TIDMDIG
RNS Number : 1247N
Dunedin Income Growth Inv Tst PLC
21 September 2023
DUNEDIN INCOME GROWTH INVESTMENT TRUST PLC
HALF YEARLY REPORT FOR THE SIX MONTHSED 31 JULY 2023
Legal Entity Identifier (LEI): 549300PPXLZPR5JTL763
HIGHLIGHTS FOR THE PERIOD
- NAV total return of 5.5%, outperforming the total return of
0.8% from the FTSE All-Share Index.
- Against a flat market return, investment performance has been
positive, aided by the Company's focus on higher quality areas of
the market, coupled with good stock selection.
- Dividend yield of 4.6% at the period end.
INVESTMENT OBJECTIVE
The objective of Dunedin Income Growth Investment Trust PLC is
to achieve growth of income and capital from a portfolio invested
mainly in companies listed or quoted in the United Kingdom that
meet the Company's sustainable and responsible investing criteria
as set by the Board.
BENCHMARK
The Company's benchmark is the FTSE All-Share Index (total
return). Performance is measured on a net asset value total return
basis over the long-term.
Performance Highlights
Net asset value total return Share price total return per Ordinary
per Ordinary share(AB) share(A)
Six months ended 31 July 2023 Six months ended 31
July 2023
+5.5% (0.4)%
Year ended 31 January
Year ended 31 January 2023 +2.4% 2023 (0.9)%
Revenue return per Ordinary share FTSE All-Share Index total return
Six months ended 31 July 2023 Six months ended 31
July 2023
8.25p +0.8%
Year ended 31 January
Six months ended 31 July 2022 8.54p 2023 +5.2%
Dividend yield(A) Discount to net asset value(AB)
As at 31 July 2023 As at 31 July 2023
4.6% (8.4)%
As at 31 January 2023 4.5% As at 31 January 2023 (2.9)%
(A) Considered to be an Alternative Performance Measure.
(B) With debt at fair value (including income).
Financial Calendar
Expected payment dates of quarterly 24 November 2023
dividends 23 February 2024
31 May 2024
30 August 2024
==================================== ==================
Financial year end 31 January 2024
==================================== ==================
Expected announcement of results March 2024
for year ended 31 January 2024
==================================== ==================
Annual General Meeting (London) May 2024
==================================== ==================
Financial Highlights
31 July 2023 31 January % change
2023
=========================================== ============= =========== ========
Total assets (GBP'000)(A) 500,934 492,105 +1.8
=========================================== ============= =========== ========
Equity shareholders' funds (GBP'000) 456,610 448,605 +1.8
=========================================== ============= =========== ========
Market capitalisation (GBP'000) 423,974 435,898 (2.7)
=========================================== ============= =========== ========
Net asset value per Ordinary share 308.02p 302.57p +1.8
=========================================== ============= =========== ========
Net asset value per Ordinary share with
debt at fair value(B) 312.17p 302.80p +3.1
=========================================== ============= =========== ========
Share price per Ordinary share (mid) 286.00p 294.00p (2.7)
=========================================== ============= =========== ========
Discount to net asset value with debt
at fair value(B) (8.4%) (2.9%)
=========================================== ============= =========== ========
Revenue return per Ordinary share(C) 8.25p 8.54p (3.4)
=========================================== ============= =========== ========
Gearing - net(B) 9.7% 7.1%
------------------------------------------- ------------- ----------- --------
(A) Defined as total assets per the Statement of Financial Position
less current liabilities (before deduction of bank loans and Loan Notes).
(B) Considered to be an Alternative Performance Measure.
(C) Figure for 31 July 2023 is for six months to that date. Figure
for 31 January 2023 is for the six months to 31 July 2022.
For further information, please contact:
Stephanie Hocking
William Hemmings
abrdn Fund Managers Limited
0131 372 2200
Chairman's Statement
Review of the Period
Looking back over past the few years, our Half Yearly Report has
often corresponded with significant geopolitical events such as the
global pandemic in 2020 and the invasion of Ukraine in 2022. In
contrast, the first six months of this financial year saw a return
to more conventional points of focus: a UK economy struggling for
growth amidst the steepest inflation in 40 years, trying to assess
the extent of central bank interest rate increases, concerns over
growth in China and speculation on the potential of new
developments in Artificial Intelligence. Against that backdrop, the
Company delivered a positive absolute return for the six month
period ended 31 July 2023. The net asset value ("NAV") increased by
5.5% on a total return basis, exceeding that of its benchmark, the
FTSE All-Share Index, which produced a total return of 0.8%. The
share price total return for the period was -0.4%, reflecting a
widening of the discount at which the Company's shares trade
relative to the NAV. At the end of the period the shares traded on
a discount of 8.4% (on a cum-income basis with borrowings stated at
fair value), compared to a discount of 2.9% at the beginning of the
financial year.
Your Investment Manager has continued to execute our strategy of
investing in businesses of higher quality that meet our sustainable
and responsible investment criteria and balancing attention between
both income and capital growth potential. The portfolio continues
to exhibit strong quality characteristics, while retaining a
premium yield to, and superior dividend growth to, the FTSE
All-Share Index. At the same time, it exhibits a high level of
active share and stock specific risk reflecting a very
differentiated approach to the wider index and many investment
trusts in the peer group with similar objectives.
Against a flat market return, investment performance has been
positive, aided by the Company's focus on higher quality areas of
the market, coupled with good stock selection. In particular, we
have seen strong performance from a number of the portfolio's
holdings alongside continued merger and acquisition activity.
A detailed review of portfolio activity during the period is
contained in the Investment Manager's Review.
Earnings and Dividends
Revenue earnings per share fell by 3.4% during the period to
8.25p (2022: 8.54p) per share. Importantly, underlying dividend
income increased by 1.5% reflecting good trading from a number of
our holdings, although the level of option income generated was
lower than the equivalent period last year.
