SUMMARY OF RESULTS
|
|
At 30 June 2018 |
At 30 June 2017 |
Change |
|
Equity shareholders' funds |
17,334,093 |
17,736,777 |
(2.27)% |
|
Number of ordinary shares in issue |
4,772,049 |
4,772,049 |
– |
|
Net asset value (“NAV”) per ordinary share |
363.24p |
371.68p |
(2.27)% |
|
Ordinary share price (mid) |
331.00p |
325.00p |
1.85% |
|
(Discount)/premium to NAV |
(8.88)% |
(12.56)% |
– |
|
|
At 30 June 2018 |
At 30 June 2017 |
|
|
Total return per ordinary share* |
12.27p |
36.31p |
– |
|
Return after taxation per ordinary share |
25.69p |
24.64p |
– |
|
Dividends paid/declared per ordinary share |
20.70p |
20.70p |
– |
CHAIRMAN'S STATEMENT
This statement covers the year to 30 June 2018.
Introduction
Between 30 June 2017 and 30 June 2018 the FTSE All Share Index rose by 5.0%. The FTSE Actuaries UK Conventional Gilts All Stocks Index fell by 0.72% during the same period. The Company's NAV, which has a portfolio invested in both fixed income and equities, was 2.27 % lower within that period. Four dividends amounting to 20.7p per share were declared during the year.
Board Changes
Following earlier undertakings to refresh the Board, a number of changes were made on 6 July 2018. Sir David Thompson, Stephen Cockburn and Peter Allen, who had served on the Board for 13, 27 and 22 years respectively, retired and the Board, on behalf of all Shareholders, takes this opportunity to thank them for their long service. I was appointed, together with Tim Metcalfe, on 6 July 2018. We are both grateful for the continuity, support and expertise that Martin Perrin continues to bring to the Board.
Administrative and Portfolio Changes
As highlighted in the interim report, and following shareholder approval of the continuation vote at the last Annual General Meeting, the Board announced a change of Investment Manager to Fiske plc on 1 February 2018. The Board made a number of other administrative changes with the aim of significantly reducing the Company's ongoing annual expenses. However, the current regulatory environment and your Board's commitment to meet appropriate standards of governance mean that costs will always be subject to upward pressure.
Since the change of Investment Manager there have been a number of changes to the portfolio which are set out more fully in the Investment Manager's Report. You will also see there have been a number of changes to the Twenty Largest Investments.
Auditor
Saffery Champness have served the Company loyally for many years, for which we are grateful. We are now faced with their tenure becoming time-expired. We are pleased to report that we have asked PKF Littlejohn to become the Company's auditor and a resolution to that effect will be proposed at the Annual General Meeting.
Changes to Portfolio
Your new Board asked the Investment Manager to review the portfolio and the assess the Company's ability to meet the current mandate's yield expectations, whilst also carefully appraising the attendant risks in doing so. In order to put the Company on a more sustainable footing, and to give your new Investment Manager the opportunity to grow the assets of the Company, thereby giving your Board the opportunity to grow the size of the Company, we believe that some portfolio repositioning is necessary.
Dividend
In previous years, a relatively sizeable proportion of the dividend has been paid out of capital. Your new Board believes that this is not sustainable in the long term and that the Company must move towards ensuring that any dividend paid to shareholders is covered by the income produced by the assets, after allowing for the fixed costs, in order to give the Company a chance to grow in size. As a result of this change in approach, along with the change in the portfolio yield expectations, it is expected that a lower dividend totalling some 15p1 is likely to be declared throughout the forthcoming year. This will still require a proportion of the dividend to be paid out of capital; however, this will be much lower than in previous years.
The Investment Manager will now seek to invest in equities and loan stocks to achieve a portfolio yield of approximately
5% where this can be achieved without compromising total return.
Portfolio Valuation Changes
As a result of the Board and the Investment Manager's review of the portfolio, a number of changes have been made to the carrying value of those investments which have no market price. This has a resulted in a £234,000 (1.4%) decrease in their valuation, which represents a decrease of 4.9p to the NAV of the Company. The Investment Manager, together with the Company's auditors, believe that these changes to carrying valuations are appropriate as a result of its review of the existing investments.
The Investment Manager's review of the portfolio is set out fully in the Investment Manager's Report.
Outlook and Recommendation
Your Board believes that Shareholders benefit from the diversification provided by the combination of fixed income and equity investments, as well as from the quarterly dividends paid by the Company. When combined with the measures adopted during the last six months and the Board's commitment to growing the size of the Company meaningfully, the Board believes that the Company has the potential to be an attractive investment proposition.