abrdn Equity Income - Half-year Report
14/05/2024 07:00
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RNS Number : 2424O abrdn Equity Income Trust plc 14 May 2024
abrdn Equity Income Trust plc
Half Yearly Report 31 March 2024
Equity income using an index-agnostic approach focusing on our best ideas from
the full UK market cap spectrum
Performance Highlights
Investment Objective
The investment objective of the Company is to provide Shareholders with an
above average income from their equity investment, while also providing real
growth in capital and income.
Net asset value total return per Ordinary share(A) Share price total return per Ordinary share(A)
Six months ended 31 March 2024 Six months ended 31 March 2024
+1.6% -8.2%
Year ended 30 September 2023 +1.8% Year ended 30 September 2023 +11.4%
Revenue return per Ordinary share Discount to net asset value(A)
Six months ended 31 March 2024 As at 31 March 2024
9.05p 10.0%
Six months ended 31 March 2023 8.60p As at 30 September 2023 0.2%
Dividend yield(A) Ongoing charges ratio(A)
As at 31 March 2024 Forecast for year ending 30 September 2024
8.2% 0.95%
As at 30 September 2023 7.3% Year ended 30 September 2023 0.94%
(A) Considered to be an Alternative Performance Measure.
Investment Portfolio by Sector as at 31 March 2024
Financials 36.4
Energy 16.4
Industrials 10.8
Basic Materials 9.4
Utilities 7.8
Consumer Staples 7.5
Real Estate 6.3
Consumer Discretionary 3.0
Telecommunications 1.6
Health Care 0.8
Financial Calendar, Dividends and Highlights
Expected payment dates of interim dividends for the remainder of the financial 27 June 2024
year to 30 September 2024
26 September 2024
9 January 2025
Financial year end 30 September 2024
Expected announcement of results for year ending December 2024
30 September 2024
Annual General Meeting (London) February 2025
Financial Highlights
Capital return 31 March 2024 30 September 2023 % change
Total assets(A) (m) £168.0 £170.8 -1.6%
Equity Shareholders' funds (m) £147.1 £149.9 -1.9%
Net asset value per Ordinary share 307.81p 314.55p -2.1%
Market capitalisation (m) £132.4 £149.6 -11.5%
Share price per Ordinary share 277.0p 314.0p -11.8%
Discount of Ordinary share price to net asset value(B) 10.0% 0.2%
FTSE All-Share Index 4,338.05 4,127.24 +5.1%
Revenue return per Ordinary share(C) 9.05p 8.60p +5.2%
Gearing - net(B) 12.5% 11.3%
Ongoing charges ratio(BD) 0.95% 0.94%
(A) Defined as total assets per the Statement of Financial Position less
current liabilities (before deduction of bank loans).
(B) Considered to be an Alternative Performance Measure.
(C) Figures relate to the six month periods ended 31 March 2024 and 31 March
2023.
(D) The ongoing charges ratio for the current year includes a forecast of
costs and net assets for the six months to 30 September 2024.
Chair's Statement
"Company earnings remain solid across the majority of our holdings, supporting
confidence in the dependable nature of the dividend and income and capital
growth during 2024"
Sarika Patel, Chair
Performance
In the six months ended 31 March 2024, the Company delivered an NAV total
return of 1.6% compared to the total return of the FTSE All-Share Index of
6.9%. Over the period, the share price total return was -8.2%. As an asset
class, UK equities struggled to keep up with other major equity markets,
notably US equities. Whilst performance has been disappointing, the portfolio
continues to deliver a dependable income and the Investment Manager has
re-focused current positioning in the portfolio to stocks where he sees the
potential for a combination of dividend yield, dividend growth and valuation
re-rating. The Investment Manager's Review provides a more detailed
explanation of the drivers of this performance.
Revenue
Total income for the six months ended 31 March 2024 increased by 13.9% to
£5.4 million, compared to £4.7 million for the same period last year.
Management fees decreased by 21.9% compared to the same time last year. This
was in part attributable to the reduction in the management fee to a flat fee
of 0.55% per annum on net assets which the Board negotiated with the Manager
and took effect on 1 October 2023 at the beginning of the period.
Administrative expenses were largely unchanged, meaning that overall costs
charged to revenue were down 9.4% at £368k compared to £406k in 2023. The
tax charge, which increased significantly from £57k last year to £447k in
this reporting period, reflects an increase in withholding tax on overseas
dividends, primarily in relation to South African-listed Thungela Resources.
After interest costs and tax, net earnings increased by 6% to £4.3 million
with revenue per share of 9.05 pence compared to 8.60 pence in 2023 for the
same period. Typically, the Company earns between 30% and 40% of its total
income for the year in the first six months and this year we are in the top
half of that range. As a result, given the outlook for the balance of the
financial year, the Board expects that the full year earnings will be
sufficient to cover the proposed dividend.
Dividends
The Board declared its plans for the dividend for the current financial year
in last year's annual report and the proposed schedule is unchanged at this
time. The Company currently intends to pay three interim dividends for the
current year of 5.70 pence per share. The first interim dividend was paid to
Shareholders on 28 March 2024.
The Board is declaring that the second interim dividend of 5.70 pence per
share will be paid on 27 June 2024 to shareholders on the register on 24 May
2024 with an associated ex-dividend date of 23 May 2024. The fourth interim
dividend will be determined towards the end of the Company's financial year.
The Board's current expectation remains for a fourth interim dividend of at
least 5.80 pence per share, making a total payment for the year of a minimum
of 22.90 pence per share.
Based on the share price of 277.0p at 31 March 2024, this puts the Company on
a dividend yield of 8.3%, amongst the highest of any investment trust invested
in equities.
Gearing
At 31 March 2024, £21 million of the £30 million facility provided by the
Royal Bank of Scotland International was drawn down and net gearing, allowing
for cash held, amounted to 12.5% of net assets which compared to 11.3% at the
Company's 30 September 2023 year end. The borrowing facility is in the form of
a revolving credit facility which in aggregate cost 6.5% per annum at the end
of the period. Given market volatility the Board carefully monitors the
leverage.
