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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Murray Income Trust Plc | LSE:MUT | London | Ordinary Share | GB0006111123 | ORD 25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 8.00 | 0.94% | 863.00 | 861.00 | 865.00 | 863.00 | 857.00 | 861.00 | 111,742 | 16:35:08 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Investors, Nec | 82.21M | 73.49M | 0.6851 | 12.57 | 923.58M |
From Apr 2019 to Apr 2024
TIDMMUT
RNS Number : 0447F
Murray Income Trust PLC
15 February 2018
Murray Income Trust PLC
LEGAL ENTITY IDENTIFIER (LEI): 549300IRNFGVQIQHUI
Half-Yearly Report for the 6 months ended 31 December 2017
The Directors of Murray Income Trust PLC report the unaudited results for the six months ended 31 December 2017.
Financial Highlights
Hot Features
Premium
31 December 30 June % Change
2017 2017
Total assets {A} (GBP'000) 632,112 623,588 +1.4
Equity shareholders' funds
(GBP'000) 585,833 576,462 +1.6
Net asset value per Ordinary
share 874.1p 860.1p +1.6
Share price of Ordinary
share (mid-market) 797.0p 795.0p +0.3
Discount to net asset
value on Ordinary shares 8.8% 7.6%
Ongoing charges ratio
{B} 0.69% 0.72%
{A} Total assets as per the Condensed Statement
of Financial Position less current liabilities
(excluding prior charges such as bank loans).
{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 31 December 2017 is based on
forecast ongoing charges for the year ending
30 June 2018.
Performance (total return)
Six months Year ended
ended
31 December 30 June 2017
2017
Net asset value per Ordinary
share +4.0% +16.7%
Share price per Ordinary
share +2.8% +23.5%
FTSE All-Share Index +7.2% +18.1%
Financial Calendar
12 January 2018 First interim dividend (8.0p per share) paid for year ending 30 June 2018 February 2018 Half-Yearly Report posted to shareholders 29 March 2018 Second interim dividend (8.0p per share) payable for year ending 30 June 2018 29 June 2018 Third interim dividend (8.0p per share) payable for year ending 30 June 2018 September 2018 Announcement of Annual Results for year ending 30 June 2018 October 2018 Annual Report posted to shareholders 5 November 2018 Annual General Meeting in Glasgow 8 November 2018 Final dividend payable for year ending 30 June 2018
CHAIRMAN'S STATEMENT
Review of the Period
Our objective is to achieve a high and growing income combined with capital growth through investment in a portfolio principally of UK equities. At the time of writing our dividend yield stands at 4.4%, higher than both the FTSE All-Share Index's equivalent figure of 3.8% and the AIC sector's median of 3.9%.
Income continues to grow with the final dividend approved by shareholders at our Annual General Meeting in November marking our 44th consecutive year of dividend growth. In December we announced an increase in our three quarterly dividends from 7p to 8p. This increase should not be extrapolated into forecasting next year's final dividend. Its purpose was to provide a more even distribution over the year between the three interim dividends and the final dividend.
In total return terms, net asset value rose 4.0% over the six months ended 31 December 2017 and 11.7% over 2017 as a whole while the share price increased by 2.8% and 10.1%, respectively. The discount widened from 7.6% at 30 June 2017 to 8.8% at 31 December 2017.
But relative to our benchmark index, the FTSE All-Share Index, it is disappointing to report that the Company's net asset value per share ("NAV") has lagged behind, 4.0% versus 7.2% over six months, and 11.6% versus 13.1% over twelve months to 31 December 2017 (all figures in total return terms). The longer-term numbers are also disappointing in this regard and we are monitoring the situation closely with our Manager.
It is fair to say that the Manager's style was out of favour in 2017. The Manager's long-term focus on quality tends to lead to a portfolio which is underweight cyclical stocks. With the UK market up by 13.1% in 2017, driven in part by a strong rebound in cyclicals, there was certainly a strong headwind to performance. Charles Luke explains the portfolio performance over the six months in greater detail within the Manager's Portfolio Review.
As previously reported, we have negotiated a management fee reduction which took effect on 1 January 2018. The year ahead will see the completion of the merger between the investment teams of Aberdeen Asset Management PLC and Standard Life plc.
Dividends
Following shareholder approval at the Annual General Meeting on 6 November 2017, a final dividend per share of 11.75p (2016 - 11.25p) was paid on 9 November 2017 to shareholders on the register as at 29 September 2017. In relation to the year ending 30 June 2018, a first interim dividend of 8.0p per share was paid on 12 January 2018 to shareholders on the register at the close of business on 15 December 2017. A second interim dividend of 8.0p per share will be paid on 29 March 2018 to shareholders on the register at the close of business on 2 March 2018. A third interim dividend of 8.0p per share will be paid on 29 June 2018 to shareholders on the register at the close of business on 1 June 2018.
