Interim Management Statement

RNS Number : 1082Q

Investors Capital Trust PLC

28 July 2010

 



Investors Capital Trust plc

Interim Management Statement

For the three month period from 1 April 2010 to 30 June 2010

Investment objective

To provide an attractive return to shareholders each year in the form of dividends and/or capital distributions, together with prospects for capital growth.

The Company's portfolio is managed in two parts.  The first part comprises investments in UK equities and equity-related securities of large and mid-sized companies (the Equities Portfolio) and the second part comprises investments in fixed interest and other higher yielding stocks and securities (the Higher Yield Portfolio).

Performance summary

Capital return	As at 30 June 2010	As at   31 March 2010	Movement
Total assets	£130.9 million	£142.7 million	(8.3)%
Net asset value:    A share and B share    Unit*	73.8p 295.2p	83.1p 332.4p	(11.2)% (11.2)%
Share price:    A share    B share    Unit	77.0p 79.5p 319.0p	80.0p 89.5p 317.0p	(3.8)% (11.2)% 0.6%
Premium/(discount):   A share   B share   Unit	4.3% 7.7% 8.1%	(3.7)% 7.7% (4.6)%
Gearing**:   Maximum potential ratio   Actual ratio (Investment gearing)     Actual ratio (Equity gearing)	138.9 129.8 89.4	134.6 124.6 87.7
Total return	For the three month period ended 30 June 2010	Period from launch on 1 March 2007 to 30 June 2010
Net asset value:   A and B share and Unit	(9.6)%	(6.1)%
FTSE All-Share Capped 5% Index	(11.1)%	(8.3)%

Sources: F&C Investment Business Limited and Datastream.

* A unit consists of three A shares and one B share

**The gearing ratio indicates the extra amount by which shareholders' funds would rise or fall if total assets were to rise or fall. A figure of 100 means that the Company has a nil geared position.

Maximum potential ratio = the ratio of total assets (including fixed interest and cash assets) to assets attributable to shareholders.

If securities held in the Company's Higher Yield Portfolio are included as fixed interest assets then the actual ratio will be as shown below.

Actual ratio (investment gearing) = the ratio of total assets (less cash assets) to assets attributable to shareholders.

Actual ratio (equity gearing) = the ratio of total assets (less fixed interest and cash assets) to assets attributable to shareholders.

Review

The UK equity market decreased 11.1% during the quarter, as measured by the FTSE All-Share Capped 5% Index on a total return basis.

Following the emergency budget delivered by the new coalition Government, the UK has joined a number of European countries in accelerating efforts to reduce the fiscal deficit.  The scale of the spending cuts proposed by the coalition Government, alongside an increasing tax burden, will put a significant strain on the economy.  The required acceleration in private sector economic activity, to compensate for the shrinkage in the public sector, is still impeded by a banking industry that is reluctant to extend credit.  The contemporaneous nature of European austerity measures will reduce consumption thereby limiting the extent to which UK exports can support economic growth.  The lacklustre outlook for economic activity in Europe only serves to highlight the relative strength of Asian economic growth.

The level of cash held by Investors Capital Trust remained broadly unchanged during the quarter at 7% of total assets resulting in equity gearing of 89% and investment gearing of 130% at the end of June.  We do not envisage any imminent change to the exceptionally low level of interest rates in the UK which provides a powerful support to equity valuations.  As a result, despite the muted outlook for the economy, we continue to see value in equities that offer the prospect of attractive dividend yields that can grow in real terms.  We continue to utilise the opportunity to invest internationally through UK listed companies in order to limit exposure to the challenges facing the UK economy.

Dividends and Capital Distributions

A fourth quarter dividend in respect of the year ended 31 March 2010, of 1.375 pence per share, was paid on the A shares of the Company on 7 May 2010 to A shareholders on the register on 9 April 2010. A fourth quarter capital return of 1.375 pence per share was paid on the B shares of the Company on 7 May 2010 to B shareholders on the register on 9 April 2010.  Capital distributions on B shares are paid at the same time as, and in an amount equal to, each dividend paid on an A share.

