REG - North Atlantic Smlr - Final Results
07/05/2025 07:00
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RNS Number : 5805H North Atlantic Smlr Co Inv Tst PLC 07 May 2025
North Atlantic Smaller Companies Investment Trust plc (the "Company")
Financial Results for the Year Ended 31 January 2025
The Company today announces its financial results for the full year ended 31
January 2025.
Company Registered 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 January 2025 % change 31 January 2024 31 January 2023 31 January 2022 31 January 2021
return
Return for the year (£'000) 41,920 1,851.6% 2,148 (91,038) 64,906 130,078
Basic return per 5p Ordinary Share:*
- Revenue 112.91 24.9% 90.39 32.65 9.94 3.76
- Capital 201.75 370.8% (74.49) (699.41) 456.30 916.57
Dividend per 5p Ordinary Share (declared) 88.0p** 68.5p 22.0p nil nil
assets
Net assets (£'000) 713,504 3.4% 690,230 693,356 789,466 742,230
Net asset value ("NAV") per 5p Ordinary Share:†
Basic and Diluted 5,397p 5.3% 5,127p 5,097p 5,779p 5,292p
Basic and Diluted adjusted‡ 5,740p 6.5% 5,391p 5,236p 5,856p 5,355p
Mid-market price of the 5p Ordinary Shares 3,750p 1.6% 3,690p 3,900p 4,330p 3,850p
discount to net asset value 30.5% 28.0% 23.5% 25.1% 27.2%
discount to adjusted net asset value 34.7% 31.6% 25.5% 26.1% 28.1%
indices and exchange rates at 31 January
Standard & Poor's 500 Composite Index 6,040.5 24.7% 4,845.7 4,076.6 5,515.6 3,714.2
Russell 2000 Index 2,287.7 17.5% 1,947.3 1,931.9 2,028.5 2,073.6
US Dollar/Sterling exchange rate 1.24255 (2.4%) 1.27330 1.23065 1.34180 1.37295
Standard & Poor's 500 Composite Index - Sterling adjusted 4,850.3 27.3% 3,810.1 3,307.3 3,360.5 2,709.5
Russell 2000 - Sterling adjusted 1,836.9 20.0% 1,531.2 1,567.4 1,509.6 1,512.7
* Please refer to note 7 for details on how the basic return per 5p Ordinary
Share is calculated.
** Declared 27 February 2025.
† Please refer to note 7 for details on how the net asset value per 5p
Ordinary Share is calculated.
‡ Adjusted to reflect Oryx International Growth Fund Limited ("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 7.
strategic report - corporate summary
introduction
North Atlantic Smaller Companies Investment Trust plc ("NASCIT") is an investment trust, the shares of which are listed on the London Stock Exchange.
objective and investment strategy
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. The Company invests in both listed and
unquoted companies.
company's business
The Company is an investment company within the meaning of Section 833 of the
Companies Act 2006 and its business is that of an investment trust.
risk
Investment in small companies is generally perceived to carry a greater risk
than investment in large companies. This is reasonable when comparing
individual companies, but is much less so when comparing the volatility of
returns from a diversified portfolio of companies. The Board believe that the
Company's portfolio is diversified although considerably less liquid than a
portfolio of large-cap listed equities.
The Company has the ability to utilise gearing in the form of term loan
facilities, although no facility currently exists. Gearing has the effect of
accentuating market falls and gains.
The Company outsources all of its main operational activities to recognised
third party providers.
AIFMD
The Company is authorised and regulated by the Financial Conduct Authority.
The Company has been a full scope internally managed AIF with effect from 1
October 2021 under the Alternative Investment Fund Managers Regulations 2013.
For further information see page 22.
company secretary
SGH Company Secretaries Limited.
website
www.nascit.co.uk (http://www.nascit.co.uk)
strategic report - directors
Sir Charles Wake ¹ Non-Executive Chairman. Appointed 27 June 2018 and became
Chairman on 25 February 2022. Started as a management trainee with Whitbread's
in 1972 and left in 1980. Since then he has been a director of various
companies including sheet metal engineers, motor retailers, off-licences,
pubs, bonded warehouses, farming and healthcare. He was chairman of St
Andrew's Healthcare from 2004-2014 having been on the board since 1991.
Christopher H B Mills Chief Executive and Investment Manager. Appointed
January 1984. He is Chief Investment Officer of Harwood Capital LLP including
its subsidiaries. In addition, he is a non-executive director of numerous UK
companies which are either now or have in the past five years been publicly
quoted, further details of which are included in note 15 of the financial
statements.
The Lord Howard of Rising ¹³ Non-Executive Director. Appointed November
2015. He is a member of the House of Lords and a District Councillor for the
Borough Council of Kings Lynn & West Norfolk, as well as being a landowner
and farmer. He was formerly a director of The Keep Trust and Fortress Trust.
G Walter Loewenbaum (USA) ¹²³ Non-Executive Director. Appointed on 31
October 2017. As an investment banker and private equity investor, Mr
Loewenbaum has worked with multiple companies in a variety of different
industries at different phases of organisational development, ranging from
startup to publicly traded. He brings a depth of knowledge in serving as
chairman for public and private companies, building stockholder value and
capital market considerations.
Peregrine D E M Moncreiffe Non-Executive Director. Appointed November 2008
(having previously been a Director of the Company from 1993-2006) and served
as Chairman from June 2009 until 25 February 2022. He has over the years
worked in London, New York and East Asia, with Credit Suisse First Boston,
Lehman Brothers and Buchanan Partners.
Professor Fiona Gilbert ¹²³(4) Non-Executive Director. Appointed 6
September 2022. She is Professor of Radiology and Head of the Department at
the University of Cambridge. Professor Gilbert leads a team of researchers in
various fields of radiology assessing new imaging technologies and has over
250 scientific publications and over £20M in research income. She works in
the NHS as an honorary consultant with expertise in musculoskeletal and breast
imaging. She holds non-executive positions on several private company boards.
Julian Fagge ¹²(4) Non-Executive Director. Appointed 20 June 2023. Mr Fagge
has over 25 years' experience within global blue-chip and FTSE 100 plc
environments. He is currently President of Smiths Interconnect, a division of
Smiths Group PLC, having formerly held positions within Smiths including
President of Flex-Tek, Strategy & M&A Director, and Group Financial
Controller. Prior to this, he spent time at Royal Caribbean Cruises and at
Procter & Gamble. Mr Fagge is a Chartered Accountant and holds a degree
from Edinburgh University.
¹ Independent
² Member of the Audit Committee
³ Member of the Remuneration Committee
(4) Member of the ESG Committee
strategic report - chairman's statement
During the year under review, the net asset value adjusted for the dividend
paid rose by 6.5% which compares unfavourably with the Sterling Adjusted
Standard & Poor's Index but a modest outperformance of appropriate United
Kingdom indices where the majority of the trust's quoted assets are invested.
The revenue account for the period showed a surplus post taxation of
£15,042,000 (2024: £12,210,000) and an interim dividend of 88.0p has been
declared in respect of the year ending January 2025 (2024: 68.5p). Your
directors are not proposing a final dividend.
Your directors are seeking to improve liquidity of shares in the trust and
have therefore recommended a 10 for 1 share sub-division which will require
shareholder approve at the AGM. Full details of the sub-division will follow
when the AGM Notice is released.
During the year, 241,575 shares (2024: 140,493) were acquired at a substantial
discount to the net asset value. This policy has continued into the current
financial year. This benefits all long term shareholders by creating an
immediate uplift in the net asset value per share. At the forthcoming AGM
shareholders will once again be asked to support a Rule 9 waiver allowing the
company to continue to repurchase shares without requiring our Chief
Executive, and persons and companies presumed to be acting in concert with
him, to make a mandatory offer under Rule 9 of the Takeover Code for the
company. This proposal, and the background surrounding it, are outlined in a
separate circular being sent to shareholders (excluding the largest
shareholder who is disqualified from voting). Although 19.81% of eligible
shareholder proxy votes voted against this resolution at the last Annual
General Meeting, the Board will continue to give shareholders the opportunity
to vote on this resolution as long as it believes that the majority of
shareholders who are able to vote will continue to support the resolution at
forthcoming AGM's.
In my last report, I stated that expected interest rates would remain higher
for longer and despite the recent reduction in short term rates, it is
increasingly obvious that future reductions will fail to meet consensus
expectations of only a few months ago.
Inflation is not falling as fast as Anglo-Saxon governments had hoped whilst
the expectations of larger than expected government deficits, combined with
the need to refinance historic debt, creates further risk to financial
markets.
The fact that this debt is now being refinanced at higher interest rates than
was originally expected, as the ten year debt rate has risen to multi year
highs (despite falling back modestly recently), creates additional
uncertainty. Inevitably higher long term rates impact the value of future cash
flows which inevitably creates a headwind to equity valuations.
In the United Kingdom these headwinds are compounded by government policies
which pretend to be supportive of growth but are more than likely to achieve
exactly the opposite. The Chancellor's last budget unleashed a massive
increase in employment costs to the private sector which, given the almost
stagnant economic outlook, will be difficult to pass on. The leisure and
retail sectors in particular which, fortunately, the trust has minimal
exposure to, are likely to face disruption and bankruptcies.
Against this background it is hardly surprising that domestic equities face a
tough economic environment where even a modest profit warning can result in a
total collapse in the share price.
Sadly, UK small and midcap equities have further challenges as many fund
managers face redemptions as clients reorientate their portfolio to more
liquid global equities.
Whilst both the recent Conservative government and now the Labour government
pay lip service to supporting the UK equity market, there is to date little
substance to this. Indeed, the Labour Party's recent reduction in tax
incentives for AIM listed companies and their cancellation of plans for a
British ISA suggests that they are moving in precisely the opposite direction.
Your Board have been discussing these issues with your manager over the past
year and have gained comfort from the fact that many of the UK businesses held
in the trust secure a substantial proportion of their profits from outside the
UK. Others should benefit from the manager's shareholder activism with Carr's
Group being a recent case in point.
Your directors continue to monitor the ongoing discount to the net asset value
that the company trades on. The trust has increased transparency through more
frequent announcements covering new investments and disposals, as well as
significant developments in portfolio companies that are in the public domain
with the expectation this will lead to a better understanding of the trust's
portfolio. Our share buyback programme will hopefully reduce this discount
over time but this comes at the expense of making our own shares more
illiquid, which in turn adversely impacts the discount.
Your directors also believe it is important to continue to make new
investments and, where appropriate, continue to support existing ones as we
are firmly of the belief that this will add more value than buying back shares
over the longer term. The Board has agreed that at Mr Mills' retirement it
will prioritise share buy-backs over new investments as long as the
substantial discount persists.
In conclusion, it is hard to be optimistic about the UK domestic market but I
am confident that your Chief Executive understands the headwinds that the
trust faces and can continue to grow our asset value over the coming year
despite the difficult environment.
Sir Charles Wake
Chairman
6 May 2025
strategic report - investment manager's report
The market background for equities in the financial year ending January 2025 was little different from the previous year with domestic companies suffering from higher for longer interest rates and increases in National Insurance and the minimum wage. Furthermore, redemptions from the sector both reduced liquidity and increased volatility, particularly if a company announced disappointing results.
Although there were a large number of takeovers in the year ending January 2025, unlike the previous year, the trust only had limited exposure to these corporate events. This will hopefully change in the coming financial year.
quoted portfolio UK
Stocks that performed notably well during the year include Hargreaves Services
(now the trust's largest holding), Paypoint, Pinewood Technologies and TP ICAP
as they exceeded market expectations.
The trust has a substantial exposure to fund management businesses. Assetco
performed poorly but the recent announcement that its large holding in
Parmenion is being given to shareholders should result in a significant
recovery in value over the coming months. Frenkel Topping was also
disappointing falling by 25% as profits missed forecasts and clients became
increasingly risk adverse placing funds into lower margin money market funds.
Notwithstanding this, the group achieved record new fund inflows, which bodes
well for 2025 and beyond. Fortunately, our largest investment Polar Capital
performed well which together with a dividend yield of circa 9% largely
compensated for the above challenges.
The trust's modest exposure to property performed satisfactorily as PRS Reit
has received a takeover approach and Palace Capital and Real Estate Investors
continue their liquidation process.
In our healthcare portfolio Spire, NIOX and EKF all performed at least in line
with market expectations but sadly this was not reflected in their share
prices.
Finally, recent investments in NCC and Restore have been flat since
acquisition but we believe they are both high quality companies with excellent
free cash flow, trading at significant discount to their private market value.
quoted portfolio USA
The United States portfolio is limited to a single stock, Mountain Commerce
Bancorp, which performed well during the period rising by 18%.
unquoted portfolio UK
There is relatively little to report on the UK portfolio. Spring had a
somewhat tougher year but its overall performance remains excellent. Source
Bioscience was the standout performer rising in value by circa 50% after
adjusting for a capital repayment due to excellent results. Furthermore, the
company has entered the current year well placed to have an even better
performance in fiscal 2025-26.
No new investments were made either directly or through our private equity
funds as we have exercised caution following the change of government.
Notwithstanding this, we are now looking at a number of transactions which we
believe are attractive as the economic outlook becomes more quantifiable.
US private equity
Performance Chemicals was taken over during the year at an uplift to the
January 2024 valuation and we are currently negotiating the sale of Jaguar
which will hopefully conclude in the near future.
The standout performance was, however, Crest Foods which was acquired early
last year. Since acquisition the company has secured several new long term
contracts which will add very materially to future years profitability. In
addition, the base business continues to perform in line with expectations at
the time of the acquisition.
liquidity
The trust continues to have very substantial cash resources which we expect to
put to good use as appropriate opportunities arise.
conclusion
The threat and then the announcement by President Trump of tariffs potentially
undermining the world order of the last eighty years has resulted in a very
substantial, and largely indeterminate, fall in equity values. This will
inevitably lead to many businesses having to adjust their business models.
It is still too early to understand the full implications for the global
economy but a period of stagflation is a real risk.
The Trust has for a number of years maintained substantial cash balances.
However, given the collapse in UK, the value of UK equities due to mass
redemptions and the panic that is spreading across equity markets courtesy of
President Trump, I believe now is the right time to start to deploy our
liquidity into companies where we either understand the financial impact of a
potential global trade war or where there is little or no impact.
Obviously, calling a bottom in markets is never easy and we will cautiously
deploy our liquid reserves. However, I believe there is considerable intrinsic
value in our portfolio as evidenced by the bid approach to NIOX and the
potential sale of the nuclear business at Carr's.
We are hopeful that further evidence of the value of the businesses we have
invested in will become evident over the course of the coming year.
Christopher Mills
Chief Executive & Investment Manager
6 May 2025
strategic report - sector analysis of investments at fair value
as at 31 January
equities, convertible securities & loan stocks as a % of total portfolio United States United Kingdom Total Total
valuation
31 January 2025 31 January 2025 31 January 2025 31 January 2024
% % % %
Financial Services* - 26.2 26.2 28.2
Industrial Goods and Commercial Services 5.2 8.6 13.8 11.7
Banks 1.0 11.8 12.8 13.2
Pharmaceuticals and Health Care - 11.2 11.2 13.6
Consumer Products and Services 5.0 2.7 7.7 8.0
Transport, Travel & Leisure - 6.1 6.1 5.3
Technology and Software - 4.5 4.5 1.8
Real Estate - 3.8 3.8 1.8
Insurance - 3.3 3.3 4.0
Automobiles and Parts - 0.5 0.5 -
Telecommunications - 0.4 0.4 0.5
Oil and Gas 0.1 - 0.1 2.0
11.3 79.1 90.4 90.1
treasury bills 9.6 - 9.6 9.9
total at 31 January 2025 20.9 79.1 100.0
total at 31 January 2024 22.2 77.8 100.0
* Includes Investment Trusts.
strategic report - twenty largest investments
as at 31 January
equities (including convertibles, loan stocks and related financing) At fair value £'000
Oryx International Growth Fund Limited* UK Quoted 81,750
Hargreaves Services Plc UK Quoted 42,427
Harwood Private Equity V LP UK Unquoted 36,593
Crest Foods US Unquoted 35,105
Polar Capital Holdings Plc UK Quoted 35,070
TP ICAP Group plc UK Quoted 27,250
Odyssean Investment Trust Plc UK Quoted 24,960
MJ Gleeson Group plc UK Quoted 24,400
EKF Diagnostics Holdings plc UK Quoted 24,000
Conduit Holdings Limited UK Quoted 22,750
ten largest investments 354,305
Niox Group Plc UK Quoted 21,000
Harwood Private Equity IV LP UK Unquoted 19,800
SMT Corporation US Unquoted 18,056
Paypoint Plc UK Quoted 14,220
Pinewood Technologies Group Plc UK Quoted 13,431
Frenkel Topping Group Plc UK Quoted 13,423
Restore Plc UK Quoted 13,376
Carr's Group Plc UK Quoted 12,927
Harwood Private Capital UK LP UK Unquoted 12,919
Spire Healthcare Group Plc UK Quoted 11,700
twenty largest investments 505,157
Aggregate of other investments at fair value 123,816
628,973
US Treasury Bills 66,445
total 695,418
* incorporated in Guernsey.
