TIDMNAS
RNS Number : 5022M
North Atlantic Smlr Co Inv Tst PLC
16 September 2019
North Atlantic Smaller Companies Investment Trust plc
Half-Yearly Report for the six months ended 31 July 2019
Registered in England and Wales number 1091347
objective of the company and financial highlights
The objective of the Company is to provide capital appreciation
through investment in a portfolio of smaller companies principally
based in countries bordering the North Atlantic Ocean.
31 July 31 January
2019 2019 %
(unaudited) (audited) Change
Net asset value ("NAV") per 5p Ordinary Share*:
Basic 4,120p 3,710p 11.1
Diluted 4,118p 3,708p 11.1
Basic adjusted# 4,255p 3,776p 12.7
Diluted adjusted# 4,253p 3,774p 12.7
Mid-market price of the 5p Ordinary Shares 3,100p 2,910p 6.5
Discount to diluted net asset value 24.7% 21.5%
Discount to diluted adjusted net asset value 27.1% 22.9%
Standard & Poor's 500 Composite Index 2,451.2 2,062.8 18.8
Russell 2000 Index 1,295.0 1,143.8 13.2
Ongoing charges (annualised) 1.1% 1.1%
* Includes current period.
# Adjusted to reflect Oryx International Growth Fund plc
("Oryx") under the equity method of accounting, which is how the
Company previously accounted for its share of Oryx, prior to the
adoption of IFRS 10. This is useful to the shareholder as it shows
the NAV based on valuing Oryx at NAV. See note 6.
Sterling adjusted.
chief executive's review
During the six months period under review the fully diluted net
asset value rose by 12.7% (with Oryx under the equity method of
accounting) as compared to a rise in the Sterling Adjusted Standard
& Poors Composite Index of 18.8%. The performance however
compares very favourably with UK indices where the majority of the
Company's assets are located.
Profit for the period amounted to GBP3,671,000 (31 July 2018 of
GBP2,389,000). The Directors do not intend to declare a dividend at
this time, although it is highly likely that a final dividend will
be paid in respect of the current financial year.
During the period, the Company purchased for cancellation
132,863 ordinary shares at a favourable discount to NAV which
benefits all long term shareholders.
quoted portfolio
The majority of the UK portfolio performed well with Oryx's NAV
rising 14.9% and MJ Gleeson rising 16.9%. Other stocks that
performed well include Polar Capital, Ergomed, Augean and, in
particular, Renalytix which rose over 100%.
This was, however, to some extent offset by the need to totally
write off Goals Soccer following a fraud which adversely impacted
the net asset value by just under 1%.
Principal new investments during the period were made in Stobart
Group, Ergomed and Hargreaves Services.
US quoted portfolio
Our two biggest investments Mountain Commerce and Ambac, both
reported satisfactory results during the period but the overall
portfolio remains small as a percentage of the total fund.
unquoted portfolio
No new direct investments were made during the period. GAJV and
Harwood Leeds were sold. The proceeds were invested in UK
equities.
outlook
The Company invested approximately GBP33m in equities during the
period. All the investments were made in businesses trading at a
significant discount to private market value and which it is
believed will add to the net asset value over the medium term.
Nevertheless, the Company remains conservatively invested with net
cash of approximately GBP93m.
Markets as a whole are facing considerable headwinds including a
major economic slowdown in Europe in its manufacturing industries
and the very realistic possibility of a major China/US trade war
which could also spill into Europe. MIFID 2 and a dire IPO market
is creating further problems for the UK small cap sector with
falling liquidity. However, given the Company's permanent capital
structure and substantial cash balances, it remains well placed to
benefit from the favourable opportunities which we foresee over the
medium term.
