Half Yearly Report

RNS Number : 0866G

F&C Managed Portfolio Trust PLC

25 January 2010

 



To:        RNS

Date:     25 January 2010

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 2009.

Highlights

• Net asset value total return per Income share for the six months was 17.9%, compared to the FTSE All-Share Index total return of 19.7%.

• Dividend yield of 5.4% at 30 November 2009, based on dividends at the historic annual rate of 4.4p per Income share, compared to the yield on the FTSE All-Share Index of 3.3%.

• Net asset value total return per Growth share for the six months was 15.7%, compared to the FTSE All-Share Index total return of 19.7%.

Chairman's Statement

Introduction

During the second half of 2009, equity markets continued the strong recovery which began in the Spring. For the calendar year as a whole, the total return (adding dividends paid to capital performance) for the UK stock market, as measured by the FTSE All-Share index, was 30%, a return which few predicted during the anxious early months, while Asian and Emerging markets were even stronger.

Investment performance

For the six months to 30 November 2009, the total return for the FTSE All-Share Index, was 19.7%. However the total return for the Investment Company sector, as measured by the FTSE Equity Investment Instruments Index, was only 14.8%. This helps to put into context the net asset value (NAV) total return for the Income shares of 17.9% and 15.7% for the Growth shares for the same period.  

It is unusual for the Investment Company sector to lag the main UK stock market index during an upswing. The underperformance in the current period was primarily due to a widening of discounts across the investment trust sector (excluding private equity, hedge funds and direct property funds) from an average of 7% to 10% over the period. The large Global Growth and UK Growth and Income investment trusts, in which your Company has significant holdings, were particularly affected. 

Within the portfolios there were particularly strong performances from trusts invested mainly in corporate bonds (Invesco Leveraged High Yield Trust +51% and City Merchants High Yield Trust +42%), Property (TR Property Investment Trust +30% and Invista Foundation Property Trust +38%), Emerging Markets (Templeton Emerging Markets Investment Trust +29%) and Commodities (BlackRock World Mining Trust +27%). There were few changes to the portfolio and we remained effectively fully invested.

Revenue and dividends

Under the Company's capital structure any net revenue arising on the Growth Portfolio is transferred to the Income Portfolio in exchange for a capital contribution of an identical amount. The net revenue return for the Income shares for the six months to 30 November 2009 totalled £392,000 which is equivalent to 1.9p per Income share.  

Income shares are entitled to all the dividends paid by the Company which are paid quarterly in October, January, April and July each year. 

Your Board has stated that, in the absence of unforeseen circumstances, it intends to declare three interim dividends, each of 1p per Income share in the current financial year. The amount of the fourth interim dividend for the year, which last year was 1.4p per share, will be determined when a clearer view of income for the year emerges. If, as we hope but cannot forecast at present, we are able to maintain last year's total annualised distribution of 4.4p per Income share, the yield on the Income share price at 30 November 2009 would be 5.4%.

The outlook for dividends in 2010 is still unclear but it is reassuring that a large proportion of the Company's investee companies have significant revenue reserves, out of which dividends can be paid. For example, the simple average of the revenue reserves of the Income Portfolio's top 20 holdings amounts to 1.4 times the estimated cost of their annual dividend payouts.

The Directors have declared a first and second interim dividend in respect of the year to 31 May 2010, each of 1p per Income share. The second interim dividend was paid to Income shareholders after the period end, on 8 January 2010.

Discount to NAV and share buy-backs

The share price of investment trusts does not always reflect closely their underlying NAV and many trusts trade at a substantial discount. In normal circumstances we aim to maintain the discount on our shares below 5% by standing ready to buy back overhanging stock. During the six months to 30 November 2009 we have been able to maintain an average discount of 1% for the Income shares and 2% for the Growth shares. At 30 November 2009, the Income shares stood at a discount of 4% to NAV and the Growth shares at a discount of 4.7%. 

