Half-year Report

RNS Number : 9748C

F&C Managed Portfolio Trust PLC

26 January 2018

 

To:      RNS

Date:  26 January 2018

From: F&C Managed Portfolio Trust plc

Interim Results

The Board of F&C Managed Portfolio Trust plc announces the unaudited interim results of the Company for the six month period to 30 November 2017.

Chairman's Statement

Highlights

·      Net asset value total return of 2.0% for the Income shares and 6.3% for the Growth shares, both of which outperformed the FTSE All-Share Index total return of -0.2%

·      First two interim dividends increased to 1.3 pence per Income share

·      Income share dividend yield of 3.9% at 30 November 2017

Investment performance

For the six months to 30 November 2017, the net asset value (NAV) total return was 2.0% for the Income shares and 6.3% for the Growth shares.  The total return for the benchmark index for both portfolios, the FTSE All-Share Index, was -0.2%.

Once again the past six months have been eventful, particularly in the context of the political environment in the UK. A surprise general election in June produced an inconclusive result and served only to add to the climate of uncertainty caused by the prolonged negotiations over Brexit. Though this did affect UK equity markets initially, the driving factor for global equity markets has been the synchronised nature of the strengthening recovery which has become increasingly apparent around the world.  This is particularly true of the US where the Federal Reserve has started the process of raising interest rates. This policy has been well flagged so as not to create undue volatility in either equity or bond markets.

Against this background it is encouraging that both portfolios were ahead of the FTSE All-Share Index over the period. This maintains their long term record of strong performance.

For the Growth Portfolio two themes were evident in the outperformers. First was exposure to Japanese and Asia Pacific markets which performed strongly. In the case of Japan the stock market moved ahead following the re-election of Prime Minister Abe in October. This was of benefit to long time holding Baillie Gifford Japan Trust where the focus on medium and small growth companies in Japan has been the driver to the trust's 27% share price gain. Schroder Asian Total Return Investment Company rose 20% helped by strong performances from a number of markets in the Asia Pacific region. The second theme was the portfolio's continuing exposure to the biotechnology and technology sectors. Leading the gainers was Syncona which was ahead by 24% over the period where a key factor was the successful listing on NASDAQ of one of its major holdings. Allianz Technology Trust gained 18% and fully benefitted from the strong performance of the wider technology sector. Herald Investment Trust is another long time holding in the portfolio and in this case its exposure to smaller technology companies in the UK was behind a 19% rise in the share price. The main laggards in the portfolio were Woodford Patient Capital Trust which fell 9% due in part to poor performance from its largest holding and a widening of the share price discount to asset value and Perpetual Income & Growth Investment Trust which was 6% lower also due to poor share price performance from a large holding in Provident Financial and a widening in the discount.

For the Income Portfolio the best performer was BB Biotech which rose 15%. Listed in Zurich, this £2.8bn portfolio is principally invested in a number of the major US biotechnology companies also with exposure to some medium sized and smaller companies. A series of new products has underpinned strong earnings growth for companies in the sector where valuations are attractive relative to the broader US market. CC Japan Income and Growth Trust gained 15% and benefitted from the buoyant Japanese stock market. Recent new issue Jupiter Emerging & Frontier Income Trust was 13% ahead over the period and has got off to a strong start due to good stock selection. The trust has a 4% dividend yield. The Bankers Investment Trust was also a notable performer rising 11%. The trust has a global mandate and benefitted from favourable asset allocation and strong stock selection from an experienced manager and team. Although the dividend yield is only just over 2%, it has a record of increasing the dividend for 50 successive years. Most of the laggards were either in the UK Equity Income or Infrastructure sectors. Edinburgh Investment Trust was down 8% and as has been mentioned earlier Perpetual Income & Growth Investment Trust was 6% lower. Exposure to larger companies in the FTSE 100 with significant overseas earnings was a headwind due to the unexpected 5% rise in the value of sterling relative to the dollar. Encouragingly both trusts raised their dividend by 5% and have dividend yields of around 3.6%. HICL Infrastructure fell 7% following threats by the Labour party to unwind PFI contracts and Renewables Infrastructure Group was down 5% as a result of falling power prices. The attraction for holding them is secure and modestly growing dividends with yields which are around 5% and 6% respectively.

