Half Yearly Report

RNS Number : 8318V

RCM Technology Trust PLC

16 July 2009

 



For immediate release    

16 July 2009

RCM TECHNOLOGY TRUST PLC

HALF-YEARLY FINANCIAL REPORT

For the six months ended 31 May 2009

Highlights

	31 May  2009	30 November 2008	% Change
Net Asset Value per Ordinary Share	227.5p	191.1p	19.0
Ordinary Share price	208.0p	176.5p	17.8
Subscription Share Price	29.0p	9.0p	322.2
Discount	8.6%	7.6%	n/a
Shareholders' Funds	£52.1m*	£44.9m	16.0
Dow Jones World Technology Index (sterling adjusted, total return)	216.92	178.2	21.7

*After share buy backs totalling £1,101,340 (2008: £823,674).

The Company has not declared an interim dividend (2008: nil).

Interim Management Report

Net asset value and dividend

During the six month period to 31 May 2009 the Company's net asset value per share increased by 19.0 per cent  from 191.1p to 227.5p. Over the same period the Company's benchmark, the Dow Jones World Technology Index, rose by 21.7 per cent. and the NASDAQ Composite Price Index rose by 9.5 per cent.  

Over the period the Company's share price increased by 17.8 per cent from 176.5p to 208.0p and the discount to net asset value of the shares moved slightly from 7.6 per cent to 8.6 per cent.   

The Company's investments continue to produce a low level of income and no dividend is payable in respect of the six months ended 31 May 2009 (2008: nil).

Investment Review   

Technology stocks appreciated sharply during the period under review, as investors focused on a number of favourable factors:

• Technology offers the prospect of superior growth from historically low valuation levels;

• There are substantial cash balances in the sector, providing balance sheet resilience in a tough trading environment;

• The availability of cash provides scope for increased merger and acquisition activity.;

• Many companies in the sector took early steps to contain costs and this has helped preserve margins and sustain profitability despite the downturn. 

• Many technology companies provide solutions to mainstream businesses to help cut costs and  they are seeing relatively strong trading compared to the market overall.

The Fund's holdings in Riverbed Technology, ON Semiconductor, and First Solar were the main positive contributors to returns during the half year.  Riverbed Technology produced a particularly impressive performance based on the company's Steelhead WAN optimisation products , which consolidate servers into data centres more effectively, and enable the 'virtualisation' of services and applications to reduce costs. First Solar, the leading low cost provider of solar energy modules maintained healthy gross margins and although  the company is under competitive pressure amid falling silicon prices it should benefit from new federal laws that would require US utility companies to supply approximately 15% of their electricity from renewable sources by 2020. 

Comcast, Nintendo Inc., and Research In Motion (RIM) detracted from relative returns during the period. Nintendo declined on slowing WII sales and a lack of new products.  Our lack of exposure to RIM held back relative returns.  

Towards the end of the period we increased the Trust's exposure to mid-cap, growth oriented companies which we believe have a better chance of growing earnings in the modest consumer and corporate spending recovery that we expect.

Outlook

We believe that a weaker dollar against most major currencies can provide a helpful tailwind for many of our holdings, by improving the competitiveness of their products globally. We do not expect a material recovery in the United States and North America before the fourth quarter of 2009. However, for companies that have controlled their costs, we believe that there is the possibility of a significant upturn in profits with only moderate increases in revenues in 2010. We will continue to focus on companies that offer the business sector opportunities for efficiency gains and we see further potential in smart phones and the roll out of 3G technology in Asia.

Material events and transactions

In the six month period to 31 May 2009 the following material events and transactions have taken place:

At the Annual General Meeting of the Company held on 30 March 2009 all resolutions put to shareholders were passed.  

On 6 April 2009, 530 Ordinary Shares were issued following the conversion of Subscription Shares.  

There were no related party transactions in the period.

