The criteria for the Snowball has been tweaked, it was previously very roughly an equal weighted amount invested in each position but has now been changed to equal income from each position.
The target is income of 1k per share, there are currently 10 shares in the Snowball, so it will take some time to achieve, although gently increasing dividends over time should help to shorten the time frame.
I’ve bought for the Snowball a further 1311 shares in SUPR which should produce total income in the next 12 months of £928.00
Next years Income Fcast is £9,120 and the Target is 10k, a yield on seed capital of 9%.
Bluefield Solar (LON: BSIF), the London listed UK income fund focused primarily on acquiring and managing solar energy assets, is pleased to announce the Company’s fourth interim dividend for the financial year which ended on 30 June 2024 (the ‘Fourth Interim Divdend’).
The Fourth Interim Dividend of 2.20 pence per Ordinary Share (September 2023: 2.30 pence per Ordinary Share) will be payable to Shareholders on the register as at 11 October 2024 with an associated ex-dividend date of 10 October 2024 and a payment date on or around 15 November 2024.
The Board is pleased to have declared full year dividends totalling 8.80 pence per Ordinary Share for the financial year ended 30 June 2024, in line with our target, compared to a full year dividend of 8.60 pence per Ordinary Share for the financial year ended 30 June 2023.
Furthermore, the Board has set a target dividend for the financial year ending 30 June 2025 of not less than 8.90 pence per Ordinary Share. This is expected to be covered by earnings and to be post debt amortisation.
SDCL Energy Efficiency Income Trust plc (“SEEIT” or the “Company”)
Interim Update Statement
The Company announces an Interim Update Statement for the period from 1 April 2024 to 30 September 2024 (the “Period”).
Jonathan Maxwell, CEO of the Investment Manager, SDCL, said:
“The operational assets in SEEIT’s portfolio are performing in line with expectations, on a consolidated basis. The portfolio is also well positioned for growth.
Two of our largest investments, Onyx, which is one of the most established providers of distributed clean energy solutions to commercial and industrial customers across the United States, and EVN, which is one of the most successful electric vehicle charging platforms in the UK, are growing fast and ahead of budget. Both platforms require further capital. Therefore, we are actively pursuing financing, co-investment and disposal opportunities to support their growth and secure value for SEEIT shareholders. Surplus capital raised will be used to pay down our Revolving Credit Facility (RCF).
Interest rate cuts in the US and UK are likely to have a positive impact on the value of SEEIT’s portfolio on a discounted cash flow basis. While this may in due course reduce SEEIT’s weighted average discount rate, we view it as prudent to materially absorb decreases in risk free rates through increases in risk premiums for the September 2024 valuation due to ongoing economic and geopolitical uncertainty.
The Board and the Manager remain highly focused on SEEIT’s share price discount to NAV, as well as keeping its gearing levels well within limits, and we continue to prioritise taking actions described below in line with the Manager’s six-point plan set out in the March 2024 Annual Report.”
Operational performance
On a consolidated basis, operational performance is generally in line with expectations. Noteworthy updates for the Period are included below.
Onyx, now the largest SEEIT portfolio investment, which provides on-site generated solar power to commercial and industrial sectors across 14 US states, continues to create and convert significant pipeline through its development activity. Onyx has already hit its 70 MW Notice to Proceed (NTP) target for the year and is on track to meet or exceed its annual Power Purchase Agreement (PPA) target. It is also on track to meet its Commercial Operation Date (COD) target for this year. COD is the point at which these new projects begin generating revenue.
EVN, the electric vehicle (EV) charging infrastructure development company, continues to see strong demand for ultra-fast EV charging stations across the UK and has successfully brought a further 3 sites operational, bringing the total to 26.
Oliva is currently performing ahead of budget, and we expect this will continue due to the successful management of the cost of gas by their in-house procurement team, maximising operating margins.
