LEGAL
ENTITY IDENTIFIER: 549300K1D1P23R8U4U50
Invesco Perpetual UK Smaller Companies Investment Trust
plc
Half-Yearly Financial Report for the Six Months to
31 July 2023
The
following text is extracted from the Half-Yearly Financial Report
for the Six Months to 31 July 2023.
All page numbers below refer to the Half-Yearly Financial Report
which will be made available on the Company's
website.
Investment Objective
The
Company is an investment trust whose investment objective is to
achieve long-term total returns for shareholders primarily by
investment in a broad cross-section of small to medium sized UK
quoted companies.
Financial
Information and Performance Statistics
Total Return Statistics (with dividends
reinvested)
|
Six Months to 31 July
2023
|
Year Ended
31 January
2023
|
|
Net asset value(1)(2)
|
-6.9%
|
-17.5%
|
|
Share price(1)(2)
|
-5.4%
|
-17.0%
|
|
Benchmark Index
(2)(3)
|
-4.2%
|
-12.4%
|
|
Capital Statistics
|
At
|
At
|
|
|
31
July
|
31
January
|
|
Period
End Date
|
2023
|
2023
|
Change
|
Total
shareholders’ funds (£’000)
|
159,378
|
174,915
|
–8.9%
|
|
|
|
|
Net asset
value per share (‘NAV’)
|
471.16p
|
517.09p
|
–8.9%
|
Share
price(2)
|
416.50p
|
451.00p
|
–7.6%
|
Discount(1)
|
(11.6)%
|
(12.8)%
|
|
|
|
|
|
Gearing(1):
|
|
|
|
– gross
gearing
|
nil
|
nil
|
|
– net
cash
|
0.4%
|
2.9%
|
|
Maximum
authorised gearing
|
9.4%
|
8.6%
|
|
|
|
|
|
|
Six
months
ended
31
July
2023
|
Six
months
ended
31
July
2022
|
|
|
|
|
|
|
|
Return
and dividend per ordinary share
|
|
Return(1)
|
|
|
|
–
revenue
|
8.17p
|
6.74p
|
|
–
capital
|
(43.56)p
|
(80.21)p
|
|
-
Total
|
(35.39)p
|
(73.47)p
|
|
First
interim dividend
|
3.85p
|
3.75p
|
|
Notes:
(1) Alternative
Performance Measures (‘APM’). See pages 16 and 17 for the
explanation and calculation of APMs. Further details are provided
in the Glossary of Terms and Alternative Performance Measures in
the Company’s 2023 Annual Financial Report.
(2) Source:
Refinitiv.
(3) The
Benchmark Index of the Company is the Numis Smaller Companies + AIM
(excluding Investment Companies) Index with dividends
reinvested.
CHAIRMAN’S
STATEMENT
Highlights
-
Discount
to NAV has narrowed from 12.8% to 11.6% during the
period
-
Discount
has further narrowed to 8.9% as at 9 October
2023
-
First
interim dividend increased to 3.85p (2022: 3.75p), maintaining the
target dividend yield of 4%
-
Revenue
per ordinary share up to 8.17p (2022: 6.74p) during the
period
Dear
Shareholders,
I am
pleased to succeed Jane Lewis
as the Company’s new Chairman. Having served on the Board for nine
years, Jane retired at the conclusion of the AGM held in
June 2023. I would
like to take this opportunity to thank Jane for all her hard work
and service to the Company. Her vast knowledge and experience of
the investment trust industry proved invaluable to the Board over
that time. I would also like to welcome Simon Longfellow to the Board. As previously
announced, Simon was appointed as a Non-Executive Director of the
Company with effect from 1 July 2023
and has specialist experience of marketing investment trusts and
communicating effectively with Shareholders. The Board has now
settled back to its normal number of four Directors.
Performance
In common
with many companies investing in the smaller companies sector, it
has been a difficult six months. The increasing interest rate
environment has led to the highest rates the UK has experienced for
15 years which has proven challenging for markets in general and
smaller companies in particular. Fears about the cost of living
crisis and the UK dipping into recession have weighed heavily on
sentiment. There is hope that interest rates might have peaked and
that the UK may avoid recession, though growth is still
weak.
Your
Company’s net asset value (‘NAV’) return was -6.9% compared to
-4.2% for the benchmark index (in each case measured on a total
return basis).
The
Company’s share price fell from 451.00p to 416.50p during the six
months to 31 July 2023, a decrease of
7.6% (a 5.4% decrease on a total return basis), and the discount to
net asset value ended the period narrower at 11.6%, having been
12.8% as at 31 January
2023.
It is
particularly pleasing to report an increase in revenue per share
for the period to 8.17p (2022: 6.74p). This reflects the robust
dividend flow from the portfolio.
Since the
Company’s half-year end to 9 October
2023, the latest practical date before publication of this
interim report, the Company’s NAV total return is -9.1%, the share
price total return is -6.2%, whilst the benchmark index total
return is -8.7%. As at 9 October
2023, the discount has narrowed further to 8.9%.
Dividends
The
Company’s dividend policy is to target a dividend yield of 4% of
the year end share price paid from income earned within the
portfolio and enhanced, as necessary, through the use of realised
capital profits.
In
accordance with this policy, on 20 July
2023 the Board declared a first interim dividend of 3.85p
for the year ending 31 January 2024,
which was paid on 1 September 2023 to
shareholders on the register on 4 August
2023 (2022: 3.75p). The expected timetable for the remaining
dividend payments is as follows: the second and third interim
dividends are payable in December
2023 and March 2024
respectively, with the final dividend payable in June 2024, following its approval by shareholders
at the Company’s Annual General Meeting.
Shareholders
who hold shares on the main register and are residents of the UK,
Channel Islands and Isle of Man, have the opportunity to reinvest
their dividend via the Dividend Reinvestment Plan (‘DRIP’).
Shareholders will need to submit an election by the 17 November 2023. Further information can be
found in the leaflet included with this report and on the Company’s
webpage: www.invesco.co.uk/ipukscit.
