New Star IT PLC Half-year Report

 
TIDMNSI 
 
NEW START INVESTMENT TRUST PLC 
 
                                INTERIM REPORT 
 
                   For the six months ended 31 December 2016 
 
INVESTMENT OBJECTIVE 
 
The Company's objective is to achieve long term capital growth 
 
                                           31st       30th       % 
                                       December       June  Change 
                                         2016         2016 
 
PERFORMANCE 
 
Net assets (GBP '000)                      98,302     89,274    10.1 
 
Net asset value per Ordinary share      138.41p    125.70p    10.1 
 
Mid-market price per Ordinary share      94.50p     76.00p    24.3 
 
Discount of price to net asset value      31.7%      39.5%     n/a 
 
                                            Six Six months 
                                         months ended 31st 
                                          ended   December 
                                           31st       2015 
                                       December 
                                           2016 
 
NAV performance (dividend added back)    10.35%      2.52%     n/a 
 
IA Mixed Investment 40-85% Shares        10.37%     -0.48%     n/a 
(total return) 
 
MSCI AC World Index (total return,       15.55%      1.72%     n/a 
sterling adjusted) 
 
MSCI UK Index (total return)             11.52%     -3.27%     n/a 
 
 
 
                                        Six months      Six months 
                                        ended 31st           ended 
                                          December   31st December 
                                              2016            2015 
 
REVENUE 
Return (GBP'000)                                 495             112 
 
Return per Ordinary share                    0.70p           0.16p 
 
Proposed dividend per Ordinary                   -               - 
share 
 
Dividend paid per Ordinary share             0.30p           0.30p 
 
TOTAL RETURN 
Return (GBP'000)                               9,241           2,010 
 
Net assets                                   10.1%            2.3% 
 
Net assets (dividend added back)             10.4%            2.5% 
 
                             CHAIRMAN'S STATEMENT 
 
PERFORMANCE 
 
Your Company generated a total return of 10.35% over the six months to 31st 
December 2016, leaving the net asset value (NAV) per ordinary share at 138.41p. 
By comparison, the Investment Association's Mixed Investment 40-85% Shares 
Index rose 10.37%. The MSCI AC World Total Return Index gained 15.55% while the 
MSCI UK Total Return Index gained 11.52%. Over the same period, UK government 
bonds fell 1.18%. Further information is provided in the Investment Manager's 
report. 
 
Your Company made a revenue profit for the six months of GBP495,000 (2015: GBP 
112,000). 
 
GEARING AND DIVIDS 
 
Your Company has no borrowings. It ended the period under review with cash 
representing 14.9% of its NAV and is likely to maintain a significant cash 
position. Your Company has small retained revenue reserves and your Directors 
do not recommend the payment of an interim dividend (2015: nil). Your Company 
paid a dividend of 0.3p per share (2015: 0.3p) in November 2016 in respect of 
the previous financial year. 
 
DISCOUNT 
 
During the period under review, the Company's shares continued to trade at a 
significant discount to their NAV. Your Board has explored ways of reducing 
this discount but no satisfactory solution has been found. The position is, 
however, kept under continual review. 
 
OUTLOOK 
 
Political events are likely to have a significant impact on financial market 
returns during 2017. The protectionism of Donald Trump, the new US president, 
may benefit US companies but emerging market equities and bonds may be 
negatively affected by substantive threats to free trade. In Europe, political 
uncertainties include the UK's Brexit negotiations, France's forthcoming 
presidential election and general elections in Germany and Holland and, 
possibly, Italy. These elections will take place at a time of growing 
nationalist opposition to European Union institutions, free trade and open 
financial markets. 
 
Reviving inflation on both sides of the Atlantic may also affect investor 
sentiment over the coming months. US interest rates are likely to rise steadily 
over the course of the year and the Bank of England may face pressures to 
unwind its recent monetary easing following the stimulus to the UK economy 
provided by the fall in sterling over the second half of 2016. Equities tend to 
rise in the initial phase of a revival in inflation from low levels but 
longer-dated government and investment grade corporate bonds could prove 
vulnerable. 
 
NET ASSET VALUE 
 
Your Company's unaudited NAV at 31st January 2017 was 140.24p. 
 
Geoffrey Howard-Spink 
 
Chairman 
 
2 March 2017 
 
                          INVESTMENT MANAGER'S REPORT 
 
MARKET REVIEW 
 
Political events dominated financial markets during the six months to 31st 
December 2016, the key events being the UK electorate's Brexit vote just before 
the start of the period and Donald Trump's election as US president in 
November. Brexit and Trump's victory realised the worst fears of some 
observers, however, global equities advanced 15.55% in sterling terms, with the 
dollar's 8.19% rise against the pound enhancing returns for sterling investors. 
 
Market movements differed from expectations for a number of reasons. Equities 
were buoyed by the slower-than-anticipated pace of US monetary tightening. The 
Federal Reserve raised interest rates only once and then only in December. 
Investors were heartened by the steady pace of global economic growth, a 
recovery in the prices of oil and other industrial commodities and rising 
inflation. 
 
Trump's victory came to be viewed positively once investors weighed the 
expansionary impact of tax cuts, increased infrastructure spending, 
deregulation and "putting America first" on growth and inflation. US equities 
outperformed, rising 16.65% in sterling terms over the period under review. 
Trump's election focused investor attention on the rise in inflation but 
inflationary pressures were already building ahead of the vote because of 
near-full employment and rising commodity prices. US unemployment remained 
below 5% and the oil price rose 10.13% in sterling terms because of lower US 
output and an Opec supply accord. Global bonds fell 6.31% in local currency 
although this translated into a 1.36% gain for sterling investors because of 
the pound's weakness. 
 
