Annual Financial Report - Rep
AMENDMENT
This announcement replaces the earlier announcement released on 31 March 2009) at 8.00 hrs (RNS No: 4463J)
Please note the amendment to note 6 regarding the proposed final dividend. 'The final dividend, subject to shareholder approval, will be paid on 21 May 2010 to shareholders on the register at the close of business on 23 April 2010. The ex-dividend date is 21 April 2010'.
Please see below the correct announcement.
31 March 2010
EDINBURGH US TRACKER TRUST PLC
ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 JANUARY 2010
Edinburgh US Tracker Trust aims to achieve long term growth of capital and income by tracking the performance of the S&P 500 Index.
• Company continues to track the performance of the S&P Composite Index
• Total dividend increased to 10.0p per share for the year ended 31 January 2010 (2009 - 7.90p)
For further information, please contact:
David McCraw
Aberdeen Asset Managers Limited 0131 528 4000
CHAIRMAN'S STATEMENT
US equities staged a powerful recovery, after a particularly weak start to the year, as investors anticipated correctly that lower interest rates and government stimulus packages would lead to a turnaround in the economy. This recovery duly transpired with the US economy growing at an annualised rate of 5.6% in the fourth quarter of 2009 following growth of 2.2% in the third quarter. The improvement in the economy was also reflected in corporate profits which were generally ahead of market expectations. The S&P500 Index rose by 30% in US dollars but the relative weakness in the US currency reduced these gains significantly for sterling based investors.
The Company continues to meet the objective of tracking the performance of the S&P 500 Index. In the 12 months to 31 January 2010, the net asset value per share (excluding undistributed revenue for the period) rose by 17.0% to 557.96p (NAV), compared to an increase of 17.0% in the index (in sterling terms).
Since the investment objective of the Company was revised in June 1997, the capital performance has matched that of the Index to within 0.25% per annum. The annualised returns of the Company's capital net asset values per share for the period 31 July 1997 to 31 January 2010 were 1.34% per annum compared to an annualised return of 1.12% per annum for the Index.
The Company operates a share buy-back programme with the aim of establishing a long-term level of discount of no greater than 3% and in the year bought back 1,142,871 of its own shares for cancellation. The share price rose by 9.7% during the year (compared to the index return of 17.0%) and at 31 January 2010 the shares were standing at a discount of 3.8% to the net asset value per share (excluding the undistributed revenue of the period) compared with a premium of 2.6% at 31 January 2009.
Dividend
The revenue return per share rose by 1.1% to 8.02p. The slight increase in the revenue return is attributable to a more beneficial US dollar/exchange rate, over the comparative period in 2009, and a lower tax charge which more than offset lower dividends being paid by a number of companies held in the portfolio. Most of the Company's income is derived from its overseas investments and from 1 July 2009 overseas dividends received by investment trusts were exempted from corporation tax. The full benefit of this change in taxation will be received in the year ahead. The Directors declared an interim dividend of 6.20p per share for the year to 31 January 2010 which included an additional 2.00p per share from accumulated revenue reserves. This one-off supplement recognised the non-recurring benefit to revenue reserves per share arising from the tender offer, which took place in January 2008, the increase in personal tax rates in April 2010 and the opportunity to make an increased distribution to shareholders at a time when income from equity investments has been under pressure. Your Board is recommending a final dividend of 3.80p which will take the total dividends for the year to 10.00p (2009: 7.90p).
Marketing
Your Board continues to contribute to the Investment Manager's marketing initiative which provides a series of savings schemes through which savers can invest in Edinburgh US Tracker Trust in a low cost and convenient manner. Up-to-date information about the Company is available on the Company's website on www.edinburghustracker.co.uk.
Alternative Investment Fund Manager (AIFM) Directive
The European Commission published the draft AIFM Directive in April 2009. Its purpose is to introduce a new authorisation and supervisory regime for all alternative investment fund managers managing alternative investment funds within the European Union. If implemented as currently drafted, the Directive would impose an onerous additional regulatory burden on investment trusts, with potentially adverse consequences. The Board supports the efforts of the Association of Investment Companies to ensure that any such proposed regulation is proportionate and appropriate in relation to investment companies. The Board will keep shareholders informed of any major further developments concerning this.
Annual General Meeting
The Company's Articles of Association require shareholders to vote on the continuation of the Company at every Annual General Meeting. Accordingly, a resolution to this effect will be proposed as Special Business at the Annual General Meeting to be held on Monday 17 May 2010. If this resolution is not passed, a resolution to liquidate the Company will be proposed later this year. Liquidation would result in a disposal of the Company's shares for taxation purposes and therefore shareholders should consider carefully whether they wish the Company to be wound up. There will be another opportunity to consider the future of the Company at the same time next year. I believe that our investment performance, aided by low management and administration costs, as evidenced by the total expense ratio of 0.40%, underlines the attractions of the index tracking approach to investors. Your Board therefore strongly recommends all shareholders to vote in favour of the resolution.
The Directors are also seeking shareholder approval to renew the authority to issue new shares for cash, to meet investor demand provided the subscription price is not below the net asset value per share. Your Board also has the authority to purchase the Company's shares for cancellation were the shares to trade persistently at a level in excess of the Company's stated discount policy. Special resolutions proposing an extension of these facilities will be put to shareholders in the Annual General Meeting.
The law in relation to companies has undergone a number of changes following the introduction of new legislation in the UK under the Companies Act 2006. The changes have been implemented in stages and the final parts were implemented in October 2009. A special resolution will be proposed as special business at the Annual General Meeting to update the Articles of Association in order to reflect the latest provisions of the Act.
Outlook
The US economy has rebounded strongly from the depths of recession but questions remain over the durability of this recovery in the face of the high levels of private and public debt that continue to be key features of the US. The Federal Reserve has stated that interest rates could be maintained at historically low levels for a prolonged period to assist the economic recovery and this accommodating stance to monetary policy should continue to provide support for equity markets in the months ahead. At some point, any sustained recovery in economies will require Governments to address the need for tighter monetary regimes.
