Athelney Trust plc
Annual Report
for the year ended 31 December 2006
Athelney Trust plc
CONTENTS
Chairman's Statement and Business Review
Investment and Portfolio Analysis
Report of the Directors
Report of the Auditors
Income Statement
Balance Sheet
Cash Flow Statement
Notes to the Financial Statements
Officers and Financial Advisers
Page
2 - 4
5 - 6
7 - 8
9
10
11
12
13 - 20
21
1
Athelney Trust plc
2 Queen Anne’s Gate Buildings, Dartmouth Street, London, SW1H 9BP
Telephone: 020 7222 8989
CHAIRMAN’S STATEMENT AND BUSINESS REVIEW
I have pleasure in enclosing the audited results for the twelve months to 31 December 2006. The salient points
are as follows:
• Audited Net Asset Value (“NAV”) is 189.7p per share (31 December 2005: 157.7p) a rise of 20.3 per
cent.
• Gross Revenue increased by 10.8 per cent to £95,614 (31 December 2005: £86,265).
• On a like-for-like basis revenue increased by 12.5 per cent and dividend income rose by 15 per cent.
• Revenue return per ordinary share was 3.3p, an increase of 22.2 per cent (31 December 2005: 2.7p).
• Recommended dividend for the year of 3.25p per share (2005: 2.5p), a rise of 30 per cent.
Review of 2006
This has been another excellent year for investors, despite all the problems and worries that many had at the start
of the year. Could the world-wide bull market continue for an amazing fourth year, we all asked ourselves in
January? Well, we now know that it could, thanks to no avian flu pandemic, a mild hurricane season, no
successful terrorist attack on the West and no big hedge fund blow-up beyond Amaranth, which had wildly over-
exposed itself to natural gas prices. There were plenty of nasty surprises, though, with Iraq and Palestine moving
to the brink of civil war, the summer conflict between Israel and the Hezbollah, North Korea firing off nuclear
weapons, Iran determined to acquire some of the same and Russia turning into the school-yard bully under its ex-
KGB president. Despite these international factors, the price of crude oil failed to stay high: there were confident
forecasts in January that it could spike at $100 a barrel (from $61) but, in the event, it hit $77 during the Lebanon
conflict and dropped to just over $50 by the turn of the year. I believe that this fall in the oil price was critical to
the health of world equity markets in 2006.
Interest rates rose in the U.S., the U.K., Europe and Japan: as a consequence, the new housing market in America
was badly hit although the impact of two rate rises here at home was less marked, nor did they seem to have
much effect on inflation which finished the year at 3 per cent. Indeed, there was considerable scepticism as to
whether that figure was high enough although I do not seem to remember too many people pointing out that
many consumer items have fallen in price these last six years, such as used cars (an average of 3.6 per cent a
year), IT equipment (20 per cent), photographic stuff (8 per cent), clothing (6 per cent), toys (5 per cent) and new
cars (2 per cent).
One constant and hugely positive factor last year was the tidal wave of global liquidity (the sum of corporate
cash, funds available for investment by financial institutions and consumers' bank balances) which helped drive
equities, bonds and gilts to ever higher levels. Investors' attitude to risk changed as well: the spread between
emerging market bonds, corporate debt and U.S. Treasuries narrowed to all-time lows in December. The
reason? Too many investors moving into ever-riskier areas of the market as returns in their traditional hunting
grounds were squeezed.
Commodities on average fell by 15 per cent in 2006 but most other things did well: China was the top-
performing equity market (up by 138.4 per cent in Dollar terms), followed by Venezuela (99 per cent), Russia
(70.7 per cent) and India (51.3 per cent). Turkey, on the other hand, fell by 5.6 per cent and Saudi Arabia by a
striking 52.5 per cent. In the U.K., the FTSE 100 Index rose by a rather sedate 11 per cent whereas small caps.,
typically, were 17-18 per cent higher over the year.
