F&C INVESTMENT TRUST PLC
Date: 30 July 2014
Contact: Paul Niven
F&C Management Limited
0207 011 4385
FOREIGN & COLONIAL INVESTMENT TRUST PLC
Unaudited Statement of Results
for the half-year ended 30 June 2014
SUMMARY OF UNAUDITED RESULTS FOR THE HALF-YEAR ENDED 30 JUNE 2014
· Net asset value per share 424.9 pence
· Share price of 378.2 pence
· Net asset value per share total return of 1.1%
· Share price total return of 0.8%
· The total dividend for 2014 can be expected to be at least 9.30 pence per share, an increase of 3.3% on 2013 and the forty-fourth consecutive annual increase.
(Net asset value based on debt at market value)
The Chairman's Statement
Dear Shareholder,
Markets and Performance
After one of the strongest years for global equity investors in recent decades it is perhaps not surprising that, so far, 2014 has seen more subdued levels of market returns.
Many investors were anticipating an improvement in global economic momentum coming into the year and forecasting a rise in government bond yields but, despite these bullish expectations, the first quarter saw a significant contraction of 2.9% in the US economy, attributed to adverse weather conditions. This economic weakness and a general commitment by central banks to pursue low rates pushed bond yields down, to the surprise of most who had been positioned for rising rates. The US Federal Reserve reiterated their intention to maintain low interest rates in the longer term and the European Central Bank announced a major new programme of lending to banks. The Bank of England was seen as presenting a slightly more hawkish view with expectations of rate rises being pulled forward into 2014, leading to a strengthening of sterling.
The broad based rise of sterling against the major currencies held back returns from global investments in the first six months of the year. The Company's Net Asset Value total return per share was 1.1% and the share price total return was 0.8%. This compares less favourably with a total return of 3.2% from the FTSE All World Index, largely attributable to stock selection which detracted from our investment performance. There was a marked rotation within global equity markets with investors moving away from some of the high quality stocks, which we continue to favour, towards some of the stocks that had previously lagged particularly in the UK and Europe.
As indicated previously, in the early part of the year we reduced our UK portfolio in a further step towards establishing a truly global portfolio, investing the £250m proceeds in a global portfolio of funds and raising our European equity exposure over the period. Our private equity portfolio produced an impressive return of 5.7% during the period and generated net cashflow of £39m, significantly up from the £30m produced in the equivalent period last year.
Contributors to total return in first half of 2014 | |
% | |
Benchmark total return | 3.2 |
Asset allocation | 0.2 |
Stock selection | (2.1) |
Effect of directly incurred management fees | (0.2) |
Other expenses | (0.1) |
Interest expense | (0.3) |
Buybacks | 0.0 |
Change in debenture valuation | 0.2 |
Gearing | 0.2 |
Net asset value total return* | 1.1 |
Effect of discount | (0.3) |
Share price total return | 0.8 |
*Debt at market value
Source: F&C Investment Business Limited
Dividends
Our total income fell modestly in the first half by comparison to the first six months of 2013. A switch from UK equities, which offer a higher yield relative to overseas markets, accounted for this.
We paid an interim dividend of 2.1p per share in February 2014 and a final dividend of 2.7p in May in respect of 2013. The first interim dividend of 2.2p for 2014 will be paid on 1 August. Second and third interim dividends of 2.2p each will be paid in November 2014 and February 2015 respectively. A final dividend payment of 2.7p can be expected in May 2015 bringing the total for 2014 to 9.3p; a 3.33% rise on 2013 and the forty-fourth consecutive rise in dividends.
Outlook
The extraordinary policy measures implemented in recent years by central banks continue to have a material impact on global asset markets. Low interest rates and abundant liquidity had been necessary in order to avert a more damaging systemic crisis and help unwind excessive debt in the underlying economies but, with improving growth in many major economies, central bankers are now trying to navigate a challenging exit from these loose policy measures.
Recent years have seen global equity markets rise in price relative to fundamentals and, on many metrics, they now offer less compelling valuation upside on a prospective basis. Arguments for lower returns from here are well founded but, for investors faced with a dearth of value amongst competing assets, equities continue to offer relative attractions. Nonetheless, we are of the view that fundamental improvement in earnings is required in order to see significant further upside in equities from current levels. In addition, while we expect interest rate rises in the US and the UK to be relatively modest the global economy continues to tread a narrow path in terms of growth and inflation and we are mindful of the risks to markets from both further falls in inflation, notably in the Eurozone, and from some acceleration in pricing pressure, perhaps emanating from labour markets in the US and the UK.
