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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Shires Income Plc | LSE:SHRS | London | Ordinary Share | GB0008052507 | ORD 50P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 2.00 | 0.84% | 240.50 | 238.00 | 242.00 | 245.00 | 241.00 | 244.00 | 69,092 | 16:35:16 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Mgmt Invt Offices, Open-end | -372k | -2.03M | -0.0490 | -49.18 | 99.98M |
From May 2019 to May 2024
TIDMSHRS
RNS Number : 7629W
Shires Income PLC
17 November 2017
SHIRES INCOME PLC
HALF YEARLY FINANCIAL REPORT
FOR THE SIX MONTHSED 30 SEPTEMBER 2017
Legal Entity Identifier (LEI): 549300HVCIHNQNZAYA89
INVESTMENT OBJECTIVE
The Company's investment objective is to provide shareholders with a high level of income, together with the potential for growth of both income and capital from a diversified portfolio substantially invested in UK equities but also in preference shares, convertibles and fixed income securities.
HIGHLIGHTS
Hot Features
Premium
30 September 31 March % change
2017 2017
Equity shareholders'
funds (GBP'000) 84,805 81,477 +4.1
Net asset value per
share 282.71p 271.61p +4.1
Share price (mid-market) 267.00p 243.25p +9.8
Discount to net asset
value 5.56% 10.44%
Dividend yield 4.78% 5.20%
Net gearing(A) 18.4% 21.1%
Ongoing charges ratio(B) 0.97% 1.04%
(A) Calculated in accordance with AIC guidance
"Gearing Disclosures post RDR".
(B) Ongoing charges ratio calculated in accordance
with guidance issued by the AIC as the total of
the investment management fee and administrative
expenses (annualised) divided by the average cum
income net asset value throughout the year. The
ratio for 30 September 2017 is based on forecast
ongoing charges for the year ending 31 March 2018.
PERFORMANCE (TOTAL RETURN)
6 months 1 year 3 years 5 years
ended ended ended ended
30 September 30 September 30 September 30 September
2017 2017 2017 2017
Net asset value +6.7% +14.6% +33.3% +81.1%
Share price +12.8% +23.5% +29.8% +66.9%
FTSE All-Share
Index +3.6% +11.9% +27.8% +61.2%
All figures are for total return and assume re-investment
of net dividends excluding transaction costs.
For further information, please contact:
Colin Edge 020 7463 6000
Aberdeen Asset Managers Limited
INTERIM BOARD REPORT - CHAIRMAN'S STATEMENT
This is my first Chairman's Statement following the retirement of Tony Davidson at the Company's Annual General Meeting on 11 July 2017. I would like to thank Tony for his excellent stewardship of your Company during the period of nearly nine years that he was Chairman.
Background
Compared to the strong gains that characterised the start of 2017, market returns were more muted during the period under review. They have, however, been positive and reflective of a more normalised level of return. Smaller companies have, on average, performed approximately twice as strongly as the broader market.
Politics has dominated sentiment surrounding the domestic economy. Brexit has been at the forefront of investors' minds and the associated uncertainty was increased by Theresa May's decision to call a snap general election and the ensuing result that saw her party lose its majority. Markets reacted quite calmly, and as Sterling weakened further this provided additional support for businesses with significant levels of overseas earnings.
Inflation remained at a relatively high level during the period and, although the initial impact of Sterling weakness is beginning to moderate on an annual basis, the elevated level of inflation combined with the low level of unemployment led the Bank of England to suggest that interest rates were likely to rise sooner rather than later. Equity markets took the news in their stride given expectations of limited tightening, although recognising that any increase would further squeeze the consumer who was already suffering from the effects of higher inflation and low wage growth. Since the end of the period, the Bank of England has increased interest rates by 0.25%, the first such move since 2007.
The first quarter's reporting season for corporate earnings was characterised by solid aggregate results. One theme was the clear sign of improvement in the health of European economies as the region as whole made progress. A number of potentially troublesome elections were navigated without the feared populist and anti-EU agenda making significant progress. In Italy, the government was able to recapitalise some of the more distressed banks without re-igniting a debt crisis. And, although the Brexit negotiations have seen the expected political positioning taking place, there have been occasional signs that there is a growing realisation that an agreeable resolution is in all parties' interests. However a more abrupt exit remains a risk for the UK domestic economy.
The US economy has also prospered over the period. Despite the sabre rattling over North Korea, the political tensions relating to the 2018 budget and the need to extend the debt ceiling, growth has been sufficiently strong to allow the Federal Reserve to increase interest rates for a second time this year.
