TIDMOIG
RNS Number : 0568J
Oryx International Growth Fund Ld
11 July 2013
11 July 2013
FOR IMMEDIATE RELEASE
RELEASED BY BNP PARIBAS SECURITIES SERVICES S.C.A GUERNSEY
BRANCH
FINAL RESULTS ANNOUNCEMENT
THE BOARD OF DIRECTORS OF ORYX INTERNATIONAL GROWTH FUND
LIMITED
ANNOUNCE FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2013
A copy of the Company's Consolidated Financial Statements will
be available via the following link:
www.oryxinternationalgrowthfund.co.uk
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 the 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
The Investment Manager 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 Conduct Authority (formerly known as the Financial
Service 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 In addition, he is a non-executive
Housing Bank SAOG from 1998 until director of numerous UK companies
2006 and Chairman of the Oryx Fund which are either currently, or
Ltd from 1994 until 2004. have in the past five years been,
publicly quoted.
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 has 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 year to 31(st) March 2013, represented another good year for
the company with net assets increasing by 22.44%. This follows a
rise of 11.4% in 2012 and 23% in 2011 respectively. This year's
result compares favourably with an increase of 24.29% in FTSE
Smaller Companies Index given this company's weighting in unlisted
securities where valuations are, by their nature, more
conservative.
This good performance reflects the work undertaken by our
Investment Manager to identify investments opportunities where
value can be realised. There are some interesting companies within
the portfolio which have good potential to create future profit,
but there is a constant need to seek out new prospects in which to
invest at attractive prices. At a time of rising markets, this
becomes more challenging.
Over the past years, the discount at which the Company's shares
trade has ranged from 17.07% to 32.46% and at the year-end was
21.96%. The board are conscious that the discount is higher than
would we would like and, during the year, 649,653 shares were
acquired for cancellation. These purchases were done at a discount
to the net asset value and therefore benefited long term
shareholders.
In accordance with our long established policy, the directors
are not recommending a dividend in respect of the year ended March
2013, however we will be seeking authority to continue our
programme of share buy backs when the level of discount is
attractive.
Nigel Cayzer
Chairman
10 July 2013
INVESTMENT MANAGER'S REPORT
It is pleasing to note that the net asset value rose by 22.44%
during the year, reaching an all time high of 378p per share before
ending the year at 371p per share.
Quoted Portfolio:
The company benefited from substantial rises in a number of its
major holdings. In particular, MJ Gleeson rose 70%; Assetco 70%;
CVS Group 40%; Innovation 25%; Essenden over 100%; Catalyst Media
over 50% and Eckoh over 40%.
The principal disappointment during the year was Mecom which is
in the process of selling all of its businesses but is experiencing
difficult trading conditions.
There was also a relatively high turnover in the portfolio with
total sales of RPC, Sinclair Pharma, Green CO2, Bavaria and partial
sales in Augean and CVS Group. The major new positions purchased
during the year were Goals Soccer, IFG and a further significant
investment into Bioquell.
Unquoted Portfolio:
The unquoted portfolio performed well rising by 34% during the
period driven by good operating performances but also assisted by
the strength in the Dollar relative to Sterling.
Celsis is in the process of selling a small division which will
enable it to repay all our initial investment leaving the best
division at zero cost.
Both Orthoproducts and Bionostics are in discussions to be sold.
Sinav suffered from the poor US corn crop but recent results have
been satisfactory.
Outlook:
The broad rise in the market over the past year has accentuated
the challenge to find attractive companies trading at discounts to
private market value.
Notwithstanding this, there are a number of catalysts in place
in the quoted portfolio which should support a further improvement
in the net asset value.
The unquoted portfolio also has the potential to increase
further in the current year if the current negotiations to sell the
three businesses referred to above prove successful.
Thus, despite the probability of further turbulence in the EU
and anaemic economic growth, we are hopeful that the current year
will maintain the positive momentum of the past few years.
Harwood Capital LLP
10 July 2013
TEN LARGEST EQUITY HOLDINGS
as at 31 March 2013
Gleeson (M.J.) Group Plc
Cost GBP7,118,533 (3,500,000 shares)
Market value GBP7,000,000 representing 10.02% 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.
Recent results have been encouraging and the outlook is
favourable.
Guinness Peat Group Plc
Cost GBP4,947,216 (15,000,000 shares)
Market value GBP4,957,768 representing 7.09% of Net Asset
Value
The company is an investment holding company which is in
liquidation. The liquidation process is expected to take about a
further eighteen months. Recently the company has sold a number of
businesses at good prices and we believe the ultimate break up
value will be in excess of the current share price.
Bioquell Plc
Cost GBP3,586,359 (3,000,000 shares)
Market value GBP4,350,000 representing 6.22% of Net Asset
Value
The company is the market leader in the United Kingdom providing
tests and measurements services to a variety of specialised
components in the aerospace and electronic industries. The company
is also a world leader in decontaminating pharmaceutical production
facilities. The company is currently introducing a number of new
products which could accelerate profit over the next few years.
