North Atlantic Smaller Companies Investment Trust plc
Annual Report
for the year ended 31 January 2026
contents
Company Registered Number:
Front Cover: ‘Destruction of the French Fleet in Basque Roads - April th ’ (Sutherland, Thomas; Whitcombe, Thomas)
© National Maritime Museum, Greenwich, London
objective of the company and financial highlights 1
corporate summary 2
directors 3
chairman’s statement 4
investment manager’s report 6
sector analysis of investments at fair value 8
twenty largest investments 9
unquoted investments profile 10
strategic report 15
report of the directors 24
statement of directors’ responsibilities in respect
of the annual report and financial statements 28
corporate governance 30
directors’ remuneration report 36
independent auditor’s report 42
statement of comprehensive income 49
statement of changes in equity 50
balance sheet 51
cash flow statement 52
notes to the financial statements 53
directors and advisers 81
shareholder information 82
1
north atlantic smaller companies investment trust plc
objective of the company and financial highlights
The objective of the Company is to provide capital appreciation through
investment in a portfolio of smaller companies principally based
in countries bordering the North Atlantic Ocean.
January
change
January
January
January
January
return
Return for the year (£’) , (.) , , (,) ,
Basic and Diluted return per .p Ordinary Share:*
‡
– Revenue . (.) . . . .
– Capital . (.) . (.) (.) .
Dividend per .p Ordinary Share (declared)
‡
.p** .p .p .p nil
assets
Net assets (£’) , . , , , ,
Net asset value (“NAV”) per .p Ordinary Share:
‡
Basic and Diluted .p . .p .p .p .p
Basic and Diluted adjusted† .p . .p .p .p .p
Market price of the .p Ordinary Shares
‡
.p (.) .p .p .p .p
discount to net asset value
. . . . .
discount to adjusted net asset value
. . . . .
indices and exchange rates at 31 January
Standard & Poor’s Composite Index ,. . ,. ,. ,. ,.
Russell Index ,. . ,. ,. ,. ,.
US Dollar/Sterling exchange rate . . . . . .
Standard & Poor’s Composite Index – Sterling
adjusted ,. . ,. ,. ,. ,.
Russell – Sterling adjusted ,. . ,. ,. ,. ,.
* Please refer to note for details on how the basic return per .p Ordinary Share and net asset value per .p Ordinary Share are calculated.
** Declared February .
† Adjusted to reflect Oryx International Growth Fund Limited (“Oryx”) under the equity method of accounting. See Note .
‡ Figures for comparative periods restated for the sub-division of each Ordinary Share into new Ordinary Shares, approved at the AGM held on
June and completed on June .
north atlantic smaller companies investment trust plc
2
introduction North Atlantic Smaller Companies Investment Trust plc (“NASCIT”) is an investment trust, the
shares of which are listed on the London Stock Exchange.
The objective of the Company is to provide capital appreciation through investment in a portfolio of
smaller companies principally based in countries bordering the North Atlantic Ocean. The
Company invests in both listed and unquoted companies.
company’s business The Company is an investment company within the meaning of Section of the Companies Act
and its business is that of an investment trust.
risk Investment in small companies is generally perceived to carry a greater risk than investment in large
companies. This is reasonable when comparing individual companies, but is much less so when
comparing the volatility of returns from a diversified portfolio of companies. The Board believe that
the Company’s portfolio is diversified although considerably less liquid than a portfolio of large-cap
listed equities.
The Company has the ability to utilise gearing in the form of term loan facilities, although no
facility currently exists. Gearing has the effect of accentuating market falls and gains.
The Company outsources all of its main operational activities to recognised third party providers.
AIFMD The Company is authorised and regulated by the Financial Conduct Authority. The Company has
been a full scope internally managed AIF with effect from October under the Alternative
Investment Fund Managers Regulations . For further information see page .
company secretary SGH Company Secretary – Resigned rd May .
Ben Harber – Appointed rd May .
website www.nascit.co.uk
objective and
investment strategy
strategic report – corporate summary
3
north atlantic smaller companies investment trust plc
strategic report – directors
Sir Charles Wake ¹ Independent Non-Executive Chairman. Appointed June and became
Chairman on February . Started as a management trainee with Whitbread’s in and left
in . Since then he has been a director of various companies including sheet metal engineers,
motor retailers, off-licences, pubs, bonded warehouses, farming and healthcare. He was chairman of
St Andrew’s Healthcare from - having been on the board since .
Christopher H B Mills Chief Executive and Investment Manager. Appointed January . He is
Chief Investment Officer of Harwood Capital LLP including it's subsidiaries. In addition, he is a
non-executive director of numerous UK companies which are either now or have in the past six years
been publicly quoted, further details of which are included in note of the financial statements.
The Lord Howard of Rising ¹ Non-Executive Director. Appointed November . He is a member
of the House of Lords and a District Councillor for the Borough Council of Kings Lynn & West
Norfolk, as well as being a landowner and farmer. He was formerly a director of The Keep Trust and
Fortress Trust.
G Walter Loewenbaum (USA) ¹²³ Independent Non-Executive Director. Appointed on October
. As an investment banker and private equity investor, Mr Loewenbaum has worked with multiple
companies in a variety of different industries at different phases of organisational development,
ranging from startup to publicly traded. He brings a depth of knowledge in serving as chairman for
public and private companies, building stockholder value and capital market considerations. The
Board acknowledges that Mr Loewenbaum will no longer be considered independent from
November and therefore will be reviewing the succession of Mr Loewenbaum ahead of the
AGM.
Peregrine D E M Moncreiffe Non-Executive Director. Appointed November (having
previously been a Director of the Company from -) and served as Chairman from June
until February . He has over the years worked in London, New York and East Asia, with Credit
Suisse First Boston, Lehman Brothers and Buchanan Partners.
Professor Fiona Gilbert ¹²³
4
Independent Non-Executive Director. Appointed September .
She is Professor of Radiology and Head of the Department at the University of Cambridge. Professor
Gilbert leads a team of researchers in various fields of radiology assessing new imaging technologies
and has over scientific publications and over £M in research income. She works in the NHS as
an honorary consultant with expertise in musculoskeletal and breast imaging. She holds
non-executive positions on several private company boards.
Julian Fagge ¹²
4
Independent Non-Executive Director. Appointed June . Mr Fagge has over
years' experience within global blue-chip and FTSE plc environments. He is currently Chief
Financial Officer and Board Director of Smiths Group Plc, having formerly held positions within
Smiths including President of Smiths Interconnect, President of Flex-Tek, and Strategy & M&A
Director. Prior to joining Smiths, he held roles at Royal Caribbean Cruises, Procter & Gamble and
PwC and brings deep experience across industrial technology, energy aerospace and consumer
facing businesses. Mr Fagge qualified as a Chartered Accountant (ICAS) and holds a degree from
the University of Edinburgh.
¹ Independent on appointment
² Member of the Audit Committee
³ Member of the Remuneration Committee
Member of the ESG Committee
north atlantic smaller companies investment trust plc
4
strategic report – chairman’s statement
The Trust’s net asset value, adjusted for the dividend, rose by .% during the period under review –
ahead of the sterling-adjusted S&P Composite Index. In a world not exactly short of economic
anxiety, that is a respectable result.
The revenue account recorded a post-tax surplus of £,, (: £,,). The fall reflects
lower cash balances, lower interest rates and a weaker dollar relative to sterling. An interim dividend
of .p (: .p) was declared and paid post year end which will be recognised in accounts.
The dividend rate from the prior year has been restated due to the for share split. Your directors
are not proposing a final dividend.
During the year the Company repurchased ,, shares (: ,) at a substantial discount
to net asset value and cancelled them. This policy continues. Buying one’s own shares at a discount
is one of the few manoeuvres in finance that is both simple and unequivocally beneficial to long-
term shareholders: the net asset value per share rises immediately.
At the forthcoming AGM shareholders will again be asked to approve a Rule waiver allowing the
Company to continue repurchasing shares without triggering a mandatory offer under the Takeover
Code by our Chief Executive and those presumed to be acting in concert with him. The necessary
detail is contained in a separate circular sent to shareholders (with the exception of the largest
shareholder, who is precluded from voting).
One of the more curious features of Britain’s economic debate is the government’s fondness for
reminding the public that the UK remains the world’s sixth-largest economy. The statistic is
generally deployed as reassurance whenever another costly spending commitment is announced.
The message is simple: Britain is still rich, therefore Britain can still afford it.
This is soothing – but deeply misleading.
Aggregate GDP flatters large countries. The more revealing measure is wealth per person. By that
yardstick, adjusted for purchasing power, Britain’s relative prosperity has slipped alarmingly. In
the UK ranked among the world’s five richest nations. Today it languishes somewhere around th.
On present trends it will fall further before the decade is out.
In other words, Britain is no longer the country its political rhetoric assumes it to be.
That reality demands a more serious economic conversation than the one currently taking place.
The nation faces an ageing population, a shrinking ratio of taxpayers to dependants and public
finances that have deteriorated steadily since the financial crisis. Government debt has more than
tripled since –.
For years this was disguised by the monetary anaesthetic of ultra-low interest rates and quantitative
easing. Cheap money encouraged the comforting illusion that borrowing did not matter very much.
It does now.
Even today’s interest rate of roughly .% remains modest by historical standards. During the entire
eleven-year tenure of Margaret Thatcher, rates never dipped below .%. Yet the political debate
already treats current levels as though they were punitive.
5
north atlantic smaller companies investment trust plc
strategic report – chairman’s statement
The uncomfortable arithmetic is that Britain may soon be borrowing more than £bn each year
simply to finance the gap between what it spends and what it earns. Meanwhile inflation – long
thought tamed – has reasserted itself. That is awkward for a government which, over the decades,
has issued large quantities of index-linked gilts. Foreign investors were happy to buy them because
repayments rise with inflation. But the arrangement becomes rather less attractive if Britain’s
inflation persistently outpaces that of its peers.
As a former Governor of the Bank of England once remarked, relying on “the kindness of strangers”
is not an ideal fiscal strategy.
Over time Britain has quietly made a collective bargain: tomorrow’s taxpayers will pay for today’s
political convenience. Such arrangements can persist for longer than expected. But they rarely end
gracefully. At some point the country may face an abrupt fiscal reckoning. The alternative –
arguably more likely – is a long, weary stretch of stagnation accompanied by gradually declining
living standards.
Neither scenario is particularly bullish for domestically exposed UK equities.
Fortunately many of the Trust’s largest holdings are international businesses whose fortunes are not
tied exclusively to the health of the British economy. Although recent dollar weakness has affected
valuations, their underlying prospects remain tied to global rather than purely domestic demand.
The Board continues to monitor closely the discount at which the Company’s shares trade relative to
net asset value. Greater transparency should help. Accordingly, we have increased the frequency of
announcements relating to new investments, disposals and developments within portfolio
companies that are already public knowledge. Investors tend to value what they understand.
Our share buy-back programme should also narrow the discount over time, though it comes with
an unavoidable trade-off: fewer shares mean less liquidity, which can itself widen the discount.
Finance, like physics, rarely allows a free lunch.
The Board nevertheless believes it remains important to continue making selective new investments
and to support existing holdings where appropriate. Over the long term we expect this to create
more value than relying solely on share buy-backs. However, the Board has agreed that, although
there are no immediate plans for Mr Mills to retire, it will, upon his eventual retirement, prioritise
share repurchases over new investments.
The world, meanwhile, provides no shortage of complications. Two major wars continue, energy
markets remain volatile and British economic policy has shown little enthusiasm for the health of
the domestic equity market.
Yet the Trust has navigated difficult conditions before. Our Chief Executive has demonstrated an
ability to do so repeatedly. With several potential realisations anticipated in the coming months,
Iremain cautiously optimistic that the coming year may yet produce further progress – despite the
broader economic weather.
Sir Charles Wake Chairman
April
north atlantic smaller companies investment trust plc
6
Whilst the UK market performed well in , this was mainly driven by large banks and natural
resource companies to which the Trust has no exposure. A further headwind has been the endless
redemption in funds holding small and medium capitalisation companies stocks which the fund
specialises in. Sadly, there is no evidence that this trend is reversing and, of course, the Chancellor’s
decision in her first budget to restrict the tax relief on companies listed on the AIM market was less
than helpful.
quoted UK portfolio Our two holdings in funds, Odyssean and Oryx performed satisfactorily rising by .% and .%
respectively. Corporate activity resulted in Urban Logistics and PRS Reit being taken over at good
profits whilst the sale of a division at Carrs Group resulted in a satisfactory return of capital and an
uplift in the valuation.
Individual stock's that performed well include Hargreaves Services following a number of profit
upgrades, Polar Capital on better than expected profits and flow of funds and Frenkel Topping
following a bid which the Trust is participating in. A recent investment in ZIG was also successful
but this position is now being sold. Another recent investment Animalcare also performed well after
purchase rising by over %.
Sadly, three stocks in particular performed poorly – Conduit had a poor year following the
Californian fire storms, although the share price has recovered strongly in recent weeks. Paypoint
fell for no obvious reason as profit targets were met. The worst performer was however MJ Gleeson
which fell % as expectations for a recovery in the house building sector failed to materialise.
In our healthcare portfolio EKF and NIOX were little changed despite both companies reporting
good results whilst Spire fell due to problems with the NHS despite announcing a sales process.
unquoted UK portfolio There was little overall activity in the unquoted UK portfolio although we participated with other
investors in the take private of Benchmark which we expect will deliver a very satisfactory return
over a three year period. The Trust is the lead investor in the take private of Frenkel Topping which
in the short term will have challenges adapting the business for Artificial Intelligence but has, in our
opinion, excellent prospects over a three to four year time horizon.
Three of the Trust’s private companies have or are close to starting a sales process which could add
meaningfully to our cash balances whilst increasing the net asset value during the current year.
US quoted portfolio Mountain Commerce – The Trust’s only holding is currently subject to a takeover bid which is
expected to close in the second quarter.
strategic report – investment manager’s report
7
north atlantic smaller companies investment trust plc
US unquoted portfolio Coventbridge is in discussions to sell part of its business which would result, if successful, in a
substantial write up on the current valuation. SMT saw a major recovery in its operating profits last
year and the outlook for the current year is good but is obviously tied to defense expenditure in
theUSA.
The bid for Jaguar fell through but the business has won some major new contracts which augurs
well for the future.
Finally, Crest continues to perform well and we remain optimistic that this investment can create
significant value for the Fund in the future.
liquidity The Trust continues to have a very strong cash position with cash and US Treasury Bills of
approximately £m. Since the year end, we have been selling some of our holdings which will have
increased this still further, despite the payment of the dividend and ongoing share buy backs.
conclusion It is a statement of the obvious that there is a great deal of uncertainty and risk in equity markets.
Two wars and economic policies which in the UK are fundamentally failing to deliver economic
growth are, to say the least, unhelpful. Notwithstanding this, there are grounds for optimism that
the Trust will have a reasonably good year in the year to January as corporate activity and
subsequent share buy backs drive a further improvement in the Trust’s net asset value.
Christopher Mills Chief Executive & Investment Manager
April
strategic report – investment manager’s report
north atlantic smaller companies investment trust plc
8
strategic report – sector analysis of investments at fair value
as at 31 January
equities, convertible securities & loan stocks
as a % of total portfolio valuation
United
States
January
%
United
Kingdom
January
%
Tot a l
January
%
Tot a l
January
%
Financial Services* – . . .
Industrial Goods and Commercial Services . . . .
Pharmaceuticals and Health Care – . . .
Banks . . . .
Consumer Products and Services . . . .
Transport, Travel and Leisure – . . .
Technology and Software – . . .
Insurance – . . .
Real Estate – . . .
Oil and Gas . – . .
Telecommunications – . . .
Automobiles and Parts
– – – .
. . . .
treasury bills . – . .
total at 31 January 2026 . . .
total at 31 January 2025 . . .
* Includes Investment Trusts.
9
north atlantic smaller companies investment trust plc
equities (including convertibles,
loan stocks and related financing)
At fair value
£’
At fair value
£’
Oryx International Growth Fund Limited* UK Quoted , ,
Hargreaves Services Plc UK Quoted , ,
Crest Foods US Unquoted , ,
Harwood Private Equity V LP UK Unquoted , ,
Polar Capital Holdings Plc UK Quoted , ,
Odyssean Investment Trust Plc UK Quoted , ,
TP ICAP Group plc UK Quoted , ,
Restore Plc UK Quoted , ,
Niox Group Plc UK Quoted , ,
Conduit Holdings Limited UK Quoted
, ,
ten largest investments , ,
EKF Diagnostics Holdings plc UK Quoted , ,
Harwood Private Capital UK LP UK Unquoted , ,
MJ Gleeson Group plc UK Quoted , ,
Pinewood Technologies Group Plc UK Quoted , ,
SMT Corporation US Unquoted , ,
Frenkel Topping Group Plc UK Quoted , ,
Animalcare Group Plc UK Quoted , –
Paypoint Plc UK Quoted , ,
Harwood Private Equity IV LP UK Unquoted , ,
SourceBio International Limited UK Unquoted
, ,
twenty largest investments , ,
Aggregate of other investments at fair value
, ,
, ,
US Treasury Bills
, ,
total , ,
* incorporated in Guernsey.
