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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Svm Uk Emerging Fund Plc | LSE:SVM | London | Ordinary Share | GB0000684174 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 65.00 | 63.00 | 67.00 | 65.00 | 65.00 | 65.00 | 0.00 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Mgmt Invt Offices, Open-end | -961k | -1.17M | -0.1948 | -3.34 | 3.9M |
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TIDMSVM
SVM UK EMERGING FUND PLC
(the "Fund")
ANNUAL FINANCIAL RESULTS
FOR THE YEARED 31 MARCH 2016
The Board is pleased to announce the Annual Financial Results for the year
ended 31 March 2016. The full Annual Report and Financial Statements, Notice of
Annual General Meeting and Form of Proxy will be posted to shareholders and be
available shortly on the Manager's website at www.svmonline.co.uk
Copies of the Annual Report have been submitted to the National Storage
Mechanism and will shortly be available for inspection at www.morningstar.co.uk
/uk/nsm
HIGHLIGHTS
* Over the 12 months, net asset value increased by 8.1% and the share price
gained 5.9% compared to a return of -2.5% in the benchmark.
* Since the current investment managers took on responsibility for the
portfolio in September 2012, net asset value has gained 70.3% against a
benchmark return of 25.4%.
* Portfolio emphasises exposure to growth in the UK economy, and improving
consumer confidence.
* The portfolio is focused on medium sized and smaller growing businesses,
where management can deliver growth via self-help.
Financial Highlights Year to 31 March Year to 31
2016 March
2015
Total Return performance:
Net Asset Value total return +8.1% +2.0%
Share Price total return +5.9% +2.2%
Benchmark Index (IMA UK All Companies -2.5% +5.6%
Sector Average Index since 1 October
2013*)
31 March 31 March % Change
2016 2015
Capital Return performance:
Net asset value (p) 81.47 75.38 +8.1%
Share price (p) 62.50 59.00 +5.9%
FTSE All-Share Index 3,395 3,664 -7.3%
Discount 23.3% 21.7%
Gearing**** 25.2% 27.4%
Ongoing Charges ratio:
Investment management fees** - -
Other operating expenses*** 1.2% 0.9%
Total Return to 1 3 5 10 Launch
31 March 2016 (%) Year Years Years (2000)
Years
Net Asset Value +8.1 +51.2 -6.7 +64.7 -16.0
Benchmark Index* -2.5 +20.6 -0.6 -20.8 -39.8
*The benchmark index for the Fund was changed to the IMA UK All Companies
Sector Average Index from 1 October 2013 prior to which the FTSE AIM Index was
used.
**The Manager has waived its management fees for the year to 31 March 2016 and
2015.
***2015 figure reduced by an accrual in respect of a prior year; without this
reduction, the ongoing charges ratio for 2015 would be 1.4%.
**** The gearing figure indicates the extra amount by which shareholders' funds
would change if total assets (including CFD position exposure and netting off
cash and cash equivalents) were to rise or fall. A figure of zero per cent
means that the Company has a nil geared position.
INVESTMENT OBJECTIVE
The investment objective of the Fund is long term capital growth from
investments in smaller UK companies. Its aim is to outperform the IMA UK All
Companies Sector Average Index on a total return basis.
CHAIRMAN'S STATEMENT
Over the 12 months to 31 March 2016, the Company's net asset value increased by
8.1% to 81.47p per share, compared to a fall of 2.5% in the benchmark, the IMA
UK All Companies Sector Average Index. Over the 12 months, the share price
gained 5.9%. Since the current joint managers were appointed in September
2012, net asset value has risen 70.3%, versus a benchmark return of 25.4%.
Since the period end, the EU Referendum result has created stock market
volatility and the Company's net asset value has been reduced.
