Half Yearly Report

RNS Number : 3722Y

F&C Managed Portfolio Trust PLC

23 January 2014

 



To:      RNS

Date:  23 January 2014

From: F&C Managed Portfolio Trust plc

Interim Results

The Board of F&C Managed Portfolio Trust plc announces the unaudited interim results of the Company for the six month period to 30 November 2013.

Chairman's Statement

Highlights

•        A period of positive net asset value total returns; 2.9% for the Income shares and 7.0% for the Growth shares

•        First two interim dividends for the financial year each of 1.1 pence per Income share

•        Income share dividend yield of 4.0% at 30 November 2013

Investment performance

For the six months to 30 November 2013, the net asset value (NAV) total return was 2.9% for the Income shares and 7.0% for the Growth shares.  The total return for the benchmark index for both Portfolios, the FTSE All-Share Index, was 3.9% while the Investment Company sector, as measured by the FTSE Equity Investment Instruments Index, returned 3.1%.

Against a background of gradual economic recovery, particularly in the US and UK, equity markets   made modest headway. The dominating influence on investor sentiment was when the Federal Reserve in the US was going to start tapering its policy of Quantitative Easing which has been so supportive of equity markets across the globe. This led to an undue focus on short term data releases causing unusual volatility in equity markets.

The other notable feature was the unexpected strength of Sterling which rose by 8% against the Dollar, 9.5% against the Yen and 3.4% against the Euro. This trend served to reduce sterling returns from many overseas markets. With over half the assets of the Investment Company sector being invested overseas this went some way to explaining the slight underperformance of the sector relative to the FTSE All-Share Index.

Whilst the Income Portfolio nearly held its own against the benchmark index and that of the Investment Company sector, the Growth Portfolio strongly outperformed. The key themes driving    its performance were technology and UK mid and small cap equities. The best performer was RCM Technology Trust which rose by 28% whilst other technology trusts, Herald Investment Trust and Polar Capital Technology Trust also contributed strongly. In the UK mid and small cap area the   top performer was Schroder UK Mid Cap Fund which gained 26% followed by Diverse Income Trust and BlackRock Throgmorton Trust both of which rose around 20%.

An absence of dividend yield makes it difficult for the Income Portfolio to gain exposure in these   sectors. The regions of notable underperformance were the Pacific (ex Japan) and Emerging Markets as investors became concerned over the prospects for growth once the US began to taper its monetary stimulus. This was reflected particularly in the Income Portfolio with underperformance from Aberdeen Asian Income Fund which fell 12% and similar declines from Schroder Oriental Income Fund and Murray International Trust.

Revenue and dividends

The Company's net revenue return for the six month period was £740,000 which is equivalent to 2.76p per Income share (compared to 2.55p per Income share for the corresponding period in 2012). Income shares are entitled to all the dividends paid by the Company which are paid quarterly in October, January, April and July each year.

The Company has declared a first and second interim dividend in respect of the year to 31 May 2014, each of 1.1p per Income share (1.1p per Income share in the prior periods).

The second interim dividend was paid to Income shareholders on 3 January 2014, after the period end.

The Board intends to pay three interim dividends, each of 1.1p per Income share in the current financial year. The amount of the fourth interim dividend will be determined when a clearer view of income for the year emerges. The annual rate of 4.6p per Income share paid in the prior year represents a yield on the Income share price at 30 November 2013 of 4.0%.

Discount to NAV and share buy-backs

In normal circumstances we aim to maintain our discount at not more than 5% by buying back shares from time to time. During the six months to 30 November 2013 we have been able to maintain an average discount of 0.3% for the Income shares and 1.8% for the Growth shares. At 30 November 2013, the Income shares stood at a discount of 2.5% to NAV and the Growth shares at a discount of 0.8%.