All investments are valued at fair value.
strategic report – twenty largest investments
as at 31 January
north atlantic smaller companies investment trust plc
10
strategic report – unquoted investments profile
as at 31 January
At fair value
£’
At fair value
£’
Crest Foods (US) Cost: £22,883,000 , ,
Crest Foods is a food ingredients and food packaging company
operating through three divisions. The Ingredients division (% of
sales in FY) develops and manufactures proprietary dairy stabiliser
formulations for US dairy manufacturers of sour cream, cottage cheese,
cream cheese, yoghurt, protein-based drinks, and other dairy-based
products. The Contract Packaging division (% of FY sales)
provides ' contract packaging services to US food manufacturers of
branded and private-label dry-food products. The Consumer Products
division (% of FY sales) develops, through an in-house R&D lab,
and manufactures turn-key dry-food products for US branded food
companies. Crest's headquarters and production facilities are based in
Ashton, Illinois.
The business performed well throughout . Ingredients has shown
strong growth in the second half of the calendar year and is performing
ahead of and ahead of budget. Contract Packaging experienced
continued growth in revenues and profitability and is investing
million in new high speed packaging lines in anticipation of a
significant long-term contract commencing in . Contract
Packaging performed significantly ahead of and continues to
perform well into .
The valuation was written up during the year reflecting the strong
business performance across all divisions.
Harwood Private Equity V LP (UK) Cost: £16,100,000 , ,
Harwood Private Equity V LP (HPE) was established in with
committed capital of £ million. The fund has made investments to
date in the property services, medical packaging, pet food, data center,
green energy, gardening products, electronic components, food
ingredients healthcare industries. The Trust’s commitment to the fund
was £ million which is now fully drawn. Since the investment has
been made, HPE has returned £. million to date.
Carried forward , ,
11
north atlantic smaller companies investment trust plc
strategic report – unquoted investments profile
as at 31 January
At fair value
£’
At fair value
£’
Brought Forward , ,
Harwood Private Capital UK LP (UK) Cost: £17,396,000 , ,
The fund was established in with committed capital of £million.
It is intended that all new sterling debt-type investments are made
through the fund which is targeting an IRR in excess of %. To date, it
has made investments, including two in : a culinary food tour
operator and a business providing subsea services to the offshore wind
industry. The fund is fully invested, and its investment period ended on
th September .
In , the fund made several distributions totalling £. million to
NASCIT following the receipt of cash interest income from its
underlying investments and the repayment of its senior loan investment
in Boostworks. NASCIT’s commitment to the fund is £. million and
it has received total distributions to date of £. million.
SMT Corporation – Loan Notes (US) & Loan Notes (US)
Cost: £21,407,000
, ,
SMT is a value-added supplier of high-reliability, obsolete and hard to
find defense, aerospace, and high-end critical electronic components
that it locates, tests, certifies, and distributes. The company benefits
from the increasing awareness of counterfeit and cloned components in
the US military supply chain, geopolitical tensions, and the scarcity of
counterfeit testing capacity. The company has now recovered from the
supply chain overhang post covid.
Harwood Private Equity IV LP (UK) Cost: £9,609,000 , ,
Harwood Private Equity IV LP (HPE) was established in June
with committed capital of £. million. The Company made a
£million commitment to HPE, which is now fully drawn. HPE
invests primarily in small and lower mid-market companies. HPE is
looking to exit its remaining investments with one expected to close in
the near future.
Carried forward , ,
north atlantic smaller companies investment trust plc
12
strategic report – unquoted investments profile
as at 31January
At fair value
£’
At fair value
£’
Brought Forward , ,
SourceBio International Ltd (UK) Cost: £8,616,000 , ,
Source Bio International is a leading international provider of integrated
laboratory services and products to clients in the healthcare, clinical, life
science research and biopharma industries, with a focus on patient
diagnosis, management, and care. The Group is headquartered in
Nottingham, with facilities in the UK and US.
The company has delivered strong growth in the year due to its leading
position in digital pathology and pent up demand at the NHS.
Harwood Private Equity VI LP (UK) Cost: £7,500,000 , –
Harwood Private Equity VI LP (HPE) was established in with
committed capital of £ million. The fund has made one investment
to date in a medical technology company. The Trust's commitment to
the fund was £ million having drawn down % of the commitment.
Spring Investments LP (UK) Cost: £4,391,000 , ,
This is a specialty manufacturer of pharmaceuticals for the NHS. The
Limited partnership continues to perform well. After record profits we
achieved in fiscal for / the business slowed down in / as
backlogs in the NHS were wound down. The company is expected to be
sold in at an uplift to the current value.
CoventBridge Group – Loan Notes (US) Cost: £5,404,000 , ,
CoventBridge is a provider of insurance claims, healthcare network and
government reimbursement integrity services. Its clients include global
insurance carriers, third party administrators, healthcare networks and
government agencies. The company performed broadly in line with
expectations and an exit is expected in . The company is paying
down our debt and this will continue in the current year.
Carried forward , ,
13
north atlantic smaller companies investment trust plc
strategic report – unquoted investments profile
as at 31January
At fair value
£’
At fair value
£’
Brought Forward , ,
Benchmark Holdings Ltd Cost:£9,592,000 , –
The company is a leading producer of fertility products for the
aquaculture industry. The company was delisted from the AIM market
following the sale of a significant part of the business. The company has
no debt and is performing in line with expectations. We anticipate a
liquidity event in another three years at a substantial uplift to the
current valuation, hopefully fully recovering the Trusts investment.
Jaguar Holdings Ltd (US) Cost: £1,714,000 , ,
The company provides food services to major US airlines through Los
Angeles, Memphis, and Indianapolis. Principal clients include United
Airlines, Jet Blue and Federal Express. Sales and profits grew in ,
although the company experienced some labour cost pressure which
impacted margins. Recent contract wins with new airlines and in new
locations underpin expected growth in .
Sportech Limited Cost: £6,061,000 , ,
The company operates sport betting and other gaming services in the
US mainly in Connecticut. The company was delisted from the stock
market in October as the costs associated with the listing given the
limited float was disproportionate to the size of the company. The
holding is valued at a discount to management’s estimate of the breakup
of the business. The company made a substantial return of capital in
. Substantial costs have been taken out of the business and future
prospects look exciting.
Oryx International Growth Fund Limited – 6 Loan Notes (UK)
Cost: £2,750,000
, ,
Oryx International Growth (OIG) Fund is a closed-end investment
company and its shares are admitted to the Official List and to trading
on the main market of the London Stock Exchange. The investment
objective is to consistently seek high absolute returns while maintaining
a low level of risk, principally through investment in medium and small
quoted and unquoted companies in the United Kingdom and the
United States. NASCIT has provided a loan to OIG while waiting for
proceeds from a sale from an underlying investment to be received. The
loan was fully repaid in early February .
Carried forward , ,
north atlantic smaller companies investment trust plc
14
strategic report – unquoted investments profile
as at 31January
At fair value
£’
At fair value
£’
Brought Forward , ,
3BL Media Limited – 13 Loan Notes (US) Cost: £6,123,000 , ,
BL is a cloud-based digital marketing software-as-a-service (SaaS)
platform providing targeted multi-media content communications and
distribution to global corporate organisations in support of their
adoption of environmental, social and governance (ESG) best-practices.
The business has experienced a significant slowdown in demand,
reflecting a broader reduction in ESG-related priorities among US
corporations following the November US election. This has
negatively impacted revenues and profitability, and the valuation has
been written down as a result.
Hampton Investment Properties (UK) Cost: £2,534,000
The company continues with its programme of liquidation. Heads of
Terms have been signed for the disposal, subject to planning permission.
The basis of valuation is anticipated to be a modest discount to
realizable value. On successful completion the company will be
liquidated. We had hoped planning would have occurred in but it
has slipped back and is now likely for the third quarter of .
Balance carried forward , ,
Other unquoted investments at fair value – (BigBlu Broadband Limited,
Specialist Components Limited, Performance Chemical earn out,
Trident Private Equity , WEP Superior Industrial Maintenance Co. and
SINAV). , ,
Total value of unquoted investments at fair value* , ,
* Includes unquoted loan notes in these companies with a total value of £,, (: £,,).
15
north atlantic smaller companies investment trust plc
strategic report
The Directors present the strategic report of the Company for the year ended January .
principal activity The Company carries on business as an investment trust and its principal activity is portfolio investment.
objective The Company’s objective is to provide capital appreciation to its shareholders through investing in a
portfolio of smaller companies which are based primarily in countries bordering the North
AtlanticOcean.
strategy In order to achieve the Company’s investment objective, the Manager uses a stock specific approach
in managing the Company’s portfolio, selecting investments that he believes will increase in value
over a period of time, whether that be due to issues in the management of the businesses which he
believes can be improved by shareholder engagement and involvement or simply due to the fact that
the stock is undervalued and he can see potential for improvement in value over the long term. The
Company may invest in both quoted and unquoted companies. At present, the investments in the
portfolio are principally in companies which are located either in the United Kingdom or the United
States of America. Typically the investment portfolio will comprise between and securities
investment policy While pursuing the Company’s objective, the Manager adheres to the following:
the maximum investment limit is % of the Company’s investments in any one company at the
time of the investment;
gearing is limited to a maximum of % of net assets;
the Company may invest on both sides of the Atlantic, with the weighting varying from
time to time;
the Company may invest in unquoted securities as and when opportunities arise and again the
weighting will vary from time to time.
investment restrictions The Company has not adopted any specific investment restrictions, and the Company’s investments
may be highly concentrated. However, the Manager has put in place internal limitations to control
risk and to manage diversification with the aim of allowing it to operate within parameters that it
believes are wide enough for it to generate target returns but which are suitable to prevent
unduerisk.
north atlantic smaller companies investment trust plc
16
investment approach The Company invests in a diversified range of companies, both quoted and unquoted, on both sides
of the Atlantic in accordance with its objective and investment policy.
Christopher Mills, the Company’s Chief Executive and Investment Manager, is responsible for the
construction of the portfolio and principle investments are discussed in his report on pages and .
The top twenty largest investments by current valuation are listed on page .
When analysing a potential investment, the Manager will employ a number of valuation techniques
depending on their relevance to the particular investment. A key consideration when deciding on a
potential investment would be the sustainability and growth of long term cash flow. The Manager
will consider the balance of quoted and unquoted securities in the portfolio when deciding whether
to invest in an unquoted stock as he is aware that the level of risk in unquoted securities may be
considered higher.
In respect of the unquoted portfolio, regular contact is maintained with the management of
prospective and existing investments and rigorous financial and business analysis of these
companies is undertaken. It is recognised that different types of business perform better than others
depending on economic cycles and market conditions and this is taken into consideration when the
Manager selects investments and is therefore reflected within the range of investments in the
portfolio. The Company attempts to minimise its risk by investing in a diversified spread of
investments whether that spread be geographical, industry type or quoted or unquoted companies.
best execution The Company as the operator of a closed-ended investment trust has considered the rules on best
execution as noted in the Financial Services Markets Act and COBS . of the FCA
Handbook. The Company has determined that the rules on performing best execution do not apply
to the Company when, acting in the capacity of operator of an internally managed AIF (regulated
collective investment scheme), it purchases or sells units in that AIF/scheme.
borrowing and leverage The Company does not intend to incur borrowings as part of its investment strategy.
However, in the event that it did employ leverage for working capital purposes, any such borrowings
incurred will not remain outstanding for more than calendar days. In each such case, leverage
may be obtained on an unsecured or secured/collateralised basis. The Company is not otherwise
expected to engage in borrowing or make use of leverage.
The Company’s borrowing and leveraging capacity is limited to an amount equal to: % of the net
asset value of the Company when calculated in accordance with the “commitment” method set out
in the AIFMD Rules.
The calculation and disclosure of such maximum leverage limits is required in order to satisfy the
requirements of the AIFMD Rules. However, the Investment Manager expects the typical leverage
levels to be lower than the maximum levels stated above, and generally not to exceed % of the
Company’s net asset value. The Investment Manager will inform investors to the extent such
leverage limits are exceeded in accordance with the AIFMD Rules.
The Company does not currently grant any guarantee under any leveraging arrangement. The grant
of any such guarantee would be disclosed to investors in accordance with the AIFMD Rules. Save as
set out herein, there are no restrictions on the Company’s use of leverage, by borrowing or
otherwise, other than those which may be imposed by applicable law, rule or regulation.
strategic report
17
north atlantic smaller companies investment trust plc
Changes to the investment policy, investment restrictions and investment approach of the Company
as set out above may be made by the Directors. Changes believed by the Directors to be material will
be notified to investors in advance of the change taking effect.
financial instruments The financial instruments employed by the Company primarily comprise equity and loan stock
investments, although it does hold cash and liquid instruments. Further details of the Company’s
risk management objectives and policies relating to the use of financial instruments can be found in
note to the financial statements on pages to .
delegated activities The Company being internally managed has not delegated the provision of portfolio management
and risk management functions but does rely on third party services providers to provide ancillary
services to support the activities of the company. As a result, the Company will continue to act as an
internally managed AIFM of the Company for the purposes of the FCA Rules in accordance with
the Investment Management Agreement.
depositary The Company has appointed Bank of New York Mellon (BNYM) as depositary for the quoted
securities deposited for safekeeping with BNYM or with any third party appointed by BNYM and to
hold cash in accordance with the terms of its agreement.
From time to time conflicts may arise between the Depositary and the delegates, for example where an
appointed delegate is an affiliated group company which receives remuneration for another custodial
service it provides to the Company. In the event of any potential conflict of interest which may arise
during the normal course of business, the Depositary will have regard to the applicable laws.
performance At January , the NAV per share was .p (: .p), an increase of .% during the year,
compared to an increase of .% during the year in the Standard & Poor’s Composite Index
(Sterling adjusted). The NAV per share from has been restated due to the for share split.
Net assets attributable to equity holders at January amounted to £,, compared
with £,, at January .
The ongoing charges relating to the Company are .% (: .%), based on total expenses,
excluding finance charges and non-recurring items for the year and average monthly net assets.
results and dividends The total net return after taxation for the financial year ended January amounted to
£,, (: £,,). The Board has declared an interim dividend of .p per ordinary
share (: .p). The dividend rate from has been restated due to the for share split.
changes to the investment
policy, investment restrictions
and investment approach
any conflicts of interest that
may arise from such
delegations
strategic report
north atlantic smaller companies investment trust plc
18
key performance indicators The Directors regard the following as the main key indicators pertaining to the Company’s
performance:
(i) Net asset value per Ordinary Share: the following chart illustrates the movement in the net asset
value per Ordinary Share over the past five years:
net asset value in pence
(ii) Share price return: the following chart illustrates the movement in the share price per Ordinary
Share over the past five years:
share price return in pence
(iii) Performance against benchmark
The performance of the Company’s share price is measured against the Standard & Poor’s
Composite Index (Sterling adjusted), the Company’s benchmark. A graph comparing performance
can be found in the Directors’ Remuneration Report on page .
* Figures for comparative periods restated for a for share split.
200
600
550
500
400
300
350
250
20262025202420232022
450
539.7
512.7
577.9
509.7
NASCIT NAV*
555.4
500
300
400
450
350
200
250
NASCIT Share Price*
150
100
20262025202420232022
369
375
390
433
359
strategic report
19
north atlantic smaller companies investment trust plc
The Board has carried out a robust assessment of the emerging and principal risks facing the
Company including those that would threaten the Company’s business model, future performance,
solvency of liquidity and reputation.
The key risks faced by the Company are set out below. The Board regularly reviews these and agrees
policies for managing these risks.
• Performance risk: the Board is responsible for deciding the investment strategy in order to fulfil
the Company’s objectives and for monitoring the performance of the Manager. An inappropriate
investment strategy may result in under-performance against the companies in the peer group
or against the benchmark indices. The Board manages this risk by ensuring that the investments
are appropriately diverse and by receiving reports from the Manager at every board meeting
explaining his investment decisions and the composition and performance of the portfolio.
• Market risk: this category of risk includes currency risk, market price risk and interest rate risk.
The fair value of all future cash flows of a financial investment held by the Company may
fluctuate. Also, the valuations of the investments in the portfolio may be subject to fluctuation
due to exchange rates or general market prices. The Manager monitors these fluctuations and
the markets on a daily basis. The performance of the investment portfolio against its
benchmarks is also closely monitored by the Manager. The afore-mentioned graph on page of
the Directors’ Remuneration Report illustrates the Company’s performance against its
benchmarks over the last ten years.
• Investments in unquoted stocks, by their nature may involve a higher degree of risk than
investments in the listed market. The valuation of unquoted investments can include a
significant element of estimation based on professional assumptions that is not always supported
by prices from current market transactions. Recognised valuation techniques are used and
recent arm's length transactions in the same or similar entities may be taken into account.
