Athelney Tst. Regulatory News (ATY)

11 Apr 2007 07:01

Athelney Trust PLC11 April 2007 Embargoed 7 am April 11 2007 ATHELNEY TRUST PLC: NAV AT RECORD HIGH Athelney Trust plc, the AIM-traded investment company which invests in smallercompanies and junior markets, announces its audited results for the 12 monthsended 31 December 2006. Highlights: •Net Asset Value ("NAV") up 20.3 per cent at 189.7p per share (2005: 157.7p) •Revenue on a like-for-like basis rose 12.5 per cent; gross revenue up 10.8 per cent at £95,614 •Dividend income up 15 per cent •Revenue return per Ordinary Share up 22.2 per cent at 3.3p (2005: 2.7p) •Recommended annual dividend of 3.25p per share (2005: 2.5p) a 30 per cent rise Chairman, Hugo Deschampsneufs, said: "2006 was another excellent year forinvestors, despite all the problems and worries that many had at the start ofthe year. However I have worries about hedge funds, private equity and the newissue market. I believe all three should be watched extremely carefully in thecoming year and beyond by investors large and small. "I remain positive on the long-term prospects of small caps, provided one staysaway from the high risk sectors. Selected small caps offer good value, risingdividends, strong balance sheets and are targets for larger competitors andfinancial buyers. "However opaque prospects seem in the short-term, I am absolutely convinced thateach and every investor should hold a strong portfolio of small caps forlong-term growth and rising income". -ends- For further information: Robin Boyle, Managing DirectorAthelney Trust plc 020 7628 7937 Paul Quade 07947 186694CityRoad Communications 020 7248 8010 Chairman's Statement & Business Overview I have pleasure in announcing the audited results for the twelve months to 31December 2006. The salient points are as follows: •Audited Net Asset Value ("NAV") is 189.7p per share (31 December 2005: 157.7p) a rise of 20.3 per cent. •Gross Revenue increased by 10.8 per cent to £95,614 (31 December 2005: £86,265). •On a like-for-like basis revenue increased by 12.5 per cent and dividend income rose by 15 per cent. •Revenue return per ordinary share was 3.3p, an increase of 22.2 per cent (31 December 2005: 2.7p). •Recommended dividend for the year of 3.25p per share (2005: 2.5p), a rise of 30 per cent. Review of 2006 This has been another excellent year for investors, despite all the problems andworries that many had at the start of the year. Could the world-wide bullmarket continue for an amazing fourth year, we all asked ourselves in January?Well, we now know that it could, thanks to no avian flu pandemic, a mildhurricane season, no successful terrorist attack on the West and no big hedgefund blow-up beyond Amaranth, which had wildly over-exposed itself to naturalgas prices. There were plenty of nasty surprises, though, with Iraq andPalestine moving to the brink of civil war, the summer conflict between Israeland the Hezbollah, North Korea firing off nuclear weapons, Iran determined toacquire some of the same and Russia turning into the school-yard bully under itsex-KGB president. Despite these international factors, the price of crude oilfailed to stay high: there were confident forecasts in January that it couldspike at $100 a barrel (from $61) but, in the event, it hit $77 during theLebanon conflict and dropped to just over $50 by the turn of the year. Ibelieve that this fall in the oil price was critical to the health of worldequity markets in 2006. Interest rates rose in the U.S., the U.K., Europe and Japan: as a consequence,the new housing market in America was badly hit although the impact of two raterises here at home was less marked, nor did they seem to have much effect oninflation which finished the year at 3 per cent. Indeed, there was considerablescepticism as to whether that figure was high enough although I do not seem toremember too many people pointing out that many consumer items have fallen inprice these last six years, such as used cars (an average of 3.6 per cent ayear), IT equipment (20 per cent), photographic stuff (8 per cent), clothing (6per cent), toys (5 per cent) and new cars (2 per cent). One constant and hugely positive factor last year was the tidal wave of globalliquidity (the sum of corporate cash, funds available for investment byfinancial institutions and consumers' bank balances) which helped driveequities, bonds and gilts to ever higher levels. Investors' attitude to riskchanged as well: the spread between emerging market bonds, corporate debt andU.S. Treasuries narrowed to all-time lows in December. The reason? Too manyinvestors moving into ever-riskier areas of the market as returns in theirtraditional hunting grounds were squeezed. Commodities on average fell by 15 per cent in 2006 but most other things didwell: China was the top-performing equity market (up by 138.4 per cent in Dollarterms), followed by Venezuela (99 per cent), Russia (70.7 per cent) and India(51.3 per cent). Turkey, on the other hand, fell by 5.6 per cent and SaudiArabia by a striking 52.5 per cent. In the U.K., the FTSE 100 Index rose by arather sedate 11 per cent whereas small caps., typically, were 17-18 per centhigher over the year. With an estimated $300bn in 'dry powder' (funds available for investment to youand I), private equity had a major effect on 2006 