Half-year Report

RNS Number : 6353U

F&C Managed Portfolio Trust PLC.

19 January 2017

 

To:      RNS

Date:  19 January 2017

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 2016.

Chairman's Statement

Highlights

•     Net asset value total return of 10.0% for both the Income shares and Growth shares, compared with the FTSE All-Share Index rise of 9.6%

•     First two interim dividends increased to 1.25 pence per Income share

•     Income share dividend yield of 4.2% at 30 November 2016

Investment performance

For the six months to 30 November 2016, the net asset value (NAV) total return was 10.0% for both the Income shares and the Growth shares. The total return for the benchmark index for both Portfolios, the FTSE All-Share Index, was 9.6% while the FTSE Equity Investment Instruments Index, achieved 12.6%.

To say it has been an eventful six months would be an understatement. To start with there was the Brexit vote, the result of which was widely unexpected. The most immediate effect was the plunge in the value of sterling, which declined by 14% against the dollar and by 10% against the Euro during the period under review. A significant knock-on effect was the boost to returns from overseas markets for sterling based investors.

The Bank of England moved swiftly to avert fears over Brexit by cutting interest rates. The combined effect of this action and weaker sterling pushed the UK equity market sharply higher. Over the six months to 30 November 2016, the FTSE 100 Index rose 11%, led by large global companies with substantial overseas operations. More domestic orientated companies were left behind. This is best illustrated by the FTSE 250 Index (medium sized companies) which gained only 3.5% and the FTSE Small Cap (ex-Investment Companies) which rose only 5.3% (all in total return terms).

The surprises just kept on coming with the result of the US Presidential election in early November. In response, equity markets, led by the US, rather unexpectedly moved sharply higher.

Against this background it is encouraging that both investment portfolios ended the period with significant gains, slightly ahead of the FTSE All-Share Index. This maintains their long-term record of strong performance.

For the Growth Portfolio the best performers were led by Polar Capital Technology Trust and Allianz Technology Trust which gained 39% and 34% respectively. Both have outstanding long-term performance records and have proven a good way for the portfolio to gain exposure to the dynamic US technology sector. Gabelli Value Plus Trust, a US equity trust, experienced a strong 38% gain whilst Monks Investment Trust rose 30%. The latter is a more global trust with around half its assets in the US and draws on the best ideas generated by manager Baillie Gifford. Another trust from the same house, Baillie Gifford Japan Trust rose by 25%, driven by its exposure to medium sized growth companies in Japan.

The detractors to performance in the Growth Portfolio tended to be UK and European trusts with a bias towards smaller companies. Strategic Equity Capital, a UK smaller company specialist, fell 14%. European Assets Trust, which invests in European medium sized and small companies was 6% lower as was Woodford Patient Capital Trust. Henderson Opportunities Trust, a UK equity trust with a sizeable exposure to smaller companies was down 5% and TR Property Investment Trust which invests mainly in UK and European listed property companies was also 5% lower, reflecting concerns over the prospects for property following Brexit.

In the Income Portfolio the best performance was a gain of 34% by BlackRock Commodities Income Investment Trust which invests in energy and mining companies and has experienced a strong recovery on the back of rising oil and commodity prices. Another Blackrock trust, BlackRock North American Income was next best with a rise of 26% in its share price as it benefitted from the strong performance from US equity markets. Of the other notable performers there was a common theme of exposure to Emerging Markets or the Asia Pacific region. JPMorgan Global Emerging Markets Income Trust was ahead by 26% whilst Schroder Oriental Income Fund gained 22% and Henderson Far East Income rose by 20%. All of the trusts highlighted benefitted significantly from the decline in the value of sterling. It should also be mentioned that this trend is positive for dividends from trusts which receive their income from overseas companies.

