Half-year Report

RNS Number : 8834V

BMO UK High Income Trust PLC

06 December 2019

 

To:                 RNS

From:             BMO UK High Income Trust PLC

Date:              6 December 2019

LEI:                  213800B7D5D7RVZZPV45

 

Unaudited Interim Results

The Board of BMO UK High Income Trust PLC announces the unaudited interim results of the Company for the six month period to 30 September 2019.

 

Highlights

·    Net asset value total return⁽¹⁾ per share for the six months was 4.7%, ahead of the Benchmark⁽²⁾ total return of 4.6%.

·    Expected distribution yield⁽¹⁾ of 5.5% on Ordinary shares and B shares at 30 September 2019, (based on expected total distribution of 5.21p per share for the year ended 31 March 2020). This compares with the yield on the FTSE All-Share Index of 4.2%.

·    Interim distributions in respect of the period increased by 3.2% compared to the prior year.

Notes:

1.   Yield and Total Return - see Alternative Performance Measures.

2.   Benchmark - From launch on 1 March 2007, the Company's benchmark index was the FTSE All-Share Capped 5% Index. Following shareholder approval at the Company's AGM on 5 July 2018, the benchmark was changed to the FTSE All-Share Index.

Chairman's Statement

Investment performance

For the six months to 30 September 2019 the net asset value total return for the Ordinary shares and B shares was 4.7% which was marginally ahead of the 4.6% total return for the FTSE All-Share Index, the benchmark.

As explained in recent reports, the Manager has now concentrated the investment portfolio and, in the process, improved the quality of the holdings. He now feels that at around 35 holdings, we have the appropriate balance between diversification and conviction. Through this process the Manager has also delivered a contrarian stance for an Income fund, in terms of the stocks owned and the portfolio construction. This is not a traditional value stance as the Manager is underweight in sectors including banks and utilities. He seeks to own quality business models that are out of favour with the market, due to their cycle or concerns around the UK backdrop. This style, in terms of performance, has been compounded by the Manager's decision to continue reducing firstly the exposure to the mega-cap companies, which are deemed by the market to be safe-haven assets, and secondly reducing the expensive growth stocks, that have continued to perform well in the current uncertain environment. This stance has been rewarded in September and October, where the portfolio delivered significant outperformance versus the benchmark. It is too early to call this a trend but the rhetoric around Brexit and domestic UK companies being too cheap if a resolution is reached, has driven a sharp rebound in some of the portfolio's larger positions.

Despite the Manager's contrarian stance, over this six-month period the Company has performed in line with the market, which is testament to the stock-selection. Given the composition of the portfolio, we would however expect a disconnect from the benchmark and within this period, shorter term performance did deviate. From the Board's perspective it is also pleasing to see the shift in focus deliver a better balance between capital and dividends over the long term.

Earnings, dividends and capital distributions

The revenue return per share for the six months to 30 September 2019 was 1.78p per share as compared to 1.72p per share in the comparable period in 2018.

Movements in the sterling exchange rate, most notably against the US dollar, have an important influence on the Company's revenue, as approximately 15% of the Company's income comes from UK-listed companies that declare dividends in US dollars. While growth in underlying dividends has continued, income at the half year has also been assisted by the continued weakness of sterling against the US dollar.

In the absence of unforeseen circumstances, it is intended that the Company's aggregate dividend for the year ending 31 March 2020 will be 5.21p per share, which would represent an increase of 3.4% compared to the prior year (2019: 5.04p per share).

The first three quarterly dividends will be paid in equal instalments of 1.29p per share and a fourth quarterly dividend of 1.34p per share is expected to be paid to Ordinary shareholders. B shareholders will receive capital repayments of the same amount per share at the same time as dividends are received by Ordinary shareholders.

The expected annual distribution level represents a yield for Ordinary shareholders and B shareholders of 5.5% based on share prices as at 30 September 2019. This yield compares favorably with the yield on the FTSE All-Share Index of 4.2% at that date.

