Interim Results
British Portfolio Trust PLC
25 June 2007
For Immediate Release 25th June 2007
BRITISH PORTFOLIO TRUST plc
ANNOUNCEMENT OF UNAUDITED INTERIM RESULTS
For the period from 1st November 2006 to 30th April 2007
Net Asset Value
A summary of the results for the period from 1st November 2006 to 30th April
2007 is set out below. The Net Asset Value (NAV) per Ordinary Share as at 30th
April 2007 was 194.7p. This represents an increase of 5.6% over the NAV as at
31st October 2006. Over the same period the Company's benchmark index, the FTSE
All-Share Index, rose by 6.9%.
Interim and Special Dividend
On 3rd May 2007 the Board declared an interim dividend of 1.75p per Ordinary
Share (compared to 1.75p last year), which absorbed £688,854 and was paid on
14th June 2007 to all holders of Ordinary Shares on the Register of Members at
the close of business on 18th May 2007.
On 3rd May 2007 the Board also declared a special dividend of 1.25p per Ordinary
Share which absorbed £492,039 and was paid on 14th June 2007 to all holders of
Ordinary Shares on the Register of Members at the close of business on 18th May
2007. This amended timetable and special dividend reflect the fact that the
Company successfully participated in proposals to offer new shares to loan
noteholders of Greene King Acquisitions (No. 3) Limited. These dividend
payments were made to avoid diluting existing shareholders. Under these
proposals 2,914,502 Ordinary Shares were transferred out of treasury at
199.7337p per Ordinary Share to new shareholders on 23rd May 2007.
Market Review and Outlook
Equity markets continued to perform well during the period with strong earnings
reports and merger and acquisition activity remaining at high levels. This
acquisition activity has moved up into the FTSE 100 Index and away from being
just a mid and small cap phenomenon. The main reason is that the availability of
capital from the credit markets remains buoyant. Large private equity firms
have taken advantage of this, and in the foreseeable future we see no slowdown.
Managements have responded to the threat of takeovers by increasing their
dividend pay out ratios and in some cases, including Smiths Group and Reed
Elsevier, have instigated value creating disposal strategies.
We have seen two further interest rate rises over the period taking UK base
rates to 5.5%. CPI inflation in the 12 months to March 2007 was 3.1%, which is
above the Monetary Policy Committee's target, and accordingly it responded with
a second rate rise in this reporting period. There is now a likelihood that
borrowing costs will have to go up further this year, with businesses now
showing more confidence in their ability to raise prices. Wage inflation has so
far been muted, but with the economy remaining strong and labour markets tight,
this may become a feature later in the year. The interest rate rises have
already had an impact on parts of the economy, with the housing market showing
signs of slowing down. The commercial property market is no longer seeing a
downward shift in yields and parts of the sector which are not in prime
locations are failing to sell at the levels seen earlier in the year. On the
positive side for inflation, retail electricity and gas prices are now seeing
phased price cuts. Commodities saw price falls in February but have since
recovered strongly with Chinese demand remaining firm.
In May the Government released its Energy White Paper which focused on cutting
Britain's carbon emissions and looking at increasing the security of future
energy supply. This focus by the Government is likely to increase with time and
has led the Manager to invest in companies with exposure to this improving
environment.
We also initiated positions in 3i, Standard Life and Galliford Try during the
period under review. 3i is one of Europe's leading private equity investors and
should continue to produce good returns. Standard Life has significant
exposure to the fast growing individual SIPP market where they have 'first mover
' advantage. The fund participated in the equity placing by Galliford Try to
buy Linden Homes, which provides them with the opportunity to grow their
housebuilding division more quickly. The company also has exposure to
construction and regeneration markets which are both seeing increased spending.
Disposals included Tullett Prebon, post the de-merger from Collins Stewart,
and William Hill. The holding in Savills was sold on valuation grounds
following strong share price performance.
Over the period the fund's overweighting to the utilities sector negatively
affected performance relative to the index as the sector was impacted by the
increase of bond yields in the UK and US. The longer term prospects for the
sector remain attractive, however, given above average dividend yields and the
prospect of further pan European consolidation. Merger and acquisition activity
has remained high in the UK and the fund benefited from the takeovers of Hanson
and BDI Mining. Unfortunately we did not hold either Reuters or Alliance
Boots, which also received approaches.
