All information is at 29 February 2020 and unaudited.
Performance at month end is calculated on a capital only basis
| One month % | Three months % | One year % | Three years % | Five years % | |
| Net asset value* | -9.9 | 0.0 | 11.7 | 25.6 | 64.2 |
| Share price* | -13.6 | -5.4 | 11.6 | 40.0 | 82.8 |
| Numis ex Inv Companies + AIM Index | -9.7 | -5.5 | -1.4 | -2.0 | 12.8 |
*performance calculations based on a capital only NAV with debt at par, without income reinvested. Share price performance calculations exclude income reinvestment.
Sources: BlackRock and Datastream
| At month end | |
| Net asset value Capital only (debt at par value): | 1,548.55p |
| Net asset value Capital only (debt at fair value): | 1,532.41p |
| Net asset value incl. Income (debt at par value)1: | 1,572.53p |
| Net asset value incl. Income (debt at fair value)1: | 1,556.39p |
| Share price | 1,484.00p |
| Discount to Cum Income NAV (debt at par value): | 5.6% |
| Discount to Cum Income NAV (debt at fair value): | 4.7% |
| Net yield2: | 2.2% |
| Gross assets3: | £847.4m |
| Gearing range as a % of net assets: | 0-15% |
| Net gearing including income (debt at par): | 5.8% |
| 2019 Ongoing charges ratio4: | 0.7% |
| Ordinary shares in issue5: | 48,829,792 |
- includes net revenue of 23.98p.
- Yield calculations are based on dividends announced in the last 12 months as at the date of release of this announcement, and comprise of the final dividend of 19.20 pence per share, (announced on 03 May 2019, ex-dividend on 16 May 2019) and the interim dividend of 12.8 pence per share (announced on 5 November 2019, ex-dividend on 14 November 2019).
- includes current year revenue.
- As reported in the Annual Financial Report for the year ended 28 February 2019 the Ongoing Charges Ratio (OCR) was 0.7%. The OCR is calculated as a percentage of net assets and using operating expenses, excluding performance fees, finance costs and taxation.
- excludes 1,163,731 shares held in treasury.
| Sector Weightings | % of portfolio |
| Industrials | 32.7 |
| Financials | 21.6 |
| Consumer Services | 17.9 |
| Consumer Goods | 10.5 |
| Technology | 5.9 |
| Health Care | 5.7 |
| Basic Materials | 3.4 |
| Oil & Gas | 1.6 |
| Telecommunications | 0.7 |
| —– | |
| Total | 100.0 |
| ===== |
| Ten Largest Equity Investments | |
| Company | % of portfolio |
| IntegraFin | 2.6 |
| YouGov | 2.4 |
| 4imprint Group | 2.2 |
| Avon Rubber | 2.2 |
| IG Design Group | 2.0 |
| Johnson Service Group | 1.7 |
| Watches of Switzerland | 1.7 |
| Breedon | 1.6 |
| Team 17 | 1.5 |
| Impax Asset Management | 1.4 |
Commenting on the markets, Roland Arnold, representing the Investment Manager noted:
During February the Company’s NAV per share fell by -9.9%1 to 1,548.55p, whilst our benchmark index, Numis ex Inv Companies + AIM Index, fell by -9.7%1; the FTSE 100 Index also fell by -9.7%1 on a capital only basis (all calculations are on a capital only basis).
Markets globally fell significantly in February as the coronavirus outbreak and its spread beyond China, into Europe and the US, caused mounting concerns over the impact on the global economy. Oil & Gas and Basic Materials led the market lower; however the sell-off was broad based across most industries with very little dispersion, which resulted in the Company marginally underperforming our benchmark.
Two of the largest detractors during the month included marketer of promotional products, 4imprint and country clothing retailer, Joules, both impacted by investors’ concerns around the impact caused by coronavirus. Both businesses have subsequently issued negative updates during March, which is unsurprising given the likely impact of coronavirus. However, we feel that the short-term share price reaction fails to appreciate the long-term prospects for these two businesses which have market leading positions, are well capitalised and operated by strong management teams. Liontrust Asset Management was another notable detractor during the month. The shares were not impacted by stock specific newsflow; however the business is exposed to the performance of financial markets and the shares were therefore impacted by the significant market falls during the month.
On the positive side the portfolio benefitted from our holding in Avon Rubber and YouGov, which both continued to rise following positive trading updates issued in January. IntegraFin, the operator of the Transact investment platform, outperformed the falling market as the business has continued to generate strong inflows, and Mattioli Woods reported strong first-half profits, as it boosted sales and improved its margins following an operational restructure.
As shareholders will be aware, the recent coronavirus outbreak and its spread beyond China, into Europe and the US, has caused mounting concerns over the impact on global growth, and this has caused a significant market sell-off. Recent falls (after month end) have been savage and indiscriminate, with share prices completely detached from fundamentals and extreme levels of intraday volatility. Essentially these are unprecedented times. We certainly don’t have the answers on the scope, scale and effect of the virus, or implications at this stage, therefore we have not materially changed positioning. However, our focus on financially strong businesses and avoiding companies that are overly indebted provides us with confidence in the holdings in our portfolio. The impact of coronavirus is unpredictable, unavoidable and unprecedented. But it will get better, and recent volatility/market falls presents us with a fantastic investment opportunity. The Company’s investment strategy is focused on quality growth investment opportunities in smaller companies, a style that has demonstrably worked for the long-term, and historically periods of sudden underperformance, such as this, have proven to be excellent investment opportunities. We thank shareholders for their ongoing support.