James Ferguson
Chairman
MANAGER'S REVIEW
Edinburgh US Tracker Trust is the only UK investment trust to track the performance of the S&P 500 Index and provides shareholders with a diversified portfolio which is invested in the leading 500 companies across the main industries within the US economy. The method employed by the Company to track the index involves full replication of the index constituents. This means that the Company's portfolio holds every stock making up the index in an amount that equals the stock's proportionate weight in the index. The index is calculated on the basis of the market capitalisation of its 500 constituents which are drawn from companies listed on the New York Stock Exchange and NASDAQ and is widely regarded as the best single gauge of the US equity market.
The constituents of the S&P 500 Index are controlled by the Standard & Poor's Index Committee which employs a strict definition of a US company. To be considered for inclusion in one of Standard and Poor's US index series, a company is required to have the following characteristics:
- Incorporated in the US
- Financial reporting is in US GAAP, in US dollars and the company should not be considered a foreign entity by the SEC
- A corporate governance structure consistent with US practice
- Principal executive presence is in the US
- The US portion of revenues, operations, fixed assets and employees should be a significant portion of the total, but need not exceed 50%
- The common stock should be listed on NYSE and NASDAQ
- The company should generally be considered a US company by analysts and investors
Standard & Poor's undertakes regular reviews of the market cap guidelines for its US indices to ensure that these reflect changes in share prices. The current guidelines are:
- S&P 500 Index - market cap of $3.5 billion or greater
- S&P MidCap 400 - $850 million to $3.8 billion
- S&P SmallCap 600 - $250 million to $1.2 billion
The level of activity within the portfolio reflected changes to the constituents of the Index which were the result of takeover activity (7 constituents were acquired), low market capitalisations (10 constituents were removed) and change of domicile (8 constituents were removed). The other feature of the period was the continuing need for banks to raise additional equity capital.
Some of the better known names to leave the S&P 500 Index as a result of takeover activity included Rohm & Haas, Centex, Wyeth, Schering Plough and Sun Microsystems. The new entrants to the index included Western Digital, Airgas, Visa, Time Warner Cable, Red Hat and Berkshire Hathaway.
Apart from changes to the constituents of the Index, additional trading activity was generated by sales from the portfolio to finance the purchase of the Company's own shares - a total of 1,142,871 shares were purchased during the year at a total cost of £5.9 million.
The total value of purchases in the year, excluding the Company's own shares, amounted to £8.8 million while sales totalled £14.8 million.
Aberdeen Asset Managers Limited
PERFORMANCE TABLES
Performance
|
|
1 year return |
3 year return* |
5 year return* |
|
|
% |
% |
% |
|
Capital return |
|
|
|
|
Share price |
9.7 |
-8.4 |
10.7 |
|
Net asset value per share |
16.3 |
-9.0 |
7.4 |
|
S&P 500 Index (in sterling terms) |
17.0 |
-8.8 |
7.0 |
|
|
|
|
|
|
Total return |
|
|
|
|
Share price |
12.1 |
-3.2 |
19.6 |
|
Net asset value per share |
18.7 |
-4.0 |
15.6 |
|
S&P 500 Index (in sterling terms) |
19.8 |
-2.5 |
18.8 |
|
|
|
|
|
* cumulative return
Financial Summary
|
|
31 January 2010
|
31 January 2009
|
%
change |
|
Total Assets
|
£204,098,000
|
£181,077,000
|
+12.7
|
|
Equity shareholders' funds
|
£204,098,000
|
£181,042,000
|
+12.7
|
|
Share price (mid market)
|
537.00p
|
489.50p
|
+9.7
|
|
Net Asset Value per share
(including undistributed revenue for the period) |
559.84p
|
481.50p
|
+16.3
|
|
Net Asset Value per share
(excluding undistributed revenue for the period) |
557.96p
|
477.06p
|
+17.0
|
|
S&P 500 Index (in sterling terms)
|
670.16
|
572.85
|
+17.0
|
|
Premium/(Discount) (difference between share price and net asset value B )
|
(3.8%)
|
2.6%
|
|
|
|
|
|
|
|
Dividends and earnings
|
|
|
|
|
Revenue return per share
|
8.02p
|
7.93p
|
+1.1
|
|
Dividends per share
(including proposed final dividend) |
10.00p
|
7.90p
|
+26.6
|
|
Dividend cover
|
0.80
|
1.00
|
|
|
Revenue reserves per share
(prior to payment of proposed final dividend) |
8.27p
|
10.60p
|
|
|
Revenue reserves per share
(after payment of proposed final dividend) |
4.47p
|
6.20p
|
|
|
|
|
|
|
|
Operating costs
|
|
|
|
|
Total expense ratio
|
0.40%
|
0.38%
|
|
B Based on Net Asset Value per share (excluding undistributed revenue for the period)
BUSINESS REVIEW
The Board has prepared this Business Review in accordance with the requirements of Section 417 of the Companies Act 2006.
Principal Activity and Status
The business of the Company is that of an investment trust and the Directors do not envisage any change in this activity in the foreseeable future.
The Company is registered as a public limited company and is an investment company as defined by Section 833 of the Companies Act 2006. The Company has been approved by HM Revenue & Customs as an investment trust for the purposes of Section 842 of the Income and Corporation Taxes Act 1988 for the year ended 31 January 2009. The Directors are of the opinion, under advice, that the Company has conducted its affairs for the year ended 31 January 2010 so as to be able to continue to obtain approval as an investment trust under Section 842 of the Income and Corporation Taxes Act 1988 for that year, although approval for the year would be subject to review were there to be any enquiry under the Corporate Tax Self Assessment regime.
The Company has conducted its affairs so as to satisfy the requirements as a qualifying security for Individual Savings Accounts. The Directors intend that the Company will continue to conduct its affairs in this manner in the future.
Investment Objective and Policy
The investment objective is to invest in a portfolio designed to track closely the S&P 500 Index, both in terms of capital and income.
The Company's methodology in tracking the Index is full replication of the Index constituents. Details of the investment policy are provided in the Corporate Summary section.
Review of Performance
An outline of the performance, market background, investment activity and portfolio strategy during the year under review, as well as the investment outlook, is provided in the Chairman's Statement and Manager's Review.