Discount / Share Buybacks
The underperformance of the share price relative to the NAV resulted in a
widening of the discount, which ended the period at 10.0%. The Board
constantly monitors the level of the share price discount to NAV and the
Company buys back shares when market conditions suggest that this may reduce
discount volatility and the discount is considered wide over a period of time
in absolute and relative terms. Discounts have widened across the whole
investment trust sector over the last couple of years and in October 2023 the
average of all investment trusts reached the widest level since the Global
Financial Crisis in 2008. It is encouraging to note that the wider level of
the Company's discount has not been sustained and since the period end the
discount has narrowed steadily with the shares currently trading at around a
6% discount to NAV, as at the date of this Report.
There have been no changes to the Company's share capital structure during the
six months under review other than the sale from treasury of 135,000 shares at
a premium to the prevailing net asset value per share. Accordingly, as at 31
March 2024, there were 47,781,522 Ordinary 25p shares in issue with voting
rights and an additional 1,397,245 shares held in treasury.
Outlook
The geopolitical and macroeconomic backdrop has led to a period of volatile
performance for UK equities. Although expectations are growing for an interest
rate cut in June, we expect any decreases to be slower than analysts
originally forecast. Against this backdrop, the Investment Manager remains
focused on companies that have the ability to generate growth and strong cash
flows which can then be used to pay sustainable dividends.
Since the beginning of 2024 there has been significant press commentary
highlighting how undervalued the UK is relative to other markets and, within
the UK, how mid- and small-cap companies are undervalued relative to
large-caps. The Company's index-agnostic investment approach, coupled with the
manager's focus on valuation, means that the portfolio is well positioned to
benefit from any resurgent interest in the UK equity market, either via
increased investor allocations or merger activity. Since February, three of
our holdings have received bid approaches at substantial premiums to the then
existing share prices, underlining the fact that the UK's low valuations are
being noticed overseas.
Over time, dividends have tended to represent a high proportion of total
return from UK equities. Income stocks have been out of favour in recent years
as investors have favoured growth. This remained true during the period as a
whole, although the Investment Manager observed a pronounced shift towards
value stocks towards the end of the period, which coincided with a recovery in
our relative performance.
Having weathered recent crises, our Investment Manager believes that our
holdings have demonstrated a level of resilience not reflected in their
valuations. This implies low expectations, which provides the potential for
share prices to respond favourably to further evidence of solid cash flows and
dividends in the months ahead. The portfolio is well diversified, providing a
range of earnings drivers and limiting the dependence on an economic recovery.
Company earnings remain solid across the majority of our holdings, supporting
confidence in the dependable nature of the dividend and income and capital
growth during 2024.
Sarika Patel
Chair
13 May 2024
Interim Management Report and Directors' Responsibility Statement
Principal Risks and Uncertainties
The Board has an ongoing process for identifying, evaluating and managing the
principal and emerging risks and uncertainties of the Company and has carried
out a robust review. The process is regularly reviewed by the Board. Most of
the Company's principal risks and uncertainties are market related and are no
different from those of other investment trusts that invest primarily in the
UK listed market. These are set out on pages 19 to 21 within the Annual Report
for the year ended 30 September 2023 (the "2023 Annual Report) and comprise
the following risk categories:
· Strategy;
· Investment Performance;
· Exogenous risks such as health, social, financial, economic and
geopolitical;
· Operational Risk;
· Governance Risk;
· Discount / Premium to NAV;
· Financial obligations; and
· Legal and Regulatory Risks.
In addition to these risks, the Board is conscious of the impact of inflation
and higher interest rates on financial markets. The Board also monitors the
potential impact of the heightened geopolitical risks and potential supply
chain issues caused by the conflicts in Ukraine and the Middle East. The
Company has made enquiries of its Manager and third party service providers in
relation to continued compliance with sanctions measures enacted by the UK in
response to Russia's invasion of Ukraine.
The Board is also very conscious of the risks emerging from increasing
Environmental, Social and Governance ("ESG") challenges together with climate
change and continues to monitor, through its Investment Manager, the potential
risk that investee companies may fail to keep pace with the rates of ESG and
climate change adaptation required.
In all other respects, the Company's principal risks and uncertainties have
not changed materially since the date of the 2023 Annual Report.
Going Concern
In accordance with the FRC's Guidance on Risk Management, Internal Control and
Related Financial and Business Reporting, the Directors have undertaken a
rigorous review of the Company's ability to continue as a going concern.
The Company's assets consist substantially of equity shares in companies
listed on recognised stock exchanges and in most circumstances are realisable
within a short timescale. The Company has adequate resources to continue in
operational existence for the foreseeable future and the ability to meet all
its liabilities and ongoing expenses from its assets.
The Directors are mindful of the principal and emerging risks and
uncertainties disclosed above, and review on a regular basis forecasts
detailing revenue and liabilities and the Company's operational expenses.
Having reviewed these matters, the Directors believe that the Company has
adequate financial resources to continue its operational existence for the
foreseeable future and for at least 12 months from the date of this Half
Yearly Report. Accordingly, they continue to adopt the going concern basis in
preparing the Half Yearly Report.
Related Party Transactions
There have been no material changes to the related party transactions
described in the 2023 Annual Report.
Responsibility Statement of the Directors in respect of the Half-Yearly Financial Report
The Disclosure Guidance and Transparency Rules require the Directors to
confirm their responsibilities in relation to the preparation and publication
of the Interim Management Report and Financial Statements.
The Directors confirm that to the best of their knowledge:
· The condensed set of financial statements contained within the Half
Yearly Financial Report has been prepared in accordance with FRS 104 Interim
Financial Reporting and gives a true and fair view of the assets, liabilities,
financial position and return of the Company for the period ended 31 March
2024.
· The Interim Management Report, together with the Chair's Statement and
Investment Manager's Report, includes a fair review of the information
required by:
a) DTR 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 year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months of
the financial year and that have materially affected the financial position or
performance 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 was approved by the Board and the above
Directors' Responsibility Statement was signed on its behalf by the Chair.
For abrdn Equity Income Trust plc
Sarika Patel
Chair
13 May 2024
Our Strategy
Business Model
The Company is an investment trust with a premium listing on the London Stock
Exchange.
Investment Objective
The Company's objective is to provide shareholders with an above average
income from their equity investment, while also providing real growth in
capital and income.
Investment Policy
The Directors set the investment policy, which is to invest in a diversified
portfolio consisting mainly of quoted UK equities which will normally comprise
between 50 and 70 individual equity holdings.
