REG - Onward Opportunities - Half-year Report
04/09/2023 07:00
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RNS Number : 1978L Onward Opportunities Limited 04 September 2023
4 September 2023
Onward Opportunities Limited
("Onward Opportunities", "ONWD" or the "Company")
Interim Results
Onward Opportunities Limited, the UK smaller company focused Guernsey
non-cellular (closed-ended) investing company, is pleased to announce its
unaudited interim results for the five-month period from the Company's
incorporation and ended 30 June 2023 (the "Period").
FINANCIAL HIGHLIGHTS
· Net Asset Value (NAV) performance over the period from IPO to 30
June 2023 of +0.8% and ONWD share price performance of +5.5%, both materially
outperforming the UK AIM All-Share (-6.5%) and MSCI UK Small Cap (-1.3%)
indices.
· Gross portfolio IRR (annualised return) of 11%, aggregating UK
Government Debt and equity holdings, gross IRR (annualised return) of 139%
from pure equity portfolio.
· Onward Opportunities was the first investment company to launch
on AIM since November 2021 and at launch the largest IPO year to date.
· Eight new initial investments including one core position
(Angling Direct plc), c.19% NAV deployed into UK smaller companies.
· 71% of NAV held in UK Government Debt at period end, a further
10% held in cash at bank.
POST PERIOD-END
· Encouraging market leading start to investment performance (NAV
growth) since inception placed 3(rd) /26 versus peers in the AIC UK smaller
companies sector; NAV +3.6% to 99.2p, outperforming UK AIM All-Share index by
11.5%, which fell 7.9%.
· Gross portfolio IRR (annualised return) of 20.7% across Gilts and
equity holdings, gross IRR (annualised return) of 65.8% from pure equity
portfolio.
· Three further core positions developed; React Specialist Cleaning
plc, Comptoir Libanais plc and Transense Technologies plc
· Around 50% of NAV deployed into UK smaller companies, other c.50%
NAV held in UK Government Debt and held in cash at bank.
· Three nursery investments realized for an aggregated IRR
(annualised return) materially ahead of target returns, particularly strong
supernormal returns captured from very recent investment into Restore plc.
· Nominated for the 'Best Use of AIM' and 'Best Newcomer' awards at
the upcoming 2023 AIM Awards.
Andrew Henton, Chairman, commented:
"Blessed with hindsight, it is hard to envision a less propitious timing for
the launch of a specialist fund targeting smaller listed UK companies than the
first quarter of 2023. A core thesis underlying the launch of the Company is
that the London stock market presents value investors with a rich seam of
opportunity, and the ability to buy companies whose earnings streams are
materially undervalued by reference both to their larger quoted market
comparators, and to unlisted companies backed by private equity. Great care is
being taken to deploy capital in a measured and considered manner, harnessing
the investment committee process and to build core positions only when the
full investment analysis process has been completed. The Board is fully
supportive of this approach and the performance potential is already very
evident."
Laurence Hulse, portfolio manager, commented:
"It was encouraging to see Onward Opportunities' portfolio get off to a market
leading start both in absolute terms and relative to the peer group. We have a
high-touch investment strategy that is well disposed to capitalise on the
current conditions in the UK. We operate using an independent mindset that is
underscored with proprietary due diligence and a collaborative team approach
drawing on depth of experience. Our pipeline and portfolio have been focused
on tangible investment theses; cash profits, margins of safety and
idiosyncratic catalysts. These factors have all combined to create conviction
and sector leading investment performance in a cautious market.
"Our first equity investments entered the portfolio this year, with deployment
into equities increasing to around 50% NAV across nascent ideas in the
"nursery" and four core positions."
The full version of the Onward Opportunities Limited interim report will be
available on its website shortly
at https://onwardopportunities.co.uk/wp-content/uploads/2023/09/Onward-Opportunities-Limited-June-2023.pdf
(https://protect-eu.mimecast.com/s/Jl4RCjRo0cyz2zVFWB7TJ?domain=onwardopportunities.co.uk)
-ENDS-
FOR FURTHER ENQUIRIES:
Onward Opportunities Limited Tel: +44 (0) 203 5303 150
Andrew Henton, Chairman ool@maitlandgroup.com
Dowgate Wealth Limited (Portfolio Manager) Tel: +44 (0) 203 5303 150
Laurence Hulse, Investment Director ool@maitlandgroup.com
Maitland Administration (Guernsey) Limited (Company Secretary) Tel: +44 (0) 203 5303 150
Martin Baxter / Harry Rouillard ool@maitlandgroup.com
Cenkos Securities plc (Nominated Adviser and Joint Broker) Tel: +44 (0)20 7397 8900
Ben Jeynes/Camilla Hume
Dowgate Capital Limited (Joint Broker) Tel: +44 (0)12 9351 7744
Russell Cooke / Nicholas Chambers
The information contained within this announcement is deemed by the Company to
constitute inside information pursuant to Article 7 of EU Regulation 596/2014
as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 as amended. Upon the publication of this announcement
via a Regulatory Information Service, this inside information is now
considered to be in the public domain
Certain of the information contained in this announcement regarding the
Company's investments has been provided by the relevant underlying portfolio
company and has not been independently verified by the Company. The
information contained herein is unaudited.
This announcement is for information purposes only and is not an offer to
invest. All investments are subject to risk. Past performance is no guarantee
of future returns. Prospective investors are advised to seek expert legal,
financial, tax and other professional advice before making any investment
decision. The value of investments may fluctuate. Results achieved in the past
are no guarantee of future results. Neither the content of the Company's
website, nor the content on any website accessible from hyperlinks on its
website for any other website, is incorporated into, or forms part of, this
announcement nor, unless previously published by means of a recognised
information service, should any such content be relied upon in reaching a
decision as to whether or not to acquire, continue to hold, or dispose of,
securities in the Company.
Highlights
Highlights in the reporting period to 30 June 2023 include:
· NAV performance over the period from IPO to 30 June 2023 of +0.8%
and ONWD share price performance of +5.5%, both materially outperforming the
UK AIM All-Share (-6.5%) and MSCI UK Small Cap (-1.3%) indices.
· Gross portfolio IRR (annualised return) of 11%, aggregating UK
Government Debt and equity holdings, gross IRR (annualised return) of 139%
from pure equity portfolio.
· Onward Opportunities was the first investment company to launch
on AIM since November 2021 and at launch the largest IPO year to date.
· Eight new initial investments including one core position
(Angling Direct plc), c.19% NAV deployed into UK smaller companies.
· 71% of NAV held in UK Government Debt at period end, a further
10% held in cash at bank.
Post period end Highlights (1 July 2023 - 31 August 2023)
· Encouraging market leading start to investment performance (NAV
growth) since inception placed 3(rd) /26 versus peers in the AIC UK smaller
companies sector; NAV +3.6% to 99.2p, outperforming UK AIM All-Share index by
11.5%, which fell 7.9%.
· Gross portfolio IRR (annualised return) of 20.7% across Gilts and
equity holdings, gross IRR (annualised return) of 65.8% from pure equity
portfolio.
· Three further core positions developed; React Specialist Cleaning
plc, Comptoir Libanais plc and Transense Technologies plc
· Around 50% of NAV deployed into UK smaller companies, other c.50%
NAV held in UK Government Debt and held in cash at bank.
· Three nursery investments realized for an aggregated IRR
(annualised return) materially ahead of target returns, particularly strong
supernormal returns captured from very recent investment into Restore plc.
· Nominated for the 'Best Use of AIM' and 'Best Newcomer' awards at
the upcoming 2023 AIM Awards.
Chairman's Statement
Onward Opportunities Limited ("ONWD" or "the Company") was successfully
admitted to AIM on 30 March 2023. As at 31 August 2023 (the latest
practicable date prior to the publication of this report) the net asset value
("NAV") per share was 99.2p and the share price 104p, representing a premium
to NAV of 4.9% and a NAV performance of +3.6% since inception.
Launch of the Fund
Blessed with hindsight, it is hard to envision less propitious timing for the
launch of a specialist fund targeting smaller listed UK companies than the
first quarter of 2023.
Whilst 2021 closed buoyed with optimism following the successful distribution
of COVID-19 vaccines, the announcement of myriad governmental stimulus
measures and loosening travel restrictions, the speed and vigour of the
"recovery" brought with it rapidly growing fears about resurgent inflation.
Bullish first quarter equity performance in the US thus flattered to deceive,
with indices distorted by the surging prices of a small number of technology
"giants". Any hopes that the Federal Funds Rate might plateau at around 4%
were swiftly scotched, and investor attention was soon more focused on the
threat posed to both corporate earnings and consumer spending by higher than
expected global interest rates.
A core thesis underlying the launch of the Company is that AIM presents value
investors with a rich seam of opportunity, and the ability to buy companies
whose earnings streams are materially undervalued by reference both to their
larger quoted market comparators, and to unlisted companies backed by private
equity. Lack of liquidity in AIM stocks is considered to be a major
contributory factor, so it is perhaps appropriate that the Manager should have
found itself seeking to close a fund raising when liquidity, such as it was,
further receded from the market; if nothing else, the experience means that
the Company's investment team can empathise with the valuation challenges
facing its investee companies!
That the Portfolio Manager was successful in raising capital and closing the
fund raise amidst the collapse of international banking giants and the
challenging market environment, is testament both to the team's tenacity and
commitment (features which all of us as shareholders should celebrate) and to
the fundamentals which underpin the investment strategy.
Portfolio development
As at 31 August 2023, the Fund was around fifty percent invested into
equities, and the NAV was up by 3.6% compared to the AIM market performance of
-7.9%. As explained further in the Portfolio Manager's report below, great
care is being taken to deploy capital in a measured and considered manner, and
to build core positions only when the full investment analysis process has
been completed. The Board is fully supportive of this approach and the
performance potential is already very evident with top decile NAV performance
within the AIC UK smaller companies sector.