All investments are valued at fair value.
strategic report - unquoted investments profile
as at 31 January
At fair value £'000
Harwood Private Equity V LP (UK) Cost: £16,100,000 36,593
Harwood Private Equity V LP (HPE5) was established in 2020 with committed
capital of £160 million. The fund has made 11 investments to date in the
property services, medical packaging, pet food, data center, green energy,
gardening products, electronic components, food ingredients healthcare
industries. The Trust's commitment to the fund was £40 million which is now
fully drawn. Since the investment has been made, HPE5 has distributed £23.9
million to date.
Crest Foods Cost: £22,883,000 35,105
Crest Foods is a food ingredients and food packaging company operating through
three divisions. The Ingredients division (52% of sales in FY24) develops and
manufactures proprietary dairy stabiliser formulations for US dairy
manufacturers of sour cream, cottage cheese, cream cheese, yoghurt,
protein-based drinks, and other dairy-based products. The Contract Packaging
division (41% of FY24 sales) provides contract packaging services to US food
manufacturers of branded and private-label dry-food products. The Consumer
Products division (7% of sales) develops, through an in-house R&D lab, and
manufactures turn-key dry-food products for US branded food companies. Crest's
headquarters and production facilities are based in Ashton, Illinois.
NASCIT and HPE5 acquired the company in an off-market transaction in February
2024, and the business has performed well throughout 2024. The Ingredients
division generates high-margin, stable income with strong customer retention
through proprietary, customer-bespoke stabiliser formulations, with organic
growth through product innovation and increasing end-product demand. Contract
Packaging experienced strong growth in revenues and profitability, recovering
from a modestly disruptive post-Covid period. Consumer Products and Contract
Packaging both won several large contracts towards the end of 2024 which
should underpin further strong growth in 2025 and beyond.
The valuation was written up during the year reflecting favourable valuation
metrics for the dairy ingredients sector and the strong business performance
overall and for Contract Packaging and Consumer Products in particular.
Carried forward 71,698
At fair value £'000
Brought Forward 71,698
Harwood Private Equity IV LP (UK) Cost: £9,609,000 19,800
Harwood Private Equity IV LP (HPE4) was established in June 2015 with
committed capital of £152.5 million. The Company made a £40 million
commitment to HPE4, which is now fully drawn. HPE4 invests primarily in small
and lower mid-market companies. HPE4 is looking to exit its three remaining
investments with one expected to close in the near future.
SMT Corporation - 11% Loan Notes (US) & 15% Loan Notes (US) Cost: £19,088,000 18,056
SMT is a value-added supplier of high-reliability, obsolete and hard to find
defense, aerospace, and high-end critical electronic components that it
locates, tests, certifies, and distributes. The company benefits from the
increasing awareness of counterfeit and cloned components in the US military
supply chain, geopolitical tensions, and the scarcity of counterfeit testing
capacity. The loan value is below cost due to the dollar weakening since the
investment was made.
Harwood Private Capital UK LP (UK) Cost: £12,067,100 12,919
The fund was established in 2020 with committed capital of £70 million. It
is intended that all new sterling debt-type investments are made through the
fund which is targeting an IRR in excess of 12%. The fund has made 9
investments to date including two investments in 2024, a leisure marina
business and a food hall restaurant operator. In addition, it has just called
the capital to make its tenth investment into a niche tour operator.
In 2024, the Fund had its first realisation, Principal Logistics Technologies.
This exit generated a return of 24% IRR/1.8x Money Multiple which provided
NASCIT with a profit of £2.0 million. NASCIT's commitment to the fund is
£20.0 million, of which £3.2 million is undrawn following the latest
capital call.
Carried forward 122,473
At fair value £'000
Brought Forward 122,473
Spring Investments LP (UK) Cost: £4,391,000 9,968
This is a specialty manufacturer of pharmaceuticals for the NHS. The company
continues to perform very strongly. After record profits were achieved in
fiscal for 2023/2024 the business slowed down in 2024/2025 as backlogs in the
NHS were wound down. Notwithstanding this, the company expects to return of
shareholder value in the medium term.
SourceBio International Limited Cost: £8,616,000 9,600
Source Bio International is a leading international provider of integrated
laboratory services and products to clients in the healthcare, clinical, life
science research and biopharma industries, with a focus on patient diagnosis,
management, and care. The Group is headquartered in Nottingham, with
facilities in the UK and US. During the year, the stability storage division
was sold at a price ahead of expectation. The proceeds were distributed in
March 2024 of which the Trust's share was £2.28 million. 2024 saw a very
substantial improvement in profitability with further significant progress
anticipated in the current year.
CoventBridge Group - 10% Loan Notes (US) Cost: £7,639,000 8,249
CoventBridge is a provider of insurance claims, healthcare network and
government reimbursement integrity services. Its clients include global
insurance carriers, third party administrators, healthcare networks and
government agencies. The company performed broadly in line with expectations
although new contracts were disappointing. The company is paying down our debt
and this will continue in the current year.
Carried forward 150,290
At fair value £'000
Brought Forward 150,290
3BL Media Limited - 13% Loan Notes (US) Cost: £6,123,000 6,065
3BL is a cloud-based digital marketing software-as-a-service (SaaS) platform
dedicated to corporate social responsibility (CSR) communications. It provides
targeted multi-channel media content distribution for global corporate and
other major international organisations in their adoption of environmental,
social and governance (ESG) best practices. The loss reflects the weakness of
the dollar since the investment was made.
Oryx International Growth Fund Limited - 6% Loan Notes (UK) Cost: £6,000,000 6,000
Oryx International Growth (OIG) Fund is a closed ended investment company, and
its shares are admitted to the Official List and to trading on the main market
of the London Stock Exchange. The investment objective is to consistently seek
high absolute returns while maintaining a low level of risk, principally
through investment in medium and small quoted and unquoted companies in the
United Kingdom and United States. NASCIT has provided a loan to OIG while
waiting for proceeds from a sale from an underlying investment to be received.
The loan was fully repaid in early February 2025.
Sportech Limited Cost: £6,061,000 4,752
The company operates sport betting and other gaming services in the US mainly
in Connecticut. The company was delisted from the stock market in October 2023
as the costs associated with the listing given the limited float was
disproportionate to the size of the company. The holding is valued at a
discount to management's estimate of the breakup of the business. The company
made a substantial return of capital in 2024, and we remain hopeful that it
will be sold within twelve months.
Jaguar Holdings Ltd (US) Cost: £1,714,000 3,750
The company provides food services to major US airlines through
Los Angeles, Memphis, and Indianapolis. Principal clients include United
Continental, Jet Blue and Federal Express, and the company won several smaller
contracts with other airlines in 2024. With these contract wins and expected
growth in customer flight volumes the company expects to see material growth
in 2025.
Carried forward 170,857
At fair value £'000
Brought Forward 170,857
Specialist Components Limited (UK) Cost: £2,740,000 2,622
Specialist Components Limited, the acquirer of the previously listed APC
Technology Group, is a trusted supplier of reliable, high quality and
technologically advanced components and products. The company has a range of
clients in the public and private sectors, within aerospace, space, defence,
industrial, real estate, financial, logistics and healthcare sectors. The
company's performance has continued to improve over the course of the past
year and are expected to benefit from ongoing supply chain issues and higher
defence spending.
Hampton Investment Properties (UK) Cost: £2,534,000 792
The company continues with its programme of liquidation. Heads of Terms have
been signed for the disposal, subject to planning permission. The basis of
valuation is anticipated to be a modest discount to realisable value. On
successful completion the company will be liquidated. We had hoped planning
would have occurred in 2024, but it has slipped back and is now likely for the
third quarter of 2025.
Carried forward 174,271
Other unquoted investments at fair value - (Performance Chemical earn out, Trident Private Equity 3, WEP Superior Industrial Maintenance Co and SINAV). 1,554
Total value of unquoted investments at fair value* 175,825
* Includes unquoted loan notes in these companies with a total value of
£49,845,000.
strategic report
The Directors present the strategic report of the Company for the year ended
31 January 2025.
principal activity
The Company carries on business as an investment trust and its principal
activity is portfolio investment.
objective
The Company's objective is to provide capital appreciation to its shareholders
through investing in a portfolio of smaller companies which are based
primarily in countries bordering the North Atlantic Ocean.
strategy
In order to achieve the Company's investment objective, the Manager uses a
stock specific approach in managing the Company's portfolio, selecting
investments that he believes will increase in value over a period of time,
whether that be due to issues in the management of the businesses which he
believes can be improved by shareholder engagement and involvement or simply
due to the fact that the stock is undervalued and he can see potential for
improvement in value over the long term. The Company may invest in both quoted
and unquoted companies. At present, the investments in the portfolio are
principally in companies which are located either in the United Kingdom or the
United States of America. Typically the investment portfolio will comprise
between 40 and 50 securities.
investment policy
While pursuing the Company's objective, the Manager adheres to the following:
1. the maximum investment limit is 15% of the Company's investments in
any one company at the time of the investment;
2. gearing is limited to a maximum of 30% of net assets;
3. the Company may invest on both sides of the Atlantic, with the
weighting varying from time to time;
4. the Company may invest in unquoted securities as and when
opportunities arise and again the weighting will vary from time to time.
investment restrictions
The Company has not adopted any specific investment restrictions, and the
Company's investments may be highly concentrated. However, the Manager has put
in place internal limitations to control risk and to manage diversification
with the aim of allowing it to operate within parameters that it believes are
wide enough for it to generate target returns but which are suitable to
prevent undue risk.
investment approach
The Company invests in a diversified range of companies, both quoted and
unquoted, on both sides of the Atlantic in accordance with its objective and
investment policy.
Christopher Mills, the Company's Chief Executive and Investment Manager, is
responsible for the construction of the portfolio and principle investments
are discussed in his report on page 6 and 7. The top twenty largest
investments by current valuation are listed on page 9.
When analysing a potential investment, the Manager will employ a number of
valuation techniques depending on their relevance to the particular
investment. A key consideration when deciding on a potential investment would
be the sustainability and growth of long term cash flow. The Manager will
consider the balance of quoted and unquoted securities in the portfolio when
deciding whether to invest in an unquoted stock as he is aware that the level
of risk in unquoted securities may be considered higher.
In respect of the unquoted portfolio, regular contact is maintained with the
management of prospective and existing investments and rigorous financial and
business analysis of these companies is undertaken. It is recognised that
different types of business perform better than others depending on economic
cycles and market conditions and this is taken into consideration when the
Manager selects investments and is therefore reflected within the range of
investments in the portfolio. The Company attempts to minimise its risk by
investing in a diversified spread of investments whether that spread be
geographical, industry type or quoted or unquoted companies.
best execution
The Company as the operator of a closed-ended investment trust has considered
the rules on best execution as noted in the Financial Services Markets Act
2000 and COBS 11.2 of the FCA Handbook. The Company has determined that the
rules on performing best execution do not apply to the Company when, acting in
the capacity of operator of an internally managed AIF (regulated collective
investment scheme), it purchases or sells units in that AIF/scheme.
borrowing and leverage
The Company does not intend to incur borrowings as part of its investment
strategy.
However, in the event that it did employ leverage for working capital
purposes, any such borrowings incurred will not remain outstanding for more
than 60 calendar days. In each such case, leverage may be obtained on an
unsecured or secured/collateralised basis. The Company is not otherwise
expected to engage in borrowing or make use of leverage.
The Company's borrowing and leveraging capacity is limited to an amount equal
to: 30% of the net asset value of the Company when calculated in accordance
with the "commitment" method set out in the AIFMD Rules.
The calculation and disclosure of such maximum leverage limits is required in
order to satisfy the requirements of the AIFMD Rules. However, the Investment
Manager expects the typical leverage levels to be lower than the maximum
levels stated above, and generally not to exceed 10% of the Company's net
asset value. The Investment Manager will inform investors to the extent such
leverage limits are exceeded in accordance with the AIFMD Rules.
The Company does not currently grant any guarantee under any leveraging
arrangement. The grant of any such guarantee would be disclosed to investors
in accordance with the AIFMD Rules. Save as set out herein, there are no
restrictions on the Company's use of leverage, by borrowing or otherwise,
other than those which may be imposed by applicable law, rule or regulation.
changes to the investment policy, investment restrictions and investment approach
Changes to the investment policy, investment restrictions and investment
approach of the Company as set out above may be made by the Directors. Changes
believed by the Directors to be material will be notified to investors in
advance of the change taking effect.
financial instruments
The financial instruments employed by the Company primarily comprise equity
and loan stock investments, although it does hold cash and liquid instruments.
Further details of the Company's risk management objectives and policies
relating to the use of financial instruments can be found in note 14 to the
financial statements on pages 69 to 77.
delegated activities
The Company being internally managed has not delegated the provision of
portfolio management and risk management functions but does rely on third
party services providers to provide ancillary services to support the
activities of the company. As a result, the Company will continue to act as an
internally managed AIFM of the Company for the purposes of the FCA Rules in
accordance with the Investment Management Agreement.
depositary
The Company has appointed Bank of New York Mellon (BNYM) as depositary for the
quoted securities deposited for safekeeping with BNYM or with any third party
appointed by BNYM and to hold cash in accordance with the terms of its
agreement.
any conflicts of interest that may arise from such delegations
From time to time conflicts may arise between the Depositary and the
delegates, for example where an appointed delegate is an affiliated group
company which receives remuneration for another custodial service it provides
to the Company. In the event of any potential conflict of interest which may
arise during the normal course of business, the Depositary will have regard to
the applicable laws.
performance
At 31 January 2025, the NAV per share was 5,397p (2024: 5,127p), an increase
of 5.3% during the year, compared to an increase of 27.3% during the year in
the Standard & Poor's 500 Composite Index (Sterling adjusted).
Net assets attributable to equity holders at 31 January 2025 amounted to
£713,504,000 compared with £690,230,000 at 31 January 2024.
The ongoing charges relating to the Company are 1.1% (2024: 1.2%), based on
total expenses, excluding finance charges and non-recurring items for the year
and average monthly net assets.
results and dividends
The total net return after taxation for the financial year ended 31 January
2025 amounted to £41,920,000 (2024: £2,148,000). The Board has declared an
interim dividend of 88.0p per ordinary share (2024: 68.5p).
key performance indicators
The Directors regard the following as the main key indicators pertaining to
the Company's performance:
(i) Net asset value per Ordinary Share: the following chart illustrates the
movement in the net asset value per Ordinary Share over the past five years:
net asset value in pence
[chart on page 18 of the Annual Report and Accounts]
(ii) Share price return: the following chart illustrates the movement in the
share price per Ordinary Share over the past five years:
share price return in pence
[chart on page 18 of the Annual Report and Accounts]
(iii) Performance against benchmark
The performance of the Company's share price is measured against the Standard
& Poor's 500 Composite Index (Sterling adjusted), the Company's benchmark.
A graph comparing performance can be found in the Directors' Remuneration
Report on page 41.
principal risks and uncertainties
The Board has carried out a robust assessment of the emerging and principal
risks facing the Company including those that would threaten the Company's
business model, future performance, solvency of liquidity and reputation.
The key risks faced by the Company are set out below. The Board regularly
reviews these and agrees policies for managing these risks.
· Performance risk: the Board is responsible for deciding the
investment strategy in order to fulfil the Company's objectives and for
monitoring the performance of the Manager. An inappropriate investment
strategy may result in under-performance against the companies in the peer
group or against the benchmark indices. The Board manages this risk by
ensuring that the investments are appropriately diverse and by receiving
reports from the Manager at every board meeting explaining his investment
decisions and the composition and performance of the portfolio.
· Market risk: this category of risk includes currency risk, market
price risk and interest rate risk. The fair value of all future cash flows of
a financial investment held by the Company may fluctuate. Also, the valuations
of the investments in the portfolio may be subject to fluctuation due to
exchange rates or general market prices. The Manager monitors these
fluctuations and the markets on a daily basis. The performance of the
investment portfolio against its benchmarks is also closely monitored by the
Manager. The afore-mentioned graph on page 41 of the Directors' Remuneration
Report illustrates the Company's performance against its benchmarks over the
last ten years.
· Investments in unquoted stocks, by their nature may involve a
higher degree of risk than investments in the listed market. The valuation of
unquoted investments can include a significant element of estimation based on
professional assumptions that is not always supported by prices from current
market transactions. Recognised valuation techniques are used and recent arm's
length transactions in the same or similar entities may be taken into account.
Clearly the valuation of such investments is therefore a key uncertainty but
the Board manages this risk by regularly reviewing the valuation principles
applied by the Manager to ensure that they comply with the Company's
accounting policies and with fair value principles. Harwood Capital Management
Limited, a firm which is ultimately owned by Christopher Mills, the Company's
Manager, and which provides services through the group such as dealing,
administration and compliance to the Company, operates a Valuations and
Pricing Committee which meets regularly throughout the year to review and
agree the valuations of the investments in the portfolio for onward submission
to the Board.
