NEW STAR INVESTMENT TRUST PLC
NEW STAR INVESTMENT TRUST PLC
HALF YEAR RESULTS
For the six months ended 31st December 2014
INVESTMENT OBJECTIVE
The Company's objective is to achieve long term growth.
FINANCIAL HIGHLIGHTS
31st 30th %
December June
2014 2014 Change
PERFORMANCE
Net assets (£ `000) 77,355 76,227 1.5
Net asset value per Ordinary share 108.92p 107.33p 1.5
Mid-market price per Ordinary share 71.50p 71.50p --
Discount (Premium) of price to net asset 34.4% 33.4% N/A
value
NAV performance 1.5% 4.0%
IA Mixed Investment 40-85% Shares (total 3.4% 8.0%
return)
MSCI AC World Index (total return, sterling 7.8% 9.6%
adjusted)
MSCI UK Index (total return) -1.3% 12.3%
Six months Six months
ended 31st ended 31st
December December
2014 2013
REVENUE
Return per Ordinary share 0.18p 0.25p
Dividend per Ordinary share - -
TOTAL RETURN
Net assets 1.5% 3.1%
INTERIM MANAGEMENT REPORT
CHAIRMAN'S STATEMENT
PERFORMANCE
Your Company's net assets rose 1.5% over the six months to 31st December 2014,
taking the net asset value (NAV) per ordinary share to 108.92p. By comparison,
the Investment Association's Mixed Investment 40-85% Shares index gained 3.4%.
The MSCI AC World Total Return Index posted a positive return of 7.8% while the
MSCI UK Index fell by 1.3%. UK government bonds performed strongly, returning
10.3%. Further information is provided in the Investment Manager's report.
Your Company made a revenue profit for the six months of £128,000 (2013: £
179,000).
GEARING AND DIVIDENDS
Your Company has no borrowings. It ended the period under review with cash
representing 15.7% of its NAV and is likely to maintain a significant cash
position. Your Company has small retained revenue reserves. Your directors do
not recommend the payment of an interim dividend (2013: nil).
DISCOUNT
During the period under review, the Company's shares continued to trade at a
significant discount to their NAV. Your Board has explored various
possibilities with a view to reducing this discount but no satisfactory
solution has been found. This position is, however, kept under continual review
by your directors.
THE ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE
The Alternative Investment Fund Managers Directive (AIFMD) is a European Union
directive creating an EU-wide framework for the regulation of managers of
Alternative Investment Funds (AIFs), including investment trusts. The directive
requires all AIFs to nominate an Alternative Investment Fund Manager (AIFM),
which can be the Company itself or a third party. Your Board has registered the
Company as its own AIFM, with Brompton Asset Management providing support
services. This approach minimises the cost to shareholders of implementing the
directive without affecting the management of your Company.
OUTLOOK
The potential for negative surprises has increased as a result of falling
inflation, sharp falls in commodity prices and heightened currency volatility.
Your company's investments in dollars, gold and gold securities, however,
provide an important source of diversification and may prove defensive should
the economic outlook worsen. The divergent monetary policies now being adopted
by major central banks may lead to a further strengthening in the dollar. There
may be further sterling weakness over the next few months given the
uncertainties associated with the impending UK general election and the
possible consequences for the UK's EU membership. Investments in gold and gold
securities may benefit as investors seek safety in the light of the continued
central bank monetary expansion and attendant fiat currency debasement.
Overall, however, your Investment Manager remains positive about the prospects
for equities in 2015 as central banks continue to expand monetary support and
lower energy costs prove supportive for global growth.
NET ASSET VALUE
Your Company's unaudited NAV at 31st January 2015 was 112.50p.
Geoffrey Howard-Spink
Chairman
23 February 2015
MARKET REVIEW
In October, the Federal Reserve stuck to its script and stopped quantitative
easing, the extraordinary policy of monetary expansion first adopted during the
credit crisis in 2008. During the subsequent six years, successive programmes
of quantitative easing eventually culminated in an "open-ended" commitment to
continue money-printing until unemployment fell below target. US economic data
ended 2014 sufficiently robust to justify the Federal Reserve making the first
moves to normalise monetary policy. Unemployment fell to 5.7%, leading
indicators remained strong and consumer confidence was high. At the period end,
US interest rates were widely expected to start rising from the middle of 2015
although the pace of increase was predicted to be slow.