As with the Growth Portfolio most of the relative detractors from performance came from UK equity sectors. Aberforth Geared Income Trust a UK smaller company specialist fell by 8% whilst Standard Life Equity Income Trust was 7% lower. These two trusts along with The Mercantile Investment Trust which was 4% lower over the period all had substantial exposure to UK medium and smaller companies. Perpetual Income & Growth Investment Trust, a long time holding with an excellent record, was 4% lower due mainly to having little in the way of cyclical exposure in energy, mining, banks or industrials, which had been the best performing sectors over the period. (All returns for individual trusts are capital only).

Revenue and dividends

The Company's net revenue for the six months was £1,212,000 which is equivalent to 2.91p per Income share (compared to 2.83p per Income share for the corresponding period in 2015). 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 2017, each of 1.25p per Income share (1.2p per Income share in the prior periods).

The Board intends to pay a third interim dividend of 1.25p 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 5.2p per Income share paid in the prior year represents a yield on the Income share price at 30 November 2016 of 4.2%.

Borrowing

Borrowings are not normally expected to exceed 20% of the total assets of the relevant Portfolio and at the time of writing total £3.5 million (6.2% of gross assets) in the Income Portfolio and nil in the Growth Portfolio.

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 2016 the average discount to NAV for the Income shares and for the Growth shares was 0.7% and 0.5% respectively. At 30 November 2016, the Income shares and the Growth shares stood at a discount to NAV of 0.1% and 1.4% respectively.

Outlook

"Stockmarkets climb walls of worry", has certainly been true this past year, as the FTSE 100 Index has just made an all-time high and yet scarcely has there been a time when financial markets have faced so many uncertainties. The imminent change in administration in the US appears to herald a change in economic policy towards a fiscal-led domestic stimulus through tax cuts and infrastructure spending with an increase in tariffs to protect US industry. This may lead to higher interest rates and a rise in bond yields in the US. Meanwhile in the UK, inflation is set to rise and growth may well slow as the uncertainties around Brexit negotiations come to the fore. Yet at the company level many continue to trade well, due in part to weaker sterling. In summary, the potential downside to equity markets suggests that a cautious approach appears sensible. In terms of investment strategy, a preference for overseas exposure and a continued emphasis on quality are the key elements in investment selection for both portfolios.

Richard M Martin

Chairman

19 January 2017

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.

Unaudited Condensed Income Statement

Six months to 30 November 2015

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Losses on investments Foreign exchange gains		-             -	(4,144)             3	(4,144) 3
Income	2	1,298	-	1,298
Investment management and performance fee	3	(85)	(232)	(317)
Other expenses		(192)	-	(192)
Return on ordinary activities before finance           costs and tax		1,021	(4,373)	(3,352)
Finance costs		(6)	(12)	(18)
Return on ordinary activities before tax		1,015	(4,385)	(3,370)
Tax on ordinary activities		(8)	-	(8)
Return attributable to shareholders		1,007	(4,385)	(3,378)
Return per Income share (pence)	5	2.83p	(9.31)p	(6.48)p
Return per Growth share (pence)	5	-	(3.60)p	(3.60)p

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 2016

	Notes	Revenue	Capital	Total
		£'000	£'000	£'000
Losses on investments Foreign exchange gains		- -	(6,051) 2	(6,051) 2
Income	2	2,797	-	2,797
Investment management and performance fee	3	(177)	(418)	(595)
Other expenses		(415)	-	(415)
Return on ordinary activities before finance costs and tax		2,205	(6,467)	(4,262)
Finance costs		(8)	(20)	(28)
Return on ordinary activities before tax		2,197	(6,487)	(4,290)
Tax on ordinary activities		(11)	-	(11)
Return attributable to shareholders		2,186	(6,487)	(4,301)
Return per Income share (pence)	5	5.62p	(11.18)p	(5.56)p
Return per Growth share (pence)	5	-	(6.72)p	(6.72)p

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 2016

	Notes	Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Fixed assets
Investments	4	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	7	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

