REG-New Star Investment Trust PLC New Star Investment Trust PLC: Interim ANNOUNCEMENT for the Six Months to 31 12 2022
21/03/2023 11:30
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New Star Investment Trust PLC (NSI)
New Star Investment Trust PLC: Interim ANNOUNCEMENT for the Six Months to
31 12 2022
21-March-2023 / 11:29 GMT/BST
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NEW STAR INVESTMENT TRUST PLC
This announcement constitutes regulated information.
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31st DECEMBER 2022
INVESTMENT OBJECTIVE
The Company’s objective is to achieve long-term capital growth.
FINANCIAL HIGHLIGHTS
31st December 30th June %
2022
2022 Change
PERFORMANCE
Net assets (£ ‘000) 123,225 123,978 (0.61)
Net asset value per Ordinary 173.50p 174.56p (0.61)
share
Mid-market price per Ordinary 124.50p 125.00p (0.40)
share
Discount of price to net asset 28.6% 28.4% n/a
value
Six months ended Six months ended
31st December 2022 31st December
2021
Total Return* 0.19% 2.59% n/a
IA Mixed Investment 40-85% 0.89% 4.18% n/a
Shares (total return)
MSCI AC World Index (total
return, sterling adjusted)
3.50% 7.86% n/a
MSCI UK Index (total return) 5.39% 7.42% n/a
Six months ended 31st Six months ended
December
31st December
2022
2021
REVENUE
Return (£’000) 735 405
Return per Ordinary share 1.04p 0.57p
Proposed dividend per Ordinary 0.90p -
share
Dividend paid per Ordinary share 1.40p 1.40p
TOTAL RETURN
Return (£’000) 241 3,584
Net assets (dividend added back) 0.19% 2.59%
Net assets (0.61)% 1.88%
* 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 0.19% over the six
months to 31st December 2022, taking the net asset value (NAV) per
ordinary share to 173.50p. By comparison, the Investment Association’s
Mixed Investment 40-85% Shares Index rose 0.89%. The MSCI AC World Total
Return Index rose 3.50% in sterling over the period, the MSCI UK Total
Return Index rose 5.39% while UK government bonds fell 12.06%. Further
information is provided in the investment manager’s report.
Your Company made a revenue profit for the six months of £735,000 (2021:
£405,000).
GEARING AND DIVIDENDS
Your Company has no borrowings. It ended the period under review with cash
representing 14.63% of its NAV and is likely to maintain a significant
cash position. In recent years, your Company has invested in
income-yielding assets with the aim of increasing its revenue and
dividend. Its revenue and retained earnings are now sufficient for your
Directors to pay a maiden interim dividend of 0.9p per share (2021: nil).
Your Directors intend to maintain this policy of paying an interim
dividend and recommending a final dividend to shareholders. Your Company
paid a dividend of 1.4p per share (2021: 1.4p) in November 2022 in respect
of the previous financial year.
DISCOUNT
Your Company’s shares continued to trade at a significant discount to
their NAV during the period under review. The Board keeps this issue under
review.
OUTLOOK
Although inflationary pressures have reduced, the lagged impact of rising
interest rates may lead to recessions in the US and Europe over the coming
months. This will affect corporate profits but equity markets may benefit
from easing inflation as investors anticipate a turn downwards in the
interest rate cycle. Your Company entered 2023 with above-average
holdings in emerging market equities relative to collective funds with
the same benchmark. Emerging markets are trading on relatively-low
valuations and have the potential to outperform as China relaxes its
zero-Covid-19 policies. Your Company’s significant cash holdings have
benefitted from rising deposit rates in recent months and can be deployed
should other attractive opportunities emerge.
NET ASSET VALUE
Your Company’s unaudited NAV at 28th February 2023 was 178.10p.
Geoffrey Howard-Spink
Chairman
21st March 2023
INVESTMENT MANAGER’S REPORT
MARKET REVIEW
The leading central banks increased interest rates on four occasions over
the six months to 31 December 2022 to combat inflation. The Federal
Reserve and the Bank of England raised their policy rates to 4.25-4.5% and
3.5% respectively while the European Central Bank lifted the rate on its
main refinancing operations to 2.5%. In February 2023, all three central
banks increased rates again, the Fed by a quarter point and the BoE and
the ECB by half a point. Investors were, however, anticipating a turn
downwards in policy rates further ahead on expectations that inflation
would reduce significantly.
