Invesco Perpetual UK Smaller
Companies Investment Trust plc
Annual Financial Report
Announcement
For the year ended 31 January
2017
FINANCIAL
HIGHLIGHTS
The Benchmark Index of the Company is the Numis Smaller
Companies Index (excluding Investment Companies) with income
reinvested.
AT 31 JANUARY |
2017 |
2016 |
CHANGE |
Net asset value(1) (NAV)
per share as shown on the balance sheet |
454.1p |
390.3p |
+16.3% |
Shareholders’ funds
(£’000)(1) |
241,603 |
207,657 |
+16.3% |
Share price |
432.0p |
362.0p |
+19.3% |
Discount(1) |
4.9% |
7.3% |
|
|
|
|
|
Gearing(1): |
|
|
|
– gross
gearing |
nil |
nil |
|
– net gearing |
nil |
nil |
|
– net cash |
3.1% |
4.9% |
|
Maximum authorised gearing |
6.2% |
7.2% |
|
|
|
|
|
FOR THE YEAR ENDED 31
JANUARY |
2017 |
2016 |
|
Total return (with income
reinvested): |
|
|
|
NAV(1): |
|
|
|
– Datastream(2) |
+21.3% |
+11.7% |
|
– based on prior
year NAV after charging both paid and proposed
dividends(3) |
+20.4% |
+10.9% |
|
Benchmark
Index(1)(2) |
+18.6% |
+3.8% |
|
FTSE All-Share
Index(2) |
+20.1% |
–4.6% |
|
Share price(2) |
+24.0% |
+16.2% |
|
Return(1) and dividend
per ordinary share: |
|
|
|
Revenue return |
7.37p |
8.98p |
|
Capital return |
70.83p |
30.16p |
|
Total return |
78.20p |
39.14p |
|
First interim dividend |
3.45p |
3.40p |
|
Second interim dividend |
3.45p |
3.40p |
|
Third interim dividend |
3.45p |
3.40p |
|
Final dividend |
6.75p |
4.10p |
|
Total dividends |
17.10p |
14.30p |
+19.6% |
Dividend payable for the year: |
|
|
|
– from revenue |
7.37p |
8.98p |
|
– from capital |
9.73p |
5.32p |
|
|
17.10p |
14.30p |
|
Capital dividend as a % of year end
net assets |
2.1% |
1.4% |
|
Ongoing charges(1) –
excluding performance fee |
0.82% |
0.82% |
|
Performance fee |
0.44% |
1.01% |
|
Notes: (1) The term is defined in the Glossary
on page 62 of the annual financial report.
(2) Source: Thomson Reuters Datastream
(‘Datastream’).
(3) Source: Invesco Perpetual and defined in the
Glossary on page 63 of the annual financial report.
CHAIRMAN’S STATEMENT
Performance
I am pleased to report that for the year ended 31 January 2017 the net asset value (NAV) of your
Company rose by 21.3%, on a total return basis, an outperformance
of 2.7% versus the benchmark index of the Company, the Numis
Smaller Companies Index (excluding Investment Companies) with
income reinvested, which returned 18.6%. The Company also generated
a small outperformance of 1.2% against the wider UK stock market
(as measured by the FTSE All-Share Index) which rose by 20.1% over
the same period. Over the past 12 months the underlying share price
discount to NAV narrowed from 7.3% to 4.9%. As at the latest
practical date prior to the publication of this report being
25 April 2017, the discount has
further narrowed and now stands at 3.5%.
Recent Company History
The Company has come a long way over the last few years,
enjoying strong absolute and relative total returns over the last
five financial years, outperforming its benchmark index over one,
three and five years. The NAV total return over the five years to
31 January 2017 was 123.0% and share
price total return was 169.5% compared with 98.6% for the benchmark
and 57.0% for the FTSE All-Share Index. The discount to net asset
value at which the shares have traded has also substantially
narrowed over the same period which has contributed to the strong
share price performance. The Company’s positive performance has
continued in the current financial year.
The Board believes that two specific initiatives in particular
have helped narrow the discount from persistently above the sector
average to now being one of the narrowest discounts within its peer
group. The first of these initiatives was a commitment by the Board
in 2012 to offer shareholders a number of options on or around the
date of the annual general meeting in 2017. This was followed by a
significant increase in the level of dividend to an initial yield
target of 4% per annum (based on the share price prevailing at the
time of the announcement in March
2015), with any revenue shortfall supplemented from profits
retained as capital reserves, and the payment of dividends on a
quarterly basis enhancing shareholder cash flow.
Future of the Company
In considering the future of the Company, the Board is mindful
of its strong historical performance, the financial returns it has
provided for shareholders and the outlook for the Company.
In the light of the above and in fulfilment of the Company’s
commitment in 2012, the Board will offer shareholders a
continuation of their investment together with the alternative of a
Tender Offer at a level close to NAV.
This decision follows discussions over the future of the Company
held with major shareholders, the Company’s broker and the Manager.
The Board proposes that:
• for shareholders wishing to
retain their investment in the Company:
– the Company will continue to be managed
by the portfolio managers in the same way that it is now;
– consistent with the current dividend
policy, and in the absence of unforeseen circumstances, the
Board intends to pay a dividend for the year to 31 January 2018 of 17.1p per share, which equates
to a yield of approximately 4% at the 2017 year end;
– the Board may seek to limit discount
volatility through the prudent use of share buy-backs; and
– a further range of options will be put to
shareholders on or around the annual general meeting in 2020.
• those shareholders wishing to
realise part or all of their investment will have a chance to do so
through a tender offer for up to 40% of the Company’s shares in
issue.
The full proposals are set out in a separate Circular to
shareholders which accompanies the annual financial report.
Dividends
This year is the second full year of quarterly dividends, which
are paid in September, December, March and June. For the year ended
31 January 2017, three interim
dividends of 3.45p each have been paid and the Board has announced
a proposed final dividend of 6.75p per share, making a total
dividend for the year of 17.1p per share, an increase of 19.6% on
the previous year’s total dividend. Based on the year end share
price of 432p this gives a dividend yield of 4.0%. The final
dividend will be payable, subject to shareholder approval, on
12 June 2017 to shareholders on the
register on 5 May 2017 and the shares
will go ex-dividend on 4 May
2017.
In my Chairman’s Statement last year I highlighted that there
had been a notable increase in dividends earned, resulting in a
substantial increase in revenue return per share – from 7.4p to 9p.
This year has seen the exact opposite, with revenue return falling
back to 7.4p. A small amount of the decrease arose from the receipt
of fewer special dividends being recognised as revenue items this
year, although the total of special dividends received in the year
(i.e. including those attributed to capital) rose substantially to
£883,000 (2016: £520,000). This has resulted in a balance of
dividend being paid from capital reserves amounting to 9.73p,
representing 2.1% of net assets (2016: 5.32p, 1.4%). This continues
to represent only a small proportion of annualised returns over the
last ten years.