Clearly the valuation of such investments is therefore a key uncertainty but the Board manages
this risk by regularly reviewing the valuation principles applied by the Manager to ensure that
they comply with the Company’s accounting policies and with fair value principles. Harwood
Capital Management Limited, a firm which is ultimately owned by Christopher Mills, the
Company’s Manager, and which provides services through the group such as dealing,
administration and compliance to the Company, operates a Valuations and Pricing Committee
which meets regularly throughout the year to review and agree the valuations of the investments
in the portfolio for onward submission to the Board.
• Regulatory risk: any breach of a number of regulations applicable to the Company, the UKLA’s
Listing Rules, the FCA compliance regime and the Companies Act could lead to a number of
detrimental effects on the Company as well as reputational damage. The Audit Committee
monitors compliance with these regulations in close alliance with the Manager and Secretary.
principal risks and
uncertainties
strategic report
north atlantic smaller companies investment trust plc
20
• Custodial and Banking risk: there is a risk that the custodians and banks used by the Company
to hold assets and cash balances could fail and the Company’s assets may not be returned.
Associated with this is the additional risk of fraud or theft by employees of those third parties.
The Board exercises monitoring through the Manager and North Atlantic Investment Services
Limited ("NAIS") over the financial position of its custodial banks.
• Credit risk/Counterparty risk: the Company holds preference shares in some investee companies
and provides other forms of debt or loan guarantees where deemed necessary. There is a risk of
those counterparties being unable to meet their obligations. The financial position and
performance of those investee companies are continually monitored by the Manager and actions
are taken to protect the Company’s investment if needed.
professional negligence The Company covers professional liability risks set out in Article () of Directive //EU on
Alternative Investment Fund Managers (the “Directive") and article and of the AIFMD level
regulation (professional liability risks) by holding professional indemnity insurance and maintaining
an amount of own funds to meet the PII capital requirement under the Directive; and comply with
the qualitative requirements addressing professional liability risks.
section 172 statement Under Section of the Companies Act , directors are required to promote the success of the
Company for the benefit of the stakeholders. In accordance with the requirements of the Companies
(Miscellaneous Reporting) Regulations, , the Company has to detail how this duty has been
performed with regard to the matters set out in Section () (a) to (f).
• The directors have to consider the likely consequences of their decisions in the long term taking
into account the interests of the various different stakeholders of the Company.
• A company’s stakeholders are normally considered to comprise of its shareholders, employees,
customers and suppliers as well as the wider community in which the company operates. As the
Company is an internally managed investment company it does not have any employees as its
activities are outsourced. Its customers are its shareholders and details of those owning more
than % of the Company’s shares are shown on page . The Company’s relations with its
shareholders are detailed on page .
• The main stakeholders are therefore the Company’s shareholders and a small number of key
third party suppliers, principally the Investment Manager, together with the company secretary,
accountants, brokers, depositary, bankers and auditors, to whom the day to day functions are
delegated.
• The Board works closely with the Investment Manager to promote the long-term success of the
Company as effectively and responsibly as possible and he in turn interacts directly with the
investee companies. Details of the investment policy and investment approach can be found on
pages and .
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21
north atlantic smaller companies investment trust plc
• The Company has a limited impact on the environment and has no greenhouse gas emissions to
report as indicated on page . Its impact on social, community and human rights issues are
detailed on page , and a statement on the Modern Slavery Act is given on page .
• The Directors take care to ensure that the Company maintains a reputation for high standards
of business conduct.
• The Directors ensure that the Company always acts fairly between members of the Company.
• To summarise, the Directors are fully aware of their duty under Section in all their
deliberations, and decisions made always take into account the interests of the key stakeholders.
viability statement In accordance with the UK Corporate Governance Code the Board has considered the longer term
prospects for the Company. The Directors have reviewed the Company over the next five years to
May , which is generally a reasonable investment horizon for many investment trust
shareholders. This assessment took into account the Company’s current position as well as its
continuing investment strategy. Additional factors under review included the principal risks
inherent in its management and portfolio structure, contractual arrangements and cost base.
The Directors have noted the following elements as part of its evaluation:
• the Company invests in a combination of listed and unquoted companies, most of which have
positive EBITDA and/or net tangible asset values which support their valuations;
• as at March , the company held more than £.m of its portfolio in cash and US
Treasury Bills which are readily realisable and intends to continue to hold liquidity comfortably
in excess of any contingent liabilities, including any requirements to fund any future drawdowns
resulting from private equity or put option commitments; and
• the Company’s expenses are relatively stable, except for the Investment Manager's fee which is
positively correlated with the Company’s net asset value and relative performance, giving
comfort that the Company could easily cover costs in the event of a substantial decline in net
asset value.
The Directors have also assessed the Company’s principal risks and uncertainties and believe that
appropriate measures are in place to minimise the likelihood of their potential to impact the
viability of the Company. These measures include:
• the Manager’s reports on compliance with the investment objective;
• the Manager’s control of counterparty and custodial risk;
• the Board’s monitoring of gearing (if any), compliance with specific investment guidelines and
liquidity risk; and
• monitoring the share price’s discount to net asset value and the stability of the shareholder base.
Based on the results of this analysis, the Directors have concluded that there is a reasonable
expectation that the Company can continue in operation and meet its liabilities as they fall due
during the period to May .
future prospects The directors remain confident that the underlying portfolio will provide shareholders with
significant upside over the mid-term both through asset realisation and a narrowing of the
substantial discount to fair market value of our publicly listed assets.
strategic report
north atlantic smaller companies investment trust plc
22
As an investment trust with no employees the Company has no direct social or community
responsibilities or impact on the environment. The Company, however, takes into account the impact
of environmental, social and governance factors when selecting and managing its investments within
the context of its obligation to manage investments in the financial interests of its shareholders.
modern slavery act The Company is committed to the highest standards of ethical, moral and legal business conduct
and we expect those that we do business with to uphold the same values. As an investment vehicle
the Company does not provide goods or services in the normal course of business. We have adopted
an ethical approach to investing which prohibits modern slavery in our business and supply chains,
and are committed to implementing systems and controls aimed at ensuring that modern slavery is
recognised and eradicated.
AIFMD The Company is authorised and regulated by the Financial Conduct Authority. The Company has
been a full scope internally managed AIF with effect from October under the Alternative
Investment Fund Managers Regulations .
For AIFMD purposes the Company is internally managed with Christopher Mills making the
investment decisions in his capacity as Chief Executive. The Company must not perform any
activities other than the internal management of the AIF in accordance with Annex I of
theDirective:
Investment management functions which an AIFM shall at least perform when managing an AIF:
(a) portfolio management;
(b) risk management.
Other functions that an AIFM may additionally perform in the course of the collective
management of an AIF:
(a) Administration:
(i) legal and fund management accounting services;
(ii) customer inquiries;
(iii) valuation and pricing, including tax returns;
(iv) regulatory compliance monitoring;
(v) maintenance of unit-/shareholder register;
(vi) distribution of income;
(vii) unit/shares issues and redemptions;
(viii) contract settlements, including certificate dispatch;
(ix) record keeping;
(b) Marketing;
(c) Activities related to the assets of AIFs, namely services necessary to meet the fiduciary duties
of the AIFM, facilities management, real estate administration activities, advice to
undertakings on capital structure, industrial strategy and related matters, advice and services
relating to mergers and the purchase of undertakings and other services connected to the
management of the AIF and the companies and other assets in which it has invested.
social, community and
human rights issues
ANNEX I
strategic report
23
north atlantic smaller companies investment trust plc
periodic and regular disclosure . The following information is available to investors in the annual report:
(i) the percentage of the Company’s assets that are subject to special arrangements arising from
their illiquid nature;
(ii) any material changes to the arrangements for managing the liquidity of the Company;
(iii) the current risk profile of the Company and the risk management systems employed by the
Company to manage those risks;
(iv) the total amount of leverage employed by the Company if applicable; and
(v) details of the Company’s policy towards best execution.
. Any changes to the following information will be provided by the Company to investors without
undue delay (and may be provided by email) in accordance with the AIFMD Rules:
(i) the maximum level of leverage which the Company may employ on behalf of the Company;
(ii) the grant of or any changes to any right of re-use of collateral or any changes to any
guarantee granted under any leveraging arrangement; and
(iii) activation of liquidity management tools.
By Order of the Board
Ben Harber
Company Secretary
April
strategic report
north atlantic smaller companies investment trust plc
24
report of the directors
for the year ended 31January
The Directors present their report to shareholders and the financial statements for the year ended
January . Certain information that is required to be disclosed in this report has been
provided in other sections of this Annual Report and accordingly, these are incorporated into this
report by reference.
taxation status In the opinion of the Directors, the Company has conducted its affairs during the period under review,
and subsequently, so as to maintain its status as an investment trust for the purposes of Chapter of
Part of the Corporation Tax Act . The Company made a successful application under
Regulation of the Investment Trust (Approved Company) (Tax) Regulations for investment trust
status to apply to all accounting periods starting on or after February subject to the Company
continuing to meet the eligibility conditions contained in Section of the Corporation Tax Act
and the ongoing requirements outlined in Chapter of Part of the Regulations.
share capital The Company’s issued share capital consisted of ,, Ordinary Shares of .p nominal value
each on January . Since the year end, ,, Ordinary Shares have been repurchased for
cancellation. 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.
During the year, the Company purchased ,, (: ,) Ordinary Shares for £.m (:
£.m) for cancellation to improve net asset value per Share. This comprised .% (: .%) of the
issued share capital.
A subdivision of the Company's Ordinary Shares on a ten for one basis took effect from June .
share valuations On January , the quoted price and the net asset value per .p Ordinary Share were .p
and .p respectively. The comparable figures, restated for the for share split, at January
were .p and .p respectively.
substantial shareholders As at January , the following interests in the Ordinary Shares of the Company which exceed
.% of the issued share capital had been notified to the Company:
Number of
Ordinary Shares
% of issued share
capital
Christopher Mills* ,, .
CG Asset Mgt (London) ,, .
Butterfield Bank ,, .
Interactive Investor ,, .
Peregrine Moncrieffe ,, .
Capital Partners (Richmond) ,, .
Hargreaves Lansdown Asset Mgt ,, .
Rathbone Investment Mgt ,, .
Charles Stanley Group (London) ,, .
The Company has not been informed of any changes to the above interests between January
and the date of this report. Since January , the Company has purchased and cancelled
,, Ordinary Shares reducing the Ordinary Shares in issue to ,,, which increases
the % of issued share capital held by all shareholders listed above.
* Inclusive of , shares for a private client account managed by Christopher Mills and ,, shares
for Harwood Holdco Limited.
25
north atlantic smaller companies investment trust plc
report of the directors
for the year ended 31January
directors The biographical details for Directors currently in office are shown on page .
The Company’s Articles of Association require that Directors should submit themselves for election
at the first Annual General Meeting following their appointment and thereafter for re-election at
least every three years. However, the Company is adopting the requirements of the UK Corporate
Governance Code in relation to the annual re-election of directors. Therefore, in accordance with
provision of the UK Corporate Governance Code all of the Directors will retire at the Annual
General Meeting and being eligible, offer themselves up for re-election.
directors’ interests The interests of the Directors as notified to the Company, including those of their connected
persons, in the Ordinary Shares of the Company as at January and January were as
follows:
January
.p Ordinary Shares
January
p Ordinary Shares
Sir Charles Wake , ,
Christopher Mills* ,, ,,
Christopher Mills (non-beneficial) ,, ,
Lord Howard of Rising , ,
Professor Fiona Gilbert , ,
G Walter Loewenbaum , ,
Peregrine Moncreiffe ,, ,
Julian Fagge ,
* Inclusive of , (, pre-stock split in ) shares for a private client account managed by
Christopher Mills and ,, (, pre-stock split in ) shares for Harwood Holdco Limited.
Since January and as at the date of this report, there have been no further share purchases
from the Directors or their connected persons, other than the following:
Date
Price
per share
Number
of shares
Fiona Gilbert February .p ,
Mhairi Jane Davidson Gilbert February .p ,
Details of Directors’ remuneration are described in the Directors’ Remuneration Report on pages
to .
Save as disclosed on page or in notes and to the financial statements, no Director was party
to or had any interest in any contract or arrangement with the Company at any time during the year.
significant agreements The Company is required to disclose details of any agreement that it considers to be essential to the
business and the two agreements detailed below are considered by the Board to be significant.
Pursuant to the Sub Advisory, Administration and Transmission Services Agreement dated
February , North Atlantic Investment Services Limited provides administration services to
the Company which were previously provided by Harwood Capital LLP under a similar agreement.
The Sub Advisory, Administration and Transmission Services Agreement continues unless
thereafter 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.
north atlantic smaller companies investment trust plc
26
report of the directors
for the year ended 31January
Pursuant to the Secondment Services Agreement between the Company, Growth Financial Services
Limited (“GFS”) and Christopher Mills and the Sub Advisory, Administration and Transmission
Services Agreement between the Company and North Atlantic Investment Services Limited,
Christopher Mills is responsible for the day-to-day investment decisions. The Secondment Services
Agreement continues until terminated by the Company or GFS on not less than twelve months’ notice.
The Board reviews the activities of the Manager. The Chief Executive carries out day-to-day
investment decisions for and on behalf of the Company. As part of this review, the Board is satisfied
that the continuing appointment of the Manager, on the terms agreed, is in the best interests of
shareholders. Christopher Mills has been Chief Executive of the Company since and the Board
consider it is in the best interest of the Company for this arrangement to continue.
As part of this review, the Board has given consideration to the experience, skills and commitment
of the Chief Executive in addition to the personnel, services and resources provided by NAIS. The
Company’s performance over the last year is described in the Chairman’s Statement on page .
related party transactions Christopher Mills makes day-to-day investment decisions for the Company in his capacity as its
Chief Executive and this position is distinct from his position as Chief Investment Officer of NAIS.
Christopher Mills is a director of Growth Financial Services Limited (“GFS”). GFS is a wholly-
owned subsidiary of Harwood Capital Management Limited, which is the holding company of the
Harwood group of companies and is, in turn, % owned by Christopher Mills.
Details of the related party transactions and fees payable are disclosed in note on pages and
and in the Directors’ Remuneration Report on pages to . The Investment Management Fees are
disclosed in note on page . Any Performance Fee payable to GFS is disclosed in the Directors’
Remuneration Report on pages to and note of the financial statements on page .
With the exception of the matters referred to above, during the year no Director was materially
interested in any contract of significance (as defined by the UK Listing Authority Listing Rules)
entered into by the Company.
The Chief Executive, in the absence of explicit instruction from the Board, is empowered to exercise
discretion in the use of the Company’s voting rights in respect of investments and to then report to
the Board, where appropriate, regarding decisions taken. The Board has considered whether it is
appropriate to adopt a new voting policy and an investment policy with regard to social, ethical and
environmental issues and concluded that it is not appropriate to change the existing arrangements.
donations The Company does not make any political or charitable donations.
creditors’ payment policy 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. All supplier invoices received in the year had been paid
by January ( January : all supplier invoices received).
greenhouse gas emissions The Company has no physical assets, operations, premises or employees of its own. Consequently it
consumed less than , kWh of energy during the year so has no greenhouse gas emissions to report.
The Company has not included any climate-related disclosures consistent with the TCFD
Recommendations and Recommended Disclosures in this annual report as the Company is a
closed-ended investment company, with no premises or staff. The Board do not believe that such
disclosures would be of any benefit to its shareholders or other stakeholders.
institutional investors –
use of voting rights
task force on climate-
related financial
disclosures (TCFD)
27
north atlantic smaller companies investment trust plc
report of the directors
for the year ended 31January
corporate governance The Corporate Governance Statement on pages to forms part of this report.
auditors Resolutions to re-appoint RSM UK Audit LLP as the Company’s auditors and to authorise the Board
to determine their remuneration will be proposed at the forthcoming Annual General Meeting.
In the case of each of the persons who are directors at the time the report is approved, so far as each
director is aware there is no relevant audit information of which the Company's auditor is unaware,
and they have taken all the steps that they ought to have taken as a director in order to make
themself aware of any relevant audit information and to establish that the Company's auditor is
aware of that information.
going concern The Company’s assets largely comprise readily realisable securities which can be sold to meet
funding commitments if necessary and it also has sufficient cash reserves so the Directors have a
reasonable expectation that the Company has adequate resources to continue in operation for the
foreseeable future. They have, therefore, adopted the going concern basis in preparing these
financial statements.
additional disclosures The following further information is disclosed in accordance with the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations :
• the Company’s capital structure and voting rights are summarised on page and note ;
• details of the substantial shareholders in the Company are listed on page ;
• the rules concerning the appointment and replacement of directors are contained in the
Company’s Articles of Association and are discussed on pages and ;
• amendment of the Company’s Articles of Association and powers to issue on a pre-emptive basis
or buy back the Company’s shares require a special resolution to be passed by the shareholders;
and
• there are: no restrictions concerning the transfer of securities in the Company; no special rights
with regard to control attached to securities; no agreements between holders of securities
regarding their transfer known to the Company; no agreements which the Company is party to
that might affect its control following a takeover bid; no agreements between the Company and
its Directors concerning compensation for loss of office; and no qualifying third party
indemnities in place.
