Interim Management Statement

RNS Number : 3335W

Investors Capital Trust PLC

24 January 2013

 



Investors Capital Trust plc

Interim Management Statement

For the three month period from 1 October 2012 to 31 December 2012

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 2012		As at 30 September 2012	Movement
Total assets	£128.8 million		£126.3 million	2.0%
Net asset value:    A share and B share    Unit*	89.37p 357.48p		87.02p 348.08p	2.7% 2.7%
Share price:    A share    B share    Unit	84.00p 85.50p 326.00p		82.50p 82.50p 316.00p	1.8% 3.6% 3.2%
Discount:   A share   B share   Unit	(6.0)% (4.3)% (8.8)%		(5.2)% (5.2)% (9.2)%
Gearing**:    Actual percentage (Investment gearing)      Actual percentage (Equity gearing)		13.2% (2.1)%	14.9% (1.1)%
Total return	For the three month period ended 31 December 2012		For the nine month period ended 31 December 2012	For the five year period ended 31 December 2012
Net asset value:   A and B share and Unit	3.9%		7.8%	21.2%
FTSE All-Share Capped 5% Index	3.8%		5.9%	15.6%

Sources: F&C Investment Business Limited and Datastream.

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

** The gearing figure indicates the extra amount by which shareholders' funds would rise or fall if total assets were to rise or fall. A figure of zero per cent means that the Company has a nil gearing position. A negative number means the Company holds net cash after offsetting gearing.

Actual (investment gearing) = the percentage figure of investments held divided by assets attributable to shareholders.

Actual (equity gearing) = the percentage figure of the Equities Portfolio divided by assets attributable to shareholders.

Review

The UK equity market increased 3.8% during the quarter, as measured by the FTSE All-Share Capped 5% Index on a total return basis.

Despite a plethora of negative headlines related to economic issues around the world the corporate sector has continued to increase profits and dividends.  Tempering the outlook for profit growth several companies released third quarter results with outlook statements that moderated expectations for earnings growth in 2013.  As a result we believe forecasts for corporate profit growth in 2013 are now set at a more achievable level although the risks to economic activity are considerable.  The UK continues to endure the weight of fiscal austerity, an extension of which was outlined by the chancellor in the autumn statement.  In the US, politics will remain a key focus for investors.  The passing of a vote to extend the majority of income tax cuts and defer a decision on budget cuts for a couple of months provides relief from the worst case fall-out from the 'fiscal cliff'.  The political brinksmanship displayed through the process unfortunately provides the template for the debate to come on US government spending.  Despite the many challenges facing economic activity we are encouraged by the improvement in the US housing market which also reflects a better functioning US banking system.  Europe, which remains the UK's most important trading partner, continues to face significant economic challenges although the reduction in the yield for Italian and Spanish government debt since the late summer, and stabilisation since, has been a welcome development. 

The use of unconventional policy tools, such as quantitative easing, by central bankers leads us to be wary of inflationary risks that may be imbedding within the economy.  As a result we continue to favour the inflation protection inherent in equities and have maintained a very short duration within the corporate bond portfolio. Equities currently represent 84% and corporate bonds 13% of the Company's total assets with the balance of 3% held in cash.  The Company currently has equity gearing of -2% and an investment gearing of 13%.  Investors Capital Trust remains invested in geographically diversified businesses with a focus on companies that can deliver dividend growth that can match or exceed the rate of inflation.

Dividends and Capital Distributions

A second quarter dividend in respect of the year ending 31 March 2013, of 1.06 pence per share, was paid on the A shares of the Company on 2 November 2012 to A shareholders on the register on 5 October 2012.

A second quarter capital return of 1.06 pence per share was paid on the B shares of the Company on 2 November 2012 to B shareholders on the register on 5 October 2012.  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 2013 of 1.06 pence per A share and a third quarter capital distribution of 1.06 pence per B share, both payable on 1 February 2013.

Share Buy Backs

During the three months ended 31 December 2012, the Company bought back 500,000 A Shares and nil B Shares to hold in treasury at a cost of £410,000. The Company did not issue or re-sell any shares during the quarter. At 31 December 2012 the Company held 9,539,000 A Shares and 655,000 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 2012
HSBC Holdings			4.8%
GlaxoSmithKline			4.4%
British American Tobacco			4.3%
Royal Dutch Shell			4.1%
BP			4.0%
Vodafone			3.6%
Rio Tinto			3.5%
BHP Billiton			2.9%
AstraZeneca			2.8%
National Grid			2.0%
Total			36.4%

Higher Yield Portfolio

Security			Percentage of total assets as at 31 December 2012
Paragon Group 7% 20/04/17			0.4%
UBS 6.375% 20/07/16			0.3%
Permanent Master ABS 15/07/42			0.3%
Ineos 7.875% 15/02/16			0.3%
Nationwide Building Society FRN 23/01/15			0.3%
Barclays Bank FRN 20/01/15			0.3%
National Australia Bank FRN 27/01/15			0.3%
Bupa Finance 7.5% 04/07/16			0.3%
Abbey National Treasury Service FRN 16/02/15			0.3%
Marstons FRN 15/07/20			0.3%
Total			3.1%

Portfolio Summary

		Market Value at 31 Dec 2012 £'000	% of Total Assets at 31 Dec 2012	% of Total Assets at  30 Sept 2012
Equities Portfolio		108,347	84.1	84.8
Higher Yield Portfolio		16,890	13.1	13.7
Net Current Assets		3,531	2.8	1.5
Total Assets (less Current Liabilities)		128,768	100.0	100.0
Bank Term Loan		(18,000)	(14.0)	(14.3)
Net Assets Attributable to Shareholders		110,768	86.0	85.7

The fair value of the £18 million term loan, on a marked to market basis, was £18,148,000 at 31 December 2012 (30 September 2012: £18,132,000).

The Board is not aware of any significant events or transactions which have occurred since 31 December 2012 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:      92,528,144 A shares and 31,421,703 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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