TIDMBHI TIDMBHIB TIDMBHIU
RNS Number : 3677U
BMO UK High Income Trust PLC
02 December 2021
To: RNS
From: BMO UK High Income Trust PLC
Date: 2 December 2021
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 2021.
Highlights
-- Net asset value total return(1) per share for the six months
was +4.4%, compared to the Benchmark(2) total return of +8.0%.
-- Ordinary share price total return for the six months was
+10.2% compared to the Benchmark total return of +8.0%.
-- B share price total return for the six months was +16.4%
compared to the Benchmark total return of +8.0%.
-- Distribution yield(1) of 5.5% on Ordinary shares and 5.2% on
B shares at 30 September 2021, compared to the yield on the FTSE
All-Share Index of 3.1%.
Notes:
1. Total return and yield - 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 2021 the net asset value
("NAV") total return for both the Ordinary shares and B shares was
+4.4%, while the equivalent total return for the FTSE All-Share
Index (the benchmark) was +8.0%.
The Manager has constructed a focused portfolio consisting of
approximately 35 investments with a high level of commitment behind
each one. I have mentioned in previous statements that there could
be a relatively low correlation between the portfolio performance
and that of the benchmark and recent periods have proven that to be
the case.
The Company was consistently geared over the period and
therefore the underperformance relative to the benchmark was due to
stock selection.
The first six months of this financial year saw an almost
complete reversal from the update written at the time of our
full-year results to 31 March 2021. Having witnessed investors
desert cyclicals and sectors that faced the brunt of the pandemic,
we were always going to see a risk-on environment as restrictions
and lockdowns came to an end. Sectors that had almost completely
stopped, burst back to life. Travel and leisure, industrials,
high-street retail, and real estate have all seen a very strong
recovery, off a very low base. Recent data shows that several of
these sectors are back to 70%-80% of 2019 levels and in some cases
closer to 90% which is positive for growth, jobs and the outlook
for the UK economy.
We have also seen a surge in the price of a barrel of oil, and
an exceptional rise in gas prices, lift the oil sector close to
pre-pandemic levels. These larger sectors, which we are not
invested in, can drag on performance in the short-term, but the
Manager is comfortable that this recovery will slow as we get back
to normal consumption patterns.
Our over-indexation to digital assets has also been a headwind.
Digital performed exceptionally well through 2020, and early 2021.
Just Eat Takeaway nearly doubled from the pandemic low but has
since retreated below the levels of the crisis, due to short-term
investment and competition concerns. This is not just a UK
phenomenon and we have seen profit-taking and share price weakness
across most of the digital platforms. The Manager has met with all
these holdings and is comfortable with the structural growth and
the medium-term thesis.
While there remain several hurdles to negotiate, we are
encouraged by the work the Manager has done on the medium-term
opportunities. While the market is being very short-term in the
pursuit of depressed earnings, and cyclical recovery, your Manager
has been identifying businesses he feels will come out of the
crisis stronger. This may be driven by taking market share from
weaker competitors, or structurally reduced costs. I would note
that has not led to any wholesale change, turnover in holdings has
been very low; more a nuanced shift to allocate more capital to
those companies he feels have a better earnings trajectory than we
have seen historically.
Share price performance
Over the period there was a welcome narrowing of the discount to
NAV at which the shares in the Company traded. For the Ordinary
shares the discount closed from -7.8% at 31 March 2021 to -2.9% at
30 September 2021. Consequently, the share price total return for
the Ordinary shares for the period was +10.2%.
The B shares were also trading at a discount to NAV of -7.8% on
31 March 2021 but ended the period valued at a premium to NAV of
+2.6% thus generating a share price total return of +16.4% for the
period under review.
Your Board and Manager have been working hard to increase the
awareness of the Company, particularly among self-directed
investors and we are pleased to see the ownership of the Company's
shares by these groups increasing on a consistent basis, be that
through the BMO Savings plans or via direct purchase by
investors.
No buybacks in either share class were undertaken in the period
under review.
At 30 September 2021 the distribution yields on the Ordinary
shares (5.5%) and B shares (5.2%) were both greater than the
benchmark index yield (3.1%) and at levels which are significantly
higher than other interest rates. These are attractive yields in
the current low interest rate environment.
