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Personal Assets Tst. (PNL)

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Thursday 06 June, 2019

Personal Assets Tst.

Final Results

RNS Number : 2856B
Personal Assets Trust PLC
06 June 2019
 

To:                   RNS

From:              Personal Assets Trust plc

LEI:                 213800Z7ABM7RLQ41516

Date:               6 June 2019

 

Results for the year ended 30 April 2019

 

The Directors of Personal Assets Trust plc ("PAT") are pleased to announce the Group's results for the year ended 30 April 2019.

 

The key points are as follows:

 

·    PAT is run expressly for private investors. Its investment policy is to protect and increase (in that order) the value of shareholders' funds per share over the long term.

 

·    Over the year to 30 April 2019 PAT's net asset value per share ("NAV") rose by 4.3%. This compares to a fall of 1.4% in the FTSE All-Share Index.  PAT's share price rose by £16.00 during the year and at 30 April 2019 was £408.00. An analysis of performance is provided in the Chairman's Statement and Investment Adviser's Report below.

 

·    Since PAT became independently managed in 1990 its NAV has increased by 614.5% compared to the FTSE All-Share's 290.0% and the RPI's 130.4%.

 

Capital returns to 30 April 2019:

 

 

3 Years

5 Years

10 Years

Since 1990

NAV

10.3%

21.3%

76.3%

614.5%

FTSE All-Share

18.9%

12.4%

87.2%

290.0%

RPI

10.3%

12.7%

36.3%

130.4%

 

·    During the year the Company's shares continued to trade close to NAV. The Company issued 179,842 Ordinary shares.

 

·    During the year, PAT continued to maintain a high level of liquidity. At 30 April 2019, liquidity was 64.0%. This included 21.0% in UK T-Bills, UK cash, overseas cash, and net current liabilities and 43.0% in various classes of non-equity risk assets: 27.8% in US TIPS; 3.8% in US Treasuries; 8.1% in Gold Bullion; and 3.3% in UK Index-Linked Gilts. This compared to holdings as at 30 April 2018 of 26.4% in UK T-Bills, UK cash, overseas cash, and net current liabilities and 35.2% in various classes of non-equity risk assets: 20.0% in US TIPS; 2.7% in US Treasuries; 8.9% in Gold Bullion; and 3.6% in UK Index-Linked Gilts.

 

·    Dividends are paid in July, October, January and April of each year. The first interim dividend of £1.40 per Ordinary share will be paid to shareholders on 12 July 2019. Barring unforeseen circumstances, three further interim dividends of £1.40 per Ordinary share are expected to be paid to shareholders in the year ending 30 April 2020, totalling £5.60 for the year.

 

The Chairman, Hamish Buchan, said:

Personal Assets' objective is simply stated. It is to protect and increase (in that order) the value of shareholders' funds per share (otherwise known as net asset value per share, or "NAV") over the long term. To us this means not just examining performance over an arbitrary period of five or ten years but going right back to 1990, when the Company became self-managed and so began its existence in its present form. Since 30 April 1990 the NAV has risen at an annual compound rate of 7.0% compared to 4.8% for the FTSE All-Share Index and 2.9% for the RPI. (The rise in share price at the higher annual compound rate of 8.4% is because at 30 April 1990 the shares sold at a discount to NAV of 30.3%.)

 

To measure how far Personal Assets succeeds in achieving its objective the Board looks at investment

performance from two angles - the result achieved and, just as important, the degree of risk accepted in achieving it. The result achieved is shown in Key Features on page 1 of the Annual Report while the degree of risk accepted is indicated in the bottom chart on page 10. This shows how over the past nineteen years Personal Assets has been not only less volatile than UK equities in general but also less volatile than any of the investment trusts in the AIC Global Sector, in which we were included until December 2015, and the AIC Flexible Sector, in which we have been included since January 2016. In his Investment Adviser's Report, Sebastian Lyon cautions that significant amounts of fragility and vulnerability lie beneath current levels of equity markets and we are positioned to withstand this.