RED, one of North America’s largest district energy systems, has multiple workstreams underway, including:
· Current negotiations of tariff amendments are expected to significantly improve EBITDA performance, correcting current underperformance in part resulting from lower demand from one of its key customers. The Manager forecasts that RED will miss 2024 budget EBITDA by c.17% but considering the upcoming tariff amendments, it sees the underperformance as predominantly a short-term timing matter.
· As previously reported, Li-Cycle, an existing customer, is significantly expanding its facilities with the construction of a new hub processing centre that will increase their demand for services from RED. The additional funding Li-Cycle needs to restart construction continues to be expected before the end of 2024, as previously announced.
· Meanwhile, RED’s cogeneration project is progressing as planned and remains on schedule to come online by Q1 2025.
As announced on 25 July 2024, the Manager has successfully renegotiated the loan facility for Primary Energy, a portfolio of on-site energy recycling, cogeneration and process efficiency projects, servicing blast furnaces, including the largest steel blast furnace in North America. This includes an improved margin of 350bps over Secured Overnight Financing Rate (SOFR), down from c.425bps and restructuring the debt to improve yields for SEEIT.
Dividend
The Company is on track to deliver its target dividend of 6.32p per share for the financial year to 31 March 2025, covered by net operational cash received from investments.
If u are saving for a special occasion/reason, u have two choices.
One Deposit Account.
U can invest in either a deposit account or a cash ISA, the current problem is that interest rates are expected to fall, so your final amount returned will also fall, unless u choose a fixed date interest amount against a variable interest amount.
If u are saving for a house deposit research LISA’s.
Two. Government Gilts.
It’s a lot easier to buy Government Gilts (loans) nowdays.
The rule is, if inside a tax wrapper u can choose a higher interest amount but if outside a tax wrapper, a low interest rate with a tax free capital gain.
If we set a date 3 years from now.
Inside a tax wrapper
On the 7/12/2027 the current government will return your cash of par value £100. The next ‘dividend’ is the 7/12/24, then every six months.
U have to pay the current holder of the Gilt the interest already accrued since the last date. U should be able to work out the amount u will have at the end of 2027, 3.73% on the amount invested pa.
Outside of a tax wrapper.
Tax to pay on the nominal interest, u will not lose money as long as u hold until the maturity date. U would currently buy at £93.72 and have £100 returned on the 22/7/2027.
In this week’s Fund Monitor, another possible tie-up in the REIT sector – this time NewRiver REIT is looking to acquire Capital & Regional; and another fund considers its options on account of its size – Menhaden Resource Efficiency.
By Frank Buhagiar
NewRiver REIT Looks to Acquire Capital & Regional
New River REIT (NRR) has joined the London-REIT takeover party after announcing a possible offer for Capital & Regional (CAL). Principal terms and conditions of the potential cash and share offer have been agreed by the Board that would see NRR acquire the entire issued and to be issued share capital of CAL. In exchange for each CAL share, shareholders would receive 31.25p in cash and 0.41946 New NewRiver shares. Based on NRR’s closing share price of 74.5p on 22 May 2024 (the last trading day before the Offer Period commenced), the offer would value CAL shares at 62.5p each. That’s a premium of approximately 21% to CAL’s undisturbed closing price of 51.5p per share.
In conjunction with the offer, NRR successfully launched and completed a placing and retail offer of new shares on the same day as the offer announcement. In all, around £50 million has been raised. CEO Allan Lockhart “This successful placing to support our proposed offer for Capital & Regional further underpins our belief in the strategic rationale for the transaction.” It must have been a busy day at NRR HQ!
JLEN Environmental Assets Changes Its Name
JLEN Environmental Assets (JLEN) is no longer, at least in terms of the name. The fund is now known as Foresight Environmental Infrastructure following shareholder approval at the company’s AGM on Friday 13 September 2024. That means the ticker also changes – from JLEN to FGEN.
