Final Results

RNS Number : 5673R

Schroder AsiaPacific Fund PLC

12 December 2016

 

12 December 2016

ANNUAL REPORT AND ACCOUNTS

Schroder AsiaPacific Fund plc (the "Company") hereby submits its annual financial report for the year ended 30 September 2016 as required by the UK Listing Authority's Disclosure Guidance and Transparency Rule 4.1. 

The Company's Annual Report and Accounts for the year ended 30 September 2016 are also being published in hard copy format and an electronic copy will shortly be available to download from the Company's webpage http://www.schroderasiapacificfund.com.  Please click on the following link to view the document:

http://www.rns-pdf.londonstockexchange.com/rns/5673R_-2016-12-12.pdf

The Company has submitted its Annual Report and Accounts to the National Storage Mechanism and it will shortly be available for inspection at www.hemscott.com/nsm.do.

Enquiries:

Ria Vavakis

Schroder Investment Management Limited               

Tel: [phone]

Chairman's Statement

Investment performance

The year to 30 September 2016 has been an exceptional year for the Company, with both its net asset value and share price reaching hitherto unseen levels. The net asset value produced a total return of 40.9% (2015: negative total return of 2.7%) compared to the benchmark total return of 36.6%, the outperformance attributable to both asset allocation and stock selection. The share price produced a total return of 41.3% (2015: negative total return of 5.7%). While these returns can largely be attributed to the weakness of sterling in the aftermath of the result of the UK referendum on EU membership, performance has also benefited from pockets of opportunity in Asian markets. This performance continues the excellent long-term record and it remains ahead of the benchmark index over one, three, five and ten years.

A more detailed comment on performance and investment policy may be found in the Manager's Review.

Final dividend

The Directors recommend the payment of a final dividend of 4.75 pence per share for the year ended 30 September 2016. Net revenue after taxation has increased by 12.4% from £7,151,000 to £8,040,000 (with income received from investments contributing to the increase), and a similar percentage increase in the dividend from that paid to shareholders in respect of the previous financial year is proposed. If the resolution proposed at the Annual General Meeting to pay a final dividend is passed, the dividend will be paid on 1 February 2017 to shareholders on the Register on 30 December 2016.

Gearing policy

During the year, the Company's level of gearing has remained relatively modest, starting at 2.3% at the commencement of the year and at 0.4% at its close. The Company's gearing continues to operate within pre-agreed limits so that net effective gearing does not represent more than 20% of shareholders' funds.

Discount management

At the Company's last Annual General Meeting, the Company was given the authority to purchase up to 14.99% of its issued share capital. The Board utilised this authority during the year to purchase 1,430,000 shares as part of its efforts to actively manage the level of discount at which the Company's shares trade. In the Board's view, monitoring the discount, and consideration of whether to make purchases of the ordinary shares, should take place on a regular basis. It therefore proposes that this authority be renewed at the forthcoming Annual General Meeting. Any shares so purchased would be cancelled or held in Treasury for potential reissue.

Over the last year, the longer term target maximum discount level was again set at approximately 10% and the discount traded roughly in line with this target (the average discount being 11.3% over the year).

The Board continues to believe that it is not necessarily in the best interests of shareholders as a whole to adopt a rigid discount control mechanism that seeks to target a defined maximum discount level regardless of market conditions. Instead the Board continues to follow a more flexible strategy that takes into account the level of discount at which the Company's peer group trades as well as the absolute level of its own discount and prevailing market conditions.

The Board and succession

The Board has adopted a new policy on succession and refreshment. This policy has been designed to ensure that the Board achieves a diverse balance of skills, experience, background and gender which is appropriately refreshed over time and remains capable of overseeing the Company's strategic direction and adopted business model.

The Board believes that it is important for appropriate new skills to be brought to the Board and will look to refresh one Director every two to three years. A Director will serve for a period of more than nine years only in exceptional circumstances. All Directors will be subject to re-election every year at the Annual General Meeting.

With regards to the Chairman, the Board is of the view that while experience of the Company is a key requirement, it would not be beneficial to the Company for the Chairman to serve for extended periods. Therefore, should a serving Director be subsequently appointed as Chairman, such appointment would take effect for an initial term of five years. Any further term would be considered on a case by case basis and would depend on overall length of service and the prevailing circumstances of the Company at that time.

The Board currently has five members. Anthony Fenn, the Senior Independent Director, will retire at the AGM in January 2018, having delayed his retirement by one year to assist me in the early term of my appointment. The Board will commence a recruitment process for Anthony's successor in 2017 and expects to make an appointment later in the year.

