Half-year Report
14/12/2023 07:00
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RNS Number : 7053W STS Global Income & Growth Trust 14 December 2023
To: RNS
From: STS Global Income & Growth Trust plc
LEI: 549300UZ1Y7PPQYJGE19
Date: 14 December 2023
Half-year financial report
Six months to 30 September 2023
FINANCIAL HIGHLIGHTS
Total return^ Six months ended Six months ended
(including reinvested dividends) 30 September 2023 30 September 2022
% %
Net asset value per share 0.7 (2.7)
Lipper Global - Equity Global Income Index 0.5 (5.9)
Share price 3.2 (1.4)
Key data As at As at
30 September 2023 31 March 2023
Net asset value per share (cum income)(˄) 220.09p 220.37p
Net asset value per share (ex income)(˄) 216.67p 218.37p
Share price 219.00p 214.00p
Discount (˄) (0.49%) (2.89%)
Net assets £206,657,000 £219,235,000
Income Six months ended Six months ended
30 September 2023 30 September 2022
Revenue per share 3.31p 3.43p
Dividend per share 3.05p 2.90p
^ For details of all Alternative Performance Measures refer to the half-year
report.
INTERIM MANAGEMENT REPORT
Chairman's statement
Introduction
For the six-month period to 30 September 2023 the net asset value total return
for your Company was +0.7%, in line with the +0.5% total return from the
benchmark, the Lipper Global - Equity Global Income Index.
There was a slight narrowing of the discount to net asset value at which the
share price traded over the period from 2.9% to 0.5% which resulted in a share
price total return of +3.2%.
Equity and more recently bond markets around the world have faced a
challenging background, during the period under review. Short term interest
rates continued to rise. The debate has moved on from how high would rates go,
to how long rates will remain at current levels - suggesting that we are close
to or at the peak in the current rate cycle. In the US, in particular,
stubbornly resilient growth in the economy is forcing the Federal Reserve to
signal a 'higher for longer' stance on rates, as the strength of demand
continues to present inflationary pressures on the economy. By contrast, in
the UK and Europe where growth is weaker the rate of inflation appears to have
peaked, but the rate of decline is disappointing and likewise leading to rates
predicted to remain at current levels for some time.
Financial markets have also had to cope with an increasingly uncertain
geopolitical backdrop, due to the ongoing conflicts in Ukraine and the Middle
East.
Consequently, the low nominal returns detailed above are no surprise and
equity markets have struggled to generate consistent positive returns in the
face of economic and political uncertainty.
More recently, bond markets in the US and UK have seen yields rise to in
excess of 5% - comfortably the highest level since 2008. The medium term
implication of such rises in yields are seen in higher financing cost for
companies and financial investors (including venture capital and private
equity funds). After a prolonged period of (what can now be described as)
abnormally low rates, it remains to be seen how markets adapt to a return to
what was normality ahead of the financial crash in 2007/08.
Revenue and earnings
Total revenue for the period was £4.0m and Revenue earnings per share were
3.31p. These earnings are lower than the previous comparable period. As
discussed in the statement last year, movements in £/US$ exchange rate can
have an impact on the level of revenue earned in sterling terms. The average
£/US$ rate in this first half has been 1.259 compared with 1.217 in the
previous comparable period.
Underlying dividends declared by your Company's investments have been
encouraging and this is a sound indicator of the quality of the companies
which the Manager has chosen to invest in.
A first quarterly dividend of 1.525p per share was paid to shareholders on 27
October 2023. This represented a 5.2% increase on the equivalent payment in
2022. The Board's policy is to declare three equal dividends for the first
three quarterly payments and consider the fourth quarterly dividend once
clarity on earnings for the full year is available around the time of the year
end.
Proposed merger with Troy Income & Growth Trust plc
On 28 November 2023 it was announced that agreement had been reached between
the Boards of your Company and Troy Income & Growth Trust plc ('TIGT') for
a proposed combination of STS with the assets of TIGT. This combination is
subject to approval by the shareholders of both companies, and you will
receive documents in respect of this transaction in February 2024.