CVS Group Plc
Cost GBP2,270,488 (2,335,000 shares)
Market value GBP4,273,050 representing 6.11% 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. Recent profits have
been in excess of market expectations and the shares have performed
well.
Quarto Group Inc
Cost GBP4,004,064 (3,000,000 shares)
Market value GBP4,140,000 representing 5.92% 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 new
management and board appointments will refocus the business in
order to maximise share value over the medium term.
Goals Soccer Centers Plc
Cost GBP3,697,740 (2,900,000 shares)
Market value GBP3,973,000 representing 5.68% of Net Asset
Value
The company is the largest 5-a-side soccer company in the United
Kingdom. It also has a small operation in the United States where
there are significant prospects for growth in the medium term. The
company generates substantial quantities of free cash and the
shares were bought at a discount to private market values.
IFG Group Plc
Cost GBP3,517,395 (3,000,000 shares)
Market value GBP3,628,142 representing 5.19% of Net Asset
Value
The company provides personal financial services such as
personal fund administration and personal advisory investment
advice. Through a subsidiary, James Hay, the company is one of the
largest UK SIPP providers. The company has no debt and holds
substantial cash reserves. Assets under advice amounts to circa
GBP12bn which compares with a market cap excluding cash of
GBP100m.
Assetco Plc
Cost GBP2,600,000 (1,050,000 shares)
Market value GBP3,622,500 representing 5.18% of Net Asset
Value
The company provides fire services to the government of Abu
Dhabi. Unprofitable contracts in London and Lincolnshire have now
been disposed of and the group is profitable. Future progress will
depend on winning additional contracts in the Middle East.
Celsis AG/Nastor Inv Ltd
Cost GBP1,378,684 (1,798,890 shares)
Market value GBP3,611,735 representing 5.17% 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
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.
Orthoproducts Limited
Cost GBP1,206,964 (319,000 shares)
Market value GBP3,509,000 representing 5.02% 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 2013 and
the medium term outlook is most encouraging. The Company is in
discussion with several potential acquirers in a formal sale
process.
INVESTMENT SCHEDULE
as at 31 March 2013, expressed in GBP Sterling
Holding Fair Value Proportion
of Net Assets
GBP %
LISTED INVESTMENTS
Great Britain - Equities (67.38%,
2012: 58.96%)
Aimshell Acquisitions Plc 450,000 126,000 0.18
Augean Plc 6,000,000 2,100,000 3.00
Asset Co Plc 1,050,000 3,622,500 5.18
Bioquell Plc 3,000,000 4,350,000 6.22
Catalyst Media Group Plc 3,125,000 3,343,750 4.78
Cupid Plc 500,000 430,000 0.62
CVS Group Plc 2,335,000 4,273,050 6.11
Dods Group Plc 3,500,000 140,000 0.20
Eckoh Plc 13,300,000 2,061,500 2.95
Essenden Plc 1,600,000 512,000 0.73
Gleeson (M.J.) Group Plc 3,500,000 7,000,000 10.02
Goals Soccer Centres Plc 2,900,000 3,973,000 5.68
Guinness Peat Group Plc 15,000,000 4,957,768 7.09
Innovation Group Plc 7,000,000 1,767,500 2.53
Journey Group Plc 54,825,188 2,741,259 3.92
Mecom Group Plc 4,000,000 3,390,000 4.85
Nationwide Accident Repair 800,000 528,000 0.76
Omega Diagnostics Group Plc 3,500,000 481,250 0.69
Puricore Plc 910,000 391,300 0.56
Quarto Group Inc 3,000,000 4,140,000 5.92
Service Power Technologies 12,000,000 420,000 0.60
50,748,877 72.59
Great Britain - Fixed Interest (0.78%,
2012: 0.60%)
Essenden 0% 09-31/12/2049 Loan 1,600,000 544,000 0.78
544,000 0.78
----------- ---------------
Ireland - Equities (5.19%, 2012: Nil)
IFG Group Plc 3,000,000 3,628,142 5.19
Payzone Plc 1,250,000 - -
----------- ---------------
3,628,142 5.19
----------- ---------------
USA - Equities (Nil, 2012: Nil)
Catalina Lighting Inc 46,200 163 -
Total listed investments 54,921,182 78.56
----------- ---------------
Holding Fair Value Proportion
of Net Assets
GBP %
UNLISTED INVESTMENTS
Great Britain - Warrants (Nil, 2012:
Nil)
Asset Co Plc Wts Senior A 31/12/2013 400,000 - -
Journey Wts 1,578,718 - -
----------- ---------------
- -
----------- ---------------
Great Britain - Equities (17.47%,
2012: 9.91%)
AC Management Services Ltd 1,000 - -
AT Communications 3,300,000 - -
Babble Net Group Plc 1,000,000 - -
Capital Accumulation Ltd 5,000 200,000 0.29
Celsis AG 594,276 2,818,296 4.03
Crucible Ordinary A 59,117 - -
Crucible Preference 684,065 - -
GEI Group Ltd B Shares 35,000 - -
IPT Group CI A Shares 112,498 - -
Orthoproducts Limited 319,000 3,509,000 5.02
Nastor Inv Ltd Zero Redeem Preference
Shares 1,204,614 793,439 1.14
Sinav Limited Ordinary Shares 10p 1,200,000 127,658 0.18
Sinav Limited Preference Shares 90p 1,200,000 1,148,918 1.64
Wembley Plc 100,000 3,000 0.02
----------- ---------------
8,600,311 12.32
----------- ---------------
USA - Equities (4.58%, 2012: 4.21%)
Bionostics Holdings Limited 3,000,000 1,976,000 2.83
Bionostics Holdings Limited Preference
Shares 1,709,550 563,012 0.81
EOriginal Inc Series B Shares 12,513 - -
ICarbon Corp 490,183 - -
Tagos 750,000 668,196 0.96
----------- ---------------
3,207,208 4.60
----------- ---------------
USA - Warrants (Nil 2012 : Nil)
EOriginal Inc Warrants 562 - -
ICarbon Corp Warrants 245,092 - -
----------- ---------------
- -
----------- ---------------
Total unlisted investments 11,807,519 16.92
----------- ---------------
Total investments 66,728,701 95.48
----------- -------
Cash 3,807,885 5.45
