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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| New Star Investment Trust PLC | AQSE:NSI.GB | Aquis Stock Exchange | Ordinary Share | GB0002631041 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 1.64 | 1.43% | 116.64 | 111.00 | 117.00 | 116.64 | 114.00 | 114.00 | 850 | 09:14:38 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMNSI
NEW STAR INVESTMENT TRUST PLC
This announcement constitutes regulated information.
UNAUDITED RESULTS
FOR THE YEARED 30TH JUNE 2016
New Star Investment Trust plc (the 'Company'), whose objective is to achieve
long-term capital growth, announces its consolidated results for the year ended
30th June 2016.
FINANCIAL HIGHLIGHTS
30th June 30th June %
2016 2015 Change
PERFORMANCE
Net assets (GBP '000) 89,274 79,854 11.80
Net asset value per Ordinary share 125.70p 112.43p 11.80
Mid-market price per Ordinary share 76.00p 73.50p 3.40
Discount of price to net asset value 39.5% 34.6% n/a
Total Return 12.1% 4.8% n/a
IA Mixed Investment 40% - 85% Shares (total 2.2% 6.7% n/a
return)
MSCI AC World Index (total return, sterling 13.9% 10.1% n/a
adjusted)
MSCI UK Index (total return) 3.4% -0.2% n/a
1st July 2015 to 1st July 2014 to
30th June 2016 30th June 2015
REVENUE RETURN
Return per Ordinary share 0.27p 0.49p
Proposed Dividend per Ordinary Share 0.30p 0.30p
Dividend paid per Ordinary share 0.30p -
CAPITAL RETURN
Return per Ordinary Share 13.29p 4.62p
TOTAL RETURN 12.1% 4.8%
CHAIRMAN'S STATEMENT
PERFORMANCE
Your Company's Total Return was 12.06% for the year to 30th June 2016. This
took the year-end Net Asset Value ('NAV') per ordinary share to 125.70p. By
comparison, the Investment Association's Mixed Investment 40-85% Shares index
gained 2.20%. Your Directors believe this benchmark is appropriate because your
Company has, since inception, been invested in a broad range of asset classes.
Equity markets generated positive returns, with overseas performance enhanced
in sterling terms as a result of the pound's fall against other major
currencies. The MSCI AC World Total Return and MSCI UK Total Return Indices
gained 13.92% and 3.43% respectively while UK government bonds returned 13.50%.
Further information is provided in the investment manager's report.
EARNINGS AND DIVID
The revenue return for the year was 0.27p per share (2015: 0.49p).
Your Company has a small revenue surplus in its retained revenue reserve, which
will enable it to pay a dividend. Your Directors recommend the payment of a
final dividend in respect of the year of 0.3p per share (2015: 0.3p).
OUTLOOK
The shift in monetary conditions since early 2016 should be positive for
equities and bonds. Emerging market assets, in particular equities, may recover
further given their low relative valuations. Improvements in developing
economies' trade balances may also underpin recoveries in their currencies,
particularly against sterling, which could weaken further if Brexit talks prove
difficult. Your Company has maintained a significant allocation to these
investments. Over the coming months, the US presidential election and the start
of UK "Brexit" negotiations will influence market returns. Your Company's
investments in cash, lower-risk assets and gold equities should provide some
diversification and prove defensive during periods of market stress. Central
banks in aggregate, however, continue to pursue supportive monetary policies
while the pace of interest rate rises by the US Federal Reserve is likely to be
slow.
CASH AND BORROWINGS
Your Company has no borrowings and ended its financial year with cash
representing 11.13% (2015: 14.89%) of its net asset value. Your Company is
likely to maintain a significant cash position.
The Company is a small registered Alternative Investment Fund Manager under the
European Union directive. The Company's assets now exceed 100 million euros. As
a result, should it wish to borrow it would require a change in regulatory
permissions.
DISCOUNT
Your Company's shares continued to trade at a significant discount to their NAV
during the year under review. Your Directors have discussed various options
with a view to reducing this discount but no satisfactory solution has yet been
found. This position is, however, kept under continual review by the board.
Annual meeting
The annual general meeting will be held at 1 Knightsbridge Green, London SW1X
7QA on Thursday, 3rd November 2016 at 11am.
Net asset value
Your Company's unaudited net asset value per share at 31st August 2016 was
134.45p.
INVESTMENT MANAGER'S REPORT
MARKET REVIEW
In December 2015, US Federal Reserve members voted unanimously to raise
interest rates for the first time since 2007. After seven years of exceptional
measures, members considered a change in monetary policy to be justified
because unemployment had halved from its post credit crisis peak of 10% in
October 2009 to 5% six years later in October 2015 and the US economy had
continued to expand steadily. Inflation, however, remained below the Fed's 2%
target but its chair, Janet Yellen, considered this to be a "transitory"
consequence of the sharp oil price fall. Members recognised that there were
"downside risks" to the US economy from global economic and financial
developments but these were ultimately considered to be "balanced" by the
stronger domestic picture.
In raising rates, Fed members acted in the interests of the US economy but one
of the broader consequences of this widely-anticipated monetary policy shift is
a stronger dollar. Unfortunately, the dollar's strength exacerbated some of
those global risks recognised by the Fed. Global equity markets seemingly took
December's interest rate rise in their stride but fell sharply in the early
days of 2016. The close link between the dollar and the Chinese currency in
recent years has resulted in a strong renminbi at a time when Chinese economic
growth has been slowing and has led to a substantial reduction in China's
export competitiveness. Chinese policy makers responded without warning in
August 2015 and January 2016 by allowing the renminbi to depreciate against the
dollar. These episodes of Chinese currency weakness coincided with falling oil
prices and sparked fears of global deflation.