· Regulatory risk: any breach of a number of regulations applicable
to the Company, the UKLA's Listing Rules, the FCA compliance regime and the
Companies Act could lead to a number of detrimental effects on the Company as
well as reputational damage. The Audit Committee monitors compliance with
these regulations in close alliance with the Manager and Secretary.
· Custodial and Banking risk: there is a risk that the custodians
and banks used by the Company to hold assets and cash balances could fail and
the Company's assets may not be returned. Associated with this is the
additional risk of fraud or theft by employees of those third parties. The
Board exercises monitoring through the Manager and North Atlantic Investment
Services Limited ("NAIS") over the financial position of its custodial banks.
· Credit risk/Counterparty risk: the Company holds preference
shares in some investee companies and provides other forms of debt or loan
guarantees where deemed necessary. There is a risk of those counterparties
being unable to meet their obligations. The financial position and performance
of those investee companies are continually monitored by the Manager and
actions are taken to protect the Company's investment if needed.
professional negligence
The Company covers professional liability risks set out in Article 9(7) of
Directive 2011/61/EU on Alternative Investment Fund Managers (the "Directive")
and article 12 and 13 of the AIFMD level 2 regulation (professional liability
risks) by holding professional indemnity insurance and maintaining an amount
of own funds to meet the PII capital requirement under the Directive; and
comply with the qualitative requirements addressing professional liability
risks.
Section 172 statement
Under Section 172 of the Companies Act 2006, directors are required to promote
the success of the Company for the benefit of the stakeholders. In accordance
with the requirements of the Companies (Miscellaneous Reporting) Regulations,
2018, the Company has to detail how this duty has been performed with regard
to the matters set out in Section 172 (1) (a) to (f).
· The directors have to consider the likely consequences of their
decisions in the long term taking into account the interests of the various
different stakeholders of the Company.
· A company's stakeholders are normally considered to comprise of
its shareholders, employees, customers and suppliers as well as the wider
community in which the company operates. As the Company is an internally
managed investment company it does not have any employees as its activities
are outsourced. Its customers are its shareholders and details of those owning
more than 3% of the Company's shares are shown on page 24. The Company's
relations with its shareholders are detailed on page 33.
· The main stakeholders are therefore the Company's shareholders
and a small number of key third party suppliers, principally the Investment
Manager, together with the company secretary, accountants, brokers,
depositary, bankers and auditors, to whom the day to day functions are
delegated.
· The Board works closely with the Investment Manager to promote
the long-term success of the Company as effectively and responsibly as
possible and he in turn interacts directly with the investee companies.
Details of the investment policy and investment approach can be found on pages
15 and 16.
· The Company has a limited impact on the environment and has no
greenhouse gas emissions to report as indicated on page 26. Its impact on
social, community and human rights issues are detailed on page 22, and a
statement on the Modern Slavery Act is given on page 22.
· The Directors take care to ensure that the Company maintains a
reputation for high standards of business conduct.
· The Directors ensure that the Company always acts fairly between
members of the Company.
· To summarise, the Directors are fully aware of their duty under
Section 172 in all their deliberations, and decisions made always take into
account the interests of the key stakeholders.
viability statement
In accordance with the UK Corporate Governance Code the Board has considered
the longer term prospects for the Company. The Directors have reviewed the
Company over the next five years to May 2030, which is generally a reasonable
investment horizon for many investment trust shareholders. This assessment
took into account the Company's current position as well as its continuing
investment strategy. Additional factors under review included the principal
risks inherent in its management and portfolio structure, contractual
arrangements and cost base.
The Directors have noted the following elements as part of its evaluation:
· the Company invests in a combination of listed and unquoted
companies, most of which have positive EBITDA and/or net tangible asset values
which support their valuations;
· as at 31 March 2025, the company held more than £55.83m of its
portfolio in cash and US Treasury Bills which are readily realisable and
intends to continue to hold liquidity comfortably in excess of any contingent
liabilities, including any requirements to fund any future drawdowns resulting
from private equity or put option commitments; and
· the Company's expenses are relatively stable, except for the
Investment Manager's fee which is positively correlated with the Company's net
asset value and relative performance, giving comfort that the Company could
easily cover costs in the event of a substantial decline in net asset value.
The Directors have also assessed the Company's principal risks and
uncertainties and believe that appropriate measures are in place to minimise
the likelihood of their potential to impact the viability of the Company.
These measures include:
· the Manager's reports on compliance with the investment
objective;
· the Manager's control of counterparty and custodial risk;
· the Board's monitoring of gearing (if any), compliance with
specific investment guidelines and liquidity risk; and
· monitoring the share price's discount to net asset value and the
stability of the shareholder base.
Based on the results of this analysis, the Directors have concluded that there
is a reasonable expectation that the Company can continue in operation and
meet its liabilities as they fall due during the period to May 2030.
future prospects
The Directors are hopeful that some of the Company's investments will see
corporate activity over the coming year so that the Company's net asset value
should outperform its benchmark.
social, community and human rights issues
As an investment trust with no employees the Company has no direct social or
community responsibilities or impact on the environment. The Company, however,
takes into account the impact of environmental, social and governance factors
when selecting and managing its investments within the context of its
obligation to manage investments in the financial interests of its
shareholders.
modern slavery act
The Company is committed to the highest standards of ethical, moral and legal
business conduct and we expect those that we do business with to uphold the
same values. As an investment vehicle the Company does not provide goods or
services in the normal course of business. We have adopted an ethical approach
to investing which prohibits modern slavery in our business and supply chains,
and are committed to implementing systems and controls aimed at ensuring that
modern slavery is recognised and eradicated.
AIFMD
The Company is authorised and regulated by the Financial Conduct Authority.
The Company has been a full scope internally managed AIF with effect from 1
October 2021 under the Alternative Investment Fund Managers Regulations 2013.
For AIFMD purposes the Company is internally managed with Christopher Mills
making the investment decisions in his capacity as Chief Executive. The
Company must not perform any activities other than the internal management of
the AIF in accordance with Annex I of the Directive:
ANNEX I
1. Investment management functions which an AIFM shall at least
perform when managing an AIF:
(a) portfolio management;
(b) risk management.
2. Other functions that an AIFM may additionally perform in the course
of the collective management of an AIF:
(a) Administration:
(i) legal and fund management accounting services;
(ii) customer inquiries;
(iii) valuation and pricing, including tax returns;
(iv) regulatory compliance monitoring;
(v) maintenance of unit-/shareholder register;
(vi) distribution of income;
(vii) unit/shares issues and redemptions;
(viii)
contract settlements, including certificate dispatch;
(ix) record keeping;
(b) Marketing;
(c) Activities related to the assets of AIFs, namely services necessary to
meet the fiduciary duties of the AIFM, facilities management, real estate
administration activities, advice to undertakings on capital structure,
industrial strategy and related matters, advice and services relating to
mergers and the purchase of undertakings and other services connected to the
management of the AIF and the companies and other assets in which it has
invested.
periodic and regular disclosure
1. The following information is available to investors in the annual
report:
(i) the percentage of the Company's assets that are subject to special
arrangements arising from their illiquid nature;
(ii) any material changes to the arrangements for managing the liquidity
of the Company;
(iii) the current risk profile of the Company and the risk management
systems employed by the Company to manage those risks;
(iv) the total amount of leverage employed by the Company if applicable; and
(v) details of the Company's policy towards best execution.
2. Any changes to the following information will be provided by the
Company to investors without undue delay (and may be provided by email) in
accordance with the AIFMD Rules:
(i) the maximum level of leverage which the Company may employ on behalf
of the Company;
(ii) the grant of or any changes to any right of re-use of collateral or
any changes to any guarantee granted under any leveraging arrangement; and
(iii) activation of liquidity management tools.
By Order of the Board
SGH Company Secretaries Limited
Company Secretary
6 May 2025
report of the directors
for the year ended 31 January
The Directors present their report to shareholders and the financial
statements for the year ended 31 January 2025. Certain information that is
required to be disclosed in this report has been provided in other sections of
this Annual Report and accordingly, these are incorporated into this report by
reference.
taxation status
In the opinion of the Directors, the Company has conducted its affairs during
the period under review, and subsequently, so as to maintain its status as an
investment trust for the purposes of Chapter 4 of Part 24 of the Corporation
Tax Act 2010. The Company made a successful application under Regulation 5 of
the Investment Trust (Approved Company) (Tax) Regulations 2011 for investment
trust status to apply to all accounting periods starting on or after 1
February 2013 subject to the Company continuing to meet the eligibility
conditions contained in Section 1158 of the Corporation Tax Act 2010 and the
ongoing requirements outlined in Chapter 3 of Part 2 of the Regulations.
share capital
The Company's issued share capital consisted of 13,220,000 Ordinary Shares of
5p nominal value each on 31 January 2025. Since the year end, 20,000 Ordinary
Shares have been repurchased for cancellation. All shares hold equal rights
with no restrictions and no shares carry special rights with regard to the
control of the Company. There are no special rights attached to the shares in
the event that the Company is wound up.
During the year, the Company purchased 241,575 (2024: 140,493) Ordinary Shares
for £9.5m (2024: £5.3m) for cancellation to improve net asset value per
Share. This comprised 1.8% (2024: 1.0%) of the issued share capital.
share valuations
On 31 January 2025, the quoted price and the net asset value per 5p Ordinary
Share were 3,750p and 5,397p respectively. The comparable figures at 31
January 2024 were 3,690p and 5,127p respectively.
substantial shareholders
As at 31 January 2025, the following interests in the Ordinary Shares of the
Company which exceed 3.0% of the issued share capital had been notified to the
Company:
Number of Ordinary Shares % of issued share capital
Christopher Mills* 3,809,581* 28.82
CG Asset Mgt (London) 914,559 6.92
Butterfield Bank 524,060 3.96
Interactive Investor 514,283 3.89
Hargreaves Lansdown Asset Mgt 461,118 3.49
Charles Stanley Group (London) 412,420 3.12
Peregrine Moncrieffe 405,630 3.07
The Company has not been informed of any changes to the above interests
between 31 January 2025 and the date of this report. Since 31 January 2025,
the Company has purchased and cancelled 20,000 Ordinary Shares reducing the
Ordinary Shares in issue to 13,200,000, which increases the % of issued share
capital held by all shareholders listed above.
* Inclusive of 43,581 shares for a private client account managed by
Christopher Mills and 600,000 shares for Harwood Holdco Limited.
directors
The biographical details for Directors currently in office are shown on page
3.
The Company's Articles of Association require that Directors should submit
themselves for election at the first Annual General Meeting following their
appointment and thereafter for re-election at least every three years.
However, the Company is adopting the requirements of the UK Corporate
Governance Code in relation to the annual re-election of directors. Therefore,
in accordance with provision 18 of the UK Corporate Governance Code all of the
Directors will retire at the Annual General Meeting and being eligible, offer
themselves up for re-election.
directors' interests
The interests of the Directors as notified to the Company, including those of
their connected persons, in the Ordinary Shares of the Company as at 31
January 2025 and 31 January 2024 were as follows:
31 January 2025 31 January 2024
5p Ordinary Shares 5p Ordinary Shares
Sir Charles Wake 8,170 8,170
Christopher Mills* 3,809,581 3,817,424
Christopher Mills (non-beneficial) 355,740 355,740
Lord Howard of Rising 5,000 5,000
Professor Fiona Gilbert 3,200 3,200
G Walter Loewenbaum 15,000 15,000
Peregrine Moncreiffe 447,889 445,589
Julian Fagge 523 -
* Inclusive of 43,581 shares for a private client account managed by
Christopher Mills and 600,000 shares for Harwood Holdco Limited.
Since 31 January 2025 and as at the date of this report, there have been no
further share purchases from the Directors or their connected persons.
Details of Directors' remuneration are described in the Directors'
Remuneration Report on pages 36 to 41.
Save as disclosed on page 36 or in notes 3 and 15 to the financial statements,
no Director was party to or had any interest in any contract or arrangement
with the Company at any time during the year.
significant agreements
The Company is required to disclose details of any agreement that it considers
to be essential to the business and the two agreements detailed below are
considered by the Board to be significant.
Pursuant to the Sub Advisory, Administration and Transmission Services
Agreement dated 27 February 2023, North Atlantic Investment Services Limited
provides administration services to the Company which were previously provided
by Harwood Capital LLP under a similar agreement. The Sub Advisory,
Administration and Transmission Services Agreement continues unless thereafter
terminated by either party on not less than twelve months' notice in writing
or may be terminated forthwith as a result of a material breach of the
agreement or the insolvency of either party. No compensation is payable on
termination of the Agreement.
Pursuant to the Secondment Services Agreement between the Company, Growth
Financial Services Limited ("GFS") and Christopher Mills and the Sub Advisory,
Administration and Transmission Services Agreement between the Company and
North Atlantic Investment Services Limited, Christopher Mills is responsible
for the day-to-day investment decisions. The Secondment Services Agreement
continues until terminated by the Company or GFS on not less than twelve
months' notice.
The Board reviews the activities of the Manager. The Chief Executive carries
out day-to-day investment decisions for and on behalf of the Company. As part
of this review, the Board is satisfied that the continuing appointment of the
Manager, on the terms agreed, is in the best interests of shareholders.
Christopher Mills has been Chief Executive of the Company since 1984 and the
Board consider it is in the best interest of the Company for this arrangement
to continue.
As part of this review, the Board has given consideration to the experience,
skills and commitment of the Chief Executive in addition to the personnel,
services and resources provided by NAIS. The Company's performance over the
last year is described in the Chairman's Statement on page 4.
related party transactions
Christopher Mills makes day-to-day investment decisions for the Company in his
capacity as its Chief Executive and this position is distinct from his
position as Chief Investment Officer of NAIS. Christopher Mills is a director
of Growth Financial Services Limited ("GFS"). GFS is a wholly-owned subsidiary
of Harwood Capital Management Limited, which is the holding company of the
Harwood group of companies and is, in turn, 100% owned by Christopher Mills.
Details of the related party transactions and fees payable are disclosed in
note 15 on pages 77 and 78 and in the Directors' Remuneration Report on pages
36 to 41. The Investment Management Fees are disclosed in note 3 on page 58.
Any Performance Fee payable to GFS is disclosed in the Directors' Remuneration
Report on pages 36 to 41 and note 3 of the financial statements on page 58.
With the exception of the matters referred to above, during the year no
Director was materially interested in any contract of significance (as defined
by the UK Listing Authority Listing Rules) entered into by the Company.
institutional investors - use of voting rights
The Chief Executive, in the absence of explicit instruction from the Board, is
empowered to exercise discretion in the use of the Company's voting rights in
respect of investments and to then report to the Board, where appropriate,
regarding decisions taken. The Board has considered whether it is appropriate
to adopt a new voting policy and an investment policy with regard to social,
ethical and environmental issues and concluded that it is not appropriate to
change the existing arrangements.
donations
The Company does not make any political or charitable donations.
creditors' payment policy
It is the Company's policy to settle investment transactions according to the
settlement periods operating for the relevant markets. For other creditors, it
is the Company's policy to pay amounts due to them as and when they become
due. All supplier invoices received in the year had been paid by 31 January
2025 (31 January 2024: all supplier invoices paid).
greenhouse gas emissions
The Company has no physical assets, operations, premises or employees of its
own. Consequently it consumed less than 40,000 kWh of energy during the year
so has no greenhouse gas emissions to report.
task force on climate-related financial disclosures (TCFD)
The Company has not included any climate-related disclosures consistent with
the TCFD Recommendations and Recommended Disclosures in this annual report as
the Company is a closed-ended investment company, with no premises or staff.
The Board do not believe that such disclosures would be of any benefit to its
shareholders or other stakeholders.
corporate governance
The Corporate Governance Statement on pages 30 to 35 forms part of this
report.
auditors
Resolutions to re-appoint RSM UK Audit LLP as the Company's auditors and to
authorise the Board to determine their remuneration will be proposed at the
forthcoming Annual General Meeting.
In the case of each of the persons who are directors at the time the report is
approved, so far as each director is aware there is no relevant audit
information of which the Company's auditor is unaware, and they have taken all
the steps that they ought to have taken as a director in order to make
themself aware of any relevant audit information and to establish that the
Company's auditor is aware of that information.
going concern
The Company's assets largely comprise readily realisable securities which can
be sold to meet funding commitments if necessary and it also has sufficient
cash reserves so the Directors have a reasonable expectation that the Company
has adequate resources to continue in operation for the foreseeable future.
