To: RNS
From: CT UK High Income Trust PLC
Date: 29 November 2024
LEI: 213800B7D5D7RVZZPV45
Unaudited Half-Year Results
The Board of CT UK High Income Trust PLC (the 'Company') announces the unaudited half-year results of the Company for the six month period to 30 September 2024.
Financial Highlights for the six months
· Net asset value total return(1) per share for the six months was +6.8%, compared to the total return of the Benchmark(2) of +6.1%.
· Ordinary share price total return for the six months was +9.4% compared to the total return of the Benchmark of +6.1%.
· B share price total return for the six months was +6.7% compared to the total return of the Benchmark of +6.1%.
· Distribution yield(1) of 6.3% on Ordinary shares and 6.5% on B shares at 30 September 2024, compared to the yield on the FTSE All-Share Index of 3.6%.
Notes:
1. Yield and total return - see Alternative Performance Measures.
2. Benchmark - FTSE All-Share Index.
Chairman's Statement
Investment performance
For the six months to 30 September 2024 the net asset value ("NAV") total return for both the Ordinary shares and B shares was +6.8%, which outperformed the +6.1% total return for the FTSE All-Share Index, the Company's benchmark index.
Equity markets globally have been positive in 2024 and the UK has joined in, albeit at a slower pace than other major markets, producing a total return of just over 6% in the six months to 30 September 2024. As is now the norm, market sectors have been volatile within this as they reacted to newsflow whether geo-political, macro-economic and on occasion even stock specific. Perhaps surprisingly, the continuing war in Ukraine, the conflict in the Middle East and the potential for this to expand into a wider regional war have had, in the main, limited impact on equity markets. The bigger focus once again has been on inflation and interest rates. When I wrote this statement a year ago, I noted that inflation had been stubborn but had begun to fall. This continued, possibly faster than many had anticipated, and stands now at around 2%. At last, the Bank has now begun to cut interest rates, rather belatedly in my view. They are still higher than most other major country, but the path is clear and equity markets responded positively.
The other major event in the last six months was of course the UK election and the resounding victory of the Labour party was at first seen very positively. Whatever the politics, investors were relieved at least, by the certainty that the UK would be led by the same party and probably the same individuals for the next five years which, after the chaos of recent times, is indeed a big positive. Unfortunately, the positivity and enthusiasm ebbed away over the following months as the new government seemed to go out of its way to be increasingly negative on the inherited fiscal situation.
Despite all of this, David Moss, our portfolio manager, does remain positive on the future of investing in UK equities. We will have a period of stable government - rather unusual in the context of our European trading partners - which, of itself, should encourage vital foreign direct investment to help our economy to grow. The anticipated cuts in interest rates will help reduce the cost of borrowing for all but particularly the cost of borrowing on mortgages. As I said a year ago, though, our portfolio manager continues to believe that while the cost of borrowing will continue to fall, we are in a regime more in common with the 1990s than the period post-financial crisis and interest rates, wherever they settle, will remain positive in real terms, likely in the 3-4% range. He remains of the view this is a positive backdrop for borrowers and savers and the efficient allocation of capital.
Trading activity by the portfolio manager has been much less in the last six months to 30 September 2024, driven primarily by increasing the quality of the portfolio or the ability to generate sustainable and growing income. Performance has been good during this period with the NAV total return out-performance of the benchmark coming from stock selection. Irish housebuilder Cairn Homes was one of the top contributors as the shares performed very strongly on the back of strong results and cash generation enabling them to continue returning cash to shareholders through an ongoing share buyback and growing dividend. Likewise, NatWest has delivered much better than expected results, despite the weak UK economic backdrop, which has enabled them to increase the dividend and continue to buy back shares from the government. In contrast, UK brickmaker Ibstock has delivered fairly weak results hurt by levels of UK housebuilding below 2009. They have continued to invest through this period leaving them very well positioned for the recovery which the Investment Manager is highly confident will come, as the UK continues to have a clear shortage of housing and increasing this is a very clear policy of the new Labour government.
Share price performance
Over the six month period, the discount to NAV at which the Company's Ordinary shares traded, narrowed from -10.6% to -8.8% at 30 September 2024 and consequently, the Ordinary share price total return for the period was +9.4%. The discount of the B shares to NAV widened slightly from -11.6% to -12.2% at the period end, thus generating a B share price total return of +6.7% for the period under review.
During the period, 250,000 B shares were bought back for treasury at an average discount of approximately 12% to the prevailing NAV. No Ordinary shares were bought back in the period under review. It continues to be the Board's strategy to buy back shares in line with the Company's stated policy, which helps to enhance the NAV per share for continuing shareholders, especially if a mismatch of demand and supply causes the discount to widen.
