Half-year Report
21/11/2024 07:00
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RNS Number : 0252N Shires Income PLC 21 November 2024
SHIRES INCOME PLC
HALF YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2024
Legal Entity Identifier (LEI): 549300HVCIHNQNZAYA89
INVESTMENT OBJECTIVE
The Company's investment objective is to provide shareholders with a high
level of income, together with the potential for growth of both income and
capital from a diversified portfolio substantially invested in UK equities but
also in preference shares, convertibles and fixed income securities.
BENCHMARK
The Company's benchmark is the FTSE All-Share Index (total return).
DIVIDENDS
The Company pays dividends to Ordinary shareholders on a quarterly basis.
Performance Highlights
Net asset value per Ordinary share total return(A) Share price total return(A)
Six months ended 30 September 2024 Six months ended 30 September 2024
+6.8% +14.5%
Year ended 31 March 2024 +5.1% Year ended 31 March 2024 (5.7)%
Benchmark index total return Earnings per Ordinary share (revenue)
Six months ended 30 September 2024 Six months ended 30 September 2024
+6.1% 8.15p
Year ended 31 March 2024 +8.4% Six months ended 30 September 2023 7.66p
Dividend yield(A) Discount to net asset value(A)
As at 30 September 2024 As at 30 September 2024
5.9% 7.4%
As at 31 March 2024 6.5% As at 31 March 2024 13.3%
(A) Considered to be an Alternative Performance Measure.
Financial Calendar and Financial Highlights
Financial Calendar
Expected payment dates of quarterly dividends 31 January 2025
30 April 2025
31 July 2025
31 October 2025
Financial year end 31 March 2025
Expected announcement of results for year ended 31 March 2025 May 2025
Annual General Meeting July 2025
Financial Highlights
30 September 2024 31 March 2024 % change
Total assets (£'000)(A) 128,708 124,920 +3.0
Shareholders' funds (£'000) 109,739 105,957 +3.6
Net asset value per share 265.14p 256.00p +3.6
Share price (mid-market) 245.50p 222.00p +10.6
Discount to net asset value (cum-income)(B) 7.4% 13.3%
Dividend yield(B) 5.9% 6.5%
Net gearing(B) 16.4% 16.4%
Ongoing charges ratio(B) 1.00% 1.10%
(A) Less current liabilities excluding bank loans of £9,000,000.
(B) Considered to be an Alternative Performance Measure.
Performance (total return)
Six months ended Year ended Three years ended Five years ended
30 September 2024 30 September 2024 30 September 2024 30 September 2024
Net asset value(A) +6.8% +11.3% +8.9% +28.2%
Share price(A) +14.5% +11.5% +8.3% +23.6%
FTSE All-Share Index +6.1% +13.4% +23.9% +32.2%
(A) Considered to be an Alternative Performance Measure..
All figures are for total return and assume reinvestment of net dividends
excluding transaction costs.
For further information, please contact:
Paul Finlayson
abrdn Investments Limited
0131 372 2200
Chairman's Statement
Highlights
- Company delivers on its objective of providing a high level of
income and capital growth.
- Net Asset Value ("NAV") total return of 6.8%.
- Share price total return of 14.5%.
- Dividend yield of 5.9% (based on the period end share price).
Review of the Period
In my first statement to shareholders as Chairman of your Company, I am
pleased to report a period of positive performance, with the Company
delivering on its objective of providing a high level of income and capital
growth.
The Net Asset Value ("NAV") total return was 6.8%, which compares to a wider
market return of 6.1% as measured by the FTSE All-Share Index. The share price
total return was 14.5%, resulting from a narrowing of the discount of share
price to NAV, which was 7.4% at the end of the period.
Based on the current annual rate of dividend, the dividend yield on the share
price at the end of the period was 5.9%, a material premium to the FTSE
All-Share Index which yields approximately 3.7%.
Following a period of relatively high inflation and increased interest rates,
there were signs of economic improvement during the period under review.
Inflation has moderated and interest rates have started to fall, with further
reductions expected in the months ahead. This backdrop has been helpful to
equity markets and the UK market in particular, which remains undervalued
relative to other developed markets. The positive factors are, however,
over-shadowed by a number of continuing global geo-political risks, most
notably the continuing conflicts in Ukraine and the Middle East. The recent
UK budget will also impact on savers and their choice of savings, with
increasing taxes (including National Insurance, Capital Gains Tax and
Inheritance Tax) all having an unquantifiable impact on the UK market.
A detailed review of performance and investment activity is contained in the
Investment Manager's Review.
Earnings and Dividends
The revenue earnings per share for the period were 8.15p, an increase of 6.4%
compared to the 7.66p of earnings generated in the equivalent period last
year.
As stated in the recent Annual Report, with effect from 1 April 2024
management fees and finance costs have been charged 40% to Revenue and 60% to
Capital in the Statement of Comprehensive Income (compared to an historic
allocation of 50% to Revenue and 50% to Capital), which accords with the
anticipated long term split of returns from the portfolio. This resulted in a
benefit to revenue earnings of 0.20p per share for the period, with some
additional cost being applied against capital.
A first interim dividend of 3.2p per Ordinary share in respect of the year
ending 31 March 2025 was paid on 31 October 2024 (2024: first interim dividend
3.2p). The Board is declaring a second interim dividend of 3.2p per Ordinary
share, payable on 31 January 2025 to shareholders on the register at close of
business on 3 January 2025. Subject to unforeseen circumstances, it is
proposed to pay a further interim dividend of 3.2p per Ordinary share prior to
the Board deciding on the rate of final dividend at the time of reviewing the
full year results. From time to time the Company recalibrates the level of
interim dividend payable, but typically has three equal interim dividends and
a higher balance being applied to the final dividend, which is subject to
shareholder approval at the AGM.
The Company continues to generate a high level of income and to deliver a
material yield premium to the market. The current annual rate of dividend is
14.40p per Ordinary share which represented a dividend yield of 5.9% based on
the share price at the end of the period. The Board considers the Company's
high level of dividend to be one of its key attractions and recognises that,
in the current economic environment, with a falling yield on cash investments,
there is likely to be a continuing demand for an attractive and reliable level
of income. We have a very high proportion of our investors invested through
retail platforms and many of those will be 'tax protected' in ISAs or SIPPs.
Some will have elected for periodic saving into the shares of the Company and
some for reinvestment of dividends, both historically good ways of obtaining a
long-term return on investments made in income funds, especially if held
through ISAs.
