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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Abrdn Smaller Companies Income Trust Plc | LSE:ASCI | London | Ordinary Share | GB0008063728 | ORD 50P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 238.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Mgmt Invt Offices, Open-end | -31M | -32.2M | -1.4562 | -1.63 | 52.62M |
From Apr 2019 to Apr 2024
TIDMASCI
RNS Number : 2865B
Aberdeen Smaller Co's Inc Tst PLC
19 September 2018
Aberdeen Smaller Companies Income Trust PLC
Half Yearly Financial Report for the six months to 30 June 2018
OBJECTIVE
The objective of the Company is to provide a high and growing dividend and capital growth from a portfolio invested principally in the ordinary shares of smaller UK companies and UK fixed income securities.
BENCHMARK
FTSE SmallCap Index - excluding Investment Companies (total return).
MANAGEMENT
The Company's alternative investment fund manager is Aberdeen Fund Managers Limited ("AFML" or "the Manager") (authorised and regulated by the Financial Conduct Authority). The Company's portfolio is managed on a day-to-day basis by Aberdeen Asset Managers Limited ("AAML" or "the Investment Manager") by way of a delegation agreement in place between AFML and AAML.
For further information please contact:-
Jonathan Allison, Senior Investment Manager, 020 7463 6240
Aberdeen Asset Management Limited
HIGHLIGHTS
Hot Features
Premium
30 June 2018 31 December 2017 % change
Equity shareholders' funds
(GBP'000) 75,854 75,421 +0.6
Net asset value per share 343.08p 341.12p +0.6
Share price (mid-market) 296.00p 288.00p +2.8
Discount to net asset value 13.7% 15.6%
Dividend yield 2.4% 2.5%
Ongoing charges ratio{A} 1.25% 1.35%
{A} Considered to be an Alternative Performance Measure. 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 June 2018 is based on
forecast ongoing charges for the year ending 31 December 2018.
PERFORMANCE (TOTAL RETURN)
Six months 1 year 3 years 5 years
ended ended ended ended
30 June 30 June 30 June 30 June
2018 2018 2018 2018
Share price{A} + 4.1% + 31.6% + 47.5% + 86.0%
Net asset value per share{A} + 1.7% + 18.0% + 43.1% + 105.6%
FTSE SmallCap Index (ex IC's) + 0.1% + 6.4% + 31.6% + 78.7%
FTSE All-Share Index + 1.7% + 9.0% + 31.6% + 52.8%
{A} Considered to be an Alternative Performance Measure. All figures
are for total return and assume re-investment of net dividends excluding
transaction costs.
Source: AFML, Morningstar & Factset.
INTERIM BOARD REPORT - CHAIRMAN'S STATEMENT
Performance
In the six month period to the end of June 2018, the Trust has outperformed its benchmark, the FTSE Smaller Companies Index (excl. Investment Trusts), returning 1.7% on a Net Asset Value (NAV) basis compared to the Index return of 0.1%. The Trust's share price grew 4.1% with the discount to NAV narrowing over the period. Over the 1, 3 and 5 year periods, it is pleasing to report that both the NAV and share price are comfortably ahead of the benchmark returns.
Trust Gearing and Debt
We renewed the Trust's debt facilities at the end of April, opting to continue with a 5 year GBP5m fixed rate loan facility and a 3 year GBP5m revolving credit facility. There has been no change to the level of borrowings drawn down with GBP7m of the total GBP10m facility currently being deployed. The Trust's gearing remains modest and continues to be used largely to fund the fixed income portfolio as this provides a good yield enhancement on what is attractively priced debt. Portfolio gearing was approximately 8% at the end of June 2018 which is a slight reduction from 8.5% at the end of December 2017 and reflects a slightly higher cash balance at this half year end.
We are comfortable that there is sufficient flexibility with these facilities for the Manager to put more money to work quickly should interesting investment opportunities arise.
Dividend
After some robust dividend growth from the portfolio, and the addition of some large special dividends from Victrex and Aveva this year, the income account looks very healthy. The portfolio is also well positioned for sound dividend growth in the years ahead.
Ongoing Charges
Your Board actively monitors costs and is committed to keeping these under tight control. Following a review, it was agreed to revise the basis of the calculation of the management fee from net assets plus debt to net assets with effect from 19 April 2018. The management fee rate remains at 0.75%.
Management Changes
Following the merger of Aberdeen Asset Management PLC and Standard Life plc, and the subsequent integration of the equity teams at Aberdeen Standard Investments (ASI), Abby Glennie has taken over the management of the Company's portfolio. Abby has been at Standard Life Investments since February 2013 and joined the UK Smaller Companies team at Standard Life Investments in January 2016.