Outlook
It is
hoped that interest rates and inflation have now peaked; while it
is too early to declare new shoots of growth, there are some
positive indicators such as the easing of wage
inflation.
The worst
may now be behind us and there is certainly a widespread belief
that UK equities are good value. Our portfolio managers comment
more about this in relation to UK smaller
companies in their report.
Bridget Guerin
Chairman
10 October 2023
PORTFOLIO MANAGERS’ REPORT
Q What were the key influences on the market over the
period?
A Inflation
and the central banks response to inflation were the dominant
features of the period under review. The Bank of England raised rates significantly, from 3.5%
to 5.25%, with the hope that the increased cost of borrowing would
reduce demand and moderate price increases. Although inflation has
begun to moderate, it typically takes around a year for higher
rates to take effect, suggesting this has so far been a minor
factor. In fact, many economists calculate that the increased
income from consumer savings currently outweighs the negative
impact from higher mortgage rates. More importantly, many of the
factors that drove inflation to multi-decade highs, such as energy
prices, and the supply chain disruption that we saw after the
pandemic, have finally begun to normalise.
Another
notable feature of the half year was a bout of Artificial
Intelligence (‘AI’) exuberance.
This was prompted by the launch of the latest version of AI
software ChatGPT. Whilst various forms of machine learning have
been in use for the last decade, ChatGPT captured the imagination
of investors due to its ability to produce written output with a
realistic human like quality. The software analyses vast amounts of
written online content and uses the information to predict the
order in which to place words to create coherent text. Whilst it is
a very useful tool, its lack of any actual intelligence makes it
prone to regurgitating false information in a highly convincing
way. As with all popular stock market trends, investment banks
created various instruments (“baskets” of stocks) to allow
investors to play this theme. This negatively impacted the shares
of a number of companies, which rightly or wrongly, were deemed to
be potential victims of this new technology. Whilst we see AI as an
important tool for driving productivity, we were surprised by the
market volatility created by this phenomenon.
The
much-heralded UK recession is yet to materialise. Although the
level of growth in the UK economy is anaemic, we continue to
benefit from full employment and a higher level of consumer savings
than we have seen for some time. So contrary to the endless news
headlines about the “cost of living crisis”, the consumer
discretionary sector was by far the strongest performing area
within the UK smaller companies sector, with leisure stocks
performing particularly well.
Q How did the portfolio perform over the
period?
A The Net
Asset Value total return for the portfolio over the period was
-6.9%, which was an underperformance versus the benchmark index,
the Numis Smaller Companies + AIM (excluding Investment Companies),
which returned -4.2% on the same basis. The share price total
return was -5.4%, reflecting the narrowing of the discount from
12.8% at last financial year end to 11.6% at the end of this
period.
Q Which stocks contributed to and detracted from
performance?
A The best
performing stocks over the period included: Infrastructure products
business, Hill
& Smith (+27%),
which is benefitting from increased spending on infrastructure,
particularly in the US, where the company generates most of its
profits. Gresham
House (+42%), is
a fund management business focused on ethical investing. The
company received a takeover approach at a significant premium to
its share price. Pubs businesses, Young
& Co’s Brewery (+32%)
and Mitchells
& Butlers (+40%),
both recovered significantly after a period of underperformance.
The shares had suffered due to high energy prices and wage
inflation substantially reducing profits. However, consumer
spending has remained far more resilient than many had expected,
and with energy prices
now moderating, the stocks have
recovered much of the lost ground.
Software and services company, FD Technologies
(+31%),
had a good period after it announced strong sales figures for its
innovative data software. Historically it was mostly used within
the financial sector, but the company is now gaining new customers
across a variety of verticals, which has substantially increased
the addressable market for its product.
In a
difficult period for markets, inevitably there were some poorly
performing holdings: Oil and Gas company, Jadestone
Energy
(–73%),
suffered from reduced production due to some maintenance issues at
its main oil field. The profit shortfall meant the business had to
issue shares at a discount to bolster its cash position. Whilst the
stock appears good value it has been blighted by a number of
missteps, so we are currently reviewing the holding.
Keywords
Studios (–38%),
which provides outsourced services to the computer games industry,
was caught up in the bout of AI exuberance
which gripped the market following the release of the latest
version of ChatGPT. Some commentators believe that its revenue
could be negatively impacted by generative AI. However, the company
already uses AI as a productivity tool in a number of areas of its
business, so we believe the fears are misplaced. We think it is an
excellent business and used the share price weakness to add to the
holding. Software and services business, Learning
Technologies (–46%),
was also impacted by short selling due to fears about the impact of
AI. Again, we do not believe the business will be significantly
affected. However, lower business confidence in the US did lead to
a reduction in earnings estimates toward the end of the period.
Whilst this is disappointing, we believe the company still has
substantial growth potential and we have retained our
holding. Videndum
(–40%),
which manufactures products used in the TV, film and photographic
industries has seen its earnings expectations eroded due to the
strikes called by script writers and actors in the US. The strikes
will ultimately be resolved, and profits will recover, so we have
retained our holding.
Q What is the current portfolio
strategy?
A Our
investment philosophy remains unchanged. The current portfolio is
comprised of around 70 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 from 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 the position of a
business 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”, which is particularly important in the current
inflationary environment. It is also important to determine which
businesses possess unique capabilities, in the form of intellectual
property, specialist know-how or a scale advantage in their chosen
market. We conduct around 300 company meetings and site visits a
year, and these areas are a particular focus for us on such
occasions.
The
current uncertainty over the timing and pace of economic recovery
has led us to manage the portfolio using a “barbell” strategy.
Around half the portfolio is invested in businesses with more
defensive characteristics. These companies either benefit from long
term contracts or are exposed to more stable, less economically
sensitive end markets. These characteristics provide a greater
degree of resilience and earnings visibility in the current
environment. However, it should be noted that this sort of
certainty comes at a price, with these stocks typically trading at
a valuation premium to the market. The other half of the portfolio
is invested in more cyclical, economically sensitive stocks. In
some cases, these businesses are experiencing more difficult
trading, however, we believe they can still be attractive
investments where this is reflected in the valuation. When economic
conditions improve it is possible to make strong returns from these
stocks, as both earnings and the multiple investors willing to pay
for those earnings, start to recover.
