Menhaden Capital PLC
(the “Company”)
HALF YEAR REPORT
FOR THE SIX MONTHS ENDED 30 JUNE
2017
FINANCIAL
HIGHLIGHTS |
|
|
Performance |
As at 30 June
2017 |
As at 31 December
2016 |
Net asset value per share |
87.6p |
85.4p |
Share price |
65.5p |
66.4p |
Discount |
25.2% |
22.2% |
|
|
|
Total
returns |
Six months to 30
June 2017 |
Year to 31 December
2016 |
Net asset value per share |
2.6% |
1.8% |
Share price |
(1.4%) |
(13.8)% |
MSCI World Index (sterling
adjusted) |
5.3% |
28.2% |
|
|
|
|
Six months to 30
June 2017 |
Year to 31 December
2016 |
Ongoing charges* |
2.1% |
2.1% |
Source: Frostrow Capital LLP
* Ongoing charges are calculated as a percentage of
shareholders’ funds using average net assets over the period and
calculated in line with the AIC’s recommended methodology.
CHAIRMAN’S STATEMENT
This report covers your Company’s progress in the six months to
30 June 2017 and its financial
position as at that date, almost two years since its launch.
Performance
During the first half of the year, the Company’s net asset value
(“NAV”) per share grew by 2.6% (2016: -4.2%). The increase in
the NAV was primarily due to the good performance of the public
equities component of the portfolio. The market value of the
Company’s shares decreased by 1.4% over the period (2016: -19.5%)
at the end of which the share price stood at a 25.2% discount to
the NAV per share.
While the Company does not have a formal benchmark and our
Portfolio Manager does not invest by reference to an index, over
the same period the MSCI World Total Return Index (in sterling),
rose by 5.3% (2016: +11.0%). By way of additional comparison,
the WilderHill New Energy Global Innovation Index (in sterling)
rose by 8.3% and the AIC Environmental Sector rose by
5.4%.
Our Portfolio Manager has provided a comprehensive analysis of
all the factors contributing to the Company’s performance during
the period later in this report.
Discount
The Board remains conscious of the level of the share price
discount to NAV per share and reviews the situation at each Board
meeting. As I stated in the last Annual Report, the Board has
considered the possibility of share buybacks but has decided that
it would not be in the interests of shareholders to reduce the size
of the Company at this stage of its development. Instead, the
Board will continue to focus on the Portfolio Manager’s performance
and the effectiveness of marketing and distribution.
Dividend
The Board’s policy is to pay dividends as required to maintain
UK investment trust status; thus no interim dividend will be
declared for this period.
The Company’s prospectus contains an undertaking to target an
annual dividend yield of 2% of the average NAV by a target
implementation date of 31 December 2017. Having reviewed the
Company’s income forecasts the Board believes that it will not
achieve the target dividend without paying a significant portion
out of capital. The Board does not believe that this would be
appropriate under current circumstances. The Board will keep
the dividend target under close review and continue to advise
shareholders accordingly.
Management
Since the Company’s launch in 2015, the partners of Menhaden
Capital Management LLP (“MCM”) have been seconded to the Company’s
AIFM, Frostrow Capital LLP (“Frostrow”), in order to carry out the
Company’s portfolio management responsibilities. In the
Company’s last Annual Report, it was stated that the Menhaden Team
had applied to the Financial Conduct Authority for MCM to be
authorised to perform portfolio management activities in its own
right and the Board is pleased to report that such authorisation
was granted by the FCA on 11 August.
As a result, the secondment of the Menhaden Team to Frostrow has
now ended and Frostrow has, with the Board’s consent, delegated the
Company’s day-to-day portfolio management activities to MCM by way
of a portfolio management agreement. The portfolio management
and performance fees have not been affected.
Outlook
Our Portfolio Manager firmly believes that the long-term
prospects for companies delivering or benefiting from the efficient
use of energy and resources remain good. The Board has been
encouraged by steady improvements in the Company’s NAV per share
over the past year and believes that the premise on which the
Company was launched and its underlying investment strategy remain
valid.
