Half-yearly Report
Invesco Perpetual UK Smaller Companies Investment Trust plc
Half-Yearly Financial Report for the Six Months to 31 July 2014
KEY FACTS
Invesco Perpetual UK Smaller Companies Investment Trust plc (the Company) is an
investment trust, quoted on the London Stock Exchange, which invests
predominantly in the shares of small to medium sized UK quoted companies.
Investment Objective and Policy of the Company
The Company's investment objective is to achieve long-term total return for
shareholders primarily by investment in a broad cross-section of small to
medium sized UK quoted companies. The pursuit of income is of secondary
importance.
Full details of the Company's investment policy and risk and investment limits
can be found in the annual financial report for the year ended 31 January 2014.
Performance Statistics
The Benchmark Index of the Company is the Numis Smaller Companies Index
(excluding Investment Companies) on a total return basis.
AT AT
31 JUL 31 JAN %
2014 2014 CHANGE
Net asset value and share
price:
Net asset value (NAV) per
share:
- balance sheet 356.2p 367.9p -3.2%
- after charging 354.6p 363.0p -2.3%
proposed dividends
(capital NAV)
Shareholders' funds 189,535 195,749 -3.2%
(£'000)
Share price 310.0p 316.8p -2.1%
Discount per share based 13.0% 13.9%
on balance sheet NAV
Total return (with income reinvested) for the six
months ended 31 July 2014:
Net asset value* -1.6%
Benchmark Index* -2.9%
FTSE All-Share Index* +4.5%
Capital return:
Net asset value -2.3%
Benchmark Index* -4.3%
FTSE All-Share Index* +2.6%
*Source: Thomson Reuters Datastream
AT AT
31 JUL 31 JAN
2014 2014
Gearing:
- gross gearing(1) nil 1.2%
- net gearing(2) nil nil
- net cash(3) 3.7% 1.2%
- maximum permissible gearing (4) 10.6% 10.2%
SIX MONTHS SIX MONTHS
ENDED ENDED
31 JUL 31 JUL
2014 2013
Return and dividend per share:
Revenue return 3.6 p 3.6 p
Capital return (10.4)p 41.2 p
Total return (6.8)p 44.8 p
Interim dividend 1.6 p 1.6 p
Notes:
1. Gross gearing: borrowings ÷ shareholders' funds.
2. Net gearing: borrowings less cash ÷ shareholders' funds.
3. Net cash: net exposure to cash and cash equivalents ÷ shareholders' funds.
4. Maximum permissible gearing: maximum permissible borrowings as laid down in
the investment policy and covenants under the borrowing
facility ÷ shareholders' funds.
.
CHAIRMAN'S STATEMENT INCORPORATING THE INTERIM
MANAGEMENT REPORT
Chairman's Statement
Performance
Over the six months to 31 July 2014, your Company delivered a total return of
-1.6%, outperforming its benchmark, the Numis Smaller Companies Index (ex
Investment Companies), which returned -2.9%. This return is reflective of a
challenging period for the UK Smaller Companies sector as a whole during the
past six months. Nevertheless, the portfolio remains resilient and has
delivered a return in excess of the benchmark.
The Company's share price decreased by -2.1% during the period, down from
316.8p as at 31 January 2014 to 310.0p as at 31 July 2014. During this period
the Company's discount to NAV narrowed marginally from 13.9% to 13.0%.
The Future of the Company and Discount Control
In my Chairman's Statement to the 2014 annual financial report, I reiterated
the Board's commitment that, on or around the date of the Company's Annual
General Meeting in 2017, the Board will make available a number of options for
shareholders to consider. These may include one or more of a continuation of
the existing Company, a rollover into a similar or other investment vehicle and
/or the provision of a cash exit at a price close to NAV. One of the benefits
the Board hopes to achieve by this initiative is a narrowing of the discount to
NAV at which the shares trade. The Board expects this benefit to become more
apparent over time.
No buy backs have been conducted during the period, although the Board will
continue to monitor the discount level closely.
Interim Dividend
The Board is pleased to declare an interim dividend of 1.6p per share to be
paid on 24 October 2014 to shareholders on the register on 26 September 2014.
The shares will go ex-dividend on 24 September 2014. Future dividends, will, as
always, depend on market conditions and investment performance.