Q What are the major holdings in the
portfolio?
A The 5
largest holdings in the portfolio at the end of the period
were:
• 4imprint
(4.4% of
the portfolio) sells promotional materials such as pens, bags and
clothing which are printed with company logos. The business gathers
orders through online and catalogue marketing, which are then
routed to their suppliers who print and dispatch the products to
customers. As a result of outsourcing manufacture, the business has
a relatively low capital requirement and can focus on marketing and
customer service. Continual reinvestment of revenue into marketing
campaigns has enabled the business to generate an enviable long
term growth record whilst maintaining margins.
• JTC
(3.3% of
the portfolio) is a financial administration business providing
services to real estate and private equity funds, multinational
companies, and high net worth individuals. The business has a
strong culture, a reputation for quality and has augmented its
organic growth with acquisitions. Margins and returns on capital
are strong and the business benefits from long term contracts,
giving it excellent earnings visibility.
• Hill
& Smith (3.2% of
the portfolio) is a supplier of products and services into the
infrastructure sectors in the UK and US. Its proprietary steel and
composite products are used in the rail, roads, water, and energy
sectors. The business also provides galvanizing services to protect
steel structures, and leases temporary road barriers and security
products. The company generates good margins and benefits from
exposure to growing infrastructure investment, particularly in the
US.
• CVS
(3.1% of
the portfolio) is a leading veterinary services business, which
owns over 500 vet surgeries and specialist centres, predominantly
in the UK. The scale of the business gives it purchasing power,
allowing it to generate a higher margin than individual surgeries.
The business has been a leading consolidator of the UK market and
have recently entered continental Europe and Australia. The company is relatively immune to
the economic cycle, and with ever more being spent on the wellbeing
of the nation’s pets, it can continue to grow for many years to
come.
The recent
announcement of a Competition and Markets Authority consultation on
the sector has negatively impacted its share price. However, there
are already restrictions on the number of vets any business can
have in a given area in order to ensure a competitive market, and
we do not believe the business is generating excessive profits.
Whilst prices for veterinary services have risen over the last few
years, the increases have only been in-line with wage inflation in
the sector.
• Advanced
Medical Solutions (2.7% of
the portfolio) produces a range of proprietary wound care and wound
closure products such as sutures, medical adhesives, antimicrobial
dressings and surgical devices. The company should benefit from the
backlog of medical procedures following the pandemic and has an
exciting pipeline of innovative products which should drive longer
term growth.
Q What were the new holdings added over the
period?
A New stocks
that we added to the portfolio in the period include:
• Tatton
Asset Management (‘Tatton’) creates
model portfolios which it sells via independent financial advisors
(‘IFAs’) in the UK. The outsourcing of investment decisions by IFAs
to businesses such as Tatton has increased significantly over the
last decade due to an increasing burden of regulation on IFAs.
Tatton has a range of model portfolios, made up of both active and
passive funds, that correspond with a variety of risk categories
for clients. The service has one of the lowest fee structures in
the industry, a good long-term performance record and a strong
reputation within the IFA sector. The business is growing strongly,
and with a highly scalable business model, it achieves an enviable
level of profitability.
• Niox
is a
medical diagnostic business with technology that can more
accurately diagnose and monitor asthma. The company is the world
leader in fractional exhaled nitric oxide (‘FeNO’) testing, which
measures exhaled Nitric Oxide as a diagnostic marker for asthma.
FeNO testing is significantly more accurate than traditional
methods of testing. The product is approved by the National
Institute for Health and Care Excellence in the UK and is
reimbursable in all its major markets. We believe the business can
substantially grow its installed base of devices, and this should
drive a high level of recurring test kit revenue.
Q What is the Portfolio Managers’ approach to
gearing?
A Gearing
decisions are taken after reviewing a variety of metrics including
valuations, earnings momentum, market momentum, bond spreads and a
range of economic indicators. After analysing this data, we
concluded that the Company should not be geared at this point. We
will continue to monitor these factors and look to gear the Company
when the indicators turn more positive.
Q How does ESG factor in the investment
process?
A Environment,
Social and Governance (‘ESG’) issues are increasingly a focus for
many investors and analysis of these factors has always been a core
part of our investment process. Invesco has significant resources
focussed on ESG, both at a group and individual team level. Our
proprietary ESGintel system draws in company specific data from a
broad range of sources and enables ESG related metrics to be
quantified. This provides fund managers with a clear overview of
areas of concern, allowing targeted engagement with businesses to
bring about positive change.
Environmental
liabilities, socially dubious business practises and poor corporate
governance, can have a significant impact on share prices. We
assess environmental risks within a business, and analyse the steps
being taken to reduce its environmental impact. We like businesses
with strong cultures and engaged employees, and avoid businesses,
which, whilst acting within the law, run the risk of a public
backlash, or being constrained by new legislation.
We believe that governance, board structure and incentivisation,
are by far
the most important factors within ESG in
determining shareholder returns. The importance
of businesses being managed by good quality people, with
appropriate incentivisation should not be underestimated.
Therefore, we proactively consult with all the businesses we own on
these matters and vote against resolutions where standards fall
short of our expectations.
Q What is the dividend policy of the
Company?
A The
Company pays out all the income earned within the portfolio and
enhances it using a small amount of realised capital profits to
target a dividend yield of 4.0% based on the year end share price.
This provides shareholders with an attractive and consistent yield
whilst allowing us to target businesses that we believe will
deliver the best total return, without having to compromise on
quality to hit an income target.
Q What are your expectations for the year
ahead?