Our previous portfolio manager, Jonathan Allison, has moved to another team at ASI and we would like to take this opportunity to thank him for his stewardship.
Outlook
At a global level, trade war fears have arguably overtaken concerns over the interest rate cycle as the main talking point for markets and will continue to dominate economic headlines for the foreseeable future. Narrowing the lens on the UK domestic picture, the future shape of Brexit remains frustratingly unclear and one suspects this will continue to act as a dampener on UK growth and general investor sentiment for some time yet.
These are volatile times but as a Board we take comfort in the judicious and systematic investment approach followed by our Managers, which is focused on identifying stocks with the most diversified earnings streams and resilient business models. We believe this approach will help to buffer the portfolio during times of stress and help to position the portfolio to deliver attractive longer term returns for our shareholders.
Robert Lister
Chairman
19 September 2018
INTERIM BOARD REPORT - OTHER
Principal Risks and Uncertainties
There are a number of risks which, if realised, could have a material adverse effect on the Company and its financial condition, performance and prospects. The Board has identified the principal risks and uncertainties facing the Company together with a description of the mitigating actions it has taken. These can be summarised under the following headings:
- Investment and Market - Investment Portfolio Management - Gearing - Income and Dividend - Reliance on Third Party Service Providers
Details of these risks are provided in detail on pages 5 to 6 of the 2017 Annual Report. The principal risks have not changed nor are they expected to change in the second half of the financial year ended 31 December 2018.
The impact on the risks of the Company following the implementation of the 'Leave' decision of the EU Referendum is difficult to assess at this stage although it may affect the Company's risk profile by introducing potentially significant new uncertainties and instability in financial markets as the United Kingdom negotiates its exit terms.
Going Concern
In accordance with the Financial Reporting Council's Guidance on Risk Management, Internal Control and Related Financial and Business Reporting issued in September 2014, the Directors have undertaken a rigorous review and consider both that there are no material uncertainties and that the adoption of the going concern basis of accounting is appropriate. The Company's assets consist principally of equity shares in companies listed on the London Stock Exchange which are, in most circumstances, realisable within a short timescale.
The Directors have a reasonable expectation that the Company has adequate financial resources to continue in operational existence for the foreseeable future and at least twelve months from the date of approval of this Half Yearly Report. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
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 has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'
- the Interim Board Report includes a fair review of the information required by rule 4.2.7R of the Disclosure 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)
- the Interim Board Report includes a fair review of the information required by 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 do so).
The Half Yearly Financial Report for the six months to 30 June 2018 comprises the Interim Board Report and a condensed set of financial statements.
For and on behalf of the Board of Aberdeen Smaller Companies Income Trust PLC
Robert Lister
Chairman
19 September 2018
INVESTMENT MANAGER'S REVIEW
Equity Portfolio Performance
Stock specific rather than sector allocation reasons contributed to the Trust's outperformance in the first six months of the year.
During this period, the UK software engineering business Aveva and animal pharmaceutical business Dechra were the biggest positive contributors. Aveva's share price has continued to move ahead, following its merger with Schneider Electric's Software division, as investors have begun to factor in the significant cost savings and revenue growth opportunities on offer as a result of the combination. Dechra continues to deliver good growth numbers, particularly out of its North American business, and the market also reacted positively to news of two further acquisitions earlier in the year which will strengthen its European presence. Against this, Dignity and RPC were the primary laggards. Dignity shares fell sharply after its strategic review earlier in the year highlighted an increasingly competitive UK funeral services market and RPC disappointed investors with an organic outlook that was slightly below expectations.
Economic Overview
Recent macroeconomic news has been dominated by Trade War talk. President Trump's decision to impose tariffs on selected Chinese goods, and his threats to do so elsewhere, has increased the risk of a surge in protectionist measures across the globe. Despite these risks the latest trade figures are healthy with most economists' global GDP growth figures little changed since the start of the year.
In the UK, weak growth numbers in the first quarter of the year were due to temporary factors, including a disruptive week of snow in late February/early March, with growth bouncing back in the second quarter. A stronger recovery in household spending is likely to be constrained by both tighter credit conditions and tough welfare reforms. Those factors, together with evidence that inflation was easing from its highs earlier in the year, are likely to have caused the Bank of England to hold off on increasing interests rates in May. However, the Monetary Policy Committee in early August voted unanimously to raise rates to 0.75%. Bank of England Governor Mark Carney has suggested most recently that one hike a year over the next three years might be the appropriate path for rates.
