Annual Report and Financial Statements
CT UK
High Income
Trust PLC
For the year ended:
31 March 2024
CT UK High Income Trust PLC
Contents
Overview
Company Overview 1
Financial Highlights 2
Summary of Performance 3
Strategic Report
Chairman’s Statement 5
Purpose, Strategy and Business Model 7
Key Performance Indicators 9
Manager’s Review 10
Manager’s Investment Philosophy and Process 12
Classification of Investments 14
Investment Portfolio 15
Sustainability and ESG 17
Promoting the Success of the Company 22
Principal Risks and Uncertainties and Viability Statement 24
Principal Policies 27
Governance Report
Board of Directors 29
Report of the Directors 30
Corporate Governance Statement 37
Report of the Nomination Committee 40
Report of the Engagement and Remuneration Committee 41
Report of the Audit Committee 42
Directors’ Remuneration Report 46
Statement of Directors’ Responsibilities 49
Independent Auditor’s Report 50
Financial Report
Financial Statements 58
Notes to the Financial Statements 62
AIFMD Disclosures 77
Notice of Meeting
Notice of Annual General Meeting 78
Other Information
Capital Structure 82
Shareholder Information 83
How to Invest 84
Ten Year Record 85
Alternative Performance Measures (‘APMs’) 87
Glossary of Terms 89
Corporate Information 91
Financial Calendar
Annual General Meeting 26 July 2024
First quarter’s distribution paid (XD Date 4 July 2024) 2 August 2024
Second quarter’s distribution paid (XD Date 3 October 2024) 1 November 2024
Announcement of Interim Results December 2024
Third quarter’s distribution paid (XD Date 2 January 2025) 7 February 2025
Fourth quarter’s distribution paid (XD Date 3 April 2025) 2 May 2025
Announcement of Annual Results May 2025
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the action you should take,
you are recommended to seek your own independent financial advice from your stockbroker, bank manager, solicitor, accountant or other
independent financial adviser authorised under the Financial Services and Markets Act 2000 (as amended by the Financial Services Act
2012) if you are in the United Kingdom or, if not, from another appropriately authorised financial adviser. If you have sold or otherwise
transferred all your shares in CT UK High Income Trust PLC please forward this document, together with the accompanying documents,
immediately to the purchaser or transferee or to the stockbroker, bank or agent through whom the sale or transfer was effected for
transmission to the purchaser or transferee. If you have sold or otherwise transferred only part of your holding of shares, you should retain
these documents.
Report and Accounts 2024 | 1
Governance Report Auditor's Report Notice of Meeting Other InformationStrategic ReportOverview Financial Report
Overview
Company Overview
CT UK High Income Trust PLC (the ‘Company’) is an investment trust and its shares are listed
on the premium segment of the Official List of the Financial Conduct Authority and traded on the
London Stock Exchange.
Purpose
The purpose of the Company is to be a cost effective investment vehicle for investors seeking
income and capital returns from a portfolio invested predominantly in UK equities.
Investment Objective
The investment objective of the Company is to provide an attractive return to shareholders each year
in the form of dividends and/or capital repayments, together with prospects for capital growth.
In pursuit of its objective, the Company invests predominantly in UK equities and equity related
securities of companies across the market capitalisation spectrum.
Capital Structure
The Company has two classes of shares: Ordinary shares and B shares. The rights of each class
are identical, save in respect of the right to participate in distributions of dividends and capital.
The net asset value attributable to each class of shares is the same.
Only Ordinary shares are entitled to dividends paid by the Company. B shares, instead of receiving
dividends, receive a capital repayment at the same time as, and in an amount equal to, each
dividend paid on the Ordinary shares.
Visit our website at ctukhighincome.co.uk
The Company is registered in Scotland with company registration number SC314671
Legal Entity Identifier: 213800B7D5D7RVZZPV45
Forward looking statements
This document may contain forward looking statements with respect to the financial condition, results of operations and business of the Company. Such statements
involve risk and uncertainty because they relate to future events and circumstances that could cause actual results to differ materially from those expressed or
implied by forward looking statements. The forward looking statements are based on the Directors’ current view and on information known to them at the date of
this document. Nothing should be construed as a profit forecast.
Governance Report Auditor's Report Notice of Meeting Other InformationStrategic ReportOverview Financial Report
2 | CT UK High Income Trust PLC
Overview
+11.8%
NAV total return
(1)
Net asset value total return per share for the financial year was +11.8%,
compared to the total return of the Benchmark
(2)
of +8.4%.
+10.2%
Ordinary share price total return
(1)
Ordinary share price total return per share for the financial year was +10.2%,
compared to the total return of the Benchmark
(2)
of +8.4%.
+5.5%
B share price total return
(1)
B share price total return per share for the financial year was +5.5%, compared
to the total return of the Benchmark
(2)
of +8.4%.
6.7%
Yield
(1)
on Ordinary shares
Distribution yield of 6.7% on Ordinary shares at 31 March 2024, compared
to the yield on the FTSE All-Share Index of 3.8%. Total dividends increased by
2.0% to 5.62p per Ordinary share compared to the prior year.
6.7%
Yield
(1)
on B shares
Distribution yield of 6.7% on B shares at 31 March 2024, compared to the yield
on the FTSE All-Share Index of 3.8%. Total capital repayments increased by
2.0% to 5.62p per B share compared to the prior year.
(1)
Yield and total return – See Alternative Performance Measures on pages 87 and 88.
(2)
Benchmark – FTSE All-Share Index.
Investors are reminded that the value of investments and any income from them may go down as well as up and they may not
receive back the full amount invested. Tax benefits may vary as a result of statutory changes and their value will depend on
individual circumstances.
Financial Highlights
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Governance Report Auditor's Report Notice of Meeting Other InformationStrategic ReportOverview Financial Report
Overview
Summary of Performance
Total Return
(1)
Year to
31 March
2024
Year to
31 March
2023
Net asset value per Ordinary share and B share +11.8% -0.4%
Ordinary share price +10.2% +0.6%
B share price +5.5% +2.3%
Benchmark
(2)
+8.4% +2.9%
Revenue and Distributions
Year to
31 March
2024
Year to
31 March
2023 % Change
Distributions per Ordinary share and B share 5.62p 5.51p +2.0
Yield
(1)
– Ordinary share 6.7% 6.7%
Yield
(1)
– B share 6.7% 6.5%
Revenue earnings per share 4.01p 3.62p +10.8
Revenue reserve – per Ordinary share
(3)
2.77p 2.83p -2.1
Capital
31 March
2024
31 March
2023 % Change
Net assets £107.8m £104.2m +3.5
Net asset value per Ordinary share and B share 94.51p 89.97p +5.0
FTSE All-Share Index 4,338.05 4,157.88 +4.3
Discount
(1)
Ordinary shares -10.6% -8.9%
B shares -11.6% -6.1%
Gearing
(1)
Gearing 12.5% 8.5%
Ongoing Charges
(1)
as percentage of average shareholders’ funds 1.08% 1.02%
(1)
Total return, yield, discount, gearing and ongoing charges – see Alternative Performance Measures on pages 87 and 88.
(2)
Benchmark – see definition on page 2.
(3)
Calculated after deducting the fourth interim dividend (which was paid after the year end) from the revenue reserve at 31 March.
Sources: Columbia Threadneedle Investments and Refinitiv Eikon.
4 | CT UK High Income Trust PLC
Overview
Annual dividends and Capital repayments
Growth in payments to shareholders
over last ten financial years
1st interim
Pence per share
2nd interim 3rd interim 4th interim
Source: Columbia Threadneedle Investments
0
1
2
3
4
5
6
2024202320222021202020192018201720162015
Distribution yield compared to the Benchmark Index
and Peer Group at 31 March 2024
0
1
2
3
4
5
7
FTSE All-Share
Index – Yield
Ordinary shares
– Distribution Yield
6
UK Equity Income Sector –
AIC Peer Group – Yield
Yield %
Source: Refinitiv Eikon and AIC
B shares
– Distribution Yield
Cumulative Performance to 31 March 2024
0
10
20
30
40
50
60
70
80
90
10 Years5 Years3 Years1 Year
Net Asset Value total return
Source: Columbia Threadneedle Investments and Refinitiv Eikon
Ordinary share price total return B share price total return Benchmark - total return
11.8
10.2
5.5
8.4
13.4
11.6
9.7
26.1
22.6
21.3
19.2
30.3
53.0
56.7
41.0
75.3
%
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Governance Report Auditor's Report Notice of Meeting Other InformationStrategic ReportOverview Financial Report
I am pleased to present the annual results of CT UK High
Income Trust PLC for the financial year ended 31 March 2024.
Particularly pleased, in fact, as against a backdrop during
the year of high interest rates and inflation in the UK and an
escalation of global tensions, David Moss, the Company’s
Portfolio Manager has produced index-beating returns and
generated an increase in dividends and capital repayments.
These have not been easy times. I hope that one day I shall
not have to write such words and that investment managers,
to whom shareholders have entrusted their savings, will find
the investment universe easier to navigate. But for now, our
daily lives seem to be peppered with news of yet another
conflict that threatens world peace. I see that this time last
year I believed that “the worst is behind us”. Palpably wrong.
Russia seems to have settled in for the long term in its desire
to rebuild the old Soviet Union through destroying Ukraine and
the Israel-Palestine war shows little sign of any permanent
resolution in the short term. How does one manage money in
such unpredictable times?
Well, I’m delighted to say that your Portfolio Manager has
indeed maintained his focus and concentrated on the
Company’s priorities for its shareholders, namely, the growth
in capital and dividends. Over the last few years, the Board
has employed the Company’s revenue reserve to maintain and
grow distributions and this year is no exception. However, the
Portfolio Manager is very well aware of – and is delivering upon
– the Board’s stated objective to rebuild revenue reserves and
the principal reason for drawing on reserves again this year
was the timing of dividend payments from investee companies
that occurred after our year end.
Performance
In the financial year to 31 March 2024 your Company produced
a Net Asset Value (‘NAV’) total return of +11.8% against a total
return of +8.4% from the FTSE All-Share Index, the benchmark
index. This is a very welcome and highly commendable
outperformance of +3.4 percentage points from the Company’s
Portfolio Manager, David Moss. This was especially so during
another challenging economic period which saw inflation peak
at 11.1% in early 2023 with an attendant rise in the Bank of
England base rate to 5.25% in a belated attempt to combat
inflation’s harmful effects on consumers and the UK economy.
As you will read in the detailed Manager’s Review, the portfolio
has been fine-tuned since the appointment of David Moss in
July 2023 to take account of changing market conditions and
sentiment, an approach applauded by your Board as being
not only sensible and pragmatic but also in the best long-term
interests of shareholders.
The Board also concurred with David that the Company should
remain geared throughout the period. This proved painful as
interest rates rose but, as he was confident that positions in
quality companies could be acquired at reasonable prices, it
proved tactically correct to do so. Altering gearing levels on
a play-by-play basis seldom proves beneficial and whilst the
Company has a flexible revolving credit facility, maintaining full
exposure was a unanimous decision.
Strategic Report
Strategic Report
This Strategic Report, which includes pages 5 to 28 and incorporates the Chairman’s Statement,
has been prepared in accordance with the Companies Act 2006.
“Eleventh consecutive year of dividend/capital repayment increases and at
31 March 2024 the Ordinary shares and B shares had yields of 6.7%”
Andrew Watkins, Chairman
Chairman’s Statement
6 | CT UK High Income Trust PLC
Strategic Report
Share Price Performance and Discount to NAV
At the financial year end, the Company’s Ordinary share and
B share prices stood at discounts to the net asset value of
10.6% and 11.6% respectively. These discounts were wider
than the Board would prefer but may have been affected,
temporarily, by adjustments in the market as the Company’s
Units were cancelled at the very end of its financial year. The
average discount levels at which the Company’s Ordinary
shares and B shares traded relative to net asset value in the
financial year were 6.9% and 5.2% respectively and it remains
the Board’s preference for the discounts to be in single figures
whilst maintaining the balance of supply and demand in the
market for both share classes on a daily basis.
Consequently, the share price total return for the Ordinary
shares and B shares was +10.2% and +5.5% respectively.
Dividends and Capital Repayments
As already mentioned, your Board recognises the importance
of dividends to shareholders and has utilised the Company’s
revenue reserve to maintain and increase dividend payments
to Ordinary shareholders in recent years. Total distributions
to shareholders this year increased by 2% to 5.62p per share
compared to the previous year. In the year to 31 March 2024
the revenue earnings per share increased by 10.8% but, due
to the timing of some dividend receipts, as explained earlier,
it has been necessary to draw £105,000 from the revenue
reserve. This is a very short-term situation as those companies
that were due to pay in March duly paid in April 2024. After
payment of the fourth interim dividend on 3 May 2024, the
revenue reserve is £2.3 million, representing 2.77p per
Ordinary share.
Your Company has now increased its distributions to
shareholders in each financial year since 2013 and has been
duly recognised by the AIC as being part of the next generation
of “Dividend Heroes” for increasing dividends to shareholders
in ten or more consecutive years. The total dividend/capital
repayment for the year to 31 March 2024 represented a yield
of 6.7% based on the Ordinary share price and B share price of
84.5p and 83.5p respectively at 31 March 2024.
Gearing
As at the end of the year under review, the Company had a
total borrowing facility of £15 million through an unsecured
Revolving Credit Facility with The Royal Bank of Scotland
International Limited. Your Board believes that an investment
company should use gearing to enhance returns to
shareholders whenever possible and encourages the Portfolio
Manager to use his discretion accordingly. As at the year end,
all of the £15 million facility had been drawn down.
Annual General Meeting (AGM)
The AGM will be held at 11 am on 26 July 2024 at Columbia
Threadneedle Investments, Cannon Place, 78 Cannon Street,
London EC4N 6AG. It is an opportunity for shareholders to
engage with the Board and Manager and I hope you will be able
to attend.
Outlook
It is a relief for all to see that, in spite of recent tensions,
energy prices have come off their highs and domestic bills
have correspondingly fallen. Combined with average wage
increases now exceeding inflation, it feels that discretionary
spending power is improving despite it seeming that the cost of
everything is still going up. Personally, I would not be surprised
if manufacturers attempted to rebuild profits through price
rises but competition is a great leveller when vying for the
consumer’s money.
So, that was a long-winded way of saying that my (relatively)
optimistic outlook is back. With a General Election now called
for 4 July 2024, whichever party forms the next Government is
likely to oversee a slowly growing economy, inflation possibly
at the Bank of England’s target 2% rate accompanied by a very
welcome (and overdue) fall in interest rates. Global tensions
notwithstanding and assuming no major escalation or serious
interruption to trade routes, it is possible to envision a much
better environment for UK equities after a tough few years of
treading water.
If my reading is correct, I firmly believe your Company is in
the best possible shape to benefit accordingly. David Moss
has constructed a balanced portfolio of companies with
the potential to grow in capital terms and increase dividend
payments, exactly the recipe required to produce positive
returns for you, our shareholders. It is likely that the portfolio
will remain geared during the Company’s 2024-2025 financial
year to capitalise accordingly, especially as interest rates
decline and the cost of borrowing reduces. Making the most
of the closed-ended structure of an investment company by
gearing at appropriate times is wholly supported by your Board
and should, I hope, reap rewards over the next 12 months.
As ever, thank you for being a shareholder in CT UK High
Income Trust PLC. Your support is very much appreciated.
Andrew Watkins
Chairman
30 May 2024
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Strategic Report
Purpose and Strategy
The purpose of the Company is be a cost effective investment
vehicle for investors seeking income and capital returns from a
portfolio invested predominately in UK equities.
The investment objective is to provide an attractive return
to shareholders each year in the form of dividends and/
or capital repayments, together with prospects for capital
growth. We do this by investing predominantly in UK equities
and equity related securities of companies across the market
capitalisation spectrum. Our wider strategy is to promote
the Company as a compelling investment choice through all
available channels.
Business Model
CT UK High Income Trust PLC is a listed closed-end investment
company and carries on business as an investment trust.
As an investment company with no employees, the Directors
believe that the best way of meeting their duty to promote the
success of the Company and achieving its investment objective
for the benefit of stakeholders is to work closely with its
appointed Manager. The Board has contractually delegated the
management of the investment portfolio, and other services,
to Columbia Threadneedle Investment Business Limited
(the ‘Manager’) which is owned by Columbia Threadneedle
Investments, the global investment management business of
Ameriprise Financial, Inc. (‘Ameriprise’) a company incorporated
in the United States. Within policies set and overseen by the
Directors, the Manager has been given overall responsibility
for the management of the Company’s assets, gearing, stock
selection and risk management. Engagement on environmental,
social and governance (‘ESG’) matters is undertaken through a
global team within Columbia Threadneedle Investments.
As a listed closed-end investment company, the Company is
not constrained by asset sales to meet redemptions. The
Company’s capital structure provides the flexibility to take a
longer term view and to remain invested while taking advantage
of volatile market conditions. Having the ability to borrow
to invest is a significant advantage over a number of other
investment fund structures. These features combine to form
a resilient and adaptable business model.
The Company’s Board of non-executive Directors is responsible
for the overall stewardship and governance of the Company and
how it promotes the success of the Company is set out on pages
22 and 23. The Board’s biographical details can be found on
page 29. The Company has no executive Directors or employees.
The Board remains responsible for decisions over corporate
strategy, corporate governance, risk and control assessment,
setting policies as detailed on pages 27 and 28, setting limits
on gearing and monitoring investment performance.
Alignment of Values and Culture
In addition to strong investment performance from our Manager,
we expect it to adhere to the highest standards of responsible
investment, transparency, corporate governance and business
ethics and that its values and culture align with our own.
Columbia Threadneedle Investments was an original signatory
to the United Nations Principles for Responsible Investment
(‘UNPRI’) and in 2023, across each reporting module, it scored in
line or above the investment management median. The Manager
has a culture of diversity, collaboration and inclusion, anchored
by shared values and industry-leading employee engagement in
keeping with the Board’s own expectations and beliefs.
Responsible Investment Impact
Environmental, Social and Governance (‘ESG’) issues can present
both opportunities and threats to the long-term investment
performance the Company aims to deliver and its approach, as
set out on pages 17 to 21, is aligned towards the delivery of
sustainable investment performance over the longer term.
The direct impact of the Company’s activities on the community
or environment is minimal as it has no employees, premises,
physical assets or operations, either as a producer or a provider
of goods and services, and it does not have customers in the
traditional sense. Consequently, it does not directly generate any
greenhouse gas or other emissions or pollution. The Company’s
indirect impact occurs through its investments and this is
mitigated by the Manager’s Responsible Investment approach as
explained on pages 17 to 21.
The Manager
A summary of the investment management agreement is
contained in note 4 to the financial statements. The Manager
also acts as the Alternative Investment Fund Manager
(‘AIFM’) under the Alternative Investment Fund Managers
Directive (‘AIFMD’) and provides ancillary functions such as
administration, marketing, accounting and company secretarial
services to the Company.
During the financial year, on 13 July 2023, the Board announced
that David Moss would succeed Philip Webster to act as the
Portfolio Manager (‘Portfolio Manager’) to the Company, on
behalf of the Manager. David has 28 years’ industry experience,
the majority of them in managing assets on behalf of a wide
variety of clients, including investment trusts. He is supported in
carrying out research and in the selection of stocks by a team of
investment professionals. Details of the Manager‘s investment
philosophy and process are set out on pages 12 and 13.
Purpose, Strategy and Business Model
8 | CT UK High Income Trust PLC
Strategic Report
Manager Evaluation
Investment performance and responsible ownership are
fundamental to delivering the investment objective for
shareholders and therefore an important responsibility of the
independent non-executive Board of Directors is the robust
annual evaluation of the Manager. This evaluation is an
essential element of strong governance and mitigation of risk.
The process for the evaluation of our Manager’s performance
and its capabilities and resources for the period under review,
which was conducted by the Engagement and Remuneration
Committee, and the basis on which the re-appointment
decision was made, is set out on page 41.
Investment Policy
The Company’s investment policy is set out on page 27 and an
analysis of the investment portfolio is contained on pages 14
to 16.
Any material change to the investment policy of the Company
will only be made with shareholder approval.
Managing Risks and Opportunities
We seek to make effective use of our corporate structure and
the investment opportunities that lead to long-term growth in
capital and income for our shareholders. These opportunities
do not come without risks and therefore the performance of
our Manager is monitored at each Board meeting on a number
of levels. In addition to managing the investments, ancillary
functions such as administration, marketing, accounting and
company secretarial services are also carried out by the Manager.
At each Board meeting it reports on the Company’s investment
portfolio, performance, recent portfolio activity, market outlook,
revenue and expense forecasts, internal control procedures,
any errors, marketing, shareholder and other stakeholder issues
including the prices of the Company’s shares relative to NAV,
together with accounting and regulatory updates. The Board also
considers compliance with the investment policy, investment
restrictions and compliance with borrowing covenants.
The Company’s principal risks and uncertainties that could
threaten its objective, strategy and performance, and how the
Board manages such risks, are set out in detail on pages 24
and 25. The risk of not achieving the Company’s objective, or
of consistently underperforming its benchmark or competitors,
may arise from any or all of inappropriate investment strategy,
poor market conditions, the use of gearing, insufficient
monitoring of costs and service provider issues.
In addition to monitoring our Manager’s performance,
capabilities, available resources and its systems and controls,
the Directors also review the services provided by other
principal suppliers. These include JPMorgan Chase Bank, the
Custodian and JPMorgan Europe Limited, the Depositary in
their duties towards the safeguarding of the Company’s assets.
Review of Performance and Outlook
The principal policies that support our investment and business
strategy are set out on pages 27 and 28. Shareholders can
assess our financial performance from the Key Performance
Indicators (‘KPIs’) that are set out on page 9. The Chairman’s
Statement on pages 5 and 6 and the Manager’s Review on
pages 10 and 11, both of which form part of this Strategic
Report, provide a review of the Company’s returns and market
conditions during the financial year, the position of the
Company at the year end, and the outlook for the coming year.
In light of the Company’s strategy, investment processes and
control environment (relating to both the oversight of its service
providers and the effectiveness of the risk mitigation activities),
the Board has set out its viability assessment and statement
on page 26 and its reasonable expectation that the Company
will be able to continue in operation and meet its liabilities as
they fall due over the next three years.
Stakeholder Communication and Marketing
The Company fosters good working relationships with its key
stakeholders; such as the Manager, shareholders, bankers
and other key service providers. The Board works closely with
the Manager to ensure optimal delivery of the Company’s
investment proposition through all available channels and,
together, we remain focused on promoting the success of the
Company. The Manager offers a range of savings plans for
retail investors which are a convenient and flexible way to invest
in the Company, details of which can be found in the ‘How to
Invest’ section of this report on page 84.
The Company welcomes the views of all shareholders and places
great importance on communication with them. In addition to the
annual and half-year reports that are available for shareholders,
monthly fact sheets and additional information is included on the
Company’s website at ctukhighincome.co.uk.
Whenever the Manager holds meetings with the Company’s
larger shareholders, these are reported on to the Board.
The Chairman and other Directors are available to meet
shareholders if required. In addition, meetings are held with
current and prospective shareholders and analysts covering the
investment trust sector.
The Annual General Meeting of the Company provides a forum,
both formal and informal, for all shareholders to meet and
discuss issues with the Directors and Manager of the Company.
Through the Manager, we also make sure the savings plan
investors are encouraged to vote at the AGM in addition to
those who hold their shares on the main shareholder register.
Details of the voting results on each resolution are published
on the Company’s website.
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Strategic Report
Total return
(1)
performance to 31 March 2024
1 Year % 3 Years % 5 Years % 10 Years %
Net asset value per Ordinary share and B share 11.8% 13.4% 22.6% 53.0%
This measures the Company’s share price and NAV total
returns (which assumes dividends/capital repayments
paid by the Company have been reinvested), relative to
the benchmark.
Ordinary share price 10.2% 11.6% 21.3% 56.7%
B share price 5.5% 9.7% 19.2% 41.0%
Benchmark
(2)
8.4% 26.1% 30.3% 75.3%
Distribution Yield
(1)
%
Financial year to 31 March
2024
%
2023
%
2022
%
Ordinary shares 6.7 6.7 6.3
This shows the Company’s distribution yield at the
year-end relative to the benchmark.
B shares 6.7 6.5 6.2
Yield on FTSE All-Share Index 3.8 3.6 3.1
Average discount
(1)
to NAV
During the financial year to 31 March
Ordinary
shares
%
B shares
%
2024 -6.9 -5.2
This is the average difference between the share price
and the NAV per share during the financial year.
2023 -7.5 -4.3
2022 -6.9 -5.2
Ongoing charges ratio
(1)
As at 31 March %
2024 1.08
This data shows whether the Company is being
run efficiently. It measures the running costs as a
percentage of average net assets.
2023 1.02
2022 0.98
(1)
See Alternative Performance Measures on pages 87 and 88 for explanation.
(2)
Benchmark – see definition on page 2.
Sources: Columbia Threadneedle Investments and Refinitiv Eikon.
The Board recognises that it is the distribution level of the Ordinary shares and B shares together
with the longer term share price performance that is most important to the Company’s investors.
Share price performance is driven largely by the performance of the net asset value.
The Board uses a number of performance measures to assess the Company’s success in meeting
its objectives. The key performance indicators (‘KPIs’) (also referred to as Alternative Performance
Measures) are set out below. Additional comments are provided in the Chairman’s Statement and the
Manager’s Review discussing the performance of the Company during the current year.
Key Performance Indicators
10 | CT UK High Income Trust PLC
Strategic Report
The last financial year has been different from recent ones in
that Covid has not been a subject of discussion nor the key
driver of share prices. We have, though, arguably been dealing
with the consequences of the pandemic – namely the huge
increases in Government borrowing and the money supply
together with the breakdown of supply chains exacerbated by
the conflict in Ukraine. The result has been that two directly
related topics have been the only real driver of equity markets
in the last twelve months – inflation and interest rates. When
we started our financial year on 1 April 2023, we had already
seen the fastest pace of UK base rate rises ever and we saw
a further 100 basis points before the end of August. While
sentiment on inflation has waxed and waned since then and
the Bank of England has kept rates flat, there is clear evidence
of inflation falling and we look forward to the Company’s new
financial year with a focus on when the first rate cut will be,
rather than if it will happen.
What has perhaps been surprising is that while the UK economy
has clearly slowed as a result of these interest rate increases,
we have seen neither the collapse in consumer spending nor rise
in unemployment predicted by some. While the UK experienced
a very brief technical recession, the impact was minimal. The
biggest liability for UK consumers is their mortgage and the
nature of the majority of UK mortgages, where the rates are
fixed typically for two to five years, has meant that together
with the sheer number of UK homeowners that don’t have a
mortgage, many households have yet to be negatively impacted
by higher rates. While inflation has clearly had an effect on
household consumption habits, we have also seen rising
nominal wages helping to offset the impact. With employment
numbers remaining strong, inflation now falling and lower
long-term rates feeding into lower mortgage rates, the outlook
for the UK consumer is, in our opinion, improving. While we
expect to see interest rates fall this year we do not see them
falling to anywhere near the levels prevailing pre-and during the
pandemic. Contrary to many, we see this as a positive and an
environment that we consider ‘normal’ where money is not free
and accordingly capital should be allocated more efficiently and
one where savers are rewarded rather than punished.
After the turbulence in politics last year, we have had a
relatively stable political backdrop in the last twelve months.
We can expect a lot more political noise at least during the rest
of this calendar year as we move through the general election
and see the emergence of actual policy thereafter. Despite
the economy holding up, a better outlook ahead and cuts to
National Insurance contributions, it appears clear that this
election will see a change in Government. Whilst the likelihood
of a Labour administration often causes concern for investors
and volatility in markets, for now at least the messaging from
Labour and in particular the Shadow Chancellor has been
benign. We will see the reality in due course but for now we see
nothing to disturb our positive view of the year ahead.
Performance
While UK equities were volatile at times, falling 10% from the
initial high point in April 2023 and then rising and falling over
6% twice more during the Company’s financial year, better
economic news, in particular on inflation, led the UK stock
market, as measured by the FTSE All-Share Index, to rise fairly
consistently from the October 2023 low to produce a total
return of 8.4% over our financial year.
The net asset value (“NAV”) total return of the Company was
11.8% over the financial year out-performing the benchmark
index by 3.4 percentage points, representing a welcome
return to out-performance. This represents an acceleration in
performance from the first part of the financial year helped
by the judicious use of gearing, the Company’s portfolio was
ahead of a rising market, with the biggest driver of performance
being strong stock selection.
Pleasingly, we have had positive contributions from stocks we
have held for some time, as well as stocks newly purchased
this year. It has taken over a decade, but legal finance group
Burford Capital finally received a positive opinion from the
Judge in its case against the Argentinian Government for the
forced nationalisation of YPF. There are still appeals to come
but the market recognised the potential for value generation
and the shares responded very strongly. Two other long-
held investments were also amongst the leading positive
Manager’s Review
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David Moss, Portfolio Manager
Report and Accounts 2024 | 11
Strategic Report
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contributors with Cairn Homes producing strong results with
rising dividends and share buybacks as they benefit from being
the largest housebuilder in an Irish market with a shortage
of housing. The biggest individual contributor was private
markets investor Intermediate Capital Group where asset
raising and investment returns have been robust. The demand
from investors for access to private assets looks set to remain
strong for years to come. Recent purchase SAP was amongst
the top positive contributors as results were consistently good,
the company increased guidance and was seen as a beneficiary
of Artificial Intelligence.
Portfolio Changes
There has been an increase in turnover in the financial year
as we looked to position the portfolio for what we felt were the
opportunities ahead. This focused overwhelmingly on increasing
the level of sustainable income generated by the portfolio and
investing in companies where we could expect this to grow
into the future. We approached this in two ways; we sold out of
companies where dividends were zero or very low and where
there was little prospect of any meaningful income soon and
re-invested the proceeds in companies that have high current
dividend yields and/or have the ability to grow distributions
to shareholders. The latter is, we believe, the most important
element as our strategy is to provide shareholders with a high
and growing level of income. In terms of the companies that we
sold, this included THG, ASOS, Wizz Air and Delivery Hero, all
companies that we felt would struggle to fulfil expectations and
where we saw no prospect of dividends on any sensible time
horizon. We also sold a number of stocks with very low dividend
yields and limited growth prospects including Experian, Deutsche
Boerse, ASML and Hiscox.
We have made new investments in several areas but activity
within the financials sector stands out. As stated above, we
believe we are now in an era in which money is no longer
free, i.e. interest rates will be positive even if lower than now.
This is a significant change for banks in particular which have
struggled to generate acceptable returns for some time. After
many years of limited demand for credit and strict regulation,
UK banks are very well capitalised, highly liquid and, having
been ignored by investors for years, are now very attractively
valued. In this new era, they are able to generate low-mid
teens returns on equity and can deliver significant returns to
shareholders including very attractive and growing dividends
and we have, therefore, bought a position in NatWest Group.
All the previous points apply to NatWest but in addition, at
the time of purchase, the resolution of well-publicised internal
issues and the change of CEO gave us even greater comfort.
We also added to our position in specialist buy-to-let lender
OSB Group and bought UK asset manager and insurance
company M&G.