Gearing
On 9 November 2017, the Company announced that it had issued GBP40m of 10 year Senior Secured Fixed Rate Notes (the "Notes") at a coupon of 2.51% and entered into a new GBP20 million three-year unsecured multi-currency revolving credit loan facility agreement with Scotiabank Europe PLC (the "New Facility"). The proceeds from the Notes and the New Facility replaced the Company's previous GBP80m multicurrency loan facility agreement with The Royal Bank of Scotland PLC. Through the issue of the Notes, the Company has obtained fixed rate long dated Sterling-denominated financing at a price which the Board considers attractive.
The Board continues to believe that sensible use of modest financial gearing will enhance returns of both capital and income to shareholders over the longer term. Combined, these borrowing facilities of GBP60m represent just over 10% of net asset value. There has been no change to the Company's policy on gearing as set out on page 7 (and referred to in the Chairman's statement on page 5) of the Company's Annual Report for the year ended 30 June 2017.
Board
As previously announced, our Chairman Neil Honebon retired at the end of the Annual General Meeting in Glasgow on 6 November 2017 after serving three years as Chairman and twelve as a Director. We thank him for his wise counsel and his investment leadership and wish him well. Peter Tait joined the Board the following day to replace Neil. Peter is a career UK fund manager, mostly at the Nestlé UK Pension Fund and Nestlé Capital Management but also at Blackrock, Dunedin and Scottish Widows.
On 8 December 2017 we announced that Mike Balfour was resigning from the Board. This was unplanned: as well as being a Director of Murray Income Trust PLC, Mike is also a director of Standard Life Investments Property Income Trust Limited. After completion was announced, on 14 August 2017, of the merger between Aberdeen Asset Management PLC and Standard Life plc, our corporate brokers, Canaccord, advised that Mike would no longer be deemed fully independent by the UKLA's Listing Rules: a director of more than one investment trust managed by the same management company is not necessarily considered independent. Mike graciously stepped down with our thanks and best wishes and a search is underway to find a replacement.
Share Capital
The Company's share capital was unchanged over the period, comprising 67,022,458 Ordinary shares, with voting rights, and 1,571,000 Ordinary shares held in treasury, as at 31 December 2017. Between 1 January 2018 and the date of approval of this Report, the Company bought into treasury 40,000 Ordinary shares resulting in 66,982,458 shares with voting rights and a further 1,611,000 shares in treasury.
Principal Risks and Uncertainties
The Board regularly reviews the principal risks and uncertainties which it has identified, together with the delegated controls it has established to manage the risks and address the uncertainties, and these are set out in detail on pages 8 and 9 of the Company's Annual Report for the year ended 30 June 2017 ("Annual Report 2017") which is available on the Company's website. The Annual Report 2017 also contains, in note 16 to the Financial Statements, an explanation of other risks relating to the Company's investment activities, specifically market price, interest rate, liquidity and credit risk, and a note of how these risks are managed.
Related Party Transactions
Any related party transactions during the period are disclosed in the Notes to the Financial Statements. There have been no related party transactions that have had a material effect on the financial position of the Company during the period.
Going Concern
The factors which have an impact on the Company's status as a going concern are set out in the Going Concern section of the Directors' Report on page 36 of the Company's Annual Report 2017. As at 31 December 2017, there had been no significant changes to these factors.
The Board has set limits for borrowing and regularly reviews the level of any gearing, cash flow projections and compliance with banking covenants. As at 31 December 2017, in addition to the GBP40m Notes, GBP6.4m of the Company's three-year GBP20m multi-currency revolving loan facility was drawn down.
The Directors are mindful of the principal risks and uncertainties disclosed above, and, having reviewed forecasts detailing revenue and liabilities, they believe that the Company has adequate financial resources to continue its operational existence for the foreseeable future. Accordingly, the Directors believe that it is appropriate to continue to adopt the going concern basis of accounting in preparing the Financial Statements.
Dividend Tax Allowance
Shareholders may be aware of changes to the taxation of dividends which are taking effect on 6 April 2018.
Outlook
After many years in which it was better to ignore politics completely when assessing market outlook, 2018 is probably going to be again dominated by Brexit, the survival of the UK government and President Trump. Views on all three seem to be highly polarised but there is a lot of room in between for economies and companies to continue to grow their earnings and dividends. At 31 December 2017, the Company's investment portfolio had a dividend yield of 3.7%. The average dividend cover of the portfolio companies was 1.6x, so that 3.7% dividend yield has considerable underpinning. The prospective price to earnings ratio, the most commonly used yardstick of valuation, was 17.4x, not cheap but neither is it at the top of its historic range. Some UK companies will struggle with Brexit but some have great opportunities and most will have plans to, and be able to, adapt. Quality companies with good management thrive on change. The opportunity is there for our investment manager's focus on quality to deliver outperformance.