Unaudited Condensed Balance Sheet

As at 30 November 2015

	Notes	Income Shares	Growth Shares	Total
		£'000	£'000	£'000
Fixed assets
Investments		43,111	45,745	88,856
Current assets
Debtors Cash at bank and on deposit		7,139 1,123	5,919 1,432	13,058 2,555
		8,262	7,351	15,613
Creditors
Amounts falling due within one year		(1,673)	(1,613)	(3,286)
Net current assets		6,589	5,738	12,327
Net assets		49,700	51,483	101,183
Capital and reserves
Called-up share capital		4,254	3,428	7,682
Share premium		21,690	18,549	40,239
Capital redemption reserve		-	182	182
Special reserve		19,380	17,197	36,577
Capital reserves		3,009	12,127	15,136
Revenue reserve		1,367	-	1,367
Shareholders' Funds		49,700	51,483	101,183
Net asset value per share (pence)	8	116.84p	150.20p

Condensed Balance Sheet (audited)

As at 31 May 2016

		Income Shares	Growth Shares	Total
	Notes	£'000	£'000	£'000
Fixed assets
Investments	4	48,262	49,051	97,313
Current assets
Debtors		161	28	189
Cash at bank and on deposit		762	1,005	1,767
		923	1,033	1,956
Creditors
Amounts falling due within one year		(1,141)	(142)	(1,283)
Net current (liabilities)/assets		(218)	891	673
Net assets		48,044	49,942	97,986
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		18,532	16,733	35,265
Capital reserves		1,973	11,053	13,026
Revenue reserve		1,600	-	1,600
Shareholders' Funds		48,044	49,942	97,986
Net asset value per share (pence)	8	114.98p	147.02p

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

Unaudited Condensed Statement of Cash Flows

Six months to 30 November 2015

	Notes		Income Shares	Growth Shares	Total
			£'000	£'000	£'000
Net cash inflow from operating activities	9		706	62	768
Investing activities
Purchases of investments		(3,371)		(3,291)	(6,662)
Sales of investments		1,199		1,237	2,436
Cash flows from investing activities		(2,172)		(2,054)	(4,226)
Cash flows before financing activities		(1,466)		(1,992)	(3,458)
Financing activities
Equity dividends paid		(964)		-	(964)
Net proceeds from issuance of new shares		2,165		2,361	4,526
Cash flows from financing activities		1,201		2,361	3,562
Net movement in cash and cash equivalents		(265)		369	104
Cash and cash equivalents at the beginning of the      period Cash and cash equivalents at the end of the    period		1,388 1,123		1,063 1,432	2,451 2,555
Represented by: Cash at bank and short-term deposits		1,123		1,432	2,555

Condensed Statement of Cash Flows (audited)

Year to 31 May 2016

	Notes			Income Shares		Growth Shares	Total
			£'000			£'000	£'000
Net cash inflow from operating activities	9		1,535		226		1,761
Investing activities
Purchases of investments			(9,703)		(8,606)		(18,309)
Sales of investments			1,682		2,035		3,717
Cash flows from investing activities			(8,021)		(6,571)		(14,592)
Cash flows before financing activities			(6,486)		(6,345)		(12,831)
Financing activities
Equity dividends paid			(1,910)		-		(1,910)
Net proceeds from issue of new shares Sale of shares from treasury Shares purchased to be held in treasury			9,118 - (848)		8,159 400 (872)		17,277 400 (1,720)
Loan repayment			(500)		(1,400)		(1,900)
Cash flows from financing activities			5,860		6,287		12,147
Net movement in cash and cash equivalents			(626)		(58)		(684)
Cash and cash equivalents at the beginning of the    period Cash and cash equivalents at the end of the    period			1,388 762		1,063 1,005		2,451 1,767
Represented by: Cash at bank and short-term deposits			762		1,005		1,767

 

