REG-Temple Bar Inv.Tst: Half-year Report
19/08/2022 07:15
Temple Bar Investment Trust PLC
Half-Year Results for the six months ended 30 June 2022
Temple Bar Investment Trust PLC (“Temple Bar” or the “Company”) is
pleased to present its half-year results for the six months ended 30 June
2022.
The Company's half-year report for the six months ended 30 June 2022 is also
being published in hard copy format and an electronic copy will shortly be
available to download from the Company's website:
www.templebarinvestments.co.uk.
Please click on the following link to view the document:
https://mma.prnewswire.com/media/1881138/TBIT_HY22_1_10_web.pdf
CHAIRMAN’S STATEMENT
Performance
The UK market fell in the first half of the year, however it performed
relatively well in comparison to other global indices. The total return of the
FTSE All-Share Index was -4.57%. The Company’s net asset value total return
was marginally better at -4.03% and the share price return was more pleasing
at +0.21%.
Discount
The discount to Net Asset Value (“NAV”) during the period narrowed from
7.80% to 3.84%. The Board and Investment Manager have continued their efforts
to generate more buying interest in the Company. The website has been
refreshed and rebranded, targeted marketing has been undertaken, both in
mainstream and social media, and we have maintained our commitment to public
relations. In addition, the Board has been active in pursuing its buy back
policy. During the period nearly 2m shares were bought back. This has the
effects of accreting to the remaining shares’ net asset value and reducing
the supply versus demand imbalance in the market.
Board
The Board is pleased to have welcomed Charles Cade to the Board as an
independent non-executive Director. He brings a wealth of experience in the
investment trust sector.
As previously announced, I will step down as Chairman at the next Annual
General Meeting (“AGM”). The Board has decided that Richard Wyatt should
replace me as Chairman, subject to his re-election at the AGM.
Share Split
On 13 May 2022, the Company completed the sub-division of each Ordinary Share
of 25p into 5 Ordinary Shares of 5p each (the “Share Split”), which was
approved by shareholders at the Annual General Meeting held on Tuesday, 10 May
2022. Following the Share Split, the values reported with effect from close of
business on 13 May 2022 are calculated in accordance with the new Ordinary
Shares of 5p each. The comparative figures in the Financial Statements and
Notes have been restated where indicated to reflect the Share Split.
Dividend
The Board declared a first interim dividend of 10.25 pence along with a
commitment to pay at least 41 pence for the full year (equivalent to 2.05
pence and 8.2 pence respectively on a post-share split basis). However, the
Company’s revenue account has been much more buoyant than expected and our
revenue projections support a more generous distribution. Accordingly, the
second interim dividend will be 2.30 pence and the total for the year will be
9.0 pence. It is anticipated that this level of dividend will be fully covered
by earnings. Going forward our revenue projections imply that in the coming
years further rises in the dividend will be warranted by the portfolio
generating more dividend growth.
Outlook
Rarely has it been so difficult to predict the future. Inflation in the UK
gets ever higher and recession may be just around the corner. The terrible
events in Ukraine and the pressure that, inter alia, has put on energy and
commodity prices all add to the uncertainty. The domestic political situation
is unclear. Nevertheless, as outlined in their report the Investment Manager
believes the portfolio remains attractively priced and can still perform well.
Arthur Copple
Chairman
18 August 2022
INVESTMENT MANAGER’S REPORT
The FTSE All-Share Index delivered a negative return of -4.57% in the first
six months of the year. Equity markets generally have been weak, with the UK
market having fared better than most, as investors worry that the tighter
monetary conditions that are needed to bring inflation under control will tip
the global economy into recession.
Forecasting the macro-economic environment is notoriously hard as economic
growth is ultimately driven by consumer and corporate confidence (and
therefore a willingness to spend and invest) but we can say that rising
interest rates and higher commodity prices act as a tax on consumption and
thereby reduce levels of disposable income and corporate profits. Although we
do not attempt to forecast if, or when, the UK economy might go into recession
(we might already be in one), we can say that the outlook for corporate
profits in the short term is particularly uncertain.
In the first six months of 2022, the Temple Bar NAV performed broadly in line
with the FTSE All-Share Index, whilst the share price outperformed as the
discount closed over the period. The three energy companies (Shell, BP and
Total Energies), Standard Chartered, Vodafone and Pearson were positive
contributors to return, whereas four domestically focussed names, Royal Mail,
Marks & Spencer, ITV and Currys were detractors.
