Half-year Report

RNS Number : 4310R

Schroder UK Mid Cap Fund PLC

30 June 2020

 

30 June 2020

Half Year Report

Schroder UK Mid Cap Fund plc (the "Company") hereby submits its half year report for the period ended 31 March 2020 as required by the UK Listing Authority's Disclosure Guidance and Transparency Rule 4.2. 

The half year report is also being published in hard copy format and an electronic copy of that document will shortly be available to download from the Company's website www.schroders.co.uk/ukmidcap . Please click on the following link to view the document:

http://www.rns-pdf.londonstockexchange.com/rns/4310R_1-2020-6-29.pdf

The Company has submitted a pdf of the hard copy format of its half year report to the National Storage Mechanism. It will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .

Enquiries:

Matthew Riley

Schroder Investment Management Limited

Tel: [phone]

Half Year Report and Accounts for the six months ended 31 March 2020

Chairman's Statement

In the 2019 Annual Report issued in December I commented upon the strong asset and share price performance since the year end particularly following the decisive UK general election result in December but ended with a warning about potentially more difficult economic conditions worldwide in 2020. At that time we certainly did not envisage the unprecedented changes to global markets and economies caused by the COVID-19 pandemic. This has resulted in extreme market volatility around the world with many companies choosing to cut or eliminate their dividend payments and to issue profit warnings.

Investment and share price performance

During the six-month period to 31 March 2020, which ended shortly after the global lockdown started, the Company's net asset value total return ("NAV") was -30.0%, compared to the -26.0% delivered by the Benchmark. The share price fared a little better, showing a total return of -27.9% as the discount narrowed from 14.8% at the start of the period to 12.4% at its close. These numbers are even more noteworthy, considering that between mid-December and late February the Company's NAV and share price were 20% higher than at 30 September 2019.

However, since 31 March 2020, the Company's NAV has recovered significantly, by 20.4%, and the Company's share price has recovered by 17.8% (as at 24 June 2020), but is still 16.9% below its level at 30 September 2019. The performance of the Benchmark over that period was a recovery of 13.4%. These sharp upwards movements have not however been matched by an equivalent improvement in the outlook for the global economy.

More detailed comment on the performance of your Company may be found in the Manager's review.

Revenue and dividends

The start of the lockdown coincided with one of the key dividend-paying seasons, and many portfolio companies were quick to cut or stop their dividends. As a result the Company's income from investments fell by 29% in the first half of the year compared to the same period a year ago, and the fall in income has continued into April, May and June. The board is receiving regular updates from the Manager on the portfolio income expected in coming quarters, but we recognise that any forecast is difficult at the moment.

Notwithstanding this, and the likelihood that investment income will take time to recover, the board will pay the same interim dividend of 3.80p as last year. The strength of investment income in past years has not only allowed the board to pay higher dividends, but also to build up a revenue reserve which is available for use in years when investment income is less strong. The revenue reserve after this interim dividend will be equivalent to nearly nine months of a full year's dividend, based on the prior year's dividend.

The board will wait until the preparation of the full year's accounts before deciding on the final dividend at which point we hope the position on the likely levels of investment income that may be expected in future years will be clearer. At the moment however, we cannot predict what that dividend will be.

Gearing

The Company's £25 million revolving credit facility with Scotiabank Europe plc was converted into a three year term loan on 12 February 2020. Following the refinancing, this term loan provides a low cost of debt and the extension of the maturity from July 2020 to February 2023 reduces the Company's refinancing risk. Average gearing during the period was 3.8% and the gearing is currently 1.4% (as at 24 June 2020). The Manager intends to use this gearing to take advantage of investment opportunities and to participate in capital raisings by portfolio companies.

Share purchases and discount management

In the six month period to 31 March 2020, 380,000 shares were bought back, at an average discount to NAV of 13.8%, which was accretive for our shareholders. Since the period end, no further shares have been bought back. Following the lockdown and the resultant market volatility your board decided not to make further market purchases until such time as the market had settled. Your board continues to monitor the discount and will take action where it believes it to be in shareholders' best interests. The shares currently stand at a discount of 14.3% to NAV (as at 24 June 2020).

