Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • FEAnalytics.com
  • FEInvest.net
  • FETransmission.com
  • Investegate.co.uk
  • Trustnet.hk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email [email protected] in the first instance.

 Information  X 
Enter a valid email address

Independent Inv Tst (IIT)

  Print      Mail a friend

Monday 12 February, 2018

Independent Inv Tst

Annual Financial Report

RNS Number : 5811E
Independent Investment Trust PLC
12 February 2018
 

The Independent Investment Trust PLC

 

Annual Financial Report

 

This is the Annual Financial Report of The Independent Investment Trust PLC as required to be published under DTR 4 of the UKLA Listing Rules.

 The financial information set out in this Annual Financial Report does not constitute the Company's statutory accounts for the years ended 30 November 2016 or 30 November 2017 but is derived from those accounts. The Company's auditors have reported on the annual report and financial statements for 2016 and 2017; their reports were unqualified, did not draw attention to any matters by way of emphasis, and did not contain statements under 498(2) or 498(3) of the Companies Act 2006. Statutory accounts for the year ended 30 November 2016 have been filed with the Registrar of Companies and the statutory accounts for the year ended 30 November 2017 will be delivered to the Registrar in due course.

The annual report and financial Statements for the year ended 30 November 2017, including the Notice of Annual General Meeting, has been submitted electronically to the National Storage Mechanism and will shortly be available for inspection at http://www.morningstar.co.uk/uk/NSM and is also available on the Independent Investment Trust's website at: www.independentinvestmenttrust.co.uk.

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

 

 

Baillie Gifford & Co

Company Secretaries

12 February 2018

 

 

Chairman's Statement

 

Over the year to 30 November 2017, our company produced a net asset value (NAV) total return of 54.8%. However one measures performance this was, by some margin, the best annual result in the history of the Independent: theoretical investments in the FTSE All-Share Index and the FTSE World Index would have produced total returns of 13.4% and 15.4% respectively. For the period from inception in October 2000 to 30 November 2017, we produced an NAV total return of 788%, equivalent to a rate of roughly 13.7% per annum, of which 2.8% per annum can be offset by RPI inflation. By comparison, the notional return available from the FTSE All-Share Index over the period amounted to 146%, or 5.4% per annum. Our performance is to the great credit of Max Ward, who has managed the portfolio from inception.

The results rekindled enthusiasm for our shares, which moved from a discount of 11.2% at 30 November 2016 to a premium of 7.2% at 30 November 2017, producing a share price total return of 87.0%.

Two factors were particularly helpful to us in the year under review. First, it was a market environment in which investors were happy to re-rate companies with a good story and results to match. This was particularly true of UK domestic companies, such as the housebuilders, whose valuations were artificially depressed in the wake of the vote to leave the European Union. Secondly, an unusually high proportion of our companies produced operating results during the period that exceeded expectations. Either or both of these factors could reverse at any time.

Once again, there has been little change in the global economic background. Growth has been unexciting; inflation has been generally modest; and consumer spirits have been subdued by limited real wage gains (indeed, real wages have declined in the UK). Interest rates have started to rise in some parts of the world, but at a slower pace than some would have liked. The overwhelming impression is of policymakers trying to direct events that have a mind of their own. Markets have once again benefited from a combination of loose monetary policy and high levels of corporate profitability.

The main changes in our sectoral distribution have been a reduction in the importance of our housebuilding stake as we sold out of Berkeley Group and a significant increase in our exposure to the technology and telecommunications sector (despite modest net sales). The emergence of the latter as our largest sector marks a major change in our thinking in recent years. Up until 2014 we did not trust ourselves to invest in individual small technology companies, fearing that we lacked the relevant specialist expertise. Instead, we delegated the task, very successfully, to Katie Potts and her team at Herald Investment Trust. Since 2014 we have been able to persuade ourselves in the case of a growing number of small technology companies that we understand enough about their businesses to justify investing directly. Our results to date have exceeded our wildest hopes, but have not blinded us to the risks of investing in highly rated companies operating in fast changing markets. Our greater willingness to invest directly in this area has led to a less obvious role for Herald in our portfolio and we have reduced the holding accordingly.

We ended our year with cash balances of just over 7% of shareholders' funds (5% at 30 November 2016). Further comments on the portfolio can be found in the Managing Director's Report below.

Earnings per share for the year were 9.2p (7.93p in 2016). Given the buoyancy of our revenue account and an encouraging outlook, we have decided to recommend a final dividend of 4p (nil in 2016), making a total regular dividend of 6p (5p in 2016). In addition, we are proposing a special dividend of 2p (2.5p in 2016). If approved, both will be paid on 6 April with an ex-dividend date of 22 February.

The growth in our assets had a beneficial effect on our ongoing charges ratio, which fell from 0.34% to 0.25%. Not only is this one of the lowest ratios in the industry - if not the lowest - but the level of 0.25% is also a record low for us.

In the early part of our year, our shares traded at a discount to NAV and we were able to buy back 60,000 at a discount of 7.3%. In normal market conditions we are happy to buy back shares when this can be done on terms that are not detrimental to the interests of continuing shareholders.

It is now nine years since the FTSE All Share Index last delivered a negative total return over a year ending on 30 November. Over that nine year period total returns for the index have averaged comfortably over 10% per annum, which is far in excess of UK - or global - economic growth for the period. Common sense would suggest that we are overdue a significant market correction, but in the absence of any clear indication of the timing of such a correction we see little point in trying to anticipate it. Our companies are in good fettle and we are confident about their long term prospects. This is the foundation on which our future strategy is based.