Review of the year
Global stockmarkets drifted in the 12 months under review, and the UK was no
exception. In the first part of the period, a rise in US interest rates drove
weakness in mining, oils and banks. Fortunately, your Company has very low
exposure to these areas. In the first quarter of 2016, however, domestic UK
sectors experienced profit-taking, as fears about the EU Referendum weighed on
sentiment. Sterling and consumer sectors underperformed, and resources
recovered. There was concern about the trend of real earnings in the UK and
disinflationary pressures. Since the year end, however, in April and May, there
has been a sharp rebound in the over-sold areas. Fortunately, economic data is
now more supportive of the UK economy, and the sectors on which the portfolio
is focused are recovering. These include UK consumer and business services,
healthcare and property. The EU Referendum has created some economic and
political uncertainty, but the implications are as yet unclear.
The most significant contributions to performance came from Paddy Power,
Betfair, Dart Group, SuperGroup, Ryanair and Johnson Service Group. Paddy
Power and Betfair gained as they completed their merger, which took the
combined group into the FTSE 100. The main disappointment was Hutchison China
Meditech (HCM), which saw its shares weaken as it raised new capital when
listing on the US Nasdaq market. HCM has a strong pipeline of drug research,
and has subsequently announced new trials. The investment in Claremont
Partners, representing 0.7% of the portfolio, was written-off at the year end
recognising uncertainty over its prospects and valuation. The portfolio now
consists solely of listed companies.
During the period, the Company added to its investments in RPC Group, Imperial
Brands, Kerry Group and Sage Holdings. New investments were made in Palace
Capital, Fevertree Drinks and Autotrader. New investments emphasise businesses
with potential to grow against a background of low inflation. To fund these,
some profit was taken in Unite Group, ITV and SSP Group, and Kainos was sold.
The portfolio includes businesses where there are good self-help opportunities
or potential for acquisition, such as Kerry Group, RPC, Micro Focus and DCC.
Companies are held where there are good prospects for pricing improvement and
volume recovery, such as Imperial Brands. The Company has a balance between
cyclical exposure and investments in more defensive sectors.
The portfolio also has above average exposure to medium sized and smaller
companies which are typically growing more rapidly than the largest FTSE 100
groups. Over the longer term, medium sized companies have significantly
outperformed large ones. The current environment of low cost finance is
encouraging businesses to restructure, facilitating acquisitions and
disposals. In contrast, the largest groups tend to be more exposed to mature
markets and lower growth prospects.
Against a background of low economic growth, the Managers focus on identifying
companies that generate growing cash flow, with a good management record of
delivering shareholder value. This emphasis is core to the Company's
investment strategy. Good examples of these company characteristics include
Johnson Services Group, GVC, UDG Healthcare and RPC Group.
Annual General Meeting
The Annual General Meeting will be held on 9 September 2016 at SVM's offices in
Edinburgh. In the interim report, I said your Board is considering measures to
improve ease of dealing, recognising that liquidity in our shares is currently
low. At previous General Meetings, the Company has sought from shareholders
powers both to issue shares and to buy back for cancellation, or to hold in
treasury. We now seek shareholders' approval to permit shares to be re-issued
from treasury at a discount. Taken together with purchase of shares into
treasury at a discount, your Board does not expect this overall to be dilutive
to shareholders, but does consider it can improve liquidity. Your Board will
monitor the operation of share purchase and re-issuance very carefully and
report on this to shareholders each year.
Outlook
The Managers report that meetings with management of companies in the portfolio
continue to be predominantly favourable. While the mixed economic background
has an impact, there is good potential for organic growth in many portfolio
companies. They would benefit from further economic recovery in the UK and
Europe.
The Company emphasises exposure to the UK, and businesses with operations in
the US and Europe. Returns on cash deposits and bonds will remain very low, and
so equities that offer growth and attractive dividend yields are being sought
by investors.
The Company remains fully invested, reflecting the potential for dividend
growth, share re-ratings, and for self-help in many portfolio companies. Many
may also benefit from the lower level of sterling and lower interest rates.
Over the coming months, uncertainty on political issues may dissipate.
Peter Dicks
Chairman
1 July 2016
MANAGER'S REVIEW
Summary
The Fund continued its strong recovery since 2012 with a positive absolute and
relative performance in the 12 months to 31 March, 2016. Net asset value
increased by 8.1%, despite a fall in the benchmark. Since the current
investment managers, Margaret Lawson and Colin McLean, assumed portfolio
responsibility, net asset value has risen 70.3%, versus a benchmark return of
25.4%.
