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North Atlantic Smaller Companies is an Investment Trust

To provide capital appreciation through investment in a portfolio of smaller companies principally based in countries bordering the North Atlantic Ocean.

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Half-year Report

13 Sep 2018 09:44

RNS Number : 6733A
North Atlantic Smlr Co Inv Tst PLC
13 September 2018
 

North Atlantic Smaller Companies Investment Trust plc

Half-Yearly Report for the six months ended 31 July 2018

Registered in England and Wales number 1091347

 

objective of the company and financial highlights

The objective of the Company is to provide capital appreciation through investment in a portfolio of smaller companies principally based in countries bordering the North Atlantic Ocean.

 

31 July

2018

(unaudited)

31 January

2018

(audited)

%

Change

Net asset value ("NAV") per 5p Ordinary Share*:

Basic

 3,787p

3,462p

9.4

Diluted

 3,782p

3,458p

9.4

Basic adjusted#

 3,843p

3,529p

8.9

Diluted adjusted#

 3,838p

3,525p

8.9

Mid-market price of the 5p Ordinary Shares

 3,050p

2,870p

6.3

Discount to diluted net asset value

19.4%

17.0%

Discount to diluted adjusted net asset value

20.5%

18.6%

Standard & Poor's 500 Composite Index†

2,145.9

1,989.9

7.8

Russell 2000 Index†

1,273.1

1,109.9

14.7

US Dollar/Sterling exchange rate

1.3118

1.42205

-7.8

Ongoing charges (annualised)

1.1%

1.0%

 

* Includes current period.

# Adjusted to reflect Oryx International Growth Fund plc ("Oryx") under the equity method of accounting, which is how the Company previously accounted for its share of Oryx, prior to the adoption of IFRS 10. This is useful to the shareholder as it shows the NAV based on valuing Oryx at NAV. See note 5.

† Sterling adjusted.

 

chief executive's review

During the six month period to 31 July 2018 the fully diluted net asset value (with Oryx under the equity method of accounting) rose by +8.9% as compared to a rise in the sterling adjusted Standard & Poor's 500 Composite Index of +7.8%. The Standard and Poor's Index actually fell marginally but sterling relative to the dollar was notably weak falling from 1.42205 to 1.3118.

Income for the period amounted to a profit of £2,389,000 (31 July 2017: £2,592,000). Consistent with past policy, the Directors do not propose to pay a dividend (31 July 2017: nil). However, it is probable that a final dividend in respect of the current year will be paid as all brought forward losses against the revenue account will have been utilised.

quoted portfolio

UK - It is pleasing to note that the UK portfolio taken as a whole performed well. Oryx once again outperformed its benchmark. AssetCo plc rose 30% following good results as did Bioquell PLC and EKF Diagnostics Holdings plc. Polar Capital Holdings plc also performed notably well on better than expected results together with a significant increase in the dividend. MJ Gleeson Group plc, Goals Soccer Centres plc and Benchmark Holdings plc underperformed but did not have a material impact on the portfolio. Finally, 25% of the holding in Ten Entertainment Group plc was sold at a significant profit.

USA - The US portfolio outperformed the Index with Ambac Financial Group Inc. in particular performing notably well following partial resolution of some of the problems in Puerto Rico. The opportunity was taken to increase the holding in Inspired Entertainment Inc. and the stock has subsequently risen.

unquoted portfolio

A small investment was made in a US unquoted during the period and in early August a significant investment was made in Pelsis Limited, a global pest control business. However, at the same time, the holding in Curtis Gilmour Holding Company was sold at a very substantial profit from cost. The holding in GAJV Holdings Inc. is also for sale with the price being subject to arbitration.

AIFMD

The Company is working with the Financial Conduct Authority on finalising its application to be a Full-scope internally managed UK Alternative Investment Fund Manager ("UK AIFM"). The FCA has confirmed that NASCIT can no longer be a small registered UK AIFM that is internally managed but must be authorised as a result of its total assets passing €500 million.

outlook

The Company continues to be defensively positional with over £98.2 million in cash and Treasury bills. Equity markets are both volatile and in my opinion overvalued. Nevertheless I am reasonably confident that the Company will make further progress over the balance of the year provided there is no major melt down in equity markets.

