MITON INCOME OPPORTUNITIES TRUST PLC
(formerly known as Henderson Fledgling Trust plc)
HALF YEAR REPORT (UNAUDITED)
For the six months to 28 February 2013
At a General Meeting of the Company held on 5 April 2013, shareholders approved a revised
investment objective and investment policy, as set out below:
INVESTMENT OBJECTIVE The Company's investment objective is to
provide shareholders with an attractive level of dividends coupled
with capital growth over the long-term.
INVESTMENT POLICY
The Company will invest primarily in quoted or traded small and mid-sized UK
companies and shall seek exposure to those companies that have the prospect of
paying good and growing dividends. The Company may also invest in large cap
companies, including FTSE 100 constituents, where it is believed that this may
increase shareholder value.
The Investment Manager will adopt a stock specific approach in
managing the Company's portfolio and therefore sector weightings
are of secondary consideration. As a result of this approach, the
Company's portfolio will not track any benchmark index.
The Company may utilise derivative instruments including index-linked notes,
contracts for differences, covered options and other equity-related derivative
instruments for efficient portfolio management, gearing and investment
purposes. Any use of derivatives for investment purposes will be made on the
basis of the same principles of risk spreading and diversification that apply
to the Company's direct investments, as described below. The Company will not
enter into uncovered short positions.
Risk diversification Portfolio risk will be mitigated by
investing in a diversified spread of investments. Investments in
any one company shall not, at the time of acquisition, exceed 15%
of the value of the Company's investment portfolio.
The Company will not invest more than 10% of its gross assets, at the time of
acquisition, in other listed closed-ended investment funds, whether managed by
the Investment Manager or not, except that this restriction shall not apply to
investments in listed closed-ended investment funds which themselves have
stated investment policies to invest no more than 15% of their gross assets in
other listed closed-ended investment funds. In addition to this restriction,
the Directors have further determined that no more than 15% of the Company's
gross assets will, at the time of acquisition, be invested in other listed
closed-ended investment funds (including investment trusts) notwithstanding
whether or not such funds have stated policies to invest no more than 15% of
their gross assets in other listed closed-ended investment funds.
Unquoted investments
The Company may invest in unquoted companies from time to time subject to prior
Board approval. Investments in unquoted companies in aggregate will not exceed
5% of the value of the Company's investment portfolio as at the time of
investment.
Borrowing and gearing policy
The Board considers that long-term capital growth can be enhanced by the use of
gearing which may be through bank borrowings and the use of derivative
instruments such as contracts for differences. The Company may borrow (through
bank facilities and derivative instruments) up to 15% of net asset value
(calculated at the time of borrowing). The Board will oversee the level of
gearing in the Company, and will review the position with the Investment
Manager on a regular basis.
CHAIRMAN'S STATEMENT
This report covers the six month period ended 28 February 2013. On 15 February
2013 the Company announced a proposed change in its investment policy, the
appointment of a new investment manager and a proposed merger with the Diverse
Income Trust plc ("DIT").
The net asset value ("NAV") of the Company has increased by 20.5% over the six
month period on a total return basis, which compares with a rise of 22.4% in
the FTSE Fledgling (excluding Investment Companies) Index (the "Fledgling
Index"). During the same period, the share price has increased by 47.6% on a
total return basis. The Board is pleased to note the re-rating of the shares
following the announcement which saw the discount to NAV reduce from 27.3% to
9.2% as at 28 February 2013.
An interim dividend of 6p per ordinary share will be paid to shareholders on 28
May 2013. This enhanced interim dividend, as referred to in the recent
Circular, includes approximately 4p per ordinary share which will be paid from
accumulated revenue reserves. The Board has determined that a further interim
dividend from reserves may be paid prior to completion of the proposed merger
with DIT. It should be noted, however, that in the event the merger with DIT
does not take place, the final dividend level may not be maintained at the
previous year's level.
The Company has sought long-term growth in capital and dividends from
investment predominantly in the constituents of the Fledgling Index. In recent
years, the policy has been to adopt a broad indexation of the Fledgling Index
with an active overlay of up to a maximum of 35% of the portfolio. This dual
approach of broad indexation coupled with an active overlay was historically
viewed by the Board as a practicable way of obtaining full exposure to any
longer-term outperformance of the Fledgling Index.
