TIDMSHRS
RNS Number : 5490W
Shires Income PLC
13 December 2023
SHIRES INCOME PLC
HALF YEARLY FINANCIAL REPORT
FOR THE SIX MONTHSED 30 SEPTEMBER 2023
Legal Entity Identifier (LEI): 549300HVCIHNQNZAYA89
INVESTMENT OBJECTIVE
The Company's investment objective is to provide shareholders
with a high level of income, together with the potential for growth
of both income and capital from a diversified portfolio
substantially invested in UK equities but also in preference
shares, convertibles and fixed income securities.
BENCHMARK
The Company's benchmark is the FTSE All-Share Index (total
return).
DIVIDS
The Company pays dividends to Ordinary shareholders on a
quarterly basis.
Performance Highlights
Net asset value per Ordinary
share total return(A) Share price total return(A)
Six months ended 30 September Six months ended 30 September
2023 2023
+0.9% (3.1)%
Year ended 31 March 2023 (2.2)% Year ended 31 March 2023 (5.5)%
Benchmark index total return Earnings per Ordinary share (revenue)
Six months ended 30 September Six months ended 30 September
2023 2023
+1.4% 7.66p
Six months ended 30 September
Year ended 31 March 2023 +2.9% 2022 7.50p
Dividend yield(A) Discount to net asset value(A)
As at 30 September 2023 As at 30 September 2023
6.1% (7.0)%
As at 31 March 2023 5.7% As at 31 March 2023 (3.1)%
(A) Considered to be an Alternative Performance Measure.
Financial Calendar and Financial Highlights
Financial Calendar
Expected payment dates of quarterly dividends 27 October 2023
31 January 2024
26 April 2024
26 July 2024
============================================== =================
Financial year end 31 March 2024
============================================== =================
Expected announcement of results for year May 2024
ended 31 March 2024
============================================== =================
Annual General Meeting July 2024
============================================== =================
Financial Highlights
30 September 31 March % change
2023 2023
============================================ ============ ======== ========
Total assets (GBP'000)(A) 96,310 98,864 -2.6
============================================ ============ ======== ========
Shareholders' funds (GBP'000) 77,353 79,913 -3.2
============================================ ============ ======== ========
Net asset value per share 252.20p 257.92p -2.2
============================================ ============ ======== ========
Share price (mid-market) 234.50p 250.00p -6.2
============================================ ============ ======== ========
Discount to net asset value (cum-income)(B) (7.0)% (3.1)%
============================================ ============ ======== ========
Dividend yield(B) 6.1% 5.7%
============================================ ============ ======== ========
Net gearing(B) 23.1% 22.2%
============================================ ============ ======== ========
Ongoing charges ratio(B) 1.26% 1.17%
============================================ ============ ======== ========
(A) Less current liabilities excluding
bank loans of GBP9,000,000.
(B) Considered to be an Alternative Performance Measure.
Performance (total return)
Six months Year ended Three years Five years
ended ended ended
30 September 30 September 30 September 30 September
2023 2023 2023 2023
======================= ============= ============= ============= ============
Net asset value(A) +0.9% +12.1% +29.4% +20.3%
======================= ============= ============= ============= ============
Share price(A) -3.1% +8.2% +29.2% +21.3%
======================= ============= ============= ============= ============
FTSE All-Share Index +1.4% +13.8% +39.8% +19.7%
----------------------- ------------- ------------- ------------- ------------
(A) Considered to be an Alternative Performance Measure.
All figures are for total return and assume reinvestment of net dividends
excluding transaction costs.
For further information, please contact:
Paul Finlayson
abrdn Investments Limited
0131 372 9376
Chairman's Statement
Introduction
I am pleased to present the Half Yearly Report for the period
ended 30 September 2023. I would like to welcome those new
shareholders who have rolled over their shareholdings from abrdn
Smaller Companies Income Trust PLC ("aSCIT"), following the
completion of the combination of our two companies on 1 December
2023. The transaction offers significant benefits for both sets of
shareholders, which I will describe in more detail later in this
statement and in the subsequent events note.
It has been an eventful period for the Company and I'm pleased
to be able to end it on this positive note.
Market Background
The main macro-economic trend in the six-month period was the
continued rise in interest rates as central banks attempted to
tackle inflation. The US Federal Reserve increased rates from 4.75%
in March to 5.5% at the end of September and the Bank of England
increased interest rates from 4.0% to 5.25%. In both cases rising
short rates together with the corresponding rises in longer-term
bond yields, have seen a rapid tightening of financial conditions
since the end of 2021. Markets have accepted the likelihood that
interest rates will remain higher for longer, and that the previous
period of ultra-low interest rates will not be returned to. It is,
however, increasingly likely that we are close to the peak in
interest rates. Inflation has started to decline as key input costs
such as energy and agricultural commodities fall, and although more
persistent inputs such as wage inflation remain high, recent data
suggests that economic growth is slowing, giving central banks some
room to consider interest rate cuts as we move into 2024.
Over the last twelve months the UK economy has defied the
pessimists with economic growth being far more resilient than
feared and more recent data has also indicated that the recovery
post Covid has been at least as strong as elsewhere in the world.
In the US, the economy has performed reasonably well, driven by
robust consumer and business balance sheets and, alongside
moderating inflation, this has increased the probability of a soft
landing. By contrast, the Chinese and European economies are facing
some headwinds. The Chinese property market is heavily indebted and
in considerable excess supply, with developer and homebuyer
confidence very low. However, policy is now easing, which should
prevent further downside outcomes and deflation becoming embedded
in the economy, and this could even surprise markets on the upside.
But in the Eurozone and the UK, the pass-through of earlier
monetary policy tightening reflected in both short and longer-term
interest rates, is still likely to mean that economic growth
remains subdued in 2024 given the effects on mortgage rates and
corporate borrowing costs.
Despite these forces, equity markets have been resilient, with
the MSCI World Index up 3% over the six-month period, although it
was up by as much as 10% at its high at the end of July. The UK
FTSE All-Share Index benchmark did not quite keep pace, rising by
1.4% over the period in total return terms. Performance by sector
was mixed. Technology was the best performing sector in the UK,
rising by 14.5%, but remains a small weight in the market. Energy
(+11.5%) and Financials (+4.3%) performed well. Conversely, those
sectors which are negatively correlated to rising bond yields, such
as Consumer Staples (-5.0%) and Real Estate (-4.8%) lagged the
market.
Investment Performance
Over the six-month period to 30 September 2023 the Company's Net
Asset Value ("NAV") increased by 0.9% on a total return basis. This
compares to the FTSE All-Share Index total return of 1.4% referred
to above, and the average return from the open-ended UK Equity
Income Sector of 0.5%. The main driver of performance was a
recovery in the Company's preference shares in the last few months
as bond yields started to peak. The total return from the
preference share portfolio during the period was 5.8%. Given the
tough economic and equity market background we believe that this
was a creditable performance from the Investment Manager.
Disappointingly, the share price total return for the period was
-3.1%, reflecting a widening of the discount at which the Ordinary
shares trade relative to the NAV, from 3.1% at the start of the
period to 7.0% at 30 September 2023. This is addressed in more
detail below, under Discount and Share Buy Backs. The average
discount over the 12 month period to 30 September 2023 was 3.1%,
demonstrating that the discount widening has been a recent
development.