Outlook

Five months ago, with the half year results, I mentioned that one important goal for the Company was for the share price to break out of the range it has been in for the last three years. That has happened, albeit largely from the EU referendum's effect on sterling. It is always pleasing to see the share price reaching a new all-time high during the year, although volatility following Trump's victory has seen some recent pull back.

Currency movements apart, can Asia now take up the running? The region's corporate sectors increasingly look split into two. On the one hand, there is a core of shareholder-focused management, continued opportunities as the region's middle class grows, and new technologies to exploit. On the other hand, there are a number of poorly run businesses, too many industries contaminated by their government, and exporters stuck with low-growth end markets. It's a different environment from one where high economic growth made most companies successful, and one where even more pressure is on the Manager to find the right opportunities. We believe that the Company's track record over the last two decades should offer shareholders comfort on this.

Annual General Meeting

The Annual General Meeting will be held on Wednesday, 25 January 2017 at 12.00 noon and shareholders are encouraged to attend. As in previous years, Matthew Dobbs, on behalf of the Manager, will give a presentation on the prospects for Asia and the Company's investment strategy.

Nicholas Smith

Chairman

12 December 2016

Manager's Review

The net asset value per share of the Company recorded a total return of 40.9% over the 12 months to end September 2016. This was ahead of the performance of the benchmark, the MSCI All Countries Asia ex Japan Index, which was up 36.6% over the same period.

The scale of returns over the year has been materially influenced by the weakness of sterling in response to the uncertainty caused by the EU referendum result. This somewhat disguised the extent to which regional markets made steady progress in local currency terms over the second half of the fiscal year.

Much of this represented a recovery from the very severe falls seen in the summer of 2015. More tangible support has come from continued accommodative monetary policies worldwide. This has been mirrored in the region, with reductions in policy rates in Korea, India and China. Concerns over the direction of the Chinese renminbi exchange rate and dwindling foreign currency reserves were soothed by concerted policy action including a restructuring of local government debt, proactive interest rate cuts and discouragement of capital outflows. Credit has continued to expand, resulting in a stabilisation in growth and a recovery in commodity prices.

Indonesia has been the strongest market thanks to a recovery in commodity prices, a stabilisation in the rupiah and increasing confidence in the reform agenda of President Jokowi. Korea and Thailand benefited from an upturn in corporate earnings revisions, while Hong Kong was supported by the stabilisation in China and the overspill of mainland liquidity into the property and stock markets.

In contrast, Singapore yielded subpar returns with key financial and offshore and marine stocks out of favour, the Philippines reflected policy uncertainty following the election of maverick Duterte to the Presidency, and India consolidated following previous strong performance. Although Chinese growth has stabilised, the overall index has been hampered by its heavy weighting towards State Owned Enterprises, where national policy dictates have priority over shareholder returns, while the private sector remains under pressure.

Performance and portfolio activity

The return on the Company's portfolio has been significantly ahead of the benchmark. The primary contribution has come from stock selection with significant value added in China, Taiwan and Hong Kong, along with lesser impact from the Philippines, Indonesia and Korea. The main detractors have been selection in India and Thailand; in both cases our holdings in the telecom sector reflected adverse developments in terms of regulation and competitive intensity.

In terms of allocation, modest gearing aided relative performance given the underlying rise in markets, along with the overweighting in Thailand and underweight stances in Singapore and China. Partial offset came from the underweighting of Korea and Indonesia, and the overweight position in India.

In terms of portfolio adjustments over the year, exposures in Hong Kong and India have been reduced, funding an addition to Korea (although the portfolio remains underweight) and to a more modest degree in China and Taiwan. In sector terms we have reduced financials and consumer staples and added to energy, materials and information technology.

Outlook and policy

The prospects for global growth remain somewhat muted. Policy settings are likely to remain supportive, though whether the concentration on monetary tools gives way to greater fiscal activism remains to be seen. Headwinds to growth include still elevated levels of indebtedness, limited pricing power and generally low levels of private capital investment. A number of major industries such as energy, financials and auto manufacturing are facing potentially destabilising levels of disruption, further contributing to caution. This is as true within the region as elsewhere.

On top of all this, recent events in the United States and the United Kingdom point to the febrile political atmosphere. The big worry for the region is the potential reversal in the trend of globalisation and integration on which the all important trade and investment flows depend. Amid the obvious uncertainty, however, we believe pragmatism and the realities of economic self-interest will prevail.

