Athelney Trust Plc
Annual Report 2005

Plain-text annual report

Athelney Trust plc Annual Report for the year ended December 2005 Athelney Trust plc CONTENTS Chairman's Statement Investment and Portfolio Analysis Report of the Directors Report of the Auditors Statement of Total Return Balance Sheet Cash Flow Statement Notes to the Financial Statements Officers and Financial Advisers Page 2 - 3 4 - 5 6 - 7 8 9 10 11 12 - 19 20 1 Athelney Trust plc 2 Queen Anne's Gate Buildings, Dartmouth Street, London, SW1H 9BP Telephone: 020 7222 8989 CHAIRMAN'S STATEMENT I have pleasure in enclosing the audited results for the twelve months to 31 December 2005. The salient points are as follows:- • Audited Net Asset Value ("NAV") is 157.7p per share (31 December 2004 : 136.9p{ as restated}), a rise of 15.2 per cent. • Gross Revenue increased by 8.1 per cent to £86,265 (31 December 2004: £79,822). • On a like-for-like basis both revenue and dividend income rose by 14.8 per cent • Revenue return per ordinary share was 2.7p, an increase of 12.5 per cent ( 31 December 2004: 2.4p). • Recommended dividend for the year of 2.5p per share (2004: 2p). The Market Back in February 2003, the unaudited Athelney NAV was 79.4p, so between that date and 31 December 2005, the company experienced a growth in value of fully 98.6 per cent. Not only that, but shareholders will have benefited from a total increase in dividend of 38.9 per cent (2003 1.8p: 2004 2p: 2005 2.5p). And yet, particularly looking at the year recently finished, there is a long list of problems and worries that markets apparently coped with pretty well. Take, for instance, UK pension funds which may have sold £75bn of equities during the year because of FRS17 and IFRS. Even after that avalanche of selling, 61per cent of the average UK pension fund consists of equities. It really is not too hard to imagine that selling could actually increase in 2006. Overseas companies were undoubtedly massive buyers of UK equities in 2005, but who is to say how long this buying spree is to continue? Surely, relaxed world-wide monetary conditions must have had a good deal to do with strong equity markets over the past three years. Following fifteen consecutive rises in interest rates in America and an unmistakable sign that the Bank of Japan is to tighten up in the coming months from the current position of an overnight call rate of 0.001 per cent, conditions will be a good deal tighter this year. Now this is quite important because hedge funds, amongst others, have been borrowing in Yen to speculate in emerging markets such as the Middle East, South America and Russia. As interest rates rise in Japan, so hedge funds will start to unwind speculative positions in these countries. Here at home, things look quiet, and dare I say it, a little dull. GDP should rise by 2.1 per cent in 2006 and 2.5 per cent in 2007. Wages will probably go up by 3.5 per cent this year and consumer prices should rise by no more than 1.9 per cent (i.e. 0.1 per cent below target) in 2006 and 2007. No, most of the excitement is happening abroad. America ran an astonishing record current account deficit of $805bn in 2005. China’s industrial production was 16.2 per cent higher than a year ago and Russia’s trade surplus rose to $124bn. A basket of commodities rose by nearly 19 per cent in Sterling terms with gold up by 24 per cent (in Dollars) and oil having another good year at around $60 per barrel. What is not helping things is the increased interest being shown in commoditie s by institutions – since few have specialized knowledge of the subject, they tend to buy a basket rather than bet on individual metals, so all commodities rise together. And with China’s GDP increasing by 9.9 per cent in 2005 and India’s by 7.6 per cent, who is to say when commodity prices will return to lower levels? Results Gross Revenue rose by 8.1 per cent to £86,265 compared with the calendar year 2004. However, special dividends for 2005 amounted to just £2,900 (James Latham £1,200, Air Partner £1,700) whereas £7,200 was received from Stanley Gibbons in the previous year. When due allowance is made for this, on a like-for-like basis, Gross Revenue actually rose by 14.8 per cent, a most satisfactory result particularly when combined with the 15.2 per cent rise in NAV. 2 Athelney Trust plc CHAIRMAN'S STATEMENT (CONTINUED) The growth in dividend income is illustrated by the following table:- Companies paying dividends Companies sold (therefore no true comparison) Companies purchased (therefore no true comparison) Increased total dividend in the calendar year