On an individual equity basis, the greatest positive
contribution to performance came from the holding in Standard
Chartered , where the shares rallied by 13% over the period as
concerns around contagion from US banks at the start of the year
receded and the company continued to report good performance. HSBC
Holdings (+15%) benefitted from the same trends. There were also
strong performances from a number of more cyclical UK companies,
with Morgan Sindall (+26%), Direct Line Insurance (+26%), Melrose
Industries (+15%) and Vistry Group (+21%) all performing well.
Dechra Pharmaceuticals was a standout performer, with its shares
rising by more than 30% following a bid from a private equity firm.
A rally in energy stocks in September was also positive, with
TotalEnergies and Shell both performing well. The holding in aSCIT
(+4%) also outperformed the benchmark, with the discount narrowing
as a result of the proposal for the combination with the Company,
as referred to above.
Negative performers were more concentrated, with a number of
portfolio holdings disappointing meaningfully. OSB (OneSavingsBank)
fell by 30% after having to adjust assumptions made in its credit
book in response to higher interest rates. The Investment Manager
sees this as a one-off hit to the bank and considers the shares to
be good value. Since the period end the shares have regained some
lost ground after a reassuring update. Genus (-30%) was also weak
as it faces headwinds from cyclical weakness in the Chinese pork
market. Drax (-25%) has also been weak as the market has grown
concerned about the viability of its BECCS biomass power generation
project.
Portfolio Activity
Activity in the portfolio was, as ever, driven by the Investment
Manager's views on individual companies rather than a change in
strategy. However, if we were to characterise the aim of trading
during the period, it was to increase the resilience and strength
of income from the portfolio. The Investment Manager's view at the
end of the 2023 financial year was that upwards progress from
equity markets would be challenging in the short-term and that a
period of some economic weakness was a reasonable possibility in
the next 12-18 months. At the same time, rising interest rates and
bond yields meant that cash and bonds were a reasonable alternative
for investors looking for income. It is therefore important that
the portfolio continues to provide a high level of income, and that
this income generation will be resilient in any macro-economic
downturn.
In April, the Investment Manager made a number of trades to
enhance income from the portfolio. It sold out of the position in
Nordea. While it continues to like the company, it saw better value
elsewhere in the sector and initiated a position in Dutch bank ING
Group which it considers to be a low risk, well-funded and
attractively priced bank.
The Investment Manager also started a new position in Genus ,
which develops genetics for livestock. While the company is lower
yielding than would usually be considered for the portfolio, it
does pay a dividend and is very high quality, with a strong market
position. The Investment Manager considers that the shares are
valued attractively compared to their historic levels and that
there are potential catalysts from gene editing development within
the investment time horizon.
Similar to the trades in European banks, the Investment Manager
changed the UK bank exposure at the start of the period by
switching from NatWest to Lloyds Banking Group . This trade took
advantage of the timing of dividend payments to enhance income and
gives the Company exposure to a retail bank with a high level of
sustainable returns and likely increasing distribution capacity as
interest rates normalise and the group's pension fund deficit is
eliminated, reducing the drag on statutory profits.
In May, the Investment Manager bought back into Sirius Real
Estate . It exited this position late in 2022, with increasing
concerns around commercial real estate. However, the shares were
recently upgraded and the company has delivered strong cashflow and
an increase in its dividend, signalling management's confidence in
cashflows to come. The Investment Manager therefore saw an
opportunity to add back some weight in real estate to the
portfolio, with the view that the sector could rally sharply once
bond yields peak, provided demand remains resilient in the
sector.
The Investment Manager sold the Company's holding in British
American Tobacco , which had been a source of significant income in
the portfolio for a long period of time. However, recent sales data
had disappointed in its key US market and, after reducing the
position over time, the Investment Manager decided to exit. The
Company continues to hold a position in Imperial Brands , where the
Investment Manager sees continued operational improvement after
recent management change and a strategy focused on driving cash
generation, which protects the dividend.
In June, the Investment Manager exited the position in Dechra
Pharmaceuticals . This was a recent purchase, in November last
year. However, the company received a bid from a private equity
buyer in April and the share price moved higher, giving an
attractive 30%+ return in a short period of time. The proceeds from
the sale were invested in a new holding, IP Group , which is an
investor in early-stage companies focused on three areas: Life
Sciences, Clean Energy and Advanced Technology.
The Investment Manager started one new position in July, buying
Italian utility Enel . The holding provides exposure to long term
investment growth in renewable power generation.. To fund the
purchase and control the level of overseas exposure, the Investment
Manager sold the remaining position in Bawag , which had done well
since purchase but where the Investment Manager saw less attractive
risk/reward.
During August, the Investment Manager started a new position in
Convatec , which produces medical supplies in areas such as wound
care, infusion and stomas. To fund the purchase, the Investment
Manager sold out of the holding in Smith & Nephew , where it
saw less consistent delivery. Finally, the Investment Manager sold
out of a small remaining position in Vodafone , where it saw the
dividend as unlikely to grow and where the quality did not meet the
level it looks for in portfolio companies.
Earnings and Dividends
The revenue earnings per share for the period were 7.66p, which
compares to 7.50p for the equivalent period last year. Across the
portfolio, there has been a modest increase in dividend income as
companies continue to increase distributions from levels re-based
during the Covid pandemic. Companies in certain sectors have seen
tailwinds to earnings, with energy companies benefitting from
higher commodity prices and banks from higher interest rates. One
marked trend has been an increased preference for share buybacks
amongst UK companies. This is understandable given the need to
maintain flexibility with distributions and also the recognition
that UK equities are lowly valued compared to history and other
developed markets. The UK now has a higher buyback yield than the
US, the long-time leader in this regard, providing an additional
source of shareholder returns. Portfolio changes have also been
made with the aim of enhancing the income generation. At a time of
higher inflation and an uncertain economic outlook, the Investment
Manager considers a high level of income as being important for the
total return potential of the Company.
A first interim dividend of 3.2p per Ordinary share in respect
of the year ending 31 March 2024 was paid on 27 October 2023 (2023:
first interim dividend - 3.2p). The Board is declaring a second
interim dividend of 3.2p per Ordinary share, payable on 31 January
2024 to shareholders on the register at close of business on 5
January 2024. Subject to unforeseen circumstances, it is proposed
to pay a further interim dividend of 3.2p per Ordinary share prior
to the Board deciding on the rate of final dividend at the time of
reviewing the full year results.
The current annual rate of dividend Is 14.20p per Ordinary
share, and represented a dividend yield of 6.1% based on the share
price at the end of the period. The Board considers that one of the
key attractions of the Company is its high level of dividend and
recognises that, in the current economic environment, there is
likely to be a continuing demand for an attractive and reliable
level of income. Whilst the Company remains on track to cover its
annual dividend cost with net income, the Board is conscious of the
Company's accumulated revenue reserves which add security to the
sustainability of the dividend.
Discount and Share Buy Backs
As stated above, the discount at which the price of the
Company's Ordinary shares trade relative to the NAV widened during
the period, to 7.0% as at 30 September 2023. This is consistent
with a general widening of discounts across the whole investment
trust sector, but exacerbated by the transfer of the abrdn
investment trust saving plans to Interactive Investor.
