NEW STAR INVESTMENT TRUST PLC
NEW STAR INVESTMENT TRUST PLC
HALF YEAR RESULTS
For the six months ended 31st December 2015
INVESTMENT OBJECTIVE
The Company's objective is to achieve long term growth.
31st December 30th June %
2015 2015 Change
PERFORMANCE
Net assets (£ '000) 81,651 79,854 2.3
Net asset value per Ordinary share 114.96p 112.43p 2.3
Mid-market price per Ordinary share 72.50p 73.50p (1.4)
Discount (Premium) of price to net asset 36.9% 34.6% N/A
value
NAV performance (dividend added back) 2.5% 4.8%
IA Mixed Investment 40-85% Shares (total -0.48% 6.7%
return)
MSCI AC World Index (total return, 1.72% 10.1%
sterling adjusted)
MSCI UK Index (total return) -3.27% -0.2%
Six months Six months
ended 31st ended
December 31st December
2015 2014
REVENUE
Return per Ordinary share 0.16p 0.18p
Proposed dividend per Ordinary share - -
TOTAL RETURN
Net assets 2.3% 1.5%
Net assets (dividend added back) 2.5% 1.5%
INTERIM MANAGEMENT REPORT
CHAIRMAN'S STATEMENT
PERFORMANCE
Your Company generated a total return of 2.5% over the six months to 31st
December 2015, taking the net asset value (NAV) per ordinary share to 114.96p.
By comparison, the Investment Association's Mixed Investment 40-85% Shares
Index fell 0.48%. The MSCI AC World Total Return Index gained 1.72% while the
MSCI UK Total Return Index fell 3.27%. Over the same period, UK government
bonds returned 1.88%. Further information is provided in the Investment
Manager's report.
Your Company made a revenue profit for the six months of £112,000 (2014: £
128,000).
GEARING AND DIVIDENDS
Your Company has no borrowings. It ended the period under review with cash
representing 13.9% of its NAV and is likely to maintain a significant cash
position. Your Company has small retained revenue reserves and your Directors
do not recommend the payment of an interim dividend (2014: nil). Your Company
paid a dividend of 0.3p per share (2014: £Nil) in November 2015 in respect of
the previous financial year.
DISCOUNT
During the period under review, the Company's shares continued to trade at a
significant discount to their NAV. Your Board has explored various ways of
reducing this discount but no satisfactory solution has been found. The
position is, however, kept under continual review by your directors.
OUTLOOK
Global equities fell in January 2016 in response to renewed renminbi weakness
as China moved to loosen its currency's ties to the dollar, which had
strengthened in response to the turn upwards in the US interest rate cycle.
Investors have been concerned that a weaker renminbi would generate deflation,
and by recent weakness in the oil price. The stronger dollar has, however,
tightened US monetary conditions and this may cause the Federal Reserve to slow
down its planned programme of interest rate rises during 2016. A more dovish
stance from the Fed should reduce pressure on China to weaken the renminbi
further and should be positive for equities, particularly global consumer
stocks that benefit from increased consumer spending resulting from lower oil
prices.
NET ASSET VALUE
Your Company's unaudited NAV at 31st January 2016 was 112.11p.
Geoffrey Howard-Spink
Chairman
12th February 2016
INVESTMENT MANAGER'S REPORT
MARKET REVIEW
In December 2015, the US Federal Reserve finally went ahead and raised interest
rates for the first time since 2006. The Fed is charged with a dual mandate to
secure full employment and stable prices in the US. By December 2015, after
seven years of exceptional monetary policy, US unemployment had fallen to 5%
and tighter monetary policy seemed warranted. Headline inflation, however,
remained short of the Fed's target primarily as a result of the fall in the oil
price. The Fed chair, Janet Yellen, although surprised by the magnitude of the
oil price fall, viewed it as a "transitory factor" and raised interest rates.
Fed members also recognised there were "downside risks" to the US from global
economic and financial developments but these were considered to be "balanced"
by the stronger domestic picture.
Global equity markets seemingly took December's US interest rate rise in their
stride and gained 1.72% during the six months to 31 December 2015 in sterling
terms. There was, however, a reversal of sentiment in January 2016, with shares
falling sharply in the early days of trading. So why did investors take fright?
