Annual Report for the period ended 31 March 2022

RNS Number : 7232S

Worsley Investors Limited

18 July 2022

 

  18 July 2022

Worsley Investors Limited

(the "Company")

Annual Report for the period ended 31 March 2022

The Company is pleased to announce the release of its annual report and audited consolidated financial statements for the period ended 31 March 2022 (the "Annual Report"). A copy of the Annual Report will be posted to shareholders and will be available to view on the Company's website shortly at: www.worsleyinvestors.com

END

For further information, please contact:

Worsley Associates LLP (Investment Advisor)

Blake Nixon
Tel:   [phone]

Shore Capital (Financial Adviser and Broker)

Robert Finlay / Anita Ghanekar
Tel:  [phone]

Sanne Fund Services (Guernsey) Limited (Administrator and Secretary)

Chris Bougourd / Katrina Rowe

Tel:  [phone]

LEI: 213800AF85VEZMDMF931

Performance Summary

	31 March 2022	31 March 2021	% change
Net Asset Value ("NAV") per share	39.91p	41.55p	-3.95%
Share price1	27.70p	28.00p	-1.07%
Share price discount to NAV	30.59%	32.6%

	year ended 31 March 2022	9 month period ended 31 March 2021
(Loss)/earnings per share2	-1.50p	4.91p
NAV Total Return3	-3.95%	8.77%
Share price Total Return4
- Worsley Investors Limited	-1.07%	15.25%
- FTSE All Share Index	13.03%	26.71%
- FTSE Real Estate Investment Trust Index	22.54%	19.93%

Worsley Associates LLP ("Worsley Associates") was appointed on 31 May 2019 as Investment Advisor (the "Investment Advisor") to Worsley Investors Limited (the "Company"). At an EGM held on 28 June 2019, an ordinary resolution was passed to adopt the new Investment Objective and Policy.  The Investment Objective and Policy are set out below.

These financial statements are made up to the year ended 31 March 2022. The annual results, therefore, cover a twelve-month period up to 31 March 2022 and are not entirely comparable to the previous results, which covered a period of nine months to 31 March 2021.

Past performance is not a guide to future performance.

¹ Mid-market share price (source: Shore Capital and Corporate Limited).

² Loss per share based on the net loss for the year of £0.505 million (nine month period to 31 March 2021: net profit of £1.657 million) and the weighted average number of Ordinary Shares in issue during the year of 33,740,929 (nine month period to 31 March 2021: 33,740,929).

³ On a pro forma basis which includes adjustments to add back any prior NAV reductions from share redemptions. NAV Total Return is a measure showing how the NAV per share has performed over a period of time, taking into account both capital returns and any dividends paid to shareholders.

⁴ A measure showing how the  share price  has performed over a period of time, taking into account both capital returns and any dividends paid to shareholders.

Source :  Worsley Associates LLP and Shore Capital and Corporate Limited.

Chairman's Statement

After a positive NAV total return of +3.11% in the first half year (i.e. to 30 September 2021), the second half of the year saw that progress more than reversed with our result dipping for the full 12 months to 31 March 2022 to a -3.95% return. 

On a share price basis, shareholder returns were somewhat better, in that the mid-market share price fell by just over 1% in the year from 28.0p to 27.7p per share.  The discount which the share price represents in relation to NAV improved from 32.6% to 30.6% as the decline of the market price of shares was less than the fall in NAV. As at 11 July, the latest practicable date for which independent data was available before going to print, the performance of Worsley Investors Limited shares was ranked 1st and 3rd in the UK smaller companies sector (in each case out of 24 in the sector) over the past 3 and 12 months respectively.

The biggest contributor to this NAV return outcome was a reduction in the independent valuer's appraisal of the Curno cinema value.  Over the full year, this more than outweighed the rest of the Group's profit contribution.  A fuller description of the effects of this valuation downgrade is given in the Investment Adviser's Report ("IAR"), but a very high-level summary is that the valuer has chosen to increase the already very conservative discount rate it applied to the rental stream from Curno and this has more than offset the effect of the significant increase in passing rental. 

I would like to remind shareholders that the rent benefits from an annual upwards-only indexation clause in relation to Italian consumer price inflation.  If this measure of inflation exceeds 5.29% p.a. for the year to 31 December 2022, the contractual base rental for 2023 will exceed €1 million to give a passing rental yield of more than 11.5% on the 31 March 2022 valuation. 

We are in the fortunate position of having no borrowings and consequently no banking covenants within which to operate.  We can therefore be judicious in an orderly sale process to optimise the value of the asset as and when confidence returns to the pool of potential buyers.  We note that the last remaining restrictions on the sale of food and beverages by cinema operators in this region of Italy came to an end on 15 June 2022.  This should improve the in-theatre experience for customers and, as it is generally a major contributor to operator returns in the cinema sector, the profitability for our tenant, UCI.

The second major contributor to the negative NAV returns was the corporate costs of Worsley Investors Limited.  At £530,000, this represented a welcome reduction in the annualised run-rate of just under 10% and was broadly in line with expectations.

We also had a foreign exchange mark-to-market translation loss of £48,000 on the Sterling value of mainly euro-based assets, predominantly Curno.  This was a modest figure over the whole year, although it represented a £161,000 adverse turnaround from the position at the halfway point in the year.

Notwithstanding the impact on equity markets of the Ukrainian conflict, returns on our core equity portfolio held up well with a total annualised return of 1.9% on the capital deployed in the portfolio over the year .  Worsley Associates gives more detail in its IAR.

Strategic Priorities

It remains our key priority to release the capital tied up in the Curno asset for redeployment in our core equity strategy.  In that regard, external events of the past two years have not been helpful.  Firstly, Covid restrictions and secondly, the acceleration of rises in interest rates and medium-term bond yields which, with the general availability of credit are key to the ability of buyers to finance the purchase of property assets, have made this a slower process than we hoped.  The current yield and the inflation protection built into the lease terms mean that the cinema is an increasingly attractive asset in its own right, generating a high and stable return.  It is a truism that sometimes portfolio managers have to sell good investments (such as the cinema) to buy even better ones such as those in our core equity strategy.  While the board cannot control the external factors which determine investment demand for a cinema in northern Italy, we are not forced sellers at the prey of opportunistic buyers and can temper our response to retain the cinema until a disposal can be achieved at a price which properly reflects its medium-term prospects.  In the meantime, we have the prospect of an inflation-hedged return in excess of 10% p.a.

As we compound returns on our core equity strategy over time and have available for additional re-investment the net cash flow from the cinema sub-group, the proportion of our total NAV represented by the cinema can be expected to continue to fall.  As at 31 March 2022, it had declined to 54% of NAV, down from 55% at 30 September 2021 and 58% at 31 March 2021.  Two years ago, at 30 June 2020, Curno represented 66% of NAV.

Our other key priority will be to grow the Company, thereby spreading our largely fixed costs over an enlarged asset base and benefiting from keener rates on tiered fee structures.  Current market circumstances are not likely to be receptive to an immediate raise and so this remains more aspirational in the immediate short term than something on which we have a particular timetable.

Outlook

When I last wrote to you in mid-December, we were looking forward to an economy growing at a brisk pace as it recovered from the COVID-19 lock-downs albeit there was then some uncertainty and concern from the emergence of the then-new "Omicron" variant.  As it has turned out, Omicron was not the disaster which some had feared and by being relatively mild, may arguably have had some benefit in the achievement of so-called "herd immunity" and bringing to a close the public health emergency phase of the pandemic.  We expected interest rates, which had been cut as the pandemic started, to increase again in response to rising activity and prices.  After more than a decade of ultra-low rates in the wake of the Global Financial Crisis of 2008, normalisation was at some point inevitable.  What we did not foresee was the Russian invasion of Ukraine in February.  Although both countries, especially Russia, are geographically large, their proportion of global GDP is relatively small.  In 2019 (the last full year before the Covid pandemic), according to the World bank and IMF, Russia's GDP was ranked at number 12 in the World (smaller than South Korea) and Ukraine, at number 57, was much smaller than New Zealand.  That said, Russia is a significant supplier of energy and minerals and Ukraine of food for both the human and animal population across the world and of fertiliser used in the agricultural industries of many countries.  The supply disruption caused by sanctions and by Russian military action has caused dislocation and sharp price rises in basic elements of our own, apparently domestic, economy. 

The immediate consequence is that interest rates are rising (as we expected) but at a much faster rate than we had anticipated.  Whilst the stock market has weakened in immediate consequence, in due course this should further enrich the opportunity set for a value-based equity strategy such as is our core strategy. 

On behalf of the Board, I would like to thank our Investment Advisor, Worsley Associates LLP, for the encouraging progress they continue to make in developing our portfolio and to thank you, our shareholders, for your continuing support.

W. Scott

Chairman

15 July 2022

Investment Advisor's Report

Investment Advisor

The Investment Advisor, Worsley Associates LLP, is regulated by the FCA and is authorised to provide investment management and advisory services.

In the year under review, the equities portfolio continued to be almost fully invested, and the Investment Advisor has concentrated on its development and fostering investor interest in the Curno cinema, which was impacted operationally by the tail end of the COVID-19 pandemic.

Curno Cinema Complex

The Group's Italian multiplex cinema complex, located in Curno, on the outskirts of Bergamo, is let in its entirety to UCI Italia S.p.A. ("UCI").

The cinema lease documentation remains as amended in June 2020.

The key rental terms of the lease, which has a final termination date of 31 December 2042, are:

Base Rent

1 April 2022 to 31 December 2022 - €949,770 per annum.

From 1 January 2022, at which point it increased by 3.8%, base rental is indexed annually to 100% of the Italian ISTAT Consumer Index on an upwards-only basis. The ISTAT Consumer Index in the six months to 30 June has already risen 5.5%.

Variable Rent

Incremental rent is payable at the rate of €1.50 per ticket sold above a minimum threshold of 350,000 tickets per year up to 450,000 tickets per year, rising in 50,000 ticket stages above this level up to €2.50 per extra ticket.

Tenant Guarantee

The lease benefits from a rental guarantee of an initial €13 million, reducing over 15 years to €4.5 million, given by a U.K. domiciled European holding company for the UCI group, United Cinemas International Acquisitions Limited, which has latest published shareholders' funds of £312.2 million.

Tenant break option

UCI has the right to terminate the lease on 30 June 2035.

Trading

The cinema, having been closed at the beginning of the period because of Lombardy COVID-19 related regulations, reopened on 20 May 2021, and has remained open since. Notwithstanding the wearing of masks being compulsory throughout the period, trading built steadily, bolstered in the third quarter by a strong slate of new movie releases. From 25 December 2021 to 9 March 2022 Italian cinemas were prohibited from selling food and beverages, a significant revenue generator and major profit source. During most of the period COVID-19 passes were mandatory, which also impacted demand, but it is pleasing to note that this restriction was lifted on 30 April 2022 and masks have no longer been required since 15 June.

Rentals have remained current throughout the period.

Valuation

As at 31 March 2022, the Group's independent asset valuer, Knight Frank LLP, fair valued the Curno cinema at €8.7 million (30 September 2021: €9.6 million), and this figure has been adopted in these Financial Statements.

Since the June 2020 lease amendment, the Board's expectation has been that the valuation of the Curno cinema would increase once the enhanced rental began to be generated by the property from 1 March 2021 onwards. The current rental is some 14% higher than the pre amendment level.

In spite of this, the valuer as at 31 March 2022 has chosen to increase the yield at which it capitalised the rental stream from 9.10% to 10.53%, which was had the effect of reducing the valuation by nearly 10%. This extremely conservative approach reflects the significant impact on investor demand of COVID-19 trading restrictions in Italian cinemas.

Following the resumption of regular rental arrangements, we have received enquiries from a number of investors. However, it quickly became apparent that appetite would remain very subdued until the cinema was fully free from all COVID-19 constraints. The Group will retain the Curno cinema until a disposal can be effected at a price which the board believes properly reflects its medium term prospects.

Investment Strategy

The Investment Advisor's strategy allies the taking of holdings in British quoted securities priced at a deep discount to their intrinsic value, as determined by a comprehensive and robust research process. Most of these companies will have smaller to mid-sized equity market capitalisations, which will in general not exceed £600 million. It is intended to secure influential positions in such British quoted securities, with the employment of activism as necessary to drive highly favourable outcomes.

In the first six weeks of 2022, dovish signals from the US Federal Reserve and easing of fears regarding the Omicron COVID-19 variant saw the British stock market drifting upwards, peaking on 10 February. Fourteen days later, sentiment altered very dramatically with the Russian invasion of Eastern Ukraine, and the Ukrainian conflict has joined inflation concerns and the expected impact on monetary policy as the largest influences on the U.K. market.

The fortnight immediately following the invasion saw a sharp downturn in global equity markets, but over the next month these rallied on hopes that economic sanctions and subsequent peace talks would be successful. However, those proved unfruitful and in early April continued high US inflation and signals from the US Federal Reserve that it would tackle that with higher interest rates, allied to weak US retail sales, then sent equities into reverse.

In the first week of May the Bank of England announced a 0.25% increase in the base rate to 1%, the highest level for 13 years, and a warned that a very sharp U.K. slowdown was imminent. Trading for the rest of May was choppy, as mid-month U.K. inflation was revealed to have hit 9%, and since the beginning of June the British market has slewed downwards as concerns regarding runaway inflation have reasserted themselves. Such concerns drove the US Federal Reserve on 15 June to hike US interest rates by 0.75%, the largest increase in 28 years. This was followed the next day by the Bank of England raising U.K. rates a further 0.25%.

The prognosis is for rates in the U.K. and US to continue to be lifted to a level of 3% or more and, in response, the U.K. stock market has retreated, falling 5.9% over the June quarter. Within the Company's target universe of British smaller companies, share prices have fared significantly worse than the market as a whole, being on the slide from almost the beginning of the June quarter and ending it down 10.3%.

The Company's portfolio has remained quite fully invested during the reporting period. This includes a previously undisclosed holding of some 3.7% of Net Assets in Amedeo Air Four Plus Limited ('AA4'). AA4 is a Guernsey company, whose shares are listed on the Specialist Fund Segment of the London Stock Exchange's Main Market. AA4 has a market capitalisation of £109.4 million and owns via its subsidiaries an aircraft fleet of six A380s and two B777-300ERs leased to Emirates Airlines ('Emirates') and four A350-900s leased to Thai Airways ('Thai Air'). As at 30 September 2021, the AA4 group held cash, net of provisions for maintenance, of slightly less than £84 million, which has subsequently been reduced by a £30 million pro rata capital redemption. In addition, unencumbered gross lease payments contracted to be paid to AA4 by Emirates as at 31 March 2022 were some £194 million.  Once Thai Air trading has normalised, there is scope to return by way of capital return the £15 million held by AA4 as a capital buffer, and to increase very substantially the annual dividend of five pence per share, which is presently constrained by the AA4 board's prudent approach to Thai Air's current trading.

The holding in Hurricane Energy plc July 2022 US$ 7.5% bonds, which we disclosed had been purchased in the first half at 63.6% of par, was disposed of shortly after year end at slightly more than 100% of par.

The largest portfolio position continues to be the shareholding of just over 4% in Smiths News plc, England's major distributor of newspapers and magazines. In early May, Smiths News published its 2022 interim results, which disclosed flat profitability with magazine sales recovering well owing to the end of COVID-19 restrictions, reorganisation costs continuing to be relatively modest, and good debt reduction from some significant one-off non-trading receipts. Nevertheless, the shares have underperformed over the past year, with the prospect of significant special dividends now severely diminished by unduly restrictive banking facilities entered into at the end of 2021.

The Northamber plc shareholding was increased modestly in the second half, but that in Shepherd NeameLimited is unchanged since the Interim Report. Preliminary (less than 2% of Net Assets) holdings are also held in 9 other companies. During the second half we exited two positions, crystallising substantial gains over their cost. Other than AA4, one new position was initiated.