To date, the Fund has four fully invested positions. These are supported by
smaller nursery positions in companies which are undergoing final due
diligence. Trading into (and out of) positions over time in this way is itself
a differentiating competence, and an important one in the context of tightly
held blocks of shares where daily trading volumes are low. It has been
encouraging for the Board to observe the investment and share dealing
processes and disciplines described in the Admission Document being put into
daily practice.
Equally worthy of note is the deployment of uninvested cash into UK Government
Debt (Gilts). The Portfolio Manager has taken this approach both to maximise
yield, and to mitigate counterparty exposures to banks. All instruments have a
maturity duration of less than six months, and the income being generated is
sufficient to substantially cover the projected operating costs of the Company
while the manager continues to deploy capital in accordance with the stated
strategy.
Market environment
The Company's investment strategy is based on deep, analytical research of
investee company earnings, valuation and market positioning. Opportunities
arise where those earnings are not reflected in the prevailing share price.
Deliberate and active engagement with the management teams of investee
companies is intended to catalyse the hidden value identified. Prevailing
market conditions are thus favourable for the building of the Company's
initial portfolio and shareholders have been seeing some early evidence of the
team's approach at Angling Direct plc (ANG LN) ("Angling Direct").
Going forward, the Board is supportive of, and encouraged by the recent
Mansion House Compact. This is intended to encourage investment from
institutional investors (particularly the managers of defined contribution
("DC") pension schemes) into unlisted securities. Shares in AIM quoted
companies are considered to be "unlisted" for these purposes. Several of the
larger UK pension fund managers have committed to allocate at least 5% of
their DC assets under management into "unlisted" shares by 2030. Not only does
this initiative annualise the potential for higher returns available from
investment in UK smaller companies, but the impact of a potential incremental
£50 billion of new money into the asset class would have a material positive
impact on liquidity and thus valuations.
Corporate actions
Such are the investment opportunities available at both an underlying company
level and on a wider UK small cap / micro cap relative value basis, that it is
the Board's intention to raise new money and grow the share capital of the
Company over time. In the short to medium term this is likely to take the form
of one or more "tap issues", offering new securities to existing and new
investors. Given the largely fixed cost base of the Company, the issuance of
new shares would reduce the Total Expense Ratio ("TER") per share as well as
increasing the investee company opportunity set.
In conclusion, I and my fellow Directors remain confident about the Company's
long term strategy and we are pleased with the nascent track record. I look
forward to writing to you again in our first set of full Financial Statements
for the period ending 31 December 2023.
Andrew Henton
Chairman
1 September 2023
Portfolio Manager's Report
It is a privilege to present Onward Opportunities Limited's maiden set of
unaudited condensed interim financial statements as a public company. The
success of the Company's 2023 AIM Initial Public Offering ("IPO") in the
current market environment is testament to the hard work of my colleagues at
Dowgate. At the time of launch the Company was the largest AIM IPO in 2023 and
I am delighted to share that as a result, the Company has been nominated for
both the Best Use of AIM Award and Best Newcomer Award at the 2023 AIM awards.
Some early highlights in the reporting period to 30 June 2023 include:
· NAV performance over the period from IPO to 30(th) June 2023 of
+0.8% and ONWD share price performance of +5.5%, both materially outperforming
the UK AIM All-Share (-6.5%) and MSCI UK Small Cap (-1.3%) indices.
· Encouraging market leading start to investment performance (NAV
growth) versus peers in the AIC UK smaller companies sector; 3(rd) /26 since
inception to 31 August 2023.
· Gross portfolio IRR (annualised return) of 11% aggregating UK
Government Debt and equity holdings, gross IRR (annualised return) of 139%
from pure equity portfolio.
· Eight new initial investments including one core position
(Angling Direct plc), c.19% NAV deployed into UK smaller companies.
· 71% of NAV held in UK Government Debt at period end, earning a
blended running yield in excess of 4% and a further 10% held in cash at bank.
Market Commentary
To June 2023, investor sentiment has been mixed although markets have shown
some evidence of risk appetite returning. Whilst consumers and policymakers
remain understandably worried about inflation, markets are more concerned with
the implications of elevated interest rates on financial stability and
corporate solvency. The widely anticipated recession is proving elusive as
most output and employment measures are far more resilient than expected.
However, rapid interest rate rises do increase the risk of excessive policy
tightening, and the fear of recession lurks.
After the dramas of bank runs at Silicon Valley Bank and First Republic which
occurred in the Company's launch month, immediate concerns over global
financial stability have subsided, reflected in the 10% fall in the dollar
price of gold. However, worries closer to home about the viability of highly
indebted Thames Water remind us that the uncertain trajectory of interest
rates requires vigilance regarding indebtedness. We must not forget that the
consequences of monetary tightening can be slow to play out and multi-faceted.
We believe the market's implied base case global outlook is for an economic
slowdown. Negative forward indicators include inverted yield curves, declining
energy and industrial material prices, falling producer prices and a faltering
Chinese recovery. As a result, most large investors remain cautiously
positioned with lower-than-normal risk asset exposure and higher-than-normal
cash holdings, meaning illiquid risk assets such as UK small-caps remain
attractively valued.
It was disappointing but perhaps unsurprising that investors did not view UK
equities as a safe haven in this period. Although various bodies including the
OECD, IMF and OBR have upgraded assessments of the UK's economy, the UK market
has remained sluggish with all indices falling.
One feature of these market conditions has been the impact of private equity
backed bids for UK listed companies, as the first quarter flurry of bids
faded. EQT's substantial offer for Dechra Pharmaceuticals and offers for
Medica and Alfa Financial Software highlighted how other investors will
recognise value if public markets don't.
With Japan at long last re-rating, the UK does look increasingly isolated as
the final value play among developed equity markets.
Many less liquid smaller UK companies now resemble the "cigar butts" of Warren
Buffet's much quoted quip - "like picking up a discarded cigar butt" astute
value investors should look for companies that have been overlooked but still
have value in them. The AIM segment is our preferred investment hunting
ground, and we look forward to today's value becoming tomorrow's accepted
recovery and momentum plays. We are very conscious that the timing of
sentiment transition is always unknowable, but believe that the end of rate
increases will be a positive catalyst.
Fund Manager's Report
It was encouraging to see the Onward shares perform strongly post launch both
in absolute terms and relative to the market, ending the half-year at 105.5p,
+5.5% and outperforming the majority of its peer group (AIC UK Smaller
Companies). Investment performance (NAV) also got off to a positive start
ending +0.8% for Q2 at 96.42p (IPO NAV: 95.70p), and this accelerated post
period end in July and August as discussed later in this report. The portfolio
of equities and UK Government Debt as a whole has delivered an 11% gross IRR
(annualised return) since IPO and within that, our small equity portfolio
(c.19 % NAV) has delivered a gross IRR (annualised return) of 139%. Whilst
early days it has been pleasing to see the first investments set off in the
right direction. These figures compare favorably to UK indices, which had a
weak quarter; the UK AIM All-Share was down 6.5%.
Performance IPO to 30 Jun 23 IPO to 31 Aug 2023
Onward Opportunities NAV Total Return +0.8% +3.6%
Onward Opportunities Total Shareholder Return +5.5% +4.0%
UK AIM All-Share Index -6.5% -7.9%
MSCI UK Small Cap Index -1.3% +0.7%
Given we have just the three months of trading to discuss within the reporting
period in this first set of unaudited, condensed interim financial statements,
our commentary is briefer than shareholders can expect in future reports. It
has been a productive period for the team, albeit one tempered by deliberate
caution. April was our first month of full operations and we unwittingly
launched in the midst of a banking crisis which cast a gloomy pall over the
financial markets. Shareholders who would like to hear more about the launch
process can do so here in this podcast with Edison Group:
https://www.youtube.com/watch?v=a8onhzrtIEo
(https://www.youtube.com/watch?v=a8onhzrtIEo) .
It was this backdrop that has informed our early pipeline and investment
activity. On the Company's first day of trading, we deployed 98% of NAV into a
blend of UK Government Debt with a six-month maturity ladder; these
offered higher reward (interest rate) and lower risk (government backed)
than was available from our banking counterparties. We expect to maintain this
mix of high-quality liquid assets, drawing capital down into equity
investments as and when they are identified. We have been earning a
yield-to-maturity in excess of 4%, thereby generating a healthy contribution
to overheads and helped to recover launch costs. At the end of the quarter, we
held c.71% of NAV in UK Government Debt, with a further 10% in cash at hand,
ready for deployment into new core positions. The remaining c.19% was invested
in equities as described below.
Top 10 Holdings Table as at 30 June 2023
Holding £ value % weighting portfolio Unrealised Profit on investment £ Total Unrealised Return % Unrealised IRR (annualised return)
Cash at bank £1.3m N.A N.A N.A N.A
UK Govt 0% T-Bills 31/07/23 £1.2m 10.8% +£12k +1% +4.0%
UK Govt 2.25% SNR 07/09/23 10.8% +£2k +0.2% +0.9%
£1.2m
UK Govt 0% T-Bills 29/08/23 10.7% +£10k +0.9% +3.6%
£1.2m
UK Govt 0% T-Bills 11/09/23 £1.2m 10.7% +£10k +0.9% +3.5%
UK Govt 0% T-Bills 25/09/23 10.7% +£10k +0.8% +3.5%
£1.2m
UK Govt 0.75% SNR 22/07/23 9.5% +£8k +1.2% +3.1%
£1.0m
UK Govt 0% T-Bills 17/07/23 9.0% +£8k +0.8% +4.3%
£998k
Angling Direct plc £894k 8.1% +£125k +16.3% +525.4%
UK Govt 0% T-Bills 20/11/2023 6.8% £0k 0% +0.7%
£749k
Aggregated other investments £1.4m 13% +£34k +2.4% +34.4%
May saw our first equity investments enter the portfolio, comprising positions
taken in a handful of pre-identified pipeline opportunities. This work
continued throughout June, with deployment into equities increasing to c.19%
NAV across six ideas into the "nursery" and our first full allocation to a
core position, Angling Direct. The nursery comprises positions of 1-2% NAV in
businesses which we are actively working on, where that initial work has
revealed a returns opportunity that we want to start capturing as due
diligence continues. This phased approach to building positions is deliberate
and gives our investment strategy more agility. We look forward to updating
shareholders in due course on nursery positions as they develop, including in
this case via the post period end highlights section of this report.