Earnings, dividends and capital repayments
In the period under review, your Company's revenue earnings per share has risen by 14.7% from 2.31p per share to 2.65p per share in comparison to the six months to 30 September 2023.
As I have previously stated, it is a key objective of the Board and Investment Manager to return to a covered dividend and rebuild the revenue reserve. Now that the changes made by the portfolio manager over the last year are coming to fruition, we believe the Company's revenue position at the half-year stage is in a much-improved position.
In the absence of unforeseen circumstances, it is the Board's current intention that the aggregate dividend and capital repayment for the current financial year to 31 March 2025 will be at least 5.62p per Ordinary share and B share respectively. Three quarterly interim dividends and capital repayments have so far been declared, each of 1.35p per share.
At 30 September 2024, this aggregate distribution represented a yield of 6.3% and 6.5% on the Ordinary share price and B share price respectively, as compared with the yield on the FTSE All-Share Index of 3.6%.
Borrowing
At 30 September 2024, the Company had fully drawn down its £15 million revolving credit facility ("RCF") with The Royal Bank of Scotland International Limited. This facility provides flexibility for the Board and Investment Manager to utilise borrowing when investment opportunities arise or, conversely, reduce borrowing dependent on market conditions and outlook.
Outlook
I talked earlier about the portfolio manager's positive view on investing in UK equities and in the context of this and looking forward, I must mention the UK budget. There had been a lot of leaks and even more speculation on its content but we have finally now seen the first budget from Rachel Reeves, the Chancellor of this new Labour government. The initial judgement from investors was positive with bond yields falling and domestic UK shares rising. Unfortunately, this lasted only until we saw the detailed numbers as the Office for Budget Responsibility revised up borrowing numbers and revised down growth. As investors digested this information and the sheer amount of debt the government intends to issue, sentiment turned more negative with bond yields rising sharply and shares falling. Even if this looks like a classic left-wing tactic of tax and spend, investment in UK infrastructure and housing is desperately needed. Businesses at least now know the rules under which they have to operate and the ultimate impact remains to be seen.
We probably all have a view on the pros and cons of borrowing more to invest and raising taxes but I think arguments will persist for some time as to whether pre-election promises have been broken and the right taxes have been raised. Whilst I think this debate will rumble on, the fact that we will have a period of stable government intending to invest more has to be beneficial for the long-term future of the country, helpful for economic growth and positive for those businesses that are exposed to infrastructure and housing in particular.
Without acknowledging it, this new Labour Government has actually inherited one of the fastest growing European economies and with fiscal clarity now here and interest rates still likely to fall further, our portfolio manager remains constructive on the UK and positive on UK domestic companies where dividends and valuations remain very attractive.
The landslide election victory by President-elect Trump in America defied prediction but is being taken particularly well by equity markets. His pre-election rhetoric is yet to be tested but, as the UK's largest single-country trading partner, we should take the early signs as encouraging. We shall see.
As ever, your support of this Company is very much appreciated.
Andrew Watkins
Chairman
28 November 2024
Condensed Unaudited Statement of Comprehensive Income
For the six month period to 30 September 2024
| | Six months to 30 September 2024 | ||
| | | | |
| Notes | Revenue | Capital | Total |
| | £'000 | £'000 | £'000 |
| |
|
|
|
| Gains on investments held at fair value | - | 4,831 | 4,831 |
| Exchange losses | - | (4) | (4) |
| Income 2 | 3,529 | - | 3,529 |
| Investment management fee 3 | (100) | (233) | (333) |
| Other expenses | (222) | - | (222) |
| Profit before finance costs and taxation | 3,207 | 4,594 | 7,801 |
| | | | |
| Net finance costs | | | |
| Interest on bank loans | (144) | (336) | (480) |
| Total finance costs | (144) | (336) | (480) |
| | | | |
| Profit before tax | 3,063 | 4,258 | 7,321 |
| Tax on ordinary activities 4 | (46) | - | (46) |
| Profit for the period | 3,017 | 4,258 | 7,275 |
|
| | | |
|
| | | |
| Total comprehensive income for the period | 3,017 | 4,258 | 7,275 |
|
| | | |
| | | | |
| Earnings per share 5 | 2.65p | 3.73p | 6.38p |
The total column of this statement represents the Company's Profit and Loss Account. The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations.
All of the profit and comprehensive income for the period is attributable to the owners of the Company.