Principal Risks and Uncertainties
The Board has reviewed the key risks that affect its business. The principal risks are as follows:
- Market and performance risk: The Company is exposed to the effect of variations in share prices and movements in the US$/£ exchange rate due to the nature of its business. A fall in the market value of its portfolio would have an adverse effect on shareholders' funds. The NAV performance relative to the Index and the underlying stock weightings in the portfolio against the Index weightings are monitored closely to eliminate any risk of a significant tracking error developing.
- Discount volatility: The Company's share price can trade at a discount to its underlying net asset value. The Company operates a share buyback programme with the aim of establishing a long-term level of discount of no greater than 3%.
- Regulatory risk: The Company operates in a complex regulatory environment and faces a number of regulatory risks. Breaches of regulations, such as Section 842 of the Income and Corporation Taxes Act 1988, the UKLA Listing Rules and the Companies Acts, could lead to a number of detrimental outcomes and reputational damage. The Audit Committee monitors compliance with regulations by reviewing internal control reports from the Manager.
Further details on other risks relating to the Company's investment activities, including market price, liquidity and foreign currency risks, are provided in note 17 to the accounts.
Monitoring Performance - Key Performance Indicators
At each Board meeting, the Directors consider a number of performance measures to assess the Company's success in achieving its objectives. The following key performance indicators (KPIs) have been identified by the Board for determining the progress of the Company:
- Net asset value
- S&P 500 Index (in sterling terms)
- Discount
- Total expense ratio
A record of these measures is disclosed in the above Results section.
Resource
The Company has no employees. The responsibility for the management of the Company has been delegated to Aberdeen Asset Managers Limited under the investment management agreement, details are which are provided in the 2010 Annual Report.
As an investment trust, the Company has no direct social, or community responsibilities. Details of the Company's policy on socially responsible investment are set out in the Statement of Corporate Governance, which is provided in the 2010 Annual Report.
DIRECTOR'S RESPONSIBILITY STATEMENT
The Directors are responsible for preparing the Annual Report and Accounts in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).
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 estimates that are reasonable and prudent;
- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
- prepare the financial statements on the 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 comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.
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.
For Edinburgh US Tracker Trust plc
James Ferguson
Chairman
30 March 2010
INCOME STATEMENT (audited)
|
|
|
Year ended 31 January 2010 |
Year ended 31 January 2009 |
||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Net gains/(losses) on investments |
8 |
- |
30,214 |
30,214 |
- |
(37,641) |
(37,641) |
|
Net currency (losses)/gains |
16 |
- |
(284) |
(284) |
- |
1,015 |
1,015 |
|
Income |
2 |
4,433 |
- |
4,433 |
4,936 |
- |
4,936 |
|
Investment management fee |
3 |
(386) |
- |
(386) |
(397) |
- |
(397) |
|
Administrative expenses |
4 |
(370) |
- |
(370) |
(371) |
- |
(371) |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
Net return on ordinary activities before finance costs and taxation |
|
3,677 |
29,930 |
33,607 |
4,168 |
(36,626) |
(32,458) |
|
Finance costs |
|
(1) |
- |
(1) |
- |
- |
- |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
Return on ordinary activities before taxation |
|
3,676 |
29,930 |
33,606 |
4,168 |
(36,626) |
(32,458) |
|
Taxation |
5 |
(687) |
- |
(687) |
(1,180) |
- |
(1,180) |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
Return on ordinary activities after taxation |
|
2,989 |
29,930 |
32,919 |
2,988 |
(36,626) |
(33,638) |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
Return per share (pence) |
7 |
8.02 |
80.28 |
88.30 |
7.93 |
(97.18) |
(89.25) |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
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. |
|||||||
|
The accompanying notes are an integral part of the financial statements. |
|||||||
|
|
|||||||
|
Proposed final dividend |
|||||||
|
The Board is proposing a final dividend of 3.80p per share (£1,344,000), making a total dividend of 10.0p per share (£3,649,000) for the year to 31 January 2010 which, if approved, will be payable on 21 May 2010 (see note 6). |
|||||||
|
|
|||||||
|
For the year ended 31 January 2009, the final dividend was 4.40p per share (£1,654,000) making a total dividend of 7.90p per share (£2,970,000). |
|||||||
BALANCE SHEET (audited)
|
|
|
As at |
As at |
|
|
|
31 January 2010 |
31 January 2009 |
|
|
Notes |
£'000 |
£'000 |
|
Fixed assets |
|
|
|
|
Investments at fair value through profit or loss |
8 |
202,656 |
178,452 |
|
|
|
__________ |
__________ |
|
Current assets |
|
|
|
|
Debtors and prepayments |
9 |
206 |
319 |
|
Cash and short term deposits |
16 |
1,729 |
2,828 |
|
|
|
1,935 |
3,147 |
|
|
|
|
|
|
Creditors: amounts falling due within one year |
10 |
(493) |
(522) |
|
|
|
__________ |
__________ |
|
Net current assets |
|
1,442 |
2,625 |
|
|
|
__________ |
__________ |
|
Total assets less current liabilities |
|
204,098 |
181,077 |
|
|
|
|
|
|
Provision for liabilities and charges |
11 |
- |
(35) |
|
|
|
__________ |
__________ |
|
Net assets |
|
204,098 |
181,042 |
|
|
|
__________ |
__________ |
|
Capital and reserves |
|
|
|
|
Called-up share capital |
12 |
9,114 |
9,400 |
|
Share premium account |
|
32,643 |
32,643 |
|
Capital redemption reserve |
|
12,981 |
12,695 |
|
Capital reserve |
13 |
146,346 |
122,320 |
|
Revenue reserve |
|
3,014 |
3,984 |
|
|
|
__________ |
__________ |
|
Equity shareholders' funds |
|
204,098 |
181,042 |
|
|
|
__________ |
__________ |
|
|
|
|
|
|
Net asset value per share (pence) |
14 |
559.84 |
