Half-yearly Report
PRESS RELEASE
17 November 2011
SVM UK EMERGING FUND plc
Half Yearly Statement
(for the six months to 30 September 2011)
Investment Objective
The investment objective of the Fund is long term capital growth from
investments in smaller UK companies with a particular focus on the Alternative
Investment Market ("AIM")
Highlights
* Net asset value per share declines but outperforms its benchmark index.
* Strong medium and long term absolute and relative outperformance with net
asset value more than doubling since remit changed in September 2004.
* The Fund remains defensively positioned, retaining cash while investing in
special situations.
* Small companies lag large companies as investor risk appetite wanes.
For further information, please contact:
Donald Robertson SVM Asset Management 0131 226 6699
Roland Cross Broadgate Mainland 020 7726 6111
Chairman's Statement
After three years of strong markets, it is probably not surprising that markets
have paused for breath and indeed have been trading within an ever narrowing
range for more than a year. Of more interest to a smaller companies fund has
been the recent underperformance of smaller against larger companies. This can
be starkly demonstrated over the last six months where the FTSE AIM Index, the
index of small companies, declined by 22.0% compared to a fall of only 11.6% in
large companies represented by the FTSE 100 Share Index. While the Fund
continues to be defensively positioned, it did not stop it registering a fall
of 16.5% in asset value over the six months. This represents a 6% relative
outperformance which adds to the longer term position. Since the Fund changed
it name and remit to invest in AIM companies in September 2004, the asset value
has increased by 128% against a fall in the AIM Index of 18% and a rise of the
FTSE 100 Share Index of 44%.
Generally, investors have avoided seemingly risky assets and have preferred the
perceived safety of higher yielding large companies and government bonds.
Globally, this has led to emerging markets suffering greater falls than mature
markets while domestically smaller companies have underperformed larger ones.
This appears perverse given the superior growth prospects and debt dynamics
within emerging markets and smaller companies.
The Fund retains a concentrated portfolio of forty companies with 86% invested
in AIM companies. Of the balance, 9% is in four unquoted investments and a
further 5% in three residual PLUS quoted companies. In terms of sectors, the
Fund continues to be fully exposed to resources, industrials and consumer
services with little in healthcare, financials and property.
The Fund continues to be defensively positioned, generally out-performing in
adverse markets while lagging in strong markets. Although managed on a
comparatively low risk basis, the portfolio remains concentrated with a number
of comparatively large holdings. Many of the holdings are special situations or
companies on the cusp of profitability and represent an attractive area for
investment.
The portfolio changes over the six months have been restricted to continuing
sales in gold producer Archipelago Resources and the receipt of funds from the
cash takeover of ToLuna. This has allowed for the introduction of a number of
fresh holdings and additions to a number of existing holdings. New holdings in
the portfolio include Beowulf Mining (iron ore exploitation) Chaarat Gold (gold
exploration) and ILA Group (marketing) while additions have been made to
Silvermere, Intellego and Nostra Terra Oil & Gas.
With the economic background challenging, the Managers remain cautious but
continue to see attractive opportunities particularly in smaller companies. The
Board believes the Fund is well positioned to continue to deliver its long term
out-performance.
Peter Dicks
Chairman
Summarised Income Statement
(unaudited)
Six months to 30 September Six months to 30 September
2011 2010
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gain/(loss) / on - 719 719 - (39) (39)
sale of investments
Movement in investment - (1,541) (1,541) - 97 97
holding gains
-------- -------- -------- -------- -------- --------
Net (losses) / gains - (822) (822) - 58 58
on investments
Income 15 - 15 8 - 8
Investment management - - - - - -
fees
Other expenses (29) - (29) (24) - (24)
-------- -------- -------- -------- -------- --------
Return before (14) (822) (836) (16) 58 42
interest and
taxation
Bank overdraft (2) - (2) (1) - (1)
interest
-------- -------- -------- -------- -------- --------
Return attributable (16) (822) (838) (17) 58 41
to shareholders
-------- -------- -------- -------- -------- --------
Return per ordinary (0.27p) (13.69p) (13.96p) (0.29p) 0.97p 0.68p
share
-------- -------- -------- -------- -------- --------
The total column of this statement is the profit and loss account of the Company.
All revenue and capital items in this statement derive from continuing operations.
A Statement of Total Recognised Gains and Losses is not required as all gains
and losses of the Company have been reflected in the above statement.