With an estimated $300bn in 'dry powder' (funds available for investment to you and I), private equity had a
major effect on 2006 and will again this year. At its crudest, a private equity deal is no more than an old-
fashioned asset-strip (and paying themselves a huge dividend) and gearing up the balance sheet (and paying
themselves another huge dividend). The aim is to 'strip and flip' in three years by selling the husk onto gullible
2
Athelney Trust plc
CHAIRMAN’S STATEMENT AND BUSINESS REVIEW
(CONTINUED)
investors. As gearing ratios rise higher and higher, and the asking price of suitable targets increases steadily, the
risks of doing this type of business are enough to make one sleep uneasily in one's bed.
Hedge funds are private pools of capital that are lightly regulated, often borrow heavily to enhance returns and
are sometimes paid enormous performance fees to undertake quite simple tasks, such as borrowing at very low
rates of interest in Yen or Swiss Francs and lending at high rates in Australian or New Zealand Dollars for
instance. Other strategies involve equities, bonds, distressed debt and so on. If 20 per cent of trading in equities
on the New York Stock Exchange and 30 per cent in London is accounted for by hedge funds, as has been
estimated, then I think that it is very natural to worry about this opaque area of the fund management business.
Yet another area of concern is the new issue market in London. The collapse of the London-listed internet
gaming shares following the Senate's effective ban on their U.S. activities came just months after the
controversial flotation of Rosneft. This Russian oil giant's prospectus included a 26-page risk statement which
acknowledged allegations that its assets were obtained via a 'conspiracy.' AIM, the LSE's junior market, attracted
companies as far apart as Silicon Valley and China but more than a handful, in my opinion, and particularly in
mining, oil and gas, looked to be poorly put together with low governance standards and speculative business
plans. The continued survival of such companies should not be taken for granted.
Proponents of private equity, hedge funds and new issues will no doubt think that the above comments are, to say
the least, unkind. Nevertheless, I believe that all three should be watched extremely carefully in the coming year
and beyond by all investors, large and small.
Am I the only one to be worried about the flood of take-overs of major British companies and the lack of
reciprocity when our companies want to expand overseas? I suspect that I am. As the year finished (I will use
the old names to remind you just how important they are), British Oxygen Company, British Airports Authority,
Associated British Ports and Pilkington Brothers have all been absorbed by overseas buyers, British Steel,
Scottish Power and Gallagher were headed in the same direction and even the London Stock Exchange was under
attack by American rival NASDAQ. For good or ill, take-overs were a significant factor in 2006 and are likely to
be so again this year. As the market in high quality equities continued to shrink, someone invented the word 'de-
equitisation' when describing the short-term beneficial effect of take-overs and cash buy-backs on the remaining
stock of equities.
Finally under this sub-heading, it is interesting to read that India, after years cast as China’s underperforming
neighbour, is now in hot pursuit. Over the past year, the Indian economy has grown by an impressive 9.2 per
cent, not far behind China’s 10.4 per cent.
Results
Gross Revenue increased 10.8 per cent compared to 2005. A breakdown of the companies paying dividends is
given below:
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
82
9
17
44
7
5
3
Athelney Trust plc
CHAIRMAN’S STATEMENT AND BUSINESS REVIEW
(CONTINUED)
Corporate Activity
Six of our companies were taken over in 2006: three were reported at the half-way stage, namely PD Ports,
Brandon Hire and Wyvale Garden Centres. In the second half, cash offers were accepted in respect of Richmond
Foods (a 24 per cent profit on book value), MSB International (60.6 per cent) and Biotrace International (44.6
per cent).
Portfolio Review
A total of fifteen holdings were purchased for the first time or were existing holdings which were increased in the
six months to 30 June; in the second half, the following investments were purchased: Arden Partners, Dowgate
Capital, Broker Network Holdings, Johnson Service Group, Somero Enterprises, Hitachi Capital (UK),
Macfarlane Group, XP Power, City of London Investment Group, Speymill Group and Tristel. Five investments
were sold, all in the first half.
Dividend
The Board is pleased to recommend an increased annual dividend of 3.25p per ordinary share for the year ended
31 December 2006 (2005: 2.5p). This represents an increase of 30 per cent over the previous year. Subject to
shareholder approval at the Annual General Meeting on 23 May 2007, the dividend will be paid on 25 May 2007
to shareholders on the register on 27 April 2007.
Update
The unaudited NAV at 28 February 2007 was 192.6p per share, whereas the share price stood at 190p on the
same date. Further updates can be found on www.chelvertonam.com.
