TIDMATT
RNS Number : 9345S
Allianz Technology Trust PLC
15 March 2019
For immediate release
14 March 2019
ALLIANZ TECHNOLOGY TRUST PLC
LEI: 549300OMDPMJU23SSH75
FINAL RESULTS FOR THE YEARED 31 DECEMBER 2018
The following comprises extracts from the Company's Annual
Financial Report ("AFR") for the period ended 31 December 2018. The
full AFR is available to be viewed on or downloaded from the
company's website at www.allianztechnologytrust.com. Copies will be
posted to shareholders shortly.
For further information contact:
Robert Jeens Stephanie Carbonneil Eleanor Emuss
Chairman Head of Investment Trusts Company Secretary
Telephone:
020 3246 7405 020 3246 7539 020 3246 7405
MANAGEMENT REPORT
Chairman's Statement
Volatile times for the technology sector but stock selection
delivers a robust
performance
The financial period under review, running for 13 months from 30
November 2017 to 31 December
2018 (following a change in the Company's year-end from November
to December), has been a
turbulent period for global investment markets. However, despite
global equity markets selling
off over the period it is pleasing to report that the Company's
investment manager has delivered
a robust performance for investors, with the Company delivering
a positive return and beating its
benchmark index by some distance.
In the 13 months to 31 December 2018, the Company's Net Asset
Value (NAV) per share increased
by 9.0%. Our benchmark index, the Dow Jones World Technology
Index (sterling adjusted, total
return), increased by 0.1% over the same period. In what was a
challenging, volatile year for global
markets - and some technology stocks in particular - your
Manager has emphasised individual stock
selection to deliver solid results.
This period has seen Shareholders' funds increasing by over
GBP116 million to GBP430.1 million (30
November 2017: GBP313.4 million). Over this period, the market
price of the Company's shares rose by
1.7%, from 1200p to 1220p. The share price typically traded at a
small discount or small premium
to NAV throughout most of the reporting period, although the
discount widened a little towards
the end of the period, ending at -5.0% (31 December 2018). At 30
November 2017, the shares had
been trading at a 1.8% premium to NAV. This shift reflected the
market volatility and deterioration in
investor sentiment in the latter part of 2018.
No dividend is proposed for the 13 month period ended 31
December 2018 (2017: nil). Given the
nature of the Company's investments and its stated objective to
achieve long-term capital growth
the Board considers it unlikely that any dividend will be
declared in the near future.
Your Board regularly considers the use of borrowing and gearing.
Although we have this flexibility,
to date our assessment has been not to take on this additional
risk.
Investment Managers' Review
In both the Company's interim results to 31 May 2018 and the
previous annual results to 30
November 2017, the Board had commented that the possibility of a
significant market correction
was high. This finally came to pass in the second half of 2018,
with global equities selling off
sharply and October being the worst month in a decade for
technology stocks. In contrast to the
previous, extremely positive year, 2018 was much more
challenging overall, a year characterised by
geopolitical challenges and sharp swings in equity markets.
Your Company's performance is explored in depth in the
Investment Managers' Review on pages 38
to 45 which also discusses the impact of a slowing global
economy and the factors that have worried
investors around the world over the review period. The Managers'
overview considers how the year's
events have impacted the portfolio as well as the team's view on
future prospects for technology in a
slower growth world. Good stock picking remains key as the
Managers have frequently commented
that technology stocks can thrive in all market conditions,
including when economic growth falters.
How do we compare with our peers and other indices?
The table below compares the Company to its technology
investment trust peers and related
indices. You will note that the Company's performance over all
timeframes has been robust when
compared to peers and indices.
% change 1 year 3 years 5 years 10 years
ATT NAV 10.5 88.2 139.1 508.1
------- -------- -------- ---------
Dow Jones World Technology
Index (sterling adjusted) (0.2) 73.6 130.9 400.5
------- -------- -------- ---------
MSCI World Technology
Index (total return) 3.8 75.7 142.3 412.7
------- -------- -------- ---------
Russell MidCap Technology
Index 12.1 101.4 158.9 545.6
------- -------- -------- ---------
Polar Capital Technology
(NAV) 5.2 85.0 142.7 528.2
------- -------- -------- ---------
Source: Allianz Global Investors in GBP as at 31 December
2018
The table below provides a comparison with the broader UK and
world equity indices which many
investors will use when reviewing the performance of their
individual investments.
% change 1 year 3 years 5 years 10 years
ATT NAV 10.5 88.2 139.1 508.1
------- -------- -------- ---------
FTSE All Share Index (total
return) (9.5) 19.5 22.1 138.3
------- -------- -------- ---------
FTSE World Index (total
return) (3.1) 42.3 65.3 196.4
------- -------- -------- ---------
Source: AllianzGI in sterling as at 31 December 2018.
*1 year figures are 01.01.2018 - 31.12.18 inclusive, rather than
the Company's financial year of 01.12.17 - 31.12.18, as a result of
its
change of financial year end. Future financial years will run
from 1 January to 31 December inclusive.
As noted in previous reports the Board pays close attention to
the Company's performance
position against the wider universe of open ended funds, closed
ended funds and exchange traded
funds. The performance of your Company versus the other funds
within the Morningstar Global
Technology Sector - Equity (Morningstar) category is extremely
positive over all periods.
1 year 3 years 5 years 10 years
Peer Group Ranking vs
Morningstar 4/76 2/62 5/54 6/76
------- -------- -------- ---------
*All figures relate to 1 year performance from 1 January to 31
December 2018 inclusive.
Promoting the interests of shareholders
Your Board continues to believe that growing the Company
strongly benefits all shareholders. In
addition to delivering capital growth per share, increasing the
total value of the Company should
make the Company more attractive to a wider range of investors
through improved secondary
market liquidity and marketability; it also enables the
Company's fixed expenses to be spread over
a larger asset base.
Each year the Board considers carefully what level of
expenditure should be incurred to promote
the growth of the Company, recognising that the benefit of much
marketing-related expenditure is
cumulative and hence that returns are not easily measured within
each financial year. Over recent
years the Board has modestly increased marketing expenditure on
a strongly focused basis and it is
very pleasing to note the heightened profile the Company has
achieved. Awareness has grown on
the back of the Company's long-term performance record as well
as the numerous (and prestigious)
awards and positive press comment that this performance has
generated.
How Marketing can serve to grow the Company
Our communications programme has created significant demand for
the Company's shares in recent
years, particularly through execution-only investment platforms.
The Company was the 8th most
viewed investment trust on the Association of Investment
Companies (AIC) website for the whole of
2018. Online trading platform demand spiked upwards on the back
of this heightened awareness. For
example, the Company was regularly amongst the top five most
bought investment trusts through the
Interactive Investor platform in 2018. Notably, the Company
remained a popular investment choice
even when markets became more erratic and the share prices of
technology stocks tumbled.