Initial positions typically involve businesses with robust balance sheets or
margins of safety and discounted earnings multiples; we are not trying to time
the market and seek investments that are self-sustaining through any economic
volatility. All have identifiable catalysts that are often idiosyncratic in
nature. It was a combination of strong returns in some of these initial
investments and the larger position in Angling Direct, that drove our alpha
generation in the first quarter of operations.
The Company deployed c.6% NAV into Angling Direct, the UK's leading retailer
of fishing equipment and tackle. This position gives us an opportunity to
provide investors with some early insights to our investment strategy in
action.
We believe we have captured dual optionality on upside with the Company's
investment into Angling Direct, which creates an attractive asymmetric risk
profile for our capital, invested between 24 and 30 pence per share. This
position represents either a growth or value investment, depending on various
strategic decisions that are taken in the coming months. The business has a
dominant market position in the United Kingdom ("UK"), where it is profitable
and cash generative from a repeat customer base of "anglers". These metrics
are expected to improve under new management, and benefit from a UK consumer
recovery.
More recently, the business has been attempting to enter the much larger
European market to provide additional earnings growth, a strategy launched by
the previous management team. Success has been limited so far, with annual
losses that are material in the context of overall group profits, whereas the
UK business generates a profit that is approximately double the current group
number (which factors in European losses).
Our returns thesis is that either the European strategy starts to bear fruit
in the near-term and contributes profitable growth to the group, or it can be
wound down to remove the opportunity cost to management and losses from group
profits. In the latter case, we would be left with a valuable investment in a
leading UK retailer, purchased on c.2x EV/EBITDA. We estimate a 6-12 month
payback on the closure of the European strategy. AO World plc made a similar
decision 12 months ago following a strategic review and that business' share
price has doubled since the decision was taken recovering material shareholder
value.
Our analysis suggests either of these outcomes would add more than 50% to
Angling Direct's current profits. Our entry valuation on Angling Direct was at
c.£20 million, a market capitalisation underpinned by balance sheet assets
c.£14 million net cash and c.£16 million of inventory. We have an active and
engaged approach to investee companies, and shareholders can expect us to be
working hard to drive one of these two profitable outcomes on our investment.
We have in this context noted with interest, the consolidation of angling
retailers in the USA and Nordic countries in recent years. As shown by the
Unrealised annualised return column in the holdings table, our investment has
set off in an encouraging direction and we look forward to updating
shareholders in due course. Post period end we were encouraged to see the
company release its first 'in-line' trading update for some time and the UK
business' resilient trading covered in both The Times and The Mail.
Outlook
Post Period end Highlights (1 July 2023 - 31 August 2023)
· NAV performance since inception to 31 August 2023 of +3.6%, ONWD
share price performance of +4%, both materially outperforming the UK AIM
All-Share which fell -7.9% and the MSCI UK Small Cap Index (+0.71%).
· Sector leading top-decile investment performance (NAV growth),
3(rd) /26 since inception versus UK AIC Smaller Companies peer group.
· Gross portfolio IRR (annualised return) of 20.7% across UK
Government Debt and equity holdings, gross IRR (annualised return) of 65.8%
from pure equity portfolio.
· Three further core positions developed; React Specialist Cleaning
plc, Comptoir Libanais plc and Transense Technologies plc.
· c.50% NAV deployed into UK smaller companies, 47% NAV held in UK
Government Debt (Gilts) at period end, further 5.6% held in cash at bank.
Post Period End
Further to the investment commentary on the reporting period to the end of
June, comments on post period end activity are also provided. NAV Performance
accelerated per the highlights covered above. Our investment in Angling Direct
progressed further with green shoots of a recovery emerging in the company's
summer trading update and a number of new investments began to generate
additional alpha too. The team added several investments to the nursery of
nascent ideas and three new core holdings graduated from the nursery into the
top 10. These were React Specialist Cleaning plc (REAT) ("React"), Comptoir
Libanais plc (COM LN) ("Comptoir Libanais") and Transense Technologies plc
(TRT LN) ("Transense Technologies"), all of which generated early positive
returns for the portfolio and are discussed in more detail below.
Three nursery investments were realised post period end, generating an
aggregated IRR (annualised return) significantly ahead of our target returns.
Particularly strong profits were captured for shareholders from the purchase
of Restore plc at 135p, which got almost halfway to our target price within
two weeks, so the team opted to crystallise a healthy profit at an average of
178p, allowing for the investment to be revisited later.
Top 10 Holdings as at 31 August 2023
Holding £ value % weighting portfolio Unrealised Profit on investment £ Total Unrealised Return % Unrealised IRR (annualised return)
UK Govt 2.25% SNR 07/09/23 £1.2m 9.5% +£8k +0.7% +1.7%
UK Govt 0% T-Bills 11/09/23 £1.2m 9.5% +£20k +1.7% +4.2%
UK Govt 0% T-Bills 25/09/23 £1.2m 9.4% +£20k +1.7% +4.1%
Angling Direct plc £1.1m 8.7% +£251k +29% +204%
React Specialist Cleaning plc £800k 6.3% +£63k +9% +64%
UK Govt 0% T-Bills 20/11/23 £749k 6.0% +£7k +0.9% +4.6%
UK Gilt 0.125% 31 Jan 202 £753k 5.9% +£3k +0.4% +4.6%
Transense Technologies pl £497k 3.9% +£52k +12% +103%
UK Govt 0% T-Bills Oct 23 £452k 3.6% £0k 0% N/A
UK Govt 0% T-Bills Jan 24 £446k 3.5% £0k 0% N/A
Aggregated other equity investments £3.6m 28.1% +£58k +2% +15.1%
Cash at bank £742k 5.6% N/A N/A N/A
With React, we believe we have captured a defensive growth opportunity, at a
value price and invested c.6% NAV into the company. It is a business the team
have been researching since September last year and was an early pipeline
priority. Through a mix of specialist cleaning services for UK corporates, the
business has a highly attractive earnings profile. The business has three core
divisions:
1. React - the heritage of the group, reactive specialist cleaning
often needed for emergencies or callouts requiring specialist cleaning
techniques, high margin but less predictable.
2. LaddersFree - large glass pane and cladding cleaning for UK
corporates, executed through a capital-light membership model.
3. Fidelis - contract cleaning focused on public services.
The business operates over 80% of its sales on contracted terms of one to five
years and has been organically growing at 17%+ per annum for the past four
years under a new management team. Sales are highly cash generative and yield
a high contribution margin, whilst CAPEX, depreciation and amortisation are
all insignificant.
Crucially now as a result of to a mix of organic and acquisitive growth and
the upcoming cessation of deferred consideration payments, the business is
beginning to generate strong profits and free cash flow growth from
contribution margin, as it exploits inherent operational gearing. If one were
to look away for a moment - not knowing the company cleans large glass
facades, rolling stock, and prisons - its characteristics mean it could easily
be mistaken for a small, successful software company. Yet we have been able to
acquire shares in React over the past six months on forward P/E multiple of
6.5x - 8.5x.
We have analysed React's ability to continue growing organically and
potentially through bolt-on acquisitions over the next five years. Independent
referencing with a number of larger customers and partners have underscored
React's competitive advantage and high levels of service delivery. This work
has given us confidence to model and substantiate projections further out than
most analysts. Based on our work, we believe the business can grow sales to
c.£30m and generate a c.15% EBITDA margin within the next five years. Such
a growth and margin profile should command a P/E multiple well in excess of
12x, and as a result, our investment has the potential to outperform our
target returns of 2x money invested. At this scale, we believe the business
would become a target for larger managed services groups.
Transense Technologies is a very different business, but we believe they are
another example of a small UK company quietly working up great prospects for
growth. It is fair to say the business has had a chequered history of 'jam
tomorrow' as a listed business, with a series of false dawns leading to cash
consumption, funding requirements and shareholder value destruction. However,
our screens and subsequent DD uncovered that over the past few years,
prospects and crucially profits have tangibly changed and this success is
partly obscured by perceptions from the past.
The business has three core market leading technologies at various stages of
execution and a valuation of £13m at the point of investment. In 2019 the
first of these, iTrack, became profitable through a 10-year royalty deal with
Bridgestone, that is 100% profit margin and we believe will peak at around
£3m per annum versus £2m currently. The future cashflows of this deal
underpin the current value of the business. This deal, led by the now
Executive Chairman Nigel Rogers, has been crucial, as it has provided the
group with visible long-term profits that have allowed tangible development of
the groups other two exciting technologies - Translogik and Surface Acoustic
Wave ("SAW") sensors. Translogik provides tyre wear monitoring equipment to
fleet managers and revenues have more than doubled since 2020 when the new
team started to deploy time and effort into the opportunity using iTrack
profits. The technology generates a gross margin in excess of 50% for the
group and we expect that under the recently appointed Director of Business
Development, Ryan Maughan, revenues can at least double again in the next few
years, if not more.
