New Star Investment Trust PLC (NSI) New Star Investment Trust
PLC: Interim ANNOUNCEMENT for the Six Months to 31 12 2022
21-March-2023 / 11:29 GMT/BST
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NEW STAR INVESTMENT TRUST PLC
This announcement constitutes regulated information.
UNAUDITED RESULTS FOR THE SIX MONTHSED 31st DECEMBER 2022
INVESTMENT OBJECTIVE
The Company's objective is to achieve long-term capital
growth.
FINANCIAL HIGHLIGHTS
30th June %
31st December 2022
2022 Change
PERFORMANCE
Net assets (GBP '000) 123,225 123,978 (0.61)
Net asset value per Ordinary share 173.50p 174.56p (0.61)
Mid-market price per Ordinary share 124.50p 125.00p (0.40)
Discount of price to net asset value 28.6% 28.4% n/a
Six months ended Six months ended
31st December 2022 31st December 2021
Total Return* 0.19% 2.59% n/a
IA Mixed Investment 40-85% Shares (total return) 0.89% 4.18% n/a
MSCI AC World Index (total return, sterling adjusted)
3.50% 7.86% n/a
MSCI UK Index (total return) 5.39% 7.42% n/a
Six months ended
Six months ended 31st December
31st December
2022
2021
REVENUE
Return (GBP'000) 735 405
Return per Ordinary share 1.04p 0.57p
Proposed dividend per Ordinary share 0.90p -
Dividend paid per Ordinary share 1.40p 1.40p
TOTAL RETURN
Return (GBP'000) 241 3,584
Net assets (dividend added back) 0.19% 2.59%
Net assets (0.61)% 1.88% * The total return figure for the Group represents the revenue and capital return shown in the consolidated statement of comprehensive income plus dividends paid.
INTERIM REPORT
CHAIRMAN'S STATEMENT
PERFORMANCE
Your Company generated a positive total return of 0.19% over the
six months to 31st December 2022, taking the net asset value (NAV)
per ordinary share to 173.50p. By comparison, the Investment
Association's Mixed Investment 40-85% Shares Index rose 0.89%. The
MSCI AC World Total Return Index rose 3.50% in sterling over the
period, the MSCI UK Total Return Index rose 5.39% while UK
government bonds fell 12.06%. Further information is provided in
the investment manager's report.
Your Company made a revenue profit for the six months of
GBP735,000 (2021: GBP405,000).
GEARING AND DIVIDS
Your Company has no borrowings. It ended the period under review
with cash representing 14.63% of its NAV and is likely to maintain
a significant cash position. In recent years, your Company has
invested in income-yielding assets with the aim of increasing its
revenue and dividend. Its revenue and retained earnings are now
sufficient for your Directors to pay a maiden interim dividend of
0.9p per share (2021: nil). Your Directors intend to maintain this
policy of paying an interim dividend and recommending a final
dividend to shareholders. Your Company paid a dividend of 1.4p per
share (2021: 1.4p) in November 2022 in respect of the previous
financial year.
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 Although inflationary pressures have reduced, the lagged
impact of rising interest rates may lead to recessions in the US
and Europe over the coming months. This will affect corporate
profits but equity markets may benefit from easing inflation as
investors anticipate a turn downwards in the interest rate cycle.
Your Company entered 2023 with above-average holdings in emerging
market equities relative to collective funds with the same
benchmark. Emerging markets are trading on relatively-low
valuations and have the potential to outperform as China relaxes
its zero-Covid-19 policies. Your Company's significant cash
holdings have benefitted from rising deposit rates in recent months
and can be deployed should other attractive opportunities
emerge.
NET ASSET VALUE
Your Company's unaudited NAV at 28th February 2023 was
178.10p.
