New Star Inv Regulatory News (NSI)

NEW STAR INVESTMENT TRUST PLC INTERIM REPORTFor the six months ended 31st December 2013 INVESTMENT OBJECTIVEThe Company's objective is to achieve long-term capital growth. REGISTERED OFFICE1 Knightsbridge Green, London, SW1X 7QACompany Number: 3969011 DIRECTORSG Howard-Spink (Chairman)J L Duffield (Deputy Chairman)M J Gregson INVESTMENT MANAGERBrompton Asset Management LLP1 Knightsbridge Green, London SW1X 7QA(Authorised and regulated by the Financial Conduct Authority) SECRETARY AND ADMINISTRATORPhoenix Administration Services LimitedSpringfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW SOLICITORSOlswang LLP90 High Holborn, London WC1V 6XX AUDITORSErnst & Young LLP1 More London Place, London SE1 2AF CUSTODIANBrown Brothers Harriman & CoPark House, 16-18 Finsbury Circus, London EC2M 7EB REGISTRARSEquiniti LimitedAspect House, Spencer Road, Lancing, West Sussex BN99 6DAWebsite: www.shareview.co.uk WEBSITEwww.nsitplc.com The Company's shares are traded on the London Stock Exchange and their pricesare shown in the Financial Times under "Investment Companies". FINANCIAL HIGHLIGHTS 31st December 30th June % 2013 2013 Change PERFORMANCE Net assets (£ `000) 75,595 73,320 3.1 Net asset value per Ordinary share 106.44p 103.23p 3.1 Mid-market price per Ordinary share 68.50p 67.50p 1.5 Discount (Premium) of price to net asset 35.6% 34.6% N/Avalue NAV performance 3.1% 5.3% IMA Mixed Investment 40% - 85% Shares 6.6% 7.3%(total return) MSCI AC World Index (total return, 6.3% 14.0%sterling adjusted) MSCI UK Index (total return) 10.2% 7.5% Six months ended Six months ended 31st December 31st December 2013 2012 REVENUE Return per Ordinary share 0.25p 0.24p Dividend per Ordinary share - - TOTAL RETURN Net assets 3.1% 5.3% CHAIRMAN'S STATEMENT Your Company's total assets rose 3.1% to £75.6 million over the half year to31st December 2013. Over this period, the IMA Mixed Investment 40-85% SharesIndex gained 6.6%, the MSCI AC World Total Return Index gained 6.3% while theMSCI UK Total Return Index gained 10.2%. At the period end, the net asset valueper ordinary share was 106.44p. The principal reasons why your Company lagged global equity markets during theperiod under review were its cautious positioning, with cash and cashequivalents accounting for a substantial proportion of its assets, and itsholdings in natural resources and emerging markets. The net revenue profit for the period was £179,000 compared with £172,000 inthe prior period. As in previous years, your directors are not recommendingpayment of an interim dividend to shareholders. The Company's shares continue to trade at a significant discount to net assetvalue. The Board continues to review the situation, but they do not anticipatea significant change in the near future. Market review After months of speculation, the Federal Reserve announced in December that itwould start tapering the pace of monetary expansion, signalling the first stepon the road to withdrawing the monetary stimulus that has been the signaturepolicy of the post credit crisis years. Ben Bernanke, the architect ofpost-credit crisis monetary policy, has retired after presiding over a periodof extraordinary, some might say experimental, monetary policy. His legacyrests on the ability of the US economic recovery to withstand the gradualwithdrawal of stimulus. Strong US employment, manufacturing and housing datapreceded this move and may presage an acceleration in US economic growth in2014 and investors ultimately took the onset of tapering in their stride. Treasury and gilt yields rose rapidly but bond market losses were contained bythe Fed's commitment to keep interest rates low well past the time when USunemployment falls below 6.5%. In the UK, Mark Carney, the Bank of Englandgovernor, recently distanced himself from his own forward guidance as economicstrength led to a more rapid fall in unemployment than anticipated. Carney isalso committed to keeping interest rates low well past the time whenunemployment falls below target. While developed economic stockmarkets were strong, the period under review wasa disappointing one for developing economy stockmarkets, with Asia Pacificex-Japan equities rising just 0.64% in sterling and emerging market equitiesfalling 1.22% in sterling. Your Company has significant holdings in theseequity markets, which proved vulnerable to capital flight as treasury yieldsstarted to rise. Regional central banks may ultimately be forced to combatcurrency weakness and the attendant risk of rising inflation with interest raterises irrespective of the adverse impact on growth. The European central bank (ECB), by contrast, cut its policy interest