TIDMBPO
RNS Number : 5707I
British Portfolio Trust PLC
16 June 2011
For Immediate Release 16th June 2011
BRITISH PORTFOLIO TRUST plc
HALF-YEARLY FINANCIAL REPORT
For the six months ended 30th April 2011
Interim Management Report
Net Asset Value
A summary of the financial results for the period from 1st
November 2010 to 30th April 2011 is set out below. The Net Asset
Value (NAV) per Ordinary Share as at 30th April 2011 was 153.5p.
This represents an increase of 4.5% over the NAV as at 31st October
2010. Over the same period the capital return on the Company's
benchmark index, the FTSE All-Share Index, rose by 7.5%.
Since the half year, the Company's portfolio, reflecting its
defensive positioning, has performed better than the benchmark
index, and as at 16th June 2011 the NAV performance for the
financial year to date was approximately in line with the
benchmark, having increased by 2.06% versus 2.24% in respect of the
FTSE All-Share Index (Source: Datastream).
Interim Dividend
The Board has declared an interim dividend of 1.80p per Ordinary
Share (unchanged from last year), which will absorb GBP550,437 and
is payable on 1st September 2011 to all holders of Ordinary Shares
on the Register of Members at the close of business on 29th July
2011.
Manager's Review
The UK market performed strongly during the first half of the
financial year as the US Federal Reserve unleashed a second round
of liquidity via a $600bn quantitative easing programme, improving
in the short term investors' appetite for risk assets. Due to our
more cautious strategic stance the portfolio underperformed the
FTSE All-Share Index. Some stock specific issues in the support
services and consumer discretionary sectors were contributory
factors. The most significant negative contributor was Xchanging,
the business process outsourcing company which cost 0.6% of
relative performance. It is now clear that Xchanging made an ill
judged acquisition in 2009, which has necessitated a costly
restructuring of the business under the new CEO, Ken Lever. We are
supportive of these management actions, which should result in a
stronger and better managed company. In the consumer discretionary
sector weak performances from bwin.party, N Brown and Mothercare
were a further drag on returns. This was partly offset by strong
share price appreciation from two of the smaller companies in the
portfolio, Henry Boot and Energy XXI, the latter of which was sold
towards the end of this period.
i) Portfolio Activity
Portfolio activity was concentrated in three areas during the
period: financials, media and defensive growth stocks. In general,
the financial sector remains lowly valued and unloved following the
global financial crisis and this provides an opportunity to buy
good franchises at attractive prices. We added new holdings in IG
Group, Ashmore, Man Group, Amlin and RBS in the last six months.
The media sector continues to benefit from rising investment
spending from cash rich corporates and we added new positions in
Aegis and UBM. Finally, defensive growth stocks that can achieve
modest, but predictable profits growth and have strong balance
sheets are attractive in the current environment in our view. As a
result, we bought Carillion, Bunzl and Inmarsat. Disposals were
focused in the reduction of mid-cap (and in general terms more
risky) investments, such as ITV, SVG Capital, Melrose, Valiant, CPP
and TalkTalk.
A strong performance by the market from the March lows is not
expected to be maintained in the coming months for reasons further
discussed below. Gearing was eliminated progressively over the six
months via a greater emphasis on sales than new investments. At
30th April 2011 net current assets (cash) represented 2.6% of the
net asset value.
ii) Market Review
The six months to 30th April 2011 was a volatile period, driven
in the autumn by a strong rally prompted by US quantitative easing,
whilst the spring was dominated by unrest in the Middle East and
the tragic earthquake and tsunami in Japan. With hindsight it is
clear that the speech delivered by the Chairman of the US Federal
Reserve, Ben Bernanke, on 27th August 2010, was the green light for
investors to take on risk with a realisation that the Fed was
likely to make additional purchases of longer-term securities, as
it had in March 2009, marking at that time the low in equity
markets. December was a key month for the period as a whole as
fears over European sovereign debt risk temporarily abated and
additional fiscal stimulus in the US added to the bullish mood of
investors.