The change in inflation expectations sparked a change in equity market 
leadership. In the wake of the credit crisis, investors favoured companies with 
dependable business models and strong market positions often secured by 
competitive advantages such as strong brands or superior technology. The stable 
nature of cash flows led to these businesses being dubbed "bond proxies". The 
valuations of these companies became stretched during 2016, making them appear 
expensive compared to more cyclical "value" stocks. The outperformance of 
"value" stocks compared to "bond proxies" that characterised the period under 
review may persist in conjunction with rising inflation. 
 
The UK economy proved resilient during the third quarter of 2016 and into the 
fourth quarter. Consumer spending remained strong despite the likely future 
squeeze on real incomes from higher import prices following sterling's fall. 
The robust growth may have resulted from the Bank of England's swift action in 
cutting interest rates, increasing quantitative easing and fostering bank 
lending but UK monetary conditions may have eased too much given the powerful 
stimulus from the weaker pound. The Bank cut its 2017 UK gross domestic product 
forecast from 2.3% to 0.8% in its August 2016 inflation report to reflect its 
fears about the impact of Brexit. This pessimistic assessment was, however, 
soon reversed and growth revised upwards to 2.0%, close to the pre-referendum 
rate, in the February 2017 inflation report. UK government bonds fell 1.18% 
over the period under review but could prove vulnerable to further falls if the 
Bank tightens monetary policy in response to stronger growth and rising 
inflation. 
 
Emerging markets were buoyed over the period by the recovery in commodity 
prices and slower-than-expected pace of US monetary tightening. The improvement 
in the current account positions of some countries contributed to gains for 
local currencies relative to sterling. Despite giving back some gains on fears 
of protectionism following Trump's election, equities in Asia excluding Japan 
and emerging markets gained 11.82% and 13.27% respectively in sterling terms. 
 
Portfolio review 
 
Your Company's total return was 10.35% over the period under review. By 
comparison, the Investment Association's Mixed Investment 40-85% Shares Index, 
which measures a peer group of funds with a multi-asset approach to investing 
and a typical investment in global equities in the 40-85% range, rose 10.37%. 
The MSCI AC World Total Return Index gained 15.55% in sterling terms while the 
MSCI UK Total Return Index rose 11.52%. Your Company benefited from its 
relatively-high holdings in foreign-currency investments. In particular, the 
majority of your Company's significant cash allocation is held in dollars. Over 
the period, profits were taken from some investments in overseas equity funds 
and reinvested in US equities and one UK private company. 
 
Rising inflation and the accompanying change in equity market leadership in 
favour of more cyclical, "value" stocks proved, however, to be a headwind for 
some of the portfolio's actively-managed funds. The managers of Fundsmith 
Equity and Newton Global Income focus on companies with stable cash flows and 
strong barriers to entry. These funds returned 10.18% and 10.46% respectively 
over the period but fell short of the 15.55% sterling gain from global 
equities. The holdings in both funds were reduced through profit-taking. 
Artemis Global Income, however, outperformed, rising 19.81% because of its 

higher holdings in cyclical companies. 
 
Your Company's largest investment, FP Crux European Special Situations, was 
also affected by the change in equity market leadership, rising 11.64% while 
equities in Europe excluding UK gained 14.60%. The holding was reduced through 
profit-taking. 
 
From an economic perspective, the outlook for Europe ex-UK equities brightened 
over the period. Economic leading indicators and employment and inflation data 
all improved but the region is confronted in 2017 by a number of elections in 
which populist, anti-European Union candidates may gain support. Your company's 
investment in Europe ex-UK equities was reduced further through the outright 
sale of Schroder European Alpha Income. 
 
Following the US election, your Company invested directly in US equities 
through purchases of the SPDR S&P 500 and iShares S&P 500 Financials Sector 
exchange-traded funds. Trump's expansionary economic policies should benefit US 
equities. Rising US bond yields and the new president's commitment to reducing 
regulatory burdens favour financial companies. A high-water mark in financial 
regulation appeared to have been reached in February 2017 when Trump signed an 
executive order to review the Dodd-Frank Wall Street Reform and Consumer 
Protection Act. During a period in which US equities gained 16.65% in sterling 
terms, your Company benefited from its significant allocation to US equities 
through investments in global equity and multi-asset funds. Polar Capital 
Technology, which typically has a high allocation to US technology companies, 
gained 18.22%. 
 
UK equities returned 11.52% as sterling's fall increased the export 
competitiveness of UK companies. All your Company's UK equity fund holdings 
outperformed because of their relatively high allocation to UK smaller 
companies, which outperformed their larger peers. Aberforth Geared Income did 
best, returning 16.41% as a result of the manager's focus on smaller companies 
and value-investing. 
 
Amongst your Company's emerging market investments, Neptune Russia & Greater 
Russia did best. It returned 38.82%, buoyed by the rouble's 13.21% rise against 
sterling and higher oil prices. The investment was reduced during the period 
through profit taking. Indian equities underperformed other emerging market 
equities, rising 5.44% in sterling terms, with their losses in local currency 
more than offset by the rupee's 7.59% gain against the pound. The Stewart 
Investors India Subcontinent holding, which returned 7.98%, was reduced through 
profit-taking. In November, India's prime- minister, Narendra Modi, announced 
the demonetisation of larger denomination bank notes to reduce corruption and 
tax evasion. The unexpected money supply reduction led to temporary falls for 
Indian equities followed by a recovery in January 2017. 
 