Alternative Investment Fund Managers Directive (AIFMD)
As previously announced on 22 July 2014, the Company has entered into
arrangements necessary to ensure compliance with the AIFMD. The Board has
appointed Invesco Fund Managers Limited (IFML) as the Company's Alternative
Investment Fund Manager. The existing investment management agreement between
the Company and Invesco Asset Management Ltd (IAML) has been terminated,
although IAML will continue to manage the Company's investment portfolio under
delegated authority from IFML. The management fees and notice period remain
unchanged. The Company has also appointed BNY Mellon Trust & Depositary (UK)
Limited, to act as the Company's depositary. It is not expected or intended
that these new arrangements will result in any change to the way the Company's
assets are invested.
The Company's Strategy and Outlook
Recent economic data has been indicative of a recovery in the UK. Although this
domestic improvement is positive news for UK smaller companies, it is somewhat
offset by the lacklustre recovery within the Eurozone which appears fragile.
The spectre of deflation, coupled with concern over the potential impact on
growth of the ongoing geo-political issues in Russia and Ukraine add to the
Eurozone's woes. In the UK, the strength of sterling has acted to erode some of
the gains made by companies trading with the primary export markets of the
Eurozone and U.S, although more recently the pound has weakened amid
uncertainty around the outcome of the Scottish referendum. The inevitable rise
in interest rates - as intimated by the Bank of England - may also create more
challenging conditions for growth. However, against this backdrop your
portfolio manager believes that there is still much to be positive about, not
least the exposure of UK smaller companies to the more benign domestic
environment, a strengthening labour market and increasing consumer spending. As
you will read in the Portfolio Manager's Report which follows, Jonathan Brown,
your portfolio manager, continues to take a longer term investment approach,
identifying opportunities to purchase high quality growing businesses at good
valuations, with a focus on fundamental analysis; your Board remains fully
supportive of this strategy.
Ian Barby
Chairman
15 September 2014
.
Portfolio Managers' Report
Investment Review
The six month period under review provided mixed returns for equity investors.
Stock markets were initially buoyed by the ongoing improvement in the general
economic outlook, with smaller companies rising 6% in the first few weeks.
However, this was relatively short lived as fears about the potential impact of
higher interest rates in the UK and a series of geopolitical problems began to
weigh on investor sentiment. Compounding this, there was also a diminishing
level of liquidity support for markets, as the Federal Reserve in the US
continued to reduce the level of quantitative easing (QE), and an abnormally
active IPO market in the UK diverted money away from existing holdings. These
circumstances, together with greater bid activity within large companies, has
led to investors switching from small and mid-cap companies into large
companies. After a period of strong outperformance over the last couple of
years, small companies underperformed, declining 2.9% on a total return basis
compare to the FTSE All-Share Index which rose by 4.5% on the same basis.
Portfolio Strategy and Review
Against this background, your Company saw a decrease in its net asset value of
1.6% for the half year, in total return terms. The portfolio benefited from
overweight positions in the Health Care and Software & Computer Services
sectors, but was hurt by its exposure to the Support Services and Consumer
Goods sectors. At the individual stock level, the best performers included:
Staffline (+72%), a blue collar recruitment business, which benefited from
improving demand and a significantly earnings enhancing acquisition; CVS Group
(+27%), the UK's leading provider of veterinary services, which saw upgrades to
its earnings expectations due to strong trading and a number of small bolt-on
acquisitions; and Amerisur Resources (+19%), which is a Colombian oil & gas
business that enjoyed continued success with the drill bit. Inevitably there
were disappointments in the period. These included RPS Group (-24%), a
consultancy business specialising in the energy and environmental markets. The
company saw diminished demand for its services in Australia and reduced
overseas earnings due to the strength of sterling. The fall in the share price
looks overdone and we have modestly added to the position. Xaar (-50%), the
digital print-head manufacturer and the star performer from last year, saw a
savage de-rating due to lower growth in its end markets. We had taken
substantial profits from Xaar in the previous period and we have bought some
of this back following the fall in the share price.
The US economy suffered a significant wobble in the first quarter of 2014 as
the severe winter weather took its toll on economic activity. The economy
bounced back strongly in the second quarter, erasing doubts that this was a
more significant slowdown, and re-enforcing the view that the US is the best
placed of the major western economies. Their economy continues to benefit from
a significant energy cost advantage due to exploitation of shale oil and gas
reserves and the banking sector is returning to more normal levels of activity.
