Half-year Report
06/03/2024 07:00
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RNS Number : 6893F Murray Income Trust PLC 06 March 2024
Murray Income Trust PLC
Half Yearly Report 31 December 2023
An investment trust founded in 1923 aiming for high and growing income with
capital growth.
Investment Objective
The Company aims for a high and growing income combined with capital growth
through investment in a portfolio principally of UK equities
Performance Highlights
Net asset value total return(AB) Share price total return(A)
Six months ended 31 December 2023 Six months ended 31 December 2023
+4.5% +6.2%
Year ended 30 June 2023 +8.8% Year ended 30 June 2023 +4.9%
Benchmark total return Ongoing charges(A)
Six months ended 31 December 2023 Forecast year to 30 June 2024
+5.2% 0.51%
Year ended 30 June 2023 +7.9% Year ended 30 June 2023 0.50%
Earnings per share (revenue) Dividend per Ordinary share
Six months ended 31 December 2023 Year ended 30 June 2023
14.2p 37.50p
Six months ended 31 December 2022 16.3p Year ended 30 June 2022 36.00p
Discount to net asset value(AB) Dividend yield(A)
As at 31 December 2023 As at 31 December 2023
6.9% 4.3%
As at 30 June 2023 8.2% As at 30 June 2023 4.5%
(A) Considered to be an Alternative Performance Measure.
(B) With debt at fair value.
Net asset value per share (B)
At 30 June (*31 December) - pence
2019 887.8
2020 807.7
2021 935.7
2022 871.0
2023 911.7
2023* 929.4
Dividends per share
Year ended 30 June - pence
2019 34.00
2020 34.25
2021 34.50
2022 36.00
2023 37.50
Mid-Market price per share
At 30 June (*31 December) - pence
2019 850.0
2020 768.0
2021 871.0
2022 832.0
2023 837.0
2023* 865.0
Financial Calendar, Dividends and Highlights
Financial Calendar
Payment dates of quarterly dividends March, June, September, December
Financial year end 30 June
Expected announcement date of annual results September
Annual General Meeting (London) 5 November 2024
Dividends
Rate Ex-dividend date Record date Payment date
First interim 9.50p 16 Nov 2023 17 Nov 2023 14 Dec 2023
Second interim 9.50p 15 Feb 2024 16 Feb 2024 14 Mar 2024
Third interim 9.50p 16 May 2024 17 May 2024 13 Jun 2024
Chair's Statement
"The Company has prospered over the years through multiple economic, social
and political crises. There are many good reasons to believe that it will
continue to thrive in the years to come."
Peter Tait, Chair
Having taken over as Chair of Murray Income Trust plc (the "Company") at the
Centenary Annual General Meeting ("AGM") in November 2023, I am delighted to
present my first Half-Yearly Report for the Company for the six months ended
31 December 2023 (the "Period"). Last year was historic for the Company. Not
only did it celebrate its centenary, it also increased its annual dividend for
the 50th consecutive year, giving it one of the longest records of progressive
dividend growth in the investment trust sector. Our aim is to continue the
trend of capital and income growth which we have seen over many years - and a
dividend yield of 4.5% at 31 December 2023 is a good place to start. The Board
also welcomed the announcement by abrdn plc, in December 2023, that it had
commenced a programme whereby it would purchase shares in the Company
equivalent to six months' management fees.
Performance
The Company's net asset value ("NAV") per share (with debt at fair value)
increased by 4.5% over the Period, as compared to the rise of 5.2% in the FTSE
All-Share Index (the "Benchmark"), both figures in total return terms. The
fair value of the Company's long-term debt was adversely affected by interest
rate movements during the Period, which weighed on the Company's NAV return.
The share price total return was 6.2% following a narrowing of the discount
from 8.2% to 6.9%.
Year ended 3 years ended 5 years ended
31 December 2023 31 December 2023 31 December 2023
Cumulative Performance (total return) % % %
Share price 7.3 17.4 47.1
Net asset value per Ordinary share(A) 8.9 21.6 46.0
FTSE All-Share Index 7.9 28.1 37.7
(A) With debt at fair value
Investment Team
abrdn is our appointed investment management company. Charles Luke has been
our lead portfolio manager since 2006 and works alongside co-manager Iain Pyle
and Rhona Millar as part of abrdn's Developed Markets Equities team.
Investment Process
Our Manager's investment process is best summarised as a search for good
quality companies at attractive valuations. The Manager defines a quality
company as one capable of strong and predictable cash generation, sustainably
high returns on capital and with attractive growth opportunities over the
longer term. These typically result from a sound business model, a robust
balance sheet, good management and strong environmental, social and governance
characteristics.
Annual General Meeting ("AGM")
The 2023 AGM for the Company was held in Glasgow on 7 November 2023,
celebrating the centenary of its launch in that city in 1923. The Company
was initially called "The Second Scottish Western Investment Company",
changing its name to Murray Income Trust plc in 1984, at which time it also
altered its remit to invest for a high and growing income from a portfolio of
predominantly UK equities. It was encouraging to see such a strong and
enthusiastic turn-out for this special event.
A further centenary event for the Company was held in December 2023 when I, as
Chair, had the pleasure of officiating at the closing ceremony of the London
Stock Exchange, where I was joined by most of the Board, representatives from
abrdn and our corporate broker, as well as the three most recent former
Chairs.
Board
Following the retirement of Neil Rogan and resignation of Merryn Somerset Webb
at the conclusion of the 2023 AGM, the Board was delighted to announce the
appointment of Angus Franklin as a new non-executive director from 1 January
2024. Angus joined the Board following a distinguished career in various
senior investment roles with Bailie Gifford & Co. Having, myself, assumed
the role as Chair, my former position as Senior Independent Director is now
held by Alan Giles who has been a Board member for three years. The other
members of the Board are Stephanie Eastment, as Chair of the Audit Committee,
and Nandita Sahgal Tully, who specialises in investment and ESG matters.
