TIDMCHI TIDMCHIB TIDMCHIU
RNS Number : 2553B
CT UK High Income Trust PLC
01 June 2023
To: RNS
From: CT UK High Income Trust PLC
Date: 1 June 2023
LEI: 213800B7D5D7RVZZPV45
Statement of Audited Results for the year ended 31 March
2023
Financial Highlights
-- Distribution yield(1) of 6.7% on Ordinary shares at 31 March
2023, compared to the yield on the FTSE All-Share Index of 3.6%.
Total dividends increased by 1.1% to 5.51p per Ordinary share
compared to the prior year.
-- Distribution yield(1) of 6.5% on B shares at 31 March 2023,
compared to the yield on the FTSE All-Share Index of 3.6%. Total
capital repayments increased by 1.1% to 5.51p per B share compared
to the prior year.
-- Net asset value total return(1) per share for the financial
year was -0.4%, compared to the total return of the Benchmark(2) of
+2.9%.
-- Ordinary share price total return(1) per share for the
financial year was +0.6%, compared to the total return of the
Benchmark(2) of +2.9%.
-- B share price total return(1) per share for the financial
year was +2.3% compared to the total return of the Benchmark(2) of
+2.9%.
(1) Yield and total return - See Alternative Performance
Measures
(2) Benchmark - From launch on 1 March 2007, the Company's
benchmark index was the FTSE All-Share Capped 5% Index. Following
shareholder approval at the Company's AGM on 5 July 2018, the
benchmark was changed to the FTSE All-Share Index.
Chairman's Statement
"Tenth consecutive year of dividend/capital repayment increases
and at 31 March 2023 the Ordinary shares and B shares had yields of
6.7% and 6.5% respectively."
I am pleased to present the first annual results of CT UK High
Income Trust PLC since becoming the Company's Chairman upon the
retirement of John Evans at the conclusion of the 2022 AGM. I have
put on record my thanks to John for his nine years of unswerving
service to shareholders and am pleased to reiterate my appreciation
for his guidance and leadership.
The year under review has been yet another difficult one for
investors in conventional equity investments. The unprovoked
invasion by Russia into Ukraine's territory has become a full-on
war which, apart from the tragic and needless loss of life, has
created and exacerbated global price rises of energy, commodities,
raw materials, grain and most other foodstuffs leading to severe
inflationary pressures. This has become a global problem and the UK
has not escaped its effects with headline inflation exceeding 10%.
The Bank of England was slow to acknowledge the threat of
escalating prices to the stability of the economy but it is
expected that, after twelve rises in Bank interest rates to 4.5%,
its actions will have the desired effect of reining in the beast
before the calendar year end. Meanwhile, full employment has been
maintained and recession avoided so, being an optimist, I am
prepared to say that I think the worst is behind us.
Against this backdrop, managing an investment company investing
predominantly in a differentiated but concentrated portfolio of
UK-quoted equities for income and capital growth has not been a
walk in the park. Your Portfolio Manager, Philip Webster, deserves
due credit for maintaining his focus during what has now been a
trying three years. He has taken positions in quality stocks at
depressed prices over the last few months and is continuing to see
other opportunities. Your Board has the utmost confidence in Philip
to deliver income and capital returns over the coming years.
Performance
In the year to 31 March 2023 your Company produced a Net Asset
Value ('NAV') total return of -0.4% versus the total return from
the FTSE All-Share Index, the benchmark index, of +2.9%. Whilst it
is disappointing to lag the index, given the backdrop I have
described, the shortfall is not unexpected. Philip goes into his
usual detail on the portfolio holdings in the Manager's Review but
the Board is well aware and supportive of what he is aiming to
achieve by investing in a concentrated number of positions,
differentiated from the benchmark index. This can lead to the
portfolio's performance being periodically at variance with that of
the benchmark index when, say, energy companies (to which the
Company has no exposure but tend to be large and thus in the index)
see their share prices increase sharply purely on the back of
rising wholesale costs of oil and gas due to the war in Ukraine. On
the positive side, however, not being bound to invest solely to
reflect index constituents, offers many opportunities for superior
growth prospects.
Share Price Performance and Discount to NAV
At the financial year end, the Company's Ordinary share and B
share prices stood at discounts to the net asset value of 8.9% and
6.1% respectively. These were tighter than at 31 March 2022 and
consequently, the share price total return for the Ordinary shares
and B shares was +0.6% and +2.3% respectively. The average discount
levels at which the Company's Ordinary shares and B shares traded
relative to net asset value in the year were 7.5% and 4.3%
respectively.
Dividends and Capital Repayments
Your Board recognises the importance of dividends to
shareholders and has utilised the Company's revenue reserve to
maintain and increase dividend payments to Ordinary shareholders in
recent years and has done so again in the year to 31 March 2023.
Total distributions to shareholders increased by 1.1% to 5.51p per
share compared to the previous year. In order to pay this total
dividend to Ordinary shareholders, GBP497,000 was drawn from the
Company's revenue reserve. After payment of the fourth interim
dividend on 5 May 2023, the revenue reserve is GBP2.4 million,
representing 2.83p per Ordinary share.
Your Company has now increased its distribution to shareholders
in each financial year since 2013. The total dividend/capital
repayment for the year to 31 March 2023 represented a yield of 6.7%
and 6.5% based on the Ordinary share price and B share price of
82.0p and 84.5p respectively at 31 March 2023.
As I mentioned in the Company's Interim Report, it is the
Board's intention to rebuild the revenue reserve and return to a
covered dividend as soon as practicable.
Gearing
As at the end of the year under review, the Company had a total
borrowing facility of GBP15 million through an unsecured Revolving
Credit Facility with The Royal Bank of Scotland International
Limited. Your Board believes that an investment company should use
gearing to enhance returns to shareholders whenever possible and
encourages the Portfolio Manager to use his discretion accordingly.
As at the year end, GBP12 million of this facility had been drawn
down and invested in quality stocks including during one of the
market's increasingly common "risk-off" periods, hence at
advantageous prices and decent yields. More details can be found in
the Manager's Review.
Responsible Investment
Environmental, Social and Governance ('ESG') engagement is an
activity in which your Manager has a long and respected record of
achievement and these considerations lie at the core of your
Manager's investment process. Our approach to Responsible
Investment is set out in the Annual Report and Financial Statements
and illustrates the engagement the Manager has had with investments
within our portfolio.
Board Change
As mentioned in my Interim Statement, I am pleased to report
that Angus Pottinger joined the Board as a non-executive Director
with effect from 24 November 2022. He has huge experience in the
investment world and over 22 years working directly with investment
companies as Head of Invesco's accounting, company secretariat and
administration functions. His deep knowledge of the sector and
relevant experience will be of direct benefit to shareholders.
Manager and Name Change
As previously reported, Columbia Threadneedle Investments, part
of Ameriprise Financial acquired BMO's EMEA asset management
business ('BMO GAM (EMEA)'), which included your Company's Manager
('BMO Investment Business Limited'). The rebranding of the BMO GAM
(EMEA) business was completed towards the start of July 2022 and
your Company's Board decided that continuing to align with the
brand of the Manager and its savings plans would avoid unnecessary
confusion.