C H B Mills
Chief Executive
16 September 2019
top ten investments
as at 31 July 2019
Company
Fair
Value % of
GBP'000 net assets
US Treasury Bills US Treasury Stock 82,249 14.1
Oryx International Growth Fund Limited* UK Listed 57,960 9.9
MJ Gleeson Group plc UK Listed 42,762 7.3
Polar Capital Holdings plc UK Quoted on AIM 40,040 6.8
Harwood Private Equity Fund IV LP UK Unquoted 37,338 6.4
Ten Entertainment Group plc UK Listed 36,300 6.2
EKF Diagnostics Holdings plc UK Quoted on AIM 34,104 5.8
Stobart Group Limited UK Quoted on AIM 21,812 3.7
Augean plc UK Quoted on AIM 21,275 3.6
Sherwood Holdings Limited UK Unquoted 18,181 3.1
----------------------------------------- ------------------- -------- -----------
392,021 66.9
------------------------------------------------------------- -------- -----------
* Traded price under IFRS 10, incorporated in Guernsey.
All investments are valued at fair value.
interim management report
investment objective
The objective of North Atlantic Smaller Companies Investment
Trust PLC ("the Company") is to provide capital appreciation to its
shareholders through investing in a portfolio of smaller companies
which are principally based in countries bordering the North
Atlantic Ocean.
material events
The Board do not consider that there were any material events
during the period ended 31 July 2019.
material transactions
There were no material transactions during the period.
risk profile
The principal risks and uncertainties for the remaining six
months of the year continue to be as described in the Annual Report
for the year ended 31 January 2019. The principal risks arising
from the Company's financial instruments are market price risk,
including currency risk, interest rate risk and other price risk,
liquidity risk and credit risk. The Directors review and agree
policies with the Manager, Harwood Capital LLP, for managing these
risks. The policies have remained substantially unchanged in the
six months since the year end.
The Company does not have any significant exposure to credit
risk arising from any one individual party. Credit risk is spread
across a number of counterparties, each having an immaterial effect
on the Company's cash flows, should a default happen. The Company
assesses the credit worthiness of its debtors from time to time to
ensure that they are neither past due or impaired.
To support its investment in unquoted companies, the Company may
periodically agree to guarantee all or part of the borrowings of
investee companies. Provision is made for any costs that may be
incurred when the Directors consider it likely that the guarantee
will crystallise.
The Company's exposure to market price risk comprises mainly
movements in the value of the Company's investments. It should be
noted that the prices of options tend to be more volatile than the
prices of the underlying securities. The Manager assesses the
exposure to market risk when making each investment decision and
monitors the overall level of market risk on the whole of the
investment portfolio on an ongoing basis.
The functional and presentational currency of the Company is
Sterling, and therefore, the Company's principal exposure to
foreign currency risk comprises investments priced in other
currencies, principally US Dollars.
The Company invests in equities and other investments that are
realisable.
related party
These are listed in note 10 to the half yearly condensed
financial transactions statements.
By Order of the Board
Peregrine Moncreiffe
Chairman
16 September 2019
responsibility statement
The Directors confirm to the best of their knowledge that:
-- The condensed set of financial statements contained within
this half yearly financial report have been prepared in accordance
with International Accounting Standard ("IAS") 34 'Interim
Financial Reporting' as adopted by the European Union and gives a
true and fair view of the assets, liabilities, financial position
and profit of the Company; and
-- The half yearly financial report includes a fair review of
the information required by the FCA's Disclosure and Transparency
Rule 4.2.7R being disclosure of important events that have occurred
during the first six months of the financial year, their impact on
the condensed set of financial statements and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
-- The half yearly financial report includes a fair review of
the information required by the Disclosure and Transparency Rule
4.2.8R being disclosure of related party transactions during the
first six months of the financial year, how they have materially
affected the financial position of the Company during the period
and any changes therein.
