Half-year Report
RNS Number : 3731U
Athelney Trust PLC
28 July 2020
 

 

Athelney Trust PLC

 

Legal Entity Identifier:

213800ON67TJC7F4DL05

 

28 July 2020

 

Half Yearly Financial Report for the Period ended 30 June 2020

 

Athelney Trust PLC (LSE: ATY) is a company making investments in the equity securities of quoted United Kingdom companies including smaller companies.

 

Investment Objective

 

 

 

Our Investment Objective is to offer our prospects

long-term dividend and capital growth

 

Investment Policy

 

The assets of the Trust are allocated predominantly to companies with either a full listing on the London Stock Exchange or a trading facility on AIM or ISDX, and in two main ways: first, to the shares of those companies which have grown steadily over the years in terms of profits and dividends but, despite this progress, whose market rating is favourable when compared to future earnings and dividends; second, to those companies whose shares are standing at a favourable level compared with the value of land, buildings, other assets or cash on their balance sheet.

 

 

 

 

 

 

CHAIRMAN'S STATEMENT

 

Period Highlights

 

·    Investment performance beat the FTSE 250 index by 6.9%  - unaudited Net Asset Value (NAV) declined to 227.3p, a drop of 14.9% for the half year compared to a FTSE 250 drop of 21.8%.  Over the past 12 months, our portfolio beat the same index by 7.0%

 

·    The Trust remains third in the AIC's 'Next Generation of Dividend Heroes' table published in March - with a yield at that time of 4.8%, dividend cover of 2.19 and 16 years increasing dividend

 

·    Total return to shareholders declined by 11.4%.  This is calculated as the change in net asset value (NAV) during the half year including dividend paid

 

·    Largely due to the impact of the COVID-19 pandemic leading to portfolio companies cancelling or postponing dividends, gross revenue has dropped to £52,578 - minus 56% compared to the same period last year (£119,303)

 

·    Revenue return per ordinary share was 1.7p (31 December 2019: 9.1p, 30 Jun 2019:  4.7p)

 

·    A final dividend of 9.3p was paid in April 2020 (2019: 9.1p)

 

·    We announce payment of an interim dividend for the first time, providing shareholders with income when perhaps it has dropped or been cancelled this year from their direct or open-ended fund investments. In future we plan to pay dividends twice a year; this interim dividend will be 1.7p.

 

Performance

I am very pleased to report the Company has produced very strong investment performance in relative terms for its shareholders; the board is delighted with our Managing Director's effort, skill and diligence in such challenging times.

 

The NAV return for the period was -14.8% compared to -21.8% for the FTSE 250 Index, an outperformance of 7% (consistent with 7.0% outperformance for the 12 months ending 30 June 2020).  Further information on portfolio activity and the drivers behind the portfolio's performance is contained in the Managing Director's Report below.

 

However I am disappointed by the Company's share price which dropped to 165p at the end of this period and therefore traded at a discount to NAV of 27.4%. At the time of writing the discount had improved a little to 21.2%. The board believes this reflects a high degree of uncertainty about the future from both markets and individual investors, leading to greater reluctance to commit as well as higher volatility in prices.  In March we had a brutal equity sell-off in many major markets followed by good recovery in June, including the best second quarter for US equities since 1987 - more feast-famine swings seem likely in the future.

 

Dividends

Faced with the medical and economic impact of the COVID-19 pandemic, the British government and Bank of England responded with an almost unprecedented range of health protection and economic support measures. The Office of Budget Responsibility says they may result, along with lost tax revenues, in a record peacetime high for borrowing of £370bn this year.  At the time of writing 200 countries report infections and the peak wave is arriving in Africa and South America having passed through Asia, Europe and America.  Other countries will likely reach record public borrowing and possibly unemployment levels however the UK has been hit harder than most.

 

A good number of UK companies, faced with resulting uncertainty about income, cash flows and even survival, have cut or cancelled their dividend, affecting many investors.  Recent figures confirm Q2 dividend payouts by British companies dropped by approximately £22bn (57%) compared to Q2 2019, by far the lowest quarterly figure since 2010 (report by Link Group).  For our Company, gross revenue for the period fell by 56% compared to H1 2019 to £52,578.

