Half Yearly Report

RNS Number : 5658S

Securities Trust of Scotland PLC

08 November 2013

 



Securities Trust of Scotland plc

Half-yearly financial report

Six months to 30 September 2013

A copy of the half yearly financial report has been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.Hemscott.com/nsm.do

A copy of this half-yearly financial report can shortly be downloaded at www.securitiestrust.com

FINANCIAL SUMMARY

Key data	As at 30 September 2013	As at 31 March 2013	% change
Net asset value per share (cum income)	140.04p	141.76p	(1.2)
Net asset value per share (ex income)	138.60p	140.60p	(1.4)
Share price	142.00p	146.25p	(2.9)
MSCI World High Dividend Yield Index	637.2	653.69	(2.5)
(Premium)	(1.4%)	(3.17%)

 

Total returns‡	Six months ended 30 September 2013	Six months ended 30 September 2012
Share price	(1.3%)	(6.6%)
Net asset value per share*	0.4%	(5.1%)
Benchmark**	(0.4%)	(4.2%)

Income	Six months ended 30 September 2013	Six months ended 30 September 2012
Revenue return per share	2.62p	2.77p

Ongoing charges#	Six months ended 30 September 2013	Year ended 31 March 2013	Six months ended 30 September 2012
Ongoing charges ratio	0.9%	1%	0.9%

Source: Martin Currie Investment Management Limited

‡ The combined effect of any dividend paid, together with the rise or fall in the share price, net asset value or benchmark.

* The net asset value is exclusive of income with dividends reinvested.

# Ongoing charges (as a percentage of shareholders' funds) are calculated using average net assets over the period. The ongoing charges figure has been calculated with the AIC's recommended methodology.                        

Annual total returns with dividends reinvested over 12 month periods to 30 September

Annual total returns	2013	2012	2011	2010	2009
Net asset value per share	18.3%	18.3%	3.3%	14.6%	6.6%
Share price	15.2%	27.7%	9.4%	15.8%	6.9%
Benchmark**	17.6%	15.7%	2.6%	12.5%	10.8%

Source: Martin Currie Investment Management Limited

** Prior to 1 August 2011, the company's benchmark was the FTSE All-Share index and the MSCI World High Dividend Yield index thereafter.

INTERIM MANAGEMENT STATEMENT

Chairman's statement

Welcome to your latest half-yearly report. Despite the event-driven volatility that characterised global markets inthe six months under review, I'm pleased to be able to report that the Securities Trust of Scotland managed to register a slight positive return, outperforming its benchmark in the process. The net asset value (NAV) total return was 0.4% compared with a fall of 0.4% in the MSCI World High Dividend Yield index. We also continue to perform strongly against our competitor peer group, andare ranked 1st in our AIC peer group over the three years to 30 September 2013.*

The manager's review describes how this performance was achieved and provides an update on how the portfolio is positioned for the coming months.

REVENUES AND DIVIDENDS

The revenue return per share for the six months to 30 September 2013 was 2.62p, a fall of 5.4% compared with thesix months to 30 September 2012. A first interim dividend payment of 1.15p for the financial year to 31 March 2014 was declared and paid on 6 September 2013. Your board has also declared a second interim dividend of1.15p per share. This will be paid on 13 December 2013 to shareholders who were on the register on 22 November 2013. At 30 September, the company's shares offered a net yield of 3.3%.

BORROWING

The loan facility was £14 million for the majority of the six-month period. £10 million was drawn down and the loan facility was reduced to £10 million with effect from 27 September 2013. The company maintained the level of gearing between 5.6% and 6.3% throughout the period. This allowed the manager to enhance returns for shareholders.

NEW SHARES ISSUED

The continued rising demand from investors is truly a sign of how much Securities Trust of Scotland has achieved following the change to a global mandate two years ago in August 2011. We were pleased to receive shareholder approval over the summer to issue up to 100 million new shares and hope to sustain interest in the company through continued positive performance and strong returns. At the time of writing we have issued 4,750,000 new shares.

.

THE BOARD

Following this summer's retirement of Charles Berry we are delighted to announce that Angus Gordon Lennox was appointed as a director on 1 November. Angus brings with him over twenty years experience at Cazenove, latterly heading the Investment Companies Division and we look forward to his contribution.