481.50 |
|
|
|
__________ |
__________ |
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (audited)
|
For the year ended 31 January 2010 |
|
|
|
|
|
|
|
|
|
Share |
Capital |
|
|
|
|
|
Share |
Premium |
Redemption |
Capital |
Revenue |
|
|
|
Capital |
Account |
Reserve |
Reserve |
Reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 31 January 2009 |
9,400 |
32,643 |
12,695 |
122,320 |
3,984 |
181,042 |
|
Return on ordinary activities after taxation |
- |
- |
- |
29,930 |
2,989 |
32,919 |
|
Dividends paid (see note 6) |
- |
- |
- |
- |
(3,959) |
(3,959) |
|
Purchase of own shares for cancellation |
(286) |
- |
286 |
(5,904) |
- |
(5,904) |
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
Balance at 31 January 2010 |
9,114 |
32,643 |
12,981 |
146,346 |
3,014 |
204,098 |
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended 31 January 2009 |
|
|
|
|
|
|
|
|
|
Share |
Capital |
|
|
|
|
|
Share |
Premium |
Redemption |
Capital |
Revenue |
|
|
|
Capital |
Account |
Reserve |
Reserve |
Reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 31 January 2008 |
9,489 |
32,643 |
12,606 |
160,917 |
5,699 |
221,354 |
|
Return on ordinary activities after taxation |
- |
- |
- |
(36,626) |
2,988 |
(33,638) |
|
Dividends paid (see note 6) |
- |
- |
- |
- |
(4,703) |
(4,703) |
|
Purchase of own shares for cancellation |
(89) |
- |
89 |
(2,010) |
- |
(2,010) |
|
Over-accrual of expenses relating to the Tender Offer |
- |
- |
- |
39 |
- |
39 |
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
Balance at 31 January 2009 |
9,400 |
32,643 |
12,695 |
122,320 |
3,984 |
181,042 |
|
|
______ |
______ |
______ |
______ |
______ |
______ |
CASH FLOW STATEMENT (audited)
|
|
|
Year ended |
Year ended |
||
|
|
|
31 January 2010 |
31 January 2009 |
||
|
|
Notes |
£'000 |
£'000 |
£'000 |
£'000 |
|
Net cash inflow from operating activities |
15 |
|
3,811 |
|
3,248 |
|
|
|
|
|
|
|
|
Servicing of finance |
|
|
|
|
|
|
Interest paid |
|
|
(1) |
|
- |
|
|
|
|
|
|
|
|
Taxation |
|
|
|
|
|
|
UK corporation tax paid |
|
(290) |
|
(770) |
|
|
Overseas withholding tax paid |
|
(660) |
|
(716) |
|
|
|
|
______ |
|
______ |
|
|
Net tax paid |
|
|
(950) |
|
(1,486) |
|
|
|
|
|
|
|
|
Financial investment |
|
|
|
|
|
|
Purchases of investments |
|
(8,666) |
|
(8,541) |
|
|
Sales of investments |
|
14,859 |
|
12,023 |
|
|
|
|
______ |
|
______ |
|
|
Net cash inflow from financial investment |
|
|
6,193 |
|
3,482 |
|
|
|
|
|
|
|
|
Equity dividends paid |
|
|
(3,964) |
|
(4,703) |
|
|
|
|
______ |
|
______ |
|
Net cash inflow before financing |
|
|
5,089 |
|
541 |
|
|
|
|
|
|
|
|
Financing |
|
|
|
|
|
|
Buy back of Ordinary shares (including expenses) |
|
(5,904) |
|
(2,010) |
|
|
Tender offer for own shares (including expenses) |
|
- |
|
39 |
|
|
|
|
______ |
|
______ |
|
|
Net cash outflow from financing |
|
|
(5,904) |
|
(1,971) |
|
|
|
|
______ |
|
______ |
|
Decrease in cash |
|
|
(815) |
|
(1,430) |
|
|
|
|
______ |
|
______ |
|
Reconciliation of net cash flow to movement in net funds |
|
|
|
|
|
|
Decrease in cash as above |
|
|
(815) |
|
(1,430) |
|
Exchange movements |
|
|
(284) |
|
1,015 |
|
|
|
|
______ |
|
______ |
|
Movement in net funds in the year |
|
|
(1,099) |
|
(415) |
|
Opening net funds |
|
|
2,828 |
|
3,243 |
|
|
|
|
______ |
|
______ |
|
Closing net funds |
16 |
|
1,729 |
|
2,828 |
|
|
|
|
______ |
|
______ |
NOTES TO THE ACCOUNTS
|
1. |
Accounting policies |
|
|
|
A summary of the principal accounting policies, all of which have been consistently applied throughout the year and the preceding year is set out below. |
|
|
|
(a) |
Basis of preparation and going concern |
|
|
|
The financial statements have been prepared under the historical cost convention, as modified to include the revaluation of investments and in accordance with the applicable UK Accounting Standards and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (issued in January 2009). They have also been prepared on the assupmtion that approval as an investment trust will continue to be granted. The financial statements have been prepared on a going concern basis. |
|
|
|
|
|
|
|
The financial statements and the net asset value per share figures have been prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP). |
|
|
|
|
|
|
|
The Company adopted the extended disclosure requirements within FRS 29 for accounting periods beginning on or after 1 January 2009. The extended disclosure requirements introduced a fair value hierarchy and this is disclosed in Note 19. |
|
|
|
|
|
|
(b) |
Investment income, interest receivable, expenses and interest payable |
|
|
|
Income from investments (other than special dividends), including taxes deducted at source, is included in revenue by reference to the date on which the investment is quoted ex dividend. Special dividends are credited to capital or revenue, according to the circumstances. Short term deposits, expenses and interest payable are treated on an accruals basis. All expenses are charged to revenue except where they directly relate to the acquisition or disposal of an investment, in which case, they are added to the cost of the investment or deducted from the sale proceeds. |
|
|
|
|
|
|
(c) |
Deferred taxation |
|
|
|
Deferred taxation is provided on 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 or a right to pay less tax in future have occurred at the Balance Sheet date, measured on an undiscounted basis and based on enacted tax rates. 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 accounts which are capable of reversal in one or more subsequent periods. Due to the Company's status as an investment trust company, and the intention to continue to meet the conditions required to obtain approval for the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments. |
|
|
|
|
|
|
(d) |
Investments |
|
|
|
All purchases and sales of investments are recognised on the trade date, being the date the Company commits to purchase or sell the investment. Investments are initially recognised and subsequently re-measured at fair value in the Income Statement. Transaction costs on purchases and sales are expensed through the Income Statement. |
|
|
|
|
|
|
(e) |
Dividends payable |
|
|
|