By Order of the Board
Ben Harber
Company Secretary
April
north atlantic smaller companies investment trust plc
28
statement of directors’ responsibilities in respect of the annual report and the financial statements
for the year ended 31January
The Directors are responsible for preparing the Annual Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. The
Directors elected under company law are required under the Listing Rules of the Financial Conduct
Authority to prepare the financial statements in accordance with UK-adopted International
Accounting Standards.
The financial statements are required by law and UK-adopted International Accounting Standards
to present fairly the financial position and performance of the company. The Companies Act
provides in relation to such financial statements that references in the relevant part of that Act to
financial statements giving a true and fair view are references to their achieving a fair presentation.
Under company law the Directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Company and of the profit or loss for
that period. In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with UK-adopted International
Accounting Standards;
• assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Company or
to cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show
and explain the Company’s transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that its financial statements and the
Directors’ Remuneration Report comply with the Companies Act . They are responsible for
such internal control as they determine isnecessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error, and have general
responsibility for taking such steps as are reasonably open to them to safeguard the assets of the
Company and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic
Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement
that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial
information included on the company’s website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from legislation in other jurisdictions.
29
north atlantic smaller companies investment trust plc
Each of the directors, whose names and functions are listed in the strategic report on page confirm
that to the best of each person’s knowledge:
• the financial statements, prepared in accordance with UK-adopted International Accounting
Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss
of the Company taken as a whole; and
• the Strategic Report and the Report of the Directors includes a fair review of the development
and performance of the business and the position of the company, together with a description of
the principal risks and uncertainties that they face.
We consider the Annual Report and financial statements, taken as a whole, are fair, balanced and
understandable and provide the information necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
For and on behalf of the Board
Sir Charles Wake
Chairman
April
responsibility statement of
the directors in respect of
the annual financial report
statement of directors’ responsibilities in respect of the annual report and the financial statements
for the year ended 31January
north atlantic smaller companies investment trust plc
30
corporate governance
The Company’s policy is to achieve best practice in its standards of business integrity in all of its
activities. This includes a commitment to follow the highest standards of corporate governance
wherever possible. This section of the Annual Report describes how the Company has complied
with the applicable provisions of the UK Corporate Governance Code published by the Financial
Reporting Council (“FRC”) in January (the “Code”) and is available from the FRC website
(www.frc.org.uk). Provision of the code is only applicable from January , so the
Company continues to apply provision of the code. The Board considers that it has
complied with the provisions of the Code throughout the year with few exceptions: these are
detailed on page .
directors Brief biographical details of the Directors in office are set out on page . The Board consists of seven
Directors, four of whom are considered independent non-executive Directors for the purposes of
the Code, to include the Chairman – Sir Charles Wake, Fiona Gilbert, Julian Fagge and G Walter
Loewenbaum, who are each free of any relationship that could materially interfere with the exercise
of their independent judgment on issues concerning strategy, performance and standards of
conduct. The other Non-Executive Directors are Peregrine Moncreiffe (the former Chairman) and
Lord Howard of Rising. Christopher Mills, the Chief Executive Officer, also serves as a member of
the Board. The Board considers that it has the appropriate balance of skills, experience, ages and
length of service in the circumstances and values highly the experience of those Directors who have
served on the Board for a longer period.
The Board has determined that, in light of the Company’s strategic priorities and the value of
continuity and deep institutional knowledge, it is in the best interests of the Company and its
shareholders for Lord Howard of Rising to continue to serve on the Board beyond nine years.
Accordingly, in line with the provisions of the UK Corporate Governance Code, the Board no
longer considers Lord Howard of Rising to be independent.
Fiona Gilbert was appointed as the Company’s Senior Independent Director on January . As
the Senior Independent Director, Fiona provides a sounding Board for the Chairman and serves as
an intermediary for the other Directors and shareholders. Fiona also provides a channel for any
shareholder concerns regarding the Chairman.
The Board comprises of male Directors and female Director.
The Company has effective procedures in place to monitor and deal with conflicts of interest. All
declared conflicts will be discussed by the Board. The Board is aware of the other commitments and
interests of the Directors.
The Board is made up of individual members who have a wide range of qualifications and expertise
to bring to any debate. The Board normally meets four times a year and at other times as necessary.
The terms and conditions of their appointment, including the expected time commitment, are
available for inspection at the Registered Office of the Company during normal business hours and
will also be available for at least fifteen minutes prior to and during the Annual General Meeting.
The contract for Christopher Mills’ services as a Director is with GFS.
statement of compliance
with the uk corporate
governance code
31
north atlantic smaller companies investment trust plc
corporate governance
The Chairman and other members of the Board recommend that all of the Directors be re-elected.
The Chairman has confirmed that all Directors have been subject to a performance evaluation in
and following that evaluation, the Chairman confirms that their performance continues to be
effective and that they continue to demonstrate commitment to their role and in his view
responsibly fulfil their functions. The performance evaluation programme took the form of a
questionnaire circulated to and completed by all Directors. The performance evaluation provides an
anonymous vehicle for Directors to highlight any concerns or issues to the Board. The Chairman
then discussed the results with the Board and the individual Directors and any requests for further
training or action were complied with. The non-executive Directors evaluated the performance of
the Chairman and can confirm that they were satisfied with his performance and with his leadership
of the Board. The next performance evaluation would be conducted during .
board meetings The Board conducts its affairs in accordance with its schedule of matters for consideration which is
agreed once annually by the whole Board. The Chief Executive carries out day-to-day activities
pursuant to the terms of the management arrangements in place. These day-to-day activities relate
to the management of the Company’s investment portfolio on a discretionary basis within guidelines
that have been set by the Board. These guidelines include, amongst other things, maximum
exposure to any one investment and total exposure to unquoted investments. The management of
the investment portfolio also includes the monitoring of the performance and activities of the
investee companies in the portfolio and detailed research into any prospective investment. In
addition to scheduled Board Meetings, the Board may carry out certain urgent matters not requiring
debate by way of delegation to a Committee of the Board or by resolution in writing of all Directors.
Total number
in year
Board
Meetings
Total number
in year
Audit
Committees
Total number
in year
Remuneration
Committee
Total number
in year
ESG
Committee
Total number
in year
Nominations
Committee
Peregrine Moncreiffe N/A N/A N/A N/A
Christopher Mills N/A N/A N/A N/A
Lord Howard of Rising N/A N/A N/A N/A
G Walter Loewenbaum N/A
Sir Charles Wake N/A N/A N/A N/A
Fiona Gilbert
Julian Fagge
remuneration committee The Remuneration Committee is chaired by G Walter Loewenbaum and the other members are
Julian Fagge and Fiona Gilbert. The Remuneration Committee reviews the remuneration paid to
NAIS and GFS pursuant to the Management Agreements. The remuneration of GFS is disclosed in
the Directors’ Remuneration Report on pages to and also in note on page .
audit committee The Board is supported by an Audit Committee which is chaired by Julian Fagge and during the
year the other members were G Walter Loewenbaum and Fiona Gilbert. The Audit Committee
meets representatives of NAIS twice a year, who report on the proper conduct of business in
accordance with the regulatory environment in which the Company operates. The Company’s
Auditors also attend the Committee at its request, at least once a year, and report on their findings
in relation to the Company’s statutory audit. The responsibilities of the Audit Committee include
monitoring the integrity of the financial statements including Annual and Half-Yearly reports,
reviewing the effectiveness of the Company’s internal controls and risk management, making
recommendations in relation to the appointment of the auditors and reporting to the Board on all
matters within its duties and responsibilities.
attendance at board meetings,
nomination, ESG, audit and
remuneration committees
north atlantic smaller companies investment trust plc
32
The Committee monitors the performance of the Auditors on a regular basis (at least annually) and
if satisfied, recommends their re-appointment to the Board. The Audit Committee is authorised to
take such independent professional advice (including legal advice) and to secure the attendance of
any external advisers with relevant expertise as it considers necessary. The Audit Committee is also
responsible for the review of the Annual and Half-Yearly Reports, the nature and scope of the
external audit, its findings and the provision of any non-audit services. The Audit Committee is
satisfied that RSM UK Audit LLP, the Company’s Auditor, is independent and that it has adequate
policies and safeguards in place to ensure that its objectivity and independence is maintained. The
Audit Committee receive each year a report from the Auditor as to any matters the Auditor
considers bear on its independence and which require disclosure to the Company.
RSM UK Audit LLP were appointed as the Company’s auditors in and carried out their first
audit on the accounts for the year ended January .
There has been no interaction between the Company and the Financial Reporting Council’s
Corporate Reporting Review team during the period.
The Committee’s terms of reference are available from the Company Secretary. The Audit
Committee met twice during the year to review the Half-Yearly and Annual financial statements and
to review reports and hold discussions with the Chief Executive and NAIS. In carrying out its duties
during this review, the Audit Committee has considered inter alia the annual budget, internal
control reports, the risk management framework, the effectiveness of the external audit process, the
independence and objectivity of the External Auditor, the Audit Plan, Audit Reports and Corporate
Governance Report including the Code. The Board is satisfied that all of the Committee’s members
have recent and relevant commercial and financial knowledge and experience to satisfy the Code, by
virtue of their having held various executive and non-executive roles in investment management
and business management.
corporate governance
33
north atlantic smaller companies investment trust plc
The Audit Committee met with the Auditor during the year to discuss the audit plan and strategy
for the year and identify the significant issues to be dealt with in the review of the year end results.
The principal issues identified as presenting the greatest risks were the valuation of the unquoted
investments in the portfolio.
Listed investments are valued using stock exchange prices provided by third party financial data
vendors. Unquoted investments are recognised on a fair value basis as set out in the statement of
accounting policies on page and are reviewed by NAIS Valuations and Pricing Committee before
being approved by the Board and being made available to the Auditor.
These and other matters, identified as posing less of a risk, were considered and discussed with the
Manager and the Auditor as part of the year end process.
Throughout the year the Board has considered, as part of its ongoing Risk Management Review, the
principal risks facing the Company. This has included specifically assessing those risks which would
threaten its business model, future performance, solvency or liquidity. The Company carries out its
activities using the services of third party service providers; it has no staff of its own.
shareholder relations The Company, through its Chief Executive, has regular contact with its Institutional shareholders.
The Board supports the principle that the Annual General Meeting be used to communicate with
private shareholders and encourages them to participate. The Annual General Meeting is attended
by Directors and the Chief Executive. During the year, the Board engaged in dialogue with dissenting
investors as part of an outreach campaign to offer the opportunity for further engagement and to
answer any questions or queries they may have and the Directors continue to engage positively with
interested parties on this matter.
ESG committee The ESG Committee was established to enhance the Board’s oversight of environmental, social and
governance issues. The committee, currently chaired by Fiona Gilbert with members Julian Fagge
and Nicholas Mills, a Director and Fund Manager at Harwood Capital, has met several times to
review the governance structure and environmental policy. Board training has been undertaken in
governance to ensure all procedures are in place.
nominations committee The Board is a small Board and previously fulfilled the function of the Nominations Committee.
During the Board established a formal Nominations Committee who was responsible for
reviewing the composition and make-up of the Board and its committees and considers the
leadership needs and succession of the Board when making decisions on new appointments. The
Committee, is currently chaired by Julian Fagge with members Fiona Gilbert and G Walter
Loewenbaum. The committee will continuously review the structure, size and composition of the
Board and its committees and made recommendations for changes to the membership of the
committees. The Committee will actively participate in the recruitment process, and contribute to
the on-boarding and induction of newly appointed Directors assisted by the Company Secretary.
The Committee oversees succession planning for directors and senior management and ensures that
appointments are made on merit against objective criteria, with due regard to the benefits of
diversity and the skills, experience, independence and knowledge required to support the
Company’s long-term success, in line with the principles of the UK Corporate Governance Code
.
financial report and
significant issues
corporate governance
north atlantic smaller companies investment trust plc
34
diversity Due to the size of the Board and the fact that there are no employees, the Company does not have a
diversity policy.
the company secretary The Board has direct access to the advice and services of the Company Secretary, Ben Harber, which
is responsible for ensuring that the Board and Committee procedures are followed and that the
applicable regulations are complied with. The Company Secretary is also responsible to the Board
for ensuring timely delivery of information and reports.
accountability and audit The statement of going concern is given on page and the Board’s responsibilities with regard to
the financial statements are set out on pages and . The Independent Auditor’s Report is on
pages to . The principal risks and uncertainties, s statement and viability statement are set
out in the Strategic Report on pages to .
share capital Shareholders’ attention is drawn to the further information on page which is disclosed in
accordance with the Large and Medium-sized Companies and Groups (Account and Reports)
Regulations and rule .. of the Disclosure and Transparency Rules.
internal control The Board is responsible for the Company’s system of internal control and for reviewing its
effectiveness. The Board has regularly reviewed the effectiveness of the system of internal control in
place. The Board believes that the key risks identified and implementation of the system to monitor
and manage those risks are appropriate to the Company’s business as an investment trust. The
ongoing risk assessment includes the monitoring of the financial, operational and compliance risks
as well as an evaluation of the scope and quality of the system of internal control adopted by the
third party service providers. The Board regularly reviews the delegated services to ensure their
continued competitiveness and effectiveness. The system is designed to ensure regular
communication of the results of monitoring by the third parties to the Board and the incidence of
any significant control failings or weaknesses that have been identified and the extent to which they
have resulted in unforeseen outcomes or contingencies that may have a material impact on the
Company’s performance or operations.
This review process was in place throughout the year under review and including the period to the
date of the approval of the Annual Report and there were no problems identified from this review.
The Board believes that, although robust, the Company’s system of internal control is designed to
manage rather than eliminate the risk of failure to achieve business objectives. Any system can
provide only reasonable and not absolute assurance against material misstatement or loss. The
principal features of the internal control systems in respect of financial reporting include segregation
of duties between the processing and approval of investment transactions and the recording of these
transactions in the accounting records as well as the production and review of monthly management
accounts. The annual and interim reports are reviewed and approved by the Board. The Company
does not have an internal audit function as it uses third party service providers and does not employ
any staff, nor does the Board consider it appropriate to do so.
corporate governance
35
north atlantic smaller companies investment trust plc
compliance statement Throughout the year ended January the Company has complied with the Code (apart from
the workforce provisions , and which are not applicable as the Company has no employees
other than the Directors), except as follows:
Provision – The Chairman does not routinely engage directly with shareholders to understand
their views on governance or the Company’s performance against its strategy. Whilst the Board
acknowledges the potential for market perception risk, this is mitigated by the Chief Executive
maintaining an ongoing programme of engagement with major shareholders, through which
feedback and any concerns are communicated to the Board. Where appropriate, the Chairman is
available to meet with shareholders to discuss specific issues. In addition, the Directors, including
the Chairman and Chief Executive, attend the Annual General Meeting, where they are available to
engage with shareholders and respond to questions. This approach will continue to be reviewed.
Provision and – The Board does not currently conduct a formal annual evaluation of its own
performance, its committees, or individual directors. Instead, an informal evaluation is carried out
every two years, complemented by ongoing oversight of Board performance by the Chairman. This
approach enables the Board to monitor effectiveness in a flexible manner while considering the
views of directors and key stakeholders. The Board keeps the effectiveness of this evaluation process
under review to ensure it continues to meet the principles of good governance.
Provision – As the Company has only one Executive Director, the scope of the Remuneration
Committee’s work and the corresponding disclosures differ from the requirements of Provision .
The Committee nevertheless ensures that the remuneration of the Executive Director is determined
in a fair, transparent, and structured manner, with independent oversight and alignment to the
Company’s long-term strategy. The Committee keeps its approach under review to ensure that it
continues to meet the principles of good governance and provides meaningful information to
shareholders.
By Order of the Board
Ben Harber
Company Secretary
April
corporate governance
north atlantic smaller companies investment trust plc
36
directors’ remuneration report
for the year ended 31 January
This Report has been prepared in accordance with the Large and Medium sized Companies and
Groups (Accounts and Reports) Regulations , Schedule . The Directors’ Remuneration Report
will be put to an advisory shareholder vote at this year’s annual general meeting.
The law requires the Company’s Auditor to audit certain of the disclosures provided and to state
whether, in their opinion, those parts of the report have been properly prepared in accordance with
the Accounting Regulations. Where disclosures have been audited, they are indicated as such. The
Auditor’s opinion is included in their report on pages to .
role and composition The Remuneration Committee consists of Julian Fagge, G Walter Loewenbaum and Fiona Gilbert.
Christopher Mills, the Company’s Chief Executive, does not attend meetings of the Remuneration
Committee.
The Remuneration Committee is responsible for determining all aspects of Director's remuneration.
The Remuneration Committee in the year did not propose that there should be any change to the
level of remuneration paid to the Directors. In making this decision, consideration of the scope of
work undertaken and input required by the Directors was considered. No Director participates in
discussions on their own remuneration. The Committee takes independent professional advice
where it considers this is appropriate. No such advice has been received in the year.
The Remuneration Committee held a meeting on February to discuss the policy on
Director's Remuneration.
