|
FINANCIALSInterim 1995 |
 |
 |
|
 |
|
 |
|
|
|
||||||
|
|
||||||||
Chairman's Review
It is satisfactory to report that Herald's net asset value (NAV) has risen by 11.7% in the first half of 1995, compared with a rise of 4.1% in the most relevant index, the Hoare Govett Smaller Companies Index (HGSCI). Management figures show a further improvement since the end of the six months under report.
| Inception | End Dec 1994 |
End June 1995 |
End July 1995 |
|
| Herald basic NAV per share | 98.7p* | 93.6p | 104.5p | 112.0p |
| % changes since 31 Dec 1994 | +11.7% | +19.7% | ||
| FT-SE % change since 31 Dec 1994 | + 8.1% | +13.0% | ||
| HGSCI % change since 31 Dec 1994 | + 4.1% | + 8.4% | ||
| *The NAV per share raised net of expenses on 16 Feb 1994, when 65m shares were placed at 100p per share with warrants attached on a 1 for 5 basis. | ||||
In spite of a background of generally strong trading and earnings growth for most of Herald's investments, the portfolio traded sideways in net asset terms for the first quarter, mirroring the performance of the fourth quarter of 1994. Herald's performance reflected the dull stock market conditions, but was still some 5% ahead of the declining HGSCI over those two quarters. However sentiment changed markedly in April, when the portfolio benefited from a rally in the radio stocks following the government's announcement of a relaxation in licence ownership rules, and the market began to recognise the strong earnings growth in some technology stocks. The average annualised growth in earnings per share, excluding loss-making companies, across the Herald portfolio is currently about 33%, albeit slightly flattered by some companies' growth from marginal levels of profitability.
Herald was established to follow an investment policy which is expected to offer opportunities for above-average share price performance. The strategy has been vindicated over the last six months, and in relative terms has been aided by the dull trading seen in more cyclical parts of the economy such as builders and retailers. The manager believes that over the long term these opportunities will continue. The manager continues generally to avoid investment in start-up businesses - a number of which have been floated in recent months - in the belief that venture capital propositions require a different approach to investment, and carry markedly higher risks than investments in established businesses.
Herald's policy is to pay annual dividends only, reflecting the emphasis on capital growth. The dividend in respect of the current full year is expected to be paid in April 1996.
The expected strong earnings growth across most of the portfolio should be reflected in higher valuations over time.
| Martin Boase | 22 August 1995 |
The information on this page is taken from the Interim Report for the six months ended 30th June 1995