In response to the strength in listed equity markets and reasonable expectations of lower prospective returns we have reduced our gearing further at the end of June, to 7%. The redemption of our longstanding £110m debenture at the end of the year will lead to a significant reduction in overall borrowing costs going forward.
The future is inherently uncertain but we are well placed to deal with any rise in volatility from current low levels. The handover to our new Fund Manager, Paul Niven, on 1 July 2014 has been seamless; our portfolio diversification is high; our borrowing costs are diminishing and we are generating significant and rising cash levels from our private equity portfolio. A more global approach has had the short term effect of dampening underlying earnings but we remain confident that more breadth will bring more opportunities and enable us to continue to achieve our objective of growing capital and income in the longer term for the benefit of our shareholders.
Simon Fraser
Chairman
29 July 2014
Forward-looking statements
This document may contain forward-looking statements with respect to the financial condition, results of operations and business of the Company. Such statements involve risk and uncertainty because they relate to future events and circumstances that could cause actual results to differ materially from those expressed or implied by forward-looking statements. The forward looking statements are based on the Directors' current view and on information known to them at the date of this document. Nothing should be construed as a profit forecast.
Weightings, stock selection and performance in each market versus index in the period to 30 June 2014 | ||||
Portfolio | Our portfolio weighting % | Benchmark weighting % | Our performance in sterling % | Index performance in sterling % |
UK | 10.3 | 7.9 | -4.1 | 1.7 |
North America | 30.5 | 51.8 | 2.1 | 4.1 |
Europe ex UK | 13.5 | 16.4 | -1.0 | 3.0 |
Japan | 4.7 | 8.0 | -0.8 | -1.9 |
Emerging Markets | 8.6 | 15.9 | 3.5 | 3.8 |
Private Equity | 14.5 | - | 5.7 | - |
Global Income | 6.6 | - | 5.5 | 3.2 |
Global Funds | 1.6 | - | 3.4 | 3.2 |
Global Multi Manager* | 9.7 | - | 1.8 | - |
*performance since 1 April 2014.
Source: F&C Investment Business Limited
UNAUDITED CONDENSED INCOME STATEMENT
6 months to 30 June 2014 | 6 months to 30 June 2013 | ||||||||
Notes | Revenue £'000s | Capital £'000s | Total £'000s | Revenue £'000s | Capital £'000s | Total £'000s | |||
Gains on investments and derivatives | - | 2,348 | 2,348 | - | 250,381 | 250,381 | |||
Exchange (losses)/gains | (145) | 1,503 | 1,358 | 60 | 125 | 185 | |||
3 | Income | 35,686 | - | 35,686 | 36,695 | - | 36,695 | ||
4 | Fees and other expenses | (3,502) | (2,708) | (6,210) | (3,313) | (2,547) | (5,860) | ||
Net return before finance costs and taxation | 32,039 | 1,143 | 33,182 | 33,442 | 247,959 | 281,401 | |||
Interest payable and similar charges | (3,884) | (3,884) | (7,768) | (4,340) | (4,340) | (8,680) | |||
Net return on ordinary activities before taxation | 28,155 | (2,741) | 25,414 | 29,102 | 243,619 | 272,721 | |||
5 | Taxation on ordinary activities | (2,395) | - | (2,395) | (2,062) | - | (2,062) | ||
6 | Net return attributable to shareholders | 25,760 | (2,741) | 23,019 | 27,040 | 243,619 | 270,659 | ||
6 | Net return per share - basic (pence) | 4.53 | (0.48) | 4.05 | 4.71 | 42.42 | 47.13 | ||
The total column of this statement is the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
A statement of total recognised gains and losses is not required as all gains and losses of the Company have been reflected in the above statement.