Some of the optimism was punctured in March as the market
focused on the potential for contagion in the Middle East as the
'Jasmine Revolution', that began in Tunisia at the end of 2010,
spread to neighbouring countries, most notably Libya. The most
immediate impact of the turmoil was on the oil price, which rose
over 25% during the first 3 months of 2011. In conjunction with
rises in other commodities, including food, the squeeze on
disposable consumer income and company margins became an increasing
concern for the growth outlook. Furthermore, with inflation rising
in developing markets, further monetary tightening became evident
in those economies that are driving much of the growth in economic
activity. The earthquake in Japan also briefly impacted markets.
Although there has been terrible loss of life and some risk of
nuclear fallout, the economic impact for the global economy looks
to have been fairly muted. It was interesting to observe how
quickly equity markets recovered towards the end of this period as
abundant liquidity again appeared to trump other concerns.
UK economic growth remains sluggish as consumers continue to pay
down debt and the Coalition Government's austerity programme begins
to bite. UK GDP grew 0.5% in the first quarter of 2011, which
offset the 0.5% fall in the final quarter of 2010 meaning that in
real terms the UK economy had not grown since the third quarter of
last year. Although headline inflation is in excess of 4%, average
earnings are only growing at around 2% per annum currently.
Financial markets are pricing in a 50% chance of a 0.25% increase
in UK interest rates in August of this year, but there is a great
deal of uncertainty, particularly with oil prices in Sterling terms
still around the previous peak of 2008. If interest rates do rise
at all in 2011 it is likely to be only a token gesture from the
Monetary Policy Committee.
The best performing sectors over the six months were industrial
cyclicals, particularly those exposed to emerging market growth
such as engineering, automotive suppliers and electronics. Oil and
oil service companies also performed well. The laggards were mostly
amongst the defensive sectors, although banks and retailers were
also weak.
iii) Outlook
Our outlook has become more cautious as markets have risen and
time has passed. We have been increasingly attentive to the long
term risks including consumer deleveraging in the Western world,
the high levels of Sovereign debt in the US, Europe and Japan,
unstable Chinese growth and rising inflation. These concerns have
until now been mitigated by global liquidity, upward surprises to
economic growth, and rising corporate profit expectations. However,
these short term positives are beginning to wane and we expect
markets to question the long term growth outlook more intensely as
we move to the second half of 2011. The US quantitative easing
programme is due to end in June, Chinese efforts to constrain
inflation are becoming more urgent and there are signs that global
economic growth expectations are becoming more subdued. Most
importantly for equity markets, company profit expectations are no
longer rising. This is prompting a rotation to more defensive
sectors and we expect this to continue for a while yet. Market
positioning is still biased towards risk, perhaps best evidenced by
the consensus negative view on the US dollar. This recent change in
market environment has had a beneficial impact on relative
performance as we move into the second half of our financial
year.
Although our outlook is in general cautious, corporate cashflow
and balance sheets are strong which will support dividend growth.
We expect UK market dividends to grow in both 2011 and 2012, which
will help the Company's earnings and reduce reliance on revenue
reserves, which have been used to maintain the dividend in recent
years. Headline valuations at the market level are also reasonable
in the UK, notwithstanding the concern that profit margins have
already achieved new peaks in the aftermath of the global financial
crisis and may not be sustainable in the long term. Most
importantly we can still identify a good number of companies,
particularly amongst the large capitalisation shares where absolute
valuations are attractive, and this is where the portfolio is
focused.
Jeremy Thomas
RCM (UK) Limited
16th June 2011
Share Buybacks and Treasury Share Transactions
During the period under review 362,000 Ordinary Shares were
repurchased for cancellation at a cost of GBP516,261, and 100,000
Ordinary Shares were repurchased into treasury at a cost of
GBP147,023, at an average discount of around 5%. In addition,
during the period 300,000 Ordinary Shares held in treasury were
cancelled. In the period from 1st May 2011 until 15th June 2011 a
further 313,000 Ordinary Shares have been repurchased for
cancellation.
