Interim Management Statement

RNS Number : 2296W

Investors Capital Trust PLC

26 January 2012

 



Investors Capital Trust plc

Interim Management Statement

For the three month period from 1 October 2011 to 31 December 2011

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 31 December 2011	As at   30 September 2011	Movement
Total assets	£139.5 million	£133.0 million	4.9%
Net asset value:    A share and B share    Unit*	82.5p 330.0p	76.8p 307.2p	7.4% 7.4%
Share price:    A share    B share    Unit	75.5p 81.0p 303.0p	71.0p 81.0p 319.0p	6.3% 0.0% (5.0)%
Premium/(discount):   A share   B share   Unit	(8.5)% (1.8)% (8.2)%	(7.6)% 5.5% 3.8%
Gearing**:   Potential ratio   Actual ratio (Investment gearing)     Actual ratio (Equity gearing)	133.0 120.5 100.4	135.8 125.8 99.5
Total return	For the three month period ended 31 December 2011	For the nine month period ended 31 December 2011	From launch on 1 March 2007 to 31 December 2011
Net asset value:   A and B share and Unit	8.8%	0.1%	13.2
FTSE All-Share Capped 5% Index	8.0%	(4.7)%	7.7

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.

Potential ratio = the ratio of total assets (including fixed interest and net 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 increased 8.0% during the quarter, as measured by the FTSE All-Share Capped 5% Index on a total return basis.  The Company's net asset value total return for the quarter was 8.8%.

A year-end rally, albeit on seasonally low trading volumes, contributed to a strong quarterly return for the UK equity market.  Robust corporate balance sheets, excluding the financial sector, and an encouraging trend in US economic indicators provide some off-set to the problems confronting Continental Europe.  The European banking system faces a number of significant challenges in 2012 which only heighten the downside risk to economic activity in the region.  Avoiding a reduction in the flow of credit to individuals and small and medium sized enterprises will be a challenge as European banks de-leverage.  The UK government commitment to austerity measures has helped maintain investor confidence in UK gilts.  Preserving the historically low yield on UK gilt issuance will be a crucial factor in laying the foundations for economic recovery.   

During the quarter the equity gearing ratio was kept broadly constant, representing 100 per cent of net asset value at 31 December 2011.  The overall investment gearing ratio, including the corporate bond portfolio, reduced to 121 per cent of net asset value from a level of 126 per cent at the end of September 2011.  The reduced level of investment gearing partly reflects a reduction in the corporate bond portfolio where sales were focussed on financial issuers.  Amongst the many negative economic headlines we do take encouragement from the credible level of loan loss recognition by the US banking system.  The willingness of banks to provide for bad loans provides an insight into their financial strength.  We view the US loan loss rate as a positive signal that its banking system is slowly repairing.  Despite the problems in Europe we recognise the progress in the US financial system and continue to invest in geographically diversified businesses that we believe can sustain real dividend growth.

Dividends and Capital Distributions

A second quarter dividend in respect of the year ended 31 March 2012, of 1.06 pence per share, was paid on the A shares of the Company on 4 November 2011 to A shareholders on the register on 7 October 2011.

A second quarter capital return of 1.06 pence per share was paid on the B shares of the Company on 4 November 2011 to B shareholders on the register on 7 October 2011.  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 has announced a third quarter dividend in respect of the year ending 31 March 2012 of 1.06 pence per A share and a third quarter capital distribution of 1.06 pence per B share, both payable on 3 February 2012.

Share Buy Backs

The Company did not buy back, issue or re-sell any shares during the quarter. At 31 December 2011 the Company held 6,889,000 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 31 December 2011
Vodafone			4.5%
GlaxoSmithKline			4.5%
Royal Dutch Shell			4.2%
British American Tobacco			4.1%
BP			4.0%
HSBC Holdings			3.3%
Rio Tinto			2.9%
BG Group			2.8%
AstraZeneca			2.3%
BHP Billiton			2.3%
Total			34.9%

Higher Yield Portfolio

Security			Percentage of total assets as at 31 December 2011
Paragon Group 7% 20/04/17			0.4%
Marstons FRN 15/07/20			0.3%
UBS 6.375% 20/07/16			0.3%
France Telecom 6% 29/03/12			0.3%
Permanent Master ABS 15/07/42			0.3%
Kraft Foods 5.75% 20/03/12			0.3%
Altria Group 8.5% 10/11/13			0.3%
Sutton Bridge 8.625% 30/06/22			0.3%
GE Capital 6% 11/04/13			0.3%
Marks & Spencer 5.875% 29/05/12			0.3%
Total			3.1%

Portfolio Summary

		Market Value at 31 Dec 2011 £'000	% of Total Assets at 31 Dec 2011	% of Total Assets at  30 Sept 2011
Equities Portfolio		105,272	75.5	73.3
Higher Yield Portfolio		21,114	15.1	19.4
Net Current Assets		13,110	9.4	7.3
Total Assets (less Current Liabilities)		139,496	100.0	100.0
Bank Term Loan & Interest Rate Swap		(34,595)	(24.8)	(26.4)
Net Assets Attributable to Shareholders		104,901	75.2	73.6

The Board is not aware of any significant events or transactions which have occurred since 31 December 2011 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:      95,178,144 A shares and 32,051,703 B shares.

This interim management statement has been prepared solely to provide information to meet the requirements of the UK Listing Authority's Disclosure and Transparency Rules.

For further information please contact:

Rodger McNair, Investment Manager                         Tel: [phone]

Michael Campbell, Company Secretary                     Tel: [phone]

 

END

 

 

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