ODYSSEAN INVESTMENT TRUST PLC
INTERIM REPORT
for the period ended 30 September 2019
The Directors present the unaudited Interim Report for the period ended 30 September 2019.
Copies of the Interim Report can be obtained from the Company's website: www.oitplc.com or by contacting the Company Secretary by telephone on 01392 477500.
HIGHLIGHTS
· Portfolio total net asset value per share ("NAV") growth of 7.2% over the period, compared with a rise in the NSCI ex IT plus AIM Index of 1.4% over the same period.
· Since IPO in May 2018, the NAV per share has increased by 4.9%, with the NSCI ex IT plus AIM Index declining 7.7% over the same period, demonstrating the Company's differentiated investment strategy.
· The Company's portfolio is now 90% invested in 17 companies, with three new positions entered during the period.
· The Portfolio Manager believes that the aggregate portfolio metrics appear attractive, with average earnings growth forecast to be 13%1 over the next 12 months, the average rating c.13x p/e1,2 and modest gearing of less than 1x net debt/EBITDA1,3.
· Stuart Widdowson has begun a progressive return to work during Q4 2019 and his compassionate leave will finish as planned at the end of 2019.
1 Source: FactSet. Data excludes Benchmark Holdings which is loss making on an earnings per share basis
2 p/e - price-earnings ratio
3 EBITDA - Earnings Before Interest Tax Depreciation and Amortisation
ABOUT US
Odyssean Investment Trust PLC (the "Company", the "Trust" or "OIT") is an investment trust which is listed on the premium segment of the Official List of the FCA and admitted to trading on the premium segment of the main market for listed securities of the LSE. The Company had total net assets of £91.1m as at 30 September 2019.
The Board of the Company comprises four non-executive Directors, all of whom are independent of the portfolio manager, Odyssean Capital LLP ("Odyssean" or the "Portfolio Manager").
INVESTMENT OBJECTIVE
The investment objective of the Company is to achieve attractive total returns per share principally through capital growth over a long-term period.
INVESTMENT POLICY
The Company primarily invests in smaller company equities quoted on markets operated by the LSE, which the Portfolio Manager believes are trading below intrinsic value and where this value can be increased through strategic, operational, management and financial initiatives.
It is expected that the majority of the portfolio by value will be invested in companies too small to be considered for inclusion in the FTSE 250 Index, although there are no specific restrictions on the market capitalisation of issuers into which the Company may invest.
The portfolio will typically consist of up to 25 holdings, with the top 10 holdings accounting for the majority of the Company's aggregate NAV, across a range of industries.
The Company may hold cash in the portfolio from time to time to maintain investment flexibility. There is no limit on the amount of cash which may be held by the Company from time to time.
Where the Company owns an influencing stake, it will engage with other stakeholders to help improve value. The Company may, at times, invest in securities quoted on other recognised exchanges and/or unquoted securities.
Investment restrictions
- No exposure to any investee company will exceed 15.0% of NAV at the time of investment.
- The Company may invest up to 20.0% of gross assets at the time of investment in unquoted securities where the issuer has its principal place of business in the UK.
- The Company may invest up to 20.0% of gross assets at the time of investment in quoted securities not traded on the LSE.
- The Company will not invest more than 10.0%, in aggregate, of gross assets at the time of investment in other listed closed-ended investment funds.
Borrowings
The Company does not intend to incur borrowings for investment purposes, although the Company may, from time to time, utilise borrowings over the short term for working capital purposes up to 10.0% of NAV at the time of borrowing.
Derivatives and hedging
The Company will not use derivatives for investment purposes. It is expected that the Company's assets will be predominantly denominated in Sterling and, as such, the Company does not intend to engage in hedging arrangements. However, the Company may do so if the Board deems it appropriate for efficient portfolio management purposes.
General
The Company will not be required to dispose of any asset or to rebalance the portfolio as a result of a change in the respective valuations of its assets.
The Company intends to conduct its affairs so as to qualify as an investment trust for the purposes of section 1158 of the CTA.
Any material change to the Company's investment policy set out above will require the approval of shareholders by way of an ordinary resolution at a general meeting and the approval of the FCA. Non-material changes to the investment policy may be approved by the Board.
FINANCIAL SUMMARY
|
As at |
As at |
|
|
30 September |
31 March |
|
Results for the period |
2019 |
2019 |
Change |
|
|
|
|
Shareholders' funds |
£91.1m |
£85.0m |
7.2% |
NAV per ordinary share |
103.2p |
96.3p |
7.2% |
Share price per ordinary share |
101.0p |
99.3p |
1.7% |
Share price (discount)/premium to NAV |
(2.1)% |
3.1% |
|
|
Period to |
Period from IPO on |
|
30 September |
1 May 2018 |
|
2019 |
to 31 March 2019 |
|
|
|
Revenue return per ordinary share* |
0.7p |
(0.6)p |
Capital return per ordinary share* |
6.2p |
(1.4)p |
Total return per ordinary share* |
6.9p |
(2.0)p |
* Based on the weighted average number of shares in issue during the period.
|
Period to |
Period from IPO on |
|
30 September |
1 May 2018 |
Performance |
2019 |
to 30 September 2019 |
|
|
|
NAV total return per ordinary share |
7.2% |
4.9% |
NSCI ex IT plus AIM Index Total Return* |
1.4% |
(7.7)% |
* Source: Bloomberg
|
Period to |
Period from IPO on |
|
30 September |
1 May 2018 |
Cost of running the Company |
2019 |
to 31 March 2019 |
|
|
|
Annualised ongoing charges* |
1.5% |
1.6% |
* See glossary below.
Past performance is not a guide to future performance.
CHAIRMAN'S STATEMENT
I am pleased to present the Interim Report and Financial Statements for Odyssean Investment Trust PLC ("OIT" or the "Company") covering the period from 1 April 2019 to 30 September 2019.
Performance
Over the period, the net assets of the Company increased by £6.1m to £91.1m and represented a growth in net asset value per share ("NAV") of 7.2%. This is a pleasing outcome in a volatile market, where the comparator NSCI ex IT plus AIM Index (the "Comparator Index") increased marginally by 1.4%.
The Portfolio Manager has built its initial portfolio matching the Company's investment strategy and objectives. The team continues to identify potential new investment opportunities as well as engaging with the ongoing due diligence and monitoring of existing holdings.
At the end of the period, the Company was 90% invested in 17 quoted smaller companies, one of which is quoted outside the UK. At the IPO we indicated to shareholders that we would like to travel with some cash in order to allow us to act opportunistically, hence our current position is close to full investment.
Since IPO, OIT's NAV has increased by 4.9%. This is a pleasing result given the challenging period for UK smaller companies. The Comparator Index declined by 7.7% over the same period. These initial results are encouraging and supportive of the Portfolio Manager's differentiated investment approach.
Discount and premium management
The share price has remained resilient since IPO and at the period end was trading at a 2% discount to NAV, compared to a sector discount of c.13%. The rating is a testament to the efforts undertaken at the Company's launch to build the right shareholder base who share the Company's view that patient investors will be rewarded in the longer term.