Discount Management Policy and Buy Back Authority

Pursuant to the proposals sanctioned by shareholders in December 2005, the Board has adopted a discount management policy under which the Company repurchases Ordinary shares for cancellation at prices representing a discount of not less than 7 per cent to NAV, where there is demand in the market for it to do so. Shareholders should note that the shares may from time to time trade at a discount of greater than 7 per cent, but that there may be no unmet demand from selling shareholders at this level.  The making and timing of any share buy back is at the absolute discretion of the Board and there is no guarantee that buy backs will be made or that the policy will be successful in establishing and supporting an improved rating in the Company's shares. Under this discount management policy a total of 588,850 shares have been purchased and held in treasury since 1 December 2008 at a total cost of £1,101,340.

Principal risks and uncertainties for the next six months

The principal risks and uncertainties facing the Company over the next six months are broadly unchanged from those described in the Annual Financial Report for the year ended 30 November 2008. These are set out in the Business Review on page 13 of that Report, together with commentary on the Board's approach to mitigating the risks and uncertainties, under the following headings: Objective and Strategy; Level of Discount / Premium; Market Price Risk; Foreign Currency Risk; Interest Rate Risk; Liquidity Risk; Credit Risk; Portfolio Performance; and, Operational and Regulatory Risk.

Recent economic data has shown a degree of stabilisation in economic conditions. However, the world's financial system remains fragile and the scale of government debt required to stabilise the financial sector will generate additional uncertainty in markets.

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'; and 

• the interim management report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.7 R, 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; and 

• the interim management report includes a fair review of the information concerning related parties transactions as required by Disclosure and Transparency Rule 4.2.8 R.

The half-yearly financial report was approved by the Board on 16 July 2009 and the above responsibility statement was signed on its behalf by the Chairman.

David Quysner

Chairman

Enquiries:

For further information, please contact:

RCM (UK) Limited

Simon White

Head of Investment Trusts

Tel: [phone]

SUMMARY OF UNAUDITED RESULTS

INCOME STATEMENT

for the six months ended 31 May 2009

	Revenue	Capital	Total
			Return
	£'000s	£'000s	£'000s
			(Note 2)
Net gains on investments held at fair value	-	8,665	8,665
Exchange losses on currency balances	-	(160)	(160)
Income from investments Other Income	225 -	- -	225 -
Investment management fee	(253)	-	(253)
Administration expenses	(123)	-	(123)
Net return before finance costs and taxation	(151)	8,505	8,354
Finance costs: interest payable and similar charges	-	-	-
Net return on ordinary activities before taxation	(151)	8,505	8,354
Taxation	(32)	-	(32)
Net return attributable to Ordinary Shareholders	(183)	8,505	8,322
Return per Ordinary Share (Note 1)
(basic and diluted)	(0.79p)	36.62p	35.83p

BALANCE SHEET 

as at 31 May 2009

	£'000s
Investments held at fair value through profit or loss	49,539
Net current assets	2,604
Total Net Assets	52,143
Called up Share Capital	5,932
Share Premium Account	23,453
Capital Redemption Reserve	1,021
Capital Reserves: Realised	31,563
Unrealised	1,748
Revenue Reserve	(11,574)
Equity Shareholders' Funds	52,143
Net Asset Value per Ordinary Share	227.5p
The net asset value is based on 22,918,929 Ordinary Shares in issue.
As at 31 May 2009 there were an additional 618,850 Ordinary shares held in treasury.

