Annual Financial Report
MURRAY INTERNATIONAL TRUST PLC
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2011
1. CHAIRMAN'S STATEMENT
Highlights
- Net Asset Value Total Return of -0.1%
- Benchmark Total Return of -4.6%
- Total Ordinary dividend increased by 15.6% compared with 2010
- Shares trading at a premium to net asset value per Ordinary share for the whole year
- £72m of new shares issued at a premium during the year
Performance
Against a backdrop of slowing global growth and widespread credit concerns, the main investment management priority that evolved during the year was simply to preserve capital. The total return on net asset value of -0.1% just about achieved this objective and was superior to the return on the benchmark of -4.6%. The share price total return was +1.3%, reflecting a slight increase in the premium to net asset value per share. The Investment Manager's Review in this Report contains an attribution analysis, which shows the factors affecting net asset performance. The key positive influence was strong stock selection across the board which more than offset predominantly negative contributions from regional asset allocation.
Background
What on the surface looked like a fairly small decline in equity markets in 2011 actually concealed a period of intense financial market volatility. Persistent negative sentiment and anaemic growth in the developed world, combined with escalating fears over sovereign solvency in many European nations, caused widespread uncertainty. Further angst was generated by a credit quality downgrade of United States debt, although, in the context of graver concerns elsewhere, this event failed to undermine the predominant flow of money into dollar based assets. Somewhat paradoxically, given the precarious state of prevailing fiscal fundamentals in the United States, US bonds and equities performed relatively well as investors sought refuge in familiar asset classes. Very little progress was made towards resolving the developed world's debt crisis as policymakers baulked at the prospective pain of austerity packages. New initiatives largely centred on printing more money or issuing more debt, essentially just trying to buy time. During periods of heightened anxiety and rising risk aversion, equities sold off sharply. Late summer proved particularly problematic for markets as Greece edged closer to insolvency, but fragile confidence was restored by the year end to keep the European Union intact, at least for now. Asia, Latin America and Emerging Markets faced different issues: trying to restrain growth and tame inflationary pressures. Using straightforward orthodox monetary and fiscal policies, objectives were largely achieved, leaving such regions well positioned to grow and prosper over the coming years. Unfortunately, prevailing negative sentiment meant such progress was largely ignored. By emphasising solid business fundamentals and good quality balance sheets in portfolio holdings, the Company managed to preserve capital and grow its dividend receipts. In a world where positive financial returns were hard to come by, this can be viewed as a satisfactory result.
Dividends
In 2011 we were able to continue the trend of increasing the level of dividends paid and three interim dividends of 8.0p were declared (2010: three interims of 6.8p). Your Board is now recommending a final dividend of 13.0p (2010: 11.6p final and special dividend of 2.5p) which, subject to the approval of shareholders at the Annual General Meeting, will be paid on 16 May 2012 to shareholders on the register on 10 April 2012. Subject to the approval of the final dividend, the total Ordinary dividend for the year will amount to 37.0p, an increase of 15.6% from last year (2010: 32p), excluding last year's special interim dividend. B Ordinary shares will receive their capitalisation issue of B Ordinary shares at the same time as each dividend is paid. Accordingly, subject to approval at the Annual General Meeting, B Ordinary shareholders will be issued on 16 May 2012 with new B Ordinary shares equivalent in Net Asset Value to the recommended final dividend for the year just ended.
Gearing
At the year end total borrowings amounted to the equivalent of £171.8 million all drawn in Yen representing 17.2% of net assets. At the year end the proportion of net assets invested in equities was 105% (2010 - 104%).
Issue of New Shares
At the Annual General Meeting held in April 2011 shareholders authorised Directors to issue up to 10% of the Company's issued share capital for cash at a premium to the prevailing asset value at the time of each issue. During the year we have continued to see a steady and strong demand for the Company's shares resulting in the issue of 7.9 million new Ordinary shares representing 7.7% of the Ordinary shares in issue at the start of the year. Given the continuing demand for the Company's shares, the Board will be seeking approval from shareholders to renew the authority to issue new shares for cash in 2012. As in previous years, to avoid diluting the asset value of existing shareholders, new shares will only be issued at a premium to net asset value. Resolutions to this effect will be proposed at the Annual General Meeting and the Directors strongly encourage shareholders to support this proposal.
Directorate
As stated in the Half-Yearly Report last August, during the year Mr Peter Dunscombe and Ms Ella Brown joined the Board and Mr John Trott retired as Chairman and as a Director. Ms Ella Brown subsequently resigned in June in order to pursue a career opportunity overseas. I would like to reiterate the Board's thanks to Mr Trott for his valuable contribution to the Company over many years.
Annual General Meeting
This year's Annual General Meeting will be held in London on 26 April 2012 at 12.30 p.m. at the London Chamber of Commerce and Industry, 33 Queen Street, London EC4R 1AP. As at previous AGMs, there will be a presentation from the Manager and an opportunity to meet the Directors and Manager and ask questions. I would be grateful if you would confirm your attendance by completing the notice that will accompany the Annual Report and returning it together with an indication of any particular questions.
Outlook
These are disturbing times for international financial markets. Given the chronic structural indebtedness of the developed world, it is not difficult to envisage a protracted period of low growth as problems are slowly addressed. Dependence on external financing to maintain solvency in those countries worst affected suggests markets may remain vulnerably exposed to changing sentiment. Against this backdrop, trying to forecast future returns is futile. Capital preservation and dividend growth remain core to the management philosophy for the Company's portfolio, so despite widespread uncertainty, nothing has changed in that respect. The investment strategy will continue to focus on holding high quality, globally diversified companies that offer solid growth prospects.
Kevin Carter
Chairman
28 February 2012
2. MANAGER'S REVIEW
Background
Can't pay, won't pay. Four small words that struck fear into the heart of global financial markets throughout 2011. For without doubt, the crisis of public sector indebtedness in the developed world proved to be the single most powerful factor influencing financial returns. The spectre of debt defaults, bankruptcies and insolvency cast dark shadows across the economic landscape, as the Western world's fifty year love affair with credit finally died from exhaustion. Intensification of financial gangrene spreading throughout public finances and excessively leveraged banking systems even ended the constant denial of policymakers. Realism prevailed and perceptions changed. The reality of Europe's unsustainable debt dynamics, muted growth, high unemployment and a future dominated by the need for debt reduction, frightened credit markets. Solvency concerns of various nations ebbed and flowed and attitudes towards funding future liabilities hardened. Perceptions changed markedly as traditional economic relationships broke down. The notion of a "risk free" rate of return, so long associated with short-term sovereign debt, was constantly questioned. At times, even bank deposit accounts failed to provide comfort for investors suffering from increasing mistrust and acute insecurity. In time honoured fashion, financial assets gravitated towards perceived safe havens. Bond markets in the United States and the UK received enormous cash inflows, driving yields down towards historical lows. Scant attention was paid to precarious fiscal fundamentals also prevailing in both these nations. Somewhat ironically, such capital flows became popularly portrayed as a flight to quality. It seemed what mattered most in an environment of systemic financial fragility was perceived security, not necessarily economic facts. Given the retreat to financial comfort zones, it was not surprising that economic stability and fiscal prudence in the developing world went largely unnoticed. Harshly labelled as high risk economies, many countries in Asia and Latin America refuted such unwarranted status and made solid progress. Responsible fiscal and monetary policies delivered budget surpluses, savings growth and declining inflation. These were impressive achievements by any account and more than a crumb of comfort in a world of crumbling confidence. Unfortunately, against a backdrop of prevailing uncertainties, no-one wanted to know.
Burdened by insecurities and fragile sentiment, returns from stock markets were predominantly negative. Regionally, Latin America recorded the largest decline in Sterling terms as local currency weakness compounded negative market returns. The region was down 19.6% over the period. Total returns from Asia and Japan were marginally less negative, coincidentally both declining by 12.9%. As usual, returns from within the Asian region were extremely varied, ranging from -36.8% in India and -21.5% in Taiwan to +10.1% in Indonesia and +3.3% in Malaysia. Such total return diversity once again highlighted the difficulties associated with generalising returns of global financial markets. As if to emphasise the point, Europe's decline of -14.7% arguably was much less than expected, or indeed justified, given its prominent role in fuelling international debt concerns. The UK market scraped out a respectable -2.3% total return based on perceived defensive characteristics. Somewhat ironically, given the severity and magnitude of prevailing negative fundamentals, the United States was the only major market to record positive returns. Consequently, North America produced a total return in Sterling terms of +1.2%, the first time the region has topped the list of regional returns since 1996 and only the fourth time over the past twenty five years.
Performance
The Net Asset Value Total Return for the year to 31 December 2011 with net dividends reinvested was -0.1% compared with a return on the benchmark of -4.6%. A full attribution analysis will be provided in the Annual Report which details the various influences on portfolio performance. In summary of the 587 basis points (before expenses) of performance above the benchmark, asset allocation deleted 432 basis points and stock selection contributed 1029 basis points. Structural effects relating to the fixed income portfolio, net of borrowing and hedging costs deleted a further 10 basis points of positive relative performance. Superior stock selection in all six regional areas was the over-riding reason for relative outperformance.
USA
Pushing on a string usually conjures up images of fruitless endeavour. When used to describe the efforts of US policymakers in 2011, it accurately depicts exactly the same picture. Despite monetary directives of effectively zero interest rates and roughly $2 trillion of additional liquidity through quantitative easing since August 2008, US economic activity remained extremely subdued. The economy essentially remained hostage to powerful deflationary forces. Contracting real incomes and stubbornly high unemployment intensified the pressure on household balance sheets. Property prices declined, consumer confidence evaporated and existing debt obligations intensified. Both orthodox and unorthodox policy initiatives proved wholly ineffectual. Consequently, the public and private debt dynamics of the United States moved into critical territory. Over twenty five per cent of all outstanding private sector mortgages reflected negative equity for homeowners. The arithmetic of compounding interest and failure to repay principal caused outstanding levels of credit card and personal debt to escalate further. For a consumer based society such as the United States, this proved particularly problematic. In response, at least consumers tried to tighten their belts. In the public sector, no such attempt at prudence was forthcoming. As politicians played political brinkmanship with the nation's debt ceiling and outstanding fiscal obligations surged towards 100% of GDP, the inevitable happened. US debt was downgraded by the rating agencies, citing grave concerns over fiscal management. This should have been taken as a real wake-up call for policymakers. Unfortunately, it went largely ignored. Indeed, with the eyes of the world fixed firmly on rapidly changing events in Europe, very little changed. A presidential election in 2012 and the unrealistic economic promises that typically accompany this event, suggests that such fiscal inertia will likely continue. Fortunately many US companies continue to thrive in international markets, largely immune from domestic difficulties. A new position in Pepsico, a worldwide operator of beverage, snack and food businesses was initiated during the period. Existing positions in Johnson & Johnson and Philip Morris, leading global consumer products companies, were also added to on weakness.
UK
Bereft of fiscal and monetary policy options, UK politicians and policymakers experienced a rough ride throughout 2011. Constant attempts were made to divert public attention away from domestic fragilities towards Europe's precarious predicament. Condemnation of Europe's "monetary inflexibility", "fiscal irresponsibility" and "bureaucratic rigidity" poured from the mouths of self-righteous opportunists. What is it that is said about throwing stones and glass houses? For beneath the veneer of Euro-bashing, the UK economy stagnated with many similar degenerative economic symptoms caused by over-indebtedness. Growth remained scarce as Government spending cuts and soaring food and energy prices eroded household spending power. Unemployment reached a seventeen year high as service and manufacturing industries felt the full brunt of economic headwinds. Credit contracted, consumer spending declined and the chronic imbalance between demand for money and supply of money was harshly exposed. Broad money supply turned negative for the first time since records began in 1983. Saving and debt reduction became over-riding household priorities. Statistics argued that in the absence of consecutive negative GDP growth, the UK was not in recession; in the real world of negative income growth, negative retail sales and numerous bankruptcies of major high street stores, the evidence suggested otherwise. With the UK embarking on the largest fiscal contraction in memory there appears no respite in sight. Long term structural reform of the nation's debt problems cannot be avoided. Neither can the pain that will accompany it. As the probability of prolonged sub trend growth in the UK increases, investment opportunities may increasingly diverge. It is difficult to envisage domestically focused companies prospering against a backdrop of anaemic demand and intense competition. Thankfully, numerous high quality businesses with expanding international presence remain domiciled in the UK. Prospects for Weir Group, Standard Chartered and British American Tobacco remain very encouraging and are likely to remain core holdings within the portfolio.
Europe
A toxic mixture of excessive sovereign indebtedness and escalating banking problems festered effervescently throughout the Eurozone over the period. Investor sentiment oscillated constantly between hope and fear, but neither offered supportive fundamentals for financial returns. Policy remained focused on monetary aid through enormous rescue packages and enforced fiscal austerity: essentially layering more debt on top of existing debt and buying time through stretching liabilities out into the future. European government budget deficit positions threatened, at times, to spiral out of control. Understandable reluctance by bond investors to purchase government debt of heavily indebted countries elevated bond yields towards breaking point. While the Greek government debt market crossed the point of no return, numerous emergency measures were required to keep Italy and Spain from suffering the same fate. By year end, the European Central Bank had virtually no choice but to aggressively expand its balance sheet in order to ease growing solvency concerns surrounding European banks. For the second consecutive year, the continent remained the epicentre of global systemic financial risk. The much hoped for end to the European debt crisis proved elusive as political influence stayed divided over future policy direction. Currently, the unsustainable combination of monetary union without fiscal union prevails, which suggests Europe will remain mired in uncertainty. The enormous task of restructuring debt obligations to manageable levels whilst simultaneously implementing pragmatic austerity measures, that won't cause economic depression, is a balancing act of immense proportions. Achieving it under the full glare of extremely nervous bond and equity markets only adds to the degree of difficulty. Hopefully, as the year progresses, Eurozone nations can move towards greater fiscal integration or fiscal union which would permit greater flexibility in future monetary policies and debt repayments. The process will likely be prolonged, painful and precarious, but does present a viable solution to the Eurozone's woes. Against such a difficult economic environment, exposure to European companies remained very defensive. Despite widespread market weakness, capital was preserved and dividend flows remain solid from holdings such as Nestle, Novartis and Roche in Switzerland. Such focus on defensive businesses will continue within the European portfolio.