US headline inflation peaked at 9.1% in June 2022 and declined every month
thereafter, falling to 6.4% in January 2023. Eurozone and UK headline
inflation proved more obdurate, standing at 10.6% and 11.1% respectively
in October 2022 before falling to 8.6% and 10.1% respectively in January
2023. Oil prices fell 16.85% in sterling over the period under review,
easing inflationary pressures. UK and eurozone inflation may have peaked
later partly because of the impact of elevated gas prices following
Russia’s invasion of Ukraine.
Fed hawkishness was founded on the strength of the labour market, with
unemployment just 3.4% in January 2023, and the resilience of consumer
spending. Unemployment tends, however, to be a lagging indicator and is
typically low at the start of a recession. Inflation is widely regarded as
“sticky” when it becomes entrenched in pay increases but real wages fell
over the period despite the strength of the labour market.
Rising interest rates proved a headwind for global bonds, which fell 1.78%
in sterling. UK government bonds were particularly weak, falling 12.06%.
The government’s September announcement of unfunded tax cuts led to some
pension funds becoming forced sellers of gilts. The BoE intervened,
announcing UK government bond purchases of up to £65 billion to ensure
financial stability.
PORTFOLIO REVIEW
Your Company’s total return over the period was 0.19%. By comparison, the
Investment Association (IA) 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 0.89%. The MSCI
AC World Total Return Index rose 3.50% in sterling while the MSCI UK Total
Return Index rose 5.39%. Your company benefited from holding
value-oriented equity investments and investments in gold miners and
Indian stocks. A low overall exposure to bonds also helped performance.
Performance suffered, however, from weakness among US and Chinese
technology stocks, which resulted in falls for Polar Capital Global
Technology and Matthews Asia ex Japan Dividend.
Your Company’s allocation to equity increased from October to December
2022 by approximately £6 million at the expense of cash because inflation
appeared to be close to peaking, increasing expectations that easier
monetary policy could be on the horizon. In October, your Company invested
£2 million in Redwheel Global Equity Income, which has a disciplined
approach to income-investing. All investments must yield at least 25% more
than the market average at the time of purchase and profits are taken on
stocks that appreciate to the point where they yield less than the market
average. The managers aim to select high-quality stocks while excluding
stocks that may be at risk of cutting dividends. The addition of holdings
managed in accordance with an income mandate should support your Company’s
ability to pay dividends.
More accommodative monetary policy may result in outperformance for
growth-oriented investments and approximately £1 million was invested in
the iShares S&P 500 exchange-traded fund, which tracks the US market, and
£1 million was added to Lindsell Train Japanese Equity, which holds a
concentrated portfolio of growth stocks including consumer-related
companies that should benefit from increased Chinese tourism as China’s
zero-Covid-19 policies are relaxed.
The remaining £2 million was invested in emerging markets, with £1 million
added to Vietnam Enterprise Investments in October and £1 million added to
Somerset Asia Income in November. Some emerging markets trade on low
valuations relative to developed markets and dollar strength, which has
proved a headwind for emerging markets, may subside in anticipation of
easier monetary policy. In December, Beijing relaxed its zero-Covid
policies, leading to gains for Chinese stocks.
Value stocks typically outperformed growth stocks over the period because
rising interest rates affected longer-duration assets. Technology stocks
were hurt because future cash flows from these high-growth stocks are
discounted more aggressively at higher interest rates. US technology
stocks fell 5.39% in sterling over the period, contributing to an 8.86%
fall by Polar Capital Global Technology, but your Company’s largest
holding, Fundsmith Equity, rose 3.49%, despite its growth style and
significant technology holdings. Gains by Novo Nordisk, one of its 10
largest holdings, fuelled the rise as investors warmed to the potential of
its anti-obesity drugs.