Two of our purchases this year have been the largest stocks
in the UK market – AstraZeneca and Shell. While we believe
we can add a lot of value at the smaller end of the market
we will not be dogmatic about what makes a good business
whether that be size or type. AstraZeneca under CEO Pascal
Soriot’s tenure has proven to be one of the UK’s most dynamic
and high growth companies and one of the world’s foremost
pharmaceutical companies. Shell in common with most of
its peers, has had a radical transformation in its approach to
capital allocation. The oil companies have experienced high oil
prices many times in the past but this boon normally results in
big increases in capital expenditure on increasingly marginal
projects and ultimately weaker returns for shareholders. In this
cycle, Shell has been very disciplined on investment and the
result has been high and growing returns to shareholders.
Outlook
What is most important for us is the quality of companies we
invest in and the price we pay, not any particular economic view.
That said, few of our investee companies operate in isolation
and we are positive for the year ahead as the combination
of an improving economic outlook, falling inflation and lower
interest rates should be a very positive backdrop for equities.
We can look at other equity markets and question whether
this is priced in, but we are firmly of the view that this is not
the case in the UK and especially in the more domestically
exposed areas of the market. We and others have written
extensively about the low valuation of UK equities but for our
Company this provides fantastic opportunities. We can invest in
companies that have the levels of dividends we need to meet
our ambitions for our shareholders but the reason for these
high dividends is not because they are weak or low returning
businesses, but because they are in an out-of-favour market –
the UK – and often in out-of-favour sectors. The result is that
not only do these companies pay high dividends now, but we
strongly believe they can grow these dividends into the future.
Dividends grew 7.7% last year in the UK and we would expect
more growth this coming year, together with a continuation of
share buybacks if low valuations persist.
David Moss
Portfolio Manager
Columbia Threadneedle Investment Business Limited
30 May 2024
12 | CT UK High Income Trust PLC
Strategic Report
We believe investment markets can be inefficient and that share prices may not fully reflect the
future prospects and returns of companies. We believe it is possible to identify significant deviations
between market prices and a conservative assessment of the intrinsic value of a business.
By investing in such companies at attractive prices, superior
investment performance can be generated. In particular,
we believe those companies that can compound returns at
sustainably high rates over many years tend to be undervalued
by the market. The valuations of companies can also become
attractive because of adverse market reaction to short-
term difficulties or simply because a sector has become
unfashionable. If companies are able to generate attractive
returns over long periods, there is evidence that the market
eventually rewards this success with higher valuations.
This philosophy leads naturally to long-term investment thinking
and the generation and preservation of value over the longer
term. We are not looking to trade shares, nor are we making
short-term bets on market movements, but instead are looking
to the longer term. Over time, we expect the high returns
generated by our holdings to be reflected in share prices, which
will in turn benefit further from valuation increases as the
market recognises the level and sustainability of those returns.
As shareholders, we are part-owners of businesses, and take
our responsibilities seriously, engaging with the company’s
management and non-executives if necessary, and voting on all
resolutions at company meetings.
Manager’s Investment Philosophy
andProcess
The Investment Process focuses on Three Aspects for Each Company
• Margin of safety
• Present value of
future cash flows
• Sustainable
superior returns
• ESG score embedded
in proprietary
valuation method
• Proven operators
• Responsible capital
allocators
• Aligned interests
• Appropriate
incentives
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• Durable competitive
advantages
• Attractive business model
• Strong sustainability
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• Strong governance
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Strategic Report
Risk is often seen as the flipside of return. The standard
economic and business academic approach to risk measures
it in terms of volatility. Sharp upward moves in share prices
are seen as just as “risky” as an equivalent downward move.
This is not really a measure that most practical investors would
find useful or familiar. We prefer an approach which focuses
on companies with attractive returns and relatively little debt
where we expect to be able to reduce the risk of a permanent
loss of capital.
We carry out detailed analysis of all the companies in which
we invest, looking in particular at three aspects: the Quality
of the company; its Management; and the Valuation of the
shares. Amongst the most important issues examined is a
thorough assessment of the sustainability of the company’s
competitive position and returns it can generate, and the ability
of the management team and its alignment with shareholders.
Integral to our assessment of these factors is an analysis of
the Environmental, Social and Governance (‘ESG’) issues that
face the company and its responses to them which is fully
integrated into our process and valuation analysis. More detail
is given on pages 17 to 21. Our valuation approach focuses
on discounted cash flows, but is pragmatic enough to realise
this does not work for all companies in all sectors so other
valuation methods are also used.
Before investing, we ascertain that the share price stands at a
reasonable discount to an assessment of the intrinsic value of
the business, giving us a margin of safety on the investment.
Our research is conducted in-house, which is peer reviewed
by the wider investment team prior to any purchase decision.
This ensures the benefit of shared knowledge and experience
is brought to bear on each investment. The progress of the
company and its share price will then be continually monitored
with in-depth reviews and retesting of the original investment
thesis particularly if the company or its share price don’t
perform as initially expected.
Like all investors, we are having to make assessments about
the future and take decisions in the face of uncertainty.
There is a real possibility of being wrong. We believe that we
can mitigate this risk by following this long-term philosophy,
emphasising a number of factors: thorough analysis; peer
review; the need for a margin of safety on purchase; continual
monitoring; and diversification of the investment portfolio.
Reasons to sell can be driven by positive or negative
factors: positive, if the value of the company has risen to our
assessment of its value, or negative, if the assessment of
the company’s long-term value deteriorates significantly. An
investment may also be sold if, for example, a similar, but
cheaper alternative can be found or if the size of the investment
position has become larger than is preferred for risk purposes.
David Moss
Portfolio Manager
30 May 2024
Implementation of the Investment Process
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14 | CT UK High Income Trust PLC
Strategic Report
The following table and chart shows, at 31 March 2024, the percentage weightings by industry classification benchmark (‘ICB’)
industry of the investment portfolio in comparison to the FTSE All-Share Index.
Investment Portfolio by ICB Industry
ICB Industry % Total investments % FTSE All-Share Index
Financials 23.0 23.7
Consumer Discretionary 22.7 12.5
Industrials 13.0 12.5
Health Care 10.7 11.4
Energy 8.1 11.0
Basic Materials 6.5 6.7
Consumer Staples 5.8 13.7
Real Estate 4.3 2.5
Utilities 3.5 3.5
Technology 2.4 1.4
Telecommunications 0.0 1.1
Total 100.0 100.0
0510 15 20 25
Telecommunications
Technology
Utilities
Real Estate
Consumer Staples
Basic Materials
Energy
Health Care
Industrials
Consumer Discretionary
Financials
FTSE All-Share Index %
Total Investments %
%
Investment Portfolio analysis by Index as at 31 March 2024
Source: Columbia Threadneedle Investments
% of Investment
Portfolio
FTSE 100 70.0%
FTSE 250 17.9%
Overseas 6.0%
Non-Index 4.6%
AI M 1.5%
100.0%
Classification of Investments
Report and Accounts 2024 | 15
Strategic Report
At 31 March 2024
Company (ICB Industry – Sector)
Market Value
31 March 2024
£’000
% of
Total
Investments
Shell (Energy – Oil, Gas & Coal)
A leading international oil exploration, production and marketing group. Historically, Shell and its peers
struggled to generate consistently good returns on capital, but the combination of a higher oil price and
much greater capital discipline is driving higher returns and very strong cash generation. 9,796 8.1
AstraZeneca (Health Care – Pharmaceuticals & Biotechnology)
AstraZeneca is a major international pharmaceutical company which has consistently been one of the most
innovative companies in the UK. Its pipeline of new drugs is proving successful and producing strong growth
now, with more potential further out. 7,861 6.5
Rio Tinto (Basic Materials – Industrial Metals & Mining)
Rio Tinto is a diversified international mining company with very strong positions in iron ore and aluminium
and has been investing heavily in copper where demand should grow over many years due to the demands
from electrification. 6,633 5.5
GSK (Health Care – Pharmaceuticals & Biotechnology)
GSK is a global manufacturer and marketer of pharmaceutical products. Post the spin-off of the over-the-
counter healthcare business GSK is a pure play pharmaceutical company, with strong positions in areas such
as vaccines and HIV treatment, and is starting to see a return in growth from its R&D investment. 5,118 4.2
Phoenix Group Holdings (Financials – Life Insurance)
Phoenix Group is the UK’s largest long-term savings and retirement business and offer a range of products
across their market-leading pensions, savings and life insurance brands. Phoenix consistently pays a high
and growing dividend. 4,866 4.0
Legal & General Group (Financials – Life Insurance)
Legal & General is one of the UK’s leading financial services groups. The market leader in the Pension
buy-out market in the UK, this market is expected to provide strong growth for several years. Despite this
growth, Legal & General pays out a high dividend to shareholders. 4,443 3.6
RELX (Consumer Discretionary – Media)
RELX is a multinational information and analytics company with strong positions in financial and legal
information and the publisher of some of the largest and well-known academic publications in the world. 4,386 3.6
NatWest Group (Financials – Banks)
NatWest is one of the foremost UK financial institutions with leading positions in all segments. The bank is
very well capitalised which is enabling it to make significant returns to shareholders. 4,348 3.6
Imperial Brands (Consumer Staples – Tobacco)
Imperial Brands is involved in the manufacture, marketing and selling of cigarettes and other tobacco
products. It is also at the forefront of developing alternatives to traditional tobacco products. 4,316 3.5
Compass Group (Consumer Discretionary – Consumer Services)
Compass is the global leader in outsourced catering. The business has emerged in a stronger position post
the pandemic and is the market leader in most segments in most countries, benefiting from significant
economies of scale. 4,243 3.5
Ten Largest Investments 56,010 46.1
Investment Portfolio
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16 | CT UK High Income Trust PLC
Strategic Report
At 31 March 2024
Company ICB Industry – Sector
Market Value
31 March 2024
£’000
% of
Total
Investments
Cairn Homes Consumer Discretionary – Household Goods & Home Construction 3,909 3.2
OSB Group Financials – Finance & Credit Services 3,765 3.1
M&G Financials – Investment Banking & Brokerage Services 3,745 3.1
Smurfit Kappa Group Industrials – General Industrials 3,624 3.0
Vistry Group Consumer Discretionary – Household Goods & Home Construction 2,986 2.5
Rolls Royce Industrials – Aerospace & Defense 2,826 2.3
British American Tobacco Consumer Staples – Tobacco 2,758 2.3
Intermediate Capital Group Financials – Investment Banking & Brokerage Services 2,696 2.2
Londonmetric Property Real Estate – Real Estate Investment Trusts 2,610 2.2
Supermarket Income REIT Real Estate – Real Estate Investment Trusts 2,580 2.1
Twenty Largest Investments 87,509 72.1
Mercedes-Benz Consumer Discretionary – Automobiles & Parts 2,426 2.0
SSE Utilities – Electricity 2,384 2.0
Pearson Consumer Discretionary – Media 2,329 1.9
Ibstock Industrials – Construction and Materials 2,317 1.9
Hargreaves Lansdown Financials – Investment Banking & Brokerage Services 2,254 1.9
WPP Consumer Discretionary – Media 2,109 1.7
Ashtead Group Industrials – Industrial Transportation 2,106 1.7
Rotork Industrials – Electronic & Electrical Equipment 1,898 1.6
Persimmon Consumer Discretionary – Household Goods & Home Construction 1,848 1.5
Compagnie Financière Richemont Consumer Discretionary – Personal Goods 1,802 1.5
Thirty Largest Investments 108,982 89.8
Pennon Group Utilities – Gas, Water & Multi-utilities 1,794 1.5
Burford Capital Financials – Investment Banking & Brokerage Services 1,762 1.5
SAP Technology – Software & Computer Services 1,556 1.3
Schneider Electric Industrials – Electronic & Electrical Equipment 1,495 1.2
Dunelm Group Consumer Discretionary – Retailers 1,494 1.2
CRH Industrials – Construction & Materials 1,439 1.2
Sage Group Technology – Software & Computer Services 1,282 1.1
Croda International Basic Materials – Chemicals 1,213 1.0
Investors Securities Company Limited N/A (subsidiary undertaking) 250 0.2
Total Investments 121,267 100.0
Report and Accounts 2024 | 17
Strategic Report
Responsible Investment
We believe investing responsibly is fundamental to long-
term wealth creation. The Company has not set out to be an
investment trust with any ESG or sustainable characteristics.
However, we have a Manager that integrates the consideration
of financially material environmental, social and governance
(‘ESG’) factors into its research and investment process and
encourages stronger ESG practices to be adopted by issuers
through its engagement and voting activities.
Our Approach
We believe that good financial outcomes are more likely to be
achieved if we fully understand the risks and opportunities that
relate to the markets in which we invest. More than ever, ESG is
a critical component of this understanding. We need to ensure
the companies we invest in have a robust approach to managing
environmental and social risks and opportunities. We also expect
good governance practices which we believe better positions
companies to manage risks, identify opportunities, and deliver
sustainable growth.
There are two strands to the Board’s approach to responsible
investment:
• The Company’s own responsibilities on matters such as
governance; and
• The impact the Company has through the investments that
are made on its behalf by its Manager.
The Company’s compliance with the AIC Code of Corporate
Governance is detailed in the Corporate Governance Statement
on pages 37 to 39. In addition, the Principal Policies statement
on pages 27 and 28 notes the Company’s policies towards board
diversity and tenure, integrity and business ethics, UK financial
sanctions and prevention of the facilitation of tax evasion.
The Board recognises that the most material way in which the
Company can have an impact is through responsible ownership of its
investments. The Manager engages actively with the management of
investee companies to encourage high standards of ESG practice.
Responsible Ownership
Engaging actively with companies on significant ESG matters
to reduce risk, improve performance, encourage best practice
and underpin long-term investor value forms a fundamental part
of the Manager’s approach towards responsible investment.
Engagement in the first instance rather than simply divesting or
excluding investment opportunities is also part of this approach.
The Manager’s Corporate Governance Guidelines set out its
expectations of the management of investee companies in terms
of good corporate governance. This includes the affirmation of
responsibility for reviewing internal ethics policies and ensuring
that there is an effective mechanism for the internal reporting
of wrongdoing, whether within the investee company itself, or
involving other parties, such as suppliers, customers, contractors
or business partners. The Manager is a signatory to the United
Nations Principles for Responsible Investment (‘UNPRI’) under
which signatories contribute to the development of a more
sustainable global financial system. As a signatory the Manager
aims to incorporate the consideration of financially material ESG
factors into its investment processes.
ESG and the Investment Process
During 2023, as part of the integration of the Manager’s
business with Columbia Threadneedle Investments, the
Manager underwent an extensive project to join all investment
teams together on a single order management system (‘OMS’).
This was completed in October 2023 and helped to expand the
availability of the Manager’s ESG integration tools, through the
combined OMS. These tools use data from many sources to
enhance and inform the integration of ESG considerations into
investment research, portfolio construction and risk monitoring,
by giving a clear picture of the ESG considerations that are
financially relevant to different investment opportunities. Key
tools include:
• ESG materiality ratings;
• Sustainable Development Goals (‘SDG’) mapping tool;
• Net zero framework;
• Good governance model;
• Exclusions framework; and
• Controversy rating.
These tools mark a starting point for the Manager’s ESG
assessment and the Responsible Investment team at the
Manager hosted training sessions on them as well as thematic
ESG topics. The Portfolio Manager works with the Responsible
Investment analysts to ensure that those performing the work
on individual investment opportunities for the Company are well
informed in what to look for in relation to the ESG aspects of their
analysis. Specialism within the Responsible Investment team
allows the fund managers to talk to those who understand the key
ESG issues relating to a particular sector.
Sustainability and ESG
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As stewards of more than £100 million of net assets, we support investing responsibly and the
Company benefits from the Manager’s approach in this field.
18 | CT UK High Income Trust PLC
Strategic Report
ESG analysis is therefore a key part of our quality scoring of
companies and overall risk assessment. The Portfolio Manager
also note if individual investments are aligned explicitly with any
of the UN Sustainable Development Goals. More information on
the approach and methodology can be found on the Manager’s
website at www.columbiathreadneedle.com.
Portfolio Case Study
NatWest Group
NatWest is a key retail and commercial bank in the UK,
providing numerous financial services to personal, business and
commercial customers. The company plays an important role
in supporting the UK economy and local communities, with a
high share of their loan book going towards small and medium-
sized enterprises, where they play a proactive role in supporting
the growth of these businesses and broader financial inclusion
efforts. Serving their 19 million customers and their local
communities remains the key pillar of their ESG strategy.
This is exemplified in their approach to climate risk management
and decarbonisation, having recently released a sector-leading
climate transition plan, detailing how they are putting their broader
ESG strategy into practice. As part of this, the company has
measured 90% of their loan and financed investments emissions,
setting targets for a total of 9 sectors. This includes for their
residential mortgage book, which accounts for 50% of their total
lending. They have set a target for 50% of this portfolio to have
an Energy Performance Certificate rated A to C by 2030, in order
to support the decarbonisation of buildings, which accounts for
17% of UK total emissions. They offer a suite of green mortgage
products to incentivise and support clients to enhance their
energy efficiency and reduce their emissions. In light of lower
demand for these products, they have more recently developed
several tools to better help clients understand potential cost
savings and options to enhance energy efficiency, stimulating
demand for these products whilst also supporting the UK
Government’s decarbonisation goals. They have also played a
proactive role in engaging with Government to implement policies
to enhance energy efficiency in homes.
More broadly, NatWest continued to action their Transition-
Plan-Taskforce aligned climate transition plan by focusing on
prioritising climate-related opportunities based on their relative
commercial and decarbonisation potential to support their
customers. They have now provided £61.9 billion in climate
and sustainable funding and financing against their target of
£100 billion by the end of 2025.
Engagement
During the year ended 31 March 2024, the Responsible Investment team engaged 40 times with management in 15 companies in
the investment portfolio, across 3 countries. Following its engagement, the Manager recorded 6 improvements in their ESG policy,
management systems or practices. The most common areas for discussion were Net Zero, followed by Energy Transition, Climate
Change Disclosure and Transparency, and Human Rights Due Diligence. Analysis of this engagement follows.
2024 engagement analysis
Climate Change 35%
Corporate Governance 21%
Environmental Stewardship 15%
Human Rights 12%
Labour Standards 8%
Public Health 6%
Business Conduct 3%
Source: Columbia Threadneedle Investment Business Limited
Report and Accounts 2024 | 19
Strategic Report
Engagement examples in the reporting period
Rio Tinto (Basic Materials – Industrial
Metals & Mining)
Issue: Climate Change
SDG target(s): 13.2 Climate Action
Rio Tinto (Rio) is the world’s second largest metals and mining company. It announced in
July 2023 that it is unlikely to achieve its 2025 climate targets; largely due to the scope 1
and 2 emissions from its Australian aluminium refineries, stating that the target could only
be reached if it ‘resorted’ to buying carbon credits. As a result, the Manager engaged with
Rio Tinto on this announcement, seeking to understand the barriers that the company had
identified and any plans to address them.
Rio Tinto has been hit hard by the revisions to the Australian ‘safeguarding mechanism’
which taxes the country’s largest industrial sites (ie those that emit more than 100,000
tons of direct (scope 1) carbon dioxide emissions annually). In July 2023, Rio reported a
US$1.2bn write down of its Australian aluminium refiners due to the mechanism’s new rules.
The Manager engaged with Rio on its reaction to this policy, as well as its preparedness for
any future punitive measures. According to the Investor Relations team, the company were
actually aware of the risks to the aluminium refineries and had planned for this eventuality.
As a result, the Manager encouraged the company to provide better scenario analyses
and risk assessments to investors around the potential for further regulatory shifts in
any of the countries it operates refineries in, as the actions taken by the company did not
indicate that Rio had embedded this potential write-down risk into its climate strategy and
financial planning.
Rio is being transparent about its current struggles with net-zero, which the Manager
commends. However, the Manager is keen to see clearer evidence of it aligning its financial
accounts and risks with its net-zero strategy. The Manager will continue to engage with
Rio on its decarbonisation target and have already reached out to set up a follow up
conversation on its offsetting strategy –now its last resort for achieving its 2025 targets.
Smurfit Kappa Group PLC (Industrials –
General Industrials)
Issue: Environmental Stewardship
SDG target(s): 15.5 Life on Land
Smurfit Kappa Group PLC (Smurfit) is an Ireland-based provider of paper-based packaging.
It is the largest producer in Europe of corrugated packaging, containerboard and ‘bag in
box’, and it is the only Pan-American producer of containerboard and corrugated packaging.
The Manager had two meetings with the company in 2023 and participated in their ESG
materiality survey.
Biodiversity was a key focus for the Manager’s conversations. Smurfit’s primary operational
impact on biodiversity is through its Colombian forestry assets. It also discloses on the
presence of threatened species and protected areas in the vicinity of operational sites, but
has not set operational targets on biodiversity. The bulk of Smurfit’s wood fibre is sourced
from third party providers, currently 94% of this supply is Forest Stewardship Council’s chain
of custody certified which is market leading, but the firm has not set wider biodiversity targets
for suppliers. The Manager flagged to Smurfit that several industry peers have now set
explicit biodiversity targets covering operations and suppliers, and that there are an increasing
number of ways to collect data and have suppliers certified to improved standards. The
company seemed receptive of the Manager’s views on this, and the Manager followed up with
additional guidance.
The Manager spoke about the impact of the EU Deforestation Regulation. The company has
evolved its due diligence practices to meet the requirements, but still has a considerable
way to go to meet the geolocation requirement. The Manager encouraged Smurfit to set top-
level biodiversity targets for its Colombian and European operations that cover both set-aside
areas for conservation and plantations, and provided examples of targets the company could
look to emulate. The Manager also encouraged the company to explore setting biodiversity
targets to cover the suppliers it procures from. The company also reached out to the
Manager to request that it complete their bi-annual ESG materiality assessment which is
being carried out by a third-party consultant.
Smurfit Kappa has been responsive to the Manager’s engagement. The Manager will
continue its engagement on environmental stewardship in 2024 with a particular focus
on water stewardship.
Governance Report Auditor's Report Notice of Meeting Other InformationStrategic ReportOverview Financial Report
20 | CT UK High Income Trust PLC
Strategic Report
Engagement examples in the reporting period
GSK (Health Care – Pharmaceuticals &
Biotechnology)
Issue: Public Health
SDG target(s): 3.8 Good health and
well-being
GSK is a global bio-pharmaceutical company which manufactures innovative medicines and
vaccines. US regulatory requirements due to take effect in 2024 will push the industry to
include diversity planning in their trial protocol or justify why this is not necessary. In the
Manager’s view, being under-prepared for this might result in novel drugs and therapies
not being approved by the FDA, which poses a very material risk to drug manufacturers
and Contract Research Organisations (CROs). As part of the Manager’s diversity in clinical
trials engagement project, it organised a call with GSK’s Senior Vice President of Global
Clinical Operations to learn more about the company’s work on diversity in clinical trials and
preparations for stricter regulation.
The Manager discussed the regulatory requirements on diversity in clinical trials and how
GSK prepares for compliance. The company has a dedicated team that works on diversity
in clinical trials, which ultimately falls under the Chief Scientific Officer. While work on trial
diversity costs time and effort, GSK considers this a continuous learning curve for the
company. They stressed that this is the right thing to do for patients and communities and
that financially, the cost of getting it wrong will be more substantial. They also consider
it a crucial part of their ambition to reach 2.5 billion patients by the end of 2030. The
company shared a number of insightful case studies, for instance on how it works together
with patient advocacy groups to assess and better understand patient needs as well as
increasing the availability of Decentralised Clinical Trials (DCT). Finally, GSK shared more
insight into how they collaborate with CROs, that they expect these to adhere to GSK’s third-
party vendor rules and that GSK is not interested in working with CROs who do not work on
improving diversity in clinical trials.
The key take-away from this conversation was that diversity in clinical trials is increasingly
embedded in the company-wide strategy. GSK feels confident about their preparedness for
regulatory requirements, having made efforts to increase diversity in clinical trials for over
15 years. This is evidenced by successful progress on their target to have 100% of 2023
phase III trials contain a proactive strategy to enroll appropriately diverse trial participants,
consistent with the disease epidemiology. We consider GSK a leader in this space and will
monitor further developments.
Voting on portfolio investments
As noted previously, the Manager’s Corporate Governance
Guidelines set out expectations of the boards of investee
companies in terms of good corporate governance. The Board
expects to be informed by the Manager of any sensitive voting
issues involving the Company’s investments. In the absence of
explicit instructions from the Board, the Manager is empowered
to exercise discretion in the use of the Company’s voting rights
and reports to the Board on its voting record. The Manager will
vote on all investee company resolutions.
The Manager is a signatory of the UK Stewardship Code.
Its statement of compliance can be found on the Manager’s
website at www.columbiathreadneedle.com.
We expect the Company’s shares to be voted on all holdings
where possible. During the financial year, the Manager voted at
38 meetings of investee companies held by the Company. The
Manager did not support management’s recommendations on at
least one resolution at approximately 31% of all meetings. With
respect to all items voted, the Manager supported over 91%
of all management resolutions. One of the most contentious
voting issues remained remuneration. Either by voting
against or abstaining, the Manager did not support 15% of all
management resolutions relating to pay, often due to either poor
disclosure or a misalignment of pay with long-term performance.
Report and Accounts 2024 | 21
Climate Change
The Manager considers climate change to be one of the
defining issues of our generation, and fully supports the goals
of the Paris agreement. The Company expects the Manager to
incorporate considerations around financially material climate
change risks and opportunities in its investment processes.
The Manager published its second climate change report in
June 2023. The report, which is available on the Manager’s
website, details how the Manager manages climate-related
risks and opportunities, in line with the recommendations of
the Taskforce on Climate-related Financial Disclosures (‘TCFD’).
This year, in accordance with the deadline for complying with
regulations set by the Financial Conduct Authority, disclosure
specific to the Company’s portfolio will be published on
the Manager’s website. The report will provide data on
the portfolio’s carbon footprint and the largest individual
contributors to the carbon footprint by individual issuer and
sector as well as overall net zero alignment of the portfolio.
In line with this reporting, we disclose as follows the portfolio
weighted average carbon intensity (‘WACI’) of the Company’s
investments. WACI shows the emissions impact of companies
as a proportion of sales. It shows how companies generate
revenue while emitting more or lesser amounts of greenhouse
gas (‘GHG’). A low score means a fund invests in more
carbon-efficient companies. WACI is calculated by dividing
GHG emissions by the revenue generated by companies held.
It is reported in GHG per $m of underlying revenues of holdings
in the fund. WACI gives an indication of exposure to companies
with high emissions.
We are of course aware that some of the new holdings acquired
during the year have contributed to our portfolio having a
higher carbon intensity than at the prior year end. We focus on
businesses that are taking action to improve their industries
rather than only considering the absolute numbers contributing
to the calculation. Using some of the largest contributors as
examples, Shell is working to increase the proportion of gas
produced; CRH are building new roads using old, recycled
roads; and Ibstock are making bricks with renewable energy.
Weighted-average carbon intensity
50
100
150
Tons CO2e/sales $m
CT UK High Income Trust PLC
FTSE All-Share
Source: Columbia Threadneedle Investment Business Limited
0
2024
2024
In 2024 the Manager will continue focusing on its priority
engagement themes: climate change; environmental
stewardship; public health; labour standards; human rights;
corporate governance and business conduct. The Manager will
identify and prioritise companies for engagement based on a
number of financially material factors including: the impact of
ESG factors; the investment team’s and research analysts’
judgement and expertise; previous engagement track record
and level of exposure.
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22 | CT UK High Income Trust PLC
Strategic Report
Section 172 Statement
Under Section 172 of the Companies Act 2006, the Directors
have a duty to act in the way they consider, in good faith, would
be most likely to promote the success of the Company for the
benefit of its members as a whole, and in doing so, have regard
(amongst other matters) to:
• the likely consequences of any decision in the long term;
• the interests of the Company’s shareholders;
• the need to foster the Company’s business relationships
with suppliers, customers and others;
• the impact of the Company’s operations on the community
and environment;
• the desirability of the Company maintaining a reputation for
high standards of business conduct; and
• the need to act fairly as between members of the Company.
As explained on page 7, the Company is an externally managed
investment company and has no employees, customers
or premises.
The Board believes that the optimum basis for meeting its duty
to promote the success of the Company is by appointing and
managing third parties with the requisite performance records,
resources, infrastructure, experience and control environments
to deliver the services required to achieve the investment
objective and successfully operate the Company. By developing
strong and constructive working relationships with these
parties, the Board seeks to ensure high standards of business
conduct are adhered to at all times and service levels are
enhanced whenever possible. This combined with the careful
management of costs is for the benefit of all shareholders who
are also key stakeholders.
As set out on page 7, the Board’s principal working relationship
is with the Manager which is responsible for the management
of the Company’s assets in line with the investment objective
and policy set by the Board. The Manager also provides
ancillary functions such as administration, marketing,
accounting and company secretarial services to the Company
and acts as the AIFM.
The Board works closely with the Manager and oversees the
various matters which have been delegated to it, and to ensure
the Company’s daily operations run smoothly for the benefit of all
shareholders. The portfolio activities undertaken by our Manager
are set out in the Manager’s Review on pages 10 and 11.
While the Company’s direct impact on the community and
environment is limited, its indirect ESG impact occurs through
the businesses in which it invests. The Board gives effect
to this through the Manager’s Responsible Investment
approach which is set out on pages 17 to 21. The Board is
very supportive of the Manager’s approach, which focuses
on engagement with the investee companies on ESG issues
and how these link with the United Nations Sustainable
Development Goals (‘SDGs’). Information on the annual
evaluation of the Manager, to ensure its continued appointment
remains in the best interests of shareholders, is set out on
page 41.
In addition to the Company’s shareholders, Manager and
bankers, other key stakeholders include its service providers
such as the Custodian and Depositary, Broker and Registrar.
The Board receives regular reports from the Company’s key
service providers on an ongoing basis and evaluates them to
ensure expectations on service delivery are met.
The Board places great importance on communication with
shareholders and further information is set out on page 8.
The Company’s stakeholders are always considered when the
Board makes decisions and examples include:
• Portfolio manager change
During the financial year, in July 2023, the Board
announced that David Moss had been appointed as the
Company’s Portfolio Manager with immediate effect. David
has worked for 26 years at the Company’s Investment
Manager, which became part of Columbia Threadneedle
Investments in 2021 and is currently Head of European
Equities Research Strategy. David has 28 years’ industry
experience, managing assets on behalf of a wide variety
of clients, including investment trusts. The Board believes
David’s experience makes him very well suited to the
role and to deliver the Company’s investment objective
for shareholders. The Company’s investment policy and
objective has remain unchanged.
Promoting the Success of the Company
Report and Accounts 2024 | 23
Strategic Report
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• Dividends/capital repayments.
The Board recognises that the distribution levels on the
Company’s shares are important to shareholders. Following
the payment of the fourth interim dividend and capital
repayment, dividends/capital repayments total 5.62p per
share for the financial year to 31 March 2024. This
represents an increase of 2.0% compared to the prior year.
Over the last few years and since the COVID-19 pandemic,
the Company has made use of some of its revenue reserve
to help supplement revenue earnings to pay dividends
when there was a shortfall in revenue income. It has
been a key objective of the Board and Manager to return
to a covered dividend and to rebuild the revenue reserve.
In the year to 31 March 2024 the revenue earnings per
share increased by 10.8% in comparison to the prior year,
however £105,000 was utilised from the revenue reserve.
The need for this was due to timing, as a couple of stocks
moved their ex-dividend dates from March 2024 to April
2024 resulting in income moving to the next financial year.