(All share prices are total return)

Revenue and dividends

The Company's net revenue for the six months was £1,421,000 which is equivalent to 3.36p per Income share (compared to 2.91p per Income share for the corresponding period in 2016). Income shares are entitled to all the dividends paid by the Company.

In line with our objective of increasing dividends over time, the Company has declared a first and second interim dividend in respect of the year to 31 May 2018, each of 1.3p per Income share (1.25p per share in the prior periods).

In the absence of unforeseen circumstances the Board intends to pay three interim dividends, each of 1.3p per Income share in the current financial year. The amount of the fourth interim dividend will be determined when a clearer view of income for the year emerges. The annual rate of 5.45p per Income share paid in the prior year represents a yield on the Income share price at 30 November 2017 of 3.9%.

Borrowing

At 30 November 2017 the Income Portfolio had total borrowings of £5 million (7.9% of gross assets) the investment of which helps to boost net income after allowing for the interest cost. The Growth Portfolio had no borrowings.

Discount to NAV and share buy-backs

In normal circumstances we aim to maintain our discount at not more than 5%, by buying back shares from time to time if necessary. In practice over the years the shares have generally traded close to NAV. During the six months to 30 November 2017 the average premium to NAV for the Income shares and for the Growth shares was 1.8% and 0.9% respectively.  At 30 November 2017, the Income shares and the Growth shares stood at a premium to NAV of 1.4% and 1.3% respectively.

Outlook

The global outlook for equity markets remains constructive. That said it would be wrong to ignore that markets have had a remarkable run since the great financial crash nearly ten years ago and that geo-political risks abound. Valuations in certain markets, especially the US are elevated, stretched even. However neither age nor valuation are, when viewed in isolation, reasons why further positive returns cannot be achieved. The economic recovery has broadened out through Europe, Asia Pacific and many emerging markets. Globally corporate earnings growth is strong and looks likely to continue in robust fashion into 2018. Although monetary policy is tightening in the US this has been well flagged and is gradual, whilst elsewhere it remains stimulative and supportive of equity markets. There are risks, which warrant a cautious approach with regard to strategy and investment selections, where the focus will remain on the best quality investment companies for both portfolios.

Richard M Martin

Chairman

25 January 2018

Unaudited Condensed Income Statement

Six months to 30 November 2017

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Gains on investments Foreign exchange gains		-             -	4,384             2	4,384 2
Income	2	1,812	-	1,812
Investment management and performance fee	3	(124)	(620)	(744)
Other expenses		(235)	-	(235)
Return on ordinary activities before finance           costs and tax		1,453	3,766	5,219
Finance costs		(22)	(33)	(55)
Return on ordinary activities before tax		1,431	3,733	5,164
Tax on ordinary activities		(10)	-	(10)
Return attributable to shareholders		1,421	3,733	5,154
Return per Income share (pence)	5	3.36p	(0.67)p	2.69p
Return per Growth share (pence)	5	-	11.65p	11.65p

The total column of this statement is the Profit and Loss Account of the Company.

The supplementary revenue and capital columns are prepared under the guidance published by The Association of Investment Companies.

All revenue and capital items in the Income Statement derive from continuing operations.

Unaudited Condensed Income Statement

Six months to 30 November 2016

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Gains on investments Foreign exchange gains		-             -	8,664             4	8,664 4
Income	2	1,559	-	1,559
Investment management and performance fee	3	(103)	(245)	(348)
Other expenses		(231)	-	(231)
Return on ordinary activities before finance           costs and tax		1,225	8,423	9,648
Finance costs		(4)	(7)	(11)
Return on ordinary activities before tax		1,221	8,416	9,637
Tax on ordinary activities		(9)	-	(9)
Return attributable to shareholders		1,212	8,416	9,628
Return per Income share (pence)	5	2.91p	8.30p	11.21p
Return per Growth share (pence)	5	-	14.69p	14.69p

The total column of this statement is the Profit and Loss Account of the Company.

The supplementary revenue and capital columns are prepared under the guidance published by The Association of Investment Companies.

All revenue and capital items in the Income Statement derive from continuing operations.