Earnings, dividends and capital repayments
As noted in the 2021 Annual Report, revenue earnings declined
significantly in the year to 31 March 2021 reflecting the sharp
reduction in dividend payments made by UK companies as the economic
chaos caused by the COVID-19 pandemic impacted. In the period under
review your Company's revenue earnings per share have risen by
79.7% in comparison to the six months to 30 September 2020. The
recovery in dividend payment levels by UK corporates has been rapid
and most encouraging - an indication of long-term confidence by
Boards and management alike.
Your Board was pleased to increase dividends and capital
repayments to shareholders against a very weak background for
earnings in the year to 31 March 2021. This was made possible by
the ability to utilise the revenue reserves that your Company has
consistently built up over the years.
I am pleased to say that revenue has recovered faster than
anticipated and that the revenue forecast for the year to 31 March
2022 currently looks robust. Having maintained the first two
quarterly interim dividends for the current financial year to 31
March 2022 the Board was pleased to announce that the third
quarterly interim dividend will be increased to 1.32p per Ordinary
Share and that in the absence of unforeseen circumstances, it is
currently intended that the aggregate dividend for the current
financial year to 31 March 2022 will be at least 5.4p per Ordinary
share.
One of the benefits of the Investment Trust structure is the
ability to create and use revenue reserves to help smooth the level
of dividend payments to shareholders over the longer term. The past
two years have shown how effectively this structure can work.
Ownership of the Manager
On 8 November 2021, Columbia Threadneedle Investments, part of
Ameriprise Financial acquired BMO's EMEA asset management business
('BMO GAM (EMEA)'). This added GBP97 billion of assets under
management ('AUM') to Columbia Threadneedle increasing its AUM to
GBP530 billion. This was a transaction that was discussed in the
Chairman's Statement in respect of the year to 31 March 2021. Your
Board maintained a regular dialogue with BMO and has met with
representatives of the now new owners. We look forward to
benefitting from the increase in scale and resources that the
combined BMO/Columbia Threadneedle business can provide, however
there will be no changes to the personnel running the activities of
your Company in terms of both Fund Management and
Administration.
Outlook
Stock markets anticipated the economic recovery from the
dislocation caused by the COVID-19 pandemic and this was reflected
in the high capital returns generated by markets in the second half
of calendar year 2020 and in the first half of 2021. The recent
period has seen focus shift to the issues created by a rapid
resurgence of industrial and commercial activity around the world.
This coupled with the added confusion of Brexit related issues has,
in the UK, been reflected in much publicised supply bottlenecks,
rapidly rising energy prices, inflation reaching recent high levels
and much speculation about interest rates rising from all-time
lows.
In addition, the need for Central Banks around the world to
scale back the level of support provided via the various forms of
Quantitative Easing creates an uncertain macro background.
The rate of inflation in the UK and in most developed economies
is challenging, not least because it remains unclear as to whether
this is a short-term factor caused by shortages, or the beginnings
of a prolonged spell of price adjustment. Policy response to these
scenarios would be different and as yet unclear- a further cause of
uncertainty.
Overarching all of these economic and market developments is the
fact that the course of the pandemic remains uncertain and the
virus has the capacity continually to surprise. The course of the
economic recovery is likely to be smoother than that of stock
markets. Set against this is the evidence of a strong recovery in
corporate profits and with it, dividends. Your Board is pleased
that the revenue for your Company has recovered so quickly and
looks forward to a continued improvement into 2022.
John M Evans
Chairman
2 December 2021
Condensed Unaudited Statement of Comprehensive Income
For the six month period to 30 September 2021
Six months to 30 September
2021
Notes Revenue Capital Total
GBP'000 GBP'000 GBP'000
Gains on investments held at fair
value - 2,850 2,850
Exchange differences - 1 1
Income 2 2,993 - 2,993
Investment management fee 3 (117) (272) (389)
Other expenses (247) - (247)
--------- --------- ---------
Profit before finance costs and
taxation 2,629 2,579 5,208
Net finance costs
Interest on bank loans (41) (95) (136)
Total finance costs (41) (95) (136)
--------- --------- ---------
Profit before tax 2,588 2,484 5,072
Tax on ordinary activities 4 (23) - (23)
--------- --------- ---------
Profit for the period 2,565 2,484 5,049
--------- --------- ---------
Total comprehensive income for
the period 2,565 2,484 5,049
--------- --------- ---------
Earnings per share 5 2.21p 2.15p 4.36p
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 revenue and capital items in the above statement derive from
continuing operations.
