Half Yearly Report

RNS Number : 8291S

Oryx International Growth Fund Ld

25 November 2011

 



FOR IMMEDIATE RELEASE

RELEASED BY BNP PARIBAS FUND SERVICES (GUERNSEY) LIMITED

HALF YEARLY RESULTS ANNOUNCEMENT

THE BOARD OF DIRECTORS OF ORYX INTERNATIONAL GROWTH FUND LIMITED ANNOUNCE UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2011

 

Corporate Summary

 

INVESTMENT OBJECTIVE

The investment objective of Oryx International Growth Fund Limited (the "Company") is to seek to generate consistently high absolute returns whilst maintaining a low level of risk for Shareholders.

The Company principally invests in small and mid-size quoted and unquoted companies in the United Kingdom and United States.  The Investment Manager targets companies that have fundamentally strong business models, but where there may be specific factors which are constraining the maximisation or realisation of shareholder value, which may be realised through the pursuit of an activist shareholder agenda by the Investment Manager.  Dividend income is a secondary consideration when making investment decisions.

 

STRUCTURE

The Company is an authorised closed-ended investment company incorporated in Guernsey on 2 December 1994.  The Company's shares have been admitted to the Official List and to trading on the main market of the London Stock Exchange.  The issued capital during the period comprises the Company's Ordinary Shares.

INVESTMENT MANAGER AND INVESTMENT ADVISER

The Investment manager and the Investment adviser during the period was Harwood Capital LLP (formerly named North Atlantic Value LLP), a United Kingdom limited liability partnership incorporated under the Limited Partnerships Act 2000 (partnership number OC304213) and regulated by the Financial Services Authority.

DIRECTORS

NIGEL CAYZER (Chairman)	CHRISTOPHER MILLS
British	British
Nigel Cayzer is Chairman of Aberdeen Asian Smaller Companies Investment Trust PLC.  He is also a director of a number of private companies.  He was Chairman of the Oriel Group PLC from 1989 until 1998, a non-executive director of Caledonia Investments PLC from 1986 until 2002, the Alliance Housing Bank SAOG from 1998 until 2006 and Chairman of the Oryx Fund Ltd from 1994 until 2004.	Christopher Mills is Chief Investment Officer of North Atlantic Smaller Companies Investment Trust plc, "NASCIT".  NASCIT is winner of numerous Micropal and S&P Investment Trust awards.
SIDNEY CABESSA	JOHN RADZIWILL
French	British
Sidney Cabessa is Chairman of CIC Finance an Investment Fund and a subsidiary of French banking group, CIC - Credit Mutuel. Mr Cabessa is a director of Nature et Decouvertes, International Metal Service, Nord Est, Club-Sagem, CIC Securities, CIC Capital Prive, Medias-Participation and HRA Pharma.	John Radziwill is currently a director of International Assets Holding Corp, Goldcrown Group Limited, Fourth Street Capital, Ltd (BVI), Fifth Street Capital,Ltd (BVI), PingTone Communications, Inc. and Vendor Safe Technologies LLC. In the past five years, he has also served as a director of Baltimore Capital Plc, USA Micro Cap Value Co. Ltd, Acquisitor Plc, Acquisitor Holdings (Bermuda) Ltd and Lionheart Group Inc. Mr Radziwill is a member of the Bar of England and Wales.
WALID CHATILA	JOHN GRACE
Canadian	New Zealander
Walid Chatila is a Certified Public Accountant (Texas 1984) and a Chartered Accountant (Ontario 1991). He is currently the General Manager of Al Nowais Investments LLC In Abu Dhabi, United Arab Emirates. From 1994 to 2006 he was the Finance Director of Emirates Holdings in Abu Dhabi and prior to that he worked in audit and has more than 11 years of international audit and special assignment experience in the Middle East and North America.	Mr Grace is a Director and Founder of Sterling Grace International Ltd.  Mr Grace is also Chairman of Trustees Executors Holdings Ltd, the premier and oldest New Zealand trust company established in 1882.  Mr Grace graduated from Georgetown University.  Mr Grace has served as a director of numerous public companies and charities.  John Grace was appointed as a director on 8th March 2011.
RUPERT EVANS
British
Rupert Evans is a Guernsey Advocate and was a partner in the firm of Ozannes between 1982 and 2003, since then he has been a consultant to Ozannes (now Mourant Ozannes).  He is a non-executive director of a number of other investment companies some of which are quoted on recognised stock exchanges.  He is a Guernsey resident.