Reduced total dividend in the calendar year No change in dividend Number 72 5 24 35 6 2 Corporate Activity Cash takeovers were completed in respect of six holdings: Countryside Properties; Bristol & West Investments; Merrydown; Broadcastle; James Beattie and Belhaven Group . In relation to the offer by Vantis for Numerica , shares were taken rather than cash. At the time of writing, a cash bid for PD Ports has just gone through, Wyevale remains under siege, an MBO is possible at Tenon Group. Lookers has rejected a bid by Pendragon and Brandon Hire is to be bought by a larger competitor. Portfolio Review The following were purchased for the first time or were existing holdings which have been increased in size: Belhaven Group; Blacks Leisure Group; Clinton Cards; Domestic & General; Goldshield Group; MSB International; Phoenix IT; Treatt; Arbuthnot Banking Group; Belgravium Technologies; City Lofts; Group NBT; Idox; Jarvis Securities; Nichols; RWS Holdings; Tenon Group; Urbium; Numerica Group. ICM Computers; Patientline; Rok; Ultimate Leisure and Cardpoint have all been sold and Camellia again been top-sliced. Dividend The Board is pleased to recommend an increased annual dividend of 2.5p per ordinary share for the year ended 31 December 2005 (2004: 2p). This represents an increase of a full 25 per cent over the previous year. Update The unaudited NAV at the 28 February 2006 was 165.9p per share, which means that at the price of 127p on the same day the shares stood at a discount of 23.4 per cent. It is disappointing to note the discount creeping back over the 20 per cent mark again. Outlook Recent weakness in markets as far apart as Dubai and Reykjavik is the result of the Bank of Japan’s decision to tighten monetary conditions for the first time in very many years. Is this a straw in the wind? Probably not, but it is a sign that we must proceed more cautiously this year despite the market’s bright performance in January and February. Fifteen consecutive interest rate rises in America, Europe following suit, despite problems in Italy and elsewhere, maverick nations like Iran and North Korea wanting to flex their muscles and at home, the advent of the first Socialist government since the Seventies, as and when Mr. Brown moves house. None of this is calculated to cheer but at least the housing market has stabilized, UK interest rates should remain mostly unchanged throughout the year and inflation seems to be sleeping soundly. On balance, another steady, decent year for small caps seems likely. Hugo Deschampsneufs Chairman 20 April 2006 3 Athelney Trust plc INVESTMENT AND PORTFOLIO ANALYSIS AT 31 DECEMBER 2005 SECTOR STOCK HOLDING VALUE (£) £ % SECTOR Automobiles and Parts Beverages Construction & Building Materials Diversified Industrials Engineering Machinery Food Processors General Retail Household Goods Insurance Leisure & Hotels Media & Entertainment Real Estate Software & Computer Services Speciality & Other Finance Support Services Pharmaceuticals Transport European Motor Holdings Lookers Nichols Shepherd Neame "A" Ben Bailey Clarke (T) Galliford Try Gibbs & Dandy Latham (James) N.W.F. Group Gooch & Housego Goodwin Severfield-Rowen Slingsby (H.C. ) Treatt Wynnstay Group Black Leisure Group Clinton Cards Flying Brands Mallett SCS Upholstery Stanley Gibbons Wyevale Garden Centres Havelock Europa Domestic & General Group Personal Group Holdings Enterprise Inns International Greetings Landround Media Square City Lofts Group Colliers C.R.E. Mountview Estates Smart (J) & Co. Unite Group Bergravium Technologies Group NBT Idox Pennant International Group Phoenix IT Albemarle & Bond Arbuthnot Banking Group Camellia Charles Taylor Consulting Jarvis Securities Park Group S & U Tenon Group Vantis Brandon Hire Dawson Holdings Enterprise Erinaceous Group Fountains Genus MSB International Penna Consulting RWS Holdings VP Group Waterman Partnership Holdings Watermark Group WSP Group Goldshield Group Air Partner Braemar Seascope Group Clarkson Fisher (James) PD Ports 11,350 7,200 14,000 6,000 6,800 18,000 65,000 10,000 16,000 13,000 18,000 17,000 6,500 4,000 10,500 30,000 6,000 28,500 14,000 12,000 12,000 90,000 7,000 24,000 3,300 22,000 10,000 18,000 5,000 213,179 25,000 16,000 1,925 4,000 10,000 150,000 22,000 165,000 116,000 8,500 20,000 8,818 1,300 8,000 20,000 80,000 8,000 72,500 36,667 20,000 34,000 16,000 13,000 20,000 15,000 56,000 16,000 14,000 17,000 40,000 20,000 23,000 9,000 8,500 20,000 8,000 17,000 25,000 4 36,405 33,084 30,520 73,800 30,838 40,905 58,013 37,250 30,240 84,825 58,950 104,125 62,790 53,900 27,195 68,400 