January
.p Ordinary
Shares
January
p Ordinary
Shares*
Sir Charles Wake , ,
Christopher Mills** ,, ,,
Christopher Mills (non-beneficial) ,, ,
Lord Howard of Rising , ,
Professor Fiona Gilbert , ,
G Walter Loewenbaum , ,
Peregrine Moncreiffe ,, ,
Julian Fagge ,
* Shareholding before the ten for one share split that took effect on June .
** Inclusive of , shares for a private client account managed by Christopher Mills and ,, shares
for Harwood Holdco Limited.
directors’ interests
(audited)
37
north atlantic smaller companies investment trust plc
directors’ remuneration report
for the year ended 31 January
The Company’s Articles of Association were amended by a special resolution passed by shareholders
at the Annual General Meeting on June which increased the aggregate total of Directors’ fees
that can be paid during the year from £, to £,. The Remuneration Committee’s policy,
subject to this overall limit, is to determine the level of Directors’ fees having regard to the level of
fees payable to non-executive directors in other investment trusts, the rate of inflation and the
increasing amount of time that individual Directors must commit to the Company’s affairs. The
Committee is also concerned that the remuneration of the non-executive Directors should reflect
the experience of those Directors and believes that the level of remuneration should be sufficient to
attract and retain non-executive Directors to oversee the Company.
The Directors are entitled to be reimbursed for any reasonable expenses properly incurred by them
in connection with the performance of their duties and attendance at meetings. Non-executive
Directors are not eligible for bonuses, pension benefits, share options or any other incentives or
benefits. There are no agreements between the Company and its Directors concerning
compensation for loss of office.
The Directors’ Remuneration Policy is the same in all material aspects as that implemented by the
Board during the year under review and as summarised in last year’s Directors’ Remuneration
Report. The Board will consider, where raised, shareholders’ views on Directors’ remuneration.
The Company has no employees and therefore has no policy on the remuneration of employees.
The performance graph on page measures the Company’s share price and net asset value
performance against the Sterling adjusted Russell and the Sterling adjusted Standard & Poor’s
Composite Index. An explanation of the Company’s performance is given in the Chairman’s
Statement and the Investment Manager’s Report.
The policy is to review Directors’ fees from time to time, but reviews will not necessarily result in
the level of Directors’ fees changing. Since August , the Directors have been paid at a rate of
£, per annum with the exception of Peregrine Moncreiffe, the former Chairman whose
emoluments amount to £, per annum which reflects his contribution to stakeholder
engagement and supporting Sir Charles Wake as Chairman. The Directors’ Remuneration Policy
was last presented to the shareholders for approval in and therefore will be presented for
approval by the shareholders at the Company's AGM in .
policy on directors’
remuneration
north atlantic smaller companies investment trust plc
38
directors’ remuneration report
for the year ended 31 January
directors’ remuneration table (audited)
Fees &
Salary
£
Change
from
Annual
Incentives
£
Change
from
Tot a l
£
Executive
Christopher Mills , – ,, . ,,
Non-Executive
Sir Charles Wake , – – – ,
Peregrine Moncreiffe , – – – ,
Lord Howard of Rising , – – – ,
G Walter Loewenbaum , – – – ,
Professor Fiona Gilbert , – – – ,
Julian Fagge , – – – ,
, ,, ,,
Fees &
Salary
£
Change
from
%
Annual
Incentives
£
Change
from
%
Tot a l
£
Executive
Christopher Mills , – ,, . ,,
Non-Executive
Sir Charles Wake , – – – ,
Peregrine Moncreiffe , – – – ,
Lord Howard of Rising , – – – ,
G Walter Loewenbaum , – – – ,
Professor Fiona Gilbert , – – – ,
Julian Fagge , .* – – ,
, ,, ,,
* This figure reflects the change in total pay Julian Fagge received given that the appointment was part way
through the year ending January .
39
north atlantic smaller companies investment trust plc
chief executive The Chief Executive is responsible for the day-to-day investment decisions. He has no service
contract with the Company; his appointment is pursuant to the Secondment Services Agreement
dated January between the Company, the Chief Executive and GFS. The Remuneration
Committee has no plans to alter the remuneration structure for the Chief Executive. As stated in note
on pages and , the Chief Executive is entitled to retain any fees received from investee
companies in respect of his role as a non-executive director of these entities; such a role is considered
to benefit shareholders as it allows the Chief Executive to monitor the performance of the investee
company more closely than would be possible under other circumstances.
Year Ended
Director’s
fees
£
Investment
Management and
related fees
£
Performance
fee
£
Total (excluding
irrecoverable
VAT )
£
January , ,, – ,,
January , ,, ,, ,,
January , ,, ,, ,,
January , ,, , ,,
January , ,, ,, ,,
January , ,, – ,,
January , ,, – ,,
January , ,, – ,,
January , ,, – ,,
January , ,, , ,,
The total fees of £,,, in respect of Christopher Mills’ services as a Director and Chief
Executive are payable to GFS, as described on page . GFS receives, and is contractually entitled to
receive, part of the Annual Fee payable to the GFS and NAIS in respect of the investment
management activities of the Chief Executive pursuant to the Investment Management Agreements
described on page and note on page to the financial statements.
Christopher Mills is a director of GFS. GFS is a wholly owned subsidiary of Harwood Capital
Management Limited, which is in turn wholly owned by Christopher Mills. Christopher Mills is also
the Chief Investment Officer of NAIS.
The Performance Fee is a contractual entitlement pursuant to the Secondment Services Agreement
dated January as amended and is paid to GFS. Calculation of the Performance Fee includes
Oryx at the adjusted price (using equity accounting methods).
Explanations of the calculation of the Investment Management and Performance fees can be found
in note on page to the financial statements.
No pension or other benefits are paid to the Chief Executive.
remuneration of chief
executive (audited)
directors’ remuneration report
for the year ended 31 January
north atlantic smaller companies investment trust plc
40
directors’ remuneration report
for the year ended 31 January
The fixed element represents the director’s fee of £, per annum.
Included within the ‘On-target’ bar is the investment management fee, £,, and performance
fee of £, that are payable to GFS and NAIS for the year ended January .
The difference between the “On-target” bar and the “Max” bar is the maximum payment under the
performance fee arrangements which could have fallen due in respect of the year. This is explained
in more detail in note (iii) to the financial statements.
Christopher Mills is deemed to have received these fees due to the fact that he is a director of and
the ultimate beneficial owner of GFS and NAIS. These amounts are included in the ‘On Target’ bar
as the fees were only payable if performance related hurdles were met. The NAIS fee is excluded
from Christopher’s reported remuneration, as it relates to operational services, including business
management and the disbursement of staff salaries.
The Directors who served during the years ended January and January received the
following emoluments:
Total Fees £
January
Total Fees £
January
Peregrine Moncreiffe , ,
Lord Howard of Rising , ,
G Walter Loewenbaum , ,
Sir Charles Wake , ,
Christopher Mills ,, ,,
Professor Fiona Gilbert , ,
Julian Fagge
, ,
Total
,, ,,
The Directors are aware that it is a statutory requirement that this report provides shareholders and
other interested parties with an analysis of Directors’ Remuneration against the remuneration of
employees or the amount of distributions to shareholders. However, the Company has no employees
and has a long-standing policy of not paying dividends (except to ensure compliance with Investment
Trust rules) so it is not possible to provide any such analysis. The Directors also do not consider that
such a comparison would be a meaningful measure of the Company’s overall performance.
0
4,000,000
3,000,000
2,000,000
1,000,000
Fixed only On-target Max
£30,000 £3,562,000 £6,898,000
7,000,000
6,000,000
5,000,000
single total figure of
remuneration for each
director (audited)
41
north atlantic smaller companies investment trust plc
directors’ remuneration report
for the year ended 31 January
service contracts No Director has a service contract. The contract for the Chief Executive’s services and the carrying
on day-to-day investment decisions is with GFS and contained in the Secondment Services
Agreement between GFS and the Company as noted in the paragraph describing the Chief
Executive’s activities.
company’s performance The following graph compares over a ten year period the total shareholder return on the Company’s
Shares with a hypothetical holding of Shares of the same kinds and number as those by reference to
which a broad equity market index is calculated.
Graph showing total shareholder return over 10 years as compared to total shareholder return of a
broad equity market index over the last 10 years. (Source: Financial Data/Datastream)
NASCIT NAV is the diluted NAV at each balance sheet date.
The equity market indexes chosen are the Sterling adjusted Russell and the Sterling adjusted
Standard & Poor’s Composite Index.
voting The Directors’ Remuneration Report for the year ended January was approved by shareholders
at the Annual General Meeting held on June . The votes cast by proxy were as follows:
Directors’ Remuneration Report
Number of votes Percentage
For ,, .
Against , .
At Chairman’s discretion
, .
total votes cast ,, .
Number of votes withheld ,
This Report was approved by the Board on April and signed by:
On behalf of the Board
G Walter Loewenbaum
Remuneration Committee Chairman
April
% Growth
50
300
150
200
250
350
100
2024 2026202520232022202120202019201820172016
400
0
S&P 500 Composite
Sterling adjusted
NASCIT Share Price
NASCIT NAV
Russell 2000
Sterling adjusted
north atlantic smaller companies investment trust plc
42
opinion We have audited the financial statements of North Atlantic Smaller Companies investment Trust plc
(the ‘company’) for the year ended January which comprise the statement of comprehensive
income, statement of changes in equity, balance sheet, cash flow statement and notes to the financial
statements, including significant accounting policies. The financial reporting framework that has been
applied in their preparation is applicable law and UK-adopted International Accounting Standards.
In our opinion the financial statements:
• give a true and fair view of the state of the company’s affairs as at January and of its
return for the year then ended;
• have been properly prepared in accordance with UK-adopted International Accounting
Standards; and
• have been prepared in accordance with the requirements of the Companies Act .
basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of
the company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public
interest entities and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Key audit matters • Valuation of Unquoted Investments
• Valuation of Quoted Investments
Materiality
• Overall materiality: £.m (: £.m)
• Performance materiality: £.m (: £.m)
Scope Our audit procedures covered % of income, % of total assets and
% of return before tax.
key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) we identified, including those which
had the greatest effect on the overall audit strategy, the allocation of resources in the audit and
directing the efforts of the engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
independent auditor’s report
to the members of North Atlantic Smaller Companies Investment Trust plc
summary of our
auditapproach
43
north atlantic smaller companies investment trust plc
independent auditor’s report
to the members of North Atlantic Smaller Companies Investment Trust plc
Key audit matter
description
As at January , unquoted investments (including loan stock) were
£m (: £m), which was % (: %) of the company’s net
assets at that date. These investments are measured at fair value in
accordance with the International Private Equity and Venture Capital
Valuation Guidelines. These valuations involve material judgements and
estimation and is a significant audit risk and for this reason it is considered
to be a key audit matter.
Unquoted investment disclosures are set out in notes and to the
financial statements.
How the matter
wasaddressed in
theaudit
Our audit procedures included:
• Obtaining an understanding of the company’s unquoted investments held
at the year end, including attendance at valuation meetings with the
investment manager and reviewing underlying investment agreements
and other relevant documentation;
• Understanding and challenging the key assumptions and judgements
affecting investee company valuations, including consultation with an
expert from our valuations team and consideration of the appropriateness
of the valuation basis and sensitivities;
• Considering whether events that occurred subsequent to the period end
affect the underlying assumptions of the valuations at January
(including wider political turmoil); and
• Considering of the appropriateness of the disclosures in the financial
statements in respect of unquoted investments.
Key observations We concluded that the carrying value of unquoted investments is acceptable.
Key audit matter
description
As at January , quoted investments (including treasury bills) were
£m (: £m), which was % (: %) of the company’s net assets
at that date. Quoted investments are one of the key drivers of financial
performance. Whilst this is not considered to be a significant audit risk, due
to the quantum of these investments, we consider it to be a key audit matter.
Quoted investment disclosures are set out in note to the financial statements.
How the matter
wasaddressed in
theaudit
Our audit procedures included:
• Agreeing % of year end investment holdings (including treasury bills)
to independently received confirmations from the depository.
• Checking % of the year end valuations to externally quoted prices.
Key observations We concluded that the carrying value of quoted investments is acceptable.
valuation of unquoted
investments
valuation of quoted
Investments
north atlantic smaller companies investment trust plc
44
independent auditor’s report
to the members of North Atlantic Smaller Companies Investment Trust plc
our application of materiality When establishing our overall audit strategy, we set certain thresholds which help us to determine the
nature, timing and extent of our audit procedures. When evaluating whether the effects of
misstatements, both individually and on the financial statements as a whole, could reasonably
influence the economic decisions of the users we take into account the qualitative nature and the size
of the misstatements. Based on our professional judgement, we determined materiality as follows:
Overall materiality £.m (: £.m)
Basis for determining
overall materiality % of net assets (: % of net assets)
Rationale for benchmark
applied
Net asset value per share is one of the company’s key performance
indicators and considered to be one of the principal considerations
for members of the company when assessing financial performance.
Performance materiality £.m (: £.m)
Basis for determining
performance materiality % of overall materiality (: %)
Reporting of misstatements
to the Audit Committee
Misstatements in excess of £, (: £,) and
misstatements below that threshold that, in our view, warranted
reporting on qualitative grounds.
The company has been subject to a full scope audit. The company is a single entity, subject to local
statutory audit, and our audit work was designed to address the risks of material misstatements
identified to the level of materiality indicated above.
In auditing the financial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of
the directors’ assessment of the company’s ability to continue to adopt the going concern basis of
accounting included:
• reviewing, evaluating and challenging the company’s going concern disclosures in note (b) to the
financial statements and the company’s viability statement on page of the annual report; and
• corroborating the cash and treasury bills as at January and at the date of approval of the
financial statements.
Our key observation in relation to going concern is that the company has sufficient cash and liquid
investments to continue as a going concern for the foreseeable future.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the company’s
ability to continue as a going concern for a period of at least twelve months from when the financial
statements are authorised for issue.
In relation to the entity's reporting on how it has applied the UK Corporate Governance Code, we
have nothing material to add or draw attention to in relation to the Directors’ statement in the
financial statements about whether the Directors considered it appropriate to adopt the going
concern basis of accounting.
an overview of the scope
of our audit
conclusions relating to
going concern
45
north atlantic smaller companies investment trust plc
independent auditor’s report
to the members of North Atlantic Smaller Companies Investment Trust plc
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
other information The other information comprises the information included in the annual report other than the
financial statements and our auditor’s report thereon. The directors are responsible for the other
information contained within the annual report. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in
the course of the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
In our opinion, the part of the directors’ remuneration report to be audited has been properly
prepared in accordance with the Companies Act .
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial year for
which the financial statements are prepared is consistent with the financial statements;
• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable
legal requirements.
In the light of the knowledge and understanding of the company and its environment obtained in
the course of the audit, we have not identified material misstatements in the Strategic Report or the
Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies
Act requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the company, or returns adequate for our
audit have not been received from branches not visited by us; or
• the financial statements and the part of the directors’ remuneration report to be audited are not
in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
opinions on other matters
prescribed by the
companies act 2006
matters on which we are
required to report by
exception
north atlantic smaller companies investment trust plc
46
independent auditor’s report
to the members of North Atlantic Smaller Companies Investment Trust plc
We have reviewed the directors’ statement in relation to going concern, longer-term viability and
that part of the Corporate Governance Statement relating to the company’s compliance with the
provisions of the UK Corporate Governance Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the Corporate Governance Statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
• Directors’ statement with regards the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on page ;
• Directors’ explanation as to their assessment of the company’s prospects, the period this
assessment covers and why the period is appropriate set out on page ;
• Directors’ statement on whether it has a reasonable expectation that the company will be able to
continue in operation and meets its liabilities set out on page ;
• Directors’ statement on fair, balanced and understandable set out on page ;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal
risks set out on page ;
• Section of the annual report that describes the review of effectiveness of risk management and
internal control systems set out on page ; and,
• Section describing the work of the audit committee set out on page .
responsibilities of directors As explained more fully in the directors’ responsibilities statement set out on page , the directors
are responsible for the preparation of the financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the directors are responsible for assessing the company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
corporate governance
statement
auditor’s responsibilities for
the audit of the financial
statements
47
north atlantic smaller companies investment trust plc
Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit
are to obtain sufficient appropriate audit evidence regarding compliance with laws and regulations
that have a direct effect on the determination of material amounts and disclosures in the financial
statements, to perform audit procedures to help identify instances of non-compliance with other
laws and regulations that may have a material effect on the financial statements, and to respond
appropriately to identified or suspected non-compliance with laws and regulations identified during
the audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material
misstatement of the financial statements due to fraud, to obtain sufficient appropriate audit evidence
regarding the assessed risks of material misstatement due to fraud through designing and
implementing appropriate responses and to respond appropriately to fraud or suspected fraud
identified during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with
governance, to ensure that the entity's operations are conducted in accordance with the provisions
of laws and regulations and for the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including
fraud, the audit engagement team:
• obtained an understanding of the nature of the industry and sector, including the legal and
regulatory framework that the company operates in and how the company is complying with the
legal and regulatory framework;
• inquired of management, and those charged with governance, about their own identification
and assessment of the risks of irregularities, including any known actual, suspected or alleged
instances of fraud;
• discussed matters about non-compliance with laws and regulations and how fraud might occur
including assessment of how and where the financial statements may be susceptible to fraud
having obtained an understanding of the overall control environment.