 

Three years ago I reported that, as a result of the change in the Articles of Association to permit the Company to distribute realised capital profit as dividend, the Board had been able to commit to paying the dividend at the present annual rate of £5.60 per share for the foreseeable future without interfering with the balance and composition of our investment portfolio. In the year to 30 April 2019 the dividend was over 90% covered by earnings but to maintain the level of payment we also drew on capital to the extent of £0.50 per share (based on the number of shares outstanding at the year end).

 

During the year we issued 179,842 shares for a total of £71.6 million. It is the policy of the Board that our shares should at all times be readily realisable by individual holders at as close as possible to their NAV, and it is reassuring to report that since 8 November 1999, 'Discount Freedom Day', when investment trusts were empowered to use capital to buy back shares and hence to control the discount to net assets at which their shares sell, Personal Assets' share price has risen more or less exactly in line with shareholders' funds per share while the number of shares outstanding is now six and a half times higher, having grown from 369,121 at 30 April 2000 to 2,392,275 by 30 April 2019.

 

Last year I described how since 2016 we had diversified and strengthened the Board's composition by the recruitment of Jean Sharp, Iain Ferguson and Paul Read, and I also mentioned that Frank Rushbrook had intimated that he would like to retire after the 2019 AGM on completing ten years' service. Frank has been a hard-working and enthusiastic Director with a special concern for the needs of private shareholders. We are most grateful to him and we shall miss him as a Director, although glad that he remains a shareholder and a friend.

 

Next year we can also look to further diversifying and strengthening of the Board as Robin Angus and I retire after completing 36 and 19 years of service respectively. We will, however, remain closely involved (perhaps through a charitable foundation) in preserving and extending Personal Assets' legacy of commitment to financial education and research as well as making more widely known the benefits for individual investors of investing through investment trusts. As our plans for this develop we shall keep you in touch and hope you will share our enthusiasm for continuing the work which Ian Rushbrook began. The Board has agreed that on my retirement Iain Ferguson will take over as Chairman and I wish him every success when he takes over from me next year.

 

As I wrote last year, continuity and collective memory are extremely important to any Board and especially to one with Personal Assets' long tradition of independent thought and action. With this in mind, Gordon Neilly has agreed to stay on (subject to re-election) as a Director over this period of change specifically in order to provide such continuity. To give maximum scope to new Directors as they begin their duties, Gordon will not be a member of any of the Board Committees.

 

The Investment Adviser, Sebastian Lyon, said:

Over the year to 30 April 2019 the net asset value per share ("NAV") of Personal Assets rose by 4.3% while our comparator, the FTSE All-Share Index ("FTSE"), fell by 1.4%.

 

The twelve months to 30 April 2019 was very much a 'game of two halves' with the UK stock market falling sharply from its peak last May, followed by a rally since the calendar year end. Our aim is to 'preserve and grow' the NAV, in that order, and - as shareholders would expect - the trust's NAV and share price volatility was considerably lower than that of the wider market. We believe conditions will continue to be challenging in a world of prospective low returns from all asset classes.

 

Equity markets today offer an invidious choice to investors: overvalued quality on the one hand and 'cheap' stocks on the other. In the latter category are cyclically or structurally challenged businesses. Earnings from financials, airlines, housebuilders and miners may well be close to cyclical peaks, while structurally challenged businesses are to be avoided as they will likely prove to be wasting assets. More often than not, high yields are an indication of future poor returns, not bargains. With interest rates having remained low for such a prolonged period, dividend growth has been rewarded by share price rises, but many company pay-out ratios are now unsustainable; they are acting as bribes to shareholders, converting capital into income. The temptation of high beta, low quality stocks should be resisted. Our preference remains for companies which invest to sustain good returns and which have a proven history of prudent capital allocation.

 

During the year, portfolio turnover remained modest. Our emphasis has been on cutting out the weeds and allowing the flowers to bloom. We added to a select few existing holdings on weakness including

Franco-Nevada, the gold streaming and royalty company.