The rise in inflation and expectations of further monetary tightening in 2017 
resulted in a 6.25% fall in the gold price in sterling as the opportunity cost 
of holding this nil-yielding asset increased. The gold price fall led to bigger 
falls for gold equities, with BlackRock Gold & General declining 12.18%. Your 
Company's holding in this fund was reduced although the residual investment 
continues to provide an important source of diversification. In January 2017, 
the gold price recovered 3.09% in sterling terms. 
 
All six FP Brompton Global funds outperformed their respective benchmarks 
during the period under review, with FP Brompton Global Equity the strongest 
performer, rising 18.34%. FP Brompton Global Conservative was the weakest in 
absolute terms, returning 6.91% as a result of its low-risk mandate. 
 
In July, your Company invested in the unquoted Embark Group, a leading personal 
pension and small self-administered pension scheme administrator through its 
Hornbuckle and Rowanmoor brands. The industry is undergoing significant 
regulatory and technological change. These developments should provide an 
opportunity for larger players such as Embark to increase market share. 
 
Outlook 
 
Over the coming months, fresh details about Donald Trump's policies of fiscal 
stimulus and protectionism are likely to have a significant impact on financial 
markets. In Europe, meanwhile, the eurozone's stability and integrity may be 
challenged by election results. 
 
The recovery in inflation in developed economies is also likely to remain an 
important theme. Equities could prove vulnerable if inflation rises rapidly and 
precipitates a more hawkish stance on monetary policy from the Federal Reserve. 
In this event, your Company's investments in gold equities, cash and FP 
Brompton Global Conservative should provide some diversification and prove 
defensive. Equities tend to perform well, however, when inflation rises from 
subdued levels and conversely, longer-duration bonds could post losses. Your 
Company is positioned for this environment with a high allocation to global 
equities and no direct investments in bonds. 
 
Brompton Asset Management LLP 
 
2 March 2017 
 
                               DIRECTORS' REPORT 
 
PERFORMANCE 
 
In the six months to 31st December 2016 the total return per Ordinary share 
increased by 10.4% to  138.41p, whilst the share price increased by 24.3% to 
94.50p. This compares to an increase of 10.4% in the IA Mixed Investment 40-85% 
Shares Index. 
 
INVESTMENT OBJECTIVE 
 
The Company's investment objective is to achieve long-term capital growth. 
 
INVESTMENT POLICY 
 
The Company's investment policy is to allocate assets to global investment 
opportunities through investment in equity, bond, commodity, real estate, 
currency and other markets. The Company's assets may have significant 
weightings to any one asset class or market, including cash. 
 
The Company will invest in pooled investment vehicles, exchange traded funds, 
futures, options, limited partnerships and direct investments in relevant 
markets. The Company may invest up to 15% of its net assets in direct 
investments in relevant markets. 
 
The Company will not follow any index with reference to asset classes, 
countries, sectors or stocks. Aggregate asset class exposure to any one of the 
United States, the United Kingdom, Europe ex UK, Asia ex Japan, Japan or 
Emerging Markets and to any individual industry sector will be limited to 50% 
of the Company's net assets, such values being assessed at the time of 
investment and for funds by reference to their published investment policy or, 
where appropriate, their underlying investment exposure. 
 
The Company may invest up to 20% of its net asset value in unlisted securities 
(excluding unquoted pooled investment vehicles) such values being assessed at 
the time of investment. 
 
The Company will not invest more than 15% of its net assets in any single 
investment, such values being assessed at the time of investment. 
 
Derivative instruments and forward foreign exchange contracts may be used for 
the purposes of efficient portfolio management and currency hedging. 
Derivatives may also be used outside of efficient portfolio management to meet 
the Company's investment objective. The Company may take outright short 
positions in relation to up to 30% of its net assets, with a limit on short 
sales of individual stocks of up to 5% of its net assets, such values being 
assessed at the time of investment.  The Company may borrow up to 30% of net 
assets for short-term funding or long-term investment purposes.  No more than 
10%, in aggregate, of the value of the Company's total assets may be invested 
in other closed-ended investment funds except where such funds have themselves 
published investment policies to invest no more than 15% of their total assets 
in other listed closed-ended investment funds. 
 
SHARE CAPITAL 
 
The Company's share capital comprises 305,000,000 Ordinary shares of 1p each, 
of which 71,023,695 (2015: 71,023,695) have been issued fully paid.  No 
Ordinary shares are held in treasury, and none were bought back or issued 
during the six months to 31st December 2016. 
 
RISK MANAGEMENT 
 
The principal risks associated with the Company that have been identified by 
the Board, together with the steps taken to mitigate them, are as follows: 
 
Investment strategy: inappropriate long-term strategy, asset allocation and 
manager selection might lead to the underperformance of the Company. The 
Company's strategy is kept under regular review by the Board.  Investment 
performance is discussed at every Board meeting and the Directors receive 
reports detailing the Company's asset allocation, investment selection and 
performance. 
 
Business conditions and general economy: the Company's future performance is 
heavily dependent on the performance of different equity and currency markets. 
The Board cannot mitigate the risks arising from adverse market movements. 
However, diversification within the portfolio will reduce the impact.  Further 
information is given in portfolio risks below. The Board regularly considers 
the economic environment in which the Company operates. 
 