Discount and Share Buy Backs
As stated above, the discount at which the price of the Company's Ordinary
shares traded relative to the NAV narrowed during the period, to 7.4% as at 30
September 2024 (31 March 2024: 13.3%). With the discount narrowing during the
period, the Company did not buy back any shares. The Board will, however,
continue to monitor the discount level carefully and make use of the share
buyback authority granted by shareholders at the Company's last AGM, if we
consider it in the best interests of shareholders to do so. It has been
disappointing to see the entire investment company sector de-rated, including
income funds, but it does potentially provide a buying opportunity where
shares are trading materially below their intrinsic NAV, if there is a
prospect of the discount narrowing at some point in the future.
Gearing
The Company has a £20 million loan facility of which £19 million was drawn
down at the period end. Net of cash, this represented gearing of 16.4%,
unchanged since the start of the period. The weighted average borrowing cost
at the period end was 5.2% (31 March 2024 - 5.3%).
The Board monitors the level of gearing regularly. Although the absolute level
of gearing may look high relative to some other investment trusts,
strategically we take the view that the borrowings are notionally invested in
the less volatile fixed income part of the portfolio which generates a high
level of income (namely the preference share part of the portfolio), giving
the Investment Manager greater ability to invest in a range of equity stocks
with lower yields and higher growth prospects. The Board believes that this
combination should enable the Company to achieve a high and potentially
growing level of dividend, and also deliver some capital appreciation for
shareholders - as has been the case in the past.
Cancellation of Share Premium Account
Following shareholder approval at the Company's AGM on 5 July 2024, the
Company received court approval by way of a court order dated 13 August 2024
for cancellation of the Share Premium Account. The court order was registered
at Companies House on 16 August 2024 at which point cancellation of the Share
Premium Account became effective. Consequently, the amount of approximately
£50 million previously standing to the credit of the Share Premium Account
has been transferred to a newly created distributable reserve which is
available to fund the cost of share buy backs and dividend payments. The Board
considers that it is in shareholders' interests for the Company to have this
flexibility, although it has no current intention of making use of the new
reserve for dividend payments which will continue to be resourced through net
revenue and revenue reserves.
Board
The Company focuses on having a relatively small and engaged board of
individuals with experience in the closed-ended sector and more widely. This
works well, as has the succession planning in introducing new members to the
Board over recent years, without impairing the chemistry and cohesion of the
Board. I want to pay tribute to Robert Talbut's chairmanship during my
tenure on the Board and his oversight of various constructive changes in how
the Company operates, as well as during the combination with abrdn Smaller
Companies Income Trust, which completed last year. We wish Robert well in
his other roles and thank him for his contribution to the Company.
Outlook
With inflation now seemingly under control and interest rates starting to
fall, there are reasons to be optimistic about the prospects for economic
stability. However, the conflicts in the Middle East and Ukraine continue to
create significant geopolitical risk, and the recent UK budget and result of
the US presidential election both create economic uncertainties that could
have an impact on financial markets.
Further reductions in interest rates should be beneficial for equity markets
and the investment company sector, and the UK Equity Income sector in
particular. However, as always, good stock selection will be key and the Board
has confidence in the ability of the Manager to continue to deliver the
Company's objective of delivering a high level of income for shareholders,
together with the potential for growth of both income and capital.
Robin Archibald
Chairman
20 November 2024
Investment Manager's Review
Market Background
The first half of our financial year was a period of elevated geopolitical
risk and uncertainty globally, and of political change in the UK. A Labour
government was elected in July for the first time since 2010, winning a
significant majority, although this perhaps flattered a more modest share of
the popular vote. After campaigning with a pro-growth agenda, the government
now has the hard work of balancing economic growth and stability with
commitments to improve public services and invest in infrastructure.
Overseas, the US election in November, after the end of the period, produced a
Republican victory and an initial rise in the US Dollar. There has been no end
to conflict in Ukraine and in the Middle East, with recent escalation of
tensions between Israel and Iran, a concerning development.
Economically, after a period of high inflation and rapidly rising interest
rates, the six months to the end of September saw these macro-economic forces
moderate. Inflation in most regions has come back towards target, with the
latest CPI prints in the US, Europe and the UK significantly below recent
peaks. The drop in headline inflation reflects lower commodity costs being
passed through to goods, and although services and wage inflation remain above
target, risks of persistent high inflation seem to have lessened for now.
Lower inflation has allowed central banks the opportunity to start bringing
interest rates back down towards a more normalised level, and we have seen the
first rate cuts in the US, Europe and the UK already. These probably came
slightly later than expected and the path of rate cuts from here will not be
linear and will remain very dependent on economic data, especially signals
from the labour market. While timing is uncertain, we should expect a
continued moderation in interest rates and we expect to see steady economic
growth from developed market economies in the next few years, with a recession
avoided.
This economic backdrop has helped markets to continue a strong run in the
six-month period, with the MSCI World Index increasing in value by 8%.
Performance was again led by US technology stocks, with the US S&P 500
Index up by 10%. Europe and the UK lagged, with the MSCI Europe Index up 2%
and the FTSE All-Share Index returning just over 6%. Emerging markets were
strong, however, with the MSCI Emerging Markets Index up by 12.5%. Returns
were boosted by a bounce in Chinese stocks after the Chinese government
announced a broad stimulus package at the end of the period. That news also
boosted commodities, although performance over the six months has been mixed -
for example, the Brent crude oil price fell from $80/bbl to $72/bbl, despite
the increase in tensions in the Middle East.
Within the UK market, we saw defensive sectors generally outperform -
partially in reaction to increased macro uncertainty, but also because these
sectors tend to perform well in falling interest rate environments. Telecoms
increased in value by 19%, Consumer Staples by 13% and Utilities by 10%.
Financials also performed particularly well, with banks continuing to benefit
from higher interest rates but also as investors belatedly begin to understand
that their practice of hedging interest rates creates a lagged benefit from
rate increases and will protect cash generation for some years to come.
Unsurprisingly, with a falling oil price, the Energy sector was the most
notable laggard, falling by 10% over the six month period.
