Interim Report & Financial Statements. Elite Webb Capital Fund. For the six months ended 31 August 2018 (unaudited)

Transcription

1 Interim Report & Financial Statements Elite Webb Capital Fund For the six months ended 31 August 2018 (unaudited)

2 contents Elite Webb Capital Fund Page Authorised Corporate Director s ( ACD ) Report* 3 Certification of Financial Statements by Directors of the ACD* 4 Elite Webb Capital Smaller Companies Income & Growth Fund 5 General Information 14 Contact Information 17 * Collectively these comprise the ACD s Report. 2

3 Elite Webb Capital Fund Authorised Corporate Director's Report We are pleased to present the Interim Report & Financial Statements for Elite Webb Capital Fund for the six months ended 31 August Authorised Status Elite Webb Capital Fund ("the Company") is an investment company with variable capital ("ICVC") incorporated in England and Wales under registered number IC and authorised by the Financial Conduct Authority ("FCA"), with effect from 19 November The Company has an unlimited duration. Shareholders are not liable for the debts of the Company. Head Office: the Head Office of the Company is at Cedar House, 3 Cedar Park, Cobham Road, Wimborne, Dorset BH21 7SB. The Head Office is the address of the place in the UK for service on the Company of notices or other documents required or authorised to be served on it. Structure of the Company The Company is structured as an umbrella company, in that different Funds may be established from time to time by the ACD with the approval of the FCA. On the introduction of any new Fund or Share Class, a revised prospectus will be prepared setting out the relevant details of each Fund or Share Class. The Company is a non-ucits retail scheme ("NURS"). The assets of each Fund will be treated as separate from those of every other Fund and will be invested in accordance with the investment objective and investment policy applicable to that Fund. Investment of the assets of each of the Funds must comply with the FCA's Collective Investment Schemes Sourcebook ("COLL"), the FCA's Investment Funds Sourcebook ("FUND") and the investment objective and policy of the relevant Fund. Currently the Company has only one Fund. In the future there may be other Funds established. Under the Alternative Investment Fund Managers Directive ( AIFMD ) we are required to disclose remuneration information (see page 15) in regards to those individuals whose actions have a material impact on the risk profile of the Company. Base Currency: The base currency of the Company is Pounds Sterling. Share Capital: The minimum Share Capital of the Company is 1 and the maximum is 100,000,000,000. Shares in the Company have no par value. The Share Capital of the Company at all times equals the Net Asset Value of the Fund. 3

4 Elite Webb Capital Fund Certification of Financial Statements by Directors of the ACD For the six months ended 31 August 2018 (unaudited) Directors' Certification This report has been prepared in accordance with the requirements of COLL and FUND, as issued and amended by the FCA. We hereby certify the report on behalf of the Directors of WAY Fund Managers Limited. The Directors are of the opinion that it is appropriate to continue to adopt the going concern basis in the preparation of the Financial Statements as the assets of the Fund consist predominantly of securities that are readily realisable, and accordingly, the Fund has adequate resources to continue in operational existence for the foreseeable future. V. Hoare I. Hobday WAY Fund Managers Limited 29 October

