REG-New Star Investment Trust PLC New Star Investment Trust PLC: Interim ANNOUNCEMENT for the Six Months to 31 12 2020
22/03/2021 07:05
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New Star Investment Trust PLC (NSI)
New Star Investment Trust PLC: Interim ANNOUNCEMENT for the Six Months to
31 12 2020
22-March-2021 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR), transmitted by
EQS Group.
The issuer is solely responsible for the content of this announcement.
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NEW STAR INVESTMENT TRUST PLC
This announcement constitutes regulated information.
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31st DECEMBER 2020
INVESTMENT OBJECTIVE
The Company's objective is to achieve long-term capital growth.
FINANCIAL HIGHLIGHTS
31st December 30th June %
2020
2020 Change
PERFORMANCE
Net assets (£ '000) 122,813 113,885 7.8
Net asset value per Ordinary 172.92p 160.35p 7.8
share
Mid-market price per Ordinary 122.00p 106.00p 15.1
share
Discount of price to net asset 29.4% 33.9% n/a
value
Six months ended Six months ended
31st December 2020 31st December
2019
Total Return* 8.71% 4.02% n/a
IA Mixed Investment 40-85% 10.00% 4.41% n/a
Shares (total return)
MSCI AC World Index (total 12.32% 4.89% n/a
return, sterling adjusted)
MSCI UK Index (total return) 5.48% 3.03% n/a
Six months ended 31st Six months ended
December
31st December
2020
2019
REVENUE
Return (£'000) 279 792
Return per Ordinary share 0.39p 1.11p
Proposed dividend per Ordinary - -
share
Dividend paid per Ordinary share 1.40p 1.40p
TOTAL RETURN
Return (£'000) 9,922 4,582
Net assets (dividend added back) 8.7% 4.0%
Net assets 7.8% 3.1%
* The total return figure for the Group represents the revenue and capital
return shown in the consolidated statement of comprehensive income plus
dividends paid.
INTERIM REPORT
CHAIRMAN'S STATEMENT
PERFORMANCE
Your Company generated a positive total return of 8.71% over the six
months to 31st December 2020, taking the net asset value (NAV) per
ordinary share to 172.92p. By comparison, the Investment Association's
Mixed Investment 40-85% Shares Index rose 10.00%. The MSCI AC World Total
Return Index rose 12.32% in sterling while the MSCI UK Total Return Index
rose 5.48%. Over the six months, UK government bonds declined 0.82%.
Further information is provided in the investment manager's report.
Your Company made a revenue profit for the six months of £279,000 (2019:
£792,000).
GEARING AND DIVIDENDS
Your Company has no borrowings. It ended the period under review with cash
representing 9.51% of its NAV and is likely to maintain a significant cash
position. Your Company has small retained revenue reserves and your
Directors do not intend to pay an interim dividend (2019: nil). Your
Company paid a dividend of 1.4p per share (2019: 1.4p) in November 2020 in
respect of the previous financial year. The level of future dividends may,
in the short term, be adversely affected by Covid-19-related dividend
cuts.
DISCOUNT
During the period under review, your Company's shares continued to trade
at a significant discount to their NAV. The Board keeps this issue under
review.
OUTLOOK
Accommodative monetary and fiscal policies, the roll-out of Covid-19
vaccination programmes and mild inflation should underpin equities in
early 2021, particularly lowly-valued cyclical stocks. Geographically, the
UK stockmarket appeared attractive in the early spring of 2021 because of
its heavy weightings in cyclical sectors as did the stockmarkets of Asia
excluding Japan and the emerging markets, where public sector debt levels
were low and where companies were trading on low valuations. Long-dated
government bonds appeared vulnerable at a time of rising inflation
expectations but gold equities may benefit from the current environment in
which inflation is higher than official interest rates.
NET ASSET VALUE
Your Company's unaudited NAV per share at 28th February 2021 was 170.52p.
Geoffrey Howard-Spink
Chairman
18th March 2021
INVESTMENT MANAGER'S REPORT
MARKET REVIEW
Global equities rose 12.32% in sterling terms over the six months to 31
December 2020 as monetary and fiscal stimulus proved supportive and global
Covid-19 vaccine rollout programmes began, increasing expectations of an
early return to economic normality. Global bonds gained 6.03% in local
currencies but fell 4.15% in sterling because of foreign exchange
movements.
In the autumn of 2020, increasingly stringent lockdown measures were
introduced in America and Europe to combat a second wave of the pandemic.