Sir Ian Cheshire
Chairman
20 September
2017
Investment Themes
Theme |
Description |
Clean energy production |
Companies producing power from clean
sources such as solar or wind |
Resource and energy efficiency |
Companies focused on improving
energy efficiency (e.g. in buildings or manufacturing processes) or
creating emissions reduction products or services |
Sustainable transport |
Companies in the transport sector
focused on helping to reduce harmful air emissions / distance
travelled |
Water and waste management |
Companies with products or services
that enable reductions in usage / volumes and / or smarter ways to
manage water and waste |
PORTFOLIO SUMMARY as at 30 June 2017 |
|
|
|
Investment |
Country |
|
Fair Value
£’000 |
% of
net assets |
|
X-ELIO*1 |
Spain |
|
10,633 |
15.2 |
|
Airbus |
France |
|
5,754 |
8.2 |
|
Terraform Power |
United States |
|
4,813 |
6.9 |
|
Volkswagen |
Germany |
|
3,890 |
5.5 |
|
Red Electrica De
Espana |
Spain |
|
3,519 |
5.0 |
|
Safran |
France |
|
3,501 |
5.0 |
|
Calvin
Capital*2 |
UK |
|
3,500 |
5.0 |
|
Brookfield Renewable
Energy |
Canada |
|
3,153 |
4.5 |
|
Terraform Global |
Emerging Markets |
|
2,895 |
4.1 |
|
Senvion |
Luxembourg |
|
2,799 |
4.0 |
|
Top 10
investments |
|
|
44,457 |
63.4 |
|
Atlantica Yield |
United States |
|
2,533 |
3.6 |
|
FirstGroup |
UK |
|
2,399 |
3.4 |
|
Alpina Partners Fund
LP* |
UK |
|
2,226 |
3.2 |
|
Air Products &
Chemicals |
United States |
|
2,157 |
3.1 |
|
Abengoa - Bonds |
Spain |
|
1,356 |
2.0 |
|
WCP Growth Fund
LP* |
UK |
|
1,204 |
1.7 |
|
Rockwell
Automation |
United States |
|
1,170 |
1.7 |
|
Adient |
Ireland |
|
1,052 |
1.5 |
|
Stericycle |
United States |
|
967 |
1.4 |
|
Atlantica Yield –
Bonds |
United States |
|
163 |
0.2 |
|
Top 20
investments |
|
|
59,684 |
85.2 |
|
Terra Santa Agro |
Brazil |
|
125 |
0.2 |
|
Perfin Apollo* |
Brazil |
|
97 |
0.1 |
|
Grivalia
Properties |
Greece |
|
75 |
0.1 |
|
Total
investments |
|
|
59,981 |
85.6 |
|
Net current assets
(including cash) |
|
|
10,111 |
14.4 |
|
Total net
assets |
|
|
70,092 |
100.0 |
|
|
|
|
|
|
|
|
|
|
1 Investment made through Helios Co-Invest L.P.
2 Investment made through KKR Evergreen Co-Invest
L.P.