With the ongoing improvement in the labour market, the Federal Reserve has
maintained its policy of tapering QE, with the aim of halting altogether in the
autumn. So far this appears to have had a limited impact on the economy and on
the market, although we have seen less progress from equities and a small
increase in bond yields. The portfolio retains a significant exposure to the US
via companies such as Senior, which sells components into Boeing and
Caterpillar, and Diploma, which distributes pneumatic seals and other
industrial products in the region.
As our largest trading partner, the economic fortunes of continental Europe and
the UK are to some extent intertwined. The last year has seen a significant
improvement in business sentiment in the Eurozone, and some of this confidence
has fed through to improving conditions in industrial and service sectors,
resulting in a modest fall in unemployment. However, there are signs that the
recovery is already waning. Recent data suggests that the French and Italian
economies are once again experiencing slowing growth, and Germany, for so long
the engine room of Europe, is starting to see the effects of the economic
sanctions levelled against Russia in the wake of the Ukraine crisis. The
European Central Bank (ECB) has implemented some fairly extreme policies in
order to shore up the nascent recovery, including record low interest rates and
negative deposit rates. These initiatives are designed to encourage borrowing
and spending, but also to moderate the strength of the Euro, which has to some
extent reversed the improvements in export competitiveness derived from lower
wages. While the ECB has so far stopped short of outright quantitative easing,
this may change if the economic situation fails to improve soon. Inevitably the
portfolio contains some exposure to the region, and although the economic
situation is unhelpful, we aim to target companies with the ability to generate
profitable growth even in the absence of economic recovery. However, it seems
that Europe may continue to be a drag on the domestic UK economy for some time
to come.
The picture elsewhere in the world is mixed. Japan has returned to economic
growth after extraordinary levels of central bank stimulus. There is some
evidence that their banking system may finally have been cleansed, and the
debasement of the Yen has led to an improved export performance. Whether the
current recovery will lead to a sustained period of prosperity is debatable.
Growth in China, while slowing, is still well in excess of most countries.
However, the principal drivers of that growth, a debt financed construction
binge, looks to be built on increasingly shaky foundations. It appears to have
resulted in a colossal misallocation of capital, with many projects failing to
make an economic return. The consequence is likely to be a banking crisis
triggered by non-performing loans, and we are already seeing the initial signs
of this occurring. The knock on effects of slowing infrastructure spend in
China are already being felt in commodity based economies and businesses
exposed to the mining sector. With this in mind, we retain a very low level of
exposure to this sector. Lower commodity prices are however, providing a much
needed boost to the rest of the global economy, keeping inflation in check and
allowing central banks to continue with their expansionary policies.
There is evidence of a broadening economic recovery in the UK. Data from the
service, industrial and manufacturing sectors has shown an ongoing improvement,
with business investment also growing after a period of stagnation. GDP in the
UK has finally passed the peak previously achieved before the financial crisis
and the continued reduction in unemployment is encouraging consumers to loosen
the purse strings. It appears that the unprecedented level of stimulus applied
to the economy over the last 5 years is finally having an impact. The UK
economy may well be in a "sweet spot", enjoying the benefits of economic
recovery driven by cheap money, without the corresponding increases in interest
rates that you would normally expect to see at this stage of the economic
cycle. However, this may be about to change, with increasing signals from the
Bank of England (BoE) that base rates could start to rise soon. As consumer and
government debt levels remain high the BoE will wish to tread carefully to
avoid damaging growth prospects. With inflation remaining benign and no
evidence of wage increases causing an upward spiral, any increase in base rates
is likely to be modest and gradual.
Much of the improvement in UK economic growth has been driven by consumer and,
to a lesser extent, government spending. The strength of sterling and weak
economic growth in the Eurozone in particular has constrained export growth,
and this may persist for a while. On the other hand, there are early signs that
investment spending, which has remained at low levels for the last few years,
has started to pick-up and this should help sustain and accelerate economic
growth.