 

Against this backdrop I would like to underline the value of prudence in prior years, in making use of our status as a closed-ended fund that allows us to keep up to 15% of investment income (not possible for open-ended funds) so that 'fat years' can help pay for 'lean years'.   With dividend cover of more than 2 we are better placed in this regard than 21 of the other funds in the AIC's 'Next Generation Heroes' table of 25 trusts, published in late March, to pay dividend.

 

As a result I am delighted to report your board has decided to pay for the first time an interim dividend. This will be 1.7p per share and should be a welcome positive contribution to what otherwise may be a lean year for many investors; we will pay this on 25 September 2020 to all shareholders on the register of members at close of business on 11 September 2020.

 

We will review the case for a final dividend in Q1 2021, and subject to shareholder approval, pay any final dividend on 6 April 2021 to all shareholders on the register at 12 Mar 2021.

 

Shareholder Relations

The Board held the AGM on 8 April 2020 in Yorkshire, in order to safeguard the health of its shareholders, officers and service providers. It intends to hold the AGM for the current financial year in London on 30 March 2021.

 

Outlook

I wrote in our Annual Report on 2 March 2020 that our internal dynamics had stabilised, that our smaller portfolio in terms of number of companies was more focused on value creation and that we had returned to a more normal operating environment.

 

In just a few months there have been many changes to the local and global environment and markets, much of them as a result of the pandemic - the full outcome is yet to be understood.  In addition there are significant uncertainties for the next 6-9 months that may impact the timing and strength of recovery in the UK, Europe and the rest of the world.  Will there be a second wave in the UK/Europe during the winter months?  Will there be an effective and widely available vaccine for the majority of the population?  Will trade agreements between the UK and Europe as Brexit continues, help or hinder recovery?  Will UK relations with China and America develop as win-win?  In the meantime how many more will be made redundant and what will the new normal be for companies?

 

We cannot know the answers to these questions and to speculate is largely pointless.

 

However we do know that investing in quality and for the long term reaps rewards - we are already seeing the fruit of this approach in relative portfolio performance since April last year.  We also know that our fund manager's relentless search for features in potential investee companies that make them more resilient in challenging times for capital, growth and cash will provide comparative advantage to Athelney shareholders. 

 

On dividends, we know that UK companies have in the past proportionately paid out more dividends than the rest of the world but also that dividend cover is lower here.  The news in May that Royal Dutch Shell had cut its dividend by two thirds - the first time since 1945 - was a huge blow to many investors used to high income. 

 

Given the oil and gas sector was far below the average dividend cover in 2019 and that Shell had become a hostage to paying a dividend (cutting future investment and selling assets to service it), the pandemic has provided the perfect push to halt the self-digestion.  Don't be surprised if BP follows suit and cuts its dividend soon - the market generally expects it.  Chasing high yield for its own sake is risky, especially if it is fully at the expense of capital growth.

 

Investors might now use this and other prompts to review their expectations for future dividends from individual UK companies or sectors.

 

We also know that existing and potential Athelney investors are and will remain attracted by the risk diversification inherent in our portfolio, where both income and capital growth is possible across a wide range of sectors through companies that may provide income or growth.  Most understand that for all but a few stocks in the current climate, there will be a degree of share price volatility for a while and that our investment trust status will help smooth the impact of spotty dividend payments by portfolio companies year-on-year.

 

Overall the board remains confident the Company remains well-positioned to weather this storm and meet its objectives.

 

We have all been affected in some way by this virus, reminded of the need to be grateful, struck by stories of resilience and tragedy; its impact will be with us for months to come, however we also know that we will ultimately reach calmer waters.  I wish you and those dear to you both health and happiness in the meantime.

 

Frank Ashton

Chairman

28 July 2020

 

OTHER MATTERS

 

The important events that have occurred during the period under review and the key factors influencing the financial statements are set out above.

