Strategic Equity Cap: Half-year Report
09/03/2023 07:00
Strategic Equity Capital PLC
HALF YEARLY REPORT AND FINANCIAL STATEMENTS SIX MONTH PERIOD ended 31 DECEMBER
2022
The full Half Yearly Report and Financial Statements can be accessed via the
Company’s website at: www.strategicequitycapital.com or by contacting the
Company Secretary by telephone on 0131 378 0500.
Copies of the announcement, annual reports, quarterly update presentations and
other corporate information can be found on the Company’s website at:
www.strategicequitycapital.com
FINANCIAL SUMMARY
Capital Return As at 31 December 2022 As at 30 June 2022 As at 31 December 2021 Six months % change to 31 December 2022
Net asset value (“NAV”) per Ordinary share^ 293.08p 316.21p 355.19p (7.3)%
Ordinary share price 275.00p 280.00p 317.00p (1.8)%
Comparative index * 5,026.45 5,164.05 5,935.33 (2.7)%
Discount of Ordinary share price to NAV (6.2)% (11.5)% (10.8)%
Average discount of Ordinary share price to NAV for the period (7.1)% (12.6)% (13.7)%
Total assets (£’000) 151,033 177,198 225,374 (14.8)%
Equity Shareholders’ funds (£’000) 150,550 175,030 224,824 (14.0)%
Ordinary shares in issue with voting rights 51,368,273 55,352,088 63,296,844 (7.2)%
Performance Six month period to 31 December 2022 Year ended 30 June 2022 Six month period to 31 December 2021
NAV total return for the period (6.7)% (9.2)% 1.9%
Share price total return for the period (1.0)% (9.5)% 2.5%
Comparative index* total return for the period (1.1)% (14.6)% 2.1%
Ongoing charges - annualised 1.21% 1.08% 1.05%
Ongoing charges (including performance fee) - annualised 1.21% 1.08% 1.05%
Revenue return per Ordinary share 2.16p 2.43p 1.71p
Dividend yield n/a 0.7% n/a
Proposed dividend for the period n/a 2.00p n/a
Interim period’s Highs/Lows High Low
NAV per Ordinary share 329.2p 279.7p
Ordinary share price 303.0p 258.0p
^ Net asset value or NAV, the value of total assets less current
liabilities. The net asset value divided by the number of shares in issue
produces the net asset value per share.
*FTSE Small Cap (ex Investment Trusts) index
CHAIRMAN’S STATEMENT
Introduction
I am delighted to introduce my first Chairman’s statement since I was
appointed as Chair of your Company at the AGM in November 2022. I would like
to take this opportunity to thank my predecessor, Richard Hills, for all his
efforts and leadership over the past 8 years on the Board. I have taken up
this role at an exciting time in the Company’s development and at an
eventful time for equity markets and for the wider global economy. The period
to the end of December was a mixed one in terms of market direction, NAV
performance and share price. The political turmoil in the UK and sharp moves
in bond markets catalysed by the aborted “mini-budget” injected
uncertainty and volatility into global equity markets and UK smaller companies
were not immune. However, the final quarter of the year seemed to demonstrate
improving, if potentially fragile, market stability and share price recoveries
resulting in NAV and the Company’s share price ending the year on a somewhat
brighter note.
Weaker market conditions and an uncertain economic backdrop in the UK and
globally will inevitably throw up more challenges as 2023 progresses. However,
market volatility and depressed equity valuations also present opportunities
for your Investment Manager to uncover attractive long term investment
opportunities, and the pipeline remains buoyant.
The Company’s investment portfolio remains highly concentrated with 77% of
the NAV made up of the top ten holdings as at the end of December 2022. The
Investment Manager has undertaken a detailed review of the valuations of these
key assets, including benchmarking them against the valuations applied to
private market transactions for comparable business. This analysis indicates a
substantial margin of safety currently underpinning the potential for long
term investment returns, which provides the Board with confidence
notwithstanding the uncertain environment.
Weaker equity markets, particularly in the area of UK Smaller Companies, has
increasingly been attracting the attention of well funded private equity funds
seeking to take advantage of the relative valuation discount being applied to
publicly listed companies compared to prevailing private market transaction
valuation multiples. The Company’s portfolio has been a beneficiary of this
phenomenon, with takeover approaches for a number of companies over the past
two years.
The Company is positioned as a high conviction concentrated portfolio of high
quality businesses that have the potential to be strategically valuable. As
such it remains susceptible to further approaches while valuation multiples
remain depressed. This, together with the underlying financial health of the
portfolio despite the weaker economic environment, provides the Board with
confidence that our investment management team will be able to generate good
long term returns for shareholders in the Company.
Performance
During the six months to 31 December 2022, the Company’s NAV per share (on a
total return basis) decreased by 6.7%. The FTSE Small Cap (ex Investment
Trusts) Total Return Index (“FTSE Small Cap Index”), which we use for
comparison purposes only, decreased by 1.1%. Over the same period, the share
price of the Company decreased by 1.0% on a total return basis. It is
worthwhile to remind shareholders that the Investment Manager’s strategy
includes the avoidance of certain more cyclical sectors such as oil & gas,
mining, banking and real estate. It is these sectors, in the main, that have
driven the overall outperformance of the benchmark over this period. The
Investment Manager and Board believe that over the long term the avoidance of
these areas of the market will not be detrimental to performance but will also
reduce volatility and improve the consistency of investment returns.
The performance of the Company varied significantly between Q3 and Q4. NAV per
share (on a total return basis) decreased by 8.9% in Q3, before increasing by
2.4% in Q4. This trend of improving NAV performance has continued into this
year with the NAV up a further 11.2% as I write.
Absolute NAV performance has inevitably been weaker during the period as a
result of the broad market sell off. However, the relatively defensive
positioning of the portfolio, focused on higher quality companies exposed to
areas of structural growth where they have a degree of pricing power and
largely in businesses with resilient business fundamentals and strong balance
sheets, should enable the Company to outperform over the medium to long term.
Performance is discussed more fully in the Investment Manager’s Report.
Development of the Company
Ken Wotton (Managing Director, Public Equity at Gresham House) has been Lead
Manager of the Company since September 2020. Since then Ken and his team have
gradually repositioned the portfolio into a high conviction set of businesses,
in many of which the Company now holds strategic and influential equity stakes
which form a platform to implement the Investment Manager’s highly
differentiated and engaged Strategic Public Equity strategy (summarised in the
Investment Manager’s Report).