Condensed Unaudited Statement of Comprehensive Income
| | Six months to 30 September 2023 | Year to 31 March 2024* | ||||
| | | | | | | |
| Notes | Revenue | Capital | Total | Revenue | Capital | Total |
| | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| |
|
|
|
|
|
|
| (Losses)/ gains on investments held at fair value | - | (3,694) | (3,694) |
- |
7,674 |
7,674 |
| Exchange gains | - | 15 | 15 | 1 | 9 | 10 |
| Income 2 | 3,141 | - | 3,141 | 5,603 | - | 5,603 |
| Investment management fee 3 | (91) | (213) | (304) | (186) | (435) | (621) |
| Other expenses | (223) | - | (223) | (518) | - | (518) |
| Profit/(loss) before finance costs and taxation | 2,827 | (3,892) | (1,065) | 4,900 | 7,248 | 12,148 |
| | | | | | | |
| Net finance costs | | | | | | |
| Interest on bank loans | (122) | (283) | (405) | (269) | (627) | (896) |
| Total finance costs | (122) | (283) | (405) | (269) | (627) | (896) |
| | | | | | | |
| Profit/(loss) before tax | 2,705 | (4,175) | (1,470) | 4,631 | 6,621 | 11,252 |
| Tax on ordinary activities 4 | (38) | - | (38) | (30) | - | (30) |
| Profit/(loss) for the period | 2,667 | (4,175) | (1,508) |
4,601 |
6,621 |
11,222 |
|
| | | | | | |
|
| | | | | | |
| Total comprehensive income for the period | 2,667 | (4,175) | (1,508) | 4,601 | 6,621 | 11,222 |
|
| | | | | | |
| | | | |
|
|
|
| Earnings per share 5 | 2.31p | (3.62)p | (1.31)p | 4.01p | 5.77p | 9.78p |
The total column of this statement represents the Company's Profit and Loss Account. The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations.
All of the profit and comprehensive income for the period is attributable to the owners of the Company.
*audited figures
Condensed Unaudited Statement of Financial Position
| | | | |
| Notes | 30 September | 30 September | 31 March |
| | 2024 | 2023 | 2024* |
| | £'000 | £'000 | £'000 |
| |
|
|
|
| Non-current assets | | | |
| Investments held at fair value through profit or loss 9 | 125,626 | 112,301 | 121,267 |
| | 125,626 | 112,301 | 121,267 |
| | | | |
| Current assets | | | |
| Receivables 10 | 513 | 970 | 1,203 |
| Cash and cash equivalents | 787 | 282 | 1,086 |
|
| 1,300 | 1,252 | 2,289 |
| | | | |
| Total assets | 126,926 | 113,553 | 123,556 |
| Current liabilities | | | |
| Payables 11 | (534) | (506) | (790) |
| Bank loans 12 | (15,000) | (15,000) | (15,000) |
| Total liabilities | (15,534) | (15,506) | (15,790) |
| Net assets | 111,392 | 98,047 | 107,766 |
| | | | |
| Capital and reserves |
|
|
|
| Share capital 13 | 134 | 134 | 134 |
| Share premium | 153 | 153 | 153 |
| Capital redemption reserve | 5 | 5 | 5 |
| Buy back reserve | 78,806 | 79,022 | 79,022 |
| Special capital reserve | 7,395 | 9,131 | 8,320 |
| Capital reserves | 20,702 | 5,648 | 16,444 |
| Revenue reserve | 4,197 | 3,954 | 3,688 |
| Equity shareholders' funds | 111,392 | 98,047 | 107,766 |
| Net asset value per Ordinary share 14 | 97.90p | 85.98p | 94.51p |
| Net asset value per B share 14 | 97.90p | 85.98p | 94.51p |
Approved by the Board, and authorised for issue, on 28 November 2024 and signed on its behalf by:
Andrew Watkins, Chairman
*audited figures
Condensed Unaudited Statement of Changes in Equity
for the six months to 30 September 2024
| |
Share Capital |
Share Premium | Capital Redemption Reserve | Buy Back Reserve | Special Capital Reserve |
Capital Reserves |
Revenue Reserve |
Total |
| | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| |
|
|
|
|
|
|
|
|
| Balance as at 1 April 2024 | 134 | 153 | 5 | 79,022 | 8,320 | 16,444 | 3,688 | 107,766 |
| Profit for the period | - | - | - | - | - | 4,258 | 3,017 | 7,275 |
| Shares bought back for treasury | - | - | - | (216) | - | - | - | (216) |
| Dividends paid on Ordinary shares | - | - | - | - | - | - | (2,508) | (2,508) |
| Capital returns paid on B shares | - | - | - | - | (925) | - | - | (925) |
| Balance as at 30 September 2024 | 134 | 153 | 5 | 78,806 | 7,395 | 20,702 | 4,197 | 111,392 |
for the six months to 30 September 2023
| |
Share Capital |
Share Premium | Capital Redemption Reserve | Buy Back Reserve | Special Capital Reserve |
Capital Reserves |
Revenue Reserve |
Total |
| | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| |
|
|
|
|
|
|
|
|
