TIDMASCI
RNS Number : 3651M
abrdn Smaller Companies Inc Tst plc
14 September 2023
abrdn Smaller Companies Income Trust plc
Half Yearly Financial Report for the six months to 30 June
2023
OBJECTIVE
The objective of the Company is to provide a high and growing
dividend and capital growth from a portfolio invested principally
in the ordinary shares of smaller UK companies and UK fixed income
securities.
BENCHMARK
Numis Smaller Companies ex Investment Trusts Index - effective
from 1 January 2020; FTSE Small Cap ex Investment Trusts Index
(total return) - up to 31 December 2019
MANAGEMENT
The Company's alternative investment fund manager is abrdn Fund
Managers Limited ("aFML" or "the Manager"), previously named
Aberdeen Standard Fund Managers Limited, authorised and regulated
by the Financial Conduct Authority. The Company's portfolio is
managed on a day-to-day basis by abrdn Investments Limited,
previously named Aberdeen Asset Managers Limited ("aIL" or "the
Investment Manager") by way of a delegation agreement in place
between aFML and aIL.
Performance Highlights
Performance Highlights
Net asset value total return(A) Numis Smaller Companies ex Inv
Trust Index
Six months ended 30 June 2023 Six months ended 30 June 2023
-0.7% +1.4%
Year ended 31 December 2022: -33.2% Year ended 31 December 2022: -17.9%
Earnings per Ordinary share (revenue) Share price total return(A)
Six months ended 30 June 2023 Six months ended 30 June 2023
6.52p +8.1%
Six months ended 30 June 2022: Year ended 31 December 2022: -33.7%
6.10p
Discount to net asset value(A) Net cash/(gearing)(A)
As at 30 June 2023 As at 30 June 2023
9.3% 1.6%
As at 31 December 2022: 16.3% As at 31 December 2022: -8.2%
(A) Considered to be an Alternative Performance Measure. Further
details can be found on pages 25 and 27 of the 2023 Interim Report.
Performance (total return)
Six months 1 year ended 3 years ended 5 years ended
ended
30 June 2023 30 June 2023 30 June 2023 30 June 2023
============================= ============ ============ ============= =============
Share price(A) +8.1% +1.8% +6.2% +0.4%
============================= ============ ============ ============= =============
Net asset value per Ordinary
share(A) -0.7% -5.2% -0.6% -6.7%
============================= ============ ============ ============= =============
Composite benchmark(B) +1.4% +4.4% +29.5% +4.2%
----------------------------- ------------ ------------ ------------- -------------
(A) Considered to be an Alternative Performance Measure. Further details
can be found on page 27 of the 2023 Interim Report.
(B) Comprises the Numis Smaller Companies (exc Inv Trusts) from 1
January 2020 and the FTSE SmallCap Index (exc Inv Trusts) up to 31
December 2019.
Source: aFML, Lipper & Morningstar.
Financial Calendar, Dividends and Highlights
Payment dates of quarterly dividends January 2023
April 2023
July 2023
October 2023
===================================== =================
Financial year end 31 December 2023
===================================== =================
Extraordinary General Meetings 20 November 2023
1 December 2023
===================================== =================
Financial Highlights
30 June 2023 31 December % change
2022
====================================== ============== ============ =========
Shareholders' funds (GBP'000) 61,397 63,520 -3.3
====================================== ============== ============ =========
Net asset value per Ordinary share
(with debt at par value) 277.69p 287.29p -3.3
====================================== ============== ============ =========
Share price (mid-market) 252.00p 240.50p +4.8
====================================== ============== ============ =========
Discount to net asset value per
Ordinary share(A) 9.3% 16.3%
====================================== ============== ============ =========
Net cash/(gearing)(A) 1.6% (8.2%)
====================================== ============== ============ =========
Ongoing charges ratio(A) 1.31% 1.34%
-------------------------------------- -------------- ------------ ---------
(A) Considered to be an Alternative Performance Measure. Further details
can be found on pages 25 and 26 of the 2023 Interim Report.
Chair's Statement
Introduction
Since the year end, the Board has announced, on 13 February
2023, a review to consider the future of the Company (the
"Strategic Review") and more recently, on 26 July 2023, the results
of the Strategic Review: that the Board has agreed heads of terms
with the board of Shires Income plc ("Shires") for a combination of
the assets of the Company with the assets of Shires. If approved by
the shareholders of each company, the combination of assets will be
implemented by way of a scheme of reconstruction and members'
voluntary winding up of the Company under section 110 of the
Insolvency Act and the associated transfer of assets to Shires (the
"Proposals").
The Board was very satisfied with the interest shown in the
Strategic Review, with proposals received from more than a dozen
candidates, and is now pleased to recommend the Proposals to
shareholders of the Company.
We believe the Proposals will provide an attractive and
potentially growing level of dividend and the potential for future
capital growth, whilst also allowing you to retain some exposure to
smaller companies overseen by the UK Equities team at abrdn.
Shareholders can choose to rollover into Shires or receive cash for
all or some of their shareholding, as calculated at the cut-off
date, on materially improved terms to those which Shires proposed
prior to the Strategic Review. The default option under the Scheme
is for shareholders to receive new shares in Shires.
The Proposals will be subject to the approval of shareholders of
the Company and Shires, as well as regulatory and tax approvals.
Further details will be in the circular, which is expected to be
published in the coming weeks.
The Board believes that the Proposals as a whole are in the best
interests of the Company. In the event that the scheme of
reconstruction does not go-ahead, then the Company will make an
announcement to the London Stock Exchange and on the Company's
website. We therefore encourage shareholders to check for such
updates.
Performance
During what has been a very challenging economic environment for
smaller companies, the Company's net asset value for the six month
period to 30 June 2023 underperformed its benchmark, the Numis
Smaller Companies ex Investment Companies Index, by 2.1%, returning
-0.7% on a total return basis, versus a benchmark return of
1.4%.
Share price performance over the six month period was more
positive, with a return of +8.1%.
Discount
The Company's discount to net asset value as at 30 June 2023
stood at 9.3%, compared with 16.3% at the end of December 2022. The
narrowing of the discount reflects the positive market sentiment
which followed the announcement of the Strategic Review. At the
time of writing it is also encouraging to see that, following the
announcement of the results of the Strategic Review, the Company's
discount remains at these lower levels.
Company Gearing and Debt
In April 2023, the Company's GBP5 million fixed rate loan with
the Royal Bank of Scotland International Limited, London Branch
expired and, in light of the Strategic Review at that time, the
Board decided not to renew it.
The Company's GBP5 million revolving credit facility remained in
place and at 30 June 2023, GBP2 million was drawn down under this
facility.
This resulted in a reduction in the Company's gearing level,
which stood at 1.6% at the end of June 2023, compared with 8.2% at
the end of December 2022.
After the period end, the Board took the decision to repay the
Company's remaining facility in full and the facility was cancelled
on 7 August 2023.
Dividend
As announced with the results of the Strategic Review, the
Company expects to pay out the vast majority of its accumulated
revenue reserves via a pre-liquidation dividend to all
shareholders. More details will be announced separately to the
London Stock Exchange via a regulatory news service
announcement.
For the first and second quarters of 2023, the Board announced
dividends of 2.60p each per Ordinary share (2022 - 2.40p each), an
increase on last year's equivalent figures of 8.3%.