The most significant laws and regulations were determined as follows:
Legislation/
Regulation
Additional audit procedures performed by the audit
engagementteam included:
UK-adopted IAS and
Companies Act
Review of the financial statement disclosures and testing to
supporting documentation;
Completion of disclosure checklists to identify areas of
non-compliance.
the extent to which the
audit was considered
capable of detecting
irregularities, including
fraud
independent auditor’s report
to the members of North Atlantic Smaller Companies Investment Trust plc
north atlantic smaller companies investment trust plc
48
The areas that we identified as being susceptible to material misstatement due to fraud were:
Risk Audit procedures performed by the audit engagement team:
Management override
ofcontrols
Testing the appropriateness of journal entries and other
adjustments;
Assessing whether the judgements made in making accounting
estimates are indicative of a potential bias; and
Evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Following the recommendation of the audit committee, we were appointed by the Directors on
February to audit the financial statements for the year ended January and
subsequent financial periods.
The period of total uninterrupted consecutive appointment is years, covering the years ending
January to .
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the company
and we remain independent of the company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee in accordance with
ISAs (UK).
use of our report This report is made solely to the company’s members, as a body, in accordance with Chapter of
Part of the Companies Act . 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.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency
Rules, these financial statements will form part of the Annual Financial Report prepared in
Extensible Hypertext Markup Language (XHTML) format and filed on the National Storage
Mechanism of the UK FCA. This auditor’s report provides no assurance over whether the annual
financial report has been prepared in XHTML format.
Andrew Allchin (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
April
other matters which we are
required to address
independent auditor’s report
to the members of North Atlantic Smaller Companies Investment Trust plc
49
north atlantic smaller companies investment trust plc
statement of comprehensive income
for the year ended 31January
Notes
Revenue
£’
Capital
£’
Tot a l
£’
Revenue
£’
Capital
£’
Tot a l
£’
Income , – , , – ,
Net gains on investments at fair value – , , – , ,
Currency (losses)/gains
– () () –
total income , , , , , ,
Expenses
Investment management fee (,) () (,) (,) – (,)
Other expenses
(,) () (,) (,) – (,)
return before finance costs and taxation , , , , , ,
Finance costs
() – () – – –
return before taxation , , , , , ,
Taxation
() – () () – ()
return for the year , , , , , ,
basic and diluted earnings per ordinary share* . . . . . .
The total column of the statement is the Statement of Comprehensive Income of the Company,
prepared in accordance with UK-adopted International Accounting Standards. The supplementary
revenue and capital columns are presented in accordance with the Statement of Recommended
Practice issued by the Association of Investment Companies (“AIC SORP”).
All items in the above Statement derive from continuing operations. No operations were acquired or
discontinued in the year.
There is no other comprehensive income, and therefore the return for the year is also the
comprehensive income.
The notes on pages to form part of these financial statements.
* In accordance with IAS ‘Earnings per Share’, the comparative return per Ordinary Share figures have been
restated using the new number of shares in issue following the ten for one share split. For weighted average
purposes, the share split has been treated as happening on the first day of the accounting period. See note
for further details.
north atlantic smaller companies investment trust plc
50
statement of changes in equity
for the year ended 31January
Share
capital
£’
Capital
redemption
reserve
£’
Share
premium
£’
Capital
reserve
£’
Revenue
reserve
£’
Tot a l
£’
2026
January , , , ,
Total comprehensive income for the year – – – , , ,
Dividend – – – – (,) (,)
Shares purchased for cancellation
() – (,) – (,)
31 January 2026 , , , ,
Share
capital
£’
Capital
redemption
reserve
£’
Share
premium
£’
Capital
reserve
£’
Revenue
reserve
£’
Tot a l
£’
2025
January , , , ,
Total comprehensive income for the year – – – , , ,
Dividend – – – – (,) (,)
Shares purchased for cancellation
() – (,) – (,)
31 January 2025 , , , ,
The notes on pages to form part of these financial statements.
51
north atlantic smaller companies investment trust plc
Notes
£’
£’
non current assets
Investments at fair value through profit or loss , ,
, ,
current assets
Trade and other receivables , ,
Cash and cash equivalents
, ,
, ,
total assets , ,
current liabilities
Trade and other payables (,) (,)
total liabilities (,) (,)
total assets less current liabilities , ,
net assets , ,
represented by:
Share capital
Capital redemption reserve
Share premium account , ,
Capital reserve , ,
Revenue reserve
, ,
total equity attributable to equity holders of the company , ,
net asset value per ordinary share:
Basic and Diluted* .p .p
* Figures for January restated for a for share split.
The notes on pages to form part of these financial statements.
These financial statements were approved and authorised for issue by the Board of Directors on
April and signed on its behalf by:
Sir Charles Wake, Chairman
Company Registered Number:
balance sheet
as at 31January
north atlantic smaller companies investment trust plc
52
cash flow statement
for the year ended 31January
Notes
£’
£’
cash flows from operating activities
Investment income received , ,
Deposit interest received
Interest received from money market funds
Investment Manager’s fees paid (,) (,)
Other cash payments
(,) (,)
cash generated from operations , ,
Taxation paid
() ()
net cash inflow from operating activities , ,
cash flows from investing activities
Purchases of investments (,) (,)
Sales of investments
, ,
net cash inflow from investing activities , ,
cash flows from financing activities
Dividend paid (,) (,)
Repurchase of Ordinary Shares for cancellation
(,) (,)
net cash outflow from financing activities (,) (,)
increase in cash and cash equivalents for the year , ,
cash and cash equivalents at the start of the year , ,
Revaluation of foreign currency balances
()
cash and cash equivalents at the end of the year , ,
The notes on pages to form part of these financial statements.
53
north atlantic smaller companies investment trust plc
notes to the financial statements
1 accounting policies
NASCIT is a listed public company incorporated and registered in England and Wales. The
registered office of the Company is Stratton Street, Mayfair, London WJ LD. The principal
activity of the Company is that of an investment trust company within the meaning of sections
/ of the Corporation Tax Act and its investment approach is detailed in the
StrategicReport.
a) basis of preparation
The financial statements of the Company have been prepared in accordance with UK-adopted
International Accounting Standards. The annual financial statements have also been prepared in
accordance with the AIC SORP for the financial statements of investment trust companies and
venture capital trusts, except to any extent where it is not consistent with the requirements of
UK-adopted International Accounting Standards.
The functional currency of the Company is Pounds Sterling because this is the currency of the
primary economic environment in which the Company operates. The financial statements are also
presented in Pounds Sterling rounded to the nearest thousand, except where otherwise indicated.
b) going concern
The financial statements have been prepared on a going concern basis and on the basis that approval
as an investment trust company will continue to be met.
The Directors have made an assessment of the Company's ability to continue as a going concern and
are satisfied that the Company has adequate resources to continue in operational existence for a
period of at least months from the date when these financial statements were approved.
The Directors are of the view that the Company can meet its obligations as and when they fall due.
The cash and US treasury bills available enables the Company to meet any funding requirements
and finance future additional investments. The Company is a closed-end fund, where assets are not
required to be liquidated to meet day-to-day redemptions.
c) segmental reporting
The Directors are of the opinion that the Company is engaged in a single segment of business, being
investment business. The Company invests in small companies principally based in countries
bordering the North Atlantic Ocean.
d) accounting developments
There are no standards or amendments not yet effective which have a material impact on the
Company.
The Company has applied the following amendment during the current year:
In August the IASB issued Amendments to IAS The Effects of Changes in Foreign Exchange
Rates that contained guidance to specify when a currency is exchangeable and how to determine the
exchange rate when it is not. The amendments are effective for annual reporting periods beginning
on or after January . The amendments have not had a material impact on the Company’s
Financial Statements.
north atlantic smaller companies investment trust plc
54
1 accounting policies continued
d) accounting developments continued
In April the IASB issued IFRS Presentation and Disclosure in Financial Statements which
changes the structure of the profit or loss statement, requires disclosure of management-defined
performance measures and enhances principles on aggregation and disaggregation for the financial
statements and notes. It is effective for annual reporting periods beginning on or after January
. The Company is still assessing the impact of IFRS . The presentation of the Statement of
Comprehensive Income will change but the measurement and valuation of balances will not be
impacted.
In May the IASB issued Amendments to IFRS Financial Instruments and IFRS Financial
Instruments: Disclosures regarding the classification and measurement of financial instruments. It is
effective for annual reporting periods beginning on or after January . The amendments are
not expected to have a material impact on the Company’s Financial Statements.
e) critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in accordance with UK-adopted International Accounting
Standards requires management to make judgements, estimates and assumptions that affect the
application of policies and the reported amounts in the Balance Sheet, the Income Statement and
the disclosure of contingent assets and liabilities at the date of the financial statements. The
estimates and associated assumptions are based on historical experience and various other factors
that are believed to be reasonable under the circumstances, the results of which form the basis of
making judgements about carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates.
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 period if the revision affects both
current and future periods.
In order to value the unquoted investments, there are a number of valuation techniques that can be
used. Judgement is used to determine the best methodology to obtain the most accurate valuation.
Details of valuation techniques used and sensitivities are set out in Note .
The Board of Directors has assessed the Company as meeting the definition of an investment entity
within IFRS Consolidated Financial Statements requirements. The Company measures the
subsidiaries at fair value through profit or loss rather than consolidate the entities. The details are
set out in Note .
Except as set out above, there were no accounting estimates or significant judgements in the current
period that have had a material impact upon the financial statements.
notes to the financial statements
55
north atlantic smaller companies investment trust plc
notes to the financial statements
1 accounting policies continued
f) investments
All investments are designated upon initial recognition as held at fair value through profit or loss,
and are measured at subsequent reporting dates at fair value. Quoted investments are valued using
closing traded price for Stock Exchange Electronic Trading Service (‘SETS’) shares and bid price for
other quoted shares.
The Company derecognises a financial asset only when the contractual rights to the cash flows from
the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of
ownership of the asset to another entity. On derecognition of a financial asset, the difference
between the asset’s carrying amount and the sum of consideration received and receivable and the
cumulative gain or loss that had been accumulated is recognised in profit or loss.
Fair values for unquoted investments, or investments for which the market is inactive, are
established by using various valuation techniques in accordance with the International Private
Equity and Venture Capital Valuation (the “IPEV”) guidelines. These may include recent arm’s
length market transactions, the current fair value of another instrument which is substantially the
same, discounted cash flow analysis and option pricing models. Where there is a valuation
technique commonly used by market participants to price the instrument and that technique has
been demonstrated to provide reliable estimates of prices obtained in actual market transactions,
that technique is utilised.
Gains and losses arising from changes in fair value are included in the total return as a capital item.
Also included within this heading are transaction costs in relation to the purchase or sale of
investments. When a sale or purchase is made under a contract, the terms of which require delivery
within the timeframe of the relevant market, the investments concerned are recognised or
derecognised on the trade date.
All investments for which a fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy levels set out in Note .
g) foreign currency translation
Transactions in currencies other than Pounds Sterling are recorded at the rates of exchange
prevailing on the date of the transaction. Items that are denominated in foreign currencies are
retranslated at the rates prevailing on the Balance Sheet date. Any gain or loss arising from a change
in exchange rate subsequent to the date of the transaction is included as an exchange gain or loss in
the capital reserve or the revenue account depending on whether the gain or loss is capital or
revenue in nature.
h) cash and cash equivalents
Cash comprises cash in hand, overdrafts and demand deposits. Cash equivalents are short-term,
highly liquid investments that are readily convertible to known amounts of cash and which are
subject to insignificant risk of changes in value.
For the purpose of the Cash Flow Statement, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts when applicable.
north atlantic smaller companies investment trust plc
56
1 accounting policies continued
i) other receivables and payables
Trade receivables and trade payables are measured at amortised cost and balances revalued for
exchange rate movement.
j) income
Dividends receivable on quoted equity shares are taken to revenue on an ex-dividend basis.
Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account
when the Company’s right to receive payment is established. Fixed returns on non-equity shares are
recognised on a time-apportioned basis. Dividends from overseas companies are shown gross of any
withholding taxes which are disclosed separately in the Statement of Comprehensive Income.
Special dividends are taken to the revenue or capital account depending on their nature. In deciding
whether a dividend should be regarded as capital or revenue receipt, the Board reviews all relevant
information as to the sources of the dividend on a case-by-case basis.
When the Company has elected to receive scrip dividends in the form of additional shares rather
than in cash, the amount of the cash dividend foregone is recognised as income. Any excess in the
value of the cash dividend is recognised in the capital column.
k) expenses and finance costs
All expenses are accounted on an accruals basis and are allocated wholly to revenue with the
exception of the Performance Fees which are allocated wholly to capital, as the fee payable by
reference to the capital performance of the Company.
Expenses incurred in shares purchased for cancellation are charged to the capital reserve through
the Statement of Changes in Equity.
l) taxation
The charge for taxation is based on the net revenue for the year and takes into account taxation
deferred or accelerated because of temporary differences between the treatment of certain items for
accounting and taxation purposes.
Deferred tax is provided using the liability method on temporary differences between the tax bases
of assets and liabilities and their carrying amount for financial reporting purposes at the reporting
date. Deferred tax assets are only recognised if it is considered more likely than not that there will be
suitable profits from which the future reversal of timing differences can be deducted. In line with
recommendations of the SORP, the allocation method used to calculate the tax relief expenses
charged to capital is the ‘marginal’ basis. Under this basis, if taxable income is capable of being offset
entirely by expenses charged through the revenue account, then no tax relief is transferred to the
capital account.
notes to the financial statements
57
north atlantic smaller companies investment trust plc
notes to the financial statements
1 accounting policies continued
m) dividends payable to shareholders
Dividends to shareholders are recognised as a liability when paid for interim dividends or approved
at general meetings for final dividends, and are taken to the Statement of Changes in Equity.
Dividends declared and approved by the Company after the Balance Sheet date have not been
recognised as a liability of the Company at the Balance Sheet date.
n) share capital and reserves
Share Capital: Represents the nominal value of equity shares.
Capital Redemption Reserve: The amount by which the share capital has been reduced, equivalent
to the nominal value of the Ordinary Shares repurchased for cancellation.
Share Premium: The account is a non-distributable reserve which represents the accumulated
premium paid for shares issued in previous periods above their nominal value less issue expenses.
Capital Reserve: The following items are taken to this reserve:
• realised and unrealised capital and exchange gains and losses on the disposal and revaluation of
investments and of foreign currency items;
• performance fee costs;
• Ordinary Shares repurchased for cancellation and
• exchange differences of a capital nature.
This is a non-distributable reserve.
Revenue Reserves: Represents the surplus of accumulated revenue profits being the excess of income
derived from holding investments less the costs associated with running the Company. This reserve
may be distributed by way of dividends.
north atlantic smaller companies investment trust plc
58
notes to the financial statements
2 income
£’
£’
income from investments
Dividend income , ,
Interest , ,
Other investment income
, ,
other income
Interest receivable
Interest from money market funds
,
Total income
, ,
total income comprises
Dividends , ,
Interest , ,
Other investment income
, ,
income from investments
Listed UK , ,
Other listed , ,
Unquoted UK
Other unquoted
, ,
, ,
59
north atlantic smaller companies investment trust plc
3 investment management fee
(i) Pursuant to the Secondment Services Agreement, described in the Report of the Directors on
page and the Directors’ Remuneration Report on page , GFS provides the services of
Christopher Mills as Chief Executive of the Company, who is responsible for day-to-day
investment decisions. Christopher Mills is a director of GFS. GFS is entitled to receive part of
the investment management and related fees payable to GFS and NAIS as may be agreed
between them from time to time.
(ii) Pursuant to the terms of the Sub Advisory, Administration and Transmission Services
Agreement, described on page of the Report of the Directors, NAIS is entitled to receive a fee
(the Annual Fee) in respect of each financial period equal to the difference between (a) % of
shareholders’ Funds (as defined) on January each year and (b) the amount payable to GFS
referred to in note (i) above. This fee is payable quarterly in advance.
As set out in note , no formal arrangements exist to avoid double charging on investments
managed or advised by the Chief Executive or NAIS.
(iii) The Performance Fee, calculated annually to January, is only payable if the investment
portfolio, including Oryx at the adjusted price, outperforms the Sterling adjusted Standard &
Poors’ Composite Index. It is calculated as % of the outperformance and paid as a
percentage of shareholders’ Funds. It is limited to a maximum payment of .% of shareholders’
Funds. The Performance Fee arrangements payable to GFS have been in place since when
they were approved byshareholders.
The amounts payable in the year in respect of investment management are as follows:
Revenue
£’
Capital
£’
Tot a l
£’
Revenue
£’
Capital
£’
Tot a l
£’
Annual fee payable to NAIS , – , , – ,
Annual fee payable to GFS , – , , – ,
Performance fee – – – –
Irrecoverable VAT thereon*
– – – –
, , , – ,
At January , £, was payable to NAIS in respect of outstanding management fees (:
£,). At January , there was £, payable to GFS in respect of outstanding
performance fees (: £nil).