Consequently, to help address the imbalance of supply and demand
for the shares, and in accordance with the share buy-back authority
provided by shareholders at the Annual General Meeting, the Company
bought back 312,673 Ordinary shares during the period at a cost of
GBP720,000 and an average discount of 9.2%, thereby providing an
enhancement to the NAV for continuing shareholders. Since the
period end, the Company has bought back a further 432,895 shares at
a cost of GBP954,000. The Board will continue to make use of the
share buy-back authority if it considers it in the interests of
shareholders to do so. All shares bought back are held in treasury
for future resale at a premium to the NAV.
Gearing
The Company has a GBP20 million loan facility of which GBP19
million was drawn down at the period end. Net of cash, this
represented gearing of 23.1%, compared to 22.2% at the start of the
period. The weighted average borrowing cost at the period end was
5.3% (31 March 2023 - 4.7%). The Board continually monitors the
level of gearing and continues to take the view that the borrowings
are notionally invested in the less volatile fixed income part of
the portfolio which generates a high level of income, giving the
Investment Manager greater ability to invest in a range of equity
stocks with various yields. The Board believes that this
combination should enable the Company to achieve a high and
potentially growing level of dividend, and also deliver some
capital appreciation for shareholders.
Board Changes
At the AGM in July 2024, I shall be stepping down from the Board
having served for nine years. Having conducted a full succession
process involving the evaluation of external candidates, the Board
has reached the decision that Robin Archibald, who is the current
Chair of the Audit Committee and Senior Independent Director,
should replace me as Chairman upon my retirement. Jane Pearce will
become the new Chair of the Audit Committee, and Helen Sinclair
will become the new Senior Independent Director. We have separately
announced that Simon White, who was Head of Investment Trusts at
BlackRock from 2011 until June 2022 will be joining the B oard as
an independent non-executive Director on 1 January 2024. With these
changes, the Board remains confident that we have the appropriate
collective skills and experience to take the Company forward.
Combination of aSCIT and Shires
On 26 July 2023, the Company announced that it had agreed terms
with the Board of aSCIT for a proposed combination of the assets of
the Company with those of aSCIT. This was achieved by a scheme of
reconstruction and winding up of aSCIT, where assets were
transferred to the Company in exchange for the issue of new
Ordinary shares to aSCIT shareholders. A cash exit was also
available under the scheme. aSCIT and Shires shareholders approved
the scheme on 20 November 2023 and the scheme completed on 1
December. Shires issued 11,268,494 new Ordinary shares to aSCIT
shareholders, with the new Shares admitted to trading on 4 December
2023. The terms of the scheme were such that Shires shareholders
did not suffer any dilution in their interests from the costs of
the scheme.
The combination has increased the size of Shires by more than
35%, to net assets of GBP101 million at the point when aSCIT's
assets transferred. As a result, the Company will benefit from the
reducing tiered management fee structure at higher levels of assets
under management, reducing the Ongoing Charges Ratio ("OCR"), and
there should be improved secondary liquidity in the Company's
shares, as well as greater scale to promote the Company from. The
Company will continue with its existing investment objective and
policy and management arrangements, but will have a direct exposure
to UK smaller companies rather than obtaining its exposure through
investing in aSCIT. The Company's gearing ratio has fallen as a
result of the combination, from 23.1% at 30 September 2023 to 13.5%
at the time of writing, which includes GBP4.4 million of cash
awaiting investment.
aSCIT's shares were trading at a 12-month average discount of
15.7% before the announcement of its strategic review on 13
February 2023. aSCIT shareholders who have received new Shires
shares will benefit from a much lower OCR, a significant increase
in dividend yield outlook and an improved rating for their
shareholding.
We believe it has been a successful transaction for all
concerned.
Outlook
UK equities look good value, trading at a material discount to
other developed markets which is not justified by the fundamentals
of earnings and dividends. Economic growth has been similar to
other large economies and while inflation has been higher this is
now falling. The yield available on UK equities is ahead of other
markets and delivers an attractive rate of return. The preference
shares held in the portfolio also offer a high yield and the
potential decline in bond yields should provide a tailwind to their
valuation. However, the Investment Manager remains cautious on
equities globally, as it believes on a medium-term view that
markets are pricing in an overly benign outlook for macro-economic
outcomes and interest rates.
By sector, the expected peaking of interest rates creates
opportunities for income investors in the UK, although the
Investment Manager continues to look for higher quality and more
defensive areas of the market. Certain high yield sectors, such as
Utilities and Real Estate, are negatively correlated with bond
yields and can perform well. Utilities, in particular, offer
defensive exposure to falling bond yields and longer-term
structural growth due to higher investment requirements through a
period of energy transition. Sectors which are more economically
sensitive and consumer exposed, such as Consumer Discretionary,
look less attractive.
It is reassuring to see more government attention on potential
solutions to some issues around UK market valuations, including
liquidity and a lack of home-grown investors into equities. While
these will likely take time to bear fruit, it highlights that there
remain relatively cheap valuations ascribed to UK equities that
should provide rewards to patient investors. The combination of the
Company and abrdn Smaller Companies Income Trust will increase
direct exposure to small and mid-cap names in the portfolio.
Despite the issues currently facing smaller companies, the
Investment Manager sees this as an attractive area for new
opportunities, and continues to invest in companies that have
sufficient quality and income characteristics, independent of their
size.
Overall, while market conditions may remain challenging in the
shorter-term, the Board remains confident in the defensive nature
of the portfolio, its ability to deliver long term capital growth
and, most importantly, the resilience of income, supported by
substantial revenue reserves.
Robert Talbut
Chairman
13 December 2023
Interim Management Statement
Directors' Responsibility Statement
The Directors are responsible for preparing the Half Yearly
Financial Report in accordance with applicable law and regulations.
The Directors confirm that to the best of
their knowledge:
- the condensed set of financial statements within the Half
Yearly Financial Report has been prepared in accordance with IAS 34
'Interim Financial Reporting'; and
- the Interim Board Report (constituting the Interim Management
Report) includes a fair review of the information required by rules
4.2.7R of the Disclosure Guidance and Transparency Rules (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 and a description of the principal
risks and uncertainties for the remaining six months of the
financial year) and 4.2.8R (being related party transactions that
have taken place during the first six months of the financial year
and that have materially affected the financial position of the
Company during that period; and any changes in the related party
transactions described in the last Annual Report that could so
do).
Principal and Emerging Risks and Uncertainties
The Board regularly reviews the principal and emerging risks and
uncertainties faced by the Company together with the mitigating
actions it has established to manage the risks. These are set out
within the Strategic Report contained within the Annual Report for
the year ended 31 March 2023 and comprise the following risk
headings:
- Strategic objectives and investment policy
- Investment performance
- Failure to maintain, and grow the dividend over the longer term
- Share price and shareholder relations
- Gearing
- Accounting and financial reporting
- Regulatory and governance
- Operational
Exogenous risks such as health, social, financial, economic,
climate and geo-political
In addition to these risks, the Board is conscious of the
continuing impact of the conflicts in Ukraine and, more recently,
the Middle East, as well as continuing tensions between the US and
China. The Board is also conscious of the impact of inflation and
higher interest on financial markets. The Board considers that
these are risks that could have further implications for financial
markets.
In all other respects, the Company's principal and emerging
risks and uncertainties have not changed materially since the date
of the Annual Report and are not expected to change materially for
the remaining six months of the Company's financial year.
Going Concern
The Company's assets consist mainly of equity shares in
companies listed on the London Stock Exchange. The Board has
performed stress testing and liquidity analysis on the portfolio
and considers that, in most foreseeable circumstances, the majority
of the Company's investments are realisable within a relatively
short timescale.