5 Elite Webb Capital Smaller Companies Income & Growth Fund Investment Manager s Report For the six months ended 31 August 2018 (unaudited) Investment Objective The investment objective of the Fund is to provide a mixture of long term capital growth and income. Investment Policy The Fund will aim to achieve its investment objective through a portfolio of transferable securities (including investment trusts), Collective Investment Schemes, deposits and money market instruments. The Fund will invest primarily in ordinary Shares and the convertible loan stock of UK smaller companies listed, quoted and/or traded in the UK including those listed on the LSE Main Market, AIM and Plus and which are selected for their growth and yield characteristics. For the purpose of the investments into which the fund will be primarily invested, a smaller company is defined as being listed on AIM or PLUS or having a main market listing and having a market capitalisation of less than 300 million. The Fund may also invest in selected unlisted convertible loan stock to a maximum of 20% in aggregate of the value of the scheme property as permitted by the Regulations. The portfolio will be actively managed and normally remain fully invested save for such operational liquidity as may be required from time to time. The assets of the Fund will be managed in such a way that the Shares in the Fund will be qualifying investments for Individual Savings Accounts. Derivatives will not be used. Investment Review The period under review was another successful period for investors in the fund with strong gains in all unit classes. *Among the best performing investments were Xpediator, the acquisitive logistics group (share price up 59%); Lighthouse Group, the UK based IFA (share price up 35%); private banking group Arbuthnot (share price up 16%); PCF Bank, the asset backed lender (share price up 26%) and Harvey Nash, a leading IT recruitment company specialising in Information Technology (share price up 51%). There was just one disappointment and that was at XL Media, a company procuring customers for the global gaming industry that experienced a slowdown in growth expectations due to regulatory changes overseas and consolidation amongst its UK customer base. As is always the case, the shares were sold on this warning. The fund made a good profit on investment albeit not as high as it might have been. Caretech Holdings, a provider of specialist care services for vulnerable young people and adults, announced the acquisition of children s care specialist Cambian Group. The combined business looks very interesting and may well prove to be an exciting investment for the future. Your Manager increased the Fund s shareholding in Caretech towards the end of the period. Harvey Nash received a bid from its largest shareholder at 130p per share. This looks opportunistic given the significant improvement in profitability achieved part the way through a 3 year plan of business transformation. However, with management support it might succeed and prove a steal for a greedy hedge fund. As part of the process of seeking value 2 of our larger company investments were sold to make way for valuebased investments lower down the market capitalisation range. It is not that I am in any way pessimistic about the future of companies such as FDM Group and RWS Holdings but more-so that share price valuations appear high enough. JRP Group was sold because it did not meet our initial expectations. New investments were made in old chestnut, Safestay, the pan European branded hostel owner and operator; T Clarke, the building services provider; Michelmersh Brick, a substantial producer of quality bricks for housing and RMI sectors; HML Holdings, the property management services group with 74,000 blocks of properties under management; Getech, a provider of expertise to governments and major exploration companies to assist in the discovery of natural resources and Venture Life, an acquisitive consumer facing personal care company that has recently completed a successful fund raising supported by leading UK institutions. 5

6 Elite Webb Capital Smaller Companies Income & Growth Fund Investment Manager s Report (continued) For the six months ended 31 August 2018 (unaudited) Investment Review (continued) In summary, the period under review has been one of subtle change and the heart of the portfolio at the start of the period remains largely intact. The main reason for change has been your manager's ongoing pursuit of value within a market where growth valuations appear close to their peaks. Market Overview The UK equity market seems to lack direction right now and the issues pertaining to Brexit and constant bickering amongst politicians about the best way forward are hardly conducive to rational thinking. The Bank of England has recently raised base rates on far from clear economic grounds and seems somewhat spell bound by the lack of clear leadership from the top. It is very apparent that certain sectors of the UK economy are not growing as fast as they were just a short while ago. Whether this is the fault of economic uncertainty caused by Brexit, the upwards direction of base rates or the traditional economic cycle running its course, I do not know. However, I believe that some cause for caution is required. Growth company valuations may well have peaked relative to the remainder of the market. It is perfectly possible that growth company share price ratings will remain high while companies continue to deliver strong earnings growth and interest rates remain low. However, even modest earnings disappointment has in the past led to dramatic loss of value in this type of company and the risks right now appear high. It is noticeable that many of the fastest growing British businesses are significant exporters. More traditional value style investment strategies may well become more popular in uncertain times. However, the performance of cyclicals in general remains poor. Corporate activity tends to peak towards the end of a bull market and there is plenty going on right now with perhaps more to come. Outlook The Fund has performed exceptionally well during recent times and particularly when measured against other funds investing in UK equities (source : FE Analytics). A focus on value brings defence to the portfolio that would not be provided if we have continued to focus primarily on more highly valued international companies. This does not necessarily mean that cheap cannot get cheaper and growth more expensive. On balance your Manager has made the decision that he believes that value will become a greater slice of the worth of the overall market in the immediate future and positioned the fund accordingly. Your Investment Manager believes that the Fund is well positioned to enjoy further growth in the second half of the year and looks forward to the future with confidence. *Source of data: Peterhouse Capital Asset Management Investment Manager Peterhouse Capital Asset Management Limited 13 September

7 Elite Webb Capital Smaller Companies Income & Growth Fund Net Asset Value per Share and Comparative Table As at 31 August 2018 (unaudited) Net Asset Value Date Net Asset Value of Net Asset Value Percentage Share Class ( ) Shares in issue pence per Share Change (%) Share Class B Accumulation 28/02/18 758, , /08/18 890, , Share Class B Income 28/02/18 1,142, , /08/18 899, , Share Class Retail Accumulation 28/02/18 973, , /08/18 1,134, , Share Class Retail Income 28/02/18 242, , /08/18 270, ,