Dividend
The dividend for the year ended 30 June 2023 was increased by 4.2% to 37.5p
per share, giving a year-end historic yield for the Company of 4.5%. Whilst
intending to maintain the Company's progressive dividend policy for the year
to 30 June 2024, the Board also decided to rebalance the quarterly dividend
pay-outs, allowing shareholders to access more quickly and more evenly their
dividend income throughout the year. As announced in November 2023, the first
three dividend payments for the year ended 30 June 2024 are 9.5p per share
(previously 8.25p per share). As a result, the fourth interim dividend will
be lower than that for last year but it is anticipated to be not less than
9.5p per share, giving an expected total for the year of a minimum of 38.0p
per share.
Share Capital
The Board constantly monitors the level of the share price discount to NAV and
buys back shares when market conditions suggest that this may reduce discount
volatility. In addition, all share buybacks are at a discount to NAV and are
accretive to the Company. To that end, the Company bought back 3,686,219
Ordinary shares of 25p into treasury during the Period, representing 3.3% of
shares in issue at 30 June 2023. As a result, at 31 December 2023, the Company
had 108,033,782 Ordinary shares of 25p in issue with voting rights and an
additional 11,495,750 shares held in treasury.
Environmental, Social and Governance ("ESG")
ESG considerations are deeply embedded into the company analysis carried out
by our Manager with the aim of mitigating risk and enhancing returns. There is
frequent dialogue with investee companies, focused on ensuring that the
companies in the portfolio are acting in the best long-term interests of both
their shareholders and society at large. By way of example, the Investment
Manager's Report describes engagement during the Period with Standard
Chartered, National Grid and London Stock Exchange Group.
It is important to note that the policy pursued by our Manager on our behalf
is dynamic rather than static. ESG conclusions can evolve if the inputs
change: for example, one might reassess Russia's invasion of Ukraine or the
conflict in the Middle East and conclude that the social factor of national
security and safety is more important now than previously considered.
Update
At 29 February 2024 (the latest practicable date prior to approval of this Report), the net asset value per share (with debt at fair value) and share price were 906.98p and 821.00p, respectively. Accordingly, for the period from 31 December 2023 to 29 February 2024, the net asset value total return (with debt at fair value) and share price total return were -1.4% and -4.0%, respectively, while the Benchmark total return was -1.1%.
Outlook
The previous calendar year (2023) was a mixed bag for equity markets with a
strong recovery in technology stocks, resulting in a 25% gain in the US
S&P index, but a more modest 7.9% increase in the UK FTSE All-Share Index,
the Company's own benchmark. With other non-UK markets also performing well
during the year, the portfolio benefited from its near 20% exposure to
overseas stocks including Accton Technology, Novo Nordisk and VAT Group, which
each rose by more than 20% in the six months ended 31 December 2023.
As we turn our attention to 2024, one question I am asking myself is why has
the UK market been a laggard and what might cause the situation to improve in
the months and years ahead? There is, of course, never one definitive reason
for market performance, but such reasons could include higher than anticipated
inflation and interest rates, the impact of the Ukraine war on energy supply
and utility bills, a lack of technology stocks in the Benchmark, a continuing
Brexit hangover (dissuading foreign investors from the market) and the sharp
reduction in equity exposure, particularly UK equity exposure, by UK Defined
Benefit pension schemes. Information published by the Pensions and Lifetime
Savings Association shows that, 20 years ago, UK Defined Benefit pension
schemes invested about half of their assets in UK equities, but that this had
fallen to only about 3% by 2023.
As a result, as noted in the Investment Manager's Report, the UK market now
looks very cheap compared to its own history and to international markets.
Of course, there will be headwinds along the way, but interest rate trends are
usually very important for equity market movements. The anticipation of
falling UK interest rates later this calendar year could attract the attention
of potential investors, particularly given the appealing combination of a
market dividend yield of 4.0% and forecast dividend and earnings growth in
2024, according to a Bloomberg consensus of estimates in January, of 9.2% and
10.1%, respectively, despite the lacklustre outlook for overall economic
growth.
From a Murray Income shareholder perspective, your starting point is a higher
yield of 4.6%, and the shares standing on a 9.5% discount to net asset value
(as at the date of this Report, with debt at fair value). The potential,
therefore, for positive returns from owning the Company's shares is
encouraging, with a good yield and the capacity for earnings growth, together
with a discount to net asset value at present. Markets can be blown off-course
by many exogenous factors, and there remain significant risks in the current
geo-political situation, emanating from the continuing Russian war in Ukraine,
the current Middle East crisis, and tensions between China and both Taiwan and
the USA, not to mention the fact that nearly half of the world's population
will be participating in general elections during the course of 2024. But
the Company has prospered over the years through multiple economic, social and
political crises. There are many good reasons to believe that it will
continue to thrive in the years to come.
For a more detailed review of the UK market and the outlook for the Company's
portfolio, please see the Investment Manager's Report.
Peter Tait
Chair
5 March 2024
Investment Manager's Report
The Company generated a positive Net Asset Value ("NAV") per share (with debt
at fair value) return of 4.5% for the six months ended 31 December 2023 (the
"Period"). This underperformed the Company's Benchmark (the FTSE All-Share
Index ) which returned 5.2% (both figures calculated on a total return
basis).
From a style perspective, the portfolio's Quality bias continued to be a
headwind to performance (albeit to a lesser extent than during the first half
of the calendar year) as the Value factor outperformed. In sector terms, the
portfolio's overweight position in the Consumer Discretionary sector and
underweight exposure to the Financials sector benefited performance. In
contrast, the overweight position in the Industrials sector detracted from
relative performance, as did the underweight exposure to the Basic Materials
sector. The holdings in Sage, TotalEnergies and Vistry were the most
beneficial to relative returns while the holdings in Rentokil Initial and
Diageo detracted the greatest, relatively. Not holding Shell and Rolls-Royce
also detracted from performance.