                                                                  

Directors' Responsibility Statement

The Directors are responsible for preparing the Half Yearly Financial Report in accordance with applicable laws and regulations. The Directors confirm that to the best of their knowledge:

 

·    The condensed set of Financial Statements for the six months to 30 June 2020 have been prepared in accordance with FRS 104 "Interim Financial Reporting", gives a fair view of the assets, liabilities, financial position and profit of the Company.

 

·    The Half Yearly Financial Report includes a fair review of the information required by:

 

a)  rule 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the year; and

 

b)  rule 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so.

The Half Yearly Financial Report for the six months ended 30 June 2020 comprises an Interim Management Report, in the form of the Chairman's Statement and Other Matters, the Managing Director's Report, Portfolio Information and a set of Financial Statements which have not been reviewed or audited by the Company's Auditor.

 

Principal Risks and Uncertainties

The Board considers that the principal risks and uncertainties facing the Company, other than as set out below, remain the same as those disclosed in the Annual Report for the year ended 31 December 2019 on pages 15, 16 and 49. These risks include, but are not limited to, market risk, investment and strategic risk, regulatory risk, operational risk, financial risk and liquidity risk.

 

Global Pandemic 

The global pandemic COVID-19 declared by WHO on 11 March 2020 has emerged as a significant risk which has impacted global commercial activities. The board has been monitoring the development of the pandemic and has considered the impact it has had to date and assessed the impact it may have in the future. The Chairman's Statement and Managing Director's Report cover this in more detail.

 

On behalf of the Board

 

Frank Ashton

Chairman

28 July 2020

 

MANAGING DIRECTOR'S REPORT

 

Investment Changes

No new holdings were purchased during this period. Additional holdings of 4Imprint, Begbies Traynor, Boohoo, Clarke(T), Costain, Fevertree, Homeserve, Jarvis Securities, JD Sports, and Rightmove were acquired. The following holdings were sold: Andrews Sykes, Biffa, Camellia, Hansteen Holdings, Marstons, Vitec, VP and Wilmington. In addition, Mountview Estates was top-sliced to provide capital for new purchases.

 

Corporate Activity

The holding of Hansteen Holdings was taken over at a capital profit of 15%.

 

Portfolio Commentary

In the period under review, businesses across the globe were impacted by COVID-19.  After all-time highs in January, volatility was the only consistent feature for the remainder of the year.  Due to the Company's investments in listed securities the market volatility had a significant impact on the financial position as tracked by the monthly net asset value (NAV) per share before tax on unrealised gains:

 

Month

NAV Pence per Share

Month on Month Movement

Three-Month Movement

Six-Month Movement

FTSE 250 Movement

Three-Month Movement

Six-Month Movement

Dec 2019

266.90

 

 

 

 

 

 

Jan 2020

270.90

1.51%

 

 

-2.03%

 

 

Feb 2020

247.80

-8.53%

 

 

-9.84%

 

 

Mar 2020

191.70

-22.64%

-28.18%

 

-21.88%

-30.99%

 

Apr 2020

209.90

9.49%

 

 

8.96%

 

 

May 2020

224.00

6.72%

 

 

3.58%

 

 

Jun 2020

227.30

1.47%

+18.57%

-14.84%

0.45%

+13.36%

-21.77%

 

Over the quarter to June 2020, the portfolio return was 18.6% as compared to the FTSE 250 return of 13.4%, over the six-month period -14.8% compared to -21.8% for the index and for the twelve months to June the portfolio return was -5.0% compared to the FTSE 250 return of -12.0%.  Thus, by the end of June 2020 the market had recovered somewhat with the portfolio tracking significantly ahead. 

 

As mentioned in the Chairman's Statement dividend revenue in the current financial year is down by 56% on FY2019 which is largely due to COVID-19 related precautions from companies preserving capital and also reflective of the current portfolio mix which includes investments with higher capital growth prospects and lower dividend yields than in the prior years.

 

COVID-19 has had an impact on every element of society and has posed a significant challenge for businesses and governments across the globe.  One of the common themes during the last four months has been a focus on capital.  Many companies have been raising capital and also cutting or delaying dividends until a clearer vision of the future exists.  For Athelney, this may have an impact on dividend revenue for the remainder of the year and additionally the volatility in the market has impacted the valuation of listed investment assets throughout the period.