Investment Performance
Over the first half of the financial year, the Company delivered a net asset
value ("NAV") total return of 6.8% and the share price (with dividends
reinvested) returned 14.5%, helped by a closing of the discount which ended
the period at 7.4% (31 March 2024: 13.3%). The revenue earnings per share also
increased, growing by 6.4% over the comparable period in the prior year. The
Company therefore delivered on its targets of generating a high level of
income and capital growth for shareholders. Sector allocation detracted 0.2%
from relative performance, largely due to the overweight position in the
Energy sector, but this was more than offset by positive stock selection. On a
sectoral basis, we saw strong returns from the positions in Industrials
(+16%), due to our conviction overweight exposure to UK construction
companies. There were also good returns from Financials (+11%), Telecoms
(+16%), Basic Materials (+17%) and Utilities (+11%).
Performance on an individual stock basis reflected that sectoral mix. Morgan
Sindall (Industrials) continues to deliver earnings upgrades and is well
exposed to increased construction and infrastructure investment in the UK. Its
shares rose 37% in the period and it was the top contributor to portfolio
returns. In the same sector, Balfour Beatty and Kier also performed well. In
the Financials sector, NatWest was a standout performer, increasing in value
by 32%, reflecting a robust outlook for returns over the next few years.
Utilities delivered very encouraging returns, and in the portfolio Drax
(+34%), Enel (+18%), SSE (+17%) and Telecom Plus (+16%) all performed well.
The peak in interest rates also allowed the preference shares in the portfolio
to perform well, and the position in the Royal & Sun Alliance preference
shares gained 14%, following a tender offer.
On the negative side, we saw some of the Energy holdings lag the market as
commodity prices dipped. Although the Energy positions are designed to be less
commodity price sensitive than the market as a whole, they are not immune.
Energean (-13%) delivered stable cashflows due to its fixed price gas
contracts but was understandably impacted by the increased risk in the Middle
East given its main operations are in offshore Israel. Other disappointing
performers included Melrose Industrials (Industrials) (-31%) which has been
impacted by slowing activity in the aerospace sector - we continue to believe
in the strength of long-term service agreements and the attraction of these
long duration cashflows. The position in 4Imprint Group (Consumer
Discretionary) also gave back some gains from earlier in the calendar year,
dipping 19%. Some of the overseas holdings were also weak, with ASML Holdings
(Technology) falling 13%, Novo-Nordisk (Health Care) 13% and Mercedes-Benz
(Consumer Discretionary) down 17%. While we continue to see significant
attraction in the long-term growth potential of Novo-Nordisk and ASML, we
exited the position in Mercedes-Benz before a recent profit warning.
Portfolio Activity
It was an active period for the portfolio as we reacted to the changing
outlook, with interest rates starting to decline and increased economic
uncertainty. In April, we added a new position in construction contractor
Kier. The company has delivered significant balance sheet improvement in
recent years and is now approaching resumption of its dividend. We like the
company, given structurally supportive industry trends, high cash generation
and still a low valuation despite a period of outperformance. The free cash
flow yield at close to 20% supports dividend growth and continued
deleveraging, while the opportunity to acquire more distressed smaller
companies in adjacent areas is under appreciated by the market. It trades on a
6x price to earnings multiple compared to peers on 9-10x.
We switched the holding in Mondi into Smurfit Westrock. This was simply
reflecting our preference in the paper and packaging sector. Although we
continue to like Mondi, we see greater upside in the medium term from Smurfit
Westrock as it delivers on a significant acquisition in the US market. There
is material self-help potential here and the share price fell somewhat on the
deal, giving us a chance to buy a high-quality operator at a reasonable price.
In May we initiated a new position in Reckitt Benckiser Group. The portfolio
has generally been underweight Consumer Staples categories in recent years,
given unattractive valuations, low yields and limited genuine growth. A recent
sell-off in Reckitt offered an opportunity to gain sector exposure at a
material discount to the peer group and with a yield of over 4.5%. The company
has struggled operationally in recent years, but we see signs of a turnaround
under new management and the underlying brands remain high quality. Given a
relatively cautious view on market levels and the economic outlook there is
also an appeal to adding more defensive exposure.
We sold out of IT distributor Softcat in May. We have held the stock for a
number of years and have seen it grow strongly over that time. The shares have
re-rated and trade in excess of 25x price to earnings, while the dividend
yield has compressed to just 2%. It remains a well-run company with growth
potential, but we see more value elsewhere.
We also exited one position in June: Greggs. The company has performed very
well since we added it to the portfolio in November last year, and we continue
to like the business model and the potential for strong medium-term growth as
it expands its offering and rolls out more stores. However, with the yield now
compressed and the shares trading at over 21x earnings, we see the company as
now being more fairly valued.
In July we started a new position in UK reinsurance company Conduit Holdings.
This is a relatively new reinsurance business which is set to deliver earnings
growth as its book matures and it benefits from positive market trends. Recent
quarters have demonstrated strong premium growth and improved underwriting
profitability. The shares had a 6% dividend yield at the time of purchase and
the position helps diversify the portfolio. We reduced exposure to Engie,
where dividends have already been paid for the year and sold out of AXA. The
French insurer has performed very well since purchase, but with no further
income this financial year we chose to reallocate capital. The other exit from
the portfolio in July came in the preference share portfolio, where issuer
Royal & Sun Alliance tendered its preference shares. This created an
attractive premium and allowed us to reinvest at a higher yield, with the
proceeds used to purchase bonds issued by Nationwide, with a 10.25% coupon and
a yield of around 7.3% on the purchase price.
In August we sold out of the position in Lloyds Banking, a company we still
like, but given the need to generate income through the year we chose to
allocate to other names given there is no income remaining this financial
year, instead maintaining a position in NatWest. We also topped up the
position in Assura, a high yielding company which will benefit from the lower
interest rates we expect to see over the next few months.
A more meaningful trade in August was to start a position in Dutch technology
company ASML. When adding overseas companies we generally look for something
we can't find in the UK market, and ASML is a prime example of this. The
company designs and manufactures the lithography machines essential in the
production of today's cutting edge semiconductors. It is a company with
extremely high technical barriers to entry, making products that are essential
for one of the highest growth parts of the market. While it screens as
relatively expensive, a recent pullback in the share price means it has
de-rated in the last few months and we expect growth to make it look much more
reasonably priced a few years from now. It is the top-rated stock globally by
our technology analysts. We funded the purchase by selling the position in
French utility company Engie. This has been an excellent performer since its
introduction into the portfolio but is not due to pay any more dividends this
year, and so we chose to take the profit.
At the other end of the market cap spectrum, we initiated a new position in ME
Group. This UK mid-cap company operates automated photo booths and
laundromats. A somewhat niche market, but one with high returns on capital and
plenty of room for growth as it rolls out the laundry model into Eastern
Europe and Asia.
