TIDMBUT
RNS Number : 9018F
Brunner Investment Trust PLC
18 July 2019
17 July 2019
THE BRUNNER INVESTMENT TRUST PLC
HALF-YEARLY FINANCIAL REPORT
For the six months ended 31 May 2019
Highlights
-- Net asset value (debt at fair value) per share up by +1.8% (2018: +3.1%)
-- Net asset value (debt at par) per share up by +2.6% (2018: +2.4%)
-- Earnings per ordinary share 12.6p (2018: 10.6p) +18.9%
-- Dividends for the half year 9.32p(1) (2018: 8.1p) +15.1%
-- Net asset value total return (debt at fair value) per share up by +2.9% (2018: +4.0%)
-- Net asset value total return (debt at par) per share up by +3.7% (2018: +3.4%)
-- Share price up by 3.9% to 774.0p (2018: 745.0p)
-- Discount of net asset value (debt at fair value) to share
price 10.1% and an average of 9.6% over the period (2018: 11.9%,
average over the year 9.5%)
-- Benchmark Index increased by 3.4% (2018: +4.5%)
Six months Six months %
ended ended change
Revenue 31 May 2019 31 May 2018
Available for
ordinary
dividend GBP5,372,000 GBP4,502,000 +19.3
Earnings per
ordinary share 12.6p 10.6p +18.9
Quarterly
dividends per
ordinary share 9.32p(1) 8.1p +15.1
Retail price
index 289.2 280.7 +3.0
(1) First
quarterly
4.66p,
second
quarterly 4.66p
At 31 May At 30 Nov %
Assets 2019 2018 change
Net asset value
per ordinary
share
(debt at fair
value) 861.2p 845.8p +1.8
Net asset value
per ordinary
share (debt at
par) 865.8p 843.9p +2.6
Ordinary share
price 774.0p 745.0p +3.9
Total net
assets (debt
at
fair value) GBP367,656,000 GBP361,105,000 +1.8
Total net
assets (debt
at
par) GBP369,616,000 GBP360,273,000 +2.6
Performance relative to the benchmark for the six months to 31
May 2019
Net Asset Capital Total Return(2)
Value with Return
debt
at fair value
relative to
Benchmark*
Change in net
asset value 1.8% 2.9%
Change in
benchmark 1.7% 3.4%
Percentage
point
performance
against
benchmark* 0.1 -0.5
*The benchmark applied is 70% FTSE World Ex UK Index and 30%
FTSE All-Share Index.
(2) Total returns are calculated with net dividends
reinvested
Reconciliation of Benchmark performance to total return
to shareholders
Equity portfolio return (excluding
cash) 4.1%
Impact of gearing 0.2%
Finance costs -0.1%
Increase in fair value of
debt -0.8%
Effect of gearing -0.7%
Management fee -0.2%
Administration expenses -0.1%
Other -0.2%
Total of above factors -0.5%
Return to shareholders 2.9%
Change in benchmark 3.4%
Relative performance -0.5
Interim Management Report
Performance
The Net Asset Value per ordinary share of the company increased
by 2.9% on a total return basis; the difference between this and
the portfolio return of 4.1% is explained in the table above. The
benchmark (70% FTSE Word Index Ex UK and 30% FTSE All-Share Index)
rose by 3.4% over the period.
Earnings
Earnings increased by 18.9% to 12.6p per ordinary share in the
six months to 31 May 2019 (2018: 10.6p).
Dividends
In continuation of the policy to distribute income more evenly
throughout the year, the board declared a first quarterly dividend
of 4.66p per ordinary share which is payable on 25 July 2019. The
board has now declared a second quarterly dividend of 4.66p per
ordinary share payable on 19 September 2019 to holders on the
register of members at the close of business on 9 August 2019. A
Dividend Reinvestment Plan (DRIP) is available for this dividend
and the relevant Election Date is 23 August 2019.
