Invesco Perpetual UK Smaller Co's Investment Trust Plc - Half-year Report
Half-Yearly Financial Report for the Six Months to
Investment Objective and Policies of the Company
The Company is an investment trust whose investment objective is to achieve long-term total returns for shareholders primarily by investment in a broad cross-section of small to medium sized
The portfolio primarily comprises shares traded on the
The Company’s dividend policy is to distribute all available revenue earned by the portfolio in the form of dividends to shareholders. In addition, the Board has approved the use of the Company’s capital reserves to enhance dividend payments.
As announced on
Full details of the Company’s investment and dividend policies, as well as the Company’s risk and investment limits, can be found in the annual financial report for the year ended
(1) This is a target only and not a profit forecast and there is no guarantee of future dividends which are at the Directors’ discretion.
AT AT 31 JUL 31 JAN % Period End Date 2020 2020 Change Net asset value(1) per share (NAV) 456.64p 606.74p –24.7 Share price(2) 390.00p 606.00p –35.6 Discount(1) (14.6)% (0.1)% Gearing(1): – gross gearing nil nil – net gearing nil nil – net cash 1.4% 2.7% Maximum authorised gearing(1) 9.7% 7.3% Total return (with income reinvested) for the six months ended
31 July 2020: NAV(1) (2) –23.0% Share price(1) (2) –34.0% Benchmark Index(1) (2) (3) –21.2% FTSE All-Share Index(2) –17.8%
Return and dividend per ordinary share SIX MONTHS ENDED
31 JUL 31 JUL 2020 2019 Return(1): – revenue 0.67p 5.30p – capital (139.67)p 70.58p – total (139.00)p 75.88p First interim dividend 3.75p 3.75p
(1) Alternative Performance Measures (APM). See page 7 for the explanation and calculation of APMs. Further details are provided in the Glossary of Terms and Alternative Performance Measures in the Company’s 2020 annual financial report.
(2) Source: Refinitiv.
(3) The Benchmark Index of the Company is the Numis Smaller Companies Index (excluding Investment Companies) with income reinvested.
CHAIRMAN’S STATEMENT INCORPORATING THE INTERIM MANAGEMENT REPORT
The six months to
The Company’s share price fell from 606.00p to 390.00p during the same period, a decrease of 35.6% (34.0% decrease on total return basis), and the discount to NAV ended the period at 14.6%, having been 0.1% as at
Since the Company’s half-year end to
The Board is aware of how important dividends are to shareholders and, as previously announced, with the aim of delivering more predictable dividend levels, the Board has decided that it will seek to increase dividends annually(1). The rate of increase will take into account the Board’s expectations of income and capital returns.
Progressive dividends are possible, even during difficult periods like the one under review, where income received by the Company is around half what it would normally expect, because the Company’s dividend policy is to distribute all available revenue generated by the portfolio, together with an amount from realised capital profits. The Company’s dividend policy sits alongside the Company’s investment objective to achieve total returns for shareholders over the longer term and allows the Company to continue to deliver an enhanced yield relative to its peers within the
In the absence of unforeseen circumstances, the Board intends at least to maintain this level of quarterly dividend for the current financial year which would amount to a total dividend of at least 15p per share, representing a yield of 3.7% based on the share price as at
The expected timetable for the remaining dividend payments is: second and third interim dividends in
While the Covid-19 pandemic remains the primary focus dictating activity for the economy and the volatility of global markets, Brexit has slipped from the front pages even though deadlines loom. ‘No deal’ will add to economic uncertainties in the
The Company’s portfolio managers continue their strategy of investment in good quality, growing and well managed companies at sensible valuations. They have not been distracted by cheap stocks driving market volatility, concentrating instead on opportunities which they believe will generate long term total returns for shareholders. Your Board wholly supports the portfolio managers’ approach to stock selection in this difficult political and economic environment.
(1) This is a target only and not a profit forecast and there is no guarantee of future dividends which are at the directors’ discretion.