In raising interest rates, Fed members acted in the interests of the US economy
but one far-reaching consequence of this monetary policy change has been a
stronger dollar. The dollar gained 6.90% against sterling during the period
under review as investors anticipated the rate rise, and it has appreciated
further in early January. Unfortunately, the dollar's strength has exacerbated
some of those global risks recognised by the Fed. The link between the dollar
and the Chinese currency in recent years has produced a strong renminbi at a
time when Chinese economic growth has slowed.
This all changed last August, when the People's Bank of China's (PBOC) loosened
the ties between the two currencies. The renminbi fell in subsequent days,
causing a fall in global equity markets as investors reacted to the potentially
deflationary consequences of a weaker renminbi. Another bout of renminbi
weakness in early January 2016 caused volatility to rise and equity markets to
fall sharply.
There was also a double-digit fall in the oil price in early January, primarily
as a result of a supply-side shock rather than the global economic slowdown. In
the stand-off between the Organisation of the Petroleum Exporting Countries
and US shale oil producers, neither side showed signs of blinking first
although the increasing financial distress of US producers was shown in the
elevated yields demanded by holders of their bonds. The prospect of increased
supply from Iran following last year's nuclear accord may lead to a further oil
price decline.
The risks of global deflation have clearly risen and, in consequence,
safe-haven assets have outperformed, with gilts rising as oil prices fell. In a
recent speech, the Bank of England governor, Mark Carney, said UK growth was
slowing. Unsurprisingly, investor expectations of a UK rate rise receded
further, with some commentators saying rates would not rise until 2017. The
approaching Brexit vote only adds to the uncertainty and may have contributed
to recent sterling weakness.
In January's monetary policy statement, the European Central Bank (ECB)
president, Mario Draghi, said downside risks had increased again, adding that
eurozone monetary policy would be reconsidered in March. The euro's rise
against sterling in early January was another indication that December's ECB
decision to prolong its asset purchases to March 2017 was not sufficient to
counteract the heightened risk of deflation. The Japanese yen also rebounded
against sterling and the Bank of Japan reviewed policy at the end of January
and imposed a negative interest rate on central bank deposits.
After a fourth-quarter recovery, China's stockmarket resumed its decline in
early January, generating double-digit losses in sterling. Chinese stocks were
hit by a relaxation in share dealing rules imposed in August to stem market
losses and capital flight. The PBOC now faces a delicate balancing act to help
China's domestic economy, which would benefit from a weaker currency, without
precipitating damaging capital outflows.
Chinese policy makers may ultimately stimulate growth. They are certainly
deploying all the policy tools in the toolbox to tackle the growth slowdown.
Currency depreciation is only the latest in a series of measures including
interest rate cuts, a relaxation in bank lending restrictions and increased
infrastructure spending. China also is a net energy importer and thus benefits
from cheaper oil. Until there is clear evidence, however, of an improvement in
Chinese data, global equities may suffer bouts of weakness. Developed economy
markets may continue to outperform Asia excluding Japan and emerging
markets, which are more vulnerable to continued dollar strength. Funds
that invest heavily in global consumer companies that benefit from weak oil
prices should perform well over the longer term.
PORTFOLIO REVIEW
The total return of the Company was 2.52% for the period under review. It ended
the period with the majority of its investments in global equities, and a
significant investment in dollar cash. By comparison, the Investment
Association's Mixed Investment 40-85% Shares Index, which measures a peer group
of funds with a multi-asset approach to investing and a typical investment in
equities in the 40-85% range, fell 0.48% during the period. The MSCI AC World
Total Return Index gained 1.72% while the MSCI UK Total Return Index fell
3.27%.
US equities outperformed, rising 6.86% in sterling, but the gain was wholly
accounted for by the 6.90% rise in the dollar against the pound. This factor
favoured your Company's investments in Fundsmith Equity and Polar Capital
Global Technology, which gained 14.71% and 8.35% respectively. Although the
Company's overall investment in US equities was relatively low during the
period, the majority of the cash was held in dollars, which also benefited
performance in sterling terms.