Accordingly, on 29 June 2022, your Company therefore announced
that it had changed its name to CT UK High Income Trust PLC with
immediate effect. The Company's website address was also changed to
ctukhighincome.co.uk and its trading instrument display mnemonics
("TIDM") changed to CHI, CHIB and CHIU for the Company's Ordinary
shares, B shares and Units respectively.
There has been no change to the personnel running the activities
of your Company in terms of both portfolio management and
administration.
Annual General Meeting (AGM)
The AGM will be held at 12 noon on 20 July 2023 at Exchange
House, Primrose Street, London EC2A 2NY. It is an opportunity for
shareholders to engage with the Board and Manager and I hope you
will be able to attend.
Outlook
After two years of COVID and dealing with its aftermath, the
world was plunged into further uncertainty by Russia. The effects
on shareholder returns have been magnified in both directions over
that three-year period, first fueled by a total change in working
practices amid massive (and expensive) Government support packages
and then through rising energy prices and supply chain shortages
leading to yet more (expensive) support, especially for the
vulnerable and elderly. Added to this, in the UK came the advent of
three Prime Ministers in a matter of weeks; the haphazard policy
announcements that ensued caused serious disquiet in the gilt
market which has only recently subsided.
A long period of near-zero interest rates probably led many to
believe that borrowing money at such levels was the norm and
unlikely to change anytime soon. The slowly dawning realisation
that interest rates had to rise to defeat inflation has had the
anticipated effect on the country but, miraculously, has not
collapsed the economy, regardless of the inevitable squeeze on
household budgets, or affected employment numbers as businesses
still find it difficult to fill vacancies. Nor has it led to
recession or to a stock market rout.
However, uncertainty is always the enemy and whilst the
resilience of all the above is commendable, a period of calm in the
wider world and stock markets in particular would be welcome and
possibly key to making positive headway. Given war is on Europe's
doorstep and the rhetoric more alarming by the day, it is all the
more remarkable that the UK's FTSE 100 index recently hit an
all-time high.
I sound all doom and gloom and I really don't mean to be. It is
likely that interest rates and inflation have peaked with the
latter forecast to be nearer 5% by the end of 2023. This should
help resolve many of the difficulties currently being experienced
brought about by the likes of soaring energy prices, now thankfully
abating, and wage demands, with more realistic settlements likely
to be achieved. Your Board oversees a Portfolio Manager dedicated
to the task of securing growth in capital and income for
shareholders and he works for an organisation that supplies all the
resources he needs to carry out that objective. The Company has
changed in many ways over the six years I have been on the Board,
but I firmly believe - as do my fellow Directors - that it is in
the best shape possible, with a balanced but differentiated and
concentrated portfolio of quality stocks, to achieve the Company's
objectives over the coming years.
As ever, thank you for being a shareholder in CT UK High Income
Trust PLC.
Andrew Watkins
Chairman
31 May 2023
Manager's Review
There is no doubt that this has been another challenging year to
navigate. I'm beginning to sound like a broken record as this was
exactly what I said in the 2021 and 2022 Annual Report. What I can
say is that every year has been totally unique; first with the
Covid pandemic, then the Ukraine war and now a cost-of-living
crisis. This is also the first time in over a decade where we have
seen interest rates closer to longer term historic averages, which
will have a slow but significant impact on consumer spending. This
has brought with it considerable debate about whether or not the UK
experiences a mild slowdown rather than a hard recession.
UK politics has also played a significant part in the turbulence
we have seen over the last year. In September, the appointment of
Liz Truss as Prime Minister was the start of what was to be seen as
an unprecedented time in UK politics, with three Prime Ministers in
as many months. The demise of Truss was driven by Chancellor Kwasi
Kwarteng's ill-conceived mini-budget, which was received very
poorly by the markets. The bond market took fright from the initial
GBP45 billion tax giveaway which was seen as fiscally
irresponsible, sending UK Gilts and the pound into freefall. The
ensuing crisis of confidence led to her swift replacement by Rishi
Sunak, with Jeremy Hunt appointed as his new Chancellor. According
to many commentators, the Chancellor, faced a 'politically
impossible' budget U-turn, but one that has ultimately stabilised
the economy. His package consisted of GBP30 billion in spending
cuts and a massive GBP25 billion increase in taxes. There was help
for the poorest, with benefits and pensions being increased in line
with inflation, while manifesto spending plans that had been
promised, were scrapped as they sought to balance the books. The
budget has helped the UK bond yield recover, a key tenet for the
mortgage market. We have also seen the pound recover, another
positive sign that the UK is deemed to be on a firmer footing.
Events of the last few weeks in March, with the collapse of
Silicon Valley Bank ('SVB') and Credit Suisse have sent shockwaves
through the banking sector. SVB was the 16th largest bank in the US
with $209 billion of assets, and the 2nd largest bank failure in US
history. Regulators had to act swiftly to stabilise the system;
deposit guarantees, and additional lines of liquidity being offered
to mitigate any contagion risk. While this event seems to have been
contained it has yet again raised concerns about the fragility of
the banking system and whether this failure is the start of
something more significant.
You would expect these headlines would have caused investors to
shy away from equity markets. Quite the reverse is true, with the
FTSE All-Share close to all-time highs. This does mask vast
differences when you break the market down by size and sector,
which we will come back to later, but evidence suggests that the UK
equity market remains an attractive proposition for global
investors.
If further corroboration was needed, we have also seen private
equity takeover activity rise. Offers have been made for Wood
Group, Network International, Dechra Pharmaceuticals and, in
mid-April, Apollo tabled an offer for THG, which is one of the
Company's holdings. With the strength of the US dollar over the
last few years and depressed valuations, it's not a surprise to see
a rise in dealmaking as private equity firms look to deploy
capital.
Performance
The net asset value ('NAV') total return of the Company declined
0.4% over the year to 31 March 2023, underperforming the 2.9% total
return from the FTSE All-Share index. As mentioned previously, size
has been a major contributor to performance with some of the more
defensive, or commodity exposed sectors, performing well post the
outbreak of the Ukraine war. The FTSE 100 rose 5.4% (total return)
over the Company's financial year. Meanwhile, the FTSE 250 index of
mid-market capitalised stocks fell 7.9% and the FTSE Small Cap
(ex-investment trusts) index a more extreme 12.9% decline (all
total return).
The Company's investment portfolio has been constructed to have
a larger focus on the mid-market, where we see better quality
assets and growth over the medium-term, but as we discussed in the
2022 Annual Report, there will be periods where the performance of
the benchmark behemoths can significantly outweigh the performance
of these smaller index constituents.
An analysis of the investment portfolio by index is provided in
the Annual Report and Financial Statements and shows its
significant exposure down the market cap spectrum. Including AIM
and non-index positions, this now accounts for nearly 40% of our
invested assets.