In order to reduce risk in the Company without compromising flexibility:
a) no holding within the portfolio should exceed 10% of total
assets at the time of acquisition; and
b) the top ten holdings within the portfolio will not exceed 50%
of net assets.
The Company may invest in convertible preference shares, convertible loan
stocks, gilts and corporate bonds.
The Directors have set the gearing policy within which the portfolio is
managed. The parameters are that the portfolio should operate between holding
5% net cash and 15% net gearing. The Directors have delegated responsibility
to the Investment Manager for the operation of the gearing level within the
above parameters.
Delivering the Investment Objective
The Board delegates investment management to abrdn plc ("abrdn"). The team
within abrdn managing the Company's portfolio of investments has been headed
up by Thomas Moore since 2011.
Our Strategy
The portfolio is invested on an index-agnostic basis. The process is based on
a bottom-up stock-picking approach where sector allocations are a function of
the sum of the stock selection decisions, constrained only by appropriate risk
control parameters. The aim is to apply the "Focus on Change" process by
evaluating changing corporate situations and identifying insights that are not
fully recognised by the market.
Idea Generation and Research
The vast majority of the investment insights are generated from information
and analysis from one-on-one company meetings. Collectively, more than 6,000
company meetings are conducted annually by abrdn. These meetings are used to
ascertain the company's own views and expectations of its future prospects and
the markets in which it operates. Through actively questioning the senior
management and key decision makers of companies, the portfolio managers and
analysts look to uncover the key changes affecting the business and the
materiality of their impact on company fundamentals within the targeted
investment time horizon.
ESG considerations are at the heart of this engagement. Understanding a
company's attitudes towards ESG issues helps to mitigate risks and actively
enhance returns. As part of the company research, analysts evaluate the
ownership structures, governance and management quality of the companies.
Potential environmental and social risks that these companies may face are
also assessed. The Investment Manager employs dedicated ESG specialists who
sit within each regional investment team, providing industry-leading expertise
and insight at the company level. These specialists also mediate the insights
of the central team to the stock analysts, as well as interpret and
contextualise sector and company insights. The central ESG team provides
thought leadership, thematic and global sector insights, as well as
event-driven research.
Investment Process in Practice
The index-agnostic approach allows the weightings of holdings to reflect the
conviction levels of the investment team, based on an assessment of the
management team, the strategy, the prospects and the valuation metrics. The
Focus on Change process recognises that some of the best investment
opportunities come from under-researched parts of the market, where the
breadth and depth of the analyst coverage that the Portfolio Manager can
access provides the scope to identify a range of investment opportunities.
The consequence of this is that the Company's portfolio often looks very
different from other investment vehicles which aim to provide their investors
with access to UK equity income. This is because the process focuses on
conviction levels rather than index weightings. This means that the Company
may provide a complementary portfolio to the existing portfolios of investors
who prefer to make their own decisions and manage their ISAs, SIPPs and
personal dealing accounts themselves. At 31 March 2024 48% (30 September 2023:
47%) of the Company's portfolio is invested in companies outside the FTSE-100
Index, whereas the constituents of the FTSE-100 Index account for 84% of the
total value of the FTSE All-Share Index.
The index-agnostic approach, and Focus on Change process, further
differentiates the portfolio because it allows the Portfolio Manager to take a
view at a thematic level, concentrate the portfolio's holdings in certain
areas and avoid others completely. The effect of this approach is that the
weightings of the portfolio can be expected to differ significantly from that
of any index, and the returns generated by the portfolio may reflect this
divergence, particularly in the short term.
Investment Manager's Review
Market Review
UK equities advanced over the six months to 31 March 2024 as investors
expressed relief over the receding risk of a hard landing for the economy, as
falling inflation raised hopes of interest rate cuts later in the year.
The start of the period was characterised by nervousness over the resilience
of the global economy against the backdrop of elevated interest rates and
geopolitical tensions. UK consumer spending remained subdued throughout the
period, reflecting cost of living concerns after a prolonged period of high
inflation. GDP data for the final quarter of 2023 confirmed a second
consecutive quarterly contraction in output, signalling that the UK fell into
a mild technical recession in the second half of the year. The market brushed
off this news, focusing instead on the reduction in inflation from 6.7% in
September 2023 to 3.2% in March 2024, at the same time as a robust jobs market
supported UK wage growth running ahead of inflation. This raised the prospect
of accelerating GDP growth later in the year.
Elsewhere, the strength of the US economy continued to surprise investors,
with the US Federal Reserve providing a further impetus to sentiment by
signalling a change in monetary policy in November 2023. This helped to
persuade investors that a hard landing for the US economy could be avoided.
The success of the US economy was in sharp contrast to China which was held
back by an ongoing slump in the real estate sector. Geopolitics remained
febrile with investors' nerves tested by tension in the Middle East and the
ongoing conflict in Ukraine.
Towards the end of the period, rate cut expectations were pared back,
especially in the US where inflation data remained sticky, leading to higher
Treasury yields. Around the world, growth stocks continued to outperform value
stocks, while cyclical stocks outperformed defensive stocks. The US equity
market continued to outperform that of the UK, helped by the heavy weighting
in Technology stocks at a time of intense interest in Artificial Intelligence.
European equity markets benefited from their heavy weightings in Industrials,
Technology and Healthcare stocks. Late in the period, the UK equity market
gained some support from a reversal in commodity prices following more
encouraging industrial data from China, while oil prices moved higher on
concerns over the potential escalation of conflict in the Middle East. The
domestically focused FTSE-250 Index was supported by hopes of imminent rate
cuts, outperforming the FTSE-100 Index during the six months, although its
outperformance tailed off towards the end of the period as the prospect of
early interest rate cuts receded.
Revenue Account
Total income generated by the portfolio in the period under review increased
by over £650,000 or 13.9% to £5.4 million. We remain confident that the
second half of the year will generate more than 60% of the total income for
the period. This is the experience of the last 10 years to differing degrees
and is as a result of many of the holdings declaring their final dividend for
their previous financial year after our period end.
The contribution from special dividends remained low at 3.7% of the total cash
dividend income. We note that share buybacks, rather than special dividends,
remain the preferred method of distributing surplus capital. This partly
reflects the view amongst management teams that unusually low valuations make
these buybacks particularly accretive to earnings. We note that 19 of our
holdings, representing 45% of the portfolio, have undertaken a share buyback
so far during the current financial year.
