Half-yearly Report
Keystone Investment Trust plc
Half-Yearly Financial Report for the Six Months to 31 March 2015
Key Facts
Keystone Investment Trust plc is an investment trust company listed on the
London Stock Exchange. The Company is managed by Invesco Fund Managers Limited.
Objective of the Company
The objective of Keystone Investment Trust plc is to provide shareholders with
long-term growth of capital, mainly from UK investments.
Full details of the Company's investment policy, risk and limits can be found
in the annual financial report for the year ended 30 September 2014.
Performance Statistics
SIX SIX
MONTHS MONTHS YEAR
ENDED ENDED ENDED
31 MAR 31 MAR 30 SEPT
2015 2014 2014
CHANGE % CHANGE % CHANGE %
Total Return Statistics (capital growth with income
reinvested)(1)
Net asset value (NAV) per share:
- debt at par +8.2 +10.1 +11.7
- debt at fair value +7.8 +10.6 +12.5
Share price (mid-market) +7.2 +6.0 +7.4
FTSE All-Share Index +5.3 +4.8 +6.1
Capital Statistics
NAV per share:
- debt at par +5.3 +6.9 +8.1
- debt at fair value +4.8 +7.3 +8.8
Share price(1) +4.8 +3.6 +3.8
FTSE All-Share Index(1) +3.7 +3.2 +2.6
(1) Source: Thomson Reuters Datastream and Morningstar.
SIX MONTHS SIX MONTHS
ENDED ENDED
31 MAR 31 MAR
2015 2014 % CHANGE
Revenue Statistics
Revenue return per ordinary share 30.2p 29.1p +3.8
Interim dividend per ordinary share 18.0p 18.0p -
AT AT AT
31 MAR 31 MAR 30 SEPT
2015 2014 2014
NAV per share:
- debt at par 1948.6p 1831.2p 1851.3p
- debt at fair value 1892.5p 1781.8p 1806.2p
Share price 1791.0p 1705.0p 1709.0p
Discount of share price to net asset value per
share:
- debt at par 8.1% 6.9% 7.7%
- debt at fair value 5.4% 4.3% 5.4%
Gearing from borrowings:
- gross 12.1% 12.9% 12.8%
- net 5.2% 4.5% 5.7%
.
INTERIM MANAGEMENT REPORT INCORPORATING THE CHAIRMAN'S STATEMENT
Chairman's Statement
Performance
Over the six months from 30 September 2014 to 31 March 2015 the Company's
shares gave a total return of 8.2%. The underlying net asset value (NAV) per
ordinary share (with debt at fair value) gave a total return of 7.8%. These
compare with a total return by the Company's benchmark for performance
measuring purposes, the FTSE All-Share Index, of 5.3% (all these figures are
with income reinvested). On 31 March 2015, the discount of the share price
relative to NAV (debt at fair value) was 5.4%.
Gearing and Investment Guidelines
The Board sets guidelines for the Manager for gearing, the limit has not been
changed over the course of the last six months and remains that market exposure
should not exceed 105% of net assets through investment activity and the
Manager must make sales if (as a result of market movements) equity exposure
rises to more than 115% of net assets.
Dividend
The Board has declared a first interim dividend of 18p per ordinary share which
will be paid on 30 June 2015 to shareholders on the register on 29 May 2015.
The shares will be marked ex-dividend on 28 May 2015.
Beatrice Hollond
Chairman
11 May 2015
.
Manager's Report
Market Review
The six month period ended 31 March 2015 produced a return of 5.3% for the UK
equity market, as measured by the FTSE All-Share index (total return). During
the final quarter of 2014, the index was broadly flat as market performance was
held back by concerns relating to future profit growth, the end to the
Quantitative Easing (QE) programme in the US, rising geopolitical risk, and
uncertainty surrounding the UK general election. The first quarter of 2015 saw
the index rally as the market started to focus on the positive implications of
the significant fall in the oil price and on the introduction of QE in Europe.