rate inthe final quarter in response to the deflationary risk posed by persistentlyhigh unemployment. The ECB is likely to maintain a highly accommodativemonetary policy for longer than the UK or the US. Japanese monetary policy also remains expansionary and conviction is growingthat more than a year of "Abenomics" has been successful in igniting inflation.Evidence of a major change in consumer behaviour is widespread. Increasedconsumer spending is apparent in the growth of motor vehicle registrations andhousing starts. Bank lending is expanding and Japanese business confidence ishigh. Portfolio review UK mid and smaller companies performed strongly in the second half of 2013 aseconomic recovery gathered pace. Companies in these market tiers generally aremore sensitive to domestic economic trends than their larger peers. UK smallercompanies returned 17.40% compared to 10.22% from UK equities as a whole in thesix months and the Investment Management Association (IMA) UK smaller companiessector was the best performing IMA sector last year. The Aberforth GearedIncome Trust was the best-performing fund during the period, returning 41.85%.Artemis UK Special Situations and PFS Brompton UK Recovery also have a highportfolio allocation to UK smaller companies and returned 16.54% and 15.16%respectively. Your Company invested in the iShares FTSE 250 exchange-tradedfund (ETF) as a low-cost way of increasing the exposure to medium-sizedcompanies. The gold price fell 10.24% in sterling terms as rising bond yields and greaterconfidence in economic growth reduced the attractions of this nil-yieldingasset. The ETFS Gold Bullion Securities ETF and Blackrock Gold & General fell7.89% and 8.07% respectively. A number of the major gold producers now have newmanagement teams at the helm committed to reducing costs, instilling greaterfinancial discipline when allocating capital and focusing on improvingshareholder returns. The gold mining equities in the Blackrock Gold & Generalportfolio should benefit from these trends while the gold price appeared to bestabilising in the early weeks of 2014 as the pace of capital outflows fromgold ETFs slowed. Chinese economic data has been soft for some time, raising concerns that Chinamay fail to deliver target economic growth of 7.5% in 2014 and affecting yourCompany's investments in Asian equities. Shibor, the Chinese interbank lendingrate, is on a rising trend and could prove to be an indicator of stress in thebanking system. The Chinese banking system is ultimately state-controlled andthe People's Bank of China is likely to continue injecting funds to prevent aserious liquidity squeeze but concerns remain that banks will be forced towrite-off significant amounts of non-performing loans. Without a majorrefinancing, this would severely restrict banks' ability to lend and maintaineconomic growth. Your Company's emerging market equity investments were caught up in the generalcapital flight from emerging markets and concerns about Chinese growth. YourCompany did, however, benefit from its selective approach to investing in thesemarkets. Wells Fargo China Equity was the best-performing developing economyequity fund, posting a gain of 10.88%, while Aberdeen Asia Pacific Equity wasthe weakest, falling 6.80%. The generalist Atlantis China fund was sold and theproceeds reinvested in Atlantis China Healthcare, which is a beneficiary ofrising consumer spending and has no exposure to the banking sector. Outlook This year will be one in which investors assess the success of quantitativeeasing and whether, after four years of money printing, US economic growth isrobust enough to withstand the gradual withdrawal of stimulus. At New Year,confidence was running high as testified by the performance of equity markets.The Fed was able to cite the waning efficacy of continued monetary easing andfears of promoting excessive risk-taking in financial markets as twinjustifications for this major policy reversal. In January, markets were in amore volatile phase as investors pondered the impact of tapering on developedmarket bond yields and emerging market capital flows and slowing Chineseeconomic growth. Your Company's significant cash holding and diversifiedapproach across asset classes should provide a measure of protection if equitymarket volatility increases. The unaudited net asset value at 31 January 2014 was 105.69p per Ordinaryshare. Geoffrey Howard-SpinkChairman21 February 2014 DIRECTORS' REPORT Performance In the six months to 31st December 2013 the net asset value per Ordinary shareincreased by 3.1% to 106.44p. In the same period the share price increased by1.5% to 68.50p. This compares to an increase of 6.6% in the IMA MixedInvestment 40% - 85% Shares Index. Further details of the Company's performancemay be found in the Chairman's Statement. 