Interim and final dividends are recognised in the period in which they are paid. |
|
|
|
|
|
|
(f) |
Capital reserve |
|
|
|
Gains or losses on realisation of investments and changes in fair values of investments which are readily convertible to cash, without accepting adverse terms, are transferred to the capital reserve. The costs of share buybacks are also deducted from this reserve. |
|
|
|
|
|
|
(g) |
Foreign currency |
|
|
|
Assets and liabilities in foreign currencies are translated at the rates of exchange ruling on the Balance Sheet date. Transactions involving foreign currencies are converted at the rate ruling on the date of the transaction. Gains and losses on the realisation of foreign currencies are recognised in the Income Statement and are then transferred to the capital reserve. |
|
|
|
|
|
|
(h) |
Derivative financial instruments |
|
|
|
Index future contracts are accounted for as separate derivative contracts and are shown in other assets or other liabilities in the Balance Sheet at their fair value. |
|
|
|
2010 |
2009 |
|
2. |
Income |
£'000 |
£'000 |
|
|
Income from investments held at fair value through profit or loss |
|
|
|
|
Dividends from overseas listed investments |
4,404 |
4,863 |
|
|
Stock dividends |
29 |
- |
|
|
|
______ |
______ |
|
|
|
4,433 |
4,863 |
|
|
|
______ |
______ |
|
|
Other income |
|
|
|
|
Deposit interest |
- |
73 |
|
|
|
______ |
______ |
|
|
Total income |
4,433 |
4,936 |
|
|
|
______ |
______ |
|
|
|
2010 |
2009 |
|
3. |
Investment management fee |
£'000 |
£'000 |
|
|
Investment management fee |
386 |
397 |
|
|
|
______ |
______ |
|
|
|
||
|
|
The management fee payable to Aberdeen Asset Managers Limited ("Aberdeen") is 0.05% per quarter of the total assets of the Company after deducting current liabilities and excluding commonly managed funds. |
||
|
|
|
||
|
|
The management agreement between the Company and Aberdeen is terminable by either party on three months' notice. In the event of a resolution being passed at the AGM to wind up the Company the Manager shall be entitled to three months' notice from the date the resolution was passed. In the event of termination on not less than the agreed notice period, compensation is payable in lieu of the unexpired notice period. |
||
|
|
|
2010 |
2009 |
|
4. |
Administrative expenses |
£'000 |
£'000 |
|
|
Directors' fees |
49 |
45 |
|
|
Registrar's fees |
59 |
57 |
|
|
Custody and bank charges |
29 |
25 |
|
|
Auditor's remuneration: |
|
|
|
|
- fees payable to the Company's auditor for the audit of the annual accounts |
14 |
14 |
|
|
Contribution to the Investment Trust Initiative |
68 |
74 |
|
|
Printing, postage and stationery |
24 |
18 |
|
|
Fees, subscriptions and publications |
33 |
45 |
|
|
Standard & Poors' licence fee |
18 |
15 |
|
|
Other expenses |
76 |
78 |
|
|
|
______ |
______ |
|
|
|
370 |
371 |
|
|
|
______ |
______ |
|
|
|
|
|
|
|
The contribution to the Investment Trust Initiative was paid to the Manager in respect of marketing of the Company. At the year end £6,000 was due (2009 - £11,000 prepaid) to the Manager. |
||
|
|
|
||
|
|
Included within other expenses for 2010 is an amount of £22,000 (2009 - £20,000) being advisory fees payable to Noble Grossart Limited for the services of Sir Angus Grossart who served as a Director of the Company until 23 May 2007. |
||
|
5. |
Taxation |
2010 |
2009 |
||||
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
(a) Analysis of charge for the year |
|
|
|
|
|
|
|
|
Corporation tax at 28% (2009 - 28.33%) |
384 |
- |
384 |
1,181 |
|
1,181 |
|
|
Double taxation relief |
(309) |
- |
(309) |
(706) |
- |
(706) |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
75 |
- |
75 |
475 |
- |
475 |
|
|
Overseas tax suffered |
647 |
- |
647 |
720 |
- |
720 |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
|
Current tax charge for the year |
722 |
- |
722 |
1,195 |
- |
1,195 |
|
|
Deferred taxation |
(35) |
- |
(35) |
(15) |
- |
(15) |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
|
Taxation |
687 |
- |
687 |
1,180 |
- |
1,180 |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
|
(b) Factors affecting the tax charge for the year |
|||||||
|
The tax assessed for the year is lower than the corporation tax rate of 28% (2009 - effective rate of 28.33%). The effective rate for 2009 was calculated using a rate of 30% until 31 March 2008 and 28% from 1 April 2008. The differences are explained below. |
|||||||
|
|
2010 |
2009 |
|||||
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
|
Net profit on ordinary activities before taxation |
3,676 |
29,930 |
33,606 |
4,168 |
(36,626) |
(32,458) |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
|
Return on ordinary activities before taxation multiplied by the applicable rate of corporation tax of 28% (2009 - 28.33%) |
1,029 |
8,381 |
9,410 |
1,181 |
(10,376) |
(9,624) |
|
|
|
|
|
|
|
|
|
|
|
Effects of: |
|
|
|
|
|
|
|
|
Non taxable overseas dividends |
(717) |
- |
(717) |
- |
- |
- |
|
|
Income taxable in different periods |
72 |
- |
72 |
- |
- |
- |
|
|
Overseas taxes |
647 |
- |
647 |
720 |
- |
720 |
|
|
Double taxation relief |
(309) |
- |
(309) |
(706) |
- |
(706) |
|
|
Capital (gains)/losses not taxable |
- |
(8,461) |
(8,461) |
- |
10,664 |
10,664 |
|
|
Currency losses/(gains) not taxable |
- |
80 |
80 |
- |
(288) |
(288) |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
|
Current tax charge |
722 |
- |
722 |
1,195 |
- |
1,195 |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
|
(c) Provision for deferred taxation
No provision for deferred taxation has been made in the current year or in the prior year. 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.
|
|
|
2010 |
2009 |
|
6. |
Dividends |
£'000 |
£'000 |
|
|
Amounts recognised as distributions to equity holders in the year: |
|
|
|
|
Final dividend for 2009 - 4.40p per share (2008 - 8.97p) |
1,654 |
3,400 |
|
|
Interim dividend for 2010 - 6.20p per share (2009 - 3.50p) |
2,305 |
1,316 |
|
|
Unclaimed dividends from previous years |
- |
(13) |
|
|
|
_______ |
_______ |
|
|
|
3,959 |
4,703 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
The proposed final dividend for 2010 is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.