Net revenue earnings for the six month period were £4.3 million, or 6.0%
higher than last year's £4.1 million.
We calculate that the portfolio is expected to deliver a gross dividend yield,
before costs, of around 6.9% based on the income expected to be generated by
the portfolio over this financial year divided by the portfolio value at the
period end. While this is lower than it was at the end of the last financial
year it continues to represent a significant premium to the dividend yield of
the reference index of 3.8% as at 31 March 2024. Elevated interest rates are
unhelpful for our investment return as they reduce the gap between the rate we
pay for the bank facility and the dividend yield we earn on the portfolio,
although we note that money markets are now factoring in rate cuts in late
summer.
We continue to focus on identifying stocks that could help us deliver on the
yield aspect of our investment objective, while also providing dividend and
capital growth over time. The focus on portfolio income is consistent with our
investment process given the emphasis we place on finding companies whose cash
flow and dividend potential are not effectively priced in by the market.
We are aware of the challenges facing income investors, notably the preference
among management teams for share buybacks over special dividends, as well as
the prolonged period of geopolitical and economic uncertainty. Looking ahead,
we expect many UK stocks to be able to accelerate dividend growth once this
uncertainty starts to ease. This would help to reduce the concentration in
dividend payments among a handful of sectors that has resulted from the
unusual macro backdrop since Covid. Our index-agnostic approach allows us to
consider a wide range of stocks, across the UK market, with many different
drivers of earnings. We have worked hard during the period to seek out
companies with strong dividend prospects from a broad range of sectors,
helping to diversify the portfolio's income.
Portfolio Performance
The Company's net asset value ("NAV") total return was 1.6% for the period.
This was behind the total return of 6.9% for the Company's reference index.
Performance during the period was largely the result of stock-specific
drivers.
Within the Financials sector, Close Brothers fell on concerns over the risk of
sizeable customer redress following the announcement of an FCA review into
historic motor finance industry lending practices before 2021. Shortly after
this decision, the Company announced that it would waive the dividend,
reflecting its priority to build capital and so allay any market concerns over
capital adequacy in the event of a harsher than expected outcome from the
review. The shares subsequently retraced some of the losses, helped by results
that indicated solid trading in their Banking and Asset Management divisions.
Also in Financials, performance was hit by the holding in Vanquis which guided
to weaker than expected profits in 2024 due to the cost of processing a large
number of vexatious Financial Ombudsman Service claims, alongside the
financial impact of a restructuring programme.
In contrast, CMC Markets (see the Case Study following) surged on the
publication of a string of positive trading updates revealing higher than
expected operating income, as well as earnings upgrades from a cost management
programme. CMC is generating an increasing contribution from institutional
clients, suggesting that recent heavy investment in this area is beginning to
pay off. We added to our holding near the trough in the share price, seeing
this as an example of the potential to identify a growth business trading on
low valuation despite a well-invested platform and sector-leading technology.
Within the Energy sector, a backdrop of falling commodity prices for most of
the period was unhelpful for some of our holdings. Diversified Energy declined
as a collapse in the US natural gas price impacted cash flows, ultimately
leading to the decision to cut the dividend in order to increase the balance
sheet flexibility, enabling them to continue making accretive acquisitions,
while paying down debt. The stock subsequently rallied as investor confidence
in the balance sheet outlook improved. Thungela Resources declined in response
to falling thermal coal prices, although results revealed that it remains
highly cash generative, providing the management team with optionality on use
of capital and supporting the share price.
The return of M&A activity helped performance in DS Smith (see the Case
Study following) as the share price reacted positively to the announcement of
rival bids for the company from International Paper and Mondi. We had
identified DS Smith as an example of a business that was of far higher quality
than the valuation implied. DS Smith had struggled to close the gap with its
global paper and packaging peers, but this bid situation highlights the role
that can be played by M&A in correcting these valuation anomalies.
Finally, performance relative to the index was impacted by the strong
performance of lower yielding large cap growth stocks RELX, Rolls-Royce, 3i
and Experian, although this was partially offset by the weak performance of
defensive consumer stocks Unilever and Reckitt Benckiser.
Activity
During the period we intensified our focus on identifying investment
opportunities that can help to deliver on each aspect of our investment
objective. We seek individual stocks that can exhibit a combination of
dividend yield, dividend growth or valuation re-rating. Sometimes we find
stocks that have the potential to deliver all three of these attributes.
We see current market conditions as particularly conducive to finding such
stocks, given the long period of valuation de-rating experienced by many UK
companies, in particular small and mid-cap companies. It is unusual for the
mid-cap index to be trading at a similar yield to the large-cap index. As a
result, we see the current period as benign for our index-agnostic investment
approach, with a potential kicker to returns as improving investor sentiment
drives a re-rating in valuations, alongside dividend yield and growth. As a
reminder, a key feature of our investment process is the identification of
stocks that offer positive catalysts that can drive a valuation re-rating.
Current market conditions are therefore supportive in allowing us to identify
opportunities across a broad range of sectors, helping to diversify the
portfolio's income.
Notable examples of some of the largest purchases during the period include:
- Assura: We initiated a new holding in Assura, the primary
healthcare property group. We last owned this stock in the portfolio in 2021,
selling the stock at a large premium to its NAV, since which time the share
price slipped below its NAV as a result of higher interest rates.
Operationally the business remains strong, with evidence of attractive rental
growth and a pipeline of new developments.
- Sirius Real Estate: We bought a new holding in Sirius Real Estate,
the multi-let real estate business, taking part in a placing. We see potential
to use the funds to acquire attractively valued assets onto the existing
platform, driving up income.
- Energean: We built a new position in oil and gas business
Energean, which operates mainly in the Mediterranean where it is growing
production rapidly and building long-term gas contracts that insulate against
commodity price volatility. Rising geopolitical tension is increasing
awareness of the need for energy security, especially in Europe.
- M&G: We started a new holding in M&G which is using strong
cash generation from its life business to invest in new sources of growth
while paying a very attractive dividend. The high dividend yield implies that
the market is not efficiently pricing in further success in these growth
initiatives.
- Imperial Brands: We added to our existing position. We note that
since the arrival of a new management team, the business has consistently
delivered on the profits guidance they provide to the market, focusing on
getting the operational basics right. Earnings growth is underpinned by a
large share buyback, with over £600 million of stock bought back in the first
half of their current financial year, equating to nearly 8% of the shares in
issue on an annualised basis, in addition to the 8% dividend yield.
