LCS.PR.A Semi-Annual Report 2014

Brompton Lifeco Split Corp has released its Semi-Annual Report to June 30, 2014.

Figures of interest are:

MER: “The MER per unit of the Fund, excluding Preferred share distributions and issuance costs and agents’ fees in connection with the Fund’s treasury offering of Preferred shares, was 1.79% for the first six months of 2014 up from 1.34% in 2013.”

Average Net Assets: We need this to calculate portfolio yield. The Total Assets of the fund at year end was $28.8-million, compared to $43.8-million on June 30, so call it an average of $36.3-million. Preferred share dividends of $553,870 were paid over the half year at 0.575 p.a., implying average units outstanding of 963,252, at an average NAVPU of about $16.72, implies $16.1-million. This is a huge difference, caused by a large treasury offering completed May 1, 2014; none of the preferred shares in this offering accrued a dividend during the six month period. So take the beginning figure of $28.8- million twice and the period-end figure of $43.8-million once, to arrive at an estimated average of $33.8-million.

Underlying Portfolio Yield: Dividend, interest and securities lending income received of $568,825 divided by average net assets of $33.8-million, multiplied by two because it’s semiannual, is 3.37%.

Income Coverage: Investment income of $568,825, less recurring expenses of $250,570 (disregarding legal fees, transaction costs and agents’ fees) is 318,255, divided by preferred share dividends of $553,870 is 57%.

There are a lot of approximations here and, regrettably, the 2014 Annual Report won’t be of much use in nailing them down, due to all the treasury offerings.

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