REG-SVM UK Emerging Fund Plc: Half-year Report
26/11/2024 13:45
SVM UK EMERGING FUND plc
Half Yearly Report 2024
HIGHLIGHTS
• Over the six months to 30 September 2024, net asset value per share
increased by 2.8% to 99.45p and the share price gained 6.5% compared to a
return of 6.2% in the chosen comparator, the IA UK All Companies Sector
Average.
• Over the five years to 30 September 2024, net asset value per share has
fallen 10.7% and the share price 24.7%, against the comparator return of
25.5%.
• Consumer discretionary and financial services were the best performing
sectors in the portfolio over the six month review period.
• Consumer confidence is improving and the portfolio is positioned to
benefit from lower inflation and interest rates.
“Long term capital growth from investments in smaller UK companies. The
Fund’s aim is to outperform the IA UK All Companies Sector Average on a
total return basis”
Financial Highlights
6 months 3 years 5 Years 10 Years
Net Asset Value 2.8% -31.8% -10.7% 52.7%
Share Price 6.5% -43.3% -24.7% 28.4%
Comparator * 6.2% 9.0% 25.5% 72.0%
*The comparator for the Fund is the IA UK All Companies Sector Average.
SVM UK EMERGING FUND plc
Half Yearly Report 2024
CHAIRMAN’S STATEMENT
During the six months to 30 September 2024, net asset value per share
increased by 2.8% to 99.45 and the share price gained 6.5% compared to a
return of 6.2% in the chosen comparator, the IA UK Companies Sector Average.
Over the five years to 30 September 2024, net asset value per share has fallen
10.7% and the share price 24.7%, against the comparator return of 25.5%.
This year, investors have favoured businesses seen as ‘quality’, with
strong balance sheets and less debt risk. Before this rally began, smaller and
medium sized London-listed companies had fallen to long term low valuations
relative to the largest global businesses. The period under review has seen a
broadening of stock market performance, with investors looking for growing
businesses in out-of-favour areas. Despite the challenges for the global
economy there appears potential for more catch up from small and medium-sized
businesses.
The strongest contributions to performance over the period were Marks &
Spencer (M&S), JTC, Cranston’s, Tesco and Alpha Group International. M&S was
the largest positive contributor to returns. Consumer discretionary stocks
typically perform well at this point in the cycle, but M&S also benefited from
indications that it was continuing to take share in both food and clothing.
Insurers, Beasley and Conduit also gained. Negative performers included
4Imprint Group, Melrose Industries, Man Group, Boku and DiscoverIE Group. The
holding in Unite Group was reduced against a background of concern on the
growth outlook for student accommodation.
Positive real wage growth has supported a recovery in consumer confidence,
with the potential for further improvement from release of excess savings. UK
smaller companies are more exposed to the domestic economy and typically more
cyclical. They are also more geared to central bank base rates and should
benefit from easing of inflation and interest rates. UK inflation has reduced
and forecasts for growth of the UK economy for 2025 exceed both the US and the
Eurozone.
The portfolio focuses on resilient growing businesses, with low exposure to
commodities, oils and banks. Portfolio investments are typically scalable
businesses with a competitive edge. The Fund remains fully invested with
minimal gearing.
At the Annual General Meeting in September, all resolutions were passed. I
reiterated that your Board is focused on the scheduled continuation vote in
2025 and is continuing to look at a range of options. This strategic review
will include assessing the discount and consulting with shareholders before
reverting to shareholders with a formal recommendation. In order to reduce
costs, the Manager has continued to waive its management fee.
Peter Dicks
Chairman
8 November 2024
SVM UK EMERGING FUND plc
Half Yearly Report 2024
INVESTMENT OBJECTIVE and POLICY
The investment objective of SVM UK Emerging Fund plc (the “Fund” or the
“Company”) is long term capital growth from investments in smaller UK
companies. Its aim is to outperform the IA UK All Companies Sector Average on
a total return basis.
The Fund aims to achieve its objective and to diversify risk by investing in
shares and related instruments, controlled by a number of limits on exposures.
Appropriate guidelines for the management of the investments, gearing and
financial instruments have been established by the Board. This is an abridged
version of the Fund’s investment policy. The full investment policy can be
found in the Strategic Report within the Fund’s latest Annual Report &
Accounts.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors are responsible for preparing the Half Yearly Report in
accordance with applicable law and regulations.