 

We are wary of management teams that allocate capital as if it were 'other people's money'. Regrettably, this becomes more common later on in the cycle, when capital becomes all too readily available. We sold Altria after it announced in December 2018 that it would be paying nearly $13bn for a 35% stake in JUUL, the US e-cigarette company. Few financial details of the transaction were provided but it was clear that Altria is paying a multiple of almost 40x 2018 revenue for its minority stake. We believe it will be difficult to generate attractive returns on this investment.

 

More modest holdings in PZ Cussons and Henkel were also sold prior to deteriorating trading, which led to subsequent sharp falls in share prices. We still rate Henkel highly but were concerned that management of its consumer franchise has deteriorated just at a point where the adhesives business is likely to face greater cyclical headwinds.

 

We are at that dangerous stage in the market cycle when too much liquidity in the system has caused share prices to rise without much improvement to earnings, a sign of investor insensitivity to valuation risk. Corporate indebtedness is at record highs. This has brought forward demand and flattered margins but the economic cycle is at its peak, not a trough. To us, the prospective rewards look less than compelling when compared to the risks.

 

Markets have been buoyed recently by the reversal of the short-term, oversold position in December, a more dove-ish tone from the Federal Reserve regarding the outlook for monetary policy and 'travelling hopefully' in the expectation of a resolution for Brexit and US/China trade talks. The stock market has reacted positively to the pause in US interest rate rises but the less emotional and more rational bond market is more reliable and less swayed by short-term sentiment. Bond yields point to a weaker economic outlook.

 

There is a misconception that falling interest rates are good for equities. Cast your mind back to 2002 or 2008 when interest rates were being cut aggressively; those were dreadful years for equity returns. A significant amount of underlying fragility and vulnerability lies beneath current levels of stock markets. In the words of the novelist Ian McEwan, 'the present is the frailest of possible constructs, in which a kaleidoscope of options remains possible'. We agree and are positioned accordingly.

 

For further information contact:

 

Robin Angus

Executive Director

Tel:  0131 538 6601

 

Sebastian Lyon

Investment Adviser

Tel:  0207 499 4030

 

Steven Davidson

Company Secretary

Tel:  0131 538 6603

 

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

 

Group Income Statement

 

 

Year ended 30 April 2019

 

Revenue

Capital

 

 

return

return

Total

 

£'000

£'000

£'000

Investment income

 

 

 

Calculated using the effective interest rate method

3,092

-

3,092

Other investment income

13,088

-

13,088

Other operating income

1,112

-

1,112

 

17,292

-

17,292

 

 

 

 

Gains on investments held at fair value

through profit or loss

-

63,327

63,327

Foreign exchange losses

-

(20,495)

(20,495)

Total income

17,292

42,832

60,124

 

 

 

 

Expenses

(4,477)

(3,815)

(8,292)

Return before taxation

12,815

39,017

51,832

 

 

 

 

Taxation

(1,400)

538

(862)

Return for the year

11,415

39,555

50,970

 

 

 

 

Return per share

£4.97

£17.20

£22.17

 

The "Return for the Year" is also the "Total Comprehensive Income for the Year", as defined in IAS1 (revised), and no separate Statement of Comprehensive Income has been presented.

 

The "Total" column of this statement represents the Group's Income Statement, prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRSs"). 

 

The Revenue and Capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.

 

Return per share is calculated on 2,299,470 (2018: 2,103,529) shares, being the weighted average number in issue (excluding Treasury shares) during the year.

 

All items in the above statement derive from continuing operations.

 

 

 

 

 

 

 

 

Dividend Information

2019

 

2018

Dividends per share

£5.60

 

£5.60

 

 

 

 

Dividends paid

£'000

 

£'000

First interim dividend of £1.40 per share (2018: £1.40 per share)

3,125

 

2,774

Second interim dividend of £1.40 per share (2018: £1.40 per share)

3,176

 

2,907

Third interim dividend of £1.40 per share (2018: £1.40 per share)

3,232

 

2,997

Fourth interim dividend of £1.40 per share (2018: £1.40 per share)

3,317

 

3,067

 

12,850

 

11,745

 

Group Income Statement

 

 

Year ended 30 April 2018

 

Revenue

Capital

 

 

return

return

Total

 

£'000

£'000

£'000

Investment income

 