During the period the Company bought back 320,000 Income shares to be held in treasury and 1,305,000 Growth shares for cancellation. We have been able to re-sell some of the shares held in treasury as demand arose. During the period 550,000 Income shares and 100,000 Growth shares were resold out of treasury.

Outlook 

It seems likely that the UK will emerge from recession in 2010; however the strength of the recovery is likely to be modest and weaker than that of most other major developed countries. In the near-term monetary policy continues to be highly accommodative and supportive of equity markets but, looking further ahead, the withdrawal of the monetary stimulus without causing either inflation or renewed recession poses a challenge for the Bank of England.

Accordingly the Company maintains substantial overseas exposure, at least 40% for the Income Portfolio and approximately 60% for the Growth Portfolio.

Richard M. Martin

Chairman

25 January 2010

Unaudited Condensed Income Statement

Six months to 30 November 2009

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Gains on investments		-	4,301	4,301
Income	2	543	-	543
Investment management fee		(30)	(66)	(96)
Other expenses		(114)	-	(114)
Return on ordinary activities before tax		399	4,235	4,634
Tax on ordinary activities		(7)	-	(7)
Return attributable to shareholders	4	392	4,235	4,627
Return per Income share	4	1.89p	11.00p	12.89p
Return per Growth share	4	-p	10.80p	10.80p

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

The supplementary revenue and capital columns are prepared under 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

Period from 20 February 2008 (date of incorporation) to 30 November 2008*

		Revenue	Capital	Total
		£'000	£'000	£'000
Losses on investments		-	(14,614)	(14,614)
Income		855	-	855
Investment management fee		(38)	(87)	(125)
Other expenses		(145)	-	(145)
Return on ordinary activities before tax		672	(14,701)	(14,029)
Tax on ordinary activities		(19)	18	(1)
Return attributable to shareholders		653	(14,683)	(14,030)
Return per Income share		3.07p	(32.69)p	(29.62)p
Return per Growth share		-p	(38.43)p	(38.43)p

* The Company was incorporated on 20 February 2008 and commenced operations on 16 April 2008.

  Condensed Income Statement (audited)

Period from 20 February 2008 (date of incorporation) to 31 May 2009*

		Revenue	Capital	Total
		£'000	£'000	£'000
Losses on investments		-	(11,462)	(11,462)
Income		1,527	-	1,527
Investment management fee		(62)	(180)	(242)
Other expenses		(319)	-	(319)
Return on ordinary activities before tax		1,146	(11,642)	(10,496)
Tax on ordinary activities		(32)	24	(8)
Return attributable to shareholders		1,114	(11,618)	(10,504)
Return per Income share (pence)		5.33p	(27.39)p	(22.06)p
Return per Growth share (pence)		-p	(30.00)p	(30.00)p

* The Company was incorporated on 20 February 2008 and commenced operations on 16 April 2008.

Unaudited Condensed Balance Sheet

As at 30 November 2009

		Income Shares	Growth Shares	Total
	Note	£'000	£'000	£'000
Non-current assets
Investments at fair value		17,089	13,766	30,855
Current assets
Debtors		51	10	61
Cash at bank and on deposit		329	376	705
		380	386	766
Creditors
Amount falling due within one year		(99)	(51)	(150)
Net current assets		281	335	616
Net assets		17,370	14,101	31,471
Capital and reserves
Called-up share capital		2,191	1,937	4,128
Capital redemption reserve		-	157	157
Special reserve		18,371	15,950	34,321
Capital reserve		(3,480)	(3,943)	(7,423)
Revenue reserve		288	-	288
Shareholders' Funds		17,370	14,101	31,471
Net asset value per share (pence)	8	84.40p	80.76p

  Unaudited Condensed Balance Sheet

As at 30 November 2008

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Non-current assets
Investments at fair value		10,797	8,903	19,700
Current assets
Debtors		49	25	74
Cash at bank and on deposit		3,234	2,822	6,056
		3,283	2,847	6,130
Creditors
Amount falling due within one year		(163)	(147)	(310)
Net current assets		3,120	2,700	5,820
Net assets		13,917	11,603	25,520
Capital and reserves
Called-up share capital		2,191	2,094	4,285
Special reserve		18,334	17,250	35,584
Capital reserve		(6,951)	(7,741)	(14,692)
Revenue reserve		343	-	343
Shareholders' Funds		13,917	11,603	25,520
Net asset value per share (pence)		67.44p	59.88p