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 investmentopportunities through investment in equity, bond, commodity, real estate,currency and other markets. The Company's assets may have significantweightings 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 relevantmarkets. The Company may invest up to 15% of its net assets in directinvestments 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 theUnited States, the United Kingdom, Europe ex UK, Asia ex Japan, Japan orEmerging 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 ofinvestment 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 atthe time of investment. The Company will not invest more than 15% of its net assets in any singleinvestment, such values being assessed at the time of investment. Derivative instruments and forward foreign exchange contracts may be used forthe purposes of efficient portfolio management and currency hedging.Derivatives may also be used outside of efficient portfolio management to meetthe Company's investment objective. The Company may take outright shortpositions in relation to up to 30% of its net assets, with a limit on shortsales of individual stocks of up to 5% of its net assets, such values beingassessed at the time of investment. The Company may borrow up to 30% of netassets for short-term funding or long-term investment purposes. No more than10%, in aggregate, of the value of the Company's total assets may be investedin other closed-ended investment funds except where such funds have themselvespublished investment policies to invest no more than 15% of their total assetsin 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 (2012: 71,023,695) have been issued fully paid. No Ordinaryshares are held in treasury, and none were bought back or issued during the sixmonths to 31st December 2013. Risk management The principal risks associated with the Company that have been identified bythe Board, together with the steps taken to mitigate them, are as follows: Investment strategy: inappropriate long-term strategy, asset allocation andmanager selection might lead to the underperformance of the Company. TheCompany's strategy is kept under regular review by the Board. Investmentperformance is discussed at every Board meeting and the Directors receive amonthly report which details the Company's asset allocation, portfolio changesand performance. Business conditions and general economy: the Company's investment returns areinfluenced by general economic conditions in the UK and globally. Factors suchas interest rates, inflation, investor sentiment and the availability and costof credit could adversely affect investment returns. The Board regularlyconsiders the economic environment in which the Company operates. The portfoliois managed with a view to mitigating risk by investing in a spread of differentasset classes and geographic regions. Portfolio risks - market price, foreign currency and interest rate risks: thedownward valuation of investments contained in the portfolio would lead to areduction in the Company's net asset value. A proportion of the Company'sportfolio is invested in investments denominated in foreign currencies andmovements in exchange rates can significantly affect their sterling value. Itis the Board's policy to hold an appropriate spread of investments in order toreduce the risk arising from factors specific to a particular investment orsector. The Investment Manager takes account of foreign currency risk andinterest rate risk when making investment decisions. The Company does not normally hedge against foreign currency movementsaffecting the value of the investment portfolio, although hedging techniquesmay be employed in appropriate circumstances. Investment Manager: the quality of the management team employed by theInvestment Manager is an important factor in delivering good performance andthe loss by the Investment Manager of key staff could adversely affectinvestment returns. The Company's portfolio is managed by Gill Lakin. The Boardreceives a monthly financial report which includes information on performance,and a representative of the Investment Manager attends each Board meeting. TheBoard is kept informed of any personnel changes to the investment team employedby 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 investmenttrust status, resulting in capital gains realised within the portfolio beingsubject to United Kingdom capital gains tax. A breach of the UKLA Listing Rulescould result in suspension of the Company's shares, while a breach