Statement of Directors' Responsibilities
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 Financial Reporting Standard 104 (Interim Financial Reporting);
- the Half-Yearly 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); and
- the Half-Yearly 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 ended 31 December 2017 comprises the Half-Yearly Board Report, the Directors' Responsibility Statement and a condensed set of Financial Statements.
For and on behalf of the Board
N A H Rogan
Chairman
15 February 2018
MANAGER'S PORTFOLIO REVIEW
The portfolio underperformed the benchmark during the six months ended 31 December 2017 with the NAV per Ordinary share increasing by 4.0% compared to a rise in the FTSE All-Share of 7.2% (all figures calculated on a total return basis). This reflected a number of broad themes as well as one particular stock specific disappointment.
Firstly, cyclical sectors and in particular oil and mining companies performed strongly as commodity prices performed well and global growth prospects improved. Secondly, in contrast, companies with defensive growth characteristics such as pharmaceutical and tobacco companies underperformed as interest rates increased and inflation expectations rose over the period. The portfolio is generally comprised of companies that combine attractive dividend yields and/or those with good scope for dividend growth with a relatively high degree of income security. In addition, we are keen to ensure that the capital and income exposure is diversified across the portfolio and that the income contribution from any particular holding is relatively modest. The broad themes above and, in particular, the strong performance of the oil and mining sectors (where the portfolio is underweight) accounted for around half of the underperformance. Most of the remaining underperformance can be attributed to Provident Financial whose share price fell very sharply following a significant profit warning which resulted in the sale of the holding (the factors behind this are explained in more detail below).
We added five new holdings to the portfolio. The first was LondonMetric, a mid-cap property company mainly focused on distribution assets for retailers. The company benefits from the growth of internet retailing, a sticky customer base and an attractive dividend yield. The second purchase was Euromoney, which is a mid-cap business-to-business information company providing services to a range of sectors including asset management, banking and commodities. The company, which trades at a modest valuation compared to its peers, benefits from low capital intensity and has recently enhanced its dividend policy to increase the payout ratio. The next new holding was GIMA, an Italian-listed mid cap which came to the market during the period. The company produces manufacturing and packaging machines for the tobacco industry with a particularly strong niche in next generation products (including Philip Morris International's iQOS heat-not-burn technology), an area where we would expect to see significant growth. We also purchased a modest holding in Relx (the old Reed Elsevier). The company operates a variety of strong businesses with high barrier to entry and good growth potential. Although the dividend yield is relatively low, there should be good scope for growth over the longer term. Finally, we purchased a small holding in Rio Tinto. The mining company owns a number of very high quality, low cost deposits, particularly of iron ore and copper. Management is focused on enhancing returns and using capital in the most efficient manner. The company's balance sheet has been repaired and although the dividend policy has evolved from a progressive dividend to one that is more dependent on nearer term conditions, the shares currently offer a generous dividend yield.
We increased the exposure to a number of companies with attractive prospects including Assura, the property company focused on primary healthcare assets, Croda International, the specialty chemicals company, and Aveva, the software company which performed strongly after announcing it would combine its business with Schneider Electric's companion division during the period. Of note were a number of other strong share price performances. The continued success of its cloud offering benefited Microsoft. XP Power, which manufactures power converters, reported buoyant trading conditions which helped its share price to rise by more than 40% over the six month period. Finally, Novo Nordisk performed strongly helped by the success of its pipeline of diabetes-related medications.
We sold three holdings during the period. Firstly, Provident Financial, which followed the announcement of a significant deterioration in trading at the company's Home Collected Credit business, an investigation into Vanquis bank by the Financial Conduct Authority ("FCA"), the decision to cancel the company's dividend, and the removal of the company's Chief Executive. We were particularly disappointed and puzzled to discover that due to the FCA investigation the company had stopped selling its highly profitable 'Repayment Option Plan' in April 2016 but did not deem this worthy of public disclosure. Given the significant deterioration in the quality of the company and the breakdown in trust with the management we sold the shares. We also sold the holding in Pearson given the high level of uncertainty over future earnings in the key North American Higher Education division, likely profit erosion from the stake in Penguin Random House, coupled with the move to pay a lower than expected dividend. Finally, we sold the holding in Capita having become more cautious on a number of issues including the risk of further earnings shortfalls given the challenging environment, the need for further investment in the business, a weak balance sheet and the potential for a cut in the dividend. At the time of writing, Capita's shares had fallen over 50% in value since the Company's sale of the holding.
