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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 | 3,141 | 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 2018
The Board is pleased to announce the Annual Financial Results for the year
ended 31 March 2018. 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 18.9% and the share price
gained 33.3% compared to a return of 2.7% in the benchmark.
* Since the current investment managers took on responsibility for the
portfolio in September 2012, net asset value has gained 134.2% against a
benchmark return of 52.3%.
* The 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
2018 March
2017
Total Return performance:
Net Asset Value total return +18.9% +15.7%
Share Price total return +33.3% +8.0%
Benchmark Index (IA UK All Companies +2.7% +18.3%
Sector Average Index since 1 October
2013*)
31 March 31 March % Change
2018 2017
Capital Return performance:
Net asset value (p) 112.05 94.25 +18.9%
Share price (p) 90.00 67.50 +33.3%
FTSE All-Share Index 3,894 3,990 -2.4%
Discount 19.7% 28.4%
Gearing*** 25.6% 23.8%
Ongoing Charges ratio:
Investment management fees** - -
Other operating expenses 1.0% 1.3%
Total Return to 1 3 5 10 Launch
31 March 2018 (%) Year Years Years Years (2000)
Net Asset Value +18.9 +48.6 +107.9 +71.1 +15.5
Benchmark Index* +2.7 +18.5 +46.6 +17.7 -26.8
*The benchmark index for the Fund was changed to the IA 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 2018 and
2017.
***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 IA UK All
Companies Sector Average Index on a total return basis.
CHAIRMAN'S STATEMENT
Over the 12 months to 31 March 2018, the Company's net asset value increased by
18.9% to 112.0p per share, compared to a gain of 2.7% in the benchmark, the IA
UK All Companies Sector Average Index. Over the 12 months, the share price
gained 33.3%. Since Margaret Lawson took over management of the portfolio in
September 2012, net asset value has risen 134.2%, versus a benchmark return of
52.3% (total return). The Company's share price and net asset value continued
to make progress in the two months since the year end, being 94.5p and 121.96p,
respectively at 31 May 2018.
Review of the year
Despite the background of the Brexit negotiations, the UK market has proved
relatively resilient over the twelve months. The global economy also grew.
Short term inflation in the UK appears to have peaked at the end of 2017, and
should ease further as 2018 progresses. At the same time, the pick-up in wage
growth from mid-2017 is continuing in the first half of 2018, reversing the
consumer squeeze. This is a favourable development for many of the businesses
in the portfolio.
Since your Company focuses on investing in growing medium sized and smaller
companies, it has little exposure to cyclical global businesses. Your Company
has no direct investment in oil and commodity groups, which recovered sharply,
but this did not hinder performance. The portfolio also has no exposure to
banks, utilities, and telecoms. We remain particularly concerned at the longer
term outlook for banks, which face competition from new entrants such as
challenger banks and online services. The Fund has above average investment in
technology, healthcare, consumer services, and business services.
Most companies in the portfolio are reporting good earnings progress, and
investor interest has returned to recognise their inherent business strengths.
The technology sector has performed particularly well. The portfolio not only
has invested in a number of innovative technology businesses, but the
investment strategy also recognises the impact of technology in other sectors.
Some portfolio businesses are using technology to cut costs or service
customers better. Technology is also enabling some companies to make their
businesses more scalable and employ less capital. Key to future investment
success is understanding the pervasiveness of technology and the economic
change it drives.
The most significant contributions to performance came from Fevertree Drinks,
Burford Capital, Learning Technologies, Blue Prism, Dechra Pharmaceuticals and
GVC Holdings. Fevertree illustrates characteristics common to many portfolio
holdings; a clear business strategy, excellent management, consistent growth,
and limited use of internal capital. Litigation finance business, Burford, also
grew strongly. Blue Prism designs and develops application software focused on
robotic process automation. During the year, GVC purchased Ladbrokes Coral,
creating one of the world's biggest gaming groups. This should enhance its
growth prospects, and the US appears to be moving towards the legalisation of
sports betting. Hikma Pharmaceuticals was the main disappointment in the year,
and the shares have been sold.
During the year, new investments were made in Zoo Digital, Keystone Law,
Rentokil and carpet manufacturer, Victoria. Additional investments were made in
Money Supermarket, BTG and Hilton Food. To fund these, Melrose, Crest Nicholson
and STL were sold.
