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Invesco Perpetual UK Smaller Co's Investment Trust Plc - Half-year Report

Invesco Perpetual UK Smaller Companies Investment Trust plc
Half-Yearly Financial Report for the Six Months to 31 July 2020

Key Facts

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 UK quoted companies.

The portfolio primarily comprises shares traded on the London Stock Exchange and on AIM.

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 22 July 2020, with the aim of delivering more predictable dividend levels to shareholders, the Board has decided that it will seek to increase dividends annually(1). The rate of increase will take into account the Board’s expectation of income and capital returns.

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 31 January 2020.

(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.

Financial Highlights

                                          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)%


– 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


– 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

The six months to 31 July 2020 have been challenging for investors and disappointing for this Company’s shareholders.  For the period under review, on a total return basis, your Company’s net asset value (NAV) returned -23.0% compared with -21.2% for its benchmark, the Numis Smaller Companies Index (excluding Investment Companies). Over the same period the wider UK stock market outperformed the small cap market. Reasons for the underperformance of smaller companies together with a detailed review of the investment portfolio and strategy for the period are set out in the Portfolio Manager’s Report that follows.

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 31 January 2020.  It will be of little comfort to shareholders to know that many of the Company’s peers were similarly affected.

Since the Company’s half-year end to 9 October 2020, the latest practical date before publication, the Company’s NAV total return is 6.8%, the share price total return is 5.5%, whilst the benchmark total return is 3.7%. As at 9 October 2020, the discount was 15.7%.


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 UK Smaller Company investment trust sub-sector. 

On 22 July 2020 the Board declared a first interim dividend of 3.75p for the year ending 31 January 2021, payable on 3 September 2020 to shareholders on the register on 7 August 2020 (2020: 3.75p).

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 12 October 2020(1).

The expected timetable for the remaining dividend payments is: second and third interim dividends in December 2020 and March 2021 respectively, with the final dividend payable in June 2021 following its approval by shareholders at the Company’s Annual General Meeting.

Board Succession

Richard Brooman retired from the Board and as Chairman of the Audit Committee after the Annual General Meeting on 11 June 2020. He leaves with our thanks for his services to the Company.  Graham Paterson has succeeded Richard as the Chairman of the Audit Committee and the Board now is made up of four non-executive directors.


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 UK which will knock-on to the UK equity markets in which your Company invests.

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.

Jane Lewis


13 October 2020

(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

Investment Review

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 UK equity market, with the FTSE All-Share Index declining by 17.8% on a total return basis. The underperformance of smaller companies resulted from a greater exposure to the leisure and retail sectors which fared particularly badly.

Portfolio Review

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 UK economy suffered its biggest slump on record, as the economy contracted by over 20% in the second quarter of the year.

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.

Portfolio Strategy

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 Digital Camera World. The business aims to produce relevant, high quality content and monetise it via subscriptions, advertising and ecommerce. Management have been successful in revitalising numerous brands, and the company has grown revenue and profit both organically and via acquisition.

•       CVS is a leading veterinary services business, which owns over 500 vet surgeries and specialist centres, predominantly in the UK. The scale of the business gives it purchasing power, allowing it to generate a higher margin than individual surgeries. Management successfully consolidated the UK market and have recently entered continental Europe. The business is relatively unaffected by the economic cycle, and with ever more being spent on the wellbeing of the nation’s pets, can continue to grow for many years to come.

•       JTC is a financial administration business operating primarily in the Channel Islands but also with offices in North America and Europe. It provides services to real estate and private equity funds, multinational companies and high net worth individuals. The business has a strong reputation for quality and has augmented it organically with acquisitions. The business benefits from long term contracts, giving it excellent earnings visibility.

•       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 UK economy or overseas. We prefer to invest in cash generative businesses that can fund their own expansion, although we are willing to back strong management teams by providing additional capital to invest for growth.

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.

Jonathan Brown & Robin West

Portfolio Managers

13 October 2020

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 London Stock Exchange or on AIM. By their nature these are generally considered riskier than their larger counterparts and their share prices can be more volatile, with lower liquidity. There can be no guarantee that the Company will achieve its published investment objective.

–    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:

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.

Going Concern

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


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

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

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 – note 4              —         —          —       —       —          —

(Loss)/profit after          228  (47,248)   (47,020)   1,740  23,187     24,927

Return per ordinary        0.67p (139.67)p  (139.00)p   5.30p  70.58p     75.88p

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 European Union. The (loss)/profit after taxation is the total comprehensive income. The supplementary revenue and capital columns are both prepared in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies. All items in the above statement derive from continuing operations of the Company. No operations were acquired or discontinued in the period.

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


Dividends received                           823     2,205

Condensed statement of changes in equity


                              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 European Union and, where possible, in accordance with the Statement of Recommended Practice for Financial Statements of Investment Trust Companies and Venture Capital Trusts, issued by the Association of Investment Companies in October 2019.

2.            Income

                                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 31 July 2019: £2,579,000).

The first interim dividend of 3.75p per ordinary share (2019: 3.75p) was paid on 3 September 2020 to shareholders on the register on 7 August 2020.

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.

As at 31 July 2020, the majority of the Company’s portfolio was composed of quoted (Level 1) investments. Berry Starquest Limited (dormant subsidiary) was the only Level 3 investment valued at £100 (31 January 2020: £100).

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 31 July 2019 and 31 July 2020 has not been audited. The figures and financial information for the year ended 31 January 2020 are extracted and abridged from the latest audited accounts and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the Independent Auditor's Report, which was unqualified.

By order of the Board

Invesco Asset Management Limited

Company Secretary

13 October 2020

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.

Jane Lewis


13 October 2020


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 31 July 2020 and the year ended 31 January 2020. The APMs listed here are widely used in reporting within the investment company sector and consequently aid comparability.

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)/Premium (APM)

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 July 2020 the Company had no gross borrowings (31 January 2020: £nil).

                                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 or Net Cash (APM)

      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

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 2020 of 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.