Lastly, the patent protected SAW technology, which is the least progressed,
but with the largest potential for earnings contribution, has started to make
headway in some of the highest barrier to entry markets; US defence and
high-performance motorsport. SAW is garnering industry and investor interest
because of its ability to provide more specific and consistent torque readings
in high-intensity and adverse operating environments. It is not impeded by
magnetic interference, nor does it require structural integrity reductions (to
allow flexing) unlike rival technologies, as SAW uses sound waves to
continuously monitor torque rather than movement or electro-magnetism. This is
especially relevant in the era of electric motors, which give off magnetic
interference and where efficiency through more precise torque monitoring is
key to the value proposition (range anxiety!). The team are targeting
opportunities in the industrial, electric drivetrain and aerospace sectors and
we are monitoring progress closely following early successes with McLaren and
GE aviation. We were delighted to see Stephen Parker join the board in May
given his experience in scaling applied technologies, such as YASA, which was
acquired by Mercedes, where he now sits on a subsidiary board.
As an applied technology, revenues generate an extremely high gross margin,
north of 85% and sales have been accelerating, from £90k in 2020 to c.£0.5m
in 2023. The GE aviation deal to retrofit SAW to over 5000 helicopter engines
for the US military has particularly caught the team's eye given the scale and
specification of the work, though admittedly deployment does not ramp up until
the late 2020's.
A blended partial success across these three technologies can create a
compelling and high quality earnings figure and quality in the context of a
current valuation for the business of £13m, though we have weighted our
investment accordingly given the longer-term nature of the opportunity,
investing c.3% NAV. Much like with React, we have been able to acquire such
potential and earnings on a single digit P/E and attractive free-cash flow
yield.
Thirdly, we have invested into Comptoir Libanais a chain of around 30 Lebanese
restaurants predominantly in the UK that have impressively traded profitably
through both one of the toughest environments for the sector in living memory
and boardroom disruption. Despite this resilience and the subsequent assembly
of an impressive new board and leadership team, the sector and personnel
headwinds saw the shares de-rate to a discount to the material net cash
balance of the group, leaving a profitable, growing restaurant chain with a
brand that references well trading at a negative value. The group floated in
2017 at 50p with 15 restaurants, it now has around 30, which are trading
profitably with a net cash balance in excess of 6p/share but we have been able
to invest in the company for less than 5.5p/share.
Whilst restaurants do not typically lend themselves to our investment
strategy, the margin of safety provided by a net cash balance that was larger
than the market cap and the resilience of the core business' trading created a
basis for further analysis. Further due diligence revealed the upside
potential of a quick-service-retail franchise roll out via the international
Shawa brand. This potential is to be explored under new CEO Nick Ayerst, who
joined from a background at LEON and The Restaurant Group and Chair Beatrice
Lafon who has an impressive private equity background, both of whom reference
strongly. We have noted with interest the near doubling of the Net Promoter
Score of the chain from the mid-40s to 80+ under the new team and, having
visited a number of sites ourselves, there is noticeable improvement in the
menus and their contents.
Board Members
The Board is responsible for the determination of the Company's investment
objective and investing policy and has overall responsibility for the
Company's activities including the review of investment activity and
performance and the control and supervision of the AIFM, the Portfolio Manager
and the other service providers.
The Directors will meet at least four times a year, and at such other times as
may be required. The Directors (including the Chair) are all independent
non-executive directors.
The Board has been assembled to ensure that the Company has the appropriate
breadth of skills and experience in order to ensure that it can be governed
effectively and comprises the following persons:
Director Biographies
Andrew Henton (Independent Non-Executive Chairman)
Andrew graduated from Oxford University in 1991 and subsequently qualified as
a Chartered Accountant with PricewaterhouseCoopers in London, specialising as
a corporate tax consultant. He spent eight years working in the City as a
corporate finance advisor with HSBC Investment Bank and as a principal of the
Baring English Growth Fund, a private equity Fund focussed on mid-market
transactions sponsored by ING Barings. In 2002 Andrew was relocated to
Guernsey by Close Brothers Group plc to take responsibility for integrating
and reorganising a number of regulated banking, custody, asset management and
fiduciary administration businesses that the bank had acquired in Jersey,
Guernsey and Isle of Man. He was Head of Offshore Businesses for Close until
the division he managed was sold in 2011. Thereafter he chose to remain in
Guernsey and to work with a portfolio of companies as a non-executive
director. He has wide board experience of both regulated and non-regulated
businesses (including listed funds and venture backed companies) in both
executive and non-executive capacities. Andrew is British and resident in
Guernsey.
Susan Norman (Independent Non-Executive Director)
Susan has over 20 years of boardroom experience formerly in company
secretarial roles and most recently through non-executive director roles
across a wide range of companies in multiple jurisdictions. Susan is currently
a non-executive director of a number of Terra Firma Capital Partners Limited's
Guernsey-based private equity vehicles. Susan started her career within the
private banking and fund of hedge funds sectors and now runs her own
consultancy business providing company secretarial, governance and independent
directorship services to a broad range of clients across various
jurisdictions. Susan's board experience covers public and private equity
investment companies, real estate investment companies and impact investment
funds, amongst others. Susan holds an LLB (Hons) degree in Scots Law from the
University of Strathclyde, is a Fellow of the Chartered Governance Institute
and holds the Institute of Directors' Diploma in Company Direction.
Henry Freeman (Independent Non-Executive Director)
Henry is an investment professional with over 25 years of investment decision
making and over 10 years of Board experience. In addition to Onward
Opportunities, he sits on a number of commercial fund and investment company
boards, as well as the Crown Dependency of Guernsey's sovereign wealth and
pension funds. He is a member of the Guernsey Investment & Funds
Association (GIFA) Executive Committee and is proud to have established the
GIFA Schools Investment Challenge, encouraging financial literacy and
investment education among young people. Henry holds the Institute of
Directors' Diploma in Company Direction.
During his executive career in fund management, investment banking and
fintech, Henry managed institutional and private client funds, investing
across equities and alternative investments; advised London-listed companies
and funds on strategy, structuring, IPOs and M&A; built technology and
investment businesses and advised UK government on fintech and social finance,
sitting on parliamentary policy groups and Downing Street roundtables. Henry
was a founding member of Innovate Finance.
Luke Allen (Independent Non-Executive Director)
Luke is an independent non-executive director with over 30 years' experience
working in the financial services sector, the last 18 of which have been spent
in the investment funds industry. Until December 2019 he was the chief
executive and managing director of Man Group plc's Guernsey office, which
serviced an extensive range of hedge funds and funds of hedge funds. His
primary role was to lead Man Group's operations in Guernsey, chairing the
local management company boards, setting strategy and ensuring effective risk
management, outsourced service provider oversight, and compliance with laws
and regulations. He has over 13 years' experience (in both an executive and
independent non-executive capacity) of working with, and sitting on the boards
of, a wide range of fund and management company structures across various
asset classes and international jurisdictions. He is a chartered accountant
(ICAEW) and, prior to running Man Group's Guernsey office, he headed up their
fund financial reporting and liquidations team, with responsibility for the
production of fund financial statements and for fund terminations across their
entire product range. He has completed the Institute of Directors' Diploma in
Company Direction and is the holder of a personal fiduciary licence issued by
the Guernsey Financial Services Commission.
Investment Committee
Laurence Hulse (Investment Director & Founder)
Laurence joined Dowgate Wealth in September 2022 as an Investment Director.
Laurence started his career at Gresham House in 2015, around the time of its
inception, and worked on a number of outperforming equity products as part of
a small team during that time. At the time of his departure from Gresham
House, he had co-managed or deputised on a number of equity funds; namely
Gresham House Strategic plc (now called Rockwood Strategic plc), Strategic
Public Equity Fund LP and Gresham House Smaller Companies Fund. He was awarded
both AAA and AA-ratings by Citywire during this time and two of these
co-managed funds achieved FE "5-crown" ratings while he was part of the team
working on them. During his tenure, the company grew from a handful of
employees and less than £50m assets to over 200 employees and in excess of
£7.5 billion of assets. Gresham House was bid for by Searchlight Capital in
Q3 2023 for a value of c.£500m, generating a total return to Gresham House
Shareholders since the management buy-in in December 2014 of over 300%.
Laurence joined Dowgate to pursue a long-held ambition to build and manage an
investment vehicle tailored for HNWIs and Family Offices focused on special
situations in the UK, which perfectly aligns with the Dowgate ethos. The first
step of this ambition was achieved with the floatation of Onward Opportunities
in March 2023.
As an investor, Laurence strongly believes in creating value through change;
whether that be strategic, operational or personnel within a business -
particularly in small and micro-cap companies where the impacts of these
changes tend to be most tangible. He prides himself on working actively with
the Boards and Executive teams of investee companies to drive shareholder
value through the investment cycle. He holds a truly active approach to
investment management by applying private equity techniques to publicly listed
companies. His enthusiasm and drive have allowed him to successfully garner a
track record of outperformance and close industry network throughout his early
career in the City.
Career highlights for Laurence include when he was nominated for the rising
star of investment companies award in 2021 and the flotation of Onward
Opportunities, the investment vehicle he founded, on the London stock market
in 2023. His biggest achievement away from work was climbing Mount Kilimanjaro
for charity at the age of 16. In addition to his duties as Investment
Director, Laurence loves cycling, driving, and vintage cars.
Tom Teichman (Investment Committee Chair)
Tom started his career at Willis Faber & Dumas and then William Brandt's
Sons & Co., becoming head of European merchant banking. Over the next 40
years he has sat on various credit and investment committees whilst working at
Bankers Trust Company, Credit Suisse, Finanz AG, Mitsubishi Finance
International, Bank of Montréal Nesbitt Thomson, NewMedia Investors, SPARK
Ventures (which he co-founded), The Garage Soho (which he co-founded) and
Gresham House Strategic, where he worked directly with Laurence Hulse. Tom was
personally, or through investment vehicles he established, a very early-stage
investor in MAID, Argonaut Games, ARC Risc Cores, lastminute.com,
mergermarket.com, System C, Notonthehighstreet.com, made.com,
moshimonsters.com, Kobalt Music Group and IMI Mobile. He served on the boards
of almost all of these companies, in some cases as chairman, advising on
growth, funding and exit strategy. Some of these eventually went public or
were acquired by major corporations, including The Financial Times and Oracle,
and/or achieved valuations of over £1 billion.