A first interim dividend in respect of the year ending 31
January 2024, of 3.2p (2023: 3.0p) per share, was paid on 25 August
2023 and the Board has declared a second interim dividend of 3.2p
(2023: 3.0p) per share, which will be paid on 24 November 2023 to
shareholders on the register on 3 November 2023. The rate of
interim dividend was last increased in August 2018. The Board had
been mindful that the increases in the overall annual rate of
dividend since 2018 had caused the final dividend to become a
growing percentage of the total annual payment. The Board therefore
decided, and announced on declaring the first interim dividend, to
increase the rate of each of the three interim dividends from 3.0p
to 3.2p per share so as to create a more even balance between the
rates of the interim and final dividends. The 6.7% increase in the
rate of interim dividends therefore represents a rebalancing of
dividend payments.
Based on last year's annual dividend of 13.1p per share, the
dividend yield on the Company's shares was 4.6% at the end of the
period. This is one of the higher yields available from the AIC's
UK Equity Sector and is approximately 20 % higher than the yield
available from the UK equity market as measured by the FTSE
All-Share Index.
In the year ahead, the Board's intention is to maintain a
progressive dividend, substantially covered by earnings, although
given the high level of inflation it is unlikely to increase in
real terms, so as to allow the Company to continue to appropriately
balance its focus on both capital and income generation. Our
distribution policy, though, remains to grow the dividend faster
than inflation over the medium term and, with the Company's robust
revenue reserves, modest level of gearing and the healthy
underlying dividend growth of the companies within the portfolio,
that policy remains well supported.
Sustainability
Your Company continues to exhibit strong evidence of its
sustainable positioning, elements that we believe will enhance the
portfolio's long-term risk adjusted returns. Its carbon footprint
is significantly lower than the benchmark. MSCI has assigned the
Company an AA ESG rating and it is considered top decile out of all
investment funds globally. The Investment Manager has continued to
actively engage with the companies invested in, having addressed
ESG specific issues with management teams at companies representing
28 of the holdings in the portfolio. Voting policy also forms an
important part of the corporate engagement approach and the
Investment Manager voted against management recommendations at
least once in 21% of company general meetings held during the
period.
Gearing
The Company currently employs two sources of gearing. The GBP30
million loan notes maturing in 2045, and a recently renewed one
year GBP30 million multi-currency revolving credit facility with
Bank of Nova Scotia that matures in July 2024. Under the terms of
the facility the Company has the option to increase the level of
the commitment from GBP30 million to GBP40 million at any time,
subject to the lender's credit approval. A sterling equivalent of
GBP13.4 million was drawn down under the facility at the end of the
period.
With debt valued at par, the Company's net gearing increased
from 7.1% to 9.7% during the period, reflecting lower cash balances
at the period end, despite an increase in net assets due to capital
appreciation. The Board believes this remains a relatively
conservative level of gearing and, with the option to increase the
revolving credit facility, provides the Company with financial
flexibility should further opportunities to deploy capital
arise.
Discount
As stated above, at the end of the period your Company's shares
traded at a discount of 8.4% (on a cum-income basis with borrowings
stated at fair value), compared to a discount of 2.9% at the
beginning of the financial year.
Widening discounts were evident across the investment trust
sector during the period. As a result of this, and in order to
address the imbalance of supply and demand for the Company's
shares, we bought back 22,055 shares to be held in treasury. With
the higher level of discount persisting, we have bought back a
further 400,863 shares since the period end. The Board believes
that this action, together with continued delivery of investment
performance, our commitment to grow the dividend faster than
inflation over the medium-term and clear communication of the
investment strategy should all help to improve the Company's
current rating. The Board will continue to monitor the rating of
your Company's shares carefully and make further use of both the
Company's share buyback and issuance powers to address any
imbalance of supply and demand in the Company's shares.
abrdn Investment Trust Savings Plans
The Board is aware that over 20% of the Company's shares are
held through the abrdn Investment Trust Savings Plans (the
"Plans"). These types of share schemes were the original and only
means by which the shares of investment trusts could be made
available to private investors. The development of whole of market
platform offerings means other options are now available. abrdn has
written to their clients in the Plans explaining that they will be
closing in December 2023 and that the Plans will be transferring to
the interactive investor platform. The Board continues to monitor
this change. We would stress this has no impact on those holders'
ability to receive communications from the Company, to vote and
attend general meetings in person or to re-invest dividends.
Amendment to Investment Policy (Overseas Exposure)
As explained in the recent Annual Report, during the previous
year, the Board and Investment Manager reviewed the guidelines
governing the management of the portfolio and determined that the
part of the investment policy relating to the limit on the exposure
to investments in companies listed or quoted overseas should be
amended from its previous limit of 20% to a new limit of 25%. The
change took effect on 1 May 2023 and this higher limit provides the
Investment Manager with greater flexibility to invest in overseas
companies but does not represent a change in the way that the
portfolio is managed.
The change was not a material change to the investment policy
that would have required shareholder approval.
Outlook
The economic challenges to global growth continue to build,
following rapid and sustained interest rate increases from central
banks across the world, coupled with a Chinese economy facing
significant headwinds. Despite some signs of easing, inflationary
pressures remain significant in most economies and supply
constraints are placing upward pressure on many commodity prices.
In the UK, inflation remains too high and growth too low, albeit
there are indications that a trough has been reached and perhaps
somewhat ahead of other major economies. For equity markets, there
remain reasons to be cautious and the next 18 months are likely to
be a tough period for corporate earnings development. It is that
very unpredictability of world and economic events that makes us
concentrate on the companies within the portfolio and their ability
to navigate the environment ahead of them.
