TIDMASEI
RNS Number : 7382Z
Aberdeen Standard Equity Income Tst
22 May 2019
ABERDEEN STANDARD EQUITY INCOME TRUST PLC
HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHSED 31 MARCH 2019
Objective
To provide Shareholders with an above average income from their
equity investment, while also providing real growth in capital and
income.
Investment policy
The management of the Company's investments and the day to day
operation of the Company is delegated to Aberdeen Standard Fund
Managers Limited ("the Manager").
The Directors set the investment policy which is to invest in a
diversified portfolio consisting mainly of quoted UK equities which
will normally comprise between 50 and 70 individual equity
holdings.
In order to reduce risk in the Company without compromising
flexibility:
-- no holding within the portfolio will exceed 10% of net assets; and
-- the top ten holdings within the portfolio will not exceed 50% of net assets.
The Company may invest in convertible preference shares,
convertible loan stocks, gilts and corporate bonds.
The Directors set the gearing policy within which the portfolio
is managed. The parameters are that the portfolio should operate
between holding 5% net cash and 15% net gearing. The Directors have
delegated responsibility to the Manager for the operation of the
gearing level within the above parameters.
For further information, please contact:
James Thorneley
Press Office
Aberdeen Standard Investments Tel: 020 7463 6323
Evan Bruce-Gardyne
Client Director, Investment Trusts
Aberdeen Standard Investments Tel: 0131 245 0571
Strategic Report
Key Financial Highlights
Total return* for periods to 31 March 2019
6 months 1 year 3 years 5 years
NAV per Share -7.0% +2.4% +13.7% +26.4%
--------- ------- -------- --------
Share Price -9.1% -3.1% +10.5% +21.0%
--------- ------- -------- --------
Capital return for the six months As at 31 March 2019
to
31 March 2019
NAV per Share* Share Price Discount* Net Gearing
----------------------- --------------------- ---------------------
439.72p 419.00p -4.7% 12.0%
-9.3% -11.4% (30/09/2018: -2.5%) (30/09/2018: 12.0%)
(30/09/2018: 485.00p) (30/09/2018: 473.00p)
----------------------- --------------------- ---------------------
As at 31 March 2019
Market Cap Net Assets
GBP206.0m GBP216.2m
-11.4% -9.3%
(30/09/2018: GBP232.5m) (30/09/2018: GBP238.4m)
-------------------------
For the six months to 31 March 2019
Dividend per Share Revenue Earnings
per Share*
9.8p 9.43p
+11.4% -2.0%
(31/03/2018: 8.8p) (31/03/2018: 9.62p)
---------------------
* Considered to be an Alternative Performance Measure.
Chairman's Statement
Performance
The performance of the portfolio over the six months under
review was poor, with the net asset value total return being -7.0%,
compared with the benchmark total return of -1.8%. The share price
also suffered and the share price total return for the period was
-9.1%. This was reflected in a widening of the discount from 2.5%
in September 2018 to 4.7% at the end of March. It was very much a
period of two halves, with the final quarter of 2018 being the
worst fourth calendar quarter for the British market since 1987,
and mid and small cap companies, in which we are heavily invested,
underperforming large cap stocks. This pattern was reversed in the
first quarter of this year, but our relative improvement was not
sufficient to make up much of the ground lost in the last three
months of 2018.
Revenue
Total income for the period of GBP5.212m was very similar to
last year's GBP5.251m. Management fees and administrative expenses
charged to the revenue account were also in line, GBP438k in 2019
compared to GBP451k in 2018. After interest costs and tax, net
earnings were down 2.0% at GBP4.638m and the revenue per Ordinary
Share was 9.43p compared to 9.62p in 2018. While this is marginally
below the cumulative level of the dividends distributed, the
revenue forecasts indicate that, as is typical, more income will be
generated in the second half of the financial year than in the
first half.
Dividends
The Board is declaring a second quarterly dividend of 4.9p per
share, bringing total dividends for the six months to 31 March 2019
to 9.8p per share, an increase of 11.4% on the 8.8p paid for the
six months to 31 March 2018. This second quarterly dividend will be
paid on 21 June 2019 to Shareholders on the register on 31 May
2019, with an associated ex-dividend date of 30 May 2019. The
Board's intention is that the third quarterly dividend, which will
be paid in September, will be 4.9p per share and that the final
dividend, in January 2020, will be not less than 5.5p per share.
Cumulatively, this would amount to a dividend for the year of 20.2p
per share, which the Board expects to be covered by earnings in the
current year. This will represent an increase of 5.2% on last
year's 19.2p per share.