Outlook

The lockdown provides a challenging background to the holdings in the portfolio and to your Company. The essence of the Company's purpose is the belief that there are a number of dynamic UK mid-caps that will provide us with substantial capital growth, and that our investment managers can identify them. It is fair to say that the characteristics the investment managers have looked for in these long-term growth opportunities - such as pricing power, organic growth and strong cash flow - did not anticipate a world where the staff of our portfolio holdings are locked out of their offices, factories and shops. Nonetheless we still consider them to be valid criteria.

There is only one relevant precedent in the Company's life, but I believe it is a reassuring one. The 2007-09 Global Financial Crisis was as traumatic for mid-cap companies as the virus is today, and the Company's share price fell more than has happened this year. Recovery felt painfully slow at the time, but the mid-caps that had genuine competitive advantages emerged stronger, and by 2014 the Company's share price was nearly double what it had been at the 2007 peak (and nearly five times what it had been at the bottom). Balance sheet strength and cash flow are going to be as important now as then. There is also the uncertainty of the negotiations over the trading terms arising from the UK's departure from the EU. However, we want our investment managers to continue to concentrate on those companies that will emerge stronger from the current uncertainties. History tells us that sharp dislocation often provides great opportunities for the right mid-caps, and we want to take advantage of that.

Eric Sanderson

Chairman

29 June 2020

Manager's Review

Market background

UK equities fell sharply over the period as the coronavirus pandemic caused the fastest decline in global financial markets on record. The FTSE 250 Index (ex investment companies) fell 26.0%. UK small & mid caps trailed their FTSE 100 counterparts, the index returning -21.8%.

In late 2019 domestic politics were driving UK assets. The UK election delivered a strong victory for the Conservative Party, lowering political uncertainty. The Conservatives used their large majority to take the UK out of the EU. In late February, however, coronavirus cases increased exponentially outside China and wide-spread lockdowns were imposed globally. Sterling hit multi-decade lows in mid March versus the US dollar as investors retreated to cash. The Bank of England reduced interest rates by 0.65% to 0.10% while the UK government unveiled an unprecedented series of fiscal support measures.

Mid cap stocks underperformed large cap stocks. However, there were two phases. In late 2019, mid caps benefited from reduced uncertainty post the election and a pick-up in UK consumer confidence. This reversed in March, as equity markets fell. Mid cap businesses in travel and leisure, household goods, home construction businesses and general retailers all fell sharply as the government locked down activity to prioritise public safety.

Over the period as a whole, the hardest hit mid cap sectors were oil and gas, consumer services (particularly travel and leisure), consumer goods (including automobiles) and financials.

Portfolio performance

The NAV underperformed the index by 4.0% over the period primarily due to the fall in March. The weak markets meant gearing contributed the bulk of this, with the rest from a spread of holdings particularly exposed to the initial effects of the coronavirus, or to energy as the oil price tumbled. There was also a 28.7% decline in the portfolio's investment income, as companies rapidly reacted to the new environment.

Among the individual holdings, serviced office space specialist IWG performed very poorly, as countries introduced lockdown measures. The balance sheet is stronger than in a long time, with leverage much reduced as a result of progress transitioning to a franchise model. IWG has taken precautionary measures of not paying the declared final dividend for 2019 and suspending a £100 million buyback. In our opinion, the share price reaction was sentiment driven. The group appeared to have been incorrectly categorised with others that have weak balance sheets and was unfairly punished as investors moved in March to a "glass half empty" approach to anything related to offices and to the company's finances. A post period end capital raise of over £300 million has reassured the market and underlined that there are opportunities now for IWG which did not exist previously in the form of attractively priced deals as competitors struggle. Many companies are adapting to a new normal of a hub-and-spoke way of operating office space (with one central office and several regional ones), and on a more flexible basis, which speaks directly to the IWG offer. We are reassured not only by founder CEO Mark Dixon's stock purchases in March, but also the far more material investment of up to £100 million in the capital raise.