These purchases were funded by profit-taking in some larger cap stocks that
had rallied strongly on the improving macro outlook, as well as some mid or
small-cap holdings where our process has led us to conclude that the
investment thesis may have weakened due to a lack of imminent catalysts.
Notable examples of our largest sales include:
- Glencore/Shell: We moderated the position size, in both cases
managing the trade-off between portfolio income and portfolio risk,
redeploying the proceeds elsewhere.
- Barclays/NatWest: We took some profits following a very sharp
rally in the share prices, as investors became more positive on the sector,
recognising the brightening outlook for net interest income and feeding
through to upgrades to return on equity forecasts. We reinvested some of the
proceeds in HSBC and Standard Chartered, which had lagged.
- Bellway/Vistry: We sold our holding in Bellway towards the end of
the period, after the shares had rallied strongly in response to falling
mortgage rates. We sold our holding in Vistry earlier in the period following
a change in dividend policy.
- Hays: We sold the holding as the macro-economic backdrop was
unhelpful, with a mismatch between candidate and employer confidence causing a
slowdown in hiring activity.
Outlook
The period under review was characterised by gradually improving investor
sentiment, despite ongoing geopolitical tensions, as the risk of a hard
landing for the global economy was perceived to be receding. The market
backdrop was initially challenging given the market's preference for growth
stocks over value stocks, but market conditions became more benign later in
the period as market leadership began to broaden out.
After troughing in mid-February, our NAV performance picked up sharply as the
results season unfolded, providing catalysts for our holdings to unlock the
value that is latent in the portfolio. A prolonged period of scepticism on the
macro outlook has driven down expectations, paving the way for a sharp
recovery in share prices, analogous to a coiled spring, on the first hint of
more positive news. As valuation re-rating comes through, it can be extremely
powerful for our NAV, especially when coupled with earnings and dividend
upgrades. A further benefit of a recovery in the NAV is that it provides an
increased capital base from which to generate portfolio income.
The full year earnings season (February-April) tends to be the richest period
of the year for our team in generating investment insights, as this is when we
are most busy meeting company management teams, writing stock notes and
collaborating, providing a decent pipeline of new investment ideas for the
portfolio.
As I explained in the Activity section, we have continued to use our
investment process to position the portfolio in stocks where we see the
potential for a combination of dividend yield, dividend growth and valuation
re-rating. A more stable macro backdrop would increase the number and breadth
of stock opportunities offering all of these characteristics, but we are
working hard to ensure that the stock-specific catalysts that we have
identified are robust enough such that our portfolio is not dependent on an
improving macro backdrop.
The scale of the valuation opportunity can be seen from the gap between the
valuations of our holdings and those of the wider market. At the time of
writing, the portfolio has a median Price/Earnings ratio of 9.4x and a median
Price/Book ratio of 1.2x which compares favourably with 12.1x and 1.6x
respectively for the FTSE All-Share (ex Investment Trusts) Index. Elsewhere in
this report I provide two stock examples where we are now seeing valuations
re-rate on positive news flow.
Valuations can seem to be an abstract concept, but they come to life when
thinking about the dividend yields available, the buybacks being pursued by
management teams hungry to take advantage of low valuations to hoover up
shares or the surge in inbound M&A activity taking hold as the gap between
UK valuations and global valuations becomes too wide for overseas companies to
ignore.
In conclusion, we are now increasingly confident that the clouds that have
existed for some time are now dissipating, with many of our holdings now
delivering on the investment thesis we originally anticipated at the time of
purchase. In the second half of the Company's financial year, we will strive
to build a portfolio that can deliver for shareholders both an attractive
level of portfolio income and a sustained NAV recovery.
Thomas Moore
Portfolio Manager
13 May 2024
Ten Largest Investments
As at 31 March 2024
Smith (DS) BP
DS Smith is an international packaging company, offering sustainable BP is an oil and petrochemicals company. The Company explores for and produces
plastic-free packaging, integrated recycling services and sustainable paper oil and natural gas, refines, markets, and supplies petroleum products,
products. generates renewable energy, and manufactures and markets chemicals.
National Grid Imperial Brands
National Grid is a utility company which is focused on the transmission and Imperial Brands is a global consumer goods company that manufactures, markets
distribution of electricity and gas in Great Britain and the United States. and distributes tobacco products across approximately 120 markets.
Shell HSBC
Shell explores for, produces and refines petroleum. The Company produces HSBC is a banking and financial services company. The Company's segments
fuels, chemicals, and lubricants, as well as operating gasoline filling include Wealth and Personal Banking, Commercial Banking and Global Banking and
stations and developing renewable energy. Markets.
SSE British American Tobacco
SSE engages in the generation, transmission, distribution and supply of British American Tobacco sells combustible tobacco products in more than 50
electricity and the production, storage, distribution and supply of gas. countries around the world, as well as a growing portfolio of non-combustible
products such as vapour and tobacco heating products.
CMC Markets Conduit Holdings
CMC Markets is a financial derivatives dealer offering online trading in Conduit is a Bermuda-based reinsurer with a diversified portfolio across
spread betting, contracts for difference and foreign exchange. Property, Casualty and Specialty.