Gearing
As foreshadowed in the Annual Report, the Company now has a
GBP40m revolving credit facility with Banco Santander S.A., London
Branch, replacing the GBP30m funding which had previously been
provided by Scotiabank (Ireland) Limited up to 17 December 2018.
This new facility was in use from that date and GBP30m was drawn at
the end of the period at a weighted average cost of 1.9%. At the
end of the period, net gearing amounted to 12.0% of net assets.
Being geared in investments that generally fell in value
exacerbated the negative performance of the portfolio by 0.8%.
Governance and Board
As part of the Board's succession planning, Jo Dixon has
indicated that she will stand down from the Board following the
Annual General Meeting to be held in 2020. Jo has been a valuable
member of the Board since 2011, and Chairman of the Audit Committee
since 2012, and her knowledge and contribution will be missed. A
process to identify a successor has begun and a further
announcement on this will be made in due course.
Aberdeen Standard Investments Savings Plans
The Board has agreed to participate in the Aberdeen Standard
Investments promotional programme which it hopes will help to
promote the appeal of the Company and to make it accessible to as
wide an audience of investors as possible. Details of the savings
plans available to investors can be found in the Half-Yearly
Report.
Outlook
At the beginning of 2019 the general expectation was that the
trend of rising interest rates, particularly in the US, would
continue. This has not materialised: in the United States some
fairly blunt pressure from the White House seems to have deterred
the Federal Reserve from taking any further action to tighten
policy; the yield curve has flirted with inverting (the position
where short-dated interest rates are higher than longer-dated
ones), which implies that the bond market is pricing in a
recession. In Europe, negative interest rates on German government
debt have reappeared. Meanwhile in Britain the Brexit imbroglio
continues without any indication of an imminent resolution. The
"Euro can" has been kicked further down the road to Halloween but
what the outcome will be is still as uncertain as it has been at
any time in the nearly three years since the June 2016 referendum.
This political situation continues to be a substantial headwind for
the UK market. By contrast, the British economy continues to
perform reasonably, certainly no worse than our European
neighbours, with unemployment at its lowest level since 1975 and
the businesses of most of our portfolio companies are performing
well.
The outlook, therefore, is no less uncertain than it was when my
annual statement was written on 20 November last year. The Board,
while acknowledging that this has been a very disappointing six
months, believes that the investment process and resources
available to the Manager should produce long-term investment
success.
Richard Burns
Chairman
21 May 2019
Principal Risks and Uncertainties
The Board has an ongoing process for identifying, evaluating and
managing the principal risks and uncertainties of the Company and
has carried out a robust review. The process is regularly reviewed
by the Board. Most of the Company's principal uncertainties and
risks are market related and are no different from those of other
investment trusts that invest primarily in the UK listed market.
Risks may vary in significance from time to time and the controls
and actions to mitigate these are described below.
The Board considers the following to be the principal risks and
uncertainties:
-- Investment Performance The Board recognises that market risk
is significant in achieving performance and consequently it reviews
strategy and investment guidelines to ensure that these are
appropriate. Regular reports are received from the Manager on stock
selection, asset allocation, gearing and the costs of running the
Company. The performance is reviewed in detail and discussed with
the Portfolio Manager at each Board meeting.
The Board regularly reviews the impact of geopolitical
instability and change on market risk. The Board is mindful of the
continuing uncertainty following the UK's referendum decision to
leave the EU and, along with the Manager, is closely monitoring the
situation.
The Board, through its review process, did not identify any
specific new actions required to mitigate performance risks during
the first half of the year. The Investment Manager's Report
explains the changes made within the portfolio during the six
months ended 31 March 2019.
-- Operational Risk In common with most investment trusts, the
Board delegates the operation of the business to third parties, the
principal delegate being the Manager. Failure of controls and poor
performance of any service provider could lead to disruption,
reputational damage or loss to the Company. As part of the annual
assessment of key third party service providers, the internal
control reports of the service providers are reviewed.
During the period there were no issues identified that
compromised the security of the assets and the Board received
assurances on the internal control environment of service providers
from these reports.
-- Governance Risk The Directors recognise the impact that an
ineffective board, unable to discuss, review and make decisions,
could have on the Company and its Shareholders. The Board is aware
of the importance of effective leadership and board composition and
this is ensured through a regular performance evaluation of both
the Chairman and the Board.
-- Discount/Premium to NAV A significant share price discount or
premium to net asset value per share could lead to high levels of
uncertainty for Shareholders. In particular, a wide discount could
potentially reduce Shareholder confidence.
The Board keeps the level of the Company's discount/premium
under regular review.