Portfolio Manager’s Report
The six months under review proved to be a very difficult and extremely volatile period for investors. The hopes for a ‘Boris bounce’ quickly faded as the Covid-19 pandemic and the government actions to limit its effects had a dramatic impact on the economy. Huge packages of government stimulus caused markets to bounce hard, and in some cases, make new highs. The result of all this was that smaller companies, as measured by the Numis Smaller Companies index (ex-investment trusts), declined 21.2% on a total return basis. This performance lagged the wider
Against this background, your Company saw a decrease in its net asset value of 23.0% for the half year, in total return terms. Clearly this is a disappointing outcome after a number of years of outperformance. The initial market reaction was to place very high valuations on companies that could continue to grow earnings. The subsequent market bounce centred on cheap, and in our opinion, lower quality stocks. Our strategy of focussing on fundamentally high-quality businesses at sensible valuations lagged the market. However, we continue to believe maintaining this focus is the best way to deliver long term returns for our shareholders.
The portfolio benefitted from exposure to the technology and healthcare sectors but was hurt by its exposure to the consumer goods sector. Within the smaller company sector, healthcare was the only area to register a positive return. The weakest areas were the oil and gas sector, due to the collapse in the oil price, and industrials which suffered due to the collapse in economic activity during the lockdown. The
At the individual stock level, in common with the market, the majority of portfolio holdings declined over the period. However, the best performers included: Keywords Studios (+51%), which provides outsourced services to the computer games industry. The sector fared well through the crisis and Keywords Studios continued to grow its presence in areas such as art creation, language translation and games engineering. Kainos (+42%), an IT services business which reduces administrative costs for the government by creating systems that allow people to ‘self-serve’ in areas such as paying their road tax, continued to perform well. The company is seen as an ongoing winner as the public and private sector continue to modernise their interactions with customers. Building supplies company, Grafton (+62%), is a holding that we added during the March sell-off. The stock bounced hard as it became apparent that the construction and DIY sectors would lead the recovery from the crisis.
The portfolio holdings that fared poorly over the period included: Arrow Global (–72%), a debt recovery business. It is likely to recover a lower level of money from borrowers over the coming year as unemployment rises. However, we added to the holding during the sell-off because its financial position remains manageable and the shares had become over-sold. Johnson Service (–56%), is a provider of linen to the hotel and restaurant sector. This sector was effectively shut down during the crisis which had a severe short-term effect on trading. It is another holding we added to in the sell-off due to its strong financial position and the likelihood that it will emerge from the crisis with an enhanced market position as smaller, weaker competitors fall by the wayside. Housebuilder, Vistry (–56%), formerly known as Bovis Homes, had been a strong performer for us but fell along with the sector as investors grappled with the implications of the crisis. The evidence since the end of the national lockdown suggests that people are still keen to buy their own house. However, we chose to reduce the holding following a partial share price recovery due to our concern about the effect of rising unemployment on future housing demand.
As well as adding to existing holdings, the sharp sell-off in March presented us with the opportunity to add several new holdings to the portfolio. These stocks had fallen very heavily and offered substantial value even in the event of a protracted recovery. Examples include pub group Mitchells & Butlers, which at its low was trading at a 70% discount to its real estate value, and leading low cost gym operator, Gym Group, which had fallen over 60% from its high.
We also added a number of businesses that we had been following for some time, which suddenly fell to attractive valuations: Industrial component manufacturer discoverIE, has seen a steady improvement in profitability under its current management team and has plenty of headroom for growth, both organically and via acquisitions. Gooch & Housego had been on our target list for many years. It is a world expert in the manufacture of optical products for the healthcare, telecoms and industrial sectors. Management have successfully broadened the business into high growth adjacent markets.
