TIDMSEC
Strategic Equity Capital plc
Half Yearly Report & Financial Statements
for the six months to 31 December 2011
Investment objective
The investment objective of the Company is to achieve absolute returns (i.e.
growth in the value of investments) rather than relative returns (i.e.
attempting to outperform selected indices) over a medium-term period,
principally through capital growth.
The Company's investment policy can be found below.
Investment Manager's strategy
The Investment Manager, SVG Investment Managers Limited ("SVGIM"), employs a
strategy to invest in publicly quoted companies which will create value
through strategic, operational and management change. SVGIM follows a practice
of constructive corporate engagement and aims to work with management teams in
order to enhance shareholder value.
A more detailed explanation can be found in the Investment manager's report
below.
Shareholder information
Financial calendar
Company's year-end 30 June
Annual results September
announced
Annual General Meeting November
Company's half-year 31 December
Half yearly results February
announced
Share price
The Company's Ordinary shares are listed on the London Stock Exchange. The
midmarket price is quoted daily in the Financial Times under `Investment
Companies'.
Share dealing
Shares can be traded through your usual stockbroker.
Share register enquires
The register for the Ordinary shares is maintained by Computershare Investor
Services plc ("Registrar").In the event of queries regarding your holding,
please contact the Registrar on 0870 707 1285. Changes of name and/or address
must be notified in writing to the Registrar whose address is shown below.
NAV
The Company's net asset value is announced weekly to the London Stock
Exchange.
Website
Further information on the Company can be accessed via the Company's website
www.strategicequitycapital.com
Neither the contents of the Company's website nor the contents of
any website accessible from hyperlinks on the Company's on the Company's
website (or any other website) is incorporated into, or forms part of, this
announcement.
Capital structure
Issued share capital
70,122,203 Ordinary shares of 10p each: GBP7,012,220.
At 31 December 2011 the issued share capital of the Company was 70,122,203
Ordinary shares. All shares have equal voting rights.
Financial summary
1 July 2011 to Year to 1 July 2010 to Period to
date %
31 December 2011 30 June 2011 31 December 2010 Change
Performance
Total return¹ (9.06%)
Capital return
Net asset value
per Ordinary share 93.55p 103.35p 90.45p (9.48%)
Ordinary share price
(mid-market) 74.25p 93.00p 68.25p (20.16%)
Discount of Ordinary
share price to net asset value 20.63% 10.01% 24.54%
Total assets (GBP'000) 65,770 73,877 69,597 (10.97%)
Equity shareholders'
funds (GBP'000) 65,601 72,470 69,442 (9.48%)
Total expense ratio
(TER)² - annualised 1.01% 1.52% 1.80%
Revenue return per
Ordinary share 0.76p 0.40p (0.01)p
Dividend yield 0.63% 0.44% 0.44%
Proposed final
dividend for year n/a 0.44p n/a n/a
Ordinary shares in
issue with voting
rights (excluding
shares held in
treasury) 70,122,203 70,122,203 79,815,974
Ordinary shares - - 3,045,500
held in treasury
Interim period's Highs/Lows High Low
Net asset value per
Ordinary share 104.63p 84.89p
Ordinary share price 92.75p 69.00p
Discount of Ordinary
share price to net
asset value 9.00% 22.62%
Banking Facility
GBP5.0m revolving credit facility with RBS which expires on 14 July 2012.
¹ Total return is the increase/(decrease) per share in net asset value plus
dividends paid.
² Total expense ratio calculated as the total expenses divided by the average
shareholders' equity.
Investment policy
The Company invests primarily in equity and equity-linked
securities quoted on markets operated by the London Stock Exchange where the
Investment Manager believes the securities are undervalued and could benefit
from strategic, operational or management initiatives. The Company also has
the flexibility to invest up to 20% of the Company's gross assets at the time
of investment in securities quoted on other recognised exchanges.
The Company may meet all calls on its undrawn loan commitment to
Strategic Recovery Fund II ("SRF II") and to Vintage 1 Limited ("Vintage").
Subject thereto, until such time as all of the undrawn loan commitment to SRF
II has been called or, if earlier, SRF II's investment period has expired,
save for investments pursuant to its commitments to SRF II and Vintage, the
Company will not make any further investments in unquoted securities.
Thereafter, the Company may invest up to 20% of its gross assets at the time
of investment in unquoted securities, provided that, for the purpose of
calculating this limit, any undrawn commitment to Vintage which may still be
called shall be deemed to be an unquoted security.
The maximum investment in any single investee company will be no
more than 15% of the Company's investments at the time of investment.
The Company will not invest more than 10%, in aggregate, of the
value of its total assets at the time the investment is made in other listed
closed-end investment funds provided that this restriction does not apply to
investments in any such funds which themselves have published investment
policies to invest no more than 15% of their total assets in other listed
closed-end investment funds.
Other than as set out above, there are no specific restrictions on
concentration and diversification. The Board does expect the portfolio to be
relatively concentrated, with the majority of the value of investments
typically concentrated in the securities of 10 to 15 issuers across a range of
industries. There is also no specific restriction on the market capitalisation
of issues into which the Company will invest, although it is expected that the
majority of the investments by value will be invested in companies with a
market capitalisation of less than GBP300 million.
The Company's Articles of Association permit the Board to take on
borrowings of up to 25% of the net asset value at the time the borrowings are
incurred for investment purposes.
Chairman's report
Introduction
I am pleased to report that, despite challenging market conditions, the
Company made reasonable progress in the six months to the end of December 2011
and was the only investment trust in the AIC UK Smaller Company sector to
deliver NAV growth and share price appreciation, over the course of 2011.
Performance
As at 31 December the Company's net assets were GBP65.6m (93.6p per share). This
represented a decrease of 9.5% since the year end, 30 June 2011. This was
driven by the opposing impacts of strongly positive earnings growth across the
portfolio offset by a sharp de-rating of smaller companies.
The Company's NAV performance per share was considerably better than that of
its benchmark and its peers. It outperformed the FTSE SmallCap ex Investment
Companies Index by 8.4% over the period, the fifth consecutive half of
outperformance.
This strong performance means that it has now outperformed its benchmark by
77% over the last three years. Its next best competitor in the AIC sector has
achieved a 55.4% outperformance. The simple average sector outperformance was
25.9% and the weighted average sector outperformance was 5.9%.
This consistency of performance continues to strengthen the Board's confidence
in the Company's investment strategy and Manager.