After providing for the second quarter dividend, the Company had revenue reserves of £5.2m at 30 September 2019 (approximately 6.00p per Ordinary share or 115% of the expected current annual dividend cost).

Discount and buy backs

The Company's Ordinary share price and B share price stood at a discount to net asset value of 10.2% and 8.8% respectively at 30 September 2019.

Over the six-month period, the price of the Company's Ordinary shares and B shares traded at an average discount to net asset value of 8.4% and 8.8% respectively.

During the six-month period, the Company did not buy back any Ordinary shares or B shares. Following the period end, 255,491 Ordinary shares and 117,953 B shares were bought back at a discount of approximately 13% to the prevailing net asset value at the time of purchase.

Board changes

Following the Annual General Meeting on 9 July 2019, the Chairman Iain McLaren retired from the Board and I was pleased to accept the Board's invitation to become Chairman. Iain was a Director of your company for ten years, of which eight were as Chairman. I would like to thank Iain for his exceptional contribution and commitment to the Company throughout the period of his appointment.

By the time we reach the Company's year end in March 2020, two of the current non-executive directors will have served on the Board for more than nine years and reflecting this position the Nomination Committee is currently undertaking a recruitment process. The Board is committed to maintaining the highest levels of corporate governance in terms of the independence and diversity of its members. The current refreshment of your Board seeks to achieve its longer-term goals whilst balancing the need to ensure an adequate level of continuity and experience on the board.

Change of broker

In October 2019, the Company appointed Panmure Gordon (UK) Limited to act as the Company's sole corporate broker and financial adviser.

Outlook

In the full-year report the Chairman reminded investors of the patience needed to see the Manager's style come to fruition. While the period in question has seen performance track in line with the benchmark, we have seen a significantly more positive contribution in September and October. This more optimistic backdrop was driven by a potential Brexit resolution, however further uncertainty now exists with the General Election process underway in the UK.

Despite this backdrop there has recently been an increase in the level of corporate activity in the UK which may be another indicator that good value exists in this asset class and it is encouraging that a wider range of investors appear to share this view.

John Evans

Chairman

5 December 2019

 

Condensed Unaudited Statement of Comprehensive Income

For the six month period to 30 September 2019

	Six months to 30 September 2019
Notes	Revenue	Capital	Total
	£'000	£'000	£'000
Gains on investments held at fair value	-	3,965	3,965
Exchange differences	-	(8)	(8)
Investment income                                          2	2,479	-	2,479
Investment management fee                           3	(121)	(281)	(402)
Other expenses	(208)	-	(208)
Profit before finance costs and taxation	2,150	3,676	5,826
Net finance costs
Interest on bank loan	(31)	(72)	(103)
Total finance costs	(31)	(72)	(103)
Profit before tax	2,119	3,604	5,723
Tax on ordinary activities                                 4	(27)	-	(27)
Profit for the period	2,092	3,604	5,696
Total comprehensive income for the period	2,092	3,604	5,696
Earnings per share                                           5	1.78p	3.07p	4.85p

The total column of this statement represents the Company's Income Statement and Statement of Comprehensive Income, prepared in accordance with IFRS.  The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies.

All of the profit and comprehensive income for the period is attributable to the owners of the Company.

All items in the above statement derive from continuing operations.

 

Condensed Unaudited Statement of Comprehensive Income

For the six month period to 30 September 2018

	Six months to 30 September 2018
Notes	Revenue	Capital	Total
	£'000	£'000	£'000
Gains on investments held at fair value	-	6,177	6,177
Exchange differences	-	10	10
Investment income                                          2	2,394	-	2,394
Investment management fee                           3	(127)	(295)	(422)
Other expenses	(204)	-	(204)
Profit before finance costs and taxation	2,063	5,892	7,955
Net finance costs
Interest on bank loan	(31)	(72)	(103)
Total finance costs	(31)	(72)	(103)
Profit before tax	2,032	5,820	7,852
Tax on ordinary activities	-	-	-
Profit for the period	2,032	5,820	7,852
Total comprehensive income for the period	2,032	5,820	7,852
Earnings per share                                           5	1.72p	4.94p	6.66p

The total column of this statement represents the Company's Income Statement and Statement of Comprehensive Income, prepared in accordance with IFRS.  The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies.

