Final Results

I enclose the results for the year ended 31 December 2012. The salient points are as follows:

Review of 2012

Capital Gains

Portfolio Review

Dividend

The Board is pleased to recommend an increased annual dividend of 5p per ordinary share (2011: 4.95p). This represents an increase of 1 per cent over the previous year. Subject to shareholder approval at the Annual General Meeting on 9 April 2013, the dividend will be paid on 12 April 2013 to shareholders on the register on 21 March 2013.

For those patient investors who subscribed for Athelney Trust shares in the IPO of 1994, the annual return has now risen to 10 per cent net of basic rate tax on the capital originally invested.

Update

RNS Number : 5366Z

Athelney Trust PLC

08 March 2013

Embargoed 7am March 8 2013

ATHELNEY TRUST: RESULTS FOR YEAR

ENDED DECEMBER 31 2012

Athelney Trust plc, the investor in small companies and junior markets, announces its results for the year ended December 31 2012.

Main points:

· Audited Net Asset Value up 21.1 per cent at 149p per share (2011: 123p)

· Revenue return per ordinary share unchanged at 5.4p (2011: 5.4p)

· Recommended final dividend of 5p per share (2011: 4.95p)

· Unaudited NAV at 28 February 2013 160.9p

Athelney Chairman, Hugo Deschampsneufs said: "Small caps had a very good year with the Small Cap Index up a powerful 24.4 per cent, the Fledgling by 19.8 per cent but AIM rose only by 2.2 per cent.

"For the year as a whole, Athelney increased by 21.1 per cent with 44 per cent, 14 per cent and 39 per cent invested in the Small Cap, Fledgling and AIM indices respectively, the blended average comes out at 17.6 per cent, so one is relatively pleased by the overall result despite another poor result from AIM.

"Markets from London to Tokyo to New York hit multi-year highs in January and the VIX, known as the fear gauge, fell to its lowest since 2007. Is all this optimism justified? There is a gap between market optimism and economic reality and with more austerity ahead and credit tight, it is hard to see much growth in the UK and continental Europe.

"Markets may improve this year on hopes of a better 2014 and blue-chips may outperform small caps, but cautious optimism feels right to me rather than anything stronger".

-ends-

For further information:

Robin Boyle, Managing Director

Athelney Trust plc 020 7628 7937

Paul Quade 020 7248 8010

CityRoad Communications 07947 186694

CHAIRMAN'S STATEMENT AND BUSINESS REVIEW

· Audited Net Asset Value ("NAV") was 149.1p per share (31 December 2011: 123p) an increase of 21.1 per cent.

· Revenue return per ordinary share was 5.4p, (31 December 2011: 5.4p).

· Recommended final dividend of 5p per share (2011: 4.95p), an increase of 1 per cent.

We all know what to do, we just don't know how to get re-elected after we have done it. - Jean-Claude Juncker, prime minister of Luxembourg.

Insanity: doing the same thing over and over again and expecting different results - Albert Einstein.

To be broke is not a disgrace, it is only a catastrophe. Nero Wolfe, The League of Frightened Men by Rex Stout (1935).

Think how much barbarism there is around us, from the brutal savagery of the gutter to the cunning savagery of the Stock Exchange! George Gissing, The Crown of Life (1899).

Let's first have a look at some performance numbers for the year 2012 - and really good they are, too. Taking the major markets, Tokyo, New York, London and Shanghai rose by 22.9 per cent, 9.8 per cent, 8.2 per cent and 3.1 per cent respectively. Best performers among the minor markets were Venezuela +303 per cent, Egypt +55.5 per cent and Turkey + 55.3 per cent. In fact, the only market that I could find which actually fell last year was Spain and that only by 0.6%. Back to London, where small caps had a very good year, with the Small Cap Index up by a powerful 24.4%, Fledgling by 19.8% but the real tiddlers, as represented by the AIM index, rose only by 2.2% (more of this later). For the year as a whole, the Athelney Trust NAV increased by 21.1 per cent so, with 44 per cent, 14 per cent and 39 per cent invested in Small Cap, Fledgling and AIM indices respectively, the blended average comes out at 17.6 per cent so one is relatively pleased by the overall result despite another poor result from AIM.