A The
current level of economic growth in the UK is lacklustre, and we
are just beginning to feel the lagged effects of the steep increase
in the Bank of England base rate,
so the prognosis for the coming year appears gloomy. However, we
are not currently in recession and the most recent data suggests
that wages are growing again in real terms for the first time in a
couple of years. We are also in the fortunate position of having
full employment and healthy consumer balance sheets (in aggregate)
which should feed through to confidence over time.
We are
hopeful that inflation should continue to
decline over coming months. The supply chain tightness that drove
the initial wave of inflation following the pandemic has largely
normalised, and energy prices have now significantly fallen year on
year. Conversations with companies suggest that it is now much
easier to find staff than it was a year ago and this is beginning
to feed through to wage settlements. So hopefully the worst of the
cost of living crisis is now behind us, and we are near the peak of
the current interest rate cycle.
The value
within the UK smaller companies market is very apparent to us.
Whether we compare current valuations to history, or to other
international markets, the sector looks anomalously cheap. Over
time this should attract increased interest from the investment
community, but in the meantime we have seen a surge in takeover
activity from both corporate and private equity buyers looking to
exploit the “knock-down” prices of UK equities. Whilst the economic
backdrop is underwhelming we continue to see opportunities to buy
undervalued shares in companies with excellent long term growth
potential. So, after a difficult couple of years, we are optimistic
of better returns over the coming year.
Jonathan Brown & Robin
West
Portfolio
Managers
10 October 2023
PRINCIPAL
RISKS AND UNCERTAINTIES
The
Directors confirm that they have carried out a robust assessment of
the emerging and principal risks facing the Company, including
those that would threaten its business model, future performance,
solvency or liquidity. Most of these risks are market related and
are similar to those of other investment trusts investing primarily
in listed markets. The Audit Committee reviews the Company’s risk
control summary at each meeting, and as part of this process, gives
consideration to identify emerging risks. Emerging risks, such as
evolving cyber threat, geo-political tension and climate related
risks, have been considered during the period as part of the
Directors’ assessment.
Principal
Risk Description
|
Mitigating
Procedures and Controls
|
Market
(Economic) Risk
|
|
Factors
such as fluctuations in stock markets, interest rates and exchange
rates are not under the control of the Board or the Portfolio
Managers, 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 the discount to its NAV. The risk
could be triggered by unfavourable developments globally and/or in
one or more regions, contemporary examples being the market
uncertainty in relation to ongoing invasion of Ukraine by
Russia.
|
The
Directors have assessed the market impact of the ongoing
uncertainty from the conflict in Ukraine and the resulting
sanctions imposed on Russia through regular discussions with the
Portfolio Managers and the Corporate Broker. The Company’s current
portfolio consists of companies listed on the main UK equity market
and those listed on AIM. The Company does not have direct
investments in Russia or hold stocks with significant links to
Russia. To a limited extent, futures can be used to mitigate
against market (economic) risk, as can the judicious holding of
cash or other very liquid assets. Futures are not currently being
used.
|
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 may 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.
Furthermore,
the risk of climate change and matters concerning ESG could affect
the valuation of companies held in the portfolio.
|
The
Portfolio Managers’ 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 Managers, cautiously, 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 Managers are relatively risk averse, look
for lower volatility in the portfolio and seek to outperform in
more challenging markets. The Portfolio Managers remain 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, giving due consideration
to how the Manager has incorporated ESG considerations including
climate change into their investment process. The Board also has
guidelines in place to ensure that the Portfolio Managers adhere 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.
|
The Board
reviews regularly the Company’s investment objective and strategy
to ensure that it remains relevant, as well as reviewing the
composition of the shareholder register, peer group performance on
both a share price and NAV basis, and the Company’s share price
discount to NAV per share. The Board and the Portfolio Managers
maintain an active dialogue with the aim of ensuring that the
market rating of the Company’s shares reflects the underlying NAV;
both share buy back and issuance facilities are in place to help
the management of this process.
|
Reliance
on the Manager and other Third-Party Service
Providers
|
|
The
Company has no employees and comprises non-executive directors
only. The Company is therefore reliant upon the performance of
third-party service providers for its executive function and
service provisions. The Company’s operational structure means that
all cyber risk (information and physical security) arises at its
third-party service providers, including fraud, sabotage or crime
against the Company. The Company’s operational capability relies
upon the ability of its third-party service providers to continue
working throughout the disruption caused by a major event such as
the Covid-19 pandemic. 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, of which the Manager is the principal
provider, are listed on page 18. 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. Damage to the reputation of the
Manager could potentially result in 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.
|
Third-party
service providers are subject to ongoing monitoring by the Manager
and the Board.
The
Manager reviews the performance of all third-party providers
regularly through formal and informal meetings.
The Audit
Committee reviews regularly the performance and internal controls
of the Manager and all third-party providers through audited
service organisation control reports, together with updates on
information security, the results of which are reported to the
Board.
The
Manager’s business continuity plans are reviewed on an ongoing
basis and the Directors are satisfied that the Manager has in place
robust plans and infrastructure to minimise the impact on its
operations so that the Company can continue to trade, meet
regulatory obligations, report and meet shareholder requirements.
The Board receives regular update reports from the Manager and
third-party service providers on business continuity processes and
has been provided with assurance from them all insofar as possible
that measures are in place for them to continue to provide
contracted services to the Company.
|
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 UK
AIFMD regime. A loss of investment trust status could lead to the
Company being subject to corporation tax on the chargeable capital
gains arising 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 regular 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 team produce annual reports
for review by 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 16 of
the Company’s 2023 Annual Financial Report.
|
In the
view of the Board, these principal risks and uncertainties are as
much applicable to the remaining six months of the financial year
as they were to the six months under review.