The decline in the oil price and a slowing Chinese economy has resulted in
falling inflation and the expectation that bank rates will rise later rather
than sooner. This in turn fuelled optimism that consumer disposable income
would rise as fuel and utility bills fell.
Portfolio Strategy & Review
The Company's net asset value, including reinvested dividends, rose by 7.8%
during the six months to the end of March 2015, compared to the above index
return. The portfolio's continued rise in value over a period which has seen
some high profile profit warnings and pronounced swings in sentiment is
encouraging.
The holdings in Reynolds American, Imperial Tobacco, Provident Financial and BT
Group were significant contributors to the portfolio's performance.
The portfolio's holdings in tobacco companies delivered a significant positive
contribution to performance over the period. A combination of continuing robust
profit margins and solid dividend growth helped drive performance.
Reynolds American and Imperial Tobacco delivered total share price returns of
30% and 15% respectively over the period. Last summer Reynolds American
announced the agreed acquisition of its North American competitor, Lorillard,
which should further strengthen its position in the US market. Imperial Tobacco
also stands to benefit from this deal, which is currently awaiting approval
from the US Federal Trade Commission as it will make a strategic purchase of
some of Lorillard's North American brands. Both companies continue to offer
above average dividend yields, in spite of the strong share price performance
over the last six months.
The tobacco industry's high barriers to entry for new competitors and the
premium brands continue to demonstrate revenue growth despite an increasingly
difficult operating environment. The advent of plain packaging in Australia has
encouraged a greater focus on brand differentiation through quality of tobacco,
innovation around packaging and filter technology. The prospect of plain
packaging spreading across the globe is not considered a major threat given the
significant existing restrictions on packaging in most jurisdictions.
The portfolio has significant exposure to the financials sector, with holdings
in insurance companies, specialist lenders and property companies, and these
all contributed positively to performance during the period. The portfolio has
no exposure to banks.
Provident Financial, the largest UK non-standard lender, continued its positive
run after an upbeat trading update in November 2014 followed, in February 2015,
by solid final results which were accompanied by a 15% increase in its
dividend. The digital investment in its home credit business is nearing completion
and its successful drive to improve credit quality and collections continues to
have a positive impact on margins. Last year's acquisition of the Moneybarn car
finance business is expected to open up opportunities for further synergies and
for cross-selling the Vanquis credit card products, and vice versa. Also, an
online instalment lending business, Satsuma, has been launched and demand has
been encouraging.
There was positive news from BT Group regarding its agreed acquisition of
mobile telephony company EE. The acquisition of EE for £12.5 billion provides
BT with access to 31 million UK mobile telephone customers and 834,000
broadband customers as well as the largest 4G customer base of any operator in
Europe. The combined business is expected to achieve attractive cost and
capital expenditure synergies as well as provide greater scope for future
product innovation. Furthermore, it will enable BT to offer a full range of
communications services to the combined customer base including broadband,
fixed line and pay-TV services. Significant cross-selling opportunities are
expected and the acquisition is seen as a major milestone for the company.
Among the detractors to portfolio performance were Drax Group, Centrica and
Game Digital. Whilst the portfolio's exposure to the oil and gas sector is
relatively low, the impact of a falling oil price was felt through the holdings
in UK utilities, Drax and Centrica, as earnings forecasts were downgraded and
sentiment turned negative. Additionally, Drax was also impacted by the UK
government's decision to change its method of subsidy for future biomass
conversions and by the possibility of EU intervention. Centrica announced a
reduced dividend in its final results and its recently appointed chief
executive announced that he would conduct a strategic business review with a
view to improving efficiencies and streamlining the business. The share price
reacted negatively in the short term, but we remain positive on the longer term
outlook for the company.
Game Digital, after a strong share price performance post flotation in June
2014, gave back some gains following a profit warning in January, when it
reported that short-term profitability had been negatively impacted by Black
Friday trading, and after a more muted start to 2015 than management had
expected. The portfolio manager viewed the fall in share price as an additional
opportunity to buy, remaining optimistic about the long term potential of the
company and the attractive valuation point to which the shares had fallen.