Meanwhile, events in China will remain very influential for investor sentiment. Structural issues remain, with the private sector cutting investment and conserving cash, while the government-influenced parts of the economy are being encouraged to invest, primarily in infrastructure and other "priority" projects. The sources of this funding have become increasingly opaque, the latest mechanism being the encouragement of public-private partnerships (PPPs) with return on investment considerations likely to be subordinate to other aims such as sustaining growth and employment. Despite poor affordability, particularly in the major cities, we also see little appetite to seriously disrupt the real estate market.

The continued expansion of credit in excess of nominal growth is clearly not sustainable, but given the priority for social cohesion and the leadership transition in prospect in 2017, stability is the priority rather than inherently risky restructuring and capital discipline, however desirable they may be. While we continue to see the situation in China as the main source of domestic risk facing the region, we expect relative stability over the next year given a modest recovery in growth, a steady decline in the currency, and further credit growth enabled by low nominal interest rates, high household savings and government direction.

Regional equity valuations have partially recovered the steep falls seen in the second half of 2015. They are not expensive by historic standards, but earnings expansion is likely to remain modest given the global backdrop and subdued demand drivers across the region. The latter continues to be a function of relatively high aggregate debt levels compared to history, although in general they are well below those pertaining in developed markets, including the United Kingdom.

However, the aggregate position disguises the variations at a sector, market and stock level. Looking at our own portfolio, we see many companies that have (rightly in our view) been cautious and disciplined about investment spending, preferring to conserve cash and retire debt. Consequently, many companies are lowly geared, and generating excess cash. Absent some sort of severe economic dislocation, we feel a fully invested stance remains justified.

Schroder Investment Management Limited

12 December 2016

Principal Risks and Uncertainties

The Board is responsible for the Company's system of risk management and internal control and for reviewing its effectiveness. The Board has adopted a detailed matrix of principal risks affecting the Company's business as an investment trust and has established associated policies and processes designed to manage and, where possible, mitigate those risks, which are monitored by the Audit Committee on an ongoing basis. This system assists the Board in determining the nature and extent of the risks it is willing to take in achieving its strategic objectives. Both the principal risks and the monitoring system are also subject to robust review at least annually. The last review took place in November 2016.

Although the Board believes that it has a robust framework of internal control in place this can provide only reasonable, and not absolute, assurance against material financial misstatement or loss and is designed to manage, not eliminate, risk.

A summary of the principal risks and uncertainties faced by the Company which have remained unchanged throughout the year, and actions taken by the Board and, where appropriate, its Committees, to manage and mitigate these risks and uncertainties, is set out below.

Risk	Mitigation and management
Strategic risk The Company's investment objectives may become out of line with the requirements of investors, resulting in a wide discount of the share price to underlying net asset value. The Company's cost base could become uncompetitive, particularly in light of open ended alternatives.	Appropriateness of the Company's investment remit periodically reviewed and success of the Company in meeting its stated objectives is monitored. Share price relative to net asset value monitored and use of buy back authorities considered on a regular basis. Marketing and distribution activity is actively reviewed. Ongoing competitiveness of all service provider fees subject to periodic benchmarking against competitors. Annual consideration of management fee levels.
Investment management risk The Manager's investment strategy, if inappropriate, may result in the Company underperforming the market and/or peer group companies, leading to the Company and its objectives becoming unattractive to investors.	Review of the Manager's compliance with the agreed investment restrictions, investment performance and risk against investment objectives and strategy; relative performance; the portfolio's risk profile; and appropriate strategies employed to mitigate any negative impact of substantial changes in markets. Annual review of the ongoing suitability of the Manager.
Financial and currency risk The Company is exposed to the effect of market fluctuations due to the nature of its business. A significant fall in regional equity markets or a substantial currency fluctuation could have an adverse impact on the market value of the Company's underlying investments.	Risk profile of the portfolio considered and appropriate strategies to mitigate any negative impact of substantial changes in markets or currency discussed with the Manager. Board considers the overall hedging policy on a regular basis.
Custody risk Safe custody of the Company's assets may be compromised through control failures by the Depositary, including cyber hacking.	Depositary reports on safe custody of the Company's assets, including cash and portfolio holdings, are independently reconciled with the Manager's records. Review of audited internal controls reports covering custodial arrangements. Annual report from the Depositary on its activities, including matters arising from custody operations.
Gearing and leverage risk The Company utilises credit facilities. These arrangements increase the funds available for investment through borrowing. While this has the potential to enhance investment returns in rising markets, in falling markets the impact could be detrimental to performance.	Gearing is monitored and strict restrictions on borrowings imposed: gearing continues to operate within pre-agreed limits so as not to exceed 20% of shareholders' funds in cash or cash equivalents.
Accounting, legal and regulatory risk In order to continue to qualify as an investment trust, the Company must comply with the requirements of Section 1158 of the Corporation Tax Act 2010. Breaches of the UK Listing Rules, the Companies Act or other regulations with which the Company is required to comply, could lead to a number of detrimental outcomes.	Confirmation of compliance with relevant laws and regulations by key service providers. Shareholder documents and announcements, including the Company's published Annual Report, are subject to stringent review processes. Procedures have been established to safeguard against disclosure of inside information.
Service provider risk The Company has no employees and has delegated certain functions to a number of service providers. Failure of controls and poor performance of any service provider could lead to disruption, reputational damage or loss.	Service providers appointed subject to due diligence processes and with clearly-documented contractual arrangements detailing service expectations. Regular reporting by key service providers and monitoring of the quality of services provided. Review of annual audited internal controls reports from key service providers, including confirmation of business continuity arrangements.

