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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
North Atlantic Smaller Companies Investment Trust Plc | LSE:NAS | London | Ordinary Share | GB0006439003 | ORD 5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
80.00 | 1.98% | 4,130.00 | 3,930.00 | 4,020.00 | 4,050.00 | 3,950.00 | 4,050.00 | 4,395 | 16:35:13 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Unit Inv Tr, Closed-end Mgmt | -81.43M | -91.04M | -6.6597 | -6.04 | 549.53M |
TIDMNAS
RNS Number : 5022M
North Atlantic Smlr Co Inv Tst PLC
16 September 2019
North Atlantic Smaller Companies Investment Trust plc
Half-Yearly Report for the six months ended 31 July 2019
Registered in England and Wales number 1091347
objective of the company and financial highlights
The objective of the Company is to provide capital appreciation through investment in a portfolio of smaller companies principally based in countries bordering the North Atlantic Ocean.
31 July 31 January 2019 2019 % (unaudited) (audited) Change Net asset value ("NAV") per 5p Ordinary Share*: Basic 4,120p 3,710p 11.1 Diluted 4,118p 3,708p 11.1 Basic adjusted# 4,255p 3,776p 12.7 Diluted adjusted# 4,253p 3,774p 12.7 Mid-market price of the 5p Ordinary Shares 3,100p 2,910p 6.5 Discount to diluted net asset value 24.7% 21.5% Discount to diluted adjusted net asset value 27.1% 22.9% Standard & Poor's 500 Composite Index 2,451.2 2,062.8 18.8 Russell 2000 Index 1,295.0 1,143.8 13.2 Ongoing charges (annualised) 1.1% 1.1%
* Includes current period.
# Adjusted to reflect Oryx International Growth Fund plc ("Oryx") under the equity method of accounting, which is how the Company previously accounted for its share of Oryx, prior to the adoption of IFRS 10. This is useful to the shareholder as it shows the NAV based on valuing Oryx at NAV. See note 6.
Sterling adjusted.
chief executive's review
During the six months period under review the fully diluted net asset value rose by 12.7% (with Oryx under the equity method of accounting) as compared to a rise in the Sterling Adjusted Standard & Poors Composite Index of 18.8%. The performance however compares very favourably with UK indices where the majority of the Company's assets are located.
Profit for the period amounted to GBP3,671,000 (31 July 2018 of GBP2,389,000). The Directors do not intend to declare a dividend at this time, although it is highly likely that a final dividend will be paid in respect of the current financial year.
During the period, the Company purchased for cancellation 132,863 ordinary shares at a favourable discount to NAV which benefits all long term shareholders.
quoted portfolio
The majority of the UK portfolio performed well with Oryx's NAV rising 14.9% and MJ Gleeson rising 16.9%. Other stocks that performed well include Polar Capital, Ergomed, Augean and, in particular, Renalytix which rose over 100%.
This was, however, to some extent offset by the need to totally write off Goals Soccer following a fraud which adversely impacted the net asset value by just under 1%.
Principal new investments during the period were made in Stobart Group, Ergomed and Hargreaves Services.
US quoted portfolio
Our two biggest investments Mountain Commerce and Ambac, both reported satisfactory results during the period but the overall portfolio remains small as a percentage of the total fund.
unquoted portfolio
No new direct investments were made during the period. GAJV and Harwood Leeds were sold. The proceeds were invested in UK equities.
outlook
The Company invested approximately GBP33m in equities during the period. All the investments were made in businesses trading at a significant discount to private market value and which it is believed will add to the net asset value over the medium term. Nevertheless, the Company remains conservatively invested with net cash of approximately GBP93m.
Markets as a whole are facing considerable headwinds including a major economic slowdown in Europe in its manufacturing industries and the very realistic possibility of a major China/US trade war which could also spill into Europe. MIFID 2 and a dire IPO market is creating further problems for the UK small cap sector with falling liquidity. However, given the Company's permanent capital structure and substantial cash balances, it remains well placed to benefit from the favourable opportunities which we foresee over the medium term.