Gresham House plc, directly and indirectly through its in-house fund, Gresham
House UK Micro Cap Fund, purchased 1,158,813 shares in the Company during the
year and ended the period with a combined direct and indirect equity stake of
8.9% of the Company as at the end of December 2022.
The Board is pleased with the progress made by Gresham House over the period.
Although investment returns were weaker, this primarily reflected weaker
equity markets with portfolio company fundamentals largely remaining strong,
which should underpin the potential for future investment returns.
Marketing
I’m pleased to report that good progress has been made in the marketing of
the Company. The Board and the Investment Manager reviewed the proposition and
communications of the Company, and have been working hard to roll out a
refreshed positioning across a range of communication channels. This work has
included updating the Company’s website with updated messaging and imagery,
a re-design of the Company’s factsheet, a new template for the Annual and
Interim Report & Accounts, and a refreshed presentation template. The team has
also focused on creating updated, engaging content for existing investors and
to attract new investors to the Company. This has included the introduction of
a new video series with fund manager Ken Wotton interviewing the CEOs of the
companies within our highly concentrated portfolio, to provide greater
insights into the businesses and their opportunities.
Working with the Company’s PR agency, KL Communications, the Board has
sought to build the profile of the Company in key investment and retail
investor media to highlight the Company’s distinctive investment process of
using a private equity approach to investing in public markets. While the
focus has been on emphasising the Company’s resilience in the face of a
tough macroeconomic environment for UK equities, our strategy for the coming
year is to highlight the opportunities ahead for UK smaller companies.
Discount and Discount Management
The measures implemented in March 2022 to address the persistent share price
discount to NAV are set out below. These have been encouraging, resulting in
the discount narrowing from 11.5% at the beginning of the period to 6.2% at
the end of the period. For comparison over the same period the average UK
Smaller Company Investment Trust discount decreased from 11.7% to 8.2%.(1)
The average discount to NAV of the Company’s shares during the period was
7.1%, compared to the equivalent 13.7% figure from the prior year. The
discount range was 2.5% to 13.8%.
The Board has announced a series of proposals which it believes will address
the persistent discount. These include:
* the implementation of a tender offer for up to 10 per cent. of the
Company’s share capital. The tender offer was approved by shareholders on 23
March 2022 and a total of 6,329,685 shares were repurchased at a cost of
322.8748 pence per share.
* following the completion of the initial tender offer, the implementation of
a share buyback programme for up to an additional approximate 9 per cent. of
NAV with Shares repurchased during the 2022 calendar year at a discount to NAV
of greater than 5 per cent;
* a new buyback policy to return 50 per cent. of proceeds from profitable
realisations, at greater than a 5 per cent. discount on an ongoing basis, in
each financial year, commencing in the financial year ending 30 June 2023;
* a commitment by Gresham House plc to use £5 million of its cash resources
to purchase Shares by June 2023 at greater than a 5 per cent. discount;
* an ongoing commitment by Gresham House Asset Management to reinvest 50 per
cent . of its management fee per quarter in shares if the Company’s shares
trade at an average discount of greater than 5 per cent. for the quarter; and
* the deferral of the continuation resolutions that would otherwise be
proposed at the Company’s annual general meetings in 2022, 2023 and 2024 in
favour of the implementation of a 100 per cent. realisation opportunity for
Shareholders in 2025, the structure and timing of which will be communicated
by the Board in due course.
During the six month period the Company bought back 3,983,815 shares. For the
year to 31 December 2022 5,598,886 shares were bought back.
The Board
I am delighted to welcome Brigid Sutcliffe and Howard Williams to your Board
as non-executive Directors. They were appointed on 8 February 2023.
Brigid qualified as a Chartered Accountant in 1983 and after gaining an MBA in
1987, spent thirty years working in investment banking and as a strategic
change management consultant, advising companies across a wide range of
sectors. She has been a non-executive director for a variety of organisations
in the public, private and third sectors over the past eighteen years,
including science and technology research, technical business services, higher
education and
social housing. Brigid is also a non-executive Director and Audit Chair of
Troy Income & Growth Trust plc.
Howard has forty years of fund management experience and was, until October
2017, Chief Investment Officer and Head of the Global Equity Team at JPMorgan
Asset Management. Prior to joining JPMorgan Asset Management in 1994, he held
a number of senior positions at Shell Pensions and Kleinwort Benson Asset
Management. He started his career at James Capel & Co. He is also a
non-executive director of Schroders Unit Trust Limited, a non-executive
director of Dunedin Income Growth Investment Trust PLC and of LifeSight
Limited.
It is the intention that Brigid take over the role of Audit Committee Chair
after Jo Dixon retires at the conclusion of the Company’s AGM in November.
Gearing and Cash Management
The Company has maintained its policy of operating without a banking loan
facility. This policy is periodically reviewed by the Board in conjunction
with the Investment Manager. The Board, together with the Investment Manager,
has a conservative approach to gearing because of the concentrated nature of
the portfolio. No gearing has been in place at any point during the period.
Cash balances are generally maintained to take advantage of suitable
investment opportunities as they arise.
Dividend
The Directors continue to expect that returns for Shareholders will derive
primarily from the capital appreciation of the shares rather than from
dividends. In line with previous years, the Board does not intend to propose
an interim dividend.
Outlook
The global macroeconomic and geopolitical environment remains highly
uncertain. Closer to home the UK’s economic outlook remains lacklustre. This
backdrop remains challenging for company earnings and UK smaller company
equity market ratings.
Despite these obvious challenges the Investment Manager is observing an
increasing number of attractive long term investment opportunities. Strong
underlying fundamentals across the existing portfolio provide a robust and
resilient platform for future investment returns. The significant dislocation
between current UK public market valuations and the comparisons in private
market provides good grounds for optimism about the prospects for positive
valuation momentum over the medium term.
The resilient positioning of the Company’s portfolio should enable it to
outperform in the current challenging environment and deliver attractive
long-term capital growth when markets stabilise. The enhanced marketing
programme, ongoing share buybacks and purchases by
Gresham House should support the Company’s ability to maintain a
structurally narrower share price discount to NAV over the coming year.
The Board, once again, thanks you for your continued support.
William Barlow
Chairman
8 March 2023
(1) Selected peer group
INVESTMENT MANAGER'S REPORT
Investment Strategy
In the following section, we remind shareholders of our strategy and
investment process.
Our Strategic Public Equity strategy
The appointment of Gresham House as Investment Manager in May 2020 and the
subsequent appointment of Ken Wotton as Lead Fund Manager in September 2020
resulted in a refocus of the investment strategy, ensuring that it is strictly
applied and is able to effectively leverage the experienced resource of the
Gresham House Strategic Equity team, the wider Group platform and its
extensive network. We set out this strategy in detail in the Company’s 2022
Annual Report which we summarise again below.