The Board has been pleased with the strength of the dividends
generated from the Company's portfolio holdings, which reflects the
quality focus of these companies. We have seen companies with
robust business models, strong balance sheets and the ability to
defend margins against a challenging market back drop. In
recognition of this, the Board now declares a third interim
dividend of 2.60p per share in respect of the year to 31 December
2023 payable on 27 October 2023 to shareholders on the register at
close of business on 29 September 2023. The ex-dividend date is 28
September 2023.
More information on the Company's portfolio can be found in the
Investment Manager's Review on pages 8 to 10 of the half yearly
report for the period ended 30 June 2023 (the "2023 Interim
Report").
General Meetings
The Board strongly encourages attendance at general meetings,
where you are offered an opportunity to meet with the Board and
representatives from the Manager face to face after the
meeting.
Your Manager's presentation, which was delivered at the Annual
General Meeting on 14 June 2023, is available to view on the
Company's website, abrdnsmallercompaniesincome.co.uk.
The notice for the general meetings required to effect the
Proposals will be circulated separately to all shareholders,
together with the circular. As usual, shareholders are encouraged
to lodge their proxy votes in advance of the meetings, irrespective
of whether they are able to attend in person. You may also submit
any questions in advance of the meetings by email to:
smallercompaniesincome@abrdn.co.uk.
It is anticipated that the documentation in connection with the
Proposals will be published during October, with a view to
convening general meetings on 20 November 2023 and 1 December 2023
in order to complete the transaction before the end of the
year.
Thus, if the necessary approvals are forthcoming, this will be
my final statement as Chair of the Company. I would like to thank
shareholders for their continuing support and all of the Company's
service providers, including the Manager and the Investment
Manager, particularly Abby Glennie and Amanda Yeaman, for all their
hard work and stewardship of the Company's investments, through
some very challenging times for the smaller companies sector.
Whilst many of the challenges may remain, your Board believes that
shareholders will continue to benefit from the Investment Manager's
focus on high income and the potential upside presented under the
merger Proposals.
Dagmar Kent Kershaw
Chair
13 September 2023
Other Matters
Principal Risks and Uncertainties
There are a number of risks which, if realised, could have a
material adverse effect on the Company and its financial condition,
performance and prospects. The Board has identified the principal
risks and uncertainties facing the Company together with a
description of the mitigating actions it has taken. These can be
summarised under the following headings:
- Investment and Market
- Investment Portfolio Management
- Major Market Event, Climate Change or Geopolitical Development
- Income and Dividend
- Operational
- Gearing
Details of these risks are provided in detail on pages 23 to 25
of the Annual Report for the year ending 31 December 2022.
The Board monitors these principal risks closely and has a
process to identify and assess emerging risks, such as climate
change and geopolitical developments.
The Board is also aware of the elevated threat posed by climate
change and continues to monitor, through the Investment Manager,
the potential risk that the companies in the portfolio may fail to
adapt to the requirements imposed by climate change.
In all other respects, the Company's principal risks have not
changed materially since the year end, nor are they expected to
change in the second half of the financial year ended 31 December
2023. Please note the material uncertainty with regard to the
future of the Company outlined below.
Going Concern with Material Uncertainty
The Company's assets consist substantially of "Level One"
securities in companies listed on recognised stock exchanges and in
normal circumstances are realisable within a short timescale.
The Board has set gearing limits and regularly reviews actual
exposures, cash flow projections and compliance with banking
covenants. During the period and in light of the Strategic Review,
the Board has fully repaid the GBP5 million variable rate loan
facility using the proceeds of the sale of investments and has
terminated the loan facility with effect from 7 August 2023. The
GBP5 million fixed rate loan facility expired in April 2023 and was
not renewed. Accordingly, the Company no longer has a credit
facility in place.
In accordance with the Financial Reporting Council's Guidance on
Risk Management, Internal Control and Related Financial and
Business Reporting issued in September 2014, taking account of the
"Level One" assets (being realisable within a short timescale) and
the fact that the Company no longer has any gearing, the Directors
believe that adopting a going concern basis of accounting remains
appropriate. The Company has adequate financial resources to
continue in operational existence for the foreseeable future and at
least twelve months from the date of approval of this Half Yearly
Report.
Material Uncertainty
The Board announced a Strategic Review on 13 February 2023,
which concluded on 26 July 2023 with the announcement of the
proposed combination of the assets of the Company with the assets
of Shires Income plc ("Shires"), subject to shareholder approval,
through a tax efficient scheme of reconstruction under section 110
of the Insolvency Act 1986 (the "Proposals"). More detail can be
found in the Chair's Statement above and in the RNS announcement
dated 26 July 2023.
The Board believes that the Proposals are in the best interests
of shareholders as a whole and recommends that shareholders vote in
favour of the resolutions required to effect the Proposals. This
would result in the voluntary liquidation of the Company. Due to
the requirement for the Proposals to receive approval from the
shareholders of both the Company and Shires (including the approval
of independent shareholders in the Company for a related party
transaction) there remains material uncertainty as to the future of
the Company.
However, should the Proposals not receive the necessary
shareholder approvals, the Board believes that other attractive
options remain viable for shareholders, which can be pursued. The
Board also believes that the investment objective remains relevant
and the Company remains in a position to generate attractive
returns for all shareholders. Accordingly, the Board has prepared
the financial statements in this Half Yearly Report on a going
concern basis.
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 International Accounting Standard 34 'Interim
Financial Reporting';
- the Interim Board Report includes a fair review of the
information required by rule 4.2.7R of the Disclosure Guidance and
Transparency Rules (being an indication of important events that
have occurred during the first six months of the financial year and
their impact on the condensed set of Financial Statements and a
description of the principal risks and uncertainties for the
remaining six months of the financial year); and
- the Interim Board Report includes a fair review of the
information required by 4.2.8R (being related party transactions
that have taken place during the first six months of the financial
year and that have materially affected the financial position of
the Company during that period; and any changes in the related
party transactions described in the last Annual Report that could
do so).
The Half Yearly Financial Report for the six months to 30 June
2023 comprises the Interim Board Report and a condensed set of
financial statements.
For and on behalf of the Board
Dagmar Kent Kershaw,
Chair
13 September 2023
Investment Manager's Review
Overview
UK equities made steady gains over the first six months of 2023
but underperformed major markets in Europe and North America.
Persistently high inflation rates, further increases in interest
rates and a gloomy economic outlook were detrimental to the UK
market. Overall, the UK's small and medium sized companies
underperformed their blue-chip counterparts over the period. While
the FTSE 100 Index returned 3.1%, the domestically focused FTSE 250
Index and FTSE Small Cap Index both declined by 0.6%.
Global equity markets remained volatile throughout the period,
with the collapse of US-based Silicon Valley Bank and a loss of
confidence in Switzerland's Credit Suisse in March 2023, sparking
fears about the resilience of the global financial system. The
prospect of a US government debt default also impacted markets in
May 2023 before Congress eventually approved an eleventh-hour
increase of the debt ceiling. Lacklustre economic data from China
in the second quarter of 2023 also led to a weakening of
commodities prices, which weighed on the UK's large-cap energy and
mining stocks.