Continuation Vote and Discount Management
Shareholders currently have the opportunity to vote annually on the
continuation of the Company as an investment trust. In addition, with effect
from 2011, the Board introduced annual discount and performance tests, which
are measured as at 30 June each year and require the Directors to bring
forward proposals to allow shareholders to realise their investment in the
Company if either test is failed. The Company passed both tests in 2011.
However, the Company bought back approximately 8.7% of its issued share
capital during the three months ended 30 June 2011 (being the measurement
period for the discount test).
Having reviewed the operation of the annual discount test and consulted
investors representing a substantial majority of the Company's issued share
capital, the Board is proposing to replace the existing annual tests with
periodic tender offers which the Board believes should permit more orderly
management of the Company's portfolio and ensure equality of treatment for all
shareholders. Accordingly, the Board intends, subject to shareholder approval,
to conduct periodic tender offers in May and November each year, with each
tender offer being for up to 4% of the issued share capital at a price
equivalent to a 10% discount to the net asset value (including current period
revenue and the estimated tender offer costs) per share. The first tender
offer is expected to be undertaken in May this year, and a circular containing
further details of that tender offer and a notice convening a general meeting
of the Company at which the requisite shareholder approval will be sought is
expected to be posted to shareholders in March.
Shareholders will continue to have the opportunity, at each annual general
meeting, to vote on the continuation of the Company. Apart from shares bought
back pursuant to the periodic tender offers, the Directors anticipate that, in
future, the Company will only buy back shares for investment, rather than
discount management, reasons.
Outlook
The Board believes that the prospects for the Company over the medium term
continue to be good.
John Hodson
28 February 2012
Investment manager's report
Investment strategy
Our strategy is to invest in publicly quoted companies which will increase in
value through strategic, operational or management change.
Our typical investee company has a market capitalisation of under GBP150 million
at the time of initial investment. We believe that smaller companies provide
the greatest opportunity for our investment style as they are relatively
under-researched, often have more limited resources and frequently can be more
attractively valued.
We are long-term investors; we typically aim to hold companies for the
duration of three-year investment plans that include an entry and exit
strategy and a clearly identified route to value creation. The duration of
these plans can be shortened by transactional activity or lengthened by
adverse economic conditions. Before investing we undertake an extensive
private equity style due diligence process focused on fundamental company
analysis as well assessing market conditions, management and stakeholders. Our
investments are underpinned by valuations, which we derive using private
equity-based techniques. These include a focus on cash flows, the potential
value of the company to trade or financial buyers and the capital structure.
We follow a practice of constructive corporate engagement and aim to work with
management teams in order to enhance shareholder value. We aim to build a
consensus with other stakeholders, and prefer to work alongside like-minded
co-investors as leaders, followers or supporters. We try to avoid
confrontation with investee companies as we believe that there is strong
evidence that overtly hostile activism generally generates poor returns for
investors.
We believe that this approach, if properly executed, will generate favourable
risk-adjusted returns for shareholders over the long term.
Market commentary
The period saw significant volatility and falls in the prices of risk assets
as the spectre of sovereign default and slowing global growth expectations
weighed on markets. In the third quarter, there was indiscriminate selling,
with large, mid and smaller company indices experiencing drops of c.15%. In
the fourth quarter risk appetite returned a little, leading to a rebound of
8.4% in the valuations of larger companies. The FTSE Small Cap (ex Investment
Companies) Index continued falling, significantly underperforming the FTSE All
Share and ultimately delivering a negative 17.4% return for the six month
period.
The return to bear market conditions triggered a sudden, if long expected,
consolidation in the stockbroking and corporate finance sectors. Two long
established firms shut their doors for good, and a further three were acquired
by their rivals. We believe that downwards pressure on commissions, lower
trading volumes on traditional markets and a structural shift to order
matching pools means further consolidation is highly likely. What the long
term impact on the Smaller Companies market is of this consolidation is
unclear; in the short term it is likely to lead to a continued decline in the
quality of research available to the investment community and corporate
broking advice to corporate clients. This should benefit the Company,
increasing the number of mispriced investment opportunities and the value of
our engagement to smaller quoted companies.
Another major development was a flurry of private equity related bid activity
among smaller technology companies. There were two standalone take privates
and two further bids launched by private equity portfolio companies. Group NBT
was acquired by HgCapital, and Workplace Systems by Lloyds Development
Capital. Better Capital succeeded in a hostile bid for Clarity Commerce, which
it is likely to combine with its portfolio company DigiPoS. Ion Trading, a TA
Associates portfolio company, launched a bid for PATSystems. Given the low
absolute valuations of many niche software companies quoted on AIM and the
LSE, we believe there is a binary outcome between either re-rating or being
subject to M&A over the medium term.
Performance report
As at 31 December the Company's net assets were GBP65.6m (93.6p per share). This
represented a decrease of 9.5% since the year end. This was driven by the
opposing impacts of strongly positive earnings growth across the portfolio
offset by a sharp de-rating of smaller companies.
Allocate Software was the largest positive contributor to performance, with
the shares gaining 7% over the period. Since we helped to finance its
acquisition of Timecare AB in late 2009, the company has delivered significant
organic growth, matched by strong cash flows. These have been used to make
three further complementary acquisitions to broaden the product set and
geographical exposure. We took advantage of the August market sell off to
materially increase the holding at a depressed level. The final results were
released in early September, with the company exceeding expectations and
upgrading forecasts. The shares rallied c.20% on the news. Despite the recent
strong relative performance, we continue to believe that the company is
significantly undervalued.
Vintage 1, a highly diversified private equity fund of funds vehicle, was a
positive contributor to performance, with the NAV rising by 4% over the
period. This continues to be a highly successful investment for the Company.
The holding was acquired in March 2007 at the top of the market with an
initial cash drawdown of GBP566k and further undrawn commitment of GBP1.30m. There
have been no further draw downs, and we have been advised by the manager that
no further draw-downs are envisaged. GBP983k has been returned in cash and the
unrealised value is GBP1.96m. The cash multiple and IRR are 5.2x and 53.5% to
date respectively.
Mecom was another significant positive contributor to performance. We have
long believed that the valuation of the company has failed to reflect its cash
flow generation or its realisable value to trade or private equity buyers.
There were three key catalysts during the period. The sale of its Polish
national titles was announced in September for c.7x EBITDA, roughly twice the
rating of the parent company. The sale of the Norwegian assets was announced
in December for c.7x EBITDA. In addition, the strong degearing over the past
two years allowed the company to pay a maiden dividend in October. We believe
that further disposals are likely and that profits should benefit from further
operational improvement.
