CT UK High Income Trust (CHI) has published its audited results for the year ended 31 March 2025, delivering another year of outperformance and a twelfth consecutive annual increase in distributions to shareholders. Over the financial year, the trust’s NAV total return was +13.5%, comfortably ahead of the FTSE All-Share Index’s +10.5% return. Share price total returns were even stronger, at +25.0% for ordinary shares and +24.0% for B shares, as market demand narrowed the discounts on both share classes.
No continuation vote required
Over the three-year performance measurement period (1 April 2022 to 31 March 2025), the trust delivered an NAV total return of +26.6%, outperforming the benchmark return of +23.3%. As this exceeded the board’s performance threshold, no continuation vote will be required at the 2025 AGM.
Income and dividends
The trust continues to focus on delivering a high and growing income. Total distributions rose by 3.0% to 5.79p per share, equating to a yield of 5.8% on the ordinary shares and 6.0% on the B shares at the year-end. A strong uplift in earnings (up 19.7%) enabled a transfer of £635,000 to the revenue reserve, which now stands at £2.9m – equivalent to 60% of the current annual dividend.
Portfolio activity and gearing
Manager David Moss highlighted successful stock selection as the main driver of outperformance, with strong contributions from NatWest, Rolls-Royce, Shell, and a re-rating in Hargreaves Lansdown following a private equity takeover. The trust also added holdings such as HSBC, Taylor Wimpey, and Breedon Group, while reducing exposure to Vistry and CRH.
Although structurally geared, leverage was tactically reduced in early 2025 amid growing macro volatility – particularly around the re-election of Donald Trump and his tariff agenda. As of year-end, £15m of the trust’s revolving credit facility had been drawn, with £9.5m held in cash.
Share issuance and discount management
Reflecting improved sentiment, the trust’s odinary shares ended the year at a 2.1% discount to NAV, while B shares traded at a 4.1% discount. The trust was one of the few in the sector to issue new shares, with 1m ordinary shares resold from treasury at a premium to NAV. Conversely, 250,000 B shares were bought back into treasury at a discount.
Outlook
Chairman Andrew Watkins struck a cautious but ultimately optimistic tone, noting ongoing challenges from high interest rates, UK fiscal policy, and geopolitical tensions. Nevertheless, he expressed confidence in the portfolio’s positioning and praised Moss’s ongoing stewardship. The manager remains focused on identifying undervalued UK equities with strong dividend-paying capacity, noting the potential for further income and capital growth in a still-overlooked domestic market.
[QD comment MR: This is a decent set of results from CT UK High Income Trust. While it has outperformed during the last financial year, these results confirm its outperformance over three years, which has allowed it to dispense with a continuation vote this year.
The NAV total return of 13.5% over the year looks solid given the uncertain macro backdrop and, with the UK equity market still trading at historically wide discounts to global peers, it, and its peers that are focused on UK equities, should be well-placed to benefit from any reappraisal of UK valuations. The ongoing bid activity in UK equities adds weight to the argument that investors who are avoiding the UK could miss out. In the meantime, twelve consecutive years of dividend increases, along with the rebuilding of the revenue reserve, provide some comfort to income-seeking investors amid a still-uncertain economic outlook.]