Alternative Investment Fund Managers Directive ("AIFMD")

Shareholders may be aware of the introduction of the AIFMD. The Company is an 'alternative investment fund' (AIF), as defined by the AIFMD. This directive, which originates from the European  Commission, imposes significant regulation on the management and operations of AIFs and is effective, subject  to  transitional  provisions, from 22 July 2013. The Investment Manager has expressed a willingness to act as the Company's Alternative Investment Fund Manager, at no additional cost to the Company. Under the Directive, the Company is also required to appoint a Depositary and the Board is well advanced in addressing this. Although the use of a depository will result in additional cost to the Company, the Board does not expect this to be significant.

Outlook

As we move into 2014, economic recovery is strengthening in the US and UK whilst in the Euro zone it appears to be stabilising. In contrast, growth in the Asia Pacific region and China has been slowing although from higher levels. Monetary policy is likely to remain broadly stimulative albeit at a gradually reducing rate. At the start of the New Year, economists' forecasts for the developed countries are almost universally positive, which given their poor record for accuracy, is somewhat disturbing.

Nonetheless, rising activity gives more confidence in earnings growth for 2014. Even with bond yields rising, equities remain attractively valued relative to bonds and although no longer cheap they are not expensive in a historical context. On balance, this is an environment which should result in positive returns for equities. Both portfolios will remain focussed on the best managed investment companies in the belief that over the longer term they will deliver superior returns.

Richard M Martin

Chairman

23 January 2014

Unaudited Condensed Income Statement

Six months to 30 November 2013

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Gains on investments		-	2,440	2,440
Income	2	962	-	962
Investment management and performance fee	3	(61)	(146)	(207)
Other expenses		(152)	-	(152)
Return on ordinary activities before finance           costs and tax		749	2,294	3,043
Finance costs		(5)	(9)	(14)
Return on ordinary activities before tax		744	2,285	3,029
Tax on ordinary activities		(4)	-	(4)
Return attributable to shareholders		740	2,285	3,025
Return per Income share (pence)	4	2.76p	0.45p	3.21p
Return per Growth share (pence)	4	-	8.67p	8.67p

The total column of this statement is the Profit and Loss Account of the Company.

The supplementary revenue and capital columns are prepared under the guidance published by The Association of Investment Companies.

All revenue and capital items in the Income Statement derive from continuing operations.

Unaudited Condensed Income Statement

Six months to 30 November 2012

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Gains on investments		-	5,571	5,571
Income	2	928	-	928
Investment management and performance fee	3	(50)	(122)	(172)
Other expenses		(190)	-	(190)
Return on ordinary activities before finance costs and tax		688	5,449	6,137
Finance costs		(3)	(5)	(8)
Return on ordinary activities before tax		685	5,444	6,129
Tax on ordinary activities		(1)	-	(1)
Return attributable to shareholders		684	5,444	6,128
Return per Income share (pence)	4	2.55p	9.57p	12.12p
Return per Growth share (pence)	4	-	11.15p	11.15p

The total column of this statement is the Profit and Loss Account of the Company. 

The supplementary revenue and capital columns are prepared under guidance published by The Association of Investment Companies.

All revenue and capital items in the Income Statement derive from continuing operations.

Condensed Income Statement (audited)

Year to 31 May 2013

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Gains on investments		-	14,907	14,907
Income	2	1,920	-	1,920
Investment management and performance fee	3	(108)	(337)	(445)
Other expenses		(410)	-	(410)
Return on ordinary activities before finance costs and tax		1,402	14,570	15,972
Finance costs		(7)	(12)	(19)
Return on ordinary activities before tax		1,395	14,558	15,953
Tax on ordinary activities		(5)	-	(5)
Return attributable to shareholders		1,390	14,558	15,948
Return per Income share (pence)	4	5.20p	25.30p	30.50p
Return per Growth share (pence)	4	-	30.60p	30.60p

The total column of this statement is the Profit and Loss Account of the Company.

The supplementary revenue and capital columns are prepared under the guidance published by The Association of Investment Companies.

All revenue and capital items in the Income Statement derive from continuing activities.

