DJ New Star Investment Trust PLC: IR-Half-yearly Results
New Star Investment Trust PLC (NSI)
New Star Investment Trust PLC: IR-Half-yearly Results
21-March-2024 / 16:13 GMT/BST
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NEW STAR INVESTMENT TRUST PLC
This announcement constitutes regulated information.
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31st DECEMBER 2023
INVESTMENT OBJECTIVE
The Company's objective is to achieve long-term capital growth.
FINANCIAL HIGHLIGHTS
30th June %
31st December 2023
2023 Change
PERFORMANCE
Net assets (GBP '000) 128,623 125,592 2.41
Net asset value per Ordinary share 181.10p 176.83p 2.41
Mid-market price per Ordinary share 116.00p 120.00p (3.33)
Discount of price to net asset value 36.0% 32.1%
Six months ended Six months ended
31st December 2023 31st December 2022
Total Return* 3.38% 0.19%
IA Mixed Investment 40-85% Shares (total return) 5.52% 0.89%
MSCI AC World Index (total return, sterling adjusted) 7.19% 3.50%
MSCI UK Index (total return) 5.58% 5.39%
Six months ended
Six months ended 31st December
31st December
2023
2022
REVENUE
Return (GBP'000) 1,467 735
Return per Ordinary share 2.07p 1.04p
Proposed dividend per Ordinary share 1.70p 0.90p
Dividend paid per Ordinary share 1.70p 1.40p
TOTAL RETURN
Return (GBP'000) 4,238 241
Net assets (dividend added back) 3.38% 0.19%
Net assets 2.41% (0.61)% * The total return figure for the Company represents the revenue and capital return shown in the statement of comprehensive income plus dividends paid.
INTERIM REPORT
CHAIRMAN'S STATEMENT
PERFORMANCE
Your Company's generated a total return of 3.38% over the six months to 31st December 2023, leaving the net asset value (NAV) per ordinary share at 181.10p. By comparison, the Investment Association's Mixed Investment 40-85% Shares Index gained 5.52%. The MSCI AC World Total Return Index gained 7.19% in sterling while the MSCI UK Total Return Index rose 5.58%. Over the period, global bonds returned 3.94%. Further information is provided in the investment manager's report.
Your Company made a revenue profit for the six months of GBP1,467,000 (2022: GBP735,000). The 2022 revenue profit was struck after the GBP385,000 direct management fee was deducted. Following a change in accounting treatment last year, direct management fees are now taken from capital.
GEARING AND DIVIDENDS
Your Company has no borrowings. It ended the period under review with cash representing 14.70% of its NAV and is likely to maintain a significant cash position. In respect of the six months to 31st December 2023, your Directors will pay an interim dividend of 1.70p per share (2022: 0.90p). Over the second half of 2023, your Company continued to increase its investments in income-yielding assets with the aim of enhancing its revenue and thus its dividend-paying capacity. Further purchases of income-yielding assets were made after the period end.
DISCOUNT
Your Company's shares continued to trade at a significant discount to their NAV during the period under review. The Board keeps this issue under review.
OUTLOOK Global equities and bonds should benefit over the next few months from expectations that central banks will reduce interest rates in response to declining inflation and lacklustre economic growth, with equity market sectors such as technology likely to provide leadership. Lower interest rates may weaken the dollar, benefitting emerging markets, where economic growth is likely to be stronger than in major industrialised countries. Political risks are, however, likely to be more significant this year than in 2023, with elections being held in the US, some large emerging markets and probably the UK.
NET ASSET VALUE
Your Company's unaudited NAV at 29th February 2024 was 184.56p.
Geoffrey Howard-Spink
Chairman
21st March 2024
INVESTMENT MANAGER'S REPORT
MARKET REVIEW
Global equities and bonds rose 7.19% and 3.94% respectively in sterling over the six months to 31 December as investors became increasingly confident that interest rates had peaked for this monetary cycle and would soon be reduced in response to falling inflation. Some leading indicators suggested the global economy would deteriorate in 2024 but a soft, rather than a hard, landing is likely.
The Federal Reserve increased its official rate by a quarter percentage point to 5.25-5.5% in July. The Bank of England raised its Bank Rate a quarter point to 5.25% in August and a month later the European Central Bank raised its policy rate a quarter point to 4%. Since then, official interest rates have been on hold although monetary policy has tightened somewhat because central banks have reduced their bond holdings. Interest rates are expected to fall in the second half of 2024, with inflation figures showing price rises trending down to central bank targets of 2%.