In economic news, inflation in the UK remained stubbornly high
over the period, with a surprise rise in February 2023 and gradual
declines in the months that followed. The Bank of England ("BoE")
increased the base rate in the first half of the year in its
ongoing efforts to bring price rises under control. The 0.5%
increase in interest rates surprised markets in June and raised
fears that further rate rises could be implemented later in the
year. Higher interest rates led to a surge in mortgage costs for
homeowners and prompted a sharp decline in construction sector and
housing market activity.
Performance
In the first six months of the year, UK markets have been
volatile, macro-driven and have sold-off heavily. The dominating
market narrative is one of out-of-control inflation in the UK that
requires the BoE to increase interest rates. Against this backdrop
our quality, growth and momentum process has been out of favour. A
series of four above expectation inflation reports have made it
clear to investors that UK inflation is differentiated from that of
the Eurozone or the US; with a combination of labour market
shortages and a lack of productivity growth conspiring to embed
inflation in the UK economy more than overseas. This excessive
pessimism about inflation and monetary policy in the UK has
constrained UK equity markets and has been the driving narrative
for the first half of the year.
Overall, with the exception of the month of March 2023, when the
market moved towards quality names in the wake of the crisis in US
regional banks and the demise of Credit Suisse, the economic
environment has been challenging for the Company's portfolio.
Accordingly, the Company has underperformed the Numis Smaller
Companies (excluding Investment Trusts) Index (total return)
benchmark by 2.1%.
Portfolio Activity
During the period, the Company initiated a position in Next
Fifteen, the high matrix scoring technology and data driven growth
consultancy firm, taking advantage of an attractive valuation entry
point and consistent robust earnings delivery. While the uncertain
macroeconomic backdrop does present risk, we believe the company
has multiple growth levers and has left itself material room on
margins compared to consensus expectations. The shares are trading
on a 45% discount to its average valuation over the last ten years.
Our view is that this economic risk is over-estimated by the market
and the shares are undervalued.
The Company took a new position in the engineering consultant,
Ricardo, after the strategy laid out by management several years
ago has finally come to fruition. The company's new CEO has been
key to driving this transformation and there is more for the
company to do, particularly in terms of cross-selling, as well as
organic growth or growth by acquisition. An increase in focus on
environmental and energy consultancy is expected to help Ricardo
approach its mid double-digit margin target over the next few
years.
A new position in Alpha Group International ("Alpha") was
initiated, after several years of strong execution, with the
company having successfully addressed risks and processes in its
foreign-exchange business and improved banking solutions
operations. Alpha has a strong management team built around founder
and CEO Morgan Tillbrook. We expect the company to deliver progress
on earnings growth and margins in the second half of 2023, while
continuing to reinvest in the business.
We sold the Company's position in Polar Capital, due to a
decline in its matrix score. While we believe the business is well
placed over the longer term, the industry backdrop is challenging
and we haven't seen sufficient, sustained momentum returning in the
short term.
We also sold out of Victrex in view of perceived risk to
earnings, deteriorating end markets and lacklustre delivery.
Moreover, we believe the special dividend paid by the company last
year is unlikely to be repeated.
ESG Engagement
During the first half of the year, we met with management at
Paragon Banking Group ("Paragon"), a business affected by
environmental, social and governance ("ESG") matters on several
levels. The most insightful part of the engagement was our
discussion around sustainable finance and the company's capital
allocation towards that area. This includes lending for rental
properties with high energy-performance certificate ratings,
finance for electric vehicles and development finance for energy
efficient property developments. Paragon is in a powerful position
to create change and also be involved in determining future
regulation in the sector; however, we should not necessarily expect
them to cut exposure to other areas.
From a social perspective, Paragon's professional landlord
service and the wider influence it has in its buy-to-let business
can help deliver a better outcome for tenants. The company's staff
turnover levels are also attractive in comparison with its peers,
and Paragon has made a very strong effort to support women in
senior roles. Overall, we were pleased with the progress the
business has already made and its general strategy. However, we
would like to engage further on Paragon's exposure to the UN's
Sustainable Development Goals through sustainable finance, as well
as look in greater detail at its performance relative to its peers
in new originations in lower-emission homes.
We engaged directly with Smart Metering Systems ("SMS")
regarding its battery supply chain. We received clear evidence that
SMS was taking its responsibilities around the sourcing and
handling of batteries seriously, with regular independent audits of
key suppliers. The company recognises the importance of lithium's
role in enabling the transition to a low-carbon future and has
clear policies to ensure suppliers' adherence to controls around
the sourcing and management of the raw materials and related
resources involved in battery production.
Fixed Income Portfolio
The first half of 2023 has been somewhat challenging for the UK
bond market. Inflation continues to run significantly ahead of the
BoE's 2% target and the Monetary Policy Committee has been forced
to raise rates significantly more than the market expected at the
start of the new year. Credit spreads were volatile in the first
quarter on the back of the banking failures mentioned earlier in
this report. However, they have been rallying back and the increase
in government bond yields has more than offset the move.
The Company's holdings in the shorter end of the sterling market
were impacted by the significant tightening of monetary policy.
Five-year yields were about 50 basis points higher over the period
leading to some losses from bond holdings. Bond issued by banks
performed well relative to other areas of the market which
contributed to the Company's performance. Thames Water's well
documented financial and operational issues have no material impact
on the holdings.
Outlook
The markets continue to be dominated by macro conditions,
predominantly the pathway of inflation and interest rates,
globally. The UK still stands out in terms of inflation, in that
whilst many countries are battling with high inflation
environments, the UK appears to be showing stickier inflation.
Whilst energy prices have stepped back, we are seeing areas such as
food inflation in the UK remain at high levels; and wage inflation
as well as a strong labour market continue to support consumer
spending. Without a recession, there remains the challenge of how
inflation gets controlled; interest rates having already been
increased significantly, but often taking some time to have an
impact. China is the region where Covid-19 and the re-opening still
remains uncertain, with other countries having returned to some
'normality'. The combination of these factors creates a very
uncertain environment, which continues to drive market
challenges.
We would also remind investors of the geographic exposures of
the portfolio companies' revenues. At the time of writing, 51% of
revenues are generated in the UK, with 49% overseas. This is
similar to the exposure within the Company's benchmark. Many of the
companies in the portfolio, as has been true through time and a
result also of our investment process, have strong international
growth exposure. Some are global leaders in what they do. One
challenge in the upcoming period for overseas earners is the
current strength of Sterling, which, if it continues, may cause
some currency headwinds for these businesses.
In a recessionary environment, or continued low economic growth,
we believe the market will move towards quality, resilience,
reliability, visible revenue streams and strong balance sheets. We
have seen these characteristics fundamentally demonstrated by the
portfolio companies over this period, clear also through the
dividend strength. In that economic situation, where growth becomes
scarcer, the growth that remains tends to become more valuable.
In a recovery phase, small and mid-cap stocks tend to lead that
market recovery, and the outlook for the asset class should be
attractive. Small and mid-caps in the UK have still lagged large
companies in the market moves since the start of 2022. In that
environment, we believe the small-cap asset class can produce some
attractive return potential, as markets recover and the disparity
to large-cap narrows. Encouragingly, the Company outperformed in
the sharp market recovery in Q4 2022, with quality growth companies
performing well.