Your Board considers the proposed merger to be an excellent opportunity for
your Company and shareholders will benefit from an increase in scale allowing
the enlarged STS to spread its fixed costs over a larger asset base. It has
been agreed that the management fee charged on the enlarged company will be
reduced to 0.55% of shareholders' funds up to £250m and 0.50% above £250m
(currently the fee is 0.65% of shareholders' funds). Troy is also making a
significant cost contribution in the form of an 18-months fee waiver on the
assets transferred from TIGT to the Company.
It is expected that the transaction will be complete by your Company's year
end on 31 March 2024. When transferred, the assets of TIGT will be invested in
line with the current STS portfolio and there will be no change to the
investment process, philosophy or personnel managing the portfolio.
Discount Management
Your Board has adopted and implements a formal discount control mechanism,
with the objective of ensuring that the share price consistently trades close
to net asset value per share. Shares are bought in or sold, at the appropriate
times, to manage this objective. During the period under review, 5,585,197
shares were purchased at an average discount of 1.9%.
The consistent application of the discount control mechanism should mean that,
over the long term, the net asset per share total return and the share price
total return should be very similar. However, it is possible that, in the
short term, these respective returns can deviate due to small movements in the
discount/premium, particularly in periods of low nominal returns.
Borrowing facilities
Your Company entered into new borrowing agreements in the period as the seven
year term of the previous agreement expired in September. A new three year
revolving credit facility ('RCF') was agreed with The Royal Bank of Scotland
International for £20m with an additional £5m being available, should it be
considered necessary.
Outlook
At the core of your Manager's philosophy is the preservation of capital and
the objective of delivering above average returns with below average
volatility. In particular, the Manager seeks to provide some protection from
significant drawdowns in weaker markets. The political and economic background
around the world might suggest that higher bond yields and rising political
tension may be a precursor to a period in which equity markets find it hard to
make consistent progress.
In such periods, your Manager's process and consistent application of their
philosophy should stand your Company in a relatively strong position. Your
portfolio consists of a group of carefully chosen companies that have high and
defendable operating margins, pricing power and in particular strong balance
sheets supported by robust free cash flow.
These attributes should stand the Company in good stead in the current
uncertain world.
John Evans
Chairman
13 December 2023
Manager's review
After a bright start to the year, broader world equity markets have been
meandering over the summer. The MSCI Equal Weighted Net Total Return Index,
used to reduce the distortion of the highly concentrated MSCI World Index and
associated AI excitement, returned 0.12% in sterling terms over the six month
period under review. The benchmark for the Company did slightly better at 0.5%
and the Company share price better still.
The strongest contributor to performance during the half-year was Domino's
Pizza ('Domino's'). In July the company benefited from the appointment of a
new CEO and strong results. The new CEO, Andrew Rennie, is a known quantity
having been regarded as a potential leader for the business as early as 2019.
Andrew has a long experience in Domino's Pizza Enterprises in Australia, and
we have no doubt that he is the right person for the role. Meanwhile, the
company continues to grow sales at a healthy pace, supported by better
execution and the collaboration with Just Eat. During September we started
reducing our position in Domino's as the valuation improved. We currently have
a 2.1% position.
Admiral Group ('Admiral') was strong following a positive update at the half
year results. UK car insurers have had a torrid 18 months as high claims
inflation combined with record low insurance premiums following the pandemic
have led to a squeeze on underwriting profits. This has led to competitors
such as Direct Line and Sabre Insurance issuing multiple profit warnings. As
it has done numerous times over its 20+ year history, Admiral executed
exceptionally through this market cycle, raising rates ahead of peers in the
face of rising claims costs, allowing it to protect profits. In its most
recent results, Admiral claimed it has reached pre-pandemic levels of
profitability on policies written in 2023. As the wider market scrambles to
belatedly raise rates, Admiral should continue to take market share.
Novartis also made a decent contribution, rising strongly in September
following a lacklustre period. This may be explained by the fact that the
company was preparing to spin-off its generic drug company, named Sandoz. The
Company received shares in this business, which we then sold, favouring the
remaining, now more focussed company which other investors also appear to have
preferred.