As at 30 June 2022 the Company's portfolio, which had a total cost of £3.92 million and a combined market value of some £5.75 million, comprised 13 stocks. The surplus on the portfolio was a little under 50% of cost, and the annualised return on capital invested since the current strategy was adopted remains very acceptable at more than 31%.

Results for the period

Cash revenue from Curno for the period to 31 March 2022 was €923,700 (£790,000) ( 31 March 2021 nine months : €284,000 (£254,000)). As previously reported, the rental received in the comparative period reflected the five-month holiday granted under the 2020 lease amendment.

General and administrative expenses (including transaction charges) of £530,000 ( 31 March 2021 nine months : £440,000) were significantly lower than the 2021 run rate, an outturn which was in line with expectations. Accounting and taxation-related expenses at the Italian subsidiary, Multiplex 1 S.r.l. (' Multiplex'), were significantly higher in 2022 because of one-off projects, but Group legal and professional costs were considerably lower. The Company audit fee was broadly similar to 2021's, the fee for a nine-month period being no lower than that required for a full year. As previously foreshadowed, t he growth in the value of the portfolio during calendar year 2021 led to an increase in AUM-based costs in the current period.

Transaction charges incurred on equity acquisitions were £4,000 ( 31 March 2021 nine months : £17,000). The initial buildup of the portfolio in the previous period had incurred much greater charges, reflecting an abnormally elevated level of transactions.

The Group's ongoing operating costs in the current year are expected to be similar to the 2022 level. Prior to the ultimate sale of Curno there remains limited scope for significant reduction in the overall cost base.

The equities portfolio was steady in the third quarter before a downturn in the fourth, culminating for the year as a whole in a small (£0.161 million) net investment mark-to-market reduction ( 31 March 2021 nine months : £2.082 million gain). Investment Income for the year, predominantly dividends, was £217,000 and net investment gains realised added £46,000. As a result, the total annualised return on capital invested in the portfolio over the year came out at 1.9%.

Taxation is payable on an ongoing basis on Italian income and in Luxembourg. The bulk of the small legacy exposure in Germany was settled in the second half. For the year, an operating tax charge of £51,000 ( 31 March 2021 nine months : £10,000 operating credit) was incurred. In addition, net VAT, predominantly in Luxembourg, of some £5,000 was paid. The Group took the opportunity in late 2021 to recapitalise Multiplex, and this generated a one-off tax credit of €108,000 (£92,000).

Owing to the inflation linked increase in the Curno rental, operating cash flow (that is prior to allowance for equity income) is now expected to be modestly positive in the current year.

Net Assets at 31 March 2022 were £13.466 million, which compares with the £14.453 million contained in the 30 September 2021 Interim Report. The decrease arose from the combined impact of the loss in the second half of £0.826 million, of which £770,000 (€900,000) related to the reduction in the Euro valuation of the Curno property, and a £161,000 decrease in the pound sterling fair value of Euro-denominated assets, principally the property.

Financial Position

The Group's Statement of Financial Position improved slightly in the period, with £576,000 in cash held at 31 March 2022 and no debt. Augmented by the ample secondary liquidity of the equity portfolio and positive ongoing cash flows, the financial position remains strong.

In due course, the sale of the Curno cinema will provide considerable additional resources for equity investment.

Euro

As at 31 March 2022, some 58% of Total Assets were denominated in Euros, of which the Curno property was some 55% of Total Assets, down from 58% as at 31 March 2021. The pound sterling Euro cross rate moved slightly during the period from 1.175 as at 31 March 2021 to 1.187 as at 31 March 2022. This cross rate will remain a potentially significant influence on the level of Group Net Assets until Curno's disposal.

Outlook

U.K. stock market prices, whilst volatile, finished the first five months of this year at close to their opening level, in part reflecting a view that the economic effects of the COVID-19 pandemic were behind us.

Against that, in the Interim Report we had expressed the view that the economic distortions caused thereby would take some time to dissipate, and that we anticipated the unwinding across the globe of the exceptional quantitative easing during the pandemic would expose areas of business vulnerability.

In the event, the extent of the outbreak of rampant pandemic-fueled inflation became clear in May, spurring a tightening in monetary conditions which was the fastest since the Global Financial Crisis, and more abrupt than we had anticipated. Global equities markets have reflected the unexpected level of tightening, experiencing sharp downturns since.

We have previously commented that COVID-19 has had little direct impact in the period on the Group.

C inemas in Italy have been reopened for over a year, and our rentals have remained current. Nevertheless, the continued operating restrictions imposed on the cinema by the Lombardy authorities ruled out any prospect of a disposal.  The final restrictions have now been lifted which will be positive for future investor appetite.

The Worsley investment strategy, which is focussed on the medium-term prospects of specific companies, is relatively insensitive to shorter term economic conditions.

We continue to believe that the British stock market is yet fully to discount the impact of extreme inflation on U.K. company earnings and the permanent changes in the structure of certain industries in reaction to the vulnerabilities exposed by the pandemic, and more recently the Ukrainian conflict.

In consequence, we expect the upcoming trading outlooks to be announced by many British companies to be materially worse than market expectations. Whilst the share prices of many have already tumbled, this is likely to result in further falls.

Such downturns inexorably lead to a significant level of stock mispricing, from which strategies such as ours have previously benefitted well.

The equity portfolio is soundly based, and against the above background the Company can look forward to the future with confidence.

Worsley Associates LLP

15 July 2022

Board of Directors

William Scott (Chairman) , a Guernsey resident, was appointed to the board of the Company as an independent Director on 28 March 2019. Mr Scott also currently serves as an independent non-executive director of a number of investment companies and funds, of which Axiom European Financial Debt Fund Limited and RTW Venture Fund Limited are listed on the Premium Segment of the LSE. He is also a director of The Flight and Partners Recovery Fund Limited and a number of funds sponsored by Man and Abrdn (formerly Standard Life Aberdeen). From 2003 to 2004, Mr Scott worked as senior vice president with FRM Investment Management Limited, which is now part of Man Group plc. Previously, Mr Scott was a director at Rea Brothers (which became part of the Close Brothers group in 1999) from 1989 to 2002 and assistant investment manager with the London Residuary Body Superannuation Scheme from 1987 to 1989. Mr Scott graduated from the University of Edinburgh in 1982 and is a chartered accountant having qualified with Arthur Young (now Ernst & Young LLP) in 1987. Mr Scott also holds the Securities Institute Diploma and is a chartered fellow of the Chartered Institute for Securities & Investment. He is also a chartered wealth manager.

Robert Burke , a resident of Ireland, was appointed to the board of the Company as an independent Director on 28 March 2019. He also serves as an independent non-executive director of a number of investment companies and investment management companies which are domiciled in Ireland as well as a number of companies engaged in retail activities, aircraft leasing, pharmaceuticals, corporate service provision and group treasury activities. He is a graduate of University College Dublin with degrees of Bachelor of Civil Law (1968) and Master of Laws (1970). He was called to the Irish Bar in 1969 and later undertook training for Chartered Accountancy with Price Waterhouse (now PricewaterhouseCoopers) in London, passing the final examination in 1973. He later was admitted as a Solicitor of the Irish Courts and was a tax partner in the practice of McCann FitzGerald in Dublin from 1981 to 2005 at which point he retired from the partnership to concentrate on directorship roles in which he was involved. He continues to hold a practice certificate as a solicitor and is a member of the Irish Tax Institute.

Blake Nixon  was one of the pioneers of activism in the UK and has wide corporate experience in the UK and overseas. Following three years at Jordan Sandman Smythe (now part of Goldman Sachs), a New Zealand stockbroker, Mr Nixon emigrated to Australia, where he spent three years as an investment analyst at Industrial Equity Limited ("IEL"), then Australia's fourth largest listed company. In 1989 he transferred to IEL's UK operation and early in 1990 led the takeover of failing LSE listed financial conglomerate, Guinness Peat Group plc ("GPG"). The group was then relaunched as an investment company, applying an owner orientated approach to listed investee companies. Mr Nixon was UK Executive Director, responsible for GPG's UK operations and corporate function, for the following 20 years, finally retiring as a non-executive director in December 2015. He is a founding partner of Worsley Associates LLP, an activist fund manager, and has served as a non-executive director of a number of other UK listed companies, as well as numerous unlisted companies. He is a British resident and was appointed to the Board on 23 January 2019.

 

Report of Directors

The Directors of the Company present their Annual Report together with the Group's Audited Consolidated Financial Statements (the "Financial Statements") for the year ended 31 March 2022. The Directors' Report together with the Financial Statements give a true and fair view of the financial position of the Group. They have been prepared properly, in conformity with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board and are in accordance with any relevant enactment for the time being in force; and are in agreement with the accounting records.

Principal Activity and Status

The Company is an Authorised closed-ended investment company domiciled in Guernsey, registered under the provision of The Companies (Guernsey) Law, 2008 and has a premium listing on the Official List and trades on the Main Market of the London Stock Exchange. Trading in the Company's ordinary shares commenced on 18 April 2005. The Company and the entities listed in note 3(f) to the Financial Statements together comprise the "Group".

Investment Objective and Investment Policy .

The investment objective and investment policy of the Company are described in greater detail below.

Going Concern

These Financial Statements have been prepared on a going concern basis. The Directors, at the time of approving the Financial Statements, have a reasonable expectation that the Group has adequate resources to continue in operational existence for a period of at least twelve months from the date of approval of these Financial Statements. The Group maintains a significant cash balance and an extensive portfolio of realisable securities, and the property lease generates sufficient cash flows to pay on-going expenses and other obligations. The Directors have considered the cash position and performance of the current capital invested by the Group, the potential impact on markets and supply chains of geo-political risks such as the current crisis in Ukraine, the risk of further COVID-19 uncertainty and continuing macro-economic factors and inflation and concluded that it is appropriate to adopt the going concern basis in the preparation of these Consolidated Financial Statements.

Going concern is assessed over the period until 12 months from the approval of these Consolidated Financial Statements. Owing to the fact that the Group currently has no borrowing, has a significant cash holding and that the Company's equity investments predominantly comprise readily realisable securities, the Board considers there to be no material uncertainty. Matters relating to the going concern status of the Group are also discussed in the long-term viability statement below.

Viability Statement

The Board has evaluated the long-term prospects of the Group, beyond the 12 month time horizon assumption within the going concern framework. The Directors have conducted a review of the viability of the Company taking account of the Company's current position and considering the potential impact of risks likely to threaten the Company's business model, future performance, solvency or liquidity. For the purposes of this statement the Board has adopted a three year viability period.

The Directors consider that a 20% fall in the value in the Company's equity portfolio would not have a fundamental impact on the Company's ability to continue in operation over the next three years. In reaching this conclusion, the Directors considered the Company's expenditure projections, the fact that the Group currently has no borrowing, has a significant cash holding and that the Company's equity investments predominantly comprise readily realisable securities, which inextremis could be expected to be sold to meet funding requirements if necessary, assuming usual market liquidity.

The Directors in forming this view also considered the long operational history and track record of the Group's investment property, Curno.

In addition, the Board has assumed that the regulatory and fiscal regimes under which the Group operates will continue in broadly the same form during the viability period. The Board consults with its broker and legal advisers to the extent required to understand issues impacting on the Company's regulatory and fiscal environment. The Administrator also monitors changes to regulations and advises the Board as necessary.

Based on the Company's processes for monitoring operating costs, internal controls, the Investment Advisor's performance in relation to the investment objective, the portfolio risk profile and liquidity risk, the Board has concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three year period.

Results and Dividends

These Financial Statements are made up for the year ended 31 March 2022. The annual results, therefore, cover a twelve-month period up to 31 March 2022 and are not entirely comparable to the previous results, which cover a period of a nine months to 31 March 2021.

The results for the year are set out in the Consolidated Statement of Comprehensive Income.

No dividend payments were paid in the year (nine months to 31 March 2021: none).

Directors

The Directors who held office during the year and up to the date of this report and their interests in the shares of the Company (all of which are beneficial) were:

			31 March 2022		31 March 2021
W. Scott (Chairman)			400,000	1.19%	400,000	1.19%
B. A. Nixon			10,083,126	29.88%	10,083,126	29.88%
R. H. Burke			n/a	n/a	n/a	n/a

At the date of this report, Mr Nixon holds 10,083,126 shares, being an interest of 29.88% in the shares of the Company and Mr Scott holds 453,500 shares, being an interest of 1.34% in the shares of the Company.

Mr Nixon, a Director of the Company, is also Founding Partner of the Investment Advisor.

Management

With effect from 31 May 2019 the Board appointed Worsley Associates LLP as its Investment Advisor. A summary of the contract between the Company and the Investment Advisor in respect of the advisory services provided is given in note 4 to the Financial Statements.

Listing Requirements

Throughout the year the Company's shares were admitted to the Official List of the London Stock Exchange maintained by the Financial Conduct Authority ("FCA") and it has complied with the Listing Rules.

Investee Engagement

The Company is a closed-ended investment company which has no employees. The Company operates by outsourcing significant elements of its operations to reputable professional companies, which are required to comply with all relevant laws and regulations.

The nature of the Company's investments is such that it often seeks to acquire substantial shareholdings which provide a direct route via which to influence investee companies. The Company's focus is on investees' medium-term financial performance, and, if necessary, it will press them to adopt governance practices which ensure that they are properly accountable to their shareholders for the delivery of sustainable shareholder value. This active involvement is outside the scope of many traditional institutional shareholders. In matters which may affect the success of the Company's investments the Board and the Investment Advisor work together to ensure that all relevant factors are carefully considered and reflected in investment decisions.

In carrying out its investment activities and in relationship with suppliers, the Company aims to conduct itself responsibly, ethically and fairly.

International Tax Reporting

For purposes of the US Foreign Accounts Tax Compliance Act, the Company is registered with the US Internal Revenue Service ("IRS") as a Guernsey reporting Foreign Financial Institution ("FFI"), has received a Global Intermediary Identification Number (G0W47U.99999.SL.831), and can be found on the IRS FFI list.

The Common Reporting Standard ("CRS"), which came into effect on 1 January 2016, is a global standard for the automatic exchange of financial account information, developed by the Organisation for Economic Co-operation and Development ("OECD"), and has been adopted by Guernsey. The Board has taken the necessary action to ensure that the Company is compliant with Guernsey regulations and guidance in this regard.

Significant Shareholdings

As at 8 July 2022, shareholders with 3% or more of the voting rights are as follows:

	Shares held	% of issued share capital
B.A. Nixon	10,083,126	29.88%
Transact Nominees Limited	3,679,409	10.90%
Pershing Nominees Limited	3,000,000	8.89%
Chase Nominees Limited	2,522,420	7.48%
State Street Nominees Limited	2,075,804	6.15%
Lion Nominees Limited	1,815,734	5.38%
BBHISL Nominees Limited	1,800,000	5.33%
Winterflood Client Nominees Limited	1,060.235	3.14%

Guernsey Financial Services Commission Code of Corporate Governance

The Board of Directors confirms that, throughout the year covered by the Financial Statements, the Company complied with the Code of Corporate Governance issued by the Guernsey Financial Services Commission, to the extent it was applicable based upon its legal and operating structure and its nature, scale and complexity.

Anti-Bribery and Corruption

The Company adheres to the requirements of the Prevention of Corruption (Bailiwick of Guernsey) Law, 2003. In consideration of the UK Bribery Act 2010, the Board abhors bribery and corruption of any form and expects all the Company's business activities, whether undertaken directly by the Directors themselves or by third parties on the Company's behalf, to be transparent, ethical and beyond reproach.

Criminal Finances Act

The Directors of the Company have a zero-tolerance commitment to preventing persons associated with it from engaging in criminal facilitation of tax evasion. The Board has satisfied itself in relation to its key service providers that they have reasonable provisions in place to prevent the criminal facilitation of tax evasion by their own associated persons and will not work with service providers who do not demonstrate the same zero-tolerance commitment to preventing persons associated with them from engaging in criminal facilitation of tax evasion.

Independent Auditor

BDO Limited served as the Company's Independent Auditor throughout the year and has indicated its willingness to continue in office.  