Central banks responded with more stimulus to cushion the impact on
businesses and households. The Federal Reserve shifted its inflation
target from the fixed 2% rate it adopted after the credit crisis to an
average of 2%, implying inflation will be allowed to exceed 2% for some
time to compensate for more than a decade of persistently below-target
inflation. The Bank of England announced £150 billion of additional
quantitative easing in November while the European Central Bank announced
an additional €500 billion of asset purchases in December. In the US, a
further large-scale fiscal stimulus is on the way, with the new president,
Joe Biden, unveiling a $1.9 trillion rescue plan in addition to the $900
billion relief package enacted in December.
Sterling strengthened as December's European Union-UK trade agreement
averted a hard Brexit. Sterling gained 10.63%, 5.87% and 1.55%
respectively against the dollar, yen and euro. UK stocks underperformed,
rising 5.48%, but UK smaller companies, typically more sensitive to
domestic trends, gained 27.56%. UK government bonds fell 0.82% but
sterling corporate investment-grade and high-yield bonds gained 5.57% and
9.29% respectively as default fears receded and income-seeking investors
bought corporate bonds in the wake of equity dividend cuts.
US stocks rose 22.16% in dollars but only 10.42% in sterling. Investors
welcomed the initial outcome to November's elections. These gave the
Democrats the presidency and control of the House of Representatives but
not the Senate, initially forestalling investor fears of higher taxation
and increased regulation. Run-off elections in January, however, gave the
Democrats Senate control.
Asia was largely spared a second wave of Covid-19 infections, allowing
China to ease restrictions. Dollar-weakness and stronger industrial
commodity prices contributed to outperformance by equities in Asia
excluding Japan and emerging markets, which gained 18.84% and 18.77%
respectively in sterling. Strong global demand for Chinese products,
particularly electronic goods, contributed to a record $78 billion trade
surplus.
Inflation data were stronger than anticipated, particularly in the US and
UK, despite unemployment rising significantly above pre-pandemic levels.
In the US, the five-year breakeven inflation rate, which measures
medium-term inflation expectations, rose and implied that inflation would
exceed 2%. In early 2021, commentators were divided on the long-term
inflationary consequences of the exceptional monetary and fiscal easing in
response to the pandemic. It is likely, however, that higher commodity
prices, pent-up consumer demand and disrupted supply chains will foster
inflation in the short term.
PORTFOLIO REVIEW
Your Company's total return over the period under review was 8.71%. By
comparison, the Investment Association (AI) Mixed Investment 40-85% Shares
sector, a peer group of funds with a multi-asset approach to investing and
a typical investment in global equities in the 40-85% range, rose 10.00%.
The MSCI AC World Total Return Index rose 12.32% in sterling while the
MSCI UK Total Return Index rose 5.48%. Your Company benefited from its
allocations to UK smaller stocks and emerging market equities but its
allocations to dollar cash and gold equities hurt performance. Income from
investments fell over the period as dividends were cut, cancelled and
deferred. This will affect the revenue available to pay a dividends unless
retained reserves are utilised.
Your Company's investment in dollar cash and the allocation to gold
equities within the BlackRock Gold & General portfolio were hurt by
currency movements over the period as extraordinary monetary and fiscal
stimulus weakened the dollar and hopes of a Brexit deal buoyed the pound.
Gold and gold equities rose 3.26% and 0.91% respectively in dollars but
fell 6.66% and 8.78% respectively in sterling because of currency
movements. Dollar cash and gold equities provide diversification, however,
and may offer some capital protection should equity markets in general
fall.
Your Company benefited from its relatively-low allocation to US equities,
which underperformed global equites, gaining 10.42% in sterling. US
technology stocks, however, gained 14.45%, contributing to the 19.13% gain
by Polar Capital Technology. Fundsmith Equity gained only 9.99%, however,
despite its heavy technology weighting.
Good news on vaccines benefited your Company's allocation in cyclical
stocks as investors looked beyond the American and European pandemic
lockdowns and anticipated the reopening of economies. Aberforth Split
Level Income was the best-performing holding over the period, gaining
50.64%. Its manager invests in UK smaller companies and follows a
value-oriented investment style, which had been out of favour in an
environment of ultra-low interest rates and below-target inflation. The
addition of leverage from zero-dividend preference shares amplified the
sensitivity to domestic economic trends, contributing to outperformance.
Chelverton UK Equity Income, which focuses on smaller stocks, rose 22.80%
but lagged the gain for UK smaller companies. MI Brompton UK Recovery and
Man GLG Income gained 18.09% and 12.39% respectively, outperforming UK
equities because of their bias towards small and medium-sized companies.