At the time of the US interest rate rise, many commentators expected a
succession of rises during 2016. The fall in equity markets and corresponding
increase in market volatility in January was, however, succeeded by
weaker-than-anticipated economic data, raising concerns that economic growth
could falter. In the light of these events, the Fed did not tighten monetary
policy further during the second half of your Company's financial year. The
looming UK referendum on European Union (EU) membership may also have caused
the Fed to stay its hand. In September 2016, however, a further interest rate
rise in late 2016 was expected.
In June, pollsters, bookmakers and investors were wrong-footed when the UK
electorate voted to leave the EU. Some 51.9% of those who voted chose Brexit,
leaving 48.1% facing an outcome they had not endorsed. Importantly, a majority
of voters in Scotland and Northern Ireland voted to remain, potentially sowing
the seeds of another testing time for the union. The high turnout on polling
day was testament to the strength of opinion across the country as practical
consideration of the pros and cons of EU membership were swept up with issues
related to globalisation and national identity.
Predictions that a Brexit vote would precipitate sustained falls in risky asset
prices proved unfounded as global equities emerged from post-referendum
turbulence to post gains of 13.92% in sterling terms during your Company's
financial year. The gains were fuelled by sterling weakness as the pound fell.
This proved a "silver lining" for UK equities, which recovered from initial
falls to gain 3.43% over the year because sterling-weakness improved export
competitiveness and increased the value of overseas profits in sterling terms
and may even
offset the impact of any future trade tariffs. The rally in global equities
extended beyond your Company's year- end, with US shares reaching record highs
in August.
Interest rate expectations adjusted swiftly following the surprise Brexit vote
as the prospect of monetary tightening receded. Weak May US employment data and
downward revisions to data for the two preceding months had already pushed bond
yields lower. UK gilts gained 13.50% over the year as yields hit historic lows.
The Bank of England signalled after the Brexit vote that it would increase its
support for the economy. In August, after your Company's year end, the Bank's
Monetary Policy Committee cut the bank rate for the first time since 2009,
reducing it from 0.5% to 0.25%. Renewed quantitative easing and measures to
encourage bank lending were also announced and interest rates may be reduced
further if the economy worsens.
Even after recovering from its low in February, the oil price still finished
the year down 30.89%. The weak oil price is a consequence of over-supply
following Saudi Arabia's decision to maintain market share in the face of
increased competition from US shale producers. In the last months of your
Company's year, the cumulative decline in US oil output brought supply and
demand closer to equilibrium. Financial distress among US shale producers may
also have convinced Saudi Arabia and other Opec countries that higher oil
prices would not immediately lead to a recovery in US output. The recent
recoveries in prices for oil and other commodities, the receding prospect of US
interest rate rises and some respite from dollar strength contributed to rises
in emerging market equities. Equities in Asia excluding Japan and emerging
markets underperformed global equities during the year but by early September
2016 they had risen significantly from their values at your Company's year-
end.
PORTFOLIO REVIEW
During the year under review, New Star Investment Trust's Total Return was
12.06%. Your Company ended the year with significant investments in cash and
gold securities although the majority of its assets were in global equities. By
comparison, the Investment Association's Mixed Investment 40-85% Shares Index,
which measures a peer group of funds with a multi-asset approach to investing
and a typical investment in equities in the 40-85% range, rose 2.20%. The MSCI
AC World Total Return Index gained 13.92% in sterling and the MSCI UK Total
Return Index gained 3.43% in sterling. Global equities outperformed UK peers in
sterling terms primarily because most major currencies strengthened against
sterling. Gilts also rose strongly, returning 13.50% as yields fell to historic
lows. Your Company had no direct investments in bonds because they appeared
expensive but this did not negatively affect performance because of the high
allocation to global equities, which generated a similar return.
The strong gains made by many currencies relative to sterling contributed
significantly to your Company's overall performance. As a result of global
diversification across asset classes, a majority of your company's assets were
held in investments denominated in foreign currencies. The dollar, euro and
yen, for example, strengthened 17.65%, 17.30% and 40.32% respectively against
the pound during the year. In consequence, the decision to invest your
Company's cash in dollars was a major positive contributor to overall returns.
Your Company invests principally through actively-managed funds. The managers
of your company's two largest investments, FP Crux European Special Situations
and Fundsmith Equity, outperformed strongly. FP Crux European Special
Situations rose 14.35% while Europe ex-UK equities gained 5.84% in sterling.
Fundsmith Equity gained 33.56% while global equities rose 13.92% in sterling.
Lindsell Train Japanese Equity also generated significant outperformance,
rising 29.89% while Japanese equities gained 9.5% in sterling. All three
managers have well-defined approaches to stock selection and remain committed
to their core holdings for long periods of time.
Your Company's investments in income-focused funds increased over the year. In
November 2015, Artemis Global Income, Newton Global Income and Man GLG UK
Income were added. In January 2016, Trojan Income was added and the Liontrust
Asia Income and Newton Global Income holdings were increased. These additions
contributed to your Company's ability to pay a maintained dividend to
shareholders for the year. The reduction in US interest rate expectations
during the second half of the year led to good returns from high-yielding
assets as a result of demand from income-seeking investors. These purchases
were funded through sales of lower-yielding investments including sales of
Artemis UK Special Situations, the iShares FTSE 250 exchange-traded fund (ETF),
the BH Global investment trust, the Gold Bullion Securities ETF and Aberdeen
Asia Pacific and a reduction in the holding in Trojan.
Gold also benefited from investors' growing convictions that the pace of future
US interest rate rises would be slower than anticipated, rising 32.06% in
sterling. The opportunity cost of holding this nil-yielding asset is lower when
interest rates are low. Gold-mining stocks did even better because most of
their costs are fixed so the impact on their earnings of a gold price change is
magnified. In consequence, Blackrock Gold & General was the portfolio's best
performer, gaining 76.27%.
