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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 | 2,141 | 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 2017
The Board is pleased to announce the Annual Financial Results for the year
ended 31 March 2017. 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 to 94.25p and the share price
gained 8.0% compared to a return of 18.3% in the benchmark.
* Since the current investment managers took on responsibility for the
portfolio in September 2012, net asset value has gained 97.0%, against a
benchmark return of 48.3%.
* Portfolio emphasises exposure to healthcare, technology and business
services.
* The portfolio is focused on medium-sized and smaller businesses, with a
competitive edge that can protect margins and deliver growth.
Financial Highlights Year to 31 March Year to 31
2017 March
2016
Total Return performance:
Net Asset Value total return +15.7% +8.1%
Share Price total return +8.0% +5.9%
Benchmark Index (IMA UK All Companies +18.3% -2.5%
Sector Average Index since 1 October
2013*)
31 March 31 March % Change
2017 2016
Capital Return performance:
Net asset value (p) 94.25 81.47 +15.7%
Share price (p) 67.50 62.50 +8.0%
FTSE All-Share Index 3,990 3,395 +17.5%
Discount 28.4% 23.3%
Gearing*** 23.8% 25.2%
Ongoing Charges ratio:
Investment management fees** - -
Other operating expenses 1.3% 1.2%
Total Return to 1 3 5 10 Launch
31 March 2017 (%) Year Years Years Years (2000)
Net Asset Value +15.7 +47.6 +31.9 +37.5 -2.8
Benchmark Index* +18.3 +30.9 +32.3 +51.8 -28.8
*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 2017 and
2016.
***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 2017, the share price gained 8.0%. Since the
current joint managers were appointed in September 2012, net asset value has
risen 97.0%, versus a benchmark return of 48.3% (total return). The Company's
share price and net asset value continued to progress in the two months since
the year end and were 74.50p and 103.52p, respectively at 31 May 2017.
Review of the year
Political and economic change created a challenging backdrop to the year under
review. In June 2016, the Brexit vote triggered a fall in the Pound and
weakness in shares of many domestically-oriented businesses. As the portfolio
tends to be more exposed to UK earnings than the FTSE 100 or FTSE All-Share
indices, this did not help performance. Then, in the closing months of 2016,
inflation began to pick-up, focusing investor interest in mining, oil and
banks. As your Company focuses on investing in growing medium sized and
smaller companies, it has little exposure to these cyclical global businesses.
In more recent months, however, this market pattern has changed, with political
and macro-economic headwinds easing. Most companies in the portfolio are
reporting good earnings progress, and investor interest has returned to
recognise their inherent business strengths.
The most significant contributions to performance came from Fevertree Drinks,
Burford Capital, 4Imprint Group, ASOS and Hutchison China Meditech. The Fund
has above average investment in healthcare, technology, business services,
travel and gaming.
During the year, new investments were made in specialist property developer,
Watkin Jones, and in radiology group, Medica. Additional investments were made
in Clinigen, Melrose and Mattioli Woods. To fund these, Shire Pharmaceuticals,
Sage, Compass and Imperial Brands were sold. This cut in FTSE 100 exposure in
favour of growing mid cap businesses recognises the opportunities a number of
medium sized companies currently have, and follows encouraging recent meetings
with management.
The Fund focuses on companies where there are self-help opportunities or
potential for acquisition, such as Kerry Group, RPC, Micro Focus and DCC. The
portfolio also includes businesses where there are good prospects for pricing
improvement and volume recovery, such as Polypipe and construction engineering
group, Severfield.
Annual General Meeting
The Annual General Meeting will be held on 15 September 2017 at SVM's offices
in Edinburgh. At the last General Meeting, shareholders approved powers for
the Company to issue shares and to buy back for cancellation, or to hold in
treasury. Your Board has directed the Manager to implement this arrangement,
operating within Board guidelines and approvals. This aims to improve
liquidity in our shares, and your Board ensure that this overall is not
dilutive to shareholders.
Outlook
Although Brexit has created some uncertainty in the short term for the UK, the
economy is proving resilient. The fall in the Pound has assisted exporters and
boosted tourism, with the Bank of England continuing to assist bank lending and
housing. There are signs that the Eurozone is returning to growth, which will
help many portfolio companies.
Despite the uptick in global growth, debt has been increasing in many nations.
This will bring disinflationary pressures in the medium term despite the
current respite. With technology maintaining pressure on margins, there remain
longer term headwinds for some cyclical sectors. The environment favours
businesses with genuine organic growth and some pricing power.