Housebuilders Crest Nicholson and Redrow, casual dining specialist Restaurant Group and retailers Superdry and Ted Baker were among the largest detractors as lockdown brought these businesses to a standstill. As lockdown begins to ease post period end, the majority of these stocks have performed well.

Playtech was also a significant detractor as its Italian retail operations closed due to coronavirus; subsequent to the period end, the company has revealed that its Tradetech division, through online CFD broker, markets.com, has benefitted from high levels of market volatility, and that it had gained regulatory approval to enter the US market. Similarly to the other detractors above, the shares have contributed positively since the period end.

Support services company Capita fell sharply as delays to its turnaround plan, exacerbated by a hiatus in government spending because of Brexit and the election, coincided with the worsening economic backdrop and concerns it might need additional finance. We expect the role of government to increase given the expansive fiscal policies of the Johnson administration both prior to coronavirus and in its response to it. Capita, as one of the primary delivery partners, will be part of the solution in the delivery of public service priorities.

Oil & gas holdings Cairn Energy and Premier Oil also suffered on concerns about falling energy demand in the wake of the virus and the failure of negotiations between OPEC and Russia to control the supply of oil. The oil price has since started to recover as industries begin to come out of lockdown.

Pets at Home was the top contributor, on the back of a strong Christmas trading update and after veterinary surgeries and pet shops were deemed essential retailers. The re-shaping of its agreements with its vet partners is showing signs of success and the long term growth opportunity presented by the increase in pet ownership and "humanisation" of animals in UK society, catching up with trends in the US, underpins the investment case.

Retail derivatives platform provider IG Group was also resilient, being a beneficiary of the market volatility.

Meat processor Cranswick performed very well reflecting changing meat protein consumption resulting from the lockdown. The company supplies pork and poultry products to the whole spectrum of UK grocers. The enforced shift from out-of-home eating (restaurants) and wholesale (such as school catering) to retail is likely to benefit Cranswick. Meat protein is proving one of supermarkets' fastest-moving lines at present. If UK schools do not return until the autumn and summer holidays are taken inside the UK (when the food industry usually sees a summer lull), a pick-up in demand could be well underpinned. In addition, their pork products are enjoying strong demand in China, where domestic supply lines has been impaired due to African swine fever. The company, which is cash generative, has a strong balance sheet and is likely to maintain dividend payments.

UK multi-utility specialist Telecom Plus was resilient as it was rewarded for its strong balance sheet and defensive utility exposure. Defence group QinetiQ was another top contributor following a reassuring Q3 trading update. QinetiQ has promising growth prospects, continues to benefit from self-help measures and is underpinned by a strong balance sheet. The recent purchase of US-based Manufacturing Techniques (MTEQ) is particularly interesting. MTEQ's expertise in sensors fits well with QinetiQ's strong robotics and AI capabilities. The transaction has doubled operations in America, increasing US revenues to c.25% of group revenues. It is a good step towards QinetiQ's goal of sourcing 50% of revenues from international customers.

One of the largest detractors was not owning water utility and waste management company Pennon, which agreed to a bid for its waste recycling business Viridor.  Not owning highly indebted Tullow Oil was a positive, as was a zero weighting in Microfocus, which continues to struggle to digest its recent acquisition.

Portfolio activity

The portfolio began the period with gearing of 4.3% which was helpful going into a strong December. However, this worked against performance as the market hollowed out in March.

We established a new holding in drinks manufacturer A.G. Barr in November subsequent to share price weakness. The group's ready-to-drink nitro-infused cocktails are a potentially exciting growth area. We added to the position in asset manager Man Group, which we see as a unique and undervalued asset with a strong balance sheet and a disruptive approach. Our view that Playtech has some undervalued gaming technology and that the company will be successfully streamlined meant that we also increased the size of the holding. We also added to real estate company St Modwen, which is exposed to structural growth in urban logistics, which are in demand due to the rise of online retail.

