ScotGems Plc – Final Results

From:              ScotGems plc

LEI:                  549300GQHCPU9P1NYM13

Date:               9 March 2020

Results for the year ended 31 December 2019

The Directors of ScotGems plc (“the Company”) are pleased to announce the Company's results for the year ended 31 December 2019.

Highlights

• The Company’s objective is to provide long-term capital growth by investing in a diversified portfolio of small cap companies listed on global stock markets across a range of sectors.
• Shareholders approved the new investment policy on 9 December 2019.
• The new investment team at Stewart Investors have substantially completed the portfolio transition.

Chairman’s Statement             

I am pleased to present the third Annual Report and Accounts of your Company for the year ended 31 December 2019. 

During 2019 the share price fell by 23.2% and the Net Asset Value (“NAV”) by 6.5%. This compares to a rise in the MSCI AC World Index of 19.3%, a rise in the MSCI Emerging Markets Small Cap Index of 5.5% and a rise in the MSCI Emerging Markets Index of 11.0%. The Company’s discount has widened from 0.6% to 18.4%. I remind shareholders that it is not currently the Board’s policy to buy back shares. 

Since inception the share price has fallen by 29.0% and the NAV by 13.0%. This compares to a rise in the MSCI AC World Index of 21.9%, a rise in the MSCI Emerging Markets Small Cap Index of 0.4% and a rise in the MSCI Emerging Markets Index of 11.9%.

In September the Board was disappointed to learn of the resignation of the investment management team at Stewart Investors consisting of Ashish Swarup and Tom Allen. We considered a number of options and in October we announced the continuation of Stewart Investors as Managers. Tom Prew assumed the role of lead portfolio manager, and Chris Grey that of co-manager.

The new investment management team proposed two changes to the investment policy, which the Board supported and were duly passed at a General Meeting on 9 December 2019:

• To increase the number of investments permitted within the Company’s portfolio from between 20 and 30 to between 30 and 50; and

• To clarify that the Company’s focus will continue to be on small cap companies which are primarily listed in emerging markets as opposed to small cap companies listed on any global stock market.

  Whilst the performance thus far has been disappointing, may I remind shareholders that it remains the intention to create a long-term portfolio of between 30 and 50 companies, the market capitalisation of which is less than $2.5 billion at the time of investment.  In that sense the short-term performance figures, in my view, are a poor guide as to what the long-term outcome of these investments might be.  The Investment Manager has set out below a detailed description of the existing portfolio, as well as describing their philosophy in selecting the particular companies in which ScotGems invests.

  The Annual General Meeting will be held on 27 May 2020 at the offices of First State Investments, and I look forward to seeing many of you there.  There will be a presentation by the Investment Managers and an opportunity to question them in more detail about individual investments that the Company has made.

  It may be of some comfort to shareholders to know that the Board and Managers are aligned with the body of shareholders through their own investment in the Company: the Directors owning 2,140,096 shares, and the Investment Manager owning 2,749,155 shares as individuals and 5,000,000 shares through the Stewart Investors Employee Benefit Trust, details of which are set out on pages 11 and 29 of the Annual Report.

Investment Management Report

Background

Stewart Investors notified the Board of ScotGems of the resignation of lead manager Ashish Swarup in September, and that of his co-manager Tom Allen shortly afterwards. The Board of ScotGems consequently decided to review the contract of the Trust. This review included an invitation to Stewart Investors to submit a proposal to the Trust, showing how the new investment team would manage the Trust on a long term basis should they be retained to do so. This proposal was accepted on 22 October 2019 and a shareholder resolution confirming the above was passed on 9 December 2019. 

Portfolio Transition

The investment philosophy followed by the Trust’s new investment team, based in Edinburgh, is identical to that elsewhere in Stewart Investors. We believe that the strategic vision, execution capability and governance of a company – in particular the integrity of its management and owners – are far more important than shorter term considerations such as next year’s earnings.

In compiling this proposal, we identified changes we intended to make to the portfolio so that the Board had all the information required to make a decision. Our indicative proposal retained 12 out of the existing 25 companies held, leading to approximately 60% turnover by value. Our proposal also contained a longer, but still concentrated, list of 34 stocks. With regards to geographic distribution, the indicative portfolio continued to be composed almost entirely of smaller GEM companies, albeit with less of a slant towards Asia.