Condensed Income Statement (audited)

Year to 31 May 2017

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Gains on investments Foreign exchange gains		- -	22,555 3	22,555 3
Income	2	3,167	-	3,167
Investment management and performance fee	3	(219)	(554)	(773)
Other expenses		(461)	-	(461)
Return on ordinary activities before finance costs and tax		2,487	22,004	24,491
Finance costs		(19)	(30)	(49)
Return on ordinary activities before tax		2,468	21,974	24,442
Tax on ordinary activities		(17)	-	(17)
Return attributable to shareholders		2,451	21,974	24,425
Return per Income share (pence)	5	5.89p	21.35p	27.24p
Return per Growth share (pence)	5	-	38.71p	38.71p

The total column of this statement is the Profit and Loss Account of the Company.

The supplementary revenue and capital columns are prepared under the guidance published by The Association of Investment Companies.

All revenue and capital items in the Income Statement derive from continuing activities.

Unaudited Condensed Balance Sheet

As at 30 November 2017

	Notes	Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Fixed assets
Investments	4	61,877	67,042	128,919
Current assets
Debtors Cash at bank and on deposit		266 982	100 1,895	366 2,877
		1,248	1,995	3,243
Creditors
Amounts falling due within one year		(254)	(413)	(667)
Net current assets		994	1,582	2,576
Creditors
Amounts falling due in more than one year		(5,000)	-	(5,000)
Net assets		57,871	68,624	126,495
Capital and reserves
Called-up share capital	7	4,254	3,475	7,729
Share premium		21,894	19,626	41,520
Capital redemption reserve		-	182	182
Special reserve		19,163	17,190	36,353
Capital reserves		10,582	28,151	38,733
Revenue reserve		1,978	-	1,978
Shareholders' Funds		57,871	68,624	126,495
Net asset value per share (pence)	8	136.63p	197.47p

Unaudited Condensed Balance Sheet

As at 30 November 2016

	Notes	Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Fixed assets
Investments		52,461	53,574	106,035
Current assets
Debtors Cash at bank and on deposit		201 2,245	75 976	276 3,221
		2,446	1,051	3,497
Creditors
Amounts falling due within one year		(3,648)	(143)	(3,791)
Net current (liabilities)/assets		(1,202)	908	(294)
Net assets		51,259	54,482	105,741
Capital and reserves
Called-up share capital		4,254	3,428	7,682
Share premium		21,685	18,546	40,231
Capital redemption reserve		-	182	182
Special reserve		18,265	16,315	34,580
Capital reserves		5,431	16,011	21,442
Revenue reserve		1,624	-	1,624
Shareholders' Funds		51,259	54,482	105,741
Net asset value per share (pence)	8	123.34p	161.75p

Condensed Balance Sheet (audited)

As at 31 May 2017

		Income Shares	Growth Shares	Total
	Notes	£'000	£'000	£'000
Fixed assets
Investments	4	61,863	61,770	123,633
Current assets
Debtors		189	48	237
Cash at bank and on deposit		773	2,691	3,464
		962	2,739	3,701
Creditors
Amounts falling due within one year		(171)	(688)	(859)
Net current assets		791	2,051	2,842
Creditors
Amounts falling due in more than one year		(5,000)	-	(5,000)
Net assets		57,654	63,821	121,475
Capital and reserves
Called-up share capital	7	4,254	3,435	7,689
Share premium		21,839	18,879	40,718
Capital redemption reserve		-	182	182
Special reserve		18,873	17,190	36,063
Capital reserves		10,865	24,135	35,000
Revenue reserve		1,823	-	1,823
Shareholders' Funds		57,654	63,821	121,475
Net asset value per share (pence)	8	136.93p	185.78p

Unaudited Condensed Statement of Cash Flows

Six months to 30 November 2017

	Notes	Income Shares		Growth Shares	Total
		£'000		£'000	£'000
Net cash inflow from operating activities	9	848		77	925
Investing activities
Purchases of investments		(5,733)		(4,374)	(10,107)
Sales of investments		6,015		2,714	8,729
Cash flows from investing activities		282		(1,660)	(1,378)
Cash flows before financing activities		1,130		(1,583)	(453)
Financing activities
Equity dividends paid Net proceeds from issuance of new shares		(1,266) -		- 787	(1,266) 787
Sale of shares from treasury		345		-	345
Cash flows from financing activities		(921)		787	(134)
Net movement in cash and cash equivalents		209		(796)	(587)
Cash and cash equivalents at the beginning of the      period Cash and cash equivalents at the end of the      period		773 982		2,691                   1,895	3,464 2,877
Represented by: Cash at bank and short-term deposits		982		1,895	2,877