Menhaden Resource Efficiency Considering Its Options
Menhaden Resource Efficiency (MHN) announced, alongside its half-year results, that “it proposes to carry out, together with its advisers, a formal review of the options available to it in order to address the issues facing the Company prior to its continuation vote in 2025.” For issues, read the fund’s size, “Notwithstanding its good net asset value performance, at its current size the Company’s secondary market liquidity is relatively low and it has been unable to attract attention and demand from investors, which has led to the Company’s shares trading at a material discount to the Company’s net asset value per share.”
Numis “Menhaden Resources Efficiency has announced that it will conduct a formal review of the options for the company, given the size, low trading liquidity and wide discount. The company is due to hold its five-yearly continuation vote by the AGM in July 2025 and will provide investors with a further update ahead of that with the outcome of the review.”
Dividend Watch
City of London (CTY) has clocked up 58 consecutive years of dividend growth. As per CTY’s Annual Report. The “annual dividend grew by 2.5% to 20.60p per share, slightly ahead of UK CPI inflation, and was covered by earnings per share.” That means “Over ten years, City of London’s dividend has grown by 39.6% compared with a cumulative increase in UK CPI inflation of 33.8%.” CTY, the inflation-buster!
The Times asks if it’s worth investing in Edinburgh IT right now; while The Telegraph puts its hands up and admits it backed the wrong horse in the digital infrastructure sector but, luckily, the tipster believes it’s not too late to back the other horse – Cordiant Digital Infrastructure.
By Frank Buhagiar
Tempus – Is it worth investing in Edinburgh Investment Trust right now?
Founded in 1889, Edinburgh Investment Trust (EDIN) has seen a lot: world wars, depressions, financial crises, and, most recently, a global pandemic. And yet, despite the challenges faced, the UK equity fund has built up an impressive track record. For example, over the last five years, a period that covers the pandemic, the fund has generated a +60% total return, easily beating the FTSE 100’s +35%, the FTSE all-share’s +33%, and the FTSE 250’s +18%. EDIN trumps the FTSE all-share in terms of yield too, at 3.8% compared to the index’s 3.6%, although this is short of the 4.1% peer average.
Strong track record then, but not one that comes with a hefty price tag. In fact, fees have been coming down. A new annual management fee structure came into effect in April: 0.45% on the first £500m market capitalisation; 0.4% on the next £500m; 0.35% thereafter. Based on the trust’s market cap as of the end of last year, the restructuring is expected to result in an 11% reduction in the pro forma management fee. As a well-known supermarket tells us, “Every Little Helps”.
And yet, the trust’s shares trade at a 10% discount to net assets even with a share buyback programme in place. Tempus thinks this “looks far too wide given the strength of the portfolio and its robust record. A re-rating is unlikely to appear quickly, but a quality, longstanding name such as the Edinburgh Investment Trust should stand to gain.”
Questor: We backed the wrong digital horse – here’s how to fix it
Two years ago, The Telegraph’s Questor tipped Digital 9 Infrastructure (DGI9) as its preferred means of gaining exposure to the “plumbing of the internet”, the transmission towers and cable providers that are the enablers of the internet. This was on the back of surging use of the internet following the pandemic. Two years on and, weighed down by a litany of setbacks including soaring interest rates, expensive debts, capital spending, the loss of the original fund managers, and the scrapping of the dividend, it’s fair to say DGI9 has failed to deliver. “The brutal fact is we backed the wrong horse at the wrong time.” All is not lost, however. For the tipster sees a chance for redemption – in the form of the other horse in the race, Cordiant Digital Infrastructure (CORD).
Questor believes “Cordiant is everything its beleaguered competitor is not.” Managed by Steven Marshall, a former boss of telecoms and broadcast giant American Tower, the fund “wisely invested the £795m raised from investors in its first year.” This enabled CORD to avoid paying “racy” prices of up to 25 times the earnings that digital platforms were later going for in mainland Europe. Instead, a portfolio of five cash-generative businesses was acquired at an average of 10.2 times earnings. These include CRA, a Czech group that owns towers, broadcast networks, and data centers; and Emitel, a Polish operator of radio broadcast services, mobile towers, and an internet TV platform. And the portfolio is performing – CORD posted an underlying +10.6% return for the year to 31 March, ahead of the 9% annual target.