UNAUDITED CONDENSED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Half-year ended 30 June 2014 | Share | Capital | Capital | Revenue | Total |
Capital | Redemption | Reserves | Reserve | Shareholders' | |
Reserve | Funds | ||||
£'000s | £'000s | £'000s | £'000s | £'000s | |
Balance brought forward 31 December 2013 | 142,590 | 120,172 | 2,068,847 | 98,713 | 2,430,322 |
Shares repurchased by the Company | (921) | 921 | (13,902) | - | (13,902) |
Dividends paid | - | - | - | (27,337) | (27,337) |
Return attributable to shareholders | - | - | (2,741) | 25,760 | 23,019 |
Balance carried forward 30 June 2014 | 141,669 | 121,093 | 2,052,204 | 97,136 | 2,412,102 |
Half-year ended 30 June 2013
Share | Capital | Capital | Revenue | Total | |
Capital | Redemption | Reserves | Reserve | Shareholders' | |
Reserve | Funds | ||||
£'000s | £'000s | £'000s | £'000s | £'000s | |
Balance brought forward 31 December 2012 | 144,298 | 118,464 | 1,711,696 | 104,538 | 2,078,996 |
Shares repurchased by the Company | (1,467) | 1,467 | (20,999) | - | (20,999) |
Dividends paid | - | - | - | (25,884) | (25,884) |
Return attributable to shareholders | - | - | 243,619 | 27,040 | 270,659 |
Balance carried forward 30 June 2013 | 142,831 | 119,931 | 1,934,316 | 105,694 | 2,302,772 |
Year ended 31 December 2013 | Share capital £'000s | Capital redemption reserve £'000s | Capital reserves £'000s | Revenue reserve £'000s | Total shareholders' funds £'000s |
Balance brought forward 31 December 2012 | 144,298 | 118,464 | 1,711,696 | 104,538 | 2,078,996 |
Shares repurchased by the Company | (1,708) | 1,708 | (24,573) | - | (24,573) |
Dividend paid | - | - | - | (49,862) | (49,862) |
Return attributable to shareholders | - | - | 381,724 | 44,037 | 425,761 |
Balance carried forward 31 December 2013 | 142,590 | 120,172 | 2,068,847 | 98,713 | 2,430,322 |
UNAUDITED CONDENSED BALANCE SHEET
Notes | 30 June 2014 £'000s | 30 June 2013 £'000s | 31 December 2013 £'000s | |
Fixed assets | ||||
7 | Investments | 2,585,394 | 2,581,266 | 2,623,202 |
Current assets | ||||
Debtors | 11,611 | 12,493 | 5,280 | |
Cash at bank and short term deposits | 20,508 | 22,091 | 32,477 | |
32,119 | 34,584 | 37,757 | ||
Creditors: amounts falling due within one year | ||||
7 | Derivative financial instruments | - | (158) | (19) |
8 | Loans | - | (95,000) | (30,000) |
8 | Debentures | (110,000) | - | (110,000) |
9 | Other | (9,946) | (10,792) | (3,827) |
(119,946) | (105,950) | (143,846) | ||
Net current liabilities | (87,827) | (71,366) | (106,089) | |
Total assets less current liabilities | 2,497,567 | 2,509,900 | 2,517,113 | |
Creditors: amounts falling due after more than one year | ||||
8 | Loans | (84,890) | (96,553) | (86,216) |
8 | Debentures | (575) | (110,575) | (575) |
(85,465) | (207,128) | (86,791) | ||
Net assets | 2,412,102 | 2,302,772 | 2,430,322 | |
Capital and reserves | ||||
10 | Share capital | 141,669 | 142,831 | 142,590 |
Capital redemption reserve | 121,093 | 119,931 | 120,172 | |
Capital reserves | 2,052,204 | 1,934,316 | 2,068,847 | |
Revenue reserve | 97,136 | 105,694 | 98,713 | |
Total shareholders' funds | 2,412,102 | 2,302,772 | 2,430,322 | |
12 | Net asset value per share - prior charges at nominal value (pence) | 425.66 | 403.06 | 426.10 |
UNAUDITED CONDENSED CASH FLOW STATEMENT
6 months to 30 June 2014 | 6 months to 30 June 2013 | Year ended 31 December 2013 | ||
Notes | £'000s | £'000s | £'000s | |
13 | Net cash inflow from operating activities | 25,224 | 25,482 | 47,339 |
Interest paid and similar charges | (7,864) | (8,679) | (17,262) | |
Net cash inflow from financial investment | 39,918 | 45,127 | 137,382 | |
Equity dividends paid | (27,337) | (25,884) | (49,862) | |
Net cash inflow before use of liquid resources and financing | 29,941 | 36,046 | 117,597 | |
Decrease/(increase) in short term deposits | 11,455 | 6,136 | (9,432) | |
Net cash (outflow)/inflow from financing | (42,087) | (40,457) | (110,164) | |
(Decrease)/increase in cash | (691) | 1,725 | (1,999) | |
Reconciliation of net cash movement to movement in net debt | ||||
Net cash movement | (691) | 1,725 | (1,999) | |
(Decrease)/increase in short term deposits | (11,455) | (6,136) | 9,432 | |
Decrease/(increase) in loans | 30,000 | 20,000 | 85,000 | |
Exchange movements | 1,503 | 125 | 9,004 | |
Movement in net debt in the period | 19,357 | 15,714 | 101,437 | |
Net debt brought forward | (194,314) | (295,751) | (295,751) | |
Net debt carried forward | (174,957) | (280,037) | (194,314) | |
Represented by: | ||||
Cash at bank | 6,325 | 11,704 | 7,002 | |
Short term deposits | 14,183 | 10,387 | 25,475 | |
Loans | (84,890) | (191,553) | (116,216) | |
Debentures | (110,575) | (110,575) | (110,575) | |
Net debt carried forward | (174,957) | (280,037) | (194,314) | |
UNAUDITED NOTES ON THE CONDENSED ACCOUNTS
1 Results
The results for the six months to 30 June 2014 and 30 June 2013 constitute non-statutory accounts within the meaning of Section 434 of the Companies Act 2006. The latest published accounts which have been delivered to the Registrar of Companies are for the year ended 31 December 2013; the report of the Auditors thereon was unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The condensed financial statements shown above for the year ended 31 December 2013 are an extract from those accounts.