CHAIRMAN'S STATEMENT

As the investment manager has reported, market conditions have been very volatile during the first six months of our financial year. Against this background it is comforting to report that net asset value per share fell only 1.1% in the period to 30^th September 2011. This compares to a fall in the FT small cap indice of approximately 12.9%.

The investment philosophy of Harwood Capital LLP is based on the identification of potential value in underperforming companies and then realising that value through positive action.

The period under review reflects a fairly quiet period, but opportunities continue to be sought in relation to new investments and work continues on realising value in the existing portfolio. 

In line with our stated policy, no dividend will be paid for the period. 

Nigel Cayzer

Chairman

25 November 2011

INVESTMENT ADVISER'S REPORT

The period under review saw extremely turbulent market conditions with the FTSE falling by 13.2% and the FTSE Small Cap by 12.9%.  Against this background it is encouraging to report that the Company limited the decline in net asset value per share to 1.1%.

Quoted Portfolio:

A number of stocks outperformed the general market and, in particular, CVS rose 7%; RPC nearly 20%; IDOX over 20% and Prime Focus which was sold for nearly a 100% uplift.

Against this GTL fell 15%; GPG Group 20%; Quarto 10% and BBA 14%.  The only major new holding during the period was Redhall, a small specialist engineering group.

Unquoted Portfolio:

Overall the private equity portfolio was unchanged during the six months under review.  This reflects a modest write down in Indicant and a modest write up in Celsis.  Taken as a whole, the portfolio continues to perform well and it is possible that there will be a number of realisations above the current valuation.

Outlook:

Although the broad market has recovered since the end of September, the FTSE Small Cap has only enjoyed a very modest recovery which has inevitably impacted the Company.  However, it is pleasing to note that at the end of October the Net Asset Value has risen since the end of March and continues to substantially out-perform the Small Cap Index.

Notwithstanding this, it is our view that the market as a whole will remain very volatile for the foreseeable future; the financial problems facing Europe remain unresolved.  However, a number of the Company's listed investments are well positioned for corporate activity and there remains in our opinion scope for capital appreciation in the unquoted portfolio.  Taken as a whole, we are hopeful that the current year will see a further modest increase in the net asset value of the Company.

Harwood Capital LLP

25 November 2011

TEN LARGEST EQUITY HOLDINGS

as at 30 September 2011

CVS Group Plc

Cost £3,635,969 (3,750,000 shares)

Market value £3,698,438 representing 6.83% of Net Asset Value

The company owns the largest chain of veterinary practice in the United Kingdom with a market share of circa 10%.  The shares were acquired on a price earning ratio of 7x.  Recent results have been in line with market expectations and the shares have performed well.

Gleeson (M.J.) Group Plc

Cost £7,118,533 (3,500,000 shares)

Market value £3,631,250 representing 6.70% of Net Asset Value

Gleeson is a small builder with operations in the Midlands and North of England. The company has no debt and was modestly profitable for the six months ended June 2011.  The shares trade at a discount to tangible book of about 40%.

RPC Group Plc

Cost £1,939,267 (1,000,000 shares)

Market value £3,369,000 representing 6.22% of Net Asset Value

RPC is the largest company plastic packaging company in Europe. A new chairman has restructured the business and made a good acquisition and this will lead to a significant improvement in profitability over the next few years. Recent results have been most encouraging and the shares have performed well.

Redhall Group Plc

Cost £2,847,795 (4,600,000 shares)

Market value £2,955,500 representing 5.46% of Net Asset Value

The company is a specialist engineer with a strong market presence in nuclear decommissioning.  The shares were purchased on less than 4 x EV/EBITDA reflecting a substantial de-rating as a result of a contract where it is alleged the company under performed.  The company has repudiated the clients allegations and so far has been successful.

BBA Aviation Plc

Cost £3,950,503 (1,750,000 shares)

Market value £2,929,500 representing 5.41% of Net Asset Value

BBA Aviation's principal business is Signature which is the leading provider of aviation support facilities for private jets throughout the world. The company has modest debt and is seeing good growth in the US in particular as business travel in private jets returns to historic level.  Although profits have met expectations the share price performance in recent months has been disappointing.