ADP appreciated over this time. As investors worry about a potential spike in
unemployment following the Federal Reserve's tightening cycle, the company was
penalised by the market at the beginning of the year. However, we argue that
the pendulum has swung too far to the pessimistic side and ADP regained some
ground. As the economic horizon darkens, it is useful to remind ourselves that
these companies are less sensitive to unemployment than the market believes.
The company remains a core long term investment.
Nintendo is a business which is benefitting from the positively received
launch of several games including The Legend of Zelda: Tears of the Kingdom
and Super Mario Bros. Wonder. This is helping to underpin profitability while
investors wait for the release of a replacement to the current Switch console.
This will be called Switch Pro and is likely to be launched in 2024. We
continue to believe the company is good value and are excited about the value
of the company's timeless intellectual property and the prospect of a new
hardware cycle in the coming years.
The single biggest detractor was the Link REIT. Investors are not unreasonably
concerned about the effect of the rapid increase in interest rates on this
sector and company. Having been recapitalised and with underlying exposure to
defensive assets we believe this company is well placed to buy distressed
assets as others seek to reduce debt levels. If interest rates are close to
reaching a peak, as we believe, the shares should perform better in the coming
months.
Next was Diageo, reflecting worries over a potential slowdown in the US as
sales data continues to be soft. Additionally, with a new CEO (Debra Crew) and
an investor day planned for mid-November, there is a degree of uncertainty
around strategy. However, the first set of results from the new CEO in August
was robust. While there is some weakness in the US, the underlying spirits
category continues to take market share, Diageo remains uniquely positioned to
capture its fair share of growth.
Also within the consumer staples sector, Hershey declined after years of
strong performance. The company has had tremendous success in increasing
prices during 2022 without any significant effect on volumes. The ability to
raise prices to cover inflation is a testament to the dominant market position
of this company as well as the strength of the brand. As we lap those strong
price increases, sales growth is slowing, and volumes are starting to turn
negative. There have also been some concerns that a new category of
weight-loss drugs may diminish the demand for this popular but sugary product.
We view these concerns as over-stated given the length of time that such an
eventuality becomes impactful, even if the concerns prove credible.
British American Tobacco was also weak as it was impacted by ever-present
regulatory concerns, as well as softness in demand for combustibles in the US.
This fear was confirmed at the recent results whereby the company lowered
medium term guidance. Further, and consistent with the company's stated aim to
be smoke-free by 2035, the value of the brands in the US acquired from
Reynolds in 2016 are to be written down to zero over 30 years. This led to
further share price weakness. We continue to believe the shares offer
exceptional value for what remains a highly cash generative company. We also
note that the brand write down is a non-cash item that does not impact
profitability and therefore the company's ability to continue to fund its
dividend for many years to come.
Finally, the most recent purchase in the portfolio, Texas Instruments, lost
ground. We established an initial investment in this business in October 2022
at an attractive valuation. Cognizant of the inherent cyclicality of the end
markets for this business, which include industrial, automotive and personal
electronics, we allocated 2% of the Company to this holding. The quality of
the business warrants a more substantial investment, in time.
Outlook
While equity markets have lacked direction, government bond markets have been
on the move. Over this period the US 10-year yield has risen from 3.47% to
4.57%. This updraft may be a result of several factors, including the
influence of other major bond markets, notably Japan, concerns over
large-scale upcoming issuance and, most likely, a belief that growth is
proving impervious to higher interest rates. Whatever the cause, it represents
a significant change in the relative price of government bonds to equities.
4.57%, when compared to an historic earnings yield for the S&P 500 of
4.80%, implies a further compression of the equity risk premium.
Perhaps more striking has been the move in inflation- linked bonds. Again,
over the same period, the yield on US 30-year US Treasury Inflation Protected
Securities has risen from 1.40% to 2.30%. At the same time, the 30-year
break-even inflation rate has remained remarkably stable at close to the
Federal Reserve's inflation target of 2% (2.40% as at 30 September 2023). At
least according
to markets, this is not about increasing inflation expectations. It is a
function of an expansion in real yields driven by the rise in the nominal
interest rate.