At 31 March 2024, the yield on the Ordinary shares and
B shares was 6.7%, as compared to the yield on the FTSE
All-Share Index of 3.8% at that time.
• Units
Since the Company’s launch, Units (which each comprised
three ordinary shares and one B share) were admitted to
trading on the main market of the London Stock Exchange.
In order to simplify the Company’s listing structure, the
Board decided to cancel them and in March 2024 took the
requisite steps to do so. Instead, Unit holders now hold
and trade their underlying Ordinary shares and B shares
independently.
• Continuation measurement period
At the 2022 Annual General Meeting, approval was granted
by shareholders to reduce the five year performance
period (which was stipulated in the Company’s Articles
of Association) to three years, over which the Company’s
performance against the FTSE All-Share Index is measured.
Therefore should the net asset value total return of the
Ordinary shares not be equal to or greater than the total
return performance of the FTSE All-Share Index for the three
years to 31 March 2025, a continuation vote will be held
at the 2025 Annual General Meeting. There has been no
change to the portfolio management process despite the
shorter performance period, but should the performance
hurdle not be met, this change will allow shareholders an
opportunity to consider the life of the Company sooner than
otherwise would have been the case.
• Retail investors
A significant proportion of the Company’s shareholders are
retail investors who invest through savings or execution-
only platforms. These include those who invest through the
Manager’s savings plans and the Board remains focused
with the Manager on the optimal delivery of the Company’s
investment proposition for the benefit of all shareholders.
Now that Child Trust Fund accounts, are reaching maturity,
the Board’s objective is to retain as many of these young
investors as possible. Prior to account maturity the
Manager writes to their parents setting out their options
and currently retention rates are in line with expectations.
The Manager remains committed to its savings plans
and its relationship with its customers and has invested
significantly in its offering to enhance digital capabilities in
order to meet its customers’ expectations.
• Institutional shareholders, wealth managers and IFAs
The Manager has a team dedicated to fostering good
relations with institutional shareholders, wealth managers
and independent financial advisers and keeping investors
regularly informed, with the aim of promoting the Company’s
investment proposition and improving the rating of the
Company’s share prices. This team organises meetings with
these parties as well as preparing webinars, interviews and
videos which are shared through various media channels.
The team gathers feedback and answers any queries
in relation to the Company and its investment strategy.
Feedback from these activities is reported to the Board.
24 | CT UK High Income Trust PLC
Strategic Report
As an investment company, investing primarily in listed
securities, most of the Company’s principal risks and
uncertainties that could threaten the achievement of its
objective, strategy, future performance, liquidity and solvency
are market-related.
A summary of the Company’s risk management and internal
controls arrangements is included within the Report of
the Audit Committee on pages 42 to 45. By means of the
procedures set out in that summary, the Board has established
an ongoing process for identifying, evaluating and managing
the significant risks faced by the Company. The Board also
considers emerging risks which might affect the Company
and related updates from the Manager on such risks are
also considered. During the year risks included the outlook
for inflation and ongoing macroeconomic and geopolitical
concerns. Any emerging risks that are identified and that are
considered to be of significance would be included on the
Company’s risk register with any mitigations. These significant
risks, emerging risks and other risks are regularly reviewed by
the Audit Committee and the Board. They have also regularly
reviewed the effectiveness of the Company’s risk management
and internal control systems for the period.
In November 2021, the Company’s Manager, which was
part of BMO GAM (EMEA) was acquired by Ameriprise and
the integration of its business with Columbia Threadneedle
Investments then progressed. There has been little change for
your Company, however, an acquisition such as this introduces
some uncertainty, until the integration of systems is fully
implemented. A critical milestone was the move to a new
order management system, Aladdin, which is widely regarded
as the market leading system. This change was successfully
completed in October 2023 and this risk is now viewed as
reduced.
The principal risks and uncertainties faced by the Company,
and the Board’s mitigation approach, are described below.
Note 21 to the financial statements provides detailed
explanations of the risks associated with the Company’s
financial instruments and their management.
Principal Risks and Uncertainties Mitigation
Investment performance risk
Inappropriate strategy, asset allocation,
stock selection, (in the context of the market,
economic or geopolitical backdrop) and the
use of gearing could all lead to poor returns for
shareholders including impacting the capacity
to pay dividends.
No change in overall risk but given
macroeconomic and geopolitical
concerns, this risk remains heightened.
The Company’s objective and investment policy and performance against peers
and the benchmark are considered by the Board at each meeting and strategic
issues are considered regularly.
The Board regularly considers the composition and diversification of the
Investment Portfolio (which comprises listed securities) and considers
individual stock performance together with purchases and sales of
investments. Investments and markets are discussed in detail with the
Manager on a regular basis.
Engagement on environmental, social and governance matters is undertaken by
the Manager and its approach is explained on pages 17 to 21.
As a closed-end investment company, it is not constrained by asset sales to
meet redemptions so can remain invested through volatile market conditions
and is well suited to investors seeking longer term returns.
The Board regularly considers ongoing charges combined with underlying
dividend income from portfolio companies and the consequent dividend paying
capacity of the Company.
Principal Risks and Uncertainties
and Viability Statement
Report and Accounts 2024 | 25
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Principal Risks and Uncertainties Mitigation
Legal and regulatory risk
Breach of regulatory rules could lead to the
suspension of the Company’s stock exchange
listing, financial penalties, or a qualified
audit report. Breach of section 1158 of the
Corporation Tax Act 2010 could lead to the
Company being subject to tax on capital gains.
No change in overall risk
The Board liaises with advisors to ensure compliance with laws or regulations.
The Manager and its Operational Risk Management team provide regular
reports to the Board and Audit Committee on their monitoring and oversight
of such rules and are reviewed by the Board. This includes the conditions to
maintain investment trust status including the income distribution requirement.
The Board has access to the Manager’s Head of Operational Risk Management
and requires any significant issues directly relevant to the Company to be
reported immediately.
Third party service delivery and Cyber risks
Failure of the Manager as the Company’s
main service provider or disruption to its
business, or that of an outsourced or third
party service provider, could lead to an inability
to provide accurate reporting and monitoring
or a misappropriation of assets leading to a
potential breach of the Company’s investment
mandate or loss of shareholders’ confidence.
External cyber attacks could cause such failure
or could lead to the loss or sabotage of data.
No change in overall risk but due
to the integration with Columbia
Threadneedle’s systems, this risk
was heightened
The Board meets regularly with the management of the Manager and its
Operational Risk Management team to review internal control and risk reports
which includes oversight of its own third party service providers. The Manager’s
appointment is reviewed annually and the contract can be terminated with six
months’ notice. The Manager has a business continuity plan in place to ensure
that it is able to respond quickly and effectively to an unplanned event that
could affect the continuity of its business.
The Manager has outsourced certain functions to State Street Bank and
Trust Company (‘State Street’) and supervision of such third party service
providers, including the administrator of the Manager’s savings plans, has
been maintained by the Manager. This includes the review of IT security and
heightened cyber threats.
The Manager also closely monitors the performance of its technology platform
to ensure it is functioning within acceptable service levels.
The Board receives quarterly reports from the Depositary confirming safe
custody of the Company’s assets and cash and holdings are reconciled to
the Custodian’s records. The Custodian’s internal controls reports are also
reviewed by the Manager and key points reported to the Audit Committee.
The Board also receives periodic updates from the custodian on its own
cyber-security controls.
The Depositary is specifically liable for loss of any of the Company’s assets
that constitute financial instruments under the AIFMD.
26 | CT UK High Income Trust PLC
Strategic Report
Viability assessment and statement
In accordance with the UK Corporate Governance Code, the Board
is required to assess the future prospects for the Company and
has considered that a number of characteristics of its business
model and strategy were relevant to this assessment:
• The Board looks to long-term outperformance rather than
short-term opportunities.
• The Company’s investment objective, strategy and policy,
which are subject to regular Board monitoring, mean that
the Company is invested primarily in liquid listed securities
and that the level of borrowing is restricted.
• The Company is a listed closed-end investment trust, whose
shares are not subject to redemptions by shareholders.
• Subject to shareholder continuation votes, in the event that
the net asset value total return performance of the Company
is less than that of the FTSE All-Share Index over the relevant
period, the Company’s business model and strategy is not
time limited. The current performance measurement period
for this purpose will be the three years to 31 March 2025.
Also relevant were a number of aspects of the Company’s
operational arrangements:
• The Company retains title to all assets held by the
Custodian under the terms of a formal agreement with the
Custodian and Depositary.
• The borrowing facility, which remains available until
September 2025, is also subject to a formal agreement,
including financial covenants with which the Company
complied in full during the year.
• Revenue and expenditure forecasts are reviewed by the
Directors at each Board Meeting.
• Cash is held with banks approved and regularly reviewed by
the Manager.
• The operational robustness of key service providers and
the effectiveness of alternative working arrangements.
• That alternative service providers could be engaged at
relatively short notice if necessary.
In considering the viability of the Company, the Directors
carried out a robust assessment of the principal risks and
uncertainties which could threaten the Company’s objective
and strategy, future performance and solvency. This included
the impact of market volatility and a significant fall in equity
markets on the Company’s investment portfolio. These risks,
their mitigations and the processes for monitoring them
are set out on pages 24 and 25 on Principal Risks and
Uncertainties, on pages 42 to 45 in the Report of the Audit
Committee and in note 21 of the financial statements.
The Directors also considered:
• The level of ongoing charges incurred by the Company
which are modest and predictable and (at 31 March 2024)
total 1.08% of average net assets.
• Future revenue and expenditure projections.
• The Company’s ability to meet liquidity requirements given
its investment portfolio consists mainly of readily realisable
listed equity securities which can be realised if required.
• The ability to undertake share buy-backs if required.
• Whether the Company’s objective and investment policy
continue to be relevant to investors.
• The effect of significant future falls in investment
values and the ability to maintain dividends and capital
repayments, particularly given the uncertainty in markets
and macroeconomic and geopolitical concerns.
These matters were assessed over a three year period to May
2027, and the Board will continue to assess viability over three
year rolling periods.
As part of this assessment the Board considered stress tests
and scenarios which considered the impact of severe stock
market volatility on shareholders’ funds and declines in income
over a three year period. The results demonstrated the impact
on the Company’s net assets and its expenses and its ability
to meet its liabilities over that period.
A rolling three year period represents the horizon over which
the Directors believe they can form a reasonable expectation
of the Company’s prospects, balancing the Company’s
financial flexibility and scope with the current outlook for
longer-term economic conditions affecting the Company and
its shareholders.
Based on their assessment, and in the context of the Company’s
business model, strategy and operational arrangements set
out above, the Directors have a reasonable expectation that
the Company will be able to continue in operation and meet its
liabilities as they fall due over the three year period to May 2027.
Report and Accounts 2024 | 27
Strategic Report
Investment Policy
In pursuit of its objective, the Company invests predominantly
in UK equities and equity related securities of companies
across the market capitalisation spectrum.
The objective will be to achieve a total return in excess of that of
the FTSE All-Share Index. The Manager will approach investment
portfolio construction with the aim of maintaining a diversified
portfolio with approximately 40 holdings at any given time. No
single investment in the portfolio may exceed 10 per cent of the
Company’s gross assets at the time of purchase. In addition, the
Manager expects few individual holdings to exceed five per cent
of the Company’s gross assets at the time of purchase. There
are no maximum levels set for exposures to sectors.
Income may be enhanced from the investment portfolio by
writing call options, but only where the portfolio has an existing
holding and the holding is greater than the amount of stock
subject to the call option. The percentage of the portfolio that
may be used to generate call premium is limited to 5 per cent
by value at any one time. The Company may use derivatives for
efficient portfolio management from time to time.
The Company has the power under its Articles of Association
to borrow an amount up to 100 per cent of the Company’s
Adjusted Capital and Reserves. The Directors currently intend
that the aggregate borrowings of the Company will be limited
to approximately 20 per cent of the Company’s gross assets
immediately following drawdown of any new borrowings. The
Directors will however retain flexibility to increase or decrease the
level of gearing to take account of changing market circumstances
and in pursuit of the Company’s investment objectives.
As required by the Listing Rules, the Company has a policy to
invest no more than 15 per cent of gross assets in other listed
investment companies.
The Company’s Benchmark
The Company’s benchmark is the FTSE All-Share Index.
Gearing Policy
As explained in the Investment Policy, the Company has the
flexibility to borrow and the Board has set a gearing limit. The
Board receives recommendations on gearing levels from the
Manager and it is responsible for setting the gearing range
within which the Manager may operate.
The Company has a £15 million unsecured revolving credit
facility with The Royal Bank of Scotland International Limited,
which is available until 28 September 2025 and is described
in more detail in the notes to the financial statements. At
31 March 2024, borrowings totalling £15 million had been
drawn down.
Dividend/Capital Repayment Policy
Within the Company’s investment objective is the aim to
provide an attractive return to shareholders in the form of
dividends and/or capital repayments.
In determining dividend payments, the Board takes account of
income forecasts, brought forward revenue reserves, prevailing
inflation rates, the Company’s dividend payment record and
the Corporation Tax rules governing investment trust status.
Dividends can also be paid from capital reserves where the
balance on this reserve is positive. At the same time as
dividend payments are made to Ordinary shareholders, capital
repayments of the same amount are made to B shareholders
from the special capital reserve. Risks to the dividend policy
have been considered as part of the Principal Risks and
Uncertainties and Viability statement on pages 24 to 26 and
include financial risks leading to a deterioration in the level of
income received by the Company or a significant change to the
Company’s regulatory environment.
Dividends/capital repayments are currently paid quarterly in
August, November, February and May.
In the financial year to 31 March 2025 the Board is strongly
minded to try and maintain the annual level of dividend/capital
repayment.
Buy-backs/Discount Policy
Share buy-backs help reduce the volatility of the discount and
enhance the net asset value per share for continuing shareholders.
While the Directors will at all times retain discretion over
whether or not to repurchase shares, it will be the Company’s
policy, in the absence of unforeseen or extreme circumstances
and subject to the aim of maintaining the Ordinary share:
B share ratio within the range (72.5% : 27.5% and 77.5% :
22.5%), to repurchase shares of either class when there are
net sellers and the market price stands at a discount to net
asset value of 5% or more. The Board may, if it considers it
to be in the best interests of the Company, amend this ratio
from time to time. However, the Board will always be mindful
of any impact on the level of revenue available for the Ordinary
shares. Shares will not be bought back at a premium to net
asset value. Shares which are bought back by the Company
may be cancelled or may be held in treasury. There is no limit
on the amount of shares the Company can hold in treasury.
Shares held in treasury may be resold at a price not less than
the net asset value per share.
Principal Policies
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28 | CT UK High Income Trust PLC
Strategic Report
UK Financial Sanctions and Prevention of the
Facilitation of Tax Evasion
The Board is fully committed to complying with all legislation,
regulation and relevant guidelines including those relating
to the UK financial sanctions regime in the context of the
Company’s business and also the UK’s Criminal Finances Act
2017, designed to prevent tax evasion and the facilitation of
tax evasion in the jurisdictions in which the Company operates.
Professional advice is sought as and when deemed necessary.
Taxation
The policy towards taxation is one of full commitment to
complying with applicable legislation and statutory guidelines.
The Company has received approval from HMRC as an
investment trust under Section 1158 of the Corporation Tax
Act 2010 (“Section 1158”) and has since continued to comply
with the eligibility conditions such that it does not suffer UK
Corporation Tax on capital gains. The Manager ensures that the
Company submits correct taxation returns annually to HMRC;
settles promptly any taxation due; and claims back, where
possible, taxes suffered in excess of taxation treaty rates on
non-UK dividend receipts.
Board Diversity and Tenure
The Board is composed solely of non-executive Directors and
its approach to the appointment of non-executive Directors is
based on its belief in the benefits of having a diverse range of
experience, skills, length of service and backgrounds. The Board
is conscious of the diversity targets set out in the FCA Listing
Rules and the Board complies with the UK Corporate Governance
Code and AIC Code in appointing appropriately diverse,
independent non-executive Directors who set the operational and
moral standards of the Company. The Board will always appoint
the best qualified person for the role and will not discriminate on
the grounds of gender, race, ethnicity, religion, sexual orientation,
age, physical ability, educational, professional or socio-economic
background. The Board is committed to maintaining the highest
levels of corporate governance in terms of independence and
would normally expect the Directors to serve for a nine-year
term although this may be adjusted for reasons of flexibility
and continuity. As each of the Audit Committee, the Engagement
and Remuneration Committee and the Nomination Committee
comprise all of the Directors, the diversity policy applied to
the Board generally applies equally to each of the Company’s
committees.
In accordance with Listing Rule 9.8.6R(9), (10) and (11) the
Board is required to disclose on a ‘comply or explain’ basis
whether it has met the following targets: (i) at least 40 per cent
of the Board should be women; (ii) at least one of the senior
board positions should be held by a woman; and (iii) at least
one member of the Board should be from a minority ethnic
background. The Board has provided the information set out in
the following tables in relation to diversity; the data for which
has been obtained through the completion of questionnaires
by the individual Directors. As is shown, the Company does not
meet the targets. The Company’s board, with four non-executive
directors, is relatively small which makes achieving these
targets more challenging.
Board Gender as at 31 March 2024
(1)
Number of
Board
members
Percentage of
the Board
Number of
senior positions
on the Board
(3)
Men 3 75% 2
Women 1 25%
(2)
–
Not specified/
prefer not to say
– – –
(1)
The Company has opted not to disclose against the number of Directors in
executive management as this is not applicable for an investment trust which
does not have the roles of CEO or CFO.
(2)
This does not meet the Listing Rules target of 40%.
(3)
The senior positions on the Board consist of the Chairman and the Senior
Independent Director. The position of the Chairman of the Audit Committee is
held by a woman however this is not currently defined as a senior position under
the Listing Rules.
Board Ethnic Background as at 31 March 2024
(1)
Number of
Board
members
Percentage of
the Board
Number of
senior positions
on the Board
(3)
White British or other
White (including
minority-white groups)
4
(2)
100% 2
Mixed/Multiple
Ethnic Groups
– – –
Asian/Asian British – – –
Black/African/
Caribbean/
Black British
– – –
Other ethnic group,
including Arab
– – –
Not specified/
prefer not to say
– – –
(1)
The Company has opted not to disclose against the number of Directors in
executive management as this is not applicable for an investment trust which
does not have the roles of CEO or CFO.
(2)
This does not meet the Listing Rules target of at least 1 individual from a
minority ethnic background.
(3)
The senior positions on the Board consist of the Chairman and the Senior
Independent Director.
Integrity and Business Ethics
The Board applies a strict anti-bribery and anti-corruption policy
insofar as it applies to any directors or employee of the Manager
or any other organisation with which the Company conducts
business. The Board also ensures that adequate procedures
are in place and followed in respect of third-party appointments,
acceptance of gifts, hospitality and similar matters.
The Strategic Report, contained on pages 5 to 28, has been
approved by the Board of Directors.
By order of the Board
For Columbia Threadneedle Investment Business Limited
Company Secretary
6th Floor
Quartermile 4
7a Nightingale Way
Edinburgh EH3 9EG
30 May 2024
Report and Accounts 2024 | 29
Governance
Andrew Watkins
Chairman of the Board and
Nomination Committee
Appointed on 29 June 2017 and as Chairman
on 20 July 2022.
Experience and contribution: He has worked
in the financial services industry for over
45 years and was head of Client Relations for
investment trusts at Invesco from 2004 until
his retirement in June 2017. He is a Member
of The Chartered Institute for Securities and
Investment.
Other appointments: Andrew is currently
a non-executive director and chairman of
Ashoka India Equity Investment Trust plc and
a non-executive director of Chelverton UK
Dividend Trust PLC, Baillie Gifford European
Growth Trust plc and Consistent Unit Trust
Management Company Limited.
Stephen Mitchell
Senior Independent Director and
Chairman of the Engagement and
Remuneration Committee
Appointed on 6 May 2020 and as Senior
Independent Director on 20 July 2022
and as Chairman of the Engagement and
Remuneration Committee on 2 December
2020.
Experience and contribution: He has worked
in investments for 40 years, most recently
as a global equity specialist, previously
on Japanese and Asia-Pacific equities. He
worked at Flemings then JPMorgan Asset
Management and Private Bank for 24 years,
subsequently at Caledonia Investment Trust
running a global equity income fund and
then Jupiter Asset Management. Latterly
he also covered investment strategy and
multi-asset allocation.
Other appointments: Stephen is currently a
Trustee of National Trust for Scotland and
chair of its investment committee, and a
member of the investment committee at
Westminster Almshouses.
Helen Galbraith (nee Driver)
Chairman of the Audit Committee
Appointed on 6 May 2020 and as Chairman of
the Audit Committee on 27 July 2021.
Experience and contribution: Helen has over
20 years’ experience in the Insurance and
Asset Management industry as Head of
Investor Relations at Aviva plc, Head of Global
Equities at Aviva Investors and managing UK
equities as Investment Director at Standard
Life Investments. Helen is the founder of
Moneyready, an online financial education
platform for young people. She is a Chartered
Financial Analyst.
Other appointments: Helen is currently a non-
executive director of Schroder UK Mid Cap
Fund PLC and a non-executive director and
Chair of Orwell Housing Association.
Angus Pottinger
Non-Executive Director
Appointed on 24 November 2022.
Experience and contribution: He has worked
in financial services for over 35 years,
including most recently 22 years in Invesco’s
investment trust team, where he was Head
of Investment Company Services, specifically
in charge of accounting, company secretarial
and administration functions. Prior to that he
was a corporate broker at Merrill Lynch.
Other appointments: Angus is currently a
trustee of the Invesco UK pension scheme
and a director of Boardforms Ltd, a provider
of board evaluation services.
All Directors are members of the Audit Committee, the Engagement and Remuneration Committee and Nomination Committee.
No Director holds a directorship elsewhere in common with other members of the Board.
Board of Directors
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30 | CT UK High Income Trust PLC
Statement Regarding Annual Report and Financial
Statements
The Directors consider that, following a detailed review and
advice from the Audit Committee, the Annual Report and
Financial Statements for the year to 31 March 2024, taken
as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the
Company’s position and performance, business model and
strategy. The Audit Committee reviewed the draft Annual Report
and Financial Statements for the purpose of this assessment
and, in reaching this conclusion, the Directors have assumed
that the reader of the Annual Report and Financial Statements
would have a reasonable level of knowledge of the investment
industry in general and investment companies in particular.
The outlook for the Company can be found on pages 6 and 11.
Principal risks and uncertainties can be found on pages 24
and 25 with further information in note 21 to the financial
statements. There are no instances where the Company is
required to make disclosures in respect of Listing Rule 9.8.4R.
Results and Dividends
The results for the year are set out in the financial statements on
pages 58 to 76. The return to shareholders was £11,222,000.
The Company has paid quarterly interim dividends in the year
ended 31 March 2024 as follows:
Interim Dividend Payments
Payment date
Rate per
Ordinary share
Fourth interim for 2023 5 May 2023 1.55p
First interim for 2024 4 August 2023 1.32p
Second interim for 2024 3 November 2023 1.32p
Third interim for 2024 2 February 2024 1.32p
Dividend payments in the prior year ended 31 March 2023 are
set out in note 9 to the financial statements.
A fourth interim dividend of 1.66p per Ordinary share was paid
on 3 May 2024 to Ordinary shareholders on the register at
close of business on 5 April 2024. This dividend, together with
the first three interim dividends of 1.32p per Ordinary share
paid during the year, make a total dividend for the financial
year to 31 March 2024 of 5.62p per Ordinary share. This
represents an increase of 2.0% over the 5.51p per Ordinary
share paid in respect of the previous financial year.
At the same time as dividend payments are made to Ordinary
shareholders, capital repayments of the same amount are
made to B shareholders from the special capital reserve.
As set out in the Company’s dividend/capital repayment policy
on page 27, payments are made quarterly and the Company
does not currently pay a final dividend that would require formal
shareholder approval at the AGM. This enables the fourth
interim dividend/capital repayment to be made in May and
earlier than would be possible if classed as a final dividend/
capital repayment and subject to shareholder approval at the
AGM in July.
As an alternative, the Board proposes to seek formal
shareholder approval at the AGM, and in future years, to
continue quarterly payments (Resolution 9).
Principal Activity and Status
The Company is registered in Scotland as a public limited
company in terms of the Companies Act 2006 (number:
SC314671) and is an investment company under section 833
of the Companies Act 2006.
The Company carries on business as an investment trust
and has been approved as such by HM Revenue & Customs
(‘HMRC’), subject to it continuing to meet the relevant eligibility
conditions and ongoing requirements. As a result, it is not
liable to corporation tax on capital gains. The Company
intends to conduct its affairs so as to enable it to comply with
the requirements.
The Directors submit the Annual Report and Financial Statements of the Company for the year
to 31 March 2024. The Directors’ biographies, Corporate Governance Statement, the Report of
the Nomination Committee, the Report of the Engagement and Remuneration Committee, the
Report of the Audit Committee and the Directors’ Remuneration Report form part of this Report of
the Directors.
Report of the Directors
Governance
Report and Accounts 2024 | 31
The Company is required to comply with company law, the rules
of the Financial Conduct Authority, and other legislation and
regulations including financial reporting standards and its own
Articles of Association.
The Company is a member of the Association of Investment
Companies (the ‘AIC’).
Subsidiary Company
The Company has a 100% interest in Investors Securities
Company Limited (number: SC140578), a company which
deals in investments. In the year to 31 March 2024, Investors
Securities Company Limited made a profit before taxation of £nil
(2023: £nil).
Investors Securities Company Limited did not trade during the
year to 31 March 2024 and it has not been consolidated in
the financial statements in accordance with section 405 of the
Companies Act 2006 on grounds of materiality.
Accounting and Going Concern
Shareholders will be asked to approve the adoption of
the Annual Report and Financial Statements at the AGM
(Resolution 1).
The financial statements start on page 58 and the unqualified
Independent Auditor’s Report on the financial statements is
on pages 50 to 57. The significant accounting policies of the
Company are set out in note 1 to the financial statements.
In assessing the going concern basis of accounting, the
Directors have had regard to the guidance issued by the
Financial Reporting Council and have undertaken a rigorous
review of the Company’s ability to continue as a going concern.
As an investment company, investing primarily in listed
securities, most of the Company’s principal risks and
uncertainties are market-related. An explanation of these risks
and how they are managed is set out on pages 24 and 25. The
Board has, in particular, considered the outlook for inflation and
ongoing macroeconomic and geopolitical concerns which have
impacted the value of investments, but does not believe the
Company’s ability to continue as a going concern is affected.
The Company’s investment objective and investment policy,
which is described on pages 7 and 27 and which is subject to
regular Board monitoring processes, is designed to ensure that
the Company is invested mainly in liquid, listed securities. The
value of these investments exceeds the Company’s liabilities
by a significant margin. The Company retains title to all assets
held by its custodian, and has an agreement relating to its
borrowing facility with which it has complied during the year.
Cash is only held with banks approved and regularly reviewed
by the Manager.
As part of the going concern review, the Directors noted that
a borrowing facility of a £15 million revolving credit facility is
committed to the Company until 28 September 2025 and loan
covenants are reviewed by the Board on a regular basis. Further
details are set out in note 16 to the financial statements.
Note 21 to the financial statements sets out the financial risk
profile of the Company and indicates the effect on the assets
and liabilities of falls (and rises) in the value of securities and
market rates of interest.
The Company does not have a fixed life. However, in the
event that the net asset value total return performance of
the Company is less than that of the FTSE All-Share Index
over the relevant three year period, in accordance with the
Company’s articles of association, shareholders will be given
the opportunity to vote on whether the Company should
continue in existence, by ordinary resolution at the Company’s
Annual General Meeting. The current three year performance
measurement period will run to 31 March 2025.
At the AGM held on 20 July 2022, an ordinary resolution
that the Company should continue in existence, was passed.
Also, a special resolution that new articles of association be
approved and adopted was passed, which included reducing
the performance measurement period from five years to three
years, as referenced above.
The Directors believe, having assessed the principal risks and
other matters, in light of the controls and review processes
noted previously and bearing in mind the nature of the
Company’s business and assets and revenue and expenditure
projections, that the Company has adequate resources to
continue in operational existence for a period of at least twelve
months from the date of approval of the financial statements.
For these reasons, they continue to adopt the going concern
basis in preparing the financial statements.
The Company’s longer term viability is considered in the
‘Viability assessment and statement’ on page 26.
Statement of Disclosure of Information to the Auditor
Each of the Directors confirm that, so far as he or she is
aware, there is no information relevant to the preparation
of the Annual Report and Financial Statements of which the
Company’s auditor is unaware, and each Director has taken all
the steps that he or she ought to have taken as a Director in
order to make himself or herself aware of any relevant audit
information and to establish that the Company’s auditor is
aware of that information.
Governance
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32 | CT UK High Income Trust PLC
Governance
Re-appointment of Auditor
Deloitte LLP was re-appointed as the Company’s auditor at the
Annual General Meeting on 20 July 2023 and it has expressed
its willingness to continue in office as the Company’s auditor.
A resolution proposing its re-appointment and a resolution
authorising the Directors to determine its remuneration will be
submitted at the Annual General Meeting (Resolutions 7 and 8).
Further information in relation to the re-appointment can be
found on page 45.
Capital Structure and Voting Rights
The Company’s capital structure is explained in the ‘Capital
Structure’ section on page 82 of this Annual Report and
Financial Statements and details of the share capital, including
voting rights, are set out in note 17 to the financial statements.
Details of voting rights are also set out in the Notes to the
Notice of Annual General Meeting.
At 31 March 2024 there were 102,067,144 Ordinary shares
of 0.1p each listed, of which 18,744,491 were held in treasury
and 32,076,703 B shares of 0.1p each listed, of which
1,367,953 were held in treasury. At 31 March 2024, the total
listed share capital of the Company was represented 76.1 per
cent by Ordinary shares and 23.9 per cent by B shares.
There are: no significant restrictions concerning the transfer
of securities in the Company (other than certain restrictions
imposed by laws and regulations such as insider trading laws);
no agreements known to the Company concerning restrictions
on the transfer of securities in the Company or on voting
rights; and no special rights with regard to control attached to
securities. Pursuant to the Company’s loan facility agreement,
repayment may be required in the event of a change in control
of the Company. There are no significant agreements which the
Company is a party to that might be affected by a change of
control of the Company following a takeover bid.
Substantial Interests in Share Capital
At 31 March 2024 the Company had received notification of the
following holdings of voting rights (under the FCA’s Disclosure
Guidance and Transparency Rules):
Ordinary Shares
Number
held
Percentage
held*
D. C. Thomson & Company Limited 7,944,896 9.5
Thomson Leng Provident Fund 3,800,000 4.6
* Based on 83,322,653 Ordinary Shares in issue as at 31 March 2024.
B Shares
Number
held
Percentage
held*
D. C. Thomson & Company Limited 2,241,623 7.3
* Based on 30,708,750 B Shares in issue as at 31 March 2024.
The Company has not received any other notification of any
changes in these voting rights and no new holdings have been
notified since 31 March 2024 up to the date of this report.
Manager’s Savings Plans
Approximately 46% of the Company’s total share capital is held
through the Manager’s savings plans. The Manager does not
have discretion to exercise any voting rights in respect of the
shares held through the savings plans. Instead the nominee
company holding these shares votes in line with any voting
directions received from the underlying planholders. Where
no instruction is received from any underlying planholder, the
voting rights attached to their shares will not be exercised.