All of the profit and comprehensive income for the period is
attributable to the owners of the Company.
Condensed Unaudited Statement of Comprehensive Income
Six months to 30 September Year to March 2021*
2020
Notes Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains on investments held at fair
value - 12,797 12,797 - 29,988 29,988
Exchange differences - (17) (17) - (35) (35)
Income 2 1,803 - 1,803 3,788 - 3,788
Investment management fee 3 (105) (245) (350) (212) (494) (706)
Other expenses (220) - (220) (480) - (480)
--------- --------- --------- -------- -------- --------
Profit before finance costs and
taxation 1,478 12,535 14,013 3,096 29,459 32,555
Net finance costs
Interest on bank loans (32) (74) (106) (69) (160) (229)
Total finance costs (32) (74) (106) (69) (160) (229)
--------- --------- --------- -------- -------- --------
Profit before tax 1,446 12,461 13,907 3,027 29,299 32,326
Tax on ordinary activities 4 (7) - (7) (7) - (7)
--------- --------- --------- -------- -------- --------
Profit for the period 1,439 12,461 13,900 3,020 29,299 32,319
--------- --------- --------- -------- -------- --------
Total comprehensive income for
the period 1,439 12,461 13,900 3,020 29,299 32,319
--------- --------- --------- -------- -------- --------
Earnings per share 5 1.23p 10.67p 11.90p 2.59p 25.16p 27.75p
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 revenue and capital items in the above statement derive from
continuing operations.
All of the profit and comprehensive income for the period is
attributable to the owners of the Company.
*these figures are audited.
Condensed Unaudited Statement of Financial Position
Notes 30 Sept 30 Sept 31 March
2021 2020 2021*
GBP'000 GBP'000 GBP'000
Non-current asset s
Investments held at fair value through
profit or loss 9 127,861 109,398 123,249
--------- --------- ---------
127,861 109,398 123,249
--------- --------- ---------
Current assets
Receivables 562 300 990
Cash and cash equivalents 1,999 552 2,310
--------- --------- ---------
2,561 852 3,300
Total assets 130,422 110,250 126,549
--------- --------- ---------
Current liabilities
Payables (518) (519) (542)
Bank loans 10 (13,000) (2,000) (3,500)
--------- --------- ---------
(13,518) (2,519) (4,042)
--------- --------- ---------
Non-current liabilities
Bank loan 10 - (7,500) (7,500)
--------- --------- ---------
- (7,500) (7,500)
--------- --------- ---------
Total liabilities (13,518) (10,019) (11,542)
--------- --------- ---------
Net assets 116,904 100,231 115,007
--------- --------- ---------
Capital and Reserves
Share capital 11 134 134 134
Share premium 153 153 153
Capital redemption reserve 5 5 5
Buy back reserve 80,394 81,038 80,394
Special capital reserve 12,505 14,133 13,340
Capital reserves 18,876 (446) 16,392
Revenue reserve 4,837 5,214 4,589
--------- --------- ---------
Equity shareholders' funds 116,904 100,231 115,007
--------- --------- ---------
Net asset value per Ordinary share
12 100.88p 85.94p 99.25p
Net asset value per B share 12 100.88p 85.94p 99.25p
Approved by the Board, and authorised for issue, on 2 December
2021 and signed on its behalf by:
John M Evans, Director
*these figures are audited.