We exited Intermediate Capital Group on its promotion to the FTSE 100, in line with our usual policy. We also exited Jupiter as we saw more upside in their asset management peer Man Group, as mentioned above. Elsewhere, we took profits in the position in home emergency insurer and service company Homeserve as we believed that the company's growth opportunities in the US and the UK with Checkatrade had begun to be more than fairly reflected in the share price. We also trimmed our position in industrial and medical metrology specialist Renishaw in anticipation of some short term challenges.

The portfolio benefitted from the gearing after mid March. Gearing now stands at 1.4% having being reduced during the subsequent bounce in prices of certain holdings.

Outlook

We have witnessed some of the most volatile market conditions, in the UK and globally, on record. In  January/February, the UK economic environment was riding high with accelerating wages and companies performing or recovering well and we were positioning the portfolio to capture what might be termed the "Boris Bounce". What has happened since has been transformational. In the early stages of the pandemic, we found ourselves moving from positioning the portfolio to maximise the benefit of improving economic conditions and certainty, to analysing how much cash companies had remaining and what their survival prospects were. This change occurred largely within one month. In all our time running money, we have never seen something which has affected such a broad swathe of companies and made them realise how inter-related they are; and that is now the big concern, the interrelationship of these companies and how they can get through this crisis. It has also emphasised the virtue of direct engagement with our investee companies to understand how they are reacting and their balance sheet strength. The advent of the virus has really tested companies' ability to adapt. Those with the most sustainable business models and willingness to test and adapt using new technologies or methodologies have outperformed.

We have been asked what types of new trends are emerging, and if it will change our investment approach. This leads us to examine our core long term growth opportunity stocks, and whether we believe that the opportunities we saw previously would persist in a post coronavirus world. Whilst we have just over two months' of evidence, we can make the following observations:

-  Certain secular growth trends, for example online retail and more frequent working from home, will have been accelerated. Stocks such as Dunelm (UK's number one homewares retailer), Telecom Plus, Pets at Home, Grainger (high quality private rented accommodation), Safestore (self storage) and Computacenter (IT services and equipment) should all benefit.

-  Economic turmoil is likely to lead to a number of opportunistic stock ideas. Companies already undergoing significant restructuring or change may be able to use the environment to speed up their transformations. These are likely to be in categories initially hit hardest by the virus, in leisure or retail. They might be stocks which have fallen out of the FTSE 100 Index or which have been promoted from the  benchmark - some twenty changes are slated for the benchmark for June, underlying what a transformational time this has been.

We then think about what will spark a recovery. For the situation to improve in the UK, we need people to be paid more so they can spend that money. If people are going to be furloughed, taking 10-20% wage cuts, and then some made redundant, what does that mean for a consumer spending recovery over the next 15-18 months, particularly if a second lockdown is deemed necessary later in the year? It's an emotive subject that it's hard to have a real debate on now because of entrenched views, with scientists on the one hand with a range of death rate predictions and economic numbers and companies on the other.

This volatility has led us to reflect on where the market was and where it has come to today and to think about what that means for UK businesses and the overall portfolio. What we are doing is striking a balance between evolution and innovation, between growth and value, between long term and short term. We are achieving this without compromising on strong balance sheets and high quality management teams which combined can help these businesses through the crisis.

In conclusion, we continue to primarily focus the portfolio as we have always done: seeking out the next mid-cap disruptor, while looking to avoid exposure to the next industry to be disrupted.

Schroder Investment Management Limited

29 June 2019

Half Year Report

Principal risks and uncertainties

The principal risks and uncertainties with the Company's business fall into the following risk categories: strategic; investment management; financial custody; gearing and leverage; accounting, legal and regulatory; service provider; and cyber. A detailed explanation of the risks and uncertainties in each of these categories can be found on pages 14 and 15 of the Company's published annual report and accounts for the year ended 30 September 2019.