OUTLOOK

We firmly believe that the attractions of a global equity income portfolio are compelling. The manager's research-driven, stock-picking approach continues to deliver success for the company. We are convinced that his focus on the outlook for individual companies rather than for countries, sectors or the market as a whole is absolutely the right strategy - especially as the outlook for economies and markets around the world remains uncertain.

KEEPING IN TOUCH

Lastly, I would like to thank you again for your continued support. As ever, please feel free to contact me if you have any questions regarding your company. Contact details can be found at the back of this report. I would also encourage you to visit the company's website at www. securitiestrust.com, which is a comprehensive source of information. There you can register your email address in order to be sent regular monthly updates on the company.

Neil Donaldson

Chairman

8 November 2013

MARKET REVIEW

Equity markets have had a volatile start to fiscal 2013, with the MSCI World High Dividend Yield index - our benchmark - giving a negative total return of -0.4%. By comparison, the broad MSCI World index achieved a positive return of 2.4%.

As I wrote in the last annual report, a small number of macroeconomic concerns have dominated investor sentiment and the performance of equity markets. Chief among these are the sovereign-debt crisis in the eurozone, the US debt situation and itsimpact on growth, and finally the sustainability or otherwise of economic growth in theemerging markets. Newsflow on each of these and policy-makers' responses to them have been paramount in dictating how, and in which direction, the equity markets have travelled. Given the comments on equity returns in the opening paragraph, you can see that the equity market has, over the six months, taken each in its stride. This has to be seen in the context of the equity market roughly doubling from March 2009, at which point they had more than halved since the 2007 peak. Equity-market cycles can, at least, be called recurrent.

Until 22 May, equity-market participants had been focusing on the positives of the 'whatever it takes' policies from central bankers around the world. But this changed on the day when the US Federal Reserve hinted at the beginning of the end for its third round of quantitative easing (QE). In testimony to Congress, Fed Chairman Ben Bernanke said that if 'we see continued improvement and we have confidence that this is going to be sustained, then in the next few meetings, we could take a step down in our pace of purchases'. Instead of being seen as good news that the world's largest economy was close to repair, this comment caused fear and weakness across global markets. 'Tapering' has become the big new word in financial markets as commentators discuss the possible timing of any reductions in QE. At its mid-September meeting, however, the Fed left its monthly pace of asset purchases intact. For me, the main consequence of this was to call into the question the effectiveness of the central bank's new communication strategy. It also makes me wonder how confident we can be about strength of theUS economy.

Earlier in the period, another august body, the International Monetary Fund, updated its 2013 World Economic Outlook and concluded that 'Global growth is projected to remain subdued at slightly above 3 percent in 2013, the same as in 2012'. This is slightly less than its forecast in April and is driven, to a large extent, by appreciably weaker domestic demand and slower growth in several key emerging-market economies, as well as a more protracted recession in the euro area. The report flags that downside risks remain and stronger global growth willrequire additional policy action.

If anything, this 'macro-noise'helps re-emphasise the benefits of our philosophy, namely delivering stock-focused portfolios rather than portfolios whose performance can be dictated by macro factors or market-directional bets. Our strategy is based on investing in global high-yielding companies with quality, growing franchises at attractive valuations - inline with our objective of delivering an income return along with the potential for long-term capital appreciation.

PERFORMANCE

For the first half of its fiscal year, the company outperformed its benchmark by 0.8 percentage points. By region, emerging markets constituted a small negative while allother regions were either neutral or positive contributors - the best being North America, Europe and Asia. By sector, the range was broader. The portfolio was slightly behind in the consumer discretionary sector, but outperformed significantly in industrials and financials. As always, though, for us it is all about the stocks. Of the six holdings that had the biggest impact on portfolio performance, five made a positive contribution. These included the defence companies BAE Systems and Lockheed, which have performed well despite fears surrounding defence spending (note we have now sold our holding in Lockheed). It was refreshing to see Modern Times Group, a stock we bought this calendar year, as one of our top performers. The investment thesis is coming to fruition, with strength in the company's emerging-market pay-TV businesses and positive news on dividends. Total, the French energy group that we mentioned as a new purchase in last year's interim report, was also a top contributor. The company is doing well as it restructures its refining & marketing division, and higher-margin exploration & production projects start bearing fruit. Lastly, the aircraft-engine manufacturer Safran was a strong performer on continuing strong growth in aftermarket sales and service revenues. On the negative side, Daimler, a stock we do not own, performed well as good second-quarter results reflected recovering end-markets; our preferred auto stock is Nissan, which we bought earlier this year.