THIRTY
LARGEST INVESTMENTS
at 31 July
2023
Ordinary
shares unless stated otherwise
|
|
Market
Value
£’000
|
|
|
|
%
of
Portfolio
|
Company
|
Sector
|
4imprint
|
Media
|
6,967
|
4.4
|
JTC
|
Investment
Banking and Brokerage Services
|
5,206
|
3.3
|
Hill &
Smith
|
Industrial
Metals and Mining
|
5,072
|
3.2
|
CVSAIM
|
Consumer
Services
|
4,865
|
3.1
|
Advanced
Medical SolutionsAIM
|
Medical
Equipment and Services
|
4,240
|
2.7
|
Hollywood
Bowl
|
Travel and
Leisure
|
4,092
|
2.6
|
Chemring
|
Aerospace
and Defence
|
3,937
|
2.5
|
Energean
|
Oil, Gas
and Coal
|
3,869
|
2.4
|
Serco
|
Industrial
Support Services
|
3,642
|
2.3
|
Alfa
Financial Software
|
Software
and Computer Services
|
3,592
|
2.3
|
Top
Ten Holdings
|
|
45,482
|
28.8
|
Hilton
Food
|
Food
Producers
|
3,577
|
2.2
|
AJ
Bell
|
Investment
Banking and Brokerage Services
|
3,485
|
2.2
|
Brooks
MacdonaldAIM
|
Investment
Banking and Brokerage Services
|
3,456
|
2.2
|
Coats
|
General
Industrials
|
3,308
|
2.1
|
discoverIE
|
Electronic
and Electrical Equipment
|
3,031
|
1.9
|
Young
& Co's Brewery - Non-VotingAIM
|
Travel and
Leisure
|
2,945
|
1.8
|
Ricardo
|
Construction
and Materials
|
2,869
|
1.8
|
Gresham
HouseAIM
|
Closed End
Investments
|
2,789
|
1.8
|
Keywords
StudiosAIM
|
Leisure
Goods
|
2,735
|
1.7
|
Johnson
ServiceAIM
|
Industrial
Support Services
|
2,686
|
1.7
|
Top
Twenty Holdings
|
|
76,363
|
48.2
|
Essentra
|
Industrial
Support Services
|
2,677
|
1.7
|
Kainos
|
Software
and Computer Services
|
2,676
|
1.7
|
Volution
|
Construction
and Materials
|
2,612
|
1.6
|
Alpha
Financial Markets ConsultingAIM
|
Industrial
Support Services
|
2,524
|
1.6
|
Churchill
ChinaAIM
|
Household
Goods and Home Construction
|
2,448
|
1.5
|
Marshalls
|
Construction
and Materials
|
2,398
|
1.5
|
Aptitude
Software
|
Software
and Computer Services
|
2,343
|
1.5
|
RWSAIM
|
Industrial
Support Services
|
2,301
|
1.5
|
Auction
Technology
|
Software
and Computer Services
|
2,283
|
1.4
|
Genuit
|
Construction
and Materials
|
2,264
|
1.4
|
Top
Thirty Holdings
|
|
100,889
|
63.6
|
Other
Investments (40)
|
|
57,828
|
36.4
|
Total
Investments: 70
|
|
|
|
(31
January 2023: 70)
|
|
158,717
|
100.0
|
AIM Investments
quoted on AIM.
GOVERNANCE
Going
Concern
The
financial statements have been prepared on a going concern basis.
The portfolio of investments is comprised entirely of quoted
securities and the ongoing charges are around 1% of net assets. As
at 9 October 2023, the Company has
drawn down £3.4m of its bank overdraft borrowing facilities, with a
further £11.6m available for investment opportunities within
prescribed limits as set by the Board.
The
Directors consider this is the appropriate basis, as the Company
has adequate resources to continue in operational existence for the
foreseeable future, being taken as at least 12 months after signing
the balance sheet. In considering this, the Directors took into
account the diversified portfolio of readily realisable securities
which can be used to meet funding commitments, and the ability of
the Company to meet all of its liabilities, including any bank
overdraft, and ongoing expenses as they fall due.
Related
Party Transactions and Transactions with the
Manager
Note 20 of
the Company’s 2023 Annual Financial Report gives details of related
party transactions and transactions with the Manager. This report
is available on the Company’s section of the Manager’s website at
www.invesco.co.uk/ipukscit.
Directors’
Responsibility Statement in respect of the preparation of the
Half-Yearly Financial Report
The
Directors are responsible for preparing the Half-Yearly Financial
Report using accounting policies consistent with applicable law and
International Financial Reporting Standards.
The
Directors confirm that to the best of their knowledge:
– the
condensed set of financial statements contained within the
Half-Yearly Financial Report have been prepared in accordance with
the International Accounting Standards 34 ‘Interim Financial
Reporting’;
– the
interim management report includes a fair review of the information
required by 4.2.7R and 4.2.8R of the UKLA’s Disclosure Guidance and
Transparency Rules; and
– the
interim management report includes a fair review of the information
required on related party transactions.
The
Half-Yearly Financial Report has not been audited or reviewed by
the Company’s auditor.
Signed on
behalf of the Board of Directors.
Bridget Guerin
Chairman
10 October 2023
CONDENSED
STATEMENT OF COMPREHENSIVE INCOME
|
For
the six months ended
31
July 2023
|
For
the six months ended
31
July 2022
|
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
Notes
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
Loss on
investments held at fair value
|
|
—
|
(14,695)
|
(14,695)
|
—
|
(26,494)
|
(26,494)
|
Income
|
2
|
3,074
|
491
|
3,565
|
2,584
|
—
|
2,584
|
|
|
3,074
|
(14,204)
|
(11,130)
|
2,584
|
(26,494)
|
(23,910)
|
Investment
management fee
|
3
|
(92)
|
(523)
|
(615)
|
(111)
|
(631)
|
(742)
|
Other
expenses
|
|
(217)
|
(1)
|
(218)
|
(192)
|
(3)
|
(195)
|
Loss
before finance costs and taxation
|
|
2,765
|
(14,728)
|
(11,963)
|
2,281
|
(27,128)
|
(24,847)
|
Finance
costs
|
3
|
(1)
|
(8)
|
(9)
|
(1)
|
(4)
|
(5)
|
Loss
before taxation
|
|
2,764
|
(14,736)
|
(11,972)
|
2,280
|
(27,132)
|
(24,852)
|
Taxation
|
4
|
—
|
—
|
—
|
—
|
—
|
—
|
Loss
after taxation
|
|
2,764
|
(14,736)
|
(11,972)
|
2,280
|
(27,132)
|
(24,852)
|
Return
per ordinary share
|
|
8.17p
|
(43.56)p
|
(35.39)p
|
6.74p
|
(80.21)p
|
(73.47)p
|
Weighted
average number of ordinary shares in issue during the
period
|
|
|
|
|
|
|
|
|
|
|
33,826,929
|
|
|
33,826,929
|
The total
columns of this statement represent the Company’s statement of
comprehensive income, prepared in accordance with UK-adopted
international accounting standards. The loss after taxation is the
total comprehensive loss. The supplementary revenue and capital
columns are both prepared in accordance with the Statement of
Recommended Practice issued by the Association of Investment
Companies. All items in the above statement derive from continuing
operations of the Company. No operations were acquired or
discontinued in the period.