Annual General Meeting

The next AGM of the Company is scheduled to be held on 22 September 2022.

Directors' Responsibilities

The Directors of the Company are responsible for preparing for each financial year an annual report and the Financial Statements which give a true and fair view of the state of affairs of the Group and of the respective results for the period then ended, in accordance with applicable Guernsey law and International Accounting Standards Board ("IASB") adopted International Financial Reporting Standards ("IFRS"). In preparing these Financial Statements, the Directors are required to:

-  select suitable accounting policies and apply them consistently;

-  make judgements and estimates which are reasonable and prudent;

-  prepare the Financial Statements on a going concern basis unless it is inappropriate to presume that the Group will continue in business; and

-  state whether or not applicable accounting standards have been followed, subject to any material departures disclosed and explained in the Financial Statements.

The Directors confirm that they have complied with the above requirements in preparing the Financial Statements.

The Directors are responsible for keeping proper accounting records which are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that its financial statements comply with the Companies (Guernsey) Law, 2008. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements which are free from material misstatement, whether owing to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Disclosure of Information to Auditors

So far as each Director is aware, all relevant information has been disclosed to the Company's Auditor; and each Director has taken all the steps which he ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.

Responsibility Statement

Each of the Directors, confirms to the best of that person's knowledge and belief:

· the Financial Statements, prepared in accordance with the IFRS as endorsed by the IASB, give a true and fair view of the assets, liabilities, financial position and profit of the Group, as required by DTR 4.1.12R of the Disclosure and Transparency Rules, and are in compliance with the requirements set out in the Companies (Guernsey) Law, 2008;

· the Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for the shareholders to assess the Group's position, performance, business model and strategy; and

· the Financial Statements including information detailed in the Chairman's Statement, the Report of the Directors, the Investment Advisor's report and the notes to the Financial Statements, include a fair review of the development and performance of the business and the position of the Group together with a description of the principal risks and uncertainties that it faces, as required by:

- DTR 4.1.8 and DTR 4.1.9 of the Disclosure and Transparency Rules, being a fair review of the Group's business and a description of the principal risks and uncertainties facing the Group; and

- DTR 4.1.11 of the Disclosure and Transparency Rules, being an indication of important events which have occurred since the end of the financial period and the likely future development of the Group.

Signed on behalf of the Board by:

W. Scott   

Director     

15 July 2022  

Corporate Governance Report

On 18 December 2019, the Company became a member of the Association of Investment Companies ("AIC") and except as noted herein complies with the 2019 AIC Code of Corporate Governance issued in February 2019 ("the AIC Code"), effective for accounting periods commencing on or after 1 January 2019. By complying with the AIC Code, the Company is deemed to comply with both the UK Corporate Governance Code (July 2018) (the "UK Code") issued by the Financial Reporting Council ("FRC") and the Code of Corporate Governance issued by the Guernsey Financial Services Commission (the "GFSC Code").

The Board considers that reporting against the principles and recommendations of the AIC Code provides appropriate information to shareholders and during the period the Board has reviewed its policies and procedures against the AIC Code.

The GFSC Code provides a governance framework for GFSC licensed entities, authorised and registered collective investment schemes. Companies reporting against the UK Code or the AIC Code are deemed to comply with the GFSC Code. The AIC Code is available on the AIC's website, www.theaic.co.uk.

For the year ended 31 March 2022, the Company has complied with the recommendations of the AIC Code and the relevant provisions of the UK Code, except for the following provisions relating to:

· Senior Independent Director;

· the need for an internal audit function;

· the whistle blowing policy;

· Remuneration Committee; and

· Nomination Committee

The Board considers these provisions are not relevant given the nature, scale and lack of complexity of the Company and its legal and operating structure as a self-managed investment company. The Company has therefore not reported further in respect of these provisions. Details of compliance are noted below. The absence of an Internal Audit function is discussed in the Audit Committee Report.

The Directors are non-executive and the Company does not have any employees, hence no Chief Executive, Executive Directors' remuneration nor whistle-blowing policy is required. The Board is satisfied that any relevant issues can be properly considered by the Board. Moreover, the Directors have satisfied themselves that the Company's service providers have appropriate whistle-blowing policies and procedures and have received confirmation from the service providers that nothing has arisen under those policies and procedures which should be brought to the attention of the Board.

Composition, Independence and Role of the Board

The Board currently comprises three non-executive Directors. Both Mr Scott and Mr Burke are considered by the Board to be independent of the Company's Investment Advisor. Mr Nixon is Founding Partner of the Investment Advisor and is therefore not independent.

Whilst Mr Nixon is not an independent director, the presence of two other directors who are independent and non-executive mitigates the risk of Mr Nixon acting against the Company's interest.

Mr Scott was appointed Chairman on 28 March 2019. The Chairman of the Board must be independent for the purposes of Chapter 15 of the Listing Rules. Mr Scott is considered independent because he:

· has no current or historical employment with the Investment Advisor; and

· has no current directorships in any other investment funds managed by the Investment Advisor.

The Board has overall responsibility for maximising the Company's success by directing and supervising the affairs of the business and meeting the appropriate interests of shareholders and relevant stakeholders, while enhancing the value of the Company and also ensuring protection of investors. A summary of the Board's responsibilities is as follows:

· statutory obligations and public disclosure;

· strategic direction and financial reporting;

· risk assessment and management including reporting compliance, governance, monitoring and control; and

· other matters having a material effect on the Company.

The Board is responsible to shareholders for the overall management of the Company.

The Board needs to ensure that the Annual Report and Financial Statements, 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 seeking to achieve this, the Directors have set out the Company's investment objective and policy and have explained how the Board and its delegated Committees operate and how the Directors review the risk environment within which the Company operates and set appropriate risk controls. Furthermore, throughout the Annual Report and Financial Statements the Board has sought to provide further information to enable shareholders better to understand the Company's business and financial performance.

The Board's responsibilities for the Annual Report are set out in the Directors' Responsibility Statement.

The Board is also responsible for issuing half yearly reports, NAV updates and other price sensitive public reports.

The Board does not consider it appropriate to appoint a Senior Independent Director. The Board believes it has a good balance of skills and experience to ensure it operates effectively. The Chairman is responsible for leadership of the Board and ensuring its effectiveness.

The Board has engaged external businesses to undertake the investment advisory and administrative activities of the Company. Documented contractual arrangements are in place with these businesses and these define the areas where the Board has delegated responsibility to them. The Board has adopted a schedule of matters specifically reserved for its decision-making and distinguished these from matters it has delegated to the Company's key service providers.

The Company holds regular board meetings to discuss general management, structure, finance, corporate governance, marketing, risk management, compliance, asset allocation and gearing, contracts and performance. The quarterly Board meetings are the principal source of regular information for the Board enabling it to determine policy and to monitor performance, compliance and controls which are supplemented by communication and discussions throughout the year.

A representative of each of the Investment Advisor and Administrator attends each Board meeting either in person or by telephone, thus enabling the Board fully to discuss and review the Company's operation and performance. Each Director has direct access to the Investment Advisor and Company Secretary and may at the expense of the Company seek independent professional advice on any matter. The Company maintains appropriate Directors' and Officers' liability insurance.

Conflicts of interest

Directors are required to disclose all actual and potential conflicts of interest as they arise for approval by the Board, who may impose restrictions or refuse to authorise conflicts. The process of consideration and, if appropriate, approval will be conducted only by those Directors with no material interest in the matter being considered. The Board maintains a Conflicts of Interest policy which is reviewed periodically and a Business Interests and Potential Conflicts of Interest register which is reviewed by the Board at each quarterly Board meeting.

Re-election

There are provisions in the Company's Articles of Incorporation which require Directors to seek re-election on a periodic basis. There is no limit on length of service, nor is there any upper age restriction on Directors. The Board considers that there is significant benefit to the Company arising from continuity and experience among directors, and accordingly does not intend to introduce restrictions based on age or tenure. It does, however, believe that shareholders should be given the opportunity to review membership of the Board on a regular basis.

The Board believes that, while regular rotation is in keeping with good governance, the unquestionable benefits of ensuring that there is some continuity mean that it is in the best interests of the Company that not all Directors offer themselves for re-election each year. The Company may terminate the appointment of a Director immediately on serving written notice and no compensation is payable upon termination of office as a director of the Company becoming effective.

In accordance with the Company's Articles of Incorporation, at each AGM all Directors who held office at the two previous AGM's and did not retire shall retire from office and shall be available for re-election. Messrs Scott and Nixon will stand for re-election at this year's AGM. Mr Nixon as Founding Partner and a Designated Member of Worsley Associates LLP stands annually. Further details regarding the experience of each of the Directors are set out within the Board of Directors section.

Board Diversity

The Board has also given careful consideration to the recommendation of the Davies Report on "Women on Boards" and notes the recommendations of the Parker review into ethnic diversity and the Hampton-Alexander review on gender balance in FTSE leadership. As recommended in the Davies Report, the Board has reviewed its composition. However, it believes that the current appointments provide an appropriate range of skills and experience and are in the interests of shareholders.

Board Evaluation and Succession Planning

The Board conducts an annual self-evaluation of its performance and that of the Company's individual Directors, which is led by the Chairman and, as regards the Chairman's performance evaluation, by the other Directors. The annual self-evaluation considers how the Board functions as a whole taking balance of skills, experience and length of service into consideration and also reviews the individual performance of its members.

To facilitate this annual self-evaluation, the Company Secretary circulates a detailed questionnaire to each Director and a separate questionnaire for the evaluation of the Chairman. The questionnaires, once completed, are returned to the Company Secretary who collates responses, prepares a summary and discusses the Board evaluation with the Chairman prior to circulation to the remaining Board members. The performance of the Chairman is evaluated by the other Directors. On occasions, the Board may seek to employ an independent third party to conduct a review of the Board.

The Board considers it has a breadth of experience relevant to the Company, and the Directors believe that any changes to the Board's composition can be managed without undue disruption. An induction programme has been prepared for any future Director appointments and all Directors receive other relevant training as necessary .

Board and Committee Meetings

The table below sets out the number of scheduled Board, Audit Committee and Management Engagement Committee meetings held during the year ended 31 March 2022 and, where appropriate, the number of such meetings attended by each Director who held office during the same period.

	Board of Directors		Audit Committee		Risk Committee		Management Engagement Committee
	Scheduled	Attended	Scheduled	Attended	Scheduled	Attended	Scheduled	Attended
W. Scott (Chairman)	4	4	2	2	3	3	1	1
R. H. Burke	4	4	2	2	3	3	1	1
B. A. Nixon	4	4	2*	2*	3	3	1*	1*
*In attendance by invitation

In normal circumstances the Board intends to meet not less than four times per year on a quarterly basis in addition to such ad hoc meetings as may be necessary.

Audit Committee

The Company has established an Audit Committee with formal duties and responsibilities. The Audit Committee meets formally at least twice a year and each meeting is attended by the independent external auditor and Administrator. The Company's Audit Committee is comprised of Mr Burke and Mr Scott. At the invitation of the Audit Committee, Mr. Nixon may attend meetings of the Committee. The Audit Committee is chaired by Mr Burke. The Company does not maintain an internal audit function, and, given that there are only three Directors, the Chair of the Board is a member of the Committee.

The Audit Committee monitors the performance of the auditor, and also examines the remuneration and engagement of the auditor, as well as its independence and any non-audit services provided by it. A report of the Audit Committee detailing its responsibilities and its key activities.

Risk Committee

The Company established a Risk Committee on 26 February 2020 with formal duties and responsibilities. The Risk Committee meets formally at least twice a year. The Risk Committee is comprised of the entire Board and is chaired by Mr Scott. The principal function of the Risk Committee is to identify, assess, monitor and, where possible, oversee the management of risks to which the Company's investments are exposed, with regular reporting to the Board. The Directors have appointed the Risk Committee to manage the additional risks faced by the Company as well as the disclosures to be made to investors and the relevant regulators.

The Risk Committee reviews the robustness of the Company's risk management processes, the integrity of the Company's system of internal controls and risk management systems, and the identification and management of risks through the use of the Company's risk matrix. The Risk Committee reviews the principal, emerging, and other risks relevant to the Company.

The Risk Committee reports on the internal controls and risk management systems to the Board of Directors. The Board of Directors is responsible for establishing the system of internal controls relevant to the Company and for reviewing the effectiveness of those systems. The review of internal controls is an on-going process for identifying and evaluating the risks faced by the Company, designed to manage effectively rather than attempt to eliminate business risks, to ensure the Board's ability to achieve the Company's business objectives.

It is the responsibility of the Board to undertake the risk assessment and review of the internal controls in the context of the Company's objectives in relation to business strategy, and the operational, compliance and financial risks facing the Company. These controls are operated in the Company's main service providers: the Investment Advisor and Administrator. The Board receives regular updates and undertakes an annual review of each service provider.

The Board of Directors considers the arrangements for the provision of Investment Advisor and Administration services to the Company and as part of the annual review the Board considered the quality of the personnel assigned to handle the Company's affairs, the investment process and the results achieved to date.

The Board is satisfied that each service provider has effective controls in place to control the risks associated with the services which they are contracted to provide to the Company and therefore the Board is satisfied with the internal controls of the Company.

Management Engagement Committee

The Company has established a Management Engagement Committee with formal duties and responsibilities. The Management Engagement Committee meets formally at least once a year. The Management Engagement Committee is comprised of Mr Burke and Mr Scott. The principal function of the Management Engagement Committee is to ensure that the Company's investment advisory arrangements are competitive and reasonable for the shareholders, along with the Company's agreements with all other third party service providers (other than the external auditor).

During the period the Management Engagement Committee has reviewed the services provided by the Investment Advisor and other service providers, and recommended that the continuing appointments of the Company's service providers was in the best interests of the Company. The Management Engagement Committee is chaired by Mr Scott.

Nomination Committee

The Board does not have a separate Nomination Committee. The Board as a whole fulfils the function of a Nomination Committee. Any proposal for a new Director will be discussed and approved by the Board, giving full consideration to succession planning and the leadership needs of the Company.

Remuneration Committee

In view of its non-executive nature, the Board considers that it is not appropriate for there to be a separate Remuneration Committee, as anticipated by the AIC Code, because this function is carried out as part of the regular Board business. A Remuneration Report prepared by the Board is contained in the Financial Statements within the Directors' Remuneration Report.

Terms of Reference

All Terms of Reference for Committees are available from the Administrator upon request.

Internal Controls

The Board is ultimately responsible for establishing and maintaining the Company's system of internal controls and for maintaining and reviewing its effectiveness. The system of internal controls is designed to manage rather than to eliminate the risk of failure to achieve business objectives and by its nature can only provide reasonable and not absolute assurance against misstatement and loss. These controls aim to ensure that assets of the Company are safeguarded, proper accounting records are maintained and the financial information for publication is reliable.

The Board has delegated the day-to-day management of the Company's investment portfolio and the administration, registrar and corporate secretarial functions including the independent calculation of the Company's NAV and the production of the Annual Report and Financial Statements, which are independently audited. Whilst the Board delegates responsibility, it retains accountability for the functions it delegates and is responsible for the systems of internal control.

Formal contractual agreements have been put in place between the Company and providers of these services. On an ongoing basis, board reports are provided at each quarterly board meeting from the Investment Advisor, Administrator and Company Secretary and Registrar; and a representative from the Investment Advisor is asked to attend these meetings.

In accordance with Listing Rule 15.6.2 (2) R the Directors formally appraise the performance and resources of the Investment Advisor on an annual basis. In the opinion of the Directors their continuing appointment of the Investment Advisor on the terms agreed is in the interests of the Company and the shareholders.

The Investment Advisor was appointed on 31 May 2019.

The Board has reviewed the need for an internal audit function and owing to the size of the Company and the delegation of day-to-day operations to regulated service providers, an internal audit function is not considered necessary. The Directors will continue to monitor the systems of internal controls in place in order to provide assurance that they operate as intended.