| Balance as at 1 April 2023 | 134 | 153 | 5 | 80,315 | 10,012 | 9,823 | 3,729 | 104,171 |
| (Loss)/profit for the period | - | - | - | - | - | (4,175) | 2,667 | (1,508) |
| Shares bought back for treasury | - | - | - | (1,293) | - | - | - | (1,293) |
| Dividends paid on Ordinary shares | - | - | - | - | - | - | (2,442) | (2,442) |
| Capital returns paid on B shares | - | - | - | - | (881) | - | - | (881) |
| Balance as at 30 September 2023 | 134 | 153 | 5 | 79,022 | 9,131 | 5,648 | 3,954 | 98,047 |
for the year to 31 March 2024 *
| |
Share Capital |
Share Premium | Capital Redemption Reserve | Buy Back Reserve | Special Capital Reserve |
Capital Reserves |
Revenue Reserve |
Total |
| | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| |
|
|
|
|
|
|
|
|
| Balance as at 1 April 2023 | 134 | 153 | 5 | 80,315 | 10,012 | 9,823 | 3,729 | 104,171 |
| Profit for the period | - | - | - | - | - | 6,621 | 4,601 | 11,222 |
| Shares bought back for treasury | - | - | - | (1,293) | - | - | - | (1,293) |
| Dividends paid on Ordinary shares | - | - | - | - | - | - | (4,642) | (4,642) |
| Capital returns paid on B shares | - | - | - | - | (1,692) | - | - | (1,692) |
| Balance as at 31 March 2024 | 134 | 153 | 5 | 79,022 | 8,320 | 16,444 | 3,688 | 107,766 |
*audited figures
Condensed Unaudited Cash Flow Statement
| | Six months to 30 September 2024 | Six months to 30 September 2023 | Year to 31 March 2024* |
| | £'000 | £'000 | £'000 |
| Cash flows from operating activities |
|
|
|
| Profit/(loss) before tax | 7,321 | (1,470) | 11,252 |
| Adjustments for: | | | |
| (Gains)/losses on investments held at fair value through profit or loss | (4,831) | 3,694 |
(7,674) |
| Exchange losses/(gains) | 4 | (15) | (10) |
| Interest income | (34) | (36) | (84) |
| Interest received | 34 | 36 | 84 |
| Dividend income | (3,495) | (3,105) | (5,519) |
| Dividend income received | 4,140 | 3,576 | 5,727 |
| Decrease/(increase) in receivables | 9 | (2) | 1 |
| (Decrease)/increase in payables | (37) | (22) | 45 |
| Finance costs | 480 | 406 | 896 |
| Overseas tax suffered | (20) | (97) | (69) |
| Cash flows from operating activities | 3,571 | 2,965 | 4,649 |
| Cash flows from investing activities | | |
|
| Purchases of investments | (30,519) | (37,247) | (62,065) |
| Sales of investments | 30,782 | 34,270 | 61,699 |
| Cash flows from investing activities | 263 | (2,977) | (366) |
|
| | | |
| Cash flows from financing activities | | | |
| Dividends paid on Ordinary shares | (2,508) | (2,442) | (4,642) |
| Capital returns paid on B shares | (925) | (881) | (1,692) |
| Interest on bank loans | (480) | (393) | (1,293) |
| Shares purchased for treasury | (216) | (1,293) | (868) |
| Drawdown of bank loans | - | 3,000 | 3,000 |
| Cash flows from financing activities | (4,129) | (2,009) | (5,495) |
|
| | | |
| Net decrease in cash and cash equivalents | (295) | (2,021) | (1,212) |
| Effect of movement in foreign exchange | (4) | 15 | 2,288 |
| Opening net cash and cash equivalents | 1,086 | 2,288 | 10 |
| Closing cash and cash equivalents | 787 | 282 | 1,086 |
|
| | | |
| Represented by: | | | |
| Cash at bank | 47 | 73 | 176 |
| Short term deposits | 740 | 209 | 910 |
|
| 787 | 282 | 1,086 |
*audited figures
Notes to the Condensed Financial Statements (unaudited)
1. Accounting Policies
The condensed unaudited financial statements have been prepared on a going concern basis and in accordance with UK-adopted International Accounting Standard 34 "Interim Financial Reporting" and the accounting policies set out in the statutory financial statements of the Company for the year ended 31 March 2024. Where presentational guidance set out in the Statement of Recommended Practice ("SORP") for investment trusts issued by the Association of Investment Companies is consistent with the requirements of UK-adopted International Accounting Standards, the Directors have sought to prepare the condensed financial statements on a basis compliant with the recommendations of the SORP. The condensed financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the financial statements of the Company for the year ended 31 March 2024, which were prepared under UK-adopted International Accounting Standards.