Latin America
The dominant economic issues confronting Latin America's two largest economies, Mexico and Brazil, differed greatly from those prevailing elsewhere in the world. Flush with savings, well-funded pension schemes, plentiful resources of capital and commodities plus competitive manufacturing exports, the economic backdrop remained structurally sound. Policy directives, unburdened by debt or capital dependency, were free to address domestic priorities. Brazilian technocrats focused on engineering a slowdown in economic growth from the breakneck speed of 2010. A combination of prudent interest rate management combined with fiscal tightening delivered the desired results by year end. Inflationary pressures subsided, Brazil's primary fiscal surplus surged to record highs and the nation's net debt to GDP fell to thirty six per cent, its lowest level for fifteen years. Mexico's on-going economic decoupling from the United States became increasingly evident as its northern neighbour's woes failed to derail economic progress. Policymakers enjoyed a relatively inactive year as stable growth, inflation and fiscal finances continued to match conservative projections. With export orientated labour costs now lower than China, Mexico's international competitiveness has never been stronger. Despite such commendable macro-economic management, global concerns over the developed world's debt crisis unsettled financial markets in Latin America over the period. Rising risk aversion devalued Mexican and Brazilian currencies against Sterling by 12% and 13% respectively and equity market returns were negative. Such contagion from external financial shocks is not uncommon in Latin America, but history suggests domestic corporate fundamentals are unlikely to be materially affected. Generally, balance sheets remain pristine, growth tends to be financed from free cash flows and returning cash to shareholders through higher dividends is very much entrenched in corporate culture. Currency and equity market weakness provided excellent opportunities to add to existing holdings in tissue paper manufacturer Kimberly Clark de Mexico and seamless-pipe manufacturer Tenaris. A new holding was also initiated in Femsa, a leading beverage producer and convenience store operator based in Mexico. Following a tough year for financial returns in the region, valuations remain attractive for longer term capital and income growth.
Japan and Asia
It feels extremely uncomfortable analysing the investment backdrop in Japan given the scale of human tragedy that unfolded following the earthquake and tsunami in March. But putting emotion aside some observations are worth airing. Unfortunately, as the largest debtor nation in the world, Japan couldn't fiscally afford the money required to rebuild. In the event, more debt was issued, placing greater concerns on future solvency. Economic growth contracted for three quarters, but just managed to turn positive by year end. Companies worked hard to recover lost output from the disaster but were continually hindered by shortages of power and components. As the Yen traded upwards towards post-World War II highs and demand from Europe softened, export orientated manufacturers struggled to maintain profit margins. Deflationary pressures, which have blighted the economy for close to twenty years, showed no signs of abating, compounding an already treacherous business landscape. Unfortunately there appears no respite in sight. Seventeen years of zero interest rates and numerous expensive fiscal packages have failed to turn the deflationary tide, leaving Japan structurally weaker than ever. Where it goes from here remains as opaque as ever.
Elsewhere in Asia, policy objectives for 2011 were relatively straightforward too. Dampen inflationary pressures and simultaneously slow economic growth to sustainable levels. Given double digit growth rates and inflation scares which were so pronounced across the region this time last year, central bankers generally achieved success. Economic activity decelerated and inflation moderated in response to monetary tightening. Currencies slightly declined against the US dollar, reinforcing structural competitiveness, and real incomes/savings continued to expand. The one notable exception to the general trend was India where stubbornly high inflation persisted. Investors may have to wait longer before the tightening bias can be relaxed there, but elsewhere the outlook is encouraging. The potential for interest rate cuts and more manageable levels of growth are positive for the region and are reflected in current holdings of Asian financials, consumer goods and telecommunications companies in the portfolio.
Outlook
It is impossible to perpetually avoid the unavoidable as the debt infested developed world has finally discovered. Western central bankers may intellectually defend the rationale for near zero interest rates, pleading impotence towards the liquidity trap they created, but for the real world the economic consequences remain extremely harsh. Lenders won't lend for fear of credit risk; borrowers can't borrow because of punitive existing debts and low confidence; and savers can only watch as existing real wealth is eroded by inflation. What sort of financial landscape is this evolving before our very eyes? Economic maxims have been inverted. Credits became viewed as debts, assets became viewed as liabilities and illiquidity became viewed as insolvency. This interpretation became the reality that dominated economic life, but arguably just reflected the inevitable. Presidents or Prime Ministers can resign; governments, such as Greece or Italy, can tumble; austerity packages can be passed from here to eternity; and trillions of dollars can be promised. Unfortunately, none of this means the developed world's debt problems are over. Without competence, co-operation, credibility and belief, the crisis cannot even be properly addressed, never mind resolved. As denial finally succumbs to realism, at last progress can be made. Assuming there is no collective will to orchestrate systemic financial collapse throughout the world, the painful healing process may begin.
From an investment perspective, this backdrop will likely present many challenges, none more so than preserving and growing capital, plus securing sustainable dividend growth. Prevailing low interest rates threaten the real value of savings at a time when sovereign bond quality remains poor and bank deposits yield very little. Whilst corporate earnings risk is always heightened during periods of macro-economic uncertainty, the compelling argument for favouring equities over bonds still exists. A globally diversified company with a strong balance sheet, above average yield plus sustainable earnings and dividend growth remains inherently attractive, especially relative to bonds. Providing such exposure can be secured at attractive prices and at present it can, we will continue to focus on investment opportunities associated with such companies.
Bruce Stout
Aberdeen Asset Managers Limited
Investment Manager
28 February 2012
3. BUSINESS REVIEW
The Company is an investment company in accordance with Section 833 of the Companies Act 2006 and carries on business as an investment trust. The Company is registered in Scotland with number SC006705. In the opinion of the Directors of the Company, its affairs have been conducted in a manner to satisfy the conditions to enable it to continue to obtain approval as an investment trust under s1158 of the Corporation Tax Act 2010. HM Revenue & Customs will grant s1158 status, if requested, provided that the Company's affairs have been conducted in such a manner as to satisfy the conditions of that section. Approval for such status has been given by HM Revenue & Customs for the year ended 31 December 2010.
Principal Risks and Uncertainties
General
An investment in the shares is only suitable for investors who are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses which may arise therefrom (which may be equal to the whole amount invested). Such an investment should be seen as long term in nature and complementary to existing investments in a range of other financial assets.
Changes in economic conditions (including, for example, interest rates and rates of inflation), industry conditions, competition, changes in the law, political and diplomatic events and trends, tax laws and other factors can substantially and adversely affect the value of investments and therefore the Company's performance and prospects.
Past performance of the Company, and of investments managed by the Manager, is not necessarily indicative of future performance.
The Shares
The market value of, and the income derived from, the shares can fluctuate and, notwithstanding the Board's discount and premium control policy, may not always reflect the Net Asset Value per share. There can be no guarantee that any appreciation in the value of the Company's investments will occur and investors may not get back the full value of their investment. No assurance can be given that any sale of the Company's investments would realise proceeds which would be sufficient to repay any borrowings or provide funds for any capital repayment to shareholders. Shareholders will bear the rewards and risks of the success or otherwise of the Company's investments.
The market value of the shares, as well as being affected by their Net Asset Value, also takes into account their dividend yield and prevailing interest rates, supply and demand for the shares, market conditions and general investor sentiment.
Borrowings
The Company may incur borrowings for investment purposes. Whilst the use of borrowings should enhance the total return on the shares where the return on the Company's underlying assets is rising and exceeds the cost of borrowing, it will have the opposite effect where the underlying return is falling, further reducing the total return on the shares. As a result, the use of borrowings by the Company may increase the volatility of the Net Asset Value and market price per share.
There is no guarantee that any borrowings of the Company would be refinanced on their maturity either at all or on terms that are acceptable to the Company.
Dividends
The Company will only pay dividends on the Ordinary shares (and a capitalisation issue for B Ordinary shares) to the extent that it has profits (including available reserves) available for that purpose, which will largely depend on the amount of income which the Company receives on its investments and the timing of such receipt. The amount of dividends payable by the Company may fluctuate.
If under UK law or accounting rules and standards applicable to the Company, there were to be a change to the basis on which dividends could be paid by companies, this could have a negative effect on the Company's ability to pay dividends.
Investment Objective and Strategy
There is no guarantee that the Company's investment objective will be achieved.
The Company may from time to time invest in other listed investment companies. As a consequence of these investments, the Company may itself be indirectly exposed to gearing through the borrowings from time to time of these other investment companies. The Company has a policy of not investing more than 15% of its gross assets in other listed investment companies. The Net Asset Value, which is a factor in determining the market value of the shares, will be linked to the underlying share price performance of any such other investment companies.
Debt Instruments
The Company invests in fixed interest investments issued by corporate bodies and sovereign issuers. Bonds are subject to credit, liquidity and interest rate risks and in the event of a default there is a risk that the Net Asset Value may be adversely affected. Adverse changes in the financial position of an issuer of bonds or in general economic conditions may impair the ability of the issuer to make payments of principal and interest or may cause the liquidation or insolvency of an issuer. There can be no assurance as to the levels of default and/or recoveries that may be experienced with respect to bonds. Debt instruments held by the Company may be affected by changes in market sentiment or changes in interest rates that will, in turn, result in increases and decreases in the market value of those instruments. When interest rates decline, the value of the Company's investments in fixed rate debt obligations can be expected to rise and, when interest rates rise or are expected to rise, the value of those investments can be expected to decline.
To the extent that the Company invests in sub-investment grade securities, the Company may realise a higher yield than the yield offered by investment grade securities, but investment in such securities involves a greater volatility of price and a greater risk of default by the issuers of such securities, with potential loss of interest payment and principal. Sub-investment grade securities will be subject, in the judgment of a ratings agency, to uncertainties in terms of their performance in adverse conditions and will be speculative with respect to an issuer's capacity to meet interest payments and repay principal in accordance with its obligations. There can be no assurance that an issuer will not default or that the Company will be able to recover its investments in defaulted fixed interest debt instruments.
As bond investments of the Company mature, it may be difficult for the Company to obtain replacement investments having similar financial characteristics.
Market Price Risk
The fair value of equity and other financial securities held in the Company's portfolio fluctuates with changes in market prices. Prices are themselves affected by movements in currencies and interest rates and by other financial issues including the market perception of future risks.
Foreign Currency Risks
The Company's investments are principally in overseas securities. The Company accounts for its activities and reports its results in pounds sterling. The Company currently hedges most of the foreign currency exposure in respect of the liabilities attached to its borrowings. Where the Company does not hedge its currency exposure, which is currently the case with the investment portfolio, the movement of exchange rates may have a favourable or unfavourable effect on the gains and losses experienced on investments which are made or realised in currencies other than pounds sterling.
Charges to Capital
The Company currently deducts part of the management charge from capital. This increases distributable income at the expense of capital growth, which will either be eroded or constrained. The maintenance of a high level of dividend may also diminish capital values.
Discount and Premium Control Policy
The Company operates a discount and premium control policy. The operation of the discount control element of this policy could lead to a significant reduction in the size of the Company over time, which would increase the Company's total expense ratio and prejudice the ability of the Company to pay satisfactory levels of dividend to shareholders. While the Company intends to issue new shares and to resell shares held in treasury at a small premium to the Net Asset Value per share where demand exceeds supply, this will be dependent upon the Company being able to issue new shares and to resell shares held in treasury at a premium, on market conditions generally at the relevant time, upon shareholders in general meeting conferring appropriate authorities on the Board to issue further shares and, where required under the Prospectus Rules, upon a prospectus having been approved by the Financial Services Authority and published. The ability of the Company to operate the discount control policy will depend on the Company being able to purchase its own shares, which will be dependent upon shareholders in general meeting conferring authority on the Board to purchase its own shares. The Directors will seek renewal of this authority from shareholders annually and at other times should this prove necessary. However, there can be no guarantee that requisite shareholder approvals will be obtained.
In accordance with the Listing Rules, the extent of each buy-back authority which will be sought by the Company from shareholders in general meeting will be limited to 14.99%, of the Company's issued share capital as at the date on which such authority is granted. In order to continue purchasing its own shares once any such authority has been exhausted, the Company would be required to seek a renewal of such authority from shareholders in general meeting.
The ability of the Company to purchase its own shares will be subject to the Act and all other applicable legislation, rules and regulations of any government, regulatory body or market applicable to the Directors or the Company and, in particular, will be dependent on the availability of distributable reserves.
Cessation of Investment Trust Status
The Company attempts to conduct its business so as to satisfy the conditions for approval as an investment trust under Part 24 Chapter 4 of the Corporation Tax Act 2010. In respect of each accounting period for which approval is granted, the Company will be exempt from United Kingdom taxation on its capital gains. Any breach of the tests that a company must meet to obtain approval as an investment trust company could lead to the Company being subject to tax on capital gains.
Tax and Accounting
Any change in the Company's tax status or in taxation legislation or accounting practice could affect the value of the investments held by the Company, affect the Company's ability to provide returns to shareholders or alter the post-tax returns to shareholders. Representations in this document concerning the taxation of investors are based upon current tax law and practice which are subject to change.
Any change in accounting standards may adversely affect the value of the Company's assets in its books of account or restrict the ability of the Company to pay dividends.
Regulatory
It is expected that the Alternative Investment Fund Managers Directive will enter into force in 2013. The Directive may have significant consequences for the Company (and all similar investment companies) which might materially increase compliance and regulatory costs. The Directive is subject to further implementation measures, and the Board will continue to monitor the progress and likely implications of the Directive.
Reliance Upon The Manager
The ability of the Company to successfully pursue its investment policy is significantly dependent upon the expertise of the Manager and the principal members of its management team. The Company does not currently have employees or own any facilities and depends on the Manager for the day to day management and operation of its business. The loss of any of the Manager's management team could reduce the Company's ability to pursue successfully its planned investment policy.