The board has reviewed the risks related to the COVID-19 pandemic and considers it to be a major event with an ongoing impact on the likelihood and severity of the Company's principal risks. COVID-19 will continue to affect the value of the Company's investments due to the disruption of supply chains and demand for products and services, increased costs and cash flow problems, and changed legal and regulatory requirements for companies. The pandemic has triggered a sharp fall in global stock markets and created uncertainty around future dividend income. The board notes the Manager's investment process is unaffected by the COVID-19 pandemic and the Manager continues to focus on long-term company fundamentals and detailed analysis of current and future investments. COVID-19 also affected the Company's service providers, who have implemented business continuity plans and are working almost entirely remotely. The board continues to receive regular reporting on operations from the Company's major service providers and does not anticipate a material fall in the level of service.

Going concern

Having assessed the principal risks and uncertainties, and the other matters discussed in connection with the viability statement as set out on page 16 of the published annual report and accounts for the year ended 30 September 2019, as well as considering the additional risks related to COVID-19, and where appropriate, action taken by the Manager and Company's service providers in relation to those risks, detailed above, the directors consider it appropriate to adopt the going concern basis in preparing the accounts.

Related party transactions

There have been no transactions with related parties that have materially affected the financial position or the performance of the Company during the six months ended 31 March 2020.

Directors' responsibility statement

The directors confirm that, to the best of their knowledge, this set of condensed financial statements has been prepared in accordance with United Kingdom Generally Accepted Accounting Practice and with the Statement of Recommended Practice, "Financial Statements of Investment Companies and Venture Capital Trusts" issued  in October 2019 and that this Interim Management Report includes a fair review of the information required by 4.2.7R and 4.2.8R of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

Income Statement

For the six months ended 31 March 2020 (unaudited)

	(Unaudited) For the six months ended 31 March 2020			(Unaudited) For the six months ended 31 March 2019			(Audited) For the year ended 30 September 2019
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Losses on investments held at fair value through profit or loss	-	(66,485)	(66,485)	-	(13,183)	(13,183)	-	(3,615)	(3,615)
Income from investments	2,265	-	2,265	3,177	-	3,177	8,260	615	8,875
Other interest receivable and similar income	4	-	4	5	-	5	9	-	9
Gross return/(loss)	2,269	(66,485)	(64,216)	3,182	(13,183)	(10,001)	8,269	(3,000)	5,269
Investment management fee	(208)	(484)	(692)	(214)	(499)	(713)	(442)	(1,032)	(1,474)
Administrative expenses	(300)	-	(300)	(243)	-	(243)	(476)	-	(476)
Net return/(loss) before finance costs and taxation	1,761	(66,969)	(65,208)	2,725	(13,682)	(10,957)	7,351	(4,032)	3,319
Finance costs	(27)	(65)	(92)	(18)	(43)	(61)	(39)	(91)	(130)
Net return/(loss) on ordinary activities before taxation	1,734	(67,034)	(65,300)	2,707	(13,725)	(11,018)	7,312	(4,123)	3,189
Taxation (note 3)	-	-	-	13	-	13	13	-	13
Net return/(loss) on ordinary activities after taxation	1,734	(67,034)	(65,300)	2,720	(13,725)	(11,005)	7,325	(4,123)	3,202
Return/(loss) per share (note 4)	4.89p	(189.20)p	(184.31)p	7.59p	(38.28)p	(30.69)p	20.43p	(11.50)p	8.93p

The "Total" column of this statement is the profit and loss account of the Company. The "Revenue" and "Capital" columns represent supplementary information prepared under guidance issued by The Association of Investment Companies. The Company has no other items of other comprehensive income, and therefore the net return on ordinary activities after taxation is also the total comprehensive income for the period.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period.