In the Eurozone there are concerns over whether the recovery there could be running out of steam. Our view is that the investment outlook continues to improve and that the region is still some way short of running into any major capacity constraints. There are more acute risks in both Spain and Italy because of the more uncertain political environments in those countries.
In the US, economic momentum has picked up this year, benefitting from tax cuts and higher government spending, against this, as mentioned above, trade tensions have risen and it remains uncertain as to what the eventual outcome of negotiations with large trading partners like China will be.
The outlook for emerging markets continues to be dominated by fears of escalating trade protectionism and what a strong Dollar will mean for those countries - like Argentina and Turkey - that have substantial amounts of Dollar based lending.
Portfolio Activity
We participated in two capital raisings earlier in the year. The first was an equity placing by Dechra Pharmaceuticals to help fund the acquisition of Dutch animal pharma business AST Farma and European animal-focused company Le Vet. These two businesses will help Dechra expand its European network as well as bolster the product portfolio and pipeline. We also supported Unite Group's placing to finance some large student accommodation developments in London and Oxford, an attractive continuation of their niche property strategy.
Other strategic actions included the exit of Xaar, Dignity and Mothercare and introductions of Hollywood Bowl and Hostelworld.
Xaar released another weak trading update announcing that the decline in sales from its legacy ceramic tile business was more severe than expected and it is now reliant on cost savings to meet full year estimates. We view the risk to near term guidance as significant and have been unconvinced that the investment to support growth in new areas is delivering the necessary results. The announcement that the fairly new CFO would be departing in November was further cause for concern. We recycled the proceeds into Hollywood Bowl, a niche UK leisure business which runs ten pin bowling centres, that has a good track record of delivering reliable, steady growth over the long term. Returns in the business are attractive helped by a carefully managed refurbishment programme and innovative pricing initiatives. The company offers a high dividend yield with the potential for additional special dividends in the absence of larger acquisitions.
We also started a new position in Hostelworld in the Trust. The company's booking platform is a global leader with strong growth opportunities in a number of markets, as the hostel industry continues to professionalise. It also benefits from the powerful network effects that being a dominant platform provider brings. The cash flow and balance sheet are strong, enabling it to pay an attractive yield with good growth prospects.
Mothercare had been a difficult investment for us for some time but one that we'd deliberately kept at a very low weight with the prevailing investment rationale one of 'managing for short term value', given the lowly valuation and market expectations. Unfortunately, like a number of other embattled UK consumer businesses, the company experienced a very difficult Christmas trading period resulting in a set of weak UK numbers both in-store and online. Unlike in past years, the International business was unable to offset this weakness as acute trading problems, in Russia and the Middle East specifically, hampered the performance of that division. Finally, whilst we had taken some comfort earlier last year that Mothercare would be able to materially improve its debt position over the short to medium term, following the difficult trading more recently, net debt guidance was pushed out to GBP50m for the financial year 2018 from an already adjusted GBP30-40m range. This was a further cause for concern and something we believed would ultimately limit the company's ability to take more meaningful restructuring actions and hence the holding was sold.
In Dignity's case our decision to sell ultimately came down to our growing uncertainty over the company's ability to prosper in what has become an increasingly competitive pricing environment in the funeral market. The overall level of debt on the balance sheet was also cause for concern especially under a scenario where the quality of earnings and cash flows is not as strong as it once was.
Corporate Governance
Highlights for the first six months of the year included a meeting with BBA Aviation's Remuneration Committee Chair and Company Secretary in order to address our concerns regarding their proposed remuneration amendments. They have taken on board our comments and we should see greater clarity of disclosure on targets and performance going forward. We also discussed Board and CEO succession and welcomed the positive progress culminating in the appointment of new CEO Mark Johnstone at the start of the year. We have also been conducting regular engagement with RPC Group, Europe's largest plastics business, on its sustainability strategy. RPC is broadly in favour of a revision to the Plastic Recovery Note (PRN) system. PRN's are taken by accredited recyclers for every tonne of recycled material taken for processing but there is a de minimis in place for companies that handle less than 50 tonnes of waste and have less than GBP2m of turnover. RPC is in favour of a revision of this exemption to allow more companies to fall under the regulatory requirements. The company has also developed a 'circular economy' rating tool. This tool is integral to the design process and rates products according to RecyClass criteria such as light-weighting, recycled content and end-of-life use.
