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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 | 0.00 | 01:00:00 |
| 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")
HALF YEARLY REPORT
(FOR THE SIX MONTHS TO 30 SEPTEMBER 2017)
A copy of the Half Yearly Report will be available to download from the
Manager's website at www.svmonline.co.uk and a copy will shortly be available
for inspection at the National Storage Mechanism at www.morningstar.co.uk/uk/
nsm. Copies are also available at 7 Castle Street, Edinburgh EH2 3AH, the
registered office of the Fund.
HIGHLIGHTS
* Net asset value return of 14.2% compared to a 4.9% return for the IA UK All
Companies Sector Average Index and 3.6% return for the FTSE All-Share
Index. The share price rose 19.3%.
* Positive contributions from Fevertree Drinks, Burford Capital, Johnson
Service Group and Watkin Jones.
* Since the current investment managers took on responsibility for the
portfolio in September 2012, net asset value has gained 124.9% against a
benchmark return of 55.6%
* The portfolio is focused on medium-sized and smaller growing businesses,
where management can deliver growth via self-help.
* Net asset value gained 5.7% in October 2017 to 113.7p.
"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"
Financial Highlights
Total Return 10 Years
Performance to 6 months 3 years 5 Years
30 September
2017
Net Asset Value +14.2% +65.2% +124.9% +50.5%
Share Price +15.6% +52.9% +95.0% -1.9%
Benchmark Index +4.9% +29.7% +55.6% +4.0%
*
* 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.
SVM UK EMERGING FUND plc
Half Yearly Report 2017
CHAIRMAN'S STATEMENT
After a weak start in April, the UK stockmarket made progress in the period
under review. Medium sized and smaller companies outperformed the FTSE 100
Index. Over the six months to 30 September 2017, the Company's net asset value
increased by 14.2% to 107.6p per share, compared to a return of 4.9% in the
benchmark index, the IA UK All Companies Sector Average Index (total return).
Progress continued in October with the Company's net asset value gaining a
further 5.7% to 113.7p.
The strongest contributions to performance in the period under review were from
Fevertree Drinks, Burford Capital, Johnson Service Group and Watkin Jones.
These are growing businesses that operate with innovative strategies. Each has
a business model that is scalable, with limited need for additional external
capital. For example, Watkin Jones is a specialist property developer and
manager, building student accommodation that it sells on to long term investing
institutions. It also operates management contracts for the properties on
behalf of insurers and pension funds. The main disappointment over the period
was Hikma Pharmaceuticals.
During the six months, some profits were taken on investments in the gaming and
property sectors. After strong performance, part of the gains in Fevertree
Drinks and Micro Focus were also realised. Reinvestment was made in a number
of medium sized growing businesses, including; Oxford Instruments, Gamma
Communications, Polypipe Group, Sophos, Blue Prism and Moneysupermarket. New
smaller company investments included Animalcare Group, Hotel Chocolat and
Quixant, a gaming technology business. These portfolio changes increase the
emphasis on specialist medium sized and smaller companies addressing growth
markets. These businesses operate in niches, generally less exposed to price
competition.
The British economy proved relatively resilient despite Brexit uncertainty.
Many domestic companies have significant overseas earnings and were helped by
the better economic performance of the global economy and, particularly,
Continental Europe. UK inflation is higher, putting pressure on real wages,
but the rise in employment numbers is maintaining consumption growth. The
portfolio continues to have relatively low exposure to banks, oil and gas, and
mining. We remain particularly concerned at the longer term outlook for banks
and retailing, where there is the potential for disruption by newer business
models.
Although monetary policy is likely to tighten in the UK, we expect this to be
measured and gradual. UK services show limited pick-up in inflation and
sterling has recently been recovering against the US Dollar. This means that
the inflation shock from last year's devaluation may not become embedded in
wage expectations. Your Managers meetings with investee companies still
indicate favourable trading conditions. The portfolio emphasises exposure to
scalable businesses with a competitive edge that can deliver above average
growth. The Fund remains fully invested, making use of its ability to apply
gearing to increase market exposure
SVM UK EMERGING FUND plc
Half Yearly Report 2017
INVESTMENT OBJECTIVE and POLICY
The investment objective of SVM UK Emerging Fund plc (the "Fund" or the
"Company") 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
The Fund aims to achieve its objective and to diversify risk by investing in
shares and related instruments, controlled by a number of limits on exposures.