Despite optimism over their longer term growth potential, we reduced the weight in both GlaxoSmithKline and Inmarsat in recognition that the dividend risk for these two companies had increased. The assignment of call options also led to the marginal reductions of a number of holdings that had generally performed well including Microsoft, Linde, Sage and Prudential. The holdings in both Inmarsat and Ultra Electronics performed relatively poorly over the period, albeit the latter has since recovered a fair proportion of its losses. For Inmarsat, delays and the extra investment required in the company's aviation division have pressured earnings. Ultra Electronics issued a profits warning given mounting budgetary pressure for UK defence programmes and announced that its Chief Executive had stepped down.
As indicated previously, in order to increase and diversify the income available to the Company, we continued our judicious option-writing programme, selling both puts and calls on a variety of companies where we have sought to reduce or add to holdings at particular price levels.
Economic and Market Background
The UK equity market returned 7.2% on a total return basis over the 6 month period. This completed another very good year for the market with the index increasing by 13.1% and reaching a new peak (in capital terms) on the last trading day of the year for the second time in succession. Despite the UK economy likely ending 2017 at the bottom of the G7 GDP growth table, the market speculated on the benign global economic backdrop, the prospects for US tax reform and a relatively limited disjoint from Brexit. In particular, with the constituents of the UK market generating around 65% of their revenues overseas, positive developments in the global economy, and allied to this, stronger commodity prices, bolstered sentiment.
Over the 6 month period in question at a sector level, the more defensive areas of the market such as tobacco and pharmaceuticals underperformed while the mining and oil sectors outperformed. While the FTSE 100 Index performed strongly rising by 6.9%, it underperformed the Mid and Small Cap Indices which increased by 8.5% and 7.2% respectively.
Although the domestic economy has not suffered the sharp slowdown that many commentators expected following the Brexit vote, growth has been somewhat anaemic. The preliminary estimate of fourth quarter GDP suggested growth of 0.5% marginally ahead of the 0.4% reported for the third quarter. The Office for Budget Responsibility downgraded its forecasts for 2018 at the time of the otherwise generally uneventful Autumn Budget to 1.4%. Manufacturing activity has been robust, helped by the recent weakness of sterling and strong overseas demand. However, services and household consumption have been under greater pressure as inflation weighs down on real incomes. Furthermore, during November, for the first time in a decade the Monetary Policy Committee raised interest rates with the decision to increase rates by 25bps to 0.5% reached with a 7-2 majority. The committee explained that given the fall in unemployment there was a reduced level of slack in the economy and that the performance of the global economy had improved, although there remained considerable risks to the outlook, principally related to Brexit.
Overseas, macroeconomic data releases have continued to demonstrate a robust recovery in activity. Consensus forecasts suggest close to 4.0% global GDP growth in 2018 compared to a likely 3.6% in 2017. In the euro area, activity has continued to recover due to increased investment and household consumption with growth broad-based across countries. With significant slack in the euro area economies, inflation has yet to pick up. The European Commission's expectation of GDP growth of 2.1% for 2018 may well be too conservative. In the United States, the Fed raised rates in December for the third time in 2017 as the economy gained strength. Recent tax reforms are likely to provide a further boost to the economy during 2018 with the Fed forecasting 2.5% GDP growth for 2018. Emerging markets performed well during the second half of 2017 aided by the strength of the global economy, robust commodity prices and a benign US dollar. Consensus expectations suggest a further pick-up in growth to around 4.7% in 2018. Within this, China's GDP growth, having performed strongly in 2017, aided by credit growth and a loose fiscal policy, may slow down a little but is likely to remain at an impressive level above 6%.
Charles Luke
Aberdeen Asset Managers Limited
Investment Manager
15 February 2018
MURRAY INCOME TRUST PLC
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (unaudited)
Six months ended
31 December 2017
Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000
Gains on investments - 9,501 9,501
Currency gains/(losses) - 811 811
Income 2 9,449 - 9,449
Investment management
fees (730) (730) (1,460)
Administrative expenses (619) - (619)
_________ _________ _________
Net return before finance
costs and taxation 8,100 9,582 17,682
Finance costs (181) (181) (362)
_________ _________ _________
Net return before taxation 7,919 9,401 17,320
Taxation 4 (74) - (74)
_________ _________ _________
Net return after taxation 7,845 9,401 17,246
_________ _________ _________
Return per Ordinary
share (pence) 5 11.7 14.0 25.7
_________ _________ _________
The total column of the Condensed Statement of
Comprehensive Income is the profit and loss account
of the Company.