CONDENSED
STATEMENT OF CHANGES IN EQUITY
|
|
|
|
Capital
|
|
|
|
|
|
Share
|
Share
|
Redemption
|
Capital
|
Revenue
|
|
|
|
Capital
|
Premium
|
Reserve
|
Reserve
|
Reserve
|
Total
|
|
Notes
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
For
the six months ended 31 July 2023
|
|
|
|
|
|
|
|
At 31
January 2023
|
|
10,642
|
22,366
|
3,386
|
137,004
|
1,517
|
174,915
|
Total
comprehensive loss for the period
|
|
–
|
–
|
–
|
(14,736)
|
2,764
|
(11,972)
|
Dividends
paid
|
5
|
–
|
–
|
–
|
(2,048)
|
(1,517)
|
(3,565)
|
At 31 July
2023
|
|
10,642
|
22,366
|
3,386
|
120,220
|
2,764
|
159,378
|
For
the six months ended 31 July 2022
|
|
|
|
|
|
|
|
At 31
January 2022
|
|
10,642
|
22,366
|
3,386
|
184,089
|
270
|
220,753
|
Total
comprehensive loss for the period
|
|
–
|
–
|
–
|
(27,132)
|
2,280
|
(24,852)
|
Dividends
paid
|
5
|
–
|
–
|
–
|
(4,906)
|
(270)
|
(5,176)
|
At 31 July
2022
|
|
10,642
|
22,366
|
3,386
|
152,051
|
2,280
|
190,725
|
|
|
|
|
|
|
|
|
|
CONDENSED
BALANCE SHEET
Registered
number 2129187
|
|
At
31
July
2023
£’000
|
At
31
January
2023
£’000
|
|
|
|
|
|
Notes
|
Non-current
assets
|
|
|
|
Investments
held at fair value through profit or loss
|
|
158,717
|
172,643
|
|
|
|
|
Current
assets
|
|
|
|
Amounts due
from brokers
|
|
—
|
48
|
Overseas
withholding tax recoverable
|
|
30
|
31
|
Income tax
recoverable
|
|
4
|
4
|
Prepayments
and accrued income
|
|
238
|
317
|
Cash and
cash equivalents
|
|
614
|
5,055
|
|
|
886
|
5,455
|
Total
assets
|
|
159,603
|
178,098
|
Current
liabilities
|
|
|
|
Amounts due
to brokers
|
|
(53)
|
(2,974)
|
Accruals
|
|
(172)
|
(209)
|
Total
assets less current liabilities
|
|
(225)
|
(3,183)
|
Net
assets
|
|
159,378
|
174,915
|
Capital
and reserves
|
|
|
|
Share
capital
|
|
10,642
|
10,642
|
Share
premium
|
|
22,366
|
22,366
|
Capital
redemption reserve
|
|
3,386
|
3,386
|
Capital
reserve
|
|
120,220
|
137,004
|
Revenue
reserve
|
|
2,764
|
1,517
|
Total
shareholders’ funds
|
|
159,378
|
174,915
|
Net
asset value per ordinary share
|
|
471.16p
|
517.09p
|
Number
of ordinary shares in issue at the period end
|
6
|
33,826,929
|
33,826,929
|
CONDENSED
CASH FLOW STATEMENT
|
|
Six
months
ended
31 July
2023
£’000
|
Six
months
ended
31 July
2022
£’000
|
|
|
|
|
|
Notes
|
Cash
flow from operating activities
|
|
|
|
Loss before
finance costs and taxation
|
|
(11,963)
|
(24,847)
|
Adjustments
for:
|
|
|
|
Purchases
of investments
|
|
(9,562)
|
(26,326)
|
Sales
of investments
|
|
5,920
|
32,746
|
|
|
(3,642)
|
6,420
|
|
|
|
|
Loss on
investments held at fair value
|
|
14,695
|
26,494
|
Decrease/(increase)
in receivables
|
|
80
|
(71)
|
Decrease in
payables
|
|
(37)
|
(39)
|
Net
cash (outflow)/inflow from operating activities
|
|
(867)
|
7,957
|
Cash
flow from financing activities
|
|
|
|
Finance
cost paid
|
|
(9)
|
(5)
|
Dividends
paid
|
5
|
(3,565)
|
(5,176)
|
Net
cash outflow from financing activities
|
|
(3,574)
|
(5,181)
|
Net
(decrease)/increase in cash and cash
equivalents
|
|
(4,441)
|
2,776
|
Cash and
cash equivalents at start of the period
|
|
5,055
|
1,530
|
Cash
and cash equivalents at the end of the period
|
|
614
|
4,306
|
Reconciliation
of cash and cash equivalents to the Balance Sheet is as
follows:
|
|
|
|
Cash held
at custodian
|
|
44
|
61
|
Invesco
Liquidity Funds plc – Sterling, money market fund
|
|
570
|
4,245
|
Cash
and cash equivalents
|
|
614
|
4,306
|
Cash
flow from operating activities includes:
|
|
|
|
Dividends
received
|
|
3,649
|
2,516
|
Interest
received
|
|
2
|
—
|
As the
Company did not have any long term debt at both the current and
prior period ends, no reconciliation of the financial liabilities
is presented.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
1. Basis
of Preparation
The
condensed financial statements have been prepared using the same
accounting policies as those adopted in the Company’s 2023 Annual
Financial Report. They have been prepared on a historical cost
basis, in accordance with the applicable UK-adopted international
accounting standards and, where possible, in accordance with the
Statement of Recommended Practice for Financial Statements of
Investment Trust Companies and Venture Capital Trusts, updated by
the Association of Investment Companies in July 2022 (AIC SORP).