2. Income
| | 30 September 2024 | 30 September 2023 | 31 March 2024 |
| Income comprises: | £'000 | £'000 | £'000 |
| |
|
|
|
| UK dividend income | 2,773 | 2,575 | 4,653 |
| UK dividend income - special dividends | - | - | 46 |
| Overseas dividend income | 552 | 464 | 632 |
| Overseas dividend income - special dividends | - | 25 | 25 |
| Property income distributions | 170 | 41 | 163 |
| | 3,495 | 3,105 | 5,519 |
| Other income | | | |
| Interest on cash and cash equivalents | 34 | 36 | 84 |
| | 3,529 | 3,141 | 5,603 |
3. The Company's investment manager Columbia Threadneedle Investment Business Limited receives an investment management fee of 0.60 per cent per annum of the net asset value of the Company payable quarterly in arrears.
4. The taxation charge for the period represents withholding tax suffered on overseas dividend income.
5. The earnings per share are based on the net profit/(loss) for the period and on 114,005,447 shares (period to 30 September 2023 - 115,437,141; year to 31 March 2024 - 114,734,272), being the weighted average number of shares in issue during the period.
6. Earnings for the six months to 30 September 2024 should not be taken as a guide to the results of the full year.
7. The Board has considered the requirements of IFRS 8 'Operating Segments'. The Board is of the view that the Company is engaged in a single segment of business, of investing in equity, and that therefore the Company has only a single operating segment. The Board of Directors, as a whole, has been identified as constituting the chief operating decision maker of the Company. The key measure of performance used by the Board to assess the Company's performance is the total return on the Company's net asset value as calculated under UK-adopted International Accounting Standards and therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the condensed financial statements.
8. Dividends and capital repayments
|
Dividends |
Payment Date | Six months to 30 Sept 2024 | Six months to 30 Sept 2023 | Year to 31 March 2024 | |
| |
| £'000 | £'000 | £'000 | |
| In respect of the previous period: |
|
|
|
| |
| Fourth interim dividend at 1.66p (2023: 1.55p) per Ordinary share |
3 May 2024 |
1,383 |
1,319 |
1,319 | |
| | | | | | |
| In respect of the period under review: |
|
|
|
| |
| First interim dividend at 1.35p (2024: 1.32p) per Ordinary share |
2 Aug 2024 |
1,125 |
1,123 |
1,123 | |
| Second interim dividend (2024: 1.32p) per Ordinary share | |
- |
- |
1,100 | |
| Third interim dividend (2024: 1.32p) per Ordinary share | |
- |
- |
1,100 | |
|
|
| 2,508 | 2,442 | 4,642 | |
A second interim dividend for the year to 31 March 2025, of 1.35p per Ordinary share, was paid on 1 November 2024 to Ordinary shareholders on the register on 4 October 2024.
|
Capital repayments |
Payment Date | Six months to 30 Sept 2024 | Six months to 30 Sept 2023 | Year to 31 March 2024 |
| |
| £'000 | £'000 | £'000 |
| In respect of the previous period: |
|
|
|
|
| Fourth capital repayment at 1.66p (2023: 1.55p) per B share |
3 May 2024 |
510 |
476 |
476 |
| | | | | |
| In respect of the period under review: |
|
|
|
|
| First capital repayment at 1.35p (2024: 1.32p) per B share |
2 Aug 2024 |
415 |
405 |
405 |
| Second capital repayment (2024: 1.32p) per B share | |
- |
- |
406 |
| Third capital repayment (2024: 1.32p) per B share | |
- |
- |
405 |
|
|
| 925 | 881 | 1,692 |
A second capital repayment for the year to 31 March 2025, of 1.35p per B share, was paid on 1 November 2024 to B shareholders on the register on 4 October 2024.
Although the above referenced payments on 1 November 2024 relate to the period ended 30 September 2024, under UK-adopted International Accounting Standards they will be accounted for in the six months to 31 March 2025, being the period during which they are paid.
9. Investments held at fair value through profit or loss
|
|
Listed/ Quoted (Level 1) £'000 |
Subsidiary/ Unlisted (Level 3) £'000 |
Total £'000 |
| Cost brought forward | 105,822 | 250 | 106,072 |
| Gains brought forward | 15,195 | - | 15,195 |
| Fair value of investments at 31 March 2024 | 121,017 | 250 | 121,267 |
| Movement in the period: | | | |
| Purchases at cost | 30,310 | - | 30,310 |
| Sales proceeds | (30,782) | - | (30,782) |
| Gains on investments sold in the period | 5,227 | - | 5,227 |
| Losses on investments held at 30 September 2024 | (396) | - | (396) |
| Fair value of investments at 30 September 2024 | 125,376 | 250 | 125,626 |
| Cost at 30 September 2024 | 110,577 | 250 | 110,827 |
| Gains at 30 September 2024 | 14,799 | - | 14,799 |
| Fair value of investments at 30 September 2024 | 125,376 | 250 | 125,626 |
Accounting standards recognise a hierarchy of fair value measurements for financial instruments which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The classification of financial instruments depends on the lowest significant applicable input, as follows:
· Level 1 - quoted (unadjusted) prices in active markets for identical assets or liabilities.