As such, the approach of the Investment Manager is to balance
the portfolio to handle a range of potential scenarios. There is an
emphasis on protecting the downside from investing in companies
with enduring business models, pricing power, robust balance sheets
and strong management of their environmental, social and governance
risks. At the same time, the Investment Manager is making sure that
those businesses have the potential to participate in any upside
opportunities that emerge, particularly stemming from powerful
long-term structural drivers, dynamics likely to be less sensitive
to the ups and downs of the economic cycle.
Our objectives remain to meet investor needs for capital and
income returns over the medium and long term. We have again made
good progress in this period. Whilst the global outlook is far from
propitious, we believe our strategy of focussing on a concentrated
and actively managed portfolio of high quality companies from
across the UK and European markets with leading sustainability
characteristics sets us up well to navigate conditions ahead.
David Barron
Chairman
21 September 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 has been prepared in
accordance with Financial Reporting Standard 104 'Interim Financial
Reporting';
- The Interim Board Report (constituting the interim management
report) includes a fair review of the information required by DTR
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 year;
and
- The financial statements include a fair review of the
information required by DTR 4.2.8R of the Disclosure Guidance and
Transparency Rules, being related party transactions that have
taken place in the first six months of the financial year and that
have materially affected the financial position or performance of
the Company during that period, and any changes in the related
party transactions described in the last Annual Report that could
do so.
Principal Risks and Uncertainties
The Board regularly reviews the principal 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 January 2023 and comprise the following risk
categories:
- Investment objectives
- Investment strategies
- Investment performance
- Income/dividends
- Financial/market
- Gearing
- Regulatory
- Operational
- Geo-political
The Company's principal 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 and in most
circumstances are considered to be realisable within a short
timescale. The Board has set limits for borrowing and derivative
contract positions and regularly reviews actual exposures, cash
flow projections and compliance with loan covenants. The Directors
have considered the fact that the Company's investments comprise
readily realisable securities which can be sold to meet funding
requirements if necessary, and have taken into account the maturity
of the GBP30 million multi-currency revolving credit facility in
July 2024. The Directors have also performed stress testing on the
portfolio and the loan financial covenants.
Having taken these matters into account, the Directors believe
that the Company has adequate financial resources to continue in
operational existence for the foreseeable future and for at least
twelve months from the date of this Report. Accordingly, they
continue to adopt the going concern basis of accounting in
preparing the financial statements.
On behalf of the Board
David Barron
Chairman
21 September 2023
Investment Manager's Review
Performance and Market Review
The UK market faced a number of headwinds in the first half of
the Company's financial year; concerns about the financial
stability of the banking sector, fears over persistent inflation
and the continuing tightening of monetary policy. Despite this
backdrop, the Company's net asset value ("NAV") appreciated during
the six months to 31 July 2023 by 5.5% on a total return basis,
outperforming the FTSE All-Share Index benchmark total return of
0.8%. Reassuringly, the rate of UK inflation looks to have passed
its peak and is decelerating, driven by falling energy and food
prices with positive implications for expected monetary policy.
Overall, global economic data continues to be mixed, although ahead
of where many expected going into the year. The exception is China,
where activity levels have failed to rebound as much as anticipated
following the post-Covid re-opening and there remain some worrying
signs in both the shadow banking system and the real estate
market.
Outperformance in the portfolio was primarily driven by stock
selection, consistent with our bottom up approach to portfolio
construction. A number of the portfolio holdings reported positive
results during the period. Games Workshop , the company behind the
Warhammer game, delivered results ahead of expectations, alongside
important new digital content developments. The European bottler
Coca-Cola Hellenic Bottling Company continued to upgrade earnings
expectations driven by strong demand and an attractive pricing
environment. The accounting software provider Sage delivered an
encouraging update that pointed to accelerating growth, driven by
its US cloud native product Intacct. The portfolio also benefitted
from its European holdings in Volvo , Edenred and Novo-Nordisk
which continued to deliver good growth and solid results in the
period. On the negative side, the holding in Asian insurer
Prudential underperformed on concerns around the pace of China's
recovery. In July, construction materials manufacturer Marshalls
cut its guidance for the year on weaker end market demand,
particularly from discretionary home improvements and new
residential construction. However, the share price reaction was
fairly muted suggesting that expectations had already adjusted and
investors were starting to look through to end market recovery. We
added to the position during the period given our assessment of the
opportunity for attractive prospective returns when the cycle
turns.
Pleasingly, dividend income delivery was ahead of our
expectations over the period. Highlights included Games Workshop
which nearly doubled its dividend from the prior year, Weir lifted
its dividend by 37%, Sirius Real Estate increased its dividend by
30% and Nordea Bank grew its distribution by 16%. In contrast, only
Marshalls announced a reduction in its dividend for the year. Given
the timing of dividend declarations, our visibility over the income
out-turn for this financial year is high. However, given the
challenging outlook, we will continue to be watchful. It is worth
noting that the Company's future dividend prospects are tied into
businesses with exposure to structural as opposed to cyclical
growth, stronger pricing power and, consequently, greater control
over their own destiny. Ultimately, this will prove supportive if
we enter into more economically challenging times.
We continued to generate income from option writing, though at a
slower pace than the year before. We wrote puts over London Stock
Exchange , Croda and Diageo where we were happy to add to the
holdings and wrote calls over Nordea Bank, Coca Cola Hellenic
Bottling Company and Pets at Home where we were comfortable to trim
the holdings following strong performance. We anticipate that the
second half of the year will yield more opportunities to generate
additional option writing revenue.
During the period, we engaged with a number of companies in the
portfolio in order to understand the key environmental, social and
governance risks and opportunities facing them and share best
practice. For example, we have been engaging with SSE as part of
our Top 20 Financed Emitters project under our Net Zero framework.