The EU referendum result proved particularly challenging for UK commercial
property. The prospects for City of London offices are now uncertain as London
could be rendered less attractive as a financial centre by an unfavourable
Brexit settlement with the EU. In consequence, some UK property funds suspended
dealings or imposed significant dilution levies on transactions to reflect the
difficulty of selling illiquid assets at short notice. Your Company was not
affected by these developments because it had no direct investments in UK
property funds during the year.
UK equities gained 3.43% during the year as sterling's fall increased the
competitiveness of exporters. UK smaller companies typically have a lower
proportion of export sales than larger peers and consequently underperformed,
falling 6.58%. This adversely impacted MI Brompton UK Recovery and Aberforth
Geared Income, which fell 5.64% and 4.85% respectively.
Global consumers benefited from increased disposable incomes as a result of the
weaker oil price, down 30.89% in sterling during the year. Fundsmith Equity's
concentrated portfolio of consumer-orientated businesses with strong brand
franchises captured this trend. Oil importing countries such as India also
benefited from low oil prices. This trend and the reforms of Narendra Modi, the
prime minister, led to a 14.75% gain for First State Indian Subcontinent.
Emerging markets generally underperformed during the year although they
recovered strongly in the weeks after the year end. Asia ex-Japan and emerging
market equities both gained 3.86% in sterling during the year. Wells Fargo
China fell 6.71%, however, as investors remained cautious following China's
currency devaluations in August 2015 and January 2016, which led to sharp falls
in Chinese equities.
The six FP Brompton multi-asset funds all delivered positive returns during the
year and outperformed their respective benchmarks.
OUTLOOK
The shift in monetary conditions that occurred in early 2016 should be positive
for equities and bonds. Emerging market assets, in particular equities, may
recover further given their low relative valuations. Improvements in the
current account balances of many developing economies may also underpin
recoveries in their currencies, particularly against sterling, which could
weaken further if Brexit talks prove difficult. There is also further capacity
for monetary easing, with India likely to cut interest rates if food inflation
eases following the monsoon season. Your Company has maintained a significant
allocation to these investments.
Over the coming months, unpredictable political events such as the US
presidential election and the start of UK "Brexit" negotiations will influence
market returns. Your Company's investments in cash, gold equities and the FP
Brompton Global Conservative Fund should provide some diversification and prove
defensive at times of stress in markets. Central banks in aggregate continue to
pursue highly-supportive monetary policies and although the Fed is expected to
raise rates further the rate of increase is likely to be slow.
SCHEDULE OF TWENTY LARGEST INVESTMENTS
30th June
2016
Holding Activity Bid-market Percentage of
value invested
GBP '000 portfolio
FP Crux European Special Situations Investment Fund 9,803 12.34
Fund
Fundsmith Equity Fund Investment Fund 8,106 10.20
Newton Global Income Fund Investment Fund 6,417 8.07
Blackrock Gold & General Fund Investment Fund 4,796 6.04
FP Brompton Global Conservative Fund Investment Fund 3,669 4.62
Aberforth Geared Income Trust Investment Company 3,361 4.23
Artemis Global Income Fund Investment Fund 3,254 4.09
First State Indian Subcontinent Fund Investment Fund 2,904 3.65
Polar Capital Global Technology Fund Investment Fund 2,868 3.61
Aquilus Inflection Fund Investment Fund 2,779 3.50
Liontrust Asia Income Fund Investment Trust 2,338 2.94
Trojan Income Fund Investment Fund 2,286 2.88
FP Brompton Global Opportunities Fund Investment Fund 2,259 2.84
Lindsell Train Japanese Equity Fund Investment Fund 2,170 2.73
Man GLG UK Income Fund Investment Fund 2,163 2.72
Neptune Russia & Greater Russia Fund Investment Fund 2,162 2.72
FP Brompton Global Growth Fund Investment Fund 2,158 2.72
FP Brompton Global Equity Fund Investment Fund 2,044 2.57
FP Brompton Global Income Fund Investment Fund 2,015 2.54
MI Brompton UK Recovery Unit Trust Investment Fund 1,958 2.46
69,510 87.47
Balance held in 16 investments 9,957 12.53
Total investments 79,467 100.00
The investment portfolio can be further analysed as
follows:
GBP '000
Investment funds 74,085
Investment companies and ETFs 3,361
Other quoted investments 441
Unquoted investments 1,580
79,467
SCHEDULE OF TWENTY LARGEST INVESTMENTS
30th June
2015
Holding Activity Bid-market Percentage of
value invested
GBP '000 portfolio
FP Crux European Special Situations Investment Fund 8,573 12.59
Fund
Fundsmith Equity Fund Investment Fund 6,069 8.91
Artemis UK Special Situations Fund Investment Fund 4,102 6.02
Aberforth Geared Income Trust Investment Company 3,722 5.47
FP Brompton Global Conservative Fund Investment Fund 3,515 5.16
Trojan Investment Fund Investment Fund 3,150 4.63
BlackRock Gold & General Fund Investment Fund 2,710 3.98
Aquilus Inflection Fund Investment Fund 2,586 3.80
First State Indian Subcontinent Fund Investment Fund 2,514 3.69
Polar Capital Global Technology Fund Investment Fund 2,409 3.54
FP Brompton Global Opportunities Fund Investment Fund 2,130 3.13
FP Brompton Global Growth Fund Investment Fund 2,090 3.07
PFS Brompton UK Recovery Unit Trust Investment Fund 2,075 3.05
FF Brompton Global Income Fund Investment Fund 1,981 2.91
Gold Bullion Securities ETF Exchange Traded Fund 1,975 2.90
FP Brompton Global Equity Fund Investment Fund 1,870 2.75
Neptune Russia & Greater Russia Fund Investment Fund 1,849 2.72
FP Brompton Global Balanced Fund Investment Fund 1,764 2.59
Schroder European Alpha Income Fund Investment Fund 1,716 2.52
Lindsell Train Japanese Equity Fund Investment Fund 1,693 2.49
58,493 85.92
Balance held in 14 investments 9,593 14.08
Total investments 68,086 100.00
The investment portfolio can be further analysed as
follows:
GBP '000
Investment funds 57,726
Investment companies and ETFs 8,170
Other quoted investments 627
Unquoted investments 1,563
68,086
STRATEGIC REVIEW
The strategic review is designed to provide information primarily about the
Company's business and results for the year ended 30th June 2016. The strategic
review should be read in conjunction with the Chairman's Statement and the
Investment Manager's Report, which provide a review of the year's investment
activities of the Company and the outlook for the future.