The Board has set limits for borrowing and regularly reviews
actual exposures, cash flow projections and compliance with banking
covenants, including the headroom available. The Company has a
GBP20 million loan facility which matures in May 2027. GBP9 million
of this amount is drawn down on a short-term basis through a
revolving credit facility and can be repaid without incurring any
financial penalties.
The Board has also taken into account the impact on the Company
of its combination with abrdn Smaller Companies Income Trust PLC
since the period end.
Having taken these factors into account, the Directors believe
that the Company has adequate resources to continue in operational
existence for the foreseeable future and has the ability to meet
its financial obligations as they fall due for the period to 31
December 2023, which is at least twelve months from the date of
approval of this Report. For these reasons, they continue to adopt
the going concern basis of accounting in preparing the financial
statements.
On behalf of the Board
Robert Talbut
Chairman
13 December 2023
Investment Portfolio - Equities
As at 30 September 2023
=========================================================
Market Total
value portfolio
Company GBP'000 %
===================================== ======= =========
abrdn Smaller Companies Income Trust 7,715 8.2
===================================== ======= =========
Shell 4,379 4.6
===================================== ======= =========
AstraZeneca 4,032 4.2
===================================== ======= =========
BP 3,268 3.5
===================================== ======= =========
Diversified Energy 2,727 2.9
===================================== ======= =========
Diageo 2,408 2.5
===================================== ======= =========
Anglo American 2,293 2.4
===================================== ======= =========
SSE 2,053 2.2
===================================== ======= =========
TotalEnergies 2,052 2.2
===================================== ======= =========
HSBC Holdings 2,016 2.1
------------------------------------- ------- ---------
Ten largest investments 32,943 34.8
------------------------------------- ------- ---------
Standard Chartered 1,857 1.9
===================================== ======= =========
Energean 1,641 1.7
===================================== ======= =========
Rio Tinto 1,614 1.7
===================================== ======= =========
National Grid 1,523 1.6
===================================== ======= =========
Unilever 1,318 1.4
===================================== ======= =========
Intermediate Capital Group 1,209 1.3
===================================== ======= =========
Novo-Nordisk 1,205 1.3
===================================== ======= =========
Melrose Industries 1,199 1.3
===================================== ======= =========
Lloyds Banking Group 1,193 1.3
===================================== ======= =========
Imperial Brands 1,191 1.3
------------------------------------- ------- ---------
Twenty largest investments 46,893 49.6
------------------------------------- ------- ---------
Inchcape 1,184 1.2
===================================== ======= =========
Chesnara 1,106 1.2
===================================== ======= =========
Morgan Sindall 1,059 1.1
===================================== ======= =========
M&G 1,033 1.1
===================================== ======= =========
Balfour Beaty 988 1.0
===================================== ======= =========
Engie 952 1.0
===================================== ======= =========
Sirius Real Estate 950 1.0
===================================== ======= =========
Close Brothers 934 1.0
===================================== ======= =========
IP Group 920 1.0
===================================== ======= =========
Prudential 914 1.0
------------------------------------- ------- ---------
Thirty largest investments 56,933 60.2
------------------------------------- ------- ---------
Mondi 903 1.0
===================================== ======= =========
Hiscox 879 0.9
===================================== ======= =========
Convatec 875 0.9
===================================== ======= =========
Softcat 869 0.9
===================================== ======= =========
GSK 860 0.9
===================================== ======= =========
Howden Joinery 835 0.9
===================================== ======= =========
XP Power 819 0.9
===================================== ======= =========
AXA 771 0.8
===================================== ======= =========
Oxford Instruments 716 0.8
===================================== ======= =========
Games Workshop Group 707 0.7
------------------------------------- ------- ---------
Forty largest investments 65,167 68.9
------------------------------------- ------- ---------
ING Group 674 0.7
===================================== ======= =========
OSB 667 0.7
===================================== ======= =========
Dr. Martens 659 0.7
===================================== ======= =========
Vistry Group 632 0.7
===================================== ======= =========
Enel 624 0.6
===================================== ======= =========
Telecom Plus 586 0.6
===================================== ======= =========
Telenor 569 0.6
===================================== ======= =========
Wood Group 564 0.6
===================================== ======= =========
Bodycote 546 0.6
===================================== ======= =========
Coca-Cola HBC 534 0.6
------------------------------------- ------- ---------
Fifty largest investments 71,222 75.3
------------------------------------- ------- ---------
Genus 532 0.6
===================================== ======= =========
Ashmore 442 0.5
===================================== ======= =========
Direct Line Insurance 435 0.4
===================================== ======= =========
Drax 412 0.4
===================================== ======= =========
Marshalls 349 0.4
===================================== ======= =========
Redrow 328 0.4
------------------------------------- ------- ---------
Total equity investments 73,720 78.0
------------------------------------- ------- ---------
Investment Portfolio - Other Investments
As at 30 September 2023
========================================= ======= =========
Market Total
value portfolio
Company GBP'000 %
========================================= ======= =========
Preference shares(A)
========================================= ======= =========
Ecclesiastical Insurance Office 8 5/8% 5,215 5.5
========================================= ======= =========
Royal & Sun Alliance 7 3/8% 4,611 4.9
========================================= ======= =========
General Accident 7.875% 3,796 4.0
========================================= ======= =========
Santander 10.375% 3,685 3.9
========================================= ======= =========
Standard Chartered 8.25% 2,991 3.1
========================================= ======= =========
R.E.A Holdings 9% 552 0.6
----------------------------------------- ------- ---------
Total preference shares 20,850 22.0
----------------------------------------- ------- ---------
Total equity investments 73,720 78.0
----------------------------------------- ------- ---------
Total investments 94,570 100.0
----------------------------------------- ------- ---------
(A) None of the preference shares listed
above has a fixed redemption date.