and will again this year. Atits crudest, a private equity deal is no more than an old-fashioned asset-strip(and paying themselves a huge dividend) and gearing up the balance sheet (andpaying themselves another huge dividend). The aim is to 'strip and flip' inthree years by selling the husk onto gullible investors. As gearing ratios rise higher and higher, and the asking priceof suitable targets increases steadily, the risks of doing this type of businessare enough to make one sleep uneasily in one's bed. Hedge funds are private pools of capital that are lightly regulated, oftenborrow heavily to enhance returns and are sometimes paid enormous performancefees to undertake quite simple tasks, such as borrowing at very low rates ofinterest in Yen or Swiss Francs and lending at high rates in Australian or NewZealand Dollars for instance. Other strategies involve equities, bonds,distressed debt and so on. If 20 per cent of trading in equities on the NewYork Stock Exchange and 30 per cent in London is accounted for by hedge funds,as has been estimated, then I think that it is very natural to worry about thisopaque area of the fund management business. Yet another area of concern is the new issue market in London. The collapse ofthe London-listed internet gaming shares following the Senate's effective ban ontheir U.S. activities came just months after the controversial flotation ofRosneft. This Russian oil giant's prospectus included a 26-page risk statementwhich acknowledged allegations that its assets were obtained via a'conspiracy.' AIM, the LSE's junior market, attracted companies as far apart asSilicon Valley and China but more than a handful, in my opinion, andparticularly in mining, oil and gas, looked to be poorly put together with lowgovernance standards and speculative business plans. The continued survival ofsuch companies should not be taken for granted. Proponents of private equity, hedge funds and new issues will no doubt thinkthat the above comments are, to say the least, unkind. Nevertheless, I believethat all three should be watched extremely carefully in the coming year andbeyond by all investors, large and small. Am I the only one to be worried about the flood of take-overs of major Britishcompanies and the lack of reciprocity when our companies want to expandoverseas? I suspect that I am. As the year finished (I will use the old namesto remind you just how important they are), British Oxygen Company, BritishAirports Authority, Associated British Ports and Pilkington Brothers have allbeen absorbed by overseas buyers, British Steel, Scottish Power andGallagher were headed in the same direction and even the London Stock Exchangewas under attack by American rival NASDAQ. For good or ill, take-overs were asignificant factor in 2006 and are likely to be so again this year. As themarket in high quality equities continued to shrink, someone invented the word'de-equitisation' when describing the short-term beneficial effect of take-oversand cash buy-backs on the remaining stock of equities. Finally under this sub-heading, it is interesting to read that India, afteryears cast as China's underperforming neighbour, is now in hot pursuit. Over thepast year, the Indian economy has grown by an impressive 9.2 per cent, not farbehind China's 10.4 per cent. Results Gross Revenue increased 10.8 per cent compared to 2005. A breakdown of thecompanies paying dividends is given below: Number --------Companies paying dividends 82Companies sold (therefore no true comparison) 9Companies purchased (therefore no true comparison) 17Increased total dividend in the calendar year 44Reduced total dividend in the calendar year 7No change in dividend 5 Corporate Activity Six of our companies were taken over in 2006: three were reported at thehalf-way stage, namely PD Ports, Brandon Hire and Wyvale Garden Centres. In thesecond half, cash offers were accepted in respect of Richmond Foods (a 24 percent profit on book value), MSB International (60.6 per cent) and BiotraceInternational (44.6 per cent). Portfolio Review A total of fifteen holdings were purchased for the first time or were existingholdings which were increased in the six months to 30 June; in the second half,the following investments were purchased: Arden Partners, Dowgate Capital,Broker Network Holdings, Johnson Service Group, Somero Enterprises, HitachiCapital (UK), Macfarlane Group, XP Power, City of London Investment Group,Speymill Group and Tristel. Five investments were sold, all in the first half. Dividend The Board is pleased to recommend an increased annual dividend of 3.25p perordinary share for the year ended 31 December 2006 (2005: 2.5p). This representsan increase of 30 per cent over the previous year. Subject to shareholderapproval at the Annual General Meeting on 23 May 2007, the dividend will be paidon 25 May 2007 to shareholders on the register on 27 April 2007. Update The unaudited NAV at 28 February 2007 was 192.6p per share, whereas the shareprice stood at 190p on the same date. Further updates can be found onwww.chelvertonam.com. Outlook I have already signposted my worries about hedge funds, private equity and thenew issue market: other concerns include the possible trend in interest rates(particularly M. Trichet's propensity to push up rates in Euroland against allevidence