Principal Risks and Uncertainties
The principal risks facing the Company were outlined in the
Directors' Report on pages 16 and 17 of the Annual Financial Report
of the Company for the year ended 31st October 2010. These risks
fall broadly under the following categories: Investment and
Strategy, Market, Accounting, Legal and Regulatory, Corporate
Governance and Shareholder Relations, Operational and Financial. In
the opinion of the Board these principal risks have not
changed.
Material Events and Transactions
In the six month period ended 30th April 2011 the following
material events and transactions have taken place.
A C Barker retired as Chairman and a Director on 18th April
2011. J H Cartwright was appointed Chairman on the same date.
At the Annual General Meeting of the Company held on 8th
February 2011, all the resolutions put to shareholders were
passed.
The final dividend of 3.30p per share was paid on 1st March 2011
to shareholders on the register on 28th January 2011. The total
dividend payment for the year ended 31st October 2010 was 5.10p per
share.
There were no related party transactions in the period.
Responsibility Statement
The Directors confirm to the best of their knowledge that:
-- the condensed set of financial statements contained within
the half-yearly financial report has been prepared in accordance
with the Accounting Standards Board's Statement 'Half-Yearly
Financial Reports';
-- the interim management report includes a fair review of the
information required by Disclosure and Transparency Rule 4.2.7R, of
important events that have occurred during the first six months of
the financial year, and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial
year;
-- the interim management report includes a fair review of the
information concerning related parties transactions as required by
Disclosure and Transparency Rule 4.2.8R.
The half-yearly financial report was approved by the Board on
16th June 2011 and the above responsibility statement was signed on
its behalf by the Chairman.
Jonathan Cartwright
Chairman
155 Bishopsgate
London EC2M 3AD
16th June 2011
TWENTY LARGEST EQUITY HOLDINGS
As at 30th April 2011
Valuation % of Total
GBP'000s Assets* Principal Activities
GlaxoSmithKline 3,390 7.16 Pharmaceuticals & Biotechnology
BP 2,962 6.25 Oil & Gas Producers
HSBC Holdings 2,414 5.10 Banking
Royal Dutch Shell "B"
Shares 2,086 4.40 Oil & Gas Producers
Vodafone Group 2,051 4.33 Mobile Telecommunications
Rio Tinto 1,904 4.02 Mining
Unilever 1,847 3.90 Food Producers
BG Group 1,612 3.40 Oil & Gas Producers
Barclays 1,540 3.25 Banking
Diageo 1,491 3.15 Beverages
Reed Elsevier 1,421 3.00 Media
Tesco 1,332 2.81 Food & Drug Retailers
Cobham 1,279 2.70 Aerospace & Defence
Anglo American 1,073 2.27 Mining
Resolution 960 2.03 Life Insurance
Centrica 946 2.00 Gas, Water & Multiutilities
Boot (Henry) 918 1.94 Construction & Materials
BAE Systems 882 1.86 Aerospace & Defence
Compass Group 788 1.66 Travel & Leisure
Aegis Group 678 1.43 Media
31,574 66.66
--------- ----------
PORTFOLIO ANALYSIS
As at 30th April 2011
Benchmark
Valuation % of Total (FTSE All-Share)
Sector GBP'000s Assets* %
Financials 10,080 21.3 22.6
Oil & Gas 7,208 15.2 17.5
Industrials 6,746 14.2 7.5
Consumer Services 6,106 12.9 9.5
Consumer Goods 3,941 8.3 11.3
Health Care 3,390 7.2 7.0
Basic Materials 2,977 6.3 13.2
Telecommunications 2,688 5.7 6.0
Utilities 1,813 3.8 3.7
Technology 1,177 2.5 1.7
Net Current Assets 1,254 2.6 -
47,380 100.0 100.0
--------- ---------- -----------------
* Total Assets are stated net of current liabilities.