We continue to believe there are opportunities for quality
growth businesses, which deliver well on earnings expectations, to
outperform. The valuations currently being paid for growth
companies in UK small mid-cap markets remain significantly below
historic levels, whereas in other regions the market is now paying
a ten-year median valuation for growth businesses again. As such,
many quality UK growth companies currently trade on undemanding
valuations.
Amanda Yeaman & Abby Glennie
abrdn Investments Limited
13 September 2023
Ten Largest Investments
As at 30 June 2023
Games Workshop 4imprint
Global retailer of hobbyist Direct marketer of promotional
products, selling through own products, with a focus on US.
retail stores, online, and
through trade partners. Owner
of the IP of Warhammer.
Bytes Technology Morgan Sindall
UK based company that provides UK leading business in construction
information technology (IT) and regeneration work.
software offerings and solutions,
with a focus on cloud and security
products.
Hollywood Bowl DiscoverIE
Operator of bowling centres. International group of businesses
that designs, manufactures
and supplies highly differentiated
components for electronic applications.
Alpha Financial Markets Consulting Greggs
Leading global consulting company UK based food to go retailer,
to assist asset management, specialising in fresh bakes,
wealth management and insurance sandwiches, hot drinks and
industries. sweet treats.
Telecom Plus Softcat
Reseller of telecom and utilities Value added technology reseller
service, under the Utility in UK.
Warehouse brand.
Portfolio - Equities
At 30 June 2023
===============================================================================================
Valuation Total
2023 portfolio
Company Sector Classification GBP'000 %
=================================== ==================================== ========= =========
Games Workshop Leisure Goods 2,263 3.7
=================================== ==================================== ========= =========
4imprint Media 2,156 3.6
=================================== ==================================== ========= =========
Bytes Technology Software and Computer Services 2,155 3.6
=================================== ==================================== ========= =========
Morgan Sindall Construction and Materials 2,096 3.5
=================================== ==================================== ========= =========
Hollywood Bowl Travel & Leisure 2,082 3.5
=================================== ==================================== ========= =========
discoverIE Technology Hardware & Equipment 2,062 3.4
=================================== ==================================== ========= =========
Alpha Financial Markets Consulting Industrial Support Services 1,888 3.1
=================================== ==================================== ========= =========
Personal Care, Drug and
Greggs Grocery Stores 1,724 2.9
=================================== ==================================== ========= =========
Telecommunications Service
Telecom Plus Providers 1,603 2.7
=================================== ==================================== ========= =========
Softcat Software & Computer Services 1,579 2.6
----------------------------------- ------------------------------------ --------- ---------
Ten largest investments 19,608 32.6
------------------------------------------------------------------------- --------- ---------
Investment Banking & Brokerage
AJ Bell Services 1,574 2.6
=================================== ==================================== ========= =========
Investment Banking & Brokerage
Tatton Asset Management Services 1,557 2.6
=================================== ==================================== ========= =========
Real Estate Investment &
Sirius Real Estate Services 1,466 2.4
=================================== ==================================== ========= =========
Safestore Real Estate Investment Trusts 1,448 2.4
=================================== ==================================== ========= =========
Investment Banking & Brokerage
Intermediate Capital Services 1,405 2.3
=================================== ==================================== ========= =========
Energean Oil Gas & Coal 1,398 2.3
=================================== ==================================== ========= =========
Chesnara Life Insurance 1,379 2.3
=================================== ==================================== ========= =========
Investment Banking & Brokerage
Paragon Banking Services 1,351 2.3
=================================== ==================================== ========= =========
Pets at Home Retailers 1,305 2.2
=================================== ==================================== ========= =========
Assura Real Estate Investment Trusts 1,264 2.1
----------------------------------- ------------------------------------ --------- ---------
Twenty largest investments 33,755 56.1
------------------------------------------------------------------------- --------- ---------
Somero Enterprises Industrial Engineering 1,243 2.1
=================================== ==================================== ========= =========
Smart Metering Systems Industrial Support Services 1,205 2.0
=================================== ==================================== ========= =========
Midwich Industrial Support Services 1,126 1.9
=================================== ==================================== ========= =========
Chemring Aerospace & Defense 1,054 1.8
=================================== ==================================== ========= =========
Investment Banking & Brokerage
Rathbone Brothers Services 1,044 1.7
=================================== ==================================== ========= =========
Close Brothers Banks 1,042 1.7
=================================== ==================================== ========= =========
Dunelm Retailers 1,026 1.7
=================================== ==================================== ========= =========
Hilton Food Food Producers 1,026 1.7
=================================== ==================================== ========= =========
Hill & Smith Industrial Metals & Mining 1,020 1.7
=================================== ==================================== ========= =========
Personal Care, Drug & Grocery
Kesko(A) Stores 985 1.6
----------------------------------- ------------------------------------ --------- ---------
Thirty largest investments 44,526 74.0
------------------------------------------------------------------------- --------- ---------
FDM Industrial Support Services 958 1.6
=================================== ==================================== ========= =========
Severfield Construction & Materials 939 1.5
=================================== ==================================== ========= =========
Robert Walters Industrial Support Services 919 1.5
=================================== ==================================== ========= =========
Coats General Industrials 908 1.5
=================================== ==================================== ========= =========
Serica Energy Oil Gas & Coal 899 1.5
=================================== ==================================== ========= =========
Unite Real Estate Investment Trusts 886 1.5
=================================== ==================================== ========= =========
Mortgage Advice Bureau Finance & Credit Services 885 1.5
=================================== ==================================== ========= =========
Investment Banking & Brokerage
Liontrust Asset Management Services 848 1.4
=================================== ==================================== ========= =========
Forterra Construction & Materials 729 1.2
=================================== ==================================== ========= =========
Gateley Industrial Support Services 693 1.2
----------------------------------- ------------------------------------ --------- ---------
Forty largest investments 53,190 88.4
------------------------------------------------------------------------- --------- ---------
Electronic & Electrical
XP Power Equipment 654 1.1
=================================== ==================================== ========= =========
MJ Gleeson Household Goods & Home Construction 643 1.1
=================================== ==================================== ========= =========
Spirent Communications Telecommunications Equipment 606 1.0
=================================== ==================================== ========= =========
FRP Advisory Industrial Support Services 598 1.0
=================================== ==================================== ========= =========
Investment Banking & Brokerage
Impax Asset Management Services 595 1.0
=================================== ==================================== ========= =========
Next 15 Communications Media 592 1.0
=================================== ==================================== ========= =========
Ricardo Construction & Materials 552 0.9
=================================== ==================================== ========= =========
Marshalls Construction & Materials 517 0.8
=================================== ==================================== ========= =========
Alpha Group Industrial Support Services 430 0.7
----------------------------------- ------------------------------------ --------- ---------
Total Equity Investments 58,377 97.0
------------------------------------------------------------------------- --------- ---------
(A) All investments are listed on the London Stock Exchange (sterling
based), except where marked, which is listed on an overseas exchange
(sterling based).
