Fund Information / Factsheet • Mar 24, 2022
Fund Information / Factsheet
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for the six months ended 31 December 2021
2021/22 assumes that the third interim dividend in respect of the financial year ended 30 June 2022 remains in line with the first and second interim payments paid for that year at 1.26 pence per share and that the fourth interim dividend in respect of the financial year ended 30 June 2022 is estimated to be 1.82 pence per share.
Net Asset Value Total Return and Share Price Total Return v Composite Index
(ii) Composite index of 80 per cent EMIX Global Mining Index (sterling adjusted) and 20 per cent Credit Suisse High Yield Index (sterling adjusted).
To provide shareholders with capital growth and income predominantly from a portfolio of mining and resource equities and of mining, resource and industrial fixed interest securities.
| Total Return | Six months ended 31 December 2021 |
Six months ended 31 December 2020 |
Year to 30 June 2021 |
Period from 31 December 2016 to 31 December 2021 |
|---|---|---|---|---|
| Net asset value Ordinary share price Composite index EMIX Global Mining Index (sterling adjusted) Credit Suisse High Yield Index [sterling adjusted] |
15.16% 0.61% 0.18% (0.36)% 3.57% |
47.06% 61.67% 18.11% 21.70% 0.65% |
83.10% 109.63% 27.52% 32.47% 3.47% |
62.69% 62.71% 77.37% 95.00% 20.77% |
| Capital Values | 31 December 2021 | 30 June 2021 | % change period | |
| Net asset value per share Ordinary share price (mid market) |
195.2p 155.5p |
172.4p 160.5p |
13.23% (3.12)% |
|
| Revenue and Dividends | Six months ended 31 December 2021 |
Six months ended 31 December 2020 |
||
| Earnings per ordinary share Dividends per ordinary share |
2.45p 2.52p |
1.25p 2.52p |
||
| Dividend Yield* | 3.6% | 4.5% | ||
| Discount (difference between share price and fully diluted net asset value) |
20.3% | 11.9% | ||
| Gearing Gearing |
10.9% | 12.9% | ||
| Ongoing charges (as a percentage of average shareholders' funds) |
1.7% | 1.8% |
| Six months ended | Six months ended | |
|---|---|---|
| 31 December 2021 | 31 December 2021 | |
| Period's Highs/Lows | High | Low |
| Net asset value Ordinary share price (mid market) |
205.7p 171.8p |
154.9p 128.3p |
| Discount | 23.7% | 7.4% |
| Dividend History | Rate | xd date | Record date | Payment date |
|---|---|---|---|---|
| Second interim dividend 2022 First interim dividend 2022 |
1.26p 1.26p |
27January 2022 28 October 2021 |
28 January 2022 | 25 February 2022 29 October 2021 30 November 2021 |
| Total | 2.52p | |||
| Fourth interim dividend 2021 | 1.82p | 29 July 2021 | 30 July 2021 | 31 August 2021 |
| Third interim dividend 2021 | 1.26p | 29 April 2021 | 30 April 2021 | 28 May 2021 |
| Second interim dividend 2021 | 1.26p | 21 January 2021 | 22 January 2021 | 26 February 2021 |
| First interim dividend 2021 | 1.26p | 22 October 2020 | 23 October 2020 30 November 2020 | |
| Total | 5.60p |
*based on an annualised dividend of 5.60p (31 December 2020: 5.60p)
The six-month period under review to 31 December 2021 has seen the major global stock markets rise although worrying signs of higher inflation began to be seen towards the calendar year-end. Commodity markets were strong and interestingly for the sector higher interest rate expectations are supporting a broad market rotation into value, which is supportive for mining and energy equity values, given their current strong free cash flow generation.
The NAV total return for the six months to 31 December 2021 was +15.16% which compares to a increase in the composite benchmark of 0.18%. The Fund benefited from good asset allocation from its overweight positions in copper, shipping and lithium. On the individual stock positions, we saw excellent returns from Talon Metals, Sigma Lithium Resources, Foran Mining and NexGen.
The Company's share price return was more disappointing with a total return of -0.61% for the six months to 31 December 2021. The discount at which the shares traded has widened from 3.5% at the end of June 2021 to 20.3% as at 31 December 2021. This is a major concern for the Board and we have been working with our advisors to better promote the excellent returns we have seen over the last 18 months. At the time of writing the position has improved and the discount currently stands at 15.3%.