Once again, we should like to encourage you to come to the AGM, which is to be held in the Baillie Gifford offices at Calton Square at 4.30pm on 22 March 2018. It will help our planning if we know how many shareholders are likely to attend, and I shall be grateful if you will mark the proxy form accordingly and return it to the Company's registrars. I look forward to seeing as many of you as possible there.

 

Douglas McDougall

26 January 2018

 

Past performance is not a guide to future performance.

For a definition of Terms see Glossary of Terms.

Total return information is sourced from Baillie Gifford/Thomson Reuters. See disclaimer at the end of this announcement.

 

 

Managing Director's Report

 

Our performance over the year has been covered in the Chairman's Statement.

It has been a remarkable year for our large technology and telecommunications stake: worth £44.6m at 30 November 2016, it had risen in value to £87.4m by 30 November 2017 after net sales of £1.1m. Strong share price performances led us to make reductions in our holdings of FDM, Gamma Communications and Kainos. In each case this was a mistake as all three companies produced strong results. We also made a reduction in our holding in Herald Investment Trust to address the issue of overlap between our two portfolios. This, too, was a mistake as the Herald discount fell after we sold in recognition of strong investment results. Fortunately, we were less trigger happy in the case of our Blue Prism holding, which went from strength to strength throughout the year as demand for its software robots grew at quite extraordinary rates. We do not pretend to know what the "right" valuation for the company is, but we continue to believe that it could grow to many times its current size in a relatively short space of time if it maintains its position of leadership in the embryonic market for robotic process automation. Our two new technology holdings, Alfa Financial Software and Frontier Developments, both made encouraging debuts. Alfa, one of the leading providers of software to the asset finance industry, is renowned for the quality of its products and for its ability to deliver complex implementations on time and on budget. Frontier is a long established designer of computer games which is benefiting from the transformational effect of the cloud on the design and marketing of computer games. It is also notable for having attracted the attention of the giant Chinese internet company, Tencent, which has taken a 9% stake in it.

It has been a much better year for our large position in the housebuilding industry. Conditions in the housing market have been about as favourable as they could be for builders. A plentiful supply of land at very attractive prices combined with robust demand, albeit helped at the lower end of the market by the government's Help to Buy scheme, to provide strong sales at good margins. The one exception to this happy picture is the retirement homes builder, McCarthy and Stone, which has again been held back by a sluggish market for second hand houses. There are now, however, clear signs of improvement even in its business. Strong profits and dividends have been rewarded with good share price performances, but in the case of most of our holdings we think the market continues to undervalue their long-term prospects. Berkeley Group, which we held until October, is the one exception to this: its dependence on the London market and its policy of selling well ahead have left it with very high profits in the current year, but a more subdued outlook thereafter. Despite the undoubted quality of the business, we decided to sell our holding at a very good profit. Overall, despite sales of £7.7m, the value of our housebuilding stake rose from £51.0m at 30 November 2016 to £59.4m at 30 November 2017.

It has been another good year for our travel and leisure holdings: their value grew from £24.7m at 30 November 2016 to £34.8m at 30 November 2017 despite net sales of £1.8m. The main contributor to this performance, as was the case in 2016, was the online package holiday company, On the Beach, which has once again delivered strong earnings growth against a difficult market background. The strength of its customer proposition - low prices and flexible booking arrangements - is becoming increasingly apparent. Gym Group delivered another year of good growth and was rewarded with a strong recovery in its share price. The performance of the Hollywood Bowl share price was more subdued, but there was nothing wrong with its operating results.

Given our disappointing record as investors in the retail sector, it may seem perverse that we have significantly increased our exposure to it at a time when there are widespread concerns about the outlook for consumer spending. It is our hope that our new purchases, Footasylum and Quiz, will turn out to be resilient in a tough consumer environment and we believe that our addition to our old favourite, Dunelm, was made at an attractive valuation even given the uncertainties surrounding its immediate outlook. Both Footasylum and Quiz are clothing retailers. They serve totally different markets, but share the common characteristic (also shared with Joules, which we bought in 2016) of having developed a successful multichannel approach, in which the website and the physical estate feed off each other's strengths. The net result is rapid growth in internet sales combined with very fast paybacks on new store openings. All three are highly cash generative businesses. Motorpoint, our other retail holding, has seen a strong rebound in its share price as results have recovered from the disappointing spell of trading in the wake of the referendum. Overall, the value of our retail holdings rose from £15.2m at 30 November 2016 to £31.7m at 30 November 2017 after net purchases of £11.0m.

Once again we consider it appropriate to devote an entire paragraph to the soft drinks company, Fever-Tree. Fever-Tree's international business (probably 40% of total sales) is growing at over 40% per annum and in each of its geographical areas it dominates the premium segment of the mixer market. We think premium mixers will continue to gain market share for years to come because they are starting from a low base and we expect Fever-Tree to be at the forefront of this trend. Rather reluctantly, we took some profits towards the end of the year on grounds of valuation, but despite this it retained its position as our largest holding.

It has been a year of considerable change for our holdings in the business services sector: we sold out of SThree and Gama Aviation, added to Midwich and bought a new holding in Eddie Stobart Logistics. SThree has struggled in recent years to reprise the growth rates it achieved when we originally bought it, while Gama was sold largely on grounds of illiquidity. Our addition to Midwich was well timed and it is pleasing to see the attributes that attracted us to this exceptionally well-run business are now beginning to achieve wider recognition. Eddie Stobart, however, has failed to attract a following in the wake of its initial public offering despite reporting good results. Overall, our business services stake grew in value from £11.4m to £25.9m after net purchases of £3.8m.