 

 

Calculated using the effective interest rate method

4,872

-

4,872

Other investment income

10,807

-

10,807

Other operating income

972

-

972

 

16,651

-

16,651

 

 

 

 

Losses on investments held at fair value

through profit or loss

-

(35,911)

(35,911)

Foreign exchange gains

-

14,474

14,474

Total income

16,651

(21,437)

(4,786)

 

 

 

 

Expenses

(4,061)

(3,513)

(7,574)

Return before taxation

12,590

(24,950)

(12,360)

 

 

 

 

Taxation

(1,585)

602

(983)

Return for the year

11,005

(24,348)

(13,343)

 

 

 

 

Return per share

£5.23

(£11.57)

(£6.34)

 

 

 

 

 

 

 

 

 

         

 

 

 

 

Group Statement of Financial Position

 

                                                                          

 

 

 

As at

30 April 2019

 

 

As at

30 April 2018

 

 

 

£'000

 

 

£'000

Non-current assets

 

 

 

 

 

 

Investments held at fair value though profit or loss

 

 

946,459

 

 

825,792

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Receivables

 

 

1,801

 

 

1,616

Cash and cash equivalents

 

 

23,605

 

 

40,763

 

 

 

 

 

 

 

Total assets

 

 

971,865

 

 

868,171

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Financial liabilities held at fair value though profit or loss

 

 

(1,537)

 

 

(7,659)

Payables

 

 

(1,749)

 

 

(1,619)

Total liabilities

 

 

(3,286)

 

 

(9,278)

 

 

 

 

 

 

 

Net assets

 

 

968,579

 

 

858,893

 

 

 

 

 

 

 

Capital and reserves

 

 

 

 

 

 

Ordinary share capital

 

 

29,904

 

 

27,655

Share premium

 

 

657,090

 

 

587,773

Capital redemption reserve

 

 

219

 

 

219

Special reserve

 

 

22,517

 

 

22,517

Capital reserve unrealised

 

 

177,132

 

 

113,830

Distributable reserves

 

 

81,717

 

 

106,899

 

 

 

 

 

 

 

Total equity

 

 

968,579

 

 

858,893

 

Shares in issue at year end

 

 

2,392,275

 

 

2,212,433

 

Net asset value per Ordinary share

 

 

£404.88

 

 

£388.21

 

 

 

 

Company Statement of Financial Position

 

                                                                          

 

 

 

As at

30 April 2019

 

 

As at

30 April 2018

 

 

 

£'000

 

 

£'000

Non-current assets

 

 

 

 

 

 

Investments held at fair value through profit or loss

 

 

947,242

 

 

826,529

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Receivables

 

 

1,748

 

 

1,565

Cash and cash equivalents

 

 

22,792

 

 

39,979

 

 

 

 

 

 

 

Total assets

 

 

971,782

 

 

868,073

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Financial liabilities held at fair value through profit or loss

 

 

(1,537)

 

 

(7,659)

Payables

 

 

(1,666)

 

 

(1,521)

Total liabilities

 

 

(3,203)

 

 

(9,180)

 

 

 

 

 

 

 

Net assets

 

 

968,579

 

 

858,893

 

 

 

 

 

 

 

Capital and reserves

 

 

 

 

 

 

Ordinary share capital

 

 

29,904

 

 

27,655

Share premium

 

 

657,090

 

 

587,773

Capital redemption reserve

 

 

219

 

 

219

Special reserve

 

 

22,517

 

 

22,517

Capital reserve unrealised

 

 

177,315

 

 

113,967

Distributable reserves

 

 

81,534

 

 

106,762

 

 

 

 

 

 

 

Total equity

 

 

968,579

 

 

858,893

 

Shares in issue at year end

 

 

2,392,275

 

 

2,212,433

 

Net asset value per Ordinary share

 

 

£404.88

 

 

£388.21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group and Company Statements of Changes in Equity *

 

 

 

 

 

 

 

Distributable reserves

 

For the year ended

30 April 2019

Ordinary share capital

Share premium

Capital redemption reserve

 