They have, therefore, adopted the going concern basis in preparing these
financial statements.
additional disclosures
The following further information is disclosed in accordance with the Large
and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008:
· the Company's capital structure and voting rights are summarised
on page 24 and note 11;
· details of the substantial shareholders in the Company are listed
on page 24;
· the rules concerning the appointment and replacement of directors
are contained in the Company's Articles of Association and are discussed on
page 30;
· amendment of the Company's Articles of Association and powers to
issue on a pre-emptive basis or buy back the Company's shares require a
special resolution to be passed by the shareholders; and
· there are: no restrictions concerning the transfer of securities
in the Company; no special rights with regard to control attached to
securities; no agreements between holders of securities regarding their
transfer known to the Company; no agreements which the Company is party to
that might affect its control following a takeover bid; no agreements between
the Company and its Directors concerning compensation for loss of office; and
no qualifying third party indemnities in place.
By Order of the Board
SGH Company Secretaries Limited
Company Secretary
Registered Office:
60 Gracechurch Street
London
EC3V 0HR
Registered No: 1091347
6 May 2025
statement of directors' responsibilities in respect of the annual report and the financial statements
for the year ended 31 January
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. The Directors elected under company law are required under the
Listing Rules of the Financial Conduct Authority to prepare the financial
statements in accordance with UK-adopted International Accounting Standards.
The financial statements are required by law and UK-adopted International
Accounting Standards to present fairly the financial position and performance
of the company. The Companies Act 2006 provides in relation to such financial
statements that references in the relevant part of that Act to financial
statements giving a true and fair view are references to their achieving a
fair presentation.
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss for that period. In preparing
these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether they have been prepared in accordance with
UK-adopted International Accounting Standards;
· assess the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
· use the going concern basis of accounting unless they either
intend to liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that its financial statements and the Directors'
Remuneration Report comply with the Companies Act 2006. They are responsible
for such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material misstatement,
whether due to fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the Company
and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, Directors' Report, Directors' Remuneration
Report and Corporate Governance Statement that complies with that law and
those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company's website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
responsibility statement of the directors in respect of the annual financial report
Each of the directors, whose names and functions are listed in the strategic
report on page 3 confirm that to the best of each person's knowledge:
· the financial statements, prepared in accordance with UK-adopted
International Accounting Standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company taken as a
whole; and
· the Strategic Report and the Report of the Directors includes a
fair review of the development and performance of the business and the
position of the company, together with a description of the principal risks
and uncertainties that they face.
We consider the Annual Report and financial statements, taken as a whole, are
fair, balanced and understandable and provide the information necessary for
shareholders to assess the Company's position and performance, business model
and strategy.
For and on behalf of the Board
Sir Charles Wake
Chairman
6 May 2025
corporate governance
statement of compliance with the uk corporate governance code
The Company's policy is to achieve best practice in its standards of business
integrity in all of its activities. This includes a commitment to follow the
highest standards of corporate governance wherever possible. This section of
the Annual Report describes how the Company has complied with the applicable
provisions of the UK Corporate Governance Code published by the Financial
Reporting Council ("FRC") in July 2018 (the "Code") and is available from the
FRC website (www.frc.org.uk). The Board considers that it has complied with
the provisions of the Code throughout the year with few exceptions: these are
detailed on page 35.
directors
Brief biographical details of the Directors in office are set out on page 3.
The Board consists of seven Directors, five of whom are considered independent
non-executive Directors for the purposes of the Code, to include the Chairman
- Sir Charles Wake, Fiona Gilbert, Lord Howard of Rising, Julian Fagge and G
Walter Loewenbaum, who are each free of any relationship that could materially
interfere with the exercise of their independent judgment on issues concerning
strategy, performance and standards of conduct. Peregrine Moncreiffe (the
former Chairman) also serves as a Non-Executive Director on the Board as does
Christopher Mills who is the Chief Executive Officer. The Board considers that
it has the appropriate balance of skills, experience, ages and length of
service in the circumstances and values highly the experience of those
Directors who have served on the Board for a longer period.
Fiona Gilbert was appointed as the Company's Senior Independent Director on 4
January 2023. As the Senior Independent Director, Fiona provides a sounding
Board for the Chairman and serves as an intermediary for the other Directors
and shareholders. Fiona also provides a channel for any shareholder concerns
regarding the Chairman.
The Board comprises of 6 male Directors and 1 female Director.
The Company has effective procedures in place to monitor and deal with
conflicts of interest. All declared conflicts will be discussed by the Board.
The Board is aware of the other commitments and interests of the Directors.
The Board acts as the Nomination Committee and meets as and when necessary and
to discharge its role in nominating a new Director to the Board and succession
planning.
The Board is made up of individual members who have a wide range of
qualifications and expertise to bring to any debate. The Board normally meets
four times a year and at other times as necessary. The terms and condition of
their appointment, including the expected time commitment, are available for
inspection at the Registered Office of the Company during normal business
hours and will also be available for at least fifteen minutes prior to and
during the Annual General Meeting. The contract for Christopher Mills'
services as a Director is with GFS.
The Chairman and other members of the Board recommend that all of the
Directors be re-elected. The Chairman has confirmed that all Directors have
been subject to performance evaluation and following that evaluation, the
Chairman confirms that their performance continues to be effective and that
they continue to demonstrate commitment to their role and in his view
responsibly fulfil their functions. The performance evaluation programme took
the form of a questionnaire circulated to and completed by all Directors. The
performance evaluation provides an anonymous vehicle for Directors to
highlight any concerns or issues to the Board. The Chairman then discussed the
results with the Board and the individual Directors and any requests for
further training or action were complied with. The non-executive Directors
evaluated the performance of the Chairman and can confirm that they were
satisfied with his performance and with his leadership of the Board.
board meetings
The Board conducts its affairs in accordance with its schedule of matters for
consideration which is agreed once annually by the whole Board. The Chief
Executive carries out day-to-day activities pursuant to the terms of the
management arrangements in place. These day-to-day activities relate to the
management of the Company's investment portfolio on a discretionary basis
within guidelines that have been set by the Board. These guidelines include,
amongst other things, maximum exposure to any one investment and total
exposure to unquoted investments. The management of the investment portfolio
also includes the monitoring of the performance and activities of the investee
companies in the portfolio and detailed research into any prospective
investment. In addition to scheduled Board Meetings, the Board may carry out
certain urgent matters not requiring debate by way of delegation to a
Committee of the Board or by resolution in writing of all Directors.
attendance at board meetings, audit and remuneration committees
Total number Total number Total number Total number
in year
in year
in year
in year
4 Board Meetings 2 Audit Committees 1 Remuneration Committee
1 ESG
Committee
Peregrine Moncreiffe 4 N/A N/A N/A
Christopher Mills 4 N/A N/A N/A
Lord Howard of Rising 4 N/A 1 N/A
G Walter Loewenbaum 4 2 1 N/A
Sir Charles Wake 4 N/A N/A N/A
Fiona Gilbert 4 2 1 1
Julian Fagge 4 2 N/A 1
remuneration committee
The Remuneration Committee is chaired by G Walter Loewenbaum and the other
members are Lord Howard of Rising and Fiona Gilbert. The Remuneration
Committee reviews the remuneration paid to NAIS and GFS pursuant to the
Management Agreements. The remuneration of GFS is disclosed in the Directors'
Remuneration Report on pages 36 to 41 and also in note 3 on page 58.
audit committee
The Board is supported by an Audit Committee which is chaired by Julian Fagge
and during the year the other members were G Walter Loewenbaum and Fiona
Gilbert. The Audit Committee meets representatives of NAIS twice a year, who
report on the proper conduct of business in accordance with the regulatory
environment in which the Company operates. The Company's Auditors also attend
the Committee at its request, at least once a year, and report on their
findings in relation to the Company's statutory audit. The responsibilities of
the Audit Committee include monitoring the integrity of the financial
statements including Annual and Half-Yearly reports, reviewing the
effectiveness of the Company's internal controls and risk management, making
recommendations in relation to the appointment of the auditors and reporting
to the Board on all matters within its duties and responsibilities.
The Committee monitors the performance of the Auditors on a regular basis (at
least annually) and if satisfied, recommends their re-appointment to the
Board. The Audit Committee is authorised to take such independent professional
advice (including legal advice) and to secure the attendance of any external
advisers with relevant expertise as it considers necessary. The Audit
Committee is also responsible for the review of the Annual and Half-Yearly
Reports, the nature and scope of the external audit, its findings and the
provision of any non-audit services. The Audit Committee is satisfied that RSM
UK Audit LLP, the Company's Auditor, is independent and that it has adequate
policies and safeguards in place to ensure that its objectivity and
independence is maintained. The Audit Committee receive each year a report
from the Auditor as to any matters the Auditor considers bear on its
independence and which require disclosure to the Company.
RSM UK Audit LLP were appointed as the Company's auditors in 2020 and carried
out their first audit on the accounts for the year ended 31 January 2020.
The Company had one interaction with the Financial Reporting Council's
Corporate Reporting Review Team on 3 December 2024 in regard to a review of
the Company's annual report and accounts for the year ended 31 January 2024 in
accordance with Part 2 of the FRC Corporate Reporting Review Operation
Procedures. Following the review, there were no substantive questions or
queries raised. The review conducted by the Corporate Reporting Review Team
was based solely on the annual report and accounts and did not benefit from
detailed knowledge of the Company's business or an understanding of the
underlying transactions entered into. It was, however, conducted by staff of
the FRC who have an understanding of the relevant legal and accounting
framework. This letter provides no assurance that the annual report and
accounts are correct in all material respects; the FRC's role is not to verify
the information provided to it but to consider compliance with reporting
requirements. The letter was written on the basis that the FRC (which includes
its officers, employees and agents) accepts no liability for reliance on it by
the company or any third party, including but not limited to investors and
shareholders.
The Committee's terms of reference are available from the Company Secretary.
The Audit Committee met twice during the year to review the Half-Yearly and
Annual financial statements and to review reports and hold discussions with
the Chief Executive and NAIS. In carrying out its duties during this review,
the Audit Committee has considered inter alia the annual budget, internal
control reports, the risk management framework, the effectiveness of the
external audit process, the independence and objectivity of the External
Auditor, the Audit Plan, Audit Reports and Corporate Governance Report
including the Code. The Board is satisfied that all of the Committee's members
have recent and relevant commercial and financial knowledge and experience to
satisfy the Code, by virtue of their having held various executive and
non-executive roles in investment management and business management.
financial report and significant issues
The Audit Committee met with the Auditor during the year to discuss the audit
plan and strategy for the year and identify the significant issues to be dealt
with in the review of the year end results. The principal issues identified as
presenting the greatest risks were the valuation of the unquoted investments
in the portfolio.
Listed investments are valued using stock exchange prices provided by third
party financial data vendors. Unquoted investments are recognised on a fair
value basis as set out in the statement of accounting policies on pages 54 and
55 and are reviewed by NAIS's Valuations and Pricing Committee before being
approved by the Board and being made available to the Auditor.
These and other matters, identified as posing less of a risk, were considered
and discussed with the Manager and the Auditor as part of the year end
process.
Throughout the year the Board has considered, as part of its ongoing Risk
Management Review, the principal risks facing the Company. This has included
specifically assessing those risks which would threaten its business model,
future performance, solvency or liquidity. The Company carries out its
activities using the services of third party service providers; it has no
staff of its own.
shareholder relations
The Company, through its Chief Executive, has regular contact with its
Institutional shareholders. The Board supports the principle that the Annual
General Meeting be used to communicate with private shareholders and
encourages them to participate. The Annual General Meeting is attended by
Directors and the Chief Executive. Details of significant votes against a
resolution are set out in the Chairman's Statement on page 4. The Chairman
also wrote to any dissenting investors during the year as part of an outreach
campaign to offer the opportunity for further engagement and to answer any
questions or queries that they may have, especially in relation to the rule 9
waiver (resolution 17 at the 2024 AGM) and the Directors continue to engage
positively with interested parties on this matter.
ESG committee
The ESG Committee was established to enhance the Board's oversight of
environmental, social and governance issues. The committee, currently chaired
by Fiona Gilbert with members Julian Fagge and Nicholas Mills, a Director and
Fund Manager at Harwood Capital, has met several times to review the
governance structure and environmental policy. Board training has been
undertaken in governance to ensure all procedures are in place.
nominations committee
The Board is a small Board and fulfils the function of the Nominations
Committee relating to the composition and make-up of the Board and its
committees and considers the leadership needs and succession of the Board when
making decisions on new appointments. The committee reviewed the structure,
size and composition of the Board and its committees and made recommendations
for changes to the membership of the committees. The Committee actively
participated in the recruitment process, and contributed to the on-boarding
and induction of the newly appointed Non-Executive Director, assisted by the
Company Secretary.
diversity
Due to the size of the Board and the fact that there are no employees, the
Company does not have a diversity policy.
the company secretary
The Board has direct access to the advice and services of the Company
Secretary, SGH Company Secretaries Limited, which is responsible for ensuring
that the Board and Committee procedures are followed and that the applicable
regulations are complied with. The Company Secretary is also responsible to
the Board for ensuring timely delivery of information and reports.
accountability and audit
The statement of going concern is given on page 27 and the Board's
responsibilities with regard to the financial statements are set out on pages
28 and 29. The Independent Auditor's Report is on pages 42 to 48. The
principal risks and uncertainties, s172 statement and viability statement are
set out in the Strategic Report on pages 19 to 21.
share capital
Shareholders' attention is drawn to the further information on page 27 which
is disclosed in accordance with the Large and Medium-sized Companies and
Groups (Account and Reports) Regulations 2008 and rule 7.2.6 of the Disclosure
and Transparency Rules.
internal control
The Board is responsible for the Company's system of internal control and for
reviewing its effectiveness. The Board has regularly reviewed the
effectiveness of the system of internal control in place. The Board believes
that the key risks identified and implementation of the system to monitor and
manage those risks are appropriate to the Company's business as an investment
trust. The ongoing risk assessment includes the monitoring of the financial,
operational and compliance risks as well as an evaluation of the scope and
quality of the system of internal control adopted by the third party service
providers. The Board regularly reviews the delegated services to ensure their
continued competitiveness and effectiveness. The system is designed to ensure
regular communication of the results of monitoring by the third parties to the
Board and the incidence of any significant control failings or weaknesses that
have been identified and the extent to which they have resulted in unforeseen
outcomes or contingences that may have a material impact on the Company's
performance or operations.
This review process was in place throughout the year under review and
including the period to the date of the approval of the Annual Report and
there were no problems identified from this review. The Board believes that,
although robust, the Company's system of internal control is designed to
manage rather than eliminate the risk of failure to achieve business
objectives. Any system can provide only reasonable and not absolute assurance
against material misstatement or loss. The principal features of the internal
control systems in respect of financial reporting include segregation of
duties between the processing and approval of investment transactions and the
recording of these transactions in the accounting records as well as the
production and review of monthly management accounts. The annual and interim
reports are reviewed and approved by the Board. The Company does not have an
internal audit function as it uses third party service providers and does not
employ any staff, nor does the Board consider it appropriate to do so.
compliance statement
Throughout the year ended 31 January 2025 the Company has complied with the
Code (apart from the workforce provisions 2, 5 and 6 which are not applicable
as the Company has no employees other than the Directors), except as follows:
Provision 3 - The Chairman does not seek engagement with shareholders to
understand their views on governance and performance against strategy. However
the Chief Executive has regular contact with major shareholders and if any
concerns are raised the Chairman is available to meet them at their request.
Also the directors including the Chairman attend the Annual General Meeting
and are available to communicate with shareholders.
Provision 17 - The Company does not have a Nominations Committee as the Board
is a small Board and fulfils the function of the Nominations Committee
relating to the composition and make-up of the Board and its committees and
considers the leadership needs and succession of the Board when making
decisions on new appointments.
Provision 21 and 22 - There is not a formal annual evaluation of the
performance of the Board, its committees or individual directors. An informal
evaluation takes place every two years and the Chairman monitors the
performance of the Board on an ongoing basis.
Provision 41 - As there is only one Executive Director, the scope of the
Remuneration Committees work and related disclosures do not fully comply with
the requirements of Provision 41.
By Order of the Board
SGH Company Secretaries Limited
Company Secretary
Registered Office:
60 Gracechurch Street
London
EC3V 0HR
Registered No: 1091347
6 May 2025
directors' remuneration report
for the year ended 31 January
This Report has been prepared in accordance with the Large and Medium sized
Companies and Groups (Accounts and Reports) Regulations 2008, Schedule 8. The
Directors' Remuneration Report will be put to an advisory shareholder vote at
this year's annual general meeting.
The law requires the Company's Auditor to audit certain of the disclosures
provided and to state whether, in their opinion, those parts of the report
have been properly prepared in accordance with the Accounting Regulations.
Where disclosures have been audited, they are indicated as such. The Auditor's
opinion is included in their report on pages 42 to 48.
role and composition
The Remuneration Committee consists of Lord Howard of Rising, G Walter
Loewenbaum and Fiona Gilbert. Christopher Mills, the Company's Chief
Executive, does not attend meetings of the Remuneration Committee.