Reliance Upon Third Party Service Providers
The Company has no employees and the Directors have all been appointed on a non executive basis. The Company is therefore reliant upon the performance of third party service providers for its executive function. In particular, the Manager and the Secretary will be performing services which are integral to the operation of the Company. The failure by any service provider to carry out its obligations to the Company in accordance with the terms of its appointment could have a materially detrimental impact on the operation of the Company and could affect the ability of the Company to pursue successfully its investment policy.
Fluctuations In Operating Results
The Company may experience fluctuations in its operating results from period to period due to a number of factors, including changes in the values of investments made by the Company, changes in the amount of distributions, dividends or interest paid in respect of investments in the portfolio, changes in the Company's operating expenses, and general economic and market conditions. Such variability may lead to volatility in the market price of the shares and cause the Company's results for a particular period not to be indicative of its performance in a future period.
4. STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and accounting estimates that are reasonable and prudent; and,
- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Statement of Corporate Governance that comply with that law and those regulations.
The financial statements are published on www.murray-intl.co.uk which is a website maintained by the Company's Manager. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Each of the Directors confirms that to the best of his or her knowledge:
- the financial statements, prepared in accordance with the applicable UK Accounting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
- the Directors' Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that the Company faces.
For Murray International Trust PLC
Kevin Carter
Chairman
28 February 2012
5. INCOME STATEMENT
For the year ended 31 December 2011
|
|
|
Year ended 31 December 2011 |
Year ended 31 December 2010 |
|||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
(Losses)/gains on investments |
10 |
- |
(37,470) |
(37,470) |
- |
157,813 |
157,813 |
|
|
Income |
2 |
55,128 |
- |
55,128 |
46,607 |
- |
46,607 |
|
|
Investment management fees |
3 |
(1,585) |
(3,698) |
(5,283) |
(1,294) |
(3,018) |
(4,312) |
|
|
Performance fees |
4 |
- |
(3,830) |
(3,830) |
- |
(3,945) |
(3,945) |
|
|
VAT recovered on investment management and performance fees |
3 |
- |
- |
- |
1,007 |
1,458 |
2,465 |
|
|
Currency losses |
18 |
- |
(1,478) |
(1,478) |
- |
(1,681) |
(1,681) |
|
|
Other expenses |
5 |
(1,850) |
- |
(1,850) |
(1,645) |
- |
(1,645) |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
Net return before finance costs and taxation |
|
51,693 |
(46,476) |
5,217 |
44,675 |
150,627 |
195,302 |
|
|
|
|
|
|
|
|
|
|
|
|
Finance costs |
6 |
(1,261) |
(2,944) |
(4,205) |
(1,286) |
(3,002) |
(4,288) |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
Return on ordinary activities before tax |
|
50,432 |
(49,420) |
1,012 |
43,389 |
147,625 |
191,014 |
|
|
|
|
|
|
|
|
|
|
|
|
Tax on ordinary activities |
7 |
(3,632) |
822 |
(2,810) |
(4,881) |
2,019 |
(2,862) |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
Return attributable to equity shareholders |
|
46,800 |
(48,598) |
(1,798) |
38,508 |
149,644 |
188,152 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
Return per Ordinary share (pence) |
9 |
43.9 |
(45.6) |
(1.7) |
38.6 |
150.0 |
188.6 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
Return per Ordinary share assuming full conversion of the B Ordinary shares (pence) |
9 |
43.6 |
(45.2) |
(1.6) |
38.2 |
148.5 |
186.7 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
The total column of this statement represents the profit and loss account of the Company. |
||||||||
|
A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement. |
||||||||
|
All revenue and capital items in the above statement derive from continuing operations. |
||||||||
|
No operations were acquired or discontinued in the year. |
||||||||
|
The accompanying notes are an integral part of these financial statements. |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Ordinary dividends on equity shares |
8 |
38,858 |
- |
38,858 |
29,062 |
- |
29,062 |
|
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|||
|
The above dividend information does not form part of the Income Statement. |
||||||||
6. BALANCE SHEET
As at 31 December 2011
|
|
|
As at |
As at |
||
|
|
|
31 December 2011 |
31 December 2010 |
||
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
|
Non-current assets |
|
|
|
|
|
|
Investments listed at fair value through profit or loss |
10 |
|
1,140,963 |
|
1,119,500 |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Debtors |
11 |
9,450 |
|
10,659 |
|
|
Cash and short term deposits |
|
32,600 |
|
10,765 |
|
|
|
|
_______ |
|
_______ |
|
|
|
|
42,050 |
|
21,424 |
|
|
|
|
_______ |
|
_______ |
|
|
Creditors: amounts falling due within one year |
|
|
|
|
|
|
Other creditors |
12 |
(6,431) |
|
(6,577) |
|
|
|
|
_______ |
|
_______ |
|
|
|
|
(6,431) |
|
(6,577) |
|
|
|
|
_______ |
|
_______ |
|
|
Net current assets |
|
|
35,619 |
|
14,847 |
|
|
|
|
_______ |
|
_______ |
|
Total assets less current liabilities |
|
|
1,176,582 |
|
1,134,347 |
|
|
|
|
|
|
|
|
Creditors: amounts falling due after more than one year |
|
|
|
|
|
|
Bank loans and Debentures |
12/13 |
(171,808) |
|
(161,792) |
|
|
Other creditors |
12 |
(5,522) |
|
(4,879) |
|
|
|
|
_______ |
|
_______ |
|
|
|
|
|
(177,330) |
|
(166,671) |
|
|
|
|
_______ |
|
_______ |
|
Net assets |
|
|
999,252 |
|
967,676 |
|
|
|
|
_______ |
|
_______ |
|
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
|
Called-up share capital |
14 |
|
28,000 |
|
25,999 |
|
Share premium account |
|
|
185,712 |
|
115,472 |
|
Capital redemption reserve |
|
|
8,230 |
|
8,230 |
|
Capital reserve |
15 |
|
714,424 |
|
763,031 |
|
Revenue reserve |
|
|
62,886 |
|
54,944 |
|
|
|
|
_______ |
|
_______ |
|
Equity shareholders' funds |
|
|
999,252 |
|
967,676 |
|
|
|
|
_______ |
|
_______ |
|
|
|
|
|
|
|
|
Net Asset Value per Ordinary and B Ordinary share (pence) |
16 |
|
892.2 |
|
930.5 |
|
|
|
|
_______ |
|
_______ |
7 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
|
For the year ended |
|
|
|
|
|
|
|
|
|
|
|
Share |
Capital |
|
|
|
|
|
|
Share |
premium |
redemption |
Capital |
Revenue |
|
|
|
|
capital |
account |
reserve |
reserve |
reserve |
Total |
|
|
Note |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 31 December 2010 |
|
25,999 |
115,472 |
8,230 |
763,031 |
54,944 |
967,676 |
|
Return on ordinary activities after taxation |
|
- |
- |
- |
(48,598) |
46,800 |
(1,798) |
|
Dividends paid |
8 |
- |
- |
- |
- |
(38,858) |
(38,858) |
|
Issue of new shares |
|
2,001 |
70,240 |
- |
(9) |
- |
72,232 |
|
|
|
_______ |
______ |
______ |
______ |
______ |
______ |
|
Balance at |
|
28,000 |
185,712 |
8,230 |
714,424 |
62,886 |
999,252 |
|
|
|
_______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
For the year ended |
|
|
|||||
|
|
|
|
Share |
Capital |
|
|
|
|
|
|
Share |
premium |
redemption |
Capital |
Revenue |
|
|
|
|
capital |
account |
reserve |
reserve |
reserve |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 31 December 2009 |
|
23,996 |
50,693 |
8,230 |
613,396 |
45,498 |
741,813 |
|
Return on ordinary activities after taxation |
|
- |
- |
- |
149,644 |
38,508 |
188,152 |
|
Dividends paid |
8 |
- |
- |
- |
- |
(29,062) |
(29,062) |
|
Issue of new shares |
|
2,003 |
64,779 |
- |
(9) |
- |
66,773 |
|
|
|
_______ |
______ |
______ |
______ |
______ |
______ |
|
Balance at |
|
25,999 |
115,472 |
8,230 |
763,031 |
54,944 |
967,676 |
|
|
|
_______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
The revenue reserve represents the amount of the Company's reserves distributable by way of dividend. |
|||||||
|
The accompanying notes are an integral part of these financial statements. |
|||||||
8 CASH FLOW STATEMENT
For the year ended 31 December 2011
|
|
|
Year ended |
Year ended |
||
|
|
|
31 December 2011 |
31 December 2010 |
||
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
|
Net cash inflow from operating activities |
17 |
|
41,679 |
|
33,968 |
|
|
|
|
|
|
|
|
Returns on investments and servicing of finance |
|
|
|
|
|
|
Interest paid |
|
(4,178) |
|
(4,506) |
|
|
|
|
________ |
|
________ |
|
|
Net cash outflow from servicing of finance |
|
|
(4,178) |
|
(4,506) |
|
|
|
|
|
|
|
|
Corporation tax paid |
|
|
- |
|
(712) |
|
|
|
|
|
|
|
|
Financial investment |
|
|
|
|
|
|
Purchases of investments |
|
(196,704) |
|
(211,140) |
|
|
Sales of investments |
|
138,606 |
|
110,637 |
|
|
|
|
________ |
|
________ |
|
|
Net cash outflow from financial investment |
|
|
(58,098) |
|
(100,503) |
|
|
|
|
|
|
|
|
Equity dividends paid |
|
|
(38,954) |
|
(29,062) |
|
|
|
|
________ |
|
________ |
|
Net cash outflow before financing |
|
|
(59,551) |
|
(100,815) |
|
|
|
|
|
|
|
|
Financing |
|
|
|
|
|
|
Share issue |
14 |
72,232 |
|
66,773 |
|
|
|
|
________ |
|
________ |
|
|
Net cash inflow from financing |
|
|
72,232 |
|
66,773 |
|
|
|
|
________ |
|
________ |
|
Increase/(decrease) in cash |
18 |
|
12,681 |
|
(34,042) |
|
|
|
|
________ |
|
________ |
9 NOTES TO THE FINANCIAL STATEMENTS
|
1. |
Accounting policies |
||
|
|
(a) |
Basis of preparation |
|
|
|
|
The financial statements have been prepared in accordance with applicable UK Law and Accounting Standards (UK Generally Accepted Accounting Practice) and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts'. They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The financial statements have been prepared on a going concern basis. |
|
|
|
|
|
|
|
|
(b) |
Income |
|
|
|
|
Dividends receivable on equity shares (other than special dividends) are treated as revenue for the year on an ex-dividend basis. Where no ex-dividend date is available dividends are recognised on their due date. Provision is made for any dividends not expected to be received. Special dividends are credited to capital or revenue, according to their circumstances. |
|
|
|
|
|
|
|
|
|
The fixed returns on debt securities are recognised on a time apportionment basis so as to reflect the effective yield on the debt securities and shares. |
|
|
|
|
|
|
|
|
|
Interest receivable from cash and short-term deposits and interest payable is accrued to the end of the year. |
|
|
|
|
|
|
|
|
(c) |
Expenses |
|
|
|
|
All expenses are accounted for on an accruals basis and are charged to the Income Statement. Expenses are charged against revenue except as follows: |
|
|
|
|
- |
transaction costs on the acquisition or disposal of investments are charged to the capital account in the Income Statement; |
|
|
|
- |
expenses are charged to realised capital reserves where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect the investment management fee has been allocated 30% to revenue and 70% to realised capital reserves to reflect the Company's investment policy and prospective income and capital growth. The performance fee has been charged 100% to realised capital reserves, as the fee will have arisen wholly or predominantly by virtue of the capital performance of the investments. |
|
|
|
|
|
|
|
(d) |
Taxation |
|
|
|
|
Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the Balance Sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the Balance Sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the financial statements which are capable of reversal in one or more subsequent periods. Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws enacted or substantively enacted at the Balance Sheet date. |
|
|
|
|
|
|
|
|
|
Due to the Company's status as an investment trust company and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments. |
|
|
|
|
|
|
|
|
|
The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue within the Income Statement on the same basis as the particular item to which it relates using the Company's effective rate of tax for the year, based on the marginal basis. |
|
|
|
|
|
|
|
|
(e) |
Investments |
|
|
|
|
All investments have been designated upon initial recognition as fair value through profit or loss. This is done because all investments are considered to form part of a group of financial assets which is evaluated on a fair value basis, in accordance with the Company's documented investment strategy, and information about the grouping is provided internally on that basis. |
|
|
|
|
|
|
|
|
|
Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are measured initially at fair value. Subsequent to initial recognition, investments are valued at fair value through profit or loss. For listed investments, this is deemed to be bid market prices or closing prices for SETS (London Stock Exchange's electronic trading service) stocks sourced from the London Stock Exchange. |
|
|
|
|
|
|
|
|
|
Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the Income Statement and are ultimately recognised in the capital reserve. |
|
|
|
|
|
|
|
|
(f) |
Borrowings |
|
|
|
|