When you include the 15% from our European (overseas) holdings
approximately 50% of the exposure is to businesses outside the FTSE
100. This is by design, differentiating your Company from some of
our more index-tracking peers.
At a stock specific level; not owning BP, Unilever, AstraZeneca,
Shell and HSBC have been a 4.3% drag in relative performance over
the last year. I have consistently defended this stance on quality
grounds, when it comes to the oil majors. It has taken a war and
energy crisis for these names to deliver decent returns on capital
employed, a level which I don't believe is sustainable - unless of
course you can provide assurance that the oil price is going back
to $100 a barrel. I see better quality businesses than Unilever in
the staples sector. The outlier in these names is AstraZeneca. This
has performed significantly better than I thought it would, and one
I can look back and concede I was wrong to sell.
I am not going to blame the shape of the index for the Company's
performance. The way the investment portfolio is built means it
will always perform differently to the index, and despite the 4.3%
headwind, I'm happy with the underlying portfolio performance this
year and the growth outlook. We have used the recent volatility to
buy quality businesses at valuations that have not been seen for
years. Over our financial year, additions have included Rotork,
Hiscox, Hargreaves Lansdown, OSB Group, Persimmon and Schneider
Electric. These are all market leaders in their respective fields,
and businesses that have structural growth to deliver returns for
years to come. They also, in several cases, have attractive and
growing dividend yields, which are supportive of the revenue we
generate and the high dividend yield of the Company.
Many of the Company's holdings have had a very good year,
including Richemont, with luxury goods spending continuing to
recover sharply post the pandemic. This will be buoyed by the
opening of China which has already seen some of Richemont's peers
deliver sales growth ahead of expectations. UK industrial, Rotork,
has also delivered much better results since initiation, allowing
the share price to rise over 30% in the last year. OSB Group has
been another recent new position that has performed ahead of
expectations. The buy-to-let lender, to the professional investor
market, has seen growth hold up better than the market expected.
This allowed them to pay a special dividend with their full year
results, on top of an already high 7% dividend yield.
Dividends
Calendar 2022 saw UK dividends rise 8.0% to GBP94.3 billion, but
this figure was held back by a one-third decline in one-off special
payments. This was in part mitigated by a weak pound which boosted
the payouts by GBP3.8 billion. Record mining dividends accounted
for GBP1 in every GBP6 distributed, although payouts fell sharply
towards the second half of the calendar year. Banks made the
largest contribution to growth, followed by the oil majors. When
you look at the underlying statistics though (excluding special
dividends) the FTSE 100 dividends rose 14.8%, while the Mid-250
index, where the Company has a larger exposure, saw growth of
23.8%. This is one of the major attractions of our mid-cap
exposure, the compounding effect of earnings and dividend growth at
the right point in the cycle.
Discussions with the Company's Board at the outset of the
financial year were focused on capital growth and returning the
Company towards a covered dividend. The focus has therefore been
two-fold, adding quality at the right price, mentioned above,
whilst also adding to the revenue. Whilst it may appear that the
revenue has been flat, the current financial year had GBP557,000
less in special dividends including those paid by Rio Tinto and
Berkeley Group in the prior financial year.
I have sold several of the zero yielding names; Melrose, Just
Eat Takeaway and Scout24 and also sold Prudential and Haleon, the
latter following the split from GlaxoSmithKline. I wasn't
comfortable adding to Haleon given the level of its gearing and
lack of a dividend, even though they have defensive earnings
qualities from their over-the-counter pharmacy sales. I also
reduced some of the better performers in the investment portfolio
where yields had contracted, such as Deutsche Boerse, Richemont,
Intermediate Capital and Beazley. We used these proceeds to build
up positions in Legal & General, Phoenix Group and OSB Group,
alongside some of the newer additions. At acquisition these three
holdings yielded 8.0%, 9.0% and 7.0% respectively, almost twice the
level of the FTSE All-Share of 3.6% at 31 March 2023.
The final, and very important piece of the jigsaw is the
gearing. With interest rates set to rise we took the tough decision
to reduce gearing in December 2021. While strategically this was
the right decision, we sacrificed revenue to protect capital. With
rates now closer to the possible peak, and post the collapse of
SVB, we felt there was an opportunity to raise our gearing. We used
this additional capital to opportunistically add to our diversified
financial holdings, which had been caught in the crossfire of the
banking sector sell off and where declines felt unwarranted and
valuations were cheap. At 31 March 2023 we have drawn down GBP12
million of the GBP15 million facility, which will help increase the
level of revenue for the year to 31 March 2024.
The dividend outlook for 2023 is however less rosy, according to
Link Asset Monitor. They are forecasting headline payouts to
decline 2.8%, and with sales and profits under pressure from
inflation, they expect special dividends to be down further. It is
difficult to quantify this as we have very little line of sight on
earnings at this stage of the year. I am however encouraged that
the changes I have made in the investment portfolio have increased
the number of holdings with improved dividend cover and strong
balance sheets which should stand the Company in good stead to
weather a downturn.
Outlook
I have consistently said that this year will likely see investor
sentiment wax and wane. This has so far played out with markets
starting the year very strongly. In the first two months of 2023,
the FTSE All-Share rose 6% (total return), before being hit by the
collapse of SVB. This weakness has, however, been short-lived with
the FTSE All-Share close to highs, as investors look through the
current volatility.
Commentators remain nervous about the impact of a recession,
which may well be worse in the US than it is in Europe. It would be
foolish to believe we would be immune, although China has the power
to support growth as its economy reopens. While these are all
interesting topics to debate, building an investment portfolio to
manage this from a top-down perspective is an exceptionally
difficult exercise. Given the work we have done on the investment
portfolio and the qualities visible in the business models we are
comfortable with positioning. There is a scenario where the
behemoths continue to outperform as investors seek the relative
safe haven of these mega-caps, but how long will it last? The
follow-on question is; is it possible to be good (or fortunate)
enough to time this and turn the portfolio to quality mid-caps that
will outperform when we do see a rally down the cap scale?
To try and defensively manage through what might be a tough
period is thus less preferable to focusing on quality assets at the
right valuation. I prefer the latter strategy and to seek out the
relative safety of quality business models with strong balance
sheets and pricing power. These will be the ultimate winners. I
can't tell you exactly when this will turn, but when it does, the
portfolio is well placed to capitalise on the upside.