Trojan Income lagged, rising only 2.24% because of its relatively-high
holdings in larger companies and defensive sectors such as consumer
staples. The allocation to UK equites reduced in July when the investment
in the SPDR FTSE UK All Share exchange-traded fund, which was bought
following the stockmarket falls precipitated by the first lockdown in
March 2020, was sold.
Amongst your Company's emerging market investments, JP Morgan Emerging
Markets Income did best, rising 34.79%. The investment benefited from its
holdings in China and Taiwan and in the technology sector, with Taiwan
Semiconductor and Samsung Electronics amongst the largest investments.
Liontrust Asia Income marginally underperformed, however, gaining 17.79%.
Stewart Investors India Subcontinent rose 27.86%, outperforming the 26.08%
gain for Indian equities in sterling as the country's economy recovered
from nationwide lockdown earlier in the year. The prime minister, Narendra
Modi, introduced structural reforms in agriculture and labour
markets and the ease of doing business in India improved according to
a World Bank study. Your Company's allocation to emerging markets
increased through purchases of Matthews Asia ex Japan Dividend and Vietnam
Enterprise Investment Trust while the global equity allocation fell as a
result of the sale of Artemis Global Income.
All the EF Brompton Multi Manager OEIC funds outperformed their IA
benchmarks. Your Company's allocation to more conservative strategies hurt
performance in a rising equity market but may prove defensive should
markets fall.
There were no significant adjustments to the valuations of the unquoted
stocks. Your Company's largest unquoted holding, Embark, continued to
integrate its recent acquisitions.
OUTLOOK
At the period end, the outlook for equities appeared positive because
monetary and fiscal policies are likely to remain accommodative for some
time and equities may perform well in an environment of mild inflation.
Strong performance from cyclical companies, which were typically on low
valuations compared to some growth companies, may persist as vaccine
rollout programmes allow economies to reopen. The UK stockmarket may
benefit from this trend because of its relatively-high weighting in
cyclical sectors such as energy, financials, industrials and mining while
smaller companies may benefit from reviving domestic demand and increasing
takeover activity.
Equities in Asia excluding Japan and emerging markets appeared
particularly attractive because they were trading on lower valuations
while public sector debt levels were lower than in many developed
economies. Dollar weakness and stronger oil and commodity prices would
also prove tailwinds for these markets.
Your Company ended the period under review with no direct investments in
longer-dated bonds, which may fall should inflation expectations rise
whereas gold equities may provide diversification and perform well at
times such as the present time when inflation is higher than interest
rates. Investments in dollar cash and lower risk multi-asset funds also
provide diversification and, potentially, a measure of capital protection.
Brompton Asset Management LLP
18th March 2021
DIRECTORS' REPORT
PERFORMANCE
In the six months to 31st December 2020 the total return per Ordinary
share was 8.7% (2019: 4.0%) and the NAV per ordinary share increased to
172.92p, whilst the share price increased by 15.1% to 122.00p. This
compares to an increase of 10.0% in the IA Mixed Investment 40-85% Shares
Index.
INVESTMENT OBJECTIVE
The Company's investment objective is to achieve long-term capital growth.
INVESTMENT POLICY
The Company's investment policy is to allocate assets to global investment
opportunities through investment in equity, bond, commodity, real estate,
currency and other markets. The Company's assets may have significant
weightings to any one asset class or market, including cash.
The Company will invest in pooled investment vehicles, exchange traded
funds, futures, options, limited partnerships and direct investments in
relevant markets. The Company may invest up to 15% of its net assets in
direct investments in relevant markets.
The Company will not follow any index with reference to asset classes,
countries, sectors or stocks. Aggregate asset class exposure to any one of
the United States, the United Kingdom, Europe ex UK, Asia ex Japan, Japan
or Emerging Markets and to any individual industry sector will be limited
to 50% of the Company's net assets, such values being assessed at the time
of investment and for funds by reference to their published investment
policy or, where appropriate, their underlying investment exposure.
The Company may invest up to 20% of its net asset value in unlisted
securities (excluding unquoted pooled investment vehicles) such values
being assessed at the time of investment.
The Company will not invest more than 15% of its net assets in any single
investment, such values being assessed at the time of investment.
Derivative instruments and forward foreign exchange contracts may be used
for the purposes of efficient portfolio management and currency hedging.
Derivatives may also be used outside of efficient portfolio management to
meet the Company's investment objective. The Company may take outright
short positions in relation to up to 30% of its net assets, with a limit
on short sales of individual stocks of up to 5% of its net assets, such
values being assessed at the time of investment. The Company may borrow
up to 30% of net assets for short-term funding or long-term investment
purposes. No more than 10%, in aggregate, of the value of the Company's
total assets may be invested in other closed-ended investment funds except
where such funds have themselves published investment policies to invest
no more than 15% of their total assets in other listed closed-ended
investment funds.
