Annual Financial Report

RNS Number : 0841Q

Personal Assets Trust PLC

04 June 2018

 

To:                  RNS

From:              Personal Assets Trust plc

Date:               4 June 2018

Results for the year ended 30 April 2018

The Directors of Personal Assets Trust ("PAT") are pleased to announce the Group's results for the year ended 30 April 2018.

The key points are as follows:

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

·     Over the year to 30 April 2018 PAT's net asset value per share ("NAV") fell by 2.6%. This compares to a rise of 4.2% in the FTSE All-Share Index.  PAT's share price fell by £13.40 during the year and at 30 April 2018 was £392.00. An analysis of performance is provided in the Chairman's Statement and Investment Adviser's Report below.

·     Since PAT became independently managed in 1990 its NAV has increased by 585.0% compared to the FTSE All-Share's 295.7% and the RPI's 123.6%.

Capital returns to 30 April 2018:

	3 Years	5 Years	10 Years	Since 1990
NAV	11.0%	10.3%	50.8%	585.0%
FTSE All-Share	9.8%	21.8%	33.2%	295.7%
RPI	8.4%	12.1%	30.7%	123.6%

·     During the year the Company's shares continued to trade close to NAV. The Company issued 252,306 Ordinary shares.

·     During the year, PAT continued to maintain a high level of liquidity. At 30 April 2018, liquidity was 61.6%. This included 26.4% in UK T-Bills, UK cash, overseas cash, and net current liabilities and 35.2% in various classes of non-equity risk assets: 20.0% in US TIPS; 2.7% in US Treasuries; 8.9% in Gold Bullion; and 3.6% in UK Index-Linked Gilts. This compared to holdings as at 30 April 2017 of 20.9% in UK T-Bills, UK cash, and net current assets and 33.4% in various classes of non-equity risk assets: 19.3% in US TIPS; 10.0% in Gold Bullion; and 4.1% in UK Index-Linked Gilts.

·     Dividends are paid in July, October, January and April of each year. The first interim dividend of £1.40 per Ordinary share will be paid to shareholders on 13 July 2018. Barring unforeseen circumstances, three further interim dividends of £1.40 per Ordinary share are expected to be paid to shareholders in the year ending 30 April 2019, totalling £5.60 for the year.

The Chairman, Hamish Buchan, said:

"Personal Assets Trust's objective is simply stated. It is to protect and increase (in that order) the value of shareholders' funds per share (otherwise known as net asset value per share, or "NAV") over the long term. To us this means not just examining performance over five or ten years but going right back to 1990, when the Company became self-managed and so began its existence in its present form. Since 30 April 1990 the NAV has risen at an annual compound rate of 7.1% compared to 5.0% for the FTSE All-Share Index and 3.4% for the RPI. (The rise in share price at the higher annual compound rate of 8.5% is because at 30 April 1990 the shares sold at a discount to NAV of 30.3%.) Such an objective and timescale are not typical of investment trusts in general and so the Board believes it essential for existing and (especially) new shareholders to be fully aware of what we do and how and why we do it. Quarterly No. 88, enclosed along with this Report, looks in detail at each element of our investment policy as set out on page 4 of the Annual Report and explains how we seek to put it into effect.

To measure how far Personal Assets succeeds in achieving its objective the Board looks at investment performance from two angles - the result achieved and, just as important, the degree of risk accepted in achieving it. The result achieved is shown in Key Features on page 1 of the Annual Report while the degree of risk accepted is indicated in the bottom chart on page 10 of the Annual Report. This shows how over the past eighteen years Personal Assets has been not only less volatile than UK equities in general but also less volatile than any of the investment trusts in the AIC Global Sector (in which we were included until December 2015) and the AIC Flexible Sector (in which we have been included since January 2016) and which were in existence on 30 April 2000. In his Investment Adviser's Report, Sebastian Lyon highlights the increasing volatility of financial markets while looking towards the buying opportunities we are confident will await us in due course.

Two years ago I reported that as a result of the change in the Articles of Association to permit the Company to distribute realised capital profit as dividend the Board had been able to commit to paying the dividend at the present annual rate of £5.60 per share for the foreseeable future without interfering with the balance and composition of our investment portfolio. In the year to 30 April 2018 we drew on revenue reserves to the extent of £740,000 leaving us with £422,000 of undistributed revenue available from past years before we would again need to draw on the distributable Capital Reserve Realised (see page 13 of the Annual Report).