The company published a Net Zero Strategy earlier in the year in
which it updated its targets and aligned to a 1.5 degrees Paris
scenario certified by SBTi (Science Based Target Initiative). We
are comfortable with the targets set given the nature of the
utilities sector, although we continue to engage with the company
on the potential to set short-team emissions targets and provide
greater disclosure on Paris aligned capital expenditure. Weir is an
ESG Improver held in the portfolio and as such we have set out a
range of milestones for the company to monitor progress against.
For example we have provided recommendations in relation to
environmental impact disclosure, sustainable supply chain
management and improving gender diversity. Being aware of these
potential risks to companies' long-term strategies and looking to
drive mitigation and create opportunities is a key part of our
investment approach.
Portfolio Activity
We initiated a new position in Telecom Plus , a retailer of
utility, telecom and insurance products, which operates in the UK
under the Utility Warehouse brand. It has a capital-light business
model that benefits from its low fixed cost base, network of sales
agents and breadth of product offering. Its competitive positioning
in the market has continued to improve and we see attractive
opportunities for long term growth in customers, revenues and
shareholder distributions alongside a strong balance sheet. We also
introduced the UK's largest IT value added reseller Softcat to the
portfolio. We believe Softcat has significant potential for
long-term growth, coupled with a strong balance sheet and the
optionality for enhanced shareholder cash returns. Alongside these
purchases we also acquired a new position in German automotive
manufacturer Mercedes-Benz which is repositioning its strategy
towards the luxury end of the market and is well positioned from a
technology perspective to meet the challenges of the electric
vehicle transition and the gradual move to autonomous driving.
To fund these new ideas, we exited small holdings in lower
conviction names Direct Line Insurance, Ashmore and Ubisoft . We
also took the opportunity to exit Dechra Pharmaceuticals after it
received an all-cash offer from private equity company EQT and the
private equities investment department of Abu Dhabi Investment
Authority.
Outlook
We retain the relatively cautious market outlook that we have
had for some time. That said, we remain very positive on the
potential long-term returns available from the portfolio. We also
see selected value in a number of domestically focussed cyclical
stocks. In addition, the Company benefits from diversification and
the opportunity to invest a portion of assets outside the UK.
Currently we have more opportunities to deploy capital than has
been the case for a considerable period. Overall, we will continue
to seek to keep a balance to our positioning, giving ourselves the
potential to perform in a range of market environments. Our primary
attention remains on seeking to protect capital, but we will
continue to look to participate in opportunities where share prices
in good companies with attractive long term prospects have been
oversold and, at the same time, focus on those that meet our
sustainable and responsible investing criteria.
Ben Ritchie and Rebecca Maclean
abrdn Investments Limited
21 September 2023
Investment Portfolio
At 31 July 2023
================================== ================================== ======= ============
Market Total assets
value
Company Sector GBP'000 %
================================== ================================== ======= ============
AstraZeneca Pharmaceuticals and Biotechnology 45,174 9.0
================================== ================================== ======= ============
Personal Care, Drug and
Unilever Grocery Stores 35,877 7.2
================================== ================================== ======= ============
RELX Media 27,055 5.4
================================== ================================== ======= ============
TotalEnergies Oil, Gas and Coal 25,998 5.2
================================== ================================== ======= ============
Diageo Beverages 24,465 4.9
================================== ================================== ======= ============
London Stock Exchange Finance and Credit Services 22,424 4.5
================================== ================================== ======= ============
SSE Electricity 20,786 4.1
================================== ================================== ======= ============
Coca-Cola Hellenic Bottling
Company Beverages 17,358 3.5
================================== ================================== ======= ============
Chesnara Life Insurance 16,014 3.2
================================== ================================== ======= ============
Games Workshop Leisure Goods 15,858 3.1
---------------------------------- ---------------------------------- ------- ------------
Ten largest equity investments 251,009 50.1
---------------------------------------------------------------------- ------- ------------
Prudential Life Insurance 14,524 2.9
================================== ================================== ======= ============
Investment Banking and Brokerage
Intermediate Capital Services 12,604 2.5
================================== ================================== ======= ============
Sage Software and Computer Services 12,126 2.4
================================== ================================== ======= ============
Weir Industrial Engineering 11,999 2.4
================================== ================================== ======= ============
Household Goods and Home
Taylor Wimpey Construction 11,636 2.3
================================== ================================== ======= ============
Croda Chemicals 11,251 2.3
================================== ================================== ======= ============
Investment Banking and Brokerage
M&G Services 11,107 2.2
================================== ================================== ======= ============
Edenred Industrial Support Services 10,752 2.2
================================== ================================== ======= ============
Technology Hardware and
ASML Equipment 10,724 2.1
================================== ================================== ======= ============
Pets At Home Retailers 10,612 2.1
---------------------------------- ---------------------------------- ------- ------------
Twenty largest equity investments 368,344 73.5
---------------------------------------------------------------------- ------- ------------
Close Brothers Banks 10,433 2.1
================================== ================================== ======= ============
Hiscox Non-life Insurance 10,419 2.1
================================== ================================== ======= ============
Volvo Industrial Transportation 10,374 2.1
================================== ================================== ======= ============
Mercedes-Benz Automobiles and Parts 10,334 2.0
================================== ================================== ======= ============
Nordea Bank Banks 9,960 2.0
================================== ================================== ======= ============
Sirius Real Estate Real Estate Investment Trusts 9,428 1.9
================================== ================================== ======= ============
Telecommunications Service
Telecom Plus Providers 9,414 1.9
================================== ================================== ======= ============
Morgan Sindall Construction and Materials 9,386 1.9
================================== ================================== ======= ============
Assura Real Estate Investment Trusts 9,329 1.8
================================== ================================== ======= ============
Marshalls Construction and Materials 8,539 1.7
---------------------------------- ---------------------------------- ------- ------------
Thirty largest equity investments 465,960 93.0
---------------------------------------------------------------------- ------- ------------
Novo-Nordisk Pharmaceuticals and Biotechnology 8,244 1.7
================================== ================================== ======= ============
Electronic and Electrical
Oxford Instruments Equipment 6,632 1.3
================================== ================================== ======= ============
Softcat Software and Computer Services 6,594 1.3
================================== ================================== ======= ============
Moonpig Retailers 5,303 1.1
================================== ================================== ======= ============
Genus Pharmaceuticals and Biotechnology 5,109 1.0
---------------------------------- ---------------------------------- ------- ------------
Total equity investments 497,842 99.4
---------------------------------------------------------------------- ------- ------------
Net current assets(A) 3,092 0.6
---------------------------------------------------------------------- ------- ------------
Total assets less current liabilities (excluding
borrowings) 500,934 100.0
---------------------------------------------------------------------- ------- ------------
(A) Excluding bank loan of GBP13,368,000 and bank overdraft of GBP1,214,000.
