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Athelney Trust plc | Annual Report 2020 Investment Objective and Policy
Directors of the Company
Strategic Report including:
Chairman’s Statement and Business Review
Fund Manager’s Review
Investment and Portfolio Analysis
Portfolio Breakdown by Sector and by Index
Section 172(1) Statement
Other Statutory Information
Corporate Governance Statement
Report of the Directors
Statement of Directors’ Responsibilities
Directors’ Remuneration Report
Independent Auditor’s Report
Income Statement
Statement of Changes in Equity
Statement of Financial Position
Statement of Cash Flows
Notes to the Financial Statements
Officers and Financial Advisers
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2
4
6
9
10
11
12
14
18
20
21
24
28
29
30
31
32
39
Contents
Annual Report for the year ended
31 December 2020
Company number 02933559
Athelney Trust
Waterside Court, Falmouth Road
Penryn, Cornwall TR10 8AW
Investment Objective
The investment objective of the Trust is to provide long-term growth in dividends and
capital, with the risks inherent in small cap investment minimised through a spread of
holdings in quality small cap companies that operate in various industries and sectors. The
Fund Manager also considers that it is important to maintain a progressive dividend record.
Investment Policy
The assets of the Trust are allocated predominantly to companies with either a full
listing on the London Stock Exchange or a trading facility on AIM or AQSE. The assets
of the Trust have been allocated in two main ways: first, to the shares of those
companies which have grown steadily over the years in terms of profits and dividends
but, despite this progress are undervalued by the market when compared to future
earnings and dividends; second, those companies whose shares are undervalued by
the market when compared with the value of land, buildings, other assets or cash on
their balance sheet.
1 | Athelney Trust plc | Annual Report 2020
Directors of the Company
Frank Ashton
Non-Executive Chairman
Dr Emmanuel Clive Pohl AM
Managing Director
independent management consultant. After
Frank Ashton, aged 59, is a highly experienced senior manager
leaving
and
Cambridge University with a Natural Sciences degree
(Metallurgy & Materials Science), he spent much of his career
providing independent management advice to companies in a
spent at
wide variety of
PricewaterhouseCoopers
(Operational Due
Diligence) and 5 years working in Strategy and M&A for
Cummins Inc, he has a proven track record in shareholder value
creation and governance, in providing strategic and operational
advice to both public and private companies in Europe and USA,
as well as working at a policy level for Government entities.
sectors. With 15 years
and KPMG
Manny Pohl, aged 67, is the Chairman and CEO of investment
house EC Pohl & Co which he founded in June 2012 and has led
through its evolution into today’s independent, highly acclaimed
Australian fund manager. Manny holds engineering and MBA
degrees from the University of Witwatersand and a doctorate in
Business Administration (Economics) from Potchefstroom
University.
Manny has over 30 years of investment experience, initially as
head of research for leading South African broking firm, Davis
Borkum Hare, followed by Westpac Investment Management in
Australia after he emigrated to Australia in 1994. Manny
founded Hyperion Asset Management in 1996 and left in 2012.
He has served on the Boards of several major corporations in his
native South Africa, the UK and his adopted home Australia. In
2019 Manny was recognised in the Queen’s Birthday honours
list for significant service to the finance sector, and to the
community.
2 | Athelney Trust plc | Annual Report 2020
Directors of the Company
Continued
Simon Moore
Non-executive Director
Simon Moore, aged 59, is a consultant Senior Investment
Analyst. He has been an investment trust analyst since 1994 and
has worked with several stockbrokers in the City of London
including Williams de Broe, Teather & Greenwood and Collins
Stewart. He was also Senior Investment Manager at Seven
Investment Management and Head of Research at Tilney
Bestinvest and Senior Investment Analyst at EQ Investors. Simon
is a long-standing member of two important committees at the
Association of Investment Companies: the Statistics committee
and the Property and Infrastructure Forum. In 2013 and 2014
Simon was chosen as one of the Citywire Wealth Manager Top
100 most influential people in UK private client fund selection.
Simon is a scientist by training and has worked at two start up
UK biotechnology companies, before passing on his knowledge
and passion as a science tutor for the Open University. He has a
in
Biochemistry BSc from Imperial College, and an MSc
Computer Modelling of molecules from Birkbeck College. He is
a member of the UK Society of Investment Professionals and the
CFA institute. During 2020 he was appointed as a Non-Executive
Director of Home REIT Plc.
3 | Athelney Trust plc | Annual Report 2020
Strategic Report
Chairman’s Statement and Business Review
An Independent Board
The Directors in place at the time of signing these accounts are:
Myself, Frank Ashton – Non-Executive Chairman
Simon Moore – Non-Executive Director, Chair of Audit
Committee, Chair of Remuneration Committee
Dr Manny Pohl - Managing Director, Fund Manager
We currently have three directors who together make up an
independent Board under the AIC Code of Governance 2020. I have
no current or prior connection with any major shareholder of the
Company and maintain I am an independent Chairman. The Board
is also agreed that Simon Moore was independent at 31 December
2020.
Capital Gains
During the year the Company realised capital profits before
expenses arising on the sale of investments in the sum of £223,957
(2019: £262,480).
Portfolio Review
Holdings Purchased
Holdings of Clinigen and Yougov were purchased for the first time.
Additional holdings of 4imprint, Abcam, AEW UK, Begbies Traynor,
Churchill China, Clarke (T), Fevertree, Homeserve, Jarvis Securities, JD
Sport, Lok’n Store, Rightmove, Smart Metering were also acquired.
Holdings Sold or Trimmed
Andrews Sykes, Biffa, Boohoo, Camellia, Costain, Custodian REIT,
Greencore, Hill & Smith, Marstons, Mountview Estates, Picton
Property, Randall & Quillter, Regional REIT, Vianet, Vitec, VP,
Wilmington.
Corporate Activity
The holding of Hansteen was subject to a Tender Offer during the
year at a capital profit of 15%.
Dividend
In line with the majority of investment trusts and after consulting
shareholders, the board decided the Trust should pay a dividend
more frequently than once a year. During the year the Company
paid its first interim dividend of 1.7p on 25 September 2020.
The Board is very pleased to recommend a final dividend of 7.7p
per ordinary share making the total dividend this year 9.4p (2019:
9.3p). This represents an increase of 1% over the previous year.
Subject to shareholder approval at the Annual General Meeting on
30 March 2021, the dividend will be paid on 6 April 2021 to
shareholders on the register on 12 March 2021.
Dear Shareholder
I am pleased to present the Annual Financial Report for the year
to 31 December 2020.
The Strategic Report section of this Annual Report has been
prepared to help Shareholders understand how the Company
operates and assess its performance.
(the
‘Trust’)
‘Company’ or
Overview
Athelney Trust plc
faced
unprecedented market conditions resulting from the global
COVID-19 pandemic declared in March, subsequent disruption
life, business and the economy from three national
to
lockdowns, and vaccine announcements in November and
December. The company performed well in this context, with
unusually large market swings and uncertainty leading to
increased share price volatility. The key performance points are
as follows:
At 31 December 2020, audited Net Asset Value (NAV)
was 255.3p per share (2019: 266.9p), a decrease of
4.3% over the year as compared to a 6.4% decline in
the FTSE 250 and a 14.3% decline in the FTSE 100.
The Trust’s investment performance over 12 months as
measured by NAV total return, which is the change in
NAV plus the dividend paid, was -0.22% (2019: 22.2%).
Long term performance represented by the Trust’s
average 10-year total shareholder return of +112%
lagged the FTSE 100 (+119%) and lagged the FTSE 250
(+194%).
The 12-month revenue return per ordinary share was
5.9p (2019: 9.1p), a decrease of 35%.
The first interim dividend of 1.7p per share was paid on
25 September 2020.
Your Board recommend a final dividend of 7.7p per
share making a total dividend payable for the year of
9.4p (2019: 9.3p) an increase of 1%. UK Inflation for the
year of 2020 was 0.8% (Office for National Statistics).
This is the 18th successive year of progressive dividend
and importantly returns the Trust to a top position in
the dividend yield
Investment
Companies as well as keeps us in the Next Generation
of Dividend Heroes list maintained by the AIC (the trust
was top of the list in February 2021).
league table for
Board and Governance
importance on corporate
The Board places significant
governance and compliance with the AIC and UK Corporate
Governance Codes. Full details are set out in the Corporate
Governance section on pages 14 to 17.
4 | Athelney Trust plc | Annual Report 2020
Strategic Report
Chairman’s Statement and Business Review
Continued
Review
It is hard to conceive what else, short of banking collapse or world
war, might in a single year have the same impact and longer-term
implications for the world today as COVID-19; hardly any UK
business has been untouched by related challenges including
huge, panic-driven market swings.
In addition, economic
uncertainty was exacerbated by a drawn-out US Presidential
election plus perhaps an inevitable last-minute UK-EU agreement
to a Brexit deal.
by 14% compared to 2019. Non-executive Director’s fees remain
at £10,500. Other Trusts reduced management and Directors’ fees
through this year. I believe that along with a reduced management
fee of 0.75% since January 2019, we have managed ongoing costs
very effectively in ‘normal operating conditions’ and compared to
the very unusual year of 2019, our ongoing charges figure has
fallen from 4.30% to 2.45%. As detailed on page 33 in note 3,
nearly every line item represented a cost reduction on the prior
year.
The darkest cloud however arrived in the last quarter, with a
resurgence of the virus in more transmissible form in several
countries. It may not be more deadly; however, it means the UK
and other major economies must consider lockdown for longer
and hope that mutations do not dim the hope that mass
vaccination provides.
I am very pleased therefore to report that NAV outperformed both
the FTSE 100 and 250 markets over the year by 10 and 2.1
percentage points respectively. In the past 18-24 months Manny
Pohl has shown focus and efficiency in shaping a portfolio that
continues to deliver today and promises much for tomorrow. The
Board is very grateful for his efforts in a difficult year, leading
market research and a team approach that is founded on strong
basic financial and value filters. Some companies and sectors have
benefited from the conditions in 2020 (mostly the big tech names,
plus precious metals) while others seem stuck with a valuation that
defies logic. Finding a balance in the portfolio, now even more
focused to 30+ companies, to provide growth over time, at the
same time as delivering the usual Trust income during such a
pandemic-affected market has been a challenge in 2020.
Our status as a closed-ended fund provides a key advantage over
open-ended funds; we can use reserves created in good years to
smooth out dividend payments through better and leaner years.
2020 was most definitely lean as UK dividends fell by 44% to
£61.9bn, the lowest annual total since 2011. The Bank of England’s
PRA lifted the prohibition on banking dividends in December,
which since March had resulted in the financial sector accounting
for 40% of the cuts, and the beleaguered oil sector for another
fifth. Protection is now in place since December to prevent
excessive bank dividends being paid. Some dividend suspensions
were reversed in the last quarter, however the year’s meagre
results have triggered renewed interest in value-creation and cash-
generative businesses, as income investors follow the inevitable
correction. Our revenue return of 5.9p per share was 35% down
compared to last year, and comparatively speaking, a good
outcome.
Against this backdrop I am delighted to tell you that your Board
recommends a final dividend payment of 7.7p (total 9.4p). This
shares the benefits of prudence in previous good years and
increases our dividend once more, subject to approval at the AGM.
At a share price of 215p on 31 December, this represents a
dividend yield of 4.37% (better than the average 2020 yield from
FTSE 100 companies of 3.77% and much better than the FTSE 250).
Outlook
All hope for a swift return to normal dividend payments, however
some expect this will not take place during 2021, especially with the
further COVID-19 restrictions while UK vaccinations take place for
the most vulnerable groups in the first quarter. Link Group expects
a best-case UK dividend increase of 8.1% (excluding special
payments) and a slow start to the dividend year while a great deal of
uncertainty still lingers. Much depends on vaccination success
leading to our gaining a meaningful release from lockdown that lasts
long enough to deliver sustained growth in GDP after what seems
likely to be shortly announced as a UK double-dip recession in 2020.
There may well be pent-up enthusiasm from retail shoppers and
investors alike. Some, maybe many might go on a spending spree,
and the Bank of England believes there is upside risk from this.
Current talk of negative interest rates may come to nothing, but the
UK economy needs stimulating as we plan to exit lockdown in four
stages between 8 March and 21 June this year. Investors have long
waited for the time where neither Brexit nor COVID-19 uncertainties
keep foreign investors away, and some dislocated shares can return
to par from their ‘cheap comparative valuations’. If true, this now
seems most likely to happen in 2021 and will present further
opportunities for the Trust focusing on the UK Small Companies
sector.
Good companies at fair prices are still overlooked by house analysts.
Those with commitment to a proven system, prepared to analyse
fully and act on conviction, will come out on top in the long run. Our
Managing Director and Fund Manager has many years’ experience
relevant to operating successfully in the conditions of 2021 – this
bodes well for your Trust.
Our AGM in 2020 was held virtually, with no shareholders present,
as movement restrictions and the safety of our investors and staff
made a physical meeting impossible. We will be holding a similar
event for the AGM this year on 30 March 2021 at 9.00am.
