Interim Management Statement

RNS Number : 3610N

Investors Capital Trust PLC

25 July 2014

 



Investors Capital Trust plc

Interim Management Statement

For the three month period from 1 April 2014 to 30 June 2014

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

Total return	For the three month period ended 30 June 2014
Net asset value (debt at fair value):   A and B share and Unit*	2.0%
FTSE All-Share Capped 5% Index	2.1%
Capital return	As at 30 June 2014	As at   31 March 2014	Movement
Total assets	£145.1 million	£144.6 million	0.3%
Net asset value (debt at fair value):    A share and B share    Unit*	103.7p 414.9p	102.8p 411.4p	0.9% 0.9%
Share price:    A share    B share    Unit*	97.0p 101.0p 375.0p	95.0p 102.3p 375.0p	2.1% (1.3)%  -
Discount:   A share   B share   Unit*	(6.5)% (2.6)% (9.6)%	(7.6)% (0.5)% (8.8)%
Gearing**:   Net gearing	11.3%	10.0%

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 zero per cent means that the Company has a nil geared position. A negative number means that the Company holds net cash after offsetting borrowings.

Net gearing = the percentage figure of investments held divided by assets attributable to shareholders.

Review

The UK equity market increased 2.1% during the quarter, as measured by the FTSE All-Share Capped 5% Index on a total return basis.

Recent evidence suggests that the UK economic recovery is becoming more established and that the coming year may mark the transition to a more stable and enduring economic expansion. In June a greater than expected increase in the pace of UK inflation raised concerns that the Bank of England would be forced to increase interest rates sooner rather than later, pushing Sterling towards a five year high against both the US dollar and Euro. While a strong pound helps curb inflation by reducing the cost of imported goods, it also puts pressure on the profits and dividends of some of the UK's largest listed companies. UK inflation remains below the Bank of England target level and, more broadly, global inflation trends appear generally subdued. We continue to believe that central banks will remain accommodative and that any move towards a normalisation of monetary policy will be measured and gradual.

Following the rally and re-rating of equity markets over the past five years, valuation levels now appear less compelling despite robust corporate sector fundamentals. Against a background of improving global economic growth, increasing business confidence and low borrowing costs, we expect the recent upturn in merger and acquisition activity to gather pace and remain supportive for equity markets. In contrast the sharp rise in global geopolitical tensions in recent weeks as a result of mounting tensions between Russia and the West and the escalating conflict in the Middle East are likely to be a source of increased volatility for financial markets.

Equities currently represent 84.3% and corporate bonds 13.5% of the Company's total assets with the balance of 2.2% held in cash. The Company currently has investment gearing of 11.3%. 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 fourth quarter dividend in respect of the year ended 31 March 2014, of 1.1225 pence per share, was paid on the A shares of the Company on 2 May 2014 to A shareholders on the register on 4 April 2014. A fourth quarter capital repayment of 1.1225 pence per share was paid on the B shares of the Company on 2 May 2014 to B shareholders on the register on 4 April 2014.  Capital repayments on B shares are paid at the same time as, and in an amount equal to, each dividend paid on an A share.

On 27 June 2014, the Board of Investors Capital Trust plc announced a first quarter dividend in respect of the year ended 31 March 2015 of 1.11 pence per share on the A shares of the Company.  This dividend will be paid on 8 August 2014 to A shareholders on the register on 11 July 2014.   A first quarter capital repayment of 1.11 pence per share will be paid on the B shares of the Company on 8 August 2014 to B shareholders on the register on 11 July 2014.  This represents an increase of 2.5 per cent over the first quarter dividend/ capital repayment paid in the prior year.  In the absence of unforeseen circumstances, the Company intends to increase each of the remaining three quarterly dividends for the year ended 31 March 2015 by a similar amount.

Share Buy Backs

During the quarter the Company bought back 500,000 A shares to hold in treasury at a cost of £488,000. The Company did not buy back any shares for cancellation during the quarter.

At 30 June 2014 the Company held 11,289,000 A Shares and nil B Shares in treasury.

Alternative Investment Fund Managers' Directive (2011/61/EU) ("AIFMD")

The Board is pleased to announce that the Company has entered into arrangements necessary to ensure compliance with the AIFMD.

Following a review of the Company's arrangements, the Board approved the appointment of its existing investment manager, F&C Investment Business Limited, as the Company's alternative investment fund manager (the "AIFM") on the terms of and subject to the conditions of a new investment management agreement between the Company and the AIFM. The management fee and notice period remain unchanged. F&C Investment Business Limited is a subsidiary of F&C Asset Management plc and was approved as an AIFM by the UK's Financial Conduct Authority on 22 July 2014.

The Board has appointed J.P. Morgan Europe Limited (the "Depositary") to act as the Company's depositary (as required by the AIFMD) on the terms of and subject to the conditions of a depositary agreement between the Company, the AIFM and the Depositary. The Company's existing custodian, JPMorgan Chase Bank NA, will continue to provide custody functions as a delegate of the Depositary.

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

Equities Portfolio

Company			Percentage of total assets as at 30 June 2014
GlaxoSmithKline			4.6%
Royal Dutch Shell			4.3%
BP			4.3%
HSBC			4.3%
British American Tobacco			4.2%
Rio Tinto			2.7%
BT Group			2.5%
AstraZeneca			2.5%
BHP Billiton			2.4%
Vodafone			2.2%
Total			34.0%

Higher Yield Portfolio

Security			Percentage of total assets as at 30 June 2014
Paragon Group 7% 20/04/17			0.5%
UBS 6.375% 20/07/16			0.3%
Permanent Master ABS 15/07/42			0.3%
British Telecom 2.25% 14/02/19			0.3%
Abbey National Treasury Services FRN 16/02/15			0.2%
Southern Gas FRN 21/10/15			0.2%
Bupa Finance 7.5% 04/07/16			0.2%
Marstons FRN 15/07/20			0.2%
Yorkshire Building Society FRN 23/03/16			0.2%
Mitchells & Butler 1.05438% 15/12/28			0.2%
Total			2.6%

Portfolio Summary

		Market Value at 30 June 2014 £'000	% of Total Assets at 30 June 2014	% of Total Assets at  31 March 2014
Equities Portfolio		122,307	84.3	83.2
Higher Yield Portfolio		19,581	13.5	13.4
Net Current Assets		3,179	2.2	3.4
Total Assets (less Current Liabilities)		145,067	100.0	100.0
Bank Term Loan (debt at fair value)		(17,629)	(12.2)	(12.2)
Net Assets Attributable to Shareholders		127,438	87.8	87.8

The Board is not aware of any significant events or transactions which have occurred since 30 June 2014 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 Repayments paid:                  August, November, February and May

Shares in issue with voting rights at quarter end:      90,778,144 A shares and 32,076,703 B shares.

For further information please contact:

Rodger McNair, F&C Investment Business Limited, Investment Manager               

Tel: [phone]

 

END

 

 

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