Appropriate guidelines for the management of the investments, gearing and
financial instruments have been established and are regularly reviewed by the
Board. This is an abridged version of the Fund's investment policy. The full
investment policy can be found in the Strategic Report within the Fund's latest
Annual Report & Accounts.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors are responsible for preparing the Half Yearly Report in
accordance with applicable law and regulations.
The Directors confirm that to the best of their knowledge:
(i) the condensed set of financial statements have been prepared in
accordance with the Financial Reporting Council Statement 104 "Interim
Financial Reporting" on a going concern basis and give a true and fair view of
the assets, liabilities, financial position and profit or loss of the Fund;
(ii) the Half Yearly Report includes a fair review of the information
required by the Disclosure and Transparency Rules DTR 4.2.7R (indication of
important events during the first six months and description of principal risks
and uncertainties for the remaining six months of the year); and DTR 4.2.8R
(disclosure of related party transactions and changes therein).
(iii) No related party transactions have taken place during the first
six months of the year that have materially affected the financial position of
the Fund during the period and there have been no changes in the related party
transactions described in the Annual Report & Accounts for the year end 31
March 2017 that could do so.
The Directors consider that the Half Yearly Report, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the Fund's performance and strategy,
The Half Yearly Report has not been audited or reviewed by the Fund's auditors.
By Order of the Board
Peter Dicks
Chairman
28 November 2017
SVM UK EMERGING FUND plc
Half Yearly Report 2017
UNAUDITED ACCOUNTS
Income Statement
Six months to 30 September Six months to 30 September
2017 2016
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net gain on investments at - 753 753 - 202 202
fair value
Income 95 - 95 85 - 85
Investment management fees - - - - - -
Other expenses (32) (4) (36) (32) (4) (36)
Gain before finance costs and
taxation 63 749 812 53 198 251
Finance costs (10) - (10) (9) - (9)
Gain on ordinary activities
before taxation 53 749 802 44 198 242
Taxation - - - - - -
Gain attributable to ordinary 53 749 802 44 198 242
shareholders
Gain per Ordinary Share 0.88p 12.48p 13.36p 0.72p 3.29p 4.01p
Year ended 31 March 2017
(audited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
The Total column of
Net gain on investments at - 717 717 this statement is the
fair value profit and loss
account of the Fund.
Income 138 - 138 All revenue and
capital items are
Investment management fees - - - derived from
continuing
Other expenses (64) (7) (71) operations. No
operations were
Gain before finance costs and 74 710 784 acquired or
taxation discontinued in the
year. A Statement of
Finance costs (17) - (17) Comprehensive Income
is not required as all
Gain on ordinary activities 57 710 767 gains and losses of
before taxation the Fund have been
reflected in the above
Taxation 1 - 1 statement.