US equities rose 16.37% in sterling during the period, outperforming a 7.81%
gain for global equities. The majority of the gains from US equities can be
attributed to the rise in the dollar, which gained 9.66% relative to sterling.
Dollar strength is a consequence of the divergent path of monetary policy
adopted by the Federal Reserve compared to the course taken by other major
central banks. In time, the currency's strength may prove a headwind for the US
economy, a point confirmed by Janet Yellen, the Federal Reserve chairman, who
indicated that a stronger currency, eurozone economic weakness and increased
geopolitical risk were reasons for keeping monetary policy exceptionally
accommodative for longer than some observers had expected.
Despite robust US economic data, bond markets outperformed equities during the
period under review as weak global inflation compounded fears of a slowdown in
global economic growth. Gilts and sterling corporate bonds returned 10.28% and
7.19% respectively. In the UK, inflation fell to 0.5% annualised in December,
the lowest level since May 2000. The chancellor, George Osborne, celebrated
this boost to real disposable incomes while warning that inflation could fall
further and even turn negative in the months ahead. The prospect of a UK
interest rate rise receded in consequence.
Eurozone prices fell 0.6% in January 2015. The weakness was a result of poor
demand exacerbated by recent falls in energy and commodity prices. The oil
price fell 42.92% in sterling during the second half of 2014. Falls of this
magnitude have generally been associated with falling global demand but, in
this instance, it was the result of supply-side development.
Saudi Arabia maintained supply in the face of increased production from US
shale oil producers to defend its market share. The fall in energy prices is
likely to be sustained because it will take some time to achieve a long-lasting
reduction in supply. As long as economic recovery is robust enough to prevent
the onset of deflation, cheaper oil should ultimately stimulate global economic
growth.
UK equities fell 1.33% during the period because weakness among energy and
other natural resources companies, which represent a significant proportion of
the UK equity market, adversely impacted returns. The increase in the UK
current account deficit was also a major concern and contributed to sterling
weakness.
Immediately after the period end, the European Central Bank (ECB) took action
to prevent short-term falling prices leading to long-term deflation, a state of
affairs in which consumers defer purchases in the expectation of further falls
in prices, thus causing economic activity to stall. The ECB finally adopted
quantitative easing, saying it would purchase €60 billion of assets each month
from March 2015 until September 2016 and possibly beyond that date if the
inflation outlook had not improved. This will lead to an increase in the
monetary base of at least €1.1 trillion, which should be sufficient to reverse
the decline in the ECB balance sheet since 2012. The ECB is mandated to achieve
price stability whereas the Federal Reserve has an obligation to achieve full
employment. It has, however, adopted a similarly "open-ended" approach,
implying that eurozone quantitative easing will continue until inflation nears
its 2% target. Equities in Europe excluding the UK are potentially
well-supported by quantitative easing, cheaper energy and a weaker euro.
The stronger dollar and weaker commodity prices significantly affected other
assets including equities in Asia Pacific excluding Japan and emerging markets.
These equity markets lagged global equities over the period, rising just 5.44%
and 1.27% respectively in sterling. The equity markets of oil-exporting nations
such as Russia were adversely affected. The Russian stock market fell 43.96% in
sterling during the period, mainly as a result of the 37.76% decline in the
rouble. By contrast oil importers such as India benefited. Indian equities rose
11.46% and the rupee appreciated 4.49% against sterling.
PORTFOLIO REVIEW
The net asset value of the Company rose 1.5% during the period under review.
Your Company ended the period with significant investments in cash, gold and
gold securities while having the majority of its investments in global
equities. By comparison, the Investment Association's Mixed Investment 40-85%
Shares Index, which measures a peer group of funds with a multi-asset approach
to investing and a typical investment in global equities in the 40-85% range,
rose 3.4% during the period. The MSCI AC World Total Return Index gained 7.8%
while the MSCI UK Total Return Index fell 1.3%.