UK equities modestly outperformed, rising 5.39%, but smaller companies
lagged, gaining 2.97%. Amongst value-oriented investments, Man GLG Income
and Aberforth Split Level Income, a small-company investment trust, gained
9.60% and 11.22% respectively. Aberforth Split Level Income also benefited
from the gearing provided by its zero-dividend preference shares.
Chelverton UK Equity Income, another small-cap specialist, gained 2.99%.
Trojan Income rose 2.30%, underperforming because of its focus on
consumer-related stocks such as Diageo, Procter & Gamble, Reckitt
Benckiser and Unilever. All these investments delivered income in excess
of global equities, contributing to your Company’s ability to pay
dividends.
Equities in Europe excluding the UK outperformed, rising 9.35% in
sterling. BlackRock Continental European Income and Crux European lagged,
however, up 7.82% and 8.55% respectively although both benefited from
holding Novo Nordisk among their 10 largest investments.
Equities in Asia excluding Japan and emerging markets fell 2.91% and 1.81%
respectively in sterling, with Chinese stocks, which account for the
largest proportion of both indices, falling 11.10%. Chinese equities were
hurt by Covid lockdowns, political interference in companies to promote
wealth redistribution, so-called common prosperity, and high property
sector debts. Within your Company’s portfolio, the most resilient
performers were JP Morgan Global Emerging Markets Income Trust, JP Morgan
Emerging Market Income Fund and Somerset Asia Income, up 3.87% and down
1.88% and 2.20% respectively. Their income mandates proved defensive
during a period in which lower-yielding Chinese technology stocks such as
Tencent and Alibaba fell significantly. Matthews Asia ex Japan Dividend,
however, fell 10.21%. Its mandate permitted it to hold lower-yielding
Chinese technology stocks provided it had an above-market yield overall.
Indian stocks rose 9.99% against the trend in sterling although Stewart
Investors Indian Subcontinent Sustainability gained only 8.00%.
Your Company achieves diversification through its allocations to cash,
including dollar cash, gold equities and low-risk multi-asset holdings.
Interest income rose as your Company benefited from higher interest rates
on its deposits. BlackRock Gold & General rose 5.85% as gold prices
increased 1.77% in sterling. Trojan and EF Brompton Global Conservative,
both lower-risk holdings, fell 0.20% and 1.17% respectively.
OUTLOOK
Inflationary pressure from higher oil prices subsided somewhat in early
2023 but global economic growth is likely to slow over the year.
Employment data were strong but falls in real incomes imply inflation had
not become entrenched. Economic data in January and February 2023 were
stronger than anticipated but the lagged transmission of tighter monetary
policy may mean the full impact of tightening is yet to come. In March
2023, higher interest rates led to the collapse of Silicon Valley Bank in
the US and the forced takeover of Credit Suisse by UBS. Central banks
moved swiftly to contain the fallout and protect depositors. Banks are
generally more tightly regulated and have higher levels of capital
adequacy than at the time of the credit crisis in 2007 – 2008 but these
signs of distress may militate against tighter monetary policy. At the
end of the period under review, prospects for equities overall appeared
positive despite the likely deterioration in some companies’ earnings
because monetary policy easing was on the horizon. Emerging market
equities appeared particularly attractive because of low valuations
relative to some developed markets, signs of an end to zero-Covid polices
and potential respite from dollar strength.
Your Company holds a diversified portfolio of assets including sterling
and dollar cash, gold equities and lower-risk multi-asset investments.
Investment in private equity is currently low. At the period end, your
Company had more cash at the expense of bonds and higher allocations to
emerging market equities at the expense of US and European equities than
the average for the IA Mixed Assets 40-85% Shares peer group.
Portfolio diversification provides some protection in falling markets when
dollar cash and other low-risk investments may be sought by investors as
safe havens. At the period end, your Company had approximately £18 million
in cash. This cash is benefitting from higher deposit interest rates and
is available for investment should attractive opportunities arise. Higher
interest income and a bias towards income-oriented equity investments
support the growth in your Company’s dividend.