In August, we also added a new position in UK property REIT LondonMetric. This
is a company with a high-quality management team and a solid performance
through the economic cycle. It has an excellent track record of delivering
dividend growth and the recent 19% year on year increase in its dividend takes
it to a very attractive 5.9% yield. We funded the purchase by selling the
holding in Dutch bank ING. Since its purchase in April 2023, the holding has
delivered a total return of 65%, outperforming the market by 50%. However,
with no income in the next six months we chose to prioritise other
opportunities. Another overseas exit this month was Mercedes-Benz. Again, the
driver was a lack of income in the near term, but also combined with some
difficult trends in auto markets which make us less optimistic for now.
We only made one meaningful trade in September, switching the holding in UK
housebuilder Berkeley Group into peer Barratt Developments. The move came
ahead of Barratt's shares going ex-dividend, so captured some additional
income, but primarily reflects the fact that Barratt has lagged the sector
recently following its deal to buy Redrow. However, it should be able to
extract synergies from the transaction, its land position is improved and it
now trades on a notably low price to book value multiple compared to its
peers. We see more upside in Barratt and it is also more aligned with
government intentions to increase housing volumes in a way Berkeley isn't.
Investment Income
The revenue earnings per share for the period were 8.15p, which compares to
7.66p for the equivalent period last year, an increase of 6.4%.
The currency impact on dividend income has been marginally negative, with a
slightly higher Sterling putting some downward pressure on any US Dollar
denominated payments. We estimate that around 35% of the portfolio income is
denominated in overseas currencies. Another trend impacting income is that
companies are increasingly allocating excess cash to share buybacks rather
than special dividends, although we would hope that lower shares in issue
translate into dividend per share growth in future years.
Looking at individual sectors, there was also some downward pressure from the
mining companies, which follow stable payout ratios. With somewhat weaker
commodity prices this year, this resulted in lower dividend payments. For
example, Anglo American's interim dividend in July was around 25% below the
prior year. By contrast, energy companies have continued to deliver dividend
growth. The majors have increased payments by high single digit percentages:
Although energy prices have not been strong, we are seeing the benefit of
lower numbers of shares as these companies continue to buyback equity,
allowing for modest per share increases. We also saw significant dividend
growth in the sector from Energean as its main project in Israel reached
target volumes. Not all energy companies delivered robust income, however, and
Diversified Energy had to reduce its dividend in response to a US gas price
that has stayed very low for a prolonged period.
Another area delivering dividend growth was the banking sector. A period of
higher interest rates combined with significant buybacks has allowed for
increased distributions from UK banks, and we saw growth from NatWest, Lloyds
Banking, Standard Chartered and HSBC. We expect to see continued dividend
growth from the sector as income rises over the next few years. Partially
offsetting this, Close Brothers suspended its dividend to protect capital
after an unexpected review by the regulator into historic motor finance
business.
Finally, we have continued to see dividend growth from UK mid-cap names in the
portfolio. Many smaller companies do not have the highest headline yields but
deliver dividend growth as they grow. Examples such as Morgan Sindall, Balfour
Beatty, Intermediate Capital Group and Bytes Technology have delivered
consistent year on year increases as earnings have grown.
Outlook
Starting the second half of our financial year, the direction, if not the
pace, of change seems well set. Interest rates are falling, inflation is under
control and global economies are predicted to have a period of consistent, if
unspectacular, growth. That should be a good set up for investors - but we
should not be complacent. As mentioned above, there is a large amount of risk
in the market at the current time. The conflict in the Middle East is an
obvious source of risk, given its potential to impact global energy prices and
return inflation to the top of the agenda. The US election in November has
also introduced increased uncertainty. We would expect Republican policies to
increase tariffs and lower taxes - both of which are inflationary changes. The
current concentration of markets into US technology stocks also creates a risk
if they fail to deliver on expectations for high growth. Any recent shortfall
to high expectations in this sector has led to quite significant share price
reactions and, given the high weighting, this has created market volatility.
It is also worth noting that valuation at purchase can be a strong driver of
future returns - cheap entry points can lead to higher forward returns and
vice versa. Historically, when the US market has traded at this level, ten
year forward returns have been close to zero.
That last point in particular is important for our approach. Equity income has
been out of favour for some time. There are some good reasons for this -
market growth has been driven by technology stocks with low dividend payments
and investors have been able to take advantage of attractive yields on cash
and bonds to generate income. However, in a world where market levels are
flatter (which seems likely after a period of rapid growth) income naturally
makes up a greater proportion of investors' total return and again returns to
prominence. With the yield on cash investments also falling the value of a
resilient income strategy becomes much clearer.
After a period of market concentration, we may also see some dispersion, and
allocators should look to diversify. The UK, in particular, screens as
undervalued, with discounts to US or global equities still close to record
levels. The income outlook for the market remains positive. UK companies have
healthy balance sheets, with the net debt / EBITDA ratio, a standard measure
of balance sheet risk, at less than 1x, which compares to an average over the
last twenty years of nearer 2x. Payout ratios, at just under 0.5x, are also
lower than average. And while an increasing amount of excess cashflow is
directed to share buybacks, that shouldn't be seen as a negative factor given
it will spread future cashflows over fewer shares and allow for dividends to
increase on a per share basis over time.
In summary, while the outlook is benign, we should not be complacent. But we
see plenty of opportunities in an inexpensive UK equity market to invest in
great companies at reasonable prices, allowing the portfolio to deliver on the
twin goals of generating a high level of income and long-term capital growth.
Iain Pyle and Charles Luke
abrdn Investments Limited
20 November 2024
Interim Management Statement
Directors' Responsibility Statement
The Directors are responsible for preparing the Half Yearly Financial Report
in accordance with applicable law and regulations. The Directors confirm that
to the best of their knowledge:
- the condensed set of financial statements within the Half Yearly
Financial Report has been prepared in accordance with IAS 34 'Interim
Financial Reporting'; and
- the Interim Board Report (constituting the Interim Management
Report) includes a fair review of the information required by rules 4.2.7R of
the Disclosure Guidance and Transparency Rules (being an indication of
important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements
and a description of the principal risks and uncertainties for the remaining
six months of the financial year) and 4.2.8R (being related party transactions
that have taken place during the first six months of the financial year and
that have materially affected the financial position of the Company during
that period; and any changes in the related party transactions described in
the last Annual Report that could so do).