RPC and Lupus were also material outperformers over the period, returning +2%
and -1% respectively. RPC's strong trading and operational performance
continues and the investment community is starting to rate the business more
highly. With its exposure to the US housing industry, Lupus was sold off
heavily in the summer, but rallied at the year-end following improving
macroeconomic news from North America. Lupus also made a small bolt on
acquisition of a supplier to its US building products clients. The market
interpreted this as a positive signal on the Board's outlook for the business
and its balance sheet strength.
Top 5 contributors to performance
Company Cost Valuation Period attribution
Allocate Software 3,094 4,015 +0.56
RPC Group 2,793 5,011 +0.37
Vintage 1 318 1,955 +0.16
Mecom Group 7,135 5,335 +0.12
Lupus Capital 5,652 7,127 +0.04
Bottom 5 contributors to performance
Company Cost Valuation Period attribution
4imprint 4,885 4,484 -0.80
Kewill 3,084 2,416 -1.08
Lavendon 3,991 4,973 -1.68
Strategic Recovery Fund II 4,695 10,818 -1.72
E2V Technologies 6,086 6,436 -1.96
Given the adverse market conditions, it was not surprising that the value of
some holdings fell over the period. However, it was pleasing to note that the
share price of only six out of the nineteen holdings fell more than FTSE
Smaller Companies Index over the period.
The largest negative attribution was driven by the 19.3% fall in E2V, one of
the fund's major holdings. This followed a very strong performance in the
previous six months when E2V's share price rose by c.50%. News flow from the
company continued to be positive. The interim results in November were ahead
of expectations with organic sales growth of 16%. Over the past year, there
have been three relevant M&A transactions involving direct peers including CPI
Industries, Dalsa and Fairchild Imaging, which suggest fair value lies
significant in excess of the current share price. Trading momentum and cash
generation remains strong, and the balance sheet is now largely de-geared.
The Strategic Recovery Fund II fell by 8.4% over the period, largely mirroring
the fall in the Company's NAV.
Lavendon's share price fell in line with the market, despite continued
progress being made. Don Kenny, the former MD of Carillion Support Services
Division, was appointed CEO during the period. We believe he will drive
through further operational improvements across the group. Lavendon released
an in line trading update in November, which showed its highly profitable
Middle East unit returning to growth. Momentum appears to be improving and we
believe that the current all-time low EV/Sales and EV/EBITDA ratings are
unsustainable.
Kewill's share price was weak over the period, falling by 21.9% and
underperforming the market fall. A trading update in October and the interim
results in November indicated that lumpy licence sales were taking longer to
sign, driven by the macro uncertainty over the period. Short term earnings
risk does exist, but the valuation is discounting a very bleak picture and the
company has a substantial net cash balance sheet.
4imprint fell by 11.9% over the period, largely as it is perceived as a
cyclical business. However, the company released positive interim results and
a third quarter trading statement, showing continued mid-teens organic growth
in the dominant US division.
Portfolio review
The portfolio remained highly focused, with a total of 19 holdings and with
the top 10 holdings accounting for 85% of the portfolio at the end of the
financial period. The portfolio remains predominantly invested in quoted
equities. The average market capitalisation remains below GBP200m, consistent
with the focus on smaller companies.
The percentage of the portfolio invested in unlisted securities (including
SRFII) increased by 0.2% to 19.5% at the end of the period largely due to the
strong relative performance of Vintage 1. 2.4% of the portfolio was invested
in cash at the period end, a marginal increase, as we attempted to rebuild
cash to a normal level following the share buy-back programme in the second
quarter of 2011.
Portfolio as at 31 December 2011 - Sector split
Sector Percentage
Technology 23.3
Unquoted investments 19.5
Manufacturing 19.0
Support services 15.5
Media 10.2
Telecoms 7.8
Net cash 2.4
Retail 2.3
Portfolio as at 31 December 2011 - Size split (by market capitalisation)
Size Percentage
GBP100m - GBP300m 36.4
GBP500m 7.6
Net cash 2.4
The level of portfolio activity was extremely low over the period, driven by a
mix of limited cash availability, our conviction in the existing portfolio and
limited market liquidity. Secondary fundraisings, historically an important
source of new investments, were rare and largely unattractive.
GBP3.8 million of disposals in the period represented around 12% of the weighted
average NAV. GBP3.7 millon of purchases were executed including a re-investment
in Gooch & Housego during December. The investment was made at a materially
lower valuation compared to the level at which the Company exited the first
investment just over twelve months beforehand, and at an absolute valuation
not befitting such a niche global market leader in a growth market.
Opportunistic top ups were made in Mecom, Allocate, Lupus and Kewill. These
investments followed disproportionate or irrational downwards moves in the
company share prices. Purchases were typically funded through the top slicing
of large mature holdings, which have performed well, proceeds from the sale of
the stub holding of Pinewood and the continued sell down of investments which
have either disappointed or which we believe will generate less attractive
risk adjusted returns.
Our investment focus remains unchanged. Among smaller quoted companies, we
continue to seek out highly cash generative, niche market leaders, with global
earnings and growth prospects. These companies should be valued at a discount
to fair value, as measured by long term stock market ratings, but most
importantly precedent M&A in their respective niches.
Operationally the portfolio has continued to perform well. This led to the
valuation characteristics of the portfolio becoming more attractive given the
decline in the NAV over the period. The low absolute valuation of the
portfolio, along with its expected earnings and dividend growth, makes us
optimistic about the potential for further NAV uplift in the medium term. We
believe that the majority of portfolio holdings continue to trade at
significant discounts to comparable trade multiples.
Portfolio characteristics
Strategic Equity Capital Strategic Equity Capital
Consensus median portfolio characteristics (weighted median) (weighted average) Smaller Companies
Price/Earnings ratio (FY1) 9.1x 11.6x 9.1x
Dividend yield (FY1) 3.6% 3.6% 3.5%
Price/ Book ratio (FY1) 2.0x 1.9x 0.7x
Price/ Sales ratio 0.6x 0.7x 0.3x
SVG cash flow yield 15.0% 16.3% n/a
Forecast earnings growth (FY1) 7.9% 10.2% 14.9%
Forecast debt to equity 28.9x 46.8x n/a
Source: Factset Portfolio Analysis System, Investec.
We continue to view the existing portfolio as a collection of highly
attractive assets, typically enjoying market leadership, high levels of
overseas earnings, with good growth prospects, trading on undemanding earnings
and cashflow multiples. There is a balance of structural growth and cyclical
recovery. Gearing levels remain low at 0.9x net debt/EBITDA and this is
forecast to fall further during 2012. The 16.3% SVG free cash flow yield
remains at the top end of its historic range and augurs well for further NAV
growth over the medium term. This could be accelerated by any portfolio
company being subject to M&A activity.