For most of its life, the Company has delivered attractive total returns for
shareholders. However, over recent years the Fledgling Index has suffered both
structural and cyclical issues, including the increased cost of rebalancing the
portfolio every quarter as both the size of the index and the number of
constituents within it has declined materially. This led to relative
underperformance by the Fledgling Index against both the All-Share Index and
the SmallCap Index.
Over the three years to 28 February 2013, on a total return basis, the
Company's NAV increased by 11.1% compared with the Fledgling Index, and the
All-Share Index, which rose by 32.6% and 35.5% respectively. In addition, the
Company's shares traded at an average discount of approximately 20% to their
NAV per share for the 12 month period ending 28 February 2013 compared to the
UK Smaller Companies Investment Trust sector which traded at an average
discount of approximately 15%.
The Board was of the view that the structural and cyclical issues highlighted
were likely to persist and lead to further underperformance by the Company
relative to the All-Share Index and SmallCap Index. The Board therefore
initiated a Strategic Review in November 2012 with the aim of proposing a new
investment policy designed to improve shareholder returns in the future. This
resulted in an announcement on 15 February 2013 that the previous investment
strategy would be discontinued and a new investment policy be proposed which
would focus upon a UK multicap portfolio with a bias towards small and microcap
stocks that paid good and growing dividends. The Board appointed Miton Capital
Partners Limited as Investment Manager from 1 March 2013 and agreed to change
the name of the Company to Miton Income Opportunities Trust plc subject to
shareholder approval of the investment policy change, which was granted on 5
April 2013.
Following this approval, the portfolio is undergoing a degree of realignment to
meet our new investment objective. The original portfolio contained several
stocks that were already consistent with our new investment objective and, with
recent portfolio transactions, a material part of the portfolio is now aligned
with the new strategy.
The new investment strategy has continued to perform strongly for DIT, which is
also managed by Miton and by Gervais Williams, who was formerly this Company's
investment manager. Heads of terms have been agreed to merge with DIT when the
two portfolios are closely aligned, subject to Board approval. Over the period
from 1 September 2012 to 28 February 2013, DIT continued to perform well,
returning 21.4% on a total return basis with low volatility. DIT was also the
best performing UK Growth and Income Trust during 2012.
At current market levels, the combined trust would have total assets of around
£200m, so our shareholders should potentially enjoy much greater market
liquidity after the merger as well as a share price that more fully reflects
the value of the assets in the portfolio.
The Board is pleased with the progress made to date in re-aligning the
portfolio, which will continue in the year ahead. The Board will keep
shareholders informed of progress and further developments. While some market
volatility can be expected in the year ahead, we anticipate robustly financed
companies, with good and growing dividends, to be well placed to deliver
premium returns in fluctuating markets over the medium term.
The Board would like to thank the previous managers, Henderson
Global Investors, for their hard work in managing the Company's
investment portfolio.
Tom Bartlam,
Chairman
30 April 2013
INVESTMENT MANAGER'S REPORT
Miton Capital Partners Limited took on the role of Investment Manager of the
Company on 1 March 2013, and on 5 April 2013 the investment objective and
policy were changed to the mandate that will operate going forward. As has been
announced already, there is an intention to merge the Company with The Diverse
Income Trust plc in due course, which is itself already managed by Miton
Capital Partners Limited.
During the period the previous managers made the following
significant transactions. They added to the holdings in Thorntons,
Bioquell, Trifast, Future, Skyepharma, Vernalis, Acal and
office2office and made significant disposals of holdings in
Porvair, Thorntons, Dee Valley and
Real Estate Credit Investments, MJ Gleeson, Creston, Johnston Press
and Gresham Computing.
Furthermore, during the period there were a number of corporate
transactions that impacted the portfolio including the takeover of
Corin and the administration of HMV and Manganese Bronze.
Who are Miton?
Miton Group plc ("Miton") is an AIM-listed fund management business, formerly
known as MAM Funds plc. Miton operates through two FSA regulated companies:
● Miton Capital Partners Limited (formerly known as Midas
Capital Partners Limited); and
● Miton Asset Management Limited.
Our investment philosophy is based on the belief that we can
manage our clients' funds better because we recognise the nascent
investment trends beyond the credit boom.
We manage investments within:
● eleven open ended funds;
● four investment trusts; and
● segregated accounts.