During the year we issued 252,306 shares for a total of £102.6 million. It is the policy of the Board that our shares should at all times be readily realisable by individual holders at as close as possible to their net asset value, and it is reassuring to report that since 8 November 1999, 'Discount Freedom Day', when investment trusts were empowered to use capital to buy back shares and hence to control the discount to net assets at which their shares sell, Personal Assets' share price has risen almost exactly in line with shareholders' funds per share while the number of shares outstanding is now six times higher, having grown from 369,121 at 30 April 2000 to 2,212,433 by 30 April 2018.

For some time now we have been planning how best to diversify and strengthen the Board in the years to come. In 2016 Jean Sharp joined us and was recently appointed Chair of the Audit Committee. In December 2017 we welcomed Iain Ferguson and Paul Read, both of whom have already made significant contributions to our discussions. Meanwhile, Frank Rushbrook has intimated that he would like to retire after the 2019 AGM on completing ten years' service and in due course Robin Angus and I will also be seeking to retire. I am 73 and have been Chairman for nine years, while Robin, who has been closely involved with Personal Assets since its inception in 1983 and has been full time Executive Director since 2002, will be 66 this year. Shareholders can therefore expect further refreshing of the Board during the next few years.

Continuity and collective memory are, however, extremely important to any Board and especially to one with Personal Assets' long tradition of independent thought and action, and with this in view we have asked Gordon Neilly, who has been a Director since 1997 but is still, at 57, comfortably below normal retiring age, to stay on (subject to re-election) as a Director over this period of change specifically in order to provide that much-needed continuity. To give maximum scope to new Directors as they begin their duties, Gordon will not be a member of any of the Board Committees."

The Investment Adviser, Sebastian Lyon, said:

"Following the steady if unspectacular progress of recent years the Company's NAV suffered a modest fall of 2.6%. Such a result was not unexpected. We had previously highlighted that until we were more fully invested our returns were likely to continue to differ markedly from those of the stock market, and the strengthening of sterling also had a negative effect on performance.

At the beginning of 2018 the market seemed to believe that investing in stocks had become a one-way bet. Market volatility as represented by the VIX Index had been at a thirty year low for much of 2017 and positive share price momentum seemed unstoppable. Complacency was high, valuations were all but ignored and interest rates had remained so low for so long that markets seemed to have forgotten that risk-taking had a downside. Since the 2007/8 financial crisis the lack of growth in the economy had prevented monetary policy normalisation as easy conditions drove asset prices to record highs. In time this was always likely to be problematic for equities, and the calm was broken in early February by better than expected US unemployment data which indicated a stronger economy. It is the irony of financial markets that such good news is viewed negatively. The US stock market fell almost 10% in six trading days and, while markets have rallied somewhat since, we believe this sudden jolt marks a turning point. From here on we anticipate greater volatility for equities.

During the year we therefore cut our equity exposure from 46% to 38% (the lowest since 2008). We reduced longstanding holdings in British American Tobacco, Philip Morris and Microsoft on valuation grounds following periods of strong performance and before their recent price falls. We sold two longstanding US holdings in their entirety. Becton Dickinson we first acquired in 2010, attracted by its clean balance sheet, lowly valuation, sensible attitude towards capital allocation and business model of selling repetitively consumable medical devices. More recently, however, Becton's management has turned to acquiring growth and scale through acquisitions, putting the balance sheet at risk. We prefer companies we hold to create goodwill rather than expensively acquire it, so we took our (sizeable) profit. We also sold Dr Pepper Snapple following the announcement of a merger with Keurig Green Mountain. This led to a material rise in the share price, making the retention of the shares in the combined entity, with a highly leveraged balance sheet, no longer attractive.

The portfolio has been biased to the US but recently we have been finding better value in Europe, adding two new holdings in Société BIC and Henkel. Both companies have dominant shares of their respective markets, strong balance sheets and the comfort of alignment with family owners who will not mortgage their businesses for the sake of flattering today's earnings. In a cycle in which earnings growth has been driven by debt (supporting share buybacks) this provides us with comfort.