Over the past 17 years since AIM started, the total return from the index of all its constituents has been minus 1.9 per cent a year and, obviously, worse if adjusted for inflation. Critics often say that the poor performance might be due to AIM's preponderance of small oil, gas and mining companies (in which Athelney does not invest) but that cannot explain away 17 poor years. Two passing thoughts: one, that the average dividend yield is only 0.8 per cent (although the ten largest of Athelney's AIM holdings actually yield 4.3 per cent on average) and; two, that AIM shares are more volatile than those on the main market.

Many AIM companies are very small and have founder-managers who retain large stakes so are not traded easily: in fact, 37 per cent of AIM companies are traded less than once a day. Such volatility may put off potential investors. Again, investors originally probably put too high a value on AIM's growth potential, which encouraged too many of the wrong sort to come to market. Many of the worst and smallest businesses have left AIM and valuations of the balance are much more realistic so, to my mind, performance in future should pick up markedly.

But much of the good performance of major markets was, in my opinion, due to everyone's favourite central banker, Mario Draghi. Yes, I would certainly give credit to the president of the European Central Bank for his whatever it takes to save the euro comment in July, although his second sound-bite that same day, this time in London, was even more helpful - and, believe me, it will be enough. Mr. Draghi achieved two things. The euro stopped sliding against

the dollar: indeed, the exchange rate has recovered sharply from $1.20 in the summer to just over $1.30. Bond yields moved sharply down for Italy and Spain in particular with 10-year bonds for the former down from 7% to 4.5% and the latter from 7.5% to 5.2%.

However, words alone will not keep the Eurozone together. Investors worry about the level of complacency that sets in whenever Eurozone leaders make the slightest bit of progress. It is simply not good enough to have the ECB standing on the side-lines ready to wade into debt markets when the next stage of the crisis occurs, which it undoubtedly will. The Eurozone will remain in recession for most of 2013 and, meanwhile, the ability of bailed-out countries to meet ever more demanding targets (see Albert Einstein's quote above) must be in doubt. Mr. Draghi has taken the Eurozone a step towards safety but there are many more to take.

I particularly liked the news story about the American software developer working for Verizon who outsourced his job to China for about 10 per cent of what he was being paid. Could I do the same?

To: Chairman, Athelney Trust plc

From: Rent-a Riter .com

Thank you for selecting Rent-a Riter.com to write your chairman's reports. As agreed, we will provide you with two commentaries per year on corporate, economic and market news for £2,500 per annum. Please confirm the following template: funny introduction, outline consensus view, state why that view is wrong, set out alternative, list arguments for and against, end with funny pay-off line which refers back to introduction.

Perhaps not…….

For the first time since the 1950s, we learnt last year that UK pension funds held more bonds (aka fixed interest stocks) than equities. In 1956, though, George Ross Goobey, manager of Imperial Tobacco's pension fund, gave a landmark speech at the conference of the Association of Superannuation and Pension Funds. He reminded delegates that it was possible to lose money in British Government stocks and that it made sense for equities to yield less than bonds because the latter was being gradually undermined by inflation whereas equity dividends should increase in line with rising prices.

Studies going back 80 years and including several depressions show that shares have increased in value at a rate which offsets the long-term rate of inflation and, on top of this, have shown a real yield in terms of purchasing power of about 4-5%, he said. One by one, speakers stood up to make the contrary argument - interest payments on gilts are not passed or cut etc. etc. In the following years, Goobey was shown to be correct and on 27 August 1959 the yield on 2.5% Consols was 4.77% and that of the FT 30 Index 4.76% - the so-called reverse yield gap had arrived.

The pension funds had already got the message: in 1958, Manchester Corporation started buying dividend yields of 7% and others rapidly followed. The market rose by 122% between 1958 and 1960. Not everyone was happy with that, the public has been sold a pup said a prominent chartist. He was wrong and the market rose by 49% from June 1962 to October 1964 and, apart from a few blips, the reverse yield gap stayed until 2008 when QE (quantitative easing) and plain fear forced bond yields to historic lows.