The business operates under the single Miton brand and has 41
employees working out of offices in London, Reading and Liverpool. Up until December 2012 we operated under the MAM, Miton,
Midas and Acuim brands.
What is the Miton investment philosophy?
Our fund managers seek value for investors without undue regard for indices and
benchmarks. They have the flexibility to invest in companies, funds and asset
classes that are better placed to preserve value and see it grow over the
medium to longer term.
At Miton we aim to make our funds largely perform independent of
the trends of their sectors by:
● limiting our exposure to portfolios with elevated volatility, we anticipate
that our funds are less vulnerable to the more adverse trends as credit boom
conditions come to an end.
● crafting our investment strategies so our funds should be
better positioned for the potentially choppy markets beyond the
credit boom.
"We are independently-minded and do not necessarily follow the herd. Most of
our funds do not use traditional benchmarks and our fund managers are given the
freedom to have the courage of their convictions to deliver better risk
adjusted returns for our clients."
What has shaped their view?
A turning point
Since the 1980s, investors and investment products have been optimised for
credit boom conditions. Consequently, we would contend that most funds are not
well-positioned for a major change in global, economic trends as we move beyond
the credit boom.
Booms are characterised by rises in asset prices. They are normally short lived
and cyclical in nature. We are at the end of a period of growth, fuelled by
debt or a `credit boom', which has persisted for 25 years and which has been
global in scale. Speculative and potentially excessively volatile strategies
have become endemic within the investment industry.
Within our multi asset funds, we principally use a macro-economic, top down
investment approach. For our equity funds, there is a greater focus on specific
stock selection from the bottom-up. However, significantly at Miton we allow
our fund managers greater freedom to use their knowledge and experience to
manage funds without being unduly constrained by conventional benchmarks.
Importantly, our approach gives our fund managers greater
ownership of the risks and rewards of their portfolios. This
culture best suits leading fund managers who can use their superior
talent, experience and conviction to greatest effect.
The fund management industry beyond the credit boom
The last 25 years have been marked by a significant rise in asset prices. Not
only equities, but also bonds, property and commodities have participated. The
key issue is that asset prices tend to run up during credit booms. Given that
this credit boom has lasted more than 25 years, and has been global in nature,
asset prices have tended to rise off and on for an extended period.
The trend of rising asset prices has had a significant impact on the way that
investors have invested. Frequently the best performing shares have been those
that are the most speculative. Indeed, with indices rising relatively rapidly
at times, it has been difficult for professional fund managers to keep ahead.
Those too cautious have been regularly outpaced by the more adventurous.
Darwinian forces have gradually weeded out the excessively prudent. Trading
strategies have come to predominate. The culture of the financial industry has
radically changed over the last 25 years.
Debt as a percentage of GDP was stable for a long period before breaking out
upwards around the middle of the 1980s. In the UK, the late 1980s was marked by
'loadsamoney' headlines with sharply rising house prices. Although this did
drop back a bit over the early 1990s, the upward trajectory was resumed after
the UK came out of the Exchange Rate Mechanism ("ERM") in 1992.
Prior to 1985, the fund management industry typically managed assets valued at
rather less than 5% of the UK economy. However, after the credit boom took off,
this value had risen and risen to beyond 35% of the UK economy. Effectively the
fund management sector has grown some ten times in scale during the credit
boom.
How has this come about? For every pound of credit that is lent, double entry
bookkeeping requires an extra pound to be entered on the balance sheet. During
credit booms, there is a much greater willingness to take on additional
borrowings. So as debt grows, so does notional cash. In time, a proportion of
this capital finds its way to professional fund managers. Furthermore, during
the boom new fund management sectors have evolved. Prior to the credit boom
most corporate credit was funded by banks. But during the credit boom corporate
credit has become freely traded with much held in specific funds. We would
argue that the change in the scale of the fund management industry has some
correlation with the growth of credit during the boom.
Beyond the credit boom it seems unlikely that the credit mountain will unwind
rapidly. In the short term, central bankers have opted to buy in bonds and this
has permitted many governments to sustain sizeable budget deficits. So whilst
banks have been downsizing the scale of their balance sheets, this has been
offset by the dis-saving of the state. Whilst this persists the overall scale
of the fund management industry is likely to be broadly unchanged.
As a forward-looking business we are preparing ourselves for a
time when quantitative easing runs out; a time when the absolute
amount of debt in the economy could start to fall back. Already the
trends in the fund management industry are beginning to evolve as
clients' preferences change.