Notwithstanding the recent market falls, investor confidence remains high, sentiment strong and the economic outlook stable. The problem is that valuations by historical standards are even higher while geopolitical risks and the threat of greater protectionism have increased. Trends that fostered globalisation appear to be in reverse. Record debt levels may paradoxically prove deflationary, unless we see fiscal irresponsibility (the tax reform introduced in the US this year may be a precursor) lead to the higher inflation required to inflate it away. After years of stimulus, investors today are unfamiliar with the challenge of rising interest rates and our concern is that there is a lack of realisation of the risks being taken so late into this prolonged economic cycle.

Nine years into a bull market, our concern is that diversification through equities, bonds, property and other 'alternatives', such as private equity, may not protect investors as well as in previous cycles. Valuations now cause us to question the efficacy of the traditional 'barbell' balanced fund of bonds and equities which provided attractive risk-adjusted returns for more than a generation. In contrast to conventional bonds we prefer index-linked and gold as a counterweight to equities and our allocation to risk assets remains low. We are optimistic this will in due course give us the investment opportunities we have been waiting for. Recent share price falls offer the prospect for better value ahead. As the old market adage goes, "you make money when you buy, not when you sell"."

For further information contact:

Robin Angus

Executive Director

Tel:  [phone]

Sebastian Lyon

Investment Adviser

Tel:  [phone]

Steven Davidson

Company Secretary

Tel:  [phone]

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

 

Group Income Statement

	Year ended 30 April 2018
	Revenue	Capital
	return	return	Total
	£'000	£'000	£'000
Income
Investment income	15,679	-	15,679
Other operating income	972	-	972
	16,651	-	16,651
Losses on investments held at fair value through profit or loss	-	(35,911)	(35,911)
Foreign exchange gains	-	14,474	14,474
Total income	16,651	(21,437)	(4,786)
Expenses	(4,061)	(3,513)	(7,574)
Return before taxation	12,590	(24,950)	(12,360)
Taxation	(1,585)	602	(983)
Return for the year	11,005	(24,348)	(13,343)
Return per share	£5.23	(£11.57)	(£6.34)
The "Return for the Year" is also the "Total Comprehensive Income for the Year", as defined in IAS1 (revised) and no separate Statement of Comprehensive Income has been presented. The "Total" column of this statement represents the Group's Income Statement, prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRSs").  The Revenue and Capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. Return per share is calculated on 2,103,259 (2017: 1,843,254) shares, being the weighted average number in issue (excluding Treasury shares) during the year. All items in the above statement derive from continuing operations.
Dividend Information	2018		2017
Dividends per share	£5.60		£5.60
Dividends paid	£'000		£'000
First interim dividend of £1.40 per share (2017: £1.40 per share)	2,774		2,448
Second interim dividend of £1.40 per share (2017: £1.40 per share)	2,907		2,529
Third interim dividend of £1.40 per share (2017: £1.40 per share)	2,997		2,630
Fourth interim dividend of £1.40 per share (2017: £1.40 per share)	3,067		2,703
	11,745		10,310

Group Income Statement

	Year ended 30 April 2017
	Revenue	Capital
	return	return	Total
	£'000	£'000	£'000
Income
Investment income	15,088	-	15,088
Other operating income	751	-	751
	15,839	-	15,839
Gains on investments held at fair value through profit or loss	-	83,454	83,454
Foreign exchange losses	-	(26,403)	(26,403)
Total income	15,839	57,051	72,890
Expenses	(3,716)	(3,139)	(6,855)
Return before taxation	12,123	53,912	66,035
Taxation	(685)	-	(685)
Return for the year	11,438	53,912	65,350
Return per share	£6.20	£29.25	£35.45

 