 

Investment discipline is a prerequisite for long-term success, and we will ensure the application of the same consistent approach to investments during this uncertain time.  During this time, I have continued to monitor the investee businesses for long term COVID-related impacts and have made adjustments to the portfolio model and investments as necessary.

 

Athelney is a long-term investor, and as described more fully later in this report, our investment philosophy is based on the belief that the economics of a business drives long-term investment returns. We see ourselves as owners in the business which have organic growth with predictable earnings, a sustainable competitive advantage, high returns on equity, a strong financial position and an experienced and talented management team.

 

As owners of these businesses we are supportive of management otherwise we would vote with our feet and, to this end, we generally vote our proxies in accordance with management's direction other than when the resolution concerns their own remuneration.  In times of business turmoil, we would not be concerned at management foregoing margin to retain talented staff or reducing dividends to shore up the balance sheet after depleting some of the reserves built up in the good times.  However, we take a dim view of management who lay off staff and reduce dividends without adopting a similar approach to executive remuneration.  We note that a few of our investee companies have cancelled the payment of the current dividend.

 

As detailed elsewhere in this report, the number of stocks in the portfolio has been reduced further from 54 stocks as at the 30 June 2019 to 39 currently resulting in a more concentrated and focused portfolio.  As a result, the Company realised capital profits before expenses arising from the sale of investments during the period in the sum of £241,205 (30 June 2019: £71,882).

 

As a high-conviction manager of concentrated portfolios, understanding the competitiveness and sustainability of a business is paramount, combined with a healthy dose of trust in a proven management team.  To be sustainable, a business should encompass three characteristics: firstly, the business must operate in an industry with a low risk of macro-environmental factors affecting future performance; secondly, the business has demonstrated strong ESG performance to date and holds a capacity to mitigate ESG issues; and lastly, the business has dynamic capabilities that sustainably renews its competitive advantage.  ESG is a topic that is frequently discussed and within our framework, the recent disclosures pertaining to Boohoo have brought the long-term sustainability of the business model into question which has subsequently resulted in us exiting this position post period end.

 

In so far as our other investments are concerned, the management teams are trusted through their behaviour, competency, and attitudes to ensure that their businesses prosper and we remain confident that our portfolio as a result of this will produce above average returns for our shareholders. 

 

Notwithstanding the fact that previous Annual Reports have contained extensive information on our investment philosophy and my approach to investing, I have decided to summarise this in each report for the benefit of any new shareholders and to ensure that we have a succinct synopsis to which all shareholders can refer.

 

Investment Philosophy

As far as portfolio investments are concerned, our investment philosophy is clear:

 

I.       The economics of a business drives long-term investment returns; and

II.      Investing in high quality, growth businesses that have the ability to generate predictable, above-average economic returns will produce superior investment performance over the long-term.

 

In essence, this means that in assessing potential investments we:

 

a)         Value long-term potential, not just performance

b)         Choose high-quality, growing businesses; and

c)         Ignore temporary market turbulence.

 

The key attributes that will define our investments are:

 

(1)        Organic Sales Growth: Quality franchises organically growing sales above GDP growth that can do so (sustainably) because they have a large, growing market opportunity and compelling competitive advantage which will drive ongoing market share gains are attractive.

 

(2)        A Proven Track Record: This encompasses both the management's capability and the strength of the business' model. Generally, a firm that consistently delivers a Return on Equity of greater than 15% indicates a Quality Franchise for us.  Our investment philosophy is built on the belief that a stock's long-term return to shareholders is driven by the return on capital of the underlying business.

 

(3)        Company's Future Profits: In essence we are backing a proven management team and a successful business model. Management are the key decision makers regarding the company's strategy and its competitive position in the marketplace and it is critical that we have confidence in the company's ability to sustainably execute its strategy and grow their earnings, even in a tough environment like the current COVID-19 and Brexit conundrum.

