Home / Seneca Global Income & Growth Trust plc announces 2016 interim results

Seneca Global Income & Growth Trust plc announces 2016 interim results

Seneca Global Income & Growth Trust plc (the Trust) with total assets of £70.4 million, announces its interim results for the six months ended 31 October 2016.

  • Net Asset Value total return +10.1%
  • Share Price total return +9.8%
  • Quarterly Dividend increased by 3.4% to 1.52p
  • Annualised volatility 12.6% compared with 15.5% for the FTSE All-Share Index
  • Multi-Asset value investment policy – coherent and transparent
  • Discount Control Mechanism effective since 1 August
  • Shares have traded in a very narrow range around Net Asset Value

The Trust has a distinctive multi-asset value approach to investing, focusing on quality and price. This has contributed to a good six months for the share price, increasing from 147.8 pence to 159.0 pence and providing a total return of 9.8% for the period.
Reflecting the period of strong returns, the Trust has again been successful in meeting its income and volatility objectives. The dividend for the quarter increased 3.4% to 1.52p, extending further the Trust’s record of growing its dividend whilst adding to its revenue reserves. Unlike many Trusts, SIGT draws its income from a very wide range of sources, providing a strong platform from which to generate dividends. In addition, despite the market disruption caused by the Brexit vote, the Trust maintained a level of volatility significantly below that of a pure equity portfolio.
During the period, the Trust enhanced its commitment to shareholders with the introduction of a Discount Control Mechanism. The Board believes this policy will provide the comfort that Shareholders can invest without taking material discount risk. This initiative is complementary to the transparent approach to portfolio management espoused by Seneca Investment Managers, both in regard to the generation of income and of capital growth.
Richard Ramsay, Chairman, said: ‘Following this successful period, we will seek to further develop the good investment track record achieved since 2012, when the Trust’s investment policy changed. We believe the Manager’s multi-asset value style of investing is well suited to the current environment, and forms a strong basis for the future growth of the Trust as conditions allow’.

The detailed interim results announcement follows.

Unaudited results for the six months ended 31 October 2016

Highlights for the period

  • Net Asset Value total return +10.1%
  • Share Price total return +9.8%
  • Quarterly Dividend increased by 3.4% to 1.52p
  • Annualised volatility 12.6% compared with 15.5% for the FTSE All-Share Index
  • Multi-Asset value investment policy – coherent and transparent
  • Discount Control Mechanism effective since 1 August
  • Shares have traded in a very narrow range around Net Asset Value

Performance

Seneca Global Income & Growth Trust plc (‘SIGT’), your Company, generated a net asset value per share (‘NAV’) total return of +10.1% for the six months to 31st October 2016, which was better than the benchmark return of +1.8%, being 3-month LIBOR plus 3%. While a strong absolute performance, SIGT’s NAV return was less than the main equity only comparator indices, particularly those that benefited from the weak performance of Sterling since the 23 June Brexit Referendum result. Your Manager’s Review provides more details on performance. It is clear that investment markets did not expect the outcomes of the Referendum and, since the period end, the USA Presidential Election. The lasting effects of these outcomes remain to be seen but, your Board believes, they reinforce the worth of the Multi-Asset value investment policy of your Company providing, as it does, transparent and straight-forward exposure to a range of assets, which together provide lower volatility (i.e. lower risk) returns than equity only portfolios.

Dividends

Your Company paid two interim dividends of 1.52p per share for the period, an increase of 3.4% on the equivalent dividends last year. It is your Board’s intention, barring unforeseen circumstances, that it will at least maintain the quarterly rate of 1.52p per share for the full year to 30 April 2017.

Gearing

During the period, SIGT announced an increase of its rolling debt facility from £7m to £11m on similar commercial terms. The actual gearing level through-out the period was around 10% which was achieved using a little less than £7m of net debt. The extra £4m has been put in place largely to assist with the operation of the Discount Control Mechanism (‘DCM’). This will enable gearing levels to be maintained should the DCM result in the issuance of new shares, or will provide short term working capital should shares be bought-in.

Discount Control Mechanism (‘DCM’)

At the Company’s Annual General Meeting in July, all the resolutions proposed were passed by a majority of over 99% of shares voted. These resolutions included SIGT’s continuation as well as the authority to buy-in up to 14.99% of the outstanding shares and to issue new shares equivalent to up to 20% of the outstanding issued shares. These buy-in and issuance authorities are essential to enable the DCM to operate, and your Board appreciates Shareholders’ support. The DCM has been effective since 1 August since when buyers of shares in the ordinary course, have been able to do so with the comfort of knowing they are not taking any material discount risk. Since the shares have traded consistently in a very narrow range around NAV, there has been no call on the Company to buy-in any shares though your Board stands ready and very willing to do so. In due course, your Board hopes to see sufficient demand for SIGT’s shares such that new ones will be issued, but meantime is content to see matched buying and selling of shares by investors at very close to NAV, supported by the presence of the DCM.

Investment Outlook

As already mentioned, there have been at least two significant and unexpected political events of late. What will their impact be on economies and investment markets? Will there be more political change elsewhere? Is the unexpected now to be expected? Will fiscal stimulus usurp monetary stimulus as the weapon of choice from policy makers? Anyone who thinks they know the answers to all these questions is probably delusional! Of course we all have an opinion on these issues and will make investment decisions accordingly, but the great strength of SIGT’s Multi-Asset value investment policy is that it provides investors with diversification in a manner that should both reduce any negative impacts from unexpected outcomes and provide an attractive risk adjusted return over the medium to long term.

Richard Ramsay
Chairman
1 December 2016

 

Source

All data as at 31st October 2016
Sources: PATAC Limited, Bloomberg, Seneca IM

 


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Important information

Past performance is not a guide to future returns. The value of investments and any income may fluctuate and investors may not get back the full amount invested. This document is provided for the purpose of information only and if you are unsure of the suitability of these investments you should take independent advice.

Before investing you should read the Trust’s listing particulars which will exclusively form the basis of any investment. Net Asset Value (NAV) performance is not linked to share price performance, and shareholders may realise returns that are lower or higher in performance. The annual investment management charge and other charges are deducted from income and capital. The prospective yield calculation is based on the next four dividends anticipated, compared against the month end share price.

Seneca Investment Managers Limited is the Investment Manager of the Funds (0151 906 2450) and is authorised and regulated by the Financial Conduct Authority and is registered in England No. 4325961 with its registered office at Tenth Floor, Horton House, Exchange Flags, Liverpool, L2 3YL.