Monies borrowed to finance the investment objectives of the Company are stated at the amount of the net proceeds immediately after issue plus cumulative finance costs less cumulative payments made in respect of the debt. The finance costs of such borrowings are accounted for on an accruals basis using the effective interest rate method and are charged 30% to revenue and 70% to realised capital reserves to reflect the Company's investment policy and prospective income and capital growth. |
|
|
|
|
|
|
|
|
(g) |
Exchange rates |
|
|
|
|
Transactions involving foreign currencies are converted at the rate ruling at the date of the transaction. |
|
|
|
|
|
|
|
|
|
Translation of all other foreign currency balances including foreign assets and foreign liabilities is at the middle rates of exchange at the year end. Differences arising from translation are treated as capital gain or loss to capital or revenue within the Income Statement depending upon the nature of the gain or loss. |
|
|
|
|
|
|
|
|
(h) |
Derivative financial instruments |
|
|
|
|
Financial derivatives are measured by a third party at fair value based on an appropriate model. Changes in the fair value of derivative financial instruments are recognised in the Income Statement. If capital in nature, the associated change in value is presented as a capital item in the Income Statement. |
|
|
|
|
2011 |
2010 |
|
2. |
Income |
£'000 |
£'000 |
|
|
Income from investments: |
|
|
|
|
UK dividends |
7,704 |
5,990 |
|
|
UK unfranked investment income |
1,374 |
1,351 |
|
|
Overseas dividends |
40,501 |
31,525 |
|
|
Overseas interest |
5,535 |
6,115 |
|
|
|
_________ |
_________ |
|
|
|
55,114 |
44,981 |
|
|
|
_________ |
_________ |
|
|
Interest: |
|
|
|
|
Deposit interest |
10 |
13 |
|
|
Interest from HMRC (see note 3) |
4 |
1,613 |
|
|
|
_________ |
_________ |
|
|
|
14 |
1,626 |
|
|
|
_________ |
_________ |
|
|
Total income |
55,128 |
46,607 |
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
|
2011 |
2010 |
|
|
Income from investments comprises: |
£'000 |
£'000 |
|
|
Listed UK |
9,078 |
7,341 |
|
|
Listed overseas |
46,036 |
37,640 |
|
|
|
_________ |
_________ |
|
|
|
55,114 |
44,981 |
|
|
|
_________ |
_________ |
|
|
|
2011 |
2010 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
3. |
Investment management fees |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Investment management fees |
1,585 |
3,698 |
5,283 |
1,294 |
3,018 |
4,312 |
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
|
Details of the fee basis are contained in the Annual Report. |
||||||
|
|
|
||||||
|
|
On 5 November 2007, the European Court of Justice ruled that management fees should be exempt from VAT. HMRC announced its intention not to appeal against this case to the UK VAT Tribunal and therefore protective claims which have been made in relation to the Company have now been processed by HMRC. |
||||||
|
|
|
||||||
|
|
The VAT charged on the investment management fees has been refunded in stages. An amount of £1,337,000 relating to the period 1 January 2004 to 30 September 2007 was recognised in the financial statements for the year to 31 December 2008. Further amounts of £1,643,000 and £822,000, were recognised in the financial statements for the year to 31 December 2010 which represented VAT charged on investment management fees for the periods 1 January 1990 to 3 December 1996 and 1 January 2001 to 31 December 2003, respectively. These repayments were allocated to revenue and capital in line with the accounting policy of the Company for the periods in which the VAT was charged. |
||||||
|
|
|
||||||
|
|
An interest debtor relating to these reclaims of £1,613,000 was recognised in the financial statements for the year ended 31 December 2010 and £1,617,000 was received in the current year. |
||||||
|
|
|
2011 |
2010 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
4. |
Performance fees |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Performance fees |
- |
3,830 |
3,830 |
- |
3,945 |
3,945 |
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
|
Details of the fee basis are contained in the Annual Report. |
||||||
|
|
|
2011 |
2010 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
5. |
Other expenses |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Shareholders' services{A} |
720 |
- |
720 |
740 |
- |
740 |
|
|
Directors' remuneration |
125 |
- |
125 |
122 |
- |
122 |
|
|
Irrecoverable VAT |
76 |
- |
76 |
90 |
- |
90 |
|
|
Secretarial fees |
100 |
- |
100 |
100 |
- |
100 |
|
|
Auditor's fees: |
|
|
|
|
|
|
|
|
fees payable to the Company's auditor for the audit of the annual accounts |
22 |
- |
22 |
22 |
- |
22 |
|
|
fees payable to the Company's auditor for agreed upon procedures in connection with the Half-Yearly Report |
4 |
- |
4 |
4 |
- |
4 |
|
|
fees payable to the Company's auditor for review of the B Ordinary share capitalisation |
4 |
- |
4 |
4 |
- |
4 |
|
|
fees payable to the Company's auditor for other services{B} |
45 |
- |
45 |
73 |
- |
73 |
|
|
Other expenses |
754 |
- |
754 |
490 |
- |
490 |
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
______ |
|
|
|
1,850 |
- |
1,850 |
1,645 |
- |
1,645 |
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
|
{A} Includes registration, savings scheme and other wrapper administration and promotion expenses, of which £579,000 (2010 - £579,000) was paid to Aberdeen Asset Managers Limited (AAM) to cover marketing activities during the year. There were no sums due to AAM at the year end (2010 - £nil). |
||||||
|
|
{B} Relates to tax services received for the recovery of overseas withholding tax. |
||||||
|
|
|
2011 |
2010 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
6. |
Finance costs |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Bank loans and overdrafts |
1,021 |
2,386 |
3,407 |
1,079 |
2,520 |
3,599 |
|
|
Swap contracts |
238 |
554 |
792 |
205 |
478 |
683 |
|
|
Debenture Stock |
2 |
4 |
6 |
2 |
4 |
6 |
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
______ |
|
|
|
1,261 |
2,944 |
4,205 |
1,286 |
3,002 |
4,288 |
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
______ |
|
|
|
|
2011 |
2010 |
||||
|
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
7. |
Taxation |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
(a) |
Tax charge |
|
|
|
|
|
|
|
|
|
The tax charge comprises: |
|
|
|
|
|
|
|
|
|
Current UK tax |
1,367 |
(822) |
545 |
2,677 |
(2,019) |
658 |
|
|
|
Overseas tax |
3,704 |
- |
3,704 |
3,436 |
- |
3,436 |
|
|
|
Overseas tax reclaimable |
(894) |
- |
(894) |
(740) |
- |
(740) |
|
|
|
Double taxation relief |
(545) |
- |
(545) |
(656) |
- |
(656) |
|
|
|
Prior year adjustment |
- |
- |
- |
164 |
- |
164 |
|
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
______ |
|
|
|
Total tax |
3,632 |
(822) |
2,810 |
4,881 |
(2,019) |
2,862 |
|
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
|
|
(b) |
Factors affecting the tax charge for the year |
||||||
|
|
|
The UK corporaton tax rate was 28% until 31 March 2011 and 26% from 1 April 2011 giving an effective rate of 26.5% (2010 - 28%). The tax assessed for the year is lower than the effective corporation tax rate. The differences are explained below: |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
2010 |
||||
|
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Return on ordinary activities before taxation |
50,432 |
(49,420) |
1,012 |
43,389 |
147,625 |
191,014 |
|
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
______ |
|
|
|
Tax thereon at an effective rate of 26.5% (2010 - standard rate of 28%) |
13,364 |
(13,096) |
268 |
12,149 |
41,335 |
53,484 |
|
|
|
Effects of: |
|
|
|
|
|
|
|
|
|
Non taxable UK dividends |
(2,041) |
- |
(2,041) |
(1,677) |
- |
(1,677) |
|
|
|
Losses/(gains) on investments not taxable |
- |
9,930 |
9,930 |
- |
(44,188) |
(44,188) |
|
|
|
Currency losses not taxable |
- |
392 |
392 |
- |
471 |
471 |
|
|
|
Non taxable overseas dividends |
(9,956) |
- |
(9,956) |
(7,795) |
- |
(7,795) |
|
|
|
Double taxation relief |
(545) |
- |
(545) |
(656) |
- |
(656) |
|
|
|
Overseas tax reclaimable |
(894) |
- |
(894) |
(740) |
- |
(740) |
|
|
|
Irrecoverable overseas tax suffered |
3,704 |
- |
3,704 |
3,436 |
- |
3,436 |
|
|
|
Unutilised excess management expenses carried forward |
- |
1,952 |
1,952 |
- |
363 |
363 |
|
|
|
Prior year adjustment |
- |
- |
- |
164 |
- |
164 |
|
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
______ |
|
|
|
|
3,632 |
(822) |
2,810 |
4,881 |
(2,019) |
2,862 |
|
|
|
|
_______ |
_______ |
______ |
_______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
No provision for deferred tax has been made in the current or prior accounting period. |
||||||
|
|
|
|
||||||
|
|
|
The Company has not provided for deferred tax on capital gains or losses arising on the revaluation or disposal of investments as it is exempt from tax on these items because of its status as an investment trust company. |
||||||
|
|
|
|
||||||
|
|
|
The Company has an unrecognised deferred tax asset of £1,341,000 (2010 - £nil) arising as a result of unutilised management expenses) and loan relationship deficits of £5,311,000 (2010 - £nil. Any excess management expenses will be utilised against any taxable income that may arise. |
||||||
|
|
|
2011 |
2010 |
|
|
8. |
Ordinary dividends on equity shares |
£'000 |
£'000 |
|
|
|
Third interim for 2010 of 6.8p (2009 - 5.6p) |
7,015 |
5,314 |
|
|
|
Special interim for 2010 of 2.5p (2009 - nil) |
2,617 |
- |
|
|
|
Final dividend for 2010 of 11.6p (2009 - 10.2p) |
12,145 |
9,990 |
|
|
|
First interim for 2011 of 8.0p (2010 - 6.8p) |
8,513 |
6,832 |
|
|
|
Second interim for 2011 of 8.0p (2010 - 6.8p) |
8,664 |
6,934 |
|
|
|
Refund of unclaimed dividends |
(96) |
(8) |
|
|
|
|
_________ |
_________ |
|
|
|
|
38,858 |
29,062 |
|
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
|
|
In accordance with UK GAAP the third interim dividend and proposed final dividend for 2011 have not been included as liabilities in these financial statements. The proposed final dividend for 2011 is subject to approval by shareholders at the Annual General Meeting. |
|||
|
|
|
|||
|
|
The refund of unclaimed dividends for 2011 is an accrual relating to cash refunded after the period end. |
|||
|
|
|
|||
|
|
We set out below the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Sections 1158-1159 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividend for the year is £46,800,000 (2010 - £38,508,000). |
|||
|
|
|
|
|
|
|
|
|
2011 |
2010 |
|
|
|
|
£'000 |
£'000 |
|
|
|
Three interim dividends for 2011 of 8.0p (2010 - 6.8p) |
26,068 |
20,781 |
|
|
|
Special interim dividend for 2011 of nil (2010 - 2.5p) |
- |
2,605 |
|
|
|
Proposed final dividend for 2011 of 13.0p (2010 - 11.6p) |
14,659 |
12,085 |
|
|
|
|
_________ |
_________ |
|
|
|
|
40,727 |
35,471 |
|
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
|
|
Subsequent to the year end the Company has issued a further 1,630,000 Ordinary shares; therefore the amounts reflected above for the cost of the proposed final dividend for 2011 are based on 112,761,628 Ordinary shares in issue, being the number of Ordinary shares in issue at the date of this Report. |
|||
|
9. |
Returns per share |
2011 |
2010 |
|
|
Returns have been based on the following figures: |
|
|
|
|
Weighted average number of Ordinary shares |
106,560,813 |
99,783,138 |
|
|
Weighted average number of B Ordinary shares |
850,690 |
967,842 |
|
|
|
____________ |
__________ |
|
|
Weighted average number of Ordinary shares assuming conversion of B Ordinary shares |
107,411,503 |
100,750,980 |
|
|
|
____________ |
___________ |
|
|
|
|
|
|
|
|
£'000 |
£'000 |
|
|
Revenue return attributable to equity shareholders |
46,800 |
38,508 |
|
|
Capital return attributable to equity shareholders |
(48,598) |
149,644 |
|
|
|
_________ |
_________ |
|
|
Total return attributable to equity shareholders |
(1,798) |
188,152 |
|
|
|
_________ |
_________ |
|
|
|
2011 |
2010 |
|
10. |
Investments listed at fair value through profit or loss |
£'000 |
£'000 |
|
|
Opening valuation |
1,119,500 |
860,106 |
|
|
Opening investment holdings gains |
(384,102) |
(246,835) |
|
|
|
_________ |
_________ |
|
|
Opening book cost |
735,398 |
613,271 |
|
|
Movements during the year: |
|
|
|
|
Purchases |
196,704 |
211,140 |
|
|
Sales - proceeds |
(138,606) |
(110,637) |
|
|
Sales - realised gains |
32,356 |
20,546 |
|
|
Amortisation of fixed income book cost |
835 |
1,078 |
|
|
|
_________ |
_________ |
|
|
Closing book cost |
826,687 |
735,398 |
|
|
Closing investment holdings gains |
314,276 |
384,102 |
|
|
|
_________ |
_________ |
|
|
Closing valuation |
1,140,963 |
1,119,500 |
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
|
2011 |
2010 |
|
|
The portfolio valuation |
£'000 |
£'000 |
|
|
Listed on stock exchanges at bid valuation: |
|
|
|
|
United Kingdom: |
|
|
|
|
- equities |
166,277 |
160,020 |
|
|
- fixed income |
24,602 |
37,833 |
|
|
Overseas: |
|
|
|
|
- equities |
888,186 |
868,298 |
|
|
- fixed income |
61,898 |
53,349 |
|
|
|
_________ |
_________ |
|
|
Total |
1,140,963 |
1,119,500 |
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
|
2011 |
2010 |
|
|
(Losses)/gains on investments |
£'000 |
£'000 |
|
|
Realised gains based on book cost |
32,356 |
20,546 |
|
|
Net movement in investment holdings gains |