Brompton Asset Management Limited
21st March 2023
DIRECTORS’ REPORT
PERFORMANCE
In the six months to 31st December 2022 the total return per Ordinary
share was 0.19% (2021: 2.59%) and the NAV per ordinary share decreased
slightly to 173.50p, whilst the share price decreased by 0.40% to 124.50p.
This compares to an increase of 0.89% in the IA Mixed Investment 40-85%
Shares Index.
DIVIDEND
The Directors propose an interim dividend of 0.90p per Ordinary share in
respect of the six months ended 31st December 2022 (2021: £nil). The
dividend will be paid on 28th April 2023 to shareholders on the register
at the close of business on 31st March 2023 (ex-dividend 30th March 2023).
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 (2021: 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 ending 31st December 2022.
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 geopolitical, societal, economic and market focused
implications of the events in 2021 and 2022.
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 should reduce the
impact. Further information is given in portfolio risks below.
Macro-economic event risk: The Covid pandemic was felt globally in 2021
and 2022 although economies and markets have recovered. 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, geographic regions and through
investment funds.
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 a number of 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 Limited 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 a robust assessment of
the risks and emerging 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 interim report as the assets of the
Company consist mainly of securities that are readily realisable or cash
and it has no significant liabilities and limited financial commitments.
Investment income has exceeded 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 period 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.
RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge:
As disclosed in note 1, the annual consolidated financial statements of
the Group are prepared in accordance with International Financial
Reporting Standards (“IFRS”) as adopted by the European Union. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with International
Accounting Standard 34, "Interim Financial Reporting".
The Chairman’s statement and 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, the Investment Manager’s report and the
Directors’ 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 interim 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
21st March 2023
SCHEDULE OF TOP TWENTY INVESTMENTS at 31st December 2022
30th June Purchases/
2022 Market 31st Dec % of Net
(Sales) Movement 2022 £’000 Assets
£’000
Fundsmith Equity Fund 8,562 - 419 8,981 7.29
Polar Capital Global 7,277 - (628) 6,649 5.40
Technology
iShares Core S&P 500 3,828 991 39 4,858 3.94
UCITS ETF
Matthews Asia Ex Japan 5,158 - (563) 4,595 3.73
Fund
MI Chelverton UK Equity 4,581 - (25) 4,556 3.70
Inc Fund
EF Brompton Global
Conservative Fund (49)
4,454 - 4,405 3.57
First State Indian 3,943 - 303 4,246 3.45
Subcontinent Fund
BlackRock Continental
European Inc Fund 300
3,916 - 4,216 3.42
Aquilus Inflection Fund 4,242 - (130) 4,112 3.34
Baillie Gifford Global 3,876 - 148 4,024 3.27
Income Growth
BlackRock Gold & General 3,710 - 223 3,933 3.19
MI Somerset Asia Income 2,849 1,000 (150) 3,699 3.00
Fund
Vietnam Enterprise 2,944 968 (451) 3,461 2.81
Investments
EF Brompton Global 3,361 - 75 3,436 2.79
Equity Fund
Aberforth Split Level 3,144 - 187 3,331 2.70
Income Trust
EF Brompton Global
Opportunities Fund 65
3,198 - 3,263 2.65
EF Brompton Global 3,044 - 55 3,099 2.51
Growth Fund
MI Brompton UK Recovery
Unit Trust 101
2,798 - 2,899 2.35
Lindsell Train Japanese 2,650 1,000 (845) 2,805 2.28
Equity Fund
TM Crux European Special 2,460 - 233 2,693 2.19
Sits Fund
Man GLG UK Income Fund 2,468 - 157 2,625 2.13
82,463 3,959 (536) 85,886 69.70
Balance not held in 16,987 2,483 (58) 19,412 15.75
investments above
Total investments 99,450 6,442 (594) 105,298 85.45
(excluding cash)
Cash 24,530 (6,347) (159) 18,024 14.63
Other net current (2) (95) - (97) (0.08)
liabilities
Net Assets
123,978 - (753) 123,225 100.00
All of the above investments are investment funds with the exception of
Aberforth Split Level Income Trust and Vietnam Enterprise Investments
which are investment companies.