Unaudited Condensed Balance Sheet

As at 30 November 2013

	Notes	Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Non-current assets
Investments at fair value		33,023	33,702	66,725
Current assets
Debtors		83	46	129
Cash at bank and on deposit		-	-	-
		83	46	129
Creditors
Amounts falling due within one year		(1,256)	(483)	(1,739)
Net current liabilities		(1,173)	(437)	(1,610)
Net assets		31,850	33,265	65,115
Capital and reserves
Called-up share capital	6	2,736	2,740	5,476
Share premium		5,033	7,922	12,955
Capital redemption reserve		-	182	182
Special reserve		18,920	14,696	33,616
Capital reserves		4,352	7,725	12,077
Revenue reserve		809	-	809
Shareholders' Funds	7	31,850	33,265	65,115
Net asset value per share (pence)	7	118.49p	133.51p

Unaudited Condensed Balance Sheet

As at 30 November 2012

	Notes	Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Non-current assets
Investments at fair value		27,938	26,764	54,702
Current assets
Debtors		96	22	118
Cash at bank and on deposit		-	253	253
		96	275	371
Creditors
Amounts falling due within one year		(992)	(85)	(1,077)
Net current (liabilities)/assets		(896)	190	(706)
Net assets		27,042	26,954	53,996
Capital and reserves
Called-up share capital		2,736	2,740	5,476
Share premium		4,967	7,876	12,843
Capital redemption reserve		-	182	182
Special reserve		18,709	15,518	34,227
Capital reserves		40	638	678
Revenue reserve		590	-	590
Shareholders' Funds	7	27,042	26,954	53,996
Net asset value per share (pence)	7	101.45p	105.15p

Condensed Balance Sheet (audited)

As at 31 May 2013

		Income Shares	Growth Shares	Total
	Notes	£'000	£'000	£'000
Non-current assets
Investments at fair value		31,934	31,732	63,666
Current assets
Debtors		54	31	85
Cash at bank and on deposit		-	-	-
		54	31	85
Creditors
Amounts falling due within one year		(650)	(556)	(1,206)
Net current liabilities		(596)	(525)	(1,121)
Net assets		31,338	31,207	62,545
Capital and reserves
Called-up share capital		2,736	2,740	5,476
Share premium		4,978	7,876	12,854
Capital redemption reserve		-	182	182
Special reserve		18,683	14,847	33,530
Capital reserves		4,230	5,562	9,792
Revenue reserve		711	-	711
Shareholders' Funds	7	31,338	31,207	62,545
Net asset value per share (pence)	7	117.68p	124.78p

Unaudited Condensed Statement of Cash Flows

Six months to 30 November 2013

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Net cash inflow from operating activities		338	62	400
Cash outflow from servicing of finance		(11)	(3)	(14)
Net cash (outflow)/inflow from financial investment		(715)	96	(619)
Equity dividends paid		(642)	-	(642)
Net cash (outflow)/inflow before financing		(1,030)	155	(875)
Net cash inflow/(outflow) from financing		292	(105)	187
(Decrease)/increase in cash		(738)	50	(688)
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash as above		(738)	50	(688)
Opening net debt		(421)	(430)	(851)
Closing net debt		(1,159)	(380)	(1,539)
Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities
Net return before finance costs and taxation		876	2,167	3,043
Withholding tax suffered		(3)	(1)	(4)
Gains on investments		(374)	(2,066)	(2,440)
Changes in working capital and other non-cash   items		(161)	(38)	(199)
Net cash inflow from operating activities		338	62	400

Unaudited Condensed Statement of Cash Flows

Six months to 30 November 2012

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Net cash inflow from operating activities		459	106	565
Cash outflow from servicing of finance		(9)	-	(9)
Net cash inflow from financial investment		25	194	219
Equity dividends paid		(685)	-	(685)
Net cash (outflow)/inflow before financing		(210)	300	90
Net cash outflow from financing		(225)	(318)	(543)
Decrease in cash		(435)	(18)	(453)
Reconciliation of net cash flow to movement in net (debt)/cash
Decrease in cash as above		(435)	(18)	(453)
Opening net (debt)/cash		(440)	271	(169)
Closing net (debt)/cash		(875)	253	(622)
Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities
Net return before finance costs and taxation		3,262	2,875	6,137
Withholding tax suffered		(1)	-	(1)
Gains on investments		(2,767)	(2,804)	(5,571)
Changes in working capital and other non-cash       items		(35)	35	-
Net cash inflow from operating activities		459	106	565