Geoffrey Howard-Spink
Chairman
21st March 2023
INVESTMENT MANAGER'S REPORT
MARKET REVIEW
The leading central banks increased interest rates on four
occasions over the six months to 31 December 2022 to combat
inflation. The Federal Reserve and the Bank of England raised their
policy rates to 4.25-4.5% and 3.5% respectively while the European
Central Bank lifted the rate on its main refinancing operations to
2.5%. In February 2023, all three central banks increased rates
again, the Fed by a quarter point and the BoE and the ECB by half a
point. Investors were, however, anticipating a turn downwards in
policy rates further ahead on expectations that inflation would
reduce significantly.
US headline inflation peaked at 9.1% in June 2022 and declined
every month thereafter, falling to 6.4% in January 2023. Eurozone
and UK headline inflation proved more obdurate, standing at 10.6%
and 11.1% respectively in October 2022 before falling to 8.6% and
10.1% respectively in January 2023. Oil prices fell 16.85% in
sterling over the period under review, easing inflationary
pressures. UK and eurozone inflation may have peaked later partly
because of the impact of elevated gas prices following Russia's
invasion of Ukraine.
Fed hawkishness was founded on the strength of the labour
market, with unemployment just 3.4% in January 2023, and the
resilience of consumer spending. Unemployment tends, however, to be
a lagging indicator and is typically low at the start of a
recession. Inflation is widely regarded as "sticky" when it becomes
entrenched in pay increases but real wages fell over the period
despite the strength of the labour market.
Rising interest rates proved a headwind for global bonds, which
fell 1.78% in sterling. UK government bonds were particularly weak,
falling 12.06%. The government's September announcement of unfunded
tax cuts led to some pension funds becoming forced sellers of
gilts. The BoE intervened, announcing UK government bond purchases
of up to GBP65 billion to ensure financial stability.
PORTFOLIO REVIEW
Your Company's total return over the period was 0.19%. By
comparison, the Investment Association (IA) 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 0.89%. The MSCI AC World Total Return Index rose 3.50%
in sterling while the MSCI UK Total Return Index rose 5.39%. Your
company benefited from holding value-oriented equity investments
and investments in gold miners and Indian stocks. A low overall
exposure to bonds also helped performance. Performance suffered,
however, from weakness among US and Chinese technology stocks,
which resulted in falls for Polar Capital Global Technology and
Matthews Asia ex Japan Dividend.
Your Company's allocation to equity increased from October to
December 2022 by approximately GBP6 million at the expense of cash
because inflation appeared to be close to peaking, increasing
expectations that easier monetary policy could be on the horizon.
In October, your Company invested GBP2 million in Redwheel Global
Equity Income, which has a disciplined approach to
income-investing. All investments must yield at least 25% more than
the market average at the time of purchase and profits are taken on
stocks that appreciate to the point where they yield less than the
market average. The managers aim to select high-quality stocks
while excluding stocks that may be at risk of cutting dividends.
The addition of holdings managed in accordance with an income
mandate should support your Company's ability to pay dividends.
More accommodative monetary policy may result in outperformance
for growth-oriented investments and approximately GBP1 million was
invested in the iShares S&P 500 exchange-traded fund, which
tracks the US market, and GBP1 million was added to Lindsell Train
Japanese Equity, which holds a concentrated portfolio of growth
stocks including consumer-related companies that should benefit
from increased Chinese tourism as China's zero-Covid-19 policies
are relaxed.
The remaining GBP2 million was invested in emerging markets,
with GBP1 million added to Vietnam Enterprise Investments in
October and GBP1 million added to Somerset Asia Income in November.
Some emerging markets trade on low valuations relative to developed
markets and dollar strength, which has proved a headwind for
emerging markets, may subside in anticipation of easier monetary
policy. In December, Beijing relaxed its zero-Covid policies,
leading to gains for Chinese stocks.
Value stocks typically outperformed growth stocks over the
period because rising interest rates affected longer-duration
assets. Technology stocks were hurt because future cash flows from
these high-growth stocks are discounted more aggressively at higher
interest rates. US technology stocks fell 5.39% in sterling over
the period, contributing to an 8.86% fall by Polar Capital Global
Technology, but your Company's largest holding, Fundsmith Equity,
rose 3.49%, despite its growth style and significant technology
holdings. Gains by Novo Nordisk, one of its 10 largest holdings,
fuelled the rise as investors warmed to the potential of its
anti-obesity drugs.