Other net current liabilities (647,162) (0.93)
Total net assets 69,889,424 100.00
----------- -------
DIRECTORS' REPORT
The Directors present their report and the audited consolidated
financial statements of the Oryx International Growth Fund Limited
(the "Company") and its subsidiary (together, "the Group") for the
year ended 31 March 2013.
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, the Chairman's statement and the Investment Manager's
report. 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 18 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 18 to the
consolidated financial statements. An analysis of the Company's
portfolio has been disclosed 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 61.60% 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 2013, the net assets of the Ordinary shares was
GBP69,889,424 (2012 - GBP59,062,724). The Net Asset Value per share
was GBP3.71 (2012 - GBP3.03). Details on the share returns are
under Note 16.
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 for the year ended 31 March 2013 (2012 -
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 GBPNil as at 31 March 2013 (2012 - GBP28,080).
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 Manager'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 in this report served throughout the year
and up to the date of the report.
In accordance with Article 28.2 of the Articles of Incorporation
of the Company and the UK Corporate Governance Code, Mr N. Cayzer,
Mr. C. Mills, Mr. R. Evans, Mr. S. Cabessa, Mr. W. Chatila resigned
from the Board of Directors on 25 July 2012 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 2013 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 346,607 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
Harwood Capital LLP, the Investment Manager. The Investment Manager
is entitled to fees as detailed in notes 4 and 5.
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 fair value or future cash flows of a financial instrument
held by the Company may fluctuate because of changes in market
prices. This market risk comprises currency risk, interest rate
risk and other price risk. The Directors review and agree policies
for managing these risks which policies have remained substantially
unchanged during the year under review. The Investment Manager
assesses the exposure to market risk when making each investment
decision and monitors the overall level of market price risk on the
investment portfolio on an ongoing basis.
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 FCA'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 FCA'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. The Board acknowledges the revisions to
the Code (and the associated FRC Guidance on Audit Committees),
which will be applied for periods beginning on or after 1 October
2012. The Company will report against the revisions for the period
ending 31 March 2014.
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.
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 a member of the
Investment Manager. The biographical details of the Directors
holding office at the date of this report as listed previously,
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, John Radziwill
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. 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 2012 and was 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 2012, 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 independent auditor
(the "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 auditor twice during the year to review the Annual
Financial Statements for the year ended 31 March 2012 and to review
the Audit Plan for the year ended 31 March 2013. 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 Auditor 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.
Director Board meetings Audit Committee Nomination
attended meetings Committee
(total 4) attended meetings attended
(total 3) (total 1)
Mr. S. Cabessa 4 N/A 1
Mr. N. Cayzer 4 N/A 1
Mr. W. Chatila 3 3 1
Mr. R. Evans 4 3 1
Mr. J. Grace 3 N/A 1
Mr. C. Mills 4 N/A N/A
Mr. J. Radziwill 4 3 1
In addition, 1 ad-hoc and 4 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 delegated the
responsibility of regularly reviewing the effectiveness of the
systems of internal controls in place. The Audit Committee 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 Audit Committee 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
Audit Committee 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 4 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 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. The
Investment Manager is also entitled to be reimbursed for the
reasonable out-of-pocket expenses incurred.
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 2013 consisted
of 18,813,724 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 31 March 2012 to date of signing the
Financial Statements, the Company has purchased 706,153 Ordinary
Shares for cancellation, leaving 18,757,224 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 15 May 2013, 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 6,731,758 35.61
Chase Nominees Limited 2,354,496 12.46
State Street Nominees Limited 2,321,896 12.28
Hussain Al Nouwais 1,150,000 6.08
North Atlantic Smaller Companies Investment Trust, Plc, holds
7,106,284 ordinary shares in the company which are held through
multiple nominee accounts.
