TIDMBPO
RNS Number : 4854U
British Portfolio Trust PLC
22 December 2011
For Immediate Release 22nd December 2011
BRITISH PORTFOLIO TRUST plc
RESULTS FOR THE YEAR ENDED 31ST OCTOBER 2011
The following comprises extracts from the Company's Annual
Financial Report for the year ended 31st October 2011. The full
Annual Financial Report is available to be viewed on or downloaded
from the Company's website at www.britishportfoliotrust.co.uk.
Copies will be mailed to shareholders shortly.
Chairman's Statement
I have to report disappointing results for your Company for the
year under review in which the net asset value per ordinary share
decreased by 5.0% compared with a return of -2.6% on the benchmark
FTSE All-Share Index. On a rolling three year measure, the basis
applied by the Directors when assessing the Investment Manager's
performance, the total return achieved with dividends reinvested
was 41.6% compared with the FTSE All-Share Total Return of
46.0%.*
In light of this your Board has held discussions with the
Investment Manager to identify actions that can be taken to improve
portfolio performance whilst maintaining a cautious stance on
downside value risk. You will read on page 10, within the
Investment Manager's Review, details of specific actions that RCM
has taken to enhance its own resources and to improve processes. In
addition, and specifically in respect of your Company, there have
been actions taken to reduce the portfolio's exposure to relatively
illiquid smaller company stocks and to invest in high quality
dividend paying stocks. The Board is monitoring these actions
closely.
I am pleased, however, to report that the Company's balance
sheet remains robust and the Directors have proposed a final
dividend of 3.30p per Ordinary Share which will be payable on 1st
March 2012 to shareholders on the main register at close of
business on 27th January 2012.
Notwithstanding a decrease in earnings per ordinary share of
2.6% to 4.46p in the financial year, the aggregate dividend in
respect of the year has been maintained at 5.10p by drawing 0.48p
from revenue reserves. After payment of the proposed final dividend
of 3.30p, the balance on revenue reserves will be equivalent to
4.44p per ordinary share.
Under the terms of the management and administration agreement
with the Investment Manager, there will be no performance fee
payable in respect of the financial year under review, compared to
a payment of GBP234,843 in the previous financial year. The
Directors are very mindful of the necessity to contain costs and
overheads. In this regard the Total Expense Ratio ("TER") for the
year, which is a measure of the costs of administering and managing
the Company, has fallen from 1.57% last year to 1.17%. There is
more explanation about the basis and calculation of the TER shown
on page 23 of this annual report.
At the end of the financial year, the Trust was ungeared, having
reduced gearing (net of cash) to zero in October. Modest gearing is
utilised to seek enhanced returns by taking advantage of cheap
stock prices in a weak market. Individual holdings are then reduced
and gearing paid down when upward market movements deliver added
value.
We have continued our policy of repurchasing shares for
cancellation to provide both liquidity in the shares and to contain
the volatility of the share price in comparison to the underlying
net asset value. In total, 2,181,000 shares were purchased during
the financial year and a further 196,552 shares have been purchased
since the end of the financial year. In addition, 550,000 shares
previously held in treasury were cancelled during the financial
year. The Directors will be seeking renewed shareholder authority
to repurchase up to a further 15% of the issued share capital at
the forthcoming Annual General Meeting.
During the year, two Directors stepped down from the Board.
Andrew Barker, who was my predecessor as Chairman, retired on 18th
April 2011, having guided the Company since launch in 2001. Simon
White resigned on 31st August 2011 and, as Head of Investment
Trusts at RCM (UK), was instrumental in launching the Company in
2001. Their advice and service as Directors of the Company have
been much appreciated and we wish them both well in the future. Of
the remaining Directors, Nicholas Gold will be standing for
re-election at the forthcoming Annual General Meeting.
*Source: Thomson Reuters Datastream
The environment for successful investment remains extremely
challenging. The crisis in the eurozone, coupled with uncertainty
about the US recovery and whether the momentum for growth can be
sustained in developing countries has made for significant switches
of capital between asset classes, sectors and geographies. Western
governments are faced with limited choices as the market seeks
assurance that they have sustainable plans to contain government
borrowing and, at the same time, set an agenda for economic growth.