Borrowings
The Company has a £15 million unsecured revolving credit
facility with The Royal Bank of Scotland International Limited,
of which £15 million was drawn down at the year-end. Further
information is included in note 16 to the financial statements.
Directors’ Remuneration Report
At the AGM held on 20 July 2023, shareholders approved the
Directors’ Remuneration Policy and it is intended that this
policy will continue for the three year period ending at the
AGM in 2026, when shareholders will next be asked for their
approval.
There have been no material changes to the policy since
approved by shareholders at the AGM held on 20 July 2023.
The Directors’ Remuneration Report, which can be found
on pages 46 to 48, provides detailed information on the
remuneration arrangements for the Directors of the Company
and includes the Directors’ Remuneration Policy. Shareholders
will be asked to approve the Annual Report on Directors’
Remuneration (Resolution 2) at the AGM on 26 July 2024.
Remuneration is set at a level commensurate with the skills
and experience necessary for the effective stewardship of
the Company and the expected contribution of the Board as
a whole.
Director Re-Elections
Biographical details of the Directors, all of whom are non-
executive, can be found on page 29 and are incorporated into
this report by reference.
All of the Directors held office throughout the year under review.
As explained in more detail under the Corporate Governance
Statement on pages 37 to 39, the Board has agreed that
all Directors will retire annually. Accordingly, Helen Galbraith,
Stephen Mitchell, Angus Pottinger and Andrew Watkins will retire
at the AGM and, being eligible, offer themselves for re-election
(Resolutions 3, 4, 5 and 6).
Report and Accounts 2024 | 33
Governance
The skills and experience each Director brings to the Board
for the long-term sustainable success of the Company are set
out below.
• Resolution 3 relates to the re-election of Helen Galbraith
who was appointed on 6 May 2020 and has over 20 years‘
experience in the Insurance and Asset Management
industry. She also has relevant accounting experience and
is a Chartered Financial Analyst.
• Resolution 4 relates to the re-election of Stephen Mitchell
who was appointed on 6 May 2020 and has worked in
investments for over 40 years most recently as a global
equity specialist.
• Resolution 5 relates to the re-election of Angus Pottinger
who was appointed on 24 November 2022 and has
worked in financial services for over 35 years, including
most recently 22 years in Invesco’s investment trust team,
where he was Head of Investment Company Services,
specifically in charge of accounting, company secretarial and
administration functions.
• Resolution 6 relates to the re-election of Andrew Watkins
who was appointed on 29 June 2017 and has extensive
experience and knowledge of investment trusts and the sector
having been Head of Client Relations for Investment Trusts at
Invesco until his retirement in 2017. He is a Member of The
Chartered Institute for Securities and Investment.
The Directors believe that the Board has an appropriate balance
of skills, experience, independence and knowledge of the
Company to enable it to provide effective strategic leadership
and proper governance of the Company. The Chairman and the
Board confirms that, following formal performance evaluations,
the performance of each of the Directors continues to be
effective and demonstrates commitment to the role and, having
considered the Directors’ other time commitments and Board
positions are satisfied that each Director has the capacity to
be fully engaged with the Company’s business. In addition, the
Board believes that each Director is independent in character
and judgement, that they perform their duties at all times in
an independent manner and that there are no relationships or
circumstances which are likely to affect the judgement of any
Director. The Board believes that continuity and experience
add significantly to the strength of the Board. Additional
information on diversity and tenure is set out on pages 28
and 40. The Chairman and the Board therefore believes that it
is in the interests of shareholders that each of those Directors
seeking re-election are re-elected.
There are no service contracts in existence between the
Company and any Directors but each of the Directors has
been issued with, and accepted, the terms of a letter of
appointment that sets out the main terms of their appointment.
Amongst other things, the letter includes confirmation that the
Director has a sufficient understanding of the Company and
the sector in which it operates, and sufficient time available
to discharge their duties effectively taking into account their
other commitments. These letters are available for inspection
upon request at the Company’s registered office during normal
business hours and will be available for inspection at the
Annual General Meeting.
Directors’ Interests and Letters of Indemnity
There were no contracts of significance to which the Company
was a party and in which a Director is, or was, materially
interested during the year.
The Company has entered into letters of indemnity in favour of
each of the Directors and these were in force throughout the year
ended 31 March 2024. These letters give each Director the benefit
of an indemnity to the extent permitted by the Companies Act
2006 against liabilities incurred by each of them in the execution
of their duties and the exercise of their powers. A copy of each
letter of indemnity is available for inspection at the Company’s
registered office during normal business hours and will be available
for inspection at the Annual General Meeting. The Company also
maintains Directors’ and Officers’ liability insurance.
Conflicts of Interest
Under the Companies Act 2006 a Director must avoid a
situation where he or she has, or could have, a direct or
indirect interest that conflicts, or possibly may conflict, with the
Company’s interests. The requirement is very broad and could
apply, for example, if a Director becomes a Director of another
company or a trustee of another organisation. The Companies
Act 2006 allows Directors of public companies to authorise
conflicts and potential conflicts, where appropriate, where the
Articles of Association contain a provision to this effect. The
Company’s Articles of Association give the Directors authority
to approve such situations.
The Board therefore has procedures in place for the authorisation
and review of potential conflicts relating to the Directors.
The Company maintains a register of Directors’ conflicts
of interest which have been disclosed and approved by the
other Directors. Other than authorisation of Directors’ other
directorships, no authorisations have been sought. This
register is kept up-to-date and the Directors are required to
disclose to the Company Secretary any changes to conflicts or
any potential new conflicts.
Safe Custody of Assets
The Company’s investments are held in safe custody by
JPMorgan Chase Bank (the ‘Custodian’). Operational matters
with the Custodian are carried out on the Company’s behalf
by the Manager in accordance with the provisions of the
investment management agreement. The Custodian is paid a
variable fee dependent on the number of trades and the value
and location of the securities held.
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34 | CT UK High Income Trust PLC
Governance
Depositary
JPMorgan Europe Limited (the ‘Depositary’) acts as the
Company’s depositary in accordance with the Alternative
Investment Fund Managers Directive (‘AIFMD’). The
Depositary’s responsibilities, which are set out in an Investor
Disclosure Document on the Company’s website, include,
but are not limited to, cash monitoring, ensuring the proper
segregation and safe keeping of the Company’s financial
instruments that are held by the custodian and monitoring
the Company’s compliance with investment and leverage limit
requirements. The Depositary receives for its services a fee of
0.01% per annum on the value of the Company’s net assets,
payable monthly in arrears.
Although the Depositary has delegated the safekeeping of all
assets held within the Company’s investment portfolio to the
Custodian, in the event of loss of those assets that constitute
financial instruments under the AIFMD, the Depositary will
be obliged to return to the Company financial instruments
of an identical type, or the corresponding amount of money,
unless it can demonstrate that the loss has arisen as a
result of an external event beyond its reasonable control, the
consequences of which would have been unavoidable despite
all reasonable efforts to the contrary.
Management and Management Fees
The Manager provides management, administration, marketing,
accounting and company secretarial services to the Company.
A summary of the investment management agreement between
the Company and the Manager in respect of the services
provided is given in note 4 to the financial statements. The
Manager is the Company’s AIFM, for which it does not receive
any additional remuneration.
Since the end of the year, the Engagement and Remuneration
Committee has reviewed the appropriateness of the Manager’s
appointment. In carrying out its review the Committee
considered the past investment performance of the Company
and the ability of the Manager to produce satisfactory
investment performance in the future. It also considered the
length of the notice period of the investment management
agreement and the fees payable to the Manager, together
with the standard of other services provided, which include
administration, marketing, accounting and company secretarial
services. Following this review, which included a comparison
against the terms of appointment of investment managers
for similar investment companies, it is the Directors’ opinion
that the continuing appointment of the Manager on the terms
agreed is in the best interests of shareholders as a whole.
Other Companies Act 2006 Disclosures
• The rules for appointment and replacement of Directors are
contained in the Articles of Association of the Company.
In respect of retiral by rotation, the Articles of Association
provide that each Director is required to retire at the third
Annual General Meeting after the Annual General Meeting
at which last elected. As mentioned earlier in this Annual
Report and Financial Statements, the Board has agreed
that all Directors will retire annually.
• Amendment of the Articles of Association and powers to
issue and buy-back shares require shareholder authority.
• There are no agreements between the Company and the
Directors providing for compensation for loss of office that
occurs because of a takeover bid.
Future Developments of the Company
The future success of the Company in pursuit of its investment
objective is dependent primarily on the performance of its
investments and the outlook for the Company is set out in the
Chairman’s Statement on page 6 and the Manager’s Review on
page 11.
Environmental, Social and Governance
Details of the Company’s Environmental, Social and Governance
policies including voting on portfolio investments is set out on
pages 17 to 21.
The Company seeks to conduct its affairs responsibly and
environmental factors are, where appropriate, taken into
consideration with regard to investment decisions taken on
behalf of the Company.
Greenhouse Gas Emissions & Taskforce for Climate
Related Financial Disclosures (‘TCFD’)
All of the Company’s activities are outsourced to third parties, it
has no employees and all of its Directors are non-executive. As
such it does not have any physical assets, property, employees
or operations of its own and does not generate any greenhouse
gas or other emissions.
As the Company did not consume more than 40,000 kWh
of energy during the year, it is exempt from reporting under
Streamlined Energy and Carbon Reporting regulations.
Under Listing rule 15.4.29(R), the Company, as a listed closed-
end investment company, is exempt from complying with the
TCFD, however the Company has disclosed its assessment of
the weighted-average carbon intensity of its investments on
page 21.
Modern Slavery Act 2015
As an investment company with no employees or customers and
which does not provide goods or services in the normal course of
business, the Company considers that it does not fall within the
scope of the Modern Slavery Act 2015 and it is not, therefore,
obliged to make a human trafficking statement. The Company’s
own supply chain which consists predominantly of professional
advisers and service providers in the financial services industry,
which is highly regulated, is considered to be low risk in relation to
this matter. A statement by the Manager under the Act has been
published on its website columbiathreadneedle.co.uk
Report and Accounts 2024 | 35
Governance
Financial Instruments
The Company’s financial instruments comprise its investment
portfolio, cash balances, bank borrowings and debtors and
creditors that arise directly from its operations such as sales
and purchases awaiting settlement and accrued income. The
financial risk management objectives and policies arising from
its financial instruments and the exposure of the Company to
risk are disclosed in note 21 to the financial statements.
Annual General Meeting
The Company is required by law to hold an Annual General
Meeting (‘AGM’) and it will be held at Columbia Threadneedle
Investments, Cannon Place, 78 Cannon Street, London
EC4N 6AG on 26 July 2024 at 11 am. The Notice of Annual
General Meeting is set out on pages 78 to 81. David Moss, the
Portfolio Manager will give a presentation at the AGM and there
will also be an opportunity to ask questions. If you are unable
to attend the AGM, you may submit any questions you may
have with regard to the resolutions proposed at the AGM or the
performance of the Company, in advance of the meeting to the
following email address: UKHITCoSec@columbiathreadneedle.
com. The Portfolio Manager’s presentation will be available to
view on the Company’s website, ctukhighincome.co.uk, following
the meeting.
The AGM is scheduled to be held in person and voting on all
resolutions will be conducted by way of a poll. Shareholders
are encouraged to exercise their votes either through the
Registrar’s online portal or by completing and returning their
Form of Proxy or Form of Direction. The results of the poll will
be announced via a regulatory announcement and posted
on the Company’s website at ctukhighincome.co.uk after
the meeting. Any changes to the AGM arrangements will be
announced via a regulatory announcement and will be included
on the Company’s website.
Resolutions 10 to 13 are explained below.
Directors’ Authority to Allot Shares (Resolutions 10
and 11)
The Directors are seeking authority to allot Ordinary shares
and B shares.
Resolution 10 (authority to allot shares) will, if passed,
authorise the Directors to allot new Ordinary shares up to an
aggregate nominal amount of £4,166 consisting of 4,166,000
Ordinary shares and new B shares up to an aggregate nominal
amount of £1,535 consisting of 1,535,000 B shares, being
approximately 5 per cent of the total issued Ordinary shares
and B shares respectively (excluding treasury shares) as at
30 May 2024. This authority therefore authorises the Directors
to allot up to 5,701,000 shares in aggregate representing
approximately 5 per cent of the total share capital in issue
(excluding treasury shares).
Resolution 11 (power to disapply pre-emption rights) will, if
passed, authorise the Directors to allot new Ordinary shares up
to an aggregate nominal amount of £4,166 and new B shares
up to an aggregate nominal amount of £1,535, being 4.1 per
cent and 4.8 per cent of the total issued Ordinary shares and
B shares respectively (including treasury shares) as at 30 May
2024, for cash without first offering such shares to existing
shareholders pro rata to their existing holdings. This authority
therefore authorises the Directors to allot up to 5,701,000
shares in aggregate for cash on a non pre-emptive basis
representing 4.2 per cent of the total share capital in issue
(including treasury shares).
These authorities will continue until the earlier of
30 September 2025 and the conclusion of the Company’s next
Annual General Meeting.
The Directors have no current intention to exercise these
authorities and will only allot new shares pursuant to these
authorities if they believe it is advantageous to the Company’s
shareholders to do so and will not result in a dilution of
net asset value per share. The Directors consider that the
authorisations proposed in Resolutions 10 and 11 are
necessary to retain flexibility, although they do not intend to
exercise the powers conferred by these authorisations at the
present time.
Directors’ Authority to Buy-back Shares (Resolution 12)
At the Annual General Meeting held on 20 July 2023
shareholders gave the Company authority to make market
puchases of up to 14.99% of each of the issued Ordinary
shares and issued B shares (in each case, excluding
shares held in treasury). During the year to 31 March 2024
the Company purchased through the market for treasury
1,750,000 Ordinary shares of 0.1p each, representing 2.1%
of the Ordinary shares in issue at the previous year end, for
a total consideration of £1,293,000 in accordance with the
Company’s discount management policy. During the year to
31 March 2024, the Company did not purchase through the
market any B shares of 0.1p each for treasury. Subsequent
to the year end, no Ordinary shares or B shares have been
purchased through the market between 31 March 2024 and
30 May 2024.
The current authority of the Company to make market
purchases of up to 14.99% of each of the issued Ordinary
shares and issued B shares (in each case, excluding shares
held in treasury) expires at the end of the Annual General
Meeting and Resolution 12, as set out in the notice of the
Annual General Meeting, seeks renewal of that authority.
The renewed authority to make market purchases will be
in respect of a maximum of 14.99% of each of the issued
Ordinary shares and issued B shares (in each case, excluding
treasury shares) of the Company on the date of the passing
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36 | CT UK High Income Trust PLC
Governance
of the resolution. The price paid for shares will not be less
than the nominal value of 0.1p per share nor more than the
higher of (a) 5 per cent above the average of the middle market
values (as derived from the Daily Official List of the London
Stock Exchange) of those shares for the five business days
before the shares are purchased and (b) the higher of the last
independent trade and the highest current independent bid on
the London Stock Exchange. This power will only be exercised
if, in the opinion of the Directors, a purchase will result in
an increase in the net asset value per share and is in the
interests of the shareholders. Any shares purchased under this
authority will be purchased with cash and will either be held in
treasury or cancelled. This authority will expire on the earlier
of 30 September 2025 and the conclusion of the next Annual
General Meeting of the Company.
There is no limit on the number of shares that a company can
hold in treasury at any one time and the Board has not set a
limit on the number of shares that can be held in treasury by
the Company.
There were 114,031,403 Ordinary shares and B shares in
issue (excluding treasury shares) as at 30 May 2024; of
which 83,322,653 (73.1 per cent) are Ordinary shares and
30,708,750 (26.9 per cent) are B shares. At that date, the
Company held 18,744,491 Ordinary shares (18.4 per cent of
the total Ordinary share capital) in treasury and 1,367,953 B
shares (4.3 per cent of the total B share capital) in treasury.
The Company therefore in aggregate holds 20,112,444 shares
in treasury representing 17.6 per cent of the total share capital
in issue (excluding treasury shares).
Treasury Shares (Resolution 13)
The Board continues to believe that the effective use of
treasury shares assists the liquidity in the Company’s
securities and management of the discount by addressing
imbalances between demand and supply for the
Company’s securities.
Resolution 13, if passed, will enable the Company to sell shares
from treasury without having first to make a pro rata offer to
existing shareholders. This authority will be limited to shares
representing approximately 8.2 per cent and 9.6 per cent of the
Company’s issued Ordinary share capital and B share capital
respectively (including treasury shares) as at the date of passing
of the resolution. The sale of shares from treasury is to be at a
price not less than the net asset value per share of the Ordinary
shares (in the case of a sale of Ordinary shares) or B shares (in
the case of a sale of B shares).
Recommendation
The Board considers that the passing of the resolutions to
be proposed at the Annual General Meeting is in the best
interests of the Company and its shareholders as a whole
and it unanimously recommends that all shareholders vote
in favour of those resolutions. The Directors intend to vote
in favour of each of the resolutions in respect of their own
beneficial holdings of 70,479 Ordinary shares, representing
approximately 0.06% of the issued share capital of the
Company as at the date of this document. Information on
shareholder voting rights is set out in the Notes to the Annual
General Meeting.
Individual Savings Accounts
The Company’s shares are qualifying investments for Individual
Savings Accounts. It is the current intention of the Directors
that the Company will continue to conduct its affairs to satisfy
this requirement.
By order of the Board
For Columbia Threadneedle Investment Business Limited
Company Secretary
Quartermile 4
7a Nightingale Way
Edinburgh EH3 9EG
30 May 2024
Report and Accounts 2024 | 37
Governance
The biographical details of the Directors responsible for
the governance of your Company are set out on page 29.
Committee membership is also included and the respective
terms of reference and biographies are also available on the
Company’s website ctukhighincome.co.uk
In seeking to maintain the confidence and trust of the
Company’s shareholders, the Board sets out to adhere to
the highest standards of corporate governance, business
and ethics transparency and it remains committed to doing
so. As the Board believes that good governance creates
value, it expects the companies in which it invests to apply
similar standards.
Governance Overview
Throughout the financial year, an Audit Committee, Engagement
and Remuneration Committee and Nomination Committee were
in place. The role and responsibilities of these committees
are set out in their respective reports, which follow, and their
terms of reference are also available on the Company’s website.
Each of the committees comprises all of the Directors. The
Board considers that, given its size, it would be unnecessarily
burdensome to establish separate committees which did not
include the entire Board and believes that this enables all
Directors to be kept fully informed of any issues that arise.
As set out in the Strategic Report, the Board has appointed the
Manager to manage the investment portfolio as well as to carry
out the day to day management and administrative functions.
Reporting from the Manager is set out on pages 10 to 13 and
in the Report of the Audit Committee in respect of internal
controls on pages 42 to 45. The Board’s evaluation of the
Manager and its alignment with the values of the Board can be
found on pages 7 and 8.
The Board has direct access to company secretarial advice and
services of the Manager which, through the Company Secretary,
is responsible for ensuring that Board and committee
procedures are followed and applicable laws, regulations and
best practice requirements are complied with. The proceedings
at all Board and Committee meetings are fully recorded through
a process that allows any Director’s concerns to be recorded by
the Company Secretary in the minutes.
Compliance with the AIC Code of Corporate Governance
(the ‘AIC Code’)
The Board of CT UK High Income Trust PLC has considered
and supports the principles and provisions of the AIC Code
published in February 2019. The AIC code addresses
the principles and provisions set out in the UK Corporate
Governance Code (the “UK Code”) as well as setting out
additional provisions on issues that are of specific relevance
to investment companies. There are also two main differences.
In the AIC Code, both the nine year limit on chair tenure and
the restriction on the chair of the Board being a member of the
Audit Committee have been removed.
Andrew Watkins was appointed to the Board on 29 June 2017
and then as Chairman on 20 July 2022 and has therefore
served for less than nine years. None of the Directors standing
for re-election at the forthcoming AGM has served in excess
of nine years.The tenure policy relating to the Directors, which
includes the Chairman, is set out on page 28.
The Board considers that reporting against the principles and
provisions of the AIC Code, which has been endorsed by the
Financial Reporting Council, provides more relevant information
to shareholders. By reporting against the AIC Code, the
Company meets its obligations in relation to the UK Code (and
associated disclosure requirements under paragraph 9.8.6 of
the Listing Rules) and as such does not need to report further
on issues contained in the UK Code which are not relevant to
it as an externally managed investment company.
The Board believes that the Company has complied with the
recommendations of the AIC Code during the year under review
and up to the date of this report and, except as regards the
provisions of the UK Code set out below, has thereby complied
with the relevant provisions of the UK Code:
• the role of the Chief Executive;
• executive directors’ remuneration;
• the need for an internal audit function;
• membership of the Audit Committee by the Chairman of the
Board; and
• workforce engagement.
Corporate Governance Statement
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38 | CT UK High Income Trust PLC
Governance
For the reasons set out in the AIC Code, the Board considers
these provisions as not being relevant to the position of the
Company, being an externally managed investment company.
In particular, all of the Company’s daily management and
administrative functions have been delegated to the Manager.
As a result, the Company has no executive Directors, employees
or internal operations. As explained in the Report of the Audit
Committee, the Chairman of the Board is also a member of the
Audit Committee, as permitted by the AIC Code. Therefore, with
the exception of the need for an internal audit function, which is
addressed on page 44, we have not reported further in respect
of these provisions.
The AIC code can be found on theaic.co.uk and the UK code
on frc.org.uk.
Company Purpose
The Company’s purpose, values and culture and the basis on
which it aims to generate value over the longer term is set out
within the Purpose, Strategy and Business Model on pages 7
and 8. How the Board seeks to promote the success of the
Company is set out on pages 22 and 23.
Board Leadership
The Board consists solely of non-executive Directors and
Andrew Watkins is the Chairman. The Board is responsible
for the effective stewardship of the Company’s affairs and
has in place a schedule of matters that it has reserved for its
decision, which is reviewed periodically.
The Board currently meets at least five times a year and at
each meeting the Board reviews the Company’s investment
performance and considers financial analyses and other reports
of an operational nature. The Board monitors compliance
with the Company’s objectives and is responsible for setting
investment and gearing limits within which the Manager has
discretion to act, and thus supervises the management of the
investment portfolio which is contractually delegated to the
Manager.
An investment management agreement between the Company
and its Manager, Columbia Threadneedle Investment Business
Limited, sets out the matters over which the Manager has
authority and the limits beyond which Board approval must be
sought. All other matters, including strategy, investment and
dividend/capital repayment policies, gearing, and corporate
governance procedures, are reserved for the approval of the
Board of Directors.
Division of Board Responsibilities
As an externally managed investment company, all the
Directors are non-executive and there are no employees.
Andrew Watkins, as Chairman, is responsible for the leadership
and management of the Board and promotes a culture of
openness, challenge and debate. The Chairman sets the
agenda for all Board meetings under a regular programme of
matters in conjunction with the Company Secretary. There is a
strong working relationship with the Manager and the Portfolio
Manager and related personnel attend the meetings throughout
the year and report to the Board. Discussions are held in a
constructive and supportive manner with appropriate challenge
and strategic guidance and advice from the Board whenever
necessary, consistent with the culture and values.
Stephen Mitchell is the Senior Independent Director and he
acts as an experienced sounding board for the Chairman or as
an intermediary for other Directors and shareholders. He also
leads the annual evaluation of the Chairman.
In order to enable them to discharge their responsibilities, all
Directors have full and timely access to relevant information.
Directors, may at the expense of the Company, seek
independent professional advice on any matter that concerns
them in the furtherance of their duties. No such advice was
taken during the year under review. The Company maintains
appropriate directors’ and officers’ liability insurance.
Under the Articles of Association of the Company, the number
of Directors on the Board may be no less than two and no
more than seven. Directors may be appointed by the Company
by ordinary resolution or by the Board. Any Director appointed
by the Board would hold office only until the next general
meeting and then be eligible for election by shareholders. The
Board has agreed that all Directors will retire annually and,
if appropriate, seek re-election.
Full details of the duties of Directors are provided at the time
of appointment. New Directors receive an induction from the
Manager on joining the Board, and all Directors are encouraged
to attend relevant training courses and seminars and receive
regular updates on the industry and changes to laws,
regulations and best practice requirements from the Company
Secretary and other parties, including the AIC. All of the
Directors consider that they have sufficient time to discharge
their duties.
All Directors are considered by the Board to be independent
of the Company’s Manager and the Board believes that each
Director is independent in character and judgement and that
they perform their duties at all times in an independent manner
and that there are no relationships or circumstances which are
likely to affect the judgement of any Director.
Report and Accounts 2024 | 39
Governance
Directors’ attendance during the year ended 31 March 2024
Board of
Directors
Audit
Committee
Engagement and
Remuneration
Committee
Nomination
Committee
No. of meetings 5 3 1 1
A K Watkins 5 3 1 1
H M Galbraith 5 3 1 1
S J Mitchell 5 3 1 1
A W Pottinger 5 3 1 1
During the year, additional meetings were also held to approve matters such as
interim dividends and capital repayments.
Composition and Succession
The composition of the Board and Committees together with
the experience of the members is set out on page 29. The
Company’s diversity and tenure policy is set out on page 28.
Over the last few years, a succession plan has been in place,
which has enabled the retirement of the longer serving Directors
while balancing the need to ensure an adequate level of
continuity and experience on the Board. While these changes
were completed in November 2022, as set out in the Report of
the Nomination Committee on page 40, the composition of the
Board and succession continues to be considered and reviewed.
Board Evaluation and Effectiveness
During the year the performance of the Board and Committees,
including the performance of each individual Director, was
evaluated through a formal assessment process, led by Andrew
Watkins, the Chairman. The performance of the Chairman
was evaluated by the other Directors under the leadership
of Stephen Mitchell, the Senior Independent Director. This
process involved discussions with individual Directors,
individual feedback from the Chairman to each of the Directors
and discussion of the points arising amongst the Directors.
Following this process, it was concluded that the performance
of each Director and the Chairman continues to be effective
and each remain committed to the Company and that the Board
oversees the management of the Company effectively and has the
requisite skills and expertise to safeguard shareholders’ interests.
The conclusion from the assessment process was also that the
Audit Committee, Nomination Committee and Engagement and
Remuneration Committee were operating effectively, with the
right balance of membership, experience and skills.
Audit, Risk Management and Internal Control
The Board has a well established and effective Audit
Committee, the report of which is set out on pages 42 to
45. The report includes how the Board oversees the risk
management and internal control framework and determines
the nature and extent of the principal risks the Company
is willing to take in order to achieve its long-term strategic
objectives. Details of the principal risks and uncertainties are
set out on pages 24 and 25 and further information on the
Company’s risk management and internal control framework
can be found on pages 42 to 45.
The report of the Audit Committee explains how the independence
and effectiveness of the external Auditor is assessed and how the
Board satisfies itself on the integrity of financial statements. The
report also covers the process under which the Board satisfied
itself that the Annual Report and Financial Statements, taken as a
whole, presents a fair, balanced and understandable assessment
of the Company’s position and prospects. The rationale for the
Company not having established its own internal audit function
is also explained in the report.
Relations with Shareholders and Stakeholders
Communication with the Company’s key stakeholders, who are
its shareholders, the Manager, bankers and other key service
providers is set out on page 8.
Remuneration
Information on the remuneration arrangements for the non-
executive Directors of the Company can be found in the
Directors’ Remuneration Report on pages 46 to 48 and in note
6 to the financial statements.
The remuneration policy is explained on page 46 and that, as non-
executive Directors, their fees are set at a level commensurate with
the skills and experience necessary for the effective stewardship
of the Company and the contribution towards the delivery of the
investment objective. While there are no executive Directors and no
employees, shareholders should expect that the fees paid to the
Manager are aligned with the Company’s purpose, values and the
successful delivery of its long-term strategy.
Share Capital and Companies Act 2006 Disclosures
Details of the Company’s capital structure is set out on
page 82 and details of substantial interests in the Company’s
share capital and other Companies Act 2006 Disclosures are
included on pages 32 and 34.
By order of the Board
For Columbia Threadneedle Investment Business Limited
Company Secretary
Quartermile 4
7a Nightingale Way
Edinburgh EH3 9EG
30 May 2024
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40 | CT UK High Income Trust PLC
Governance
Composition of the Committee
The Committee comprises the full Board and is chaired by
Andrew Watkins. The Committee’s terms of reference can be
found on the website at ctukhighincome.co.uk
Role of the Committee
The primary role of the Nomination Committee is to review
and make recommendations with regard to Board structure,
size and composition. It takes into account the ongoing
requirements of the Company and the need to have a balance
of skills, experience, diversity (including gender, race, ethnicity,
religion, sexual orientation, age, physical ability, educational,
professional and socio-economic background), independence
and knowledge of the Company within the Board and ensuring
succession planning is carefully managed.
The Committee met on one occasion during the financial year
and considered and reviewed the following matters:
• the size of the Board and its composition, particularly in
terms of succession planning and the experience and skills
of individual Directors and diversity of the Board as a whole;
• tenure;
• the election/re-election of Directors at the annual general
meeting;
• the criteria for future Board appointments and the methods
of recruitment, selection and appointment; and
• future retirement of Directors.
Diversity and Tenure
The Company’s Board diversity and tenure policy is shown
on page 28 and recruitment searches are open to a diverse
range of candidates. Other than the diversity targets set out in
the Listing Rules, the Directors have not set any measurable
objectives in relation to diversity of the Board and will always
appoint the best qualified person for the role.
The Board believes that a Director’s tenure does not
necessarily reduce his or her contribution or ability to act
independently and that continuity and experience can add
significantly to the strength of investment company Boards
where the characteristics and relationships tend to differ from
those of other companies. However, the Board is committed
to maintaining the highest levels of corporate governance in
terms of independence and would expect that Directors would
normally serve for not more than nine years, however this may
be adjusted for reasons of flexibility and continuity.
Appointments and Succession Planning
Appointments of all new non-executive Directors are made
on a formal basis, using professional search consultants as
appropriate, with the Nomination Committee agreeing the
selection criteria and the method of recruitment, selection
and appointment.
A succession plan, to allow for the retirement of the longer
serving Directors, has been in progress over the last few years
and was completed in November 2022. The emphasis was on
ensuring the highest level of skills, knowledge and experience
of the Board and when recruiting new Directors consideration
was given to the current skills and experience of the Board
and the remaining tenure of each Director. This assisted in
identifying the desired attributes of the new Directors and
ensured that the Board continued to comprise individuals
with appropriate and complementary skills and experience
and continuity. The composition of the Board and future
succession continues to be reviewed and monitored.
Committee Evaluation
The activities of the Committee were considered as part of
the Board appraisal process completed in accordance with
standard governance arrangements as summarised on page 39.
The conclusion from the process was that the Committee
was operating effectively, with the right balance of experience
and skills.
Andrew Watkins
Chairman of the Nomination Committee
30 May 2024
Report of the Nomination Committee
Report and Accounts 2024 | 41
Governance
Composition of the Committee
The Committee comprises the full Board and is chaired by
Stephen Mitchell. The Committee’s terms of reference can be
found on the website at ctukhighincome.co.uk
Role of the Committee
The Committee meets at least annually and its role is to review
the terms and conditions of the Manager’s appointment and
the services it and other key service providers provide and the
fees charged, and also to review the remuneration of Directors.