Fixed Income and Preference Shares
Market volatility jumped sharply higher in 2018, with political uncertainty in Italy, where the prospect of an anti-establishment government clashing with Brussels, unsettled markets and President Trump's less than orthodox approach to both domestic and foreign policy were a constant source of market nervousness. US data has demonstrated a solid pace of economic activity and it continues to lead and outperform other developed markets globally. This has led to further tightening by the US Fed. UK data was a mixed bag over the second quarter. There was significant evidence that the first quarter was, as suspected, weather affected and therefore not to be extrapolated, however, some industrial and manufacturing data continues to show weakness. This is in keeping with, and likely connected to, similar weakness across Europe and in such places as China. Like other countries UK government yields have risen, with the expectation of another rate rise in the not too distant future. On the back of this, corporate bond spreads widened from the lows in February 2018, particular long dated and lower quality credits. This was led by banks and insurance companies which have previously been the stronger performers.
The only transaction in the Trust's bond portfolio has been the part tender of Wales & West Utilities. Trading at +120bp over gilts, it was tendered at +50bp. The remaining holding is expected to be called in December 2018.
In March the preference shares within the portfolio suffered some sharp falls following the announcement by Aviva that it might cancel some of these securities at par despite their 'irredeemable' status. After significant investor criticism, and engagement from a number of parties including ourselves, Aviva decided not to cancel these shares. The preference stocks climbed favourably in response, largely regaining their prior valuations.
Outlook
Domestically exposed UK businesses face additional pressures from Brexit unpredictability, which has led to a drop in consumer confidence and expectations of more lacklustre growth ahead. However, this increased market volatility can also create interesting valuation opportunities for patient bottom up investors. UK stocks now look relatively good value and we anticipate some interesting investment opportunities to arise as a result.
As ever, our focus is on selecting a range of high quality businesses that are capable of weathering shorter term gyrations in the market as well as thriving over the long term.
Aberdeen Asset Managers Limited
19 September 2018
Distribution of Assets and Liabilities
As at 30 June 2018
Valuation at Movement during the period Valuation at
31 December Gains/ 30 June
2017 Purchases Sales (losses) 2018
GBP'000 % GBP'000 GBP'000 GBP'000 GBP'000 %
Listed investments
Equities 74,544 98.9 5,735 (5,822) 757 75,214 99.2
Convertible preference
shares 1,004 1.3 - - (32) 972 1.3
Corporate bonds 2,028 2.7 - (244) (53) 1,731 2.3
Preference shares 4,097 5.4 - - (423) 3,674 4.8
_______ _______ _______ _______ _______ _______ _______
81,673 108.3 5,735 (6,066) 249 81,591 107.6
_______ _______ _______ _______ _______ _______ _______
Current assets 912 1.2 1,469 1.9
Other current liabilities (164) (0.2) (225) (0.3)
Short-term loan (7,000) (9.3) (2,000) (2.6)
Long-term loan - - (4,981) (6.6)
_______ _______ _______ _______
Net assets 75,421 100.0 75,854 100.0
_______ _______ _______ _______
Net asset value per
share 341.1p 343.1p
_______ _______
Condensed Statement of Comprehensive Income
Six months ended
30 June 2018
(unaudited)
Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000
Gains on investments at fair value - 249 249
Currency gains - - -
Revenue
Dividend income 2 1,512 - 1,512
Interest income/(expense) from
investments 2 46 - 46
Other income 2 1 - 1
_________ _________ _________
1,559 249 1,808
_________ _________ _________
Expenses
Investment management fees (88) (206) (294)
Other administrative expenses (187) - (187)
Finance costs (26) (61) (87)
_________ _________ _________
Profit/(loss) before tax 1,258 (18) 1,240
_________ _________ _________
Taxation 3 (11) - (11)
_________ _________ _________
Profit/(loss) attributable to
equity holders 1,247 (18) 1,229
_________ _________ _________
Return per Ordinary share (pence) 5 5.64 (0.08) 5.56
_________ _________ _________
The total column of this statement represents the Company's Statement
of Comprehensive Income, prepared in accordance with IFRS. The
supplementary revenue and capital columns are both prepared under
guidance published by the Association of Investment Companies.
All items in the above statement derive from continuing operations.
The Company does not have any income or expense that is not included
in profit for the year, and therefore the "Profit/(loss) attributable
to equity holders " is also the "Total comprehensive income attributable
to equity holders" as defined in IAS 1 (revised).
The accompanying notes are an integral part of these condensed
financial statements.