Tom has a B.Sc. (Econ.) Hons. from University College, London and was born in
Hungary. He has over 30 years' experience in venture capital and banking and
has chaired or been a member of several credit and investment committees
including the Gresham House Strategic Public Equity Investment Committee where
he worked directly with Laurence Hulse from its inception.
David Poutney (Investment Committee Member)
David is Chief Executive of Dowgate Capital and Chairman of, Dowgate Wealth,
and Dowgate Group. His early career was in commercial banking and asset
finance, after completing a history degree from Cardiff University in 1974. He
made the transition into stockbroking a few years ahead of the Big Bang,
becoming a number one rated financials analyst for 15 years at a number of
well-known firms including BZW, James Capel and UBS. He moved into a broader
role in corporate broking during the Dotcom boom of the 1990s and was involved
in the flotation of a number of companies which survived the crash, notably
Sports Internet Group which was taken over by Sky. After joining Numis in 2001
as head of corporate broking, he was responsible for a number of growth
companies such as Domino's Pizza, Alliance Pharma and Learning Technologies
Group. Overall, he was involved in the flotation of over 30 companies.
In addition to his positions at Dowgate Group, David is a non-executive
director of AIM-quoted Franchise Brands plc and Belluscura plc and previously
of Be Heard plc which also quoted on AIM before being sold to a private equity
firm.
Jeremy McKeown (Investment Committee Member)
After obtaining an economics degree from Georgia State University, Jeremy
began his career as a trainee investment analyst at the South Yorkshire
Pension Fund in 1982. Over the following forty years, Jeremy worked on both
the buy and sell sides of the UK stock market, including with companies such
as Abbey Life, British Gas Pension Fund, Midland Bank, Charterhouse, Merril
Lynch, Investec, Liberum and Royal Bank of Canada. Jeremy obtained an MBA from
the City University Business School during this time. Jeremy built a
reputation for independent advice to institutional small and mid-cap investors
and worked on many equity capital market transactions. He led award-winning
teams at Charterhouse, Merrill Lynch and Investec. Since 2020 Jeremy has
worked as a consultant for a number of clients, including Dowgate and
Progressive Equity Research. Jeremy is passionate about understanding the
investment landscape from the macroeconomic backdrop to the entrepreneurs
capable of delivering exceptional returns. He started writing a blog during
the pandemic and launched a podcast series covering investment issues. Jeremy
is a non-executive director at Cranfield University spinout, Loxham Precision.
Jay Patel (Investment Committee Member)
Jay is the Vice President and General Manager of Cisco's Webex CPaaS
initiative and joined Cisco when the company he ran, IMIMobile, was acquired
for US$730m in 2021. He helped start IMImobile PLC in 2003, as CEO led it to a
successful IPO in 2014 and then delivered its exit to Cisco. Today Jay is
working on combining the IMI platforms with relevant technologies from Webex
to create solutions that help clients deliver the world's best customer
experiences.
Jay is an experienced technology executive with over 25 years' commercial
experience through operational, investment and advisory roles. He has had a
successful career working with fast growth businesses and has served as both
an executive and non-executive director on the boards of both private and
public companies over the last 20 years.
Previously, Jay was a co-founder of venture capital firm Spark Ventures PLC
(an early stage venture capital firm), where he led several successful
investments, restructurings and exits in the technology sector across digital
media and publishing, B2B software and B2C eCommerce. Jay has also worked in
corporate finance roles at UBS Warburg and BSkyB and qualified as a Chartered
Accountant with KPMG. He has an MBA from INSEAD and an Economics degree from
London School of Economics.
Interim Management Report
For the 5 month period ended 30 June 2023
Principal Risks and Uncertainties
There are several potential risks and uncertainties which could have a
material impact on the Company's performance and could cause actual results to
differ materially from expected and historical results.
The AIFM has overall responsibility for risk management and control within the
context of achieving the Company's objectives. The Board agrees the strategy
for the Company, approves the Company's risk appetite and the AIFM monitors
the risk profile of the Company. The AIFM also maintains a risk management
process to identify, monitor and control risk concentration.
The Board's responsibility for conducting a robust assessment of the principal
and emerging risks is embedded in the Company's risk map, which helps position
the Company to ensure compliance with the Association of Investment Companies
Code of Corporate Governance (the "AIC Code").
The main risks that the Company faces arising from its financial instruments
are:
(i) market risk, including:
- Price risk, being the risk that the value of investments will
fluctuate because of changes in market prices;
- interest rate risk, being the risk that the future cash flows of a
financial instrument will fluctuate because of changes in interest rates;
(ii) credit risk, being the risk that a counterparty to a financial instrument
will fail to discharge an obligation or commitment that it has entered with
the Company.
(iii) liquidity risk, being the risk that the Company will not be able to meet
its liabilities when they fall due. This may arise should the Company not be
able to sell its investments.
(iv) company failure, being the risk that companies invested in may fail and
result in loss of capital invested.
To manage such risks the Company complies with the investment restrictions and
diversification limits provided for in its Admission Document.
The Company invests and manages its assets with the objective of spreading
risk. Further to the investment restrictions referenced, the Company also
seeks to manage risk by:
· not incurring debt over 25% of its NAV, calculated at time of
drawdown. The Company will target repayment of such debt within twelve months
of drawdown; and
· not using derivatives for investment purposes. It is expected
that the Company's assets will be predominantly denominated in Sterling and,
as such, the Company does not intend to engage in hedging arrangements,
although the Company may do so if the Board deems it appropriate for efficient
portfolio management purposes.
Other operational related risks identified by the Board include the following,
all of which will be more fulsomely described in the Company's first full set
of audited financial statements for the period ending 31 December 2023:
· Cybersecurity
· Portfolio concentration
· Service providers
· Key person risk
· ONWD shares trading discount to NAV
Going Concern
The Directors have adopted the going concern basis in preparing the Unaudited
Condensed Interim Financial Statements.
In assessing the going concern basis of accounting, the Directors have
assessed the guidance issued by the Financial Reporting Council and considered
the Company's own financial position, recent market volatility, the on-going
impact of the Russian war on Ukraine, energy shortages, inflation, increases
in interest rates, recent bank failures and other uncertainties impacting on
the Company's investments, their financial position and liquidity
requirements.
At period end the Company had a net asset position of £12,294,000 comprising
cash of £1,282,000, listed investments amounting to £2,331,000 and UK
Government Debt of £8,749,000.
The Company generates liquidity by raising capital and exiting investments. It
uses liquidity by making new and follow-on investments and paying company
expenses. The Directors ensure it has adequate liquidity by regularly
reviewing its financial position and forward looking liquidity requirements.
Important events and financial performance
Highlights from financial year to date are as follows:
Ordinary Shares
30 June 2023
Highlights
Net Asset Value per share 96.42p
Share Price 105.50p
% of capital deployed into AIM listed equities (investments) 19%
% of capital deployed into cash and near cash equivalents 81%
The table below provides performance information:
Date NAV % change in
per share NAV
30 March 2023 95.70
30 June 2023 96.42 1.12% increase
The net profit for the five month period ended 30 June 2023 amounted to
£79,661. Further details of the Company's performance for the period are
included in the Portfolio Manager's Report, which includes a review of
investment activity and adherence to investment restrictions.
Premium
As at 30 June 2023, the share price was trading at a premium of 9.42% to the
last published NAV per share.
Related party transactions
Details of related party transactions are given in note 14 to the Unaudited
Condensed Interim Financial Statements.
Director
1 September 2023
Independent Review Report to Onward Opportunities Limited
Introduction
We have reviewed the accompanying unaudited condensed statement financial
position of Onward Opportunities Limited as of June 30, 2023, and the related
unaudited condensed statements of comprehensive income, unaudited changes in
equity and unaudited condensed statement of cash flows for the five-month
period then ended. Management is responsible for the preparation and
presentation of this unaudited condensed interim financial information in
accordance with the International Financial Reporting Standards (IFRSs) as
issued by the International Accounting Standards Board (IASB). Our
responsibility is to express a conclusion on this unaudited condensed interim
financial information based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements 2410, Review of Interim Financial Information Performed by the
Independent Auditor of the Entity. A review of interim financial information
consists of making inquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing and consequently does not enable us
to obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusions
Based on our review, nothing has come to our attention that causes us to
believe that the accompanying interim financial information is not prepared,
in all material respects, in accordance with IFRSs as issued by the IASB.
Use of our report
This report is made solely to the Company's directors as a body, in accordance
with the terms of our engagement letter dated 06 July 2023. Our review work
has been undertaken so that we might state to the Company's directors those
matters we have agreed to state to them in a reviewer'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
directors as a body, for our review work, for this report, or for the
conclusions we have formed.
Grant Thornton Limited
St Peter Port
Guernsey
Date: 1 September 2023
Unaudited Condensed Statement of Comprehensive Income
For the 5 month period ended 30 June 2023
Period from
31 January 2023 to
30 June 2023
(unaudited)
Notes Revenue Capital Total
£'000 £'000 £'000
Investments
Net gains on investments held at fair value through profit or loss 9 - 252 252
Net investment gains - 252 252
Interest income 6 - 6
Total income 6 - 6
Investment management and 5 (47) - (47)
performance fees
Other expenses 6 (131) - (131)
(Loss) / Gain before taxation (172) 252 80
Tax expense - - -
Total (loss) / gain and comprehensive (loss) / income for the period (172) 252 80
(Loss) / Gain per 7 (1.35) 1.98 0.63
Ordinary Share (pence)
The total column of this statement represents the Unaudited Condensed
Statement of Comprehensive Income of the Company prepared under IAS 34.