Shareholder engagement and opinion is very important to us, so
there are plans in place to give you the opportunity to engage with
the Board by sending your questions to us in advance and making
sure there is a proxy for your vote. Details of the proposed AGM can
be found in the Notice to the AGM publication.
I leave you with the simple words of one of the inspirations of 2020
– Captain Sir Tom Moore, who after a remarkable 100th year, sadly
recently died from COVID-19. “Things will get better. The sun will
shine again”.
In terms of costs the Trust has continued to be prudent and has
not added a fourth Board member to replace David Lawman who
retired by rotation at the April AGM; total remuneration reduced
Frank Ashton
Non-Executive Chairman
5 | Athelney Trust plc | Annual Report 2020
24 February 2021
Strategic Report
Fund Manager’s Review
Reflecting on 2020, an extraordinary year
The Global Scene
Reflecting on the year that was, it can be confidently said, it was
one like no other! This year we saw our world turn upside down
with the unimaginable coming to the fore. We’ve seen the full
gamut of external factors impact Global markets, including raging
bushfires, a deadly pandemic, never-before-seen stimulus
packages, trade wars and an election that tested the Democratic
system of the United States.
Before I begin with this year’s review, I’d like to acknowledge
those who have worked tirelessly throughout this year for the
benefit of our society – nurses, doctors, police and members of
the defence forces. While we have all managed the significant
challenges and pressures COVID-19 has placed upon us, this crisis
has certainty provided each of us with some timely lessons: to
cherish the physical times we have with loved ones, enjoy our
social connections and to embrace our lives outdoors. Cafes and
conference rooms were replaced by the disquiet of working from
home, separated from our colleagues and families as we all
complied with social distancing.
Businesses needed to adapt to survive – gin distilleries became
hand sanitiser producers, event staging manufacturers built flat-
pack office desks, and nearly every service organisation
implemented a work from home program. Five years’ worth of
technology adoption occurred within weeks as businesses worked
out new ways of connecting staff and customers, we created
discussion channels on Slack and attended Board meetings with
our pets. This recent explosion in the use of technology is
highlighted by the fact that in the five-year period from 2010 to
2015 the global market capitalisation of vertical software
companies increased by £90bn from £50bn to £140bn, whereas in
the period from 2015 to 2020 their market capitalisation
increased by a further £340bn to £480bn.
However, something in this technology focused world was
missing: the face-to-face interaction and mentoring that occurs
within the office environment. For business leaders, these items
have become the next challenge for those who need to engage
with their teams and provide purpose and a sense of community
when normal social interactions are not possible. To ensure
business success through these times, leaders need to ensure
their companies adopt change-orientated capabilities that help
firms redeploy and reconfigure their resource base while ensuring
they remain responsible to all stakeholders and as investors, we
need to ensure that we are able to identify these companies.
The Markets and Our Portfolio
Global markets rose across the board over the last quarter with
most markets trending up since the April 2020 lows. After initially
under-performing the US tech stocks, UK stocks advanced strongly
on the news of a vaccine and a Brexit trade agreement. The pound
rose to its highest level against the USD since March 2020.
Without doubt, some areas of the global market look expensive
when viewed historically but it was the year of technology as
6 | Athelney Trust plc | Annual Report 2020
mentioned previously and the stock markets are merely reflecting
the rapid changes taking place in the economy.
The FTSE-250 hit a record high of 22,114.30 on 2nd of January 2020
before collapsing by 44.1% over the next 2 months. It then increased
by 66% over the next nine months to close the year at 20,488.3,
down 6.4% over the year. By comparison, our portfolio increased by
3.5% (adjusting for outflows on a time weighted basis) over the same
period.
Table 1: Performance Metrics
1 Yr
2 Yr
3 Yr
5 Yr
10 Yr
3.5%
15.5%
n.a
n.a
n.a.
Compound
Growth
Rate
ATY
PORTFOLIO
*
ATY NAV
-4.3%
6.3%
-3.6%
0.8%
6.0%
FTSE 250
-6.4%
8.2%
-0.4%
3.3%
5.9%
FTSE 100
-14.3%
-2.0%
-5.6%
0.7%
0.9%
FTSE Small
Cap
4.5%
9.6%
1.7%
6.0%
6.8%
* Portfolio performance is time weighted, before management fees,
expenses and dividends and is only available from when Dr Manny
Pohl AM commenced managing the portfolio.
While the FTSE-250 only declined by 6.4% this is a capitalisation
weighted index and one should not lose sight of the fact that there
are many more smaller businesses in trouble, evidenced in the latest
Red Flag Alert research report by Begbies Traynor for 2020, which
reported that 630,000 businesses in the UK are recorded to be in
significant distress at the end of the fourth quarter, the largest
quarterly increase (73,000) in financially distressed companies since
the second quarter of 2017. This 13% increase (from 557,000 in Q3
2020) comes as the UK is plunged into another nationwide lockdown
and clearly these figures would have been much worse had it not
been for Government support. The sad truth is that for many
companies this will provide little more than a stay of execution as
debt levels become unmanageable and structural changes across
many sectors take their toll.
While the majority of the stocks in the portfolio contributed to the
outperformance of the portfolio versus the market, a handful of
names performed exceptionally well, which
included Games
Workshop (LSE: GAW), Jarvis Securities (LSE: JIM) and Treatt (LSE:
TET); a brief description of these 3 companies follows. The biggest
detractors from returns over the year included 4IMPRINT (LSE: FOUR),
Forterra (LSE: FORT) and Paypoint (LSE: PAY). At an aggregate level,
all of our alpha was generated through stock selection, as opposed to
sector selection and this is consistent with our style as a bottom-up,
benchmark unaware, high conviction manager.
Strategic Report
Fund Manager’s Review
Continued
Games Workshop Group plc (LSE: GAW)
Games Workshop designs, manufactures, distributes and markets
a hobby based upon collecting, modelling, painting and tabletop
gaming with model soldiers. Its key brands are the high fantasy
Warhammer and dark future Warhammer 40,000 game systems
which it has been able to expand out to encompass video games,
books and new campaigns. Games Workshops’ competitive
advantage is driven by the fact that it has limited competition with
the games voraciously supported by a legion of fans worldwide,
who will go to great lengths (and expense) to produce their own
accompaniments to add to the series lore and backstory. The
company generates most of its income in North America and
during the COVID-19 lockdown, the majority of the 529 retail
stores were restricted or closed but normal trading did resume in
the period that the stores were allowed to trade.
and
savings
schemes,
Jarvis Securities plc (LSE: JIM)
Jarvis offers retail execution-only stockbroking, ISA and SIPP
investment wrappers,
financial
administration, settlement and custody services to other
stockbrokers and investment firms as well as individuals. It offers
Dial-n-Deal for clients wanting to open an account over the
telephone and
form while
sellmysharecertificates.com is a share sale postal service. It also
offers outsourced services to investment professionals and other
financial intermediaries and its subsidiary, Jarvis Investment
Management Ltd, is an outsourced investment administration and
certificated
shares
sell
in
Model B settlement services provider. We believe that this
business model should be able to offset the effects of the depressed
market conditions and through organic growth be able to translate
increased trade volumes into improved profits.
Treatt plc (LSE: TET)
Treatt manufactures and supplies various natural extracts and
ingredients to the flavour, fragrance, beverage, and consumer
product industries from their bases in the UK, the US and China. It
has a diverse product portfolio with particular expertise in citrus, tea
and sugar reduction. The company also provides
ingredient
applications for beverage and household products; and fragrance
ingredients that are the result of over a century of knowledge and
innovation. The business has continued partnering with customers
to develop exciting products in the fast-evolving beverages market
and some material new business wins have been achieved including
in the global alcoholic seltzer category which is continuing to grow
strongly. Treatt is well positioned as a supplier of natural extracts
and with its technical expertise enables it to add significant value to
customers across a growing range of applications resulting in margin
expansion as well as revenue growth.
Shareholders sometimes are not able to translate portfolio
performance into the disclosed NAV movement and to this end the
following waterfall chart has been included to provide shareholders
with an insight into how the portfolio performance translates into a
change in NAV.
Chart 1: Contributions to NAV in the period 1 January 2020 to 31 December 2020 (pence per share)
7 | Athelney Trust plc | Annual Report 2020
Strategic Report
Fund Manager’s Review
Continued
Investment Philosophy
As far as portfolio investments are concerned, our investment
philosophy is clear:
I. The economics of a business drives long-term investment
returns; and
II. Investing in high quality, growth businesses that have the
ability to generate predictable, above-average economic returns
will produce superior investment performance over the long-term.
In essence, this means that in assessing potential investments we:
1. Value long-term potential, not just performance
2. Choose high-quality, growing businesses; and
3. Ignore temporary market turbulence.
The key attributes that will define our investments are:
Organic Sales Growth: Quality franchises organically growing
sales above GDP growth that can do so (sustainably) because they
have a
large, growing market opportunity and compelling
competitive advantage which will drive ongoing market share
gains are attractive.
A Proven Track Record: This encompasses both the
management’s capability and the strength of the business’ model.
Generally, a firm that consistently delivers a Return on Equity of
greater than 15% indicates a Quality Franchise for us. Our
investment philosophy is built on the belief that a stock’s long-
term return to shareholders is driven by the return on capital of
the underlying business.
Company's Future Profits: In essence we are backing a proven
management team and a successful business model. Management
are the key decision makers regarding the company’s strategy and
its competitive position in the marketplace and it is critical that we
have confidence in the company’s ability to sustainably execute its
strategy and grow their earnings, even in a tough environment like
the current COVID-19 and Brexit conundrum.
Low Leverage: We require investments to operate with low
levels of debt, which ensure that they have sufficient resources to
execute on their strategy. An Interest Coverage above 4x provides
sufficient bandwidth in times of economic trouble. As a long-term
investor, capital preservation is the highest priority. There is
nothing that changes a management team’s focus toward the
short term quicker than impending debt refinancing when
market conditions suddenly change for the worse. We need to be
comfortable that this will not happen and that the company has
a strong enough balance sheet so that it will retain optionality
and can quickly and efficiently execute its strategy over the long-
term.
Sleep Well rather than Eat Well
As our process aims to find high-quality businesses that we own
for the very long-term, our portfolio turnover remains low.
Through time we continue to have investments that we have held
for over ten years, however, this doesn’t mean we aren’t always
looking for new investments. As mentioned in our monthly
reports, the focus this year has been to continue to restructure the
portfolio to align it with our investment philosophy while
cognisant of the need to maintain the dividend paid to
shareholders.
8 | Athelney Trust plc | Annual Report 2020
Investment management is more than merely generating alpha in excess
of a benchmark. While that is a core part of our mandate, other very
important qualitative issues are central to what we do. For example, we
recognise that capital allocation is a vehicle through which to drive
change. We have the opportunity to demand specific standards of
corporate governance, decide whether specific social and ethical issues
are acceptable and, if they are not, we vote with our feet.
For us, the integrity and credibility of any management team is a
founding principle to our investment process. We need to trust that
management has the best interests for all stakeholders at heart, and we
have faith that they will make sound strategic decisions and have
in their chosen field. As
substantial experience and capabilities
custodians of our capital, we must ensure that we are doing whatever
we can to preserve capital and grow it over time. We allocate capital to
investments which we believe are sustainable in the long-term, and
finding trustworthy, values-based management that aligns with our core
values and beliefs will ensure above-average economic portfolio returns.
Sustainability of investment performance or the improvement of the
wellbeing of broader society hinges upon ethical, transparent, and
honest leadership and in cases where we feel we can add something to
the conversation, we engage with the company.
Looking Forward
While the COVID epidemic has affected most businesses negatively, our
investment philosophy is based on the belief the long-term economics
of a business drives long-term investment returns. The long-term
financial metrics of our portfolio companies, including organic sales
growth, earnings and dividend growth, should provide the impetus for
improvement in valuations or at least be supportive of the current
valuations in the future. Our companies have strong business models
with capable and experienced management teams which we expect will
continue to deliver above-average returns to shareholders. Dividends
are expected to be re-instated where they have been cut or withheld,
with the Athelney dividend supported in the short-term by the reserves
we have built up in the good times and by the distributions from the high
yielding property trusts. Over time we expect that the dividends from
the high growth quality companies in the portfolio will increase
sufficiently so that the property trusts can be replaced by other high
growth quality companies without jeopardising our AIC dividend hero
status.
While we do feel that the markets are relatively fully valued and do not
see a significant improvement in the P/E ratings of the market, for many
of the companies in the portfolio our estimates and forecasts for total
portfolio return remain promising.