STATUS
The Company is an investment company under section 833 of the Companies Act
2006. It is an Approved Company under the Investment Trust (Approved Company)
(Tax) Regulations 2011 (the 'Regulations') and conducts its affairs in
accordance with those Regulations so as to continue to gain exemption from
liability to United Kingdom capital gains tax.
The Company is a small registered Alternative Investment Fund Manager under the
European Union Directive.
INVESTMENT OBJECTIVE AND POLICY
Investment Objective
The Company's investment objective is to achieve long-term capital growth.
Investment Policy
The Company's investment policy is to allocate assets to global investment
opportunities through investment in equity, bond, commodity, real estate,
currency and other markets. The Company's assets may have significant
weightings to any one asset class or market, including cash.
The Company will invest in pooled investment vehicles, exchange traded funds,
futures, options, limited partnerships and direct investments in relevant
markets. The Company may invest up to 15% of its net assets in direct
investments in relevant markets.
The Company will not follow any index with reference to asset classes,
countries, sectors or stocks. Aggregate asset class exposure to any one of the
United States, the United Kingdom, Europe ex UK, Asia ex Japan, Japan or
Emerging Markets and to any individual industry sector will be limited to 50%
of the Company's net assets, such values being assessed at the time of
investment and for funds by reference to their published investment policy or,
where appropriate, the underlying investment exposure.
The Company may invest up to 20% of its net assets in unlisted securities
(excluding unquoted pooled investment vehicles) such values being assessed at
the time of investment.
The Company will not invest more than 15% of its net assets in any single
investment, such values being assessed at the time of investment.
Derivative instruments and forward foreign exchange contracts may be used for
the purposes of efficient portfolio management and currency hedging.
Derivatives may also be used outside of efficient portfolio management to meet
the Company's investment objective. The Company may take outright short
positions in relation to up to 30% of its net assets, with a limit on short
sales of individual stocks of up to 5% of its net assets, such values being
assessed at the time of investment.
The Company may borrow up to 30% of net assets for short term funding or long
term investment purposes.
No more than 10%, in aggregate, of the value of the Company's total assets may
be invested in other closed-ended investment funds except where such funds have
themselves published investment policies to invest no more than 15% of their
total assets in other listed closed-ended investment funds.
Information on the Company's portfolio of assets with a view to spreading
investment risk in accordance with its investment policy is given above.
FINANCIAL REVIEW
Net assets at 30th June 2016 amounted to GBP89,274,000 compared with GBP79,854,000
at 30th June 2015. In the year under review, the net asset value per Ordinary
share increased by 11.8% from 112.43p to 125.70p.
The Group's gross revenue fell to GBP944,000 (2015: GBP1,081,000). Although
distributions from underlying investments increased, there was no similar
special payment from the Company's largest investment (2015: GBP148,000). After
deducting expenses and taxation the revenue profit for the year was GBP193,000
(2015: GBP344,000).
Total expenses for the year amounted to GBP751,000 (2015: GBP737,000). In the year
under review the investment management fee amounted to GBP509,000 (2015: GBP
478,000). No performance fee was payable in respect of the year under review as
the Company has not outperformed the cumulative hurdle rate. Further details on
the Company's expenses may be found in notes 3 and 4.
Dividends have not formed a central part of the Company's investment
objective. The Directors propose a final dividend of 0.3p per Ordinary share
in respect of the year ended 30 June 2016 (2015: 0.3p). If approved at the
Annual General Meeting, the dividend will be paid on 18 November 2016 to
shareholders on the register at the close of business on 4 November 2016
(ex-dividend 3 November 2016).
The primary source of the Company's funding is shareholder funds. The Company
is typically ungeared.
While the future performance of the Company is dependent, to a large degree, on
the performance of international financial markets, which, in turn, are subject
to many external factors, the Board's intention is that the Company will
continue to pursue its stated investment objective in accordance with the
strategy outlined above. Further comments on the short term outlook for the
Company are set out in the Chairman's Statement and the Investment Managers'
report.
Throughout the year the Group's investments included seven funds managed by the
Investment Manager (2015: seven). No investment management fees were payable
directly by the Company in respect of these investments.
PERFORMANCE MEASUREMENT AND KEY PERFORMANCE INDICATORS
In order to measure the success of the Company in meeting its objectives, and
to evaluate the performance of the Investment Manager, the Directors review at
each meeting: net asset value, income and expenditure, asset allocation and
attribution, share price of the Company and the discount. The Directors take
into account a number of different indicators as the Company does not have a
formal benchmark, and performance against these is shown in the Financial
Highlights.