Portfolio risks - market price, foreign currency and interest rate risks: the 
twenty largest investments are listed below. Investment returns will be 
influenced by interest rates, inflation, investor sentiment, availability/cost 
of credit and general economic conditions in the UK and globally.  A proportion 
of the portfolio is in investments denominated in foreign currencies and 
movements in exchange rates could significantly affect their sterling value. 
The Investment Manager takes all these factors into account when making 
investment decisions but the Company does not normally hedge against foreign 
currency movements. The Board's policy is to hold a spread of investments, both 
asset classes and geographic regions, in order to reduce the impact of the 
risks arising from the above factors. 
 
Net Asset Value Discount: The discount in the price at which the Company's 
shares trade to Net Asset Value means that shareholders cannot realise the real 
underlying value of their investment.  Over the last few years the Company's 

share price has been at a significant discount to the Company's Net Asset 
Value.  The Directors review regularly the level of discount, however given the 
investor base of the Company, the Board is very restricted in its ability to 
control the discount to Net Asset Value. 
 
Investment Manager: the quality of the team employed by the Investment Manager 
is an important factor in delivering good performance and the loss by the 
Investment Manager of key staff could adversely affect investment returns.  The 
Company's portfolio is managed by Gill Lakin.  The Board receives a monthly 
financial report which includes information on performance, and a 
representative of the Investment Manager attends each Board meeting.  The Board 
is kept informed if any changes to the investment team employed by the 
Investment Manager are proposed. 
 
Tax and regulatory risks: a breach of The Investment Trusts (Approved company) 
(Tax) Regulations 2011 (the Regulations) could lead to capital gains realised 
within the portfolio being subject to UK capital gains tax.  A breach of the 
UKLA Listing Rules could result in suspension of the Company's shares, while a 
breach of company law could lead to criminal proceedings, or financial or 
reputational damage.  The Board employs Brompton Asset Management LLP as 
Investment 
 
Manager and Maitland Administration Services Limited as Corporate Secretary and 
Administrator to help manage the Company's legal and regulatory obligations. 
The Board receives a monthly financial report which includes information on the 
Company's compliance with the Regulations. 
 
Operational: disruption to, or failure of, the Investment Manager's or 
Administrator's accounting, dealing or payment systems or the Custodian's 
records could prevent the accurate reporting and monitoring of the Company's 
financial position. The Company is also exposed to the operational risk that 
one or more of its suppliers may not provide the required level of service. 
The Company receives regular reports from its contracted third parties. 
 
INVESTMENT MANAGEMENT ARRANGEMENT AND RELATED PARTY TRANSACTIONS 
 
In common with most investment trusts the Company does not have any executive 
directors or employees.  The day-to-day management and administration of the 
Company, including investment management, accounting and company secretarial 
matters, and custodian arrangements are delegated to specialist third party 
service providers. 
 
Details of related party transactions are contained in the Annual Report. 
There have been no material transactions with related parties during the period 
which have had a significant impact on the performance of the Company. 
 
GOING CONCERN 
 
The Directors believe that it is appropriate to continue to adopt the going 
concern basis in preparing the accounts as the assets of the Company consist 
mainly of securities that are readily realisable or cash and it has no 
significant liabilities.  Investment income exceeds annual expenditure and 
current liquid net assets cover current annual expenses for many years. 
Accordingly, the Company is of the opinion that it has adequate financial 
resources to continue in operational existence for the foreseeable future which 
is considered to be in excess of 5 years.  In reaching this view the Directors 
reviewed the anticipated level of annual expenditure against the cash and 
liquid assets within the portfolio.  The Directors have also considered the 
risks the Company faces. 
 
AUDITORS 
 
The half year financial report has been reviewed, but not audited, by Ernst & 
Young LLP pursuant to the Auditing Practices Board 
 
guidance on the Review of Interim Financial Information. 
 
RESPONSIBILITY STATEMENT 
 
The Directors confirm that to the best of their knowledge: 
 
  * The financial statements contained within the half year financial report to 
    31st December 2016 has been prepared in accordance with International 
    Accounting Standard 34 'Interim Financial Reporting'; 
  * The Chairman's statement, Directors' report or the Investment Manager's 
    report  include a fair review of important events that have occurred during 
    the first six months of the financial year and their impact on the 
    financial statements; 
  * The Chairman's statement, Directors' report or the Investment Manager's 
    report  include a fair review of the potential risks and uncertainties for 
    the remaining six months of the year; 
  * The Director's report and note 8 to the half year financial report include 
    a fair review of the information concerning transactions with the 
    investment manager and changes since the last annual report. 
 
By order of the Board 
 
Maitland Administration Services Limited 
 
2 March 2017 
 
          INDEPENT REVIEW REPORT TO NEW STAR INVESTMENT TRUST PLC 
 
INTRODUCTION 
 
We have been engaged by the Company  to review the condensed set of financial 
statements in the half-yearly financial report for the six months ended 31 
December 2016 which comprises the consolidated statement of comprehensive 
income, the consolidated statement of changes in equity, the consolidated 
balance sheet, the consolidated cash flow statement and related explanatory 
notes 1 to 8. We have read the other information contained in the half yearly 
financial report and considered whether it contains any apparent misstatements 
or material inconsistencies with the information in the condensed set of 
financial statements. 
 
This report is made solely to the company in accordance with guidance contained 
in International Standard on Review Engagements 2410 (UK and Ireland) "Review 
of Interim Financial Information Performed by the Independent Auditor of the 
Entity" issued by the Auditing Practices Board. To the fullest extent permitted 
by law, we do not accept or assume responsibility to anyone other than the 
company, for our work, for this report, or for the conclusions we have formed. 
 