The oil price has continued to be volatile and, indeed, it declined by almost 20% between April and June before rebounding to finish the period ahead of where it started. The portfolio remains underweight to the oil and gas producers but such significant swings in the commodity's price can have a marked effect on relative performance.
Both the main political parties in the UK have been indicating a rising preparedness to intervene in various industries and this could inject some added uncertainty. With specific regard to the challenges being posed to the power providers, the portfolio's only direct exposure is to National Grid, and therefore the impact of this action has been limited.
Investment Performance
During the six month period ended 30 September 2017, the Company's net asset value per share increased by 4.1% from 271.61p to 282.71p. The total return on net assets, which includes dividends paid, was 6.7%, representing an outperformance of our benchmark, the FTSE All-Share Index, which reported a total return of 3.6%. The total return of the Company's share price was 12.8% and there was a pleasing reduction in the discount from 10.4% to 5.6%.
Portfolio Profile
Seven new holdings were introduced into the equity portfolio during the period. The Manager has continued to take advantage of opportunities to invest in a small number of high quality overseas companies, bringing an exposure to the portfolio that is difficult to replicate in the UK. Importantly, these investments create further diversification of the portfolio's dividend stream, thereby reducing the Company's dependency on some of the very significant dividend paying companies that dominate the UK market. No new investments were made in preference shares or convertible securities during the period.
Unibail-Rodamco, a French company, is Europe's largest listed commercial property company active in the development, investment and operations of shopping centres, offices and convention and exhibition venues. The business benefits from a portfolio of high quality assets and a strong balance sheet. The rental streams provide a high level of earnings visibility which manifest themselves in an attractive dividend that has been growing ahead of inflation.
As the largest food and beverage company in the world, Nestle, which is listed in Switzerland, has an unmatched product and brand portfolio and genuine global reach. This includes 34 brands that generate sales in excess of CHF 1 billion each. The small value, everyday purchase consumable nature of what they sell results in an attractive and relatively predictable earnings stream. Although the dividend yield is only 2.8% it is regarded as a safer investment and, additionally, there is the potential for a marked increase in the rate of dividend growth.
Euromoney is a UK-based provider of high value data and analytics to the banking, asset management and commodity sectors. With 90% of their content being proprietary they have no direct competitors. Approximately one third of revenues are derived from emerging markets. The business has been through a transition that has seen them shed traditional print and advertising based assets and replace them with digital content, sponsorship and events.
Nordea is a Swedish company and the largest bank in the Nordic region, with over 10 million retail customers. Additionally it is the largest private bank, asset manager and life and pensions provider in the region. Nordea management is highly regarded, with a strong reputation for shareholder value creation. The company has one of the strongest credit ratings of any international bank and successfully navigated the financial crisis without any government support.
GIMA, an Italian company, produces packaging machines for tobacco companies. A key opportunity for the business lies in the field of next generation products ('NGPs'). They have a 65% share in this market. The tobacco companies are directing increasing proportions of their capital expenditure budgets towards NGPs and it is anticipated that these products could become significant revenue generators for them in the medium term.
Big Yellow is the UK's leading provider of self-storage facilities. Although this is a very fragmented market, new supply is constrained by the difficulty of finding suitable sites. There is significant potential for growth in demand as product awareness rises. Demand is correlated with housing transactions as customers use storage when they move house. There is, however, no obvious correlation with house prices. Around 1/3 of their space is occupied by businesses, with this market being driven by the rise of small scale e-commerce.
LondonMetric Property is a UK-based company which specialises in owning distribution centres for omni-channel retailing. The growth of e-commerce drives an increasing need for logistics space because of the requirement to carry deeper stock levels and, importantly, to be able to handle returns. Supply remains constrained because the sites with the most favourable transport logistics are largely already occupied.
During the period, two companies in the portfolio conducted fundraisings in which the Company participated.
Assura Group is seeing increasing opportunities to both purchase and develop General Practitioner facilities. The fundraising will allow them to accelerate their progress whilst retaining a suitably conservative balance sheet.
Ultra Electronics conducted a fundraising to help fund its acquisition of Sparton Corporation. Ultra has a joint venture with Sparton for the production of sonobouys for the US market. The deal will strengthen the company in an area of core competency, move them closer to an important customer and increase their exposure to an area of defence expenditure that is well set for long term growth.
Three holdings were exited during the period.
Provident Financial issued a series profit warnings as they have sought to transition their Home Collected Credit business from one that largely utilises self-employed agents to one where the staff are employees of the company. This has caused significant disruption to both collections and new lending. In addition it has emerged that the company has agreed with the Financial Conduct Authority that the Vanquis Bank business will stop selling a very profitable supplementary product. With the uncertainty caused by the associated investigation, the possibility of regulatory redress, and the potential that these events could impact the business's liquidity profile it was decided to sell the holding.
