TIDMOIG
RNS Number : 4200F
Oryx International Growth Fund Ld
15 June 2012
ORYX INTERNATIONAL GROWTH FUND LIMITED
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2012
Corporate summary
INVESTMENT OBJECTIVE
The investment objective of 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
year comprises the Company's Ordinary Shares.
INVESTMENT MANAGER & INVESTMENT ADVISER
The Investment manager and the Investment adviser during the
period was Harwood Capital LLP (formerly 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 Christopher Mills is Chief Executive
Asian Smaller Companies Investment Officer of Harwood Capital LLP.
Trust PLC. He is also a director He is also Chief Investment Officer
of a number of private companies. of North Atlantic Smaller Companies
He was Chairman of the Oriel Group Investment Trust plc, "NASCIT".
PLC from 1989 until 1998, a non-executive NASCIT is winner of numerous Micropal
director of Caledonia Investments and S&P Investment Trust awards.
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.
SIDNEY CABESSA JOHN RADZIWILL
French British
Sidney Cabessa is also a director John Radziwill is currently a director
of Club-Sagem and Mercator. Mr of International Assets Holding
Cabessa was Chairman of CIC Finance Corp, Lionheart Partners, Inc.,
an Investment Fund and a subsidiary USA Micro Cap Value Co. Ltd, Goldcrown
of French banking group, CIC - Group Limited and Baltimore (Bermuda)
Credit Mutuel and was previously Ltd (formerly Acquisitor Holdings
a Director of other Investment Ltd) and Baltimore (Guernsey) Ltd
companies. (formerly New York Holdings Ltd).
In the past ten years, he also
served as a director of Acquisitor
Plc, Air Express International
Corp., Radix Ventures Inc and Radix
Organisation Inc. Mr Radziwill
is a member of the Bar of England
and Wales.
WALID CHATILA JOHN GRACE
Canadian New Zealander
Walid Chatila has more than 11 John Grace is actively involved
years of international audit and in the management of several global
special assignment experience in businesses including asset management,
the Middle East and North America. financial services, and real estate.
He is a Certified Public Accountant He is a Director and Founder of
(Texas 1984) and a Chartered Accountant Sterling Grace International Ltd.
(Ontario 1991). From 1994 to 2006 Sterling Grace and its affiliates
he was the Finance Director of manage investments for high net-worth
Emirates Holdings in Abu Dhabi, investors, institutions and investment
United Arab Emirates, and between partnerships. The company is active
2006 and 2011, he assumed the role in global money management, financial
of General Manager of Al Nowais services, private equity and real
Investment LLC. He is currently estate investments. Mr Grace is
the General Manager of Arab Development also Chairman of Trustees Executors
Establishment in Abu Dhabi. Holdings Ltd, owner of the premier
and oldest New Zealand trust company
established in 1882. It is the
RUPERT EVANS market leader in the corporate
British trust business. Its clients include
Rupert Evans is a Guernsey Advocate government divisions, corporations
and was a partner in the firm of and banks. The company is active
Ozannes between 1982 and 2003, in wholesale financial services
since then he has been a consultant including trust accounting, securities
to Ozannes (now Mourant Ozannes). custody and mutual fund registry.
He is a non-executive director It is also actively engaged in
of a number of other investment the personal trust business. Mr
companies some of which are quoted Grace graduated from Georgetown
on recognised stock exchanges. University. Mr Grace has served
He is a Guernsey resident. as a director of numerous public
companies and charities. He currently
supports genetic research and education
initiatives in science at the University
of Lausanne.
CHAIRMAN'S STATEMENT
The twelve months under review represent a difficult year for
markets with the FTSE Small Cap Index falling 2.50%. I am pleased
to report that, against this background, your company saw the NAV
per share increase by 11.4% which is a 14% outperformance against
this index. This follows last year's outperformance of 16% against
the same index.
The share price, during the same period, saw a small decline of
3.1% caused by a widening of the discount from 13.67% to 24.27%.
This is disappointing given the good performance and the fact that
your company continues to acquire its own shares when the discount
allows. During the year 1,097,392 shares were acquired at an
average discount of 24.31%. Your board will continue to take
further measures to reduce the discount including its policy of
acquiring shares at a discount which has a benefit for long term
shareholders.
As you can see from the manager's report and their commentary on
the top ten holdings, your company continues to see growth within
both the quoted and unquoted portfolio.
While there is huge uncertainty in the investment world caused
by the broader economic situation, the philosophy of your managers
to seek out potentially profitable opportunities and then seek to
realise them through careful strategic action continues to bear
fruit. We therefore continue to believe that the future can be
viewed with optimism albeit with the caveat that until some
confidence returns to both the investment and banking markets, life
will remain challenging.
In line with our stated policy, the directors do not intend to
pay a dividend.
Nigel Cayzer
Chairman
June 2012
INVESTMENT ADVISER'S REPORT
It is pleasing to note that during the year under review the net
asset value per share in the Fund rose by 11.4% as compared to a
fall in the FTSE Small Cap Index of 2.50% and a fall in the FTSE of
4.02%.
Quoted Portfolio:
The portfolio had a number of good successes over the course of
the year. Redhall was bought and sold realising a 50% profit; CVS
Group rose by over 30%: IDOX by 40%; Journey Group by 50% and Prime
Focus by nearly 100% and was sold. RPC rose by 20% as did GTL
(which was taken over by a group including the Fund). The two major
disappointments were Dods Group and Green Compliance both of which
fell by nearly 50% although these were relatively small
holdings.
Unquoted Portfolio:
The principal disappointment during the year was the need to
write off half our investment in Assetco following financial and
accounting irregularities.
Given the uncertain state of the economy and stock markets, the
directors considered it prudent not to increase (with the exception
of Tagos following excellent results and a further fund raising)
the value of any of the unquoted investments at the year end
despite continuing good progress at Celsis, Orthoproducts and
Bionostics.
One new unquoted investment was made during the year which was
Sinav, the vehicle set up to acquire GTL. It is pleasing to note
that the company since acquisition has performed ahead of
expectations.
Outlook:
In current markets it is increasingly hard to find attractive
new investments which trade at a significant discount to private
market value. In addition, liquidity in the market is extremely
limited resulting in it taking longer to acquire stakes in
businesses at attractive prices.
Notwithstanding this, it is anticipated that a number of our
major holdings will continue to benefit from corporate activity.
The outlook for the unquoted portfolio is also favourable and we
would expect this to contribute positively to performance over the
next twelve months.
Therefore, not withstanding the economic and financial
uncertainty in the EEC, we are cautiously optimistic that the Fund
will continue to make progress in the current year.
Harwood Capital LLP
15 June 2012
TEN LARGEST EQUITY HOLDINGS
as at 31 March 2012
CVS Group Plc
Cost GBP3,393,572 (3,500,000 shares)
Market value GBP4,620,000 representing 7.82% of Net Asset
Value
The company owns the dominant chain of veterinary practices in
the United Kingdom. The company has grown both organically through
adding new services such as on line pet medication products and
through acquisitions. The veterinary practice industry is highly
fragmented and CVS is therefore well placed to acquire businesses
at favourable prices and improve profitability as a result of
superior buying power. The company's current debt is modest and the
business generates substantial free cash flow.
Gleeson (M.J.) Group Plc
Cost GBP7,118,533 (3,500,000 shares)
Market value GBP4,095,000 representing 6.93% of Net Asset
Value
The company operates two divisions, Gleeson Houses and Strategic
Land. Following a number of difficult years, the business is now
profitable with no debt and substantial cash balances. Poor sites
bought by the previous management team are being worked through and
the company is optimistic about its future prospects.
Guinness Peat Group Plc
Cost GBP4,325,137 (12,597,310 shares)
Market value GBP3,540,728 representing 5.99% of Net Asset
Value
The company is an investment holding company which is in
liquidation and which is expected to take about two years. The
ultimate break up value we believe will be significantly in excess
of the current share price.
RPC Group Plc
Cost GBP1,944,025 (875,000 shares)
Market value GBP3,214,750 representing 5.44% of Net Asset
Value
The company is the largest operator of plastic packaging
facilities in Europe with an estimated market share of just under
10%. Management changes made about three years ago have
significantly improved the business and an opportunistic
acquisition made about eighteen months ago has added very
materially to group earnings per share. The shares have performed
well since acquisition and the outlook for the business remains
favourable.
Augean Plc
Cost GBP4,549,362 (9,000,000 shares)
Market value GBP2,880,000 representing 4.88% of Net Asset
Value
The company is the largest owner of hazardous waste sites in the
UK. Management has refocused the business in recent years and
operating results for 2011 exceeded market expectations. The
company recently secured planning permission to process low level
nuclear waste and this could add meaningfully to profits over the
next few years.
Quarto Group Inc
Cost GBP2,332,014 (1,935,000 shares)
Market value GBP2,844,450 representing 4.82% of Net Asset
Value
The company is the largest co-education publishing business in
the world and also publishes a range of "how to" books. The
company's performance has in recent years been at best mediocre but
we continue to believe there is substantial value in excess of the
current share price in the business.
Orthoproducts Limited
Cost GBP1,206,964 (319,000 shares)
Market value GBP2,791,250 representing 4.73% of Net Asset
Value
Orthoproducts is one of only two companies in the world that
produces specialist plastics for the orthopaedic industry. The
company had a good year in the twelve months to end March 2012 and
the medium term outlook is most encouraging.
Celsis AG
Cost GBP1,378,684 (2,879,028 shares)
Market value GBP2,579,186 representing 4.36% of Net Asset
Value
Celsis AG had an excellent year to March 2012 with EBITDA
growing on a proforma basis by nearly 15%. One division was sold at
a favourable multiple which significantly reduced debt and another
non core division is likely to be sold this year thereby allowing
for the majority if not all of the Company's investment to be
returned. Meanwhile, the company's core business, the rapid
detection of pathogens in liquids, continues to have excellent
prospects for growth.
Eckoh Plc
Cost GBP1,556,847 (21,260,000 shares)
Market value GBP2,285,450 representing 3.87% of Net Asset
Value
The company is the market leader in the UK producing voice
recognition services to large corporations. Operating results have
been excellent since the shares were acquired and this has been
reflected in the share price which is up nearly 50% since
purchase.