Special reserve

Capital reserve unrealised

Capital reserve realised

Revenue reserve

 

 

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Balance as at 30 April 2018

27,655

587,773

219

22,517

113,830

106,477

422

858,893

Return for the year

-

-

-

-

63,302

(23,747)

11,415

50,970

Ordinary dividends paid

-

-

-

-

-

(1,196)

(11,654)

(12,850)

Issue of Ordinary shares

2,249

69,317

-

-

-

-

-

71,566

Balance as at 30 April 2019

29,904

657,090

219

22,517

177,132

81,534

183

968,579

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributable reserves

 

For the year ended

30 April 2018

Ordinary share capital

Share premium

Capital redemption reserve

 

Special reserve

Capital reserve unrealised

Capital reserve realised

Revenue reserve

 

 

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Balance as at 30 April 2017

24,502

488,444

219

22,517

217,467

27,188

1,162

781,499

Return for the year

-

-

-

-

(103,637)

79,289

11,005

(13,343)

Ordinary dividends paid

-

-

-

-

-

-

(11,745)

(11,745)

Issue of Ordinary shares

3,153

99,484

-

-

-

-

-

102,637

Cost of issue of Ordinary shares

-

(155)

-

-

-

-

-

(155)

Balance as at 30 April 2018

27,655

587,773

219

22,517

113,830

106,477

422

858,893

 

* The Company's reserves are the same as the Group's other than the capital reserve unrealised, which is £177,315,000 (2018: £113,967,000), and the revenue reserve, which is £nil (2018: £285,000). The differences relate to the profit generated by the Company's subsidiary.

 

Share premium. The share premium represents the difference between the nominal value of new Ordinary shares issued and the consideration the Company receives for these shares.

 

Capital redemption reserve. The capital redemption reserve represents the nominal value of Ordinary shares bought back for cancellation since authority to do this was first obtained at a General Meeting in April 1999.

 

Special reserve. The cost of any shares bought back for cancellation is deducted from the special reserve, which was created from the share premium, also following a General Meeting in April 1999.

 

Capital reserve unrealised. Increases and decreases in the valuation of investments held at the year end, unrealised gains and losses on FTSE 100 Future contracts and unrealised exchange differences of a capital nature are accounted for in this reserve.

 

Capital reserve realised. Gains and losses on the realisation of investments, gains and losses on the realisation of FTSE 100 Future contracts, realised exchange differences of a capital nature and returns of capital are accounted for in this reserve.

 

Revenue reserve. Any surplus/deficit arising from the revenue return for the year is taken to/from this reserve.

 

Group Cash Flow Statement

 

 

Year ended

30 April

Year ended

30 April

 

2019

2018

 

£'000

£'000

Cash flows from operating activities

 

 

Return before taxation

51,832

(12,360)

(Gains)/losses on investments including effective yield

(66,419)

31,039

Foreign exchange losses/(gains)

20,495

(14,474)

 

 

 

Operating cash flows before movements in working capital

5,908

4,205

(Increase)/decrease in accrued income, prepayments and other receivables

(773)

556

Increase in other payables

130

133

 

 

 

Net cash from operating activities before taxation

5,265

4,894

 

 

 

Taxation

(274)

(970)

 

 

 

Net cash inflow from operating activities

4,991

3,924

 

 

 

Cash flows from investing activities

 

 

Purchases of investments - equity shares

(15,641)

(47,725)

Purchases of investments - fixed interest and other investments

(745,568)

(882,692)

Disposal of investments - equity shares

43,622

58,497

Disposal of investments - fixed interest and other investments

663,339

749,567

Forward foreign exchange (losses)/gains

(26,384)

32,592

 

 

 

Net cash outflow from investing activities

(80,632)

(89,761)

 

 

 

Cash flows from financing activities

 

 

Equity dividends paid

(12,850)

(11,745)

Issue of Ordinary shares

71,566

103,367

Cost of issue of Ordinary shares

-

(155)

 

 

 

Net cash inflow from financing activities

58,716

91,467

 

 

 

(Decrease)/increase in cash and cash equivalents

(16,925)