Distribution of Assets and Liabilities
Valuation at Movement during the Valuation at
period
============================
31 March 2023 Purchases Sales Losses 30 September
2023
GBP'000 % GBP'000 GBP'000 GBP'000 GBP'000 %
============================= ======= ====== ========= ======== ======= ======= ======
Listed investments
============================= ======= ====== ========= ======== ======= ======= ======
Equities 75,760 94.8 11,489 (12,200) (1,329) 73,720 95.3
============================= ======= ====== ========= ======== ======= ======= ======
Preference shares 20,895 26.2 - - (45) 20,850 27.0
----------------------------- ------- ------ --------- -------- ------- ------- ------
Total investments 96,655 121.0 11,489 (12,200) (1,374) 94,570 122.3
============================= ======= ====== ========= ======== ======= ======= ======
Current assets 2,559 3.2 2,154 2.8
============================= ======= ====== ========= ======== ======= ======= ======
Current liabilities (9,350) (11.7) (9,414) (12.2)
============================= ======= ====== ========= ======== ======= ======= ======
Non-current liabilities (9,951) (12.5) (9,957) (12.9)
----------------------------- ------- ------ --------- -------- ------- ------- ------
Net assets 79,913 100.0 77,353 100.0
----------------------------- ------- ------ --------- -------- ------- ------- ------
Net asset value per Ordinary
share 257.92p 252.20p
----------------------------- ------- ------ --------- -------- ------- ------- ------
Condensed Statement of Comprehensive Income
30 September 30 September 31 March 2023
2023 2022
(unaudited) (unaudited) (audited)
====================== ==== ============================ ============================ ============================
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
====================== ==== ======== ======== ======== ======== ======== ======== ======== ======== ========
Losses on investments
at fair value - (1,374) (1,374) - (12,177) (12,177) - (6,084) (6,084)
====================== ==== ======== ======== ======== ======== ======== ======== ======== ======== ========
Currency
(losses)/gains - (39) (39) - 5 5 - 39 39
====================== ==== ======== ======== ======== ======== ======== ======== ======== ======== ========
Investment income
====================== ==== ======== ======== ======== ======== ======== ======== ======== ======== ========
Dividend income 2,920 - 2,920 2,814 - 2,814 5,586 - 5,586
====================== ==== ======== ======== ======== ======== ======== ======== ======== ======== ========
Interest income 16 - 16 - - - 7 - 7
====================== ==== ======== ======== ======== ======== ======== ======== ======== ======== ========
Traded option premiums 79 - 79 31 - 31 73 - 73
====================== ==== ======== ======== ======== ======== ======== ======== ======== ======== ========
Money market interest 8 - 8 - - - 7 - 7
---------------------- ---- -------- -------- -------- -------- -------- -------- -------- -------- --------
3,023 (1,413) 1,610 2,845 (12,172) (9,327) 5,673 (6,045) (372)
---------------------- ---- -------- -------- -------- -------- -------- -------- -------- -------- --------
Expenses
====================== ==== ======== ======== ======== ======== ======== ======== ======== ======== ========
Management fee (100) (100) (200) (103) (103) (206) (207) (207) (414)
====================== ==== ======== ======== ======== ======== ======== ======== ======== ======== ========
Administrative
expenses (240) (24) (264) (220) - (220) (417) - (417)
====================== ==== ======== ======== ======== ======== ======== ======== ======== ======== ========
Finance costs (245) (245) (490) (152) (152) (304) (363) (363) (726)
---------------------- ---- -------- -------- -------- -------- -------- -------- -------- -------- --------
(585) (369) (954) (475) (255) (730) (987) (570) (1,557)
---------------------- ---- -------- -------- -------- -------- -------- -------- -------- -------- --------
Profit/(loss) before
taxation 2,438 (1,782) 656 2,370 (12,427) (10,057) 4,686 (6,615) (1,929)
====================== ==== ======== ======== ======== ======== ======== ======== ======== ======== ========
Taxation 2 (80) - (80) (54) - (54) (102) - (102)
---------------------- ---- -------- -------- -------- -------- -------- -------- -------- -------- --------
Profit/(loss)
attributable
to equity holders 2,358 (1,782) 576 2,316 (12,427) (10,111) 4,584 (6,615) (2,031)
---------------------- ---- -------- -------- -------- -------- -------- -------- -------- -------- --------
Earnings per Ordinary
share (pence) 4 7.66 (5.79) 1.87 7.50 (40.25) (32.75) 14.83 (21.40) (6.57)
---------------------- ---- -------- -------- -------- -------- -------- -------- -------- -------- --------
The Company does not have any income or expense that is not included
in the profit for the period, and therefore the profit for the period
is also the "Total comprehensive income for the period", as defined
in IAS 1 (revised).
The total column of this statement represents the Statement of Comprehensive
Income of the Company, prepared in accordance with UK adopted International
Accounting Standards. The revenue and capital columns are supplementary
to this and are prepared under guidance published by the Association
of Investment Companies.
All items in the above statement derive from continuing operations.
The accompanying notes are an integral part of the financial statements.
Condensed Balance Sheet
As at As at As at
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
=========================================== ==== ============ ============ =========
Non-current assets
=========================================== ==== ============ ============ =========
Equities 73,720 70,571 75,760
=========================================== ==== ============ ============ =========
Preference shares 20,850 20,819 20,895
------------------------------------------- ---- ------------ ------------ ---------
Securities at fair value 94,570 91,390 96,655
------------------------------------------- ---- ------------ ------------ ---------
Current assets
=========================================== ==== ============ ============ =========
Accrued income and prepayments 988 890 1,383
=========================================== ==== ============ ============ =========
Cash and cash equivalents 1,166 1,442 1,176
------------------------------------------- ---- ------------ ------------ ---------
2,154 2,332 2,559
------------------------------------------- ---- ------------ ------------ ---------
Creditors: amounts falling due within
one year
=========================================== ==== ============ ============ =========
Trade and other payables (414) (968) (350)
=========================================== ==== ============ ============ =========
Short-term borrowings (9,000) (9,000) (9,000)
------------------------------------------- ---- ------------ ------------ ---------
(9,414) (9,968) (9,350)
------------------------------------------- ---- ------------ ------------ ---------
Net current liabilities (7,260) (7,636) (6,791)
------------------------------------------- ---- ------------ ------------ ---------
Total assets less current liabilities 87,310 83,754 89,864
=========================================== ==== ============ ============ =========
Non-current liabilities
=========================================== ==== ============ ============ =========
Long-term borrowings (9,957) (9,945) (9,951)
------------------------------------------- ---- ------------ ------------ ---------
Net assets 77,353 73,809 79,913
------------------------------------------- ---- ------------ ------------ ---------
Share capital and reserves
=========================================== ==== ============ ============ =========
Called-up share capital 6 15,532 15,532 15,532
=========================================== ==== ============ ============ =========
Share premium account 21,411 21,412 21,411
=========================================== ==== ============ ============ =========
Capital reserve 7 33,428 30,118 35,930
=========================================== ==== ============ ============ =========
Revenue reserve 6,982 6,747 7,040
------------------------------------------- ---- ------------ ------------ ---------
Equity shareholders' funds 77,353 73,809 79,913
------------------------------------------- ---- ------------ ------------ ---------
Net asset value per Ordinary share (pence) 5 252.20 238.20 257.92
------------------------------------------- ---- ------------ ------------ ---------
The accompanying notes are an integral part of the financial statements.