(69,826) |
137,267 |
|
|
|
_________ |
_________ |
|
|
|
(37,470) |
157,813 |
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
All investments are categorised as held at fair value through profit and loss and were designated as such upon initial recognition. |
||
|
|
|
||
|
|
Transaction costs During the year expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within (losses)/gains on investments in the Income Statement. The total costs were as follows: |
||
|
|
|
|
|
|
|
|
2011 |
2010 |
|
|
|
£'000 |
£'000 |
|
|
Purchases |
414 |
358 |
|
|
Sales |
186 |
112 |
|
|
|
_________ |
_________ |
|
|
|
600 |
470 |
|
|
|
_________ |
_________ |
|
|
|
2011 |
2010 |
|
11. |
Debtors: amounts falling due within one year |
£'000 |
£'000 |
|
|
Current taxation |
1,175 |
621 |
|
|
Other debtors |
167 |
72 |
|
|
Forward contracts |
2,715 |
3,984 |
|
|
Prepayments and accrued income |
5,393 |
5,982 |
|
|
|
_________ |
_________ |
|
|
|
9,450 |
10,659 |
|
|
|
_________ |
_________ |
|
|
None of the above amounts is overdue. |
|
|
|
|
|
2011 |
2010 |
|
12. |
Creditors |
£'000 |
£'000 |
|
|
Amounts falling due within one year: |
|
|
|
|
Swap contracts |
1,151 |
1,804 |
|
|
Accruals |
5,280 |
4,773 |
|
|
|
_________ |
_________ |
|
|
|
6,431 |
6,577 |
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
|
2011 |
2010 |
|
|
Amounts falling due after more than one year: |
£'000 |
£'000 |
|
|
Bank loans and Debentures (note 13) |
171,808 |
161,792 |
|
|
Accruals |
5,522 |
4,879 |
|
|
|
_________ |
_________ |
|
|
|
177,330 |
166,671 |
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
Management fees of £1,380,000 were outstanding at the year end to the Manager (2010 - £1,189,000). |
||
|
|
|
||
|
|
A performance fee of £8,710,000 was outstanding at the year end to the Manager (2010 - £7,740,000). Of this amount, £5,522,000 (2010 - £4,879,000) falls due after more than one year. |
||
|
|
|
||
|
|
All financial liabilities are included at amortised cost or at fair value for swap and forward contracts. |
||
|
|
|
2011 |
2010 |
|
|
13. |
Bank loans and Debentures |
£'000 |
£'000 |
|
|
|
Secured by floating charge and repayable other than by instalments or at the Company's option: |
|
|
|
|
|
- |
4% Debenture Stock |
150 |
150 |
|
|
|
|
|
|
|
|
Unsecured bank loans repayable: |
|
|
|
|
|
in more than one year but no more than five years |
|
|
|
|
|
- |
Yen 1,900,000,000 at 0.86071% - 4 June 2013 |
15,890 |
14,899 |
|
|
- |
Yen 6,325,600,000 at 0.86071% - 4 June 2013 |
52,902 |
49,879 |
|
|
- |
Yen 2,300,000,000 at 2.03% - 16 February 2014 |
19,235 |
18,113 |
|
|
- |
Yen 8,400,000,000 at 3.17% - 14 May 2015 |
70,250 |
66,151 |
|
|
- |
Yen 1,600,000,000 at 2.82% - 15 May 2016 |
13,381 |
12,600 |
|
|
|
_________ |
_________ |
|
|
|
|
171,808 |
161,792 |
|
|
|
|
_________ |
_________ |
|
|
|
|
|||
|
|
The terms of these loans permit early repayment at the borrower's option which may give rise to additional amounts being either payable or repayable in respect of fluctuations in interest rates since drawdown. Since the Directors, currently, have no intention of repaying the loans early, they have been included in the accounts to 31 December 2011 at their principal amounts. |
|||
|
|
|
|||
|
|
The Company currently has a fixed rate term loan facility with ING Bank N.V., which is fully drawn down and has a maturity date of 15 May 2016. |
|||
|
|
|
|||
|
|
The Company currently has a loan facility with Barclays Bank, which is fully drawn down and has a maturity date of 4 June 2013. The rates for these loans drawn down have been fixed for 5 years through a swap. The swap is separate from the loan and under this the borrower either pays or receives the difference between LIBOR and the swap rate so that the actual rate paid is always the same. The interest charged on the loan is at LIBOR plus the margin. For Yen the LIBOR is re-set every 6 months and the LIBOR rate under the loan and as reset under the swap should be identical to each other at every 6 month interval to preserve the "fixed" nature of the overall interest costs. |
|||
|
|
|
|||
|
|
The Company currently has a fixed rate term loan facility with The Royal Bank of Scotland plc, which is fully drawn down and has a maturity date of 16 February 2014. |
|||
|
|
|
|||
|
|
The Company also has an additional JPY8,400,000,000 term loan facility with The Royal Bank of Scotland plc which expires on 14 May 2015. The full JPY8,400,000,000 facility (approx. £70,250,000) has been drawn down. |
|||
|
|
|
|||
|
|
Financial covenants contained within the relevant loan agreements provide, inter alia, that borrowings shall at no time exceed 40% of net assets and that the net assets must exceed £400 million. The net assets were £999.3 million at 31 December 2011. |
|||
|
|
|
2011 |
2010 |
||
|
14. |
Share capital |
Number |
£'000 |
Number |
£'000 |
|
|
Allotted, called up and fully paid: |
|
|
|
|
|
|
Ordinary shares of 25p each |
111,131,628 |
27,783 |
103,162,856 |
25,791 |
|
|
B Ordinary shares of 25p each |
866,687 |
217 |
833,912 |
208 |
|
|
|
_________ |
_______ |
__________ |
________ |
|
|
|
111,998,315 |
28,000 |
103,996,768 |
25,999 |
|
|
|
|
|
|
|
|
|
Unissued: |
|
|
|
|
|
|
Unclassified shares of 25p each |
32,127,685 |
8,031 |
40,129,232 |
10,032 |
|
|
|
_________ |
_______ |
__________ |
________ |
|
|
Authorised |
144,126,000 |
36,031 |
144,126,000 |
36,031 |
|
|
|
_________ |
_______ |
__________ |
________ |
|
|
|
|
|
|
|
|
|
During the year 7,966,775 Ordinary shares were issued pursuant to the Company's block listing facility. All of these shares were issued at a premium to net asset value, enhancing net assets per share for existing shareholders. The issue prices ranged from 841p to 957p and raised a total of £72,232,000, net of expenses. These expenses have been offset against the share premium account. |
||||
|
|
|
||||
|
|
In accordance with Article 131 of the Company's Articles of Association, 6,672 B Ordinary shares, 13,156 B Ordinary shares, 7,563 B Ordinary shares, and 7,381 B Ordinary shares were allotted by way of capitalisation of reserves on 17 February, 16 May, 16 August and 15 November 2011 respectively. |
||||
|
|
|
||||
|
|
On 24 June 2011, 1,997 B Ordinary shares were converted into a like number of Ordinary shares of 25p in accordance with Article 47 of the Company's Articles of Association. When the nominal value of the allotted and fully paid B Ordinary shares is less than £100,000 the Directors may, under the terms of Article 47(B), require the conversion of such shares into Ordinary shares. The net asset value at the conversion date of 24 June 2011 was 916.5p per share. |
||||
|
|
|
||||
|
|
On a winding up of the Company, any surplus assets available after payment of all debts and satisfaction of all liabilities of the Company shall be applied in repaying the Ordinary and B Ordinary shareholders the amounts paid up on such shares. Any surplus shall be divided among the holders of Ordinary and B Ordinary shares pari passu according to the amount paid up on such shares respectively. |
||||
|
|
|
||||
|
|
Voting rights |
||||
|
|
In accordance with the Articles of Association of the Company, on a show of hands, every member (or duly appointed proxy) present at a general meeting of the Company has one vote; and, on a poll, every member present in person or by proxy shall have 89 votes for every 25p nominal amount of Ordinary or B Ordinary shares held. |
||||
|
|
|
2011 |
2010 |
|
15. |
Capital reserve |
£'000 |
£'000 |
|
|
At 31 December 2010 |
763,031 |
613,396 |
|
|
Movement in fair value gains |
(37,470) |
157,813 |
|
|
Capitalised expenses (net of tax) |
(9,650) |
(7,946) |
|
|
VAT recovered on investment management and performance fees |
- |
1,458 |
|
|
Issue of shares |
(9) |
(9) |
|
|
Currency losses |
(1,478) |
(1,681) |
|
|
|
_________ |
_________ |
|
|
At 31 December 2011 |
714,424 |
763,031 |
|
|
|
_________ |
_________ |
|
|
|
|
|
|
|
Included in the total above are investment holdings gains at the year end of £314,276,000 (2010 - £384,102,000). |
||
|
16. |
Net asset value per share |
||||
|
|
The diluted net asset value per share and the net asset value attributable to the Ordinary shares (including conversion of the B Ordinary shares), at the year end calculated in accordance with the Articles of Association were as follows: |
||||
|
|
|
|
|
||
|
|
|
Net asset value |
Net asset value |
||
|
|
|
per share |
attributable |
||
|
|
|
2011 |
2010 |
2011 |
2010 |
|
|
|
P |
P |
£'000 |
£'000 |
|
|
Basic |
|
|
|
|
|
|
Ordinary and B Ordinary shares (note 14) |
892.2 |
930.5 |
999,252 |
967,676 |
|
|
Diluted |
|
|
|
|
|
|
Ordinary and B Ordinary shares (note 14) |
892.2 |
930.5 |
999,252 |
967,676 |
|
17. |
Reconciliation of net return before finance costs and |
2011 |
2010 |
|
|
taxation to net cash inflow from operating activities |
£'000 |
£'000 |
|
|
Net return before finance costs and taxation |
5,217 |
195,302 |
|
|
Add: losses/(gains) on investments |
37,470 |
(157,813) |
|
|
Add: currency losses |
1,478 |
1,681 |
|
|
Amortisation of fixed income book cost |
(835) |
(1,078) |
|
|
Decrease/(increase) in accrued income |
589 |
(2,819) |
|
|
Decrease in other debtors |
968 |
1,419 |
|
|
Increase in accruals |
157 |
239 |
|
|
Tax on unfranked income - overseas |
(3,365) |
(2,963) |
|
|
|
_________ |
_________ |
|
|
|
41,679 |
33,968 |
|
|
|
_________ |
_________ |
|
|
|
At 31 December |
|
|
|
At 31 December |
|
|
|
2010 |
differences |
flows |
movements |
2011 |
|
18. |
Analysis of changes in net debt |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Cash and short term deposits |
10,765 |
9,154 |
12,681 |
- |
32,600 |
|
|
Forward contracts |
3,984 |
(1,269) |
- |
- |
2,715 |
|
|
Swap |
(1,804) |
653 |
- |
- |
(1,151) |
|
|
Debt due after more than one year |
(161,792) |
(10,016) |
- |
- |
(171,808) |
|
|
|
_________ |
_________ |
_______ |
________ |
________ |
|
|
|
(148,847) |
(1,478) |
12,681 |
- |
(137,644) |
|
|
|
_________ |
_________ |
_______ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
|
At 31 December |
|
|
|
At 31 December |
|
|
|
2009 |
differences |
flows |
movements |
2010 |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Cash and short term deposits |
28,255 |
16,552 |
(34,042) |
- |
10,765 |
|
|
Forward contracts |
(2,848) |
6,832 |
- |
- |
3,984 |
|
|
Swap |
(1,850) |
46 |
- |
- |
(1,804) |
|
|
Debt due within one year |
(55,875) |
(6,853) |
- |
62,728 |
- |
|
|
Debt due after more than one year |
(80,806) |
(18,258) |
- |
(62,728) |
(161,792) |
|
|
|
_________ |
_________ |
_______ |
________ |
________ |
|
|
|
(113,124) |
(1,681) |
(34,042) |
- |
(148,847) |
|
|
|
_________ |
_________ |
_______ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
A statement reconciling the movement in net funds to the net cash flow has not been presented as there are no differences from the above analysis. |
|||||
|
19. |
Derivatives and other financial instruments |
|||||||||||||||||||||
|
|
Risk management |
|||||||||||||||||||||
|
|
The Company's financial instruments, other than derivatives, comprise securities and other investments, cash balances, loans and debentures and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income. The Company also has the ability to enter into derivative transactions in the form of swap contracts, forward foreign currency contracts, futures and options, for the purpose of managing currency and market risks arising from the Company's activities. |
|||||||||||||||||||||
|
|
|
|||||||||||||||||||||
|
|
The Manager has a dedicated investment management process, which ensures that the investment policy is achieved. Stock selection procedures are in place based on the active portfolio management and identification of stocks. The portfolio is reviewed on a periodic basis by a Senior Investment Manager and also by the Manager's Investment Committee. |
|||||||||||||||||||||
|
|
|
|||||||||||||||||||||
|
|
The Company's Manager has an independent Investment Risk department for reviewing the investment risk parameters of all core equity, fixed income and alternative asset classes on a regular basis. The department reports to the Manager's Performance Review Committee which is chaired by the Manager's Chief Investment Officer. The department's responsibility is to review and monitor ex-ante (predicted) portfolio risk and style characteristics using best practice, industry standard multi-factor models. |
|||||||||||||||||||||
|
|
|
|||||||||||||||||||||
|
|
Additionally, the Manager's Compliance department continually monitors the Company's investment and borrowing powers and reports to the Manager's Risk Management Committee. |
|||||||||||||||||||||
|
|
|
|||||||||||||||||||||
|
|
The main risks the Company faces from its financial instruments are (i) market risk (comprising interest rate risk, currency risk and other price risk), (ii) liquidity risk and (iii) credit risk. |
|||||||||||||||||||||
|
|
|
|||||||||||||||||||||
|
|
The Board regularly reviews and agrees policies for managing each of these risks. The Manager's policies for managing these risks are summarised below and have been applied throughout the year. The numerical disclosures exclude short-term debtors and creditors, other than for currency disclosures. |