Two new holdings were purchased for the portfolio during the Period. The first
addition was the leading global actuator business, Rotork, which has strong
quality characteristics and under-appreciated growth opportunities. Drivers of
growth include their electric actuator product which is used to reduce methane
emissions in the Oil & Gas sector, which is increasingly a priority as the
industry looks to meet emission reduction targets. The second new entrant was
US-listed Mastercard, which we see as having attractive quality
characteristics, including strong competitive positioning and high barriers to
entry, as well as having multiple long-term growth opportunities. The
Company's ability to own overseas holdings allows the portfolio to access an
industry not available through the UK market. Further information on Rotork
and Mastercard may be found in the case studies..
Three holdings were sold during the Period: Croda, where our conviction in the
long-term strategy deteriorated, while the valuation remains high; Marshalls,
where we had concerns around the trading environment and potential
implications for the company's balance sheet; and Drax, due to increasing
uncertainty around the long-term business model.
Other trading related to managing position sizes, reflecting conviction
levels. In the utilities sector, National Grid was added to while SSE was
reduced. In healthcare, we reduced Smith & Nephew and added to ConvaTec.
In the mining sector, the position in BHP was reduced and proceeds reinvested
in Anglo American. The holding in Mondi, which reached an agreement to sell
its Russian business in September, was added to. The holdings in Rentokil
Initial and Games Workshop were added to following trading statements which
led to weakness in the shares, as we remain more positive on the longer-term
outlooks for both companies. The holding in VAT Group was trimmed following
strong share price performance, which made the valuation less attractive. The
position in Vistry was reduced given it appears there is a low likelihood of
dividend payments, with the company instead favouring buybacks. Further trades
included adding to bp, Diageo, Intermediate Capital, L'Oréal, Oxford
Instruments, Oversea-Chinese Banking Corp and RS Group while trimming
AstraZeneca, Coca-Cola HBC, Inchcape, Novo Nordisk, RELX and Safestore.
We continued our measured option-writing programme which is based on our
fundamental analysis of holdings in the portfolio. We believe that the
option-writing strategy, which we have now employed for well over a decade, is
of benefit to the Company by diversifying and modestly increasing the level of
income generated and providing headroom to invest in companies with lower
starting yields but better dividend and capital growth prospects. The Company
also bought back shares, representing 3.3% of the shares in issue, during the
Period.
One of the tenets of our investment philosophy is the belief that in order to
grow dividends over the long term a company needs to grow its earnings and
that high quality companies are best placed to do that. We believe that the
portfolio is well positioned to do just this. Looking at the portfolio from a
quantitative perspective at 31 December 2023, typical measures of portfolio
quality such as returns measures and earnings stability were high in absolute
terms and considerably better than the Benchmark (for example, in aggregate,
the return on equity and return on assets of the portfolio holdings was 20.7%
and 7.5% respectively, compared to the Benchmark at 15.8% and 5.3%,
respectively). Furthermore, the portfolio generates a dividend yield
approximately in line with the Benchmark. At 31 December 2023, the portfolio
traded on a forward P/E multiple of 14.5x compared to the Benchmark on 11.5x:
more expensive but to our minds a reasonable price to pay for a considerably
better quality portfolio and one still very attractively valued in absolute
terms.
Environmental, Social and Governance ("ESG")
ESG issues are discussed as part of our regular engagement with portfolio
companies' management. However, we also engage on a variety of specific
issues outside our regular meetings cycle. It should be noted that given the
Quality threshold inherent in the portfolio, these meetings are rarely about
issues for which we hold significant concerns. To provide some examples of the
variety of engagements during the Period: firstly, we met with the Head of
Sustainable Finance at Standard Chartered to discuss the steps the bank is
taking to reach its sustainable finance targets. Secondly, we engaged with
National Grid to discuss their approach to securing public consent among those
communities that are likely to be affected by the construction of new
infrastructure required to meet the electricity needs in a net-zero economy.
Thirdly, we met with London Stock Exchange Group to discuss proposed changes
to its remuneration policy.
Market and Economic Background
The UK equity market, as measured by the Benchmark, rose by 5.2% on a total
return basis over the Period. The start was characterised by wavering optimism
that signs of declines in inflation would bring an end to the rate hiking
cycle which has been ongoing since 2022, while on the other hand concerns that
the strength of economic data in the US would lead to further rate increases
remained. In November 2023, confidence began to build that interest rates
across major economies had peaked, leading to an end of year rally for equity
markets.
Performance at a sector level was mixed. Aerospace & defence and
housebuilding companies performed well but some retail companies struggled.
The more domestically focused FTSE 250 Index outperformed the FTSE 100 Index
over the Period.
Domestic economic data was generally weak. UK economic activity continued to
stagnate with GDP falling by 0.4% in the three months to December 2023,
following a 0.1% decline in the three months to September 2023. Consumer
confidence strengthened from historically low levels over the Period;
conversely, employment data weakened with wage growth slowing and vacancies
falling.
Inflation continued to decline from a peak of 11% in 2022, no longer looking
like a significant international outlier. This led to a slowing in the pace of
rate hikes over the Period, with the Bank of England ("BoE") raising rates by
0.25% in August 2023 but holding at 5.25% at each of the subsequent meetings.
Despite the falls in inflation, the BoE Governor, Andrew Bailey, was quick to
stress that rates would not be cut in the near future, reiterating the Bank's
commitment to bring inflation back within its 2% target.
These inflation trends have been similar in the US and the Eurozone, where
inflation fell more quickly than was expected. Central banks in those regions
have also held rates flat since late summer. Economic growth in the US has
been particularly robust, which led to increased optimism of a soft landing
and a strong end to the Period for US markets, with the 'Magnificent 7'
technology companies continuing to be strong. In China, economic activity data
showed signs of bottoming and monetary and fiscal policy is expected to ease
further. Energy prices ended the Period slightly higher, rising strongly on
OPEC production cuts and following the Israel-Hamas conflict, but then falling
back on concerns about slowing global growth.
Outlook
We expect the sharp monetary policy tightening over the past 18 months to lead
to a slowdown in global economic growth in 2024. For the UK, we currently
forecast zero GDP growth in 2024. Inflation is expected to continue to trend
downwards but still remains higher than BoE targets and a key focus for
markets will be on interest rate cutting cycles and when and how quickly they
get under way. The most recent Consumer Prices Index data for the 12 months to
January 2024 indicated a reading of 4.2%. At its January 2024 meeting, six
members of the BoE's 9-strong Monetary Policy Committee voted to maintain
interest rates unchanged, at 5.25%. abrdn's economists expect the BoE to start
cutting rates in mid-2024.