Condensed Balance Sheet (audited)

As at 31 May 2009 

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Non-current assets
Investments at fair value		14,137	12,463	26,600
Current assets
Debtors		30	22	52
Cash at bank and on deposit		981	609	1,590
		1,011	631	1,642
Creditors
Amount falling due within one year		(117)	(68)	(185)
Net current assets		894	563	1,457
Net assets		15,031	13,026	28,057
Capital and reserves
Called-up share capital		2,191	2,068	4,259
Capital redemption reserve		-	26	26
Special reserve		18,194	16,831	35,025
Capital reserve		(5,748)	(5,899)	(11,647)
Revenue reserve		394	-	394
Shareholders' Funds		15,031	13,026	28,057
Net asset value per share (pence)		73.86p	69.79p

Unaudited Condensed Statement of Cash Flows

Six months to 30 November 2009

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Net cash inflow from operating activities		264	25	289
Taxation		(5)	(2)	(7)
Net cash (outflow)/inflow from financial investment		(583)	629	46
Equity dividends paid		(498)	-	(498)
Net cash (outflow)/inflow before financing		(822)	652	(170)
Net cash inflow/(outflow) from financing		170	(885)	(715)
Decrease in cash		(652)	(233)	(885)
Reconciliation of net cash flow to movement in net cash
Decrease in cash in the period		(652)	(233)	(885)
Movement in net cash resulting from cash flows		(652)	(233)	(885)
Opening net cash		981	609	1,590
Closing net cash		329	376	705

Unaudited Condensed Statement of Cash Flows

Period from 20 February 2008 (date of incorporation) to 30 November 2008*

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Net cash inflow from operating activities		422	185	607
Taxation		(6)	(2)	(8)
Net cash inflow from financial investment		3,695	3,956	7,651
Equity dividends paid		(310)	-	(310)
Net cash inflow before financing		3,801	4,139	7,940
Net cash outflow from financing		(1,243)	(1,458)	(2,701)
Increase in cash		2,558	2,681	5,239
Reconciliation of net cash flow to movement in net cash
Increase in cash in the period		2,558	2,681	5,239
Cash inflow from transfer of cash at launch†		676	141	817
Movement in net cash resulting from cash flows		3,234	2,822	6,056
Opening net cash		-	-	-
Closing net cash		3,234	2,822	6,056

† On 16 April 2008, investments with a market value of £21,201,000 (Income) and £20,764,000 (Growth) together with cash of £676,000 (Income) and £141,000 (Growth) (all of which were held in F&C's investment trust managed portfolio service) were received by the Company in exchange for the issue of Income and Growth Shares.

* The Company was incorporated on 20 February 2008 and commenced operations on 16 April 2008.

Condensed Statement of Cash Flows (audited)

Period from 20 February 2008 (date of incorporation) to 31 May 2009*

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Net cash inflow from operating activities		810	290	1,100
Taxation		(6)	(2)	(8)
Net cash inflow from financial investment		1,738	2,165	3,903
Equity dividends paid		(720)	-	(720)
Net cash inflow before financing		1,822	2,453	4,275
Net cash outflow from financing		(1,517)	(1,985)	(3,502)
Increase in cash		305	468	773
Reconciliation of net cash flow to movement in net cash
Increase in cash in the period		305	468	773
Cash inflow from transfer of cash at launch†		676	141	817
Movement in net cash resulting from cash flows		981	609	1,590
Opening net cash		-	-	-
Closing net cash		981	609	1,590

† On 16 April 2008, investments with a market value of £21,201,000 (Income) and £20,764,000 (Growth) together with cash of £676,000 (Income) and £141,000 (Growth) (all of which were held in F&C's investment trust managed portfolio service) were received by the Company in exchange for the issue of Income and Growth Shares.