UK equities modestly outperformed, rising 5.39%, but smaller
companies lagged, gaining 2.97%. Amongst value-oriented
investments, Man GLG Income and Aberforth Split Level Income, a
small-company investment trust, gained 9.60% and 11.22%
respectively. Aberforth Split Level Income also benefited from the
gearing provided by its zero-dividend preference shares. Chelverton
UK Equity Income, another small-cap specialist, gained 2.99%.
Trojan Income rose 2.30%, underperforming because of its focus on
consumer-related stocks such as Diageo, Procter & Gamble,
Reckitt Benckiser and Unilever. All these investments delivered
income in excess of global equities, contributing to your Company's
ability to pay dividends.
Equities in Europe excluding the UK outperformed, rising 9.35%
in sterling. BlackRock Continental European Income and Crux
European lagged, however, up 7.82% and 8.55% respectively although
both benefited from holding Novo Nordisk among their 10 largest
investments.
Equities in Asia excluding Japan and emerging markets fell 2.91%
and 1.81% respectively in sterling, with Chinese stocks, which
account for the largest proportion of both indices, falling 11.10%.
Chinese equities were hurt by Covid lockdowns, political
interference in companies to promote wealth redistribution,
so-called common prosperity, and high property sector debts. Within
your Company's portfolio, the most resilient performers were JP
Morgan Global Emerging Markets Income Trust, JP Morgan Emerging
Market Income Fund and Somerset Asia Income, up 3.87% and down
1.88% and 2.20% respectively. Their income mandates proved
defensive during a period in which lower-yielding Chinese
technology stocks such as Tencent and Alibaba fell significantly.
Matthews Asia ex Japan Dividend, however, fell 10.21%. Its mandate
permitted it to hold lower-yielding Chinese technology stocks
provided it had an above-market yield overall. Indian stocks rose
9.99% against the trend in sterling although Stewart Investors
Indian Subcontinent Sustainability gained only 8.00%.
Your Company achieves diversification through its allocations to
cash, including dollar cash, gold equities and low-risk multi-asset
holdings. Interest income rose as your Company benefited from
higher interest rates on its deposits. BlackRock Gold & General
rose 5.85% as gold prices increased 1.77% in sterling. Trojan and
EF Brompton Global Conservative, both lower-risk holdings, fell
0.20% and 1.17% respectively. OUTLOOK
Inflationary pressure from higher oil prices subsided somewhat
in early 2023 but global economic growth is likely to slow over the
year. Employment data were strong but falls in real incomes imply
inflation had not become entrenched. Economic data in January and
February 2023 were stronger than anticipated but the lagged
transmission of tighter monetary policy may mean the full impact of
tightening is yet to come. In March 2023, higher interest rates led
to the collapse of Silicon Valley Bank in the US and the forced
takeover of Credit Suisse by UBS. Central banks moved swiftly to
contain the fallout and protect depositors. Banks are generally
more tightly regulated and have higher levels of capital adequacy
than at the time of the credit crisis in 2007 - 2008 but these
signs of distress may militate against tighter monetary policy. At
the end of the period under review, prospects for equities overall
appeared positive despite the likely deterioration in some
companies' earnings because monetary policy easing was on the
horizon. Emerging market equities appeared particularly attractive
because of low valuations relative to some developed markets, signs
of an end to zero-Covid polices and potential respite from dollar
strength.
Your Company holds a diversified portfolio of assets including
sterling and dollar cash, gold equities and lower-risk multi-asset
investments. Investment in private equity is currently low. At the
period end, your Company had more cash at the expense of bonds and
higher allocations to emerging market equities at the expense of US
and European equities than the average for the IA Mixed Assets
40-85% Shares peer group.