Inflation is now well below its 2022 peak. US personal consumption expenditures (PCE) inflation, the Fed's preferred measure, was 3.00% in June 2023 but had fallen to 2.40% by January 2024. Eurozone inflation fell from 5.5% in June 2023 to 2.6% in February 2024. The UK's consumer price index inflation rate fell from 7.9% in June 2023 to 3.4% in February 2024.
The US economy proved stronger than many forecasters feared, with gross domestic product (GDP) showing 4.9% and 3.2% year-on-year rises during the third and fourth quarters of 2023 as unemployment remained low and consumer spending strong. By contrast, eurozone GDP was flat over the period while the UK entered a technical recession, enduring two quarters of GDP decline.
The People's Bank of China cut its key reserve requirement ratio by a quarter point in September and a further half point in February 2024 to support the economy as Country Garden, once China's largest homebuilder, joined its rival, Evergrande, in defaulting on its debts, another sign of stress in the over-indebted property sector. Chinese stocks are likely to remain out of favour in 2024 for two reasons: US bipartisan support for sanctions against Chinese companies to protect US technological leadership and Beijing's regulatory intervention in private companies in pursuit of so-called "common prosperity". By contrast, India's economy is outpacing the Chinese economy. The International Monetary Fund (IMF) forecasts India's economy will grow 6.3% in 2024 compared to 4.2% for China.
PORTFOLIO REVIEW
Your Company's total return over the period under review was 3.38%. By comparison, the Investment Association Mixed Investment 40-85% Shares sector, a peer group of funds with a multi-asset approach to investing and a typical investment in global equities in the 40-85% range, rose 5.52%. The MSCI All Companies World Total Return Index rose 7.19% in sterling while the MSCI UK Total Return Index rose 5.58%. Your Company benefited from investments in US stocks and global technology stocks while investments in some emerging market equity funds hurt performance.
US technology stocks rose 11.93% in sterling. Valuations in the technology sector and other growth sectors tend to rise in response to signs that interest rates are likely to fall because investors discount future cash flows less aggressively. Technology stocks also benefited as investors recognised the potential of artificial intelligence (AI). Nvidia, a top-three holding in Polar Capital Global Technology and the iShares S&P 500 exchange-traded fund (ETF), supplies semiconductors to artificial intelligence companies. It rose 16.77% in sterling over the period, helping Polar Capital Global Technology and the iShares S&P 500 ETF to rise 11.26% and 9.75% respectively.
Among your Company's other global equity holdings, Baillie Gifford Global Income Growth underperformed, up only 5.37%, in part because its income mandate biased it away from lower-yielding technology stocks towards higher-yielding industrials. The portfolio's largest holding was, however, Novo Nordisk, which gained 28.70% in sterling thanks to the success of its Wegovy weight-loss drug.
An increase in investments managed in accordance with their income mandate will support your Company's ability to pay an income. During the period, the Fundsmith Equity holding was reduced by GBP5.9 million, a further GBP2.5 million was invested in Baillie Gifford Global Income Growth and a further GBP4.7 million was invested in Redwheel Global Equity Income.
UK stocks lagged, rising only 5.58%, but smaller companies outperformed, up 8.86%. UK equities ended the period trading on relatively-low earnings multiples and above-average yields. Amongst your Company's UK equity income investments, Man GLG Income did best, returning 10.70%, but Trojan Income gained only 3.79% while Aberforth Split Level Income and Chelverton UK Equity Income, both small-cap specialists, rose 8.42% and 6.38% respectively.
Equities in Asia ex Japan and emerging market equities gained only 2.77% and 4.63% respectively in sterling, dragged lower by Chinese stocks, down 6.22%. Your Company's relatively-high allocation to these markets hurt performance. Matthews Asia ex Japan Total Return Equity, which switched from an income to a total return mandate, fell 8.19%. Your Company's holding was reduced by GBP1.0 million. Somerset Asia Income, JP Morgan Emerging Markets Income and JP Morgan Global Emerging Markets Income Trust, an investment trust, outperformed, however, rising 4.38%, 4.18% and 3.06% respectively.
Indian equities outperformed, rising 14.87% in sterling. Narendra Modi, India's prime minister, is likely to win a third term in office in this year's election and a mandate to continue his pro-business policies. Stewart Investors Indian Subcontinent underperformed, however, rising 6.00%. Vietnamese stocks fell 2.25% in sterling as policy makers intensified their anti-corruption campaign. Vietnam Enterprise Investments underperformed, falling 4.13%.