The half yearly financial report was approved by the Board on 16
September 2019 and the above responsibility statement was signed on
its behalf by:
Peregrine Moncreiffe
Chairman
16 September 2019
condensed statement of comprehensive income (unaudited)
Six months ended Six months ended
31 July 31 July
2019 2018
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income 6,880 - 6,880 5,273 - 5,273
Net gains on investments at fair
value - 53,377 53,377 - 44,404 44,404
Currency exchange gains - 188 188 - 129 129
------------------------------------ --------- ----------------- -------- --------- ----------------- --------
total income 6,880 53,565 60,445 5,273 44,533 49,806
Expenses
Investment management fee (note 10) (2,705) - (2,705) (2,546) - (2,546)
Other expenses (504) - (504) (338) - (338)
------------------------------------ --------- ----------------- -------- --------- ----------------- --------
return before taxation 3,671 53,565 57,236 2,389 44,533 46,922
Taxation - - - - - -
------------------------------------ --------- ----------------- -------- --------- ----------------- --------
return for the period 3,671 53,565 57,236 2,389 44,533 46,922
------------------------------------ --------- ----------------- -------- --------- ----------------- --------
earnings per ordinary share (note 5)
Basic 400.2p 325.3p
Diluted 400.1p 324.9p
The total column of the statement is the Statement of
Comprehensive Income of the Company prepared in accordance with
International Financial Reporting Standards ("IFRS"). As adopted by
the EU. The supplementary revenue and capital columns are presented
for information purposes as recommended by the Statement of
Recommended Practice ("SORP") issued by the Association of
Investment Companies ("AIC").
All items in the above Statement derive from continuing
operations. No operations were acquired or discontinued in the
period.
The accompanying notes are an integral part of these financial
statements.
Year ended
31 January
2019
Revenue Capital Total
GBP'000 GBP'000 GBP'000
11,645 - 11,645 Income
- 31,095 31,095 Net gains on investments at fair value
- 271 271 Currency exchange gains
-------------- ------------------ ------------------ --------------------------------------------------
11,645 31,366 43,011 total income
Expenses
(5,091) (1,788) (6,879) Investment management fee (note 10)
(714) - (714) Other expenses
-------------- ------------------ ------------------ --------------------------------------------------
5,840 29,578 35,418 return before taxation
- - - Taxation
-------------- ------------------ ------------------ --------------------------------------------------
5,840 29,578 35,418 return for the period
-------------- ------------------ ------------------ --------------------------------------------------
earnings per ordinary share (note 5)
246.2p Basic
245.8p Diluted
condensed statement of changes in equity (unaudited)
Share Share
Share options premium Capital
capital reserve account reserve
GBP'000 GBP'000 GBP'000 GBP'000
six months ended 31 July 2019
31 January 2019 716 24 1,301 524,316
Total comprehensive income for the period - - - 53,565
Shares purchased for cancellation (7) - - (3,927)
------------------------------------------- -------- -------- -------- ---------
31 July 2019 709 24 1,301 573,954
------------------------------------------- -------- -------- -------- ---------
six months ended 31 July 2018
31 January 2018 721 55 1,301 498,123
Total comprehensive income for the period - - - 44,533
------------------------------------------- -------- -------- -------- ---------
31 July 2018 721 55 1,301 542,656
------------------------------------------- -------- -------- -------- ---------
year ended 31 January 2019
31 January 2018 721 55 1,301 498,123
Total comprehensive income for the year - - - 29,578
Shares purchased for cancellation (5) - - (2,920)
Share option discharge - (31) - (465)
------------------------------------------- -------- -------- -------- ---------
31 January 2019 716 24 1,301 524,316
------------------------------------------- -------- -------- -------- ---------
The accompanying notes are an integral part of these financial
statements.