-- Regulatory Risk The Company operates in a complex regulatory
environment and faces a number of regulatory risks. Breaches of
regulations, including but not limited to, the Companies Act 2006,
the Corporation Tax Act 2010, the FCA Listing Rules, the FCA
Disclosure Guidance and Transparency Rules, the Market Abuse
Regulation, the Foreign Account Tax Compliance Act, the Common
Reporting Standard, the Packaged Retail and Insurance based
Investment Product (PRIIPs) Regulation, the Markets in Financial
Instruments Directive II (MiFID II) and the General Data Protection
Regulation (GDPR), could lead to a number of detrimental outcomes
and reputational damage.
There is also a regulatory risk in ensuring compliance with the
Alternative Investment Fund Managers Directive (AIFMD). In
accordance with the requirements of the AIFMD, the Company
appointed Aberdeen Standard Fund Managers Limited as its AIFM with
effect from 10 December 2018 (previously Standard Life Investments
(Corporate Funds) Limited) and BNP Paribas Securities Services as
its Depositary. The Board receives regular reporting from the AIFM
and the Depositary to ensure both are meeting their regulatory
responsibilities in relation to the Company.
Strategic Report
Our Strategy
Aberdeen Standard Equity Income Trust plc offers an actively
managed portfolio of UK quoted companies. The investment approach
is index-agnostic and the focus is on those companies delivering
sustainable dividend growth.
Management
In December 2018, the investment management agreement with the
Company's Manager was novated from Standard Life Investments
(Corporate Funds) Limited to Aberdeen Standard Fund Managers
Limited ("ASFML", the "AIFM" or the "Manager"). ASFML is a
wholly-owned subsidiary of Standard Life Aberdeen plc ("SLA"). The
investment management to the Company has been and continues to be
provided by Aberdeen Standard Investments ("ASI"), the investment
division of SLA. Thomas Moore has been the Portfolio Manager since
2011.
Investment process
The portfolio is invested on an index-agnostic basis. The
process is based on a bottom-up stock-picking approach where sector
allocations are a function of the sum of the stock selection
decisions, constrained only by the appropriate risk control
parameters. The aim is to evaluate changing corporate situations
and identify insights that are not fully recognised by the
market.
Idea generation and research
The vast majority of the investment insights are generated from
information and analysis from one-on-one company meetings.
Collectively, more than 3,000 company meetings are conducted
annually across ASI. These meetings are used to ascertain the
company's own views and expectations of the future prospects for
their company and the markets in which they operate. Through
actively questioning the senior management and key decision makers
of companies, the portfolio managers and analysts look to uncover
the key changes affecting the business and the materiality of their
impact on company fundamentals within the targeted investment time
horizon.
Investment process in practice
The index-agnostic approach ensures that the weightings of the
holdings reflect the conviction levels of the investment team,
based on an assessment of the management team, the strategy, the
prospects and the valuation metrics. The process recognises that
some of the best investment opportunities come from
under-researched parts of the market where the breadth and depth of
the analyst coverage that the Portfolio Manager can access provides
the scope to identify a range of investment opportunities.
The consequence of this is that the Company's portfolio looks
very different from many other investment vehicles providing their
investors with access to UK equity income. This is because the
process focuses on conviction levels rather than index weightings.
This means that the Company may provide a complementary portfolio
to the existing portfolios of investors who like to make their own
decisions and manage their ISAs, SIPPs and personal dealing
accounts themselves. Around 60% of the Company's portfolio is
invested in companies outside the FTSE 100.
The index-agnostic approach further differentiates the portfolio
because it allows the Portfolio Manager to take a view at a
thematic level, concentrate the portfolio's holdings in certain
areas and avoid others completely. The effect of this approach is
that the weightings of the portfolio can be expected to differ
significantly from that of any index, and the returns generated by
the portfolio may reflect this divergence, particularly in the
short term.
Investment Manager's Report
For the 6 months ended 31 March 2019, the NAV total return was
-7.0% against the FTSE All-Share Index total return of -1.8%. The
period under review was characterised by two distinct phases. The
three months to December 2018 witnessed one of the most dramatic
sell-offs in the UK equity market in recent years during which the
portfolio experienced meaningful underperformance relative to the
benchmark. Market sentiment improved in the three months to the end
of March 2019 and the portfolio recovered some of its earlier
underperformance.
As we have previously observed, the index-agnostic approach we
adopt in managing the portfolio makes this a highly active
portfolio with only limited exposure to defensive large cap stocks.
While we believe that this is the right approach in the long term,
it can lead to periods in which the portfolio performs
significantly worse than the wider market and this was one such
period.
UK market review
In the first three months of the period under review, equity
markets sold off as investors worried about fading global growth,
continuing US/China trade tensions, the path of monetary policy and
ongoing Brexit uncertainty. This period saw a rotation from
cyclical stocks into defensive stocks, with large caps
significantly outperforming small and mid-caps. The sell-off
reached its climax shortly before the New Year and January saw the
beginning of a phase in which investors regained their composure.