Investment focus
Our investment focus is to invest into high quality, publicly quoted companies
which we believe can materially increase their value over the medium to long
term through strategic, operational or management change. To select suitable
investments and to assist in this process we apply our proprietary Strategic
Public Equity (“SPE”) investment strategy. This includes a much higher
level of engagement with management than most investment managers adopt and is
closer in this respect to a private equity approach to investing in public
markets companies. Our path to achieving this involves constructing a high
conviction, concentrated portfolio; focusing on quality business fundamentals;
undertaking deep due diligence including engaging our proprietary network of
experts; and maintaining active stewardship of our investments. Through
constructive, active engagement with the management teams and boards of
directors, we seek to ensure alignment with shareholder objectives and to
provide support and access to other resource and expertise to augment a
company’s value creation strategy.
We are long-term investors and typically aim to hold companies for
three-to-five years to back a thesis that includes an entry and exit strategy
and a clearly identified route to value creation. We have clear parameters for
what we will invest in and areas which we will deliberately avoid.
Smaller company focus
We believe that UK Smaller Companies represent a structurally attractive part
of the public markets. Academic research demonstrates that smaller companies
in the UK have delivered substantial outperformance over the long term (see
Figure 1 in the Investment Manager’s Report in the Company’s Half Year
report). This is partially because there is a large number of under-researched
and under-owned businesses that typically trade at a valuation discount to
larger companies (see Figure 2 in the Investment Manager’s Report in the
Company’s Half Year report) and relative to their prospects. A highly
selective investor with the resources and experience to navigate successfully
this part of the market can find exceptional long-term investment
opportunities.
The key attractions of smaller companies are:
* Inefficient markets – Smaller companies remain under-researched and below
the radar for most investors thus creating an opportunity for those willing to
devote time and resource to this area.
* A large universe – Most UK listed companies are in the smaller companies
category and are listed on the main market or AIM. Two-thirds of UK listed
companies have a market capitalisation below £500m, offering a large
opportunity set for smaller company specialists.
* Valuation discounts – Such discounts, arising for whatever reason, present
attractive entry points at which the intrinsic worth of a company’s
long-term prospects are undervalued.
* M&A activity – Smaller companies often offer strategic opportunities
within their niche markets and can become attractive, bolt-on acquisitions to
both trade and private equity buyers. These buyers provide an additional
source of liquidity and realisation of value for smaller company investors.
Portfolio construction
We will maintain a concentrated portfolio of 15-25 high conviction holdings
with prospects for attractive absolute returns over our investment holding
period. The majority of portfolio value is likely to be concentrated in the
top 10-15 holdings, with other positions representing potential
“springboard” investments, where we are still undertaking due diligence or
awaiting a catalyst to increase our stake to an influential, strategic level.
Bottom-up stock picking determines the Company's sector weightings, which are
not explicitly managed relative to a target benchmark weighting. The absence
of certain sectors such as oil & gas, mining, and banks, as well as limited
exposure to overtly cyclical parts of the market and the absence of early
stage or pre-profit businesses, typically result in a portfolio weighted
towards, but not exclusively, profitable cash generative service sector
businesses, particularly in technology, healthcare, business services,
financials and industrials. The underlying value drivers are typically company
specific and exhibit limited correlation even within the same broad sectors.
Figure 3 in the Investment Manager’s Report in the Company’s Half Year
report sets out the sector exposure of the Company as at 31 December 2022.
Our smaller company focus and specialist expertise leads us to prioritise
companies with a market capitalisation between £100m and £300m at the point
of investment. This focus, in combination with the size of the Company and its
concentrated portfolio approach, provides the potential to build a strategic
and influential stake in the highest conviction holdings. In turn this
provides a platform to maximise the likelihood that our constructive active
engagement approach will be effective and ultimately successfully contribute
to shareholder value creation.
Once purchased there is no upper limit restriction on the market
capitalisation of an individual investment. We will run active positions
regardless of market capitalisation provided they continue to deliver the
expected contribution to overall portfolio returns and subject to exposure
limits and portfolio construction considerations.
The average market capitalisation of portfolio holdings decreased to £205m as
at 31 December 2022 compared to £231m as at 30 June 2022, largely reflecting
weaker share prices as equity markets sold off during 2022. This level of
average market capitalisation supports the Investment Manager’s strategy of
focusing on smaller market capitalisation companies where the Company has the
potential to take a meaningful equity stake as a platform to effectively apply
its active engagement strategy.
We set out a description of the Top 10 holdings as at 31 December 2022
together with a high level summary of the investment case and recent
developments for each position.
Constructive Active Engagement Approach
As far as possible, the Company aims to build consensus with other
stakeholders. We want to unlock value for shareholders, but also create
stronger businesses over the long term. The objective is to develop a dialogue
with management so that the GHAM team and its network are seen as trusted
advisors.
Operating with a highly-focused portfolio, the Company's management team can
build and maintain a deep understanding of its portfolio companies and their
potential. The team engages with company management teams and boards in a
number of areas including:
* Strategy – Working with boards to ensure business strategy and operations
are effectively aligned with long term value creation and focused on building
strategic value within a company’s market.
* Corporate activity – Support for acquisition and divestment activity
through advice, network introductions and provision of cornerstone capital.
* Capital allocation – Seeking to work with boards to optimise capital
allocation by prioritising the highest return and value added projects and
areas of focus for investment of both capital and resource.
* Board composition – Ensuring that boards are appropriately balanced
between executive and nonexecutive directors and contain the right balance of
skills and experience; we actively use our talent network to introduce high
quality candidates to enhance the quality of investee company boards as
appropriate.
* Management incentivisation – Ensuring that key management are
appropriately retained and incentivised to deliver long term shareholder value
with schemes that fit with GHAM’s principles and are well aligned to our
objectives as shareholders.
* ESG – Leveraging the Gresham House sustainable investing framework and
central resource to help to identify, understand and monitor key ESG risks and
opportunities as well as seeking to drive enhancements to a company’s
approach where there are critical material issues with a particular focus on
corporate governance.
* Investor Relations – Helping management teams to hone their equity story,
select appropriate advisors and target their investor relations activities in
the most effective way to ensure that value creation activity is understood
and reflected by the market.
Engagement is undertaken privately, as far as possible. The team will also
work to leverage its extensive network to the benefit of portfolio companies.