In terms of portfolio activity, a number of positions were added to on weakness
(such as Game Digital mentioned above) and such purchases were funded through
trimming other portfolio holdings on less compelling valuations, with the
modest borrowing level remaining fairly constant throughout.
Outlook
The recent performance of the UK equity market has seen further strong positive
returns, with the FTSE All-Share Index recently hitting a new all-time high,
which makes the near term outlook more subdued. The continued rerating of
equities primarily as a result of the policies of central banks has resulted in
boosting asset values to the point where the market looks more fully valued
than for many years. This high level of valuation coupled with a low level of
earnings growth is the primary risk to the current level of share prices.
Furthermore, the increased probability of a change in monetary policy from the
US central bank represents a more difficult back drop for government bond
markets which will inevitably have a knock-on impact into equities. The
unexpected outright Conservative victory in the general election was positive
for business and for UK plc. Importantly, it removes the uncertainty that would
have surrounded a hung parliament and fears of anti-business legislation.
However, as a result of this outcome two new political risks have risen to
prominence. First, the risk surrounding the successful integration of the
Scottish Nationalist Party (SNP) into the UK parliamentary system and second,
the longer term risk relating to the EU "in-out" referendum in 2017. The latter
will certainly have an impact on financial markets and the domestic economy in
due course.
Notwithstanding the challenging backdrop, the portfolio remains well positioned
to prosper in this environment of continued low interest rates and low nominal
GDP growth. Identifying companies that can cope with this environment and where
the ability to fund a sustainable and growing dividend remains a key principle
of corporate strategy is central to the portfolio manager's approach. The
portfolio is well represented with businesses with these qualities which
should, over the long term, provide the shareholders of the Company with a
healthy total return from a combination of capital and income growth.
Mark Barnett
Portfolio Manager
11 May 2015
.
Related Party Transactions and Transactions with the Manager
Note 20 of the 2014 annual financial report gives details of related party
transactions and transactions with the Manager. The basis of these has not
changed for the six months being reported. The 2014 annual financial report is
available on the Company's section of the Manager's website at
www.invescoperpetual.co.uk/keystone
Principal Risks and Uncertainties
The principal risk factors relating to the Company can be summarised as:
- Investment Objective - the Company may not achieve its published
objective.
- Market Risk - a fall in the stock market as a whole will affect the
performance of the portfolio and individual investments.
- Investment Risk - the active fund management approach employed can
result in a portfolio that looks and behaves differently to the benchmark
index.
- Shares - share price is affected by market sentiment, supply and
demand, and dividends declared as well as portfolio performance.
- Gearing - borrowing will amplify the effect on shareholders' funds
of portfolio gains and losses.
- Reliance on the Manager and Other Service Providers - failure by any
service provider to carry out its obligations to the Company could have a
materially detrimental impact on the operations of the Company and affect
the ability of the Company to successfully pursue its investment policy.
- Regulatory - whilst compliance with rules and regulations is closely
monitored, breaches could affect returns to shareholders.
A detailed explanation of these principal risks and uncertainties can be found
on pages 8 to 10 of the 2014 annual financial report, which is available on the
Company's section of the Manager's website.
In the view of the Board, these principal risks and uncertainties are equally
applicable to the remaining six months of the financial year as they were to
the six months under review.
Going Concern
This half-yearly financial report has been prepared on a going concern basis.
The Directors consider this is the appropriate basis as they have a reasonable
expectation that the Company has adequate resources to continue in operational
existence for the foreseeable future, being taken as 12 months after the date
of approval of these half year financial statements. In considering this, the
Directors took into account the diversified portfolio of readily realisable
securities which can be used to meet short-term funding commitments, and the
ability of the Company to meet all of its liabilities, including the
debentures, and ongoing expenses. The Directors also considered the revenue
forecasts for the year and future dividend payments in concluding on the going
concern basis.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
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 UK Accounting
Standards.