The key trigger causing sentiment to improve was an abrupt change
in signalling by the Federal Reserve on the future path of US
interest rates. Jerome Powell, the Federal Reserve Chair, said that
the case for continuing to raise rates had "weakened somewhat".
Market participants had previously pencilled in two rate rises in
2019, but these were immediately priced out and some forecasters
predicted a rate-cut within a year. The shift in policy boosted
risk appetite and stock markets rallied sharply.
Brexit remained centre stage throughout. As the period
progressed, the threat of 'no-deal' Brexit increased. This
culminated in Prime Minster Theresa May failing to secure enough
votes for her Withdrawal Agreement for a third time. As a result,
she was forced to ask the EU to delay the departure date until 12
April and the deadline was subsequently extended to 31 October
2019. While political uncertainty has not gone away, there were
signs by the end of the period that investors had become hardened
to it. Consumers also appeared to be taking Brexit uncertainty in
their stride, helped by buoyant employment conditions, rising wage
growth and improving household consumer cash flows. The UK
continued to confound expectations on GDP growth, growing at a
similar rate to Germany and France, although sceptics pointed to
the impact of manufacturers stockpiling goods ahead of Brexit.
Portfolio performance
The portfolio's poor performance during the period can be
attributed to two factors: (1) adverse market conditions during the
first half of the period and (2) some sector and stock positions
performing poorly.
The three months to December 2018 saw the biggest sell-off in
the UK stock market since the third quarter of 2011, when the
Eurozone crisis was in full swing. Companies that bucked the trend
were few and far between, with only a handful of defensive growth
stocks holding up while large parts of the stock market plummeted.
Given our index-agnostic investment approach, these market
conditions were particularly difficult for our portfolio.
Conditions improved somewhat in the first quarter of 2019, although
continued nervousness was reflected in the persistent
outperformance of a small number of defensive growth stocks. Such
stocks do not feature heavily in our portfolio as our Focus on
Change investment process points us towards stocks on low
valuations with the potential for improvement in their
fundamentals, rather than stocks on high valuations that are
already the "finished article" and consequently market expectations
are high. While we are disappointed about the returns we have
generated in the period, we remain
confident that our investment process, which focuses on changing
investment fundamentals, will ultimately reap rewards for our
Shareholders.
The second source of underperformance came from some of the
sector and stock positions in the portfolio. This was concentrated
in 5 sectors, shown in the table below, whose aggregate negative
contribution to performance exceeded the net return of the
portfolio as a whole.
Average portfolio Contribution
weight (%) Total return to portfolio
(%) return
Top 5 sector detractors to performance (%)
Construction & Materials 5.4 -29.5 -2.0
----------------- -------------- -------------
Travel & Leisure 6.8 -18.8 -1.5
----------------- -------------- -------------
Support Services 6.1 -20.7 -1.5
----------------- -------------- -------------
Oil Equipment, Services & Distribution 2.2 -34.2 -1.0
----------------- -------------- -------------
Banks 9.3 -10.0 -1.0
----------------- -------------- -------------
Total -7.0
----------------- -------------- -------------
Top 5 sector positive contributors
----------------- -------------- -------------
Gas, Water & Multi-utilities 0.9 +9.2 +0.1
----------------- -------------- -------------
General Retailers 5.4 +2.9 +0.2
----------------- -------------- -------------
Financial Services 21.7 +0.8 +0.4
----------------- -------------- -------------
Software & Computer Services 2.5 +36.0 +0.8
----------------- -------------- -------------
Mining 6.4 +21.8 +1.4
----------------- -------------- -------------
Total +2.9
----------------- -------------- -------------
Given the concentrated nature of the portfolio, there are
normally only two or three positions in each sector, so the
performance of each individual holding will often have a marked
impact on the sector return. With the benefit of hindsight the
sector positioning of the portfolio was sub-optimal going into the
market sell-off, in particular its heavy weightings to cyclical and
financial stocks, and its limited exposure to defensive
sectors.
Within Construction & Materials the key detractors to
performance were Tyman and Kier Group. Tyman was sold off
aggressively on fears over the impact of rising rates on the US
housing market. Kier Group's share price declined following the
announcement of a rights issue designed to strengthen its balance
sheet following a change in risk appetite by the banks towards the
construction sector after the collapse of Carillion. GVC is the
portfolio's largest position in Travel & Leisure and it fell
sharply on concerns over growing regulatory challenges in some of
its major markets. Within Support Services the key detractors were
Staffline and Equiniti both of which suffered from severe valuation
de-rating. Wood Group is the only position in the Oil Equipment,
Services & Distribution sector and it was adversely affected by
fears over the impact of slowing global growth on their order book.