 

(4)        Low Leverage: We require investments to operate with low levels of debt, which ensure that they have sufficient resources to execute on their strategy. An Interest Coverage above 4x provides sufficient bandwidth in times of economic trouble. As a long-term investor, capital preservation is the highest priority. There is nothing that changes a management team's focus toward the short term quicker than impending debt refinancing when market conditions suddenly change for the worse. We need to be comfortable that this will not happen and that the company has a strong enough balance sheet so that it will retain optionality and can quickly and efficiently execute its strategy over the long-term.

 

Ongoing Charges and Costs

I am very pleased to confirm that we have maintained a strict control over costs during the period under review.  Total expenses have declined by 53% from those incurred in the six months to June 2019 for reasons outlined in the 2019 Annual report, returning to a normal cost run-rate for the Company for the first half of the year.

 

Dr Manny Pohl AM

Managing Director

28 July 2020

 

INVESTMENT PORTFOLIO

Top 20 Holdings

 

 

Holding

Value

%

 

 

£

of portfolio

Liontrust Asset Management

33,000

429,000

9.08

Games Workshop

4,500

360,450

7.63

National Grid

28,000

276,920

5.86

Tritax Big Box

170,000

246,330

5.21

LondonMetric Property

100,000

210,400

4.45

Homeserve

16,000

208,640

4.42

Hill & Smith

14,000

173,880

3.68

Jarvis Securities

29,000

162,400

3.44

Close Brothers

13,500

149,040

3.15

Clarke T

145,000

143,840

3.04

XP Power Ltd

4,000

141,600

3.00

Gamma Communications

10,000

128,000

2.71

4Imprint

5,000

123,000

2.60

Lok'n Store Group

22,000

118,800

2.51

Picton Property Income

175,000

118,650

2.51

Target Healthcare REIT

100,000

109,800

2.32

Rightmove

20,000

109,160

2.31

Randall & Quilter Investment Holdings

68,217

108,465

2.30

Treatt

21,000

104,475

2.21

Belvoir Lettings

85,000

97,750

2.07

 

 



INCOME STATEMENT

for the six months ended 30 June 2020

 

 

 

 

 

 

 

 

 

Audited

 

 

 

 

 

 

 

 

 

Year ended

 

 

Unaudited

 

Unaudited

31 December

 

 

6 months ended 30 June 2020

 

6 months ended 30 June 2019

 

2019

 

 

 

 

 

 

 

 

 

 

 

Notes

Revenue

Capital

Total

 

Revenue

Capital

Total

 

Total

 

 

£

£

£

 

£

£

£

 

£

Gains/(Loss) on investments held at fair value

 

-

241,205

241,205

 

-

71,882

71,882

 

1,086,854

Income from investments

 

52,578

-

52,578

 

119,303

-

119,303

 

232,262

Investment Management expenses

 

(1,903)

(17,136)

(19,039)

 

(1,780)

(16,085)

(17,865)

 

(38,494)

Other expenses

2

(14,420)

(42,039)

(56,459)

 

(16,769)

(127,218)

(143,987)

 

(199,191)

 

 

 

 

 

 

 

 

 

 

 

Net return on ordinary

 

 

 

 

 

 

 

 

 

 

activities before taxation

 

36,255

182,030

218,285

 

100,754

(71,421)

29,333

 

1,081,431

 

 

 

 

 

 

 

 

 

 

 

Taxation

3

-

-

-

 

-

-

-

 

-

 

 

 

 

 

 

 

 

 

 

Net return on ordinary

 

 

 

 

 

 

 

 

 

 

activities after taxation

 

36,255

182,030

218,285

 

100,754

(71,421)

29,333

 

1,081,431

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends Paid:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend

 

(200,683)

-

(200,683)

 

(196,367)

-

(196,367)

 

(196,367)

 

 

 

 

 

 

 

 

 

 

 

Transferred to reserves

 

(164,428)

182,030

17,602

 

(95,613)

(71,421)

(167,034)

 

885,064

 

 

 

 

 

 

 

 

 

 

 

Return per ordinary share

4

1.7p

8.4p

10.1p

 

4.7p

(3.3)p

1.4p

 

50.1p

                           

 

The total column of this statement is the statement of comprehensive income of the Company prepared in accordance with Financial Reporting Standards ("FRS"). The supplementary revenue return and capital return columns are prepared in accordance with the Statement of Recommended Practice issued in October 2019 by the Association of Investment Companies ("AIC SORP").