· Level 2 - other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly. The Company held no such instruments during the period under review.
· Level 3 - techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data. The Company's investment in its subsidiary undertaking, Investors Securities Company Limited, is included in Level 3 and is valued at its net asset value.
There were no transfers between levels of the fair value hierarchy during the six months ended 30 September 2024.
10. Receivables
| | 30 Sept | 30 Sept | 31 March |
| | 2024 | 2023 | 2024 |
| | £'000 | £'000 | £'000 |
| Income receivable from shares and securities | 322 | 704 | 967 |
| Withholding tax recoverable | 153 | 199 | 179 |
| Sundry debtors and prepayments | 38 | 67 | 57 |
|
| 513 | 970 | 1,203 |
11. Payables
| | 30 Sept | 30 Sept | 31 March |
| | 2024 | 2023 | 2024 |
| | £'000 | £'000 | £'000 |
| Loan from subsidiary undertaking repayable on demand | 250 | 250 | 250 |
| Investment management fee payable to the investment manager | 168 | 148 | 161 |
| Amounts due to brokers in settlement of purchase of investments | - | - | 209 |
| Loan Interest | - | 2 | 10 |
| Accrued expenses | 116 | 106 | 160 |
|
| 534 | 506 | 790 |
12. Bank Loans
The Company has an unsecured revolving credit facility ('RCF') with The Royal Bank of Scotland International Limited for £15 million which is available until 28 September 2025. At 30 September 2024, £15 million was drawn down (30 September 2023: £15 million; 31 March 2024: £15 million).
The loan agreement contains certain financial covenants with which the Company must comply. These include a financial covenant with respect to the ratio of the Adjusted Portfolio Value (as defined in the loan agreement) to the level of debt and also that the Adjusted Portfolio Value does not fall below £50 million. The Company complied with the required financial covenants throughout the period since drawdown.
13. Share Capital
Allotted, issued and fully paid
|
| Listed | Held in Treasury | In Issue | |||
|
| Number | £ | Number | £ | Number | £ |
| Ordinary Shares of 0.1p each | | | | | | |
| Balance at 1 April 2024 | 102,067,144 | 102,067 | (18,744,491) | (18,744) | 83,322,653 | 83,323 |
| Balance at 30 September 2024 | 102,067,144 | 102,067 | (18,744,491) | (18,744) | 83,322,653 | 83,323 |
|
B Shares of 0.1p each | | | | | | |
| Balance at 1 April 2024 | 32,076,703 | 32,077 | (1,367,953) | (1,368) | 30,708,750 | 30,709 |
| Repurchased to be held in treasury | - | - | (250,000) | (250) | (250,000) | (250) |
| Balance at 30 September 2024 | 32,076,703 | 32,077 | (1,617,953) | (1,618) | 30,458,750 | 30,459 |
| Total at 30 September 2024 | 134,143,847 | 134,144 | (20,362,444) | (20,362) | 113,781,403 | 113,782 |
During the period the Company bought back nil Ordinary shares and bought back 250,000 B shares at a cost of £216,000 to hold in treasury (period to 30 September 2023 - 1,750,000 Ordinary shares and nil B shares; year to 31 March 2024 - 1,750,000 Ordinary shares and nil B shares).
At 30 September 2024 the Company held 18,744,491 Ordinary shares and 1,617,953 B shares in treasury (30 September 2023 - 18,744,491 Ordinary shares and 1,367,953 B shares; 31 March 2024 - 18,744,491 Ordinary shares and 1,367,953 B shares).
14. The net asset value per share is based on shareholders' funds at the period end and on 83,322,653 Ordinary shares and 30,458,750 B shares, being the number of shares in issue at the period end (30 September 2023 - 83,322,653 Ordinary shares and 30,708,750 B shares; 31 March 2024 - 83,322,653 Ordinary shares and 30,708,750 B shares).
15. The fair values of the Company's financial assets and liabilities are not materially different from their carrying values in the financial statements.
The Company's financial risk management objectives and policies are consistent with those disclosed in the Company's financial statements for the year ended 31 March 2024.