Portfolio diversification provides some protection in falling
markets when dollar cash and other low-risk investments may be
sought by investors as safe havens. At the period end, your Company
had approximately GBP18 million in cash. This cash is benefitting
from higher deposit interest rates and is available for investment
should attractive opportunities arise. Higher interest income and a
bias towards income-oriented equity investments support the growth
in your Company's dividend.
Brompton Asset Management Limited 21st March 2023
DIRECTORS' REPORT
PERFORMANCE
In the six months to 31st December 2022 the total return per
Ordinary share was 0.19% (2021: 2.59%) and the NAV per ordinary
share decreased slightly to 173.50p, whilst the share price
decreased by 0.40% to 124.50p. This compares to an increase of
0.89% in the IA Mixed Investment 40-85% Shares Index.
DIVID
The Directors propose an interim dividend of 0.90p per Ordinary
share in respect of the six months ended 31st December 2022 (2021:
GBPnil). The dividend will be paid on 28th April 2023 to
shareholders on the register at the close of business on 31st March
2023 (ex-dividend 30th March 2023).
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 (2021: 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 2022.
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 has closely monitored the geopolitical, societal,
economic and market focused implications of the events in 2021 and
2022.
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 portfolio risks below.
Macro-economic event risk: The Covid pandemic was felt globally
in 2021 and 2022 although economies and markets have recovered. The
scale and potential adverse impact of a macro-economic event, such
as the Covid pandemic, 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 in order 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
a number of years, the Company's share price has been at a
significant discount to the Company's net asset value. The
Directors review regularly 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 Maitland Administration Services
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 annual 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 consolidated financial
statements of the Group are prepared in accordance with
International Financial Reporting Standards ("IFRS") 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".
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
Maitland Administration Services Limited
21st March 2023
SCHEDULE OF TOP TWENTY INVESTMENTS at 31st December 2022
30th June 2022 Purchases/
Market Movement 31st Dec 2022 GBP'000 % of Net Assets
GBP'000 (Sales)
Fundsmith Equity Fund 8,562 - 419 8,981 7.29
Polar Capital Global Technology 7,277 - (628) 6,649 5.40
iShares Core S&P 500 UCITS ETF 3,828 991 39 4,858 3.94
Matthews Asia Ex Japan Fund 5,158 - (563) 4,595 3.73
MI Chelverton UK Equity Inc Fund 4,581 - (25) 4,556 3.70
EF Brompton Global Conservative Fund (49)
4,454 - 4,405 3.57
First State Indian Subcontinent Fund 3,943 - 303 4,246 3.45
BlackRock Continental European Inc Fund 300
3,916 - 4,216 3.42
Aquilus Inflection Fund 4,242 - (130) 4,112 3.34
Baillie Gifford Global Income Growth 3,876 - 148 4,024 3.27
BlackRock Gold & General 3,710 - 223 3,933 3.19
MI Somerset Asia Income Fund 2,849 1,000 (150) 3,699 3.00
Vietnam Enterprise Investments 2,944 968 (451) 3,461 2.81
EF Brompton Global Equity Fund 3,361 - 75 3,436 2.79
Aberforth Split Level Income Trust 3,144 - 187 3,331 2.70
EF Brompton Global Opportunities Fund 65
3,198 - 3,263 2.65
EF Brompton Global Growth Fund 3,044 - 55 3,099 2.51
MI Brompton UK Recovery Unit Trust 101
2,798 - 2,899 2.35
Lindsell Train Japanese Equity Fund 2,650 1,000 (845) 2,805 2.28
TM Crux European Special Sits Fund 2,460 - 233 2,693 2.19
Man GLG UK Income Fund 2,468 - 157 2,625 2.13
82,463 3,959 (536) 85,886 69.70
Balance not held in investments above 16,987 2,483 (58) 19,412 15.75
Total investments (excluding cash) 99,450 6,442 (594) 105,298 85.45
Cash 24,530 (6,347) (159) 18,024 14.63