The marketing programme includes targeted advertising, investor
events and substantial
communications with national and industry journalists,
coinciding with UK visits made by Walter Price
and other members of the investment management team. A new
initiative for 2018 was the introduction
of a regular podcast, providing insights and outlook views for
the tech sector. This can be accessed via
the Company's website (www.allianztechnologytrust.com), managed
by Allianz Global Investors, and
considered the Company's 'shop window'. Shareholders are
encouraged to visit the site for the very
latest news: you will find video interviews, press coverage,
regulatory market announcements and a full
Literature & Resources library. The 'How to invest' section
includes detailed background information as
well as links to the most popular online trading platforms.
Investment Insights from Silicon Valley
Shareholders are reminded that, via the website, they can
register to receive monthly performance
updates via email as well as regular 'Investment Insights from
Silicon Valley' e-newsletters from the
Company's Investment Manager. In May 2018, the General Data
Protection Regulation (GDPR) became
law. Under this regulation, shareholders must provide 'opt-in'
consent to receive communications. If you
have not already provided consent but would like to receive our
targeted communications, such as
'Investment Insights', you can opt in via the website - simply
click on 'Sign up' on the home page.
Awarding success
The Company has a specialist investment remit, so success in
industry awards is extremely helpful in
raising awareness. Shareholders will know that the Company has
received a plethora of high profile
and prestigious accolades in recent years. These awards include
the Investment Week Investment
Company of the Year Award, Specialist category, in three of the
last four years (2015, 2017 and 2018).
This award is highly coveted as it recognises excellence in
closed-ended fund management and
highlights the Company's consistent performance over time. The
judging panel was made up of some
of the UK's leading researchers and investors in investment
trusts and closed-ended companies, as well
as several senior board members with many years' experience in
the industry.
In September 2018, the Company was once again recognised by
Investors Chronicle who named it
a 'Top 100 Fund' for the sixth consecutive year. Shareholders
can read more about awards on the
Company's website. Performance accolades are greatly valued as
they reflect the Company's long-term
investment performance track record and create sustained and
ongoing demand for the Company's
shares.
Away from performance-related awards, in May 2018 the Company
was awarded 'Best Report and
Accounts (Specialist)' by the AIC. The Board is conscious that
the Company has attracted an influx of
private investors in recent years so it is proud to receive this
award that recognises provision of clear and
meaningful information to shareholders in an imaginative
way.
Successful issuance of shares
As stated earlier, the Board remains keen to increase the number
of shares in issue as a means of
growing the Company..
During the first half of the Company's financial period,
excellent investment performance, well focused
marketing and conducive market conditions all combined to enable
the reissuance of all shares
previously held in treasury. A total of 1,708,453 shares were
reissued from treasury at an average price
of 1293p and an average discount to NAV of 1.7%.
Using the authorities approved by shareholders at the AGM, the
Company was then able to issue new
shares once all those held in treasury had been reissued and
over the remainder of the period a total of
5,174,288 shares were issued at an average price of 1450p and an
average premium of 1.10%. In total
over the period, the Company raised additional capital of
GBP95.8m by the issue of 6,882,741 shares at
an average premium to NAV of 0.32%. 370,000 of these shares were
issued under the new authorities
approved by shareholders at the additional General Meeting held
on 23 July 2018. Market conditions
changed towards the end of the period and there has been no
issuance of shares since 8 November
2018.
The Board will continue to consider buying back shares when the
discount is over 7% and all other
factors align. The Board considers carefully the parameters
which should apply to both the issuance of
shares and the buy back of shares from the market and will only
proceed when the action is in the best
interests of shareholders. No shares were bought back during the
period.
Our focus on the costs of running the Company
Your Board works hard to ensure that the costs of running the
Company are both reasonable and
competitive, whilst also recognising that shareholders are
seeking strong returns from a highly
specialised investment mandate.
The ongoing charges figure (OCF) is calculated by dividing
operating expenses by the average net
asset value. The annualised OCF for the period under review was
0.93% (2017: 1.02%). The OCF
excludes any performance fee to which the Investment Manager may
be entitled if the Company's NAV
per share outperforms its benchmark (and is explained in full
under Financial Statements, Note 13 on
page 101).
The Company's market capitalisation exceeded GBP400 million for
the first time during the review period;
indeed, assets rose considerably higher than this before
October's market sell-off. However, the figure of
GBP400 million is significant because of the tiered management
fee that the Board negotiated with Allianz
Global Investors and which became effective on 1 December 2017.
Under the revised structure, the fee
of 0.8% of market capitalisation reduces to 0.6% for any amount
of market capitalisation in excess of
GBP400 million. The Board is pleased that shareholders have
benefited from lower costs per share during
this review period as a result of its earlier negotiations.
As a result of the Company's outperformance of its benchmark
index in the 13 months to 31 December
2018, a performance fee of GBP5,162,649 was earned by the
Investment Manager for this period (2017:
GBP433,476). Your board is pleased with the Company's
outperformance over the period and believe that
it is appropriate that this has triggered the payment of a
substantial performance fee. The Investment
Management Agreement is in place to encourage, recognise and
reward such positive results. Any
future performance fee will be subject to the Manager both
achieving additional outperformance of
the benchmark and the NAV exceeding the new "high water mark" of
1281.03p.
Key Investor Information
As detailed in last year's annual report, the Key Information
Document (KID) is a standardised pan-
European Union document that came into force in January 2018 for
investment trusts and many
other investment products operating under the Packaged Retail
and Insurance-based Investment
Products (PRIIP) Regulation. The KID contains product, risk,
charges and other information. It is a
regulatory requirement that you are provided with a KID before
you invest, and you are required to
declare that you have seen the latest KID when you make your
investment.
Industry concerns, which your Board shares, that disclosures
mandated for inclusion could
be unhelpful for investors have gathered pace over the year.
Specific concern surrounds the
methodology for both the investment performance and risk
sections. The Association of Investment
Companies has been very vocal in its criticism of this
regulatory document and has lobbied for
KIDs to be suspended while the problems are addressed. However,
this has not happened and
KIDs remain a regulatory disclosure requirement. With this in
mind, your Board considers it worth
reminding prospective investors in the Company not to rely
solely on the KID when making their
investment decision.
Sector reclassification
The Global Industry Classification Standard (GICS) is a
classification system for equities, allowing
market participants to classify stocks by standardised industry
definitions. As part of a September
2018 reclassification exercise, a number of stocks were moved
from the 'Consumer Discretionary',
'Information Technology' and the now discontinued
'Telecommunication Services' sectors into a new
'Communication Services' sector. The Board considers the GICS
reclassification as confirmation that
technology is broadening its reach into other industries:
technology is very much alive and continues
to be the driver of innovation across many industries, for both
businesses and consumers. The
reclassification does not change how the Company's portfolio is
managed and the Manager will
continue to build a diversified portfolio across a variety of
secular themes.