What will the new investment trends be?
Three important trends that have been underappreciated during
the boom:
● Premium yield/value shares typically outperform. During the credit boom, many
portfolios backed growth stories rather than companies with good and growing
dividends/intrinsic value which have progressively outperformed over the last
100 years.
● Multi cap rather than narrow indexation. Credit boom strategies have tended
to favour a narrow range of stocks. In sharply rising markets, capital gains
can be taken through trading strategies and overall portfolio performance
mimicked the returns of the mid/large cap index benchmarks. Prior to the credit
boom, multi cap portfolios were favoured because all holdings were selected for
their scope to deliver absolute returns. Small cap stocks in particular have
the advantage that they can perform well even at times of tepid index returns.
Small cap outperformance is beginning to become re-established.
● Diversification can be found in developed economies. Although worldwide
diversification has a place within portfolios, during more unsettled periods
immature economies can impose unwelcome constraints on overseas investors. In
contrast, diversification via smaller quoted companies in the developed
economies can not only enhance expected returns but also has the benefit of
well-developed investor protection.
Miton Capital Partners Limited
30 April 2013
TOTAL RETURN PERFORMANCE (1)
6 months 1 year 3 years 5 years 10 years
% % % % %
Net assets per +20.5 +11.1 +11.1 +27.3 +170.9
share
Ordinary share +47.6 +19.1 +29.6 +50.3 +239.9
price
Benchmark (2) +22.4 +16.3 +32.6 +50.4 +277.3
FINANCIAL HIGHLIGHTS
At At
28 February 31 August Change
2013 2012 %
Net asset value per ordinary 496.3p 423.8p +17.1
share (3)
Ordinary share price 450.5p 308.0p +46.3
Discount 9.2% 27.3%
Half year ended Half year ended
28 February 29 February
2013 2012
Revenue return per ordinary share (4) 2.0p
4.8p
Interim dividend per ordinary share 6.0p
4.0p
(1) To 28 February 2013 using
bid-market priced portfolio valuations and
re-investing dividends paid on ex-dividend date. Source: Financial Express.
(2) FTSE Fledgling (ex Investment Companies) Index.
(3) Based on investments at bid-market value including undistributed revenue.
(4) Based on weighted average number of shares in issue during the period.
FINANCIAL CALENDAR
April Announcement of Half Year Results
May Payment of interim dividend for year ended 31 August 2013
November Announcement of Annual Results
December Annual General Meeting
December Payment of final dividend for year ended 31 August 2013
PRINCIPAL INVESTMENTS
as at 28 February 2013
%
Company Main activity Valuation of net
£'000 assets
Future Media 4,711 5.9
Thorntons Food & Drug Retailers 4,273 5.4
Filtronic Technology Hardware & 3,368 4.2
Equipment
Communisis Support Services 3,324 4.2
Bioquell Health Care Equipment & 3,210 4.0
Services
Trifast Industrial Engineering 3,135 3.9
Acal Support Services 3,021 3.8
office2office Support Services 2,849 3.6
Record Financial Services 2,741 3.4
Skyepharma Pharmaceuticals & 2,510 3.1
Biotechnology
10 largest 33,142 44.1
Liontrust Asset Management Financial Services 2,116 2.7
Moss Bros General Retailers 1,960 2.5
Air Partner Travel & Leisure 1,735 2.2
T Clarke Construction & Materials 1,637 2.1
Vernalis Pharmaceuticals & 1,551 1.9
Biotechnology
Vislink Technology Hardware & 1,519 1.9
Equipment
Source Bioscience Pharmaceuticals & 1,485 1.9
Biotechnology
Energy Assets Support Services 1,471 1.8
Parity Software & Computer Services 1,445 1.8
Crystalox Solar Alternative Energy 1,395 1.7
20 largest 49,456 62.0