Balance Sheet
(unaudited) As at As at As at
30 September 31 March 30 September
2011 2011 2010
£'000 £'000 £'000
Investments at fair value through 4,016 4,973 3,771
profit or loss
Net current assets 392 273 385
--------- --------- ---------
Equity shareholders' funds 4,408 5,246 4,156
--------- --------- ---------
Net asset value per ordinary share 73.40p 87.36p 69.21p
--------- --------- ---------
Summarised Cash Flow Statement
(unaudited)
Six months Six months
(unaudited) to to
30 September 30 September
2011 2010
£'000 £'000
Net cash flow from operating activities (32) (26)
Taxation (2) (1)
Capital expenditure and financial 169 23
investment
Servicing of finance (2) (2)
-------- --------
Movements in cash 133 (6)
-------- --------
Summarised Reconciliation of Movement in
Shareholders Funds (unaudited)
For the period to 30 September 2011
Share Share Special Capital Capital Revenue
capital premium reserve redemption reserve reserve
reserve
£'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2011 300 314 5,144 27 (1) (538)
Return/(loss) - - - - (822) (16)
attributable to
shareholders
------ ------ ------ ------- ------- ------
As at 30 September 2011 300 314 5,144 27 (823) (554)
------ ------ ------ ------- ------- ------
For the period to 30 September 2010
Share Share Special Capital Capital Revenue
capital premium reserve redemption reserve reserve
reserve
£'000 £'000 £'000 £'000 £'000 £'000
As at 1 April 2010 300 314 5,144 27 (1,174) (496)
2010
Return/(loss) - - - - 58 (17)
attributable to
shareholders
------ ------ ------ ------- ------- ------
As at 30 Setember 2010 300 314 5,144 27 (1,116) (513)
------ ------ ------ ------- ------- ------
Largest Investments as at 30 September 2011 Sector Analysis as at 30 September 2011
% %
1 Kirkland Lake Gold 7.9 Basic Materials 48.1
2 Hydrodec 5.7 Industrials 17.1
3 Oracle Coalfields 5.4 Oil & Gas 21.3
4 Silvermere Energy 5.2 Consumer Goods 0.0
5 Manroy 4.7 Consumer Services 6.4
6 Symphony Environmental 4.7 Healthcare 0.0
7 Archipelago Resources 4.5 Telecoms 0.0
8 Sprue Aegis 4.2 Technology 0.0
9 Nostra Terra Oil & Gas 3.9 Financials 6.2
10 Nautical Petroleum 3.2 Utilities 0.9
-------- --------
Total 49.4 100.0
-------- --------
Risks And Uncertainties
The principal risks inherent within the Fund are market related and have been
classified as valuation risk, liquidity risk, exchange rate risk, interest rate
risk and credit risk. Additional risks faced by the Fund can be categorised
under the following headings; investment strategy, share price discount,
regulatory and operational. The Fund has an established environment for the
management of these risks which are continually monitored by the Managers. The
Board regularly considers the risks associated with the Fund and 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 2010 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 2011 Annual Report.
Directors' Responsibility Statement
The Directors are responsible for preparing the financial statements in
accordance with applicable law and regulations. Company law requires the Board
to prepare financial statements for each financial year. Under that law, the
Directors have elected to prepare the financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (UK Standards and
applicable law).
The financial statements are required by law to give a true and fair view of
the state of affairs of the Fund at the end of the financial year and of the
net return of the Fund for that year. In preparing these financial statements,
the Directors are required to: (a) select suitable accounting policies and then
apply them consistently; (b) make judgments and estimates that are reasonable
and prudent; and (c) state whether applicable accounting standards have been
followed.
The Board is also responsible for the maintenance of proper accounting records
which disclose with reasonable accuracy, at any time, the financial position of
the Fund and to enable them to ensure that the financial statements comply with
the Companies Act 2006. They are also responsible for safeguarding the assets
of the Fund and for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors confirm that to the best of their knowledge:
(i) these financial statements have been prepared in accordance with the
Accounting Standards Board's statement `Half-Yearly Financial Reports';
(ii) the Half-Yearly Report includes a fair review of the information required
by Disclosure and Transparency Rules 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
(iii) the Half-Yearly Financial Report includes a fair review of the
information required by Disclosure and Transparency Rules 4.2.8R (disclosure of
related party transactions and changes therein).
Notes
1. The results have been prepared in accordance with applicable accounting
standards and the 2009 Statement of Recommended Practice (SORP) issued by the
Association of Investment Companies. These accounts have been prepared in
accordance with prior year accounting policies.
2. Return per share is based on a weighted average of 6,005,000 (2010 - same)
ordinary shares in issue during the year.
Total return per share is based on the total loss for the period of £838,000
(2010 - gain of £41,000).
Capital return per share is based on net loss for the period of £822,000 (2010
- gain of £58,000).
Revenue return per share is based on the revenue loss after taxation for the
period of £16,000 (2010 - £17,000).
The number of shares in issue at 30 September 2011 was 6,005,000 (2010 -
6,005,000).
3. Due to the size of the Fund, the Investment Managers have waived their fees
for the periods to 30 September 2010 and 2011.
4. The above figures do not constitute full accounts in terms of Section 435 of
the Companies Act 2006. The accounts for the year to 31 March 2011, on which
the auditors issued an unqualified report under Section 495 of the Companies
Act 2006, have been lodged with the Registrar of Companies and did not contain
a statement required under Section 498 of the Companies Act 2006. The half
yearly report will be mailed to shareholders towards the end of November 2011.
Copies will be available for inspection at 7 Castle Street, Edinburgh EH2 3AH,
the registered office of the Fund and will be available on the Managers'
website: www.svmonline.co.uk.
ENDS
Friday, 17th May 2024
COMPANIES COVERED:
Latest directors dealings
- 19 minutes ago Anglo American
- 43 minutes ago Funding Circle Holdings
- 2 hours ago Taylor Wimpey
- 2 hours ago Vertu Motors
- 2 hours ago Victoria