|||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
(i) |
Market risk |
||||||||||||||||||||
|
|
|
The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - interest rate risk, currency risk and other price risk. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
Interest rate risk |
||||||||||||||||||||
|
|
|
Interest rate movements may affect: |
||||||||||||||||||||
|
|
|
- the fair value of the investments in fixed interest rate securities; |
||||||||||||||||||||
|
|
|
- the level of income receivable on cash deposits; |
||||||||||||||||||||
|
|
|
- interest payable on the Company's variable rate borrowings. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
The Board reviews on a regular basis the values of the fixed interest rate securities. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Borrowings comprise fixed rate, revolving, and uncommitted facilities. The fixed rate Yen facilities are used to finance opportunities at low rates and, the revolving and uncommitted facilities to provide flexibility in the short-term. Current bank covenant guidelines state that the total borrowings will not exceed 40% of the adjusted net tangible assets of the Company. The Company currently has two loan facilities with Barclays Bank, which are fully drawn down and have maturity dates of 4 June 2013. The rates for these loans have been fixed for 5 years through a swap. The swap is separate from the loan and under this the borrower either pays or receives the difference between LIBOR and the swap rate so that the actual rate paid is always the same. The interest charged on the loan is at LIBOR plus the margin. For JPY, the LIBOR is re-set every 6 months and the LIBOR rate under the loan and as reset under the swap should be identical to each other at every 6 month interval to preserve the "fixed" nature of the overall interest costs. Details of borrowings at 31 December 2011 are shown in note 13. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
Interest risk profile |
||||||||||||||||||||
|
|
|
The interest rate risk profile of the portfolio of financial assets and liabilities at the Balance Sheet date was as follows: |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
|
Weighted |
|
|
|
|
|||||||||||||||
|
|
|
|
average |
|
|
|
|
|||||||||||||||
|
|
|
|
period for |
Weighted |
|
|
Non- |
|||||||||||||||
|
|
|
|
which |
average |
Fixed |
Floating |
interest |
|||||||||||||||
|
|
|
|
rate is fixed |
interest rate |
rate |
rate |
bearing |
|||||||||||||||
|
|
|
At 31 December 2011 |
Years |
% |
£'000 |
£'000 |
£'000 |
|||||||||||||||
|
|
|
Assets |
|
|
|
|
|
|||||||||||||||
|
|
|
Sterling |
5.48 |
5.44 |
24,602 |
32,571 |
166,277 |
|||||||||||||||
|
|
|
US Dollar |
13.81 |
7.21 |
39,219 |
- |
246,111 |
|||||||||||||||
|
|
|
Euro |
13.47 |
4.50 |
9,006 |
- |
82,213 |
|||||||||||||||
|
|
|
Other |
13.84 |
9.75 |
13,673 |
29 |
559,862 |
|||||||||||||||
|
|
|
|
_________ |
_________ |
________ |
________ |
________ |
|||||||||||||||
|
|
|
Total assets |
- |
- |
86,500 |
32,600 |
1,054,463 |
|||||||||||||||
|
|
|
|
_________ |
_________ |
________ |
________ |
________ |
|||||||||||||||
|
|
|
Liabilities |
|
|
|
|
|
|||||||||||||||
|
|
|
Bank loans - Japanese Yen |
2.53 |
2.09 |
(171,658) |
- |
- |
|||||||||||||||
|
|
|
Debenture Stock |
- |
- |
(150) |
- |
- |
|||||||||||||||
|
|
|
Accruals |
- |
- |
- |
- |
(5,522) |
|||||||||||||||
|
|
|
|
_________ |
_________ |
________ |
________ |
________ |
|||||||||||||||
|
|
|
Total liabilities |
- |
- |
(171,808) |
- |
(5,522) |
|||||||||||||||
|
|
|
|
_________ |
_________ |
________ |
________ |
________ |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
Weighted |
|
|
|
|
|||||||||||||||
|
|
|
|
average |
|
|
|
|
|||||||||||||||
|
|
|
|
period for |
Weighted |
|
|
Non- |
|||||||||||||||
|
|
|
|
which |
average |
Fixed |
Floating |
interest |
|||||||||||||||
|
|
|
|
rate is fixed |
interest rate |
rate |
rate |
bearing |
|||||||||||||||
|
|
|
At 31 December 2010 |
Years |
% |
£'000 |
£'000 |
£'000 |
|||||||||||||||
|
|
|
Assets |
|
|
|
|
|
|||||||||||||||
|
|
|
Sterling |
6.50 |
5.44 |
25,174 |
10,638 |
160,020 |
|||||||||||||||
|
|
|
US Dollar |
13.97 |
7.59 |
36,329 |
1 |
218,482 |
|||||||||||||||
|
|
|
Euro |
14.47 |
4.50 |
11,980 |
- |
112,159 |
|||||||||||||||
|
|
|
Other |
9.92 |
10.00 |
17,699 |
126 |
537,657 |
|||||||||||||||
|
|
|
|
_________ |
_________ |
________ |
________ |
________ |
|||||||||||||||
|
|
|
Total assets |
- |
- |
91,182 |
10,765 |
1,028,318 |
|||||||||||||||
|
|
|
|
_________ |
_________ |
________ |
________ |
________ |
|||||||||||||||
|
|
|
Liabilities |
|
|
|
|
|
|||||||||||||||
|
|
|
Bank loans - Japanese Yen |
3.53 |
2.09 |
(161,642) |
- |
- |
|||||||||||||||
|
|
|
Debenture Stock |
- |
- |
(150) |
- |
- |
|||||||||||||||
|
|
|
Accruals |
- |
- |
- |
- |
(4,879) |
|||||||||||||||
|
|
|
|
_________ |
_________ |
________ |
________ |
________ |
|||||||||||||||
|
|
|
Total liabilities |
- |
- |
(161,792) |
- |
(4,879) |
|||||||||||||||
|
|
|
|
_________ |
_________ |
________ |
________ |
________ |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
The weighted average interest rate is based on the current yield of each asset, weighted by its market value. The weighted average interest rate on bank loans is based on the interest rate payable, weighted by the total value of the loans. The maturity dates of the Company's loans are shown in note 13 to the financial statements. |
||||||||||||||||||||
|
|
|
The floating rate assets consist of cash deposits on call earning interest at prevailing market rates. |
||||||||||||||||||||
|
|
|
The non-interest bearing assets represent the equity element of the portfolio. |
||||||||||||||||||||
|
|
|
Short-term debtors and creditors have been excluded from the above tables. |
||||||||||||||||||||
|
|
|
SWAP forward currency contracts are measured at fair value, all other financial liabilities are measured at amortised cost. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
Maturity profile |
||||||||||||||||||||
|
|
|
The table below shows the timing of cash outflows to settle the Company's financial liabilities at the Balance Sheet date. |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
More |
|
|||||||||||||
|
|
|
|
Within |
Within |
Within |
Within |
Within |
than |
|
|||||||||||||
|
|
|
|
1 year |
1-2 years |
2-3 years |
3-4 years |
4-5 years |
5 years |
Total |
|||||||||||||
|
|
|
At 31 December 2011 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||||
|
|
|
Bank loans |
- |
68,792 |
19,235 |
70,250 |
13,381 |
- |
171,658 |
|||||||||||||
|
|
|
Debenture Stock{A} |
- |
- |
- |
- |
- |
150 |
150 |
|||||||||||||
|
|
|
Interest cash flows on bank loans and Debenture Stock |
3,644 |
3,340 |
2,844 |
1,507 |
196 |
229 |
11,760 |
|||||||||||||
|
|
|
Interest cash flows on swaps |
827 |
414 |
- |
- |
- |
- |
1,241 |
|||||||||||||
|
|
|
Cash flows on other creditors |
5,280 |
2,620 |
1,944 |
958 |
- |
- |
10,802 |
|||||||||||||
|
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
|||||||||||||
|
|
|
|
9,751 |
75,166 |
24,023 |
72,715 |
13,577 |
379 |
195,611 |
|||||||||||||
|
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
More |
|
|||||||||||||
|
|
|
|
Within |
Within |
Within |
Within |
Within |
than |
|
|||||||||||||
|
|
|
|
1 year |
1-2 years |
2-3 years |
3-4 years |
4-5 years |
5 years |
Total |
|||||||||||||
|
|
|
At 31 December 2010 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|||||||||||||
|
|
|
Bank loans |
- |
- |
64,778 |
18,113 |
66,151 |
12,600 |
161,642 |
|||||||||||||
|
|
|
Debenture Stock{A} |
- |
- |
- |
- |
- |
150 |
150 |
|||||||||||||
|
|
|
Interest cash flows on bank loans and Debenture Stock |
4,059 |
4,060 |
3,432 |
2,622 |
1,837 |
413 |
16,423 |
|||||||||||||
|
|
|
Interest cash flows on swaps |
714 |
714 |
357 |
- |
- |
- |
1,785 |
|||||||||||||
|
|
|
Cash flows on other creditors |
4,740 |
2,230 |
1,662 |
985 |
- |
- |
9,617 |
|||||||||||||
|
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
|||||||||||||
|
|
|
|
9,513 |
7,004 |
70,229 |
21,720 |
67,988 |
13,163 |
189,617 |
|||||||||||||
|
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
{A} The Debenture Stock is perpetual and has therefore been disclosed as maturing after more than 5 years. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
Interest rate sensitivity |
||||||||||||||||||||
|
|
|
The sensitivity analyses below have been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the Balance Sheet date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
Of the total bank loans the interest rate on Yen 8,225,600,000 (£68,792,000) is fixed through a SWAP and forward currency contract, as detailed in note 13. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
If interest rates had been 100 basis points higher or lower (based on current parameter used by Manager's Investment Risk Department on risk assessment) and all other variables were held constant, the Company's: |
||||||||||||||||||||
|
|
|
- revenue return for the year ended 31 December 2011 would increase/decrease by £326,000 (2010 - increase/decrease by £108,000). This is mainly attributable to the Company's exposure to interest rates on its floating rate cash balances. These figures have been calculated based on cash positions at each year end. |
||||||||||||||||||||
|
|
|
- equity reserves would increase/decrease by £7,438,000 (2010 - increase/decrease by £4,587,000). This is also mainly attributable to the Company's exposure to interest rates on cash balances and its fixed interest portfolio. These figures have been calculated based on cash and fixed interest portfolio positions at each year end. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as part of the interest rate risk management process used to meet the Company's objectives. The risk parameters used will also fluctuate depending on the current market perception. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
Foreign currency risk |
||||||||||||||||||||
|
|
|
A significant proportion of the Company's investment portfolio is invested in overseas securities and the Balance Sheet can be significantly affected by movements in foreign exchange rates. It is not the Company's policy to hedge this risk on a continuing basis but the Company may, from time to time, match specific overseas investment with foreign currency borrowings. A significant proportion of the Company's borrowings, as detailed in note 13, is in foreign currency as at 31 December 2011. The Manager seeks, when deemed appropriate, to manage exposure to currency movements on borrowings by using forward foreign currency contracts as a hedge against potential foreign currency movements. At 31 December 2011 the Company had a foreign currency contract, details of which are listed in note 19. During the year a gain of £9,721,000 (2010 - gain of £14,552,000) was realised. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
The revenue account is subject to currency fluctuation arising on overseas income. The Company does not hedge this currency risk. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
Currency risk exposure by currency of denomination: |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
|
31 December 2011 |
31 December 2010 |
||||||||||||||||||
|
|
|
|
UK and |
|
|
UK and |
|
|
||||||||||||||
|
|
|
|
overseas |
Net |
Total |
overseas |
Net |
Total |
||||||||||||||
|
|
|
|
equity |
monetary |
currency |
equity |
monetary |
currency |
||||||||||||||
|
|
|
|
investments |
assets |
exposure |
investments |
assets |
exposure |
||||||||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
||||||||||||||
|
|
|
US Dollar |
246,111 |
- |
246,111 |
218,482 |
1 |
218,483 |
||||||||||||||
|
|
|
Sterling |
166,277 |
32,571 |
198,848 |
160,020 |
10,638 |
170,658 |
||||||||||||||
|
|
|
Euro |
82,213 |
- |
82,213 |
112,159 |
- |
112,159 |
||||||||||||||
|
|
|
Hong Kong Dollar |
74,112 |
- |
74,112 |
87,764 |
- |
87,764 |
||||||||||||||
|
|
|
Swiss Franc |
71,290 |
- |
71,290 |
65,247 |
- |
65,247 |
||||||||||||||
|
|
|
Japanese Yen |
62,618 |
- |
62,618 |
68,105 |
- |
68,105 |
||||||||||||||
|
|
|
Brazilian Real |
57,299 |
- |
57,299 |
38,828 |
- |
38,828 |
||||||||||||||
|
|
|
Taiwan Dollar |
51,055 |
28 |
51,083 |
43,600 |
126 |
43,726 |
||||||||||||||
|
|
|
Indonesian Rupiah |
42,010 |
- |
42,010 |
37,316 |
- |
37,316 |
||||||||||||||
|
|
|
Malaysian Ringgit |
37,514 |
- |
37,514 |
36,507 |
- |
36,507 |
||||||||||||||
|
|
|
Singapore Dollar |
30,262 |
- |
30,262 |
37,803 |
- |
37,803 |
||||||||||||||
|
|
|
Canadian Dollar |
29,083 |
- |
29,083 |
12,178 |
- |
12,178 |
||||||||||||||
|
|
|
Thailand Baht |
23,984 |
- |
23,984 |
24,843 |
- |
24,843 |
||||||||||||||
|
|
|
Mexican Peso |
22,833 |
1 |
22,834 |
24,886 |
- |
24,886 |
||||||||||||||
|
|
|
Swedish Krone |
21,951 |
- |
21,951 |
22,934 |
- |
22,934 |
||||||||||||||
|
|
|
Australian Dollar |
18,623 |
- |
18,623 |
19,327 |
- |
19,327 |
||||||||||||||
|
|
|
Indian Rupee |
17,228 |
- |
17,228 |
15,576 |
- |
15,576 |
||||||||||||||
|
|
|
New Zealand Dollar |
- |
- |
- |
2,743 |
- |
2,743 |
||||||||||||||
|
|
|
|
________ |
_______ |
________ |
_________ |
_______ |
_______ |
||||||||||||||
|
|
|
Total |
1,054,463 |
32,600 |
1,087,063 |
1,028,318 |
10,765 |
1,039,083 |