Investment Portfolio
At 31 March 2024
Market Market
value value
Company Sector £'000 %
Smith (DS) General Industrials 7,768 4.7
BP Oil Gas and Coal 7,150 4.4
National Grid Gas Water and Multi-utilities 6,953 4.2
Imperial Brands Tobacco 6,896 4.2
Shell Oil Gas and Coal 6,664 4.1
HSBC Banks 6,098 3.7
SSE Electricity 5,968 3.6
British American Tobacco Tobacco 5,367 3.3
CMC Markets Investment Banking and Brokerage Services 5,193 3.2
Conduit Holdings Non-life Insurance 4,791 2.9
Top ten investments 62,848 38.3
BHP Industrial Metals and Mining 4,485 2.7
Glencore Industrial Metals and Mining 4,306 2.6
OSB Group Finance and Credit Services 4,004 2.4
Hargreaves Lansdown Investment Banking and Brokerage Services 3,698 2.3
Standard Chartered Banks 3,694 2.3
Barclays Banks 3,614 2.2
Chesnara Life Insurance 3,599 2.2
Rio Tinto Industrial Metals and Mining 3,575 2.2
LondonMetric Real Estate Investment Trusts 3,494 2.1
Legal & General Life Insurance 3,487 2.1
Top twenty investments 100,804 61.4
Tyman Construction and Materials 3,310 2.0
Diversified Energy Oil Gas and Coal 3,154 1.9
Galliford Try Construction and Materials 2,967 1.8
Energean Oil Gas and Coal 2,877 1.8
Thungela Resources Oil Gas and Coal 2,786 1.7
BAE Systems Aerospace and Defense 2,770 1.7
Vodafone Telecommunications Service Providers 2,637 1.6
Ithaca Energy Oil Gas and Coal 2,635 1.6
TP ICAP Investment Banking and Brokerage Services 2,630 1.6
Petershill Partners Investment Banking and Brokerage Services 2,502 1.6
Top thirty investments 129,072 78.7
Close Brothers Banks 2,487 1.5
Real Estate Investors Real Estate Investment Trusts 2,394 1.5
Quilter Investment Banking and Brokerage Services 2,369 1.4
NatWest Group Banks 2,307 1.4
M&G Investment Banking and Brokerage Services 2,096 1.3
Centamin Precious Metals and Mining 2,084 1.3
DFS Furniture Retailers 2,055 1.3
International Personal Finance Finance and Credit Services 2,049 1.2
Assura Real Estate Investment Trusts 1,998 1.2
Litigation Capital Investment Banking and Brokerage Services 1,989 1.2
Top forty investments 150,900 92.0
Crest Nicholson Holdings Household Goods and Home Construction 1,727 1.1
Phoenix Life Insurance 1,681 1.0
Sirius Real Estate Real Estate Investment Trusts 1,638 1.0
Harbour Energy Oil Gas and Coal 1,461 0.9
Ashmore Investment Banking and Brokerage Services 1,279 0.8
AstraZeneca Pharmaceuticals and Biotechnology 1,261 0.8
Speedy Hire Industrial Transportation 1,058 0.6
Anglo American Industrial Metals and Mining 1,041 0.6
Halfords Retailers 917 0.6
CLS Holdings Real Estate Investment and Services 785 0.5
Top fifty investments 163,748 99.9
Vanquis Banking Group Finance and Credit Services 201 0.1
Randall & Quilter Non-life Insurance 42 0.0
Total portfolio 163,991 100.0
Investment Case Studies
CMC Markets
CMC Markets ("CMC") specialises in two key activities - it is best known as a
leading online Contracts for Difference ("CFD") trading platform operating in
the UK, Europe and Australasia, but it also has a growing stockbroking
investment platform and a technology business providing solutions for
institutions seeking to access their platform on a white-label basis. Having
started CMC in 1989 the founder, Lord Cruddas, remains heavily involved in the
business as its CEO and also owns more than 60% of the shares, ensuring that
he is strongly aligned with external shareholders. CMC now has over 58,000
active trading customers and over 218,000 active investing customers.
In 2022 an ambitious 3-pillar investment programme was announced, with a
target to grow net operating income by 30% within three years. The first
pillar involved investing in the core trading platform, broadening the range
of tradable instruments and investing in cloud-based technology that improves
the customer experience. The second pillar involved expanding their investment
platform, positioning themselves to take part in the rapid growth of
self-invested investing as individuals take control over their finances. The
third pillar involved growing their business to business institutional
offering, enabling clients to gain access to their technology, products and
liquidity.
One example of successful diversification is CMC's push into stockbroking,
with a new investment platform in Australia that has grown its market share to
16%, making them the second largest stockbroking platform in Australia. Their
brand was already trusted in Australia as they have operated one of the
country's largest CFD-betting trading platforms. High levels of financial
literacy in Australia make this an attractive market. CMC is now looking to
replicate their Australian success in the UK, where they have launched CMC
Invest UK, a new UK investment platform. At the same time, CMC continues to
grow its list of business to business partnerships, using cloud-based
technology to connect to their platform and offer bespoke white-label
solutions for these clients.
The market was initially sceptical over the merits of this heavy investment
programme, but is now warming to it as more evidence of success emerges. At
the low point in November 2023, the share price was trading at around the
value of CMC's own cash resources, pricing in little or nothing for its
operations. We added to our holding between mid-January and mid-March 2024 as
we had gained confidence that the management team could convince the market
that they had a range of levers to grow profitability. CMC published three
trading updates between early January and late March, signalling growing
revenue upgrades resulting from their investment programme, in particular
their Institutional business. They also announced a cost management programme,
as completion of their investment allows them to improve efficiency, releasing
development spending and streamlining back-office functions. As a result of
these developments, analysts have upgraded their earnings and dividend
forecasts, resulting in the share price more than doubling since the beginning
of January.
CMC captures the potential of index-agnostic income investing - we have
identified a business that is largely a technology platform which is valued as
if it were a pure trading business. This is a stock that is not well
understood, providing us with an opportunity to add to our holding at a highly
attractive valuation.
DS Smith
We previously featured DS Smith as an investment case study explaining the
rationale for our purchase of the stock in August 2023. We described the
long-term structural drivers supporting the business, notably the shift from
plastics to paper packaging in consumer goods, as well as the increasing
popularity of online retailing. Weakness in the share price, linked to short
term swings in demand, created an opportunity to buy back into a business with
long-term earnings tailwinds. We also discussed the reasons why UK stocks tend
to trade on lower valuations than their global peers and how low valuations
could trigger bids for UK companies.
Paper and packaging is a sector that is consolidating rapidly, as companies
seek scale economies by streamlining operations around larger sites and
becoming more vertically integrated, while building the distribution networks
necessary to service global brands. It is unsurprising that a UK-listed
business, trading on a lower valuation than its global peers, became the
subject of a bidding war.
In February 2024, Mondi announced that it was considering an all-share
combination with DS Smith. International Paper then entered the fray in March
2024, confirming that it was in discussions with DS Smith at terms that were
superior to the Mondi bid, representing a 48% premium to the closing price the
day before Mondi's original offer. After the Company's period end, in April
2024, International Paper and DS Smith announced that they had come to an
agreement.
Our investment process seeks to identify stocks whose valuations offer the
potential to re-rate as positive catalysts emerge. We saw DS Smith as a
business whose quality was far better than its valuation implied. In this
case, M&A was the catalyst for a re-rating. It seems likely that M&A
will remain a feature within our portfolio given the low valuations of our
holdings relative to their global peers. This is an example of how our
investment process can play out in practice.