of companylaw could lead to criminal proceedings, or financial or reputational damage.The Board employs Brompton Asset Management LLP as Investment Manager andPhoenix Administration Services Limited as Corporate Secretary andAdministrator to help manage the Company's legal and regulatory obligations.The Board receives a monthly financial report which includes information on theCompany's compliance with the Regulations. Operational: disruption to, or failure of, the Investment Manager's orAdministrator's accounting, dealing or payment systems or the Custodian'srecords could prevent the accurate reporting and monitoring of the Company'sfinancial position. The Company is also exposed to the operational risk thatone or more of its suppliers may not provide the required level of service. Investment Management Arrangements and Related Party Transactions In common with most investment trusts the Company does not have any executivedirectors or employees. The day-to-day management and administration of theCompany, including investment management, accounting and company secretarialmatters, and custodian arrangements are delegated to specialist third partyservice providers. Details of related party transactions are contained in the Annual Report. Therehave been no material transactions with related parties during the period whichhave had a significant impact on the performance of the Company. Going Concern The Directors believe that it is appropriate to continue to adopt the goingconcern basis in preparing the accounts as the assets of the Company consistmainly of securities that are readily realisable or cash and it has nosignificant liabilities. Accordingly, the Company has adequate financialresources 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 ofInterim Financial Information. RESPONSIBILITY STATEMENT The Directors named above confirm that to the best of their knowledge: The condensed set of financial statements contained within the half yearfinancial report to 31st December 2013 has been prepared in accordance withInternational Accounting Standard 34 `Interim Financial Reporting'; The Chairman's statement includes a fair review of important events that haveoccurred during the first six months of the financial year and their impact onthe financial statements; The Chairman's statement includes a fair review of the potential risks anduncertainties for the remaining six months of the year; The Director's report includes a fair review of the information concerningrelated party transactions and changes since the last annual report. By order of the BoardPhoenix Administration Services Limited21 February 2014 INDEPENDENT REVIEW REPORT TO NEW STAR INVESTMENT TRUST PLC Introduction We have been engaged by the Company to review the condensed set of financialstatements in the half year financial report for the six months ended 31stDecember 2013 which comprises the consolidated statement of comprehensiveincome, consolidated statement of changes in equity, consolidated balancesheet, consolidated cash flow statement and related explanatory notes 1 to 8.We have read the other information contained in the half year financial reportand considered whether it contains any apparent misstatements or materialinconsistencies with the information in the condensed set of financialstatements. This report is made solely to the Company in accordance with guidance containedin International Standard on Review Engagements 2410 (UK and Ireland) "Reviewof Interim Financial Information Performed by the Independent Auditor of theEntity" issued by the Auditing Practices Board. To the fullest extent permittedby law, we do not accept or assume responsibility to anyone other than theCompany, for our work, for this report, or for the conclusions we have formed. Directors' responsibilities The half year financial report is the responsibility of, and has been approvedby, the Directors. The Directors are responsible for preparing the half yearfinancial report in accordance with the Disclosure and Transparency Rules ofthe United Kingdom's Financial Conduct Authority. As disclosed in note 1, the annual financial statements of the Group areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed set of financial statements included in this half year financialreport has been prepared in accordance with International Accounting Standard34, "Interim Financial Reporting", as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the half year financial report based on ourreview. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, "Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity" issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof 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 tobelieve that the condensed set of financial statements in the half-yearlyfinancial report for the six months ended 31st December 2013 is not prepared,in all material respects, in accordance with International Accounting Standard34 as adopted by the European Union and the Disclosure and Transparency Rulesof the United Kingdom's Financial Conduct Authority. Ernst & Young LLPLondon21 February 2014 SCHEDULE OF TOP TWENTY INVESTMENTSat 31st December 2013 Holding Activity Bid-market % of invested value portfolio £ `000 Henderson Euro Special Situations Investment Fund 7,834 13.40Fund Fundsmith Equity Fund Investment Fund 4,869 8.33 Investec Africa Fund Investment Fund 4,800 8.21 Artemis UK Special Situations Investment Fund 3,908 6.68Fund Aberforth Geared Income Trust Investment Company 3,323 5.68 Trojan Investment Fund Investment Fund 2,907 4.97 BlackRock Gold & General Fund Investment Fund 2,799 4.79 Aquilus Inflection Fund Investment Fund 2,633 4.50 Polar Capital Global Technology Investment Fund 2,030 3.47Fund FP Brompton Opportunities Fund Investment Fund 1,967 3.36 FP Brompton Global Income Fund Investment Fund 1,947 3.33 PFS Brompton UK Recovery Unit Investment Fund 1,935 3.31Trust Gold Bullion Securities Ltd Exchange Traded Fund 1,931 3.30 FP Brompton Global Equity Fund Investment Fund 1,736 2.97 Standard Life Investment European Investment Fund 1,730 2.96Income Fund First State Indian Subcontinent Investment Fund 1,606 2.75Fund Neptune Russia & Greater Russia Investment Fund 1,561 2.67Fund Fidelity Funds Global Inflation Investment Fund 1,351 2.31Linked Bond Fund Aberdeen Asia Pacific Fund Investment Fund 1,226 2.10 BH Global Limited Investment Company 1,222 2.09 53,315 91.18 Balance held in 15 investments 5,160 8.82 Total investments (excluding cash) 58,475 100.00 The investment portfolio can be further analysed as follows: Equities (including investment companies) 7,428 Loan 56 Investment funds and ETFs 50,991 58,475 All the Company's investments are either unlisted or are unit trust/OEIC fundswith the exception of Aberforth Geared Income Trust, BH Global Limited, MitonGroup Plc, Gold Bullion Securities ETF, iShares FTSE 250, Immedia Broadcastingand Asia Resource Minerals PLC (formerly Bumi Plc). CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the six months ended 31st December 2013 Six months ended 31st December 2013 (unaudited) Revenue Capital Total Return Return Return Notes £`000 £`000 £`000 INCOME Investment income 559 - 559 Other operating income 5 - 5 Total income 2 564 - 564 GAINS AND LOSSES ON INVESTMENTS Gains on investments at fair value - 2,591 2,591through profit or loss Other exchange losses - (502) (502) Management fee rebates - 7 7 564 2,096 2,660 EXPENSES Management fees 3 (254) - (254) Other expenses (131) - (131) (385) - (385) PROFIT BEFORE FINANCE COSTS AND TAX 179 2,096 2,275 Finance costs - - - PROFITBEFORE TAX 179 2,096 2,275 Tax - - - PROFIT FOR THE PERIOD 179 2,096 2,275 EARNINGS PER SHARE Ordinary shares (pence) 4 0.25 2.95 3.20 The total column of this statement represents the Group's profit and lossaccount, prepared in accordance with IFRS. The supplementary revenue return andcapital return columns are both prepared under guidance published by theAssociation of Investment Companies. All items in the above statement derivefrom continuing operations. No operations were acquired or discontinued duringthe period. All income is attributable to the equity holders of the parent company. Thereare no minority interests. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the six months ended 31st December 2012 and the year ended 30th June 2013 Six months ended Year ended 31st December 2012 30th June 2013 (unaudited) (audited) Notes Revenue Capital Total Revenue Capital Total Return Return Return Return Return Return £'000 £'000 £'000 £'000 £'000 £'000 INCOME Investment income 486 - 486 688 - 688 Other operating 3 - 3 7 - 7income Total income 2 489 - 489 695 - 695 GAINS AND LOSSES ONINVESTMENTS Gains on investmentsat fair value - 3,771 3,771 - 4,996 4,996through profit orloss Other exchange - (281) (281) - 109 109(losses)/gains Management fee - 26 26 - 34 34rebates 489 3,516 4,005 695 5,139 5,834 EXPENSES Management fees 3 (244) - (244) (493) - (493) Other expenses (115) - (115) (237) - (237) (359) - (359) (730) - (730) PROFITBEFORE FINANCECOSTS AND TAX 130 3,516 3,646 (35) 5,139 5,104 Finance costs - - - - - - LOSS BEFORE TAX 130 3,516 3,646 (35) 5,139 5,104 Tax 42 (64) (22) - 149 149 PROFITFOR THE PERIOD 172 3,452 3,624 (35) 5,288 5,253 EARNINGS PER SHARE Ordinary shares 4 0.24 4.86 5.10 (0.05) 7.45 7.40(pence) The total column of this statement