The Committee met on one occasion during the financial year.
Manager Evaluation Process and Re-appointment
Since the end of the year, the Committee has reviewed the
appropriateness of the Manager’s appointment. In carrying
out its review the Committee considered the past investment
performance of the Company and the skills, experience
and depth of the Manager’s team involved in managing the
Company’s assets and its ability to produce satisfactory
investment performance in the future.
Investment performance is also considered by the Board at
every meeting, with a formal evaluation by the Committee
each year. For the purposes of its ongoing monitoring, the
Board receives reports from the Manager on investment
activity, attribution, gearing, risk and performance. This
enables the Board to assess the sources of positive and
negative contribution to returns in terms of gearing and
stock selection. While shorter term data is important, the
assessment of the Manager’s performance is also considered
over a three year period, looking at comparisons against
the benchmark and a peer group of other UK Equity Income
investment companies. The period of three years matches the
period between shareholder continuation votes, in the event
that the NAV total return performance of the Company is less
than that of the FTSE All-Share Index over the relevant three
year period. This allows the Board to assess the management
of the investment portfolio against the Company’s investment
objective on an ongoing basis together with performance
against the Company’s key performance indicators. The
current performance measurement period for this purpose will
be the three year period to 31 March 2025.
The annual evaluation that took place in May 2024 included
a presentation from the Portfolio Manager and the Manager’s
Head of Investment Trusts. This included reporting on the
investment performance and its ability to successfully deliver
the investment strategy for shareholders. The Manager also
reported on the strength of its current business, the integration
of its business with that of Columbia Threadneedle Investments,
the resources and opportunities that are now available as part
of the enlarged business and the continued support of the
investment trust business.
The Committee also considered the length of the notice period
of the investment management contract and fees payable
to the Manager, together with the standard of other services
provided which include ESG, marketing, company secretarial
and accounting services.
Following this review, it was the Committee’s view that the
continuing appointment of the Manager on the terms agreed
was in the best interests of shareholders as a whole. The
Board ratified this recommendation.
Review of Directors’ Fees
The Company Secretary, Columbia Threadneedle Investment
Business Limited, provides information on comparative levels of
Directors’ fees in advance of the Committee considering the level
of Directors’ fees. Following a review for the forthcoming year
to 31 March 2025 (and as indicated last year) the Committee
concluded the amount paid to Directors would remain unchanged.
Committee Evaluation
The activities of the Committee were considered as part
of the Board appraisal process completed in accordance
with standard governance arrangements as summarised
on page 39. The conclusion from the process was that the
Committee was operating effectively, with the right balance
of experience and skills.
Stephen Mitchell
Chairman of the Engagement and Remuneration Committee
30 May 2024
Report of the Engagement and
Remuneration Committee
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42 | CT UK High Income Trust PLC
Governance
Composition of the Committee
The Board recognises the requirement for the Audit Committee
as a whole to have competence relevant to the sector in which
the Company operates and at least one member with recent
and relevant experience.
The Audit Committee is chaired by Helen Galbraith who is a
Chartered Financial Analyst and has recent and relevant financial
experience. The Audit Committee operates within clearly defined
terms of reference and comprises the full Board. These directors
have a combination of relevant financial, investment and business
experience and specifically with respect to the investment company
sector and accordingly have sufficient experience to discharge their
responsibilities. Given the relevant experience of Andrew Watkins,
the Chairman of the Board, his continued independence and
valued contribution, the Audit Committee considers it appropriate
that he is a member. Details of the members can be found on
page 29 and the Committee’s terms of reference are available on
the Company’s website ctukhighincome.co.uk
The performance of the Committee was evaluated as part of
the Board appraisal process.
Role of the Committee
The duties of the Audit Committee include ensuring the
integrity of the financial reporting and financial statements
of the Company, reviewing the annual and half-year financial
statements, the risk management and internal controls
processes, and the terms of appointment and remuneration of
the Auditor, Deloitte LLP (‘Deloitte’), including its independence
and objectivity. It also provides a forum through which the
Auditor reports to the Board of Directors and meets at least
twice a year including at least two meetings with Deloitte.
The Audit Committee met on three occasions during the
financial year and the attendance of each of the members
is set out on page 39. In the due course of its duties, the
Committee had direct access to Deloitte and senior members
of the Manager’s Fund Management, Investment Trust and
Operational Risk Management teams. Amongst other things,
the Audit Committee considered and reviewed the following
matters and reported thereon to the Board:
• the annual and half-year results announcements, and
annual and half-year reports and financial statements;
• the accounting policies of the Company and the allocation
of management expenses and interest costs between
capital and revenue;
• the principal and emerging risks and uncertainties faced
by the Company and the effectiveness of the Company’s
internal control and risk management environment;
• consideration of the assumptions underlying the Board’s
statements on going concern and viability;
• the effectiveness of the external audit process and any
related non-audit services and the independence and
objectivity of Deloitte, it‘s re-appointment, remuneration and
terms of engagement;
• the policy on the engagement of Deloitte to supply non-
audit services and approval of any such services;
• the implications of proposed new accounting standards and
regulatory changes;
• the need for the Company to have its own internal audit
function;
• the ISAE/AAF and SSAE16 reports or their equivalent from
the Manager, the Custodian and other significant third party
service providers;
• whether the Annual Report and Financial Statements as a
whole is fair, balanced and understandable;
• the operational arrangements and performance of the
Manager and other third party service providers in terms of
business continuity; and
• the integration of BMO GAM (EMEA) (which included the
Company’s investment manager) and its systems, risk
management and internal control infrastructure with Columbia
Threadneedle Investments.
Following the change of ownership of BMO GAM (EMEA)
in November 2021, the integration with Columbia Threadneedle
Investments is now almost complete, but the Audit Committee
has continued to monitor it from a risk management and
internal control perspective. A critical milestone was the
move to a new order management system, Aladdin, which was
successfully completed in October 2023. The Audit Committee
has received confirmation from the Manager that the systems
of risk management and internal control have operated
effectively throughout the year under review and thereafter to
the date of this report.
During the preparation of both the half-year report for the six
month period ended 30 September 2023 and the Annual
Report and Financial Statements for the year ended 31 March
2024, the Committee has considered the outlook for inflation
and macroeconomic and geopolitical concerns upon the risks,
operations and accounting basis of the Company. As noted within
Principal Risks and Uncertainties and Viability Statement on
pages 24 to 26 the Directors have reviewed the risk register of
the Company and agreed that the overall risk from some of its
principal risks remain heightened.
Report of the Audit Committee
Report and Accounts 2024 | 43
Governance
The Board retains ultimate responsibility for all aspects relating
to external financial statements and other significant published
financial information as is noted in the Statement of Directors’
Responsibilities on page 49.
On broader control policy issues, the Committee has
considered and is satisfied with the Code of Conduct and the
Anti-Bribery and Anti-Corruption Policy to which the Manager’s
employees are subject. The Board is responsible for ensuring
appropriate procedures and processes are in place to enable
issues of concern to be raised. The Committee has also
considered the Manager’s Whistleblowing Policy, under which
its directors and staff may, in confidence, raise concerns about
possible improprieties in financial reporting or other matters.
Risk Management
The Board has established an ongoing process designed
to meet the particular needs of the Company in managing
the risks to which it is exposed, consistent with the related
guidance issued by the Financial Reporting Council.
The Manager’s Operational Risk Management team provides
regular control reports to the Audit Committee and the Board
covering risk and compliance and any significant issues of
direct relevance to the Company are required to be reported to
the Audit Committee and Board without delay.
For the management of risk, a key risk summary is produced
to help identify the risks to which the Company is exposed,
the controls in place and the actions being taken to mitigate
them. The Audit Committee and Board has a robust process for
considering the resulting risk control assessment and reviews
the significance of the risks and reasons for any changes.
The Company’s principal risks and uncertainties and their
mitigations are set out on pages 24 and 25 with additional
information provided in note 21 to the financial statements.
The integration of these risks into the consideration of the
Viability Statement on page 26 was also fully considered and
the Audit Committee concluded that the Board’s Statement was
soundly based. The period of three years was also agreed as
being appropriate for the reasons given in the Statement.
Internal Controls
The Board has overall responsibility for the Company’s system
of risk management and internal control, for reviewing its
effectiveness and ensuring that risk management and internal
control processes are embedded in the daily operations, which
are managed by the Manager.
The Audit Committee has reviewed and reported to the Board
on these controls which aim to ensure that the assets of the
Company are safeguarded, proper accounting records are
maintained, and the financial information used within the
business and for publication is reliable.
Control of the risks identified, including financial, operational,
compliance and overall risk management, is exercised by
the Audit Committee and the Board through regular reports
provided by the Manager. The reports cover investment
performance, attribution, compliance with agreed and regulatory
investment restrictions, financial analyses, revenue estimates,
performance of the third party administrator of the Manager’s
savings plans and other relevant issues. During the year,
the Audit Committee also received a presentation from the
Manager’s Chief Information Security Officer on its information
and cyber security programme.
At each Board meeting, the Board monitors the investment
performance of the Company in comparison to its objective
and relevant equity market indices. The Board also reviews the
Company’s activities since the last Board meeting to ensure
that the Manager adheres to the agreed investment policy and
approved investments guidelines and, if appropriate, approves
changes to such policy and guidelines.
The system of risk management and internal control is designed
to manage, rather than eliminate risk and, by its nature, can only
provide reasonable, but not absolute, assurance against material
misstatement, loss, or fraud. Further to the review by the Audit
Committee, the Board has assessed the effectiveness of the
Company’s internal control systems.
The assessment included a review of the Manager’s risk
management infrastructure and the Report on Internal Controls
in accordance with ISAE 3402 and AAF 01/20 for the year
to 1 October 2023 (the ‘ISAE/AAF Report’) that has been
prepared for its investment trust clients. The Audit Committee
also received confirmation from the Manager that, subsequent
to this date, on 2 October 2023, the move to the Aladdin order
management system was completed and there had been no
other significant changes to the control environment. Containing
a report and an unqualified opinion from independent reporting
accountants KPMG LLP, it sets out the Manager’s control
environment and procedures with respect to the management
of its clients’ investments and maintenance of their financial
records. The effectiveness of these controls is monitored by
the Manager’s Audit and Compliance Committee, which, for the
year to 1 October 2023, received regular internal audit reports.
Procedures are also in place to capture and evaluate any failings
and weaknesses within the Manager’s control environment and
those extending to any outsourced service providers to ensure
that action would be taken to remedy any significant issues
identified and which would be reported to the Board. Any errors
or breaches relating to the Company are reported at each Audit
Committee and Board Meeting by the Manager. No failings or
weaknesses material to the overall control environment and
financial statements in respect of the Company were identified in
the year under review nor to the date of this report.
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44 | CT UK High Income Trust PLC
Governance
The Audit Committee also reviewed appropriate reports on the
internal controls of other significant service providers, such as
the Custodian and Registrar, and was satisfied that there were
no material exceptions.
The review procedures have been in place throughout the
financial year and up to the date of approval of the financial
statements, and the Board is satisfied with their effectiveness.
Through the reviews and reporting arrangements set out above
and by direct enquiry of the Manager and other relevant parties,
the Audit Commitee and the Board have satisfied themselves
that there were no material control failures or exceptions
affecting the Company‘s operations during the financial year or
to the date of this report.
The Audit Committee has reviewed the need for an internal
audit function. Based on review, observation and enquiry,
the Audit Committee and the Board have concluded that the
systems and procedures employed by the Manager provide
sufficient assurance that a sound system of internal control,
which safeguards shareholders’ investments and the Company’s
assets, is maintained. In addition, the Company’s financial
statements are audited by an external Auditor. An internal
audit function, specific to the Company, is therefore considered
unnecessary but this decision will be kept under review.
Significant Matters Considered by the Audit Committee in Relation to the Financial Statements
Matter Action
Investment Portfolio Valuation
Possibility of incorrect valuation of the investment
portfolio.
The Company’s accounting policy is stated in note 1 to the financial
statements. The Board reviews the full portfolio valuation at each Board
meeting and receives quarterly monitoring and control reports from the
Manager and Depositary. The Audit Committee reviewed the Manager’s
annual ISAE/AAF Report, as referred to on page 43, which is reported on by
independent external accountants and sets out the systems, processes and
controls around the daily pricing of equity securities. The Manager has provided
further assurance that controls have operated satisfactorily since that date.
The Audit Committee also reviewed internal controls reports from State Street.
Misappropriation of Assets
Misappropriation or non-existence of the
Company’s investments or cash balances could
have a material impact on its net asset value
per share.
The Audit Committee reviewed the Manager’s ISAE/AAF Report, as referred
to on page 43, which details the controls around the reconciliation of the
Manager’s records to those of the Custodian. The Audit Committee also
reviewed the Custodian’s semi-annual internal controls report, which is
reported on by independent external accountants, and which provides
details regarding its control environment. The Depositary has issued reports
confirming, amongst other matters, the safe custody of the Company’s assets
for the period to 31 March 2024. The Audit Committee also reviewed internal
controls reports from State Street.
Income Recognition
Incomplete or inaccurate income recognition,
including allocation between revenue and capital,
could have an adverse effect on the Company’s
net asset value and earnings per share and its
level of dividend cover.
The Audit Committee reviewed the Manager’s ISAE/AAF Report, as previously
referred to, which details the systems, processes and controls around the
recording of investment income. It also compared the final level of income
received for the year to the budget for the year and discussed the accounting
treatment of all special dividends received with the Manager.
Investment Trust Tax Status
As an investment trust company, the Company is
exempt from taxation arising on capital gains.
Breach of Section 1158 of the Corporation Tax
Act 2010 could lead to the Company being
subject to tax on capital gains.
The Audit Committee reviewed the Company’s ongoing compliance with the
investment trust conditions set out in Section 1158 of the Corporation Tax Act
2010. In particular, the Audit Committee ensured that the retained revenue
after tax for the year was less than 15 per cent of the Company’s total income.
The Audit Committee read and discussed this Annual Report and Financial Statements and concluded that it is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Company’s performance objective and strategy.
Report and Accounts 2024 | 45
Governance
External Audit Process and Significant Matters
Considered by the Audit Committee
In carrying out its responsibilities, the Audit Committee has
considered the planning arrangements, scope, materiality levels
and conclusions of the year end 31 March 2024 external audit
of the financial statements. The table on page 44 describes
the significant matters considered by the Audit Committee in
relation to the financial statements for the year and how these
were addressed.
The Audit Committee met in May 2024 to discuss the draft
Annual Report and Financial Statements, with representatives
of Deloitte and the Manager in attendance and Deloitte
presented their year-end report to the Audit Committee.
At the conclusion of the audit, Deloitte did not report any
audit differences in excess of their reporting threshold of
£0.05 million, nor any differences below that level which would
warrant disclosure on qualitative grounds. In addition Deloitte
did not highlight any other issues to the Audit Committee which
would cause it to qualify its audit report nor did it highlight any
fundamental internal control weaknesses. Deloitte issued an
unqualified audit report which is included on pages 50 to 57.
Non-audit Services
The Committee regards the continued independence of the
Auditor to be a matter of the highest priority. The Company’s
policy with regard to the provision of non-audit services by the
external Auditor ensures that no engagement will be permitted if:
• the provision of the services would contravene any
regulation or ethical standard;
• the Auditor is not considered to be expert providers of the
non-audit services;
• the provision of such services by the Auditor creates a
conflict of interest for either the Board or the Manager; and
• the services are considered to be likely to inhibit the
Auditor’s independence or objectivity as Auditor.
In particular, the Committee has a policy that the accumulated
costs of all non-audit services sought from the Auditor in any
one year should not exceed 30% of the likely audit fees for
that year and not exceed 70% of the average audit fee for the
previous three years.
In relation to the provision of non-audit services by the Auditor
it has been agreed that all non-audit work to be carried out
by the Auditor must be approved in advance by the Audit
Committee. Deloitte did not receive any fees for non-audit
services during the year (2023: £nil).
Auditor Assessment, Independence and Re-appointment
The Audit Committee reviews the re-appointment of the Auditor
every year and has been satisfied with the effectiveness of
Deloitte’s performance on the audit just completed.
As part of the review of auditor independence and
effectiveness, Deloitte has confirmed that it is independent
of the Company and has complied with relevant auditing
standards. In evaluating Deloitte, the Audit Committee has
taken into consideration the standing, skills and experience of
the firm and the audit team. The Audit Committee, from direct
observation and enquiry of the Manager, remains satisfied that
Deloitte continues to provide effective independent challenge
in carrying out its responsibilities. Deloitte’s fee for the audit
(excluding VAT) was £36,500 (2023: £33,500).
Following professional guidelines, the Senior statutory auditor
rotates at least every five years. Michael Caullay, the current
senior statutory auditor was engaged for the first time during
the year ended 31 March 2023, which was Deloitte’s sixth
year as Auditor. Accordingly, the year ended 31 March 2024
represents Michael Caullay’s second year as the Senior
Statutory auditor and Deloitte’s seventh year as Auditor. The
Audit Committee also considered the evaluation of Deloitte’s
audit performance through the Audit Quality Review performed
by the Financial Reporting Council.
On the basis of this assessment, the Audit Committee has
recommended the re-appointment of Deloitte to the Board.
Helen Galbraith
Chairman of the Audit Committee
30 May 2024
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46 | CT UK High Income Trust PLC
Governance
Full details of the Company’s policy with regards to Directors’
fees, and fees paid during the year ended 31 March 2024,
are shown below. This shows all major decisions on Directors’
remuneration, and any substantial changes made during the
year relating to Directors’ remuneration, including the context in
which any changes occurred.
Under company law, the Auditor is required to audit certain
disclosures provided. Where disclosures have been audited
they are indicated as such. The Auditor’s opinion is included in
its report on pages 50 to 57.
The Board consists solely of independent non-executive
Directors. The Company has no executive Directors or
employees. The Engagement and Remuneration Committee is
responsible for determining the level of Directors’ fees and its
report is set out on page 41.
Directors’ Remuneration Policy
The Company’s policy is that the remuneration of non-executive
Directors should be set at a level commensurate with the skills
and experience necessary for the effective stewardship of the
Company and the expected contribution of the Board as a whole,
their responsibilities, duties and time commitment required and
be fair and comparable to that of other investment companies
that are similar in size and have similar investment objectives.
The policy also provides for the Company’s reimbursement of
all reasonable travel and associated expenses incurred by the
Directors in attending Board and Committee meetings, including
those treated as a benefit in kind subject to tax and national
insurance.
The Company has not received any views from its shareholders
in respect of the levels of Directors’ remuneration. It is a
requirement that shareholder approval of the policy is sought
at least every three years and this policy was last approved
by shareholders at the AGM on 20 July 2023. It is intended
that the policy will continue for the three year period ending
at the AGM in 2026, when it will next be put to shareholders
for approval.
The fees for the non-executive Directors are determined within
the limits set out in the Company’s Articles of Association. The
present limit is £175,000 per annum in aggregate and may not
be changed without seeking shareholder approval at a general
meeting. Directors are not eligible for bonuses, pension benefits,
share options, long-term incentive schemes or other benefits.
The non-executive Directors are engaged under letters of
appointment and do not have service contracts. Each Director
has a letter of appointment setting out the terms and conditions
of his or her appointment and such letters are available
for inspection at the Company’s registered office during
business hours.
The dates on which each Director was appointed to the Board
are set out under their biographies on page 29. The terms
of appointment provide that a Director shall retire and be
subject to election at the first Annual General Meeting after
his or her appointment. Directors are thereafter obliged to
retire periodically and, if they wish, to offer themselves for re-
election by shareholders, at least every three years after that.
However, in accordance with the recommendations of the UK
Code and the AIC Code, the Board has agreed that all Directors
will retire annually and, if appropriate, seek re-election. All the
Directors were last elected or re-elected at the AGM held on
20 July 2023 and all will stand for re-election at the AGM on
26 July 2024. There is no notice period and no provision for
compensation upon termination of appointment.
Voting at Annual General Meeting on Directors‘ Remuneration
Policy
The Directors’ Remuneration Policy was last approved by
shareholders at the Company’s Annual General Meeting held on
20 July 2023. 97.5% of votes were in favour of the resolution
and 2.5% of votes were against.
Annual Statement
As Chairman of the Engagement and Remuneration Committee,
I confirm that throughout the year to 31 March 2024, Directors’
fees were unchanged.
Future Policy Table
Following a review of the level of Directors’ fees for the
forthcoming year, the Engagement and Remuneration Committee
concluded that the amount paid to Directors would remain
unchanged.
Based on this, Directors’ fees for the financial year to
31 March 2025 would be as follows:
Director
31 March
2025
£
31 March
2024
(1)
£
31 March
2023
(1)
£
Chairman 41,250 41,250 39,000
Audit Committee chairman 34,500 34,500 32,500
Director 27,500 27,500 26,000
(1)
Actual Directors’ fees for the years ended 31 March 2024 and 31 March 2023
respectively.
Directors’ Remuneration Report
Report and Accounts 2024 | 47
Governance
Annual Report on Directors’ Remuneration
Directors’ Emoluments for the Year (audited)
The Directors who served during the financial year received the following amounts for services as non-executive Directors for
the years ended 31 March 2024 and 2023 and can expect to receive the fees indicated for 2025 as well as reimbursement for
expenses necessarily incurred. No other forms of remuneration were paid during the year.
Fees for services to the Company (audited)
Fees
(audited)
Taxable benefits
(1)
(audited)
Total
(audited)
Anticipated
fees
(2)
Director
31 March
2024
£
31 March
2023
£ % change
31 March
2024
£
31 March
2023
£ % change
31 March
2024
£
31 March
2023
£ % change
31 March
2025
£
A K Watkins (Chairman)
(3)
41,250 35,118 +17.5 – 368 -100.0 41,250 35,486 +16.2 41,250
J M Evans
(3)
n/a 11,887 n/a n/a – n/a n/a 11,887 n/a n/a
H M Galbraith 34,500 32,500 +6.2 – 276 -100.0 34,500 32,776 +5.3 34,500
S J Mitchell 27,500 26,000 +5.8 – 276 -100.0 27,500 26,276 +4.7 27,500
A W Pottinger
(4)
27,500 9,207 +198.7 27 – n/a 27,527 9,207 +199.0 27,500
Total 130,750 114,712 +14.0 27 920 -97.1 130,777 115,632 +13.1 130,750
(1)
Comprises amounts reimbursed for expenses incurred in carrying out business for the Company, which have been grossed up to include PAYE and NI contributions.
(2)
Fees expected to be payable to the Directors during the year ended 31 March 2025. Taxable benefits are also anticipated but are not currently quantifiable.
(3)
J M Evans was the Chairman until he retired following the AGM on 20 July 2022. A K Watkins was then appointed Chairman.
(4)
Appointed as a non-executive director on 24 November 2022.
Annual Percentage Change
The table below sets out the annual percentage change in fees
for each director who served in the year under review.
Director
2024
(audited)
%
2023
(audited)
%
2022
(audited)
%
2021
(audited)
%
2020
(audited)
%
A K Watkins +17.5
(1)
+35.1
(1)
+10.6 0.0 +2.2
H M Galbraith +6.2 +6.7 +43.5
(2)
n/a n/a
S J Mitchell +5.8 0.0 +22.5
(3)
n/a n/a
A W Pottinger +198.7
(4)
n/a
(4)
n/a n/a n/a
(1)
Appointed as Chairman following the AGM on 20 July 2022.
(2)
Appointed as a non-executive director on 6 May 2020 and became Chairman
of the Audit Committee on 27 July 2021.
(3)
Appointed as a non-executive director on 6 May 2020.
(4)
Appointed as a non-executive director on 24 November 2022.
Relative Importance of Spend on Pay
The table below shows the actual expenditure during the year in
relation to Directors’ remuneration (excluding taxable benefits),
other expenses and shareholder distributions:
31 March
2024
£
31 March
2023
£
Change
%
Aggregate Directors’ Remuneration 130,750 114,712 +14.0
Management fee and other expenses 1,008,000 1,016,000 -0.8
Distributions paid to Shareholders 6,334,000 6,382,000 -0.8
Aggregate cost of shares repurchased 1,293,000 79,000 +1536.7
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48 | CT UK High Income Trust PLC
Governance
Directors’ Shareholdings (audited)
There is no requirement under the Company’s Articles of
Association for the Directors to hold shares in the Company.
The Directors who held office at the year end and their
interests in the shares of the Company at 31 March 2024
(all of which were beneficially held) were as follows:
31 March 2024 31 March 2023
Director
Ordinary
Shares B Shares
Ordinary
Shares B Shares
A K Watkins (Chairman) 16,057 – 16,057 –
H M Galbraith 22,000 – 12,000 –
S J Mitchell 12,675 – 12,675 –
A W Pottinger 19,747 – 15,000 –
There have been no changes in any of the Directors’ interests
in the shares of the Company between 31 March 2024 and
30 May 2024.
Company Performance
The Board is responsible for the Company’s investment
strategy and performance, whilst the management of the
investment portfolio is delegated to the Manager.
The following graph compares, for the required ten year period
to 31 March 2024, the total return (assuming all dividends and
capital repayments are reinvested) to Ordinary shareholders
and B shareholders compared to the total return on the
FTSE All-Share Index. This index was chosen for comparison
purposes, as it represents a comparable broad equity market
index; however it should be noted that up to 20% of the
Company’s assets were held in higher yielding securities
towards the start of this period.
An explanation of the performance of the Company is given in
the Chairman’s Statement and Manager’s Review.
Share Price Total Return and the FTSE All-Share Index
Total Return Performance Graph (rebased to 100 at
31 March 2014)
CT UK High Income Trust – Ordinary Share price total return
CT UK High Income Trust – B Share price total return
FTSE All-Share Index total return
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Mar-21
Mar-22
Mar-23
Mar-24
180
170
160
150
140
130
120
110
100
90
80
Index
Source: Refinitiv Eikon
Voting at Annual General Meeting on Annual
Remuneration Report
At the Company’s last Annual General Meeting, held on 20 July
2023, shareholders approved the Directors’ Remuneration
Report in respect of the year ended 31 March 2023. 97.3% of
votes were in favour of the resolution and 2.7% were against.
An ordinary resolution for the approval of this Annual Report
on Directors’ Remuneration will be put to shareholders at the
forthcoming Annual General Meeting (Resolution 2).
On behalf of the Board
Stephen Mitchell
Director
30 May 2024
Report and Accounts 2024 | 49
Governance
Statement of Directors’ Responsibilities in Relation to
the Annual Report and Financial Statements
The Directors are responsible for preparing the Annual Report
and Financial Statements in accordance with applicable
United Kingdom law and UK-adopted International Accounting
Standards. The Directors are also required to prepare a
Strategic Report, Directors’ Report, Directors’ Remuneration
Report and Corporate Governance Statement.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the financial statements in accordance
with UK-adopted International Accounting Standards.
Under company law the Directors must not approve the
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and
of the profit or loss for that period. In preparing these financial
statements the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• state whether they have been prepared in accordance with
UK-adopted International Accounting Standards, subject
to any material departures disclosed and explained in the
financial statements;
• assess the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going
concern; and
• use the going concern basis of accounting unless they
either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at
any time the financial position of the Company and enable
them to ensure that the financial statements comply with
the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Annual Report and Financial Statements is published
on the ctukhighincome.co.uk website which is maintained by
Columbia Threadneedle Investments. The work carried out by
the Auditor does not involve consideration of the maintenance
and integrity of the Company’s website and, accordingly, the
Auditor accepts no responsibility for any changes that may have
occurred to the financial statements since they were initially
presented on the website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Responsibility statements under the Disclosure
Guidance and Transparency Rules in respect of the
Annual Report and Financial Statements
Each of the Directors listed on page 29 confirms that to the
best of their knowledge:
• the financial statements, prepared in accordance with
UK-adopted International Accounting Standards, give a true
and fair view of the assets, liabilities, financial position and
return of the Company;
• the Strategic Report and the Report of the Directors include
a fair review of the development and performance of the
business and the position of the Company together with a
description of the principal risks and uncertainties that they
face; and
• taken as a whole, the Annual Report and Financial
Statements are fair, balanced and understandable and
provide the information necessary for shareholders to
assess the performance, strategy and business model of
the Company.
On behalf of the Board
Andrew Watkins
Chairman
30 May 2024
Statement of Directors’ Responsibilities
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50 | CT UK High Income Trust PLC
Independent Auditor’s Report
Report on the audit of the financial statements
1. Opinion
In our opinion the financial statements of CT UK High Income Trust PLC (the ‘Company’):
• give a true and fair view of the state of the Company’s affairs as at 31 March 2024 and of its profit for the year then ended;
• have been properly prepared in accordance with United Kingdom adopted international accounting standards and the Statement
of Recommended Practice issued by the Association of Investment Companies in July 2022 “Financial Statements of Investment
Trust Companies and Venture Capital Trusts”; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
• the Statement of Comprehensive Income;
• the Statement of Financial Position;
• the Cash Flow Statement;
• the Statement of Changes in Equity; and
• the related notes 1 to 23.
The financial reporting framework that has been applied in their preparation is applicable law, United Kingdom adopted
international accounting standards and the Statement of Recommended Practice issued by the Association of Investment
Companies in July 2022 ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (‘SORP’).
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial
statements section of our report.
We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We confirm that we have not
provided any non-audit services prohibited by the FRC’s Ethical Standard to the Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independent Auditor’s Report
to the members of CT UK High Income Trust PLC
Report and Accounts 2024 | 51
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Independent Auditor’s Report
3. Summary of our audit approach
Key audit matters The key audit matter that we identified in the current year was the valuation and ownership of
listed investments.
Materiality The materiality that we used in the current year was £1.08m (2023: £1.04m) which was
determined on the basis of 1% of net assets at 31 March 2024.
Scoping Audit work to respond to the risks of material misstatement was performed directly by the
audit engagement team.
Significant changes in
our approach
There have been no significant changes in our audit approach for the current year.
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting
included:
• obtaining an understanding of the directors’ process for evaluating the Company’s ability to continue as a going concern;
• reviewing the output of the directors’ assessment of the Company’s ability to remain an Investment Trust;
• assessing the performance and position of the Company, including its strong cash position, dividend income and management
fee expenses;
• assessing whether the Company has complied with the revolving credit facility agreement for its borrowing to assess the
continued availability of the borrowing facility;
• assessing the Company’s ability to cover its expenses for the 12-month period from the date of signing the financial
statements, including the ability of the Company to exit underperforming investments, if needed; and
• assessing the appropriateness of the disclosures in the financial statements relating to going concern.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the Company has applied the UK Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of
this report.
52 | CT UK High Income Trust PLC
Independent Auditor’s Report
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
5.1. Valuation and ownership of listed investments
Key audit matter description As an investment entity, the Company holds listed investments of £121.0m (2023:
£112.8m). These represent the most quantitatively significant financial statement line on
the statement of financial position.
There is a risk that investments may not be valued correctly or may not represent the
property of the Company. This may result in a material misstatement within the investments
held at fair value through profit or loss and we consider that there is a potential area for
fraud since investment return is a key performance indicator for the Company.
Additionally, there is a risk that investments are not actively traded and therefore
inappropriately presented as level 1 in the fair value hierarchy.
Refer to note 1 to the financial statements for the accounting policy on investments and
details of the investments are disclosed in note 11 to the financial statements. The
valuation and ownership of listed investments is included in the Audit Committee Report as
a significant reporting matter on page 44.