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

The revenue column of the Income statement includes all income and expenses. The capital column includes the realised and unrealised profit or loss on investments

STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 June 2020

 

 

 

For the Six Months Ended 30 June 2020 (Unaudited)

 

Called-up

 

Capital

Capital

 

Total

 

Share

Share

Reserve

Reserve

Retained

Shareholders'

 

Capital

Premium

Realised

Unrealised

Earnings

Funds

 

£

£

£

£

£

£

Balance at 1 January 2020

539,470

881,087

1,916,502

1,982,060

439,598

5,758,717

Net gain on realisation

 

 

 

 

 

 

   of investments

-

-

241,205

-

-

241,205

Decrease in unrealised

 

 

 

 

 

 

   Appreciation

-

-

-

(870,649)

-

(870,649)

Expenses allocated to

 

 

 

 

 

 

   Capital

-

-

(59,175)

-

-

(59,175)

Profit for the period

-

-

-

-

36,255

36,255

Dividend paid in year

-

-

-

-

(200,683)

(200,683)

Shareholders' Funds at 30 June 2020

539,470

881,087

2,098,532

1,111,411

275,170

4,905,670

 

 

 

For the Six Months Ended 30 June 2019 (Unaudited)

 

Called-up

 

Capital

Capital

 

Total

 

Share

Share

Reserve

Reserve

Retained

Shareholders'

 

Capital

Premium

Realised

Unrealised

Earnings

Funds

 

£

£

£

£

£

£

Balance at 1 January 2019

539,470

881,087

1,855,088

1,157,686

440,322

4,873,653

Net profits on realisation

 

 

 

 

 

 

   of investments

-

-

71,882

-

-

71,882

Increase in unrealised

 

 

 

 

 

 

   Appreciation

-

-

-

449,760

-

449,760

Expenses allocated to

 

 

 

 

 

 

   Capital

-

-

(143,303)

-

-

(143,303)

Profit for the year

-

-

-

-

100,754

100,754

Dividend paid in year

-

-

-

-

(196,367)

(196,367)

Shareholders' Funds at 30 June 2019

539,470

881,087

1,783,667

1,607,446

344,709

5,156,379

 

 

 

For the Year Ended 31 December 2019 (Audited)

 

Called-up

 

Capital

Capital

 

Total

 

Share

Share

Reserve

Reserve

Retained

Shareholders'

 

Capital

Premium

Realised

Unrealised

Earnings

Funds

 

£

£

£

£

£

£

Balance at 1 January 2019

539,470

881,087

1,855,088

1,157,686

440,322

4,873,653

Net profits on realisation

 

 

 

 

 

 

   of investments

-

-

262,480

-

-

262,480

Increase in unrealised

-

-

-

824,374

-

824,374

   appreciation

 

 

 

 

 

 

Expenses allocated to

-

-

(201,066)

-

-

(201,066)

   Capital

 

 

 

 

 

 

Profit for the year

-

-

-

-

195,643

195,643

Dividend paid in year

-

-

-

-

(196,367)

(196,367)

Shareholders' Funds at 31 December 2019

539,470

881,087

1,916,502

1,982,060

439,598

5,758,717

 

 

 

FINANCIAL POSITION

as at 30 June 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Audited

 

 

 

Notes

Unaudited

 

Unaudited

 

31 December

 

 

 

30 June 2020

 

30 June 2019

 

2019

 

 

 

 

 

 

 

 

 

 

 

£

 

£

 

£

Fixed assets

 

 

 

 

 

 

 

Investments held at fair value through profit and loss

 

 

4,724,305

 

5,033,637

 

5,466,191

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Trade receivables

 

 

124,342

 

103,460

 

223,733

Cash at bank and in hand

 

 