Outlook
I have already signposted my worries about hedge funds, private equity and the new issue market: other concerns
include the possible trend in interest rates (particularly M. Trichet's propensity to push up rates in
Euroland against all evidence of static/falling output in France, Italy and elsewhere). Mr. Greenspan, the former
Chairman of the Federal Reserve Bank, has taken to musing in public about the likelihood (one chance in three,
he believes) of America sliding into recession - certainly, the housing market looks to be in a dreadful mess in
some states. Not just that, but so-called trailer-park lending is now throwing up huge bad debts. Having said all
that, I remain positive on the long-term prospects of small caps. provided one stays away from the high
risk sectors. Selected small caps. offer good value, rising dividends, strong balance sheets and are targets for
larger competitors and financial buyers.
Donald Rumsfeld, the then U.S. Defense Secretary said, 'I would not say that the future is necessarily less
predictable than the past. I think that the past was not predictable when it started.' However opaque prospects
seem in the short-term, I am absolutely convinced that each and every investor should hold a strong portfolio of
small caps. for long-term growth and a rising income.
Hugo Deschampsneufs
Chairman
2 April 2007
4
Athelney Trust plc
INVESTMENT AND PORTFOLIO ANALYSIS AT 31 DECEMBER 2006
SECTOR
STOCK
HOLDING
VALUE (£)
£
%
SECTOR
Construction & Building Materials
Drinks
Electronic & Electrical Equipment
Engineering
Finance
Food
Healthcare
Insurance
Media
Real Estate
Retail
Support Services
Ben Bailey
Clarke (T)
Galliford Try
Gibbs & Dandy
Latham (James)
Enterprise Inns
Nichols
Shepherd Neame "A"
XP Power
Acertec
Gooch & Housego
Goodwin
Severfield-Rowen
Slingsby (H.C. )
Albemarle & Bond
Arbuthnot Banking Group
Arden Partners
Camellia
Charles Taylor Consulting
City of London Investment Group
Corporate Synergy Group
Davenham Group
Dowgate Capital
Hitachi Capital (UK)
Jarvis Securities
Park Group
S & U
Tenon Group
Vantis
NWF Group
Treatt
Wynnstay Group
Tristel
Domestic & General
Personal Group Holdings
Chime Communications
Huntsworth
International Greetings
Media Square
City Lofts Group
Colliers C.R.E.
Erinaceous Group
Mountview Estates
Smart (J) & Co.
Unite Group
Blacks Leisure Group
European Motor Holdings
Flying Brands
Havelock Europe
Lookers
Mallett
SCS Upholstery
Stanley Gibbons
Broker Network Holdings
Dawson Holdings
Enterprise
Genus
Johnson Service Group
Litho Supplies
Macfarlane Group
RWS Holdings
Somero Enterprises
Speymill Group
VP Group
Waterman Group
WSP Group
6,800
18,000
35,000
10,000
16,000
9,000
16,500
5,400
8,000
20,000
15,000
12,000
5,000
4,000
20,000
10,000
18,000
1,200
8,000
17,000
100,000
10,000
4,000,000
16,000
20,000
80,000
8,000
50,000
36,667
12,000
10,500
30,000
71,500
3,300
22,000
85,000
35,000
18,000
213,179
35,000
17,400
13,000
1,750
4,000
7,426
6,000
7,160
15,000
24,000
30,000
12,000
10,000
70,000
14,000
34,000
16,000
15,000
8,000
50,500
100,000
14,000
27,550
54,000
17,000
40,000
20,000
5
209,892
5.66%
253,341
32,400
6.84%
0.87%
304,950
8.23%
616,801
16.64%
206,700
32,175
5.58%
0.87%
92,147
2.49%
193,995
5.23%
301,334
8.13%
43,044
35,685
56,963
39,000
35,200
121,770
40,095
91,476
32,400
36,600
59,250
92,400
68,700
48,000
45,000
54,000
32,760
108,000
31,060
36,550
24,500
33,000
23,200
40,680
18,600
14,400
41,200
24,750
89,101
105,000
33,600
68,100
32,175
40,887
51,260
46,325
34,563
77,400
35,707
37,800
33,060
44,850
116,375
29,000
40,249
23,850
34,816
45,000
37,920
51,900
29,760
51,000
119,000
393,246
10.61%
35,000
35,445
86,720
79,575
27,960
29,290
30,000
42,700
35,815
33,480
53,210
68,000
114,200
671,395
18.11%
Athelney Trust plc
INVESTMENT AND PORTFOLIO ANALYSIS AT 31 DECEMBER 2006
( CONTINUED)
SECTOR
STOCK
HOLDING
VALUE (£)
£
%
SECTOR
Technology
Transport
AT Communications Group
Belgravium Technologies
Group NBT
Pennant International
Phoenix IT
Air Partner
Braemar Seascope
Clarkson
Fisher (James)
Portfolio Value
Net Current Assets
Deferred tax
TOTAL VALUE
Shares in issue
Audited NAV
50,000
200,000
19,000
116,000
8,500
7,000
2,000
7,000
12,500
18,500
27,000
38,950
22,040
25,904
55,650
78,800
56,735
74,438
£
£
£
£
3,706,392
87,292
(374,390)
3,419,294
1,802,802
189.7p
132,394
3.57%
265,623
7.17%
100.00%