At the same time, not only have equities continued to trade towards the upper
end of historical valuation measures (the US CAPE remains at 29.3x) but credit
spreads have been tightening.
It would seem to us that although a higher cost of capital has been reflected
in government bond markets, it has yet to be for risk assets. Time will tell
how this apparent contradiction resolves itself - as the effect of the change
in interest rates gradually works its way through the economy, this may change
to the benefit of our quality focussed, conservatively managed Company.
James Harries
13 December 2023
Statement of Directors' responsibilities
A review of the half year and the outlook for the Company can be found in the
Chairman's statement and Manager's review above.
Risk and mitigation
The Company's business model is longstanding and resilient to most of the
short-term uncertainties that it faces, which the Board believes are
effectively mitigated by its internal controls and the oversight of the
Manager, as described in the latest annual report. The principal and
emerging risks and uncertainties are therefore largely longer-term and driven
by the inherent uncertainties of investing in global equity markets. The Board
believes that it is able to respond to these longer-term risks and
uncertainties with effective mitigation so that both the potential impact and
the likelihood of these seriously affecting shareholders' interests are
materially reduced.
Risks are regularly monitored at Board meetings and the Board's planned
mitigation measures are described in the latest annual report. The Board
maintains a risk register and also carries out a risk review as part of its
annual strategy meeting.
A detailed explanation of the principal risks and uncertainties facing the
Company and how the Board manages them can be found in the 2023 annual report,
which can be found on the Company's website www.stsplc (http://www.stsplc)
.co.uk. In the view of the Board, these principal risks and uncertainties at
the year end remain. The Board continue to work with the agents and advisers
to the Company to manage these risks. The risks identified are as applicable
to the remaining six months of the year as they were to the six months under
review.
Going concern status
The Company's business activities, together with the factors likely to affect
its future development, performance and position, are continually monitored by
the Board.
The financial position of the Company as at 30 September 2023 is shown on the
unaudited statement of financial position . The unaudited statement of cash
flow of the Company is set out below.
The Directors have undertaken a rigorous review of the Company's ability to
continue as a going concern. The Company's assets consist primarily of a
diverse portfolio of listed equity shares which, in most circumstances, are
realisable within a very short timescale. The Directors are mindful of the
principal risks disclosed above. They have reviewed revenue forecasts and the
financial position of the Company. They believe that the Company has adequate
financial resources and a suitably liquid investment portfolio to continue its
operational existence for the foreseeable future and for at least one year
from the date of signing of these financial statements. Accordingly, the
Directors consider it appropriate to continue to adopt the going concern basis
in preparing these financial statements.
Related party transactions
During the first six months of the year, no transactions with related parties
have taken place which have materially affected the financial position or
performance of the Company. There have been no material changes in any related
party transaction described in the annual report for the year ended 31 March
2023.
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 financial statements have been prepared in accordance with
United Kingdom Generally Accepted Accounting Practice, in particular with
Financial Reporting Standard 104 "Interim Financial Reporting" and with the
Statement of Recommended Practice "Financial Statements of Investment Trust
Companies and Venture Capital Trusts" issued by the AIC in July 2022;
• the interim management report includes a fair review of
the information required by Disclosure Guidance and Transparency Rule 4.2.7R
(indication of important events during the first six months of the financial
year and description of principal risks and uncertainties for the remaining
six months of the year); and
• the interim management report includes a fair review of
the information required by Disclosure Guidance and Transparency Rule 4.2.8R
(disclosure of related party transactions and charges therein).