The final dividend, subject to shareholder approval, will be paid on 21 May 2010 to shareholders on the register at the close of business on 23 April 2010. The ex-dividend date is 21 April 2010. |
||
|
|
|
||
|
|
The table below sets out the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Section 842 ('s.842') of the Income and Corporation Taxes Act 1988 are considered. The revenue available for distribution by way of dividend for the year is £2,989,000 (2009 - £2,988,000). |
||
|
|
|
|
|
|
|
|
2010 |
2009 |
|
|
|
£'000 |
£'000 |
|
|
Interim dividend for 2010 - 6.20p per share (2009 - 3.50p) |
2,305 |
1,316 |
|
|
Proposed final dividend for 2010 - 3.8p per share (2009 - 4.40p) |
1,344 |
1,654 |
|
|
|
_______ |
_______ |
|
|
|
3,649 |
2,970 |
|
|
|
_______ |
_______ |
|
|
|
||
|
|
The amount payable for the proposed final dividend above is based on the shares in issue at the date of this report 35,370,608 and this satisfies the s.842 test. |
||
|
|
|
2010 |
2010 |
2009 |
2009 |
|
7. |
Return per Ordinary share |
£'000 |
p |
£'000 |
p |
|
|
The return per Ordinary share is based on the following figures: |
|
|
|
|
|
|
Revenue return |
2,989 |
8.02 |
2,988 |
7.93 |
|
|
Capital return |
29,930 |
80.28 |
(36,626) |
(97.18) |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
Total return |
32,919 |
88.30 |
(33,638) |
(89.25) |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
|
Weighted average number of Ordinary shares in issue |
|
37,279,331 |
|
37,687,412 |
|
|
|
|
________ |
|
________ |
|
|
|
2010 |
2009 |
|
|
8. |
Investments |
£'000 |
£'000 |
|
|
|
Fair value through profit or loss: |
|
|
|
|
|
Opening fair value |
178,452 |
219,664 |
|
|
|
Opening investment holdings gains |
(4,546) |
(41,378) |
|
|
|
|
_______ |
_______ |
|
|
|
Opening book cost |
173,906 |
178,286 |
|
|
|
Purchases at cost |
8,824 |
8,477 |
|
|
|
Sales |
- proceeds |
(14,834) |
(12,048) |
|
|
|
- realised gains on sales |
1,278 |
148 |
|
|
Loss on traded index futures contracts |
- |
(957) |
|
|
|
|
_______ |
_______ |
|
|
|
Closing book cost |
169,174 |
173,906 |
|
|
|
Closing investment holdings gains |
33,482 |
4,546 |
|
|
|
|
_______ |
_______ |
|
|
|
Closing fair value |
202,656 |
178,452 |
|
|
|
|
_______ |
_______ |
|
|
|
Listed on overseas stock exchanges |
202,656 |
178,452 |
|
|
|
|
|
|
|
|
|
|
2010 |
2009 |
|
|
|
Gains/(losses) on investments |
£'000 |
£'000 |
|
|
|
Realised gains on sales |
1,278 |
148 |
|
|
|
Loss on traded index futures contracts |
- |
(957) |
|
|
|
Movement in investment holdings gains |
28,936 |
(36,832) |
|
|
|
|
_______ |
_______ |
|
|
|
|
30,214 |
(37,641) |
|
|
|
|
_______ |
_______ |
|
|
|
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 on investments in the Income Statement. The total costs were as follows: |
|||
|
|
|
|
|
|
|
|
|
2010 |
2009 |
|
|
|
|
£'000 |
£'000 |
|
|
|
Purchases |
15 |
7 |
|
|
|
Sales |
6 |
6 |
|
|
|
|
_______ |
_______ |
|
|
|
|
21 |
13 |
|
|
|
|
_______ |
_______ |
|
|
|
|
2010 |
2009 |
|
9. |
Debtors: amounts falling due within one year |
£'000 |
£'000 |
|
|
Dividends receivable |
188 |
256 |
|
|
Amounts due from brokers |
5 |
25 |
|
|
Other debtors and prepayments |
13 |
38 |
|
|
|
_______ |
_______ |
|
|
|
206 |
319 |
|
|
|
_______ |
_______ |
|
|
|
2010 |
2009 |
|
10. |
Creditors: amounts falling due within one year |
£'000 |
£'000 |
|
|
Taxation payable |
37 |
252 |
|
|
Amounts due to brokers |
264 |
106 |
|
|
Investment management fee payable |
102 |
91 |
|
|
Other creditors |
90 |
73 |
|
|
|
_______ |
_______ |
|
|
|
493 |
522 |
|
|
|
_______ |
_______ |
|
|
|
2010 |
2009 |
|
11. |
Provision for liabilities and charges |
£'000 |
£'000 |
|
|
Deferred taxation provision: |
|
|
|
|
Opening balance |
35 |
50 |
|
|
Credited to revenue |
(35) |
(15) |
|
|
|
_______ |
_______ |
|
|
Closing balance |
- |
35 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
The provision for deferred tax, relating to dividends receivable has been removed this year, as overseas dividends received after 1 July 2009 are now exempt from main stream corporation tax. |
||
|
|
|
2010 |
2009 |
|
12. |
Called-up share capital |
£'000 |
£'000 |
|
|
Allotted, called-up and fully paid: |
|
|
|
|
Opening balance |
9,400 |
9,489 |
|
|
Shares bought back for cancellation |
(286) |
(89) |
|
|
|
_______ |
_______ |
|
|
36,456,508 (2009 - 37,599,379) Ordinary shares of 25p each |
9,114 |
9,400 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
During the year the Company bought back and cancelled 1,142,871 Ordinary shares of 25p each (2009 - 357,000) for a total consideration of £5,904,000 (2009 - £2,010,000). This represents 3% of the Company's issued share capital at 31 January 2009. |
||
|
|
|
||
|
|
Subsequent to the year end, a further 1,085,900 Ordinary shares were bought back at a total cost of £6.18 million including expenses, leaving 35,370,608 Ordinary shares in issue at the date of this report. |
||
|
|
|
2010 |
2009 |
|
13. |
Capital reserve |
£'000 |
£'000 |
|
|
At 1 February |
122,320 |
160,917 |
|
|
Movement in fair value gains |
30,214 |
(37,641) |
|
|
Foreign exchange movements |
(284) |
1,015 |
|
|
Purchase of own shares for cancellation |
(5,904) |
(2,010) |
|
|
Over-accrual of expenses relating to the Tender Offer |
- |
39 |
|
|
|
_______ |
_______ |
|
|
At 31 January |
146,346 |
122,320 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
Included in the total above are investment holdings gains at the year end of £33,482,000 (2009 - £4,546,000). |
||
|
|
|
||
|
|
The Directors regard the total capital reserve as being available to fund share buy-backs. |
||
|
14. |
Net asset value per equity share |
||
|
|
The net asset value per share and the net assets attributable to the Ordinary shareholders at the year end were as follows: |
||
|
|
|
|
|
|
|
|
2010 |
2009 |
|
|
Net assets attributable |
£204,098,000 |