74,101

 

35,227

 

90,902

 

 

 

198,443

 

138,687

 

314,635

 

 

 

 

 

 

 

 

Creditors: amounts falling due within one year

 

(17,078)

 

(15,945)

 

(22,109)

 

 

 

 

 

 

 

 

Net current assets 

 

 

181,365

 

122,742

 

292,526

 

 

 

 

 

 

 

 

Total assets less current liabilities

 

4,905,670

 

5,156,379

 

5,758,717

 

 

 

 

 

 

 

Provisions for liabilities and charges

 

-

 

-

 

-

 

 

 

 

 

 

 

 

Net assets

 

 

4,905,670

 

5,156,379

 

5,758,717

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital and reserves

 

 

 

 

 

 

 

Called up share capital

 

 

539,470

 

539,470

 

539,470

Share premium account

 

 

881,087

 

881,087

 

881,087

Other reserves (non distributable)

 

 

 

 

 

 

 

            Capital reserve - realised

 

 

2,098,532

 

1,783,667

 

1,916,502

            Capital reserve - unrealised

 

 

1,111,411

 

1,607,446

 

1,982,060

Retained earnings

 

 

275,170

 

344,709

 

439,598

 

 

 

 

 

 

 

 

Shareholders' funds - all equity

 

 

4,905,670

 

5,156,379

 

5,758,717

 

 

 

 

 

 

 

 

Net Asset Value per share

 

5

227.3p

 

239p

 

266.9p

Number of shares in issue

 

 

2,157,881

 

2,157,881

 

2,157,881

                         

 

 

 

STATEMENT OF CASH FLOWS

for the six months ended 30 June 2020

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

6 months ended

 

6 months ended

 

Year ended

 

 

30 June 2020

 

30 June 2019

 

31 December 2019

 

 

£

 

£

 

£

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net revenue return

 

36,255

 

  100,754

 

195,643

Adjustments for:

 

 

 

 

 

 

Expenses charged to capital

 

(59,175)

 

(143,303)

 

(201,066)

(Decrease)/Increase in creditors

 

(5,031)

 

    (7,595)

 

(1,431)

Decrease/(Increase) in debtors

 

99,389

 

  109,975

 

(10,298)

 

 

 

 

 

 

 

Cash from operations

 

71,438

 

59,831

 

(17,152)

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

Purchase of investments

 

(481,304)

 

(1,475,968)

 

(2,074,201)

Proceeds from sales of investments

 

593,748

 

1,612,211

 

2,343,102

 

 

 

 

 

 

 

Net cash from investing activities

 

112,444

 

136,243

 

268,901

 

 

 

 

 

 

 

Equity dividends paid

 

(200,683)

 

(196,367)

 

(196,367)

 

 

 

 

 

 

 

Net Decrease

 

(16,801)

 

(293)

 

55,382

 

 

 

 

 

 

 

Cash at the beginning of the period

 

90,902

 

35,520

 

35,520

 

 

 

 

 

 

 

Cash at the end of the period

 

74,101

 

35,227

 

90,902

 

 

 

 

 

 

 

 

 

NOTES TO THE HALF YEARLY FINANCIAL REPORT

 

1.                     Accounting Policies

 

a)    Statement of Compliance

The Company's Financial Statements for the period ended 30 June 2020 have been prepared under UK Generally Accepted Accounting Practice (UK GAAP) and the Statement of Recommended Practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in October 2019 ('the SORP') issued by the Association of Investment Companies.

 

The financial statements have been prepared in accordance with the accounting policies set out in the statutory accounts for the year ended 31 December 2019.

 

b)    Financial information

The financial information contained in this report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information for the period ended 30 June 2020 and 30 June 2019 have not been audited or reviewed by the Company's Auditor pursuant to the Auditing Practices Board guidance on such reviews. The information for the year to 31 December 2019 has been extracted from the latest published Annual Report and Financial Statements, which have been lodged with the Registrar of Companies, contained an unqualified auditor's report and did not contain a statement required under Section 498(2) or (3) of the Companies Act 2006. 

