Final Results

RNS Number : 7803H

Personal Assets Trust PLC

02 June 2011

 

To:                   RNS

From:              Personal Assets Trust plc

Date:               2 June 2011

Results for the year ended 30 April 2011

The Directors of Personal Assets Trust ("PAT") are pleased to announce the Group's results for the year ended 30 April 2011.

The key points are as follows:

·      PAT is run expressly for private investors. Its investment policy is to protect and increase (in that order) the value of shareholders' funds per share over the long term and to earn as high a total return as is compatible with a risk equivalent to that of the FTSE All-Share Index.

·      Over the year to 30 April 2011 PAT's net asset value per share ("NAV") rose by 9.8%.  This compares to a rise of 10.2% in the Company's comparator, the FTSE All-Share Index.  PAT's share price rose by £28.50 during the year and at 30 April 2011 was £318.00.  An analysis of performance is provided in the Chairman's Statement and Investment Adviser's Report below.

·     Since PAT became independently managed in 1990 the Board has chosen to measure PAT's performance over rolling three-year periods.  Over the three years to 30 April 2011 the net asset value total return per share was 29.6% compared to the FTSE All-Share Index's 13.6%, an outperformance of 14.1%.

·     The Company has experienced a strong demand for its shares.  During the year the Company issued 169,522 Ordinary shares, raising £51.7 million of new capital.

·      During the year, PAT continued to maintain a high level of effective liquidity. At 30 April 2011, liquidity was 45.4% (includes 13.8% in Gold Bullion) compared to 34.5% (included 9.7% in Gold Bullion Securities) at 30 April 2010.

·     The Directors intend PAT's annual dividend rate to grow in real terms over the longer term relative to both the Retail Price Index and Consumer Price Index. Two interim dividends have been declared and paid during the year, totalling £5.40 per ordinary share.  Together these represent an increase of 3.8% over the corresponding payments for the previous year, compared to inflation of 5.2% (RPI) and 4.5% (CPI). Over the three years to 30 April 2011 the dividend has grown by 17.4% compared to the RPI's 9.5% and the CPI's 10.9%.

·      With effect from 1 May 2011, the Directors intend to pay dividends on a quarterly basis in July, October, January and April of each year. The Board's policy is never to cut the dividend rate, so that shareholders know that each quarterly payment will at least equal the previous one.  The Company has earlier today announced the first quarterly dividend for the year ended 30 April 2012 of £1.35 per share which will be paid to shareholders on 22 July 2011. The second quarterly dividend for the year ended 30 April 2012, expected to be paid in October 2011, will be at least £1.35 per share and total dividends for the year will be not less than £5.40 per share.

The Chairman, Hamish Buchan, said:

 "Ever since Personal Assets became a self-managed trust in 1990 the Board's practice has been to measure performance not over single years but over rolling three-year periods. This time it gives me special pleasure to be able to record that over the three years to 30 April 2011 our share price and net asset value ("NAV") rose by a gratifying 23.1% and 22.3% respectively compared to a rise of only 1.8% in our comparator, the FTSE All-Share Index.

The circumstances, however, were exceptional and I am unlikely ever to be in a position to report such an outperformance again. At 30 April 2008 we believed that the stock market was poised for meltdown and our portfolio was 100% liquid. Our fears proved well founded and over the year to 30 April 2009 our comparator fell by 29.9% while our share price dropped only 9.8%. This was an exercise in capital preservation and over the ensuing two years we have worked hard to consolidate the relative advantage we gained during that year of turmoil.

Given that we yield considerably less than our comparator, it is unsurprising that our outperformance in total return terms over the three year period was not as startling. Nevertheless, we still returned a very healthy 30.4% on our share price and 29.6% on our NAV compared to the FTSE All-Share's 13.6% and our dividend continued to grow. Over the three years it rose by 17.4% compared to 9.5% for the Retail Price Index ("RPI") and 10.9% in the Consumer Price Index ("CPI"). While our policy remains to seek real dividend growth over the longer term, over the next three years this will be far from easy. In a world of zero interest rates in which we also choose the comfort of holding a sizeable percentage of our shareholders' funds in gold it is hard to find income which does not entail an unacceptable capital risk or even capital sacrifice and the Board is not prepared to seek income on such terms. It was therefore a credit to our Investment Adviser that we not only managed to earn our dividend for the year to 30 April 2011 but were even able to make a modest transfer to revenue reserves. We shall continue to exercise the same care and prudence while these difficult conditions persist.