Journey Group Plc
Cost GBP4,992,873 (54,825,188 shares)
Market value GBP2,193,008 representing 3.71% of Net Asset
Value
The company is a supplier of food and other services to the
commercial airline business. The company has a conservative balance
sheet with no debt. The largest customer is United Airlines which
recently agreed to extend its contract for a further four years.
The company generates significant cash surplus cash which should
increase as new customers turn cash flow positive.
INVESTMENT SCHEDULE
as at 31 March 2012, expressed in GBP Sterling
Holding Fair Value Proportion
of Net Assets
GBP %
LISTED INVESTMENTS
Great Britain - Equities (58.96%,
2011: 75.46%)
Augean Plc 9,000,000 2,880,000 4.88
Bioquell Plc 1,500,000 1,800,000 3.05
Catalyst Media Group Plc 3,125,000 2,156,250 3.65
CVS Group Plc 3,500,000 4,620,000 7.82
DODS Group Plc 8,600,000 322,500 0.55
Eckoh Plc 21,260,000 2,285,450 3.87
Essenden Plc 1,600,000 112,000 0.19
Gleeson (M.J.) Group Plc 3,500,000 4,095,000 6.93
Green Compliance Plc 1,956,800 410,928 0.70
Guinness Peat Group Plc 12,597,310 3,540,728 5.99
Innovation Group Plc 10,000,000 2,000,000 3.39
Journey Group Plc 54,825,188 2,193,008 3.71
Nationwide Accident Repair 800,000 496,000 0.84
Omega Diagnostics Group Plc 25,000 2,500 -
Quarto Group Inc 1,935,000 2,844,450 4.82
RPC Group Plc 875,000 3,214,750 5.44
Sinclair IS Pharma Plc 7,388,700 1,847,175 3.13
34,820,739 58.96
Great Britain - Fixed Interest (0.60%,
2011: 1.00%)
Essenden 0% 09-31/12/2049 Loan 1,600,000 352,000 0.60
352,000 0.60
----------- ---------------
Germany - Equities (2.40%, 2011: 3.97%)
Bavaria Industriekapital AG 132,500 1,417,396 2.40
----------- ---------------
1,417,396 2.40
----------- ---------------
Ireland - Equities (Nil, 2011: Nil)
Payzone Plc 1,250,000 - -
----------- ---------------
- -
----------- ---------------
USA - Equities (Nil, 2011: Nil)
Catalina Lighting Inc 46,200 87 -
87 -
----------- ---------------
Total listed investments 36,590,222 61.96
----------- ---------------
Holding Fair Value Proportion
of Net Assets
GBP %
UNLISTED INVESTMENTS
Great Britain - Warrants (Nil, 2011:
Nil)
Asset Co Plc Wts Senior A 31/12/2013 400,000 - -
Journey Wts 1,578,718 - -
----------- ---------------
- -
----------- ---------------
Great Britain - Equities (15.51%,
2011: 9.91%)
AC Management Services Ltd 1,000 - -
Asset Co Plc 1,050,000 2,100,000 3.55
AT Communications 3,300,000 - -
Babble Net Group Plc 1,000,000 - -
Capital Accumulation Ltd 5,000 250,000 0.42
Celsis AG 2,879,028 2,579,186 4.36
Crucible Ordinary A 59,117 - -
Crucible Preference 684,065 - -
Gei Group Ltd B Shares 35,000 - -
Indicant Equity Limited Ordinary Shares 11,642 - -
Indicant Equity Limited Preference
A Ordinary Shares 115,793 115,793 0.20
Indicant Equity Ltd Preference Shares 56,467 56,467 0.09
IPT Group CI A Shares 112,498 - -
Orthoproducts Limited 319,000 2,791,250 4.73
Sinav Limited Ordinary Shares 10p 1,200,000 120,000 0.20
Sinav Limited Preference Shares 90p 1,200,000 1,080,000 1.83
Valiant Sports Ltd-31/10/2016 Loan 50,820 50,820 0.09
Wembley Plc 100,000 23,000 0.04
----------- ---------------
9,166,516 15.51
----------- ---------------
USA - Equities (4.21%, 2011: 7.12%)
Bionostics Holdings Limited 3,000,000 1,314,294 2.23
Bionostics Holdings Limited Preference
Shares 1,709,550 534,965 0.91
EOriginal Inc Series B Shares 12,513 - -
ICarbon Corp 490,183 - -
Tagos 750,000 634,908 1.07
----------- ---------------
2,484,167 4.21
----------- ---------------
USA - Warrants (Nil 2011 : Nil)
EOriginal Inc Warrants 562 - -
ICarbon Corp Warrants 245,092 - -
----------- ---------------
- -
----------- ---------------
Total unlisted investments 11,650,683 19.72
----------- ---------------
Total investments 48,240,905 81.68
----------- -------
Cash 10,768,581 18.23
Other net assets 53,238 0.09
Total net assets 59,062,724 100.00
----------- -------
DIRECTORS' REPORT
The Directors present their report and the audited consolidated
financial statements of the Company and its subsidiary ("the
Company" or "the Group") for the year ended 31 March 2012.
Principal Activities and Business Review
The principal activity of the Company is to carry out business
as an investment company. The Directors do not envisage any changes
in this activity for the foreseeable future.
A review of the Company's activities is given in the Corporate
Summary on page 1, the Chairman's statement on page 3 and the
Investment Adviser's report on page 4. This includes a review of
the business of the Company and its principal activities, likely
future developments of the business, dividends policy and details
of the buyback of shares for cancellation during the year by the
Company. The Company's investment policy and its approach to
achieving the investment policy and managing the associated risks
are set out below and in note 19 to the consolidated financial
statements.
Structure
The Company is a Guernsey Authorised Closed-ended Collective
Investment Scheme pursuant to the Protection of Investors
(Bailiwick of Guernsey) Law 1987, as amended, and the Authorised
Closed Ended Investment Scheme Rules 2008 issued by the Guernsey
Financial Services Commission. It was incorporated and registered
with limited liability in Guernsey on 2 December 1994, with
registration number 28917. The Company has a premium listing on the
Main Market of the London Stock Exchange.
Investment Policy
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.
Achieving the Investment Policy
The investment approach of the Investment Manager is
characterised by a rigorous focus on research and financial
analysis of potential investee companies so that a thorough
understanding of their business models is gained prior to
investment. Comprehensive due diligence, including one or more
meetings with management as well as site visits, are standard
procedure before shares are acquired.
Typically the portfolio will comprise of 40 to 60 holdings (but
without restricting the Company from holding a more or less
concentrated portfolio in the future).
The Company may invest in derivatives, financial instruments,
money market instruments and currencies solely for the purpose of
efficient portfolio management (i.e. solely for the purpose of
reducing, transferring or eliminating investment risk in the
Company's investments, including any technique or instrument used
to provide protection against exchange and credit risks).
The Investment Manager expects that the Company's assets will
normally be fully invested. However, during periods in which
changes in economic conditions or other factors so warrant, the
Company may reduce its exposure to securities and increase its
position in cash and money market instruments.
A detailed description of the investment process and risk
controls employed by the Manager is disclosed in Note 19 to the
consolidated financial statements. A comprehensive analysis of the
Company's portfolio is disclosed on pages 5 to 9 including a
description of the ten largest equity investments. At the year end
the Company's portfolio consisted of 48 holdings. The top 10
holdings represented 52.55% of total net assets.
The Board is responsible for determining the gearing strategy
for the Company. Gearing is used selectively to leverage the
Company's portfolio in order to enhance returns where and to the
extent this is considered appropriate to do so. Borrowings are
short term and particular care is taken to ensure that any bank
covenants permit maximum flexibility of investment policy.
The Company may only make material changes to its investment
policies with the approval of Shareholders (in the form of an
ordinary resolution).
Investment Restrictions
The Company has adopted the following policies:
(a) it will not invest in securities carrying unlimited
liability;
(b) short selling for the purpose of efficient portfolio
management will be permitted provided that the aggregate value of
the securities subject to a contract for sale that has not been
settled and which are not owned by the Company shall not exceed 20
percent of the Net Asset Value; in addition, the Company may engage
in uncollateralised stock lending on normal commercial terms with
counterparties whose ordinary business includes uncollateralised
stock lending provided that the aggregate exposure of the Company
to any single counterparty shall not exceed 20 percent of the Net
Asset Value;
(c) it will not take legal or management control of investments
in its portfolio;
(d) it will not buy or sell commodities or commodity contracts
or real estate or interests in real estate although it may purchase
and sell securities which are secured by real estate or commodities
and securities of companies which invest in or deal in real estate
commodities;
(e) it will not invest or lend more than 20 percent of its
assets in securities of any one company or single issuer;
(f) it will not invest more than 35 percent of its assets in
securities not listed or quoted on any
recognised stock exchange;
(g) it will not invest in any company where the investment would
result in the company holding more than 10 percent of the issued
share capital of that company or any class of that share capital,
unless that company constitutes a trading company (for the purposes
or the relevant United Kingdom legislation) in which case the
company may not make any investment that would result in its
holding 50 percent or more of the issued share capital of that
company or of any class of that share capital;
(h) it will not invest more than 5 percent of its assets in
units of unit trusts or shares or other forms of participation in
managed open-ended investment vehicles;
(i) the Company may use options, foreign exchange transactions
on the forward market, futures and contracts for differences for
the purpose of efficient portfolio management provided that:
(1) in the case of options, this is done on a covered basis;
(2) in the case of futures and forward foreign exchange
transactions, the face value of all such contracts does not exceed
100 percent of the Net Asset Value of the Company; or
(3) in the case of contracts for difference (including stock
index future or options) the face value of all such contracts does
not exceed 100 percent of Net Asset Value of the Company. None of
these restrictions, however, require the realisation of any assets
of the Company where any restriction is breached as a result of an
event outside the control of the Investment Manager which occurs
after the investment is made, but no further relevant assets may be
acquired by the Company until the relevant restriction can again be
complied with. In the event of any breach of these investment
restrictions, the Board will as soon as practicable make an
announcement on a Regulatory Information Service and subsequently
write to Shareholders if appropriate; and
(j) the Company will ensure gearing does not exceed 20% of net
assets.