DIRECTORS' RESPONSIBILITIES 
 
The half-yearly financial report is the responsibility of, and has been 
approved by, the directors. The directors are responsible for preparing the 
half-yearly financial report in accordance with the Disclosure and Transparency 
Rules of the United Kingdom's Financial Conduct Authority. 
 
As disclosed in note 1, the annual financial statements of the Group are 
prepared in accordance with IFRSs as adopted by the European Union. The 
condensed set of financial statements included in this half-yearly financial 
report has been prepared in accordance with International Accounting Standard 
34, "Interim Financial Reporting", as adopted by the European Union. 
 
OUR RESPONSIBILITY 
 
Our responsibility is to express to the Company a conclusion on the condensed 
set of financial statements in the half year financial report based on our 
review. 
 
SCOPE OF REVIEW 
 
We conducted our review in accordance with International Standard on Review 
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information 
Performed by the Independent Auditor of the Entity" issued by the Auditing 
Practices Board for use in the United Kingdom. A review of interim financial 
information consists of making enquiries, primarily of persons responsible for 
financial and accounting matters, and applying analytical and other review 
procedures. A review is substantially less in scope than an audit conducted in 
accordance with International Standards on Auditing (UK and Ireland) and 
consequently does not enable us to obtain assurance that we would become aware 
of all significant matters that might be identified in an audit. Accordingly, 
we do not express an audit opinion. 
 
CONCLUSION 
 
Based on our review, nothing has come to our attention that causes us to 
believe that the condensed set of financial statements in the half-yearly 
financial report for the six months ended 31 December 2016 is not prepared, in 
all material respects, in accordance with International Accounting Standard 34 
as adopted by the European Union and the Disclosure and Transparency Rules of 
the United Kingdom's Financial Conduct Authority. 
 
Ernst & Young LLP 
 
London 
 
2 March 2017 
 
                      SCHEDULE OF TOP TWENTY INVESTMENTS 
 
                             at 31st December 2016 
 
Holding                         Activity         Bid-market % of Net 
                                                      value   Assets 
                                                     GBP '000 
 
FP Crux European Special        Investment Fund       9,488     9.65 
Situations Fund 
 
Fundsmith Equity Fund           Investment Fund       7,945     8.08 
 
Newton Global Income Fund       Investment Fund       5,323     5.42 
 
FP Brompton Global Conservative Investment Fund       3,922     3.99 
Fund 
 
Artemis Global Income Fund      Investment Fund       3,809     3.87 
 
Aberforth Geared Income Trust   Investment            3,703     3.77 
                                Company 
 
Polar Capital Funds Plc- Global Investment Fund       3,558     3.62 
Technology Fund 
 
BlackRock Gold & General Fund   Investment Fund       3,295     3.35 
 
Aquilus Inflection Fund         Investment Fund       3,117     3.17 
 
Liontrust Asia Income Fund      Investment Fund       2,643     2.69 
 
FP Brompton Global              Investment Fund       2,575     2.62 
Opportunities Fund 
 
FP Brompton Global Growth Fund  Investment Fund       2,434     2.48 
 
FP Brompton Global Equity Fund  Investment Fund       2,419     2.46 
 
Man GLG UK Income Fund          Investment Fund       2,411     2.45 
 
Embark Group                    Unquoted              2,400     2.44 
                                investment 
 
Trojan Income Fund              Investment Fund       2,380     2.42 
 
Lindsell Train Japanese Equity  Investment Fund       2,313     2.35 
Fund 
 
MI Brompton UK Recovery Unit    Investment Fund       2,257     2.30 
Trust 
 
Stewart Investors Indian        Investment Fund       2,209     2.25 
Subcontinent Fund 
 
FP Brompton Global Income Fund  Investment Fund       2,172     2.21 
 

                                                     70,373    71.59 
 
Balance held in 17 investments                       13,519    13.75 
 
Total investments (excluding                         83,892    85.34 
cash)                                                14,410    14.66 
Net current assets                                   98,302   100.00 
Net Assets 
 
 
 
The investment portfolio can be further analysed as           cash 
follows: 
 
                                                    GBP'000 
 
Investment funds                                   72,625 
 
Investment companies and ETFs                       6,668 
Unquoted investments                                3,980 
Other quoted investments                              619 
 
                                                   83,892 
The Company's investments are either unlisted or 
are unit trust/OEIC funds with the exception of 
Aberforth Geared Income Trust, Miton Group, 
Immedia Group, iShares US Financials ETF and 
SPDR S&P UCITS ETF. 
 
                CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 
 
                  for the six months ended 31st December 2016 
 
                                  (unaudited) 
 
                                               Six months ended 
                                              31st December 2016 
                                                 (unaudited) 
 
                                            Revenue Capital   Total 
                                             Return  Return  Return 
                                     Notes   GBP '000  GBP '000  GBP '000 
 
INCOME 
 
Investment income                               942       -     942 
 
Other operating income                            9       -       9 
 
Total income                           2        951       -     951 
 
GAINS AND LOSSES ON INVESTMENTS 
 
Gains on investments at fair value     5          -   7,899   7,899 
through profit or loss 
 
Other exchange gains                              -     845     845 
 
Management fee rebates                            -       2       2 
 
                                                951   8,746   9,697 
 
EXPENSES 
 
Management fees                        3      (300)       -   (300) 
 
Other expenses                                (150)       -   (150) 
 
                                              (450)       -   (450) 
 
PROFIT BEFORE FINANCE COSTS AND TAX             501   8,746   9,247 
 
Finance costs                                     -       -       - 
 
PROFIT BEFORE TAX                               501   8,746   9,247 
 
Tax                                             (6)       -     (6) 
 
PROFIT FOR THE PERIOD                           495   8,746   9,241 
 
EARNINGS PER SHARE 
 
Ordinary shares (pence)                4      0.70p  12.31p  13.01p 
 
The total column of this statement represents the Group's profit and loss 
account, prepared in accordance with IFRS. The supplementary Revenue Return and 
Capital Return columns are both prepared under guidance published by the 
Association of Investment Companies. All items in the above statement derive 
from continuing operations. No operations were acquired or discontinued during 
the period. 
 