The Remuneration Committee is responsible for determining all aspects of
Director's remuneration. The Remuneration Committee in the year did not
propose that there should be any change to the level of remuneration paid to
the Directors. In making this decision, consideration of the scope of work
undertaken and input required by the Directors was considered. No Director
participates in discussions on their own remuneration. The Committee takes
independent professional advice where it considers this is appropriate. No
such advice has been received in the year.
The Remuneration Committee held a meeting on 23 April 2024 to discuss the
policy on Director's Remuneration.
directors' interests (audited)
31 January 2025 31 January 2024
5p Ordinary Shares 5p Ordinary Shares*
Sir Charles Wake 8,170 8,170
Christopher Mills** 3,809,581 3,817,424
Christopher Mills (non-beneficial) 355,740 355,740
Lord Howard of Rising 5,000 5,000
Professor Fiona Gilbert 3,200 3,200
G Walter Loewenbaum 15,000 15,000
Peregrine Moncreiffe 447,889 445,589
Julian Fagge** 523 -
* or date of appointment if later.
** Inclusive of 43,581 shares for a private client account managed by
Christopher Mills and 600,000 shares for Harwood Holdco Limited.
policy on directors' remuneration
The Company's Articles of Association were amended by a special resolution
passed by shareholders at the Annual General Meeting on 23 June 2021 which
increased the aggregate total of Directors' fees that can be paid during the
year from £150,000 to £250,000. The Remuneration Committee's policy, subject
to this overall limit, is to determine the level of Directors' fees having
regard to the level of fees payable to non-executive directors in other
investment trusts, the rate of inflation and the increasing amount of time
that individual Directors must commit to the Company's affairs. The Committee
is also concerned that the remuneration of the non-executive Directors should
reflect the experience of those Directors and believes that the level of
remuneration should be sufficient to attract and retain non-executive
Directors to oversee the Company.
The Directors are entitled to be reimbursed for any reasonable expenses
properly incurred by them in connection with the performance of their duties
and attendance at meetings. Non-executive Directors are not eligible for
bonuses, pension benefits, share options or any other incentives or benefits.
There are no agreements between the Company and its Directors concerning
compensation for loss of office.
The Directors' Remuneration Policy is the same in all material aspects as that
implemented by the Board during the year under review and as summarised in
last year's Directors' Remuneration Report. The Board will consider, where
raised, shareholders' views on Directors' remuneration.
The Company has no employees and therefore has no policy on the remuneration
of employees.
The performance graph on page 41 measures the Company's share price and net
asset value performance against the Sterling adjusted Russell 2000 and the
Sterling adjusted Standard & Poor's 500 Composite Index. An explanation of
the Company's performance is given in the Chairman's Statement and the
Investment Manager's Report.
The policy is to review Directors' fees from time to time, but reviews will
not necessarily result in the level of Directors' fees changing. Since 1
August 2021, the Directors have been paid at a rate of £30,000 per annum with
the exception of Peregrine Moncreiffe, the former Chairman whose emoluments
amount to £37,500 per annum which reflect his contribution to stakeholder
engagement and supporting Sir Charles Wake in transitioning to his new role as
Chairman. The Directors' Remuneration Policy was last presented to the
shareholders for approval in 2024 and therefore will be next presented for
approval by the shareholders at the Company's AGM in 2027.
directors' remuneration table (audited)
2025
Fees & Change Annual Change Total
Salary from 2024 Incentives from 2024 £
£ £ £ £
Executive
Christopher Mills 30,000 - 2,903,000 1.9 2,933,000
Non-Executive
Sir Charles Wake 30,000 - - - 30,000
Peregrine Moncreiffe 37,500 - - - 37,500
Lord Howard of Rising 30,000 - - - 30,000
G Walter Loewenbaum 30,000 - - - 30,000
Professor Fiona Gilbert 30,000 - - - 30,000
Julian Fagge 30,000 61.8* - - 30,000
217,500 2,903,000 3,120,500
* This figure reflects the change in total pay Julian Fagge received given
that the appointment was part way through the year ending 31 January 2024.
2024
Fees & Change Annual Change Total
Salary from 2023 Incentives from 2023 £
£ £ £ £
Executive
Christopher Mills 30,000 - 2,849,000 (11.0) 2,879,000
Non-Executive
Sir Charles Wake 30,000 - - - 30,000
Peregrine Moncreiffe 37,500 - - - 37,500
Lord Howard of Rising 30,000 - - - 30,000
G Walter Loewenbaum 30,000 - - - 30,000
Professor Fiona Gilbert 30,000 146.1* - - 30,000
Julian Fagge 18,538 - - - 18,538
(appointed 20 June 2023)
206,038 2,849,000 3,055,038
* This figure reflects the change in total pay Professor Gilbert received
given that the appointment was part way through the year ending 31 January
2023.
chief executive
The Chief Executive is responsible for the day-to-day investment decisions. He
has no service contract with the Company; his appointment is pursuant to the
Secondment Services Agreement dated 7 January 1993 between the Company, the
Chief Executive and GFS. The Remuneration Committee has no plans to alter the
remuneration structure for the Chief Executive. As stated in note 15 on pages
77 and 78, the Chief Executive is entitled to retain any fees received from
investee companies in respect of his role as a non-executive director of these
entities; such a role is considered to benefit shareholders as it allows the
Chief Executive to monitor the performance of the investee company more
closely than would be possible under other circumstances.
remuneration of chief executive (audited)
Year ended Year ended
31 January 2025 31 January 2024
£ £
Director's fees 30,000 30,000
Investment Management and related fees 2,903,000 2,849,000
Performance fee - -
Total (excluding irrecoverable VAT) 2,933,000 2,879,000
The total fees of £2,933,000, in respect of Christopher Mills' services as a
Director and Chief Executive are payable to GFS, as described on page 26. GFS
receives, and is contractually entitled to receive, part of the Annual Fee
payable to the GFS and NAIS in respect of the investment management activities
of the Chief Executive pursuant to the Investment Management Agreements
described on page 25 and note 3 on page 58 to the financial statements.
Christopher Mills is a director of GFS. GFS is a wholly owned subsidiary of
Harwood Capital Management Limited, which is in turn wholly owned by
Christopher Mills. Christopher Mills is also the Chief Investment Officer of
NAIS.
The Performance Fee is a contractual entitlement pursuant to the Secondment
Services Agreement dated 7 January 1993 as amended and is paid to GFS.
Calculation of the Performance Fee includes Oryx at the adjusted price (using
equity accounting methods).
Explanations of the calculation of the Investment Management and Performance
fees can be found in note 3 on page 58 to the financial statements.
No pension or other benefits are paid to the Chief Executive.
[chart on page 40 of the Annual Report and Accounts]
The fixed element represents the director's fee of £30,000 per annum.
Included within the 'On-target' bar is the investment management fee,
£2,903,000 and performance fee of zero that are payable to GFS and NAIS for
the year ended 31 January 2025.
The difference between the "On-target" bar and the "Max" bar is the maximum
payment under the performance fee arrangements which could have fallen due in
respect of the year. This is explained in more detail in note 3(iii) to the
financial statements.
Christopher Mills is deemed to have received these fees due to the fact that
he is a director of and the ultimate beneficial owner of GFS and NAIS. These
amounts are included in the 'On Target' bar as the fees were only payable if
performance related hurdles were met. The NAIS fee is excluded from
Christopher's reported remuneration, as it relates to operational services,
including business management and the disbursement of staff salaries.
single total figure of remuneration for each director (audited)
The Directors who served during the years ended 31 January 2025 and 31 January
2024 received the following emoluments:
Total Fees £ Total Fees £
31 January 2025 31 January 2024
Peregrine Moncreiffe 37,500 37,500
Lord Howard of Rising 30,000 30,000
G Walter Loewenbaum 30,000 30,000
Sir Charles Wake 30,000 30,000
Christopher Mills 2,933,000 2,879,000
Professor Fiona Gilbert 30,000 30,000
Julian Fagge 30,000 18,538
Total 3,120,500 3,055,038
The Directors are aware that it is a statutory requirement that this report
provides shareholders and other interested parties with an analysis of
Directors' Remuneration against the remuneration of employees or the amount of
distributions to shareholders. However, the Company has no employees and has a
long-standing policy of not paying dividends (except to ensure compliance with
Investment Trust rules) so it is not possible to provide any such analysis.
The Directors also do not consider that such a comparison would be a
meaningful measure of the Company's overall performance.
service contracts
No Director has a service contract. The contract for the Chief Executive's
services and the carrying on day-to-day investment decisions is with GFS and
contained in the Secondment Services Agreement between GFS and the Company as
noted in the paragraph describing the Chief Executive's activities.
company's performance
The following graph compares over a ten-year period the total shareholder
return on the Company's Shares with a hypothetical holding of Shares of the
same kinds and number as those by reference to which a broad equity market
index is calculated.
Graph showing total shareholder return over 10 years as compared to total
shareholder return of a broad equity market index over the last 10 years.
(Source: Financial Data/Datastream)
[chart on page 41 of the Annual Report and Accounts]
NASCIT NAV is the diluted NAV at each balance sheet date.
The equity market indexes chosen are the Sterling adjusted Russell 2000 and
the Sterling adjusted Standard & Poor's 500 Composite Index.
voting
The Directors' Remuneration Report for the year ended 31 January 2024 was
approved by shareholders at the Annual General Meeting held on 27 June 2024.
The votes cast by proxy were as follows:
Directors' Remuneration Report
Number of votes Percentage
For 7,672,587 99.86
Against 4,326 0.06
At Chairman's discretion 5,844 0.08
total votes cast 7,682,757 100.00
Number of votes withheld 31,867
This Report was approved by the Board on 6 May 2025 and signed by:
On behalf of the Board
G Walter Loewenbaum
Remuneration Committee Chairman
6 May 2025
independent auditor's report to the members of North Atlantic Smaller Companies Investment Trust plc
opinion
We have audited the financial statements of North Atlantic Smaller Companies
Investment Trust plc (the 'company') for the year ended 31 January 2025 which
comprise the statement of comprehensive income, statement of changes in
equity, balance sheet, cash flow statement and notes to the financial
statements, including significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable law and
UK-adopted International Accounting Standards.
In our opinion the financial statements:
· give a true and fair view of the state of the company's affairs
as at 31 January 2025 and of its return for the year then ended;
· have been properly prepared in accordance with UK-adopted
International Accounting Standards; and
· have been prepared in accordance with the requirements of the
Companies Act 2006.
basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed public interest entities and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on the overall audit strategy, the allocation of
resources in the audit and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Valuation of Unquoted Investments
Key audit matter description As at 31 January 2025, unquoted investments (including loan stock) were £176m
(2024: £138m), which was 25% (2024: 20%) of the company's net assets at that
date. These investments are measured at fair value in accordance with the
International Private Equity and Venture Capital Valuation Guidelines. These
valuations involve material judgements and estimation and is a significant
audit risk and for this reason it is considered to be a key audit matter.
Unquoted investment disclosures are set out in notes 8 and 14 to the financial
statements.
How the matter was addressed in the audit Our audit procedures included:
· Obtaining an understanding of the company's unquoted investments
held at the year end, including attendance at valuation meetings with the
investment manager and reviewing underlying investment agreements and other
relevant documentation.
· Understanding and challenging the key assumptions and judgements
affecting investee company valuations, including consultation with an expert
from our valuations team and consideration of the appropriateness of the
valuation basis and sensitivities.
· Considering whether events that occurred subsequent to the period
end affect the underlying assumptions of the valuations at
31 January 2025; and
· Considering of the appropriateness of the disclosures in the
financial statements in respect of unquoted investments.
Key observations We concluded that the carrying value of unquoted investments is acceptable.
Carrying Value of Quoted Investments
Key audit matter description As at 31 January 2025, quoted investments (including treasury bills) were
£520m (2024: £475m), which was 73% (2024: 69%) of the company's net assets
at that date. Quoted investments are one of the key drivers of financial
performance. Whilst this is not considered to be a significant audit risk, due
to the quantum of these investments, we consider it to be a key audit matter.
Quoted investment disclosures are set out in note 8 to the financial
statements.
How the matter was addressed in the audit Our audit procedures included:
· Agreeing 100% of year end investment holdings (including treasury
bills) to independently received confirmations from the depositary.
· Checking 100% of the year end valuations to externally quoted
prices.
Key observations We concluded that the carrying value of quoted investments is acceptable.
our application of materiality
When establishing our overall audit strategy, we set certain thresholds which
help us to determine the nature, timing and extent of our audit procedures.
When evaluating whether the effects of misstatements, both individually and on
the financial statements as a whole, could reasonably influence the economic
decisions of the users we take into account the qualitative nature and the
size of the misstatements. Based on our professional judgement, we determined
materiality as follows:
Overall materiality £7.1m (2024: £6.9m)
Basis for determining overall materiality 1% of net assets (2024: 1% of net assets)
Rationale for benchmark applied Net asset value per share is one of the company's key performance indicators
and considered to be one of the principal considerations for members of the
company when assessing financial performance.
Performance materiality £5.3m (2024: £5.2m)
Basis for determining performance materiality 75% of overall materiality (2024: 75%)
Reporting of misstatements to the Audit Committee Quantitative misstatements in excess of £357,000 (2024: £345,000) together
with any other misstatements below that threshold that, in our view, warranted
reporting on qualitative grounds.
an overview of the scope of our audit
The company has been subject to a full scope audit. The company is a single
entity, subject to local statutory audit, and our audit work was designed to
address the risks of material misstatements identified to the level of
materiality indicated above.
conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the company's ability to continue to adopt the going concern
basis of accounting included:
· reviewing, evaluating and challenging the company's going concern
disclosures in note 1(b) to the financial statements and the company's
viability statement on page 21 of the annual report; and
· corroborating the cash and treasury bills as at 31 January 2025
and at the date of approval of the financial statements.
Our key observation in relation to going concern is that the company has
sufficient cash and liquid investments to continue as a going concern for the
foreseeable future.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the company's ability to continue
as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
In relation to the entity's reporting on how it has applied the UK Corporate
Governance Code, we have nothing material to add or draw attention to in
relation to the Directors' statement in the financial statements about whether
the Directors considered it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
other information
The other information comprises the information included in the annual report
other than the financial statements and our auditor's report thereon. The
Directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
opinions on other matters prescribed by the companies act 2006
In our opinion, the part of the Directors' remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the Strategic Report and the Report of
the Directors for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
· the Strategic Report and the Report of the Directors have been
prepared in accordance with applicable legal requirements.
matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its
environment obtained in the course of the audit, we have not identified
material misstatements in the Strategic Report or the Report of the Directors.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the company, or
returns adequate for our audit have not been received from branches not
visited by us; or
· the financial statements and the part of the Directors'
remuneration report to be audited are not in agreement with the accounting
records and returns; or
· certain disclosures of Directors' remuneration specified by law
are not made; or
· we have not received all the information and explanations we
require for our audit.
corporate governance statement
We have reviewed the Directors' statement in relation to going concern,
longer-term viability and that part of the Corporate Governance Statement
relating to the Company's compliance with the provisions of the UK Corporate
Governance Statement specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each
of the following elements of the Corporate Governance Statement is materially
consistent with the financial statements and our knowledge obtained during the
audit:
· Directors' statement with regards the appropriateness of adopting
the going concern basis of accounting and any material uncertainties
identified set out on page 27;
· Directors' explanation as to their assessment of the Company's
prospects, the period this assessment covers and why this period is
appropriate set out on page 21;
· Directors' statement on whether they have a reasonable
expectation that the Company will be able to continue in operation and meets
its liabilities set out on page 21;
· Directors' statement on fair, balanced and understandable set out
on page 29;
· Board's confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on pages 19 and 20;
· Section of the annual report that describes the review of
effectiveness of risk management and internal control systems set out on pages
32 to 34; and,
· Section describing the work of the audit committee set out on
page 31.
responsibilities of directors
As explained more fully in the Directors' responsibilities statement set out
on pages 28 and 29, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the Directors determine is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the Company or
to cease operations, or have no realistic alternative but to do so.
auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
the extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities are instances of non-compliance with laws and regulations. The
objectives of our audit are to obtain sufficient appropriate audit evidence
regarding compliance with laws and regulations that have a direct effect on
the determination of material amounts and disclosures in the financial
statements, to perform audit procedures to help identify instances of
non-compliance with other laws and regulations that may have a material effect
on the financial statements, and to respond appropriately to identified or
suspected non-compliance with laws and regulations identified during the
audit.
In relation to fraud, the objectives of our audit are to identify and assess
the risk of material misstatement of the financial statements due to fraud, to
obtain sufficient appropriate audit evidence regarding the assessed risks of
material misstatement due to fraud through designing and implementing
appropriate responses and to respond appropriately to fraud or suspected fraud
identified during the audit.