The board is continuing to balance quarterly payments to bring
them in line with the final. It is anticipated, subject to there
being no unforeseen circumstances, that the third quarterly
dividend will be maintained at this rate, and an unchanged final
dividend of 6.00p will be proposed for the year ending 30 November
2019, giving a dividend for the year of 19.98p, a 10% increase on
the previous year. The third quarterly payment will be made in
December and the final dividend will be proposed for payment in
March 2020.
Material events and transactions
In the six month period ended 31 May 2019 the following material
events and transactions have taken place.
-- At the annual general meeting of the company held on 4 April
2019, all the resolutions put to shareholders were passed.
There were no share buy backs, share issuances and no related
party transactions in the period or since the period end.
Principal Risks
The principal risks facing the company over the next six months
are broadly unchanged from those described in the Annual Financial
Report for the year ended 30 November 2018. These are set out in a
table in the Strategic Report on page 16 of the annual report,
together with commentary on the board's approach to mitigating the
risks, under the following headings: Portfolio Risk; Business Risk;
and Operational Risk.
In addition to the principal risks, the company faces the risks
associated with the provision of services by third parties and
general business risks including accounting, legal and regulatory
matters. The board oversees a detailed review of the principal
risks by the audit committee at least twice a year to ensure the
risk assessment is current and relevant, adjusting mitigating
factors and procedures as appropriate.
Going concern
The directors believe it is appropriate to continue to adopt the
going concern basis in preparing the financial statements as the
assets of the company consist mainly of securities which are
readily realisable and accordingly, the company has adequate
financial resources to continue in operational existence for the
foreseeable future.
Responsibility Statement
The directors confirm to the best of their knowledge that:
-- The condensed set of financial statements contained within
the half-yearly financial report has been prepared in accordance
with FRS 102 and FRS 104, as set out in Note 2, and the Accounting
Standards Board's Statement 'Half-Yearly Financial Reports';
and
-- The interim management report includes a fair review of the
information required by Disclosure and Transparency Rule 4.2.7 R 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 management report includes a fair review of the
information concerning related parties transactions as required by
the Disclosure and Transparency Rule 4.2.8 R.
The half-yearly financial report was approved by the board on 17
July 2019 and the above responsibility statement was signed on its
behalf by the Chairman.
Carolan Dobson
Chairman
Enquiries:
For further information, please contact:
Allianz Global Investors GmbH, UK Branch
Stephanie Carbonneil
Head of Investment Trusts
Tel: 020 3246 7256
Investment Manager's Review
Market Review
Our expectation for the equity market to provide moderate
returns with higher volatility has been borne out in the past six
months. Overall, global equity markets as measured by the MSCI All
Country World Index, are up 3 per cent in GBP terms over the
period. However, this modest return has encompassed a sharp
correction followed by a rapid recovery. In May, markets
experienced yet another, albeit more modest, correction.
The catalysts for this increased volatility have been US trade
and monetary policy. Escalating trade tensions between the US and
its trading partners and the potential impact on global growth have
been a major source of concern. At the end of 2018, data revealed
that President Trump's tariffs were starting to create a material
economic drag. However, promising trade talks soon erased the
equity market's losses and sustained markets for some months.
Market sentiment was dented once more in May, with both the US and
China imposing higher tariffs on each other's exports. Technology
stocks were particularly hit after the US administration
effectively banned US companies from using equipment made by
China's Huawei, raising fears that Beijing would target US tech
companies in return.
The US Federal Reserve's (Fed) about turn in policy has been the
other defining influence on all asset markets. Over the period, the
central bank has gone from raising interest rates and pursuing
quantitative tightening to pausing and hinting at lower interest
rates. This has led to a fall in bond yields and support for bond
proxy investments in the equity markets. Against a background of
weakening global growth and slumping financial markets, the Fed
announced it would not raise rates for the remainder of 2019, and
slowed the pace of its balance sheet reductions. Similarly, the
European Central Bank (ECB) pledged to hold rates until the end of
2020 and reinstated its offer of cheap long-term loans to banks.