Nevertheless, corporate balance sheets remain generally strong and
there is an expectation that companies will continue to provide an
attractive dividend income stream.
Against this background, a portfolio of shares in well financed,
internationally diversified, global companies should provide the
opportunity to derive an attractive income stream in the shorter
term together with an attractive store of capital value over the
longer term.
J H Cartwright
Chairman
21st December 2011
Investment Manager's Review
Financial Year to 31st October 2011
British Portfolio Trust produced a total return of -1.47% over
the twelve months to 31st October 2011 by comparison with a 0.63%
return from the FTSE All-Share Index. The low weighting in the
mining sector was the primary positive contributor. We have been
wary of the elevated prices of commodities for some time as we
viewed the rate of fixed asset investment in China as unsustainable
and had concerns over speculative activity in the property market.
The weakness in commodity prices such as copper and iron ore during
the summer led the mining sector to correct sharply.
GlaxoSmithKline was the most important stock driver to
performance over the year as its defensive characteristics and
dividend yield proved attractive. This was a fairly dominant theme
with Bunzl and Diageo also performing well. Amongst the smaller
capitalisation stocks in the portfolio, Henry Boot and Hansen
Transmissions both produced good returns, with the latter receiving
a takeover approach.
These positives were offset by the underweight position in the
tobacco sector, where the Trust does not have any investments, and
some specific stock selection issues. We have not invested in the
tobacco sector for some time as we have been concerned at the lack
of volume growth and a reliance on ever rising consumer prices to
drive profit growth. At some point we fear a tipping point will be
reached when volumes decline sharply and pricing power disappears.
These are long term concerns and in an environment of weakening
economic growth the traditional defensiveness of the sector was to
the fore.
Stock selection was impacted by particularly disappointing
returns from Mothercare, Xchanging and Keller Group, where our
expectations of management driven turnaround were either misplaced
or poorly timed. We are attracted by the sustainable growth
potential of Mothercare's international franchise profits, and felt
that cyclical weakness in the UK store business would prove
containable and short lived. Whilst the international growth
continues to meet our expectations the trading performance of the
UK business has been particularly poor. Some of the competitive
issues Mothercare faces in the UK are likely to be structural, but
after a series of meetings with the company we do believe this part
of the business can be successfully restructured. The market
appears to be pricing in at least a GBP200m negative value for the
UK division and we believe this is much too pessimistic.
Xchanging, the business process outsourcing company, was weak as
new management came in to restructure the company after a
disastrous acquisition. The new CEO, Ken Lever, has acted swiftly
and we continue to see value in the business. Keller Group is a
ground engineering specialist for the construction industry. The
end market is cyclically depressed, with US construction for
example having fallen 42% in real terms from its 2006 peak. We see
considerable scope for recovery over the medium term, but this is
taking longer to begin than we anticipated. By way of illustration
US housing starts are currently running at 2 per thousand people,
which compares to 4 in times of recession, and the 50 year average
of 6.5 starts per thousand people. All three of these stocks have
been of great disappointment to us and we are frustrated at the
errors made in our analysis at the point of purchase. However, in
each case we continue to have conviction that there is significant
upside in the shares.
New holdings introduced into the portfolio during the year were
focused on defensive growth stocks in the industrials sector and
attractively valued non-bank financial stocks. Amongst the
industrials we started a new investment in Bunzl, the distribution
group, which produces sustainably high returns on capital and
strong cashflow driven by a balance of organic and acquisition led
growth. We were able to build a large position at attractive prices
in the early part of the year. We also added a new investment in
International Power where we felt the opportunity to grow the
business in power short emerging markets was not fairly reflected
in the valuation, and Lupus Capital, a deeply undervalued
manufacturer of doors and windows. Lupus also owns a couplings
business that provides product to the oil and gas industry, which
we expect them to sell for a consideration somewhat more than half
of the current market capitalisation of the whole group. The
remainder of the business will perform extremely well
when first signs of a recovery in new housing construction in
the US become apparent.