The top 5 holdings in the portfolio at the interim stage were:
• Future is a media business which is successfully transitioning from publishing magazines to running a diverse range of niche interest websites such as Tech Radar, What Hi Fi, Period Living and
• CVS is a leading veterinary services business, which owns over 500 vet surgeries and specialist centres, predominantly in the
• JTC is a financial administration business operating primarily in the
• Clinigen is a healthcare business which is a world leader in the specialist distribution of drugs to geographies outside the standard regulated North American, European and Japanese markets. These activities give management insight into drugs that could potentially be used on a wider basis. This enables management to acquire the rights to compounds where they can increase profitability by achieving further approvals for new categories of patients.
• 4imprint sells promotional materials such as pens, bags and clothing which are printed with company logos. The business gathers orders through online and catalogue marketing, which are then routed to their suppliers who print and dispatch the products to customers. As a result of outsourcing manufacture, the business has a relatively low capital requirement and can focus on marketing and customer service. Continual reinvestment of revenue into marketing campaigns has enabled the business to generate an enviable long-term growth record whilst maintaining margins.
Our investment strategy remains unchanged. The current portfolio is comprised of around 75 stocks with the sector weightings being determined by where we are finding attractive companies at a given time, rather than by allocating assets according to a ‘top down’ view of the economy. We continue to seek growing businesses, which have the potential to be significantly larger in the medium term. These tend to be companies that either have great products or services, that can enable them to take market share off their competitors, or companies that are exposed to higher growth niches within the
Our analysis remains focussed on the sustainability of returns and profit margins, which are vital for the long-term success of a company. We continue to look for businesses with ‘pricing power’ by assessing positioning within supply chains and having a clear understanding of how work is won and priced. It is also important to determine which businesses possess unique capabilities, in the form of intellectual property, specialist know-how or a scale advantage in their chosen market. We conduct around 300 company meetings and site visits a year, and these areas are a particular focus for us on such occasions.
The Covid-19 pandemic remains the dominant feature of the investment landscape. Although it has taken a significant toll on economies and markets, government support programmes have mitigated the most immediate impacts of the crisis. A reduced level of consumer spending during the lockdown has, in aggregate, strengthened household finances. However, the full scale of job losses will not be fully apparent until the various national furlough schemes have ended. Therefore, it will take some time for a clear picture of demand to emerge. Clearly, the onset of a significant ‘second wave’ of infection will have profound implications, but we are hopeful that a sustained recovery is now underway. Nevertheless, company profitability and balance sheets have taken a hit, and therefore we believe it will take some time for GDP to return to historic levels.
Whilst the current uncertainty is unsettling, we remain of the view that investing in fundamentally good quality businesses at sensible valuations is the correct strategy. We will continue to take advantage of opportunities that the heightened level of market volatility presents to us. We are hopeful that as the current difficulties abate, we can resume on a profitable path for our shareholders.
Principal Risks and Uncertainties
– Market (Economic) Risk – factors such as general fluctuations in stock markets, interest rates and exchange rates may give rise to high levels of volatility in the share prices of investee companies, as well as affecting the Company’s own share price and discount to NAV. The risk could be triggered by unfavourable developments globally and/or in one or more regions, contemporary examples being the market uncertainty in relation to Brexit and the current Covid-19 pandemic.
– Investment Risk – the Company invests in small and medium-sized companies traded on the
– Shareholders’ Risk – The value of an investment in the Company may go down as well as up and an investor may not get back the amount invested.
– Borrowings – the Company may borrow money for investment purposes. If the investments fall in value, any borrowings (or gearing) will magnify any loss. If the borrowing facility could not be renewed, the Company might have to sell investments to repay any borrowings made under it.
– Reliance on the Manager and other Third Party Providers – failure by any third party provider to carry out its obligations to the Company could have a materially detrimental impact on the operation of the Company and could affect the ability of the Company to successfully pursue its investment policy.
– Pandemic Risk – Restrictions to movement of people and disruption to business operations are affecting portfolio company valuations and returns. As the uncertainty of Covid-19 remains, the Directors continue to monitor the situation closely, together with the Manager and other service providers. A range of actions has been implemented to ensure that the Company and its service providers are able to continue to operate as normal, even in the event of prolonged disruption.