General Meetings
This year’s Annual General Meeting (AGM) will be held on
Thursday, 8 June 2017. A general
meeting to consider the proposed tender offer will immediately
follow the AGM. The Directors have carefully considered all of the
resolutions proposed and believe them to be in the best interests
of shareholders and the Company as a whole. Accordingly, the
Directors recommend that shareholders vote in favour of each
resolution, as will the Directors in respect of their own
shareholdings.
Outlook
The year under review has been influenced by a number of
political events including the UK’s vote in the referendum to leave
the EU and the result of the US Presidential election. Despite
these largely unanticipated outcomes, markets rallied during the
year with the UK economy continuing to grow. However, it is likely
that markets will remain volatile for some time to come, with
uncertainties created in the short term by the recently announced
UK snap election and the longer term by the Brexit negotiations,
not helped by the possibility of a second Scottish referendum and
upcoming key elections in Europe.
As you will read in the Portfolio Manager’s Report, all is not
gloom and doom and whilst these political outcomes were unexpected
– and there may be more to come this year – the UK economy is
faring well on the back of a growing world economy and the
depreciation in sterling relative both to the US dollar and the
Euro; the latter has helped exporters but also makes domestic
companies vulnerable to potential takeovers.
Nevertheless, having carefully constructed a portfolio of
quality companies that have the characteristics required by the
portfolio managers, and with a continued low interest rate
environment, there is reason to be cautiously optimistic, at least
in the short term. Donald Trump’s election as US President may be
controversial but there is a reasonable expectation that this will
lead to short-term growth in the US through infrastructure and
defence spending and, coupled with his administration’s positive
approach to a UK outside of Europe, the potential for home markets to
benefit.
Your portfolio managers have a disciplined approach to stock
selection which has served shareholders well for many years. They
are mindful of the many potential pitfalls ahead of them in markets
that are anything but straightforward and are well aware of the
many political distractions on the horizon; your Board continues to
be fully supportive of their considered and astute approach to
portfolio construction.
Ian Barby
Chairman
26 April 2017
BUSINESS REVIEW
Invesco Perpetual UK Smaller Companies Investment Trust plc is
an investment company and its investment objective is set out
below. The strategy the Board follows to achieve that objective is
to set investment policy and risk guidelines, together with
investment limits, and to monitor how they are applied. These are
also set out below and have been approved by shareholders.
The Company has contracted the services of Invesco Fund Managers
Limited (the ‘Manager’) to manage the portfolio in accordance with
the Board’s strategy and under its oversight. The portfolio manager
responsible for the day to day management of the portfolio is
Jonathan Brown, assisted by
Robin West, Deputy Portfolio
Manager.
Investment Objective
The Company is an investment trust whose investment objective is
to achieve long-term total return for shareholders primarily by
investment in a broad cross-section of small to medium sized UK
quoted companies.
Investment Policy
The portfolio primarily comprises shares traded on the London
Stock Exchange including those traded on AIM. The portfolio manager
can also invest in unquoted securities, though these are limited to
a maximum of 5% of gross assets at the time of acquisition.
The Manager seeks to outperform the Numis Smaller Companies
Index (excluding Investment Companies). As a result, the Manager’s
approach can, and often does, result in significant overweight or
underweight positions in individual stocks or sectors compared with
the benchmark. Sector weightings are ultimately determined by stock
selection decisions.
Risk diversification is sought through a broad exposure to the
market, where no single investment may exceed 5% of the Company’s
gross assets at the time of acquisition. The Company may utilise
index futures to hedge risk of no more than 10% and other
derivatives (including warrants) of no more than 5%. In addition,
the Company will not invest more than 10% in collective investment
schemes or investment companies, nor more than 10% in non-UK
domiciled companies. All these limits are referenced to gross
assets at the time of acquisition.
Borrowings may be used to raise market exposure up to the lower
of 30% of net asset value and £25 million.
Dividend Policy
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. Therefore,
the total dividend, paid to shareholders on a quarterly basis,
comprises income received from the portfolio with any balance from
capital reserves.
Performance
The Board reviews performance by reference to a number of Key
Performance Indicators which include the following:
• the movement in the net asset
value (NAV) per share on a total return basis;
• the performance relative to the
benchmark index and the peer group;
• the discount;
• dividend per share;
• the ongoing charges; and
• the risk and volatility.
The ten year record for the NAV and share price performance
compared with the Company’s benchmark index can be found on page 3
of the annual financial report, together with the five year
discount record. The ten year record for dividends and ongoing
charges is shown on page 4 of the annual financial report. Returns
versus volatility are shown on the graph on page 14 of the annual
financial report.
Results and Dividends
In the year ended 31 January 2017,
the net asset value total return was 21.3%, compared with a total
return on the benchmark index of 18.6%, an outperformance of 2.7%.
The discount at the year end was 4.9% (2016: 7.3%). The Portfolio
Manager’s Report shows an analysis of the relative performance in a
table.
For the year ended 31 January
2017, three interim dividends of 3.45p per share were paid
to shareholders in September and December
2016 and March 2017. A final
dividend of 6.75p per share will be proposed to shareholders at the
AGM on 8 June 2017 and will be paid
on 12 June 2017 to shareholders on
the register on 5 May 2017, subject
to shareholder approval. This will give total dividends for the
year of 17.1p (2016: 14.3p) which will be funded from the net
revenue of 7.37p (2016: 8.98p) generated during the year, with the
balance of 9.73p (2016: 5.32p) from capital reserves.
Financial Position and Borrowings
At 31 January 2017, the Company’s
net assets were valued at £242 million (2016: £208 million),
comprising a portfolio of equity investments and net current
assets, with no borrowings (2016: £nil). Borrowings under a
facility with Bank of New York Mellon are limited to the maximum of
the lower of 30% of net assets and £15 million (2016:
unchanged).
Outlook, including the Future of the
Company
The main trends and factors likely to affect the future
development, performance and position of the Company’s business can
be found in the Portfolio Manager’s Report. Details of the
principal risks affecting the Company are set out under ‘Principal
Risks and Uncertainties’ below.
Past performance has been good and the Directors believe that
following the tender offer (as described in brief in the Chairman’s
Statement) the Company will continue in its current form, and with
strong shareholder support. The Manager will continue to use its
best endeavours to attempt to achieve above-average performance for
shareholders.
Principal Risks and Uncertainties
The principal risks facing the Company are subject to robust
assessment by the Directors and these risks, and the steps taken to
mitigate them, follow. Most of these risks are market related and
are similar to those of other investment trusts investing primarily
in listed markets.