The three energy companies rose on the back of rising oil and gas prices
caused by the war in Ukraine, coupled with a muted supply response caused by
several years of under investment in bringing new resources to the market. We
cannot predict where oil and gas prices might end up in the next few months,
however we would point out that the share prices of all three companies
already discount commodity prices that are much below where we are today.
By way of illustration, according to their own sensitivity analysis, BP, Shell
and Total Energies are valued on price to earnings ratios of 8x to 9x assuming
$60 Brent oil(1). Oil prices at the time of writing in late July are around
$100 Brent per barrel, and we therefore take the view that there is a
considerable margin of safety built into the share prices of all three
companies.
Standard Chartered has been a beneficiary of rising dollar interest rates,
which in turn should lead to higher income growth and thereby help the bank
achieve its 2024 10% ROTE target. Although a large increase in interest rates
could lead to credit stresses and increased loan loss provisions, the bank has
been significantly de-risked over the last few years and lending standards are
now much improved. It is likely therefore that credit provisions will not need
to be increased from current levels. Standard Chartered’s tangible net asset
value per share was 960 pence at the end of 2021(2) and a 10% return would
therefore equate to around 100 pence of earnings, a price earnings ratio of
less than 6x at today’s share price. The company is priced at less than
eight times this year’s expected earnings.
Vodafone’s shares have performed poorly for some time as the company has
experienced ongoing price deflation in its main European markets and the
management have come under pressure to demonstrate the value that exists
within the business. In the last few months, both Etisalat and, the activist
investor, Cevian have taken stakes in the company with a view to accelerating
the pace of change. Vodafone has a €12bn holding in the separately quoted
Vantage Towers (owner of mobile infrastructure) which contributes relatively
little in the way of cash flow to the group. We believe that if the company
were to monetise this asset and return at least a portion of the proceeds to
shareholders, the remaining business would be valued on a price earnings ratio
of around 8x. The company also has the potential to improve its below industry
average margins through market consolidation, particularly in the UK and
Spain.
Pearson has struggled for some time with the transition from physical print
textbooks to a digital offering in its North American Higher Education
business and although this journey has proven to be protracted and damaging to
group profitability, we continue to believe that educational publishing is an
attractive business offering the prospect of healthy returns. Pearson’s
share price jumped in March on the back of two separate bid approaches from
the private equity firm, Apollo, and although both bids were rejected by the
management team as undervaluing the company and therefore came to nothing, the
approach serves to highlight the undervaluation in the company’s shares.
As fears of recession have mounted, the stock market has anticipated
downgrades to profit expectations by pushing down the share prices of those
companies likely to be most affected by a combination of lower demand and
higher input costs.
Shares in RMG have suffered as the stock market worries that this year is
going to be extremely challenging as parcel volumes normalise post the
pandemic and costs inflate. As the company is a relatively low margin business
in which wages make up around 50% of the cost base, RMG is more vulnerable
than most to the inflationary wage pressures that we are now seeing. However,
we believe this needs to be offset against the significant opportunity that
the company has to improve productivity through higher levels of automation.
Although RMG’s UK business may lose money this year, the group has recently
re-iterated its medium-term targets of 5% margins in its UK business and
€500m of profits in its international operations. This 5% margin target in
the UK is some way below the industry average of 7% to 8% and so should be
achievable, although industrial relations will have to improve if RMG is to be
successful in delivering its UK target. The company’s international
operations do not face the same challenges in respect of the trade unions and
are expected to generate £350m of profit in 2022 per the company’s guidance
and sell side forecasts. At a relatively modest 10x EBIT, this suggests a
valuation of around £3.5bn for the international business alone, suggesting
that investors are placing a substantial negative valuation on RMG’s UK
business. Accordingly, again we see that shareholders have a margin of safety
against continuing problems in the UK.
Currys was a beneficiary of the COVID-19 pandemic and that coupled with a
downturn in consumer spending will mean that the current year will be
significantly more difficult than the last. Currys operates in a competitive
market, although it is the number one by market share in all the geographies
in which it operates, and it has been consistently growing that share for
several years. Being the number one operator in its markets gives the company
a buying advantage which, in turn, enables it to earn a higher profit margin.