The first six months saw weak stockmarkets globally, reacting to falls in
commodity and energy prices. Economic data pointed to a marked slowdown in the
Chinese economy, and deflationary pressures persisted around the world. This
background encouraged profit-taking in many medium-sized and smaller companies.
However, it was the major mining and oil groups that were hit hardest, and the
Fund has low exposure to these sectors. Although the UK moved briefly into
deflation, the consumer sectors in which the Fund is invested were helped by
some improvement in real wages. The Fund primarily generated its absolute
performance over the last three months of 2015 as it became clearer that there
was potential for further stimulation in the Eurozone and China, with only
gradual US rate rises likely.
The financing background for business remains favourable, with extremely low
interest rates, and we expect more restructuring and merger activity. The Fund
emphasises smaller and medium sized growth businesses that are typically less
well researched, giving opportunity to identify value through company meetings
and fundamental analysis.
The Managers believe that the biggest risk to investment performance is poor
underlying long term returns in a business. This is often created by bad
management or governance, or simply by being in an area that is likely to be
disrupted by new entrants. Businesses that collapse typically show high levels
of borrowing, poor governance, weak business models or questionable
accounting. These can be value traps - few are good at pricing inherently
risky businesses.
Contributors to performance
During the year, the strongest contributions to performance were from Paddy
Power Betfair, Dart Group, Supergroup, Ryanair, Johnson Service Group and
4Imprint Group. Betfair and Paddy Power gained as they completed their merger,
creating a GBP6bn betting business. This joined the FTSE 100 in March 2016. The
main disappointment was in Restaurant Group, which reported a challenging
trading environment.
Other portfolio investments in consumer services include Domino Pizza,
Autotrader and Cineworld. Consumer goods and services represent 56% of the
total portfolio. The gaming sector is undergoing restructuring
internationally, as regulations change. It is a growing industry, and apart
from Paddy Power Betfair, the portfolio includes investments in GVC Holdings
and Playtech. There are also investments in more disruptive business models
where new entrants have an advantage in technology or business strategy. The
lower oil cost and improving consumer confidence should benefit travel
businesses, many of which have also proved able to manage costs aggressively.
This is an area of focus for the Fund, and includes Ryanair, SSP, Dart Group
and Easyjet.
Some 17% of the portfolio is invested in the financial sector, with all of this
in non-bank financials. The largest single group within this are Real Estate
Investment Trusts and other property companies. These investments - Helical
Bar, St Modwen Properties, Workspace Group, Londonmetric Property and Unite
Group - focus on effective management teams, typically with a specialisation.
Workspace provides tailored business premises for early stage businesses in
London, and Unite specialises in student residential accommodation throughout
the UK. Londonmetric invests across the UK, with an emphasis on logistics and
distribution properties.
Portfolio changes
The Fund added to its investments in RPC Group, Sage Holdings, GVC, Dalata
Hotel Group, Kerry Group and Imperial Brands. Additions and new investments
emphasise businesses with potential to grow against a background of low
inflation. To fund these, some profit was taken in Unite Group and Workspace
Group.
Themes in the purchases include exposure to global recovery and potential for
restructuring or self-help. Each new investment has at least one of these
characteristics, and all have growth potential. Portfolio exposure to unquoted
investments has been steadily reduced over the past three years and is now
zero. The Managers do not plan to make any new unquoted investments in the
current year.
Outlook
Signals remain mixed, and above average cash levels show investor uncertainty.
When cash is consensus, it often ends up being reinvested at higher market
levels. Recovery in the US, Eurozone and UK continues to exceed most forecasts.
Many UK-listed international companies are also benefiting from the recovery in
the global economy.
Your Fund remains fully invested, reflecting the potential for dividend growth
and share re-ratings in many portfolio companies. The portfolio emphasises
consumer sectors, property, healthcare and business services.