How the scope of our audit
responded to the key audit matter
We have performed the following procedures to test the valuation and ownership of
investments at 31 March 2024:
• We obtained an understanding of, and tested the operating effectiveness of the relevant
controls at State Street over the valuation and ownership of listed investments;
• We agreed 100% of the Company’s listed investment portfolio at the year end to
confirmations received independently from JP Morgan; and
• We tested the bid prices of 100% of listed investments on the investment ledger at year
end to closing bid prices published by an independent pricing source.
In addition, we performed the following procedures to address whether the investment
portfolio was actively traded and designated with the correct fair value hierarchy:
• We assessed the post year-end volume of trade data in order to identify any investments
that are not actively traded; and
• We tested the completeness and accuracy of disclosures in relation to fair value
measurements and liquidity risk.
Key observations Based on the work performed we concluded that the valuation and ownership of listed
investments, and disclosure thereof, is appropriate.
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Independent Auditor’s Report
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of
our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality £1.08m (2023: £1.04m)
Basis for determining materiality 1% (2023: 1%) of net assets.
Rationale for the benchmark applied Net assets has been selected as it is considered the most relevant benchmark for
investors and is the key driver of shareholder value.
NAV
Materiality
NAV £107.8m
Materiality £1.08m
Audit Committee
reporting threshold
£0.05m
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the financial statements as a whole. Performance materiality was set at 70%
of materiality for the 2024 audit (2023: 70%). In determining performance materiality, we considered the following factors :
i. there have been no significant changes in the business structure and operations;
ii. our experience from previous audits has indicated a low number of corrected and uncorrected misstatements identified in prior
periods; and
iii. there were no significant changes in the Company’s operating environment caused by the uncertainty and volatility brought
about by inflation and increased interest rates.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £54,000
(2023: £52,000), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We
also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the
financial statements.
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Independent Auditor’s Report
7. An overview of the scope of our audit
7.1. Scoping
Our audit was scoped by obtaining an understanding of the entity and its environment, including internal control, and assessing the
risks of material misstatement. Audit work to respond to the risks of material misstatement was performed directly by the audit
engagement team. The Company was audited as a single component.
7.2. Our consideration of the control environment
Certain accounting responsibilities have been delegated to State Street, including the calculation of the net asset value and
maintenance of the Company’s accounting records.
In assessing the Company’s control environment, we considered controls in place at State Street. As part of this we reviewed
State Street’s Service Organisation Controls (SOC 1) Report and have taken a controls reliance approach in respect of the controls
relating to valuation and ownership of listed investments. We also reviewed State Street’s controls report in respect of general
IT controls. Further, we obtained an understanding of relevant business processes and controls that address the risk of material
misstatement in financial reporting.
7.3 Our consideration of climate related risks
In planning our audit, we have considered the potential impact of climate change on the business and its financial statements. The
Company continues to develop its assessment of the potential impacts of environmental, social and governance (“ESG”) related
risks, including climate change, as outlined on page 17. As a part of our audit, we held discussions to understand the process of
identifying climate-related risks, the determination of mitigating actions and the impact on the Company’s financial statements.
We performed our own qualitative risk assessment of the potential impact of climate change on the account balances and classes
of transactions. We have read the disclosures in the annual report to consider whether they are materially consistent with the
financial statements and our knowledge obtained in the audit.
8. Other information
The other information comprises the information included in the annual report, other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue as a going
concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
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Independent Auditor’s Report
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with
laws and regulations, we considered the following:
• the nature of the industry and sector, control environment and business performance including the design of the Company’s
remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
• results of our enquiries of management, the directors and the Audit Committee about their own identification and assessment
of the risks of irregularities, including those that are specific to the Company’s sector;
• any matters we identified having obtained and reviewed the Company’s documentation of their policies and procedures relating
to:
• identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-
compliance;
• detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
• the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations.
• the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial
statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud
and identified the greatest potential for fraud in the valuation and ownership of listed investments. In common with all audits
under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory framework that the Company operates in, focusing on provisions
of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial
statements. The key laws and regulations we considered in this context included the UK Companies Act, Listing Rules and UK
tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but
compliance with which may be fundamental to the Company’s ability to operate or to avoid a material penalty. This included the
requirements of the United Kingdom’s Financial Conduct Authority (“FCA”) and the Alternative Investment Fund Managers Directive.
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Independent Auditor’s Report
11.2. Audit response to risks identified
As a result of performing the above, we identified the valuation and ownership of listed investments as a key audit matter related
to the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes the
specific procedures we performed in response to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of
relevant laws and regulations described as having a direct effect on the financial statements;
• enquiring of management and the Audit Committee concerning actual and potential litigation and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
misstatement due to fraud;
• reading minutes of meetings of those charged with governance; and
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and
other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential
bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of
business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and
remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have
not identified any material misstatements in the strategic report or the directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code
specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit:
• the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified on page 31 of the annual report;
• the directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the
period is appropriate on page 26 of the annual report;
• the directors’ statement on fair, balanced and understandable on page 30 of the annual report;
• the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks on page 26 of the
annual report;
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Independent Auditor’s Report
• the section of the annual report that describes the review of effectiveness of risk management and internal control systems on
page 24 of the annual report; and
• the section describing the work of the Audit Committee on page 42 of the annual report.
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not
visited by us; or
• the financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration
have not been made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting
records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit Committee, we were first appointed by the members of the Company on 29 June
2017 to audit the financial statements for the year ending 31 March 2018 and subsequent financial periods. The period of total
uninterrupted engagement including previous renewals and reappointments of the firm is 7 years, covering the years ending 31
March 2018 to 31 March 2024.
15.2. Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with
ISAs (UK).
16. Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Michael Caullay CA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Glasgow, United Kingdom
30 May 2024
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58 | CT UK High Income Trust PLC
Financial Report
Notes
Revenue
Year to
31 March
2024
£’000
Capital
Year to
31 March
2024
£’000
Total
Year to
31 March
2024
£’000
Revenue
Year to
31 March
2023
£’000
Capital
Year to
31 March
2023
£’000
Total
Year to
31 March
2023
£’000
Capital gains/(losses) on investments
11 Gains/(losses) on investments held at fair value through profit or loss – 7,674 7,674 – (4,177) (4,177)
Exchange gains/(losses) 1 9 10 3 (16) (13)
Revenue
2 Income 5,603 – 5,603 5,007 – 5,007
Total income 5,604 7,683 13,287 5,010 (4,193) 817
Expenditure
4 Investment management fee (186) (435) (621) (183) (427) (610)
5 Other expenses (518) – (518) (521) – (521)
Total expenditure (704) (435) (1,139) (704) (427) (1,131)
Profit/(loss) before finance costs and tax 4,900 7,248 12,148 4,306 (4,620) (314)
Finance costs
7 Interest on bank loans (269) (627) (896) (67) (155) (222)
Total finance costs (269) (627) (896) (67) (155) (222)
Profit/(loss) before tax 4,631 6,621 11,252 4,239 (4,775) (536)
8 Taxation (30) – (30) (47) – (47)
Profit/(loss) and total comprehensive income/(expense) for the year 4,601 6,621 11,222 4,192 (4,775) (583)
10 Earnings per share 4.01p 5.77p 9.78p 3.62p (4.12)p (0.50)p
The total column of this statement represents the Company’s Income Statement and Statement of Comprehensive Income,
prepared in accordance with UK-adopted International Accounting Standards. The supplementary revenue return and capital return
columns are both prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations.
No operations were acquired or discontinued in the year.
The accompanying notes on pages 62 to 76 are an integral part of these financial statements.
Statement of Comprehensive Income
For the year to 31 March
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Notes
31 March
2024
£’000
31 March
2023
£’000
Non-current assets
11 Investments held at fair value through profit or loss 121,267 113,018
Current assets
13 Receivables 1,203 1,394
14 Cash and cash equivalents 1,086 2,288
2,289 3,682
Total assets 123,556 116,700
Current liabilities
15 Payables (790) (529)
16 Bank loans (15,000) (12,000)
(15,790) (12,529)
Total liabilities (15,790) (12,529)
Net assets 107,766 104,171
Equity attributable to equity shareholders
17 Share capital 134 134
18 Share premium 153 153
Capital redemption reserve 5 5
Buy-back reserve 79,022 80,315
Special capital reserve 8,320 10,012
Capital reserves 16,444 9,823
Revenue reserve 3,688 3,729
Equity shareholders’ funds 107,766 104,171
19 Net asset value per Ordinary share 94.51p 89.97p
19 Net asset value per B share 94.51p 89.97p
Company Number: SC314671
Approved by the Board and authorised for issue on 30 May 2024 and signed on its behalf by:
Andrew Watkins, Director
The accompanying notes on pages 62 to 76 are an integral part of these financial statements.
Financial Report
Statement of Financial Position
As at 31 March
60 | CT UK High Income Trust PLC
Financial Report
Notes
Year to
31 March
2024
£’000
Year to
31 March
2023
£’000
Cash flows from operating activities
Profit/(loss) before taxation 11,252 (536)
Adjustments for:
11 (Gains)/losses on investments held at fair value through profit or loss (7,674) 4,177
Exchange (gains)/losses (10) 13
2 Interest income (84) (70)
Interest received 84 70
2 Dividend income (5,519) (4,937)
Dividend income received 5,727 4,698
Decrease/(increase) in receivables 1 (64)
Increase/(decrease) in payables 45 (15)
Finance costs 896 222
Overseas tax suffered (69) (76)
Cash flows from operating activities 4,649 3,482
Cash flows from investing activities
Purchases of investments (62,065) (45,856)
Sales of investments 61,699 42,153
Cash flows from investing activities (366) (3,703)
Cash flows before financing activities 4,283 (221)
Cash flows from financing activities
9 Dividends paid on Ordinary shares (4,642) (4,690)
9 Capital returns paid on B shares (1,692) (1,692)
17 Shares purchased for treasury (1,293) (79)
Interest on bank loans (868) (203)
Drawdown of bank loans 3,000 4,500
Cash flows from financing activities (5,495) (2,164)
Net decrease in cash and cash equivalents (1,212) (2,385)
Cash and cash equivalents at the beginning of the year 2,288 4,686
Effect of movement in foreign exchange 10 (13)
Cash and cash equivalents at the end of the year 1,086 2,288
Represented by:
Cash at bank 176 199
Short term deposits 910 2,089
1,086 2,288
The accompanying notes on pages 62 to 76 are an integral part of these financial statements.
Cash Flow Statement
For the year to 31 March
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Financial Report
Notes
Share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Buy-back
reserve
£’000
Special
capital
reserve
£’000
Capital
reserve –
investments
sold
£’000
Capital
reserve –
investments
held
£’000
Revenue
reserve
£’000
Total
£’000
Balance as at 31 March 2023 134 153 5 80,315 10,012 7,965 1,858 3,729 104,171
Movement during the year ended
31 March 2024
(Loss)/profit for the year – – – – – (6,716) 13,337 4,601 11,222
Total comprehensive income/
(expense) for the year
– – – – – (6,716) 13,337 4,601 11,222
Transactions with owners of the
Company recognised directly in
equity
17 Shares bought back for treasury – – – (1,293) – – – – (1,293)
9 Dividends paid on Ordinary shares – – – – – – – (4,642) (4,642)
9 Capital returns paid on B shares – – – – (1,692) – – – (1,692)
Balance as at 31 March 2024 134 153 5 79,022 8,320 1,249 15,195 3,688 107,766
Notes
Share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Buy-back
reserve
£’000
Special
capital
reserve
£’000
Capital
reserve –
investments
sold
£’000
Capital
reserve –
investments
held
£’000
Revenue
reserve
£’000
Total
£’000
Balance as at 31 March 2022 134 153 5 80,394 11,704 8,001 6,597 4,227 111,215
Movement during the year ended
31 March 2023
(Loss)/profit for the year – – – – – (36) (4,739) 4,192 (583)
Total comprehensive income/
(expense) for the year
– – – – – (36) (4,739) 4,192 (583)
Transactions with owners of the
Company recognised directly in
equity
17 Shares bought back for treasury – – – (79) – – – – (79)
9 Dividends paid on Ordinary shares – – – – – – – (4,690) (4,690)
9 Capital returns paid on B shares – – – – (1,692) – – – (1,692)
Balance as at 31 March 2023 134 153 5 80,315 10,012 7,965 1,858 3,729 104,171
The accompanying notes on pages 62 to 76 are an integral part of these financial statements.
Statement of Changes in Equity
For the year to 31 March
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Financial Report
1. Accounting policies
A summary of the principal accounting policies is set out below.
Basis of Preparation
The financial statements of the Company have been prepared on a going concern basis and in accordance with the Companies Act
2006 and UK-adopted International Accounting Standards.
The Company’s subsidiary undertaking Investors Securities Company Limited has not been consolidated in the financial
statements as it is exempt in accordance with section 405(2) of the Companies Act 2006 on grounds of materiality. Investors
Securities Company Limited has been classified at fair value through profit or loss in the Statement of Financial Position.
Where presentational guidance set out in the Statement of Recommended Practice (“SORP”) for investment trusts issued by
the Association of Investment Companies (“AIC”) is consistent with the requirements of UK-adopted International Accounting
Standards, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of
the SORP.
The notes and financial statements are presented in pounds sterling (functional and presentational currency) because that is the
currency of the primary economic environment in which the Company operates. They are rounded to the nearest thousand except
where otherwise indicated.
The Board confirms that no significant accounting judgements or estimates have been applied to the financial statements and
therefore there is not a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next financial year.
In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial
Reporting Council. After making enquiries, and bearing in mind the nature of the Company’s business and assets, the Directors
consider that the Company has adequate resources to continue in operational existence for a period of at least twelve months
from the date of approval of the financial statements. For this reason, they continue to adopt the going concern basis in preparing
the financial statements. Further detail is included in the Report of the Directors on page 31.
The accounting policies adopted are consistent with those of the previous financial year, and there have been no new standards
adopted during the year which have a material impact on the Company. No standards or amendments not yet effective are
expected to have a material impact on the Company’s accounting policies.
Presentation of Statement of Comprehensive Income
In order to reflect better the activities of an investment trust company and in accordance with guidance issued by the AIC,
supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital
nature has been presented alongside the Statement of Comprehensive Income. The net revenue return is the measure the
Directors believe appropriate in assessing the Company’s compliance with certain requirements set out in Chapter 4, Part 24 of
the Corporation Tax Act 2010.
Investments
Investments are recognised and derecognised on the trade date where a purchase or sale is under a contract whose terms require
delivery within the timeframe established by the market concerned, and are initially measured at fair value.
Investments are classified as fair value through profit or loss. As the entity’s business is investing in financial assets with a view
to profiting from their total return in the form of interest, dividends or increases in fair value, listed equities are designated as fair
value through profit or loss on initial recognition.
Notes to the Financial Statements
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Financial Report
1. Accounting policies (Continued)
Financial assets designated as at fair value through profit or loss are measured at subsequent reporting dates at fair value, which
is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted.
Unlisted investments, including the subsidiary, are valued at fair value by the Directors on the basis of all information available to
them at the time of valuation.
Where securities are designated upon initial recognition as fair value through profit or loss, gains and losses arising from
changes in fair value are included in net profit or loss for the period as a capital item. On derecognition any gain or loss arising is
transferred from the Capital reserve – Investments Held to Capital reserve – Investments Sold.
Accounting standards recognise a hierarchy of fair value measurements for financial instruments which gives the highest priority to
unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs
(Level 3). The classification of financial instruments depends on the lowest significant applicable input, as follows:
Level 1 – quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 – other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either
directly or indirectly.
Level 3 – techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable
market data. The Company’s investment in its subsidiary is included in Level 3 and is valued at its equity value.
Receivables
Receivables do not carry any interest and are short term in nature and are accordingly stated at their nominal value as reduced by
appropriate allowances for estimated irrecoverable amounts.
Cash and cash equivalents
Cash in banks and short term deposits that are held to maturity are carried at cost. Cash and cash equivalents consist of cash in
hand and short term deposits in banks with an original maturity of three months or less.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its
liabilities. Financial liabilities and equity instruments are initially recorded at the proceeds received, net of issue costs.
Bank loans
Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges,
including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the
Statement of Comprehensive Income using the effective interest method and are added to the carrying amount of the instrument
to the extent that they are not settled in the period in which they arise.
Payables
Payables are not interest bearing and are stated at their nominal value.
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Financial Report
1. Accounting policies (Continued)
Reserves
(a) Share premium – the surplus of net proceeds received from the issue of new shares over the par value of such shares is
credited to this account. The majority of the balance of this account which arose as a result of the issue of new shares at
launch was subsequently cancelled by the Court of Session to create the Buy-back reserve and Special capital reserve. These
reserves are explained below. To the extent that the consideration received exceeds the value at which the shares were initially
bought into treasury, the gain arising on the resale of shares from treasury will be credited to the share premium account.
The share premium account is non-distributable.
(b) Capital redemption reserve – the nominal value of any of the shares bought back for cancellation is added to this reserve. This
reserve is non-distributable.
(c) Buy-back reserve – created from the Court cancellation of the share premium account which had arisen from premiums paid
on the A Shares. Available as distributable profits to be used for the buy-back of shares. The cost of any shares bought back
is deducted from this reserve. The cost of any shares resold from treasury is added back to this reserve. (The A shares were
subsequently renamed Ordinary shares).
(d) Special capital reserve – created from the Court cancellation of the share premium account which had arisen from premiums
paid on the B shares. Available for paying capital returns on the B shares.
(e) Capital reserves
Capital reserve – investments sold – gains and losses on realisation of investments are dealt with in this reserve together with
the proportion of management fees, interest and taxation allocated to capital. This reserve also includes dividends of a capital
nature.
Capital reserve – investments held – increases and decreases in the valuation of investments held are accounted for in this
reserve, together with unrealised exchange differences on forward foreign currency contracts.
The Company’s Articles of Association allow distributions to be made from realised capital reserves where the balance on this
reserve is positive.
(f) Revenue reserve – the net profit/(loss) arising in the revenue column of the Statement of Comprehensive Income is added to
or deducted from this reserve. Available for paying dividends on the Ordinary shares.
Income
Dividends are recognised as income on the date that the related investments are marked ex-dividend.
Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company’s right to
receive payment is established.
Special dividends of a non-capital nature are recognised through the revenue column of the Statement of Comprehensive Income.
Where the Company has elected to receive its dividends in the form of additional shares rather than cash, an amount equal to the
cash dividend is recognised as income.
Interest income from fixed interest securities is accrued on a time apportioned basis, by reference to the principal outstanding
and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset’s net carrying amount. Other investment income and deposit interest are included
on an accruals basis.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the
Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other
periods and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using
tax rates that have been enacted or substantively enacted by the balance sheet date.
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Financial Report
1. Accounting policies (Continued)
Deferred taxation
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using
the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary
differences can be utilised.
Investment trusts which have approval under Chapter 4, Part 24 of the Corporation Tax Act 2010 are not liable for taxation on
capital gains.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged
or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Expenses and interest
All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Statement of
Comprehensive Income except where incurred in connection with the maintenance or enhancement of the value of the Company’s
investment portfolio taking account of the expected long term split of returns as follows:
– Interest payable on bank loans is recognised on an effective yield basis and allocated 30 per cent to revenue and 70 per cent
to capital.
– Management fees have been allocated 30 per cent to revenue and 70 per cent to capital.
Foreign currency
Transactions denominated in foreign currencies are expressed in pounds sterling at actual exchange rates as at the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies at the year end are reported at the rates of
exchange prevailing at the year end. Non-monetary non current assets held at fair value through profit and loss and denominated
in foreign currencies are reported at the rates of exchange prevailing when the fair value was assessed. Any gain or loss arising
from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in either the
capital or revenue column of the Statement of Comprehensive Income depending on whether the gain or loss is of a capital or
revenue nature respectively.
Rates of exchange at 31 March 2024 2023
Euro 1.1697 1.1381
Swiss Franc 1.1378 1.1296
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2. Income
2024
£’000
2023
£’000
Income from investments
UK dividend income 4,653 3,884
UK dividend income – special dividends 46 99
Overseas dividend income 632 880
Overseas dividend income - special dividends 25 –
Property income distributions 163 74
5,519 4,937
Other income
Interest on cash and cash equivalents 84 70
Total income 5,603 5,007
Total income comprises:
Dividends 5,519 4,937
Interest on cash and cash equivalents 84 70
Total income 5,603 5,007
Income from investments:
Listed 5,519 4,937
3. Operating segments
The Board has considered the requirements of IFRS 8 ‘Operating Segments’. The Board is of the view that the Company is
engaged in a single segment of business, of investing in equity and that therefore the Company has only a single operating
segment. The Board of Directors, as a whole, has been identified as constituting the chief operating decision maker of the
Company. The key measure of performance used by the Board to assess the Company’s performance is the total return on the
Company’s net asset value as calculated under UK-adopted International Accounting Standards and therefore no reconciliation is
required between the measure of profit or loss used by the Board and that contained in the financial statements.
4. Investment management fee
Revenue
£’000
Capital
£’000
2024
Total
£’000
Revenue
£’000
Capital
£’000
2023
Total
£’000
Investment management fee 186 435 621 183 427 610
The Company’s investment manager is Columbia Threadneedle Investment Business Limited. The contract between the Company
and Columbia Threadneedle Investment Business Limited may be terminated at any date by either party giving six months’ notice
of termination. In the event of the Company terminating the contract by giving less than six months’ notice, Columbia Threadneedle
Investment Business Limited is entitled to compensation calculated as a proportion of the fees payable by the Company in respect
of the previous financial year.
The Manager receives an investment management fee of 0.60% per annum of the net asset value of the Company payable
quarterly in arrears.
The investment management fee for the quarter ended 31 March 2024 of £161,000 (2023: £154,000) is due to the Company’s
investment manager at the year end.
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Financial Report
5. Other expenses
2024
£’000
2023
£’000
Auditor’s remuneration:
– for audit services
(1)
44 40
Broker and professional fees 89 76
Custody and depository 19 20
Directors’ fees for services to the Company (Note 6) 131 115
Marketing 58 56
Printing and postage 54 51
Registrar’s fees and expenses 41 42
Revolving credit facility committment fee 7 44
Subscription and listing fees 38 41
Sundry expenses 37 36
Total other expenses 518 521
All expenses are stated gross of irrevocable VAT, where applicable.
(1)
Auditor’s remuneration for audit services, exclusive of VAT, amounts to £36,500 (2023: £33,500).
6. Directors’ fees
The emoluments of the Chairman, the highest paid Director, were at the rate of £41,250 per annum (2023: £39,000).
Other Directors’ emoluments amounted to £27,500 (2023: £26,000) each per annum, with the chairman of the Audit Committee
receiving an additional £7,000 (2023: £6,500) per annum. Full details are provided in the Directors’ Remuneration Report on
pages 46 to 48.
7. Finance costs
2024
Revenue
£’000
2024
Capital
£’000
2024
Total
£’000
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
Finance costs attributable to term loan – – – 30 69 99
Finance costs attributable to revolving credit facility 269 627 896 37 86 123
Total finance costs 269 627 896 67 155 222
Finance costs have been allocated 30 per cent to revenue and 70 per cent to capital in accordance with the Company‘s
accounting policies.
8a. Tax on ordinary activities
2024
Revenue
£’000
2024
Capital
£’000
2024
Total
£’000
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
Overseas taxation 30 – 30 47 – 47
Total taxation charge (see note 8(b)) 30 – 30 47 – 47
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8b. Factors affecting tax charge for current year
A reconciliation of the current tax charge for the current year is set out below:
2024
Revenue
£’000
2024
Capital
£’000
2024
Total
£’000
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
Profit/(loss) before tax 4,631 6,621 11,252 4,239 (4,775) (536)
Profit/(loss) multiplied by the effective rate of
corporation tax of 25.0% (2023: 19.0%) 1,158 1,655 2,813 805 (907) (102)
Effects of:
Non taxable dividend income (1,339) – (1,339) (924) – (924)
Expenses not utilised in the year 181 266 447 119 111 230
Overseas taxation suffered 30 – 30 47 – 47
Non taxable capital losses – (1,921) (1,921) – 796 796
Total taxation (see note 8(a)) 30 – 30 47 – 47
The deferred tax asset of £4,151,000 (2023: £3,701,000) in respect of unutilised expenses at 31 March 2024 has not been
recognised as it is uncertain that there will be taxable profits from which the future reversal of the deferred tax asset could be
deducted. The deferred tax asset has been calculated at the UK corporation tax rate of 25% (2023: 25%).
9. Dividends and capital repayments
Dividends Payment date
2024
£’000
2023
£’000
In respect of the previous period:
Fourth interim dividend at 1.55p (2022: 1.55p) per Ordinary share 05-May-23 1,319 1,320
In respect of the period under review:
First interim dividend at 1.32p (2023: 1.32p) per Ordinary share 04-Aug-23 1,123 1,124
Second interim dividend at 1.32p (2023: 1.32p) per Ordinary share 03-Nov-23 1,100 1,123
Third interim dividend at 1.32p (2023: 1.32p) per Ordinary share 02-Feb-24 1,100 1,123
4,642 4,690
Amounts relating to the year but not paid at the year end:
Fourth interim dividend at 1.66p (2023: 1.55p) per Ordinary share 03-May-24 1,383 1,319
As shown in the preceding table, the Directors declared a fourth interim dividend in respect of the year ended 31 March 2024 of
1.66p per Ordinary share, which was paid on 3 May 2024 to Ordinary shareholders on the register on 5 April 2024.
Capital repayments Payment date
2024
£’000
2023
£’000
In respect of the previous period:
Fourth capital repayment at 1.55p (2022: 1.55p) per B share 05-May-23 476 476
In respect of the period under review:
First capital repayment at 1.32p (2023: 1.32p) per B share 04-Aug-23 405 405
Second capital repayment at 1.32p (2023: 1.32p) per B share 03-Nov-23 406 406
Third capital repayment at 1.32p (2023: 1.32p) per B share 02-Feb-24 405 405
1,692 1,692
Amounts relating to the year but not paid at the year end:
Fourth capital repayment at 1.66p (2023: 1.55p) per B share 03-May-24 510 476
As shown in the preceding table, the Directors declared a fourth capital repayment in respect of the year ended 31 March 2024 of 1.66p
per B share, which was paid on 3 May 2024 to B shareholders on the register on 5 April 2024.
Although these payments relate to the year ended 31 March 2024, under UK-adopted International Accounting Standards they will
be accounted for in the period during which they are paid.
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Financial Report
9. Dividends and capital repayments (continued)
The dividends paid and payable in respect of the financial year ended 31 March 2024, which form the basis of the retention test
under Chapter 4, Part 24 of the Corporation Taxes Act 2010 are as follows:
2024
£’000
Revenue available for distribution by way of dividends for the year 4,601
First interim dividend for the year ended 31 March 2024 of 1.32p per share (1,123)
Second interim dividend for the year ended 31 March 2024 of 1.32p per share (1,100)
Third interim dividend for the year ended 31 March 2024 of 1.32p per share (1,100)
Fourth interim dividend for the year ended 31 March 2024 of 1.66p per share* (1,383)
Transferred from revenue reserve (105)
*based on 83,322,653 Ordinary shares in issue at the record date of 5 April 2024.
10. Earnings per share
2024
Revenue
£’000
2024
Capital
£’000
2024
Total
£’000
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
Profit/(loss) and total comprehensive income/(expense) 4,601 6,621 11,222 4,192 (4,775) (583)
Earnings per share – pence 4.01p 5.77p 9.78p 3.62p (4.12)p (0.50)p
The Company’s revenue, capital and total earnings per share are based on 84,025,522 Ordinary shares (2023: 85,118,954) and
30,708,750 B shares (2023: 30,708,750), being the weighted average number of shares in issue of each share class during the year.
11. Investments held at fair value through profit or loss
2024
£’000
2023
£’000
Listed securities 121,017 112,768
Subsidiary undertaking 250 250
121,267 113,018
Listed/
Quoted
(Level 1)
£’000
Subsidiary/
Unlisted
(Level 3)*
£’000
Total
£’000
Cost brought forward 110,910 250 111,160
Gains brought forward 1,858 – 1,858
Fair value of investments at 31 March 2023 112,768 250 113,018
Purchases at cost 62,274 – 62,274
Sales proceeds (61,699) – (61,699)
Losses on investments sold in year (5,663) – (5,663)
Gains on investments held at year end 13,337 – 13,337
Fair value of investments at 31 March 2024 121,017 250 121,267
Cost at 31 March 2024 105,822 250 106,072
Gains at 31 March 2024 15,195 – 15,195
Fair value of investments at 31 March 2024 121,017 250 121,267
* Level 3 is the investment in the subsidiary undertaking, Investors Securities Company Limited, which is valued at its net asset value and for which observable market
data is not applicable.
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11. Investments held at fair value through profit or loss (continued)
2024
£’000
2023
£’000
Equity investments 121,267 113,018
(Losses)/gains on investments sold in year (5,663) 562
Gains/(losses) on investments held at year end 13,337 (4,739)
Total gains/(losses) in year 7,674 (4,177)
The Company incurred transaction costs of £320,000 (2023: £171,500) on the purchase of assets and £29,000 (2023:
£18,000) on the sale of assets in the year.
Gains on investments sold in the year represents the difference between the net proceeds of sale and the book cost of the
investments sold. Investments sold during the year have been revalued over time since their original purchase, and until they were
sold any unrealised gains/losses were included in the fair value of the investments.
Gains on investments held at year end represents the increase in the difference between the book cost of investments held and
their market value at 31 March 2024 compared with the difference between the book cost of investments held and their market
value at 31 March 2023.
12. Significant interests
As at 31 March 2024, the Company’s subsidiary undertaking which deals in investments is:
Country of
incorporation
or Registration
Class of
Capital
Share
Capital and
Reserves
£’000
Profit for
the year
£’000
% of
Class
held
% of
Equity
held
Valuation
at 31.03.24
and 31.03.23
£’000
Investors Securities Company Limited Scotland Ordinary 250 – 100 100 250
The registered office of Investors Securities Company Limited is 6th Floor, Quartermile 4, 7a Nightingale Way, Edinburgh EH3 9EG.
At 31 March 2024, no investments were held by the dealing subsidiary and it did not trade during the year. The accounts of this
subsidiary have not been consolidated with those of the Company as, in the opinion of the Directors, it is not material.
13. Receivables
2024
£’000
2023
£’000
Income receivable from shares and securities 967 1,175
Withholding tax recoverable 179 140
Sundry debtors and prepayments 57 79
1,203 1,394
14. Cash and cash equivalents
All cash balances in the current and prior year were held in cash, current accounts or in banks on short term deposits with an
original maturity of three months or less at the year end.
15. Payables
2024
£’000
2023
£’000
Loan from subsidiary undertaking repayable on demand 250 250
Investment management fee payable to the manager 161 154
Amounts due to brokers in settlement of purchase of investments 209 –
Loan Interest 10 3
Accrued expenses 160 122
790 529
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Financial Report
16. Bank loans
The Company has an unsecured revolving credit facility (‘RCF’) with The Royal Bank of Scotland International Limited for £15 million
which is available until 28 September 2025. At 31 March 2024, £15 million was drawn down (31 March 2023: £12 million).
The loan agreement contains certain financial covenants with which the Company must comply. These include a financial covenant
with respect to the ratio of the Adjusted Portfolio Value (as defined in the loan agreement) to the level of debt and also that the
Adjusted Portfolio Value does not fall below £50 million. The Company complied with the required financial covenants throughout the
period since drawdown.