– Regulatory Risk – the Company is subject to various laws and regulations by virtue of its status as an investment trust. Control failures by any of the third party providers may result in operational or reputational problems, erroneous disclosures or loss of assets through fraud, as well as breaches of regulations.
A detailed explanation of these principal risks and uncertainties can be found on pages 13 and 15 of the Company’s 2020 annual financial report, which is available on the Company’s section of the Manager’s website at: www.invesco.co.uk/ipukscit
In the view of the Board, these principal risks and uncertainties are as much applicable to the remaining six months of the financial year as they were to the six months under review.
The financial statements have been prepared on a going concern basis. The Directors consider this is the appropriate basis, as the Company has adequate resources to continue in operational existence for the foreseeable future. In considering this, the Directors took into account the diversified portfolio of readily realisable securities which can be used to meet funding commitments, and the ability of the Company to meet all of its liabilities, including any bank overdraft, and ongoing expenses.
Related Party Transactions and transactions with the manager
Note 21 of the Company’s 2020 annual report gives details of related party transactions and transactions with the Manager. This report is available on the Company’s section of the Manager’s website at www.invesco.co.uk/ipukscit.
THIRTY LARGEST HOLDINGS AT
Ordinary shares unless stated otherwise
AT MARKET VALUE % OF COMPANY SECTOR £’000 PORTFOLIO Future Media 7,575 5.0 CVSAIM General Retailers 5,619 3.7 JTC Financial Services 5,610 3.7 ClinigenAIM Pharmaceuticals & Biotechnology 4,270 2.8 4imprint Media 4,162 2.7 Ultra Electronics Aerospace & Defence 4,129 2.7 Sanne Financial Services 3,727 2.5 NCC Software & Computer Services 3,642 2.4 Hilton Food Food Producers 3,486 2.3 SDL Software & Computer Services 3,441 2.3 Keywords StudiosAIM Leisure Goods 3,223 2.1 RWSAIM Support Services 3,101 2.0 Hill & Smith Industrial Engineering 3,013 2.0 CLS Real Estate Investment & Services 2,851 1.9 Kainos Software & Computer Services 2,835 1.9 Brooks MacdonaldAIM Financial Services 2,767 1.8 Aptitude Software Software & Computer Services 2,746 1.8 Johnson ServiceAIM Support Services 2,651 1.8 Vectura Pharmaceuticals & Biotechnology 2,636 1.7 RestoreAIM Support Services 2,568 1.7 St. Modwen Properties Real Estate Investment & Services 2,442 1.6 Coats General Industrials 2,357 1.6 discoverIE Electronic & Electrical Equipment 2,266 1.5 VP Support Services 2,263 1.5 Polypipe Construction & Materials 2,177 1.4 James Fisher and Sons Industrial Transportation 2,153 1.4 Hollywood Bowl Travel & Leisure 2,146 1.4 FDM Software & Computer Services 2,038 1.4 Young & Co’s Brewery - Travel & Leisure 2,004 1.3 Non-VotingAIM KnightsAIM Support Services 2,002 1.3 95,900 63.2 Other Investments (48) 55,948 36.8 Total Investments (78) 151,848 100.0
AIM Investments quoted on AIM.