SHARE CAPITAL
The Company's share capital comprises 305,000,000 Ordinary shares of 1p
each, of which 71,023,695 (2019: 71,023,695) have been issued and fully
paid. No Ordinary shares are held in treasury, and none were bought back
or issued during the six months to 31st December 2020.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks identified by the Board, and the steps the Board takes
to mitigate them, are discussed below. The audit committee reviews
existing and emerging risks on a six monthly basis. The Board has closely
monitored the societal, economic and market focused implications of the
events of the last 12 months to consider emerging risks.
Investment strategy: Inappropriate long-term strategy, asset allocation
and fund selection could lead to underperformance. The Board discusses
investment performance at each of its meetings and the Directors receive
reports detailing asset allocation, investment selection and performance.
Business conditions and general economy: The Company's future performance
is heavily dependent on the performance of different equity and currency
markets. The Board cannot mitigate the risks arising from adverse market
movements. However, diversification within the portfolio will reduce the
impact. Further information is given in portfolio risks below.
Macro-economic event risk: The Covid pandemic has been felt globally in
2020. The scale and potential adverse impact of a macro-economic event,
such as the Covid pandemic, has highlighted the possibility of a number of
identified risks such as market risk, currency risk, investment liquidity
risk and operational risk having an adverse impact at the same time. The
risk may impact on: the value of the Company's investment portfolio, its
liquidity, meaning investments cannot be realised quickly, or the
Company's ability to operate if the Company's suppliers face financial or
operational difficulties. The Directors closely monitor these areas and
currently maintain a significant cash balance.
Portfolio risks - market price, foreign currency and interest rate risks:
The largest investments are listed below. Investment returns will be
influenced by interest rates, inflation, investor sentiment,
availability/cost of credit and general economic and market conditions in
the UK and globally. A significant proportion of the portfolio is in
investments denominated in foreign currencies and movements in exchange
rates could significantly affect their sterling value. The Investment
Manager takes all these factors into account when making investment
decisions but the Company does not normally hedge against foreign currency
movements. The Board's policy is to hold a spread of investments in order
to reduce the impact of the risks arising from the above factors by
investing in a spread of asset classes and geographic regions.
Net asset value discount: The discount in the price at which the Company's
shares trade to net asset value means that shareholders cannot realise the
real underlying value of their investment. Over the last few years the
Company's share price has been at a significant discount to the Company's
net asset value. The Directors review regularly the level of discount,
however given the investor base of the Company, the Board is very
restricted in its ability to influence the discount to net asset value.
Investment Manager: The quality of the team employed by the Investment
Manager is an important factor in delivering good performance and the loss
of key staff could adversely affect returns. A representative of the
Investment Manager attends each Board meeting and the Board is informed if
any major changes to the investment team employed by the Investment
Manager are proposed. The Investment Manager regularly informs the Board
of developments and any key implications for either the Investment
Strategy or the investment portfolio.
Tax and regulatory risks: A breach of The Investment Trust (Approved
Company) (Tax) Regulations 2011 (the 'Regulations') could lead to capital
gains realised within the portfolio becoming subject to UK capital gains
tax. A breach of the FCA Listing Rules could result in suspension of the
Company's shares, while a breach of company law could lead to criminal
proceedings, financial and/or reputational damage. The Board employs
Brompton Asset Management LLP as Investment Manager, and Maitland
Administration Services Limited as Secretary and Administrator, to help
manage the Company's legal and regulatory obligations.
Operational: Disruption to, or failure of, the Investment Manager's or
Administrator's accounting, dealing or payment systems, or the Custodian's
records, could prevent the accurate reporting and monitoring of the
Company's financial position. The Company is also exposed to the
operational risk that one or more of its suppliers may not provide the
required level of service. The Board monitors its service providers, with
an emphasis on their business interruption procedures.
The Directors confirm that they have carried out an assessment of the
risks facing the Company, including those that would threaten its business
model, future performance, solvency and liquidity.
INVESTMENT MANAGEMENT ARRANGEMENTS AND RELATED PARTY TRANSACTIONS
In common with most investment trusts the Company does not have any
executive directors or employees. The day-to-day management and
administration of the Company, including investment management, accounting
and company secretarial matters, and custodian arrangements are delegated
to specialist third party service providers.
Details of related party transactions are contained in the Annual Report.
There have been no unusual material transactions with related parties
during the period which have had a significant impact on the performance
of the Company.