Other net current liabilities (2) (95) - (97) (0.08)
Net Assets
123,978 - (753) 123,225 100.00
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 94,942
Unquoted investments including loans of GBP1.2m 2,187
Investment companies and exchange traded funds 7,617
Other quoted investments 552
105,298
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31st December 2022 (unaudited)
Six months ended
31st December 2022
(unaudited)
Total
Revenue Return Capital Return
GBP '000 Return
GBP '000 GBP '000
Notes
INCOME
Investment income 1,101 - 1,001
Other operating income 191 - 191
Total income 2 1,292 - 1,292
GAINS AND LOSSES ON INVESTMENTS
Losses on investments at fair value through profit or loss 5
- (594) (594)
Legal and professional costs - - -
Other exchange gains - 99 99
Trail rebates - 1 1
1,292 (494) 798
EXPENSES
Management fees 3 (385) - (385)
Other expenses (163) - (163)
(548) - (548)
PROFIT/(LOSS) BEFORE FINANCE COSTS AND TAX
744 (494) 250
Finance costs - - -
PROFIT/(LOSS) BEFORE TAX 744 (494) 250
Tax (9) - (9)
PROFIT/(LOSS) FOR THE PERIOD 735 (494) 241
EARNINGS/(LOSS) PER SHARE
Ordinary shares (pence) 4 1.04p (0.70)p 0.34p
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.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31st December 2021 and the year ended
30th June 2022
Six months ended Year ended
31st December 2021 30th June 2022
(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 1,001 - 1,001 1,837 - 1,837
Other operating income - - - 20 - 20
Total income 2 1,001 - 1,001 1,857 - 1,857
GAINS AND LOSSES ON INVESTMENTS
Gains/(losses) on investments at fair value
through profit or loss
5 - 3,114 3,114 - (15,188) (15,188)
Legal and professional costs - (60) (60) (60) (60)
Other exchange gains - 121 121 - 1,382 1,382
Trail rebates - 4 4 - 6 6
1,001 3,179 4,180 1,857 (13,860) (12,003)
EXPENSES
Management fees 3 (437) - (437) (837) - (837)
Other expenses (158) - (158) (320) - (320)
(595) - (595) (1,157) - (1,157)
PROFIT/(LOSS) BEFORE TAX 406 3,179 3,585 700 (13,860) (13,860)
Tax (1) - (1) - - -
PROFIT/(LOSS) FOR THE PERIOD 405 3,179 3,584 700 (13,860) (13,160)
EARNINGS PER SHARE
Ordinary shares (pence) 4 0.57p 4.48p 5.05p 0.98p (19.51)p (18.53)p
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.
CONSOLIDATED 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
Included within retained earnings were GBP1,407,000 of Company
reserves available for distribution.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31st December 2021 (unaudited)
Share
Share premium Special reserve Retained earnings
capital Total
GBP '000 GBP '000 GBP '000
GBP '000 GBP '000
At 30th JUNE 2021 710 21,573 56,908 58,941 138,132
Total comprehensive income for the period - - - 3,584 3,584
Dividend paid - - - (994) (994)
At 31st DECEMBER 2021 710 21,573 56,908 61,531 140,722
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30th June 2021 (audited)
Share
Share premium Special reserve Retained earnings
capital Total
GBP '000 GBP '000 GBP '000
GBP '000 GBP '000
At 30th JUNE 2021 710 21,573 56,908 58,941 138,132
Total comprehensive income for the year - - - (13,160) (13,160)
Dividend paid - - - (994) (994)
At 30th JUNE 2022 710 21,573 56,908 44,787 123,978
CONSOLIDATED BALANCE SHEET
at 31st December 2022
31st December 31st December 30th June
2022 2021 2022
Notes
(unaudited) (unaudited) (audited)
GBP '000 GBP '000 GBP '000
NON-CURRENT ASSETS
Investments at fair value through profit or loss
5 105,298 135,726 99,450
CURRENT ASSETS
Other receivables 152 126 258
Cash and cash equivalents 18,024 5,139 24,530
18,176 5,265 24,788
TOTAL ASSETS 123,474 140,991 124,238
CURRENT LIABILITIES
Other payables (249) (269) (260)
TOTAL ASSETS LESS CURRENT LIABILITIES
123,225 140,722 123,978
NET ASSETS 123,225 140,722 123,978
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 44,034 61,531 44,787
TOTAL EQUITY 123,225 140,722 123,978
NET ASSET VALUE PER ORDINARY SHARE (PENCE) 7 173.50p 198.13p 174.56p
The interim report was approved and authorised for issue by the
Board on 21st March 2023.