29,730 18,881 25,130 28,020 49,800 81,450 33,775 34,800 26,796 53,570 93,800 76,770 4,425 46,899 20,125 25,120 87,106 27,600 38,000 24,375 25,190 23,513 12,760 22,993 32,900 40,342 84,994 25,300 15,800 11,400 40,200 17,763 79,017 34,700 55,420 62,800 40,138 28,200 53,400 20,160 17,840 38,990 42,500 55,200 25,700 85,100 34,200 53,975 76,600 69,440 64,600 37,375 69,489 2.33% 104,320 3.49% 197,246 84,825 6.61% 2.84% 279,765 9.37% 95,595 3.20% 266,786 34,800 80,366 93,800 8.93% 1.17% 2.69% 3.14% 128,094 4.29% 197,951 6.63% 108,831 3.64% 347,716 11.65% 560,148 34,200 18.76% 1.15% 301,990 10.11% Athelney Trust plc INVESTMENT AND PORTFOLIO ANALYSIS AT 31 DECEMBER 2005 ( CONTINUED) Portfolio Value Net Current Assets Deferred tax TOTAL VALUE Shares in issue Audited NAV £ 2,985,922 £ 151,388 £ (295,142) £ 2,842,168 1,802,802 157.7p 100.00% Portfolio by Sectors 11.12% 4.26% 2.47% 1.15% 18.72% 12.62% 7.77% 2.84% 9.37% 2.29% 7.98% 1.79% 3.14% 3.64% 6.55% 4.29% Portfolio by Listing AIM 34.41% Automobiles and Parts Beverages Construction & Building Materials Diversified Industrials Engineering Machinery Food Processors General Retail Insurance Leisure & Hotels Media & Entertainment Real Estate Software & Computer Services Speciality & Other Finance Support Services Pharmaceuticals Transport FULL AIM OFEX OFEX 2.47% FULL 63.12% 5 REPORT OF THE DIRECTORS OF Athelney Trust plc The directors present their report and audited financial statements of the Company for the year ended 31 December 2005. Principal activity and business review The principal activity of the Company is that of an investment company. The investment objectives of the Company are to achieve long term capital growth while at the same time producing a progressive income return. Investments made by the Company are primarily in the equity securities of both unquoted and quoted UK companies, including smaller companies with a market capitalisation of below £50 million. During the period, the Company followed the normal activities of an investment company. Details of these are given in the Chairman's Statement on pages 2 and 3. Directors and their interests The directors who held office during the year and their interest in the ordinary shares of the Company are stated below:- 31 December 2005 1 January 2005 H.B. Deschampsneufs 108,750 108,750 R.G. Boyle 485,000 485,000 D.A. Horner 15,000 15,000 The above figures include a holding of 58,000 shares (2004 - 58,000) owned by a pension fund in which R.G. Boyle and H.B. Deschampsneufs have an interest and 15,000 shares (2004 - 15,000) owned by a pension fund in which D.A. Horner has an interest. Statement of directors' responsibilities The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and United Kingdom Generally Accepted Accounting Practice. Company law requires the directors to prepare for each financial year which give a true and fair view of the state of affairs of the company and of the result for the company for that period. In preparing those financial statements, the directors are required to : -select suitable accounting policies and then apply them consistently; -make judgements and estimates that are reasonable and prudent; -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 proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In determining how amounts are presented within items in the financial statements , the directors have had regard to the substance of the reported transaction or arrangement, in accordance with generally accepted accounting principles or practice. Corporate governance The Board continues to give careful consideration to the principles of corporate governance as set out in the Combined Code appended to the Listing Rules issued by the Financial Services Authority. However the Company is small and it is the opinion of the directors that not all the provisions of the Code are relevant or desirable for a company of Athelney's size. The Board meets regularly and has ultimate responsibility for the management of the Company, although the Remuneration Committee makes recommendations to the Board relating to the remuneration of the managing director and the non-executive directors. The Audit Committee assists the Board in relation to matters concerning corporate governance and financial reporting. Both Committees, currently comprising H.B. Deschampsneufs and D.A. Horner, meet during the year as required, with the Audit Committee to include external auditors if appropriate. 