A Statement of Total Recognised Gains and Losses
has not been prepared as all gains or losses are
recognised in the Condensed Statement of Comprehensive
Income.
All revenue and capital items in the above statement
derive from continuing operations.
MURRAY INCOME TRUST PLC
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (unaudited) (Cont'd)
Six months ended
31 December 2016
Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000
Gains on investments - 39,631 39,631
Currency gains/(losses) - (2,196) (2,196)
Income 2 9,083 - 9,083
Investment management
fees (694) (694) (1,388)
Administrative expenses (567) - (567)
_________ _________ _________
Net return before finance
costs and taxation 7,822 36,741 44,563
Finance costs (122) (122) (244)
_________ _________ _________
Net return before taxation 7,700 36,619 44,319
Taxation 4 (85) - (85)
_________ _________ _________
Net return after taxation 7,615 36,619 44,234
_________ _________ _________
Return per Ordinary
share (pence) 5 11.3 54.6 65.9
_________ _________ _________
MURRAY INCOME TRUST PLC
CONDENSED STATEMENT OF FINANCIAL POSITION (unaudited)
As at As at
31 December 30 June
2017 2017
Notes GBP'000 GBP'000
Non-current assets
Investments at fair
value through profit
or loss 605,859 595,367
Current assets
Other debtors and receivables 2,299 3,301
Cash and short term
deposits 24,897 25,801
_________ _________
27,196 29,102
_________ _________
Creditors: amounts
falling due within
one year
Other payables (943) (881)
Bank loans 6 (6,401) (47,126)
_________ _________
(7,344) (48,007)
_________ _________
Net current assets/(liabilities) 19,852 (18,905)
_________ _________
Total assets less current
liabilities 625,711 576,462
Creditors: amounts
falling due after one
year
2.51% Senior Loan Notes 6 (39,878) -
_________ _________
Net assets 585,833 576,462
_________ _________
Share capital and reserves
Called-up share capital 17,148 17,148
Share premium account 24,020 24,020
Capital redemption
reserve 4,997 4,997
Capital reserve 7 514,344 504,943
Revenue reserve 25,324 25,354
_________ _________
Equity shareholders'
funds 585,833 576,462
_________ _________
Net asset value per
Ordinary share (pence) 8 874.1 860.1
_________ _________
MURRAY INCOME TRUST PLC
CONDENSED STATEMENT OF CHANGES IN EQUITY (unaudited)
Six months ended
31 December 2017
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
Balance at 1
July 2017 17,148 24,020 4,997 504,943 25,354 576,462
Return after
taxation - - - 9,401 7,845 17,246
Dividends paid - - - - (7,875) (7,875)
_______ _______ _______ _______ _______ _______
Balance at 31
December 2017 17,148 24,020 4,997 514,344 25,324 585,833
_______ _______ _______ _______ _______ _______
Six months ended
31 December 2016
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
Balance at 1
July 2016 17,148 24,020 4,997 440,595 28,276 515,036
Return after
taxation - - - 36,619 7,615 44,234
Buyback of Ordinary
shares for Treasury - - - (1,221) - (1,221)
Dividends paid - - - - (12,259) (12,259)
_______ _______ _______ _______ _______ _______
Balance at 31
December 2016 17,148 24,020 4,997 475,993 23,632 545,790
_______ _______ _______ _______ _______ _______
MURRAY INCOME TRUST PLC
CONDENSED STATEMENT OF CASH FLOWS (unaudited)
Six months Six months
ended ended
31 December 31 December
2017 2016
GBP'000 GBP'000
Net return before finance
costs and taxation 17,682 44,563
Increase in accrued expenses 207 452
Overseas withholding tax (97) 117
Dividend income (8,579) (8,120)
Dividends received 9,599 8,987
Interest income (10) (5)
Interest received 12 1
Interest paid (224) (217)
Gains on investments (9,501) (39,631)
Foreign exchange (gains)/losses
on loans (73) 2,162
Decrease in other debtors 3 4,687
Stock dividends included
in investment income (192) (1,107)
_______ _______
Net cash inflow from operating
activities 8,827 11,889
Investing activities
Purchases of investments (38,748) (44,484)
Sales of investments 37,590 44,424
_______ _______
Net cash outflow from investing
activities (1,158) (60)
Financing activities
Dividends paid (7,875) (12,259)
Buyback of Ordinary shares - (1,221)
Repayment of bank loans (40,652) -
Issue of Loan Notes 39,954 -
_______ _______
Net cash outflow from financing
activities (8,573) (13,480)
_______ _______
Decrease in cash (904) (1,651)
_______ _______
Analysis of changes in
cash during the period
Opening balance 25,801 10,270
Decrease in cash as above (904) (1,651)
_______ _______
Closing balance 24,897 8,619
_______ _______
Notes to the Financial Statements
1. Accounting policies
Basis of preparation
The condensed financial statements have been
prepared in accordance with Financial Reporting
Standard 104 (Interim Financial Reporting)
and with the Statement of Recommended Practice
for 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' issued
in November 2014 and updated in January 2017
with consequential amendments. They have
also been prepared on a going concern basis
and on the assumption that approval as an
investment trust will continue to be granted.