SUMMARY OF UNAUDITED RESULTS

INCOME STATEMENT

for the six months ended 31 May 2008

	Revenue	Capital	Total
			Return
	£'000s	£'000s	£'000s
			(Note 2)
Net losses on investments held at fair value	-	(1,362)	(1,362)
Exchange losses on currency balances	-	(5)	(5)
Income from investments Other Income	232 2	- -	232 2
Investment management fee	(294)	-	(294)
Administration expenses	(170)	(16)	(186)
Net return before finance costs and taxation	(230)	(1,383)	(1,613)
Finance costs: interest payable and similar charges	(5)	-	(5)
Net return on ordinary activities before taxation	(235)	(1,383)	(1,618)
Taxation	(8)	-	(8)
Net return attributable to Ordinary Shareholders	(243)	(1,383)	(1,626)
Return per Ordinary Share (Note 1)
(basic and diluted)	(1.03p)	(5.84p)	(6.87p)

BALANCE SHEET 

as at 31 May 2008

	£'000s
Investments held at fair value through profit or loss	58,867
Net current assets	1,407
Total Net Assets	60,274
Called up Share Capital	5,946
Share Premium Account	23,452
Capital Redemption Reserve	1,007
Capital Reserves: Realised	35,155
Unrealised	5,852
Revenue Reserve	(11,138)
Equity Shareholders' Funds	60,274
Net Asset Value per Ordinary Share	255.5p
The net asset value is based on 23,595,249 Ordinary Shares in issue.

As at 31 May 2008 there were no Ordinary Shares held in treasury.

SUMMARY OF UNAUDITED RESULTS

INCOME STATEMENT 

for the year ended 30 November 2008

	Revenue	Capital	Total
			Return
	£'000s	£'000s	£'000s
			(Note 2)
Net losses on investments held at fair value	-	(16,472)	(16,472)
Exchange gains on currency balances	-	159	159
Income from investments Other Income	479 -	- -	479 -
Investment management fee	(561)	-	(561)
Administration expenses	(359)	-	(359)
Net return before finance costs and taxation	(441)	(16,313)	(16,754)
Finance costs: interest payable and similar charges	(5)	-	(5)
Net return on ordinary activities before taxation	(446)	(16,313)	(16,759)
Taxation	(50)	-	(50)
Net return attributable to Ordinary Shareholders	(496)	(16,313)	(16,809)
Return per Ordinary Share (Note 1)
(basic and diluted)	(2.10p)	(69.08p)	(71.18p)

BALANCE SHEET

as at 30 November 2008

	£'000s
Investments held at fair value through profit or loss	44,086
Net current assets	835
Total Net Assets	44,921
Called up Share Capital	5,932
Share Premium Account	23,452
Capital Redemption Reserve	1,021
Capital Reserves: Realised	32,481
Unrealised	(6,574)
Revenue Reserve	(11,391)
Equity Shareholders' Funds	44,921
Net Asset Value per Ordinary Share	191.1p
The net asset value is based on 23,507,249 Ordinary Shares in issue.
As at 30 November 2008 there were an additional 30,000 Ordinary Shares held in treasury.

  RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

	Called up Share Capital £'000s	Share Premium Account £'000s	Capital Redemption Reserve £'000s	Capital Reserve Realised £'000s	Capital Reserve Unrealised £'000s	Revenue Reserve £'000s	Total £'000s
Six months ended 31 May 2009
Net Assets at 30 November 2008	5,932	23,452	1,021	32,481	(6,574)	(11,391)	44,921
Revenue Return	-	-	-	-	-	(183)	(183)
Shares repurchased during the period	-	-	-	(1,101)	-	-	(1,101)
Conversion of Subscription Shares	-	1	-	-	-	-	1
Capital Return	-	-	-	183	8,322	-	8,505
Net Assets at 31 May 2009	5,932	23,453	1,021	31,563	1,748	(11,574)	52,143
Six months ended 31 May 2008
Net Assets at 30 November 2007	6,013	23,440	939	35,165	7,879	(10,895)	62,541
Revenue Return	-	-	-	-	-	(243)	(243)
Shares repurchased during the period	(68)	-	68	(654)	-	-	(654)
Conversion of Subscription Shares	1	12	-	-	-	-	13
Capital Return	-	-	-	644	(2,027)	-	(1,383)
Net Assets at 31 May 2008	5,946	23,452	1,007	35,155	5,852	(11,138)	60,274
Year ended 30 November 2008
Net Assets at 30 November 2007	6,013	23,440	939	35,165	7,879	(10,895)	62,541
Revenue Return	-	-	-	-	-	(496)	(496)
Shares repurchased during the year	(82)	-	82	(824)	-	-	(824)
Conversion of Subscription Shares	1	12	-	-	-	-	13
Capital Return	-	-	-	(1,860)	(14,453)	-	(16,313)
Net Assets at 30 November 2008	5,932	23,452	1,021	32,481	(6,574)	(11,391)	44,921