 

 

C H B Mills

Chief Executive

13 September 2018

chief executive's review (continued)

top ten investments

as at 31 July 2018

Company

Fair

value

£'000

% of

net assets

US Treasury Bills

US Treasury Stock

87,089

15.9

Oryx International Growth Fund Limited*

UK Listed

59,940

11.0

Polar Capital Holdings plc

UK Quoted on AIM

45,500

8.3

Ten Entertainment Group plc

UK Listed

38,700

7.1

Gleeson MJ Group plc

UK Listed

38,314

7.0

EKF Diagnostics Holdings plc

UK Quoted on AIM

33,026

6.0

Bioquell PLC

UK Listed

19,950

3.7

Harwood Private Equity Fund IV LP

UK Unquoted

16,129

3.0

Trident Private Equity Fund III LLP

UK Unquoted

15,808

2.9

Sherwood Holdings Limited

UK Unquoted

15,165

2.8

369,621

67.7

 

* Traded price under IFRS 10, incorporated in Guernsey.

All investments are valued at fair value.

 

 

interim management report

investment objective

The objective of North Atlantic Smaller Companies Investment Trust PLC ("the Company") is to provide capital appreciation to its shareholders through investing in a portfolio of smaller companies which are principally based in countries bordering the North Atlantic Ocean.

material events

The Board do not consider that there were any material events during the period ended 31 July 2018.

material transactions

There were no material transactions during the period.

risk profile

The principal risks and uncertainties for the remaining six months of the year continue to be as described in the Annual Report for the year ended 31 January 2018 on pages 19 and 20 and pages 69 to 78. The principal risks arising from the Company's financial instruments are market price risk, including currency risk, interest rate risk and other price risk, liquidity risk and credit risk. The Directors review and agree policies with the Manager, Harwood Capital LLP, for managing these risks. The policies have remained substantially unchanged in the six months since the year end.

The Company does not have any significant exposure to credit risk arising from any one individual party. Credit risk is spread across a number of counterparties, each having an immaterial effect on the Company's cash flows, should a default happen. The Company assesses the credit worthiness of its debtors from time to time to ensure that they are neither past due or impaired.

To support its investment in unquoted companies, the Company may periodically agree to guarantee all or part of the borrowings of investee companies. Provision is made for any costs that may be incurred when the Directors consider it likely that the guarantee will crystallise.

The Company's exposure to market price risk comprises mainly movements in the value of the Company's investments. It should be noted that the prices of options tend to be more volatile than the prices of the underlying securities. The Manager assesses the exposure to market risk when making each investment decision and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis.

The functional and presentational currency of the Company is Sterling, and therefore, the Company's principal exposure to foreign currency risk comprises investments priced in other currencies, principally US Dollars.

The Company invests in equities and other investments that are realisable.

related party transactions

These are listed in note 10 to the half yearly condensed financial statements.

By Order of the Board

 

Peregrine Moncreiffe

Chairman

13 September 2018

responsibility statement

The Directors confirm to the best of their knowledge that:

· The condensed set of financial statements contained within this half yearly financial report have been prepared in accordance with International Accounting Standard ("IAS") 34 'Interim Financial Reporting' as adopted by the European Union and gives a true and fair view of the assets, liabilities, financial position and profit of the Company; and

· The half yearly financial report includes a fair review of the information required by the FCA's Disclosure and Transparency Rule 4.2.7R being disclosure of important events that have occurred during the first six months of the financial year, 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

· The half yearly financial report includes a fair review of the information required by the FCA's Disclosure and Transparency Rule 4.2.8R being disclosure of related party transactions during the first six months of the financial year, how they have materially affected the financial position of the Company during the period and any changes therein.