Elsewhere in the portfolio, good results were reflected in the share prices of Ashtead and Luceco (although the latter issued a profits warning after our year end). Our new holding in RPC, the oil service company, enjoyed a good share price performance. The same was true of teleradiology company, Medica, but in its case much of the share price strength has reversed since our year end in the wake of a disappointing trading statement. The Polar Capital Global Insurance Fund had a quiet year, while NAHL, to which we started to add towards the end of our year, saw its share price affected by uncertainty (which we consider largely resolved now) about the future of personal injury litigation. We sold Telecom Plus and Bluefield Solar on grounds of valuation, and disposed of The AA and UP Global in the wake of disappointing trading news.

 

Max Ward

26 January 2018

 

Past performance is not a guide to future performance.

 

 

List of Investments as at 30 November 2017

 

Sector

Name

Value

2016

£'000

 

Net transactions

£'000

 

Gains/ (losses)

£'000

 

Value

2017

£'000

 

%

Housing

Bellway

4,882

 

 

2,036 

 

6,918

 

2.0

 

Berkeley Group

4,952

 

(7,733)

 

2,781 

 

-

 

-

 

Crest Nicholson

13,113

 

 

1,992 

 

15,105

 

4.5

 

McCarthy and Stone

8,315

 

 

(95)

 

8,220

 

2.4

 

Persimmon

3,398

 

 

1,676 

 

5,074

 

1.5

 

Redrow

16,344

 

 

7,696 

 

24,040

 

7.1

 

 

51,004

 

(7,733)

 

16,086 

 

59,357

 

17.5

Industrials

Ashtead Group

15,640

 

 

3,350 

 

18,990

 

5.6

Retailing

Dunelm Group

5,908

 

4,182 

 

432 

 

10,522

 

3.1

 

Footasylum

-

 

3,409 

 

691 

 

4,100

 

1.2

 

Joules Group

3,660

 

(1,327)

 

1,717 

 

4,050

 

1.2

 

Motorpoint

5,670

 

 

2,655 

 

8,325

 

2.5

 

Quiz

-

 

4,782 

 

(42)

 

4,740

 

1.4

 

 

15,238

 

11,046 

 

5,453 

 

31,737

 

9.4

Consumer Services

AA

5,308

 

(5,194)

 

(114)

 

-

 

-

 

NAHL Group

3,056

 

183 

 

(625)

 

2,614

 

0.8

 

 

8,364

 

(5,011)

 

(739)

 

2,614

 

0.8

Consumer Goods

Luceco

5,744

 

(1,469)

 

2,976 

 

7,251

 

2.1

 

Up Global Sourcing

-

 

664 

 

(664)

 

-

 

-

 

 

5,744

 

(805)

 

2,312 

 

7,251

 

2.1

Travel and Leisure

Hollywood Bowl Group

6,680

 

 

440 

 

7,120

 

2.1

 

On the Beach Group

13,260

 

(1,814)

 

9,818 

 

21,264

 

6.3

 

The Gym Group

4,770

 

 

1,680 

 

6,450

 

1.9

 

 

24,710

 

(1,814)

 

11,938 

 

34,834

 

10.3

Business Services

Eddie Stobart Logistics

-

 

11,176 

 

(256)

 

10,920

 

3.2

 

Gama Aviation

2,360

 

(4,591)

 

2,231 

 

-

 

-

 

Midwich

4,945

 

2,069 

 

7,986 

 

15,000

 

4.5

 

SThree

4,125

 

(4,851)

 

726 

 

-

 

-

 

 

11,430

 

3,803 

 

10,687 

 

25,920

 

7.7

Technology and

Alfa Financial Software

-

 

9,372 

 

2,751 

 

12,123

 

3.6

   Telecommunications

Blue Prism

5,780

 

(838)

 

22,320 

 

27,262

 

8.1

 

FDM Group

13,125

 

(7,198)

 

8,286 

 

14,213

 

4.2

 

Frontier Developments

-

 

5,977 

 

2,473 

 

8,450

 

2.5

 

Gamma Communications

4,735

 

(2,645)

 

925 

 

3,015

 

0.9

 

Herald Investment Trust

16,500

 

(4,638)

 

5,778 

 

17,640

 

5.2

 

Kainos Group

4,455

 

(1,148)

 

1,418 

 

4,725

 

1.4

 

 

44,595

 

(1,118)

 

43,951 

 

87,428

 

25.9

Beverages

Fever-Tree Drinks

19,242

 

(8,157)

 

18,075 

 

29,160

 

8.6

Utilities

Telecom Plus

5,000

 

(4,813)

 

(187)

 

-

 

-

Healthcare

Medica Group

-

 

5,779 

 

2,701 

 

8,480

 

2.5

Insurance

Polar Capital Global Insurance Fund -

  Ireland

4,408

 

 

381 

 

4,789

 

1.4

Energy/Oilfield Services

RPC - USA

-

 

2,823 

 

729 

 

3,552

 

1.0

Renewable Energy Funds

Bluefield Solar Income - Channel Islands

5,187

 

(5,691)

 

504 

 

-

 

-

Total Investments

 

210,562

 

(11,691)

 

115,241 

 

314,112

 

92.8

Net Liquid Assets

 

10,308

 

14,063 

 

(32)

 

24,339

 

7.2

Shareholders' Funds

 

220,870

 

2,372 

 

115,209 

 

338,451

 

100.0

 

The above table excludes holdings valued at nil. All holdings are in equities domiciled in the UK unless otherwise stated.

 

 

Key Performance Indicators

 

The key performance indicators (KPIs) used to measure the progress and performance of the Company over time are established industry measures and are as follows:

• the movement in net asset value per ordinary share on a total return basis;

• the discount or premium of the share price to the net asset value; and

• the ongoing charges.

 

The Long Term Record on pages 7 and 8 of the annual report and financial statements provides detailed performance information since inception. The net asset value total return for the year is contained in the Chairman's Statement along with information on the discount and ongoing charges.