Unaudited Condensed Statement of Cash Flows

Six months to 30 November 2016

	Notes	Income Shares		Growth Shares	Total
		£'000		£'000	£'000
Net cash inflow from operating activities	9	784		86	870
Investing activities
Purchases of investments		(6,300)		(3,253)	(9,553)
Sales of investments		5,948		3,551	9,499
Cash flows from investing activities		(352)		298	(54)
Cash flows before financing activities		432		384	816
Financing activities
Equity dividends paid Net proceeds from issuance of new shares		(1,188) 6		- 5	(1,188) 11
Shares purchased to be held in treasury Loan drawn down		(267) 2,500		(418) -	(685) 2,500
Cash flows from financing activities		1,051		(413)	638
Net movement in cash and cash equivalents		1,483		(29)	1,454
Cash and cash equivalents at the beginning of the      period Cash and cash equivalents at the end of the     period		762 2,245		1,005 976	1,767 3,221
Represented by: Cash at bank and short-term deposits		2,245		976	3,221

Condensed Statement of Cash Flows (audited)

Year to 31 May 2017

	Notes			Income Shares		Growth Shares	Total
			£'000			£'000	£'000
Net cash inflow from operating activities	9		1,676		226		1,902
Investing activities
Purchases of investments			(11,594)		(5,871)		(17,465)
Sales of investments			7,650		6,530		14,180
Cash flows from investing activities			(3,944)		659		(3,285)
Cash flows before financing activities			(2,268)		885		(1,383)
Financing activities
Equity dividends paid			(2,228)		-		(2,228)
Net proceeds from issue of new shares Sale of shares from treasury Shares purchased to be held in treasury			12 1,074 (579)		144 1,075 (418)		156 2,149 (997)
Loan drawn down			4,000		-		4,000
Cash flows from financing activities			2,279		801		3,080
Net movement in cash and cash equivalents			11		1,686		1,697
Cash and cash equivalents at the beginning of the    period Cash and cash equivalents at the end of the    period			762 773		1,005 2,691		1,767 3,464
Represented by: Cash at bank and short-term deposits			773		2,691		3,464

Unaudited Condensed Statement of Changes in Equity

Six months to 30 November 2017

Income Shares	Share capital £000	Share premium account £000	Capital redemption reserve £000	Special reserve £000	Capital reserves £000	Revenue reserve £000	Total shareholders' funds £000
As at 31 May 2017	4,254	21,839	-	18,873	10,865	1,823	57,654
Shares sold from treasury	-	55	-	290	-	-	345
Transfer of net income from Growth to Income Portfolio	-	-	-	-	-	338	338
Transfer of capital from Income to Growth Portfolio	-	-	-	-	(338)	-	(338)
Dividends paid	-	-	-	-	-	(1,266)	(1,266)
Return attributable to shareholders	-	-	-	-	55	1,083	1,138
As at 30 November 2017	4,254	21,894	-	19,163	10,582	1,978	57,871
Growth Shares
As at 31 May 2017	3,435	18,879	182	17,190	24,135	-	63,821
Increase in share capital in issue, net of share issuance expenses	40	747	-	-	-	-	787
Transfer of net income from Growth to Income Portfolio	-	-	-	-	-	(338)	(338)
Transfer of capital from Income to Growth Portfolio	-	-	-	-	338	-	338
Return attributable to shareholders	-	-	-	-	3,678	338	4,016
As at 30 November 2017	3,475	19,626	182	17,190	28,151	-	68,624
Total Company
As at 31 May 2017	7,689	40,718	182	36,063	35,000	1,823	121,475
Shares sold from treasury	-	55	-	290	-	-	345
Increase in share capital in issue, net of share issuance expenses	40	747	-	-	-	-	787
Dividends paid	-	-	-	-	-	(1,266)	(1,266)
Return attributable to shareholders	-	-	-	-	3,733	1,421	5,154
As at 30 November 2017	7,729	41,520	182	36,353	38,733	1,978	126,495