The investment portfolio, excluding cash, can be further analysed £’000
as follows:
Investment funds 94,942
Unquoted investments including loans of £1.2m 2,187
Investment companies and exchange traded funds 7,617
Other quoted investments 552
105,298
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31st December 2022 (unaudited)
Six months ended
31st December 2022
(unaudited)
Total
Revenue Return Capital Return
£ ‘000 Return
£ ‘000 £ ‘000
Notes
INCOME
Investment income 1,101 - 1,001
Other operating income 191 - 191
Total income 2 1,292 - 1,292
GAINS AND LOSSES ON INVESTMENTS
Losses on investments at fair
value through profit or loss 5
- (594) (594)
Legal and professional costs - - -
Other exchange gains - 99 99
Trail rebates - 1 1
1,292 (494) 798
EXPENSES
Management fees 3 (385) - (385)
Other expenses (163) - (163)
(548) - (548)
PROFIT/(LOSS) BEFORE FINANCE
COSTS AND TAX
744 (494) 250
Finance costs - - -
PROFIT/(LOSS) BEFORE TAX 744 (494) 250
Tax (9) - (9)
PROFIT/(LOSS) FOR THE PERIOD 735 (494) 241
EARNINGS/(LOSS) PER SHARE
Ordinary shares (pence) 4 1.04p (0.70)p 0.34p
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 2021 and the year ended 30th June
2022
Six months ended Year ended
31st December 2021 30th June 2022
(unaudited) (audited)
Revenue Capital Total Revenue Capital Total
Notes Return Return Return Return Return Return
£’000 £’000 £’000 £’000 £’000 £’000
INCOME
Investment income 1,001 - 1,001 1,837 - 1,837
Other operating - - - 20 - 20
income
Total income 2 1,001 - 1,001 1,857 - 1,857
GAINS AND LOSSES ON
INVESTMENTS
Gains/(losses) on
investments at fair
value through 5 - 3,114 3,114 - (15,188) (15,188)
profit or loss
Legal and - (60) (60) (60) (60)
professional costs
Other exchange - 121 121 - 1,382 1,382
gains
Trail rebates - 4 4 - 6 6
1,001 3,179 4,180 1,857 (13,860) (12,003)
EXPENSES
Management fees 3 (437) - (437) (837) - (837)
Other expenses (158) - (158) (320) - (320)
(595) - (595) (1,157) - (1,157)
PROFIT/(LOSS) 406 3,179 3,585 700 (13,860) (13,860)
BEFORE TAX
Tax (1) - (1) - - -
PROFIT/(LOSS) FOR 405 3,179 3,584 700 (13,860) (13,160)
THE PERIOD
EARNINGS PER SHARE
Ordinary shares 4 0.57p 4.48p 5.05p 0.98p (19.51)p (18.53)p
(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 2022 (unaudited)
Share Share Special Retained
premium reserve earnings
capital Total
£ ‘000 £ ‘000 £ ‘000
£ ‘000 £ ‘000
At 30th JUNE 2022 710 21,573 56,908 44,787 123,978
Total comprehensive income for - - - 241 241
the period
Dividend paid - - - (994) (994)
At 31st DECEMBER 2022 710 21,573 56,908 44,034 123,225
Included within retained earnings were £1,407,000 of Company reserves
available for distribution.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31st December 2021 (unaudited)
Share Share Special Retained
premium reserve earnings
capital Total
£ ‘000 £ ‘000 £ ‘000
£ ‘000 £ ‘000
At 30th JUNE 2021 710 21,573 56,908 58,941 138,132
Total comprehensive income for - - - 3,584 3,584
the period
Dividend paid - - - (994) (994)
At 31st DECEMBER 2021 710 21,573 56,908 61,531 140,722
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th June 2021 (audited)
Share Share Special Retained
premium reserve earnings
capital Total
£ ‘000 £ ‘000 £ ‘000
£ ‘000 £ ‘000
At 30th JUNE 2021 710 21,573 56,908 58,941 138,132
Total comprehensive income for - - - (13,160) (13,160)
the year
Dividend paid - - - (994) (994)
At 30th JUNE 2022 710 21,573 56,908 44,787 123,978
CONSOLIDATED BALANCE SHEET
at 31st December 2022
31st December 31st December 30th June
2022 2021 2022
Notes
(unaudited) (unaudited) (audited)
£ ‘000 £ ‘000 £ ‘000
NON-CURRENT ASSETS
Investments at fair value
through profit or loss
5 105,298 135,726 99,450
CURRENT ASSETS
Other receivables 152 126 258
Cash and cash equivalents 18,024 5,139 24,530
18,176 5,265 24,788
TOTAL ASSETS 123,474 140,991 124,238
CURRENT LIABILITIES
Other payables (249) (269) (260)
TOTAL ASSETS LESS CURRENT
LIABILITIES
123,225 140,722 123,978
NET ASSETS 123,225 140,722 123,978
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 44,034 61,531 44,787
TOTAL EQUITY 123,225 140,722 123,978
NET ASSET VALUE PER ORDINARY 7 173.50p 198.13p 174.56p
SHARE (PENCE)
The interim report was approved and authorised for issue by the Board on
21st March 2023.