£181,042,000 |
|
|
Number of Ordinary shares in issue |
36,456,508 |
37,599,379 |
|
|
Net asset value per share |
559.84p |
481.50p |
|
15. |
Reconciliation of net return before finance costs and taxation to |
2010 |
2009 |
|
|
net cash inflow from operating activities |
£'000 |
£'000 |
|
|
Return on ordinary activities before finance costs and taxation |
33,607 |
(32,458) |
|
|
Adjustments for: |
|
|
|
|
Net (gains)/losses on investments |
(30,214) |
37,641 |
|
|
Foreign exchange movements |
284 |
(1,015) |
|
|
Decrease in accrued income |
81 |
74 |
|
|
Decrease in other debtors |
25 |
21 |
|
|
Increase/(decrease) in other creditors |
28 |
(1,015) |
|
|
|
_______ |
_______ |
|
|
Net cash inflow from operating activities |
3,811 |
3,248 |
|
|
|
_______ |
_______ |
|
|
|
At |
|
|
At |
|
|
|
1 February |
Cash |
Exchange |
31 January |
|
|
|
2009 |
flow |
movements |
2010 |
|
16. |
Analysis of changes in net funds |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Cash and short term deposits |
2,828 |
(815) |
(284) |
1,729 |
|
|
|
_______ |
_______ |
_______ |
_______ |
|
17. |
Financial instruments |
||||
|
|
The Company's financial instruments, other than derivatives, comprise listed securities, cash balances, debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income. |
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|
|
|
||||
|
|
During the year, the Company did not enter into any derivative contracts. In periods when the Company builds up cash, the Manager may enter into certain derivative contracts to gain exposure to the market. Positions closed during the previous year realised a loss of £957,000, which reflected the movements in the Index. The largest position in derivative contracts held during the previous year was £8.2 million. The Company had no open positions in derivative contracts at 31 January 2010 or 2009. |
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|
|
|
||||
|
|
Fixed asset investments (see note 8) are valued at closing market prices, which equates to their fair value. The fair values of all other assets and liabilities are represented by their carrying values in the Balance Sheet. |
||||
|
|
|
||||
|
|
There were no financial liabilities, other than short term creditors, at 31 January 2010 (2009 - £nil). |
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|
|
|
||||
|
|
Risk management |
||||
|
|
The main risk to the Company is the failure to track closely the S&P 500 Index. The main risks associated with the Company's financial instruments are market risk (comprising price risk, interest risk and foreign currency risk), liquidity risk and credit risk. |
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|
|
|
||||
|
|
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. |
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|
|
|
||||
|
|
(i) Market risk |
||||
|
|
The Company's exposure to market risk comprises of changes in interest rates, valuations awarded to equities, movements in prices and liquidity of financial instruments. In pursuing the Company's primary objective of tracking its benchmark index, the Company does not increase the level of cash balances through the sale of equities. |
||||
|
|
|
||||
|
|
The fair value of or future cash flows from a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - price risk, interest rate risk and foreign currency risk. |
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|
|
|
||||
|
|
Price risk |
||||
|
|
Price risks (i.e. changes in market prices other than those arising from interest rate risk) may affect the value of the quoted investments. The Company's stated objective is to track the S&P 500 Index. As a result the Company is exposed to movements in the underlying index. |
||||
|
|
|
||||
|
|
As the Company tracks its benchmark index it will hold an appropriate spread of investments in the portfolio. This will reduce the risk arising from factors specific to a particular sector. The Manager actively monitors market prices throughout the year and reports investment performance to the Board on a regular basis. The investments held by the Company are listed on the New York Stock Exchange and NASDAQ. |
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|
|
|
||||
|
|
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 at the year ended 31 January 2010 would have increased/decreased by £20,266,000 (2009 - increase/decrease of £17,845,000) and equity reserves would have increased/decreased by the same amount. The calculations are based on the portfolio valuations, as at the respective Balance Sheet dates, and are not representative of the year as a whole. |
||||
|
|
|
||||
|
|
Interest rate risk |
||||
|
|
Interest rate movements may affect the level of income receivable on cash deposits. |
||||
|
|
|
||||
|
|
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 decisions. |
||||
|
|
|
||||
|
|
The Company holds cash on deposit in Sterling and US Dollars. The US Dollar value of cash and short term deposits can be significantly affected by movements in foreign exchange rates. The tables below sets out the currency exposure of the cash and short term deposits as at 31 January 2010 and 2009: |
||||
|
|
|
|
|
|
|
|
|
|
Interest |
Local |
Foreign |
Sterling |
|
|
|
rate |
currency |
exchange |
equivalent |
|
|
As at 31 January 2010 |
% |
'000 |
rate |
£'000 |
|
|
US Dollar |
0.00 |
2,716 |
1.6024 |
1,695 |
|
|
Sterling |
0.25 |
34 |
- |
34 |
|
|
|
|
|
|
_______ |
|
|
Total cash on deposit per Balance Sheet |
|
|
|
1,729 |
|
|
|
|
|
|
_______ |
|
|
|
|
|
|
|
|
|
|
Interest |
Local |
Foreign |
Sterling |
|
|
|
rate |
currency |
exchange |
equivalent |
|
|
As at 31 January 2009 |
% |
'000 |
rate |
£'000 |
|
|
US Dollar |
0.00 |
3,566 |
1.4417 |
2,473 |
|
|
Sterling |
1.25 |
355 |
- |
355 |
|
|
|
|
|
|
_______ |
|
|
Total cash on deposit per Balance Sheet |