Condensed Unaudited Statement of Changes in Equity
for the six months to 30 September 2021
Capital Buy Back Special
Share Share Redemption Reserve Capital Capital Revenue
Capital Premium Reserve Reserve Reserves Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ---------- ---------- ------------ --------- --------- ----------- ---------- --------
Balance as at 1 April
2021 134 153 5 80,394 13,340 16,392 4,589 115,007
Profit for the period - - - - - 2,484 2,565 5,049
Dividends paid on
Ordinary
shares - - - - - - (2,317) (2,317)
Capital returns paid
on
B shares - - - - (835) - - (835)
Balance as at 30
September
2021 134 153 5 80,394 12,505 18,876 4,837 116,904
----------------------- ---------- ---------- ------------ --------- --------- ----------- ---------- --------
for the six months to 30 September 2020
Capital Buy Special
Share Share Redemption Back Reserve Capital Capital Revenue
Capital Premium Reserve Reserve Reserves Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ---------- ---------- ------------ -------------- --------- ----------- ---------- --------
Balance as at 1
April
2020 134 153 5 81,157 14,945 (12,907) 6,034 89,521
Profit for the
period - - - - - 12,461 1,439 13,900
Shares bought
back for
treasury - - - (119) - - - (119)
Dividends paid on
Ordinary
shares - - - - - - (2,259) (2,259)
Capital returns
paid on
B shares - - - - (812) - - (812)
------------------ ---------- ---------- ------------ -------------- --------- ----------- ---------- --------
Balance as at 30
September
2020 134 153 5 81,038 14,133 (446) 5,214 100,231
------------------ ---------- ---------- ------------ -------------- --------- ----------- ---------- --------
for the year to 31 March 2021 *
Capital Buy Back Special
Share Share Redemption Reserve Capital Capital Revenue
Capital Premium Reserve Reserve Reserves Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ---------- ---------- ------------ --------- --------- ----------- ---------- --------
Balance as at 1 April
2020 134 153 5 81,157 14,945 (12,907) 6,034 89,521
Profit for the year - - - - - 29,299 3,020 32,319
Shares bought back for
treasury - - - (763) - - - (763)
Dividends paid on
Ordinary
shares - - - - - - (4,465) (4,465)
Capital returns paid
on
B shares - - - - (1,605) - - (1,605)
Balance as at 31 March
2021 134 153 5 80,394 13,340 16,392 4,589 115,007
----------------------- ---------- ---------- ------------ --------- --------- ----------- ---------- --------
*These figures are audited
Condensed Unaudited Cash Flow Statement
Six months Six months
to to Year to
30 Sept 2021 30 Sept 2020 31 March 2021*
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit before tax 5,072 13,907 32,326
Adjustments for:
Gains on investments held at
fair value
through profit or loss (2,850) (12,797) (29,988)
Exchange (gains)/losses (1) 17 35
Interest income - (1) (1)
Interest received - 1 1
Dividend income (2,993) (1,802) (3,787)
Dividend income received 3,444 2,354 3,638
Decrease in receivables 2 4 8
(Decrease)/increase in payables (23) 12 33
Finance costs 136 106 229
Overseas tax suffered (52) (23) (21)
-------------- -------------- ----------------
Cash flows from operating activities 2,735 1,778 2,473
-------------- -------------- ----------------
Cash flows from investing activities
Purchases of investments (5,675) (11,665) (19,430)
Sales of investments 3,913 7,744 18,849
-------------- -------------- ----------------
Cash flows from investing activities (1,762) (3,921) (581)
-------------- -------------- ----------------
Cash flows from financing activities
Dividends paid on Ordinary shares (2,317) (2,259) (4,465)
Capital returns paid on B shares (835) (812) (1,605)
Interest on bank loans (133) (101) (763)
Shares purchased for treasury - (119) (217)
Drawdown of loan 2,000 2,000 3,500
-------------- -------------- ----------------
Cash flows from financing activities (1,285) (1,291) (3,550)
-------------- -------------- ----------------
Net decrease in cash and cash
equivalents (312) (3,434) (1,658)
Effect of movement in foreign
exchange 1 (17) (35)
Opening net cash and cash equivalents 2,310 4,003 4,003
-------------- -------------- ----------------
Closing cash and cash equivalents 1,999 552 2,310
-------------- -------------- ----------------
*These figures are audited
Notes to the Condensed Financial Statements (unaudited)
1. Accounting Policies
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 2021. 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 2021, which were prepared
under IFRS requirements.
2. Income
30 Sept 30 Sept 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
UK dividend income 2,147 1,694 3,379
UK dividend income - special
dividends 601 - 86
Overseas dividend income 179 67 220
Property income distributions 66 41 102
--------------------------------------- -------- -------- ---------
2,993 1,802 3,787
Other income
Interest on cash and cash equivalents - 1 1
--------------------------------------- -------- -------- ---------
2,993 1,803 3,788
--------------------------------------- -------- -------- ---------
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 for the
period and on 115,881,403 shares (period to 30 September 2020 -
116,765,010; year to 31 March 2021 - 116,451,266), being the
weighted average number of shares in issue during the period.