16. Changes in liabilities arising from financing activities
| | Six months to 30 September 2024 | Six months to 30 September 2023 | Year to 31 March 2024 |
| | £'000 | £'000 | £'000 |
| Opening net debt at beginning of period/year | 15,000 | 12,000 | 12,000 |
| Cash flows: |
| | |
| Drawdown of revolving credit facility | - | 3,000 | 3,000 |
| Closing net debt at end of period/year | 15,000 | 15,000 | 15,000 |
17. Going concern
In assessing the going concern basis of accounting, the Directors have had regard to the guidance issued by the Financial Reporting Council and have undertaken a rigorous review of the Company's ability to continue as a going concern. The Board has, in particular, considered the outlook for inflation and ongoing macroeconomic and geopolitical concerns.
The Company's investment objective and policy, which is subject to regular Board monitoring processes, is designed to ensure that the Company is invested mainly in liquid, listed securities. The value of these investments exceeds the Company's liabilities by a significant margin. The Company retains title to all assets held by its custodian, and has an agreement relating to its borrowing facility with which it has complied. Cash is held only with banks approved and regularly reviewed by the Investment Manager.
As part of the going concern review, the Directors noted that a borrowing facility of a £15 million revolving credit facility is committed to the Company until 28 September 2025 and loan covenants are reviewed by the Board on a regular basis. It is expected that a new borrowing facility could be entered into when the current arrangement expires, but, if not, or should the Board decide not to renew it, any outstanding borrowings would be repaid through the use of cash and, if required, from the proceeds of the sale of the Company's investments.
The Directors believe, having assessed the principal risks and other matters, in light of the controls and review processes noted and bearing in mind the nature of the Company's business and assets and revenue and expenditure projections, that the Company has adequate resources to continue in operational existence for a period of at least twelve months from the date of approval of the financial statements. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
The Company does not have a fixed life. However, in the event that the net asset value total return performance of the Company is less than that of the FTSE All-Share Index over the relevant three year period, in accordance with the Company's articles of association, shareholders will be given the opportunity to vote on whether the Company should continue in existence, by ordinary resolution at the Company's Annual General Meeting. The current three year period for this purpose will run from 1 April 2022 to 31 March 2025.
18. Related party transactions
The Directors of the Company are considered a related party. Under the FCA UK Listing Rules, the Manager is also defined as a related party. However, the existence of an independent Board of Directors demonstrates that the Company is free to pursue its own financial and operating policies and therefore under the AIC SORP, the Manager is not considered a related party for accounting purposes.
The Directors receive aggregated remuneration for services as Directors and for which there were no outstanding balances at the period end. There have been no transactions with related parties during the first six months of the current financial year that have materially affected the financial position or performance of the Company during the period and there have been no changes in the related party transactions described in the last Annual Report and Financial Statements that could do so.
19. The Company's auditor, Deloitte LLP, has not audited or reviewed the Half-Year Report and the results for the six months to 30 September 2024 and 30 September 2023 pursuant to the Auditing Practices Board guidance on 'Review of Interim Financial Information'. These are not full statutory financial statements in terms of Section 434 of the Companies Act 2006 and are unaudited. Statutory financial statements for the year ended 31 March 2024, which received an unqualified audit report and which did not contain a statement under Section 498 of the Companies Act 2006, have been lodged with the Registrar of Companies. The condensed financial statements shown for the year ended 31 March 2024 are an extract from those financial statements. No full statutory financial statements in respect of any period after 31 March 2024 have been reported on by the Company's auditor or delivered to the Registrar of Companies.
The Half-Year Report to 30 September 2024 is available on the website maintained on behalf of the Company at ctukhighincome.co.uk
Statement of Principal Risks and Uncertainties
As an investment company, investing primarily in listed securities, most of the Company's principal risks and uncertainties that could threaten the achievement of its objective, strategy, future performance, liquidity and solvency are market related.
These risks, and the way in which they are managed, are described under the heading 'Principal Risks and Uncertainties and Viability Statement' within the Strategic Report in the Company's Annual Report and Financial Statements for the year ended 31 March 2024.
The principal risks identified in the Annual Report were:
• Investment performance risk;
• Legal and regulatory risk; and
• Third party service delivery and Cyber risks.
The Board continues to review the key risk summary for the Company which identifies the risks that the Company is exposed to, the controls in place and the actions being taken to mitigate them. The Board has also considered the outlook for inflation and ongoing macroeconomic and geopolitical concerns.
The Board considers that the Company's principal risks and uncertainties have not changed materially since 30 May 2024, the date that the Company's Annual Report and Financial Statements was approved, and are not expected to change materially for the remainder of the Company's financial year. The Board has also considered these principal risks in relation to going concern, as set out in note 17.
Statement of Directors' Responsibilities in Respect of the Half-Year Report
We confirm that to the best of our knowledge:
· the condensed set of financial statements has been prepared in accordance with UK-adopted International Accounting Standard 34 "Interim Financial Reporting" and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;
· the Chairman's Statement and the Statement of Principal Risks and Uncertainties (together constituting the Interim Management Report) include a fair review of the information required by the Disclosure Guidance and Transparency Rule ('DTR') 4.2.7R, 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;
· the Statement of Principal Risks and Uncertainties is a fair review of the principal risks and uncertainties for the remainder of the financial year; and
· the Half-Year Report includes a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period, and any changes in the related party transactions described in the last Annual Report that could do so.