GOING CONCERN AND VIABILITY
The Directors believe that it is appropriate to continue to adopt the
going concern basis in preparing the accounts as the assets of the Company
consist mainly of securities that are readily realisable or cash and it
has no significant liabilities. Investment income exceeds annual
expenditure and current liquid net assets cover current annual expenses
for many years. Accordingly, the Company is of the opinion that it has
adequate financial resources to continue in operational existence for the
foreseeable future which is considered to be in excess of five years.
Five years is considered a reasonable time for investors when making their
investment decisions. In reaching this view the Directors reviewed the
anticipated level of annual expenditure against the cash and liquid assets
within the portfolio. The Directors have also considered the risks the
Company faces.
AUDITORS
The half year financial report has been reviewed, but not audited, by
Ernst & Young LLP pursuant to the Auditing Practices Board guidance on the
Review of Interim Financial Information.
RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge:
The financial statements contained within the half year financial report
to 31st December 2020 has been prepared in accordance with International
Accounting Standard 34 'Interim Financial Reporting';
The Chairman's statement, Directors' report or the Investment Manager's
report include a fair review of important events that have occurred during
the first six months of the financial year and their impact on the
financial statements;
The Chairman's statement, Directors' report or the Investment Manager's
report include a fair review of the potential risks and uncertainties for
the remaining six months of the year;
The Director's report and note 8 to the half year financial report include
a fair review of the information concerning transactions with the
investment manager and changes since the last annual report.
By order of the Board
Maitland Administration Services Limited
18th March 2021
SCHEDULE OF TOP TWENTY INVESTMENTS at 31st December 2020
Bid-market Value % of Net
Holding Investment Type Assets
£ '000
Fundsmith Equity Fund Investment Fund 9,416 7.67
Polar Capital Global Technology Investment Fund 8,793 7.16
Embark Group Unquoted 6,990 5.69
Investment
TM Crux European Special Investment Fund 5,477 4.46
Situations Fund
Matthews Asia Ex Japan Fund Investment Fund 5,449 4.44
BlackRock Gold & General Fund Investment Fund 4,741 3.86
EF Brompton Global Conservative Investment Fund 4,622 3.76
Fund
BlackRock Continental European Investment Fund 4,306 3.50
Income Fund
Aquilus Inflection Fund Investment Fund 4,103 3.34
Baillie Gifford Global Income Investment Fund 3,731 3.04
Growth
MI Chelverton UK Equity Income Investment Fund 3,636 2.96
Fund
Lindsell Train Japanese Equity Investment Fund 3,483 2.83
Fund
EF Brompton Global Equity Fund Investment Fund 3,405 2.77
EF Brompton Global Opportunities Investment Fund 3,309 2.69
Fund
Aberforth Split Level Income Investment 3,301 2.69
Trust Company
First State Indian Subcontinent Investment Fund 3,127 2.55
Fund
EF Brompton Global Growth Fund Investment Fund 3,103 2.53
Liontrust Asia Income Fund Investment Fund 2,990 2.43
MI Brompton UK Recovery Unit Investment Fund 2,736 2.23
Trust
EF Brompton Global Balanced Fund Investment Fund 2,551 2.08
89,269 72.68
Balance held in 21 investments 21,992 17.91
Total investments (excluding
cash) 111,261 90.59
Net current assets (including 11,552 9.41
cash)
122,813 100.00
Net Assets
The investment portfolio, excluding cash, can be further analysed as
follows:
£'000
Investment funds 94,239
Unquoted investments 8,779
Investment companies and exchange traded funds 6,561
Other quoted investments 1,682
111,261
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31st December 2020 (unaudited)
Six months ended
31st December 2020
(unaudited)
Total
Revenue Return Capital Return
£ '000 Return
£ '000 £ '000
Notes
INCOME
Investment income 795 - 795
Other operating income 3 - 3
Total income 2 798 - 798
GAINS AND LOSSES ON
INVESTMENTS
Gains on investments at fair
value through profit or loss 5
- 10,677 10,677
Other exchange gains - (1,035) (1,035)
Trail rebates - 1 1
798 9,643 10,441
EXPENSES
Management fees 3 (370) - (370)
Other expenses (149) - (149)
(519) - (519)
PROFIT BEFORE TAX 279 9,643 9,922
Tax - - -
PROFIT FOR THE PERIOD 279 9,643 9,922
EARNINGS PER SHARE
Ordinary shares (pence) 4 0.39p 13.58p 13.97p
The total return column of this statement represents the Group's profit
and loss account, prepared in accordance with IFRS. The supplementary
Revenue Return and Capital Return columns are both prepared under guidance
published by the Association of Investment Companies. All items in the
above statement derive from continuing operations. No operations were
acquired or discontinued during the period.