C H B Mills
Chief Executive
16 September 2019
top ten investments
as at 31 July 2019
Company Fair Value % of GBP'000 net assets US Treasury Bills US Treasury Stock 82,249 14.1 Oryx International Growth Fund Limited* UK Listed 57,960 9.9 MJ Gleeson Group plc UK Listed 42,762 7.3 Polar Capital Holdings plc UK Quoted on AIM 40,040 6.8 Harwood Private Equity Fund IV LP UK Unquoted 37,338 6.4 Ten Entertainment Group plc UK Listed 36,300 6.2 EKF Diagnostics Holdings plc UK Quoted on AIM 34,104 5.8 Stobart Group Limited UK Quoted on AIM 21,812 3.7 Augean plc UK Quoted on AIM 21,275 3.6 Sherwood Holdings Limited UK Unquoted 18,181 3.1 ----------------------------------------- ------------------- -------- ----------- 392,021 66.9 ------------------------------------------------------------- -------- -----------
* Traded price under IFRS 10, incorporated in Guernsey.
All investments are valued at fair value.
interim management report
investment objective
The objective of North Atlantic Smaller Companies Investment Trust PLC ("the Company") is to provide capital appreciation to its shareholders through investing in a portfolio of smaller companies which are principally based in countries bordering the North Atlantic Ocean.
material events
The Board do not consider that there were any material events during the period ended 31 July 2019.
material transactions
There were no material transactions during the period.
risk profile
The principal risks and uncertainties for the remaining six months of the year continue to be as described in the Annual Report for the year ended 31 January 2019. The principal risks arising from the Company's financial instruments are market price risk, including currency risk, interest rate risk and other price risk, liquidity risk and credit risk. The Directors review and agree policies with the Manager, Harwood Capital LLP, for managing these risks. The policies have remained substantially unchanged in the six months since the year end.
The Company does not have any significant exposure to credit risk arising from any one individual party. Credit risk is spread across a number of counterparties, each having an immaterial effect on the Company's cash flows, should a default happen. The Company assesses the credit worthiness of its debtors from time to time to ensure that they are neither past due or impaired.
To support its investment in unquoted companies, the Company may periodically agree to guarantee all or part of the borrowings of investee companies. Provision is made for any costs that may be incurred when the Directors consider it likely that the guarantee will crystallise.
The Company's exposure to market price risk comprises mainly movements in the value of the Company's investments. It should be noted that the prices of options tend to be more volatile than the prices of the underlying securities. The Manager assesses the exposure to market risk when making each investment decision and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis.
The functional and presentational currency of the Company is Sterling, and therefore, the Company's principal exposure to foreign currency risk comprises investments priced in other currencies, principally US Dollars.
The Company invests in equities and other investments that are realisable.
related party
These are listed in note 10 to the half yearly condensed financial transactions statements.
By Order of the Board
Peregrine Moncreiffe
Chairman
16 September 2019
responsibility statement
The Directors confirm to the best of their knowledge that:
-- The condensed set of financial statements contained within this half yearly financial report have been prepared in accordance with International Accounting Standard ("IAS") 34 'Interim Financial Reporting' as adopted by the European Union and gives a true and fair view of the assets, liabilities, financial position and profit of the Company; and
-- The half yearly financial report includes a fair review of the information required by the FCA's Disclosure and Transparency Rule 4.2.7R being disclosure of important events that have occurred during the first six months of the financial year, their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the year; and
-- The half yearly financial report includes a fair review of the information required by the Disclosure and Transparency Rule 4.2.8R being disclosure of related party transactions during the first six months of the financial year, how they have materially affected the financial position of the Company during the period and any changes therein.
The half yearly financial report was approved by the Board on 16 September 2019 and the above responsibility statement was signed on its behalf by:
Peregrine Moncreiffe
Chairman
16 September 2019
condensed statement of comprehensive income (unaudited)
Six months ended Six months ended 31 July 31 July 2019 2018 Revenue Capital Total Revenue Capital Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Income 6,880 - 6,880 5,273 - 5,273 Net gains on investments at fair value - 53,377 53,377 - 44,404 44,404 Currency exchange gains - 188 188 - 129 129 ------------------------------------ --------- ----------------- -------- --------- ----------------- -------- total income 6,880 53,565 60,445 5,273 44,533 49,806 Expenses Investment management fee (note 10) (2,705) - (2,705) (2,546) - (2,546) Other expenses (504) - (504) (338) - (338) ------------------------------------ --------- ----------------- -------- --------- ----------------- -------- return before taxation 3,671 53,565 57,236 2,389 44,533 46,922 Taxation - - - - - - ------------------------------------ --------- ----------------- -------- --------- ----------------- -------- return for the period 3,671 53,565 57,236 2,389 44,533 46,922 ------------------------------------ --------- ----------------- -------- --------- ----------------- -------- earnings per ordinary share (note 5) Basic 400.2p 325.3p Diluted 400.1p 324.9p
The total column of the statement is the Statement of Comprehensive Income of the Company prepared in accordance with International Financial Reporting Standards ("IFRS"). As adopted by the EU. The supplementary revenue and capital columns are presented for information purposes as recommended by the Statement of Recommended Practice ("SORP") issued by the Association of Investment Companies ("AIC").