Philip Webster
Portfolio Manager
Columbia Threadneedle Investment Business Limited
31 May 2023
Statement of Comprehensive Income
Year to 31 March 2023
Note Revenue Capital Total
GBP'000 GBP'000 GBP'000
--------------------------------------- ----- -------- ---------- ----------
Capital losses on investments
Losses on investments held at
fair value through profit or
loss - (4,177) (4,177)
Exchange gains/(losses) 3 (16) (13)
Revenue
Income 5,007 - 5,007
Total income 5,010 (4,193) 817
--------------------------------------- ----- -------- ---------- ----------
Expenditure
Investment management fee (183) (427) (610)
Other expenses (521) - (521)
Total expenditure (704) (427) (1,131)
--------------------------------------- ----- -------- ---------- ----------
Profit/(loss) before finance
costs and tax 4,306 (4,620) (314)
Finance costs
Interest on bank loans (67) (155) (222)
Total finance costs (67) (155) (222)
--------------------------------------- ----- -------- ---------- ----------
Profit/(loss) before tax 4,239 (4,775) (536)
Taxation (47) - (47)
Profit/(loss) and total comprehensive
income/(expense) for the year 4,192 (4,775) (583)
Earnings per share 2 3.62p (4.12)p (0.50)p
--------------------------------------- ----- -------- ---------- ----------
The total column of this statement represents the Company's
Income Statement and Statement of Comprehensive Income, prepared in
accordance with UK-adopted International Accounting Standards.
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.
No operations were acquired or discontinued in the year.
Statement of Comprehensive Income
Year to 31 March 2022
Note Revenue Capital Total
GBP'000 GBP'000 GBP'000
--------------------------------------- ----- -------- ---------- ----------
Capital losses on investments
Losses on investments held at
fair value through profit or
loss - (1,087) (1,087)
Exchange gains - 5 5
Revenue
Income 5,013 - 5,013
Total income 5,013 (1,082) 3,931
--------------------------------------- ----- -------- ---------- ----------
Expenditure
Investment management fee (227) (529) (756)
Other expenses (506) - (506)
Total expenditure (733) (529) (1,262)
--------------------------------------- ----- -------- ---------- ----------
Profit/(loss) before finance
costs and tax 4,280 (1,611) 2,669
Finance costs
Interest on bank loans (78) (183) (261)
Total finance costs (78) (183) (261)
--------------------------------------- ----- -------- ---------- ----------
Profit/(loss) before tax 4,202 (1,794) 2,408
Taxation (24) - (24)
Profit/(loss) and total comprehensive
income/(expense) for the year 4,178 (1,794) 2,384
--------------------------------------- ----- -------- ---------- ----------
Earnings per share 2 3.61p (1.55)p 2.06p
--------------------------------------- ----- -------- ---------- ----------
The total column of this statement represents the Company's
Income Statement and Statement of Comprehensive Income, prepared in
accordance with UK-adopted International Accounting Standards.
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.
No operations were acquired or discontinued in the year.
Statement of Financial Position
as at 31 March
2023 2022
Note GBP'000 GBP'000
------------------------------ ----- ---------- ----------
Non-current assets
Investments held at fair
value through profit or
loss 113,018 111,362
------------------------------- ----- ---------- ----------
Current assets
Receivables 1,394 3,210
Cash and cash equivalents 2,288 4,686
------------------------------- ----- ---------- ----------
3,682 7,896
------------------------------ ----- ---------- ----------
Total assets 116,700 119,258
------------------------------- ----- ---------- ----------
Current liabilities
Payables (529) (543)
Bank loan (12,000) (7,500)
(12,529) (8,043)
------------------------------ ----- ---------- ----------
Total liabilities (12,529) (8,043)
------------------------------- ----- ---------- ----------
Net assets 104,171 111,215
------------------------------- ----- ---------- ----------
Equity attributable to
equity shareholders
Share capital 134 134
Share premium 153 153
Capital redemption reserve 5 5
Buy back reserve 80,315 80,394
Special capital reserve 10,012 11,704
Capital reserves 9,823 14,598
Revenue reserve 3,729 4,227
------------------------------- ----- ---------- ----------
Equity shareholders' funds 104,171 111,215
------------------------------- ----- ---------- ----------
Net asset value per Ordinary
share 6 89.97p 95.97p
Net asset value per B
share 6 89.97p 95.97p
Cash Flow Statement
for the year to 31 March
Year to Year to
31 March 31 March
2023 2022
GBP'000 GBP'000
-------------------------------------------- ---------- ----------
Cash flows from operating activities
(Loss)/profit before taxation (536) 2,408
Adjustments for:
Losses on investments held at fair
value through profit or loss 4,177 1,087
Exchange losses/(gains) 13 (5)
Interest income (70) (5)
Interest received 70 5
Dividend income (4,937) (5,008)
Dividend income received 4,698 4,935
Increase in receivables (64) (5)
(Decrease)/increase in payables (15) 2
Finance costs 222 261
Overseas tax suffered (76) (49)
-------------------------------------------- ---------- ----------
Cash flows from operating activities 3,482 3,626
-------------------------------------------- ---------- ----------
Cash flows from investing activities
Purchases of investments (45,856) (10,594)
Sales of investments 42,153 19,264
-------------------------------------------- ---------- ----------
Cash flows from investing activities (3,703) 8,670
-------------------------------------------- ---------- ----------
Cash flows before financing activities (221) 12,296
Cash flows from financing activities
Dividends paid on Ordinary shares (4,690) (4,540)
Capital returns paid on B shares (1,692) (1,636)
Shares purchased for treasury (79) -
Interest on bank loans (203) (249)
Drawdown/(repayment) of loan 4,500 (3,500)
Cash flows from financing activities (2,164) (9,925)
-------------------------------------------- ---------- ----------
Net (decrease)/increase in cash and
cash equivalents (2,385) 2,371
Cash and cash equivalents at the beginning
of the year 4,686 2,310
Effect of movement in foreign exchange (13) 5
-------------------------------------------- ---------- ----------
Cash and cash equivalents at the
end of the year 2,288 4,686
Represented by:
Cash at bank 199 77
Short term deposits 2,089 4,609
-------------------------------------------- ---------- ----------
2,288 4,686
-------------------------------------------- ---------- ----------
Statement of Changes in Equity
for the year to 31 March 2023
Capital Capital
Capital Special Reserve Reserve
Share Share Redemption Buy Capital - - Revenue
Capital Premium Reserve Back Reserve Investments Investments Reserve Total
Reserve sold held
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- --------- ------------ --------- --------- ------------ ------------ --------- --------
Balance as at
31 March
2022 134 153 5 80,394 11,704 8,001 6,597 4,227 111,215
--------------- --------- --------- ------------ --------- --------- ------------ ------------ --------- --------
Movement
during the
year
ended 31 March
2023
(Loss)/profit
for the
year - - - - - (36) (4,739) 4,192 (583)
Total
comprehensive
income/
(expense) for
the year - - - - - (36) (4,739) 4,192 (583)
--------------- --------- --------- ------------ --------- --------- ------------ ------------ --------- --------
Transactions
with owners
of the Company
recognised
directly in
equity
Shares bought
back for
treasury - - - (79) - - - - (79)
Dividends paid
on Ordinary
shares - - - - - - - (4,690) (4,690)
Capital
returns paid
on
B shares - - - - (1,692) - - - (1,692)
Balance as at
31 March
2023 134 153 5 80,315 10,012 7,965 1,858 3,729 104,171
--------------- --------- --------- ------------ --------- --------- ------------ ------------ --------- --------
Statement of Changes in Equity
for the year to 31 March 2022
Capital Capital
Capital Special Reserve Reserve
Share Share Redemption Buy Capital - - Revenue
Capital Premium Reserve Back Reserve Investments Investments Reserve Total
Reserve sold held
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- --------- ------------ --------- --------- ------------ ------------ --------- --------
Balance as at
31 March
2021 134 153 5 80,394 13,340 3,083 13,309 4,589 115,007
--------------- --------- --------- ------------ --------- --------- ------------ ------------ --------- --------
Movement
during the
year
ended 31 March
2022
Profit/(loss)
for the
year - - - - - 4,918 (6,712) 4,178 2,384
Total
comprehensive
income/
(expense) for
the year - - - - - 4,918 (6,712) 4,178 2,384
--------------- --------- --------- ------------ --------- --------- ------------ ------------ --------- --------
Transactions
with owners
of the Company
recognised
directly in
equity
Dividends paid
on Ordinary
shares - - - - - - - (4,540) (4,540)
Capital
returns paid
on
B shares - - - - (1,636) - - - (1,636)
Balance as at
31 March
2022 134 153 5 80,394 11,704 8,001 6,597 4,227 111,215
--------------- --------- --------- ------------ --------- --------- ------------ ------------ --------- --------
CT UK High Income Trust PLC
Principal Risks and Uncertainties and Viability Statement
As an investment company investing primarily in listed
securities, most of the Company's principal risks and uncertainties
that could threaten the achievement of its objective, strategy,
future performance, liquidity and solvency are market-related.