Pearson needs to make significant changes to its US Higher Education business model. Whilst there may be a sizable opportunity, it is currently difficult to determine the likelihood of success. In light of this and, despite the fact that it has already been cut, it is difficult to be confident about the future growth prospects for the dividend. Therefore the holding was exited.
Elementis have acquired the personal care business Summit Reheisis. Although this is in line with their strategy, the scale of the acquisition will limit the company's dividend paying capability for some time, so it was decided to sell the holding.
Investment Income
There have been welcome increases in the dividends paid by some of the holdings in the portfolio. British American Tobacco, Hansteen, Imperial Brands, Prudential, Unilever and Schroders were among the companies that announced increases of 10% or more. BHP Billiton delivered a trebling of its final dividend as its earnings began to recover from the declines that had led to the prior year's reduced distribution. In line with the Company's objective, we pay careful attention both to the absolute level of dividends from investee companies but also the potential for them to grow.
For many holdings, the weakness of Sterling played a role in the early part of the period. Some of the dividends received from companies such as Royal Dutch Shell, Vodafone and BP increased by in excess of 10% despite the fact that the actual US Dollar or Euro-based dividends that they declared were unchanged. This effect had largely annualised by the end of the period under review and, absent further changes in foreign currency rates, it is not expected to repeat during the second half.
Although Pearson's decision to cut the dividend was announced in the previous financial year the negative impact from the reduction has been felt this year. However, and despite the travails experienced by Provident Financial as described above, the level of investment income received by the Company during the period actually increased, contributing to revenue earnings per share of 7.44p, an increase of 6.0% compared to the equivalent period last year.
Dividends
A first interim dividend of 3.0p per share in respect of the year ending 31 March 2018 was paid on 27 October 2017. The Board declares a second interim dividend of 3.0p per share, payable on 26 January 2018 to shareholders on the register at close of business on 5 January 2018. Subject to unforeseen circumstances, it is proposed to pay a further interim dividend of 3.0p per share prior to the Board deciding on the rate of final dividend at the time of reviewing the full year results.
The current annual rate of dividend is 12.75p per share, representing a dividend yield of 4.8% based on the share price of 267.0p at 30 September 2017. The Board considers that one of the key attractions of the Company is its high level of income and recognises that, in the current economic environment, there is likely to be a continuing demand for an attractive and reliable level of income. Whilst the Company aims to cover its annual dividend cost with net income, the Board is conscious of the significant revenue reserves, which amounted to 1.3 times the annual dividend cost as at 30 September 2017.
Gearing
Gearing decreased during the period from 21.1% to 18.4%. The primary cause of this was the increase in net assets since the previous year-end. There has been no significant change to the overall allocations in the portfolio. Fixed interest securities represented 27.1% of total assets at the end of the period, the increase compared to the prior year-end being due to the strength of their performance. Equities dipped below 70% of total assets in large part because Pearson was exited very close to the period end and the proceeds were held as cash.
The Board continually monitors the level of gearing and, although the absolute level looks high, I would remind shareholders that it is deployed notionally in fixed interest securities which should prove less volatile than equities and do bring a further element of diversification to the Company's total revenue stream. At the period-end, these fixed interest securities had a value of GBP28.2 million, materially in excess of borrowings of GBP19 million.
Since the end of the period, the Company has announced that it has entered into a new GBP20 million loan facility agreement with Scotiabank Europe PLC (the "New Facility"). The New Facility is for a three year period to 30 October 2020 and replaces the Company's previous GBP20 million loan facility agreement with Scotiabank Europe PLC which was due to mature on 19 December 2017.
Under the terms of the New Facility, a GBP10 million fixed rate loan has been drawn down at an all-in interest rate of 1.956% per annum. This rate of interest is fixed until the maturity of the facility on 30 October 2020 and the proceeds have been used to repay the Company's previous GBP10 million fixed rate loan which had an all-in interest rate of 2.103% per annum. In repaying the previous fixed rate loan early, the Company has incurred a small break cost.
In addition, GBP9 million has been drawn down on a revolving basis, at an initial all-in interest rate of 1.3782% per annum, with first maturity on 1 December 2017, and the proceeds have been used to repay the Company's previous drawings under the old facility.
Following the drawdowns under the New Facility, the Company's borrowings are unchanged at GBP19 million.
Investment Objective
Shareholders may have noticed that we have made minor changes to the wording of the Company's investment objective, which is included above. The changes are not significant and do not therefore require shareholder approval, and are designed to align the wording of the objective more closely to the investment policy, which has not changed. However the Board believes that the wording makes clearer the diversified sources of income generation.