Dividend
The Directors expect that returns for shareholders will be primarily driven by capital growth of the shares rather than dividend income. The Board is not proposing paying an interim dividend.
Portfolio Manager update
We announced on 26 March 2019 that Stuart Widdowson would be taking three months' compassionate leave from Odyssean Capital LLP. This leave was extended on 27 June 2019 for a further six months. Stuart started a progressive return to work during the fourth quarter of 2019 and the Portfolio Manager has confirmed that he will be returning to work at the beginning of January 2020 as planned. Both the Board and the Portfolio Manager wish to thank shareholders for their support during this time.
Outlook
Geopolitical and domestic political uncertainties continue to dominate the headlines. Overall, the cloud over the UK stock market has led to UK stocks trading at meaningful discounts to international markets. In addition, UK smaller companies are trading at discounted ratings to overall UK markets, and thus have the potential to offer a double discount. In the event that earnings estimates are broadly achievable, the current depressed market ratings augur well for investors.
The concentrated nature of the portfolio compared with broader markets means that the NAV growth dynamics are more likely to be driven by what has been happening on a company-specific basis rather than overall market movements. A good example of this is where a portfolio company may be going through some positive management and efficiency change, but where these changes are neither understood nor anticipated by the broader investment community. These are some of the situations that the Portfolio Manager actively seeks out. A positive change in sentiment combined with growing profits can lead to the portfolio company becoming either more highly rated by the market, or failing that, more attractive to potential corporate acquirers, catalysing a takeover.
The imperfect nature of the quoted smaller company investment market lends itself well to this approach and the investment trust structure is the ideal vehicle for this kind of concentrated, engaged investment approach, giving the Portfolio Manager time to take a long-term view and engage with companies as and when appropriate.
No investment approach can outperform at all stages of the market. However, the encouraging progress made since launch is supportive of the Portfolio Manager's differentiated investment approach.
Jane Tufnell
Chairman
29 November 2019
PORTFOLIO MANAGER'S REPORT
Details of the Portfolio Manager
The Company's Portfolio Manager is Odyssean Capital LLP.
The Portfolio Manager was founded in 2017 by Stuart Widdowson and Harwood Capital Management Limited, an independently owned investment group, and is jointly owned by both parties. The Chairman of the Portfolio Manager is Ian Armitage, former CEO and Chairman of HgCapital.
The Portfolio Manager's investment team, Stuart Widdowson and Ed Wielechowski, identify and undertake research on potential investee companies as well as managing the portfolio. They draw on the experience of a three-strong Panel of Advisors, who have run and invested in multiple quoted and unquoted smaller companies. In addition, the investment team draws on the expertise and experience of Mr Armitage and Mr Christopher Mills, who sits on Odyssean's Board as a Non-Executive Director. Mr Armitage and Mr Mills have more than 85 years' combined investment experience in quoted and unquoted smaller companies.
Stuart Widdowson
Stuart has spent the last 18 years investing in public and private UK small and mid-size corporates and a further two years providing investment advisory services in the same field.
Prior to founding the Portfolio Manager, Stuart was at GVQ Investment Management ("GVQ"), where he held the position of fund manager and head of strategic investments for more than seven years. During his time at GVQ, Stuart led the transformation of the performance of Strategic Equity Capital plc ("SEC") and significantly improved shareholder value. Stuart led SEC to win several industry awards and was recognised as Fund Manager of the Year at both the PLC and QCA awards in 2015.
Stuart began his career as a strategy consultant undertaking commercial due diligence and strategy projects for private equity and corporate clients. In 2001, he joined HgCapital and spent five years working on small and mid-cap leveraged buyouts in the UK and Germany. During this time, he worked on a number of public to private transactions of UK quoted companies.
Ed Wielechowski
Ed joined the Portfolio Manager in December 2017 as a Fund Manager.
Prior to joining Odyssean, Ed was a Principal in the technology team at HgCapital. He joined HgCapital in 2006 and worked on numerous completed deals, including multiple bolt-on transactions made by portfolio companies. He has additional quoted market experience, having led the successful IPO of Manx Telecom plc in 2014, as well as having evaluated and executed public to private transactions. Ed started his career as an analyst in the UK mergers and acquisitions department of JPMorgan in 2004.
The investment approach
Our investment approach applies the core elements of the private equity investment philosophy - highly focused, long-term, engaged 'ownership' style investment - to public markets. We believe that this approach creates a portfolio unlike that of many typical public equity funds and that, well executed, can offer attractive, differentiated, risk-adjusted returns.
- Highly concentrated portfolio: We look to build a highly concentrated portfolio of no more than 25 investee companies where we carry out intensive diligence, only investing behind our highest conviction ideas.
- Narrow focus: We are focused on smaller companies typically too small for inclusion in the FTSE 250 Index. We believe this market is less efficient, offering more opportunities to find mis-pricings. Further, we believe the best investment decisions are made from a base of knowledge and experience, and we will make the majority of investments in industry sectors that we and our advisors, know well (TMT, Services, Industrials and Healthcare).
- Targeting long-term holding periods: We will evaluate each investment opportunity over a three to five year investment horizon. We have structured our business to reflect this belief and do not intend to run any capital which is redeemable over short time periods. To think like an 'owner' of a business we believe your capital should behave like one too.
- Engaged investment style: We are engaged investors. We like investing in companies which, whilst good, are underperforming their potential and where we see the opportunity for constructive corporate engagement to unlock improved returns for all stakeholders.
The Company's investment objective is to deliver long-term capital growth rather than outperform a specific index. Our differentiated investment approach is likely to lead to periods of NAV per share performance materially different to those of the broader market. We fully anticipate this potential short-term performance variance and will focus on comparative investment performance on a rolling three-year basis.
The absolute return mentality of the strategy, allied with the desire to avoid being a forced seller, may lead to net cash balances being held over the long term. We anticipate a core range of 5-15% over the long term. Net cash balances will not be used as an attempt to market time, but to enable us to invest where blocks of stock are available rather than being required to sell a less liquid holding on short notice.
Implementing the investment strategy
There are three key factors we look for when we analyse a potential investment:
1) a valuation opportunity;
2) in a high-quality company; and
3) with improvement potential.
Our view is that buying at a fair price and supporting improved performance generates capital growth, while our quality filters mitigate losses in the event of unexpected headwinds.
Valuation
We look for two valuation factors in every investment. Firstly, what we refer to as "static value" - does the company trade at a discount to its current value? This is not only judged by traditional public market ratios. We also seek to model every company through the lens of a private equity buyer (of which we have considerable experience) as well as evaluating its attractiveness to strategic trade buyers.
Secondly, we are looking for companies which can grow their value over time - "dynamic value". We particularly look for situations where there are multiple, independent drivers of value creation present, and where management actions can unlock these. We believe seeking multiple value drivers makes an investment case more secure and less exposed to single areas of uncertainty or misjudgement.
Quality
We assess every potential investment against qualitative and quantitative quality criteria. The quality assessment is important to mitigate the risk of permanent capital destruction from investments which fail to achieve their value potential. In our experience, high quality companies are more likely to maintain a minimum value through difficult times and are more able to attract high-calibre management teams to rectify underperformance.