We seek to make introductions to our network in as collaborative way as
appropriate where we believe there is an opportunity to support initiatives to
create shareholder value.
In summary, we follow a practice of constructive corporate engagement and aim
to work with management teams in order to support and enhance shareholder
value creation. We attempt to build a consensus with other stakeholders and
prefer to work collaboratively alongside likeminded co-investors.
Portfolio review for the six months to 31 December 2022
Over the course of the six months to 31 December 2022 the portfolio remained
steady, with no new holdings purchased, and one full exit, Tyman plc, which
represented 4.2% of NAV at the start of the period. At the end of the period
the number of influential equity stakes where GHAM funds, in aggregate, hold a
5% or more equity stake now stands at ten, and represented 75% of the
portfolio by value at 31 December 2022.
Market Background
Over the six months to the end of December, the FTSE Smaller Companies (ex
Investment Trusts) Index (“the index”) fell by 1.1% on a total return
basis underperforming the FTSE All Share (+5.1%) but outperforming the FTSE
AIM (-5.1%). The market witnessed a substantial style shift from growth to
value as expectations of increasing interest rates took hold. This led to
certain more value orientated sectors outperforming such as oil & gas, mining
and banks, all areas where the Company does not invest. In addition during
2022 the very largest stocks in the FTSE 100, typically focused on these same
defensive and value sectors outperformed, with the vast majority of other
stocks, demonstrating negative absolute returns.
Significant geopolitical and macroeconomic uncertainty continued to dominate
sentiment, driving falling share prices particularly in smaller companies and
heightened market volatility. This was particularly acute during the
Company’s first fiscal quarter ending September 2022 with the UK’s
mini-budget and political turmoil destabilising debt markets and exacerbating
an already building shift towards a higher inflation, higher interest rate
environment and accelerating the shift in equity markets from the growth style
that has dominated for much of the period since the financial crisis in 2008,
towards a more value focused style.
The UK equity market continued to be out of favour with asset allocators with
a reported £20bn of net outflows from UK equity funds during 2022. This
volume of money leaving the UK market has weighed on valuations with the UK at
multi-decade lows relative to other developed markets, particularly the US,
despite the drawdowns experienced last year.
In addition the dispersion of valuation multiples within the UK market remains
at elevated levels albeit moderated from their 2021 peak.
These two facts together highlight the value opportunities in the UK market
but the need for careful assessment of the bottom up characteristics of each
company. This suits the private equity approach taken by the Investment
Manager to investing on behalf of the Company.
Performance Review
The net asset value (“NAV”) decreased 6.7%, on a total return basis, over
the six months to the end of December, closing at 293.08p per share. This
reduction in NAV reflected the volatile equity market conditions over the
period driven by the well documented geopolitical and macroeconomic challenges
impacting investor sentiment. The Company underperformed its benchmark during
the period, as the FTSE Smaller Companies (ex Investment Trusts) index fell by
1.1%. This reflected the relatively defensive positioning of the portfolio
compared to the wider market – focused on high quality businesses in less
cyclical parts of the market and with resilient business models and robust
balance sheets. This under performance was achieved without exposure to
sectors such as oil & gas, mining or banks which were strong relative
performers during the period.
Despite the market volatility experienced over the year, we remain confident
about the resilient underlying fundamentals of the portfolio companies and
their ability to withstand the macroeconomic headwinds that look set to
persist through the current financial year.
Wilmington, a professional media provider, delivered strong operational
performance and upgraded financial forecasts benefitting from a substantial
period of restructuring and a refocused strategy supported by the Gresham
House team. Hostelworld, an online travel agent demonstrating recovering
demand driven by the easing of global travel restrictions. XPS Pensions, an
actuarial services provider, which announced the earnings enhancing
acquisition of Penfida Limited, a leading independent corporate finance and
covenant advisor to UK pension funds; Ten Entertainment, a leading operator of
ten pin bowling centres, which reported strong results and continued positive
trading momentum.
In challenging equity market conditions a number of the portfolio holdings
suffered from share price weakness during the period, reversing the very
positive trend during the prior year. The largest detractors included
Inspired, an energy consultancy, was de-rated on negative sentiment due to the
disruption to the UK energy market; Tribal, an international provider of
student administration software, which downgraded expectations due to
challenges with a large contract resulting in a provision for potential
losses; LSL Property Services, which derated on a weaker outlook for the UK
housing market; R&Q Insurance Holdings, a global non-life specialty insurance
company, following a cautionary statement and weaker than expected interim
results; Iomart, an information technology and cloud computing company,
following annual results at the lower end of market expectations.
Portfolio Review
The portfolio remained highly focused with a total of 17 holdings and the top
10 accounted for 77% of the NAV at the end of the period. 7% of the NAV was
held in cash at the period end.
Over the period there was one full exit, from Tyman, at an IRR of 23.4%.
We believe the Company currently has a number of key holdings which currently
trade at material valuation discounts to comparable private market transaction
values which provides a strong margin of safety on the long term upside
potential of the portfolio.
Changes in sector weightings have been minimal in the period, with the largest
change being in cash, which has decreased from 8.6% to 6.8% of the NAV of the
Company.