Political risk, with a number of significant likely elections including the US
and UK this calendar year, and geopolitical risk with, in particular,
increased tensions in the Middle East, are likely to remain elevated.
The portfolio is full of high quality, predominantly global businesses capable
of delivering appealing long term earnings and dividend growth at a modest
valuation. Our focus on quality companies should provide protection through a
downturn: those companies with pricing power, high margins and strong balance
sheets are better placed to navigate a more challenging economic environment
and emerge in a strong position. Furthermore, these quality characteristics
are helpful in underpinning the portfolio's income generation.
The valuations of UK-listed companies remain attractive on a relative and
absolute basis. Apart from the global financial crisis in 2008/2009 the UK's
price/earnings multiple of 10.4x is near its lowest point for 30 years. The UK
stockmarket is cheap in absolute terms, relative to history and also relative
to global equities. Investors are earning global income at a knock-down price.
Moreover, the dividend yield of the UK market remains at an appealing premium
to other regional equity markets.
In summary, we feel optimistic that our long-term focus on investments in high
quality companies with robust competitive positions and strong balance sheets,
which are led by experienced management teams, will be capable of delivering
premium earnings and dividend growth.
Charles Luke and Iain Pyle,
abrdn Investments Limited
5 March 2024
Ten Largest Investments
As at 31 December 2023
Relx AstraZeneca
Relx is a global provider of information and analytics for professionals and AstraZeneca researches, develops, produces and markets pharmaceutical
businesses across a number of industries including scientific, technical, products. With a significant focus on oncology and rare diseases the company
medical and law. offers appealing growth potential over the medium term.
The company offers resilient earnings combined with long term structural
growth opportunities.
Unilever Diageo
Unilever is a global consumer goods company supplying food, home and personal Diageo produces, distills and markets alcoholic beverages including vodkas,
care products. The company has a portfolio of strong brands including Dove, whiskies, tequilas, gins and beer. The company should benefit from attractive
Knorr, Axe and Persil. Over half of the company's sales are to developing and long term drivers such as population and income growth, and premiumisation.
emerging markets. The company has a variety of very strong brands and faces very limited private
label competition.
TotalEnergies bp
TotalEnergies is a broad energy company that produces and markets fuels, bp is a fully integrated energy company involved in exploration, production,
natural gas and electricity. It is a leader in the sector's energy transition refining, transportation and marketing of oil and natural gas. The company
with an attractive pipeline of renewable assets. provides an attractive dividend yield and is well placed for the energy
transition.
Sage London Stock Exchange
Sage is a market leading software business focused on accounting, payroll and London Stock Exchange is a diversified global financial markets infrastructure
payments. The company has a strong product suite and is well placed to benefit and data business. The company is highly cash generative and very well placed
from the software automation of its small and mid-sized customers over the to benefit from increased spend on data services.
medium term.
BHP Experian
BHP Group (formerly BHP Billiton) is a diversified resources group with a Experian is a market leader in the provision of credit and marketing
global portfolio of high quality assets particularly iron ore and copper. The services. It maintains one of the largest credit bureaus and offers
company combines an appealing dividend yield combined with a strong balance specialist analytical solutions for credit scoring, risk management and
sheet. application processing across a number of different markets including
financial services, health, retail and government.
Investment Portfolio
As at 31 December 2023
Total
Valuation investments
Investment Sector Country £'000 %
Relx Media UK 61,004 5.7
AstraZeneca Pharmaceuticals and Biotechnology UK 55,071 5.1
Unilever Personal Care Drug and Grocery Stores UK 52,113 4.8
Diageo Beverages UK 47,636 4.4
TotalEnergies Oil, Gas and Coal France 40,680 3.8
bp Oil, Gas and Coal UK 39,856 3.7
Sage Software and Computer Services UK 38,061 3.5
London Stock Exchange Finance and Credit Services UK 37,592 3.5
BHP Industrial Metals and Mining UK 32,470 3.0
Experian Industrial Support Services UK 31,113 2.9
Top ten investments 435,596 40.4
Intermediate Capital Investment Banking and Brokerage Services UK 28,114 2.6
National Grid Gas Water and Multi-utilities UK 27,495 2.5
Oversea-Chinese Banking Banks Singapore 25,087 2.3
Anglo American Industrial Metals and Mining UK 24,210 2.2
Close Brothers Banks UK 24,050 2.2
Rentokil Initial Industrial Support Services UK 23,951 2.2
SSE Electricity UK 22,856 2.1
Howden Joinery Retailers UK 22,677 2.1
Inchcape Industrial Support Services UK 22,352 2.1
Convatec Medical Equipment and Services UK 22,209 2.1
Top twenty investments 678,597 62.8
Microsoft Software and Computer Services United States 19,682 1.8
Nordea Bank Banks Sweden 18,938 1.8
Safestore Holdings Real Estate Investment Trusts UK 18,767 1.7
Oxford Instruments Electronic and Electrical Equipment UK 18,653 1.7
Vistry Household Goods and Home Construction UK 17,490 1.6
M&G Investment Banking and Brokerage Services UK 17,269 1.6
Genus Pharmaceuticals and Biotechnology UK 16,344 1.5
Mondi General Industrials UK 15,011 1.4
Games Workshop Leisure Goods UK 14,894 1.4
Novo-Nordisk Pharmaceuticals and Biotechnology Denmark 13,987 1.3
Top thirty investments 849,632 78.6
OSB Finance and Credit Services UK 13,987 1.3
Hiscox Non-life Insurance UK 13,523 1.3
Nestlé Food Producers Switzerland 13,157 1.2
Kone Industrial Engineering Finland 12,983 1.2
L'Oréal Personal Care Drug and Grocery Stores France 12,664 1.2
Direct Line Insurance Non-life Insurance UK 12,645 1.2
VAT Electronic and Electrical Equipment Switzerland 12,324 1.1
RS Industrial Support Services UK 12,245 1.1
Standard Chartered Banks UK 11,788 1.1
Genuit Construction and Materials UK 11,711 1.1
Top forty investments 976,659 90.4
Coca-Cola HBC Beverages UK 11,329 1.1
Rotork Industrial Engineering UK 11,142 1.0
Accton Technology Telecommunications Equipment Taiwan 10,674 1.0
LVMH Personal Goods France 10,579 1.0
Telenor Telecommunications Service Providers Norway 10,507 1.0
Roche Pharmaceuticals and Biotechnology Switzerland 9,397 0.9
Smith & Nephew Medical Equipment and Services UK 8,801 0.8
Mastercard Finance and Credit Services United States 8,231 0.8
GSK Pharmaceuticals and Biotechnology UK 8,138 0.8
Chesnara Life Insurance UK 6,901 0.6
Top fifty investments 1,072,358 99.4
Moonpig Retailers UK 6,185 0.6
Total investments (51) 1,078,543 100.0
Ordinary shares unless otherwise stated.