The Directors confirm that to the best of their knowledge:
- the condensed set of financial statements contained within this
half-yearly financial report have been prepared in accordance with the
Accounting Standards Board's Statement 'Half-Yearly Financial Report';
- the interim management report includes a fair review of the
information required by DTR 4.2.7R and DTR 4.2.8R of the FCA'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 auditors.
Signed on behalf of the Board of Directors.
Beatrice Hollond
Chairman
11 May 2015
.
INVESTMENTS IN ORDER OF VALUATION AT 31 MARCH 2015
UK listed ordinary shares unless otherwise stated
EQUITY SECTOR MARKET % OF
INVESTMENTS VALUE PORTFOLIO
ISSUER £'000
Reynolds American - US common Tobacco 13,265 4.8
stock
British American Tobacco Tobacco 12,094 4.4
BT Group Fixed Line Telecommunications 11,754 4.2
AstraZeneca Pharmaceuticals & 11,543 4.2
Biotechnology
Imperial Tobacco Tobacco 11,244 4.1
Roche - Swiss common stock Pharmaceuticals & 9,945 3.6
Biotechnology
BAE Systems Aerospace & Defence 9,272 3.3
Provident Financial Financial Services 7,621 2.8
GlaxoSmithKline Pharmaceuticals & 7,105 2.6
Biotechnology
Legal & General Life Insurance 7,035 2.5
Top Ten Investments 100,878 36.5
BP Oil & Gas Producers 6,717 2.4
Beazley Non-life Insurance 6,140 2.2
Capita Support Services 5,896 2.1
BTG Pharmaceuticals & 5,772 2.1
Biotechnology
Compass Travel & Leisure 5,685 2.1
Reed Elsevier Media 5,663 2.1
Bunzl Support Services 5,479 2.0
Derwent London Real Estate Investment Trusts 5,327 1.9
London Stock Exchange Financial Services 5,250 1.9
Babcock International Support Services 5,188 1.9
Top Twenty Investments 157,995 57.2
Rentokil Initial Support Services 5,088 1.8
Amlin Non-life Insurance 5,071 1.8
SSE Electricity 5,050 1.8
Reckitt Benckiser Household Goods & Home 5,017 1.8
Construction
Hiscox Non-life Insurance 4,911 1.7
Thomas Cook Travel & Leisure 4,833 1.7
Rolls-Royce Aerospace & Defence 4,778 1.7
Shaftesbury Real Estate Investment Trusts 4,726 1.7
Novartis - Swiss common stock Pharmaceuticals & 4,680 1.7
Biotechnology
Workspace Real Estate Investment Trusts 4,385 1.6
Top Thirty Investments 206,534 74.5
G4S Support Services 3,997 1.4
TalkTalk Telecom Fixed Line Telecommunications 3,858 1.4
NewRiver Retail Real Estate Investment Trusts 3,771 1.4
A J Bell - Unquoted Financial Services 3,504 1.3
KCOM Fixed Line Telecommunications 3,469 1.3
GAME Digital General Retailers 3,431 1.2
Lancashire Non-life Insurance 3,015 1.1
HomeServe Support Services 2,951 1.1
Centrica Gas, Water & Multiutilities 2,888 1.0
P2P Global Investments General Retailers 2,830 1.0
(including C Shares)
Top Forty Investments 240,248 86.7
ISSUER SECTOR MARKET % OF
VALUE PORTFOLIO
£'000
N Brown General Retailers 2,611 1.0
Drax Electricity 2,450 0.9
Nimrod Sea Assets Equity Investment 2,439 0.9
Instruments
Imperial Innovations Financial Services 2,336 0.9
Napo Pharmaceuticals - Unquoted Pharmaceuticals & 2,263 0.8
Biotechnology
IP Group Financial Services 2,250 0.8
Ladbrokes Travel & Leisure 2,241 0.8
Macau Property Opportunities Fund Real Estate Investment & 2,138 0.8
Services
CLS Real Estate Investment & 2,054 0.7