Within financials we invested in lowly geared businesses with
long term growth potential such as Ashmore, IG Group, Man Group,
and Hiscox. Although the portfolio remains underweight financial
stocks relative to the wider market, the travails of the sector
have left many of these stocks lowly valued even where their market
positions and business models have been mostly unaffected.
Over the course of the year we continued to focus the portfolio
by eliminating lower conviction positions in stocks that had
recovered from the aftermath of the global financial crisis such as
SVG Capital, DMGT, Energy XXI and 3i. We also sold Aviva, the
diversified insurance company. Aviva shares have also performed
relatively well since purchase. The original investment case was
based on an improving but underappreciated cash flow profile
combined with a valuation discount against peers, which has now
largely played out.
Hansen Transmissions International, the leading global
manufacturer of gearboxes for multi megawatt wind turbines,
received a takeover offer from ZF Friedrichshafen at a substantial
premium to the prevailing share price. Although the short term
outlook for the wind industry is poor, the longer term outlook is
better driven by the need to reduce carbon emissions. Before the
offer, Hansen shares were being valued at less than 50% of
replacement cost. Even at the takeover price, the shares still
appeared cheap relative to the underlying asset base. However, in
the context of a very weak end market that looked likely to
deteriorate even further before it recovers, we took the view that
the offer price was a fair one and we sold the position.
We also sold our remaining shares in Melrose, the industrial
restructuring vehicle. We have been investors in Melrose for many
years, and continue to believe it is a high quality company with an
excellent management team. We sold our position because there was
no longer sufficient valuation support following the exceptional
performance of the shares.
Performance History
The events of recent years make it important that a review of
the investment performance of British Portfolio Trust for the
financial year to 31st October 2011 is put into a longer term
context.
The global financial crisis of 2008/9 will be read about in the
history books in a hundred years' time. Future generations will
view it as an event of the same magnitude as the Crash and Great
Depression of the 1930's. The behaviour of markets today continues
to be driven by the shock waves and after effects of the crisis.
One of the slight peculiarities of investment trusts is that they
do not all have financial year ends that correspond to calendar
years. This is particularly true for British Portfolio Trust, with
the October year end coming only six weeks after the bankruptcy of
Lehman Brothers. As a result I have broken performance over the
last three years into two phases: first the crash of 2008, second
the partial recovery of 2009 and 2010.
Prior to 2008 the Trust was performing reasonably well,
delivering a solid combination of capital growth and income for
investors. However, the effect of the global financial crisis has
been to leave the total return (capital and dividends) of the Trust
trailing the FTSE All-Share Index by 4.4% over three years. Over
five years the Trust has returned -10.1% versus a return on the
FTSE All-Share of 8.9%. This performance is in need of detailed
explanation.
During the first half of 2008 the portfolio held up well even in
the immediate aftermath of Bear Stearns' rescue by JP Morgan in
February and the subsequent deterioration in credit markets. I took
over as the fund manager for British Portfolio Trust on 1st April
2008. At that time it was clear that economic growth was waning,
but we did not anticipate a full blown banking crisis and I began
to make only gradual changes to the portfolio. The portfolio was
subsequently not well prepared for the scale of the market falls
that occurred in the months following the collapse of Lehman
Brothers and the rescue of AIG, or their economic implications.
Amid some of the most volatile equity markets ever seen, the
portfolio lost 15.8% of relative performance (NAV relative to FTSE
All-Share, capital and income) in the 12 months to 31st December
2008. The largest single negative contributor to performance during
2008 was the banking group, HBOS where we badly underestimated the
equity and credit markets' lack of confidence in the company's
capital and liquidity position. Other significant negative stock
specific contributors to performance were chiefly amongst the
smaller oil, mining and emerging market exposed companies that had
been held by the Trust for a number of years. As the investment
climate for these types of companies deteriorated during 2008
Energy XXI, Prosperity Minerals, Mercator Gold and Titan Europe all
produced extremely disappointing returns. In aggregate the small
capitalisation stocks in the portfolio accounted for approximately
half of the underperformance. We felt the portfolio was
appropriately positioned going into the second half of 2008, being
underweight banks and with a full exposure to large, diversified
companies with strong balance sheets. However, in the event, the
overall portfolio strategy was not sufficiently defensively
positioned for a complete seizure of credit markets or the deep
global recession that followed.