All income is attributable to the equity holders of the parent company. There 
are no minority interests. 
 
                CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 
 
 for the six months ended 31st December 2015 and the year ended 30th June 2016 
 
                                Six months ended          Year ended 
                               31st December 2015       30th June 2016 
                                  (unaudited)             (audited) 
 
                       Notes Revenue Capital  Total Revenue Capital  Total 
                              Return  Return Return  Return  Return Return 
                               GBP'000   GBP'000  GBP'000   GBP'000   GBP'000  GBP'000 
 
INCOME 
 
Investment income                475       -    475     934       -    934 
 
Other operating income             3       -      3      10       -     10 
 
Total income             2       478       -    478     944       -    944 
 
GAINS AND LOSSES ON 
INVESTMENTS 
 
Gains on investments 
at fair value through    5         -   1,282  1,282       -   7,921  7,921 
profit or loss 
 
Other exchange gains               -     610    610       -   1,510  1,510 
 
Management fee rebates             -       6      6       -       9      9 
 
                                 478   1,898  2,376     944   9,440 10,384 
 
EXPENSES 
 
Management fees          3     (242)       -  (242)   (509)       -  (509) 
 
Other expenses                 (124)       -  (124)   (242)       -  (242) 
 
                               (366)       -  (366)   (751)       -  (751) 
 
PROFIT BEFORE FINANCE 
COSTS AND TAX                    112   1,898  2,010     193   9,440  9,633 
 
Finance costs                      -       -      -       -       -      - 
 
PROFIT BEFORE TAX                112   1,898  2,010     193   9,440  9,633 
 
Tax                                -       -      -       -       -      - 
 
PROFIT FOR THE PERIOD            112   1,898  2,010     193   9,440  9,633 
 
EARNINGS PER SHARE 
 
Ordinary shares          4     0.16p   2.67p  2.83p   0.27p  13.29p 13.56p 
(pence) 
 
The total column of this statement represents the Group's profit and loss 
account, prepared in accordance with IFRS. The supplementary Revenue Return and 
Capital Return columns are both prepared under guidance published by the 
Association of Investment Companies. All items in the above statement derive 
from continuing operations. No operations were acquired or discontinued during 
the periods. 
 
All income is attributable to the equity holders of the parent company. There 
are no minority interests. 
 
                  CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
 
                  for the six months ended 31st December 2016 
 
                                  (unaudited) 
 
                                Share    Share Special Retained 
                              capital  premium reserve earnings  Total 
                               GBP '000   GBP '000  GBP '000   GBP '000 GBP '000 
 
At 30th JUNE 2016                 710   21,573  56,908   10,083 89,274 
 
Total comprehensive income          -        -       -    9,241  9,241 
for the period 
 
Dividend paid                       -        -       -    (213)  (213) 
 
At 31st DECEMBER 2016             710   21,573  56,908   19,111 98,302 
 
                  CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
 
                  for the six months ended 31st December 2015 
 
                                  (unaudited) 
 
                                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          -        -       -    2,010  2,010 
for the period 
 
Dividend paid                       -        -       -    (213)  (213) 
 
At 31st DECEMBER 2015             710   21,573  56,908    2,460 81,651 
 
                  CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
 
                       for the year ended 30th June 2016 
 
                                   (audited) 
 
                                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          -        -       -    9,633  9,633 
for the year 
 
Dividend paid                       -        -       -    (213)  (213) 
 
At 30th JUNE 2016                 710   21,573  56,908   10,083 89,274 
 
                          CONSOLIDATED BALANCE SHEET 
 
                             at 31st December 2016 
 
                        Notes        31st 31st December  30th June 
                                 December          2015       2016 
                                     2016   (unaudited)  (audited) 
                              (unaudited)        GBP '000     GBP '000 
                                   GBP '000 
 
NON-CURRENT ASSETS 
 
Investments at fair 
value through profit or   5        83,892        70,418     79,467 
loss 
 
CURRENT ASSETS 
 
Other receivables                      25            31         55 
 
Cash and cash                      14,580        11,370      9,938 
equivalents 
 
                                   14,605        11,401      9,993 
 
TOTAL ASSETS                       98,497        81,819     89,460 
 
CURRENT LIABILITIES 
 
Other payables                      (195)         (168)      (186) 
 
TOTAL ASSETS LESS 
CURRENT LIABILITIES                98,302        81,651     89,274 
 
NET ASSETS                         98,302        81,651     89,274 
 
EQUITY ATTRIBUTABLE TO 
EQUITY HOLDERS 
 
Called-up share capital               710           710        710 
 
Share premium                      21,573        21,573     21,573 
 
Special reserve                    56,908        56,908     56,908 
 
Retained earnings         6        19,111         2,460     10,083 
 
TOTAL EQUITY                       98,302        81,651     89,274 
 
NET ASSET VALUE PER       7       138.41p        114.96     125.70 
ORDINARY SHARE (PENCE) 
 
The interim report was approved and authorised for issue by the Board on 2 
March 2017. 
 