 

Future Developments of the Company

 

The outlook for the Company is dependent to a significant degree on economic events and the financial markets. Further comments on the outlook for the Company are included in the Chairman's Statement above.

 

Market Purchases of Own Shares

 

At the last Annual General Meeting the Company was granted authority to purchase up to 8,314,953 ordinary shares (equivalent to 14.99% of its issued share capital), such authority to expire at the conclusion of the Annual General Meeting to be held in respect of the year ended 30 November 2017. During the year to 30 November 2017 the Company bought back 60,000 ordinary shares (nominal value £15,000, representing 0.1% of the called up share capital at 30 November 2016) on the London Stock Exchange for cancellation. The total consideration for these shares was £238,000. No further ordinary shares were bought back by the Company between 1 December 2017 and 24 January 2018, the latest practicable date prior to publication of this report.

The principal reasons for share buybacks are to address any imbalance between the supply and demand for the Company's shares and to increase the net asset value per remaining share. The Company may either cancel bought-back shares immediately or hold them 'in treasury' and then: (i) sell such shares (or any of them) for cash (or its equivalent under the Companies Act 2006); or (ii) cancel the shares (or any of them).

Shares will only be resold from treasury at a price at or above net asset value per share. No shares were held in treasury as at 24 January 2018, and no such holdings are planned.

 

Related Party Transactions

 

The directors' fees and shareholdings are detailed in the Directors' Remuneration Report on page 24 of the annual report and financial statements. With the exception of Max Ward, the managing director, no director has a contract of service with the Company. Details of Mr Ward's contract for services are set out on page 23 of the annual report and financial statements. During the year no director was interested in any contract or other matter requiring disclosure under section 412 of the Companies Act 2006.

 

Principal Risks

 

As explained on pages 19 and 20 of the annual report and financial statements there is a process for identifying, evaluating and managing the risks faced by the Company on a regular basis. The directors have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. There have been no significant changes to the principal risks during the year except for the disclosure of 'Investment strategy risk' as a separate risk rather than being covered as an element of discount risk. A description of these risks and how they are being managed or mitigated is set out below:

 

Financial risk

The Company's assets consist mainly of listed securities and its principal financial risks are therefore market related and include market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. An explanation of those risks and how they are managed is contained in note 16 to the accounts on pages 42 to 44 of the annual report and financial statements. To mitigate this risk, at each board meeting the composition and diversification of the portfolio by geographical and industrial sectors are considered along with sales and purchases of investments. Individual investments are discussed with the managing director together with his general views on the various investment markets and sectors.

 

Investment strategy risk

Pursuing an investment strategy to fulfil the Company's objective which the market perceives to be unattractive or inappropriate, or an ineffective implementation of an attractive or appropriate strategy, may lead to reduced returns for shareholders and, as a result, a decreased demand for the Company's shares. This may lead to the Company's shares trading at a widening discount to their Net Asset Value. To mitigate this risk, the board regularly reviews and monitors: the Company's objective and investment policy and strategy; the investment portfolio and its performance; the level of discount/premium to Net Asset Value at which the shares trade; and movements in the share register.

 

Regulatory risk

Failure to comply with applicable legal and regulatory requirements such as the tax rules for investment trusts, the UKLA Listing Rules, the Companies Act and the Alternative Investment Fund Managers Regulations 2013 could lead to suspension of the Company's Stock Exchange listing, financial penalties, a qualified audit report or to the Company being subject to tax on capital gains. To mitigate this risk, the practical measures to ensure compliance with regulations and with company law, and to provide effective and efficient operations as they relate to secretarial and administrative matters, have been delegated to Baillie Gifford & Co. Baillie Gifford's Internal Audit and Compliance departments provide regular reports to the audit committee on Baillie Gifford's monitoring programmes. Major regulatory change could impose disproportionate compliance burdens on the Company or threaten the viability of the investment trust structure. In such circumstances representation would be made to defend the special circumstances of investment trusts. Shareholder documents and announcements, including the Company's published interim and annual report and financial statements, are subject to stringent review processes and procedures are in place to ensure adherence to the Transparency Directive and the Market Abuse Directive with reference to inside information.

 

Custody risk

Safe custody of the Company's assets may be compromised through control failures by the Company's custodian, including breaches of cyber security. To mitigate this risk, cash and portfolio holdings are regularly reconciled to the custodian's records by Baillie Gifford & Co. In addition, the existence of assets is subject to annual external audit. The audit committee reviewed Baillie Gifford's Report on Internal Controls which details the controls in place regarding the recording and reconciliation of cash and portfolio holdings to third party data. The custodian's Internal Controls Reports are reviewed by Baillie Gifford & Co's Internal Audit department and a summary of the key points is provided to the audit committee.

 

 

Operational risk

Risk of loss resulting from inadequate or failed internal controls, processes and systems, or from external events. To mitigate this risk, Baillie Gifford's Internal Audit and Compliance departments provide regular reports to the audit committee. The board also reviews Baillie Gifford's Report on Internal Controls and the reports by other key service providers are reviewed by Baillie Gifford on behalf of the board. In addition, Baillie Gifford has a comprehensive business continuity plan which facilitates continued operations of the business in the event of a service disruption or major disaster.

 

Discount risk

The discount/premium at which the Company's shares trade relative to its Net Asset Value can change. The risk of a widening discount is that it may undermine investor confidence in the Company. To manage this risk, the board monitors the level of discount/premium at which the shares trade and the Company has authority to buy back its existing shares when deemed by the board to be in the best interests of the Company and its shareholders.

 

Political risk

The board is of the view that political change in areas in which the Company invests or may invest may increasingly have practical consequences for the Company. To mitigate this risk, developments are closely monitored and considered by the board.