Improvement potential and engagement
We particularly like companies that are in some way underperforming relative to their potential, and where the current valuation does not price in improvement. Once invested, constructive corporate engagement can help to unlock value. Our mantra is to buy good businesses and sell excellent businesses. The spectrum of areas which can be improved is broad and includes operating performance, asset utilisation, overly complex business structures/organisation, strategic direction, poor M&A, investor relations and finally, governance and pay.
Progress and performance in the past six months
The past six months have seen UK markets broadly flat as continuing global and domestic political uncertainty, alongside softening economic data, has left investors cautious. Against this backdrop we have deployed capital selectively, focusing on rigorously applying our investment process.
At the end of the period the Company was 90% invested into a portfolio of 17 companies, with three new positions in the period. We are pleased that we have now effectively 'built' our initial portfolio and our focus increasingly shifts to managing and driving value across our positions alongside a more 'normal' level of portfolio turnover which we would expect to be four to six new investments per year.
Over the six months to September 2019 the NAV of the Company increased 7.2%, with the NSCI ex IT plus AIM Index (which we use as a comparator but not a benchmark) up 1.4% across the period. The portfolio was on average 85% invested across the period.
Portfolio development
The portfolio was largely stable through the period with few major changes. £14m was invested into stock purchases. Three new small positions were started for a total investment of £6m, we see scope to grow these over time as we continue our diligence. The remaining £8m was invested into existing positions, both growing weightings in those names where diligence supported an increased position, and actively topping up names on share price weakness where the investment thesis remained robust.
We continue to see good prospects for engagement to add value across the portfolio. This can be a time-consuming process, and we have been through an exercise to identify the opportunities most likely to create value and focus our attention in these areas. We look forward to seeing the fruits of these efforts in future periods.
Portfolio detail
At the end of the period under review, the portfolio comprised of 17 companies, the largest positions being SDL, NCC, Equiniti and Chemring. Backgrounds to our investment thesis for each company have been detailed in our prior reports and key updates through the period are detailed below:
SDL
% NAV: 13.3%
Sector: TMT
SDL continued to perform in line with our investment thesis through the period. A strong set of interim results showed organic growth of 6% with continued improvement in the volume of work handled through their internally developed Helix workflow platform. This supported utilisation and gross margin improvements in the key language services division. Delivery of synergies from the recent acquisition of US-based Donnelly Language Services, combined with delivery of management identified opex savings, helped drive group margins up c.100bps on prior year. We see further scope for all these trends to continue and drive future value growth.
NCC
% NAV: 11.7%
Sector: TMT
NCC's full year results showed broad delivery of the key points of our investment thesis. The Assurance division continued to deliver strong organic growth supported by growing numbers of consultants and reduced consultant attrition. This growth and progress on management's refreshment of central support infrastructure saw assurance division margins increase by 200bps. Performance of the escrow business was more disappointing with revenues showing a small decline. We believe management actions taken to refresh the sales function of this division will bear fruit and help the division return to growth.
Equiniti
% NAV: 10.3%
Sector: TMT
Equiniti's 2019 interim results continued the solid performance seen recently. The business delivered continued organic growth with headwinds in the pension division being more than offset by strong growth elsewhere. Margin progression was muted while investments to drive future growth were made. Critically the integration of the Wells Fargo business progressed well with the division showing strong growth and synergy delivery on target, further evidencing the strong mid-term opportunity the business now has in the US.
We are cognisant that the outlook for capital market activity levels and interest rates is volatile but, looking through these uncertainties, see the attractive business model, mid-term growth opportunities and margin upside as undervalued at current prices.
Chemring
% NAV: 10.2%
Sector: Industrials
Chemring showed good progress across the period. The business completed the disposal of its non-core, commoditised energetics businesses leaving a continuing business focused on higher value add products. The phased re-start of the Salisbury facility following the incident in 2018 continued as planned and investment in countermeasure facilities to support growing demand for flares for the F-35 platform progressed. Interim results were in-line with expectations and demonstrated that end market demand remains robust. We see a material step up in performance in 2020 as the various recent actions begin to bear fruit, key large US Department of Defense programmes come through and the new shape of the group is better appreciated by investors.
We have six mid-sized investments in Volution, Flowtech Fluidpower, Benchmark, Wilmington, Devro and Huntsworth. Huntsworth is a new position built during the period and our investment thesis is detailed below. The investment cases for the other names have been described in prior reports.
Volution
% NAV: 5.8%
Sector: Industrials
A solid trading update showed improving organic growth through the year, and importantly a return to growth in the UK public sector RMI division, which has been a drag on performance. The company also completed the rationalisation of two manufacturing sites into a new facility in Reading. We see this update as supportive of our thesis that the business is well positioned to continue to deliver organic growth and improve margins from its now modernised operational footprint.
Flowtech Fluidpower
% NAV: 5.4%
Sector: Services
Flowtech released a disappointing HY 2019 interim trading update. Although H1 performance was in line with our expectations, guidance for the rest of the year and 2020 was weak citing end market, Brexit-driven softness. As disappointing as these short-term issues are, we remain positive on the longer-term investment thesis. Management are actively focusing on extracting synergies from unintegrated legacy M&A. If effectively executed, we see significant opportunity to create material value from these actions regardless of the end market dynamics, and ultimately this will better position the business as a platform to further roll up its fragmented market.
Benchmark Holdings plc
% NAV: 5.0%
Sector: Healthcare
The period saw significant developments for Benchmark. A disappointing Q3 trading update flagged that ongoing challenges in end markets required a reduction in full year expectations. The group also announced significant management change with the CFO replaced in the period and the CEO stepping down with the Chairman taking a more executive role while a replacement is sought. We have been disappointed by the trading updates from Benchmark but believe that change in management is largely positive for our investment thesis, which is based on streamlining the business and building an increased focus on return on capital. We believe Benchmark retains an attractive and highly valuable market position with segment leading products and technology. With the right leadership we continue to see significant value above the current share price.
Wilmington plc
% NAV: 4.9%
Sector: TMT
Wilmington delivered a set of full year results in line with expectations, which pleasingly showed a stabilisation of performance after declines in recent periods. The key development in the business has been the appointment of a new CEO in July 2019. We continue to see significant potential to unlock value from Wilmington's disparate collection of high-quality businesses, through refocusing and rationalising what has become a complex group. We see the appointment of a new, credible team with a clear strategy as key to starting this journey.
Devro
% NAV: 4.4%
Sector: Consumer
Devro posted an in-line HY 2019 interim update, showing profit progression driven by management cost-saving actions on a small decline in revenues. Our investment case is supported by the cost actions delivered to date and the further potential we still see from centralising functions, improving asset utilisation and sharing best practice across the group. We believe the group is also well placed to start to deliver organic volume and revenue growth driven by recent new product launches.