Construction & Building Materials
Drinks
Electronic & Electrical Equipment
Engineering
Finance
Food
Healthcare
Insurance
Media
Real Estate
Retail
Support Services
Technology
Transport
FULL
AIM
PLUS
PLUS
2.47%
Portfolio
by Sectors
7.17%
5.66%
3.57%
18.11%
10.61%
6.84%
0.87%
8.23%
16.64%
8.13%
5.58%
5.23%
2.49% 0.87%
Portfolio
by Listing
AIM
40.29%
FULL
57.24%
6
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 2006.
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 and Business Review on pages 2 to 4.
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 2006 1 January 2006
H.B. Deschampsneufs 69,913 108,750
R.G. Boyle 448,970 485,000
D.A. Horner 20,000 20,000
H.B. Deschampsneufs' interest includes 19,163 shares held in his Self-Invested Personal Pension. R.G. Boyle's interest
includes 16,970 shares held in his Self-Invested Personal Pension. H.B. Deschampsneufs' and R.G. Boyle's previous
interest included a holding of 58,000 shares owned by a pension fund in which they both had an interest. D.A. Horner's
interest includes 20,000 shares (2005 - 20,000) 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 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 United Kingdom Generally Accepted Accounting
Practice ( United Kingdom Accounting Standards and applicable law).The financial statements are required by law to 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 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.
So far as each of the directors is aware at the time the report is approved :
there is no relevant audit information of which the auditors are unaware, and the directors have taken all steps that they
ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware
of that information.
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.
7
REPORT OF THE DIRECTORS OF
Athelney Trust plc
(CONTINUED)
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.
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.
Results and dividends
The return on ordinary revenue activities before dividends for the year is £60,322 (2005: £48,825) as detailed on page 10.
It is recommended that a final dividend of 3.25p (2005: 2.5p) per ordinary share be paid.
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 2 April 2007
8
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 2006, which comprise the
Income Statement, the Balance Sheet, the Cashflow Statement and the related notes. 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 whether in our opinion the information given in the Directors'
Report is consistent with the financial statements.This information includes specific information presented in the Chairman's
Statement that is cross referred from the Business Review section of the Directors' Report. In addition we report to you if, in our
opinion 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 the information specified by law regarding directors' remuneration and other transactions 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
In forming our opinion we also evaluated the overall
misstatement, whether caused by fraud or other irregularity or error.
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 2006 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 and
the information given in the Directors' Report is consistent with the financial statements.
Clement Keys
Chartered Accountants
Registered Auditors
39 / 40 Calthorpe Road
Edgbaston
BIRMINGHAM
B15 1TS 2 April 2007
9
Athelney Trust plc
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2006
31 December 2006
31 December 2005
Note
Revenue
£
Capital
£
Total
£
Revenue
£
Capital
£
Total
£
8
2
3
3
-
708,480
708,480
-
460,306
460,306
95,615
-
95,615
86,265
-
86,265
(8,216)
(24,164)
(32,380)
(7,266)
(21,362)
(28,628)
(35,355)
-
(35,355)
(37,753)
-
(37,753)
52,044
684,316
736,360
41,246
438,944
480,190
Profits on investments
Income
Investment management expenses
Other expenses
Return on ordinary
activities before taxation
Taxation
5
8,278
(122,442)
(114,164)
7,579
(77,234)
(69,655)
Return on ordinary
activities after taxation
13
60,322
561,874
622,196
48,825
361,710
410,535
Return per ordinary share
6
3.3p
31.2p
34.5p
2.7p
20.1p
22.8p
Dividend per ordinary share
paid during the year
2.5p
2p
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 13 to 20 form part of these financial statements.