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

Unaudited Condensed Statement of Changes in Equity

Six months to 30 November 2015

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 2015	3,469	13,346	-	19,380	6,320	1,324	43,839
Increase in share capital in issue, net of share issuance expenses	785	8,344	-	-	-	-	9,129
Transfer of net income from Growth to Income Portfolio	-	-	-	-	-	196	196
Transfer of capital from Income to Growth Portfolio	-	-	-	-	(196)	-	(196)
Dividends paid	-	-	-	-	-	(964)	(964)
Return attributable to shareholders	-	-	-	-	(3,115)	811	(2,304)
As at 30 November 2015	4,254	21,690	-	19,380	3,009	1,367	49,700
Growth Shares
As at 31 May 2015	2,884	10,927	182	17,197	13,201	-	44,391
Increase in share capital in issue, net of share issuance expenses	544	7,622	-	-	-	-	8,166
Transfer of net income from Growth to Income Portfolio	-	-	-	-	-	(196)	(196)
Transfer of capital from Income to Growth Portfolio	-	-	-	-	196	-	196
Return attributable to shareholders	-	-	-	-	(1,270)	196	(1,074)
As at 30 November 2015	3,428	18,549	182	17,197	12,127	-	51,483
Total Company
As at 31 May 2015	6,353	24,273	182	36,577	19,521	1,324	88,230
Increase in share capital in issue, net of share issuance expenses	1,329	15,966	-	-	-	-	17,295
Dividends paid	-	-	-	-	-	(964)	(964)
Return attributable to shareholders	-	-	-	-	(4,385)	1,007	(3,378)
As at 30 November 2015	7,682	40,239	182	36,577	15,136	1,367	101,183

Condensed Statement of Changes in Equity (audited)

Year to 31 May 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 2015	3,469	13,346	-	19,380	6,320	1,324	43,839
Increase in share capital in issue, net of share issuance expenses	785	8,339	-	-	-	-	9,124
Shares purchased for treasury	-	-	-	(848)	-	-	(848)
Transfer of net income from Growth to Income Portfolio	-	-	-	-	-	438	438
Transfer of capital from Income to Growth portfolio	-	-	-	-	(438)	-	(438)
Dividends paid	-	-	-	-	-	(1,910)	(1,910)
Return attributable to shareholders	-	-	-	-	(3,909)	1,748	(2,161)
As at 31 May 2016	4,254	21,685	-	18,532	1,973	1,600	48,044
Growth Shares
As at 31 May 2015	2,884	10,927	182	17,197	13,201	-	44,391
Increase in share capital in issue, net of share issuance expenses	544	7,619	-	-	-	-	8,163
Shares sold from treasury	-	-	-	408	(8)	-	400
Shares purchased for treasury	-	-	-	(872)	-	-	(872)
Transfer of net income from Growth to Income Portfolio	-	-	-	-	-	(438)	(438)
Transfer of capital from Income to Growth Portfolio	-	-	-	-	438	-	438
Return attributable to shareholders	-	-	-	-	(2,578)	438	(2,140)
As at 31 May 2016	3,428	18,546	182	16,733	11,053	-	49,942
Total Company
As at 31 May 2015	6,353	24,273	182	36,577	19,521	1,324	88,230
Increase in share capital in issue, net of share issuance expenses	1,329	15,958	-	-	-	-	17,287
Shares sold from treasury	-	-	-	408	(8)	-	400
Shares purchased for treasury	-	-	-	(1,720)	-	-	(1,720)
Dividends paid	-	-	-	-	-	(1,910)	(1,910)
Return attributable to shareholders	-	-	-	-	(6,487)	2,186	(4,301)
As at 31 May 2016	7,682	40,231	182	35,265	13,026	1,600	97,986

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 2016 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 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

19 January 2017

Notes

1.  Accounting Policies

The unaudited interim results have been prepared on a going concern basis in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority, FRS 102, FRS 104 Interim Financial Reporting issued by the FRC in March 2015 and Statement of Recommended Practice ("SORP") "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued by the AIC in November 2014.