2 Accounting policies
These condensed half-year financial statements for the six months to 30 June 2014 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with the UK Accounting Standard Board's "Half-yearly Financial Reports" Statement. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2013, which have been prepared in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
3 Income
6 months to 30 June 2014 £'000s | 6 months to 30 June 2013 £'000s | |
Income comprises: | ||
UK dividends | 8,747 | 13,389 |
Overseas dividends | 26,793 | 22,916 |
Derivative income | 116 | 298 |
Interest on cash and short-term deposits | 22 | 22 |
Underwriting Commission | 5 | 70 |
Sundry income | 3 | - |
Total Income | 35,686 | 36,695 |
4 Fees and other expenses
6 months to 30 June 2014 £'000s | 6 months to 30 June 2013 £'000s | |
Fees and other expenses | 6,210 | 5,860 |
Comprise: Allocated to Revenue Account | ||
- Management fees payable directly to F&C* | 2,376 | 2,203 |
- Other expenses | 1,126 | 1,110 |
3,502 | 3,313 | |
Allocated to Capital Account | ||
- Management fees payable directly to F&C* | 2,376 | 2,203 |
- Management fees payable directly to Private Equity managers | 305 | 304 |
- Other expenses | 27 | 40 |
2,708 | 2,547 |
* Including reimbursement in respect of services provided by sub-managers
The Manager, F&C Management Limited until 21 July 2014 and thereafter F&C Investment Business Limited, a fellow subsidiary of the F&C Asset Management Group, receives remuneration of 0.365% per annum of the market capitalisation of the Company, calculated at each month end date on a pro-rata basis. The fee is adjusted for fees earned by the Manager in respect of investment holdings managed or advised by the Manager. The services provided by F&C remain unchanged from those disclosed within the accounts for the year ended 31 December 2013. Variable fees payable in respect of third party sub-managers and private equity managers remain unchanged since the year end.
5 Taxation
The taxation charge of £2,395,000 (30 June 2013 - £2,062,000) relates to irrecoverable overseas taxation.
6 Net Return
Net return per ordinary share attributable to ordinary shareholders reflects the overall performance of the Company in the period. Net revenue recognised in the first six months is not indicative of the total likely to be received in the full accounting year.