All of the profit and comprehensive income for the period is attributable to the owners of the Company.

All items in the above statement derive from continuing operations.

 

Condensed Statement of Comprehensive Income

For the year to 31 March 2019

	Year to 31 March 2019*
Notes	Revenue	Capital	Total
	£'000	£'000	£'000
Gains on investments held at fair value	-	462	462
Exchange differences	-	7	7
Investment income                                           2	5,219	-	5,219
Investment management fee                            3	(238)	(555)	(793)
Other expenses	(469)	-	(469)
Profit/(loss) before finance costs and taxation	4,512	(86)	4,426
Net finance costs
Interest on bank loan	(61)	(143)	(204)
Total finance costs	(61)	(143)	(204)
Profit/(loss) before tax	4,451	(229)	4,222
Tax on ordinary activities	-	-	-
Profit/(loss) for the period	4,451	(229)	4,222
Total comprehensive income for the period	4,451	(229)	4,222
Earnings per share                                           5	3.77p	(0.19)p	3.58p

*These figures are audited

The total column of this statement represents the Company's Income Statement and Statement of Comprehensive Income, prepared in accordance with IFRS.  The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies.

All of the profit and comprehensive income for the period is attributable to the owners of the Company.

All items in the above statement derive from continuing operations.

 

Condensed Unaudited Statement of Financial Position

	As at 30 Sept 2019	As at 30 Sept 2018	As at 31 March 2019*
Notes	£'000	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss  9	126,189	132,418	125,259
	126,189	132,418	125,259
Current assets
Receivables	471	3,231	1,696
Cash and cash equivalents	5,290	1,177	1,204
	5,761	4,408	2,900
Total assets	131,950	136,826	128,159
Current liabilities
Payables	(1,675)	(2,097)	(554)
	(1,675)	(2,097)	(554)
Non-current liabilities
Bank loan                                                                10	(7,500)	(7,500)	(7,500)
	(7,500)	(7,500)	(7,500)
Total liabilities	(9,175)	(9,597)	(8,054)
Net assets	122,775	127,229	120,105
Capital and reserves
Share capital                                                            11	134	134	134
Share premium	153	153	153
Capital redemption reserve	5	5	5
Buy back reserve	81,643	82,190	81,643
Special capital reserve	15,742	17,315	16,540
Capital reserves	18,801	21,246	15,197
Revenue reserve	6,297	6,186	6,433
Shareholders' funds	122,775	127,229	120,105
Net asset value per Ordinary share                      12	104.66p	107.91p	102.39p
Net asset value per B share                                  12	104.66p	107.91p	102.39p

*These figures are audited

Condensed Unaudited Statement of Changes in Equity

for the six months to 30 September 2019

	Share Capital	Share Premium	Capital Redemption Reserve	Buy Back Reserve	Special Capital Reserve	Capital Reserves	Revenue Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 April 2019	134	153	5	81,643	16,540	15,197	6,433	120,105
Profit for the period	-	-	-	-	-	3,604	2,092	5,696
Dividends paid on Ordinary shares	-	-	-	-	-	-	(2,228)	(2,228)
Capital returns paid on B shares	-	-	-	-	(798)	-	-	(798)
Balance as at 30 September 2019	134	153	5	81,643	15,742	18,801	6,297	122,775