A summary of the Company's risk management and internal control
arrangements is included within the Report of the Audit Committee
in the Annual Report and Financial Statements. By means of the
procedures set out in that summary, the Board has established an
ongoing process for identifying, evaluating and managing the
significant risks faced by the Company. The Board also considers
emerging risks which might affect the Company and related updates
from the Manager on such risks are also considered. During the year
emerging risks included the outlook for inflation and the war in
Ukraine. Any emerging risks that are identified and that are
considered to be of significance would be included in the Company's
risk register with any mitigations. These significant risks,
emerging risks and other risks are regularly reviewed by the Audit
Committee and the Board. While the effect of the COVID-19 pandemic
appears to have eased, increased market volatility due to recent
macroeconomic and geopolitical concerns have been considered and is
referred to in Financial Risk. They have also regularly reviewed
the effectiveness of the Company's risk management and internal
control systems for the period.
As was explained in the 31 March 2022 Annual Report and
Financial Statements, the Company's Manager, which was part of BMO
GAM (EMEA) was acquired by Ameriprise and the integration of its
business with Columbia Threadneedle Investments is now well
advanced. The Board looks favourably upon this transaction and
there has been little change for your Company. Nevertheless, an
acquisition such as this introduces some uncertainty, until the
integration of systems is fully implemented. A critical milestone
is the move to a new order management system, Aladdin, which is
widely regarded as market leading. Therefore the Board will
continue to monitor this risk closely.
The principal risks and uncertainties faced by the Company, and
the Board's mitigation approach, are described below.
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.
Increased uncertainty in markets since the COVID-19 pandemic,
the war in Ukraine and macroeconomic and geopolitical concerns has
led to volatility in the Company's NAV.
Climate change is likely to have an impact on some of our
investee companies in the coming years potentially affecting their
operating models for example, supply chains and energy costs.
Increase in overall risk during the year, given the war in
Ukraine and macroeconomic and geopolitical concerns.
Mitigation:
The Board regularly considers the composition and
diversification of the Investment Portfolio and considers
individual stock performance together with purchases and sales of
investments. Investments and markets are discussed in detail with
the Manager on a regular basis.
Engagement on environmental, social and governance matters is
undertaken by the Manager and its approach is explained in the
Annual Report and Financial Statements.
The Board has, in particular, considered the impact of
heightened market volatility since the COVID-19 pandemic,
macroeconomic and geopolitical concerns and inflation. As a
closed-end investment company, it is not constrained by asset sales
to meet redemptions so can remain invested through volatile market
conditions and is well suited to investors seeking longer term
returns.
An explanation of these risks and the way in which they are
managed are contained in the notes to the financial statements.
Investment and strategic risk .
Incorrect strategy, asset allocation, stock selection,
inappropriate capital structure, insufficient monitoring of costs,
failure to maintain an appropriate level of discount/premium and
the use of gearing could all lead to poor returns for shareholders
including impacting the capacity to pay dividends.
Increase in overall risk during the year, given the war in
Ukraine and macroeconomic and geopolitical concerns .
Mitigation:
The Company's objective and investment policy and performance
against peers and the benchmark are considered by the Board at each
meeting and strategic issues are considered regularly. The
Investment Portfolio is diversified and comprises listed securities
and its composition is reviewed regularly with the Board. The
Manager's Investment Risk team provides oversight on investment
risk management.
Market intelligence is maintained via the Company's broker and
the effectiveness of the marketing strategy together with the level
of discount to NAV at which the Company's shares trade are also
reviewed at each meeting. The Manager also meets with major
shareholders.
The Board regularly considers ongoing charges combined with
underlying dividend income from portfolio companies and the
consequent dividend paying capacity of the Company.
Regulatory.
Breach of regulatory rules could lead to the suspension of the
Company's Stock exchange listing, financial penalties, or a
qualified audit report. Breach of section 1158 of the Corporation
Tax Act 2010 could lead to the Company being subject to tax on
capital gains. Changes to tax regulations could alter the
attractions of the Company's B shares.
No change in overall risk.
Mitigation:
The Board liaises with advisors to ensure compliance with laws
or regulations.
The Manager and its Operational Risk Management team provide
regular reports to the Board and Audit Committee on their
monitoring and oversight of such rules and are reviewed by the
Board. This includes the conditions to maintain investment trust
status including the income distribution requirement.
The Board has access to the Manager's Head of Operational Risk
Management and requires any significant issues directly relevant to
the Company to be reported immediately.
Operational.
Failure of the Manager as the Company's main service provider or
disruption to its business, or that of an outsourced or third party
service provider, could lead to an inability to provide accurate
reporting and monitoring or a misappropriation of assets leading to
a potential breach of the Company's investment mandate or loss of
shareholders' confidence.
This risk includes failures or disruption as a consequence of
external events such as the COVID-19 pandemic.
External cyber attacks could cause such failure or could lead to
the loss or sabotage of data.
No change in overall risk but due to the integration with
Columbia Threadneedle's systems, this risk remains heightened.
Mitigation:
The Board meets regularly with the management of the Manager and
its Operational Risk Management team to review internal control and
risk reports which includes oversight of it's own third party
service providers. The Manager's appointment is reviewed annually
and the contract can be terminated with six months' notice. The
Manager has a business continuity plan in place to ensure that it
is able to respond quickly and effectively to an unplanned event
that could affect the continuity of its business.
The Manager has outsourced trade processing, valuation and
middle office tasks and systems to State Street Bank and Trust
Company ('State Street') and supervision of such third party
service providers, including SS&C who administer the Manager's
savings plans, has been maintained by the Manager. This includes
the review of IT security and heightened cyber threats.