Update
The unaudited NAV on 31 January 2021 was 256.2p per share – up 0.35%
from 31 December 2020, the third monthly increase in a row and beating
the FTSE 100(-0.82%), FTSE 250 (-1.27%), Small Cap Index (+0.24%) as
well as AIM All-share Index (+0.31%). The share price on the same day
was 210p (trading at a discount of 18%). Further updates can be found
at www.athelneytrust.co.uk
Dr Manny Pohl AM
Fund Manager
24 February 2021
Strategic Report
Investment and Portfolio Analysis at 31 December 2020
Stock
Holding
Value (£)
Biotechnology
Chemicals
Construction & materials
Electronic & electrical equipment
Food & beverages
General financial
Healthcare
Household goods & construction
Leisure goods
Media
Mobile communications
Multiutilities
Property, commercial &
residential
Retailers
Support services
Abcam
Treatt
Clarke T
Forterra
XP Power
Fevertree
Close Brothers
Jarvis Securities
Liontrust Asset Management
S & U
Clinigen
Churchill China
Games Workshop
4Imprint
Rightmove
Yougov
Gamma Communications
National Grid
AEW UK REIT
Belvoir Lettings
Lok’n Store
Londonmetric
LXI REIT
Mountview Estates
Target Healthcare REIT
Tritax BigBox REIT
JD Sports
Begbies Traynor
Homeserve
NWF Group
Paypoint
Smart Metering Systems
7,000
21,000
145,000
40,000
4,000
4,000
13,500
116,000
33,000
6,000
20,000
7,000
4,500
5,000
20,000
10,100
10,000
28,000
430,000
85,000
33,000
100,000
60,000
800
100,000
170,000
10,000
95,000
16,000
35,000
9,000
8,000
108,430
171,780
141,230
97,400
187,200
101,040
186,435
255,200
427,350
135,000
134,900
93,275
503,550
128,000
130,120
105,040
164,000
242,146
333,250
127,925
217,800
228,800
71,280
100,400
113,800
285,260
85,980
88,160
163,840
66,500
58,770
56,800
SECTOR
£
108,430
171,780
238,630
187,200
101,040
1,003,985
134,900
93,275
503,550
363,160
164,000
242,146
%
2.0
3.2
4.5
3.5
1.9
18.9
2.5
1.8
9.5
6.8
3.1
4.6
1,478,515
85,980
27.9
1.6
434,070
8.2
Portfolio Value
Net Current Assets
TOTAL VALUE
Shares in issue
Audited NAV
255.3p
£5,310,661
£197,360
£5,508,021
2,157,881
9 | Athelney Trust plc | Annual Report 2020
Strategic Report
Investment and Portfolio Analysis at 31 December 2020
Continued
Portfolio by Sectors
3.2% Chemicals
2% Biotechnology
8.2% Support Services
1.6% Retailers
4.5% Construction and
Materials
3.5% Electronic and
Electrical Equipment
1.9% Food and
Beverages
18.9% General Financial
2.5% Healthcare
1.8% Household Goods
and Construction
6.8% Media
9.5% Leisure Goods
27.9% Property,
Commercial and
Residential
4.6% Multiutilities
3.1% Mobile
Communications
Portfolio by Listing
1.9% Non-Indexed
2.1% Cash
8.4% FTSE 100
16.8% Small Caps
40.2% FTSE 250
2.6% Fledgling
28% AIM
10 | Athelney Trust plc | Annual Report 2020
Strategic Report
Section 172(1) Statement
The Directors of the Company are required to promote the success
of the Company for the benefit of the Members and Shareholders
as a whole. Section 172(1) of the Companies Act (2006) expands
this duty and requires the Directors to consider a broader range of
interested parties when considering the promotion of the
Company. This wider group of stakeholders will
include
employees, if any, suppliers, customers and others, and the Board
will look to understand and take into account the needs of each
stakeholder, although recognising that different stakeholders may
have conflicting priorities and not all decisions made will be to the
benefit of all stakeholder groups.
When making decisions the Board should consider the following:
the likely consequences of any decisions in the long-
term;
the interests of the Company’s employees (if applicable);
impact of the Company’s operations on the
the
environment and the community;
the need to foster the Company’s business relationships
with suppliers, customers and others;
the need to act fairly for all members of the Company,
and
the desirability of the Company maintaining a reputation
for high standards of business conduct.
In line with similar small Investment Trusts and Investment
Companies, Athelney Trust plc does not have any customers and
relies on a number of third-party providers of services such as
Company Administrator, the Custodian and the Registrar to
maintain its operations. The Company takes into account the
regulations of the market in which it operates and has regard to
the environment and the wider community in which it operates.
At every Board meeting the Directors review the performance of
the Company towards meeting the Company’s
Investment
Objective through its strategy. Manny Pohl is the fund manager
and reports to other Board members and answers any questions
raised. The compliance with existing regulatory and
legal
requirements are reviewed, together with any new regulations
that are due to be introduced or are being proposed that may
affect the Company.
The Board recognises the importance of, and is committed to,
understanding the views of Shareholders and maintaining
communication with its Shareholders in the most appropriate
manner.
This is undertaken through:
Annual General Meeting
The Company,
in normal circumstances encourages all
Shareholders to attend and participate at its Annual General
Meeting (“AGM”). Whilst the formal business of the meeting is the
primary purpose of the meeting, members of the Board are
available to answer questions directly from Shareholders, to
provide an update to the meeting and to offer Shareholders an
insight into the business.
11 | Athelney Trust plc | Annual Report 2020
The AGM held in April 2020 was subject to government COVID-19
restrictions and the Board reluctantly held the meeting behind
closed doors and Shareholders were requested not to attend. Voting
was poll based and Shareholders were requested to email any
questions to the Directors. In light of the current Government
COVID-19 guidance the Directors have again decided to hold the
2021 AGM behind closed doors. Further details regarding the 2021
AGM are contained in the Notice of the Annual General Meeting
published in a separate notification.
Published Reports
The Company produces Annual and Half Yearly Reports and monthly
fact sheets are all available from the Company’s website and paper
copies are available on request from the registered office. The
publication of these reports is considered to be the primary method
of communication to Shareholders and other readers of the reports
and provides detailed information on the portfolio, performance
over the period and an assessment of the outlook for the Company.
The Annual Report also contains details regarding the Company’s
corporate governance and the Board seek to ensure that the Report
is readable and is mindful that it should be fair, balanced and
understandable.
Shareholder enquiries
Shareholders can contact the Company or any of its Directors
through the Company Secretary or through their company email
address. Alternatively, letters can be sent to the registered office
address. Although the Directors are not available full time, with the
assistance of the Company Secretary they seek to maintain open
communication to all Shareholders.
Suppliers
The Company Secretary Deborah Warburton and Administrator GW
& Co. Limited are often the main contact point for advisors and
stakeholders in the Company. Regular communication is maintained
between the Company Secretary and the Directors advising them of
all matters concerning the Company. The Company also relies on the
provision of services from outside parties to operate and gives
consideration to the needs and objectives of those providers and
recognises that their success will often assist the Company in
achieving its objectives.
Regulators
The Company operates in an environment that is governed by legal
and regulatory requirements. The Board recognises that these
requirements are there to protect stakeholders, including the
government.
Environment and Community
As the Company does not have any direct employees nor any
physical office environment of its own it has little direct impact on
the community or the environment. The Company seeks to reduce
its impact on the environment in encouraging Shareholders to
receive Reports electronically rather than through printed hard
copies. When paper copies are requested FSC paper is used. The
Board also engage through electronic means where possible rather
than hold excessive face to face meetings.
Strategic Report
Other Statutory Information
As explained within the Report of the Directors on pages 18 to 19,
the Company carries on business as an
investment trust.
Investment trusts are collective closed-ended public limited
companies.
Board
The Board of Directors is responsible for the overall stewardship of
the Company,
investment and dividend policies,
corporate and gearing strategy, corporate governance procedures
and risk management. Biographical details of the three male
Directors, can be found on pages 2 and 3.
including
One of the Directors is the Company's only employee (2019: one
employee).
Investment Objective
The investment objective of the Trust is to provide shareholders
with prospects of long-term capital growth with the risks inherent
in small cap investment minimised through a spread of holdings in
quality small cap companies that operate in various industries and
sectors. The Fund Manager also considers that it is important to
maintain a progressive dividend record.
Investment Policy
The assets of the Trust are allocated predominantly to companies
with either a full listing on the London Stock Exchange or a trading
facility on AIM or AQSE. The assets of the Trust have been
allocated in two main ways: first, to the shares of those companies
which have grown steadily over the years in terms of revenue and
profits but, despite this progress are undervalued by the market
when compared to future earnings and dividends; second, those
companies whose shares are undervalued by the market when
compared with the value of land, buildings, other assets or cash on
their balance sheet.
Investment Strategy
The investment strategy employed by the Fund Manager in
meeting the
investment objective focuses on active stock
selection. The selection of individual holdings is based on analysis
of, amongst other things, market positioning, competitive
advantage, future growth, financial strength and cash flows. The
weighting of individual investments reflects the Fund Manager’s
conviction in those holdings and his views on asset allocation,
including between UK and overseas equities, corporate bonds,
cash and gearing.
Investment of Assets
At each Board meeting, the Board considers compliance with the
Company’s investment policy and other investment restrictions
during the reporting period. An analysis of the portfolio on 31
December 2020 can be found on pages 9 and 10 of the annual
report.
12 | Athelney Trust plc | Annual Report 2020
interest
Responsible Ownership
The Fund Manager takes a particular
in corporate
governance and social responsibility investment policy. As stated
within the Corporate Governance Statement on pages 14 to 17, the
Fund Manager’s current policy is available on the Trust’s website
www.athelneytrust.co.uk. The Board supports the Fund Manager on
his voting policy and his stance towards environmental, social and
governance issues.
Review of Performance and Outlook
Reviews of the Company’s returns during the financial year, the
position of the Company at the year end, and the outlook for the
coming year are contained in the Chairman’s Statement on pages 4
to 5 and the Fund Manager’s review on pages 6 to 8 which form part
of the Strategic Report.
Principal Risks and Uncertainties and Risk
Management
As stated within the Corporate Governance Statement on pages 14
to 17, the Board applies the principles detailed in the internal control
guidance issued by the Financial Reporting Council, and has
established a continuing process designed to meet the particular
needs of the Company in managing the risks and uncertainties to
which it is exposed.
The principal risks and uncertainties faced by the Company are
described below and
in note 12 which provides detailed
explanations of the risks associated with the Company’s financial
instruments.
Market – the Company’s fixed assets consist almost entirely
of listed securities and it is therefore exposed to movements
in the prices of individual securities and the market
generally.
Investment and strategic – incorrect investment strategy,
asset allocation, stock selection and the use of gearing could
all lead to poor returns for shareholders.
the
recommendations of
Regulatory – Relevant legislation and regulations which
apply to the Company include the Companies Act 2006, the
Corporation Tax Act 2010 (“CTA”) and the Listing Rules of the
Financial Conduct Authority (“FCA”). The Company has
the UK Corporate
noted
Governance Code and its statement of compliance appears
on pages 14 to 17. A breach of the CTA could result in the
Company losing its status as an investment company and
becoming subject to capital gains tax, whilst a breach of the
Listing Rules might result in censure by the FCA. At each
Board meeting the status of the Company is considered and
discussed, so as to ensure that all regulations are being
adhered to by the Company and its service providers.
Operational – failure of the accounting systems or disruption
to its business, or that of other third-party service providers,
could lead to an inability to provide accurate reporting and
monitoring, leading to a loss of shareholders’ confidence.
Strategic Report
Other Statutory Information
Continued
Financial – inadequate controls by the Fund Manager or
other third-party service providers could
lead to
misappropriation of assets. Inappropriate accounting
policies or failure to comply with accounting standards
could lead to misreporting or breaches of regulations.
Liquidity – the Company may have difficulty in meeting
obligations associated with financial liabilities.
Trading – ATY is a small trust and its shares can be
illiquid, which means that investors may have difficulty
in dealing in larger amounts of shares.
The Company has complied with the MiFID ll and KID legislation
and the deadlines to ensure that shares in the Company were still
able to be traded. A copy of the Company’s KID can be found on
the website http://www.athelneytrust.co.uk
The Board is not aware of any breaches of laws or regulations
during the period under review and up to the date of this report.
The Board seeks to mitigate and manage these risks through
continual review, policy setting and enforcement of contractual
obligations. It also regularly monitors the investment environment
and the management of the Company’s investment portfolio.
Investment risk is spread through holding a wide range of
securities in different industrial sectors.
taken as a whole it is fair, balanced and understandable and
provides the information necessary for shareholders to assess the
Company’s performance, business model and strategy.
Environment Emissions
The Company does not have any physical assets, property, or
operations of its own and as such does not generate any greenhouse
gas or other emissions.
Social, Community and Human Rights Issues
The Company has one employee and, as far as the Board is aware,
no issues exist in respect of social, community or human rights
issues.
Alternative Investment Fund Manager’s Directive
(“AIFMD”)
The Company is registered as its own AIFM with the FCA under the
AIFMD and confirms that all required returns have been completed
and filed.
On behalf of the Board
Statement Regarding Annual Report and Financial
Statements
Following a detailed review of the Annual Report and Financial
Statements by the Audit Committee, the Directors consider that
Dr Manny Pohl AM
Managing Director
24 February 2021
13 | Athelney Trust plc | Annual Report 2020
Corporate Governance Statement
David Lawman retired by rotation at the AGM on 8 April 2020. The
Directors believe that the Board has the balance of skills, experience,
ages and length of service to enable it to provide effective leadership
and proper governance of the Company. The Directors possess a
range of business and financial expertise relevant to the direction of
the Company and consider that they commit sufficient time to the
Company’s affairs.