  SUMMARY OF UNAUDITED RESULTS

CASH FLOW STATEMENT

	Six Months ended 31 May 2009		Six Months ended 31 May 2008		Year ended 30 November 2008
	£'000s		£'000s		£'000s
Net cash outflow from operating activities	(163)		(1,596)		(1,895)
Return on investments and servicing of finance
Interest paid	-		(5)		(5)
Capital expenditure and financial investment
Purchases of fixed asset investments	(45,525)		(113,735)		(173,840)
Sales of fixed asset investments	48,714		116,952		176,801
Net cash inflow from capital expenditure and financial investment	3,189		3,217		2,961
Net cash inflow before financing	3,026		1,616		1,061
Financing
Purchase of Ordinary shares for cancellation and holding in treasury	(1,101)		(651)		(823)
Conversion of Subscription shares	1		13		13
Net cash outflow from financing	(1,100)		(638)		(810)
Net cash inflow	1,926		978		251
Reconciliation of Return on Ordinary Activities before Finance Costs and Taxation to Net Cash Outflow from Operating Activities
Total return before finance costs and taxation	8,354		(1,613)		(16,754)
Add: Net (gains) losses on investments at fair value	(8,665)		1,362		16,472
Less: Effective Yield Amortisation	(1)		(97)		(122)
Add: Net losses (gains) on foreign currency	160		5		(159)
Less: Overseas tax suffered	(32)		(8)		(50)
	(184)		(351)		(613)
Decrease (Increase) in debtors	29		(10)		(41)
Decrease in creditors	(8)		(1,235)		(1,241)
Net cash outflow from operating activities	(163)		(1,596)		(1,895)
Reconciliation of net cash flow to movement in net funds
Net cash inflow	1,926		978		251
Net (losses) gains on foreign currencies	(160)		(5)		159
Movement in net funds	1,766		973		410
Net funds brought forward	1,153		743		743
Net funds carried forward	2,919		1,716		1,153