Market
Sector analysis* % Listing* % Capitalisation %
*
Consumer AIM 18.9 Small 31.1
Services 38.6 Other 5.9 Mid 41.0
Industrials 12.5 Main Market 75.2 Large 27.9
Financials 16.6
Consumer Goods 17.7
Technology 4.4
Health Care 9.2
Basic Materials 1.0
*Analysis is of gross exposure
INVESTMENT PORTFOLIO
as at 31 March 2016
Market Market
Exposure Exposure
2016 % of 2015
Stock GBP000 Net Assets GBP000
ITV Television 351
275 5.6
Paddy Power -
Betfair 251 5.1
Johnson Service 166
Group 223 4.6
Hikma 163
Pharmaceuticals 200 4.1
4imprint Group 160
196 4.0
Unite Group 240
193 3.9
Dart Group 61
191 3.9
Ryanair 98
191 3.9
Ted Baker 130
142 2.9
Hutchison China 87
Meditech 139 2.8
Ten largest
investments 2,001 40.8
GVC Holdings 125
135 2.8
Supergroup 91
135 2.8
Workspace Group 209
130 2.7
Fevertree -
Drinks 114 2.3
Beazley Group 41
113 2.3
Redrow 101
112 2.3
St James Place 112
110 2.2
Henderson Group 118
108 2.2
Imperial Brands 63
102 2.1
Shire 135
Pharmaceuticals 100 2.0
Twenty largest
investments 3,160 64.5
Travis Perkins 106
100 2.0
Kerry Group -
99 2.0
FDM Group 31
95 1.9
Tui Travel 98
89 1.8
M&C Saatchi 93
89 1.8
Crest Nicholson 66
88 1.8
Whitbread 115
87 1.8
Greggs -
87 1.8
ASOS 78
87 1.8
DS Smith -
79 1.6
Thirty largest
investments 4,060 82.8
Other 1,869
investments (39 38.3
holdings)
Total 5,929
investments 121.1
CFD positions (1,335) (27.2)
exposure
CFD unrealised 34 0.7
gains
Net current 264 5.4
assets/
(liabilities)
Net Assets 4,892 100.0
Market exposure for equity investments held is the same as fair value and for
CFDs held is the market value of the underlying shares to which the portfolio
is exposed via the contract. Further information is given in note 5 to the
financial statements. A full portfolio listing as at 31 March 2016 is detailed
on the website.
PRINCIPAL RISKS AND UNCERTAINTIES
The Directors review policies for identifying and managing the principal risks
faced by the Fund.
Many of the Fund's investments are in small companies and may be seen as
carrying a higher degree of risk than their larger counterparts. These risks
are mitigated through portfolio diversification, in-depth analysis, the
experience of the Manager and a rigorous internal control culture. Further
information on the internal controls operated for the Fund is detailed in the
Report of the Directors.
The principal risks facing the Fund relate to the investment in financial
instruments and include market, liquidity, credit and interest rate risk. An
explanation of these risks and how they are mitigated is explained in note 9 to
the financial statements. Additional risks faced by the Fund are summarised
below:
Investment strategy - The risk that an inappropriate investment strategy may
lead to the Fund underperforming its benchmark, for example in terms of stock
selection, asset allocation or gearing. The Board have given the Manager a
clearly defined investment mandate which incorporates various risk limits
regarding levels of borrowing and the use of derivatives. The Manager invests
in a diversified portfolio of holdings and monitors performance with respect to
the benchmark. The Board regularly reviews the Fund's investment mandate and
long term strategy.
Discount - The risk that a disproportionate widening of discount in comparison
to the Fund's peers may result in loss of value for shareholders. The discount
varies depending upon performance, market sentiment and investor appetite. The
Board regularly reviews the discount and the Fund operates a share buy-back
programme.
Accounting, Legal and Regulatory - Failure to comply with applicable legal and
regulatory requirements could lead to a suspension of the Fund's shares, fines
or a qualified audit report. In order to qualify as an investment trust the
Fund must comply with section 1158 of the Corporation Tax Act 2010 ("CTA").
Failure to do so may result in the Fund losing investment trust status and
being subject to Corporation Tax on realised gains within the Fund's
portfolio. The Manager monitors movements in investments, income and
expenditure to ensure compliance with the provisions contained in section 1158.