Financial Review
At 31 March 2012, the net assets of the Ordinary shares was
GBP59,062,724 (2011 - GBP55,881,895). The Net Asset Value per share
was GBP3.03 (2011 - GBP2.72). Details on the share returns are
under Note 17.
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 Authorities and the requirements of the Companies
(Guernsey) Law, 2008 (as amended). The Directors do not propose
payment of a dividend (2011 - Nil).
Payment of Service Providers
It is the Company's policy to settle investment transactions
according to the settlement periods operating for the relevant
markets. For other creditors, it is the Company's policy to pay
amounts due to them as and when they become due. There were trade
creditors of GBP28,080 as at 31 March 2012 (2011 - Nil).
The Bribery Act 2010
The Board of the Company has adopted a zero tolerance approach
to instances of bribery and corruption. Accordingly it expressly
prohibits any Director or associated persons when acting on behalf
of the Company, from accepting, soliciting, paying, offering or
promising to pay or authorise any payment, public or private, in
the United Kingdom or abroad to secure any improper benefit for
themselves or for the Company.
The Board insists on the same standards from its service
providers in their activities for the Company.
Future Developments
While the future performance of the Company is dependent, to a
large degree, on the performance of international financial
markets, which, in turn, are subject to many external factors, the
Board's intention is that the Company will continue to pursue its
stated investment objective in accordance with the strategy
outlined above. Further comments on the outlook for the Company for
the next twelve months are set out in both the Chairman's Statement
and the Investment Adviser's Report.
Going Concern
In the opinion of the Directors, the Company is able to meet its
liabilities as they fall due because it has adequate cash
resources. Given the nature of the Company's business, the
Directors have a reasonable expectation that the Company has
adequate financial resources to continue in operational existence
for the foreseeable future. Accordingly, these consolidated
financial statements have been prepared on a going concern
basis.
Directors
The Directors listed on page 2 served throughout the year.
In accordance with Article 76 of the Articles of Incorporation
of the Company, Mr. C. Mills, Mr. R. Evans, Mr. S. Cabessa, Mr. J.
Grace resigned from the Board of Directors on 12 August 2011 at the
Annual General Meeting, and were re-appointed to the Board of
Directors at the same time.
Certain Directors have an interest in the Company by way of
their investment in the shares of the Company. The details of these
interests, at 31 March 2011 and the date of the report are as
follows:
Directors' Investments
Christopher Mills holds a beneficial interest of 328,716
Ordinary Shares.
John Radziwill is a Director of a fund, held by his family
trust, that holds 419,000 Ordinary shares and which is managed by
an independent fund manager.
John Grace holds a beneficial interest of 130,000 Ordinary
Shares. Mr Grace is also a member of a class of beneficiaries which
holds an interest in 358,607 Ordinary Shares.
No other Directors had a beneficial or non-beneficial interest
in the Company during the year under review.
Directors' Interests
1. 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, the
Manager and Investment Adviser. The Investment Manager is entitled
to fees as detailed in notes 5 and 6.
2. Rupert Evans is a consultant to the law firm Mourant Ozannes,
the legal adviser to the Company.
Other than fees payable in the ordinary course of business,
there have been no material transactions with
these related parties.
Principal Risks and Uncertainties
The Board is responsible for the Company's system of internal
controls and for reviewing its effectiveness. The Board also
monitors the investment limits and restrictions set out in the
Company's investment objective and policy.
The principal risks that have been identified and the steps
taken by the Board to mitigate these are as follows:
Investment activity and performance
An inappropriate investment strategy may result in under
performance against the Company's objectives. The Board manages
these risks by ensuring a diversification of investments. The
Investment Manager operates in accordance with the investment
limits and restrictions policy determined by the Board. The
Directors review the limits and restrictions on a regular basis and
the Administrator monitors adherence to the limits and restrictions
every month and notifies the Board for any breach. The Investment
Manager provides the Board with management information including
performance data and reports, and the Corporate Broker provides
shareholder analyses. The Directors monitor the implementation and
results of the investment process with the Investment Manager at
each Board meeting and monitor risk factors in respect of the
portfolio. Investment strategy is reviewed at each meeting.
Level of discount or premium
A discount or premium to NAV can occur for a variety of reasons,
including market conditions or to the extent investors undervalue
the management activities of the Investment Manager or discount
their valuation methodology and judgement. While the Directors may
seek to mitigate any discount to NAV per Share through share
buybacks, there can be no guarantee that they will do so and the
Directors accept no responsibility for any failure of any such
strategy to effect a reduction in any discount or premium.
Market price risk
The market value of senior loans may vary because of a number of
factors, including, but not limited to, the financial condition of
the underlying borrowers, the industry in which a borrower
operates, general economic or political conditions, interest rates,
the condition of the debt trading markets and certain other
financial markets, developments or trends in any particular
industry and changes in prevailing interest rates. The Investment
Manager carries out extensive due diligence on each borrower which
is subsequently assessed by a credit committee to mitigate this
risk.
Accounting, legal and regulatory
The Company must comply with the provisions of the Companies
(Guernsey) Law, 2008 (as amended), and, since its shares are
admitted to listing on the Official List of the UK Listing
Authority and to trading on the Main Market of the London Stock
Exchange, the Company is subject to the FSA's Listing, Disclosure
and Transparency Rules. A breach of the legislation could result in
the Company and/or the Directors being fined or subject to criminal
proceedings. A breach of the Listing Rules could result in the
suspension of the Company's shares. The Board relies on its company
secretary and advisers to ensure adherence to the Guernsey
legislation and the FSA's rules. The Investment Manager and the
Administrator are contracted to provide investment, company
secretarial, administration and accounting services through
qualified professionals. The Board receives regular internal
control reports that confirm compliance.
Operational
Disruption to, or the failure of either the Investment Manager's
or the Administrator's accounting, dealings or payment systems, or
the custodians' records could prevent the accurate reporting or
monitoring of the Company's financial position.
Details of how the Board monitors the services provided by the
Investment Manager and the Administrator, and the key elements
designed to provide effective internal control are explained
further in the internal controls section of the Corporate
Governance Statement, which is set out below.
Corporate Governance Statement
Applicable corporate governance codes
The Board of the Company has considered how the principles and
provisions of The UK Corporate Governance Code ("the Code"), issued
by the Financial Reporting Council in June 2010, have been applied
by the Company. A copy of the Code can be found at
www.frc.org.uk/documents.
On 1 January 2012, the Guernsey Financial Services Commission's
("GFSC") "Finance Sector Code of Corporate Governance" ("GFSC
Code") came into effect. The GFSC have stated in the GFSC Code that
companies which report against the UK Corporate Governance Code are
deemed to meet the GFSC Code, and need take no further action.
The Company has complied with the recommendations of the Code,
except as set out below.
The role of the chief executive
Since all the Directors are non-executive and day-to-day
management responsibilities are sub-contracted to the Investment
Manager, the Company does not have a Chief Executive Officer.
Executive directors' remuneration
As the Board has no executive directors, it is not required to
comply with the principles of the Code in respect of executive
directors' remuneration. Directors' fees are detailed in the
Directors' Remuneration Report on page 23.
Internal audit function
As the Company delegates to third parties its day-to-day
operations and has no employees, the Board has determined that
there is no requirement for an internal audit function. The
Directors review annually whether a function equivalent to an
internal audit is needed and will continue to monitor its systems
of internal controls in order to provide assurance that they
operate as intended.
Board Independence and Composition
The Board
The Board is comprised of six independent non-executive
Directors including the Chairman Nigel Cayzer and one
non-independent Director, Christopher Mills who is an employee of
the Investment Manager. The biographical details of the Directors
holding office at the date of this report are listed on page 2, and
demonstrate a breadth of investment, accounting and professional
experience. The Board does not consider it necessary to appoint a
senior independent Director, as it is considered that all the
Directors have different qualities and areas of expertise on which
they may lead where issues arise and to whom concerns can be
conveyed. The performance of the Company is considered in detail at
each board meeting. An evaluation of Directors' performance, their
independence and the work of the Board as a whole and its
committees is reviewed annually by the Nominations Committee. The
Directors also meet without the Chairman present in order to review
his performance. The Board considers that independence is not
compromised by the length of tenure and that it has the appropriate
balance of skills, experience, ages and length of service in the
circumstances. The majority of the Board is considered to be
independent.
The Board meets at least four times each year and deals with the
important aspects of the Company's affairs, including the setting
and monitoring of the investment strategy and the review of
investment performance.
The Investment Manager takes decisions as to the purchase and
sale of individual investments. The Directors have access to the
advice and services of the Company Secretary through its appointed
representatives who are responsible to the Board for ensuring that
Board procedures are followed and that applicable rules and
regulations are complied with. Directors are able to have access to
independent professional advice at the Company's expense if they
judge it necessary to discharge their responsibilities as
directors. To enable the Board to function effectively and allow
Directors to discharge their responsibilities, full and timely
access is given to all relevant information.
Re-election of Directors
The Articles of Incorporation provide that Directors are
initially appointed until the following Annual General Meeting
when, it is required that they be re-elected by shareholders. The
Articles of Incorporation also provide that each year one-third of
the Directors shall retire by rotation. The retiring Directors will
then be eligible for reappointment. Accordingly, Walid Chatila will
retire by rotation and, being eligible, seeks re-election to the
Board at the Annual General Meeting.
Having served for more than nine years as non-executive
directors and in accordance with the Code, Nigel Cayzer, Rupert
Evans and Sidney Cabessa are also retiring and, being eligible,
seek re-election to the Board.
In accordance with Listing Rule 15.2.13A, which requires
Directors or members of the Investment Manager to be subject to
annual election, Christopher Mills is a member of the Investment
Manager, and accordingly, is retiring and, being eligible, seeks
re-election to the Board.
The Board continues to believe that Mr Chatila, Mr Cayzer, Mr
Cabessa and Mr Evans are independent and that all Directors
standing for re-election make an effective and valuable
contribution to the Board.
Directors' appointment
No Director has a service contract with the Company. Any
Director may resign in writing to the Board at any time.