 

c)     Going concern

The Company's assets consist mainly of equity shares in companies listed on a recognised stock exchange which, in most circumstances, are realisable within a short timescale under normal market conditions. The Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. In assessing the Company's ability to continue as a going concern, the Board has fully considered the impact of COVID-19.  

2.          Issues leading to board/major shareholder disruption in H1 2019 resulted in approximately £71,000 non-recurring costs in that period.

 

3.             Taxation

 

The tax charge for the six months to 30 June 2020 is nil (year to 31 December 2019: nil; six months to 30 June 2019: nil).

 

The Company has an effective tax rate of 0% for the year ending 31 December 2020. The estimated effective tax rate is 0% as investment gains are exempt from tax owing to the Company's status as an Investment Trust and there is expected to be an excess of management expenses over taxable income.

 

4.          The calculation of earnings per share for the six months ended 30 June 2020 is based on the attributable return on ordinary activities after taxation and on the weighted average number of shares in issue during the period.

 

 

 

6 months ended 30 June 2020 (Unaudited)

 

6 months ended 30 June 2019 (Unaudited)

 

 

 

Revenue

Capital

Total

 

Revenue

Capital

Total

 

 

 

£

£

£

 

£

£

£

 

 

Attributable return on

 

 

 

 

 

 

 

 

 

ordinary activities after taxation

36,255

182,030

218,285

 

100,754

(71,421)

29,333

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares

2,157,881

 

2,157,881

 

 

 

 

 

 

 

 

 

 

 

 

 

Return per ordinary share

1.7p

8.4p

10.1p

 

4.7p

(3.3)p

1.4p

 

 

                                 

 

 

 

 

 

 

 

 

 

 

12 months ended 31 December 2019 (Audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

Capital

Total

 

 

 

 

 

 

 

£

£

£

 

 

 

 

 

 

Attributable return on

 

 

 

 

 

 

 

 

 

ordinary activities after taxation

195,643

885,788

1,081,431

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares

2,157,881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return per ordinary share

9.1p

41.0p

50.1p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                               

5.             Net Asset Value per share is calculated by dividing the net assets by the weighted average number of shares in issue 2,157,881.

 

6.             Financial Instruments

 

Fair value hierarchy

 

The fair value hierarchy consists of the following three classifications:

 

Classification A - Quoted prices in active markets for identical assets or liabilities.

Quoted in an active market in this context means quoted prices are readily and regularly available and those prices represent actual and regularly occurring market transactions on an arm's length basis.

 

Classification B - The price of a recent transaction for an identical asset, where quoted prices are unavailable.

 

The price of a recent transaction for an identical asset provides evidence of fair value as long as there has not been a significant change in economic circumstances or a significant lapse of time since the transaction took place. If it can be demonstrated that the last transaction price is not a good estimate of fair value (e.g. because it reflects the amount that an entity would receive or pay in a forced transaction, involuntary liquidation or distress sale), that price is adjusted.

 

Classification C - Inputs for the asset or liability that are based on observable market data and unobservable market data, to estimate what the transaction price would have been on the measurement data in an arm's length exchange motivated by normal business considerations.

 

The Company only holds classification A investments (2019: classification A investments only).

 

7.             Related Party Transactions

 

Dr. E. C. Pohl is the sole beneficial owner of E C Pohl & Co Pty Limited, which owns 54.1% of the issued share capital of Global Masters Fund Limited on behalf of itself and clients whose portfolios it manages. E C Pohl & Co Pty Limited held 339,054 (2019: Nil), Global Masters Fund Limited held 204,951 (2019: 379,640) shares in the Company as at 30 June 2020. On the 15 July 2020 E C Pohl & Co Pty Limited purchased 53,946 shares making their holding 393,000 shares, on the same day Global Masters Fund Limited sold 100,116 shares reducing their holding to 105,835 shares.

 

Copies of the Half Yearly Financial Statements for the six months ended 30 June 2020 will be available on the Company's website www.athelneytrust.co.uk as soon as practicable.

 

 

 

For further information:

Debbie Warburton

Company Secretary

01326 378 288

 


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