Japanese stocks rose 6.88% in sterling but Lindsell Train Japan lagged and was sold. The gold price rose 6.78% in sterling and BlackRock Gold & General, which holds mining stocks, rose 6.75%. Your Company's unquoted investments account for less than 2.0% of the assets.
Investments in sterling and dollar cash generated significant income, with interest rates above 5% throughout the period. With interest rates likely to have peaked for this cycle, your Company has invested GBP3.1 million in longer-dated US government bonds through a sterling-hedged holding in the iShares Treasury Bond 7-10 year ETF. In line with most of the other portfolio changes made over the period, this investment aims to support growth in your Company's dividend. Further changes aimed at increasing income have been made since the period end.
OUTLOOK
There are grounds to be positive about equity and bond markets over the coming months because easier monetary policy should prove a tailwind for both asset classes. Economies have proved resilient so far in the face of rising interest rates despite well-established leading indicators suggesting the onset of recession. These include inverted yield curves as 10-year government bond yields fell below two-year yields and tighter lending conditions at commercial banks.
US stocks should perform well because the economic environment is likely to favour growth sectors such as technology and growing investor recognition of the commercial possibilities of AI. There are also grounds to be positive about emerging markets although it will probably pay to be cautious about China. Some developing countries have lower levels of public sector indebtedness than industrialised countries and better economic growth prospects. The International Monetary Fund predicts that developing countries will show 4% economic growth in 2024 against 1.4% for developed countries.
Political risks are likely, however, to move markets more this year than in 2023 because a large percentage of the world's population will be voting in general elections. Countries holding elections in 2024 include the US, India, Taiwan, Indonesia, Pakistan, South Africa and Mexico and probably the UK. Sterling and dollar cash, low-risk multi-asset investments, gold equities and bonds provide diversification and should prove defensive should equities fall.
Brompton Asset Management Limited 21st March 2024
DIRECTORS' REPORT
PERFORMANCE
In the six months to 31st December 2023 the total return per Ordinary share was 3.38% (2022: 0.19%) and the NAV per ordinary share increased to 181.10p, whilst the share price decreased by 3.33% to 116.00p. This compares to an increase of 5.52% in the IA Mixed Investment 40-85% Shares Index.
The Company made a revenue profit for the six months of GBP1,467,000 (2022: GBP735,000).
The management fee charged directly by Brompton is now allocated to the capital account. Compared with the corresponding period last year, the amount available for distribution has increased by GBP385,000 (GBP0.55p per share).
DIVIDEND
The Directors propose an interim dividend of 1.70p per Ordinary share in respect of the six months ended 31st December 2023 (2022: GBP0.90). The dividend will be paid on 29th April 2024 to shareholders on the register at the close of business on 2nd April 2024 (ex-dividend 28th March 2024).
INVESTMENT OBJECTIVE
The Company's investment objective is to achieve long-term capital growth.
INVESTMENT POLICY
The Company's investment policy is to allocate assets to global investment opportunities through investment in equity, bond, commodity, real estate, currency and other markets. The Company's assets may have significant weightings to any one asset class or market, including cash.
The Company will invest in pooled investment vehicles, exchange traded funds, futures, options, limited partnerships and direct investments in relevant markets. The Company may invest up to 15% of its net assets in direct investments in relevant markets.
The Company will not follow any index with reference to asset classes, countries, sectors or stocks. Aggregate asset class exposure to any one of the United States, the United Kingdom, Europe ex UK, Asia ex Japan, Japan or Emerging Markets and to any individual industry sector will be limited to 50% of the Company's net assets, such values being assessed at the time of investment and for funds by reference to their
published investment policy or, where appropriate, their underlying investment exposure.
The Company may invest up to 20% of its net asset value in unlisted securities (excluding unquoted pooled investment vehicles) such values being assessed at the time of investment.
The Company will not invest more than 15% of its net assets in any single investment, such values being assessed at the time of investment.
Derivative instruments and forward foreign exchange contracts may be used for the purposes of efficient portfolio management and currency hedging. Derivatives may also be used outside of efficient portfolio management to meet the Company's investment objective. The Company may take outright short positions in relation to up to 30% of its net assets, with a limit on short sales of individual stocks of up to 5% of its net assets, such values being assessed at the time of investment.
The Company may borrow up to 30% of net assets for short-term funding or long-term investment purposes.
No more than 10%, in aggregate, of the value of the Company's total assets may be invested in other closed-ended investment funds except where such funds have themselves published investment policies to invest no more than 15% of their total assets in other listed closed-ended investment funds.