Notifications of Shareholdings
In the period from 1 April 2012 to 5 May 2013 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%.
Number of Percentage of
Ordinary shares total voting
rights (%)
------------------------------ ----------------- --------------
SVM Asset Management Limited 2,830,865 14.95
------------------------------ ----------------- --------------
Henderson Global Investors 3,103,086 16.26
------------------------------ ----------------- --------------
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 at least one Director. 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, and 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.
2013 Annual General Meeting ("AGM")
The AGM will be held in Guernsey on 29 July 2013 at 10:30 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 propose
re-appointing them as independent auditors for the ensuing year,
and to authorise the Directors to determine their remuneration.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Directors'
report and the financial statements in accordance with applicable
law and regulations. Company law requires the Directors to prepare
financial statements for each year. Under that law they have
elected to prepare the financial statements in accordance with
International Financial Reporting Standards as adopted by the EU
and applicable law. The financial statements are required by law to
give a true and fair view of the state of affairs of the company
and of the profit or loss of the company for that period. 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. 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, together with the Director'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, together with the Director's
report, includes a fair review of the information required by DTR
4.2.8R (disclosure of related party transactions, and changes
therein).
Related Parties
The Investment Manager is considered to be a related party. The
fees paid are included in the Consolidated Statement of
Comprehensive Income.
The Directors are also considered to be related parties and
their fees are disclosed in the Consolidated Statement of
Comprehensive Income.
See note 20 for a list of related party transactions. There were
no significant changes in related party transactions from the prior
year.
By order of the Board
Director Director
10 July 2013 10 July 2013
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 2013. The Company also reimbursed
reasonable out of pocket expenses incurred by Directors to attend
the Board meetings.
GBP
Nigel Cayzer (Chairman) 25,000
Walid Chatila (Audit Committee Chairman) 18,000
Sidney Cabessa 18,000
Rupert Evans 18,000
John Grace 18,000
Christopher Mills 18,000
John Radziwill 18,000
Total 133,000
No other remuneration or compensation was paid or payable by the
Company during the year to any of the Directors.
For and on behalf of the Board
Director
10 July 2013
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 2013 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 European Union (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, 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 2013 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
10 July 2013
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2013, expressed in GBP Sterling
2013 2012
Notes GBP GBP
Income
Dividends 3 894,295 918,010
Other Income 19,435 79,268
913,730 997,278
Realised gains on investments 10 1,856,031 5,252,355
Unrealised gain on revaluation of investments 10 11,421,987 485,482
(Loss) / gain on foreign currency translation (6,125) 10,981
Total revenue 14,185,623 6,746,096
----------- ----------
Expenses
Management and Investment Manager's fee 4 660,057 616,043
Directors' fees and expenses 8 166,305 170,405
Legal and professional fees 212,495 120,986
Supplementary Management fee 5 100,000 100,000
Transaction costs 66,930 95,164
Administration fees 7 61,777 58,416
Audit fees 46,156 36,294
Custodian fees 6 20,794 20,316
Insurance 4,650 10,500
Registrar and transfer agent fees 20,062 9,112
Other expenses 423,915 55,821
Total expenses 1,783,141 1,293,057
----------- ----------
Total comprehensive income for the year before taxation 12,402,482 5,453,039
Withholding tax on dividends 9 53,511 1,688
Total comprehensive income for the year 12,348,971 5,451,351
----------- ----------
Income per share - basic and diluted:
Ordinary 16 GBP0.65 GBP0.28
----------- ----------
All items in the above statement are derived from continuing
operations.