The company currently generates more than 50% of its profits from its
high-quality overseas operations(3) (primarily in the Nordics). Valuing the
Nordic profits at even a modest multiple suggests that the company’s UK
operations (with £5.5bn of revenues) are included in the group valuation for
free. The company’s two-year target is to generate free cash flow of £150m
per annum(4), and whilst there is much uncertainty around this number, if it
is successful, it suggests very significant potential upside to today’s
share price.
Likewise, ITV and Marks & Spencer fell on fears that a recession will lead to
a fall in profits and whilst we think that this will indeed happen, our view
is that this is more than factored into the companies’ share prices. ITV is
valued below 6x this year’s expected profits and Marks & Spencer below 9x.
ITV offers a dividend yield of over 7% in 2022. Again, visibility is low and
there is much uncertainty surrounding these forecasts.
We believe that our ability to add value results from the fact that we focus
on a company’s medium to long term profit potential (defined here as three
or more years), whilst many other investors will typically focus on the
outlook for profits in the next six to twelve months. We think that investors
should not forget that the purchase of an equity entitles the shareholder to a
long-term stream of cashflows and that a temporary reduction in those cash
flows due to an economic downturn does relatively little to alter the long-run
intrinsic value of the share. Despite this, investors tend to overreact to
short-term news flow, often pushing share prices down by 50% or more on fears
of recession. When fears of recession increase, investors shun economic
cyclicality and bid up the price of those companies which are perceived to be
less exposed to a potential downturn.
Whilst risk appetite is difficult to measure, the relative valuation of
cyclical stocks versus the more defensive names can provide a useful guide. On
some measures the discount applied to cyclical stocks today is near to record
levels. Previous peaks in this valuation spread coincided with the COVID-19
crisis in 2020 and the financial crisis in 2008 and suggest that expectations
baked into the share prices of the cyclical companies are at a very low ebb.
On each of the previous occasions when valuation spreads have become as wide
as they are today, it has paid to take a more pro-risk, cyclical stance
although we cannot know of course when risk appetite might improve, and
cyclicality will re-rate.
Despite the UK equity market holding up better than most overseas markets so
far this year, UK equities continue to be valued at a significant discount to
global equities generally. Accordingly, we believe that, notwithstanding the
shorter-term uncertainties, UK equities are priced to offer relatively
attractive returns into the future. There were no new holdings established in
the portfolio during the six-month period, although early in February we
reduced the level of gearing on the Company on concerns that even prior to the
war in Ukraine, the deteriorating economic outlook was not being adequately
reflected in share prices. Conversely, at the end of June, we reintroduced an
element of gearing, increasing the Company’s holdings in the most
undervalued stocks, in the belief that the valuations of those shares now
fully discounted a likely recession. The economic backdrop is highly uncertain
and there is much for investors to worry about, however, we must not forget
that the stock market is a discounting mechanism and much of this will already
have been factored into share prices. From the starting point of today’s
depressed valuations, for those who can extend their time horizons, the
opportunities are compelling, with stocks in the portfolio offering the
potential for significant upside to a reasonable view of intrinsic value.
Ian Lance and Nick Purves
RWC Asset Management LLP
18 August 2022
(1) Bloomberg
(2) Standard Chartered’s Company Report & Accounts
(3) Currys Annual Report and Accounts
(4) Currys Management Team
RESPONSIBILITY STATEMENT
The important events that have occurred during the period under review, the
key factors influencing the financial statements and the principal risks and
uncertainties for the remaining six months of the financial year are set out
in the Chairman’s Statement on page 2 and the Investment Manager’s Report
on pages 3 and 4.
The principal risks facing the Company are unchanged since the date of the
Annual Report and Financial Statements for the year ended 31 December 2021 and
continue to be as set out in that report on pages 19 to 21 and note 22 to the
financial statements.
Risks faced by the Company include, but are not limited to: investment
strategy risk, loss of investment team or portfolio managers, income risk –
dividend, share price risk, reliance on the Investment Manager and other
service providers, compliance with laws and regulations, cyber security,
global risk (e.g. climate risk, a pandemic), market price risk, interest rate
risk, liquidity risk, credit risk and currency risk.