STV Media 1,340 1.7
Dee Valley Gas, Water & Multi-Utilities 1,316 1.7
Local Shopping REIT Real Estate Investment Trusts 1,281 1.6
MS International Industrial Engineering 1,249 1.6
AXA Property Trust Non Equity Investment 1,248 1.6
Instruments
Macfarlane General Industrials 1,231 1.5
Gresham Computing Software & Computer Services 1,153 1.4
Jersey Electricity Electricity 1,147 1.4
Hornby Leisure Goods 1,139 1.4
Molins Industrial Engineering 1,111 1.4
30 largest 61,671 77.3
Tamar European Industrial Equity Investment Instruments 1,036 1.3
Fund
Treatt Chemicals 925 1.2
Victoria Household Goods 776 1.0
Harvey Nash Support Services 753 0.9
600 Group Industrial Engineering 623 0.8
J Smart Support Services 617 0.8
Oxford Biomedica Pharmaceuticals & 583 0.7
Biotechnology
Panther Securities Real Estate & Investment 523 0.7
Services
City of London Group Financial Services 492 0.6
Superglass Construction & Materials 463 0.5
40 largest 68,462 85.8
Other listed investments (30 stocks) 6,813
8.6
Total equity investments 75,275 94.4
Cash and other net assets 4,506 5.6
Total net assets 79,781 100.0
CLASSIFICATION OF INVESTMENTS AND PORTFOLIO WEIGHTING
as at 28 February 2013
FTSE
Fledgling
(ex
% of Investment Relative
net Companies) to the
assets Index % Index %
Oil & Gas Alternative Energy 1.8 5.5 -3.7
1.8 5.5 -3.7
Basic Materials Chemicals 1.2 1.6 -0.4
Mining 1.2 0.9 +0.3
2.4 2.5 -0.1
Industrials Construction & 4.1 4.9 -0.8
Materials
Electronic & 0.1 0.1 -
Electrical Equipment
General Industrials 1.5 1.7 -0.2
Industrial Engineering 7.8 6.8 +1.0
Support Services 15.2 13.3 +1.9
28.7 26.8 +1.9
Consumer Goods Food Producers - 0.1 -0.1
Household Goods 1.4 3.5 -2.1
Leisure Goods 1.4 1.4 -
Personal Goods - 0.1 -0.1
2.8 5.1 -2.3
Health Care Health Care Equipment 4.2 4.1 +0.1
& Services
Pharmaceuticals & 8.2 4.8 +3.4
Biotechnology
12.4 8.9 +3.5
Consumer Services Food & Drug Retailers 5.4 1.9 +3.5
General Retailers 4.2 4.9 -0.7
Media 8.4 9.4 -1.0
Travel & Leisure 2.2 1.6 +0.6
20.2 17.8 +2.4
Utilities Electricity 1.4 1.7 -0.3
Gas, Water & 1.6 3.1 -1.5
Multi-utilities
3.0 4.8 -1.8
Financials Equity Investment 1.3 4.9 -3.6
Instruments
Financial Services 7.5 9.9 -2.4
Non Equity Investment 1.6 - +1.6
Instruments
Real Estate & 1.1 2.8 -1.7
Investment Services
Real Estate Investment 1.6 2.1 -0.5
Trusts
13.1 19.7 -6.6
Technology Software & Computer 3.7 3.5 +0.2
Services
Technology Hardware & 6.3 5.4 +0.9
Equipment
10.0 8.9 +1.1
Cash and other net assets 5.6
Total net assets 100.0 100.0
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties associated with the Company's business
can be divided into the following main areas:
● Portfolio and market price risk
● Operational risk
● Tax and regulatory risk
Information on these risks and how they are managed is given in the Annual
Report to 31 August 2012. In the view of the Board these principal risks and
uncertainties were unchanged over the last six months and are as applicable to
the remaining six months of the financial year as they were to the six months
under review.
RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge:
● the condensed set of financial statements has been prepared in accordance
with International Accounting Standard ("IAS") 34, Interim Financial Reporting,
as adopted by the European Union; and gives a true and fair view of the assets,
liabilities and financial position of the Company; and
● this Half Year Report includes a fair review of the
information required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the Company
during that period; and any changes in the related party
transactions that could do so.