All Directors receive relevant training, collectively or individually, as
necessary.
The Directors of the Company meet at regular Board Meetings.
During the year ended 31 December 2020, the Board met a total of
5 times.
E C Pohl
N F Ashton
S Moore
D Lawman
Board
Meetings
5
5
5
1
Audit
Committee
-
-
1
1
Remuneration
Committee
-
-
1
1
The Board subscribes to the view expressed in the AIC Code that
long-serving Directors should not be prevented from forming part of
an independent majority. It does not consider that the length of a
Director’s tenure reduces their ability to act independently. The
Board’s policy on tenure is that continuity and experience are
considered to add significantly to the strength of the Board and, as
such, no limit on the overall length of services of any of the
Company’s Directors, including the Chairman, has been imposed,
although the Board believes in the merits of periodic and progressive
refreshment of its composition.
The Board of Directors of the Company comprises three male
Directors. Whilst the Board recognises the benefits of diversity in
appointments to the Board, the key criteria for the appointment of
new Directors will be the appropriate skills and experience in the
interest of shareholder value. The Directors are satisfied that it has
an appropriate breadth of skills and experience. The Board is not
currently planning to add a fourth Director to the Board.
The basis on which the Company aims to generate value over the
longer term is set out in the Strategic Report on pages 4 to 19. All
matters, including corporate and gearing strategy, investment and
dividend policies, corporate governance procedures and risk
management are reserved for the approval of the Board of Directors.
The Board receives full information on the Company’s investment
performance, assets, liabilities and other relevant information in
advance of Board meetings.
Shareholders hold the Directors of a company responsible for the
stewardship of that company’s affairs. Corporate governance is
the process by which a Board of Directors discharges this
responsibility. The Company’s arrangements
in respect of
corporate governance are explained in this report.
The Company is required to comply with, or to explain its non-
compliance with, the relevant provisions of the UK Corporate
Governance Code issued by the Financial Reporting Council (the
‘FRC’) in July 2018 which can be found at www.frc.org.uk. The
Association of Investment Companies issued its own Code of
Corporate Governance in February 2019 (the ‘AIC Code’), which
can be found at www.theaic.co.uk. and which has been approved
by the FRC as it addresses all the principles of the UK Corporate
Governance Code as well as setting out additional principles and
provisions on issues which are of specific relevance to investment
trusts. The Board considers that reporting against the Principles
and Provisions of the AIC Code, which has been endorsed by the
FRC, provides more relevant information to shareholders.
The Company has not complied with the provisions of the AIC Code
and the UK Corporate Governance Code in respect of the
following:
Due to the size of the Board, formal performance
evaluations of the Chairman, the Board, its Committees
and individual Directors are not undertaken. Instead, it
is felt more appropriate to address matters as and when
they arise.
Due to the size of the Board, it is felt inappropriate to
appoint a senior independent non-executive Director.
All the Directors have agreements for provision of their
services but no limit has been imposed on the overall
length of service. The recommendation of the Code is
for fixed term renewable contracts. In recent years each
of the Directors has retired and, where appropriate,
sought re-election. One third of the Directors retires by
rotation annually in accordance with the Company’s
articles of association.
The Company has one employee. The Company
Secretary’s line of communication in relation to whistle-
blowing is to the Chairman of the Company.
The Company does not have a Nominations Committee. During the
year the Board comprised a maximum of four Directors who liaised
continuously throughout and were aware of their obligations to
consider recruitment of further Directors as and when the
occasion occurred. Shareholders hold the Directors of a company
responsible for the stewardship of that company’s affairs.
Corporate governance is the process by which a Board of Directors
discharges this responsibility. The Company’s arrangements in
respect of corporate governance are explained in this report.
Board Membership
At 31 December 2020 the Board consisted of three Directors, of
which two were and remain independent. The biographies of all
the current Directors are contained on pages 2 and 3.
14 | Athelney Trust plc | Annual Report 2020
Corporate Governance Statement
Continued
Board Responsibilities and Relationship with
the Fund Manager
The Board is responsible for the investment policy (the Mandate)
and strategic and operational decisions of the Company and for
ensuring that the Company is run in accordance with all
regulatory and statutory requirements.
These matters include:
The maintenance of clear investment objective and risk
management policies, changes to which require Board
approval;
• The monitoring of the business activities of the Company,
annual
performance
investment
and
including
budgeting; and
• Review of matters delegated to the Fund Manager and
Company Secretary.
The Fund Manager ensures that Directors have timely access to
all relevant management and financial information to enable
informed decisions to be made and contacts the Board as
required for specific guidance. The Company Secretary and Fund
Manager prepare monthly reports for Board consideration on
matters of relevance, for example current valuation and
portfolio changes, dividend comparisons with previous years,
cash availability and requirements and a breakdown of
shareholdings by listing and sector. The Board takes account of
Corporate Governance best practice.
Corporate Governance and Social Responsible
Investment Policy
The Board is aware of its duty to act in the interests of the
Company. The Board acknowledges that there are risks associated
with investment in companies which fail to conduct business in a
socially responsible manner. The Fund Manager considers social,
factors which may affect the
environmental and ethical
investments. The
performance or value of the Company's
Directors, through the Fund Manager, encourage companies in
which investments are held to adhere to best practice in the area
of Corporate Governance. They believe that this can best be
achieved by entering into a dialogue with company management
to encourage them, where necessary, to improve their policies in
this area. The Company's ultimate objective is to deliver superior
long term returns for Shareholders which the Board believe will be
produced on a sustainable basis by investing in companies which
adhere to best practice in the area of Corporate Governance.
Accordingly, the Fund Manager will seek to favour companies
which pursue best practice in this area.
Chairman
Mr. N F Ashton is independent and considers himself to have
sufficient time to commit to the Company’s affairs.
Directors’ Independence
In accordance with the Listing Rules for investment entities, the
Board has reviewed the status of its individual Directors and the
Board as a whole. Two of the three current Directors including the
Chairman
15 | Athelney Trust plc | Annual Report 2020
Are considered by the Board to be independent in character and
judgement and there are no relationships or circumstances which
are likely to affect or could appear to affect the Directors’
judgement.
Remuneration Committee
During the year the Remuneration Committee comprised Simon
Moore and David Lawman. After the AGM on the 8 April 2020 when
David Lawman did not seek re-election the Remuneration
Committee comprised Simon Moore and Frank Ashton. The
Committee will meet as necessary to determine and approve
Director’s fees, following proper consideration of the role that
individual Directors fulfil in respect of Board and Committee
responsibilities, the time committed to the Company’s affairs and
remuneration levels generally within the Investment Trust Sector.
Under Listing Rule 15.6.6, the Code principles relating to Directors’
remuneration do not apply to an investment trust company other
than to the extent that they relate specifically to non-executive
Directors. Detailed information on the remuneration arrangements
can be found in the Directors’ remuneration report on pages 21 to
23 and in note 4 to the financial statements.
Company Secretary
The Company Secretary, Deborah Warburton FCCA, is responsible
for ensuring that Board and Committee procedures are followed and
that the Company complies with regulations. The Company
Secretary also ensures timely delivery of information and reports
and that the statutory obligations of the Company are met.
All the Directors have access to the advice and services of the
Company Secretary.
Independent Professional Advice and Directors’
Training
Individual Directors may, at the expense of the Company, seek
independent professional advice on any matter that concerns them
in the furtherance of their duties.
The Chairman liaises on a regular basis with the other Directors and
the Company Secretary to ensure that they are maintaining
adequate training and continuing professional development.
Institutional Investors – Use of Voting Rights and
Voting Policy
The Fund Manager, in the absence of explicit instruction from the
Board, is empowered to exercise discretion in the use of the
Company’s voting rights. The Fund Manager votes against
resolutions he believes may damage shareholders’ rights or
economic interests.
Audit Committee
During the year the Audit Committee comprised Simon Moore and
David Lawman. After the AGM on the 8 April 2020 the Audit
Committee comprised Simon Moore and Frank Ashton. The
Committee met once during the year. The duties of the committee
include reviewing the Annual and Interim Accounts, the system of
internal controls, and the terms of appointment and remuneration
Corporate Governance Statement
Continued
of the auditor, Hazlewoods LLP, including its independence and
objectivity. It is also the forum through which Hazlewoods LLP
reports to the Board of Directors.
Much of the Board’s corporate governance responsibility is discharged
through the Audit Committee. This Committee operates within clearly
defined written terms of reference which are available upon request
at the Company’s registered office.
Significant Issues Considered by the Audit Committee in Relation to the Financial Statements
Matter
Action
COVID-19 pandemic
The COVID-19 pandemic has adversely affected the global
economy and this, in turn, may impact on the valuation of
investee companies and their ability to pay dividends.
Key service providers could experience high levels of staff
illness which may interrupt services
The Fund manager and the Administrator monitor the dividend
situation monthly and make the Board aware of cancelled,
postponed dividends as soon as they become aware.
The Board have checked with key service providers the steps they
have taken to protect their employees and procedures they have
in place for a continuity of service
Investment Portfolio Valuation
The Company’s portfolio is invested predominantly in listed
securities. Although all the securities are fully listed or traded
on AIM or AQSE, errors in the portfolio valuation could have a
material impact on the Company’s net asset value per share.
The portfolio is valued at bid price at the end of each month by
the custodians James Sharp & Co.
Misappropriation of Assets
Misappropriation of the Company’s investments or
cash balances could have a material impact on its net
asset value per share.
The portfolio is valued at bid price at the end of each month by
the custodians James Sharp & Co. The portfolio is agreed on a
monthly basis by the Company Secretary during the completion
of the monthly accounts.
Income Recognition
Incomplete or inaccurate income recognition could have an
adverse effect on the Company’s net asset value and earnings
per share and its level of dividend cover.
The level of income received for the year and the dividend
forecast for the year are agreed on a monthly basis with the Fund
Manager and the Company Secretary.
The Audit Committee reviews the scope and results of the audit
and, during the year, considered and approved Hazlewoods LLP’s
plan for the audit of the financial statements for the year ended 31
December 2020. At the conclusion of the audit Hazlewoods LLP did
not highlight any issues to the Audit Committee which would cause
it to qualify its audit report nor did it highlight any fundamental
issued an
internal control weaknesses. Hazlewoods LLP
unqualified audit report which is included on pages 24 to 27.
As part of the review of auditor independence and effectiveness,
Hazlewoods LLP has confirmed that it is independent of the
Company and has complied with relevant auditing standards. In
evaluating Hazlewoods LLP, the Audit Committee has taken into
consideration the standing, skills and experience of the firm and
the audit team. Following professional guidelines, the audit
partner rotates after five years.
Company Information
The following information is disclosed in accordance with The
Large and Medium-Sized Companies and Groups (Accounts and
Reports) Regulations 2008 and DTR 7.2.6.
16 | Athelney Trust plc | Annual Report 2020
The Company’s capital structure and voting rights are
•
summarised on pages 18 and 19
•
•
Details of the substantial shareholders in the Company are
listed on page 18.
The rules concerning the appointment and replacement of
in the Company’s Articles of
Directors are contained
Association and are discussed on page 18.
The Board is seeking to renew its current powers to issue and re-
purchase shares at the forthcoming Annual General Meeting.
•
•
There are: no restrictions concerning the transfer of
securities in the Company; no special rights with regard to
the control attached to securities; no restrictions on voting
rights; no agreements which the Company is party to that
might affect its control following a successful takeover.
There are no agreements between the Company and its
Directors concerning compensation for loss of office.
Corporate Governance Statement
Continued
Relations with Shareholders
The Company places great importance on communication with
shareholders and welcomes their views. The Chairman and the
other Directors have spoken to major shareholders during the year
to discuss their aspirations for the Company going forward. The
Annual General Meeting of the Company provides a forum, both
formal and informal, for shareholders to meet and discuss issues
with the Directors of the Company.
To comply with the AIC Code the Board are required to consult
with shareholders when 20 percent or more of votes have been
cast against Board recommendations for a resolution. Due to
COVID-19 the AGM on the 8 April 2020 was held behind closed
doors with no shareholders in physical attendance. All resolutions
proposed at the AGM were unanimously passed.
The notice of the Annual General Meeting, to be held behind closed
doors on 30 March 2021, is published in a separate notification. The
Annual Report and Notice of Annual General Meeting are sent to
shareholders at least 20 working days before the Meeting. Further
details regarding the 2021 AGM are contained in the Notice of the
Annual General Meeting published in a separate notification.
Internal Control
The Board is responsible for the Company’s system of internal
control and for reviewing its effectiveness. It has therefore
established an ongoing process designed to meet the particular
needs of the Company in managing the risks to which it is exposed,
consistent with the internal control guidance issued by the
Financial Reporting Council.
Adequate internal controls are in place for identifying, evaluating
and managing risks faced by the Company. This process, together
with key procedures established with a view to providing effective
financial control, has been in place for the full financial year and
up to the date the financial statements were approved and is
consistent with the internal control guidance issued by the
Financial Reporting Council.