The Directors confirm to the best of their knowledge that:
* the condensed set of financial statements contained within the Half-Year
Report has been prepared in accordance with the Accounting Standards Board’s
Statement ‘Half-Yearly Financial Reports’, and gives a true and fair view
of the assets, liabilities and financial position and return of the Company;
* the Half-Year Report includes a fair review of the information required by
Disclosure Guidance and Transparency Rule 4.2.7R 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
* in accordance with Disclosure Guidance and Transparency Rule 4.2.8R there
have been no transactions with related parties that have materially affected
the financial position or the performance of the Company during the six months
ended 30 June 2022.
The Half-Year Report was approved by the Board on 18 August 2022 and the above
responsibility statement was signed on its behalf by:
Arthur Copple
Chairman
TEN LARGEST INVESTMENTS
AS AT 30 JUNE 2022
COMPANY INDUSTRY PLACE OF PRIMARY LISTING VALUATION £000 % OF INVESTMENT PORTFOLIO*
1. Shell Oil & Gas UK 59,748 7.6
2. BP Oil & Gas UK 56,870 7.2
3. Standard Chartered Financials UK 44,502 5.7
4. TotalEnergies Oil & Gas France 41,670 5.3
5. NatWest Group Financials UK 39,486 5.0
6. Centrica Utilities UK 39,309 5.0
7. Marks & Spencer Group Consumer Services UK 39,176 5.0
8. Anglo American Basic Materials UK 39,035 5.0
9. Pearson Consumer Services UK 37,662 4.8
10. Royal Mail Industrials UK 37,385 4.7
Top Ten Investments 434,843 55.3
*Quoted equity portfolio plus debt securities.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2022 (unaudited)
30 June 2022 (unaudited) 30 June 2021 (unaudited) 31 December 2021 (audited)
Notes Revenue £000 Capital £000 Total £000 Revenue £000 Capital £000 Total £000 Revenue £000 Capital £000 Total £000
Investment Income 5 15,336 - 15,336 11,185 3,026 14,211 27,721 3,026 30,747
Other operating income 5 2 - 2 - - - - - -
15,338 - 15,338 11,185 3,026 14,211 27,721 3,026 30,747
(Losses)/profit on investments
(Losses)/profit on investments held at fair value through profit or loss 4 - (54,996) (54,996) - 115,934 115,934 - 133,841 133,841
Currency exchange (loss)/gain - (17) (17) - (21) (21) - (12) (12)
Total income/(loss) 15,338 (55,013) (39,675) 11,185 118,939 130,124 27,721 136,855 164,576
Expenses
Management fees (606) (909) (1,515) (393) (590) (983) (1,031) (1,546) (2,577)
Other expenses including dealing costs (475) (292) (767) (547) (213) (760) (1,022) (369) (1,391)
Profit/(loss) before finance costs and tax 14,257 (56,214) (41,957) 10,245 118,136 128,381 25,668 134,940 160,608
Finance costs (556) (834) (1,390) (705) (1,058) (1,763) (1,267) (1,901) (3,168)
Profit/(loss) before tax 13,701 (57,048) (43,347) 9,540 117,078 126,618 24,401 133,039 157,440
Tax (482) - (482) (483) - (483) (664) - (664)
Profit/(loss) for the year 13,219 (57,048) (43,829) 9,057 117,078 126,135 23,737 133,039 156,776
Earnings per share (basic and diluted)* 4.02p (17.33p) (13.31p) 2.70p 35.02p 37.72p 7.11p 39.87p 46.98p
A first interim dividend of 2.05 pence per share in respect of the quarter
ended 31 March 2022 was paid on 30 June 2022.
A second interim dividend of 2.30 pence per share in respect of the quarter
ended 30 June 2022 was declared on 16 August 2022 and is payable on 30
September 2022.
The total column of this statement represents the Statement of Comprehensive
Income, prepared in accordance with IFRS. The supplementary revenue and
capital columns are both prepared under guidance published by the AIC.
All items in the above statement derive from continuing operations.
*In accordance with IAS 33 ‘Earnings per Share’, the comparative return
per ordinary share figures have been restated using the new number of shares
in issue following the five for one share split. For weighted average
purposes, the share split has been treated as happening on the first day of
the accounting period.
STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2022 (unaudited)
Ordinary share capital £000 Share premium account £000 Capital reserves £000 Retained earnings £000 Total equity £000
Balance at 1 January 2022 16,719 96,040 672,616 11,708 797,083
Total comprehensive loss for the period - - (57,048) 13,219 (43,829)
Contributions by and distributions to owners
Cost of Share Bought back for Treasury - - (4,483) - (4,483)
Dividends paid to equity shareholders - - - (13,485) (13,485)
Balance at 30 June 2022 16,719 96,040 611,085 11,442 735,286
STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2021 (unaudited)
Ordinary share capital £000 Share premium account £000 Capital reserves £000 Retained earnings £000 Total equity £000
Balance at 1 January 2021 16,719 96,040 549,593 12,984 675,336
Total comprehensive income for the period - - 117,078 9,057 126,135
Contributions by and distributions to owners
Dividends paid to equity shareholders - - - (12,037) (12,037)
Balance at 30 June 2021 16,719 96,040 666,671 10,004 789,434
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022 (unaudited)
30 June 2022 (unaudited) 30 June 2021 (unaudited) 31 December 2021 (audited)
£000 £000 £000
Non-current assets
Investments held at fair value through profit or loss 763,748 841,017 849,150
Current assets
Investments held at fair value through profit or loss 23,018 14,666 7,944
Cash and cash equivalents 13,204 6,193 11,626
Receivables 27,238 3,166 5,172
63,460 - 24,742
Total assets 827,208 865,042 873,892
Current liabilities
Payables (17,233) (956) (2,138)
Total assets less current liabilities 809,975 864,086 871,754
Non-current liabilities
Interest bearing borrowings (74,689) (74,652) (74,671)
Net assets 735,286 789,434 797,083
Equity attributable to equity holders
Ordinary share capital 16,719 16,719 16,719
Share premium 96,040 96,040 96,040
Capital reserves 611,085 666,671 672,616
Retained revenue earnings 11,442 10,004 11,708
Total equity attributable to equity holders 735,286 789,434 797,083
Net asset value per share* 224.31 236.10p 241.72p
* Comparative periods have been restated for the sub-division of each ordinary
share into 5 new ordinary shares, approved at the AGM held on 10 May 2022 and
completed on 13 May 2022.
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2022 (unaudited)
30 June 2022 (unaudited) 30 June 2021 (unaudited) 31 December 2021 (audited)
£000 £000 £000
Cash flows from operating activities
(Loss)/profit before tax (43,347) 126,618 157,440
Adjustments for:
Losses/(gains) on investments 54,996 (115,934) (133,841)
Finance costs 1,390 1,763 3,168
Dividend income (15,180) (14,223) (30,761)
Interest income (158) 12 14
Dividends received 17,459 13,497 28,065
Interest received 353 658 932
Increase in receivables (167) (170) (276)
Increase/(decrease) in payables 15 (685) 69
Overseas withholding tax suffered (482) (483) (664)
58,226 (115,565) (133,294)
Net cash flows from operating activities 14,879 11,053 24,146
Cash flows from investing activities
Purchases of investments (68,311) (94,735) (124,529)
Sales of investments 74,789 128,127 174,213
Net cash flows from investing activities 6,478 33,392 49,684
Cash flows from financing activities
Repayment of borrowings - (38,000) (38,000)
Equity dividends paid (13,485) (12,037) (25,013)
Interest paid on borrowings (1,386) (2,432) (3,818)
Shares bought back from treasury (4,908) - (9,590)
Net cash flows used in financing activities (19,779) (52,469) (76,421)
Net increase/(decrease) in cash and cash equivalents 1,578 (8,024) (2,591)
Cash and cash equivalents at the start of the period 11,626 14,217 14,217
Cash and cash equivalents at the end of the period 13,204 6,193 11,626
SIGNIFICANT ACCOUNTING POLICIES
The half-year financial statements have been prepared on the basis of the
accounting policies set out in the Company’s Annual Report and Financial
Statements for the year ended 31 December 2021 and have not been audited or
reviewed by the Auditor pursuant to the Auditing Practices Board Guidance on
‘Review of Interim Financial Information’. They have been prepared on a
going concern basis as it is the Directors’ opinion that the
Company will continue in operational existence for the foreseeable future.
Going Concern
The Directors have made an assessment of the Company’s ability to continue
as a going concern and are satisfied that the Company has adequate resources
to continue in operational existence for a period of at least 12 months from
the date when these financial statements were approved.