From now on, Personal Assets will be paying dividends quarterly, in July, October, January and April of each year. This will not only benefit shareholders' cash flow but also avoid the adverse effect on our revenue position of creating new shares entitled to a full six months' dividend close to an ex dividend date. The first quarterly dividend will be paid on 22 July and will be at a rate of £1.35, corresponding to the old half-yearly rate of £2.70. It remains the Directors' policy never to cut the dividend rate, so shareholders know that each quarterly payment will at least equal the previous one, and the total dividend for the year to 30 April 2012 will accordingly be not less than £5.40.

During the year we issued 169,522 new Ordinary shares, raising £51.7 million of additional capital. On 18 May 2011 our number of shares in issue reached 1,000,000 ― 6.7 times the number in issue when we became a self-managed trust in 1990. Size is of itself not important to us but it is reassuring to know that others approve of what we do and want to join us. On behalf of the Board I warmly welcome those who have become shareholders for the first time. Communication with shareholders is something we take seriously and I am pleased to report that our second annual London shareholders' meeting in January was a great success. Nearly 300 shareholders attended compared to under 200 last year and the London meeting will be a regular feature of our yearly calendar. The next one is planned for the morning of Tuesday 24 January 2012 at the Institution of Engineering and Technology, 2 Savoy Place, London WC2R 0BL.

I referred earlier to our startling outperformance amid the troubles of 2008. This was chiefly due to the courage and foresight of Ian Rushbrook, our Managing Director, who died on 12 October of that year. As a tribute to him we have just published '60 Not Out ― Personal Assets Trust Quarterlies 2002-2011', which not only contains Quarterlies Nos. 26-60 but also has as its centrepiece Ian's Investment Reports covering the period 2000-2008. It is available to shareholders free on application and a request form for it is included along with the Annual Report."

The Investment Adviser, Sebastian Lyon, said:

"Over the year to 30 April 2011 we held our own in a market environment we distrust. Asset prices are too high, interest rates are too low and at some stage both will have to undergo a major realignment. The trouble is that we have no means of knowing when this will happen. Although everyone accepts the need for reform in the Eurozone, the US remains reluctant to accept that it spends over 60% more than its tax revenue compared to the UK's 'responsible' 32%. This year the US budget deficit will be $1.4 trillion (10% of GDP) following $1.3 trillion in 2010 and $1.4 trillion in 2009. Standard & Poor's have downgraded US sovereign debt from 'stable' to 'negative' and we fear a third round of quantitative easing (QE) later this year or early in 2012. In Britain there is a Faustian pact between the Treasury and the Bank of England whereby the Treasury engages in austerity, withdrawing its fiscal stimulus, while the Bank maintains its monetary stimulus via zero interest rates and (when needed) QE, ensuring that the Treasury turns a blind eye to inflation above the Bank's target.

Two key issues determine the outlook for real returns ― debt (sovereign debt in particular) and inflation. Debt restructuring must come, but need not be as sudden and violent as explicit sovereign default. 'Financial repression', a sort of creeping default which swindles the saver through the maintenance of negative real interest rates, was used after WWII to whittle away war debt; and similar policies are being slipped into place today. The Federal Reserve keeps short-term interest rates at zero while it tries to put a ceiling on long-term rates by buying government bonds with newly printed money. Requirements for banks and insurance companies to retain higher levels of capital and liquidity also fuel demand for government bonds, while exchange controls may provide a 'forced home bias' to such asset purchases. In extremis there is the potential for the introduction of capital controls.

Our capital is irreplaceable and we continue to protect it against inflation via index linked bonds while we work on building a portfolio of long-term equity holdings in market leaders with real pricing power such as BAT Industries, Coca-Cola, Unilever and Nestlé. As frustrated bulls we are excited about the prospect of becoming a stock picking trust once more; but because the purchase price is critical to generating long term returns, we have been patient and have not overpaid for stocks we feel will be available more cheaply later. We say more about our stock selection process in the accompanying Quarterly N^o. 61, but we like companies with strong balance sheets ― preferably with no debt, so they can work for shareholders rather than for their bankers or bondholders. Nothing focuses the mind better than the need to pay dividends; and the longer the track record, the more likely it is ingrained in the culture. Where possible we look at dividend records over decades, not the last few years. All the companies just mentioned actually increased their payouts throughout the crisis and one of the attractions to us of Coca Cola is its 49 years of uninterrupted growth in its dividend.