Principal and Emerging Risks and Uncertainties
The Board regularly reviews the principal and emerging risks and uncertainties
faced by the Company together with the mitigating actions it has established
to manage the risks. These are set out within the Strategic Report contained
within the Annual Report for the year ended 31 March 2024 and comprise the
following risk headings:
- Strategic objectives and investment policy
- Investment performance
- Failure to maintain, and grow the dividend over the longer term
- Share price and shareholder relations
- Gearing
- Accounting and financial reporting
- Regulatory and governance
- Operational
- Exogenous risks such as health, social, financial, economic,
climate and geo-political
In addition to these risks, the conflicts in Ukraine and the Middle East and
other geo-political tensions have created uncertainty which has further
increased market risk. The most significant direct issue that the Company has
faced is the increasing discounts to net asset value that have affected the
entire investment company sector, including income funds, resulting from
selling pressure and lack of investor demand.
In all other respects, the Company's principal and emerging risks and
uncertainties have not changed materially since the date of the Annual Report
and are not expected to change materially for the remaining six months of the
Company's financial year.
Going Concern
The Company's assets consist mainly of equity shares in companies listed on
the London Stock Exchange. The Board has performed stress testing and
liquidity analysis on the portfolio and considers that, in most foreseeable
circumstances, the majority of the Company's investments are realisable within
a relatively short timescale.
The Board has set limits for borrowing and regularly reviews actual exposures,
cash flow projections and compliance with banking covenants, including the
headroom available. The Company has a £20 million loan facility which matures
in May 2027. £9 million of this amount is drawn down on a short-term basis
through a revolving credit facility and can be repaid without incurring any
financial penalties.
Having taken these factors into account, the Directors believe that the
Company has adequate resources to continue in operational existence for the
foreseeable future and has the ability to meet its financial obligations as
they fall due for the period to 30 November 2025, which is at least twelve
months from the date of approval of this Report. For these reasons, they
continue to adopt the going concern basis of accounting in preparing the
financial statements.
On behalf of the Board
Robin Archibald
Chairman
20 November 2024
Investment Portfolio - Equities
As at 30 September 2024
Market Total
value portfolio
Company £'000 %
AstraZeneca 5,735 4.5
Shell 4,318 3.4
Morgan Sindall 4,281 3.4
HSBC Holdings 3,760 2.9
National Grid 3,510 2.8
SSE 3,398 2.7
BP 3,324 2.6
Rio Tinto 3,166 2.5
Inchcape 2,924 2.3
Standard Chartered 2,915 2.3
Ten largest investments 37,331 29.4
Energean 2,751 2.2
Intermediate Capital Group 2,711 2.1
Telecom Plus 2,700 2.1
Anglo American 2,689 2.1
NatWest 2,566 2.0
Assura 2,338 1.9
Chesnara 2,325 1.8
Imperial Brands 2,285 1.8
Enel 2,223 1.8
Balfour Beatty 2,194 1.7
Twenty largest investments 62,113 48.9
Reckitt Benckiser Group 2,143 1.7
M&G 2,058 1.6
Diversified Energy 2,043 1.6
Sirius Real Estate 1,991 1.5
RS Group 1,849 1.5
Kier 1,841 1.5
Convatec 1,822 1.4
Bytes Technology 1,686 1.3
Hollywood Bowl 1,648 1.3
Melrose Industrials 1,418 1.1
Thirty largest investments 80,612 63.4
Conduit Holdings 1,418 1.1
Hunting 1,395 1.1
TotalEnergies 1,323 1.1
MONY Group 1,206 1.0
ASML Holdings 1,156 0.9
Games Workshop Group 1,092 0.9
OSB 1,066 0.8
GSK 1,056 0.8
LondonMetric 1,054 0.8
Drax 1,040 0.8
Forty largest investments 92,418 72.7
ME Group 1,032 0.8
Smurfit Westrock 1,024 0.8
IP Group 1,016 0.8
Barratt Developments 996 0.8
Wood Group 994 0.8
4imprint Group 968 0.8
Ashmore 915 0.7
Novo-Nordisk 767 0.6
Close Brothers 709 0.6
Genus 547 0.4
Fifty largest investments 101,386 79.8
Dr. Martens 429 0.3
Total equity investments 101,815 80.1
Investment Portfolio - Other Investments
As at 30 September 2024
Market Total
value portfolio
Company £'000 %
Preference shares and Fixed Interest investments(A)
Ecclesiastical Insurance Office 8 5/8% 6,017 3.8
Nationwide 10.25% 4,787 4.7
Santander 10.375% 4,644 3.7
General Accident 7.875% 4,435 3.5
Standard Chartered 8.25% 3,348 2.6
Lloyds Bank 11.75% 991 0.8
R.E.A Holdings 9% 731 0.6
Standard Chartered 7.375% 284 0.2
Total preference shares and fixed interest investments 25,237 19.9
Total equity investments 101,815 80.1
Total investments 127,052 100.0
(A) None of the preference shares and Fixed Interest investments listed above
have a fixed redemption date.
Distribution of Assets and Liabilities
Valuation at Movement during the period Valuation at
31 March 2024 Purchases Sales Gains 30 September 2024
£'000 % £'000 £'000 £'000 £'000 %
Listed investments
Equities 97,974 92.5 28,571 (26,965) 2,235 101,815 92.8
Preference shares and Fixed Interest investments 24,195 22.8 4,749 (5,724) 2,017 25,237 23.0
Total investments 122,169 115.3 33,320 (32,689) 4,252 127,052 115.8
Current assets 3,242 3.1 2,131 1.9
Current liabilities (9,491) (9.0) (9,475) (8.6)
Non-current liabilities (9,963) (9.4) (9,969) (9.1)
Net assets 105,957 100.0 109,739 100.0
Net asset value per Ordinary share 256.00p 265.14p
Condensed Statement of Comprehensive Income
30 September 2024 30 September 2023 31 March 2024
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments at fair value - 4,253 4,253 - (1,374) (1,374) - (5,748) (5,748)
Currency losses - (18) (18) - (39) (39) - (56) (56)
Investment income
Dividend income 3,911 - 3,911 2,920 - 2,920 6,302 - 6,302
Interest income 8 - 8 16 - 16 62 - 62
Traded option premiums - - - 79 - 79 34 - 34
Other income 92 - 92 - - - - - -
Money market interest 14 - 14 8 - 8 31 - 31
4,025 4,235 8,260 3,023 (1,413) 1,610 6,429 (5,804) 625
Expenses
Management fee (124) (187) (311) (100) (100) (200) (210) (210) (420)
Administrative expenses (232) - (232) (240) (24) (264) (505) (24) (529)
Finance costs (206) (308) (514) (245) (245) (490) (502) (502) (1,004)
(562) (495) (1,057) (585) (369) (954) (1,217) (736) (1,953)
Profit/(loss) before taxation 3,463 3,740 7,203 2,438 (1,782) 656 5,212 (6,540) (1,328)
Taxation 2 (92) (19) (111) (80) - (80) (144) - (144)
Profit/(loss) attributable to equity holders 3,371 3,721 7,092 2,358 (1,782) 576 5,068 (6,540) (1,472)
Earnings per Ordinary share (pence) 4 8.15 8.99 17.14 7.66 (5.79) 1.87 14.75 (19.03) (4.28)
The Company does not have any income or expense that is not included in the
profit for the period, and therefore the profit for the period is also the
"Total comprehensive income for the period", as defined in IAS 1 (revised).