Condensed Statement of Comprehensive income
SIX MONTHS TO 31 JUL 2020 SIX MONTHS TO 31 JUL 2019 REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL £’000 £’000 £’000 £’000 £’000 £’000 (Loss)/profit on — (46,740) (46,740) — 23,749 23,749 investments held at fair value Income – note 2 501 — 501 2,021 — 2,021 501 (46,740) (46,239) 2,021 23,749 25,770 Investment management (89) (503) (592) (98) (556) (654) fees – note 3 Other expenses (184) (2) (186) (182) (3) (185) (Loss)/profit before finance costs and taxation 228 (47,245) (47,017) 1,741 23,190 24,931 Finance costs – note 3 — (3) (3) (1) (3) (4) (Loss)/profit before 228 (47,248) (47,020) 1,740 23,187 24,927 taxation Taxation – note 4 — — — — — — (Loss)/profit after 228 (47,248) (47,020) 1,740 23,187 24,927 taxation Return per ordinary 0.67p (139.67)p (139.00)p 5.30p 70.58p 75.88p share Weighted average number of ordinary shares in issue during 33,826,929 32,851,929 the period
The total column of this statement represents the Company’s statement of comprehensive income, prepared in accordance with International Financial Reporting Standards as adopted by the
Condensed Balance Sheet
Registered number 2129187
AT AT 31 JUL 31 JAN 2020 2020 £’000 £’000 Non-current assets Investments held at fair value through profit or loss 151,848 199,973 Current assets Amounts due from brokers 633 — Prepayments and accrued income 102 420 Cash and cash equivalents 2,228 5,493 2,963 5,913 Total assets 154,811 205,886 Current liabilities Amounts due to brokers (195) (435) Accruals (148) (208) (343) (643) Net assets 154,468 205,243 Capital and reserves Share capital 10,642 10,642 Share premium 22,366 22,366 Capital redemption reserve 3,386 3,386 Capital reserve 117,846 167,973 Revenue reserve 228 876 Shareholders' funds 154,468 205,243 Net asset value per ordinary share 456.64p 606.74p Number of 20p ordinary shares in issue at the period end - note 6 33,826,929 33,826,929
Condensed Statement of Cash Flow
SIX SIX MONTHS TO MONTHS TO 31 JUL 31 JUL 2020 2019 £’000 £’000 Cash flow from operating activities (Loss)/profit before finance costs and taxation (47,017) 24,931 Adjustments for: Purchases of investments (26,287) (20,405) Sales of investments 26,799 20,540 512 135 Loss/(profit) on investments held at fair value 46,740 (23,749) Decrease in receivables 318 179 Decrease in payables (60) (881) Net cash inflow from operating activities after taxation 493 615 Cash flow from financing activities Finance cost paid (3) (3) Dividends paid – note 5 (3,755) (3,712) Net cash outflow from financing activities (3,758) (3,715) Net decrease in cash and cash equivalents (3,265) (3,100) Cash and cash equivalents at start of the period 5,493 10,399 Cash and cash equivalents at the end of the period 2,228 7,299 Reconciliation of cash and cash equivalents to the Balance Sheet is as follows: Cash held at custodian 118 39 Invesco Liquidity Funds plc – Sterling 2,110 7,260 Cash and cash equivalents 2,228 7,299 Cash flow from operating activities includes: Dividends received 823 2,205
Condensed statement of changes in equity
CAPITAL SHARE SHARE REDEMPTION CAPITAL REVENUE CAPITAL PREMIUM RESERVE RESERVE RESERVE TOTAL £’000 £’000 £’000 £’000 £’000 £’000 For the six months ended 31 July 2020 At 31 January 2020 10,642 22,366 3,386 167,973 876 205,243 Total comprehensive loss — — — (47,248) 228 (47,020) for the period Dividends paid – note 5 — — — (2,879) (876) (3,755) At 31 July 2020 10,642 22,366 3,386 117,846 228 154,468 For the six months ended 31 July 2019 At 31 January 2019 10,642 21,244 3,386 121,880 1,133 158,285 Total comprehensive income — — — 23,187 1,740 24,927 for the period Dividends paid – note 5 — — — (2,579) (1,133) (3,712) At 31 July 2019 10,642 21,244 3,386 142,488 1,740 179,500
Notes to the Condensed Financial Statements
1. Basis of Preparation
Accounting Standards and Policies
The condensed financial statements have been prepared using the same accounting policies as those adopted in the Company’s 2020 annual financial report. They have been prepared on an historical cost basis, in accordance with the applicable International Financial Reporting Standards (IFRS), as adopted by the
31 JUL 31 JUL 2020 2019 SIX MONTHS ENDED £’000 £’000 Income from listed investments: UK dividends 387 1,791 Overseas dividends 114 188 Special dividends — 42 501 2,021
3. Management Fees and Finance Costs
Investment management fees and finance costs are allocated 15% to revenue and 85% to capital.