Breaches of other regulations, including the Companies Act 2006, the Listing
Rules of the UK Listing Authority or the Disclosure and Transparency Rules of
the UK Listing Authority, could lead to regulatory and reputational damage. The
Board relies on the Manager and its professional advisers to ensure compliance
with section 1158 CTA, Companies Act 2006 and UKLA Rules.
Operational - The risk of loss resulting from inadequate or failed internal
processes, people and systems or from external events. Like most other
Investment Trusts, the Fund has no employees and relies upon the services
provided by third parties. The Manager has comprehensive internal controls and
processes in place to mitigate operational risks. These are regularly
monitored and are reviewed to give assurance regarding the effective operation
of the controls.
Corporate Governance and Shareholder Relations - Details of the Fund's
compliance with corporate governance best practice, including information on
relations with shareholders, are set out in the Directors' Statement on
Corporate Governance.
Financial - The Fund's investment activities expose it to a variety of
financial risks including market, credit and interest rate risk. These risks
are explained in note 9 to the financial statements. The Board seeks to
mitigate and manage these risks through continuous review, policy setting and
enforcement of contractual obligations. The Board receives both formal and
informal reports from the Manager and third party service providers addressing
these risks. The Board believes the Fund has a relatively low risk profile as
it has a simple capital structure; invests principally in UK quoted companies;
does not use derivatives other than CFDs and uses well established and
creditworthy counterparties.
The capital structure comprises only ordinary shares that rank equally. Each
share carries one vote at general meetings.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors consider that the Annual Report and Financial Statements, taken
as a whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Fund's performance, business model and
strategy.
The Directors each confirm to the best of their knowledge that:
* the financial statements, prepared in accordance with the applicable
accounting standards, on a going concern basis, give a true and fair view of
the assets, liabilities, financial position and profit or loss of the Fund and;
* the Annual Report and Financial Statements includes a fair review of
the development and performance of the business and the position of the Fund
together with a description of the principal risks and uncertainties that it
faces.
* the Annual Report and Financial Statements includes details of
related party transactions, if any.
By Order of the Board
Peter Dicks
Chairman
1 July 2016
Income statement
for the year to 31 March 2016
Notes Revenue Capital Total
GBP000 GBP000 GBP000
Net gain on investments at fair value 5 - 317 317
Income 1 137 - 137
Investment management fees - - -
Other expenses 2 (59) (9) (68)
Gain before finance costs and taxation 78 308 386
Finance costs (20) - (20)
Gain on ordinary activities before taxation 58 308 366
Taxation 3 - - -
Gain attributable to ordinary shareholders 58 308 366
Gain per Ordinary Share 4 0.97p 5.13p 6.09p
for the year to 31 March 2015
Notes Revenue Capital Total
GBP000 GBP000 GBP000
Net gain on investments at fair value 5 - 35 35
Income 1 109 - 109
Investment management fees - - -
Other expenses 2 (37) (9) (46)
Gain before finance costs and taxation 72 26 98
Finance costs (11) - (11)
Gain on ordinary activities before taxation 61 26 87
Taxation 3 - - -
Gain attributable to ordinary shareholders 61 26 87
Gain per Ordinary Share 4 1.02p 0.43p 1.45p
The Total column of this statement is the profit and loss account of the Fund.
All revenue and capital items are derived from continuing operations. No
operations were acquired or discontinued in the year. A Statement of
Comprehensive Income is not required as all gains and losses of the Fund have
been reflected in the above statement.