The Board considers that the dividend policy is very attractive to shareholders and therefore provides an element of share price stability especially whilst other companies have been forced to cut dividends. The Company has continued to maintain the dividend and has paid two quarterly dividends of 1.26p each per share during the year to date.
Since the Manager is focused on generating capital growth and income from the portfolio the dividend may not always be completely covered by income and in those circumstances the Board will use distributable reserves to meet any shortfall. The yield on the Company's shares is 2.9% as at 9 March 2022.
As at 31 December 2021 the gearing was 10.9% but has increased to 11.6% as at 9 March 2022. The Scotiabank facility was renewed during the six-month period and a new two-year facility for £20 million was agreed in September 2021. The amount drawdown under the Scotiabank facility is currently £19 million.
I have been a Director of the Company since 2006 and became Chairman in March 2018. I will be stepping down as a Director of the Company on 31 March 2022. Helen Green will be taking over as Chair on that date and I wish her and my colleagues on the Board my best wishes for the Company going forwards.
Just as the global economy was beginning to recover after the pandemic the unprovoked invasion of Ukraine by Russia has resulted in extreme volatility in financial markets and significant increases in energy prices.
The severe sanctions imposed by the West on Russia has accelerated governments to rethink energy, defence and food security policies. The transition to low carbon economy will be at the forefront of these policies.
Commodity prices were already rising prior to Russia's invasion of Ukraine but now these raw materials are centre stage for investors forward planning. The Manager has articulated these trends in more detail in their report and the Fund was well positioned to take advantage of these before the crisis in Ukraine deepened.
Inflationary pressures are now rising along with these commodity price increases, and the Fund is also protected with a significant exposure to gold and other precious metals.
The closed end structure of the Fund has enabled it to take positions in less obvious and liquid stocks and expect these to provide very positive returns.
Since the year end the net asset value of the Fund has increased by 15.3% to 224.94 per share.
I would like to conclude again by extending my thanks to the Manager and all the shareholders for their continued support.
Richard Prickett Chairman 10 March 2022
Recent commodity price moves have pushed raw material supply to the forefront of investor thinking. Against a backdrop of recovering economic growth and supply constraint inflationary pressures have been building for some time. In such an environment the Trust has performed well. The Fund returned 15% in the second half of 2021 and at the time of writing, year-to-date returns have risen a further 12%.
Behind these figures the composition of performance has changed. Strong gains by metals exposed to energy transition such as copper together with lithium and rare earth metal miners have latterly shifted more in favour of traditional sources of energy. The Fund has seen some rebalancing of exposure over the last year that continues to offer protection against ongoing inflation which may take time to resolve.
Following a decade of underinvestment and exacerbated by Russia-Ukraine events, persistently high input prices have shattered complacency towards the sector. Notwithstanding government response to Russia's aggression, the extent of commodity price moves is reshaping fundamental thinking with regards government policy, economic growth and the composition of growth. In addition to addressing commodity supply deficits, the lack of diversification in the sources of supply, to better manage raw material availability and help mitigate extreme commodity price volatility, will become more integral to long-term strategic planning. Importantly, the Fund portfolio had already adjusted to reflect such shifts, itself becoming more diversified to more appropriately balance the short and long-term outlook for various commodities: in the short-term there is an immediate need to responsibly source energy; longer-term we expect commodity price moves to reset expectations regarding the pace at which energy transition evolves.
At the time of writing exposure to copper, oil & gas production and precious metals, each stand at around 20% of assets. Energy storage minerals such as rare earth metals, lithium and nickel represent nearer 15% of assets. Exposure to shipping, which is biased towards transportation of energy, stands at around 8% of assets. Elsewhere, by virtue of strong performance, the Fund's exposure to nuclear power has become a more meaningful position as investors recognise the value inherent in existing clean, baseload generating capacity which has recaptured credence as many country's reassess their energy policies.
Perhaps most notably, the Fund began increasing exposure directly into traditional fossil-based energy over the summer of 2021 as the perceived risks to energy supply increased. Investment in low cost, rapid response US shale production figured highly in this rotation. Names such as Precision Drilling were added in anticipation of a pick-up in North American oil and gas production given a more expedient need for a sizeable supply response than seen thus far in the post-covid recovery. Other companies added to the portfolio include EOG, Diamond Back and Vermilion Energy, that owns significant Europe facing gas production. Cognisant of the risks, in late summer 2021 the Fund took a small position in Gazprom, a pressure point for the supply of gas into Europe.Following its suspension from the London Stock Exchange this investment has been written down to zero.