The People's Bank of China also injected a record amount of
liquidity into China's economy and cut the reserve requirement
ratio for banks.
At a sector level, Real Estate, Utilities and Information
Technology have made the most impressive gains. The latter has
continued to demonstrate its ability to generate meaningful
earnings growth amidst market volatility. Meanwhile, Real Estate
and Utilities have benefited from lower bond yields. Conversely,
Health Care has come under consistent pressure as Democratic
nominees for the US Presidency push for greater state medical
provision.
In terms of currencies, sterling has remained a Brexit
bellwether, consistently reflecting investors' fluctuating concerns
over the likelihood, timing and nature of the UK's exit from the
European Union (EU). As a result, sterling strengthened steadily
until March, in line with the prospects of either a soft Brexit or
second referendum. Since then, the currency has weakened to
December levels, reflecting Theresa May's departure and the
likelihood of her being replaced by Boris Johnson, who is more
vocal about leaving the EU without a deal.
Portfolio Review
Between December 2018 and May 2019 inclusive, the Trust's
portfolio returned 4.1 per cent against a benchmark return of 3.4
per cent. The main driver of performance over this period has been
stock selection. Holdings in the Consumer Goods, Utilities and
Financials sectors have all contributed positively to returns.
Adidas, the maker of sports apparel, has made the strongest
contribution to the portfolio. Its CEO, Kasper Rorsted, has made
clear cultural and operational changes to the company, and these
continue to bear fruit. In its Q1 results, the company reported
strong growth, particularly in Russia and Asia Pacific. The
company's focus on digitalisation is central to our investment case
and e-commerce grew 40 per cent. Earlier in the year, some slowdown
in sales growth led us to test our investment case by commissioning
a report from Grassroots Research, our proprietary market research
division. Using on the ground interviews and big data web-scraping,
the report found that this slowdown was due to Adidas exercising
its pricing power over retailers, leading to improved margin and
profitability. This has since been borne out in the results, with
margins clearly rising and Adidas maintaining a positive outlook
for 2019.
Iberdrola, the Spanish based power company, is delivering
revenue and net income growth of 9 and 15 per cent, respectively.
Renewables are a key growth area, and the company has seen pricing,
production and capacity all rise as countries try to move away from
fossil fuels. Looking ahead, the company is optimistic about full
year earnings and dividends, aided further by lower debt and tax
costs.
In Financials, our positions in Munich Re, Visa and Ashmore have
all distinguished themselves by virtue of their ability to generate
fee-based revenues. Visa in particular continues to benefit from a
structural move away from cash, and its strategic investment in new
payment technologies.
Conversely, stock selection in Industrials and Health Care
sectors was weaker.
Wabtec detracted from performance. We believe this has been
mostly driven by arbitrage around the closure of Wabtec's General
Electric deal, as well as the relatively high leverage this
incurred. However, as rail companies move towards Precision
Scheduled Railroading (PSR), Wabtec's merger with GE makes it the
leading Original Equipment Manufacturer (OEM) supplier of the most
efficient diesel-electric locomotives in the world and thus well
positioned to benefit from this modernisation. Moreover, while
economic weakness remains a potential risk, industry order backlog
remains strong. With the company expecting to reduce leverage to
2.5 times net debt / EBITDA* by the end of the year thanks to its
strong free cash flow, the company looks oversold.
UnitedHealth Group has had the largest negative impact on
returns over this period. Shares in the integrated healthcare
provider weakened following calls for universal state provision
from US Democrats in the run up to 2020's presidential election. We
regard this as a very low probability event and more of an excuse
for profit-taking given the company's success in recent years. We
believe that some reform of drug pricing and rebates is likely to
emerge, and that rhetoric is likely to rise over the next year.
However, we view the concerns towards the healthcare providers, who
are drivers of lower healthcare costs, as overdone. Indeed, the
stock has rebounded with recent results showing strong growth in
premiums, services and products, with healthy medical loss ratios
and good cost control.