Going concern

Having assessed the principal risks and the other matters discussed in connection with the viability statement set out on page 17 of the 2016 Annual Report, and the "Guidance on Risk Management, Internal Control and Related Financial and Business Reporting" published by the Financial Reporting Council in 2014, the Directors consider it appropriate to adopt the going concern basis in preparing the accounts.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report, the Strategic Report, the Report of the Directors, the Corporate Governance Statement, the Remuneration 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 prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising Financial Reporting Standard (FRS) 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" 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 return 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;

-   state whether applicable UK Accounting Standards, comprising FRS 102, have been followed, subject to any material departures disclosed and explained in the financial statements;

-   notify the Company's shareholders in writing about the use of disclosure exemptions in FRS 102, used in the preparation of the financial statements; and

-   prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

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 and the Remuneration Report 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.

The Manager is responsible for the maintenance and integrity of the webpage dedicated to the Company. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed on pages 18 and 19 of the 2016 Annual Report, confirm that to the best of their knowledge:

-   the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and net return of the Company;

-   the Strategic Report contained in the Report and Accounts 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 it faces; and

-   the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

Income Statement

for the year ended 30 September 2016

		2016			2015
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains/(losses) on investments held at fair value through profit or loss	-	186,860	186,860	-	(17,571)	(17,571)
Gains/(losses) on derivative contracts	-	163	163	-	(55)	(55)
Net foreign currency losses	-	(3,664)	(3,664)	-	(1,032)	(1,032)
Income from investments	15,232	220	15,452	13,597	-	13,597
Other interest receivable and similar income	1	-	1	2	-	2
Gross return/(loss)	15,233	183,579	198,812	13,599	(18,658)	(5,059)
Investment management fee	(5,006)	-	(5,006)	(4,571)	-	(4,571)
Administrative expenses	(855)	-	(855)	(939)	-	(939)
Net return/(loss) before finance costs and taxation	9,372	183,579	192,951	8,089	(18,658)	(10,569)
Finance costs	(304)	-	(304)	(116)	-	(116)
Net return/(loss) on ordinary activities before taxation	9,068	183,579	192,647	7,973	(18,658)	(10,685)
Taxation on ordinary activities	(1,028)	(162)	(1,190)	(822)	(1,496)	(2,318)
Net return/(loss) on ordinary activities after taxation	8,040	183,417	191,457	7,151	(20,154)	(13,003)
Return/(loss) per Ordinary share	4.77p	108.78p	113.55p	4.23p	(11.91)p	(7.68)p

The "Total" column of this statement is the profit and loss account of the Company. The "Revenue" and "Capital" columns represent supplementary information prepared under guidance issued by The Association of Investment Companies. The Company has no recognised gains and losses other than those included in the Income Statement and Statement of Changes in Equity.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year.