Condensed Statement of Comprehensive Income (unaudited)
Six months ended Six months ended
31 July 2023 31 July 2022
============================== ==== ========================= ===========================
Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================== ==== ======= ======= ======= ======= ======== ========
Gains/(losses) on investments - 7,192 7,192 - (16,343) (16,343)
============================== ==== ======= ======= ======= ======= ======== ========
Income 2 13,776 - 13,776 13,989 - 13,989
============================== ==== ======= ======= ======= ======= ======== ========
Investment management fees (352) (527) (879) (348) (522) (870)
============================== ==== ======= ======= ======= ======= ======== ========
Administrative expenses (541) - (541) (462) - (462)
============================== ==== ======= ======= ======= ======= ======== ========
Currency gains/(losses) - 227 227 - (15) (15)
------------------------------ ---- ------- ------- ------- ------- -------- --------
Net return before finance
costs and tax 12,883 6,892 19,775 13,179 (16,880) (3,701)
============================== ==== ======= ======= ======= ======= ======== ========
Finance costs (353) (523) (876) (287) (415) (702)
------------------------------ ---- ------- ------- ------- ------- -------- --------
Return before taxation 12,530 6,369 18,899 12,892 (17,295) (4,403)
------------------------------ ---- ------- ------- ------- ------- -------- --------
Taxation 3 (305) - (305) (225) - (225)
------------------------------ ---- ------- ------- ------- ------- -------- --------
Return after taxation 12,225 6,369 18,594 12,667 (17,295) (4,628)
------------------------------ ---- ------- ------- ------- ------- -------- --------
Return per Ordinary share
(pence) 5 8.25 4.29 12.54 8.54 (11.66) (3.12)
------------------------------ ---- ------- ------- ------- ------- -------- --------
The total column of the Condensed Statement of Comprehensive Income
is the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing
operations.
The accompanying notes are an integral part of the financial statements.
Condensed Statement of Financial Position (unaudited)
As at As at
31 July 2023 31 January
2023
Note GBP'000 GBP'000
============================================== ===== ============ ==========
Non-current assets
============================================== ===== ============ ==========
Investments at fair value through profit
or loss 9 497,842 478,895
---------------------------------------------- ----- ------------ ----------
Current assets
============================================== ===== ============ ==========
Debtors 4,165 2,452
============================================== ===== ============ ==========
Cash and short-term deposits - 12,267
---------------------------------------------- ----- ------------ ----------
4,165 14,719
---------------------------------------------- ----- ------------ ----------
Creditors: amounts falling due within
one year
============================================== ===== ============ ==========
Bank loan (13,368) (13,762)
============================================== ===== ============ ==========
Bank overdraft (1,214) -
============================================== ===== ============ ==========
Other creditors (1,073) (1,509)
---------------------------------------------- ----- ------------ ----------
(15,655) (15,271)
---------------------------------------------- ----- ------------ ----------
Net current liabilities (11,490) (552)
---------------------------------------------- ----- ------------ ----------
Total assets less current liabilities 486,352 478,343
============================================== ===== ============ ==========
Creditors: amounts falling due after
more than one year
============================================== ===== ============ ==========
Loan Notes 2045 (29,742) (29,738)
---------------------------------------------- ----- ------------ ----------
Net assets 456,610 448,605
---------------------------------------------- ----- ------------ ----------
Capital and reserves
============================================== ===== ============ ==========
Called-up share capital 38,419 38,419
============================================== ===== ============ ==========
Share premium account 4,908 4,908
============================================== ===== ============ ==========
Capital redemption reserve 1,606 1,606
============================================== ===== ============ ==========
Capital reserve 6 386,146 379,839
============================================== ===== ============ ==========
Revenue reserve 25,531 23,833
---------------------------------------------- ----- ------------ ----------
Equity shareholders' funds 456,610 448,605
---------------------------------------------- ----- ------------ ----------
Net asset value per Ordinary share (pence) 7 308.02 302.57
---------------------------------------------- ----- ------------ ----------
The accompanying notes are an integral part of the financial statements.
Condensed Statement of Changes in Equity (unaudited)
Six months ended 31 July 2023
================================================================================================
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================== ==== ======= ======= ========== ======== ======== ========
Balance at 31 January 2023 38,419 4,908 1,606 379,839 23,833 448,605
============================== ==== ======= ======= ========== ======== ======== ========
Return after taxation - - - 6,369 12,225 18,594
============================== ==== ======= ======= ========== ======== ======== ========
Purchase of own shares
for treasury - - - (62) - (62)
============================== ==== ======= ======= ========== ======== ======== ========
Dividends paid 4 - - - - (10,527) (10,527)
------------------------------ ---- ------- ------- ---------- -------- -------- --------
Balance at 31 July 2023 38,419 4,908 1,606 386,146 25,531 456,610
------------------------------ ---- ------- ------- ---------- -------- -------- --------
Six months ended 31 July 2022
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================== ==== ======= ======= ========== ======== ======== ========
Balance at 31 January 2022 38,419 4,619 1,606 396,303 23,632 464,579
============================== ==== ======= ======= ========== ======== ======== ========
Return after taxation - - - (17,295) 12,667 (4,628)
============================== ==== ======= ======= ========== ======== ======== ========
Issue of shares from treasury - 289 - - - 289
============================== ==== ======= ======= ========== ======== ======== ========
Dividends paid 4 - - - - (10,227) (10,227)
------------------------------ ---- ------- ------- ---------- -------- -------- --------
Balance at 31 July 2022 38,419 4,908 1,606 379,008 26,072 450,013
------------------------------ ---- ------- ------- ---------- -------- -------- --------
The accompanying notes are an integral part of the financial statements.