Condensed Statement of Comprehensive Income (unaudited)
Six months ended Six months ended
31 March 2024 31 March 2023
Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Net (losses)/gains on investments at fair value - (1,264) (1,264) - 2,174 2,174
Currency losses - (4) (4) - - -
Income 2 5,360 - 5,360 4,705 - 4,705
Investment management fee (122) (285) (407) (156) (365) (521)
Administrative expenses (245) - (245) (250) - (250)
Net return before finance costs and taxation 4,993 (1,553) 3,440 4,299 1,809 6,108
Finance costs (224) (522) (746) (167) (391) (558)
Return before taxation 4,769 (2,075) 2,694 4,132 1,418 5,550
Taxation 3 (447) - (447) (57) - (57)
Return after taxation 4,322 (2,075) 2,247 4,075 1,418 5,493
Return per Ordinary share (pence) 4 9.05 (4.35) 4.70 8.60 2.99 11.59
The "Total" column of this statement represents the profit and loss account of
the Company.
A Statement of Total Recognised Gains and Losses has not been prepared as all
gains and losses are recognised in the Condensed Statement of Comprehensive
Income.
All revenue and capital items in the above statement derive from continuing
operations.
The accompanying notes are an integral part of the financial statements.
Condensed Statement of Financial Position (unaudited)
As at As at
31 March 2024 30 September 2023
Notes £'000 £'000
Fixed assets
Investments at fair value through profit or loss 163,991 165,734
Current assets
Debtors 2,036 1,611
Money-market funds 2,188 3,027
Cash and short-term deposits 238 1,196
4,462 5,834
Creditors: amounts falling due within one year
Bank loan (20,952) (20,941)
Other creditors (426) (754)
(21,378) (21,695)
Net current liabilities (16,916) (15,861)
Net assets 147,075 149,873
Capital and reserves
Called-up share capital 6 12,295 12,295
Share premium account 52,043 52,043
Capital redemption reserve 12,616 12,616
Capital reserve 7 61,062 62,735
Revenue reserve 9,059 10,184
Equity Shareholders' funds 147,075 149,873
Net asset value per Ordinary share (pence) 8 307.81 314.55
Statement of Changes in Equity (unaudited)
Six months ended 31 March 2024
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Balance at 30 September 2023 12,295 52,043 12,616 62,735 10,184 149,873
Return after taxation - - - (2,075) 4,322 2,247
Issue of own shares from treasury 6 - - - 402 - 402
Dividends paid 5 - - - - (5,447) (5,447)
Balance at 31 March 2024 12,295 52,043 12,616 61,062 9,059 147,075
Six months ended 31 March 2023
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Balance at 30 September 2022 12,295 52,043 12,616 70,276 10,269 157,499
Return after taxation - - - 1,418 4,075 5,493
Purchase of own shares for treasury 6 - - - (315) - (315)
Dividends paid 5 - - - - (5,779) (5,779)
Balance at 31 March 2023 12,295 52,043 12,616 71,379 8,565 156,898
Notes to the Financial Statements
For the year ended 31 March 2024
1. Accounting policies
Basis of accounting. The condensed financial statements have been prepared in
accordance with Financial Reporting Standard 104 (Interim Financial Reporting)
and with the Statement of Recommended Practice (SORP) for 'Financial
Statements of Investment Trust Companies and Venture Capital Trusts', issued
in July 2022 (The AIC SORP). 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.
2. Income
Six months ended Six months ended
31 March 2024 31 March 2023
£'000 £'000
Income from investments
UK investment income
Ordinary dividends 4,070 3,579
Special dividends 158 101
4,228 3,680
Overseas and Property Income Distribution investment income
Ordinary dividends 979 852
979 852
Total income from investments 5,207 4,532
Other income
Money-market interest 67 20
Stock dividends 82 152
Bank interest 4 1
Total other income 153 173
Total income 5,360 4,705
3. Taxation
The taxation charge for the period, and the comparative period, represents
withholding tax suffered on overseas dividend income.
4. Return per Ordinary share
Six months ended Six months ended
31 March 2024 31 March 2023
p p
Revenue return 9.05 8.60
Capital return (4.35) 2.99
Total return 4.70 11.59
The figures above are based on the following figures:
Six months ended Six months ended
31 March 2024 31 March 2023
£'000 £'000
Revenue return 4,322 4,075
Capital return (2,075) 1,418
Total return 2,247 5,493
Weighted average number of Ordinary shares in issue(A) 47,751,741 47,391,568
(A) Calculated excluding shares in treasury.
5. Dividends
Six months ended Six months ended
31 March 2024 31 March 2023
£'000 £'000
Ordinary dividends on equity shares deducted from reserves:
Final dividend for 2023 of 5.70p per share (2022 - 6.50p) 2,724 3,079
First interim dividend for 2024 of 5.70p per share (2023 - 5.70p) 2,723 2,700
5,447 5,779
6. Called-up share capital
As at As at
31 March 30 September
2024 2023
£'000 £'000
Issued and fully paid:
Ordinary shares 25p each
Opening balance of 47,646,522 (2023 - 47,471,939 ) Ordinary shares 11,912 11,868
Buyback of nil (2023 - 100,417) Ordinary shares - (25)
Issue of 135,000 (2023 - 275,000) Ordinary shares 33 69
Closing balance of 47,781,522 (2023 - 47,646,522 ) Ordinary shares 11,945 11,912
Treasury shares
Opening balance of 1,532,245 (2023 - 1,706,828 ) Ordinary shares 383 427
Buyback of nil (2023 - 100,417) Ordinary shares to Treasury - 25
Issue of 135,000 (2023 - 275,000) Ordinary shares from Treasury (33) (69)
Closing balance of 1,397,245 (2023 - 1,532,245 ) Ordinary shares 350 383
12,295 12,295
During the period, 135,000 Ordinary shares (2023 - 275,000) were issued from
Treasury for a consideration of £402,000 (2023 - £858,000). No Ordinary
shares (2023 - 100,417) were repurchased for a consideration of £nil (2023 -
£315,000), and. The total shares held in Treasury is 1,397,245 (2023 -
1,532,245).