Guinness Peat Group Plc

Cost £3,694,546 (10,000,000 shares)

Market value £2,894,958 representing 5.34% of Net Asset Value

The company is an industrial conglomerate with its principal subsidiary being Coats - the world's largest manufacturer of thread.  The company is in the process of breaking itself up which we expect will lead to a substantial profit for this holding.

Orthoproducts Limited

Cost £1,206,964 (319,000 shares)

Market value £2,791,250 representing 5.15% of Net Asset Value

Orthoplastics is one of two companies in the world capable of manufacturing advanced plastic materials to the orthopaedics industry. In addition the company is successful in rapidly growing plastic components for the same industry.  Recent results have been very good and the outlook of the business looks encouraging.

Augean Plc

Cost £5,560,331 (11,000,000 shares)

Market value £2,777,500 representing 5.13% of Net Asset Value

Augean owns 60% of the hazard based landfill capacity in the United Kingdom.  Recent results have reflected a weakness in the construction industry.  The company has recently secured planning permission to dispose of low level nuclear waste in the United Kingdom.

GTL Resources Plc

Cost £2,514,357 (3,400,000 shares)

Market value £2,575,500 representing 4.75% of Net Asset Value

The company owns a 115 million gallon per annum ethanol facility in Rochelle Illinois.  Although the business is principally a commodity business, there are reasons to believe that over the long term supply and demand will be broadly in balance and that margins will widen.  Since the end of the period, Oryx International Growth Fund Limited is a participant in an offer which has resulted in a 40% increase in value from the 30^th September.

Quarto Group Inc

Cost £2,332,014 (1,935,000 shares)

Market value £2,534,850 representing 4.68% of Net Asset Value

The company is the world's largest publisher of 'coffee table' books, and a significant publisher of 'How to' books.  Both these segments appear to be more resilient than traditional publishing.  The shares currently trade on a modest price earnings of multiple of around 5x.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors confirm to the best of their knowledge that:

·     The half-yearly accounts, which have been prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole as required by DTR 4.2.4R;

·     The Interim Management Report and Investment Adviser's Report include a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

·     The Interim Management Report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board

Walid Chatila                                                     John Radziwill

Director                                                            Director

25 November 2011                                            25 November 2011

INTERIM MANAGEMENT REPORT

Business review

A review of the Company's activities is given in the Corporate Summary on page 2, the Chairman's statement on page 4 and the Investment Adviser's report on page 5.

Dividend Policy

To the extent that any dividends are paid they will be paid in accordance with any applicable laws and regulations of the UK Listing Authority and the requirements of the Companies (Guernsey) Law, 2008, as amended.  The Directors do not propose payment of a dividend (30 September 2010 - Nil, 31 March 2011- Nil).

Capital Values

At 30 September 2011 the value of net assets available to Shareholders was £54,175,634 (30 September 2010 - £50,905,571, 31 March 2011 - £55,881,895) and the Net Asset Value per share was £2.69 (30 September 2010 - £2.47, 31 March 2011 - £2.72).

Related party transactions

Related party transactions are disclosed in note 8 to the condensed financial statements.

Risks and uncertainties

The main risks arising from the Group's financial instruments are:

(i)         market risk, including currency risk, interest rate risk and other price risk;

(ii)        liquidity risk; and

(iii)       credit risk

The Company Secretary, in close cooperation with the Board of Directors and the Investment Manager, coordinates the Group's risk management.  The policies for managing each of these risks are summarised below and have been applied throughout the period.

(i) Market risk

The fair value or future cash flows of a financial instrument held by the Group may fluctuate because of changes in market prices. This market risk comprises currency risk, interest rate risk and other price risk. The Board of Directors reviews and agrees policies for managing these risks, which policies have remained substantially unchanged from those applying in the year ended 31 March 2011. The Investment Manager assesses the exposure to market risk when making each investment decision and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis.

Currency risk

The functional and presentational currency of the Group is Sterling and, therefore, the Group's principal exposure to foreign currency risk comprises investments priced in other currencies, principally US Dollars.  The Investment Manager monitors the Group's exposure to foreign currencies and reports to the board on a regular basis.  The Investment Manager measures the risk to the Group of the foreign currency exposure by considering the effect on the net asset value and income of a movement in the rates of exchange to which the Group's assets, liabilities, income and expenses are exposed.

Income denominated in foreign currencies is converted to Sterling on receipt.

The Group's financial assets comprise fixed and equity investments, trade receivables and cash balances.

The Group finances its investment activities through the Group's Ordinary Share capital and reserves.  The Group's financial liabilities comprise trade payables.