The Directors confirm that to the best of their knowledge:
(i) the condensed set of financial
statements have been prepared in accordance with the Financial Reporting
Council Statement 104 “Interim Financial Reporting” on a going concern
basis and give a true and fair view of the assets, liabilities, financial
position and gain or loss of the Fund;
(ii) the Half Yearly Report includes a fair review of the information
required by the Disclosure and Transparency Rules DTR 4.2.7R (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 financial year); and DTR 4.2.8R (disclosure of related party
transactions and changes therein that could have a material effect on the
financial position or performance of the Fund during the first six months of
the current financial year).
(iii) No related party transactions have taken place during the first six
months of the year that have materially affected the financial position of the
Fund during the period and there have been no changes in the related party
transactions as described in the Annual Report & Accounts for the year end 31
March 2024 that could do so.
The Directors consider that the Half Yearly Report, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the Fund’s performance and strategy,
The Half Yearly Report has not been audited or reviewed by the Fund’s
auditors.
By Order of the Board
Peter Dicks
Chairman
8 November 2024
SVM UK EMERGING FUND plc
Half Yearly Report 2024
UNAUDITED ACCOUNTS
Income Statement
Six months to 30 September 2024 Six months to 30 September 2023
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net gain/(loss) on investments at fair value - 153 153 - (214) (214)
Income 98 98 95 - 95
Investment management fees - - - - (17) (17)
Other expenses (80) - (80) (76) - (76)
Gain/(loss) before finance costs and taxation 18 153 171 19 (231) (212)
Finance costs (8) - (8) (17) - (17)
Gain/(loss) on ordinary activities before taxation 10 153 163 2 (231) (229)
Taxation - - - - - -
Gain/(loss) attributable to ordinary shareholders 10 153 163 2 (231) (229)
Gain/(loss) per Ordinary Share 0.17p 2.55p 2.72p 0.03p (3.85)p (3.82)p
The Total column of this statement is the profit and loss account of the Fund. All revenue and capital items are derived from continuing operations. No operations were acquired or discontinued in the year. A Statement of Comprehensive Income is not required as all gains and losses of the Fund have been reflected in the above statement.
Year ended 31 March 2024 (audited)
Revenue Capital Total
£’000 £’000 £’000
Net gain on investments at fair value - 272 272
Income 140 - 140
Investment management fees - (17) (17)
Other expenses (143) - (143)
(Loss)/Gain before finance costs and taxation (3) 255 252
Finance costs (30) - (30)
(Loss)/Gain on ordinary activities before taxation (33) 255 222
Taxation - - -
(Loss)/Gain attributable to ordinary shareholders (33) 255 222
(Loss)/Gain per Ordinary Share (0.55)p 4.25p 3.70p
SVM UK EMERGING FUND plc
Half Yearly Report 2024
UNAUDITED ACCOUNTS
Balance Sheet
As at 30 September 2024 (unaudited) As at 31 March 2024 (audited) As at 30 September 2023 (unaudited)
£’000 £’000 £’000
Fixed Assets
Investments at fair value through profit or loss 5,606 5,485 4,836
Total current assets 479 522 979
Creditors: amounts falling due within one year (123) (208) (467)
Net current assets 356 314 512
Total assets less current liabilities 5,962 5,799 5,348
Capital and Reserves 5,962 5,799 5,348
Equity shareholders’ funds 5,962 5,799 5,348
Net asset value per Ordinary Share 99.45p 96.73p 89.21p
SVM UK EMERGING FUND plc
Half Yearly Report 2024
UNAUDITED ACCOUNTS
Statement of Changes in Equity
For the period to 30 September 2024
Share capital Share premium Special reserve* Capital redemption reserve** Capital reserve** Revenue reserve* Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
As at 1 April 2024 300 314 5,136 27 649 (627) 5,799
Gain attributable to shareholders - - - - 153 10 163
As at 30 September 2024 300 314 5,136 27 802 (617) 5,962
For the year to 31 March 2024
Share capital Share premium Special reserve* Capital redemption reserve** Capital reserve** Revenue reserve* Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
As at 1 April 2023 300 314 5,136 27 394 (594) 5,577
Loss attributable to shareholders - - - - 255 (33) 222
As at 31 March 2024 300 314 5,136 27 649 (627) 5,799
For the period to 30 September 2023
Share capital Share premium Special reserve* Capital redemption reserve** Capital reserve** Revenue reserve* Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
As at 1 April 2023 300 314 5,136 27 394 (594) 5,577
Gain/(loss) attributable to shareholders - - - - (231) 2 (229)
As at 30 September 2023 300 314 5,136 27 163 (592) 5,348
*Distributable reserves comprise of the Special Reserve and the Revenue
Reserve and were £4,519,000 at 30 September 2024 (31 March 2024:
£4,509,000).
**Non-distributable reserves comprise the Capital Redemption Reserve and
Capital Reserve and were £829,000 at 30 September 2024 (31 March 2024 :
£676,000).