Condensed Statement of Cash Flows (unaudited)
Six months Six months
ended ended
31 July 2023 31 July 2022
GBP'000 GBP'000
================================================= ============ ============
Operating activities
================================================= ============ ============
Net return/ (loss) before finance costs and
taxation 19,775 (3,701)
================================================= ============ ============
Adjustments for:
================================================= ============ ============
(Gains)/losses on investments (7,192) 16,343
================================================= ============ ============
Currency (gains)/losses (227) 15
================================================= ============ ============
Increase in accrued dividend income (623) (1,377)
================================================= ============ ============
Stock dividends included in dividend income (432) -
================================================= ============ ============
Decrease/(increase) in other debtors excluding
tax 144 (626)
================================================= ============ ============
Increase in other creditors 111 435
================================================= ============ ============
Net tax paid (944) (225)
------------------------------------------------- ------------ ------------
Net cash inflow from operating activities 10,612 10,864
================================================= ============ ============
Investing activities
================================================= ============ ============
Purchases of investments (57,296) (36,244)
================================================= ============ ============
Sales of investments 44,824 40,939
------------------------------------------------- ------------ ------------
Net cash (used in)/from investing activities (12,472) 4,695
------------------------------------------------- ------------ ------------
Financing activities
================================================= ============ ============
Interest paid (921) (686)
================================================= ============ ============
Dividends paid (10,527) (10,227)
================================================= ============ ============
Purchase of own shares for treasury (6) -
================================================= ============ ============
Share issue proceeds - 289
================================================= ============ ============
Loan repayment (394) -
------------------------------------------------- ------------ ------------
Net cash used in financing activities (11,848) (10,624)
------------------------------------------------- ------------ ------------
(Decrease)/increase in cash and cash equivalents (13,708) 4,935
------------------------------------------------- ------------ ------------
Analysis of changes in cash and cash equivalents
during the period
================================================= ============ ============
Opening balance 12,267 2,855
================================================= ============ ============
Effect of exchange rate fluctuations on cash
held 227 22
================================================= ============ ============
(Decrease)/increase in cash as above (13,708) 4,935
------------------------------------------------- ------------ ------------
Closing balance (1,214) 7,812
------------------------------------------------- ------------ ------------
The accompanying notes are an integral part
of the financial statements.
Notes to the Financial Statements (unaudited)
1. Accounting policies
Basis of preparation. The condensed financial statements have been
prepared in accordance with Financial Reporting Standard 104 'Interim
Financial Reporting' and with the Statement of Recommended Practice
for 'Financial Statements of Investment Trust Companies and Venture
Capital Trusts', issued in July 2022. They have also been prepared
on a going concern basis and on the assumption that status as an
investment trust will be maintained.
The half yearly financial statements have been prepared using the
same accounting policies and methods of computation as the preceding
annual financial statements (year ended 31 January 2023), which
were prepared in accordance with Financial Reporting Standard 102.
2. Income
======================== ============ ============
Six months Six months
ended ended
31 July 2023 31 July 2022
GBP'000 GBP'000
Income from investments
======================== ============ ============
UK dividend income 6,983 8,348
============================ ============ ============
Overseas dividends 5,642 4,512
============================ ============ ============
Stock dividends 432 -
---------------------------- ------------ ------------
13,057 12,860
---------------------------- ------------ ------------
Other income
======================== ============ ============
Income on derivatives 684 1,127
============================ ============ ============
Interest income 35 2
---------------------------- ------------ ------------
719 1,129
---------------------------- ------------ ------------
Total income 13,776 13,989
---------------------------- ------------ ------------
3. Taxation
The taxation charge for the period, and the comparative period,
represents withholding tax suffered on overseas dividend income.
4. Ordinary dividends on equity shares
=============================================== ============= ============
Six months Six months
ended ended
31 July 2023 31 July 2022
GBP'000 GBP'000
=============================================== ============= ============
Third interim dividend 2023 of 3.00p (2022
- 3.00p) 4,448 4,445
=================================================== ============= ============
Final dividend 2023 of 4.10p (2022 - 3.90p) 6,079 5,782
--------------------------------------------------- ------------- ------------
10,527 10,227
--------------------------------------------------- ------------- ------------
A first interim dividend in respect of the year ending 31 January
2024 of 3.20p per Ordinary share (2023 - 3.00p) was paid on 25 August
2023 to shareholders on the register on 4 August 2023. The ex-dividend
date was 3 August 2023.
5. Returns per share
=========================================== ============ ============
Six months Six months
ended ended
31 July 2023 31 July 2022
p p
=========================================== ============ ============
Revenue return 8.25 8.54
=============================================== ============ ============
Capital return 4.29 (11.66)
----------------------------------------------- ------------ ------------
Total return 12.54 (3.12)
----------------------------------------------- ------------ ------------
The returns per share are based on the
following:
=========================================== ============ ============
Six months Six months
ended ended
31 July 2023 31 July 2022
GBP'000 GBP'000
=========================================== ============ ============
Revenue return 12,225 12,667
=============================================== ============ ============
Capital return 6,369 (17,295)
----------------------------------------------- ------------ ------------
Total return 18,594 (4,628)
----------------------------------------------- ------------ ------------
Weighted average number of Ordinary shares 148,264,249 148,248,095
----------------------------------------------- ------------ ------------
6. Capital reserves
The capital reserve reflected in the Condensed Statement of Financial
Position at 31 July 2023 includes gains of GBP75,872,000 (31 January
2023 - gains of GBP54,080,000) which relate to the revaluation of
investments held at the reporting date.