All income is attributable to the equity holders of the parent company.
There are no minority interests.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31st December 2019 and the year ended 30th June
2020
Six months ended Year ended
31st December 2019 30th June 2020
(unaudited) (audited)
Revenue Capital Total Revenue Capital Total
Notes Return Return Return Return Return Return
£'000 £'000 £'000 £'000 £'000 £'000
INCOME
Investment income 1,127 - 1,127 2,169 - 2,169
Other operating 167 - 167 250 - 250
income
Total income 2 1,294 - 1,294 2,419 - 2,419
GAINS AND LOSSES ON
INVESTMENTS
Gains/(losses) on
investments at fair
value through profit
or loss 5
- 5,023 5,023 - (212) (212)
Other exchange - (612) (612) - 414 414
(losses)/gains
Trail rebates - 2 2 - 4 4
1,294 4,413 5,707 2,419 206 2,625
EXPENSES
Management and 3 (364) (623) (987) (697) (623) (1,320)
performance fees
Other expenses (138) - (138) (397) - (397)
(502) (623) (1,125) (1,094) (623) (1,717)
PROFIT/(LOSS) BEFORE 792 3,790 4,582 1,325 (417) 908
TAX
Tax - - - - - -
PROFIT FOR THE 792 3,790 4,582 1,325 (417) 908
PERIOD
EARNINGS PER SHARE
Ordinary shares 4 1.11p 5.34p 6.45p 1.87p (0.59)p 1.28p
(pence)
The total return column of this statement represents the Group's profit
and loss account, prepared in accordance with IFRS. The supplementary
Revenue Return and Capital Return columns are both prepared under guidance
published by the Association of Investment Companies. All items in the
above statement derive from continuing operations. No operations were
acquired or discontinued during the periods.
All income is attributable to the equity holders of the parent company.
There are no minority interests.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31st December 2020 (unaudited)
Share Share Special Retained
premium reserve earnings
capital Total
£ '000 £ '000 £ '000
£ '000 £ '000
At 30th JUNE 2020 710 21,573 56,908 34,694 113,885
Total comprehensive income for
the period
- - - 9,922 9,922
Dividend paid - - - (994) (994)
At 31st DECEMBER 2020 710 21,573 56,908 43,622 122,813
Included within retained earnings were £1,298,000 of Company reserves
available for distribution.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31st December 2019 (unaudited)
Share Share Special Retained
premium reserve earnings
capital Total
£ '000 £ '000 £ '000
£ '000 £ '000
At 30th JUNE 2019 710 21,573 56,908 34,780 113,971
Total comprehensive income for
the period
- - - 4,582 4,582
Dividend paid - - - (994) (994)
At 31st DECEMBER 2019 710 21,573 56,908 38,368 117,559
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th June 2020 (audited)
Share Share Special Retained
premium reserve earnings
capital Total
£ '000 £ '000 £ '000
£ '000 £ '000
At 30th JUNE 2019 710 21,573 56,908 34,780 113,971
Total comprehensive income for - - - 908 908
the year
Dividend paid - - - (994) (994)
At 30th JUNE 2020 710 21,573 56,908 34,694 113,885
CONSOLIDATED BALANCE SHEET
at 31st December 2020
31st December 31st December 30th June
2020 2019 2020
Notes
(unaudited) (unaudited) (audited)
£ '000 £ '000 £ '000
NON-CURRENT ASSETS
Investments at fair value
through profit or loss
5 111,261 101,518 103,015
CURRENT ASSETS
Other receivables 101 100 137
Cash and cash equivalents 11,682 16,786 10,962
11,783 16,886 11,099
TOTAL ASSETS 123,044 118,404 114,114
CURRENT LIABILITIES
Other payables (231) (845) (229)
TOTAL ASSETS LESS CURRENT
LIABILITIES
122,813 117,559 113,885
NET ASSETS 122,813 117,559 113,885
EQUITY ATTRIBUTABLE TO EQUITY
HOLDERS
Called-up share capital 710 710 710
Share premium 21,573 21,573 21,573
Special reserve 56,908 56,908 56,908
Retained earnings 6 43,622 38,368 34,694
TOTAL EQUITY 122,813 117,559 113,885
NET ASSET VALUE PER ORDINARY 7 172.92p 165.52p 160.35p
SHARE (PENCE)
The interim report was approved and authorised for issue by the Board on
18th March 2021.