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2013, expressed in GBP Sterling
2013 2012
Notes GBP GBP
Non-current assets
Listed investments designated at fair value through profit or loss (Cost -
GBP58,290,135:
2012 - GBP46,296,276) 10 54,921,182 36,590,222
Unlisted investments designated at fair value through profit or loss (Cost -
GBP5,851,068:
2012 - GBP10,779,118) 10 11,807,519 11,650,683
66,728,701 48,240,905
------------- -------------
Current assets
Cash and cash equivalents 3,807,885 10,768,581
Amounts due from brokers - 349,299
Dividends and interest receivable 17,500 183,346
Other receivables 2,385 -
3,827,770 11,301,226
------------- -------------
Total assets 70,556,471 59,542,131
------------- -------------
Current liabilities
Other payables and accrued expenses 667,047 451,327
Amounts due to brokers - 28,080
667,047 479,407
------------- -------------
Net assets 69,889,424 59,062,724
------------- -------------
Shareholders' equity
Called up share capital 11 52,103,367 52,428,194
Capital redemption reserve 1,246,500 1,246,500
Other reserves 12 16,539,557 5,388,030
Total equity shareholders' funds 69,889,424 59,062,724
Net Asset Value per Share - basic and diluted 16 GBP3.71 GBP3.03
------------- -------------
The consolidated financial statements were approved by the Board
of Directors on 3 July 2013 and are signed on its behalf by:
Director Director
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2013, expressed in GBP Sterling
Capital
redemption
Notes Share Capital reserve Other reserves Total
GBP GBP GBP GBP
Balance at 1 April
2012 52,428,194 1,246,500 5,388,030 59,062,724
-------------- ------------ --------------- ------------
Total Comprehensive
Income
For the Year - - 12,348,971 12,348,971
-------------- ------------ --------------- ------------
Transactions with
owners,
recorded directly
in equity
Contributions, redemptions
and distributions
to shareholders
- Cancellation of
shares 11,12 (324,827) - (1,197,444) (1,522,271)
Total transactions
with owners (324,827) - - -
-------------- ------------ --------------- ------------
Balance at 31 March
2013 52,103,367 1,246,500 16,539,557 69,889,424
-------------- ------------ --------------- ------------
Capital
redemption
Notes Share Capital reserve Other reserves Total
GBP GBP GBP GBP
Balance at 1 April
2011 52,976,894 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 (548,700) - (1,721,822) (2,270,522)
Total transactions
with owners (548,700) - - -
-------------- ------------ --------------- ------------
Balance at 31 March
2012 52,428,194 1,246,500 5,388,030 59,062,724
-------------- ------------ --------------- ------------
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2013, expressed in GBP Sterling
2013 2012
Notes GBP GBP
Net cash (outflow)/inflow from operating activities 14 (5,432,300) 12,147,377
-------------- -------------
Financing Activities
Cancellation of shares (1,522,271) (2,270,522)
Cash outflow from financing activities (1,522,271) (2,270,522)
-------------- -------------
Net (decrease)/increase in cash and cash equivalents (6,954,571) 9,876,855
Cash and cash equivalents at beginning of year 10,768,581 880,745
Effect of exchange rate fluctuations on cash and cash equivalents (6,125) 10,981
Cash and cash equivalents at end of year 3,807,885 10,768,581
-------------- -------------
For the year ended 31 March 2013, income received from dividends
and interest was GBP883,160.
The accompanying notes 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 ("EU"). 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.
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 areas of 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). Information about significant areas of estimation uncertainty
that have the most significant effect on the amounts recognised in
the financial statements are set out in notes 18 and 19.
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
2013, 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 (2010) and IFRS 9 Financial
Instruments (2009) (together IFRS 9)
IFRS 9 (2009) introduces new requirements for the classification
and measurement of financial assets. IFRS 9 (2010) introduces
additions relating to financial liabilities. The IASB currently has
an active project to make limited amendments to the classification
of and measurements requirements of IFRS 9 and add new requirements
to address the impairment of financial assets and hedge
accounting.
The IFRS 9 (2009) requirements represent a significant change
from the existing requirements in IAS 39 in respect of financial
assets. The standard contains two primary measurements 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 objectives is to hold assets in order to
collect contractual cash flows, and the assets' 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. Investment in equity
instruments in respect of which 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 and
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
instruments is assessed in its entirety as to whether it should be
measured at amortised cost to fair value.
IFRS 9 (2010) introduces a new requirement in respect of
financial liabilities designated under the fair value option to
generally present fair value changes that attributable to the
liability's credit risk in other comprehensive income rather than
in profit or loss. Apart from this change, IFRS 9 (2010) largely
carries forward without substantive amendment the guidance on
classification and measurement of financial liabilities from IAS
39. IFRS 9 is effective for annual periods beginning on or after 1
January 2015 with early adoption permitted.
IFRS 10 - Consolidated Financial Statements, IFRS 12 -
Disclosure of Interests in Other Entities (2011)
IFRS 10 introduces a single control model to determine whether
an investee should be consolidated. In accordance with IFRS 10 an
investment entity is required to apply the exception to
consolidation and instead account for its investment in a
subsidiary at fair value through profit and loss except for
subsidiaries that are considered as an extension of the company's
activities. As a result, the Group will not need to change its
consolidation policy.
IFRS 10 - Consolidated Financial Statements, IFRS 12 -
Disclosure of Interests in Other Entities (2011) (continued)
IFRS 12 brings together into a single standard all the
disclosure requirements about an entity's interest in subsidiary,
joint arrangements, associates and unconsolidated structured
entities. It requires the disclosure of information about the
nature of risks and financial effects of these interests except for
subsidiaries that are considered an extension of the Company's
investing activities. These standards are effective for annual
periods beginning on or after 1 January 2013 with early adoption
permitted. The Group is still assessing the Impact of IFRS 12.
IFRS 13 - Fair Value Measurements (2011).
IFRS 13 provides a single source of guidance on how fair value
is measured, and replaces the fair value measurement guidance that
is currently dispersed through out IFRS. Subject to limited
exceptions, IFRS 13 is applied when fair value measurements or
disclosures are required or permitted by other IFRs. IFRS 13 is
effective for annual periods beginning on or after 1 January 2013
with early adoption.
Amendments to IFRS 7 and IAS 32 on offsetting financial assets
and financial liabilities (2011).