Despite the improving economic backdrop many UK companies have seen a steady
erosion of earnings expectations driven mainly by sterling strength and
difficult economic conditions in Europe and the emerging markets. Larger
companies have seen greater downgrades than more domestically orientated
smaller companies. It seems unlikely that sterling will keep appreciating
versus the US Dollar given the strengthening recovery in the US and the reduced
level of economic stimulus from the Federal Reserve. However, the Euro is
likely to remain weak, as the ECB is seemingly determined to debase the
currency in order to improve the competitiveness of Eurozone exports. Overall
we therefore anticipate that the currency headwind companies have been facing
should start to abate, particularly if Scotland votes to leave the UK. Market
expectations of around 9% earnings growth for next year for UK smaller
companies look reasonable. Company valuations, whilst higher than we have seen
over the last few years, do not look excessive, with a prospective median price
earnings ratio for the small cap sector of around 13.5x. Small companies are
now rated on broadly the same multiple as the market as a whole and are
forecast to deliver similar growth. With their greater domestic exposure and
the relative strength of the UK economy, UK small companies remain attractive.
Certainly when compared with the fixed income sector, which has never been more
expensive, equities look relatively attractive. Also when you consider that the
yield offered by equities is similar to 10 year government bonds but is also
growing year by year, the case for equities still looks strong.
The overarching investment strategy remains unchanged. We continue to look for
high quality, growing businesses with strong balance sheets, with a view to
acquiring them at decent valuations. The recent sell off in consumer focused
stocks, prompted by fears of rising interest rates, is presenting some
opportunities to buy good quality businesses at much more attractive
valuations. The same is true for export focused businesses, where currency
moves have, until recently, depressed short term earnings. Having a long term
investment approach allows us to see through the "noise" in the market, and by
focusing on the fundamental qualities of companies, we are able to build
positions in great businesses when the market takes fright at short term
fluctuations in trading.
Outlook
Heightened geopolitical risks and the ongoing reduction in central bank
stimulus are currently weighing on investor sentiment, and there is no doubt
that these factors could have an impact on company prospects over the coming
period. Uncertainty about the outcome of the Scottish referendum and the UK
election in 2015 may also cause some short-term concerns - although the next
government will remain constrained in what economic actions it can take by the
ongoing requirement to reduce the budget deficit. That said, there are many
reasons to be optimistic: (a) The broadening economic recovery in the UK is a
clear positive for domestic businesses and the improving situation in the US
and Japan will benefit export business exposed to those regions; (b) The
currency headwinds that UK exporters have been facing are showing signs of
abating, putting less downward pressure on forecasts; (c) The selling pressure
from fund managers moving up the market cap scale will reach an end once those
allocation switches have been completed; and (d) Valuations still look
reasonable and we are seeing signs of increasing takeover activity after a
particularly quiet period. We are finding plenty of opportunities to buy top
quality stocks at good valuations, and this more than anything gives hope of
generating positive returns for investors in the second half of the financial
year.
Jonathan Brown
Portfolio Manager
15 September 2014
.
Related Party Transactions and Transactions with the Manager
Under International Financial Reporting Standards, the Company has identified
the Directors as related parties. No other related parties have been
identified.
With effect from 22 July 2014, Invesco Fund Managers Limited (IFML), a wholly
owned subsidiary of Invesco Limited and associate company of Invesco Asset
Management Limited (IAML), was appointed as Manager, Company Secretary and
Administrator to the Company. Prior to 22 Jul 2014, IAML carried out these
functions and continues to do so under delegated authority of IFML. Details of
the basis of fees payable to the Manager are as shown in the 2014 annual
financial report which is available on the Manager's website.
Principal Risks and Uncertainties
- Market (Economic) Risk - factors such as general fluctuations in stock
markets, interest rates and exchange rates may give rise to high levels of
volatility in the share prices of investee companies, as well as affecting the
Company's own share price and discount to NAV.
- Investment Risk - the Company invests in small and medium-sized companies
traded on the London Stock Exchange or on AIM. By their nature these are
generally considered riskier than their larger counterparts and their share
prices can be more volatile, with lower liquidity. There can be no guarantee
that the Company will achieve its published investment objective.
- Shareholder Risk - The value of an investment in the Company may go down as
well as up and an investor may not get back the amount invested.
- Borrowings - the Company may borrow money for investment purposes. If the
investments fall in value, any borrowings (or gearing) will magnify any loss.
If borrowing facilities could not be renewed, the Company might have to sell
investments to repay any borrowings it has.