All items in the above Statement derive from continuing operations. No operations were acquired or discontinued in the period.
The accompanying notes are an integral part of these financial statements.
Year ended 31 January 2019 Revenue Capital Total GBP'000 GBP'000 GBP'000 11,645 - 11,645 Income - 31,095 31,095 Net gains on investments at fair value - 271 271 Currency exchange gains -------------- ------------------ ------------------ -------------------------------------------------- 11,645 31,366 43,011 total income Expenses (5,091) (1,788) (6,879) Investment management fee (note 10) (714) - (714) Other expenses -------------- ------------------ ------------------ -------------------------------------------------- 5,840 29,578 35,418 return before taxation - - - Taxation -------------- ------------------ ------------------ -------------------------------------------------- 5,840 29,578 35,418 return for the period -------------- ------------------ ------------------ -------------------------------------------------- earnings per ordinary share (note 5) 246.2p Basic 245.8p Diluted
condensed statement of changes in equity (unaudited)
Share Share Share options premium Capital capital reserve account reserve GBP'000 GBP'000 GBP'000 GBP'000 six months ended 31 July 2019 31 January 2019 716 24 1,301 524,316 Total comprehensive income for the period - - - 53,565 Shares purchased for cancellation (7) - - (3,927) ------------------------------------------- -------- -------- -------- --------- 31 July 2019 709 24 1,301 573,954 ------------------------------------------- -------- -------- -------- --------- six months ended 31 July 2018 31 January 2018 721 55 1,301 498,123 Total comprehensive income for the period - - - 44,533 ------------------------------------------- -------- -------- -------- --------- 31 July 2018 721 55 1,301 542,656 ------------------------------------------- -------- -------- -------- --------- year ended 31 January 2019 31 January 2018 721 55 1,301 498,123 Total comprehensive income for the year - - - 29,578 Shares purchased for cancellation (5) - - (2,920) Share option discharge - (31) - (465) ------------------------------------------- -------- -------- -------- --------- 31 January 2019 716 24 1,301 524,316 ------------------------------------------- -------- -------- -------- ---------
The accompanying notes are an integral part of these financial statements.
Capital redemption Revenue reserve reserve Total GBP'000 GBP'000 GBP'000 six months ended 31 July 2019 154 4,914 531,425 31 January 2019 - 3,671 57,236 Total comprehensive income for the period 7 - (3,927) Shares purchased for cancellation -------------- ------------- ----------------- ------------------------------------------ 161 8,585 584,734 31 July 2019 -------------- ------------- ----------------- ------------------------------------------ six months ended 31 July 2018 149 (926) 499,423 31 January 2018 - 2,389 46,922 Total comprehensive income for the period -------------- ------------- ----------------- ------------------------------------------ 149 1,463 546,345 31 July 2018 -------------- ------------- ----------------- ------------------------------------------ year ended 31 January 2019 149 (926) 499,423 31 January 2018 - 5,840 35,418 Total comprehensive income for the year 5 - (2,920) Shares purchased for cancellation - - (496) Share option discharge -------------- ------------- ----------------- ------------------------------------------ 154 4,914 531,425 31 January 2019 -------------- ------------- ----------------- ------------------------------------------
condensed balance sheet (unaudited)
As at As at As at 31 July 31 July 31 January 2019 2018 2019 GBP'000 GBP'000 GBP'000 non current assets Investments at fair value through profit or loss 569,914 526,415 500,696 ------------------------------------------------------------ --------- --------- ----------- 569,914 526,415 500,696 current assets Trade and other receivables 2,961 11,279 19,623 Cash and cash equivalents 12,865 11,066 30,669 ------------------------------------------------------------ --------- --------- ----------- 15,826 22,345 50,292
------------------------------------------------------------ --------- --------- ----------- total assets 585,740 548,760 550,988 ------------------------------------------------------------ --------- --------- ----------- current liabilities Trade and other payables (1,006) (2,415) (19,563) ------------------------------------------------------------ --------- --------- ----------- total liabilities (1,006) (2,415) (19,563) ------------------------------------------------------------ --------- --------- ----------- total assets less current liabilities 584,734 546,345 531,425 ------------------------------------------------------------ --------- --------- ----------- net assets 584,734 546,345 531,425 ------------------------------------------------------------ --------- --------- ----------- represented by: Share capital 709 721 716 Share options reserve 24 55 24 Share premium account 1,301 1,301 1,301 Capital reserve 573,954 542,656 524,316 Capital redemption reserve 161 149 154 Revenue reserve 8,585 1,463 4,914 ------------------------------------------------------------ --------- --------- ----------- total equity attributable to equity holders of the company 584,734 546,345 531,425 ------------------------------------------------------------ --------- --------- ----------- net asset value per ordinary share (note 6): Basic 4,120p 3,787p 3,710p Diluted 4,118p 3,782p 3,708p
The accompanying notes are an integral part of these financial statements.