* The Company was incorporated on 20 February 2008 and commenced operations on 16 April 2008.

Unaudited Condensed Reconciliation of Movements in Shareholders' Funds 

Six months to 30 November 2009

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Opening shareholders' funds		15,031	13,026	28,057
Sale of shares from treasury		412	72	484
Shares purchased for treasury		(242)	-	(242)
Shares purchased for cancellation		-	(957)	(957)
Transfer of net income from Growth shares to Income shares		63	(63)	-
Transfer of capital from Income shares to Growth shares		(63)	63	-
Dividends paid		(498)	-	(498)
Return attributable to shareholders		2,667	1,960	4,627
Closing shareholders' funds		17,370	14,101	31,471

  Unaudited Condensed Reconciliation of Movements in Shareholders' Funds 

Period from 20 February 2008 (date of incorporation) to 30 November 2008*

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Opening shareholders' funds		-	-	-
Increase in share capital in issue		21,907	20,936	42,843
Launch costs		(328)	(314)	(642)
Shares purchased for treasury		(1,059)	(1,282)	(2,341)
Transfer of net income from Growth shares to Income shares		206	(206)	-
Transfer of capital from Income shares to Growth shares		(206)	206	-
Dividends paid		(310)	-	(310)
Return attributable to shareholders		(6,293)	(7,737)	(14,030)
Closing shareholders' funds		13,917	11,603	25,520

* The Company was incorporated on 20 February 2008 and commenced operations on 16 April 2008.

Condensed Reconciliation of Movements in Shareholders' Funds (audited)

Period from 20 February 2008 (date of incorporation) to 31 May 2009*

		Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Opening shareholders' funds		-	-	-
Increase in share capital in issue		21,907	20,936	42,843
Launch costs		(328)	(314)	(642)
Sale of shares from treasury		182	16	198
Shares purchased for treasury		(1,401)	(1,564)	(2,965)
Shares purchased for cancellation		-	(153)	(153)
Transfer of net income from Growth shares to Income shares		318	(318)	-
Transfer of capital from Income shares to Growth shares		(318)	318	-
Dividends paid		(720)	-	(720)
Return attributable to shareholders		(4,609)	(5,895)	(10,504)
Closing shareholders' funds		15,031	13,026	28,057

* The Company was incorporated on 20 February 2008 and commenced operations on 16 April 2008.

Statement of Principal Risks and Uncertainties

The Company's assets consist mainly of listed equity securities and its principal risks are therefore market-related. Other key risks faced by the Company include external, investment and strategy, credit risk, regulatory issues, operational and financial risks. 

These risks, and the way in which they are managed, are described in more detail under the heading "Principal risks and risk management" within the Report of the Directors in the Company's 2009 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.

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 the Statement 'Half-Yearly Financial Reports' issued by the UK Accounting Standards Board and  give a true and fair view of the assets, liabilities, financial position and return of the Company;

• the Chairman's Statement includes a fair review of the information required by the Disclosure and Transparency Rules ('DTR') 4.2.7R(1), 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;

• the Statement of Principal Risks and Uncertainties shown above is a fair review of the information required by DTR 4.2.7R(2); and

• the condensed set of financial statements includes 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

Chairman

25 January 2010

  Notes 

1.         Accounting Policies

Basis of preparation

The unaudited interim results have been prepared on the basis of the accounting policies set out in the Company's statutory financial statements for the period ended 31 May 2009. These accounting policies are expected to be followed throughout the year ending 31 May 2010.

2.          Income for the period is derived from:

	Six months to 30 November 2009	Period from 20 February 2008 to 30 November 2008	Period from 20 February 2008 to 31 May 2009
	£’000	£’000	£’000
Equity investments	541	680	1,335
Deposit interest	2	175	192
	543	855	1,527

3.         Investment management 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 Report and Accounts to 31 May 2009. During the period, the Company has incurred management fees of £96,000, of which £48,000 is payable to F&C Investment Business Limited at the period end. At 31 May 2009 the total return of the Income Portfolio exceeded that of the FTSE All-Share Index and a Performance fee of £39,000 was recognised, however as the NAV per Income share was less than 98p (NAV per Income share immediately following Admission) payment has been deferred until the end of the next financial year when the NAV per Income share is in excess of 98p.    