We prefer dividends to share buybacks, the timing of which we cannot control but management often misjudges ― many share buyback programmes came to a halt in 2008, just as markets plummeted. Nestlé was one exception, having returned a third of the company's market capitalisation over the past five years in both dividends and share buybacks. We avoid companies that grow aggressively by acquisition. It is so often the overpayment for acquisitions, either using equity or debt, that leads to value destruction. More often than not, investors celebrate mergers in haste but repent at leisure.

There has been much talk ― particularly by those who have never owned or recommended it ― of a possible bubble in gold. With only 0.6% of global financial assets invested in gold compared to 3% in 1980 and with the supply of paper money increasing at an exponential rate we are way off bubble territory. An investor asked me recently, 'What is the difference between gold and tulips?' The relatives of Mr Martin Sulzbacher, a German Jewish banker, who hid a hoard of gold coins in a garden in Hackney before being interned in 1940, could answer this easily. On his release Mr Sulzbacher failed to find the coins but, as was reported last month, they were recently discovered by a local resident and returned to Mr Sulzbacher's son. No paper money could have preserved wealth better than those coins did over the 70 years since Mr Sulzbacher buried them. Indeed, paper money would scarcely have preserved wealth at all. Worth £100,000 when they were found, they were US $20 gold coins ('double eagles') and their total face value when issued as currency was $1,640."

For further information contact:

Robin Angus

Executive Director

Tel:  [phone]

Sebastian Lyon

Investment Adviser

Tel:  [phone]

Steven Davidson

Company Secretary

Tel:  [phone]

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

Group Income Statement

	Year ended 30 April 2011
	Revenue	Capital	Total
	£'000	£'000	£'000
Income
Investment income	6,744	-	6,744
Other operating income	150	-	150
	6,894	-	6,894
Gains on investments held at fair value	-	18,050	18,050
Losses on derivatives held at fair value	-	(1,673)	(1,673)
Foreign exchange gains	-	9,176	9,176
Total income	6,894	25,553	32,447
Expenses	(1,742)	(1,120)	(2,862)
Profit before tax	5,152	24,433	29,585
Tax	(148)	-	(148)
Profit for the year	5,004	24,433	29,437
Earnings per share	£5.68	£27.75	£33.43
The Group does not have any income or expenses that are not included in the profit for the year other than expenses of £213,000 charged directly to the Share Premium account in respect of the issue of the Company's shares. Accordingly, the "Profit for the Year" is also the "Total Comprehensive Income for the Year", as defined in IAS1 (revised) and no separate Statement of Comprehensive Income has been presented. The 'Total' column of this statement represents the Group's Income Statement, prepared in accordance with IFRS.  The supplementary revenue and capital return columns are both prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations.
Dividend Information
Dividends per share	£5.40
Dividends paid	£'000
First interim dividend of £2.70 per share	2,296
Second interim dividend of £2.70 per share	2,602
	4,898

Group Income Statement

	Year ended 30 April 2010
	Revenue	Capital	Total
	£'000	£'000	£'000
Income
Investment income	6,181	-	6,181
Other operating income	73	-	73
	6,254	-	6,254
Gains on investments held at fair value	-	31,279	31,279
Gains on derivatives held at fair value	-	10,946	10,946
Foreign exchange gains	-	2,342	2,342
Total income	6,254	44,567	50,821
Expenses	(2,413)	-	(2,413)
Profit before tax	3,841	44,567	48,408
Tax	(241)	-	(241)
Profit for the year	3,600	44,567	48,167
Earnings per share	£4.61	£57.12	£61.73