INVESTMENT PORTFOLIO
as at 31 May 2009
			Fair Value	% of
Investment	Sector	Country	£'000	Portfolio
Cisco	Hardware	United States	2,868	5.8
Google	Software	United States	2,512	5.1
First Solar	Alternative Energy	United States	2,095	4.2
Salesforce.com	Software	United States	1,988	4.0
Qualcomm	Hardware	United States	1,893	3.8
Riverbed Technologies	Hardware	United States	1,681	3.4
China Telecom	Telecommunications	Hong Kong	1,522	3.1
Data Domain	Hardware	United States	1,514	3.1
Research In Motion	Hardware	Canada	1,297	2.6
Amazon	General Retailer	United States	1,289	2.6
Top ten investments			18,659	37.7
Suntech Power	Alternative Energy	United States	1,226	2.5
On Semiconductor	Hardware	United States	1,217	2.5
Itron	Electronics	United States	1,124	2.3
Cognizant	Software	United States	1,102	2.2
Apple	Hardware	United States	1,078	2.2
McAfee	Software	United States	1,025	2.1
Equinix	Software	United States	1,022	2.1
F5 Network	Hardware	United States	1,020	2.1
Capita Group	Support Services	United Kingdom	966	1.9
Amphenol	Electronics	United States	941	1.9
Top twenty investments			29,380	59.5
Netease.com	Software	United States	865	1.7
Concur Technologies	Software	United States	854	1.7
Sandisk	Hardware	United States	762	1.5
American Tower	Hardware	United States	711	1.4
Baidu.com	Software	United States	700	1.4
Juniper Networks	Hardware	United States	669	1.4
Tencent	Software	Hong Kong	643	1.3
Taiwan Semiconductor ADS	Hardware	United States	617	1.2
Longtop Financial ADR	Software	United States	610	1.2
NetApp	Hardware	United States	562	1.1
Top thirty investments			36,373	73.4
Expedia	Travel & Leisure	United States	554	1.1
International Business Machines	Software	United States	540	1.1
ABB	Industrial Engineering	Switzerland	535	1.1
Yahoo	Software	United States	532	1.1
Activision	Leisure Goods	United States	529	1.1
Autonomy	Software	United Kingdom	529	1.1
Synaptics	Hardware	United States	527	1.1
Samsung Electronic	Hardware	South Korea	525	1.1
Texas Instruments	Hardware	United States	519	1.0
Johnson Controls	Automobiles	United States	517	1.0
Top forty investments			41,680	84.2
Ariba	Software	United States	509	1.0
Nokia ADR	Hardware	United States	500	1.0
Monsanto	Food Producers	United States	486	1.0
Microdose Therapeutx*	Hardware	United States	466	0.9
Cybersource	Software	United States	463	0.9
Quanta	Construction	United States	447	0.9
Taiwan Semiconductor	Hardware	Taiwan	439	0.9
Cree	Hardware	United States	413	0.8
Alibaba.com	Software	Hong Kong	405	0.8
Intel	Hardware	United States	386	0.8
Top fifty investments			46,194	93.2
Visa	Financial Services	United States	377	0.8
BMC Software	Software	United States	354	0.8
ASML Holding	Hardware	Netherlands	338	0.7
Asiainfo	Support Services	United States	307	0.6
HTC	Hardware	Taiwan	300	0.6
Starent Networks	Hardware	United States	267	0.5
Vmware	Software	United States	267	0.5
WebMD Health	Media	United States	244	0.5
Clearwire	Software	United States	241	0.5
Nuance Communications	Software	United States	224	0.5
Top sixty investments			49,113	99.2
Energy Conversion Devices	Alternative Energy	United States	213	0.4
Motorola	Hardware	United States	206	0.4
Bede	Hardware	United Kingdom	7	0.0
Total Investments			49,539	100.0
* Unquoted investment

NOTES

Note 1

The return per Ordinary Share is based on a weighted average number of shares in issue of 23,222,300 (31 May 2008: 23,656,624; 30 November 2008: 23,614,795).

Note 2

The total 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 which amounted to £65,000 on purchases and £58,000 on sales (31 May 2008; purchases: £77,000, sales: £86,000; 30 November 2008; purchases: £128,000, sales: £143,000).

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.  

Unlisted and unquoted investments are valued by the Directors in accordance with the International Private Equity and Venture Capital Guidelines issued in March 2005.

Note 4

The half yearly financial report has neither been audited nor reviewed by the Company's auditors. The financial information for the year ended 30 November 2008 has been extracted from the statutory accounts for that year which have been delivered to the Registrar of Companies. The accounting policies and presentation are consistent with those applied in the latest published annual accounts.  The auditor's report on those accounts was unqualified and did not contain a statement under either Section 237(2) or Section 237(3) of the Companies Act 1985.

In accordance with recently introduced changes to the UK's disclosure requirements for listed companies, the Company is now required to make limited additional and updated disclosures, mainly relating to the first and third quarters of the financial year. These Interim Management Statements will be released via the Regulatory News Service and posted on the Company's website www.rcmtechnologytrust.co.uk on or shortly before 19 April and 19 October each year.

The half yearly financial report will be sent to shareholders in mid to end July 2009 and will be available to members of the public from the Company's registered office at 155 Bishopsgate, London EC2M 3AD, or via the Company's website www.rcmtechnologytrust.co.uk.

 

END

 

 

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