The Company announced on 6 July 2010 that as a result of the cumulative impact of dividend cuts during the economic downturn, most notably from the banking sector, together with the recent dividend suspension by BP and also falling corporate bond yields, the Board had determined that it was prudent to revise with immediate effect the Company's dividend level.

The dividend for the year ending 31 March 2011 is estimated, barring unforeseen circumstances, to be 4.28p per share (2010 - 5.35p). The first three quarterly dividends will be paid in equal instalments of 1.06p per share and a fourth quarterly dividend of 1.1p will be paid to A shareholders. B Shareholders will receive capital distributions of the same amount per share at the same time as A shareholders.

Accordingly, the Board has announced a first quarterly dividend of 1.06p per share on the A shares of the Company.  This dividend will be paid on 6 August 2010 to A shareholders on the register on 16 July 2010.  A first quarterly capital distribution of 1.06p per share will be paid on the B shares of the Company on 6 August 2010 to B shareholders on the register on 16 July 2010.

The Directors continue to believe that the yield on the Company's shares, relative to that available from the stockmarket as a whole, will remain attractive for investors.

Share Buy Backs

The Company did not buy back, issue or re-sell any shares during the quarter.

At 30 June 2010 the Company held 6,489,000 A Shares and 25,000 B Shares in treasury.

Top ten Equities Portfolio holdings and top ten Higher Yield Portfolio holdings

Equities Portfolio

Company			Percentage of total assets as at 30 June 2010
GlaxoSmithKline			4.0%
British American Tobacco			3.7%
HSBC			3.7%
Vodafone			3.2%
Royal Dutch Shell			3.0%
AstraZeneca			2.7%
Rio Tinto			2.5%
Diageo			2.3%
National Grid			2.1%
BHP Billiton			2.1%
Total			29.3%

Higher Yield Portfolio

Security			Percentage of total assets as at 30 June 2010
Iron Mountain 7.25% 15/04/14			0.7%
Land Securities 4.625% 03/02/13			0.5%
RWE Finance 6.375% 03/06/13			0.5%
Skipton Building Society 2% 04/05/12			0.4%
Paragon Group 7% 20/04/17			0.4%
Marstons FRN 15/07/20			0.3%
Ineos 7.875% 15/02/16			0.3%
France Telecom 6% 29/03/12			0.3%
Sutton Bridge 8.625% 30/06/22			0.3%
Yorkshire Water 6.5876% 21/02/23			0.3%
Total			4.0%

Portfolio Summary

		Market Value at 30 June 2010 £'000	% of Total Assets at 30 June 2010	% of Total Assets at  31 March 2010
Equities Portfolio		84,251	64.4	65.2
Higher Yield Portfolio		38,063	29.1	27.4
Net Current Assets		8,544	6.5	7.4
Total Assets (less Current Liabilities)		130,858	100.0	100.0
Bank Term Loan & Interest Rate Swap		(36,626)	(28.0)	(25.7)
Net Assets Attributable to Shareholders		94,232	72.0	74.3

The Board is not aware of any significant events or transactions which have occurred since 30 June 2010 and the date of publication of this statement which would have a material impact on the financial position of the Company.

Daily and key information

Further information regarding the Company, including daily net asset values published since the end of the period and monthly factsheets, can be found at the Company's website www.investorscapital.co.uk, or at www.fandc.com.

Year end:                                                                     31 March

Dividends and Capital Distributions paid:                   August, November, February and May

Shares in issue with voting rights at quarter end:      95,578,144 A shares and 
32,051,703 B shares.

For further information please contact:

Rodger McNair, Investment Manager                         Tel: [phone]

Michael Campbell, Company Secretary                     Tel: [phone]

 

END

 

 

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