Within Banks, CYBG/Virgin Money declined on fears over the earnings
impact of intensifying mortgage market competition.
The portfolio had some significant successes, notably within
Financial Services where John Laing Group whose consistently strong
returns drove a valuation re-rating, Litigation Capital Management
which soared after its IPO on completion of litigation projects and
Ashmore which delivered strong performance while improving
sentiment towards Emerging Markets drove a surge in demand for its
funds. While General Retailers as a sector has been enduring tough
trading conditions, our holding in Dunelm bucked the trend and its
January trading update led to analysts upgrading their earnings
forecasts. Within Software & Computer Services, Micro Focus
performed well as strong execution has helped to restore investors'
faith in management's ability to hit guidance. Within Mining, both
Rio Tinto and Anglo American delivered returns of over 20% in the
period on rising commodity prices and disruption to global iron ore
supply caused by a burst dam owned by a Brazilian competitor.
Revenue Account
The dividend income, including stock dividends, received by the
portfolio during the period was GBP5.2m, which was 1.0% or GBP54k
less than last year. UK investment income, which makes up 82% of
the income, was down 4.7%, while the income from overseas and
property income distributions was up 1.8%. 97% of the dividend
income came from recurring rather than special dividends, which
provides reassurance that the income is sustainable in the
future.
In the three years prior to the current year, the income
generated in the first six months has been between 40% and 45% of
the total income for the year. Our forecasts for the full year
indicate that the current year will follow this pattern and that
the second half of the year will ensure that we are able to pay the
projected full year dividend out of the earnings for the year.
Activity
Purchases
We bought back into Imperial Brands where we believe the market
is too fearful about the impact of new competition on earnings and
dividends. Imperial appears to be gaining momentum in vaping, with
potential for its Blu brand to become a leading player in a
consolidating market. Recent management guidance has driven
earnings upgrades, which should in due course drive the share price
from the starting point of a very low valuation. We also bought
shares in mining business Glencore where the management team
appears to be highly incentivised to deliver for shareholders. We
like the diversified nature of Glencore's portfolio, with stable
marketing revenues in addition to high quality mining assets. While
there remain some regulatory risks, these appear to be more than
fully priced in at the current valuation.
Sales
We took profits in Legal & General where management's
strategy has been successful in addressing growth opportunities by
linking the company's investing, annuities, investment management
and insurance businesses. However, this is now better understood by
the wider market, as reflected in the valuation which has moved
ahead of its peers after a period of very strong share price
performance. We also took profits in Dunelm where the investment
case appeared to have played out and the valuation had moved ahead
of its closest competitors. Dunelm's success can be attributed to
management's focus on its core business which is enabling the
company to overcome the headwinds being faced elsewhere in the
sector. This is an example of a UK domestic stock whose share price
had been under pressure from macro concerns, but which has
ultimately responded to positive corporate fundamentals. We
anticipate that other UK domestic stocks will follow Dunelm's lead
and we expect this to be a helpful driver of the portfolio's
performance in the months ahead.
Outlook
While the weak performance of the portfolio during the period
was disappointing, we remain convinced in the long-term merits of
our investment process which looks to identify stocks whose
potential for improvement in fundamentals has not been priced into
their valuations. This process tends to perform best when investors
are receptive to changes in company fundamentals. This was not such
a period. The primary focus for many investors during the period
was fear of macro turmoil, notably slowing global growth and the
risk of a hard Brexit. The result was a widening in the valuation
divergence between defensive growth stocks, to which the portfolio
has limited exposure, and value/income stocks, to which the
portfolio has considerable exposure. We see an abundance of stocks
with attractive prospects on significantly lower valuations, with
scope to rebound strongly.
We remain convinced of the importance of scrutinising a stock's
valuation when assessing its investment case. Many investors talk
about "reassuringly high" valuations, but we beg to differ. We
would rather identify companies whose valuations offer scope to
increase over time as their robust fundamentals become better
appreciated by the market. Our focus remains on ensuring that the
portfolio is set up to generate improved returns by sticking to our
investment process and identifying companies with a combination of
robust fundamentals and low valuations.
Currently we are finding the most compelling investment ideas
within three areas.
-- Global Yield stocks - attractively valued overseas earners
whose strong cash flows underpin confidence in dividend delivery
(this includes resource stocks and industrials).
-- Domestic Opportunities - UK- focused companies that offer the
prospect of meaningful valuation re-rating as political uncertainty
fades (this includes consumer and financial stocks).
-- Uncorrelated Value - stocks whose growth prospects are
independent of macro drivers (this includes stocks such as John
Laing).