Portfolio - Other Investments
At 30 June 2023
==========================================================================
Valuation Total
2023 portfolio
Company GBP'000 %
=============================================== ============ ===========
Corporate Bonds(A)
=============================================== ============ ===========
NGG Finance 5.625% 379 0.7
=============================================== ============ ===========
Barclays Bank 9% Perp 311 0.5
=============================================== ============ ===========
HSBC Holdings 6.5% 300 0.5
=============================================== ============ ===========
Northumbrian Water 1.625% 256 0.4
=============================================== ============ ===========
Anglian Water Service Finance 4.5% 191 0.3
=============================================== ============ ===========
Informa 3.125% 180 0.3
=============================================== ============ ===========
NatWest Group 2.105% 165 0.3
=============================================== ============ ===========
Total Corporate Bonds 1,782 3.0
----------------------------------------------- ------------ -----------
Total Investments 60,159 100.0
----------------------------------------------- ------------ -----------
(A) All investments are listed on the London Stock Exchange (Sterling
based).
Distribution of Assets and Liabilities
As at 30 June 2023
===========================================================================================
Valuation at Valuation at
31 December Movement during the 30 June 2023
2022 period
============================= =============== =========================== ==============
Purchases Sales Losses
GBP'000 % GBP'000 GBP'000 GBP'000 GBP'000 %
============================= ======= ====== ========= ======= ======= ======= =====
Listed investments
============================= ======= ====== ========= ======= ======= ======= =====
Equity investments 66,628 104.9 3,130 (9,236) (2,145) 58,377 95.1
============================= ======= ====== ========= ======= ======= ======= =====
Corporate bonds 2,104 3.3 - (300) (22) 1,782 2.9
----------------------------- ------- ------ --------- ------- ------- ------- -----
68,732 108.2 3,130 (9,536) (2,167) 60,159 98.0
----------------------------- ------- ------ --------- ------- ------- ------- -----
Current assets 2,127 3.3 3,483 5.7
============================= ======= ====== ========= ======= ======= ======= =====
Other current liabilities (340) (0.5) (245) (0.4)
============================= ======= ====== ========= ======= ======= ======= =====
Loans (6,999) (11.0) (2,000) (3.3)
----------------------------- ------- ------ --------- ------- ------- ------- -----
Net assets 63,520 100.0 61,397 100.0
----------------------------- ------- ------ --------- ------- ------- ------- -----
Net asset value per Ordinary
share 287.29p 277.69p
----------------------------- ------- ------ --------- ------- ------- ------- -----
Condensed Statement of Comprehensive Income
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
(unaudited) (unaudited) (audited)
========================== ===== ========================= =========================== ===========================
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================== ===== ======= ======= ======= ======= ======== ======== ======= ======== ========
Losses on investments
at fair value - (2,167) (2,167) - (30,167) (30,167) - (34,164) (34,164)
========================== ===== ======= ======= ======= ======= ======== ======== ======= ======== ========
Currency losses - (3) (3) - - - - - -
========================== ===== ======= ======= ======= ======= ======== ======== ======= ======== ========
Income
========================== ===== ======= ======= ======= ======= ======== ======== ======= ======== ========
Dividend income 2 1,688 - 1,688 1,656 - 1,656 3,037 - 3,037
========================== ===== ======= ======= ======= ======= ======== ======== ======= ======== ========
Interest income from
investments 2 41 - 41 46 - 46 90 - 90
========================== ===== ======= ======= ======= ======= ======== ======== ======= ======== ========
Other income 2 59 - 59 9 - 9 37 - 37
-------------------------- ----- ------- ------- ------- ------- -------- -------- ------- -------- --------
1,788 (2,170) (382) 1,711 (30,167) (28,456) 3,164 (34,164) (31,000)
-------------------------- ----- ------- ------- ------- ------- -------- -------- ------- -------- --------
Expenses
========================== ===== ======= ======= ======= ======= ======== ======== ======= ======== ========
Investment management
fee (72) (168) (240) (88) (205) (293) (160) (373) (533)
========================== ===== ======= ======= ======= ======= ======== ======== ======= ======== ========
Other administrative
expenses (226) - (226) (226) - (226) (435) - (435)
========================== ===== ======= ======= ======= ======= ======== ======== ======= ======== ========
Finance costs (33) (77) (110) (33) (77) (110) (62) (145) (207)
-------------------------- ----- ------- ------- ------- ------- -------- -------- ------- -------- --------
Profit/(loss) before
tax 1,457 (2,415) (958) 1,364 (30,449) (29,085) 2,507 (34,682) (32,175)
-------------------------- ----- ------- ------- ------- ------- -------- -------- ------- -------- --------
Taxation 3 (15) - (15) (15) - (15) (21) - (21)
-------------------------- ----- ------- ------- ------- ------- -------- -------- ------- -------- --------
Profit/(loss) attributable
to equity holders 1,442 (2,415) (973) 1,349 (30,449) (29,100) 2,486 (34,682) (32,196)
-------------------------- ----- ------- ------- ------- ------- -------- -------- ------- -------- --------
Return per Ordinary
share (pence) 5 6.52 (10.92) (4.40) 6.10 (137.72) (131.62) 11.24 (156.86) (145.62)
-------------------------- ----- ------- ------- ------- ------- -------- -------- ------- -------- --------
The total column of this statement represents the Company's Statement
of Comprehensive Income, prepared in accordance with IFRS. The supplementary
revenue and capital columns are both prepared under guidance published
by the Association of Investment Companies (AIC). All items in the
above statement derive from continuing operations.
The Company does not have any income or expense that is not included
in profit for the period, and therefore the "Profit/(loss) attributable
to equity holders" is also the "Total comprehensive income attributable
to equity holders" as defined in IAS 1 (revised).
The accompanying notes are an integral part of these condensed financial
statements.
Condensed Balance Sheet
As at As at As at
30 June 2023 30 June 2022 31 December
2022
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
====================================== ===== ============ ============ ===========
Non-current assets
====================================== ===== ============ ============ ===========
Equities 58,377 68,363 66,628
====================================== ===== ============ ============ ===========
Corporate Bonds 1,782 2,181 2,104
-------------------------------------- ----- ------------ ------------ -----------
Securities at fair value 60,159 70,544 68,732
-------------------------------------- ----- ------------ ------------ -----------
Current assets
====================================== ===== ============ ============ ===========
Cash and cash equivalents 2,945 3,741 1,786
====================================== ===== ============ ============ ===========
Other receivables 538 651 341
-------------------------------------- ----- ------------ ------------ -----------
3,483 4,392 2,127
-------------------------------------- ----- ------------ ------------ -----------
Current liabilities
====================================== ===== ============ ============ ===========
Bank loan (2,000) (6,997) (6,999)
====================================== ===== ============ ============ ===========
Trade and other payables (245) (260) (340)
-------------------------------------- ----- ------------ ------------ -----------
(2,245) (7,257) (7,339)
-------------------------------------- ----- ------------ ------------ -----------
Net current assets/(liabilities) 1,238 (2,865) (5,212)
-------------------------------------- ----- ------------ ------------ -----------
Total assets less current liabilities 61,397 67,679 63,520
====================================== ===== ============ ============ ===========
Net assets 61,397 67,679 63,520
-------------------------------------- ----- ------------ ------------ -----------
Share capital and reserves
====================================== ===== ============ ============ ===========
Called-up share capital 11,055 11,055 11,055
====================================== ===== ============ ============ ===========
Share premium account 11,892 11,892 11,892
====================================== ===== ============ ============ ===========
Capital redemption reserve 2,032 2,032 2,032
====================================== ===== ============ ============ ===========
Capital reserve 32,564 39,212 34,979
====================================== ===== ============ ============ ===========
Revenue reserve 3,854 3,488 3,562
-------------------------------------- ----- ------------ ------------ -----------
Shareholders' funds 61,397 67,679 63,520
-------------------------------------- ----- ------------ ------------ -----------
Net asset value per Ordinary
share (pence) 6 277.69 306.10 287.29
-------------------------------------- ----- ------------ ------------ -----------
The accompanying notes are an integral part of these condensed financial
statements.