Market (Economic) Risk
Factors such as fluctuations in stock markets, interest rates
and exchange rates are not under the control of the Board and the
portfolio manager, but 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. To a limited extent,
futures can be used to mitigate this risk.
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. In
addition, as smaller companies do not generally have the financial
strength, diversity and resources of larger companies, they may
find it more difficult to overcome periods of economic slowdown or
recession.
The portfolio manager’s approach to investment is one of
individual stock selection. Investment risk is mitigated via the
stock selection process, together with the slow build-up of
holdings rather than the purchase of large positions outright. This
allows the portfolio manager to observe more data points from a
company before adding to a position. The overall portfolio is well
diversified by company and sector. The weighting of an investment
in the portfolio tends to be loosely aligned with the market
capitalisation of that company. This means that the largest
holdings will often be amongst the larger of the smaller companies
available.
The portfolio manager is relatively risk averse, looks for lower
volatility in the portfolio and seeks to outperform in more
challenging markets. The portfolio manager remains cognisant at all
times of the potential liquidity of the portfolio.
There can be no guarantee that the Company’s strategy and
business model will be successful in achieving its investment
objective. The Board monitors the performance of the Company and
has guidelines in place to ensure that the portfolio manager
adheres to the approved investment policy. The continuation of the
Manager’s mandate is reviewed annually.
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.
On 10 March 2015 the Company
announced a new dividend policy, targeting an initial yield of
approximately 4% per annum, based on the prevailing share price at
that time of 344p per share. Dividends will continue to be funded
by distributing 100% of available income each year, with any
balance paid from capital reserves.
The Board and the portfolio manager maintain an active dialogue
with the aim of ensuring that the market rating of the Company’s
shares reflects the underlying net asset value; and there are in
place both share buy back and issuance facilities to help the
management of this process.
Borrowings
The Company may borrow money for investment purposes. If the
investments fall in value, any borrowings (or gearing) will magnify
the extent of any loss. If the borrowing facility could not be
renewed, the Company might have to sell investments to repay any
borrowings made under it. All borrowing and gearing levels are
reviewed at every Board meeting and limits agreed.
Reliance on the Manager and other
Third Party Providers
The Company has no employees and the Directors have all been
appointed on a non-executive basis. The Company is therefore
reliant upon the performance of third party service providers for
its executive function and service provisions. Third party service
providers are subject to ongoing monitoring by the Manager and the
Company, including review of their cyber security. Failure by any
service provider to carry out its obligations to the Company in
accordance with the terms of its appointment 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. The Company’s main service providers are listed
on page 61 of the annual financial report, of which the Manager is
the principal provider.
The Manager may be exposed to reputational risks. In particular,
the Manager may be exposed to the risk that litigation, misconduct,
operational failures, negative publicity and press speculation,
whether or not it is valid, will harm its reputation. Any damage to
the reputation of the Manager could result in potential
counterparties and third parties being unwilling to deal with the
Manager and by extension the Company, which carries the Manager’s
name. This could have an adverse impact on the ability of the
Company to pursue its investment policy successfully.
The Audit Committee regularly reviews the performance and
internal controls of the Manager, the results of which are reported
to the Board. The Manager reviews the performance of all third
party providers regularly through formal and informal meetings.
Regulatory Risk
The Company is subject to various laws and regulations by virtue
of its status as an investment trust, its listing on the London
Stock Exchange and being an Alternative Investment Fund under the
Alternative Investment Fund Managers Directive. A loss of
investment trust status could lead to the Company being subject to
capital gains tax on the sale of its investments. Other control
failures, either by the Manager or any other of the Company’s
service providers, could result in operational or reputational
problems, erroneous disclosures or loss of assets through fraud, as
well as breaches of regulations.
The Manager reviews the level of compliance with tax and other
financial regulatory requirements on a daily basis. The Board
regularly considers all risks, the measures in place to control
them and the possibility of any other risks that could arise. The
Manager’s Compliance and Internal Audit Officers produce regular
reports for review at the Company’s Audit Committee.
Further details of risks and risk management policies as they
relate to the financial assets and liabilities of the Company are
detailed in note 17 to the financial statements.
Viability Statement
In accordance with provision C.2.2 of the UK Corporate
Governance Code, the Directors have assessed the prospects of the
Company over a longer period than the 12 months required by the
‘Going Concern’ provision. The Company is an investment trust, a
collective investment vehicle designed and managed for long term
investment. The Company does not have a fixed life. The Board
believes that the Company, at its essence, remains evergreen and
the tender offer does not distort this view. In their going concern
assessment, the Directors have assumed that the tender offer will
not affect the Company’s ability to continue in operational
existence. While the appropriate period over which to assess the
Company’s viability may vary from year to year, the long term for
the purpose of this viability statement is currently considered by
the Board to be at least five years, with the life of the Company
not intended to be limited to that or any other period.
The main risks to the Company’s continuation are: continuing
poor investment performance; or shareholder dissatisfaction through
failure to meet the Company’s investment objective; or the
investment policy not being appropriate in prevailing market
conditions. Accordingly, failure to meet the Company’s investment
objective, and contributory market and investment risks, are deemed
by the Board to be principal risks of the Company and are given
particular consideration when assessing the Company’s long term
viability.
The investment objective of the Company had been substantially
unchanged for many years. The 2015 amendment to dividend policy
gave some additional weight to targeting increased dividend income
to shareholders. This change was not expected to, and did not,
affect the total return sought or produced by the portfolio manager
but was designed to increase significantly returns distributed to
shareholders. This was well received by the market and accordingly,
the Board considers the revised investment objective remains
appropriate. This is confirmed by contact with major shareholders
and demonstrated by demand for the Company’s shares, as evidenced
by the narrower discount to net asset value at which they now
trade.
Performance derives from returns for risk taken. The Portfolio
Manager’s Report sets out his current investment strategy. The
Company’s performance has been very strong for many years and
through different market cycles, as shown by the ten year total
return performance graph on page 3, and by comparison with its peer
group’s returns versus volatility over five years, as set out on
page 14 of the annual financial report. Whilst past performance may
not be indicative of performance in the future, it should be noted
that the Company’s current Manager has been in place throughout
that ten years, the current portfolio manager has been involved
with the Company for over 11 years, and there has been no material
change in the Company’s investment objective or policy.
Demand for the Company’s shares and performance are not things
that can be forecast, but there are no current indications that
either or both of these may decline materially over the next five
years so as to affect the Company’s viability.
The Company’s portfolio is readily realisable and is many times
the value of its normal level of short term liabilities and annual
operating costs. With respect to the short term liability that will
arise as a result of the tender offer: the Manager has undertaken a
detailed review of the liquidity of the portfolio and, based on the
maximum tender amount, has confirmed that there is little to no
prospect of the Company not being able to meet its obligations as
they fall due.