The two calendar years spanning 2009 and 2010 were a better
period for the performance of the Trust, which outperformed its
benchmark by 7.8%. Although 2009 started as 2008 had finished with
a series of failed rallies, eventually these gave way to a final
sell off that saw the market make its low on 3rd March. At that
point the stability of the financial system was being called into
question. That the situation was so desperate sowed the seeds for
the equity market recovery, as governments and central banks had
little choice but to invoke extreme policy measures to tackle the
crisis. In effect the excessive debts of the private sector were
absorbed by the public sector as the banking system was rescued,
interest rates on cash were cut close to zero, and central banks
began to buy financial assets via 'quantitative easing'. Enormous
fiscal stimulus packages were announced across the world and
surprisingly quickly it became apparent that the rate of decline of
economic growth was bottoming out. This prompted a wholesale
improvement in risk appetite across equity, commodity, corporate
bond and real estate markets.
The key drivers of the improvement in relative portfolio
performance were the strong recovery of some of our high conviction
mid cap holdings. Melrose, an industrial buy-out and restructuring
vehicle, was the biggest positive contributor to performance,
adding 2.5%. The market had been concerned about the debt level
that the company was carrying, but our analysis suggested that the
management would be able to extract sufficient cash cost savings
from the business to bring the debt down substantially. The
portfolio also benefitted from the recovery in BBA Aviation,
Tullett Prebon and Informa, which had been hugely oversold towards
the end of 2008. We also successfully took advantage of the
narrowing of credit spreads from extremely wide levels via
investments in the specialist credit fund managers, Ashmore and
BlueBay, both of which performed extremely well as spreads narrowed
and they began to receive inflows into their funds.
In truth the magnitude of the recovery in markets surprised us.
As markets recovered we began to eliminate the smaller companies in
the portfolio and added to more defensive stocks, perhaps
underestimating the extent to which abundant liquidity would drive
markets. As a result we did not fully recover in 2009 and 2010 the
value lost in 2008.
The process of improving the long term track record of the
Trust, which was so damaged by the global financial crisis, has
begun but it will likely be a long process because we firmly
believe that the portfolio should be run conservatively given the
long term challenges still facing the global economy. I am acutely
aware that this has been a difficult period for investors in
British Portfolio Trust, but I believe the portfolio is now much
better positioned to withstand, and indeed take advantage, of the
challenges of the coming years with a well balanced portfolio of
good quality, attractively valued investments.
Investment Outlook
Most Western economies are likely to need a period of austerity
to address high and increasing debt levels. Recent evidence of a
slowing in the pace of the economic recovery from the last
recession will make it more difficult to avoid another recession or
at least a period of economic stagnation as this austerity bites.
Policy makers have few tools left with interest rates already very
low, and having tried fiscal and monetary stimuli. Furthermore,
political risks are high with little agreement on the best way to
tackle the major issues such as the Eurozone crisis or the US
budget deficit.
Emerging markets, in particular China, have provided a hugely
important source of growth for the world economy since the global
financial crisis, but even here there are issues. Rising food and
energy prices and increasing inflation have led many developing
countries to tighten monetary policy significantly. Higher interest
rates and strong currencies are now leading to slower growth rates.
China also has specific problems related to its overheated property
market and the wider economy's dependence on fixed asset investment
spending.
Despite the difficult economic background, the corporate sector
is surprisingly healthy. Many companies have cut costs aggressively
since the recession and have rebuilt their balance sheets as
profits have recovered. Labour costs have been under tight control
and profit margins are high. In addition multinational companies,
which make up a large part of the UK market, have been able to
exploit growth opportunities in developing countries in contrast to
the relatively tough home environment.