The half yearly financial report was approved by the Board on 13 September 2018 and the above responsibility statement was signed on its behalf by:

 

Peregrine Moncreiffe

Chairman

13 September 2018

condensed statement of comprehensive income

Six months ended

31 July

2018

(unaudited)

Six months ended

31 July

2017

(unaudited)

Year ended

31 January

2018

(audited)

Revenue

£'000

Capital

£'000

Total

£'000

Revenue

£'000

Capital

£'000

Total

£'000

Revenue

£'000

Capital

£'000

Total

£'000

Income

5,273

-

 5,273

4,999

-

4,999

10,115

-

10,115

Net gains on investments at fair value

-

44,404

44,404

-

28,724

28,724

-

69,197

69,197

Currency exchange gains/(losses)

-

129

129

-

(395)

(395)

-

(769)

(769)

total income

5,273

44,533

49,806

4,999

28,329

33,328

10,115

68,428

78,543

Expenses

Investment management fee (note 10)

(2,546)

-

(2,546)

(2,190)

(759)

(2,949)

(4,380)

(2,749)

(7,129)

Other expenses

(338)

-

(338)

(213)

-

(213)

(586)

-

(586)

return before taxation

2,389

44,533

46,922

2,596

27,570

30,166

5,149

65,679

70,828

Taxation

-

-

-

(4)

-

(4)

(11)

-

(11)

return for the period

2,389

44,533

46,922

2,592

27,570

30,162

5,138

65,679

70,817

earnings per ordinary share (note 4)

Basic

325.3p

209.1p

490.9p

Diluted

324.9p

209.1p

490.8p

 

The total column of the statement is the Statement of Comprehensive Income of the Company prepared in accordance with International Financial Reporting Standards ("IFRS"). The supplementary revenue and capital columns are presented for information purposes as recommended by the Statement of Recommended Practice ("SORP") issued by the Association of Investment Companies ("AIC").

All items in the above Statement derive from continuing operations. No operations were acquired or discontinued in the period.

condensed statement of changes in equity

Share

capital

£'000

Share

options

reserve

£'000

Share

premium

account

£'000

Capital

reserve

£'000

Capital

redemption

reserve

£'000

Revenue

reserve

£'000

Total

£'000

six months ended 31 July 2018 (unaudited)

31 January 2018

721

55

1,301

498,123

149

(926)

499,423

Total comprehensive income for the period

-

-

-

44,533

-

2,389

46,922

31 July 2018

721

55

1,301

542,656

149

1,463

546,345

six months ended 31 July 2017 (unaudited)

31 January 2017

721

55

1,301

432,444

149

(6,064)

428,606

Total comprehensive income for the period

-

-

-

27,570

-

2,592

30,162

31 July 2017

721

55

1,301

460,014

149

(3,472)

458,768

year ended 31 January 2018 (audited)

31 January 2017

721

55

1,301

432,444

149

(6,064)

428,606

Total comprehensive income for the year

-

-

-

65,679

-

5,138

70,817

31 January 2018

721

55

1,301

498,123

149

(926)

499,423

 

 

condensed balance sheet

As at

31 July

2018

(unaudited)

£'000

As at

31 July

2017

(unaudited)

£'000

As at

31 January

2018

(audited)

£'000

non current assets

Investments at fair value through profit or loss

526,415

440,394

488,912

526,415

440,394

488,912

current assets

Trade and other receivables

11,279

3,808

3,943

Cash and cash equivalents

11,066

15,815

10,653

22,345

19,623

14,596

total assets

548,760

460,017

503,508

current liabilities

Trade and other payables

(2,415)

(1,249)

(4,085)

total liabilities

(2,415)

(1,249)

(4,085)

total assets less current liabilities

546,345

458,768

499,423

net assets

546,345

458,768

499,423

represented by:

Share capital

 721

721

721

Share options reserve

 55

55

55

Share premium account

 1,301

1,301

1,301

Capital reserve

 542,656

460,014

498,123

Capital redemption reserve

 149

149

149

Revenue reserve

1,463

(3,472)

(926)

total equity attributable to equity holders of the company

 546,345

458,768

499,423

net asset value per ordinary share (note 5):

