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SVM UK Emerging Fund Plc - Half-year Report


(the “Fund”)



A copy of the Half Yearly Report will be available to download from the Manager’s website at and a copy will shortly be available for inspection at the National Storage Mechanism at . Copies are also available at , EH2 3AH, the registered office of the Fund.www.svmonline.co.ukwww.morningstar.co.uk/uk/nsm7 Castle StreetEdinburgh


 “Long term capital growth from investments in smaller companies. Its aim is to outperform the IA All Companies Sector Average Index on a total return basis”UKUK

Financial Highlights

* The benchmark index for the Fund was changed to the IA All Companies Sector Average IndexUK

from prior to which the FTSE AIM Index was used.1 October 2013


Over the six months to , the Company’s net asset value gained 28.4% to 105.0p per share, compared to a return of 12.8% in the benchmark, the IA All Companies Sector Average Index.   Over the six months, the share price rose 1.4%.  Over the five years to , net asset value has gained 31.4% and the share price 17.4%, against a benchmark return of 17.0%.  The Company’s net asset value was 104.71p] at (total return, Lipper data). 30 September 202030 September 202031 October 2020UK

The period under review began after a sharp stockmarket fall, resulting from the disruption caused by COVID-19, but over the six months many shares rebounded. Most portfolio investments rose following government and Bank of England support for the worst hit sectors. Higher unemployment remains a risk for the economy; lower inflation and interest rates are now likely.  More recently, market concerns with regard to a successful Brexit have resurfaced.UK

The strongest contributions to performance over the period were from Ocado, 4Imprint Group, Rentokil Initial, Games Workshop and Gamma Communications.  Laggards included Workspace Group, Beazley and Creo Medical Group. During the six months, travel and property sector exposure was reduced; EasyJet, Trainline, Workspace, IWG and WH Smith were sold. New investments were made in manufacturing and industrial services; Avon Rubber, Aveva, and DiscoverIE Group. We expect many businesses to increase focus on resilience and sustainability; shortening supply chains and strengthening their online capability.

The investment strategy of the Company involves focusing on growing businesses benefiting from structural change in the economy. Typically, these have pricing power within their chosen niche. Companies that were already well invested in technology and able to make good use of customer data have seen an acceleration of change this year. Businesses are demanding more enterprise support services, assisting cloud data, mobile services and virtual operations. Suppliers of these technologies were typically already disrupters in their sectors and have proven their agility in offering differentiated services in scalable ways. 

The crisis has heightened the contrast between legacy businesses and well-adapted agile disruptors. Changes in tastes are often slow to evolve, but persistent once set. At the centre of this trend is a shift in sentiment to the home environment and wellbeing.  This investment theme could shape the economy for some time and the portfolio includes a number of businesses expected to benefit from these trends.

The portfolio focuses on resilient growing businesses, with low exposure to commodities, oil and banks. These are typically scalable businesses with a competitive edge. The Fund remains fully invested with some additional gearing.

Peter Dicks


6November 2020


The investment objective of SVM UK Emerging Fund plc (the “Fund” or the “Company”) is long term capital growth from investments in smaller companies. Its aim is to outperform the IA All Companies Sector Average Index on a total return basisUKUK

The Fund aims to achieve its objective and to diversify risk by investing in shares and related instruments, controlled by a number of limits on exposures. Appropriate guidelines for the management of the investments, gearing and financial instruments have been established by the Board. This is an abridged version of the Fund’s investment policy.  The full investment policy can be found in the Strategic Report within the Fund’s latest Annual Report & Accounts.


The Directors are responsible for preparing the Half Yearly Report in accordance with applicable law and regulations.  

The Directors confirm that to the best of their knowledge:

(i)        the condensed set of financial statements have been prepared in accordance with the Financial Reporting Council Statement 104 “Interim Financial Reporting” on a going concern basis, taking in to account guidance on Covid-19,  and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Fund;

(ii)         the Half Yearly Report includes a fair review of the information required by the Disclosure and Transparency Rules DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and DTR 4.2.8R (disclosure of related party transactions and changes therein).