This Half Year Report was approved by the Board of Directors on
30 April 2013 and the above
responsibility statement was signed on its behalf by:
Tom Bartlam
Chairman
STATEMENT OF COMPREHENSIVE INCOME
for half year ended 28 February 2013
Half year ended Half year ended Year ended
28 February 2013 29 February 2012 31 August 2012
(unaudited) (unaudited) (audited)
Revenue Capital Revenue Capital Revenue Capital
return return Total return return Total return return Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on - 12,562 12,562 - (5,126) (5,126) - (9,807) (9,807)
investments held at
fair value through
profit or loss
Investment income (note 592 - 592 1,081 - 1,081 2,318 - 2,318
2)
Other income (note 2) - - - 2 - 2 2 - 2
Total income 592 12,562 13,154 1,083 (5,126) (4,043) 2,320 (9,807) (7,487)
Expenses
Management fees (note (120) (179) (299) (121) (181) (302) (235) (353) (588)
5)
Other expenses (142) (83) (225) (149) (29) (178) (310) (115) (425)
Profit/(loss) before 330 12,300 12,630 813 (5,336) (4,523) 1,775 (10,275) (8,500)
finance costs and
taxation
Finance costs (6) (9) (15) (34) (51) (85) (51) (76) (127)
Profit/(loss) before 324 12,291 12,615 779 (5,387) (4,608) 1,724 (10,351) (8,627)
taxation
Taxation - - - - - - - - -
Net profit/(loss) for 324 12,291 12,615 779 (5,387) (4,608) 1,724 (10,351) (8,627)
the period and total
comprehensive income
Return per ordinary 2.02p 76.46p 78.48p 4.80p (33.21)p (28.41)p
10.68p (64.10)p (53.42)p share (note 3)
The total column of this statement represents the Company's
Statement of Comprehensive Income, prepared in accordance with
IFRS, as adopted by the European Union.
The revenue return and capital return columns are supplementary
to this and are prepared under guidance published by The
Association of Investment Companies.
The Company does not have any other comprehensive income and hence the net profit, as
disclosed above, is the same as the Company's total comprehensive income.
All items in the above statement derive from continuing activities. No operations were
acquired or discontinued during the period. (see note 1).
The accompanying notes are an integral part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
for the half year ended 28 February 2013
Called-up Capital
share redemption Capital Revenue
capital reserve reserve reserve Total
(1)
Half year ended 28 February £'000 £'000 £'000 £'000 £'000
2013 (unaudited)
Total equity at 31 August 2012 4,019 6,279 55,548 2,285 68,131
Total comprehensive income
Profit for the period - - 12,291 324 12,615
Transactions with owners,
recorded directly to equity
Ordinary dividends paid - - - (965) (965)
Total equity at 28 February 4,019 6,279 67,839 1,644 79,781
2013
Called-up Capital
share redemption Capital Revenue
capital reserve reserve reserve Total
(1)
Half year ended 29 February £'000 £'000 £'000 £'000 £'000
2012 (unaudited)
Total equity at 31 August 2011 4,127 6,171 67,488 2,174 79,960
Total comprehensive income
(Loss)/profit for the period - - (5,387) 779 (4,608)
Transactions with owners,
recorded directly to equity
Ordinary dividends paid - - - (970) (970)
Buy-backs of ordinary shares (108) 108 (1,588) - (1,588)
Total equity at 29 February 4,019 6,279 60,513 1,983 72,794
2012
Called-up Capital
share redemption Capital Revenue
capital reserve reserve reserve Total
(1)
Year ended 31 August 2012 £'000 £'000 £'000 £'000 £'000
(audited)
Total equity at 31 August 2011 4,127 6,171 67,488 2,174 79,960
Total comprehensive income
(Loss)/profit for the period - - (10,351) 1,724 (8,627)
Transactions with owners,
recorded directly to equity
Ordinary dividends paid - - - (1,613) (1,613)
Buy-backs of ordinary shares (108) 108 (1,589) - (1,589)
Total equity at 31 August 2012
4,019 6,279 55,548 2,285 68,131
(1) The revenue reserve represents the amount of reserves
distributable by way of dividend.
The accompanying notes are an integral part of these financial statements.
BALANCE SHEET
as at 28 February 2013
28 February 29 February 31 August
2013 2012 2012
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Non-current assets
Investment in subsidiary - (122) -
Investments held at fair 7 75,275 77,053 69,995
value through profit or
loss
75,275 76,931 69,995
Current assets
Balances due from brokers 14 523 -
Other receivables 59 167 111
Cash and cash equivalents 4,602 1,084 1,359
4,675 1,774 1,470
Total assets 79,950 78,705 71,465
Current liabilities
Balance due to brokers - - (297)
Other payables (169) (5,911) (3,037)
(169) (5,911) (3,334)
Net assets 79,781 72,794 68,131
Equity attributable to
equity shareholders
Called-up share capital 4,019 4,019 4,019
Capital redemption reserve 6,279 6,279 6,279
Capital reserve 67,839 60,513 55,548
Revenue reserve 1,644 1,983 2,285
Total equity 79,781 72,794 68,131
Net asset value per 4 496.3p 452.8p 423.8p
ordinary share
The accompanying notes are an integral part of these financial statements.