The main reason to change stocks is not necessarily because of a strong dislike, and certainly not a lack of knowledge, of the companies held. As the risk of capital loss in earlier stage companies can be acute, stock-picking is even more about personal choice than it might be for mid or larger capitalisation companies. Our investment philosophy prioritises integrity of management and ownership above all other things; clearly, degrees of integrity are impossible to quantify making personal comfort with holdings, especially of smaller companies, vital. Stewart Investors has always defined risk as the permanent loss of capital for clients, as opposed to shorter term index underperformance.

Portfolio Transactions

The new investment team has been transitioning the portfolio at a measured pace. Details of significant changes follow below.

Additions:

Aramex is a Dubai listed logistics company operating across the Middle East.  The company’s founder is still involved in the business.  A number of the management team have been involved for almost 30 years and own shares. The company has a net cash balance sheet, $1.5bn market cap, and a 70% free float.

BRAC Bank is a Bangladeshi Bank which is 45% owned by BRAC, the largest NGO in the world.  BRAC Bank currently have a 3% market share.  There is an opportunity presented by a large number of poorly run state and crony banks and advances by BRAC Bank in mobile payments via the BKash App.

Chemical and Allied Products (CAP) is a Nigerian paint company. The company is owed by UAC, and pays a 3% royalty to Akzo Nobel for the Dulux brand. The market cap of $49m makes liquidity hard to find and we were pleased to acquire stock for the Trust. The current dividend yield is approximately 10%.

City Lodge Hotels is a chain of budget hotels based in South Africa. The company owns the majority of its 60 hotels. The company has a conservative balance sheet with a small amount of debt used to fund a handful of properties in sub-Saharan Africa. It is currently at a cyclical low 59% occupancy but still generates healthy cash. Market cap is $200m, with a 75% free float, 15% is owned by black empowerment and employee trusts and 10% by the founding family.

Consorcio Ara is a mid-market property developer based in Mexico. The company has a $300m market cap, is family owned and has a large land bank. It is exceptionally conservatively run with a net cash balance sheet.  

Fragua is a Mexican pharmacy chain with a strong track record. It is a family owned company, has net cash in the balance sheet, and has a market cap of around $1.2bn.

Integrated Diagnostics is a UK listed, Egyptian diagnostics company with a very large potential market at the early stages of growth and consolidation. The company is 25% family owned and has a net cash balance sheet.  

Inversiones Aguas Metropolitanas (IAM Chile) is a holding company with a 50% share in a Chilean water utility called Aguas Andinas. This is a lower growth company but with a fantastic track record of dividends and, we believe, a first world regulatory environment.

Orascom Construction is a Dubai listed contractor operating predominantly in Egypt but with operations also in the UAE, USA and beyond. The Sawiris family control the business and have a track record for financial conservatism. The business is net cash.  Some of what it constructs it seeks to own for the long term, including wind farms offering attractive tariffs in Egypt.

Disposals:

Batu Kawan is the holding company of Kuala Lumpur Kepong, a palm oil company. It is difficult to analyse the long term prospects for the palm oil industry and the value of the business could be lower in the long term.

Blue Star is a manufacturer of air conditioners. It was sold on concerns over valuation.

Greatview Aseptic is a producer of packaging for dairy products and non-carbonated soft drinks products. It was sold because of concerns that this might be a weak franchise. Demonstrating that a patent can be re-engineered is extremely impressive but not necessarily lucrative in the new manager’s opinion, especially if all it proves is that a third and fourth and fifth person can copy it. Greatview Aseptic has high exposure to two state-owned Chinese dairy companies which is a risk if it cannot diversify.

Hero Supermarket is an Indonesia subsidiary of Jardine Matheson-owned Dairy Farm. This company was sold because we feel that the turnaround of the franchise will be challenging.

Leeno Industrial is a manufacturer of testing equipment for the semiconductor industry. Smaller-cap technology companies are notoriously unpredictable and the giants of technology in Korea often give little breathing space to smaller companies.

Zydus Wellness is a branded consumer goods company making health-related products. It was sold because the new manager has a different view of the company and in particular has concerns over the debt that results from an ambitious acquisition.