*Earnings before interest, tax, depreciation and
amortisation
Significant Transactions
Overall we have continued the strategic shift in the portfolio,
concentrating the holdings on higher conviction, higher quality
investments. The restructured balance sheet has provided higher
dividend cover, allowing greater flexibility in stock
selection.
Having monitored St James's Place for some time, we initiated a
position in the UK financial services company in January.
Brexit-induced weakness has made the shares increasingly cheap.
However, the business has an exceptional growth record and there is
substantial valuation support underpinned by its existing book of
business.
In March, we initiated positions in Bright Horizons, Assa Abloy
and Intuit. These are a provider of childcare and educational
services, a manufacturer of door locking services and a developer
of financial management software, respectively. Each company has
demonstrated the ability to generate sustainable earnings growth at
a time when this is in short supply and, at the time of purchase,
the shares were reasonably valued.
More recently we have started a position in Intuitive Surgical,
the manufacturer of the da Vinci surgical system. Growth is being
driven by new product launches and increased adoption of robotic
surgery in different procedures beyond its traditional areas of
Gynaecology and Urology. A Grassroots study in the month showed
strong intent among Chinese hospitals to buy or upgrade their
systems, and a growing awareness of the product among surgeons and
patients. The stock is likely to exhibit higher volatility than
average but this is balanced by higher growth potential.
To fund these new holdings, we have continued to exit positions
with lower medium term conviction, using short term strength where
possible. Greene King, the UK pub company, was held primarily for
yield, while growth was pedestrian. However, the shares rallied
sharply following a strong Christmas trading statement, so we used
the recovery to exit our holding. Similarly Ameriprise and Apple
were sold after sharp recoveries in the first quarter.
Across the portfolio, we have also taken advantage of several
bouts of market volatility to increase positions in favoured
stocks. In December, despite good overall numbers, slightly weaker
new business figures for Accenture caused the consultancy firm's
share price to decline to overly pessimistic levels, so we took the
position up. In January, we took the opportunity to add to TSMC,
which was trading at a depressed valuation with earnings starting
to stabilise.
Outlook
Monetary policy and trade are likely to remain key drivers of
market behaviour in the foreseeable future.
US/China trade tensions and tariffs have the potential for
further negative impacts on growth. At the micro level, the more
uncertain operating environment for the corporate sector is
increasingly hindering decision making and reducing visibility on
demand. On balance, our base case assumption remains that some
partial deal with be reached between US and China, potentially
rolling back some of the recently increased tariffs. We are,
however, expecting long term friction to feature in the technology
sector with ongoing tension around state control, intellectual
property and cyber security.
Global growth has slowed in the last six months as the stimulus
from US tax reform faded and trade frictions hold back investment.
The considerable stimulus being applied in China should lead to
stabilisation later this year, but domestic demand is weaker in the
meantime. Within Europe, the recent elections, with no further
shift towards populism, have removed some risk but growth remains
sluggish. Italy continues to be a long term source of instability,
as now does the UK.
Monetary policy remains a source of uncertainty. In the US, the
Fed has paused and is mulling over recent mixed data while
conducting a major review of its tools, policies and communication
methods, including what targets to aim for going forward. In
Europe, the ECB also faces a potential shift when its President,
Mario Draghi departs at the end of October. US ten-year treasury
yields are at their lowest level in two years, lifting bond proxies
in the equity markets as a result. Whether growth or value stocks
are more likely to outperform in this event is a constant source of
debate.
Our expectation of more moderate returns with higher volatility
is therefore still a central case, with slight gains and
considerable movement in between. With monetary policy on hold and
optimistic rate expectations already embedded, earnings growth
decelerating and valuations towards the upper end of historic
ranges, there is no reason to expect equity markets overall to
deliver strong nominal returns. Therefore, an active approach such
as ours, driven by superior stock selection, is going to be
required to provide additional upside.