 

Resource risk

As the Company is self managed and has only two employees (the managing director and full-time portfolio manager of the portfolio, Max Ward, and an office manager) the loss of personnel may adversely impact investment performance. To mitigate this risk, contingency plans are in place to deal with any loss of personnel. Secretarial and accounting functions are contracted out to Baillie Gifford & Co and are not subject to resource risk.

 

Viability Statement

 

In accordance with provision C.2.2 of the 2016 UK Corporate Governance Code, the directors have assessed the prospects of the Company over a five year period. The directors believe this period to be appropriate as it is reflective of the Company's investment and planning timeframe and, in the absence of any adverse change to the regulatory environment and the favourable tax treatment afforded to UK investment trusts, is a period over which they do not expect there to be any significant change to the current principal risks and to the adequacy of the mitigating controls in place. The directors do not envisage any change in strategy or objectives or any events that would prevent the Company from continuing to operate over that period.

In making this assessment the directors have taken into account the Company's current position and its self-managed status and have conducted a robust assessment of the Company's principal risks and uncertainties detailed on pages 10 and 11 of the annual report and financial statements. Although the Company has the authority to buy back up to 14.99% of its issued share capital, which is renewed annually, there is no stated discount control mechanism in place. The directors have also considered the Company's investment objective and policy, its dividend policy, the nature of its assets, its liabilities and projected income and expenditure. The Company is not permitted to employ gearing whilst it continues to be a small registered UK AIFM, its ongoing charges are a very small percentage of its assets (2017 - 0.25%; 2016 - 0.34%) and the vast majority of the Company's investments are readily realizable and can be sold to meet liabilities as they fall due. Contingency plans are in place to deal with any loss of key personnel. In the event of the departure of the managing director, which is not foreseen within the indicated timespan, the board would endeavour to present shareholders with an option to realize their investment at around liquidating value or to convert to another investment trust.

Based on this assessment, the directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next five years.

 

Going Concern

 

Having assessed the principal risks and other matters set out in the Viability Statement above, the directors consider it appropriate to adopt the going concern basis of accounting in preparing these financial statements and confirm that they are not aware of any material uncertainties which may affect the Company's ability to continue to do so over a period of at least twelve months from the date of approval of these financial statements.

 

Financial Instruments

 

The Company's financial instruments comprise its investment portfolio, cash balances, borrowings, if any, and debtors and creditors that arise directly from its operations such as sales and purchases awaiting settlement and accrued income. The financial risk management objectives and policies arising from its financial instruments and the exposure of the Company to risk are disclosed below.

As an investment trust, the Company invests in equities and makes other investments so as to achieve its investment objective of providing good absolute returns over long periods by investing the great majority of its assets in quoted securities and, if appropriate, index futures. In pursuing its investment objective, the Company is exposed to various types of risk that are associated with the financial instruments and markets in which it invests.

These risks are categorised here as market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. The board monitors closely the Company's exposures to these risks but does so in order to reduce the likelihood of a permanent loss of capital rather than to minimise short-term volatility. Risk provides the potential for both losses and gains. In assessing risk, the board encourages the managing director to exploit the opportunities that risk affords.

The risk management policies and procedures outlined in this note have not changed substantially from the previous accounting period.

 

Market Risk

The fair value or future cash flows of a financial instrument or other investment held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - currency risk, interest rate risk and other price risk. The board of directors reviews and agrees policies for managing these risks and the Company's managing director both assesses the exposure to market risk when making individual investment decisions and monitors the overall level of market risk across the investment portfolio.

Details of the Company's investment portfolio are shown above. There were no derivative financial instrument holdings during the year.

 

Currency Risk

Some of the Company's assets, liabilities and income are denominated in currencies other than sterling (the Company's functional currency and that in which it reports its results). Consequently, movements in exchange rates may affect the sterling value of those items.

The managing director monitors the Company's exposure to foreign currencies and reports to the board on a regular basis. He assesses the risk to the Company of the foreign currency exposure by considering the effect on the Company's net asset value and income of a movement in the rates of exchange to which the Company's assets, liabilities, income and expenses are exposed. However, the country in which a company is listed is not necessarily where it earns its profits. The effect of movement in exchange rates on overseas earnings may have a more significant impact upon a company's valuation than that arising from a simple translation of the currency in which the company is quoted.

Foreign currency borrowings and forward currency contracts may be used to limit the Company's exposure to anticipated future changes in exchange rates which might otherwise adversely affect the value of the portfolio of investments. At 30 November 2017 the Company had no such borrowings or contracts.

Exposure to currency risk through asset allocation, which is calculated by reference to the currency in which the asset or liability is quoted, is shown below.

 

 

 

At 30 November 2017

 

Investments

£'000

Cash and cash equivalents

£'000

Other debtors and creditors*

£'000

 

Net exposure

£'000

US dollar

3,552

-

18

3,570

Total exposure to currency risk

3,552

-

18

3,570

Sterling

310,560

23,704

617

334,881

314,112

23,704

635

338,451

*    Includes net non-monetary assets of £47,000.

 

 

 

At 30 November 2016

 

Investments

£'000

Cash and cash equivalents

£'000

Other debtors and creditors*

£'000

Net exposure

£'000

US dollar

-

4,344

-

4,344

Total exposure to currency risk

-

4,344

-

4,344

Sterling

210,562

5,903

61

216,526

210,562

10,247

61

220,870

*    Includes net non-monetary assets of £48,000.

 

Currency Risk Sensitivity

At 30 November 2017, if sterling had strengthened by 5% in relation to all currencies, with all other variables held constant, total net assets and total return on ordinary activities would have decreased by the amounts shown below. A 5% weakening of sterling against all currencies, with all other variables held constant, would have had an equal but opposite effect on the financial statement amounts.