Top 10 Investee Company Review
Company Investment Thesis Developments
XPS Pensions - Leading ‘challenger’ brand in the pensions administration and advice market with organic market share opportunity following industry consolidation - Highly defensive - - Strong results over the period with inflation linked contract pricing and rate increases accelerating revenue growth - Multiple industry award winners for 2022 - Alan Bannatyne appointed as chairman - Acquisition of Penfida added scale to covenants advisory business
high degree of revenue visibility and largely non-discretionary, regulation driven client activity - Below market rating despite favourable cash flow characteristics
Medica - A niche market leader in the UK teleradiology sector which is acyclical and is growing rapidly driven by increasing healthcare requirements and a structural shortage of § Softer summer utilisation levels recovered strongly supporting operating margins § Progress made with FutureTech investment programme § US and Irish businesses growing strongly
radiologists - Above market organic growth and underappreciated cash generation characteristics
Wilmington - International provider of B2B data and training in the compliance, insurance, financial and healthcare sectors - New chair, CEO and CFO incentivised to re-focus the - Revenue and margin growth accelerating resulting in forecast upgrades - Non-core asset disposal programme continued driving increased focus
business and deliver a return to organic growth
Brooks Macdonald - UK focused wealth management platform; structural growth given continuing transition to self-investment - Opportunity to leverage operational investments to grow margin - Adverse market movements to AUM partially offset by sustained net inflows - Revised pricing introduced to Managed Portfolio Service offering to improve competitiveness - Chairman retired due to ill health - CFO and COO exited the business
and continue strong cash flow generation - A consolidating market; opportunity for Brooks as both predator and prey
Fintel - Leading UK provider of technology enabled regulatory solutions and services to IFAs, financial institutions and other intermediaries - Strategically valuable technology - Accelerating revenue growth and increased proportion of contracted recurring income - Strong cash generation eliminated group debt - Strategic distribution partnership with M&G
platform with opportunity to drive material growth in revenues and margins through supporting customers’ digitisation journeys
Hostelworld - Category leader within the hosteling niche of the online travel sector - Social media led customer acquisition and engagement strategy to enhance profitability and - Strong momentum in bookings, average order value - Launch of app to underpin social media strategy - Return to profitability and cash generation - Reducing marketing spend as a proportion of revenue - Reduction in net debt
customer lifetime value - Growth driven by post-Covid recovery in international travel and value for money positioning
Ten Entertainment - Leading UK operator of ten pin bowling centres - High ROCE operating model with strong cash characteristics - Improving competitive and property dynamics post Covid - Strong like-for-like revenue growth well ahead of pre pandemic levels - Continued measured new site -expansion
driving a long term growth opportunity
LSL Property Services - Leading provider of services to the UK residential property sector with activities spanning mortgage broking, surveying and real estate agencies - Significant - Weak housing market transaction volumes weighing on mortgage volumes - Conveyancing volumes below expectations - Sale of Marsh & Parsons estate agency business accelerated transformation strategy - Chairman succession plan announced
opportunity to reallocate capital to the Financial Services division which is strategically valuable, high growth and underappreciated by the market
Tribal - International provider of student administration software with market leading positions in the UK, Australia and NZ - Strong defensive characteristics with high - Independent Gresham House review of technology platform confirmed best in class proposition - Onerous contract in Singapore led to profit downgrade - Good progress in cloud contract win rate
visibility of earnings - Transition to cloud-based platform has potential to drive growth, margins and rating
Ricardo - Environmental and Engineering consultancy business - Ongoing strategic transformation to refocus and prioritise the business towards higher growth, higher margin and - In line interims – environmental transition part of the business growing significantly YoY, in line with the redefined strategy - A&I facing headwinds, however not core to the thesis going forwards, and largely offset by growth in E&E - Positive outlook with record order pipeline
less capital intensive parts of the business - Strong market position underpinned by significant sector experience
Outlook
The Investment Manager’s core planning assumption is that continued
geopolitical and macroeconomic uncertainty will drive market volatility
throughout 2023. The paradigm shift to a period of higher inflation and higher
interest rates has fundamentally impacted asset markets and equities in
particular with the value style outperforming growth substantially during
2022. It is likely that increasing focus on company fundamentals and valuation
discipline will be required to outperform in this environment which plays to
the strengths of the Company’s investment strategy and the Investment
Manager’s approach.
The Investment Manager does not seek to make major macroeconomic predictions
or to tilt portfolio construction materially in any direction to mitigate or
benefit from macro trends. Rather the core focus remains building a portfolio
bottom up by investing in high-quality, resilient companies exposed to
structural growth, key competitive advantages or selfhelp opportunities and
maintain valuation discipline such that they could drive attractive investment
returns over the medium-to-long term regardless of the economic environment
and where the Investment Manager’s constructive active engagement approach
can help to support or unlock that potential.
The Investment Manager continues to believe that stock-level volatility across
the market, while creating some challenges, will provide an attractive
environment for investors to back quality companies with attractive long-term
structural capital growth at reasonable valuations across the market cap
spectrum. The economic environment and market discontinuity will provide agile
smaller businesses with strong management teams the opportunity to take market
share and build strong, enduring franchises.
The elevated levels of corporate activity within the UK equity space continue
to play out. The investment process and private equity lens across public
markets position enables identification of investment opportunities with
potential strategic value that could be attractive acquisitions for both,
corporate and financial buyers.
We continue to believe that our fundamental focused investment style has the
potential to outperform over the long term. We see significant opportunities
for long term investors to back quality growth companies at attractive
valuations in an environment where agile smaller businesses with strong
management teams can take market share and build strong long-term franchises.
We will maintain our focus on building a high conviction portfolio of less
cyclical, high quality, strategically valuable businesses which we believe can
deliver strong returns through the market cycle regardless of the performance
of the wider economy.
Ken Wotton
Gresham House Asset Management
8 March 2023
Portfolio as at 31 December 2022
Company Sector Classification Date of first Investment Cost £’000 Valuation £’000 % of invested portfolio at 31 December 2022 % of invested portfolio at 30 June 2022 % of net assets
XPS Financial Services Jul 2019 16,851 20,279 14.5 11.8 13.5
Medica Healthcare Mar 2017 19,120 20,019 14.3 13.3 13.3
Wilmington Media Oct 2010 8,143 12,483 8.9 7.4 8.3
Brooks Macdonald Financial Services Jun 2016 9,810 11,367 8.1 7.4 7.6
Fintel Financial Services Oct 2020 10,076 11,105 7.9 5.8 7.4
Hostelworld Travel & Leisure Oct 2019 9,137 10,428 7.4 5.3 6.9
Ten Entertainment Travel & Leisure Oct 2020 6,372 8,733 6.2 4.6 5.8
LSL Property Services Real Estate Mar 2021 13,256 7,719 5.5 6.5 5.1
Tribal Technology Dec 2014 11,742 7,423 5.3 9.0 4.9
Ricardo Construction & Materials Sep 2021 5,892 6,562 4.7 2.5 4.4
Inspired Energy Industrial Goods & Services Jul 2020 13,325 6,545 4.7 8.4 4.3
Benchmark Healthcare Jun 2019 6,734 5,138 3.7 4.3 3.5
Nexus Infrastructure Construction & Materials Jul 2021 4,523 3,516 2.5 2.1 2.3
Iomart Technology Mar 2022 4,346 3,410 2.4 3.0 2.2
Idox Technology Mar 2021 2,487 2,599 1.9 1.5 1.7
Randall & Quilter Financial Services Jun 2022 3,396 1,912 1.4 1.7 1.3
Assetco Financial Services Jun 2022 - 1,045 0.6 0.8 0.7
Total investments 140,283 93.2
Cash 10,723 7.1
Net current liabilities (456) (0.3)
Total shareholders’ funds 150,550 100.0
Statement of Directors’ Responsibilities, Going Concern, Principal Risks and
Uncertainties
Statement of Directors’ Responsibilities
The Directors confirm that to the best of their knowledge:
* the condensed set of financial statements contained within the Half-Yearly
Report has been prepared in accordance with IAS 34, ‘Interim Financial
Reporting’, and give a true and fair view of the assets, liabilities,
financial position and profit of the Company as required by Disclosure
Guidance and Transparency Rules (“DTR”) 4.2.4R;
* the Half-Yearly Report includes a fair review of the information required
by:
(a) DTR 4.2.7 of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) DTR 4.2.8 of the Disclosure Guidance and Transparency Rules, being related
party transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position or performance of the Company during that period; and any changes in
the related party transactions described in the last Annual Report that could
do so.