Today, the equity market yields 3.6% net of basic rate tax compared with the 2.1% before tax on a 10-year gilt. Today's world is very different from that of the 1950s but the two important questions have remained all these years: will there be inflation and do you trust the government to protect the purchasing power of your savings and investments? How about yes and no respectively? In 1956, I hope that you would have chosen equities and in 2013 you should do the same.

Many pundits see China as an attractive place to invest in 2013 and I can at least see why. The market has been depressed for even longer than our equity markets in the West, being down by about 40 per cent since 1992 but having bounced strongly in the fourth quarter of 2012. Ratings seem relatively good value and local investors have ceased that crazy speculation on borrowed money that made the local stock market look so dangerous to conservative investors. Yes, I grant that the present rally in prices may well continue for the time being but, longer term, I retain my doubts.

Any study of financial cycles shows that a combination of strong credit growth and rapidly rising property prices provides an indicator, not of strength, but of financial fragility. China is currently experiencing a huge boom in credit: in the five years to 2012, the country's rate of debt to GDP rose by about 60 per cent - a much larger increase than that experienced by either the U.S. prior to 2008 or Japan in the second half of the 1980s.

Reckless credit expansion produces unsustainable growth and results in the misallocation of capital: such malinvestment (as our Austrian economist friends would say) is generally accompanied by a property bubble. China resembles a vast building site (62 new airports to be built this year) with land prices in Shanghai and Beijing up by five times since 2005. No-one can tell when the cycle will peak - all I know is that the longer this boom lasts the harder the landing will be.

As an appendix to the above, I was interested to read a recent news story about Chinese government officials who have been panicked into a fire sale of their illicit properties by the introduction of a house registration system. Until recently, a bribe was paid in property not cash with that property put into a relative's name and only sold after six months. Apparently, 714 such officials fled the country last October during the holidays to buy properties in the Cayman Islands and the U.S. and start a new life. Some high-end houses are now being deliberately designed for fleeing Chinese with ponds for koi carp and second kitchens for, er, pungent cooking.

Every computer-user knows the feeling of dread when a new piece of software causes the entire system to crash. On 1 August, Knight Capital, a U.S. stockbroker, started to use a new software programme to execute its trades. Within an hour, the programme had reduced the entire market to a shambles, sending wrong buy and sell orders which cost Knight Capital $440m to sort out and forcing its shareholders to accept a rescue bid just five days later. This was just the latest in a series of glitches linked to computerised trading, the most serious of which was the so-called flash-crash of May 2010 on which I commented unfavourably at the time.

The financial world needs markets to allocate capital so as to reward good companies with a higher share price but high frequency traders are seeking to benefit from tiny changes in price and are not interested in a company's future prospects. Such traders might well be dealing in cigarette cards. What we need is an expansion of the circuit-breaker introduced in 1987 in response to Black Monday, when the market fell by 23 per cent in a day. The most successful investor in my life-time, Warren Buffett, says his ideal holding period for a share is for ever. Surely it would not harm investors unduly if they have to wait a second or two before dealing.

I am indebted to Lucy Kellaway of the pinko paper for the following Mangled Meanings by Management for 2012:-

· In the wholesale channel, Burberry exited doors not aligned with brand status and invested in presentation through both enhanced assortments and dedicated, customised real estate in key doors. (Funny, I thought Burberry made clothing not doors).

· We have made substantial progress against our strategic objectives. (Lloyds).

· I've got some slides to talk to…..(No-one listening?)

· What is a Head Inventiologist?

· Optimizing the customer footprint across geographies. (Citibank sacking 1,100 employees).

· Stockbroker Religare described a fall in profits at United Spirits as Ebitda de-grew by 23.3 per cent.

· Finally, You have to appreciate that the milestones we have set in these swim lanes provide a road map for this flow chart. When we get to toll gates, we'll assess where you sit in the waterfall……..