The analysis is performed on the same basis for 2016.

 

2017

£'000

 

2016

£'000

US dollar

179

 

217

 

Interest Rate Risk

Interest rate movements may affect directly:

¾  the fair value of any investments in fixed interest rate securities;

¾  the level of income receivable on cash deposits;

¾  the fair value of any fixed-rate borrowings; and

¾  the interest payable on any variable rate borrowings.

Interest rate movements may also have an impact upon the market value of investments outwith fixed income securities. The effect of interest rate movements upon the earnings of a company may have a significant impact upon the valuation of that company's equity.

The possible effects on fair value and cashflows that could arise as a result of changes in interest rates are taken into account when making investment decisions and when entering into borrowing agreements.

The board reviews on a regular basis the amount of investments in cash and fixed income securities and the income receivable on cash deposits, floating rate notes and other similar investments.

The Company may finance part of its activities through borrowings at approved levels. The amount of any such borrowings and the approved levels are monitored and reviewed regularly by the board. Movements in interest rates, to the extent that they affect the market value of the Company's fixed rate borrowings, if any, may also affect the valuation of the Company's shares in relation to its net asset value.

Cash deposits generally comprise call or short-term money market deposits of less than one month which are repayable on demand. The benchmark rate which determines the interest payments received on cash balances is the bank base rate.

There have been no significant changes to the interest rate risk profile of the Company's financial assets during the year. There were no financial assets subject to interest rate risk at 30 November 2017 and 30 November 2016 other than the cash and cash equivalents shown in the credit risk exposure table below.

 

Interest Rate Risk Sensitivity

The weighted average interest rate on cash balances held at 30 November 2017 was 0.3% (2016 - 0.1%). An increase of 100 basis points in interest rates at 30 November 2017 would, over a full year, have increased the net return on ordinary activities after taxation by £237,000 (2016 - increased by £102,000) and would have increased the net asset value per share by 0.43p (2016 - increased by 0.18p). The calculations are based on the cash balances as at the respective Balance Sheet dates and are not representative of the year as a whole.

 

Other Price Risk

Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the Company's net assets.

The board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the managing director. The board meets regularly and at each meeting reviews investment performance, the investment portfolio and the rationale for the current investment positioning to ensure consistency with the Company's objectives and investment policies.

The portfolio does not seek to reproduce any index. Investments are selected based upon the merit of individual companies and therefore performance may well diverge from comparative indices.

 

Other Price Risk Sensitivity

A full list of the Company's investments by broad industrial or commercial sector is shown above. In addition, an analysis of the investment portfolio is contained in the Managing Director's Report above.

93% (2016 - 95%) of the Company's net assets are invested in equities. A 5% increase in quoted equity valuations at 30 November 2017 would have increased net assets and total return on ordinary activities by £15,706,000 (2016 - £10,528,000). A decrease of 5% would have had an equal but opposite effect.

 

Liquidity Risk

This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

Liquidity risk is not significant as the majority of the Company's investment assets are in quoted securities that are readily realizable. The board provides guidance to the managing director as to the maximum exposure to any one holding and to the maximum aggregate exposure to substantial holdings.

The Company's liabilities at 30 November 2017 are all due within 3 months.

 

Credit Risk

This is the risk that a failure of a counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss.

This risk is managed as follows:

¾  where the managing director makes an investment in a bond or other security with credit risk, that credit risk is assessed and then compared to the prospective investment return of the security in question;

¾  the Company's listed investments are held on its behalf by The Bank of New York Mellon SA/NV, the Company's custodian. Bankruptcy or insolvency of the custodian may cause the exercise of the Company's rights with respect to securities held by the custodian to be delayed. The company secretaries monitor the Company's risk by reviewing the custodian's internal control reports and reporting their findings to the board;

¾  investment transactions are carried out with a large number of brokers whose creditworthiness is reviewed by the managing director. Transactions are ordinarily undertaken on a delivery versus payment basis whereby the Company's custodian bank ensures that the counterparty to any transaction entered into by the Company has delivered on its obligations before any transfer of cash or securities away from the Company is completed;

¾  cash is only held at banks that have been approved by the board as creditworthy.

 

Credit Risk Exposure

The exposure to credit risk at 30 November was:

 

2017

£'000

2016

£'000

Cash and cash equivalents

23,704

10,247

Debtors

751

67

 

24,455

10,314

 

The maximum exposure in cash during the year was £23,780,000 (2016 - £22,531,000) and the minimum £4,024,000 (2016 - £3,849,000). None of the Company's financial assets are past due or impaired.

 

Capital Management

The capital of the Company is its share capital and reserves as set out in notes 11 and 12 of the annual report and financial statements. The objective of the Company is to provide good absolute returns over long periods by investing the great majority of its assets in UK and international quoted securities and, if appropriate, index futures. The Company's investment policy is set out on pages 9 and 10 of the annual report and financial statements. In pursuit of the Company's objective, the board has a responsibility for ensuring the Company's ability to continue as a going concern and details of the related risks and how they are managed are set out in the Principle Risks, Viability Statement and Going Concern disclosures above and on pages 10, 11, 12, 19 and 20 of the annual report and financial statements.

Shares may be issued and/or repurchased as explained on pages 15 and 16 of the annual report and financial statements and any changes to the share capital during the year are set out in note 12 of the annual report and financial statements. The Company does not have any externally imposed capital requirements.

 

Fair Value of Financial Instruments

Investments in securities as disclosed in note 8 on page 40 of the annual report and financial statements are financial assets held at fair value through profit or loss. In accordance with FRS 102, all of the Company's investments are classified as level 1 within the fair value hierarchy described below, which reflects the reliability and significance of the information used to measure their fair value. All of the Company's investments as at 30 November 2016 were also classified as level 1. For all other financial assets and liabilities, carrying value approximates to fair value.