The total column of this statement represents the Statement of Comprehensive
Income of the Company, prepared in accordance with UK adopted International
Accounting Standards. The revenue and capital columns are supplementary to
this and are prepared under guidance published by the Association of
Investment Companies.
All items in the above statement derive from continuing operations.
The accompanying notes are an integral part of the financial statements.
Condensed Balance Sheet
As at As at As at
30 September 2024 30 September 2023 31 March 2024
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
Non-current assets
Equities 101,815 73,720 97,974
Preference shares and Fixed Interest investments 25,237 20,850 24,195
Securities at fair value 127,052 94,570 122,169
Current assets
Accrued income and prepayments 1,230 988 1,567
Cash and cash equivalents 901 1,166 1,675
2,131 2,154 3,242
Creditors: amounts falling due within one year
Trade and other payables (475) (414) (491)
Short-term borrowings (9,000) (9,000) (9,000)
(9,475) (9,414) (9,491)
Net current liabilities (7,344) (7,260) (6,249)
Total assets less current liabilities 119,708 87,310 115,920
Non-current liabilities
Long-term borrowings (9,969) (9,957) (9,963)
Net assets 109,739 77,353 105,957
Share capital and reserves
Called-up share capital 6 21,166 15,532 21,166
Share premium account 1 - 21,411 49,952
Special reserve 1 49,952 - -
Capital reserve 7 31,172 33,428 27,451
Revenue reserve 7,449 6,982 7,388
Equity shareholders' funds 109,739 77,353 105,957
Net asset value per Ordinary share (pence) 5 265.14 252.20 256.00
The accompanying notes are an integral part of the financial statements.
Condensed Statement of Changes in Equity
Six months ended 30 September 2024 (unaudited)
Share
Share premium Special Capital Revenue
capital account reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
As at 31 March 2024 21,166 49,952 - 27,451 7,388 105,957
Repurchase of Ordinary shares into treasury - - - - - -
Cancellation of share premium account (note 1) - (49,952) 49,952 - - -
Profit for the period - - - 3,721 3,371 7,092
Equity dividends - - - - (3,310) (3,310)
As at 30 September 2024 21,166 - 49,952 31,172 7,449 109,739
Six months ended 30 September 2023 (unaudited)
Share
Share premium Special Capital Revenue
capital account reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
As at 31 March 2023 15,532 21,411 - 35,930 7,040 79,913
Repurchase of Ordinary shares into treasury - - - (720) - (720)
(Loss)/profit for the period - - - (1,782) 2,358 576
Equity dividends - - - - (2,416) (2,416)
As at 30 September 2023 15,532 21,411 - 33,428 6,982 77,353
Year ended 31 March 2024 (audited)
Share
Share premium Special Capital Revenue
capital account reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
As at 31 March 2023 15,532 21,411 - 35,930 7,040 79,913
Issue of new Ordinary shares on the ASCI transaction 5,634 29,594 - - - 35,228
Cost of shares issued in respect of the ASCI transaction - (1,053) - - - (1,053)
Repurchase of Ordinary shares into treasury - - - (1,939) - (1,939)
(Loss)/profit for the period - - - (6,540) 5,068 (1,472)
Equity dividends - - - - (4,720) (4,720)
As at 31 March 2024 21,166 49,952 - 27,451 7,388 105,957
The capital reserve at 30 September 2024 is split between realised gains of
£28,291,000 and unrealised gains of £2,881,000 (30 September 2023: realised
gains of £26,737,000 and unrealised gains of £6,691,000; 31 March 2024:
realised gains of £24,831,000 and unrealised gains of £2,620,000).
The Company's reserves available to be distributed by way of dividends or
buybacks which includes the special reserve, the revenue reserve and the
realised element of the capital reserve amount to £85,692,000 (30 September
2023 - £33,719,000; 31 March 2024 - £32,219,000).
Condensed Cash Flow Statement
Six months ended Six months ended Year ended
30 September 2024 30 September 2023 31 March 2024
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net cash inflow from operating activities
Dividend income received 4,461 3,301 6,171
Options premium received - 81 35
Interest received from money market funds 14 9 31
Bank interest received 8 13 31
Management fee paid (266) (206) (397)
Other cash expenses (278) (247) (539)
Cash generated from operations 3,939 2,951 5,332
Interest paid (516) (503) (991)
Overseas tax paid (102) (79) (140)
Net cash inflow from operating activities 3,321 2,369 4,201
Cash flows from investing activities
Purchases of investments (33,346) (11,404) (43,873)
Sales of investments 32,579 12,200 44,372
Net cash (outflow)/inflow from investing activities (767) 796 499
Cash flows from financing activities
Equity dividends paid (3,310) (2,416) (4,720)
Repurchase of Ordinary shares into treasury - (720) (1,838)
Net cash acquired and received following the ASCI transaction - - 3,444
Cost of shares issued in respect of the ASCI transaction - - (1,031)
Net cash outflow from financing activities (3,310) (3,136) (4,145)
Net (decrease)/increase in cash and cash equivalents (756) 29 555
Reconciliation of net cash flow to movements in cash and cash equivalents
(Decrease)/increase in cash and cash equivalents as above (756) 29 555
Net cash and cash equivalents at start of period 1,675 1,176 1,176
Effect of foreign exchange rate changes (18) (39) (56)
Cash and cash equivalents at end of period 901 1,166 1,675
Notes to the Financial Statements
For the six months ended 30 September 2024
1. Accounting policies - Basis of accounting
The condensed interim financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) 34 'Interim Financial
Reporting', as adopted by the International Accounting Standards Board (IASB),
and interpretations issued by the International Financial Reporting
Interpretations Committee of the IASB (IFRIC). They have also been prepared
using the same accounting policies applied for the year ended 31 March 2024
financial statements, which were prepared in accordance with International
Financial Reporting Standards (IFRS) and received an unqualified audit report.