The Board has reviewed the need for an internal audit function. It
has decided that the systems and procedures employed by the
Directors, provide sufficient assurance that a sound system of
internal control, which safeguards the Company’s assets, is
maintained. An internal audit function specific to the Company is
therefore considered unnecessary.
Internal Control Assessment Process
Risk assessment and the review of
internal controls are
undertaken by the Board in the context of the Company’s overall
investment objective. The review covers the key business,
operational, compliance and financial risks facing the Company. In
arriving at its judgement of what risks the Company faces, the
Board has considered the Company’s operations in the light of the
following factors:
• The nature and extent of risks which it regards as
acceptable for the Company to bear within its overall
business objective;
• The threat of such risks becoming a reality;
17 | Athelney Trust plc | Annual Report 2020
• The Company’s ability to reduce the incidence and impact
of risk on its performance; and
• The cost and benefits to the Company of third parties
operating the relevant controls.
Against this background, the Board has split the review of risk and
associated controls into four sections reflecting the nature of the
risks being addressed. These sections are as follows:
• Corporate strategy;
• Published
information, compliance with
laws and
regulations;
• Relationship with service providers; and
•
Investment and business activities.
The key procedures which have been established to provide
internal controls are as follows:
• Custody and valuation of assets is undertaken by James
Sharp & Co;
• The duties of investment management, accounting and
the custody of assets are segregated. The procedures of
the individual parties are designed to complement one
another;
• The Directors of the Company clearly define the duties and
responsibilities of
their agents and advisers. The
appointment of agents and advisers is conducted by the
Board after consideration of the quality of the parties
involved; the Board monitors their ongoing performance
and contractual arrangements;
• Mandates for authorization of investment transactions
and expense payments are set by the Board; and
• The Board reviews financial information produced by the
Fund Manager and the Company Secretary in detail on a
regular basis.
In accordance with guidance
listed
companies, the Directors have carried out a review of the
effectiveness of the system of internal control as it has operated
over the year.
issued to Directors of
On behalf of the Board
Dr Manny Pohl AM
Managing Director
24 February 2021
Report of the Directors
The Directors present their report and audited
financial
statements of the Company for the year ended 31 December 2020.
This report also contains certain
in
accordance with S992 of the Companies Act 2006.
information required
Results and Dividends
The return on ordinary revenue activities before dividends for the
year is £127,275 (2019: £195,643) as detailed on page 28.
The company paid its first interim dividend of 1.7p per ordinary
share paid on the 25 September 2020.
It is recommended that a final dividend of 7.7p per ordinary share
be paid. This will take the total dividend paid this year to 9.4p
(2019: 9.3p) per ordinary share.
Principal Activity and Status
The Company (company number: 02933559) is a public limited
company, limited by shares and incorporated in England and
Wales. It is an investment company as defined in Section 833 of
the Companies Act 2006. The registered office is Waterside Court,
Falmouth Road, Penryn, TR10 8AW.
The Company carries on business as an investment trust. The
Company has been granted approval from HM Revenue & Customs
('HMRC') as an authorised investment trust under Section 1158 of
the Corporation Tax Act 2010 for the year ended 31 December
2019. The Directors are of the opinion that the Company has
conducted its affairs for the year ended 31 December 2020 so as
to be able to continue to obtain approval as an authorised
investment trust, under Section 1158 of the Corporation Tax Act
2010.
Directors
Biographical details of the Directors can be found on pages 2 and
3.
In accordance with the arrangements for retirement contained in
the Company’s Articles of Association, the Directors will retire by
rotation on a yearly cycle. Frank Ashton will retire at the 2021 AGM
and will offer himself for re-election.
In addition to any power of removal conferred by the Companies
Acts, the Company may by special resolution remove any Director
without notice.
Conflicts of Interest
Each Director has a statutory duty to avoid a situation where they
have, or could have, a direct or indirect interest which conflicts, or
may conflict, with the interests of the Company. A Director will not
be in breach of that duty if the relevant matter has been
authorised by the Board in accordance with the Company’s Articles
of Association. The Board has approved a protocol for identifying
and dealing with conflicts and conducts a review of actual or
possible conflicts at least annually. No conflicts or potential
conflicts were identified during the year. It is not considered that
an interest in the Company’s shares held by a Director will of itself
give rise to a situation where that Director’s interests or duties
conflict with the interests of the Company.
18 | Athelney Trust plc | Annual Report 2020
Capital Structure
At 31 December 2020 the Company’s capital structure consisted of
2,157,881 Ordinary Shares of 25p each (2019: 2,157,881 Ordinary
Shares of 25p each).
Directors and Their Interests
The Directors who held office during the year and at the date of this
report are shown below; their interest in the ordinary shares of the
Company is stated on page 23 in the Directors’ Remuneration
Report.
Dr E. C. Pohl AM
(Managing Director)
N. Ashton
S. Moore
D. Lawman
(Chairman)
(Non-Executive Director)
(Retired 8 April 2020)
The Company does not have any contract of significance subsisting
during the year, with any other company in which a Director is or
was materially interested.
J C Pohl as alternate Director for Dr E C Pohl. As Dr E C Pohl was able
to attend all meetings of the Board during the year, J C Pohl was not
required to act as his alternate.
Substantial Shareholders
The Directors have been notified of the
following major
shareholdings in the Company that represent greater than 3% of the
voting rights:
Ordinary Shares
E C Pohl & Co Pty Ltd
IP Worldwide Flexible Fund
Astuce Group
Mr GW & Mrs DJ Whicheloe
Mehr Mutual
Global Masters Fund
Mrs E Davison
Mr C Frostick
Mr S Moore
P Grodzinski
394,000
339,054
140,000
104,000
102,918
102,000
75,000
70,500
67,500
65,000
% of
Issue
18.3
15.7
6.5
4.8
4.7
4.7
3.5
3.3
3.1
3.0
Out of the ten major shareholders listed above three were under the
direct control of two of the Directors during the year. The remaining
seven are in regular contact with the Directors (or their respective
agent) to ensure that they are frequently apprised and are content
with the manner in which the Company is being run.
There have been no other changes in the above major shareholdings
in the Company up to 20 February 2021.
Report of the Directors
Continued
Dividends
The Ordinary Shares carry a right to receive dividends which are
declared from time to time by an Ordinary Resolution of the
Company (up to the amount recommended by the Directors) and
to receive any interim dividends which the Directors may resolve
to pay.
Capital Entitlement
On a winding up, after meeting the liabilities of the Company, the
surplus assets will be paid to ordinary shareholders in proportion
to their shareholdings.
Voting
On a show of hands, every ordinary shareholder present in person
or by proxy has one vote and, on a poll, every ordinary shareholder
present in person has one vote for every share he/she holds and a
proxy has one vote for every share in respect of which he/she is
appointed.
Engagement with Suppliers and Other Business
Relationships
The Directors have regard for the need to maintain good business
relationships with suppliers and other businesses that the
Company may have contact with throughout the year. Suppliers
are paid in a timely manner and well within the credit terms
afforded to the Company. Other business relationships are
maintained on a professional and courteous level with regular
contact being maintained by the Fund Manager, Company
Secretary and Audit Committee Chairman.
Going Concern
In assessing the going concern basis of accounting, the Directors
have had regard to the guidance issued by the Financial Reporting
Council. They have considered the current cash position of the
Company, and forecast revenues for the current financial year. The
Directors have also taken into account the Company’s investment
policy, which is described on page 12 and which is subject to
regular Board monitoring processes, and is designed to ensure that
the Company is invested in listed securities and those traded on
AIM or AQSE.
The Company retains title to all assets held by its Custodian. Note
12 to the financial statements sets out the financial risk profile of
the Company and indicates the effect on its assets and liabilities of
falls and rises in the value of securities, market rates of interest
and changes in exchange rates.
The Directors believe, in the light of the controls and review
processes noted above and bearing in mind the nature of the
Company’s business and assets that the Company has adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, they continue to adopt the going concern
basis in preparing the financial statements.
19 | Athelney Trust plc | Annual Report 2020
Viability Statement
The Directors have assessed the prospects of the Company for a period
of three years. The Board believes this time period is appropriate
having consideration
for the Company’s principal risks and
uncertainties (outlined on pages 12 and 13), its portfolio of listed
equity investments and cash balances, and its ability to achieve the
stated dividend policy. The Directors have assessed the ability of the
Company to continue as a going concern as outlined above.
In making this assessment, the Directors have considered detailed
information provided at Board meetings which
includes the
Company’s balance sheet, investment portfolio and income and
operating expenses.
Based on the above, the Board confirms that the Company fully
expects it will be able to continue in operation and meet its liabilities
as they fall due over the three-year period of this assessment.
instruments comprise
Financial Instruments
The Company’s financial
investment
portfolio, cash balances and debtors and creditors that arise directly
from its operations such as sales and purchases awaiting settlement
and accrued income. The financial risk management objectives and
policies arising from its financial instruments and the exposure of the
Company to risk are disclosed in note 12 to the financial statements.
its
Annual General Meeting
The Notice of Annual General Meeting is published in a separate
notification.
Disclosure of Information to Auditors
The Directors confirm that, so far as each of them is aware, there is no
relevant audit information of which the Company’s auditor is unaware
and the Directors have taken all the steps that they ought to have
taken as Directors in order to make themselves aware of any relevant
audit information and to establish that the Company’s auditor is aware
of that information.
Re-appointment of Auditor
A resolution will be put to the shareholders at the Annual General
Meeting proposing the re-appointment of Hazlewoods LLP as Auditor
to the Company. Hazlewoods LLP has indicated its willingness to
continue in office.
On behalf of the Board
Dr Manny Pohl AM
Managing Director
24 February 2021
Statement of Directors’ responsibilities in respect of the
financial statements
The Directors are responsible for preparing the Annual Report and
the financial statements and have elected to prepare them in
accordance with applicable United Kingdom
law and United
(United Kingdom Generally
Kingdom Accounting Standards
Accepted Accounting Practice). Under company law the Directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Company and of its profit or loss for that period.
In preparing the 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;
• present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;
•
state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy, at any time, the
financial position of the Company and to enable them to ensure that
the financial statements comply with the Companies Act 2006. 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.
Under applicable
law and regulations, the Directors are also
responsible for preparing a Report of the Directors, a Strategic Report,
Directors’ Remuneration Report and Statement on Corporate
Governance.
The Directors state that to the best of their knowledge:
•
•
•
in accordance with UK
the Financial Statements, prepared
Generally Accepted Accounting Practice, give a true and fair view
of the assets, liabilities, financial position and net return of the
Company;
consider the Annual Report and accounts, taken as a whole, are
fair, balanced and understandable and provide the necessary
information for shareholders to assess the Company’s position and
performance, business model and strategy; and
the Chairman’s Statement and Report of the Directors include a
fair review of the development and performance of the business
and the position of the Company together with a description of the
principal risks and uncertainties that it faces.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information related to the Company including
on the Company’s website http://www.athelneytrust.co.uk
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
On behalf of the Board
Dr Manny Pohl AM
Managing Director
24 February 2021
20 | Athelney Trust plc | Annual Report 2020
Directors’ Remuneration Report
The Board has prepared this Report in accordance with the
requirements of Section 421 of the Companies Act 2006. An
Ordinary Resolution will be put to the members to approve the
Report at the forthcoming Annual General Meeting.
The law requires the Company’s Auditors to audit certain
disclosures provided. Where disclosures have been audited, they
are indicated as such. The Auditor’s opinion is included in their
report on pages 24 to 27.
Remuneration Committee
The Company had a Remuneration Committee during the year
comprising Simon Moore and David Lawman. After the AGM on
the 8 April 2020 the Remuneration Committee comprised Simon
Moore and Frank Ashton.
The Committee met during the year to review and implement
measures to avoid or manage conflicts of interest where applicable
and to consider and approve the Directors’ remuneration for the
year ending 31 December 2020.
Policy on Directors’ Remuneration
The Board’s policy is that the remuneration of non-executive
Directors should be sufficient to attract and retain Directors with
suitable skills and experience, and is determined in such a way as
to reflect the experience of the Board as a whole, in order to be
comparable with other organisations and appointments. It is
intended that this policy will continue for the year ending 31
December 2021 and thereafter.
The fees for non-executive Directors are determined within the
limits set out in the Company’s Articles of Association. The
approval of shareholders would be required to increase the limits
set out in the Articles of Association. Directors are not eligible for
bonuses, pension benefits, share options, long-term incentive
schemes or other benefits, as the Board does not consider such
arrangements or benefits necessary of appropriate.
Fees for any new Director appointed will be made on the same basis.
Non-executive Director’s fees have been set at £10,500 per annum for
a number of years and no changes are expected for the foreseeable
future.
The salary for the Managing Director and Fund Manager was fixed on
1 January 2019 at 0.75% of the portfolio value.
The policy was last approved by Shareholders at the Annual General
Meeting on 8 April 2020 and will remain valid until the Annual General
Meeting in 2023.
Directors’ Service Contracts
Each of the Directors has a service contract or letter of engagement
with the Company for an initial three-year term commencing in 2019.