ACTIVITY

Key purchases in the period include Kinder Morgan, Shin Corp and Telefónica. We bought a position in the US pipeline operator Kinder Morgan because of the attraction of its legacy assets, which include around 75,000 miles of pipelines and 180 terminals handling natural gas and refined petroleum product. We were attracted to thecompany on four counts: strong demand drivers; its future growth opportunities given the infrastructure needs for oil sands and shale gas; the relatively low-risk nature of the business, given its diversified assets and fee based business model; and finally its combination of dividend yield (around 4%) and dividend growth (around 10% compound-annual-growth rate expected).

Shin Corp is a Thai holding company whose principal asset is its stake in the Thai mobile-phone operator AIS. The investment case for AIS is predicated on the successful rolling out of the 15-year 3G licence it was awarded in December 2012. Thailand is a relatively benign mobile market in terms of regulation and competitive environment, andwe believe that AIS is being conservative in its guidance regarding the impact of data growth andthe number ofcustomers switching from 2G. An added attraction is the lack of handset subsidies in the Thai market, meaning that this data growth shouldn't come at the expense of high subsidies. Shin Corp trades on 13.9x 2014 consensus earnings per share, yields 7.0% and has an expected dividend-per-share compound growth rate of 20% over the next three years.

Telefónica is a Spanish-quoted telecommunications stock. Our investment thesis is based on three drivers: a return toorganic growth; a strengthening of the company's financial situation; and an improvement in its return profile. There are risks to the case relating to foreign exchange and Spain's financial travails, but we are comforted by the cash options, with free cashflow (post dividend) of around 2-2.5 billion Eurosanda current dividend of around 3 billion Eurosas well as the potential for further asset sales. Telefónica has committed to a 0.75c dividend, which means it yields around 7%. The growth in this dividend depends upon how quickly the investment thesis plays out.

Key sales in the period included Taiwan Semiconductor Manufacturing Company (TSMC), Lockheed Martin, and China Mobile. TSMC has been a strong contributor to performance in the strategy. As a consequence of its share- price performance but lack of strong dividend growth, the yield has dropped to around 2.5%. Dividend growth is expected to be, at best, in the low single digits. This does not fit our income andgrowth objective.

There were two catalysts for the sale of US-quoted defence company Lockheed Martin. Firstly, recent meetings haveconfirmed our increasingly negative outlook for US defence spending in 2014. And secondly, the stock was trading around our estimate of fair value.

While we believe that Chinese mobile-telecoms operator China Mobile is attractively valued, it has become clear that the prospects for dividend growth remain muted for.

Outlook

We remain confident in our neutral stance on markets. The biggest driver remains the economic backdrop, which, although showing some signs of improvement is still largely negative with concerns over the strength of the US recovery, the sustainability of Emerging Market growth and their stake in the eurozone Company margins are high, cashflow generation is strong, but confidence is low. This is positive for dividend growth in the short term, but we are looking for rising capital expenditure and merger & acquisition activity to signal a return of confidence in corporate boardrooms. After the markets' rally this year, valuations remain neutral, while the most positive support for equities remains the attractiveness of the dividend yields available. We aim to capitalise on this by being fully invested and focused on companies offering growing dividends that we believe are sustainable.

Alan Porter

8 November 2013

Risk and mitigation

With the assistance of the manager, the board has drawn up a risk matrix, which identifies the key risks to the company. These key risks fall broadly under the following categories and the implementation of specific mitigating measures and procedures has taken place in order to reduce the probability and impact of each risk to the greatest extent possible. The board considers the key ongoing risks to be:

 Regulatory change                      Loss of investment team or portfolio manager

 Maintaining market liquidity         Failure to manage the discount

 Loss of s1158-1159 status          Investment underperformance

 Operational disruption at the manager's premises  Gearing/interest rate risk

 Regulatory, accounting/ internal control breach                             Foreign exchange risk

Further details of these risks and how the board manages them can be found in the 2013 annual report and on the company's website www.securitiestrust.com

Directors' responsibility

In accordance with Chapter 4 of the Disclosure and Transparency Rules, and to the best of their knowledge, each director of Securities Trust of Scotland, confirms that the financial statements have been prepared in accordance with the applicable set of accounting standards and give a true and fair view of the assets, liabilities, financial position and net return of the company. Furthermore, each director certifies that the interim management report includes an indication of important events that have occurred during the first six months of the financial year, and their impact on the financial statements, together with a description of the principal risks and uncertainties that the company faces. In addition, each director of Securities Trust of Scotland confirms that there have been no related party transactions during the six months to 30 September 2013.