(iii)        No related party transactions have taken place during the first six months of the year that have materially affected the financial position of the Fund during the period and there have been no changes in the related party transactions described in the Annual Report & Accounts for the year end that could do so.31 March 2020

The Directors consider that the Half Yearly Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Fund’s performance and strategy,

The Half Yearly Report has not been audited or reviewed by the Fund’s auditors.

By Order of the Board

Peter Dicks


6 November 2020






Risks and Uncertainties

The principal risks facing the Fund relate to the investment in financial instruments and include market, liquidity, credit and interest rate risk.  Additional risks faced by the Fund are investment strategy, share price discount, accounting, legal and regulatory, operational, corporate governance and shareholder relations, and financial.  The Board seeks to mitigate and manage these risks through continuous review, policy setting and enforcement of contractual obligations.  The Board receives both formal and informal reports from the Managers and third party service providers addressing these risks.  An explanation of these risks and how they are mitigated is explained in the 2020 Annual Report, which is available on the Manager’s website: .  These principal risks and uncertainties have not changed from those disclosed in the 2020 Annual Report.www.svmonline.co.uk

Going Concern

The Board, having made appropriate enquiries, has a reasonable expectation that the Fund has adequate resources to continue in operational existence for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, it continues to adopt the going concern basis in preparing the financial statements.


1.         The Financial Statements have been prepared on a going concern basis in accordance with FRS 102 “Financial Reporting Standard applicable in the and Republic of Ireland”, FRS 104 “Interim Financial Reporting” and under the Association of Investment Companies Statement of Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital Trusts” (“SORP”) issued in 2019 (the interim financial statements for the period to were prepared under the SORP issued in 2014).  The requirements have been met to qualify for the exemption to prepare a Cash Flow Statement. These financial statements have been prepared in accordance with the accounting policies used for the financial year ended .  UK30 September 201931 March 2020

2.         During the period no shares were bought back (2019 - 10,000 Ordinary Shares with a nominal value of £500 and representing 0.17% of the issued share capital were bought back and placed in treasury for an aggregate consideration of £8,650).

            The number of shares in issue at was 5,995,000 (2019 – 5,995,000).30 September 2020

            Return per share is based on a weighted average of 5,995,000 (2019 – 6,004,672) ordinary shares in issue during the period.

Total return per share is based on the total gain for the period of £1,384,000 (2019 – gain of £85,000). Capital return per share is based on the capital gain for the period of £1,442,000 (2019 – gain of £47,000). Revenue return per share is based on the revenue loss after taxation for the period of £58,000 (2019 - gain of £38,000).

3.         All investments are held at fair value.  At no unlisted investments were held with value attributed (: same; : same).30 September 202031 March 202030 September 2019

            Investments have been classified using the fair value hierarchy:

            Level 1 reflects financial instruments quoted in an active market.

            Level 2 reflects financial instruments whose fair value is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from observable markets.  The CFD positions are the sole Level 2 investments at and .30 September 202031 March 2020

            Level 3 reflects financial instruments whose fair value is determined in whole or in part using a valuation technique based on assumptions that are not supported by prices from observable market transactions in the same instrument and not based on available observable market data.

4.            The Board has granted the Manager a limited authority to invest in CFDs to achieve some degree of gearing and/or hedging without incurring the gross cost of the investment. The Board requires the Manager to operate within certain risk limits, as detailed in the Annual Report. The following table details the CFD positions:

Number of CFD holdings at : 9 (: 9)30 September 202031 March 2020

The gearing ratio is 11.4% at (: 16.5%).  The gearing figure indicates the extra amount by which the shareholders’ funds would change if total assets (including CFD position exposure and netting off cash and cash equivalents) were to rise or fall.  A figure of zero per cent means that the Company has a nil geared position.30 September 202031 March 2020

5.         SVM Asset Management Limited provides investment management and secretarial services to the Fund.  The Manager is entitled to a fee for these services, payable quarterly in arrears, equivalent to 0.75% per annum of the total assets of the Fund, less current liabilities.