6 REPORT OF THE DIRECTORS OF Athelney Trust plc (CONTINUED) Results and dividends The return on ordinary revenue activities before dividends for the year is £48,825 (2004: £42,818) as detailed on page 9. It is recommended that a final dividend of 2.5p (2004: 2p) per ordinary share be paid. The retained profit for the year of £12,769,which is before proposed dividends has been added to revenue reserves. Payment of suppliers It is the Company's policy to obtain the best possible terms for all business and, therefore, there is no consistent policy as to the terms used. The Company contracts the terms on which business will take place throughout the year with its suppliers. There were no invoiced trade creditors outstanding at the end of the year, the amounts shown as creditors in the balance sheet comprise expenses and proposed dividends. Auditors In accordance with Section 385 of the Companies Act 1985, a resolution proposing that Clement Keys be re-appointed as auditors of the Company will be put to the annual general meeting. BY ORDER OF THE BOARD J.M. Davies Secretary 2 Queen Anne's Gate Buildings Dartmouth Street LONDON SW1H 9BP 20 April 2006 7 INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF Athelney Trust plc We have audited the financial statements of Athelney Trust plc for the year ended 31 December 2005, set out on pages 9 to 19. These financial statements have been prepared under the accounting policies set out therein. This report is made solely to the company's members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by the law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors The directors' responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of directors' responsibilities. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the Directors' Report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and transactions with the Company is not disclosed. We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. This other information comprises only the Directors' Report, the Chairman's Statement and the Investment and Portfolio Analysis. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes an examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. Opinion In our opinion the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of affairs of the Company as at 31 December 2005 and of the revenue, total return and cash flows for the year then ended and have been properly prepared in accordance with the provisions of the Companies Act 1985. Clement Keys Chartered Accountants Registered Auditors 39 / 40 Calthorpe Road Edgbaston BIRMINGHAM B15 1TS 20 April 2006 8 Athelney Trust plc STATEMENT OF TOTAL RETURN (INCORPORATING THE REVENUE ACCOUNT) FOR THE YEAR ENDED 31 DECEMBER 2005 31 December 2005 31 December 2004 Note Revenue £ Capital £ Restated* Revenue £ Total £ Restated* Capital £ Total £ 8 2 3 3 - 460,306 460,306 - 535,518 535,518 86,265 - 86,265 79,822 - 79,822 (7,266) (21,362) (28,628) (6,810) (19,789) (26,599) (37,753) - (37,753) (38,199) - (38,199) 41,246 438,944 480,190 34,813 515,729 550,542 Profits on investments Income Investment management expenses Other expenses Return on ordinary activities before taxation Taxation 5 7,579 (77,234) (69,655) 8,005 (90,367) (82,362) Return on ordinary activities after taxation 48,825 361,710 410,535 42,818 425,362 468,180 Dividend 7 (36,056) - (36,056) (32,450) - (32,450) Transfer to reserves 12,769 361,710 374,479 10,368 425,362 435,730 Return per ordinary share 6 2.7p 20.1p 22.8p 2.4p 23.6p 26.0p Dividend paid per ordinary share Final dividend 2p 1.8p * Restated on adoption of FRS21 - see note 1.1 The revenue column of this statement is the profit and loss account for the Company. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the above financial years. A statement of movements of reserves is given in note 13. There have been no recognised gains or losses, other than the results for the financial years shown above. The notes on pages 12 to 19 form part of these financial statements. 9 Athelney Trust plc BALANCE SHEET AS AT 31 DECEMBER 2005 Fixed assets Investments Current assets Debtors Cash at bank and in hand Note 8 9 2005 £ Restated* 2004 £ 2,985,922 2,555,581 145,109 40,048 185,157 116,514 61,311 177,825 (21,617) 156,208 Creditors: amounts falling due within one year 10 (33,769) Net current assets 151,388 Total assets less current liabilities 3,137,310 2,711,789 Provisions for liabilities and charges 11 (295,142) (244,100) Net assets 2,842,168 2,467,689 Capital and reserves Called up share capital Share premium account Other reserves - non distributable Capital reserve - realised Capital reserve - unrealised Revenue reserve Shareholders' funds - all equity 12 13 13 13 13 14 450,700 405,605 520,007 1,360,604 105,252 450,700 405,605 389,458 1,129,445 92,481 2,842,168 2,467,689 Net Asset Value per share 157.7p 136.9p * Restated on adoption of FRS21 - see note 1.1 Approved by the board of directors on 20 April 2006. ……………………………….. R.G. Boyle The notes on pages 12 to 19 form part of these financial statements. 