Board Matters
Your Company's Investment Manager continues to enjoy
considerable benefits from being located
in San Francisco, at the epicentre of the industry and close to
where many of the Company's top
holdings are located. As a Board we recognise the advantage that
the Company gains from its
close proximity to Silicon Valley. Moreover, we have worked hard
to optimise working practices with
the Manager, whilst recognising the constraints imposed by the
geographical distance and time
zone difference between London and San Francisco.
Most of the Company's Board meetings are held in London, but we
schedule a visit to San Francisco
every couple of years. The next visit is planned for September
2019. The frequency of these visits
recognises the importance of good communications and close
working relationships between the
Manager and the Board, but also the costs and time commitment of
such trips.
Brexit, other than the possible impact on the Sterling exchange
rate, is not a material factor to
the global investment proposition offered by the Company (but
does potentially have some
administration implications). The Company's AIFM, Allianz Global
Investors GmbH (AllianzGI GmbH)
is incorporated in Germany and it currently provides
cross-border management services to the
Company using the AIFMD management passport. The German
regulator BaFin and the FCA in the
UK have reached a formal understanding that AllianzGI GmbH can
continue to operate as the AIFM
after Brexit, and apply to be regulated in the UK by the FCA, in
a three year transition period. More
detail can be found on page 59.
An internally facilitated Board and Manager performance
appraisal process was conducted
towards the end of the year. This confirmed that the current
Board is working in an effective manner
with no significant shortcomings identified.
In accordance with the Articles of Association, at this year's
AGM, Humphrey van der Klugt shall
retire by rotation and Richard Holway shall retire due to tenure
having served as a Director in
excess of nine years. I am pleased to confirm that Humphrey and
Richard remain fully effective as
independent directors and the re-election of both is fully
supported by the Board.
Continuation Vote
In accordance with our Articles of Association we are required
to propose a continuation vote every five
years. The most recent continuation vote was proposed and passed
by Shareholders at the 2016 AGM.
Shareholders will have a further opportunity to vote on the
continuation of the Company at the AGM to
be held in 2021.
Outlook
Since the end of the reporting period, markets have continued to
be unpredictable but the Trust's
NAV has experienced a significant and positive 'bounce', rising
by 14.2% over the initial two months of
2019. Markets have been more buoyant but positive stock section
has been the key contributor to the
Company's relative performance. The slowdown in global economies
(with China particularly under
the spotlight) remains a concern and markets continue to be
influenced by the latest news flow on the
US-China trade conflict, with the prospect of some sort of
resolution looking more likely at the time of
writing.
Weakening global growth will remain a factor, making 2019 a
difficult year for investors to navigate.
The Company's Managers expect crosscurrents and some weakness in
the first half of the year followed
by a stronger second half. Significantly, however, the team
continues to believe that a carefully chosen
portfolio of technology stocks can continue to deliver positive
returns over the long term as it has done
in the past. And let us not forget that, while there will always
be examples of technology stocks that
don't deliver on their promised growth, the technology sector as
a whole continues to widen its grip on
the global economy.
In times of elevated volatility, your Board is reassured by the
Manager's proven ability to carefully
balance risks and opportunities, over both shorter and longer
time frames. The team continues
to leverage its industry experience, emphasising individual
stock selection. We also believe that a
diversified technology fund like ours has its advantages, since
it offers access to a portfolio of stocks
across a range of technology subsectors. As such, the Company's
shareholders are never reliant on
the success of just one or two investments. Our reassurance also
derives from the knowledge that
investment decisions are being taken with such an experienced
investment management team
informed by significant research resources.
Annual General Meeting
The AGM will be held at The City of London Club, 19 Old Broad
Street, London EC2N 1DS, on 22 May
2019 at 12 noon. I look forward to welcoming and meeting those
Shareholders who are able to attend.
Your Board takes very seriously its responsibility for
safeguarding the interests of all Shareholders. We
are keen to remind you that being a Shareholder gives you the
right to vote on issues that affect the
Company, such as director elections and any amendments to
policy. Irrespective of whether or not
you are able to attend the AGM, Shareholders are encouraged to
makes their voices heard by voting
on ordinary and special business matters, as detailed on the
voting instruction card enclosed with this
report.
Robert Jeens
Chairman
14 March 2019
Investment Managers' Review
Financial Year to 31 December 2018
Economic and Market Backdrop
It was always unlikely that markets would repeat their
performance in 2017, which was characterised by low volatility and
high returns. However, few were prepared for the onslaught of 2018,
where volatility returned forcefully and some of technology's
largest names found themselves vulnerable. In spite of
apparently
synchronised global economic growth at the start of the year,
sentiment soon soured and financial markets struggled.
Initially, the US market managed to resist much of this weakness
and the technology sector - where companies were still growing
earnings - continued its strength. Partly, this was due to the
package of corporate tax cuts brought in by the Trump
Administration. Companies started to feel the effects on their cash
flows early in 2018. US economic activity increased, with Gross
Domestic Product (GDP) rising to a peak of 4.2% in the second
quarter of the year.
However, the shine wore off as the US trade war with China
escalated. Investors were increasingly troubled about the potential
repercussions for the global economy and for US manufacturing. The
strong Dollar hurt those emerging markets with significant Dollar
denominated debt, precipitating currency crises in Argentina and
Turkey. Markets wobbled as the international environment looked
increasingly unstable. This tipped in October,
with markets - and technology stocks in particular - sliding as
much as 20%.
While geopolitics has played a role, the recent volatility must
be set against a backdrop of higher bond yields. US interest rates
rose four times in 2018,2 quantitative easing was progressively
withdrawn in Europe and the UK also saw a rate rise. Only Japan
held out. This withdrew liquidity from the system. At the same
time, the gap between shorter- and longer dated bonds narrowed,
typically a harbinger of imminent recession. It was this, perhaps
more than anything else, that ultimately changed the path of
markets over the year.
The technology sector
For the technology sector, there was a notable difference
between its performance pre-October and post-October. Before
October, technology companies had led the S&P 500 to its
longest-ever bull run. There were hints of the problems to come -
Facebook's data privacy issues, for example - but companies kept
delivering on high earnings expectations and they appeared to be a
bright spot for growth.
The catalyst for the sharp reversal was not entirely clear.
However, it was sudden and dramatic. Over the month of October, the
Nasdaq dropped from 8,025 (3 October) to 7,050 (29 October) - a 12%
fall. By 24
December, it was another 12% lower at 6,192.3 With hindsight,
the deciding factor appeared to be the weakness in China. Chinese
demand is an important source of growth for technology companies
and
earnings suffered as the US/China trade war hurt Chinese
consumer sentiment. This impacted certain sectors more than others.