In making this assessment, the Directors have considered a wide variety of
emerging and current risks to the Company, as well as mitigation strategies
that are in place. Of particular focus in the wake of the global COVID-19
pandemic is the possibility of further pandemic incidents, either from a new
strain of COVID or an entirely new disease, as well as the ongoing lockdowns
still being seen in parts of the world. Sadly, the conflict in Ukraine has
continued throughout the first part of the year, causing ongoing disruption to
global supply chains and soaring commodity prices. The impacts of this
senseless war to both the Company and the investment portfolio are also a key
focus for the Directors and Investment Manager.
Despite this, the Directors are not aware of any material uncertainties that
may cast significant doubt on the
Company’s ability to continue as a going concern, having taken into account
the liquidity of the Company’s
investment portfolio and the Company’s financial position in respect of its
cash flows, borrowing facilities and
investment commitments (of which there are none of significance). Therefore,
the financial statements have been
prepared on a going concern basis.
COMPARATIVE FIGURES
The financial information contained in this Half-Year 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 June 2022 and
30 June 2021 has not been audited.
The information for the year ended 31 December 2021 does not constitute
statutory accounts, but has been extracted from the latest published audited
accounts, which have been filed with the Registrar of Companies. The report of
the Auditor on those accounts contained no qualification or statement under
section 498 (2) or (3) of the Companies Act 2006.
GLOSSARY OF TERMS
AIC
The Association of Investment Companies.
Benchmark
A comparative performance index.
Cash Alternatives/Equivalent
Also known as cash equivalents. A class of investments considered relatively
low-risk because of their high liquidity, meaning they can be quickly
converted into cash.
Discount*
The amount by which the market price per share of an investment trust is lower
than the net asset value per share. The discount is normally expressed as a
percentage of the net asset value per share.
Diversification
Holding a range of assets to reduce risk.
Dividend
The portion of company net profits paid out to shareholders.
Dividends per Ordinary Share
Dividends per share paid or proposed for the financial period for Section 1158
purposes.
In the period ended 30 June 2022 there were two interim payments of 2.05 pence
per share, totalling 4.10 pence.
In 2021 there were three interim payments of 1.95 pence (restated from 9.75
pence) per share and a declared fourth interim dividend of 2.05 pence
(restated from 10.25 pence) per share, totalling 7.90 pence (restated from
39.5 pence).
In the period ended 30 June 2021 there were two interim payments of 1.95 pence
(restated from 9.75 pence) per
share, totalling 3.90 pence (restated from 19.50 pence).
Fixed Interest
Fixed-interest securities, also known as bonds, are loans usually taken out by
a government or company which normally pay a fixed rate of interest over a
given time period, at the end of which the loan is repaid.
FTSE All-Share Index
A comparative index that tracks the market price of the UK’s leading
companies listed on the London Stock Exchange. Covering around 600 companies,
including investment trusts, the name FTSE is taken from the Financial Times
and the London Stock Exchange, who are its joint owners.
FTSE 350 Index
A comparative index that tracks the market price of the UK’s 350 largest
companies, by market value, listed on the London Stock Exchange.
Liquidity
The ease with which an asset can be purchased or sold at a reasonable price
for cash.
Market Capitalisation
The total value of a company’s equity, calculated by the number of shares
multiplied by their market price.
Net Asset Value per Share with Debt at Amortised Cost
The value of total assets less liabilities, with debenture and loan stocks at
book value. Book value is the amount
borrowed less the current loan arrangement fee debtor. The net asset value per
share is calculated by dividing this amount by the number of ordinary shares
outstanding.
Net Asset Value per Share with Debt at Market Value*
The value of total assets less liabilities, with debentures and loan stocks at
market value. The net asset value per share is calculated by dividing this
amount by the number of ordinary shares outstanding.
Ongoing Charges*
Ongoing charges is calculated on an annualised basis. This figure excludes any
portfolio transaction costs and may vary from period to period. The
calculation below is in line with AIC guidelines.
Six months to 30 June 2022 £
Investment management fee 1,515,000
Administrative expenses 539,000
Less: one off legal and professional fees -
Total (a) 2,054,000
Average cum income net asset value throughout the period (b) 798,895,000
Ongoing charges (c=a/b)*2 (c) 0.51%
Peer Companies
Companies that operate in the same industry sector and are of similar size.