Condensed Statement of Comprehensive Income
(Continued)
Six months ended Year ended
30 June 2017 31 December 2017
(unaudited) (audited)
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains on investments
at fair value - 7,660 7,660 - 17,278 17,278
Currency gains - - - - 1 1
Revenue
Dividend income 2 1,173 - 1,173 2,212 - 2,212
Interest income/(expense)
from investments 2 101 (13) 88 104 347 451
Other income 2 2 - 2 2 - 2
_______ _______ _______ _______ _______ _______
1,276 7,647 8,923 2,318 17,626 19,944
_______ _______ _______ _______ _______ _______
Expenses
Investment management
fees (78) (183) (261) (167) (390) (557)
Other administrative
expenses (204) - (204) (371) - (371)
Finance costs (25) (57) (82) (50) (116) (166)
_______ _______ _______ _______ _______ _______
Profit/(loss) before
tax 969 7,407 8,376 1,730 17,120 18,850
_______ _______ _______ _______ _______ _______
Taxation 3 (8) - (8) (14) - (14)
_______ _______ _______ _______ _______ _______
Profit/(loss) attributable
to equity holders 961 7,407 8,368 1,716 17,120 18,836
_______ _______ _______ _______ _______ _______
Return per Ordinary share
(pence) 5 4.35 33.51 37.86 7.76 77.43 85.19
_______ _______ _______ _______ _______ _______
Condensed Balance Sheet
As at As at As at
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Equities 75,214 65,552 74,544
Convertible preference shares 972 1,024 1,004
Corporate bonds 1,731 2,046 2,028
Preference shares 3,674 3,748 4,097
____________ ____________ ____________
Securities at fair value 81,591 72,370 81,673
____________ ____________ ____________
Current assets
Cash 724 191 582
Other receivables 745 318 330
____________ ____________ ____________
1,469 509 912
____________ ____________ ____________
Current liabilities
Bank loan (2,000) (7,000) (7,000)
Trade and other payables (225) (152) (164)
____________ ____________ ____________
(2,225) (7,152) (7,164)
____________ ____________ ____________
Net current liabilities (756) (6,643) (6,252)
____________ ____________ ____________
Total assets less current
liabilities 80,835 65,727 75,421
Non-current liabilities
Bank loan (4,981) - -
____________ ____________ ____________
Net assets 75,854 65,727 75,421
____________ ____________ ____________
Share capital and reserves
Called-up share capital 11,055 11,055 11,055
Share premium account 11,892 11,892 11,892
Capital redemption reserve 2,032 2,032 2,032
Capital reserve 6 47,715 38,020 47,733
Revenue reserve 3,160 2,728 2,709
____________ ____________ ____________
Equity shareholders' funds 75,854 65,727 75,421
____________ ____________ ____________
Net asset value per Ordinary
share (pence) 7 343.08 297.28 341.12
____________ ____________ ____________
The accompanying notes are an integral part of these condensed
financial statements.
Condensed Statement of Changes in Equity
Six months ended 30 June
2018 (unaudited)
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31 December 2017 11,055 11,892 2,032 47,733 2,709 75,421
(Loss)/profit for the
period - - - (18) 1,247 1,229
Dividends paid in the
period - - - - (796) (796)
______ ______ ______ ______ ______ ______
As at 30 June 2018 11,055 11,892 2,032 47,715 3,160 75,854
______ ______ ______ ______ ______ ______
Six months ended 30 June
2017 (unaudited)
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31 December 2016 11,055 11,892 2,032 30,613 2,541 58,133
Profit for the period - - - 7,407 961 8,368
Dividends paid in the
period - - - - (774) (774)
______ ______ ______ ______ ______ ______
As at 30 June 2017 11,055 11,892 2,032 38,020 2,728 65,727
______ ______ ______ ______ ______ ______
Year ended 31 December
2017 (audited)
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 31 December 2016 11,055 11,892 2,032 30,613 2,541 58,133
Profit for the year - - - 17,120 1,716 18,836
Dividends paid in the
year - - - - (1,548) (1,548)
______ ______ ______ ______ ______ ______
As at 31 December 2017 11,055 11,892 2,032 47,733 2,709 75,421
______ ______ ______ ______ ______ ______
Condensed Cash Flow Statement
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Dividend income received 1,531 1,160 2,152
Interest income received 29 88 117
Other income received 1 2 2
Investment management fees paid (304) (296) (585)
Other cash expenses (195) (217) (365)
___________ ___________ ___________
Cash generated from operations 1,062 737 1,321
Interest paid (94) (85) (182)
Overseas taxation suffered (26) (14) (26)
___________ ___________ ___________
Net cash inflows from operating
activities 942 638 1,113
___________ ___________ ___________
Cash flows from investing activities
Purchases of investments (5,682) (8,025) (15,198)
Sales of investments 5,678 7,805 15,667
___________ ___________ ___________
Net cash (outflows)/inflows from
investing activities (4) (220) 469
___________ ___________ ___________
Cash flows from financing activities
Equity dividends paid (796) (774) (1,548)
___________ ___________ ___________
Net cash outflows from financing
activities (796) (774) (1,548)
Net increase/(decrease) in cash
and cash equivalents 142 (356) 34
___________ ___________ ___________
Analysis of changes in cash and cash equivalents
during the period
Opening balance 582 547 547
Currency gains - - 1
Increase/(decrease) in cash and
cash equivalents as above 142 (356) 34
___________ ___________ ___________
Cash and cash equivalents at
the end of the period 724 191 582
___________ ___________ ___________
NOTES TO THE ACCOUNTS
1. Accounting policies
Basis of preparation
The condensed 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
('IFRIC') of the IASB. They have also been prepared using the
same accounting policies applied for the year ended 31 December
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 principally
consist of equity shares in companies listed on the London
Stock Exchange which, in most circumstances, are realisable
within a short timescale.