Investment Case Studies
Mastercard
Mastercard, the US-listed technology company in the global payments industry,
was added to the portfolio in the six months ended 31 December 2023. The
company has an approximate market capitalisation of $430bn and the
overseas-listed holding adds exposure to a market segment that would be
difficult for the portfolio to access through the UK market.
Mastercard's core business is consumer payments processing for credit and
debit cards and the business model is a beneficiary of the shift from cash to
electronic payments, which will continue to drive earnings growth.
Furthermore, business to business flows are also an attractive area for
growth. In addition, the company's value-added services business (which
includes cyber-security and analytics insights into consumer spending),
provides a further avenue for expansion.
The company has a significant competitive advantage, driven by the 'network
effect' of issuing over a billion credit cards, accepted by millions of
merchants and many financial institutions, as well as the security
capabilities enabled by the extensive data these transactions generate. The
dividend yield of the stock is relatively modest compared to some of the other
holdings in the portfolio but we see potential for strong long-term dividend
growth supported by a share buy-back programme.
Rotork
A constituent of the FTSE 250 Index, with a market capitalisation of
approximately £2.7bn, Rotork was introduced to the portfolio during the six
months ended 31 December 2023. Rotork operates in the valve industry and is
the global leading manufacturer of actuators, selling products and services to
industries including Oil & Gas, Industrials, Chemicals, Water and Power.
In the short term, the recovery in oil and gas capex budgets should be a
tailwind for the company. In the longer term, the company has a part to play
in the energy transition helping to remove methane emissions in oil and gas
wells while also enabling the growth of hydrogen and carbon capture,
utilisation and storage (CCUS). Rotork is conservatively managed and has
strong quality characteristics, such as, for example, attractive margins, a
high return on capital employed, high barriers to entry (such as strong brand
resonance, certification, reliability and field service) and a net cash
balance sheet.
The company's dividend has good scope to grow as earnings increase through a
mixture of revenue growth, product mix and operating leverage while the strong
balance sheet provides an opportunity for inorganic growth.
Interim Board Report
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. These are considered to be materially
unchanged as at 31 December 2023, as compared to 30 June 2023. The principal
risks and uncertainties are set out in detail on pages 18 to 22 of the
Company's Annual Report for the year ended 30 June 2023 ("Annual Report 2023")
which is available on the Company's website. The Annual Report 2023 also
contains, in note 18 to the Financial Statements, an explanation of other
risks relating to the Company's investment activities, specifically market
risk, liquidity risk and credit risk, and a note of how these risks are
managed.
Related Party Transactions
Under Generally Accepted Accounting Practice (UK Accounting Standards and
applicable law), the Company has identified the Directors as related parties.
No other related parties have been identified. There have been no related
party transactions that have had a material effect on the financial position
of the Company.
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 pages 42
and 43 of the Annual Report 2023. As at 31 December 2023, there had been no
material 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 covenants associated with
the Senior Loan Notes and bank facilities. As at 31 December 2023, in addition
to the £40m 10 year Senior Loan Notes 2027 and £60m 10 year Senior Loan
Notes 2029, £6.5m of the Company's three-year £50m multi-currency revolving
bank credit facility (the "Facility") was drawn down. On the expiry of the
Facility in October 2024, the Company would expect to continue to access a
credit facility. However, should acceptable terms for a new credit facility
not be forthcoming at that time, any outstanding borrowing will be repaid
through the proceeds of sales of portfolio holdings.
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.
US Executive Order No. 14032
The Board confirms that the Company has not and does not intend to invest in
any of the companies designated as "Chinese Military-Industrial Complex
Companies" by the US Executive Order No. 14032.
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 Guidance and Transparency Rules
(being an indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed set of
Financial Statements and a description of the principal risks and
uncertainties for the remaining six months of the financial year); and
· 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 2023
comprises the Half-Yearly Board Report, the Directors' Responsibility
Statement and the condensed set of Financial Statements.
For and on behalf of the Board
Peter Tait
Chair
5 March 2024
Condensed Statement of Comprehensive Income (unaudited)
Six months ended Six months ended
31 December 2023 31 December 2022
Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Gains on investments - 32,687 32,687 - 22,014 22,014
Currency (losses)/gains - (59) (59) - 626 626
Income 2 17,364 - 17,364 20,869 - 20,869
Investment management fees 4, 13 (551) (1,287) (1,838) (566) (1,321) (1,887)
Administrative expenses (683) - (683) (718) - (718)
Net return before finance costs and taxation 16,130 31,341 47,471 19,585 21,319 40,904
Finance costs (385) (897) (1,282) (359) (837) (1,196)
Net return before taxation 15,745 30,444 46,189 19,226 20,482 39,708
Taxation 5 (191) - (191) (259) - (259)
Net return after taxation 15,554 30,444 45,998 18,967 20,482 39,449
Return per Ordinary share 6 14.2p 27.7p 41.9p 16.3p 17.6p 33.9p
The total column of this statement represents the profit and loss account of
the Company prepared in accordance with FRS 102. The 'Revenue' and 'Capital'
columns represent supplementary information prepared under guidance issued by
the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued in the period.