Unlisted Investments
Over the period the Company received a distribution of GBP124k from Vintage I.
At the period end, the outstanding commitment relating to Vintage I was GBP1.30
million, a 28% reduction in constant currency since the position was
purchased. The manager of Vintage I has communicated that they do not expect
to make any further net draw downs.
The investment period of the SRFII ended in June 2011 and the Fund is now a
distributing vehicle with no outstanding commitments. We anticipate that the
vehicle will be fully distributed by the end of June 2013.
Outlook
2011 was a year in which negative macro news flow dominated and positive
corporate news flow went largely un-noticed. As a result, another year of
strong earnings growth has meant that on traditional metrics such as price to
earnings, the market has rarely looked cheaper. On a EV/EBITDA basis the UK
markets are now cheaper than even during the nadir of 2009.
A benefit of investing in smaller companies is that an investor can create a
portfolio of companies able to grow despite operating in a low growth domestic
economy. Examples of these growth strategies include: geographic expansion,
product extension, moving up the value chain, new product development and
taking market share through a superior business model and execution. We are
actively focused on investing in these companies which can outperform peers
and grow.
Although UK consumer discretionary companies have seen significant falls in
their share prices, and are valued on modest cash flow multiples, we believe
it is still too early to call the bottom. In addition, the field of
appropriate candidates is very limited, with many of the higher quality UK
consumer services companies in private ownership. Equally, with public
expenditure set to be challenged for some time, growth appears scarce among
companies supplying the public sector. The exception is if they are offering
productivity enhancing products or services, where there are specific ring
fenced budgets available and willing buyers.
We continue to believe that equities remain the most compelling asset class to
own for medium to long term returns. Strong balance sheets and a slower macro
growth environment are powerful catalysts for M&A, which currently remains
extremely subdued. Historically, smaller companies have been major
beneficiaries of this trend.
Additional information - Top 10 Investee Company Review
4imprint Group is the fourth largest distributor of promotional products in
the world with an international network of companies in the UK, USA, Hong Kong
and Europe. We have been involved with the company since a change of
management in 2003. The company has benefited recently from material upgrades
to forecast earnings. The US business continues to grow strongly and we
believe its value is significantly in excess of the value of the whole
company. Funds managed by SVGIM currently hold approximately 13% of the
company's equity.
Allocate Software is the leading workforce optimisation software applications
provider for global organisations with large, multi-skilled workforces. It is
the clear European market leader in the healthcare vertical market, where the
compelling return on investment for clients is driving significant growth. It
is also the clear lead provider of optimisation software for the global
offshore and defence markets. A strong management team is focused on
delivering continued profitable growth, maximising the commercial potential of
the product suite. SVG became a major shareholder as part of a placing to fund
the acquisition of its Nordic equivalent, Timecare AB, in December 2009. The
company has subsequently made three further acquisitions of complementary
businesses - Dynamic Change and Zircadian in the UK and RosterOn in Australia.
Funds managed by SVGIM currently hold approximately 8% of the company's
equity.
CVS Group is the UK's leading operator of veterinary practices, with a market
share of c.12% and several times the size of its nearest competitor. CVS has
followed a strategy of consolidating the market through the acquisition of
single and small chains of practices, largely funded by debt. Given the
economics of scale in veterinary drug and products purchasing, the roll up
economics are compelling. SVG became a shareholder following a period of
disappointing trading. The shares de-rated significantly as disappointed
growth investors exited and other investors concerned about the level of
borrowings reduced their holdings. With limited ongoing capex requirement, we
believed that the company could degear rapidly and still continue its roll up
strategy. The entry valuation was undemanding on a cashflow basis and demand
for its services is less discretionary than many retailers. Funds managed by SVGIM
currently hold approximately 2% of the company's equity.
E2V Technologies is a global market leader in the design and manufacture of
specialist electronic components and low volume/high value and high
reliability semiconductors, predominately for the medical, aerospace, defence
and industrial markets. An ill-timed acquisition in September 2008 funded by
debt left the balance sheet of the business over-stretched as the economic
downturn began. A new finance director, well known to SVGIM, was appointed in
May 2009. The management team has acted to raise equity to pay down debt as
well as restructure the UK and French cost base, a process which is now
largely complete. The Company made its initial investment during December 2009
via a placing and a deeply discounted rights issue to refinance the balance
sheet. The restructuring has been executed flawlessly and the company is
returning to a growth track with a much stronger balance sheet. Funds managed
by SVGIM currently hold approximately 10% of the company's equity.
KCOM Group is a provider of communications solutions to businesses and the
public sector in the UK. It also has a very strong regional consumer-based
business based around Hull in East Yorkshire. Following discussions instigated
by shareholders the company announced major changes to its management team in
November 2008. Following further consultation with shareholders the company
has implemented an innovative remuneration package that closely aligns
shareholders and management. Since then, the company has undergone a strategic
review and announced an important network sharing deal with BT Group. The
positive impact of these changes and the Company's growth potential has taken
time to be translated into headline sales growth. The investment community
remains reluctant to value the group at a rating which reflects growth
potential. The proportion of recurring revenues, and therefore quality of
earnings continue to increase and cash and dividend returns remain strong.
Funds managed by SVGIM currently hold approximately 5% of the company's
equity.
Kewill is a leading global provider of software and services to simplify
global trade and logistics. Its applications are used to reduce complexity and
automate manual processes across supply chains, in areas such as sourcing,
customs, compliance, transportation, storage, finance, visibility and
connectivity. The company was founded in 1972 and has sales activities in the
UK, Europe, North American and Asia. Kewill has generated consistent returns
to shareholders during the past eight years and its revenues proved resilient
during the credit crisis. Historic strong cashflows have been used to acquire
complementary businesses in its sectors. Given the continued reliance on some
high margin, lumpy licence revenue, short term earnings risk does exist.
However, the balance sheet is exceptionally strong and the valuation
undemanding. M&A activity is a recurrent feature in its sector and we believe
it unlikely that Kewill will remain independent in the long term. Funds
managed by SVGIM currently hold approximately 3% of the company's equity.