By order of the Board
John Evans, Chairman
13 December 2023
Portfolio Summary
Portfolio distribution as at 30 September 2023
By region (excluding cash) As at 30 September 2023 As at 31 March 2023
% %
North America 52.8 52.9
Europe 41.4 41.0
Asia 5.8 6.1
100.0 100.0
By sector (excluding cash) As at 30 September 2023 As at 31 March 2023
% %
Consumer staples 38.2 39.9
Industrials 16.2 6.2
Healthcare 14.1 12.9
Information technology 10.6 20.2
Financials 8.1 6.7
Consumer discretionary 7.0 7.1
Communication services 3.5 3.1
Real estate 2.3 3.9
100.0 100.0
By asset class
(including cash and borrowings) As at 30 September 2023 As at 31 March 2023
% %
Equities 106.6 106.5
Cash 1.1 0.7
Borrowings (7.7) (7.2)
100.0 100.0
Ten Largest holdings 30 September 2023 30 September 31 March 31 March
2023 2023 2023
Market value % of total Market value % of total
£000 portfolio £000 portfolio
Paychex 11,891 5.4 12,274 5.3
Unilever 11,491 5.2 12,081 5.2
Reckitt Benckiser 11,448 5.2 11,824 5.1
British American Tobacco 11,295 5.1 13,070 5.6
PepsiCo 11,054 5.0 11,984 5.1
CME Group 11,039 5.0 9,934 4.2
Philip Morris 9,830 4.5 10,402 4.4
Novartis 9,784 4.5 9,235 3.9
ADP 9,737 4.4 9,294 4.0
Relx 8,885 4.0 9,002 3.8
Unaudited Statement of Comprehensive Income
Six months to Six months to
30 September 2023 30 September 2022
Note Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Net losses on investments 5 - (1,204) (1,204) - (7,283) (7,283)
Net currency (losses)/gains (22) (66) (88) 24 (1,946) (1,922)
Income 3 4,034 - 4,034 4,269 266 4,535
Investment management fee (247) (459) (706) (266) (494) (760)
Other expenses (287) - (287) (295) - (295)
Net return before finance costs and taxation 3,478 (1,729) 1,749 3,732 (9,457) (5,725)
Finance costs (83) (153) (236) (85) (158) (243)
Net return on ordinary activities before taxation 3,395 (1,882) 1,513 3,647 (9,615) (5,968)
Taxation 4 (192) - (192) (215) - (215)
Net return attributable to ordinary shareholders 3,203 (1,882) 1,321 3,432 (9,615) (6,183)
Net return per ordinary share 2 3.31p (1.94p) 1.37p 3.43p (9.61p) (6.18p)
(Audited)
Year to 31 March 2023
Revenue Capital Total
Note £000 £000 £000
Net losses on investments 5 - (8,800) (8,800)
Net currency losses (4) (869) (873)
Income 3 8,238 266 8,504
Investment management fee (531) (985) (1,516)
Other expenses (625) - (625)
Net return before finance costs and taxation 7,078 (10,388) (3,310)
Finance costs (171) (318) (489)
Net return on ordinary activities before taxation 6,907 (10,706) (3,799)
Taxation 4 (566) - (566)
Net return attributable to ordinary shareholders 6,341 (10,706) (4,365)
Net return per ordinary share 2 6.34p (10.70p) (4.36p)
The total columns of this statement are the profit and loss accounts of the
company.
The revenue and capital items are presented in accordance with the Association
of Investment Companies ('AIC') Statement of Recommended Practice ('SORP
2022').
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued during the period.