Some modest exposure to coal production was also added. This was largely funded by a reduction in exposure to industrial metals such as copper which was already in the process of being reduced as potential risks emerged from China's property slowdown. The Fund also took some profits on soon-to-be lithium producer, Sigma Lithium, which has made an outstanding contribution to performance.
The Fund retains exposure to precious metals. While the contribution to performance was muted in the six months to end-December, with gold and related equities trading in narrow range as markets grappled with the competing forces of rising inflation and rising interest rates, the prospect of stubbornly high inflation and less hawkish rate outlook has latterly seen a return of investment flows into the precious metal sector. Precious metal valuations remain extremely attractive. Exposure continues to provide cheap insurance should the tragedy in Ukraine escalate further while also protecting against stagflation risks should raw material prices remain high despite decelerating demand growth. More immediately, the shift in the EU's industrial competitiveness brought about by higher energy prices is already feeding into the ECB's mind set; it comes as little surprised that ECB monetary policy has become less hawkish which has prompted some increased attention on precious metals.
Commodity prices rises over the interim period have more recently accelerated. Recent events, in particular the invasion of Ukraine, has served to accentuate rising commodity price trends that have been underway since the post-covid process of reopening economies took hold in early 2021. Combined with rising demand during the
unlocking process the more recent Russian incursion has seen a broader scramble for energy which has, at least temporarily, upended the clean energy investment theme. Long-term goals to reduce fossil fuel consumption have been demoted as regions scramble to ensure energy is available for immediate needs.
Nowhere has this been felt more acutely than in energy markets in regions such as Europe, which has found itself squeezed by an extreme energy shortage. The global drive to reduce fossil fuel consumption has not only discouraged investment in traditional fuels curbing underlying supply but many utilities also wound down fossil fuel inventories to the lowest level on record. The region has found itself exposed to extreme supply shortages in the post covid economic rebound. Furthermore, Europe's energy policies placed considerably more reliance on imported fuel, notably from Russia, to meet future gas needs. Even without deliveries from the now stalled Nordstream II gas pipeline, Russia provided approximately 40% of the Europe's gas.
As illustration, one year forward gas prices in Europe, for delivery in December 2022, had risen nearly four-fold in the calendar year to end-December 2021, the majority of this rise occurring in the second half of the year. Since Russia's invasion of Ukraine, the price of gas for December 2022 delivery has risen a further 160% as sanctions on trade bite. Alternate fuels sought to fill the
energy supply gap have seen similar price moves. The thermal coal market, another sector in which Russia has a dominant 20%+ share of global export trade, has seen seaborne benchmark prices (FOB Australia) rising over 60% during calendar 2021 and prices have since doubled in the year-to-date. Analogous moves have also impacted crude markets. The price of Brent crude, which had risen nearly 50% in 2021, has now more than doubled and at the time of writing stood at US\$126 per barrel.
At the vanguard of economic growth, supply shortages and energy price rises continue to exert inflationary pressures that may take time to address. The Fund is well positioned to sustain returns in a fast changing world reconfiguring to blend short-term energy requirements with longerterm environmental goals. Our closed ended structure, which allows a focus on more attractively valued, less liquid investments, provides another dimension to this.