Disclosures-Offsetting Financial Assets and Financial
Liabilities (amendments to IFRS 7) introduces disclosures about the
impact of netting arrangements on an entity's financial position.
The amendments are effective for annual periods beginning on or
after 1 January 2013 and interim periods within those annual
periods.
Offsetting Financial Assets and Financial Liabilities
(amendments to IAS 32) clarify the offsetting criteria in IAS 32 by
explaining when an entity currently has legally enforceable right
to set-off and when gross settlement is equivalent to net
settlement. The amendments are effective for annual periods
beginning on or after 1 January 2014 and interim periods within
those annual periods. Earlier application is permitted.
IFRS 9 and amendments to IFRS 10 and 12 standards have not yet
been endorsed by the EU.
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 financial
reporting 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
(IPEVB) 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 company's pound
Sterling which reflects the Group's primary activity of investing
in Sterling securities. The Company'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 Financial reporting
date are also included in the Consolidated Statement of
Comprehensive Income.
The cost of investments disposed is determined by the weighted
average method.
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.
k) Segmental reporting
Operating segments are reported in the manner consistent with
the internal reporting used by the chief operating decision-maker
('CODM'). The CODM, who is responsible for allocating resources and
assessing performance of the operating segments, has been
identified as the Board of Directors who makes strategic decisions
regarding the investment of the Fund. Other than as disclosed in
note 17, the manager does not consider necessary to provide further
analysis for the Fund.
3. Dividends
2013 2012
GBP GBP
Dividend income 894,295 918,010
894,295 918,010
-------- --------
4. Management and Investment Manager's Fee
Harwood Capital LLP (formerly North Atlantic Value LLP), the
Investment Manager, 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 2013 an amount of GBP240,821
payable to the Investment Manager(2012: GBP157,334) was included in
other payables and accrued expenses.
5. Supplementary Management 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 (supplementary management fee)
of GBP100,000.
In April 2013, the Investment Manager requested that a payment
of GBP100,000 be paid to Harwood Capital LLP in respect of the 2012
supplementary management fee (2011: GBP100,000). The supplementary
management fee is paid a year in arrears.
This payment was approved by the Board on 21.03.13.
6. 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 2013
an amount of GBP5,921 is payable to the custodian (2012 - GBP1,888)
and is included in other payables and accrued expenses.
7. 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
2013 an amount of GBP16,515 is payable to the administrator (2012 -
GBP4,975) and is included in other payables and accrued
expenses.
8. 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.
9. 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. The withheld tax shown in the profit
and loss account relates to overseas dividend income.
10. Investments at Fair Value Through Profit and Loss
2013 2012
GBP GBP
Cost at beginning of year 57,075,394 63,786,555
Additions 23,622,446 21,603,132
Disposals (18,412,668) (33,566,648)
Realised gains on investments 1,856,031 5,252,355
------------- -------------
Cost at end of year 64,141,203 57,075,394
Unrealised gain/(loss) on investments 2,587,498 (8,834,489)
------------- -------------
Fair Value at end of the year 66,728,701 48,240,905
------------- -------------
Representing:
2013 2012
GBP GBP
Listed Equities 54,377,182 36,238,222
Listed Fixed Income 544,000 352,000
Unlisted Equities 11,807,519 11,650,683
----------- -----------
66,728,701 48,240,905
----------- -----------
11. Share Capital
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 2012 to 31 March 2013
Ordinary Shares Number Share Capital
of 50p each of Shares GBP
At 1 April 2012 19,463,377 52,428,194
Cancellation of
shares (649,653) (324,827)
----------- --------------
At 31 March 2013 18,813,724 52,103,367
----------- --------------
Ordinary Shares Issued - 1 April 2011 to 31 March 2012
Ordinary Shares Number Share Capital
of 50p each of Shares GBP
At 1 April 2011 20,560,769 52,976,894
Cancellation of
shares (1,097,392) (548,700)
------------ --------------
At 31 March 2012 19,463,377 52,428,194
------------ --------------
12. Other reserves
31 March Movement 31 March
2012 2013
GBP GBP GBP
Net income 16,480,199 12,348,971 28,829,170
Repurchase of ordinary shares (9,763,279) (1,197,444) (10,960,723)
Repurchase of warrants (8,179) - (8,179)
Discount on repurchase of
Convertible Loan Stock (1,320,711) - (1,320,711)
-------------- ------------ --------------
5,388,030 11,151,527 16,539,557
-------------- ------------ --------------
13. Share Buybacks
Between 1 April 2012 and 31 March 2013, the Company carried out
6 share buybacks, resulting in
a total reduction of 649,653 shares for a cost of GBP1,522,271.
These shares were subsequently cancelled.