This Half-Yearly Report was approved by the Board of Directors on 8 March 2023
and the above responsibility statement was signed on its behalf by William
Barlow, Chairman.
Going Concern
The Company has adequate financial resources to meet its investment
commitments and, as a consequence, the Directors believe that the Company is
well placed to manage its business risks. After making appropriate enquiries
and due consideration of the Company’s cash balances, the liquidity of the
Company’s investment portfolio and the cost base of the Company, the
Directors have a reasonable expectation that the Company has adequate
available financial resources to continue in operational existence for the
foreseeable future and accordingly have concluded that it is appropriate to
continue to adopt the going concern basis in preparing the Half-Yearly Report,
consistent with previous periods.
Principal Risks and Uncertainties
The overriding risks and uncertainties to an investor relate to the markets on
which are traded the Company’s shares and the shares of the companies in
which the Company invests.
The principal risks and uncertainties are set out on pages 18 and 19 of the
Annual Report for the year ended 30 June 2022, which is available at
www.strategicequitycapital.com.
The Company’s principal risks and uncertainties have not changed since the
date of the Annual Report and are not expected to change for the remaining six
months of the Company’s financial year.
Statement of Comprehensive Income
for the six month period to 31 December 2022
Six month period ended 31 December 2022 unaudited Year ended 30 June 2022 audited Six month period to 31 December 2021 unaudited
Note Revenue return £'000 Capital return £'000 Total £'000 Revenue return £’000 Capital return £’000 Total £’000 Revenue return £'000 Capital return £'000 Total £'000
Investments
(Losses)/gains on investments held at fair value through profit or loss 6 - (13,459) (13,459) - (21,776) (21,776) - 3,187 3,187
- (13,459) (13,459) - (21,776) (21,776) - 3,187 3,187
Income
Dividends 2 2,124 - 2,124 4,173 - 4,173 2,221 - 2,221
Interest 2 35 - 35 6 - 6 - - -
Total income 2,159 - 2,159 4,179 - 4,179 2,221 - 2,221
Expenses
Investment Manager’s fee 8 (603) - (603) (1,564) - (1,564) (831) - (831)
Other expenses 3 (397) - (397) (1,128) - (1,128) (309) - (309)
Total expenses (1,000) - (1,000) (2,692) - (2,692) (1,140) - (1,140)
Net return before taxation 1,159 (13,459) (12,300) 1,487 (21,776) (20,289) 1,081 3,187 4,268
Taxation - - - - - - - - -
Net return and total comprehensive income for the period 1,159 (13,459) (12,300) 1,487 (21,776) (20,289) 1,081 3,187 4,268
pence pence pence pence pence pence pence pence pence
Return per Ordinary share 5 2.16 (25.08) (22.92) 2.43 (35.53) (33.10) 1.71 5.03 6.74
The total column of this statement represents the Statement of Comprehensive
Income. The supplementary revenue and capital columns are both prepared under
guidance published by the AIC.
All items in the above statement derive from continuing operations. No
operations were acquired or discontinued in the period.
The notes form an integral part of these Half-Yearly financial statements.
Statement of Changes in Equity
for the six month period to 31 December 2022
Note Share capital £'000 Share premium account £'000 Special reserve £'000 Capital reserve £'000 Capital redemption reserve £’000 Revenue reserve £'000 Total £'000
For the six month period to 31 December 2022 unaudited
1 July 2022 6,353 11,300 19,767 132,350 2,897 2,363 175,030
Net return and total comprehensive income for the period - - - (13,459) - 1,159 (12,300)
Dividend paid 4 - - - - - (1,061) (1,061)
Share buy-backs - - (11,119) - - - (11,119)
31 December 2022 6,353 11,300 8,648 118,891 2,897 2,461 150,550
For the year to 30 June 2022 audited
1 July 2021 6,986 31,737 24,567 154,126 2,264 1,889 221,569
Net return and total comprehensive income for the year - - - (21,776) - 1,487 (20,289)
Dividend paid 4 - - - - - (1,013) (1,013)
Share buy-backs (633) (20,437) (4,800) - 633 - (25,237)
30 June 2022 6,353 11,300 19,767 132,350 2,897 2,363 175,030
For the six month period to 31 December 2021 unaudited
1 July 2021 6,986 31,737 24,567 154,126 2,264 1,889 221,569
Net return and total comprehensive income for the period - - - 3,187 - 1,081 4,268
Dividend paid 4 - - - - - (1,013) (1,013)
31 December 2021 6,986 31,737 24,567 157,313 2,264 1,957 224,824
The notes form an integral part of these Half-Yearly financial statements.
Balance Sheet
as at 31 December 2022
Note As at 31 December 2022 unaudited £'000 As at 30 June 2022 audited £'000 As at 31 December 2021 unaudited £'000
Non-current assets
Investments held at fair value through profit or loss 6 140,283 159,950 208,708
Current assets
Trade and other receivables 27 885 211
Cash and cash equivalents 10,723 16,363 16,455
10,750 17,248 16,666
Total assets 151,033 177,198 225,374
Current liabilities
Trade and other payables (483) (2,168) (550)
Net assets 150,550 175,030 224,824
Capital and reserves
Share capital 7 6,353 6,353 6,986
Share premium account 11,300 11,300 31,737
Special reserve 8,648 19,767 24,567
Capital reserve 118,891 132,350 157,313
Capital redemption reserve 2,897 2,897 2,264
Revenue reserve 2,461 2,363 1,957
Total shareholders’ equity 150,550 175,030 224,824
pence pence pence
Net asset value per share 293.08 316.21 355.19
number number number
Ordinary shares in issue 7 51,368,273 55,352,088 63,296,844
The notes form an integral part of these Half-Yearly financial statements.
