North Atlantic Smaller Companies Trust reports 4.8% NAV growth in H1 2025

North Atlantic Smaller Companies Investment Trust plc (LON:NAS) has announced its half-Yearly Report for the six months ended 31 July 2025.

	31 July	31 January
	2025	2025	%
	(unaudited)	(audited)	Change
Net asset value (“NAV”) per 0.5p Ordinary Share*:
Basic and diluted	565.4p	539.7p‡	4.8
Basic and diluted adjusted#	594.3p	574.0p‡	3.5
Market price of the 0.5p Ordinary Shares	393.0p	375.0p‡	4.8
Discount to net asset value	30.5%	30.5%
Discount to adjusted net asset value	33.9%	34.7%
Standard & Poor’s 500 Composite Index†	4,794.2	4,850.3	(1.2)
Russell 2000 Index†	1,672.6	1,836.9	(8.9)
Ongoing charges (annualised)	1.2%	1.1%

* Includes current period revenue.

# Adjusted to reflect Oryx International Growth Fund plc (“Oryx”) under the equity method of accounting, which is how the Company previously accounted for its share of Oryx, prior to the adoption of IFRS 10. This is useful to the shareholder as it shows the NAV based on valuing Oryx at NAV. See note 6.

† Sterling adjusted.

‡ Restated for the sub-division of each Ordinary Share into 10 new Ordinary Shares, approved at the AGM held on 12 June 2025 and completed on 13 June 2025.

Chief Executive’s Review

During the six months period under review the total return to shareholders, adjusting for the payment of the dividend, was 4.8% as compared to a fall in the Sterling adjusted Standard & Poors Index of 1.2%. Performance of the indices, and to a lesser extent the fall, was adversely impacted by the weakness of the Dollar which fell by 6.1% relative to Sterling during the period.

The company generated an income profit for the period of £8,522,000 which compares favourably with the corresponding period last year of £8,076,000 despite lower rates and a weaker Dollar. Consistent with prior years, no dividend is being declared until the outcome of the year becomes clearer. However, based on my current expectations, it is anticipated that the dividend in respect of the current year will approximate the dividend paid in respect of the 2025 fiscal year, adjusted for the stock split following the Annual General Meeting.

The company purchased 700,000 shares (adjusted for the stock split) for cancellation during the period. The shares were purchased at a discount to net asset value of circa 30% and will therefore benefit all long-term shareholders. It is expected that further purchases will be made over the next six months.

Quoted Portfolio

The period under review saw very considerable volatility, not least because of the volatile and sometimes contradictory nature of US President Trump.

It is therefore encouraging that the fund’s largest investment, Oryx International Growth, saw an increase in it’s net asset value of just over 9% during the period under review. Sadly, Odyssean performed less well rising by only 1%, adversely impacted by its exposure to industrial businesses which have borne the full weight of Trump’s tariffs and the weakness of the Dollar.

Stocks held directly were mixed but overall performance was assisted by the decision to increase exposure to UK equities in April when valuations were depressed as a result of Trump’s ‘Liberation Day’.

UK Quoted Portfolio

Assetco performed well rising by 15% following their decision to hive off the Parmenion holding into a separate legal entity. Carr’s Group rose by around 20% as a result of the sale of its nuclear business and a tender offer which reduced the number of shares outstanding by circa 45%. EKF rose by 20% following good results and a share buyback. Frenkel Topping also performed well following a bid from a consortium of which the Trust is a member. The Trust’s largest holding, Hargreaves Services, rose 18% following good results and the stand-out performer was Pinewood which rose 40% following significant new contract wins and the buyout of the United States joint venture.

Sadly, two of our larger holdings performed very disappointingly. Gleeson fell by 20% as the Labour Party’s chaotic housing policy has led to difficulties across the whole sector. The greater disappointment however was Conduit Reinsurance which despite a very benign insurance market managed to lose money in the twelve months to end June 2025. The shares fell circa 33% and now trade at a 40% discount to the end December estimate of the net asset value. A shareholder activist has recently targeted the company so I am hopeful that I can report more positive news in the forthcoming Annual Report.

United States Portfolio

Mountain Commerce, the only listed holding, reported good news and increased its dividend by 40%. Notwithstanding this, the stock in Sterling adjusted terms fell by 13%, although given the small size of the holding the impact on the fund was immaterial.

Unquoted Portfolio

One new investment was made during the period, Benchmark Holdings, which delisted from the market. We rejected an offer of 25p as we felt this materially undervalued the business which we believe will return more than 40 pence per share within two years including an 8 pence per share return of capital no later than end November this year.

As to the individual investments:

Coventbridge – the company is performing well and is substantially in excess of last year and budget.

3BL Media – The company has suffered some client losses due to Trump’s attack on woke businesses. As the largest distributor of ESG strategies for major corporations, it has seen cancellation and postponement of some major contracts. The company is right sizing to deal with these issues” but it was necessary to write down the investment by 50% during the period.

Spring – The company manufactures drugs for the NHS and the private hospital industry. Trading in the current year has recovered from what now looks like a temporary blip in 2024. It is expected that the company will be put up for sale in early 2026 and we are hopeful that we will receive a good premium to the current valuation.

Journey Group – The company provides catering services to the airline industry in the US. The business is performing well winning new customers and has minimal debt.

SMT – The company distributes hard to get components mainly for the US military. Trading has recovered from the disappointing performance last year but the core business remains challenging.

Specialist Components – The company distributes parts in the UK. Trading conditions are improving with some good recent contract wins. The company is in discussion with two parties which may lead to its acquisition, although the price is likely to be only in line with the current valuation.

Source Bioscience – The company which is the leading digital pathology business in the UK is performing very strongly with operating results considerably ahead of last year and budget. The outlook for next year is also very good which bodes well for a successful exit in the medium term.

Crest – The company manufactures specialty food ingredients and food with a significant packaging division. The fiscal year just ended was significantly ahead of budget and the outlook for the current year is for further growth. Recently a number of large long-term contracts have been won which bodes extremely well for fiscal 2027.

Other businesses held within the unquoted funds are all trading satisfactorily with no adverse news anticipated.

Outlook

The UK stock market has been volatile with the best performance coming from the major international businesses and banks. Smaller companies continue to face headwinds as fund managers experience redemptions and brutal price falls if expectations are missed even only marginally.

The unquoted portfolio suffers from indigestion across the unlisted sector with exits becoming harder to achieve as public markets view private equity IPO’s with (well founded) suspicion.

The Trust’s liquidity fell from approximately £70m to £51m during the period as we took advantage of the weak equity market in April.

Looking to the balance of the year, we are hopeful that a number of corporate events, both in the quoted and unquoted portfolios, will enable us to maintain the momentum of the first half.