Six months Six months Year
ended ended ended
30 June 2018 30 June 2017 31 December
2017
2. Income GBP'000 GBP'000 GBP'000
Income from investments
UK listed dividends 1,141 939 1,746
Overseas listed dividends 251 195 324
Property income distribution 89 39 142
Scrip dividends 31 - -
_________ _________ _________
1,512 1,173 2,212
Fixed interest income 46 101 104
_________ _________ _________
1,558 1,274 2,316
_________ _________ _________
Other income
Bank interest 1 - -
Underwriting commission - 2 2
_________ _________ _________
1 2 2
_________ _________ _________
The Company amortises the premium or discount on acquisition
on debt securities against the capital reserve. For the six
months to 30 June 2018 this represented GBPnil (30 June 2017
- GBP13,000; 31 December 2017 - GBP1,000) which has been reflected
in the capital column of the Condensed Statement of Comprehensive
Income.
3. Taxation
The tax expense reflected in the Condensed Statement of Comprehensive
Income represents irrecoverable withholding tax suffered on
overseas dividend income.
4. 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 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Revenue 1,247 961 1,716
Dividends declared (796){A} (774){B} (1,559){C}
_________ _________ _________
451 187 157
_________ _________ _________
{A} Dividends declared relate to first two interim dividends
(both 1.80p each) declared in respect of the financial year
2018.
{B} Dividends declared relate to first two interim dividends
(both 1.75p each) declared in respect of the financial year
2017.
{C} Dividends declared relate to the four interim dividends
declared in respect of the financial year 2017 totalling 7.05p.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
5. Return per share p p p
Revenue return 5.64 4.35 7.76
Capital return (0.08) 33.51 77.43
_________ _________ _________
Net return 5.56 37.86 85.19
_________ _________ _________
The returns per share are based on the following figures:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Revenue return 1,247 961 1,716
Capital return (18) 7,407 17,120
_________ _________ _________
Net return 1,229 8,368 18,836
_________ _________ _________
Weighted average number
of shares in issue 22,109,765 22,109,765 22,109,765
_________ _________ _________
6. Capital reserves
The capital reserve reflected in the Condensed Balance Sheet
at 30 June 2018 includes gains of GBP29,551,000 (30 June 2017
- gains of GBP21,773,000; 31 December 2017 - gains of GBP29,015,000)
which relate to the revaluation of investments held at the
reporting date.
7. Net asset value per share
Ordinary shares
The net asset value per Ordinary share and the net asset values
attributable to Ordinary shareholders at the period end calculated
in accordance with the Articles of Association were as follows:
As at As at As at
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
Attributable net assets
(GBP'000) 75,854 65,727 75,421
Number of Ordinary shares
in issue 22,109,765 22,109,765 22,109,765
Net asset value per Ordinary
share (p) 343.08 297.28 341.12
8. Transaction costs
During the period expenses were incurred in acquiring or disposing
of investments classified as fair value. 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 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Purchases 31 32 64
Sales 4 5 9
_________ _________ _________
35 37 73
_________ _________ _________
9. 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 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 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 June 2018 (unaudited) Note GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair
value through profit or loss
Quoted equities a) 75,214 - - 75,214
Quoted convertibles, bonds
and preference shares b) - 6,377 - 6,377
______ ______ ______ ______
75,214 6,377 - 81,591
______ ______ ______ ______
Level Level Level Total
1 2 3
At 30 June 2017 (unaudited) Note GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair
value through profit or loss
Quoted equities a) 65,552 - - 65,552
Quoted convertibles, bonds
and preference shares b) - 6,818 - 6,818
______ ______ ______ ______
65,552 6,818 - 72,370
______ ______ ______ ______
Level Level Level Total
1 2 3
At 31 December 2017 (audited) Note GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair
value through profit or loss
Quoted equities a) 74,544 - - 74,544
Quoted convertibles, bonds
and preference shares b) - 7,129 - 7,129
______ ______ ______ ______
74,544 7,129 - 81,673
______ ______ ______ ______
a) Quoted equities
The fair value of the Company's investments in quoted equities
has been determined by reference to their quoted bid prices
at the reporting date. Quoted equities included in Fair Value
Level 1 are actively traded on recognised stock exchanges.