Performance is discussed in the Chairman's Statement and Investment Manager's
report.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks identified by the Board are as follows:
- Investment strategy
- Business conditions and general economy
- Portfolio risks - including market price, foreign currency
exposure and interest rates
- Net Asset Value discount
- Investment Manager
- Tax and regulatory issues
- Operational matters
Further details on these and the steps taken to mitigate them can be found in
the annual accounts.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
30th June 2016 30th June 2015
Revenue Capital Revenue Capital
Return Return Total Return Return Total
Notes GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
INVESTMENT INCOME 2 934 - 934 1,076 - 1,076
Other operating income 2 10 - 10 5 - 5
944 - 944 1,081 - 1,081
GAINS AND LOSSES ON
INVESTMENTS
Gains on investments at
fair value through profit 9 - 7,921 7,921 - 2,574 2,574
or loss
Other exchange gains/ - 1,510 1,510 - 697 697
(losses)
Trail rebates - 9 9 - 12 12
944 9,440 10,384 1,081 3,283 4,364
EXPENSES
Management fees 3 (509) - (509) (478) - (478)
Other expenses 4 (242) - (242) (259) - (259)
(751) - (751) (737) - (737)
PROFIT BEFORE FINANCE 193 9,440 9,633 344 3,283 3,627
COSTS AND TAX
Finance costs - - - - - -
PROFIT BEFORE TAX 193 9,440 9,633 344 3,283 3,627
Tax 5 - - - - - -
PROFIT FOR THE YEAR 193 9,440 9,633 344 3,283 3,627
EARNINGS PER SHARE
Ordinary shares (pence) 7 0.27p 13.29p 13.56p 0.49p 4.62p 5.11p
The total column of this statement represents the Group's profit and loss
account, prepared in accordance with IFRS, as adopted by the European Union.
The supplementary Revenue Return and Capital Return columns are both prepared
under guidance published by the Association of Investment Companies. All
revenue and capital items in the above statement derive from continuing
operations.
The Company did not have any income or expense that was not included in 'profit
for the year'. Accordingly, the 'profit for the year' is also the 'Total
comprehensive income for the year', as defined in IAS1 (revised) and no
separate Statement of Other Comprehensive Income has been presented.
No operations were acquired or discontinued during the year.
All income is attributable to the equity holders of the parent company. There
are no minority interests.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th June 2016
Note Share Share Special Retained
capital premium reserve earnings Total
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
AT 30TH JUNE 2015 710 21,573 56,908 663 79,854
Total comprehensive income for the - - - 9,633 9,633
year
Dividend Paid 8 - - - (213) (213)
AT 30TH JUNE 2016 710 21,573 56,908 10,083 89,274
Included within Retained earnings were GBP255,000 of Company reserves available
for distribution.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th June 2015
Share Share Special Retained
capital premium reserve earnings Total
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
AT 30TH JUNE 2014 710 21,573 56,908 (2,964) 76,227
Total comprehensive income for the - - - 3,627 3,627
year
AT 30TH JUNE 2015 710 21,573 56,908 663 79,854
Included within Retained earnings were GBP276,000 of Company reserves available
for distribution.
CONSOLIDATED BALANCE SHEET
Notes 30th June 30th June
2016 2015
GBP '000 GBP '000
NON-CURRENT ASSETS
Investments at fair value through profit or loss 9 79,467 68,086
CURRENT ASSETS
Other receivables 11 55 46
Cash and cash equivalents 12 9,938 11,889
9,993 11,935
TOTAL ASSETS 89,460 80,021
CURRENT LIABILITIES
Other payables 13 (186) (167)
TOTAL ASSETS LESS CURRENT LIABILITIES 89,274 79,854
NET ASSETS 89,274 79,854
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS
Called-up share capital 14 710 710
Share premium 15 21,573 21,573
Special reserve 15 56,908 56,908
Retained earnings 15 10,083 663
TOTAL EQUITY 89,274 79,854
NET ASSET VALUE PER ORDINARY SHARE (Pence) 16 125.70p 112.43p
CASH FLOW STATEMENTS
Year ended Year ended
30th June 30th June
2016 2015
Group Group
Notes GBP '000 GBP '000
NET CASH INFLOW FROM OPERATING
ACTIVITIES 212 349
INVESTING ACTIVITIES
Purchase of Investments (14,613) (4,420)
Sale of Investments 11,153 4,092
NET CASH OUTFLOW FROM INVESTING
ACTIVITIES (3,460) (328)
FINANCING
Equity Dividends Paid 8 (213) -
NET CASH (OUTFLOW)/INFLOW AFTER (3,461) 21
FINANCING
(DECREASE)/INCREASE IN CASH (3,461) 21
RECONCILIATION OF NET CASH FLOW
TO MOVEMENT IN CASH & CASH
EQUIVALENTS
(Decrease)/Increase in cash (3,461) 21
resulting from cash flows
Exchange movements 1,510 697
Movement in net funds (1,951) 718
Net funds at 1st July 11,889 11,171
CASH & CASH EQUIVALENTS AT OF 17 9,938 11,889
YEAR
RECONCILIATION OF PROFIT BEFORE
FINANCE COSTS AND TAXATION TO NET
CASH FLOW FROM OPERATING
ACTIVITIES
Profit before finance costs and 9,633 3,627
taxation
Gains on investments (7,921) (2,574)
Exchange differences (1,510) (697)
Capital trail rebates (9) (12)
Net revenue gains before finance
costs and taxation 193 344
(Increase)/Decrease in debtors (7) 8
Increase/(Decrease) in creditors 19 (28)
Taxation (2) 13
Capital trail rebates 9 12
NET CASH INFLOW FROM OPERATING
ACTIVITIES 212 349
1. ACCOUNTING POLICIES
The financial statements of the Group have been prepared in accordance with
International Financial Reporting Standards ('IFRS'). These comprise standards
and interpretations approved by the International Accounting Standards Board
('IASB'), together with interpretations of the International Accounting
Standards and Standing Interpretations Committee ('IASC') that remain in
effect, and to the extent that they have been adopted by the European Union.