Aggregate stock market valuations look attractive on a long term
basis, especially compared to government bonds and discount many
risks. We would caution that certain cyclical sectors, including
mining and industrials, are making high or record profit margins
which could be vulnerable in the event of a significant economic
slowdown.
Bottom-up analyst forecasts imply strong earnings growth and
margin expansion across most sectors next year, which we consider
unlikely to happen. However we can find many attractive companies
in which to invest, where low valuations offer genuine support to
the long term investor.
Our investment policy in this environment continues to be
cautious. We have a bias towards high quality, attractively valued
multinational businesses with strong balance sheets operating in
relatively defensive or less cyclical industries such as
pharmaceuticals, telecoms, utilities or household products.
However, there remain opportunities in other sectors. We continue
to favour businesses with structural growth potential, for example
those with exposure to emerging market consumers, as we think
growth should be valued at a premium in this environment.
Jeremy Thomas
21st December 2011
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Company fall
broadly under the following categories:
Investment and Strategy: An inappropriate investment strategy,
for example asset allocation or the level of gearing, may lead to
underperformance against the Company's benchmark index and peer
companies, resulting in a fall in the Company's share price and the
Company's shares trading on a wider discount. The Board manages
these risks by diversification of investments through its
investment restrictions and guidelines which are monitored and
reported on. RCM (UK) Limited ("RCM") provides the Directors with
timely and accurate management information, including performance
data and attribution analyses, revenue estimates, liquidity reports
and shareholder analyses. The Board monitors the implementation and
results of the investment process with the Investment Manager and
reviews data which shows statistical measures of the Company's risk
profile. The Investment Manager employs the Company's gearing
tactically, within a strategic range set by the Board.
Market: Market risk arises from the uncertainty about the future
prices of the Company's investments. It represents the potential
loss the Company might suffer through holding investments in the
face of negative market movements. The Board considers asset
allocation, stock selection and levels of gearing on a regular
basis and has set investment restrictions and guidelines which are
monitored and reported on by RCM. The Board monitors the
implementation and results of the investment process with the
Investment Manager.
Accounting, Legal and Regulatory: In order to qualify as an
investment trust, the Company must comply with Section 1158 of the
Corporation Tax Act 2010 (formerly Section 842 of the Income and
Corporation Taxes Act 1988) ("Section 1158"). Details of the
Company's approval are given under "Business of the Company" on
page 22. Should the Company breach Section 1158, it may lose
investment trust status and as a consequence realised chargeable
gains within the Company's portfolio would be subject to
Corporation Tax. The Section 1158 qualification criteria are
monitored by RCM and results reported to the Board at each Board
Meeting. The Company must also comply with the provisions of the
Companies Act 2006 and, as its shares are listed on the London
Stock Exchange, the UKLA Listing Rules. A breach of the Companies
Act could result in the Company and/or the Directors being fined or
the subject of criminal proceedings. A breach of the UKLA Listing
Rules may result in the Company's shares being suspended from
listing which in turn would breach Section 1158. The Board has
ultimate responsibility but relies on its Company Secretary and its
professional advisers to ensure compliance with the Companies Act
2006 and the UKLA Listing Rules and Disclosure and Transparency
Rules.
Corporate Governance and Shareholder Relations: Details of the
Company's compliance with Corporate Governance best practice,
including information on relations with shareholders, are set out
in the Corporate Governance Report on pages 30 to 34.
Operational: Disruption to, or failure of, RCM's accounting,
dealing or payments systems or the custodian's records may prevent
accurate reporting and monitoring of the Company's financial
position. RCM has transferred operational functions, principally
relating to trade processing and investment administration, to BNY
Mellon Asset Servicing - London Branch. Details of how the Board
monitors the services provided by RCM and other suppliers and the
key elements designed to provide effective internal control are
included within the Internal Control section of the Corporate
Governance Report on pages 30 to 34.
Financial: The financial risks faced by the Company are
disclosed in Note 17 on pages 53 to 56.