17. Share capital
Allotted, issued and fully paid
Number
Listed
£ Number
Held in
Treasury
£ Number
In Issue
£
Ordinary shares of 0.1p each
Balance at 1 April 2023 102,067,144 102,067 (16,994,491) (16,994) 85,072,653 85,073
Repurchased to be held in treasury – – (1,750,000) (1,750) (1,750,000) (1,750)
Balance at 31 March 2024 102,067,144 102,067 (18,744,491) (18,744) 83,322,653 83,323
B shares of 0.1 pence each
Balance at 1 April 2023 32,076,703 32,077 (1,367,953) (1,368) 30,708,750 30,709
Balance at 31 March 2024 32,076,703 32,077 (1,367,953) (1,368) 30,708,750 30,709
Total at 31 March 2024 134,143,847 134,144 (20,112,444) (20,112) 114,031,403 114,032
During the year the Company bought back 1,750,000 Ordinary shares (2023: 100,000 Ordinary shares) to hold in treasury at a
cost of £1,293,000 (2023: £79,000). During the year the Company bought back nil B shares (2023: nil B Shares).
At 31 March 2024 the Company held 18,744,491 Ordinary shares (2023: 16,994,491 Ordinary shares) and 1,367,953 B shares
(2023: 1,367,953 B shares) in treasury.
Shareholder entitlements
The Company has two classes of shares: Ordinary shares and B shares. The rights of each class of shares are identical, save in
respect of the right to participate in dividends and capital repayments. Ordinary shares are entitled to all dividends paid by the
Company and no dividends may be paid to B shareholders. B shareholders are entitled to capital repayments from the Company
at an amount per share equal to, but not exceeding, any dividend paid per share to Ordinary shareholders. The capital repayments
are paid out of the special capital reserve and accordingly will only be able to be paid for so long as the amount of the special
capital reserve remains sufficient. If and when this reserve is exhausted, the Articles of Association provide that all the Ordinary
shares and all the B shares automatically convert into Ordinary shares with identical rights.
The net asset value attributable to each class of share is the same. Apart from voting rights entitlements at separate class
meetings, every Ordinary share and every B share carries equal voting rights. Upon a winding up or reconstruction of the Company,
each Ordinary share and each B share shall have an equal right to share in the residual assets of the Company.
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18. Share premium account and reserves
In 2007, the Court of Session confirmed the cancellation of the entire amount originally standing to the credit of the share
premium account and the creation of two distinct reserves, the first reserve relating to that part of the cancelled share premium
account arising from premiums paid on the A shares (the “buy-back reserve”) and the second reserve relating to that part of the
cancelled share premium account arising from premiums paid on the B shares (the “special capital reserve”).
The Company will apply these two reserves as follows:
• the buy-back reserve will be available as distributable profits to be used for the buy-back of both Ordinary shares and B shares;
and
• the special capital reserve will be used for the purpose of paying capital repayments on the B shares.
Capital management
The Company’s capital is represented by the issued share capital, share premium account, capital redemption reserve, buy-back
reserve, special capital reserve, capital reserve – investments sold, capital reserve – investments held and revenue reserve.
Details of the movement through each reserve are shown in the Statement of Changes in Equity. The Company is not subject to
any externally imposed capital requirements.
The capital of the Company is managed in accordance with its investment policy, in pursuit of its investment objective, both of
which are detailed in the Purpose, Strategy and Business Model and Principal Policies and the Report of the Directors. In order to
maintain an optimal capital structure through varying market conditions the Company has the ability to:
– issue and buy-back share capital within limits set by the shareholders in general meeting;
– borrow money in the short and long term;
– pay dividends to Ordinary shareholders out of current year revenue earnings as well as out of the brought forward revenue
reserve; and
– pay capital repayments to B shareholders out of the special capital reserve.
The Company’s Articles of Association allow distributions to be made from realised capital reserves where the balance on this
reserve is positive.
The Company has the power under its Articles to borrow an amount up to 100 per cent of the Company’s Adjusted Capital and
Reserves. The Directors currently intend that the aggregate borrowings of the Company will be limited to approximately 20 per cent
of the Company’s gross assets immediately following drawdown of any new borrowings. The Directors will, however, retain flexibility
to increase or decrease the level of gearing to take account of changing market circumstances and in pursuit of the Company’s
investment objectives.
19. Net asset value per share
2024 2023
Net assets attributable at the year end £107,766,000 £104,171,000
Equity shares in issue at the year end
(1)
114,031,403 115,781,403
Net asset value per Ordinary/B share 94.51p 89.97p
(1)
Consisting of 83,322,653 Ordinary Shares and 30,708,750 B Shares (2023: 85,072,653 Ordinary Shares and 30,708,750 B Shares), being the number of shares
in issue at the year end.
The Company’s treasury net asset value per share, incorporating the 18,744,491 Ordinary shares and 1,367,953 B shares held
in treasury at the year end (2023: 16,994,491 Ordinary shares and 1,367,953 B shares), was 94.51p (2023: 89.97p). The
Company’s current policy is to only re-sell shares held in treasury at a price not less than the net asset value per share.
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Financial Report
20. Changes in liabilities arising from financing activities
2024
£’000
2023
£’000
Opening liabilities from financing activities 12,000 7,500
Cash-flows:
Drawdown of revolving credit facility 3,000 12,000
Repayment of bank loan – (7,500)
Closing liabilities from financing activities 15,000 12,000
21. Financial instruments
The Company’s financial instruments comprise equity investments, cash balances, receivables and payables that arise directly
from its operations and borrowings. As an investment trust the Company holds a portfolio of financial assets in pursuit of its
investment objective. The Company makes use of borrowings to achieve enhanced returns. The downside risk of borrowings can
be mitigated by raising the level of cash balances held.
The Company may use derivatives for efficient portfolio management from time to time. No derivative financial instruments were
used during the current year or prior year. The Company may also write call options over some investments held in the investment
portfolio. There were no call options written during the current year or prior year.
The fair value of the financial assets and liabilities of the Company at 31 March 2024 is not materially different from their carrying
value in the financial statements.
The Company is exposed to various types of risk that are associated with financial instruments. The most important types are
credit risk, market price risk, liquidity risk, interest rate risk and foreign currency risk.
The Board reviews and agrees policies for managing its risk exposure. These policies are summarised as follows and have
remained unchanged for the year under review.
Credit risk
Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with
the Company.
The Company’s principal financial assets are bank balances and cash and other receivables, whose carrying amounts in the
Statement of Financial Position represent the Company’s maximum exposure to credit risk in relation to financial assets. The
Company did not have any exposure to any financial assets which were past due or impaired at the current or prior year end.
The Company is exposed to potential failure by counterparties to deliver securities for which the Company has paid, or to pay for
securities which the Company has delivered. A list of pre-approved counterparties used in such transactions is maintained and
regularly reviewed by the Manager, and transactions must be settled on a basis of delivery against payment. Broker counterparties
are selected based on a combination of criteria, including credit rating, balance sheet strength and membership of a relevant
regulatory body. Risk relating to unsettled transactions is considered to be small due to the short settlement period involved and
the acceptable quality of the brokers used. The rate of default in the past has been insignificant.
All of the investments of the Company, are held by JPMorgan Chase Bank, the Company’s custodian. Bankruptcy or insolvency
of the custodian may cause the Company’s rights with respect to the securities held by the custodian to be delayed or limited.
The Board monitors the Company’s risk by reviewing the custodian’s internal control reports as described in the Report of the
Audit Committee.
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit
ratings, normally rated A or higher, assigned by international credit rating agencies. Bankruptcy or insolvency of such financial
institutions may cause the Company’s ability to access cash placed on deposit to be delayed, limited or lost.
The Company has no significant concentration of credit risk with exposure spread over a number of counterparties and financial
institutions.
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21. Financial instruments (Continued)
Market price risk
The fair value of equity and other financial securities held in the Company’s portfolio fluctuates with changes in market prices. Prices
are themselves affected by movements in currencies and interest rates and by other financial issues, including the market perception
of future risks. Other external events such as protectionism, inflation or deflation, economic recessions, geopolitical backdrop and
terrorism could also affect share prices in particular markets. The Company’s strategy for the management of market price risk
is driven by the Company’s investment policy as outlined within the Purpose, Strategy and Business Model on pages 7 and 8 and
Principal Policies on pages 27 and 28. The Board sets policies for managing this risk and meets regularly to review full, timely and
relevant information on investment performance and financial results. The management of market price risk is part of the fund
management process and is typical of equity investment. The portfolio is managed with an awareness of the effects of adverse price
movements through detailed and continuing analysis with an objective of maximising overall returns to shareholders. Investment
performance is discussed in more detail in the Manager’s Review and further information on the investment portfolio is set out in the
sections of this report entitled ‘Classification of Investments’ and ‘Investment Portfolio’.
Any changes in market conditions will directly affect the profit or loss reported through the Statement of Comprehensive Income.
A 20 per cent increase in the value of the investment portfolio as at 31 March 2024 would have increased net assets and income
for the year by £24,253,000 (2023: an increase of 20 per cent in the Investment Portfolio would have increased net assets and
income by £22,604,000). A decrease of 20 per cent (2023: 20 per cent) would have had an equal but opposite effect.
The calculations above are based on investment valuations at the respective statement of financial position dates and are not
representative of the year as a whole, nor are they reflective of future market conditions.
Disclosure of the hierarchy of fair value measurements for financial instruments, as required by IFRS 13, is provided in note 11
and in the accounting policies.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in realising assets or otherwise raising funds to meet financial
commitments. The risk of the Company not having sufficient liquidity at any time is not considered by the Board to be significant,
given the liquid nature of the portfolio of investments and the level of cash and cash equivalents ordinarily held. Cash balances
are held with a spread of reputable banks with a credit rating of normally A or higher, usually on overnight deposit. The Manager
reviews liquidity at the time of making each investment decision. The Board reviews liquidity exposure at each meeting.
In certain circumstances, the terms of the Company’s bank facility entitle the lender to demand early repayment and, in such
circumstances, the Company’s ability to maintain dividend levels and the net asset value attributable to equity shareholders could
be adversely affected. Such early repayment may be required on the occurrence of certain events of default which are customary
for facilities of this type. These include events of non payment, breach of other obligations, misrepresentations, insolvency and
insolvency proceedings, illegality and a material adverse change in the financial condition of the Company.
The remaining contractual maturities of the financial liabilities at 31 March 2024, based on the earliest date on which payment
can be required, were as follows:
Three
months
or less
£’000
More than
three months
but less than
one year
£’000
More than
one year but
less than
two years
£’000
More than
two years but
less than
five years
£’000
Total
£’000
31 March 2024
Current liabilities
Payables 540 – – – 540
Loan from subsidiary undertaking 250 – – – 250
Revolving credit facility 15,000 – – – 15,000
31 March 2023
Current liabilities
Payables 279 – – – 279
Loan from subsidiary undertaking 250 – – – 250
Revolving credit facility 12,000 – – – 12,000
The figures in the above table are on a contractual maturity basis and therefore include interest payments where applicable.
Report and Accounts 2024 | 75
Financial Report
Interest rate risk
Some of the Company’s financial instruments are interest bearing. They can be a mix of both fixed and variable rate instruments
with differing maturities. As a consequence, the Company is exposed to interest rate risk due to fluctuations in the prevailing
market rate. The Company’s exposure to floating interest rates gives cashflow interest rate risk and its exposure to fixed interest
rates gives fair value interest rate risk.
Floating rate
When the Company retains cash balances the majority of the cash is held in deposit accounts. The benchmark rate which
determines the interest payments received on cash balances is the bank base rate, which was 5.25 per cent at 31 March 2024
(2023: 4.25 per cent).
Considering the effect on cash balances, an increase of 100 basis points in interest rates would have increased net assets and
income for the year by £11,000 (year to 31 March 2023: £23,000). A decrease of 100 basis points would have had an equal but
opposite effect. The calculations are based on the net cash balances at the respective statement of financial position date and
are not representative of the year as a whole, nor are they reflective of future market conditions.
When the Company draws down amounts under its revolving credit facility, interest is payable based on SONIA (which can vary on a
daily basis) plus a margin.
Fixed rate
At 31 March 2024 and 31 March 2023 the Company’s investment portfolio did not contain any fixed interest or floating rate
interest assets. Details of the Company’s investment portfolio are given in note 11 and in the section of this report entitled
‘Classification of Investments’ and ‘Investment Portfolio’. At 31 March 2024 the Company had no fixed interest liabilities.
Foreign currency risk
It is not the Company’s policy to hedge any overseas currency exposure on equity investments. Foreign currency exposure (which
includes Euro, US Dollar and Swiss Franc denominated assets) at 31 March 2024 and 31 March 2023 was as follows:
Investments
£’000
2024
Net
Current
Assets
£’000
Total
£’000
Investments
£’000
2023
Net
Current
Assets
£’000
Total
£’000
Swiss Franc 1,802 59 1,861 5,548 91 5,639
Euro 5,478 110 5,588 13,370 99 13,469
US Dollar – 6 6 – – –
Total 7,280 175 7,455 18,918 190 19,108
Total gains in the year from foreign exchange transactions and balances held in cash were £10,000 (2023 losses: £13,000).
At 31 March 2024, if the value of sterling had weakened against the Euro, US Dollar and Swiss Franc by 10 per cent the impact on
the profit or loss and the net asset value would have been an increase of £884,000 (2023: £2,217,000). If the value of sterling
had strengthened against the Euro, US Dollar and Swiss Franc by 10 per cent the effect the impact on the profit or loss and the
net asset value would have been a decrease of £724,000 (2023: £1,814,000).
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76 | CT UK High Income Trust PLC
Financial Report
22. Related party and transactions with the Manager
The Directors of the Company are considered a related party. Under the FCA Listing Rules, the Manager is also defined as a
related party. However, the existence of an independent Board of Directors demonstrated that the Company is free to pursue
its own financial and operating policies and therefore under the AIC SORP, the Manager is not considered a related party for
accounting purposes.
There are no transactions with the Board other than aggregated remuneration for services as Directors as disclosed in the
Directors’ Remuneration Report on pages 46 to 48 and as set out in note 6 to the financial statements. There are no outstanding
balances with the Board at year end.
The beneficial interests of the Directors in the Ordinary shares and B shares of the Company are disclosed on page 48.
Transactions between the Company and Columbia Threadneedle Investment Business Limited are detailed in note 4 on investment
management fees and in note 15 in relation to fees owed to Columbia Threadneedle Investment Business Limited at the
statement of financial position date.
23. Post-balance sheet events
Since 31 March 2024, there are no post balance sheet events which would require adjustment of or disclosure in the financial
statements.
Report and Accounts 2024 | 77
Financial Report
Alternative Investment Fund Managers (‘AIFM’) Directive
In accordance with the AIFM Directive, information in relation to the Company’s leverage and the remuneration of the Company’s AIFM,
Columbia Threadneedle Investment Business Limited, is required to be made available to investors. Detailed regulatory disclosures
including those on the AIFM’s remuneration policy and costs are available on the Company’s website or from Columbia Threadneedle
Investments on request.
The Company’s maximum and average actual leverage levels at 31 March 2024 are shown below:
Leverage exposure
Gross
method
Commitment
method
Maximum limit 260% 260%
Actual 113% 114%
For the purposes of the AIFM Directive, leverage is any method which increases the Company’s exposure, including the borrowing
of cash and the use of derivatives. It is expressed as a percentage of the Company’s exposure to its net asset value and is
calculated on both a gross and commitment method.
Under the gross method, exposure represents the sum of the Company’s positions after deduction of cash balances, without
taking account of any hedging or netting arrangements. Under the commitment method, exposure is calculated without the
deduction of cash balances and after certain hedging and netting positions are offset against each other.
The leverage limits are set by the AIFM and approved by the Board and are in line with the maximum leverage levels permitted in
the Company’s Articles of Association. The AIFM is also required to comply with the gearing parameters set by the Board in relation
to borrowings.
Detailed regulatory disclosures to investors in accordance with the AIFM Directive are contained on the Company’s website under
Key Documents.
AIFMD Disclosures
Governance Report Auditor's Report Notice of Meeting Other InformationStrategic ReportOverview Financial Report
78 | CT UK High Income Trust PLC
Notice of Meeting
Notice is hereby given that the seventeenth Annual General
Meeting of CT UK High Income Trust PLC will be held at
Columbia Threadneedle Investments, Cannon Place, 78 Cannon
Street, London EC4N 6AG, on 26 July 2024 at 11 am for the
following purposes: to consider and, if thought fit, pass the
following Resolutions, of which Resolutions 1 to 10 will be
proposed as Ordinary Resolutions and Resolutions 11 to 13 as
Special Resolutions:
Ordinary Resolutions
1. That the Annual Report and Financial Statements for the
year to 31 March 2024 be received and adopted.
2. That the Annual Report on Directors’ Remuneration for the
year ended 31 March 2024 be approved.
3. That Helen M Galbraith, who retires annually, be re-elected
as a Director.
4. That Stephen J Mitchell, who retires annually, be re-elected
as a Director.
5. That Angus W Pottinger, who retires annually, be re-elected
as a Director.
6. That Andrew K Watkins, who retires annually, be re-elected
as a Director.
7. That Deloitte LLP be re-appointed as Auditor to the Company.
8. That the Directors be authorised to determine the
remuneration of the Auditor.
9. That the Company’s dividend/capital repayment policy
with regard to quarterly payments as set out in the Annual
Report and Financial Statements be approved.
10. That, in substitution for any existing authority, but without
prejudice to the exercise of any such authority prior to the
passing of this resolution, the Directors of the Company
be and they are hereby generally and unconditionally
authorised in accordance with Section 551 of the
Companies Act 2006 (the “Act”) to exercise all the powers
of the Company to allot shares in the Company and to grant
rights to subscribe for or to convert any security into shares
in the Company (“Rights”) provided that such authority
shall be limited to the allotment of shares and the grant
of Rights in respect of shares with an aggregate nominal
value of up to £4,166 in respect of Ordinary shares of
0.1 pence each in the capital of the Company (“Ordinary
Shares”) and £1,535 in respect of B shares of 0.1 pence
each in the capital of the Company (“B Shares”), (being
approximately 5.0 per cent of the total nominal value of the
issued share capital of the Company (excluding treasury
shares), as at 30 May 2024), such authority to expire at the
conclusion of the Company’s next Annual General Meeting
or on 30 September 2025, whichever is the earlier, unless
previously revoked, varied or extended by the Company in
a general meeting, save that the Company may at any time
prior to the expiry of this authority make an offer or enter
into an agreement which would or might require shares in
the Company to be allotted or Rights to be granted after the
expiry of such authority and the Directors shall be entitled
to allot shares in the Company or grant Rights in pursuance
of such an offer or agreement as if such authority had
not expired.
Special Resolutions
11. That, subject to the passing of Resolution number 10
above, and in substitution for any existing power but without
prejudice to the exercise of any such power prior to the
passing of this resolution, the Directors of the Company
be and they are hereby generally and unconditionally
empowered, pursuant to Section 570 of the Companies
Act 2006 (the “Act”), to allot equity securities (as defined
in Section 560 of the Act, provided that for the purposes
of this resolution an allotment of equity securities shall be
deemed not to include the sale of shares in the Company
that immediately before the sale are held by the Company
as treasury shares) for cash pursuant to the authority given
by Resolution number 10 above as if Section 561(1) of the
Act did not apply to any such allotment of equity securities,
provided that this power:
(a) expires at the conclusion of the Company’s next Annual
General Meeting or on 30 September 2025, whichever
is the earlier, save that the Company may, before such
expiry, make an offer or agreement which would or
might require equity securities to be allotted after such
expiry and the Directors may allot equity securities in
pursuance of any such offer or agreement as if the
power conferred hereby had not expired; and
(b) shall be limited to the allotment of equity securities up
to an aggregate nominal value of £4,166 in respect of
Ordinary Shares and £1,535 in respect of B Shares
(being approximately 4.2 per cent of the total nominal
value of the issued share capital of the Company
(including treasury shares), as at 30 May 2024) at a
price of not less than the net asset value per share of
the existing Ordinary Shares (in the case of an allotment
of Ordinary Shares) or B Shares (in the case of an
allotment of B Shares).
Notice of Annual General Meeting
Report and Accounts 2024 | 79
Governance Report Auditor's Report Notice of Meeting Other InformationStrategic ReportOverview Financial Report
Notice of Meeting
12. That, in substitution for any existing authority but without
prejudice to the exercise of any such authority prior to the
passing of this resolution, the Company be and is hereby
generally and unconditionally authorised, pursuant to and in
accordance with Section 701 of the Companies Act 2006
(the “Act”) to make market purchases (within the meaning
of Section 693(4) of the Act) of fully paid Ordinary shares
of 0.1 pence each in the capital of the Company (“Ordinary
shares”) and fully paid B shares of 0.1 pence each in the
capital of the Company (“B shares”) (either for cancellation
or for retention as treasury shares for future reissue, resale,
transfer or cancellation), provided that:
(a) the maximum aggregate number of Ordinary Shares
and B Shares hereby authorised to be purchased is
14.99 per cent of the issued Ordinary Shares and
14.99 per cent of the issued B Shares (excluding
Ordinary Shares and B Shares held in treasury)
immediately prior to the passing of this resolution
(see note 15);
(b) the minimum price (excluding expenses) which may be
paid for an Ordinary Share or B Share is 0.1 pence;
(c) the maximum price (excluding expenses) which may be
paid for an Ordinary Share or B Share shall not be more
than the higher of:
i. 5 per cent. above the average of the middle market
values (as derived from the Daily Official List of the
London Stock Exchange) of an Ordinary Share or
B Share over the five business days immediately
preceding the date of purchase; and
ii. the higher of the last independent trade of an
Ordinary Share or B Share and the highest current
independent bid for such an Ordinary Share or
B Share on the London Stock Exchange at the time
the purchase is carried out; and
(d) unless previously varied, revoked or renewed by
the Company in a general meeting, the authority
hereby conferred shall expire at the conclusion of
the Company’s next Annual General Meeting or on
30 September 2025 whichever is the earlier, save that
the Company may, prior to such expiry, enter into a
contract to purchase Ordinary Shares and/or B Shares
under such authority which will or might be completed
or executed wholly or partly after the expiration of such
authority and may make a purchase of Ordinary Shares
and/or B Shares pursuant to any such contract.
13. That, the Directors of the Company be and they are hereby
empowered pursuant to section 573 of the Companies Act
2006 (as amended) (the “Act”) to sell equity securities
(within the meanings of sections 560(1) and 560(2) of
the Act) wholly for cash as if section 561 of the Act did
not apply to any such sale, provided that this power shall
be limited to the sale of equity securities for cash out of
treasury up to an aggregate nominal amount of £8,332
in respect of Ordinary Shares and £3,070 in respect of
B Shares, representing approximately 8.2 per cent of
the Company’s Ordinary share capital in issue (including
treasury shares) as at the date of the passing of this
resolution and approximately 9.6 per cent of the Company’s
B share capital in issue (including treasury shares) as at
the date of the passing of this resolution and shall expire
on the earlier of 30 September 2025 or at the conclusion
of the Company’s next Annual General Meeting, unless
renewed at a general meeting prior to such time, save
that the Company may before such expiry make offers,
agreements or arrangements which would or might require
equity securities to be allotted after such expiry and so that
the Directors of the Company may allot equity securities in
pursuance of such offers, agreements or arrangements as
if the power conferred hereby had not expired.
By order of the Board
For Columbia Threadneedle Investment Business Limited
Company Secretary
Quartermile 4,
7a Nightingale Way
Edinburgh EH3 9EG
30 May 2024
80 | CT UK High Income Trust PLC
Notice of Meeting
Notes
1. A member entitled to attend and vote at this meeting may appoint
one or more persons as his/her proxy to attend, speak and vote
on his/her behalf at the meeting. A proxy need not be a member
of the Company. If multiple proxies are appointed they must not
be appointed in respect of the same shares. To be effective, the
duly executed enclosed form of proxy, together with any power of
attorney or other authority under which it is signed or a certified
copy thereof, should be lodged at the address shown on the proxy
form not later than 48 hours before the time of the meeting or, in
the case of an adjourned meeting, no later than 48 hours before
the holding of that adjourned meeting (or in the case of a poll taken
subsequent to the date of the meeting or adjourned meeting, no
later than 24 hours before the time appointed for the taking of the
poll). In the calculation of these time periods, no account is taken
of any part of a day that is not a working day. The appointment of
a proxy will not prevent a member from attending the meeting and
voting in person if he/she so wishes. A member present in person
or by proxy shall have one vote on a show of hands and on a poll
every member present in person or by proxy shall have one vote for
every share of which he/she is the holder. Any power of attorney
or any other authority under which this proxy is signed (or a duly
certified copy of such power or authority) must be included with the
proxy form. On a poll each Ordinary shareholder is entitled to one
vote per Ordinary share held and each B shareholder is entitled to
one vote per B share held.
2. CREST members who wish to appoint a proxy or proxies by utilising
the CREST electronic proxy appointment service may do so for
this meeting by following the procedures described in the CREST
Manual and by logging on to www.euroclear.com. CREST personal
members or other CREST sponsored members, and those CREST
members who have appointed a voting service provider(s), should
refer to their CREST sponsor or voting service provider(s), who will
be able to take the appropriate action on their behalf.
3. In order for a proxy appointment or instruction made by means
of CREST to be valid, the appropriate CREST message (a “CREST
Proxy Instruction”) must be properly authenticated in accordance
with Euroclear UK & International Limited’s (“Euroclear”)
specifications and must contain the information required for such
instructions, as described in the CREST Manual. The message,
in order to be valid, must be transmitted so as to be received by
the Company’s agent (ID RA19) by the latest time for receipt of
proxy appointments specified in Note 1 above. For this purpose,
the time of receipt will be taken to be the time (as determined by
the timestamp applied to the message by the CREST Applications
Host) from which the Company’s agent is able to retrieve the
message by enquiry to CREST in the manner prescribed by CREST.
After this time, any change of instructions to proxies appointed
through CREST should be communicated to the appointee through
other means.
4. The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.
5. If you are an institutional investor you may be able to appoint a
proxy electronically via the Proxymity platform, a process which has
been agreed by the Company and approved by the Registrar. For
further information regarding Proxymity, please go to www.proxymity.
io. Your proxy must be lodged by 11 am on 24 July 2024 in order
to be considered valid. Before you can appoint a proxy via this
process you will need to have agreed to Proxymity’s associated
terms and conditions. It is important that you read these carefully
as you will be bound by them and they will govern the electronic
appointment of your proxy.
6. Shareholders can vote online by going to Equiniti’s Shareview
website, www.shareview.co.uk, and logging in to your Shareview
Portfolio. Once you have logged in, simply click ‘View’ on the ‘My
Investments’ page and then click on the link to vote and follow
the on-screen instructions. Votes should be submitted not later
than 48 hours excluding non-working days before the time of
the meeting or adjourned meeting. If you have not yet registered
for a Shareview Portfolio, go to www.shareview.co.uk and enter
the requested information. It is important that you register for a
Shareview Portfolio with enough time to complete the registration
and authentication processes.
7. A person to whom this notice is sent who is a person nominated
under section 146 of the Companies Act 2006 to enjoy information
rights (a “Nominated Person”) may, under an agreement between
him/her and the shareholder by whom he/she was nominated,
have a right to be appointed (or to have someone else appointed)
as a proxy for the Annual General Meeting. If a Nominated Person
has no such proxy appointment right or does not wish to exercise
it, he/she may, under any such agreement, have a right to give
instructions to the shareholder as to the exercise of voting rights.
The statements of the rights of members in relation to the
appointment of proxies in Notes 1 and 2 above do not apply to a
Nominated Person. The rights described in those Notes can only be
exercised by registered members of the Company.
8. Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, the Company specifies that only those holders
of shares entered on the Register of Members of the Company
as at 6.30 p.m. on 24 July 2024 or, in the event that the meeting
is adjourned, on the Register of Members as at 6.30 pm on the
day two days (excluding non-working days) prior to any adjourned
meeting, shall be entitled to attend or vote at the meeting in
respect of the number of Shares registered in their names at that
time. Changes to the entries on the Register of Members after
6.30 p.m. on 24 July 2024 or, in the event that the meeting is
adjourned, in the Register of Members as at 6.30 pm on the day
two days prior to any adjourned meeting (excluding non-working
days), shall be disregarded in determining the rights of any person
to attend or vote at the meeting, notwithstanding any provisions in
any enactment, the Articles of Association of the Company or other
instrument to the contrary.
9. As at 30 May 2024 (being the last business day prior to the
publication of this notice) the Company’s issued share capital
consists of 83,322,653 Ordinary Shares carrying one vote each
and 30,708,750 B Shares carrying one vote each. The Company
holds 18,744,491 Ordinary Shares and 1,367,953 B shares in
treasury which do not carry voting rights. Therefore the total voting
rights in the Company as at 30 May 2024 were 114,031,403
votes. Any person holding 3 per cent of the total voting rights in the
Company who appoints a person other than the Chairman as his/
her proxy will need to ensure that both he/she and such third party
complies with their respective disclosure obligations under the
Disclosure Guidance and Transparency Rules.
10. No Director has a contract of service with the Company. The
Directors’ letters of appointment will be available for inspection at
the Company’s registered office during normal business hours on any
weekday (Saturdays, Sundays and public holidays excepted) and for
15 minutes prior to, and during, the Annual General Meeting.
11. Information regarding the Annual General Meeting, including
information required by section 311A of the Companies Act 2006,
is available from ctukhighincome.co.uk.
Report and Accounts 2024 | 81
Notice of Meeting
12. Under section 319A of the Companies Act 2006, the Company
must answer any question relating to the business being dealt with
at the meeting put by a member attending the meeting unless:
(a) answering the question would interfere unduly with the
preparation for the meeting or involve the disclosure of
confidential information;
(b) the answer has already been given on a website in the form of
an answer to a question; or
(c) it is undesirable in the interests of the Company or the good
order of the meeting that the question be answered.
13. The members of the Company may require the Company to publish,
on its website (without payment), a statement (which is also
passed to the Company’s auditor) setting out any matter relating
to the audit of the Company’s accounts including the auditor’s
report and the conduct of the audit. The Company will be required
to do so once it has received such requests from either members
representing at least 5 per cent of the total voting rights of the
Company or at least 100 members who have a relevant right to
vote and hold shares in the Company on which there has been
paid up an average sum per member of at least £100. Such
requests must be made in writing and must state your full name
and address and be sent to Quartermile 4, 7a Nightingale Way,
Edinburgh, EH3 9EG.
14. You may not use any electronic address provided either in this
Notice of Annual General Meeting or any related documents
(including the Form of Proxy) to communicate with the Company for
any purpose other than those expressly stated.
15. Following Resolution 12 becoming effective, the maximum
aggregate number of shares hereby authorised to be purchased
shall be 12,490,000 Ordinary shares and 4,603,200 B shares
(or, if less, 14.99 per cent. of the number of Ordinary shares and
14.99 per cent. of the number of B shares in issue (excluding
treasury shares) immediately prior to the passing of the resolution).