Interest rate risk

Interest rate movements may affect:

·     the fair value of the investments in fixed rate securities; and

·     the level of income receivable on cash deposits.

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions.  The Board reviews on a regular basis the values of the unquoted loans to companies in which private equity investment is made.  Interest rate risk is not significant to the Group.

Other price risk

Other price risks (i.e. changes in market prices other than those arising from currency risk or interest rate risk) may affect the value of investments.

The Group's exposure to price risk comprises mainly movements in the value of the Group's investments.

The Board of Directors manages the market price risks inherent in the investment portfolios by ensuring full and timely access to relevant investment information from the Investment Manager. The Board meets regularly and at each meeting reviews investment performance. The Board monitors the Investment Manager's compliance with the Group's objectives and is directly responsible for investment strategy and asset allocation.

(ii) Liquidity risk

This is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities.

Liquidity risk is significant as the Group invests in unlisted equities and other investments that may not be readily realisable.

In accordance with the Group's policy, the Investment Manager monitors the Company's liquidity risk, and the Board of Directors reviews it.

(iii) Credit risk

The Group does not have any significant exposure to credit risk arising from any one individual party. Credit risk is spread across a number of counterparties, each having an immaterial effect on the Group's cash flows, should a default happen. 

BY ORDER OF THE BOARD

Walid Chatila, Director	John Radziwill, Director
25 November 2011	25 November 2011

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six month period ended 30 September 2011, expressed in £ sterling

 

			Six months	Six months	Year ended
			ended 30	ended 30	31 March
			Sept 2011	Sept 2010	2011
		Notes	£	£	£
Income
Interest			-	342,138	311,423
Dividends			673,789	818,900	879,884
Other Income			79,220	32,155	48,886
			753,009	1,193,193	1,240,193
Realised gains/losses on investments		2(g)	1,052,942	(2,339,640)	(3,369,053)
Unrealised (loss)/gain on revaluation of investments		2(g)	(1,967,934)	6,075,383	12,904,723
Gain on foreign currency translation		2(f)	16,936	626	129,818
(Loss)/gain from investments			(898,056)	4,929,562	10,905,681
Expenses
Management and investment adviser's fees		2(j)	308,899	273,578	577,525
Performance fees			-	-	100,000
Directors' fees and expenses		2(j)	83,891	93,736	130,451
Administration fees			29,559	26,579	55,120
Audit fees			23,759	24,082	31,260
Printing fees			15,563	-	-
Transaction costs			14,861	31,468	164,589
Legal and professional fees			64,218	120,942	218,226
Regulatory fees			7,918	-	-
Custodian fees			7,275	7,335	17,317
Insurance fees			5,236	4,401	9,637
Registrar and transfer agent fees			2,841	5,422	14,973
Other expenses			29,506	12,783	142,562
Total expenses			593,526	600,326	1,461,660
Net (loss)/income for the period/year before taxation			(738,573)	4,329,236	9,444,021
Withholding tax on dividends			(1,688)	122,492	111,532
Net (loss)/income for the period/year			(740,261)	4,206,744	9,332,489
(Loss)/Income per share - basic and diluted:
Ordinary		7	£(0.04)	£0.20	£0.44

All items in the above statement are derived from continuing operations.

The accompanying notes on pages 15 to 21 form an integral part of these condensed financial statements.

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 30 September 2011, expressed in £ sterling

			30 September	30 September	31 March
			2011	2010	2011
		Notes	£	£	£
Non-current assets
Listed investments designated at fair value through profit or loss (Cost - £58,922,871)			45,059,918	32,983,981	44,948,567
Unlisted investments designated at fair value through profit or loss (Cost - £5,800,928)			8,375,974	8,742,222	9,518,017
			53,435,892	41,726,203	54,466,584
Current assets
Amounts due from brokers			668,973	22,455	1,024,781
Dividends and interest receivable			460,487	171,225	24
Other receivables and prepayments		2(c)	8,806	80,748	75,185
Cash and cash equivalents		2(d)	-	9,343,390	880,745
			1,138,266	9,617,818	1,980,735
Total assets			54,574,158	51,344,021	56,447,319
Current liabilities
Other payables and accrued expenses		2(e)	284,568	372,010	565,424
Overdraft			61,590	-	-
Amounts due to brokers			52,366	66,440	-
			398,524	438,450	565,424
Net assets			54,175,634	50,905,571	55,881,895
Shareholders' equity
Called up share capital		3	10,070,385	10,314,310	10,280,385
Share premium		3	42,696,509	42,696,509	42,696,509
Capital redemption reserve			1,246,500	1,246,500	1,246,500
Other reserves		4	162,240	(3,351,748)	1,658,501
Total equity shareholders' funds			54,175,634	50,905,571	55,881,895
Net Asset Value per Share - basic and diluted		7	£2.69	£2.47	£2.72