Annual General Meeting
The Annual General Meeting will be held on 14 September 2018 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, overall, your Board does not expect this to be
dilutive to shareholders.
Your Board has engaged State Street to perform investment accounting services
and maintain the primary accounting records. There is no change to company
secretarial and investment management services. This change should move the
Company to best practice in segregation of duties, and enable the publication
of estimated net asset value per share on a daily basis.
Outlook
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.
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
6 July 2018
MANAGER'S REVIEW
Summary
In the 12 months to 31 March 2018, the Fund continued its strong recovery since
2012.
Net asset value increased by 18.9%, versus 2.7% 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 134.2%, versus a benchmark return of 52.3% (total
return). The Company's share price and net asset value have continued to
progress in the two months since year end.
Contributors to performance
Performance over the year was broadly based across a range of medium sized
growth businesses. The most significant contributions to performance came from
Fevertree Drinks, Burford Capital, Learning Technologies, Blue Prism, Dechra
Pharmaceuticals and GVC Holdings. Fevertree and litigation finance business,
Burford, grew strongly. Online travel business, On The Beach is growing market
share as more business moves online. Dechra announced two acquisitions which
are likely to enhance earnings from 2019 onwards. This will accelerate the
compound growth rate as the product pipeline will be materially expanded.
Dechra funded the acquisitions with 75% in cash, but its balance sheet is not
stretched.
Portfolio changes
During the year, new investments were made in Zoo Digital, Keystone Law,
Rentokil and carpet manufacturer, Victoria. Additional investments were made in
Money Supermarket, BTG and Hilton Food. To fund these, Melrose, Crest Nicholson
and SDL were sold. Sales were also made of Micro Focus, Eve Sleep and Ibstock.
The Managers aim to position the portfolio to benefit from major secular
trends, such as the continuing disruption in many sectors. This is not purely
technology-driven change; consumer trends in tastes are a factor in Western
economies. These have brought a focus on experiences rather than goods, and are
showing less respect for longstanding brands.
Additional investment was made in travel. Rising oil prices pose a challenge
for airlines, but in other ways prospects for the travel sector are
improving. Pricing discipline is being reinforced as some struggling airlines
fail and capacity is rationalised. Surviving airlines have been able to
acquire slots of the collapsed airlines. This consolidation reinforces
prospects for efficient survivors, such as Ryanair and EasyJet. Not only are
ticket prices likely to rise, but the surviving airlines are proving more adept
at using their customer data to sell hotels, car hire and other travel
services. The remaining businesses are creating an industry that looks much
more attractive for shareholders.
Portfolio Review and Investment Strategy
Most companies in the portfolio are reporting good earnings progress, and the
technology sector has performed particularly well. The portfolio not only has
invested in a number of innovative technology businesses, but the investment
strategy also recognises the impact of technology in other sectors. Some
portfolio businesses are using technology to cut costs or service customers
better. Technology is also enabling some companies to make their businesses
more scalable and employ less capital. Key to future investment success is
understanding the pervasiveness of technology and the economic change it
drives.
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. Not all
disruptors that target an opportunity actually succeed. Even for the winners,
it may take a few years and a lot of capital to establish the infrastructure
and credibility needed. So, there can be risk in investing too early, even if
a management team appears to have promise. Usually, there is a point at which
it is clear the business is gaining traction and seeing accelerating sales
growth. This might be evident in like-for-like numbers or in endorsements it
gains through strategic partnerships. There is value in waiting for this
timing, which may not be at the share price lows, but is before most of the
potential has been secured. The Managers monitor these companies, using
analysis of numbers and regular meetings to get clues to this traction, and
identify the best entry point.
Outlook
The UK economy has proved relatively resilient, with the resumption of real
wage growth signalling a reversal of the consumer squeeze. Inflation appears
to have peaked at the end of 2017, and is likely to ease further this year.
Already, it is falling faster than the consensus and Bank of England expected.
Confidence in the UK is returning, but this has yet to transfer fully to
shares.
Cash rich overseas companies appear interested in UK acquisitions. Merger
activity has been strong to date this year, and corporate buyers seem to see
the value in the UK market, even if institutional investors do not. That is
often an early indicator of value in a stockmarket.