However, it is the primary responsibility of management, with the oversight of
those charged with governance, to ensure that the entity's operations are
conducted in accordance with the provisions of laws and regulations and for
the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of
irregularities, including fraud, the audit engagement team:
· obtained an understanding of the nature of the industry and
sector, including the legal and regulatory framework that the company operates
in and how the Company is complying with the legal and regulatory framework;
· inquired of management, and those charged with governance, about
their own identification and assessment of the risks of irregularities,
including any known actual, suspected or alleged instances of fraud;
· discussed matters about non-compliance with laws and regulations
and how fraud might occur including assessment of how and where the financial
statements may be susceptible to fraud, having obtained an understanding of
the effectiveness of the control environment.
The most significant laws and regulations were determined as follows:
Legislation/Regulation Additional audit procedures performed by the audit engagement team included:
Companies Act 2006, UK-adopted International Accounting Standards and Review of the financial statement disclosures and testing to supporting
the Listing Rules documentation; and completion of disclosure checklists to identify areas of
non-compliance.
The areas that we identified as being susceptible to material misstatement due
to fraud were:
Risk Additional audit procedures performed by the audit engagement team included:
Management override of controls Testing the appropriateness of journal entries and other adjustments;
Assessing whether the judgements made in making accounting estimates
(including the valuation of unquoted investments) are indicative of a
potential bias; and
Evaluating the business rationale of any significant transactions that are
unusual or outside the normal course of business.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
http://www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor's report.
other matters which we are required to address
Following the recommendation of the audit committee, we were appointed by the
directors on 28 February 2020 to audit the financial statements for the year
ended 31 January 2020 and subsequent financial periods. This is the sixth
period of engagement, so the period of total uninterrupted engagement is six
years covering the years ended 31 January 2020 to 2025.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the company and we remain independent of the company in conducting
our audit.
Our audit opinion is consistent with the additional report to the audit
committee in accordance with ISAs (UK).
use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and
Transparency Rules, these financial statements will form part of the Annual
Financial Report prepared in Extensible Hypertext Markup Language (XHTML)
format and filed on the National Storage Mechanism of the UK FCA. This
auditor's report provides no assurance over whether the annual financial
report has been prepared in XHTML format.
Andrew Allchin (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
6 May 2025
statement of comprehensive income
for the year ended 31 January
2025 2024
Notes Revenue £'000 Capital £'000 Total £'000 Revenue £'000 Capital £'000 Total £'000
Income 2 23,655 - 23,655 20,817 - 20,817
Net gains/(losses) on investments at fair value 8 - 26,724 26,724 - (9,539) (9,539)
Currency gains/(losses) 8 - 154 154 - (523) (523)
total income 23,655 26,878 50,533 20,817 (10,062) 10,755
Expenses
Investment management fee 3 (7,258) - (7,258) (7,122) - (7,122)
Other expenses 4 (1,344) - (1,344) (1,449) - (1,449)
return before finance costs and taxation 15,053 26,878 41,931 12,246 (10,062) 2,184
Finance costs - - - (6) - (6)
return before taxation 15,053 26,878 41,931 12,240 (10,062) 2,178
Taxation 6 (11) - (11) (30) - (30)
return for the year 15,042 26,878 41,920 12,210 (10,062) 2,148
basic and diluted earnings per ordinary share 7 112.91 201.75 314.66 90.39 (74.49) 15.90
The total column of the statement is the Statement of Comprehensive Income of
the Company, prepared in accordance with UK-adopted International Accounting
Standards. The supplementary revenue and capital columns are presented in
accordance with the Statement of Recommended Practice issued by the
Association of Investment Companies ("AIC SORP").
All items in the above Statement derive from continuing operations. No
operations were acquired or discontinued in the year.
There is no other comprehensive income, and therefore the return for the year
is also the comprehensive income.
The notes on pages 53 to 78 form part of these financial statements.
statement of changes in equity
for the year ended 31 January
Share capital £'000 Capital redemption reserve Share premium £'000 Capital reserve £'000 Revenue reserve £'000 Total £'000
£'000
2025
31 January 2024 673 197 1,301 670,168 17,891 690,230
Total comprehensive income for the year - - - 26,878 15,042 41,920
Dividend - - - - (9,195) (9,195)
Shares purchased for cancellation (12) 12 - (9,451) - (9,451)
31 January 2025 661 209 1,301 687,595 23,738 713,504
Share capital £'000 Capital redemption reserve Share premium £'000 Capital reserve £'000 Revenue reserve £'000 Total £'000
£'000
2024
31 January 2023 680 190 1,301 685,504 5,681 693,356
Total comprehensive (loss)/income for the year - - - (10,062) 12,210 2,148
Shares purchased for cancellation (7) 7 - (5,274) - (5,274)
31 January 2024 673 197 1,301 670,168 17,891 690,230
The notes on pages 53 to 78 form part of these financial statements.
balance sheet
as at 31 January
Notes 31 January 2025 £'000 31 January 2024 £'000
non current assets
Investments at fair value through profit or loss 8 695,418 612,425
695,418 612,425
current assets
Trade and other receivables 9 6,365 69,272
Cash and cash equivalents 17,310 9,203
23,675 78,475
total assets 719,093 690,900
current liabilities
Trade and other payables 10 (5,589) (670)
total liabilities (5,589) (670)
total assets less current liabilities 713,504 690,230
net assets 713,504 690,230
represented by:
Share capital 11 661 673
Capital redemption reserve 209 197
Share premium account 1,301 1,301
Capital reserve 687,595 670,168
Revenue reserve 23,738 17,891
total equity attributable to equity holders of the company 713,504 690,230
net asset value per ordinary share:
Basic and Diluted 7 5,397p 5,127p
The notes on pages 53 to 78 form part of these financial statements.
These financial statements were approved and authorised for issue by the Board
of Directors on 6 May 2025 and signed on its behalf by:
Sir Charles Wake, Chairman
Company Registered Number: 1091347
cash flow statement
for the year ended 31 January
Notes 2024 2023
£'000 £'000
cash flows from operating activities
Investment income received 17,545 17,362
Deposit interest received 897 765
Interest received from money market funds 474 -
Investment Manager's fees paid (7,265) (7,078)
Other cash payments (1,469) (1,581)
cash generated from operations 12 10,182 9,468
Taxation paid (11) (30)
net cash inflow from operating activities 10,171 9,438
cash flows from investing activities
Purchases of investments (389,154) (424,801)
Sales of investments 405,276 424,503
net cash inflow/(outflow) from investing activities 16,122 (298)
cash flows from financing activities
Dividend paid (9,195) (2,992)
Repurchase of Ordinary Shares for cancellation (9,451) (5,274)
net cash outflow from financing activities (18,646) (8,266)
increase in cash and cash equivalents for the year 7,647 874
cash and cash equivalents at the start of the year 9,203 9,010
Revaluation of foreign currency balances 460 (681)
cash and cash equivalents at the end of the year 13 17,310 9,203
The notes on pages 53 to 78 form part of these financial statements.
notes to the financial statements
1 accounting policies
NASCIT is a listed public company incorporated and registered in England and
Wales. The registered office of the Company is 6 Stratton Street, Mayfair,
London W1J 8LD. 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 and its investment approach is detailed in the Strategic Report.
a) basis of preparation
The financial statements of the Company have been prepared in accordance with
UK-adopted International Accounting Standards. The annual financial statements
have also been prepared in accordance with the AIC SORP for the financial
statements of investment trust companies and venture capital trusts.
The functional currency of the Company is Pounds Sterling because this is the
currency of the primary economic environment in which the Company operates.
The financial statements are also presented in Pounds Sterling rounded to the
nearest thousand, except where otherwise indicated.
b) 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 adequate resources to
continue in operational existence for a period of at least 12 months from the
date when these financial statements were approved.
The Directors are of the view that the Company can meet its obligations as and
when they fall due. The cash and US treasury bills available enables the
Company to meet any funding requirements and finance future additional
investments. The Company is a closed-end fund, where assets are not required
to be liquidated to meet day-to-day redemptions.
c) 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 small
companies principally based in countries bordering the North Atlantic Ocean.
d) accounting developments
In the current year, the Company has applied a number of amendments to IFRS,
issued by the IASB mandatorily effective for an accounting period that begins
on or after 1 January 2024. The adoption of these has not had any material
impact on these financial statements.
e) critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in accordance with UK-adopted
International Accounting Standards requires management to make judgements,
estimates and assumptions that affect the application of policies and the
reported amounts in the Balance Sheet, the Income Statement and the disclosure
of contingent assets and liabilities at the date of the financial statements.
The estimates and associated assumptions are based on historical experience
and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making judgements about
carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future period if the revision affects both current and
future periods.
In order to value the unquoted investments, there are a number of valuation
techniques that can be used. Judgement is used to determine the best
methodology to obtain the most accurate valuation. Details of valuation
techniques used and sensitivities are set out in Note 14.
The Board of Directors has assessed the Company as meeting the definition of
an investment entity within IFRS 10 Consolidated Financial Statements
requirements. The Company measures the subsidiaries at fair value through
profit or loss rather than consolidate the entities. The details are set out
in Note 8.
Except as set out above, there were no accounting estimates or significant
judgements in the current period that have had a material impact upon the
financial statements.
f) investments
All investments are designated upon initial recognition as held at fair value
through profit or loss, and are measured at subsequent reporting dates at fair
value. Quoted investments are valued using closing traded price for Stock
Exchange Electronic Trading Service ('SETS') shares and bid price for other
quoted shares. The Company derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and rewards of
ownership of the asset to another entity. On derecognition of a financial
asset, the difference between the asset's carrying amount and the sum of
consideration received and receivable and the cumulative gain or loss that had
been accumulated is recognised in profit or loss.
Fair values for unquoted investments, or investments for which the market is
inactive, are established by using various valuation techniques in accordance
with the International Private Equity and Venture Capital Valuation (the
"IPEV") guidelines. These may include recent arm's length market transactions,
the current fair value of another instrument which is substantially the same,
discounted cash flow analysis and option pricing models. Where there is a
valuation technique commonly used by market participants to price the
instrument and that technique has been demonstrated to provide reliable
estimates of prices obtained in actual market transactions, that technique is
utilised.
Gains and losses arising from changes in fair value are included in the total
return as a capital item. Also included within this heading are transaction
costs in relation to the purchase or sale of investments. When a sale or
purchase is made under a contract, the terms of which require delivery within
the timeframe of the relevant market, the investments concerned are recognised
or derecognised on the trade date.
All investments for which a fair value is measured or disclosed in the
financial statements are categorised within the fair value hierarchy levels
set out in Note 14.
g) foreign currency translation
Transactions in currencies other than Pounds Sterling are recorded at the
rates of exchange prevailing on the date of the transaction. Items that are
denominated in foreign currencies are retranslated at the rates prevailing on
the Balance Sheet date. Any gain or loss arising from a change in exchange
rate subsequent to the date of the transaction is included as an exchange gain
or loss in the capital reserve or the revenue account depending on whether the
gain or loss is capital or revenue in nature.
h) cash and cash equivalents
Cash comprises cash in hand, overdrafts and demand deposits. Cash equivalents
are short-term, highly liquid investments that are readily convertible to
known amounts of cash and which are subject to insignificant risk of changes
in value.
For the purpose of the Cash Flow Statement, cash and cash equivalents consist
of cash and cash equivalents as defined above, net of outstanding bank
overdrafts when applicable.
i) other receivables and payables
Trade receivables and trade payables are measured at amortised cost and
balances revalued for exchange rate movement.
j) income
Dividends receivable on quoted equity shares are taken to revenue on an
ex-dividend basis. Dividends receivable on equity shares where no ex-dividend
date is quoted are brought into account when the Company's right to receive
payment is established. Fixed returns on non-equity shares are recognised on a
time-apportioned basis. Dividends from overseas companies are shown gross of
any withholding taxes which are disclosed separately in the Statement of
Comprehensive Income.
Special dividends are taken to the revenue or capital account depending on
their nature. In deciding whether a dividend should be regarded as capital or
revenue receipt, the Board reviews all relevant information as to the sources
of the dividend on a case-by-case basis.
When the Company has elected to receive scrip dividends in the form of
additional shares rather than in cash, the amount of the cash dividend
foregone is recognised as income. Any excess in the value of the cash dividend
is recognised in the capital column.
All other income is accounted on a time-apportioned accruals basis and is
recognised in the Statement of Comprehensive Income.
k) expenses and finance costs
All expenses are accounted on an accruals basis and are allocated wholly to
revenue with the exception of the Performance Fees which are allocated wholly
to capital, as the fee payable by reference to the capital performance of the
Company.
Expenses incurred in shares purchased for cancellation are charged to the
capital reserve through the Statement of Changes in Equity.
l) taxation
The charge for taxation is based on the net revenue for the year and takes
into account taxation deferred or accelerated because of temporary differences
between the treatment of certain items for accounting and taxation purposes.
Deferred tax is provided using the liability method on temporary differences
between the tax bases of assets and liabilities and their carrying amount for
financial reporting purposes at the reporting date. Deferred tax assets are
only recognised if it is considered more likely than not that there will be
suitable profits from which the future reversal of timing differences can be
deducted. In line with recommendations of the SORP, the allocation method used
to calculate the tax relief expenses charged to capital is the 'marginal'
basis. Under this basis, if taxable income is capable of being offset entirely
by expenses charged through the revenue account, then no tax relief is
transferred to the capital account.
m) dividends payable to shareholders
Dividends to shareholders are recognised as a liability when paid for interim
dividends or approved at general meetings for final dividends, and are taken
to the Statement of Changes in Equity. Dividends declared and approved by the
Company after the Balance Sheet date have not been recognised as a liability
of the Company at the Balance Sheet date.
n) share capital and reserves
Share Capital: Represents the nominal value of equity shares.
Capital Redemption Reserve: The amount by which the share capital has been
reduced, equivalent to the nominal value of the Ordinary Shares repurchased
for cancellation.
Share Premium: The account is a non-distributable reserve which represents the
accumulated premium paid for shares issued in previous periods above their
nominal value less issue expenses.
Capital Reserve: The following items are taken to this reserve:
· realised and unrealised capital and exchange gains and losses on
the disposal and revaluation of investments and of foreign currency items;
· performance fee costs;
· Ordinary Shares repurchased for cancellation and
· exchange differences of a capital nature.
This is a non-distributable reserve.
Revenue Reserves: Represents the surplus of accumulated revenue profits being
the excess of income derived from holding investments less the costs
associated with running the Company. This reserve may be distributed by way of
dividends.
2 income
2025 2024
£'000 £'000
income from investments
Dividend income 12,842 11,785
Interest 9,240 7,928
Other investment income 171 339
22,253 20,052
other income
Interest receivable 897 765
Interest from money market funds 505 -
1,402 765
Total income 23,655 20,817
total income comprises
Dividends 12,842 11,785
Interest 10,642 8,693
Other investment income 171 339
23,655 20,817
income from investments
Listed UK 9,879 9,501
Other listed 2,963 2,284
Unquoted UK 619 859
Other unquoted 8,792 7,408
22,253 20,052
3 investment management fee
(i) Pursuant to the Secondment Services Agreement,
described in the Report of the Directors on page 25 and the Directors'
Remuneration Report on page 36, GFS provides the services of Christopher Mills
as Chief Executive of the Company, who is responsible for day-to-day
investment decisions. Christopher Mills is a director of GFS. GFS is entitled
to receive part of the investment management and related fees payable to GFS
and NAIS as may be agreed between them from time to time.
(ii) Pursuant to the terms of the Sub Advisory,
Administration and Transmission Services Agreement, described on page 25 of
the Report of the Directors, NAIS is entitled to receive a fee (the Annual
Fee) in respect of each financial period equal to the difference between (a)
1% of shareholders' Funds (as defined) on 31 January each year and (b) the
amount payable to GFS referred to in note 3(i) above. This fee is payable
quarterly in advance.
As set out in note 15, no formal arrangements exist to avoid double charging
on investments managed or advised by the Chief Executive or NAIS.
(iii) The Performance Fee, calculated annually to 31
January, is only payable if the investment portfolio, including Oryx at the
adjusted price, outperforms the Sterling adjusted Standard & Poor's' 500
Composite Index. It is calculated as 10% of the outperformance and paid as a
percentage of shareholders' Funds. It is limited to a maximum payment of 0.5%
of shareholders' Funds. The Performance Fee arrangements payable to GFS have
been in place since 1984 when they were approved by shareholders.
The amounts payable in the year in respect of investment management are as
follows:
2025 2024
Revenue £'000 Capital £'000 Total £'000 Revenue £'000 Capital £'000 Total £'000
Annual fee payable to NAIS 4,355 - 4,355 4,273 - 4,273
Annual fee payable to GFS 2,903 - 2,903 2,849 - 2,849
Performance fee - - - - - -
7,258 - 7,258 7,122 - 7,122
At 31 January 2025, £363,000 was payable to NAIS in respect of outstanding
management fees (2024: £356,000). At 31 January 2025, there was no fee
payable to GFS in respect of outstanding performance fees (2024: £nil).
