Interim Results

British Assets Trust PLC 09 May 2007 BRITISH ASSETS TRUST PLC To: RNS From: British Assets Trust plc Date: 9 May 2007 Interim Results for the six months ended 31 March 2007 Financial Highlights • Net asset value total return of 7.7 per cent • Share price total return of 11.6 per cent Chairman's Statement For the six months ended 31 March 2007, the Company's net asset value total return, with net dividends reinvested, was 7.7 per cent. This compares with a return of 8.4 per cent from the composite benchmark of 75 per cent FTSE All-Share Index and 25 per cent FTSE World (ex UK) Index. The share price total return for the period was 11.6 per cent and the debt adjusted discount of share price to net asset value per share narrowed from 10.5 per cent as at 30 September 2006 to 8.1 per cent as at the end of the period. Strong corporate earnings and ongoing merger and acquisition activity continued to support markets during the period. Lower oil prices and easing global inflationary concerns also boosted markets. However, a sharp fall in Chinese stocks in late February and concerns for the US sub-prime mortgage market combined to unsettle markets. Equity markets fell sharply but recovered again in March. Financial market volatility has declined substantially over the past five years. This in the main has reflected a more stable macroeconomic environment as globalisation has improved growth whilst keeping inflation low. However, investors are now starting to question if this stability will continue. This, together with uncertainty over the outlook for the US economy is resulting in more volatile financial markets. Asset allocation, gearing and stock selection within the overseas portfolios contributed positively to performance during the period. However, stock selection returns within the UK portfolio lagged the FTSE All-Share Index. As announced during the period, a new manager of the Company's UK portfolio was appointed from within the F&C UK Equities Team. This will result in a more focused portfolio going forward and the Board believes the change will result in improved performance for this important part of the overall portfolio. The underperformance of the UK portfolio during the period includes the cost of re-aligning the portfolio in February. Gearing At the end of the period the Company's gearing, net of cash, was 16.2 per cent, compared to 20.3 per cent as at 30 September 2006. This is represented by 9.7 per cent in equities and 6.5 per cent in corporate bonds. As a reflection of the Managers' cautious view on markets, the level of net gearing was reduced during the period by raising cash from the UK portfolio. Earnings and Dividends The Company's revenue earnings for the period were 2.7p per Ordinary Share (2006 - 2.4p). A first interim dividend of 1.356p per Ordinary Share was paid on 10 April 2007 and the Board has declared a second interim dividend of 1.356p per Ordinary Share which will be paid on 6 July 2007 to shareholders on the register on 8 June 2007. The Company has continued to benefit from strong dividend growth from its investee companies, in particular within the UK, and the continuing trend of companies to return cash to shareholders by way of special dividends. Subject to unforeseen circumstances, the Board would therefore hope to increase the total dividend in respect of the current financial year by not less than 3.0 per cent compared to the previous year. The Board considers the Company's dividend yield to be one of its key attractions. As at 31 March 2007, the yield of 3.8 per cent was some 36 per cent higher than the FTSE All-Share Index yield of 2.8 per cent. Outlook Despite recent uncertainty, the fundamental backdrop for global stockmarkets remains reasonable with little to choose between the geographic regions. A recession in the US is unlikely but we do expect to see slower global growth and lower earnings growth. Merger and acquisition activity is likely to continue to bolster stockmarkets although there is some concern about the associated rising debt levels. W R E Thomson Chairman For further information please contact: Julie Dent 0207 628 8000 Julie.dent@fandc.com F&C Investment Business Limited Unaudited Income Statement For the 6 Months ended 31 March 2007 2007 2007 2007 Revenue Capital Total £'000 £'000 £'000 Gains on investments - 30,766 30,766 Exchange differences - 6 6 Income 10,368 - 10,368 Investment management fee: Basic (258) (775) (1,033) Performance related - - - Other expenses (460) - (460) Net return before finance costs & taxation 9,650 29,997 39,647 Finance Costs: 6.625% Bonds 2008 (505) (1,514) (2,019) 6.25% Bonds 2031 (474) (1,422) (1,896) Return on ordinary activities before tax 8,671 27,061 35,732 Tax on ordinary activities (124) - (124) Return attributable to shareholders 8,547 27,061 35,608 Return per Ordinary Share (p) 2.7 8.8 11.5 The total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies. Unaudited Income Statement For the 6 Months ended 31 March 2006 2006 2006 2006 Revenue Capital Total £'000 £'000 £'000 Gains on investments - 53,760 53,760 Exchange differences - (113) (113) Income 9,335 - 9,335 Investment management fee: Basic (253) (760) (1,013) Performance related - (583) (583) Other expenses (308) - (308) Net return before finance costs & taxation 8,774 52,304 61,078 Finance Costs: 6.625% Bonds 2008 (505) (1,514) (2,019) 6.25% Bonds 2031 (474) (1,422) (1,896) Return on ordinary activities before tax 7,795 49,368 57,163 Tax on ordinary activities (117) - (117) Return attributable to shareholders 7,678 49,368 57,046 Return per Ordinary Share (p) 2.4 15.4 17.8 Audited Income Statement For the Year ended 30 September 2006 2006 2006 2006 Revenue Capital Total £'000 £'000 £'000 Gains on investments - 33,150 33,150 Exchange differences - 177 177 Income 23,353 257 23,610 