The interim financial statements have been
prepared using the same accounting policies
as the preceding annual financial statements.
Six months Six months
ended ended
31 December 31 December
2017 2016
2. Income GBP'000 GBP'000
Investment income
UK dividends 7,280 6,236
Overseas dividends 696 592
Property income dividends 411 185
Stock dividends 192 1,107
_______ _______
8,579 8,120
_______ _______
Other income
Deposit interest 10 5
Traded option premiums 860 958
_______ _______
870 963
_______ _______
Total income 9,449 9,083
_______ _______
3. Dividends
Dividends paid on Ordinary shares deducted
from the revenue reserve:
Six months Six months
ended ended
31 December 31 December
2017 2016
GBP'000 GBP'000
2016 third interim dividend
- 7.00p - 4,705
2016 final dividend -
11.25p - 7,554
2017 final dividend - 7,875 -
11.75p
_______ _______
7,875 12,259
_______ _______
A first interim dividend for 2018 of 8.00p
(2017 - 7.00p) was paid on 12 January 2018
to shareholders on the register on 15 December
2017. The ex-dividend date was 14 December
2017.
A second interim dividend for 2018 of 8.00p
(2017 - 7.00p) will be paid on 29 March 2018
to shareholders on the register on 2 March
2018. The ex-dividend date is 1 March 2018.
A third interim dividend for 2018 of 8.00p
(2017 - 7.00p) will be paid on 29 June 2018
to shareholders on the register on 1 June
2018. The ex-dividend date is 31 May 2018.
4. Taxation
The expense for taxation 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 30 June 2018 is an effective
rate of 19% (2017 - 19.75%).
During the period the Company suffered withholding
tax on overseas dividend income of GBP74,000
(2016 - GBP85,000).
Six months Six months
ended ended
31 December 31 December
2017 2016
5. Return per share p p
Revenue return 11.7 11.3
Capital return 14.0 54.6
_______ _______
Total return 25.7 65.9
_______ _______
The figures are based
on the following:
Six months Six months
ended ended
31 December 31 December
2017 2016
GBP'000 GBP'000
Revenue return 7,845 7,615
Capital return 9,401 36,619
_______ _______
Total return 17,246 44,234
_______ _______
Weighted average number
of Ordinary shares in
issue 67,022,458 67,101,132
__________ __________
6. Secured Loan Notes and bank loans
On 8 November 2017 the Company completed
the issue of GBP40,000,000 of 10 year Senior
Loan Notes at a fixed rate of 2.51%. Interest
is payable in half yearly instalments in
May and November and the Loan Notes are due
to be redeemed at par on 8 November 2027.
The Loan Notes are secured by a floating
charge over the whole of the assets of the
Company. The Company has complied with the
Note Purchase Agreement that the ratio of
net assets to gross borrowings will be greater
than 3.5:1 and that net assets will not be
less than GBP275,000,000.
The fair value of the Loan Notes as at 31
December 2017 was GBP40,314,000 (2016 - N/A),
the value being calculated by aggregating
the expected future cash flows discounted
at a rate comprising the borrower's margin
plus a market rate applicable to a loan over
a similar time period.
On 8 November 2017, the Company entered into
a new GBP20,000,000, 3 year unsecured multi-currency
revolving credit facility agreement with
Scotiabank Europe PLC. This replaced the
previous facility with The Royal Bank of
Scotland PLC. As at 31 December 2017 the
Company had drawn down the following amounts
from the facility:
- Swiss Franc 2,400,000 at an all-in rate
of 0.85%;
- Euro 2,000,000 at an all-in rate of 0.85%;
- Swedish Krona 17,150,000 at an all-in rate
of 0.85%;
- US Dollar 1,700,000 at an all-in rate of
2.25688%.
7. Capital reserve
The capital reserve reflected in the Condensed
Statement of Financial Position at 31 December
2017 includes gains of GBP213,433,000 (30
June 2017 - GBP191,156,000) which relate
to the revaluation of investments held at
the reporting date.