Manager
The Board notes the recent completion of the merger between Aberdeen Asset Management PLC, which is the parent company of the Manager, and Standard Life PLC. The Board will continue to monitor developments closely to ensure that satisfactory arrangements are in place for the continued effective management of the Company.
Outlook
Any debate regarding the prospects for the domestic economy is dominated by the Brexit process. Currently there is little clarity regarding the outcome which will materialise, how long it will take to reach or how much it will cost. Such an environment creates material uncertainty for investors. However, companies and fund managers alike need to work with the information that they have. The Board has reviewed the portfolio with the Manager who believes that, although the companies in the portfolio will be impacted to indeterminate and varying degrees, they typically have sound balance sheets and management teams with significant international expertise. These two characteristics confer a level of optionality that will allow them to address the challenges that arise. The complexities and indeed costs of doing business may increase but these should not be insurmountable. More tangibly, the portfolio remains overweight to overseas earnings and by consequence it is underweight in its direct exposure to the more consumer orientated cyclical domestic companies. Although economic prospects are not a direct proxy for the performance of stock markets, this positioning might be expected to provide some protection in the event of a deterioration in the performance of the UK economy.
In the meantime, the domestic economic fundamentals show rising inflation, with the CPI reading reaching 3% in September. The upward pressure arose principally from food and transport costs which have been pushed higher by the weakness in Sterling. At the time of the increase in interest rates following the period-end, the Governor of the Bank of England, Mark Carney, also expressed a view that no further increases are expected in the near term. The Manager believes that the companies in the portfolio have sufficient funding and liquidity to allow them to cope with any tightening of credit conditions.
Although the major central banks are at different points in the interest rate cycle, they are generally pointing towards a tightening of monetary conditions and a reduction in either the rate of or absolute size of their stimulus packages. This all suggests that policy makers have a broadly favourable view of the outlook for their economies. Indeed when one considers the outlook for the global economy the prognosis is quite positive. Although there is the potential for additional political disruption, investors have so far looked through this and focussed on the fundamentals.
The US economy is continuing to grow strongly and, whilst this will inevitably slow at some point, Europe is recovering well and growth is picking up across the region. Elsewhere, the increasingly significant Chinese and Indian economies also appear on good growth trajectories. In the former, the recent Communist Party Congress seemed to re-emphasise the importance of further developing domestic demand while the reform agenda in the latter still appears intact.
Valuations, and in particular those of good quality companies, remain elevated, and any disappointment in the levels of growth achieved has the potential to result in a de-rating of equities. For the time being, and despite the fact that we are entering a rising interest rate cycle, markets are in an optimistic frame of mind. However, the number of potential political and geopolitical flashpoints that could materialise, together with the uncertainty generated by the likely scaling back of central bank support to global financial markets, should make investors vigilant to the possibility of more volatile market returns than have been enjoyed over the last few years.
Robert Talbut
Chairman
17 November 2017
INTERIM BOARD REPORT - OTHER MATTERS
Directors' Responsibility Statement
The Directors are responsible for preparing the Half Yearly Financial Report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:
- the condensed set of financial statements within the Half Yearly Financial Report has been prepared in accordance with IAS 34 'Interim Financial Reporting'; and
- the Interim Board Report (constituting the Interim Management Report) includes a fair review of the information required by rules 4.2.7R of the Disclosure Guidance and Transparency Rules (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year) and 4.2.8R (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could so do).
Principal Risks and Uncertainties
The Board regularly reviews the principal risks and uncertainties faced by the Company together with the mitigating actions it has established to manage the risks. These are set out within the Strategic Report contained within the Annual Report for the year ended 31 March 2017 and comprise the following risk headings:
- Investment performance - Failure to maintain and grow the dividend over the longer term - Widening of discount - Financial and economic - Gearing - Regulatory - Operational
In addition to these risks, the Board considers that there may be an increase in economic risk should satisfactory progress not be made in the UK Government's negotiations with the European Union in respect of the UK's decision in the 2016 referendum to leave the European Union. In all other respects, the Company's principal risks and uncertainties have not changed materially since the date of the Annual Report and are not expected to change materially for the remaining six months of the Company's financial year.
Going Concern
The Company's assets comprise mainly readily realisable securities which can be sold to meet funding commitments if necessary. The Board has set limits for borrowing and regularly reviews actual exposures, cash flow projections and compliance with banking covenants. Borrowings of GBP20 million are committed to the Company until 30 October 2020. The Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future and has the ability to meet its financial obligations as they fall due for a period of at least twelve months from the date of approval of this Report. For these reasons, they continue to adopt the going concern basis of accounting in preparing the financial statements.