Is a fraudster the victim of circumstances or does he give in to bad impulses that others suppress? Probably a little of both: Kweku Adoboli was jailed for seven years on 10 November for a banking fraud leading to a $2.3bn loss. Adoboli was a reckless gambler and a liar - he used his position as a trader to defraud billions from Swiss banking employer UBS. Having said that, the penitent and tearful Adoboli is an expression of a dysfunctional investment banking culture that cries out for reform. In better times, one line manager praised him for making $6m before ticking him off for breaking his dealing limits in the process!

Adoboli worked on the Exchange Trade Funds desk which, apparently combines servicing bank clients and prop trading, i.e. making bets on behalf of UBS. Such a combination is quite common but, nevertheless, the thought of it makes me feel rather queasy. Like predecessors Nick Leeson and Jerome Kerviel, Adoboli moved out of the back office to the trading desk, presumably bringing with him a knowledge of systems useful when concealing escalating losses. Perhaps it is better for such box-wallahs and paper-shufflers to follow a completely separate career path.

On 23 November, Psy, a rather chubby South Korean pop star, claimed the title for the most-watched online video of all time. His rodeo-dancing Gangnam Style clip was viewed more than 805m times. His sudden success tells us that video has become the dominant form of online content. Three years ago such entertainment was less than 30 per cent of peak-time internet traffic in America - that share has now doubled, whereas web-browsing has sunk by two-thirds. Just as I was getting the hang of it……

Many international companies that appear to be operating successfully in Britain pay little or no corporation tax here. It is not difficult to understand why ordinary people being paid wages and salaries and small British companies that pay tax at the normal rate on their profits are angry. But the origin of the problem is easier to describe than to solve. If a business operates in many countries and makes a profit, in which country is the profit earned? The old rule that the profit belongs to the country in which the business is managed or headquartered does not work very well because it is often hard to identify exactly where that is. Moreover, if it is highly profitable, then countries all over the world will want to tax it. Profits are therefore often tucked away in tax havens - then there is the case of the Scotch whisky brands which are apparently owned by companies based in the Netherlands.

This is all a familiar problem to tax collectors in America where States deal with the issue through apportionment. Instead of attempting to estimate what percentage of a company's profit was earned in, say, California or Nevada, States use the Massachusetts Formula which gives equal weight to sales, payroll and assets as well as profits. Unfortunately, America agreed to keep apportionment within its own boundaries after a long and successful campaign by the Brutish government and business in the mid-1980s. So a global agreement on apportionment would seem like the only sensible way forward, perhaps through the G8 or G20.

Results

Number

Companies paying dividends 79

Companies sold (therefore no true comparison) 15

Companies purchased (therefore no true comparison) 9

Increased total dividends in the year 33

Reduced total dividends in the year 15

No change in dividend 7

During the year the Company realised capital profits arising on the sale of investments in the sum of £183,707 (31 December 2011: £158,922).

Holdings of Abbey Protection, Greencore, Lok'n Store, NewRiver Retail, Photo-Me, Sweett Group, UTV Media and 4imprint were all purchased for the first time. Additional holdings of Air Partner, Chime Communications, Hansard Global, Huntsworth and Randall & Quilter were also acquired. Alumasc and Timeweave were sold. In addition, a total of twenty one holdings were top-sliced to provide capital for the new purchases.

UK Main Market listed investments

UK AIM listed investments

The unaudited NAV at 28 February 2013 was 160.9p whereas the share price on the same day stood at 130p. Further updates can be found on www.athelneytrust.co.uk

Prospects

Markets from London to Tokyo to New York hit multi-year highs in January and the VIX, known as the fear gauge, fell to its lowest since 2007. Is all this optimism justified? Up to a point, Lord Copper. There are three reasons for feeling more hopeful about the world economy: disasters such as the breaking up of the euro and the fiscal cliff in America have been avoided, the ECB, the Fed and the Bank of Japan have promised unlimited bond-buying and there is tentative evidence of accelerating economic growth. There is, though, a gap between market optimism and economic reality. In America, increased workers' payroll taxes will choke off demand. The single currency area may not fracture but the IMF expects the euro-zone economy to contract by 0.2 per cent in 2013. Those on the periphery are mired in recession whereas even the core is looking a little weaker. With more financial austerity ahead and credit tight, it is hard to see much growth in the UK and continental Europe.