The supplementary revenue and capital return columns are prepared under
guidance published by the Association of Investment Companies ("AIC").
All items in the above statement derive from continuing operations.
The notes form an integral part of these Unaudited Condensed Interim Financial
Statements.
Unaudited Condensed Statement of Financial Position
As at 30 June 2023
30 June
2023
£'000
Notes (unaudited)
Non-current assets
Investments held at fair value through profit or loss 9 2,331
Current assets
UK Government Debt 9 8,749
Cash and cash equivalents 1,282
Other receivables 27
10,058
Total assets 12,389
Current liabilities
Management fee payable 5 (15)
Other payables (80)
Total liabilities (95)
Net assets 12,294
Equity
Share Capital 10 12,214
Capital reserve 252
Revenue reserve (172)
Total equity 12,294
Net Asset Value per Ordinary Share (pence) 11 96.42
Number of Ordinary Shares in issue 10 12,750,010
Approved by the Board of Directors and authorised for issue on 1 September
2023 and signed on their behalf:
_______________________
Director
The notes form an integral part of these Unaudited Condensed Interim Financial
Statements.
Unaudited Condensed Statement of Changes in Equity
For the 5 month period ended 30 June 2023
Share capital Revenue reserve Capital reserve Total
£'000 £'000 £'000 £'000
For the period 31 January 2023
to 30 June 2023 (unaudited)
At 31 January 2023 - - - -
Share issue 12,750 - - 12,750
Share issue costs (536) - - (536)
Total (loss) / gain and comprehensive (loss) / income for the period - (172) 252 80
At 30 June 2023 12,214 (172) 252 12,294
The notes form an integral part of these Unaudited Condensed Interim Financial
Statements.
Unaudited Condensed Statement of Cash Flows
For the 5 month period ended 30 June 2023
Period from
31 January 2023
to 30 June
2023
Notes £'000
(unaudited)
Cash flows from operating activities
Other expense payments 12 (110)
Interest income 6
Purchase of UK Government Debt 9 (13,908)
Sale of UK Government Debt 9 5,248
Net cash outflow from operating activities (8,764)
Cash flows from investing activities
Purchase of equity instruments 9 (2,200)
Sale of equity instruments 9 32
Net cash outflow from investing activities (2,168)
Cash flows from financing activities
Issue of Ordinary Shares 10 12,750
Share issue costs 10 (536)
Net cash inflow from financing activities 12,214
Net increase in cash and cash equivalents 1,282
Cash and cash equivalents at beginning of period -
Cash and cash equivalents at end of period 1,282
Cash and cash equivalents comprise of the following:
Cash at bank 1,282
1,282
The notes form an integral part of these Unaudited Condensed Interim Financial
Statements.
Notes to the Unaudited Condensed Interim Financial Statements
For the 5 month period ended 30 June 2023
1. Reporting Entity
Onward Opportunities Limited (the "Company") is registered in Guernsey and was
formed on 31 January 2023, with registered number 71526. The Company's
registered office is 1 Royal Plaza, Royal Avenue, St Peter Port, Guernsey, GY1
2HL.
The Company is a Registered Closed-ended Collective Investment Scheme
regulated by the Guernsey Financial Services Commission ("GFSC"), with
reference number 2804577, pursuant to the Protection of Investors (Bailiwick
of Guernsey) Law 2020, as amended and the Registered Collective Investment
Scheme Rules and Guidance, 2021.
The Company's Board of Directors comprises Andrew Henton, Susan Norman, Henry
Freeman and Luke Allen, all of whom are non-executive and considered to be
independent.
The Company's 12,750,010 shares in issue under ticker ONWD, SEDOL BMZR151 and
ISIN GG00BMZR1514 were admitted to trading on AIM, on 30 March 2023. The
Company is also a member of the AIC. The Unaudited Condensed Interim Financial
Statements of the Company are presented for the five month period ended 30
June 2023.
The Company and its Alternative Investment Fund Manager received discretionary
portfolio management services directly from Dowgate Wealth Limited ("DWL")
during the five month period ended 30 June 2023. The administration of the
Company is delegated to Maitland Administration (Guernsey) Limited ("MAGL")
(the "Administrator"), an Apex Group company.
2. Significant accounting policies
(a) Basis of accounting
The Unaudited Condensed Interim Financial Statements have been prepared on a
going concern basis in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU, and applicable Guernsey law. These Unaudited Condensed
Interim Financial Statements do not comprise statutory Financial Statements
within the meaning of the Companies (Guernsey) Law, 2008.
Where presentational guidance set out in the Statement of Recommended Practice
("SORP") for investment companies issued by the Association of Investment
Companies ("AIC") updated in April 2021 is consistent with the requirements of
IFRS, the Directors have sought to prepare the Unaudited Condensed Interim
Financial Statements on a basis compliant with the recommendations of the
SORP.
(b) Going concern
The Directors have adopted the going concern basis in preparing the Unaudited
Condensed Interim Financial Statements.
In assessing the going concern basis of accounting, the Directors have
assessed the guidance issued by the Financial Reporting Council and considered
the Company's own financial position, recent market volatility, the on-going
impact of the Russian war on Ukraine, energy shortages, inflation, increases
in interest rates, recent bank failures and other uncertainties impacting on
the Company's investments, their financial position and liquidity
requirements.
At period end the Company had a net asset position of £12,294,000 comprising
cash of £1,282,000, listed investments amounting to £2,331,000 and UK
Government Debt of £8,749,000.
The Company generates liquidity by raising capital and exiting investments. It
uses liquidity by making new and follow-on investments and paying company
expenses. The Directors ensure it has adequate liquidity by regularly
reviewing its financial position and forward looking sources and uses of
liquidity.
(c) Segmental reporting
The chief operating decision maker is the Board of Directors. The Directors
are of the opinion that the Company is engaged in a single segment of business
with the primary objective of investing in securities to generate capital
growth for shareholders. Consequently, no business segmental analysis is
provided.
The key measure of performance used by the Board is the Net Asset Value of the
Company (which is calculated under IFRS). Therefore, no reconciliation is
required between the measure of profit or loss used by the Board and that
contained in these Unaudited Condensed Interim Financial Statements.
(d) Functional and presentational currency
The Unaudited Condensed Interim Financial Statements of the Company are
presented in the currency of the primary economic environment in which it
operates (its functional currency). For the purpose of the Unaudited Condensed
Interim Financial Statements, the results and financial position of the
Company are expressed in pound sterling ("£"). All amounts have been rounded
to the nearest thousand, unless otherwise indicated.
(e) Income
Interest income is accounted for on an accruals basis and recognised in profit
or loss in the Unaudited Condensed Statement of Comprehensive Income. Interest
income includes interest earned on senior notes (UK treasury debts), cash held
at bank on call, on deposit and cash held as cash equivalents.
(f) Expenses
Expenses are accounted for on an accruals basis. The Company's portfolio
management and administration fees, finance costs and all other expenses are
charged through the Unaudited Condensed Statement of Comprehensive Income and
are charged to revenue. Performance fee is charged to the capital column in
the Unaudited Condensed Statement of Comprehensive Income.
(g) Dividends to shareholders
Dividends are recognised in the year in which they are paid.
(h) Taxation
The Company has been granted exemption from liability to income tax in
Guernsey under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989
amended by the Director of Income Tax in Guernsey for the current period.
Exemption is applied and granted annually and subject to the payment of a fee,
currently £1,200.
(i) Financial instruments
Classification
The Company's financial assets are classified in the following measurement
categories:
· those to be measured at fair value through profit or loss; and
· those to be measured at amortised cost.
The classification depends on the entity's business model for managing the
financial assets and the contractual terms of the cash flows.
At initial recognition, the Company measures a financial asset at its fair
value, plus, in the case of a financial asset not at fair value through profit
or loss, transaction costs that are directly attributable to the acquisition
of the financial asset. Transaction costs of financial assets carried at fair
value through profit or loss are expensed in profit or loss.
Financial assets held at amortised cost
Assets that are held in order to collect contractual cash flows give rise to
cash flows that are solely payments of principal and interest are measured at
amortised cost. These assets are subsequently measured at amortised cost using
the effective interest method.
The Company has elected to apply the simplified approach permitted by IFRS 9
in respect of trade and other receivables. This approach requires expected
lifetime losses to be recognised from initial recognition of the receivables.
The Company's financial assets held at amortised cost include trade and other
receivables and cash and cash equivalents.
Financial assets at fair value through profit or loss
For investments actively traded in organised financial markets, fair value
will generally be determined by reference to Stock Exchange quoted market bid
prices at the close of business on the valuation date, without adjustment for
transaction costs necessary to realise the asset.
In respect of unquoted instruments, including associates, or where the market
for a financial instrument is not active, fair value is established by using
recognised valuation methodologies, in accordance with International Private
Equity and Venture Capital Valuation Guidelines ("IPEVC").
The Company has adopted a valuation policy for unquoted securities to provide
an objective, consistent and transparent basis for estimating the fair value
of unquoted equity securities in accordance with IFRS as well as IPEVC.
The unquoted securities valuation policy and the associated valuation
procedures are subject to review on a regular basis, and updated as
appropriate, in line with industry best practice. In addition, the Company
works with independent third-party valuation firms, to obtain assistance,
advice, assurance, and documentation in relation to the ongoing valuation
process.
The Company considers it impractical to perform an in-depth valuation analysis
for every unquoted investment on a daily basis (whether internally or with the
assistance of an independent third party). Therefore, it is expected that an
in-depth valuation of each investment will be performed: (i) on an annual
basis; and (ii) where DWL determines that a Triggering Event has occurred.