The strong showing has continued in the current year with revenues and profits growing 8.9% and 14.2% respectively in the first quarter. The fund is therefore on course to meet the raised dividend target of 4.2p, a level that puts the shares on a 5.2% yield. Questor points out, “Unlike DGI9, Cordiant is not in a financial straitjacket.” CORD has access to £335.4m of cash and borrowings, while 70% of its debt is fixed with the first repayment not due until 2029.
And crucially, Questor is not now backing the right horse after the horse has bolted. The shares are currently trading at a 32% discount to the latest net asset value and at a 19% discount to the fund’s launch price. Questor puts the bargain prices down to DGI9’s woes and high interest rates but believes investors should follow the lead of Marshall, a regular buyer of CORD shares. As Questor writes, “With the boom in artificial intelligence increasing demand for data, Cordiant is in the right place with a sensible portfolio to take advantage.” In short, investors may well have another bite of the cherry.
The Results Round-Up – The Week’s Investment Trust Results
Another bumper week of results, but which two funds from two different sectors each posted an impressive +21% NAV total return for their respective full years and which fund says its North Star currently sits high and shines brightly?
By Frank Buhagiar
Brown Advisory US Smaller Companies (BASC) and long-term compounders
BASC’s +2.8% NAV per share return for the full year couldn’t match the Russell 2000 Index’s +10.7% (£). Chairman Stephen White puts this largely down to the fund’s “strategy of identifying long-term compounders that offer durable growth, good governance and a strong ‘go-to-market’ position”. This focus “meant missing out on some of the more momentum-driven and speculative stocks that have led the smaller companies market more recently.” It’s a strategy that requires patience. Cue the portfolio managers thanking shareholders for their “patience with short-term performance fluctuations”. Our enduring objective is to outperform small-cap benchmarks with reduced risk, a goal we’ve achieved as an investment team over the past 18 years.”
JPMorgan: “BASC has now had just over three years under new management at Brown Advisory. This has been a difficult period, with BASC lagging its smaller cap US benchmark, while also seeing larger caps perform better still, and is around 7% behind the Russell 2000 since Brown Advisory took over. The Board is confident that its investment style will come good, and that small caps will outperform large caps.”
BioPharma Credit (BPCR) has it covered
BPCR’s half-year highlights include a 6.15 cents net revenue per share which, in just six months, almost fully covers the 7 cent annual dividend target; becoming debt free; and the recovery of an anticipated 96% of its investment in LumiraDx. Chairman Harry Hyman points out that “With 94 per cent. of its portfolio consisting of loans with floating interest rates, the Company has benefited from the recent period of rising interest rates.” The thing is, interest rates are heading down. Not to worry “with an overall expectation of decreasing interest rates, the Company benefits from the interest rate floors in its portfolio that set minimum coupons.” Sounds like the life sciences debt investor has it all covered.
Liberum: “The net revenues of 6.15 cents are 14% ahead of the same period last year and investment returns of $82.9m are 7.7% ahead of the same period last year despite the non-performing loans to LumiraDx. A company that can show these kinds of growth rates despite the difficult environment it operated in deserves to trade at a much lower discount to NAV than the 9.8% it currently does.”
JPMorgan: “We see no reason to change our Overweight recommendation.”
NB Private Equity Partners (NBPE) get active
NBPE posted a +1% NAV per share return for the half year, as a +4.3% increase in private company valuations was partially offset by the quoted holdings and foreign exchange headwinds. That +4.3% return was driven by a strong operating performance by the private companies themselves which delivered 11% aggregated weighted average revenue growth over the year and 16% aggregated EBITDA growth. Managing Director Paul Daggett puts the strong operating performance down to “active ownership of our underlying private equity managers.”