The data from the US is mixed with the housing market remaining subdued and
employment growth slowing. So far we have not seen the slowdown in the US spill
over into the rest of the world, and in general we expect companies who have
globally spread businesses to make up any slowdown in the US with better sales
elsewhere in the world. Indeed parts of Europe are recovering strongly and also
China continues to show high levels of growth. Although concerns exist about
the outlook for inflation and interest rates, valuations appear realistic and
company profits remain buoyant, and these factors should help support equity
markets.
Share Buybacks and Treasury Transactions
During the period under review 1,464,866 Ordinary Shares were purchased for
cancellation at a cost of £2,673,501, (including 871,666 Ordinary Shares
purchased into treasury at a cost of £1,578,298), at an average discount of
around 3.5%. 10,000 Ordinary Shares held in treasury were cancelled during the
period. In the period from 1st May 2007 until 25th June 2007 a further 75,000
Ordinary Shares have been purchased for cancellation at a cost of £144,512
(including 20,000 Ordinary Shares into treasury at a cost of £38,678).
2,914,502 Ordinary Shares have also been released from treasury.
155 Bishopsgate By Order of the Board
London EC2M 3AD P W I Ingram
25th June 2007 Secretary
SUMMARY OF RESULTS
INCOME STATEMENT
Six months ended 30th April 2007
Revenue Capital Total
Return
£'000s £'000s £'000s
(Note 2)
Net gains on investments at fair value - 4,564 4,564
Income 1,416 - 1,416
Investment management fee (148) (358) (506)
Administration expenses (111) (2) (113)
Net return before finance costs and taxation 1,157 4,204 5,361
Finance costs : interest payable and similar charges (50) (144) (194)
Net return on ordinary activities before taxation 1,107 4,060 5,167
Taxation (1) - (1)
Net return attributable to Ordinary Shareholders 1,106 4,060 5,166
Return per Ordinary Share (Note 1) 2.76p 10.14p 12.90p
(basic and undiluted)
BALANCE SHEET
As at 30th April 2007
£'000s
Investments at fair value through profit or loss 78,803
Interest Rate Swaps at fair value through profit or loss (29)
Net Current Assets 3,862
Total Assets less Current Liabilities 82,636
Creditors - Amounts falling due after one year (6,000)
Total Net Assets 76,636
Called up Share Capital 437
Share Premium Account 13,388
Special Reserve 39,903
Capital Redemption Reserve 112
Capital Reserves - Realised 6,269
Unrealised 14,553
Hedging Reserve (82)
Revenue Reserve 2,056
Shareholders' Funds 76,636
Net Asset Value per Ordinary Share 194.7p
The net asset value is based on 39,363,108 Ordinary Shares in issue.
An additional 4,361,666 Ordinary Shares were held in treasury.
SUMMARY OF RESULTS
INCOME STATEMENT
Six months ended 30th April 2006
Revenue Capital Total
Return
£'000s £'000s £'000s
(Note 2)
Net gains on investments at fair value - 11,665 11,665
Income 1,426 - 1,426
Investment management fee (149) (358) (507)
Administration expenses (83) (2) (85)
Net return before finance costs and taxation 1,194 11,305 12,499
Finance costs : interest payable and similar charges (47) (140) (187)
Net return on ordinary activities before taxation 1,147 11,165 12,312
Taxation (1) - (1)
Net return attributable to Ordinary Shareholders 1,146 11,165 12,311
Return per Ordinary Share (Note 1) 2.66p 25.96p 28.62p
(basic and undiluted)
BALANCE SHEET
As at 30th April 2006
£'000s
Investments at fair value through profit or loss 80,897
Interest Rate Swaps at fair value through profit or loss 85
Net Current Assets 4,485
Total Assets less Current Liabilities 85,467
Creditors - Amounts falling due after one year (6,000)
Total Net Assets 79,467
Called up Share Capital 453
Share Premium Account 12,379
Special Reserve 46,259
Capital Redemption Reserve 91
Capital Reserves - Realised 2,010
Unrealised 16,444
Hedging Reserve 85
Revenue Reserve 1,746
Shareholders' Funds 79,467
Net Asset Value per Ordinary Share 187.5 p
The net asset value is based on 42,385,669 Ordinary Shares in issue.
An additional 2,887,333 Ordinary Shares were held in treasury.