Condensed Statement of Cash Flows (audited)

Year to 31 May 2013

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Net cash inflow from operating activities		1,023	223	1,246
Cash outflow from servicing of finance		(18)	(1)	(19)
Net cash inflow from financial investment		524	67	591
Equity dividends paid		(1,270)	-	(1,270)
Net cash inflow before financing		259	289	548
Net cash outflow from financing		(240)	(990)	(1,230)
Increase/(decrease) in cash		19	(701)	(682)
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash as above		19	(701)	(682)
Opening net (debt)/cash		(440)	271	(169)
Closing net debt		(421)	(430)	(851)
Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities
Net return before finance costs and taxation		8,170	7,802	15,972
Withholding tax suffered		(3)	(2)	(5)
Gains on investments		(7,262)	(7,645)	(14,907)
Changes in working capital and other non-cash   items		118	68	186
Net cash inflow from operating activities		1,023	223	1,246

Unaudited Condensed Reconciliation of Movements in Shareholders' Funds

Six months to 30 November 2013

Notes		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Opening shareholders' funds		31,338	31,207	62,545
Shares sold from treasury		292	220	512
Shares purchased for treasury		-	(325)	(325)
Transfer of net income from Growth shares to   Income shares		184	(184)	-
Transfer of capital from Income shares to Growth   shares		(184)	184	-
Dividends paid	5	(642)	-	(642)
Return attributable to shareholders		862	2,163	3,025
Closing shareholders' funds		31,850	33,265	65,115

Unaudited Condensed Reconciliation of Movements in Shareholders' Funds

Six months to 30 November 2012

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Opening shareholders' funds		24,692	24,385	49,077
Shares purchased for treasury		(218)	(306)	(524)
Transfer of net income from Growth shares to   Income shares		137	(137)	-
Transfer of capital from Income shares to Growth   shares		(137)	137	-
Dividends paid		(685)	-	(685)
Return attributable to shareholders		3,253	2,875	6,128
Closing shareholders' funds		27,042	26,954	53,996

Condensed Reconciliation of Movements in Shareholders' Funds

Year to 31 May 2013 (audited)

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Opening shareholders' funds		24,692	24,385	49,077
Shares sold from treasury		59	-	59
Shares purchased for treasury		(292)	(977)	(1,269)
Transfer of net income from Growth shares to   Income shares		298	(298)	-
Transfer of capital from Income shares to Growth   shares		(298)	298	-
Dividends paid		(1,270)	-	(1,270)
Return attributable to shareholders		8,149	7,799	15,948
Closing shareholders' funds		31,338	31,207	62,545

 Statement of Principal Risks and Uncertainties

The Company's assets consist mainly of listed equity securities and its principal risks are therefore market-related.  The most important types of risk associated with financial instruments are credit risk, market price risk, liquidity risk, interest rate risk and foreign currency risk.  Other risks faced by the Company include external, investment and strategic, regulatory, operational and financial risks.

These risks, and the way in which they are managed, are described in more detail under the heading "Principal risks and risk management" within the Report of the Directors in the Company's 2013 Annual Report. 

The Company's principal risks and uncertainties have not changed materially since the date of that report and are not expected to change materially for the remainder of the Company's financial year.

Statement of Directors' Responsibilities in Respect of the Interim Report

We confirm, that to the best of our knowledge:

·      the condensed set of financial statements have been prepared in accordance with the Statement 'Half-Yearly Financial Reports' issued by the UK Accounting Standards Board and  give a true and fair view of the assets, liabilities, financial position and return of the Company;

·      the Chairman's Statement (constituting the Interim Management Report) together with the Statement of Principal Risks and Uncertainties shown above include a fair review of the information required by the Disclosure and Transparency Rules ('DTR') 4.2.7R, being an indication of important events that have occurred during the first six months of the financial year and their impact on the financial statements; and

·      the condensed set of financial statements include a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during the period, and any changes in the related party transactions described in the last Annual Report that could do so.