for the six months to 30 September 2018

	Share Capital	Share Premium	Capital Redemption Reserve	Buy Back Reserve	Special Capital Reserve	Capital Reserves	Revenue Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 April 2018	134	153	5	82,190	18,089	15,426	6,328	122,325
Profit for the period	-	-	-	-	-	5,820	2,032	7,852
Dividends paid on Ordinary shares	-	-	-	-	-	-	(2,174)	(2,174)
Capital returns paid on B shares	-	-	-	-	(774)	-	-	(774)
Balance as at 30 September 2018	134	153	5	82,190	17,315	21,246	6,186	127,229

for the year to 31 March 2019 *

	Share Capital	Share Premium	Capital Redemption Reserve	Buy Back Reserve	Special Capital Reserve	Capital Reserves	Revenue Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance as at 1 April 2018	134	153	5	82,190	18,089	15,426	6,328	122,325
(Loss)/Profit for the year	-	-	-	-	-	(229)	4,451	4,222
Shares bought back for treasury	-	-	-	(547)	-	-	-	(547)
Dividends paid on Ordinary shares	-	-	-	-	-	-	(4,346)	(4,346)
Capital returns paid on B shares	-	-	-	-	(1,549)	-	-	(1,549)
Balance as at 31 March 2019	134	153	5	81,643	16,540	15,197	6,433	120,105

*These figures are audited

Condensed Unaudited Cash Flow Statement

	Six months to 30 Sept 2019	Six months to 30 Sept 2018	Year to 31 March 2019*
	£'000	£'000	£'000
Net cash inflow from operating activities	2,793	2,284	3,671
Net cash inflow from investing activities	4,424	368	2,598
Net cash outflow from financing activities	(3,123)	(3,048)	(6,635)
Net Increase/(decrease) in cash and cash equivalents	4,094	(396)	(366)
Currency (losses)/gains	(8)	10	7
Net cash and cash equivalents at beginning of period	1,204	1,563	1,563
Net cash and cash equivalents at end of period	5,290	1,177	1,204

*These figures are audited

 

Notes to the Condensed Financial Statements (unaudited)

1.    The condensed unaudited financial statements have been prepared on a going concern basis and in accordance with IAS 34 Interim Financial Reporting and the accounting policies set out in the statutory financial statements of the Company for the year ended 31 March 2019. The condensed financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the financial statements of the Company for the year ended 31 March 2019, which were prepared under full IFRS requirements to the extent that they have been adopted by the European Union.

2.    Income for the period is derived from:

	30 Sept 2019	30 Sept 2018	31 March 2019
	£'000	£'000	£'000
Equity investments	2,472	2,386	5,207
Deposit interest	7	3	7
Other income	-	5	5
	2,479	2,394	5,219

3.    The Company's investment Manager BMO Investment Business Limited receives an investment management fee of 0.65 per cent per annum of the net asset value of the Company payable quarterly in arrears.

4.    The taxation charge for the period represents withholding tax suffered on overseas dividend income.

5.    The earnings per share are based on the net profit / (loss) for the period and on 117,304,847 shares (period to 30 September 2018 - 117,904,847; year to 31 March 2019 - 117,881,285), being the weighted average number of shares in issue during the period.

6.    Earnings for the six months to 30 September 2019 should not be taken as a guide to the results of the full year.

7.    The Board has considered the requirements of IFRS 8 'Operating Segments'. The Board is of the view that the Company is engaged in a single segment of business, of investing in equity securities, and that therefore the Company has only a single operating segment. The Board of Directors, as a whole, has been identified as constituting the chief operating decision maker of the Company. The key measure of performance used by the Board to assess the Company's performance is the total return on the Company's net asset value as calculated under IFRS and therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the condensed financial statements.