A detailed explanation of the principal risks and uncertainties
can be found on pages 23 and 24 of the Annual Financial Report,
which will be available shortly on the Company's website.
Related Parties' Transactions
During the financial year, no transactions with related parties
have taken place, which have materially affected the financial
position or the performance of the Company during the period.
Directors' Responsibilities
The Directors each confirm to the best of their knowledge
that:
a) the financial statements have been prepared in accordance
with applicable UK accounting standards, and
give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company; and
b) the Annual Financial Report, to be published shortly,
includes 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 it
faces.
155 Bishopsgate For and on behalf of the Board
London EC2M 3AD J H Cartwright
21st December 2011 Chairman
INCOME STATEMENT
For the year ended 31st October 2011
Revenue Capital Total Return
GBP GBP GBP
Net losses on investments at
fair value - (2,086,116) (2,086,116)
Income 1,672,984 - 1,672,984
Investment management fee (107,353) (172,057) (279,410)
Performance fee - - -
Administration expenses (191,705) (4,535) (196,240)
Net return before finance costs
and taxation 1,373,926 (2,262,708) (888,782)
Finance costs: interest payable
and similar charges (8,050) (22,082) (30,132)
Net return on ordinary activities
before taxation 1,365,876 (2,284,790) (918,914)
Taxation - - -
Net return on ordinary activities
attributable to Ordinary Shareholders 1,365,876 (2,284,790) (918,914)
Return per Ordinary Share (Note
B) 4.46p (7.46)p (3.00)p
BALANCE SHEET
as at 31st October 2011
GBP
Investments held at fair value through profit or
loss 40,209,916
Net current assets 476,887
------------
Total Net Assets 40,686,803
------------
Called up Share Capital 341,955
Share Premium Account 14,819,243
Capital Redemption Reserve 207,308
Special Reserve 27,379,027
Capital Reserve (4,315,706)
Revenue Reserve 2,254,976
Equity Shareholders' Funds (all equity interests) 40,686,803
------------
Net asset value per Ordinary Share 139.6p
The Net Asset Value is based on 29,140,820 Ordinary Shares in
issue at the year end.
INCOME STATEMENT
For the year ended 31st October 2010
Revenue Capital Total Return
GBP GBP GBP
Net gains on investments at
fair value - 6,566,036 6,566,036
Income 1,820,164 - 1,820,164
Investment management fee (108,333) (174,997) (283,330)
Performance fee - (234,843) (234,843)
Administration expenses (198,164) (6,332) (204,496)
Net return before finance costs
and taxation 1,513,667 6,149,864 7,663,531
Finance costs: interest payable
and similar charges (11,915) (35,633) (47,548)
Net return on ordinary activities
before taxation 1,501,752 6,114,231 7,615,983
Taxation (436) - (436)
Net return attributable to Ordinary
Shareholders 1,501,316 6,114,231 7,615,547
Return per Ordinary Share (Note
B) 4.58p 18.66p 23.24p
BALANCE SHEET
as at 31st October 2010
GBP
Investments held at fair value through profit or
loss 46,164,256
Net current liabilities (141,109)
------------
Total Net Assets 46,023,147
------------
Called up Share Capital 368,265
Share Premium Account 14,819,243
Capital Redemption Reserve 180,998
Special Reserve 30,223,584
Capital Reserve (2,030,916)
Revenue Reserve 2,461,973
Equity Shareholders' Funds (all equity interests) 46,023,147
------------
Net asset value per Ordinary Share 146.9p
The Net Asset Value is based on 29,140,820 Ordinary Shares in
issue at the year end. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS'
FUNDS
For the year ended 31st October 2011
Called Share Capital Special Capital Revenue Total
up Premium Redemption Reserve Reserve Reserve
Share Account Reserve
Capital GBP GBP GBP GBP GBP GBP
GBP
---------- ------------ ------------ ------------- ------------- ------------- -------------