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31st December 2020
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2020 2019 2020
(unaudited) (unaudited) (audited)
£ '000 £ '000 £ '000
NET CASH INFLOW FROM OPERATING 318 501 382
ACTIVITIES
INVESTING ACTIVITIES
Purchase of investments (6,500) (2,722) (12,725)
Sale of investments 8,931 8 3,280
NET CASH INFLOW/(OUTFLOW) FROM
INVESTING ACTIVITIES
2,431 (2,714) (9,445)
FINANCING
Equity dividend paid (994) (994) (994)
NET CASH INFLOW/(OUTFLOW) AFTER
FINANCING 1,755 (3,207) (10,057)
INCREASE /(DECREASE) IN CASH 1,755 (3,207) (10,057)
RECONCILIATION OF NET CASH FLOW TO
MOVEMENT IN NET FUNDS
Increase/(Decrease) in cash 1,755 (3,207) (10,057)
resulting from cash flows
Exchange movements (1,035) (612) 414
Movement in net funds 720 (3,819) (9,643)
Net funds at start of period/year 10,962 20,605 20,605
NET FUNDS AT END OF PERIOD/YEAR 11,682 16,786 10,962
RECONCILIATION OF PROFIT BEFORE
FINANCE COSTS AND TAXATION TO NET
CASH FLOW FROM OPERATING ACTIVITIES
Profit before finance costs and 9,922 4,582 908
taxation *
(Gains)/Losses on investments (10,677) (5,022) 212
Exchange differences 1,035 612 (414)
Management fee rebates (1) (2) (4)
Revenue profit before finance costs 279 170 702
and taxation
Decrease in debtors 36 120 81
Increase/(Decrease) in creditors 2 209 (407)
Taxation - - 2
Management fee rebates 1 2 4
NET CASH INFLOW FROM OPERATING 318 501 382
ACTIVITIES
* Includes dividends received in cash of £693,000 (30th June 2020:
£1,977,000) (2019: £1,013,000), accumulation income of £173,000 (30th June
2020: £245,000) (2019: £225,000) and interest income of £3,000 (30th June
2020: £250,000) (2019: £167,000)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 31st December 2020
1. ACCOUNTING POLICIES
The condensed consolidated interim financial statements comprise the
unaudited results of the Company and its subsidiary, JIT Securities
Limited (together "the Group"), for the six months to 31st December 2020.
The comparative information for the six months to 31st December 2019 and
the year to 30th June 2020 are a condensed set of accounts and do not
constitute statutory accounts under the Companies Act 2006. Full statutory
accounts for the year to 30th June 2020 included an unqualified audit
report, did not contain any statements under section 498 of the Companies
Act 2006, and have been filed with the Registrar of Companies.
The half year financial statements have been prepared in accordance with
International Accounting Standard 34 'Interim Financial Reporting', and
are presented in pounds sterling, as this is the Group's functional
currency.
The same accounting policies have been followed in the interim financial
statements as applied to the accounts for the year ended 30th June 2020,
which were prepared in accordance with IFRSs.
No segmental reporting is provided as the Group is engaged in a single
segment.
2. TOTAL INCOME
Year ended
Six months ended 31st 30th June
December 2020 Six months ended
31st December 2019 2020
£'000
£'000
£'000
Income from
Investments
UK net dividend 677 1,045 1,844
income
Unfranked investment 118 82 325
income
795 1,127 2,169
Other Income
Bank interest 3 167 250
receivable
Loan interest income - - -
3 167 250
Year ended
Six months ended 31st December 30th June
2020 Six months ended
31st December 2019 2020
£'000
£'000
£'000
Total income
comprises
Dividends 795 1,127 2,169
Other income 3 167 250
798 1,294 2,419
3. MANAGEMENT FEES
Year ended
Six months ended 31st 30th June
December 2020 Six months ended
31st December 2019 2020
£'000
£'000
£'000
Investment management 370 364 697
fee
Performance fee - 623 623
370 986 1,320
The Investment Manager receives a management fee, payable quarterly in
arrears, equivalent to an annual 0.75 per cent of total assets after the
deduction of the value of any investments managed by the Investment
Manager or its associates (as defined in the investment management
agreement).
The Company agreed with the Investment Manager that the performance fee
was not appropriate in a low interest rate environment. Accordingly the
performance fee agreement ceased with effect from 1st January 2020.
