Interim Results
Personal Assets Trust PLC
23 November 2007
PERSONAL ASSETS TRUST PLC
To: RNS
From: Personal Assets Trust plc
Date: 23 November 2007
INTERIM REPORT FOR THE SIX MONTHS ENDED 31 OCTOBER 2007
• Personal Assets Trust plc ('PAT') is an independent investment trust run
expressly for private investors.
• Over the six months to 31 October 2007 PAT's net asset value per share
('NAV') fell by 2.3% to £258.70 compared to a rise of 2.9% in our benchmark,
the FTSE All-Share Index. PAT's share price fell by £7 to £259 over
the same period, being a premium of 0.1% to the Company's NAV at that date.
• The Board measures PAT's performance over rolling three-year periods. Over
the three years to 31 October 2007 the NAV rose by 21.2% compared to the
FTSE All-Share Index's rise of 50.3%. This underperformance of 19.4%
reflects our very cautious attitude to equity valuations, represented by the
level of liquidity we have held over the period.
• We continue to believe that in present circumstances it is appropriate to
maintain a substantial level of liquidity. At 31 October 2007 PAT
had effective liquidity of 100% of shareholders' funds (30 April 2007: 51%).
• Over the six months PAT's shares continued to trade close to NAV. We issued
3,573 ordinary shares from Treasury at a small premium (adding just over £0.9
million of new capital) to satisfy continuing demand for the Company's
shares, principally through its zero-charge Investment Plans. At 31 October
2007, 42.9% of the Company's share capital was held in these plans. The
Company also bought back 6,984 ordinary shares to be held in Treasury during
the period at a cost of £1.8 million including stamp duty.
• Earnings for the period were £2.17 per share (2006: £2.18). Earnings for the
first six months should not be taken as a guide for the full year.
• The first interim dividend of £2.25 per ordinary share (2006: £2.00) was paid
to shareholders on 26 October 2007. The Board's stated policy is never to cut
the dividend rate. Therefore, the second interim dividend for the year ended
30 April 2008, expected to be paid in April 2008, will be at least £2.25 per
share. The total dividend for the year will be not less than £4.50,
representing an increase of at least 9.8% compared to the previous year.
PORTFOLIO VALUATION
31 October Purchases/ 30 April
2007 (Sales) 2007
Company £'000 £'000 £'000
Royal Dutch Shell 16,333 - 13,837
BP 14,988 - 13,572
HBOS 9,603 - 11,902
BT Group 8,463 - 8,223
Glaxosmithkline 8,041 - 9,412
RBS Group 7,843 (4,109) 13,896
Scottish & Newcastle 6,412 - 5,055
Alliance Trust 4,830 - 4,830
Barclays 4,798 (2,974) 8,724
Rentokil Initial 1,718 - 1,738
Other Holdings (13) 12,912 - 12,480
Total Equity Holdings 95,941 (7,083) 103,669
FTSE 100 Future Laibility (96,299) - (8,731)
Effective Equity Exposure (358) (7,083) 94,938
US Treasury Strip 0% 15/11/07 60,088
Standard Life Sterling Fund 5,764
FTSE 100 Future Asset 92,571
Net Current Assets 29,108
Liquidity 187,531 97,478
Shareholders' Funds 187,173 192,416
INTERIM MANAGEMENT REPORT
We have grown increasingly bearish of the UK and US equity markets since the
publication of the Annual Report and Accounts for the year ended 30 April 2007
and as a result of this we progressed in four stages from being 51% liquid at
the beginning of the period to being 100% liquid at its end.
On 3 July, following a Board 'AwayDay', we sold 283 FTSE 100 contracts to give
us a short position of 418 contracts, thereby increasing our liquidity from 51%
to 60% of shareholders' funds. We decided also to reduce our holdings in Banks
because of growing concerns about bad debts, selling 405,000 shares in Barclays
and 640,000 shares in Royal Bank of Scotland on 16 July for a total of £7.1
million at prices respectively 33% and 38% higher than those now prevailing (21
November). In consequence of this, and also on 16 July, we bought back 95 of our
418 short position in FTSE 100 contracts in order to maintain our overall
liquidity at 60%. When the US Federal Reserve reduced its 'discount window' rate
by 0.5% on 17 August in response to a deterioration in the commercial credit
market, we saw this as confirmation of our belief that there was a systemic
threat to the financial system. We therefore on 17 August sold a further 230
FTSE 100 contracts, increasing our effective liquidity to 70% of shareholders'
funds.