New Position
Huntsworth
% NAV: 3.8%
Sector: Healthcare
Huntsworth is a leading player in the large and growing healthcare communications market. The business supports healthcare firms to communicate effectively to a full range of stakeholders. Services range from digestion and dissemination of the results of clinical trials, through regulatory submissions and education of healthcare professionals, to marketing to consumers and driving commercial acceptance of treatments from healthcare payors.
The market for healthcare communication is highly attractive, driven by secular tailwinds from the growing numbers of new drugs in development, increasing complexity through the rise of personalised medicine and a trend for increased outsourcing of communication functions. Compared to broader communications/marketing markets, healthcare is more stable with longer, multi-year engagements and higher barriers to entry, given regulatory requirements and often highly technical subject matter. We see the scale and breadth of Huntsworth's offer as positioning it to gain share through a unique ability to be a 'one stop shop' to support communication needs across the full drug lifecycle.
Our investment thesis sees the market as undervaluing the potential in the platform built by Huntsworth. We believe the group is well positioned to continue to deliver above market organic growth as the value of the breadth of offer it now has is better appreciated by clients. Further, we see scope for additional accretive bolt-on M&A in what remains a fragmented market, and finally the de-emphasis of the legacy, non-healthcare focused marketing division in the group will allow the business to more clearly tell its story as a pure play healthcare business and benefit from the superior ratings this attractive end market typically commands.
The remaining seven investments each represent between c.2% and 3% of the Company's NAV. These are spread across our core focus sectors and all offer scope to scale, subject to further due diligence and pricing remaining attractive.
Outlook
At the time of preparation, markets appeared highly volatile. Continuing mixed economic news across all regions, combined with the political uncertainty, is driving significant wariness amongst investors.
Brexit uncertainty has left UK equities particularly unloved and relatively cheap in absolute terms, as well as compared with other international markets. This de-rating of the UK is particularly marked in our focus area of small-cap stocks. We believe this rotation of capital away from the UK, driven by 'top down' concerns, presents pockets of opportunity.
In our view, the portfolio is well positioned regardless of broader market conditions. Average earnings growth for the portfolio is forecast to be 13%¹ over the next 12 months and the current rating of c.13x¹ earnings is attractive for this growth profile in high quality businesses. Further self-help opportunity and relatively secure balance sheets give us comfort that even in tougher markets the portfolio can protect and grow value.
We continue to drive value from the portfolio and actively look to discover new and exciting ideas which will deliver strong value growth over the long term.
1Average excludes Benchmark Holdings PLC as currently loss making on a reported basis.
Stuart Widdowson | Ed Wielechowski
Odyssean Capital LLP
29 November 2019
PORTFOLIO OF INVESTMENTS
as at 30 September 2019
Company |
Sector |
Country |
Valuation £'000 |
% of Net Assets |
Top 10 Investments |
|
|
|
|
SDL |
TMT |
United Kingdom |
12,164 |
13.3 |
NCC Group |
TMT |
United Kingdom |
10,684 |
11.7 |
Equiniti Group |
Business Services |
United Kingdom |
9,465 |
10.3 |
Chemring Group |
Industrials |
United Kingdom |
9,368 |
10.2 |
Volution Group |
Industrials |
United Kingdom |
5,342 |
5.8 |
Flowtech Fluidpower |
Business Services |
United Kingdom |
4,945 |
5.4 |
Benchmark Holdings |
Healthcare |
United Kingdom |
4,425 |
5.0 |
Wilmington |
TMT |
United Kingdom |
4,500 |
4.9 |
Devro |
Consumer |
United Kingdom |
4,005 |
4.4 |
Huntsworth |
TMT |
United Kingdom |
3,487 |
3.8 |
|
|
|
|
|
|
|
|
68,385 |
74.8 |
|
|
|
|
|
DISTRIBUTION OF INVESTMENTS
as at 30 September 2019
Portfolio holdings (% of net assets) |
% |
SDL |
13.3 |
NCC |
11.7 |
Equiniti |
10.3 |
Chemring |
10.2 |
Volution |
5.8 |
Flowtech |
5.4 |
Benchmark Holdings |
5.0 |
Wilmington |
4.9 |
Devro |
4.4 |
Huntsworth |
3.8 |
Other |
15.0 |
Cash |
10.2 |
|
100.0 |
Sector exposure (% of net assets) |
% |
TMT |
36.0 |
Business Services |
22.5 |
Industrials |
18.1 |
Healthcare |
9.0 |
Consumer |
4.4 |
Cash |
10.0 |
|
100.0 |
Geographical revenue exposure (% of invested capital) |
% |
UK |
42.0 |
US |
22.7 |
Europe Other |
19.5 |
Rest of World |
15.8 |
|
100.0 |
Market capitalisation (% of invested capital) |
% |
Below £150m |
67.9 |
£150m-£750m |
14.5 |
Over £750m |
10.2 |
Cash |
7.4 |
|
100.0 |
As at 30 September 2019, the net assets of the Company were £91.1m.
INTERIM MANAGEMENT REPORT AND STATEMENT OF DIRECTORS' RESPONSIBILITIES
Interim management report
The important events that have occurred during the period under review, the key factors influencing the financial statements and the principal factors that could impact the remaining six months of the financial year are set out in the Chairman's statement and the Portfolio Manager's report above.
The Directors consider that the principal risks facing the Company are substantially unchanged since the date of the Annual Report for the period ended 31 March 2019 and continue to be as set out in that report.
Risks faced by the Company include, but are not limited to, investment performance not being comparable to the expectations of investors, share price performance, loss of personnel or reputation of the Portfolio Manager, material changes within the Portfolio Manager's organisation, valuation of unquoted investments, reliance on the performance of third-party service providers, market risks (including market price risk, currency risk and interest rate risk), liquidity risk and credit risk. Details of the Company's management of these risks are set out in the 2019 Annual Report.
Responsibility statement
The Directors confirm that to the best of their knowledge:
- the condensed set of financial statements has been prepared in accordance with International Accounting Standard ("IAS") 34, 'Interim Financial Reporting', as adopted by the European Union;
- the Interim Report and condensed financial statements give a true and fair view of the assets, liabilities, financial position and return of the Company; and
- the Interim Report and condensed financial statements include a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions that could do so.