Further to the acquisition of the Company's Manager by
Ameriprise, the Board continues to monitor the integration of its
business with Columba Threadneedle Investments. Comfort is taken
from its long-term financial strength and resources and commitment
towards the investment trust business and savings plans.
The Manager also closely monitors the performance of its
technology platform to ensure it is functioning within acceptable
service levels.
Custody Risk.
Safe custody of the Company's assets may be compromised through
control failures by the custodian.
No change in overall risk.
Mitigation:
The Board receives quarterly reports from the Depositary
confirming safe custody of the Company's assets and cash and
holdings are reconciled to the Custodian's records. The Custodian's
internal controls reports are also reviewed by the Manager and key
points reported to the Audit Committee. The Board also receives
periodic updates from the custodian on its own cyber-security
controls.
The Depositary is specifically liable for loss of any of the
Company's assets that constitute financial instruments under the
AIFMD.
Viability assessment and statement
In accordance with the UK Corporate Governance Code, the Board
is required to assess the future prospects for the Company and has
considered that a number of characteristics of its business model
and strategy were relevant to this assessment:
-- The Board looks to long-term outperformance rather than short-term opportunities.
-- The Company's investment objective, strategy and policy,
which are subject to regular Board monitoring, mean that the
Company is invested primarily in liquid listed securities and that
the level of borrowing is restricted.
-- The Company is a listed closed-end investment trust, whose
shares are not subject to redemptions by shareholders.
-- Subject to shareholder continuation votes, in the event that
the net asset value total return performance of the Company is less
than that of the FTSE All-Share Index over the relevant period, the
Company's business model and strategy is not time limited. The next
such performance measurement period will cover the three years to
31 March 2025.
Also relevant were a number of aspects of the Company's
operational arrangements:
-- The Company retains title to all assets held by the Custodian
under the terms of the formal agreement with the Custodian and
Depositary.
-- The borrowing facility, which remains available until
September 2025, is also subject to a formal agreement, including
financial covenants with which the Company complied in full during
the year.
-- Revenue and expenditure forecasts are reviewed by the Directors at each Board Meeting.
-- Cash is held with banks approved and regularly reviewed by the Manager.
-- The operational robustness of key service providers and the
effectiveness of alternative working arrangements.
-- That alternative service providers could be engaged at
relatively short notice if necessary.
In considering the viability of the Company, the Directors
carried out a robust assessment of the principal risks and
uncertainties which could threaten the Company's objective and
strategy, future performance and solvency. This included the impact
of market volatility and a significant fall in equity markets on
the Company's investment portfolio. These risks, their mitigations
and the processes for monitoring them are set out above within
Principal Risks and Uncertainties and in the Report of the Audit
Committee and in the notes of the financial statements within the
Annual Report.
The Directors have also considered:
-- The level of ongoing charges incurred by the Company which
are modest and predictable and total 1.02% of average net
assets.
-- Future revenue and expenditure projections.
-- Its ability to meet liquidity requirements given the
Company's investment portfolio consists mainly of readily
realisable listed equity securities which can be realised if
required.
-- The ability to undertake share buybacks if required.
-- Whether the Company's objective and investment policy continue to be relevant to investors.
-- The effect of significant future falls in investment values
and the ability to maintain dividends and capital repayments,
particularly given the impact of increased market volatility since
the COVID-19 pandemic, the war in Ukraine and macroeconomic and
geopolitical concerns.
As the Company's performance measurement period was reduced from
five years to three years (following shareholder approval at the
2022 AGM), these matters were assessed over a three year period to
May 2026, and the Board will continue to assess viability over
three year rolling periods. As part of this assessment the Board
considered stress tests and scenarios which considered the impact
of severe stock market volatility on shareholders' funds and
declines in income over a three year period. The results
demonstrated the impact on the Company's net assets and its
expenses and its ability to meet its liabilities over that period.
A rolling three year period represents the horizon over which the
Directors believe they can form a reasonable expectation of the
Company's prospects, balancing the Company's financial flexibility
and scope with the current outlook for longer-term economic
conditions affecting the Company and its shareholders.
Based on their assessment, and in the context of the Company's
business model, strategy and operational arrangements set out
above, the Directors have a reasonable expectation that the Company
will be able to continue in operation and meet its liabilities as
they fall due over the three year period to May 2026.
Statement of Directors' Responsibilities in Relation to the
Annual Report and Financial Statements
The Directors confirm, in respect of the Annual Report and
Financial Statements for the year ended 31 March 2023 of which this
statement of results is an extract, that to the best of their
knowledge:
-- the financial statements contained within the Annual Report
have been prepared in accordance with UK-adopted International
Accounting Standards, give a true and fair view of the assets,
liabilities, financial position and return of the Company;
-- the Strategic Report and the Report of the Directors include
a fair review of the development and performance of the business
and the position of the Company together with a description of the
principal risks and uncertainties that they face ; and
-- taken as a whole, the Annual Report and Financial Statements
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the performance, strategy and
business model of the Company.
On behalf of the Board
Andrew Watkins
Chairman
31 May 2023
Notes
1. The financial statements of the Company which are the
responsibility of, and were approved by, the Board on 31 May 2023,
have been prepared on a going concern basis and in accordance with
the Companies Act 2006 and UK-adopted International Accounting
Standards.
The Company's subsidiary undertaking Investors Securities
Company Limited has not been consolidated in the financial
statements as it is exempt in accordance with Section 405(2) of the
Companies Act 2006 on grounds of materiality. Investors Securities
Company Limited has been classified at fair value through profit or
loss in the Statement of Financial Position.
Where presentational guidance set out in the Statement of
Recommended Practice ("SORP") for investment trusts issued by the
Association of Investment Companies ("AIC") is consistent with the
requirements of UK-adopted International Accounting Standards, the
Directors have sought to prepare the financial statements on a
basis compliant with the recommendations of the SORP.
2. The Company's earnings per share are based on the loss for
the year of GBP(583,000) (year to 31 March 2022: profit of
GBP2,384,000) and on 85,118,954 Ordinary shares (2022: 85,172,653)
and 30,708,750 B shares (2022: 30,708,750), being the weighted
average number of shares in issue of each share class during the
year.
The Company's revenue earnings per share are based on the
revenue profit for the year of GBP4,192,000 (year to 31 March 2022:
GBP4,178,000) and on the weighted average number of shares in issue
as above.
The Company's capital earnings per share are based on the
capital loss for the year of GBP(4,775,000) (year to 31 March 2022:
loss GBP(1,794,000)) and on the weighted average number of shares
in issue as above.
3. A fourth interim dividend in respect of the year ended 31
March 2023 of 1.55p per Ordinary share was paid on 5 May 2023 to
Ordinary shareholders on the register on 11 April 2023. A fourth
capital repayment in respect of the year ended 31 March 2023 of
1.55p per B share was paid on 5 May 2023 to B shareholders on the
register on 11 April 2023.