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31st December 2022
Six months Six months Year
ended ended ended
31st December 31st December 30th June
2022 2021 2022
(unaudited) (unaudited) (audited)
GBP '000 GBP '000 GBP '000
NET CASH INFLOW FROM OPERATING ACTIVITIES 831 517 673
INVESTING ACTIVITIES
Purchase of investments (6,442) (2,885) (11,861)
Sale of investments - - 26,950
Legal and professional costs - (60) (60)
NET CASH (OUTFLOW)/INFLOW FROM INVESTING ACTIVITIES
FINANCING (6,442) (2,945) 15,029
Equity dividend paid (994) (994) (994)
NET CASH (OUTFLOW)/INFLOW AFTER FINANCING
(6,605) (3,422) 14,708
(DECREASE)/INCREASE IN CASH (6,605) (3,422) 14,708
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
(Decrease)/increase in cash resulting from cash flows (6,605) (3,422) 14,708
Exchange movements 99 121 1,382
Movement in net funds (6,506) (3,301) 16,090
Net funds at start of period/year 24,530 8,440 8,440
NET FUNDS AT OF PERIOD/YEAR 18,024 5,139 24,530
RECONCILIATION OF PROFIT BEFORE FINANCE COSTS AND TAXATION TO NET CASH FLOW FROM OPERATING ACTIVITIES
Profit/(loss) before finance costs and taxation * 250 3,585 (13,160)
Losses/(gains) on investments 594 (3,114) 15,188
Exchange gains (99) (121) (1,382)
Legal and professional costs - 60 60
Capital trail rebates (1) (4) (6)
Revenue profit before finance costs and taxation 744 406 700
Decrease/(increase) in debtors 106 109 (30)
Decrease in creditors (11) (1) (10)
Finance costs - (1) -
Taxation (9) - 7
Capital trail rebates 1 4 6
NET CASH INFLOW FROM OPERATING ACTIVITIES 831 517 673
* Includes dividends received in cash of GBP1,012,000 (30th June
2022: GBP1,653,000) (2021: GBP963,000), accumulation income of
GBP188,000 (30th June 2022: GBP149,000) (2021: GBP140,000) and
interest received of GBP189,000 (30th June 2022: GBP20,000) (2021:
GBP1,000).
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 31st December 2022
1. ACCOUNTING POLICIES
The condensed consolidated interim financial statements comprise
the unaudited results of the Company and its subsidiary, JIT
Securities Limited (together "the Group"), for the six months ended
31st December 2022. The comparative information for the six months
ended 31st December 2021 and the year ended 30th June 2022 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 2022 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 2022, which were prepared in accordance with IFRSs.
No segmental reporting is provided as the Group is engaged in a
single segment.