SUMMARY OF RESULTS
INCOME STATEMENT
For the six months ended 30th
April 2011
Total
Revenue Capital Return
GBP'000s GBP'000s GBP'000s
(Note 2)
Net gains on investments at fair
value - 2,483 2,483
Income 826 - 826
Investment management fee (55) (89) (144)
Performance fee - - -
Administration expenses (103) (3) (106)
Net return before finance costs
and taxation 668 2,391 3,059
Finance costs: interest payable
and similar charges (3) (8) (11)
--------- --------- ---------
Net return on ordinary activities
before taxation 665 2,383 3,048
Taxation - - -
--------- --------- ---------
Net return attributable to Ordinary
Shareholders 665 2,383 3,048
--------- --------- ---------
Return per Ordinary Share (Note 2.14p 7.66p 9.80p
1)
BALANCE SHEET
As at 30th April 2011
GBP'000s
Investments at fair value through profit or loss 46,126
Net Current Assets 1,254
---------
Total Net Assets 47,380
---------
Called up Share Capital 361
Share Premium Account 14,819
Capital Redemption Reserve 188
Special Reserve 29,561
Capital Reserve 352
Revenue Reserve 2,099
Shareholders' Funds 47,380
---------
Net Asset Value per Ordinary Share 153.5p
The net asset value is based on 30,859,820 Ordinary Shares in
issue.
An additional 5,304,664 Ordinary Shares were held in treasury.
SUMMARY OF RESULTS
INCOME STATEMENT
For the six months ended 30th
April 2010
Total
Revenue Capital Return
GBP'000s GBP'000s GBP'000s
(Note 2)
Net gains on investments at fair
value - 5,896 5,896
Income 997 - 997
Investment management fee (54) (88) (142)
Performance fee - (93) (93)
Administration expenses (94) (3) (97)
Net return before finance costs
and taxation 849 5,712 6,561
Finance costs: interest payable
and similar charges (4) (12) (16)
--------- --------- ---------
Net return on ordinary activities
before taxation 845 5,700 6,545
Taxation - - -
--------- --------- ---------
Net return attributable to Ordinary
Shareholders 845 5,700 6,545
--------- --------- ---------
Return per Ordinary Share (Note 2.51p 16.96p 19.47p
1)
BALANCE SHEET
As at 30th April 2010
GBP'000s
Investments at fair value through profit or loss 47,730
Net Current Liabilities (298)
---------
Total Net Assets 47,432
---------
Called up Share Capital 383
Share Premium Account 14,819
Capital Redemption Reserve 166
Special Reserve 32,130
Capital Reserve (2,445)
Revenue Reserve 2,379
Shareholders' Funds 47,432
---------
Net Asset Value per Ordinary Share 144.4 p
The net asset value is based on 32,848,820 Ordinary Shares in
issue.
An additional 5,504,664 Ordinary Shares were held in treasury.
SUMMARY OF RESULTS
INCOME STATEMENT
For the year ended 31st October 2010
Total
Revenue Capital Return
GBP'000s GBP'000s GBP'000s
(Note 2)
Net gains on investments at fair
value - 6,566 6,566
Income 1,820 - 1,820
Investment management fee (108) (175) (283)
Performance fee - (235) (235)
Administration expenses (198) (6) (204)
Net return before finance costs and
taxation 1,514 6,150 7,664
Finance costs: interest payable and
similar charges (12) (36) (48)
---------- ---------- ---------
Net return on ordinary activities
before taxation 1,502 6,114 7,616
Taxation (1) - (1)
---------- ---------- ---------
Net return attributable to Ordinary
Shareholders 1,501 6,114 7,615
---------- ---------- ---------
Return per Ordinary Share (Note 1) 4.58p 18.66p 23.24p
BALANCE SHEET
As at 31st October 2010
GBP'000s
Investments at fair value through profit or loss 46,164
Net Current Liabilities (141)
---------
Total Net Assets 46,023
---------
Called up Share Capital 368
Share Premium Account 14,819
Capital Redemption Reserve 181
Special Reserve 30,224
Capital Reserve (2,031)
Revenue Reserve 2,462
Shareholders' Funds 46,023
---------
Net Asset Value per Ordinary Share 146.9p
The net asset value is based on 31,321,820 Ordinary Shares
in issue.