||||||||||||||
|
|
|
|
________ |
_______ |
________ |
_________ |
_______ |
_______ |
||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
The asset allocation between specific markets can vary from time to time based on the Manager's opinion of the attractiveness of the individual markets. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
Foreign currency sensitivity |
||||||||||||||||||||
|
|
|
The following table details the Company's sensitivity to a 10% increase and decrease in sterling against the major foreign currencies in which the Company has exposure (based on exposure >5% of total exposure). The sensitivity analysis includes foreign currency denominated monetary items and adjusts their translation at the year end for a 10% change in foreign currency rates. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
|
2011 |
2011 |
2010 |
2010 |
||||||||||||||||
|
|
|
|
Revenue |
Equity{A} |
Revenue |
Equity{A} |
||||||||||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
||||||||||||||||
|
|
|
US Dollar |
862 |
24,611 |
853 |
21,848 |
||||||||||||||||
|
|
|
Euro |
539 |
8,221 |
584 |
11,216 |
||||||||||||||||
|
|
|
Hong Kong Dollar |
252 |
7,411 |
219 |
8,776 |
||||||||||||||||
|
|
|
Swiss Franc |
248 |
7,129 |
106 |
6,525 |
||||||||||||||||
|
|
|
Brazilian Real |
242 |
5,730 |
187 |
3,883 |
||||||||||||||||
|
|
|
Japanese Yen |
236 |
6,262 |
184 |
6,811 |
||||||||||||||||
|
|
|
|
___________ |
__________ |
__________ |
__________ |
||||||||||||||||
|
|
|
Total |
2,379 |
59,364 |
2,133 |
59,059 |
||||||||||||||||
|
|
|
|
___________ |
__________ |
__________ |
__________ |
||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
{A} represents equity exposures to the relevant currencies |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
Foreign exchange contracts |
||||||||||||||||||||
|
|
|
The following Japanese Yen forward contracts were outstanding at the Balance Sheet date: |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
Unrealised profit at |
||||||||||||||||
|
|
|
|
|
Amount |
|
31 December |
||||||||||||||||
|
|
|
|
Settlement |
JPY |
Contracted |
2011 |
||||||||||||||||
|
|
|
Date of contract |
date |
'000 |
rate |
£'000 |
||||||||||||||||
|
|
|
9 December 2011 |
9 March 2012 |
20,000,000 |
119.36 |
2,715 |
||||||||||||||||
|
|
|
|
___________ |
__________ |
__________ |
__________ |
||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
The fair value of forward foreign currency contracts is based on forward exchange rates at the Balance Sheet date. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
Other price risk |
||||||||||||||||||||
|
|
|
Other price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular country or sector. The allocation of assets to international markets and the stock selection process both act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on various stock exchanges worldwide. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
Other price risk sensitivity |
||||||||||||||||||||
|
|
|
If market prices at the Balance Sheet date had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders for the year ended 31 December 2011 would have increased/decreased by £114,096,000 (2010 - increase/decrease of £111,950,000) and equity reserves would have increased/decreased by the same amount. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
(ii) |
Liquidity risk |
||||||||||||||||||||
|
|
|
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
Liquidity risk is not considered to be significant as the Company's assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of loan and overdraft facilities (note 13). |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
(iii) |
Credit risk |
||||||||||||||||||||
|
|
|
This is failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
The risk is not significant, and is managed as follows: |
||||||||||||||||||||
|
|
|
- where the Manager makes an investment in a bond, corporate or otherwise, the credit ratings of the issuer are taken into account so as to manage the risk to the Company of default; |
||||||||||||||||||||
|
|
|
- investments in quoted bonds are made across a variety of industry sectors and geographic markets so as to avoid concentrations of credit risk; |
||||||||||||||||||||
|
|
|
- transactions involving derivatives are entered into only with investment banks, the credit rating of which is taken into account so as to minimise the risk to the Company of default; |
||||||||||||||||||||
|
|
|
- investment transactions are carried out with a large number of brokers, whose credit-standing is reviewed periodically by the Manager, and limits are set on the amount that may be due from any one broker; |
||||||||||||||||||||
|
|
|
- the risk of counterparty exposure due to failed trades causing a loss to the Company is mitigated by the review of failed trade reports on a daily basis. In addition, both stock and cash reconciliations to the custodian's records are performed on a daily basis to ensure discrepancies are investigated on a timely basis. The Manager's Compliance department carries out periodic reviews of the custodian's operations and reports its finding to the Manager's Risk Management Committee. |
||||||||||||||||||||
|
|
|
- cash is held only with reputable banks with acceptable credit quality. It is the Manager's policy to trade only with A- and above (Long Term rated) and A-1/P-1 (Short Term rated) counterparties. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
Credit risk exposure |
||||||||||||||||||||
|
|
|
In summary, compared to the amounts in the Balance Sheet, the maximum exposure to credit risk at 31 December 2011 was as follows: |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
|
2011 |
2010 |
||||||||||||||||||
|
|
|
|
Balance |
Maximum |
Balance |
Maximum |
||||||||||||||||
|
|
|
|
Sheet |
exposure |
Sheet |
exposure |
||||||||||||||||
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
||||||||||||||||
|
|
|
Non-current assets |
|
|
|
|
||||||||||||||||
|
|
|
Securities at fair value through profit or loss |
1,140,963 |
1,140,963 |
1,119,500 |
1,119,500 |
||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
Current assets |
|
|
|
|
||||||||||||||||
|
|
|
Current taxation |
1,175 |
1,175 |
621 |
621 |
||||||||||||||||
|
|
|
Other debtors |
167 |
167 |
72 |
72 |
||||||||||||||||
|
|
|
Forward contracts |
2,715 |
2,715 |
3,984 |
3,984 |
||||||||||||||||
|
|
|
Accrued income |
5,393 |
5,393 |
5,982 |
5,982 |
||||||||||||||||
|
|
|
|
__________ |
_________ |
________ |
__________ |
||||||||||||||||
|
|
|
|
1,150,413 |
1,150,413 |
1,130,159 |
1,130,159 |
||||||||||||||||
|
|
|
|
__________ |
_________ |
________ |
__________ |
||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
None of the Company's financial assets is secured by collateral or other credit enhancements. |
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||
|
|
|
Fair values of financial assets and financial liabilities |
||||||||||||||||||||
|
|
|
The fair value of borrowings has been calculated at £178,461,000 as at 31 December 2011 (2010 - £171,396,000) compared to an accounts value in the financial statements of £171,808,000 (2010 - £161,792,000) (note 13). The fair value of each loan is determined by aggregating the expected future cash flows for that loan discounted at a rate comprising the borrower's margin plus an average of market rates applicable to loans of a similar period of time and currency. All other assets and liabilities of the Company are included in the Balance Sheet at fair value. |
||||||||||||||||||||
|
20. |
Fair value hierarchy |
||||||
|
|
FRS 29 'Financial Instruments: Disclosures' requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the following levels: |
||||||
|
|
|
|
|||||
|
|
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; |
||||||
|
|
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (ie as prices) or indirectly (ie derived from prices); and |
||||||
|
|
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). |
||||||
|
|
|
||||||
|
|
The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy at 31 December 2011 as follows: |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
As at 31 December 2011 |
Note |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
|
|
|
Quoted equities |
a) |
1,054,463 |
- |
- |
1,054,463 |
|
|
|
Quoted bonds |
b) |
86,500 |
- |
- |
86,500 |
|
|
|
Foreign exchange forward contracts |
c) |
- |
2,715 |
- |
2,715 |
|
|
|
|
|
________ |
______ |
_______ |
________ |
|
|
|
Total |
|
1,140,963 |
2,715 |
- |
1,143,678 |
|
|
|
|
|
________ |
______ |
_______ |
________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
|
Note |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Financial liabilities at fair value through profit or loss |
|
|
|
|
|
|
|
|
Derivatives |
d) |
- |
(1,151) |
- |
(1,151) |
|
|
|
|
|
________ |
______ |
_______ |
________ |
|
|
|
Total |
|
- |
(1,151) |
- |
(1,151) |
|
|
|
|
|
________ |
______ |
_______ |
________ |
|
|
|
Net fair value |
|
1,140,963 |
1,564 |
- |
1,142,527 |
|
|
|
|
|
________ |
______ |
_______ |
________ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
As at 31 December 2010 |
Note |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
Financial assets at fair value through profit or loss |
|
|
|
|
|
|
|
|
Quoted equities |
a) |
1,028,318 |
- |
- |
1,028,318 |
|
|
|
Quoted bonds |
b) |
91,182 |
- |
- |
91,182 |
|
|
|
Foreign exchange forward contracts |
c) |
- |
3,984 |
- |
3,984 |
|
|
|
|
|
________ |
______ |
_______ |
________ |
|
|
|
Total |
|
1,119,500 |
3,984 |
- |
1,123,484 |
|
|
|
|
|
________ |
______ |
_______ |
________ |
|
|
|
Financial liabilities at fair value through profit or loss |
|
|
|
|
|
|
|
|
Derivatives |
d) |
- |
(1,804) |
- |
(1,804) |
|
|
|
|
|
________ |
______ |
_______ |
________ |
|
|
|
Total |
|
- |
(1,804) |
- |
(1,804) |
|
|
|
|
|
________ |
______ |
_______ |
________ |
|
|
|
Net fair value |
|
1,119,500 |
2,180 |
- |
1,121,680 |
|
|
|
|
|
________ |
______ |
_______ |
________ |
|
|
|
|
|
|
|
|
|
|
|
|
a) |
Quoted equities |
|
|
|
|
|
|
|
|
The fair value of the Company's investments in quoted equities has been determined by reference to their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on recognised stock exchanges. |
|||||
|
|
|
|
|||||
|
|
b) |
Quoted bonds |
|||||
|
|
|
The fair value of the Company's investments in quoted bonds has been determined by reference to their quoted bid prices at the reporting date. Bonds included in Fair Value Level 1 include Government Bonds and Corporate Bonds. |
|||||
|
|
|
|
|||||
|
|
c) |
Foreign exchange forward contracts |
|||||
|
|
|
The fair value of the Company's investment in foreign exchange forward contracts has been determined in relation to models using observable market inputs and hence are categorised in Fair Value Level 2. |
|||||
|
|
|
|
|||||
|
|
d) |
Derivatives |
|||||
|
|
|
The fair value of the Company's investment in derivatives has been determined in relation to models using observable market inputs and hence are categorised in Fair Value Level 2. |
|||||
|
21. |
Capital management policies and procedures |
|
|
The investment objective of the Company is to achieve a total return greater than its benchmark by investing predominantly in equities worldwide. |
|
|
|
|
|
The capital of the Company consists of equity, comprising issued capital, reserves and retained earnings. The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. |
|
|
|
|
|
The Board monitors and reviews the broad structure of the Company's capital on an on-going basis. This review includes : |
|
|
- the planned level of gearing which takes into account the Investment Manager's views on the market; |
|
|
- the level of equity shares in issue; and |
|
|
- the extent to which revenue in excess of that which is required to be distributed should be retained. |
|
|
|
|
|
The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period. |
|
|
|
|
|
Details of the Company's gearing facilities and financial covenants are detailed in note 13 of the financial statements. |
The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 31 December 2011 are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The 2010 and 2011 statutory accounts received unqualified reports from the Company's auditors and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying the reports, and did not contain a statement under s.498 of the Companies Act 2006. The financial information for 2010 is derived from the statutory accounts for 2009 which have been delivered to the Registrar of Companies. The 2011 accounts will be filed with the Registrar of Companies in due course.
The Annual Report will be posted to shareholders in March 2012 and additional copies will be available from the registered office of the Company and on the Company's website, http://www.murray-intl.co.uk/doc.nsf/Lit/ReportUKClosedMINTAnnual*
The Annual General Meeting will be held at 12.30 pm on 26 April 2012 at the London Chamber of Commerce, 33 Queen Street, London EC4R 1AP
Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements. Investors may not get back the amount they originally invested.
*Neither the content of the Company's website nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.