Statement of Cash Flows
for the six month period to 31 December 2022
Six month period to 31 December 2022 unaudited £'000 Year ended 30 June 2022 audited £’000 Six month period to 31 December 2021 unaudited £'000
Operating activities
Net return before taxation (12,300) (20,289) 4,268
Adjustment for losses/(gains) on investments 13,459 21,776 (3,187)
Operating cash flows before movements in working capital 1,159 1,487 1,081
Decrease/(increase) in receivables 615 (219) 212
(Decrease)/increase in payables (101) (19) 26
Purchases of portfolio investments (8,264) (36,443) (26,352)
Sales of portfolio investments 13,229 70,129 34,921
Net cash flow from operating activities 6,638 34,935 9,888
Financing activities
Equity dividend paid (1,061) (1,013) (1,013)
Shares bought back in the period (11,217) (25,139) -
Net cash flow from financing activities (12,278) (26,152) (1,013)
(Decrease)iIncrease in cash and cash equivalents for period (5,640) 8,783 8.875
Cash and cash equivalents at start of period 16,363 7,580 7,580
Cash and cash equivalents at end of the period 10,723 16,363 16,455
The notes form an integral part of these Half-Yearly financial statements.
Notes to the Financial Statements
for the six month period to 31 December 2022
1.1 Corporate information
Strategic Equity Capital plc is a public limited company incorporated and
domiciled in the United Kingdom, registered in England and Wales under the
Companies Act 2006 whose shares are publicly traded. The Company is an
investment company as defined by Section 833 of the Companies Act 2006.
The Company carries on business as an investment trust within the meaning of
Sections 1158/1159 of the Corporation Tax Act 2010.
1.2 Basis of preparation/statement of compliance
The condensed Half-Yearly financial statements of the Company have been
prepared on a going concern basis and in accordance with international
accounting standards in conformity with the requirements of the Companies Act
2006. They do not include all the information required for a full report and
financial statements and should be read in conjunction with the report and
financial statements of the Company for the year ended 30 June 2022, which
have been prepared in accordance with IFRS. Where presentational guidance set
out in the Statement of Recommended Practice (“SORP”) for investment trust
companies and venture capital trusts issued by the AIC is consistent with the
requirements of IFRS, the Directors have sought to prepare financial
statements on a basis compliant with the recommendations of the SORP.
The condensed Half-Yearly financial statements do not comprise statutory
accounts within the meaning of Section 434 of the Companies Act 2006. The
financial statements for the six month periods to 31 December 2022 and 31
December 2021 have not been either audited or reviewed by the Company’s
Auditor. Information for the year ended 30 June 2022 has been extracted from
the latest published Annual Report and financial statements, which have been
filed with the Registrar of Companies. The report of the Auditor on those
financial statements was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498 of the Companies
Act 2006.
Convention
The financial statements are presented in Sterling, being the currency of the
Primary Economic Environment in which the Company operates, rounded to the
nearest thousand.
Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
segment of business, being investment business.
1.3 Accounting policies
The accounting policies, presentation and method of computation used in these
condensed financial statements are consistent with those used in the
preparation of the financial statements for the year ended 30 June 2022.
1.4 New standards and interpretations not applied
Implementation of changes and accounting standards in the financial period, as
outlined in the financial statements for the year ended 30 June 2022, had no
significant effect on the accounting or reporting of the Company.
2. Income
Six month period to 31 December 2022 unaudited Year ended 30 June 2022 audited Six month period to 31 December 2021 unaudited
£'000 £'000 £'000
Income from investments
UK dividend income 2,124 4,173 2,221
Other operating income
Liquidity interest 35 6 -
Total income 2,159 4,179 2,221
3. Other expenses
Six month period to 31 December 2022 unaudited Year ended 30 June 2022 audited Six month period to 31 December 2021 unaudited
£'000 £'000 £'000
Secretarial services 85 153 77
Auditors’ remuneration for:
Audit services 36 43 21
Directors’ remuneration 74 140 65
Other expenses 202 792 146
397 1,128 309
4. Dividend
The Company paid a final dividend of 2.00p in respect of the year ended 30
June 2022 (30 June 2021: 1.60p) per Ordinary share on 53,027,547 (30 June
2021: 63,296,844) shares, amounting to £1,060,551 (30 June 2021:
£1,012,750). The dividend was paid on 16 November 2022 to Shareholders on the
register at 15 October 2022. In line with previous years, the Board does not
intend to propose an interim dividend.
5. Return per Ordinary share
Six month period to 31 December 2022 Year ended 30 June 2022 Six month period to 31 December 2021
Revenue return pence Capital return pence Total pence Revenue return pence Capital return pence Total pence Revenue return pence Capital return pence Total Pence
Return per Ordinary share 2.16 (25.08) (22.92) 2.43 (35.53) (33.10) 1.71 5.03 6.74
Returns per Ordinary share are calculated based on 53,653,477 (30 June 2022:
61,286,517 and 31 December 2021: 63,296,844) being the weighted average number
of Ordinary shares, excluding shares held in treasury, in issue throughout the
period.
6. Investments
31 December 2022 £’000
Investment portfolio summary:
Quoted investments at fair value through profit or loss 140,283
The Company is required to classify its investments using a fair value
hierarchy that reflects the subjectivity of the inputs used in measuring the
fair value of each asset. The fair value hierarchy has the following levels:
Investments whose values are based on quoted market prices in active markets
are classified within level 1 and include active listed equities. The Company
does not adjust the quoted price for these instruments.
The definition of level 1 inputs refers to ‘active market’ which is a
market in which transactions take place with sufficient frequency and volume
for pricing information to be provided on an ongoing basis. Due to the
liquidity levels of the markets in which the Company trades, whether
transactions take place with sufficient frequency and volume is a matter of
judgement, and depends on the specific facts and circumstances. The Investment
Manager has analysed trading volumes and frequency of the Company’s
portfolio and has determined these investments as level 1 of the hierarchy.
Financial instruments that trade in markets that are not considered to be
active but are valued based on quoted market prices, dealer quotations or
alternative pricing sources supported by observable inputs are classified
within level 2. As level 2 investments include positions that are not traded
in active markets and/or are subject to transfer restrictions, valuations may
be adjusted to reflect illiquidity and/or non-transferability, which are
generally based on available market information.
Level 3 instruments include private equity, as observable prices are not
available for these securities the Company has used valuation techniques to
derive the fair value. In respect of unquoted instruments, 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 (“IPEV”) Valuation Guidelines.
The level in the fair value hierarchy within which the fair value measurement
is categorised is determined on the basis of the lowest level input that is
significant to the fair value of the investment.