So, markets may improve this year on hopes of a better 2014 and blue-chips may out-perform small caps. but cautious optimism feels right to me rather than anything stronger.

H.B. Deschampsneufs

Chairman

8 March 2013

INCOME STATEMENT

(INCORPORATING THE REVENUE ACCOUNT)


			For the Year Ended 31 December 2012			For the Year Ended 31 December 2011

	Note		Revenue	Capital	Total	Revenue	Capital		Total
			£	£	£	£		£	£
Gains/(losses) on investments held at fair value		8	-	601,046	601,046	-		(293,815)	(293,815)
Income from investments		2	141,049	-	141,049	139,558		-	139,558
Investment Management expenses		3	(5,774)	(52,847)	(58,621)	(5,785)		(53,169)	(58,954)
Other expenses		3	(27,319)	(39,658)	(66,977)	(26,477)		(41,610)	(68,087)

Net return/(loss) on ordinary			107,956	508,541	616,497	107,296		(388,594)	(281,298)
activities before taxation

Taxation		5	-	-	-	-		-	-


Net return/(loss) on ordinary activities after taxation 6			107,956	508,541	616,497	107,296		(388,594)	(281,298)

Net return/(loss) per ordinary share		6	5.4p	25.6p	31.1p	5.4p		(19.5p)	(14.1p)


Dividend per ordinary share paid during the year 7			4.95p			4.9p

The total column of this statement is the profit and loss account for the Company.

All revenue and capital items in the above statement derive from continuing operations.

No operations were acquired or discontinued during the above financial years.

A statement of movements of reserves is given in note 12.

A Statement of Total Recognised Gains and Losses is not required as all gains and losses of the Company have been reflected in the above Statement.

The notes on pages 30 to 37 form part of these financial statements.

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

	Called-up		Capital	Capital		Total
	Share	Share	reserve	reserve	Revenue	Shareholders'
	Capital	Premium	realised	unrealised	reserve	Funds
	£	£	£	£	£	£
Balance brought forward at 1 January 2011	495,770	545,281	620,251	951,712	203,148	2,816,162
Transfer between capital reserves	-	-	(23,568)	23,568	-	-
Net profits on realisation
of investments	-	-	158,922	-	-	158,922
Decrease in unrealised
appreciation	-	-	-	(452,737)	-	(452,737)
Expenses allocated to
capital	-	-	(94,779)	-	-	(94,779)
Profit for the year	-	-	-	-	107,296	107,296
Dividend paid in year	-	-	-	-	(97,171)	(97,171)

Shareholders' Funds at 31 December 2011	495,770	545,281	660,826	522,543	213,273	2,437,693

Balance brought forward at 1 January 2012	495,770	545,281	660,826	522,543	213,273	2,437,693
Net profits on realisation
of investments	-	-	183,707	-	-	183,707
Increase in unrealised
appreciation	-	-	-	417,339	-	417,339
Expenses allocated to
capital	-	-	(92,505)	-	-	(92,505)
Profit for the year	-	-	-	-	107,956	107,956
Dividend paid in year	-	-	-	-	(98,162)	(98,162)

Shareholders' Funds at 31 December 2012	495,770	545,281	752,028	939,882	223,067	2,956,028

BALANCE SHEET AS AT 31 DECEMBER 2012

Note		2012	2011

		£	£
Fixed assets
Investments held at fair value through profit and loss	8	2,859,671	2,375,521

Current assets
Debtors	9	90,209	57,349
Cash at bank and in hand		21,369	19,954
		111,578	77,303

Creditors: amounts falling due within one year	10	(15,221)	(15,131)

Net current assets		96,357	62,172

Total assets less current liabilities		2,956,028	2,437,693

Provisions for liabilities and charges		-	-

Net assets		2,956,028	2,437,693


Capital and reserves
Called up share capital	11	495,770	495,770
Share premium account	12	545,281	545,281
Other reserves (non distributable)
Capital reserve - realised	12	752,028	660,826
Capital reserve - unrealised	12	939,882	522,543
Revenue reserve (distributable)	12	223,067	213,273

Shareholders' funds - all equity		2,956,028	2,437,693

Net Asset Value per share	14	149.1p	123p

Approved and authorised for issue by the Board of Directors on 6 March 2013.