Capital
redemption Revenue
reserve reserve Total
GBP'000 GBP'000 GBP'000
six months ended 31 July 2019
154 4,914 531,425 31 January 2019
- 3,671 57,236 Total comprehensive income for the period
7 - (3,927) Shares purchased for cancellation
-------------- ------------- ----------------- ------------------------------------------
161 8,585 584,734 31 July 2019
-------------- ------------- ----------------- ------------------------------------------
six months ended 31 July 2018
149 (926) 499,423 31 January 2018
- 2,389 46,922 Total comprehensive income for the period
-------------- ------------- ----------------- ------------------------------------------
149 1,463 546,345 31 July 2018
-------------- ------------- ----------------- ------------------------------------------
year ended 31 January 2019
149 (926) 499,423 31 January 2018
- 5,840 35,418 Total comprehensive income for the year
5 - (2,920) Shares purchased for cancellation
- - (496) Share option discharge
-------------- ------------- ----------------- ------------------------------------------
154 4,914 531,425 31 January 2019
-------------- ------------- ----------------- ------------------------------------------
condensed balance sheet (unaudited)
As at As at As at
31 July 31 July 31 January
2019 2018 2019
GBP'000 GBP'000 GBP'000
non current assets
Investments at fair value through profit or loss 569,914 526,415 500,696
------------------------------------------------------------ --------- --------- -----------
569,914 526,415 500,696
current assets
Trade and other receivables 2,961 11,279 19,623
Cash and cash equivalents 12,865 11,066 30,669
------------------------------------------------------------ --------- --------- -----------
15,826 22,345 50,292
------------------------------------------------------------ --------- --------- -----------
total assets 585,740 548,760 550,988
------------------------------------------------------------ --------- --------- -----------
current liabilities
Trade and other payables (1,006) (2,415) (19,563)
------------------------------------------------------------ --------- --------- -----------
total liabilities (1,006) (2,415) (19,563)
------------------------------------------------------------ --------- --------- -----------
total assets less current liabilities 584,734 546,345 531,425
------------------------------------------------------------ --------- --------- -----------
net assets 584,734 546,345 531,425
------------------------------------------------------------ --------- --------- -----------
represented by:
Share capital 709 721 716
Share options reserve 24 55 24
Share premium account 1,301 1,301 1,301
Capital reserve 573,954 542,656 524,316
Capital redemption reserve 161 149 154
Revenue reserve 8,585 1,463 4,914
------------------------------------------------------------ --------- --------- -----------
total equity attributable to equity holders of the company 584,734 546,345 531,425
------------------------------------------------------------ --------- --------- -----------
net asset value per ordinary share (note 6):
Basic 4,120p 3,787p 3,710p
Diluted 4,118p 3,782p 3,708p
The accompanying notes are an integral part of these financial
statements.
condensed cash flow statement (unaudited)
Six months Six months
ended ended Year ended
31 July 31 July 31 January
2019 2018 2019
GBP'000 GBP'000 GBP'000
cash flows from operating activities
Investment income received 5,502 4,036 9,002
Deposit interest received 13 5 15
Other income - - -
Investment Manager's fees and performance fees paid (4,463) (3,654) (7,686)
Share based payment - discharge of options - - (496)
Other cash payments (987) (847) (826)
------------------------------------------------------ ----------- ----------- -------------
cash generated/(expended) from operations (note 8) 65 (460) 9
Taxation paid - - -
------------------------------------------------------ ----------- ----------- -------------
net cash inflow/(outflow) from operating activities 65 (460) 9
cash flows from investing activities
Purchases of investments (185,307) (195,357) (358,127)
Sales of investments 171,297 196,188 380,966
------------------------------------------------------ ----------- ----------- -------------
net cash (outflow)/inflow from investing activities (14,010) 831 22,839
------------------------------------------------------ ----------- ----------- -------------
cash flows from financing activities
Repurchase of Ordinary Shares for cancellation (3,927) - (2,920)
------------------------------------------------------ ----------- ----------- -------------
net cash outflow from financing activities (3,927) - (2,920)
------------------------------------------------------ ----------- ----------- -------------
(decrease)/increase in cash and cash
equivalents for the period (17,872) 371 19,928
cash and cash equivalents at the start of the period 30,669 10,653 10,653
Revaluation of foreign currency balances 68 42 88
------------------------------------------------------ ----------- ----------- -------------
cash and cash equivalents at the end of
the period 12,865 11,066 30,669
------------------------------------------------------ ----------- ----------- -------------
The accompanying notes are an integral part of these financial
statements.
notes to the financial statements (unaudited)
1. a) basis of accounting
North Atlantic Smaller Companies Investment Trust plc ("NASCIT")
is a company incorporated and registered in England and Wales. The
principal activity of the Company is that of an investment trust
company within the meaning of Sections 1158/1159 of the Corporation
Tax Act 2010.