represents the Group's profit and lossaccount, prepared in accordance with IFRS. The supplementary revenue return andcapital return columns are both prepared under guidance published by theAssociation of Investment Companies. All items in the above statement derivefrom continuing operations. No operations were acquired or discontinued duringthe periods. All income is attributable to the equity holders of the parent company. Thereare no minority interests. CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor 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 - - - 2,275 2,275for the period AT 31st DECEMBER 2013 710 21,573 56,908 (3,596) 75,595 for the six months ended 31st December 2012 (unaudited) Share Share Special Retained capital premium reserve earnings Total £`000 £`000 £`000 £`000 £`000 AT 30th JUNE 2012 710 21,573 56,908 (11,124) 68,067 Total comprehensive income - - - 3,624 3,624for the period AT 31st DECEMBER 2012 710 21,573 56,908 (7,500) 71,691 for the year ended 30th June 2013 (audited) Share Share Special Retained capital premium reserve earnings Total £`000 £`000 £`000 £`000 £`000 AT 30th JUNE 2012 710 21,573 56,908 (11,124) 68,067 Total comprehensive income - - - 5,253 5,253for the year AT 30th JUNE 2013 710 21,573 56,908 (5,871) 73,320 CONSOLIDATED BALANCE SHEETat 31st December 2013 Notes 31st December 31st December 30th June 2013 2012 2013 (unaudited) (unaudited) (audited) £`000 £`000 £`000 NON-CURRENT ASSETS Investments at fair valuethrough profit or loss 5 58,475 59,021 58,326 CURRENT ASSETS Other receivables 154 74 251 Cash and cash equivalents 17,184 12,980 14,969 17,338 13,054 15,220 TOTAL ASSETS 75,813 72,075 73,546 CURRENT LIABILITIES Other payables (218) (213) (226) TOTAL ASSETS LESS CURRENTLIABILITIES 75,595 71,862 73,320 NON-CURRENT LIABILITIES Deferred tax liability - (171) - NET ASSETS 75,595 71,691 73,320 EQUITY ATTRIBUTABLE TOEQUITY 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 (3,596) (7,500) (5,871) TOTAL EQUITY 75,595 71,691 73,320 NET ASSET VALUE PER 7ORDINARY SHARE (PENCE) 106.44 100.94 103.23 The half year report was approved and authorised for issue by the Board on 21February 2014. CONSOLIDATED CASH FLOW STATEMENTfor the six months ended 31st December 2013 Six months Six months Year ended ended ended 31st December 31st December 30th June 2013 2012 2013 (unaudited) (unaudited) (audited) £`000 £`000 £`000 NET CASH INFLOWFROM OPERATING 246 194 22ACTIVITIES INVESTING ACTIVITIES Purchase of investments (2,371) (13,258) (15,008) Sale of investments 4,842 9,144 12,665 NET CASH INFLOW/(OUTFLOW)FROMINVESTINGACTIVITIES 2,471 (4,114) (2,343) EQUITY DIVIDENDS PAID - - - NET CASH INFLOW/( OUTFLOW)BEFORE 2,717 (3,920) (2,321)FINANCING FINANCING - - - INCREASE/( DECREASE)IN CASH 2,717 (3,920) (2,321) RECONCILIATION OF NET CASH FLOW TOMOVEMENT IN NET FUNDS Increase/( Decrease) in cash 2,717 (3,920) (2,321)resulting from cash flows Exchange movements (502) (281) 109 Movement in net funds 2,215 (4,201) (2,212) Net funds at start of period/year 14,969 17,181 17,181 NET FUNDS AT END OF PERIOD/YEAR 17,184 12,980 14,969 RECONCILIATION OF PROFITBEFOREFINANCE COSTS AND TAXATION TO NETCASH FLOW FROM OPERATINGACTIVITIES Profit before finance costs and 2,275 3,646 5,104taxation Gains on investments (2,591) (3,771) (4,996) Exchange differences 502 281 (109) Management fee rebates (7) (26) (34) Net profit/(loss) before finance 179 130 (35)costs and taxation Decrease/( Increase) in debtors 37 22 (6) Decrease in creditors (8) (19) (6) Taxation 31 35 35 Management fee rebates 7 26 34 NET CASH INFLOWFROM OPERATING 246 194 22ACTIVITIES NOTES TO THE INTERIM FINANCIAL STATEMENTSfor the six months ended 31st December 2013 1.Accounting policies The consolidated half year financial statements on pages 16 to 26 comprise theunaudited results of the Company and its subsidiary, JIT Securities Limited,for the six months to 31st December 2013. The comparative information for thesix months to 31st December 2012 and the year to 30th June 2013 do notconstitute statutory accounts under the Companies Act 2006. Full statutoryaccounts for the year to 30th June 2013 included an unqualified audit report,did not contain any statements under section 498 of the Companies Act 2006, andhave been filed with the Registrar of Companies. The half year financial statements have been prepared in accordance withInternational Accounting Standard 34 `Interim Financial Reporting', and arepresented in pounds sterling, as this is the Group's functional currency. The same accounting policies have been followed in the interim financialstatements as applied to the accounts for the year ended 30th June 2013, whichare prepared in accordance with IFRSs as adopted by the European Union. 