The accounting policies applied for the unaudited interim results are set out in the Company's annual report for the year ended 31 May 2016.

2.  Income

	Six months to 30 November 2016	Six months to 30 November 2015	Year to 31 May 2016
	£'000	£'000	£'000
UK dividends	1,049	741	1,635
Overseas dividends	499	541	1,132
Interest on fixed   interest securities Deposit income	6 5	9 7	17 13
Total income	1,559	1,298	2,797

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 2016. 

    During the period, the Company has incurred investment management fees of £343,000, (30 November 2015: £287,000; 31 May 2016: £593,000) of which £175,000 is payable to F&C Investment Business Limited at the period end.  

    At 30 November 2016 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 £5,000 has been accrued. At 30 November 2016 the adjusted total return of the Growth portfolio since launch did not exceed that of the FTSE All-Share Index and a performance fee has not been recognised in the Growth Portfolio (30 November 2015: £nil - Income Portfolio and £30,000 - Growth Portfolio; 31 May 2016: £2,000 - Income Portfolio and £nil - Growth Portfolio).         

4.  Investments

	Income Shares Level 1* £'000	Growth Shares Level 1* £'000	Total £'000
Cost at 31 May 2016 Gains at 31 May 2016	40,589 7,673	37,471 11,580	78,060 19,253
Valuation at 31 May 2016 Movement in the period: Purchases at cost Sales proceeds Gains on investments sold in the period Gains on investments held at period end	48,262 6,304 (5,948) 931 2,912	49,051 3,253 (3,551) 1,213 3,608	97,313 9,557 (9,499) 2,144 6,520
Valuation of investments held at 30 November 2016	52,461	53,574	106,035

	Income Shares Level 1* £'000	Growth Shares Level 1* £'000	Total £'000
Cost at 30 November 2016 Gains at 30 November 2016	41,876 10,585	38,386 15,188	80,262 25,773
Valuation at 30 November 2016	52,461	53,574	106,035

* 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 (previously described as Level A)

·      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 (previously described as Level B)

·      Level 3 - Investments whose value is not based on observable market data (previously described as Level C).

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 2016 is as follows:

	Income Shares			Growth Shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to   Portfolios	938	3,732	4,670	274	4,684	4,958
Transfer of net income      from Growth to Income     Portfolio	274	-	274	(274)	-	(274)
Transfer of capital from    Income to Growth      Portfolio	-	(274)	(274)	-	274	274
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 six months to 30 November 2015 is as follows:

	Income Shares			Growth Shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to   shareholders	1,007	(3,311)	(2,304)	-	(1,074)	(1,074)
Return per share	2.83p	(9.31)p	(6.48)p	-	(3.60)p	(3.60)p
Weighted average number of shares in issue during the period	35,559,855			29,836,768

The return per share for the comparative year to 31 May 2016 is as follows:

	Income Shares			Growth Shares
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return attributable to   shareholders	2,186	(4,347)	(2,161)	-	(2,140)	(2,140)
Return per share	5.62p	(11.18)p	(5.56)p	-	(6.72)p	(6.72)p
Weighted average number of shares in issue during the period	38,891,707			31,829,730

6.    Dividends

	Six months to 30 November 2016	Six months to 30 November 2015	Year to 31 May 2016
Dividends on Income Shares	£'000	£'000	£'000
Amounts recognised as distributions during the period:
In respect of the previous financial year:
- fourth interim of 1.60p (prior period: 1.55p) per       share	669	538	538
In respect of the period under review:
- first interim of 1.25p (prior period: 1.20p) per share	519	426	426
- second interim (prior period: 1.20p per share)	-	-	439
- third interim (prior period: 1.20p per share)	-	-	507
	1,188	964	1,910

       A second interim dividend in respect of the year to 31 May 2017 of 1.25p per Income share was paid on 6 January 2017 to shareholders on the register on 16 December 2016. This amount has not been accrued in the results for the six months to 30 November 2016.