On behalf of the Board
Robert Talbut
Chairman
17 November 2017
DISTRIBUTION OF ASSETS AND LIABILITIES
Valuation Movement during the Valuation
at period at
31 March Purchases Sales Other Gains 30 September
2017 2017
GBP'000 % GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 %
Listed investments
Equities 72,118 88.5 4,158 (6,295) - 1,742 71,723 84.6
Convertibles 575 0.7 - - (20) (2) 553 0.7
Other Fixed
Interest 25,133 30.9 - - (28) 2,563 27,668 32.6
______ ______ ______ ______ ______ ______ ______ ______
Total investments 97,826 120.1 4,158 (6,295) (48) 4,303 99,944 117.9
Current assets 2,881 3.5 4,236 5.0
Current liabilities (19,230) (23.6) (19,375) (22.9)
______ ______ ______ ______
Net assets 81,477 100.0 84,805 100.0
______ ______ ______ ______
Net asset
value per
Ordinary share 271.61p 282.71p
______ ______
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
30 September 2017
(unaudited)
Revenue Capital Total
Note GBP'000 GBP'000 GBP'000
Gains on investments
at fair value - 3,352 3,352
Currency losses - (21) (21)
Investment income
Dividend income 2,265 - 2,265
Interest income/(expense) 284 (52) 232
Stock dividends 17 - 17
Traded option premiums 81 - 81
Other income - - -
Money market interest 1 - 1
Underwriting commission - - -
_______ _______ _______
2,648 3,279 5,927
_______ _______ _______
Expenses
Management fee (108) (108) (216)
Administrative expenses (203) - (203)
Finance costs (79) (79) (158)
_______ _______ _______
(390) (187) (577)
_______ _______ _______
Profit before taxation 2,258 3,092 5,350
Taxation 2 _______ _______ _______
Profit attributable
to equity holders 4 2,232 3,114 5,346
_______ _______ _______
Earnings per Ordinary
share (pence) 4 7.44 10.38 17.82
_______ _______ _______
The Company does not have any income or expense
that is not included in the profit for the period,
and therefore the profit for the period is also
the "Total comprehensive income for the period",
as defined in IAS 1 (revised).
The total column of this statement represents the
Condensed Statement of Comprehensive Income of
the Company, prepared in accordance with IFRS.
The revenue and capital columns are supplementary
to this and are prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. The accompanying notes are an integral part of the financial statements.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (Cont'd)
30 September 2016
(unaudited)
Revenue Capital Total
Note GBP'000 GBP'000 GBP'000
Gains on investments
at fair value - 8,822 8,822
Currency gains - 2 2
Investment income
Dividend income 1,928 - 1,928
Interest income/(expense) 287 (49) 238
Stock dividends 171 - 171
Traded option premiums 91 - 91
Other income - - -
Money market interest 3 - 3
Underwriting commission - - -
_______ _______ _______
2,480 8,775 11,255
_______ _______ _______
Expenses
Management fee (97) (97) (194)
Administrative expenses (189) - (189)
Finance costs (84) (84) (168)
_______ _______ _______
(370) (181) (551)
_______ _______ _______
Profit before taxation 2,110 8,594 10,704
Taxation 2 (3) 3 -
_______ _______ _______
Profit attributable to
equity holders 4 2,107 8,597 10,704
_______ _______ _______
Earnings per Ordinary
share (pence) 4 7.02 28.66 35.68
_______ _______ _______
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (Cont'd)
31 March 2017
(audited)
Revenue Capital Total
Note GBP'000 GBP'000 GBP'000
Gains on investments
at fair value - 12,856 12,856
Currency gains - 7 7
Investment income
Dividend income 3,603 - 3,603
Interest income/(expense) 569 (101) 468
Stock dividends 259 - 259
Traded option premiums 204 - 204
Other income 55 - 55
Money market interest 4 - 4
Underwriting commission 1 - 1
_______ _______ _______
4,695 12,762 17,457
_______ _______ _______
Expenses
Management fee (198) (198) (396)
Administrative expenses (386) - (386)
Finance costs (164) (164) (328)
_______ _______ _______
(748) (362) (1,110)
_______ _______ _______
Profit before taxation 3,947 12,400 16,347
Taxation 2 (22) 20 (2)
_______ _______ _______
Profit attributable to
equity holders 4 3,925 12,420 16,345
_______ _______ _______
Earnings per Ordinary
share (pence) 4 13.08 41.41 54.49
_______ _______ _______
CONDENSED BALANCE SHEET
As at As at As at
30 September 30 September 31 March
2017 2016 2017
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
Non-current assets
Equities 71,723 68,298 72,118
Convertibles 553 560 575
Other fixed interest 27,668 25,396 25,133
_______ _______ _______
Securities at fair
value 99,944 94,254 97,826
_______ _______ _______
Current assets
Trade and other receivables 30 20 126
Accrued income and
prepayments 844 765 982
Cash and cash equivalents 3,362 1,821 1,773