Reduced:

Tata Consumer Products is a food and beverages company with a focus on tea and coffee in India. The manager has reduced the position size moderately but retains a large holding.

Portfolio Commentary

At the end of the year the portfolio contained 28 companies. We continue to transition the portfolio but the most important changes have been made. We thank shareholders for passing the resolution allowing us a slightly longer list, but the concentration of the fund remains more than worthwhile – the top ten holdings are 46.4% of NAV.

The average market cap (weighted by position size) in the portfolio was $1.23bn at the end of 2019 which is similar to that of $1.16bn at the end of 2018. This is substantially below the $2.5bn upper limit (at time of investment) envisaged by the Trust. It is worth pointing out that our preference for investing alongside a family shareholder does result in free float being significantly lower than the market cap in many of the companies in the portfolio. The closed ended structure of ScotGems allows us to own considerably larger positions in some of our favourite small caps than would be possible in open ended funds.

Cash is currently 9.0% of the portfolio. Longer term we should prefer cash to be close to nil given the closed-ended nature of the Trust. The exception would be where valuations of listed companies are stretched in which case we are content having a higher cash balance in order to assume a more defensive posture, and also to allow the Trust to be opportunistic as and when individual companies, countries, or indeed broader markets, suffer a slide in valuations. The cash is held in a deliberately conservative combination of USD and GBP – it is not intended to be a source of return and therefore risk itself. Turnover has been higher this year but we would expect this to fall to around 15 – 20% per annum similar to our other funds in normal conditions.

Outlook

It is hard to make general points about small caps across GEM but it is worth making some points about the GEM universe across all market caps – not least because this should help illustrate how we apply our investment philosophy. Firstly on valuations we doubt there are very many cheap high quality companies in GEM today but we do see some instances of decent cash flows being rewarded less generously than the jam tomorrow of some of the more conceptual and technological companies. South Africa, perhaps for the third or fourth year in a row, feels like the place where a small-cap investor (not concerned with making spectacular short-term returns) would have the most exceptional opportunities though. On a recent trip we met, or were reminded of, probably a dozen well managed, cash generative businesses, far away from government interference, trading at more than acceptable valuations. We wouldn’t buy all of them for any fund – South Africa is not high growth and not without risk either.

One of the riskiest areas of value is traditional banks. Assuming that the world and its regulators wish to have a number of financial institutions with large amounts of loss-absorbing capital then there is a role for a traditional bank, not only for a ‘digital disruptor’ aiming to have all the fun of taking fees with none of the disadvantages of committing capital to anything other than customer acquisition and employee stock options. We have never owned many banks, given their lack of downside protection in a crisis. However, we are keen to add to one or two of the most conservatively-run financial institutions, especially those where higher interest rates would lead to higher profits without blowing up the loan book. A relevant example recently added to the portfolio, and discussed above, is BRAC Bank.

The Chinese technology ‘national champions’ continue to perform well on stock markets including, in the case of Alibaba, a new listing in Hong Kong raising yet more equity. Although most national champions would never be included in the portfolio on account of size, it is worth pointing out that they make for difficult investments as the quid pro quo of being allowed monopolistic status (not to mention freedom from international competition) is never clear. A very minor taster of the favours that may one day need to be returned was the capital raised by a struggling state-owned telecoms company two years ago, to which many of the tech giants (kindly) subscribed. Barring the tech giants, much of corporate China is highly indebted. Some minor defaults are being permitted to occur but it is not outwith the realms of possibility that the more successful end of corporate China is asked to do its bit for the cause.

Contribution

Positive

Tata Consumer Products is an Indian incorporated food and beverages company with a focus on tea and coffee. It announced strategic plans to move into new consumer categories such as food and home care and the parent has consolidated group assets into the company.

Philippine Seven is a 7-Eleven convenience franchise. It continues to expand its convenience store network across the Philippines, where they have significant first mover advantage.

Voltronic Power is a Taiwanese business which manufactures and sells uninterruptible power supplies. It has successfully grown market share over the course of the last few years, delivering robust results in the process.

Vinda International manufactures paper products and personal care products in China and Asia-Pacific. We continue to back the company to make the slow transition towards branded diapers and other hygiene products. This change has been reflected in recent strong results.