Group Balance Sheet

			As at 30 April 2011			As at 30 April 2010
			£'000			£'000
Non current assets
Investments held at fair value			291,598			225,773
Current assets
Financial assets			4,151			1,742
Other receivables			3,591			1,107
Cash and cash equivalents			11,399			6,391
			19,141			9,240
Total Assets			310,739			235,013
Current liabilities Financial liabilities			-			(639)
Other payables			(739)			(589)
Total liabilities			(739)			(1,228)
Net assets			310,000			233,785
Capital and reserves
Ordinary share capital			12,310			10,191
Share premium			153,230			103,673
Capital redemption reserve			219			219
Special reserve			22,517			22,517
Other Capital reserves			118,457			94,024
Revenue reserve			3,267			3,161
Total equity			310,000			233,785
Net asset value per Ordinary share			£314.78			£286.75

Company Balance Sheet

			As at 30 April 2011			As at 30 April 2010
			£'000			£'000
Non current assets
Investments held at fair value			291,618			225,788
Current assets
Financial assets			4,151			1,742
Other receivables			3,653			1,107
Cash and cash equivalents			11,297			6,381
			19,101			9,230
Total Assets			310,719			235,018
Current liabilities Financial liabilities			-			(639)
Other payables			(719)			(594)
Total liabilities			(719)			(1,233)
Net assets			310,000			233,785
Capital and reserves
Ordinary share capital			12,310			10,191
Share premium			153,230			103,673
Capital redemption reserve			219			219
Special reserve			22,517			22,517
Other Capital reserves			118,467			94,029
Revenue reserve			3,257			3,156
Total equity			310,000			233,785
Net asset value per Ordinary share			£314.78			£286.75

 

Group Statement of Changes in Equity

For the year ended 30 April 2011	Share Capital	Share Premium	Capital Redemption Reserve	Special Reserve	Treasury Share Reserve	Other Capital Reserves	Revenue Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 30 April 2010	10,191	103,673	219	22,517	-	94,024	3,161	233,785
Profit for the year	-	-	-	-	-	24,433	5,004	29,437
Issue of new ordinary shares	2,119	49,557	-	-	-	-	-	51,676
Dividends paid	-	-	-	-	-	-	(4,898)	(4,898)
Balance as at 30 April 2011	12,310	153,230	219	22,517	-	118,457	3,267	310,000
For the year ended 30 April 2010	Share Capital	Share Premium	Capital Redemption Reserve	Special Reserve	Treasury Share Reserve	Other Capital Reserves	Revenue Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 30 April 2009	9,386	87,224	219	22,517	(1,346)	49,457	3,675	171,132
Profit for the year	-	-	-	-	-	44,567	3,600	48,167
Issue of ordinary shares
from Treasury	-	3	-	-	1,346	-	-	1,349
Issue of new ordinary shares	805	16,446	-	-	-	-	-	17,251
Dividends paid	-	-	-	-	-	-	(4,114)	(4,114)
Balance as at 30 April 2010	10,191	103,673	219	22,517	-	94,024	3,161	233,785

Company Statement of Changes in Equity

For the year ended 30 April 2011	Share Capital	Share Premium	Capital Redemption Reserve	Special Reserve	Treasury Share Reserve	Other Capital Reserves	Revenue Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 30 April 2010	10,191	103,673	219	22,517	-	94,029	3,156	233,785
Profit for the year	-	-	-	-	-	24,438	4,999	29,437
Issue of new ordinary shares	2,119	49,557	-	-	-	-	-	51,676
Dividends paid	-	-	-	-	-	-	(4,898)	(4,898)
Balance as at 30 April 2011	12,310	153,230	219	22,517	-	118,467	3,257	310,000
For the year ended 30 April 2010	Share Capital	Share Premium	Capital Redemption Reserve	Special Reserve	Treasury Share Reserve	Other Capital Reserves	Revenue Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 30 April 2009	9,386	87,224	219	22,517	(1,346)	49,457	3,675	171,132
Profit for the year	-	-	-	-	-	44,572	3,595	48,167
Issue of ordinary shares
from Treasury	-	3	-	-	1,346	-	-	1,349
Issue of new ordinary shares	805	16,446	-	-	-	-	-	17,251
Dividends paid	-	-	-	-	-	-	(4,114)	(4,114)
Balance as at 30 April 2010	10,191	103,673	219	22,517	-	94,029	3,156	233,785