7. Capital reserve
The capital reserve figure reflected in the Condensed Statement of Financial
Position includes investment holdings losses at 31 March 2024 of £12,099,000
(30 September 2023 - losses of £17,939,000) which relate to the revaluation
of investments held on that date and realised gains as at 31 March 2024 of
£73,161,000 (30 September 2023 - £80,674,000).
8. Net asset value per Ordinary share
As at As at
31 March 2024 30 September 2023
Attributable net assets (£'000) 147,075 149,873
Number of ordinary shares in issue(A) 47,781,522 47,646,522
NAV per ordinary share (p) 307.81 314.55
(A) Excludes shares in issue held in treasury.
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 ended Six months ended
31 March 2024 31 March 2023
£'000 £'000
Purchases 149 83
Sales 17 12
166 95
10. Loans
On 23 June 2023, the Company agreed a three year £30 million revolving credit
facility with the Royal Bank of Scotland International Limited, which has a
maturity date of 23 June 2026.
At 31 March 2024, £21,000,000 had been drawn down (30 September 2023 -
£21,000,000) at an all-in interest rate of 6.6887% (30 September 2023 -
all-in interest rate of 6.6847%).
The loan is shown in the Condensed Statement of Financial Position net of
amortised expenses of £48,000 (30 September 2023 - £59,000).
11. 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 shall have the following
classifications:
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 liabilities, either directly (ie as prices) or
indirectly (ie derived from prices); and
Level 3: inputs for the assets or liabilities that are not based on observable
market data (unobservable inputs).
All of the Company's investments are in quoted equities (30 September 2023 -
same) that are actively traded on recognised stock exchanges, with their fair
value being determined by reference to their quoted bid prices at the
reporting date. The total value of the investments has therefore been deemed
as Level 1 (30 September 2023 - same).
12. Half Yearly Report
The financial information contained in this Half Yearly 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 31 March 2024 and
31 March 2023 have not been audited.
The information for the year ended 30 September 2023 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.
This Half Yearly Report was approved by the Board on 13 May 2024.
Alternative Performance Measures ("APMs")
Alternative performance measures are numerical measures of the Company's
current, historical or future performance, financial position or cash flows,
other than financial measures defined or specified in the applicable financial
framework. The Company's applicable financial framework includes FRS 102 and
the AIC SORP.
The Directors assess the Company's performance against a range of criteria
which are viewed as particularly relevant for closed-end investment companies.
Where the calculation of an APM is not detailed within the financial
statements, an explanation of the methodology employed is provided below:
Dividend yield
Dividend yield measures the dividend per share as a percentage of the share
price per share.
31 March 2024 30 September 2023
Share price 277.00p 314.00p
Dividend per share 22.80p 22.80p
Dividend yield 8.2% 7.3%
Discount & premium
A discount is the percentage by which the market price of an investment trust
is lower than the Net Asset Value ("NAV") per share. A premium is the
percentage by which the market price per share of an investment trust exceeds
the NAV per share.
31 March 2024 30 September 2023
Share price 277.00p 314.00p
Net asset value per share 307.81p 314.55p
Discount 10.0% 0.2%
Net gearing
Net gearing measures the total borrowings less cash and cash equivalents
divided by Shareholders' funds, expressed as a percentage. Under AIC reporting
guidance cash and cash equivalents includes amounts due from and to brokers at
the period end as well as cash and short-term deposits.
31 March 2024 30 September 2023
£'000 £'000
Total borrowings a 20,952 20,941
Cash and short-term deposits 238 1,196
Investments in AAA-rated money-market funds 2,188 3,027
Amounts due from brokers 90 148
Amounts payable to brokers - (305)
Total cash and cash equivalents b 2,516 4,066
Gearing (borrowings less cash & cash equivalents) c=(a-b) 18,436 16,875
Shareholders' funds d 147,075 149,873
Net gearing e=(c/d) 12.5% 11.3%
Ongoing charges ratio
The ongoing charges ratio has been calculated in accordance with guidance
issued by the AIC, which is defined as the total of investment management fees
and recurring administrative expenses and expressed as a percentage of the
average net assets throughout the period. The ratio reported for 31 March 2024
is based on forecast ongoing charges for the year ending 30 September 2024.
31 March 2024 30 September 2023
£'000 £'000
Investment management fees 821 1,006
Administrative expenses 463 508
Less: non-recurring charges(A) - (27)
Ongoing charges a 1,284 1,487
Average net assets b 146,028 158,676
Ongoing charges ratio (excluding look-through costs) c=(a/b) 0.88% 0.94%
Look-through costs(B) d 0.07% 0.00%
Ongoing charges ratio (including look-through costs) e=c+d 0.95% 0.94%
(A) Comprises professional fees not expected to recur.
(B) Calculated in accordance with AIC guidance issued in October 2020 to
include the Company's share of costs of holdings in investment companies on a
look-through basis.
The ongoing charges ratio provided in the Company's Key Information Document
is calculated in line with the PRIIPs regulations, which also includes
financing and transaction costs.
Total return
NAV and share price total returns show how the NAV and share price has
performed over a period of time in percentage terms, taking into account both
capital returns and dividends paid to shareholders. Share price and NAV total
returns are monitored against open-ended and closed-ended competitors, and the
Reference Index, respectively.
Share
Six months ended 31 March 2024 NAV Price
Opening at 1 October 2023 a 314.55p 314.00p
Closing at 31 March 2024 b 307.81p 277.00p
Price movements c=(b/a)-1 (2.1%) (11.8%)
Dividend reinvestment(A) d 3.7% 3.6%
Total return c+d +1.6% -8.2%
Share
Year ended 30 September 2023 NAV Price
Opening at 1 October 2022 a 331.77p 302.50p
Closing at 30 September 2023 b 314.55p 314.00p
Price movements c=(b/a)-1 (5.2%) 3.8%
Dividend reinvestment(A) d 7.0% 7.6%
Total return c+d +1.8% +11.4%
(A) NAV total return involves investing the net dividend in the NAV of the
Company with debt at fair value on the date on which that dividend goes
ex-dividend. Share price total return involves reinvesting the net dividend in
the share price of the Company on the date on which that dividend goes
ex-dividend.
For more information visit abrdnequityincome.com
abrdn Holdings Limited
Secretaries
Email: cef.cosec@abrdn.com (mailto:cef.cosec@abrdn.com)
13 May 2024
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