An additional 5,504,664 Ordinary Shares were held in treasury.
SUMMARY OF RESULTS
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the six months ended 30th April 2011 and comparative
periods
Called Share Capital
up Share Premium Redemption Special Capital Revenue
Capital Account Reserve Reserve Reserve Reserve Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Six months
ended 30(th)
April 2011
Net Assets
at 31(st)
October
2010 368 14,819 181 30,224 (2,031) 2,462 46,023
Revenue
Return - - - - - 665 665
Shares
repurchased
during the
period (7) - 7 (663) - - (663)
Dividends on
Ordinary
Shares - - - - - (1,028) (1,028)
Capital
Return - - - - 2,383 - 2,383
Net Assets
at 30(th)
April 2011 361 14,819 188 29,561 352 2,099 47,380
--------- --------- ----------- --------- --------- --------- ---------
Six months
ended 30(th)
April 2010
Net Assets
at 31(st)
October
2009 385 14,819 164 34,500 (8,145) 2,641 44,364
Revenue
Return - - - - - 845 845
Shares
repurchased
during the
period (2) - 2 (2,370) - - (2,370)
Dividends on
Ordinary
Shares - - - - - (1,107) (1,107)
Capital
Return - - - - 5,700 - 5,700
Net Assets
at 30(th)
April 2010 383 14,819 166 32,130 (2,445) 2,379 47,432
--------- --------- ----------- --------- --------- --------- ---------
Year ended
31(st)
October
2010
Net Assets
at 31(st)
October
2009 385 14,819 164 34,500 (8,145) 2,641 44,364
Revenue
Return - - - - - 1,501 1,501
Shares
repurchased
during the
year (17) - 17 (4,276) - - (4,276)
Dividends on
Ordinary
Shares - - - - - (1,680) (1,680)
Capital
Return - - - - 6,114 - 6,114
Net Assets
at 31(st)
October
2010 368 14,819 181 30,224 (2,031) 2,462 46,023
--------- --------- ----------- --------- --------- --------- ---------
SUMMARY OF RESULTS
CASH FLOW STATEMENT
For the six months ended 30th April 2011 and comparative
periods
Six Months Six Months
ended ended Year ended
30th April 30th April 31st October
2011 2010 2010
GBP'000s GBP'000s GBP'000s
Net cash inflow from operating
activities 271 627 1,209
Return on investments and
servicing of finance
Interest paid (11) (16) (48)
Capital expenditure and financial
investment
------------ ------------ --------------
Purchases of fixed asset
investments (8,686) (9,039) (23,142)
Sales of fixed asset investments 10,478 12,480 28,870
------------ ------------ --------------
Net cash inflow from capital
expenditure and financial
investment 1,792 3,441 5,728
Equity dividends paid (1,028) (1,107) (1,680)
------------ ------------ --------------
Net cash inflow before financing 1,024 2,945 5,209
Financing
------------ ------------ --------------
Purchase of Ordinary Shares for
cancellation and held in
treasury (663) (2,370) (4,277)
Repayment of loan (1,000) - (2,000)
Drawdown of loan - - 1,500
Net cash outflow from financing (1,663) (2,370) (4,777)
(Decrease) Increase in cash (639) 575 432
------------ ------------ --------------
Reconciliation of Return on
Ordinary Activities before
Finance Costs and Taxation to Net
Cash Flow from Operating
Activities
Total Return before finance costs
and taxation 3,059 6,561 7,664
Less: Net gains on investments at
fair value (2,483) (5,896) (6,566)
576 665 1,098
Increase in debtors (147) (151) (60)
(Decrease) Increase in creditors (158) 113 171
------------ ------------ --------------
Net cash inflow from operating
activities 271 627 1,209
------------ ------------ --------------
Reconciliation of net cash flow
to movement in net debt
Net cash (outflow) inflow (639) 575 432
Repayment of loan 1,000 - 2,000
Drawdown of loan - - (1,500)
------------ ------------ --------------
Movement in net funds 361 575 932
Net funds (debt) brought forward 23 (909) (909)
------------ ------------ --------------
Net funds (debt) carried forward 384 (334) 23
------------ ------------ --------------
Note 1
The returns per Ordinary Share have been calculated using a
weighted average number of shares in issue of 31,097,019 (30th
April 2010 - 33,614,501; 31st October 2010 - 32,770,227).