Unaudited Condensed Statement of Changes in Equity

Six months to 30 November 2016

Income Shares	Share capital £000	Share premium account £000	Capital redemption reserve £000	Special reserve £000	Capital reserves £000	Revenue reserve £000	Total shareholders' funds £000
As at 31 May 2016	4,254	21,685	-	18,532	1,973	1,600	48,044
Shares purchased for treasury	-	-	-	(267)	-	-	(267)
Transfer of net income from Growth to Income Portfolio	-	-	-	-	-	274	274
Transfer of capital from Income to Growth Portfolio	-	-	-	-	(274)	-	(274)
Dividends paid	-	-	-	-	-	(1,188)	(1,188)
Return attributable to shareholders	-	-	-	-	3,732	938	4,670
As at 30 November 2016	4,254	21,685	-	18,265	5,431	1,624	51,259
Growth Shares
As at 31 May 2016	3,428	18,546	182	16,733	11,053	-	49,942
Shares purchased for treasury	-	-	-	(418)	-	-	(418)
Transfer of net income from Growth to Income Portfolio	-	-	-	-	-	(274)	(274)
Transfer of capital from Income to Growth Portfolio	-	-	-	-	274	-	274
Return attributable to shareholders	-	-	-	-	4,684	274	4,958
As at 30 November 2016	3,428	18,546	182	16,315	16,011	-	54,482
Total Company
As at 31 May 2016	7,682	40,231	182	35,265	13,026	1,600	97,986
Shares purchased for treasury	-	-	-	(685)	-	-	(685)
Dividends paid	-	-	-	-	-	(1,188)	(1,188)
Return attributable to shareholders	-	-	-	-	8,416	1,212	9,628
As at 30 November 2016	7,682	40,231	182	34,580	21,442	1,624	105,741

Condensed Statement of Changes in Equity (audited)

Year to 31 May 2017

Income Shares	Share capital £000	Share premium account £000	Capital redemption reserve £000	Special reserve £000	Capital reserves £000	Revenue reserve £000	Total shareholders' funds £000
As at 31 May 2016	4,254	21,685	-	18,532	1,973	1,600	48,044
Shares sold from treasury	-	154	-	920	-	-	1,074
Shares purchased for treasury	-	-	-	(579)	-	-	(579)
Transfer of net income from Growth to Income Portfolio	-	-	-	-	-	516	516
Transfer of capital from Income to Growth portfolio	-	-	-	-	(516)	-	(516)
Dividends paid	-	-	-	-	-	(2,228)	(2,228)
Return attributable to shareholders	-	-	-	-	9,408	1,935	11,343
As at 31 May 2017	4,254	21,839	-	18,873	10,865	1,823	57,654
Growth Shares
As at 31 May 2016	3,428	18,546	182	16,733	11,053	-	49,942
Increase in share capital in issue, net of share issuance expenses	7	133	-	-	-	-	140
Shares sold from treasury	-	200	-	875	-	-	1,075
Shares purchased for treasury	-	-	-	(418)	-	-	(418)
Transfer of net income from Growth to Income Portfolio	-	-	-	-	-	(516)	(516)
Transfer of capital from Income to Growth Portfolio	-	-	-	-	516	-	516
Return attributable to shareholders	-	-	-	-	12,566	516	13,082
As at 31 May 2017	3,435	18,879	182	17,190	24,135	-	63,821
Total Company
As at 31 May 2016	7,682	40,231	182	35,265	13,026	1,600	97,986
Increase in share capital in issue, net of share issuance expenses	7	133	-	-	-	-	140
Shares sold from treasury	-	354	-	1,795	-	-	2,149
Shares purchased for treasury	-	-	-	(997)	-	-	(997)
Dividends paid	-	-	-	-	-	(2,228)	(2,228)
Return attributable to shareholders	-	-	-	-	21,974	2,451	24,425
As at 31 May 2017	7,689	40,718	182	36,063	35,000	1,823	121,475

Statement of Principal Risks and Uncertainties

Most of the Company's principal risks that could threaten the achievement of its objective; strategy, future performance, liquidity and solvency are market related and comparable to those of other investment trusts investing primarily in listed securities.

These risks, and the way in which they are managed, are described in more detail under the heading "Principal Risks and Viability Statement" within the Strategic Report in the Company's 2017 Annual Report.