 

8.         Dividends and capital repayments

	Payment Date	Six months to 30 Sept 2019	Six months to 30 Sept 2018	Year to 31 March 2019
		£'000	£'000	£'000
In respect of the previous period:
Fourth interim dividend at 1.29p (2018: 1.25p) per Ordinary share	3 May 19	1,114	1,087	1,087
Fourth capital repayment at 1.29p (2018: 1.25p) per B share	3 May 19	399	387	387
In respect of the period under review:
First interim dividend at 1.29p (2019: 1.25p) per Ordinary share	2 Aug 19	1,114	1,087	1,087
First capital repayment at 1.29p (2019: 1.25p) per B share	2 Aug 19	399	387	387
Second interim dividend (2019: 1.25p) per Ordinary share		-	-	1,086
Second capital repayment (2019: 1.25p) per B share		-	-	387
Third interim dividend (2019: 1.25p) per Ordinary share		-	-	1,086
Third capital repayment (2019: 1.25p) per B share		-	-	388
		3,026	2,948	5,895

A second interim dividend for the year to 31 March 2020, of 1.29p per Ordinary share, was paid on 1 November 2019 to Ordinary shareholders on the register on 4 October 2019. A second quarter capital repayment of 1.29p per B share was paid on 1 November 2019 to B shareholders on the register on 4 October 2019. Although these payments relate to the period ended 30 September 2019, under IFRS they will be accounted for in the six months to 31 March 2020, being the period during which they are paid.

 

9.         Investments held at fair value through profit or loss

	Listed/ Quoted (Level 1) £'000	Subsidiary/ Unlisted (Level 3) £'000	Total £'000
Opening book cost	109,783	250	110,033
Opening unrealised gains	15,226	-	15,226
Opening valuation	125,009	250	125,259
Movement in the period:
Purchases at cost	7,383	-	7,383
Sales - proceeds	(10,418)	-	(10,418)
- gains on sales	3,141	-	3,141
Increase in unrealised gains	824	-	824
Closing valuation at 30 September 2019	125,939	250	126,189
Closing book cost at 30 September 2019	109,889	250	110,139
Closing unrealised gains at 30 September 2019	16,050	-	16,050
Closing valuation at 30 September 2019	125,939	250	126,189

Accounting standards recognise a hierarchy of fair value measurements for financial instruments which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The classification of financial instruments depends on the lowest significant applicable input, as follows:

·    Level 1 - quoted (unadjusted) prices in active markets for identical assets or liabilities.

·    Level 2 - other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly. The Company held no such instruments during the period under review.

·    Level 3 - techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data. The Company's investment in its subsidiary undertaking, Investors Securities Company Limited, is included in Level 3 and is valued at its net asset value.

There were no transfers between levels of the fair value hierarchy during the six months ended 30 September 2019.

10.       The Company has a £7.5 million unsecured term loan from Scotiabank Europe plc with a five year term to 28 September 2022 and at a fixed interest rate of 2.58 per cent per annum. The Company also has a £7.5 million unsecured multicurrency revolving credit facility ("RCF") with Scotiabank (Ireland) Designated Activity Company, available until 28 September 2022. £nil of the RCF was drawn down at 30 September 2019 (30 September 2018 - £nil; 31 March 2019 - £nil). During the period there were no changes in the amount borrowed and therefore no change in liabilities arising from financing activities.

The fair value of the £7.5 million term loan, calculated using a discounted cashflow technique, is not materially different from the value reflected in the Unaudited Statement of Financial Position.

 

11.       Share capital

            Allotted, issued and fully paid

	Listed		Held in Treasury		In Issue
	Number	£	Number	£	Number	£
Ordinary Shares of 0.1p each
Balance at 1 April 2019	102,067,144	102,067	(15,739,000)	(15,739)	86,328,144	86,328
Repurchased to be held in treasury	-	-	-	-	-	-
Balance at 30 September 2019	102,067,144	102,067	(15,739,000)	(15,739)	86,328,144	86,328
B Shares of 0.1p each
Balance at 1 April 2019	32,076,703	32,077	(1,100,000)	(1,100)	30,976,703	30,977
Repurchased to be held in treasury	-	-	-	-	-	-
Balance at 30 September 2019	32,076,703	32,077	(1,100,000)	(1,100)	30,976,703	30,977
Total at 30 September 2019	134,143,847	134,144	(16,839,000)	(16,839)	117,304,847	117,305

The Company did not buy back any Ordinary shares or B shares to hold in treasury during the period (period to 30 September 2018 - nil Ordinary shares and nil B shares; year to 31 March 2019 - 600,000 Ordinary shares and nil B shares). The Company did not resell any Ordinary shares or B shares from treasury and did not issue any new shares during the period (period to 30 September 2018 - nil Ordinary or B shares; year to 31 March 2019 - nil Ordinary or B shares).