condensed cash flow statement (unaudited)
Six months Six months ended ended Year ended 31 July 31 July 31 January 2019 2018 2019 GBP'000 GBP'000 GBP'000 cash flows from operating activities Investment income received 5,502 4,036 9,002 Deposit interest received 13 5 15 Other income - - - Investment Manager's fees and performance fees paid (4,463) (3,654) (7,686) Share based payment - discharge of options - - (496) Other cash payments (987) (847) (826) ------------------------------------------------------ ----------- ----------- ------------- cash generated/(expended) from operations (note 8) 65 (460) 9 Taxation paid - - - ------------------------------------------------------ ----------- ----------- ------------- net cash inflow/(outflow) from operating activities 65 (460) 9 cash flows from investing activities Purchases of investments (185,307) (195,357) (358,127) Sales of investments 171,297 196,188 380,966 ------------------------------------------------------ ----------- ----------- ------------- net cash (outflow)/inflow from investing activities (14,010) 831 22,839 ------------------------------------------------------ ----------- ----------- ------------- cash flows from financing activities Repurchase of Ordinary Shares for cancellation (3,927) - (2,920) ------------------------------------------------------ ----------- ----------- ------------- net cash outflow from financing activities (3,927) - (2,920) ------------------------------------------------------ ----------- ----------- ------------- (decrease)/increase in cash and cash equivalents for the period (17,872) 371 19,928 cash and cash equivalents at the start of the period 30,669 10,653 10,653 Revaluation of foreign currency balances 68 42 88 ------------------------------------------------------ ----------- ----------- ------------- cash and cash equivalents at the end of the period 12,865 11,066 30,669 ------------------------------------------------------ ----------- ----------- -------------
The accompanying notes are an integral part of these financial statements.
notes to the financial statements (unaudited)
1. a) basis of accounting
North Atlantic Smaller Companies Investment Trust plc ("NASCIT") is a company incorporated and registered in England and Wales. The principal activity of the Company is that of an investment trust company within the meaning of Sections 1158/1159 of the Corporation Tax Act 2010.
The condensed financial statements of the Company have been prepared in accordance with International Accounting Standard (IAS) 34 - "Interim Financial Reporting" as adopted by the EU. The accounting policies and methods of computation followed in these half-yearly condensed financial statements are consistent with the most recent annual financial statements for the year ended 31 January 2019 included in the Annual Report.
The financial statements have also been prepared in accordance with the AIC SORP for the financial statements of investment trust companies and venture capital trusts, except to any extent where it is not consistent with the requirements of IFRS.
The financial information contained in this Half-Yearly Report does not constitute statutory accounts as defined in the Companies Act 2006. The financial information for the periods ended 31 July 2019 and 31 July 2018 have not been audited or reviewed by the Company's Auditor. The figure and financial information for the year ended 31 January 2019 are an extract from the latest published audited financial statements, which have been filed with the Registrar of Companies. The report of the Auditor on those financial statements was unqualified and did not contain a statement under either Section 498(2) or 498(3) of the Companies Act 2006.
b) functional currency
The functional currency of the Company is Pounds Sterling because this is the primary economic currency in which the Company operates. The financial statements are presented in Pounds Sterling rounded to the nearest thousand, except where otherwise indicated.
c) significant accounting policies
The accounting policies applied are consistent with those of the Annual Financial Report for the year ended 31 January 2019. Since the year end no new standards have been adopted.
d) segmental reporting
The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business. The Company invests in smaller companies principally based in countries bordering the North Atlantic Ocean.
e) going concern
The financial statements have been prepared on a going concern basis and on the basis that approval as an investment trust company will continue to be met.