The Company's principal risks and uncertainties have not changed materially since the date of that report and are not expected to change materially for the remainder of the Company's financial year.

The most important types of risk associated with financial instruments are credit risk, market price risk, liquidity risk, interest rate risk and foreign currency risk.  Other risks faced by the Company include investment, custody and operational risks.

Statement of Directors' Responsibilities in Respect of the Interim Report

We confirm, that to the best of our knowledge:

·      the condensed set of financial statements have been prepared in accordance with applicable UK Accounting Standards on a going concern basis and give a true and fair view of the assets, liabilities, financial position and return of the Company;

·      the Chairman's Statement (constituting the Interim Management Report) together with the Statement of Principal Risks and Uncertainties shown above include a fair review of the information required by the Disclosure Guidance and Transparency Rules ('DTR') 4.2.7R, being an indication of important events that have occurred during the first six months of the financial year and their impact on the financial statements; and

·      the condensed set of financial statements include a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during the period, and any changes in the related party transactions described in the last Annual Report that could do so.

On behalf of the Board

Richard M. Martin

Director

25 January 2018

Notes

1.  Accounting Policies

The unaudited interim results have been prepared on a going concern basis in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, FRS 102, FRS 104 Interim Financial Reporting issued by the FRC in March 2015 and the Statement of Recommended Practice ("SORP") "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued by the AIC.

The accounting policies applied for the unaudited interim results are set out in the Company's annual report for the year ended 31 May 2017.

2.  Income

	Six months to 30 November 2017	Six months to 30 November 2016	Year to 31 May 2017
	£'000	£'000	£'000
UK dividends	1,100	1,049	2,081
Overseas dividends	706	499	1,071
Interest on fixed   interest securities Deposit income	2 4	6 5	9 6
Total income	1,812	1,559	3,167

3.  Investment management and performance fee

    There have been no changes to the terms of the management and performance fee arrangements with F&C Investment Business Limited, which are set out in detail in the Annual Report and Accounts to 31 May 2017. 

    During the period, the Company has incurred investment management fees of £419,000 (30 November 2016: £343,000; 31 May 2017: £730,000) of which £207,000 is payable to F&C Investment Business Limited at the period end.  

    At 30 November 2017 the adjusted total return of the Income Portfolio for the period since 31 May 2016 (being the date a performance fee was last payable) exceeded that of the FTSE All-Share Index and a performance fee of £85,000 has been accrued in the Income Portfolio. At 30 November 2017 the adjusted total return of the Growth portfolio since 31 May 2017 (being the date a performance fee was last payable) exceeded that of the FTSE All-Share Index and a performance fee of £240,000 has been accrued in the Growth Portfolio (30 November 2016: £5,000 - Income Portfolio and £nil - Growth Portfolio; 31 May 2017: £nil - Income Portfolio and £43,000 - Growth Portfolio).                

4.  Investments

	Income Shares Level 1* £'000	Growth Shares Level 1* £'000	Total £'000
Cost at 31 May 2017 Gains at 31 May 2017	45,332 16,531	39,422 22,348	84,754 38,879
Valuation at 31 May 2017 Movement in the period: Purchases at cost Sales proceeds Gains on investments sold in the period (Losses)/gains on investments held at period end	61,863 5,735 (6,015) 1,203 (909)	61,770 3,896 (2,714) 229 3,861	123,633 9,631 (8,729) 1,432 2,952
Valuation of investments held at 30 November 2017	61,877	67,042	128,919

	Income Shares Level 1* £'000	Growth Shares Level 1* £'000	Total £'000
Cost at 30 November 2017 Gains at 30 November 2017	46,255 15,622	40,833 26,209	87,088 41,831
Valuation at 30 November 2017	61,877	67,042	128,919

* Fair value hierarchy

The Company's investments as disclosed in the balance sheet are valued at fair value. The fair value as at the reporting date has been estimated using the following fair value hierarchy:

·      Level 1 - Quoted prices (unadjusted) in active markets for identical assets;

·      Level 2 - Investments whose value is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables includes only data from observable markets; and

·      Level 3 - Investments whose value is not based on observable market data.

There are no investments held which are valued in accordance with levels 2 or 3.