Balance sheet
as at 31 March 2016
Notes 2016 2015
GBP000 GBP000
Fixed Assets
Investments at fair value through profit or loss 5 4,628 4,571
Current Assets
Debtors 6 299 20
Cash at bank and on deposit 102 131
Total current assets 401 151
Creditors: amounts falling due within one year 7 (137) (196)
Net current assets/(liabilities) 264 (45)
Total assets less current liabilities 4,892 4,526
Capital and Reserves
Share capital 8 300 300
Share premium 314 314
Special reserve 5,144 5,144
Capital redemption reserve 27 27
Capital reserve (399) (707)
Revenue reserve (494) (552)
Equity shareholders' funds 4,892 4,526
Net asset value per Ordinary Share 4 81.47p 75.38p
Statement of Changes in Equity
for the year to 31 March 2016
Share Share Special Capital Capital Revenue
capital premium reserve redemption reserve reserve
GBP000 GBP000 GBP000 reserve GBP000 GBP000
GBP000
As at 1 April 2015 300 314 5,144 27 (707) (552)
Gain attributable to
shareholders - - - - 308 58
As at 31 March 2016 300 314 5,144 27 (399) (494)
for the year to 31 March 2015
Share Share Special Capital Capital Revenue
capital premium reserve redemption reserve reserve
GBP000 GBP000 GBP000 reserve GBP000 GBP000
GBP000
As at 1 April 2014 300 314 5,144 27 (733) (613)
Gain attributable to
shareholders - - - - 26 61
As at 31 March 2015 300 314 5,144 27 (707) (552)
Cash flow statement
for the year to 31 March 2016
2016 2015
GBP000 GBP000
Operating Activities
Gain before finance costs and taxation 386 98
Adjusted for:
(Gains) on investments (317) (35)
Transaction costs 9 9
Taxation recovered - 7
Movement in debtors (279) 21
Movement in creditors (2) (39)
Cash flow from operating activities (203) 61
Financing activities
Finance costs (20) (11)
Cash flow from financing activities (20) (11)
Investment Activities
Purchases of fixed asset investments (2,702) (2,686)
Sales of fixed asset investments 2,896 2,709
Cash flow from investing activities 194 23
Movement in cash and cash equivalent (29) 73
Cash and cash equivalent as at start of the year 131 58
Cash and cash equivalent as at end of the year 102 131
Accounting policies
Basis of preparation
This is the first year that the Company has presented its financial statements
under Financial Reporting Standard 102 (FRS 102) issued by the Financial
Reporting Council and under the AIC's Statement of Recommended Practice
"Financial Statements of Investment Trust Companies and Venture Capital Trusts"
(SORP) issued in 2014. The last financial statements under previous UK GAAP
were for the year ended 31 March 2015 and the date of transition to FRS 102 was
therefore 1 April 2015. There have been no changes in accounting policies as a
consequence of adopting FRS 102. There was no adjustment to the Company's
Income Statement for the year to 31 March 2015 and the Balance Sheet as at 31
March 2015. The Cash Flow Statement for the year to 31 March 2015 has been
restated to reflect presentational changes to be consistent with the format of
FRS 102. The financial statements have been prepared on a going concern basis.
The functional and presentation currency is pounds sterling, which is the
currency of the environment in which the Company operates.
Significant Judgements and estimates
Preparation of financial statements can require management to make significant
judgements and estimates. There are no significant judgements or sources of
estimation uncertainty the Board considers need to be disclosed.
Income
Income is included in the Income Statement on an ex-dividend basis. Income on
fixed interest securities is included on an effective interest rate basis.
Deposit interest is included on an accruals basis.
Expenses and interest
Expenses and interest payable are dealt with on an accruals basis.
Investment management fees
Investment management fees, if any, are allocated 100 per cent to capital. The
allocation is in line with the Board's expected long-term return from the
investment portfolio. Due to the size of the Fund, the Manager has waived its
management fee. The terms of the investment management agreement are detailed
in the Report of the Directors.
Taxation
Deferred taxation is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more or a right to pay less tax in
the future have occurred at the balance sheet date measured on an undiscounted
basis and based on enacted tax rates. This is subject to deferred tax assets
only being recognised if it is considered more likely than not that there will
be suitable profits from which the future reversal of the underlying timing
differences can be deducted. Timing differences are differences arising between
the taxable profits and the results as stated in the financial statements which
are capable of reversal in one or more subsequent periods.
Investments
The investments have been categorised as "fair value through profit or loss".