This Interim Report was approved by the Board of Directors and the above responsibility statement was signed on its behalf by:
Jane Tufnell
Chairman
29 November 2019
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
for the period ended 30 September 2019 (unaudited)
|
Period ended 30 September 2019 |
Period ended 30 September 2018 |
Period ended 31 March 2019 |
|||||||
|
Notes |
Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
|
|
|
|
|
|
|
|
|
|
Income |
3 |
1,311 |
- |
1,311 |
107 |
- |
107 |
715 |
- |
715 |
Net gains on investments at fair value |
9 |
- |
5,939 |
5,939 |
- |
1,767 |
1.767 |
- |
(1,266) |
(1,266) |
Currency exchange losses |
|
- |
- |
- |
- |
(1) |
(1) |
- |
(5) |
(5) |
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
1,311 |
5,939 |
7,250 |
107 |
1,766 |
1,873 |
715 |
(1,271) |
(556) |
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
Portfolio management fee |
4 |
(442) |
(477) |
(919) |
(363) |
(130) |
(493) |
(784) |
- |
(784) |
Other expenses |
5 |
(248) |
- |
(248) |
(212) |
- |
(212) |
(455) |
- |
(455) |
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
(690) |
(477) |
(1,167) |
(575) |
(130) |
(705) |
(1,239) |
- |
(1,239) |
|
|
|
|
|
|
|
|
|
|
|
Return before taxation |
|
621 |
5,462 |
6,083 |
(468) |
1,636 |
1,168 |
(524) |
(1,271) |
(1,795) |
Taxation |
6 |
(4) |
- |
(4) |
- |
- |
- |
(5) |
- |
(5) |
|
|
|
|
|
|
|
|
|
|
|
Return for the period |
|
617 |
5,462 |
6,079 |
(468) |
1,636 |
1,168 |
(529) |
(1,271) |
(1,800) |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per ordinary share (pence) |
7 |
0.7 |
6.2 |
6.9 |
(0.5) |
1.8 |
1.3 |
(0.6) |
(1.4) |
(2.0) |
The total column of the statement is the Statement of Comprehensive Income of the Company prepared in accordance with International Financial Reporting Standards ("IFRS") as endorsed by the European Union ("EU"). The supplementary revenue and capital columns are presented for information purposes as recommended by the Statement of Recommended Practice ("SORP") issued by the AIC.
All items in the above Statement derive from continuing operations. No operations were acquired or discontinued during the period.
The notes below form part of these financial statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY
for the period ended 30 September 2019 (unaudited)
|
Notes |
Share capital £'000 |
Share premium account £'000 |
Special distributable reserve* £'000 |
Capital reserve £'000 |
Revenue reserve* £'000 |
Total £'000 |
Period ended 30 September 2019 |
|
|
|
|
|
|
|
Opening balance |
|
883 |
449 |
85,475 |
(1,271) |
(529) |
85,007 |
Gross proceeds of share issue |
10 |
- |
- |
- |
- |
- |
- |
Share issue costs |
10 |
- |
- |
- |
- |
- |
- |
Transfer to special distributable reserve |
10 |
- |
- |
- |
- |
- |
- |
Share premium cancellation costs |
10 |
- |
- |
- |
- |
- |
- |
Total comprehensive income for the period |
|
- |
- |
- |
5,462 |
617 |
6,079 |
As at 30 September 2019 |
|
883 |
449 |
85,475 |
4,191 |
88 |
91,086 |
|
Notes |
Share capital £'000 |
Share premium account £'000 |
Special distributable reserve* £'000 |
Capital reserve £'000 |
Revenue reserve* £'000 |
Total £'000 |
Period ended 30 September 2018 |
|
|
|
|
|
|
|
Opening balance |
|
- |
- |
- |
- |
- |
- |
Gross proceeds of share issue |
10 |
883 |
87,403 |
- |
- |
- |
88,286 |
Share issue costs |
10 |
- |
(1,459) |
- |
- |
- |
(1,459) |
Transfer to special distributable reserve |
10 |
- |
(85,495) |
85,495 |
- |
- |
- |
Share premium cancellation costs |
10 |
- |
- |
(20) |
- |
- |
(20) |
Total comprehensive income for the period |
|
- |
- |
- |
1,636 |
(468) |
1,168 |
As at 30 September 2018 |
|
883 |
449 |
85,475 |
1,636 |
(468) |
87,975 |
|
|
|
|
|
|
|
|
|
Notes |
Share capital £'000 |
Share premium account £'000 |
Special distributable reserve* £'000 |
Capital reserve £'000 |
Revenue reserve* £'000 |
Total £'000 |
Period ended 31 March 2019 |
|
|
|
|
|
|
|
Opening balance |
|
- |
- |
- |
- |
- |
- |
Gross proceeds of share issue |
10 |
883 |
87,403 |
- |
- |
- |
88,286 |
Share issue costs |
10 |
- |
(1,459) |
- |
- |
- |
(1,459) |
Transfer to special distributable reserve |
10 |
- |
(85,495) |
85,495 |
- |
- |
- |
Share premium cancellation costs |
10 |
- |
- |
(20) |
- |
- |
(20) |
Total comprehensive income for the period |
|
- |
- |
- |
(1,271) |
(529) |
(1,800) |
As at 31 March 2019 |
|
883 |
449 |
85,475 |
(1,271) |
(529) |
85,007 |
* The special distributable and revenue reserves can be distributed in the form of dividends.
The notes below form part of these financial statements.
CONDENSED BALANCE SHEET
as at 30 September 2019 (unaudited)
|
|
As at |
As at |
As at |
|
|
30 September |
30 September |
31 March |
|
|
2019 |
2018 |
2019 |
|
Notes |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
Non-current assets |
|
|
|
|
Investments at fair value through profit or loss |
9 |
82,012 |
39,843 |
66,807 |
|
|
|
|
|
Current assets |
|
|
|
|
Trade and other receivables |
|
469 |
104 |
298 |
Cash and cash equivalents |
|
9,413 |
48,472 |
18,219 |
|
|
|
|
|
|
|
9,882 |
48,576 |
18,517 |
|
|
|
|
|
Total assets |
|
91,894 |
88,419 |
85,324 |
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
|
(331) |
(314) |
(317) |
|
|
|
|
|
|
|
(331) |
(314) |
(317) |
|
|
|
|
|
Total assets less current liabilities |
|
91,563 |
88,105 |
85,007 |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Performance fee provision |
|
(477) |
(130) |
- |
|
|
|
|
|
Net assets |
|
91,086 |
87,975 |
85,007 |
|
|
|
|
|
Represented by: |
|
|
|
|
Share capital |
10 |
883 |
883 |
883 |
Share premium account |
|
449 |
449 |
449 |
Special distributable reserve |
|
85,475 |
85,475 |
85,475 |
Capital reserve |
|
4,191 |
1,636 |
(1,271) |
Revenue reserve |
|
88 |
(468) |
(529) |
|
|
|
|
|
Total equity attributable to equity holders of the Company |
|
91,086 |
87,975 |
85,007 |
|
|
|
|
|
Basic and diluted net asset value per ordinary share (pence) |
8 |
103.2 |
99.7 |
96.3 |
The notes below form part of these financial statements.
