BMO UK High Income Trust PLC

Annual General Meeting

The Company held its Annual General Meeting on 27 July 2020. Due to current restrictions and social distancing measures this year’s AGM was restricted to the formal business of the meeting and was only attended by the minimum number of members sufficient to form a quorum. 

More information below:

Philip Webster

Director, Portfolio Manager, European Equities

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Lead Manager's Presentation

Philip Webster’s presentation focuses on the Trust’s performance and he discusses the three phased approach that he and the investment team are taking in response to Covid-19. Watch the video below.

 

For more information, download the full presentation

Frequently Asked Questions

For the period from 31 March 2020 to 23 July 2020, the NAV total return for the Ordinary shares/B shares and Units has been +19.1% as compared with the return from the FTSE All-Share Index (the benchmark) of +11.4%.

For the period from 31 March 2020 to 23 July 2020, the share price total return for the Ordinary shares, B shares and Units has been +17.9%, +23.7% and +20.5% respectively as compared with the return from the FTSE All-Share Index (the benchmark) of +11.4%.

On 23 June 2020 the Company announced a first quarter dividend in respect of the financial year to 31 March 2021 of 1.29 pence per Ordinary share. This dividend will be paid on 7 August 2020 to Ordinary shareholders on the register on 3 July 2020.

A first quarter capital repayment of 1.29 pence per B share will also be paid on 7 August 2020 to B shareholders on the register on 3 July 2020. Capital repayments on B shares are paid at the same time and in an amount equal to each dividend paid on an Ordinary share.

This represents an unchanged dividend / capital repayment from the first quarter of the prior financial year to 31 March 2020.

As was reported within the Company’s Annual Report to 31 March 2020; as a consequence of COVD-19 many companies (including a number of those held within the Company’s investment portfolio) have chosen to cancel, delay or significantly reduce the dividend payments they make to shareholders. Furthermore, there is an exceptionally low level of visibility as to when companies may be in a position to commence paying dividends once more and at what level they may choose to do so. This position will become clearer as the financial year progresses.

At 31 March 2020, the Company had a revenue reserve of approximately 5.7p per Ordinary share, equivalent to 109% of the total annual dividend of 5.21p per Ordinary share paid in respect of the year to 31 March 2020. It is probable that the Company’s dividend payments for the current financial year will not be covered by net revenue earned and this revenue reserve can and will be used to supplement revenue earnings in the current period.

The normal pattern for the Company is to pay four quarterly interim distributions per financial year.

At this stage and in the absence of unforeseen circumstances, the Company currently intends that the second and third quarter distributions will each be 1.29 pence per share and that the aggregate distribution for the financial year to 31 March 2021 will be at least 5.21 pence per share (Financial year to 31 March 2020: 5.21 pence per share).

Based on these intended distributions, the dividend yield on an Ordinary share was 6.6 per cent based on the Ordinary share price of 79 pence as at 23 July 2020, and the distribution yield on a B share was 6.4 per cent based on the B share price of 81 pence on the same date. These yields compare favourably with the yield on the FTSE All-Share Index of 4.6 per cent at the same date.

The Company’s investment portfolio has been through a significant amount of change over the last 18 months which left us well-placed heading into the Covid-19 sell-off. We have no or limited exposure, to some of the hardest hit sectors; retail, real estate, high-street banks and a large underweight in oil & gas.
We have used this opportunity to continue to upgrade the quality of the investment portfolio and in the addition of a new holding. As we have referenced before, the concentrated nature of the investment portfolio means we don’t have any outliers, or small weights where we have no conviction. Therefore, the majority of our activity has been to support holdings that we currently own.

We have backed several holdings with fresh capital. This hasn’t been from a point of weakness, but one of strength, allowing them to continue investing and to make sure they come out the other side better and stronger businesses. We have added capital to ASOS, Compass Group, Beazley and Signature Aviation. We have added to some holdings on weakness, including Compagnie Financiere Richemont, Burford Capital and Just Eat Takeaway.

We also initiated a position in Amadeus, a provider of software to the aviation industry. Amadeus are the market leader with over 40% market share in Distribution be that through online or offline travel agents, while also running the software systems of over 120 airlines globally. They are a transactional business model, taking fees for passengers boarded or bookings which has been impacting revenue severely as fleets remain grounded. They raised capital early, putting themselves in a very strong position to continue investing in their market leading software as they help to drive efficiencies and revenue growth as the airlines return to service.

This is undoubtedly the hardest question to answer. Trying to second-guess what will happen is worth debating but forecasting is impossible so there is very little value in anchoring to the unknown.
Most of my time is focused on stock specifics, and which businesses are going to come out better and stronger. These fundamentals are tangible and allow me to take a view on what I want to own and how I weight them in the investment portfolio.

Will the recovery be u-shaped, will it take longer, and will we have several false starts as we hit second-wave lockdowns on a city or regional level are all part of our thought process. We are already witnessing some of these already but markets in the main seem to be looking through a lot of this as governments and central banks throw unparalleled stimulus at this problem.

Let’s talk about risk

Past performance should not be seen as an indication of future performance. The value of investments and income derived from them can go down as well as up as a result of market or currency movements and investors may not get back the original amount invested.

If you feel you need specific investment advice that takes your individual circumstances fully into account, please talk to a financial adviser.

Views and opinions have been arrived at by BMO and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.