5,630

Cash and cash equivalents at the start of the year

40,763

34,926

Effect of exchange rate changes

(233)

207

Cash and cash equivalents at the year end

23,605

40,763

 

 

 

 

 

 

Net cash inflow from operating activities includes the following:

 

 

Dividends received

9,853

9,943

Interest received

3,195

1,534

 

 

 

 

 

 

 

 

 

 

 

Company Cash Flow Statement

 

 

Year ended 30 April

Year ended

30 April

 

2019

2018

 

£'000

£'000

Cash flows from operating activities

 

 

Return before taxation

51,786

(12,460)

(Gains)/losses on investments including effective yield

(66,419)

31,039

Foreign exchange losses/(gains)

20,495

(14,474)

 

 

 

Operating cash flows before movements in working capital

5,862

4,105

(Increase)/decrease in accrued income, prepayments and other receivables

(771)

557

Increase in other payables

145

29

 

 

 

Net cash from operating activities before taxation

5,236

4,691

 

 

 

Taxation

(274)

(970)

 

 

 

Net cash inflow from operating activities

4,962

3,721

 

 

 

Cash flows from investing activities

 

 

Purchases of investments - equity shares

(15,641)

(47,875)

Purchases of investments - fixed interest and other investments

(745,568)

(882,692)

Disposal of investments - equity shares

43,622

58,497

Disposal of investments - fixed interest and other investments

663,339

749,567

Forward foreign exchange (losses)/gains

(26,384)

32,592

 

 

 

Net cash outflow from investing activities

(80,632)

(89,911)

 

 

 

Cash flows from financing activities

 

 

Equity dividends paid

(12,850)

(11,745)

Issue of Ordinary shares

71,566

103,367

Cost of issue of Ordinary shares

-

(155)

 

 

 

Net cash inflow from financing activities

58,716

91,467

 

 

 

(Decrease)/increase in cash and cash equivalents

(16,954)

5,277

Cash and cash equivalents at the start of the year

39,979

34,495

Effect of exchange rate changes

(233)

207

Cash and cash equivalents at the year end

22,792

39,979

 

 

 

 

Net cash inflow from operating activities includes the following:

 

 

Dividends received

9,853

9,943

Interest received

3,195

1,534

 

 

 

 

 

 

 

 

 

 

 

 

Principal Risks and Risk Management

 

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

 

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

 

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

 

Statement of Directors' Responsibilities in respect of the Annual Report

 

In accordance with the Disclosure Guidance and Transparency Rules, each of the Directors confirms that to the best of her or his knowledge:

 

·      the financial statements contained within the Annual Report for the year ended 30 April 2019, of which this statement of results is an extract, have been prepared in accordance with applicable International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the undertakings included in the consolidation taken as a whole; and

 

·      the Strategic Report includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole together with a description of the principal risks and uncertainties that it faces.

 

Going Concern

 

The Directors believe, in the light of the controls and review processes reported in the Report of the Audit Committee on page 31 of the Annual Report and bearing in mind the nature of the Group's business and assets, which are considered to be readily realisable if required, that the Group has adequate resources to continue operating for at least twelve months from the date of approval of the financial statements. For this reason, they continue to adopt the going concern basis in preparing the accounts.

 

Related Party Transactions

 

The Company pays £30,000 per annum for the rental of the Executive Office to Rushbrook & Co LLP, of which Frank Rushbrook is a partner. The notice period on the lease is six months. No amount was outstanding at the year end.

 

Investment advisory services are provided by Troy Asset Management Limited. The investment advisory fee for the year ended 30 April 2019 was £5,869,000 (2018: £5,405,000). An amount of £1,517,125 was outstanding to the Investment Adviser at 30 April 2019 (2018: £1,334,500).

 

Secretarial and administrative services are provided by the Company's wholly owned subsidiary, PATAC. Costs, net of third party income, amounted to £307,000 (2018: £257,000) in respect of these services in the year to 30 April 2019. No amounts were outstanding at the year end.