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, with flexible borrow arrangements
allowing a typical gearing of 120% of assets.
Market
Sector analysis* % Listing* % Capitalisation %
*
Consumer Services 29.8 Main Market 53.7 Small 52.4
Financials 16.8 AIM 41.5 Mid 35.9
Consumer Goods 14.5 Other 4.8 Large 11.7
Industrials 13.3
Technology 12.8
Healthcare 11.8
Telecommunications 1.0
*Analysis is of gross exposure
INVESTMENT PORTFOLIO
as at 31 March 2018
Market Market
Exposure Exposure
2018 % of 2017
Stock GBP000 Net Assets GBP000
Fevertree 4.3 259
Drinks 292
Johnson Service 4.3 244
Group 288
Burford Capital 256 3.8 190
GVC Holdings 246 3.7 197
Unite Group 225 3.3 149
Hostelworld 224 3.3 50
Hutchison China 194 2.9 158
Meditech
4Imprint Group 190 2.8 272
ASOS 186 2.8 162
Hilton Food 180 2.7 68
Group
Ten largest 2,281 33.9
investments
Beazley Group 179 2.7 134
K3 Capital 168 2.5 -
Redrow 167 2.5 143
FDM Group 167 2.5 118
Workspace Group 165 2.5 130
Blue Prism 160 2.4 -
Dechra 150 2.2 90
Pharmaceuticals
Kerry Group 150 2.2 131
Superdry 148 2.2 -
GB Group 144 2.1 91
Twenty largest 3,879 57.7
investments
UDG Healthcare 142 2.1 115
Ryanair 136 2.0 120
Dotdigital 127 1.9 103
Group
Zoo Digital 125 1.9 -
Group
Rentokil 122 1.8 89
SSP Group 121 1.8 63
Learning 114 1.7 -
Technologies
Cineworld Group 108 1.6 53
Watkin Jones 107 1.6 -
JD Sport 106 1.6 122
Thirty largest 5,087 75.7
investments
Other 3,045 45.3
investments (46
holdings)
Total 8,132 121.0
investments
CFD positions (1,668) (24.8)
CFD unrealised 16 0.2
gains
Net current 249 3.6
assets/
liabilites
Net assets 6,729
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 2018 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 has 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
6 July 2018
Income statement
for the year to 31 March 2018
Notes Revenue Capital Total
GBP000 GBP000 GBP000
Net gain on investments at fair value 5 - 1,019 1,019
Income 1 141 - 141
Investment management fees - - -
Other expenses 2 (62) (7) (69)
Gain before finance costs and taxation 79 1,012 1,091
Finance costs (23) - (23)
Gain on ordinary activities before taxation 56 1,012 1,068
Taxation 3 1 - 1
Gain attributable to ordinary shareholders
57 1,012 1,069
Gain per Ordinary Share 4 0.94p 16.83p 17.77p
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
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 2018
Notes 2018 2017
GBP000 GBP000
Fixed Assets
Investments at fair value through profit or loss 5 6,480 5,583
Current Assets
Debtors 6 427 238
Cash at bank and on deposit 8 16
Total current assets 435 254
Creditors: amounts falling due within one year 7 (186) (177)
Net current assets 249 77
Total assets less current liabilities 6,729 5,660
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 1,323 311
Revenue reserve (379) (436)
Equity shareholders' funds 6,729 5,660
Net asset value per Ordinary Share 4 112.05p 94.25p
Statement of Changes in Equity
for the year to 31 March 2018
Share Share Special Capital Capital Revenue
capital premium reserve redemption reserve reserve
GBP000 GBP000 GBP000 reserve GBP000 GBP000
GBP000
As at 1 April 2017 300 314 5,144 27 311 (436)
Gain attributable to
shareholders - - - - 1,012 57
As at 31 March 2018 300 314 5,144 27 1,323 (379)
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)
Cash flow statement
for the year to 31 March 2018
2018 2017
GBP000 GBP000
Operating Activities
Gain before finance costs and taxation 1,091 784
Adjusted for:
(Gains) on investments (1,019) (717)
Transaction costs 7 7
Taxation recovered 1 1
Movement in debtors (118) 61
Movement in creditors 1 1
Cash flow from operating activities (37) 137
Financing activities
Finance costs (23) (17)
Cash flow from financing activities (23) (17)
Investment Activities
Purchases of fixed asset investments (2,355) (2,110)
Sales of fixed asset investments 2,365 1,881
Cash flow from investing activities 10 (229)