* Unquoted
Investment |
Business Description |
Theme |
X-ELIO*1 |
Develops and operates solar
energy projects |
Clean energy production |
Airbus |
Designs and manufactures
aircraft |
Sustainable transport |
Terraform Power |
Operates contracted renewable
energy assets |
Clean energy production |
Volkswagen |
Designs and manufactures cars and
light commercial vehicles |
Sustainable transport |
Red Electrica |
Operates the national electricity
grid in Spain |
Resource and energy efficiency |
Safran |
Supplies systems and equipment
for aerospace, defence and security |
Sustainable transport |
Calvin Capital |
Invests in utility infrastructure
assets |
Resource and energy efficiency |
Brookfield Renewable Energy |
Open-ended fund investing in
hydroelectric and wind facilities |
Clean energy production |
Terraform Global |
Operates contracted renewable
energy assets in emerging markets |
Resource and energy efficiency |
Senvion |
Manufactures wind
turbines |
Clean energy production |
Atlantica Yield |
Owns and manages contracted
renewable energy assets |
Resource and energy efficiency |
Firstgroup |
Operates transport services in
the UK, Ireland, Canada and United States |
Sustainable transport |
Alpina Partners Fund LP* |
Growth capital fund managed by
specialist environmental PE firm, Alpina Partners |
Resource and energy efficiency |
Air Products & Chemicals |
Sells gases and chemicals for
industrial uses |
Resource and energy efficiency |
WCP Growth Fund LP* |
Growth capital fund managed by
specialist environmental PE firm, Alpina Partners |
Resource and energy efficiency |
Abengoa - Bonds |
Operates and develops renewable
energy assets |
Clean energy production |
Rockwell Automation |
Provides integrated systems for
process manufacturing |
Resource and energy efficiency |
Adient |
Manufacturer of lightweight
automotive seating components |
Sustainable transport |
Stericycle |
Provides medical and
pharmaceutical waste management |
Water and waste management |
Atlantica Yield – Bonds |
Owns and manages contracted
renewable energy assets |
Clean energy production |
Terra Santa Agro |
Brazilian agricultural production
and land development company |
Resource and energy efficiency |
Perfin Apollo* |
Builds and operates energy
transmissions lines in Brazil |
Resource and energy efficiency |
Grivalia Properties |
Real estate investment company in
Greece |
Resource and energy efficiency |
|
|
|
PORTFOLIO MANAGER’S REVIEW
Performance
For the half year under review, the Company’s NAV per share
increased by 2.6% to 87.6p. Total net assets increased by £1.8
million to £70.1 million during the period.
The contribution to the increase over the year is summarised
below:
|
30 June
2017 |
|
Asset
Category |
NAV % |
Contribution
% |
Public Equities |
34.0 |
4.1 |
Private
Investments |
25.2 |
(1.5) |
Yield Investments |
26.4 |
1.1 |
Liquidity |
14.4 |
- |
Gross
Return |
|
3.7 |
Expenses |
|
(1.1) |
Net Assets |
100.0 |
2.6 |
Public Equities
Most of the gain in NAV during the period came from the public
equities component of our portfolio, of which the largest
contributors to performance for the quarter were Airbus,
contributing 1.4%, Safran, 0.9%, and Senvion, 0.6%. There were no
detractors of note amongst our public equity positions.
Airbus shares rose 20% over the period. First quarter
revenues at Airbus Commercial rose 13% year-over-year driven by a
9% increase in aircraft deliveries. Year-to-date, global airline
passenger growth is running well above trend at 8% and load factors
(capacity utilisation) are at a record high. Airlines require new
aircraft to support this growth and both Airbus and Boeing are
planning to increase production rates to fulfil the demand. Airbus
now has an order book of over 6,700 aircraft which is 10 years of
current production.
Airbus Commercial margins were weak due to fewer than expected
deliveries of A320neos. Pratt & Whitney (“P&W”) are having
to change the design of the GTF (one of the engines that powers the
aircraft) due to problems discovered since the engine entered into
service last year. Customers are unwilling to take the aircraft
before P&W has introduced a permanent solution to the problems,
which means that deliveries of A320neos will be heavily weighted to
Q4. Airbus currently has about 30 A320neos in Toulouse without
engines that cannot be delivered and this will negatively impact
margins and cash flow in Q2 and Q3. Nevertheless, the A320neo
delivers a 15% fuel burn saving compared to current single aisle
aircraft operations, with targets to achieve a 20% reduction in
fuel burn and CO2 emissions by 2020. The A350 ramp-up is
on track and Airbus is optimistic that 2017 will be a much better
year for the programme. The A350 is still expected to break even in
2019, with price escalation being the main driver of this profit
growth as launch pricing rolls off in 2018/2019.