Based on the above analysis, the Directors confirm that they
expect the Company will continue to operate and meet its
liabilities, as they fall due, during the five years ending
January 2022.
Board Diversity
The Board considers diversity, including the balance of skills,
knowledge, diversity (including gender) and experience, amongst
other factors when reviewing its composition and appointing new
directors, but does not consider it appropriate to establish
targets or quotas in this regard. The Board consists of five
directors, one of whom is a woman, thereby constituting 20% female
representation.
Social and Environmental Matters
As an investment company with no employees, property or
activities outside investment, environmental policy has limited
application. The Manager considers various factors when evaluating
potential investments. While a company’s policy towards the
environment and social responsibility, including with regard to
human rights, is considered as part of the overall assessment of
risk and suitability for the portfolio, the Manager does not
necessarily decide to, or not to, make an investment on
environmental and social grounds alone. The Manager applies the
United Nations Principles for Responsible Investment.
PORTFOLIO MANAGER’S REPORT
Investment Review
The year under review saw good returns from global stock
markets. Investors shrugged off the “surprise” results of the EU
referendum and the US election, and pushed the UK and US stock
markets on to new all-time highs. The somewhat unusual combination
of extreme political uncertainty and strong stock markets may be
due to the hope that governments are turning away from “austerity”
and adopting more inflationary policies. Increased government
spending, particularly infrastructure investment, is likely to
boost short term economic growth and push up demand for commodities
and capital goods. These sectors have performed strongly and are
part of the reason for the equity rally we’ve seen over the second
half of the year. The second consequence of a more expansionary
government policy is likely to be increased inflation and higher
interest rates, which has potentially negative consequences for
bond markets. With bond valuations at all-time highs, the appeal of
equities has increased on a relative basis, and markets have been
supported by additional investment flow.
During the year, the UK stock market, as measured by the FTSE
All-Share Index, returned 20.1% on a total return basis. This very
strong outcome is largely attributable to the significant fall in
sterling prompted by the decision to leave the EU. A significant
proportion of profit generated by businesses listed on the UK
market is earned overseas, and this benefited from significant
foreign exchange gains when translated into sterling. As an
illustration, when calculated in US dollars, the FTSE All-Share
Index returned a much more modest 6.5%. As you would expect,
sectors with significant non-UK revenues were the biggest
contributors to market returns, in particular the mining and oil
& gas sectors, which also benefited from higher commodity
prices. UK smaller companies, as measured by the Numis Smaller
Companies Index (excl. Investment Companies), gained 18.6% on a
total return basis. Smaller companies tend to have less overseas
exposure and therefore enjoyed less of a currency related gain.
However, the mining sector, which had a heavier weighting than
usual this year, contributed around 6.5% to the index return.
Portfolio Strategy and Review
Against this background, your Company generated a net asset
value total return of 21.3% for the fiscal year. Positive
contributions came from retail and healthcare, while the
portfolio's lack of exposure to the mining sector negatively
impacted performance.
At the individual stock level, the stand-out performer was
on-line fashion retailer boohoo.com (+256%). Its keenly
priced “fast fashion” continued to be a hit with consumers as the
business rapidly grew sales both in the UK and overseas. The stock
has been a strong performer for the last two of years, so we have
locked-in some profit and reduced the position. Keywords
Studios (+168%), a leading provider of outsourced services to
the computer games industry, had another good year driven by a
combination of organic growth and acquisitions. The demand for
games continues to grow around the world, which along with
increasing complexity is providing a fertile market for Keyword
Studios’ language translation and art creation services.
Coats (+157%), the world’s leading manufacturer of
industrial threads, also had a good year, following the resolution
of its pension dispute. The company’s thread is used in around a
fifth of all shirts, and a third of all the quality shoes worn in
the world. It also produces a growing range of speciality fibres
used in applications such as fibre optics, car air-bags and tyre
casings. Ithaca Energy (+407%), a North Sea oil & gas
producer, was one our worst performers last year but bounced back
along with the oil price. The business also received a takeover
approach following the year end. Sadly, we also had some
disappointments. Carpetright (–53%), the UK’s leading carpet
retailer, suffered from increased competition and a higher cost of
goods due to the fall in sterling. The company is still reducing
costs by rationalising its store estate and seeing improved trading
as a result of its refurbishment programme, leading us for the time
being to maintain our holding. Diversified manufacturing business
Essentra (–44%), struggled due to management problems. We
are hopeful that the new CEO can get to grips with the issues and
return the business to growth. The UK’s leading tile retailer,
Topps Tiles (–38%), experienced slower growth following the
EU referendum and a slowdown in the housing market. The fall in the
share price feels overdone and we are confident that the company
can continue to take market share.
Invesco Perpetual UK Smaller Companies
Investment Trust plc
Performance attribution for the year
ended 31 January 2017
|
Total |
|
Absolute |
|
% |
Net asset value total
return(1) |
21.3 |
Less:?Benchmark total
return(1) |
18.6 |
Relative outperformance |
2.7 |
Analysis of Relative
Performance |
|
Portfolio total return |
22.6 |
Less: Benchmark total
return(1) |
(18.6) |
Portfolio outperformance |
4.0 |
Net gearing effect |
— |
Management fees |
(0.7) |
Performance fee |
(0.4) |
Interest payable |
— |
Other expenses |
(0.2) |
Total |
2.7 |
(1) Source: Datastream
Performance attribution analyses the Company’s net asset value
performance relative to its benchmark.
Portfolio outperformance measures the relative effect of the
Company’s investment portfolio against that of its benchmark.
Net gearing effect measures the impact of borrowings less any
cash balances on the Company’s relative performance. This is nil
where there is no gearing in a year.
Management fees, performance fee and other expenses reduce the
level of assets and therefore result in a negative effect for
relative performance. There are no fees or expenses imputed to the
benchmark index.
Investment Strategy
Our investment strategy remains unchanged. The current portfolio
comprises around 80 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.
The sustainability of returns and profit margins is vital for
the long term success of a company. The assessment of a business’
position within its supply chain and a clear understanding of how
work is won and priced, are key to determining if a company has
“pricing power”. 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 350 company meetings and site visits a year, and
these areas are a particular focus for us on such occasions.
Currently just under a third of our portfolio is invested in the
highly diverse industrials sector. We continue to favour companies
such as Johnson Service,
which benefits from market leading positions in workwear and linen
hire. Its scale ensures it has a greater customer density on its
logistic routes, giving the company a cost advantage over smaller
competitors. Management leverage this position by acquiring smaller
competitors and consolidating them into its existing business,
thereby driving further efficiencies.