A "Triggering Event" may include any of the following:
· a subsequent round of financing (whether pro rata or otherwise) by the
relevant investee company;
· a significant or material milestone achieved by the relevant investee
company;
· a secondary transaction involving the relevant investee company on
which sufficient information is available;
· a change in the makeup of the management of the relevant investee
company;
· a material change in the recent financial performance or expected
future financial performance of the relevant investee company;
· a material change in the market environment in which the relevant
investee company operates; or
· a significant movement in market indices or economic indicators.
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date.
The change in fair value is recognised in profit or loss and is presented
within the "net gains on investments held at fair value through profit or
loss" in the Unaudited Condensed Statement of Comprehensive Income.
IFRS requires the Company to measure fair value using the following fair value
hierarchy that reflects the significance of the inputs used in making the
measurements. IFRS establishes a fair value hierarchy that prioritises the
inputs to valuation techniques used to measure fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the lowest priority
to unobservable inputs (Level 3 measurements).
The three levels of fair value hierarchy under IFRS are as follows:
· Level 1 reflects financial instruments quoted in an active market.
· Level 2 reflects financial instruments whose fair value is evidenced by
comparison with other observable current market transactions in the same
instrument or based on a valuation technique whose variables include only data
from observable markets.
· Level 3 reflects financial instruments whose fair value is determined
in whole or in part using a valuation technique based on assumptions that are
not supported by prices from observable market transactions in the same
instrument and not based on available observable market data. For investments
that are recognised in the Audited Financial Statements on a recurring basis,
the Company determines whether transfers have occurred between levels in the
hierarchy by re-assessing the categorisation (based on the lowest significant
input) at the date of the event that caused the transfer.
Recognition and derecognition of financial assets
The Company recognises a financial asset at its fair value, plus, in the case
of a financial asset not at fair value through profit or loss, transaction
costs that are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at fair value through
profit or loss which are directly attributable to the acquisition are
capitalised.
A financial asset (in whole or in part) is derecognised either (i) when the
Company has transferred substantially all the risks and rewards of ownership;
or (ii) when it has neither transferred nor retained substantially all the
risks and rewards and when it no longer has control over the assets or a
portion of the asset; or (iii) when the contractual right to receive cash flow
has expired. The derecognised investments are measured at the weighted average
method. Any gain or loss on derecognition is recognised in the Net gains on
investments held at fair value through profit or loss in the Unaudited
Condensed Statement of Comprehensive Income.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments
issued by the Company are recognised at the proceeds received, net of direct
issue costs.
Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or
as equity in accordance with the substance of the contractual arrangement.
Financial liabilities, including borrowings, are initially measured at fair
value, net of transaction costs.
Financial liabilities are subsequently measured at amortised cost using the
effective interest method, with interest expense recognised on an effective
yield basis.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the
Company's obligations are discharged, cancelled or they expire.
(j) Cash and cash equivalents
Cash comprises cash and demand deposits. Cash equivalents, are short-term,
highly liquid investments that are readily convertible to known amounts of
cash, are subject to insignificant risks of changes in value, and are held for
the purpose of meeting short-term cash commitments rather than for investment
or other purposes. Included in cash and cash equivalents at the period end was
cash at bank of £1,282,000.
(k) Other receivables
Other receivables do not carry interest and are short-term in nature and are
accordingly recognised at amortised cost.
(l) Foreign currency
Transactions and balances
At each Statement of Financial Position date, monetary assets and liabilities
that are denominated in foreign currencies are translated at the rates
prevailing at that date.
Non-monetary items carried at fair value that are denominated in foreign
currencies are translated at the rates prevailing at the date fair value is
measured. Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated. Exchange differences are recognised
in profit or loss in the year in which they arise. Transactions denominated in
foreign currencies are translated into pound sterling (£) at the rate of
exchange ruling at the date of the transaction.
Foreign exchange gains and losses arising from translation are included in the
Unaudited Condensed Statement of Comprehensive Income.
Where foreign currency items are held at fair value, the foreign currency
movements are presented as part of the fair value change.
(m) Capital reserve
Profits achieved by selling investments and changes in fair value arising upon
the revaluation of investments that remain in the portfolio are all charged to
profit or loss in the capital column of the Unaudited Condensed Statement of
Comprehensive Income and allocated to the capital reserve. The capital reserve
is also used to fund dividend distributions.
(n) Revenue reserve
The balance of all items allocated to the revenue column of the Unaudited
Condensed Statement of Comprehensive Income for the year is transferred to the
Company's revenue reserve.
(o) Investment entities
In accordance with IFRS 10 an investment entity is an entity that:
· obtains funds from one or more investors for the purpose of providing
those investor(s) with investment management services;
· commits to its investor(s) that its business purpose is to invest funds
solely for returns from capital application, investment income, or both; and
· measures and evaluates the performance of substantially all of its
investments on a fair value basis.
The Directors are satisfied that the Company meets each of these criteria and
hence is an investment entity in accordance with IFRS 10.
3. Use of estimates and critical judgements
The preparation of Unaudited Condensed Interim Financial Statements in
accordance with IFRS requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the Unaudited Condensed
Interim Financial Statements and the reported amounts of income and expenses
during the period. Actual results could differ from those estimates and
assumptions.
The estimates and underlying assumptions are reviewed on an ongoing basis.
There were no significant accounting estimates or significant judgements in
the current period.
4. New and revised standards
There are no accounting standards and their amendments that were in issue at
the period end but will not be in effect until after this financial period
end.
5. Investment management and performance fees
31 January 2023
to 30 June
2023
£'000
Investment management fees 47
Total investment management fees 47
The Company procures portfolio management services directly from DWL, under
the Portfolio Management Agreement.
Management fee
The monthly management fee is equal to of 1.5% of the Net Asset Value is up to
and including £50m and 1% of the Net Asset Value that is above £50m (the
"Management Fee"). The management fee is calculated and paid monthly in
arrears.
As at 30 June 2023, an amount of £15,183 was outstanding in respect of
management fees.
Performance fee
For the period ended 31 December 2023, a performance fee may be payable, the
sum of which is equal to 12.5% of the amount by which the Adjusted Net Asset
Value at the end of a Calculation Period exceeds the higher of: (i) the
Performance Hurdle; and (ii) the High Water Mark (the "Performance Fee"). The
calculation period for the current period will be the period commencing on 30
March 2023 and ending on 31 December 2023 (the "Calculation Period").
As at 30 June 2023, the Company had not exceeded the High Water Mark and
Performance Hurdle therefore an accrual of £nil for performance fees has been
reflected within these Unaudited Condensed Interim Financial Statements.
6. Other expenses
31 January 2023 to 30 June
2023
£'000
Directors' fees 32
Administration fee 20
Auditor's remuneration for:
- audit fees 10
- non-audit fees 13
Custodian fees 4
Broker fees 3
Registrars' fees 1
Listing fees 3
Regulatory fees 25
Legal fee and professional fees:
- ongoing operations 10
Directors' liability insurance 1
Sundry expenses 9
Total other expenses 131
7. (Loss) / Gain per Ordinary Share
30 June 2023
Net return Per share
£'000 pence
Revenue return (172) (1.35)
Capital return 252 1.98
At 30 June 80 0.63
Weighted average number of Ordinary Shares 12,750,010
The return per share is calculated using the weighted
average number of Ordinary Shares.
8. Dividends
The Board has not declared an interim dividend.
9. Investments held at fair value through profit or loss
UK Government Debt Equity instruments
30 June 30 June
2023 2023
£'000 £'000
Opening book cost - -
Opening investment holding unrealised gains - -
Opening valuation - -
Movements in the period
Purchases at cost 13,908 2,200
Sales - proceeds (5,248) (32)
Net gains on investments held at fair value
through profit or loss 89 163
Closing valuation 8,749 2,331
Closing book cost 8,660 2,168
Closing investment holding unrealised gains 89 163
Closing valuation 8,749 2,331
UK Government Debt Equity instruments
30 June 30 June
2023 2023
£'000 £'000
Movement in unrealised gains during the period 79 230
Movement in unrealised losses during the period (19) (71)
Realised gain on sale of investments 29 4
Net gain on investments held at fair value through profit or loss 89 163
10. Share capital
No of
shares £'000
Ordinary Shares at no par value
Opening balance as at 31 January 2023 - -
Issue of shares 12,750,010 12,750
Issue costs - (536)
At 30 June 2023 12,750,010 12,214
The holders of Ordinary Shares have the right to receive notice of and attend,
speak and vote in general meetings of the Company. They are also entitled to
participate in any dividends and other distributions of the Company.
11. Net Asset Value per Ordinary Share
The Net Asset Value per Ordinary Share and the Net Asset Value at the period
end calculated in accordance with the Articles of Incorporation were as
follows:
30 June 2023
NAV NAV
per share attributable
pence £'000
Ordinary Shares: basic and diluted 96.42 12,294
The Net Asset Value per Ordinary Share is based on 12,750,010 Ordinary Shares,
being the number of Ordinary Shares in issue at the period end.
12. Other expense payments
30 June
2023
£'000
Total gains for the period 80
Net gains on investments held at fair value
through profit or loss (252)
Interest income (6)
Movement in working capital
(Increase) in other receivables (27)
Increase in payables 95
Total other expense payments (110)
13. Financial instruments and capital disclosures
The Company's activities expose it to a variety of financial risks; market
risk (including other price risk, foreign currency risk and interest rate
risk), credit risk and liquidity risk.
Certain financial assets and financial liabilities of the Company are carried
in the Unaudited Condensed Statement of Financial Position at their fair
value. The fair value is the amount at which the asset could be sold, or the
liability transferred in a current transaction between market participants,
other than a forced or liquidation sale. For investments actively traded in
organised financial markets, fair value is generally determined by reference
to Stock Exchange quoted market mid prices and Stock Exchange Electronic
Trading Services ("SETS") at last trade price at the period end date, without
adjustment for transaction costs necessary to realise the asset. Other
financial instruments not carried at fair value are typically short-term in
nature and reprice to the current market rates frequently. Accordingly, their
carrying amount is a reasonable approximation of fair value. This includes
cash and cash equivalents, other receivables and other payables.