All investments are held at fair value. For listed investments this is deemed
to be at bid prices. Contracts for Differences are synthetic equities and are
valued with reference to the investment's underlying bid prices. Unlisted
investments are valued at fair value based on the latest available information
and with reference to International Private Equity and Venture Capital
Valuation Guidelines. All changes in fair value and transaction costs on the
acquisition and disposal of portfolio investments are included in the Income
Statement as a capital item. Purchases and sales of investments are accounted
for on trade date.
Foreign currency translation
Transactions involving foreign currencies are converted at the rate ruling as
at the date of the transaction. Foreign currency monetary assets and
liabilities are retranslated into sterling at the rate ruling on the financial
reporting date.
Capital reserve
Gains and losses on realisations of fixed asset investments, and transactions
costs, together with appropriate exchange differences, are dealt with in this
reserve. All incentive fees and investment management fees, together with any
tax relief, is also taken to this reserve. Increases and decreases in the
valuation of fixed asset investments are dealt with in this reserve.
Notes to the financial statements
1. Income
Income from shares and securities
2016 2015
GBP000 GBP000
- dividends 137 109
- interest - -
137 109
2. Other expenses
Revenue
General expenses 28 6?
Directors' fees 18 18
Auditor's remuneration audit services 12 12
taxation services 1 1
59 37
? The figure for 2015 has been reduced by an accrual for Auditor's fees in
respect of a prior year of GBP20,000.
Capital
Transaction costs
- acquisitions 4 4
- disposals 5 5
9 9
3. Taxation
Current taxation - -
Deferred taxation - -
Total taxation for the year - -
The tax assessed for the year is different from the standard small company rate
of corporation tax in the UK. The differences are noted below:
Gain on ordinary activities before taxation 366 87
Corporation tax (20%, 2015 - 20%) 73 17
Non taxable UK dividends (25) (18)
Non taxable investment (gains)/losses in capital (61) (5)
Movement in unutilised management expenses and NTLR 13 6
deficits
Total taxation charge for the year - -
At 31 March 2016, the Fund had unutilised management expenses and non trade
loan relationship ("NTLR") deficits of GBP927,000 (2015 - GBP910,000).
A deferred tax asset of GBP185,000 (2015 - GBP182,000) has not been recognised on
the unutilised management expenses as it is unlikely that there would be
suitable taxable profits from which the future reversal of the deferred tax
asset could be deducted.
4. Returns per share
Returns per share are based on a weighted average of 6,005,000 (2015 -
6,005,000) ordinary shares in issue during the year.
Total return per share is based on the total gain for the year of GBP366,000
(2015 - gain of GBP87,000).
Capital return per share is based on the net capital gain for the year of GBP
308,000 (2015 - gain of GBP26,000).
Revenue return per share is based on the revenue gain after taxation for the
year of GBP58,000 (2015 - gain of GBP61,000).
The net asset value per share is based on the net assets of the Fund of GBP
4,892,000 (2015 - GBP4,526,000) divided by the number of shares in issue at the
year end as shown in note 8.
5. Investments at fair value through profit or loss
2016 2015
GBP000 GBP000
Listed investments 4,628 4,541
Unlisted investments - 30
Valuation as at end of year 4,628 4,571
Listed Unlisted Total
GBP000 GBP000 GBP000
Valuation as at start of year 4,541 30 4,571 4,421
Investment holding (gains)/losses (1,225) (155) (1,070) (896)
as at start of year
Cost as at start of year 3,316 185 3,501 3,525
Purchases of investments at cost 2,547 - 2,547 2,816
Proceeds from sale of investments (2,901) - (2,901) (2,715)
Transfers - - - -
Net gain/(loss) on sale of 545 - 545 (125)
investments
Cost as at end of year 3,507 185 3,692 3,501
Investment holding gains/(losses) 1,121 (185) 936 1,070
as at end of year
Valuation as at end of year 4,628 - 4,628 4,571
Net gain/(loss) on sale of 545 - 545 (125)
investments
Movement in investment holding (198) (30) (228) 160
gains
Total gain/(loss) on investments 347 (30) 317 35
6. Debtors
2016 2015
GBP000 GBP000
Investment income due but not received 9 12
Amounts receivable relating to CFDs 290 8
Taxation - -
299 20
7. Creditors: amounts falling due within one year
2016 2015
GBP000 GBP000
Amounts due relating to CFDs 116 23
Other creditors 21 173
137 196
8. Share capital
Allotted, issued and fully paid
6,005,000 ordinary 5p shares (2015 - same) 300 300
As at the date of publication of this document, there was no change in the
issued share capital and each ordinary share carries one vote.