- Reliance on the Manager and other Third Party Service Providers - failure by
any third party service provider to carry out its obligations to the Company
could have a materially detrimental impact on the operation of the Company to
successfully pursue its investment policy.
- Regulatory Risk - the Company is subject to various laws and regulations by
virtue of its status as an investment trust. Control failures by any of the
third party service providers may result in operational or reputational
problems, erroneous disclosures or loss of assets through fraud, as well as
breaches of regulations.
A detailed explanation of these principal risks and uncertainties can be found
on pages 8 and 9 of the Company's 2014 annual financial report, which is
available on the Manager's website at: www.invescoperpetual.co.uk/
investmenttrusts
In the view of the Board, these principal risks and uncertainties are as much
applicable to the remaining six months of the financial year as they were to
the six months under review.
Going Concern
The financial statements have been prepared on a going concern basis. The
Directors consider this is the appropriate basis, as the Company has adequate
resources to continue in operational existence for the foreseeable future. In
considering this, the Directors took into account the diversified portfolio of
readily realisable securities which can be used to meet funding commitments,
and the ability of the Company to meet all of its liabilities, including any
bank overdraft, and ongoing expenses from its assets.
.
THIRTY LARGEST HOLDINGS AT 31 JULY 2014
Ordinary shares unless stated otherwise
VALUE % OF
COMPANY ACTIVITY BY SECTOR £'000 PORTFOLIO
Synergy Health Health Care Equipment 7,060 3.9
& Services
Senior Aerospace & Defence 5,034 2.8
CVS AIM General Retailers 4,823 2.6
Howden Joinery Support Services 4,401 2.4
Diploma Support Services 4,089 2.2
Elementis Chemicals 3,916 2.1
Amerisur Resources Oil & Gas Producers 3,527 1.9
AIM
Ultra Electronics Aerospace & Defence 3,469 1.9
Mears Support Services 3,332 1.8
Bovis Homes Household Goods & 3,292 1.8
Home Construction
RPS Support Services 3,154 1.7
Marston's Travel & Leisure 3,133 1.7
Dechra Pharmaceuticals & 3,075 1.7
Pharmaceuticals Biotechnology
RPC General Industrials 3,031 1.7
LSL Property Services Real Estate 3,019 1.7
Investment & Services
Innovation Software & Computer 2,988 1.6
Services
Euromoney Media 2,979 1.6
Institutional
Investor
Hunting Oil Equipment, 2,945 1.6
Services &
Distribution
N Brown General Retailers 2,914 1.6
Micro Focus Software & Computer 2,863 1.6
International Services
Aveva Software & Computer 2,850 1.6
Services
EMIS AIM Software & Computer 2,715 1.5
Services
Northgate Support Services 2,609 1.4
FDM Software & Computer 2,519 1.4
Services
Staffline AIM Support Services 2,381 1.3
Victrex Chemicals 2,373 1.3
Dunelm General Retailers 2,352 1.3
RWS AIM Support Services 2,296 1.3
Interserve Support Services 2,198 1.2
Vertu Motors AIM General Retailers 2,168 1.2
97,505 53.4
Other Investments 84,955 46.6
(67)
Total Investments 182,460 100.0
(97)
AIM Investments quoted on AIM
.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
YEAR
ENDED
31 JAN
SIX MONTHS TO 31 JUL 2014 SIX MONTHS TO 31 JUL 2013 2014
REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL TOTAL
£'000 £'000 £'000 £'000 £'000 £'000 £'000
(Losses)/ - (4,995) (4,995) - 22,215 22,215 43,806
profits on
investments
held at fair
value
Income
UK dividends 1,883 - 1,883 1,728 - 1,728 3,453
UK unfranked 87 - 87 - - - 36
investment
income
Scrip - - - - - - 206
dividends
Overseas 205 - 205 155 - 155 273
dividends
Special 221 5 226 446 - 446 587
dividends
Underwriting 8 - 8 - - - -
commission
Gross profit 2,404 (4,990) (2,586) 2,329 22,215 24,544 48,361
/(loss)
Investment (318) (318) (636) (267) (267) (534) (1,134)
management
fee - note 2
Performance - (213) (213) - - - -
fee - note 2
Other (170) (2) (172) (149) (2) (151) (318)
expenses
Profit/ 1,916 (5,523) (3,607) 1,913 21,946 23,859 46,909
(loss)
before
finance
costs and
tax
Finance - - - - - - (6)
costs note 2
Profit/ 1,916 (5,523) (3,607) 1,913 21,946 23,859 46,903
(loss)
before tax
Taxation - - - - - - -
Profit/ 1,916 (5,523) (3,607) 1,913 21,946 23,859 46,903
(loss) after
tax
Return per
ordinary
share
Basic - note 3 3.6p (10.4)p (6.8)p 3.6p 41.2p 44.8p 88.1p
The total column of this statement represents the Company's statement of
comprehensive income, prepared in accordance with International Financial
Reporting Standards. The profit after tax is the total comprehensive income for
the period. The supplementary revenue and capital columns are both prepared in
accordance with the Statement of Recommended Practice issued by the Association
of Investment Companies. All items in the above statement derive from
continuing operations and the Company has no other gains or losses. No
operations were acquired or discontinued in the period.