6 months to 30 June 2014 pence | 6 months to 30 June 2014 £'000s | 6 months to 30 June 2013 Pence | 6 months to 30 June 2013 £'000s | |
Total return | 4.05 | 23,019 | 47.13 | 270,659 |
Revenue return | 4.53 | 25,760 | 4.71 | 27,040 |
Capital return | (0.48) | (2,741) | 42.42 | 243,619 |
Weighted average ordinary shares in issue | 569,004,502 | 574,336,281 |
7 Investments and derivative financial instruments
6 months to 30 June 2014 | |||||
Level 1 £'000s | Level 2 £'000s | Level 3 £'000s | Total £'000s | ||
Cost at 1 January 2014 | 1,621,484 | - | 354,155 | 1,975,639 | |
Unrealised gains at 1 January 2014 | 606,310 | - | 41,234 | 647,544 | |
Valuation at 1 January 2014 of Investments and derivatives | 2,227,794 | - | 395,389 | 2,623,183 | |
Purchases at cost | 745,142 | - | 10,717 | 755,859 | |
Sales proceeds | (745,602) | - | (50,394) | (795,996) | |
Gains/(losses) on derivatives sold | 19 | - | - | 19 | |
Gains/(losses) on investments sold | 148,259 | - | 21,228 | 169,487 | |
Gains/(losses) on investments held | (167,289) | - | 131 | (167,158) | |
Valuation at 30 June 2014 of investments and derivatives | 2,208,323 | - | 377,071 | 2,585,394 | |
Analysed at 30 June 2014 | |||||
Cost at 30 June 2014 | 1,769,302 | - | 335,706 | 2,105,008 | |
Unrealised gains at 30 June 2014 | 439,021 | - | 41,365 | 480,386 | |
Valuation at 30 June 2014 of Investments and derivatives | 2,208,323 | - | 377,071 | 2,585,394 | |
Valuation of investments and derivatives | 30 June 2014 £'000s | 30 June 2013 £'000s | 31 December 2013 £'000s | ||
Valuation of investments | 2,585,394 | 2,581,266 | 2,623,202 | ||
Valuation of derivatives | - | (158) | (19) | ||
2,585,394 | 2,581,108 | 2,623,183 | |||
Level1 includes investments and derivatives listed on any recognised stock exchange or quoted on the AIM market in the UK.
Level 2 includes investments for which the quoted price has been suspended, forward exchange contracts and other derivative instruments.
Level 3 includes investments in private companies or securities, whether invested in directly or through pooled Private Equity vehicles.
8 Loans and Debentures
30 June 2014 £'000s | 30 June 2013 £'000s | 31 December 2013 £'000s | ||
Loans falling due within one year | - | 95,000 | 30,000 | |
Debenture falling due within one year | 110,000 | - | 110,000 | |
Loans falling due after more than one year | 84,890 | 96,553 | 86,216 | |
Debentures falling due after more than one year | 575 | 110,575 | 575 | |
Comprise: Sterling denominated loan falling due within one year | - | £95m | £30m | |
11.25% debenture stock 2014 falling due within one year | £110m | - | £110m | |
US dollar denominated loan falling due after more than one year | $80m | $80m | $80m | |
Yen denominated loan falling due after more than one year | ¥ 6.60bn | ¥ 6.60bn | ¥ 6.60bn | |
11.25% Debenture Stock 2014 falling due after more than one year | - | £110m | - | |
4.25% perpetual debenture | £0.575m | £0.575m | £0.575m |
The 11.25% debenture stock is redeemable at par on 31 December 2014
9 Other creditors falling due within one year
30 June 2014 £'000s | 30 June 2013 £'000s | 31 December 2013 £'000s | |
Cost of ordinary shares repurchased | 1,814 | 1,134 | - |
Investment creditors | 6,022 | 7,323 | 1,600 |
Management fee payable to F&C | 986 | 973 | 965 |
Other accrued expenses | 1,124 | 1,362 | 1,262 |
9,946 | 10,792 | 3,827 |
10 Share capital
Issued and fully paid | ||||||
Number | Nominal £'000s | |||||
Ordinary shares of 25p each | ||||||
Balance at 31 December 2013 | 570,359,016 | 142,590 | ||||
Shares repurchased by the Company | (3,682,000) | (921) | ||||
Balance at 30 June 2014 | 566,677,016 | 141,669 | ||||
3,682,000 ordinary shares were repurchased and cancelled during the period at a total cost of £13,902,000.
Since 30 June 2014 a further 1,630,000 ordinary shares have been repurchased at a cost of £6,215,000.
11 Dividends
Dividends paid on ordinary shares | Register date | Payment date | 6 Months to 30 June 2014 £'000s | 6 Months to 30 June 2013 £'000s | Year ended 31 December 2013 £'000s |
2012 Second interim of 2.00p | 11 January 2013 | 1 February 2013 | - | 11,544 | 11,544 |
2012 Final of 2.50p | 5 April 2013 | 1 May 2013 | - | 14,340 | 14,340 |
2013 First interim of 2.10p | 12 July 2013 | 1 August 2013 | - | - | 11,995 |
2013 Second interim of 2.10p | 4 October 2013 | 1 November 2013 | - | - | 11,983 |
2013 Third interim of 2.10p | 3 January 2014 | 3 February 2014 | 11,978 | - | - |
2013 Final of 2.70p | 28 March 2014 | 1 May 2014 | 15,359 | - | - |
27,337 | 25,884 | 49,862 |
The first interim dividend for 2014 of 2.20p will be paid on 1 August 2014 to shareholders on the register on 4 July 2014.