14. Cash Flows from Operating Activities
2013 2012
GBP GBP
Net income for the year 12,348,971 5,451,351
------------- -------------
Realised (gains) on investments (1,856,031) (5,252,355)
Unrealised (gain) on revaluation
of investments (11,421,987) (485,481)
Loss/(Gain) on foreign currency
translation 6,125 (10,981)
(13,271,893) (5,748,817)
------------- -------------
Purchase of investments (23,622,446) (21,603,132)
Proceeds from sale of investments 18,412,668 33,566,648
(5,209,778) 11,963,516
------------- -------------
Decrease/(Increase) in dividends
and interest receivable 165,846 (183,393)
(Increase)/Decrease in other receivables (2,385) 75,255
Decrease in amounts due from brokers 349,299 675,482
(Decrease)/Increase in amounts due
to brokers (28,080) 28,080
Increase/(Decrease) in other payables
and accrued expenses 215,720 (114,097)
------------- -------------
700,400 481,327
------------- -------------
(5,432,300) 12,147,377
------------- -------------
15. Reconciliation of Net Asset Value to Published Net Asset
Value
2013 2012
GBP GBP GBP GBP
Ordinary Shares per per
share share
Published Net Asset Value 71,032,504 3.78 59,676,417 3.07
Unrealised loss on revaluation
of investments at bid / mid
price (ref note (a) below) (1,088,973) (0.07) (513,693) (0.03)
Reduction in value of Subsidiary - - - -
Brokers and audit fee accrual 11,154 - - -
adjustments
Write off of receivable and (65,261) -
payables
Performance fee accrual (100,000) (0.01)
Net Asset Value attributable
to shareholders 69,889,424 3.71 59,062,724 3.03
-------------- --------- ------------- ---------
(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.
16. 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 GBP12,348,971 (2012 - net income
GBP5,451,351) and the weighted average number of shares in issue
during the year of 19,040,288 shares (2012 - 19,826,640 shares). At
31 March 2013 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 GBP69,889,424
(2012 - GBP59,062,724) and the number of shares in issue at the
year end of 18,813,724 shares (2012 - 19,463,377 shares).
17. 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 under IFRS basis.
Information on realised gains and losses derived from sales of
investments are disclosed in Note 10 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 in the annual report.
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 Manager's report , no
single investment accounts for more than 10% of the Company's
income.
The Company also has a highly diversified shareholder
population.
18. 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 .
The Group's financial instruments comprise its investment
portfolio, 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.
(i) Market risk
The fair value or future cash flows of a financial instrument
held by the Group may fluctuate because of changes in market
prices. This market risk comprises currency risk, interest rate
risk and other price risk. The Board of Directors reviews and
agrees policies for managing these risks.
Currency risk
The functional and presentational currency of the company 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 2013 the currency profile of those financial assets
and liabilities was:
GBP USD NZD EUR Total
GBP GBP GBP GBP GBP
Non current investments
at fair value through
profit or loss 50,047,109 8,095,682 4,957,768 3,628,142 66,728,701
Dividends and interest
receivable 17,500 - - - 17,500
Cash and cash equivalents 3,807,879 6 - - 3,807,885
Other receivables and
prepayments 2,385 - - - 2,385
Other payables and accrued
expenses (634,114) (32,933) - - (667,047)
Total net foreign currency
exposure 53,240,759 8,062,755 4,957,768 3,628,142 69,889,424
------------ ----------- ---------- ---------- ------------
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 to brokers (28,080) - - (28,080)
Other payables and accrued
expenses (451,327) - - (451,327)
Total net foreign currency
exposure 55,094,617 2,546,293 1,421,814 59,062,724
------------ ---------- ---------- ------------
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 GBP895,862 (2012:
GBP282,921) and reduced the net loss by GBP895,862 (2012:
GBP282,921).
If Sterling had strengthened against the US Dollar by 10%, this
would have decreased the net assets by GBP732,978 (2012:
GBP231,481) and increased the net loss by GBP732,978 (2012:
GBP231,481).
If Sterling had weakened against the Euro by 10%, this would
have increased the net assets by GBP403, 127 (2011: GBP157,979) and
reduced the net loss by GBP403,127 (2012: GBP157,979).
If Sterling had strengthened against the Euro by 10%, this would
have decreased the net assets by GBP329,832 (2012: GBP129,256) and
increased the net loss by GBP329,831 (2011: GBP129,256).
If Sterling had weakened against the New Zealand Dollar by 10%,
this would have increased the net assets by GBP550,863 (2012:
GBPNIL) and reduced the net loss by GBP550,863 (2012: GBPNIL).
If Sterling had strengthened against the New Zealand Dollar by
10%, this would have decreased the net assets by GBP450,706 (2012:
GBPNIL) and increased the net loss by GBP450,706 (2012:
GBPNIL).
Interest rate risk
Interest rate movements may affect:
-- the fair value of the investments in fixed rate securities
(including unquoted preferred shares);
-- 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 as it has no significant fixed
income investments or borrowings.
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 in this
report.
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 2013 on its investments was as
follows:
2013 2012
GBP GBP
Financial assets at fair value through
profit or loss
- Non current investments at fair
value through profit or loss 66,728,701 48,240,905
------------- -------------
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.