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31st December 2022
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2022 2021 2022
(unaudited) (unaudited) (audited)
£ ‘000 £ ‘000 £ ‘000
NET CASH INFLOW FROM OPERATING 831 517 673
ACTIVITIES
INVESTING ACTIVITIES
Purchase of investments (6,442) (2,885) (11,861)
Sale of investments - - 26,950
Legal and professional costs - (60) (60)
NET CASH (OUTFLOW)/INFLOW FROM INVESTING ACTIVITIES
FINANCING (6,442) (2,945) 15,029
Equity dividend paid (994) (994) (994)
NET CASH (OUTFLOW)/INFLOW AFTER
FINANCING (6,605) (3,422) 14,708
(DECREASE)/INCREASE IN CASH (6,605) (3,422) 14,708
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
(Decrease)/increase in cash (6,605) (3,422) 14,708
resulting from cash flows
Exchange movements 99 121 1,382
Movement in net funds (6,506) (3,301) 16,090
Net funds at start of period/year 24,530 8,440 8,440
NET FUNDS AT END OF PERIOD/YEAR 18,024 5,139 24,530
RECONCILIATION OF PROFIT BEFORE FINANCE COSTS AND TAXATION TO NET CASH
FLOW FROM OPERATING ACTIVITIES
Profit/(loss) before finance costs 250 3,585 (13,160)
and taxation *
Losses/(gains) on investments 594 (3,114) 15,188
Exchange gains (99) (121) (1,382)
Legal and professional costs - 60 60
Capital trail rebates (1) (4) (6)
Revenue profit before finance 744 406 700
costs and taxation
Decrease/(increase) in debtors 106 109 (30)
Decrease in creditors (11) (1) (10)
Finance costs - (1) -
Taxation (9) - 7
Capital trail rebates 1 4 6
NET CASH INFLOW FROM OPERATING 831 517 673
ACTIVITIES
* Includes dividends received in cash of £1,012,000 (30th June 2022:
£1,653,000) (2021: £963,000), accumulation income of £188,000 (30th June
2022: £149,000) (2021: £140,000) and interest received of £189,000 (30th
June 2022: £20,000) (2021: £1,000).
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 31st December 2022
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 ended 31st December
2022. The comparative information for the six months ended 31st December
2021 and the year ended 30th June 2022 are a condensed set of accounts and
do not constitute statutory accounts under the Companies Act 2006. Full
statutory accounts for the year ended 30th June 2022 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 2022,
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 2022 Six months ended
31st December 2021 2022
£’000
£’000
£’000
Income from
Investments
UK net dividend 952 900 1,581
income
Unfranked investment 125 85 219
income
UK fixed interest 24 16 37
1,101 1,001 1,837
Other Income
Bank interest 191 - 20
receivable
191 - 20
Year ended
Six months ended 31st December 30th June
2022 Six months ended
31st December 2021 2022
£’000
£’000
£’000
Total income
comprises
Dividends 1,101 985 1,800
Other income 191 16 57
1,292 1,001 1,857
3. MANAGEMENT FEES
Year ended
Six months ended 31st 30th June
December 2022 Six months ended
31st December 2021 2022
£’000
£’000
£’000
Investment 385 437 837
management fee
385 437 837
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).