Haw Par is a family conglomerate whose assets include the Tiger Balm brand and the Singaporean Bank, UOB. Tiger Balm continues to expand its footprint in countries such as India.

Top Ten Contributors – Year ended 31 December 2019

Company	Contribution to Return %
Tata Consumer Products	2.81
Philippine Seven	1.04
Voltronic Power	0.67
Vinda International	0.48
Haw Par	0.36
Coca-Cola Icecek	0.28
Fragua*	0.28
Dis-Chem Pharmacies*	0.27
Narayana Hrudayalaya**	0.21
Zydus Wellness* **	0.18

* Company not held at start of period

** Company not held at end of period

Negative

Unilever Nigeria is a local subsidiary of multinational consumer goods company Unilever. It struggled as Nigeria continues to experience a harsh and prolonged downturn which has led to some trading down from consumers. Management has recently been replaced by the parent which has a strong pool of experienced country heads. The company is very small in comparison to Unilever’s operations in India and Indonesia – both are countries with similar demographics.

Cyient is an Indian software engineering company with global clients in industries such as aerospace and transportation. Despite recent poor results we continue to back this company on account of its high quality franchise, continued founder involvement, hard currency earnings, and strong net cash balance sheet.

Youngone is a family owned garment manufacturer with facilities predominantly in Bangladesh. Notwithstanding recent dull results, the company remains strongly cash generative, has a net cash balance sheet, and owns some international brands.

RCL Foods generates the majority of its earnings from commodity foods, namely chicken and sugar which are under pressure from imports. Longer term we are backing the company to develop consumer brands in grocery categories. The company is controlled by the Rupert family’s South African investment holding company, Remgro. The family is long term, competent and honest and has a history of incubating good businesses – we invest in Remgro in many client funds.

GlaxoSmithKline Nigeria is a consumer goods focussed local subsidiary of the global pharmaceutical company GlaxoSmithKline. Similar to Unilever Nigeria, it suffered from prevailing consumer weakness.

Top Ten Detractors – Year ended 31 December 2019

Company	Contribution to Return %
Unilever Nigeria	-2.40
Cyient	-1.83
Youngone	-1.26
RCL Foods	-1.13
GlaxoSmithKline Nigeria	-0.74
Integrated Diagnostics*	-0.52
Inversiones Aguas Metropolitanas*	-0.48
Aramex*	-0.48
Delfi	-0.36
Mynews*	-0.32

* Company not held at start of period

For further information contact:

Stewart Investors
Investment Manager
Tel:  0131 473 2900

PATAC Limited
Company Secretary
Tel:  0131 538 1400

The Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and Cash Flow Statement follow.

Statement of Comprehensive Income

	Year ended 31 December 2019			Year ended 31 December 2018
	Revenue	Capital		Revenue	Capital
	return	return	Total	return	return	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Income
Investment income	966	-	966	603	-	603
Losses on investments held at fair value through profit or loss	-	(3,422)	(3,422)	-	(1,570)	(1,570)
Foreign exchange gain	-	34	34	-	348	348
Total income/(loss)	966	(3,388)	(2,422)	603	(1,222)	(619)
Expenses	(744)	-	(744)	(748)	-	(748)
Profit/(loss) before taxation	222	(3,388)	(3,166)	(145)	(1,222)	(1,367)
Taxation	(47)	(40)	(87)	(29)	-	(29)
Profit/(loss) for the year	175	(3,428)	(3,253)	(174)	(1,222)	(1,396)
Return/(loss) per share	0.33p	(6.40p)	(6.07p)	(0.33p)	(2.28p)	(2.61p)
The Total column of this statement represents the Statement of Comprehensive Income of the Company. The Revenue return and Capital return columns are supplementary to this and are prepared under guidance issued by the Association of Investment Companies. All revenue and capital items in the above statement derive from continuing operations. Return/(loss) per share is calculated on 53,533,770 shares (2018: 53,533,770), being the weighted average number in issue during the year.