.
CONDENSED BALANCE SHEET
Registered number 2129187 AT AT AT
31 JUL 31 JUL 31 JAN
2014 2013 2014
£'000 £'000 £'000
Non-current assets
Investments held at fair 182,460 171,037 193,461
value through profit or
loss
Current assets
Amounts due from brokers 1,116 1,859 796
Other receivables 369 489 312
Cash and cash 7,078 1,363 4,690
equivalents
8,563 3,711 5,798
Total assets 191,023 174,748 199,259
Current liabilities
Amounts due to brokers (1,118) (1,045) (959)
Bank overdraft - - (2,371)
Other payables (157) (147) (180)
(1,275) (1,192) (3,510)
Total assets less current 189,748 173,556 195,749
liabilities
Provision for performance (213) - -
fee - note 2
Net assets 189,535 173,556 195,749
Issued capital and
reserves
Share capital 10,642 10,642 10,642
Share premium 21,244 21,244 21,244
Capital redemption reserve 3,386 3,386 3,386
Capital reserves 149,554 133,793 155,077
Revenue reserve 4,709 4,491 5,400
Total Shareholders' funds 189,535 173,556 195,749
Net asset value per
ordinary share
Basic - see note 5 356.2p 326.2p 367.9p
.
CONDENSED STATEMENT OF CASH FLOW
SIX MONTHS SIX MONTHS YEAR
TO TO TO
31 JUL 31 JUL 31 JAN
2014 2013 2014
£'000 £'000 £'000
Cash flow from operating
activities
(Loss)/profit before tax (3,607) 23,859 46,903
Adjustments for:
Purchases of investments (31,561) (39,300) (86,351)
Sales of investments 37,406 33,849 81,044
5,845 (5,451) (5,307)
Loss/(profit) on 4,995 (22,215) (43,806)
investments
Finance costs - - 6
Operating cash flows before 7,233 (3,807) (2,204)
movements in working capital
Increase in receivables (57) (226) (49)
Increase/(decrease) in 190 (9) 24
payables and provisions
Net cash flows from 7,366 (4,042) (2,229)
operating activities after
tax
Cash flows from financing
activities
Interest paid - - (6)
Equity dividends paid (2,607) (2,337) (3,188)
Net cash used in financing (2,607) (2,337) (3,194)
activities
Net increase/(decrease) in 4,759 (6,379) (5,423)
cash and cash equivalents
Cash and cash equivalents at 2,319 7,742 7,742
the beginning of the period
Cash and cash equivalents at 7,078 1,363 2,319
the end of the period
.