Lavendon Group is the market leader in the rental of powered aerial work
platforms in both Western Europe and the Gulf States. The group entered the
current downturn having over-spent on equipment, and with an overstretched
balance sheet. The nature of powered access equipment is such that capital
expenditures can be reduced materially for a significant amount of time
without detriment to the fleet. We believe that the company will generate
significant surplus cash flow over the next two years which will be used to
pay down debt and thus create value for equity shareholders. We invested in
the company via a fundraising in late 2009 which brought the company's debt
down to high but manageable levels, and have been actively engaged with the
board to help drive improved returns. Since 2009, the company has met its debt
reduction targets, announced an operational and strategy review and executive
board changes. A new group CEO was appointed in Q4 2011. Funds managed by
SVGIM currently hold approximately 10% of the company's equity.
Lupus Capital is a leading international supplier of building products to the
door and window industry, and the world's leading manufacturer of marine
breakaway couplings. The company has significant operations in nine separate
countries across Europe, the Americas, Asia and Australasia. The building
products division enjoys clear market leadership in a number of niches, with a
highly diversified customer base, serving both the new build and RMI (repair
and maintenance) markets. The building products division has been adversely
impacted by the significant fall in residential construction activity
experienced since 2007, which, combined with a geared balance sheet, led to a
material fall in the share price through 2008. Despite end markets continuing
to trade at a low ebb, the building products division generates double digit
margins with strong cash flow. The marine couplings business operates in a
structural growth market and is a very high quality asset. We began building
our stake in the company in late 2009 following the appointment of a new
Chairman, who has subsequently reconstituted the executive management and
non-executive board. Since then, strong cashflows have reduced the debt burden
substantially. We believe the company trades at a material discount to its sum
of parts valuation and that there is substantial upside from a medium term
recovery in the end markets of the building products division. Funds managed
by SVGIM currently hold approximately 7% of the company's equity.
Mecom Group is a European media business. The group owns over 300 printed
titles and over 200 websites in its four divisions, with substantial
operations in the Netherlands, Denmark, Norway and Poland, generating
readership of 23 million per week and attracting 32 million unique website
users per month. The company has undergone substantial corporate restructuring
in the last two years having over-extended its balance sheet through
acquisitions in the run up to the recession. We have engaged extensively with
the company, investigating the progress of its turn around, assisting it with
investor relations and lobbying on its behalf for greater coverage by the
analyst community. Having originally invested in 2005 and fully realised the
cost of that investment before the recession struck, we revisited the
investment case in 2010 and rebuilt a holding. We believe that the company is
worth significantly in excess of its current share price based on precedent
transactions, as evidenced by its own disposals since early 2009. Further
disposals are likely, the dividend return remains attractive, and there is
scope for increased returns from a return of capital to shareholders. Funds
managed by SVGIM currently hold approximately 6% of the company's equity.
RPC Group is Europe's leading manufacturer of rigid plastic packaging.
Following lobbying from SVGIM and another shareholder acting in concert the
group has initiated a strategic and operational review and made substantial
changes to its board. The management team has performed well against RPC's new
objectives, leading to a significant reduction in group debt and ongoing focus
on improving return on invested capital. As the restructuring ended, RPC
acquired its smaller Scandinavian competitor, Superfos, funded by a mixture of
debt and new equity. It is clear that this acquisition has created value
through substantial cost synergies, although it is too early to judge whether
sales synergies will be delivered. While this is a longer term investment we
believe that there is still more for the taking, particularly when taking into
account the scope for more favourable raw materials pricing. Funds managed by
SVGIM currently hold approximately 4% of the company's equity.
SVG Investment Managers Limited
28 February 2012
All statements of opinion and/or belief contained in this Investment manager's
report and all views expressed and all projections, forecasts or statements
relating to expectations regarding future events or the possible future
performance of the Company represent SVG Investment Managers Limited's own
assessment and interpretation of information available to it at the date of
this report. As a result of various risks and uncertainties, actual events or
results may differ materially from such statements, views, projections or
forecasts. No representation is made or assurance given that such statements,
views, projections or forecasts are correct or that the objectives of the
Company will be achieved.
Top 10 holdings
as at 31 December 2011
% of
invested % of
portfolio at invested % of
Sector Date of first Cost Valuation 31 December portfolio at net
Company Classification investment GBP'000 GBP'000 2011 30 June 2011 assets
Strategic Recovery Fund II Unquoted investments Jul 2009 4,695 10,818 16.9 16.6 16.5
Lupus Capital Manufacturing Apr 2007 5,652 7,127 11.1 9.3 10.9
E2V Technologies Technology Oct 2009 3,007 6,436 10.1 11.8 9.8
Mecom Group Media Aug 2005 7,135 5,335 8.3 7.8 8.1
KCOM Group Telecoms May 2007 2,653 5,116 8.0 8.9 7.8
RPC Group Manufacturing Feb 2007 2,793 5,011 7.8 8.9 7.6
Lavendon Group Support services Nov 2009 3,991 4,973 7.8 8.4 7.6
4imprint Group Support services Feb 2006 4,885 4,484 7.0 7.3 6.8
Allocate Software Technology Dec 2009 3,094 4,015 6.3 4.3 6.1
Kewill Technology Mar 2011 3,084 2,416 3.8 3.6 3.7
40,989 55,731 87.1 86.9 84.9
Interim management report
The important events that have occurred during the period under review are set
out in the Chairman's report and Investment manager's report, which also
include the key factors influencing the financial statements.
The Directors do not consider that the principal risks and uncertainties have
changed since the publication of the annual report for the year ended 30 June
2011. The principal risks are set out in the annual report which is available
at www.strategicequitycapital.com.
In summary these risks are:
- general risk;
- market risk;
- regulatory risk;
- financial risk; and
- financial instruments.
Going concern
The Directors believe, bearing in mind the nature of the Company's business
and assets, that the Company has adequate resources to continue in operational
existence for the foreseeable future. For this reason, they continue to adopt
the going concern basis in preparing the accounts.
Responsibility statement
The Directors confirm that to the best of their knowledge:
- the condensed set of financial statements has been prepared in accordance
with the Statement on Half Yearly Financial Reports issued by the
International Accounting Standards Board and gives a true and fair view of the
assets, liabilities, financial position and profit/(loss) of the Company.
- the interim management report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication
of important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the Company during that period; and any changes in the related
party transactions described in the last annual report that could do so.
This Half Yearly Report was approved by the Board of Directors on 28 February
2012 and the above responsibility statement was signed on its behalf by John
Hodson, Chairman.