* % irrecoverable VAT (: n/a) based on rates per latest VAT return information.
notes to the financial statements
north atlantic smaller companies investment trust plc
60
notes to the financial statements
4 other expenses
£’
£’
Auditor’s remuneration – audit – RSM UK Audit LLP
– Other audit services*
Directors’ fees (see page )
Administration fee**
Legal and Professional fees
Registrar’s fees
Stock Exchange related fees
Irrecoverable VAT
Depositary fees
Custody fees
Directors’ insurance
Prior year interest impaired –
Other expenses
, ,
* Other audit services relates to £, (: nil) for the Client Assets Sourcebook (CASS) rules limited
assurance report, and £, (: £,) for the audit of NASCIT's subsidiary, Consolidated Venture
Finance Limited.
** Included within the administration fee are amounts of £, (: £,) due to companies
ultimately controlled by Harwood Capital Management Ltd.
For the year ended January the company incurred £, of legal fees relating to the share
split, these have been recognised as a capital expense.
5 dividends
£’
£’
Dividend for the year ended January of . pence per share (: .p)* , ,
, ,
* This value is restated from .p (: .p) due to the for share split.
Subsequent to the year end, the Directors have declared an interim dividend totalling £.m (:
£.m) from the revenue reserves, in respect of the year ended January of .p per share
(: .p), payable April toshareholders of ordinary shares on the Company’s register at
the close of business on February . The dividend value is restated from .p due to the
for share split.
61
north atlantic smaller companies investment trust plc
6 taxation
£’
£’
Withholding tax
The current taxation charge for the year is lower than the standard rate of Corporation Tax in the UK of
% (: %). The differences are explained below.
£’
£’
Total return before taxation , ,
Theoretical tax at UK Corporation tax rate of % (: %) , ,
Effects of:
Non taxable capital return (,) (,)
UK and overseas dividends which are not taxable (,) (,)
Withholding tax
Increase in tax losses, disallowable expenses and excess management expenses
()
actual current tax charge
Factors that may affect future tax charges:
As at January , the company had tax losses of £,, (: £,,) that are
available to offset against future taxable revenue, comprising excess management expenses of
£,, and a non-trade loan relationship deficit of £,, (: excess management
expenses of £,, and a non-trade loan relationship deficit of £,,). A deferred tax asset
has not been recognised in respect of those losses as the company is not expected to generate taxable
income in the future in excess of the deductible expenses of future periods and, accordingly, it is
unlikely that the company will be able to reduce future tax liabilities through the use of those losses.
The Company is exempt from corporation tax on capital gains provided it maintains its status as an
investment trust under Chapter of Part of the Corporation Tax Act . Due to the Company's
intention to continue to meet the conditions required to maintain its investment trust status, it has
not provided for deferred tax on any capital gains or losses arising on the revaluation or disposal of
investments.
notes to the financial statements
north atlantic smaller companies investment trust plc
62
notes to the financial statements
7 return per ordinary share and net asset value per ordinary share
a) return per ordinary share:
Revenue Capital Tota l
Net return
£’
Ordinary
Shares
Per Share
pence
Net return
£’
Ordinary
Shares
Per Share
pence
Net return
£’
Ordinary
Shares
Per Share
pence
2026
Basic and diluted
return perShare
, ,, . , ,, . , ,, .
Revenue Capital Tot a l
Net return
£’
Ordinary
Shares
Per Share
pence
Net return
£’
Ordinary
Shares
Per Share
pence
Net return
£’
Ordinary
Shares
Per Share
pence
2025
Basic and diluted
return perShare
, ,,* .* , ,,* .* , ,,* .*
Return per Ordinary Share has been calculated using the weighted average number of Ordinary
Shares in issue during the year.
* Figures for January restated for a for share split.
b) net asset value per ordinary share:
The net asset value per Ordinary Share calculated in accordance with the Articles of Association is
as follows:
2026
Net assets
£’
Number of
Ordinary Shares
Net asset
value per Share
Ordinary Shares – Basic and diluted , ,, .p
Ordinary Shares* – Basic and diluted , ,, .p
2025
Net assets
£’
Number of
Ordinary Shares
Net asset
value per Share
Ordinary Shares – Basic and diluted , ,,** .p**
Ordinary Shares* – Basic and diluted , ,,** .p**
* Adjusted for Oryx using equity accounting.
** Figures for January restated for a for share split.
There is no dilutive effect for January or January .
63
north atlantic smaller companies investment trust plc
7 return per ordinary share and net asset value per ordinary share continued
The Company has also reported an adjusted net asset value per share, in accordance with its
previous method of valuing its investment in Oryx. The Company has chosen to report this net
asset value per share to show the difference derived if equity accounting was used. Equity accounting
permits the use of net asset value pricing for listed assets, which in the case of Oryx, is higher than
its fair value.
The values of Oryx, as at each year end, are as follows:
£’
£’
Oryx at fair value (traded price) using IFRS , ,
Oryx value using equity accounting , ,
Increase in net assets using equity accounting , ,
8 investments at fair value through profit or loss
a) investments at fair value through profit or loss
£’
£’
Quoted at fair value:
United Kingdom , ,
Overseas
, ,
Total quoted investments , ,
Treasury bills at fair value , ,
Unlisted and loan stock at fair value
, ,
investments at fair value through profit or loss , ,
notes to the financial statements
north atlantic smaller companies investment trust plc
64
notes to the financial statements
8 investments at fair value through profit or loss continued
a) investments at fair value through profit or loss continued
2026
Quoted
equities
£’
Unquoted
equities
£’
Loan
stocks
£’
Treasury
Bills
£’
Tot a l
£’
analysis of investment portfolio movements
Opening bookcost as at February , , , , ,
Opening unrealised appreciation/(depreciation)
, , () ,
opening fair value as at 1 February 2025 , , , , ,
Movements in year:
Transfer – at cost (,) , – – –
– unrealised depreciation at date of transfer , (,) – – –
Purchases at cost , , , , ,
Sales – proceeds (,) (,) (,) (,) (,)
– realised gains/(losses) on sales , () (,) ,
Increase/(decrease) in appreciation on assets held
, (,) (,) () ,
closing fair value as at 31January 2026 , , , , ,
Closing bookcost as at January , , , , ,
Closing appreciation/(depreciation)
, , (,) () ,
, , , , ,
2025
Quoted
equities
£’
Unquoted
equities
£’
Loan
stocks
£’
Treasury
Bills
£’
Tot a l
£’
analysis of investment portfolio movements
Opening bookcost as at February , , , , ,
Opening unrealised appreciation/(depreciation)
, , (,) ,
opening fair value as at 1 February 2024 , , , , ,
Movements in year:
Purchases at cost , , , , ,
Sales – proceeds (,) (,) (,) (,) (,)
– realised (losses)/gains on sales (,) , , (,)
Increase/(decrease) in appreciation on assets held
, , () ,
closing fair value as at 31January 2025 , , , , ,
Closing bookcost as at January , , , , ,
Closing appreciation/(depreciation)
, , () ,
, , , , ,
65
north atlantic smaller companies investment trust plc
8 investments at fair value through profit or loss continued
a) investments at fair value through profit or loss continued
£’
£’
analysis of capital gains and losses
Gains/(losses) on sales , (,)
Unrealised gains
, ,
gains on investments at fair value , ,
£’
£’
Exchange gains/(losses) on capital items ()
Exchange (losses)/gain on currency
()
exchange (losses)/gains ()
£’
£’
portfolio analysis
Equity shares , ,
Preference securities , ,
Fixed interest/Loan note securities , ,
Treasury Bills
, ,
, ,
notes to the financial statements
north atlantic smaller companies investment trust plc
66
notes to the financial statements
8 investments at fair value through profit or loss continued
b) subsidiary undertakings
At January the Company has the following Subsidiaries which were active during the year:
Subsidiary Principal activity Equity held Country of registration
Consolidated Venture Finance Limited Investment entity % England and Wales
Hampton Investment Properties Limited Property investment .% England and Wales
Oryx International Growth Fund Limited Investment company .% Guernsey
assessment as an investment entity
Entities that meet the definition of an investment entity within IFRS Consolidated Financial
Statements, are required to measure their subsidiaries at fair value through profit or loss rather than
consolidate the entities. The criteria which define an investment entity are as follows:
• an entity that obtains funds from one or more investors for the purpose of providing those
investors with investment services;
• an entity that commits to its investors that its business purpose is to invest funds solely for
returns from capital appreciation, investment income or both; and
• an entity that measures and evaluates the performance of substantially all of its investments on a
fair value basis.
The Board concluded that the Company continues to meet the characteristics of an investment
entity in that it has more than one investment, it has ownership interests in the form of equity and
similar interests, it has more than one investor and its investors are not related parties other than
those disclosed in note .
67
north atlantic smaller companies investment trust plc
8 investments at fair value through profit or loss continued
c) significant holdings
At the year-end, the Company held % or over of the following entities:
Company and address
of principal business
Country of
incorporation
and registration Year end
Capital and
reserves
£’
Profit/
(loss) for
the last
financial year
£’
Company
holding
January
Company
holding
January
%
Consolidated Venture Finance Limited
Stratton Street, Mayfair, London WJ LD
England and Wales January () () . .
Crest Foods Co, Inc
Brown Avenue, Ashton, IL
United States of
America
July (,) , . .
EKF Diagnostics Holdings Plc
Avon House, Stanwell Road, Penarth,
Cardiff CF EZ
England and Wales December , , . .
Frenkel Topping Group Plc
Frenkel House Carolina Way, Salford,
Manchester M ZY
England and Wales December , , . .
Hampton Investment Properties
Stratton Street, Mayfair, London WJ LD
England and Wales December , () . .
Hargreaves Services Plc
West Terrace, Esh Winning, Durham
DHPT
England and Wales May , , . .
Harwood Private Capital UK LP
Stratton Street, Mayfair, London WJ LD
England and Wales March , , . .
Harwood Private Equity Fund IV LP
Stratton Street, Mayfair, London WJ LD
England and Wales December , () . .
Harwood Private Equity Fund V LP
Stratton Street, Mayfair, London WJ LD
England and Wales December , . .
Harwood Private Equity Fund VI LP
Stratton Street, Mayfair, London WJ LD
England and Wales December , () . N/A
Oryx International Growth Fund Limited
BNP Paribas House, St Julian’s Avenue
St Peter Port, Guernsey GY WA
Guernsey March , (,) . .
Trident Private Equity Fund III LP
Stratton Street, Mayfair, London WJ LD
England and Wales December , () . .
All the investments detailed above have not been consolidated into the financial statements due to
the Company meeting the definition of an investment entity under IFRS and therefore these
investments are included at fair value through profit and loss.
notes to the financial statements
north atlantic smaller companies investment trust plc
68
notes to the financial statements
8 investments at fair value through profit or loss continued
At the year end, the Company held over % of the shares in the following listed companies which
were considered to be material:
Oryx International Growth Fund Limited . .
Frenkel Topping Group Plc . .
EKF Diagnostics Holdings Plc . .
Hargreaves Services Plc . .
River Global Plc . –
Odyssean Investment Trust Plc . .
Fevara Plc . .
Real Estate Investors Plc . .
Animalcare Group Plc . –
MJ Gleeson Plc . .
Niox Group Plc . .
Verici DX Limited . .
Restore Plc . .
Palace Capital Plc . .
Mountain Comm Bancorp . .
Polar Capital Holdings Plc . .
Redcentric Plc . .
Paypoint Plc . –
Conduit Holdings Limited . .
Pinewood Technologies Group Plc . .
d) investments in US treasury bills
At January , the Company held US Treasury Bills with a market value of £,, (:
£,,).
e) transaction costs
During the year, the Company incurred total transaction costs of £, (: £,)
comprising £, (: £,) and £, (: £,) on purchases and sales of
investments respectively. These amounts are included in net gains/(losses) on investments as
disclosed in the Statement of Comprehensive Income.
f) commitment
At January NASCIT had undrawn capital commitments to invest £. million (:
£. million) in HarwoodPrivate Equity VI LP and no undrawn capital commitments (
£. million) to invest in Harwood Private Capital U.K. LP.
69
north atlantic smaller companies investment trust plc
9 trade and other receivables
£’
£’
Accrued income , ,
Amounts due from brokers –
Prepayments and other receivables , ,
Recoverable withholding tax
, ,
10 trade and other payables
£’
£’
Investment Manager’s fees
Performance fees (including VAT) –
Amounts due to brokers – ,
Other payables and accruals
, ,
11 share capital
Number
£’
Number
£’
allotted, called up and fully paid:
Ordinary Shares of p:
Balance at beginning of year ,, ,,
Cancellation of shares (prior to share split) (,) () (,) ()
Shares added due to share split ,, – – –
Cancellation of shares (post share split)
(,,) () – –
Balance of .p shares (: p) at end of year
,, ,,
Since January , ,, Ordinary Shares have been purchased by the Company for
cancellation for total consideration of £,,. As at the date of this report, the Company’s issued
share capital consists of ,, Ordinary Shares of .p nominal value each.
notes to the financial statements
north atlantic smaller companies investment trust plc
70
notes to the financial statements
12 reconciliation of total return before taxation to cash received from operations
£’
£’
Total return before taxation , ,
Gains on investments and currency (,) (,)
Income reinvested – (,)
Increase in trade and other receivables (,) (,)
Increase in trade and other payables
Cash generated from operations
, ,
13 financial instruments and risk profile
The Company’s financial risk management objectives, policies and strategy can be found in the
Strategic Report on pages to .
The Company’s financial instruments comprise its investment portfolio, cash balances, receivables
and payables that arise directly from its operations. Investments are stated at fair value through
profit and loss. All other financial assets and all financial liabilities are stated at amortised cost with
the balance sheet values a reasonable approximation to fair value.
The main risks arising from the Company’s financial instruments are:
(i) market price risk, including currency risk, interest rate risk and other price risk;
(ii) liquidity risk; and
(iii) credit risk
The Board and Manager consider and review the risks inherent in managing the Company’s assets
which are detailed below.
(i) 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 Board of Directors review and agree policies for managing these risks through
detail and continuing analysis. The Manager assesses the exposure to market risk when making each
investment decision and monitor the overall level of market risk on the whole of the investment
portfolio on an ongoing basis.
71
north atlantic smaller companies investment trust plc
notes to the financial statements
13 financial instruments and risk profile continued
currency risk
The Company’s total return and net assets can be materially affected by currency translation
movements as a significant proportion of the Company’s assets are denominated in currencies other
than Sterling, which is the Company’s functional currency. It is not the Company’s policy to hedge
this risk on a continuing basis but the Company may, from time to time, match specific overseas
investment with foreign currency borrowings. The Manager seeks, when deemed appropriate, to
manage exposure to currency movements on borrowings by using forward foreign currency
contracts as a hedge against potential foreign currency movements. At January , the
Company had no open forward currency contracts (: none).
The revenue account is subject to currency fluctuation arising on overseas income. The Company
does not hedge this currency risk.
Foreign currency exposure by currency of denomination:
January January
Overseas
investments
£’
Net monetary
assets
£’
Total currency
exposure
£’
Overseas
investments
£’
Net monetary
assets
£’
Total currency
exposure
£’
US Dollar , , , , , ,
, , , , , ,
Sensitivity analysis is based on the Company’s monetary foreign currency exposure at each balance
sheet date. If Sterling had moved by % against the US Dollar, with all other variables constant, net
assets would have moved by the amounts shown below. The analysis is shown on the same basis
for.
January January
%
weakening
£’
%
strengthening
£’
%
weakening
£’
%
strengthening
£’
US Dollar , (,) , (,)
, (,) , (,)
In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a
whole, since the level of exposure changes frequently as part of the currency risk management
process used to meet the Company’s objectives.
north atlantic smaller companies investment trust plc
72
13 financial instruments and risk profile continued
interest rate risk
Interest rate movements may affect;
• the fair value of the investments in fixed interest rate securities (including unquoted loans); or
• the level of income receivable on cash deposits;
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.
The Board reviews on a regular basis the values of the fixed interest rate securities and the unquoted
loans to companies in which private equity investment is made.
Movements in interest rates would not significantly affect net assets attributable to the Company’s
shareholders and total profit.
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 the quoted and unquoted investments.
The Company’s exposure to price risk comprises mainly movements in the value of the Company’s
investments. As at the year-end, the spread of the Company’s investment portfolio analysed by
sector was as set out on page .
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 Manager. The Board
meets regularly and at each meeting reviews investment performance. The Board monitors the
Manager’s compliance with the Company’s objectives and is directly responsible for investment
strategy and asset allocation.
The Company’s exposure to other changes in market prices at January on its quoted and
unquoted investments and options on investments was as follows:
£’
£’
Financial assets at fair value through profit or loss
– Non current investments at fair value through profit or loss
, ,
The Directors have determined that the fair value of all loan note instruments and preferred shares
is equal to cost less any impairment.