While the UK economy is not growing as fast as the US or Eurozone, it is
surprisingly robust and offers a good environment for many portfolio
companies. For most, the outlook is also helped by the strengthening global
economy. The portfolio emphasises scalable businesses operating in niches
where they have an edge that can protect margins and deliver above average
growth. Your Company remains fully invested.
Peter Dicks
Chairman
30 June 2017
MANAGER'S REVIEW
Summary
The Fund continued its strong recovery since 2012 in the 12 months to 31 March
2017. Net asset value increased by 15.7%, versus 18.3% in the benchmark, the
IA UK All Companies Sector Average. Since the current investment managers,
Margaret Lawson (lead manager) and Colin McLean, assumed portfolio
responsibility, net asset value has risen 97.0%, versus a benchmark return of
48.3% (total return). The Company's share price and net asset value continued
to progress in the two months since the year end.
Contributors to performance
Performance over the year was broadly based across a range of medium sized
growth businesses. Many of the successful portfolio companies operate scalable
business models, making use of outsourcing and external capital. Fevertree
Drinks has emerged as a major provider of premium mixers in the UK, but focuses
on branding and distribution, delegating manufacturing to others. Fevertree is
broadening its range beyond gin mixers, and its strategy is also to expand
internationally. Online retailer, ASOS, has built strengths in its website
offering and delivery, and has potential to grow its market share at the
expense of high street retailers. Hutchison China Meditech (Chi-Med) has a
research opportunity in China to develop cancer treatments, in association with
major global pharmaceutical groups. Chi-Med has used the profitability of its
consumer pharmaceutical division to finance this to date, but it has added a US
listing to its UK AIM listing, to expand its potential to raise finance for
drug development in future. These three companies are amongst the largest
listed on London's Alternative Investment Market, but have been able to grow
significantly without a full listing.
Another portfolio theme is the potential for self-help in companies - where
management can restructure, acquire or cut costs to add shareholder value.
Johnson Service Group sold its dry cleaning division, allowing it to focus on
restaurant, hotel and workwear services, which have attractive profit margins
and growth potential. GVC Holdings acquired competitor, Bwin, in 2016 and
should be able to enhance growth as well as make some cost savings as the
businesses are merged. A number of other businesses in the portfolio, such as
Rentokil and wealth manager, Mattioli Woods, have similar potential for adding
to their organic growth via selective acquisitions.
There were relatively few disappointments during the year, but the higher oil
price and terrorist attacks and terrorism in France adversely impacted
Easyjet. ITV and Restaurant Group fell after the Brexit vote raised concerns
about UK consumer confidence.
Watkin Jones develops and manages student accommodation. However, it sells the
developed properties on to institutional investors, allowing it to recover
capital and separately to win attractive management contracts. We believe its
growth outlook is strong, and it has the potential to return some capital to
investors. Eve Sleep, which was bought in May 2017, serves consumer markets
online, disrupting high street operators. The portfolio also holds online
businesses; Hostelworld, FreeAgent, Moneysupermarket, dotDigital Group and
Learning Technologies Group.
Portfolio changes
New investments were made in a number of smaller and medium sized businesses
during the year, funded by sales of larger companies. This recognised the
resilience of the British economy, and potential for some companies to benefit
from the lower level of the Pound. Sales included Reckitt & Benckiser, Glanbia,
Imperial Brands, Sage Holdings, Compass and Travis Perkins. New investments
included litigation finance specialist, Burford Capital, media consultant,
Ascential, and Vectura Medical. Additions were made to Hutchison China
Meditech, radiology services provider, Medica Group, Melrose and Clinigen.
Although the portfolio is spread across a range of sectors, the emphasis is on
healthcare, technology, business services, travel and gaming. There are no
portfolio investments in banks, oil & gas or mining. Those sectors are
dominated by large global businesses, more subject to competition and impact of
the economic cycle.
Outlook
Last year, investor attention focused on inflation prospects, and sectors that
might benefit such as banks, oil and miners. But in 2017, it is clearer that
much of the global inflation boost came from the oil price alone, boosted by
OPEC production cuts. Inflation has not yet become embedded in wages and may
not spiral to higher levels. Bond markets still reflect a belief that inflation
will be subdued in the longer term. Disinflationary forces of technology and
low productivity growth continue to constrain real wage growth globally.
New business models are emerging that are disrupting some traditional sectors
and large established companies. Scale and brands may not be sufficient to
protect some older businesses in sectors such as retailing, banking and
finance. The portfolio includes a number of the newer disruptive businesses
with significant growth potential. There is a spread of holdings to recognise
risks that individual companies may face in creating these new strategies. To
date, this approach has been rewarding for the Company.