The strong performance of US equities aided by a significant rise in the dollar
was a major contributor to the returns from global equities. Your Company has a
low allocation to US equities and this adversely affected returns during the
period compared to the peer group. Fundsmith Equity and Polar Capital Global
Technology, however, both have significant investments in US equities and this
factor contributed to their gains of 18.53% and 12.33% respectively. In
addition, the majority of the cash in New Star Investment Trust was invested in
dollars, which benefited from their significant appreciation relative to
sterling during the period. The extraordinary monetary policy of recent years
has increased the importance of considering currency when making investment
decisions.
The disparate performance of your Company's investments in developing economy
equity markets was largely attributable to the impact of the stronger dollar
and weaker commodity prices on their underlying economies. Geo-political events
also played a significant role in determining investment market returns during
the period. Neptune Russia and Greater Russia fell 38.39% as the impact of the
armed conflict in the Ukraine and the weaker oil price led to a sharp fall in
the rouble. Investec Africa fell 6.47% as the fall in the oil price resulted in
major falls for the equity markets of Ghana and Nigeria, where a significant
proportion of this fund is invested. By contrast, First State Indian
Subcontinent and Wells Fargo China rose 25.87% and 21.35% respectively because
both India and China are net importers of oil and should, therefore, benefit
from cheaper energy costs.
The stronger dollar proved a headwind for the gold price, which fell 1.94% in
sterling during the period. Blackrock Gold & General, which is invested in gold
equities, fell 14.31%, whereas your Company's investment in the Gold Bullion
Securities exchange-traded fund, which invests in the physical commodity, fell
0.20%.
Your Company ended the period under review with no investments in conventional
gilts or longer-dated fixed income securities. These assets performed well in
the period because falling inflation and the prospect of a major ECB programme
of asset purchases pushed yields close to all-time lows. Central bank policies
of quantitative easing had, however, materially inflated the valuation of this
asset class by the period end to point where yields did not offer sufficient
compensation for the risks of rising inflation and interest rates over the
longer term.
DIRECTORS' REPORT
PERFORMANCE
In the six months to 31st December 2014 the net asset value per Ordinary share
increased by 1.5% to 108.92p, whilst the share price remained unchanged at
71.50p. This compares to an increase of 3.4% in the IA Mixed Investment 40-85%
Shares Index.
INVESTMENT OBJECTIVE
The Company's investment objective is to achieve long-term capital growth.
INVESTMENT POLICY
The Company's investment policy is to allocate assets to global investment
opportunities through investment in equity, bond, commodity, real estate,
currency and other markets. The Company's assets may have significant
weightings to any one asset class or market, including cash.
The Company will invest in pooled investment vehicles, exchange traded funds,
futures, options, limited partnerships and direct investments in relevant
markets. The Company may invest up to 15% of its net assets in direct
investments in relevant markets.
The Company will not follow any index with reference to asset classes,
countries, sectors or stocks. Aggregate asset class exposure to any one of the
United States, the United Kingdom, Europe ex UK, Asia ex Japan, Japan or
Emerging Markets and to any individual industry sector will be limited to 50%
of the Company's net assets, such values being assessed at the time of
investment and for funds by reference to their published investment policy or,
where appropriate, their underlying investment exposure.
The Company may invest up to 20% of its net asset value in unlisted securities
(excluding unquoted pooled investment vehicles) such values being assessed at
the time of investment.
The Company will not invest more than 15% of its net assets in any single
investment, such values being assessed at the time of investment.
Derivative instruments and forward foreign exchange contracts may be used for
the purposes of efficient portfolio management and currency hedging.
Derivatives may also be used outside of efficient portfolio management to meet
the Company's investment objective. The Company may take outright short
positions in relation to up to 30% of its net assets, with a limit on short
sales of individual stocks of up to 5% of its net assets, such values being
assessed at the time of investment. The Company may borrow up to 30% of net
assets for short-term funding or long-term investment purposes. No more than
10%, in aggregate, of the value of the Company's total assets may be invested
in other closed-ended investment funds except where such funds have themselves
published investment policies to invest no more than 15% of their total assets
in other listed closed-ended investment funds.
SHARE CAPITAL
The Company's share capital comprises 305,000,000 Ordinary shares of 1p each,
of which 71,023,695 (2013: 71,023,695) have been issued fully paid. No Ordinary
shares are held in treasury, and none were bought back or issued during the six
months to 31st December 2014.