4 other expenses
2025 2024
£'000 £'000
Auditor's remuneration - audit - RSM UK Audit LLP 86 80
Directors' fees (see page 38) 218 206
Administration fee* 396 460
Legal and Professional fees 70 76
Registrar's fees 63 48
Stock Exchange related fees 82 55
Irrecoverable VAT 151 212
Depositary fees 90 92
Custody fees 38 38
Directors' insurance 34 44
Other expenses 116 138
1,344 1,449
* Included within the administration fee are amounts of £268,000 (2024:
£338,000) due to companies ultimately controlled by Harwood Capital
Management Ltd.
5 dividends paid
2025 2024
£'000 £'000
Dividend for the year ended 31 January 2025 of 68.5 pence per share (2024: 9,195 -
nil)
9,195 -
Subsequent to the year end, the Directors have declared an interim dividend
totalling £11.6m (2024: £9.2m) from the revenue reserves, in respect of the
year ended 31 January 2025 of 88.0p per share (2024: 68.5p), payable 8 April
2025 to shareholders of ordinary shares on the Company's register at the
close of business on 7 March 2025.
6 taxation
2025 2024
Total Total
£'000 £'000
Withholding tax 11 30
11 30
The current taxation charge for the year is lower than the standard rate of
Corporation Tax in the UK of 25% (2024: 24%). The differences are explained
below.
2025 2024
Total Total
£'000 £'000
Total return before taxation 41,931 2,178
Theoretical tax at UK Corporation tax rate of 25% (2024: 24%) 10,483 523
Effects of:
Non taxable capital return (6,720) 2,415
UK and overseas dividends which are not taxable (3,120) (2,695)
Withholding tax 11 30
Increase in tax losses, disallowable expenses and excess management expenses (643) (243)
actual current tax charge 11 30
Factors that may affect future tax charges:
As at 31 January 2025, the company had tax losses of £76,498,000 (2024:
£79,096,000) that are available to offset against future taxable revenue,
comprising excess management expenses of £71,126,000 and a non-trade loan
relationship deficit of £5,372,000 (2024: excess management expenses of
£70,101,000 and a non-trade loan relationship deficit of £8,995,000). A
deferred tax asset has not been recognised in respect of those losses as the
company is not expected to generate taxable income in the future in excess of
the deductible expenses of future periods and, accordingly, it is unlikely
that the company will be able to reduce future tax liabilities through the use
of those losses.
The Company is exempt from corporation tax on capital gains provided it
maintains its status as an investment trust under Chapter 4 of Part 24 of the
Corporation Tax Act 2010. Due to the Company's intention to continue to meet
the conditions required to maintain its investment trust status, it has not
provided for deferred tax on any capital gains or losses arising on the
revaluation or disposal of investments.
7 return per ordinary share and net asset value per ordinary share
a) return per ordinary share:
Revenue Capital Total
Net return Ordinary Shares Per Share Net return Ordinary Shares Per Share Net return Ordinary Shares Per Share
£'000 pence £'000 pence £'000 pence
2025
Basic and diluted return per Share 15,042 13,322,158 112.91 26,878 13,322,158 201.75 41,920 13,322,158 314.66
Revenue Capital Total
Net return Ordinary Shares Per Share Net return Ordinary Shares Per Share Net return Ordinary Shares Per Share
£'000 pence £'000 pence £'000 pence
2024
Basic and diluted return per Share 12,210 13,508,610 90.39 (10,062) 13,508,610 (74.49) 2,148 13,508,610 15.90
Return per Ordinary Share has been calculated using the weighted average
number of Ordinary Shares in issue during the year.
b) net asset value per ordinary share:
The net asset value per Ordinary Share calculated in accordance with the
Articles of Association is as follows:
2025 Net assets Number of Ordinary Shares Net asset value
£'000 per Share
Ordinary Shares - Basic and diluted 713,504 13,220,000 5,397p
Ordinary Shares* - Basic and diluted 758,879 13,220,000 5,740p
2024 Net assets Number of Ordinary Shares Net asset value
£'000 per Share
Ordinary Shares - Basic and diluted 690,230 13,461,575 5,127p
Ordinary Shares* - Basic and diluted 725,778 13,461,575 5,391p
* Adjusted for Oryx using equity accounting.
There is no dilutive effect for 31 January 2025 or 31 January 2024.
The Company has also reported an adjusted net asset value per share, 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 was 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 year end, are as follows:
2025 2024
£'000 £'000
Oryx at Fair value (traded price) using IFRS 10 81,750 83,706
Oryx value using Equity Accounting 127,125 119,254
Increase in net assets using Equity Accounting 45,375 35,548
8 investments at fair value through profit or loss
a) investments at fair value through profit or loss
2025 2024
£'000 £'000
Quoted at fair value:
United Kingdom 446,419 408,377
Overseas 6,729 5,697
Total quoted investments 453,148 414,074
Treasury bills at fair value 66,445 60,757
Unlisted and loan stock at fair value 175,825 137,594
investments at fair value through profit or loss 695,418 612,425
2025 Quoted Unquoted Loan Treasury Total £'000
equities Equities Stocks Bills
£'000 £'000 £'000 £'000
analysis of investment portfolio movements
Opening bookcost as at 1 February 2024 316,671 59,146 32,840 60,341 468,998
Opening unrealised appreciation/(depreciation) 97,403 46,768 (1,160) 416 143,427
opening fair value as at 414,074 105,914 31,680 60,757 612,425
1 February 2024
Movements in year:
Purchases at cost 53,697 25,123 21,560 319,742 420,122
Sales - proceeds (25,367) (18,728) (4,367) (315,391) (363,853)
- realised (losses)/gains on sales (47,636) 11,346 131 1,455 (34,704)
Increase/(decrease) in appreciation on assets held 58,380 2,325 841 (118) 61,428
closing fair value as at 31 January 2025 453,148 125,980 49,845 66,445 695,418
Closing bookcost as at 31 January 2025 297,365 76,887 50,164 66,147 490,563
Closing appreciation/(depreciation) 155,783 49,093 (319) 298 204,855
453,148 125,980 49,845 66,445 695,418
2024 Quoted equities £'000 Unquoted equities £'000 Loan stocks £'000 Treasury Bills £'000 Total £'000
analysis of investment portfolio movements
Opening bookcost as at 1 February 2023 285,154 65,544 31,404 100,663 482,765
Opening unrealised appreciation/(depreciation) 164,940 37,971 65 (250) 202,726
opening fair value as at 1 February 2023 450,094 103,515 31,469 100,413 685,491
Movements in year:
Transfer - at cost (7,069) 7,069 - - -
- unrealised depreciation at date of transfer 4,650 (4,650) - - -
Purchases at cost 77,505 4,575 7,800 312,667 402,547
Sales - proceeds (90,599) (18,992) (6,515) (349,968) (466,074)
- realised gains/(losses) on sales 51,680 950 151 (3,021) 49,760
(Decrease)/increase in appreciation on assets held (72,187) 13,447 (1,225) 666 (59,299)
closing fair value as at 31 January 2024 414,074 105,914 31,680 60,757 612,425
Closing bookcost as at 31 January 2024 316,671 59,146 32,840 60,341 468,998
Closing appreciation/(depreciation) 97,403 46,768 (1,160) 416 143,427
414,074 105,914 31,680 60,757 612,425
2025 2024
£'000 £'000
analysis of capital gains and losses
(Losses)/gains on sales (34,704) 49,760
Unrealised gains/(losses) 61,428 (59,299)
gains/(losses) on investments at fair value 26,724 (9,539)
2025 2024
£'000 £'000
Exchange (losses)/gains on capital items (306) 158
Exchange gains/(losses) on currency 460 (681)
exchange gains/(losses) 154 (523)
2025 2024
£'000 £'000
portfolio analysis
Equity shares 563,595 518,198
Preference securities 15,533 1,790
Fixed interest/Loan note securities 49,845 31,680
Treasury Bills 66,445 60,757
695,418 612,425
b) subsidiary undertakings
At 31 January 2025 the Company has the following Subsidiaries which were
active during the year:
Subsidiary Principal activity Equity held Country of registration
Consolidated Venture Finance Limited Investment entity 100% England and Wales
Hampton Investment Properties Limited Property investment 79.65% England and Wales
Oryx International Growth Fund Limited Investment company 53.57% Guernsey
assessment as an investment entity
Entities that meet the definition of an investment entity within IFRS 10
Consolidated Financial Statements, are required to measure their subsidiaries
at fair value through profit or loss rather than consolidate the entities. The
criteria which define an investment entity are as follows:
· an entity that obtains funds from one or more investors for the
purpose of providing those investors with investment services;
· an entity that commits to its investors that its business purpose
is to invest funds solely for returns from capital appreciation, investment
income or both; and
· an entity that measures and evaluates the performance of
substantially all of its investments on a fair value basis.
The Board concluded that the Company continues to meet the characteristics of
an investment entity in that it has more than one investment, it has ownership
interests in the form of equity and similar interests, it has more than one
investor and its investors are not related parties other than those disclosed
in note 15.
c) significant holdings
At the year-end, the Company held 20% or over of the aggregate nominal value
of voting equity of the following companies:
Company and address of principal business Country of incorporation and registration Year end Capital and reserves £'000 Profit/ Company holding Company holding
(loss) for 31 January 2025 31 January 2024
the last financial year £'000 % %
Consolidated Venture Finance Limited England and Wales 31 January 2024 (740) - 100.00 100.00
6 Stratton Street, Mayfair, London W1J 8LD
Crest Foods Co, Inc United States of America 31 July 2024 231 11,041 32.11 -
502 Brown Avenue, Ashton, IL 61006
EKF Diagnostics Holdings Plc England and Wales 31 December 2024 73,212 5,331 21.20 21.20
Avon House, 19 Stanwell Road, Penarth, Cardiff CF64 2EZ
Frenkel Topping Group Plc England and Wales 31 December 2024 42,251 3,061 29.96 29.96
Frenkel House 15 Carolina Way, Salford, Manchester M50 2ZY
Hampton Investment Properties England and Wales 31 December 2023 12,042 (46) 79.65 79.65
6 Stratton Street, Mayfair, London W1J 8LD
Hargreaves Services Plc England and Wales 31 May 2024 192,096 2,533 20.17 20.32
West Terrace, Esh Winning, Durham DH7 9PT
Harwood Private Capital UK LP England and Wales 31 March 2024 32,846 2,011 28.57 28.57
6 Stratton Street, Mayfair, London W1J 8LD
Harwood Private Equity Fund IV LP England and Wales 31 December 2024 75,042 256 26.28 26.28
6 Stratton Street, Mayfair, London W1J 8LD
Harwood Private Equity Fund V LP England and Wales 31 December 2024 146,105 (94) 25.00 25.00
6 Stratton Street, Mayfair, London W1J 8LD
Oryx International Growth Fund Limited Guernsey 31 March 2024 231,666 25,233 53.57 52.68
BNP Paribas House, St Julian's Avenue
St Peter Port, Guernsey GY1 1WA
Trident Private Equity Fund III LP England and Wales 31 December 2023 2,893 (257) 38.76 38.76
6 Stratton Street, Mayfair, London W1J 8LD
All the investments detailed above have not been consolidated into the
financial statements due to the Company meeting the definition of an
investment entity under IFRS 10 and therefore these investments are included
at fair value through profit and loss.
At the year end, the Company held over 3% of the shares in the following
listed companies which were considered to be material:
%
Oryx International Growth Fund Limited 53.57
Frenkel Topping Group Plc 29.96
EKF Diagnostics Holdings Plc 21.16
Hargreaves Services Plc 20.17
Bigblu Broadband Plc 14.44
AssetCo Plc 14.04
Odyssean Investment Trust Plc 12.02
Carr's Group Plc 10.91
Real Estate Investors Plc 10.01
Verici DX Limited 9.48
Niox Group Plc 8.79
MJ Gleeson Plc 8.56
Polar Capital Holdings Plc 6.89
Palace Capital Plc 6.47
Mountain Comm Bancorp 6.12
Redcentric Plc 4.86
Restore Plc 4.56
Pinewood Technologies Group Plc 4.49
Conduit Holdings Limited 3.04
Renalytix AI Plc 3.02
d) investments in US treasury bills
At 31 January 2025, the Company held US Treasury Bills with a market value of
£66,445,000 (2024: £60,757,000).
e) transaction costs
During the year, the Company incurred total transaction costs of £230,000
(2024: £371,000) comprising £225,000 (2024: £363,000) and £5,000 (2024:
£8,000) on purchases and sales of investments respectively. These amounts are
included in net gains/(losses) on investments as disclosed in the Statement of
Comprehensive Income.
f) commitment
At 31 January 2025 NASCIT had undrawn capital commitments to invest £5.7
million (2024: £10.6 million) in Harwood Private Capital U.K. LP and £50.0
million (2024: £nil) in Harwood Private Equity VI LP.
9 trade and other receivables
2025 2024
£'000 £'000
Accrued income 5,170 3,696
Amounts due from brokers - 41,729
Prepayments and other receivables 1,011 23,694
Recoverable withholding tax 184 153
6,365 69,272
The 2024 amounts due from brokers was the sale of an investment for which the
funds were remitted
6 February 2024. 2024 prepayments and other debtors included £22.8 million
paid for an investment which completed 2 February 2024.
10 trade and other payables
2025 2024
£'000 £'000
Investment Manager's fees 363 356
Amounts due to brokers 4,887 -
Other payables and accruals 339 314
5,589 670
11 share capital
2025 2025 2024 2024
Number £'000 Number £'000
- allotted, called up and fully paid:
Ordinary Shares of 5p:
Balance at beginning of year 13,461,575 673 13,602,068 680
Cancellation of shares (241,575) (12) (140,493) (7)
Balance at end of year 13,220,000 661 13,461,575 673
Since 31 January 2025, 20,000 Ordinary Shares have been purchased by the
Company for cancellation for total consideration of £721,000. As at the date
of this report, the Company's issued share capital consists of 13,200,000
Ordinary Shares of 5p nominal value each.
12 reconciliation of total return before taxation to cash generated from operations
2025 2024
£'000 £'000
Total return before taxation 41,931 2,178
(Gains)/losses on investments and currency (26,878) 10,062
Income reinvested (3,275) (549)
Increase in trade and other receivables (1,628) (2,186)
Increase/(decrease) in trade and other payables 32 (37)
Cash received from operations 10,182 9,468
13 analysis of net cash
net cash At 1 February 2024 £'000 Cash flow £'000 Exchange movement £'000 At 31 January 2025 £'000
Cash and cash equivalents 9,203 7,647 460 17,310
14 financial instruments and risk profile
The Company's financial risk management objectives, policies and strategy can
be found in the Strategic Report on pages 2 to 23.
The Company's financial instruments comprise its investment portfolio, cash
balances, receivables and payables that arise directly from its operations.
Investments are stated at fair value through profit and loss. All other
financial assets and all financial liabilities are stated at amortised cost
with the balance sheet values a reasonable approximation to fair value.
The main risks arising from the Company's financial instruments are:
(i) market price risk, including currency risk, interest rate risk and
other price risk;
(ii) liquidity risk; and
(iii) credit risk
The Board and Manager consider and review the risks inherent in managing the
Company's assets which are detailed below.
(i) market price risk
The fair value or future cash flows of a financial instrument held by the
Company may fluctuate because of changes in market prices. This market risk
comprises currency risk, interest rate risk and other price risk. The Board of
Directors review and agree policies for managing these risks through detail
and continuing analysis. The Manager assesses the exposure to market risk when
making each investment decision and monitor the overall level of market risk
on the whole of the investment portfolio on an ongoing basis.
currency risk
The Company's total return and net assets can be materially affected by
currency translation movements as a significant proportion of the Company's
assets are denominated in currencies other than Sterling, which is the
Company's functional currency. It is not the Company's policy to hedge this
risk on a continuing basis but the Company may, from time to time, match
specific overseas investment with foreign currency borrowings. The Manager
seeks, when deemed appropriate, to manage exposure to currency movements on
borrowings by using forward foreign currency contracts as a hedge against
potential foreign currency movements. At 31 January 2025, the Company had no
open forward currency contracts (2024: none).
The revenue account is subject to currency fluctuation arising on overseas
income. The Company does not hedge this currency risk.
Foreign currency exposure by currency of denomination:
31 January 2025 31 January 2024
Overseas investments £'000 Net monetary assets Total currency exposure £'000 Overseas investments £'000 Net monetary assets Total currency exposure £'000
£'000 £'000
US Dollar 145,506 3,229 148,735 111,822 26,237 138,059
145,506 3,229 148,735 111,822 26,237 138,059
Sensitivity analysis is based on the Company's monetary foreign currency
exposure at each balance sheet date. If Sterling had moved by 10% against the
US Dollar, with all other variables constant, net assets would have moved by
the amounts shown below. The analysis is shown on the same basis for 2024.