The condensed financial statements of the Company have been
prepared in accordance with International Accounting Standard (IAS)
34 - "Interim Financial Reporting" as adopted by the EU. The
accounting policies and methods of computation followed in these
half-yearly condensed financial statements are consistent with the
most recent annual financial statements for the year ended 31
January 2019 included in the Annual Report.
The financial statements have also been prepared in accordance
with the AIC SORP for the financial statements of investment trust
companies and venture capital trusts, except to any extent where it
is not consistent with the requirements of IFRS.
The financial information contained in this Half-Yearly Report
does not constitute statutory accounts as defined in the Companies
Act 2006. The financial information for the periods ended 31 July
2019 and 31 July 2018 have not been audited or reviewed by the
Company's Auditor. The figure and financial information for the
year ended 31 January 2019 are an extract from the latest published
audited financial statements, which have been filed with the
Registrar of Companies. The report of the Auditor on those
financial statements was unqualified and did not contain a
statement under either Section 498(2) or 498(3) of the Companies
Act 2006.
b) functional currency
The functional currency of the Company is Pounds Sterling
because this is the primary economic currency in which the Company
operates. The financial statements are presented in Pounds Sterling
rounded to the nearest thousand, except where otherwise
indicated.
c) significant accounting policies
The accounting policies applied are consistent with those of the
Annual Financial Report for the year ended 31 January 2019. Since
the year end no new standards have been adopted.
d) segmental reporting
The Directors are of the opinion that the Company is engaged in
a single segment of business, being investment business. The
Company invests in smaller companies principally based in countries
bordering the North Atlantic Ocean.
e) going concern
The financial statements have been prepared on a going concern
basis and on the basis that approval as an investment trust company
will continue to be met.
The Directors have made an assessment of the Company's ability
to continue as a going concern and are satisfied that the Company
has the resources to continue in operational existence for the
foreseeable future (being a period of at least 12 months from the
date these financial statements were approved). Furthermore, the
Directors are not aware of any material uncertainties that may cast
significant doubt upon the Company's ability to continue as a going
concern, having taken into account the liquidity of the Company's
investment portfolio and the Company's financial position in
respect of its cash flows, borrowing facilities and investment
commitments (of which there are none of significance). Therefore,
the financial statements have been prepared on the going concern
basis.
2. investment management and performance fees
A Performance Fee is only payable if the investment portfolio,
including Oryx at the adjusted price, outperforms the Sterling
adjusted Standard & Poor's 500 Composite Index at the end of
each financial year and is limited to a maximum payment of 0.5% of
Shareholders' Funds, and is allocated 100% to capital.
An amount would be included in these financial statements for
the Performance Fee that could be payable based on investment
performance to 31 July 2019. At that date, no Performance Fee,
inclusive of VAT, has been accrued for in the accounts (31 July
2018: GBPnil; 31 January 2019: GBP1,788,000).
3. taxation
The Company has an effective tax rate of 0%. The estimated
effective tax rate is 0% as investment gains are exempt from tax
owing to the Company's status as an Investment Trust and there is
expected to be an excess of management expenses over taxable income
and thus there is no charge for corporation tax.
During the half year to 31 July 2019, the Company recognised a
total charge of GBPnil (half year to 31 July 2018: GBPnil, year
ended 31 January 2019: GBPnil), representing irrecoverable
withholding tax paid on overseas investment income.