Airbus’ key engines supplier, Safran reported very strong
first quarter revenues with civil aftermarket sales up 18%
year-over-year. Safran is focused on producing engines that are
significantly more efficient and less polluting. The company
delivered 81 LEAP engines in the quarter, up from 44 in Q4 2016,
which indicates that the ramp-up is progressing well. LEAP
production is on track to reach 500 engines in 2017. The LEAP-1A
(which powers the Airbus A320neo) is now in operation with nine
airlines, with 80,000 flight hours accumulated to date. It is
meeting all performance specifications. The strong aftermarket
growth and steady production ramp-up suggests profit growth should
be very good this year.
The activist campaign by The Children’s Investment Fund against
the proposed acquisition of Zodiac by Safran led to better proposed
terms for the deal. Safran is financing the transaction mostly with
low cost debt so the deal will be extremely accretive to earnings
per share. Zodiac has two divisions: a) Aerosystems, which makes
equipment such as power distribution and safety systems with
substantial overlap with Safran’s Aircraft Equipment business. Most
of the targeted synergies of €200 million will come from this
division; and b) Aircraft Interiors, which makes cabin equipment
(such as galleys and toilets) and seats. Revenues are over €3
billion but due to poorly priced, overly complex contracts and poor
execution this division is currently making losses. If the deal
with Zodiac closes, the combined company will be approximately 50%
engines and 50% aircraft equipment and the business mix will remain
extremely attractive.
Over the half year we initiated three new positions. We remain
cautious over heady valuations in the public equity markets and
when we initiate new positions it is where we believe they are
positioned to benefit from changed circumstances.
Senvion, a German wind turbine manufacturer with a
particularly strong position in turbines suited to high wind speed
locations, is an example of this. Senvion is, we believe, well
positioned for growth given the lifting of significant constraints
placed on the business by the previous owners, and the recent
appointment of a world-class management team from the German
automotive sector. Senvion has significant cost cutting
opportunities and is trading at a healthy discount to peers.
Year-to-date, Senvion has shown significant progress. First quarter
financials showed 8% growth year-over-year and disciplined working
capital. Two orders from new markets (Ireland and the Czech Republic) came through and significant
interest savings were achieved in a recently completed
refinancing.
Adient, a position we initiated in Q2, is one of the
world’s largest automotive seating suppliers, spun out of Johnson
ControIs late last year. Adient’s innovative weight optimized
components contribute to reduced fuel consumption and thus allow
for lower greenhouse gas emissions. We like Adient in part because
the business is part of a rational, oligopolistic market that
possesses significant barriers to entry. Moreover, Adient has a
clear path to improving operating performance (Adient’s expenses as
a percentage of revenue are approximately 200bps higher than its
nearest competitor).
In May we initiated a position in Terra Santa Agro, a Brazil-based company primarily involved in the
agricultural sector. Terra Santa
focuses on the cultivation of soybean, cotton and corn and owns
approximately 89,000 hectares in the state of Mato Grosso. Brazil has one of the strictest
environmental frameworks for land ownership, in the case of
Terra Santa, 47,000 hectares are
environmental reserves. 70% of the soy produced by Terra Santa Agro has the RTRS certification
(Roundtable on Responsible Soy Association) with the intention to
achieve 100% in the next 5-8 years. 100% of the cotton produced by
Terra Santa has the Better Cotton
Initiative certification. We believe the company is currently
trading with a discount to NAV of approximately 70%.
During the period we divested a number of positions. In January
we sold our position in Acuity Brands, a leading provider of LED
lighting solutions. Acuity posted double digit volume growth for 14
consecutive quarters ending in November of last year. At 31
December, Acuity was trading at 16x forward EBITDA estimates and
was starting to show signs of slowing growth. At this point we felt
the risk of loss outweighed the expectation of gain and so we sold
the entire position. Since that point the share price has fallen by
20% on the back of further disappointing operational news. In the
same vein, we also divested positions in Shimano, Wabtec
Corporation, Roper Technologies, BorgWarner and Johnson Matthey.
Private Investments
In January we completed our second direct private equity
investment of £3.5 million in one of the largest independent smart
electricity meter providers in the UK, Calvin Capital,
alongside the infrastructure arm of global investment firm KKR.