SHARE CAPITAL
The Company's share capital comprises 305,000,000 Ordinary shares of 1p each, of which 71,023,695 (2022: 71,023,695) have been issued and fully paid. No Ordinary shares are held in treasury, and none were bought back or issued during the six months ending 31st December 2023.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks identified by the Board, and the steps the Board takes to mitigate them, are discussed below. The audit committee reviews existing and emerging risks on a six monthly basis. The Board continues to monitor the geopolitical, societal, economic and market focused implications of the events in 2022 and 2023.
Investment strategy: Inappropriate long-term strategy, asset allocation and fund selection could lead to underperformance. The Board discusses investment performance at each of its meetings and the Directors receive reports detailing asset allocation, investment selection and performance.
Business conditions and general economy: The Company's future performance is heavily dependent on the performance of different equity and currency markets. The Board cannot mitigate the risks arising from adverse market movements. However, diversification within the portfolio should reduce the impact. Further information is given in the portfolio risks below.
Macro-economic event risk: The scale and potential adverse impact of a macro-economic event, such as the Covid pandemic and wars, has highlighted the possibility of a number of identified risks such as market risk, currency risk, investment liquidity risk and operational risk having an adverse impact at the same time. The risk may impact on: the value of the Company's investment portfolio, its liquidity, meaning investments cannot be realised quickly, or the Company's ability to operate if the Company's suppliers face financial or operational difficulties. The Directors closely monitor these areas and currently maintain a significant cash balance.
Portfolio risks - market price, foreign currency and interest rate risks: The largest investments are listed below. Investment returns will be influenced by interest rates, inflation, investor sentiment, availability/cost of credit and general economic and market conditions in the UK and globally. A significant proportion of the portfolio is in investments denominated in foreign currencies and movements in exchange rates could significantly affect their sterling value. The Investment Manager takes all these factors into account when making investment decisions, but the Company does not normally hedge against foreign currency movements. The Board's policy is to hold a spread of investments to reduce the impact of the risks arising from the above factors by investing in a spread of asset classes, geographic regions and through investment funds.
Net asset value discount: The discount in the price at which the Company's shares trade to net asset value means that shareholders cannot realise the real underlying value of their investment. Over several years, the Company's share price has been at a significant discount to the Company's net asset value. The Directors regularly review the level of discount, however given the investor base of the Company, the Board is very restricted in its ability to influence the discount to net asset value.
Investment Manager: The quality of the team employed by the Investment Manager is an important factor in delivering good performance and the loss of key staff could adversely affect returns. A representative of the Investment Manager attends each Board meeting and the Board is informed if any major changes to the investment team employed by the Investment Manager are proposed. The Investment Manager regularly informs the Board of developments and any key implications for either the investment strategy or the investment portfolio.
Tax and regulatory risks: A breach of The Investment Trust (Approved Company) (Tax) Regulations 2011 (the 'Regulations') could lead to capital gains realised within the portfolio becoming subject to UK capital gains tax. A breach of the FCA Listing Rules could result in suspension of the Company's shares, while a breach of company law could lead to criminal proceedings, financial and/or reputational damage. The Board employs Brompton Asset Management Limited as Investment Manager, and Apex Fund Administration Services (UK) Limited as Secretary and Administrator, to help manage the Company's legal and regulatory obligations.
Operational: Disruption to, or failure of, the Investment Manager's or Administrator's accounting, dealing or payment systems, or the Custodian's records, could prevent the accurate reporting and monitoring of the Company's financial position. The Company is also exposed to the operational risk that one or more of its suppliers may not provide the required level of service. The Board monitors its service providers, with an emphasis on their business interruption procedures.
The Directors confirm that they have carried out a robust assessment of the risks and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency and liquidity.
INVESTMENT MANAGEMENT ARRANGEMENTS AND RELATED PARTY TRANSACTIONS
In common with most investment trusts the Company does not have any executive directors or employees. The day-to-day management and administration of the Company, including investment management, accounting and company secretarial matters, and custodian arrangements are delegated to specialist third party service providers.
Details of related party transactions are contained in the Annual Report. There have been no unusual material transactions with related parties during the period which have had a significant impact on the performance of the Company.
GOING CONCERN AND VIABILITY
The Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the interim report as the assets of the Company consist mainly of securities that are readily realisable or cash and it has no significant liabilities and limited financial commitments. Investment income has exceeded annual expenditure and current liquid net assets cover current annual expenses for many years. Accordingly, the Company is of the opinion that it has adequate financial resources to continue in operational existence for the foreseeable future which is considered to be in excess of five years. Five years is considered a reasonable period for investors when making their investment decisions. In reaching this view the Directors reviewed the anticipated level of expenditure against the cash and liquid assets within the portfolio. The Directors have also considered the risks the Company faces.
RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge:
As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with UK adopted international accounting standard. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting".
The Chairman's statement and the Investment Manager's report include a fair review of important events that have occurred during the first six months of the financial year and their impact on the financial statements.
The Chairman's statement, the Investment Manager's report and the Directors' report include a fair review of the potential risks and uncertainties for the remaining six months of the year.
The Director's report and note 8 to the interim financial report include a fair review of the information concerning transactions with the investment manager and changes since the last annual report.
By order of the Board
Apex Fund Administration Services (UK) Limited
21st March 2024
SCHEDULE OF TOP TWENTY INVESTMENTS at 31st December 2023
30th June 2023 Purchases/
Market Movement 31st Dec 2023 GBP'000 % of Net Assets
GBP'000 (Sales)
Polar Capital Global Technology 8,615 - 1,072 9,687 7.53
Baillie Gifford Global Income Growth 4,252 2,500 273 7,025 5.46
TM Redwheel Global Equity Income Fund 2,132 4,700 180 7,012 5.45
iShares Core S&P 500 UCITS ETF 5,327 - 404 5,731 4.46
First State Indian Subcontinent Fund 4,578 - 274 4,852 3.77
Aquilus Inflection Fund 4,544 - 175 4,719 3.67
EF Brompton Global Conservative Fund 4,439 - 133 4,572 3.56
BlackRock Continental European Income
Fund
4,355 - 175 4,530 3.52
MI Chelverton UK Equity Income Fund 4,300 - 99 4,399 3.42
Fundsmith Equity Fund 9,745 (5,883) 168 4,030 3.13
BlackRock Gold & General 3,832 - 137 3,969 3.09
MI Somerset Asia Income Fund 3,782 - 35 3,817 2.97
EF Brompton Global Equity Fund 3,615 - 175 3,790 2.95
Aberforth Split Level Income Trust 3,526 - 79 3,605 2.80
EF Brompton Global Opportunities Fund 3,332 - 115 3,447 2.68
Vietnam Enterprise Investments 3,473 - (166) 3,307 2.57
EF Brompton Global Growth Fund 3,159 - 121 3,280 2.55
MI Brompton UK Recovery Unit Trust 2,933 - 192 3,125 2.43
iShares USD Treasury Bond 7-10yr UCITS ETF
- 3,057 (16) 3,041 2.36
Matthews Asia Ex Japan Total Return 4,266 (1,000) (385) 2,881 2.24
84,205 3,374 3,240 90,819 70.61
Balance not held in investments above 24,096 (2,281) 83 21,898 17.02
Total investments (excluding cash) 108,301 1,093 3,323 112,717 87.63
Cash 17,244 1,961 (292) 18,913 14.71
Other net current assets/(liabilities) 47 (3,054) - (3,007) (2.34)
Net Assets 125,592 - 3,031 128,623 100.00
All of the above investments are investment funds with the exception of Aberforth Split Level Income Trust and Vietnam Enterprise Investments which are investment companies.
The investment portfolio, excluding cash, can be further analysed as follows: GBP'000
Investment funds 91,487
Unquoted investments including loans of GBP0.7m 2,462
Investment companies and exchange traded funds 18,197
Other quoted investments 571
112,717
STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31st December 2023 (unaudited)
Six months ended
31st December 2023
(unaudited)
Total
Revenue Return Capital Return
GBP '000 Return
GBP '000 GBP '000
Notes
INCOME
Investment income 1,180 - 1,180
Other operating income 474 - 474
Total income 2 1,654 - 1,654
GAINS AND LOSSES ON INVESTMENTS
Gains/(losses) on investments at fair value through profit or loss
5 - 3,206 3,206
Other exchange (losses)/gains - (43) (43)
Trail rebates - 1 1
1,654 3,164 4,818
EXPENSES
Management fees 3 - (393) (393)
Other expenses (187) - (187)
(187) (393) (580)
PROFIT BEFORE FINANCE COSTS AND TAX 1,467 2,771 4,238
Finance costs - - -
PROFIT BEFORE TAX 1,467 2,771 4,238
Tax - - -
PROFIT FOR THE PERIOD 1,467 2,771 4,238
EARNINGS PER SHARE
Ordinary shares (pence) 4 2.07p 3.90p 5.97p
The total return column of this statement represents the Group's profit and loss account, prepared in accordance with IFRS. The supplementary Revenue Return and Capital Return columns are both prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period.