|
|
|
2,828 |
|
|
|
|
|
|
_______ |
|
|
|
|
|
|
|
|
|
Cash and short term deposits are held in floating rate accounts. The benchmark that determines the interest received, or paid on balances, is the bank base rate which was 0.25% (2009 - 1.25%) for Sterling funds, and nil (2009 - nil) for US Dollar funds at 31 January 2010. Movements in interest rates would not significantly affect net assets attributable to the Company's shareholders and total profit. |
||||
|
|
Foreign currency risk |
||||||
|
|
The Company's portfolio is invested in US quoted 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. |
||||||
|
|
|
||||||
|
|
The revenue account is subject to currency fluctuation arising on overseas income. The Company does not hedge this currency risk as its investment objective is to track closely the S&P 500 Index. |
||||||
|
|
|
||||||
|
|
Foreign currency risk exposure by currency of denomination: |
||||||
|
|
|
||||||
|
|
|
31 January 2010 |
31 January 2009 |
||||
|
|
|
|
Net |
Total |
|
Net |
Total |
|
|
|
Overseas |
monetary |
currency |
Overseas |
monetary |
currency |
|
|
|
investments |
assets |
exposure |
investments |
assets |
exposure |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
US Dollar |
202,656 |
1,619 |
204,274 |
178,452 |
2,647 |
181,099 |
|
|
Sterling |
- |
(177) |
(176) |
- |
(22) |
(22) |
|
|
|
________ |
________ |
_______ |
________ |
________ |
________ |
|
|
Total |
202,656 |
1,442 |
204,098 |
178,452 |
2,625 |
181,077 |
|
|
|
________ |
________ |
_______ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
|
The asset allocation between specific markets can vary from time to time based on the constituents of the Company's benchmark index. |
||||||
|
|
|
||||||
|
|
Foreign currency sensitivity |
||||||
|
|
There is no sensitivity analysis included as the Company's significant foreign currency financial instruments are in the form of equity investments, and they have been included within the other price risk sensitivity analysis so as to show the overall level of exposure. |
||||||
|
|
|
||||||
|
|
(ii) Liquidity risk |
||||||
|
|
Liquidity risk 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 of mainly readily realisable securities, which can be sold to meet funding commitments if necessary. |
||||||
|
|
|
||||||
|
|
(iii) Credit risk |
||||||
|
|
This is the risk that a counter party to a transaction fails to discharge its obligations under that transaction, resulting in a loss to the Company. |
||||||
|
|
|
||||||
|
|
The Company considers credit risk not to be significant as it is actively managed as follows: |
||||||
|
|
- investment securities are safeguarded by an independent custodian; |
||||||
|
|
- 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; |
||||||
|
|
- cash is held only with banks with high quality external credit ratings; |
||||||
|
|
- the Company does not undertake stocklending. |
||||||
|
|
|
||||||
|
|
None of the Company's financial assets are secured by collateral or other credit enhancements. |
||||||
|
|
|
||||||
|
|
Exposure to credit risk |
||||||
|
|
In summary, compared to the amounts in the Balance Sheet, the exposure to credit risk at 31 January 2010 was as follows: |
||||||
|
|
|
|
|
||||
|
|
|
2010 |
2009 |
||||
|
|
|
£'000 |
£'000 |
||||
|
|
Debtors and prepayments |
206 |
319 |
||||
|
|
Cash and short term deposits |
1,729 |
2,828 |
||||
|
|
|
________ |
________ |
||||
|
|
|
1,935 |
3,147 |
||||
|
|
|
________ |
________ |
||||
|
18. |
Capital management policies and procedures |
|
|
The capital of the Company consists of equity, comprising issued capital, reserves and retained earnings. The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes the impact of share buybacks and the extent to which revenue should be retained. The Company is not subject to any externally imposed capital requirements. |
|
19. |
Fair Value hierarchy |
|||||
|
|
The Company adopted the amendments to FRS 29 'Financial Instruments: Disclosures' effective from 1 January 2009. These amendments require an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the input. |
|||||
|
|
|
|||||
|
|
- 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 January 2010 as follows: |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
|
|
Note |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
Financial assets at fair value through profit or loss |
|||||
|
|
Quoted Equities |
a) |
202,656 |
- |
- |
202,656 |
|
|
|
|
|
|
|
|
|
|
|
|
________ |
________ |
________ |
________ |
|
|
Net fair value |
|
202,656 |
- |
- |
202,656 |
|
|
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
a) Quoted Equities |
|||||
|
|
The fair value of the Group'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. |
|||||
|
20. |
The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 31 January 2010 have been agreed with the auditors and are an abridged version of the Company's full accounts, which have been approved and audited with an unqualified report. The 2010 and 2009 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 either section 498(2) or 498(3) of the Companies Act 2006. The financial information for 2009 is derived from the statutory accounts for 2009 which have been delivered to the Registrar of Companies. The 2010 accounts will be filed with the Registrar of Companies in due course.
The Annual General Meeting will be held at 40 Princes Street, Edinburgh EH2 2BY on 17 May 2010 at 11.00am. |
|
|
|
|
21. |
The Annual Report and Accounts will be posted to shareholders in April 2010 and copies will be available from the investment manager or from the Company's website, www.edinburghustracker.co.uk. |
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.
By Order of the Board
Aberdeen Asset Management PLC, Secretary
This information is provided by RNS
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