A base management fee is payable monthly in arrears and is calculated at the rate of 0.75% (2019: 0.75%) per annum by reference to the Company’s gross funds under management.
4. Taxation and Investment Trust Status
No tax liability arises on capital gains because the Company has been accepted by HMRC as an approved investment trust and it is the intention of the Directors to conduct the affairs of the Company so that it continues to satisfy the conditions for this approval.
5. Dividends paid on Ordinary Shares
31 JUL 2020 31 JUL 2019 SIX MONTHS ENDED RATE £’000 RATE £’000 Third interim 3.75p 1,268 3.65p 1,199 Final 7.35p 2,487 7.65p 2,513 Total 11.10p 3,755 11.30p 3,712
Dividends paid in the period have been charged to revenue except for £2,879,000 which was charged to capital reserves (six months to
The first interim dividend of 3.75p per ordinary share (2019: 3.75p) was paid on
6. Share capital
SIX MONTHS YEAR TO TO 31 JUL 31 JAN 2020 2020 Share capital: Ordinary shares of 20p each (£’000) 6,765 6,765 Treasury shares of 20p each (£’000) 3,877 3,877 10,642 10,642 Number of ordinary shares in issue: 33,826,929 33,826,929
7. Classification Under Fair Value Hierarchy
Note 17 of the Company’s 2020 annual financial report sets out the basis of classification.
8. Status of Half-Yearly Financial Report
The financial information contained in this half-yearly financial report, which has not been reviewed or audited by an independent auditor, does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The financial information for the half years ended
By order of the Board
Statement of directors’ responsibilities
in respect of the preparation of the half-yearly financial report.
The Directors are responsible for preparing the half-yearly financial report using accounting policies consistent with applicable law and International Financial Reporting Standards.
The Directors confirm that to the best of their knowledge:
– the condensed set of financial statements contained within the half-yearly financial report have been prepared in accordance with the International Accounting Standards 34 ‘Interim Financial Reporting’;
– the interim management report includes a fair review of the information required by 4.2.7R and 4.2.8R of the UKLA’s Disclosure Guidance and Transparency Rules; and
– the interim management report includes a fair review of the information required on related party transactions.
The half-yearly financial report has not been audited or reviewed by the Company’s auditor.
Signed on behalf of the Board of Directors.
ALTERNATIVE PERFORMANCE MEASURE (APM)
An APM is a measure of performance or financial position that is not defined in applicable accounting standards and cannot be directly derived from the financial statements. The calculations shown in the corresponding tables are for the six months ended
Benchmark (or Benchmark Index)
A market index, which averages the performance of companies in any sector, giving a good indication of any rises or falls in the market. The benchmark used in these accounts is the Numis Smaller Companies Index (excluding Investment Companies) with income reinvested. This index does not include AIM stocks.
Discount is a measure of the amount by which the mid-market price of an investment company share is lower than the underlying net asset value (NAV) of that share. Conversely, Premium is a measure of the amount by which the mid-market price of an investment company share is higher than the underlying net asset value of that share. In this half-yearly financial report the discount is expressed as a percentage of the net asset value per share and is calculated according to the formula set out below. If the shares are trading at a premium the result of the below calculation will be positive and if they are trading at a discount it will be negative.
31 JUL 2020 31 JAN 2020 Share price a 390.00p 606.00p Net asset value per share b 456.64p 606.74p Discount c = (a-b)/b (14.6)% (0.1)%
The gearing percentage reflects the amount of borrowings that a company has invested. This figure indicates the extra amount by which net assets, or shareholders’ funds, would move if the value of a company’s investments were to rise or fall. A positive percentage indicates the extent to which net assets are geared; a nil gearing percentage, or ‘nil’, shows a company is ungeared. A negative percentage indicates that a company is not fully invested and is holding net cash as described below.