Net Assets
at 1st November
2009 385,415 14,819,243 163,848 34,500,025 (8,145,147) 2,640,742 44,364,126
Revenue Return - - - - - 1,501,316 1,501,316
Dividends on
Ordinary Shares - - - - - (1,680,085) (1,680,085)
Capital Return - - - - 6,114,231 - 6,114,231
Shares
repurchased
during the
year (17,150) - 17,150 (4,276,441) - - (4,276,441)
Net Assets
at 31st October
2010 368,265 14,819,243 180,998 30,223,584 (2,030,916) 2,461,973 46,023,147
---------- ------------ ------------ ------------- ------------- ------------- -------------
Called Share Capital Special Capital Revenue Total
up Premium Redemption Reserve Reserve Reserve
Share Account Reserve
Capital GBP GBP GBP GBP GBP GBP
GBP
---------- ------------ ------------ ------------- ------------- ------------- -------------
Net Assets
at 1st November
2010 368,265 14,819,243 180,998 30,223,584 (2,030,916) 2,461,973 46,023,147
Revenue Return - - - - - 1,365,876 1,365,876
Dividends on
Ordinary Shares - - - - - (1,572,873) (1,572,873)
Capital Return - - - - (2,284,790) - (2,284,790)
Shares
repurchased
during the
year (20,810) - 20,810 (2,844,557) - - (2,844,557)
Cancellation
of Ordinary
Shares
previously
held in treasury (5,500) - 5,500 - - - -
Net Assets
at 31st October
2011 341,955 14,819,243 207,308 27,379,027 (4,315,706) 2,254,976 40,686,803
---------- ------------ ------------ ------------- ------------- ------------- -------------
CASH FLOW STATEMENT
For the year ended 31st October 2011
2011 2010
GBP GBP
------------- ------------
Net cash inflow from operating activities 1,066,253 1,209,219
Returns on investments and servicing
of finance
Interest paid (30,170) (47,450)
Capital expenditure and financial investment
------------- ------------
Purchases of fixed asset investments (14,707,789) (23,142,389)
Sales of fixed asset investments 18,224,034 28,869,889
------------- ------------
Net cash inflow from capital expenditure
and financial investment 3,516,245 5,727,500
Equity dividends paid (1,572,873) (1,680,085)
Net cash inflow before financing 2,979,455 5,209,184
Financing
------------- ------------
Repurchase of Ordinary Shares for cancellation
or holding in treasury (2,844,313) (4,277,166)
Repayment of short term loan (2,000,000) (2,000,000)
Drawdown of short term loan 3,000,000 1,500,000
Net cash outflow from financing (1,844,313) (4,777,166)
Increase in cash 1,135,142 432,018
------------- ------------
BRITISH PORTFOLIO TRUST PLC
LISTED HOLDINGS at 31st October 2011
Value (GBP) % of Total Sector
Investments
GlaxoSmithKline 3,020,023 7.5 Pharmaceuticals and Biotechnology
BP 2,967,822 7.4 Oil and Gas Producers
Vodafone Group 2,397,512 6.0 Mobile Telecommunications
HSBC Holdings 2,006,667 5.0 Banks
Royal Dutch Shell "B" Shares 2,003,297 5.0 Oil and Gas Producers
Unilever 1,913,926 4.8 Food Producers
Rio Tinto 1,507,408 3.7 Mining
Reed Elsevier 1,434,117 3.6 Media
Tesco 1,426,088 3.5 Food and Drug Retailers
Diageo 1,370,010 3.4 Beverages
Value of ten largest equity
holdings 20,046,870 49.9
Centrica 1,335,528 3.3 Gas, Water and Multiutilities
Anglo American 1,019,621 2.5 Mining
Cobham 1,008.142 2.5 Aerospace and Defence
Barclays 958,042 2.4 Banks
BAE Systems 856,224 2.1 Aerospace and Defence
BG Group 836,791 2.1 Oil and Gas Producers
Bunzl 802,486 2.0 Support Services
Henry Boot 761,289 1.9 Construction and Materials
Compass Group 706,915 1.8 Travel and Leisure
Resolution 700,166 1.7 Life Insurance
Tullett Prebon 695,058 1.7 Financial Services
Inmarsat 683,273 1.7 Mobile Telecommunications
International Power 564,189 1.4 Gas, Water and Multiutilities
UBM 563,901 1.4 Media
Phoenix Group 505,833 1.3 Life Insurance
Sage Group 475,099 1.2 Software and Computer Services
Man Group 453,964 1.1 Financial Services
Intermediate Capital Group 449,032 1.1 Financial Services
Travis Perkins 447,012 1.1 Support Services
Hiscox 427,308 1.1 Non-Life Insurance