Basic

3,787p

3,180p

3,462p

Diluted

3,782p

 3,177p

3,458p

 

condensed cash flow statement

Six months

ended

31 July

2018

(unaudited)

£'000

Six months

ended

31 July

2017

(unaudited)

£'000

Year ended

31 January

2018

(audited)

£'000

cash flows from operating activities

Investment income received

4,036

2,902

7,023

Deposit interest received

5

-

5

Other income

-

192

192

Investment Manager's fees and performance fees paid

(3,654)

(2,208)

(4,398)

Other cash payments

(847)

(363)

(653)

cash (expended)/generated from operations (note 7)

(460)

523

2,169

Taxation paid

-

(4)

(11)

net cash (outflow)/inflow from operating activities

(460)

519

(2,158)

cash flows from investing activities

Purchases of investments

(195,357)

(244,178)

(431,754)

Sales of investments

196,188

247,782

428,896

net cash inflow/(outflow) from investing activities

831

3,604

(2,858)

increase/(decrease) in cash and cash equivalents for the period

371

4,123

(700)

cash and cash equivalents at the start of the period

10,653

11,829

11,829

Revaluation of foreign currency balances

42

(137)

(476)

cash and cash equivalents at the end of the period

11,066

15,815

10,653

 

 

 

notes

1. a) general information

North Atlantic Smaller Companies Investment Trust plc ("NASCIT") is a Company incorporated and domiciled in Great Britain and registered in England and Wales.

The Company operates as an investment trust company within the meaning of Section 833 of the Companies Act 2006 and has made a successful application under Regulation 5 of the Investment Trust (Approved Company) (Tax) Regulations 2011 for investment trust status to apply to all accounting periods starting on or after 1 February 2013. The Company is managed in such a way to ensure that it continues to meet the eligibility conditions contained in Section 1158 of the Corporation Tax Act 2010 and the ongoing requirements outlined in Chapter 3 of Part 2 of the regulations.

b) basis of preparation

The condensed interim financial statements for the six months ended 31 July 2018 have been prepared in accordance with IAS 34 "Interim Financial Reporting". They do not include all financial information required for full annual financial statements and have been prepared using the accounting policies adopted in the audited financial statements for the year ended 31 January 2018. Those financial statements were prepared in accordance with IFRS and with the SORP for Investment Companies and Venture Capital Trusts issued by the AIC in November 2014 and updated in February 2018 with consequential amendments, except to any extent where it conflicts with IFRS.

The condensed interim financial information includes the financial statements of the Company, for the six months ended 31 July 2018.

c) measurement basis

These financial statements are presented in Sterling rounded to the nearest thousand.

d) significant accounting policies

The accounting policies applied are consistent with those of the Annual Financial Report for the year ended 31 January 2018. Since the year end no new standards have been adopted.

e) segmental reporting

The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business. The Company invests in smaller companies principally based in countries bordering the North Atlantic Ocean.

f) going concern

The Company has adequate financial resources and no significant investment commitments and as a consequence, the Directors believe that the Company is well placed to manage its business risks successfully. After making appropriate enquiries, 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 this half yearly financial report.

2. investment management and performance fees

A Performance Fee is only payable if the investment portfolio, including Oryx at the adjusted price, outperforms the Sterling adjusted Standard & Poor's 500 Composite Index at the end of each financial year and is limited to a maximum payment of 0.5% of Shareholders' Funds, and is allocated 100% to capital.

In accordance with the SORP for investment trust companies, an amount would be included in these financial statements for the Performance Fee that could be payable based on investment performance to 31 July 2018.

At that date, a Performance Fee, inclusive of VAT, of £nil has been accrued for in the accounts (31 July 2017: £759,000; 31 January 2018: £2,749,000).

notes (continued)

3. taxation

The Company has an effective tax rate of 0%. The estimated effective tax rate is 0% as investment gains are exempt from tax owing to the Company's status as an Investment Trust and there is expected to be an excess of management expenses over taxable income and thus there is no charge for corporation tax.