These attractive valuation opportunities exist partly as a
result of the uncertain economic and political outlook.
When the current uncertainty has disappeared, valuations are
likely to be meaningfully higher. While taking a non- consensual
view can be uncomfortable when investing, we believe that it holds
the key to achieving strong investment returns over the long
term.
While the capital performance of the portfolio has been
disappointing, the income that the portfolio has generated has been
stable in the first half of the financial year, on the back of a
19% increase this time last year. We firmly believe that the
acceleration in the portfolio's dividend growth in recent years has
been supported by the index- agnostic approach, which provides the
flexibility to invest in small and mid-cap stocks whose long-term
dividend growth prospects appear significantly more attractive than
their large cap peers. Over time we would expect this approach to
support capital growth, as well as dividend growth.
Thomas Moore
Portfolio Manager
21 May 2019
Condensed Statement of Comprehensive Income
Six months ended Six months ended
31 March 2019 31 March 2018
(unaudited) (unaudited)
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- ---------- ---------- -------- ---------- ---------
Net losses on investments
at fair value - (21,073) (21,073) - (13,846) (13,846)
----- -------- ---------- ---------- -------- ---------- ---------
Currency gains / (losses) - 2 2 - (6) (6)
----- -------- ---------- ---------- -------- ---------- ---------
Income 2 5,212 - 5,212 5,251 - 5,251
----- -------- ---------- ---------- -------- ---------- ---------
Investment management fee (225) (526) (751) (254) (593) (847)
----- -------- ---------- ---------- -------- ---------- ---------
Administrative expenses (213) - (213) (197) - (197)
----- -------- ---------- ---------- -------- ---------- ---------
NET RETURN BEFORE FINANCE
COSTS AND TAXATION 4,774 (21,597) (16,823) 4,800 (14,445) (9,645)
----- -------- ---------- ---------- -------- ---------- ---------
Finance costs (85) (199) (284) (57) (132) (189)
----- -------- ---------- ---------- -------- ---------- ---------
RETURN BEFORE TAXATION 4,689 (21,796) (17,107) 4,743 (14,577) (9,834)
----- -------- ---------- ---------- -------- ---------- ---------
Taxation 3 (51) - (51) (12) - (12)
----- -------- ---------- ---------- -------- ---------- ---------
RETURN AFTER TAXATION 4,638 (21,796) (17,158) 4,731 (14,577) (9,846)
----- -------- ---------- ---------- -------- ---------- ---------
RETURN PER ORDINARY SHARE 4 9.43p (44.33p) (34.90p) 9.62p (29.65p) (20.03p)
----- -------- ---------- ---------- -------- ---------- ---------
The total column of this statement represents the profit and
loss account of the Company.
A Statement of Total Recognised Gains and Losses has not been
prepared as all gains and losses are recognised in the Condensed
Statement of Comprehensive Income.
All revenue and capital items in the above statement derive from
continuing operations.
The accompanying notes are an integral part of the Financial
Statements.
Condensed Statement of Financial Position
As at As at
31 March 2019 30 September 2018
(unaudited) (audited)
Notes GBP'000 GBP'000
FIXED ASSETS
------- -------------- ------------------
Investments at fair value through profit
or loss 240,984 266,742
------- -------------- ------------------
CURRENT ASSETS
------- -------------- ------------------
Debtors 2,154 1,886
------- -------------- ------------------
Money-market funds 3,734 1,350
------- -------------- ------------------
Cash and short-term deposits 206 35
------- -------------- ------------------
6,094 3,271
------- -------------- ------------------
CREDITORS: AMOUNTS FALLING DUE
WITHIN ONE YEAR
------- -------------- ------------------
Bank loan (29,851) (30,000)
------- -------------- ------------------
Other creditors (1,049) (1,564)
------- -------------- ------------------
(30,900) (31,564)
------- -------------- ------------------
NET CURRENT LIABILITIES (24,806) (28,293)
------- -------------- ------------------
NET ASSETS 216,178 238,449
------- -------------- ------------------
CAPITAL AND RESERVES
------- -------------- ------------------
Called-up share capital 6 12,295 12,295
------- -------------- ------------------
Share premium account 52,043 52,043
------- -------------- ------------------
Capital redemption reserve 12,616 12,616
------- -------------- ------------------
Capital reserve 7 128,879 150,675
------- -------------- ------------------
Revenue reserve 10,345 10,820
------- -------------- ------------------
EQUITY SHAREHOLDERS' FUNDS 216,178 238,449
------- -------------- ------------------
NET ASSET VALUE PER ORDINARY SHARE 8 439.72p 485.02p
------- -------------- ------------------
The Financial Statements of Aberdeen Standard Equity Income
Trust plc, registered number 2648152, were approved by the Board of
Directors and authorised for issue on 21 May 2019 and were signed
on its behalf by:
Richard Burns
Chairman