31 January 2025 31 January 2024
10% weakening £'000 10% strengthening £'000 10% weakening £'000 10% strengthening £'000
US Dollar 16,526 (13,521) 15,340 (12,551)
16,526 (13,521) 15,340 (12,551)
In the opinion of the Directors, the above sensitivity analyses are not
representative of the year as a whole, since the level of exposure changes
frequently as part of the currency risk management process used to meet the
Company's objectives.
interest rate risk
Interest rate movements may affect;
· the fair value of the investments in fixed interest rate
securities (including unquoted loans); or
· the level of income receivable on cash deposits;
The possible effects on fair value and cash flows that could arise as a result
of changes in interest rates are taken into account when making investment
decisions.
The Board reviews on a regular basis the values of the fixed interest rate
securities and the unquoted loans to companies in which private equity
investment is made.
Movements in interest rates would not significantly affect net assets
attributable to the Company's shareholders and total profit.
other price risk
Other price risks (i.e. changes in market prices other than those arising from
currency risk or interest rate risk) may affect the value of the quoted and
unquoted investments.
The Company's exposure to 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. As at
the year-end, the spread of the Company's investment portfolio analysed by
sector was as set out on page 8.
The Board of Directors manages the market price risks inherent in the
investment portfolios by ensuring full and timely access to relevant
investment information from the Manager. The Board meets regularly and at each
meeting reviews investment performance. The Board monitors the Manager's
compliance with the Company's objectives and is directly responsible for
investment strategy and asset allocation.
The Company's exposure to other changes in market prices at 31 January 2025 on
its quoted and unquoted investments and options on investments was as follows:
2025 2024
£'000 £'000
Financial assets at fair value through profit or loss
- Non current investments at fair value through profit or loss 695,418 612,425
As mentioned in the accounting policies note, the Private equity investments
have been valued following the IPEV Valuation Guidelines. The valuation
incorporates all relevant factors that market participants would consider in
setting a price.
Methods applied include cost of investment, price of recent investments, net
assets and earnings multiples. Any valuations in local currency are converted
into sterling at the prevailing exchange rate on the valuation date.
Although the Manager believes that the estimates of fair values are
appropriate, the use of different methodologies or assumptions could lead to
different measurements of fair values.
Subsequent adjustments in price are determined by the Manager's Valuation and
Pricing Committee.
The table below shows how the most significant unquoted investments have been
valued as at 31 January 2025.
Method of fair value valuation 2025 fair value GBP £'000 2024 fair value GBP £'000
3BL Media USD 13% Loan Notes Cost 6,065 5,105
Coventbridge Group Limited 10% loan USD Cost 8,249 10,406
Crest Foods Common Shares USD EBITDA Multiple 12,055 -
Crest Foods Preference Shares USD Cost 14,197 -
Crest Foods 14.5% USD Loan Notes Cost 8,853 -
Hampton Investment Properties Ltd GBP Adjusted Net Assets 792 792
Harwood Private Capital UK L.P. GBP Net Assets 12,919 9,251
Harwood Private Equity Fund IV LP Net Assets 19,800 20,419
Harwood Private Equity Fund V LP Net Assets 36,593 33,596
Jaguar Holdings Limited Ordinary Shares - USD EBITDA Multiple 2,414 1,688
Jaguar Holdings Limited Preference Shares - USD Cost 1,336 1,790
Oryx International Growth Fund Limited 6% Loan Notes GBP Cost 6,000 -
Performance Chemical Holding Common Stock USD EBITDA Multiple 534 11,681
SMT Corporation 11% USD Loan Notes Cost 16,446 13,547
SMT Corporation 15% USD Loan Notes Cost 1,610 -
SourceBio International Ordinary Shares GBP EBITDA Multiple 9,600 9,200
Specialist Components Ltd GBP 5% Loan Notes GBP Cost 2,622 2,622
Specialist Components Ltd APC Technology Ord GBP EBITDA Multiple - -
Sportech Limited - Ordinary Shares GBP EBITDA Multiple 4,752 5,760
Spring Investment LP (Duke Street) GBP Net Assets 9,968 10,143
Trident Private Equity Fund LP3 GBP Net Assets 447 443
WEP Fund II SIMCO Co-Investment USD Net Assets 166 754
175,418 137,197
Other investments 407 397
175,825 137,594
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 difference 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.
Further detail on the valuation of significant investments, are detailed
below:
Harwood Private Equity IV LP (HPE4) and Harwood Private Equity V LP (HPE5)
Held at net asset value, derived from the audited financial statements of the
Funds as at 31 December 2024, as the underlying investments within HPE4 and
HPE5 are valued on a fair value basis and adjusted for Fund transactions
between 1 January 2025 to 31 January 2025. As the funds have no debts, a
change of 10% in the underlying assets would have a 10% impact on the Funds'
carrying value.
Harwood Private Capital LP (HPC):
Held at net asset value, derived from the monthly management accounts of the
Fund as at 31 January 2025. HPC invests mainly in debt instruments which
accrue payment in kind and cash interest, and also holds some minority equity
positions which are fair valued. As the Fund has no debts, a change of 10% in
the underlying assets would have a 10% impact on the Funds' carrying value.
SourceBio International - Ordinary Shares
This investment is held at the £1.20 per share price used for the
transactions associated with the acquisition and delisting in December 2022
(price of recent investment). This equates to an enterprise value calculated
based on an EBITDA multiple of 10.3x (2024: 9.6x). A reduction in the multiple
by a factor of 1x would reduce the carrying value of the total investment by
£0.944 million, or -10%. An increase in the multiple by a factor of 1x would
increase the value of the total investment by £0.944 million, or -10%.
SMT Corporation 11% and 15% USD - Loan Notes
The loan is held at par plus accrued interest. The enterprise value is
calculated using an EBITDA multiple of 12.5x (2024: 12.5x). Neither a
reduction nor an increase in the multiple by a factor of 1x would impact the
carry value of the loan.
CoventBridge Group 10% USD - Loan Notes
The loan is held at par plus accrued interest. The enterprise value is
calculated using an EBITDA multiple of 8.9x (2024: 8.1x). Neither a reduction
nor an increase in the multiple by a factor of 1x would impact the carry value
of the loan.
Spring Investment LP
Held at net asset value derived from the audited financial statements of the
Fund as at 31 December 2024 as the underlying investment is at fair value
using an EBITDA multiple of 7.3x (2024: 7.0x). As the fund has no debt, a
change of 10% in the underlying assets would have a 10% impact on the Fund's
carrying value.
Crest Foods USD - Ordinary Shares, Preference Shares and Loan Notes
The ordinary shares are valued using an EBITDA multiple of 10.0x (2024: not
held) to calculate an enterprise value. A reduction in the multiple by a
factor of 1x would reduce the carrying value of the total investment by £4.2
million or 28%. An increase in the multiple by factor of 1x would increase the
value of the total investment by £4.2 million or 28%. The loan notes are held
at par plus accrued interest. Neither a reduction nor an increase in the
multiple by a factor of 1x would impact the carrying value of the loan.
The following table illustrates the sensitivity of the profit after taxation
and net assets to an increase or decrease of 10% in the fair values of the
Company's investments. This level of change is considered to be reasonably
possible based on observation of current market conditions. The sensitivity
analysis is based on the Company's equities and equity exposure through
options at each Balance Sheet date, with all other variables held constant.
2025 2024
Increase in Decrease in Increase in Decrease in
fair value fair value fair value fair value
£'000 £'000 £'000 £'000
Increase/(decrease) in net assets 69,542 (69,542) 61,243 (61,243)
(ii) liquidity risk
This is the risk that the Company will encounter difficulty in meeting
obligations associated with financial liabilities.
The Company invests in equities and other investments that are readily
realisable. It also invests in unquoted securities, which are less readily
marketable than equities. These investments are monitored by the Board on
regular basis.
As at 31 January 2025, £66,445,000 (2024: £60,757,000) of the Company's
investments are held in short-term Treasury Bills, which are highly liquid and
could be accessed within one week.
As the Company is a closed-end company, assets do not need to be liquidated to
meet redemptions and sufficient liquidity is maintained to meet obligations as
they fall due.
(iii) credit risk
Other than its investment in US Treasury Bills, 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 receivables from time to time to
ensure they are neither past due or impaired.
The maximum exposure of the financial assets to credit risk at the Balance
Sheet date was as follows:
2025 2024
£'000 £'000
financial assets neither past due or impaired
Fixed income securities 49,845 31,680
Preference shares 15,533 1,790
Treasury Bills 66,445 60,757
Accrued income and other receivables 5,170 45,425
Cash and cash equivalents 17,310 9,203
154,303 148,855
The maximum credit exposure of financial assets represents the carrying
amount.
There are no financial assets that are past due or impaired.
commitments giving rise to credit risk
There are no commitments giving rise to credit risk as at 31 January 2025.
fair value of financial assets
The Company measures fair values using the fair value hierarchy that reflects
the significance of the inputs used in making the measurements of the relevant
assets as follows:
· 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). See note 1f for details on how
the value of level 3 investments are calculated.
The Company's main unobservable inputs are earnings multiples, recent
transactions and net asset basis. The market value would be sensitive to
movements in these unobservable inputs. Movements in these inputs,
individually or in aggregate could have a significant effect on the market
value. The effect of such a change or a reasonable possible alternative would
be difficult to quantify as such data is not available.
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 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 of financial assets in
accordance with the IFRS 13 fair value hierarchy system:
financial assets at fair value through profit or loss
At 31 January 2025
Total Level 1 Level 2 Level 3
£'000 £'000 £'000 £'000
Equity investments 579,128 453,148 - 125,980
Fixed interest investments 116,290 66,445 - 49,845
total 695,418 519,593 - 175,825
At 31 January 2024
Total Level 1 Level 2 Level 3
£'000 £'000 £'000 £'000
Equity investments 519,988 414,074 - 105,914
Fixed interest investments 92,437 60,757 - 31,680
total 612,425 474,831 - 137,594
A reconciliation of fair value measurements in Level 3 is set out below.
level 3 financial assets at fair value through profit or loss
At 31 January 2025
Total £'000 Equity investments £'000 Fixed interest investments £'000
Opening fair value 137,594 105,914 31,680
Purchases 46,683 25,123 21,560
Sales (23,095) (18,728) (4,367)
Total gains included in gains on investments in the Statement of Comprehensive
Income:
- on assets sold 11,477 11,346 131
- on assets held at the end of the year 3,166 2,325 841
closing fair value 175,825 125,980 49,845
capital management policies and procedures
The Company's capital management objectives are:
· to ensure that the Company will be able to continue as a going
concern; and
· to maximise the income and capital return to its equity
shareholders through an appropriate balance of equity capital and debt. The
policy is that gearing should not exceed 30% of net assets.
The Company's capital at 31 January comprises:
2025 2024
£'000 £'000
debt - -
equity
Equity share capital 661 673
Retained earnings and other reserves 712,843 689,557
713,504 690,230
debt as a % of net assets 0.0% 0.0%
The Board, with the assistance of the Manager monitor and reviews the broad
structure of the Company's capital on an ongoing basis. This review includes:
· the planned level of gearing, which takes account of the
Manager's views on the market;
· the need to buy back equity Shares for cancellation, which takes
account of the difference between the net asset value per share and the Share
price (i.e. the level of share price discount or premium);
· the need for new issues of equity Shares; and
· the extent to which revenue in excess of that which is required
to be distributed should be retained.
capital requirement
The Company's objectives, policies and processes for managing capital are
unchanged from the preceding accounting period.
15 related party transactions
Harwood Capital LLP, Harwood Private Equity LLP and Harwood Capital Management
(Gibraltar) Ltd are regarded as related parties of the Company due to
Christopher Mills, the Company's Chief Executive and Investment Manager
currently being a Director of Harwood Capital Management (Gibraltar) Ltd and a
Member of Harwood Capital LLP until 9 June 2015, and the ultimate beneficial
owner. Harwood Private Equity LLP replaced Harwood Capital LLP as Investment
Manager or Investment Adviser to the Private Equity Funds on 21 December 2022.
Harwood Capital Management (Gibraltar) Ltd acts as Investment Manager or
Investment Adviser to Oryx International Growth Fund Ltd, and Harwood Private
Equity LLP acts as Investment Manager or Investment Adviser of the Private
Equity Funds below, in which the Company has an investment and from which
companies it receives fees or other incentives for its services.
The table below discloses fees paid by Oryx and the Private Equity Funds to
these related parties:
Services 2025 2024
£'000 £'000
Oryx International Growth Fund Limited Investment Advisory 2,818 2,582
Trident Private Equity III LP Investment Advisory - -
Harwood Private Equity IV LP Investment Advisory 770 883
Harwood Private Equity V LP Investment Advisory 3,200 3,200
The amounts payable to the Manager are disclosed in note 3. The relationships
between the Company, its Directors and the Manager are disclosed in the Report
of the Directors on pages 24 to 26.
Christopher Mills is Chief Executive Officer and indirectly a member of
Harwood Capital LLP and Harwood Private Equity LLP. He is also a director of
Oryx. GFS is a wholly-owned subsidiary of Harwood Capital Management Limited,
which is the holding company of the Harwood group of companies and is, in
turn, 100% owned by Christopher Mills. Harwood Capital Management Limited is
also a Designated Member of Harwood Capital LLP and Harwood Private Equity
LLP, the past and current Administrators of the Company.
North Atlantic Investment Services Ltd provides administration services to the
Company (which were previously provided by Harwood Capital LLP under a similar
agreement) for the value £4,355,000 (2024: £3,913,000) At year-end balance
due to the business was £363,000 (2024:£356,000).
Fees from Odyssean Investment Trust Plc and Harwood Private Capital UK LP go
to Odyssean Capital LLP (OCLLP) and Harwood Private Capital LLP (HPCLLP)
respectively. Both OCLLP and HPCLLP are 50:50 JVs between Harwood Capital
Management Ltd and Stuart Widdowson, for OCLLP, and Haseeb Aziz, for HPCLLP.
During the year, a loan was made to Oryx for £8.0m. This was partially repaid
in the year and income on the loan was £105,000. The remaining balance at the
year end was £6.0m.
disclosure of interests
Christopher Mills is also a director of the following companies in which the
Company has an investment or may have had in the year and/or from which he may
receive fees or hold shares: AssetCo plc, Bigblu Broadband plc, CoventBridge
Group Limited, EKF Diagnostics Holdings Plc, Frenkel Topping Group plc, Jaguar
Holdings Limited, M J Gleeson Group plc, Oryx, Renalytix Al Plc,
SourceBio International plc, SureServe Group plc, Ten Entertainment Group
Plc, Trellus Health plc and Utitec Holdings Inc. Employees of the Manager may
hold options over shares in investee companies. A total of £314,069 (2024:
£469,202) in directors fees was received by Christopher Mills during the year
under review.
No formal arrangements exist to avoid double charging on investments held by
the Company which are also managed or advised by Christopher Mills (Chief
Executive) and/or Harwood Capital LLP. Members and certain private clients of
Harwood Capital LLP, and its associates (excluding Christopher Mills and his
family) hold 43,581 shares in the Company (2024: 51,424).
Members, employees, institutional clients and private clients of Harwood
Capital LLP and Harwood Private Equity LLP may co-invest in the same
investments as the Company.
From time to time Directors may co-invest in the same investments as the
Company.
directors and advisers
Directors
Sir Charles Wake (Chairman)
Christopher Mills (Chief Executive)
Fiona Gilbert
Lord Howard of Rising
G Walter Loewenbaum
Peregrine Moncreiffe
Julian Fagge
Administrator
North Atlantic Investment Services Limited
(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
Riverbank House
2 Swan Lane
London EC4R 3GA
Registered Office
6 Stratton Street
Mayfair
London W1J 8LD
Telephone: 020 7640 3200
Registrars
MUFG Corporate Markets
Central Square
29 Wellington Street
Leeds LS1 4DL
Auditors
RSM UK Audit LLP
25 Farringdon Street,
London EC4A 4AB
Company Secretary
SGH Company Secretaries Limited
60 Gracechurch Street
London EC3V 0HR
shareholder information
financial calendar
Announcement of results and Annual Report May
Annual General
Meeting
June
Half-Yearly results and
report September
Half-Yearly report
posted
September
share price
The Company's share price can be found on: SEAQ Ordinary Shares: NAS
Trustnet: www.trustnet.ltd.uk
net asset value
The latest net asset value of the Company can be found on the Company's
website: www.nascit.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 MUFG Corporate Markets. If you have a question
about your shareholding in the Company you should contact: MUFG Corporate
Markets, Central Square, 29 Wellington Street, Leeds LS1 4DL, by email:
shareholderenquiries@cm.mpms.mufg.com, or by telephone 0371 664 0300 and
+44 (0) 371 664 0300 (international).
Calls are charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable
international rate. Lines are open between 9am and 5.30pm, Monday to Friday
excluding public holidays in England and Wales.
Changes of name or address must be notified to the registrars in writing at:
MUFG Corporate Markets
Central Square
29 Wellington Street
Leeds LS1 4DL
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