6.         The above figures do not constitute full or statutory accounts in terms of Sections 434 and 435 of the Companies Act 2006. All information shown for the six months to is30 September 2020

            unaudited. The accounts for the year to , on which the auditors issued an unqualified report, have been lodged with the Registrar of Companies and did not contain a statement required under Section 498 of the Companies Act 2006. 31 March 2020

For further information, please contact:

Colin McLean                SVM Asset Management            0131 226 6699

Sally Moore                  Four Communications                020 3697 4200

--  Net asset value return of 28.4% compared to a 12.8% return in the IA 
        All Companies Sector Average Index and 7% return in the FTSE All-Share
        Index.The share price rose 1.4%.

    --  Over the five years to , net asset value gained 31.4%
        and the share price 17.4%, against a benchmark return of 17.0%.UK30 September 2020
--  At , net asset value per share was 104.71p
    --  Positive contributions from Ocado, 4Imprint Group, Games Workshop and
        Gamma Communications31 October 2020
--  Portfolio emphasises exposure to scalable businesses with a competitive
        edge that can protect margins and deliver growth.
Total Return Performance to 30 September 2020                          10 Years
                                              6 months 3 years 5 Years

Net Asset Value                                +28.4%   -2.5%  +31.4%   +51.7%

Share Price
                                               +1.4%   -11.8%  +17.4%   +44.9%

Benchmark Index *
                                               +12.8%   -8.2%  +17.0%   +31.0%
Income Statement

                                      Six months to 30      Six months to 30
                                         September           September 2019

                                   Revenue Capital  Total Revenue Capital Total

                                     £’000   £’000  £’000   £’000   £’000 £’000

Net gain on investments at fair          -   1,464  1,464       -      73    73

Income                                  20       -     20      94       -    94

Investment management fees               -    (22)   (22)       -    (26)  (26)

Other expenses                        (73)       -   (73)    (45)       -  (45)

(Loss)/gain before finance costs      (53)   1,442  1,389
and taxation                                                   49      47    96

Finance costs                          (5)       -    (5)    (11)       -  (11)

(Loss)/gain on ordinary activities    (58)   1,442  1,384
before taxation                                                38      47    85

Taxation                                 -       -      -       -       -     -

(Loss)/Gain attributable to           (58)   1,442  1,384
ordinary shareholders                                          38      47    85

(Loss)/Gain per Ordinary Share     (0.96)p 24.05p  23.09p   0.63p   0.78p 1.41p
Year ended 31 March 2020

                           Revenue  Capital    Total

                             £’000    £’000    £’000
                                                       he Total column of this
Net loss on investments at       -  (1,633)  (1,633)  statement is the profit
fair value                                            and loss account of the
                                                      Fund. All revenue and
Income                         137        -      137  capital items are derived
                                                      from continuing
Investment management fees       -     (52)     (52)  operations. No operations
                                                      were acquired or
Other expenses               (120)        -    (120)  discontinued in the year.
                                                      A Statement of
Gain/(loss) before finance      17  (1,685)  (1,668)  Comprehensive Income is
costs and taxation                                    not required as all gains
                                                      and losses of the Fund
Finance costs                 (24)        -     (24)  have been reflected in the
                                                      above statement.
Loss on ordinary               (7)  (1,685)  (1,692)
activities before taxation

Taxation                         -        -        -

Loss attributable to           (7)  (1,685)  (1,692)
ordinary shareholders

Loss per Ordinary Share    (0.12)p (28.08)p (28.20)p
Balance Sheet

                                                   As at     As at        As at
                                            30 September 31 March  30 September
                                                    2020 (audited)         2019
                                             (unaudited)            (unaudited)

                                                   £’000     £’000        £’000

Fixed Assets

Investments at fair value through profit or        6,278     4,463        6,668

Total Current Assets                                 227       745          138

Creditors: amounts falling due within one          (212)     (299)        (121)

Net current assets                                    15     (446)           17

Total assets less current liabilities              6,293     4,909        6,685

Capital and Reserves                               6,293     4,909        6,685

Equity shareholders’ funds                         6,293     4,909        6,685

Net asset value per Ordinary Share               104.97p    81.88p      111.51p
Statement of Changes in Equity

For the period to 

                 Share   Share Special   Capital  Capital Revenue
               capital premium reserve redemption reserve reserve