These financial statements are presented in pounds sterling, the Group's
functional currency, being the currency of the primary economic environment in
which the Group operates, rounded to the nearest thousand.
(a) Basis of preparation: The financial statements have been prepared on a
going concern basis. The principal accounting policies adopted are set out
below.
Where presentational guidance set out in the Statement of Recommended Practice
('SORP') for investment trusts issued by the Association of Investment
Companies ('AIC') in November 2014 is consistent with the requirements of IFRS,
the Directors have sought to prepare the financial statements on a
basis compliant with the recommendations of the SORP.
(b) Basis of consolidation: The Consolidated Financial Statements include the
Accounts of the Company and its subsidiary made up to 30th June 2016. No
Statement of Comprehensive Income is presented for the parent company as
permitted by Section 408 of the Companies Act 2006.
The parent company is an investment entity as defined by IFRS 10. The
consolidated accounts include subsidiaries which are an integral part of the
Group and not investee companies.
Subsidiaries are consolidated from the date of their acquisition, being the
date on which the Company obtains control, and continue to be consolidated
until the date that such control ceases. The financial statements of the
subsidiary used in the preparation of the consolidated financial statements are
based on consistent accounting policies. All intra-group balances and
transactions, including unrealised profits arising therefrom, are eliminated
(c) Presentation of Statement of Comprehensive Income: In order to better
reflect the activities of an investment trust company and in accordance with
guidance issued by the AIC, supplementary information which analyses the
Consolidated Statement of Comprehensive Income between items of a revenue and
capital nature has been presented alongside the Consolidated Statement of
Comprehensive Income.
In accordance with the Company's Articles of Association, net capital returns
may not be distributed by way of a dividend. Additionally, the net revenue is
the measure the Directors believe is appropriate in assessing the Group's
compliance with certain requirements set out in the Investment Trust (Approved
Company)(Tax) Regulations 2011.
(d) Use of estimates: The preparation of financial statements requires the
Group to make estimates and assumptions that affect items reported in the
Consolidated and Company Balance Sheets and Consolidated Statement of
Comprehensive Income and the disclosure of contingent assets and liabilities at
the date of the financial instruments. Although these estimates are based on
the Directors' best knowledge of current facts, circumstances and, to some
extent, future events and actions, the Group's actual results may ultimately
differ from those estimates, possibly significantly.
(e) Revenue: Dividends and other such distributions from investments are
credited to the revenue column of the Consolidated Statement of Comprehensive
Income on the day in which they are quoted ex-dividend. Where the Company has
elected to receive its dividends in the form of additional shares rather than
in cash and the amount of the cash dividend is recognised as income, any excess
in the value of the shares received over the amount recognised is credited to
the capital reserve. Deemed Revenue from non-reporting funds is credited to
the Revenue account. Interest on fixed interest securities and deposits is
accounted for on an effective yield basis. Deposit interest is taken into
account on a receipts basis.
(f) Expenses: Expenses are accounted for on an accruals basis. Management
fees, administration and other expenses, with the exception of transaction
charges, are charged to the revenue column of the Consolidated Statement of
Comprehensive Income. Transaction charges are charged to the capital column of
the Consolidated Statement of Comprehensive Income.
(g) Investments held at fair value: Purchases and sales of investments are
recognised and derecognised on the trade date where a purchase or sale is under
a contract whose terms require delivery within the timeframe established by the
market concerned, and are initially measured at fair value.
All investments are classified as held at fair value through profit or loss on
initial recognition and are measured at subsequent reporting dates at fair
value, which is either the bid price or the last traded price, depending on the
convention of the exchange on which the investment is quoted. Investments in
units of unit trusts or shares in OEICs are valued at the bid price for dual
priced funds, or single price for non-dual priced funds, released by the
relevant investment manager. Unquoted investments are valued by the Directors
at the balance sheet date based on recognised valuation methodologies, in
accordance with International Private Equity and Venture Capital ('IPEVC')
Valuation Guidelines such as dealing prices or third party valuations where
available, net asset values and other information as appropriate.
(h) Taxation: The charge for taxation is based on taxable income for the year.
Withholding tax deducted from income received is treated as part of the
taxation charge against income. Taxation deferred or accelerated can arise due
to temporary differences between the treatment of certain items for accounting
and taxation purposes. Full provision is made for deferred taxation under the
liability method on all temporary differences not reversed by the Balance Sheet
date. No deferred tax provision is made against deemed reporting offshore
funds.
(i) Foreign currency: Assets and liabilities denominated in foreign currencies
are translated at the rates of exchange ruling at the Balance Sheet date.
Foreign currency transactions are translated at the rates of exchange
applicable at the transaction date. Exchange gains and losses are taken to the
revenue or capital column of the consolidated statement of comprehensive income
depending on the nature of the underlying item.
(j) Capital reserve: The following are accounted for in this reserve:
- gains and losses on the realisation of investments together with the related
taxation effect;
- foreign exchange gains and losses on capital transactions, including those on
settlement, together with the related taxation effect;
- revaluation gains and losses on investments; and
- trail rebates received from the managers of the Company's investments.
The capital reserve is not available for the payment of dividends.
(k) Special reserve: The special reserve can be used to finance the redemption
and/or purchase of shares in issue.
(l) Cash and cash equivalents: Cash and cash equivalents comprise current
deposits and overdrafts with banks. Cash and cash equivalents may be held for
the purpose of either asset allocation or managing liquidity.
(m)Dividends payable: Dividends are recognised from the date on which they are
irrevocably committed to payment.
(n) Segmental Reporting: The Directors consider that the Group is engaged in a
single segment of business with the primary objective of investing in
securities to generate long term capital growth for its shareholders.