This interim report was approved by the Board of Directors on 25 November 2011 and signed on its behalf by:

Walid Chatila                                                    John Radziwill

Director                                                            Director

The accompanying notes on pages 15 to 21 form an integral part of these condensed financial statements. 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six month period ended 30 September 2011 (comparative: year ended 31 March 2011), expressed in

£ sterling

	Notes	Share Capital	Share Premium	Capital redemption reserve	Other reserves	Total
		£	£	£	£	£
Balance at 1 April 2011		10,280,385	42,696,509	1,246,500	1,658,501	55,881,895
Total Comprehensive Loss
For the Period		-	-	-	(740,261)	(740,261)
Transactions with owners,
recorded directly in equity
Contributions, redemptions and distributions to shareholders
- Cancellation of shares	3, 4	(210,000)	-	-	(756,000)	(966,000)
Total transactions with owners		(210,000)	-	-	(756,000)	(966,000)
Balance at 30 September 2011		10,070,385	42,696,509	1,246,500	162,240	54,175,634

	Notes	Share Capital	Share Premium	Capital redemption reserve	Other reserves	Total
		£	£	£	£	£
Balance at 1 April 2010		11,252,912	42,696,509	1,246,500	(5,157,918)	50,038,003
Total Comprehensive Income		-	-	-
For the Year					9,332,489	9,332,489
Transactions with owners,
recorded directly in equity
Contributions, redemptions and distributions to shareholders
- Cancellation of shares	3, 4	(972,527)	-	-	(2,516,070)	(3,488,597)
Total transactions with owners		(972,527)	-	-	(2,516,070)	(3,488,597)
Balance at 31 March 2011		10,280,385	42,696,509	1,246,500	1,658,501	55,881,895

The accompanying notes on pages 15 to 21 form an integral part of these condensed financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

for the six month period ended 30 September 2011, expressed in £ sterling

			Six months	Six months	Year
			ended	ended	Ended
			30 September	30 September	31 March
			2011	2010	2011
		Notes	£	£	£
Net cash inflow from operating activities		5	6,729	13,603,292	5,160,876
Financing Activities
Cancellation of shares			(966,000)	(3,339,176)	(3,488,597)
Proceeds of borrowings			-	-	990,000
Repayment of borrowings			-	-	(990,000)
Bank overdraft (repaid)/drawn down			-	(1,116,352)	(1,116,352)
Cash outflow from financing activities			(966,000)	(4,455,528)	(4,604,949)
Net (decrease)/increase in cash and cash equivalents			(959,271)	9,147,764	555,927
Cash and cash equivalents at beginning of period/year			880,745	195,000	195,000
Effect of exchange rate fluctuations on cash and cash equivalents			16,936	626	129,818
Cash and cash equivalents at end of period/year			(61,590)	9,343,390	880,745

The accompanying notes on pages 15 to 21 form an integral part of these condensed financial statements. 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   General

Oryx International Growth Fund Limited (the "Company") was incorporated in Guernsey on 2 December 1994 and commenced activities on 3 March 1995.  The Company was listed on the London Stock Exchange on 3 March 1995.

The Company is a Guernsey Authorised Closed-Ended Investment Scheme and is subject to the Authorised Closed-Ended Investment Scheme Rules 2008.

The investment activities of the Company are managed by Harwood Capital LLP, formerly named North Atlantic Value LLP, ('the Investment Manager') and the administration of the Company is delegated to BNP Paribas Fund Services (Guernsey) Limited ('the Administrator').

The Half-yearly Report will be available to view and download at the Company's website www.oryxinternationalgrowthfund.co.uk and copies may also be obtained from the Company's registered office at BNP Paribas House, 1 St Julian's Avenue, St Peter Port, Guernsey GY1 1WA.