Statement of comprehensive income
for the 6 month period ended 31 December 2011
6 month period ended Year ended 6 month period ended
31 December 2011 30 June 2011 31 December 2010
unaudited audited unaudited
Revenue Capital Revenue Capital Revenue Capital
return return Total return return Total return return Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investments
(Losses)/gains
on investments
at fair value
through profit
or loss - (7,091) (7,091) - 27,131 27,131 - 18,455 18,455
- (7,091) (7,091) - 27,131 27,131 - 18,455 18,455
Income
Dividends 2 897 - 897 1,253 - 1,253 550 - 550
Interest 2 9 - 9 26 - 26 13 - 13
Underwriting 2
commission - - - 23 - 23 - - -
906 - 906 1,302 - 1,302 563 - 563
Expenses
Investment
Manager's
fee 9 (212) - (212) (473) - (473) (221) - (221)
Other expenses 3 (138) - (138) (469) - (469) (322) - (322)
Total expenses (350) - (350) (942) - (942) (543) - (543)
Net return/(loss)
before finance
costs and
taxation 556 (7,091) (6,535) 360 27,131 27,491 20 18,455 18,475
Finance costs
Interest payable (25) - (25) (50) - (50) (25) - (25)
Total finance
costs (25) - (25) (50) - (50) (25) - (25)
Net return/(loss)
before taxation 531 (7,091) (6,560) 310 27,131 27,441 (5) 18,455 18,450
Taxation - - - - - - - - -
Net return/(loss)
after taxation for
the period 531 (7,091) (6,560) 310 27,131 27,441 (5) 18,455 18,450
Returns per Ordinary share pence pence pence pence pence pence pence pence pence
- Basic and diluted 5 0.76 (10.12) (9.36) 0.40 25.60 36.00 (0.01) 24.04 24.03
The total column of this statement is the Statement of comprehensive income of
the Company. All items in the above statement derive from continuing
operations. These accounts are unaudited and have not been reviewed by the
Company's auditors. These are not the Company's statutory accounts. These
accounts have been prepared under International Financial Reporting Standards,
and in accordance with the accounting policies applied in the annual report
which is available at www.strategicequitycapital.com.
Statement of changes in equity
for the 6 month period ended 31 December 2011
Share Capital
Share premium Special Capital redemption Revenue
capital account reserve reserve reserve reserve Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the 6 month period ended 31 December 2011
1 July 2011 7,001 5,246 54,435 4,117 970 691 72,470
Net return and total comprehensive income
for the period - - - (7,091) - 531 (6,560)
Dividend paid 4 - - - - - (309) (309)
31 December 2011 7,011 5,246 54,435 (2,974) 970 913 65,601
For the year to 30 June 2011
1 July 2010 7,981 5,246 60,398 (23,014) - 611 51,222
Net return and total comprehensive income
for the period - - - 27,131 - 310 27,441
Dividend paid 4 - - - - - (230) (230)
Treasury shares cancelled (305) - - - 305 - -
Share buy backs (665) - (5,963) - 665 - (5,963)
30 June 2011 7,011 5,246 54,435 4,177 970 691 72,470
For the 6 month period ended
31 December 2010
1 July 2010 7,981 5,246 60,398 (23,014) - 611 51,222
Comprehensive income for the period - - - 18,455 - (5) 18,450
Dividend paid 4 - - - - - (230) (230)
31 December 2010 7,981 5,246 60,398 (4,559) - 376 69,422
These accounts have been prepared under International Financial Reporting
Standards, and in accordance with the accounting policies.
Balance sheet
as at 31 December 2011
As at As at As at
31 December 30 June 31 December
2011 2011 2010
unaudited audited unaudited
Note GBP'000 GBP'000 GBP'000
Non-current assets
Investments held at fair value through profit or loss 6 63,989 71,336 64,458
Current assets
Other receivables 200 217 221
Cash and cash equivalents 1,581 2,324 4,918
1,781 2,541 5,139
Total assets 65,770 73,877 69,597
Current liabilities
Other payables 169 1,407 155
169 1,407 155
Total assets less current liabilities 65,601 72,470 69,442
Net assets 65,601 72,470 69,442
Capital and reserves:
Share capital 7,011 7,011 7,981
Share premium account 5,246 5,246 5,246
Special reserve 54,435 54,435 60,398
Capital reserve (2,974) 4,117 (4,559)
Capital redemption reserve 970 970 -
Revenue reserve 913 691 376
Total shareholders' equity 65,601 72,470 69,442
Net asset value per share pence pence pence
Basic and diluted 93.55 103.35 90.45
Shares in issue number number number
Ordinary shares (excluding shares
held in treasury) 70,122,203 70,122,203 76,770,474
These accounts have been prepared under International Financial Reporting
Standards and in accordance with the accounting policies.
Statement of cash flows
for the 6 month period ended
31 December 2011
6 month 6 month
period ended Year ended period ended
31 December 30 June 31 December
2011 2011 2010
unaudited audited unaudited
Note GBP'000 GBP'000 GBP'000
Operating activities
Net return before finance costs and taxation (6,535) 27,491 18,475
Adjustment for losses/(gains) on investments 7,091 (27,131) (18,455)
Interest paid (25) (50) (25)
Operating cash flows before movements in working capital 531 310 (5)
Decrease/(increase) in receivables 24 (39) (26)
(Decrease)/increase in payables (826) 22 (27)
Purchases of portfolio investments (4,123) (17,367) (7,197)
Sales of portfolio investments 3,960 23,451 11,036
Net cash flow from operating activities (434) 6,377 3,781
Financing activities
Equity dividend paid 4 (309) (230) (230)
Shares brought back in the period - (5,190) -
Net cash flow from financing activities (309) (5,420) (230)
(Decrease)/increase in cash and cash equivalents for period (743) 957 3,551
Cash and cash equivalents at start of period 2,324 1,367 1,367
Cash and cash equivalents at
31 December 2011 1,581 2,324 4,918
These accounts have been prepared under International Financial Reporting
Standards and in accordance with the accounting policies.
Notes to the half yearly report for the 6 month period ended 31 December 2011
1.1 Corporate information
Strategic Equity Capital plc is a public limited company incorporated and
domiciled in the United Kingdom, registered in England and Wales whose shares
are publicly traded. The Company is registered as a public limited company and
is an investment company as defined by Section 833 of the Companies Act 2006.
The Company carries on business as an investment trust within the meaning of
Sections 1158/1159 of the Corporation Tax Act 2010.
1.2 Basis of preparation/statement of compliance
The condensed interim financial statements of the Company have been prepared
in accordance with International Accounting Standard ("IAS") 34, `Interim
financial reporting' issued by the International Accounting Standards Board
("IASB") (as adopted by the EU). They do not include all the information
required for a full report and financial statements and should be read in
conjunction with the report and financial statements of the Company for the
year ended 30 June 2011, which have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by the EU.