_______ _______ _______
4,236 2,606 2,881
_______ _______ _______
Total assets 104,180 96,860 100,707
Creditors: amounts
falling due within
one year
Trade and other payables (375) (223) (230)
Short-term borrowings (19,000) (9,000) (19,000)
_______ _______ _______
(19,375) (9,223) (19,230)
_______ _______ _______
Net current liabilities (15,139) (6,617) (16,349)
_______ _______ _______
Total assets less
current liabilities 84,805 87,637 81,477
Non-current liabilities
Long-term borrowings - (10,000) -
_______ _______ _______
Net assets 84,805 77,637 81,477
_______ _______ _______
Share capital and
reserves
Called-up share capital 15,049 15,049 15,049
Share premium account 19,308 19,308 19,308
Capital reserve 6 43,726 36,789 40,612
Revenue reserve 6,722 6,491 6,508
_______ _______ _______
Equity shareholders'
funds 84,805 77,637 81,477
_______ _______ _______
Net asset value per
Ordinary share (pence) 5 282.71 258.81 271.61
_______ _______ _______
The accompanying notes are an integral part of
the financial statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY
Six months ended 30
September 2017 (unaudited)
Share Retained
Share premium Capital revenue
capital account reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31 March 2017 15,049 19,308 40,612 6,508 81,477
Revenue profit for
the period - - - 2,232 2,232
Capital profit for
the period - - 3,114 - 3,114
Equity dividends - - - (2,018) (2,018)
_______ _______ _______ _______ _______
As at 30 September
2017 15,049 19,308 43,726 6,722 84,805
_______ _______ _______ _______ _______
Six months ended 30
September 2016 (unaudited)
Share Retained
Share premium Capital revenue
capital account reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31 March 2016 15,049 19,308 28,192 6,253 68,802
Revenue profit for
the period - - - 2,107 2,107
Capital profit for
the period - - 8,597 - 8,597
Equity dividends - - - (1,869) (1,869)
_______ _______ _______ _______ _______
As at 30 September
2016 15,049 19,308 36,789 6,491 77,637
_______ _______ _______ _______ _______
Year ended 31 March
2017 (audited)
Share Retained
Share premium Capital revenue
capital account reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31 March 2016 15,049 19,308 28,192 6,253 68,802
Revenue profit for
the year - - - 3,925 3,925
Capital profit for
the year - - 12,420 - 12,420
Equity dividends - - - (3,670) (3,670)
_______ _______ _______ _______ _______
As at 31 March 2017 15,049 19,308 40,612 6,508 81,477
_______ _______ _______ _______ _______
CONDENSED CASH FLOW STATEMENT
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2017 2016 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Net cash inflow from
operating activities
Dividend income received 2,409 2,098 3,423
Interest income received 283 295 721
Options premium received 76 80 204
Other income - - 55
Money market interest
received 1 3 4
Management fee paid (211) (185) (385)
Other cash expenses (222) (153) (349)
__________ __________ __________
Cash generated from operations 2,336 2,138 3,673
Interest paid (158) (168) (327)
Overseas taxation (8) - (4)
__________ __________ __________
Net cash inflows from
operating activities 2,170 1,970 3,342
__________ __________ __________
Cash flows from investing
activities
Purchases of investments (4,011) (5,468) (9,092)
Sales of investments 5,469 5,313 9,313
__________ __________ __________
Net cash inflow/(outflow)
from investing activities 1,458 (155) 221
__________ __________ __________
Cash flows from financing
activities
Equity dividends paid (2,018) (1,869) (3,670)
__________ __________ __________
Net cash outflow from
financing activities (2,018) (1,869) (3,670)
__________ __________ __________
Net increase/(decrease)
in cash and cash equivalents 1,610 (54) (107)
__________ __________ __________
Reconciliation of net
cash flow to movements
in cash and cash equivalents
Increase/(decrease) in
cash and cash equivalents
as above 1,610 (54) (107)
Net cash and cash equivalents
at start of period 1,773 1,873 1,873
Effect of foreign exchange
rate changes (21) 2 7
__________ __________ __________
Cash and cash equivalents
at end of period 3,362 1,821 1,773
__________ __________ __________
Notes to the Financial Statements
For the six months ended 30 September 2017
1. Accounting policies
Basis of accounting
The financial statements have been prepared
in accordance with International Financial
Reporting Standards (IFRS) 34 'Interim Financial
Reporting', as adopted by the International
Accounting Standards Board (IASB), and interpretations
issued by the International Financial Reporting
Interpretations Committee of the IASB (IFRIC).