8 Elite Webb Capital Smaller Companies Income & Growth Fund Performance Information As at 31 August 2018 (unaudited) Operating Charges Other Transaction Operating AMC* expenses costs Charges Date (%) (%) (%) (%) 31/08/18 Share Class B Share Class Retail /02/18 Share Class B Share Class Retail * Annual Management Charge The Operating Charge is the total expenses paid by the Fund in the period, annualised, against its average Net Asset Value. This will fluctuate as underlying costs change. Risk Warning An investment in an Open-Ended Investment Company should be regarded as a medium to long term investment. Investors should be aware that the price of Shares and the income from them may fall as well as rise and investors may not receive back the full amount invested. Past performance is not a guide to future performance. Investments denominated in currencies other than the base currency of a fund are subject to fluctuation in exchange rates, which may be favourable or unfavourable. 8

9 Elite Webb Capital Smaller Companies Income & Growth Fund Portfolio Statement As at 31 August 2018 (unaudited) Holdings or Nominal Market value % of Total Value Investments Net Assets Jersey 4.44% [9.60%] 465,000 SyQic ,625 XP Power 141, , United Kingdom 96.48% [93.19%] 350,000 1pm 2 182, ,000 AFH Financial 2 192, ,918 Arbuthnot Banking 2 161, ,000 Arena Events 2 159, ,200 Avation 169, ,000 Bilby 2 118, ,365 Caretech 2 170, ,050 Cello 2 111, ,000 Clarke, T 104, ,750 Constellation Healthcare Technologies - Promissory Note 1 52, ,000 Finsbury Food 2 123, ,000 GETECH 2 96, ,000 Gordon Dadds 2 147, ,341 Harvey Nash 2 142, ,000 HML 2 96, ,120 Lighthouse 2 153, ,000 Mickelmersh Brick 2 102, ,647 Oxford Instruments 141, ,000 PCF 2 145, ,000 S&U 31.5% Cumulative Preference 12.5p 13, ,000 Safestay 2 121, ,000 Venture Life 2 84, ,167 Xpediator 2 163, ,340 Zotefoams 129, ,082, Portfolio of investments 3,224, Net other liabilities (29,440) (0.92) Net assets 3,194, Unquoted Investments. Priced by the Fair Value Pricing Committee of the ACD on a Fair Value Price basis. 2 Holdings quoted on AIM. Unless otherwise stated, all other Holdings are held on a main market. Comparative figures shown above in square brackets relate to 28 February Gross purchases for the six months: 910,906 [2017: 905,796]. Total sales net of transaction costs for the six months: 1,288,312 [2017: 1,582,109]. 9

10 Elite Webb Capital Smaller Companies Income & Growth Fund Statement of Total Return For the six months ended 31 August 2018 (unaudited) 01/03/18 to 31/08/18 01/03/17 to 31/08/17 Income Net capital gains 371, ,187 Revenue 42,064 60,957 Expenses (36,937) (30,390) Interest payable and similar charges (792) (323) Net revenue before taxation 4,335 30,244 Taxation - - Net revenue after taxation 4,335 30,244 Total return before distributions 375, ,431 Distributions (22,802) (45,440) Change in net assets attributable to Shareholders from investment activities 352, ,991 Statement of Change in Net Assets Attributable to Shareholders For the six months ended 31 August 2018 (unaudited) 01/03/18 to 31/08/18 01/03/17 to 31/08/17 Opening net assets attributable to Shareholders 3,116,279 3,359,827 Amounts received on issue of Shares 329,554 25,856 Less: Amounts paid on cancellation of Shares (625,588) (1,056,827) (296,034) (1,030,971) Dilution Levy 6,997 9,930 Change in net assets attributable to Shareholders from investment activities (see above) 352, ,991 Retained distribution on accumulation Shares 14,579 19,292 Closing net assets attributable to Shareholders 3,194,785 2,702,069 The above statement shows the comparative closing net assets at 31 August 2017 whereas the current accounting period commenced 1 March

11 Elite Webb Capital Smaller Companies Income & Growth Fund Balance Sheet As at 31 August 2018 (unaudited) 31/08/18 28/02/18 Assets Fixed assets: Investment 3,224,225 3,203,208 Current assets: Debtors 81, ,429 Total current assets 81, ,429 Total assets 3,305,858 3,340,637 Liabilities Creditors: Bank overdrafts (55,158) (208,886) Distribution payable on income Shares (8,299) - Other creditors (47,616) (15,472) Total creditors (111,073) (224,358) Total liabilities (111,073) (224,358) Net assets attributable to Shareholders 3,194,785 3,116,279 11