Group Statement of Financial Position

			As at 30 April 2018			As at 30 April 2017
			£'000			£'000
Non-current assets
Investments held at fair value though profit or loss			825,792			733,479
Current assets
Financial assets held at fair value though profit or loss			-			10,666
Receivables			1,616			5,052
Cash and cash equivalents			40,763			34,926
Total assets			868,171			784,123
Current liabilities
Financial liabilities held at fair value though profit or loss			(7,659)			-
Payables			(1,619)			(2,624)
Total liabilities			(9,278)			(2,624)
Net assets			858,893			781,499
Capital and reserves
Ordinary share capital			27,655			24,502
Share premium			587,773			488,444
Capital redemption reserve			219			219
Special reserve			22,517			22,517
Capital reserve unrealised			113,830			217,467
Distributable reserves			106,899			28,350
Total equity			858,893			781,499
Shares in issue at year end			2,212,433			1,960,127
Net asset value per Ordinary share			£388.21			£398.70

 

Company Statement of Financial Position

			As at 30 April 2018			As at 30 April 2017
			£'000			£'000
Non-current assets
Investments held at fair value through profit or loss			826,529			733,966
Current assets
Financial assets held at fair value through profit or loss			-			10,666
Receivables			1,565			5,002
Cash and cash equivalents			39,979			34,495
Total assets			868,073			784,129
Current liabilities
Financial assets held at fair value through profit or loss			(7,659)			-
Payables			(1,521)			(2,630)
Total liabilities			(9,180)			(2,630)
Net assets			858,893			781,499
Capital and reserves
Ordinary share capital			27,655			24,502
Share premium			587,773			488,444
Capital redemption reserve			219			219
Special reserve			22,517			22,517
Capital reserve unrealised			113,967			217,504
Distributable reserves			106,762			28,313
Total equity			858,893			781,499
Shares in issue at year end			2,212,433			1,960,127
Net asset value per Ordinary share			£388.21			£398.70

Group and Company Statement of Changes in Equity *

							Distributable reserves
For the year ended 30 April 2018	Ordinary share capital	Share premium	Capital redemption reserve	Special reserve	Treasury share reserve	Capital reserve unrealised	Capital reserve realised	Revenue reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 30 April 2017	24,502	488,444	219	22,517	-	217,467	27,188	1,162	781,499
Loss for the year	-	-	-	-	-	(103,637)	79,289	11,005	(13,343)
Ordinary dividends paid	-	-	-	-	-	-	-	(11,745)	(11,745)
Issue of Ordinary shares	3,153	99,484	-	-	-	-	-	-	102,637
Cost of issue of Ordinary shares	-	(155)	-	-	-	-	-	-	(155)
Balance as at 30 April 2018	27,655	587,773	219	22,517	-	113,830	106,477	422	858,893
							Distributable reserves
For the year ended 30 April 2017	Ordinary share capital	Share premium	Capital redemption reserve	Special reserve	Treasury share reserve	Capital reserve unrealised	Capital reserve realised	Revenue reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 30 April 2016	21,848	406,302	219	22,517	(1,039)	128,259	62,484	34	640,624
Profit for the year	-	-	-	-	-	89,208	(35,296)	11,438	65,350
Ordinary dividends paid	-	-	-	-	-	-	-	(10,310)	(10,310)
Issue and reissue of Ordinary shares	2,654	82,142	-	-	2,837	-	-	-	87,633
Buybacks of Ordinary shares	-	-	-	-	(1,798)	-	-	-	(1,798)
Balance as at 30 April 2017	24,502	488,444	219	22,517	-	217,467	27,188	1,162	781,499

* The Company's reserves are the same as the Group's other than the capital reserve unrealised, which is £113,967,000 (2017: £217,504,000), and the revenue reserve, which is £285,000 (2017: £1,125,000). The differences relates to the profit generated by the Company's subsidiary.

Share premium. The share premium represents the difference between the nominal value of new Ordinary shares issued and the consideration the Company receives for these shares.

Capital redemption reserve. The capital redemption reserve represents the nominal value of Ordinary shares bought back for cancellation since authority to do this was first obtained at a General Meeting in April 1999.

Special reserve. The cost of any shares bought back for cancellation is deducted from the special reserve, which was created from the share premium, also following a General Meeting in April 1999.

Treasury share reserve. The net cost of any shares bought back to be held in Treasury.

Capital reserve unrealised. Increases and decreases in the valuation of investments held at the year end, unrealised gains and losses on FTSE 100 Future contracts and unrealised exchange differences of a capital nature are accounted for in this Reserve.