Statement of Changes in Equity

For the six months ended 31 March 2020 (unaudited)

	Called-up		Capital		Share
	share	Share	redemption	Merger	purchase	Capital	Revenue
	capital	premium	reserve	reserve	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30 September 2019	9,036	13,971	220	2,184	13,337	178,064	9,612	226,424
Repurchase of the Company's own shares into treasury	-	-	-	-	(2,103)	-	-	(2,103)
Net (loss)/return on ordinary activities	-	-	-	-	-	(67,034)	1,734	(65,300)
Dividend paid in the period (note 5)	-	-	-	-	-	-	(5,198)	(5,198)
At 31 March 2020	9,036	13,971	220	2,184	11,234	111,030	6,148	153,823

For the six months ended 31 March 2019 (unaudited)

	Called-up		Capital		Share
	share	Share	redemption	Merger	purchase	Capital	Revenue
	capital	premium	reserve	reserve	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30 September 2018	9,036	13,971	220	2,184	13,934	182,187	8,202	229,734
Net (loss)/return on ordinary activities	-	-	-	-	-	(13,725)	2,720	(11,005)
Dividend paid in the period (note 5)	-	-	-	-	-	-	(4,553)	(4,553)
At 31 March 2019	9,036	13,971	220	2,184	13,934	168,462	6,369	214,176

For the year ended 30 September 2019 (audited)

	Called-up		Capital		Share
	share	Share	redemption	Merger	purchase	Capital	Revenue
	capital	premium	reserve	reserve	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30 September 2018	9,036	13,971	220	2,184	13,934	182,187	8,202	229,734
Repurchase of the Company's own shares into treasury	-	-	-	-	(597)	-	-	(597)
Net (loss)/return on ordinary activities	-	-	-	-	-	(4,123)	7,325	3,202
Dividends paid in the year (note 5)	-	-	-	-	-	-	(5,915)	(5,915)
At 30 September 2019	9,036	13,971	220	2,184	13,337	178,064	9,612	226,424

Statement of Financial Position at 31 March 2020 (unaudited)

	(Unaudited) 31 March 2020 £'000	(Unaudited) 31 March 2019 £'000	(Audited) 30 September 2019 £'000
Fixed assets
Investments held at fair value through profit or loss	164,498	215,217	232,621
Current assets
Debtors	365	5,404	3,990
Cash at bank and in hand	14,686	5,550	356
	15,051	10,954	4,346
Current liabilities
Creditors: amounts falling due within one year	(726)	(11,995)	(10,543)
Net current assets/(liabilities)	14,325	(1,041)	(6,197)
Total assets less current liabilities	178,823	214,176	226,424
Creditors: amounts falling due after more than one year (note 6)	(25,000)	-	-
Net assets	153,823	214,176	226,424
Capital and reserves
Called-up share capital (note 7)	9,036	9,036	9,036
Share premium	13,971	13,971	13,971
Capital redemption reserve	220	220	220
Merger reserve	2,184	2,184	2,184
Share purchase reserve	11,234	13,934	13,337
Capital reserves	111,030	168,462	178,064
Revenue reserve	6,148	6,369	9,612
Total equity shareholders' funds	153,823	214,176	226,424
Net asset value per share (note 8)	435.01p	597.40p	633.51p

Notes to the Accounts

1.  Financial Statements

The information contained within the accounts in this half year report has not been audited or reviewed by the Company's independent auditor.

The figures and financial information for the year ended 30 September 2019 are extracted from the latest published accounts of the Company and do not constitute statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the report of the auditor which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

2.  Accounting policies

Basis of accounting

The accounts have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice and with the Statement of Recommend Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued by the Association of Investment Companies in October 2019.

All of the Company's operations are of a continuing nature.

The accounting policies applied to these accounts are consistent with those applied in the accounts for the year ended 30 September 2019.