Unaudited Statement of Financial Position
(Audited)
As at As at As at
30 September 2023 30 September 2022 31 March 2023
Note £000 £000 £000 £000 £000 £000
Fixed assets
Investments at fair value through profit or loss 5 219,848 235,338 234,362
Current assets
Trade and other receivables 1,260 3,415 1,113
Cash and cash equivalents 2,210 4,414 1,570
3,470 7,829 2,683
Current liabilities
Bank loans 6 (15,855) (16,878) (15,795)
Trade payables (806) (2,848) (572)
Dividend payable - - (1,443)
Total current liabilities (16,661) (19,726) (17,810)
Net current liabilities (13,191) (11,897) (15,127)
Total net assets 206,657 223,441 219,235
Capital and reserves
Called up share capital 8 1,223 1,223 1,223
Capital redemption reserve 78 78 78
Share premium account 31,808 31,571 31,808
Special distributable reserve 58,813 72,837 70,924
Capital reserve 110,023 112,996 111,905
Revenue reserve 4,712 4,736 3,297
Total shareholders' funds 206,657 223,441 219,235
Net asset value per ordinary share 2 220.09p 222.86p 220.37p
Unaudited Statement of Changes in Equity
For the period ended 30 September 2023 Called up share capital Capital redemption reserve Share Special distributable reserve*
£000 £000 premium £000 Capital Revenue
account reserve* reserve* Total
£000 £000 £000 £000
As at 1 April 2023 1,223 78 31,808 70,924 111,905 3,297 219,235
Net return attributable to shareholders** - - - - (1,882) 3,203 1,321
Shares bought back into treasury - - - (12,111) - - (12,111)
Dividends paid - - - - - (1,788) (1,788)
As at 30 September 2023 1,223 78 31,808 58,813 110,023 4,712 206,657
For the period ended 30 September 2022 Called up share capital Capital redemption reserve Share Special distributable reserve*
£000 £000 premium £000 Capital Revenue
account reserve* reserve* Total
£000 £000 £000 £000
As at 1 April 2022 1,223 78 30,762 71,925 122,611 3,058 229,657
Net return attributable to shareholders** - - - - (9,615) 3,432 (6,183)
Shares issued from treasury - - 809 1,906 - - 2,715
Shares bought back into treasury - - - (994) - - (994)
Dividends paid - - - - - (1,754) (1,754)
As at 30 September 2022 1,223 78 31,571 72,837 112,996 4,736 223,441
For the year ended 31 March 2023 Called up share capital Capital redemption reserve Share Special distributable reserve* Capital Revenue Total
(Audited) premium reserve* reserve*
account
£000 £000 £000 £000 £000 £000 £000
As at 1 April 2022 1,223 78 30,762 71,925 122,611 3,058 229,657
Net return attributable to shareholders** - - - - (10,706) 6,341 (4,365)
Shares issued from treasury - - 1,046 2,585 - - 3,631
Shares bought back into treasury - - (3,586) - - (3,586)
-
Dividends paid - - - - - (6,102) (6,102)
As at 31 March 2023 1,223 78 31,808 70,924 111,905 3,297 219,235
*These reserves are distributable with the exception of the unrealised portion
of the capital reserve (£25,529,000; 31 March 2023: £27,700,000; 30
September 2022: £25,784,000), which is non-distributable.
**The company does not have any other income or expenses that are not included
in the 'Net return attributable to shareholders' as disclosed in the condensed
statement of comprehensive income above, and therefore this is also the 'Total
comprehensive income' for the period.
Unaudited Statement of Cash Flow
(Audited)
Year to
Six months to Six months to
30 September 2023 30 September 2022 31 March 2023
Note £000 £000 £000 £000 £000 £000
Cashflows from operating activities
Net return on ordinary activities before taxation 1,513 (5,968) (3,799)
Adjustments for:
Losses on investments 5 1,204 7,283 8,800
Finance costs 236 243 489
Exchange movement on bank borrowings 7 60 1,877 794
Purchases of investments* (2,851) (7,401) (22,917)
Sales of investments* 16,106 9,312 24,316
Dividend income 3 (4,029) (4,533) (8,496)
Other income 3 (5) (2) (8)
Dividend income received 3,950 4,615 8,523
Other income received 5 2 8
Decrease/(increase) in receivables 15 14 (5)
(Decrease)/increase in payables (97) (12) 70
Overseas withholding tax deducted (161) (240) (612)
14,433 11,158 10,962
Net cash flows from operating activities 15,946 5,190 7,163
Cash flows from financing activities
Repurchase of ordinary share capital (11,786) (994) (3,586)
Issue of ordinary share capital from treasury - 2,715 3,631
Equity dividends paid from revenue (3,231) (3,122) (6,027)
Interest and fees paid on borrowings (289) (240) (476)
Net cash flows from financing activities (15,306) (1,641) (6,458)
Net increase in cash and cash equivalents 640 3,549 705
Cash and cash equivalents at the start of the period 1,570 865 865
Cash and cash equivalents at the end of the period 7 2,210 4,414 1,570
*Receipts from the sale of, and payments to acquire investment securities,
have been classified as components of cash flows from operating activities
because they form part of the company's dealing operations.