Aberforth Geared Income gained 12.93% as UK smaller companies outperformed the
commodity-heavy UK equity market. The oil price fell 40.94% over the period and
the prices of many other industrial commodities also fell as a result of excess
supply. Gold proved relatively defensive, falling 3.67%, but the impact was
magnified in the performance of Blackrock Gold & General fund, which fell
13.36%, making it the worst performer during the period.
Asia excluding Japan and emerging market equities underperformed, falling 7.94%
and 11.63% respectively in sterling. The Company's investments in these markets
also fell, with Wells Fargo China, 10.47%, the worst affected.
During the period, your Company sold investments in the Gold Bullion Securities
exchange-traded fund (ETF), the BH Global investment trust and the iShares FTSE
250 ETF. Your Company invested in Newton Global Income, Artemis Global Income
and GLG UK Income. These new investments increased your Company's allocation to
funds focused on global consumer companies that should benefit from increased
consumer spending as a result of the low oil price. The addition of these
income-focused funds should also increase the amount of investment income
received, which could be distributable to shareholders.
OUTLOOK
December's Fed decision to raise rates may have been finely balanced given the
weakness of headline inflation at the time. In the subsequent weeks, the
stronger dollar produced a tightening of US monetary conditions while the fall
in commodity prices dampened inflation expectations. As a result, the Fed may
re-examine its plans for future interest rates and adopt a more dovish stance.
This would be positive for risky assets in general and, more specifically,
would reduce pressure on China to weaken the renminbi. Given the near-universal
gloom among investors and the magnitude of recent falls, equity markets could
recover strongly on any signs of good news.
Brompton Asset Management LLP
12th February 2016
DIRECTORS' REPORT
PERFORMANCE
In the six months to 31st December 2015 the total return per Ordinary share
increased by 2.5% to 114.96p, whilst the share price fell by 1.4% to 72.50p.
This compares to a fall of 0.48% in the IA Mixed Investment 40-85% Shares
Index.
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 (2014: 71,023,695) have been issued fully paid. No
Ordinary shares are held in treasury, and none were bought back or issued
during the six months to 31st December 2015.
RISK MANAGEMENT
The principal risks associated with the Company that have been identified by
the Board, together with the steps taken to mitigate them, are as follows:
Investment strategy: inappropriate long-term strategy, asset allocation and
manager selection might lead to the underperformance of the Company. The
Company's strategy is kept under regular review by the Board. Investment
performance is discussed at every Board meeting and the Directors receive a
monthly report which details the Company's asset allocation, portfolio changes
and performance.
Business conditions and general economy: the Company's investment returns are
influenced by general economic conditions in the UK and globally. Factors such
as interest rates, inflation, investor sentiment and the availability and cost
of credit could adversely affect investment returns. The Board regularly
considers the economic environment in which the Company operates. The
portfolio is managed with a view to mitigating risk by investing in a spread of
different asset classes and geographic regions.
Portfolio risks - market price, foreign currency and interest rate risks: the
downward valuation of investments contained in the portfolio would lead to a
reduction in the Company's net asset value. A proportion of the Company's
portfolio is invested in investments denominated in foreign currencies and
movements in exchange rates can significantly affect their sterling value. It
is the Board's policy to hold an appropriate spread of investments in order to
reduce the risk arising from factors specific to a particular investment or
sector. The Investment Manager takes account of foreign currency risk and
interest rate risk when making investment decisions.
The Company does not normally hedge against foreign currency movements
affecting the value of the investment portfolio, although hedging techniques
may be employed in appropriate circumstances.
Investment Manager: the quality of the management team employed by the
Investment Manager is an important factor in delivering good performance and
the loss by the Investment Manager of key staff could adversely affect
investment returns. The Company's portfolio is managed by Gill Lakin. The
Board receives a monthly financial report which includes information on
performance, and a representative of the Investment Manager attends each Board
meeting. The Board is kept informed of any personnel changes to the investment
team employed by the Investment Manager.
Tax and regulatory risks: a breach of The Investment Trusts (Approved company)
(Tax) Regulations 2011 (the Regulations) could lead to a loss of investment
trust status, resulting in capital gains realised within the portfolio being
subject to United Kingdom capital gains tax. A breach of the UKLA Listing
Rules could result in suspension of the Company's shares, while a breach of
company law could lead to criminal proceedings, or financial or reputational
damage. The Board employs Brompton Asset Management LLP as Investment Manager
and Phoenix Administration Services Limited as Corporate Secretary and
Administrator to help manage the Company's legal and regulatory obligations.