Lucy Macdonald
Allianz Global Investors
BRUNNER INVESTMENT TRUST PLC
INVESTMENT PORTFOLIO AS AT 31 MAY 2019
Listed Equity Holdings
Value % of Invested
Name GBP'000s Funds Sector
Microsoft 17,763 4.51 Software & Computer Services
Health Care Equipment &
United Health 13,127 3.34 Services
Royal Dutch Shell 'B' Shares 11,452 2.90 Oil & Gas Producers
Accenture 10,440 2.65 Support Services
Visa 10,108 2.56 Financial Services
Health Care Equipment &
The Cooper 9,923 2.52 Services
Ecolab 9,639 2.44 Chemicals
Muenchener Rueckver 9,407 2.39 Non-Life Insurance
Roche Holdings 9,087 2.30 Pharmaceuticals & Biotechnology
Taiwan Semiconductor 8,877 2.25 Technology Hardware & Equipment
BP 8,850 2.24 Oil & Gas Producers
Estée Lauder 'A' Shares 8,327 2.11 Personal Goods
Electronic & Electrical
Agilent 8,315 2.11 Equipment
AIA 8,015 2.03 Life Insurance
Adidas 7,914 2.01 Personal Goods
GlaxoSmithKline 7,634 1.94 Pharmaceuticals & Biotechnology
AbbVie 7,244 1.84 Pharmaceuticals & Biotechnology
Amadeus 6,934 1.76 Software & Computer Services
Informa 6,601 1.67 Media
Unilever 6,578 1.67 Personal Goods
Electronic & Electrical
Schneider Electric 6,448 1.63 Equipment
Compass 6,446 1.63 Travel & Leisure
Electronic & Electrical
AMETEK 6,435 1.63 Equipment
Microchip Technology 6,418 1.63 Technology Hardware & Equipment
Itochu 6,221 1.58 General Industrials
Charles Schwab 6,045 1.53 Financial Services
HSBC 5,870 1.49 Banks
Nestle 5,714 1.45 Food Producers
Booking Holdings 5,690 1.44 Travel & Leisure
Iberdrola 5,524 1.40 Electricity
Cie Financiere Richemont 5,416 1.37 Personal Goods
Tyman 5,333 1.35 Construction & Materials
Senior 5,290 1.34 Aerospace & Defence
St. James's Place 5,230 1.33 Life Insurance
Rio Tinto 4,990 1.27 Mining
Prudential 4,733 1.20 Life Insurance
SThree 4,697 1.19 Support Services
Jiangsu Express 4,659 1.18 Industrial Transportation
Enel 4,649 1.18 Electricity
Citigroup 4,583 1.16 Banks
Electronic & Electrical
Amphenol 4,492 1.14 Equipment
Ashmore 4,488 1.14 Financial Services
Sirius Real Estate 4,466 1.13 Real Estate
Partners Group 4,444 1.13 Financial Services
Wabtec 4,415 1.12 Industrial Engineering
Brambles 4,413 1.12 General Industrials
Howden Joinery 4,396 1.11 Support Services
Value % of Invested
Name GBP'000s Funds Sector
Bright Horizons Family Solutions 4,335 1.10 General Retailers
EOG Resources 4,199 1.06 Oil & Gas Producers
United Internet 4,090 1.04 Software & Computer Services
Atlas Copco 3,881 0.98 Industrial Engineering
Intuit 3,860 0.98 Software & Computer Services
Health Care Equipment
Intuitive Surgical 3,826 0.97 & Services
Lloyds Banking Group 3,722 0.94 Banks
Assa Abloy 3,660 0.93 Construction & Materials
UBS 3,606 0.91 Banks
TP ICAP 3,567 0.90 Financial Services
Nielsen 3,554 0.90 Media
China Mobile 3,503 0.89 Mobile Telecommunications
Health Care Equipment
Fresenius 3,480 0.88 & Services
Merlin Properties 3,422 0.87 Real Estate
Astellas Pharma 3,416 0.87 Pharmaceuticals & Biotechnology
Australia & New Zealand Bank 3,354 0.85 Banks
Covestro 2,942 0.75 Chemicals
Albemarle 2,766 0.70 Chemicals
Helical 1,469 0.37 Real Estate
----------- --------------
394,392 100.00
----------- --------------
Unlisted Equity Holdings
Fintrust Debenture 4 - Financial Services
----------- --------------
4 -
----------- --------------
GEOGRAPHICAL ANALYSIS AS AT 31 MAY 2019
%
North America 39.44