Capital reserve realised. Gains and losses on the realisation of investments, gains and losses on the realisation of FTSE 100 Future contracts, realised exchange differences of a capital nature and returns of capital are accounted for in this Reserve.

Revenue reserve. Any surplus/deficit arising from the revenue profit/loss for the year is taken to/from this Reserve.

 

Group Cash Flow Statement

	Year Ended 30 April	Year Ended 30 April
	2018	2017
	£'000	£'000
Cash flows from operating activities
(Loss)/profit before taxation	(12,360)	66,035
Losses/(gains) on investments including effective yield	31,039	(87,954)
Foreign exchange (gains)/losses	(14,474)	26,403
Operating cash flows before movements in working capital	4,205	4,484
Decrease/(increase) in accrued income, prepayments, and other receivables	556	(84)
Increase in other payables	133	184
Net cash from operating activities before taxation	4,894	4,584
Taxation	(970)	(895)
Net cash inflow from operating activities	3,924	3,689
Investing activities
Purchases of investments - equity shares	(47,725)	(15,977)
Purchases of investments - fixed interest and other investments	(882,692)	(569,673)
Disposal of investments - equity shares	58,497	1,914
Disposal of investments - fixed interest and other investments	749,567	537,000
Forward foreign exchange gains/(losses)	32,592	(34,710)
Net cash outflow from investing activities	(89,761)	(81,446)
Financing activities
Equity dividends paid	(11,745)	(10,310)
Issue of Ordinary shares	103,367	83,846
Cost of issue of Ordinary shares	(155)	-
Cost of share buybacks	-	(1,798)
Reissue of Ordinary shares from Treasury	-	3,130
Net cash inflow from financing activities	91,467	74,868
Increase/(decrease) in cash and cash equivalents	5,630	(2,889)
Cash and cash equivalents at the start of the year	34,926	37,278
Effect of exchange rate changes	207	537
Cash and cash equivalents at the end of the year	40,763	34,926
Net cash inflow from operating activities includes the following:
Dividends received	9,943	9,233
Interest received	1,534	1,320

Company Cash Flow Statement

	Year Ended 30 April	Year Ended 30 April
	2018	2017
	£'000	£'000
Cash flows from operating activities
(Loss)/profit before taxation	(12,460)	66,032
Losses/(gains) on investments including effective yield	31,039	(87,954)
Foreign exchange (gains)/losses	(14,474)	26,403
Operating cash flows before movements in working capital	4,105	4,481
Decrease/(increase) in accrued income, prepayments, and other receivables	557	(79)
Increase in other payables	29	216
Net cash from operating activities before taxation	4,691	4,618
Taxation	(970)	(895)
Net cash inflow from operating activities	3,721	3,723
Investing activities
Purchases of investments - equity shares	(47,875)	(16,077)
Purchases of investments - fixed interest and other investments	(882,692)	(569,673)
Disposal of investments - equity shares	58,497	1,914
Disposal of investments - fixed interest and other investments	749,567	537,000
Forward foreign exchange gains/(losses)	32,592	(34,710)
Net cash outflow from investing activities	(89,911)	(81,546)
Financing activities
Equity dividends paid	(11,745)	(10,310)
Issue of Ordinary shares	103,367	83,846
Cost of issue of Ordinary shares	(155)	-
Cost of share buybacks	-	(1,798)
Reissue of Ordinary shares from Treasury	-	3,130
Net cash inflow from financing activities	91,467	74,868
Increase/(decrease) in cash and cash equivalents	5,277	(2,955)
Cash and cash equivalents at the start of the year	34,495	36,913
Effect of exchange rate changes	207	537
Cash and cash equivalents at the end of the year	39,979	34,495

Net cash inflow from operating activities includes the following:
Dividends received	9,943	9,233
Interest received	1,534	1,320

Principal Risks and Risk Management

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

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

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

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

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

·      The financial statements contained within the Annual Report for the year ended 30 April 2018, of which this statement of results is an extract, have been prepared in accordance with applicable International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the undertakings included in the consolidation taken as a whole; and

·      The Strategic Report includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole together with a description of the principal risks and uncertainties that it faces.