All income is attributable to the equity holders of the parent company. There are no minority interests.
STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31st December 2022 and the year ended 30th June 2023
Six months ended Year ended
31st December 2022 30th June 2023
(unaudited) (audited)
Revenue Capital Total Revenue Capital Total
Notes Return Return Return Return Return Return
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
INCOME
Investment income 1,101 - 1,101 1,997 - 1,837
Other operating income 191 - 191 457 - 20
Total income 2 1,292 - 1,292 2,454 - 1,857
GAINS AND LOSSES ON INVESTMENTS
Gains/(losses) on investments at fair value
through profit or loss
5 - (594) (594) - 2,279 2,279
Other exchange (losses)/gains - 99 99 - (381) (381)
Trail rebates - 1 1 - 2 2
1,292 (494) 798 2,454 1,900 4,354
EXPENSES
Management fees 3 (385) - (385) - (775) (775)
Other expenses (163) - (163) (332) - (332)
(548) - (548) (332) (775) (1,107)
PROFIT/(LOSS) BEFORE TAX 744 (494) 250 2,122 1,125 3,247
Tax (9) - (9) - - -
PROFIT/(LOSS) FOR THE PERIOD 735 (494) 241 2,122 1,125 3,247
EARNINGS PER SHARE
Ordinary shares (pence) 4 1.04p (0.70)p 0.34p 2.99p 1.58p 4.57p
The total return column of this statement represents the Group's profit and loss account, prepared in accordance with IFRS. The supplementary Revenue Return and Capital Return columns are both prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the periods.
All income is attributable to the equity holders of the parent company. There are no minority interests.
STATEMENT OF CHANGES IN EQUITY
for the six months ended 31st December 2023 (unaudited)
Share
Share premium Special reserve Retained earnings
capital Total
GBP '000 GBP '000 GBP '000
GBP '000 GBP '000
At 30th JUNE 2023 710 21,573 56,908 46,401 125,592
Total comprehensive income for the period - - - 4,238 4,238
Dividend paid - - - (1,207) (1,207)
At 31st DECEMBER 2023 710 21,573 56,908 49,432 128,623
Included within retained earnings were GBP2,416,000 of Company reserves available for future distribution.
STATEMENT OF CHANGES IN EQUITY
for the six months ended 31st December 2022 (unaudited)
Share
Share premium Special reserve Retained earnings
capital Total
GBP '000 GBP '000 GBP '000
GBP '000 GBP '000
At 30th JUNE 2022 710 21,573 56,908 44,787 123,978
Total comprehensive income for the period - - - 241 241
Dividend paid - - - (994) (994)
At 31st DECEMBER 2022 710 21,573 56,908 44,034 123,225
STATEMENT OF CHANGES IN EQUITY
for the year ended 30th June 2023 (audited)
Share
Share premium Special reserve Retained earnings
capital Total
GBP '000 GBP '000 GBP '000
GBP '000 GBP '000
At 30th JUNE 2022 710 21,573 56,908 44,787 123,978
Total comprehensive income for the year - - - 3,247 3,247
Dividend paid - - - (1,633) (1,633)
At 30th JUNE 2023 710 21,573 56,908 46,401 125,592
BALANCE SHEET
at 31st December 2023
31st December 31st December 30th June
2023 2022 2023
Notes
(unaudited) (unaudited) (audited)
GBP '000 GBP '000 GBP '000
NON-CURRENT ASSETS
Investments at fair value through profit or loss
5 112,717 105,298 108,301
CURRENT ASSETS
Other receivables 323 152 345
Cash and cash equivalents 18,913 18,024 17,244
19,236 18,176 17,589
TOTAL ASSETS 131,953 123,474 125,890
CURRENT LIABILITIES
Other payables (3,330) (249) (298)
TOTAL ASSETS LESS CURRENT LIABILITIES
128,623 123,225 125,592
NET ASSETS 128,623 123,225 125,592
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS
Called-up share capital 710 710 710
Share premium 21,573 21,573 21,573
Special reserve 56,908 56,908 56,908
Retained earnings 6 49,432 44,034 46,401
TOTAL EQUITY 128,623 123,225 125,592
NET ASSET VALUE PER ORDINARY SHARE (PENCE) 7 181.10p 173.50p 176.83p
The interim report was approved and authorised for issue by the Board on 21st March 2024.