They have also been prepared using the same
accounting policies applied for the year ended
31 March 2017 financial statements, which
received an unqualified audit report.
The financial statements have been prepared
on a going concern basis. In accordance with
the Financial Reporting Council's guidance
on 'Going Concern and Liquidity Risk' the
Directors have undertaken a review of the
Company's assets which primarily consist of
a diverse portfolio of listed equity shares
which, in most circumstances, are realisable
within a very short timescale.
2. Taxation
The taxation expense reflected in the Condensed
Statement of Comprehensive Income is based
on the estimated annual tax rate expected
for the full financial year. The estimated
annual corporation tax rate used for the year
to 31 March 2018 is a rate of 19%.
Detailed below is an analysis of the tax charge
for each period.
Six months Six months Year ended
ended ended 31 March 2017
30 September 30 September
2017 2016
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Taxation GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
UK Corporation
tax 22 (22) - 3 (3) - 20 (20) -
Overseas
tax suffered 4 - 4 - - - 2 - 2
______ ______ _____ ______ ______ _____ ______ ______ ______
Total
tax charge 26 (22) 4 3 (3) - 22 (20) 2
______ ______ _____ ______ ______ _____ ______ ______ ______
3. Dividends
The following table shows the revenue for each
period less the dividends declared in respect
of the financial period to which they relate.
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Revenue 2,232 2,107 3,925
Dividends declared (1,800)(A) (1,800)(B) (3,825)(C)
__________ __________ __________
432 307 100
__________ __________ __________
(A) Dividends declared relate to first two
interim dividends (both 3.00p each) in respect
of the financial year 2017/18.
(B) Dividends declared relate to first two
interim dividends (both 3.00p each) in respect
of the financial year 2016/17.
(C) First three interim dividends (each 3.00p)
and the final dividend (3.75p) declared in
respect of the financial year 2016/17.
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2017 2016 2017
4. Return per share GBP'000 GBP'000 GBP'000
Returns are
based on the
following figures:
Revenue return 2,232 2,107 3,925
Capital return 3,114 8,597 12,420
__________ __________ __________
Total return 5,346 10,704 16,345
__________ __________ __________
Weighted average
number of Ordinary
shares in issue 29,997,580 29,997,580 29,997,580
__________ __________ __________
5. Net asset value per share
The net asset value per Ordinary share and
the net asset values attributable to Ordinary
shareholders at the period end were as follows:
As at As at As at
30 September 30 September 31 March
2017 2016 2017
(unaudited) (unaudited) (audited)
Attributable
net assets (GBP'000)
per Balance
Sheet 84,805 77,637 81,477
Number of Ordinary
shares in issue 29,997,580 29,997,580 29,997,580
Net asset value
per Ordinary
share (p) 282.71 258.81 271.61
6. Capital reserve
The capital reserve reflected in the Balance
Sheet at 30 September 2017 includes unrealised
gains of GBP25,597,000 (30 September 2016
- gains of GBP16,409,000; 31 March 2017 -
gains of GBP21,294,000) which relate to the
revaluation of investments held at the reporting
date.
7. Transaction costs
During the period expenses were incurred in
acquiring or disposing of investments classified
as fair value though profit or loss. These
have been expensed through capital and are
included within gains on investments at fair
value in the Condensed Statement of Comprehensive
Income. The total costs were as follows:
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Purchases 16 29 41
Sales 2 3 5
__________ __________ __________
18 32 46
__________ __________ __________
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2017 2016 2017
8. Movement in GBP'000 GBP'000 GBP'000
net debt
Increase/(decrease)
in cash and
cash equivalents 1,610 (54) (107)
Effect of foreign
exchange rate
changes (21) 2 7
__________ __________ __________
Change in net
debt in the
year 1,589 (52) (100)
Opening net
debt (17,227) (17,127) (17,127)
__________ __________ __________
Closing net
debt (15,638) (17,179) (17,227)
__________ __________ __________
9. Transactions with the Manager
The Company has an agreement with Aberdeen
Fund Managers Limited ("AFML") for the provision
of management, secretarial, accounting and
administration services and for the carrying
out of promotional activities in relation
to the Company.