The financial statements have been prepared on a going concern basis. In
accordance with the Financial Reporting Council's guidance on 'Going Concern
and Liquidity Risk', the Directors have undertaken a review of the Company's
assets which primarily consist of a diverse portfolio of listed equity shares
and in most circumstances, are realisable within a very short timescale.
During the period, the Company cancelled its share premium account and
transferred the proceeds to a newly created special reserve, which is
distributable in nature.
2. Taxation
The taxation charge for the period represents withholding tax suffered on
overseas dividend income.
3. Dividends
The following table shows the revenue for each period less the dividends
declared in respect of the financial period to which they relate.
Six months ended Six months ended Year ended
30 September 2024 30 September 2023 31 March 2024
£'000 £'000 £'000
Revenue 3,371 2,358 5,068
Dividends declared (2,648)(A) (1,962)(B) (5618)(C)
723 396 (550)
(A) Dividends declared relate to first two interim dividends (3.20p each) in
respect of the financial year 2024/25.
(B) Dividends declared relate to first two interim dividends (3.20p each) in
respect of the financial year 2023/24.
(C) Three interim dividends (9.60p each), and the final dividend (4.80p)
declared in respect of the financial year 2023/24.
4. Earnings per Ordinary share
Six months ended Six months ended Year ended
30 September 2024 30 September 2023 31 March 2024
£'000 £'000 £'000
Returns are based on the following figures:
Revenue return 3,371 2,358 5,068
Capital return 3,721 (1,782) (6,540)
Total return 7,092 576 (1,472)
Weighted average number of Ordinary shares in issue 41,369,542 30,795,219 34,363,846
5. Net asset value per Ordinary share
The net asset value per Ordinary share and the net asset values attributable
to Ordinary shareholders at the period end were as follows:
As at As at As at
30 September 2024 30 September 2023 31 March 2024
(unaudited) (unaudited) (audited)
Net assets per Condensed Balance Sheet (£'000) 109,739 77,353 105,957
3.5% Cumulative Preference shares of £1 each (£'000) (50) (50) (50)
Attributable net assets (£'000) 109,689 77,303 105,907
Number of Ordinary shares in issue 41,369,542 30,651,907 41,369,542
Net asset value per Ordinary share (p) 265.14 252.20 256.00
The Company has a policy of calculating the net asset value per Ordinary share
based on net assets less an amount due to holders of 3.5% Cumulative
Preference shares of £1 each equating to £1 per share (£50,000), divided by
the number of Ordinary shares in issue.
6. Called up share capital
30 September 2024 30 September 2023 31 March 2024
Number £'000 Number £'000 Number £'000
Allotted, called up and fully paid Ordinary shares of 50 pence each:
Balance brought forward 41,369,542 20,684 30,964,580 15,482 30,964,580 15,482
Ordinary shares issued - - - - 11,268,494 5,634
Ordinary shares bought back - - (312,673) (156) (863,532) (432)
Balance carried forward 41,369,542 20,684 30,651,907 15,326 41,369,542 20,684
Treasury shares:
Balance brought forward 863,532 432 - - - -
Ordinary shares bought back to treasury - - 312,673 156 863,532 432
Balance carried forward 863,532 432 312,673 156 863,532 432
Allotted, called up and fully paid 3.5% Cumulative Preference shares of £1
each
Balance brought forward and carried forward 50,000 50 50,000 50 50,000 50
21,166 15,532 21,166
The Company acquired £35,228,000 million of net assets from abrdn Smaller
Companies Income Trust plc ("ASCI") following approval by ASCI shareholders on
1 December 2023. The transaction resulted in the issue of 11,268,494 new
Shires shares to ASCI shareholders.
During the six months ended 30 September 2024, no Ordinary shares were bought
back to treasury (six months ended 30 September 2023 - 312,673 at a cost of
£720,000; year ended 31 March 2024 - 863,532 at a cost of £1,939,000). No
Ordinary shares were issued during the period (six months ended 30 September
2023 - nil; year ended 31 March 2024 11,268,494 Ordinary shares were issued in
exchange for £35,228,000 of net assets from ASCI).
7. Capital reserve
The capital reserve reflected in the Condensed Balance Sheet at 30 September
2024 includes unrealised gains of £2,881,000 (30 September 2023 - unrealised
gains of £6,691,000; 31 March 2024 - unrealised gains of £2,620,000) which
relate to the revaluation of investments held at the reporting date. The
balance relates to realised gains of £28,291,000 (30 September 2023 -
£26,737,000; 31 March 2024 - £24,830,000).
8. Analysis of changes in financial liabilities
Six months ended Six months ended Year ended
30 September 2024 30 September 2023 31 March 2024
£'000 £'000 £'000
Opening balance at 1 April (18,963) (18,951) (18,951)
Other movements(A) (6) (6) (12)
Closing balance (18,969) (18,957) (18,963)
(A) The other movements represent the amortisation of the loan arrangement
fees.
On 3 May 2022, the Company entered into a five year £20 million loan facility
with The Royal Bank of Scotland International Limited, London Branch. £10
million of the loan facility has been drawn down and fixed at an all-in
interest rate of 3.903% until 30 April 2027. £9 million of the facility has
been drawn down on a short-term basis at an all-in interest rate of 6.6%,
maturing 9 October 2024.
9. Transactions with the Manager
The Company has an agreement with abrdn Fund Managers Limited ("aFML") for the
provision of management, secretarial, accounting and administration services
and for the carrying out of promotional activities in relation to the Company.
The management fee is based on 0.45% per annum up to £100 million and 0.40%
per annum over £100 million, by reference to the net assets of the Company
and including any borrowings up to a maximum of £30 million, and excluding
commonly managed funds, calculated monthly and paid quarterly. In addition,
with effect from 1 December 2023, a further fee of £120,000 per annum is
charged for other services provided under the terms of the management
agreement. The fees are allocated 40% to revenue and 60% to capital (31 March
2024 - 50% to revenue and 50% to capital). The agreement is terminable on not
less than six months' notice. For the period 1 December 2023 to 30 May 2024,
there was a management fee waiver in place as a result of the transaction with
abrdn Smaller Companies Income Trust plc ("ASCI"). For this period the fee was
calculated at 0.29% per annum of net assets up to £100 million and 0.26% per
annum of net assets over this threshold. After this waiver period ended the
fee returned to the existing fee rates. Should the Company terminate the
management agreement within three years of the date of the transaction with
ASCI (ie before 1 December 2026), then the Company undertakes to repay all or
a proportion of the management fees waived by the Manager based on the time
elapsed since completion of the transaction.