In particular, hardware and semiconductor names saw a rapid
sell-off. Robotics names
also suffered.
Rising US interest rates also contributed. In raising the
discount rate, technology valuations needed to undergo some
reappraisal. Future growth was no longer as valuable and this saw
some of the highest growth technology names marked lower.
Earnings growth remained strong across the technology sector. In
aggregate, growth rates for the sector are expected to be over 20%
for the full year 2018,4 and over 30% in our portfolio. Amazon
continued to grow at just under 30%5 in the third quarter, but
guided markets lower for the fourth quarter. Netflix continued to
see growth at a similar level.6 The problem was that high
expectations were embedded into share prices. As such, when forward
guidance from some key technology names was not as buoyant as
anticipated, markets became
troubled.
Taking the year as a whole, the technology sector remains one of
the few areas to have seen positive returns, albeit with
considerable volatility. Technology stocks remain a strong source
of growth in a low growth world.
Technology developments over the year
Data security & Facebook
Data remains a problem for many technology groups. In 2018, it
became clear that many users had not been aware of how social media
groups were using their data. At the same time, companies such as
Facebook struggled to fight against criminality and propaganda on
their sites. As Facebook CEO Mark Zuckerberg has
pointed out, the 'bad guys' are not robots. While Facebook and
other companies are moving fast, the hackers are often moving
faster.
The new General Data Protection Regulation (GDPR) was introduced
in May. This was Europe's new framework for data protection laws.
It significantly extended the rights of individuals to ask
companies to reveal or delete the personal data they hold on them.
Fines for breaching the new rules are significant - the
maximum fine is the higher of EUR20m (GBP17.5m) or 4% of a
company's global turnover.
Elon Musk and management
The last few months of 2018 were a tough time for Tesla founder
Elon Musk. A threat to take the company private surprised
shareholders and the market, while Musk also engaged in a bizarre
spat with a British cave diver. Perhaps more worryingly, there was
also a stream of senior management departures from the electric car
maker, including important engineering and sales personnel.
However, Tesla resolved some of the production issues of its
Model 3 saloon car showing that mass production was a reality.
Production sped up and the company saw greater free cash flow as a
result. Separately, Musk has now been replaced as chairman of Tesla
by Australian business executive Robyn Denholm.
Portfolio analysis
Within our portfolio, Amazon and Square were the two stand-out
performers for the 13 months to 31 December 2018.
Amazon proved more resilient than a number of the other FAANG
(Facebook, Apple, Amazon, Netflix and Alphabet's Google) stocks. It
has continued to grow its earnings, although third-quarter sales
and its forecast for fourth quarter sales missed analyst estimates;
it could not prove entirely immune to the weakness in
consumer spending. However, revenue from Amazon Web Services,
the group's cloud services business, continued to expand rapidly,
nearing $7bn in the third quarter
Square has been a strong long-term contributor to returns and
was also among last year's top contributors to fund performance.
Having started life as a payment processing company, it has evolved
into a valuable Software-as-a- Service (SaaS) option for small
business. Initially, it just allowed small businesses -
hairdressers, cab drivers, corner shops - to accept credit card
payments, many of whom had been cash-only.
However, increasingly those same businesses are starting to use
Square's software to manage other aspects of their businesses -
staffing costs, inventories, supply chains. It allows far more
efficient business management for small merchants and has continued
to build its position in 2018.
Elsewhere, among the top performers in the portfolio were some
of the software names: ServiceNow, Workday, Paycom. These proved
resilient as the corporate sector continued its digital
transformation, fuelled in part by cash freed up by tax cuts.
Security names such as Okta and Palo Alto Networks did well for
similar reasons: digital transformation requires better security.
Many security companies also emerged from a different
transformation in their business models.
There were also companies where we benefited from holding a low
weighting. The most important of these was Facebook. The company
had a dismal year, dropping 19% in a single day in July11 after
revenues missed target
and user numbers weakened. It had struggled since the start of
the year over privacy issues. While it has made significant hires
to combat data issues, it is clear that it will take time to
restore its credibility and this may cost more than it originally
expected.
Semiconductors had a difficult year. We spotted the decline
early, but the sector still made a negative contribution to overall
portfolio returns. The sector is still a beneficiary of some
important long-term trends: Cloud, Artificial Intelligence (AI) and
the connected car. These innovations need high performance
processing
chips to manage large volumes of data. Consolidation has helped
pricing.
Apple's problems became increasingly apparent as the year wore
on. However, for most of the year, investors stayed with the
company. Our large underweight position hurt performance overall,
but we believe investors
were slow to see the difficulties for Apple resulting from
Chinese economic weakness. China remains its biggest growth market.
The product upgrade cycle was underwhelming, with Chinese consumers
generally unimpressed with Apple's innovation and choosing to
support local providers such as Huawei. The situation
in China, combined with poor-take-up for the group's new phone,
saw Apple issue a rare profits warning in early 2019.
International holdings - It was a tough period for some non-US
names, particularly some of the large Chinese technology groups.
Emerging markets in general were out of favour, and China in
particular, as the trade war took its toll. Our low weighting in
Tencent and Alibaba helped performance over the year with both
companies losing ground over the year.
The corporate tax changes introduced at the start of the year
had a notable impact on earnings but this had often already been
built into expectations. Technology companies repatriated cash
balances held offshore,
spending it on M&A activity, buybacks and dividends. The
largest M&A activity was seen in the SaaS arena, with deals
such as German based SAP agreeing to buy technology unicorn
Qualtrics for $8 billion in November. This helped support prices in
the sector.
During the period, we made our first investments in e-Sports.
These are an important emerging trend. Participants play video
games, while being watched by a live audience and are drawing
larger and larger crowds: One major tournament, the 2018 League of
Legends World Championship finals, attracted 200 million
viewers.
Absolute performance
While we saw a significant spike in market volatility that drove
most technology and broad market indices to negative returns for
the period, the Company delivered a NAV gain of 9% in 2018. The
Company benefited from having exposure to a variety of companies
that delivered consistent earnings growth over the year. The
majority of the gains were driven by higher growth companies in the
SaaS, security, payments/software, and video streaming segments.
Our positions in mega cap companies such as Amazon and Microsoft
also meaningfully helped absolute returns.
The Company was not completely immune to the macro issues that
sparked the extreme market volatility. We had small positions in
some semiconductor and robotics companies that were negatively
impacted by the trade
conflict between the US and China. However, we identified the
issues and quickly reduced exposure to minimize the impact to the
Company.
Relative performance
A final note on relative performance: This period we
outperformed the Dow Jones Technology Index (sterling adjusted,
total return), with the Company returning 9% against an index
performance of 0.1% GBP. Although our investments are not driven by
the weightings of individual companies in the benchmark, we are
aware of the benchmark and use it to measure the success of our
performance. While many of the companies mentioned above that
contributed on an absolute and relative basis are also held in the
benchmark, stocks such as Amazon, Netflix, and Square are not
currently part of our benchmark and have helped overall
performance.