6. Earnings for the six months to 30 September 2021 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
Six months Six months Year
Payment to to to
Date 30 Sept 30 Sept 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
In respect of the previous
period:
Fourth interim dividend at
1.43p (2020: 1.34p) per Ordinary
share 7 May 21 1,218 1,151 1,151
Fourth capital repayment at
1.43p (2020: 1.34p) per B share 7 May 21 439 414 414
In respect of the period under
review:
First interim dividend at 1.29p
(2021: 1.29p) per Ordinary
share 6 Aug 21 1,099 1,108 1,108
First capital repayment at
1.29p (2021: 1.29p) per B share 6 Aug 21 396 398 398
Second interim dividend (2021:
1.29p) per Ordinary share - - 1,107
Second capital repayment (2021:
1.29p) per B share - - 397
Third interim dividend (2021:
1.29p) per Ordinary share - - 1,099
Third capital repayment (2021:
1.29p) per
B share - - 396
----------- ----------- ----------
3,152 3,071 6,070
=========== =========== ==========
A second interim dividend for the year to 31 March 2022, of
1.29p per Ordinary share, was paid on 5 November 2021 to Ordinary
shareholders on the register on 8 October 2021.
A second quarter capital repayment of 1.29p per B share was paid
on 5 November 2021 to B shareholders on the register on 8 October
2021.
Although these payments relate to the period ended 30 September
2021, under IFRS they will be accounted for in the six months to 31
March 2022, being the period during which they are paid.
9. Investments held at fair value through profit or loss
Listed/ Subsidiary/
Quoted Unlisted
(Level (Level Total
1) 3) GBP'000
GBP'000 GBP'000
------------------------------------------- ---------- -------------- ----------
Cost brought forward 109,690 250 109,940
Gains brought forward 13,309 - 13,309
------------------------------------------- ---------- -------------- ----------
Fair value of investments at 31 March
2021 122,999 250 123,249
Movement in the period:
Purchases at cost 5,675 - 5,675
Sales proceeds (3,913) - (3,913)
Gains on investments sold in the period 505 - 505
Gains on investments held at 30 September
2021 2,345 - 2,345
------------------------------------------- ---------- -------------- ----------
Fair value of investments at 30 September
2021 127,611 250 127,861
------------------------------------------- ---------- -------------- ----------
Cost at 30 September 2021 111,957 250 112,207
Gains at 30 September 2021 15,654 - 15,654
------------------------------------------- ---------- -------------- ----------
Fair value of investments at 30 September
2021 127,611 250 127,861
------------------------------------------- ---------- -------------- ----------
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 2021.
10. Bank loans
The Company has a GBP7.5 million unsecured term loan from
Scotiabank Europe plc until 28 September 2022 and at a fixed
interest rate of 2.58 per cent per annum. The fair value of the
GBP7.5 million term loan, calculated using a discounted cashflow
technique, is not materially different from the value reflected in
the Unaudited Statement of Financial Position.
The Company also has a GBP7.5 million unsecured multicurrency
revolving credit facility ("RCF") with Scotiabank (Ireland)
Designated Activity Company, available until 28 September 2022.
GBP5.5 million of the RCF was drawn down at 30 September 2021 at an
interest rate of 1.5% (30 September 2020 - GBP2 million; 31 March
2021 - GBP3.5 million).
11. Share capital
Allotted, issued and fully paid
Listed Held in Treasury In Issue
Number GBP Number GBP Number GBP
Ordinary Shares
of 0.1p each
Balance at 1 April
2021 102,067,144 102,067 (16,894,491) (16,894) 85,172,653 85,173
Balance at 30 September
2021 102,067,144 102,067 (16,894,491) (16,894) 85,172,653 85,173
------------------------- ------------ -------- ------------- --------- ------------ --------
B Shares of 0.1p
each
Balance at 1 April
2021 32,076,703 32,077 (1,367,953) (1,368) 30,708,750 30,709
Balance at 30 September
2021 32,076,703 32,077 (1,367,953) (1,368) 30,708,750 30,709
------------------------- ------------ -------- ------------- --------- ------------ --------
Total at 30 September
2021 134,143,847 134,144 (18,262,444) (18,262) 115,881,403 115,882
------------------------- ------------ -------- ------------- --------- ------------ --------
During the period, the Company bought back nil Ordinary shares
and bought back nil B shares to hold in treasury (period to 30
September 2020 - 100,000 Ordinary shares and 50,000 B shares; year
to 31 March 2021 - 750,000 Ordinary shares and 150,000 B
shares).