Numis: “The shares trade on a 23% discount to NAV, which appears cheap for a diversified portfolio of private equity interests.”
JPMorgan: “We see no reason to change our Overweight recommendation.”
North Atlantic Smaller Companies (NAS) sees no cause for alarm
NAS’ +8.3% increase in NAV (dividend-adjusted) for the half year couldn’t match the S&P’s +12.9% (£). The fund’s large cash weighting along with the underperformance of the private equity holdings, was blamed for the shortfall. A lack of realisations held back the UK portion of the unquoted portfolio, although this is expected to change after at least one holding has since received a bid. As for the quoted holdings, CEO CHB Mills has been busy, “I have had a chance to meet with all our major quoted holdings over the past three weeks and in not a single case do I see cause for alarm.”
Winterflood: “Share price +17.9% as discount narrowed from 31.6% to 24.6%. Dividend in respect of FY25 expected to ‘comfortably exceed’ that paid in respect of FY24 (68.50p).”
Schroder Japan’s (SJG) chalks up four years of outperformance
SJG posted an impressive +21% NAV total return for the full year, comfortably ahead of the benchmark’s +16.4%. That means SJG has outperformed the benchmark for four years now. Deserved mention in despatches for the portfolio manager from Chairman Philip Kay “The Investment Manager has produced excellent relative performance over each of the last four financial years when market conditions have remained challenging. He has achieved this by adopting a clear, well defined investment strategy centred on his disciplined bottom-up stock picking approach.” Bravo.
Winterflood: “The manager noted that ‘recent volatility has taken the market back to a reasonably undervalued level’.”
Invesco Global Equity Income (IGET) shows Its class
IGET’s new structure got off to a good start. During the year, the multi-share class fund consolidated the UK Equity, Balanced Risk Allocation and Managed Liquidity shares into the Global Equity Income share-class, thereby, creating a one share-class vehicle. The restructuring didn’t distract from the day job though, as the Global Equity Income Shares clocked up a +21% NAV total return, a smidgeon below the MSCI World’s (£) +21.6%. Not bad going, all things considered.
Winterflood: “Underperformance driven by benchmark agnostic nature of portfolio allocation, as the Magnificent 7 drove 60% of the total return.”
Strategic Equity Capital’s (SEC) concentrated approach pays off
SEC’s concentrated portfolio generated a +16.6% NAV total return for the full year. Chairman William Barlow notes the NAV performance was a little off the FTSE Small Cap’s (ex-Investment Trusts) +18.5% total return. But this “reflects the Manager’s strategy of avoiding more cyclical sectors which outperformed during the period.” Besides “Over the past three years, the NAV per share has grown by 15.6%, significantly outpacing the FTSE Small Cap (ex-Investment Trusts) Total Return Index’s 0.8% growth.” What’s more, the fund manager believes “our focus on business fundamentals will continue to deliver long-term outperformance. We see many opportunities to back high-quality growth companies at attractive valuations.”
Winterflood: “At 30 June, the portfolio contained 16 holdings and had c.5% of NAV in cash. Revenue return per share was 4.15p (FY23: 3.53p). Final dividend of 4.15p proposed (FY23: 2.5p).”
Aurora’s (ARR) North Star
ARR’s+36.3% 2023 return was always going to be a tough act to follow and so it has proved. Over the latest half year, NAV per share total return came in at +0.3%, while the share price total return was up +1.6%. Both are some way off the FTSE All-Share’s +7.4%. Despite the flat performance, progress is being made on the corporate front, specifically the proposed combination with Artemis Alpha. As Chair Lucy Walker notes, “If approved, this will add over 50% to the Company’s market capitalisation, leading to improved liquidity, and lower fees for shareholders.” As for the existing portfolio, the investment manager points out “We have a very UK focused portfolio, which is priced attractively, generating profits, and buying back shares. If the UK economy continues to pick up momentum as it has done this year, then they will benefit from that. As always, Intrinsic Value is our North Star, and right now it sits high and shines brightly.”