Principal Risks and Uncertainties

In respect of the Company's system of internal controls and its effectiveness, the Directors:

· are satisfied that they have carried out a robust assessment of the emerging and principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity; and

· have reviewed the effectiveness of the risk management and internal control systems including material financial, operational and compliance controls (including those relating to the financial reporting process) and no significant failings or weaknesses were identified.

The principal risks and uncertainties which have been identified and the steps which are taken by the Board to mitigate them are as follows:

Investment Risks

The Company is exposed to the risk that its investment portfolio and the remaining investment property fail to perform in line with the Company's objectives. The Company is exposed to the risk that markets move adversely. The Board reviews reports from the Investment Advisor at each quarterly Board meeting and at other times when expedient, paying particular attention to the diversification of the portfolio and to the performance and volatility of underlying investments.

Operational Risks

The Company is exposed to the risk arising from any failures of systems and controls in the operations of the Investment Advisor, Administrator and the Corporate Broker. The Board and its Committees regularly review reports from the Investment Advisor and the Administrator on their internal controls.

Accounting, Legal and Regulatory Risks

The Company is exposed to the risk that it may fail to maintain accurate accounting records, fail to comply with requirements of its Prospectus or fail to adapt its processes to changes in law or regulations. The accounting records prepared by the relevant service providers are reviewed by the Investment Advisor. The Administrator, Corporate Broker and Investment Advisor provide regular updates to the Board on compliance with the Prospectus and any changes in regulation.

Financial Risks

The financial risks, including market, credit, liquidity and interest rate risk faced by the Company are set out in note 15 of the Financial Statements. These risks and the controls in place to reduce the risks are reviewed at the quarterly Board meetings.

Foreign Exchange Risk

The Company is exposed to currency risk given that the assets of its subsidiaries are predominantly denominated in Euro but the presentation currency of the Company is pounds sterling. The Investment Advisor reports at least quarterly to the Board on the strategy for managing this risk. Although the Company has the ability to hedge this risk, it has not to date chosen to do so and has no plans to make such arrangements.

COVID-19

The COVID-19 pandemic has been a significant influence on global markets and has had an economic impact on certain companies held within the Company's portfolio. The impact of the pandemic is discussed further in the Chairman's statement, the Investment Advisor's report and the report of the Audit Committee.

The Board seeks to mitigate and manage these risks through ongoing review, policy-setting and enforcement of contractual obligations and monitoring of the Company's investment portfolio. The Board, Investment Advisor and the Corporate Broker also continually monitor the investment environment in order to identify any new or emerging risks.

Emerging Risks

The Board is alert to the identification of any new or emerging risks through the ongoing monitoring of the Company's investment portfolio and by conducting regular reviews of the Company's risk assessment matrix. Should an emerging risk be identified the risk assessment matrix is updated and appropriate mitigating measures and controls will be agreed.

Non-Audit Services Policy

The Company has implemented a policy in relation to the engagement of the external auditor, BDO Limited, to perform non-audit services. As a Market Traded Company ("MTC"), since March 2020, the Company is classified as an EU/UK Public Interest Entity ("PIE") for the purposes of FRCs Ethical Standard. Accordingly, the Audit Committee must consider whether or not the provision of such non-audit services is compatible with the list of permissible services under the FRC's UK Ethical Standards:

The Audit Committee reviews the need for non-audit services, authorises such on a case by case basis, and recommends an appropriate fee for such non-audit services to the Board.

The Board considers the actual, perceived and potential impact upon the independence of the external auditor prior to engaging the external auditor to undertake any non-audit service, as well as confirming that any non-audit services are included on the list of permissible services, as amended from time to time by the FRC.

The Board reserves the right to review the policy periodically and, if required, amend it to ensure that the policy is compliant with all applicable law and regulation and best practice.

Relations with Shareholders

The Board welcomes shareholders' views and places great importance on communication with its shareholders. The Board receives regular reports on the views of shareholders and the Chairman and other Directors are available to meet shareholders if required. The Investment Advisor meets with major shareholders on a regular basis and reports to the Board on these meetings. Issues of concern can be addressed by any shareholder in writing to the Company at its registered address. The AGM of the Company provides a forum for shareholders to meet and discuss issues with the Directors and Investment Advisor of the Company. In addition, the Company maintains a website (www.worsleyinvestors.com ) which contains comprehensive information, including regulatory announcements, share price information, financial reports, investment objectives and strategy and investor contacts.

Promotion of the success of the Company

The Board acts in a manner which is considered to be:

· in good faith;

· likely to promote the continuing success of the Company; and

· to the benefit of its shareholders as a whole.

Whilst the primary duty of the Directors is owed to the Company, the Board considers as part of its discussions and decision making process the interests of all stakeholders.

The Board is committed to maintaining high standards of corporate governance and accountability.

As an investment company, the Company does not have any employees and conducts its core operations through third party service providers. Each provider has an established track record and, through regulatory oversight and control, is required to have in place suitable policies and procedures to ensure it maintains high standards of business conduct, treats customers fairly, and employs corporate governance best practice.

Particular consideration is given to the continued alignment between the activities of the Company and those which contribute to delivering the Board's strategy, which include the Investment Advisor, the Corporate Broker and the Administrator.

The Board respects and welcomes the views of all stakeholders. Any queries or areas of concern regarding the Company's operations can be raised with the Company Secretary.

Signed on behalf of the Board by:

W. Scott 

Chairman   

15 July 2022

Audit Committee Report

Dear Shareholders,

I am pleased to present the Audit Committee's Report for the year ended 31 March 2022, which covers the following topics:

· Responsibilities of the Audit Committee and its key activities during the period,

· Financial reporting and significant areas of judgement and estimation,

· Independence and effectiveness of the external auditor, and

· Internal control and risk management systems.

The Company remains in a transition period until the Curno investment property is disposed of. The Audit Committee's activities during the year have therefore concentrated on maintaining an appropriate risk and control environment, providing suitable disclosure of progress and residual risks in the Financial Statements, ensuring ongoing engagement from service providers and maintaining sufficient liquid funds to meet expenditure for essential or justified items.

Responsibilities

The Audit Committee reviews and recommends to the Board for approval or otherwise, the Financial Statements of the Company and is the forum through which the independent external auditor reports to the Board of Directors. The independent external auditor and the Audit Committee, if either considers this to be necessary, will meet together without representatives of either the Administrator or Investment Advisor being present.

The responsibilities of the Audit Committee include:

1.  Monitoring the integrity of the Financial Statements of the Company covering:

· formal announcements relating to the Company's financial performance;

· significant financial reporting issues and judgements;

· matters raised by the external auditor; and

· appropriateness of accounting policies and practices.

2.  Reviewing and considering the AIC Code and FRC Guidance on Audit Committees.

3.  Monitoring the quality and effectiveness of the independent external auditor, which includes:

· meeting regularly to discuss the audit plan and the subsequent findings;

· considering the level of fees for both audit and non-audit work;

· reviewing independence, objectivity, expertise, resources and qualification; and

· making recommendations to the Board on their appointment, reappointment, replacement and remuneration.

4.  Reviewing the Company's procedures for prevention, detection and reporting of fraud, bribery and corruption, and

5.  Monitoring and reviewing the internal control and risk management systems of the service providers together with the need for a Company Internal Audit function.

The Audit Committee's full terms of reference can be obtained by contacting the Company's Administrator.

Financial Reporting

The Audit Committee's review of the Audited Annual Report and Financial Statements focused on the following significant risks;

Valuation of Investment Property

The Company's sole remaining investment property was independently valued at £7.33 million (€8.70 million) as at 31 March 2022 (31 March 2021: £8.17 million (€9.60 million)) and represented the majority of the assets of the Group. The remaining investment property comprises a cinema complex in Curno, Italy, owned via an intermediate holding company. The valuation of this investment is in accordance with the requirements of IFRS as issued by the International Accounting Standards Board. The valuation estimate is provided by Knight Frank LLP, an external independent valuer. The Audit Committee considers the fair value of the sole investment property held by the Group as at 31 March 2022 to be reasonable based on information provided by the Investment Advisor and Administrator. All valuations are also subject to review and oversight by the Investment Advisor.

The valuation report received from the independent valuer included a 'Material Valuation Uncertainty' paragraph in relation to the market risks linked to the COVID-19 pandemic: this paragraph explains that the valuer continues to be faced with an unprecedented set of circumstances caused by COVID-19 and an absence of relevant / sufficient market evidence on which to base their judgements. Their valuation is therefore reported as being subject to 'material valuation uncertainty' and a higher degree of caution should be attached to their valuation than would normally be the case.

Valuation of investments

The Company's non-property investments had a fair value of £5.97million as at 31 March 2022 (31 March 2021: £5.50 million). The investments are all listed. The Committee considered the fair value of the investments held by the Company as at 31 March 2022 to be reasonable based on information provided by the Investment Advisor and Administrator. All prices are confirmed to independent pricing sources as at 31 March 2022 by the Administrator and are subject to a review process at the Administrator and oversight at the Investment Advisor.

Audit Findings Report

The independent external auditor reported to the Audit Committee that no material unadjusted misstatements were found in the course of their work. Furthermore, the Investment Advisor and Administrator confirmed to the Audit Committee that they were not aware of any material unadjusted misstatements including matters relating to the Financial Statements presentation.

Accounting Policies & Practices

The Audit Committee has assessed the appropriateness of the accounting policies and practices adopted by the Group together with the clarity of disclosures included in the Financial Statements. Following a review of the presentations and reports from the Administrator and consulting where necessary with the independent external auditor, the Audit Committee is satisfied that the Financial Statements appropriately address the critical judgements and key estimates (both in respect to the amounts reported and the disclosures). It is also satisfied that the significant assumptions used for determining the value of assets and liabilities have been appropriately scrutinised, challenged and are sufficiently robust.

The Audit Committee advised the Board that this Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable.

Fraud, Bribery and Corruption

The Audit Committee continues to monitor the fraud, bribery and corruption policies of the Group. The Board receives a confirmation from all service providers that there have been no instances of fraud or bribery.

The Independent External Auditor

BDO Limited served as the Company's Independent Auditor throughout the year and has indicated its willingness to continue in office. 

The independence and objectivity of the external auditor is reviewed by the Audit Committee, which also reviews the terms under which the independent external auditor is appointed to perform non-audit services. The Audit Committee has established pre-approval policies and procedures for the engagement of the auditor to provide non audit services.

The following table summarises the remuneration payable to BDO Limited for audit and non-audit services provided to the Company during the year ended 31 March 2022 and the nine month period ended 31 March 2021.

		31 March 2022	31 March 2021
		£	£
Statutory audit		37,500	37,500
Total fees		37,500	37,500

The following table summarises the remuneration payable to BDO Italia S.p.A for audit and non-audit services provided to the Group during the year ended 31 March 2022 and the nine month period ended 31 March 2021.

		31 March 2022	31 March 2021
		€	€
Statutory audit of subsidiary		8,050	8,100
Total fees		8,050	8,100

Performance and Effectiveness

During the period, when considering the effectiveness of the independent external auditor, the Audit Committee has taken into account the following factors:

· the audit plan presented to them before the audit;

· changes in audit personnel;

· the post audit findings report;

· the independent external auditor's own internal procedures to identify threats to independence; and

· feedback received from both the Investment Advisor and Administrator.

The Audit Committee reviewed and, where appropriate, challenged the audit plan and the audit findings report of the independent external auditor and concluded that the audit plan sufficiently identified audit risks and that the audit findings report indicated that the audit risks were sufficiently addressed with no significant variations from the audit plan. The Audit Committee considered reports from the independent external auditor on their procedures to identify threats to independence and concluded that the procedures were sufficient.

Appointment of External Auditor

Consequent to this review process, the Audit Committee recommended to the Board that a resolution be put to the next AGM to confirm the reappointment of BDO Limited as independent external auditor.

Internal Control and Risk Management Systems

The Board of Directors considers the arrangements for the provision of Investment Advisory, Investment Management, Administration and Custody services to the Company on an on-going basis and a formal review is conducted annually. As part of this review the Board considered the quality of the personnel assigned to handle the Company's affairs, the investment process and the results achieved to date.

The Audit Committee has reviewed the need for an internal audit function and has decided that the systems and procedures employed by the Investment Advisor and the Administrator provide sufficient assurance that a sound system of internal control, which safeguards the Company's assets, is maintained. An internal audit function specific to the Group is therefore considered unnecessary.

In finalising the Financial Statements for recommendation to the Board for approval, the Audit Committee has satisfied itself that the Financial Statements 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.

A member of the Audit Committee will continue to be available at each AGM to respond to any shareholder questions on the activities of the Audit Committee.

R. H. Burke,

Chairman, Audit Committee

15 July 2022

Directors' Remuneration Report

Introduction

An ordinary resolution for the approval of the Director's Remuneration Report will be put to the shareholders at the forthcoming AGM held.

Remuneration Policy

All Directors are non-executive and a Remuneration Committee has not been established. The Board as a whole considers matters relating to the Directors' remuneration. No advice or services were provided by any external person in respect of its consideration of the Directors' remuneration.

The Company's policy is that the fees payable to the Directors should reflect the time spent by the Directors on the Company's affairs and the responsibilities borne by the Directors and be sufficient to attract, retain and motivate directors of a quality required to run the Company successfully. The Chairman of the Board is paid a higher fee in recognition of his additional responsibilities. The policy is to review fee rates periodically, although such a review will not necessarily result in any changes to the rates, and account is taken of fees paid to directors of comparable companies. The Directors of the Company are remunerated for their services at such a rate as the Directors determine provided that the aggregate amount of such fees does not exceed £120,000 per annum.

There are no long-term incentive schemes provided by the Company and no performance fees are paid to Directors.

None of the Directors has a service contract with the Company but each of the Directors is appointed by a letter of appointment which sets out the main terms of their appointment. Directors hold office until they retire by rotation or cease to be a director in accordance with the Articles of Incorporation, by operation of law or until they resign.

Remuneration

Directors are remunerated in the form of fees, payable quarterly in arrears, to the Director personally. No Directors have been paid additional remuneration outside their normal Directors' fees and expenses.

The current annual Directors' fees comprise £20,000 per annum payable to the Chairman and £15,000 per annum payable to the other Directors.

Upon appointment of Worsley Associates as Investment Advisor on 31 May 2019, Mr Nixon waived any future Director's fee for as long as he is a member of the Investment Advisor.

For the year ended 31 March 2022 and the nine month period ended 31 March 2021 Directors' fees incurred were as follows:

		For the year ended 31 March 2022	For the nine months ended  31 March 2021
		£	£
W. Scott (Chairman)		20,000	15,000
B.A. Nixon		-	-
R. H. Burke		15,000	11,250
		35,000	26,250

The directors of the subsidiaries of the Group received emoluments amounting to £10,994 (31 March 2021: £7,858). Total fees paid to Directors and directors of the subsidiaries were £45,994 (31 March 2021: £34,108).

Signed on behalf of the Board by:

W. Scott 

Director   

15 July 2022 

Independent Auditor's Report to the Members of Worsley Investors Limited

Opinion on the financial statements

In our opinion, the financial statements of Worsley Investors Limited ("the Parent Company") and its subsidiaries (together the "Group"):

· give a true and fair view of the state of the Group's affairs as at 31 March 2022 and of its loss for the year then ended;

· have been properly prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the IASB; and

· have been properly prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.

We have audited the financial statements of the Group, for the year ended 31 March 2022, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies.

The financial reporting framework that has been applied in their preparation is applicable law and IFRS as issued by the International Accounting Standards Board ("IASB").

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs(UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the audit committee.

Independence

We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by that standard as applied to listed public interest entities were not provided to the Group or the Parent Company.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors' assessment of the Group and the Parent Company's ability to continue to adopt the going concern basis of accounting included:

· Obtaining from those charged with governance and the Directors' a paper in respect of going concern and challenging this, based on our knowledge of the Group, with both those charged with governance and the Directors;

· Consideration of the cash available, the liquidity of the equity portfolio held, and the expected profit generated by the property holding subsidiary, together with the expected annual running costs of the Group and determining whether these assumptions were reasonable based on our knowledge of the Group.