Ian Francis, Keith Watson and Rob Crayfourd New City Investment Managers
10 March 2022
As at 31 December 2021
7
| Valuation | Total Investments | ||
|---|---|---|---|
| Company | Sector | £'000 | % |
| First Quantum Minerals ** (Note 1) | Copper | 11,281 | 7.9 |
| Sigma Lithium Resources | Lithium | 9,415 | 6.6 |
| West African Resources | Gold | 8,304 | 5.8 |
| Foran Mining | Copper | 6,417 | 4.5 |
| Metals X | Base Metals | 6,379 | 4.5 |
| REA Holdings ** (Note 2) | Palm Oil | 5,718 | 4.0 |
| Lynas Corporation | Rare Earth | 5,454 | 3.8 |
| Euronav NV** (Note 3) | Shipping | 5,048 | 3.5 |
| NexGen Energy | Uranium | 4,768 | 3.3 |
| Talon Metals (Note 4) | Nickel | 4,203 | 2.9 |
| Top ten investments | 66,987 | 46.8 | |
| Precision Drilling | Oil & Gas | 4,164 | 2.9 |
| Diversified Energy | Oil & Gas | 3,859 | 2.7 |
| Ero Copper | Copper | 3,650 | 2.5 |
| Firefinch | Lithium | 3,645 | 2.5 |
| Emerald Resources | Gold | 3,083 | 2.2 |
| BW LPG | Shipping | 2,907 | 2.0 |
| 2020 Bulkers | Shipping | 2,873 | 2.0 |
| Teck Resources | Diversified Miner | 2,745 | 1.9 |
| Gazprom | Oil & Gas | 2,729 | 1.9 |
| Trevali Mining | Zinc | 2,415 | 1.7 |
| Top twenty investments | 99,057 | 69.1 | |
| Capstone Mining Corporation | Copper | 2,339 | 1.6 |
| Fortuna Silver Mines | Silver | 2,050 | 1.4 |
| Galena Mining | Base Metals | 1,954 | 1.4 |
| Central Asia Metals | Copper | 1,899 | 1.3 |
| Adventus Mining | Copper | 1,819 | 1.3 |
| Raven Russia | Property | 1,774 | 1.2 |
| MAG Silver | Silver | 1,734 | 1.2 |
| Ascendant Resources ** | Zinc | 1,677 | 1.2 |
| Goodbulk ** | Shipping | 1,461 | 1.0 |
| EOG Resources | Oil & Gas | 1,345 | 1.0 |
| Top thirty investments | 117,109 | 81.7 | |
| Peyto Exploration & Development | Oil & Gas | 1,320 | 0.9 |
| Base Resources | Mineral Sands | 1,317 | 0.9 |
| Integra Resources | Gold | 1,296 | 0.9 |
| IGO | Base Metals | 1,258 | 0.9 |
| Calidus | Gold | 1,227 | 0.9 |
| Ur-Energy | Uranium | 1,185 | 0.8 |
| Odyssey Energy | Oil & Gas | 1,152 | 0.8 |
| PetroTal Corp | Oil & Gas | 1,111 | 0.8 |
| Palladium One Mining | Platinum | 1,080 | 0.8 |
| Red 5 | Gold | 1,077 | 0.7 |
| Top forty investments | 129,132 | 90.1 | |
| Calibre Mining | Gold | 1,037 | 0.7 |
| Stavely Minerals | Gold | 995 | 0.7 |
| Westgold Resources | Gold | 970 | 0.7 |
| Fission Uranium | Uranium | 949 | 0.7 |
| Fenix Resources | Iron | 932 | 0.7 |
| Thungela Resources | Coal | 764 | 0.5 |
| Oceanagold | Gold | 695 | 0.5 |
| Vintage Energy | Oil & Gas | 655 | 0.5 |
| Americas Gold and Silver | Silver | 648 | 0.4 |
| Peabody Energy | Coal | 558 | 0.4 |
| Top fifty investments | 137,335 | 95.9 |
| Company | Sector | Valuation £'000 |
Total Investments % |
|---|---|---|---|
| Platinum Group Metals | Platinum | 503 | 0.4 |
| Bluestone Resources | Gold | 497 | 0.3 |
| Castile Resources Property | Gold | 462 | 0.3 |
| Oklo Resources | Gold | 414 | 0.3 |
| Galiano Gold | Gold | 398 | 0.3 |
| Peregrine Gold | Gold | 392 | 0.3 |
| Tharisa | Platinum | 380 | 0.3 |
| Gold Resource Corp | Gold | 364 | 0.2 |
| Diamondback Energy | Oil & Gas | 358 | 0.2 |
| Jupiter Mines | Iron | 320 | 0.2 |
| Top sixty investments | 141,423 | 98.7 | |
| Denison Mines | Uranium | 319 | 0.2 |
| Aurcana Silver Corporation | Silver | 317 | 0.2 |
| Ora Banda Mining | Gold | 252 | 0.2 |
| Sabina Gold & Silver | Gold | 167 | 0.1 |
| Silver Lake Resources | Gold | 145 | 0.1 |
| Sherritt International Corp 8.5% 30/11/2026 ** | Nickel | 120 | 0.1 |
| Goldenstar Resources | Gold | 104 | 0.1 |
| Oilflow SPV 1 DAC 12% 13/01/2022 ** | Oil & Gas | 88 | 0.1 |
| ValOre Metals | Gold | 87 | 0.1 |
| Pure Gold Mining | Gold | 57 | 0.1 |
| Top seventy investments | 143,079 | 100.0 | |
| Other investments | 195 | – | |
| Total investments | 143,274 | 100.0 |
Note 1 - Includes First Quantum Minerals valued at £10,521,000 and First Quantum Minerals 7.5% 01/04/2025 ** valued at £760,000.