The accompanying notes are an integral part of the condensed financial
statements.
Condensed Statement of Financial Position (unaudited)
As at As at
31 December 2023 30 June 2023
Notes £'000 £'000
Fixed assets
Investments at fair value through profit or loss 1,078,543 1,098,311
Current assets
Other debtors and receivables 5,900 7,274
Cash and cash equivalents 24,568 15,115
30,468 22,389
Creditors: amounts falling due within one year
Derivative financial instruments (1,371) -
Other payables (2,578) (5,997)
Bank loans 7 (6,497) (6,378)
(10,446) (12,375)
Net current assets 20,022 10,014
Total assets less current liabilities 1,098,565 1,108,325
Creditors: amounts falling due after one year
2.51% Senior Loan Notes 2027 7 (39,948) (39,941)
4.37% Senior Loan Notes 2029 7 (68,409) (69,200)
(108,357) (109,141)
Net assets 990,208 999,184
Capital and reserves
Share capital 8 29,882 29,882
Share premium account 438,213 438,213
Capital redemption reserve 4,997 4,997
Capital reserve 489,332 489,428
Revenue reserve 27,784 36,664
Total Shareholders' funds 990,208 999,184
Net asset value per Ordinary share 9
Debt at fair value 929.4p 911.7p
Debt at par value 916.6p 894.4p
The accompanying notes are an integral part of the condensed financial
statements.
Condensed Statement of Changes in Equity (unaudited)
Six months ended 31 December 2023
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 July 2023 29,882 438,213 4,997 489,428 36,664 999,184
Net return after tax - - - 30,444 15,554 45,998
Buyback of Ordinary shares for treasury 8 - - - (30,540) - (30,540)
Dividends paid 3 - - - - (24,434) (24,434)
Balance at 31 December 2023 29,882 438,213 4,997 489,332 27,784 990,208
Six months ended 31 December 2022
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 July 2022 29,882 438,213 4,997 502,672 33,491 1,009,255
Net return after tax - - - 20,482 18,967 39,449
Buyback of Ordinary shares for treasury 8 - - - (9,296) - (9,296)
Dividends paid 3 - - - - (22,614) (22,614)
Balance at 31 December 2022 29,882 438,213 4,997 513,858 29,844 1,016,794
The accompanying notes are an integral part of the condensed financial
statements.
Condensed Statement of Cash Flows (unaudited)
Six months ended Six months ended
31 December 2023 31 December 2022
Notes £'000 £'000
Operating activities
Net return before finance costs and taxation 47,471 40,904
Adjustments for
Increase in accrued expenses 115 1,114
Overseas withholding tax (201) (244)
Decrease in dividend income receivable 1,830 1,600
Increase in interest income receivable (28) (47)
Interest paid (1,508) (1,177)
Gains on investments (32,687) (22,014)
Amortisation of loan note expenses 7 6
Accretion of loan note book cost (791) (791)
Foreign exchange losses/(gains) 59 (626)
Increase in other debtors (417) (342)
Net cash inflow from operating activities 13,850 18,383
Investing activities
Purchases of investments (62,488) (112,528)
Sales of investments 113,005 135,999
Net cash inflow from investing activities 50,517 23,471
Financing activities
Dividends paid 3 (24,434) (22,614)
Buyback of Ordinary shares for treasury 8 (30,540) (9,296)
Repayment of bank loans - (6,755)
Draw down of bank loans - 6,664
Net cash outflow from financing activities (54,974) (32,001)
Increase in cash 9,393 9,853
Analysis of changes in cash during the period
Opening balance 15,115 20,131
Effect of exchange rate fluctuations on cash held 60 875
Increase in cash as above 9,393 9,853
Closing balance 24,568 30,859
Represented by:
Cash at bank and in hand 4,675 4,786
Money market funds 19,893 26,073
24,568 30,859
The accompanying notes are an integral part of the condensed financial
statements.
Notes to the Financial Statements
For the six months ended 31 December 2023
1. Accounting policies
Basis of preparation. The condensed financial statements have been prepared in
accordance with Financial Reporting Standard ("FRS") 104 (Interim Financial
Reporting) and with the Statement of Recommended Practice for 'Financial
Statements of Investment Trust Companies and Venture Capital Trusts' issued in
July 2022. 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 condensed 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 December 2023 31 December 2022
£'000 £'000
Investment income
UK dividends 11,738 15,006
Overseas dividends 3,109 3,693
Property income dividends 252 634
15,099 19,333
Other income
Deposit interest 25 13
Money Market interest 538 318
Traded option premiums 1,695 1,205
Interest on tax reclaim 7 -
2,265 1,536
Total income 17,364 20,869
3. Dividends
Dividends paid on Ordinary shares deducted from the revenue reserve:
Six months ended Six months ended
31 December 2023 31 December 2022
£'000 £'000
2022 fourth interim dividend - 11.25p - 13,127
2023 first interim dividend - 8.25p - 9,556
2023 fourth interim dividend - 12.75p 14,100 -
2024 first interim dividend - 9.50p 10,334 -
Return of unclaimed dividends - (69)
24,434 22,614
The first interim dividend for 2024 of 9.50p (2023 - 8.25p) was paid on 14
December 2023 to shareholders on the register on 17 November 2023. The
ex-dividend date was 16 November 2023.
A second interim dividend for 2024 of 9.50p (2023 - 8.25p) will be paid on 14
March 2024 to shareholders on the register on 16 February 2024. The
ex-dividend date is 15 February 2024.
A third interim dividend for 2024 of 9.50p (2023 - 8.25p) will be paid on 13
June 2024 to shareholders on the register on 17 May 2024. The ex-dividend date
is 16 May 2024.
4. Management fee and finance costs
The management fee is as reported in the 2023 Annual Report, being a tiered
fee based on net assets and calculated as follows:
Fee rate Net
per annum assets £'million
0.55% up to 350
0.45% within the range 350-450
0.25% greater than 450
The management fee and finance costs are charged 30% to revenue and 70% to
capital.