The Company measures fair values using the following hierarchy that reflects
the significance of the inputs used in making the measurements.
The Company measures fair values using the following hierarchy that reflects
the significance of the inputs used in making the measurements. Categorisation
within the hierarchy has been determined on the basis of the lowest level
input that is significant to the fair value measurement of the relevant assets
as follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or
liabilities.
An active market is a market in which transactions for the asset or liability
occur with sufficient frequency and volume on an ongoing basis such that
quoted prices reflect prices at which an orderly transaction would take place
between market participants at the measurement date. Quoted prices provided by
external pricing services, brokers and vendors are included in Level 1, if
they reflect actual and regularly occurring market transactions on an
arm's-length basis.
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 2 inputs include the following:
· quoted prices for similar (i.e., not identical) assets in active markets;
· quoted prices for identical or similar assets or liabilities in markets
that are not active. Characteristics of an inactive market include a
significant decline in the volume and level of trading activity, the available
prices vary significantly over time or among market participants or the prices
are not current;
· inputs other than quoted prices that are observable for the asset (for
example, interest rates and yield curves observable at commonly quoted
intervals); and
· inputs that are derived principally from, or corroborated by, observable
market data by correlation or other means (market-corroborated inputs).
Level 3 - Inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement in its entirety. 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.
At 30 June 2023 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Equity instruments 2,331 - - 2,331
UK Government Debt 8,749 - - 8,749
11,080 - - 11,080
The Company only has exposure to level 1 instruments in the current period.
The following table shows a reconciliation of the opening balance to the
closing balance for Level 1 fair values:
June
2023
£'000
Level 1
Opening balance -
Purchases at cost 16,108
Sales at cost (5,280)
Total gains included in net gains on investments in the Unaudited Condensed
Statement of Comprehensive Income
- on assets sold 33
- on assets held at period end 219
11,080
Investments are transferred between levels at the point of the trigger event.
The main risks that the Company faces arising from its financial instruments
are:
(i) market risk, including:
- other price risk, being the risk that the value of investments will
fluctuate as a result of changes in market prices;
- interest rate risk, being the risk that the future cash flows of a financial
instrument will fluctuate because of changes in interest rates;
(ii) credit risk, being the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that it has
entered into with the Company; and
(iii) liquidity risk, being the risk that the Company will not be able to meet
its liabilities when they fall due. This may arise should the Company not be
able to liquidate its investments.
Other price risk
The management of price risk is part of the portfolio management process and
is characteristic of investing in equity securities. The investment portfolio
is managed with an awareness of the effects of adverse price movements through
detailed and continuing analysis with an objective of maximising overall
returns to shareholders. Although it is the Company's current policy not to
use derivatives, they may be used from time to time for the purpose of
efficient portfolio management and managing any exposure to assets denominated
in currencies other than pound sterling.
If the investment portfolio valuation rose or fell by 10% at 30 June 2023, the
impact on the net asset value would have been £1,108,031/-£1,108,031. The
calculations are based on the investment portfolio valuation as at the
Unaudited Condensed Statement of Financial Position date and are not
necessarily representative of the year as a whole.
Interest rate risk
As at 30 June 2023 the financial assets and financial liabilities exposed to
interest rate risk are as shown below:
In one year Greater than 2023
or less one year Total
£'000 £'000 £'000
Cash at bank 1,282 - 1,282
UK Government Debt 8,749 - 8,749
Total 10,031 - 10,031
Liquidity and interest risk tables
The following tables detail the Company's remaining contractual maturity for
its current financial assets and liabilities.
Over
Interest Year 1 Year 1 - 2 2 years Total
2023 rate % £'000 £'000 £'000 £'000
Assets
Cash at bank Daily bank rate 1,282 - - 1,282
UK Treasury bills 0% fixed rate 6,508 - - 6,508
UK Gilts Variable coupon rate 2,241 - - 2,241
Other receivables Interest free 27 - - 27
Total 10,058 - - 10,058
Over
Interest Year 1 Year 1 - 2 2 years Total
2023 rate % £'000 £'000 £'000 £'000
Liabilities
Other current liabilities Interest free 95 - - 95
Total 95 - - 95
Credit risk
Credit risk is the risk that a counterparty to a financial instrument will
fail to discharge an obligation or commitment that it has entered into with
the Company. The Audit and Risk Committee has in place a monitoring procedure
in respect of counterparty risk which is reviewed on an ongoing basis.
The carrying amounts of financial assets best represent the maximum credit
risk exposure at the Unaudited Condensed Statement of Financial Position date,
and the main exposure to credit risk is via the Company's Custodian who is
responsible for the safeguarding of the Company's cash balances.
At the reporting date, the Company's financial assets exposed to credit risk
amounted to the following:
2023
Total
£'000
Cash at bank 1,282
UK Government Debt 8,749
Other receivables 27
Total 10,058
All the assets of the Company which are traded on a recognised exchange are
held on its behalf by Butterfield Bank (Guernsey) Limited, the Company's
Custodian. Bankruptcy or insolvency of the Custodian may cause the Company's
rights with respect to securities held by the Custodian to be delayed or
limited.
The credit risk on cash is controlled through the use of counterparties or
banks with high credit ratings, rated AA or higher, assigned by international
credit rating agencies. Bankruptcy or insolvency of such financial
institutions may cause the Company's ability to access cash placed on deposit
to be delayed, limited or lost.
Cash of £1,282,000 was held with Butterfield Bank (Guernsey) Limited and
Alpha FX Group plc at period end.
The credit rating of Butterfield Bank (Guernsey) Limited was A2 and Alpha FX
Group plc was B at the period end.
Liquidity risk
Liquidity risk is defined as the risk that the Company does not have
sufficient liquid resources to meet its obligations as they fall due. In
managing the Company's assets, the Company will seek to ensure that it holds
at all times a portfolio of assets (including cash) to enable the Company to
discharge its payment obligations as they fall due. The Company may also
maintain a short-term overdraft facility that it may utilise from time to time
to manage short-term liquidity.
The Company's liquidity risk is maintained by the Board in accordance with
established policies, procedures and governance structures in place. Cash flow
forecasting is reviewed by the Board to ensure that it has sufficient cash to
meet obligations as they fall due.
The maturity profile of the Company's current assets and liabilities is
presented in the following table.
Between Between
Up to 3 and 12 1 and 5 Total
3 months months years Total
2023 £ £ £ £
Assets
Cash at bank 1,282 - - 1,282
313333 313333
UK Government Debt 8,749 - - 8,749
Other receivables 27 - - 27
Liabilities
Current liabilities (95) - - (95)
Total 9,963 - - 9,963
Capital management objectives, policies and procedures
The structure of the Company's capital is described in note 10 and details of
the Company's reserves are shown in the Unaudited Condensed Statement of
Changes in Equity.
The Company's capital management objectives are:
· to ensure that it is able to continue as a going concern; and
· to generate long-term capital growth through investing in a
portfolio consisting primarily of equity or equity related investments in
unquoted companies.
The Board, with the assistance of the Portfolio Manager, regularly monitors
and reviews the broad structure of the Company's capital. These reviews
include:
· the extent to which revenue reserves should be retained or
utilised; and
· ensuring the Company's ability to continue as a going concern.
14. Related parties
DWL provides portfolio management services to the Company.
31 January 2023 to
30 June
2023
£'000
Management fee charged by DWL:
Total management fee charged 47
Management fee outstanding 15
Total AIFM fee recharged (13)
AIFM fee recharge outstanding (8)
AIFM fee charged by FundRock:
Total AIFM fee charged 13
AIFM fee outstanding 8
Directors' fees
Total Directors' fees charged 32
Directors' fees outstanding 17
As at 30 June 2023 the following Directors have holdings in the Company:
Number
of
% Ordinary Shares in
Director
Ordinary Shares issue as at 30 June 2023
Andrew
Henton
100,000
0.0078
Susan
Norman
20,000
0.0016
15. Post statement of financial position events
There has not been any matter or circumstance occurring subsequent to the end
of the interim financial period that has significantly affected, or may
significantly affect, the operations of the Company, the results of those
operations, or the state of affairs of the Company in future financial period.
Corporate Information
Directors
Andrew Henton, Chairman
Henry Freeman
Luke Allen
Susan Norman
Registered office
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey, GY1 2HL
Portfolio Manager
Dowgate Wealth Limited ("DWL")
15 Fetter Lane
London
EC4A 1BW
AIFM
FundRock Management Company (Guernsey) Limited
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey, GY1 2HL
Nominated Advisor and Joint Broker
Cenkos Securities plc
6-8 Tokenhouse Yard
London
EC2R 7AS
Joint Broker
Dowgate Capital Limited
15 Fetter Lane
London
EC4A 1BW
Administrator and Company Secretary
Maitland Administration (Guernsey) Limited, an Apex group company
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey, GY1 2HL
Registrar
Link Market Services (Guernsey) Limited
Mont Crevelt House
Bulwer Avenue
St Sampson
GY2 4LH
Guernsey
Custodian
Butterfield Bank (Guernsey) Limited
P.O. Box 25
Regency Court
Glategny Esplanade
St Peter Port
Guernsey
GY1 3AP
Channel Islands
English Legal Adviser to the Company
Gowling WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
Guernsey Legal Adviser to the Company
Collas Crill LLP
Glategny Court
PO Box 140
St Peter Port
Guernsey
GY1 4EW
Independent Auditor
Grant Thornton Limited Channel Islands
St James Place
St James Street
St Peter Port
Guernsey
GY1 2NZ
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