RISK MANAGEMENT
The principal risks associated with the Company that have been identified by
the Board, together with the steps taken to mitigate them, are as follows:
Investment strategy: inappropriate long-term strategy, asset allocation and
manager selection might lead to the underperformance of the Company. The
Company's strategy is kept under regular review by the Board. Investment
performance is discussed at every Board meeting and the Directors receive a
monthly report which details the Company's asset allocation, portfolio changes
and performance.
Business conditions and general economy: the Company's investment returns are
influenced by general economic conditions in the UK and globally. Factors such
as interest rates, inflation, investor sentiment and the availability and cost
of credit could adversely affect investment returns. The Board regularly
considers the economic environment in which the Company operates. The portfolio
is managed with a view to mitigating risk by investing in a spread of different
asset classes and geographic regions.
Portfolio risks - market price, foreign currency and interest rate risks: the
downward valuation of investments contained in the portfolio would lead to a
reduction in the Company's net asset value. A proportion of the Company's
portfolio is invested in investments denominated in foreign currencies and
movements in exchange rates can significantly affect their sterling value. It
is the Board's policy to hold an appropriate spread of investments in order to
reduce the risk arising from factors specific to a particular investment or
sector. The Investment Manager takes account of foreign currency risk and
interest rate risk when making investment decisions.
The Company does not normally hedge against foreign currency movements
affecting the value of the investment portfolio, although hedging techniques
may be employed in appropriate circumstances.
Investment Manager: the quality of the management team employed by the
Investment Manager is an important factor in delivering good performance and
the loss by the Investment Manager of key staff could adversely affect
investment returns. The Company's portfolio is managed by Gill Lakin. The Board
receives a monthly financial report which includes information on performance,
and a representative of the Investment Manager attends each Board meeting. The
Board is kept informed of any personnel changes to the investment team employed
by the Investment Manager.
Tax and regulatory risks: a breach of The Investment Trusts (Approved company)
(Tax) Regulations 2011 (the Regulations) could lead to a loss of investment
trust status, resulting in capital gains realised within the portfolio being
subject to United Kingdom capital gains tax. A breach of the UKLA Listing Rules
could result in suspension of the Company's shares, while a breach of company
law could lead to criminal proceedings, or financial or reputational damage.
The Board employs Brompton Asset Management LLP as Investment Manager and
Phoenix Administration Services Limited as Corporate Secretary and
Administrator to help manage the Company's legal and regulatory obligations.
The Board receives a monthly financial report which includes information on the
Company's compliance with the Regulations.
Operational: disruption to, or failure of, the Investment Manager's or
Administrator's accounting, dealing or payment systems or the Custodian's
records could prevent the accurate reporting and monitoring of the Company's
financial position. The Company is also exposed to the operational risk that
one or more of its suppliers may not provide the required level of service.
INVESTMENT MANAGEMENT ARRANGEMENT AND RELATED PARTY TRANSACTIONS
In common with most investment trusts the Company does not have any executive
directors or employees. The day-to-day management and administration of the
Company, including investment management, accounting and company secretarial
matters, and custodian arrangements are delegated to specialist third party
service providers.
Details of related party transactions are contained in the Annual Report. There
have been no material transactions with related parties during the period which
have had a significant impact on the performance of the Company.
GOING CONCERN
The Directors believe that it is appropriate to continue to adopt the going
concern basis in preparing the accounts as the assets of the Company consist
mainly of securities that are readily realisable or cash and it has no
significant liabilities. Accordingly, the Company has adequate financial
resources to continue in operational existence for the foreseeable future.
AUDITORS
The half year financial report has been reviewed, but not audited, by Ernst &
Young LLP pursuant to the Auditing Practices Board guidance on the Review of
Interim Financial Information.
RESPONSIBILITY STATEMENT
The Directors of the Company confirm that to the best of their knowledge:
* The financial statements contained within the half year financial report to
31st December 2014 have been prepared in accordance with International
Accounting Standard 34 `Interim Financial Reporting';
* The Chairman's statement or the Investment Manager's report include a fair
review of important events that have occurred during the first six months
of the financial year and their impact on the financial statements;
* The Chairman's statement or the Investment Manager's report include a fair
review of the potential risks and uncertainties for the remaining six
months of the year;
* The Director's report includes a fair review of the information concerning
transactions with the investment manager and changes since the last annual
report.