Group Cash Flow Statement

	Year Ended 30 April	Year Ended 30 April
	2011	2010
	£'000	£'000
Cash flows from operating activities
Profit before taxation	29,585	48,408
Gains on investments	(16,993)	(43,011)
Foreign exchange differences at fair value through profit or loss	(9,176)	(2,342)
Operating cash flows before movements in working capital	3,416	3,055
Decrease in other receivables	(389)	(291)
Increase in other payables	90	297
Net cash from operating activities before taxation	3,117	3,061
Taxation	(243)	(180)
Net cash inflow from operating activities	2,874	2,881
Investing activities
Purchases of investments	(108,498)	(75,934)
Sales of investments	59,027	55,402
Net cash outflow from investing activities	(49,471)	(20,532)
Financing activities
Equity dividends paid	(4,898)	(4,114)
Issue of ordinary shares	49,736	18,600
Net cash inflow from financing activities	44,838	14,486
Net decrease in cash and cash equivalents	(1,759)	(3,165)
Cash and cash equivalents at the start of the year	6,391	8,202
Effect of foreign exchange rate changes	6,767	1,354
Cash and cash equivalents at the end of the year	11,399	6,391

Company Cash Flow Statement

	Year Ended 30 April	Year Ended 30 April
	2011	2010
	£'000	£'000
Cash flows from operating activities
Profit before taxation	29,580	48,413
Gains on investments	(16,998)	(43,016)
Foreign exchange differences at fair value through profit or loss	(9,176)	(2,342)
Operating cash flows before movements in working capital	3,406	3,055
Decrease in other receivables	(451)	(291)
Increase in other payables	70	297
Net cash from operating activities before taxation	3,025	3,061
Taxation	(243)	(180)
Net cash inflow from operating activities	2,782	2,881
Investing activities
Purchases of investments	(108,498)	(75,944)
Sales of investments	59,027	55,402
Net cash outflow from investing activities	(49,471)	(20,542)
Financing activities
Equity dividends paid	(4,898)	(4,114)
Issue of ordinary shares	49,736	18,600
Net cash inflow from financing activities	44,838	14,486
Net decrease in cash and cash equivalents	(1,851)	(3,175)
Cash and cash equivalents at the start of the year	6,381	8,202
Effect of foreign exchange rate changes	6,767	1,354
Cash and cash equivalents at the end of the year	11,297	6,381

 

Principal Risks and Risk Management

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

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

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

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

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

·      The financial statements contained within the Annual Report for the year ended 30 April 2011, of which this statement of results is an extract, have been prepared in accordance with applicable International Financial Reporting Standards, on a going concern basis, and give a true and fair view of the assets, liabilities, financial position and return of the Company and the undertakings included in the consolidation taken as a whole;

·      The Chairman's Statement and Investment Adviser's Report include a fair review of the important events that have occurred during the financial year and their impact on the financial statements;

·      'Principal Risks and Risk Management' includes a description of the Company's principal risks and uncertainties; and

·      The Annual Report includes details of related party transactions, if any, that have taken place during the financial year.

 

Notes:

1.         The financial statements of the Group, which are the responsibility of, and were approved by, the Board on 2 June 2011, have been prepared in accordance with International Financial Reporting Standards ("IFRS"). These comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), together with such interpretations by the International Accounting Standards and Standing Interpretations Committee as have been approved by the IASB and still remain in effect, to the extent that these have been adopted by the European Union.

Where the presentational guidance set out in the Statement of Recommended Practice (the "SORP") for investment trusts issued by the Association of Investment Companies (the "AIC") is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendation of the SORP.

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (its subsidiaries) made up to 30 April each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

2.         Return per ordinary share is based on a weighted average of 880,589 ordinary shares in issue during the year (2010 - 780,184).

3.         Net asset value per ordinary share is based on the 984,803 ordinary shares in issue as at 30 April 2011 (2010 - 815,281).

4.         During the year the Directors issued 169,522  shares from its Prospectuses for net proceeds of £51,676,000.

5.         At 30 April 2011 the sterling value of the US Treasury stocks was protected by a forward currency contract.

6.         Financial Instruments

The Group holds investments in listed companies and fixed interest securities, holds cash balances and has receivables and payables. It may from time to time also invest in FTSE 100 Futures and enter into forward currency contracts. Cash balances are held for future investment and forward currency contracts are used to manage the exchange risk of holding foreign investments.

The fair value of the financial assets and liabilities of the Group at 30 April 2011 is not different from their carrying value in the financial statements.

The Group is exposed to various types of risk that are associated with financial instruments. The most important types are credit risk, liquidity risk, interest rate risk, market price risk and foreign currency risk.