Gain attributable to ordinary 58 710 768
shareholders
Gain per Ordinary Share 0.96p 11.82p 12.78p
SVM UK EMERGING FUND plc
Half Yearly Report 2017
UNAUDITED ACCOUNTS
Balance Sheet
As at As at As at
30 September 31 March 30 September
2017 2017 2016
(unaudited) (audited) (unaudited)
GBP'000 GBP'000 GBP'000
Fixed Assets
Investments at fair value through profit 6,307 5,583 5,001
or loss
Total Current Assets 382 254 333
Creditors: amounts falling due within (227) (177) (200)
one year
Net current assets 155 77 133
Total assets less current liabilities 6,462 5,660 5,134
Capital and Reserves 6,462 5,660 5,134
Equity shareholders' funds 6,462 5,660 5,134
Net asset value per Ordinary Share 107.61p 94.25p 85.48p
SVM UK EMERGING FUND plc
Half Yearly Report 2017
UNAUDITED ACCOUNTS
Statement of Changes in Equity
For the period to 30 September 2017
Share Share Special Capital Capital Revenue
capital premium reserve redemption reserve reserve
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April 2017 300 314 5,144 27 311 (436)
Gain attributable to - - - - 749 53
shareholders
As at 30 September 2017 300 314 5,144 27 1,060 (383)
For the year to 31 March 2017
Share Share Special Capital Capital Revenue
capital premium reserve redemption reserve reserve
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April 2016 300 314 5,144 27 (399) (494)
Gain attributable to - - - - 710 58
shareholders
As at 31 March 2017 300 314 5,144 27 311 (436)
For the period to 30 September 2016
Share Share Special Capital Capital Revenue
capital premium reserve redemption reserve reserve
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April 2016 300 314 5,144 27 (399) (494)
Gain attributable to - - - - 198 44
shareholders
As at 30 September 2016 300 314 5,144 27 (201) (450)
SVM UK EMERGING FUND plc
Half Yearly Report 2017
UNAUDITED ACCOUNTS
Condensed Cash Flow Statement
Six months Year to 31 Six months to
to 30 March 30 September
September 2017 2016
2017
GBP'000 GBP'000 GBP'000
(unaudited) (audited) (unaudited)
Operating Activities
Cash flow from operating activities 3 137 32
Taxation - - -
Investing Activities
Purchases and sales of fixed asset 109 (229) (102)
investments
Financing Activities
Finance costs (10) (17) (9)
Movement in cash and cash 102 (109) (79)
equivalents
Cash and cash equivalents at start (7) 102 102
of period
Cash and cash equivalents at end of 95 (7) 23
period
SVM UK EMERGING FUND plc
Half Yearly Report 2017
UNAUDITED ACCOUNTS
Investment Portfolio as at 30 September 2017
Market % of Net Sector analysis as at % of
Exposure 2017 Assets 30 September 2017 Gross
Stock GBP000 Exposure
Sector
1 Fevertree Drinks 317 4.9 Consumer Services 28.8
2 Johnson Service Group 4.8 Consumer Goods 20.1
310
3 4Imprint Group 4.3 Industrials 15.2
285
4 Eve Sleep* 276 4.3 Financials 12.7
5 Burford Capital 256 4.0 Healthcare 11.5
6 GVC Holdings 220 3.4 Technology 10.8
7 Hutchison China Meditech 194 3.0 Telecommunications 0.9
8 Redrow* 166 2.6 Total 100.0
9 Supergroup* 161 2.5
10 Unite Group 161 2.5
Ten largest investments 2,346 36.3
11 ASOS 159 2.5
12 FDM Group 158 2.4
13 Kerry Group 150 2.3
14 Beazley Group 150 2.3
15 Workspace Group 147 2.3
16 UDG Healthcare 139 2.2
17 Ryanair 139 2.2
18 Watkin Jones 131 2.0
19 GB Group* 131 2.0
20 JD Sports* 110 1.8
Twenty largest investments 3,760 58.3
21 Eco Animal Health Group 113 1.7
22 Hill & Smith 113 1.7
23 Dechra Pharmaceuticals 110 1.7
24 CVS Group 110 1.7
25 Blue Prism 109 1.7
26 Renishaw* 109 1.7
27 Rentokil 108 1.7
28 Premier Technical 107 1.7
Services
29 SSP Group 107 1.6
30 Dotdigital 106 1.6
Thirty largest investments 4,852 75.1 *Includes Contract for
Difference (CFD)
Other investments (47 3,034 46.9
holdings)
Market exposure for equity
Total investments 7,886 122.0 investments held is the same as
fair value and for CFDs held is
CFD positions exposure (1,792) (27.7) the market value of the
underlying shares to which the
CFD unrealised gains 213 3.3 portfolio is exposed via the
contract.
Net current assets 155 2.4
Net assets 6,462 100.0
SVM UK EMERGING FUND plc
Half Yearly Report 2017
UNAUDITED ACCOUNTS
Risks and Uncertainties
The principal risks facing the Fund relate to the investment in financial
instruments and include market, liquidity, credit and interest rate risk.