As mentioned in the accounting policies note, the Private equity investments have been valued
following the IPEV Valuation Guidelines. The valuation incorporates all relevant factors that market
participants would consider in setting a price.
Methods applied include cost of investment, price of recent investments, net assets and earnings
multiples. Any valuations in local currency are converted into sterling at the prevailing exchange
rate on the valuation date.
Although the Manager believes that the estimates of fair values are appropriate, the use of different
methodologies or assumptions could lead to different measurements of fair values.
Subsequent adjustments in price are determined by the Manager's Valuation and PricingCommittee.
notes to the financial statements
73
north atlantic smaller companies investment trust plc
notes to the financial statements
13 financial instruments and risk profile continued
other price risk continued
The table below shows how the most significant unquoted investments have been valued as at
January .
Method of fair
valuevaluation
fair
value
£’
Method of fair
valuevaluation
fair
value
£’
BL Media USD % Loan Notes Fair Market Value , Cost ,
Benchmark Holdings Limited – Ordinary Shares GBP Last traded price , N/A –
Bigblu Broadband Limited – Ordinary Shares GBP
Last traded price N/A –
Bigblu Broadband Limited – % Loan Notes GBP Cost N/A –
Coventbridge Group Limited % loan USD Cost , Cost ,
Crest Foods Co., Inc. Common Shares USD EBITDA Multiple , EBITDA Multiple ,
Crest Foods Co., Inc. Preference Shares USD Cost , Cost ,
Crest Foods Co., Inc. .% USD Loan Notes Cost , Cost ,
Hampton Investment Properties Ltd GBP Adjusted Net Assets Adjusted Net Assets
Harwood Private Capital UK L.P. GBP Net Assets , Net Assets ,
Harwood Private Equity Fund IV LP Net Assets , Net Assets ,
Harwood Private Equity Fund V LP Net Assets , Net Assets ,
Harwood Private Equity Fund VI LP Net Assets , N/A –
Jaguar Holdings Limited Ordinary Shares – USD EBITDA Multiple , EBITDA Multiple ,
Jaguar Holdings Limited Preference Shares – USD Cost , Cost ,
Oryx International Growth Fund Limited % Loan Notes GBP Cost , Cost ,
SMT Corporation % USD Loan Notes Cost , Cost ,
SMT Corporation % USD Loan Notes Cost , Cost ,
SourceBio International Ordinary Shares GBP EBITDA Multiple , EBITDA Multiple ,
Sportech Limited – Ordinary Shares GBP EBITDA Multiple , EBITDA Multiple ,
Spring Investment LP (Duke Street) GBP Net Assets , Net Assets ,
Trident Private Equity Fund LP GBP Net Assets Net Assets
WEP FUND II SIMCO Co-Investment USD Net Assets
Net Assets
, ,
Other investments
,
, ,
north atlantic smaller companies investment trust plc
74
13 financial instruments and risk profile continued
other price risk continued
the valuation techniques applied are based on the following assumptions:
Unquoted investments are usually valued by reference to the valuation multiples of similar listed
companies or from transactions of similar businesses. Where appropriate discounts are then applied
to those comparable multiples to reflect difference in size and liquidity. These enterprise values are
then adjusted for net debt to arrive at an equity valuation. Where companies are in compliance with
the loan note terms these loans are generally held at par plus accrued interest (where applicable)
unless the enterprise value suggests that the debt cannot be recovered.
Further detail on the valuation of significant investments, are detailed below:
Harwood Private Equity IV LP (HPE), Harwood Private Equity V LP (HPE) and
Harwood Private Equity VI LP (HPE)
Held at net asset value, derived from the audited financial statements of the Funds as at
December , as the underlying investments within HPE, HPE and HPE are valued on a
fair value basis and adjusted for Fund transactions between January to January .
As the funds have no debts, a change of % in the underlying assets would have a % impact
on the Funds’ carrying value.
Harwood Private Capital LP (HPC):
Held at net asset value, derived from the monthly management accounts of the Fund as at
January . HPC invests mainly in debt instruments which accrue payment in kind and
cash interest, and also holds some minority equity positions which are fair valued. As the Fund
has no debts, a change of % in the underlying assets would have a % impact on the Funds’
carrying value.
SourceBio International – Ordinary Shares
The ordinary shares are valued using an EBITDA multiple of .x (: .x) to calculate an
enterprise value. A reduction in the multiple by a factor of x would reduce the carrying value of
the total investment by £. million, or .%. An increase in the multiple by a factor of x
would increase the value of the total investment by £. million, or .%.
SMT Corporation % and % USD – Loan Notes
The loan is held at par plus accrued interest. The enterprise value is calculated using an EBITDA
multiple of .x (: .x). Neither a reduction nor an increase in the multiple by a factor of
x would impact the carry value of the loan.
CoventBridge Group % USD – Loan Notes
The loan is held at par plus accrued interest. The enterprise value is calculated using an EBITDA
multiple of .x (: .x). Neither a reduction nor an increase in the multiple by a factor of x
would impact the carry value of the loan.
notes to the financial statements
75
north atlantic smaller companies investment trust plc
13 financial instruments and risk profile continued
other price risk continued
Spring Investment LP
Held at net asset value derived from the audited financial statements of the Fund as at
December as the underlying investment is at fair value using an EBITDA multiple of .x
(: .x). As the fund has no debt, a change of % in the underlying assets would have a %
impact on the Fund's carrying value.
Crest Foods USD – Ordinary Shares, Preference Shares and Loan Notes
The ordinary shares are valued using an EBITDA multiple of .x (: .) to calculate an
enterprise value. A reduction in the multiple by a factor of x would reduce the carrying value of
the total investment by £. million or %. An increase in the multiple by factor of x would
increase the value of the total investment by £. million or %. The loan notes are held at par
plus accrued interest. Neither a reduction nor an increase in the multiple by a factor of x would
impact the carrying value of the loan.
The following table illustrates the sensitivity of the profit after taxation and net assets to an increase
or decrease of % in the fair values of the Company’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 Company’s equities and equity exposure through options at each
Balance Sheet date, with all other variables held constant.
Increase in
fair value
£’
Decrease in
fair value
£’
Increase in
fair value
£’
Decrease in
fair value
£’
Increase/(decrease) in net assets , (,) , (,)
(ii) liquidity risk
This is the risk that the Company will encounter difficulty in meeting obligations associated with
financial liabilities.
The Company invests in equities and other investments that are readily realisable. It also invests in
unquoted securities, which are less readily marketable than equities. These investments are
monitored by the Board on regular basis.
As at January , £,, (: £,,) of the Company’s investments are held in
short-term Treasury Bills, which are highly liquid and could be accessed within one week.
As the Company is a closed-end company, assets do not need to be liquidated to meet redemptions
and sufficient liquidity is maintained to meet obligations as they fall due.
(iii) credit risk
The Company 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 Company’s cash flows, should a default happen. The Company assesses the creditworthiness of
its receivables on an ongoing basis to determine whether there has been a significant increase in
credit risk since initial recognition.
notes to the financial statements
north atlantic smaller companies investment trust plc
76
notes to the financial statements
13 financial instruments and risk profile continued
other price risk continued
The maximum exposure of the financial assets to credit risk at the Balance Sheet date was as follows:
£’
£’
financial assets
Fixed income securities , ,
Preference shares , ,
Treasury Bills , ,
Accrued income and other receivables , ,
Cash and cash equivalents
, ,
, ,
The maximum credit exposure of financial assets represents the carrying amount.
The expected credit loss in respect of receivables is considered to be immaterial. Receivable balances
primarily relate to underlying investment assets which remain recoverable. Credit risk is managed
on an ongoing basis with reference to the performance and valuation of the underlying assets and
counterparty creditworthiness. While these balances are exposed to macroeconomic and market
conditions over a longer time horizon, based on historical experience, current asset values, and the
absence of significant indicators of impairment, no material expected credit loss has been recognised.
commitments giving rise to credit risk
There are no commitments giving rise to credit risk as at January .
fair value of financial assets
The Company measures fair values using the fair value hierarchy that reflects the significance of the
inputs used in making the measurements of the relevant assets as follows:
• Level – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level – Inputs other than quoted prices included within Level that are observable for the
asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
• Level – Inputs for the asset or liability that are not based on observable market data
(unobservable inputs). See note f for details on how the value of level investments
arecalculated.
The Company’s main unobservable inputs are earnings multiples, recent transactions and net
asset basis. The market value would be sensitive to movements in these unobservable inputs.
Movements in these inputs, individually or in aggregate could have a significant effect on the
market value. The effect of such a change or a reasonable possible alternative would be difficult
to quantify as such data is not available.
77
north atlantic smaller companies investment trust plc
13 financial instruments and risk profile continued
fair value of financial assets continued
The level in the fair value hierarchy within which the fair value measurement is categorised in its
entirety is determined on the basis of the lowest level input that is significant to the fair value
measurement in its entirety. For this purpose, the significance of an input is assessed against the fair
value measurement in its entirety. If a fair value measurement uses observable inputs that require
significant adjustment based on unobservable inputs, that measurement is a Level measurement.
Assessing the significance of a particular input to the fair value measurement in its entirety requires
judgement, considering factors specific to the asset or liability.
The Company considers observable data from investments actively traded in organised financial
markets, fair value is generally determined by reference to Stock Exchange quoted market bid prices
at the close of business on the Balance Sheet date, without adjustment for transaction costs
necessary to realise the asset.
The table below sets out fair value measurements of financial assets in accordance with the IFRS
fair value hierarchy system:
financial assets at fair value through profit or loss
At January
Tot a l
£’
Level
£’
Level
£’
Level
£’
Equity shares , , – ,
Preference securities , – – ,
Fixed interest/loan note securities , – – ,
Treasury Bills
, , – –
total , , – ,
At January
Tot a l
£’
Level
£’
Level
£’
Level
£’
Equity shares , , – ,
Preference securities , – – ,
Fixed interest/loan note securities , – – ,
Treasury Bills
, , – –
total , , – ,
A reconciliation of fair value measurements in Level is set out below.
notes to the financial statements
north atlantic smaller companies investment trust plc
78
13 financial instruments and risk profile continued
level 3 financial assets at fair value through profit or loss
At January
Tot a l
£’
Equity
investments
£’
Preference
securities
£’
Fixed
interest
investments
£’
Opening fair value , , , ,
Purchases , , – ,
Sales (,) (,) – (,)
Transfers , , – –
Total gains included in gains/(losses) on
investments in the Statement of
Comprehensive Income:
– on assets sold – ()
– on assets held at the end of the year
(,) (,) (,) (,)
closing fair value , , , ,
In the year ending January , two investments held, Benchmark Holdings plc and Bigblu
Broadband Plc, previously Level , were transferred to Level following their delistings from AIM.
capital management policies and procedures
The Company’s capital management objectives are:
– to ensure that the Company 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 debt. The policy is that gearing should not exceed % of netassets.
The Company’s capital at January comprises:
£’
£’
debt
– –
equity
Equity share capital
Retained earnings and other reserves
, ,
, ,
debt as a % of net assets . .
notes to the financial statements
79
north atlantic smaller companies investment trust plc
13 financial instruments and risk profile continued
capital management policies and procedures continued
The Board, with the assistance of the Manager monitor 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 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 orpremium);
– 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 beretained.
capital requirement
The Company’s objectives, policies and processes for managing capital are unchanged from the
preceding accounting period.
14 related party transactions
Harwood Capital LLP, Harwood Private Equity LLP and Harwood Capital Management (Gibraltar)
Ltd are regarded as related parties of the Company due to Christopher Mills, the Company’s Chief
Executive and Investment Manager currently being a Director of Harwood Capital Management
(Gibraltar) Ltd and a Member of Harwood Capital LLP until June , and the ultimate beneficial
owner. Harwood Private Equity LLP replaced Harwood Capital LLP as Investment Manager or
Investment Adviser to the Private Equity Funds on December . Harwood Capital
Management (Gibraltar) Ltd acts as Investment Manager or Investment Adviser to Oryx
International Growth Fund Ltd, and Harwood Private Equity LLP acts as Investment Manager or
Investment Adviser of the Private Equity Funds below, in which the Company has an investment
and from which companies it receives fees or other incentives for its services.
The table below discloses fees paid by Oryx and the Private Equity Funds to these related parties.
Services
£'
£'
Oryx International Growth Fund Limited Investment Advisory , ,
Trident Private Equity III LP Investment Advisory – –
Harwood Private Equity IV LP Investment Advisory
Harwood Private Equity V LP Investment Advisory , ,
Harwood Private Equity VI LP Investment Advisory –
The amounts payable to the Manager are disclosed in note . The relationships between the Company,
its Directors and the Manager are disclosed in the Report of the Directors on pages to .
Christopher Mills is Chief Executive Officer and indirectly a member of Harwood Capital LLP and
Harwood Private Equity LLP. He is also a director of Oryx. GFS is a wholly-owned subsidiary of
Harwood Capital Management Limited, which is the holding company of the Harwood group of
companies and is, in turn, % owned by Christopher Mills. Harwood Capital Management
Limited is also a Designated Member of Harwood Capital LLP and Harwood Private Equity LLP, the
past and current Administrators of the Company.
notes to the financial statements
north atlantic smaller companies investment trust plc
80
14 related party transactions continued
North Atlantic Investment Services Ltd provides administration services to the Company (which
were previously provided by Harwood Capital LLP under a similar agreement) for the value
£,, (: £,,) At year-end balance due to the business was £, (: £,).
Fees from Odyssean Investment Trust Plc and Harwood Private Capital UK LP go to Odyssean
Capital LLP (OCLLP) and Harwood Private Capital LLP (HPCLLP) respectively. Both OCLLP and
HPCLLP are : JVs between Harwood Capital Management Ltd and Stuart Widdowson, for
OCLLP, and Haseeb Aziz, for HPCLLP.
During the year, a further loan was made to Oryx for £. million. This was partially repaid in the
year and income on the loan was £,. The remaining balance at the year end was £. million,
was fully repaid in February with interest. In the prior year, a loan was made to Oryx for
£. million. The opening balance this year was £. million. This was fully repaid and income on
the loan was £,.
disclosure of interests
Christopher Mills is also a director of the following companies in which the Company has an
investment or may have had in the year and/or from which he may receive fees or hold shares:
AssetCo plc, Bigblu Broadband plc, CoventBridge Group Limited, EKF Diagnostics Holdings Plc,
Frenkel Topping Group plc, Jaguar Holdings Limited, M J Gleeson Group plc, Oryx, Renalytix Al Plc,
and SourceBioInternationalplc. A total of £, (: £,) in directors fees was received
by Christopher Mills during the year under review.
No formal arrangements exist to avoid double charging on investments held by the Company which
are also managed or advised by Christopher Mills (Chief Executive) and/or Harwood Capital LLP.
Members and certain private clients of Harwood Capital LLP, and its associates (excluding
Christopher Mills and his family) hold , shares in the Company (: ,). The figure
from has been restated due to the for share split.
Members, employees, institutional clients and private clients of Harwood Capital LLP and Harwood
Private Equity LLP may co-invest in the same investments as the Company.
From time to time Directors may co-invest in the same investments as the Company.
notes to the financial statements
81
north atlantic smaller companies investment trust plc
directors and advisers
Directors
Sir Charles Wake (Chairman)
Christopher Mills (Chief Executive)
Fiona Gilbert
Lord Howard of Rising
G Walter Loewenbaum
Peregrine Moncreiffe
Julian Fagge
Administrator
North Atlantic Investment Services Limited
(Authorised and regulated by the Financial Conduct Authority)
Stratton Street
Mayfair
London WJ LD
Telephone:
Financial Adviser and Stockbroker
Panmure Liberum Ltd
Ropemaker Place, Level
Ropemaker Street
London ECY LY
Registered Office
Stratton Street
Mayfair
London WJ LD
Telephone:
Registrars
MUFG Corporate Markets
Central Square
Wellington Street
Leeds LS DL
Auditors
RSM UK Audit LLP
Farringdon Street
London ECA AB
Company Secretary
Ben Harber
Orchard Avenue
Woodham
Addlestone
Surrey KT EA
north atlantic smaller companies investment trust plc
82
financial calendar Announcement of results and Annual Report April
Annual General Meeting June
Half-Yearly results and report September
Half-Yearly report posted September
share price The Company’s share price can be found on:
SEAQ Ordinary Shares: NAS
Trustnet: www.trustnet.com
net asset value The latest net asset value of the Company can be found on the Company's website:
www.nascit.co.uk
share dealing Investors wishing to purchase more Ordinary Shares or dispose of all or part of their holding may
do so through a stockbroker. Many banks also offer this service.
The Company’s registrars are MUFG Corporate Markets. If you have a question about your
shareholding in the Company you should contact: MUFG Corporate Markets, Central Square,
Wellington Street, Leeds LS DL, by email: shareholderenquiries@cm.mpms.mufg.com, or by
telephone and + () (international).
Calls are charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open
between am and .pm, Monday to Friday excluding public holidays in England and Wales.
Changes of name or address must be notified to the registrars in writing at:
MUFG Corporate Markets
Central Square
Wellington Street
Leeds LS DL
shareholder information
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