At 30 September 2021 the Company held 16,894,491 Ordinary shares
and 1,367,953 B shares in treasury (30 September 2020 - 16,244,491
Ordinary shares and 1,267,953 B shares; 31 March 2021 - 16,894,491
Ordinary shares and 1,367,953 B shares).
12. The net asset value per share is based on shareholders'
funds at the period end and on 85,172,653 Ordinary shares and
30,708,750 B shares, being the number of shares in issue at the
period end (30 September 2020 - 85,822,653 Ordinary shares and
30,808,750 B shares; 31 March 2021 - 85,172,653 Ordinary shares and
30,708,750 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 2021.
14. Changes in liabilities arising from financing activities
Six months Six months Year to
to to 31 March
30 September 30 September 2021
2021 2020
GBP'000 GBP'000 GBP'000
---------------------------------------- -------------- -------------- ----------
Opening net debt at beginning
of
period/year 11,000 7,500 7,500
Cash flows:
Drawdown of revolving credit
facility 2,000 2,000 3,500
---------------------------------------- -------------- -------------- ----------
Closing net debt at end of period/year 13,000 9,500 11,000
---------------------------------------- -------------- -------------- ----------
15. Going concern
In assessing the going concern basis of accounting, the
Directors have had regard to the guidance issued by the Financial
Reporting Council (including that due to COVID-19) and have
undertaken a rigorous review of the Company's ability to continue
as a going concern and specifically in the context of the COVID-19
pandemic.
The Company's investment 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
value of these investments exceeds the Company's liabilities by a
significant margin. 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 GBP7.5 million fixed term loan and a
GBP7.5 million revolving credit facility are committed to the
Company until 28 September 2022 and loan covenants are reviewed by
the Board on a regular basis.
The Directors believe, having assessed the principal risks and
other matters, including the COVID-19 pandemic and in light of the
controls and review processes noted and bearing in mind the nature
of the Company's business and assets and revenue and expenditure
projections, 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.
16. Related party transactions
The Directors of the Company are considered a related party. The
Directors receive aggregated remuneration for services as Directors
and for which there were no outstanding balances at the period end.
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.
17. The Company's auditor, Deloitte LLP, has not audited or
reviewed the Interim Report to 30 September 2021 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 2021,
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 2021 are an
extract from those financial statements. No full statutory
financial statements in respect of any period after 31 March 2021
have been reported on by the Company's auditor or delivered to the
Registrar of Companies.
The Interim Report to 30 September 2021 is available on the
website maintained on behalf of the Company at
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 2021.
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 principal risks identified in the Annual Report were:
-- Financial Risk. The Company's assets consist mainly of listed
equity securities and its principal financial risks are therefore
market related and include market risk (comprising currency risk,
interest rate risk and other price risk), liquidity risk and credit
risk
-- Investment and strategic risk
-- Regulatory risk
-- Operational risk
-- Custody risk
These include risks in relation to failures at service providers
or loss or sabotage of data through cyber threats or business
continuity failure.
The Board has also considered the impact of Coronavirus
(COVID-19) which has increased uncertainty and volatility in
markets and has impacted the value of investments. In addition, the
operational resilience of the Manager and the Company's other third
party service providers has been considered. This is included
within financial risk and operational risk.
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 Rule ('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 M Evans
Director
2 December 2021
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 2021 31 March 2021
-------------------- ----- ------------------------------ ------------------------------
Ordinary B Shares Units Ordinary B Shares Units
Shares Shares
-------------------- ----- --------- --------- -------- --------- --------- --------
Net asset value
per share (a) 100.88p 100.88p 403.52p 99.25p 99.25p 397.00p
Share price (b) 98.00p 103.50p 389.00p 91.50p 91.50p 365.00p
-------------------- ----- --------- --------- -------- --------- --------- --------
(Discount)/premium
(c=(b-a)/(a)) (c) (2.9)% 2.6% (3.6)% (7.8)% (7.8)% (8.1)%
-------------------- ----- --------- --------- -------- --------- --------- --------
Gearing - represents the excess amount above shareholders' funds
of total investments, expressed as a percentage of the
shareholders' funds. If the amount calculated is negative, this is
a 'net cash' position and no gearing.