United Kingdom 26.81
Europe 22.98
Pacific Basin 8.32
Japan 2.45
Total 100.00
---------------- -------
SECTORAL ANALYSIS AS AT 31 MAY 2019
%
Financials 21.93
Industrials 21.06
Health Care 14.66
Technology 12.17
Consumer Goods 8.61
Consumer Services 6.74
Oil & Gas 6.20
Basic Materials 5.16
Utilities 2.58
Telecommunications 0.89
Total 100.00
-------------------- -------
SUMMARY OF UNAUDITED RESULTS
INCOME STATEMENT
for the six months ended 31 May 2019
Revenue Capital Total Return
GBP'000s GBP'000s GBP'000s
(Note 2)
Gains on investments held at fair
value through profit or loss - 9,227 9,227
Losses on foreign currencies - (52) (52)
Income from investments 6,615 - 6,615
Other income 11 - 11
Investment management fee (258) (601) (859)
Administration expenses (340) - (340)
--------- --------- -------------
Profit before finance costs and
taxation 6,028 8,574 14,602
Finance costs: interest payable
and similar charges (148) (318) (466)
--------- --------- -------------
Profit on ordinary activities
before taxation 5,880 8,256 14,136
Taxation (508) - (508)
--------- --------- -------------
Profit after taxation attributable
to ordinary shareholders 5,372 8,256 13,628
========= ========= =============
Earnings per ordinary share (Note
1)
(basic and diluted) 12.58p 19.34p 31.92p
BALANCE SHEET
as at 31 May 2019
GBP'000s
Investments held at fair value through profit or loss
(Note 3) 394,396
Net current assets 280
-----------
Total assets less current liabilities 394,676
Creditors: amount falling due after more than one
year (25,060)
Total net assets 369,616
-----------
Called up share capital 10,673
Capital redemption reserve 5,327
Capital reserves 336,741
Revenue reserve 16,875
Equity Shareholders' funds 369,616
-----------
Net asset value per ordinary share 865.8p
The net asset value is based on 42,692,727 ordinary
shares in issue at 31 May 2019
SUMMARY OF UNAUDITED RESULTS
INCOME STATEMENT
for the six months ended 31 May 2018
Revenue Capital Total Return
GBP'000s GBP'000s GBP'000s
(Note 2)
Gains on investments held at fair
value through profit or loss - 10,156 10,156
Losses on foreign currencies - (72) (72)
Income from investments 5,945 - 5,945
Other income 10 - 10
Investment management fee (272) (636) (908)
Administration expenses (349) (1) (350)
--------- --------- -------------
Profit before finance costs and
taxation 5,334 9,447 14,781
Finance costs: interest payable
and similar charges (415) (939) (1,354)
--------- --------- -------------
Profit on ordinary activities
before taxation 4,919 8,508 13,427
Taxation (417) - (417)
--------- --------- -------------
Profit after taxation attributable
to ordinary shareholders 4,502 8,508 13,010
========= ========= =============
Earnings per ordinary share (Note
1)
(basic and diluted) 10.55p 19.93p 30.48p
BALANCE SHEET
as at 31 May 2018
GBP'000s
Investments held at fair value through profit or loss
(Note 3) 405,108
Net current assets 2,282
-----------
Total assets less current liabilities 407,390
Creditors: amount falling due after more than one
year (30,422)
Total net assets 376,968
-----------
Called up share capital 10,673
Capital redemption reserve 5,327
Capital reserves 345,618
Revenue reserve 15,350
Equity Shareholders' funds 376,968
-----------
Net asset value per ordinary share 883.0p
The net asset value is based on 42,692,727 ordinary
shares in issue at 31 May 2018