                 £’000   £’000   £’000      £’000   £’000   £’000   £’000

As at 1 April      300     314   5,136         27   (492) (376)   (4,909)

Gain/(Loss)          -       -       -          -   1,442    (58)   1,384

As at 30           300     314   5,136         27     950   (434)   6,293
September 2020

For the year to 

                 Share   Share Special    Capital Capital Revenue
               capital premium reserve redemption reserve reserve
                                          reserve                   Total

                 £’000   £’000   £’000      £’000   £’000   £’000   £’000

As at 1 April      300     314   5,144         27   1,193   (369)   6,609

shares               -       -     (8)          -       -       -     (8)

Loss                 -       -       -          -
attributable                                      (1,685)     (7) (1,692)

As at 31 March     300     314   5,136         27   (492)   (376)   4,909

For the period to 

                 Share   Share Special    Capital Capital Revenue
               capital premium reserve redemption reserve reserve
                                          reserve                   Total

                 £’000   £’000   £’000      £’000   £’000   £’000   £’000

As at 1 April      300     314   5,144         27   1,193   (369)   6,609

Ordinary             -       -     (9)          -       -       -
shares                                                                (9)

Gain                 -       -       -          -      47      38      85

As at 30           300     314   5,135         27   1,240   (331)   6,685
September 201930 September 202031 March 202030 September 2019
Investment Portfolio as at 

                     Market    % of Net  Sector analysis as  % of Gross
                   Exposure      Assets  at 30 September      Exposure
Stock                  2020              2020

 1 Ocado Group          343         5.5  Industrials                 20.4

 2 Hilton Food          261         4.1  Consumer                    19.1
   Group                                 Discretionary

 3 Rentokil             241         3.8  Technology                  15.3

 4 Unite Group          231         3.6  Consumer Staples            11.8

 5 Alpha Financial      211         3.4  Financials                   9.6

 6 Knights Group        208         3.3  Real Estate                  6.5

 7 Dechra               192         3.1  Healthcare                   5.8

 8 Gamma                179         2.8  Consumer Services            4.7

 9 4Imprint Group       177         2.8  Telecommunications           3.6

10 FDM Group            168         2.7  Energy                       2.4

Ten largest           2,211        35.1  Consumer Goods 0.8

11 JD Sports            152         2.4  Total                      100.0
   Fashion *

12 Games Workshop       148         2.4

13 Experian             146         2.3

14 Renishaw *           128         2.0

15 Codemasters          127         2.0

16 Learning             126         2.0

17 Just Eat             123         2.0
   Takeaway *

18 Keystone Law         120         1.9

19 Ceres Power          117         1.9

20 Draper Espirit       116         1.8

Twenty largest        3,514        55.8

21 Flutter              116         1.8
   Entertainment *

22 XP Power             111         1.8

23 Globaldata           107         1.7

24 Johnson Service      103         1.6

25 Computacenter         98         1.6

26 Manolete              98         1.6

27 Dunelm Group          98         1.6

28 Asos *                97         1.5  *Includes Contract for
                                         Difference (“CFD”)
29 Beazley Group         96         1.5

30 Team17 Group          92         1.5  Market exposure for equity
                                         investments held is the same as
Thirty largest        4,530        72.0  fair value and for CFDs held is
investments                              the market value of the
                                         underlying shares to which the
Other investments     2,351        37.4  portfolio is exposed via the
(38 holdings)                            contract. The investment
                                         portfolio is grossed up to
Total investments     6,881       109.4  include CFDs and the net CFD
                                         position is then deducted in
CFD positions         (750)      (11.9)  arriving at the net asset total.

CFD unrealised          147         2.3

Net current assets       15         0.2

Net assets            6,293       100.030 September
September 2020 March 2020
                                                   £000       £000

Classification of financial instruments

Level 1                                           6,131      4,455

Level 2                                             147          8

Level 3 – 2 investments (March 2020 – 2)              -          -
CFD positions     September 2020 March 2020

                            £000       £000

Gross exposure               750        514

Net exposure                 750        514

Unrealised gains             147          8

Unrealised losses             92        224

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