Around a quarter of the portfolio is invested in the consumer
goods and services sectors. There is some concern regarding
consumer spending in the wake of Brexit, due to a weaker currency
putting upward pressure on the cost of living. It is not all bad
news however, with the increased minimum wage and decreasing tax
burden on low earners providing an offset. Although the sector has
had a poor year in general, it has been a strong contributor to our
portfolio due to stock selection. We believe that companies such
JD Sports Fashion, will continue to prosper. Its growth has
been driven by the current fashion trend for “athleisure wear” and
a strong performance from the stores it is rolling out in
Europe. The company has a
considerable opportunity to continue its overseas expansion, and is
seen as a key strategic partner by the large sportswear brands such
as Nike and Adidas.
Financials, technology and healthcare each account for around
10% of the portfolio. Within financials, we are finding value in
the real estate sector. Companies such as Workspace, which
provides high quality, flexible office space to small growing
businesses, offers significant growth potential from redevelopments
and increasing rental income. The stock can be bought at a large
discount to asset value, despite carrying minimal debt on its
balance sheet. In technology, we continue to hold FDM, which
is growing strongly in the UK and US. Its model of training
graduates in an IT specialism before placing them with blue chip
clients is proving very popular. In the healthcare sector,
veterinary drug specialist Dechra Pharmaceuticals remains
our largest holding. Prospects for the business, which has produced
excellent returns over many years, continue to look positive
following the recent acquisition of US branded generic
pharmaceutical business Putney. The company has extended its reach
well beyond the UK in recent years, allowing it to market its
products to a significantly larger customer base.
Outlook
The global economy is in reasonable shape. Both Japan and the Eurozone are experiencing a
pick-up in economic growth, and the reflationary rhetoric emanating
from the US suggests the potential for high growth there too. The
UK economy has shrugged off the Brexit uncertainty so far and,
although we are likely to experience increased inflation over the
coming year, the continued record levels of employment should be
supportive of consumer confidence. Exporting businesses should
continue to benefit from weak sterling and the weak currency also
increases the attractiveness of UK business to overseas acquirers.
In the event of an economic downturn, the Government appears ready
to stimulate the economy through increased infrastructure spending.
So, notwithstanding political interference, the economic backdrop
looks reasonably favourable.
There is no doubt that we are in a period of heightened
political uncertainty. A combination of the UK “snap” election,
protracted Brexit negotiations, the possibility now raised of a
second Scottish referendum, key elections in France and Germany and the potential for significant
changes in the US approach to global trade could lead to increased
volatility within equity markets. Our investment approach seeks out
companies that can shape their own destiny rather than rely on
general market growth – for example through self-help,
consolidating fragmented markets or through exposure to areas of
structural growth. We believe that these kinds of businesses are
well positioned to navigate current variable politico-economic
conditions. We continue to find plenty of opportunities to invest
in good quality, growing businesses trading at reasonable
valuations, and we remain hopeful of continued positive performance
over the coming year.
Jonathan Brown
Portfolio Manager
Robin West
Deputy Portfolio Manager
The Strategic Report was approved by the Board of Directors on
26 April 2017.
Invesco Asset Management Limited
Company Secretary
INVESTMENTS IN ORDER OF VALUATION
at 31 JANUARY 2017
Ordinary shares unless stated
otherwise
|
|
MARKET |
|
|
|
VALUE |
% OF |
ISSUER |
SECTOR |
£’000 |
PORTFOLIO |
JD Sports Fashion |
General Retailers |
7,257 |
3.1 |
CVSAIM |
General Retailers |
7,071 |
3.0 |
Dechra Pharmaceuticals |
Pharmaceuticals &
Biotechnology |
6,102 |
2.6 |
Sanne |
Support Services |
5,574 |
2.4 |
Johnson Service AIM |
Support Services |
5,468 |
2.3 |
boohoo.com AIM |
General Retailers |
5,087 |
2.2 |
FDM |
Software & Computer
Services |
5,066 |
2.2 |
Coats |
General Industrials |
4,934 |
2.1 |
Clinigen AIM |
Pharmaceuticals &
Biotechnology |
4,900 |
2.1 |
RPC |
General Industrials |
4,841 |
2.1 |
Top Ten Holdings |
|
56,300 |
24.1 |
Keywords Studios AIM |
Support Services |
4,722 |
2.0 |
4imprint |
Media |
4,701 |
2.0 |
Safestore |
Real Estate Investment Trusts |
4,453 |
1.9 |
Consort Medical |
Health Care Equipment &
Services |
4,409 |
1.9 |
Victrex |
Chemicals |
4,335 |
1.8 |
EMIS AIM |
Software & Computer
Services |
4,286 |
1.8 |
Equiniti |
Support Services |
3,928 |
1.6 |
Ultra Electronics |
Aerospace & Defence |
3,804 |
1.6 |
RWS AIM |
Support Services |
3,774 |
1.6 |
Northgate |
Support Services |
3,764 |
1.6 |
Top Twenty Holdings |
|
98,476 |
41.9 |
Faroe Petroleum AIM |
Oil & Gas Producers |
3,691 |
1.6 |
Euromoney Institutional
Investor |
Media |
3,672 |
1.6 |
JD Wetherspoon |
Travel & Leisure |
3,558 |
1.5 |
Gamma Communications
AIM |
Mobile Telecommunications |
3,493 |
1.5 |
Diploma |
Support Services |
3,485 |
1.5 |
Vectura |
Pharmaceuticals &
Biotechnology |
3,466 |
1.5 |
Hill & Smith |
Industrial Engineering |
3,455 |
1.5 |
Severfield |
Industrial Engineering |
3,445 |
1.5 |
Ithaca Energy AIM |
Oil & Gas Producers |
3,330 |
1.4 |
Savills |
Real Estate Investment &
Services |
3,311 |
1.4 |
Top Thirty Holdings |
|
133,382 |
56.9 |
Mears |
Support Services |
3,248 |
1.4 |
Rathbone Brothers |
Financial Services |
3,156 |
1.3 |
SDL |
Software & Computer
Services |
3,119 |
1.3 |
ECO Animal Health
AIM |
Pharmaceuticals &
Biotechnology |
3,031 |
1.3 |
Hilton Food |
Food Producers |
3,001 |
1.3 |
Servelec |
Software & Computer
Services |
2,986 |
1.3 |
Staffline AIM |
Support Services |
2,983 |
1.3 |
Essentra |
Support Services |
2,981 |
1.3 |
Tarsus |
Media |
2,969 |
1.3 |
Amerisur Resources
AIM |
Oil & Gas Producers |
2,880 |
1.2 |
Top Forty Holdings |
|
163,736 |
69.9 |