By order of the Board
Phoenix Administration Services Limited
Secretary
23 February 2015
INDEPENDENT REVIEW REPORT TO NEW STAR INVESTMENT TRUST PLC
INTRODUCTION
We have been engaged by the Company to review the financial statements in the
half-yearly financial report for the six months ended 31 December 2014 which
comprises the consolidated statement of comprehensive income, consolidated
statement of changes in equity, consolidated balance sheet, consolidated cash
flow statement and related explanatory notes 1 to 8. We have read the other
information contained in the half yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies with
the information in the financial statements.
This report is made solely to the company in accordance with guidance contained
in International Standard on Review Engagements 2410 (UK and Ireland) "Review
of Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we have formed.
DIRECTORS' RESPONSIBILITIES
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
financial statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
OUR RESPONSIBILITY
Our responsibility is to express to the Company a conclusion on the financial
statements in the half year financial report based on our review.
SCOPE OF REVIEW
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, 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 (UK and Ireland) 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.
CONCLUSION
Based on our review, nothing has come to our attention that causes us to
believe that the financial statements in the half-yearly financial report for
the six months ended 31 December 2014 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
23 February 2015
SCHEDULE OF TOP TWENTY INVESTMENTS
at 31st December 2014
Holding Activity Bid-market % of
value invested
£'000 portfolio
Henderson Euro Special Situations Fund Investment Fund 7,962 12.18
Fundsmith Equity Fund Investment Fund 6,011 9.19
Artemis UK Special Situations Fund Investment Fund 3,912 5.98
FP Brompton Global Conservative Fund Investment Fund 3,409 5.21
Trojan Investment Fund Investment Fund 3,167 4.84
Aberforth Geared Income Trust Investment Company 3,162 4.84
Blackrock Gold & General Fund Investment Fund 2,879 4.40
Aquilus Inflection Fund Investment Fund 2,669 4.08
First State Indian Subcontinent Fund Investment Fund 2,446 3.74
Polar Capital Global Technology Fund Investment Fund 2,334 3.57
Investec Africa Fund Investment Fund 2,214 3.39
Gold Bullion Securities ETF Exchange Traded 2,039 3.12
Fund
FP Brompton Global Opportunities Fund Investment Fund 2,028 3.10
FP Brompton Global Growth Fund Investment Fund 1,978 3.02
FP Brompton Global Income Fund Investment Fund 1,938 2.96
PFS Brompton UK Recovery Unit Trust Investment Fund 1,923 2.94
FP Brompton Global Equity Fund Investment Fund 1,791 2.74
FP Brompton Global Balanced Fund Investment Fund 1,694 2.59
Standard Life Investment European Investment Fund 1,687 2.58
Income Fund
Neptune Russia & Greater Russia Fund Investment Fund 1,558 2.38
56,801 86.85
Balance held in 15 investments 8,590 13.15
Total investments (excluding cash) 65,391 100.00
The investment portfolio can be further analysed as follows:
Equities (including investment companies) 6,184
Loan -
Investment funds and ETFs 59,207
65,391
All the Company's investments are either unlisted or are unit trust/OEIC funds
with the exception of Aberforth Geared Income Trust, BH Global Limited, Miton
Group, Gold Bullion Securities ETF, iShares FTSE 250, Immedia Group and Asia
Resource Minerals.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31st December 2014
Six months ended
31st December 2014
(unaudited)
Notes Revenue Capital Total
Return Return Return
£`000 £`000 £`000
INCOME
Investment income 488 - 488
Other operating income 3 - 3
Total income 2 491 - 491
GAINS AND LOSSES ON INVESTMENTS
Gains on investments at fair value - 196 196
through profit or loss
Other exchange gains - 798 798
Management fee rebates - 6 6
491 1,000 1,491
EXPENSES
Management fees 3 (234) - (234)
Other expenses (129) - (129)
(363) - (363)
PROFIT BEFORE FINANCE COSTS AND TAX 128 1,000 1,128
Finance costs - - -
PROFIT BEFORE TAX 128 1,000 1,128
Tax - - -
PROFIT FOR THE PERIOD 128 1,000 1,128
EARNINGS PER SHARE
Ordinary shares (pence) 4 0.18p 1.41p 1.59p
The total column of this statement represents the Group's profit and loss
account, prepared in accordance with IFRS. The supplementary Revenue Return and
Capital Return columns are both prepared under guidance published by the
Association of Investment Companies. All items in the above statement derive
from continuing operations. No operations were acquired or discontinued during
the period.