10 Athelney Trust plc CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005 2005 2004 £ £ £ £ Net cash inflow from operating activities 3,487 19,170 Servicing of finance Dividends paid (36,056) (32,450) Net cash (outflow) from servicing of finance (36,056) (32,450) Taxation Corporation tax paid Investing activities Purchases of investments Sales of investments Net cash (outflow) from investing activities (Decrease) / increase in cash in the year Reconciliation of operating net revenue to net cash inflow from operating activities Revenue on ordinary activities before taxation (Increase) / decrease in debtors Increase in creditors Management expenses charged to capital Analysis of net debt Cash at bank and in hand (2,017) - (529,075) 542,398 (575,195) 575,193 13,323 (21,263) £ 41,246 (28,595) 12,198 (21,362) 3,487 2004 £ 61,311 (2) (13,282) £ 34,813 (398) 4,544 (19,789) 19,170 Cashflow £ (21,263) 2005 £ 40,048 The notes on pages 12 to 19 form part of these financial statements. 11 Athelney Trust plc NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005 1. Accounting policies 1.1 Basis of Preparation of Financial Statements The financial statements are prepared under the historical cost convention modified to include fixed asset investments at valuation. The financial statements are prepared in accordance with applicable accounting standards and, unless otherwise stated, the provisions of the Statement of Recommended Practice in 'Financial Statements of Investment Trust Companies' (SORP) in effect for this period. Change in accounting policy The company adopted the provisions of FRS 21 'Events after the balance sheet date' during the year by which final dividends proposed by the Board and unpaid at the end of the year are not recognised in the financial statements until they have been approved by the shareholders at the Annual General Meeting. Interim dividends are recognised when they are paid. This represents a change in policy from that of recognising dividends in the year for which they are proposed. The previously published figures at 31 December 2003 and 31 December 2004 have been restated. This has resulted in the dividend balance being reduced by £32,450 and £36,056 respectively with a corresponding decrease in creditors less than one year.These changes have resulted in shareholders funds increasing from £1,999,509 to £2,031,959 in 2003 and £2,431,633 to £2,467,689 in 2004. 1.2 Income Income from investments including taxes deducted at source is recognised as income on the date the dividend is due for payment. UK dividend income is reported net of tax credits in accordance with Financial Reporting Standard 16 'Current Tax'. Interest is dealt with on an accruals basis. 1.3 Expenses Expenses (including VAT) and interest payable are dealt with on an accruals basis and charged through the Revenue Account. 1.4 Investment management expenses Investment management expenses have been allocated 25% to revenue and 75% to capital, in line with the Board's expected long term split of returns, in the form of income and capital gains respectively, from the investment portfolio. 1.5 Investments Listed investments comprise those listed on the Official List of the London Stock Exchange. Profits and losses on sales of investments are taken to realised capital reserve. Any unrealised appreciation or depreciation is taken to unrealised capital reserve. The Company's investments have been valued according to the following rules:- (i) Where bid and offer prices are quoted by a market maker in such securities on the valuation date, investments have been valued on the basis of the middle market price. (ii) Where no spread is available, investments have been valued on the basis of the average of the dealing prices recorded by a market maker for such securities on the valuation date or, in the absence of any dealings on that date, at the average of such dealing prices on the latest practicable day prior to the valuation date. 1.6 Taxation The tax effect of different items of income and expenses is allocated between capital and revenue on the same basis as the particular item to which it relates, using the Company's effective rate of tax for the year. 12 Athelney Trust plc NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005 1. Accounting policies (continued) 1.7 Deferred taxation Deferred taxation is provided in respect of all future obligations to pay additional tax arising as a result of past events. Tax is provided at rates expected to apply in the period in which timing differences reverse based on tax rates and laws substantively enacted at the balance sheet date.Deferred tax assets and liabilities are not discounted. 