The total cost of the first interim dividend of 2014, which has not been accrued, based on 566,277,016 shares in issue on 4 July 2014 is £12,458,000.
12 Net asset value per ordinary share
30 June 2014 | 30 June 2013 | 31 December 2013 | |
Net asset value per share (with debenture stocks at nominal value) | 425.66p | 403.06p | 426.10p |
Net assets attributable at end of period -£'000s | 2,412,102 | 2,302,772 | 2,430,322 |
Ordinary shares of 25p in issue at end of period - number | 566,677,016 | 571,324,016 | 570,359,016 |
Net asset value per share (with debenture stocks at market value) at 30 June 2014 was 424.85p (30 June 2013 - 401.09p and 31 December 2013 - 424.80p). The market value of debenture stocks at 30 June 2014 was £115,126,000 (30 June 2013 - £121,814,000 and 31 December 2013 - £117,997,000).
13 Reconciliation of total return before finance costs and taxation to net cash inflow from operating activities
6 months to 30 June 2014 £'000s | 6 months to 30 June 2013 £'000s | Year ended 31 December 2013 £'000s | |
Total return before finance costs and taxation | 33,182 | 281,401 | 446,641 |
Adjust for returns from non-operating activities: | |||
- Gains on investments and derivatives | (2,348) | (250,381) | (386,631) |
- Exchange gains of a capital nature | (1,503) | (125) | (9,004) |
- Non-operating expenses of a capital nature | 27 | 40 | 67 |
Return from operating activities | 29,358 | 30,935 | 51,073 |
Adjust for non-cash-flow items: | |||
-Exchange losses/(gains) of a revenue nature | 145 | (60) | 198 |
-(Increase)/decrease in accrued income | (1,474) | (2,851) | 149 |
-Decrease in prepayments | 40 | 38 | 58 |
-Decrease in creditors | (135) | (206) | (172) |
-Overseas taxation | (2,710) | (2,374) | (3,967) |
Net cash inflow from operating activities | 25,224 | 25,482 | 47,339 |
14 Report and accounts
This Half-Yearly Report is released to the London Stock Exchange and the New Zealand Stock Exchange. It may be viewed and downloaded from our website www.foreignandcolonial.com. Copies may be obtained from the Company's registered office, Exchange House, Primrose Street, London EC2A 2NY.
By order of the Board
F&C Investment Business Limited, Secretary
Exchange House, Primrose Street, London EC2A 2NY
29 July 2014
Directors' Statement of Principal Risks and Uncertainties
Most of the Company's principal risks and uncertainties are market related and no different from those of other investment trusts investing primarily in listed equities. They are described in more detail under the heading "Principal risks and their management" within the Strategic Report in the Company's annual report for the year ended 31 December 2013 and have not changed materially since the date of that report.
The risks include: having an inappropriate strategy in relation to investor demands in a rapidly changing financial services and savings market; failure on the part of the Manager to continue operate effectively putting in jeopardy the business of the Company; inappropriate asset allocation, sector and stock selection, currency exposure and use of gearing and derivatives leading to investment underperformance; those relating to private equity investments, which can prove difficult or impossible to realise; and administrative errors or control failures by or between other service providers.
Directors' Statement of Responsibilities in Respect of the Half-Yearly Financial Report
In accordance with Chapter 4 of the Disclosure and Transparency Rules, the Directors confirm that to the best of their knowledge:
· the condensed set of financial statements has been prepared in accordance with applicable UK Accounting Standards on a going concern basis and gives a true and fair view of the assets, liabilities, financial position and net return of the Company;
· the half-yearly report includes a fair review of the important events that have occurred during the first six months of the financial year and their impact on the financial statements;
· the Directors' Statement of Principal Risks and Uncertainties shown above is a fair review of the principal risks and uncertainties for the remainder of the financial year;
· the half-yearly report includes a fair review of the related party transactions that have taken place in the first six months of the financial year; and
· in light of the controls and monitoring processes that are in place, the Company has adequate resources and arrangements to continue operating within its stated objective and policy for the foreseeable future. Accordingly, the accounts continue to be drawn up on the basis that the Company is a going concern.
On behalf of the Board
Simon Fraser
Chairman
29 July 2014
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