On behalf of the Board

Richard M. Martin

Director

23 January 2014

Notes

1.  Accounting Policies

The unaudited interim results have been prepared on the basis of the accounting policies set out in the Company's statutory financial statements for the year ended 31 May 2013. These accounting policies are expected to be followed throughout the year ending 31 May 2014.

2.  Income

	Six months to 30 November 2013	Six months to 30 November 2012	Year to 31 May 2013
	£'000	£'000	£'000
UK dividends	617	582	1,324
Overseas dividends	336	334	575
Interest on fixed   interest securities	9	10	18
Deposit interest	-	2	3
Total income	962	928	1,920

3.  Investment management and performance fee

    There have been no changes to the terms of the management and performance fee arrangements with F&C Investment Business Limited, which are set out in detail in the Annual Report and Accounts to 31 May 2013. 

    During the period, the Company has incurred investment management fees of £207,000, (30 November 2012: £166,000; 31 May 2013: £359,000) of which £107,000 is payable to F&C Investment Business Limited at the period end.  

    At 30 November 2013 the total return of the Income Portfolio (for the six months) and the Growth Portfolio (since launch) did not exceed that of the FTSE All-Share Index and a performance fee has not been recognised in either portfolio (30 November 2012: £6,000 - Income Portfolio and £nil - Growth Portfolio; 31 May 2013: £86,000 - Income Portfolio and £nil - Growth Portfolio).                                                  

4.  Return per share

     The return per share for the six months to 30 November 2013 is as follows:

	Income Shares			Growth Shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to   Portfolios	556	306	862	184	1,979	2,163
Transfer of net income from   Growth to Income Portfolio	184	-	184	(184)	-	(184)
Transfer of capital from   Income to Growth Portfolio	-	(184)	(184)	-	184	184
Return attributable to   shareholders	740	122	862	-	2,163	2,163
Return per share	2.76p	0.45p	3.21p	-	8.67p	8.67p
Weighted average number of shares in issue during the period		26,829,116			24,960,198

     The return per share for the comparative six months to 30 November 2012 is as follows:

	Income Shares			Growth Shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to   shareholders	684	2,569	3,253	-	2,875	2,875
Return per share	2.55p	9.57p	12.12p	-	11.15p	11.15p
Weighted average number of shares in issue during the period		26,837,040			25,779,105

The return per share for the comparative year to 31 May 2013 is as follows:

	Income Shares			Growth Shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to   shareholders	1,390	6,759	8,149	-	7,799	7,799
Return per share	5.20p	25.30p	30.50p	-	30.60p	30.60p
Weighted average number of shares in issue during the period		26,715,073			25,484,706

5.    Dividends

	Six months to 30 November 2013	Six months to 30 November 2012	Year to 31 May 2013
Dividends on Income Shares	£'000	£'000	£'000
Amounts recognised as distributions during the period:
In respect of the previous financial year:
- special interim (prior period: 0.3p per share)	-	67	67
- fourth interim of 1.3p (prior period: 1.2p) per share	346	323	323
In respect of the period under review:
- first interim of 1.1p (prior period: 1.1p) per share	296	295	295
- second interim (prior period: 1.1p per share)	-	-	293
- third interim (prior period: 1.1p per share)	-	-	292
	642	685	1,270

       A second interim dividend in respect of the year to 31 May 2014 of 1.1p per Income share was paid on 3 January 2014 to shareholders on the register on 20 December 2013. This amount has not been accrued in the results for the six months to 30 November 2013.

       For the financial year to 31 May 2013 interim dividends totalled 4.6p per Income share.

       The Growth shares do not carry an entitlement to receive dividends.