The Board receives a monthly financial report which includes information on the
Company's compliance with the Regulations.
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.
INVESTMENT MANAGEMENT ARRANGEMENT 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 material transactions with related parties during the period
which have had a significant impact on the performance of the Company.
GOING CONCERN
The Directors believe that it is appropriate to continue to adopt the going
concern basis in preparing the accounts as the assets of the Company consist
mainly of securities that are readily realisable or cash and it has no
significant liabilities. Accordingly, the Company has adequate financial
resources to continue in operational existence for the foreseeable future.
AUDITORS
The half year financial report has been reviewed, but not audited, by Ernst &
Young LLP pursuant to the Auditing Practices Board guidance on the Review of
Interim Financial Information.
RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge:
* The financial statements contained within the half year financial report to
31st December 2015 has been prepared in accordance with International
Accounting Standard 34 'Interim Financial Reporting';
* The Chairman's statement or the Investment Manager's reportinclude 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 statementor the Investment Manager's reportinclude 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 half year 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
Phoenix Administration Services Limited
12th February 2016
INDEPENDENT REVIEW REPORT TO NEW STAR INVESTMENT TRUST PLC
INTRODUCTION
We have been engaged by the Company to review the condensed set of
financial statements in the half-yearly financial report for the six months
ended 31 December 2015 which comprises the consolidated statement of
comprehensive income, the consolidated statement of changes in equity, the
consolidated balance sheet, the consolidated cash flow statement and
related explanatory notes 1 to 8. We have read the other information
contained in the half yearly financial report and considered whether it
contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK and
Ireland) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices Board.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our work, for this
report, or for the conclusions we have formed.
DIRECTORS' RESPONSIBILITIES
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. 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", as adopted by the
European Union
OUR RESPONSIBILITY
Our responsibility is to express to the Company a conclusion on the
condensed set of financial statements in the half year financial report
based on our review.
SCOPE OF REVIEW
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical
and other review procedures. A review is substantially less in scope than
an audit conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
CONCLUSION
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 December 2015 is not prepared,
in all material respects, in accordance with International Accounting
Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
12th February 2016
SCHEDULE OF TOP TWENTY INVESTMENTS
at 31st December 2015
Holding Activity Bid-market % of
value invested
£ '000 portfolio
FP Crux European Special Situations Fund - Investment Fund 9,016 12.80
I Acc
Fundsmith Equity Fund-I ACC Investment Fund 6,961 9.89
Aberforth Geared Income Trust Investment 4,014 5.70
Company
FP Brompton Global Conservative Fund - B Investment Fund 3,541 5.03
Acc
Newton Global Income Fund W - Inc Investment Fund 3,357 4.77
Artemis Global Income Fund I - Inc Investment Fund 3,219 4.57
Polar Capital Funds Plc- Global Tech Fund- Investment Fund 2,646 3.76
I
Aquilus Inflection Fund Ltd Class A Investment Fund 2,612 3.71
Stewart Investors Indian Subcontinent B GBP Investment Fund 2,595 3.69
Acc
Man GLG UK Income Fund 'D' Inc Investment Fund 2,404 3.41
BlackRock Gold & General Fund 'D' Inc Investment Fund 2,357 3.35
FP Brompton Global Opportunities Fund B Acc Investment Fund 2,170 3.08
FP Brompton Global Growth Fund - B Acc Investment Fund 2,121 3.01
Artemis UK Special Situations Fund - I - Investment Fund 2,074 2.95
Acc
PFS Brompton UK Recovery Unit Trust Investment Fund 1,985 2.82
FP Brompton Global Income Fund B Inc Investment Fund 1,969 2.80
FP Brompton Global Equity Fund B Acc Investment Fund 1,925 2.73
Lindsell Train Japanese Equity Fund Investment Fund 1,847 2.62