2.    Accounting Policies

Basis of Preparation

The financial statements of the Company are prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and International Accounting Standards and Standing Interpretations Committee interpretations approved by the International Accounting Standards Committee ("IASC") that remain in effect, together with applicable legal and regulatory requirements of Guernsey Law.  The condensed set of financial statements included in this half-yearly financial report are unaudited and have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting.  The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Company's latest annual audited financial statements.

The financial statements have been prepared on the historical cost basis except for the inclusion at fair value of certain financial instruments. The principal accounting policies are set out below. The preparation of financial statements in conformity with International Financial Reporting Standards requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. It also requires the Board of Directors to exercise its judgement in the process of applying the Company's accounting policies.

Adoption of new standards

The following new standards came into force for periods commencing 1 April 2011.

IFRS 7   Financial Instruments: Disclosures (revised October 2010)

IAS 1     Presentation of Financial Instruments (revised May 2010)

IAS 24   Related Party Disclosures (revised November 2009)

IAS 34   Interim Financial Reporting (revised May 2010)

The adoption of these standards did not have a material impact on the financial statements of the Company.

The Directors believe that other pronouncements which are in issue but not yet operative or adopted by the Company will not have a material impact on the financial statements of the Company.

Going Concern

The Directors believe it is appropriate to adopt the going concern basis in preparing the financial statements as, after due consideration, the Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future. 

a)          Income Recognition

Dividend income is recognised when the right to receive income is established. Usually this is the ex-dividend date for equity securities.  Deposit interest is accrued on a day-to-day basis.  Loan interest is accounted for using the effective interest method.  All income is shown gross of any applicable withholding tax.

b)         Investments

             Classification

All investments of the Company, together with its subsidiaries ('the Group'), are designated into the financial assets at fair value through profit or loss category.  The investments are purchased mainly for their capital growth and the portfolio is managed, and performance evaluated, on a fair value basis in accordance with the Group's documented investment strategy.  Therefore the Directors consider that this is the most appropriate classification.

This category comprises financial instruments designated at fair value though profit or loss upon initial recognition - these include financial assets that are not held for trading purposes and which may be sold.  These are principally investments in listed and unlisted equities.

Fair value measurement principles

Financial instruments are measured initially at fair value being the transaction price.  Subsequent to initial recognition on trade date, all instruments classified as fair value through profit or loss are measured at fair value with changes in their fair value recognised in the Statement of Comprehensive Income.  Transaction costs are separately disclosed in the Statement of Comprehensive Income.

Listed investments have been valued at the bid market price ruling at the Statement of Financial Position date.  In the absence of the bid market price, the closing price has been taken, or, in either case, if the market is closed on the Consolidated Statement of Financial Position date, the bid market or closing price on the preceding business day.

Fair Values of unlisted investments are derived in accordance with the International Private Equity and Venture Capital Association (IPEVCA) guidelines.  Their valuation includes all factors that market participants would consider in setting a price.  The primary valuation techniques employed to value the unlisted investments are earnings multiples, recent transactions and the net asset basis.  Cost is considered appropriate for early stage investments.  The relevance of this methodology can be eroded over time and in these cases the carrying values will be adjusted to reflect fair value. 

For certain of the Group's financial instruments, including cash and cash equivalents, interest and dividends and interest receivable and amounts due to and from broker, the carrying amounts approximate fair value due to their immediate or short-term maturity.

Derecognition of financial assets occur when the rights to receive cash flows from financial instruments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred.

Fair value measurement should be determined based on assumptions that market participants would use in pricing an asset or liability.  As a basis for considering market participant assumptions, IFRS 7 establishes a fair value hierarchy that gives the highest priority to unadjusted quoted prices in active markets (Level 1) and lowest priority to unobservable inputs (Level 3).  The three levels of the value hierarchy are as follows. 

Level 1: Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date;

Level 2: Inputs reflect quoted prices of similar assets and liabilities in active markets and quoted prices of identical assets and liabilities in markets that are considered to be inactive, as well as inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

Level 3: Inputs that are unobservable for the asset or liability and reflect the Investment Manager's own assumptions in accordance with the accounting policies disclosed within note 2 to the financial statements.

c)         Other receivables

Other receivables do not carry any interest and are short term in nature and are accordingly stated at their amortised cost as reduced by appropriate allowances for impairment.

d)         Cash and cash equivalents

Cash and cash equivalents consist of cash in hand and short term deposits in banks with original maturities of less than three months.

e)         Other Payables and Accrued Expenses

Other payables and accrued expenses are not interest bearing and are stated at their amortised cost.

f)          Foreign Currency Translation

Items included in the Group's financial statements are measured using the currency of the primary economic environment in which it operates (the "functional currency").  This is the pound sterling which reflects the Group's primary activity of investing in sterling securities.  The Group's shares are also issued in sterling.