VP |
Support Services |
2,819 |
1.2 |
St. Modwen Properties |
Real Estate Investment &
Services |
2,705 |
1.1 |
Marston’s |
Travel & Leisure |
2,672 |
1.1 |
Polypipe |
Construction & Materials |
2,632 |
1.1 |
M&C Saatchi AIM |
Media |
2,606 |
1.1 |
Bovis Homes |
Household Goods & Home
Construction |
2,599 |
1.1 |
Fisher (James) & Sons |
Industrial Transportation |
2,576 |
1.1 |
Dairy Crest |
Food Producers |
2,573 |
1.1 |
Advanced Medical Solutions
AIM |
Health Care Equipment &
Services |
2,568 |
1.1 |
Arrow Global |
Financial Services |
2,553 |
1.1 |
Top Fifty Holdings |
|
190,039 |
81.0 |
Softcat |
Software & Computer
Services |
2,545 |
1.1 |
Brooks Macdonald AIM |
Financial Services |
2,452 |
1.0 |
Secure Trust Bank |
Banks |
2,412 |
1.0 |
Workspace |
Real Estate Investment Trusts |
2,408 |
1.0 |
Sthree |
Support Services |
2,216 |
0.9 |
Aveva |
Software & Computer
Services |
2,130 |
0.9 |
Restore AIM |
Support Services |
2,116 |
0.9 |
Brammer |
Support Services |
1,973 |
0.8 |
Majestic Wine AIM |
General Retailers |
1,930 |
0.8 |
Ricardo |
Support Services |
1,925 |
0.8 |
Top Sixty Holdings |
|
212,146 |
90.2 |
Topps Tiles |
General Retailers |
1,900 |
0.8 |
CLS |
Real Estate Investment &
Services |
1,867 |
0.8 |
Microgen |
Software & Computer
Services |
1,828 |
0.8 |
Crest Nicholson |
Household Goods & Home
Construction |
1,746 |
0.7 |
Cape |
Oil Equipment, Services &
Distribution |
1,704 |
0.7 |
Patisserie Holdings
AIM |
Travel & Leisure |
1,596 |
0.7 |
Ebiquity AIM |
Media |
1,565 |
0.7 |
E2V Technologies |
Electronic & Electrical
Equipment |
1,340 |
0.6 |
Revolution Bars |
Travel & Leisure |
1,335 |
0.6 |
Carpetright |
General Retailers |
1,301 |
0.6 |
Top Seventy Holdings |
|
228,328 |
97.2 |
Kainos |
Software & Computer
Services |
1,172 |
0.5 |
Luceco |
Electronic & Electrical
Equipment |
1,095 |
0.4 |
Digital Barriers AIM |
Support Services |
967 |
0.4 |
Young & Co’s Brewery –
Non-Voting AIM |
Travel & Leisure |
893 |
0.4 |
Urban & Civic |
Real Estate Investment &
Services |
820 |
0.3 |
Origin Enterprises |
Food Producers |
705 |
0.3 |
Earthport AIM |
Software & Computer
Services |
533 |
0.2 |
Tracsis AIM |
Software & Computer
Services |
481 |
0.2 |
Avon Rubber |
Aerospace & Defence |
322 |
0.1 |
Total Investments (79) |
|
235,316 |
100.0 |
AIM: Investments quoted on AIM
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
in respect of the preparation of the Annual Financial Report
The Directors are responsible for preparing the annual financial
report in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under the law the Directors
have elected to prepare financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. Under company law, the Directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that
period.
In preparing these financial statements, the Directors are
required to:
• select
suitable accounting policies and then apply them consistently;
• make
judgements and estimates that are reasonable and prudent;
• state whether
applicable IFRSs have been followed, subject to any material
departures disclosed and explained in the financial statements;
and
• prepare the
financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in
business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing the Strategic Report, a Corporate
Governance Statement, a Directors’ Remuneration Report and a
Directors’ Report that comply with the law and regulations.
The Directors of the Company each confirm to the best of their
knowledge, that:
• the financial
statements, prepared in accordance with applicable accounting
standards, give a true and fair view of the assets, liabilities,
financial position and profit of the Company; and
• this annual
financial report includes a fair review of the development and
performance of the business and the position of the Company
together with a description of the principal risks and
uncertainties that it faces.
The Directors consider that this annual financial report, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
Signed on behalf of the Board of Directors
Ian Barby
Chairman
26 April 2017
STATEMENT of comprehensive income
FOR THE YEAR ENDED 31 JANUARY
|
|
2017 |
2016 |
|
|
REVENUE |
CAPITAL |
TOTAL |
REVENUE |
CAPITAL |
TOTAL |
|
NOTES |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Profits on investments held at fair
value |
|
— |
39,171 |
39,171 |
— |
19,288 |
19,288 |
Exchange differences |
|
— |
3 |
3 |
— |
45 |
45 |
Income |
2 |
4,523 |
691 |
5,214 |
5,331 |
28 |
5,359 |
Investment management fee |
3 |
(213) |
(1,206) |
(1,419) |
(207) |
(1,175) |
(1,382) |
Performance fee |
3 |
— |
(969) |
(969) |
— |
(2,131) |
(2,131) |
Other expenses |
|
(385) |
(1) |
(386) |
(344) |
(4) |
(348) |
Profit before finance costs and
taxation |
|
3,925 |
37,689 |
41,614 |
4,780 |
16,051 |
20,831 |
Finance costs |
|
(1) |
(3) |
(4) |
(1) |
(5) |
(6) |
Profit before taxation |
|
3,924 |
37,686 |
41,610 |
4,779 |
16,046 |
20,825 |
Taxation |
|
— |
— |
— |
— |
— |
— |
Profit after taxation |
|
3,924 |
37,686 |
41,610 |
4,779 |
16,046 |
20,825 |
Return per ordinary
share |
|
|
|
|
|
|
|
Basic |
4 |
7.37p |
70.83p |
78.20p |
8.98p |
30.16p |
39.14p |
The total column of this statement represents the Company’s
Statement of Comprehensive Income, prepared in accordance with
International Financial Reporting Standards. The profit after tax
is the total comprehensive income for the year. 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 and the Company has no other gains or losses.
No operations were acquired or discontinued in the year.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JANUARY
|
|
|
|
Capital |
|
|
|
|
|
Share |
SHARE |
redemption |
CAPITAL |
REVENUE |
|
|
|
Capital |
PREMIUM |
RESERVE |
RESERVE |
RESERVE |
TOTAL |
|
NOTES |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
At 31 January 2015 |
|
10,642 |
21,244 |
3,386 |
155,767 |
5,875 |
196,914 |
Profit for the year |
|
— |
— |
— |
16,046 |
4,779 |
20,825 |
Dividends paid |
5 |
— |
— |
— |
(589) |
(9,493) |
(10,082) |
At 31 January 2016 |
|
10,642 |
21,244 |
3,386 |
171,224 |
1,161 |
207,657 |
Profit for the year |
|
— |
— |
— |
37,686 |
3,924 |
41,610 |
Dividends paid |
5 |
— |
— |
— |
(2,831) |
(4,833) |
(7,664) |
At 31 January 2017 |
|
10,642 |
21,244 |
3,386 |
206,079 |
252 |
241,603 |
The accompanying notes are an
integral part of these financial statements.