CONDENSED STATEMENT OF CHANGES IN EQUITY
CAPITAL
SHARE SHARE REDEMPTION CAPITAL REVENUE
CAPITAL PREMIUM RESERVE RESERVE RESERVE TOTAL
£'000 £'000 £'000 £'000 £'000 £'000
For the six
months ended
31 July 2014
At 31 January 10,642 21,244 3,386 155,077 5,400 195,749
2014
(Loss)/profit - - - (5,523) 1,916 (3,607)
for the year
Dividends paid - - - - (2,607) (2,607)
- note 4
At 31 July 10,642 21,244 3,386 149,554 4,709 189,535
2014
For the six
months ended
31 July 2013
At 31 January 10,642 21,244 3,386 111,847 4,915 152,034
2013
Profit for the - - - 21,946 1,913 23,859
year
Dividends paid - - - - (2,337) (2,337)
- note 4
At 31 July 10,642 21,244 3,386 133,793 4,491 173,556
2013
For the year
ended 31
January 2014
At 31 January 10,642 21,244 3,386 111,847 4,915 152,034
2013
Profit for the - - - 43,230 3,673 46,903
year
Dividends paid - - - - (3,188) (3,188)
- note 4
At 31 January 10,642 21,244 3,386 155,077 5,400 195,749
2014
.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1. Basis of Preparation
Accounting Standards and Policies
These condensed financial statements have been prepared using the same
accounting policies as those adopted in the 2014 annual financial report, which
are consistent with International Financial Reporting Standards (IFRS), and
Standard Interpretation Committee and International Financial Reporting
Interpretation Committee interpretations issued by the International Accounting
Standards Board to the extent adopted by the EU.
2. Management Fee, Performance Fee and Finance Costs
The investment management fee is allocated 50% to revenue and 50% to capital;
finance costs are allocated 20% to revenue and 80% to capital.
Performance-related fees are charged wholly to capital and at the period end
there was a provision of £213,000 (31 July 2013 and 31 January 2014: nil).
3. Basis of Returns
SIX MONTHS SIX MONTHS YEAR
ENDED ENDED ENDED
31 JUL 31 JUL 31 JAN
2014 2013 2014
Returns after tax:
Revenue £1,916,000 £1,913,000 £3,673,000
Capital (£5,523,000) £21,946,000 £43,230,000
Total (£3,607,000) £23,859,000 £46,903,000
Number of ordinary 53,209,084 53,209,084 53,209,084
20p shares in issue
during the period
4. Dividends on Ordinary Shares
RATE SIX MONTHS SIX MONTHS YEAR
ENDED ENDED ENDED
31 JUL 31 JUL 31 JAN
2014 2013 2014
£'000 £'000 £'000
Final 2013 4.4p - 2,341 2,341
Interim 2014 1.6p - - 852
Final 2014 4.9p 2,607 - -
Return of - (4) (5)
unclaimed
dividends from
previous years
Total 2,607 2,337 3,188
An interim dividend of 1.6p per ordinary share (2013: 1.6p) will be paid on 24
October 2014 to shareholders on the register on 26 September 2014.
5. Basis of Net Asset Value per 20p Ordinary Share
AT 31 JUL AT 31 JUL AT 31 JAN
2014 2013 2014
Shareholders' funds £189,535,000 £173,556,000 £195,749,000
Ordinary shares in 53,209,084 53,209,084 53,209,084
issue at period end
6. Investment Trust Status
It is the intention of the Directors to conduct the affairs of the Company so
that it satisfies the conditions for approval as an investment trust company.
7. Status of Half Yearly Financial Report
The financial information contained in this half yearly financial report, which
has not been reviewed or audited by an independent auditor, does not constitute
statutory accounts within the meaning of section 434 of the Companies Act 2006.
The financial information for the half years ended 31 July 2013 and 31 July
2014 has not been audited. The figures and financial information for the year
ended 31 January 2014 are extracted and abridged from the latest published
accounts and do not constitute the statutory accounts for that year. Those
accounts have been delivered to the Registrar of Companies and include the
Report of the Independent Auditor, which was unqualified.
By order of the Board
Invesco Asset Management Limited
Company Secretary
15 September 2014
.
DIRECTORS' RESPONSIBILITY STATEMENT
in respect of the preparation of the half-yearly financial report.
The Directors are responsible for preparing the half-yearly financial report
using accounting policies consistent with applicable law and International
Financial Reporting Standards.
The Directors confirm that to the best of their knowledge:
- the condensed set of financial statements contained within the half-yearly
financial report have been prepared in accordance with the International
Accounting Standards 34 `Interim Financial Reporting';
- the interim management report includes a fair review of the information
required by 4.2.7R and 4.2.8R of the UKLA's Disclosure and Transparency Rules;
and
- the interim management report includes a fair review of the information
required on related party transactions.
The half-yearly financial report has not been audited or reviewed by the
Company's auditor.
Signed on behalf of the Board of Directors.
Ian Barby
Chairman
15 September 2014
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