b) Quoted convertibles, bonds and preference shares
The fair value of the Company's investments in quoted convertibles,
bonds and preference shares has been determined by reference
to their quoted bid prices at the reporting date. Investments
categorised as Level 2 are not considered to trade in active
markets.
Quoted preference shares of GBP3,748,000 at 30 June 2017 have
been reclassified as level 2 investments from level 1 due to
them not being considered to trade in active markets.
There have been no transfers of assets between levels of the
fair value hierarchy during the period to 30 June 2018.
10. Related party transactions
There were no related party transactions during the period.
11. Transactions with the Manager
The Company has agreements with Aberdeen Fund Managers Limited
("AFML" or "the Manager") for the provision of investment management,
secretarial, accounting and administration and promotional
activities.
The management fee was calculated at an annual rate of 0.75%
of the net assets of the Company adding back bank debt, calculated
and paid monthly until 18 April 2018. With effect from 19 April
2018, the Company and the Manager agreed that the management
fee be calculated at an annual rate of 0.75% of the net assets
of the Company, calculated and paid monthly. During the period
GBP294,000 (30 June 2017 - GBP261,000; 31 December 2017 - GBP557,000)
of investment management fees were payable to the Manager,
with a balance of GBP41,000 (30 June 2017 - GBP45,000; 31 December
2017 - GBP52,000) being payable to AFML at the period end.
There were no commonly managed funds held in the portfolio
during the period to 30 June 2018 (30 June 2017 and 31 December
2017 - none). The management fee is chargeable 30% to revenue
and 70% to capital.
During the period expenses of GBP30,000 (30 June 2017 - GBP30,000;
31 December 2017 - GBP59,000) were payable to the Manager in
connection with the promotion of the Company. The balance outstanding
at the period end was GBP30,000 (30 June 2017 - GBP15,000;
31 December 2017 - GBP15,000).
12. Segmental information
The Company is engaged in a single segment of business, which
is to invest 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 on the Company as one segment.
13. Publication of non-statutory accounts
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 June 2018 and 30 June
2017 has not been audited.
The information for the year ended 31 December 2017 has been
extracted from the latest published audited financial statements
which have been filed with the Registrar of Companies. The
report of the auditors on those accounts contained no qualification
or statement under Section 498 (2), (3) or (4) of the Companies
Act 2006.
14. This Half Yearly Financial Report was approved by the Board
on 19 September 2018.
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
Investment Portfolio - Ordinary Shares
As at 30 June 2018
Market Total
value portfolio
Company Sector GBP'000 %
XP Power 3,316 4.1
A power solutions business that Electronic &
designs and manufactures power Electrical Equipment
convertors used by customers
to ensure their electronic equipment
can function both safely and
efficiently. With over 5,000
different products, XP Power
can provide a full value add
capability to its customers.
Dechra Pharmaceuticals 3,020 3.7
An international specialist veterinary Pharmaceuticals
pharmaceuticals business that & Biotechnology
manufactures and distributes
veterinary products in more than
50 countries around the world.
Recent acquisitions have enhanced
the pipeline of drugs as well
as granted access to new markets.
Victrex 2,929 3.6
The leading global manufacturer Chemicals
of PEEK polymer which is a high
performance thermoplastic. With
its high strength and performance
qualities it is used as an alternative
product to metal in a number
of different industries. Victrex's
dominant position is entrenched
through their reputation and
product quality as well as their
track record in commercialising
applications for PEEK.
Aveva Group 2,914 3.6
One of the world's leading engineering, Software & Computer
design and information management Services
software providers to the process,
plant and marine industries.
Aveva's world-leading technology
was originally developed and
spun out of Cambridge University
and today the business operates
in 46 countries around the world.
DiscoverIE Group 2,830 3.5
DiscoverIE Group is a supplier Support Services
of niche electronic products,
manufacturing customs designed
and built electronics to industrial
and medical companies across
Europe and South Africa.
Assura 2,724 3.3
Assura is a long-term investor Real Estate
and developer of primary care Investment Trusts
property, working with general
practitioners, health professionals
and National Health Services
to deliver patient care.