SVM UK EMERGING FUND plc
Half Yearly Report 2024
UNAUDITED ACCOUNTS
Investment Portfolio as at 30 September 2024
Stock Market Exposure 2024 £000 % of Net Assets Sector analysis as at 30 September 2024 Sector % of Gross Exposure
1 Beazley Group 238 4.0 Industrials 27.6
2 4Imprint Group 236 4.0 Financials 18.7
3 Howden Joinery Group 218 3.7 Consumer Discretionary 17.5
4 Marks and Spencer Group 217 3.6 Consumer Staples 12.3
5 Experian 196 3.3 Communication Services 7.4
6 Cranswick 196 3.3 Real Estate 6.9
7 Alpha Group International 189 3.2 Information Technology 5.1
8 Games Workshop Group 188 3.1 Materials 2.8
9 Tesco 183 3.1 Healthcare 1.7
10 Ashtead Group 181 3.0 Total 100.0
Ten largest investments 2,042 34.3
11 JTC 173 2.9
12 CRH 168 2.8
13 Compass Group 168 2.8
14 Serco Group 168 2.8
15 Conduit Holdings 165 2.8
16 Boku 160 2.7
17 Jet2 160 2.7
18 IMI 158 2.7
19 InterContinental Hotels Group 150 2.5
20 London Metric Property 145 2.4
Twenty largest investments 3,657 61.4
21 Computacenter 143 2.4
22 Keystone Law Group 143 2.4
23 Unite Group 142 2.4
24 Whitbread 142 2.4
25 Renew 134 2.2
26 Hilton Food Group 132 2.2
27 Greggs 131 2.2
28 Flutter Entertainment 126 2.1
29 Segro 120 2.0
30 Auto Trader Group 114 1.9
Thirty largest investments 4,984 83.6
Other investments (15 holdings)*** 950 15.9
CFD positions (378) (6.3)
CFD unrealised gains 50 0.8
Total investments 5,606 94.0
CFD unrealised losses (21) (0.3)
Net current assets** 377 6.3
Net assets 5,962 100.0
SVM UK EMERGING FUND plc
Half Yearly Report 2024
UNAUDITED ACCOUNTS
Risks and Uncertainties
The major risks inherent within the Fund are market risk, liquidity risk,
credit risk and interest rate risk. The Fund has an established environment
for the management of these risks which are continually monitored by the
Manager. Appropriate guidelines for the management of its financial
instruments and gearing have been established by the Board of Directors. The
Fund has no significant exposure to foreign currency assets and therefore does
not use currency hedging. It does not use derivatives within the portfolio
with the exception of CFDs. An explanation of these risks and how they are
mitigated is explained in the 2024 Annual Report, which is available on the
Manager’s website: www.river.global. These principal risks and
uncertainties have not changed from those disclosed in the 2024 Annual Report.
Going Concern
The Board, having made appropriate enquiries, has a reasonable expectation
that the Fund has adequate resources and sufficient liquidity to continue in
operational existence for the foreseeable future, a period of not less than 12
months from the date of this report. This conclusion takes in to account the
Directors’ assessment of the continuing risks and impacts from the
geopolitical risks relating to the conflict between Russia and Ukraine, the
conflict in the Middle East, and economic factors that are influencing the
current market volatility, such as inflation, interest rates and supply
chains. Accordingly, it continues to adopt the going concern basis in
preparing the financial statements.
Notes
1. The Financial Statements have been prepared on a going concern basis in
accordance with FRS 102 “Financial Reporting Standard applicable in the UK
and Republic of Ireland”, FRS 104 “Interim Financial Reporting” and
under the Association of Investment Companies Statement of Recommended
Practice “Financial Statements of Investment Trust Companies and Venture
Capital Trusts” (“SORP”) issued in April 2021. The Company is exempt
from presenting a Cash Flow Statement as a Statement of Changes in Equity is
presented and substantially all of the Company’s investments are liquid and
are carried at market value. These financial statements have been prepared in
accordance with the accounting policies used for the financial year ended 31
March 2024.
2. During the period no shares were bought back (2023: no shares were bought
back during the period).
The number of shares in issue at 30 September 2024 was 6,005,000 (2023:
6,005,000).
Returns per share are based on a weighted average of 5,995,000 (2023:
5,995,000) ordinary shares, being the number of shares in issue during the
period excluding the 10,000 shares held in Treasury.
Total return per share is based on the total gain for the period of £163,000
(2023: loss of £229,000). Capital return per share is based on the capital
gain for the period of £153,000 (2023: loss of £231,000). Revenue return
per share is based on the revenue gain after taxation for the period of
£10,000 (2023: gain of £2,000).