By order of the board

Neil Donaldson, Chairman

Edinburgh

8 November 2013

PORTFOLIO SUMMARY Portfolio distribution as at 30 September 2013
By region (excluding cash)	As at 30 September 2013	As at 31 March 2013
	(%)	(%)
Developed Europe	52.8	49.3
North America	37.7	41.0
Developed Asia Pacific ex Japan	6.7	6.8
Japan	2.8	2.9
	100	100

By sector (excluding cash)	As at 30 September 2013	As at 31 March 2013
	(%)	(%)
Healthcare	20	19
Consumer goods	16	18
Financials	15	16
Oil & gas	14	12
Telecommunications	10	11
Consumer services	9	8
Industrials	8	9
Basic materials	5	4
Utilities	2	2
Technology	1	1
	100	100

By asset class Including cash and borrowings)	As at 30 September 2013	As at 31 March 2013
	(%)	(%)
Equities	106	107
Less borrowings	(6)	(7)
	100	100

Largest holdings	30 September 2013	As at 30 September 2013	31  March 2013	As at 31 March 2013
	Market value	% of total	Market value	% of total
	£000	portfolio	£000	portfolio
Pfizer	7,958	4.7	8,173	5.0
Chevron	7,934	4.7	6,813	4.2
Roche Holdings	6,932	4.1	5,138	3.1
AT&T	6,587	3.9	8,549	5.2
Total	6,538	3.9	5,487	3.4
Nestlé	6,158	3.6	6,529	4.0
Sanofi	6,112	3.6	6,266	3.8
Novartis	5,511	3.3	6,396	3.9
Phillip Morris International	5,133	3.0	5,624	3.4
Royal Dutch Shell ('B') Shares	5,109	3.0	5,748	3.5

UNAUDITED INCOME STATEMENT

		Six months to 30 September 2013			Six months to 30 September 2012
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£000	£000	£000	£000	£000	£000
(Losses)/gains on investments	6	-	(1,763)	(1,763)	-	3,525	3,525
Currency (losses)/gains		(34)	(12)	(46)	1	(286)	(285)
Income	3	3,823	-	3,823	3,445	-	3,445
Investment management fee		(158)	(294)	(452)	(125)	(233)	(358)
Other expenses		(271)	-	(271)	(200)	-	(200)
Net return before finance costs and taxation		3,360	(2,069)	1,291	3,121	3,006	6,127
Finance costs		(32)	(62)	(94)	(45)	(89)	(134)
Net return on ordinary activities before taxation		3,328	(2,131)	1,197	3,076	2,917	5,993
Taxation on ordinary activities	5	(384)	-	(384)	(275)	-	(275)
Return attributable to ordinary redeemable shareholders		2,944	(2,131)	813	2,801	2,917	5,718
Return per ordinary redeemable share	2	2.62p	(1.90p)	0.72p	2.77p	2.88p	5.65p

		(Audited)
		Year to
		31 March 2013
		Revenue	Capital	Total
	Note	£000	£000	£000
(Losses)/gains on investments	6	-	23,978	23,978
Currency (losses)/gains		8	136	144
Income	3	6,340	-	6,340
Investment management fee		(271)	(503)	(774)
Other expenses		(525)	-	(525)
Net return before finance costs and taxation		5,552	23,611	29,163
Finance costs		(89)	(164)	(253)
Net return on ordinary activities before taxation		5,463	23,447	28,910
Taxation on ordinary activities	5	(557)	-	(557)
Return attributable to ordinary redeemable shareholders		4,906	23,447	28,353
Return per ordinary redeemable share	2	4.71p	22.50p	27.21p

The total columns of this statement are the income statement of the company. 

The revenue and capital items are presented in accordance with the Association of Investment Companies (AIC) SORP 2009.

All revenue and capital items in the above statement derive from continuing operations.

No operations were acquired or discontinued in the period.

A Statement of Total Recognised Gains and Losses is not required as all gains and losses of the company have been reflected in the income statement.