2. Income
|
Six
months
ended
31 July
2023
£’000
|
Six
months
ended
31 July
2022
£’000
|
|
|
|
Income
from investments:
|
|
|
UK
dividends
|
|
|
–
ordinary
|
2,561
|
2,249
|
–
special
|
409
|
210
|
Overseas
dividends
|
102
|
125
|
|
3,072
|
2,584
|
Other
income:
|
|
|
Deposit
interest
|
2
|
—
|
|
3,074
|
2,584
|
Special
dividends of £491,000 were recognised in capital during the period
(31 July 2022: £nil).
Overseas
dividends include dividends received on UK listed investments where
the investee company is domiciled outside of the UK.
3. Management
Fee and Finance Costs
The
investment management fee and finance costs are allocated 15% to
revenue and 85% to capital.
A base
management fee is payable monthly in arrears and is calculated at
the rate of 0.75% (31 July 2022:
0.75%) per annum by reference to the Company’s gross funds under
management.
4. Taxation
and Investment Trust Status
No tax
liability arises on capital gains because the Company has been
accepted by HMRC as an approved investment trust and it is the
intention of the Directors to conduct the affairs of the Company so
that it continues to satisfy the conditions for this
approval.
5.
Dividends
paid on Ordinary Shares
|
Six
months ended
|
Six
months ended
|
|
31
July 2023
|
31
July 2022
|
|
Rate
|
£’000
|
Rate
|
£’000
|
Third
interim (prior year)
|
3.75p
|
1,269
|
3.75p
|
1,269
|
Final
(prior year)
|
6.79p
|
2,296
|
11.55p
|
3,907
|
Total
|
10.54p
|
3,565
|
15.30p
|
5,176
|
The first
interim dividend of 3.85p per ordinary share (31 July 2022: 3.75p) was paid on 1 September 2023 to shareholders on the register
on 4 August
2023.
6. Share
Capital, including Movements
Share
capital represents the total number of shares in issue, including
treasury shares.
|
Six
months
|
Year
ended
|
|
ended
31 July
|
31
January
|
|
2023
|
2023
|
Share
capital:
|
|
|
Ordinary
shares of 20p each (£’000)
|
6,765
|
6,765
|
Treasury
shares of 20p each (£’000)
|
3,877
|
3,877
|
|
10,642
|
10,642
|
Number of
ordinary shares in issue:
|
33,826,929
|
33,826,929
|
Number of
shares held in treasury:
|
19,382,155
|
19,382,155
|
Total
|
53,209,084
|
53,209,084
|
7. Classification
Under Fair Value Hierarchy
Note 16 of
the Company’s 2023 Annual Financial Report sets out the basis of
classification.
As at
31 July 2023, all of the Company’s
portfolio was composed of quoted (Level 1) investments.
In the
prior year, Berry Starquest Limited was a dormant subsidiary and
was the only Level 3 investment valued at £100 as at 31 January 2023. The subsidiary was dissolved on
28 February 2023.
8. Status
of Half-Yearly Financial Report
The
financial information contained in this Half-Yearly Financial
Report, which has not been reviewed or audited by an independent
auditor, does not constitute statutory accounts within the meaning
of section 434 of the Companies Act 2006. The financial information
for the half years ended 31 July 2022
and 31 July 2023 has not been
audited. The figures and financial information for the year ended
31 January
2023 are extracted and abridged from the latest audited
accounts and do not constitute the statutory accounts for that
year. Those accounts have been delivered to the Registrar of
Companies and included the Independent Auditor’s Report, which was
unqualified.
The
Half-Yearly Financial Report for the Six Months to 31 July 2023 will be available to shareholders,
and copies may be obtained during normal business hours from the
Company’s Registered Office, from its correspondence address, 43-45
Portman Square, London W1H 6LY,
and via www.invesco.co.uk/ipukscit.
A copy of
the Half-Yearly Financial Report will be submitted shortly to the
National Storage Mechanism ("NSM") and will be available for
inspection at the NSM, which is situated at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
By order of
the Board
Invesco
Asset Management Limited
Company
Secretary
10 October 2023
GLOSSARY
OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES
Alternative
Performance Measure (APM)
An APM is a
measure of performance or financial position that is not defined in
applicable accounting standards and cannot be directly derived from
the financial statements. The calculations shown in the
corresponding tables are for the six months ended 31 July 2023 and the year ended 31 January 2023. The APMs listed here are widely
used in reporting within the investment company sector and
consequently aid comparability.
Benchmark
(or Benchmark Index)
A market
index, which averages the performance of companies in any sector,
giving a good indication of any rises or falls in the market. The
benchmark index used in these accounts is the Numis Smaller
Companies + AIM (excluding Investment Companies) Index with
dividends reinvested.
(Discount)/Premium
(APM)
Discount is
a measure of the amount by which the mid-market price of an
investment company share is lower than the underlying net asset
value (‘NAV’) of that share. Conversely, premium is a measure of
the amount by which the mid-market price of an investment company
share is higher than the underlying net asset value of that share.