Calvin Capital’s business model is to purchase smart meters on
behalf of energy suppliers, fund and pay for their installation and
manage the billing process throughout their expected operating life
of over 20 years. Given Calvin’s market leading position, we
believe the business is well placed to capture the further rollout
of smart meters in the UK over the next five years.
X-Elio, the solar developer and operator which represents
our largest single position in the portfolio, is performing to
expectations. Operating performance has been slightly above budget
and we remain optimistic that X-Elio’s management team has the
capability to take advantage of the burgeoning global solar
opportunity. Our X-Elio position contributed 0.8% in the quarter,
largely due to a revaluation of the portfolio.
As set out in the Company’s annual report for the year ended
31 December 2016 (the “Annual
Report”), in March 2017 we divested
half of our limited partner stake in Alpina Partners Fund
LP* to limit the Company’s potential exposure to this fund, as
once fully invested it would have represented nearly 15% of the
Company’s NAV. The stake was sold at a discount to invested capital
and was valued in the Annual Report using the sale price. The level
of discount applied to the retained portion will be assessed on a
quarterly basis, following review of the valuation report received
from the fund’s general partner.
Meanwhile, our stake in the WCP Growth Fund LP* was the
greatest detractor in the period, with a 2.4% negative impact on
NAV; one portfolio company was written down to zero and another was
sold at below holding value.
In Q2 we completed our third direct private equity investment in
Perfin Apollo 12, with a total commitment of approximately
£4.4 million. Perfin is an investment vehicle focused on the
development of Brazilian electricity transmission assets, alongside
one of the largest public transmission companies in Brazil, Alupar. Brazil is the second largest producer of
hydroelectric power in the world, trailing only China, and the country depends on
hydroelectricity for more than 75% of its electric power supply.
Perfin Apollo 12 participated in the latest round of government
auctions for transmission licences and will hold 49% of the equity
of each individual transmission asset with Alupar holding the rest.
The expected returns for the transmission assets in Brazilian Reals
are inflation plus 10-12%. Perfin Apollo 12 also holds a put option
that allows it to sell the assets back to Alupar, regardless of
performance, at inflation plus 5% nine years after deployment.
Yield Investments
The main positive contributor for the period was Terraform
Global after the announcement that its board had initiated an
exploration of strategic alternatives and the subsequent
acquisition of the company by Brookfield Asset Management at
$5.10 per share, a 50% premium to the
September 2016 price prior to the
board announcement. This is expected to complete in the second half
of 2017. Brookfield is also assuming the sponsor position from (now
bankrupt) SunEdison for Terraform Power and will keep the company
listed whilst providing the resources to expand the operating
portfolio. We hold Brookfield in high esteem and believe their
expertise in asset management will enable Terraform Power to grow
in a sustainable, profitable manner.
We added two positions in the quarter. The first, Red
Electrica, is sizeable at nearly 5% of NAV. Red Electrica is
the monopoly owner of the Spanish transmission grid. The company
develops the necessary infrastructure to facilitate the integration
of renewable energy and implements demand-side management
initiatives aimed at achieving greater electricity system
efficiency. Red Electrica possesses an irreplaceable and essential
asset base and a highly visible business model. We started building
a position in the second, Grivalia, a Greek commercial real
estate company, but stopped as political turmoil in Greece increased. Grivalia is the market
leader in energy efficient buildings in Greece. So much so that the IFC, the financing
arm of the World Bank, provided a loan to the company to help boost
energy efficiency in the sector. This position represents less than
0.5% of NAV.
Lastly, Abengoa’s debt restructuring plan was approved
and creditors injected over €1 billion into the company to enable
it to continue operations and complete some late stage projects. We
subscribed to the Company’s portion of this capital injection,
which was well collateralised by a stake in Atlantica Yield, at
just over €1 million. After the restructuring the bonds increased
in value and, after the half-year end, we decided to exit the
position as we felt the bonds no longer offered a material upside
at their new level.