Meetings with company managements continue to be encouraging, and portfolio
companies are making good progress. We see considerable investment opportunity
and accordingly the Fund is fully invested.
Market
Sector analysis* % Listing* % Capitalisation %
*
Consumer Services 36.7 Main Market 65.9 Small 42.9
Consumer Goods 18.2 AIM 27.6 Mid 37.6
Financials 14.3 Other 6.5 Large 19.5
Industrials 12.7
Healthcare 12.2
Technology 5.9
*Analysis is of gross exposure
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
INVESTMENT PORTFOLIO
as at 31 March 2017
Market Market
Exposure Exposure
2017 % of 2016
Stock GBP000 Net Assets GBP000
4Imprint Group 4.8 196
272
Fevertree Drinks 4.6 114
259
Johnson Service Group 4.3 223
244
GVC Holdings 3.5 135
197
Burford Capital 3.4 -
190
Paddy Power Betfair 2.9 251
166
ASOS 2.9 87
162
Hutchison China Meditech 2.8 139
158
Hikma Pharmaceuticals 2.7 200
152
Unite Group 2.6 193
149
Ten largest investments 1,949 34.5
Redrow 2.5 112
143
Supergroup 2.5 135
141
Beazley Group 2.4 113
134
Kerry Group 2.3 99
131
Workspace Group 2.3 130
130
JD Sports 2.2 71
122
ITV Television 2.2 275
122
Ryanair 2.1 66
120
FDM Group 2.0 95
118
UDG Healthcare 2.0 -
115
Twenty largest investments 3,225 57.0
Hill & Smith 2.0 -
114
Ted Baker 1.9 142
110
Dotdigital Group 1.8 -
103
Melrose 1.7 -
94
Restaurant Group 1.6 -
93
GB Group 1.6 -
91
Dechra Pharmaceuticals 1.6 -
90
Watkin Jones 1.6 -
90
Rentokil 1.6 -
89
Eco Animal Health Group 1.6 -
89
Thirty largest investments 4,188 74.0
Other investments (50 2,626 46.4
holdings)
Total investments 6,814 120.4
CFD positions exposure (1,342) (23.7)
CFD unrealised gains 2.0
111
Net current assets 1.3
77
Net assets 5,660 100.0
2017 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, are fair, balanced and understandable and provide 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, give a true and fair view of the assets,
liabilities, financial position and gain or loss of the Fund and;
* the Strategic Report 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.
By Order of the Board
Peter Dicks
Chairman
30 June 2017
Income statement
for the year to 31 March 2017
Notes Revenue Capital Total
GBP000 GBP000 GBP000
Net gain on investments at fair value 5 - 717 717
Income 1 138 - 138
Investment management fees - - -
Other expenses 2 (64) (7) (71)
Gain before finance costs and taxation 74 710 784
Finance costs (17) - (17)
Gain on ordinary activities before taxation 57 710 767
Taxation 3 1 - 1
Gain attributable to ordinary shareholders
58 710 768
Gain per Ordinary Share 4 0.96p 11.82p 12.78p
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
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 2017
Notes 2017 2016
GBP000 GBP000
Fixed Assets
Investments at fair value through profit or loss 5 5,583 4,628
Current Assets
Debtors 6 238 299
Cash at bank and on deposit 16 102
Total current assets 254 401
Creditors: amounts falling due within one year 7 (177) (137)
Net current assets 77 264
Total assets less current liabilities 5,660 4,892
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 311 (399)
Revenue reserve (436) (494)
Equity shareholders' funds 5,660 4,892
Net asset value per Ordinary Share 4 94.25p 81.47p
Statement of Changes in Equity
for the year to 31 March 2017
Share Share Special Capital Capital Revenue
capital premium reserve redemption reserve reserve
GBP000 GBP000 GBP000 reserve GBP000 GBP000
GBP000
As at 1 April 2016 300 314 5,144 27 (399) (494)
Gain attributable to
shareholders - - - - 710 58
As at 31 March 2017 300 314 5,144 27 311 (436)
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)
Cash flow statement
for the year to 31 March 2017
2017 2016
GBP000 GBP000
Operating Activities
Gain before finance costs and taxation 784 386
Adjusted for:
(Gains) on investments (717) (317)
Transaction costs 7 9
Taxation recovered 1 -
Movement in debtors 61 (279)
Movement in creditors 1 (2)
Cash flow from operating activities 137 (203)
Financing activities
Finance costs (17) (20)
Cash flow from financing activities (17) (20)
Investment Activities
Purchases of fixed asset investments (2,110) (2,702)
Sales of fixed asset investments 1,881 2,896
Cash flow from investing activities (229) 194
Movement in cash, cash equivalent and bank overdraft (109) (29)
Cash and cash equivalent as at start of the year 102 131
Cash, cash equivalent and bank overdraft as at end of
the year (7) 102
Accounting policies
Basis of preparation
The Financial Statements have been prepared on a going concern basis in
accordance with FRS 102, the "Financial Reporting Standards applicable in the
UK and Republic of Ireland" and under the AIC's Statement of Recommended
Practice "Financial Statements of Investment Trust Companies and Venture
Capital Trusts" (SORP) issued in 2014.