Investment management fee: Basic (512) (1,537) (2,049) Performance related - - - Other expenses (826) - (826) Net return before finance costs & taxation 22,015 32,047 54,062 Finance Costs: 6.625% Bonds 2008 (1,010) (3,028) (4,038) 6.25% Bonds 2031 (944) (2,832) (3,776) Return on ordinary activities before tax 20,061 26,187 46,248 Tax on ordinary activities (305) - (305) Return attributable to shareholders 19,756 26,187 45,943 Return per Ordinary Share (p) 6.3 8.3 14.6 Unaudited Balance Sheet Audited As At As At As At 31.03.06 31.03.07 30.09.06 £'000 £'000 £'000 Non-Current Assets Investments 577,954 566,081 594,880 Current Assets Debtors 8,385 5,430 7,503 Cash at bank and on deposit 34,000 24,140 19,764 42,385 29,570 27,267 Creditors: Amounts falling due within one year (3,840) (6,014) (2,830) Net Current Assets 38,545 23,556 24,437 Total Assets less Current Liabilities 616,499 589,637 619,317 Creditors: amounts falling due after more than one year: 6.625% Bonds 2008 (59,936) (59,905) (59,873) 6.25% Bonds 2031 (59,355) (59,342) (59,329) (119,291) (119,247) (119,202) Net assets 497,208 470,390 500,115 Capital and reserves Called-up share capital 77,128 77,128 79,103 Capital redemption reserve 11,213 11,213 9,238 Capital reserve - realised 305,733 246,431 255,476 Capital reserve - unrealised 69,110 101,351 125,867 Revenue reserve 34,024 34,267 30,431 Shareholders' Funds 497,208 470,390 500,115 Net Asset Value per Ordinary Share (p) 161.2 152.5 158.1 Unaudited Reconciliation of Movements in Shareholders' Funds Six months Six months Audited Year to to to 31 March 31 March 30 September 2007 2006 2006 £'000 £'000 £'000 Opening shareholders' funds 470,390 460,858 460,858 Share buy-backs - (9,016) (19,395) Dividends paid (8,790) (8,773) (17,016) Return attributable to shareholders 35,608 57,046 45,943 Closing shareholders' funds 497,208 500,115 470,390 Summarised Unaudited Statement of Cash Flows Six months Six months Audited Year to to to 31 March 31 March 30 September 2007 2006 2006 £'000 £'000 £'000 Net cash inflow from operating activities 7,060 4,613 19,048 Servicing of finance (5,850) (3,863) (5,738) Taxation - 46 39 Financial investment 17,132 8,454 18,728 Dividends paid (8,790) (8,773) (17,016) Net cash inflow before financing 9,552 477 15,061 Financing - (9,016) (19,395) Increase/(decrease) in cash 9,552 (8,539) (4,334) Increase/(decrease) in cash 9,552 (8,539) (4,334) Currency gains 308 - 171 Increase in 6.625% Bonds 2008 liability (31) (31) (63) Increase in 6.25% Bonds 2031 liability (13) (13) (26) Movement in net debt 9,816 (8,583) (4,252) Opening net debt (95,107) (90,855) (90,855) Closing net debt (85,291) (99,438) (95,107) Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities Net revenue before finance costs and taxation 39,647 61,078 54,062 Gains on investment (30,766) (53,760) (33,150) Exchange differences (308) - (171) Tax on investment income (121) (130) (304) Changes in working capital and other non-cash items (1,392) (2,575) (1,389) Net cash inflow from operating activities 7,060 4,613 19,048 Notes: 1. The unaudited interim results have been prepared on the basis of the accounting policies set out in the statutory accounts of the Company for the year ended 30 September 2006. 2. Earnings for the first six months should not be taken as a guide to the results of the full year. 3. Total income of £10,368,000 includes special dividends of £874,000 all recognised through revenue (31 March 2006 - £231,000 all through revenue and 30 September 2006 - £4,636,000 of which £4,379,000 was recognised through revenue and £257,000 was recognised through capital). 4. The second interim dividend of 1.356p per Ordinary Share will be paid on 6 July 2007 to shareholders on the register on 8 June 2007. In accordance with FRS 21 this dividend, and the first interim dividend of 1.356p per Ordinary Share paid on 10 April 2007, have not been accounted for in the results for the six months ended 31 March 2007. 5. The last date for receipt of mandate instructions for those shareholders who wish to join the Dividend Reinvestment Plan is 15 June 2007. 6. Return per share is based on a weighted average 308,512,282 Ordinary Shares in issue during the period (31 March 2006 - 320,093,326 and 30 September 2006 - 315,715,159). 7. There were 308,512,282 Ordinary Shares in issue at 31 March 2007 (31 March 2006 - 316,412,282 and 30 September 2006 - 308,512,282). 8. The following table provides a breakdown of the estimated contributions to the net asset value total return for the period: Attribution of Return Percentage Points Market/benchmark return 8.4 Stock selection UK equities -0.8 UK equities - cost of portfolio re-alignment -0.4 Overseas equities 0.3 Regional asset allocation 0.1 Corporate bonds -0.3 Gearing/cash 0.7 Expenses -0.3 British Assets Trust net asset value total return 7.7 9. The Company's geographic exposure as a percentage of shareholders' funds at 31 March 2007 was as follows (comparative figures are for 30 September 2006). 31 March 2007 30 September 2006 UK 80.0 85.0 North America 12.3 12.3 Europe (ex UK) 7.3 6.2 Japan 5.7 6.1 Pacific (ex Japan) 4.4 4.0 Corporate Bonds 6.5 6.7 Liquidity 7.8 5.1 Borrowings (24.0) (25.4) _____ ____ 100.0 100.0 10. These are not statutory accounts in terms of Section 240 of the Companies Act 1985 and are unaudited. Statutory accounts for the year ended 30 September 2006, which received an unqualified audit report, have been lodged with the Registrar of Companies. No statutory accounts in respect of any period after 30 September 2006 have been reported on by the Company's auditors or delivered to the Registrar of Companies. The Interim Report will be sent to shareholders in May 2007. This information is provided by RNS The company news service from the London Stock Exchange
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