10
Athelney Trust plc
BALANCE SHEET AS AT 31 DECEMBER 2006
Fixed assets
Investments
Current assets
Debtors
Cash at bank and in hand
Note
8
9
2006
£
2005
£
3,706,392
2,985,922
105,603
32,486
138,089
145,109
40,048
185,157
(33,769)
151,388
Creditors: amounts falling due within one year
10
(50,797)
Net current assets
87,292
Total assets less current liabilities
3,793,684
3,137,310
Provisions for liabilities and charges
11
(374,390)
(295,142)
Net assets
3,419,294
2,842,168
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
Net Asset Value per share
12
13
13
13
13
14
16
450,700
405,605
719,086
1,723,399
120,504
450,700
405,605
520,007
1,360,604
105,252
3,419,294
2,842,168
189.7p
157.7p
Approved by the board of directors on 2 April 2007
………………………………..
R.G. Boyle
The notes on pages 13 to 20 form part of these financial statements.
11
Athelney Trust plc
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2006
2006
2005
£
£
£
£
Net cash inflow from operating activities
68,111
3,487
Servicing of finance
Dividends paid
(45,070)
(36,056)
Net cash (outflow) from servicing of finance
(45,070)
(36,056)
Taxation
Corporation tax paid
Investing activities
Purchases of investments
Sales of investments
Net cash (outflow)/inflow from investing
activities
Decrease 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
(18,613)
(2,017)
(1,103,978)
1,091,988
(529,075)
542,398
(11,990)
(7,562)
£
52,044
39,506
725
(24,164)
68,111
2005
£
40,048
13,323
(21,263)
£
41,246
(28,595)
12,198
(21,362)
3,487
Cashflow
£
(7,562)
2006
£
32,486
The notes on pages 13 to 20 form part of these financial statements.
12
Athelney Trust plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
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 25 'Financial Instruments: Disclosure and Presentation' and FRS 26
'Financial Instruments:Recognition and Measurement' during the year ended 31 December 2006. The effect of this is to
reduce the investment valuations from a mid-market price to a fair value price being market bid price.The impact of
valuing the portfolio at market bid price as at 31 December 2005 would have resulted in a downward adjustment of
£74,648, reducing the NAV at that date to 140.2p (previously stated 143.6p). Under the transitional provisions of FRS
26, the comparative figures for 2005 have not been restated.
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.
Investments have been classified as 'fair value through profit and loss' upon initial recognition.
Subsequent to initial recognition, investments are measured at fair value with changes in fair value recognised in the
Income Statement.
Securities of companies quoted on a recognised stock exchange are valued by reference to their quoted bid prices at the
close of the year.
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.
13
Athelney Trust plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
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
UK dividend income
UK listed investments
AIM investments
Other investments
2006
£
91,470
4,145
-
95,615
£
57,800
32,566
1,104
91,470
2005
£
80,987
5,219
59
86,265
£
54,506
25,365
1,116
80,987
14
Athelney Trust plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
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
Further assurance services
-advice on accounting matters
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
2006
£
9,000
25,000
6,921
881
1,350
2006
£
34,000
2,399
36,399
7,000
253
7,253
41,000
2,652
43,652
No.
1
2
1
4
15
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
Athelney Trust plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
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
2006
2005
Revenue
Capital
Total
Revenue
Capital
Total
£
-
£
£
34,916
34,916
£
-
£
£
18,613
18,613
(8,278)
8,278
-
(7,579)
7,579
-
Adjustment in respect of previous years
Deferred taxation
-
-
-
79,248
-
79,248
-
-
-
51,042
-
51,042
(8,278)
122,442
114,164
(7,579)
77,234
69,655
(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
2006
£
736,360
2005
£
480,190
Total return on ordinary activities multiplied by the average small
company rate of corporation tax 19% (2005: 19%)
108,472
91,236
Effects of:
UK dividend income not taxable
Revaluation of shares not taxable
Indexation relief for capital gains
Other
Current tax charge for the year
6.