There are no provisions in the service agreements for payments to be
made for loss of office, the service contracts are kept at the
Registered Office and are available for inspection by appointment.
The letters of engagement for all the Directors provide for renewal by
the Board on terms to be agreed from time to time.
Company Performance
The graph below compares capital growth, for the ten financial years
ended 31 December 2020, as a cumulative performance graph over
the whole 10 years and a table of discrete calendar year performance
figures. The comparison is between AIM All-Share and FTSE Small
Caps indices as the majority of investment holdings by the Company
are a constituent of one or the other of these two indices. The
comparison is required by Statutory Instrument to enable the readers
of the accounts to compare the performance of the Company.
21 | Athelney Trust plc | Annual Report 2020
Directors’ Remuneration Report
Continued
250
200
150
100
50
0
2010
2011
2012
ATY NAV
Capital Growth
(re-based to 100 at 31/12/2010)
2013
FTSE100
2014
2015
FTSE 250
2016
2017
FTSE Small Cap
2018
2019
AIM All Share
2020
dividends at 9.4p per share amounting to £202,840 (£200,683).
Expected
Fees for the
Year to 31
December
2021
10,500
42,000
10,500
Fees for
Year to 31
December
2020
10,500
37,807
10,500
Chairman basic
Fund Manager
fee
Non-Executive
0.75% of net
Director basic
assets
fee
No expenses were claimed by any Directors during this year.
Past performance is no guarantee of future performance.
Directors’ Remuneration for the Year (audited)
The Directors who served in the year received the following
remuneration in the form of salaries or non-executive Directors’
fees, no other salary related payments were made to any Director
during the year.
Dr E C Pohl (Managing Director)
Dr E C Pohl (Non-executive)
S Moore (Non-executive)
F Ashton (Chairman)
D Lawman (Non-executive)
H Sachdev (Non-executive)
J Jackson (Non-executive)
2020
£
37,807
-
10,500
10,500
2,625
-
-
2019
£
19,170
18,952
8,750
12,250
9,625
1,750
875
61,432
71,372
The Directors who were removed from the Board in 2019 did not
receive any payments for loss of office.
The Directors’ remuneration for the year of £61,432 which is
down by 14% on 2019 and is before the proposed final dividend
of 7.7p (2019:9.3p) per ordinary share, and as compared to total
22 | Athelney Trust plc | Annual Report 2020
2011201220132014201520162017201820192020ATY NAV-13.3%21.1%47.0%4.0%7.5%2.5%13.4%-20.7%18.2%-4.4%FTSE 100-5.6%5.8%14.4%-2.7%-4.9%14.4%7.6%-12.5%12.1%-14.3%FTSE 250-12.6%22.5%28.8%0.9%8.4%3.7%14.7%-15.6%25.0%-6.4%FTSE Small Cap-26.8%46.1%4.2%-24.0%7.8%4.5%3.6%-23.8%31.2%4.4%AIM All Share-48.0%37.4%17.9%-31.4%27.5%8.6%8.8%-34.2%36.4%20.7%
Directors’ Remuneration Report
Continued
Relative importance of spend on pay
2020
37,807
2019
38,122
% Change
-1%
Total remuneration
paid to the Fund
Manager
Total remuneration
paid to non-
executive Directors
Total remuneration
paid
23,625
33,250
-29%
61,432
71,372
-14%
For
Against
Total votes cast
Number of votes withheld
The Directors’ Remuneration Report for the year ended 31 December
2019 was approved by shareholders at the Annual General Meeting
held on 8 April 2020. The votes cast by proxy were as follows:
Number of
Votes
1,150,101
Nil
1,150,101
Nil
% of
votes
53.3
-
53.3
-
Directors’ beneficial and family interests (audited)
The interests of the Directors and their families in the Ordinary
shares of the Company are set out below:
The Directors’ Remuneration Policy was approved by shareholders
at the Annual General Meeting held on 8 April 2020. The votes cast
by proxy were as follows:
31
December
2020
(or date of
Resignation
If earlier)
31
December
2019
(or date of
appointment
if later)
-¹
67,500
2,234
1,000¹
67,500
-
For
Against
Total votes cast
Number of votes withheld
Number of
Votes
1,150,101
Nil
1,150,101
Nil
% of
votes
53.3
-
53.3
-
Approval
The Directors’ Remuneration Report was approved by the Board
on 24 February 2021.
Dr E. C. Pohl
S. Moore
F. Ashton
Notes:
1. Dr. E. C. Pohl is the sole beneficial owner of E C Pohl & Co
Pty Limited, which owns 54.1% of the issued share capital
of Global Masters Fund Limited on behalf of itself and
clients whose portfolios it manages. E C Pohl & Co Pty
Limited holds 394,000 (2019: 339,054), Global Masters
Fund Limited holds 102,000 (2019: 204,951) shares in the
Company.
None of the Directors nor any persons connected with them had a
material interest in the Company’s transactions, arrangements or
agreements during the year other than through their holdings in the
Company’s shares. There are no requirements for the Director’s to
own shares in the Company.
The Directors are fully aware that the Company is not a close
company and of the rules associated with this status. The Company
Secretary maintains a record of shareholders which is regularly
updated. The Company breached the 5/50 rule during 2019 and this
has remained during 2020 due to the top 5 shareholders owning
more than 50% of the total shares in the company. The Company
holds its Investment Trust status under the S446 Companies Act 2010
exemption because more than 35% of the company’s shares are held
by the public and have been actively traded in the past 12 months on
the London Stock Exchange.
Dr Manny Pohl AM
Managing Director
.
23 | Athelney Trust plc | Annual Report 2020
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
ATHELNEY TRUST PLC
Opinion
We have audited the financial statements of Athelney Trust plc (“the
Company”) for the year ended 31 December 2020, which comprise the
Income Statement, Statement of Changes in Equity, Statement of the
Financial Position, Statement of Cash Flows and notes to the financial
statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their
law and United Kingdom Accounting
preparation
Standards, including Financial Reporting Standard 102 The Financial
Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
is applicable
In our opinion the financial statements:
give a true and fair view of the state of the Company’s affairs as
at 31 December 2020 and of its net return for the year then
ended;
have been properly prepared
in accordance with United
Kingdom Generally Accepted Accounting Practice;
have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with international Standards
on Auditing (UK) ((ISAs UK)) and applicable law. Our responsibilities
under those standards are further described
in the Auditor’s
Responsibilities for the audit of the financial statements section of our
report. We are independent of the Company in accordance with the
ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
An overview of the scope of our audit
Our audit approach was based on a thorough understanding of the
Company’s business and is risk-based. The day-to-day management of
the Company’s investment portfolio, the custody of its investments
and the maintenance of the Company’s accounting records is
outsourced to third-party service providers. Accordingly, our audit
work is focused on obtaining an understanding of, and evaluating,
internal controls at the Company and the third-party service providers
and inspecting records and documents held by the third-party service
providers. We undertook substantive
testing on significant
transactions, balances and disclosures, the extent of which was based
on various factors such as our overall assessment of the control
environment, the effectiveness of controls over individual systems and
the management of specific risks.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
24 | Athelney Trust plc | Annual Report 2020
In making this assessment we have considered the directors’
procedures for overseeing the activities of the company and
reviewing its results and forecasts. The application of those
procedures has been supported by us reviewing Board minutes and
other accessible documentation which confirm that the directors
regularly benchmark key performance indicators which include but
is not restricted to, comparing performance against the FTSE Small
Cap, FTSE 250 and FTSE 100 markets, frequent monitoring of
available funds, anticipated cash outflows and financial headroom.
In conjunction with the evaluation of management’s assessment of
going concern, we have observed that resources are carefully
planned and managed with the intention of ensuring that the
company has sufficient resources available and accessible to ensure
that the company’ commitments and obligations are capable of
being met as they fall due.
In relation to the entity’s reporting on how it has applied the UK
Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the directors’ statement in the
financial statements about whether the director’s considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections of
this report.
Our approach to the audit
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key audit matters
identified were valuation, ownership and
existence of investments and the allocation of capital and revenue
items. Revenue recognition and the risk of management override of
controls are always deemed risks in any audit. This is not a complete
list of all risks identified by our audit.
Valuation, ownership and existence of investments
The Company’s investment portfolio is one of the key drivers of its
results, of which 100% is represented by quoted investments. The
investments are not considered to be at a high risk of material
misstatement, or to be subject to a significant level of judgement,
because they comprise liquid, quoted investments for which
evidence of the market price is readily available.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
ATHELNEY TRUST PLC
Continued
However, due to their materiality in the context of the financial
statements as a whole, they are considered to be a significant risk area.
Our audit work included, but was not restricted to, consideration of
the design and implementation of controls over the pricing of quoted
investments and agreeing 100% of investment prices to independent
sources. We considered the appropriateness of the use of the quoted
bid price by reviewing the liquidity of the market of the quoted
investments held. We also confirmed investment holdings to either
third party confirmations, direct investee confirmations or share
certificates.
Allocation of costs between capital and revenue
The Company allocates expenditure between revenue and capital on
the basis of the Board’s expected long-term capital and revenue
returns. The allocation is important as it affects distributable reserves.
Our audit work included, but was not restricted to, a detailed review
of the actual dividend and capital income received in the past nine
years compared to the Board’s expected long-term capital and
revenue returns. The Company’s accounting policy on this allocation is
included in note 1 to the financial statements.
Management override of financial controls
The risk of management override is always considered a significant
audit risk but is particularly relevant for the Company due to the size
of the organisation structure. Our audit work included, but was not
restricted to a review of all significant management estimates and
judgements applied during the preparation of the
financial
statements. We also reviewed material journal entries processed by
management during the period. The company’s principal accounting
policies are included in note 1 to the financial statements.
Revenue recognition
There is always a presumed risk that revenue may be misstated due to
the improper recognition of revenue. In particular we identified
completeness and occurrence of investment income as a risk that
requires particular audit attention. Our audit work included, but was
not restricted to: Obtaining an understanding of management’s
process to recognise revenue in accordance with the stated accounting
policy; checking on a sample basis income transactions by comparing
dividends during the year obtained from an independent source with
those recognised by the Company; checking on a sample basis gains
and losses on investments to third party contracts; and checking
transactions close to the financial year end date on a sample basis, to
ensure that they have been allocated to the correct accounting period.
Investment trust status
In order to maintain its status as a tax exempt investment trust certain
criteria must be fulfilled. These requirements include a 15% limit on
retention of income after dividends and revenue expenses and a
minimum of 35% of the Company’s shares must be owned by the
general public and traded on a recognised stock exchange. Our audit
work included, but was not restricted to: reviewing calculations to
ensure that no more than 15% of income was retained after dividends
and revenue expenditure; reviewing the shareholder' register to
ensure that at least 35% of the share were not held by a related party;
and obtaining an Audit Representation Letter from the Company's
Directors confirming that they complied with the applicable rules.
25 | Athelney Trust plc | Annual Report 2020
Our application of materiality
We apply the concept of materiality in planning and performing
our audit, in evaluating the effect of any identified misstatements
and in forming our opinion. For the purpose of determining
whether the financial statements are free from material
misstatement, we define materiality as the magnitude of a
misstatement or an omission from the financial statements or
related disclosures that would make
it probable that the
judgement of a reasonable person, relying on the information
would have been changed or influenced by the misstatement or
omission. We also determine a level of performance materiality,
which we use to determine the extent of testing needed, to reduce
to an appropriately low-level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality
for the financial statements as a whole.
We established materiality for the financial statements as a whole
to be £111,000, which is 2% of the value of the Company’s net
assets. For income and expenditure items we determined that
misstatements of lesser amounts than materiality for the financial
statements as a whole would make it probable that the judgement
of a reasonable person, relying on the information would have
been changed or influenced by the misstatement or omission.
Accordingly, we established materiality for revenue items within
the income statement to be £32,000, which is 25% of the
Company’s net revenue return on ordinary activities before
taxation.
Other information
The Directors are responsible for the other information contained
within the annual report. The other information comprises the
information included in the annual report, other than the financial
statements and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material
inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there
is a material
misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
In this context, we also have nothing to report in regard to our
responsibility to specifically address the following items in the
information and to report as uncorrected material
other
misstatements of the other information where we conclude that
those items meet the following conditions:
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
ATHELNEY TRUST PLC
Continued
Fair, balanced and understandable, set out on page 11 – the
statement given by the Directors that they consider the annual
report and financial statements taken as a whole is fair, balanced
and understandable and provides the information necessary for
shareholders to assess the Company’s performance, business
model and strategy, is materially inconsistent with our knowledge
obtained in the audit; or
Audit committee reporting, set out on pages 15 to 16 – the
section describing the work of the audit committee does not
appropriately address matters communicated by us to the audit
committee; or
Directors’ statement of compliance with the UK Corporate
Governance Code, set out on page 14 the parts of the Directors’
statement required under the Listing Rules relating to the
Company’s compliance with the UK Corporate Governance Code
containing provisions specified for review by the auditors in
accordance with Listing Rule 9.8.10R (2) do not properly disclose a
departure from a relevant provision of the UK Corporate
Governance Code.