 

Fair Value Hierarchy

The fair value hierarchy used to analyse the basis on which the fair values of financial instruments held at fair value through the profit or loss account are measured is described below. Fair value measurements are categorised on the basis of the lowest level input that is significant to the fair value measurement.

Level 1 - using unadjusted quoted prices for identical instruments in an active market;

Level 2 - using inputs, other than quoted prices included within level 1, that are directly or indirectly observable (based on market data); and

Level 3 - using inputs that are unobservable (for which market data is unavailable).

 

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

 

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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:

¾  select suitable accounting policies and then apply them consistently;

¾  make judgements and accounting estimates that are reasonable and prudent;

¾  state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

¾  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. The Directors are also responsible both for safeguarding the assets of the Company and for the maintenance and integrity of the Company's website, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities (in the case of the safeguarding of assets) and also for the preservation of the website integrity.

Under applicable laws and regulations, the directors are also responsible for preparing a Strategic Report, a Directors' Report, a Directors' Remuneration Report and a Corporate Governance Statement that comply with that law and those regulations.

The work carried out by the auditor does not involve any consideration of these matters and, accordingly, the auditor accepts no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

Each of the directors, whose names and functions are listed within the board of directors section confirm that, to the best of their knowledge:

¾  the financial statements, which have been prepared in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', give a true and fair view of the assets, liabilities, financial position and net return of the Company;

¾  the annual report and financial statements 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; and

¾  the Strategic Report includes a fair review of the development and performance of the business and the position of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

 

On behalf of the board

Douglas McDougall

Chairman

26 January 2018

 

Income Statement

 

 

For the year ended

30 November 2017

For the year ended

30 November 2016

 

Revenue

£'000

Capital

£'000

Total

£'000

Revenue

£'000

Capital

£'000

Total

£'000

Gains on investments

115,241 

115,241 

5,720

5,720 

Currency (losses)/gains

(32)

(32)

139

139 

Income (note 2)

5,830 

5,830 

5,139 

-

5,139 

Administrative expenses

(721)

(721)

(719)

-

(719)

Net return on ordinary activities before taxation

5,109 

115,209 

120,318 

4,420 

5,859

10,279 

Tax on ordinary activities

(3)

(3)

-

Net return on ordinary activities after taxation

5,106 

115,209 

120,315 

4,420 

5,859

10,279 

Net return per ordinary share: basic (note 3)

9.20p

207.67p

216.87p

7.93p

10.51p

18.44p

Note:

Dividends per share paid and payable in respect of the year (note 4)

8.00p

 

 

 

 

7.50p

 

 

 

The total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital columns are prepared under guidance published by the Association of Investment Companies.

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

A Statement of Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement.

 

 

Balance Sheet

 

 

At 30 November 2017

At 30 November 2016

 

£'000

£'000

£'000

£'000

Fixed assets

 

 

 

 

Investments held at fair value through profit or loss

 

314,112

 

210,562

Current assets     

 

 

 

 

Debtors

798 

 

115 

 

Cash and cash equivalents

23,704 

 

10,247 

 

 

24,502 

 

10,362 

 

Creditors

 

 

 

 

Amounts falling due within one year

(163)

 

(54)

 

Net current assets

 

24,339

 

10,308

Total net assets

 

338,451

 

220,870

 

 

 

 

 

Capital and reserves

 

 

 

 

Share capital

 

13,867

 

13,882

Share premium account

 

15,242

 

15,242

Special distributable reserve

 

16,387

 

16,625

Capital redemption reserve

 

2,665

 

2,650

Capital reserve

 

283,191

 

167,982

Revenue reserve

 

7,099

 

4,489

Shareholders' funds

 

338,451

 

220,870

Net asset value per ordinary share (note 5)

 

610.2p

 

397.7p

 

 

Statement of changes in equity

 

For the year ended 30 November 2017

 

 Share

capital

£'000

Share premium account

£'000

Special distributable reserve

£'000

Capital redemption reserve

£'000

Capital

reserve*

£'000

Revenue reserve

£'000

 

Shareholders'
funds

£'000

Shareholders' funds at 1 December 2016

13,882 

15,242

16,625 

2,650

167,982

4,489 

220,870 

Net return on ordinary activities after taxation

-

-

115,209

5,106 

120,315 

Shares bought back for cancellation (note 5)

(15)

-

(238)

15

-

(238)

Dividends paid during the year

(note 4)

-

-

-

(2,496)

(2,496)

Shareholders' funds at 30 November 2017

13,867 

15,242

16,387 

2,665

283,191

7,099 

338,451 

 

 

 

 

For the year ended 30 November 2016

 

 Share capital

£'000

Share premium account

£'000

Special distributable reserve

£'000

Capital redemption reserve

£'000

Capital

reserve*

£'000

Revenue reserve

£'000

 

Shareholders'
funds

£'000

Shareholders' funds at 1 December 2015

14,032 

15,242

18,831 

2,500

162,123

6,243 

218,971 

Net return on ordinary activities after taxation

-

-

5,859

4,420 

10,279 

Shares bought back for cancellation (note 5)

(150)

-

(2,206)

150

-

(2,206)

Dividends paid during the year

(note 4)

-

-

-

(6,174)

(6,174)

Shareholders' funds at 30 November 2016

13,882 

15,242

16,625 

2,650

167,982

4,489 

220,870 

 

*      The Capital Reserve balance at 30 November 2017 included an investment holding gain on fixed asset investments of £145,636,000 (2016 - gain of £57,240,000).

 

Notes

    

1.    