For Murray International Trust PLC
Aberdeen Asset Management PLC, Secretaries
28 February 2012
10 SUMMARY OF INVESTMENT CHANGES DURING THE YEAR
|
|
Valuation |
Appreciation/ |
|
Valuation |
||
|
|
31 December 2011 |
(depreciation) |
Transactions |
31 December 2010 |
||
|
|
£'000 |
% |
£'000 |
£'000 |
£'000 |
% |
|
Equities |
|
|
|
|
|
|
|
United Kingdom |
166,277 |
14.2 |
1,761 |
4,496 |
160,020 |
14.1 |
|
North America |
120,761 |
10.3 |
18,170 |
18,711 |
83,880 |
7.4 |
|
Europe ex UK |
175,454 |
14.9 |
(40,421) |
15,536 |
200,339 |
17.6 |
|
Japan |
62,618 |
5.3 |
(1) |
(5,486) |
68,105 |
5.9 |
|
Asia Pacific ex Japan |
294,789 |
25.1 |
(10,677) |
(13) |
305,479 |
27.1 |
|
Latin America |
234,564 |
19.8 |
(4,180) |
28,249 |
210,495 |
18.6 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
|
1,054,463 |
89.6 |
(35,348) |
61,493 |
1,028,318 |
90.7 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
Fixed income |
|
|
|
|
|
|
|
United Kingdom |
24,602 |
2.1 |
(524) |
(12,707) |
37,833 |
3.3 |
|
Europe ex UK |
9,006 |
0.8 |
(3,053) |
79 |
11,980 |
1.1 |
|
Asia Pacific ex Japan |
13,673 |
1.2 |
2,008 |
14 |
11,651 |
1.0 |
|
Latin America |
39,219 |
3.3 |
(553) |
10,054 |
29,718 |
2.6 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
|
86,500 |
7.4 |
(2,122) |
(2,560) |
91,182 |
8.0 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
Other net assets |
35,619 |
3.0 |
20,772 |
- |
14,847 |
1.3 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
Total assets |
1,176,582 |
100.0 |
(16,698) |
58,933 |
1,134,347 |
100.0 |
|
|
__________ |
________ |
_________ |
_________ |
_______ |
______ |
|
|
||||||
|
|
||||||
11 TWENTY LARGEST INVESTMENTS
As at 31 December 2011
|
|
|
Valuation |
Total |
Valuation |
||
|
|
|
2011 |
assets |
2010 |
||
|
Company |
Country |
£'000 |
% |
£'000 |
||
|
1 (1) |
British American Tobacco{A} |
|
|
|
|
|
|
British American Tobacco is the holding company for a group of companies that manufacture, market and sell cigarettes and other tobacco products. The group sells over 300 brands in approximately 180 markets around the world. |
UK & Malaysia |
52,53 |
4.5 |
39,858 |
||
|
2 (2) |
Souza Cruz |
|
|
|
|
|
|
Souza Cruz produces and sells cigarettes and other tobacco products in Latin America. Brand names include Lucky Strike, Carlton, Derby and Hollywood. The company also manufactures paper for cigarettes and packaging. |
Brazil |
44,259 |
3.8 |
38,828 |
||
|
3 (3) |
Unilever Indonesia |
|
|
|
|
|
|
Unilever Indonesia, the majority owned subsidiary of Unilever NV, manufactures soaps, detergents, margarine, oil and cosmetics. The company also produces dairy based foods, ice cream and tea beverages. |
Indonesia |
42,010 |
3.6 |
37,316 |
||
|
4 (-) |
Telus |
|
|
|
|
|
|
Telus is a telecommunications company providing a variety of communication products and services. The company provides voice, data, internet and wireless services to businesses and consumers throughout Canada. |
Canada |
29,083 |
2.5 |
14,614 |
||
|
5 (13) |
Taiwan Mobile |
|
|
|
|
|
|
Taiwan Mobile is the leading provider of cellular telecommunications services in Taiwan. Although predominantly a wireless network operator, the company also sells and leases cellular telephony equipment. |
Taiwan |
28,889 |
2.4 |
22,140 |
||
|
6 (5) |
Vale do Rio Doce{B} |
|
|
|
|
|
|
Vale is one of the world's largest, fully-integrated, natural resources companies. Based in Brazil, the company produces iron-ore, manganese, alloys, gold, nickel, copper, aluminium, potash and numerous other minerals. In addition to its mining assets, Vale also owns and operates railways and maritime terminals. |
Brazil & USA |
28,275 |
2.4 |
32,033 |
||
|
7 (-) |
Philip Morris International |
|
|
|
|
|
|
Spun out from the Altria Group in 2008, Philip Morris International is one of the world's leading global tobacco companies. It manufactures and sells leading recognisable brands such as Marlboro, Parliament and Virginia Slims. |
USA |
28,272 |
2.4 |
18,691 |
||
|
8 (8) |
Standard Chartered |
|
|
|
|
|
|
Standard Chartered is an international banking group operating principally in Asia, Africa, Latin America and the Middle East. The company offers its products and services to a wide range of customers in over fifty countries worldwide. |
UK |
28,180 |
2.4 |
26,681 |
||
|
9 (7) |
Aeroportuario del Sureste ADS |
|
|
|
|
|
|
Grupo Aeroporto del Sureste operates airports in Mexico. The company holds long-term concessions to manage airports in leading tourist resorts such as Cancun and Cozumel, plus cities such as Oaxaca, Veracruz and Merida. |
Mexico |
26,934 |
2.3 |
27,008 |
||
|
10 (-) |
Telefonica Brasil |
|
|
|
|
|
|
Telefonica Brasil provides fixed-line and wireless telecommunication services throughout the Brazilian State of Sao Paolo. The company provides voice, data, broadband and digital video to consumers, business and government entities. |
Brazil |
26,388 |
2.2 |
18,086 |
||
|
Top ten investments |
|
334,829 |
28.5 |
|
||
|
|
|
|||||
|
{A} Holding comprises UK and Malaysia securities split £33,610,000 (2010 - £22,172,000) and £18,929,000 (2010 - £17,686,000). |
||||||
|
{B} Holding comprises equity and fixed income securities split £18,018,000 (2010 - £22,197,000) and £10,257,000 (2010 - £9,836,000). |
||||||
|
|
|
|
|
|
|
|
|
11 (14) |
Weir Group |
|
|
|
|
|
|
Weir Group, based in Glasgow, Scotland, is a leading global manufacturer and supplier of engineering products and services. The group produces valve pumps, compressors, turbines and gearboxes for various industrial uses. |
UK |
24,875 |
2.1 |
21,790 |
||
|
12 (17) |
PetroChina |
|
|
|
|
|
|
PetroChina explores, develops and produces crude oil and natural gas. The company also refines, transports and distributes crude oil and petroleum products, produces and sells chemicals, and transmits, markets and sells natural gas. |
China |
24,836 |
2.1 |
19,917 |
||
|
13 (9) |
Petrobras ADR{C} |
|
|
|
|
|
|
Petrobras, Brazil's leading energy group, produces oil and gas from extensive reserves throughout the country. It also produces a wide range of derivative products, petrochemicals and fuel alcohol. |
Brazil |
24,184 |
2.0 |
25,675 |
||
|
14 (10) |
PTT Exploration and Production |
|
|
|
|
|
|
PTT Exploration is a subsidiary of the Petroleum Authority of Thailand. The company produces oil and natural gas, and also explores and develops new crude oil and gas prospects. |
Thailand |
23,984 |
2.0 |
24,843 |
||
|
15 (-) |
Banco Bradesco{D} |
|
|
|
|
|
|
Banco Bradesco is one of the leading banks in Brazil. The bank attracts deposits and offers a full range of products such as business loans, personal credit, mortgages, lease financing and internet banking services. The company also offers credit cards, insurance and pension fund management. |
Brazil |
23,616 |
2.0 |
17,366 |
||
|
16 (6) |
Tenaris ADR |
|
|
|
|
|
|
Tenaris manufactures, markets and distributes welded and seamless pipe. The company produces casing, tubing, pipeline and mechanical tubes for the oil and gas and energy industries and for mechanical applications and distributes its products worldwide. |
Mexico |
23,459 |
2.0 |
28,156 |
||
|
17 (-) |
Johnson & Johnson |
|
|
|
|
|
|
Johnson & Johnson manufactures health-care products and provides related services for consumer, pharmaceutical, and medical devices and diagnostic markets. The company has many leading branded products that are sold throughout the world. |
USA |
22,355 |
1.9 |
15,404 |
||
|
18 (15) |
Taiwan Semiconductor Manufacturing |
|
|
|
|
|
|
Taiwan Semiconductor Manufacturing Company is one of the largest integrated circuit manufacturers in the world. The company is involved in component design, wafer manufacturing, assembly, testing and mask production of integrated circuits which are used in the computer, communication and electronics industries. |
Taiwan |
22,167 |
1.9 |
21,460 |
||
|
19 (11) |
Nordea |
|
|
|
|
|
|
Nordea Bank is a financial services group based in Sweden. The company provides deposit and credit services to both business and private individuals, plus a range of products in investment banking, securities trading and insurance. Nordea offers services throughout Scandinavia and the Baltic region. |
Sweden |
21,951 |
1.9 |
22,934 |
||
|
20 (-) |
Zurich Financial Services |
|
|
|
|
|
|
Based in Switzerland, Zurich Financial Services provides insurance based financial services. The company offers general and life insurance products and services for private individuals, corporations and multinational organisations. |
Switzerland |
21,934 |
1.9 |
18,091 |
||
|
Top twenty investments |
|
568,190 |
48.3 |
|
||
|
|
|
|||||
|
{C} Holding represents equity security (2010 holding comprised equity and fixed income securities, split £21,791,000 and £3,884,000). |
||||||
|
{D} Holding comprises equity and fixed income securities split £14,382,000 (2010 - £17,366,000) and £9,234,000 (2010 - nil). |
||||||
|
|
||||||
|
|
||||||
|
The value of the 20 largest investments represents 48.3% (2010 - 46.2%) of total assets. The figures in brackets denote the position at the previous year end. (-) denotes not previously in 20 largest investments. |
||||||
Portfolio of Investments - Other Investments
|
|
|
Valuation |
Total |
Valuation |
|
|
|
2011 |
assets |
2010 |
|
Company |
Country |
£'000 |
% |
£'000 |
|
Pepsico |
USA |
21,343 |
1.8 |
- |
|
Kimberly Clark de Mexico |
Mexico |
21,235 |
1.8 |
21,358 |
|
Royal Dutch Shell |
UK |
21,227 |
1.8 |
18,295 |
|
Fomento Economico Mexicano |
Mexico |
21,067 |
1.8 |
- |
|
China Mobile |
China |
20,738 |
1.8 |
14,118 |
|
Singapore Telecommunications |
Singapore |
20,548 |
1.7 |
14,598 |
|
Kraft Foods |
USA |
19,707 |
1.7 |
16,502 |
|
QBE Insurance Group |
Australia |
18,623 |
1.6 |
19,327 |
|
Roche Holdings |
Switzerland |
18,612 |
1.6 |
15,960 |
|
Public Bank |
Malaysia |
18,585 |
1.6 |
18,821 |
|
Top thirty investments |
|
769,875 |
65.5 |
|
|
Daito Trust Construction |
Japan |
17,636 |
1.5 |
14,011 |
|
Hindustan Unilever |
India |
17,228 |
1.5 |
15,576 |
|
Canon |
Japan |
17,061 |
1.4 |
17,220 |
|
Casino |
France |
16,689 |
1.4 |
19,189 |
|
Nestlé |
Switzerland |
15,592 |
1.3 |
15,758 |
|
Total |
France |
15,315 |
1.3 |
15,798 |
|
HSBC |
UK |
15,223 |
1.3 |
- |
|
Novartis |
Switzerland |
15,151 |
1.3 |
15,439 |
|
Centrica |
UK |
15,044 |
1.3 |
17,243 |
|
Vodafone Group |
UK |
15,028 |
1.3 |
9,285 |
|
Top forty investments |
|
929,842 |
79.1 |
|
|
Wing Hang Bank |
Hong Kong |
14,923 |
1.3 |
22,143 |
|
ENI |
Italy |
14,166 |
1.2 |
14,926 |
|
Takeda Pharmaceutical |
Japan |
14,092 |
1.2 |
11,483 |
|
Astellas Pharmaceutical |
Japan |
13,829 |
1.2 |
12,897 |
|
Swire Pacific B |
Hong Kong |
13,615 |
1.2 |
17,082 |
|
Mapfre |
Spain |
13,529 |
1.1 |
11,752 |
|
AstraZeneca |
UK |
13,090 |
1.1 |
12,857 |
|
Wilson & Sons |
Brazil |
13,040 |
1.1 |
12,178 |
|
Belgacom |
Belgium |
12,836 |
1.1 |
13,671 |
|
Imperial Tobacco 5.5% 22/11/2016 |
UK |
10,409 |
0.9 |
10,101 |
|
Top fifty investments |
|
1,063,371 |
90.5 |
|
|
Telefonica Emisiones 5.375% 02/02/2018 |
UK |
9,758 |
0.8 |
10,170 |
|
Oversea-Chinese Bank |
Singapore |
9,714 |
0.8 |
12,315 |
|
GDF Suez |
France |
9,680 |
0.8 |
10,349 |
|
Hypermarcas 6.5% 20/04/21 |
USA |
9,137 |
0.8 |
- |
|
Portugal Telecom 4.5% 16/06/2025 |
Portugal |
9,006 |
0.8 |
11,980 |
|
Republic of Venezuela 8.5% 08/10/2014 |
USA |
7,181 |
0.6 |
6,515 |
|
Republic of Indonesia 9.5% 15/07/2023 |
Indonesia |
6,842 |
0.6 |
5,959 |
|
Republic of Indonesia 10% 15/02/2028 |
Indonesia |
6,831 |
0.6 |
5,692 |
|
Federal Republic of Brazil 11% 17/08/2040 |
USA |
3,410 |
0.3 |
3,435 |
|
General Accident 7.875% Cum Irred Pref |
UK |
2,616 |
0.2 |
2,728 |
|
Santander 10.375% Non Cum Pref |
UK |
1,819 |
0.1 |
2,175 |
|
Consorcio Ara |
Mexico |
1,598 |
0.1 |
3,528 |
|
Total investments |
|
1,140,963 |
97.0 |
|
|
Net current assets |
|
35,619 |
3.0 |
|
|
Total assets{E} |
|
1,176,582 |
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
12 FINANCIAL HIGHLIGHTS
|
|
31 December 2011 |
31 December 2010 |
% change |
|
Total assets less current liabilities (before deducting prior charges) |
£1,176,582,000 |
£1,134,347,000 |
|
|
Equity shareholders' funds (Net Assets) |
£999,252,000 |
£967,676,000 |
|
|
Share price - Ordinary share (mid market) |
916.5p |
941.0p |
-2.6 |
|
Share price - B Ordinary share (mid market) |
890.0p |
835.0p |
+6.6 |
|
Net Asset Value per Ordinary and B Ordinary share |
892.2p |
930.5p |
-4.1 |
|
Premium to Net Asset Value on Ordinary shares |
2.7% |
1.1% |
|
|
|
|
|
|
|
Gearing (ratio of borrowing to shareholders' funds) |
|
|
|
|
Actual gearing ratio (net of cash) |
13.9% |
15.6% |
|
|
|
|
|
|
|
Dividends and earnings per Ordinary share |
|
|
|
|
Revenue return per share |
43.9p |
38.6p |
+13.8 |
|
Dividends per share{A} |
37.0p |
32.0p |
+15.6 |
|
Special interim dividend per share{A} |
- |
2.5p |
|
|
Dividend cover (including proposed final and special interim dividends) |
1.19 |
1.12 |
|
|
Revenue reserves{B} |
£62,886,000 |
£54,944,000 |
|
|
|
|
|
|
|
Operating costs |
|
|
|
|
Total expense ratio - excluding performance fee |
0.74% |
0.71% |
|
|
Total expense ratio - including performance fee |
1.14% |
1.18% |
|
|
|
|||
|
{A} The figure for dividends per share reflects the years in which they were earned (see note 8). |
|||
|
{B} The revenue reserve figure does not take account of the third interim, final and special interim dividends amounting to £8,891,000, £14,659,000 and £nil respectively (2010 - £7,015,000, £12,145,000 and £2,617,000). |
|||
Performance (total return)
|
|
1 year |
3 year |
5 year |
10 year |
|
|
% return |
% return |
% return |
% return |
|
Share price{A} |
+1.3 |
+74.2 |
+76.8 |
+232.0 |
|
Net asset value per Ordinary and B Ordinary share |
-0.1 |
+60.1 |
+61.2 |
+170.0 |
|
Benchmark |
-4.6 |
+34.4 |
+14.4 |
+51.1 |
|
|
||||
|
Total return represents the capital return plus dividends reinvested. |
||||
|
{A} Mid to mid. |
||||
This information is provided by RNS
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