7. Net asset value
Equity shareholders' funds have been calculated in accordance with
the provisions of Financial Reporting Standard 102. The analysis
of equity shareholders' funds on the face of the Condensed Statement
of Financial Position does not reflect the rights under the Articles
of Association of the Ordinary shareholders on a return of assets.
These rights are reflected in the net asset value and the net asset
value per share attributable to Ordinary shareholders at the period
end, adjusted to reflect the deduction of the Loan Notes at par.
A reconciliation between the two sets of figures is as follows:
31 July 2023 31 January
2023
============================================== ============= ===========
Net assets attributable (GBP'000) 456,610 448,605
================================================== ============= ===========
Number of Ordinary shares in issue at the
period end(A) 148,242,615 148,264,670
================================================== ============= ===========
Net asset value per Ordinary share 308.02p 302.57p
-------------------------------------------------- ------------- -----------
(A) Excluding shares held in treasury
31 July 2023 31 January
2023
Adjusted net assets GBP'000 GBP'000
============================================== ============= ===========
Net assets attributable (as above) 456,610 448,605
================================================== ============= ===========
Unamortised Loan Notes issue expenses (258) (262)
-------------------------------------------------- ------------- -----------
Adjusted net assets attributable 456,352 448,343
-------------------------------------------------- ------------- -----------
Number of Ordinary shares in issue at the
period end(A) 148,242,615 148,264,670
-------------------------------------------------- ------------- -----------
Adjusted net asset value per Ordinary share 307.84p 302.39p
-------------------------------------------------- ------------- -----------
(A) Excluding shares held in treasury.
31 July 2023 31 January
2023
Net assets - debt at fair value GBP'000 GBP'000
============================================== ============= ===========
Net assets attributable 456,610 448,605
================================================== ============= ===========
Amortised cost Loan Notes 29,742 29,738
================================================== ============= ===========
Market value Loan Notes (23,577) (29,393)
-------------------------------------------------- ------------- -----------
Net assets attributable 462,775 448,950
-------------------------------------------------- ------------- -----------
Number of Ordinary shares in issue at the
period end(A) 148,242,615 148,264,670
-------------------------------------------------- ------------- -----------
Net asset value per Ordinary share - debt
at fair value 312.17p 302.80p
-------------------------------------------------- ------------- -----------
(A) Excluding shares held in treasury.
8. Transaction costs
During the period expenses were incurred in acquiring or disposing
of investments classified as fair value through profit or loss.
These have been expensed through capital and are included within
gains/(losses) on investments in the Condensed Statement of Comprehensive
Income. The total costs were as follows:
Six months Six months
ended ended
31 July 2023 31 July 2022
GBP'000 GBP'000
================================ ====================== =====================
Purchases 151 146
==================================== ====================== =====================
Sales 25 23
------------------------------------ ---------------------- ---------------------
176 169
------------------------------------ ---------------------- ---------------------
9. Fair value hierarchy
FRS 102 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 classifications:
Level 1: unadjusted quoted prices in an active market for identical
assets or liabilities that the entity can access at the measurement
date.
Level 2: inputs other than quoted prices included within Level 1
that are observable (ie developed using market data) for the asset
or liability, either directly or indirectly.
Level 3: inputs are unobservable (ie for which market data is unavailable)
for the asset or liability.
The financial assets and liabilities measured at fair value in the
Condensed Statement of Financial Position are grouped into the fair
value hierarchy at the reporting date as follows:
Level Level Level Total
1 2 3
As at 31 July 2023 Note GBP'000 GBP'000 GBP'000 GBP'000
========================================== ===== ======= ======= ======= ==========
Financial assets at fair value through
profit or loss
========================================== ===== ======= ======= ======= ==========
Quoted equities a) 497,842 - - 497,842
------------------------------------------ ------------ ------- ------- ------- ----------
Total 497,842 - - 497,842
------------------------------------------ ------------ ------- ------- ------- ----------
Level Level Level Total
1 2 3
As at 31 January 2023 Note GBP'000 GBP'000 GBP'000 GBP'000
========================================== ===== ======= ======= ======= ==========
Financial assets at fair value through
profit or loss
========================================== ===== ======= ======= ======= ==========
Quoted equities a) 478,895 - - 478,895
------------------------------------------ ------------ ------- ------- ------- ----------
Total 478,895 - - 478,895
------------------------------------------ ------------ ------- ------- ------- ----------
a) Quoted equities. The fair value of the Company's investments
in quoted equities has been determined by reference to their
quoted bid prices at the reporting date. Quoted equities included
in Fair Value Level 1 are actively traded on recognised stock
exchanges.
10. Analysis of changes in net debt
==========================================================================================
At Currency Non-cash At
31 January differences Cash flows movements 31 July
2023 2023
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================================ ========== =========== ========== ========= ========
Cash and cash equivalents/(bank
overdraft) 12,267 227 (13,708) - (1,214)
===================================== ========== =========== ========== ========= ========
Debt due within one year (13,762) 43 351 - (13,368)
===================================== ========== =========== ========== ========= ========
Debt due after more than
one year (29,738) - - (4) (29,742)
------------------------------------- ---------- ----------- ---------- --------- --------
(31,233) 270 (13,357) (4) (44,324)
------------------------------------- ---------- ----------- ---------- --------- --------
At Currency Non-cash At
31 January differences Cash flows movements 31 July
2022 2022
Analysis of changes in GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
net debt
================================ ========== =========== ========== ========= ========
Cash and cash equivalents 2,855 22 4,935 - 7,812
===================================== ========== =========== ========== ========= ========
Debt due within one year (13,034) (37) - - (13,071)
===================================== ========== =========== ========== ========= ========
Debt due after more than
one year (29,731) - - (3) (29,734)
------------------------------------- ---------- ----------- ---------- --------- --------
(39,910) (15) 4,935 (3) (34,993)
------------------------------------- ---------- ----------- ---------- --------- --------
A statement reconciling the movement in net funds to the net cash
flow has not been presented as there are no differences from the
above analysis.