The management fee is based on 0.45% per annum
up to GBP100 million and 0.40% per annum over
GBP100 million, by reference to the net assets
of the Company and any borrowings up to a
maximum of GBP30 million, and excluding commonly
managed funds, calculated monthly and paid
quarterly. The fee is allocated 50% to revenue
and 50% to capital. The agreement is terminable
on not less than six months' notice. The total
of the fees paid and payable during the period
to 30 September 2017 was GBP216,000 (30 September
2016 - GBP194,000; 31 March 2017 - GBP396,000)
and the balance due to AFML at the period
end was GBP107,000 (30 September 2016 - GBP100,000;
31 March 2017 - GBP102,000). The Company held
an interest in a commonly managed fund, Aberdeen
Smaller Companies Income Trust PLC, in the
portfolio during the period to 30 September
2017 (30 September 2016 and 31 March 2017
- same). The value attributable to this holding
is excluded from the calculation of the management
fee payable by the Company.
The total fees paid and payable under the
management agreement in relation to promotional
activities were GBP39,000 (30 September 2016
- GBP43,000; 31 March 2017 - GBP83,000) and
the balance due to AFML at the period end
was GBP19,000 (30 September 2016 - GBP20,000;
31 March 2017 - GBP20,000). The Company's
management agreement with AFML also provides
for the provision of company secretarial and
administration services to the Company; no
separate fee is charged to the Company in
respect of these services, which have been
delegated to Aberdeen Asset Management PLC.
10. Segmental information
For management purposes, the Company is organised
into one main operating segment, which invests
in equity securities and debt instruments.
All of the Company's activities are interrelated,
and each activity is dependent on the others.
Accordingly, all significant operating decisions
are based upon analysis of the Company as
one segment. The financial results from this
segment are equivalent to the financial statements
of the Company as a whole.
11. Fair value hierarchy
IFRS 13 'Fair Value Measurement' requires
an entity to classify fair value measurements
using a fair value hierarchy that reflects
the significance of the inputs used in making
the measurements. The fair value hierarchy
has the following levels:
Level 1: quoted prices (unadjusted) in active
markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included
within Level 1 that are observable for the
assets or liability, either directly (ie as
prices) or indirectly (ie derived from prices);
and
Level 3: inputs for the asset or liability
that are not based on observable market data
(unobservable inputs).
The financial assets and liabilities measured
at fair value in the Condensed Balance Sheet
are grouped into the fair value hierarchy
as follows:
Level Level Level Total
1 2 3
At 30 September 2017 Note GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
at fair value through
profit or loss
Quoted investments a) 99,944 - - 99,944
Financial liabilities
at fair value through
profit or loss
Derivatives b) - (39) - (39)
______ ______ ______ ______
Net fair value 99,944 (39) - 99,905
______ ______ ______ ______
Level Level Level Total
1 2 3
At 30 September 2016 Note GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
at fair value through
profit or loss
Quoted investments a) 94,254 - - 94,254
Financial liabilities
at fair value through
profit or loss
Derivatives b) - (22) - (22)
______ ______ ______ ______
Net fair value 94,254 (22) - 94,232
______ ______ ______ ______
Level Level Level Total
1 2 3
As at 31 March 2017 Note GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
at fair value through
profit or loss
Quoted investments a) 97,826 - - 97,826
Financial liabilities
at fair value through
profit or loss
Derivatives b) - (30) - (30)
______ ______ ______ ______
Net fair value 97,826 (30) - 97,796
______ ______ ______ ______
a) Quoted investments
The fair value of the Company's quoted investments
has been determined by reference to their
quoted bid prices at the reporting date.
Quoted investments included in Fair Value
Level 1 are actively traded on recognised
stock exchanges.
b) Derivatives
The fair value of the Company's investments
in Exchange Traded Options has been determined
using observable market inputs on an exchange
traded basis although not actively traded
and therefore have been classed as level
2.
The fair value of the Company's investments
in Over the Counter Options has been determined
using observable market inputs other than
quoted prices included within Level 2.
12. The financial information contained in this
Half Yearly Financial Report does not constitute
statutory accounts as defined in Sections
434 - 436 of the Companies Act 2006. The financial
information for the six months ended 30 September
2017 and 30 September 2016 has not been reviewed
or audited by the Company's independent auditor.
The information for the year ended 31 March
2017 has been extracted from the latest published
audited financial statements which have been
filed with the Registrar of Companies. The
report of the independent auditor on those
accounts contained no qualification or statement
under Section 498 (2), (3) or (4) of the Companies
Act 2006.
13. This Half Yearly Financial Report was approved
by the Board on 17 November 2017.
14. The Half Yearly Financial Report will shortly
be available on the Company's website, www.shiresincome.co.uk*
and will be posted to shareholders in November
2017.
Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise. Investors may not get back the amount they originally invested
By order of the Board
Aberdeen Asset Management PLC
Company Secretary
17 November 2017
* Neither the Company's website nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FFEFMMFWSEIF
(END) Dow Jones Newswires
November 17, 2017 02:00 ET (07:00 GMT)
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