CONDENSED CASH FLOW STATEMENT
for the period ended 30 September 2019 (unaudited)
|
|
Period ended |
Period ended |
Period ended |
|
|
30 September |
30 September |
31 March |
|
|
2019 |
2018 |
2019 |
|
Notes |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
Investment income received |
|
1,144 |
36 |
400 |
Bank interest received |
|
15 |
18 |
49 |
Portfolio management fee paid |
|
(427) |
(144) |
(576) |
Other cash payments |
|
(282) |
(176) |
(369) |
|
|
|
|
|
Cash expended from operations |
11 |
450 |
(266) |
(496) |
Taxation paid |
|
(4) |
- |
(5) |
|
|
|
|
|
Net cash outflow from operating activities |
|
446 |
(266) |
(501) |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Purchases of investments |
|
(13,937) |
(38,058) |
(69,211) |
Sale of investments |
|
4,686 |
- |
1,138 |
Currency losses on settlement |
|
- |
- |
(5) |
|
|
|
|
|
Net cash outflow from investing activities |
|
(9,251) |
(38,058) |
(68,078) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Gross proceeds of share issue |
|
- |
88,286 |
88,286 |
Share issue costs |
|
- |
(1,469) |
(1,469) |
Share premium cancellation costs |
|
- |
(20) |
(20) |
|
|
|
|
|
Net cash inflow from financing activities |
|
- |
86,797 |
86,797 |
|
|
|
|
|
Increase in cash and cash equivalents for the period |
|
(8,805) |
48,473 |
(18,218) |
|
|
|
|
|
Cash and cash equivalents at the start of the period |
|
18,219 |
- |
- |
Revaluation of foreign currency balances |
|
(1) |
(1) |
1 |
|
|
|
|
|
Cash and cash equivalents at the end of the period |
|
9,413 |
48,472 |
18,219 |
The notes below form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
for the period ended 30 September 2019 (unaudited)
1. General information
Odyssean Investment Trust PLC is a listed public limited company incorporated in England and Wales. The registered office of the Company is Beaufort House, 51 New North Road, Exeter EX4 4EP.
2. Accounting policies
a) Basis of preparation/statement of compliance
The interim financial information covers the period 1 April 2019 to 30 September 2019 and has been prepared in accordance with IAS 34, 'Interim Financial Reporting'.
The Company's annual financial statements for the period to 31 March 2019 were prepared in conformity with IFRS as adopted by the EU, which comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), and as applied in accordance with the SORP for the financial statements of investment trust companies and venture capital trusts, except to any extent where it is not consistent with the requirements of IFRS.
The accounting policies used by the Company followed in these half-year financial statements are consistent with the Annual Report for the period ended 31 March 2019.
The interim financial information is being sent to shareholders and copies will be made available to the public at the registered office of the Company and on the Company's website: www.oitplc.com.
b) Functional and presentation currency
The condensed financial statements are presented in GBP Sterling, which is the Company's functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated.
c) Comparative information
The financial information contained in this Interim Report does not constitute statutory accounts as defined in the Companies Act 2006. The financial information contained within this report relates to the following periods: 1 April 2019 to 30 September 2019 (unaudited and unreviewed by the Company's Auditor); 1 April 2018 to 30 September 2018 (reviewed by the Company's Auditor); and 21 December 2017 to 31 March 2019 (audited). The comparative figures for the period 30 September 2018 are not the Company's statutory accounts for that financial year. The Company's statutory accounts are for the period ended 31 March 2019 and were reported on by the Company's Auditor and delivered to the Registrar of Companies. The report of the Auditor was (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
d) Going concern
The financial statements have been prepared on a going concern basis and on the basis that approval as an investment trust company will continue to be met.
The Directors have made an assessment of the Company's ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future (being a period of at least 12 months from the date on which these financial statements were approved). Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern, having taken into account the liquidity of the Company's investment portfolio and the Company's financial position in respect of its cash flows, debt and investment commitments.
3. Income
|
Period ended |
Period ended |
Period ended |
30 September |
30 September |
31 March |
|
2019 |
2018 |
2019 |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
Income from investments |
|
|
|
Dividend income |
1,294 |
89 |
666 |
|
|
|
|
Other income |
|
|
|
Bank interest |
17 |
18 |
49 |
|
|
|
|
Total income |
1,311 |
107 |
71 |
4. Portfolio management fee
|
Period ended 30 September 2019 |
Period ended 30 September 2018 |
Period ended 31 March 2019 |
||||||
|
Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
|
|
|
|
|
|
|
|
|
Management fee |
442 |
- |
442 |
363 |
- |
363 |
784 |
- |
784 |
Performance fee provision |
- |
477 |
477 |
- |
130 |
130 |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
442 |
477 |
919 |
363 |
130 |
493 |
784 |
- |
784 |
The Company is liable to pay a performance fee depending on the performance of the Company over a three-year period and thereafter a rolling three-year period as set out in the Company's prospectus dated 26 March 2018. Based on the performance of the Company to 30 September 2019, £477,000 has been accrued in the NAV.
Pursuant to the terms of the Portfolio Management Agreement, the Portfolio Manager is entitled, with effect from Initial Admission, to receive an annual management fee equal to the lower of: (i) 1.0% of the net asset value (calculated before deduction of any accrued but unpaid management fee and any performance fee) per annum; or (ii) 1.0% per annum of the Company's market capitalisation. The annual management fee is calculated and accrues daily and is payable quarterly in arrears.
In addition, the Portfolio Manager will be entitled to a performance fee (the "Performance Fee") in certain circumstances.
The Company's performance is measured over rolling three-year periods ending on 31 March each year (each a "Performance Period"), by comparing the net asset value total return per ordinary share over a Performance Period against the total return performance of the NSCI ex IT plus AIM Index (the "Comparator Index"). The first Performance Period will run from Initial Admission to 31 March 2021.
A Performance Fee is payable if the net asset value per ordinary share at the end of the relevant Performance Period (as adjusted to: (i) add back the aggregate value of any dividends per ordinary share paid (or accounted as paid for the purposes of calculating the net asset value) to shareholders during the relevant Performance Period; and (ii) exclude any accrual for unpaid Performance Fee accrued in relation to the relevant Performance Period) (the "Net Asset Value Total Return per Share") exceeds both:
(i) (a) the net asset value per ordinary share at Initial Admission, in relation to the first Performance Period; and (b) thereafter the net asset value per ordinary share on the first business day of a Performance Period; in each case as adjusted by the aggregate amount: of (i) the total return on the Comparator Index (expressed as a percentage); and (ii) 1.0% per annum over the relevant Performance Period (the "Target Net Asset Value per Share"); and
(ii) the highest previously recorded net asset value per ordinary share as at the end of the relevant Performance Period in respect of which a Performance Fee was last paid (or the net asset value per ordinary share as at Initial Admission, if no Performance Fee has been paid) (the "High Watermark"),
with any resulting excess amount being known as the "Excess Amount".
The Portfolio Manager will be entitled to 10% of the Excess Amount multiplied by the time weighted average number of ordinary shares in issue during the relevant Performance Period to which the calculation date relates. The Performance Fee will accrue daily.
Payment of a Performance Fee that has been earned will be deferred to the extent that the amount payable exceeds 1.75% per annum of the net asset value at the end of the relevant Performance Period (amounts deferred will be payable when, and to the extent that, following any later Performance Period(s) with respect to which a Performance Fee is payable, it is possible to pay the deferred amounts without causing that cap to be exceeded or the relevant net asset value total return per share to fall below both the relevant target net asset value per share and the relevant High Watermark for such Performance Period, with any amount not paid being retained and carried forward).