Induction and training
Directors are provided, on a regular basis, with key information
on the Company's policies, regulatory requirements and its internal
controls. Regulatory and legislative changes affecting Directors'
responsibilities are advised to the Board as they arise along with
changes to best practice from, amongst others, the Company
Secretary. Advisers to the Company also prepare reports for the
Board from time to time on relevant topics and issues. The Chairman
will review the training and development needs of each Director
during the annual Board evaluation process.
When a new Director is appointed to the Board, he/she will be
provided with all relevant information regarding the Company and
his/her duties and responsibilities as a Director.
Directors' indemnity
To the extent permitted by Guernsey Law, the Company's Articles
of Incorporation provide an indemnity for the Directors against any
liability except such (if any) as they shall incur by or through
their own breach of trust, breach of duty or negligence.
During the year the Company has maintained insurance cover for
its Directors and Officers under a Directors' and Officers
liability insurance policy.
Responsibilities
The Board meets at least four times each year and deals with the
important aspects of the Company's affairs including the setting
and monitoring of investment strategy, and the review of investment
performance. The Investment Manager takes decisions as to the
purchase and sale of individual investments, in line with the
investment policy and strategy set by the Board. The Investment
Manager together with the Company Secretary also ensures that all
Directors receive, in a timely manner, all relevant management,
regulatory and financial information relating to the Company and
its portfolio of investments. A representative of the Investment
Manager attends each Board meeting, enabling Directors to question
any matters of concern or seek clarification on certain issues.
Matters specifically reserved for decision by the full Board have
been defined and a procedure adopted for Directors in the
furtherance of their duties to take independent professional advice
at the expense of the Company.
Tenure
The Board has adopted a policy on tenure that is considered
appropriate for an investment company. The Board does not believe
that length of service, by itself, leads to a closer relationship
with the Investment Manager or necessarily affects a Directors'
independence. The Board's tenure and succession policy seeks to
ensure that the Board is well-balanced and will be refreshed from
time to time by the appointment of new Directors with the skills
and experience necessary to replace those lost by Directors'
retirements. Directors must be able to demonstrate their commitment
to the Company. The Board seeks to encompass relevant past and
current experience of various areas relevant to the Company's
business.
Diversity
The Board considers that its members have a balance of skills
and experience which are relevant to the Company. The Board
believes in the value and importance of diversity in the boardroom
but it does not consider it appropriate or in the interests of the
Company and its shareholders to set prescriptive targets for gender
or nationality on the Board.
Performance evaluation
The Board has adopted a formal annual evaluation of its own
performance and that of its Committees and individual Directors.
The last evaluation took place in June 2011 and is led by the
Chairman. Mr Evans took the lead in the evaluation of the
Chairman's performance.
Evaluation is conducted utilising a questionnaire. The Board has
developed criteria for use at the evaluation, which focuses on the
individual contribution to the Board and its Committees made by
each Director and the Chairman, each Directors independence and the
responsibilities, composition and agenda of the Committees and of
the Board itself. A review of Board composition and balance,
including succession planning for appointments to the Board, is
included as part of the annual performance evaluation. The
non-executive Directors also meet without the Chairman present to
appraise his performance.
Following the annual board evaluation in June 2011, it was
concluded that all Directors with the exception of Mr Mills were
independent and that the Chairman and all Directors were
contributing satisfactorily to the efficient running of the
Company, and that the Board had a good range of skills and
competency.
Board Committees
The Board has established an Audit Committee and a Nomination
Committee with defined terms of reference and duties. The terms of
reference for each committee can be found on the Company's website
www.oryxinternationalgrowthfund.co.uk.
Audit Committee
The Audit Committee is chaired by Walid Chatila. The Audit
Committee is made up of three independent non-executive Directors,
Walid Chatila, John Radziwill and Rupert Evans.
The function of the Audit Committee is to ensure that the
Company maintains the highest standards of integrity, financial
reporting and internal control. The Committee's terms of reference
are available from the Company's website. The Committee's main
functions are:
-- To review and make recommendations to the Board on the
appointment and remuneration of the Company's auditor, the scope of
the audit, any questions of resignation or dismissal of the auditor
and to approve the auditor remuneration and terms of
engagement;
-- To discuss with the auditor the nature and scope of the audit
and to keep under review such scope and its cost effectiveness;
-- To review and monitor the integrity of the Company's
half-year and annual accounts and any other financial information
published by the Company;
-- To ensure that the internal control systems of the Company's
service providers are adequate; and
-- To consider annually whether there is a need for the Company to have its own audit function.
The Audit Committee met with KPMG Channel Islands Limited, the
Company's external auditor twice during the year to review the
Annual Financial Statements and to review the Audit Plan for the
year ended 31 March 2012. The Audit Committee may meet more
frequently if the Audit Committee deems necessary or if required by
the Company's Auditor.
The Audit Committee has satisfied itself that KPMG Channel
Islands Limited, the Company's auditor is independent.
The Auditors and the Directors have agreed a policy for
non-audit services. All non-audit services are prohibited.
The Audit Committee receive each year a report from the Auditor
which includes any matters which the Auditor consider to bear on
their independence and which require disclosure to the Company. The
Audit Committee is satisfied that KPMG Channel Islands Limited has
adequate policies and safeguards in place to ensure that auditor
objectivity and independence is maintained.
The Audit Committee is authorised by the Board to investigate
any activity within its terms of reference. It is authorised to
obtain outside legal or other independent professional advice and
to secure the attendance of outsiders with relevant experience and
expertise if it considers this necessary. The Board on an
ongoing
basis evaluates its own effectiveness, the effectiveness of its
Committees and the division of responsibilities between the Board
and the Investment Manager.
Nomination Committee
A Nomination Committee has been established, comprising of all
of the independent non-executive directors. The Nominations
Committee is chaired by Nigel Cayzer. The Nomination Committee
meets annually to evaluate the effectiveness of the Board and its
Committees and to evaluate the balance of skills, knowledge and
experience on the Board and the division of responsibilities
between the Board and the Investment Manager. The Nominations
Committee also meets as and when appropriate to replace Directors
who retire from the Board, leading the process for Board
appointments and making recommendations to the Board.
The Board has not deemed it necessary to appoint a Remuneration
Committee as, being comprised of a majority of wholly independent
Directors; the whole Board considers these matters on an ongoing
basis.
Meeting attendance
The number of formal meetings during the year of the Board, the
Audit Committee, and the Nomination Committee, and the attendance
of individual Directors at those meetings, is shown in the
following table:
The table below shows the number of Board meetings attended by
each Director during the accounting year.
Board meetings Audit Committee Nomination
Director attended meetings Committee
(total 4) attended meetings attended
(total 3) (total 1)
Mr. S. Cabessa 2 N/A 0
Mr. N. Cayzer 4 N/A 1
Mr. W. Chatila 4 3 1
Mr. R. Evans 4 3 1
Mr. J. Grace 4 N/A 1
Mr. C. Mills 4 N/A N/A
Mr. J. Radziwill 4 1 1
In addition, 1 ad-hoc and 3 Committee meetings were held during
the period for various matters.
Internal Controls
The Board is responsible for the Group's system of internal
control and for reviewing its effectiveness, which was in place up
to the date the accounts were signed. The Board has regularly
reviewed the effectiveness of the system of internal controls in
place. The Board believes that the key risks identified and
implementation of the system to monitor and manage those risks, are
appropriate to the Company's business as an investment company. The
ongoing risk assessment includes the monitoring of the financial,
operational and compliance risks as well as an evaluation of the
scope and quality of the system of internal control adopted by the
third party service providers. The Board regularly reviews the
delegated services to ensure their continued competitiveness and
effectiveness. The system is designed to ensure regular
communication of the results of monitoring by the third parties to
the Board and the incidence of any significant control failings or
weaknesses that have been identified and the extent to which they
have resulted in unforeseen outcomes or contingences that may have
a material impact on the Group's performance or operations. The
Board believes that, although robust, the Group's system of
internal controls is designed to manage rather than eliminate the
risk of failure to achieve business objectives.
Management, Administration and Custody Arrangements
Pursuant to the Management Agreement dated 14 May 2002, which
was novated on 29 December 2003, Harwood Capital LLP (formerly
North Atlantic Value LLP) provides management services to the
Company. The principal contents of the Investment Management
Agreement are disclosed in note 5 to these consolidated financial
statements. The Management Agreement continues unless terminated by
either party on not less than twelve months notice, in writing or
may be terminated forthwith as a result of a material breach of the
agreement or the insolvency of either party. No compensation is
payable on termination of the Agreement. The Board reviews the
performance of the Investment Manager, who carries out the
investment decisions for and on behalf of the Company. In the
opinion of the Directors, the continued appointment of the current
Investment Manager on the terms agreed is in the interests of the
Company's shareholders as a whole. The Investment Manager has wide
experience in managing and administering investment companies.
The annual management fee is equivalent to GBP20,000 plus 1.25
percent on the first GBP15,000,000 and 1 percent of any excess, in
each case of the NAV. This fee accrues daily, is to be calculated
as of the last Business Day of each month and paid monthly in
arrears. Out of this fee the Investment Manager is responsible for
payment of the fees of the Investment Adviser. The Investment
Manager is also entitled to be reimbursed for the reasonable
out-of-pocket expenses incurred by the Investment Manager and the
Investment Adviser.
Administration, Custodian and Company Secretarial services are
provided to the Company by BNP Paribas Fund Services (Guernsey)
Limited. Registrar services are provided by Capita Registrars
(Guernsey) Limited.
Share Capital
The Company's issued share capital as at 31 March 2012 consisted
of 19,463,377 Ordinary Shares of 50p nominal value each. All shares
hold equal rights with no restrictions and no shares carry special
rights with regard to the control of the Company. There are no
special rights attached to the shares in the event that the Company
is wound up.
Since the year end, the Company has purchased 379,653 Ordinary
Shares for cancellation, leaving 19,083,724 Ordinary Shares in
issue as at the date of this report.
Substantial Share Interests
Based upon information deemed to be reliable as provided by the
Company's registrar, as at 28 May 2012, the following shareholders
owned 5% or more of the issued shares of the Company.