3.  Taxation

The Company's effective corporation tax rate is nil, as deductible expenses exceed taxable income. Taxation comprises irrecoverable overseas withholding tax deducted from dividends receivable.

4.  Return/(loss) per share

	(Unaudited) For the six months ended 31 March 2020 £'000	(Unaudited) For the six months ended 31 March 2019 £'000	(Audited) For the year ended 30 September 2019 £'000
Revenue return	1,734	2,720	7,325
Capital loss	(67,034)	(13,725)	(4,123)
Total (loss)/return	(65,300)	(11,005)	3,202
Weighted average number of shares in issue during the period	35,430,370	35,851,190	35,848,258
Revenue return per share	4.89p	7.59p	20.43p
Capital loss per share	(189.20)p	(38.28)p	(11.50)p
Total (loss)/return per share	(184.31)p	(30.69)p	8.93p

5.  Dividends

	(Unaudited) For the six months ended 31 March 2020 £'000	(Unaudited) For the six months ended 31 March 2019 £'000	(Audited) For the year ended 30 September 2019 £'000
2019 final dividend paid of 14.7p (2018: 12.7p)	5,198	4,553	4,553
Interim dividend of 3.8p	-	-	1,362
	5,198	4,553	5,915

An interim dividend of 3.8p (2019: 3.8p) per share, amounting to £1,343,725 (2019: £1,362,000), has been declared payable in respect of the year ended 30 September 2020.

6.  Creditors: amount falling due after more than one year

	(Unaudited) 31 March 2020 £'000	(Unaudited) 31 March 2019 £'000	(Audited) 30 September 2019 £'000
Bank Loan	25,000	-	-

The bank loan is a £25 million three-year term loan from from Scotiabank Europe plc, expiring in February 2023 and carrying a fixed interest rate of 1.546% per annum.

7.  Called-up share capital

	(Unaudited) Six months ended 31 March 2020 £'000	(Unaudited) Six months ended 31 March 2019 £'000	(Audited) Year ended 30 September 2018 £'000
Changes in called-up share capital during the period were as follows:
Opening balance of ordinary shares of 25p each, excluding shares held in treasury	8,935	8,963	8,963
Repurchase of shares into treasury	(95)	-	(28)
Subtotal of ordinary shares of 25p each, excluding shares held in treasury	8,840	8,963	8,935
Shares held in treasury	196	73	101
Closing balance of ordinary shares of 25p each, including shares held in treasury	9,036	9,036	9,036

	(Unaudited) Six months ended 31 March 2020 £'000	(Unaudited) Six months ended 31 March 2019 £'000	(Audited) Year ended 30 September 2018 £'000
Changes in the number of shares in issue during the period were as follows:
Ordinary shares of 25p each, allotted, called-up and fully paid
Opening balance of shares in issue, excluding shares held in treasury	35,741,190	35,851,190	35,851,190
Repurchase of shares into treasury	(380,000)	-	(110,000)
Closing balance of shares in issue, excluding shares held in treasury	35,361,190	35,851,190	35,741,190
Closing balance of shares held in treasury	782,500	292,500	402,500
Closing balance of shares in issue, including shares held in treasury	36,143,690	36,143,690	36,143,690

8.  Net asset value per share

Net asset value per share is calculated by dividing shareholders' funds by the 35,361,190 (31 March 2019: 35,851,190 and 30 September 2019: 35,741,190) shares in issue, excluding shares held in treasury.

9.  Financial instruments measured at fair value

The Company's financial instruments that are held at fair value comprise its investment portfolio. At 31 March 2020, all investments in the Company's portfolio were categorised as Level 1 in accordance with the criteria set out in paragraph 34.22 (amended) of FRS 102. That is, they are all valued using unadjusted quoted prices in active markets for identical assets (31 March 2019 and 30 September 2019: same).

10.  Events after the interim period that have not been reflected in the financial statements for the interim period

The directors have evaluated the period since the interim date and have not noted any events which have not been reflected in the financial statements.

 

END

 

 

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