Interim Management Statement

RNS Number : 3944O

British Empire Sec & Gen Tst PLC

06 August 2014

 



BRITISH EMPIRE SECURITIES AND GENERAL TRUST PLC

Interim Management Statement - 3 months ended 30 June 2014

This investment management report relates to performance figures to 30 June 2014.

Summary NAV Performance (total return basis)

	Qtr	Financial Yr# to date	Calendar Yr to date
BTEM NAV TR1	2.2%	7.0%	4.2%
MSCI ACWI Ex US TR3	2.6%	5.1%	2.5%
Morningstar Global Growth TR1	1.3%	6.9%	1.8%
MSCI AC World1	2.5%	8.3%	3.1%

# British Empire Securities & General Trust financial year commences on 1 October.  All figures published before the fiscal results announcement are AVI estimates and subject to change.

Quarterly Investment Manager's Review

Performance and Activity
During the quarter, the NAV per share rose by 2.2%, compared to an increase of 2.6% for the Benchmark³ index.

Over the 3 month period, the share price total return was 2.5%.

The period was marked by an increase in activity in both purchases and sales.  We are seeing increased levels of corporate activity across the portfolio.  M&A activity has picked up sharply, the IPO market is buoyant and companies are looking at corporate reorganisations as a means of boosting share price performance.  This is a favourable environment for our strategy.

Portfolio turnover has picked up as a consequence of discounts in some cases reaching target levels - often at, or very close to, NAV.  Thus several holdings have been entirely or partially sold during the period.  They include Gagfah, British Land and Hyundai Motor Company Preference shares.  At the same time, we are able to identify good quality companies that are still trading on wide discounts and have the potential to benefit from both NAV growth and discount contraction.  New investments made during the period include Ecofin Water & Power and Tui AG.  In addition, further investments were made in several existing companies within the portfolio.

The overall effect of these purchases and sales over the period was to reduce the net liquidity level to 3.1% as at 30 June 2014, compared to 7.4% as at 31 March 2014.

The largest positive contributors to performance were Aker ASA, Dogan Holding, Rallye, Gagfah and First Pacific.

The largest detractors to performance were Jardine Matheson, Vivendi, Marwyn Value, WM Morrison and Sofina.

Discounts³
At the end of June, the weighted average discount of the underlying portfolio (excluding liquidity) stood at 28.4% compared to 27.5% at the end of March.  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.  The trend in the weighted average discount can be seen in the chart below:

Weighted Average Discounts in the underlying portfolio of
British Empire Securities & General Trust (ex liquidity) 

http://www.rns-pdf.londonstockexchange.com/rns/3944O_-2014-8-6.pdf 

Share Buybacks

We bought back 2,098,442 shares in British Empire Securities & General Trust plc during the period at an average price of 497.61p.  The shares were purchased at an average discount of 13.7%.

Financial Performance to 30 June 2014

Statistics

	Value	% 1 qtr	% 1 yr	% 3 yr	% 5 yr
Price (£) TR2	497.0	2.5	7.2	2.7	46.7
Net Asset Value Total Return1	574.6	2.2	7.1	11.1	65.6
MSCI ACWI ex US TR3		2.6	8.4	12.4	66.6
Morningstar Global Growth TR3		1.3	10.5	22.9	88.3

Annual Returns (%)	2013	2012	2011	2010	2009
Price TR1	5.1	17.8	-12.8	18.5	27.9
Net Asset Value TR1	7.6	19.6	-13.6	21.0	25.1
MSCI ACWI ex US (£)TR3	13.6	12.2	-12.7	15.1	26.6
Morningstar Global Growth TR3	21.3	12.7	-9.4	19.0	24.6
MSCI World TR1	25.0	11.4	-4.3	15.9	16.5

1 Source: Morningstar

2 Source: Morningstar. Share price total return is on a mid-to-mid basis, with net income re-invested.

3  From 1 October 2013 the lead benchmark was changed to the MSCI ACWI ex US (£) Index.

Top Ten Equity Holdings	% of total assets
Jardine Matheson	6.12
Investor AB	6.03
Groupe Bruxelles Lambert	5.19
Aker	5.07
Sofina	3.75
First Pacific Co	3.28
Vivendi	3.26
Hyundai Motor	3.19
NB Private Equity Partners	2.96
Harbourvest Global	2.65

Geographic Breakdown (% of total assets)

	30/06/14	31/03/14
Europe	32.1	32.2
Americas	25.9	24.6
Pacific ex-Japan	17.8	16.6
United Kingdom	9.3	8.3
EMEA	7.2	6.2
Japan	4.9	4.7
Liquidity	3.1	7.4

~ Liquidity is held primarily in UK and US Government Securities

Sector Breakdown (% of total assets)

	30/06/14	31/03/14
European Holding Companies	25.9	22.6
Closed-End Funds	22.7	18.7
Property	16.8	20.7
Asian Holding Companies	12.6	12.8
Conglomerate	7.7	8.9
N. American Holding Companies	4.3	4.1
Other	4.0	2.1
Liquidity	3.1	7.4
EMEA Holding Companies	2.5	2.0
Resources & Mining	0.7	0.7

Major Movers

Largest Risers	% change	% of assets at 30/06/14
AKER ASA-A SHARES	9.50%	5.07%
ECOFIN WATER & POWER OPP-ORD	9.09%	2.62%

Largest Fallers	% change	% of assets at 30/06/14
WM MORRISON SUPERMARKETS	-9.07%	2.02%
VIVENDI	-7.12%	3.26%

Further Information Investment Manager - John Pennink and Joe Bauernfreund, AVI Ltd. [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. Information may be found on the following websites. www.british-empire.co.uk or www.assetvalueinvestors.com

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. British Empire Securities and General Trust plc, Beaufort House, 51 New Road, Exeter, EX4 4EP.  Registered in England & Wales No: 28203 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 Conduct Authority of the United Kingdom (the "FCA") and is a registered investment adviser with the Securities and Exchange Commission of the United States.  While the Investment Manager is registered with the SEC as an investment adviser, it does not comply with the Advisers Act with regard to its non-U.S. clients.  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 FCA's rules.

 

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