Outlook
Despite the recent market volatility, our view is that
technology is well-positioned to remain a major driver of market
returns. The ongoing digital transformation among corporations
should continue to drive growth in IT spending. Feedback from our
discussions with company management teams, as well as management
surveys from multiple sources, indicate that companies across the
economy are turning to technology solutions to increase revenue,
improve productivity, and enhance operating efficiency. We believe
this is a multi-year
transition which is still in the very early stages. While the
largest technology companies today will inevitably struggle to grow
as rapidly in the future, the broad technology sector should
continue to see attractive growth in the future. During the sharp
sell-off in the fourth quarter, many high quality technology
companies continued to deliver strong operational execution. With
more reasonable valuations and less euphoria in the market, we
believe high quality companies should exceed expectations and
deliver attractive stock returns in 2019.
Although valuations are elevated for some high growth companies,
we continue to see massive addressable markets much larger than the
revenues today. However, we have consolidated our exposure to these
areas in select companies having the most compelling solutions and
whose business models demonstrate a discernible path to deliver
strong earnings and cash flow growth over the next few years.
We are also finding excellent investment opportunities among
more attractively valued areas of technology. In particular,
certain technology incumbents are making compelling progress on
their "as-a-service" offerings.
Artificial intelligence (AI) is also becoming a significant
trend. From consumer goods, such as the Amazon Echo, to autonomous
driving, practical applications of AI are emerging. We expect AI
will increasingly be used to make our lives more convenient.
We continue to believe the technology sector can provide some of
the best absolute and relative return opportunities in the equity
markets - especially for bottom-up stock pickers. The growth in
technology is coming from the creation of new markets, rather than
simply gross domestic product growth. Investors need to find
companies generating organic growth by creating new markets or
effecting significant change on old markets. Industries such as
automobiles, advertising, security, retail, and manufacturing are
all being shaped and transformed by advances in technology.
We are seeing an ongoing wave of innovation in the sector that
we believe has the potential to produce attractive returns for
companies with best-in-class solutions. We also see a number of
companies with present valuations that, in our view, do not fully
reflect positive company- and/ or industry-specific tailwinds.
Walter Price
March 2019
Viability Statement
In accordance with the Corporate Governance provisions the
Company is required to make a forward looking
(longer term) Viability Statement. In order to do this the Board
has considered the appetite for a technology
investment trust against the current market backdrop and has
formally assessed the prospects for the Company over a period of
four years.
The directors believe that the period of four years continues to
be appropriate as such time frame incorporates the Company's next
five-year continuation vote which will be proposed at the AGM to be
held in 2021. In order to assess the prospects for the Company the
Board has considered:
-- The investment objective and strategy taking into account
recent, past and potential performance against
both the benchmark, other indices of note and peers;
-- The financial position of the Company, which does not
currently utilise gearing in any form but does
maintain a portfolio of, in the main, non-income bearing
investments;
-- The liquidity of the portfolio and the ability to liquidate
the portfolio on the failure of a continuation vote;
-- The ever increasing level of technology adopted by both
individuals and corporations alike;
-- The inherent risks in such technology both in terms of speed
of advancement but also potential catastrophe
with the growth of cyber fraud; and
-- The principal risks faced by the Company as outlined
below.
The Board is fully aware that the world of technology is
constantly moving and growing and the perceived picture of
technology now and in four years' time is potentially very
different. Based on the results of the formal assessment the Board
believes it is reasonable to expect that the Company will continue
in operation and meet its liabilities for the period of four years
under direct review.
Principal Risks and Uncertainties
The principal risks identified by the Board are set out in the
table on this page, together with information about the actions
taken to mitigate these risks. A more detailed version of this
table in the form of a Risk Map and Controls document is reviewed
in full and updated by the Audit Committee and Board at least twice
yearly; individual risks are considered by the Board in further
detail depending on the market situation and a high-level review of
all known risks faced by the Company is considered at every Board
meeting. The principal risks and uncertainties faced by the Company
relate to the nature of its objectives and strategy as an
investment company and the markets in which it operates.
Description Mitigation
Investment Strategy Risk The Investment Manager has responsibility
The Company's NAV may be adversely for sectoral weighting and for
affected by the Investment Manager's individual stock picking, having
inappropriate allocation of funds taken due account of Investment
to particular sub-sectors of the Objectives and Controls that are
technology market and/or to the agreed with the Board from time
selection of individual stocks to time and regularly reviewed.
that fail to perform satisfactorily, These seek, inter alia, to ensure
leading to poor investment performance that the portfolio is diversified
in absolute terms and/ or against and that its risk profile is appropriate.
the benchmark.
The Board reviews investment performance,
Technology Sector Risk including a detailed attribution
The technology sector is characterised analysis comparing performance
by rapid change. New and disruptive against the benchmark, at each
technologies can place competitive Board meeting. At such meetings,
pressures on established companies the Investment Manager reports
and business models, and technology on major developments and changes
stocks may experience greater in technology market sectors and
price volatility than securities also highlights issues relating
in some slower changing market to individual securities.
sectors.
The operations of the Company
Cyber Risk are carried out by the Investment
The Company may be at risk of Manager and various third party
cyber attacks which may result service providers, all service
in the loss of sensitive information providers report to the Board
or disruption to the business. on operational issues including
cyber risks and the controls in
place to capture potential attacks.
The Board meets with the AllianzGI
Head of Information Security and
is satisfied that appropriate
controls are in place. See Operational
Risk below.
--------------------------------------------
Market Risk The Board and the Investment Manager
The Company's NAV may be adversely monitor stock market movements
affected by a general decline in and may consider hedging, gearing
the valuation of listed securities or other strategies to respond
and/or adverse market sentiment to particular market conditions.
towards the technology sector in
particular. Although the Company The Investment Manager maintains
has a portfolio that is diversified regular contact with shareholders
by company size, sector and geography to discuss performance and expectations
its principal focus is on companies and to convey the belief of the
with high growth potential in the Board and the Investment Manager
mid-size ranges of capitalisation. that superior returns can be generated
The shares of these companies may from investment in carefully selected
be perceived as being at the higher companies that are well managed,
end of the risk spectrum, leading financially strong and focused
to a lack of interest in the Company's on those segments of the technology
shares in some market conditions. market where disruptive change
is occurring.
--------------------------------------------
Currency Risk
A high proportion of the Company's The Board monitors currency movements
assets is likely to be held in and determines hedging policy
securities that are denominated as appropriate. The Board does
in US Dollars, whilst its accounts not currently seek to hedge this
are maintained in Sterling. foreign currency risk.
Movements in foreign exchange
rates affect the performance of
the Investment Portfolio and creates
a risk for shareholders.