At 30 September 2019 the Company held 15,739,000 Ordinary shares and 1,100,000 B shares in treasury (30 September 2018 - 15,139,000 Ordinary shares and 1,100,000 B shares; 31 March 2019 - 15,739,000 Ordinary shares and 1,100,000 B shares).

12.          The net asset value per share is based on shareholders' funds at the period end and on 86,328,144 Ordinary shares and 30,976,703 B shares, being the number of shares in issue at the period end (30 September 2018 - 86,928,144 Ordinary shares and 30,976,703 B shares; 31 March 2019 - 86,328,144 Ordinary shares and 30,976,703 B shares).

13.        The fair values of the Company's financial assets and liabilities are not materially different from their carrying values in the financial statements.

The Company's financial risk management objectives and policies are consistent with those disclosed in the Company's financial statements for the year ended 31 March 2019.

14.         Going concern

In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting Council and have undertaken a rigorous review of the Company's ability to continue as a going concern. As part of that review the Board has considered the ongoing uncertainties regarding Brexit and does not consider that any related outcome would affect the Company's ability to continue as a going concern.

            The Company's objective and policy, which is subject to regular Board monitoring processes, is designed to ensure that the Company is invested mainly in liquid, listed securities. The Company retains title to all assets held by its custodian and has agreements relating to its borrowing facilities with which it has complied. Cash is held only with banks approved and regularly reviewed by the Manager.

            As part of the going concern review, the Directors noted that borrowing facilities of a £7.5 million fixed term loan and a £7.5 million revolving credit facility are committed to the Company until 28 September 2022.

            The Directors believe, in the light of the controls and review processes noted above and bearing in mind the nature of the Company's business and assets, that the Company has adequate resources to continue in operational existence for a period of at least twelve months from the date of approval of the financial statements. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

15.          Related party transactions

The Directors of the Company are considered a related party. There have been no transactions with related parties during the first six months of the current financial year that have materially affected the financial position or performance of the Company during the period and there have been no changes in the related party transactions described in the last Annual Report that could do so.

16.         The Company's auditor, Deloitte LLP, has not audited or reviewed the Interim Report to 30 September 2019 pursuant to the Auditing Practices Board guidance on 'Review of Interim Financial Information'. These are not full statutory financial statements in terms of Section 434 of the Companies Act 2006 and are unaudited. Statutory financial statements for the year ended 31 March 2019, which received an unqualified audit report and which did not contain a statement under Section 498 of the Companies Act 2006, have been lodged with the Registrar of Companies. The condensed financial statements shown for the year ended 31 March 2019 are an extract from those financial statements. No full statutory financial statements in respect of any period after 31 March 2019 have been reported on by the Company's auditor or delivered to the Registrar of Companies.

The Interim Report will be posted to shareholders during December and will be available on the website: www.bmoukhighincome.com

Statement of Principal Risks and Uncertainties

Most of the Company's principal risks and uncertainties that could threaten its objective, strategy, future performance, liquidity and solvency are market related and comparable to those of other investment trusts investing primarily in listed securities.

These risks, and the way in which they are managed, are described under the heading 'Principal Risks and Uncertainties and Viability Statement' within the Strategic Report in the Company's Annual Report for the year ended 31 March 2019.

The Company's principal risks and uncertainties have not changed materially since the date of that report and are not expected to change materially for the remainder of the Company's financial year.