Note 2 - Includes REA Holdings 9% preference shares valued at £4,975,000, REA Finance 8.75% 31/08/2025 ** valued at £452,000, REA Holdings valued at £256,000 and REA Holdings warrants valued at £35,000.
Note 3 - Includes Euronav valued at £4,444,000, Euronav Luxembourg SA 6.25% 14/09/26 ** valued at £454,000 and Euronav Luxembourg SA 7.5% 31/05/2022 ** valued at £150,000.
Note 4 - Includes Talon Metals valued at £4,203,000 and Talon Metals Warrants valued at £nil.
** Denotes a Level 2 security
| Valuation 30 June 2021 £'000 |
Purchases £'000 |
Sales £'000 |
Appreciation/ (depreciation) £'000 |
Valuation 31 December 2021 £'000 |
|
|---|---|---|---|---|---|
| First Quantum ** (Note 1) Primarily a copper producer with mines in Africa and with a large project recently brought into production in Panama. The group also has inventories of gold, nickel and cobalt. |
10,547 | 379 | (92) | 447 | 11,281 |
| Sigma Lithium Resources Explores and produces lithium for the electric vehicle-bus industry serving clients in Canada and Brazil. |
6,961 | – | (667) | 3,121 | 9,415 |
| West African Resources Has transitioned into a gold producer having brought its Sanbrado discovery discovery in Burkina Faso into production under budget and on schedule. |
6,282 | – | – | 2,022 | 8,304 |
| Foran Mining Copper-Zinc developer in Canada, progressing toward a construction decision. The company targets being the first carbon neutral copper miner. |
6,687 | – | (220) | (50) | 6,417 |
| Metals X A diversified group mining, developing and exploring for minerals and metals in Australia |
3,026 | – | (1,190) | 4,543 | 6,379 |
| REA Holdings ** (Note 2) Cultivates oil palms and produces crude palm oil and other palm products. The group's core plantations are located in Indonesia. |
4,492 | – | – | 1,226 | 5,780 |
| Lynas Corporation Lynas Rare Earths Ltd is an Australian rare-earths mining company. |
3,098 | – | – | 2,356 | 5,454 |
| Euronav NV** (Note 3) The world's largest independent crude oil tanker company. |
4,847 | 717 | (459) | (57) | 5,048 |
| NexGen Energy A uranium exploration and development company with a portfolio of projects that span the Athabasca Basin in Saskatchewan, Canada. |
4,387 | – | – | 381 | 4,763 |
| Talon Metals A base metals explorer earning into a 51% interest on the high-grade Tamarack Nickel-Copper-Cobalt Project, located in Minnesota in the US, from Rio Tinto. The group has the option to earn a larger 60% interest by 2025. |
3,643 | – | – | 560 | 4,203 |
| Top ten investments | 53,970 | 1,096 | (2,628) | 14,549 | 66,987 |
At 31 December 2021, these investments totalled £66,987,000 or 46.8% of the investment portfolio.