Return per ordinary share
(17,379)
(52,556)
(3,621)
-
34,916
(15,388)
(53,619)
(3,361)
(255)
18,613
The calculation of earnings per share has been performed in accordance with FRS 22
'Earnings per share'.
2006
2005
Attributable return on
ordinary activities after taxation
£
Revenue
£
Capital
£
Total
£
Revenue
£
Capital
£
Total
60,322
561,874
622,196
48,825
361,710
410,535
Number of shares
1,802,802
1,802,802
Return per ordinary share
3.3p
31.2p
34.5p
2.7p
20.1p
22.8p
16
Athelney Trust plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
7. Dividend
Final dividend in respect of 2005 of
2.5p (2004 - 2.0p) per share.
2006
£
45,070
2005
£
36,056
A final dividend in respect of 2006 of 3.25p (2005 - 2.5p) per share amounting to a total of £58,591
(2005 - £45,070) 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
PLUS
Gains on investment
Realised gains on sales
Increase in unrealised appreciation
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
2006
£
2,985,922
1,103,978
(1,091,988)
266,437
442,043
3,706,392
£
1,587,384
2,119,008
3,706,392
2,121,748
1,493,168
91,476
3,706,392
2006
£
266,437
442,043
708,480
17
Athelney Trust plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
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
11. Deferred taxation
2006
Provided
£
374,390
374,390
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
2006
£
103,452
2,151
105,603
2006
£
34,916
5,649
148
10,084
50,797
Not
Provided
£
-
-
2006
£
295,142
79,248
374,390
2005
£
142,046
3,063
145,109
2005
£
18,613
3,731
146
11,279
33,769
£
-
-
2005
Not
Provided
Provided
£
295,142
295,142
2005
£
244,100
51,042
295,142
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.
18
Athelney Trust plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
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 1 January 2006
Net gain on realisation of investments
Increase in unrealised appreciation
Management expenses allocated to capital
Taxation
Profit for the year
Dividend paid in year
2006
£
2005
£
2,500,000
2,500,000
£
450,700
Share
premium
account
£
405,605
-
-
-
-
-
-
2006
Capital
reserve
realised
£
520,007
266,437
-
(24,164)
(43,194)
-
-
Capital
reserve
unrealised
£
1,360,604
-
442,043
-
(79,248)
-
-
£
450,700
Revenue
reserve
£
105,252
-
-
-
-
60,322
(45,070)
Balance at end of year
405,605
719,086
1,723,399
120,504
14. Reconciliation of movement on shareholders' funds
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
2006
£
60,322
(45,070)
15,252
561,874
577,126
2,842,168
3,419,294
2005
£
48,825
(36,056)
12,769
361,710
374,479
2,467,689
2,842,168
19
Athelney Trust plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
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 market bid 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.
16. Net asset value per share
The net asset value per share is based on net assets of £3,419,294 (2005:£2,842,168) divided by 1,802,802
(2005 :1,802,802)ordinary shares in issue.
Net asset value
2006
189.7p
2005
157.7p
20
Athelney Trust plc
OFFICERS AND FINANCIAL ADVISERS
H.B. Deschampsneufs (Chairman)
R.G. Boyle (Managing Director) Email: robin171@btinternet.com
D.A. Horner (Non-Executive Director)
J. Girdlestone F.C.A.
Waterside Court
Falmouth Road
Penryn
Cornwall, TR10 8AW
Email: john@girdlestone.org.uk
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
Speirs & 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
Share Registrars Limited
Craven House
West Street
Farnham
Surrey, GU9 7EN
CityRoad Communications
42 - 44 Carter Lane
London, EC4V 5EA
Directors:
Administrator:
Secretary:
Registered Office:
Nominated Adviser:
Stockbroker:
Auditor:
Banker:
Registrar:
Public Relations Consultants:
Company Number:
2933559
21