Carillion 425,608 1.1 Support Services
Balfour Beatty 424,109 1.1 Construction and Materials
IG Group 417,671 1.0 Financial Services
Carnival 417,629 1.0 Travel and Leisure
Aegis 395,926 1.0 Media
Hays 385,850 1.0 Support Services
Lupus Capital 358,833 0.9 Construction and Materials
Xchanging 355,274 0.9 Support Services
Misys 325,264 0.8 Software and Computer Services
Lloyds Banking Group 324,480 0.8 Banks
Keller Group 319,704 0.8 Construction and Materials
Royal Bank of Scotland 297,429 0.7 Banks
Real Estate Investment and
Songbird Estates 255,898 0.6 Services
Better Capital 251,201 0.6 Equity Investment Instruments
Petroceltic International 248,568 0.6 Oil and Gas Producers
Renewable Energy 247,350 0.6 Electricity
Ashmore Group 237,239 0.6 Financial Services
Mothercare 225,140 0.6 General Retailers
Total Investments 40,209,916 100.0
============ ============
Note A
The financial statements have been prepared under the historical
cost convention, modified to include the revaluation of
investments, and in accordance with United Kingdom law and United
Kingdom Generally Accepted Accounting Practice (UK GAAP) and the
Statement of Recommended Practice - Financial Statements of
Investment Trust Companies and Venture Capital Trusts (SORP) issued
in January 2009 by the Association of Investment Companies.
Note B
The return per Ordinary Share is based on a weighted average of
30,637,282 Ordinary Shares in issue during the year (2010-
32,770,227).
Note C
2011 2010
GBP GBP
Dividends paid on Ordinary Shares of 1p:
Final dividend - 3.30p paid 1st March 2011
(2010 - 3.30p) 1,027,944 1,107,310
Interim - 1.80p paid 1st September 2011
(2010 - 1.80p) 544,929 572,775
1,572,873 1,680,085
Dividends payable and proposed at the year end are not
recognised as a liability under FRS 21 'Events After the Balance
Sheet Date' (see Annual Financial Report - Statement of Accounting
Policies). Details of these dividends are set out below.
2011 2010
GBP GBP
Final 3.30p payable 1st March 2012 (2010
- 3.30p) 961,647 1,033,620
-------- ----------
961,647 1,033,620
The proposed final dividend is based on the number of shares in
issue at the year end. However, the dividend 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 year end.
Ordinary dividends paid by the Company carry a tax credit at a
rate of 10%. The credit discharges the tax liability of
shareholders subject to income tax at less than the higher rates.
Shareholders liable to pay tax at the higher rates will have
further tax to pay.
Note D
The financial information set out in this announcement does not
constitute the Company's statutory accounts for the years ended
31st October 2011 or 31st October 2010. The financial information
for the year ended 31st October 2010 has been extracted from the
statutory accounts for that year, which were filed with the
Registrar of Companies on 9th February 2011. The auditors' report
on those accounts was unqualified and did not contain a statement
under either Section 498(2) or Section 498(3) of the Companies Act
2006. The statutory accounts for the year ended 31st October 2011
will be finalised on the basis of the financial information
presented by the Directors in this announcement and will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting.
"Ends"
The full Annual Financial Report is available to be viewed on or
downloaded from the Company's website at
www.britishportfoliotrust.co.uk . Neither the contents of the
Company's website nor the contents of any website accessible from
hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of this announcement.
For further information please contact:
Peter Ingram
Company Secretary
Telephone: 020 7065 1467
This information is provided by RNS
The company news service from the London Stock Exchange
END
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