Going Concern

The Directors believe, in the light of the controls and review processes reported in the Report of the Audit Committee on page 28 of the Annual Report and bearing in mind the nature of the Group's business and assets, which are considered to be readily realisable if required, that the Group has adequate resources to continue operating for at least twelve months from the date of approval of the financial statements. For this reason, they continue to adopt the going concern basis in preparing the accounts.

Related Party Transactions

The Company pays £30,000 per annum for the rental of the Executive Office to Rushbrook & Co LLP, of which Frank Rushbrook is a partner. The notice period on the lease is six months. No amount was outstanding at the year end.

Investment advisory services are provided by Troy Asset Management Limited. The investment advisory fee for the year ended 30 April 2018 was £5,405,000 (2017: £4,829,000). An amount of £1,334,500 was outstanding to the Investment Adviser at 30 April 2018 (2017: £1,249,000).

Secretarial and administrative services are provided by the Company's wholly owned subsidiary, PATAC Limited. Costs, net of third party income, amounted to £257,000 (2017: £250,000) in respect of these services in the year to 30 April 2018. No amounts were outstanding at the year end.

Directors of the Company received fees for their services. An amount of £25,000 was outstanding to the Directors at 30 April 2018 (2017: £10,000). Further details are provided in the Directors' Remuneration Report on pages 24 and 25 of the Annual Report. The Directors' shareholdings are also detailed on pages 21 and 24 of the Annual Report.

Notes:

1.         The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (''IFRSs''). These comprise standards and interpretations approved by the International Accounting Standards Board (''IASB''), together with such interpretations by the International Accounting Standards and Standing Interpretations Committee as have been approved by the IASB and still remain in effect, to the extent that these have been adopted by the European Union.

The financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£'000) except where otherwise indicated.

The principal accounting policies adopted are set out in pages 15 and 16 of the Annual Report. Where the presentational guidance set out in the Statement of Recommended Practice (the ''SORP'') for investment trusts issued by the Association of Investment Companies (the ''AIC'') in November 2014 and updated in January 2017 is consistent with the requirements of IFRSs, the Directors have sought to prepare the financial statements on a basis compliant with the recommendation of the SORP.

Certain new standards, including IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers, have been issued but are not effective for this accounting period. These have not been adopted early and the Group does not consider that the future adoption of any new standards, in the form currently available, will have any material impact on the financial position and performance as presented.

2.         During the year the Directors issued 252,306 new Ordinary shares for proceeds of £102,637,000 before costs of £155,000.

3.         At 30 April 2018 the sterling value of the US Treasury stocks and part of the US equities were protected by a forward currency contract.

4.         The Group held the following categories of financial instruments as at 30 April 2018:

	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'0000
Investments	825,792	-	737	826,529
Financial liabilities	-	(7,659)	-	(7,659)
Total	825,792	(7,659)	737	818,870

The above table provides an analysis of investments based on the fair value hierarchy described below and which reflects the reliability and significance of the information used to measure their fair value. The levels are determined by the lowest (that is, the least reliable or least independently observable) level of impact that is significant to the fair value measurement for the individual investment in its entirety as follows:

Level 1 reflects financial instruments quoted in an active market. The Company's investment in Gold Bullion has been included in this level.

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 the variables of which include only data from observable markets. The Company's forward currency contract has been included in this level as fair value is achieved using the foreign exchange spot rate and forward points which vary depending on the duration of the contract.

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. The Company's subsidiary has been included in this level as its valuation is based on its net assets. A reconciliation of Level 3 fair value measurements of financial assets can be found below.

 (Level 3)

£'000

Opening book cost	450
Opening unrealised appreciation	37
Opening valuation	487
Movement in the year:
Purchases at cost	150
Unrealised profit on the fair value of investments during the year	100
Closing valuation at 30 April 2018	737
Closing book cost	600
Closing unrealised appreciation	137
Closing valuation at 30 April 2018	737

5.         These are not statutory accounts in terms of Section 434 of the Companies Act 2006.  Full audited accounts for the year to 30 April 2018 will be sent to shareholders in June 2018 and will be available for inspection at 10 St Colme Street, Edinburgh, the registered office of the Company. The full annual report and accounts will be available on the Company's website www.patplc.co.uk.

6.         The audited accounts for the year ended 30 April 2018 will be lodged with the Registrar of Companies.

 

END

 

 

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