4. dividends
A final dividend for the year ended 31 January 2019 of 30p per
Ordinary Share has been declared by the Board, with an Ex date of
31 October 2019 and a payment date of 21 November 2019.
5. earnings per ordinary share
Revenue Capital
Net Per Net Per
return Ordinary Share return Ordinary Share
GBP'000 Shares pence GBP'000 Shares pence
six months ended 31 July 2019
Basic return per Share 3,671 14,300,663 25.7 53,565 14,300,663 374.5
Share options* - 5,067 - 5,067
-------- ----------- -------- -----------
Diluted return per Share 3,671 14,305,703 25.7 53,565 14,305,703 374.4
-------- ----------- -------- -----------
six months ended 31 July 2018
Basic return per Share 2,389 14,425,620 16.6 44,533 14,425,620 308.7
Share options* - 14,885 - 14,885
-------- ----------- -------- -----------
Diluted return per Share 2,389 14,440,505 16.5 44,533 14,440,505 308.4
-------- ----------- -------- -----------
year ended 31 January 2019
Basic return per Share 5,840 14,388,359 40.6 29,578 14,388,359 205.6
Share options* - 20,895 - 20,895
-------- ----------- -------- -----------
Diluted return per Share 5,840 14,409,254 40.5 29,578 14,409,254 205.3
-------- ----------- -------- -----------
Basic return per Ordinary Share has been calculated using the
weighted average number of Ordinary Shares in issue during the
period.
* Excess of total number of potential shares on Option
Conversion over the number that could be issued at the average
market price, as calculated in accordance with IAS 33: Earnings per
share.
Total
Net Per
return Ordinary Share
GBP'000 Shares pence
six months ended 31 July 2019
57,236 14,300,663 400.2 Basic return per Share
- 5,067 Share options*
-------- ------------
57,236 14,305,703 400.1 Diluted return per Share
-------- ------------
six months ended 31 July 2018
46,922 14,425,620 325.3 Basic return per Share
- 14,885 Share options*
-------- ------------
46,922 14,440,505 324.9 Diluted return per Share
-------- ------------
year ended 31 January 2019
35,418 14,388,359 246.2 Basic return per Share
- 20,895 Share options*
-------- ------------
35,418 14,409,254 245.8 Diluted return per Share
-------- ------------
Basic return per Ordinary Share has been calculated using the
weighted average number of Ordinary Shares in issue during the
period.
* Excess of total number of potential shares on Option
Conversion over the number that could be issued at the average
market price, as calculated in accordance with IAS 33: Earnings per
share.
6. net asset value per ordinary share
The basic net asset value per Ordinary Share is based on net
assets of GBP584,734,000 (31 July 2018: GBP546,345,000; 31 January
2019: GBP531,425,000) and on 14,192,757 Ordinary Shares (31 July
2018: 14,425,620; 31 January 2019: 14,325,620) being the number of
Ordinary Shares in issue at the period end.
The diluted net asset value per Ordinary Share is calculated on
the assumption that all 10,000 (31 July 2018: 30,000; 31 January
2019: 10,000) Share Options in-the-money were exercised at the
prevailing exercise prices, giving a total of 14,202,757 issued
Ordinary Shares (31 July 2018: 14,455,620; 31 January 2019:
14,335,620).
During the period, 132,863 Ordinary shares were bought back for
cancellation, at a total cost to the Company of GBP3,900,000.
adjustment for Oryx
The Company has also reported an adjusted net asset value per
share using equity accounting, in accordance with its previous
method of valuing its investment in Oryx. The Company has chosen to
report this net asset value per share to show the difference
derived if equity accounting were to be used. Equity accounting
permits the use of net asset value pricing for listed assets which
in the case of Oryx is higher than its fair value.
The values of Oryx, as at each period end, are as follows:
31 July 2019 31 July 2018 31 January 2019
GBP'000 GBP'000 GBP'000
Oryx at Fair value (traded price) 57,960 59,940 57,776
Oryx value using Equity Accounting 77,059 67,968 67,270
Increase in net assets using Equity Accounting 19,099 8,028 9,494
31 July 2019 31 July 2018 31 January 2019
Net asset value per Share
- Basic 4,120p 3,787p 3,710p
- Diluted 4,118p 3,782p 3,708p
Net asset value per Share adjusted
- Basic 4,255p 3,843p 3,776p
- Diluted 4,253p 3,838p 3,774p
7. share based remuneration
As at 31 July 2019, there were a total of 10,000 (31 July 2018:
30,000; 31 January 2019: 10,000) options in issue with an estimated
fair value of GBP24,000 under the 2011 options scheme.