Condensed Statement of Changes in Equity
Six months ended 30 September 2023 (unaudited)
==================================================================================
Share
Share premium Capital Revenue
capital account reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=================================== ======= ======= ======== ======= ========
As at 31 March 2023 15,532 21,411 35,930 7,040 79,913
=================================== ======= ======= ======== ======= ========
Repurchase of ordinary shares into
treasury - - (720) - (720)
=================================== ======= ======= ======== ======= ========
(Loss)/profit for the period - - (1,782) 2,358 576
=================================== ======= ======= ======== ======= ========
Equity dividends - - - (2,416) (2,416)
----------------------------------- ------- ------- -------- ------- --------
As at 30 September 2023 15,532 21,411 33,428 6,982 77,353
----------------------------------- ------- ------- -------- ------- --------
Six months ended 30 September 2022 (unaudited)
Share
Share premium Capital Revenue
capital account reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=================================== ======= ======= ======== ======= ========
As at 31 March 2022 15,460 21,109 42,545 6,705 85,819
=================================== ======= ======= ======== ======= ========
Issue of Ordinary shares 72 303 - - 375
=================================== ======= ======= ======== ======= ========
(Loss)/profit for the period - - (12,427) 2,316 (10,111)
=================================== ======= ======= ======== ======= ========
Equity dividends - - - (2,274) (2,274)
----------------------------------- ------- ------- -------- ------- --------
As at 30 September 2022 15,532 21,412 30,118 6,747 73,809
----------------------------------- ------- ------- -------- ------- --------
Year ended 31 March 2023 (audited)
Share
Share premium Capital Revenue
capital account reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=================================== ======= ======= ======== ======= ========
As at 31 March 2022 15,460 21,109 42,545 6,705 85,819
=================================== ======= ======= ======== ======= ========
Issue of Ordinary shares 72 302 - - 374
=================================== ======= ======= ======== ======= ========
(Loss)/profit for the period - - (6,615) 4,584 (2,031)
=================================== ======= ======= ======== ======= ========
Equity dividends - - - (4,249) (4,249)
----------------------------------- ------- ------- -------- ------- --------
As at 31 March 2023 15,532 21,411 35,930 7,040 79,913
----------------------------------- ------- ------- -------- ------- --------
Condensed Cash Flow Statement
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
=========================================== ============ ============ ==========
Net cash inflow from operating activities
=========================================== ============ ============ ==========
Dividend income received 3,301 3,134 5,478
=========================================== ============ ============ ==========
Options premium received 81 31 71
=========================================== ============ ============ ==========
Interest received from money market
funds 9 - 7
=========================================== ============ ============ ==========
Bank interest received 13 2 7
=========================================== ============ ============ ==========
Management fee paid (206) (212) (415)
=========================================== ============ ============ ==========
Other cash expenses (247) (200) (432)
------------------------------------------- ------------ ------------ ----------
Cash generated from operations 2,951 2,755 4,716
=========================================== ============ ============ ==========
Interest paid (503) (183) (684)
=========================================== ============ ============ ==========
Overseas tax paid (79) (88) (184)
------------------------------------------- ------------ ------------ ----------
Net cash inflow from operating activities 2,369 2,484 3,848
------------------------------------------- ------------ ------------ ----------
Cash flows from investing activities
=========================================== ============ ============ ==========
Purchases of investments (11,404) (5,731) (16,518)
=========================================== ============ ============ ==========
Sales of investments 12,200 5,100 16,199
------------------------------------------- ------------ ------------ ----------
Net cash inflow/(outflow) from investing
activities 796 (631) (319)
------------------------------------------- ------------ ------------ ----------
Cash flows from financing activities
=========================================== ============ ============ ==========
Equity dividends paid (2,416) (2,274) (4,249)
=========================================== ============ ============ ==========
Issue of Ordinary shares - 375 374
=========================================== ============ ============ ==========
Repurchase of ordinary shares into
treasury (720) - -
=========================================== ============ ============ ==========
Loan repayment - - (19,000)
=========================================== ============ ============ ==========
Loan drawdown - - 19,000
------------------------------------------- ------------ ------------ ----------
Net cash outflow from financing activities (3,136) (1,899) (3,875)
------------------------------------------- ------------ ------------ ----------
Net increase/(decrease) in cash and
cash equivalents 29 (46) (346)
------------------------------------------- ------------ ------------ ----------
Reconciliation of net cash flow to
movements in cash and cash equivalents
=========================================== ============ ============ ==========
Increase/(decrease) in cash and cash
equivalents as above 29 (46) (346)
=========================================== ============ ============ ==========
Net cash and cash equivalents at start
of period 1,176 1,483 1,483
=========================================== ============ ============ ==========
Effect of foreign exchange rate changes (39) 5 39
------------------------------------------- ------------ ------------ ----------
Cash and cash equivalents at end of
period 1,166 1,442 1,176
------------------------------------------- ------------ ------------ ----------
Notes to the Financial Statements
For the six months ended 30 September 2023
1. Accounting policies - Basis of accounting
The condensed interim financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS)
34 'Interim Financial Reporting', as adopted by the International
Accounting Standards Board (IASB), and interpretations issued by
the International Financial Reporting Interpretations Committee
of the IASB (IFRIC). They have also been prepared using the same
accounting policies applied for the year ended 31 March 2023 financial
statements, which were prepared in accordance with International
Financial Reporting Standards (IFRS) and received an unqualified
audit report.
The financial statements have been prepared on a going concern basis.
In accordance with the Financial Reporting Council's guidance on
'Going Concern and Liquidity Risk', the Directors have undertaken
a review of the Company's assets which primarily consist of a diverse
portfolio of listed equity shares and in most circumstances, are
realisable within a very short timescale.
2. Taxation
The taxation charge for the period represents withholding tax suffered
on overseas dividend income.
3. Dividends
The following table shows the revenue for each period less the dividends
declared in respect of the financial period to which they relate.
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2023 2022 2023
GBP'000 GBP'000 GBP'000
========================== ================= ================= =============
Revenue 2,358 2,316 4,584
============================== ================= ================= =============
Dividends declared (1,962)(A) (1,982)(B) (4,397)(C)
------------------------------ ----------------- ----------------- -------------
396 334 187
------------------------------ ----------------- ----------------- -------------
(A) Dividends declared relate to first two interim dividends (3.20p
each) in respect of the financial year 2023/24.
(B) Dividends declared relate to first two interim dividends (3.20p
each) in respect of the financial year 2022/23.
(C) Three interim dividends (3.20p each), and the final dividend
(4.60p) declared in respect of the financial year 2022/23.
4. Earnings per Ordinary share
==================================== ============ ============ ==========
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2023 2022 2023
GBP'000 GBP'000 GBP'000
==================================== ============ ============ ==========
Returns are based on the following
figures:
==================================== ============ ============ ==========
Revenue return 2,358 2,316 4,584
======================================== ============ ============ ==========
Capital return (1,782) (12,427) (6,615)
---------------------------------------- ------------ ------------ ----------
Total return 576 (10,111) (2,031)
---------------------------------------- ------------ ------------ ----------
Weighted average number of Ordinary
shares in issue 30,795,219 30,874,580 30,919,854
---------------------------------------- ------------ ------------ ----------
5. Net asset value per Ordinary share
The net asset value per Ordinary share and the net asset values
attributable to Ordinary shareholders at the period end were as
follows:
As at As at As at
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
==================================== ============ ============ ==========
Net assets per Condensed Balance
Sheet (GBP'000) 77,353 73,809 79,913
======================================== ============ ============ ==========
3.5% Cumulative Preference shares
of GBP1 each (GBP'000) (50) (50) (50)
---------------------------------------- ------------ ------------ ----------
Attributable net assets (GBP'000) 77,303 73,759 79,863
---------------------------------------- ------------ ------------ ----------
Number of Ordinary shares in issue 30,651,907 30,964,580 30,964,580
---------------------------------------- ------------ ------------ ----------
Net asset value per Ordinary share
(p) 252.20 238.20 257.92
---------------------------------------- ------------ ------------ ----------
The Company has a policy of calculating the net asset value per
Ordinary share based on net assets less an amount due to holders
of 3.5% Cumulative Preference shares of GBP1 each equating to GBP1
per share (GBP50,000), divided by the number of Ordinary shares
in issue.