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
Current tax is provided at the amounts expected to be paid or received.
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.
Financial Instruments
In addition to the investment transactions described above, basic financial
instruments are entered into that result in recognition of other financial
assets and liabilities, such as investment income due but not received, other
debtors and other creditors. These financial instruments are receivable and
payable within one year and are stated at cost less impairment.
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
2017 2016
GBP000 GBP000
- dividends 138 137
- interest - -
138 137
2. Other expenses
Revenue
General expenses 32 28
Directors' fees 18 18
Auditor's remuneration - audit services 13 12
- taxation services 1 1
64 59
Capital
Transaction costs
- acquisitions 4 4
- disposals 3 5
7 9
3. Taxation
Current taxation (1) -
Deferred taxation - -
Total taxation charge for the year (1) -
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 767 366
Corporation tax (20%, 2016 - 20%) 153 73
Non taxable UK dividends (25) (25)
Non taxable investment (gains)/losses in capital (142) (61)
Movement in unutilised management expenses and NTLR 13 13
deficits
Total taxation charge for the year (1) -
At 31 March 2017, the Fund had unutilised management expenses and non trade
loan relationship ("NTLR") deficits of GBP957,000 (2016 - GBP927000).
A deferred tax asset of GBP191,000 (2016 - GBP185,000) 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 (2016 -
6,005,000) ordinary shares in issue during the year.
Total return per share is based on the total gain for the year of GBP768,000
(2016 - gain of GBP366,000).
Capital return per share is based on the net capital gain for the year of GBP
710,000 (2016 - gain of GBP308,000).
Revenue return per share is based on the revenue gain after taxation for the
year of GBP58,000 (2016 - gain of GBP58,000).
The net asset value per share is based on the net assets of the Fund of GBP
5,660,000 (2016 - GBP4,892,000) 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
2017 2016
GBP000 GBP000
Listed investments 5,583 4,628
Unlisted investments - -
Valuation as at end of year 5,583 4,628
Listed Unlisted Total
GBP000 GBP000 GBP000
Valuation as at start of year 4,628 - 4,628 4,571
Investment holding (gains)/losses 1,121 (185) 936 (1,070)
as at start of year
Cost as at start of year 3,507 185 3,692 3,501
Purchases of investments at cost 2,106 - 2,106 2,547
Proceeds from sale of investments (1,884) - (1,884) (2,901)
Transfers - - - -
Net gain/(loss) on sale of
investments 113 (50) 63 545
Cost as at end of year 3,842 135 3,977 3,692
Investment holding gains/(losses)
as at end of year 1,741 (135) 1,606 936
Valuation as at end of year 5,583 - 5,583 4,628
Net gain/(loss) on sale of
investments 113 (50) 63 545
Movement in investment holding
gains 654 - 654 (228)
Total gain/(loss) on investments 767 (50) 717 317
6. Debtors
2017 2016
GBP000 GBP000
Investment income due but not received 9 9
Amounts receivable relating to CFDs 229 290
Taxation - -
238 299
7. Creditors: amounts falling due within one year
2017 2016
GBP000 GBP000
Bank overdraft 23 -
Amounts due relating to CFDs 132 116
Other creditors 22 21
177 137
8. Share capital
Allotted, issued and fully paid
6,005,000 ordinary 5p shares (2016 - 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 investments are
denominated in Sterling and are carried at fair value. 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 2017 were valued at GBPnil
(2016 - 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 2017 and 2016 are
an abridged version of the statutory accounts for those years. The Auditor has
reported on the 2017 and 2016 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 2016 have been filed with the Registrar of
Companies and those for 2017 will be delivered in due course.
11. The Annual Report and Accounts for the year ended 31 March 2017 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 15 September 2017 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
30 June 2017
END
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July 03, 2017 10:38 ET (14:38 GMT)
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