets. |
||||||||
|
|
Level 3 reflects financial instruments the fair value of which is determined in whole or in part using a valuation technique based on assumptions that are not supported by prices from observable market transactions in the same instrument and not based on available observable market data. |
||||||||
|
19. |
Notes to the Cash Flow Statement |
||||
|
|
(a) Reconciliation of operating profit to operating cash flows |
||||
|
|
|
2014 |
2013 |
||
|
|
|
£'000 |
£'000 |
||
|
|
Profit before taxation |
14,237 |
15,760 |
||
|
|
Add interest payable |
15 |
15 |
||
|
|
Adjustments for: |
|
|
||
|
|
Gains on investments |
(9,585) |
(11,157) |
||
|
|
Currency losses/(gains) |
4 |
(1) |
||
|
|
Decrease/(increase) in accrued income and prepayments |
5 |
(35) |
||
|
|
Decrease in trade and other payables |
(14) |
(52) |
||
|
|
|
________ |
________ |
||
|
|
|
4,662 |
4,530 |
||
|
|
|
________ |
________ |
||
|
|
|
|
|
||
|
|
(b) Analysis of changes in net funds |
||||
|
|
|
30 September |
Cash |
Exchange |
30 September |
|
|
|
2013 |
Flow |
Movements |
2014 |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Cash at bank |
4,243 |
(1,484) |
(4) |
2,755 |
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
||
|
20. |
Related party transactions |
|
|
The following are considered to be related parties: |
|
|
- The Directors of the Company |
|
|
All material related party transactions, as set out in International Accounting Standard 24, Related Party, have been disclosed in the Strategic and Directors Report extracts and in 4 above. |
|
21. |
Alternative Investment Fund Managers Directive (AIFMD) |
||||
|
|
In accordance with the AIFMD, information in relation to the Company's leverage and the remuneration of the Company's AIFM, Personal Assets Trust Administration Company Ltd ("PATAC"), is required to be made available to investors. In accordance with the Directive, the AIFM's remuneration policy is available from PATAC on request and the numerical remuneration disclosures in respect of the AIFM's first relevant reporting period (year ending 30 April 2016) will be made available in due course. |
||||
|
|
The Company's maximum and actual leverage levels at 30 September 2014 are as follows: |
||||
|
|
|
|
|
Gross |
Commitment |
|
|
|
|
|
Method |
Method |
|
|
Maximum limit |
|
|
200% |
200% |
|
|
Actual |
|
|
98% |
100% |
|
Additional Notes to the Annual Financial Report
This Annual Financial Report announcement is not the Company's statutory accounts for the year ended 30 September 2014. The statutory accounts for the year ended 30 September 2014 received an audit report which was unqualified.
The statutory accounts for the financial year ended 30 September 2014 were approved by the Directors on 26 November 2014 but will not be filed with the Registrar of Companies until after the company's Annual General Meeting which is to be held at 11.00am on 21 January 2015 at 16 Charlotte Square, Edinburgh, EH2 4DF.
The Annual Report will be posted to shareholders in December 2014 and available in due course by download from the Company's webpage (http://tigt.co.uk/secure/documents/annual/TIGTAnnual2014.pdf)
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. Investors may not get back the amount they originally invested.
For Troy Income & Growth Trust plc Steven Cowie, C.A., Secretary 26 November 2014 Enquiries: 0131 538 6610 |
This information is provided by RNS
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