UNAUDITED BALANCE SHEET

		As at 30 September 2013		As at 30 September 2012		(Audited) As at 31 March 2013
	Note	£000	£000	£000	£000	£000	£000
Non-current assets
Investments at fair value through profit or loss
Listed on Exchanges in the UK			32,257		36,285		29,447
Listed on Exchanges abroad			136,499		103,457		134,237
	6		168,756		139,742		163,684
Current assets
Loans and receivables	7	614		525		2,742
Cash at bank		2,658		4,179		2,275
		3,272		4,704		5,017
Creditors
Amounts falling due within one year	8	(10,564))		(17,107)		(12,260)
Net current liabilities			(7,292)		(12,403)		(7,243)
Net assets			161,464		127,339		156,441
Capital and reserves
Called up ordinary share capital			1,153		1,035		1,104
Capital redemption reserve			78		78		78
Share premium account			19,832		-		12,862
Special distributable capital reserve			109,299		113,364		109,359
Capital reserve			8 28,029		9,630		30,160
Revenue reserve			3,073		3,232		2,878
			161,464		127,339		156,441
Net asset value per ordinary redeemable share	2		140.04p		123.02p		141.76p

UNAUDITED STATEMENT OF CASH FLOW

		Six months to					Six months to				(Audited) Year to
		30 September 2013					30 September 2012				31 March 2013
	Note	£000		£000			£000		£000		£000		£000
Net cash inflow from operating activities	9			3,032					2,616				4,788
Servicing of finance
Finance costs				(90)					(155)				(251)
Taxation
Taxation recovered				(70)					(62)				(113)
Capital expenditure and financial investment
Payments to acquire investments		(24,645)					(23,768)				(61,430)
Receipts from disposal of investments		17,865					21,029				52,295
Net cash outflow from investing activities				(6,780)					(2,739)				(9,135)
Dividends paid	4			(2,749)					(2,426)				(4,885)
Net cash outflow before use of liquid resources and financing						(6,657)				(2,766)			(9,596)
Financing
Cost of ordinary shares issued during the period		(100)					-				-
Issue of ordinary share capital		7,140					3,985				12,911
Net movement in short-term borrowings		-					3,000				(1,000)
Net cash inflow from financing					7,040				6,985				(11,911)
Increase  in cash for the period					383				4,219				2,315
Reconciliation of net cash flow to movements in net debt
Increase in cash as above		383					4,219				2,315
Net movement in short-term borrowings		-					(3,000)				1,000
Change in net debt resulting from cash flows					383				1,219				3,315
Opening net debt					(7,725)				(11,040)				(11,040)
Closing net debt					(7,342)				(9,821)				(7,725)

 

UNAUDITED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

		Called up ordinary share capital	Capital redemption reserve		Share premium account			Special distributable capital reserve			Capital reserve			Revenue reserve			Total
For the six months to 30 September 2013	Note	£000	£000		£000			£000			£000			£000			£000
As at 31 March 2013		1,104	78		12,862			109,359			30,160			2,878			156,441
Return attributable to shareholders		-	-		-			-			(2,131)			2,944			813
Ordinary shares issued during the year		49	-		7,151			(60)			-			-			7,140
Cost of ordinary shares issued during the period		-	-		(181)			-			-			-			(181)
Dividends paid	4	-	-		-			-			-			(2,749)			(2,749)
Balance at 30 September 2013		1,153	78		19,832			109,299			28,029			3,073			161,464
For the six months to 30 September 2012
As at 31 March 2012		1,003	78			-			109,411			6,713			2,857			120,062
Return attributable to shareholders		-	-			-			-			2,917			2,801			5,718
Ordinary shares issued during the period		32	-			-			3,953			-			-			3,985
Dividends paid	4
		-	-			-			-			-			(2,426)			(2,426)
Balance at 30 September 2012		1,035	78			-			113,364			9,630			3,232			127,339
For the year ended 31 March 2013 (Audited)
As at 31 March 2012		1,003	78	-			109,411			6,713			2,857			120,062
Return attributable to shareholders		-	-	-			-			23,447			4,906			28,353
Ordinary shares issued during the period		101	-	12,862			(52)			-			-			12,911
Dividends paid	4	-	-	-			-			-			(4,885)			(4,885)
Balance at 31 March 2013		1,104	78	12,862			109,359			30,160			2,878			156,411

NOTES TO THE FINANCIAL STATEMENTS

Note 1 Accounting policies

a) The financial statements have been prepared on a going concern basis and in accordance with UK Generally Accepted Accounting Practice (UK GAAP) and the Statement of Recommended Practice for Financial Statements of Investment Trust Companies and Venture Capital Trusts' (SORP), issued in January 2009.