Additional risks faced by the Fund are investment strategy, share price
discount, accounting, legal and regulatory, operational, corporate governance
and shareholder relations, and financial. 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 Managers and third party service providers addressing these risks. An
explanation of these risks and how they are mitigated is explained in the 2017
Annual Report, which is available on the Manager's website:
www.svmonline.co.uk. These principal risks and uncertainties have not changed
from those disclosed in the 2017 Annual Report.
Going Concern
The Board, having made appropriate enquiries, has a reasonable expectation that
the Fund has adequate resources to continue in operational existence for the
foreseeable future, a period of not less than 12 months from the date of this
report. Accordingly, it continues to adopt the going concern basis in preparing
the financial statements.
Notes
1. The Financial Statements have been prepared on a going concern basis
in accordance with
FRS 102 "Financial Reporting Standard applicable in the UK and Republic of
Ireland", FRS 104 "Interim Financial Reporting" and under the Association of
Investment Companies Statement of Recommended Practice "Financial Statement of
Investment Trust Companies and Venture Capital Trusts" issued in 2014, as were
the interim financial statements for the period to 30 September 2016. These
financial statements have been prepared in accordance with the accounting
policies used for the financial year ended 31 March 2017.
2. Return per share is based on a weighted average of 6,005,000 (2016 -
6,005,000) ordinary shares in issue during the period.
Total return per share is based on the total gain for the period of GBP802,000
(2016 - gain of GBP242,000). Capital return per share is based on the capital
gain for the period of GBP749,000 (2016 - gain of GBP198,000). Revenue return per
share is based on the revenue gain after taxation for the period of GBP53,000
(2016 - gain of GBP44,000).
The number of shares in issue at 30 September 2017 was 6,005,000
(2016 - 6,005,000).
3. All investments are held at fair value. At 30 September 2017 no
unlisted investments were held with value attributed (31 March 2017: same; 30
September 2016: same).
Investments have been classified using the fair value hierarchy:
September March
2017 2017
GBP000 GBP000
Classification of financial instruments
Level 1 6,094 5,472
Level 2 213 111
Level 3 - 2 investments (March 2017 - 2) - -
Level 1 reflects financial instruments quoted in an active market.
SVM UK EMERGING FUND plc
Half Yearly Report 2017
UNAUDITED ACCOUNTS
Level 2 reflects financial instruments whose fair value is
evidenced by comparison with other observable current market transactions in
the same instrument or based on a valuation technique whose variables includes
only data from observable markets. The CFD positions are the sole Level 2
investments at 30 September 2017 and 31 March 2017
Level 3 reflects financial instruments whose fair value is
determined in whole or in part using a valuation technique based on assumptions
that are not supported by prices from observable market transactions in the
same instrument and not based on available observable market data.
4. The Board has granted the Manager a limited authority to invest
in CFDs to achieve some degree of gearing and/or hedging without incurring the
gross cost of the investment. The Board requires the Manager to operate within
certain risk limits, as detailed in the Annual Report. The following table
details the CFD positions:
Number of CFD holdings at 30 September 2017: 21 (31 March 2017: 16)
CFD positions September March
2017 2017
GBP000 GBP000
Gross exposure 1,792 1,342
Net exposure 1,792 1,342
Unrealised gains 213 111
Unrealised losses 216 132
The gearing ratio is 24.0% at 30 September 2017 (31 March 2017: 23.8%). The
gearing figure indicates the extra amount by which the 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.
5. The Manager has waived its fees for the periods to 30 September 2017
and 2016.
6. The above figures do not constitute full or statutory accounts in
terms of Sections 434 and 435 of the Companies Act 2006. All information shown
for the six months to 30 September 2017 is unaudited. The accounts for the year
to 31 March 2017, on which the auditors issued an unqualified report, have been
lodged with the Registrar of Companies and did not contain a statement required
under Section 498 of the Companies Act 2006.
For further information, please contact:
Colin McLean SVM Asset Management 0131 226 6699
Roland Cross Four Broadgate 0207 726
6111
END
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November 30, 2017 10:01 ET (15:01 GMT)
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