11. Transactions with the Manager
The Company has an agreement with the abrdn Fund Managers Limited
(the "Manager") for the provision of investment management, secretarial,
accounting and administration and promotional activity services.
The management fee is calculated and charged, on a monthly basis,
at 0.45% per annum on the first GBP225 million, 0.35% per annum
on the next GBP200 million and 0.25% per annum on amounts over GBP425
million of the net assets of the Company, with debt at par and excluding
commonly managed funds. The management fee is chargeable 40% to
revenue and 60% to capital. During the period GBP879,000 (31 July
2022 - GBP870,000) of investment management fees were payable to
the Manager, with a balance of GBP291,000 (31 July 2022 - GBP430,000)
being due at the period end. There were no commonly managed funds
held in the portfolio during the six months to 31 July 2023 (2022
- none).
The management agreement may be terminated by either party on not
less than six months' written notice. On termination by the Company
on less than the agreed notice period the Manager would be entitled
to receive fees which would otherwise have been due up to that date.
The Manager also receives a separate promotional activities fee
which is based on a current annual amount of GBP250,000 plus VAT
payable quarterly in arrears. During the period GBP125,000 plus
VAT (31 July 2022 - GBP121,000 plus VAT) of fees were payable to
the Manager, with a balance of GBP83,000 plus VAT (31 July 2022
- GBP81,000 plus VAT) being due at the period end.
12. Segmental information
The Company is engaged in a single segment of business, which is
to invest mainly in equity securities. All of the Company's activities
are interrelated, and each activity is dependent on the others.
Accordingly, all significant operating decisions are based on the
Company as one segment.
13. Half Yearly Financial Report
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 31 July 2023 and 31 July 2022 has not been
audited.
The information for the year ended 31 January 2023 has been extracted
from the latest published audited financial statements which have
been filed with the Registrar of Companies. The report of the auditor
on those accounts contained no qualification or statement under
Section 498 of the Companies Act 2006.
14. Approval
This Half Yearly Financial Report was approved by the Board on
21 September 2023.
Alternative Performance Measures ("APMs")
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
FRS 102 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 share with debt at fair value
The (discount)/premium is the amount by which the share price is lower
than the net asset value per share with debt at fair value, expressed
as a percentage of the net asset value with debt at fair value.
31 July 2023 31 January
2023
========================================= ============== ============== ===========
Share price (p) a 286.00p 294.00p
========================================= ============== ============== ===========
NAV per Ordinary share (p) b 312.17p 302.80p
========================================= ============== ============== ===========
Discount (a-b)/a 8.4% 2.9%
----------------------------------------- -------------- -------------- -----------
Dividend yield
Dividend yield is calculated using the Company's historic annual dividend
per Ordinary share divided by the share price, expressed as a percentage.
31 July 2023 31 January
2023
========================================= ============== ============== ===========
Annual dividend per Ordinary share
(p) a 13.10p 13.10p
========================================= ============== ============== ===========
Share price (p) b 286.00p 294.00p
========================================= ============== ============== ===========
Dividend yield a/b 4.6% 4.5%
----------------------------------------- -------------- -------------- -----------
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.
31 July 2023 31 January
2023
========================================= ============== ============== ===========
Borrowings (GBP'000) a 44,324 43,500
========================================= ============== ============== ===========
Cash (GBP'000) b - 12,267
========================================= ============== ============== ===========
Amounts due to brokers (GBP'000) c 57 649
========================================= ============== ============== ===========
Amounts due from brokers (GBP'000) d - -
========================================= ============== ============== ===========
Shareholders' funds (GBP'000) e 456,610 448,605
----------------------------------------- -------------- -------------- -----------
Net gearing (a-b+c-d)/e 9.7% 7.1%
----------------------------------------- -------------- -------------- -----------
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 Reference Index, respectively.
Share
Six months ended 31 July 2023 NAV Price
========================================= ============== ============== ===========
Opening at 1 February 2023 a 302.8p 294.0p
========================================= ============== ============== ===========
Closing at 31 July 2023 b 312.2p 286.0p
========================================= ============== ============== ===========
Price movements c=(b/a)-1 +3.1% (2.7)%
========================================= ============== ============== ===========
Dividend re-investment(A) d +2.4% +2.3%
----------------------------------------- -------------- -------------- -----------
Total return c+d +5.5% (0.4)%
----------------------------------------- -------------- -------------- -----------
Share
Year ended 31 January 2023 NAV Price
========================================= ============== ============== ===========
Opening at 1 February 2022 a 309.0p 310.0p
========================================= ============== ============== ===========
Closing at 31 January 2023 b 302.8p 294.0p
========================================= ============== ============== ===========
Price movements c=(b/a)-1 (2.0)% (5.2)%
========================================= ============== ============== ===========
Dividend re-investment(A) d +4.4% +4.3%
----------------------------------------- -------------- -------------- -----------
Total return c+d +2.4% (0.9)%
----------------------------------------- -------------- -------------- -----------
(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.
By order of the Board
abrdn Holdings Limited
Company Secretary
21 September 2023
Please note that past performance is not necessarily a guide to
the future and 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
This information is provided by RNS, the news service of the
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END
IR FLFVRAEIIFIV
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September 21, 2023 02:00 ET (06:00 GMT)
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