12 Elite Webb Capital Smaller Companies Income & Growth Fund Notes to the Interim Financial Statements For the six months ended 31 August 2018 (unaudited) Accounting Basis, Policies and Valuation of Investments Basis of accounting The interim Financial Statements have been prepared under the historical cost basis, as modified by the revaluation of investments and in accordance with FRS 102 The Financial Reporting Standards Applicable in the UK and Republic of Ireland and the Statement of Recommended Practice ( SORP ) for Financial Statements of UK Authorised Funds issued by the Investment Association in May The accounting policies applied are consistent with those of the audited annual Financial Statements for the year ended 28 February 2018 and are described in those Financial Statements. In this regard, comparative figures from previous periods are prepared to the same standards as the current period, unless otherwise stated. As described in the Certification of Financial Statements by Directors of the ACD on page 4, the ACD continues to adopt the going concern basis in the preparation of the Financial Statements of the Fund. Basis of valuation of investments Listed investments are valued at close of business bid prices excluding any accrued interest in the case of fixed interest securities, on the last business day of the accounting period. Market value is defined by the SORP as fair value which is the bid value of each security. Unlisted or suspended investments are valued by the Investment Manager taking into account, where appropriate, latest dealing prices, valuations from reliable sources, financial performance and other relevant factors. All investments are recognised and derecognised on trade date, and any trades that occur between valuation point and close of business are included in the Financial Statements. Non-observable entity specific data is only used where relevant observable market data is not available. Typically this category will include single broker priced instruments, suspended/unquoted securities, private equity, unlisted close-ended funds and open-ended funds with restrictions on redemption rights. SyQic Plc was suspended in February This is being valued at zero. 12

13 Elite Webb Capital Smaller Companies Income & Growth Fund Distribution Table As at 31 August 2018 (unaudited) Interim Distribution in pence per Share Group 1 Shares purchased prior to 1 March 2018 Group 2 Shares purchased on or after 1 March to 31 August 2018 Share Class B Accumulation Distribution Distribution Net payable paid revenue Equalisation 31/10/18 31/10/17 (p) (p) (p) (p) Group Group Share Class B Income Group Group Share Class Retail Accumulation Group Group Share Class Retail Income Group Group

14 Elite Webb Capital Fund General Information Classes of Shares The Company can issue different classes of Shares in respect of the Fund. Holders of Income Shares are entitled to be paid the revenue attributable to such Shares, in respect of each annual accounting period. Holders of Accumulation Shares are not entitled to be paid the revenue attributable to such Shares, but that revenue is retained and accumulated for the benefit of Shareholders and is reflected in the price of Shares. Buying and Selling Shares The ACD will accept orders to deal in the Shares on normal business days between 9.00 am and 5.00 pm. Instructions to buy or sell Shares should be in writing to: WAY Fund Managers Limited - Cedar House, 3 Cedar Park, Cobham Road, Wimborne, Dorset BH21 7SB. A contract note will be issued by close of business on the next business day after the dealing date to confirm the transaction. Valuation Point The valuation point for the Fund is 12 noon on each dealing day (being each day which is a business day in London). Valuations may be made at other times under the terms contained within the Prospectus. Prices The prices of Shares for each class in the Fund will be posted via a link on (Financial Express). Report The annual report of the Company will normally be published within two months of each annual accounting period, although the ACD reserves the right to publish the annual report at a later date but not later than four months from the end of each annual accounting period. Interim Financial Statements period ended: Annual Financial Statements year ended: 31 August 28 February Distribution Payment Dates Interim Annual 31 October 30 April 14

15 Elite Webb Capital Fund General Information (continued) Significant Information Under the Alternative Investment Fund Managers Directive ("AIFMD"), acting as the Alternative Investment Fund Manager ("AIFM"), WAY Fund Managers Limited is required to disclose how those whose actions have a material impact on the Fund are remunerated. WAY Fund Managers Limited deems itself as lower risk due to the nature of the activities it conducts and the size of the firm. Therefore the remuneration strategy is governed by the WAY Fund Managers Limited Board and WAY Fund Managers Limited has chosen not to have a Remuneration Committee. The AIFM Remuneration Code in the UK Financial Authority handbook is met proportionately for all AIFM Remuneration Code Staff. WAY Fund Managers Limited considers its activities as non complex due to the fact that regulation limits the AIF strategies conducted and the scope of investment in such a way that investor risk is mitigated. The discretion of WAY Fund Managers Limited and the portfolio manager is strictly controlled within certain pre-defined parameters as determined in the prospectus of each Alternative Investment Fund. In its role as an AIFM, WAY Fund Managers Limited deems itself as lower risk due to the nature of the activities it conducts. WAY Fund Managers Limited does not pay any form of variable remuneration currently. Therefore WAY Fund Managers Limited has provided a basic overview of how staff whose actions have a material impact on the Fund are remunerated. August 18 Total remuneration paid by WAY during the financial year Remuneration paid to employees of WAY who have a material impact on the risk profile of the AIF Number of Beneficiaries Total remuneration paid Fixed remuneration Variable remuneration paid Carried interest paid by the AIF 40 1,456,015 1,456, , , Due to the size and structure of WAY Fund Managers Limited, it is determined that employees of the AIFM who have a material impact on the risk profile of the AIF include the Board, Head of Finance and Head of Risk and Compliance. The delegated investment manager is subject to regulatory requirements on remuneration that WAY Fund Managers Limited deem to be equally as effective as those detailed in the AIFMD, which would include the Capital Requirements Directive or Markets in Financial Instruments Directive. 15