CASH FLOW STATEMENT
for the six months ended 31st December 2023
Six months Six months Year
ended ended ended
31st 31st 30th June
December December
2023
2023 2022
(audited)
(unaudited) (unaudited)
GBP '000
GBP '000 GBP '000
NET CASH INFLOW FROM OPERATING ACTIVITIES 4,129 831 1,300
INVESTING ACTIVITIES
Purchase of investments (11,374) (6,442) (9,812)
Sale of investments 10,164 - 3,240
NET CASH (OUTFLOW)/INFLOW FROM INVESTING ACTIVITIES
(1,210) (6,442) (6,572)
FINANCING
Equity dividend paid (1,207) (994) (1,633)
NET CASH (OUTFLOW) / INFLOW AFTER FINANCING
1,712 (6,605) (6,905)
(DECREASE) / INCREASE IN CASH 1,712 (6,605) (6,905)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
(Decrease)/ Increase in cash resulting from cash flows 1,712 (6,605) (6,905)
Exchange movements (43) 99 (381)
Movement in net funds 1,669 (6,506) (7,286)
Net funds at start of period/year 17,244 24,530 24,530
NET FUNDS AT END OF PERIOD/YEAR 18,913 18,024 17,244
RECONCILIATION OF PROFIT BEFORE FINANCE COSTS AND TAXATION TO NET CASH FLOW FROM
OPERATING ACTIVITIES
Profit before finance costs and taxation * 4,238 250 3,247
Losses/(gains) on investments (3,206) 594 (2,279)
Exchange gains 43 (99) 381
Capital trail rebates (1) (1) (2)
Revenue profit before finance costs and taxation 1,074 744 1,347
Decrease/(increase) in debtors 22 106 (87)
(Decrease)/increase in creditors 3,032 (11) 38
Taxation - (9) -
Capital trail rebates 1 1 2
NET CASH INFLOW FROM OPERATING ACTIVITIES 4,129 831 1,300
* Includes dividends received in cash of GBP1,034,000 (30th June 2023: GBP1,607,000) (2022: GBP1,012,000), accumulation income of GBP240,000 (30th June 2023: GBP218,000) (2022: GBP188,000) and interest received of GBP327,000 (30th June 2023: GBP586,000) (2022: GBP189,000).
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 31st December 2023
1. ACCOUNTING POLICIES
The condensed interim financial statements comprise the unaudited results of the Company for the six months ended 31st December 2023. The comparative information for the six months ended 31st December 2022 and the year ended 30th June 2023 are a condensed set of accounts and do not constitute statutory accounts under the Companies Act 2006. Full statutory accounts for the year ended 30th June 2023 included an unqualified audit report, did not contain any statements under section 498 of the Companies Act 2006, and have been filed with the Registrar of Companies.
The half year financial statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', and are presented in pounds sterling, as this is the Company's functional currency.
The same accounting policies have been followed in the interim financial statements as applied to the accounts for the year ended 30th June 2023, which were prepared in accordance with IFRSs.
No segmental reporting is provided as the Company is engaged in a single segment.
2. TOTAL INCOME
Year ended 30th June
Six months ended 31st December 2023
Six months ended 31st December 2022 2023
GBP'000
GBP'000
GBP'000
Income from Investments
UK net dividend income 1,047 952 1,707
Unfranked investment income 104 125 175
UK fixed interest 29 24 115
1,180 1,101 1,997
Other Income
Bank interest receivable 474 191 457
474 191 457
Year ended 30th June
Six months ended 31st December 2023
Six months ended 31st December 2022 2023
GBP'000
GBP'000
GBP'000
Total income comprises
Dividends 1,151 1,077 1,882
Other income 503 215 572
1,654 1,292 2,454
3. MANAGEMENT FEES
Year ended 30th June
Six months ended 31st December 2023
Six months ended 31st December 2022 2023
GBP'000
GBP'000
GBP'000
Investment management fee 393 385 775
393 385 775
The Investment Manager receives a management fee, payable quarterly in arrears, equivalent to an annual 0.75 per cent of total assets after the deduction of the value of any investments managed by the Investment Manager or its associates (as defined in the investment management agreement).