Percentage
No. of Ordinary of Share
Shareholder Shares Class (%)
The Bank of New York (Nominees) Limited 6,731,791 35.28
Chase Nominees Limited 2,305,458 12.08
BNY (OCS) Nominees Limited 2,060,868 10.80
Hussain Al Nouwais 1,150,000 6.03
Notifications of Shareholdings
In the period from 1 April 2011 to 28 May 2012 the Company had
been notified in accordance with Chapter 5 of the Disclosure and
Transparency Rules (which covers the acquisition and disposal of
major shareholdings and voting rights), of the following voting
rights as a shareholder of the Company. When more than one
notification has been received from any shareholder only the latest
notification is shown. For non-UK issuers, the thresholds
prescribed under DTR 5.1.2 for notification of holdings commence at
5%.
Percentage of
Number of total voting rights
Ordinary shares (%)
SVM Asset Management Limited 2,930,865 15.36
Communications with Shareholders
The Board believes that the maintenance of good relations with
shareholders is important for the long-term prospects of the
Company. Where appropriate the Chairman, and other Directors are
available for discussion about governance and strategy with major
shareholders and the Chairman ensures communication of
shareholders' views to the Board. The Board receives feedback on
the views of shareholders from the Investment Manager.
The Board believes that the Annual General Meeting provides an
appropriate forum for investors to communicate with the Board, and
encourages participation. The Annual General Meeting will be
attended by Directors. Details of proxy votes received in respect
of each resolution will be made available to shareholders at the
meeting and will be posted on the Company's website following the
meeting.
The Annual and Half-year Reports, the Interim Management
Statements are available to all shareholders. The Board considers
the format of the annual and interim reports so as to ensure they
are useful to all shareholders and others taking an interest in the
Company. In accordance with best practice, the Annual Report,
including the Notice of the Annual General Meeting, will be sent to
shareholders at least 20 working days before the meeting.
Institutional Investors - use of voting rights
The Investment Manager, in the absence of explicit instructions
from the Board, are empowered to exercise discretion in the use of
the Company's voting rights in respect of investments and then to
report to the Board, where appropriate, regarding decisions
taken.
The Board has considered whether it was appropriate to adopt a
voting policy and an investment policy with regard to social,
ethical and environmental issues and concluded that it was not
appropriate to change the existing arrangements.
2012 Annual General Meeting ("AGM")
The AGM will be held in Guernsey on 25 July 2012 at 11:00 am.
The notice for the Annual General Meeting set out in the
Shareholder Circular accompanying this Annual Report sets out the
ordinary and special resolutions to be proposed at the meeting.
Separate resolutions are proposed for each substantive issue.
Disclosure of Information to the Auditor
The Directors who held office at the date of approval of this
Report of the Directors confirm that, so far as
they are each aware:
(a) there is no relevant audit information of which the
Company's auditor is unaware; and
(b) each Director has taken all the steps that he ought to have
taken as a Director to make
himself aware of any relevant audit information and to establish
that the Company's auditor is
aware of that information.
Independent Auditors
Our auditors, KPMG Channel Islands Limited, have expressed their
willingness to remain in office. The Directors will place a
resolution before the Annual General Meeting to re-appoint them as
independent auditors for the ensuing year, and to authorise the
Directors to determine their remuneration.
Directors' Responsibilities
The Directors are responsible for preparing financial statements
for each financial period which give a true and fair view of the
state of affairs of the Company and of the profit and loss for the
period and are in accordance with applicable laws. In preparing
those financial statements the Directors are required to:
-- Select suitable accounting policies and apply them consistently;
-- Makejudgements and estimates that are reasonable and prudent;
-- State whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that
the financial statements comply with the Companies (Guernsey) Law,
2008 (as amended). The Directors are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors confirm to the best of their knowledge that:
-- The consolidated financial statements which have been
prepared in accordance with IFRS as adopted by the European Union
give a true and fair view of the assets, liabilities, financial
position and profit of the Company, and the undertakings included
in the consolidation taken as a whole as required by DTR
4.2.4R;
-- The Investment Manager's Report includes a fair review of the
information required by DTR 4.1.12R, which provides a review of the
development and performance of the Company and the position of the
issuer and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face;
-- The Investment Manager's Report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related party
transactions, and changes therein); and
The maintenance and integrity of the Oryx International Growth
Fund Limited website is the responsibility of the Directors; the
work carried out by the auditors does not involve consideration of
these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the
consolidated financial statements since they were initially
presented on the website.
By order of the Board
Walid Chatila John Radziwill
Director Director
15 June 2012 15 June 2012
Directors' Remuneration Report
The Board consists entirely of non-executive Directors who meet
regularly to deal with the important aspects of the Company's
affairs. Directors are appointed with the expectation that they
will initially serve for a period of three years, and will stand
for re-election every three years. Any Director may resign in
writing to the Board at any time. Directors' appointments will be
reviewed during the annual board evaluation.
The determination of the Directors' fees is a matter dealt with
by the Board. The Board has not sought the advice or services by
any outside person in respect of its consideration of the
Directors' remuneration, although the Directors will review the
fees paid to the boards of directors of similar investment
companies.
The Company's policy is for the Directors to be remunerated in
the form of fees, payable quarterly in arrears. No Director has any
entitlement to a pension, and the Company has not awarded any share
options or long-term performance incentives to any of the
Directors. No element of the Directors' remuneration is performance
related and no compensations commitments have been made to any of
the Directors.
The Company's policy is that the fees payable to the Directors
should reflect the time spent by the Board on the Company's affairs
and the responsibilities borne by the Directors and should be
sufficient to enable high calibre candidates to be recruited. The
policy is for the Chairman of the Board to be paid a higher fee
than the other Directors in recognition of his more onerous role
and more time spent.
The Company's Articles of Incorporation limit the aggregate fees
payable to the Board of Directors to a total of GBP150,000 per
annum. In the year under review the Chairman was paid GBP25,000 per
annum and all other Directors were paid GBP18,000.
Remuneration
The following fees were paid by the Company to the Directors for
the year ended 31 March 2012.
GBP
Nigel Cayzer (Chairman) 25,000
Walid Chatila (Audit Committee Chairman) 18,000
Sidney Cabessa 18,000
Rupert Evans 18,000
John Grace* 19,182
Christopher Mills 18,000
John Radziwill 18,000
Total 134,182
*John Grace was paid GBP1,182 in respect of fees relating to the
year ended 31 March 2011.
No other remuneration or compensation was paid or payable by the
Company during the year to any of the Directors, other than travel
expenses of GBP36,223.
For and on behalf of the Board
Walid Chatila
Director
15 June 2012
INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF ORYX
INTERNATIONAL GROWTH FUND LIMITED
We have audited the consolidated financial statements (the
'financial statements') of Oryx International Growth Fund Limited
(the 'Company') and its subsidiary (together, the 'Group') for the
year ended 31 March 2012 which comprise the consolidated statement
of comprehensive income, the consolidated statement of financial
position, the consolidated statement of changes in equity, the
consolidated statement of cash flows and the related notes. The
financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards as adopted by the EU.
This report is made solely to the Company's members, as a body,
in accordance with section 262 of the Companies (Guernsey) Law,
2008. Our audit work has been undertaken so that we might state to
the Company's members those matters we are required to state to
them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's
members as a body, for our audit work, for this report, or for the
opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Statement of Directors'
Responsibilities set out on page 22, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the financial statements in
accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply
with the Auditing Practices Board's (APB's) Ethical Standards for
Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Group's circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the Board of Directors; and the
overall presentation of the financial statements. In addition, we
read all the financial and non-financial information in the annual
report to identify material inconsistencies with the audited
financial statements. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
Opinion on financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the Group's affairs
as at 31 March 2012 and of its total comprehensive income for the
year then ended;
-- are in accordance with International Financial Reporting Standards as adopted by the EU; and
-- comply with the Companies (Guernsey) Law, 2008.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies (Guernsey) Law 2008 requires us to report to
you if, in our opinion:
-- the Company has not kept proper accounting records, or
-- the financial statements are not in agreement with the accounting records; or
-- we have not received all the information and explanations,
which to the best of our knowledge and belief are necessary for the
purpose of our audit.
We have nothing to report with respect to the following:
Under the Listing Rules we are required to review the part of
the Corporate Governance Statement relating to the Company's
compliance with the nine provisions of the UK Corporate Governance
Code specified for our review.
Robert A Hutchinson
for and on behalf of KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors
13 June 2012
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2012, expressed in GBP Sterling
2012 2011
Notes GBP GBP
Income
Dividends 4 918,010 879,884
Other Income 79,268 48,886
Interest 3 - 311,423
---------- ------------
997,278 1,240,193
Realised gains/(losses) on investments 11 5,252,355 (3,369,053)
Unrealised gain on revaluation of investments 11 485,482 12,904,723
Gain on foreign currency translation 10,981 129,818
Total revenue 6,746,096 10,905,681
---------- ------------
Expenses
Management and investment adviser's fee 5 616,043 577,525
Directors' fees and expenses 9 170,405 130,451
Legal and professional fees 120,986 218,226
Performance fee 6 100,000 100,000
Transaction costs 95,164 164,589
Administration fees 8 58,416 55,120
Audit fees 36,294 31,260
Custodian fees 7 20,316 17,317
Insurance 10,500 9,637
Registrar and transfer agent fees 9,112 14,973
Other expenses 55,821 142,562
Total expenses 1,293,057 1,461,660
---------- ------------
Total comprehensive income for the year before taxation 5,453,039 9,444,021
Withholding tax on dividends 1,688 111,532
Net income for the year 5,451,351 9,332,489
---------- ------------
Income per share - basic and diluted:
Ordinary 17 GBP0.28 GBP0.44
---------- ------------
All items in the above statement are derived from continuing
operations.