· Performing our own sensitivity analysis of the headroom of the investment portfolio over the annual running expenses.

· Reviewing the minutes of meetings of those charged with governance, the RNS announcements and the compliance reports for any indicators of concerns in respect of going concern.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

In relation to the Parent Company's reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors' statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

Overview

Key audit matters (2022 & 2021)	Valuation of investment property Valuation and ownership of listed investments
Materiality	Group financial statements as a whole £244,000 (2021:£253,000) based on 1.75% (2021: 1.75%) of total assets.

An overview of the scope of our audit

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group's system of internal control, and assessing the risks of material misstatement in the financial statements.  We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.

We carried out a full scope of the Group, which was tailored to take into account the nature of the Group's investments, the accounting and reporting environment and the industry in which the Group operates.

In designing our overall audit approach, we determined materiality and assessed the risk of material misstatement in the financial statements.

This assessment took into account the likelihood, nature and potential magnitude of any misstatement. As part of this risk assessment, we considered the Group's interaction with the Investment Advisor and the Administrator. We obtained an understanding of the control environment in place at the Investment Advisor and the Administrator to the extent that it was relevant to our audit.  Following this assessment, we applied professional judgement to determine the extent of testing required over each balance in the financial statements.

We concluded that the most effective audit approach for the Group was to audit the consolidated financial statements as if the Group was one entity.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current year and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter		How the scope of our audit addressed the key audit matter
Valuation of investment property Refer to accounting policies 3(d) and 3(k) and the disclosure note 8)	The Group holds a single investment property which is fair valued. The fair value has been determined by the Directors based on an independent Royal Institution of Chartered Surveyors "RICS" valuation performed by independent valuers. Such property valuations are a highly subjective area as it requires the valuer to make judgements as to property yields, quality of tenants and other variables to arrive at the current fair value of the property. Such subjectivity and judgements are increased due to the impact of the COVID-19 pandemic on the Cinema market and the changing habits of individuals as a result of COVID-19 lockdowns. As stated in the note 3(d), as a result of the impact of COVID-19 on the market, the valuer has advised that less certainty, and a higher degree of caution, should be attached to their valuation than would normally be the case. Any input inaccuracies or unreasonable bases used in the valuation judgements (such as in respect of the estimated rental value and yield profile applied) could result in a material misstatement in the consolidated financial statements.	Independent valuations For the independent property valuation, we evaluated the competence and independence of the external valuer, which included consideration of their qualifications and expertise. We read the terms of their engagement with the Group to determine whether there were any matters that might have affected their objectivity or may have imposed scope limitations upon their work.  We have read the valuation report for the property, noted the material uncertainty clauses inserted as a result of the impact of Covid-19 on the property markets, specifically Italian Cinemas, discussed the basis of the property valuation with the valuer to understand the process undertaken by them and confirmed that the valuation was prepared in accordance with professional valuation standards and IFRS. We considered the reasonableness of the inputs used by the valuer in the valuation, such as the rental terms and other assumptions that impact the value. This included discussions with and challenge of the valuer around the impact of economic variables and, the resulting adjustments to yields and overall consideration of the resulting valuation. In addition, we agreed a sample of the significant inputs into the valuation, such as the rental details, to supporting documentation. Key observation Based on the procedures performed, we did not identify any indications to suggest that the judgements made in respect of the property valuation are unreasonable.
Valuation and ownership of listed investments Refer to accounting policies 3(o) and the disclosure note 9)	The investment portfolio as at 31 March 2022 comprised listed investments whose price is readily available. This is a key accounting estimate where there is an inherent risk of management override arising from the investment valuations being prepared by the Investment Manager, who is remunerated based on the net asset value of the funds, derived using those valuations and therefore we consider this to be a key audit matter. We focused on the valuation and ownership of investments because investments represent a material proportion of the net asset value as disclosed in the Statement of Financial Position in the financial statements.	For all investments, we agreed the ownership of the investment portfolio holdings to the respective independently obtained Custodian confirmation.  We tested the valuation of all listed investments held by agreeing the prices used in the valuation to independent third-party sources such as Bloomberg. Key observation Based on the procedures performed we did not identify any matters to indicate that the ownership and valuation of investments are inappropriate.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.  We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:

	Group financial statements
	2022 £	2021 £
Materiality	244,000	253,000
Basis for determining materiality	1.75% of total assets	1.75% of total assets
Rationale for the benchmark applied	Due to it being an investment fund with the objective of long-term capital growth, with investment values being a key focus of users of the financial statements.
Performance materiality	170,000	177,000
Basis for determining performance materiality	70% of materiality This was determined using our professional judgement and took into account the complexity of the group and our knowledge of the engagement together with a history of minimal errors and adjustments.

Reporting threshold 

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £7,300 (2021: £7,600).  We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.

Other information

The Directors are responsible for the other information. The other information comprises the information included in the annual report and consolidated financial statements, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Corporate governance statement

The Listing Rules require us to review the Directors' statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Parent Company's compliance with the provisions of the UK Corporate Governance Statement specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit.

Going concern and longer-term viability

· The Directors' statement with regards the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out within the Report of Directors; and · The Directors' explanation as to its assessment of the entity's prospects, the period this assessment covers and why they period is appropriate as set out within the Report of Directors.

Other Code provisions

· Directors' statement on fair, balanced and understandable as set out within the Report of Directors; · Board's confirmation that it has carried out a robust assessment of the emerging and principal risks set out within the Corporate Governance Report; · The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out Corporate Governance Report; and · The section describing the work of the audit committee set out within the Audit Committee Report.

Other Companies (Guernsey) Law, 2008 reporting

We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion:

· proper accounting records have not been kept by the Parent Company; or

· the Parent Company financial statements are not in agreement with the accounting records; or

· we have failed to obtain all the information and explanations which, to the best of our knowledge and belief, are necessary for the purposes of our audit.

Responsibilities of Directors

As explained more fully in the Directors' responsibilities statement within the Report of Directors, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Based on our understanding of the Group and the industry in which it operates, we identified that the principal risks of non-compliance with laws and regulations related to its investment and property holding activities, and we considered the extent to which non-compliance might have a material effect on the Group's financial statements.

We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and have a direct impact on the preparation of the financial statements. We determined that the most significant frameworks which are directly relevant to specific assertions in the financial statements are those that relate to the reporting framework such as IFRS and the Companies (Guernsey) Law, 2008. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of management override of controls), and determined that the principal risks were related to revenue recognition in relation to the investment and rental income from the investments held and management bias and judgement involved in accounting estimates, specifically in relation to the valuation of the property and investments (the responses to which are detailed in our key audit matters above).

We communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws or regulations throughout the audit.

Audit procedures performed by the engagement team to respond to the risks identified included:

· Discussion with and enquiry of management and those charged with governance concerning known or suspected instances of non-compliance with laws and regulations and fraud;

· Obtaining an understanding of the internal control environment in place to prevent and detect irregularities;

· Reading minutes of meetings of those charged with governance, correspondence with the Guernsey Financial Services Commission, internal compliance reports, complaint registers and breach registers to identify and consider any known or suspected instances of non-compliance with laws and regulations or fraud;

· Recalculating investment income and realised and unrealised gains and losses in full for listed investments based on external source information; and

· Recalculating the rental income based on the lease agreement and required accounting by IFRS and comparing with that of management and challenging differences.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditor's report.

The engagement director on the audit resulting in this independent auditor's opinion is Justin Hallett.

Use of our report

This report is made solely to the Parent Company's members, as a body, in accordance with Section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Parent Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

For and on behalf of BDO Limited

Chartered Accountants and Recognised Auditor

Place du Pré

Rue du Pré

St Peter Port

Guernsey

Date 15 July 2022

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2022

		For the year ended		For the 9  months ended
		31 March 2022		31 March 2021
	Notes	£000s		£000s
Gross property income	5 & 8	742		576
Property operating expenses	5	(144)		(116)
Net property income		598		460
Other income		6		-
Net gain on investments at fair value through profit or loss	9	102		2,159
Unrealised valuation loss on investment property	8	(770)		-
Lease incentive movement	5	48		(322)
General and administrative expenses	6	(530)		(440)
(Loss)/profit before tax		(546)		1,857
Income tax refund/(expense)	12	41		(200)
(Loss)/profit for the year/ period		(505)		1,657
Other comprehensive loss
Foreign exchange translation loss		(48)		(528)
Total items that are or may be reclassified to profit or loss		(48)		(528)
Total comprehensive (loss)/income for the year/ period		(553)		1,129
Basic and diluted (loss)/earnings per ordinary share (pence)	7	(1.50)		4.91

The accompanying notes form an integral part of these Financial Statements

Consolidated Statement of Changes in Equity

For the year ended 31 March 2022

		Revenue reserve	Distributable reserve	Foreign currency reserve	Total equity
	Note	£000s	£000s	£000s	£000s
Balance at 1 April 2021		(44,972)	47,263	11,728	14,019
Loss for the year		(505)	-	-	(505)
Other comprehensive loss		-	-	(48)	(48)
Balance at 31 March 2022		(45,477)	47,263	11,680	13,466

For the 9 months ended 31 March 2021

		Revenue reserve	Distributable reserve	Foreign currency reserve	Total equity
	Note	£000s	£000s	£000s	£000s
Balance at 1 July 2020		(46,629)	47,263	12,256	12,890
Profit for the period		1,657	-	-	1,657
Other comprehensive loss		-	-	(528)	(528)
Balance at 31 March 2021		(44,972)	47,263	11,728	14,019

The accompanying notes form an integral part of these Financial Statements

Consolidated Statement of Financial Position

As at 31 March 2022

		31 March 2022		31 March 2021
	Notes	£000s		£000s
Non-current assets
Investment property	8	6,550		7,336
Lease incentive	8	778		834
Current assets
Cash and cash equivalents		576		486
Investments held at fair value through profit or loss	9	5,973		5,504
Trade and other receivables	10	34		264
Tax receivable		52		52
Total assets		13,963		14,476
Non-current liabilities
Provisions		-		42
Deferred tax payable	12	72		74
Current liabilities
Trade and other payables	11	254		167
Tax payable		171		174
Total liabilities		497		457
Total net assets		13,466		14,019
Equity
Revenue reserve	16	(45,477)		(44,972)
Distributable reserve	16	47,263		47,263
Foreign currency reserve	16	11,680		11,728
Total equity		13,466		14,019
Number of ordinary shares	13	33,740,929		33,740,929
Net asset value per ordinary share (pence)	14	39.91		41.55

The Consolidated Financial Statements were approved by the Board of Directors and authorised for issue on 15 July 2022. They were signed on its behalf by:-

W. Scott    

Director   

The accompanying notes form an integral part of these Financial Statements

Consolidated Statement of Cash Flows

For the year ended 31 March 2022

		For the year ended		For the 9 months ended
		31 March 2022		31 March 2021
	Notes	£000s		£000s
Operating activities
(Loss)/profit before tax		(546)		1,857
Adjustments for:
Unrealised valuation loss on investment property	8	770		-
Net gains on investments held at fair value through profit or loss	9	(102)		(2,159)
Investment income	9	217		17
Decrease/(increase) in trade and other receivables		172		(132)
Decrease in provisions		(42)		(4)
Increase/(decrease) in trade and other payables		87		(38)
Purchase of investments held at fair value through profit or loss	9	(868)		(1,895)
Proceeds on sale of investments held at fair value through profit or loss	9	283		217
Net cash used in operations		(29)		(2,137)
Tax received		103		43
Net cash inflow/(outflow) from operating activities		74		(2,094)
Effects of exchange rate fluctuations		16		(52)
Increase/(decrease) in cash and cash equivalents		90		(2,146)
Cash and cash equivalents at start of the year/period end		486		2,632
Cash and cash equivalents at the year/period end		576		486

The accompanying notes form an integral part of these Financial Statements

worsley investors Limited

Notes to the Consolidated Financial Statements

For the year ended 31 March 2022

1. Operations

Worsley Investors Limited (the "Company") is a limited liability, closed-ended investment company incorporated in Guernsey. The Company historically invested in commercial property in Europe and that was held through subsidiaries. The Company's current investment objective is to provide Shareholders with an attractive level of absolute long-term return, principally through the capital appreciation and exit of undervalued securities. The existing real estate asset of the Company will be realised in an orderly manner, that is with a view to optimising the disposal value of such asset.

The Consolidated Financial Statements (the "Financial Statements") of the Company for the year ended 31 March 2022 comprise the Financial Statements of the Company and its subsidiaries (together referred to as the "Group").

Please refer to the Investment Policy Note below. The Company's registered office is included under Corporate Information.

2. Change in year end

These Financial Statements are made up for the year ended 31 March 2022. The annual results, therefore, cover a twelve-month period up to 31 March 2022 and are not entirely comparable to the previous period's results, which covered a period of nine-months.

3. Significant accounting policies

(a)  Basis of preparation

The Financial Statements, which show a true and fair view, have been prepared in accordance with International Financial Reporting Standards ("IFRS") which comprise standards and interpretations issued by the International Accounting Standards Board ("IASB") and are in compliance with The Companies (Guernsey) Law, 2008. The Financial Statements have been prepared on a going concern basis, and the accounting policies, presentation and methods of computation are consistent with this basis, as disclosed in the going concern paragraph below.

The Directors believe that the Financial Statements contain all of the information required to enable shareholders and potential investors to make an informed appraisal of the investment activities and profits and losses of the Company for the period to which they relate and do not omit any matter or development of significance.

(b)  Going concern

These Financial Statements have been prepared on a going concern basis. The Directors, at the time of approving the Financial Statements, have a reasonable expectation that the Group has adequate resources to continue in operational existence for a period of at least twelve months from the date of approval of these Financial Statements. The Group maintains a significant cash balance and an extensive portfolio of securities, and the property lease generates sufficient cash flows to pay on-going expenses and other obligations. The Directors have considered the cash position and performance of the current capital invested by the Group, the potential impact on markets and supply chains of geo-political risks such as the current crisis in Ukraine, the risk of further COVID-19 uncertainty and continuing macro-economic factors and inflation and concluded that it is appropriate to adopt the going concern basis in the preparation of these Consolidated Financial Statements.

Going concern is assessed from 12 months from the approval of these Consolidated Financial Statements. Owing to the fact that the Group currently has no borrowing, has a significant cash holding and that the Company's equity investments predominantly comprise readily realisable securities the Board considers there to be no material uncertainty.

(c)  Adoption of new standards and its consequential amendments

New Accounting Standards and interpretations adopted in the reporting period

The were no relevant new standards and interpretations which have been applied for the first time in these Financial Statements:

New Accounting Standards and interpretations applicable to future reporting periods

At the date of approval of these Financial Statements, the following relevant standards and interpretations, which have not been applied in these Financial Statements, were in issue but not yet effective:

· IAS 1 (amended), "Presentation of Financial Statements" (amendments regarding the classification of liabilities, effective for periods commencing on or after 1 January 2024).

· Annual Improvements to IFRS Standards 2018-2020 (effective for periods commencing on or after 1 January 2022). In regard to IFRS 9, the amendment clarifies which fees an entity includes when it applies the '10% test' in assessing whether to derecognise a financial liability.

· Amendments to IAS 1 Classification of Liabilities as Current or Non-current (effective for periods commencing on or after 1 January 2023) - The amendments in Classification of Liabilities as Current or Non-current clarify how to classify debt and other liabilities as current or non-current.

· Amendments to IAS 1 Disclosure of Accounting Policies (effective for periods commencing on or after 1 January 2023) - The amendments in Disclosure of Accounting Policies require companies to disclose their material accounting policy information rather than their significant accounting policies.

· Amendments to IAS 8 Definition of Accounting Estimates (effective for periods commencing on or after 1 January 2023) - The amendments in Definition of Accounting Estimates clarify how companies should distinguish changes in accounting policies from changes in accounting estimates, by replacing the definition of a change in accounting estimates with a new definition.