All income is attributable to the equity holders of the parent company. There
are no minority interests.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31st December 2013 and the year ended 30th June 2014
Six months ended Year ended
31st December 2013 30th June 2014
(unaudited) (audited)
Notes Revenue Capital Total Revenue Capital Total
Return Return Return Return Return Return
£'000 £'000 £'000 £'000 £'000 £'000
INCOME
Investment income 559 - 559 778 - 778
Other operating income 5 - 5 8 - 8
Total income 2 564 - 564 786 - 786
GAINS AND LOSSES ON
INVESTMENTS
Gains on investments at - 2,591 2,591 - 3,545 3,545
fair value through
profit or loss
Other exchange losses - (502) (502) - (726) (726)
Management fee rebates - 7 7 - 11 11
564 2,096 2,660 786 2,830 3,616
EXPENSES
Management fees 3 (254) - (254) (491) - (491)
Other expenses (131) - (131) (218) - (218)
(385) - (385) (709) - (709)
PROFIT BEFORE FINANCE 179 2,096 2,275 77 2,830 2,907
COSTS AND TAX
Finance costs - - - - - -
PROFIT BEFORE TAX 179 2,096 2,275 77 2,830 2,907
Tax - - - - - -
PROFIT FOR THE PERIOD 179 2,096 2,275 77 2,830 2,907
EARNINGS PER SHARE
Ordinary shares (pence) 4 0.25 2.95 3.20 0.11 3.98 4.09
The total column of this statement represents the Group's profit and loss
account, prepared in accordance with IFRS. The supplementary Revenue Return and
Capital Return columns are both prepared under guidance published by the
Association of Investment Companies. All items in the above statement derive
from continuing operations. No operations were acquired or discontinued during
the periods.
All income is attributable to the equity holders of the parent company. There
are no minority interests.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31st December 2014 (unaudited)
Share Share Special Retained
capital premium reserve earnings Total
£`000 £`000 £`000 £`000 £'000
At 30th JUNE 2014 710 21,573 56,908 (2,964) 76,227
Total comprehensive income for - - - 1,128 1,128
the period
At 31st DECEMBER 2014 710 21,573 56,908 (1,836) 77,355
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31st December 2013 (unaudited)
Share Share Special Retained
capital premium reserve earnings Total
£`000 £`000 £`000 £`000 £'000
At 30th JUNE 2013 710 21,573 56,908 (5,871) 73,320
Total comprehensive income for - - - 2,275 2,275
the period
At 31st DECEMBER 2013 710 21,573 56,908 (3,596) 75,595
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th June 2014 (audited)
Share Share Special Retained
capital premium reserve earnings Total
£`000 £`000 £`000 £`000 £`000
At 30th JUNE 2013 710 21,573 56,908 (5,871) 73,320
Total comprehensive income for - - - 2,907 2,907
the year
At 30th JUNE 2014 710 21,573 56,908 (2,964) 76,227
CONSOLIDATED BALANCE SHEET
at 31st December 2014
Notes 31st December 31st December 30th June
2014 2013 2014
(unaudited) (unaudited) (audited)
£`000 £`000 £`000
NON-CURRENT ASSETS
Investments at fair value 5 65,391 58,475 64,890
through profit or loss
CURRENT ASSETS
Other receivables 9 154 361
Cash and cash equivalents 12,132 17,184 11,171
12,141 17,338 11,532
TOTAL ASSETS 77,532 75,813 76,422
CURRENT LIABILITIES
Other payables (177) (218) (195)
TOTAL ASSETS LESS CURRENT 77,355 75,595 76,227
LIABILITIES
NON-CURRENT LIABILITIES ______________- ________________- ___________-
NET ASSETS 77,355 75,595 76,227
EQUITY ATTRIBUTABLE TO
EQUITY HOLDERS
Called-up share capital 710 710 710
Share premium 21,573 21,573 21,573
Special reserve 56,908 56,908 56,908
Retained earnings 6 (1,836) (3,596) (2,964)
TOTAL EQUITY 77,355 75,595 76,227
NET ASSET VALUE PER 7 108.92 106.44 107.33
ORDINARY SHARE (PENCE)
The half year report was approved and authorised for issue by the Board on 23
February 2015.