Statement of Financial Position

	As at 31 December 2019	As at 31 December 2018
	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss	42,395	40,997
Current assets
Receivables	207	210
Cash and cash equivalents	4,188	8,849
	4,395	9,059
Current liabilities
Payables	(208)	(218)
Net current assets	4,187	8,841
Net assets	46,582	49,838
Capital and reserves
Ordinary share capital	535	535
Share premium	3,133	3,136
Special reserve	49,315	49,315
Capital reserve	(6,138)	(2,710)
Revenue reserve	(263)	(438)
Total equity	46,582	49,838
Shares in issue at year end	53,533,770	53,533,770
Net asset value per Ordinary share	87.01p	93.10p

Statement of Changes in Equity

For the year ended 31 December 2019	Ordinary share capital	Share premium	Special reserve	Capital reserve	Revenue reserve	Total
	£’000	£’000	£’000	£’000	£’000	£’000
Balance at 31 December 2018	535	3,136	49,315	(2,710)	(438)	49,838
(Loss)/profit for the year	-	-	-	(3,428)	175	(3,253)
Share premium cancellation costs	-	(3)	-	-	-	(3)
Balance as at 31 December 2019	535	3,133	49,315	(6,138)	(263)	46,582

   

For the year ended 31 December 2018	Ordinary share capital	Share premium	Special reserve	Capital reserve	Revenue reserve	Total
	£’000	£’000	£’000	£’000	£’000	£’000
Balance at 31 December 2017	535	52,485	-	(1,488)	(264)	51,268
Loss for the year	-	-	-	(1,222)	(174)	(1,396)
Share premium cancellation	-	(49,315)	49,315	-	-	-
Share premium cancellation costs	-	(34)	-	-	-	(34)
Balance as at 31 December 2018	535	3,136	49,315	(2,710)	(438)	49,838

Share premium. The share premium represents the difference between the nominal value of new Ordinary shares issued and the consideration the Company receives for these shares.

Special reserve. Created from the Court cancellation of the share premium account which had arisen from premiums paid on the Ordinary shares at launch. Available as distributable profits to be used for the buy back of shares. The cost of any shares bought back is deducted from this reserve. The cost of any shares resold from treasury is added back to this Reserve.

Capital reserve. Gains and losses on the realisation of investments, realised exchange differences of a capital nature and returns of capital are accounted for in this Reserve. Increases and decreases in the valuation of investments held at the year end, and unrealised exchange differences of a capital nature are also accounted for in this Reserve.

Revenue reserve. Any surplus/deficit arising from the revenue profit/loss for the year is taken to/from this Reserve.

Cash Flow Statement

	Year ended   31 December	Year ended 31 December
	2019	2018
	£’000	£’000
Net cash outflow from operations before dividends, interest, purchases and sales	(768)	(1,028)
Dividends received from investments	940	486
Interest from deposits	7	3
Purchases of investments	(25,199)	(48,993)
Sales of investments	20,419	32,239
Cash outflow from operations	(4,601)	(17,293)
Taxation	(91)	(29)
Net cash outflow from operating activities	(4,692)	(17,322)
Financing activities
Cost of share issues	-	(75)
Costs of share premium conversion	(3)	(34)
Net cash outflow from financing activities	(3)	(109)
Decrease in cash and cash equivalents	(4,695)	(17,431)
Cash and cash equivalents at the start of the year	8,849	25,932
Effect of currency gains	34	348
Cash and cash equivalents at the end of the year	4,188	8,849

Principal Risks and Risk Management

The Board believes that the principal risks to shareholders, which it seeks to mitigate through continual review of its investments and through shareholder communication, are events or developments which can affect the general level of share prices, including, for instance, inflation or deflation, economic recessions and movements in interest rates and currencies.

Other risks faced by the Company include breach of regulatory rules which could lead to suspension of the Company’s Stock Exchange listing, financial penalties, or a qualified audit report. Breach of Section 1158 of the Corporation Tax Act 2010 could lead to the Company being subject to tax on capital gains.

In the mitigation and management of these risks and to ensure emerging risks are identified, the Board regularly monitors the investment environment and the management of the Company’s investment portfolio, and applies the principles detailed in the guidance provided by the Financial Reporting Council.

Statement of Directors' Responsibilities in Respect of the Annual Financial Report

In accordance with the Disclosure Guidance and Transparency Rules, we confirm that to the best of our knowledge:

• The financial statements contained within the Annual Report for the year ended 31 December 2019, of which this statement of results is an extract, have been prepared in accordance with applicable United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102, and applicable law), give a true and fair view of the assets, liabilities, financial position and net loss of the Company; and

• 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 it faces.