                       CONSOLIDATED CASH FLOW STATEMENT 
 
                  for the six months ended 31st December 2016 
 
                                     Six months  Six months      Year 
                                          ended       ended     ended 
                                           31st        31st 30th June 
                                       December    December      2016 
                                           2016        2015 (audited) 

                                    (unaudited) (unaudited)    GBP '000 
                                         GBP '000      GBP '000 
 
NET CASH INFLOW FROM OPERATING              536         134       212 
ACTIVITIES 
 
INVESTING ACTIVITIES 
 
Purchase of investments                 (5,577)     (9,129)  (14,613) 
 
Sale of investments                       9,051       8,079    11,153 
 
NET CASH INFLOW/ (OUTFLOW) FROM 
INVESTING ACTIVITIES                      3,474     (1,050)   (3,460) 
FINANCING 
 
Equity dividend paid                      (213)       (213)     (213) 
 
NET CASH INFLOW/(OUTFLOW) AFTER           3,797     (1,129)   (3,461) 
FINANCING 
 
INCREASE/ (DECREASE) IN CASH              3,797     (1,129)   (3,461) 
 
RECONCILIATION OF NET CASH FLOW TO 
MOVEMENT IN NET FUNDS 
 
Increase/ (Decrease) in cash              3,797     (1,129)   (3,461) 
resulting from cash flows 
 
Exchange movements                          845         610     1,510 
 
Movement in net funds                     4,642       (519)   (1,951) 
 
Net funds at start of period/year         9,938      11,889    11,889 
 
NET FUNDS AT OF PERIOD/YEAR          14,580      11,370     9,938 
 
RECONCILIATION OF PROFIT BEFORE 
FINANCE COSTS AND TAXATION TO NET 
CASH FLOW FROM OPERATING ACTIVITIES 
 
Profit before finance costs and           9,247       2,010     9,633 
taxation * 
 
Gains on investments                    (7,899)     (1,282)   (7,921) 
 
Exchange differences                      (845)       (610)   (1,510) 
 
Management fee rebates                      (2)         (6)       (9) 
 
Revenue profit before finance costs         501         112       193 
and taxation 
 
Decrease/(increase) in debtors               37          15       (7) 
 
Increase in creditors                         9           1        19 
 
Taxation                                   (13)           -       (2) 
 
Management fee rebates                        2           6         9 
 
NET CASH INFLOW FROM OPERATING              536         134       212 
ACTIVITIES 
 
* Includes dividends received in cash of GBP646,000 (2015: GBP298,000), accumulated 
dividend income of GBP296,000 (2015: GBP177,000) 
 
and interest income of GBP9,000 (2015: GBP3,000) 
 
                   NOTES TO THE INTERIM FINANCIAL STATEMENTS 
 
                  for the six months ended 31st December 2016 
 
1.   ACCOUNTING POLICIES 
 
These consolidated half year financial statements comprise the unaudited 
results of the Company and its subsidiary, JIT Securities Limited (together 
"the Group"), for the six months to 31st December 2016.  The comparative 
information for the six months to 31st December 2015 and the year to 30th June 
2016 do not constitute statutory accounts under the Companies Act 2006. Full 
statutory accounts for the year to 30th June 2016 included an unqualified audit 
report, did not contain any statements under section 498 of the Companies Act 
2006, and have been filed with the Registrar of Companies. 
 
The half year financial statements have been prepared in accordance with 
International Accounting Standard 34 'Interim Financial Reporting', and are 
presented in pounds sterling, as this is the Group's functional currency. 
 
The same accounting policies have been followed in the interim financial 
statements as applied to the accounts for the year ended 30th June 2016, which 
were prepared in accordance with IFRSs as adopted by the European Union. 
 
No segmental reporting is provided as the Group is engaged in a single segment. 
 
2.   TOTAL INCOME 
 
                                Six months      Six months      Year 
                                ended 31st      ended 31st     ended 
                                  December   December 2015 30th June 
                                      2016           GBP'000      2016 
                                     GBP'000 
                                                               GBP'000 
 
Income from Investments 
 
UK net dividend income                 847             454       877 
 
UK unfranked investment income          95              21        57 
 
                                       942             475       934 
 
Operating Income 
 
Bank interest receivable                 9               3        10 
 
                                         9                        10 
 
                                           3 
 
 
 
                                Six months Six months      Year 
                                ended 31st ended 31st     ended 
                                  December   December 30th June 
                                      2016       2015      2016 
                                     GBP'000      GBP'000 
                                                          GBP'000 
 
Total income comprises 
 
Dividends                              942        475       934 
 
Other income                             9          3        10 
 
                                       951        478       944 
 
3.   MANAGEMENT FEES 
 
                                Six months Six months      Year 
                                ended 31st ended 31st     ended 
                                  December   December 30th June 
                                      2016       2015      2016 
                                     GBP'000      GBP'000 
                                                          GBP'000 
 
Investment management fee              300        242       509 
 
Performance fee                          -          -         - 
 
                                       300        242       509 
 
The Investment Manager receives a management fee, payable quarterly in arrears, 
equivalent to an annual 0.75 per cent of total assets after the deduction of 
the value of any investments managed by the Investment Manager or its 
associates (as defined in the investment management agreement). The Investment 
Manager is also entitled to a performance fee of 15% of the growth in net 
assets over a hurdle of 3-month Sterling LIBOR plus 1% per annum, payable six 
monthly in arrears, subject to a high water mark. The aggregate of the 
Company's management fee and any performance fee are subject to a cap of 4.99% 
of net assets in any financial year (with any performance fee in excess of this 
cap capable of being earned in subsequent periods). The performance fee will be 
charged 100% to capital, in accordance with the Board's expectation of how any 
out-performance will be generated.  No performance fee is payable for the 
period. 
 