On behalf of the Board
Andrew Watkins
Chairman
28 November 2024
Alternative Performance Measures ('APMs')
The Company uses the following APMs:
Discount/premium - the share price of an investment company is derived from buyers and sellers trading their shares on the stock market. This price is not identical to the net asset value (NAV) per share of the underlying assets less liabilities of the Company. If the share price is lower than the NAV per share, the shares are trading at a discount. This usually indicates that there are more sellers of shares than buyers. Shares trading at a price above NAV per share are deemed to be at a premium usually indicating there are more buyers of shares than sellers.
|
|
| 30 September 2024 | 31 March 2024 | |||
|
|
| Ordinary Shares | B Shares | Ordinary Shares | B Shares | |
| Net asset value per share | (a) | 97.90p | 97.90p | 94.51p | 94.51p | |
| Share price | (b) | 89.25p | 86.00p | 84.50p | 83.50p | |
| Discount (c=(b-a)/(a)) | (c) | -8.8% | -12.2% | -10.6% | -11.6% | |
Gearing - represents the excess amount above shareholders' funds of total investments, expressed as a percentage of the shareholders' funds. If the amount calculated is negative, this is a 'net cash' position and no gearing.
|
|
| 30 September 2024 £'000 | 31 March 2024 £'000 |
| Investments held at fair value through profit or loss | (a) | 125,626 | 121,267 |
| Net assets | (b) | 111,392 | 107,766 |
| (Net cash)/gearing (c=(a/b)-1)% | (c) | 12.8% | 12.5% |
Total Return - the theoretical return to shareholders calculated on a per share basis by adding dividends/capital repayments paid in the period to the increase or decrease in the share price or NAV in the period. The dividends/capital repayments are assumed to have been re-invested in the form of shares or net assets, respectively, on the date on which the shares were quoted ex-dividend.
The effect of reinvesting these dividends/capital repayments on the respective ex-dividend dates and the NAV total returns and Share price total returns are shown below.
| | 30 September 2024 | 31 March 2024 |
| |
| |
Ordinary shares/B shares |
Ordinary shares/B shares | ||
| NAV per share at start of period/year | 94.51p | 89.97p | ||
| NAV per share at end of period/year | 97.90p | 94.51p | ||
| Change in the period/year | +3.6% | +5.0% | ||
| Impact of dividend/capital repayment reinvestment† | +3.2% | +6.8% | ||
| NAV total return | +6.8% | +11.8% | ||
† During the six months to 30 September 2024 dividends/capital repayments totalling 3.01p (Ordinary shares/B shares) went ex-dividend. During the year to 31 March 2024 the equivalent figures were 5.51p (Ordinary shares/B shares).
|
| 30 September 2024 | 31 March 2024 |
| |||
|
| Ordinary Shares | B Shares | Ordinary Shares | B Shares | ||
| Share price per share at start of period/year | 84.50p | 83.50p | 82.00p | 84.50p | ||
| Share price per share at end of period/year | 89.25p | 86.00p | 84.50p | 83.50p | ||
| Change in the period/year | +5.6% | +3.0% | +3.0% | -1.2% | ||
| Impact of dividend/capital repayment reinvestment† | +3.8% | +3.7% | +7.2% | +6.7% | ||
| Share price total return for the period/year | +9.4% | +6.7% | +10.2% | +5.5% | ||
† During the six months to 30 September 2024 dividends/capital repayments totalling 3.01p (Ordinary shares/B shares) went ex-dividend. During the year to 31 March 2024 the equivalent figures were 5.51p (Ordinary shares/B shares).
Yield - The total annual dividend/capital repayment expressed as a percentage of the period end share price.
|
|
| 30 September 2024* | 31 March 2024 |
| |||
|
|
| Ordinary Shares | B Shares | Ordinary Shares | B Shares | ||
| Annual dividend/capital repayment |
(a) | 5.62p | 5.62p | 5.62p | 5.62p | ||
| Share price | (b) | 89.25p | 86.00p | 84.50p | 83.50p | ||
| Yield (c=a/b) | (c) | 6.3% | 6.5% | 6.7% | 6.7% | ||
*Based on expected minimum annual dividend/capital repayment of 5.62 pence per share in respect of the year ending 31 March 2025.
For further information, please contact:
David Moss, Columbia Threadneedle Investment Business Limited 0131 573 8300
Ian Ridge, Columbia Threadneedle Investment Business Limited 0131 573 8300
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