Condensed Statement of Changes in Equity
Six months ended 30 June 2023 (unaudited)
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================= ======== ======== =========== ======== ======== ========
As at 31 December 2022 11,055 11,892 2,032 34,979 3,562 63,520
============================= ======== ======== =========== ======== ======== ========
(Loss)/profit for the period - - - (2,415) 1,442 (973)
============================= ======== ======== =========== ======== ======== ========
Dividends paid in the period - - - - (1,150) (1,150)
----------------------------- -------- -------- ----------- -------- -------- --------
As at 30 June 2023 11,055 11,892 2,032 32,564 3,854 61,397
----------------------------- -------- -------- ----------- -------- -------- --------
Six months ended 30 June 2022 (unaudited)
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================= ======== ======== =========== ======== ======== ========
As at 31 December 2021 11,055 11,892 2,032 69,661 3,200 97,840
============================= ======== ======== =========== ======== ======== ========
(Loss)/profit for the period - - - (30,449) 1,349 (29,100)
============================= ======== ======== =========== ======== ======== ========
Dividends paid in the period - - - - (1,061) (1,061)
----------------------------- -------- -------- ----------- -------- -------- --------
As at 30 June 2022 11,055 11,892 2,032 39,212 3,488 67,679
----------------------------- -------- -------- ----------- -------- -------- --------
Year ended 31 December 2022 (audited)
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================= ======== ======== =========== ======== ======== ========
As at 31 December 2021 11,055 11,892 2,032 69,661 3,200 97,840
============================= ======== ======== =========== ======== ======== ========
(Loss)/profit for the period - - - (34,682) 2,486 (32,196)
============================= ======== ======== =========== ======== ======== ========
Dividends paid in the year - - - - (2,124) (2,124)
----------------------------- -------- -------- ----------- -------- -------- --------
As at 31 December 2022 11,055 11,892 2,032 34,979 3,562 63,520
----------------------------- -------- -------- ----------- -------- -------- --------
The accompanying notes are an integral part of these condensed financial
statements.
Condensed Statement of Cash Flows
Six months Six months Year ended
ended ended
30 June 2023 30 June 2022 31 December
2022
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
=========================================== ============ ============ ===========
Cash flows from operating activities
=========================================== ============ ============ ===========
Dividend income from investments received 1,511 1,369 3,071
=========================================== ============ ============ ===========
Interest income from investments received 64 57 102
=========================================== ============ ============ ===========
Interest from AAA-rated money market
funds received 47 5 29
=========================================== ============ ============ ===========
Bank interest received 7 1 3
=========================================== ============ ============ ===========
Investment management fee paid (327) (322) (447)
=========================================== ============ ============ ===========
Other cash expenses (217) (252) (476)
------------------------------------------- ------------ ------------ -----------
Cash generated from operations 1,085 858 2,282
=========================================== ============ ============ ===========
Interest paid (134) (122) (213)
=========================================== ============ ============ ===========
Overseas taxation suffered (6) (9) (33)
------------------------------------------- ------------ ------------ -----------
Net cash inflows from operating activities 945 727 2,036
------------------------------------------- ------------ ------------ -----------
Cash flows from investing activities
=========================================== ============ ============ ===========
Purchases of investments (3,125) (9,319) (21,738)
=========================================== ============ ============ ===========
Sales of investments 9,492 10,802 21,020
------------------------------------------- ------------ ------------ -----------
Net cash inflows/(outflows) from investing
activities 6,367 1,483 (718)
------------------------------------------- ------------ ------------ -----------
Cash flows from financing activities
=========================================== ============ ============ ===========
Loan repaid (5,000) - -
=========================================== ============ ============ ===========
Equity dividends paid (1,150) (1,061) (2,124)
=========================================== ============ ============ ===========
Net cash outflow from financing activities (6,150) (1,061) (2,124)
------------------------------------------- ------------ ------------ -----------
Net increase/(decrease) in cash and
cash equivalents 1,162 1,149 (806)
------------------------------------------- ------------ ------------ -----------
Analysis of changes in cash and cash
equivalents during the period
=========================================== ============ ============ ===========
Opening balance 1,786 2,592 2,592
=========================================== ============ ============ ===========
Currency loss (3) - -
=========================================== ============ ============ ===========
Increase/(decrease) in cash and cash
equivalents as above 1,162 1,149 (806)
------------------------------------------- ------------ ------------ -----------
Cash and cash equivalents at the end
of the period 2,945 3,741 1,786
------------------------------------------- ------------ ------------ -----------
The accompanying notes are an integral part of these condensed financial
statements.
Notes to the Financial Statements
For the year ended 30 June 2023
1. Accounting policies
Basis of preparation . The condensed financial statements have
been prepared in accordance with International Financial Reporting
Standards ('IFRS') 34 - 'Interim Financial Reporting', as adopted
by the International Accounting Standards Board ('IASB'), and interpretations
issued by the International Financial Reporting Interpretations
Committee ('IFRIC') of the IASB. They have been prepared using
the same accounting policies applied for the year ended 31 December
2022 financial statements, which received an unqualified audit
report.
Going concern with Material Uncertainty . In accordance with the
Financial Reporting Council's guidance on 'Going Concern and Liquidity
Risk' the Directors have undertaken a review of the Company's assets
which principally consist of equity shares in companies listed
on the London Stock Exchange and may be realised within a short
timescale to meet outstanding liabilities.
The Board announced a Strategic Review on 13 February 2023, which
concluded on 26 July 2023 with the announcement of the proposed
combination of the assets of the Company with the assets of Shires
Income plc ("Shires"), subject to shareholder approval, through
a tax efficient scheme of reconstruction under section 110 of the
Insolvency Act 1986 (the "Proposals"). More detail can be found
in the Chair's Statement above and in the RNS announcement dated
26 July 2023.
The Board believes that the Proposals are in the best interests
of shareholders as a whole and recommends that shareholders vote
in favour of the resolutions required to effect the Proposals.
This would result in the voluntary liquidation of the Company.
Due to the requirement for the Proposals to receive approval from
the shareholders of both the Company and Shires (including the
approval of independent shareholders in the Company for a related
party transaction) there remains material uncertainty as to the
future of the Company.
However, should the Proposals not receive the necessary shareholder
approvals, the Board believes that other attractive options remain
viable for shareholders, which can be pursued. The Board also believes
that the investment objective remains relevant and the Company
remains in a position to generate attractive returns for all shareholders.
Accordingly, the Board has prepared the financial statements in
this Half Yearly Report on a going concern basis.