Any standards that are deemed not relevant to the operations of the Company have been excluded. The Directors expect that the adoption of these amended standards in a future period will not have a material impact on the Financial Statements of the Group.

(c)  Significant estimates and judgements

The preparation of the Group's Financial Statements requires management to make judgements, estimates and assumptions which affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes which require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

(i)  Judgements:

In the process of applying the Group's accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the Financial Statements:

Functional currency

As disclosed in note 3(e), the Company's functional currency is pounds sterling and the subsidiaries' functional currency is Euro. The Board of Directors considers that the Parent Company's functional currency is pounds sterling, as the capital raised, return on capital and any distributions paid by the Parent Company are in pounds sterling. The Euro most faithfully represents the economic effect of the underlying transactions, events and conditions of the subsidiaries. The Euro is the currency in which the subsidiaries measure their performance and report their results.

(ii)  Estimates and assumptions:

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, which have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the Financial Statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising which are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Revaluation of investment property

The Group carries its investment property at fair value, with changes in fair value being recognised in the Consolidated Statement of Comprehensive Income. The property is valued quarterly by an external independent valuer as at the end of each calendar quarter. Their valuations are reviewed quarterly by the Board.

Quarterly valuations of the investment property are carried out by Knight Frank LLP, external independent valuers to the Group, in accordance with the Royal Institution of Chartered Surveyors' ("RICS") Appraisal and Valuation Standards. The property has been valued in accordance with the definition of the RICS Valuation which is defined as the price which would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The valuation is based on the highest and best use of the investment property.

An independent valuation was carried out for the investment property. The valuation report received from the independent valuer included a 'Material Valuation Uncertainty' paragraph in relation to the market risks linked to the COVID-19 pandemic: this paragraph explains that the valuer has attached less weight to previous market evidence for comparison purposes to achieve an informed opinion on value. The valuer therefore recommends that a higher degree of caution and less certainty should be attached to this valuation compared to valuations carried out under normal circumstances. The material uncertainty clause is to serve as a precaution and does not invalidate the valuation nor imply that the valuation cannot be relied upon.

The key assumptions used to determine the market value of the investment property are explained further in note 8.

(e)  Foreign currency translation

(i)  Foreign currency transactions

Transactions in foreign currencies are translated to presentation currency at the spot foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the Consolidated Statement of Financial Position date are translated to presentation currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Consolidated Statement of Comprehensive Income. Non-monetary assets and liabilities which are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the original transaction. Non-monetary assets and liabilities denominated in foreign currencies which are stated at fair value are translated to presentation currency at foreign exchange rates ruling at the dates the fair value was determined.

(ii)  Exchange differences on foreign operations

The assets and liabilities of foreign operations, arising on consolidation, are translated to presentation currency at the foreign exchange rates ruling at the Consolidated Statement of Financial Position date. The income and expenses of foreign operations are translated to presentation currency at an average rate. Foreign exchange differences arising on retranslation are recognised in other comprehensive income and as a separate component of equity.

(f)  Basis of consolidation

(i)  Subsidiaries

The Financial Statements comprise the Financial Statements of the Company and its subsidiaries as at 31 March each year. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases. The Financial Statements of the subsidiaries are prepared using consistent accounting policies.

(ii)  Transactions eliminated on consolidation

All intra-group balances, transactions and unrealised gains and losses resulting from intra-group transactions are eliminated in preparing the Financial Statements.

Worsley Investors Limited, the Company, is the parent of the Group. It was incorporated in Guernsey on 5 April 2005. The Company owned the following subsidiary as at the reporting date:

Subsidiaries	Country of incorporation	Date of incorporation	Ownership interest %	Principal activities	Financial year end
Property Trust Luxembourg 2 S.à r.l.	Luxembourg	24 November 2005	100.00%	Holding Company	31 March

The company shown in the table below was directly owned by Property Trust Luxembourg 2 S.à.r.l. as at the reporting date:

Indirect subsidiaries and joint ventures Property Trust Luxembourg 2 S.à r.l.	Country of incorporation	Ownership interest %	Financial year end
Multiplex 1 S.r.l.	Italy	100.00%	31 December

The entity above has a reporting date of 31 December owing to legacy set up.

(f)  Income recognition

Interest income from banks is recognised on an effective yield basis. Bond interest is recognised using the effective interest rate method.

Dividend income from equity investments is recognised when the relevant investment is quoted ex-dividend, and is included gross of withholding tax.

Rental income from the investment property leased out under operating leases is recognised in the Consolidated Statement of Comprehensive Income on a straight-line basis over the term of the lease. Lease incentives are amortised over the whole lease term.

(g)  Expenses/other Income

Expenses are accounted for on an accruals basis.

Service costs for service contracts entered into by the Group acting as the principal are recorded when such services are rendered. The Group is entitled to recover such costs from the tenants of the investment property. The recovery of costs is recognised as service charge income on an accrual basis.

(h)  Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits carried at amortised cost. Cash equivalents are short-term, highly liquid investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(i)  Provisions

A provision is recognised in the Consolidated Statement of Financial Position when the Group has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation.

(j)  Investment property

Investment property is held to earn rental income and capital appreciation and is recognised as such. Investment property is initially recognised at cost, being the fair value of consideration given, including associated transaction costs.

After initial recognition, investment property is measured at fair value using the fair value model with unrealised gains and losses recognised in the Consolidated Statement of Comprehensive Income. Realised gains and losses upon disposal of the property is recognised in the Consolidated Statement of Comprehensive Income. Quarterly valuations are carried out by Knight Frank LLP, external independent valuers, in accordance with the RICS Appraisal and Valuation Standards. The property has been valued in accordance with the definition of the RICS Valuation which is defined as the price which would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The valuation is based on the highest and best use of the investment property.

Lease incentive assets are deducted from the independent valuation to arrive at fair value for accounting purposes: refer to note 8 for further details.

Subsequent expenditure is charged to the asset's carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the Consolidated Income Statement during the financial period in which they are incurred.

Investment property is derecognised when it has been disposed of. Where the Group disposes of a property at fair value in an arm's length transaction, the carrying value immediately prior to the sale is adjusted to the transaction price, and the adjustment is recorded in the income statement within gain/(loss) on disposals of subsidiaries and investment property.

(k)  Assets held for sale

Investment property is transferred to assets held for sale when it is expected that the carrying amount will be recovered principally through sale rather than from continuing use. For this to be the case, the property must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such property and its sale must be highly probable.

For the sale to be highly probable:

· The Board must be committed to a plan to sell the property and an active programme to locate a buyer and complete the plan must have been initiated;

· The property must be actively marketed for sale at a price that is reasonable in relation to its current fair value; and

· The sale should be expected to qualify for recognition as a completed sale within one year from the date of classification.

On re-classification, any investment property which is measured at fair value would continue to be so measured.

(l)  Operating leases (lessor)

The determination of whether or not an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date. The arrangement is assessed to establish if fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

Leases in which the Group does not transfer substantially all the risks and benefits of ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned. Where an operating lease is modified it is accounted for as a new lease with any prepaid or accrued lease payments relating to the original lease being treated as part of the lease payments for the new lease.

(m)  Financial instruments

Financial assets and financial liabilities are recognised in the Consolidated Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are only offset and the net amount reported in the Consolidated Statement of Financial Position and Consolidated Statement of Comprehensive Income when there is a currently enforceable legal right to offset the recognised amounts and the Group intends to settle on a net basis or realise the asset and liability simultaneously.

On initial recognition, the Group classifies financial assets as measured at amortised cost or at fair value through profit or loss ("FVTPL").

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

· it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

· its contractual terms give rise on specified dates to cash flows which are solely payments of principal and interest.

In making an assessment of the objective of the business model in which a financial asset is held, the Group considers all of the relevant information about how the business is managed.

The Group has determined that it has two business models:

Held-to-collect business model: this includes cash and cash equivalents and other receivables. These financial assets are held to collect contractual cash flow.

Other business model: this includes investments in listed equities and investment funds. These financial assets are managed and their performance is evaluated, on a fair value basis, with sales taking place routinely.

Impairment

The Group assesses on a forward-looking basis the expected credit loss associated with its financial assets held at amortised cost. The Group has elected to apply the simplified approach permitted by IFRS 9 in respect of receivables because they have a maturity of less than one year and do not contain a significant financing component. Under the simplified approach the requirement is always to recognise lifetime Expected Credit Loss ("ECL"). Under the simplified approach practical expedients are available to measure lifetime ECL but forward-looking information must still be incorporated. Under the simplified approach there is no need to monitor significant increases in credit risk and entities will be required to measure lifetime ECLs at all times. The Directors have concluded that any ECL on receivables would be immaterial to the Financial Statements owing to the low credit risk of the relevant counterparties and the historical payment history.

A receivable is considered to be in "default" when the corresponding party is unlikely to pay its credit obligations in full, without recourse to actions such as realising security (if held), or the borrower is past due more than 90 days on any material credit obligation.

Cash and cash equivalents comprise cash balances and call deposits carried at amortised cost. Cash equivalents are short-term, highly liquid investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Investments at fair value through profit or loss ("investments")

Recognition

Investments are recognised in the Company's Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument.

Purchases and sales of investments are recognised on the trade date (the date on which the Company commits to purchase or sell the investment). Investments purchased are initially recorded at fair value, being the consideration given, including transaction or other dealing costs associated with the investment.

Measurement

Subsequent to initial recognition, investments are measured at fair value. Gains and losses arising from changes in the fair value of investments and gains and losses on investments that are sold are recognised through profit or loss in the Statement of Comprehensive Income within net changes in fair value of financial assets at fair value through profit or loss.

Investments traded in active markets are valued at the latest available bid prices ruling at midnight on the reporting date. The Directors are of the opinion that the bid-market prices are the best estimate of fair value. Investments consist of listed or quoted equities or equity-related securities, options and bonds which are issued by corporate issuers, supra-nationals or government organisations, and investment in funds.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Gains and losses arising from changes in the fair value of financial assets/(liabilities) are shown as net gains or losses on financial assets through profit or loss and recognised in the Statement of Comprehensive Income in capital in the period in which they arise.

Realised gains and losses arising on disposal of investments are calculated by reference to the proceeds received on disposal and the average cost attributable to those investments and are recognised in the Statement of Comprehensive Income. Unrealised gains and losses on investments are recognised in the Statement of Comprehensive Income.

Capital

Financial instruments issued by the Group are treated as equity if the holder has only a residual interest in the assets of the Group after the deduction of all liabilities. The Company's Ordinary Shares are classified as equity instruments.

The Group's capital is represented by the Ordinary Shares, revenue reserve, distributable reserve and foreign exchange reserve. Share premium is included in the distributable reserve presented in the Consolidated Statement of Changes in Equity. The capital of the Company is managed in accordance with its investment policy in pursuit of its investment objective. It is not subject to externally imposed capital requirements. The Ordinary shares carry rights regarding dividends, voting, winding-up and redemptions, which are detailed in full in the Company's Memorandum and Articles of Incorporation.

Equity instruments

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from proceeds.

(p) Taxation

The Company has obtained exempt company status in Guernsey under the terms of the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and accordingly is subject to an annual fee of £1,200. The Directors intend to conduct the Group's affairs such that it continues to remain eligible for exemption.

The Company's subsidiaries are subject to income tax on any income arising on investment property, after deduction of debt financing costs and other allowable expenses. However, when a subsidiary owns a property located in a country other than its country of residence the taxation of the income is defined in accordance with the double taxation treaty signed between the country where the property is located and the residence country of the subsidiary. 

Income tax on the profit or loss for the period comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year as determined under local tax law, using tax rates enacted or substantially enacted at the Consolidated Statement of Financial Position date, and any adjustment to tax payable in respect of previous periods.

Deferred income tax is provided using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the Consolidated Statement of Financial Position date, except in the case of investment property, where deferred tax is provided for the effect of the sale of the property.  Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the asset is utilised.

Details of current tax and deferred tax assets and liabilities are disclosed in note 12.

(r) Determination and presentation of operating segments

The Company has entered into an Investment Advisory Agreement with the Investment Advisor, under which the Board has appointed the Investment Advisor to oversee on a day-to-day basis the assets of the Company, subject to their review and control and ultimately the overall supervision of the Board. The Board retains full responsibility to ensure that the Investment Advisor adheres to its mandate. Moreover, the Board is fully responsible for the appointment and/or removal of the Investment Advisor. Accordingly, the Board is deemed to be the "Chief Operating Decision Maker" of the Company.

The Board has considered the requirements of IFRS 8, 'Operating Segments'. The Board is of the view that the Group has two segments of business (see note 19).

(s) Share issue costs

Share issue costs are fully written off against the share capital account in the period of the share issue in accordance with Guernsey company law.

4. Material agreements

Investment Management Agreements

Worsley Associates LLP

The Investment Advisory Agreement had an initial term of two years, with either Worsley Associates or the Company being able to terminate the agreement by giving 12 months' notice from 1 June 2020 and thereafter on a rolling 12 months' notice basis. On giving the requisite 12 months' notice there is no compensation on termination (save in respect of any payment made in lieu of notice where Worsley Associates and the Company agree to terminate the Investment Advisory Agreement on less than 12 months' notice). In addition, the Company and Worsley Associates may terminate the Investment Advisory Agreement in certain limited circumstances.

Pursuant to the Investment Advisory Agreement, Worsley Associates is entitled to an annual advisory fee of 1.25 per cent. of the Company's Net Asset Value, to the extent that the Company's Net Asset Value is £40 million or less, but subject to a minimum fee of £150,000 per annum. If the Company's Net Asset Value exceeds £40 million, the Company will pay Worsley Associates a fee equal to 1.25 per cent. of £40 million and 1.00 per cent. of the amount by which the Company's Net Asset Value exceeds £40 million.

During the year, the Worsley Associates was due an Investment Advisory fee of £181,628 (nine month period to 31 March 2021: £122,871). Fees of £16,841 were outstanding as at 31 March 2022 (31 March 2021: £14,014).

Broker Agreement

Shore Capital and Corporate Limited and Shore Capital Stockbrokers Limited

On 18 April 2019, Shore Capital and Corporate Limited and Shore Capital Stockbrokers Limited (together "Shore Capital") were appointed as the Company's financial adviser and broker. Fees expensed in the year ended 31 March 2022 totalled £25,730 (nine month period ended 31 March 2021 18,750) of which none was outstanding as at 31 March 2022 (31 March 2021: £nil).

Administrator Agreement

With effect from 28 June 2019, Sanne Fund Services (Guernsey) Limited (formerly Praxis Fund Services Limited) ("Sanne") has been entitled to an annual fee payable by the Company as follows:

-Where the Net Asset Value ("NAV") is up to £20 million a fixed fee of £70,000 per annum applies. This fee is subject to annual adjustment for inflation;

-Where the NAV is over £20 million but up to £100 million a further fee equating to 0.025% of NAV per annum will be charged on the excess; and

-Where the NAV is over £100 million, a further fee equating to 0.06% per annum of the NAV in excess of £100 million will be charged.

During the year, Sanne was due an administration fee of £72,869 (nine month period ended 31 March 2021: £54,054) of which £19,000 was outstanding as at 31 March 2022 (31 March 2021: £10,000).

Fees totalling £45,912 were paid to the administrators of the subsidiaries (nine month period ended 31 March 2021: £28,880).

Custody Agreement

With effect from 5 July 2019, Butterfield Bank (Guernsey) Limited was appointed as Custody Agent to the Company. Butterfield Bank (Guernsey) Limited is entitled to an annual fee payable by the Company at the rate of 0.15% per annum of the gross value of the investments held, subject to a minimum fee of £400 per annum.

During the year, Butterfield Bank (Guernsey) Limited was due a custody agency fee of £9,309 (nine month period to 31 March 2021: £4,179). Fees of £2,300 were outstanding as at 31 March 2022 (31 March 2021: £1,537).

During the year, Butterfield Bank (Guernsey) Limited was due transaction fees of £1,571 incurred as a result of investment trading (nine month period ended 31 March 2021: £4,450). No transaction fees were outstanding as at 31 March 2022 (31 March 2021: £nil).