Distributor
FP Brompton Global Balanced Fund - B Acc Investment Fund 1,793 2.55
Standard Life Investment European Inc Fund Investment Fund 1,752 2.49
60,358 85.73
Balance held in 11 investments 10,059 14.27
Total investments (excluding cash) 70,417 100.00
The investment portfolio can be further analysed as
follows:
£'000
Equities (including investment companies) 6,087
Investment funds and ETFs 64,330
70,417
All the Company's investments are either unlisted or are unit trust/OEIC funds
with the exception of Aberforth Geared Income Trust, Miton Group and Immedia
Group.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31st December 2015 (unaudited)
Six months ended
31st December 2015
(unaudited)
Revenue Capital Total
Return Return Return
Notes £ '000 £ '000 £ '000
INCOME
Investment income 475 - 475
Other operating income 3 - 3
Total income 2 478 - 478
GAINS AND LOSSES ON INVESTMENTS
Gains on investments at fair value through 5 - 1,282 1,282
profit or loss
Other exchange gains - 610 610
Management fee rebates - 6 6
478 1,898 2,376
EXPENSES
Management fees 3 (242) - (242)
Other expenses (124) - (124)
(366) - (366)
PROFIT BEFORE FINANCE COSTS AND TAX 112 1,898 2,010
Finance costs - - -
PROFIT BEFORE TAX 112 1,898 2,010
Tax - - -
PROFIT FOR THE PERIOD 112 1,898 2,010
EARNINGS PER SHARE
Ordinary shares (pence) 4 0.16p 2.67p 2.83p
The total 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.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31st December 2014 (unaudited) and the year ended 30th
June 2015 (audited)
Six months ended Year ended
31st December 2014 30th June 2015
(unaudited) (audited)
Notes Revenue Capital Total Revenue Capital Total
Return Return Return Return Return Return
£'000 £'000 £'000 £'000 £'000 £'000
INCOME
Investment income 488 - 488 1,076 - 1,076
Other operating income 3 - 3 5 - 5
Total income 2 491 - 491 1,081 - 1,081
GAINS AND LOSSES ON
INVESTMENTS
Gains on investments at
fair value through profit 5 - 196 196 - 2,574 2,574
or loss
Other exchange gains - 798 798 - 697 697
Management fee rebates - 6 6 - 12 12
491 1,000 1,491 1,081 3,283 4,364
EXPENSES
Management fees 3 (234) - (234) (478) - (478)
Other expenses (129) - (129) (259) - (259)
(363) - (363) (737) - (737)
PROFIT BEFORE FINANCE 128 1,000 1,128 344 3,283 3,627
COSTS AND TAX
Finance costs - - - - - -
PROFIT BEFORE TAX 128 1,000 1,128 344 3,283 3,627
Tax - - - - - -
PROFIT FOR THE PERIOD 128 1,000 1,128 344 3,283 3,627
EARNINGS PER SHARE
Ordinary shares (pence) 4 0.18 1.41 1.59 0.49 4.62 5.11
The total 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.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31st December 2015 (unaudited)
Share Share Special Retained
capital premium reserve earnings Total
£ '000 £ '000 £ '000 £ '000 £ '000
At 30th JUNE 2015 710 21,573 56,908 663 79,854
Total comprehensive income for - - - 2,010 2,010
the period
Dividend paid - - - (213) (213)
At 31st DECEMBER 2015 710 21,573 56,908 2,460 81,651
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31st December 2014 (unaudited)
Share Share Special Retained
capital premium reserve earnings Total
£ '000 £ '000 £ '000 £ '000 £ '000
At 30th JUNE 2014 710 21,573 56,908 (2,964) 76,227
Total comprehensive income for
the period - - - 1,128 1,128
At 31st DECEMBER 2014 710 21,573 56,908 (1,836) 77,355
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th June 2015 (audited)
Share Share Special Retained
capital premium reserve earnings Total
£ '000 £ '000 £ '000 £ '000 £ '000
At 30th JUNE 2014 710 21,573 56,908 (2,964) 76,227
Total comprehensive income for
the year - - - 3,627 3,627
At 30th JUNE 2015 710 21,573 56,908 663 79,854
CONSOLIDATED BALANCE SHEET
at 31st December 2015
Notes 31st 31st 30th June
December December 2015
2015 2014 (audited)
(unaudited) (unaudited) £ '000
£ '000 £ '000
NON-CURRENT ASSETS
Investments at fair value through
profit or loss 5 70,418 65,391 68,086
CURRENT ASSETS
Other receivables 31 9 46
Cash and cash equivalents 11,370 12,132 11,889
11,401 12,141 11,935
TOTAL ASSETS 81,819 77,532 80,021
CURRENT LIABILITIES
Other payables (168) (177) (167)
TOTAL ASSETS LESS CURRENT 81,651 77,355 79,854
LIABILITIES
NON-CURRENT LIABILITIES - - -
NET ASSETS 81,651 77,355 79,854
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 2,460 (1,836) 663
TOTAL EQUITY 81,651 77,355 79,854
NET ASSET VALUE PER ORDINARY SHARE 7
(PENCE) 114.96 108.92 112.43
The half year report was approved and authorised for issue by the Board on 12th
February 2016.