4. RETURN PER ORDINARY SHARE
Year ended 30th
Six months ended June
31st December 2020 Six months ended
31st December 2019 2020
£'000
£'000
£'000
Revenue return 279 792 1,325
Capital return 9,643 3,790 (417)
Total return 9,922 4,582 908
Weighted average
number of Ordinary 71,023,695 71,023,695 71,023,695
shares
Revenue return per 0.39p 1.11p 1.87p
Ordinary share
Capital return per 13.58p 5.34p (0.59)p
Ordinary share
Total return per 13.97p 6.45p 1.28p
Ordinary share
5. INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS
At At At
31st December 31st December 30th June
2020 2019
2020
£'000 £'000
£'000
GROUP AND COMPANY 111,261 101,518 103,015
ANALYSIS OF INVESTMENT
PORTFOLIO
Six months ended 31st December
2020
Total
Quoted* Unquoted**
(level 1 and (level 3)
2)
£'000 £'000
£'000
Opening book cost 67,731 8,448 76,179
Opening investment holding 26,816 20 26,836
gains/(losses)
Opening valuation 94,547 8,468 103,015
Movement in period:
Purchase at cost 6,033 467 6,500
Sales
- Proceeds (8,931) - (8,931)
- Realised gains on sales 745 - 745
Movement in investment holding 10,088 (156) 9,932
gains/(losses)
Closing valuation at 31 December 102,482 8,779 111,261
2020
Closing book cost 65,577 8,915 74,492
Closing investment holding 36,905 (136) 36,769
gains/(losses)
Closing valuation 102,482 8,779 111,261
* Quoted investments include unit trust and OEIC funds which are valued at
quoted prices. Included within Quoted Investments is one monthly valued
investment fund of £4,103,000 (30th June 2020: £4,076,000) (2019:
£3,721,000).
** The Unquoted investments, representing just over 7% of the Company's
NAV, have been valued in accordance with IPEVC valuation guidelines. The
largest Unquoted investment amounting to £6,990,000 (30th June 2020:
£6,990,000) (2019: £3,990,000) was valued at the latest transaction price.
The second largest investment has been valued based on cost and is in its
development phase. A 10% increase or decrease in the earnings of the two
largest investments would not have a material impact on the valuation of
those investments. Neither investment has reached their maturity and are
not valued on the basis of their current earnings.
There were no reclassifications for assets between Level 1, 2 and 3.
5. INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS continued
Year
Six months ended Six months ended
ended
31st December 31st December
2020 2019 30th June
£'000 £'000 2020
£'000
ANALYSIS OF CAPITAL GAINS AND
LOSSES
Realised gains on sales of 745 8 (2,086)
investments
Increase in investment holding 9,932 5,014 1,874
gains/( losses)
10,677 5,022 (212)
6. RETAINED EARNINGS
At At
At
31st December 2020 30th June
31st December 2019
£'000 2020
£'000
£'000
Capital reserve - realised 5,395 6,769 5,686
Capital reserve - 36,770 29,959 26,836
revaluation
Revenue reserve 1,457 1,640 2,172
43,662 38,368 34,694
7. NET ASSET VALUE PER ORDINARY SHARE
31st December 30th June
2020 31st December
2019 2020
£'000
£'000 £'000
Net assets attributable to Ordinary
shareholders
122,813 117,559 113,885
Ordinary shares in issue at end of
period 71,023,695 71,023,695 71,023,695
Net asset value per Ordinary share 172.92p 165.52p 160.35p
8. TRANSACTIONS WITH THE INVESTMENT MANAGER
During the period there have been no new related party transactions that
have affected the financial position or performance of the Group.
Since 1st January 2010 Brompton has acted as Investment Manager to the
Company. This relationship is governed by an agreement dated 17 May 2018.
Mr Duffield is the senior partner of Brompton Asset Management Group LLP
the ultimate parent of Brompton. Mr Duffield owns a majority (59.14%) of
the shares in the Company.
Mr Gamble has an immaterial holding in Brompton Asset Management Group
Limited LLP.
The total investment management fee payable to Brompton for the half year
ended 31st December 2020 was £370,000 (30th June 2020: £697,000) (2019:
£364,000) and at the half year £190,000 (30th June 2020: £177,000) (2019:
£177,000) was accrued. No performance fee was payable in respect of the
six months ended 31st December 2020 (30th June 2020: £623,000) (2019:
£623,000). The existing performance fee arrangements ceased with effect
from 1 January 2020.
The Group's investments include seven funds managed by Brompton or its
associates valued at £21,998,000 (30th June 2020: £19,712,000) (2019:
£19,680,000). No investment management fees were payable directly by the
Company in respect of these investments.
══════════════════════════════════════════════════════════════════════════
ISIN: GB0002631041
Category Code: IR
TIDM: NSI
OAM Categories: 1.2. Half yearly financial reports and audit
reports/limited reviews
3.1. Additional regulated information required to be
disclosed under the laws of a Member State
Sequence No.: 95947
EQS News ID: 1177081
End of Announcement EQS News Service
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