R.G. Boyle

Director

CASHFLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2012

	2012		2011
	£	£	£	£

Net cash outflow from operating activities		(17,319)		(12,466)

Taxation
Corporation tax paid		-		-

Capital Expenditure and Financial Investment
Purchases of investments	(308,880)		(550,494)
Sales of investments	425,776		647,844


Net cash inflow from Capital Expenditure and Financial Investment		116,896		97,350

Equity dividends paid		(98,162)		(97,171)


Increase/(decrease) in cash in the year		1,415		(12,287)


Reconciliation of operating net revenue to
net cash outflow from operating activities		£		£

Revenue on ordinary activities before taxation		107,956		107,296
Increase in debtors		(32,860)		(25,104)
Increase in creditors		90		121
Investment management expenses charged to
capital		(52,847)		(53,169)
Other expenses charged to capital		(39,658)		(41,610)

Net Cash outflow from operating activities		(17,319)		(12,466)

Reconciliation of net cashflow to movement in net funds
		Net funds at		Net funds at
		31.12.2011	Cashflow		31.12.2012
		£	£		£
Cash at bank and in hand		19,954	1,415		21,369

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2012

1. Accounting Policies

1.1 Basis of Preparation of Financial Statements

The financial statements are prepared on a going concern basis under the historical cost convention as modified by the revaluation of investments held at fair value.

The financial statements are prepared in accordance with the Companies Act 2006, applicable UK accounting standards and the provisions of the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" (SORP) issued by the A.I.C. in January 2009.

1.2 Income

Income from investments including taxes deducted at source is recognised when the right to the return is established (normally the ex-dividend date). UK dividend income is reported net of tax credits in accordance with FRS 16 "Current Tax". Interest is dealt with on an accruals basis.

1.3 Investment Management Expenses

Of the two directors involved in investment management, 10% of their salaries have been charged to revenue and the other 90% to capital. All other investment management expenses have been charged to capital. The Board propose continuing this basis for future years.

1.4 Other Expenses

Expenses (including VAT) and interest payable are dealt with on an accruals basis and charged through the Revenue and Capital Accounts in an allocation that the Board consider to be a fair distribution of the costs incurred.

1.5 Investments

Listed investments comprise those listed on the Official List of the London Stock Exchange. Profits or losses on sales of investments are taken to realised capital reserve. Any unrealised appreciation or depreciation is taken to unrealised capital reserve.

Investments have been classified as "fair value through profit and loss" upon initial recognition.

Subsequent to initial recognition, investments are measured at fair value with changes in fair value recognised in the Income Statement.

Securities of companies quoted on a recognised stock exchange are valued by reference to their quoted bid prices at the close of the year.

1.6 Taxation

The tax effect of different items of income and expenses is allocated between capital and revenue on the same basis as the particular item to which it relates, using the Company's effective rate of tax for the year.

1.7 Deferred Taxation

Deferred tax is recognised in respect of all timing differences that have originated but not reversed by the balance sheet date. Deferred tax liabilities are recognised for all taxable timing differences but deferred tax assets are only recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax assets and liabilities are calculated at the tax rates expected to be effective at the time the timing differences are expected to reverse. Deferred tax assets and liabilities are not discounted.

1.8 Capital Reserves

Capital Reserve - Realised

Gains and losses on realisation of fixed asset investments are dealt with in this reserve.

Capital Reserve - Unrealised

Increases and decreases in the valuations of fixed asset investments are dealt with in this reserve.