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31st December 2015
Six months Six months Year
ended ended ended
31st 31st 30th June
December December 2015
2015 2014 (audited)
(unaudited) (unaudited) £ '000
£ '000 £ '000
NET CASH INFLOW FROM OPERATING ACTIVITIES 134 155 349
INVESTING ACTIVITIES
Purchase of investments (9,129) (443) (4,420)
Sale of investments 8,079 451 4,092
NET CASH (OUTFLOW)/ INFLOW FROM INVESTING
ACTIVITIES (1,050) 8 (328)
FINANCING
Equity dividend paid (213) - -
NET CASH (OUTFLOW)/INFLOW AFTER FINANCING (1,129) 163 21
(DECREASE)/ INCREASE IN CASH (1,129) 163 21
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN
NET FUNDS
(Decrease)/ Increase in cash resulting from (1,129) 163 21
cash flows
Exchange movements 610 798 697
Movement in net funds (519) 961 718
Net funds at start of period/year 11,889 11,171 11,171
NET FUNDS AT END OF PERIOD/YEAR 11,370 12,132 11,889
RECONCILIATION OF PROFIT BEFORE FINANCE COSTS
AND TAXATION TO NET CASH FLOW FROM OPERATING
ACTIVITIES
Profit before finance costs and taxation 2,010 1,128 3,627
Gains on investments (1,282) (196) (2,574)
Exchange differences (610) (798) (697)
Management fee rebates (6) (6) (12)
Revenue profit before finance costs and 112 128 344
taxation
Decrease in debtors 15 45 8
Increase/(Decrease) in creditors 1 (37) (28)
Taxation - 13 13
Management fee rebates 6 6 12
NET CASH INFLOW FROM OPERATING ACTIVITIES 134 155 349
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 31st December 2015
1. ACCOUNTING POLICIES
These consolidated half year financial statements comprise the unaudited
results of the Company and its subsidiary, JIT Securities Limited, for the six
months to 31st December 2015. The comparative information for the six months
to 31st December 2014 and the year to 30th June 2015 do not constitute
statutory accounts under the Companies Act 2006. Full statutory accounts for
the year to 30th June 2015 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 Group'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 2015, which
are prepared in accordance with IFRSs as adopted by the European Union.
No segmental reporting is provided as the Group is engaged in a single segment.
2. TOTAL INCOME
For the six months For the six For the
ended 31st December months ended year ended
2015 31st December 30th June
£'000 2014 2015
£'000 £'000
Income from Investments
UK net dividend income 454 451 917
UK unfranked investment income 21 34 156
Loan interest income - 3 3
475 488 1,076
Operating Income
Bank interest receivable 3 3 5
3 5
3
For the six For the six For the
months ended months ended year ended
31st December 31st December 30th June
2015 2014 2015
£'000 £'000 £'000
Total income comprises
Dividends 475 485 1,073
Other income 3 6 8
478 491 1,081
3. MANAGEMENT FEES
For the six For the six For the
months ended months ended year ended
31st December 31st December 30th June
2015 2014 2015
£'000 £'000 £'000
Investment management fee 242 234 478
Performance fee - - -
242 234 478
The management fee is payable in arrears and is calculated at a rate of 3/16%
per quarter of the total assets of the Company and its subsidiary after the
deduction of the value of any investments managed by the Investment Manager (as
defined in the management agreement). The Investment Manager is also entitled
to a performance fee of 15% of the growth in net assets over a hurdle of
3-month Sterling LIBOR plus 1% per annum, payable six monthly in arrears,
subject to a high water mark. The aggregate of the Company's management fee and
any performance fee are subject to a cap of 4.99% of net assets in any
financial year (with any performance fee in excess of this cap capable of being
earned in subsequent periods). The performance fee will be charged 100% to
capital, in accordance with the Board's expectation of how any out-
performance will be generated. No performance fee is payable for the period.