4. At 31 March 2023, the Company has an unsecured revolving
credit facility ("RCF") with The Royal Bank of Scotland
International Limited for GBP15 million which is available until 28
September 2025. At 31 March 2023, GBP12 million was drawn down.
The loan agreement contains certain financial covenants with
which the Company must comply. These include a financial covenant
with respect to the ratio of the Adjusted Portfolio Value (as
defined in the loan agreement) to the level of debt and also that
the Adjusted Portfolio Value does not fall below GBP50 million. The
Company complied with the required financial covenants throughout
the period since drawdown.
Until 28 September 2022, the Company had a GBP7.5 million
unsecured term loan from Scotiabank Europe plc at a fixed interest
rate of 2.58% per annum. It also had a GBP7.5 million unsecured
multicurrency revolving credit facility ('RCF') with Scotiabank
(Ireland) Designated Activity Company. On 28 September 2022 both
loan facilities matured and the GBP7.5 million unsecured term loan
was repaid to Scotiabank Europe plc. At that time, GBPnil was drawn
down under the RCF.
5. During the year the Company bought back 100,000 Ordinary
shares (2022: nil Ordinary shares) to hold in treasury at a cost of
GBP79,000 (2022: GBPnil). During the year the Company bought back
nil B shares (2022: nil B shares).
At 31 March 2023 the Company held 16,994,491 Ordinary shares
(2022: 16,894,491 Ordinary shares) and 1,367,953 B shares (2022:
1,367,953 B shares) in treasury.
6. The Company's basic net asset value per share of 89.97p
(2022: 95.97p) is based on the equity shareholders' funds of
GBP104,171,000 (2022: GBP111,215,000) and on 115,781,403 equity
shares, consisting of 85,072,653 Ordinary shares and 30,708,750 B
shares (2022: 115,881,403 equity shares, consisting of 85,172,653
Ordinary shares and 30,708,750 B shares), being the number of
shares in issue at the year end.
The Company's shares may also be traded as units, each unit
consisting of three Ordinary shares and one B share. The basic net
asset value per unit as at 31 March 2023 was therefore 359.88p
(2022: 383.88p).
The Company's treasury net asset value per share, incorporating
the 16,994,491 Ordinary shares and 1,367,953 B shares held in
treasury at the year end (2022: 16,894,491 Ordinary shares and
1,367,953 B shares), was 89.97p (2022: 95.97p). The Company's
treasury net asset value per unit at the end of the year was
359.88p (2022: 383.88p). The Company's current policy is to only re
-- sell shares held in treasury at a price not less than the net
asset value per share.
7. Financial Instruments
The Company's financial instruments comprise equity investments,
cash balances, receivables and payables that arise directly from
its operations and borrowings. As an investment trust the Company
holds a portfolio of financial assets in pursuit of its investment
objective. The Company makes use of borrowings to achieve enhanced
returns. The downside risk of borrowings can be mitigated by
raising the level of cash balances held.
The Company may use derivatives for efficient portfolio
management from time to time. No derivative financial instruments
were used during the current year or prior year. The Company may
also write call options over some investments held in the
investment portfolio. There were no call options written during the
current year or prior year.
The fair value of the financial assets and liabilities of the
Company at 31 March 2023 is not materially different from their
carrying value in the financial statements.
The Company is exposed to various types of risk that are
associated with financial instruments. The most important types are
credit risk, market price risk, liquidity risk, interest rate risk
and foreign currency risk.
The Board reviews and agrees policies for managing its risk
exposure. These policies are summarised below and have remained
unchanged for the year under review.
Credit risk
Credit risk is the risk that an issuer or counterparty will be
unable or unwilling to meet a commitment that it has entered into
with the Company.
The Company's principal financial assets are bank balances and
cash and other receivables, whose carrying amounts in the Statement
of Financial Position represent the Company's maximum exposure to
credit risk in relation to financial assets. The Company did not
have any exposure to any financial assets which were past due or
impaired at the current or prior year end.
The Company is exposed to potential failure by counterparties to
deliver securities for which the Company has paid, or to pay for
securities which the Company has delivered. A list of pre-approved
counterparties used in such transactions is maintained and
regularly reviewed by the Manager, and transactions must be settled
on a basis of delivery against payment. Broker counterparties are
selected based on a combination of criteria, including credit
rating, balance sheet strength and membership of a relevant
regulatory body. Risk relating to unsettled transactions is
considered to be small due to the short settlement period involved
and the acceptable quality of the brokers used. The rate of default
in the past has been insignificant.
All of the investments of the Company are held by JPMorgan Chase
Bank, the Company's custodian. Bankruptcy or insolvency of the
custodian may cause the Company's rights with respect to the
securities held by the custodian to be delayed or limited. The
Board monitors the Company's risk by reviewing the custodian's
internal control reports.
The credit risk on liquid funds and derivative financial
instruments is limited because the counterparties are banks with
high credit ratings, normally rated A or higher, assigned by
international credit rating agencies. Bankruptcy or insolvency of
such financial institutions may cause the Company's ability to
access cash placed on deposit to be delayed, limited or lost.
The Company has no significant concentration of credit risk with
exposure spread over a number of counterparties and financial
institutions.
Market price risk
The fair value of equity and other financial securities held in
the Company's portfolio fluctuates with changes in market prices.
Prices are themselves affected by movements in currencies and
interest rates and by other financial issues, including the market
perception of future risks. Other external events such as
protectionism, inflation or deflation, economic recessions and
terrorism could also affect share prices in particular markets. The
Company's strategy for the management of market price risk is
driven by the Company's investment policy. The Board sets policies
for managing this risk and meets regularly to review full, timely
and relevant information on investment performance and financial
results. The management of market price risk is part of the fund
management process and is typical of equity investment. The
portfolio is managed with an awareness of the effects of adverse
price movements through detailed and continuing analysis with an
objective of maximising overall returns to shareholders. Investment
performance is discussed in more detail in the Manager's Review in
the Annual Report and Financial Statements.
Liquidity risk
Liquidity risk is the risk that the Company will encounter
difficulty in realising assets or otherwise raising funds to meet
financial commitments. The risk of the Company not having
sufficient liquidity at any time is not considered by the Board to
be significant, given the liquid nature of the portfolio of
investments and the level of cash and cash equivalents ordinarily
held. Cash balances are held with a spread of reputable banks with
a credit rating of normally A or higher, usually on overnight
deposit. The Manager reviews liquidity at the time of making each
investment decision. The Board reviews liquidity exposure at each
meeting.
In certain circumstances, the terms of the Company's bank
facility entitle the lender to demand early repayment and, in such
circumstances, the Company's ability to maintain dividend levels
and the net asset value attributable to equity shareholders could
be adversely affected. Such early repayment may be required on the
occurrence of certain events of default which are customary for
facilities of this type. These include events of non payment,
breach of other obligations, misrepresentations, insolvency and
insolvency proceedings, illegality and a material adverse change in
the financial condition of the Company.