Notes to the Financial Statements
Note 1: Accounting policies
For the period ended 30 September 2023 (and the year ended 31 March 2023), the
company is applying The Financial Reporting Standard applicable in the UK and
Republic of Ireland ('FRS 102'), which forms part of Generally Accepted
Accounting Practice ('UK GAAP') issued by the Financial Reporting Council
('FRC') in 2015.
These condensed financial statements have been prepared on a going concern
basis in accordance with the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority, FRS 102 the Financial Reporting Standard
applicable in the UK and Republic of Ireland, FRS 104 Interim Financial
Reporting, and the Statement of Recommended Practice "Financial Statements of
Investment Trust Companies and Venture Capital Trusts" ('SORP') issued by the
AIC in July 2022.
The accounting policies applied for the condensed set of financial statements
are set out in the Company's annual report for the year ended 31 March 2023.
Note 2: Returns and net asset value
(Audited)
Six months to Six months to Year to
30 September 2023 30 September 2022 31 March 2023
Returns per share
Revenue return (£000) 3,203 3,432 6,341
Capital return (£000) (1,882) (9,615) (10,706)
Total (£000) 1,321 (6,183) (4,365)
Weighted average number of ordinary shares in issue 96,715,825 100,054,419 100,005,571
Revenue return per ordinary share 3.31p 3.43p 6.34p
Capital return per ordinary share (1.94p) (9.61p) (10.70p)
Total return per ordinary share 1.37p (6.18p) (4.36p)
Net asset value per share
Net assets attributable to shareholders (£000) 206,657 223,441 219,235
Number of shares in issue at period end 93,898,378 100,260,575 99,483,575
Net asset value per share 220.09p 222.86p 220.37p
Note 3: Income
Six months to Six months to Year to
30 September 2023 30 September 2022 31 March 2023
£000 £000 £000
From listed investments
UK - equities 1,968 1,932 2,973
Overseas - equities 2,061 2,335 5,257
4,029 4,267 8,230
Other income
Deposit interest 5 2 8
4,034 4,269 8,238
During the six months to 30 September 2023 the Company did not receive any
special dividends which were treated as capital (30 September 2022 and year to
31 March 2023: special dividends of £266,000 received from Admiral Group,
which were treated as capital).
Note 4: Taxation
(Audited)
Six months to Six months to Year to
30 September 2023 30 September 2022 31 March 2023
£000 £000 £000
Irrecoverable overseas withholding tax 192 215 566
Note 5: Investments at fair value through profit or loss
(Audited)
As at As at As at
30 September 2023 30 September 2022 31 March 2023
£000 £000 £000
Opening book cost 206,662 209,480 209,480
Opening investment holding gains 27,700 35,081 35,081
Opening market value 234,362 244,561 244,561
Acquisitions at cost 2,851 9,769 22,917
Disposal proceeds received (16,161) (11,709) (24,316)
Losses on investments (1,204) (7,283) (8,800)
Closing market value of investments 219,848 235,338 234,362
Closing book cost 194,319 209,554 206,662
Closing investment holding gains 25,529 25,784 27,700
Closing market value 219,848 235,338 234,362
The company received £16,161,000 (six months ended 30 September 2022:
£11,709,000; year ended 31 March 2023: £24,316,000) from investments sold in
the six months ended 30 September 2023. The average book cost of these
investments when they were purchased was £15,194,000 (six months ended 30
September 2022: £9,695,000; year ended 31 March 2023: £25,735,000). These
investments have been revalued over time and until they were sold any
unrealised gains/losses were included in the fair value of investments.