6.    Share capital

	Listed		Held in Treasury		In issue
	Number	£'000	Number	£'000	Number	£'000
Income shares of 10p each
Balance at 1 June 2013	27,364,936	2,736	(735,000)	(73)	26,629,936	2,663
Resold out of treasury	-	-	250,000	25	250,000	25
Balance at 30 November 2013	27,364,936	2,736	(485,000)	(48)	26,879,936	2,688

During the period the Company bought back nil (30 November 2012: 225,000; 31 May 2013: 300,000) Income shares to be held in treasury and resold out of treasury 250,000 (30 November 2012: nil; 31 May 2013: 50,000) Income shares.

At 30 November 2013 the Company held 485,000 Income shares in treasury. 

	Listed		Held in Treasury		In issue
	Number	£'000	Number	£'000	Number	£'000
Growth shares of 10p each
Balance at 1 June 2013	27,404,843	2,740	(2,395,000)	(239)	25,009,843	2,501
Purchased to be held in treasury	-	-	(270,000)	(27)	(270,000)	(27)
Resold out of treasury	-	-	175,000	17	175,000	17
Balance at 30 November 2013	27,404,843	2,740	(2,490,000)	(249)	24,914,843	2,491
Total	54,769,779	5,476	(2,975,000)	(297)	51,794,779	5,179

  During the period the Company bought back 270,000 (30 November 2012: 315,000; 31 May 2013: 940,000) Growth shares to be held in treasury and resold out of treasury 175,000 (30 November 2012: nil; 31 May 2013: nil).

At 30 November 2013 the Company held 2,490,000 Growth shares in treasury. 

7.    Net asset value per share

	30 November 2013	30 November 2012	31 May 2013
Income shares
Net asset value per share	118.49p	101.45p	117.68p
Net assets attributable at end of   period - £'000s	31,850	27,042	31,338
Shares in issue at end of period - number	26,879,936	26,654,936	26,629,936
Growth shares
Net asset value per share	133.51p	105.15p	124.78p
Net assets attributable at end of   period - £'000s	33,265	26,954	31,207
Shares in issue at end of period - number	24,914,843	25,634,843	25,009,843

8.    Earnings for the six months to 30 November 2013 should not be taken as a guide to the results of the full year to 31 May 2014.

9.    Tax

       The effective revenue tax rate for the period to 30 November 2013 is 0.5 per cent (30 November 2012: 0.1 per cent; 31 May 2013: 0.4 per cent).  This is lower than the rate of corporation tax for small companies due to the level of non-taxable dividend income.

10.   Bank borrowing

       The Company has an unsecured borrowing facility with its custodian JPMorgan Chase Bank.  The facility allows up to 10% of the value of the Company's assets to be borrowed and is repayable on demand and interest is payable at the Sterling Overnight Interbank Average Rate (SONIA) plus 2%.  At 30 November 2013 £1,159,000 (30 November 2012: £875,000; 31 May 2013: £421,000) had been drawn down in the Income Portfolio and £380,000 (30 November 2012: £nil; 31 May 2013: £430,000) in the Growth Portfolio.

11.   Results

       The Company's auditors, Ernst & Young LLP have not audited or reviewed the Interim Report to 30 November 2013 pursuant to the Auditing Practices Board guidance on 'Review of Interim Financial Information'.  These are not full statutory accounts in terms of Section 434 of the Companies Act 2006 and are unaudited.  Statutory accounts for the year ended 31 May 2013, which received an unqualified audit report and which did not contain a statement under Section 498 of the Companies Act 2006, have been lodged with the Registrar of Companies.  The abridged financial statements included for the year ended 31 May 2013 are an extract from those accounts.  No full statutory accounts in respect of any period after 31 May 2013 have been reported on by the Company's auditors or delivered to the Registrar of Companies. The Interim Report will be posted to shareholders shortly and is available on the website: www.fcmanagedportfolio.co.uk 

For further information, please contact:

Peter Hewitt, F&C Investment Business Limited   0131 718 1244

Ian Ridge, F&C Investment Business Limited        0131 718 1010

 

END

 

 

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