Dividends - In accordance with FRS 21: 'Events after the balance sheet date', dividends are included in the financial statements in the period in which they are paid.

Functional currency - In accordance with FRS 23: 'The effects of changes in foreign currency', the company is required to nominate a functional currency, being the currency in which the company predominately operates. The board has determined that sterling

is the company's functional currency, which is also the currency in which these financial statements are prepared.

b) Income from equity investments is determined on the date on which the investments are quoted ex-dividend, or where no ex-dividend date is quoted, when the company's right to receive payment is established. Income from fixed interest securities

is recognised on an effective yield basis. UK dividends received are accounted for at the amount receivable and are not grossed

up for any tax credit. Other income includes any taxes deducted at source. Gains and losses arising from the translation of income denominated in foreign currencies are recognised in the revenue reserve. Scrip dividends are treated as unfranked investment income; any excess in value of shares received over the amount of the cash dividend is recognised in capital reserve. Income from underwriting commission and traded options is recognised as earned.

c) Interest receivable and payable and management expenses are treated on an accruals basis.

d) The management fee and interest costs are allocated 65% to capital and 35% to revenue in accordance with the board's expected long-term split of returns in the form of capital gains and income, respectively. All other expenses are wholly allocated to revenue.

e) Gains and losses on realisation of investments and changes in the fair value of investments which are readily convertible to cash, without accepting adverse terms, together with exchange adjustments to overseas currencies are taken to capital reserve.

f) Foreign currencies are translated at the rates of exchange ruling on the balance sheet date. Investments are recognised initially as at the trade date of a transaction. Subsequent to this, the disposal of an investment is accounted for once again as at the trade date of a transaction.

g) Revenue received and interest paid in foreign currencies are translated at the rates of exchange ruling on the transaction date.

Any exchange differences relating to revenue items are taken to the revenue account.

h) The company's investments are classified as "financial assets at fair value through profit or loss" and are therefore valued at bid price. Gains and losses arising from changes in fair value are included in the capital return for the period.

i)All financial assets and liabilities are recognised in the financial statements.

j) Deferred tax is recorded in accordance with Financial Reporting Standard 19 (Deferred Tax). Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date. A deferred tax asset is only recognised to the extent that it is regarded as recoverable. Due to the company's status as an investment trust company, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the company has not provided for deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.

k) Transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the income statement.

l) Share buy backs are funded through the capital reserve.

m) The company can us derivative financial instruments to manage the risk associated with foreign currency fluctuations arising on dividends received in currencies other than sterling. This is achieved by the use of forward foreign currency contracts. Derivative financial instruments are recognised initially at fair value on the contract date and subsequently re-measured to the fair value at each reporting date. The fair values of the derivative financial instruments are included within non-current assets or within current assets or current liabilities depending on the nature and motive of each derivative transaction.

2.  Revenue returns and net asset value

	Six months to 30 September 2013	Six months to 30 September 2012	Year to 31 March 2013
Revenue Return
Revenue return attributable to ordinary redeemable shareholders	£2,944,000	£2,801,000	£4,906,000
Average number of shares in issue during the period	112,288,626	101,300,482	104,193,470
Revenue return per ordinary redeemable share	2.62p	2.77p	4.71p
Capital return
Capital return attributable to ordinary redeemable shareholders	(£2,131,000)	£2,917,000	£23,447,000
Average number of shares in issue during the period	112,288,626	101,300,482	104,193,471
Capital return per ordinary redeemable share	(1.90p)	2.88p	22.50p
Total return
Total return per ordinary redeemable share	0.72p	5.65p	27.21p

Net asset value per share
Net assets attributable to shareholders	£161,464,000	£127,338,939	£156,441,000
Number of shares in issue at period end	115,299,148	103,509,771	110,359,771
Net asset value per share including income	140.04p	123.02p	141.76p

3. Income from listed investments

	Six months to 30 September 2013 £000	Six months to 30 September 2012 £000	Year to 31 March 2013 £000
Franked income - equities	655	972	1,837
Franked income - fixed interest and convertibles	-	62	-
Unfranked income - equities	3,167	2,408	4,425
Unfranked income - fixed interest and convertibles	-	-	70
	3,822	3,442	6,332
Other income
Interest on deposits	1	3	8
	3,823	3,445	6,340