Personnel
In terms of our portfolio management team, as previously
announced by the Company, Alexander Vavalidis resigned as a partner
of Menhaden Capital Management LLP and consequently his membership
of the Investment Committee ceased with effect from 15 September
2017. Ben Goldsmith and
Luciano Suana will continue to carry out the day to day portfolio
management activities of the Company, identifying and presenting
investment opportunities to the Investment Committee, which is
chaired by Graham Thomas. The
Investment Committee makes all investment and divestment decisions
in respect of the Company. We are also actively recruiting to
strengthen the team.
We would like to express our appreciation to Alexander for his
contribution since the Company’s launch in July 2015.
Outlook
We remain cautious in respect of markets generally, given high
levels of private and public debt globally, sluggish earnings
growth across sectors and generally exuberant valuations. We are
therefore very focused on looking for value, in the form of
opportunities to acquire clearly identifiable assets and cash flows
at attractive prices. The energy and resource efficiency theme, and
particularly renewable energy, continues to mature and grow, and
yet within it remain pockets of value. We benefit from an
exceptional origination capability and as such we have a pipeline
of potentially attractive ideas under review.
Menhaden Capital Management LLP
Portfolio Manager
20 September
2017
*The data regarding Alpina Partners Fund LP and WCP Growth Fund
LP (together, the “Partnerships”) does not necessarily reflect the
current or expected future performance of the Partnerships and
should not be used to compare returns of the Partnerships against
returns of other private equity funds.
REGULATORY DISCLOSURES
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Company were
explained in detail within the Company’s prospectus issued in
July 2015 (the “Prospectus”) and the
Annual Report for the year ended 31 December
2016 (the “Annual Report”). The Directors are not aware of
any new risks or uncertainties for the Company and its investors
for the period under review and moving forward, beyond those stated
within the Prospectus and the Annual Report.
Related Parties Transactions
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.
Going Concern
The Directors believe, having considered the Company’s
investment objective, risk management policies, capital management
policies and procedures, the nature of the portfolio and the
expenditure projections, 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, more specifically, that there are no
material uncertainties pertaining to the Company that would prevent
its ability to continue in such operational existence for at least
twelve months from the date of the approval of this half year
report. For these reasons, the Directors consider there is
reasonable evidence to continue to adopt the going concern basis in
preparing the accounts.
Directors’ Responsibilities
Statement
The Board of Directors confirms that, to the best of its
knowledge:
- the condensed set of financial statements contained within the
half year report has been prepared in accordance with FRS 104
‘Interim Financial Reporting’ and gives a true and fair view of the
assets, liabilities, financial position and return of the Company;
and
- the interim management report includes a fair review of the
information required by sections 4.2.7R and 4.2.8R of the UK
Listing Authority Disclosure and Transparency Rules.
In order to provide these confirmations, and in preparing these
financial statements, the Directors are required to:
- select suitable accounting policies and then apply them
consistently;
- make judgements and accounting estimates that are reasonable
and prudent;
- state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business;
and the Directors confirm that they have done so.
Sir Ian Cheshire
Chairman
20 September 2017
CONDENSED INCOME STATEMENT |
|
|
Six months to 30 June 2017
(unaudited)
(unaudited) |
Six months to 30 June 2016
(unaudited) |
|
Note |
Revenue
£’000 |
Capital
£’000 |
Total
£’000 |
Revenue
£’000 |
Capital
£’000 |
Total
£’000 |
Gains/(Losses) on
investments at fair value through profit or loss |
|
- |
2,074 |
2,074 |
- |
(2,421) |
(2,421) |
Income from
investments |
5 |
570 |
- |
570 |
309 |
- |
309 |
AIFM and portfolio
management fees |
6 |
(103) |
(412) |
(515) |
(93) |
(369) |
(462) |
Other expenses |
|
(251) |
(35) |
(286) |
(192) |
- |
(192) |
Net return / (loss)
before taxation |
|
216 |
1,627 |
1,843 |
24 |
(2,790) |
(2,766) |
Taxation on net
return |
|
(34) |
- |
(34) |
(24) |
- |
(24) |
Net return / (loss)
after taxation |
|
182 |
1,627 |
1,809 |
- |
(2,790) |
(2,790) |
Return / (loss) per
share |
7 |
0.2p |
2.0p |
2.2p |
0.0p |
(3.5)p |
(3.5)p |
The total column of this statement is the profit and loss
account of the Company. The supplementary revenue and capital
columns are prepared under guidance issued by the Association of
Investment Companies’ Statement of Recommended Practice.