6. Called up share capital
===========================================================================================
30 September 30 September 31 March 2023
2023 2022
============================ =================== =================== ===================
Number GBP'000 Number GBP'000 Number GBP'000
============================ ========== ======= ========== ======= ========== =======
Allotted, called up and
fully paid Ordinary shares
of 50 pence each:
============================ ========== ======= ========== ======= ========== =======
Balance brought forward 30,964,580 15,482 30,819,580 15,410 30,819,580 15,410
================================ ========== ======= ========== ======= ========== =======
Ordinary shares issued - - 145,000 72 145,000 72
================================ ========== ======= ========== ======= ========== =======
Ordinary shares bought back (312,673) (156) - - - -
-------------------------------- ---------- ------- ---------- ------- ---------- -------
Balance carried forward 30,651,907 15,326 30,964,580 15,482 30,964,580 15,482
-------------------------------- ---------- ------- ---------- ------- ---------- -------
Treasury shares:
============================ ========== ======= ========== ======= ========== =======
Ordinary shares bought back
to treasury 312,673 156 - - - -
-------------------------------- ---------- ------- ---------- ------- ---------- -------
Balance carried forward 312,673 156 - - - -
-------------------------------- ---------- ------- ---------- ------- ---------- -------
Allotted, called up and
fully paid 3.5% Cumulative
Preference shares of GBP1
each
============================ ========== ======= ========== ======= ========== =======
Balance brought forward
and carried forward 50,000 50 50,000 50 50,000 50
-------------------------------- ---------- ------- ---------- ------- ---------- -------
15,532 15,532 15,532
-------------------------------- ---------- ------- ---------- ------- ---------- -------
During the six months ended 30 September 2023, 312,673 Ordinary
shares were bought back to treasury at a total cost of GBP720,000.
No Ordinary shares were issued during the period (six months ended
30 September 2022 - 145,000 for proceeds of GBP374,000; year ended
31 March 2023 - 145,000 for proceeds of GBP374,000).
7. Capital reserve
The capital reserve reflected in the Condensed Balance Sheet at
30 September 2023 includes unrealised gains of GBP6,691,000 (30
September 2022 - unrealised gains of GBP2,800,000; 31 March 2023
- unrealised gains of GBP7,045,000) which relate to the revaluation
of investments held at the reporting date. The balance relates to
realised gains of GBP26,737,000 (30 September 2022 - GBP27,318,000;
31 March 2023 - GBP28,885,000).
8. Analysis of changes in financial liabilities
============================================================================
Six months Six months Year ended
ended ended
30 September 30 September 31 March 2023
2023 2022
GBP'000 GBP'000 GBP'000
============================== ============= ============= ==============
Opening balance at 1 April (18,951) (19,000) (19,000)
================================== ============= ============= ==============
Cashflow - 60 60
================================== ============= ============= ==============
Other movements(A) (6) (5) (11)
---------------------------------- ------------- ------------- --------------
Closing balance (18,957) (18,945) (18,951)
---------------------------------- ------------- ------------- --------------
(A) The other movements represent the amortisation of the loan
arrangement fees.
On 3 May 2022, the Company entered into a new five year GBP20 million
loan facility with The Royal Bank of Scotland International Limited,
London Branch. GBP10 million of the new loan facility has been drawn
down and fixed at an all-in interest rate of 3.903%. GBP9 million
of the facility has been drawn down on a short-term basis at an
all-in interest rate of 6.836%, maturing 4 October 2023. The new
loan facility matures on 30 April 2027.
9. Transactions with the Manager
The Company has an agreement with abrdn Fund Managers Limited ("aFML")
for the provision of management, secretarial, accounting and administration
services and for the carrying out of promotional activities in relation
to the Company.
The management fee is based on 0.45% per annum up to GBP100 million
and 0.40% per annum over GBP100 million, by reference to the net
assets of the Company and including any borrowings up to a maximum
of GBP30 million, and excluding commonly managed funds, calculated
monthly and paid quarterly. The fee is allocated 50% to revenue
and 50% to capital. The agreement is terminable on not less than
six months' notice. The total of the fees paid and payable during
the period to 30 September 2023 was GBP200,000 (30 September 2022
- GBP206,000; 31 March 2023 - GBP414,000) and the balance due to
aFML at the period end was GBP100,000. (30 September 2022 - GBP101,000;
31 March 2023 - GBP105,000). The Company held an interest in a commonly
managed investment trust, abrdn Smaller Companies Income Trust plc,
in the portfolio during the period to 30 September 2023 (30 September
2022 and 31 March 2023 - same). The value attributable to this holding
was excluded from the calculation of the management fee payable
by the Company.
The management agreement with aFML also provides for the provision
of promotional activities, which aFML has delegated to abrdn Investments
Limited. The total fees paid and payable in relation to promotional
activities were GBP20,000 (30 September 2022 - GBP20,000; 31 March
2023 - GBP40,000) and the balance due to aFML at the period end
was GBP20,000 (30 September 2022 - GBP20,000; 31 March 2023 - GBP10,000).
The Company's management agreement with aFML also provides for the
provision of company secretarial and administration services to
the Company; no separate fee was charged to the Company during the
period in respect of these services, which have been delegated to
abrdn Holdings Limited.
10. Segmental information
For management purposes, the Company is organised into one main
operating segment, which invests in equity securities and debt instruments.
All of the Company's activities are interrelated, and each activity
is dependent on the others. Accordingly, all significant operating
decisions are based upon analysis of the Company as one segment.
The financial results from this segment are equivalent to the financial
statements of the Company as a whole.
11. Fair value hierarchy
IFRS 13 'Fair Value Measurement' requires an entity to classify
fair value measurements using a fair value hierarchy that reflects
the significance of the inputs used in making the measurements.
The fair value hierarchy has the following levels:
Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1
that are observable for the assets or liability, either directly
(ie as prices) or indirectly (ie derived from prices); and
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The financial assets and liabilities measured at fair value in the
Condensed Balance Sheet are grouped into the fair value hierarchy
as follows:
Level Level Level Total
1 2 3
At 30 September 2023 Note GBP'000 GBP'000 GBP'000 GBP'000
===================================== ===== ====== ======= ======= ======= =========
Financial assets at fair value
through profit or loss
===================================== ===== ====== ======= ======= ======= =========
Quoted investments a) 94,570 - - 94,570
===================================== ================= ======= ======= ======= =========
Net fair value 94,570 - - 94,570
------------------------------------- ----------------- ------- ------- ------- ---------
Level Level Level Total
1 2 3
At 30 September 2022 Note GBP'000 GBP'000 GBP'000 GBP'000
===================================== ===== ====== ======= ======= ======= =========
Financial assets at fair value
through profit or loss
===================================== ===== ====== ======= ======= ======= =========
Quoted investments a) 91,390 - - 91,390
===================================== ================= ======= ======= ======= =========
Net fair value 91,390 - - 91,390
------------------------------------- ----------------- ------- ------- ------- ---------
Level Level Level Total
1 2 3
At 31 March 2023 Note GBP'000 GBP'000 GBP'000 GBP'000
===================================== ===== ====== ======= ======= ======= =========
Financial assets at fair value
through profit or loss
===================================== ===== ====== ======= ======= ======= =========
Quoted investments a) 96,655 - - 96,655
===================================== ================= ======= ======= ======= =========
Net fair value 96,655 - - 96,655
------------------------------------- ----------------- ------- ------- ------- ---------
a) Quoted investments. The fair value of the Company's quoted investments
has been determined by reference to their quoted bid prices at
the reporting date. Quoted investments included in Fair Value
Level 1 are actively traded on recognised stock exchanges.
12. Subsequent events
On 26 July 2023 the Company announced that it had agreed terms
with the board of abrdn Smaller Companies Income Trust plc ("aSCIT")
in respect of a proposed combination of the assets of the Company
with those of aSCIT. Shareholders were sent documentation in October
explaining that this combination was to be effected by way of
a scheme of reconstruction and winding up of aSCIT under section
110 of the Insolvency Act 1986 (the "Scheme") and the associated
transfer of the assets of aSCIT to the Company in exchange for
the issue of new Ordinary shares in the Company to those aSCIT
shareholders who rolled their shareholdings into the Company in
accordance with the Scheme.