--------------------------------------------
Financial and Liquidity Risk
The financial risks to the Company Financial and liquidity reports
and the controls in place to manage are provided to and considered
these risks are disclosed in detail by the Board on a regular basis.
in Note 15 of the AFR.
--------------------------------------------
Operational Risk The Board receives regular reports
Disruption to or the failure of from the Investment Manager and
the systems and processes utilised third parties on internal controls
by the Investment Manager or other including reports on monitoring
third party service providers. visits carried out by the Depositary
This encompasses disruption or on behalf of the Company. The
failure caused by cyber crime Board has further considered the
and covers dealing, trade processing, increased risk of cyber-attacks
administrative services, financial and has received reports and assurance
and other operational functions. from the Investment Manager regarding
the controls in place.
--------------------------------------------
In addition to the specific principal risks identified in the
table above, the Company faces risks arising from the provision of
services from third parties including the Investment Manager where
succession planning for the individuals carrying out the day-to-day
investment activities has been discussed. General risks are also
present relating to compliance with accounting, legal and
regulatory requirements, and with corporate governance and
shareholder relations issues which could have an impact on
reputation and market rating. Management of the services provided
and the internal controls procedures of the third party providers
is monitored and reported on by the Manager to the Board. These
risks are all formally reviewed by the Board twice each year and at
such other times as deemed necessary. Details of the Company's
compliance with corporate governance best practice, including
information on relations with shareholders, are set out in the
Corporate Governance Statement within the Directors' Report
beginning on page 71.
The Board's review of the risks faced by the Company also
includes an assessment of the residual risks after mitigating
action has been taken.
Related Party Transactions
During the financial period no transactions with related parties
took place which would materially affect the financial position or
the performance of the Company.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Financial
Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law). The financial
statements are required by law to give a true and fair view of the
state of affairs of the Company and of the total return of the
Company for that year. In preparing these 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;
- state whether applicable UK accounting standards have been followed; 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 confirm that the financial statements comply with
the above requirements.
The Directors are responsible for keeping adequate accounting
records that disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 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.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website.
The financial statements are published on
www.allianztechnologytrust.com, which is a website maintained by
the Investment Manager. The work undertaken by the Auditors does
not involve consideration of the maintenance and integrity of the
website and, accordingly, the Auditors accept no responsibility for
any changes that may have occurred to the financial statements
since they were initially presented on the website. Visitors to the
website need to be aware that legislation in the United Kingdom
governing the preparation and dissemination of the financial
statements may differ from legislation in other jurisdictions.
Neither an audit nor a review provides assurance on the
maintenance and integrity of the website, including controls used
to achieve this, and in particular whether any changes may have
occurred to the financial information since first published. These
matters are the responsibility of the Directors but no control
procedures can provide absolute assurance in this area.
The Directors each confirm to the best of their knowledge
that:
a) the Financial Statements, prepared in accordance with
applicable accounting standards, give a true and fair view of the
assets, liabilities, financial position and return of the
Company;
b) the Strategic Report includes 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 the Company faces.
The Directors confirm that the Annual Report and Financial
Statements, taken as a whole are fair, balanced and understandable
and provide the information necessary to assess the Company's
position and performance, business model and strategy.
For and on half of the Board
Robert Jeens
Chairman
14 March 2019
Investment Portfolio as at 31 December 2018
Investment Sector(#) Sub-sector(#) Country Fair Value % of Portfolio
GBP'000
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Internet & Direct Internet & Direct
Amazon.com Marketing Retail Marketing Retail United States 26,878 6.6
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Internet Software & Internet Software &
Alphabet Inc Services Services United States 25,354 6.2
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Microsoft Software Systems Software United States 16,591 4.1
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Internet Software & Internet Software &
Okta Services Services United States 14,986 3.7
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Paycom Software Software Application Software United States 13,465 3.3
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Salesforce.com Software Application Software United States 13,122 3.2
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Data Processing &
Square IT Services Outsourced Services United States 12,835 3.1
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Internet Services &
Twilio IT Services Infrastructure United States 11,911 2.9
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Workday Software Application Software United States 11,809 2.9
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
ServiceNow Software Systems Software United States 11,474 2.8
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Top ten investments 158,425 38.8
Semiconductors &
Semiconductor
Cree Equipment Semiconductors United States 11,199 2.7
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Zscaler Software Systems Software United States 10,974 2.7
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Technology, Hardware Technology, Hardware
Storage & Storage &
NetApp Peripherals Peripherals United States 10,354 2.5
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Automobile
Tesla Automobiles Manufacturers United States 9,630 2.4
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Data Processing &
Paypal IT Services Outsourced Services United States 9,346 2.3
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Semiconductors &
Semiconductor Semiconductor
Teradyne Equipment Equipment United States 8,722 2.2
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Tableau Software Software Systems Software United States 8,715 2.1
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Aveva Software Application Software United Kingdom 8,425 2.1
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Technology, Hardware Technology, Hardware
Storage & Storage &
Apple Peripherals Peripherals United States 8,169 2.0
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Semiconductors &
Semiconductor
Infineon Technologies Equipment Semiconductors Germany 7,319 1.8
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Top twenty investments 251,278 61.6
Data Processing &
Visa IT Services Outsourced Services United States 6,774 1.7
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Intuit Software Application Software United States 6,669 1.7
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Temenos Software Application Software Switzerland 6,613 1.6
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Data Processing &
Mastercard IT Services Outsourced Services United States 6,598 1.6
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Semiconductors &
Semiconductor
Broadcom Inc Equipment Semiconductors United States 6,532 1.6
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
IT Consulting & Other
Capgemini IT Services Services France 5,941 1.5
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Take-Two Interactive Interactive Home
Software Entertainment Entertainment United States 5,869 1.4
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Internet Services &
MongoDB IT Services Infrastructure United States 5,830 1.4
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Atlassian Software Application Software United States 5,234 1.3
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Communications Communications
Palo Alto Networks Equipment Equipment United States 4,916 1.2
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Top thirty investments 312,254 76.6