All revenue and capital items in the above statement derive from
continuing operations.
There are no recognised gains or losses other than those shown
above and therefore no Statement of Total Comprehensive Income has
been presented.
CONDENSED STATEMENT OF CHANGES IN
EQUITY
|
Share
capital £’000 |
Share
premium account £’000 |
Special reserve £’000 |
Capital reserve £’000 |
Revenue reserve £’000 |
Total
£’000 |
Six months to 30 June 2016 (unaudited) |
|
|
|
|
|
|
Balance at 31
December 2015 |
800 |
77,371 |
- |
(11,129) |
73 |
67,115 |
Conversion of share
premium account* |
- |
(77,371) |
77,371 |
- |
- |
- |
Net (loss) after
taxation |
- |
- |
- |
(2,790) |
- |
(2,790) |
Balance at 30 June
2016 |
800 |
- |
77,371 |
(13,919) |
73 |
64,325 |
Six months to 30 June 2017 (unaudited) |
|
|
|
|
|
|
Balance at 31
December 2016 |
800 |
- |
77,371 |
(9,831) |
(57) |
68,283 |
Net return after
taxation |
- |
- |
- |
1,627 |
182 |
1,809 |
Balance at 30 June
2017 |
800 |
- |
77,371 |
(8,204) |
125 |
70,092 |
* The share premium account was cancelled in June 2016 and the 'Special Reserve' created.
CONDENSED STATEMENT OF FINANCIAL
POSITION
|
As at
30 June 2017 (unaudited)
£’000 |
As at
31 December 2016
(audited)
£’000 |
Note
Fixed assets |
|
|
Investments at fair
value through profit or loss |
59,981 |
52,547 |
Current
assets |
|
|
Debtors |
166 |
65 |
Cash |
10,087 |
15,872 |
|
10,253 |
15,937 |
Current
liabilities |
|
|
Creditors: amounts
falling due within one year |
(142) |
(201) |
Net current
assets |
10,111 |
15,736 |
Net assets |
70,092 |
68,283 |
Capital and
reserves |
|
|
Ordinary share
capital |
800 |
800 |
Special reserve |
77,371 |
77,371 |
Capital reserve |
(8,204) |
(9,831) |
Revenue reserve |
125 |
(57) |
Equity
shareholders’ funds |
70,092 |
68,283 |
Net asset value per
share
8 |
87.6p |
85.4p |
CONDENSDED CASH FLOW STATEMENT
|
|
Six
months to 30 June 2017
(unaudited)
£’000 |
Six
months to 30 June 2016
(unaudited)
£’000 |
|
|
|
|
Net cash (outflow)
from operating activities |
|
(451) |
(386) |
Investing
activities |
|
|
|
Purchases of
investments |
|
(15,429) |
(8,605) |
Sales of
investments |
|
10,095 |
14,902 |
Net cash (outflow)
/ inflow from investing activities |
|
(5,334) |
6,297 |
(Decrease) /
Increase in cash and cash equivalents |
|
(5,785) |
5,911 |
Cash and cash
equivalents at beginning of period |
|
15,872 |
3,371 |
Cash and cash
equivalents at end of period |
|
10,087 |
9,282 |
Notes to the Condensed Interim
Financial Statements
- Financial Statements
The condensed financial statements contained in this interim
financial report do not constitute statutory accounts as defined in
s434 of the Companies Act 2006. The financial information for the
six months to 30 June 2017 and
30 June 2016 has not been audited or
reviewed by the Company’s external auditors.