Transaction costs
During the period, expenses were incurred in acquiring or disposing of
investments classified as fair value though profit or loss. These have been
expensed through capital and are included within losses on investments in the
statement of comprehensive income. The total costs were as follows:
Six months to Six months to (Audited)
30 September 2023 30 September 2022 Year to
£000 £000 31 March 2023
£000
Acquisitions 4 43 68
Disposals 6 4 11
10 47 79
Note 6: Bank loans
(Audited)
As at As at As at
30 September 2023 30 September 2022 31 March 2023
£000 £000 £000
Bank borrowings repayable within one year 15,855 16,878 15,795
15,855 16,878 15,795
During the period, the Company arranged a new £20m multi-currency revolving
credit facility with The Royal Bank of Scotland International Limited, which
expires on 19 September 2026. As at 30 September 2023 £15,855,000 was drawn
down until 19 December 2023. The amount has been drawn in the same currency
split as borrowed under the previous term loan facility at 30 September 2022
and 31 March 2023 - £1,500,000; €4,500,000; and US$12,750,000.
Interest is payable at the aggregate of the compounded Risk Free Rate ("RFR")
for the relevant currency and loan period, plus a margin of 1.55%, totalling
6.74%, 5.24% and 6.85% on the GBP, EUR and USD balances respectively (30
September 2022 and 31 March 2023: interest was charged at a fixed rate of
2.1408%, 1.4175% and 3.1925% on the GBP, EUR and USD balances respectively).
Note 7: Analysis of net debt
(Audited) Cash flow £000 Exchange movements
As at £000 As at
31 March 2023 30 September 2023
£000 £000
Cash at bank 1,570 640 - 2,210
Bank borrowings (15,795) - (60) (15,855)
(14,225) 640 (60) (13,645)
Note 8: Called up share capital
(Audited)
As at As at As at
30 September 2023 30 September 2022 31 March 2023
No. of shares No. of shares No. of shares
Ordinary shares of 1p
Shares in issue 93,898,378 100,260,575 99,483,575
Held in treasury 28,400,770 22,038,573 22,815,573
122,299,148 122,299,148 122,299,148
During the six months ended 30 September 2023 there were 5,585,197 shares
bought back into treasury at a cost of £12,111,000 (six months ended 30
September 2022: 429,500 shares bought back into treasury at a cost of
£994,000; year ended 31 March 2023: 1,616,500 shares bought back into
treasury at a cost of £3,586,000).
During the six months ended 30 September 2023 no shares were issued from
treasury (six months ended 30 September 2022: 1,165,000 shares were issued
from treasury for net proceeds of £2,715,000; year ended 31 March 2023:
1,575,000 shares were issued from treasury for net proceeds of £3,631,000).
No shares were purchased for cancellation or cancelled from treasury in the
current or prior periods.
Note 9: Fair value hierarchy
Under FRS 102, the company is required to classify fair value measurements
using a fair value hierarchy that reflects the significance of the inputs used
in making the measurements. The fair value hierarchy shall have the following
levels:
- Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities;
- Level 2: other significant observable inputs (including quoted prices
for similar investments, interest rates, prepayments, credit risk, etc); or
- Level 3: significant unobservable input (including the company's own
assumptions in determining the fair value of investments).
The financial assets measured at fair value through profit and loss are
grouped into the fair value hierarchy as follows:
(Audited)
As at As at As at
30 September 2023 30 September 2022 31 March 2023
£000 £000 £000
Financial assets at fair value through profit or loss - Quoted equities
Level 1 219,848 235,338 234,362
Level 2 - - -
Level 3 - - -
219,848 235,338 234,362
There have been no transfers between levels 1, 2, or 3 during the period
(period to 30 September 2022 and year to 31 March 2023: nil).
Note 10: Interim financial report
The financial information contained in this half-yearly financial report does
not constitute statutory accounts as defined in s434 - 6 of the Companies Act
2006. The financial information for the six months ended 30 September 2023 and
30 September 2022 has not been audited or reviewed.
The information for the year ended 31 March 2023 has been extracted from the
latest published audited financial statements which have been filed with the
Registrar of Companies. The report of the auditors on those accounts contained
no qualification or statement under s498 (2), (3) or (4) of the Companies Act
2006.
A copy of the half-year report can shortly be downloaded at www.stsplc.co.uk
(http://www.stsplc.co.uk) .
Enquiries:
Juniper Partners Limited
Company Secretary
Email: companysecretary@stsplc.co.uk
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