Shareholders approved the Scheme proposals at the Company's General
Meeting held on 20 November 2023 and aSCIT's shareholders approved
the Scheme proposals at their General Meeting held on the same
day. The Scheme completed on 1 December. On that date the Company
issued 11,268,494 new Ordinary shares to aSCIT shareholders in
accordance with the Scheme. The new shares were admitted to trading
on 4 December 2023.
As part of the Scheme, since the end of the period the Company
has received an exceptional terminal dividend of GBP445,000 from
its holding in aSCIT.
The management fee arrangements of the Company are unchanged,
other than through the introduction of an administration fee of
GBP120,000 per annum plus VAT, payable to the Manager.
Further details are contained in the Chairman's Statement.
13. The financial information contained in this Half Yearly Financial
Report does not constitute statutory accounts as defined in Sections
434 - 436 of the Companies Act 2006. The financial information for
the six months ended 30 September 2023 and 30 September 2022 has
not been reviewed or audited by the Company's independent auditor.
The information for the year ended 31 March 2023 has been extracted
from the latest published audited financial statements which have
been filed with the Registrar of Companies. The report of the independent
auditor on those accounts contained no qualification or statement
under Section 498 (2), (3) or (4) of the Companies Act 2006.
14. This Half Yearly Financial Report was approved by the Board on 13
December 2023.
Alternative Performance Measures
Alternative performance measures are numerical measures of the Company's
current, historical or future performance, financial position or cash
flows, other than financial measures defined or specified in the applicable
financial framework. The Company's applicable financial framework includes
IAS and the AIC SORP. The Directors assess the Company's performance
against a range of criteria which are viewed as particularly relevant
for closed-end investment companies.
Discount to net asset value per Ordinary share
The difference between the share price and the net asset value per
Ordinary share expressed as a percentage of the net asset value per
Ordinary share.
30 September 31 March 2023
2023
=================================================== ========== ============ =============
NAV per Ordinary share (p) a 252.20 250.00
=================================================== ========== ============ =============
Share price (p) b 234.50 257.92
=================================================== ========== ============ =============
Discount (a-b)/a (7.0)% (3.1)%
--------------------------------------------------- ---------- ------------ -------------
Dividend yield
The annual dividend divided by the share price, expressed as a percentage.
30 September 31 March 2023
2023(A)
=================================================== ========== ============ =============
Annual dividend per Ordinary share (p) a 14.20 14.20
=================================================== ========== ============ =============
Share price (p) b 234.50 250.00
=================================================== ========== ============ =============
Dividend yield a/b 6.1% 5.7%
--------------------------------------------------- ---------- ------------ -------------
(A) Based on annual dividend declared
for previous year.
Net gearing
Net gearing measures total borrowings less cash and cash equivalents
divided by shareholders' funds, expressed as a percentage. Under AIC
reporting guidance, cash and cash equivalents includes net amounts
due to and from brokers at the period end as well as cash and short
term deposits.
30 September 31 March 2023
2023
=================================================== ========== ============ =============
Borrowings (GBP'000) a 18,957 18,951
============================================== =============== ============ =============
Cash (GBP'000) b 1,166 1,176
============================================== =============== ============ =============
Amounts due to brokers (GBP'000) c 85 -
============================================== =============== ============ =============
Amounts due from brokers (GBP'000) d - -
============================================== =============== ============ =============
Shareholders' funds (GBP'000) e 77,353 79,913
---------------------------------------------- --------------- ------------ -------------
Net gearing (a-b+c-d)/e 23.1% 22.2%
---------------------------------------------- --------------- ------------ -------------
Ongoing charges
The ongoing charges ratio has been calculated in accordance with guidance
issued by the AIC as the total of investment management fees and administrative
expenses and expressed as a percentage of the average daily net asset
values published throughout the year. The ratio for 30 September 2023
is based on forecast ongoing charges for the year ending 31 March 2024.
30 September 31 March 2023
2023
=================================================== ========== ============ =============
Investment management fees (GBP'000) 400 414
=================================================== ========== ============ =============
Administrative expenses (GBP'000) 476 417
=================================================== ========== ============ =============
Less: non-recurring charges(A) (GBP'000) (24) -
=================================================== ========== ============ =============
Ongoing charges (GBP'000) 852 831
=================================================== ========== ============ =============
Average net assets (GBP'000) 78,175 80,617
--------------------------------------------------- ---------- ------------ -------------
Ongoing charges ratio (excluding look-through
costs) 1.09% 1.03%
--------------------------------------------------- ---------- ------------ -------------
Look-through costs(B) 0.17% 0.14%
--------------------------------------------------- ---------- ------------ -------------
Ongoing charges ratio (including look-through
costs) 1.26% 1.17%
--------------------------------------------------- ---------- ------------ -------------
(A) Comprises promotional activity fees not expected to recur.
(B) Calculated in accordance with AIC guidance issued in October 2020
to include the Company's share of costs of holdings in investment companies
on a look-through basis.
The ongoing charges ratio provided in the Company's Key Information
Document is calculated in line with the PRIIPs regulations which, amongst
other things, includes the cost of borrowings and transaction costs.
Total return
NAV and share price total returns show how the NAV and share price
has performed over a period of time in percentage terms, taking into
account both capital returns and dividends paid to shareholders. Share
price and NAV total returns are monitored against open-ended and closed-ended
competitors, and the Benchmark, respectively.
Share
Six months ended 30 September 2023 NAV Price
=================================================== ========== ============ =============
Opening at 1 April 2023 a 257.92p 250.00p
=================================================== ========== ============ =============
Closing at 30 September 2023 b 252.20p 234.50p
=================================================== ========== ============ =============
Price movements c=(b/a)-1 (2.2)% (6.2)%
=================================================== ========== ============ =============
Dividend reinvestment(A) d 3.1% 3.1%
--------------------------------------------------- ---------- ------------ -------------
Total return c+d 0.9% (3.1)%
--------------------------------------------------- ---------- ------------ -------------
Share
Year ended 31 March 2023 NAV Price
=================================================== ========== ============ =============
Opening at 1 April 2022 a 278.29p 279.00p
=================================================== ========== ============ =============
Closing at 31 March 2023 b 257.92p 250.00p
=================================================== ========== ============ =============
Price movements c=(b/a)-1 (7.3)% (10.4)%
=================================================== ========== ============ =============
Dividend reinvestment(A) d 5.1% 4.9%
--------------------------------------------------- ---------- ------------ -------------
Total return c+d (2.2)% (5.5)%
--------------------------------------------------- ---------- ------------ -------------
(A) NAV total return involves investing the net dividend in the NAV
of the Company with debt at fair value on the date on which that dividend
goes ex-dividend. Share price total return involves reinvesting the
net dividend in the share price of the Company on the date on which
that dividend goes ex-dividend.
Please note that past performance is not necessarily a guide to
the future and that the value of investments and the income from
them may fall as well as rise. Investors may not get back the
amount they originally invested
By order of the Board
abrdn Holdings Limited
Company Secretary
13 December 2023
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deemed to form) part of this announcement.
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END
IR FFWFWEEDSEDE
(END) Dow Jones Newswires
December 13, 2023 02:00 ET (07:00 GMT)
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