2. TOTAL INCOME
Year ended 30th June
Six months ended 31st December 2022
Six months ended 31st December 2021 2022
GBP'000
GBP'000
GBP'000
Income from Investments
UK net dividend income 952 900 1,581
Unfranked investment income 125 85 219
UK fixed interest 24 16 37
1,101 1,001 1,837
Other Income
Bank interest receivable 191 - 20
191 - 20
Year ended 30th June
Six months ended 31st December 2022
Six months ended 31st December 2021 2022
GBP'000
GBP'000
GBP'000
Total income comprises
Dividends 1,101 985 1,800
Other income 191 16 57
1,292 1,001 1,857
3. MANAGEMENT FEES
Year ended 30th June
Six months ended 31st December 2022
Six months ended 31st December 2021 2022
GBP'000
GBP'000
GBP'000
Investment management fee 385 437 837
385 437 837
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
2022 Six months ended 31st December
2021 2022
GBP'000
GBP'000
GBP'000
Revenue return 735 405 700
Capital return (494) 3,179 (13,860)
Total return 241 3,584 (13,160)
Weighted average number of Ordinary 71,023,695 71,023,695 71,023,695
shares
Revenue return per Ordinary share 1.04p 0.57p 0.98p
Capital return per Ordinary share (0.70)p 4.48p (19.51)p
Total return per Ordinary share 0.34p 5.05p (18.53)p
5. INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS
At
At At
30th June
31st December 2022 31st December 2021
2022
GBP'000 GBP'000
GBP'000
GROUP AND COMPANY 105,298 135,726 99,450
ANALYSIS OF INVESTMENT
PORTFOLIO
Six months ended 31st December 2022
Total
Quoted* Unquoted**
(level 1 and 2) (level 3)
GBP'000
GBP'000 GBP'000
Opening book cost 70,896 10,099 80,995
Opening investment holding gains/(losses) 25,941 (7,486) 18,455
Opening valuation 96,837 2,613 99,450
Movement in period:
Purchases at cost 6,092 350 6,442
Sales
- Proceeds - - -
- Realised gains on sales - - -
Movement in investment holding gains/(losses) 182 (776) (594)
Closing valuation at 31 December 2022 103,111 2,187 105,298
Closing book cost 76,988 10,449 87,437
Closing investment holding gains/losses 26,123 (8,262) 17,861
Closing valuation 103,111 2,187 105,298
* 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 GBP4,112,000 (30th June 2022
GBP4,242,000) (2021: GBP4,632,000).
** 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 GBP700,000
(30th June 2022: GBP957,000) (2021: GBP14,842,000) was valued at
recent transaction price. The second largest investment has also
been valued at recent transaction price. A 10% increase or decrease
in the earnings of any 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
ended
Six months ended Six months ended
30th
31st December 2022 31st December 2021
June
GBP'000 GBP'000
2022
GBP'000
ANALYSIS OF CAPITAL (LOSSES)/GAINS
Realised gains on sales of investments - - 18,375
(Decrease)/increase in investment holding gains (594) 3,114 (33,563)
(594) 3,114 (15,188)
6. RETAINED EARNINGS
At At
At
31st December 2022 30th June
31st December 2021
GBP'000 2022
GBP'000
GBP'000
Capital reserve - realised 24,766 5,381 24,666
Capital reserve - revaluation 17,861 55,132 18,455
Revenue reserve 1,407 1,018 1,666
44,034 61,531 44,787 7. NET ASSET VALUE PER ORDINARY SHARE
31st December 2022 30th June
31st December 2021
GBP'000 2022
GBP'000
GBP'000
Net assets attributable to Ordinary shareholders
123,225 140,722 123,978
Ordinary shares in issue at end of period
71,023,695 71,023,695 71,023,695
Net asset value per Ordinary share 173.50p 198.13p 174.56p
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 2022 was GBP385,000 (30th June 2022:
GBP837,000) (2021: GBP437,000) and at the half year GBP192,000
(30th June 2022: GBP193,000) (2021: GBP219,000) was accrued.
The Group's investments include seven funds managed by Brompton
or its associates valued at GBP21,697,000 (30th June 2022:
GBP24,451,000) (2021: GBP24,194,000). No investment management fees
were payable directly by the Company in respect of these
investments.
-----------------------------------------------------------------------------------------------------------------------
Dissemination of a Regulatory Announcement, transmitted by EQS
Group. The issuer is solely responsible for the content of this
announcement.
-----------------------------------------------------------------------------------------------------------------------
ISIN: GB0002631041
Category Code: IR
TIDM: NSI
Sequence No.: 231525
EQS News ID: 1588237
End of Announcement EQS News Service
=------------------------------------------------------------------------------------
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