BALANCE SHEET
as at 30 November 2018
GBP'000s
Investments held at fair value through profit or loss
(Note 3) 381,787
Net current assets 3,541
-----------
Total assets less current liabilities 385,328
Creditors: amount falling due after more than one year (25,055)
Total net assets 360,273
-----------
Called up share capital 10,673
Capital redemption reserve 5,327
Capital reserves 328,485
Revenue reserve 15,788
Equity shareholders' funds 360,273
-----------
Net asset value per ordinary share 843.9p
The net asset value is based on 42,692,727 ordinary shares
in issue at 30 November 2018
STATEMENT OF CHANGES IN EQUITY
Called Capital
up Redemption Capital Revenue
Share Reserve Reserve Reserve Total
Capital GBP'000s GBP'000s GBP'000s GBP'000s
GBP'000s
Six months ended 31 May 2018
Net assets at 1 December 2017 10,673 5,327 337,110 14,904 368,014
Revenue profit - - - 4,502 4,502
Dividends on ordinary shares (Note
4) - - - (4,056) (4,056)
Capital profit - - 8,508 - 8,508
Net assets at 31 May 2018 10,673 5,327 345,618 15,350 376,968
------------------- ------------------- ----------- ----------- -----------
Six months ended 31 May 2019
Net assets at 1 December 2018 10,673 5,327 328,485 15,788 360,273
Revenue profit - - - 5,372 5,372
Dividends on ordinary shares (Note
4) - - - (4,291) (4,291)
Unclaimed Dividends - - - 6 6
Capital profit - - 8,256 - 8,256
Net assets at 31 May 2019 10,673 5,327 336,741 16,875 369,616
CASH FLOW STATEMENT
Six months Six months
ended ended
31 May 31 May
2019 2018
GBP000's GBP000's
----------- -----------
Operating activities
Profit before finance costs and taxation 14,602 14,781
Less: Gains on investments at fair value
through profit or loss (9,227) (10,156)
Add: Special dividends credited to capital 257 -
Less: Losses on foreign currency 52 72
Less: Overseas tax suffered (508) (417)
Increase in other receivables (288) (36)
Decrease in other payables (96) (31)
Purchases of fixed asset investments held
at fair value through profit or loss (35,004) (32,244)
Sales of fixed asset investments held
at fair value through profit or loss 31,365 23,312
Net cash inflow (outflow) from operating
activities 1,153 (4,719)
Financing activities
Interest paid (451) (2,333)
Repayment of Stepped Rate Interest Loan - (18,200)
Dividends paid on cumulative preference
stock (11) (11)
Dividends paid on ordinary shares (4,291) (4,056)
Unclaimed dividends 6 -
----------- -----------
Net cash outflow from financing activities (4,747) (24,600)
Decrease in cash and cash equivalents (3,594) (29,319)
----------- -----------
Cash and cash equivalents at the start
of the period 11,133 30,998
Effect of foreign exchange rates (52) (72)
Cash and cash equivalents at the end of
the period 7,487 1,607
Comprising:
Cash at bank 7,487 1,607
----------- -----------
NOTES
Note 1
The returns per ordinary share have been calculated using a
weighted average number of shares in issue of 42,692,727 (31 May
2018: 42,692,727 shares).
Note 2
The total column of this statement is the profit and loss
account of the company.
All revenue and capital items derive from continuing operations.
No operations were acquired or discontinued in the period.
Purchases for the half year ended 31 May 2019 were GBP35,004,000
(31 May 2018: GBP31,682,000) and sales for the half year ended 31
May 2019 were GBP31,365,000 (31 May 2018: GBP19,687,000).