4. Dividends

	Six months to 30 September 2013 £000	Six months to 30 September 2012 £000	Year to 31 March 2013 £000
Year ended 31 March 2012 - fourth interim dividend of 1.25p	-	1,253	1,253
Year ended 31 March 2013 - first interim dividend of 1.15p	-	1,173	1,173
Year ended 31 March 2013 - second interim dividend of 1.15p	-	-	1,202
Year ended 31 March 2013 - third interim dividend of 1.15p	-	-	1,257
Year ended 31 March 2013 - fourth interim dividend of 1.30p	1,447	-	-
Year ended 31 March 2014 - first interim dividend of 1.15p	1,301	-	-
	2,749	2,426	4,885

5. Taxation on ordinary activities

	Six months to 30 September 2013 £000			Six months to 30 September 2012 £000			Year to 31 March 2013 £000
Foreign tax			384			275			557

6. Investments

	As at 30 September 2013 £000	As at 30 September 2012 £000	As at 31 March 2013 £000
Fair value through profit or loss
Opening valuation	163,684	130,626	130,626
Opening investment holding gains	(31,152)	(11,914)	(11,914)
Opening cost	132,532	118,712	118,712
Add: additions at cost	23,362	26,479	62,713
Disposal proceeds	(16,527)	(20,888)	(53,633)
Less: net gain on disposal of investments	3,543	(827)	4,740
Disposals at cost	(12,984)	(21,715)	(48,893)
Closing cost	142,910	123,476	132,532
Add: investment holding gains	25,846	16,266	31,152
Closing valuation	168,756	139,742	163,684
Gains/(losses) on investments
Net gain/(loss) on disposal of investments	3,543	(827)	4,740
Movement in investment holdings unrealised (losses)/gains	(5,306)	4,352	19,238
	(1,763)	3,525	23,978

Transaction costs

During the period expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss.  These have been expensed through capital and are included within gains and losses on investments in the income statement.  The total costs were as follows:

	Six months to 30 September 2013 £000	Six months to 30 September 2012 £000	Year to 31 March 2013 £000
Acquisitions	61	69	151
Disposals	30	39	96
	91	108	247

7. Loans and receivables

	As at 30 September 2013 £000	As at 30 September 2012 £000	As at 31 March 2013 £000
Dividends receivable	301	354	597
Due from brokers	-	-	1,338
VAT receivable	6	33	-
Tax recoverable	218	70	148
Prepayments and other debtors	89	68	659
	614	525	2,742

8. Creditors - amounts falling due within one year

	As at 30 September 2013 £000	As at 30 September 2012 £000	As at 31 March 2013 £000
Interest accrued	6	1	2
Due to brokers	-	2,711	1,283
Sterling bank revolving loan	10,000	14,000	10,000
Other creditors	558	395	975
	10,564	17,017	12,260

The company has a £10,000,000 revolving loan facility with State Street Bank and Trust Company which expires on 27 September 2014. Under this agreement £10,000,000 was drawn at 30 September 2013 at a rate of 1.3175% with a maturity date of 27 December 2013.

The fair value of the sterling loan is not materially different from its carrying value. The interest rate is set at each roll-over date at LIBOR plus a margin.

9. Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities

	Six months to 30 September 2013 £000	Six months to 30 September 2012 £000	Year to 31 March 2013 £000
Net return before finance costs	1,291	6,127	29,163
Decrease/(increase) in accrued income and other debtors	860	122	(573)
(Decrease)/increase in creditors	(498)	167	733
Net losses/(gains) on investments	1,763	(3,525)	(23,978)
Taxation withheld from income on investments	(384)	(275)	(557)
Net cash inflow from operating activities	3,032	2,616	4,788

10.  Analysis of net debt

	As at 31 March 2013 £000	Cash flow £000		As at 30 September 2013 £000
Cash at bank	2,275	383	2,658
Bank borrowings - sterling revolving loan	(10,000)	-	(10,000)
Net debt	(7,725)	383	(7,342)

11. Half yearly report

The financial information contained in this half-yearly financial report does not constitute statutory accounts as defined in s434 - 436 of the Companies Act 2006. The financial information for the six months ended 30 September 2013 and 30 September 2012 has not been audited.

The information for the year ended 31 March 2013 has been extracted from the latest published audited financial statements which have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under s498 (2), (3) or (4) of the Companies Act 2006.

12. Post balance sheet events

There were 2,600,000 new shares issued between 1 October 2013 and 6 November 2013.

 

END

 

 

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