Subject at all times to compliance with relevant regulatory and tax requirements, any Performance Fee paid or payable shall:
- where as at the relevant calculation date, the ordinary shares are trading at, or at a premium to, the latest published net asset value per ordinary share; be satisfied as to 50% of its value by the issuance of new ordinary shares by the Company to the Portfolio Manager (rounded down to the nearest whole number of ordinary shares) (including the reissue of treasury shares) issued at the latest published net asset value per ordinary share applicable at the date of issuance;
- where as at the relevant calculation date, the ordinary shares are trading at a discount to the latest published net asset value per ordinary share; be satisfied as to 100% of its value in cash and the Portfolio Manager shall, as soon as reasonably practicable following receipt of such payment, use 50% of such Performance Fee payment to make market purchases of ordinary shares (rounded down to the nearest whole number of ordinary shares) within four months of the date of receipt of such Performance Fee payment,
(in each case "Restricted Shares").
Each such tranche of Restricted Shares issued to, or acquired by, the Portfolio Manager will be subject to a lock-up undertaking for a period of three years post issuance or acquisition (subject to customary exceptions).
At no time shall the Portfolio Manager (and/or any persons deemed to be acting in concert with it for the purposes of the Takeover Code) be obliged, in the absence of a relevant whitewash resolution having been passed in accordance with the Takeover Code, to receive, or acquire, further ordinary shares where to do so would trigger a requirement to make a mandatory offer pursuant to Rule 9 of the Takeover Code. Where any restriction exists on the issuance of further ordinary shares to the Portfolio Manager, the relevant amount of the Performance Fee may be paid in cash.
In addition, the Portfolio Manager is entitled to reimbursement for all costs and expenses properly incurred by it in the performance of its duties under the Portfolio Management Agreement.
The initial term of the Portfolio Management Agreement is three years commencing on the date of Initial Admission (the "Initial Term"). The Company may terminate the Portfolio Management Agreement by giving the Portfolio Manager not less than six months' prior written notice, such notice not to be served prior to the end of the Initial Term. The Portfolio Manager may terminate the Portfolio Management Agreement by giving the Company not less than six months' prior written notice, such notice not to be served prior to the end of the Initial Term.
5. Other expenses
|
Period ended |
Period ended |
Period ended |
30 September |
30 September |
31 March |
|
2019 |
2018 |
2019 |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
Directors' fees* |
44 |
31 |
74 |
Company Secretarial fee |
32 |
26 |
57 |
Administration fee |
45 |
37 |
81 |
Fees paid to the Auditor with respect to:** |
|
|
|
- Audit fee |
28 |
12 |
29 |
- Non-audit services (interim financial statements review) |
- |
- |
9 |
Other expenses |
99 |
106 |
205 |
|
|
|
|
|
248 |
212 |
455 |
* Peter Hewitt is not receiving a Director fee in respect of his services to the Company. Each of the Directors has agreed to use their applicable Directors' fees (net of applicable taxes) to acquire ordinary shares in the secondary market, subject to regulatory requirements. In relation to any dealings, the Directors will comply with the share dealing code adopted by the Company in accordance with the Market Abuse Regulation. The Board will be responsible for taking all proper and reasonable steps to ensure compliance with the share dealing code by the Directors.
** A further £30,000 was paid to the Auditor relating to accounting services for the prospectus at launch, recognised in the share premium account during the period 21 December 2017 to 31 March 2019.
6. Taxation
The Company has an effective tax rate of 0%. The estimated effective tax rate is 0% as investment gains are exempt from tax owing to the Company's status as an investment trust and there is expected to be an excess of management expenses over taxable income and thus there is no charge for corporation tax.
7. Earnings per ordinary share
|
Period ended 30 September 2019 |
Period ended 30 September 2018 |
Period ended 31 March 2018 |
||||||
|
|
|
Basic and |
|
|
Basic and |
|
|
Basic and |
|
|
Weighted |
diluted |
|
Weighted |
diluted |
|
Weighted |
diluted |
|
|
average |
earnings |
|
average |
earnings |
|
average |
earnings |
|
Net return |
ordinary |
per share |
Net return |
ordinary |
per share |
Net return |
ordinary |
per share |
|
£'000 |
shares |
pence |
£'000 |
shares* |
pence |
£'000 |
shares* |
pence |
|
|
|
|
|
|
|
|
|
|
Revenue |
617 |
88,257,211 |
0.7 |
(468) |
87,782,374 |
(0.5) |
(529) |
88,040,346 |
(0.6) |
Capital |
5,462 |
88,257,211 |
6.2 |
1,636 |
87,782,374 |
1.8 |
(1,271) |
88,040,346 |
(1.4) |
|
|
|
|
|
|
|
|
|
|
Total |
6,079 |
|
6.9 |
1,168 |
|
1.3 |
(1,800) |
88,040,346 |
(2.0) |
|
|
|
|
|
|
|
|
|
|
* The Company's weighted average number of ordinary shares for the period has been calculated from 1 May 2018, being the date the initial shares were listed for trading.
8. Net asset value per ordinary share
The basic net asset value per ordinary share is based on net assets of £91,086,000 and on 88,257,211 ordinary shares, being the number of ordinary shares in issue at the period end.
There is no dilution effect and therefore no difference between the diluted total net assets per ordinary share and the basic total net assets per ordinary share.
9. Investment at fair value through profit or loss
|
As at 30 September 2019 £'000 |
As at 30 September 2018 £'000 |
As at 31 March 2019* £'000 |
|
|
|
|
Quoted at fair value |
82,102 |
39,843 |
66,807 |
|
|
|
|
Investments at fair value profit or loss |
82,102 |
39,843 |
66,807 |
* For the period from 21 December 2017 (date of incorporation) to 31 March 2019.
The Company is required to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following three levels:
- Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
- Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.
The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data from investments actively traded in organised financial markets, fair value is generally determined by reference to Stock Exchange quoted market bid or closing prices at the close of business on the Condensed Balance Sheet date, without adjustment for transaction costs necessary to realise the asset.
|
As at 30 September 2019 |
As at 30 September 2018 |
As at 31 March 2019 |
|||||||||
|
Total £'000 |
Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted at fair value |
82,012 |
82,012 |
- |
- |
39,843 |
39,843 |
- |
- |
66,807 |
66,807 |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
82,012 |
82,012 |
- |
- |
39,843 |
39,843 |
- |
- |
66,807 |
66,807 |
- |
- |
There were no transfers between levels during the period.
Analysis of capital losses and gains |
Period ended 30 September 2019 £'000 |
Period ended 30 September 2018 £'000 |
Period ended 31 March 2019 £'000 |
|
|
|
|
Unrealised gains on investments at fair value |
4,681 |
1,767 |
(1,523) |
Realised gains on sale of investment |
1,258 |
- |
257 |
|
|
|
|
Net gains on investments at fair value |
5,939 |
1,767 |
(1,266) |
10. Share capital
|
Period ended 30 September 2019 |
Period ended 30 September 2018 |
Period ended 31 March 2019 |
|||
|
Number of Shares |
£'000 |
Number of Shares |
£'000 |
Number of Shares |
£'000 |
|
|
|
|
|
|
|
Issued and fully paid: |
|
|
|
|
|
|
Ordinary shares of 1p: |
|
|
|
|
|
|
Balance at beginning of the period |
88,257,211 |
883 |
1 |
- |
- |
- |
Initial share issue |
- |
- |
87,457,210 |
875 |
88,457,211 |
875 |
Subsequent share issues - block listing |
- |
- |
800,000 |
8 |
800,000 |
8 |
|
|
|
|
|
|
|
Balance at end of the period |
88,257,211 |
883 |
88,257,211 |
883 |
88,257,211 |
883 |
The Company was incorporated with 1 ordinary share and 50,000 management shares. The management shares were cancelled on 1 May 2018. As at 30 September 2019, the Company held no management shares.