4. RETURN PER ORDINARY SHARE
For the six For the six For the
months ended months ended year ended
31st December 31st December 30th June
2015 2014 2015
£'000 £'000 £'000
Revenue return 112 128 344
Capital return 1,898 1,000 3,283
Total return 2,010 1,128 3,627
Weighted average number of Ordinary 71,023,695 71,023,695 71,023,695
shares
Revenue return per Ordinary share 0.16p 0.18p 0.49p
Capital return per Ordinary share 2.67p 1.41p 4.62p
Total return per Ordinary share 2.83p 1.59p 5.11p
5. INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS
At At At
31st 31st December 30th June
December 2014 2015
2015 £'000 £'000
£'000
GROUP AND COMPANY 70,418 65,391 68,086
ANALYSIS OF INVESTMENT
PORTFOLIO - GROUP AND COMPANY
Six months ended 31st December 2015
Listed* Unlisted**
(level 1 (level 3) Total
and 2) £'000 £'000
£'000
Opening book cost 54,175 4,427 58,602
Opening investment holding gains/ 12,348 (2,864) 9,484
(losses)
Opening valuation 66,523 1,563 68,086
Movement in period:
Purchase at cost 8,992 137 9,129
Sales
- Proceeds (7,966) (113) (8,079)
- Realised gains on sales 660 112 772
Investment holding gains/(losses) 616 (106) 510
Closing valuation 68,825 1,593 70,418
Closing book cost 55,861 4,563 60,424
Unrealised investment holding gains/ 12,964 (2,970) 9,994
(losses)
Closing valuation 68,825 1,593 70,418
* Listed investments include unit trust and OEIC funds which are valued at
quoted prices. Included within Listed Investments is one level 2 investment of
£2,612,000.
** The Unlisted investments, representing less than 2% of the Company's NAV,
have been valued in accordance with IPEVC valuation guidelines. The largest
unquoted investment amounting to £1,280,000 was valued at the latest
transaction price. A 10% increase or decrease in earnings would not have a
material impact on the value of the investment.
There were no reclassifications for assets between Level 1 and Level 3.
For the six For the six For the
months months ended year ended
ended 31st 31st December 30th June
December 2014 2015
2015 £'000 £'000
£'000
ANALYSIS OF CAPITAL GAINS AND
LOSSES
Realised (losses)/gains on sales of 772 (36) 425
investments
Increase in investment holding 510 232 2,149
gains
1,282 196 2,574
6. RETAINED EARNINGS
At At At
31st December 31st December 30th June
2015 2014 2015
£'000 £'000 £'000
Capital reserve - realised (7,859) (9,613) (9,247)
Capital reserve - revaluation 9,994 7,567 9,484
Revenue reserve 325 210 426
2,460 (1,836) 663
7. NET ASSET VALUE PER ORDINARY SHARE
31st December 31st December 30th June
2015 2014 2015
£'000 £'000 £'000
Net assets attributable to Ordinary
shareholders 81,651 77,355 79,854
Ordinary shares in issue at end of 71,023,695 71,023,695 71,023,695
period
Net asset value per Ordinary share 114.96p 108.92p 112.43p
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 23rd December 2009.
Mr Duffield is the senior partner of Brompton Asset Management Group LLP the
ultimate parent of Brompton.
The total investment management fee payable to Brompton for the half year ended
31st December 2015 was £242,000 (2014: £234,000) and at the half year end £
124,000 (2014: £117,000) was accrued. No performance fee was payable in respect
of the half year ended 31st December 2015 (2014: £nil).
The Group's investments include seven funds managed by Brompton or its
associates totalling £15,504,000. No investment management fees were payable
directly by the Company in respect of these investments.
NEW STAR INVESTMENT : Half-yearly Report
February 12, 2016 at 08:14 am EST
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© PRNewswire - 2016