Movement in cash, cash equivalent and bank overdraft (50) (109)
Cash and cash equivalent as at start of the year (7) 102
Cash, cash equivalent and bank overdraft as at end of
the year (57) (7)
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
2018 2017
GBP000 GBP000
- dividends 141 138
- interest - -
141 138
2. Other expenses
Revenue
General expenses 31 32
Directors' fees 18 18
Auditor's remuneration - audit services 13 13
- taxation services - 1
62 64
Capital
Transaction costs
- acquisitions 3 4
- disposals 4 3
7 7
3. Taxation
Current taxation (1) (1)
Deferred taxation - -
Total taxation charge for the year (1) (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 1,068 767
Corporation tax (19%, 2017 - 20%) 203 153
Non taxable UK dividends (25) (25)
Non taxable investment (gains)/losses in capital (192) (142)
Movement in unutilised management expenses and NTLR 13 13
deficits
Total taxation charge for the year (1) (1)
At 31 March 2018, the Fund had unutilised management expenses and non trade
loan relationship ("NTLR") deficits of GBP1,019,000 (2017 - GBP957,000).
A deferred tax asset of GBP173,000 (2017 - GBP191,000) 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 (2017 -
6,005,000) ordinary shares in issue during the year.
Total return per share is based on the total gain for the year of GBP1,069,000
(2017 - gain of GBP768,000).
Capital return per share is based on the net capital gain for the year of GBP
1,012,000 (2017 - gain of GBP710,000).
Revenue return per share is based on the revenue gain after taxation for the
year of GBP57,000 (2017 - gain of GBP58,000).
The net asset value per share is based on the net assets of the Fund of GBP
6,729,000 (2017 - GBP5,660,000) 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
2018 2017
GBP000 GBP000
Listed investments 6,480 5,583
Unlisted investments - -
Valuation as at end of year 6,480 5,583
Listed Unlisted Total
GBP000 GBP000 GBP000
Valuation as at start of year 5,583 - 5,583 4,628
Investment holding (gains)/losses 1,741 (135) 1,606 936
as at start of year
Cost as at start of year 3,842 135 3,977 3,692
Purchases of investments at cost 2,352 - 2,352 2,106
Proceeds from sale of investments (2,440) - (2,440) (1,884)
Transfers - - - -
Net gain/(loss) on sale of
investments 300 - 300 63
Cost as at end of year 4,054 135 4,189 3,977
Investment holding gains/(losses)
as at end of year 2,426 (135) 2,291 1,606
Valuation as at end of year 6,480 - 6,480 5,583
Net gain/(loss) on sale of
investments 300 - 300 63
Movement in investment holding
gains 719 - 719 654
Total gain/(loss) on investments 1,019 - 1,019 717
6. Debtors
2018 2017
GBP000 GBP000
Investment income due but not received 15 9
Due from brokers 71 -
Amounts receivable relating to CFDs 341 229
Taxation - -
427 238
7. Creditors: amounts falling due within one year
2018 2017
GBP000 GBP000
Bank overdraft 65 23
Amounts due relating to CFDs 98 132
Other creditors 23 22
186 177
8. Share capital
Allotted, issued and fully paid
6,005,000 ordinary 5p shares (2017 - 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 2018 were valued at GBPnil
(2017 - 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 2018 and 2017 are
an abridged version of the statutory accounts for those years. The Auditor has
reported on the 2018 and 2017 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 2017 have been filed with the Registrar of
Companies and those for 2018 will be delivered in due course.
11. The Annual Report and Accounts for the year ended 31 March 2018 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 14 September 2018 at 7 Castle Street, Edinburgh, EH2 3AH.
For further information, please contact:
Colin McLean SVM Asset Management
0131 226 6699
Roland Cross Four
Broadgate 0207 726 6111
6 July 2018
END
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July 06, 2018 10:07 ET (14:07 GMT)
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