Premium*
The amount by which the market price per share of an investment trust exceeds
the net asset value per share. The premium is normally expressed as a
percentage of the net asset value per share.
Relative Performance
The return that an asset achieves over a period of time, compared to a
benchmark.
Share Buyback
When a company buys some of its own shares in the market, which leads to a
rise in the share price. It changes the company’s debt-to-equity ratio and
is a tax-efficient alternative to paying out dividends.
Total Return*
Captures both the capital appreciation/depreciation of an investment as well
as the dividends generated over a
holding period.
Return on Net Asset Value
Expressed in percentage terms, Morningstar’s calculation of total return is
determined each month by taking the change in monthly net asset value,
reinvesting all income, and dividing by the starting net asset value.
Reinvestments are made using the actual reinvestment net asset value.
The total returns do account for management and administrative fees and other
costs taken out of assets.
Return on Gross Assets
Fees and associated costs are removed from the net asset value to arrive at a
gross return.
Return on Share price*
For equities, only market return can be calculated (since no net asset value
exists), but the market return is also stored as the total return. This is
done so that users can more easily compare a stock’s return to that of other
investments.
Market return does not reinvest dividends. Dividends are treated as a cash
payout as of the end of the period. The calculation is point to point using
adjusted price at the beginning of the period and the adjusted price at the
end of the period incorporating any dividends paid. Therefore, it doesn’t
compound returns/the impact of dividends reinvested over that period.
Valuation
Determination of the value of a company’s stock based on earnings and the
market value of assets.
Value Investing
An investment strategy that aims to identify under-valued yet good quality
companies with strong cash flows and robust balance sheets, putting an
emphasis on financial strength.
Yield*
A measure of the income return earned on an investment. In the case of a share
the yield expresses the annual dividend payment as the percentage of the
market price of the share. In the case of a bond the running yield (or flat or
current yield) is the annual interest payable as a percentage of the current
market price. The redemption yield (or yield to maturity) allows for any gain
or loss of capital which will be realised at the maturity date.
* Alternative Performance Measure.
DIRECTORS AND ADVISERS
DIRECTORS Arthur Copple – Chairman Charles Cade Lesley Sherratt Richard Wyatt Shefaly Yogendra DEPOSITARY, BANKERS AND CUSTODIAN The Bank of New York Mellon (International) Limited One Canada Square London E14 5AL
ALTERNATIVE INVESTMENT FUND MANAGER Link Fund Solutions Limited 6th Floor 65 Gresham Street London EC2V 7NQ STOCKBROKERS Cenkos Securities plc 6.7.8 Tokenhouse Yard London EC2R 7AS
INVESTMENT MANAGER RWC Asset Management LLP Verde 4th Floor 10 Bressenden Place London SW1E 5DH Telephone: 0207 227 6000 SOLICITORS Gowling WLG (UK) LLP 4 More London Riverside London SE1 2AU
REGISTERED OFFICE Beaufort House 51 New North Road Exeter EX4 4EP INDEPENDENT AUDITOR BDO LLP 55 Baker Street London W1U 7EU
COMPANY SECRETARY Link Company Matters Limited Beaufort House 51 New North Road Exeter EX4 4EP Telephone: 01392 477500 REGISTRAR Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA
FUND ADMINISTRATOR Link Alternative Fund Administrators Limited Beaufort House 51 New North Road Exeter EX4 4EP Telephone number s: +44 121 415 7047 (overseas shareholder helpline) 0371 384 2432 (shareholder helpline)* 0371 384 2030 (general registration helpline) *Lines open 8.30 a.m. to 5.30 p.m., Monday to Friday.
TEMPLE BAR IDENTIFIERS ISIN (ordinary shares) – GB00BMV92D64 SEDOL (ordinary shares) – BMV92D6 Legal Entity Identifier – 213800O8EAP4SG5JD323
REGISTERED NUMBER Registered in England Number 00214601
National Storage Mechanism
A copy of the half-year report will shortly be submitted to the National
Storage Mechanism (‘NSM’) and will be available for inspection at the NSM,
which is situated at: https://data.fca.org.uk/a/nsm/nationalstoragemechanism.
END
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website accessible from hyperlinks on this announcement (or any other website)
is incorporated into, or forms part of, this announcement.
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