 

Directors of the Company received fees for their services. An amount of £13,000 was outstanding to the Directors at 30 April 2019 (2018: £25,000). Further details are provided in the Directors' Remuneration Report on pages 26 and 27 of the Annual Report. The Directors' shareholdings are also detailed on pages 22 and 26 of the Annual Report.

 

 

 

Notes:

 

1.         The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (''IFRSs'') and interpretations issued by the International Financial Reporting Standards Interpretations Committee, to the extent that these have been adopted by the European Union.

 

The financial statements have been prepared on a going concern basis.

 

The financial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£'000) except where otherwise indicated.

 

The financial statements have been prepared on the historical cost basis, modified by revaluation of financial assets and financial liabilities held at fair value. The principal accounting policies adopted are set out in pages 15 and 16 of the Annual Report. These have been applied consistently, other than where new policies have been adopted. Where the presentational guidance set out in the Statement of Recommended Practice (the ''SORP'') for investment trusts issued by the Association of Investment Companies (the ''AIC'') in November 2014 and updated in February 2018 is consistent with the requirements of IFRSs, the Directors have sought to prepare the financial statements on a basis compliant with the recommendation of the SORP.

 

Changes in accounting policy and disclosures

 

IFRS 9 'Financial Instruments' replaced IAS 39 'Financial Instruments: Recognition and Measurement'. The adoption of IFRS 9 did not result in any change to the classification or measurement of financial instruments in either the current or prior period. The Company's investments remain classified at fair value through profit or loss.

 

IFRS 15 'Revenue from Contracts with Customers' replaced IAS 18 'Revenue'. The adoption of IFRS 15 did not result in any amendment to the Group's current revenue recognition policy.

 

IFRS 16 'Leases' replaces IAS 17 'Leases' but is not effective for this accounting period. This has not been adopted early and the Group does not consider that the future adoption of this standard, in the form currently available, will have any material impact on the financial statements as presented.

 

2.         During the year the Directors issued 179,842 Ordinary shares for proceeds of £71,566,000.

 

3.         At 30 April 2019 the sterling value of the US Treasury stocks and part of the US equities were protected by a forward currency contract.

 

4.         The Group held the following categories of financial instruments as at 30 April 2019:

 

 

Level 1

£'000

Level 2

£'000

Level 3 £'000

Total

£'000

Investments

946,459

-

783

947,242

Financial liabilities

-

(1,537)

-

(1,537)

Total

946,459

(1,537)

783

945,705

 

The above table provides an analysis of investments based on the fair value hierarchy described below and which reflects the reliability and significance of the information used to measure their fair value. The levels are determined by the lowest (that is, the least reliable or least independently observable) level of impact that is significant to the fair value measurement for the individual investment in its entirety as follows:

 

Level 1 reflects financial instruments quoted in an active market. The Company's investment in Gold Bullion has been included in this level.

 

Level 2 reflects financial instruments the fair value of which is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique the variables of which include only data from observable markets. The Company's forward currency contract has been included in this level as fair value is achieved using the foreign exchange spot rate and forward points which vary depending on the duration of the contract.

 

Level 3 reflects financial instruments the fair value of which is determined in whole or in part using a valuation technique based on assumptions that are not supported by prices from observable market transactions in the same instrument and not based on available observable market data. The Company's subsidiary has been included in this level as its valuation is based on its net assets. A reconciliation of Level 3 fair value measurements of financial assets can be found below.

 (Level 3)

£'000

 

Opening book cost

600

Opening unrealised appreciation

137

Opening valuation

737

Movements in the year:

 

Unrealised profit on the fair value of investments during the year

46

 

Closing valuation at 30 April 2019

783

Closing book cost

600

Closing unrealised appreciation

183

Closing valuation at 30 April 2019

783

 

5.         These are not statutory accounts in terms of Section 434 of the Companies Act 2006.  Full audited accounts for the year to 30 April 2019 will be sent to shareholders in June 2019 and will be available for inspection at 10 St Colme Street, Edinburgh EH3 6AA, the registered office of the Company. The full Annual Report will be available on the Company's website www.patplc.co.uk.

 

6.         The audited accounts for the year ended 30 April 2019 will be lodged with the Registrar of Companies.


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