Interim Management Statement

RNS Number : 8529W

British Empire Sec & Gen Tst PLC

06 February 2012

 



BRITISH EMPIRE SECURITIES AND GENERAL TRUST PLC

Interim Management Statement - 3 months ended 31 December 2011

This investment management report relates to performance figures to 31 December 2011.

Summary NAV Performance (total return basis)

	Qtr	Financial Year#	Calendar Year
BTEM	0.9%	0.9%	-14.%
Benchmark2	3.8%	3.8%	-8.8
MSCI World1	8.0%	8.0%	-4.3

Quarterly Investment Manager's Review

Markets have been extremely volatile during the quarter.  Europe has been at the forefront of the market's fears and this has been reflected in the relative weakness of both European stock markets and of the Euro.  Both of these factors have affected our investment performance over the period.

In terms of valuations, we see attractive opportunities.  On a weighted average discount of 38% our portfolio is trading at extreme levels of undervaluation; which are slightly wider than those seen at the time of the Lehman crisis in 2008.  Over the past 12 months the weighted average discount has widened by over 10% and this has been a headwind to our performance.  In this environment, dividends have become an important feature.  The overall portfolio dividend yield is now 4%, with many companies increasing their payouts.  Coupled with a discount of 38% we are confident that the portfolio represents good value and is well placed to outperform over time.

Performance
During the Quarter, NAV rose by 0.9%, compared to an increase of 3.8%² for the Benchmark² index on a total return basis.

Discounts³
At the end of December the weighted average discount (excluding liquidity) stood at 38.5% compared to 39% at the end of September.  The discount calculation is a measure of how much the share price of each stock in the portfolio is below our estimate of its net asset value. 

Activity
Total liquidity has been reduced over the period from 12.12% at the end of September to 8.44% at the end of December.  We have added to some of our largest holdings in Europe including GBL, Investor and Orkla on discounts ranging between 28% and 38%.  Hong Kong conglomerates have been weak over the period and now trade on discounts that more than reflect our estimates of potential declines in NAV.  Taking this into account, we added to Shun Tak and Wheelock at wide discounts.

We sold some of our smaller holdings, taking advantage of increased demand for less liquid stocks. 

Financial Performance to 31 December 2011

Statistics

	Value (GB pence)	1 qtr %	1 yr %	3 yr %	5 yr %
Price1	414.1	-0.1	-12.8	32.2	-0.1
Net Asset Value1	450.0	-0.9	-16.2	22.6	-0.5
Net Asset Value Total Return1		0.9	-14.4	29.3	8.2
Benchmark1		3.8	-8.8	34.7	10.3

Annual Returns (%)	2011	2010	2009	2008	2007
Price1	-12.8	18.5	27.9	-22.3	-2.8
MSCI World1	-4.3	15.9	16.5	-17.4	7.7

1 Source: Morningstar. Share price total return is on a mid-to-mid basis, with net income re-invested.
2 Morningstar Global Growth Index: official Benchmark from 1 October 2008
3 Discounts are AVI estimates

Top Ten Equity Holdings	%
Vivendi	11.07
Orkla	7.38
Jardine Strategic	5.98
Investor	5.53
Groupe Bruxelles Lambert	4.29
Sofina	4.09
Aker	3.99
Jardine Matheson	3.71
Deutsche Wohnen	3.01
MI Developments	2.38

Geographic Breakdown (% of total assets)      

	31/12/11	30/09/11*
Continental Europe	49.22	48.12
Asia Pacific	18.93	17.35
Canada/US	10.67	10.50
UK	5.74	5.71
EMEA	3.79	2.60
Japan	3.22	3.60
Liquidity ~	8.44	12.12

~ Liquidity is held primarily in UK and US Government Securities

* As per the Audited Annual Report and Accounts for the year ended 30 September 2011

Sector Breakdown (% of invested assets)

	31/12/11	30/09/11*
Investment Holding Companies	53.32	50.01
Other	12.61	12.10
Mining & Resources	12.39	12.82
Real Estate Companies	7.35	7.41
Investment Companies	5.90	5.54
Liquidity	8.44	12.12

* As per the Audited Annual Report and Accounts for the year ended 30 September 2011

Major Movers

Largest Risers	Percent change	Percent of Assets
Aker	30.25%	3.99%
Amerisur Resources Plc	28.85%	0.65%

Largest Fallers	Percent change	Percent of Assets
Kinross Gold Corp	-25.31%	1.31%
Allied Gold Mining	-21.52%	0.84%

Further Information Investment Manager - John Pennink, Asset Value Investors Limited. [phone]       [e-mail] The share price can be found under 'INVESTMENT COMPANIES' in The Financial Times, The Times, The Daily Telegraph, The Scotsman and The Evening Standard. #British Empire Securities and General Trust financial year commences on the 1st of October. Information may be found on the following websites. www.british-empire.co.uk or www.assetvalueinvestors.com The content of the Company's web-pages and the content of any website or pages which may be accessed through hyperlinks on the Company's web-pages, other than the content of this Interim Management Statement, are neither incorporated into nor form part of the above announcement.

Risk Factors you should consider before investing Investment in the British Empire Securities and General Trust plc (the "Trust") carries risks, which are more fully described in the Key Features Document.  Listed below are some of the key risks: Investors are reminded that past performance is not a guide to future performance and that their capital will be at risk and they may therefore lose some or all of the amounts that they choose to invest in the Trust. The Trust utilises gearing techniques (leverage) which exaggerate market movements both down and up and which could mean sudden and large falls in market value. Movements in exchange rates can impact both the level of income received and the capital value of your investment.  If the currency of your residence strengthens against the currency in which the underlying investments of the fund are made, the value of your investment will reduce and vice versa. As with all stock exchange investments the value of investment trust shares will immediately fall by the difference between the buying and selling prices. Where investments are made in emerging market, unquoted securities or smaller companies, their potential volatility may increase the risk to the value of, and the income from the investment.

All figures as at the period under review unless otherwise stated.  All sources Asset Value Investors Ltd unless otherwise stated.  Asset Value Investors Limited ("AVI") is authorised and regulated by the Financial Services Authority ("FSA").  This document does not constitute an offer to buy or sell shares in the British Empire Securities and General Trust plc (the "Trust").  The contents of this message are not intended to constitute, and should not be construed as, investment advice. Potential investors in the Trust should seek their own independent financial advice.  AVI neither provides investment advice to, nor receives and transmits orders from, investors in the Trust nor does it carry on any other activities with or for such investors that constitute "MiFID or equivalent third country business" for the purposes of the FSA's rules. British Empire Securities and General Trust plc, Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW.  Registered in England & Wales No: 28203

 

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