There are several methods of calculating gearing and the following has been used in this report:
Gross Gearing (APM)
This reflects the amount of gross borrowings in use by a company and takes no account of any cash balances. It is based on gross borrowings as a percentage of net assets. As at
31 JUL 2020 31 JAN 2020 £’000 £’000 Bank overdraft facility — — Gross borrowings a — — Net asset value b 154,468 205,243 Gross gearing c = a/b nil nil
Net gearing reflects the amount of net borrowings invested, i.e. borrowings less cash and cash equivalents (incl. investments in money market funds). It is based on net borrowings as a percentage of net assets. Net cash reflects the net exposure to cash and cash equivalents, as a percentage of net assets, after any offset against total borrowings.
31 JUL 2020 31 JAN 2020 £’000 £’000 Bank overdraft facility — — Less: cash and cash equivalents (2,228) (5,493) Net borrowings/(cash) a (2,228) (5,493) Net asset value b 154,468 205,243 Net gearing/(net cash) c = a/b (1.4)% (2.7)%
Maximum Authorised Gearing
This reflects the maximum authorised borrowings of a company taking into account both any gearing limits laid down in the investment policy and the maximum borrowings laid down in covenants under any borrowing facility and is calculated as follows:
31 JUL 2020 31 JAN 2020 £'000 £'000 Maximum authorised borrowings as laid down in: Investment policy: – lower of 30% of net asset value; and a = 30% x e 46,340 61,573 – £25m b 25,000 25,000 Bank facility covenants: lower of 30% of net asset value and £15m c 15,000 15,000 Maximum authorised borrowings (d = lower of a, b and c) d 15,000 15,000 Net asset value e 154,468 205,243 Maximum authorised gearing f = d/e 9.7% 7.3%
Net Asset Value (NAV)
Also described as shareholders’ funds the NAV is the value of total assets less liabilities. Liabilities for this purpose include current and long-term liabilities. The NAV per ordinary share is calculated by dividing the net assets by the number of ordinary shares in issue. For accounting purposes assets are valued at fair (usually market) value and liabilities are valued at par (their repayment – often nominal – value).
The return generated in a period from the investments, including the increase and decrease in the value of investments over time and the income received.
Total return is the theoretical return to shareholders that measures the combined effect of any dividends paid, together with the rise or fall in the share price or NAV. In this half-yearly financial report these return figures have been sourced from Refinitiv who calculate returns on an industry comparative basis.
Net Asset Value Total Return (APM)
Total return on net asset value per share, with debt at market value, assuming dividends paid by the Company were reinvested into the shares of the Company at the NAV per share at the time the shares were quoted ex-dividend.
Share Price Total Return (APM)
Total return to shareholders, on a mid-market price basis, assuming all dividends received were reinvested, without transaction costs, into the shares of the Company at the time the shares were quoted ex-dividend.
NET ASSET SHARE SIX MONTHS ENDED 31 JULY 2020 VALUE PRICE As at 31 Jul 2020 456.64p 390.00p As at 31 Jan 2020 606.74p 606.00p Change in period a –24.7% –35.6% Impact of dividend reinvestments(1) b 1.7% 1.6% Total return for the period c = a+b –23.0% –34.0% NET ASSET SHARE YEAR ENDED 31 JAN 2020 VALUE PRICE As at 31 Jan 2020 606.74p 606.00p As at 31 Jan 2019 481.81p 465.00p Change in year a 25.9% 30.3% Impact of dividend reinvestments(1) b 4.5% 4.9% Total return for the year c = a+b +30.4% +35.2%
1. Total dividends paid during the six months to
31 July 2020of 11.10p (31 January 2020: 18.80p) reinvested at the NAV or share price on the ex-dividend date. NAV or share price falls subsequent to the reinvestment date consequently further reduce the returns, vice versa if the NAV or share price rises.
Total return on the benchmark is on a mid-market value basis, assuming all dividends received were reinvested, without transaction costs, into the shares of the underlying companies at the time the shares were quoted ex-dividend.