1.9 Dividends

In accordance with FRS 21 "Events after the Balance Sheet Date", dividends are included in the financial statements in the year in which they are paid.

1.10 Share Issue Expenses

The costs associated with issuing shares are written off against any premium arising on the issue of Share Capital.

2. Income

Income from investments
	2012	2011
	£	£
UK dividend income	141,018	139,493
Bank interest	31	65

Total income	141,049	139,558

UK dividend income
	2012	2011
	£	£
UK Main Market listed investments	94,597	85,531
UK AIM listed investments	46,421	53,962

	141,018	139,493

3. Return on Ordinary Activities Before Taxation

	2012	2011
	£	£
The following amounts (inclusive of VAT) are included
within investment management and other expenses:

Directors' remuneration:
- Services as a director	17,500	17,500
- Otherwise in connection with management	45,000	45,000

Auditors' remuneration:
- Audit Services - Statutory audit	10,260	10,200
- Audit Services - Statutory audit movement on accruals from previous years	100	210

- Audit Services - Audit related regulatory reporting	1,050	1,050

Miscellaneous expenses:
- Other wages and salaries	31,307	30,365
- PR and communications	5,847	6,230
- Stock Exchange subscription	7,638	6,163
- Sundry investment management and other expenses	6,896	10,323

	125,598	127,041

4. Employees

	2012	2011
	£	£
Costs in respect of Directors:
Wages and salaries	62,500	62,500
Social security costs	5,583	5,729

	68,083	68,229

Costs in respect of administrator:
Wages and salaries	23,500	22,500
Social security costs	2,224	2,136

	25,724	24,636

Total:
Wages and salaries	86,000		85,000
Social security costs	7,807		7,865

	93,807		92,865


Average number of employees:
Chairman	1	1
Investment	2	2
Administration	1	1
	4	4

5. Taxation

(i) On the basis of these financial statements no provision has been made for corporation tax (2011: Nil).

(ii) Factors affecting the tax charge for the year

The tax charge for the period is the same as (2011:higher than) the average small company rate of corporation tax in the UK 20 per cent. The differences are explained below:

	2012			2011
	£		£

Total return/(loss) on ordinary activities before tax	616,497	(281,298)

Total return on ordinary activities multiplied by the average small company rate of corporation tax 20% (2011: 20.25%)	123,299	(56,963)

Effects of:
UK dividend income not taxable	(24,072)	(24,151)
Revaluation of shares not taxable	(83,468)	91,679
Capital gains not taxable	(36,741)	(32,182)
Unrelieved management expenses	20,982	21,617
Current tax charge for the year	-	-

The Company has unrelieved excess revenue management expenses of £67,123 at 31 December 2012 (2011: £43,155) and £102,597 (2011: £102,597) of capital losses for Corporation Tax purposes and which are available to be carried forward to future years. It is unlikely that the Company will generate sufficient taxable profits in the future to utilise these expenses and therefore no deferred tax asset has been recognised.

For the year ended 31 December 2011, the Company received approval from HM Revenue and Customs under Section 1158 of the Corporation Tax Act 2010, therefore the Company was not liable to Corporation Tax on any realised investment gains for 2011. The Directors intend to continue to meet the conditions required to obtain approval and therefore no deferred tax has been provided on any capital gains or losses arising on the revaluation or disposal of investments.

6. Return per Ordinary Share

The calculation of earnings per share has been performed in accordance with FRS 22 "Earnings Per Share".
	2012				2011
	£	£		£	£	£		£
	Revenue	Capital		Total	Revenue	Capital		Total
Attributable return/(loss) on
ordinary activities after taxation	107,956	508,541		616,497	107,296	(388,594)		(281,298)
Weighted average number of shares	1,983,081				1,983,081

Return per ordinary share	5.4p		25.6p	31.1p	5.4p		(19.5p)		(14.1p)

7. Dividend

	2012	2011
	£	£

Final dividend in respect of 2011 of 4.95p (2011: an interim dividend of 4.9p was paid in respect of 2010 ) per share	98,162	97,171

Set out below is the total dividend payable in respect of the financial year, which is the basis on which the requirements of Section 1158 of the Corporation Tax Act 2010 are considered.