The most important types of risk associated with financial instruments are credit risk, market risk, liquidity risk, interest rate risk and foreign currency risk. Other risks faced by the Company include investment and strategic, regulatory, operational and custody risks. These include risks in relation to failures at service providers or loss or sabotage of data through cyber threats or business continuity failure.

Statement of Directors' Responsibilities in Respect of the Interim Report

We confirm that to the best of our knowledge:

·    the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;

·    the Chairman's Statement and the Statement of Principal Risks and Uncertainties (together constituting the Interim Management Report) include a fair review of the information required by the Disclosure Guidance and Transparency Rules ('DTR') 4.2.7R, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements;

·    the Statement of Principal Risks and Uncertainties shown above is a fair review of the principal risks and uncertainties for the remainder of the financial year; and

·    the Chairman's Statement together with the condensed set of financial statements include a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period, and any changes in the related party transactions described in the last Annual Report that could do so.

On behalf of the Board

John Evans

Director

5 December 2019

Alternative Performance Measures ("APMs")

The Company uses the following APMs:

Discount/premium - the share price of an investment company is derived from buyers and sellers trading their shares on the stock market. This price is not identical to the net asset value (NAV) per share of the underlying assets less liabilities of the Company. If the share price is lower than the NAV per share, the shares are trading at a discount. This usually indicates that there are more sellers of shares than buyers. Shares trading at a price above NAV per share are deemed to be at a premium usually indicating there are more buyers of shares than sellers.

		30 September 2019			31 March 2019
		Ordinary Shares	B Shares	Units	Ordinary Shares	B Shares	Units
Net asset value per share	(a)	104.66p	104.66p	418.64p	102.39p	102.39p	409.56p
Share price	(b)	94.0p	95.5p	374.0p	95.0p	95.0p	373.0p
(Discount) (c=(b-a)/(a))	(c)	(10.2)%	(8.8)%	(10.7)%	(7.2)%	(7.2)%	(8.9)%

Total Return - the theoretical return to shareholders calculated on a per share basis by adding distributions paid in the period to the increase or decrease in the NAV in the period.  The distributions are assumed to have been reinvested in the form of shares or net assets, respectively, on the date on which the shares were quoted ex dividend.

The effect of reinvesting these distributions on the respective ex dividend dates and the NAV total returns are shown below.

	30 September 2019		31 March 2019
	Ordinary shares/B shares	Units	Ordinary shares/B shares	Units
NAV per share at start of six months/financial year	102.39p	409.56p	103.75p	415.00p
NAV per share at end of six months/financial year	104.66p	418.64p	102.39p	409.56p
Change in the period	2.2%	2.2%	-1.3%	-1.3%
Impact of dividend/capital repayment reinvestments†	2.5%	2.5%	4.8%	4.8%
NAV total return	4.7%	4.7%	3.5%	3.5%

† During the six months to 30 September 2019 dividends/capital repayments totalling 2.58p (Ordinary shares/B shares) and 10.32p (units) went ex-dividend.  During the year to 31 March 2019 the equivalent figures were 5.00p (Ordinary shares/B shares) and 20.0p (units).

Yield - The total annual dividend/capital repayment expressed as a percentage of the period end share price.

		30 September 2019*			31 March 2019
		Ordinary Shares	B Shares	Units	Ordinary Shares	B Shares	Units
Annual dividend/capital repayment	(a)	5.21p	5.21p	20.84p	5.04p	5.04p	20.16p
Share price	(b)	94.0p	95.5p	374.0p	95.0p	95.0p	373.0p
Yield (c=a/b)	(c)	5.5%	5.5%	5.6%	5.3%	5.3%	5.4%

*Based on expected annual dividend/capital repayment of 5.21 pence per share in respect of the year ending 31 March 2020.

For further information, please contact:

Philip Webster, Fund Manager                                   0207 628 8000

Ian Ridge, Company Secretary                                  0207 628 8000

 

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