The financial statements for the year to 30 November 2017 have been prepared in accordance with FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. The accounting policies adopted, which are set out on pages 36 and 37 of the annual report and financial statements, are consistent with those of the previous financial year. The Company has elected not to present a Statement of Cash Flows for the current year as a Statement of Changes in Equity has been provided and substantially all of the Company's investments are highly liquid and are carried at market value.

2.    

Income

Year to

30 November 2017

£'000

Year to

30 November 2016

£'000

Income from investments and interest receivable

5,808

5,120

Other income

22

19

 

5,830

5,139

 

 

 

 

3.    

Net return per ordinary share

Year to 30 November 2017

Year to 30 November 2016

 

Revenue

Capital

Total

Revenue

Capital

Total

Net return on ordinary activities after taxation (£'000)

5,106

115,209

120,315

4,420

5,859

10,279

Weighted average number of ordinary shares in issue during the year

55,477,890

55,738,196

Net return per ordinary share: Basic

9.20p

207.67p

216.87p

7.93p

10.51p

18.44p

 

Returns per ordinary share are based on the return for the financial year and on the weighted average number of ordinary shares in issue during the year as shown above. There are no dilutive or potentially dilutive shares in issue.

4.    

Ordinary dividends

Year to

30 November 2017

Year to

30 November 2016

 

Pence

£'000

Pence

£'000

Amounts recognized as distributions in the year:

 

 

 

 

Previous year's second interim dividend

-

-

3.00

1,684

Previous year's special dividend paid 6 April 2017

2.50

1,387

3.00

1,684

Interim dividend paid 25 August 2017

2.00

1,109

5.00

2,806

 

 

4.50

2,496

11.00

6,174

 

Set out below are the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividend for the year is £5,106,000 (2016 - £4,420,000).

 

 

Year to

30 November 2017

Year to

30 November 2016

 

Pence

£'000

Pence

£'000

Amounts paid and payable in respect of the year:

 

 

 

 

Interim dividend paid 25 August 2017

2.00

1,109

5.00

2,806

Final dividend payable 6 April 2018

4.00

2,219

-

-

Special dividend payable 6 April 2018

2.00

1,109

2.50

1,388

 

8.00

4,437

7.50

4,194

 

If approved, the recommended final and special dividends will be paid on 6 April 2018 to all shareholders on the register at the close of business on 23 February 2018. The ex-dividend date is 22 February 2018.

5.

Net asset value per ordinary share

At 30 November

2017

£000

At 30 November

2016

£'000

 

Net asset value attributable to ordinary shares

338,451

220,870

 

Net asset value per share is based on net assets (as shown above) and on 55,470,000 shares (2016 - 55,530,000), being the number of shares in issue at the year end.  There are no dilutive or potentially dilutive shares in issue.

During the year the Company bought back and cancelled 60,000 (2016 - 600,000) ordinary shares with a nominal value of £15,000 (2016 - £150,000) at a cost of £238,000 (2016 - £2,206,000). No shares were allotted during the year. At 30 November 2017 the Company had authority remaining to buy back a further 8,314,953 ordinary shares and to allot new shares up to an aggregate nominal value amount of £4,774,939.

6.    

Transaction costs incurred on the purchase and sale of the investments are added to the purchase cost or deducted from the sale proceeds, as appropriate. During the year, transaction costs on purchases amounted to £153,000 (2016 - £64,000) and transaction costs on sales amounted to £155,000 (2016 - £99,000).

 

 

                         

 

 

Glossary of Terms

 

Total Assets

The total value of all assets held less all liabilities (other than liabilities in the form of borrowings).

Net Asset Value

Net Asset Value (NAV) is the value of total assets held less all liabilities (including liabilities in the form of borrowings). The NAV per share is calculated by dividing this amount by the number of ordinary shares in issue.

Discount/Premium

As stock markets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, this situation is called a premium.

Net Liquid Assets

Net liquid assets comprise current assets less current liabilities, excluding borrowings.

Total Return

The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend.

Ongoing Charges

The total administrative expenses incurred by the Company as a percentage of the average shareholders' funds.

Gearing

At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders' assets is called 'gearing'. If the Company's assets grow, the shareholders' assets grow proportionately more because the debt remains the same. But if the value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets.

 

Third Party Data Provider Disclaimer

No third party data provider ('Provider') makes any warranty, express or implied, as to the accuracy, completeness or timeliness of the data contained herewith nor as to the results to be obtained by recipients of the data. No Provider shall in any way be liable to any recipient of the data for any inaccuracies, errors or omissions in the index data included in this document, regardless of cause, or for any damages (whether direct or indirect) resulting therefrom. No Provider has any obligation to update, modify or amend the data or to otherwise notify a recipient thereof in the event that any matter stated herein changes or subsequently becomes inaccurate. Without limiting the foregoing, no Provider shall have any liability whatsoever to you, whether in contract (including under an indemnity), in tort (including negligence), under a warranty, under statute or otherwise, in respect of any loss or damage suffered by you as a result of or in connection with any opinions, recommendations, forecasts, judgments, or any other conclusions, or any course of action determined, by you or any third party, whether or not based on the content, information or materials contained herein.

 

FTSE Index data

FTSE International Limited ('FTSE') © FTSE 2017. 'FTSE®' is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data and no party may rely on any FTSE indices, ratings and/or data underlying data contained in this communication. No further distribution of FTSE Data is permitted without FTSE's express written consent. FTSE does not promote, sponsor or endorse the content of this communication.

 

 

None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

 

Legal Entity Identifier: 213800IYHGJTZJ3MO642

Regulated Information Classification: Annual financial and audit reports

 

 

 

- ends -

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
ACSFKBDDKBKDKBD

a d v e r t i s e m e n t