Interim Management Statement

RNS Number : 6627P

Personal Assets Trust PLC

20 August 2014

 

Personal Assets Trust plc

Interim Management Statement

For the Three Month Period from 1 May 2014 to 31 July 2014

Investment Objective

Personal Assets is an investment trust run expressly for private investors. Its capital structure is the simplest possible for an investment trust, consisting only of ordinary shares. Its investment objective is to protect and increase (in that order) the value of shareholders' funds over the long term.

We aim to pay as high, secure and sustainable a dividend as is compatible with protecting and increasing the value of our shareholders' funds and maintaining our investment flexibility.

The Board's policy is to ensure that the shares of Personal Assets always trade at close to NAV.

Performance Summary

	As at  31 July  2014	As at 30 April 2014	Movement
Market capitalisation	£579.3m	£570.0m	1.6%
Shareholders' funds	£570.4m	£573.2m	(0.5%)
Equities	44.0%	44.0%	-
Gold	10.7%	10.7%	-
US TIPS	16.8%	16.6%	-
UK Index-Linked Gilts	4.7%	4.6%	-
Overseas cash and cash equivalent	5.0%	4.9%	-
UK cash and cash equivalent	18.8%	19.2%	-
Share price	£336.90	£331.90	1.5%
Net asset value per share	£331.69	£333.77	(0.6%)
Premium/(Discount) to NAV	1.6%	(0.6%)	-
FTSE All-Share index	3,585.62	3,619.83	(0.9%)

Period Review and Material Events

Stock markets made little progress during the period under review.  The FTSE 100 Index traded in a tight range of between 6,670 and 6,880 and failed to exceed the all-time high in nominal terms achieved over 14 years ago.  As central bank purchases of government securities have supported stock markets in recent years it should hardly be surprising that the withdrawal of stimulus has made upward progress more challenging.  The multi-year re-rating of equities seems to have reached some resistance.  The knowledge of poor absolute value and weakening corporate earnings combined with rising geopolitical risk in the Ukraine and the Middle East has dampened enthusiasm.

We made only modest changes to the portfolio during the quarter.  Many of the businesses that we hold have broad international diversification.  They have continued to operate in line with our expectations, even if profitability has been hampered by foreign exchange translation.  One such company is Philip Morris, in which we added to the holding following a bout of share price weakness.

We sold the trust's longstanding holding in Greggs, the largest bakery chain in the UK. After a couple of difficult operating years, trading has dramatically improved thanks to the considered actions of the impressive management team. The share price and earnings multiple have duly responded and we thought that too much future good news was being discounted, in what is becoming an increasingly competitive food-on-the-go market.

"The world economy is just as vulnerable to a financial crisis now as in 2007, with the added danger that debt ratios are far higher and emerging markets have been drawn into the fire as well".  These are the recent warnings from the Bank of International Settlements in their annual report, one of the few organisations to warn of the threats that prevailed prior to the financial crisis.  We could not agree more with such sentiments.  As a result, and until stock markets present better value, we will remain cautiously positioned.

During the three months ended 31 July 2014 the Company re-issued 12,217 Ordinary Shares from Treasury for a total consideration of £4.1 million, representing 0.7% of the Ordinary Shares in issue at the beginning of the period, and also re-purchased for Treasury 10,100 Ordinary Shares for a total cost of £3.4m, representing 0.6% of the Ordinary Shares in issue at the beginning of the period. Since 31 July 2014 the Company has issued a further 3,064 Ordinary Shares from Treasury for a total consideration of £1.0 million.

On 5 June the Company announced a first interim dividend of £1.40 per share. This was paid to shareholders on 17 July 2014. On 24 July the Company announced a second interim dividend of £1.40 per share. This will be paid to shareholders on 16 October 2014.

Top Ten Equity Holdings as at 31 July 2014

Company	Percentage of shareholders' funds	Percentage of equity exposure
British American Tobacco	4.3	9.8
Nestlé	3.7	8.4
Microsoft	3.5	8.0
Imperial Oil	3.5	8.0
Philip Morris	3.0	6.8
GlaxoSmithKline	2.9	6.6
Coca-Cola	2.9	6.6
Becton Dickinson	2.7	6.1
Dr Pepper Snapple	2.5	5.6
Altria	2.2	5.0
Other equities (9)	12.8	29.1
Total	44.0	100.0

Geographical Analysis as at 31 July 2014

Country	Percentage of shareholders' funds
US equities	22.9
UK equities	12.5
Canadian equities	4.2
European equities	3.7
Australian equities	0.7
Gold	10.7
US TIPS	16.8
UK Index-Linked Gilts	4.7
Overseas cash and cash equivalent (all in Singapore Dollars)	5.0
UK cash and cash equivalent	18.8
Total	100.0

Sector Distribution as at 31 July 2014

Sector	Percentage of shareholders' funds
Oil & Gas	3.5
Basic Materials	2.7
Consumer Goods	23.4
Health Care	5.7
Financials	3.0
Technology	5.7
Gold	10.7
US TIPS	16.8
UK Index-Linked Gilts	4.7
Overseas cash and cash equivalent	5.0
UK cash and cash equivalent	18.8
Total	100.0

Additional Information

Further information regarding the Company, including Quarterly Reports and Investment Plan documents can be obtained from the Company's website www.patplc.co.uk or from Steven Budge, Personal Assets Trust plc, 10 St. Colme Street, Edinburgh EH3 6AA. Telephone: [phone].

Email: [e-mail]

 

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