4.   RETURN PER ORDINARY SHARE 
 
                                Six months Six months Year ended 
                                ended 31st ended 31st  30th June 
                                  December   December       2016 
                                      2016       2015 
                                     GBP'000      GBP'000      GBP'000 
 
Revenue return                         495        112        193 
 
Capital return                       8,746      1,898      9,440 
 
Total return                         9,241      2,010      9,633 
 
Weighted average number of      71,023,695 71,023,695 71,023,695 
Ordinary shares 
 
Revenue return per Ordinary          0.70p      0.16p      0.27p 
share 
 
Capital return per Ordinary         12.31p      2.67p     13.29p 
share (before dividend) 
 
Total return per Ordinary share     13.01p      2.83p     13.56p 
(before dividend) 
 
5.   INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS 
 
                                        At         At           At 
                                      31st       31st    30th June 
                                  December   December         2016 
                                      2016       2015        GBP'000 
                                     GBP'000      GBP'000 
 
GROUP AND COMPANY                   83,892     70,418       79,467 
 
ANALYSIS OF INVESTMENT 
 
PORTFOLIO - GROUP AND COMPANY 
 
Six months ended 31st December 
2016 
 
                                   Listed* Unlisted**        Total 
                                  (level 1  (level 3) 
                                    and 2)      GBP'000 
                                     GBP'000                   GBP'000 
 
Opening book cost                   58,833      4,325       63,158 
 
Opening investment holding          19,054    (2,745)       16,309 
gains/(losses) 
 
Opening valuation                   77,887      1,580       79,467 
 
Movement in period: 
 
Purchase at cost                     3,177      2,400        5,577 
 
Sales 
 
- Proceeds                         (9,051)          -      (9,051) 
 
- Realised gains on sales            2,739          -        2,739 
 
Investment holding gains             5,160          -        5,160 
 
Closing valuation as at 31          79,912      3,980       83,892 
December 2016 
 
 
Closing book cost                   55,698      6,725       62,423 
 
Unrealised investment holding       24,214    (2,745)       21,469 
gains/(losses) 
 
Closing valuation                   79,912      3,980       83,892 
 
* Listed investments include unit trust and OEIC funds which are valued at 
quoted prices. Included within Listed Investments is one level 2 investment of 
GBP3,117,000 (2015: GBP2,612,000). 
 
** The Unlisted investments, representing approximately 4% of the Company's 
NAV, have been valued in accordance with IPEVC valuation guidelines. The 
largest unquoted investment amounting to GBP2,400,000 (2015: GBP1,280,000) was 
valued at the latest transaction price. A 10% increase or decrease in earnings 
would not have a material impact on the value of the investment. 
 
There were no reclassifications for assets between Level 1 and Level 3. 
 
                                Six months Six months      Year 
                                ended 31st ended 31st     ended 
                                  December   December 30th June 
                                      2016       2015      2016 
                                     GBP'000      GBP'000 

                                                          GBP'000 
 
ANALYSIS OF CAPITAL GAINS AND 
LOSSES 
 
Realised gains on sales of           2,739        772     1,096 
investments 
 
Increase in investment holding       5,160        510     6,825 
gains 
 
                                     7,899      1,282     7,921 
 
6.   RETAINED EARNINGS 
 
                                        At         At        At 
                                      31st       31st 30th June 
                                  December   December      2016 
                                      2016       2015     GBP'000 
                                     GBP'000      GBP'000 
 
Capital reserve - realised         (3,046)    (7,859)   (6,632) 
 
Capital reserve - revaluation       21,469      9,994    16,309 
 
Revenue reserve                        688        325       406 
 
                                    19,111      2,460    10,083 
 
7.   NET ASSET VALUE PER ORDINARY SHARE 
 
                                      31st       31st  30th June 
                                  December   December       2016 
                                      2016       2015      GBP'000 
                                     GBP'000      GBP'000 
 
Net assets attributable to          98,302     81,651     89,274 
Ordinary shareholders 
 
Ordinary shares in issue at end 71,023,695 71,023,695 71,023,695 
of period 
 
Net asset value per Ordinary       138.41p    114.96p    125.70p 
share 
 
8.   TRANSACTIONS WITH THE INVESTMENT MANAGER 
 
During the period there have been no new related party transactions that have 
affected the financial position or performance of the Group. 
 
Since 1st January 2010 Brompton has acted as Investment Manager to the Company. 
This relationship is governed by an agreement dated 23rd December 2009. 
 
Mr Duffield is the senior partner of Brompton Asset Management Group LLP the 
ultimate parent of Brompton. 
 
The total investment management fee payable to Brompton for the half year ended 
31st December 2016 was GBP300,000 (2015: GBP242,000) and at the half year end GBP 
151,000 (2015 GBP124,000) was accrued. No performance fee was payable in respect 
of the half year ended 31st December 2016 (2015: GBPnil). 
 
The Group's investments include seven funds managed by Brompton or its 
associates valued at GBP17,828,000 (2015: GBP15,504,000).  No investment management 
fees were payable directly by the Company in respect of these investments. 
 
 
 
END 
 

(END) Dow Jones Newswires

March 03, 2017 02:57 ET (07:57 GMT)