The Directors have made an assessment of the Company's ability to continue as a going concern and are satisfied that the Company has the resources to continue in operational existence for the foreseeable future (being a period of at least 12 months from the date these financial statements were approved). Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern, having taken into account the liquidity of the Company's investment portfolio and the Company's financial position in respect of its cash flows, borrowing facilities and investment commitments (of which there are none of significance). Therefore, the financial statements have been prepared on the going concern basis.
2. investment management and performance fees
A Performance Fee is only payable if the investment portfolio, including Oryx at the adjusted price, outperforms the Sterling adjusted Standard & Poor's 500 Composite Index at the end of each financial year and is limited to a maximum payment of 0.5% of Shareholders' Funds, and is allocated 100% to capital.
An amount would be included in these financial statements for the Performance Fee that could be payable based on investment performance to 31 July 2019. At that date, no Performance Fee, inclusive of VAT, has been accrued for in the accounts (31 July 2018: GBPnil; 31 January 2019: GBP1,788,000).
3. taxation
The Company has an effective tax rate of 0%. The estimated effective tax rate is 0% as investment gains are exempt from tax owing to the Company's status as an Investment Trust and there is expected to be an excess of management expenses over taxable income and thus there is no charge for corporation tax.
During the half year to 31 July 2019, the Company recognised a total charge of GBPnil (half year to 31 July 2018: GBPnil, year ended 31 January 2019: GBPnil), representing irrecoverable withholding tax paid on overseas investment income.
4. dividends
A final dividend for the year ended 31 January 2019 of 30p per Ordinary Share has been declared by the Board, with an Ex date of 31 October 2019 and a payment date of 21 November 2019.
5. earnings per ordinary share
Revenue Capital Net Per Net Per return Ordinary Share return Ordinary Share GBP'000 Shares pence GBP'000 Shares pence six months ended 31 July 2019 Basic return per Share 3,671 14,300,663 25.7 53,565 14,300,663 374.5 Share options* - 5,067 - 5,067 -------- ----------- -------- ----------- Diluted return per Share 3,671 14,305,703 25.7 53,565 14,305,703 374.4 -------- ----------- -------- ----------- six months ended 31 July 2018 Basic return per Share 2,389 14,425,620 16.6 44,533 14,425,620 308.7 Share options* - 14,885 - 14,885 -------- ----------- -------- ----------- Diluted return per Share 2,389 14,440,505 16.5 44,533 14,440,505 308.4 -------- ----------- -------- ----------- year ended 31 January 2019 Basic return per Share 5,840 14,388,359 40.6 29,578 14,388,359 205.6 Share options* - 20,895 - 20,895 -------- ----------- -------- ----------- Diluted return per Share 5,840 14,409,254 40.5 29,578 14,409,254 205.3 -------- ----------- -------- -----------
Basic return per Ordinary Share has been calculated using the weighted average number of Ordinary Shares in issue during the period.
* Excess of total number of potential shares on Option Conversion over the number that could be issued at the average market price, as calculated in accordance with IAS 33: Earnings per share.
Total Net Per return Ordinary Share GBP'000 Shares pence six months ended 31 July 2019 57,236 14,300,663 400.2 Basic return per Share - 5,067 Share options* -------- ------------ 57,236 14,305,703 400.1 Diluted return per Share -------- ------------ six months ended 31 July 2018 46,922 14,425,620 325.3 Basic return per Share - 14,885 Share options* -------- ------------ 46,922 14,440,505 324.9 Diluted return per Share -------- ------------ year ended 31 January 2019 35,418 14,388,359 246.2 Basic return per Share - 20,895 Share options* -------- ------------ 35,418 14,409,254 245.8 Diluted return per Share -------- ------------
Basic return per Ordinary Share has been calculated using the weighted average number of Ordinary Shares in issue during the period.
* Excess of total number of potential shares on Option Conversion over the number that could be issued at the average market price, as calculated in accordance with IAS 33: Earnings per share.