Foreign currency assets and liabilities have been translated at the exchange rates ruling at the Consolidated Statement of Financial Position date.  Transactions in foreign currency during the period have been translated into pounds sterling at the spot exchange rate in effect at the date of the transaction.  Realised and unrealised gains and losses on currency translation are recognised in the Consolidated Statement of Comprehensive Income.

g)          Realised and Unrealised Gains and Losses

Realised gains and losses arising on the disposal of investments are calculated by reference to the cost attributable to those investments and the sales proceeds, and are included in the Consolidated Statement of Comprehensive Income.  Unrealised gains and losses arising on investments held at the Consolidated Statement of Financial Position date are also included in the Consolidated Statement of Comprehensive Income.

h)         Financial Liabilities

All bank loans and borrowings are initially recognised at cost, being the fair value of the consideration received, less issue costs where applicable.  After initial recognition, all interest bearing loans and borrowings are subsequently measured at amortised cost.  Any difference between cost and redemption value has been recognised in the Condensed Consolidated Statement of Comprehensive Income over the period of the borrowings on an effective interest basis.

Financial liabilities are derecognised from the Condensed Consolidated Statement of Financial Position only when the obligations are extinguished either through discharge, cancellation or expiration.

i)          Equity

Share Capital represents the nominal value of equity shares.

Share Premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.  Share premium is debited for the excess of redemption price over par value of shares.

Other Reserves and the Capital Redemption Reserve include all current and prior results as disclosed in the Condensed Consolidated Statement of Comprehensive Income.  Other Reserves also includes the deduction for the excess of consideration paid over nominal value on share buy-backs.

j)          Expenses

Expenses are recognised in the condensed consolidated Condensed Consolidated Statement of Comprehensive Income upon utilisation of the service or at the date they are incurred. 

k)          Consolidation

These condensed consolidated financial statements comprise the condensed financial statements of the Company and its wholly owned subsidiary undertaking, American Opportunity Trust PLC, which is UK registered. Subsidiaries are those entities controlled by the Company. Control exists when the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.  

The financial statements of subsidiaries are included in the condensed consolidated financial statements from the date that control commences until the date that control ceases. The condensed financial statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances.  All intra-group balances and transactions are eliminated in full in preparing the condensed consolidated financial statements.

3.   Share Capital and Share Premium

a)          Authorised Share Capital

					Number of Shares		£
Authorised:
Ordinary shares of 50p each					90,000,000		45,000,000

b)         Ordinary Shares Issued - 1 April 2011 to 30 September 2011

Ordinary Shares of 50p each		Number of Shares		Share Capital £		Share Premium £
At 1 April 2011		20,560,769		10,280,385		42,696,509
Cancellation of shares		(420,000)		(210,000)		-
At 30 September 2011		20,140,769		10,070,385		42,696,509

Ordinary Shares Issued - 1 April 2010 to 31 March 2011

Ordinary Shares of 50p each		Number of Shares		Share Capital £		Share Premium £
At 1 April 2010		22,505,823		11,252,912		42,696,509
Cancellation of shares		(1,945,054)		(972,527)		-
At 31 March 2011		20,560,769		10,280,385		42,696,509

During April 2011, the Company repurchased for cancellation 250,000 shares at an average price of 230p per share. A further 170,000 shares were repurchased for cancellation at an average price of 230p per share in May 2011.

4.  Other reserves

		31 March 2011 £		Movement £		30 September 2011 £
Net investment income		1,999,433		157,795		2,157,228
Realised loss on investments		19,122,237		1,052,942		20,175,179
Loss on foreign currency transactions		(772,851)		16,936		(755,915)
Unrealised gain on revaluation of investments held		(9,319,971)		(1,967,934)		(11,287,905)
Repurchase of ordinary shares		(8,041,457)		(756,000)		(8,797,457)
Repurchase of warrants		(8,179)		-		(8,179)
Discount on repurchase of Convertible Loan Stock		(1,320,711)		-		(1,320,711)
		1,658,501		(1,496,261)		162,240