The initial placing of 87,457,210 ordinary shares took place on 1 May 2018, raising gross proceeds of £87,457,210. The Company commenced business on 1 May 2018 when the initial ordinary shares were admitted to the premium listing segment of the Official List of the UK Listing Authority and to trading on the LSE's Main Market for listed securities.
Following approval of the Court on 8 August 2018, the share premium account cancellation was effective. The share premium account of £85,495,000 at 7 August 2018 was transferred to a special distributable reserve. The issue costs of £1,451,000 relating to the initial and subsequent listings were offset against the share premium account. At 30 September 2018, the special distributable reserve was £85,475,000 after costs of £20,000 relating to the cancellation. This has remained unchanged at 31 March 2019 and 30 September 2019.
11. Reconciliation of return before taxation to cash expended from operations
|
Period ended 30 September 2019 £'000 |
Period ended 30 September 2018 £'000 |
Period ended 31 March 2019 £'000 |
|
|
|
|
Return before taxation |
6,083 |
1,168 |
(1,795) |
Gains/(losses) on investments |
(5,939) |
(1,767) |
1,266 |
Currency exchange losses |
- |
1 |
4 |
Increase in trade and other receivables |
(171) |
(94) |
(288) |
Increase in trade and other payables |
477 |
426 |
317 |
|
|
|
|
Cash generated/(expended) from operations |
450 |
(266) |
(496) |
12. Financial instruments
The amounts incurred, in respect of management fees, during the period to 30 September 2019 was £442,000 (30 September 2018: £363,000; 31 March 2019: £784,000), of which £224,000 was outstanding at 30 September 2019 (30 September 2018: £219,000; 31 March 2019: £208,000). The amount due to the Portfolio Manager for performance fees at 30 September 2019 was £477,000, of which £477,000 was outstanding at the period end. The amount accrued in relation to the Performance Fee provision at 30 September 2018 was £130,000, all of which was outstanding. As at 31 March 2019, the amount accrued and outstanding was £nil.
The amount incurred in respect of Directors' fees during the period to 30 September 2019 was £44,000 (30 September 2018: £31,000; 31 March 2019: £74,000), of which £nil was outstanding at 30 September 2019 (30 September 2018: £5,000; 31 March 2019: £nil).
GLOSSARY
AIC
Association of Investment Companies.
CTA
Corporation Tax Act 2010.
Discount/premium
If the share price of an investment trust is lower than the NAV per share, the shares are said to be trading at a discount. If the share price is higher than the NAV per share, the shares are said to be trading at a premium. The size of the discount/premium is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share.
FCA
Financial Conduct Authority.
IPO
Initial public offering.
LSE
London Stock Exchange.
M&A
Mergers and acquisitions.
NAV
NAV stands for net asset value and represents shareholders' funds. Shareholders' funds are the total value of a company's assets at current market value less its liabilities.
NAV total return
NAV total return is the closing NAV per share including any cumulative dividends paid as a percentage over the opening NAV.
NSCI ex IT plus AIM Index
Numis Smaller Companies ex Investment Trusts plus AIM Index.
Ongoing charges
Based on total expenses, excluding finance costs and certain non-recurring items for the period or year, and average daily net asset value.
RMI
Repair, maintenance and improvement.
TMT
Technology, media and telecom.
Total assets
Total assets are the sum of both fixed and current assets with no deductions.
Total return per ordinary share
Total return per ordinary share is the total return for the period expressed as an amount per weighted average ordinary share.
SHAREHOLDER INFORMATION
Investing in the Company
The Company's shares are traded on the LSE and can be bought or sold through a stock broker or other financial intermediary.
Shares in the Company are available through savings plans, including Investment Dealing Accounts, ISAs, Junior ISAs and SIPPs, which facilitate both regular monthly investments and lump sum investments in the Company's shares. The Company's shares are also available on various investment platforms.
Share capital and NAV information
Ordinary 0.1p shares |
88,257,211 |
SEDOL number |
BFFK7H5 |
ISIN |
GB00BFFK7H57 |
Ticker |
OIT |
LEI |
213800RWVAQJKXYHSZ74 |
The Company's NAV is released daily to the LSE and published on the Company's website.
Sources of further information
Copies of the Company's Annual and Interim Reports, Stock Exchange announcements and further information on the Company can be obtained from its website: www.oitplc.com, or from the Company Secretary at 01392 477500.
Share register enquiries
The register for the ordinary shares is maintained by Equiniti Limited. In the event of queries regarding your holding, please contact the Registrar on 0371 384 2030. Changes of name and/or address must be notified in writing to the Registrar at the address shown below. You can check your shareholding and find practical help on transferring shares or updating your details at www.shareview.co.uk.
Key dates |
|
Company's half-year end |
30 September |
Interim results announced |
December |
Company's year end |
31 March |
Annual results announced |
June/July |
Annual General Meeting |
September |
Association of Investment Companies
The Company is a member of the AIC, which publishes monthly statistical information in respect of member companies. The AIC can be contacted on 020 7282 5555, enquiries@theaic.co.uk or visit the website: www.theaic.co.uk.
CORPORATE INFORMATION
Directors (all non-executive) |
Portfolio Manager |
Jane Tufnell (Chairman) Arabella Cecil Peter Hewitt Richard King
|
Odyssean Capital LLP 6 Stratton Street Mayfair London W1J 8LD Tel: 020 7640 3282 Email: info@odysseancapital.com
|
Company Secretary and Registered Office |
Broker |
Link Company Matters Limited Beaufort House 51 New North Road Exeter EX4 4EP Tel: 01392 477500 Email: odyssean_cosec@linkgroup.co.uk
|
Winterflood Securities Limited Cannon Bridge House 25 Dowgate Hill London EC4R 2GA |
Auditor |
Solicitor |
KPMG LLP 15 Canada Square Canary Wharf London E14 5GL
|
Gowling WLG (UK) LLP 4 More London Riverside London SE1 2AU
|
Registrar |
Custodian |
Equiniti Limited Aspect House Spencer Road Lancing BN99 6DA Tel: 0371 384 2030; +44 (0) 121 415 7047
|
RBC Investor Services Trust (UK Branch) Riverbank House 2 Swan House London EC4R 3AF
|
Corporate website |
|
|
|
National Storage Mechanism
A copy of the Interim Report will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: www.morningstar.co.uk/uk/nsm.
LEI: 213800RWVAQJKXYHSZ74
END
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) are incorporated into, or form part of this announcement.