CASH FLOW STATEMENT
for the half year ended 28 February 2013
Half year Half year
ended ended Year ended
28 February 29 February 31 August
2013 2012 2012
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating activities
Net profit/(loss) before finance costs 12,630 (4,523) (8,471)
and tax
(Increase)/decrease in investments (5,280) 10,146 17,057
Decrease in receivables 38 92 671
(Decrease)/increase in payables (471) (268)
60
Net cash inflow from operating activities 6,917 5,447 9,317
Financing activities
Buy-backs of ordinary shares - (1,588) (1,589)
Decrease in bank overdraft (2,683) (2,983) (5,898)
Equity dividends paid (965) (970) (1,613)
Bank overdraft interest paid (26) (104) (140)
Net cash outflow from financing (3,674) (5,645)
(9,240)
Increase/(decrease) in cash and cash 3,243 (198)
77
equivalents
Cash and cash equivalents at the start of 1,359 1,282 1,282
the period
Cash and cash equivalents at the end of 4,602 1,084 1,359 the
period
The accompanying notes are an integral part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. General information
The financial statements comprise the unaudited results of the Company for the
six months to 28 February 2013. The financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRS"), as
adopted by the European Union, and with the Statement of Recommended Practice
("SORP") issued by the Association of Investment Companies dated January 2009,
where the SORP is consistent with the requirements of IFRS.
The trading subsidiary, GFT Dealing Limited, was dissolved from the Companies
House register on 19 February 2013. As such, there is no longer a group in
existence and therefore the financial statements, including comparatives, have
been presented on a Company only basis.
The financial statements have been prepared on the basis of the
accounting policies set out in the Annual Report and Financial
Statements for the year ended 31 August
2012. They are presented in pounds sterling, as this is the
principal currency in which the Company's transactions are
undertaken.
The financial information contained in this report does not constitute full
statutory accounts as defined in Section 434 of the Companies Act 2006. The
financial statements for the six months to 28 February 2013 and the six months
to 29 February 2012 have not been either audited or reviewed by the Company's
Auditors. The information for the year ended 31 August 2012 has been extracted
from the latest published Annual Report and Financial Statements, which have
been filed with the Registrar of Companies. The Report of the Auditors on those
financial statements contained no qualification or statement under Section 498
(2) or (3) of the Companies Act 2006.
The Directors consider that it is appropriate to adopt the going concern basis
in preparing the financial statements. After making enquiries, and bearing in
mind the nature of the Company's business and assets, the Directors consider
that the Company has adequate resources to continue in operational existence
for the foreseeable future. In arriving at this conclusion the Directors have
considered the liquidity of the portfolio and the Company's ability to meet
obligations as they fall due.
2. Dividends and other income
Half year Half year Year
ended ended ended
28 February 29 February 31 August
2013 2012 2012
£'000 £'000 £'000
Income from listed investments
Franked UK dividends 462 867 1,843
UK property income distributions 82 1 84
Overseas dividends 48 213 400
592 1,081 2,318
Other income
Interest on deposits - 2 2
592 1,083 2,320
3. Return per ordinary share
Total return per ordinary share is based on the net profit attributable to the
ordinary shares of £12,615,000 (half year ended 29 February 2012: loss £
4,608,000; year ended 31 August 2012: loss £8,627,000) and on the 16,075,080
ordinary shares being the weighted average number of shares in issue (half year
ended 29 February 2012: 16,219,827; year ended 31 August 2012: 16,147,058).
Revenue return per ordinary share is based on the net revenue return
attributable to the ordinary shares of £324,000 (half year ended 29 February
2012: £779,000; year ended 31 August 2012: £1,724,000) and on the 16,075,080
ordinary shares being the weighted average number of shares in issue (half year
ended 29 February 2012: 16,219,827; year ended 31 August 2012: 16,147,058).