The total of the fees paid and payable during the period to 30 September 2024
was £311,000 (30 September 2023 - £200,000; 31 March 2024 - £420,000) and
the balance due to aFML at the period end was £173,000. (30 September 2023 -
£100,000; 31 March 2024 - £127,000). The Company held an interest in ASCI, a
commonly managed investment trust until 1 December 2023. The value
attributable to this holding was excluded from the calculation of the
management fee payable by the Company prior to this date.
The management agreement with aFML also provides for the provision of
promotional activities, which aFML has delegated to abrdn Investments Limited.
The total fees paid and payable in relation to promotional activities were
£27,000 (30 September 2023 - £20,000; 31 March 2024 - £50,000) and the
balance due to aFML at the period end was £13,000 (30 September 2023 -
£20,000; 31 March 2024 - £19,000).
10. Segmental information
For management purposes, the Company is organised into one main operating
segment, which invests in equity securities and debt instruments. All of the
Company's activities are interrelated, and each activity is dependent on the
others. Accordingly, all significant operating decisions are based upon
analysis of the Company as one segment. The financial results from this
segment are equivalent to the financial statements of the Company as a whole.
11. Fair value hierarchy
IFRS 13 'Fair Value Measurement' requires an entity to classify fair value
measurements using a fair value hierarchy that reflects the significance of
the inputs used in making the measurements. The fair value hierarchy has the
following levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are
observable for the assets or liability, either directly (ie as prices) or
indirectly (ie derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The financial assets and liabilities measured at fair value in the Condensed
Balance Sheet are grouped into the fair value hierarchy as follows:
Level 1 Level 2 Level 3 Total
At 30 September 2024 Note £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted investments a) 127,052 - - 127,052
Net fair value 127,052 - - 127,052
Level 1 Level 2 Level 3 Total
At 30 September 2023 Note £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted investments a) 94,570 - - 94,570
Net fair value 94,570 - - 94,570
Level 1 Level 2 Level 3 Total
At 31 March 2024 Note £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted investments a) 122,169 - - 122,169
Net fair value 122,169 - - 122,169
a) Quoted investments. The fair value of the Company's quoted investments has
been determined by reference to their quoted bid prices at the reporting date.
Quoted investments included in Fair Value Level 1 are actively traded on
recognised stock exchanges.
12. The financial information contained in this Half Yearly Financial Report does
not constitute statutory accounts as defined in Sections 434 - 436 of the
Companies Act 2006. The financial information for the six months ended 30
September 2024 and 30 September 2023 has not been reviewed or audited by the
Company's independent auditor.
The information for the year ended 31 March 2024 has been extracted from the
latest published audited financial statements which have been filed with the
Registrar of Companies. The report of the independent auditor on those
accounts contained no qualification or statement under Section 498 (2), (3) or
(4) of the Companies Act 2006.
13. This Half Yearly Financial Report was approved by the Board on 20 November
2024.
Alternative Performance Measures
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 IAS 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.
Discount to net asset value per Ordinary share
The difference between the share price and the net asset value per Ordinary
share expressed as a percentage of the net asset value per Ordinary share.
30 September 2024 31 March 2024
NAV per Ordinary share (p) a 265.14 256.00
Share price (p) b 245.50 222.00
Discount (a-b)/a 7.4% 13.3%
Dividend yield
The annual dividend divided by the share price, expressed as a percentage.
30 September 2024(A) 31 March 2024
Annual dividend per Ordinary share (p) a 14.40 14.40
Share price (p) b 245.50 256.00
Dividend yield a/b 5.9% 5.6%
(A) Based on annual dividend declared for previous year.
Net gearing
Net gearing measures total borrowings less cash and cash equivalents divided
by shareholders' funds, expressed as a percentage. Under AIC reporting
guidance, cash and cash equivalents includes net amounts due to and from
brokers at the period end as well as cash and short term deposits.
30 September 2024 31 March 2024
Borrowings (£'000) a 18,969 18,963
Cash (£'000) b 901 1,675
Amounts due to brokers (£'000) c 75 101
Amounts due from brokers (£'000) d 110 -
Shareholders' funds (£'000) e 109,739 105,957
Net gearing (a-b+c-d)/e 16.4% 16.4%
Ongoing charges
The ongoing charges ratio has been calculated in accordance with guidance
issued by the AIC as the total of investment management fees and
administrative expenses and expressed as a percentage of the average daily net
asset values published throughout the year. The ratio for 30 September 2024 is
based on forecast ongoing charges for the year ending 31 March 2025.
30 September 2024 31 March 2024
Investment management fees (£'000) 654 420
Administrative expenses (£'000) 457 529
Less: non-recurring charges(A)(£'000) (5) (24)
Ongoing charges (£'000) 1,106 925
Average net assets (£'000) 110,147 85,134
Ongoing charges ratio (excluding look-through costs) 1.00% 1.09%
Look-through costs(B) - 0.01%
Ongoing charges ratio (including look-through costs) 1.00% 1.10%
(A) Comprises promotional activity 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.
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
Benchmark, respectively.
Share
Six months ended 30 September 2024 NAV Price
Opening at 1 April 2024 a 256.00p 222.00p
Closing at 30 September 2024 b 265.14p 245.50p
Price movements c=(b/a)-1 3.6% 10.6%
Dividend reinvestment(A) d 3.2% 3.9%
Total return c+d 6.8% 14.5%
Share
Year ended 31 March 2024 NAV Price
Opening at 1 April 2023 a 257.92p 250.00p
Closing at 31 March 2024 b 256.00p 222.00p
Price movements c=(b/a)-1 (0.7)% (11.2)%
Dividend reinvestment(A) d 5.8% 5.5%
Total return c+d 5.1% (5.7)%
(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.
Please note that past performance is not necessarily a guide to the future and
that the value of investments and the income from them may fall as well as
rise. Investors may not get back the amount they originally invested
By order of the Board
abrdn Holdings Limited
Company Secretary
20 November 2024
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