Services
Vectura Pharmaceuticals & 1,966 0.7
Biotechnology
Top Fifty Investments 262,996 95.0
Harworth (formerly Coalfield Real Estate Investment & 1,716 0.6
Resources) Services
Doric Nimrod Air Two - Preference Equity Investment 1,567 0.6
Shares Instruments
Doric Nimrod Air Three - Equity Investment 1,523 0.6
Preference Shares Instruments
Smith & Nephew Health Care Equipment & 1,401 0.5
Services
Sherborne Investors Financial Services 1,337 0.5
Guernsey B - A Shares
Lombard Medical
- US common stock Health Care Equipment & 1,173 0.4
Services
Damille Investments II Equity Investment 976 0.4
Instruments
Nexeon
- B Shares - Unquoted Electronic & Electrical 497
Equipment
- Preference C Shares
- Unquoted 400 0.3
- Ordinary shares
- Unquoted 4
Top Sixty Investments 273,590 98.9
PuriCore Health Care Equipment & 816 0.3
Services
Horizon Discovery Pharmaceuticals & 780 0.3
Biotechnology
Serco (including Rights
16 Apr 2015) Support Services 594 0.2
HaloSource Chemicals 208 0.1
Altus Resource Capital Equity Investment 194 0.1
Instruments
XTL Biopharmaceuticals
- ADR Pharmaceuticals & 40 -
Biotechnology
Mirada Media 3 -
Total Equity Investments (67) 276,225 99.9
Other investments VALUE % OF
ISSUER AND ISSUE SECTOR MOODY/S&P £'000 PORTFOLIO
RATING
Barclays Bank - Nuclear
Power Notes
28 Feb 2019 Electricity NR/NR 166 0.1
Total Investments (68) 276,391 100.0
NR is non-rated.
CONDENSED INCOME STATEMENT
YEAR
ENDED
30
SIX MONTHS TO SIX MONTHS TO SEPTEMBER
31 MARCH 2015 31 MARCH 2014 2014
Note REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL TOTAL
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains on investments - 17,046 17,046 - 19,278 19,278 22,105
Foreign exchange gains/ 2 - 3 3 - (9) (9) (11)
(losses)
Income:
UK dividends - ordinary 2,628 - 2,628 2,922 - 2,922 6,644
- special 532 - 532 471 280 751 767
Overseas dividends - ordinary 1,061 - 1,061 965 - 965 1,641
- special 547 - 547 351 - 351 631
Scrip dividends 50 - 50 25 - 25 88
Deposit interest 6 - 6 7 - 7 16
Investment management and
performance-related fees 3 (183) (1,691) (1,874) (231) (1,316) (1,547) (2,685)
Other expenses (182) - (182) (171) - (171) (344)
Net return before finance
costs and taxation 4,459 15,358 19,817 4,339 18,233 22,572 28,852
Finance costs
Interest payable (274) (822) (1,096) (274) (822) (1,096) (2,191)
Distributions in respect of
non-equity
shares (6) - (6) (6) - (6) (12)
Return on ordinary activities
before taxation 4,179 14,536 18,715 4,059 17,411 21,470 26,649
Tax on ordinary activities 4 (100) - (100) (122) - (122) (157)
Net return on ordinary
activities after tax 4,079 14,536 18,615 3,937 17,411 21,348 26,492
Return per ordinary share
Basic 5 30.2p 107.5p 137.7p 29.1p 128.8p 157.9p 196.0p
The total column of this statement represents the Company's profit and loss
account prepared in accordance with UK Accounting Standards. The supplementary
revenue and capital columns are presented for information purposes 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 and
therefore no statement of total recognised gains or losses is presented. No
operations were acquired or discontinued in the period.