5. 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 2024 is an effective rate of 25% (2023 - 19%).
During the period the Company suffered withholding tax on overseas dividend
income of £191,000 (31 December 2022 - £259,000).
6. Return per Ordinary share
Six months ended Six months ended
31 December 2023 31 December 2022
£'000 p £'000 p
Revenue return 15,554 14.2 18,967 16.3
Capital return 30,444 27.7 20,482 17.6
Total return 45,998 41.9 39,449 33.9
Weighted average number of Ordinary shares in issue 109,756,794 116,250,589
7. Senior Loan Notes and bank loans
Senior Loan Notes. The Company has in issue:
(i) £40,000,000 of 10 year Senior Loan Notes at a fixed rate of 2.51%,
redeemable at par on 8 November 2027;
(ii) £60,000,000 of 15 year Senior Loan Notes at a fixed rate of 4.37%
redeemable at par on 8 May 2029.
The Loan Notes rank pari passu and are secured by floating charges over the
whole of the assets of the Company and pay interest in half yearly instalments
in May and November. The Company has complied with both Note Purchase
Agreements: that the ratio of net assets to gross borrowings must be greater
than 3.5:1 and that net assets must not be less than £550,000,000.
The fair value of the Loan Notes is shown in note 9. The fair value of the
2.51% Loan Notes is calculated by aggregating the expected future cash flows
discounted at a rate comprising the borrower's margin plus an average of
market rates applicable to loans of a similar period of time. The fair value
of the 4.37% Loan Notes is based on a comparable quoted debt security and
their amortisation is presented as a finance cost, split 70% to capital and
30% to revenue.
31 December 2023 30 June 2023
£'000 £'000
2.51% Senior Loan Notes 40,000 40,000
Unamortised 2.51% Senior Loan Notes issue expenses (52) (59)
39,948 39,941
4.37% Senior Loan Notes at fair value 73,344 73,344
Amortisation of 4.37% Senior Loan Note (4,935) (4,144)
68,409 69,200
108,357 109,141
Bank loans. The Company has a three year £50 million multi-currency unsecured
revolving bank credit facility with Bank of Nova Scotia Limited, committed
until 27 October 2024. At the period end the Company had drawn down the
facility as shown below:
31 December 2023 30 June 2023
Rate Currency £'000 Rate Currency £'000
Euro 5.04% 3,300,000 2,860 4.56% 3,300,000 2,832
Swiss Franc 3.05% 1,200,000 1,118 2.80% 1,200,000 1,055
US Dollar 6.65% 1,570,000 1,232 6.31% 1,570,000 1,235
Danish Krona 5.07% 6,850,000 796 4.56% 6,850,000 789
Norwegian Krone 5.77% 6,360,000 491 5.11% 6,360,000 467
6,497 6,378
8. Share capital
Six months ended Year ended
31 December 2023 30 June 2023
Shares £'000 Shares £'000
Allotted, called-up and fully paid:
Ordinary shares of 25p each: publicly held 108,033,782 27,008 111,720,001 27,930
Ordinary shares of 25p each; held in treasury 11,495,750 2,874 7,809,531 1,952
119,529,532 29,882 119,529,532 29,882
During the period 3,686,219 (30 June 2023 - 4,970,471) Ordinary shares were
bought back for treasury at a cost of £30,540,000 (30 June 2023 -
£42,202,000). As at the date of signing this report a further 640,000 shares
have been bought back at a cost of £5,377,000.
9. Net asset value per Ordinary share
The net asset value and the net asset value attributable to the Ordinary
shares at the end of the period follow. These were calculated using
108,033,782 (30 June 2023 - 111,720,001) Ordinary shares in issue at the
period end (excluding treasury shares).
31 December 2023 30 June 2023
Net Asset Value Net Asset Value
Attributable Attributable
£'000 pence £'000 pence
Net asset value - debt at par 990,208 916.6 999,184 894.4
Add: amortised cost of 2.51% Senior Loan Notes 39,948 37.0 39,941 35.8
Less: fair value of 2.51% Senior Loan Notes (36,168) (33.5) (34,928) (31.3)
Add: amortised cost of 4.37% Senior Loan Notes 68,409 63.3 69,200 61.9
Less: fair value of 4.37% Senior Loan Notes (58,299) (54.0) (54,900) (49.1)
Net asset value - debt at fair value 1,004,098 929.4 1,018,497 911.7
10. Transaction costs
During the period, expenses were incurred in acquiring or disposing of
investments classified at 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 December 2023 31 December 2022
£'000 £'000
Purchases(A) 266 479
Sales(A) 55 82
321 561
(A) Costs associated with the purchases and sale of portfolio investments in
the normal course of the Company's business comprising stamp duty, financial
transaction taxes and brokerage.
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 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 1 Level 2 Level 3 Total
As at 31 December 2023 Note £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted equities a) 1,078,543 - - 1,078,543
Financial liabilities at fair value through profit or loss
Derivatives b) (1,165) (206) - (1,371)
Net fair value 1,077,378 (206) - 1,077,172
Level 1 Level 2 Level 3 Total
As at 30 June 2023 Note £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted equities a) 1,098,311 - - 1,098,311
Net fair value 1,098,311 - - 1,098,311
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.
The fair value of the 2.51% Senior Loan Notes have been calculated as
£36,168,000 (30 June 2023 - £34,928,000), determined by aggregating the
expected future cash flows for that loan discounted at a rate comprising the
borrower's margin plus an average of market rates applicable to loans of a
similar period of time, compared to carrying amortised cost of £39,948,000
(30 June 2023 - £39,941,000).
The fair value of the 4.37% Senior Loan Notes, have been calculated as
£58,299,000 (30 June 2023 - £54,900,000), the value being based on a
comparable debt security, compared to carrying amortised cost of £68,409,000
(30 June 2023 - £69,200,000).
All other financial assets and liabilities of the Company are included in the
Condensed Statement of Financial Position at their book value which in the
opinion of the Directors is not materially different from their fair value.