Condensed Statement of Changes in Equity
Six months ended 31 March 2019 (unaudited)
Capital
Share premium redemption Capital Revenue
Share capital account reserve reserve reserve Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
30 September 2018 12,295 52,043 12,616 150,675 10,820 238,449
------ --------------- ------------- ----------- --------- --------- ---------
Return after taxation - - - (21,796) 4,638 (17,158)
------ --------------- ------------- ----------- --------- --------- ---------
Dividends paid 5 - - - - (5,113) (5,113)
------ --------------- ------------- ----------- --------- --------- ---------
BALANCE AT
31 MARCH 2019 12,295 52,043 12,616 128,879 10,345 216,178
------ --------------- ------------- ----------- --------- --------- ---------
Condensed Statement of Changes in Equity
Six months ended 31 March 2018 (unaudited)
Capital
Share premium redemption Capital Revenue
Share capital account reserve reserve reserve Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
30 September 2017 12,295 52,043 12,616 148,939 11,380 237,273
------ --------------- ------------- ----------- --------- --------- ---------
Return after taxation - - - (14,577) 4,731 (9,846)
------ --------------- ------------- ----------- --------- --------- ---------
Dividends paid 5 - - - - (6,834) (6,834)
------ --------------- ------------- ----------- --------- --------- ---------
BALANCE AT
31 MARCH 2018 12,295 52,043 12,616 134,362 9,277 220,593
------ --------------- ------------- ----------- --------- --------- ---------
Notes to the financial Statements
1. Accounting policies
Basis accounting
The condensed Financial Statements have been prepared in
accordance with Financial Reporting Standard 104 (Interim Financial
Reporting) and with the Statement of Recommended Practice for
'Financial Statements of Investment Trust Companies and Venture
Capital Trusts' issued in November 2014 and updated in February
2018 with consequential amendments. They have also been prepared on
a going concern basis and on the assumption that approval as an
investment trust will continue to be granted.
The Half-Year Financial Statements and the net asset value per
share figures have been prepared in accordance with FRS 102 using
the same accounting policies as the preceding annual accounts.
2. Income
Six months ended Six months ended
31 March 2019 31 March 2018
GBP'000 GBP'000
Income from investments
---------------- ----------------
UK investment income
---------------- ----------------
Ordinary dividends 4,204 4,324
---------------- ----------------
Special dividends 59 151
---------------- ----------------
4,263 4,475
---------------- ----------------
Overseas and Property Income Distribution
investment income
---------------- ----------------
Ordinary dividends 675 663
---------------- ----------------
Special dividends 78 -
---------------- ----------------
753 663
---------------- ----------------
5,016 5,138
---------------- ----------------
Other income
---------------- ----------------
Money-market interest 12 7
---------------- ----------------
Stock dividends 174 106
---------------- ----------------
Underwriting commission 10 -
---------------- ----------------
196 113
---------------- ----------------
Total income 5,212 5,251
---------------- ----------------
3. Taxation on ordinary activities
The taxation charge for the period, and the comparative period,
represents withholding tax suffered on overseas dividend
income.
4. Return per ordinary share
Six months ended Six months ended
31 March 2019 31 March 2018
p p
Revenue return 9.43 9.62
---------------- ----------------
Capital return (44.33) (29.65)
---------------- ----------------
Total return (34.90) (20.03)
---------------- ----------------
The figures above are based on the following figures:
GBP'000 GBP'000
Revenue return 4,638 4,731
---------- ----------
Capital return (21,796) (14,577)
---------- ----------
Total return (17,158) (9,846)
---------- ----------
Weighted average number of ordinary
shares* 49,162,782 49,162,782
---------- ----------
* Calculated excluding shares in treasury. At 31 March 2019
there were 15,985 shares in treasury (2018: 15,985).
5. Dividends
Six months ended Six months ended
31 March 2019 31 March 2018
GBP'000 GBP'000
Ordinary dividends on equity shares
deducted from reserves:
---------------- ----------------
Third interim dividend for 2017
of 4.00p per share - 1,967
---------------- ----------------
Final dividend for 2018 of 5.50p
per share (2017: 5.50p) 2,704 2,704
---------------- ----------------
First interim dividend for 2019
of 4.90p (2018: 4.40p) 2,409 2,163
---------------- ----------------
5,113 6,834
---------------- ----------------
The third interim dividend for the financial year to 30
September 2017 was declared on 1 September 2017 with an ex-dividend
date of 14 September 2017. This dividend of 4.00p per share was
paid 6 October 2017 (during the six months ended 31 March 2018) and
was not included as a liability in the Financial Statements to 30
September 2017.