Opinion on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the course of the
audit:
the part of the Directors’ Remuneration Report to be audited has
been properly prepared in accordance with the Companies Act
2006;
the information given in the Strategic Report and the Report of
the Directors for the financial year for which the financial
statements are prepared
is consistent with the financial
statements and those reports have been prepared in accordance
with applicable legal requirements;
the information about internal control and risk management
systems in relation to financial reporting processes and about
share capital structures, given in compliance with rules 7.2.5 and
7.2.6 in the Disclosure Rules and Transparency Rules sourcebook
made by the Financial Conduct Authority (the FCA Rules), is
consistent with the financial statements and has been prepared
in accordance with applicable legal requirements; and
information about the Company’s corporate governance code
and practices and about its administrative, management and
supervisory bodies and their committees complies with rules
7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have
not identified material misstatements:
26 | Athelney Trust plc | Annual Report 2020
the strategic report or the Directors’ Report; or
the information about internal control and risk management
systems in relation to financial reporting processes and about
share capital structures, given in compliance with rules 7.2.5
and 7.2.6 of the FCA Rules.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches
not visited by us; or
the financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement with
the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law
are not made; or
we have not received all the information and explanations we
require for our audit; or
a corporate governance statement has not been prepared by
the Company.
Corporate governance statement
The Listing Rules require us to review the directors' statement in
relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the entity's
compliance with the provisions of the UK Corporate Governance
Statement specified for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
the disclosures in the annual report set out on pages 12 to 13
that describe the principal risks and explain how they are being
managed or mitigated;
the Directors’ confirmation set out on page 12 in the annual
report that they have carried out a robust assessment of the
principal risks facing the Company, including those that would
threaten its business model, future performance, solvency or
liquidity;
the Directors’ statement set out on page 19 in the financial
statements about whether the Directors considered
it
appropriate to adopt the going concern basis of accounting in
financial statements and the Directors’
preparing the
identification of any material uncertainties to the Company’s
ability to continue to do so over a period of at least twelve
months from the date of approval of the financial statements;
whether the Directors’ statement relating to going concern
required under the Listing Rules in accordance with Listing Rule
9.8.6R(3)
inconsistent with our knowledge
obtained in the audit; or
is materially
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
ATHELNEY TRUST PLC
Continued
the Directors’ explanation set out on page 19 in the annual report
as to how they have assessed the prospects of the Company, over
what period they have done so and why they consider that period
to be appropriate, and their statement as to whether they have a
reasonable expectation that the Company will be able to continue
in operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Responsibilities of Directors
As explained more fully in the Statement of Directors' responsibilities
(set out on page 20), the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the Directors determine
is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either
intend to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Auditor’s Responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with
laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud.
The audit evidence available in relation to the investment portfolio
and associated returns are publicly available and considered to be
strong sources of audit evidence. Ownership of investments has
been verified by reference to this information.
The nature of the company’s activities means that overheads are
generally consistent and predictable and where unexpected
variances occur, adequate evidence is available.
Our audit work, which utilises the above audit evidence along with
the audit procedures outlined in our description of our approach
to the audit above, provides us with a reasonable assurance that
our audit procedures will detect irregularities, including fraud.
A further description of our responsibilities for the audit of the
financial statements is located on the Financial Reporting Council’s
website at www.frc.org.uk/auditorsresposibilities. This description
forms part of our auditor’s report.
Use of our report
This report is made solely to the Company's members, as a body,
in accordance with chapter 3 of part 16 of the Companies Act 2006.
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
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.
Ryan Hancock FCCA (Senior Statutory Auditor)
for and on behalf of Hazlewoods LLP
Statutory Auditor, Cheltenham.
24 February 2021
27 | Athelney Trust plc | Annual Report 2020
Income Statement
For the Year Ended 31 December 2020
Note
Revenue
2020
Total
Capital
Revenue
Capital
2019
Total
£
£
£
£
£
£
(Losses)/gains on
investments held at
fair value
Income from
investments
Investment
management
expenses
Other expenses
Net return on
ordinary activities
before taxation
Taxation
Net return on
ordinary activities
after taxation
Net return per
ordinary share
Dividend per
ordinary share paid
during the year
8
2
3
3
5
6
6
7
-
(30,695)
(30,695)
-
1,086,854
1,086,854
160,876
-
160,876
232,262
-
232,262
(3,781)
(34,221)
(38,002)
(3,812)
(34,682)
(38,494)
(29,820)
(75,688)
(105,508)
(32,807)
(166,384)
(199,191)
127,275
(140,604)
(13,329)
195,643
885,788
1,081,431
-
-
-
-
-
-
127,275
(140,604)
(13,329)
195,643
885,788
1,081,431
5.9p
(6.5p)
(0.6p)
9.1p
41.0p
50.1p
11p
9.1p
All revenue and capital items in the above statement derive from continuing operations.
No operations were acquired or discontinued during the year.
The total column of this statement is the Statement of Total Comprehensive Income of the Company prepared in accordance with
applicable Financial Reporting Standards (“FRS”). The supplementary revenue return and capital return columns are prepared in
accordance with the Statement of Recommended Practice (“AIC SORP”) issued in October 2019 by the Association of Investment
Companies.
The notes on pages 32 to 38 form part of these financial statements.
28 | Athelney Trust plc | Annual Report 2020
Statement of Changes in Equity
For the Year Ended 31 December 2020
Called-up
Share
Capital
£
Share
Premium
£
Capital
reserve
realised
£
Capital
reserve
unrealised
£
Revenue
reserve
£
Total
Shareholders’
Funds
£
539,470
881,087
1,855,088
1,157,686
440,322
4,873,653
-
-
-
-
-
-
-
-
-
-
262,480
-
-
824,374
-
-
(201,066)
-
-
-
-
-
-
195,643
(196,367)
262,480
824,374
(201,066)
195,643
(196,367)
539,470
881,087
1,916,502
1,982,060
439,598
5,758,717
539,470
881,087
1,916,502
1,982,060
439,598
5,758,717
-
-
-
-
-
-
-
-
-
-
223,957
-
-
(254,652)
-
-
(109,909)
-
-
-
-
-
-
127,275
(237,367)
223,957
(254,652)
(109,909)
127,275
(237,367)
539,470
881,087
2,030,550
1,727,408
329,506
5,508,021
Balance brought forward at
1 January 2019
Net profits on realisation
of investments
Increase in unrealised
appreciation
Expenses allocated to
Capital
Profit for the year
Dividend paid in year
Shareholders’ Funds at 31
December 2019
Balance brought forward at
1 January 2020
Net profits on realisation
of investments
Decrease in unrealised
Appreciation
Expenses allocated to
Capital
Profit for the year
Dividend paid in year
Shareholders’ Funds at 31
December 2020
The notes on pages 32 to 38 form part of these financial statements.
29 | Athelney Trust plc | Annual Report 2020
Statement of Financial Position
As at 31 December 2020
Company Number: 02933559
Note
Fixed assets
Investments held at fair value through profit and
loss
Current assets
Debtors
Cash at bank and in hand
8
9
2020
£
2019
£
5,310,661
5,466,191
142,136
72,601
214,737
Creditors: amounts falling due within one year
10
(17,377)
Net current assets
Total assets less current liabilities
Net assets
Capital and reserves
Called up share capital
Share premium account
Other reserves (non distributable)
Capital reserve - realised
Capital reserve - unrealised
Revenue reserve (distributable)
Shareholders' funds - all equity
11
197,360
5,508,021
5,508,021
539,470
881,087
2,030,550
1,727,408
329,506
5,508,021
Net Asset Value per share
13
255.3p
223,733
90,902
314,635
(22,109)
292,526
5,758,717
5,758,717
539,470
881,087
1,916,502
1,982,060
439,598
5,758,717
266.9p
These financial statements were approved and authorised for issue by the Board of Directors on 24 February 2021 and signed on their
behalf by
Dr Manny Pohl AM
Managing Director
The notes on pages 32 to 38 form part of these financial statements.
30 | Athelney Trust plc | Annual Report 2020
Statement of Cash Flows
For the Year Ended 31 December 2020
Cash flows used in operating activities
Net revenue return
Adjustment for:
Expenses charged to capital
(Decrease)/increase in creditors
Decrease/(increase) in debtors
Cash (used)/from operations
Cash flows from investing activities
Purchase of investments
Proceeds from sales of investments
Net cash used in investing activities
Equity dividends paid
Net (decrease)/increase in cash
Cash at the beginning of the year
Cash at the end of the year
2020
£
127,275
(109,909)
(4,732)
81,597
94,231
(1,137,856)
1,262,691
124,835
(237,367)
(18,301)
90,902
72,601
2019
£
195,643
(201,066)
(1,431)
(10,298)
(17,152)
(2,074,201)
2,343,102
268,901
(196,367)
55,382
35,520
90,902
As the company does not have any loans, overdrafts or hire purchase arrangements, net debt is equal to cash and therefore no
reconciliation of net debt has been disclosed.
The notes on pages 32 to 38 form part of these financial statements.
31 | Athelney Trust plc | Annual Report 2020
Notes to the Financial Statements
For the Year Ended 31 December 2020
1. Accounting Policies
1.1 Statement of Compliance and Basis of Preparation of Financial
Statements
The financial statements are prepared in accordance with applicable
United Kingdom accounting standards, including Financial Reporting
Standard 102 (“FRS 102”), the Companies Act 2006 and with the AIC
Statement of Recommended Practice (“SORP”) issued in October
2019, regarding the Financial Statements of Investment Trust
Companies and Venture Capital Trusts. All the Company’s activities
are continuing.
The presentation currency of the financial statements is pounds
sterling, being the functional currency of the primary economic
environment in which the company operates. Monetary amounts in
these financial statements are rounded to the nearest pound.
1.2 Income
Income from investments including taxes deducted at source is
recognised when the right to the return is established (normally the
ex-dividend date). UK dividend income is reported net of tax credits
in accordance with FRS 102 “Income Tax”. Interest is dealt with on
an accruals basis.
1.3 Investment Management Expenses
All three Directors are involved in investment management, 10% of
their salaries or fees have been charged to revenue and the other
90% to capital. All other investment management expenses have
been charged to capital. The Board propose continuing this basis for
future years.
1.4 Other Expenses
Expenses (including VAT) and interest payable are dealt with on an
accruals basis and charged through the Revenue and Capital
Accounts in an allocation that the Board consider to be a fair
distribution of the costs incurred.
1.5 Investments
Listed investments comprise those listed on the Official List of the
London Stock Exchange. Unlisted investments are traded on AIM.
Profits or losses on sales of investments are taken to realised capital
reserve. Any unrealised appreciation or depreciation is taken to
unrealised capital reserve.
year, similarly, AIM-traded investments are valued using the closing
bid price on 31 December.
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.
1.7 Judgements and estimates
The Directors confirm that no judgements or significant estimates
have been made in the process of applying the Company’s
accounting policies.
1.8 Deferred Taxation
Deferred tax is recognised in respect of all timing differences that
have originated but not reversed by the balance sheet date.
Deferred tax
liabilities are recognised for all taxable timing
differences but deferred tax assets are only recognised if it is
considered more likely than not that there will be suitable profits
from which the future reversal of the underlying timing differences
can be deducted. Deferred tax assets and liabilities are calculated at
the tax rates expected to be effective at the time the timing
differences are expected to reverse. Deferred tax assets and
liabilities are not discounted.
1.9 Capital Reserves
Capital Reserve – Realised
Gains and losses on realisation 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. Unrealised capital reserves cannot be
distributed by way of dividends or similar.
1.10 Dividends
In accordance with FRS 102 “Events after the end of the Reporting
Period”, dividends are included in the financial statements in the
year in which they go ex-div.
Investments have been classified as “fair value through profit and
loss” upon initial recognition.
1.11 Share Issue Expenses
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
The costs associated with issuing shares are written off against any
premium arising on the issue of Share Capital.
1.12 Financial Instruments
Short term debtors and creditors are held at cost.
32 | Athelney Trust plc | Annual Report 2020
Notes to the Financial Statements
For the Year Ended 31 December 2020 (continued)
2. Income
Income from investments
UK dividend income
Foreign dividend income
UK Property REITs
Bank interest
Bank compensation
Total income
UK dividend income
UK Main Market listed investments
UK AIM-traded shares
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
Auditor’s remuneration:
Audit Services - Statutory audit
Miscellaneous expenses:
Other wages and salaries
Management services
PR and communications
Stock exchange subscription
Sundry investment management and other expenses
Legal fees
4. Employees and Directors’ Remuneration
Costs in respect of Directors:
Non-executive Directors’ fees
Wages and salaries
Social security costs
Average number of employees:
Chairman
Investment
Administration
33 | Athelney Trust plc | Annual Report 2020
2020
£
95,482
17,834
47,480
80
-
160,876
2020
£
65,476
30,006
95,482
2020
£
23,625
37,807
9,250
-
32,472
2,310
11,540
24,044
2,460
143,508
2020
£
23,625
37,807
-
61,432
-
1
-
1
2019
£
173,047
25,542
33,173
-
500
232,262
2019
£
124,674
48,373
173,047
2019
£
26,250
45,122
13,250
153
32,472
12,351
6,748
27,633
73,706
237,685
2019
£
26,250
45,122
153
71,525
-
1
-
1
Notes to the Financial Statements
For the Year Ended 31 December 2020 (continued)
5. Taxation
(i) On the basis of these financial statements no provision has been made for corporation tax (2019: Nil).