Numis: “We believe Aurora IT has the potential to be an interesting addition to a portfolio, given few funds with a ‘value’ approach, although we note that investors need to be prepared for performance to deviate from the index, given the highly concentrated and active approach.”
Pantheon Infrastructure (PINT) shows confidence
PINT’s Chair Vagn Sørensen described the +8.5% NAV total return for the half year, as a “strong performance”. That’s triggered a 5% increase in the dividend to 4.2p per share. This “demonstrates our confidence in, and commitment to, the portfolio strategy”. And presumably in the sector too, for “Infrastructure remains a key driver of economic growth, and the need for investment into new infrastructure is arguably stronger than ever.”
Investec: “We regard PINT as a core holding for infrastructure exposure and reiterate our Buy recommendation.”
JPMorgan Emerging Markets (JMG) focused on the long-term
JMG’s NAV total return of +7.2% for the full year fell short of the MSCI Emerging Markets Index’s +13.2% (£). Chair Aidan Lisser doesn’t sound overly worried, “Although short-term performance has been disappointing, the Company’s long-term track record is testament to the effectiveness of the Managers’ approach.” That approach is based around the investment philosophy which “can be summarised in simple terms-to take a long-term view, to find great businesses, not to overpay for them and to hold for as long as possible.’ The focus is therefore less about ‘value’ or ‘growth’ and much more about ‘quality’.” As for that long-term track record, over the 10 years to 30 June 2024, JMG’s NAV total return of +121.1% beats the benchmark’s +78.1% with room to spare.
Numis: “We continue to rate the management team highly and JMG remains our top pick for diversified Emerging Markets exposure.”
A £100,000 pension pot can now secure a significantly higher retirement income through annuities compared to recent years.
Sales soared by nearly 39 per cent in 2023/24, with 82,061 annuities sold compared to 59,163 in the previous year.
Annuities, which provide a guaranteed income for life, have seen a resurgence in popularity.
However, retirees are advised to act swiftly, as these rates may decline in the coming months when the Bank of England is expected to cut interest rates.
A 65-year-old with a £100,000 pension pot can currently obtain up to £7,146 per year from a single life level annuity. This represents a substantial 43 per cent increase from just three years ago, research from Hargreaves Lansdown has shown.
While annuities offer attractive rates, experts caution against hasty decisions.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown explained that over 80 per cent of recent purchases were level annuities, which don’t adjust for inflation.
This could erode purchasing power over time, especially given recent inflationary pressures.
Additionally, about 66 per cent were bought on a single life basis, potentially leaving spouses without income if the annuitant dies first.
Morrissey advised: “It’s vital that you consider what you need from your retirement income and look across the market before deciding to purchase an annuity rather than taking the first or highest income offered.
“Annuity comparison tools can allow you to do this easily and effectively.”
Retirees are encouraged to carefully assess their needs and explore various options before committing to an annuity.
While annuities have gained popularity, income drawdown remains a widely chosen option for retirees. This approach offers greater flexibility but comes with its own risks.
Data shows that over 225,000 pension pots had an annual withdrawal rate exceeding eight per cent in 2023/24.
Morrissey cautioned against such high withdrawal rates and said: “There could be times during retirement when you need to take a bit more from your income to cover big expenses such as holidays, but doing it on a sustained basis can lead you to erode your savings pretty quickly and
sustained basis can lead you to erode your savings pretty quickly and leave you in trouble later on.”
She recommended a more conservative approach explaining: “As a rule of thumb, withdrawals from a drawdown pot should be around four per cent per year or in line with the natural yield on investments to remain sustainable long-term.”
When considering retirement options, it’s crucial to understand the full financial picture.
The state pension, while important, is unlikely to cover all expenses, the full new state pension pays £23,004 annually per couple.
Research from Hargreaves Lansdown showed for those aiming for a middle-range yearly spending, an additional combined pot of around £89,000 per household is needed.