During the half year to 31 July 2018, the Company recognised a total charge of £nil (half year to 31 July 2017: £4,000, year ended 31 January 2018: £11,000), representing irrecoverable withholding tax paid on overseas investment income.

4. earnings per ordinary share

Revenue

Capital

Total

Net

return

£'000

Ordinary

Shares

Per

Share

pence

Net

Return

£'000

Ordinary

Shares

Per

Share

pence

Net

Return

£'000

Ordinary

Shares

Per

Share

pence

six months ended 31 July 2018 (unaudited)

Basic return per share

2,389

14,425,620

16.6

44,533

14,425,620

308.7

46,922

14,425,620

325.3

Share options*

-

14,885

-

14,885

-

14,885

Diluted return per share

2,389

14,440,505

16.5

44,533

14,440,505

308.4

46,922

14,440,505

324.9

six months ended 31 July 2017 (unaudited)

Basic return per share

2,592

14,425,620

18.0

27,570

14,425,620

191.1

30,162

14,425,620

209.1

Share options*

-

2,846

-

2,846

-

2,846

Diluted return per share

2,592

14,428,466

18.0

27,570

14,428,466

191.1

30,162

14,428,466

209.1

year ended 31 January 2018 (audited)

Basic return per share

5,138

14,425,620

35.6

65,679

14,425,620

455.3

70,817

14,425,620

490.9

Share options*

-

3,324

-

3,324

-

3,324

Diluted return per share

5,138

14,428,944

35.6

65,679

14,428,944

455.2

70,817

14,428,944

490.8

 

Basic return per Ordinary Share has been calculated using the weighted average number of Ordinary Shares in issue during the period.

* Excess of total number of potential shares on Option Conversion over the number that could be issued at the average market price, as calculated in accordance with IAS 33: Earnings per share.

5. net asset value per ordinary share

The basic net asset value per Ordinary Share is based on net assets of £546,345,000 (31 July 2017: £458,768,000; 31 January 2018: £499,423,000) and on 14,425,620 Ordinary Shares (31 July 2017: 14,425,620; 31 January 2018: 14,425,620) being the number of Ordinary Shares in issue at the period end.

The diluted net asset value per Ordinary Share is calculated on the assumption that all 30,000 (31 July 2017: 30,000; 31 January 2018: 30,000) Share Options in-the-money were exercised at the prevailing exercise prices, giving a total of 14,455,620 issued Ordinary Shares (31 July 2017: 14,455,620; 31 January 2018: 14,455,620).

During the period, there was no change to the Ordinary Shares in issue.

 

notes (continued)

5. net asset value per ordinary share (continued)

 

adjustment for Oryx

The Company has also reported an adjusted net asset value per share using equity accounting, in accordance with its previous method of valuing its investment in Oryx. The Company has chosen to report this net asset value per share to show the difference derived if equity accounting were to be used. Equity accounting permits the use of net asset value pricing for listed assets which in the case of Oryx is higher than its fair value.

The values of Oryx, as at each period end, are as follows:

31 July 2018

31 July 2017

31 January 2018

(unaudited)

(unaudited)

(audited)

£'000

£'000

£'000

Oryx at Fair value (traded price) using IFRS 10

59,940

50,632

55,663

Oryx value using Equity Accounting

67,968

60,830

65,368

Increase in net assets using Equity Accounting

8,028

10,198

9,705

 

31 July 2018

31 July 2017

31 January 2018

(unaudited)

(unaudited)

(audited)

Net asset value per Share

- Basic

3,787p

3,180p

3,462p

- Diluted

3,782p

3,177p

3,458p

Net asset value per Share adjusted

- Basic

3,843p

3,251p

3,529p

- Diluted

3,838p

3,247p

3,525p

 

6. share based remuneration

As at 31 July 2018 and as at 13 September 2018, there were a total of 30,000 options in issue with an estimated fair value of £0.4m (31 July 2017: 30,000; 31 January 2018: 30,000). 10,000 options are under the 2011 options scheme and 20,000 options are under the 2012 option scheme.