The accompanying notes on pages 30 to 47 form an integral part
of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2012, expressed in GBP Sterling
2012 2011
Notes GBP GBP
Non-current assets
Listed investments designated at fair value through profit or loss (Cost -
GBP46,296,276:
2011 - GBP57,324,121) 11 36,590,222 44,948,567
Unlisted investments designated at fair value through profit or loss (Cost -
GBP10,779,118:
2011 - GBP6,462,434) 11 11,650,683 9,518,017
48,240,905 54,466,584
------------ ------------
Current assets
Cash and cash equivalents 10,768,581 880,745
Amounts due from brokers 349,299 1,024,781
Dividends and interest receivable 183,346 24
Other receivables - 75,185
11,301,226 1,980,735
------------ ------------
Total assets 59,542,131 56,447,319
------------ ------------
Current liabilities
Other payables and accrued expenses 451,327 565,424
Amounts due to brokers 28,080 -
479,407 565,424
------------ ------------
Net assets 59,062,724 55,881,895
------------ ------------
Shareholders' equity
Called up share capital 12 9,731,685 10,280,385
Share premium 12 42,696,509 42,696,509
Capital redemption reserve 1,246,500 1,246,500
Other reserves 13 5,388,030 1,658,501
Total equity shareholders' funds 59,062,724 55,881,895
Net Asset Value per Share - basic and diluted 17 GBP3.03 GBP2.72
------------ ------------
The consolidated financial statements on pages 26 to 47 were
approved by the Board of Directors on 15 June 2012 and are signed
on its behalf by:
Walid Chatila John Radziwill
Director Director
The accompanying notes on pages 30 to 47 form an integral part
of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2012, expressed in GBP Sterling
Capital
redemption
Notes Share Capital Share Premium reserve Other reserves Total
GBP GBP GBP GBP GBP
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 (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
-------------- -------------- ------------ --------------- ------------
Capital
redemption
Notes Share Capital Share Premium reserve Other reserves Total
GBP GBP GBP GBP GBP
Balance at 1 April
2011 10,280,385 42,696,509 1,246,500 1,658,501 55,881,895
-------------- -------------- ------------ --------------- ------------
Total Comprehensive
Income
For the Year - - - 5,451,351 5,451,351
-------------- -------------- ------------ --------------- ------------
Transactions with
owners,
recorded directly
in equity
Contributions, redemptions
and distributions
to shareholders
- Cancellation of
shares 12,13 (548,700) - - (1,721,822) (2,270,522)
Total transactions
with owners (548,700) - - - -
-------------- -------------- ------------ --------------- ------------
Balance at 31 March
2012 9,731,685 42,696,509 1,246,500 5,388,030 59,062,724
-------------- -------------- ------------ --------------- ------------
The accompanying notes on pages 30 to 47 form an integral part
of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2012, expressed in GBP Sterling
2012 2011
Notes GBP GBP
Net cash inflow from operating activities 15 12,147,377 5,160,876
------------ ------------
Financing Activities
Cancellation of shares (2,270,522) (3,488,597)
Proceeds of borrowings - 990,000
Repayment of borrowings - (990,000)
Bank overdraft repaid - (1,116,352)
------------ ------------
Cash outflow from financing activities (2,270,522) (4,604,949)
------------ ------------
Net increase in cash and cash equivalents 9,876,855 555,927
Cash and cash equivalents at beginning of year 880,745 195,000
Effect of exchange rate fluctuations on cash and cash equivalents 10,981 129,818
Cash and cash equivalents at end of year 10,768,581 880,745
------------ ------------
For the year ended 31 March 2012, income received from dividends
and interest was GBP734,664.
The accompanying notes on pages 30 to 47 form an integral part
of these financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General
Oryx International Growth Fund Limited (the "Company") was
registered 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 North Atlantic Value LLP) ('the Investment
Manager') and the administration of the Company is delegated to BNP
Paribas Fund Services (Guernsey) Limited ('the Administrator').
2. Accounting Policies
Basis of Preparation
The financial statements of the Company, which give a true and
fair view, and comply with the Companies (Guernsey) Law, 2008 (as
amended), have been prepared in accordance with International
Financial Reporting Standards ("IFRS"), as adopted by the European
Union. This comprises of standards and interpretations approved by
the International Accounting Standards Board (the "IASB"), and
International Accounting Standards and Standing Interpretations
Committee interpretations approved by the International Accounting
Standards Committee ("IASC") that remain in effect.
These consolidated financial statements comprise the financial
statements of the Company and its wholly owned subsidiary
undertaking Baltimore Capital PLC, which is UK registered (together
"the Group"). Baltimore Capital PLC is currently in liquidation.
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 the subsidiary are included in the
consolidated financial statements from the date that control
commences until the date that control ceases. The 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 consolidated financial statements.
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.
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.
Use of estimates and judgements
The preparation of consolidated financial statements in
accordance with IFRS adopted by the EU requires management to make
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets,
liabilities, income and expenses. These estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may vary from
these estimates. Judgement is exercised in terms of whether the
price of recent transaction remains the best indicator of fair
value for financial instruments at the consolidated statement of
financial position date. The manager reviews sector and market
information and the circumstances of the investee company to
determine if the valuation adopted at the consolidated statement of
financial position date remains the best indicator of fair
value.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods, if the revision affects both current and future
periods.
Information about significant areas of estimation uncertainty
and critical judgements in applying accounting policies that have
the most significant effect on the amounts recognised in the
financial statements are set out in Note 2(b).
New standards and interpretations not yet adopted
A number of new standards, amendments to standards and
interpretations are not yet effective for the year ended 31 March
2012, and have not been applied in preparing these financial
statements. None of these will have an effect on the financial
statements of the Group, with the exception of the following:
IFRS 9 Financial Instruments, published on 12 November 2009 as
part of phase I of the IASB's comprehensive project to replace IAS
39, deals with classification and measurement of financial assets.
The requirements of this standard represent a significant change
from the existing requirements in IAS 39 in respect of financial
assets. The standard contains two primary measurement categories
for financial assets: amortised cost and fair value. A financial
asset would be measured at amortised cost if it is held within a
business model whose objective is to hold assets in order to
collect contractual cash flows, and the asset's contractual terms
give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal outstanding. All other
financial assets would be measured at fair value. The standard
eliminates the existing IAS 39 categories of held to maturity,
available for sale and loans and receivables. For an investment in
an equity instrument which is not held for trading, the standard
permits an irrevocable election, on initial recognition, on an
individual share-by-share basis, to present all fair value changes
from the investment in other comprehensive income. No amount
recognised in other comprehensive income would ever be reclassified
to profit or loss at a later date. However, dividends on such
investments are recognised in profit or loss, rather than other
comprehensive income unless they clearly represent a partial
recovery of the cost of the investment. Investments in equity
instruments in respect of which an entity does not elect to present
fair value changes in other comprehensive income would be measured
at fair value with changes in fair value recognised in profit or
loss.
The standard requires that derivatives embedded in contracts
with a host that is a financial asset within the scope of the
standard are not separated; instead the hybrid financial instrument
is assessed in its entirety as to whether it should be measured at
amortised cost or fair value.
IFRS 10 - Consolidated Financial Statements, IFRS 12 -
Disclosure of Interests in Other Entities, IFRS 13 - Fair Value
Measurements were issued by the IASB in May 2011.
Amendments to IFRS 7 - Financial Instruments: Disclosures and
IFRS 9 Financial Instruments were issued by the IASB in December
2011.
All of these standards are effective for annual periods
beginning on or after 1 January 2013. The Group is currently in the
process of assessing the impact, if any, of these standards on the
Group's financial statements. All of these standards have not yet
been endorsed by the EU.
Adoptions 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.
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) Financial Assets
Classification
All investments of the Company, together with its subsidiary
('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 assets 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 assets are measured initially at fair value being the
transaction price. Subsequent to initial recognition on trade date,
all assets classified as fair value through profit or loss are
measured at fair value with changes in their fair value recognised
in the Consolidated Statement of Comprehensive Income. Transaction
costs are separately disclosed in the Consolidated Statement of
Comprehensive Income.
Listed investments have been valued at the bid market price
ruling at the consolidated 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 Value of unlisted investments are derived in accordance
with the International Private Equity and Venture Capital Board
(IPEVCB) 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 monetary 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 Consolidated Statement of Comprehensive Income
over the period of the borrowings on an effective interest
basis.
Financial liabilities are derecognised from the 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.
Other Reserves and the Capital Redemption Reserve include all
current and prior results as disclosed in the 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 Consolidated Statement of
Comprehensive Income upon utilisation of the service or at the date
they are incurred.
3. Interest Income
2012 2011
GBP GBP
Interest on fixed income investments
designated at fair value through profit
and loss - 311,423
------ ---------
- 311,423
------------------------------------------------- ---------
4. Dividends
2012 2011
GBP GBP
Dividend income 918,010 879,884
918,010 879,884
-------- --------
5. Management and Investment Adviser's Fee
Harwood Capital LLP (formerly North Atlantic Value LLP), the
Investment Manager and Investment Adviser, is entitled to a fee of
1.25% on the first GBP15 million of the Net Asset Value of the
Company, and 1% of any excess, payable monthly in arrears. The
agreement can be terminated giving 12 months notice or immediately
should the Investment Manager be placed into receivership or
liquidation. The Investment Manager is entitled to all the fees
accrued and due up to the date of such termination but is not
entitled to compensation in respect of any termination. At 31 March
2012 an amount of GBP157,334 payable to the Investment Manager
(2011 - GBP202,563) was included in other payables and accrued
expenses.
6. Performance Fee
In 2005 the Investment Manager agreed to waive its right to
exercise management options to subscribe for ordinary shares in
exchange for a discretionary bonus of GBP100,000 if the Company
outperforms in any calendar year. In April 2012, the Investment
Adviser requested that a payment of GBP100,000 be paid to Harwood
Capital LLP in respect of the performance of the Company during
2011 (2010: GBP100,000) in light of the fact that the Company had
outperformed the FTSE Small Cap Index by 8.8%.
This payment was approved by the board and the disclosure is
made in accordance with Listing Rule 11.1.10.
7. Custodian Fee
BNP Paribas Fund Services (Guernsey) Limited was appointed as
Custodian on 1 April 2007 and is entitled to an annual safekeeping
fee based upon the value of investments held plus transactions
fees, subject to a minimum of GBP4,000 per annum. At 31 March 2012
an amount of GBP1,888 payable to the custodian (2011 - GBP2,905)
was included in other payables and accrued expenses.
