11th May 2020 12:36
(Alliance News) - Troy Income & Growth Trust PLC on Monday reported a drop in net asset value in the first half of its financial year as the "near global shutdown" from the Covid-19 pandemic weighed down markets.
The predominantly UK equities investor said its net asset value per share as at March 31 was 68.62 pence, down 18% from 83.50p on September 30.
Shares in Troy Income & Growth were down 0.4% at 71.74p in London at midday on Monday.
"The sharp falls in markets in February and March were caused by the Covid-19 pandemic as the economic implications of a near global shutdown were added to the already devastating social consequences of the virus," said Chair David Warnock.
The company's net asset value total return was negative 16%, while the FTSE All Share Index returned negative 22%. Warnock noted that "despite the negative returns", Troy Income & Growth's portfolio resilience "was aided by both good stock selection and the absence of any gearing".
The company's current quarterly dividend rate stands at 0.695p per share, with the second of these dividends having been paid April 24. Troy Income & Growth is planning to maintain this rate for the rest of its current financial year but will likely reduce this for the financial 2021 year.
Warnock explained that the future dividend reduction to a "sustainable level" is "almost certain", though the onset of this reduction is dependent on outlook. The firm's "significant distributable reserves" are to be used to maintain the current dividend in the meantime.
In terms of outlook, Warnock said: "It is unlikely that the speed at which the global economy has entered this crisis will be mirrored by the rate of recovery. Governments will be keen to avoid allowing a second wave of the pandemic to take off if restrictions are removed too quickly. So much uncertainty still exists with regard to the nature of the virus and its behaviour, and with the prospect of a vaccine in any volume being available for at least twelve months it would be imprudent to expect a return to pre-Covid-19 normality any time soon.
"In such a volatile environment, the company's cautious but concentrated investment approach has thus far mitigated the worst effects of the crisis. The managers are making changes which will further increase the quality and resilience of the portfolio and generate the longer term, sustainable income growth which will drive future total returns."
By Anna Farley; [email protected]
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