5.  Return per share

     The return per share for the six months to 30 November 2017 is as follows:

	Income Shares			Growth Shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to   Portfolios	1,083	55	1,138	338	3,678	4,016
Transfer of net income      from Growth to Income     Portfolio	338	-	338	(338)	-	(338)
Transfer of capital from    Income to Growth      Portfolio	-	(338)	(338)	-	338	338
Return attributable to   shareholders	1,421	(283)	1,138	-	4,016	4,016
Return per share	3.36p	(0.67)p	2.69p	-	11.65p	11.65p
Weighted average number of shares in issue during the period	42,256,401			34,476,491

The return per share for the comparative six months to 30 November 2016 is as follows:

	Income Shares			Growth Shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to   shareholders	1,212	3,458	4,670	-	4,958	4,958
Return per share	2.91p	8.30p	11.21p	-	14.69p	14.69p
Weighted average number of shares in issue during the period	41,664,543			33,756,997

The return per share for the comparative year to 31 May 2017 is as follows:

	Income Shares			Growth Shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to   shareholders	2,451	8,892	11,343	-	13,082	13,082
Return per share	5.89p	21.35p	27.24p	-	38.71p	38.71p
Weighted average number of shares in issue during the period	41,646,802			33,793,152

6.    Dividends

	Six months to 30 November 2017	Six months to 30 November 2016	Year to 31 May 2017
Dividends on Income Shares	£'000	£'000	£'000
Amounts recognised as distributions during the period:
In respect of the previous financial year:
- fourth interim of 1.70p (prior period: 1.60p) per       share	716	669	669
In respect of the period under review:
- first interim of 1.30p (prior period: 1.25p) per share	550	519	519
- second interim (prior period: 1.25p per share)	-	-	520
- third interim (prior period: 1.25p per share)	-	-	520
	1,266	1,188	2,228

       A second interim dividend in respect of the year to 31 May 2018 of 1.30p per Income share was paid on 5 January 2018 to shareholders on the register on 15 December 2017. This amount has not been accrued in the results for the six months to 30 November 2017.

       For the financial year to 31 May 2017 interim dividends totalled 5.45p per Income share.          

       The Growth shares do not carry an entitlement to receive dividends.

7.    Share capital

	Listed		Held in Treasury		In issue
	Number	£'000	Number	£'000	Number	£'000
Income shares of 10p each
Balance at 1 June 2017	42,535,035	4,254	(430,000)	(43)	42,105,035	4,211
Resold from Treasury	-	-	250,000	25	250,000	25
Balance at 30 November 2017	42,535,035	4,254	(180,000)	(18)	42,355,035	4,236

During the period, the Company sold 250,000 Income shares from treasury receiving net proceeds of £345,000. At 30 November 2017, the Company held 180,000 Income shares in treasury. 

	Listed		Held in Treasury		In issue
	Number	£'000	Number	£'000	Number	£'000
Growth shares of 10p each
Balance at 1 June 2017	34,352,037	3,435	-	-	34,352,037	3,435
Issued	400,000	40	-	-	400,000	40
Balance at 30 November 2017	34,752,037	3,475	-	-	34,752,037	3,475
Total at 30 November 2017	77,287,072	7,729	(180,000)	(18)	77,107,072	7,711

  During the period, the Company issued 400,000 Growth shares and received net proceeds of £787,000. At 30 November 2017, the Company held no Growth shares in treasury. 

8.     Net asset value per share

	30 November 2017	30 November 2016	31 May 2017
Income shares
Net asset value per share	136.63p	123.34p	136.93p
Net assets attributable at end of   period - £'000s	57,871	51,259	57,654
Shares in issue at end of period - number	42,355,035	41,560,035	42,105,035
Growth shares
Net asset value per share	197.47p	161.75p	185.78p
Net assets attributable at end of   period - £'000s	68,624	54,482	63,821
Shares in issue at end of period - number	34,752,037	33,683,500	34,352,037

9.    Reconciliation of return on ordinary activities before tax to cash flows from operating activities

Six months to 30 November 2017	Income Shares             £'000		Growth Shares £'000	Total £'000
Return on ordinary activities before tax Adjust for returns from non-operating activities:		1,145	4,019	5,164
Gains on investments		(294)	(4,090)	(4,384)
Exchange gains		(2)	-	(2)
Return from operating activities		849	(71)	778
Increase in prepayments and accrued   income		(86)	(51)	(137)
Increase in creditors		83	202	285
Withholding tax suffered		2	(3)	(1)
Net cash flows from operating activities		848	77	925