Internet & Direct
Grubhub Retailing Marketing Retail United States 4,755 1.2
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Sophos Software Systems Software United Kingdom 4,691 1.2
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Ringcentral Software Application Software United States 4,688 1.1
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Electronic Equipment
Instruments & Technology
CDW Components Distributors United States 4,540 1.1
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Zendesk Software Application Software United States 4,476 1.1
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Fortinet Software Systems Software United States 4,419 1.1
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Technology, Hardware Technology, Hardware
Storage & Storage &
Pure Storage Peripherals Peripherals United States 4,348 1.1
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Communications Communications
Arista Networks Equipment Equipment United States 4,291 1.0
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Nemetschek Software Application Software Germany 4,182 1.0
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Semiconductors &
Semiconductor
Qualcomm Equipment Semiconductors United States 4,072 1.0
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Top forty investments 356,716 87.5
IT Consulting & Other
DXC Technology IT Services Services United States 3,934 1.0
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Proofpoint Software Systems Software United States 3,785 0.9
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
New Relic Software Application Software United States 3,700 0.9
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Hubspot Software Application Software United States 3,531 0.9
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Realpage Software Application Software United States 3,471 0.9
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Internet Software & Internet Software &
Alibaba Services Services China 3,268 0.8
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Internet Software & Internet Software &
Tencent Services Services China 2,807 0.7
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Health Care Health Care
Veeva Systems Technology Technology United States 2,630 0.6
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Autodesk Software Application Software United States 2,327 0.6
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Semiconductors &
Semiconductor
Taiwan Semiconductor Equipment Semiconductors Taiwan 2,258 0.6
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Top fifty investments 388,427 95.4
Semiconductors &
Microchip Technology Semiconductor
Inc Equipment Semiconductors United States 2,193 0.5
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Fireeye Software Systems Software United States 2,161 0.5
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Oracle Corporation Software Systems Software United States 2,133 0.5
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Communications Communications
Cisco Systems Equipment Equipment United States 2,117 0.5
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Communications Communications
Viavi Solutions Equipment Equipment United States 1,984 0.5
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Guidewire Software Software Application Software United States 1,848 0.4
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Internet Software & Internet Software &
Yandex Services Services United States 1,780 0.4
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
IT Consulting & Other
Computacenter IT Services Services United Kingdom 1,560 0.4
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Electronic Equipment
Instruments & Electronic Equipment
Cognex Components Instruments United States 1,228 0.3
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Blue Prism Software Systems Software United Kingdom 861 0.2
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Top sixty investments 406,292 99.6
Heavy Electrical
Bloom Energy Electrical Equipment Equipment United States 660 0.2
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Elastic NV Software Application Software Netherlands 583 0.1
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Alfa Financial
Software Software Application Software United Kingdom 367 0.1
---------------------- --------------------- ---------------------- ---------------- ------------ ---------------
Total Investments 407,902 100.00
--------------------------------------------------------------------------------------- ------------ ---------------
(#) GICS Industry classifications
INCOME STATEMENT
for the 13 month period ended 31 December 2018
2018 Revenue 2018 Capital 2018 Total 2017 Revenue 2017 Capital 2017 Total
GBP GBP Return GBP GBP Return
GBP GBP
--------------------- -------------- -------------- ------------- -------------- -------------- -------------
Gains on investments
held at fair value
through profit
or loss - 27,035,470 27,035,470 - 91,039,974 91,039,974
---------------------- -------------- -------------- ------------- -------------- -------------- -------------
(Loss) gains on
foreign currencies (276) 1,958,678 1,958,402 - (515,184) (515,184)
---------------------- -------------- -------------- ------------- -------------- -------------- -------------
Income 1,861,880 - 1,861,880 1,723,582 - 1,723,582
---------------------- -------------- -------------- ------------- -------------- -------------- -------------
Investment management
fee and performance
fee (3,561,453) (5,162,649) (8,724,102) (2,116,945) (433,476) (2,550,421)
---------------------- -------------- -------------- ------------- -------------- -------------- -------------
Administration
expenses (847,061) - (847,061) (609,756) - (609,756)
---------------------- -------------- -------------- ------------- -------------- -------------- -------------
(Loss) profit
before finance
costs and taxation (2,546,910) 23,831,499 21,284,589 (1,003,119) 90,091,314 89,088,195
---------------------- -------------- -------------- ------------- -------------- -------------- -------------
Finance costs:
interest payable
and similar charges (26,174) - (26,174) (1,536) - (1,536)
---------------------- -------------- -------------- ------------- -------------- -------------- -------------
(Loss) profit
before taxation (2,573,084) 23,831,499 21,258,415 (1,004,655) 90,091,314 89,086,659
---------------------- -------------- -------------- ------------- -------------- -------------- -------------
Taxation (204,749) - (204,749) (228,129) - (228,129)
---------------------- -------------- -------------- ------------- -------------- -------------- -------------
(Loss) profit
attributable to
ordinary shareholders (2,777,833) 23,831,499 21,053,666 (1,232,784) 90,091,314 88,858,530
---------------------- -------------- -------------- ------------- -------------- -------------- -------------
(Loss) earnings
per ordinary share (9.19p) 78.81p 69.62p (4.75p) 346.78p 342.03p
---------------------- -------------- -------------- ------------- -------------- -------------- -------------
The total return column of this statement is the profit and loss
account of the Company.
The supplementary revenue and capital columns are both prepared
under the guidance published by the Association of Investment
Companies.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
in the 13 month period.
The net profit for the period disclosed above represents the
Company's total comprehensive income.
BALANCE SHEET
at 31 December 2018
2018 GBP 2018 GBP 2017 GBP
--------------------------------------- ------------- ------------- -------------
Non Current Assets
--------------------------------------- ------------- ------------- -------------
Investments held at fair value through
profit or loss 407,901,923 304,958,713
---------------------------------------- ------------- ------------- -------------
Current Assets
--------------------------------------- ------------- ------------- -------------
Other receivables 2,141,300 2,641,205
---------------------------------------- ------------- ------------- -------------
Cash and cash equivalents 30,717,000 7,189,378
---------------------------------------- ------------- ------------- -------------
32,858,300 9,830,583
--------------------------------------- ------------- ------------- -------------
Current Liabilities
--------------------------------------- ------------- ------------- -------------
Other payables (10,687,522) (1,356,349)
---------------------------------------- ------------- ------------- -------------
Net current assets 22,170,778 8,474,234
---------------------------------------- ------------- ------------- -------------
Net assets 430,072,701 313,432,947
---------------------------------------- ------------- ------------- -------------
Capital and Reserves
--------------------------------------- ------------- ------------- -------------
Called up share capital 8,369,292 7,075,720
---------------------------------------- ------------- ------------- -------------
Share premium Account 130,694,014 41,810,716