Note 2
The total return column of this statement is the profit and loss
account of the Company.
All revenue and capital items derive from continuing operations.
No operations were acquired or discontinued in the period.
A Statement of Total Recognised Gains and Losses is not required
as all gains and losses of the Company have been reflected in the
Income Statement.
Included in the cost of investments are transaction costs on
purchases which amounted to GBP52,271 (30th April 2010 - GBP49,504;
31st October 2010 - GBP112,703) and transaction costs on sales
which amounted to GBP15,534 (30th April 2010 - GBP16,401; 31st
October 2010 - GBP34,257).
Note 3
Investments are designated as held at fair value through profit
or loss in accordance with FRS 26 'Financial Instruments:
Recognition and Measurement'. Listed investments are valued at bid
market prices.
Note 4
In accordance with FRS 21'Events after the Balance Sheet Date'
the final dividend payable on Ordinary Shares is recognised as a
liability when approved by shareholders. Interim dividends are
recognised only when paid.
Dividends paid on Ordinary Shares in respect of earnings for
each period are as follows:
Six months Six months
ended ended Year ended
30(th) April 30(th) April 31(st) October
2011 2010 2010
GBP'000s GBP'000s GBP'000s
Final dividend 3.30p paid 1st
March 2011 (2010 - 3.30p) 1,028 1,107 1,107
Interim dividend 1.80p paid
2nd September 2010 - - 573
1,028 1,107 1,680
------------- ------------- ---------------
Dividends payable at the period end are not recognised as a
liability under FRS 21 'Events after the Balance Sheet Date'.
Details of these dividends are set out below.
Six months Six months
ended ended Year ended
30(th) April 30(th) April 31(st)
2011 2010 October 2010
GBP'000s GBP'000s GBP'000s
Interim dividend 1.80p payable
1st September 2011 (2010 -1.80p) 555 591 -
Final dividend 3.30p - - 1,034
----------- ------------- --------------
555 591 1,034
----------- ------------- --------------
The proposed dividends above are based on the number of shares
in issue at the period end. However, the dividends payable will be
based on the number of shares in issue on the record date and will
reflect any purchases and cancellations of shares by the Company
settled subsequent to the period end. Note 5
The Directors believe it is appropriate to continue to adopt the
going concern basis in preparing the financial statements, as the
assets of the Company consist mainly of securities which are
readily realisable and accordingly, that the Company has adequate
financial resources to continue in operational existence for the
foreseeable future.
Note 6
The half-yearly financial report has neither been audited nor
reviewed by the Company's auditors. The financial information for
the year ended 31st October 2010 has been extracted from the
statutory financial statements of the Company for that year, which
have been delivered to the Registrar of Companies. The Auditors'
Report on those financial statements was unqualified, did not
contain an emphasis of matter paragraph and did not contain a
statement under Section 498(2) or (3) of the Companies Act
2006.
In accordance with the UK's disclosure requirements for listed
companies, the Company is required to make limited additional and
updated disclosures, mainly relating to the first and third
quarters of the financial year. These Interim Management Statements
are released via the Regulatory News Service and posted on the
Company's website www.britishportfoliotrust.co.uk on or shortly
before 19th March and 19th September each year.
The half-yearly financial report will be sent to Shareholders
shortly and made available to the public at the Registered Office
of the Company, 155 Bishopsgate, London EC2M 3AD.
For further information, please contact:-
Peter Ingram
Company Secretary
Tel: 020 7065 1467
This information is provided by RNS
The company news service from the London Stock Exchange
END
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