SUMMARY OF RESULTS
INCOME STATEMENT
for the year to 31st October 2006
Revenue Capital Total
Return
£'000s £'000s £'000s
(Note 2)
Net gains on investments at fair value - 10,410 10,410
Income 2,768 - 2,768
Investment management fee (298) (718) (1,016)
Administration expenses (179) (4) (183)
Net return before finance costs and taxation 2,291 9,688 11,979
Finance costs: interest payable and similar (72) (215) (287)
charges
Net return on ordinary activities before taxation 2,219 9,473 11,692
Taxation (1) - (1)
Net return attributable to Ordinary Shareholders 2,218 9,473 11,691
Return per Ordinary Share (Note 1) 5.21p 22.25p 27.46p
BALANCE SHEET
As at 31st October 2006
£'000s
Investments at fair value through profit or loss 81,281
Interest Rate Swaps at fair value through profit or loss (30)
Net Current Liabilities (1)
Total Assets less Current Liabilities 81,250
Creditors- Amounts falling due after one year (6,000)
Total Net Assets 75,250
Called up Share Capital 443
Share Premium Account 13,388
Special Reserve 42,576
Capital Redemption Reserve 106
Capital Reserves - Realised 3,181
Unrealised 13,581
Hedging Reserve (107)
Revenue Reserve 2,082
Shareholders' Funds 75,250
Net Asset Value per Ordinary Share 184.3p
The net asset value is based on 40,827,974 Ordinary Shares in issue.
An additional 3,500,000 Ordinary Shares were held in treasury.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the six months ended 30th April 2007 and comparative periods
Called up Share Capital Capital Capital
Share Premium Special Redemption Reserve Reserve Hedging Revenue
Capital Account Reserve Reserve Realised Unrealised Reserve Reserve Total
(£'000s) (£'000s) (£'000s) (£'000s) (£'000s) (£'000s) (£'000s) (£'000s) (£'000s)
Six months ended 30th April
2007
Net Assets at 31st October
2006 443 13,388 42,576 106 3,181 13,581 (107) 2,082 75,250
Amortization of Hedging
Reserve - - - - - - 25 - 25
Revenue Return - - - - - - - 1,106 1,106
Shares repurchased during
the period (6) - (2,673) 6 - - - - (2,673)
Dividends on Ordinary - - - - - - - (1,132) (1,132)
Shares
Capital Return - - - - 3,088 972 - - 4,060
Net Assets at 30th April 437 13,388 39,903 112 6,269 14,553 (82) 2,056 76,636
2007
Six months ended 30th April
2006
Net Assets at 31st October 460 12,379 51,067 84 (1,055) 8,396 - 1,626 72,957
2005
Adjustments to record
investments at bid value - - - - - (52) - - (52)
Recognition of Interest - - - - - - 85 - 85
Rate Swaps
Revenue Return - - - - - - - 1,146 1,146
Shares repurchased during
the period (7) - (4,808) 7 - - - - (4,808)
Dividends on Ordinary - - - - - - - (1,026) (1,026)
Shares
Capital Return - - - - 3,065 8,100 - - 11,165
Net Assets at 30th April
2006 453 12,379 46,259 91 2,010 16,444 85 1,746 79,467
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the six months ended 30th April 2007 and comparative periods
Called up Share Capital Capital Capital continued
Share Premium Special Redemption Reserve Reserve Hedging Revenue
Capital Account Reserve Reserve Realised Unrealised Reserve Reserve Total
(£'000s) (£'000s) (£'000s) (£'000s) (£'000s) (£'000s) (£'000s) (£'000s) (£'000s)
Year ended 31st October
2006
Net Assets at 31st October
2005 460 12,379 51,067 84 (1,055) 8,396 - 1,626 72,957
Adjustments to record
investments at bid value - - - - - (52) - - (52)
Recognition of Interest - - - - - - (107) - (107)
Rate Swaps
Revenue Return - - - - - - - 2,218 2,218
Shares repurchased during (22) - (8,491) 22 - - - - (8,491)
the year
Shares issued during the 5 1,009 - - - - - - 1,014
year
Dividends on Ordinary - - - - - - - (1,762) (1,762)
Shares
Capital Return - - - - 4,236 5,237 - - 9,473
Net Assets at 31st October
2006 443 13,388 42,576 106 3,181 13,581 (107) 2,082 75,250
SUMMARY OF RESULTS
CASH FLOW STATEMENT
For the six months ended 30th April 2007 and comparative periods
Six Months to Six Months to Year to
30th April 30th April 31st October
2007 2006 2006
£'000s £'000s £'000s
Net cash inflow from operating activities 260 736 2,364
Servicing of finance
Interest paid (128) (202) (393)