Financial instruments at fair value through profit or loss as at 31 December
2022
Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000
Equity investments 140,283 - - 140,283
Liquidity funds - 2,489 - 2,489
Total 140,283 2,489 - 142,772
A list of the portfolio holdings is given in the Investment Manager’s report
above.
31 December 2022 Total £’000
Analysis of capital gains:
Gains on sale of investments 334
Movement in investment holding gains (13,793)
(13,459)
7. Share capital
Number 31 December 2022 £’000
Allotted, called up and fully paid Ordinary shares of 10p each:
Ordinary shares in circulation at 30 June 2022 63,529,206 6,353
Shares held in treasury at 30 June 2022 (8,177,118) (818)
Ordinary shares in issue per Balance Sheet at 30 June 2022 55,352,088 5,535
Shares bought back during the period to be held in treasury (3,983,815) (398)
Ordinary shares in issue per Balance Sheet at 31 December 2022 51,368,273 5,137
Shares held in treasury at 31 December 2022 12,160,933 1,216
Ordinary shares in circulation at 31 December 2022 63,529,206 6,353
8. Investment Manager’s fee
A basic management fee is payable to the Investment Manager at the annual rate
of 0.75% of the NAV of the Company. The basic management fee accrues daily and
is payable quarterly in arrears.
The Investment Manager is also entitled to a performance fee, details of which
are set out below.
9. Performance fee arrangements
The Company’s performance is measured over rolling three-year periods ending
on 30 June each year, by comparing the NAV total return per share over a
performance period against the total return performance of the FTSE Small Cap
(ex Investment Companies) Index. A performance fee is payable if the NAV total
return per share (calculated before any accrual for any performance fee to be
paid in respect of the relevant performance period) at the end of the relevant
performance period exceeds both:
(i) the NAV per share at the beginning of the relevant performance period as
adjusted by the aggregate amount of (a) the total return on the FTSE Small Cap
(ex Investment Companies) Index (expressed as a percentage) and (b) 2.0% per
annum over the relevant performance period (“Benchmark NAV”); and
(ii) the high watermark (which is the highest NAV per share by reference to
which a performance fee was previously paid).
The Investment Manager is entitled to 10% of any excess of the NAV total
return over the higher of the Benchmark NAV per share and the high watermark.
The aggregate amount of the Management Fee and the Performance Fee in respect
of each financial year of the Company shall not exceed an amount equal to 1.4%
per annum of the NAV of the Company as at the end of the relevant financial
period.
A performance fee of £nil has been accrued in respect of the six months ended
31 December 2022 (30 June 2022: £nil; 31 December 2021: £nil).
10. Taxation
The tax charge for the half year is £nil (30 June 2022: £nil; 31 December
2021: £nil). The estimated effective corporation tax rate for the year ended
30 June 2023 is 0%. This is because investment gains are exempt from tax owing
to the Company’s status as an investment company and there is expected to be
an excess of management expenses over taxable income.
Directors and Advisors
Directors
William Barlow (Chairman)
Richard Locke (Deputy Chairman)
Annie Coleman
Josephine Dixon
Brigid Sutcliffe
Howard Williams
Auditor
KPMG LLP
Saltire Court
20 Castle Terrace
Edinburgh EH1 2EG
Broker
Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
Custodian
J.P. Morgan Chase Bank N.A.
25 Bank Street
Canary Wharf
London E14 5JP
Depositary
J.P. Morgan Europe Limited
25 Bank Street
Canary Wharf
London E14 5JP
Investment Manager
Gresham House Asset Management Limited
80 Cheapside
London EC2V 6EE
Tel: 020 3837 6270
Registrar
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol BS99 6ZY
Tel: 0370 707 1285
Website: www.computershare.com
Solicitor
Stephenson Harwood LLP
1 Finsbury Circus
London EC2M 7SH
Company Secretary and Administrator
Juniper Partners Limited
28 Walker Street
Edinburgh EH3 7HR
Tel: 0131 378 0500
Registered Office
c/o Stephenson Harwood LLP
1 Finsbury Circus
London EC2M 7SH
Shareholder Information
Investment Policy
The Company invests primarily in equities quoted on markets operated by the
London Stock Exchange where the Investment Manager believes the securities are
undervalued and could benefit from strategic, operational or management
initiatives. The Company also has the flexibility to invest up to 20% of the
Company’s gross assets at the time of investment in securities quoted on
other recognised exchanges.
The Company may invest up to 20% of its gross assets at the time of investment
in unquoted securities, provided that, for the purpose of calculating this
limit, any undrawn commitments which may still be called shall be deemed to be
an unquoted security.
The maximum investment in any single investee company will be no more than 15%
of the Company’s investments at the time of investment.
The Company will not invest more than 10%, in aggregate, of the value of its
total assets at the time the investment is made in other listed closed-end
investment funds.
Other than as set out above, there are no specific restrictions on
concentration and diversification. The Board does expect the portfolio to be
relatively concentrated, with the majority of the value of investments
typically in the securities of 10 to 15 issuers across a range of industries.
There is also no specific restriction on the market capitalisation of
securities into which the Company will invest, although it is expected that
the majority of the investments by value will be invested in companies too
small to be considered for inclusion in the FTSE 250 Index.
The Company’s Articles of Association permit the Board to take on borrowings
of up to 25% of the NAV at the time the borrowings are incurred for investment
purposes.
Financial calendar
Company’s year-end
30 June
Annual results announced
September
Annual General Meeting
November
Company’s half-year
31 December
Half-yearly results announced March
Share price
The Company’s Ordinary shares are premium listed on the main market of the
London Stock Exchange plc (the “London Stock Exchange”). The share price
is quoted daily in the Financial Times under ‘Investment Companies’.
Share dealing
Shares can be traded through your usual stockbroker.
Share register enquiries
The register for the Ordinary shares is maintained by Computershare Investor
Services plc (“Registrar”). In the event of queries regarding your
holding, please contact the Registrar, on 0370 707 1285. Changes of name
and/or address must be notified in writing to the Registrar, whose address is
shown above.
NAV
The Company’s NAV is announced daily to the London Stock Exchange.
Website
Further information on the Company can be accessed via the Company’s
website: www.strategicequitycapital.com
An investment company as defined under Sections 833 of the Companies Act 2006
REGISTERED IN ENGLAND AND WALES No 5448627
A member of the Association of Investment Companies
The Half Yearly Financial Report will be posted to shareholders shortly. The
Report will also be available for download from the following website:
www.strategicequitycapital.com or on request from the Company Secretary.
National Storage Mechanism
A copy of the Half Yearly Report will be submitted shortly to the National
Storage Mechanism and will be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of this announcement.
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