6. net asset value per ordinary share
The basic net asset value per Ordinary Share is based on net assets of GBP584,734,000 (31 July 2018: GBP546,345,000; 31 January 2019: GBP531,425,000) and on 14,192,757 Ordinary Shares (31 July 2018: 14,425,620; 31 January 2019: 14,325,620) being the number of Ordinary Shares in issue at the period end.
The diluted net asset value per Ordinary Share is calculated on the assumption that all 10,000 (31 July 2018: 30,000; 31 January 2019: 10,000) Share Options in-the-money were exercised at the prevailing exercise prices, giving a total of 14,202,757 issued Ordinary Shares (31 July 2018: 14,455,620; 31 January 2019: 14,335,620).
During the period, 132,863 Ordinary shares were bought back for cancellation, at a total cost to the Company of GBP3,900,000.
adjustment for Oryx
The Company has also reported an adjusted net asset value per share using equity accounting, in accordance with its previous method of valuing its investment in Oryx. The Company has chosen to report this net asset value per share to show the difference derived if equity accounting were to be used. Equity accounting permits the use of net asset value pricing for listed assets which in the case of Oryx is higher than its fair value.
The values of Oryx, as at each period end, are as follows:
31 July 2019 31 July 2018 31 January 2019 GBP'000 GBP'000 GBP'000 Oryx at Fair value (traded price) 57,960 59,940 57,776 Oryx value using Equity Accounting 77,059 67,968 67,270 Increase in net assets using Equity Accounting 19,099 8,028 9,494 31 July 2019 31 July 2018 31 January 2019 Net asset value per Share - Basic 4,120p 3,787p 3,710p - Diluted 4,118p 3,782p 3,708p Net asset value per Share adjusted - Basic 4,255p 3,843p 3,776p - Diluted 4,253p 3,838p 3,774p
7. share based remuneration
As at 31 July 2019, there were a total of 10,000 (31 July 2018: 30,000; 31 January 2019: 10,000) options in issue with an estimated fair value of GBP24,000 under the 2011 options scheme.
8. reconciliation of total return before taxation to cash (expended)/generated from operations
Six months Six months ended ended Year ended 31 July 31 July 31 January 2019 2018 2019 GBP'000 GBP'000 GBP'000 Total return before taxation 57,236 46,922 35,418 Gains on investments (53,565) (44,533) (31,366) Interest reinvested (1,050) - (3,500) Share option discharge - - (496) Net return from Subsidiary (7) (7) (7) (Increase)/decrease in debtors and accrued income (365) (805) 847 Decrease in creditors and accruals (2,184) (2,037) (887) --------------------------------------------------- ----------- ----------- ----------- Cash generated/(expended) from operations 65 (460) 9 --------------------------------------------------- ----------- ----------- -----------
9. investments
financial assets at fair value through profit or loss
This requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following three levels:
-- Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
-- Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
-- Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety.
For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.
The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data from investments actively traded in organised financial markets, fair value is generally determined by reference to Stock Exchange quoted market bid prices at the close of business on the Balance Sheet date, without adjustment for transaction costs necessary to realise the asset.
The table below sets out fair value measurements as at the period end, by the level in the fair value hierarchy into which the fair value measurement is categorised.
six months ended 31 July 2019
Total Level 1 Level 2 Level 3 GBP'000 GBP'000 GBP'000 GBP'000 Equity investments 447,339 372,822 - 74,517 Fixed interest investments 122,575 82,249 - 40,326 ---------------------------- -------- --------- -------- -------- Total 569,914 455,071 - 114,843 ---------------------------- -------- --------- -------- --------
six months ended 31 July 2018
Total Level 1 Level 2 Level 3 GBP'000 GBP'000 GBP'000 GBP'000 Equity investments 397,117 334,188 - 62,929 Fixed interest investments 129,298 87,089 - 42,209 ---------------------------- -------- --------- -------- -------- Total 526,415 421,277 - 105,138 ---------------------------- -------- --------- -------- --------
year ended 31 January 2019
Total Level 1 Level 2 Level 3 GBP'000 GBP'000 GBP'000 GBP'000 Equity investments 364,801 297,472 - 67,329 Fixed interest investments 135,895 90,893 - 45,002 ---------------------------- --------- --------- -------- -------- Total 500,696 388,365 - 112,331 ---------------------------- --------- --------- -------- --------
reconciliation of level 3 movement - financial assets at 31 July 2019
Fixed interest Equity Total investments investments GBP'000 GBP'000 GBP'000 Opening balance at 31 January 2019 112,331 67,329 45,002 Purchases 10,724 - 10,724 Sales (19,579) (2,953) (16,626) Total gains included in gains on investments in the statement of comprehensive income: - on assets sold 2,045 1,656 389 - on assets held at the end of the period 9,322 8,485 837 ------------------------------------ --------- ------------ --------------- Closing balance 114,843 74,517 40,326 ------------------------------------ --------- ------------ ---------------
unquoted at directors' estimate of fair value
Unquoted investments are valued in accordance with the International Private Equity and Venture Capital Valuation ("IPEV") Guidelines. Their valuation incorporates all factors that market participants would consider in setting a price. The primary valuation techniques employed to value the unquoted investments are earnings multiples, recent transactions and the net asset basis. Valuations in local currency are translated into Sterling at the exchange rate ruling on the Balance Sheet date.