Consequently no business segmental analysis is provided.
(o) New standards, amendments to standards and interpretations effective for
annual accounting periods beginning after 1 July 2015:
There have been no new standards, amendment to standards and interpretations
effective for annual accounting periods beginning after 1 July 2015 that impact
these financial statements.
(p) Accounting standards issued but not yet effective: Standards issued but not
yet effective up to the date of issuance of the Group's Financial Statements
are listed below. This listing of standards and interpretations issued are
those the Group reasonably expects will have an impact on disclosure, financial
position and/or financial performance, when applied at a future date. The Group
intends to adopt those standards (where applicable) when they become effective.
The revised IFRS 9 Financial Instruments replaces IAS 39 and applies to the
classification and measurement and impairment of financial assets and financial
liabilities, and hedge accounting. The adoption of IFRS 9 will have an effect
on the classification and measurement of the Groups financial assets, but will
potentially have no impact on the classification and measurement of financial
liabilities. It will also introduce a new expected loss impairment model
requiring more timely recognition of expected credit losses and a reformed
model for hedge accounting with enhanced disclosure of risk management
activity. The standard is effective for annual periods beginning on or after 1
January 2018.
IFRS 15 Revenue from Contracts with Customers recognises revenue to depict the
transfer of goods or services to customers in amounts that reflect the
consideration to which the company expects to be entitled in exchange for those
goods or services. This standard may result in enhanced disclosure about
revenue. The standard is effective for years beginning on or after 1 January
2018.
Amendments to IFRS 10 Consolidated Financial Statements, clarify which
subsidiaries of an investment entity should be consolidated instead of being
measured at par value through profit and loss. The amendment also clarified
that the exemption from presenting consolidated financial statements continues
to apply to subsidiaries of an investment entity that are themselves parent
entities. The Standard is effective for years beginning on or after 1 January
2016.
2. INVESTMENT INCOME
Year ended Year ended
30th June 30th June
2016 2015
GBP '000 GBP '000
INCOME FROM INVESTMENTS
UK net dividend income 877 917
Unfranked investment income 57 156
Loan interest income - 3
934 1,076
OTHER OPERATING INCOME
Bank interest receivable 10 5
TOTAL INCOME COMPRISES
Dividends 934 1,073
Other income 10 8
944 1,081
3. MANAGEMENT FEES
Year ended Year ended
30th June 2016 30th June 2015
Revenue Capital Total Revenue Capital Total
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
Investment management fee 509 - 509 478 - 478
Performance fee - - - - - -
509 - 509 478 - 478
At 30th June 2016 there were amounts accrued of GBP138,000 (2015: GBP120,000) for
investment management fees.
A summary of the terms of the investment management agreement may be found in
the Directors' Report.
4. OTHER EXPENSES
Year ended Year ended
30th June 30th June
2016 2015
GBP '000 GBP '000
Directors' remuneration 50 50
Administrative and secretarial fee 94 92
Auditors' remuneration
- Audit 27 27
- Interim review 8 8
-Taxation compliance services* 12 22
Other 51 60
242 259
*The 2015 expenses cover two tax periods.
Allocated to:
- Revenue 242 259
- Capital - -
242 259
5. TAXATION
Factors affecting tax charge for the year:
The charge for the year of GBPnil (2015: GBPnil) can be reconciled to the profit
per the Consolidated Statement of Comprehensive Income as follows:
Year ended Year ended
30th June 30th June
2016 2015
GBP '000 GBP '000
Profit before tax 9,633 3,627
Theoretical tax at the UK corporation tax rate of 20.0% 1,927 753
(2015: 20.75%)
Effects of:
Non-taxable UK dividend income (176) (190)
Gains and losses on investments that are not taxable (1,886) (679)
Excess expenses not utilized 144 146
Overseas dividends which are not taxable (9) (30)
Total tax for the year - -
Due to the Company's tax status as an investment trust and the intention to
continue meeting the conditions required to obtain approval of such status in
the foreseeable future, the Company has not provided tax on any capital gains
arising on the revaluation or disposal of the majority of investments.
There is no deferred tax (2015: GBPnil) in the capital account of the Company.
There is no deferred tax charge in the revenue account (2015: GBPnil). No
deferred tax provision has been made for deemed reporting offshore funds.
At the year-end there is an unrecognised deferred tax asset of GBP420,000 (2015:
GBP319,000) as a result of excess expenses.
6. COMPANY RETURN FOR THE YEAR
The Company's total return for the year was GBP9,633,000 (2015: GBP3,627,000).
7. RETURN PER ORDINARY SHARE
Total return per Ordinary share is based on the Group total return on ordinary
activities after taxation of GBP9,633,000 (2015: GBP3,627,000) and on 71,023,695
(2015: 71,023,695) Ordinary shares, being the weighted average number of
Ordinary shares in issue during the year.
Revenue return per Ordinary share is based on the Group revenue profit on
ordinary activities after taxation of GBP193,000 (2015: GBP344,000) and on
71,023,695 (2015: 71,023,695) Ordinary shares, being the weighted average
number of Ordinary shares in issue during the year.
Capital return per Ordinary share is based on net capital gains for the year of
GBP9,440,000 (2015: GBP3,283,000) and on 71,023,695 (2015: 71,023,695) Ordinary
shares, being the weighted average number of Ordinary shares in issue during
the year.
8. DIVIDS ON EQUITY SHARES
Amounts recognised as distributions in the year:
Year ended Year ended
30th June 30th June
2016 2015
GBP '000 GBP '000
Dividends paid during the year 213 -
Dividends payable in respect of the year ended:
30th June 2016: 0.3p (2015: 0.3p) per share 213 213
It is proposed that a dividend of 0.3p per share will be paid in respect of the
current financial year.
9. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
Year ended Year ended
30th June 30th June
2016 2015
GBP '000 GBP '000
GROUP AND COMPANY 79,467 68,086
ANALYSIS OF INVESTMENT
PORTFOLIO
Listed* Unlisted Total
GBP '000 GBP '000 GBP '000
Opening book cost 54,175 4,427 58,602
Opening investment holding gains/(losses) 12,348 (2,864) 9,484
Opening valuation 66,523 1,563 68,086
Movement in period
Purchases at cost 14,476 137 14,613
Sales
- Proceeds (11,040) (113) (11,153)
- Realised gains/(losses) on sales 1,222 (126) 1,096
Movement in investment holding gains for the year 6,706 119 6,825
Closing valuation 77,887 1,580 79,467
Closing book cost 58,833 4,325 63,158
Closing investment holding gains/(losses) 19,054 (2,745) 16,309
Closing valuation 77,887 1,580 79,467
* Listed investments include unit trust and OEIC funds.
Year ended Year ended
30th June 30th June
2016 2015
GBP '000 GBP '000
ANALYSIS OF CAPITAL GAINS AND LOSSES
Realised gains on sales of investments 1,096 425
Increase in investment holding gains 6,825 2,149
Net gains on investments attributable to ordinary 7,921 2,574
shareholders
Transaction costs
The purchases and sales proceeds figures above include transaction costs on
purchases of GBP685 (2015: GBP525) and on sales of GBP6,373 (2015: GBPnil).
10. INVESTMENT IN SUBSIDIARY UNDERTAKING
The Company owns the whole of the issued share capital (GBP1) of JIT Securities
Limited, an investment company registered in England and Wales.
The financial position of the subsidiary is summarised as follows:
Year ended Year ended
30th June 30th June
2016 2015
GBP '000 GBP '000
Net assets brought forward 502 501
Profit for year 1 1
Net assets carried forward 503 502
11. OTHER RECEIVABLES
30th June 30th June
2016 2015
GBP '000 GBP '000
Prepayments and accrued income 52 45
Taxation 3 1
55 46
12. CASH AND CASH EQUIVALENTS
30th June 30th June
2016 2015
GBP '000 GBP '000
Cash at bank and on deposit 9,938 11,889
13. OTHER PAYABLES
30thJune 30th June
2016 2015
GBP '000 GBP '000
Accruals 186 167
14. CALLED UP SHARE CAPITAL
30th June 30th June
2016 2015
GBP '000 GBP '000
Authorised
305,000,000 (2015: 305,000,000) Ordinary shares of GBP0.01 3,050 3,050
each
Issued and fully paid
71,023,695 (2015: 71,023,695) Ordinary shares of GBP0.01 710 710
each
15. RESERVES
Share Special Retained
Premium Reserve earnings
account GBP '000 GBP '000
GBP '000
GROUP
At 30th June 2015 21,573 56,908 663
Increase in investment holding gains - - 6,825
Net gains on realisation of investments - - 1,096
Gain on foreign currency - - 1,510
Trail rebates - - 9
Retained revenue profit for year - - 193
Dividend paid (213)
At 30th June 2016 21,573 56,908 10,083
Share Special Retained
Premium Reserve earnings
account GBP '000 GBP '000
GBP '000
COMPANY
At 30th June 2015 21,573 56,908 663
Increase in investment holding gains - - 6,826
Net gains on realisation of investments - - 1,096
Gain on foreign currency - - 1,510
Trail rebates - - 9
Retained revenue profit for year - - 192
Dividend paid (213)
At 30th June 2016 21,573 56,908 10,083
15. RESERVES CONTINUED
The components of retained earnings are set out below:
30th June 30th June
2016 2015
GBP '000 GBP '000
GROUP
Capital reserve-realised (6,632) (9,247)
Capital reserve-revaluation 16,309 9,484
Revenue reserve 406 426
10,083 663
COMPANY
Capital reserve-realised (6,984) (9,599)
Capital reserve-revaluation 16,812 9,986
Revenue reserve 255 276
10,083 663
16. NET ASSET VALUE PER ORDINARY SHARE
The net asset value per Ordinary share is calculated on net assets of GBP
89,274,000 (2015: GBP79,854,000) and 71,023,695 (2015: 71,023,695) Ordinary
shares in issue at year end.
17. ANALYSIS OF CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
At 1st Cash Exchange At 30th
July 2015 flow movement June 2016
GBP '000 GBP '000
GROUP
Cash at bank and on deposit 11,889 (3,461) 1,510 9,938
18. FINANCIAL INFORMATION
2016 Financial information
The figures and financial information for 2016 are unaudited and do not
constitute the statutory accounts for the year. The preliminary statement has
been agreed with the Company's auditors and the Company is not aware of any
likely modification to the auditor's report required to be included with the
annual report and accounts for the year ended 30th June 2016.
2015 Financial information
The figures and financial information for 2015 are extracted from the published
Annual Report and Accounts for the year ended 30th June 2015 and do not
constitute the statutory accounts for that year. The Annual Report and
Accounts (available on the Company's website www.nsitplc.com) has been
delivered to the Registrar of Companies and includes the Report and Independent
Auditors which was unqualified and did not contain a statement under either
section 498(2) or section 498(3) of the Companies Act 2006.
Annual Report and Accounts
The accounts for the year ended 30th June 2016 will be sent to shareholders in
October 2016 and will be available on the Company's website or in hard copy
format at the Company's registered office, 1 Knightsbridge Green, London SW1X
7QA.
The Annual General Meeting of the Company will be held on 3rd November 2016 at
11.00am at 1 Knightsbridge Green, London SW1X 7QA.
15th September 2016
END
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