8. reconciliation of total return before taxation to cash
(expended)/generated from operations
Six months Six months
ended ended Year ended
31 July 31 July 31 January
2019 2018 2019
GBP'000 GBP'000 GBP'000
Total return before taxation 57,236 46,922 35,418
Gains on investments (53,565) (44,533) (31,366)
Interest reinvested (1,050) - (3,500)
Share option discharge - - (496)
Net return from Subsidiary (7) (7) (7)
(Increase)/decrease in debtors and accrued income (365) (805) 847
Decrease in creditors and accruals (2,184) (2,037) (887)
--------------------------------------------------- ----------- ----------- -----------
Cash generated/(expended) from operations 65 (460) 9
--------------------------------------------------- ----------- ----------- -----------
9. investments
financial assets at fair value through profit or loss
This requires the Company to classify fair value measurements
using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. The fair value hierarchy
consists of the following three levels:
-- Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
-- Level 2 - Inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from
prices).
-- Level 3 - Inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on
the basis of the lowest level input that is significant to the fair
value measurement in its entirety.
For this purpose, the significance of an input is assessed
against the fair value measurement in its entirety. If a fair value
measurement uses observable inputs that require significant
adjustment based on unobservable inputs, that measurement is a
Level 3 measurement. Assessing the significance of a particular
input to the fair value measurement in its entirety requires
judgement, considering factors specific to the asset or
liability.
The determination of what constitutes 'observable' requires
significant judgement by the Company. The Company considers
observable data from investments actively traded in organised
financial markets, fair value is generally determined by reference
to Stock Exchange quoted market bid prices at the close of business
on the Balance Sheet date, without adjustment for transaction costs
necessary to realise the asset.
The table below sets out fair value measurements as at the
period end, by the level in the fair value hierarchy into which the
fair value measurement is categorised.
six months ended 31 July 2019
Total Level 1 Level 2 Level 3
GBP'000 GBP'000 GBP'000 GBP'000
Equity investments 447,339 372,822 - 74,517
Fixed interest investments 122,575 82,249 - 40,326
---------------------------- -------- --------- -------- --------
Total 569,914 455,071 - 114,843
---------------------------- -------- --------- -------- --------
six months ended 31 July 2018
Total Level 1 Level 2 Level 3
GBP'000 GBP'000 GBP'000 GBP'000
Equity investments 397,117 334,188 - 62,929
Fixed interest investments 129,298 87,089 - 42,209
---------------------------- -------- --------- -------- --------
Total 526,415 421,277 - 105,138
---------------------------- -------- --------- -------- --------
year ended 31 January 2019
Total Level 1 Level 2 Level 3
GBP'000 GBP'000 GBP'000 GBP'000
Equity investments 364,801 297,472 - 67,329
Fixed interest investments 135,895 90,893 - 45,002
---------------------------- --------- --------- -------- --------
Total 500,696 388,365 - 112,331
---------------------------- --------- --------- -------- --------
reconciliation of level 3 movement - financial assets at 31 July
2019
Fixed interest
Equity
Total investments investments
GBP'000 GBP'000 GBP'000
Opening balance at 31 January 2019 112,331 67,329 45,002
Purchases 10,724 - 10,724
Sales (19,579) (2,953) (16,626)
Total gains included in gains on
investments in the statement of
comprehensive income:
- on assets sold 2,045 1,656 389
- on assets held at the end of the
period 9,322 8,485 837
------------------------------------ --------- ------------ ---------------
Closing balance 114,843 74,517 40,326
------------------------------------ --------- ------------ ---------------
unquoted at directors' estimate of fair value
Unquoted investments are valued in accordance with the
International Private Equity and Venture Capital Valuation ("IPEV")
Guidelines. Their valuation incorporates all factors that market
participants would consider in setting a price. The primary
valuation techniques employed to value the unquoted investments are
earnings multiples, recent transactions and the net asset basis.