8. Administration Fees
BNP Paribas Fund Services (Guernsey) Limited was appointed as
Secretary and Administrator on 1 April 2007 and is entitled to an
annual fee at a rate of 0.125% on the first GBP20 million, 0.10% on
the next GBP20 million and 0.075% of any excess of the Gross
Assets, subject to a minimum of GBP50,000 per annum. At 31 March
2012 an amount of GBP4,975 payable to the administrator (2011 -
GBP9,546) was included in other payables and accrued expenses.
9. Directors' Fees and Expenses
With the exception of the Chairman, who is entitled to a fee of
GBP25,000 per annum, each Director is entitled to GBP18,000 per
annum from the Company. In addition, all Directors are entitled to
reimbursement of travel, hotel and other expenses incurred by them
in course of their duties relating to the Company.
10. Taxation
The Company is eligible for exemption from taxation in Guernsey
under the provisions of the Income Tax (Exempt Bodies) (Guernsey)
Ordinance, 1989. As such, the Company is only liable to pay a fixed
annual fee, currently GBP600.
11. Investments at Fair Value Through Profit and Loss
2012 2011
GBP GBP
Cost at beginning of year 63,786,555 73,387,192
Additions 21,603,132 26,740,038
Disposals (33,566,648) (32,971,622)
Realised gains/(losses) on investments 5,252,355 (3,369,053)
------------- -------------
Cost at end of year 57,075,394 63,786,555
Unrealised loss on investments (8,834,489) (9,319,971)
------------- -------------
Fair Value at end of the year 48,240,905 54,466,584
------------- -------------
Representing:
2012 2011
GBP GBP
Listed Equities 36,238,222 44,388,567
Listed Fixed Income 352,000 560,000
Unlisted Equities 11,650,683 9,518,017
----------- -----------
48,240,905 54,466,584
----------- -----------
12. Share Capital and Share Premium
a) Authorised Share Capital
Number of GBP
Shares
Authorised:
Ordinary shares of 50p
each 90,000,000 45,000,000
----------- -----------
b) Ordinary Shares Issued - 1 April 2011 to 31 March 2012
Ordinary Shares Number Share Capital Share Premium
of 50p each of Shares GBP GBP
At 1 April 2011 20,560,769 10,280,385 42,696,509
Cancellation of
shares (1,097,392) (548,700) -
------------ -------------- --------------
At 31 March 2012 19,463,377 9,731,685 42,696,509
------------ -------------- --------------
Ordinary Shares Issued - 1 April 2010 to 31 March 2011
Ordinary Shares Number Share Capital Share Premium
of 50p each of Shares GBP GBP
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
------------ -------------- --------------
13. Other reserves
31 March Movement 31 March
2011 2012
GBP GBP GBP
Net investment income 1,999,433 (297,466) 1,701,967
Realised loss on investments 19,122,237 5,252,355 24,374,592
Loss on foreign currency
transactions (772,851) 10,981 (761,870)
Unrealised gain on revaluation
of investments held (9,319,971) 485,481 (8,834,490)
Repurchase of ordinary shares (8,041,457) (1,721,822) (9,763,279)
Repurchase of warrants (8,179) - (8,179)
Discount on repurchase of
Convertible Loan Stock (1,320,711) - (1,320,711)
------------- ------------ -------------
1,658,501 3,729,529 5,388,030
------------- ------------ -------------
14. Share Buybacks
Between 1 April 2011 and 31 March 2012, the Company carried out
7 share buybacks, resulting in
a total reduction of 1,097,392 shares for a cost of
GBP2,270,522. These shares were subsequently cancelled.
15. Cash Flows from Operating Activities
2012 2011
GBP GBP
Net income for the year 5,451,351 9,332,489
------------- -------------
Realised (gains)/losses on investments (5,252,355) 3,369,053
Unrealised loss/(gain) on revaluation
of investments (485,481) (12,904,723)
Gain on foreign currency translation (10,981) (129,818)
(5,748,817) (9,665,488)
------------- -------------
Purchase of investments (21,603,132) (26,774,670)
Proceeds from sale of investments 33,566,648 31,959,528
11,963,516 5,184,858
------------- -------------
(Increase)/Decrease in dividends
and interest receivable (183,393) 173,206
Decrease in other receivables 75,255 27,148
Decrease in amounts due from brokers 675,482 -
Increase in amounts due to brokers 28,080 -
(Decrease)/Increase in other payables
and accrued expenses (114,097) 108,663
------------- -------------
481,327 309,017
------------- -------------
12,147,377 5,160,876
------------- -------------
16. Reconciliation of Net Asset Value to Published Net Asset
Value
2012 2011
GBP GBP GBP GBP
Ordinary Shares per per
share share
Published Net Asset Value 59,676,417 3.07 57,067,877 2.77
Unrealised loss on revaluation
of investments at bid / mid
price (ref note (a) below) (513,693) (0.03) (1,036,982) (0.05)
Reduction in value of Subsidiary - - (49,000) (0.00)
Performance fee accrual (100,000) (0.01) (100,000) (0.00)
Net Asset Value attributable
to shareholders 59,062,724 3.03 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 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.
17. Earnings per Share and Net Asset Value per Share
The calculation of basic earnings per share for the Ordinary
Share is based on net income of GBP5,451,351 (2011 - net income
GBP9,332,489) and the weighted average number of shares in issue
during the year of 19,826,640 shares (2011 - 21,082,441 shares). At
31 March 2012 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 GBP59,062,724 (2011 - GBP55,881,895) and
the number of shares in issue at the year end of 19,463,377 shares
(2011 - 20,560,769 shares). At 31 March 2012 there was no
difference in the diluted Net Asset Value per share calculation for
the Ordinary Shares.
18. Segment Information
The Chief Operating Decision Makers ("CODM") of the Company are
the Board of Directors. The Company has one reportable segment. The
Board of Directors review internal management reports on a
quarterly basis.
Information on realised gains and losses derived from sales of
investments are disclosed in Note 11 to the consolidated financial
statements.
The Company is domiciled in Guernsey. All of the Company's
income from investments is from underlying Companies that are
incorporated in countries other than Guernsey (mainly Great
Britain).
The geographical breakdown of the Company's investment portfolio
is set out on pages 7 to 9.
The Company has no non-financial assets classified as
non-current assets.
The company has a highly diversified portfolio of investments
and, except as disclosed in the Investment Adviser's report on page
4, no single investment accounts for more than 10% of the Company's
income.
The Company also has a highly diversified shareholder
population.
19. Financial Instruments and Risk Profile
An explanation of the Group's financial risk management
objectives, policies and strategy can be found in the Directors'
Report on pages 10 to 23.
The Group's financial instruments comprise its investment
portfolio (see pages 7 to 9), cash balances and amounts due from
brokers and amounts due to brokers that arise directly from its
operations. Note 2 sets out the accounting policies, including
criteria for recognition and the basis for measurement, applied to
significant financial instruments. Note 2 also includes the basis
on which income and expenses arising from financial assets and
liabilities are recognised.
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, reserves and
borrowings. The Group's financial liabilities comprise trade
payables and the loan facility.
The main risks arising from the Company'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 year.
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 have remained
substantially unchanged from those applied 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 and Euros. 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.
At 31 March 2012 the currency profile of those financial assets
and liabilities was:
GBP USD EUR Total
GBP GBP GBP GBP
Non current
investments
at fair
value
through
profit or
loss 44,339,255 2,484,254 1,417,396 48,240,905
Amounts due
from brokers 349,299 - - 349,299
Dividends
and interest
receivable 116,889 62,039 4,418 183,346
Cash and
cash
equivalents 10,768,581 - - 10,768,581
Amounts due (28,080) - - (28,080)
to brokers
Other
payables and (451,327) - - (451,327)
accrued
expenses
Total net
foreign
currency
exposure 55,094,617 2,546,293 1,421,814 59,062,724
------------------------------------------------- ------------------------------------------------ ------------------------------------------------ -------------------------------------------------
At 31 March 2011 the currency profile of those financial assets
and liabilities was:
GBP USD EUR NZD Total
GBP GBP GBP GBP GBP
Non current
investments
at fair
value
through
profit or
loss 43,515,830 4,966,976 2,224,643 3,759,135 54,466,584
Amounts due
from
brokers 1,024,781 - - - 1,024,781
Dividends
and
interest
receivable 24 - - - 24
Other
receivables 11,700 63,485 - - 75,185
Cash and
cash
equivalents 880,729 16 - - 880,745
Other
payables (565,424) - - - (565,424)
and accrued
expenses
Total net
foreign 44,867,640 5,030,477 2,224,643 3,759,135 55,881,895
currency
exposure
-------------------------------------------------- ------------------------------------------------- ------------------------------------------------- -------------------------------------------------- -------------------------------------------------
Sensitivity analysis is based on the Group's monetary foreign
currency instruments held at each balance sheet date.
If Sterling had weakened against the US Dollar by 10%, this
would have increased the net assets by GBP282,921 (2011:
GBP558,942) and reduced the net loss by GBP282,921 (2011:
GBP558,942).
If Sterling had strengthened against the US Dollar by 10%, this
would have decreased the net assets by GBP231,481 (2011:
GBP457,316) and increased the net loss by GBP231,481 (2011:
GBP457,316).
If Sterling had weakened against the Euro by 10%, this would
have increased the net assets by GBP157,979 (2011: GBP247,183) and
reduced the net loss by GBP157,979 (2011: GBP247,183).
If Sterling had strengthened against the Euro by 10%, this would
have decreased the net assets by GBP129,256 (2011: GBP202,240) and
increased the net loss by GBP129,256 (2011: GBP202,240).
If Sterling had weakened against the New Zealand Dollar by 10%,
this would have increased the net assets by NIL (2011: GBP417,682)
and reduced the net loss by NIL (2011: GBP417,682).
If Sterling had strengthened against the New Zealand Dollar by
10%, this would have decreased the net assets by NIL (2011:
GBP341,740) and increased the net loss by NIL (2011:
GBP314,740).
Interest rate risk
Interest rate movements may affect:
-- the fair value of the investments in fixed rate securities
(including unquoted preferred shares - page 9);
-- the level of income receivable on cash deposits;
-- the interest payable on the Group's variable rate borrowings if any.