The information for the year ended 31
December 2016 has been extracted from the latest published
audited financial statements. Those statutory financial statements
have been filed with the Registrar of Companies and included the
report of the auditors, which was unqualified and did not contain a
statement under Sections 498(2) or (3) of the Companies Act
2006.
2. Accounting policies
These condensed financial statements have been prepared on a
going concern basis in accordance with the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority, FRS 104
‘Interim Financial Reporting’, the Statement of Recommended
Practice ‘Financial Statements of Investment Trust Companies and
Venture Capital Trusts’ issued in November
2014 and updated in January
2017 and using the same accounting policies as set out in
the Company’s Annual Report for the year ended 31 December 2016.
3. Going concern
After making enquiries, and having reviewed the investments,
Statement of Financial Position and projected income and
expenditure for the next 12 months, the Directors have a reasonable
expectation that the Company has adequate resources to continue in
operation for the foreseeable future. The Directors have therefore
adopted the going concern basis in preparing these financial
statements.
4. Principal Risks and Uncertainties
The principal risks facing the Company together with an
explanation of these risks and how they are managed is contained in
the Strategic Report and note 14 of the Company’s Annual Report for
the year ended 31 December 2016.
5. Income
|
Six
months to
30 June 2017
£’000 |
Six
months to
30 June 2016
£’000 |
Income from
investments |
|
|
UK listed
dividends |
62 |
37 |
Overseas
dividends |
462 |
269 |
Fixed interest
income |
46 |
3 |
Total
income |
570 |
309 |
6. AIFM and portfolio management fees
|
Six months to 30 June 2017 (unaudited) |
Six months to 30 June 2016 (unaudited) |
|
Revenue
£’000 |
Capital
£’000 |
Total
£’000 |
Revenue
£’000 |
Capital
£’000 |
Total
£’000 |
AIFM fee |
16 |
63 |
79 |
14 |
56 |
70 |
Portfolio management
fee |
87 |
349 |
436 |
79 |
313 |
392 |
|
103 |
412 |
515 |
93 |
369 |
462 |
7. Return per share
The revenue and capital returns per share are based on
80,000,001 shares, being the weighted average number of Ordinary
shares in issue during the six months to 30
June 2017 and 30 June
2016.
The calculation of the total, revenue and capital losses per
share is carried out in accordance with IAS 33, “Earnings per
Share”.
8. Net asset value per share
The net asset value per share is based on the number of shares
in issue at 30 June 2017 and
31 December 2016 of 80,000,001.
9. Transaction Costs
Purchase transaction costs for the six months ended 30 June 2017 were £9,000 (six months ended
30 June 2016: £4,000). These comprise
mainly commission and stamp duty. Sales transaction costs for
the six months ended 30 June 2017
were £27,000 (six months ended 30 June
2016: £24,000). These comprise mainly commission.
10. Fair value hierarchy
The methods of fair value measurement are classified into a
hierarchy based on reliability of the information used to determine
the valuation.
Level
1 |
- Quoted prices in
active markets. |
Level
2 |
- Inputs other than
quoted prices included within Level 1 that are observable (i.e.
developed using market data), either directly or indirectly. |
Level 3 |
- Inputs are
unobservable (i.e. for which market data is unavailable) |
The table below sets out the Company’s fair value hierarchy
investments as at 30 June 2017.
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
As at 30 June 2017 |
|
|
|
|
Investments |
40,966 |
1,355 |
17,660 |
59,981 |
|
|
|
|
|
As at 31 December 2016 |
|
|
|
|
Investments |
36,292 |
314 |
15,941 |
52,547 |
For further information please contact:
Frostrow Capital LLP
Company Secretary
0203 709 8734
www.frostrow.com
A copy of the Half Year Report has
been submitted to the National Storage Mechanism and will shortly
be available for inspection at http://www.morningstar.co.uk/uk/NSM
The Half Year Report will also shortly
be available on the Company's website at www.menhaden.com
where up to date information on the Company, including NAV,
share prices and fact sheets, can also be found.
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.
ENDS