| Notes | Revenue £'000 |
Six months ended 31 December 2021 (unaudited) Capital £'000 |
Total £'000 |
Revenue £'000 |
Six months ended 31 December 2020 (unaudited) Capital £'000 |
Total £'000 |
Revenue £'000 |
Year ended 30 June 2021 (audited) Capital £'000 |
Total £'000 |
|
|---|---|---|---|---|---|---|---|---|---|---|
| Gains on investments | 3 | – | 16,331 | 16,331 | – | 29,892 | 29,892 | – | 52,048 | 52,048 |
| Exchange gains/(losses) | – | 1 | 1 | – | (14) | (14) | – | (25) | (25) | |
| Income | 4 | 2,195 | – | 2,195 | 1,345 | – | 1,345 | 3,080 | – | 3,080 |
| Investment management fee | (185) | (555) | (740) | (122) | (366) | (488) | (285) | (854) | (1,139) | |
| Other expenses | (284) | – | (284) | (288) | – | (288) | (563) | – | (563) | |
| Net return before finance costs and taxation |
1,726 | 15,777 | 17,503 | 935 | 29,512 | 30,447 | 2,232 | 51,169 | 53,401 | |
| Interest payable and similar charges | (30) | (84) | (114) | (24) | (73) | (97) | (51) | (152) | (203) | |
| Net return on ordinary activities before taxation Tax on ordinary activities |
1,696 (55) |
15,693 – |
17,389 (55) |
911 (72) |
29,439 – |
30,350 (72) |
2,181 (110) |
51,017 – |
53,198 (110) |
|
| Net return attributable to equity shareholders |
5 | 1,641 | 15,693 | 17,334 | 839 | 29,439 | 30,278 | 2,071 | 51,017 | 53,088 |
| Return per ordinary share | 2.45p | 23.46p | 25.91p | 1.25p | 44.01p | 45.26p | 3.10p | 76.27p | 79.37p |
The 'total' column of this statement represents the Company's profit and loss account, prepared in accordance with UK GAAP.
All revenue and capital items in this statement derive from continuing operations.
A statement of other comprehensive income is not presented as all gains and losses of the Company have been reflected in the above Condensed Income Statement.
| Notes | As at 31 December 2021 (unaudited) £'000 |
As at 31 December 2020 (unaudited) £'000 |
As at 30 June 2021 (audited) £'000 |
|---|---|---|---|
| Fixed assets | |||
| Investments at fair value through profit or loss | 143,274 | 104,691 | 129,353 |
| Current assets | |||
| Debtors | 234 | 376 | 475 |
| Cash at bank | 3,686 | 3,499 | 2,887 |
| 3,920 | 3,875 | 3,362 | |
| Creditors: amounts falling due within one year | |||
| Other payables | (601) | (371) | (1,396) |
| Loan: amount falling due within one year 7 |
(16,000) | (14,000) | (16,000) |
| (16,601) | (14,371) | (17,396) | |
| Net current liabilities | (12,681) | (10,496) | (14,034) |
| Net assets | 130,593 | 94,195 | 115,319 |
| Capital and reserves | |||
| Called-up share capital | 16,722 | 16,722 | 16,722 |
| Special distributable reserve | 28,449 | 29,322 | 28,868 |
| Share premium | 4,851 | 4,851 | 4,851 |
| Capital reserve | 80,571 | 43,300 | 64,878 |
| Revenue reserve | – | – | – |
| Equity shareholders' funds 6 |
130,593 | 94,195 | 115,319 |
| Net asset value per share 6 |
195.2p | 140.8p | 172.4p |
| Share capital £'000 |
Share premium account £'000 |
Special distributable reserve £'000 |
Capital reserve £'000 |
Revenue reserve £'000 |
Total £'000 |
|
|---|---|---|---|---|---|---|
| Balance at 30 June 2021 | 16,722 | 4,851 | 28,868 | 64,878 | – | 115,319 |
| Return on ordinary activities after taxation |
– | – | – | 15,693 | 1,641 | 17,334 |
| Transfer from special distributable reserve | – | – | (419) | – | 419 | – |
| Dividends paid | – | – | – | – | (2,060) | (2,060) |
| Balance at 31 December 2021 | 16,722 | 4,851 | 28,449 | 80,571 | – | 130,593 |
| Share capital £'000 |
Share premium account £'000 |
Special distributable reserve £'000 |
Capital reserve £'000 |
Revenue reserve £'000 |
Total £'000 |
|
|---|---|---|---|---|---|---|
| Balance at 30 June 2020 | 16,722 | 4,851 | 30,386 | 13,861 | 157 | 65,977 |
| Return on ordinary activities after taxation |
– | – | – | 29,439 | 839 | 30,278 |
| Transfer from special distributable reserve | – | – | (1,064) | – | 1,064 | – |
| Dividends paid | – | – | – | – | (2,060) | (2,060) |
| Balance at 31 December 2020 | 16,722 | 4,851 | 29,322 | 43,300 | – | 94,195 |
The special distributable reserve and the revenue reserve represents the amount of the Company's reserves distributable by way of dividend.