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 and
borrowings under the loan facility. The Board reviews on a regular
basis the values of the unquoted loans and preferred shares 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 of movements
in the value of the Group's investments. As at the year-end, the
spread of the Group's investment portfolio is analysed on pages 7
to 9.
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.
The Group's exposure to other changes in market prices at 31
March 2012 on its investments was as
follows:
2012 2011
GBP GBP
Financial
assets at
fair value
through
profit or
loss
- Non
current
investments
at fair
value
through
profit or
loss 48,240,905 54,466,584
--------------------------------------------------- --------------------------------------------------
The following table illustrates the sensitivity of the profit
and net assets to an increase or decrease of 10% in the fair values
of the Group's investments. This level of change is considered to
be reasonably possible based on observation of current market
conditions. The sensitivity analysis is based on the Group's
investments at each balance sheet date, with all other variables
held constant.
2012 2011
Increase Decrease Increase Decrease
in fair in fair in fair in fair
value value value value
GBP GBP GBP GBP
Income
statement
Profit /
(loss)
for
the
year 4,824,090 (4,824,090) 5,446,658 (5,446,658)
------------------------------------------------- --------------------------------------------------- ------------------------------------------------- --------------------------------------------------
Net assets 4,824,090 (4,824,090) 5,446,658 (5,446,658)
------------------------------------------------- --------------------------------------------------- ------------------------------------------------- --------------------------------------------------
(ii) Liquidity risk
This is the risk that the Group will encounter difficulty in
meeting obligations associated with financial liabilities.
The Group is faced with liquidity risk 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. Details of the Group's debt instruments are disclosed
on page 9.
The table below shows the split of investments with maturity
dates of less than a year and investments with no maturity
date.
2012 2011
GBP GBP
Less than
1 year - -
No maturity
date 48,240,905 54,466,584
------------------------------------------
48,240,905 54,466,584
------------------------------------------ ------------------------------------------
The Group's financial liabilities are due to mature within one
year from the balance sheet date.
(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. The Group's maximum
credit risk exposure at the consolidated statement of financial
position date is represented by the respective carrying amounts of
the financial assets in the Consolidated Statement of Financial
Position.
There is a risk that the custodians and banks used by the
Company to hold assets and cash balances could fail and that the
Company's assets may not be returned. Associated with this is the
additional risk of fraud or theft by employees of those third
parties. The Board manages this risk through the Investment Manager
monitoring the financial position of those custodians and banks
used by the Company.
The credit ratings of the custodian, BNP Paribas Fund Services
(Guernsey) Limited, are AA- with Standard & Poor's, Aa3 with
Moody's and A+ with Fitch's.
(iv) Operational risk
Operational risk is the risk of direct or indirect loss arising
from a wide variety of causes associated with the processes,
technology and infrastructure supporting the Company's activities
with financial instruments either internally within the Company or
externally at the Company's service providers, and from external
factors other than credit, market and liquidity risks such as those
arising from legal and regulatory requirements and generally
accepted standards of investment management behaviour.
The Company's objective is to manage operational risk so as to
balance limiting of financial losses and damage to its reputation
with achieving its investment objective.
Fair value of financial assets and financial liabilities
The fair value for each class of financial assets and
liabilities, compared with the corresponding amount in the
Consolidated Statement of Financial Position were as follows:
2012 2011
Carrying Carrying
Fair value amount Fair value amount
GBP GBP GBP GBP
Financial
assets at
fair
value
through
profit or
loss
- Non current assets 48,240,905 48,240,905 54,466,584 54,466,584
-------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------
- Cash and
cash
equivalents 10,768,581 10,768,581 880,745 880,745
-------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------
- Amounts
due from
brokers 349,299 349,299 1,024,781 1,024,781
-------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------
- Dividends
and
interest
receivable 183,346 183,346 24 24
-------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------
- Other
receivables - - 75,185 75,185
-------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------
- Amounts
due to
brokers (28,080) (28,080) - -
-------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------
- Other
payables
and accrued
expenses (451,327) (451,327) (565,424) (565,424)
-------------------------------------------------- -------------------------------------------------- -------------------------------------------------- -------------------------------------------------
Fair values are derived as follows:
- Where assets and liabilities are denominated in a foreign
currency, they are converted into
Sterling using year-end rates of exchange.
- Financial assets (non current and held for trading) - as set
out in the accounting policies on
pages 30 to 34.
- Financial liabilities - as set out in the accounting policies on pages 30 to 34.
- Cash and cash equivalents - at face value of the account.
Capital management policies and procedures
The Group's capital management objectives are:
- to ensure that the Group will be able to continue as a going concern, and
- to maximise the income and capital return to its equity
shareholders through an appropriate balance of equity capital and
long-term debt. The policy is that gearing should not exceed 20% of
net assets.
The Group's capital at 31 March comprises:
2012 2011
GBP GBP
Long-term - -
Debt
-------------------------------------------------- -------------------------------------------------
Equity
Equity
share
capital 9,731,685 10,280,385
Retained 49,331,039 45,601,510
earnings
and other
reserves
-------------------------------------------------- -------------------------------------------------
59,062,724 55,881,895
---------------------------------------------------------------------------------------------------- -------------------------------------------------
Long-term - -
Debt as a
% of net
assets
-------------------------------------------------- -------------------------------------------------
The Board, with the assistance of the Investment Manager
monitors and reviews the broad structure of the Company's capital
on an ongoing basis. This review includes:
- the planned level of gearing, which takes account of the
Investment Manager's views on the market;
- the need to buy back equity shares for cancellation, which
takes account of the difference between the net asset value per
share and the share price (i.e. the level of share price discount
or premium);
- the need for new issues of equity shares; and
- the extent to which revenue in excess of that which is
required to be distributed should be retained.
The Group's objectives, policies and processes for managing
capital are unchanged from the preceding accounting period and
there are no imposed capital requirements. The Company's
information and analysis is not materially different to the
Group.
20. Fair Value hierarchy
Where an asset or liability's value is determined based on
inputs from different levels of the hierarchy, the level in the
fair value hierarchy assumed for the valuation assessment is the
lowest level input significant to the fair value measurement in its
entirety.
Investments whose values are based on quoted market prices in
active markets, and therefore classified within level 1, include
active listed equities. The Company does not adjust the quoted
price for these instruments.
Financial instruments that trade in markets that are not
considered to be active but are valued based on quoted market
prices, dealer quotations or alternative pricing sources supported
by observable inputs are classified within level 2. As level 2
investments include positions that are not traded in active markets
and/or are subject to transfer restrictions, valuations may be
adjusted to reflect illiquidity and/or non-transferability, which
are generally based on available market information.
Investments classified within level 3 have significant
unobservable inputs. Level 3 instruments include private equity and
corporate debt securities. As observable prices are not available
for these securities, the Company has used valuation techniques to
derive the fair value. In respect of unquoted instruments, or where
the market for a financial instrument is not active, fair value is
established by using recognised valuation methodologies, in
accordance with International Private Equity and Venture Board
("IPEVB") Valuation Guidelines. New investments are initially
carried at cost, for a limited period, being the price of the most
recent investment in the investee company. In accordance with IPEVC
Guidelines changes and events since the acquisition date are
monitored to assess the impact on the fair value of the investment
and the valuation derived from cost is adjusted if necessary. Fair
value is the amount for which an asset could be exchanged between
knowledgeable, willing parties in an arm's length transaction.
The table below analyses financial instruments measured at fair
value at the end of the reporting period by the level in the fair
value hierarchy into which the fair value measurement is
categorised.
31 March
2012 Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
Financial
assets at
fair
value
through
profit or
loss
Equity
securities 38,338,222 - 9,550,683 47,888,905
Debt
securities 352,000 - - 352,000
38,690,222 - 9,550,683 48,240,905
------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------
31 March Level
2011 Level 1 2 Level 3 Total
GBP GBP GBP GBP
Financial
assets at
fair value
through
profit or
loss
Equity
securities 44,388,567 - 8,092,683 52,481,250
Debt
securities 560,000 - 1,425,334 1,985,334
44,948,567 - 9,518,017 54,466,584
------------------------------------------ ------------------------------------------ ------------------------------------------ ------------------------------------------
The following table summarises the changes in fair value of the
Group's Level 3 investments for the year ended 31 March 2012.
2012 2011
GBP GBP
Balance at 1 April 2011 9,518,017 3,583,381
Net realised loss on
investments - (11,225)
Unrealised gain/(loss) on
investments (53,967) (183,316)
Purchase of investments 1,409,246 378,158
Sale of investments (1,322,613) (3,098,065)
Level 3 transfers in - 8,849,084
Balance at 31 March 2012 9,550,683 9,518,017
------------------------------------------- -------------------------------------------
Change in unrealised
gain/(loss) on
investments included in
Statement of
Comprehensive Income for
Level 3 investments
held 129,349 (333,291)
------------------------------------------- -------------------------------------------
Level 3 transfers in refers to the changes in circumstances and
valuation approach in respect of investments that were previously
classified as level 2.
21. Related Parties
The Investment Adviser is considered to be a related party. The
fees paid are included in the Consolidated Statement of
Comprehensive Income.
At 31 March 2012 GBP157,334 (2011 - GBP302,563) included in
other accruals and payables was payable to the Investment
Adviser.
The Directors are also considered to be related parties and
their fees are disclosed in the Consolidated
Statement of Comprehensive Income.
At 31 March 2012, GBP41,970 (2011 - GBP29,540) included in other
accruals and payables 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 (North Atlantic
Value LLP), the Manager and Investment Adviser.
22. Post Balance Sheet Events
There were no Post Balance Sheet Events.
23. Going Concern
Given the nature of the Company's business, the Directors have a
reasonable expectation that the Company has adequate financial
resources to continue in operational existence for the foreseeable
future. Accordingly, these consolidated financial statements have
been prepared on a going concern basis.
Enquiries:
BNP Paribas Fund Services (Guernsey) Limited 01481 750850
Company Secretary
Sara Bourne / Madiha Loveless
Westhouse Securities Limited 020 7601 6118
Alastair Moreton
This information is provided by RNS
The company news service from the London Stock Exchange
END
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