Euromoney Institutional Investor 2,617 3.2
International business-to-business Media
information company. Euromoney's
publications provide extensive
financial and business information
and are delivered largely in
digital format on a yearly subscription
basis which ensures a strong
stream of recurring revenues.
Smart Metering Systems 2,223 2.7
Smart Metering Systems is the Support Services
largest independent provider
of gas and electricity metering
assets in the UK. The company
is set to benefit from the growth
arising from a UK government
initiative mandating the installation
of a smart meter in every home
and small business across the
UK by 2020.
Chesnara 2,137 2.6
Chesnara is a holding company Life Insurance
engaged in the management of
life and pension books in the
UK, Sweden and the Netherlands.
The overriding strategy is to
deliver a reliable dividend stream
to shareholders funded from the
emergence of surplus cash from
their various life assurance
subsidiaries.
Morgan Sindall 2,071 2.5
Morgan Sindall operates a specialist Construction
construction group in the United & Materials
Kingdom and the Channel Islands.
The main activities include office
design, fitting out, refurbishment,
building contracting, property
investment and related specialist
services.
Ten Largest Equity Investments 26,781 32.8
Investment Portfolio - Other Equity Investments
as at 30 June 2018
Market Total
value portfolio
Company Sector GBP'000 %
Burford Capital Financial Services 2,006 2.5
Real Estate Investment
Workspace Group Trusts 1,960 2.4
Real Estate Investment
Unite Group Trusts 1,909 2.3
Close Brothers Financial Services 1,902 2.3
Genus Pharmaceuticals & Biotechnology 1,819 2.2
Telecom Plus Fixed Line Telecommunications 1,790 2.2
Real Estate Investment
Big Yellow Trusts 1,738 2.1
Abcam Pharmaceuticals & Biotechnology 1,734 2.1
Ultra Electronics Aerospace & Defence 1,734 2.1
RPC Group General Industrials 1,728 2.1
Twenty largest investments 45,101 55.1
Robert Walters Support Services 1,714 2.1
Manx Telecom Fixed Line Telecommunications 1,692 2.1
Electronic & Electrical
Oxford Instruments Equipment 1,640 2.0
Elementis Chemicals 1,628 2.0
Wilmington Media 1,624 2.0
Stock Spirits Group Beverages 1,608 2.0
Rathbone Brothers Financial Services 1,595 2.0
Household Goods & Home
Victoria Construction 1,564 1.9
Fisher (James) & Sons Industrial Transportation 1,540 1.9
Intermediate Capital
Group Financial Services 1,504 1.9
Thirty largest investments 61,210 75.0
Devro Food Producers 1,503 1.8
Barr (A.G.) Beverages 1,432 1.8
Household Goods & Home
Cairn Homes{A} Construction 1,420 1.8
BBA Aviation Industrial Transportation 1,390 1.7
Hiscox Non-life Insurance 1,342 1.6
Real Estate Investment
Savills & Services 1,227 1.5
Scandinavian Tobacco{A} Tobacco 1,211 1.5
Fuller Smith & Turner
'A' Travel & Leisure 936 1.1
Hostelworld Travel & Leisure 898 1.1
Hollywood Bowl Travel & Leisure 863 1.1
Forty largest investments 73,432 90.0
Real Estate Investment
Hansteen Trusts 732 0.9
Keller Group Construction & Materials 720 0.9
GIMA TT (A) Industrial Engineering 330 0.4
Total Equity Investments 75,214 92.2
{A} All investments are listed on the London Stock Exchange (sterling
based), except those marked, which are listed on overseas exchanges
based in sterling.
Investment Portfolio - Other Investments
As at 30 June 2018
Market Total
value portfolio
Company GBP'000 %
Convertible Preference Shares
Balfour Beatty Cum Conv 10.75% 972 1.2
Total Convertible Preference Shares 972 1.2
Corporate Bonds
Anglian Water 4.5% 2026 548 0.7
SSE 3.875% Var Perp GBP 505 0.6
HBOS Cap Funding 6.461% Var Perp 406 0.5
Wales & West Utilities Finance 6.75% 2036 272 0.3
Total Corporate Bonds 1,731 2.1
Preference Shares
Aviva 8.75% 1,405 1.7
General Accident 8.875% 1,357 1.7
Ecclesiastical Insurance 8.625% 912 1.1
Total Preference Shares 3,674 4.5
Total Other Investments 6,377 7.8
Total Investments 81,591 100.0
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR EAFNNFEDPEFF
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September 19, 2018 07:08 ET (11:08 GMT)
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