| Six months ended 31 December 2021 (unaudited) £'000 |
Six months ended 31 December 2020 (unaudited) £'000 |
Year ended 30 June 2021 (audited) £'000 |
|
|---|---|---|---|
| Operating activities | |||
| Investment income received | 2,251 | 1,361 | 3,022 |
| Investment management fees paid | (595) | (508) | (1,138) |
| Other cash payments | (319) | (282) | (428) |
| Net cash inflow from operating activities | 1,337 | 571 | 1,456 |
| Investing activities | |||
| Purchases of investments | (21,002) | (4,459) | (20,484) |
| Disposals of investments | 22,635 | 6,531 | 20,862 |
| Net cash inflow from investing activities | 1,633 | 2,072 | 378 |
| Financing activities | |||
| Equity dividends paid | (2,060) | (2,060) | (3,746) |
| Loan funding | – | 2,000 | 4,000 |
| Loan interest | (112) | (97) | (203) |
| Net cash (outflow)/inflow from financing activities | (2,172) | (157) | 51 |
| Increase in net cash | 798 | 2,486 | 1,885 |
| Reconciliation of net cash flow to movement in net cash | |||
| Increase in cash in the period | 798 | 2,486 | 1,885 |
| Exchange movements | 1 | (14) | (25) |
| Movement in net cash in the period | 799 | 2,472 | 1,860 |
| Opening net cash at 1 July | 2,887 | 1,027 | 1,027 |
| Closing net cash at 31 December / 30 June | 3,686 | 3,499 | 2,887 |
1. The unaudited half-yearly results which cover the six months to 31 December 2021 have been prepared in accordance with applicable accounting standards and adopting the accounting policies set out in the statutory accounts of the Company for the year ended 30 June 2021.
Transactions denominated in foreign currencies are recorded in the local currency at actual exchange rates at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the period end are reported at the rates of exchange prevailing at the period end. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in either the capital or revenue column of the Statement of Comprehensive Income depending on whether the gain or loss is of a capital or revenue nature respectively.
| Six months ended 31 December 2021 £'000 |
Six months ended 31 December 2020 £'000 |
Year ended 30 June 2021 £'000 |
|
|---|---|---|---|
| Income from investments: | |||
| UK dividend income | 257 | 53 | 176 |
| Preference share dividend income | 86 | 84 | 169 |
| Overseas dividend income | 1,663 | 892 | 2,102 |
| Overseas fixed interest | 190 | 316 | 633 |
| Total income | 2,195 | 1,345 | 3,080 |
Return per ordinary share attributable to shareholders reflects the overall performance of the Company in the period. Net revenue recognised in the first six months is not necessarily indicative of the total likely to be received in the full accounting year.
| Six months ended 31 December 2021 £'000 |
Six months ended 31 December 2020 £'000 |
Year ended 30 June 2021 £'000 |
|
|---|---|---|---|
| Revenue return | 1,641 | 839 | 2,071 |
| Capital return | 15,693 | 29,439 | 51,017 |
| Total return | 17,334 | 30,278 | 53,088 |
| Number | Number | Number | |
| Weighted average ordinary shares in issue | 66,888,509 | 66,888,509 | 66,888,509 |
| 31 December 2021 | 31 December 2020 | 30 June 2021 | |
|---|---|---|---|
| Net asset value per share | 195.2p | 140.8p | 172.4p |
| Net assets attributable at end of period | £130.6m | £94.2m | £115.3m |
| Ordinary shares of 25p each in issue at end of period | 66,888,509 | 66,888,509 | 66,888,509 |
| 31 December 2021 | 31 December 2020 | 30 June 2021 | |
|---|---|---|---|
| £'000 | £'000 | £'000 | |
| Bank loan Facility | (16,000) | (14,000) | (16,000) |
The Company has a short term unsecured loan facility with Scotiabank Europe Plc ("Scotiabank").
As at 31 December 2021 the unsecured loan facility had a limit of £20 million of which £13 million at an estimated interest rate of 1.4951% and £3 million with an estimated interest rate of 1.6437%, were drawn down at the period end.