Where presentational guidance set out in the Statement of Recommended Practice
("SORP") for investment trusts issued by the Association of Investment
Companies ("AIC") (as revised in 2009) is consistent with the requirements of
IFRS the Directors have sought to prepare financial statements on a basis
compliant with the recommendations of the SORP.
The condensed interim financial statements do not comprise Statutory Accounts
within the meaning of Section 434 of the Companies Act 2006. Statutory
Accounts for the year ended 30 June 2011 were approved by the Board of
Directors on 21 September 2011 and delivered to the Registrar of Companies.
The report of the Auditors on those Financial Statements was unqualified, did
not contain an emphasis of matter paragraph and did not contain any statement
under Section 498 of the Companies Act 2006.
Convention
The financial statements are presented in Sterling, being the currency of the
primary environment in which the Company operates, rounded to the nearest
thousand.
Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
segment of business, being investment business.
1.3 Accounting policies
The accounting policies, presentation and method of computation used in these
condensed financial statements are consistent with those used in the
preparation of the financial statements for the year ended 30 June 2011.
1.4 New standards and interpretations not applied
Implementation of changes and accounting standards in the financial period, as
outlined in the 30 June 2011 Statutory Accounts, had no significant effect on
the accounting or reporting of the Company.
2. Income
31 December 2011 30 June 2011 31 December 2010
GBP'000 GBP'000 GBP'000
Income from investments:
UK dividend income 897 1,253 550
Liquidity fund income 5 26 13
902 1,279 563
Other income:
Underwriting commission - 23 -
Other interest income 4 - -
906 1,302 563
Total income comprises:
Dividends 897 1,253 563
Interest 9 26 -
Underwriting commission - 23 -
906 1,302 563
Income from investments:
Listed UK 897 1,253 550
Listed overseas 5 26 13
902 1,279 563
3. Other expenses
6 month period ended 6 month period ended
31 December 2011 Year ended 30 June 2011 31 December 2010
(unaudited) (audited) (unaudited)
Revenue Capital Revenue Capital Revenue Capital
return return Total return return Total return return Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Secretarial
services* 10 - 10 71 - 71 35 - 35
Auditors'
remuneration
for:
audit services 14 - 14 24 - 24 10 - 10
Directors'
remuneration 49 - 49 95 - 95 50 - 50
Other expenses 65 - 65 279 - 279 227 - 227
138 - 138 469 - 469 322 - 322
* included within this amount is a receipt of GBP27,000 (30 June 2010: GBPNil; 31
December 2010: GBPNil) representing a refund from HMRC of VAT on administration fees.
4. Dividend
For the year to 30 June 2011, the Company paid a final dividend of 0.44p (30
June 2010: 0.30p) per Ordinary share on, 70,122,203 shares, amounting to
GBP308,538 (30 June 2010: GBP230,311). The dividend was paid on 17 November 2011
to shareholders on the register at 21 October 2011.
5. Return per Ordinary share
6 month period ended Year ended 6 month period ended
31 December 2011 30 June 2011 31 December 2010
Revenue Capital Revenue Capital Revenue Capital
return return Total return return Total return return Total
pence pence pence pence pence pence pence pence pence
Return per Ordinary share 0.76 (10.12) (9.36) 0.40 35.60 36.00 (0.01) 24.04 24.03
Returns per Ordinary share are calculated based on 70,122,203 (30 June 2011:
76,214,492 and 31 December 2010: 76,770,474) being the weighted average number
of Ordinary shares, excluding shares held in treasury, in issue throughout the
period.
6. Investments
31 December 2011
GBP'000
Investment portfolio summary:
Listed investments at fair value through profit or loss 51,215
Unlisted investments at fair value through profit or loss 12,774
63,989
Listed Unlisted 31 December 2011
GBP'000 GBP'000 GBP'000
Analysis of investment portfolio movement
Opening book cost 51,368 5,032 56,400
Opening investment holding gains 6,174 8,762 14,936
Opening valuation 57,542 13,794 71,336
Movements in the period:
Purchases at cost 3,711 - 3,711
Sales - proceeds (3,843) (124) (3,967)
- realised gains on sales 551 104 655
Decrease in unrealised appreciation (6,745) (1,001) (7,746)
Closing valuation 51,216 12,773 63,989
Closing book cost 51,787 5,012 56,799
Closing investment holding (losses)/gains (571) 7,761 7,190
51,216 12,773 63,989
Investments in unquoted investment funds are generally held at the valuations
provided by the managers of those funds. The valuations for SRF II and Vintage
1 are as at 31 December 2011 and 30 November 2011 respectively.
A list of the top ten portfolio holdings by their aggregate market values is
given in the Investment manager's report.
31 December 2011
Total
GBP'000
Analysis of capital gains:
Gains on sale of investments 655
Movement in investment holding gains (7,746)
(7,091)
The Company is required to classify fair value measurements using a fair value
hierarchy that reflects the subjectivity of the inputs used in measuring the
fair value of each asset. The fair value hierarchy has the following levels:
- Quoted prices (unadjusted) in active markets for identical assets or
liabilities ("level 1").
- 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 2").
- Inputs for the asset or liability that are not based on observable market
data (that is, unobservable inputs) ("level 3").
The level in the fair value hierarchy within which the fair value measurement
is categorised is determined on the basis of the lowest level input that is
significant to the fair value of the investment.
The following table analyses within the fair value hierarchy the Company's
financial assets and liabilities (by class) measured at fair value at 31
December 2011.
Financial instruments at fair value through profit and loss
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Equity investments and limited partnership interests 51,216 10,818 1,955 63,989
Liquidity funds - 1,300 - 1,300
Total 51,216 12,118 1,955 65,289
Investments whose values are based on quoted market prices in active markets
are classified within level 1, include active listed equities. The Company
does not adjust the quoted price for these instruments.
Financial instruments that trade in markets that are not considered to be
active but are valued based on quoted market prices, dealer quotations or
alternative pricing sources supported by observable inputs are classified
within level 2. As level 2 investments include positions that are not traded
in active markets and/or are subject to transfer restrictions, valuations may
be adjusted to reflect illiquidity and/or non-transferability, which are
generally based on available market information.
Level 3 instruments include private equity, as observable prices are not
available for these securities the Company has used valuation techniques to
derive the fair value. In respect of unquoted instruments, or where the market
for a financial instrument is not active, fair value is established by using
recognised valuation methodologies, in accordance with International Private
Equity and Venture Capital ("IPEVC") Valuation Guidelines.