CONDENSED BALANCE SHEET
Registered number 538179
AT
AT AT 30
31 MARCH 31 MARCH SEPTEMBER
2015 2014 2014
NOTE £'000 £'000 £'000
Fixed assets
Investments held at fair value through profit 276,391 258,564 263,999
or loss
Current assets
Amounts due from brokers 1,207 214 1,629
Prepayments and accrued income 1,305 1,358 741
Overseas withholding tax recoverable 392 356 357
Cash and cash funds 18,345 20,842 17,578
21,249 22,770 20,305
Creditors: amounts falling due within one
year
Accruals and deferred income (1,143) (1,253) (1,170)
Performance-related fee 3 - - (952)
(1,143) (1,253) (2,122)
Net current assets 20,106 21,517 18,183
Total assets less current liabilities 296,497 280,081 282,182
Creditors: amounts falling due after more
than one year
Debenture stock 6 (31,678) (31,652) (31,665)
Cumulative preference shares (250) (250) (250)
Provision 3 (1,146) (623) -
Net assets 263,423 247,556 250,267
Capital and reserves
Called up share capital 6,760 6,760 6,760
Share premium 3,449 3,449 3,449
Capital redemption reserve 466 466 466
Capital reserve 244,094 228,490 229,558
Revenue reserve 8,654 8,391 10,034
Shareholders' funds 263,423 247,556 250,267
Net asset value per share
Basic 7 1948.6p 1831.2p 1851.3p
CONDENSED CASH FLOW STATEMENT
SIX SIX
MONTHS MONTHS YEAR TO
TO TO 30
31 MARCH 31 MARCH SEPTEMBER
2015 2014 2014
£'000 £'000 £'000
Total return before finance costs and taxation 19,817 22,572 28,852
Adjustment for gains on investments and (17,046) (19,278) (22,105)
certificates of deposit
Cash outflow from forward currency contracts - - 1
Scrip dividends (50) (25) (88)
Increase in debtors (599) (937) (320)
Increase/(decrease) in creditors and provisions 167 (390) (145)
Tax on overseas dividends (100) (122) (157)
Cash inflow from operating activities 2,189 1,820 6,038
Servicing of finance (1,089) (1,089) (2,177)
Capital expenditure and financial investment
Purchases of investments (8,045) (35,835) (49,011)
Proceeds from sale of investments 13,171 51,409 60,624
Net equity dividends paid - note 8 (5,459) (5,272) (7,705)
Net cash inflow before management of liquid 767 11,033 7,769
resources and financing
Management of liquid resources (2,801) (5,700) (5,700)
(Increase)/decrease in cash in the period (2,034) 5,333 2,069
Cashflow from movement in liquid resources 2,801 5,700 5,700
Debenture stock non-cash movement (13) (13) (26)
Movement in net debt in the period 754 11,020 7,743
Net debt at beginning of period (14,337) (22,080) (22,080)
Net debt at period end (13,583) (11,060) (14,337)
Analysis of changes in net debt
Brought forward:
Cash and cash funds 17,578 9,809 9,809
Debenture stock (31,665) (31,639) (31,639)
Cumulative preference shares (250) (250) (250)
Net debt brought forward (14,337) (22,080) (22,080)
Movements in the period:
Cash inflow from cash funds and short term 767 11,033 7,769
deposits
Debenture stock non-cash movement (13) (13) (26)
Net debt at period end (13,583) (11,060) (14,337)
CONDENSED RECONCILIATION OF MOVEMENTS IN SHAREHOLDER' FUNDS
CAPITAL
SHARE SHARE REDEMPTION CAPITAL REVENUE
CAPITAL PREMIUM RESERVE RESERVE RESERVE TOTAL
£'000 £'000 £'000 £'000 £'000 £'000
For the six months ended 31
March 2015
At 30 September 2014 6,760 3,449 466 229,558 10,034 250,267
Dividends paid - note 9 - - - - (5,459) (5,459)
Net return on ordinary - - - 14,536 4,079 18,615
activities
At 31 March 2015 6,760 3,449 466 244,094 8,654 263,423
For the six months ended 31
March 2014
At 30 September 2013 6,760 3,449 466 211,079 9,726 231,480
Dividends paid - note 8 - - - - (5,272) (5,272)
Net return on ordinary - - - 17,411 3,937 21,348
activities
At 31 March 2014 6,760 3,449 466 228,490 8,391 247,556
For the year ended 30
September 2014
At 30 September 2013 6,760 3,449 466 211,079 9,726 231,480
Dividends paid - note 8 - - - - (7,705) (7,705)
Net return on ordinary - - - 18,479 8,013 26,492
activities
At 30 September 2014 6,760 3,449 466 229,558 10,034 250,267
.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1. Accounting Policies
The condensed financial statements have been prepared using the same accounting
policies as those adopted in the annual financial report for the year ended 30
September 2014.