During the year the covenants of the loan facility have been met. The following are the covenants for the facility:
• the loan facility is rolled over every three months and can be cancelled at any time
| Six months ended 31 December 2021 £'000 |
Six months ended 31 December 2020 £'000 |
Year ended 30 June 2021 £'000 |
|
|---|---|---|---|
| Net return before finance costs and taxation | 17,503 | 30,447 | 53,401 |
| Adjust for returns from non-operating activities: | |||
| – Gains on investments | (16,331) | (29,892) | (52,048) |
| – Exchange (gains)/losses | (1) | 14 | 25 |
| – Effective yield | 18 | 64 | – |
| Return from operating activities | 1,189 | 633 | 1,378 |
| Adjust for non-cash flow: | |||
| – Decrease in accrued income | 121 | 74 | 102 |
| – Increase in debtors | (11) | (32) | (1) |
| – Increase in creditors | 109 | 4 | 130 |
| – Withholding tax | (71) | (108) | (153) |
| Net cash inflow from operating activities | 1,337 | 571 | 1,456 |
10. After making enquires and having considered the Company's investment objective, nature of the investment portfolio, bank facility and expenditure projections, the Directors consider that the Company has adequate resources to continue in operation for the foreseeable future. For this reason, the Directors are satisfied that it is appropriate to adopt the going concern basis in preparing this report.
All transactions with related parties are carried out on an arms length basis.
There are no transactions with the Board other than aggregated remuneration for services as Directors. The balance due to Directors for fees at the period end was £7,000.
Details of the fee arrangement with the Investment Manager are disclosed in note 9.
The Chairman's Statement on page 3 and the Investment Manager's Review on pages 4 to 5 give details of the important events which have occurred during the period and their impact on the financial statements.
The Company's assets consist principally of listed equities and fixed interest securities and its principal risks are therefore market related. The Company is also exposed to currency risk in respect of the markets in which it invests. Other key risks faced by the Company relate to investment and strategy, market, sector, financial, earnings and dividend, operational, regulatory and political. These risks, and the way in which they are managed, are described in more detail under the heading 'Principal risks and risk mitigation' within the Strategic Review contained within the Company's annual report and accounts for the year ended 30 June 2021. The Company's principal risks and uncertainties have not changed materially since the date of the report and are not expected to change materially for the rest of the Company's financial year.
During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company.
The Directors, having considered the Company's investment objective, the nature and liquidity of the portfolio and the income and expenditure projections, consider that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future and is financially sound. For these reasons, they consider there is reasonable evidence to continue to adopt the going concern basis in preparing the financial statements.
The Board of Directors confirms that, to the best of its knowledge:
On behalf of the Board
Richard Prickett Chairman
•• March 2022
02978531 Registered in England & Wales
10 Harewood Avenue London NW1 6AA
Richard Ö Prickett (Chairman) Carole Cable Christopher Casey Alun G Evans Helen F Green*
CQS (UK) LLP 4th Floor One Strand London WC2N 5HR
BNP Paribas Securities Services Jersey Branch IFC 1 The Esplanade St Helier Jersey JE1 5BP
BNP Paribas Securities Services 9 Luna Place Dundee DD2 1TP
Dentons UK and Middle East LLP One Fleet Place London EC4M 7WS
finnCap Limited 1 Bartholomew Close London EC1A 7BL
BNP Paribas S.C.A 10 Harewood Avenue London NW1 6AA Scotiabank 201 Bishopsgate London EC2M 3NS
BNP Paribas 10 Harewood Avenue London NW1 6AA
BDO LLP 55 Baker Street London W1U 7EU
KPMG LLP 20 Castle Street Edinburgh EH1 2EG
CQS (UK) LLP 4th Floor One Strand London WC2N 5HR
Equiniti Aspect House Spencer Road, Lancing West Sussex BN99 6DA
Shareholder helpline UK: 0371 384 2410** Shareholder helpline overseas: +44 121 415 7047
The net asset value of the Company's ordinary shares may be obtained by contacting CQS on 0207 201 6900 or by email at [email protected] or alternatively by visiting the Company's web site at www.ncim.co.uk.
*Chair of the Audit Committee
**Calls from outside the UK will be charged at international rates. Other telephone provider costs may vary. Lines open 8.30am to 5.30pm, Monday to Friday.
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