In addition, each of the Directors considers that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, position, business model and strategy.

Going Concern

The Directors believe, in the light of the controls and review processes reported in the Report of the Audit Committee on pages 40 and 41 of the Annual Report and bearing in mind the nature of the

Company’s business and assets, which are considered to be readily realisable if required, that the Company has adequate resources to continue operating for at least twelve months from the date of approval of the financial statements. For this reason, they continue to adopt the going concern basis in preparing the accounts.

Related Party Transactions

Related party transactions with the Directors, for the year ended 31 December 2019 are disclosed in the Directors’ Report on page 29 of the Annual Report. At the year end no amounts were due to the Directors (2018: nil).

The AIFM, the Investment Manager and the Company have entered into the Investment Management Agreement. Pursuant to the terms of the Investment Management Agreement, the AIFM has delegated to Stewart Investors the management of the Company’s portfolio subject to its and the Directors’ overall supervision. Details of transactions during the year are disclosed in note 3 of the Annual Report. Amounts outstanding at the year end are shown in note 7 and note 8 of the Annual Report.

There were no other related-party transactions.

Notes:

1.         ScotGems plc is a public company limited by shares, incorporated and domiciled in England and Wales, and carries on business as an investment trust.  Details of the Company’s registered office can be found in the Annual Report.

The accounts are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice (Accounting Standards “UK GAAP”) including Financial Reporting Standard (FRS) 102 “The Financial Reporting Standard applicable

in the UK and Republic of Ireland” and the Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital Trusts” (“the SORP”) issued by the Association of Investment Companies in October 2019.

All of the Company’s operations are of a continuing nature.

The accounts have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of investments held at fair value through profit or loss.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

There are no critical accounting estimates or judgements.

The accounts have also been prepared on the assumption that approval as an investment trust will continue to be granted.

The functional and reporting currency of the Company is pounds sterling as most investors in the Company are based in the United Kingdom.

2.       The Company held the following categories of financial instruments as at 31 December 2019:

	Level 1	Level 2	Level 3	Total
	£’000	£’000	£’000	£’000
Listed equities	42,395	–	–	42,395
Total	42,395	–	–	42,395

The Company held the following categories of financial instruments as at 31 December 2018

	Level 1	Level 2	Level 3	Total
	£’000	£’000	£’000	£’000
Listed equities	36,013	–	–	36,013
US Treasury Bills	4,984	–	–	4,984
Total	40,997	–	–	40,997

The above table provides an analysis of financial assets and financial liabilities based on the fair value hierarchy described below. Short term balances are excluded from the table as their carrying value at the reporting date approximates to their fair value.

Fair Value Hierarchy

The fair value hierarchy used to analyse the fair values of financial assets and liabilities are described below.

The levels are determined by the lowest (that is, the least reliable or least independently observable) level of input that is significant to the fair value measurement for the individual investment in its entirety as follows:

Level 1 - investments with prices quoted in an active market;

Level 2 - investments whose fair value is based directly on observable current market prices or is indirectly being derived from market prices; and

Level 3 - investments whose fair value is determined using a valuation technique based on assumptions that are not supported by observable current market prices or are not based on observable market data.

3.

	Year ended 31 December 2019	Year ended 31 December 2018
Reconciliation of loss before taxation to net cash outflow before dividends, interest, purchases and sales	£’000	£’000
Net loss on activities before finance costs and taxation	(3,166)	(1,367)
Net losses on investments	3,422	1,570
Currency gains	(34)	(348)
Investment income	(966)	(600)
Decrease in other payables	(10)	(99)
Increase in prepayments and other receivables	(14)	(184)
Net cash outflow from operations before dividends, interest, purchases and sales	(768)	(1,028)

4.        These are not statutory accounts in terms of Section 434 of the Companies Act 2006.Full audited accounts for the year to 31 December 2019 will be sent to shareholders in March 2019 and will be available for inspection at Broadgate Tower, 20 Primrose Street, London EC2A 2EW, the registered office of the Company. The full annual report and accounts will be available on the Company’s website www.scotgems.com.

5.        The audited accounts for the year ended 31 December 2019 will be lodged with the Registrar of Companies.