2. Income
================================= ============ ============ ===========
Six months Six months Year ended
ended ended
30 June 2023 30 June 2022 31 December
2022
GBP'000 GBP'000 GBP'000
================================= ============ ============ ===========
Income from investments
================================= ============ ============ ===========
Dividend income from UK equity
securities 1,431 1,269 2,367
===================================== ============ ============ ===========
Dividend income from overseas
equity securities 149 260 462
===================================== ============ ============ ===========
Property income distributions 108 127 208
===================================== ============ ============ ===========
1,688 1,656 3,037
===================================== ============ ============ ===========
Interest income from investments 41 46 90
===================================== ============ ============ ===========
1,729 1,702 3,127
===================================== ============ ============ ===========
Other income
================================= ============ ============ ===========
Bank interest 7 1 4
===================================== ============ ============ ===========
Interest from AAA-rated money
market funds 52 8 33
===================================== ============ ============ ===========
Total revenue income 1,788 1,711 3,164
===================================== ============ ============ ===========
3. Taxation
The tax expense reflected in the Condensed Statement of Comprehensive
Income represents irrecoverable withholding tax suffered on overseas
dividend income.
4. Dividends
The following table shows the revenue for each period less the
dividends declared in respect of the financial period to which
they relate.
Six months Six months Year ended
ended ended
30 June 2023 30 June 2022 31 December
2022
GBP'000 GBP'000 GBP'000
========================= =============== =============== =============
Profit attributable 1,442 1,349 2,486
============================= =============== =============== =============
Dividends declared (1,150)(A) (1,061)(B) (2,168)(C)
----------------------------- --------------- --------------- -------------
292 288 318
----------------------------- --------------- --------------- -------------
(A) Dividends declared relate to the first two interim dividends
(both 2.60p each) declared in respect of the financial year 2023.
(B) Dividends declared relate to the first two interim dividends
(both 2.40p each) declared in respect of the financial year 2022.
(C) Dividends declared relate to the three interim dividends (2.40p
each) and final interim dividend (2.60p) declared in respect of
the financial year 2022 totalling 9.80p.
5. Return per Ordinary share
==================================== ============ ============ ===========
Six months Six months Year ended
ended ended
30 June 2023 30 June 2022 31 December
2022
p p p
==================================== ============ ============ ===========
Revenue return 6.52 6.10 11.24
======================================== ============ ============ ===========
Capital return (10.92) (137.72) (156.86)
---------------------------------------- ------------ ------------ -----------
Net return (4.40) (131.62) (145.62)
---------------------------------------- ------------ ------------ -----------
The returns per Ordinary share are based on the following figures:
Six months Six months Year ended
ended ended
30 June 2023 30 June 2022 31 December
2022
GBP'000 GBP'000 GBP'000
==================================== ============ ============ ===========
Revenue return 1,442 1,349 2,486
======================================== ============ ============ ===========
Capital return (2,415) (30,449) (34,682)
---------------------------------------- ------------ ------------ -----------
Net return (973) (29,100) (32,196)
---------------------------------------- ------------ ------------ -----------
Weighted average number of Ordinary
shares in issue 22,109,765 22,109,765 22,109,765
---------------------------------------- ------------ ------------ -----------
6. Net asset value per Ordinary share
The net asset value per Ordinary share and the net assets attributable
to Ordinary shareholders at the period end calculated in accordance
with the Articles of Association were as follows:
As at As at As at
30 June 2023 30 June 2022 31 December
2022
(unaudited) (unaudited) (audited)
==================================== ============ ============ ===========
Attributable net assets (GBP'000) 61,397 67,679 63,520
======================================== ============ ============ ===========
Number of Ordinary shares in issue 22,109,765 22,109,765 22,109,765
======================================== ============ ============ ===========
Net asset value per Ordinary share
(p) 277.69 306.10 287.29
---------------------------------------- ------------ ------------ -----------
7. Transaction costs
During the period expenses were incurred in acquiring or disposing
of investments classified as fair value. These have been expensed
through capital and are included within losses on investments at
fair value in the Condensed Statement of Comprehensive Income.
The total costs were as follows:
Six months Six months Year ended
ended ended
30 June 2023 30 June 2022 31 December
2022
GBP'000 GBP'000 GBP'000
======================= ================ =============== =============
Purchases 6 32 81
=========================== ================ =============== =============
Sales 5 9 18
--------------------------- ---------------- --------------- -------------
11 41 99
--------------------------- ---------------- --------------- -------------
8. Analysis of changes in financing liabilities during the period
The following table shows the movements during the period of financing
liabilities in the Condensed Balance Sheet:
Six months Six months Year ended
ended ended
30 June 2023 30 June 2022 31 December
2022
GBP'000 GBP'000 GBP'000
=================================== ============= ============ ===========
Opening balance 6,999 6,995 6,995
======================================= ============= ============ ===========
Amortisation of arrangement costs 1 2 4
======================================= ============= ============ ===========
Repayment of loan (5,000) - -
--------------------------------------- ------------- ------------ -----------
Closing balance 2,000 6,997 6,999
--------------------------------------- ------------- ------------ -----------
9. Fair value hierarchy
Under IFRS 13 'Fair Value Measurement' an entity is required to
classify fair value measurements using a fair value hierarchy that
reflects the significance of the inputs used in making measurements.
The fair value hierarchy has the following levels:
Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities;
Level 2: inputs other than quoted prices included within Level
1 that are observable for the assets or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The financial assets measured at fair value in the Condensed Balance
Sheet are grouped into the fair value hierarchy as follows:
Level Level Level Total
1 2 3
At 30 June 2023 (unaudited) Note GBP'000 GBP'000 GBP'000 GBP'000
=================================== ====== ======== ======== ======= =======
Financial assets at fair value
through profit or loss
=================================== ====== ======== ======== ======= =======
Quoted equities a) 58,377 - - 58,377
=================================== ========== ======== ======== ======= =======
Quoted bonds b) - 1,782 - 1,782
----------------------------------- ---------- -------- -------- ------- -------
58,377 1,782 - 60,159
---------------------------------------------- -------- -------- ------- -------
Level Level Level Total
1 2 3
At 30 June 2022 (unaudited) Note GBP'000 GBP'000 GBP'000 GBP'000
=================================== ====== ======== ======== ======= =======
Financial assets at fair value
through profit or loss
=================================== ====== ======== ======== ======= =======
Quoted equities a) 68,363 - - 68,363
=================================== ========== ======== ======== ======= =======
Quoted bonds b) - 2,181 - 2,181
----------------------------------- ---------- -------- -------- ------- -------
68,363 2,181 - 70,544
---------------------------------------------- -------- -------- ------- -------
Level Level Level Total
1 2 3
At 31 December 2022 (audited) Note GBP'000 GBP'000 GBP'000 GBP'000
=================================== ====== ======== ======== ======= =======
Financial assets at fair value
through profit or loss
=================================== ====== ======== ======== ======= =======
Quoted equities a) 66,628 - - 66,628
=================================== ========== ======== ======== ======= =======
Quoted bonds b) - 2,104 - 2,104
----------------------------------- ---------- -------- -------- ------- -------
66,628 2,104 - 68,732
---------------------------------------------- -------- -------- ------- -------
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.
b) Quoted bonds. The fair value of the Company's investments in
quoted bonds has been determined by reference to their quoted bid
prices at the reporting date. Investments categorised as Level
2 are not considered to trade in active markets.
There have been no transfers of assets between levels of the fair
value hierarchy during any of the periods covered in this Report.
10. Related party transactions
There were no related party transactions during the period.