2. Forward Currency Contracts
The equity portfolio includes £33,805,000 (31 March 2014: £32,278,000; 30
September 2014: £34,789,000) of equities denominated in currencies other than
pounds sterling. In order to manage the currency risk, the Manager may hedge
part of the currency exposure into sterling through the use of forward foreign
exchange contracts. If used, foreign exchange contracts are designated as fair
value hedges through profit or loss. At the period end no forward foreign
exchange contracts were held.
3. Base Management Fee, Finance Costs and Performance-related Fee
The base management fee and finance costs are allocated 75% to capital and 25%
to revenue. With effect from 1 July 2014 the base management fee rate is 0.15%
(previously 0.20%) of the 10 day average mid-market capital of the Company at
each quarter end date.
Performance fees are allocated wholly to capital. With effect from 1 July 2014
the performance-related fee is due when the annualised three year return
exceeds that of the benchmark by more than 1.25% (previously 2%). A performance
fee provision of £1,146,000 is provided for the six months ended 31 March 2015
(31 Mar 2014: £623,000). A £952,000 performance fee was paid in respect of the
year ended 30 September 2014.
4. Tax
The tax effect of expenditure is allocated between capital and revenue on the
same basis as the particular item to which it relates, using the Company's
effective rate of tax for the accounting period.
5. Basis of Returns
SIX MONTHS SIX MONTHS
TO TO YEAR TO
31 MAR 31 MAR 30 SEPT
2015 2014 2014
Returns after tax:
Revenue £4,079,000 £3,937,000 £8,013,000
Capital £ £ £
14,536,000 17,411,000 18,479,000
Total £ £ £
18,615,000 21,348,000 26,492,000
Weighted average number of ordinary shares 13,518,799 13,518,799 13,518,799
in issue during the period
6. Debenture Stock
The Company's structured debt at the period end is as follows:
31 MAR 31 MAR 30 SEPT
2015 2014 2014
£'000 £'000 £'000
7.75% debenture stock 2020 7,000 7,000 7,000
6.5% debenture stock 2023 24,968 24,968 24,968
Total 31,968 31,968 31,968
Discount and issue expenses on debenture (290) (316) (303)
stock
31,678 31,652 31,665
7. Basis of Net Asset Value per Ordinary Share
AT AT AT
31 MAR 2015 31 MAR 2014 30 SEPT 2014
Shareholders' funds £263,423,000 £247,556,000 £250,267,000
Ordinary shares in issue at period 13,518,799 13,518,799 13,518,799
end
8. Dividends Paid
SIX MONTHS SIX MONTHS YEAR TO
TO TO 30 SEPT
31 MAR 2015 31 MAR 2014 2014
£'000 £'000 £'000
Second interim for 2014 of 32.5p (2013: 4,393 4,326 4,326
32p)
Special dividend for 2014 of 8p (2013: 1,082 946 946
7p)
First interim 18p - - 2,433
Return of unclaimed dividends from
previous years (16) - -
Total paid 5,459 5,272 7,705
The Company pays two interim dividends a year, the second interim being in lieu
of a final dividend. The first interim dividend of 18p will be paid on 30 June
2015 to shareholders on the register on 29 May 2015.
9. 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
within the meaning of section 1159 of the Corporation Tax Act 2010.
10. Status of Half-Yearly Financial Report
The financial information contained in this half-yearly financial report, which
has not been reviewed or audited by the independent auditors, 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 March
2014 and 31 March 2015 has not been audited. The figures and financial
information for the year ended 30 September 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 Auditors, which was unqualified and
did not include a statement under section 498 of the Companies Act 2006.
By order of the Board
Invesco Asset Management Limited
Company Secretary
11 May 2015
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