4.        Return per share

     The return per share for the six months to 30 November 2009 is as follows:

	Income Shares			Growth Shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£’000	£’000	£’000	£’000	£’000	£’000
Return attributable to Portfolios	329	2,338	2,667	63	1,897	1,960
Transfer of net income from Growth to Income Portfolio	63	-	63	(63)	-	(63)
Transfer of capital from Income to Growth Portfolio	-	(63)	(63)	-	63	63
Return attributable to shareholders	392	2,275	2,667	-	1,960	1,960
Return per share	1.89p	11.00p	12.89p	-	10.80p	10.80p

Both the Revenue and Capital returns per share have been calculated using a denominator, being a specific number of shares as follows:

	Income Shares	Growth Shares
Weighted average number of shares in issue during the period	20,680,984	18,148,163

The returns per Income share for the comparative periods are based on a net revenue return of £653,000 (2008) and £1,114,000 (2009) and a net capital return of £(6,946,000) (2008) and £(5,723,000) (2009) and 21,247,921 (2008) and 20,897,345 (2009) Income shares being the weighted average number of Income shares in issue during the period.

The returns per Growth share for the comparative periods are based on a net capital return of £(7,737,000) (2008) and £(5,895,000) (2009) and 20,134,999 (2008) and 19,647,465 (2009) Growth shares being the weighted average number of Growth shares in issue during the period.

5.     Earnings for the six months to 30 November 2009 should not be taken as a guide to the results of the full year to 31 May 2010.

6.     Dividends

	Six months to 30 November 2009	Period from 20 February 2008 to 30 November 2008	Period from 20 February 2008 to 31 May 2009
	£’000	£’000	£’000
Amounts recognised as distributions to Income shareholders
In respect of the previous period:
- fourth interim dividend of 1.4p per share	293	-	-
In respect of the period under review:
- first interim dividend of 1p per share (2008: 1.5p)	205	310	310
- second interim dividend of 1p per share	-	-	207
- third interim dividend of 1p per share	-	-	203
	498	310	720

    A second interim dividend in respect of the year to 31 May 2010 of 1p per Income share was paid on 8 January 2010 to shareholders on the register on 29 December 2009.

7.    During the period to 30 November 2009 the Company bought back 320,000 Income shares at a cost of £242,000 to be held in treasury. During the period the Company resold out of treasury 550,000 Income shares for proceeds of £412,000 and 100,000 Growth shares for proceeds of £72,000. During the period the Company bought back 1,305,000 Growth shares at a cost of £957,000 for cancellation. At 30 November 2009 the Company held 1,327,000 Income shares and 1,910,000 Growth shares in treasury.

8.    The net asset value per share is based on 20,580,192 Income shares and 17,460,567 Growth shares being the number of shares in issue at the period end. (30 November 2008 - 20,635,192 Income shares and 19,380,567 Growth shares; 31 May 2009 - 20,350,192 Income shares and 18,665,567 Growth shares).

9.    The effective revenue tax rate for the period to 30 November 2009 is 1.8 per cent (30 November 2008: 2.8%; 31 May 2009: 2.8%). This is lower than the rate of corporation tax for small companies due to the level of non-taxable dividend income.

10.    The Company's auditors, Ernst & Young LLP have not audited or reviewed the Interim Report to 30 November 2009 pursuant to the Auditing Practices Board guidance on 'Review of Interim Financial Information'.

11.    These are not full statutory accounts in terms of Section 434 of the Companies Act 2006 and are unaudited. Statutory accounts for the period ended 31 May 2009, which received an unqualified audit report and which did not contain a statement under Section 498 of the Companies Act 2006, have been lodged with the Registrar of Companies. No full statutory accounts in respect of any period after 31 May 2009 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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