In this Half-Yearly Financial Report the discount is expressed as a
percentage of the net asset value per share and is calculated
according to the formula set out below. If the shares are trading
at a premium the result of the below calculation will be positive
and if they are trading at a discount it will be
negative.
|
|
31
July
|
31
January
|
|
|
2023
|
2023
|
Share
price
|
a
|
416.50p
|
451.00p
|
Net asset
value per share
|
b
|
471.16p
|
517.09p
|
Discount
|
c =
(a-b)/b
|
(11.6)%
|
(12.8)%
|
Gearing
(APM)
The gearing
percentage reflects the amount of borrowings that a company has
invested. This figure indicates the extra amount by which net
assets, or shareholders’ funds, would move if the value of a
company’s investments were to rise or fall. A positive percentage
indicates the extent to which net assets are geared; a nil gearing
percentage, or ‘nil’, shows a company is ungeared. A negative
percentage indicates that a company is not fully invested and is
holding net cash as described below.
There are
several methods of calculating gearing and the following has been
used in this report:
Gross
Gearing (APM)
This
reflects the amount of gross borrowings in use by a company and
takes no account of any cash balances. It is based on gross
borrowings as a percentage of net assets. As at 31 July 2023 the Company had no gross borrowings
(31 January 2023: £nil).
|
|
|
31
July
|
31
January
|
|
|
|
2023
|
2023
|
|
|
|
£’000
|
£’000
|
Bank
overdraft facility
|
|
|
—
|
—
|
Gross
borrowings
|
|
a
|
—
|
—
|
Net asset
value
|
|
b
|
159,378
|
174,915
|
Gross
gearing
|
|
c =
a/b
|
nil
|
nil
|
Net
Gearing or Net Cash (APM)
Net gearing
reflects the amount of net borrowings invested, i.e. borrowings
less cash and cash equivalents (incl. investments in money market
funds). It is based on net borrowings as a percentage of net
assets. Net cash reflects the net exposure to cash and cash
equivalents, as a percentage of net assets, after any offset
against total borrowings.
|
|
|
31
July
|
31
January
|
|
|
|
2023
|
2023
|
|
|
|
£’000
|
£’000
|
Bank
overdraft facility
|
|
|
—
|
—
|
Less: cash
and cash equivalents
|
|
|
614
|
5,055
|
Net
cash
|
|
a
|
614
|
5,055
|
Net asset
value
|
|
b
|
159,378
|
174,915
|
Net
cash
|
|
c =
a/b
|
0.4%
|
2.9%
|
Maximum
Authorised Gearing
This
reflects the maximum authorised borrowings of the Company taking
into account both any gearing limits laid down in the investment
policy and the maximum borrowings laid down in covenants under any
borrowing facility and is calculated as follows:
|
|
|
31
July
|
31
January
|
|
|
|
2023
|
2023
|
|
|
|
£’000
|
£’000
|
Maximum
authorised borrowings as laid down in:
|
|
|
|
|
Investment
policy:
|
|
|
|
|
– lower of
30% of net asset value; and
|
|
a = 30% x
e
|
47,813
|
52,475
|
–
£25m
|
|
b
|
25,000
|
25,000
|
Bank
overdraft facility covenants: lower of 30% of net asset value and
£15m
|
|
c
|
15,000
|
15,000
|
Maximum
authorised borrowings (d = lower of a, b and c)
|
|
d
|
15,000
|
15,000
|
Net asset
value
|
|
e
|
159,378
|
174,915
|
Maximum
authorised gearing
|
|
f =
d/e
|
9.4%
|
8.6%
|
Net
Asset Value (‘NAV’)
Also
described as shareholders’ funds, the NAV is the value of total
assets less liabilities. Liabilities for this purpose include
current and long-term liabilities. The NAV per share is calculated
by dividing the net assets by the number of ordinary shares in
issue (excluding shares held in treasury). For accounting purposes
assets are valued at fair (usually market) value and liabilities
are valued at par (their repayment – often nominal –
value).
Return
The return
generated in a period from the investments including the increase
and decrease in the value of investments over time and the income
received.
Total
Return
Total
return is the theoretical return to shareholders that measures the
combined effect of any dividends paid together with the rise or
fall in the share price or NAV. In this Half-Yearly Financial
Report these return figures have been sourced from Refinitiv who
calculate returns on an industry comparative basis.
Net
Asset Value Total Return (APM)
Total
return on net asset value per share, assuming dividends paid by the
Company were reinvested into the shares of the Company at the NAV
per share at the time the shares were quoted
ex-dividend.
Share
Price Total Return (APM)
Total
return to shareholders, on a mid-market price basis, assuming all
dividends received were reinvested, without transaction costs, into
the shares of the Company at the time the shares were quoted
ex-dividend.
|
|
|
Net
Asset
|
Share
|
Six
months ended 31 July 2023
|
|
|
Value
|
Price
|
As at 31
July 2023
|
|
|
471.16p
|
416.50p
|
As at 31
January 2023
|
|
|
517.09p
|
451.00p
|
Change in
period
|
|
a
|
–8.9%
|
–7.6%
|
Impact of
dividend reinvestments(1)
|
|
b
|
2.0%
|
2.2%
|
Total
return for the period
|
|
c =
a+b
|
–6.9%
|
–5.4%
|
|
|
|
Net
Asset
|
Share
|
Year
Ended 31 January 2023
|
|
|
Value
|
Price
|
As at 31
January 2023
|
|
|
517.09p
|
451.00p
|
As at 31
January 2022
|
|
|
652.60p
|
570.00p
|
Change in
year
|
|
a
|
–20.8%
|
–20.9%
|
Impact of
dividend reinvestments(1)
|
|
b
|
3.3%
|
3.9%
|
Total
return for the year
|
|
c =
a+b
|
–17.5%
|
–17.0%
|
(1) Total
dividends paid during the six months to 31
July 2023 of 10.54p (31 January
2023: 22.80p) reinvested at the NAV or share price on the
ex-dividend date. NAV or share price falls subsequent to the
reinvestment date consequently further reduce the returns, vice
versa if the NAV or share price rises.
Benchmark
Index
Total
return on the benchmark index is on a mid-market value basis,
assuming all dividends received were reinvested, without
transaction costs, into the shares of the underlying companies at
the time the shares were quoted ex-dividend.