7. reconciliation of total return before taxation to cash (expended)/generated from operations

Six months

ended

31 July

2018

(unaudited)

£'000

Six months

ended

31 July

2017

(unaudited)

£'000

Year ended

31 January

2018

(audited)

£'000

Total return before taxation

46,922

30,166

70,828

Gains on investments

(44,533)

(28,329)

(68,428)

Interest reinvested

-

(870)

(2,450)

Net return from Subsidiary

(7)

(89)

(82)

Increase in debtors and accrued income

(805)

(1,247)

(804)

(Decrease)/increase in creditors and accruals

(2,037)

892

3,105

Cash (expended)/generated from operations

(460)

523

2,169

 

 

notes (continued)

8. investments

financial assets at fair value through profit or loss

The Company adopted the amendment to IFRS 13, effective 1 January 2009. This requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following three levels:

· Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

An active market is a market in which transactions for the asset or liability occur with sufficient frequency and volume on an ongoing basis such that quoted prices reflect prices at which an orderly transaction would take place between market participants at the measurement date. Quoted prices provided by external pricing services, brokers and vendors are included in Level 1, if they reflect actual and regularly occurring market transactions on an arms length basis.

· Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

· Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Company's main unobservable inputs are earnings multiples, recent transactions and net asset basis. The market value would be sensitive to movements in these unobservable inputs. Movements in these inputs, individually or in aggregate could have a significant effect on the market value. The effect of such a change or a reasonable possible alternative would be difficult to quantify as such data is not available.

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data from investments actively traded in organised financial markets, fair value is generally determined by reference to Stock Exchange quoted market bid prices at the close of business on the Balance Sheet date, without adjustment for transaction costs necessary to realise the asset.

The table below sets out fair value measurements of financial assets in accordance with the IFRS 13 fair value hierarchy system:

six months ended 31 July 2018 (unaudited)

Total

£'000

Level 1

£'000

Level 2

£'000

Level 3

£'000

Equity investments

397,117

334,188

-

62,929

Fixed interest investments

129,298

87,089

-

42,209

Total

526,415

421,277

-

105,138

 

notes (continued)

8. investments (continued)

 

six months ended 31 July 2017 (unaudited)

Total

£'000

Level 1

£'000

Level 2

£'000

Level 3

£'000

Equity investments

340,746

291,445

-

49,301

Fixed interest investments

109,846

65,276

-

44,570

Total

450,592

356,721

-

93,871

 

year ended 31 January 2018 (audited)

Total

£'000

Level 1

£'000

Level 2

£'000

Level 3

£'000

Equity investments

360,468

297,897

-

62,571

Fixed interest investments

128,444

95,612

-

32,832

Total

488,912

393,509

-

95,403

 

level 3 financial assets at fair value through profit or loss

A reconciliation of fair value measurements in Level 3 is set out below:

at 31 July 2018

Total

£'000

Equity

investments

£'000

Fixed interest

investments

£'000

Opening balance at 31 January 2018

95,403

62,571

32,832

Purchases

5,833

1,526

4,307

Sales

(202)

(202)

-

Transfers between fixed interest and equity

-

(3,584)

3,584

Total gains included in gains on investments in the statement of comprehensive income:

- on assets sold

202

202

-

- on assets held at the end of the period

3,902

2,416

1,486

Closing balance

105,138

62,929

42,209

 

 

notes (continued)

8. investments (continued)

 

unquoted at directors' estimate of fair value

Unquoted investments are valued in accordance with the International Private Equity and Venture Capital Valuation ("IPEV") Guidelines. Their valuation incorporates all factors that market participants would consider in setting a price. The primary valuation techniques employed to value the unquoted investments are earnings multiples, recent transactions and the net asset basis. Valuations in local currency are translated into Sterling at the exchange rate ruling on the Balance Sheet date.