1.8 Capital reserves Capital reserve- Realised Gains and losses on realisations of fixed asset investments are dealt with in this reserve. Capital reserve- Unrealised Increases and decreases in the valuations of fixed asset investments are dealt with in this reserve. 2. Income Income from investments UK dividend income Bank interest Other income Total income Income from investments UK listed investments AIM investments Other investments 2005 £ 80,987 5,219 59 86,265 £ 54,506 25,365 1,116 80,987 2004 £ 75,922 3,900 - 79,822 £ 52,713 22,153 1,056 75,922 13 Athelney Trust plc NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005 3. Return on ordinary activities before taxation The following amounts (inclusive of VAT) are included within investment management and other expenses:- Directors' remuneration:- - Services as a director - Otherwise in connection with management Auditors' remuneration:- Audit services - Statutory audit - Audit related regulatory reporting 4. Employees Costs in respect of directors:- Wages and salaries Social security costs Costs in respect of administrator:- Wages and salaries Social security costs Total Wages and salaries Social security costs Average number of employees Chairman Investment Administration 2005 £ 8,000 22,000 5,874 752 2005 £ 30,000 2,194 32,194 3,500 134 3,634 33,500 2,328 35,828 No. 1 2 1 4 2004 £ 8,000 20,000 6,580 1,240 2004 £ 28,000 1,957 29,957 - - - 28,000 1,957 29,957 No. 1 2 - 3 14 Athelney Trust plc NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005 5. Taxation (i) The tax charge for the year is based on the return for the year Corporation tax for current year Tax relief on management expenses charged to income 2005 2004 Revenue Capital Total Revenue Capital Total £ - £ £ 18,613 18,613 £ - £ £ 2,062 2,062 (7,579) 7,579 - (8,005) 8,005 - Adjustment in respect of previous years Deferred taxation - - (7,579) - 51,042 77,234 - 51,042 69,655 £ - - (8,005) - 80,300 90,367 - 80,300 82,362 £ (ii) Factors affecting the tax charge for the year The tax charge for the period is lower than the average small company rate of corporation tax in the UK (19 per cent). The differences are explained below: Total return on ordinary activities before tax 480,190 550,542 Total return on ordinary activities multiplied by the average small company rate of corporation tax 19% (2004: 19%) 91,236 104,603 Effects of: UK dividend income not taxable Revaluation of shares not taxable Indexation relief for capital gains Relief for losses brought forward Other Current tax charge for the year 6. Return per ordinary share (15,388) (53,619) (3,361) - (255) 18,613 (14,425) (81,312) (2,138) (4,656) (10) 2,062 The calculation of earnings per share has been performed in accordance with FRS 14 'Earnings per share'. 2005 2004 Attributable return on ordinary activities after taxation £ Revenue £ Capital £ Total £ Revenue £ Capital £ Total 48,825 361,710 410,535 42,818 425,362 468,180 Number of shares 1,802,802 1,802,802 Return per ordinary share 2.7p 20.1p 22.8p 2.4p 23.6p 26.0p 15 Athelney Trust plc NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005 7. Dividend Final dividend in respect of 2004 of 2p (2003 -1.8p) per share. * Restated on adoption of FRS21 - see note 1.1 2005 £ 36,056 Restated* 2004 £ 32,450 A final dividend in respect of 2005 of 2.5p (2004 - 2p) per share amounting to a total of £45,070 (2004 - £36,056) is proposed by the Board. The dividend proposed will not be accounted for until it has been approved at the Annual General Meeting. 