2013 2012
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 6,672,870 (6,672,870) 4,824,090 (4,824,090)
---------- ------------ ---------- ------------
Net assets 6,672,870 (6,672,870) 4,824,090 (4,824,090)
---------- ------------ ---------- ------------
(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.
The table below shows the split of investments with maturity
dates of less than a year and investments with no maturity
date.
2013 2012
GBP GBP
No maturity date-Listed 54,921,182 36,590,222
No maturity date-Unlisted 11,807,519 11,650,683
-----------
66,728,701 48,240,905
----------- -----------
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 Group
to hold assets and cash balances could fail and that the Group'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.
BNP Paribas Securities Services S.C.A., Guernsey Branch, as
Custodian, is a branch of BNP Paribas Securities Services S.C.A.,
whose credit ratings are A+ with Standard & Poor's, A2 with
Moody's and A+ with Fitch's.. On 31st May 2013 BNP Paribas Fund
Services (Guernsey) Limited merged into BNP Paribas Securities
Services S.C.A., Guernsey Branch. Therefore BNP Paribas Securities
Services S.C.A., Guernsey Branch will be the Administrator and
Custodian.
(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:
2013 2012
Carrying Carrying
Fair value amount Fair value amount
GBP GBP GBP GBP
Financial assets at fair
value through profit or
loss
- Non current assets 66,728,701 66,728,701 48,240,905 48,240,905
----------- ----------- ----------- -----------
- Cash and cash equivalents 3,807,885 3,807,885 10,768,581 10,768,581
----------- ----------- ----------- -----------
- Amounts due from brokers - - 349,299 349,299
----------- ----------- ----------- -----------
- Dividends and interest
receivable 17,500 17,500 183,346 183,346
----------- ----------- ----------- -----------
- Other receivables and
prepayments 2,385 2,385 - -
----------- ----------- ----------- -----------
- Amounts due to brokers - - (28,080) (28,080)
----------- ----------- ----------- -----------
- Other payables and accrued
expenses (667,047) (667,047) (451,327) (451,327)
----------- ----------- ----------- -----------
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 (at fair value through profit and loss and
held for trading) - as set out in the accounting policies.
- Financial liabilities - as set out in the accounting policies.
- 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:
2013 2012
GBP GBP
Long-term Debt - -
----------- -----------
Equity
Equity share capital 52,103,367 52,428,194
Retained earnings and other reserves 17,786,057 6,634,530
----------- -----------
69,889,424 59,062,724
----------- -----------
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.
19. 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 Group 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 Group 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 IPEVB
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 2013 Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
Financial assets at fair
value
through profit or loss
Equity securities 54,377,182 - 11,807,519 66,184,701
Debt securities 544,000 - - 544,000
54,921,182 - 11,807,519 66,728,701
----------- -------- ----------- -----------
Level
31 March 2012 Level 1 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
----------- ------ ---------- -----------
The following table summarises the changes in fair value of the
Group's Level 3 investments for the year ended 31 March 2012.
2013 2012
GBP GBP
Balance at 1 April 2012 9,550,683 9,518,017
Net realised loss on investments (149,541) -
Unrealised gain/(loss) on investments 3,130,097 (53,967)
Purchase of investments 1,200,000 1,409,246
Sale of investments (1,923,720) (1,322,613)
Level 3 transfers out - -
Balance at 31 March 2013 11,807,519 9,550,683
------------ ------------
Change in unrealised gain/(loss) on
investments included in Statement of
Comprehensive Income for Level 3 investments
held 3,130,099 129,349
------------ ------------
Level 3 transfers in refers to the changes in circumstances and
valuation approach in respect of investments that were previously
classified as level 2. Investments held within Level 3 were valued
using a number of different valuation methods, including indicative
offers received from interested third parties during a formal
bidding process. The Directors, with the assistance of the
Investment Manager, have selected the price that, in their opinion,
best approximates fair value for those investments at the year
end.
20. Related Parties
The Investment Manager is considered to be a related party. The
fees paid are included in the Consolidated Statement of
Comprehensive Income.
At 31 March 2013 GBP240,821 (2012 - GBP157,334) included in
other accruals and payables was payable to the Investment
Manager.
The Directors are also considered to be related parties and
their fees are disclosed in the Consolidated
Statement of Comprehensive Income.
At 31 March 2013, GBP37,295 (2012 - GBP41,970) included in other
accruals and payables was payable to the Directors.
Christopher Mills is a Director and shareholder of Oryx
International Growth Fund Limited. He is also the Chief Executive
and a Member of Harwood Capital LLP (formerly North Atlantic Value
LLP), the Company's Investment Manager.
21. Post Balance Sheet Events
There were no Post Balance Sheet Events up to date of signing of
the financial statements.
Enquiries:
BNP Paribas Securities Services S.C.A., Guernsey Branch 01481 750850
Company Secretary
Sara Bourne
Winterflood Securities Limited 020 3100 0295
Jane Lewis
This information is provided by RNS
The company news service from the London Stock Exchange
END
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