2. Total income For the For the six months six months For the year ended 31st ended 31st ended 30th December 2013 December 2012 June 2013 £'000 £'000 £'000 Income from Investments UK net dividend income 536 418 561 UK unfranked investment income 23 68 127 559 486 688 Operating Income Bank interest receivable 5 3 7 5 3 7 For the For the six months six months For the year ended 31st ended 31st ended 30th December 2013 December 2012 June 2013 £'000 £'000 £'000 Total income comprises Dividends 559 486 688 Other income 5 3 7 564 489 695 3. Management fees For the For the six months six months For the year ended 31st ended 31st ended 30th December 2013 December 2012 June 2013 £'000 £'000 £'000 Investment management 254 244 493 Performance fee - - - 254 244 493 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 thededuction of the value of any investments managed by the Investment Manager (asdefined in the management agreement). The Investment Manager is also entitledto a performance fee of 15% of the growth in net assets over a hurdle of3-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 andany performance fee are subject to a cap of 4.99% of net assets in anyfinancial year (with any performance fee in excess of this cap capable of beingearned in subsequent periods). The performance fee will be charged 100% tocapital, in accordance with the Board's expectation of how any out-performancewill be generated. No performance fee is payable for any period. 4. Return per Ordinary share For the For the six months six months For the year ended 31st ended 31st ended 30th December 2013 December 2012 June 2013 £'000 £'000 £'000 Revenue return 179 172 (35) Capital return 2,096 3,452 5,288 Total return 2,275 3,624 5,253 Weighted average number of 71,023,695 71,023,695 71,023,695Ordinary shares Revenue return per Ordinary share 0.25p 0.24p (0.05)p Capital return per Ordinary share 2.95p 4.86p 7.45p Total return per Ordinary share 3.20p 5.10p 7.40p 5. Investments at fair value through profit or loss At At At 31st December 31st December 30th June 2013 2012 2013 £'000 £'000 £'000 GROUP AND COMPANY 58,475 59,021 58,326 ANALYSIS OF INVESTMENT PORTFOLIO - GROUP AND COMPANY Six months ended 31st December 2013 Listed* Unlisted Total £'000 £'000 £'000 Opening book cost 48,997 4,808 53,805 Opening investment holding gains/ 7,619 (3,098) 4,521(losses) Opening valuation 56,616 1,710 58,326 Movement in period: Purchase at cost 2,371 - 2,371 Sales - Proceeds (4,517) (296) (4,813) - Realised gains on sales (5) - (5) Investment holding gains/(losses) 2,804 (208) 2,596 Closing valuation 57,269 1,206 58,475 Closing book cost 46,846 4,512 51,358 Unrealised investment holding 10,423 (3,306) 7,117gains/(losses) Closing valuation 57,269 1,206 58,475 * Listed investments include unit trust and OEIC funds For the For the six months six months For the year ended 31st ended 31st ended 30th December 2013 December 2012 June 2013 £'000 £'000 £'000 ANALYSIS OF CAPITAL GAINS ANDLOSSES Realised (losses)/gains on sales (5) 1,299 1,624of investments Increase in investment holding 2,596 2,472 3,372gains 2,591 3,771 4,996 The unlisted investments at 31st December 2013 include loans of £56,000 andequities of £1,150,000. All unlisted investments are fair valued and are valuedby reference to valuation techniques using inputs that are not based onobservable market data for the asset (`Level 3' assets). All other investmentsare valued using unadjusted prices (`Level 1' assets). Details of thedefinitions and valuation approach adopted are given in the accounts for theyear ended 30th June 2013. There were no reclassifications for assets betweenLevel 1 and Level 3. There were no liabilities measured at fair value. 6. Retained earnings For the For the six months six months For the year ended 31st ended 31st ended 30th December 2013 December 2012 June 2013 £'000 £'000 £'000 Capital reserve - realised (10,624) (11,024) (10,124) Capital reserve - revaluation 6,844 3,312 4,248 Revenue reserve 184 212 5 (3,596) (7,500) (5,871) 7. Net asset value per Ordinary share 31st December 31st December 30th June 2013 2012 2013 £'000 £'000 £'000 Net assets attributable to 75,595 71,691 73,320Ordinary shareholders Ordinary shares in issue at end 71,023,695 71,023,695 71,023,695of period Net asset value per Ordinary 106.44p 100.94p 103.23pshare 8. Related party transactions There have been no related party transactions that have materially affected thefinancial position or performance of the Group. The Company has four (30th June2013: four) investments managed by the Investment manager. Two furtherinvestments have been made since the period end.