of static/falling output in France, Italy and elsewhere). Mr.Greenspan, the former Chairman of the Federal Reserve Bank, has taken to musingin public about the likelihood (one chance in three, he believes) of Americasliding into recession - certainly, the housing market looks to be in a dreadful mess in some states. Not just that, but so-calledtrailer-park lending is now throwing up huge bad debts. Having said all that, Iremain positive on the long-term prospects of small caps. provided one stays away from the high risk sectors.Selected small caps. offer good value, rising dividends, strong balance sheetsand are targets for larger competitors and financial buyers. Donald Rumsfeld, the then U.S. Defense Secretary said, 'I would not say that thefuture is necessarily less predictable than the past. I think that the past wasnot predictable when it started.' However opaque prospects seem in theshort-term, I am absolutely convinced that each and every investor should hold astrong portfolio of small caps. for long-term growth and a rising income. Hugo DeschampsneufsChairman2 April 2007 ATHELNEY TRUST PLC STATEMENT OF TOTAL RETURN (incorporating the revenue account) FOR THE YEAR ENDED 31 DECEMBER 2006 Audited Results to 31 December 2006 Audited Results to 31 December 2005 Revenue Capital Total Revenue Capital Total £ £ £ £ £ £Profits oninvestments - 708,480 708,480 - 460,306 460,306 Income 95,615 - 95,615 86,265 - 86,265 Investmentmanagementexpenses (8,216) (24,164) (32,380) (7,266) (21,362) (28,628) Other expenses (35,355) - (35,355) (37,753) - (37,753) ________ _________ _________ ________ _________ _________ Return onordinary activitiesbeforetaxation 52,044 684,316 736,360 41,246 438,944 480,190 Taxation 8,278 (122,442) (114,164) 7,579 (77,234) (69,655) ________ ________ _________ ________ ________ _________Return onordinary activitiesafter taxation 60,322 561,874 622,196 48,825 361,710 410,535 ________ ________ _________ ________ ________ _________ Return perordinaryshare 3.3p 31.2p 34.5p 2.7p 20.1p 22.8p Dividendpaid perordinaryshare- Finaldividend 2.5p 2p The revenue column of this statement is the profit and loss account for theCompany. All revenue and capital items in the above statement derive from continuingoperations. No operations were acquired or discontinued during the above financial years. There have been no recognised gains or losses, other than the results for thefinancial years shown above. ATHELNEY TRUST PLC BALANCE SHEET AS AT 31 DECEMBER 2006 2006 2005 (audited) (audited) £ £Fixed assetsInvestments 3,706,392 2,985,922 _________ _________ Current assets Debtors 105,603 145,109Cash at bank and in hand 32,486 40,048 _________ _________ 138,089 185,157 Creditors: amounts falling due within one year (50,797) (33,769) _________ _________ Net current assets 87,292 151,388 _________ _________Total assets less current liabilities 3,793,684 3,137,310 Provisions for liabilities and charges (374,390) (295,142) _________ _________Net assets 3,419,294 2,842,168 _________ _________ Capital and reserves Called up share capital 450,700 450,700Share premium account 405,605 405,605Other reserves - non distributableCapital reserve - realised 719,086 520,007Capital reserve - unrealised 1,723,399 1,360,604Revenue reserve 120,504 105,252 _________ _________ Shareholders' funds - all equity 3,419,294 2,842,168 _________ _________ Net Asset Value per share 189.7p 157.7p ATHELNEY TRUST PLC CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 (audited) (audited) £ £ £ £ Net cash inflow from operatingactivities 68,111 3,487 Servicing of financeDividends paid (45,070) (36,056) ________ ________ Net cash (outflow) fromservicing of finance (45,070) (36,056) Taxation Corporation tax paid (18,613) (2,017) Investing activities Purchases of investments (1,103,978) (529,075)Sales of investments 1,091,988 542,398 ________ ________Net cash (outflow)/inflow from investing activities (11,990) 13,323 ________ ________ Decrease increase in cash in the year (7,562) (21,263) ________ ________ Notes: 1. The figures included in the above statement are an abridged version ofAthelney's audited results for the year ended 31 December 2006 and do notconstitute statutory accounts within the meaning of Section 240 of the CompaniesAct 1985, as amended. The figures for the year ended 31 December 2005 areextracted from the statutory accounts filed with the Registrar of Companies andwhich contained an unqualified audit report. 2. The calculation for the return per ordinary share is based on thereturn on ordinary activities after taxation shown below and on the averageweighted number of shares in issue during the period of 1,802,802 (2005:1,802,802 ). 2006 2005 Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ 60,322 561,874 622,196 48,825 361,710 410,535 3. Dividend information: Ex dividend date 25 April 2007Dividend payable to shareholders registered on 27 April 2007Dividend payable on 25 May 2007 4. Copies of this announcement are available, free of charge, for a periodof one month from Athelney's Nominated Advisor: Noble & Company Limited, 76 George Street, Edinburgh, EH2 3BU Copies of the full financial statements will be posted to shareholders on 11April 2007. 11 April 2007 END This information is provided by RNS The company news service from the London Stock Exchange