16 Elite Webb Capital Fund General Information (continued) Other Information The Instrument of Incorporation, Prospectus, the NURS Kii and the most recent interim and annual reports may be inspected at the office of the ACD which is also the Head Office of the Company and copies may be obtained upon application. Shareholders who have any complaints about the operation of the Company should contact the ACD or the Depositary in the first instance. In the event that a Shareholder finds the response unsatisfactory they may make their complaint direct to the Financial Ombudsman Service at Exchange Tower, Harbour Exchange Square, London E14 9SR. Data Protection By completing and submitting an application to invest in any of the Funds that WAY Fund Managers Limited operates, you will be giving your consent to the processing of your personal data (including any anti-money laundering verification check), by us for the administration of services in connection with your investment on a contractual basis. Additionally we may be requested to share your personal data with our regulator, the Financial Conduct Authority, or for wider compliance with any legal or regulatory obligation to which we might be subject. If you have used an intermediary to submit the application we may also share information about your investment with them, to help them to continue to provide their services to you, unless you request us not to. We may share your personal data with contracted third parties for the purposes mentioned above (however this does not entitle such third parties to send you marketing or promotional messages) and we do not envisage that this will involve your personal data being transferred outside of the European Economic Area. We make every effort to maintain the registration of your holdings accurately. However, if you feel that we have incorrectly recorded any of your personal data, you may request its correction. You have the right to request copies of your personal data stored by us and can do so by using our contact details below. Your data will be stored and processed securely for the period of your contract with us and for a minimum of seven years after our relationship ceases, for regulatory and legislation purposes only. We are registered with the Information Commissioner s Office as a Data Controller and Data Processor for this purpose. Further information on how we manage your personal data can be found within our Privacy Notice which can be found on our website Should you wish to make a complaint or request further information on how we collect and process your personal data please contact us at: Data Protection Office, WAY Fund Managers Limited, Cedar House, 3 Cedar Park, Cobham Road, Wimborne, Dorset, BH21 7SB. DPO@wayfunds.com Tel: Alternatively, if you have any concerns or complaints as to how we have handled your personal data, you may lodge a complaint to the Information Commissioner s Office through their website which can be found at Effects of Personal Taxation Investors should be aware that unless their Shares are held within an ISA, selling Shares is treated as a disposal for the purpose of Capital Gains tax. Risk Warning An investment in an Open Ended Investment Company should be regarded as a medium to long term investment. Investors should be aware that the price of Shares and the income from them may fall as well as rise and investors may not receive back the full amount invested. Past performance is not a guide to future performance. Investments denominated in currencies other than the base currency of a fund are subject to fluctuation in exchange rates, which may be favourable or unfavourable. 16

17 Elite Webb Capital Fund Contact Information The Company and its Head Office Elite Webb Capital Fund Cedar House, 3 Cedar Park, Cobham Road, Wimborne, Dorset BH21 7SB Incorporated in England and Wales under registration number IC Telephone: * Website address: (Authorised and regulated by the FCA) Authorised Corporate Director ("ACD") WAY Fund Managers Limited Cedar House, 3 Cedar Park, Cobham Road, Wimborne, Dorset BH21 7SB (Authorised and regulated by the FCA and a member of the Investment Association) Directors of the ACD Company Secretary of the ACD V. Hoare P. Legg I. Hobday P. Legg Registrar Investor Administration Solutions Limited Cedar House, 3 Cedar Park, Cobham Road, Wimborne, Dorset BH21 7SB Depositary Northern Trust Global Services SE 50 Bank Street, Canary Wharf, London E14 5NT (Authorised by the Prudential Regulation Authority ("PRA") and regulated by the PRA and FCA) Investment Manager Auditor Peterhouse Capital Asset Management Limited Deloitte LLP New Liverpool House, Statutory Auditor Eldon Street, 110 Queen Street, London EC2M 7LD Glasgow G1 3BX (Authorised and regulated by the FCA) * Please note that telephone calls may be recorded for monitoring and training purposes, and to confirm investors' instructions. 17

18 WAY Fund Managers Limited