---------------------------------------- ------------- ------------- -------------
Capital redemption reserve 1,020,750 1,020,750
---------------------------------------- ------------- ------------- -------------
Capital Reserve 310,764,628 281,523,911
---------------------------------------- ------------- ------------- -------------
Revenue Reserve (20,775,983) (17,998,150)
---------------------------------------- ------------- ------------- -------------
Shareholders' funds 430,072,701 313,432,947
---------------------------------------- ------------- ------------- -------------
Net asset value per ordinary share 1,178.6p 1,178.6p
---------------------------------------- ------------- ------------- -------------
The financial statements of Allianz Technology Trust PLC,
company number 3117355, were approved and authorised for issue by
the Board of Directors on 14 March 2019 and signed on its behalf
by:
Robert Jeens
Chairman
STATEMENT OF CHANGES IN EQUITY
for the 13 month period ended 31 December 2018
Called Share Capital
up Share Premium Redemption Capital Revenue
Capital Account Reserve Reserve Reserve Total
GBP GBP GBP GBP GBP GBP
--------------------- ---------- ------------ ------------ ------------ ------------- ------------
Shareholders'
funds at
1 December 2016 7,075,720 37,097,551 1,020,750 188,242,722 (16,765,366) 216,671,377
---------------------- ---------- ------------ ------------ ------------ ------------- ------------
Revenue Loss - - - - (1,232,784) (1,232,784)
---------------------- ---------- ------------ ------------ ------------ ------------- ------------
Shares issued
from treasury
during the year - 4,713,165 - 3,189,875 - 7,903,040
---------------------- ---------- ------------ ------------ ------------ ------------- ------------
Capital profit - - - 90,091,314 - 90,091,314
---------------------- ---------- ------------ ------------ ------------ ------------- ------------
Net assets at
30 November
2017 7,075,720 41,810,716 1,020,750 281,523,911 (17,998,150) 313,432,947
---------------------- ---------- ------------ ------------ ------------ ------------- ------------
Net assets at
1 December 2016 7,075,720 41,810,716 1,020,750 281,523,911 (17,998,150) 313,432,947
---------------------- ---------- ------------ ------------ ------------ ------------- ------------
Revenue loss - - - - (2,777,833) (2,777,833)
---------------------- ---------- ------------ ------------ ------------ ------------- ------------
Shares issued
from treasury
during the period - 15,446,442 - 5,409,218 - 20,855,660
---------------------- ---------- ------------ ------------ ------------ ------------- ------------
Shares issued
from block listing
facility during
the period 1,293,572 73,436,856 - - - 74,730,428
---------------------- ---------- ------------ ------------ ------------ ------------- ------------
Capital profit - - - 23,831,499 - 23,831,499
---------------------- ---------- ------------ ------------ ------------ ------------- ------------
Net assets at
31 December
2018 8,369,292 130,694,014 1,020,750 310,764,628 (20,775,983) 430,072,701
---------------------- ---------- ------------ ------------ ------------ ------------- ------------
Note A
Summary of Accounting Policies
The financial statements - have been prepared on the basis of
the accounting policies set out below.
The accounts have been prepared over a 13 month period due to
the accounting year end changing from
30 November to 31 December in 2018.
The financial statements have been prepared in accordance with
The Companies Act 2006, FRS 102 and with the Statement of
Recommended Practice 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' (SORP) issued by the
Association of Investment Companies (AIC) in November 2014, as
updated in February 2018.
In order to better reflect the activities of an investment trust
company and in accordance with guidance issued
by the AIC, supplementary information which analyses the Income
Statement between items of a revenue and capital nature has been
presented alongside the Income Statement. In accordance with the
Company's status as a UK investment company under section 833 and
834 of the Companies Act 2006, net capital returns may be
distributed by way of dividend.
The requirements have been met to qualify for the exemption to
prepare a Cash Flow Statement. A Cash Flow Statement has therefore
not been included within the financial statements.
The accounting policies adopted in preparing the current year's
financial statements are consistent with those of previous
years.
The Directors believe that it is appropriate to continue to
adopt the going concern basis in preparing the financial statements
as the assets of the Company consist mainly of securities which are
readily realizable and significantly exceed liabilities.
Accordingly, the Directors believe that the Company has adequate
financial resources to continue in operational existence for the
foreseeable future. The Company's business, the principal risks and
uncertainties it faces, together with the factors likely to affect
its future development, performance and position are set out in the
Strategic Report on pages 58 to 62.
Valuation
As the Company's business is investing in financial assets with
a view to profiting from their total return in the form of
increases in fair value, financial assets are held at fair value
through profit or loss in accordance with FRS 102 Section 11:
'Basic Financial Instruments' and Section 12: 'Other Financial
Instruments'.
Investments held at fair value through profit or loss are
initially recognised at fair value. After initial recognition,
these continue to be measured at fair value, which for quoted
investments is either the bid price or the last traded price
depending on the convention of the exchange on which the investment
is listed. Gains or losses on investments are recognized in the
capital column of the Income Statement. Purchases and sales of
financial assets are recognised
on the trade date, being the date which the Company commits to
purchase or sell the assets.
Unlisted investments are valued by the Directors based upon the
latest dealing prices, stockbrokers' valuations, net asset values,
earnings and other known accounting information in accordance with
the principles set out by the International Private Equity and
Venture Capital Valuation Guidelines issued in December 2015.
Transactions with the Investment Manager and related parties
The amounts paid to the investment manager together with details
of the investment management contract are disclosed in Note 2 on
page 94. The existence of an independent board of directors
demonstrates that the company is free to pursue its own financial
and operating policies and therefore, under FRS 102 Section 33:
'Related Party Disclosures', the investment manager is not
considered to be a related party.
The Company's related parties are its directors. Fees paid to
the Company's Board, including employer national insurance
contributions, are disclosed in the Director's Remuneration Report
on page 79. There are no other identifiable related parties at the
period end, and as of 14 March 2019.
Note B
Return per Ordinary Share
The total return per Ordinary Share of 69.62p (2017: 342.03p) is
based on the weighted average number of Ordinary Shares in issue of
30,241,003 (2017: 25,979,754).
Note C
Fixed Asset Investments
Included in the cost of investments are transaction costs on
equity purchases which amounted to GBP211,910 (2017: GBP186,894)
and transaction costs on equity sales which amounted to GBP154,151
(2017: GBP151,431).
Note D
2018 Financial Information
The financial information for the period ended 31 December 2018
has been extracted from the statutory accounts for that year. The
auditor's report on those accounts was unqualified and did not
contain a statement under either Section 498(2) or (3) of the
Companies Act 2006. The Annual Financial Report has not yet been
delivered to the Registrar of Companies.
2017 Financial Information
The financial information for the year ended 30 November 2017
has been extracted from the statutory accounts for that year which
have been delivered to the Registrar of Companies. The auditor's
report on those accounts was unqualified and did not contain a
statement under either Section 498(2) or (3) of the Companies Act
2006.
Annual Report and Financial Statements
The full Annual Financial Report is available to be viewed on or
downloaded from the Company's website at
www.allianztechnologytrust.com. Neither the contents of the
Company's website nor the contents of any website accessible from
hyperlinks on the Company's website (or any other website) is
incorporated into, nor forms part of this announcement.
Annual General Meeting
The Annual General Meeting of the Company will be held at 12
noon on Wednesday, 22 May 2019 at The City Club, 19 Old Broad
Street, London, EC2N 1DS.
This information is provided by RNS, the news service of the
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END
FR CKQDPPBKDBND
(END) Dow Jones Newswires
March 15, 2019 03:00 ET (07:00 GMT)
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