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31st December 2014
Six months Six months Year
ended ended ended
31st 31st 30th
December December June
201 2013 2014
(unaudited) (unaudited) (audited)
£`000 £`000 £`000
NET CASH INFLOW FROM OPERATING ACTIVITIES 155 246 88
INVESTING ACTIVITIES
Purchase of investments (443) (2,371) (10,363)
Sale of investments 451 4,842 7,203
NET CASH INFLOW/(OUTFLOW) FROM INVESTING 2,471 (3,160)
ACTIVITIES 8
EQUITY DIVIDENDS PAID - - -
NET CASH INFLOW/( OUTFLOW) BEFORE 163 2,717 (3,072)
FINANCING
INCREASE/( DECREASE) IN CASH 163 2,717 (3,072)
RECONCILIATION OF NET CASH FLOW TO
MOVEMENT IN NET FUNDS
Increase/( Decrease) in cash resulting 163 2,717 (3,072)
from cash flows
Exchange movements 798 (502) (726)
Movement in net funds 961 2,215 (3,798)
Net funds at start of period/year 11,171 14,969 14,969
NET FUNDS AT END OF PERIOD/YEAR 12,132 17,184 11,171
RECONCILIATION OF PROFIT BEFORE FINANCE
COSTS AND TAXATION TO NET CASH FLOW FROM
OPERATING ACTIVITIES
Profit before finance costs and taxation 1,128 2,275 2,907
Gains on investments (196) (2,591) (3,545)
Exchange differences (798) 502 726
Management fee rebates (6) (7) (11)
Revenue profit before finance costs and 128 179 77
taxation
Decrease in debtors 45 37 -
Decrease in creditors (37) (8) (31)
Taxation 13 31 31
Management fee rebates 6 7 11
NET CASH INFLOW FROM OPERATING ACTIVITIES 155 246 88
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 31st December 2014
1. ACCOUNTING POLICIES
These consolidated half year financial statements comprise the unaudited
results of the Company and its subsidiary, JIT Securities Limited, for the six
months to 31st December 2014. The comparative information for the six months to
31st December 2013 and the year to 30th June 2014 do not constitute statutory
accounts under the Companies Act 2006. Full statutory accounts for the year to
30th June 2014 included an unqualified audit report, did not contain any
statements under section 498 of the Companies Act 2006, and have been filed
with the Registrar of Companies.
The half year financial statements have been prepared in accordance with
International Accounting Standard 34 `Interim Financial Reporting', and are
presented in pounds sterling, as this is the Group's functional currency.
The same accounting policies have been followed in the interim financial
statements as applied to the accounts for the year ended 30th June 2014, which
are prepared in accordance with IFRSs as adopted by the European Union. The
Company has adopted IFRS 10 Consolidated Financial Statements and the Amendment
to IFRS 10 for Investment Entities. Under IFRS 10 the Board considers that the
Company meets the criteria of an investment entity.
No segmental reporting is provided as the Group is engaged in a single segment.
2. TOTAL INCOME
For the six For the six For the
months ended months ended year ended
31st December 31st December 30th June
2014 2013 2014
£'000 £'000 £'000
Income from Investments
UK net dividend income 451 536 737
UK unfranked investment income 34 23 41
Loan interest income 3 - -
488 559 778
Operating Income
Bank interest receivable 3 5 8
3 5 8
For the six For the six For the
months ended months ended year ended
31st December 31st December 30th June
2014 2013 2014
£'000 £'000 £'000
Total income comprises
Dividends 485 559 778
Other income 6 5 8
491 564 786
3. MANAGEMENT FEES
For the six For the six For the
months ended months ended year ended
31st December 31st December 30th June
2014 2013 2014
£'000 £'000 £'000
Investment management fee 234 254 491
Performance fee - - -
234 254 491
The management fee is payable in arrears and is calculated at a rate of 3/16%
per quarter of the total assets of the Company and its subsidiary after the
deduction of the value of any investments managed by the Investment Manager (as
defined in the management agreement). The Investment Manager is also entitled
to a performance fee of 15% of the growth in net assets over a hurdle of
3-month Sterling LIBOR plus 1% per annum, payable six monthly in arrears,
subject to a high water mark. The aggregate of the Company's management fee and
any performance fee are subject to a cap of 4.99% of net assets in any
financial year (with any performance fee in excess of this cap capable of being
earned in subsequent periods). The performance fee will be charged 100% to
capital, in accordance with the Board's expectation of how any out-performance
will be generated. No performance fee is payable for the period.