As at As at
8. Net asset value 31 December 30 June
2017 2017
Attributable net assets
(GBP'000) 585,833 576,462
Number of Ordinary shares
in issue 67,022,458 67,022,458
Net asset value per
Ordinary share (p) 874.1 860.1
9. Transaction costs
During the period, expenses were incurred
in acquiring or disposing of investments
classified as fair value through profit or
loss. These have been expensed through capital
and are included within gains on investments
in the Condensed Statement of Comprehensive
Income. The total costs were as follows:
Six months Six months
ended ended
31 December 31 December
2017 2016
GBP'000 GBP'000
Purchases 171 208
Sales 15 33
_______ _______
186 241
_______ _______
10. Fair value hierarchy
FRS 102 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: unadjusted quoted prices in an active
market for identical assets or liabilities
that the entity can access at the measurement
date;
Level 2: inputs other than quoted prices
included within Level 1 that are observable
(ie developed using market data) for the
asset or liability, either directly or indirectly;
and
Level 3: inputs are unobservable (ie for
which market data is unavailable) for the
asset or liability.
The financial assets and liabilities measured
at fair value in the Condensed Statement
of Financial Position are grouped into the
fair value hierarchy at the reporting date
as follows:
Level Level Level Total
1 2 3
As at 31 December Note GBP'000 GBP'000 GBP'000 GBP'000
2017
Financial assets
at fair value through
profit or loss
Quoted equities a) 605,859 - - 605,859
Financial liabilities
at fair value through
profit or loss
Derivatives b) (168) (8) - (176)
_______ _______ _______ _______
Net fair value 605,691 (8) - 605,683
_______ _______ _______ _______
Level Level Level Total
1 2 3
As at 30 June 2017 Note GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
at fair value through
profit or loss
Quoted equities a) 595,367 - - 595,367
_______ _______ _______ _______
Net fair value 595,367 - - 595,367
_______ _______ _______ _______
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) 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 and therefore has been included
in Fair Value Level 1.
The fair value of the Company's investments
in Over the Counter Options (where the
underlying equities are also held) has
been determined using observable market
inputs other than quoted prices of the
underlying equities (which are included
within Fair Value level 1) and therefore
determined as Fair Value Level 2.
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 services.
The management fee for the six months ended
31 December 2017 is calculated, on a monthly
basis, at 0.55% on the first GBP400 million,
0.45% on the next GBP150 million and 0.25%
on amounts over GBP550 million per annum
of the net assets of the Company, with debt
at par and excluding commonly managed funds.
The management fee is chargeable 50% to revenue
and 50% to capital. During the period GBP1,460,000
(31 December 2016 - GBP1,388,000) of investment
management fees were earned by the Manager,
with a balance of GBP245,000 (31 December
2016 - GBP461,000) being payable to AFML
at the period end. There was one commonly
managed fund held in the portfolio during
the six months to 31 December 2017 (2016
- one).
With effect from 1 January 2018 the management
fee will be calculated, on a monthly basis,
at 0.55% on the first GBP350 million, 0.45%
on the next GBP100 million and 0.25% on amounts
over GBP450 million per annum of the net
assets of the Company, with debt at par and
excluding commonly managed funds.
No fees are charged in the case of investment
managed or advised by the Standard Life Aberdeen
PLC group. The management agreement may be
terminated by either party on the expiry
of three months written notice. On termination
the Manager would be entitled to receive
fees which would otherwise have been due
up to that date.
The promotional activities fee is based on
a current annual amount of GBP480,000, payable
quarterly in arrears. During the period GBP240,000
(31 December 2016 - GBP240,000) of fees were
due, with a balance of GBP120,000 (31 December
2016 - GBP120,000) being payable to AFML
at the period end.
The secretarial activities fee is based on
a current annual amount of GBP90,000, payable
quarterly in arrears. During the period GBP45,000
(31 December 2016 - GBP45,000) of fees were
due, with a balance of GBP23,000 (31 December
2016 - GBP23,000) being payable to AFML at
the period end.
12. Segmental Information
The Company is engaged in a single segment
of business, which is to invest in equity
securities. 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. Alternative performance measures
Total return is considered to be an alternative
performance measure. NAV total return involves
reinvesting the same net dividend in the
NAV of the Company on the date to which that
dividend was earned. Share price total return
involves reinvesting the net dividend in
the month that the share price goes ex-dividend.
The tables below provide information relating
to the NAVs and share prices of the Company
on the dividend reinvestment dates during
the six months ended 31 December 2017 and
the year ended 30 June 2017.