The Board reviews and agrees policies for managing its risk exposures. These policies are summarised below and have remained unchanged for the year under review.

Credit Risk

Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with the Group.

The Group's principal financial assets are investments, cash balances and other receivables, which represent the Group's maximum exposure to credit risk in relation to financial assets. The Group did not have any exposure to any financial assets which were passed due or impaired at the year end.

The Group is exposed to potential failure by counterparties to deliver securities for which the Group has paid, or to pay for securities which the Group has delivered. A list of pre-approved counterparties used in such transactions is maintained, and regularly reviewed by the Group, and transactions must be settled on a basis of delivery against payment. Broker counterparties are selected based on a combination of criteria, including credit rating, balance sheet strength and membership of a relevant regulatory body. Risk relating to unsettled transactions is considered to be small because of the short settlement period involved and the credit quality of the brokers used.

All of the assets of the Group, other than cash deposits, are held by JPMorgan Chase Bank, the Group's custodian. Bankruptcy or insolvency of the custodian might cause the Group's rights with respect to the securities held by the custodian to be delayed or limited. The Board monitors the Group's risk by reviewing the custodian's internal control reports on a regular basis.

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings, rated AA or higher, assigned by international credit rating agencies. Bankruptcy or insolvency of such financial institution might cause the Group's ability to access cash placed on deposit to be delayed or limited. The Group has no concentration of credit risk and exposure is spread over a large number of counterparties.

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. The Board sets policies for managing this risk and meets regularly to review full, timely and relevant information on investment performance and financial results. The management of market price risk is part of the fund management process and is fundamental to equity investment. The portfolio is managed with an awareness of the effects of adverse price movements in the UK equity market with an objective of maximising overall returns to shareholders.

The Company continued to use derivatives during the year. These contracts were entered into to manage the Company's effective liquidity.

Liquidity Risk

Liquidity risk is the risk that the Group will encounter in realising assets or otherwise raising funds to meet financial commitments. The risk of the Group not having sufficient liquidity at any time is not considered by the Board to be significant, given the liquid nature of the portfolio of investments and the level of cash and cash equivalents ordinarily held. Cash balances are held with reputable banks with a credit rating of AA or higher, usually on overnight deposit. The Investment Adviser reviews liquidity at the time of each investment decision. The Board reviews liquidity exposure at each meeting.

All of the Company's financial liabilities at 30 April 2011 had a maturity period of less than three months.

Interest Rate Risk

Some of the Company's financial instruments are interest bearing. As such, the Group is exposed to interest rate risk due to fluctuations in the prevailing market rate.

Floating Rate

When the Group holds cash balances, such balances are held on overnight deposit accounts and call deposit accounts. The benchmark rate which determines the interest payments received on cash balances is the bank base rate, which at 30 April 2011 was 0.50% in the UK (2010: 0.50%).

 

Foreign Currency Risk

The Company invests in overseas securities.

	2011	2010
Currency exposure at 30 April:	£'000	£'000
Australian Dollars Swiss Francs US Dollars (1)	8,663 14,013 187,232	4,696 12,096 139,236

(1)  At 30 April 2011 the Sterling cost of the US Treasury exposure was protected by a forward currency contract. The gain of £4,151,000 (2010: gain of £1,742,000) on the US$169,000,000 (2010: US$ 120,000,000) sold forward against £105,535,000 (2010: £80,160,000) is included in other receivables (2010: other receivables). All foreign exchange contracts in place at 30 April 2011 were due to mature within two months. The exposure to US Dollars also includes Gold Bullion. At 30 April 2011 the net exposure to US Dollars was £77,546,000 (2010: £57,334,000) including Gold Bullion and £34,911,000 (2010: £34,749,000) excluding Gold Bullion.

7.         These are not statutory accounts in terms of Section 434 of the Companies Act 2006.  Full audited accounts for the year to 30 April 2011 will be sent to shareholders in June 2011 and will be available for inspection at 10 St Colme Street, Edinburgh, the registered office of the Company. The full annual report and accounts will be available on the Company's website www.patplc.co.uk.

8.         The audited accounts for the year ended 30 April 2011 will be lodged with the Registrar of Companies following the Annual General Meeting to be held on 21 July 2011.

 

END

 

 

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