(ii) Factors affecting the tax charge for the year.
The tax charge for the period is higher than (2019: lower than) the average small company rate of corporation tax in the UK of 19 per cent.
The differences are explained below:
Total return on ordinary activities before tax
Total return on ordinary activities multiplied by the
average small company rate of corporation tax 19%
(2019: 19%)
Effects of:
UK dividend income not taxable
Revaluation of shares not taxable
Capital gains not taxable
Unrelieved management expenses
2020
£
(13,329)
2019
£
1,081,431
( 2,532)
205,472
(18,142)
48,384
(42,552)
14,842
(32,879)
(156,631)
(49,871)
33,909
Current tax charge for the year
-
-
The Company has unrelieved excess revenue management expenses of £401,358 at 31 December 2020 (2019: £356,765) and £102,597 (2019:
£102,597) of capital losses for Corporation Tax purposes and which are available to be carried forward to future years. It is unlikely that the
Company will generate sufficient taxable profits in the future to utilise these expenses and therefore no deferred tax asset has been recognised.
For the year ended 31 December 2019, the Company received approval from HM Revenue and Customs under Section 1158 of the Corporation
Tax Act 2010, therefore the Company was not liable to Corporation Tax on any realised investment gains for 2019. The Directors intend to
continue to meet the conditions required to obtain approval and therefore no deferred tax has been provided on any capital gains or losses
arising on the revaluation or disposal of investments.
6. Return per Ordinary Share
The calculation of earnings per share has been performed in accordance with FRS 102.
£
2020
£
Revenue
Capital
£
Total
Attributable return on ordinary activities after taxation
127,275
(140,604)
(13,329)
Weighted average number of shares
2,157,881
Return per ordinary share
5.9p
(6.5p)
(0.6p)
£
2019
£
Revenue
Capital
£
Total
Attributable return on ordinary activities after taxation
195,643
885,788
1,081,431
Weighted average number of shares
2,157,881
Return per ordinary share
9.1p
41.0p
50.1p
34 | Athelney Trust plc | Annual Report 2020
Notes to the Financial Statements
For the Year Ended 31 December 2020 (continued)
7. Dividend
Final dividend in respect of 2019 of 9.3p (2019: a final
dividend of 9.1p was paid in respect of 2018) per share
Interim dividend in respect of 2020 of 1.7p per share
2020
£
2019
£
200,683 196,367
36,684
237,367
-
196,367
Set out below is the total dividend payable in respect of the financial year, which is the basis on which the requirements of Section 1158 of
the Corporation Tax Act 2010 are considered.
It is recommended that a final dividend of 7.7p (2019: 9.3p) per ordinary share be paid out of revenue profits amounting to a total of
£166,157. For the year 2019, a final dividend of 9.3p was paid on 16 April 2020 amounting to a total of £200,683.
Summary of dividends paid for the last 10 financial years
Ex-div date
Proposed 11/3/2021
10/9/2020
19/3/2020
20/3/2019
01/3/2018
09/3/2017
17/3/2016
19/3/2015
19/3/2014
20/3/2013
21/3/2012
06/4/2011
Dividend Type
Final
Interim
Final
Final
Final
Final
Final
Final
Final
Final
Final
Final
Revenue available for distribution
Interim dividend paid
Final dividend in respect of financial year Ended 31 December 2020
Amount
7.7p
1.7p
9.3p
9.1p
8.9p
8.6p
7.9p
6.7p
5.5p
5.0p
4.95p
4.9p
2020
£
127,275
(36,684)
(166,157)
Financial Year
2020
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2019
£
195,643
-
(200,683)
Undistributed Revenue Reserve
( 75,566)
( 5,040)
8. Investments
Movements in year
Valuation at beginning of year
Purchases at cost
Sales - proceeds
- realised gains on sales
(Decrease)/Increase in unrealised appreciation
Valuation at end of year
Book cost at end of year
Unrealised appreciation at the end of the year
UK Main Market listed investments
UK AIM-traded shares
35 | Athelney Trust plc | Annual Report 2020
2020
£
5,466,191
1,137,856
(1,262,691)
223,957
(254,652)
2019
£
4,648,238
2,074,201
(2,343,102)
262,480
824,374
5,310,661
5,466,191
3,583,255
1,727,406
3,484,131
1,982,060
5,310,661
5,466,191
3,791,591
1,519,070
4,258,921
1,207,270
5,310,661
5,466,191
Notes to the Financial Statements
For the Year Ended 31 December 2020 (continued)
(Losses)/gains on investments
Realised gains on sales
(Decrease)/Increase in unrealised Appreciation
2020
£
223,957
(254,652)
2019
£
262,480
824,374
(30,695)
1,086,854
The purchase costs and sales proceeds above include transaction costs of £7,910 (2019: £15,533) and £5,056 (2019: £8,810) respectively.
9. Debtors
Investment transaction debtors
Other debtors
10. Creditors: amounts falling due within one year
Social security and other taxes
Other creditors
Accruals and deferred income
11. Called Up Share Capital
Authorised
10,000,000 Ordinary Shares of 25p
Allotted, called up and fully paid
2,157,881 Ordinary Shares of 25p
2020
£
133,210
8,926
142,136
2020
£
-
2,850
14,527
17,377
2019
£
213,862
9,871
223,733
2019
£
1,148
2,956
18,005
22,109
2020
£
2019
£
2,500,000
2,500,000
539,470
539,470
12. Financial Instruments
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.
The major risks associated with the Company are market, credit 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
Market price risk arises mainly from uncertainty about future prices of financial investments used in the Company’s business. It represents
the potential loss the Company might suffer through holding market positions by way of price movements other than movements in exchange
rates and interest rates.
The Company’s investment portfolio is exposed to market price fluctuations which are monitored by the Fund Manager who gives timely
reports of relevant information to the Directors.
Adherence to the investment objectives and the internal controls on investments set by the Company mitigates the risk of excessive exposure
to any one particular type of security or issuer.
The Company’s exposure to other changes in market prices at 31 December on its investments is as follows:
A 20% decrease in the market value of investments at 31 December 2020 would have decreased net assets attributable shareholders by 49
pence per share (2019: 51 pence per share). An increase of the same percentage would have an equal but opposite effect on net assets
available to shareholders.
36 | Athelney Trust plc | Annual Report 2020
Notes to the Financial Statements
For the Year Ended 31 December 2020 (continued)
Market risk also arises from changes in interest rates and exchange risk. All of the Company’s assets are in sterling and accordingly the
Company has limited currency exposure. The majority of the Company’s financial assets are non-interest bearing, as a result, the Company’s
financial assets are not subject to significant risk due to fluctuations in the prevailing levels of market interest rates.
The carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date. Bankruptcy or insolvency
of the custodian may cause the Company’s rights with respect to securities held with the custodian to be delayed.
Liquidity Risk
Liquidity Risk is the risk that the Company may have difficulty in meeting obligations associated with financial liabilities. The Company is able
to reposition its investment portfolio when required so as to accommodate liquidity needs. However, it may be difficult to realise its
investment portfolio in adverse market conditions.
Maturity Analysis of Financial Liabilities
The Company’s financial liabilities consist of creditors as disclosed in note 10. All items are due within one year.
Capital management policies and procedures
The Company’s capital management objectives are:
• to ensure the Company’s ability to continue as a going concern;
• to provide an adequate return to shareholders;
• to support the Company’s stability and growth;
• to provide capital for the purpose of further investments.
The Company actively and regularly reviews and manages its capital structure to ensure an optimal capital structure, taking into consideration
the future capital requirements of the Company and capital efficiency, projected operating cash flows and projected strategic investment
opportunities. The management regards capital as total equity and reserves, for capital management purposes.
Fair values of financial assets and financial liabilities
Fixed asset investments (see note 8) are valued at market bid price where available which equates to their fair values. The fair values of all
other assets and liabilities are represented by their carrying values in the balance sheet.
Fair value through profit or loss investments
Financial instruments by category
The financial instruments of the Company fall into the following categories
31 December 2020
2020
£
5,310,661
2019
£
5,466,191
At Amortised
Cost
£
-
142,136
72,601
214,737
17,377
17,377
Assets at fair
value
through
profit or loss
£
5,310,661
-
-
Total
£
5,310,661
142,136
72,601
5,310,661
5,525,398
-
-
17,377
17,377
Assets as per balance sheet
Investments
Debtors
Cash at bank
Total
Liabilities as per the balance sheet
Creditors
Total
37 | Athelney Trust plc | Annual Report 2020
Notes to the Financial Statements
For the Year Ended 31 December 2020 (continued)
31 December 2019
Assets as per balance sheet
Investments
Debtors
Cash at bank
Total
Liabilities as per the balance sheet
Creditors
Total
At Amortised
Cost
£
-
223,733
90,902
314,635
22,109
22,109
Assets at fair
value
through
profit or loss
£
5,466,191
-
-
Total
£
5,466,191
223,733
90,902
5,466,191
5,780,826
-
-
22,109
22,109
Fair value hierarchy
In accordance with FRS 102, the Company must disclose the fair value hierarchy of financial instruments.
The fair value hierarchy consists of the following three classifications:
Classification A – Quoted prices in active markets for identical assets or liabilities.
Quoted in an active market in this context means quoted prices are readily and regularly available and those prices represent actual and
regularly occurring market transactions on an arm’s length basis.
Classification B – The price of a recent transaction for an identical asset, where quoted prices are unavailable.
The price of a recent transaction for an identical asset provides evidence of fair value as long as there has not been a significant change in
economic circumstances or a significant lapse of time since the transaction took place. If it can be demonstrated that the last transaction
price is not a good estimate of fair value (e.g. because it reflects the amount that an entity would receive or pay in a forced transaction,
involuntary liquidation or distress sale), that price is adjusted.
Classification C – Inputs for the asset or liability that are based on observable market data and unobservable market data, to estimate what
the transaction price would have been on the measurement data in an arm’s length exchange motivated by normal business considerations.
The Company only holds classification A investments (2019: classification A investments only).
13. Net Asset Value per Share
The net asset value per share is based on net assets of £5,310,661 (2019: £5,758,717) divided by 2,157,881 (2019: 2,157,881) ordinary
shares in issue at the year end.
Net asset value per share
2020
£
255.3p
2019
£
266.9p
14. Dividends paid to Directors
During the year the following dividends were paid to the Directors of the Company as a result of their total shareholding:
Dr Manny Pohl AM
Simon Moore
Frank Ashton
Notes:
£59,134¹
£ 7,425
£ 246
1. Manny Pohl’s relationship with Global Masters Fund Limited is described in Note 1 to the table of Directors’ interests on page 35.
During the year dividends amounting to £59,041 were paid to Global Masters Fund Limited and EC Pohl & Co Pty Ltd and £93 to
Manny Pohl for shares held in his own name.
38 | Athelney Trust plc | Annual Report 2020
Officers and Financial Advisors
Directors:
Secretary:
Mr N F Ashton (Chairman)
Dr E C Pohl
Mr S Moore
Email: frankashton@athelneytrust.co.uk
Email: mannypohl@athelneytrust.co.uk
Email: simonmoore@athelneytrust.co.uk
Mrs D Warburton
Waterside Court
Falmouth Road
Penryn
Cornwall, TR10 8AW
Email: secretary@athelneytrust.co.uk
Tel: 01326 378 288
Registered Office: Waterside Court
Falmouth Road
Penryn
Cornwall, TR10 8AW
Email: info@athelneytrust.co.uk
Tel: 01326 378 288
Website: http://www.athelneytrust.co.uk
Company Number: 02933559
(Incorporated and registered in England)
Email: d.smith@druces.com
Tel: 020 7638 9271
Email: mail@jamessharp.co.uk
Tel: 0161 764 4043
Email: ryan.hancock@hazlewoods.co.uk
Tel: 01242 680 000
Email: peter@shareregistrars.uk.com
Tel: 01252 821 390
Solicitor:
Druces LLP
Salisbury House
London Wall
London
EC2M 5PS
James Sharp & Co
Stockbroker:
5 Bank Street
Bury
Lancashire, BL9 0DN
Auditors:
Banker:
Registrar:
Hazlewoods LLP
Staverton Court
Staverton
GL51 0UX
HSBC Bank Plc
Market Street
Falmouth
Cornwall, TR11 3AA
Share Registrars Limited
Suite E First Floor
9 Lion & Lamb Yard
Farnham
Surrey, GU9 7LL
39 | Athelney Trust plc | Annual Report 2020
Company number
02933559
Athelney Trust
Waterside Court, Falmouth Road
Penryn, Cornwall TR10 8AW
athelneytrust.co.uk
11
Athelney Trust plc | Annual Report 2020