Financial Investment
Purchases of fixed asset investments (12,307) (13,734) (28,057)
Sales of fixed asset investments 18,280 15,070 29,007
Net cash inflow from financial investment 5,973 1,336 950
Equity dividends paid (1,132) (1,026) (1,762)
Net cash inflow before financing 4,973 844 1,159
Financing
Purchase of Ordinary Shares for cancellation and held
in treasury (2,673) (4,808) (8,491)
Cash transferred from Allianz Dresdner Second Endowment
Policy Trust plc in connection with the issue of
Ordinary Shares - - 68
Net cash outflow from financing (2,673) (4,808) (8,423)
Increase (Decrease) in cash 2,300 (3,964) (7,264)
TWENTY LARGEST EQUITY HOLDINGS
As at 30th April 2007
Valuation % of Total Principal Activities
£'000s Assets*
BP 4,777 5.78 Oil & Gas
GlaxoSmithKline 4,330 5.24 Pharmaceuticals & Biotechnology
Royal Dutch Shell 'B' Shares 3,720 4.50 Oil & Gas
Vodafone Group 3,313 4.01 Mobile Telecommunications
Energy XXI 3,255 3.94 Oil & Gas
HSBC Holdings 3,107 3.76 Banks
Royal Bank of Scotland 2,881 3.49 Banks
Anglo American 2,208 2.67 Mining
AstraZeneca 2,080 2.52 Pharmaceuticals & Biotechnology
Barclays 2,044 2.47 Banks
BT Group 1,978 2.39 Fixed Line Telecommunications
National Grid 1,893 2.29 Gas, Water & Multiutilities
Prudential 1,843 2.23 Life Insurance
Marks & Spencer 1,588 1.92 General Retailers
BG Group 1,492 1.81 Oil & Gas
British American Tobacco 1,484 1.80 Tobacco
Xstrata 1,373 1.66 Mining
Morgan Crucible 1,361 1.65 Electronic & Electrical Equipment
Imperial Tobacco 1,349 1.63 Tobacco
Scottish & Southern Energy 1,208 1.46 Electricity
47,284 57.22
PORTFOLIO ANALYSIS
As at 30th April 2007
Sector Valuation % of Total
£000s Assets*
Financials 19,280 23.33
Oil & Gas 14,432 17.46
Industrials 7,866 9.52
Consumer Services 7,724 9.35
Healthcare 7,340 8.88
Utilities 5,751 6.96
Basic Materials 5,451 6.60
Telecommunications 5,291 6.40
Consumer Goods 5,240 6.34
Information Technology 428 0.52
Interest Rate Swap (29) (0.03)
Net Current Assets 3,862 4.67
82,636 100.00
* Total Assets are stated net of current liabilities.
Note 1
The return per Ordinary Share is based on a weighted average number of shares in
issue of 40,057,775 (30th April 2006: 43,015,328; 31st October 2006:
42,580,602).
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 on purchases which
amounted to £72,186 (30th April 2006: £82,618; 31st October 2006: £147,346) and
transaction costs on sales which amounted to £27,507 (30th April 2006: £21,533;
31st October 2006: £48,271).
Note 3
Investments are designated as held at fair value through profit or loss in
accordance with FRS 26 'Financial Instruments: Measurement'. Listed investments
are valued at bid market prices.
Interest rate swaps are held at fair value through profit or loss.
Note 4
Dividends paid on Ordinary Shares in respect of earnings for each period are as
follows:
Six months to Six months to Year to
30th April 2007 30th April 2006 31st October 2006
Final dividend 2.85p paid 2nd March 2007 1,132 1,026 1,026
(2006-2.40p)
Interim dividend 1.75p paid 6th September 2006 - - 736
1,132 1,026 1,762
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 to Six months to Year to
30th April 2007 30th April 2006 31st October 2006
Interim dividend 1.75p payable 14th June 2007
(2006-1.75p) 689 742 -
Special dividend 1.25p payable 14th June 2007 (2006
- Nil) 492 - -
Final dividend 2.85p - - 1,164
1,181 742 1,164
The interim and special 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 interim statement has neither been audited nor reviewed by the Company's
auditors. The financial information for the year ended 31st October 2006 has
been extracted from the statutory accounts of the Company for that year which
have been delivered to the Registrar of Companies. The Auditors' Report on those
accounts was unqualified and did not contain a statement under Section 237 (2)
or (3) of the Companies Act 1985.
The Interim 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:-
Simon White
RCM (UK) Limited
Tel: 020 7065 1539
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