Interest rate risk
Some of the Company's financial instruments are interest
bearing. They are a mix of both fixed and variable rate instruments
with differing maturities. As a consequence, the Company is exposed
to interest rate risk due to fluctuations in the prevailing market
rate. The Company's exposure to floating interest rates gives
cashflow interest rate risk and its exposure to fixed interest
rates gives fair value interest rate risk.
Floating rate
When the Company retains cash balances the majority of the cash
is held in deposit accounts. The benchmark rate which determines
the interest payments received on cash balances is the bank base
rate, which was 4.25 per cent at 31 March 2023 (2022: 0.75 per
cent).
When the Company draws down amounts under its revolving credit
facility, interest is payable based on SONIA (which can vary on a
daily basis) plus a margin. In the prior year, interest was based
on LIBOR and was fixed at the time of drawdown.
Fixed rate
At 31 March 2023 and 31 March 2022, the Company's investment
portfolio did not contain any fixed interest or floating rate
interest assets. At 31 March 2023 the Company had no fixed interest
liabilities.
During the year, the GBP7.5 million term loan which carried a
fixed interest rate of 2.58% per annum matured and was repaid on 28
September 2022.
Foreign currency risk
It is not the Company's policy to hedge any overseas currency
exposure on equity investments.
8. Going Concern
The Company's investment objective and investment 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 facility with which it has complied during the year. Cash
is only held with banks approved and regularly reviewed by the
Manager.
In assessing the going concern basis of accounting, the
Directors have had regard to the guidance issued by the Financial
Reporting Council. After making enquiries, and bearing in mind the
nature of the Company's business and assets, the Directors consider
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. For this reason, they
continue to adopt the going concern basis in preparing the
financial statements.
9. The Directors of the Company are considered a related party.
There are no transactions with the Board other than aggregated
remuneration for services as Directors as disclosed in the
Directors' Remuneration Report within the Annual Report and
Financial Statements. There are no outstanding balances with the
Board at year end. The beneficial interests of the Directors in the
Ordinary shares and B shares of the Company are disclosed in the
Annual Report and Financial Statements.
Transactions between the Company and Columbia Threadneedle
Investment Business Limited are detailed in the notes to the
financial statements. The existence of an independent Board of
Directors demonstrated that the Company is free to pursue its own
financial and operating policies and therefore under the AIC SORP,
the Manager is not considered a related party.
10. This statement was approved by the Board on 31 May 2023. It
is not the Company's full statutory financial statements in terms
of Section 434 of the Companies Act 2006. The statutory Annual
Report and Financial Statements for the year ended 31 March 2023
has been approved and audited and received an unqualified audit
report and did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying the
report. This will be sent to shareholders in early June 2023 and
will be available for inspection at 6(th) Floor, Quartermile 4, 7a
Nightingale Way, Edinburgh, EH3 9EG the registered office of the
Company.
The full Annual Report and Financial Statements are available on
the website maintained on behalf of the Company at
ctukhighincome.co.uk
The Annual General Meeting of CT UK High Income Trust PLC will
be held at 12 noon on 20 July 2023 at Exchange House, Primrose
Street, London EC2A 2NY.
The audited financial statements for the year to 31 March 2023
will be lodged with the Registrar of Companies following the Annual
General Meeting.
Alternative Performance Measures ("APMs")
The Company uses the following Alternative Performance Measures
("APMs"):
Discount/Premium - the share price of an Investment Trust 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.
At 31 March 2023
---------------------------
Ordinary
shares B shares Units
----------------------- ---- -------- -------- -------
Net asset value per
share (a) 89.97p 89.97p 359.88p
Share price (b) 82.00p 84.50p 323.00p
----------------------- ---- -------- -------- -------
Discount (c=(b-a)/(a)) (c) -8.9% -6.1% -10.2%
----------------------- ---- -------- -------- -------
Ongoing Charges - all operating costs expected to be incurred in
future and that are payable by the Company, expressed as a
proportion of the average net assets of the Company over the
reporting year. The costs of buying and selling investments and
derivatives are excluded, as are interest costs, taxation,
non--recurring costs and the costs of buying back or issuing
shares.
Ongoing charges calculation
31 March
2023
GBP'000
---------------------------------------------- ---- --------
Total expenditure 1,131
Less revolving credit facility commitment fee (44)
Less non-recurring expenses (21)
Total (a) 1,066
Average daily net assets (b) 104,494
Ongoing charges (c = a/b) (c) 1.02%
---------------------------------------------- ---- --------
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.
31 March
2023
GBP'000
---------------------------------------------- ---- --------
Investments held at fair value through profit
or loss (a) 113,018
Net assets (b) 104,171
---------------------------------------------- ---- --------
Gearing (c = (a/b)-1)% (c) 8.5%
---------------------------------------------- ---- --------
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 share price total returns
and NAV total returns are shown below.
31 March 2023
------------------
Ordinary
shares/
B shares Units
--------------------------------------- --------- -------
NAV per share at start of financial
year 95.97p 383.88p
NAV per share at end of financial year 89.97p 359.88p
Change in the year -6.3% -6.3%
Impact of dividend/capital repayment
reinvestment +5.9% +5.9%
--------------------------------------- --------- -------
NAV total return for the year -0.4% -0.4%
--------------------------------------- --------- -------
During the year to 31 March 2023 dividends/capital repayments
totalling 5.51p (Ordinary shares/B shares) and 22.04p (units) went
ex dividend.
31 March 2023
--------------------------
Ordinary
shares B shares Units
------------------------------------- -------- -------- ------
Share price per share at start
of financial year 87.0p 88.0p 336.0p
Share price per share at end of
financial year 82.0p 84.5p 323.0p
Change in the year -5.7% -4.0% -3.9%
Impact of dividend/capital repayment
reinvestment +6.4% +6.3% +5.7%
------------------------------------- -------- -------- ------
Share price total return for the
year +0.6% +2.3% +1.9%
------------------------------------- -------- -------- ------
During the year to 31 March 2023 dividends/capital repayments
totalling 5.51p (Ordinary shares/B shares) and 22.04p (units) went
ex dividend.
Yield - The total annual dividend/capital repayment expressed as
a percentage of the year end share price.
31 March 2023
---------------------------
Ordinary
shares B shares Units
------------------------ ---- -------- -------- -------
Annual dividend/capital
repayment (a) 5.51p 5.51p 22.04p
Share price (b) 82.00p 84.50p 323.00p
------------------------ ---- -------- -------- -------
Yield = (c=a/b) (c) 6.7% 6.5% 6.8%
------------------------ ---- -------- -------- -------
For further information, please contact:
Philip Webster
Portfolio Manager to CT UK High Income Trust PLC Tel: 0207 628 8000
Ian Ridge
For Columbia Threadneedle Investment Business Limited
Company Secretary to CT UK High Income Trust PLC Tel: 0207 628 8000
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END
FR UAAKRONUVOAR
(END) Dow Jones Newswires
June 01, 2023 02:00 ET (06:00 GMT)
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