Included within the Statement of Comprehensive Income as at 31 July 2018, is a gain of £2,416,000 relative to the movement in the fair value of the unquoted investments valued using IPEV valuation techniques.

the valuation techniques applied are based on the following assumptions:

Unquoted investments are usually valued by reference to the valuation multiples of similar listed companies or from transactions of similar businesses. Where appropriate discounts are then applied to those comparable multiples to reflect differences in size and liquidity. These enterprise values are then adjusted for net debt to arrive at an equity valuation. Where companies are in compliance with the loan note terms these loans are generally held at par plus accrued interest (where applicable) unless the enterprise value suggests that the debt cannot be recovered.

9. principal risk profile

The principal risks which the Company faces include exposure to:

(i) market price risk, including currency risk, interest rate risk and other price risk;

(ii) liquidity risk; and

(iii) credit risk.

Further details of the Company's management of these risks and exposure to them is set out in Note 14 of the Company's Annual Report for the year ended 31 January 2018, as issued on 11 May 2018. There have been no changes to the management of or exposure to these risks since that date.

notes (continued)

10. related party transactions

There have been no changes to the related party arrangements or transactions as reported in the Statutory Annual Financial Report for the year ended 31 January 2018.

The Manager, Harwood Capital LLP, is regarded as a related party of the Company. The amounts payable to the Manager and Growth Financial Services Limited in respect of investment management for the six months to 31 July 2018 are as follows:

Six months ended

31 July

2018

(unaudited)

£'000

Six months ended

31 July

2017

(unaudited)

£'000

Year ended

31 January

2018

(audited)

£'000

Annual fee

2,546

2,190

4,380

Performance fee

-

745

2,560

Irrecoverable VAT thereon

-

14

189

2,546

2,949

7,129

 

Shareholders should also note any payments made under share based remuneration as disclosed in note 6 to these financial statements.

11. financial information

The financial information contained in this half yearly report does not constitute full Statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information for the periods ended 31 July 2018 and 31 July 2017 is not a financial year and has not been audited. The information for the financial year ended 31 January 2018 has been extracted from the latest published Financial Statements, which have been delivered to the Registrar of Companies. The Report of the Auditors on those Financial Statements contained no qualification or statement under Section 498 of the Companies Act 2006.

shareholder information

financial calendar

Announcement of results and annual report May

Annual General Meeting June

Half Yearly figures announced September

Half Yearly Report posted September

share price

The Company's mid-market share price is quoted daily in the Financial Times appearing under "Investment Companies".

It also appears on:

SEAQ Ordinary Shares: NAS

Trustnet: www.trustnet.com

net asset value

The latest net asset value of the Company can be found on the Harwood Capital LLP website: www.harwoodcapital.co.uk

share dealing

Investors wishing to purchase more Ordinary Shares or dispose of all or part of their holding may do so through a stockbroker. Many banks also offer this service.

The Company's registrars are Link Asset Services. In the event of any queries regarding your holding of shares, please contact the registrars on: 0871 664 0300, or by email on enquiries@linkgroup.co.uk

Changes of name or address must be notified to the registrars in writing at:

Link Asset Services

The Registry

34 Beckenham Road

Beckenham

Kent BR3 4TU

 

shareholder information (continued)

Directors

Peregrine Moncreiffe (Chairman)

Christopher Mills (Chief Executive)

Lord Howard of Rising

G Walter Loewenbaum

Sir Charles Wake

Manager

Harwood Capital LLP

(Authorised and regulated by the Financial Conduct Authority)

6 Stratton Street

Mayfair

London W1J 8LD

Telephone: 020 7640 3200

Financial Adviser and Stockbroker

Winterflood Investment Trusts

The Atrium Building

Cannon Bridge

25 Dowgate Hill

London EC4R 2GA

Registered Office

6 Stratton Street

Mayfair

London W1J 8LD

Telephone: 020 7640 3200

Registrars

Link Asset Services

The Registry

34 Beckenham Road

Beckenham

Kent BR3 4TU

Auditors

KPMG LLP

15 Canada Square

London E14 5GL

Company Secretary

Derringtons Limited

Hyde Park House

5 Manfred Road

London SW15 2RS

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
IR VXLBFVKFZBBB
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