5. Gross rental income

Gross rental income for the year ended 31 March 2022 amounted to £0.74 million (nine month period ended 31 March 2021: £0.58 million). The Group leases out its investment property under an operating lease which is structured in accordance with local practices in Italy. The lease benefits from indexation.

The lease, which was signed in December 2018, is summarised as follows:

-  Term

15 years fixed, from 1 January 2019 until 31 December 2033 with an automatic nine-year extension unless cancelled by the tenant with a minimum 12-month notice period.

-  Base Rent

Year 1 - €800,000

Year 2 (i.e. from January 2020) - €830,000, and thereafter to be indexed to 100% of the ISTAT Consumer Index on an upwards-only basis.

As part of the overall negotiation package an amount of €330,329 lease incentive was paid in December 2018 to the tenant. The new lease was been treated as backdated with an effective commencement date of 1 July 2018. A further amount of €330,329 was granted to the tenant as a discount on rent which adjusted the rental income received from 1 July 2018 to 31 December 2018 to be in line with that receivable under the new lease agreement.

-  Variable Rent

There was an incremental rent of between €1.50 and €2.50 per ticket sold above a minimum threshold of 350,000 tickets per year.

During June 2020, as a result of COVID-19, negotiations with the tenant at the Curno property were held with the aim of achieving overall terms which would improve asset liquidity and maximise potential pricing. As a result, a lease amendment was signed on 11 September 2020 with alterations summarised as follows:

-  Term

17.5 years fixed, from 1 January 2019 until 30 June 2035 with an automatic nine-year extension unless cancelled by the tenant with a minimum 12-month notice period.

-  Base Rent

From 1 March 2021 - €915,000, and from 1 January 2022 to be indexed to 100% of the ISTAT Consumer Index on an upwards-only basis. As part of the overall amendment package an amount of €622,500 was granted to the tenant as a full discount on rent payable from 1 March 2020 to 30 November 2020. Of the €622,500 discount on rent, €276,667 related to the year ended 30 June 2020.  On 1 January 2022 annual rental increased to €949,770.  Please refer to the table below and note 8 for further details.

-  Variable Rent

Remains as per prior agreement. There will be an incremental rent of between €1.50 and €2.50 per ticket sold above a minimum threshold of 350,000 tickets per calendar year. There was no variable rent earned in the year ended 31 March 2022 (nine month period ended 31 March 2021: none).

Minimum Lease Payments (based on actual cash flows)

			31 March 2022	31 March 2021
			€000s	€ 000s
1 year			950	915
1-5 years			3,820	3,680
After 5 years			7,976	8,624

Lease incentive

	Year ended	9 months ended
	31 March 2022	31 March 2021
	£000s	£000s
Lease incentive at beginning of year/period	834	561
Lease incentive movement for the year/period	(48)	322
Foreign exchange translation	(8)	(49)
Lease incentive at end of year/period	778	834

The amounts recognised in the Statement of Comprehensive Income of the Group in relation to the investment property are as follows:

Rental income

	Year ended 31 March 2022		9 months ended 31 March 2021
	£000s		£000s
Rental income received (net of lease incentives)	790		254
Straight-lining of lease incentives	(48)		322
Rental income	742		576

Expense from services to tenants, other property operating and administrative expenses

	Year ended 31 March 2022		9 months ended 31 March 2021
	£000s		£000s
Property expenses arising from investment property which generates rental income	144		116
Total property operating expenses	144		116

As the investment property was rented for the entire year/period, there were no p roperty expenses arising from investment property which did not generate rental income.

6. General and administrative expenses

		Year ended 31 March 2022		9 months ended 31 March 2021
		£000s		£000s
Administration fees (note 4)		119		83
General expenses		58		78
Audit fees		44		43
Legal and professional fees		29		36
Directors' fees and expenses (note 17)		46		34
Insurance fees		26		24
Corporate Broker fees (note 4)		26		19
Investment Advisor fees (note 4 & 17)		182		123
Total		530		440

7. Basic and diluted earnings/(loss) per Share

The basic and diluted earnings or loss per share for the Group is based on the net loss for the year of £0.505 million (31 March 2021: net profit for the nine month period of £1.657 million) and the weighted average number of Ordinary Shares in issue during the year of 33,740,929 (nine month period to 31 March 2021: 33,740,929). There are no instruments in issue which could potentially dilute earnings or loss per Ordinary Share.

8. Investment property

			Year ended  31 March 2022		9 months ended 31 March 2021
			£000s		£000s
Value of investment property before lease incentive adjustment at beginning of the year/period			8,170		8,696
Fair value adjustment			(770)		-
Foreign exchange translation			(72)		(526)
Independent external valuation			7,328		8,170
Adjusted for: Lease incentive (note 5)*			(778)		(834)
Fair value of investment property at the end of the year/period			6,550		7,336

* The Lease incentive is separately classified as a non-current asset within the Consolidated Statement of Financial Position and to avoid double counting is hence deducted from the independent property valuation to arrive at fair value for accounting purposes.

The property is carried at fair value. The lease incentive granted to the tenant is amortised over the term of the lease. In accordance with IFRS, the external independent valuation is reduced by the carrying amount of the lease incentive as at the valuation date. Quarterly valuations are carried out at 31 March, 30 June, 30 September and 31 December by Knight Frank LLP, external independent valuers.

The resultant fair value of investment property is analysed below by valuation method, according to the levels of the fair value hierarchy. The different levels have been defined as follows:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included within Level 1 which are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);

Level 3: inputs for the asset or liability which are not based on observable market data (unobservable inputs).

The investment property (Curno) is classified as Level 3.

The significant assumptions made relating to its independent valuation are set out below:

Significant assumptions	31 March 2022	31 March 2021
Gross estimated rental value per sqm p.a.	114.00€	114.00€
Equivalent yield	10.53%	9.10%

The external valuer has carried out its valuation using the comparative and investment methods. The assessment was made on the basis of a collation and analysis of appropriate comparable investment and rental transactions. The market analysis has been undertaken using market knowledge, enquiries of other agents, searches of property databases, as appropriate and any information provided to them. The external valuer has adhered to the RICS Valuation - Professional Standards.

An increase/decrease in ERV (Estimated Rental Value) will increase/decrease valuations, while an increase/decrease to yield decreases/increases valuations. The information below sets out the sensitivity of the independent property valuation to changes in Fair Value.

If market rental increases by 10% then property value increases by 2.41%, being €210,484 (31 March 2021: 2.76%, being €263,590).

If market rental decreases by 10% then property value decreases by 2.41% being €210,484 (31 March 2021: 2.76%, being €263,590)

If yield increases by 1% then property value decreases by 8.36%, being €728,913 (31 March 2021: 9.76%)

If yield decreases by 1% then property value increases by 10.06%, being €877,169 (31 March 2021: 12.1%)

Property assets are inherently difficult to value due to the individual nature of each property. As a result, valuations are subject to uncertainty. There is no assurance that estimates resulting from the valuation process will reflect the actual sales price even where a sale occurs shortly after the valuation date. Rental income and the market value for properties are generally affected by overall conditions in the local economy, such as growth in Gross Domestic Product ("GDP"), employment trends, inflation and changes in interest rates. Changes in GDP may also impact employment levels, which in turn may impact the demand for premises. Furthermore, movements in interest rates may affect the cost of financing for real estate companies.

Both rental income and property values may be affected by other factors specific to the real estate market, such as competition from other property owners, the perceptions of prospective tenants of the attractiveness, convenience and safety of properties, the inability to collect rents because of the bankruptcy or the insolvency of tenants, the periodic need to renovate, repair and release space and the costs thereof, the costs of maintenance and insurance, and increased operating costs. The Investment Advisor addresses market risk through a selective investment process, credit evaluations of tenants, ongoing monitoring of tenants and through effective management of the property.

The valuation report received from the independent valuer included a 'Material Valuation Uncertainty' paragraph in relation to the market risks linked to the COVID-19 pandemic: this paragraph explains that the valuer continues to be faced with an unprecedented set of circumstances caused by COVID-19 and an absence of relevant / sufficient market evidence on which to base their judgements. Their valuation is therefore reported as being subject to 'material valuation uncertainty' and a higher degree of caution should be attached to their valuation than would normally be the case.

9. Investments at fair value through profit or loss

	Year ended 31 March 2022		9 months ended 31 March 2021
	£000s		£000s
Fair value of investments at FVTPL at beginning of year/period	5,504		1,684
Purchases	867		1,895
Sales	(283)		(217)
Realised gains	46		60
Unrealised (losses)/gains	(161)		2,082
Total investments at FVTPL	5,973		5,504

As at 31 March 2022, the cost of the Investments at FVTPL was £3.983million (31 March 2021: £3.353million).

	Year ended 31 March 2022		9 months ended 31 March 2021
	£000s		£000s
Realised gains	46		60
Unrealised (losses)/gains	(161)		2,082
Total (losses)/gains on investments at FVTPL	(115)		2,142
Investment income	217		17
Total gains on financial assets at FVTPL	102		2,159

The fair value of investments at FVTPL are analysed below by valuation method, according to the levels of the fair value hierarchy. The different levels have been defined as follows:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included within Level 1 which are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);

Level 3: inputs for the asset or liability which are not based on observable market data (unobservable inputs).

The following table analyses within the fair value hierarchy the Company's financial assets at fair value through profit or loss:

31 March 2022	Level 1	Level 2	Level 3	Total
	£000s	£000s	£000s	£000s
Fair value through profit or loss
- Investments	4,189	1,784	-	5,973

Within the Company's financial assets classified as Level 2, securities totalling £1,149,000 are traded on the London Stock Exchange or AIM Market, securities of £335,000 being traded on the Aquis Exchange and securities of £300,000 being traded in The International Stock Exchange. The Level 2 securities are valued at the traded price as at the year end and no adjustment has been deemed necessary to these prices. However, although these are traded, they are not regularly traded in significant volumes and hence have been classified as level 2.

31 March 2021	Level 1	Level 2	Level 3	Total
	£000s	£000s	£000s	£000s
Fair value through profit or loss
- Investments	3,976	1,527	-	5,503

Within the Company's financial assets classified as Level 2, securities totalling £1,227,000 are traded on the London Stock Exchange or AIM Market, with the remaining securities of £300,000 being traded on the Aquis Exchange. The Level 2 securities are valued at the traded price as at the period end and no adjustment has been deemed necessary to these prices. However, although these are traded, they are not regularly traded in significant volumes and hence have been classified as level 2.

The valuation and classification of the investments are reviewed on a regular basis. The Board determines whether or not transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input which is significant to the fair value measurement as a whole) at the end of each reporting period.  There were no transfers between levels during the reporting period (nine month period to 31 March 2021: None).

10. Trade and other receivables

			31 March 2022		31 March 2021
			£000s		£000s
Rent receivable			-		183
VAT receivable			-		53
Prepayments			34		28
Total			34		264

The carrying values of trade and other receivables are considered to be approximately equal to their fair value.

Rent receivable is non-interest bearing and typically due within 30 days. At 31 March 2021, the Group had three months of rent outstanding, but had recognised no expected credit loss provision in relation to the rent receivable. The rent receivable of £183,000 as at 31 March 2021, was received in full during April 2021.

11. Trade and other payables

		31 March 2022		31 March 2021
		£000s		£000s
Investment Advisor fee (note 4 and 17)		17		14
Administration fees (note 4)		37		10
Legal and professional fees		-		8
Audit fees		40		40
Director fees payable (note 17)		2		2
Other		158		93
Total		254		167

Trade and other payables are non-interest bearing and are normally settled on 30-day terms. The carrying values of trade and other payables are considered to be approximately equal to their fair value.

12. Taxation

			Year ended  31 March 2022		9 months ended  31 March 2021
			£000s		£000s
Effect of:
Current tax
Luxembourg			(4)		(3)
Italy			45		(121)
Total current tax			41		(124)
Deferred tax		`
Italy			-		(76)
Total deferred tax			-		(76)
Tax refund/(charge) during the year/period			41		(200)

The Parent Company is exempt from Guernsey taxation.

Movement in temporary differences

	1 April 2021	Recognised in profit or loss	Foreign exchange loss on translation	31 March 2022
	£000	£000	£000	£000
Deferred tax liabilities	74	-	(2)	72

Movement in temporary differences

	1 July 2020	Recognised in profit or loss	Foreign exchange loss on translation	31 March 2021
	£000	£000	£000	£000
Deferred tax liabilities	-	76	(2)	74

13. Share capital

	Year ended 31 March 2022	9 months ended 31 March 2021
	Number of shares	Number of shares
Shares of no par values issued and fully paid
Balance at the start of the year/period	33,740,929	33,740,929
Shares issued	-	-
Balance at the end of the year/period	33,740,929	33,740,929

Total equity	Year ended 31 March 2022	9 months ended 31 March 2021
	£000s	£000s
Balance at the start of the year/period	14,019	12,890
(Loss)/profit for the year/period and other comprehensive income	(553)	1,129
Balance at the end of the year/period	13,446	14,019

No shares were issued by the Company during the year (period to 31 March 2021: none).

14. Net asset value per ordinary share

The Net Asset Value per Ordinary Share at 31 March 2022 is based on the net assets attributable to the ordinary shareholders of £13.466 million (31 March 2021: £14.019 million) and on 33,740,929 (31 March 2021: 33,740,929) ordinary shares in issue at the Consolidated Statement of Financial Position date.

15. Financial risk management

The Group is exposed to various types of risk which are associated with financial instruments.  The Group's financial instruments comprise investments, bank deposits, cash, receivables and payables which arise directly from its operations. The carrying value of financial assets and liabilities approximates the fair value. The main risks arising from the Group's financial instruments are price risk, market risk, credit risk, liquidity risk, interest risk and foreign currency risk.  The Board reviews and agrees policies for managing its risk exposure. These policies are summarised below.

Credit risk

Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment which it has entered into with the Group. Failure of any relevant counterparty to perform its obligations in respect of these items may lead to a financial loss. The Company is exposed to credit risk in respect of cash and cash equivalents, investments held at fair value through profit or loss and trade and other receivables. The credit risk associated with debtors is limited to trade and other receivables. It is the opinion of the Board of directors that the carrying amounts of these financial assets represent the maximum credit risk exposure as at the reporting date.

The Company to date has not invested in the securities of any non-Group company which is not quoted or does not have a listing. All transactions in listed securities are settled/paid upon delivery using approved brokers. The risk of default is considered minimal, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the securities have been received by the broker. The trade will fail if either party fails to meet their obligation.

The credit risk on cash and cash equivalent is considered limited because the counterparties are banks with high credit-ratings assigned by international credit-ratings agencies.

 

As at 31 March 2022 the Group banked with Butterfield Bank (Guernsey) Limited, which has a Standard & Poor's rating of BBB+ (31 March 2021: BBB+), CA Indosuez Wealth (Europe), a subsidiary of Credit Agricole and which has a Standard & Poor's rating of A+ (31 March 20201: A+) and Banco di Desio e della Brianza S.p.A with a Fitch rating of BB+ (31 March 2021: BB+).

 

During the year the subsidiary company, Property Trust Luxembourg 2 S.à.r.l., opened a current account with Alpha FX Group plc ("Alpha FX"), an Electronic Money Institution authorised and regulated by the UK Financial Conduct Authority. Whilst Alpha FX does not have a credit rating, the underlying funds held in the subsidiary's current account are held with Citibank International Limited, Luxembourg Branch, a sub  sidiary of Citigroup Inc, which has a Standard & Poor's credit rating of BBB+.

Cash and cash equivalents, investments held at fair value through profit or loss and trade and other receivables presented in the Consolidated Statement of Financial Position are subject to credit risk with maturities within one year. The Company's maximum credit exposure is limited to the carrying amount of financial assets recognised as at the Consolidated Statement of Financial Position date.