11. Transactions with the Manager
The Company has agreements with abrdn Fund Managers Limited ("aFML"
or "the Manager") for the provision of investment management, secretarial,
accounting and administration and promotional activities.
The management fee is calculated at an annual rate of 0.75% of
the net assets of the Company, calculated and paid monthly. During
the period GBP240,000 (30 June 2022 - GBP293,000; 31 December 2022
- GBP533,000) of investment management fees were payable to the
Manager, with a balance of GBP117,000 (30 June 2022 -GBP89,000;
31 December 2022 - GBP204,000) being payable to aFML at the period
end. During the period and at the period end, the Company held
GBP2,533,000 (30 June 2022 - GBP3,498,000; 31 December 2022 - GBP1,450,000)
in Aberdeen Standard Liquidity Fund (Lux) - Sterling Fund which
is managed by abrdn Investments Luxembourg S.A. The Company pays
a management fee on the value of these holdings but no fee is chargeable
at the underlying fund level. The management fee is chargeable
30% to revenue and 70% to capital.
During the period expenses of GBP28,000 (30 June 2022 - GBP28,000;
31 December 2022 - GBP56,000) were payable to the Manager in connection
with the promotion of the Company. The balance outstanding at the
period end was GBP14,000 (30 June 2022 - GBP14,000; 31 December
2022 - GBP14,000).
12. Segmental information
The Company is engaged in a single segment of business, which is
to invest in equity securities and debt instruments. All of the
Company's activities are interrelated, and each activity is dependent
on the others. Accordingly, all significant operating decisions
are based on the Company as one segment.
13. Publication of non-statutory accounts
The financial information contained in this Half Yearly Financial
Report does not constitute statutory accounts as defined in Sections
434 - 436 of the Companies Act 2006. The financial information
for the six months ended 30 June 2023 and 30 June 2022 has not
been audited.
The information for the year ended 31 December 2022 has been extracted
from the latest published audited financial statements which have
been filed with the Registrar of Companies. The report of the
auditors on those accounts contained no qualification or statement
under Section 498 (2), (3) or (4) of the Companies Act 2006.
14. This Half Yearly Financial Report was approved by the Board on
13 September 2023.
Please note that past performance is not necessarily a guide to
the future and that the value of investments and the income from
them may fall as well as rise. Investors may not get back the
amount they originally invested
For further information please contact:-
Holly Kidd
abrdn Holdings Limited
Company Secretary
Tel: 0131 372 2200
Alternative Performance Measures
Alternative performance measures are numerical measures of the Company's
current, historical or future performance, financial position or cash
flows, other than financial measures defined or specified in the applicable
financial framework. The Company's applicable financial framework includes
IFRS and the AIC SORP. The Directors assess the Company's performance
against a range of criteria which are viewed as particularly relevant
for closed-end investment companies.
Discount to Net Asset Value per Ordinary share
The amount by which the market price per Ordinary share is lower than
the net asset value per Ordinary share, expressed as a percentage of
the net asset value per Ordinary share.
30 June 2023 31 December
2022
============================================== ============== ============ ===========
NAV per Ordinary share (p) a 277.69 287.29
============================================== ============== ============ ===========
Share price (p) b 252.00 240.50
============================================== ============== ============ ===========
Discount (b-a)/a 9.3% 16.3%
---------------------------------------------- -------------- ------------ -----------
Net cash/(gearing)
Net cash/(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.
30 June 2023 31 December
2022
============================================== ============== ============ ===========
Borrowings (GBP'000) a 2,000 6,999
============================================== ============== ============ ===========
Cash (GBP'000) b 412 336
============================================== ============== ============ ===========
Investments in AAA-rated money market
funds c 2,533 1,450
============================================== ============== ============ ===========
Amounts due to brokers (GBP'000) d 5 -
============================================== ============== ============ ===========
Amounts due from brokers (GBP'000) e 44 -
============================================== ============== ============ ===========
Shareholders' funds (GBP'000) f 61,397 63,520
---------------------------------------------- -------------- ------------ -----------
Net cash/(gearing) (a-b-c+d-e)/f 1.6% -8.2%
---------------------------------------------- -------------- ------------ -----------
Ongoing charges
The ongoing charges ratio has been calculated in accordance with guidance
issued by the AIC as the total of investment management fees and administrative
expenses and expressed as a percentage of the average published daily
net asset values with debt at fair value throughout the year. The ratio
for 30 June 2023 is based on forecast ongoing charges for the year
ending 31 December 2022.
30 June 2023 31 December
2022
============================================== ============== ============ ===========
Investment management fees (GBP'000) 470 533
============================================================== ============ ===========
Administrative expenses (GBP'000) 429 435
============================================================== ============ ===========
Less: non-recurring charges(A) (GBP'000) - (30)
-------------------------------------------------------------- ------------ -----------
Ongoing charges (GBP'000) 899 938
-------------------------------------------------------------- ------------ -----------
Average net assets (GBP'000) 62,551 71,863
-------------------------------------------------------------- ------------ -----------
Ongoing charges ratio (excluding look-through
costs) 1.44% 1.31%
-------------------------------------------------------------- ------------ -----------
Look-through costs(B) 0.02% 0.03%
-------------------------------------------------------------- ------------ -----------
Ongoing charges ratio (including look-through
costs) 1.46% 1.34%
-------------------------------------------------------------- ------------ -----------
(A) Professional services comprising new director recruitment costs
and legal fees considered unlikely to recur.
(B) Calculated in accordance with AIC guidance issued in October 2020
to include the Company's share of costs of holdings in investment companies
on a look-through basis.
The ongoing charges ratio provided in the Company's Key Information
Document is calculated in line with the PRIIPs regulations, which includes
amongst other things, financing and transaction costs.
Total return
NAV and share price total returns show how the NAV and share price
has performed over a period of time in percentage terms, taking into
account both capital returns and dividends paid to shareholders. Share
price and NAV total returns are monitored against open-ended and closed-ended
competitors, and the benchmark, respectively.
Share
Six months ended 30 June 2023 NAV Price
============================================== ============== ============ ===========
Opening at 1 January 2023 a 287.3p 240.5p
============================================== ============== ============ ===========
Closing at 30 June 2023 b 277.7p 252.0p
============================================== ============== ============ ===========
Price movements c=(b/a)-1 -3.3% 4.8%
============================================== ============== ============ ===========
Dividend reinvestment(A) d 2.6% 3.3%
---------------------------------------------- -------------- ------------ -----------
Total return c+d -0.7% +8.1%
---------------------------------------------- -------------- ------------ -----------
Share
Year ended 31 December 2022 NAV Price
============================================== ============== ============ ===========
Opening at 1 January 2022 a 442.6p 375.0p
============================================== ============== ============ ===========
Closing at 31 December 2022 b 287.3p 240.5p
============================================== ============== ============ ===========
Price movements c=(b/a)-1 -35.1% -35.9%
============================================== ============== ============ ===========
Dividend reinvestment(A) d 1.9% 2.2%
---------------------------------------------- -------------- ------------ -----------
Total return c+d -33.2% -33.7%
---------------------------------------------- -------------- ------------ -----------
(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
dividend in the share price of the Company on the date on which that
dividend goes ex-dividend.
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END
IR FLFIRADIVLIV
(END) Dow Jones Newswires
September 14, 2023 02:00 ET (06:00 GMT)
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