6. Called-up share capital
Number GBP'000
Issued and fully paid:
---------- -------
Ordinary shares 25p each
---------- -------
Balance at 30 September 2018 49,162,782 12,291
---------- -------
Balance at 31 March 2019 49,162,782 12,291
---------- -------
Treasury shares
---------- -------
Balance at 30 September 2018 15,985 4
---------- -------
Balance at 31 March 2019 15,985 4
---------- -------
Called-up share capital at 31 March
2019 12,295
---------- -------
No Ordinary shares were repurchased during the six months ended
31 March 2019 or 31 March 2018.
7. Capital reserve
The capital reserve figure reflected in the Condensed Statement
of Financial Position includes investment holdings gains at the
period end of GBP2,603,400 (30 September 2018: gains of
GBP28,901,930) which relate to the revaluation of investments held
at the reporting date and realised gains of GBP126,275,743 (30
September 2018: GBP121,773,085).
8. Net asset value per ordinary share
As at As at
31 March 2019 30 September 2018
Attributable net assets (GBP'000) 216,178 238,449
-------------- ------------------
Number of ordinary shares in issue* 49,162,782 49,162,782
-------------- ------------------
NAV per ordinary share (p) 439.72 485.02
-------------- ------------------
* Excludes shares in issue held in treasury. At 31 March 2019
there were 15,985 shares in treasury (2018: 15,985).
9. Transaction costs
During the period expenses were incurred in acquiring or
disposing of investments classified as fair value through profit or
loss. These have been expensed through capital and are included
within losses on investments in the Condensed Statement of
Comprehensive Income. The total costs were as follows:
Six months ended Six months ended
31 March 2019 31 March 2018
GBP'000 GBP'000
Purchases 91 217
---------------- ----------------
Sales 22 34
---------------- ----------------
113 251
---------------- ----------------
10. Loans
The loan facility by Scotiabank (Ireland) Limited was repaid on
17 December 2018 and refinanced by a GBP40,000,000 facility
provided by Banco Santander S.A., London Branch. The facility
consists of a five year revolving facility which has a maturity
date of 20 November 2023.
At 31 March 2019, GBP30,000,000 had been drawn down (30
September 2018: GBP30,000,000) at a rate of 1.846% (30 September
2018: 1.57463%).
The loan is shown in the Condensed Statement of Financial
Position net of amortised expenses of GBP149,000.
11. Fair Value Hierarchy
FRS 102 requires an entity to classify fair value measurements
using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. The fair value hierarchy
shall have the following classifications:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1
that are observable for the assets or liabilities, either directly
(ie as prices) or indirectly (ie derived from prices); and
Level 3: inputs for the assets or liabilities that are not based
on observable market data (unobservable inputs).
All of the Company's investments are in quoted equities (30
September 2018: same) that are actively traded on recognised stock
exchanges, with their fair value being determined by reference to
their quoted bid prices at the reporting date. The total value of
the investments have therefore been deemed as Level 1 (30 September
2018: same).
12. Half-Yearly Report
The financial information contained in this Half-Yearly
Financial Report does not constitute statutory accounts as defined
in Sections 434-436 of the Companies Act 2006. The financial
information for the six months ended 31 March 2019 and 31 March
2018 has not been audited.
The information for the year ended 30 September 2018 has been
extracted from the latest published audited Financial Statements
which have been filed with the Registrar of Companies. The report
of the auditors on those accounts contained no qualification or
statement under Section 498 (2), (3) or (4) of the Companies Act
2006.
This Half-Yearly Financial Report was approved by the Board on
21 May 2019.
Directors' Responsibility Statement
The Directors are responsible for preparing the Half-Yearly
Financial Report in accordance with applicable laws and
regulations. The Directors confirm that to the best of their
knowledge -
-- the condensed set of Financial Statements have been prepared
in accordance with the Accounting Standards Board's statement
"Half-Yearly Financial Reports"; and
-- the Interim Management Report includes a fair review of the
general conditions required by 4.2.7R and 4.2.8R of the Financial
Conduct Authority's Disclosure Guidance and Transparency Rules.
The Half-Yearly Financial Report, for the six months ended 31
March 2019, comprises an Interim Management Report, in the form of
the Chairman's Statement, the Directors' Responsibility Statement
and a condensed set of Financial Statements, which has not been
audited or reviewed by the auditors pursuant to the Accounting
Principles Board guidance on Review of Interim Financial
Information.
For and on behalf of the Directors of Aberdeen Standard Equity
Income Trust plc.
Richard Burns
Chairman
21 May 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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