       For the financial year to 31 May 2016 interim dividends totalled 5.2p 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 2016	42,535,035	4,254	(750,000)	(75)	41,785,035	4,179
Purchased for Treasury	-	-	(225,000)	(23)	(225,000)	(23)
Balance at 30 November 2016	42,535,035	4,254	(975,000)	(98)	41,560,035	4,156

During the period the Company bought back 225,000 Income shares to be held in treasury at a cost of £267,000. At 30 November 2016 the Company held 975,000 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 2016	34,277,037	3,428	(308,537)	(31)	33,968,500	3,397
Purchased for Treasury	-	-	(285,000)	(29)	(285,000)	(29)
Balance at 30 November 2016	34,277,037	3,428	(593,537)	(60)	33,683,500	3,368
Total at 30 November 2016	76,812,072	7,682	(1,568,537)	(158)	75,243,535	7,524

  During the period the Company bought back 285,000 Growth shares to be held in treasury at a cost of £418,000. At 30 November 2016 the Company held 593,537 Growth shares in treasury. 

8.     Net asset value per share

	30 November 2016	30 November 2015	31 May 2016
Income shares
Net asset value per share	123.34p	116.84p	114.98p
Net assets attributable at end of   period - £'000s	51,259	49,700	48,044
Shares in issue at end of period - number	41,560,035	42,535,035	41,785,035
Growth shares
Net asset value per share	161.75p	150.20p	147.02p
Net assets attributable at end of   period - £'000s	54,482	51,483	49,942
Shares in issue at end of period - number	33,683,500	34,277,037	33,968,500

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

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

Six months to 30 November 2015	Income Shares £'000		Growth Shares £'000	Total £'000
Return on ordinary activities before tax Adjust for returns from non-operating activities:		(2,298)	(1,072)	(3,370)
Losses on investments		3,028	1,116	4,144
Exchange losses		(3)	-	(3)
Return from operating activities		727	44	771
Increase in prepayments and accrued
income		(6)	(5)	(11)
(Decrease)/increase in creditors		(9)	25	16
Withholding tax suffered		(6)	(2)	(8)
Net cash flows from operating activities		706	62	768

Year ended 31 May 2016		Income Shares £'000	Growth Shares £'000	Total £'000
Return on ordinary activities before tax Adjust for returns from non-operating activities:	(2,152)		(2,138)	(4,290)
Losses on investments	3,725		2,326	6,051
Exchange gains	(2)		-	(2)
Return from operating activities	1,571		188	1,759
(Increase)/decrease in prepayments and     accrued income	(33)		21	(12)
Increase in creditors	18		19	37
Withholding tax suffered	(21)		(2)	(23)
Net cash flows from operating activities	1,535		226	1,761

10.  Earnings for the six months to 30 November 2016 should not be taken as a guide to the results of the full year to 31 May 2017.

11.   Tax

       The effective revenue tax rate for the period to 30 November 2016 is 0.7 per cent (30 November 2015: 0.8 per cent; 31 May 2016: 0.5 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

       The Company has a £5 million unsecured revolving credit facility ("RCF") agreement with The Royal Bank of Scotland plc until 10 February 2017 of which £3.5 million was drawn down at 30 November 2016 (£3.5 million was drawn down in the Income Portfolio and £nil was drawn down in the Growth Portfolio). The interest rates on amounts drawn down are variable based on LIBOR plus a margin and a non-utilisation fee is payable on undrawn amounts.

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.

14.   Results

       The Company's auditors, Ernst & Young LLP have not audited or reviewed the Interim Report to 30 November 2016 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 2016, 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.  The abridged financial statements included for the year ended 31 May 2016 are an extract from those accounts.  No full statutory accounts in respect of any period after 31 May 2016 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

 

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