16. Under Section 338 of the Companies Act 2006, a member or
members meeting the qualification criteria set out at Note 18
below, may, subject to certain conditions, require the Company to
circulate to members notice of a resolution which may properly
be moved and is intended to be moved at that meeting. The
conditions are that: (i) the resolution must not, if passed, be
ineffective (whether by reason of inconsistency with any enactment
or the Company’s constitution or otherwise); (ii) the resolution must
not be defamatory of any person, frivolous or vexatious; and (iii)
the request: (a) may be in hard copy form or in electronic form; (b)
must identify the resolution of which notice is to be given by either
setting out the resolution in full or, if supporting a resolution sent
by another member, clearly identifying the resolution which is being
supported; (c) must be authenticated by the person or persons
making it; and (d) must be received by the Company not later than
six weeks before the Meeting to which the requests relate.
17. Under Section 338A of the Companies Act 2006, a member or
members meeting the qualification criteria set out at Note 18
below, may, subject to certain conditions, require the Company to
include in the business to be dealt with at the meeting a matter
(other than a proposed resolution) which may properly be included
in the business (a matter of business). The conditions are that:
(i) the matter of business must not be defamatory of any person,
frivolous or vexatious; and (ii) the request: (a) may be in hard copy
form or in electronic form; (b) must identify the matter of business
by either setting it out in full or, if supporting a statement sent by
another member, clearly identify the matter of business which is
being supported; (c) must be accompanied by a statement setting
out the grounds for the request; (d) must be authenticated by
the person or persons making it; and (e) must be received by the
Company not later than 6 weeks before the Meeting to which the
requests relate.
18. In order to be able to exercise the members’ right to require: (i)
circulation of a resolution to be proposed at the Meeting (see
Note 16); or (ii) a matter of business to be dealt with at the
Meeting (see Note 17), the relevant request must be made by:
(a) a member or members having a right to vote at the Meeting
and holding at least 5% of total voting rights of the Company; or
(b) at least 100 members have a right to vote at the Meeting and
holding, on average, at least £100 of paid up share capital.
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82 | CT UK High Income Trust PLC
Other Information
The Company’s capital structure offers shareholders the
opportunity to receive quarterly returns in the form of either
dividends, capital repayments, or both, to suit their own
particular circumstances.
The Company has two classes of shares: Ordinary shares and
B shares. The rights of each class of shares are identical, save
in respect of the right to participate in dividends and capital
repayments. Irrespective of these rights, the net asset value
attributable to each class of shares is the same.
Only Ordinary shares carry a right to participate in dividends
paid by the Company. B shares are not entitled to dividends
but each B share instead carries the right to receive a capital
repayment at the same time as, and in an amount equal to,
each dividend paid in respect of Ordinary shares. The capital
repayments are paid out of the special capital reserve and
accordingly will only be able to be paid for so long as the
amount of the special capital reserve remains sufficient. If and
when this reserve is exhausted, the Articles of Association
provide that all the Ordinary shares and all the B Shares
automatically convert into Ordinary shares with identical rights.
The tax treatment on distributions received from Ordinary
shares will be different from that on distributions received
from B shares. Dividends paid on the Ordinary shares will
be taxed on receipt in the normal way for dividends. Capital
repayments received on B shares will fall to be taxed in
accordance with the rules relating to the taxation of chargeable
gains (see further information below) for non corporate holders
(including individuals).
It is the Company’s current policy to maintain the ratio of
Ordinary shares to B shares (excluding shares held in Treasury)
within the range 72.5% : 27.5% and 77.5% : 22.5%. The
Board may if it considers it to be in the best interests of the
Company, amend the ratio from time to time. However, the
Board will always be mindful in setting the ratio of any impact
on the level of revenue available for the Ordinary shares.
Bank Facility
The Company has a £15 million revolving credit facility available
until 28 September 2025. The returns of both the Ordinary
shares and B shares may be geared by this bank facility.
Further information on the B Shares
What is different about the B shares
The B shares are just like any other ordinary share except that,
instead of dividends, B shareholders receive capital repayments,
so B shareholders will receive the same amount of cash on a
quarterly basis as Ordinary shareholders, but when it comes to the
tax on these capital repayments the tax treatment will be different.
This is because the capital repayment is taxed under UK Capital
Gains Tax (‘CGT’) rules rather than Income Tax rules for non
corporate holders (including individuals). When the B shares are
disposed of the capital repayments received need to be taken
into account as part of the CGT disposal calculation.
A summary of the tax treatment.
The capital repayments paid on the B shares will be taxed for
individuals under CGT rules rather than Income Tax rules.
UK tax is not, in normal circumstances, due on receipt of the
quarterly capital repayments and you do not need to include
them on your tax return. Instead, when you dispose of B
shares, an amount equivalent to the capital repayments you
have received is deducted from the tax base cost as part of the
CGT calculation. This treatment applies because the quarterly
sums are treated as ‘small capital receipts’ under CGT rules;
being either less than 5 per cent of the market value of the
B shareholding at the date of receipt or less than £3,000.
An individual B shareholder’s annual exempt amount for CGT
purposes is not reduced or prejudiced by this treatment of capital
repayments. Non UK resident shareholders will not be subject to
UK tax on capital repayments, although local tax could arise.
This ‘small capital receipt’ treatment will only apply where,
and to the extent that, the holding of B shares from which the
capital return is derived has a positive tax base cost against
which to offset the capital receipt. Where this is not the case,
the receipt of a capital distribution may fall to be treated as a
chargeable gain.
The above is based on an understanding of legislation and HM
Revenue and Customs’ practice at the time of publication. Tax
rates and reliefs depend on the circumstances of the individual
investor, are subject to Government legislation and may change
in the future. You should consult your tax adviser on your own
individual tax circumstances.
The Company has a capital structure comprising Ordinary shares and B shares. In addition, the
Company has a bank borrowing facility.
Capital Structure At 31 March 2024
Report and Accounts 2024 | 83
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Other Information
Shareholder Information
Dividends and Capital Repayments
Dividends on Ordinary shares and capital repayments on B
shares are paid quarterly in August, November, February and
May each year. Shareholders who wish to have distributions
paid directly into a bank account rather than by cheque
to their registered address can complete a mandate form
for the purpose. Mandates may be obtained from Equiniti
Limited (see back cover page for contact details) on request.
Where distributions are paid directly into shareholders’ bank
accounts, dividend and capital repayment tax vouchers are sent
directly to shareholders’ registered addresses.
Share Prices and Daily Net Asset Value
The Company’s securities are listed on the London Stock
Exchange. Prices are given daily in the Financial Times. The net
asset value of the Company’s shares are released to the market
daily, on the working day following the calculation date. They are
available, with other regulatory information through the National
Storage Mechanism at data.fca.org.uk.
Change of Address
Communications with shareholders are mailed to the address
held on the share register. In the event of a change of address
or other amendment this should be notified to Equiniti Limited,
under the signature of the registered holder.
Data protection
The Company is committed to protecting and respecting the
confidentiality, integrity and security of the personal data it
holds. For information on the processing of personal data,
please see the privacy policy on the Company’s website at
ctukhighincome.co.uk.
Profile of the Company’s Ownership
% of Shares held at 31 March 2024
Columbia Threadneedle Investments Retail Savings Plans (46%)
Individuals and Private Client Stockbrokers (37%)
Institutions (17%)
Warning to shareholders – Boiler Room Scams
Fraudsters use persuasive and high-pressure tactics to lure investors into scams. They may offer to sell shares that turn out to be worthless or non-existent, or to
buy shares at an inflated price in return for an upfront payment.
If you receive unsolicited investment advice or requests:
• Check the Financial Services Register from www.fca.org.uk to see if the person or firm contacting you is authorised by the Financial Conduct Authority (“FCA”)
• Call the FCA on 0800 111 6768 if the firm does not have contact details on the Register or you are told they are out of date
• Search the list of unauthorised firms to avoid at www.fca.org.uk/scams
• Consider that if you buy or sell shares from an unauthorised firm you will not have access to the Financial Ombudsman Service or Financial Services
Compensation Scheme
• Think about getting independent financial and professional advice
If you are approached by fraudsters please tell the FCA by using the share fraud reporting form at www.fca.org.uk/scams where you can find out more about
investment scams. You can also call the FCA Consumer Helpline on 0800 111 6768. If you have already paid money to share fraudsters you should contact
Action Fraud on 0300 123 2040.
84 | CT UK High Income Trust PLC
Other Information
CT Individual Savings Account (ISA)
You can use your ISA allowance to make an annual tax efficient
investment of up to £20,000 for the current tax year with a
lump sum from £100 or regular savings from £25 a month. You
can also transfer any existing ISAs to us whilst maintaining the
tax benefits.
CT Junior Individual Savings Account (JISA)*
A tax efficient way to invest up to £9,000 per tax year for
a child. Contributions start from £100 lump sum or £25 a
month. JISAs or CTFs with other providers can be transferred to
Columbia Threadneedle Investments.
CT Lifetime Individual Savings Account (LISA)
For those aged 18-39, a LISA could help towards purchasing
your first home or retirement in later life. Invest up to £4,000
for the current tax year and receive a 25% Government bonus
up to £1,000 per year. Invest with a lump sum from £100 or
regular savings from £25 a month.
CT General Investment Account (GIA)
This is a flexible way to invest in our range of Investment
Trusts. There are no maximum contributions, and investments
can be made from £100 lump sum or £25 a month.
CT Junior Investment Account (JIA)
This is a flexible way to save for a child in our range of
Investment Trusts. There are no maximum contributions, and
the plan can easily be set up under bare trust (where the child
is noted as the beneficial owner) or kept in your name if you
wish to retain control over the investment. Investments can be
made from a £100 lump sum or £25 a month per account. You
can also make additional lump sum top-ups at any time from
£100 per account.
CT Child Trust Fund (CTF)*
If your child already has a CTF, you can invest up to £9,000 per
birthday year, from £100 lump sum or £25 a month. CTFs with
other providers can be transferred to Columbia Threadneedle
Investments.
*The CTF and JISA accounts are opened by parents in the child’s name
and they have access to the money at age 18. **Calls may be recorded
or monitored for training and quality purposes.
Charges
Annual management charges and other charges apply
according to the type of Savings Plan, these can be found on
the relevant product Pre- sales Cost & Charges disclosure on
our website www.ctinvest.co.uk.
Annual account charge
ISA/LISA: £60+VAT
GIA: £40+VAT
JISA/JIA/CTF: £25+VAT
You can pay the annual charge from your account, or by direct
debit (in addition to any annual subscription limits).
Dealing charges
£12 per fund (reduced to £0 for deals placed through the online
Columbia Threadneedle Investor Portal) for ISA/GIA/LISA/JIA and
JISA. There are no dealing charges on a CTF.
Dealing charges apply when shares are bought or sold but not
on the reinvestment of dividends or the investment of monthly
direct debits. Government stamp duty of 0.5% also applies on the
purchase of shares (where applicable).
The value of investments can go down as well as up and you
may not get back your original investment. Tax benefits depend
on your individual circumstances and tax allowances and rules
may change. Please ensure you have read the full Terms and
Conditions, Privacy Policy and relevant Key Features documents
before investing. For regulatory purposes, please ensure you
have read the Pre-sales Cost & Charges disclosure related to the
product you are applying for, and the relevant Key Information
Documents (KIDs) for the investment trusts you want to invest in,
these can be found at www.ctinvest.co.uk/documents.
How to Invest
To open a new Columbia Threadneedle Savings Plan, apply online
at www.ctinvest.co.uk Online applications are not available if you
are transferring an existing Savings Plan with another provider to
Columbia Threadneedle Investments, or if you are applying for a
new Savings Plan in more than one name but paper applications
are available at www.ctinvest.co.uk/documents or by contacting
Columbia Threadneedle Investments.
New Customers
Call: 0800 136 420** (9.00am – 5.00pm, weekdays)
Email: invest@columbiathreadneedle.com
Existing Plan Holders
Call: 0345 600 3030** (9.00am – 5.00pm, weekdays)
Email: investor.enquiries@columbiathreadneedle.com
By post: Columbia Threadneedle Management Limited, PO Box
11114, Chelmsford, CM99 2DG
You can also invest in the trust through online dealing platforms
for private investors that offer share dealing and ISAs. Companies
include: Barclays Stockbrokers, EQi, Halifax, Hargreaves Lansdown,
HSBC, Interactive Investor, Lloyds Bank, The Share Centre
One of the most convenient ways to invest in CT UK High Income Trust PLC is through one of the Savings Plans run by
Columbia Threadneedle Investments.
How to Invest
To find out more, visit ctinvest.co.uk
0345 600 3030, 9.00am – 5.00pm, weekdays, calls may be recorded or
monitored for training and quality purposes.
Financial promotion
Capital at risk.
The material relates to an investment trust and its Ordinary Shares and B Shares are traded on the main market of the London Stock Exchange.
The Investor Disclosure Document, Key Information Document (KID), latest annual or interim reports and the applicable terms & conditions are available from Columbia Threadneedle Investments Cannon
Place, 78 Cannon Street, London EC4N 6AG, your financial advisor and/or on our website www.columbiathreadneedle.com. Please read the Investor Disclosure Document before taking any investment decision.
This material should not be considered as an offer, solicitation, advice or an investment recommendation. This communication is valid at the date of publication and may be subject to change without
notice. Information from external sources is considered reliable but there is no guarantee as to its accuracy or completeness.
In the UK: Issued by Columbia Threadneedle Management Limited, No. 517895, registered in England and Wales and authorised and regulated in the UK by the Financial Conduct Authority.
© 2024 Columbia Threadneedle Investments. WF560250 (01/24) UK. Expiration Date: 31/01/2025
Report and Accounts 2024 | 85
Assets
at 31 March
£’000s 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Total assets less current liabilities (ex bank loans) 144,552 144,886 134,528 149,649 129,825 127,605 97,021 126,007 118,715 116,171 122,766
Bank loans at fair value* 17,692 18,103 18,156 18,078 7,500 7,500 7,500 11,000 7,500 12,000 15,000
Net assets, debt at fair value 126,860 126,783 116,372 131,571 122,325 120,105 89,521 115,007 111,215 104,171 107,766
* includes interest rate swap, where applicable
Net Asset Value (NAV)*
at 31 March
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
NAV per A/Ordinary share and per B share 102.8p 103.6p 96.3p 111.1p 103.7p 102.4p 76.7p 99.3p 96.0p 90.0p 94.5p
NAV High 105.8p 107.5p 107.3p 112.3p 116.3p 115.3p 111.8p 103.9p 107.8p 97.3p 94.6p
NAV Low 93.0p 95.0p 87.3p 92.6p 101.1p 91.1p 66.3p 71.2p 84.4p 79.5p 80.0p
NAV total return on 100p – 5 years 122.6p
NAV total return on 100p – 10 years 153.0p
* includes debt at fair value
Share Price – A/Ordinary Shares
at 31 March
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Middle market price per share 95.0p 100.8p 89.8p 104.0p 96.5p 95.0p 69.5p 91.5p 87.0p 82.0p 84.5p
Discount to NAV % (7.6)% (2.7)% (6.7)% (6.4)% (7.0)% (7.2)% (9.3)% (7.8)% (9.3)% (8.9)% (10.6)%
Share price High 97.5p 101.0p 100.0p 104.5p 108.0p 106.0p 102.0p 92.0p 100.0p 90.0p 89.0p
Share price Low 90.0p 87.5p 84.0p 87.5p 96.0p 86.3p 59.5p 64.0p 79.5p 73.5p 71.0p
Share price total return on 100p – 5 years 121.3p
Share price total return on 100p – 10 years 156.7p
Share Price – B Shares
at 31 March
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Middle market price per share 102.3p 100.8p 91.5p 104.3p 95.8p 95.0p 67.5p 91.5p 88.0p 84.5p 83.5p
Discount to NAV % (0.5)% (2.7)% (5.0)% (6.1)% (7.7)% (7.2)% (11.9)% (7.8)% (8.3)% (6.1)% (11.6)%
Share price High 103.5p 102.3p 102.0p 104.3p 107.0p 107.0p 102.5p 92.0p 106.5p 92.0p 92.0p
Share price Low 90.5p 88.5p 84.5p 86.5p 95.8p 86.0p 58.0p 64.0p 82.0p 79.0p 77.0p
Share price total return on 100p – 5 years 119.2p
Share price total return on 100p – 10 years 141.0p
Other Information
Ten Year Record
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86 | CT UK High Income Trust PLC
Other Information
Revenue
For the year ended 31 March
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Available for A/Ordinary shares – £’000s 4,598 4,848 4,571 4,585 4,764 4,451 4,053 3,020 4,178 4,192 4,601
Revenue earnings per share 3.73p 3.95p 3.74p 3.82p 4.03p 3.77p 3.46p 2.59p 3.61p 3.62p 4.01p
Dividends per A/Ordinary share 4.37p 4.48p 4.60p 4.72p 4.88p 5.04p 5.21p 5.30p 5.45p 5.51p 5.62p
Capital repayments per B share 4.37p 4.48p 4.60p 4.72p 4.88p 5.04p 5.21p 5.30p 5.45p 5.51p 5.62p
Performance
(rebased at 100 at 31 March 2014)
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
NAV per A/Ordinary share and B share 100.0 100.8 93.7 108.1 100.9 99.6 74.6 96.6 93.4 87.5 91.9
Middle market price per A/Ordinary share 100.0 106.1 94.5 109.5 101.6 100.0 73.2 96.3 91.6 86.3 88.9
Middle market price per B share 100.0 98.5 89.4 102.0 93.6 92.9 66.0 89.4 86.0 82.6 81.6
Dividends per A/Ordinary share 100.0 102.5 105.3 108.0 111.7 115.3 119.2 121.3 124.7 126.1 128.6
Capital repayments per B share 100.0 102.5 105.3 108.0 111.7 115.3 119.2 121.3 124.7 126.1 128.6
Ongoing Charges
For the year ended 31 March
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Expressed as a percentage of average net assets
– excluding performance fees 1.06% 1.05% 1.06% 1.11% 0.91% 0.98% 0.96% 1.04% 0.98% 1.02% 1.08%
– including performance fees 1.51% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Gearing
at 31 March
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Net gearing 10.0% 7.9% 9.7% 3.5% 4.4% 4.3% 3.4% 7.2% 0.1% 8.5% 12.5%
Report and Accounts 2024 | 87
The Company uses the following APMs:
Discount/premium – the share price of an Investment Trust is derived from buyers and sellers trading their shares on the stock
market. This price is not identical to the net asset value (NAV) per share of the underlying assets less liabilities of the Company.
If the share price is lower than the NAV per share, the shares are trading at a discount. This usually indicates that there are more
sellers of shares than buyers. Shares trading at a price above NAV per share are deemed to be at a premium.
At 31 March 2024 At 31 March 2023
Ordinary
shares B shares
Ordinary
shares B shares
Net asset value per share (a) 94.51p 94.51p 89.97p 89.97p
Share price (b) 84.50p 83.50p 82.00p 84.50p
Discount (c=(b-a)/(a)) (c) -10.6% -11.6% -8.9% -6.1%
Ongoing charges –all operating costs expected to be incurred in future and that are payable by the Company, expressed as a
proportion of the average net assets of the Company over the reporting year. The costs of buying and selling investments and
derivatives are excluded, as are interest costs, taxation, non recurring costs and the costs of buying back or issuing shares.
Ongoing charges calculation
Page
31 March
2024
£’000
31 March
2023
£’000
Total expenditure 58 1,139 1,131
Less revolving credit facility commitment fee 67 (7) (44)
Less non-recurring expenses (39) (21)
Total (a) 1,093 1,066
Average daily net assets (b) 100,939 104,494
Ongoing charges (c = a/b) (c) 1.08% 1.02%
Gearing – represents the excess amount above shareholders‘ funds of total investments, expressed as a percentage of the
shareholders funds. If the amount calculated is negative, this is a ‘net cash’ position and no gearing.
Page
31 March
2024
£’000
31 March
2023
£’000
Investments held at fair value through profit or loss (a) 59 121,267 113,018
Net assets (b) 59 107,766 104,171
Gearing (c = (a/b) – 1)% (c) 12.5% 8.5%
Other Information
Alternative Performance Measures (‘APMs’)
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88 | CT UK High Income Trust PLC
Other Information
Total return – the theoretical return to shareholders calculated on a per share basis by adding dividends/capital repayments paid
in the period to the increase or decrease in the Share Price or NAV in the period. The dividends/capital repayments are assumed to
have been re invested in the form of shares or net assets, respectively, on the date on which the shares were quoted ex dividend.
The effect of reinvesting these dividends/capital repayments on the respective ex dividend dates and the share price total returns
and NAV total returns are shown below.
31 March 2024 31 March 2023
Ordinary
shares/
B shares
Ordinary
shares/
B shares
NAV per share at start of financial year 89.97p 95.97p
NAV per share at end of financial year 94.51p 89.97p
Change in the year +5.0% -6.3%
Impact of dividend/capital repayment reinvestments
†
+6.8% +5.9%
NAV total return for the year +11.8% -0.4%
†
During the year to 31 March 2024 dividends/capital repayments totalling 5.51p (Ordinary shares/B shares) went ex-dividend. During the year to 31 March 2023 the
equivalent figures were 5.51p (Ordinary shares/B shares).
31 March 2024 31 March 2023
Ordinary
shares B shares
Ordinary
shares B shares
Share price per share at start of financial year 82.0p 84.5p 87.0p 88.0p
Share price per share at end of financial year 84.5p 83.5p 82.0p 84.5p
Change in the year +3.0% -1.2% -5.7% -4.0%
Impact of dividend/capital repayment reinvestment
†
+7.2% +6.7% +6.3% +6.3%
Share price total return for the year +10.2% +5.5% +0.6% +2.3%
†
During the year to 31 March 2024 dividends/capital repayments totalling 5.51p (Ordinary shares/B shares) went ex-dividend. During the year to 31 March 2023 the
equivalent figures were 5.51p (Ordinary shares/B shares).
Yield – The total annual dividend/capital repayment expressed as a percentage of the year end share price.
31 March 2024 31 March 2023
Ordinary
shares B shares
Ordinary
shares B shares
Annual dividend/capital repayment (a) 5.62p 5.62p 5.51p 5.51p
Share price (b) 84.50p 83.50p 82.00p 84.50p
Yield = (c=a/b) (c) 6.7% 6.7% 6.7% 6.5%
Report and Accounts 2024 | 89
Other Information
AAF – Audit and Assurance Faculty guidance issued by the
Institute of Chartered Accountants in England and Wales.
AIC – Association of Investment Companies, the trade body for
listed closed-end Investment Companies.
AIFMD – the UK version of the Alternative Investment Fund
Managers Directive (including all implementing and delegated
legislation and as it forms part of UK law following Brexit).
Issued by the European Parliament in 2012 and 2013, the
Directive required that all investment vehicles in the European
Union, including investment trusts, appoint a Depositary and an
Alternative Investment Fund Manager before 22 July 2014. The
Board of Directors of an investment trust, nevertheless, remain
fully responsible for all aspects of the company’s strategy,
operations and compliance with regulations.
Ordinary Shares – a security issued by the Company. The net
asset value attributable to each Ordinary share is equal to the
Net Asset Value of the Company divided by the total number of
Ordinary shares and B shares in issue. Therefore the net asset
value attributable to each of the Ordinary shares and B shares
is the same. The Ordinary shares are entitled to dividends paid
by the Company.
Benchmark – from 5 July 2018 the FTSE All-Share Index is
the benchmark against which the increase or decrease in the
Company’s net asset value is measured. Prior to 5 July 2018
the benchmark index was the FTSE All-Share Capped 5% Index.
As the investments within these indices are not identical to
those of the Company, the indices do not take account of
operating costs and the Company’s strategy does not include
replicating (tracking) these indices, there is likely to be some
level of divergence between the performance of the Company
and the Index.
B Shares – a security issued by the Company. The net asset
value attributable to each B share is equal to the Net Asset
Value of the Company divided by the total number of Ordinary
shares and B shares in issue. Therefore the net asset value
attributable to each of the Ordinary shares and B shares is
the same. The B shares are entitled to capital repayments paid
by the Company. These capital repayments will be paid at the
same time as, and in an amount equal to, each dividend paid
on the Ordinary shares.
Closed-end company – a company, including an investment
trust, with a fixed issued ordinary share capital which is
traded on an exchange at a price not necessarily related to
the net asset value of the company and in which shares can
only be issued or bought back by the company in certain
circumstances. This contrasts with an open ended company
or fund, which has units not traded on an exchange but issued
or bought back from investors at a price directly related to net
asset value.
Cum-dividend – shares are classified as cum-dividend when
the buyer of a security is entitled to receive a dividend that has
been declared, but not paid. Shares which are not cum-dividend
are described as ex-dividend.
Custodian – a specialised financial institution responsible
for safeguarding, worldwide, the listed securities and certain
cash assets of the Company, as well as the income arising
therefrom, through provision of custodial, settlement and
associated services. The Company’s Custodian is JPMorgan
Chase Bank.
Depositary – under AIFMD rules which have applied from July
2014, the Company must appoint a Depositary, whose duties
in respect of investments, cash and similar assets include:
safekeeping; verification of ownership and valuation; and
cash monitoring. Under AIFMD regulations, the depositary has
strict liability for the loss of the Company’s financial assets in
respect of which it has safe keeping duties. The Depositary’s
oversight duties will include but are not limited to oversight
of share buy-backs, dividend payments and adherence to
investment limits. The Company’s Depositary is JPMorgan
Europe Limited.
Derivative – a contract between two or more parties, the
value of which fluctuates in accordance with the value of an
underlying security. The contract is usually short-term (for
less than one year). Examples of derivatives are Put and Call
Options, Swap contracts, Futures and Contracts for Difference.
A derivative can be an asset or a liability and is a form of
gearing because the fluctuations in its value are usually greater
than the fluctuations in the underlying security’s value.
Dividend Dates – reference is made in announcements of
dividends to three dates. The “ex dividend” date is the date
up to which the shareholder needs to hold the shares in order
to be entitled to receive the next dividend. As it takes time for
a stock purchase to be recorded on the register, dividends are
actually paid to the holders of shares on the share register on
the “record” date. If a share transfer prior to the ex-dividend
date is not recorded on the register before the record date,
the selling party will need to pass on the benefit or dividend
to the buying party. The “ex-dividend” date is currently the
business day prior to the record date. The “payment” date is
the date that dividends are credited to shareholders’ bank
accounts. This may be several weeks or even months after
the record date.
Glossary of Terms
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Other Information
Gearing – this is the ratio of the borrowings of the Company
to its net assets. Borrowings have a “prior charge” over
the assets of a company, ranking before shareholders in
their entitlement to capital and/or income. They include:
overdrafts and short and long term loans from banks; and
derivative contracts. If the Company has cash assets, these
may be assumed either to net off against borrowings, giving
a “net” or “effective” gearing percentage, or to be used to
buy investments, giving a “gross” or “fully invested” gearing
figure. Where cash assets exceed borrowings, the Company
is described as having “net cash”. The Company’s maximum
permitted level of gearing is set by the Board and is described
within the Strategic Report.
Investment Company (Section 833) – UK company law allows
an investment company to make dividend distributions out of
realised distributable reserves, even in circumstances where
it has made capital losses in any year provided the Company’s
assets remaining after payment of the dividend exceed 150%
of the liabilities. An investment company is defined as investing
its funds in shares, land or other assets with the aim of
spreading investment risk.
Investment Trust taxation status (Section 1158) – UK
corporation tax law allows an investment company (referred
to in tax law as an investment trust) to be exempted from tax
on its profits realised on investment transactions, provided it
complies with certain rules. These are similar to Section 833
company law rules but further require that the Company must
be listed on a regulated stock exchange and that it cannot
retain more than 15% of income received (set out in note 9 to
the financial statements). The Report of the Directors contains
confirmation of the Company’s compliance with this law and its
consequent exemption from taxation on capital gains.
Manager – Columbia Threadneedle Investment Business
Limited (formerly called BMO Investment Business Limited),
which is ultimately owned by Columbia Threadneedle
Investments, the global investment management business of
Ameriprise Financial, Inc., a company incorporated in the United
States. The responsibilities and remuneration of the Manager
are set out in the Purpose, Strategy and Business Model,
Report of the Directors and note 4 to the financial statements.
Market capitalisation – the stock market quoted price of the
Company’s shares, multiplied by the number of shares in issue.
If the Company’s shares trade at a discount to NAV, the market
capitalisation will be lower than the Net asset value.
Net asset value (NAV) – the assets less the liabilities of the
Company, as set out on the Statement of Financial Position, all
valued in accordance with the Company’s Accounting Policies
(see note 1 to the financial statements) and UK-adopted
International Accounting Standards. The net assets correspond
to equity shareholders’ funds, which comprise the share
capital account, share premium, capital redemption reserve,
buy-back reserve, special capital reserve and capital and
revenue reserves.
Net asset value (NAV), Debt at par – the Company’s bank
loans are valued in the financial statements at par (the actual
amount borrowed) and this NAV including this number is
referred to as “NAV, Debt at par”.
Non-executive Director – a Director who has a contract for
services, rather than a contract of employment, with the
Company. The Company does not have any executive directors.
Non-executive Directors’ remuneration is described in detail
in the Remuneration Report. The duties of the Directors,
who govern the Company through the auspices of a Board
and Committees of the Board, are set out in the Corporate
Governance Statement.
Ongoing Charges – all operating costs expected to be incurred
in future and that are payable by the Company, expressed as a
proportion of the average net assets of the Company over the
reporting year. The costs of buying and selling investments and
derivatives are excluded, as are interest costs, taxation, non
recurring costs and the costs of buying back or issuing shares.
SORP – Statement of Recommended Practice “Financial
Statements of Investment Trust Companies and Venture Capital
Trusts” issued by the AIC.
Report and Accounts 2024 | 91
Other Information
Directors
A K Watkins (Chairman)
H M Galbraith (nee Driver)
S J Mitchell
A W Pottinger
Alternative Investment Fund Manager (‘AIFM’),
Investment Manager and Company Secretary
Columbia Threadneedle Investment Business Limited
6th Floor, Quartermile 4
7a Nightingale Way
Edinburgh EH3 9EG
Broker
Panmure Gordon (UK) Limited
40 Gracechurch Street
London EC3V 0BT
Auditor
Deloitte LLP, Statutory Auditor
110 Queen Street
Glasgow G1 3BX
Registrars
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Depositary
JPMorgan Europe Limited
25 Bank Street
Canary Wharf
London E14 5JP
Principal Bankers and Custodian
JPMorgan Chase Bank
25 Bank Street
Canary Wharf
London E14 5JP
Bankers
The Royal Bank of Scotland International Limited
440 Strand
London WC2R 0QS
Solicitors
Dickson Minto LLP
16 Charlotte Square
Edinburgh EH2 4DF
Company Number
SC314671
Website
ctukhighincome.co.uk
Corporate Information
Governance Report Auditor's Report Notice of Meeting Other InformationStrategic ReportOverview Financial Report
CT UK High Income Trust PLC
Annual Report and Financial Statements
31 March 2024
Contact us
Registered office:
6th Floor, Quartermile 4, 7a Nightingale Way, Edinburgh EH3 9EG
Tel: 0131 573 8300
ctukhighincome.co.uk
Registrars:
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Registrars’ Shareholder Helpline: +44(0) 371 384 2470
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shareview.co.uk
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Lines open 8.30 am to 5.30 pm, Monday to Friday, excluding public holidays in England and Wales.
To find out more visit columbiathreadneedle.com
© 2024 Columbia Threadneedle Investments. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.