BALANCE SHEET
FOR THE YEAR ENDED 31 JANUARY
|
|
2017 |
2016 |
|
NOTES |
£’000 |
£’000 |
Non-current assets |
|
|
|
Investments held at fair
value through profit or loss |
|
235,316 |
199,237 |
Current assets |
|
|
|
Other receivables |
|
253 |
845 |
Cash and cash
equivalents |
|
7,408 |
10,186 |
|
|
7,661 |
11,031 |
Total assets |
|
242,977 |
210,268 |
Current liabilities |
|
|
|
Other payables |
|
(1,374) |
(2,503) |
Total assets less current
liabilities |
|
241,603 |
207,765 |
Non-current liabilities |
|
— |
(108) |
Net assets |
|
241,603 |
207,657 |
Issued capital and
reserves |
|
|
|
Share capital |
6 |
10,642 |
10,642 |
Share premium |
|
21,244 |
21,244 |
Capital redemption reserve |
|
3,386 |
3,386 |
Capital reserve |
|
206,079 |
171,224 |
Revenue reserve |
|
252 |
1,161 |
Total shareholders’
funds |
|
241,603 |
207,657 |
Net asset value per ordinary
share |
|
|
|
Basic |
7 |
454.1p |
390.3p |
These financial statements were approved and authorised for
issue by the Board of Directors on 26 April
2017.
Signed on behalf of the Board of
Directors
Ian Barby
Chairman
Richard Brooman
Deputy Chairman
The accompanying notes are an
integral part of these financial statements.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 january
|
2017 |
2016 |
|
£’000 |
£’000 |
Cash flow from operating
activities |
|
|
Profit before tax |
41,610 |
20,825 |
Adjustments for: |
|
|
Purchases of
investments |
|
(46,937)
50,323 |
|
(67,678)
77,779 |
Sales of
investments |
|
3,386 |
10,101 |
Profits on
investments |
(39,171) |
(19,288) |
Exchange
differences |
(3) |
(45) |
Finance costs |
4 |
6 |
Operating cash flows before
movements in working capital |
5,826 |
11,599 |
Decrease/(increase) in
receivables |
74 |
(73) |
(Decrease)/increase in payables |
(1,013) |
705 |
Net cash flows from operating
activities after tax |
4,887 |
12,231 |
Cash flows from financing
activities |
|
|
Finance costs paid |
(4) |
(6) |
Equity dividends paid – note 5 |
(7,664) |
(10,082) |
Net cash used in financing
activities |
(7,668) |
(10,088) |
Net (decrease)/increase in cash and
cash equivalents |
(2,781) |
2,143 |
Exchange differences |
3 |
45 |
Cash and cash equivalents at the
beginning of the year |
10,186 |
7,998 |
Cash and cash equivalents at the
end of the year |
7,408 |
10,186 |
|
|
|
Reconciliation of cash and cash
equivalents to the |
|
|
Balance Sheet as
follows: |
|
|
Cash held at custodian |
1,508 |
186 |
Short-Term Investment Company
(Global Series) plc, money market fund |
5,900 |
10,000 |
Cash and cash
equivalents |
7,408 |
10,186 |
|
|
|
Cash flow from operating
activities includes: |
|
|
Dividends received |
5,289 |
5,288 |
Interest received |
— |
1 |
The accompanying notes are an
integral part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1.
Principal Accounting Policies
Accounting policies describe the
Company’s approach to recognising and measuring transactions during
the year and the position of the Company at the year end.
The principal accounting policies adopted in the preparation of
these financial statements are set out below. These policies have
been consistently applied during the current year and the preceding
year, unless otherwise stated. The financial statements have been
prepared on a going concern basis. The disclosure on going concern
on pages 27 and 28 in the Directors’ Report in the annual financial
report forms part of the financial statements.
(a) Basis of
Preparation
(i) Accounting Standards
Applied
The financial statements have been prepared on an historical
cost basis, except for the measurement at fair value of investments
and derivatives, and in accordance with the applicable
International Financial Reporting Standards (IFRS) and
interpretations issued by the International Financial Reporting
Interpretations Committee as adopted by the European Union. The
standards are those endorsed by the European Union and effective as
at the date the financial statements were approved by the
Board.
Where presentational guidance set out in the Statement of
Recommended Practice (SORP) ‘Financial Statements of Investment
Trust Companies and Venture Capital Trusts’, issued by the
Association of Investment Companies in November 2014, as amended in January 2017, is consistent with the requirements
of IFRS, the Directors have sought to prepare the financial
statements on a basis compliant with the recommendations of the
SORP. The supplementary information which analyses the statement of
comprehensive income between items of a revenue and a capital
nature is presented in accordance with this.
(ii) Adoption of New and Revised
Standards
New and revised standards and interpretations that became
effective during the year had no significant impact on the amounts
reported in these financial statements but may impact accounting
for future transactions and arrangements.
At the date of authorising these financial statements, the
following standards and interpretations, which have not been
applied in these financial statements, were in issue but not yet
effective (and in some cases had not yet been adopted by the
EU).
• IFRS 9:
Financial Instruments (2014) (effective 1
January 2018).
• Amendments to
IAS 7: Disclosure initiative – Statement of Cash Flows (effective
1 January 2017).
The Directors do not expect the adoption of the above standards
and interpretations (or any other standards and interpretations
which are in issue but not effective) will have a material impact
on the financial statements of the Company in future periods.
2. Income
This note shows the income generated
from the portfolio (investment assets) of the Company and income
received from any other source.
|
2017 |
2016 |
|
£’000 |
£’000 |
Income from listed
investments |
|
|
UK dividends |
3,754 |
4,043 |
UK unfranked investment income |
180 |
249 |
Scrip dividends |
— |
244 |
Overseas dividends |
397 |
302 |
Special dividends |
192 |
492 |
|
4,523 |
5,330 |
Other income |
|
|
Deposit interest |
— |
1 |
Total income |
4,523 |
5,331 |
Special dividends of £691,000 have been recognised in capital
(2016: £28,000).
Overseas dividends include dividends received on UK listed
investments where the investee company is domiciled outside of the
UK.
3.
Investment Management Fees
This note shows the fees due to the
Manager. These are made up of the management fee calculated and
paid monthly and a performance fee calculated and paid annually.