4. RETURN PER ORDINARY SHARE
Year ended 30th
Six months ended June
31st December 2022 Six months ended
31st December 2021 2022
£’000
£’000
£’000
Revenue return 735 405 700
Capital return (494) 3,179 (13,860)
Total return 241 3,584 (13,160)
Weighted average
number of Ordinary 71,023,695 71,023,695 71,023,695
shares
Revenue return per 1.04p 0.57p 0.98p
Ordinary share
Capital return per (0.70)p 4.48p (19.51)p
Ordinary share
Total return per 0.34p 5.05p (18.53)p
Ordinary share
5. INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS
At At At
31st December 31st December 30th June
2022 2021
2022
£’000 £’000
£’000
GROUP AND COMPANY 105,298 135,726 99,450
ANALYSIS OF INVESTMENT
PORTFOLIO
Six months ended 31st December
2022
Total
Quoted* Unquoted**
(level 1 and (level 3)
2)
£’000 £’000
£’000
Opening book cost 70,896 10,099 80,995
Opening investment holding 25,941 (7,486) 18,455
gains/(losses)
Opening valuation 96,837 2,613 99,450
Movement in period:
Purchases at cost 6,092 350 6,442
Sales
- Proceeds - - -
- Realised gains on sales - - -
Movement in investment holding 182 (776) (594)
gains/(losses)
Closing valuation at 31 December 103,111 2,187 105,298
2022
Closing book cost 76,988 10,449 87,437
Closing investment holding 26,123 (8,262) 17,861
gains/losses
Closing valuation 103,111 2,187 105,298
* 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 £4,112,000 (30th June 2022 £4,242,000) (2021:
£4,632,000).
** The Unquoted investments, representing just under 2% of the Company’s
NAV, have been valued in accordance with IPEVC valuation guidelines. The
largest unquoted investment amounting to £700,000 (30th June 2022:
£957,000) (2021: £14,842,000) was valued at recent transaction price. The
second largest investment has also been valued at recent transaction
price. A 10% increase or decrease in the earnings of any of these
investments would not have a material impact on the valuation of those
investments.
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 Six months ended
ended ended
30th
31st December 31st December
2022 2021 June
£’000 £’000 2022
£’000
ANALYSIS OF CAPITAL (LOSSES)/GAINS
Realised gains on sales of - - 18,375
investments
(Decrease)/increase in investment (594) 3,114 (33,563)
holding gains
(594) 3,114 (15,188)
6. RETAINED EARNINGS
At At
At
31st December 2022 30th June
31st December 2021
£’000 2022
£’000
£’000
Capital reserve – realised 24,766 5,381 24,666
Capital reserve – 17,861 55,132 18,455
revaluation
Revenue reserve 1,407 1,018 1,666
44,034 61,531 44,787
7. NET ASSET VALUE PER ORDINARY SHARE
31st December 30th June
2022 31st December
2021 2022
£’000
£’000 £’000
Net assets attributable to Ordinary
shareholders
123,225 140,722 123,978
Ordinary shares in issue at end of
period 71,023,695 71,023,695 71,023,695
Net asset value per Ordinary share 173.50p 198.13p 174.56p
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
LLP.
The total investment management fee payable to Brompton for the half year
ended 31st December 2022 was £385,000 (30th June 2022: £837,000) (2021:
£437,000) and at the half year £192,000 (30th June 2022: £193,000) (2021:
£219,000) was accrued.
The Group’s investments include seven funds managed by Brompton or its
associates valued at £21,697,000 (30th June 2022: £24,451,000) (2021:
£24,194,000). No investment management fees were payable directly by the
Company in respect of these investments.
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Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
══════════════════════════════════════════════════════════════════════════
ISIN: GB0002631041
Category Code: IR
TIDM: NSI
Sequence No.: 231525
EQS News ID: 1588237
End of Announcement EQS News Service
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