Statement of Changes in Equity

for the year ended 30 September 2016

	Called-up share capital £'000	Share premium £'000	Capital redemption reserve £'000	Warrant exercise reserve £'000	Share purchase reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total £'000
At 30 September 2014	16,923	100,956	3,221	8,704	36,301	324,694	4,728	495,527
Net (loss)/return on ordinary activities	-	-	-	-	-	(20,154)	7,151	(13,003)
Ordinary dividend paid in the year	-	-	-	-	-	-	(4,654)	(4,654)
At 30 September 2015	16,923	100,956	3,221	8,704	36,301	304,540	7,225	477,870
Repurchase and cancellation of the Company's own Ordinary shares	(143)	-	143	-	(3,905)	-	-	(3,905)
Net return on ordinary activities	-	-	-	-	-	183,417	8,040	191,457
Ordinary dividend paid in the year	-	-	-	-	-	-	(7,101)	(7,101)
At 30 September 2016	16,780	100,956	3,364	8,704	32,396	487,957	8,164	658,321

Statement of Financial Position

at 30 September 2016

	2016	2015
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	661,405	487,181
Current assets
Debtors	1,654	5,128
Cash at bank and in hand	18,196	18,763
	19,850	23,891
Current liabilities
Creditors: amounts falling due within one year	(22,934)	(33,147)
Derivative financial instrument held at fair value through profit or loss	-	(55)
Net current liabilities	(3,084)	(9,311)
Total assets less current liabilities	658,321	477,870
Net assets	658,321	477,870
Capital and reserves
Called-up share capital	16,780	16,923
Share premium	100,956	100,956
Capital redemption reserve	3,364	3,221
Warrant exercise reserve	8,704	8,704
Share purchase reserve	32,396	36,301
Capital reserves	487,957	304,540
Revenue reserve	8,164	7,225
Total equity shareholders' funds	658,321	477,870
Net asset value per Ordinary share	392.33p	282.39p

Notes to the Accounts

1. Accounting Policies

Basis of accounting

The accounts are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ("UK GAAP") and with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" (the "SORP") issued by the Association of Investment Companies in November 2014 and which superseded the SORP issued in January 2009. All of the Company's operations are of a continuing nature.

The accounts have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of investments at fair value through profit or loss.

The accounts are presented in sterling and amounts have been rounded to the nearest thousand.

With effect from 1 October 2015, the Company has adopted Financial Reporting Standard (FRS) 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the amended SORP, both of which became effective for periods beginning on or after 1 January 2015. FRS 102 replaces all extant standards applicable to the Company's accounts. As a result there are some presentational changes to the accounts but no change in the way numbers are measured. The adoption of FRS 102 has not affected the reported financial position or financial performance of the Company.

The changes to these accounts arising from FRS 102 and the amended SORP may be summarised briefly as follows:

•        the reconciliation of movements in shareholders' funds has been renamed "Statement of changes in equity";

•        the balance sheet has been renamed "Statement of financial position";

•        the Company no longer presents a statement of cash flows or the two related notes, as it is no longer required for an investment company which meets certain specified conditions; and

•        footnotes have been added to note 14, indicating which of the Company's reserves are regarded as distributable.

Other than these changes, the accounting policies applied to these accounts are consistent with those applied in the accounts for the year ended 30 September 2015.

The Company has early adopted an amendment to paragraph 34.22 of FRS 102, issued by the Financial Reporting Council in March 2016 regarding the categorisation of financial instruments into the fair value hierarchy in note 18. As a result of this amendment, the criteria used to allocate financial instruments into the three levels remain unchanged from prior years.

2. Taxation

	2016			2015
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
(a) Analysis of tax charge for the year:
Irrecoverable overseas withholding tax	1,028	-	1,028	822	-	822
Overseas capital gains tax	-	162	162	-	1,496	1,496
Tax charge for the year	1,028	162	1,190	822	1,496	2,318

The Company has no corporation tax liability for the year ended 30 September 2016 (2015: nil).

(b)        Factors affecting tax charge for the year

The tax assessed for the year is lower (2015: higher) than the Company's applicable rate of corporation tax for the year of 20.0% (2015: 20.5%).

The factors affecting the tax charge for the year are as follows:

	2016			2015
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Net return/(loss) on ordinary activities before taxation	9,068	183,579	192,647	7,973	(18,658)	(10,685)
Net return/(loss) on ordinary activities before taxation multiplied by the Company's applicable rate of corporation tax for the year of 20.0% (2015: 20.5%)	1,814	36,716	38,530	1,634	(3,824)	(2,190)
Effects of:
Capital returns on investments	-	(36,672)	(36,672)	-	3,824	3,824
Income not chargeable to corporation tax	(2,741)	(44)	(2,785)	(2,493)	-	(2,493)
Overseas withholding tax	1,028	-	1,028	822	-	822
Overseas capital gains tax	-	162	162	-	1,496	1,496
Unrelieved expenses	927	-	927	859	-	859
Tax charge for the year	1,028	162	1,190	822	1,496	2,318

(c)        Deferred taxation

The Company has an unrecognised deferred tax asset of £4,923,000 (2015: £4,543,000) based on a prospective corporation tax rate of 18% (2015: 20%). The reduction in the standard rate of corporation tax was substantively enacted in October 2015 and is effective from 1 April 2020.