12. Analysis of changes in net debt
At Currency Non-cash At
30 June 2023 differences Cash flows movements 31 December 2023
£000 £000 £000 £000 £000
Cash and cash equivalents 15,115 60 9,393 - 24,568
Debt due within one year (6,378) (119) - - (6,497)
Debt due after one year (109,141) - - 784 (108,357)
Total (100,404) (59) 9,393 784 (90,286)
At Currency Non-cash At
30 June 2022 differences Cash flows movements 31 December 2022
£000 £000 £000 £000 £'000
Cash and cash equivalents 20,131 875 9,853 - 30,859
Debt due within one year (6,507) (249) 91 - (6,665)
Debt due after one year (110,710) - - 785 (109,925)
(97,086) 626 9,944 785 (85,731)
An analysis of cash and cash equivalents between cash at bank and in hand and
money market funds is provided in the Statement of Cash Flows.
A statement reconciling the movement in net funds to the net cash flow has not
been presented as there are no differences from the above analysis.
13. Transactions with the Manager
The Company has delegated the provision of investment management, secretarial,
accounting and administration and promotional services to the Manager.
The amounts charged excluding VAT for the period are set out below:
Six months ended Six months ended
31 December 2023 31 December 2022
£'000 £'000
Management fees 1,838 1,887
Promotional activities 212 200
Secretarial fees 38 38
2,088 2,125
The amounts payable excluding VAT at the period end are set out below:
Six months ended Six months ended
31 December 2023 31 December 2022
£'000 £'000
Management fees 612 635
Promotional activities 212 100
Secretarial fees 19 19
843 754
No fees are charged in the case of investments managed or advised by the abrdn
Group. There were no commonly managed funds held in the portfolio during the
six months to 31 December 2023 (2022 - none). 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.
14. Segmental information
The Directors are of the opinion that the Company is engaged in a single
segment of business activity, being investment business. Consequently, no
business segmental analysis is provided.
15. 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 2023 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 of the Companies Act 2006.
16. This Half-Yearly Financial Report was approved by the Board on 5 March 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 reviewed as particularly relevant for closed-end
investment companies.
Discount to net asset value per Ordinary share with debt at fair value
The discount is the amount by which the share price is lower than the net
asset value per share with debt at fair value, expressed as a percentage of
the net asset value.
31 December 2023 30 June 2023
NAV per Ordinary share a 929.4p 911.7p
Share price b 865.0p 837.0p
Discount (b-a)/a (6.9%) (8.2%)
Discount to net asset value per Ordinary share with debt at par value
The discount is the amount by which the share price is lower than the net
asset value per share with debt at par value, expressed as a percentage of the
net asset value.
31 December 2023 30 June 2023
NAV per Ordinary share a 916.6p 894.4p
Share price b 865.0p 837.0p
Discount (b-a)/a (5.6%) (6.4%)
Dividend yield
The annual dividend per Ordinary share divided by the share price, expressed
as a percentage.
31 December 2023 30 June 2023
Dividends per share (p) a 37.50p 37.50p
Share price (p) b 865.0p 837.0p
Dividend yield a/b 4.3% 4.5%
The dividend used for 31 December 2023 of 37.50p is presented on a historical
basis and represents the amount paid in respect of the year ended 30 June
2023.
Net gearing
Net gearing measures the total borrowings less cash and cash equivalents
dividend by shareholders' funds, expressed as a percentage. Under AIC
reporting guidance cash and cash equivalents includes amounts due to and from
brokers at the year end as well as cash and cash equivalents.
31 December 2023 30 June 2023
Bank loans (£'000) a (6,497) (6,378)
Senior Loan Notes (£'000) b (108,357) (109,141)
Total borrowings (£'000) c=a+b (114,854) (115,519)
Cash (£'000) d 24,568 15,115
Amounts due to brokers (£'000) e (907) (3,449)
Amounts due from brokers (£'000) f - -
Shareholders' funds (£'000) g 990,208 999,184
Net gearing -(c+d+e+f)/g 9.2% 10.4%
Ongoing charges
The ongoing charges ratio has been calculated based on the total of investment
management fees and administrative expenses less non-recurring charges and
expressed as a percentage of the averge daily net asset values with debt at
fair value published throughout the period.
31 December 2023 30 June 2023
Investment management fees(A) (£'000) a 3,700 3,804
Administrative expenses(A) (£'000) b 1,401 1,390
Less: non-recurring charges(B) (£'000) c (25) (8)
Ongoing charges (£'000) a+b+c 5,076 5,186
Average net assets (£'000) d 994,510 1,036,020
Ongoing charges ratio (a+b+c)/d 0.51% 0.50%
(A) 31 December 2023 represents the annualised forecast to 30 June 2024.
(B) 31 December 2023 comprises £20,000 Directors recruitment fee, £1,500
relating to legal fees and £3,250 relating to other professional services
unlikely to recur. 30 June 2023 comprises £7,000 profesisonal fees relating
to discussions with the registrar and £1,000 quick turnaround fee for
electronic filing of statutory statements.
The ongoing charges ratio provided in the Company's Key Information Document
is calculated in line with the PRIIPs regulations, which includes financing
and transaction costs.
Total return
Share price and NAV 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
FTSE All-Share Index, respectively.
Share NAV NAV
Six months ended 31 December 2023 price (debt at fair value) (debt at par)
Opening at 1 July 2023 a 837.0p 911.7p 894.4p
Closing at 31 December 2023 b 865.0p 929.4p 916.6p
Price movements c=(b/a)-1 3.3% 1.9% 2.5%
Dividend reinvestment(A) d 2.9% 2.6% 2.7%
Total return c+d 6.2% 4.5% 5.2%
Share NAV NAV
Year ended 30 June 2023 price (debt at fair value) (debt at par)
Opening at 1 July 2022 a 832.0p 871.0p 864.9p
Closing at 30 June 2023 b 837.0p 911.7p 894.4p
Price movements c=(b/a)-1 0.6% 4.7% 3.4%
Dividend reinvestment(A) d 4.3% 4.1% 4.1%
Total return c+d 4.9% 8.8% 7.5%
(A) 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. 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.
END
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