Capital return per ordinary share is based on the net capital profit
attributable to the ordinary shares of £12,220,000 (half year ended 29 February
2012: loss £5,387,000; year ended 31 August 2012: loss £10,351,000) and on the
16,075,080 weighted average number of shares in issue (half year ended 29
February 2012: 16,219,827; year ended 31 August 2012: 16,147,058).
4. Net asset value per ordinary share
Net asset value per ordinary share is based on the 16,075,080 (half year ended
29 February 2012: 16,075,080; year ended 31 August 2012: 16,075,080) ordinary
shares in issue. During the period ended 28 February 2013, nil (half year ended
29 February 2012: 434,000; year ended 31 August 2012: 434,000) ordinary shares
were repurchased for cancellation at a total cost of £nil (half year ended 29
February 2012: £1,588,000; year ended 31 August 2012: £1,589,000). No further
shares have been repurchased since the period end.
5. Management fee
The management fee payable to Henderson Global Investors ("Hendersons") was
calculated monthly in arrears at 0.8% on the value of the Company's total
assets less current liabilities up to £75 million and at 0.5% per annum
thereafter. In this regard, current liabilities exclude any borrowings under
facilities other than bank overdraft facilities.
The fee accrued to the Balance Sheet date is £103,000 which includes the
termination fee payable from 7 February 2013 to 28 February 2013. The remainder
of the termination fee payable to 7 May 2013 is £118,000 based on net assets of
the Company as at 7 February 2013. This fee will be apportioned over the
remainder of the termination period.
With effect from 1 March 2013 Miton Capital Partners Limited ("Miton") has been
appointed as the Investment Manager. In return for its services, Miton will be
entitled to receive a management fee of 1% of the market capitalisation. Miton
has agreed to waive the management fees for the period up to the earlier of
completion of a merger with The Diverse Income Trust plc or 12 months after the
effective date of their appointment.
The management fee is allocated 60% to capital and 40% to
revenue.
6. Interim dividend
An interim dividend of 6.0p per ordinary share will be paid on 28 May 2013 to
shareholders on the register of members on 10 May 2013. The Company's shares
will be quoted ex-dividend on 8 May 2013. Based on the number of shares in
issue on 29 April 2013, the cost of this dividend will be £965,000.
7. Investments held at fair value through profit or loss
At At At
28 February 29 February 31 August
2013 2012 2012
£'000 £'000 £'000
Income from listed investments
Analysis of investments by place
of listing:
London Stock Exchange 73,100 75,032 68,268
Alternative Investment Market 2,175 2,021 1,727
Valuation of investments 75,275 77,053 69,995
DIRECTORS AND ADVISERS
Directors (all non-executive) Auditor
Tom Bartlam (Chairman) Ernst & Young LLP
Rod Birkett 1 More London Place
Peter Dicks London SE1 2AF
Secretary and Registered Office Solicitors Capita Company
Secretarial Services Stephenson Harwood LLP
Limited 1 Finsbury Circus
Beaufort House London EC2M 7SH
51 New North Road
Exeter EX4 4EP Stockbroker
Cenkos Securities plc
Telephone: 01392 412122 6.7.8 Tokenhouse Yard
London EC2R 7AS
Investment Manager Bankers and Custodians
Miton Capital Partners Limited HSBC Bank plc
10-14 Duke Street 8 Canada Square
Reading RG1 4RU London E14 5HQ
Telephone: 0118 952 8900 Registrar
Website: www.mitongroup.com Equiniti Limited
Aspect House
Company website Spencer Road
www.mitongroup.com/miot Lancing
West Sussex BN99 6DA
Administrator
Capita Sinclair Henderson Limited Telephone: 0871 384 2428
(trading as Capita Financial Group - calls to this number cost 8p per
Specialist Fund Services) minute from a BT landline. Other
Beaufort House providers costs may vary. Lines are
51 New North Road open 8.30am to 5.30pm Monday to Friday.
Exeter EX4 4EP
Website: www.equiniti.com
www.shareview.co.uk
An investment company as defined under Section 833 of the Companies Act 2006.
Registered in England No. 7584303.
A member of the Association of Investment Companies.
The Half Yearly Report will be posted to shareholders shortly.
The Report will be available for download from
www.mitongroup.com/miot. A copy will also be submitted shortly to
the National Storage Mechanism ("NSM") and will be available for
inspection at the NSM, which is situated at:
www.morningstar.co.uk/uk/NSM. Copies can also be requested from the
Company Secretary.
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of this announcement.