Six months to 30 November 2016	Income Shares             £'000		Growth Shares £'000	Total £'000
Return on ordinary activities before tax Adjust for returns from non-operating activities:		4,678	4,959	9,637
Gains on investments		(3,843)	(4,821)	(8,664)
Exchange gains		(4)	-	(4)
Return from operating activities		831	138	969
Increase in prepayments and accrued   income		(36)	(51)	(87)
Increase in creditors		7	1	8
Withholding tax suffered		(18)	(2)	(20)
Net cash flows from operating activities		784	86	870

Year ended 31 May 2017		Income Shares £'000	Growth Shares £'000	Total £'000
Return on ordinary activities before tax Adjust for returns from non-operating activities:	11,359		13,083	24,442
Gains on investments	(9,654)		(12,901)	(22,555)
Exchange gains	(3)		-	(3)
Return from operating activities	1,702		182	1,884
Decrease/(increase) in prepayments and     accrued income	45		(11)	34
(Decrease)/increase in creditors	(19)		57	38
Withholding tax suffered	(52)		(2)	(54)
Net cash flows from operating activities	1,676		226	1,902

10.  Earnings for the six months to 30 November 2017 should not be taken as a guide to the results of the full year to 31 May 2018.

11.   Tax

       The effective revenue tax rate for the period to 30 November 2017 is 0.7 per cent (30 November 2016: 0.7 per cent; 31 May 2017: 0.7 per cent).  This is lower than the rate of corporation tax for small companies due to the level of non-taxable dividend income.

12.   Bank borrowing

       Effective from 10 February 2017, the Company entered into a £5 million five year fixed term loan and a two year £2 million revolving credit facility agreement with The Royal Bank of Scotland plc. £5 million of the fixed term loan was drawn down as at 30 November 2017. The interest rate on the amount drawn down is fixed at 2.03% per annum.

13.   Going concern

       In assessing the going concern basis of accounting, the Directors have had regard to the guidance issued by the Financial Reporting Council and have undertaken a rigorous review of the Company's ability to continue as a going concern.

The Company's investment objective and policy, which is subject to regular Board monitoring processes, is designed to ensure that the Company is invested principally in listed securities. The Company retains title to all assets held by its custodian and has an agreement relating to its borrowing facility with which it has complied. Cash is only held with banks approved and regularly reviewed by the Manager.

       The Directors believe in light of the controls and review processes and bearing in mind the nature of the Company's business and assets and revenue and expenditure projections, that the Company has adequate resources to continue in operational existence within its stated investment policy for a period of at least twelve months commencing from the date of approval of the accounts. Accordingly, the financial statements have been drawn up on the basis that the Company is a going concern.

       The Company does not have a fixed life. However, the Company's Articles of Association require the Board to put a resolution to shareholders at the tenth annual general meeting of the Company to be held in September 2018 and five-yearly thereafter to continue the Company. The continuation vote will be proposed as an ordinary resolution.

14.   Results

       The Company's auditors, KPMG LLP, have not audited or reviewed the Interim Report to 30 November 2017 pursuant to the Auditing Practices Board guidance on 'Review of Interim Financial Information'.  These are not full statutory accounts in terms of Section 434 of the Companies Act 2006 and are unaudited.  Statutory accounts for the year ended 31 May 2017, which received an unqualified audit report, from the previous auditors, Ernst & Young LLP, and which did not contain a statement under Section 498 of the Companies Act 2006, have been lodged with the Registrar of Companies.  The abridged financial statements included for the year ended 31 May 2017 are an extract from those accounts.  No full statutory accounts in respect of any period after 31 May 2017 have been reported on by the Company's auditors or delivered to the Registrar of Companies. The Interim Report will be posted to shareholders shortly and is available on the website: www.fcmanagedportfolio.co.uk 

For further information, please contact:

Peter Hewitt, F&C Investment Business Limited   0131 718 1244

Ian Ridge, F&C Investment Business Limited        0131 718 1010

 

END

 

 

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