30 September 31 March 2021
2021 GBP'000
GBP'000
Investments held at fair value
through profit or loss (a) 127,861 123,249
----- ------------- --------------
Net assets (b) 116,904 115,007
----- ------------- --------------
Gearing (c=(a/b)-1)% (c) 9.4% 7.2%
----- ------------- --------------
Total Return - the theoretical return to shareholders calculated
on a per share basis by adding dividends/capital repayments paid in
the period to the increase or decrease in the share price or NAV in
the period. The dividends/capital repayments are assumed to have
been re-invested 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 dividends/capital repayments on
the respective ex-dividend dates and the NAV total returns and
Share price total returns are shown below.
30 September 2021 31 March 2021
------------------------------ ------------------------------
Ordinary shares/B Ordinary shares/B
shares Units shares Units
--------------------------------------- -------------------- -------- -------------------- --------
NAV per share at start of period/year 99.25p 397.00p 76.66p 306.64p
NAV per share at end of period/year 100.88p 403.52p 99.25p 397.00p
Change in the period/year 1.6% 1.6% 29.5% 29.5%
Impact of dividend/capital
repayment reinvestment 2.8% 2.8% 7.9% 7.9%
--------------------------------------- -------------------- -------- -------------------- --------
NAV total return 4.4% 4.4% 37.4% 37.4%
--------------------------------------- -------------------- -------- -------------------- --------
During the six months to 30 September 2021 dividends/capital
repayments totalling 2.72p (Ordinary shares/B shares) and 10.88p
(units) went ex-dividend. During the year to 31 March 2021 the
equivalent figures were 5.21p (Ordinary shares/B shares) and 20.84p
(units).
30 September 2021 31 March 2021
----------------------------- ----------------------------- -----------------------------
Ordinary B Shares Units Ordinary B Shares Units
Shares Shares
----------------------------- --------- --------- ------- --------- --------- -------
Share price per share
at start of period/year 91.5p 91.5p 365.0p 69.5p 67.5p 273.0p
Share price per share
at end of period/year 98.0p 103.5p 389.0p 91.5p 91.5p 365.0p
Change in the period/year 7.1% 13.1% 6.6% 31.7% 35.6% 33.7%
Impact of dividend/capital
repayment reinvestment 3.1% 3.3% 2.3% 9.1% 9.3% 6.9%
----------------------------- --------- --------- ------- --------- --------- -------
Share price total
return for the period/year 10.2% 16.4% 8.9% 40.8% 44.9% 40.6%
----------------------------- --------- --------- ------- --------- --------- -------
During the six months to 30 September 2021 dividends/capital
repayments totalling 2.72p (Ordinary shares/B shares) and 10.88p
(units) went ex-dividend. During the year to 31 March 2021 the
equivalent figures were 5.21p (Ordinary shares/B shares) and 20.84p
(units).
Yield - The total annual dividend/capital repayment expressed as
a percentage of the period end share price.
30 September 2021* 31 March 2021
------------------------- ------- ------------------------------- -------------------------------
Ordinary B Shares Units Ordinary B Shares Units
Shares Shares
------------------------- ------- --------- --------- --------- --------- --------- ---------
Annual dividend/capital
repayment (a) 5.40p 5.40p 21.60p 5.30p 5.30p 21.20p
Share price (b) 98.00p 103.50p 389.00p 91.50p 91.50p 365.00p
------------------------- ------- --------- --------- --------- --------- --------- ---------
Yield (c=a/b) (c) 5.5% 5.2% 5.6% 5.8% 5.8% 5.8%
------------------------- ------- --------- --------- --------- --------- --------- ---------
*Based on expected minimum annual dividend/capital repayment of
5.40 pence per share in respect of the year ending 31 March
2022.
For further information, please contact:
Philip Webster, Fund Manager 0207 628 8000
Ian Ridge, Company Secretary 0207 628 8000
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