4. RETURN PER ORDINARY SHARE
Year ended 30th
Six months ended 31st December June
2023 Six months ended 31st December
2022 2023
GBP'000
GBP'000
GBP'000
Revenue return 1,467 735 2,122
Capital return 2,771 (494) 1,125
Total return 4,238 241 3,247
Weighted average number of Ordinary 71,023,695 71,023,695 71,023,695
shares
Revenue return per Ordinary share 2.07p 1.04p 2.99p
Capital return per Ordinary share 3.90p (0.70)p 1.58p
Total return per Ordinary share 5.97p 0.34p 4.57p
5. INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS
At
At At
30th June
31st December 2023 31st December 2022
2023
GBP'000 GBP'000
GBP'000
COMPANY 112,717 105,298 108,301
ANALYSIS OF INVESTMENT
PORTFOLIO
Six months ended 31st December 2023
Total
Quoted* Unquoted**
(level 1 and 2) (level 3)
GBP'000
GBP'000 GBP'000
Opening book cost 78,281 10,729 89,010
Opening investment holding gains/(losses) 27,530 (8,239) 19,291
Opening valuation 105,811 2,490 108,301
Movement in period:
Purchases at cost 11,374 - 11,374
Sales
- Proceeds (10,078) (86) (10,164)
- Realised gains on sales 4,363 - 4,363
Movement in investment holding gains/(losses) (1,215) 58 (1,157)
Closing valuation at 31 December 2023 110,255 2,462 112,717
Closing book cost 83,940 10,643 94,583
Closing investment holding gains/(losses) 26,315 (8,181) 18,134
Closing valuation 110,255 2,462 112,717
* Quoted investments include unit trust and OEIC funds which are valued at quoted prices. Included within Quoted Investments is one monthly valued investment fund of GBP4,719,000 (30th June 2023 GBP4,544,000) (2022: GBP4,112,000).
** The Unquoted investments, representing just under 2% of the Company's NAV, have been valued in accordance with IPEVC valuation guidelines. The largest unquoted investment amounting to GBP1,215,000 (30th June 2023: GBP1,215,000) (2022: GBP700,000) was valued at the recent transaction price. The second largest investment has been valued at fair value. A 10% increase or decrease in the earnings of either of these investments would not have a material impact on the valuation of those investments.
There were no reclassifications for assets between Level 1, 2 and 3.
5. INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS continued
Year
Six months ended Six months ended ended
31st December 2023 31st December 2022 30th June
GBP'000 GBP'000 2023
GBP'000
ANALYSIS OF CAPITAL (LOSSES)/GAINS
Realised gains on sales of investments 4,363 - 1,443
(Decrease)/increase in investment holding gains (1,157) (594) 836
3,206 (594) 2,279
6. RETAINED EARNINGS
At At
At
31st December 2023 30th June
31st December 2022
GBP'000 2023
GBP'000
GBP'000
Capital reserve - realised 28,882 24,766 24,955
Capital reserve - revaluation 18,134 17,861 19,291
Revenue reserve 2,416 1,407 2,155
49,432 44,034 46,401 7. NET ASSET VALUE PER ORDINARY SHARE
31st December 2023 30th June
31st December 2022
GBP'000 2023
GBP'000
GBP'000
Net assets attributable to Ordinary shareholders
128,623 123,225 125,592
Ordinary shares in issue at end of period
71,023,695 71,023,695 71,023,695
Net asset value per Ordinary share 181.10p 173.50p 176.83p
8. TRANSACTIONS WITH THE INVESTMENT MANAGER
During the period there have been no new related party transactions that have affected the financial position or performance of the Group.
Since 1st January 2010 Brompton has acted as Investment Manager to the Company. This relationship is governed by an agreement dated 17 May 2018.
Mr Duffield is the senior partner of Brompton Asset Management Group LLP the ultimate parent of Brompton. Mr Duffield owns a majority (59.14%) of the shares in the Company.
Mr Gamble has an immaterial holding in Brompton Asset Management Group LLP.
The total investment management fee payable to Brompton for the half year ended 31st December 2023 was GBP393,000 (30th June 2023: GBP775,000) (2022: GBP385,000) and at the half year GBP196,000 (30th June 2023: GBP194,000) (2022: GBP192,000) was accrued.
The Company's investments include seven funds managed by Brompton or its associates valued at GBP22,981,000 (30th June 2023: GBP22,100,000) (2022: GBP21,697,000). No investment management fees were payable directly by the Company in respect of these investments.
The Company has equity and Loan investments of GBP300,000 (30th June 2023: GBP500,000) in an investment management company in which a related party of Mr Duffield holds a minority stake.
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ISIN: GB0002631041 Category Code: IR TIDM: NSI OAM Categories: 1.2. Half yearly financial reports and audit reports/limited reviews Sequence No.: 311247 EQS News ID: 1864699 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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(END) Dow Jones Newswires
March 21, 2024 12:13 ET (16:13 GMT)