4. RETURN PER ORDINARY SHARE
For the six For the six For the
months ended months ended year ended
31st December 31st December 30th June
2014 2013 2014
£'000 £'000 £'000
Revenue return 128 179 77
Capital return 1,000 2,096 2,830
Total return 1,128 2,275 2,907
Weighted average number of Ordinary 71,023,695 71,023,695 71,023,695
shares
Revenue return per Ordinary share 0.18p 0.25p 0.11p
Capital return per Ordinary share 1.41p 2.95p 3.98p
Total return per Ordinary share 1.59p 3.20p 4.09p
5. INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS
At At At
31st December 31st December 30th June
2014 2013 2014
£'000 £'000 £'000
GROUP AND COMPANY 65,391 58,475 64,890
ANALYSIS OF INVESTMENT
PORTFOLIO - GROUP AND COMPANY
Six months ended 31st December 2014
Listed* Unlisted** Total
(Level 1) (Level 3)
£'000 £'000 £'000
Opening book cost 53,101 4,454 57,555
Opening investment holding gains/ 10,643 (3,308) 7,335
(losses)
Opening valuation 63,744 1,146 64,890
Movement in period:
Purchase at cost 273 189 462
Sales
- Proceeds - (157) (157)
- Realised gains on sales - (36) (36)
Investment holding gains/(losses) (78) 310 232
Closing valuation 63,939 1,452 65,391
Closing book cost 53,374 4,450 57,824
Unrealised investment holding gains/ 10,565 (2,998) 7,567
(losses)
Closing valuation 63,939 1,452 65,391
* Listed investments include unit trust and OEIC funds which are valued at
quoted prices
** The Unlisted investments, representing less than 2% of the Company's NAV,
have been valued in accordance with IPEVC valuation guidelines. The largest
unquoted investment amounting to £1,143,000 was valued at the latest
transaction price.
There were no reclassification of assets between Level 1 and Level 3.
For the six For the six For the
months ended months ended year ended
31st December 31st December 30th June
2014 2013 2014
£'000 £'000 £'000
ANALYSIS OF CAPITAL GAINS AND LOSSES
Realised (losses)/gains on sales of (36) (5) 730
investments
Increase in investment holding gains 232 2,596 2,815
196 2,591 3,545
6. RETAINED EARNINGS
At At At
31st December 31st December 30th June
2014 2013 2014
£'000 £'000 £'000
Capital reserve - realised (9,613) (10,624) (10,381)
Capital reserve - revaluation 7,567 6,844 7,335
Revenue reserve 210 184 82
(1,836) (3,596) (2,964)
7. NET ASSET VALUE PER ORDINARY SHARE
31st December 31st December 30th June
2014 2013 2014
£'000 £'000 £'000
Net assets attributable to Ordinary 77,355 75,595 76,227
shareholders
Ordinary shares in issue at end of 71,023,695 71,023,695 71,023,695
period
Net asset value per Ordinary share 108.92p 106.44p 107.33p
8. TRANSACTIONS WITH THE INVESTMENT MANAGER
During the period there have been no new related party transactions that have
affected the financial position or performance of the Group.
Since 1st January 2010 Brompton has acted as Investment Manager to the Company.
This relationship is governed by an agreement dated 23rd December 2009.
Mr Duffield is the senior partner of Brompton Asset Management Group LLP the
ultimate parent of Brompton.
The total investment management fee payable to Brompton for the half year ended
31st December 2014 was £234,000 (2013: £254,000) and at the half year end £
117,000 (2013: £130,000) was accrued. No performance fee was payable in respect
of the half year ended 31st December 2014 (2013: £nil).
The Group's investments include seven funds managed by Brompton or its
associates totalling £14,761,000. No investment management fees were payable
directly by the Company in respect of these investments.NEW STAR INVESTMENT : Half-yearly Report
February 23, 2015 at 01:08 pm EST
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