There were no transfers between levels for the period ended 31 December 2011.
The following table presents the movement in level 3 instruments for the
period ended 31 December 2011 by class of financial instrument.
Equity investments
GBP'000
Opening balance 1,987
Disposals during the period (20)
Total gains for the period included in the Statement of comprehensive income (12)
Closing balance 1,955
7. Share capital
31 December
2011
Number GBP'000
Allotted, called up and fully paid Ordinary shares of 10p each: 70,122,203 7,011
8. Own shares held in treasury
During the period ended 31 December 2011 no shares were repurchased by the
Company. At 31 December 2011 the Company held Nil (30 June 2011: Nil; 31
December 2010: 3,045,500) shares in treasury for a consideration of GBPNil (30
June 2011: GBPNil; 31 December 2010: GBP1,884,000).
9. Investment Manager's fee
A basic management fee is payable to the Investment Manager at the lower of
the annual rate of (i) the annual rate of 1% of the adjusted NAV of the
Company or (ii) 1% per annum of the market capitalisation of the Company. In
order to avoid double charging of basic management fees payable to the
Investment Manager by the Company, the NAV of the Company is reduced by the
aggregate of the value of the Company's Limited Partnership Interest in SRF II
and the amount of the Company's undrawn loan commitment to SRF II. The basic
management fee accrues weekly and is payable quarterly in arrears. Prior to
the General Meeting in November 2010, the Management fee had been calculated
at 1% of the adjusted Net Asset Value of the Company, adjusted for SRF II as
described above.
The Investment Manager is also entitled to a performance fee, details of which
are set out below. No performance fee has been payable in the period.
10. Investment Manager's performance fee
The Investment Manager is entitled to a performance fee on the following
terms:
- the Company's performance is measured over rolling three year periods
ending on 30 June in each year, with the first performance period having
commenced on 1 July 2008 and ended on 30 June 2011;
- the Company's performance is measured by comparing the NAV total return
per share over a performance period against the total return performance of
the FTSE SmallCap ex Investment Companies Index, being the index against which
the Board has historically compared the Company's investment performance;
- if the NAV total return per share (calculated before any accrual for any
performance fee to be paid in respect of the relevant performance period) at
the end of the relevant performance period exceeds both:
(i) the NAV per share at the beginning of the relevant performance period as
adjusted by the aggregate amount of (a) the total return on the FTSE SmallCap
ex. Investment Companies Index (expressed as a percentage) and (b) 2.0% per
annum over the relevant performance period (`Benchmark NAV'); and
(ii) the high watermark (which is the highest NAV per share by reference to
which a performance fee was previously paid) .
Currently the Investment Manager will be entitled to 15% of the excess over
the higher of the Benchmark NAV per share and the high watermark.
Payment of a performance fee that has been earned will be deferred to the
extent that the amount payable exceeds 1.75% per annum of the Company's NAV at
the end of the relevant performance period (amounts deferred will be payable
when, and to the extent that, following any later performance period(s) with
respect to which a performance fee is payable, it is possible to pay the
deferred amounts without causing that cap to be exceeded or the relevant NAV
total return per share to fall below the relevant Benchmark NAV per share and
the relevant high watermark).
11. Taxation
The tax charge for the half year is GBPNil (30 June 2010: GBPNil; 31 December
2010: GBPNil) based on an estimated effective tax rate of 0% for the year ended
30 June 2011. The estimated effective tax rate is 0% as investment gains are
exempt from tax owing to the Company's status as an Investment Company and
there is expected to be an excess of management expenses over taxable income.
12. Capital commitments and contingent liabilities
The Company has a commitment to invest EUR1,560,000 in Vintage 1 and an
outstanding commitment of GBPNil in SRF II. The manager of Vintage 1 has
indicated it is unlikely to make any further net draw downs.
13. Related party transactions
The Investment Manager: SVGIM is regarded as a related party of the Company.
The Investment Manager may draw upon advice from the Industry Advisory Panel
("IAP") of which Sir Clive Thompson, a Director of the Company, is a member.
The IAP was established to provide advice to SVGIM in relation to the
strategy, operations and management of potential investee companies.
The amounts payable to SVGIM, in respect of management fees, during the period
to 31 December 2011 was GBP212,000 (30 June 2011: GBP473,000; 31 December 2010:
GBP221,000), of which GBP101,000 (30 June 2011: GBP134,000; 31 December 2010:
GBP107,000) was outstanding at 31 December 2011.
In June 2009 SVGIM entered into a Commission Sharing Arrangement with four
executing brokers. Under this arrangement the amount of commission received by
SVGIM in relation to trading activities carried out on behalf of the Company
for the period to 31 December 2011 was GBP2,000 (30 June 2011: GBP9,000 and 31
December 2010: GBP5,000) of which GBPNil (30 June 2011: GBPNil; 31 December 2010:
GBP5,000) was outstanding at 31 December 2011.
Directors & advisors
J Hodson*
Sir Clive M Thompson
J E Cornish*
M C Phillips*
I Dighé*
* Independent of the Investment Manager
Investment Manager
SVG Investment Managers Limited
61 Aldwych
London WC2B 4AE
Tel: 020 7010 8900
Secretary and registered office
Capita Sinclair Henderson Limited
trading as Capita Financial Group -
Specialist Fund Services
Beaufort House
51 New North Road
Exeter EX4 4EP
Enquiries: 01392 477513
Registrar and transfer office
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol BS99 6ZY
Tel: 0870 707 1285
Website: www.computershare.com
Brokers
Canaccord Genuity Limited
Cardinal Place, 7th Floor
80 Victoria Street
London SW1E 5JL
Custodian
HSBC Global Services
Level 27
8 Canada Square
London E14 5HQ
Auditors
Ernst & Young LLP
1 More London Place
London SE1 2AF
Solicitors
Slaughter and May
One Bunhill Row
London EC1Y 8YY
Stephenson Harwood
1 Finsbury Circus
London EC2M 7SH
The Half Yearly Financial Report will be posted to shareholders
shortly. The Report will also be available for download from the following
website: www.strategicequitycapital.com or on request from the Company
Secretary.
NATIONAL STORAGE MECHANISM
A copy of the Half Yearly Financial Report will be submitted shortly to the
National Storage Mechanism ("NSM") and will be available for inspection at the
NSM, which is situated at: www.hemscott.com/nsm.do
Ends
Neither the contents of the Company's website nor the contents of any website accessible
from hyperlinks on the Company's website (or any other website) is incorporated into,
or forms part of this announcement.
END
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