5.  Cash Flows from Operating Activities

		Six months	Six months	Year
		ended 30	ended 30	ended
		September	September	31 March
		2011	2010	2011
		£	£	£
Net (loss)/income for the period/year		(740,261)	4,206,744	9,332,489
Realised (gains)/losses on investments		(1,052,942)	2,339,640	3,369,053
Movement in unrealised loss on revaluation of investments		1,967,934	(6,075,383)	(12,904,723)
Loss on foreign currency translation		(16,936)	(626)	(129,818)
		898,056	(3,736,369)	(9,665,488)
Purchase of investments		(15,264,362)	(4,553,845)	(26,774,670)
Proceeds from sale of investments		15,380,063	17,747,923	31,959,528
		115,701	13,194,078	5,184,858
(Increase)/decrease in dividends and interest receivable		(104,655)	2,005	173,206
Decrease in other receivables		66,378	21,585	27,148
Decrease in other accruals and payables		(228,490)	(84,751)	108,663
		(266,767)	(61,161)	309,017
		6,729	13,603,292	5,160,876

6.  Reconciliation of Net Asset Value to Published Net Asset Value

		30 September		31 March
Ordinary Shares		2011 £	£ per share	2011 £	£ per share
Published Net Asset Value		54,433,792	2.70	57,067,877	2.77
Unrealised loss on revaluation of investments at bid / mid price (ref note (a) below)		(255,641)	(0.01)	(1,036,982)	(0.05)
Reduction in value of Subsidiary		-	-	(49,000)	(0.00)
Registrar fee accrual		(2,175)	(0.00)	-	-
Other expense accruals		(342)	(0.00)	-	-
Performance fee accrual		-	-	(100,000)	(0.00)
Net Asset Value attributable to shareholders		54,175,634	2.69	55,881,895	2.72

(a)  In accordance with International Financial Reporting Standards, as adopted by the European Union, the Group's long investments have been valued at bid price in the Condensed Consolidated Financial Statements.  However, in accordance with the Group's principal documents the Net Asset Value reported each month reflects the investments being valued at the closing, last or mid-market (as the Directors in all circumstances consider appropriate) price as notified to the Group on the valuation day by a member of the stock exchange concerned.  Certain investments remain at fair value as determined in good faith by the Directors.

7.  Earnings per Share and Net Asset Value per Share

The calculation of basic earnings per share for the Ordinary Share is based on net (loss)/income of   £(740,261) (30 September 2010 - £4,206,744, 31 March 2011 - £9,332,489) and the weighted average number of shares in issue during the period of 20,337,481 shares (30 September 2010 - 21,556,871 shares, 31 March 2011 - 21,082,441).  At 30 September 2011 there was no difference in the diluted earnings per share calculation for the Ordinary Shares.

The calculation of Net Asset Value per Ordinary Share is based on a Net Asset Value of  £54,175,634 (30 September 2010 - £50,905,571, 31 March 2011 - £55,881,895) and the number of shares in issue at the period end of 20,140,769 shares (30 September 2010 - 20,628,621 shares, 31 March 2011 - 20,560,769 shares).  At 30 September 2011 there was no difference in the diluted Net Asset Value per share calculation for the Ordinary Shares.

8.  Related Parties

            The Investment Adviser is considered to be a related party.  The fees paid are included in the condensed Consolidated Statement of Comprehensive Income.

            At 30 September 2011 £98,295 (September 2010 - £92,436, March 2011 - £302,563) included in creditors and accrued expenses was payable to the Investment Adviser.

            The Directors are also considered to be related parties and their fees are disclosed in the condensed Consolidated Statement of Comprehensive Income.

            At 30 September 2011 £33,523 (September 2010 - £33,523, March 2011 - £29,540) included in creditors and accrued expenses was payable to the Directors.

            Christopher Mills is a Director and shareholder of Oryx International Growth Fund Limited. As disclosed previously Christopher Mills is a principal shareholder and Director of JO Hambro Capital Management (Holdings) Limited, which in turn holds 100% of issued share capital in Harwood Capital LLP (formerly named North Atlantic Value LLP), the Manager and Investment Adviser.

There were no transactions between the Company and its subsidiaries in the six months ended 30 September 2011.

Enquiries:

BNP Paribas Fund Services (Guernsey) Limited                         01481 750850

Company Secretary

Sara Bourne / Madiha Loveless

Westhouse Securities Limited                                                     020 7601 6118

Alastair Moreton / Hannah Young

 

 

END

 

 

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