At the reporting date, the carrying amounts of the financial assets exposed to risk were as follows:

		Within
		one year	1-3 years		Total
As at 31 March 2022		£000s	£000s		£000s
Cash and cash equivalents		576	-		576
Investments held at fair value through profit or loss		5,973	-		5,973
Trade and other receivables		34	-		34
Total		6,583	-		6,583

		Within
		one year	1-3 years		Total
As at 31 March 2021		£000s	£000s		£000s
Cash and cash equivalents		486	-		486
Investments held at fair value through profit or loss		5,504	-		5,504
Trade and other receivables		264	-		264
Total		6,254	-		6,254

Liquidity risk

Liquidity risk is the risk that the Group will encounter in realising assets or otherwise raising funds to meet financial commitments in a reasonable time frame or at a reasonable price.

The Group has the majority of its assets invested in investment property which is relatively illiquid. The Group prepares forecasts in advance which enables the Group's operating cash flow requirements to be anticipated and ensures that sufficient liquidity is available to meet foreseeable needs and to allow any surplus cash assets to be invested safely and profitably. The Group also monitors the cash position in all subsidiaries to ensure that any working capital requirements are addressed as early as possible. As at 31 March 2022 and 31 March 2021, the Group had no significant financial liabilities other than short-term payables.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's interest-bearing financial assets and liabilities expose it to risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows.  As at the year end, the Group's overall interest rate risk is monitored on a quarterly basis by the Board. As the vast majority of the Group's investments held at fair value through profit or loss are not interest-bearing and are not directly subject to interest rate risk, the exposure to interest rate risk is not significant.

Concentration risk

As at 31 March 2022, the Company held one Investment Property representing 54.42% of NAV (31 March 2021: 58.28%).

The Group pursues a policy of diversifying its risk. Save for the Curno Asset until such time as it is realised, the Group intends to adhere to the investment restrictions detailed within the Investment Objective and Policy Change section below.

Foreign currency risk

The Group is invested in assets denominated in a currency other than pounds sterling (that is Euros and US Dollars), the Company's functional and presentation currency, and the Consolidated Statement of Financial Position may be significantly affected by movements in the exchange rate of such currencies against pounds sterling.  The following table sets out the total exposure to foreign currency risk and the net exposure to foreign currency of the Group's monetary assets and liabilities based on notional amounts.

				Monetary		Monetary		Net
				assets		liabilities		exposure
				£000s		£000s		£000s
At 31 March 2022:		Euro		7,757		(363)		7,394
		USD		306		-		306
At 31 March 2021:		Euro		8,672		(399)		8,273
		USD		-		-		-

Foreign currency risk sensitivity

The following table demonstrates the sensitivity to potential fluctuations in the Euro exchange rate (ceteris paribus) of the Group's equity.

						Increase/decrease		Effect on equity
						in exchange		and income
						rate		£000s
At 31 March 2022		Euro				+1%		82
		Euro				-1%		(82)
		USD				+5%		15
		USD				-5%		(15)
At 31 March 2021		Euro				+15%		1,241
		Euro				-15%		(1,241)

The sensitivity rates of 1% for Euros and 5% for US Dollars as at 31 March 2022 (31 March 2021: 15% for Euros) are regarded as reasonable in light of the recent volatility of pounds sterling vs the Euro and the US Dollar. Any changes in the foreign exchange rate will directly affect the profit and loss, allocated to the foreign currency reserve of the Consolidated Statement of Changes in Equity.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Group's activities expose it primarily to the market risks of changes in market prices.

Market price risk

Market price risk arises mainly from the uncertainty about future prices of the financial instruments held by the Group. It represents the potential loss the Group may suffer through holding market positions in the face of price movements.

The Group's investment portfolio is exposed to market price fluctuations, which are monitored by the Investment Advisor in pursuance of the investment objectives and policies.

Market price sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to equities risks at the reporting date. The 20% reasonably possible price movement for equity-related securities (31 March 2021: 20%) is based on the Investment Advisor's best judgement. The sensitivity rate for equity-related investments of 20% is regarded as reasonable, as in the Investment Advisor's view there is expected to be considerable volatility in equity markets in the coming year.

A 20% increase in the market prices of equity-related investments as at 31 March 2022 would have increased the net assets attributable to shareholders by £1,194,615 (31 March 2021: £1,100,682) and a 20% change in the opposite direction would have decreased the net assets attributable to shareholders by an equal but opposite amount.

Actual trading results may differ from the above sensitivity analysis and these differences could be material.

Fair value

Financial assets at fair value through profit or loss are carried at fair value. Other assets and liabilities are carried at cost which approximates fair value.

IFRS 7 requires the Company to classify a fair value hierarchy which reflects the significance of the inputs used in making the measurements. IFRS 7 establishes a fair value hierarchy which prioritises the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under IFRS 7 are as follows -

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included within Level 1 which are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);

Level 3: inputs for the asset or liability which are not based on observable market data (unobservable inputs).

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs which require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources which are actively involved in the relevant market.

Assets classified in Level 1 consist of listed or quoted equities or equity-related securities, options and bonds which are issued by corporate issuers, supra-nationals or government organisations.

Assets classified in Level 2 are investments such as funds fair-valued using the official NAV of each fund as reported by each fund's independent administrator at the reporting date. Where these funds are invested in equity-type products, they are classified as equity in the table above. Options and foreign exchange forward contracts are fair valued using publicly available data. Foreign exchange forward contracts would be shown as derivative financial assets and liabilities in the above table.

Assets classified in Level 3 consist of investments for which no market exists for trading, for example investments in liquidating or illiquid funds, which would be reported using the latest available official NAV less dividends declared to date of each fund as reported by each fund's independent administrator at the last reporting date. Where a market exists for trading in illiquid funds, these are classified in Level 2.

The Company recognises any transfers between levels of fair value hierarchy as of the end of the reporting period during which the transfer has occurred. During the year ended 31 March 2022 and the nine month period ended 31 March 2021, there were no transfers between levels of fair value hierarchy.

16. Reserves

(a) Revenue reserves

Revenue reserves arise as a result of the profit or loss created by the Group.

(b) Distributable reserves

Distributable reserves arose from the cancellation of the share premium account pursuant to the special resolution passed at the EGM on 13 April 2005 and approved by the Royal Court of Guernsey on 24 June 2005.

(c) Foreign currency reserves

Foreign currency reserves arise as a result of the translation of the Financial Statements of foreign operations, the functional and presentation currency of which is not pounds sterling.

17. Related party transactions

The Directors are responsible for the determination of the Company's investment objective and policy and have overall responsibility for the Group's activities including the review of investment activity and performance.

Mr Nixon, a Director of the Company, is also Founding Partner and a Designated Member of Worsley Associates LLP . The total charge to the Consolidated Statement of Comprehensive Income during the year in respect of Investment Advisor fees to Worsley Associates was £181,628 (nine month period to 31 March 2021: £122,871) of which £8,713 (31 March 2021: £8,128) remained payable at the year end.

The fees and expenses payable to the Investment Advisor are explained in note 4.

Upon appointment of Worsley Associates as Investment Advisor (31 May 2019), Mr Nixon waived his future Director's fee for so long as he is a member of the Investment Advisor.

As at 31 March 2022, Mr Nixon held 29.88% of the shares in the Company (31 March 2021: 29.88%).

As at 31 March 2022, Mr Scott held 1.19% of the shares in the Company (31 March 2021: 1.19%).

The aggregate remuneration and benefits in kind of the Directors and directors of its subsidiaries in respect of the Company's year ended 31 March 2022 amounted to £45,994 (nine month period ended 31 March 2021: £34,108) in respect of the Group of which £35,000 (31 March 2021: £26,250) was in respect of the Company. Please refer for further details on the Directors' fees.

All the above transactions were undertaken at arm's-length.

18. Commitments and contingent liability

As at 31 March 2022 the Company had no commitments.

Disposal of the Curno property before 1 January 2024 may, depending on the terms, incur Italian taxes which would be material in the context of Shareholders' Funds. As at the 31 March 2022 and up to the date of approval of these financial statements, no disposal was in discussion. As a result, no provision has been included in these Financial Statements.

19. Segmental analysis

As at 31 March 2022, the Group has two segments (31 March 2021: two).

The following summary describes the operations in each of the Group's reportable segments for the current year:

Property Group	Management of the Group's property asset.
Parent Company	Parent Company, which holds listed equity investments

Information regarding the results of each reportable segment is shown below. Performance is measured based on segment profit/(loss) for the year, as included in the internal management reports that are reviewed by the Board, which is the Chief Operating Decision Maker ("CODM"). Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other comparable operators.

The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 3.

(a) Group's reportable segments

	Continuing Operations
31 March 2022	Property Group	Parent Company	Total
	£000	£000	£000
External revenue
Gross property income	742	-	742
Property operating expenses	(144)	-	(144)
Unrealised loss on investment property	(770)	-	(770)
Net gain on investments at fair value through profit or loss	-	102	102
Other income	-	6	6
Lease incentive movement	48	-	48
Total segment revenue	(124)	108	(16)
Expenses
General and administrative expenses	(144)	(386)	(530)
Total operating expenses	(144)	(386)	(530)
(Loss)/profit before tax	(268)	(278)	(546)
Income tax charge	41	-	41
(Loss)/profit after tax	(227)	(278)	(505)
(Loss)/profit for the year	(227)	(278)	(505)
Total assets	7,746	6,217	13,963
Total liabilities	314	183	497

(b) Geographical information

The Company is domiciled in Guernsey. The Group has subsidiaries incorporated in Europe.

The Group's revenue from external customers from continuing operations and information about its segment non-current assets by geographical location (of the country of incorporation of the entity earning revenue or holding the asset) are detailed below:

	Revenue from External Customers	Non-Current Assets
	31 March 2022	31 March 2022
	£000	£000
Europe	742	8,086
	742	8,086

	Revenue from External Customers	Non-Current Assets
	31 March 2021	31 March 2021
	£000	£000
Europe	576	8,170
	576	8,170

20. Subsequent events

There were no post year end events which require disclosure in these Financial Statements.

Portfolio statement (unaudited)

as at 31 March 2022

	Currency	Fair value £'000	% of Group Net Assets
Property
UCI Curno	EUR	7,328	54.42%
Less: lease incentive	EUR	(778)	(5.78%)
Total		6,550	48.64%
Securities
Smith News Plc	GBP	3,404	25.28%
Amedeo Air Four Plus Limited	GBP	498	3.70%
Northamber Plc	GBP	495	3.67%
Hurricane Energy Plc - 7.5% Convertible Bond Snr 24/07/22	GBP	300	2.23%
Shepherd Neame Limited	GBP	255	1.89%
Total disclosed securities		4,952	36.77%
Other securities (none greater than 2% of Net Assets)	GBP	1,021	7.59%
Total securities		5,973	44.36%
Total investments		12,523	93.00%

Investment Policy

Investment Objective and Policy Change

At an EGM held on 28 June 2019, an ordinary resolution was passed to adopt a new Investment Objective and Policy.

Investment Objective

The Company's investment objective is to provide shareholders with an attractive level of absolute long-term return, principally through the capital appreciation and exit of undervalued securities. The existing real estate asset of the Company will be realised in an orderly manner, that is with a view to optimising the disposal value of such asset.

Investment Policy

The Company aims to meet its objectives through investment primarily, although not exclusively, in a diversified portfolio of securities and related instruments of companies listed or admitted to trading on a stock market in the British Isles (defined as (i) the United Kingdom of Great Britain and Northern Ireland; (ii) the Republic of Ireland; (iii) the Bailiwicks of Guernsey and Jersey; and (iv) the Isle of Man). The majority of such companies will also be domiciled in the British Isles. Most of these companies will have smaller to mid-sized equity market capitalisations (the definition of which may vary from market to market, but will in general not exceed £600 million). It is intended to secure influential positions in such British quoted securities with the deployment of activism as required to achieve the desired results.

The Company, Property Trust Luxembourg 2 SARL and Multiplex 1 SRL ("the Group") may make investments in listed and unlisted equity and equity-related securities such as convertible bonds, options and warrants. The Group may also use derivatives, which may be exchange traded or over-the-counter.

The Group may also invest in cash or other instruments including but not limited to: short, medium or long term bank deposits in pounds sterling and other currencies, certificates of deposit and the full range of money market instruments; fixed and floating rate debt securities issued by any corporate entity, national government, government agency, central bank, supranational entity or mutual society; futures and forward contracts in relation to any other security or instrument in which the Group may invest; put and call options (however, the Group will not write uncovered call options); covered short sales of securities and other contracts which have the effect of giving the Group exposure to a covered short position in a security; and securities on a when-issued basis or a forward commitment basis.

The Group pursues a policy of diversifying its risk. Save for the Curno Asset until such time as it is realised, the Group intends to adhere to the following investment restrictions:

· not more than 30 per cent. of the Gross Asset Value at the time of investment will be invested in the securities of a single issuer (such restriction does not, however, apply to investment of cash held for working capital purposes and, pending investment or distribution, in near cash equivalent instruments, including securities issued or guaranteed by a government, government agency or instrumentality of any EU or OECD Member State or by any supranational authority of which one or more EU or OECD Member States are members);

· the value of the four largest investments at the time of investment will not constitute more than 75 per cent of Gross Asset Value;

· the value of the Group's exposure to securities not listed or admitted to trading on any stock market will not exceed in aggregate 35 per cent. of the Net Asset Value;

· the Group may make further direct investments in real estate but only to the extent such investments will preserve and/or enhance the disposal value of its existing real estate asset. Such investments are not expected to be material in relation to the portfolio as a whole, but in any event will be less than 25 per cent. of the Gross Asset Value at the time of investment. This shall not preclude Property Trust Luxembourg 2 SARL and Multiplex 1 SRL (the "Subsidiaries") from making such investments for operational purposes;

· the Company will not invest directly in physical commodities, but this shall not preclude its Subsidiaries from making such investments for operational purposes;

· investment in the securities, units and/or interests of other collective investment vehicles will be permitted up to 40 per cent. of the Gross Asset Value, including collective investment schemes managed or advised by the Investment Advisor or any company within the Group; and

· the Company must not invest more than 10 per cent. of its Gross Asset Value in other listed investment companies or listed investment trusts, save where such investment companies or investment trusts have stated investment policies to invest no more than 15 per cent. of their gross assets in other listed investment companies or listed investment trusts.

The percentage limits above apply to an investment at the time it is made. Where, owing to appreciation or depreciation, changes in exchange rates or by reason of the receipt of rights, bonuses, benefits in the nature of capital or by reason of any other action affecting every holder of that investment, any limit is breached by more than 10 per cent., the Investment Advisor will, unless otherwise directed by the Board, ensure that corrective action is taken as soon as practicable.

Borrowing and Leverage

The Group may engage in borrowing (including stock borrowing), use of financial derivative instruments or other forms of leverage provided that the aggregate principal amount of all borrowings shall at no point exceed 50 per cent. of Net Asset Value. Where the Group borrows, it may, in order to secure such borrowing, provide collateral or security over its assets, or pledge or charge such assets.

Corporate Information

Directors (All non-executive)  W. Scott (Chairman) R. H. Burke B. A. Nixon	Registered Office Sarnia House Le Truchot St Peter Port Guernsey, GY1 1GR
Investment Advisor Worsley Associates LLP First Floor Barry House 20 - 22 Worple Road Wimbledon, SW19 4DH United Kingdom	Administrator and Secretary Sanne Fund Services (Guernsey) Limited (formerly Praxis Fund Services Limited) Sarnia House Le Truchot St Peter Port Guernsey, GY1 1GR
Financial Adviser Shore Capital and Corporate Limited Cassini House  57 St James's Street London, SW1A 1LD United Kingdom	Corporate Broker Shore Capital Stockbrokers Limited  Cassini House  57 St James's Street London SW1A 1LD United Kingdom
Independent Auditor BDO Limited Place du Pré Rue du Pré St Peter Port Guernsey, GY1 3LL	Registrar Computershare Investor Services (Guernsey) Limited 1st Floor Tudor House Le Bordage St Peter Port Guernsey, GY1 1DB
Registration Number 43007

 

END

 

 

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