9. Financial instruments
Risk Management
The Fund's investment policy is to hold investments, CFDs and cash balances
with gearing being provided by a bank overdraft. All financial instruments are
denominated in sterling and are carried at fair value. The fair value is the
same as the carrying value of all financial assets and liabilities. Where
appropriate, gearing can be utilised in order to enhance net asset value. It
does not invest in short dated fixed rate securities other than where it has
substantial cash resources. Fixed rate securities held at 31 March 2016 were
valued at GBPnil (2015 - GBPnil). Investments, which comprise principally equity
investments, are valued as detailed in the accounting policies.
The major risks inherent within the Fund are market risk, liquidity risk,
credit risk and interest rate risk. It has an established environment for the
management of these risks which are continually monitored by the Manager.
Appropriate guidelines for the management of its financial instruments and
gearing have been established by the Board of Directors. It has no foreign
currency assets and therefore does not use currency hedging. It does not use
derivatives within the portfolio with the exception of CFDs.
Market risk
The risk that the Fund may suffer a loss arising from adverse movements in the
fair value or future cash flows of an investment. Market risks include changes
to market prices, interest rates and currency movements. The Fund invests in a
diversified portfolio of holdings covering a range of sectors. The Manager
conducts continuing analysis of holdings and their market prices with an
objective of maximising returns to shareholders. Asset allocation, stock
selection and market movements are reported to the Board on a regular basis.
Liquidity risk
The risk that the Fund may encounter difficultly in meeting obligations
associated with financial liabilities. The Fund is permitted to invest in
shares traded on AIM or similar markets; these tend to be in companies that are
smaller in size and by their nature less liquid than larger companies. The
Manager conducts continuing analysis of the liquidity profile of the portfolio
and the Fund maintains an overdraft facility to ensure that it is not a forced
seller of investments.
Credit risk
The risk that the counterparty to a transaction fails to discharge its
obligation or commitment to the transaction resulting in a loss to the Fund.
Investment transactions are entered into using brokers that are on the
Manager's approved list, the credit ratings of which are reviewed periodically
in addition to an annual review by the Manager's board of directors. The
Fund's principal bankers are State Street Bank & Trust Company, the main broker
for CFDs is UBS and other approved execution broker organisations authorised by
the Financial Conduct Authority.
Interest rate risk
The risk that interest rate movements may affect the level of income receivable
on cash deposits. At most times the Fund operates with relatively low levels
of bank gearing, this has and will only be increased where an opportunity
exists to substantially add to the net asset value performance.
10. The financial information contained within this announcement does not
constitute statutory accounts as defined in sections 434 and 435 of the
Companies Act 2006. The results for the years ended 31 March 2016 and 2015 are
an abridged version of the statutory accounts for those years. The Auditor has
reported on the 2016 and 2015 accounts, their reports for both years were
unqualified and did not contain a statement under section 498 of the Companies
Act 2006. Statutory accounts for 2015 have been filed with the Registrar of
Companies and those for 2016 will be delivered in due course.
11. The Annual Report and Accounts for the year ended 31 March 2016 will
be mailed to shareholders shortly and copies will be available from the
Manager's website www.svmonline.co.uk and the Fund's registered office at 7
Castle Street, Edinburgh, EH2 3AH.
The Annual General Meeting of the Fund will be held at 9.30am on
Friday 9 September 2016 at 7 Castle Street, Edinburgh, EH2 3AH.
For further information, please contact:
Colin McLean SVM Asset
Management 0131 226 6699
Roland Cross Broadgate
Mainland 0207 726 6111
1 July 2016
END
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July 04, 2016 09:29 ET (13:29 GMT)
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