The deferred tax asset has arisen due to the cumulative excess of deductible expenses over taxable income. Given the composition of the Company's portfolio, it is not likely that this asset will be utilised in the foreseeable future and therefore no asset has been recognised in the accounts.

Given the Company's intention to meet the conditions required to retain its status as an Investment Trust Company, no provision has been made for deferred tax on any capital gains or losses arising on the revaluation or disposal of investments.

3.         Dividends

Dividends paid and proposed

	2016	2015
	£'000	£'000
2015 final dividend of 4.20p (2014: 2.75p) paid out of revenue profits	7,101	4,654
	2016	2015
	£'000	£'000
2016 final dividend proposed of 4.75p (2015: 4.20p) to be paid out of revenue profits	7,970	7,107

The proposed final dividend amounting to £7,970,000 (2015: £7,107,000) is the amount used for the basis of determining whether the Company has satisfied the distribution requirements of Section 1158 of the Corporation Tax Act 2010. The revenue available for distribution for the year is £8,040,000 (2015: £7,151,000).

The final dividend declared in respect of the year ended 30 September 2015 differs from the amount actually paid due to shares repurchased and cancelled after the accounting date but prior to the share register record date.

4.         Return/(loss) per Ordinary share

	2016	2015
Revenue return (£'000)	8,040	7,151
Capital return/(loss) (£'000)	183,417	(20,154)
Total return/(loss) (£'000)	191,457	(13,003)
Weighted average number of Ordinary shares in issue during the year	168,605,440	169,225,716
Revenue return per share	4.77p	4.23p
Capital return/(loss) per share	108.78p	(11.91)p
Total return/(loss) per share	113.55p	(7.68)p

5.         Called-up share capital

	2016	2015
	£'000	£'000
Ordinary shares of 10p each allotted, called up and fully paid:
Opening balance of 169,225,716 (2015: 169,225,716) Ordinary shares	16,923	16,923
Repurchase and cancellation of 1,430,000 (2015: nil) Ordinary shares	(143)	-
Closing balance of 167,795,716 (2015: 169,225,716) Ordinary shares	16,780	16,923

During the year, the Company made market purchases of 1,430,000 of its own Ordinary shares, nominal value £143,000, for cancellation, representing 0.84% of the Ordinary shares outstanding at the beginning of the year. The total consideration paid for these shares amounted to £3,905,000. The reason for these purchases was to seek to manage the volatility of the share price discount to NAV per share.

6.         Net asset value per Ordinary share

	2016	2015
Net assets attributable to the Ordinary shareholders (£'000)	658,321	477,870
Ordinary shares in issue at the year end	167,795,716	169,225,716
Net asset value per Ordinary share	392.33p	282.39p

7.         Disclosures regarding financial instruments measured at fair value

The Company's financial instruments within the scope of FRS 102 that are held at fair value comprise its investment portfolio. The Company has held derivative financial instruments during the year, but none were held at the year end.

These are categorised into a hierarchy consisting of the following three levels:

Level 1 - valued using quoted prices in active markets.

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted market prices included within Level 1.

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data. Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset.

Details of the valuation techniques used by the Company are given in note 1(b) on page 38 of the 2016 Annual Report.

At 30 September 2016, the Company's investments were all categorised in Level 1 (2015: investments and derivative financial instruments all Level 1).

There have been no transfers between Levels 1, 2 or 3 during the year (2015: nil).

8. Status of announcement

2015 Financial Information

The figures and financial information for 2015 are extracted from the published Annual Report and Accounts for the year ended 30 September 2015 and do not constitute the statutory accounts for that year. The 2015 Annual Report and Accounts have been delivered to the Registrar of Companies and included the Report of the Independent Auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

2016 Financial Information

The figures and financial information for 2016 are extracted from the Annual Report and Accounts for the year ended 30 September 2016 and do not constitute the statutory accounts for the year. The 2016 Annual Report and Accounts include the Report of the Independent Auditors which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The 2016 Annual Report and Accounts will be delivered to the Registrar of Companies in due course.

Neither the contents of the Company's webpage nor the contents of any website accessible from hyperlinks on the Company's webpage (or any other website) is incorporated into, or forms part of, this announcement.

 

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