SVM UK EMERGING FUND plc
Half Yearly Report 2024
UNAUDITED ACCOUNTS
3. All investments are held at fair value. At 30 September 2024 no unlisted
investments were held with value attributed (31 March 2024: same; 30 September
2023: same).
Investments have been classified using the fair value hierarchy:
September 2024 £000 £000 March 2024 £000 £000
Classification of financial instruments Assets Liabilities Assets Liabilities
Level 1 5,556 - 5,436 -
Level 2 50 21 49 9
Level 3 – 2 investments (March 2024: 2) - - - -
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. The CFD positions are the sole Level 2 investments
at 30 September 2024 and 31 March 2024.
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. The Board has instructed
the Manager not to make any new investments in unlisted shares.
There are two (March 2023 - two) investments in the Fund which have values
of £nil where the respective share prices have been suspended, or are
stale. The Fair Value and Pricing Committee oversees and has ratified the
positions.
4. The Board has established guidelines to grant the Manager a limited
authority to invest in CFDs to achieve some degree of gearing and/or hedging
without incurring the gross cost of the investment. The Board requires the
Manager to operate within certain risk limits, as detailed in the Annual
Report. The following table details the CFD positions:
Number of CFD holdings at 30 September 2024: four (31 March 2024: four)
CFD positions September 2024 March 2024
£000 £000
Gross exposure 378 389
Net exposure 378 389
Unrealised gains 50 49
Unrealised losses 21 9
The gearing ratio is 1.1% at 30 September 2024 (31 March 2024: 0.7%). The
gearing ratio indicates the extra amount by which the shareholders’ funds
would change if total assets (including CFDs’ position exposure and netting
off cash and cash equivalents) were to rise or fall. A figure of zero per
cent means that the Company has a nil geared position.
5. River Global Investors LLP provides investment management and secretarial
services to the Fund. The Manager is entitled to a fee for these services,
payable quarterly in arrears, equivalent to 0.75% per annum of the total
assets of the Fund, less current liabilities. The Manager has elected to
waive the investment management fee from 1 September 2023 until further
notice.
SVM UK EMERGING FUND plc
Half Yearly Report 2024
UNAUDITED ACCOUNTS
6. The above figures do not constitute full or statutory accounts in terms of
Sections 434 and 435 of the Companies Act 2006. All information shown for the
six months to 30 September 2024 is unaudited. The accounts for the year to 31
March 2024, on which the auditors issued an unqualified report, have been
lodged with the Registrar of Companies and did not contain a statement
required under Section 498 of the Companies Act 2006.
For further information, please contact:
River Global on +44 (0) 20 3327 5100.
Alternatively, information is available on the website: www.river.global. The
Manager is not permitted to give you financial or tax advice. If you are in
any doubt, please consult your financial adviser.
SVM UK EMERGING FUND plc
Half Yearly Report 2024
CORPORATE INFORMATION
Directors
Peter Dicks (Chairman)
Ian Gray
Jeremy Harris
Investment Manager and Secretary
River Global Investors LLP
30 Coleman Street
London EC2R 5AL
Telephone: +44 (0) 20 3327 5100
Email: sales.support@river.global
Web: www.river.global
Authorised and regulated by the Financial
Conduct Authority and a member of the
Investment Association
Registered Office
SVM UK Emerging Fund plc
7 Castle Street
Edinburgh EH2 3AH
Registrars
Computershare Investor Services plc
Edinburgh House
4 North St Andrew Street
Edinburgh EH2 1HU
Telephone: +44 (0) 370 702 0003
Auditor
Johnston Carmichael LLP
7-11 Melville Street
Edinburgh EH3 7PE
Custodians
State Street Bank & Trust Company
Registered Office:
20 Churchill Place
Canary Wharf
London EH14 5HJ
Correspondence Address:
Quartermile 3
10 Nightingale Way
Edinburgh EH3 9EG
Authorised and regulated by the Financial Conduct Authority
Registered Number
SC211841
Manager’s Website
www.river.global
©River Global Investors LLP
Copyright (c) 2024 PR Newswire Association,LLC. All Rights ReservedRecent news on SVM UK Emerging Fund
See all newsREG - Stock Exch Notice SVM UK Emerg Fund - Cancellation - SVM UK Emerging Fund PLC
AnnouncementREG - Official List - Removal - SVM UK EMERGING FUND PLC
AnnouncementREG-SVM UK Emerging Fund Plc: Net Asset Value(s)
AnnouncementREG-SVM UK Emerging Fund Plc: Result of GM
AnnouncementREG - Official List - Suspension - SVM UK EMERGING FUND PLC
Announcement