Dividend Share
Six months ended 31 December rate NAV price
2017
30 June 2017 N/A 860.10p 795.00p
28 September 2017 11.75p 834.99p 764.00p
14 December 2017 8.00p 838.81p 771.00p
31 December 2017 N/A 874.08p 797.00p
Total return 4.0% 2.8%
Dividend Share
Year ended 30 June 2017 rate NAV price
30 June 2016 N/A 766.51p 672.00p
29 September 2016 11.25p 795.50p 728.00p
15 December 2016 7.00p 790.36p 723.00p
2 March 2017 7.00p 836.59p 769.00p
1 June 2017 7.00p 891.24p 811.00p
30 June 2017 N/A 860.10p 795.00p
Total return 16.7% 23.5%
14. The financial information in this Report
does not comprise statutory accounts within
the meaning of Section 434 - 436 of the Companies
Act 2006. The financial information for the
year ended 30 June 2017 has been extracted
from published accounts that have been delivered
to the Registrar of Companies and on which
the report of the auditors was unqualified
and contained no statement under Section
498 (2), (3) or (4) of the Companies Act
2006. The interim financial statements have
been prepared using the same accounting policies
as contained within the preceding annual
financial statements.
15. This Half-Yearly Financial Report was approved
by the Board on 15 February 2018.
INVESTMENT PORTFOLIO - AS AT 31 DECEMBER 2017
Valuation Total
assets
Investment Sector GBP'000 %
Unilever Personal Care 27,979 4.4
British American
Tobacco Tobacco 26,696 4.2
Pharmaceuticals
AstraZeneca & Biotechnology 25,349 4.0
Prudential Life Assurance 24,486 3.9
HSBC Holdings Banks 22,436 3.6
Royal Dutch Shell Oil & Gas Producers 21,335 3.4
BP Oil & Gas Producers 20,963 3.3
Pharmaceuticals
Roche Holdings & Biotechnology 20,131 3.2
Vodafone Mobile Telecommunications 19,040 3.0
Aberforth Smaller Equity Investment
Companies Trust Instruments 18,962 3.0
Top ten investments 227,377 36.0
Pharmaceuticals
GlaxoSmithKline & Biotechnology 18,489 2.9
BHP Billiton Mining 17,996 2.9
Compass Group Travel & Leisure 17,357 2.8
BBA Aviation Industrial Transportation 17,100 2.7
Software & Computer
Microsoft Services 16,596 2.6
Nordea Bank Banks 16,202 2.6
Imperial Brands Tobacco 15,450 2.4
Diageo Beverages 15,244 2.4
Software & Computer
Sage Group Services 15,226 2.4
Pharmaceuticals
Novo-Nordisk & Biotechnology 14,221 2.2
Top twenty investments 391,258 61.9
Hiscox Non-life Assurance 13,776 2.2
Close Brothers Financial Services 12,641 2.0
Rotork Industrial Engineering 10,940 1.7
Software & Computer
Aveva Services 10,258 1.6
Schroder Financial Services 9,831 1.6
Standard Chartered Banks 9,560 1.5
Rolls Royce Aerospace & Defence 9,465 1.5
Real Estate Investment
Assura Trusts 9,378 1.5
Essentra Support Services 9,182 1.5
Nestlé Food Producers 7,853 1.2
Top thirty investments 494,142 78.2
Croda Chemicals 7,432 1.2
Real Estate Investment
Big Yellow Group Trusts 7,191 1.1
Oil Equipment &
John Wood Group Services 7,079 1.1
Real Estate Investment
LondonMetric Property Trusts 6,456 1.0
Ultra Electronics Aerospace & Defence 6,433 1.0
Scandinavian Tobacco Tobacco 6,431 1.0
Associated British
Foods Food Producers 6,260 1.0
Inmarsat Mobile Telecommunications 6,002 1.0
Electronic & Electrical
XP Power Equipment 5,865 0.9
Euromoney International
Investor Media 5,741 0.9
Top forty investments 559,032 88.4
Weir Group Industrial Engineering 5,624 0.9
Svenska Handelsbanken Banks 5,369 0.8
GIMA TT Industrial Engineering 5,155 0.8
Rio Tinto Mining 5,026 0.8
National Grid Gas, Water & Multi-utilities 4,913 0.8
Dunedin Smaller Companies Equity Investment
Investment Trust Instruments 4,848 0.8
Real Estate Investment
Workspace Group Trusts 3,988 0.6
Real Estate Investment
Hansteen Trusts 3,824 0.6
Relx Media 3,061 0.5
Manx Telecom Fixed Line Telecommunications 2,792 0.4
Linde Chemicals 2,227 0.4
Total investments 605,859 95.8
Net current assets{A} 26,253 4.2
Total assets 632,112 100.0
{A} Excludes bank
loan of GBP6,401,000
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGUWCPUPRGCA
(END) Dow Jones Newswires
February 15, 2018 10:00 ET (15:00 GMT)
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