Valuations in local currency are translated into Sterling at the
exchange rate ruling on the Balance Sheet date.
Included within the Statement of Comprehensive Income as at 31
July 2019, is a gain of GBP9,322,000 relative to the movement in
the fair value of the unquoted investments valued using IPEV
valuation techniques.
the valuation techniques applied are based on the following
assumptions:
Unquoted investments are usually valued by reference to the
valuation multiples of similar listed companies or from
transactions of similar businesses. Where appropriate discounts are
then applied to those comparable multiples to reflect differences
in size and liquidity. These enterprise values are then adjusted
for net debt to arrive at an equity valuation. Where companies are
in compliance with the loan note terms these loans are generally
held at par plus accrued interest (where applicable) unless the
enterprise value suggests that the debt cannot be recovered.
10. related party transactions
There have been no changes to the related party arrangements or
transactions as reported in the Statutory Annual Financial Report
for the year ended 31 January 2019.
The Manager, Harwood Capital LLP, is regarded as a related party
of the Company. The amounts payable to the Manager and Growth
Financial Services Limited in respect of investment management for
the six months to 31 July 2019 are as follows:
Six months Six months
ended ended Year ended
31 July 31 July 31 January
2019 2018 2019
GBP'000 GBP'000 GBP'000
Annual fee 2,705 2,546 5,091
Performance fee - - 1,743
Irrecoverable VAT thereon - - 45
--------------------------- ----------- ----------- -----------
2,705 2,546 6,879
--------------------------- ----------- ----------- -----------
Fees paid to Directors, for the six months ended 31 July 2019
amounted to GBP65,000 (six months ended 31 July 2018: GBP65,000;
year ended 31 January 2019: GBP130,000).
Shareholders should also note any payments made under share
based remuneration as disclosed in note 7 to these financial
statements.
shareholder information
financial calendar
Announcement of results and annual report May
Annual General Meeting June
Half Yearly figures announced September
Half Yearly Report posted September
share price
The Company's mid-market share price is quoted daily in the
Financial Times appearing under "Investment Companies".
It also appears on:
SEAQ Ordinary Shares: NAS
Trustnet: www.trustnet.com
net asset value
The latest net asset value of the Company can be found on the
Harwood Capital LLP website:
www.harwoodcapital.co.uk
share dealing
Investors wishing to purchase more Ordinary Shares or dispose of
all or part of their holding may do so through a stockbroker. Many
banks also offer this service.
The Company's registrars are Link Asset Services. In the event
of any queries regarding your holding of shares, please contact the
registrars on: 0871 664 0300, or by email on
enquiries@linkgroup.co.uk
Changes of name or address must be notified to the registrars in
writing at:
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Directors
Peregrine Moncreiffe (Chairman)
Christopher Mills (Chief Executive)
Lord Howard of Rising
G Walter Loewenbaum
Sir Charles Wake
Manager
Harwood Capital LLP
(Authorised and regulated by the Financial Conduct
Authority)
6 Stratton Street
Mayfair
London W1J 8LD
Telephone: 020 7640 3200
Financial Adviser and Stockbroker
Winterflood Investment Trusts
The Atrium Building
Cannon Bridge
25 Dowgate Hill
London EC4R 2GA
Registered Office
6 Stratton Street
Mayfair
London W1J 8LD
Telephone: 020 7640 3200
Registrars
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Auditors
KPMG LLP
15 Canada Square
London E14 5GL
Company Secretary
Derringtons Limited
Hyde Park House
5 Manfred Road
London SW15 2RS
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR EQLFFKKFFBBL
(END) Dow Jones Newswires
September 16, 2019 11:17 ET (15:17 GMT)
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