8. Investments Movements in year Valuation at beginning of year Purchases at cost Sales - proceeds - realised gains on sales Increase in unrealised appreciation Valuation at end of year Book cost at end of year Unrealised appreciation at the end of the year UK Listed AIM Other investments Gains on investment Realised gains on sales Increase in unrealised appreciation 2004 £ 2,048,785 575,195 (603,917) 107,560 427,958 2,555,581 £ 1,182,036 1,373,545 2,555,581 1,791,814 713,667 50,100 2,555,581 2004 £ 107,560 427,958 535,518 2005 £ 2,555,581 529,075 (559,040) 178,103 282,203 2,985,922 £ 1,306,753 1,679,169 2,985,922 1,884,678 1,027,444 73,800 2,985,922 2005 £ 178,103 282,203 460,306 16 Athelney Trust plc NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005 9. Debtors Amounts falling due within one year: Investment transaction debtors Other debtors 10. Creditors: amounts falling due within one year Corporation tax Social security and other taxes Other creditors Accruals and deferred income * Restated on adoption of FRS21 - see note 1.1 11. Deferred taxation 2005 Provided £ 295,142 295,142 Tax on unrealised gains net of losses Balance at beginning of year Charge to the capital element of the Statement of Total Return Balance at end of year 2005 £ 142,046 3,063 145,109 2005 £ 18,613 3,731 146 11,279 33,769 Not Provided £ - - 2005 £ 244,100 51,042 295,142 2004 £ 112,080 4,434 116,514 Restated* 2004 £ 2,062 3,781 4,921 10,853 21,617 £ - - 2004 Not Provided Provided £ 244,100 244,100 2004 £ 163,800 80,300 244,100 Tax is provided at the latest known rates on all taxable gains net of losses which would arise if investments were sold at the market value included in the balance sheet at the end of the financial year. 17 Athelney Trust plc NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005 12. Called up share capital Authorised 10,000,000 Ordinary shares of 25p each Allotted, called up and fully paid 1,802,802 Ordinary shares of 25p each 13. Reserves Balance at 31 Decmber 2004 as previously reported Adoption of FRS 21 (see note 1) Balance at 1 January 2005 as restated Net gain on realisation of investments Increase in unrealised appreciation Management expenses allocated to capital Taxation Retained profit for the year Share premium account £ 405,605 - 405,605 - - - - - 2005 £ 2004 £ 2,500,000 2,500,000 £ 450,700 2005 Capital reserve realised £ 389,458 - 389,458 178,103 - (21,362) (26,192) - Capital reserve unrealised £ 1,129,445 - 1,129,445 - 282,201 - (51,042) - £ 450,700 Restated* Revenue reserve £ 56,425 36,056 92,481 - - - - 12,771 Balance at end of year 405,605 520,007 1,360,604 105,252 * Restated on adoption of FRS21 - see note 1.1 14. Reconciliation of movement on shareholders' funds 2005 £ 48,825 (36,056) 12,769 361,710 374,479 2,467,689 2,842,168 Restated* 2004 £ 42,818 (32,450) 10,368 425,362 435,730 2,031,959 2,467,689 Retained net revenue for the year after taxation Dividend Total recognised gains for the year Shareholders' funds at beginning of year Shareholders' funds at end of year * Restated on adoption of FRS21 - see note 1.1 18 Athelney Trust plc NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005 15. Risk management, financial assets and liabilities The following information is given in accordance with Financial Reporting Standard 13. Risk management The major risks associated with the Company are market and liquidity risk. The Company has established a framework for managing these risks. The directors have guidelines for the management of investments and financial instruments. Market risk arises from changes in interest rates, valuations awarded to equities, movements in prices and the liquidity of financial instruments. The Company's portfolio is invested in UK securities. Financial assets and liabilities The Company's financial instruments comprise equity investments, cash balances and debtors and creditors that arise directly from its operations, for example, in respect of sales and purchases awaiting settlement. Short term debtors and creditors are excluded from disclosure as allowed by FRS 13. Fixed asset investments (see note 8) are valued at middle market prices where available which equate to their fair values. The fair values of all other assets and liabilities are represented by their carrying values in the balance sheet. 19 Directors: Secretary: Registered Office: Nominated Adviser: Broker: Auditor: Banker: Registrar: Athelney Trust plc OFFICERS AND FINANCIAL ADVISERS H.B. Deschampsneufs (Chairman) R.G. Boyle (Managing Director) D.A. Horner (Non-Executive Director) J.M. Davies 9 Limes Road Beckenham Kent, BR3 6NS 2 Queen Anne's Gate Buildings Dartmouth Street London, SW1H 9BP Noble & Company Limited 76 George Street Edinburgh, EH2 3BU Spiers & Jeffrey Limited 36 Renfield Street Glasgow, G2 1NA Clement Keys 39 /40 Calthorpe Road Edgbaston Birmingham, B15 1TS The Royal Bank of Scotland plc London City Office 62/63 Threadneedle Street London City Office, EC2R 8LA Park Circus Registrars Limited 2nd Floor 144 West George Street Glasgow, G2 2HG CityRoad Communications 42 - 44 Carter Lane London, EC4V 5EA Public Relations Consultants: Company Number: 2933559 20 

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