Both are based on the value of the assets being managed.
|
2017 |
2016 |
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
Base management fee |
213 |
1,206 |
1,419 |
207 |
1,175 |
1,382 |
Performance fee charged to
capital |
— |
969 |
969 |
— |
2,131 |
2,131 |
|
213 |
2,175 |
2,388 |
207 |
3,306 |
3,513 |
Details of the Investment Management Agreement can be found in
the Directors’ Report.
At 31 January 2017, £131,000
(2016: £113,000) was accrued in respect of the base management fee
and £1,077,000 (2016: £2,023,000) was accrued for the performance
fee. The performance fee payable in any year is capped at 1% of
average funds under management, with any excess (subject to a total
performance fee cap of 2%) carried forward. The excess brought
forward and provided for last year of £108,000 became payable this
year.
4. Returns per Ordinary
Share
Return per share is the amount of gain
generated for the financial year divided by the weighted average
number of ordinary shares in issue.
|
2017 |
2016 |
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
Basic |
7.37p |
70.83p |
78.20p |
8.98p |
30.16p |
39.14p |
Basic total returns per ordinary share is based on the net total
profit for the financial year of £41,610,000 (2016:
£20,825,000).
Basic revenue returns per ordinary share is based on the net
revenue profit for the financial year of £3,924,000 (2016:
£4,779,000).
Basic capital returns per ordinary share is based on the net
capital profit for the financial year of £37,686,000 (2016:
£16,046,000).
All three returns are based on the weighted average number of
shares in issue during the year of 53,209,084 (2016:
53,209,084).
5.
Dividends on Ordinary Shares
The Company paid four dividends in the
year – three interims and a final.
The final dividend shown below is based on shares in issue at
the record date or, if the record date has not been reached, on
shares in issue on the date the balance sheet is signed. The third
interim and final dividends are paid after the balance sheet
date.
|
2017 |
2016 |
|
pence |
£’000 |
pence |
£’000 |
Dividends paid from revenue in the
year: |
|
|
|
|
Third interim (prior
year) |
2.18 |
1,160 |
— |
— |
Final (prior year) |
— |
— |
11.04 |
5,875 |
First interim |
3.45 |
1,836 |
3.40 |
1,809 |
Second interim |
3.45 |
1,836 |
3.40 |
1,809 |
Payment of unclaimed
dividends from previous years |
— |
1 |
— |
— |
Total dividends paid from
revenue |
9.08 |
4,833 |
17.84 |
9,493 |
Dividends paid from capital in the
year: |
|
|
|
|
Third interim (prior
year) |
1.22 |
649 |
— |
— |
Final (prior year) |
4.10 |
2,182 |
1.11 |
589 |
Total dividends paid from
capital |
5.32 |
2,831 |
1.11 |
589 |
Total dividends paid in the
year |
14.40 |
7,664 |
18.95 |
10,082 |
|
2017 |
2016 |
|
pence |
£’000 |
pence |
£’000 |
Dividends payable in respect of the
year: |
|
|
|
|
First interim |
3.45 |
1,836 |
3.40 |
1,809 |
Second interim |
3.45 |
1,836 |
3.40 |
1,809 |
Third interim |
3.45 |
1,836 |
3.40 |
1,809 |
Final |
6.75 |
3,591 |
4.10 |
2,182 |
|
17.10 |
9,099 |
14.30 |
7,609 |
The Company’s dividend policy was changed in 2015 so that
dividends will be paid firstly from any revenue reserves available,
and thereafter from capital reserves. The amount payable in respect
of the year is shown below:
|
2017 |
2016 |
|
pence |
£’000 |
pence |
£’000 |
Dividend payable in respect of the
year: |
|
|
|
|
– from revenue
reserves |
7.37 |
3,924 |
8.98 |
4,778 |
– from capital
reserves |
9.73 |
5,175 |
5.32 |
2,831 |
|
17.10 |
9,099 |
14.30 |
7,609 |
6.
Share Capital
Share capital represents the total
number of shares in issue, on which dividends accrue.
|
2017 |
2016 |
|
NUMBER |
£’000 |
NUMBER |
£’000 |
Allotted, called-up and fully
paid |
|
|
|
|
Ordinary shares of 20p each |
53,209,084 |
10,642 |
53,209,084 |
10,642 |
During the year, the Company did not issue or repurchase any
ordinary shares (2016: nil).
7.
Net Asset Value per Ordinary Share
The Company’s total net assets (total
assets less total liabilities) are often termed shareholders’ funds
and are converted into net asset value per ordinary share by
dividing by the number of shares in issue.
The net asset value per share and the net asset values
attributable at the year end were as follows:
|
net asset value
per share |
net assets
attributable |
|
|
2017 |
2016 |
2017 |
2016 |
|
PENCE |
PENCE |
£’000 |
£’000 |
Ordinary shares |
|
|
|
|
– Basic |
454.1 |
390.3 |
241,603 |
207,657 |
Net asset value per ordinary share is based on net assets at the
year end and on 53,209,084 (2016: 53,209,084) ordinary shares,
being the number of ordinary shares in issue at the year end.
8.
Related Party Transactions and Transactions with Manager
A related party is a company or
individual who has direct or indirect control or who has
significant influence over the Company. Under accounting standards,
the Manager is not a related party.
Under International Financial Reporting Standards, the Company
has identified the Directors as related parties. The Directors’
remuneration and interests have been disclosed on page 33 with
additional disclosure in note 4 in the annual financial report. No
other related parties have been identified.
Details of the Manager’s services and fees are disclosed in the
Directors' Report on page 28 and in note 3 in the annual financial
report.
This Annual Financial Report announcement is not the Company's
statutory accounts. The statutory accounts for the year ended
31 January 2016 have been delivered
to the Registrar of Companies. The statutory accounts for the year
ended 31 January 2016 received an
audit report which was unqualified, did not include a reference to
any matters to which the auditors drew attention by way of emphasis
without qualifying the report, and did not include a statement
under either section 498(2) or 498(3) of the Companies Act 2006.
The statutory accounts for the financial year ended 31 January 2017 have been approved and audited
but have not yet been filed.
The Audited Annual Financial Report will be posted to
shareholders shortly. Copies may be obtained during normal business
hours from the offices of Invesco Perpetual, 6th Floor,
125 London Wall, London, EC2Y
5AS.
A copy of the Annual Financial Report will be available from
Invesco Perpetual on the following website:
www.invescoperpetual.co.uk/ipukscit
The Annual General Meeting (AGM) of the Company will be held at
12.00 noon on 8 June 2017 at 43-45
Portman Square, London, W1H
6LY. A General Meeting will immediate follow the AGM.
By order of the Board
Invesco Asset Management Limited
Company Secretary
26 April 2017