Included in the cost of investments are transaction costs on
purchases which amounted to GBP69,000 (31 May 2018: GBP29,000) and
transaction costs on sales which amounted to GBP7,000 (31 May 2018:
GBP8,000).
Note 3
Investments are designated as held at fair value through profit
or loss in accordance with FRS 102 sections 11 and 12. Investments
are initially recognised at fair value, which is determined to be
their cost. Subsequently, investments are revalued at fair value
which is the bid market price for listed investments.
FRS 102 fair value hierarchy disclosures (March 2016) sets out
three fair value levels.
Level 1: The unadjusted quoted price 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 (i.e., developed using market data) for the
asset or liability, either directly or indirectly
Level 3: Inputs are unobservable (i.e., for which market data is
unavailable) for the asset or liability
As at 31 May 2019, the financial assets at fair value through
profit and loss of GBP394,396,000 (30 November 2018:
GBP381,787,000) are categorised as follows:
Six months Year ended
ended 30 November
31 May 2019 2018
GBP'000s GBP'000s
Level 1 394,392 381,783
Level 2 - -
Level 3 4 4
------------ ------------
394,396 381,787
------------ ------------
Note 4
In accordance with section 32 FRS102 ' Events After the end of
the Reporting Period', dividends declared after the end of the
reporting period shall not be recognised as a liability.
Dividends payable on ordinary shares in respect of earnings for
each period are as follows:
Six months Six months Year ended
ended ended 30 November
31 May 2019 31 May 2018 2018
GBP'000s GBP'000s GBP'000s
Final dividend 6.00p paid 5 April
2019 (2018: 6.00p) 2,562 2,562 2,562
First quarterly dividend 4.05p paid
27 July 2018 (2017: 3.50p) - - 1,729
Second quarterly dividend 4.05p paid
21 September 2018 (2017: 3.50p) - - 1,729
Third quarterly dividend 4.05p paid
14 December 2018 (2017: 3.50p) 1,729 1,494 1,494
4,291 4,056 7,514
------------- ------------- -------------
Dividends declared after the period end are not recognised as a
liability under section 32 FRS 102 'Events after the end of the
reporting period'. Details of these dividends are set out
below.
Six months Six months Year ended
ended ended 30 November
31 May 2019 31 May 2018 2018
GBP'000s GBP'000s GBP'000s
First quarterly dividend 4.66p payable
25 July 2019 (2018: 4.05p) 1,989 1,729 -
Second quarterly dividend 4.66p payable
19 September 2019 (2018: 4.05p) 1,989 1,729 -
Third quarterly dividend 4.05p - - 1,729
Final dividend 6.00p - - 2,562
-------------- -------------- ---------------------
3,978 3,458 4,291
-------------- -------------- ---------------------
The final and quarterly dividends above are based on the number
of shares in issue at the period end. However, the dividend payable
will be based upon the number of shares in issue on the record date
and will reflect any purchase or cancellation of shares by the
company settled subsequent to the period end.
Note 5
The directors believe it is appropriate to continue to adopt the
going concern basis in preparing the financial statements, as the
assets of the company consist mainly of securities which are
readily realisable and accordingly, that the company has adequate
financial resources to continue in operational existence for the
foreseeable future.
Note 6
The half-yearly report has neither been audited nor reviewed by
the company's auditors. The financial information for the year
ended 30 November 2018 has been extracted from the statutory
accounts for that year which have been delivered to the Registrar
of Companies and restated by reference to the changes in the
accounting policies detailed above. The auditor's report on those
accounts was unqualified and did not contain a statement under
either section 498(2) or (3) of the Companies Act 2006.
The half-yearly financial report will be sent to shareholders in
late July 2019 and will be available to members of the public from
the company's registered office at 199 Bishopsgate, London EC2M
3TY.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LLFFDDLIDLIA
(END) Dow Jones Newswires
July 18, 2019 02:00 ET (06:00 GMT)
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