Included within the Statement of Comprehensive Income as at 31 July 2019, is a gain of GBP9,322,000 relative to the movement in the fair value of the unquoted investments valued using IPEV valuation techniques.
the valuation techniques applied are based on the following assumptions:
Unquoted investments are usually valued by reference to the valuation multiples of similar listed companies or from transactions of similar businesses. Where appropriate discounts are then applied to those comparable multiples to reflect differences in size and liquidity. These enterprise values are then adjusted for net debt to arrive at an equity valuation. Where companies are in compliance with the loan note terms these loans are generally held at par plus accrued interest (where applicable) unless the enterprise value suggests that the debt cannot be recovered.
10. related party transactions
There have been no changes to the related party arrangements or transactions as reported in the Statutory Annual Financial Report for the year ended 31 January 2019.
The Manager, Harwood Capital LLP, is regarded as a related party of the Company. The amounts payable to the Manager and Growth Financial Services Limited in respect of investment management for the six months to 31 July 2019 are as follows:
Six months Six months ended ended Year ended 31 July 31 July 31 January 2019 2018 2019 GBP'000 GBP'000 GBP'000 Annual fee 2,705 2,546 5,091 Performance fee - - 1,743 Irrecoverable VAT thereon - - 45 --------------------------- ----------- ----------- ----------- 2,705 2,546 6,879 --------------------------- ----------- ----------- -----------
Fees paid to Directors, for the six months ended 31 July 2019 amounted to GBP65,000 (six months ended 31 July 2018: GBP65,000; year ended 31 January 2019: GBP130,000).
Shareholders should also note any payments made under share based remuneration as disclosed in note 7 to these financial statements.
shareholder information
financial calendar
Announcement of results and annual report May Annual General Meeting June Half Yearly figures announced September Half Yearly Report posted September
share price
The Company's mid-market share price is quoted daily in the Financial Times appearing under "Investment Companies".
It also appears on:
SEAQ Ordinary Shares: NAS Trustnet: www.trustnet.com
net asset value
The latest net asset value of the Company can be found on the Harwood Capital LLP website:
www.harwoodcapital.co.uk
share dealing
Investors wishing to purchase more Ordinary Shares or dispose of all or part of their holding may do so through a stockbroker. Many banks also offer this service.
The Company's registrars are Link Asset Services. In the event of any queries regarding your holding of shares, please contact the registrars on: 0871 664 0300, or by email on enquiries@linkgroup.co.uk
Changes of name or address must be notified to the registrars in writing at:
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Directors
Peregrine Moncreiffe (Chairman)
Christopher Mills (Chief Executive)
Lord Howard of Rising
G Walter Loewenbaum
Sir Charles Wake
Manager
Harwood Capital LLP
(Authorised and regulated by the Financial Conduct Authority)
6 Stratton Street
Mayfair
London W1J 8LD
Telephone: 020 7640 3200
Financial Adviser and Stockbroker
Winterflood Investment Trusts
The Atrium Building
Cannon Bridge
25 Dowgate Hill
London EC4R 2GA
Registered Office
6 Stratton Street
Mayfair
London W1J 8LD
Telephone: 020 7640 3200
Registrars
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Auditors
KPMG LLP
15 Canada Square
London E14 5GL
Company Secretary
Derringtons Limited
Hyde Park House
5 Manfred Road
London SW15 2RS
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(END) Dow Jones Newswires
September 16, 2019 11:17 ET (15:17 GMT)
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