It is recommended that a final dividend of 5p (2011: 4.95p) per ordinary share be paid amounting to a total of £99,154. For the year 2011, a final dividend of 4.95p was paid on 24 April 2012 amounting to a total of £98,162.

	2012	2011
	£	£

Revenue available for distribution	107,956	107,296
Final dividend in respect of financial year ended 31 December 2012	(99,154)	(98,162)
Undistributed Revenue Reserve	8,802	9,134

8. Investments

	2012	2011
	£	£
Movements in year
Valuation at beginning of year	2,375,521	2,766,686
Purchases at cost	308,880	550,494
Sales - proceeds	(425,776)	(647,844)
- realised gains on sales	183,707	158,922
Increase/(decrease) in unrealised appreciation	417,339	(452,737)

Valuation at end of year	2,859,671	2,375,521

Book cost at end of year	1,919,789	1,852,978
Unrealised appreciation at the end of the year	939,882	522,543

	2,859,671	2,375,521

8. Investments (continued)

Gains/(losses) on investments
	2012	2011
	£	£
Realised gains on sales	183,707	158,922
(Increase)/decrease in unrealised appreciation	417,339	(452,737)

	601,046	(293,815)

The purchase costs and sales proceeds above include transaction costs of £2,305 (2011: £5,355) and £1,719 (2011: £3,178) respectively.

9. Debtors

	2012	2011
	£	£
Investment transaction debtors	76,299	41,356
Other debtors	13,910	15,993

	90,209	57,349

10. Creditors: amounts falling due within one year

	2012	2011
	£	£
Social security and other taxes	2,975	3,049
Other creditors	172	930
Accruals and deferred income	12,074	11,152

	15,221	15,131

11. Called Up Share Capital

	2012	2011
	£	£
Authorised
10,000,000 Ordinary Shares of 25p	2,500,000	2,500,000

Allotted, called up and fully paid
1,983,081 Ordinary Shares of 25p	495,770	495,770
(2011: 1,983,081 Ordinary Shares of 25p)

12. Reserves

	2012
	Share	Capital	Capital
	premium	reserve	reserve	Revenue
	account	realised	unrealised	reserve
	£	£	£	£
Balance at 1 January 2012	545,281	660,826	522,543	213,273
Net gains on realisation of investments	-	183,707	-	-
Increase in unrealised appreciation	-	-	417,339	-
Expenses allocated to capital	-	(92,505)	-	-
Profit for the year	-	-	-	107,956
Dividend paid in year	-	-	-	(98,162)
Balance at 31 December 2012	545,281	752,028	939,882	223,067

13. Financial Instruments

The Company's financial instruments comprise equity investments, cash balances and debtors and creditors that arise directly from its operations, for example, in respect of sales and purchases awaiting settlement. Short term debtors and creditors are excluded from disclosure.

Fixed asset investments (see note 8) are valued at market bid price where available which equates to their fair values. The fair values of all other assets and liabilities are represented by their carrying values in the balance sheet.

The major risks associated with the Company are market and liquidity risk. The Company has established a framework for managing these risks. The directors have guidelines for the management of investments and financial instruments.

Market Risk

Market risk arises from changes in interest rates, valuations awarded to equities, movements in prices and the liquidity of financial instruments.

At the end of the year the Company's portfolio was invested in UK securities with the exception of 5.73 per cent, which was invested in overseas securities.

Liquidity Risk

Liquidity Risk is the risk that the Company may have difficulty in meeting obligations associated with financial liabilities. The Company has no borrowings; therefore there is no exposure to interest rate changes.

The company is able to reposition its investment portfolio when required so as to accommodate liquidity needs.

14. Net Asset Value Per Share

The net asset value per share is based on net assets of £2,956,028 (2011: £2,437,693) divided by 1,983,081 (2011: 1,983,081) ordinary shares in issue at the year end.