On 4 September, as the prospects for the credit market in our opinion continued
to worsen, we sold an additional 312 FTSE 100 contracts, increasing our
liquidity to 80%. Then on 18 September, following an interview in which Alan
Greenspan stated that US house price percentage declines could be in double
digits (almost guaranteeing a US recession), and in the conviction that sooner
or later de-leverage around the world will have to occur (through sales of
assets and repayment of debt), we sold a further 605 FTSE 100 contracts,
increasing our liquidity to 100%.
In this Report we are required also to describe the principal risks and
uncertainties for the remaining six months of the year. Because the Company is
100% liquid it is not at risk of loss from adverse movements in share prices
except in the event that any shares we still held and to which we had a
percentage exposure higher than that of the FTSE 100 were significantly to
underperform the FTSE 100. At present we have no such holdings. Because the
Company's currency exposure is fully hedged it is not at risk from adverse
currency movements. The Board considers that there is negligible risk of default
by its bankers or of liquidity problems arising in the FTSE Futures market. The
Company's largest investment is in a US Treasury Strip 0% and the Board
considers there to be negligible risk that the US Government will default on its
obligations. Given that we hold very short-dated securities (a maximum of three
months to maturity), the risk of a lack of liquidity in the market for US
Treasury securities does not arise.
No material related party transactions have taken place during the first six
months of the current financial period and there were no material related party
transactions during the year ended 30 April 2007.
CONDENSED GROUP INCOME STATEMENT
FOR THE SIX MONTHS ENDED 31 OCTOBER 2007
(Unaudited)
Six months ended
31 October 2007
Revenue Capital
return return Total
£'000 £'000 £'000
Investment income 2,237 - 2,237
Other operating income 399 - 399
Losses on investments held at fair value - (6,602) (6,602)
Foreign exchange differences - 2,318 2,318
Total income 2,636 (4,284) (1,648)
Expenses (1,059) - (1,059)
Profit/(loss) before tax 1,577 (4,284) (2,707)
Taxation (9) - (9)
Profit/(loss) for the period 1,568 (4,284) (2,716)
Return per ordinary share £2.17 (£5.92) (£3.75)
The column of this statement headed Total represents the Group's Income
Statement, prepared in accordance with International Financial Reporting
Standards. The revenue return and capital return columns are supplementary to
this and are prepared under guidance published by the Association of Investment
Companies. All items in the above statement derive from continuing operations.
CONDENSED GROUP INCOME STATEMENT
FOR THE SIX MONTHS ENDED 31 OCTOBER 2006
(Unaudited)
Six months ended
31 October 2006
Revenue Capital
return return Total
£'000 £'000 £'000
Investment income 2,060 - 2,060
Other operating income 616 - 616
Losses on investments held at fair value - (1,277) (1,277)
Foreign exchange differences - 2,886 2,886
Total income 2,676 1,609 4,285
Expenses (987) - (987)
Profit before tax 1,689 1,609 3,298
Taxation (75) - (75)
Profit for the period 1,614 1,609 3,223
Return per ordinary share £2.18 £2.17 £4.35
CONDENSED GROUP INCOME STATEMENT
FOR THE YEAR ENDED 30 APRIL 2007
(Audited)
Year ended
30 April 2007
Revenue Capital
return return Total
£'000 £'000 £'000
Investment income 4,919 - 4,919
Other operating income 983 - 983
Losses on investments held at fair value - (305) (305)
Foreign exchange differences - 5,849 5,849
Total income 5,902 5,544 11,446
Expenses (2,136) - (2,136)
Profit before tax 3,766 5,544 9,310
Taxation (18) - (18)
Profit for the period 3,748 5,544 9,292
Return per ordinary share £5.08 £7.52 £12.60
CONDENSED GROUP BALANCE SHEET
AS AT 31 OCTOBER 2007
(Unaudited) (Unaudited) (Audited)
31 October 31 October 30 April
2007 2006 2007
£'000 £'000 £'000
Non current assets:
Investments held at fair value 161,793 169,851 189,645
Current assets 25,380 20,903 2,771
Net assets 187,173 190,754 192,416
Equity shareholders' funds 187,173 190,754 192,416
Net asset value per ordinary share £258.70 £258.51 £264.70
DIRECTORS' RESPONSIBILITY STATEMENT IN RESPECT OF THE INTERIM REPORT
We confirm to the best of our knowledge:
• the condensed set of financial statements has been prepared in accordance
with IAS 34 'Interim Financial Reporting' as adopted by the EU; and
• the Interim Management Report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first six months of
the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, 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 that period; and any changes in the related
party transactions described in the last Annual Report that could do so.
By Order of the Board,
Steven K Davidson,
Secretary
CONDENSED GROUP CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 31 OCTOBER 2007
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2007 2006 2007
£'000 £'000 £'000
Net cash inflow from operating activities 2,330 2,489 3,572
Net cash inflow/(outflow) from investing 25,006 (510) (19,442)
activities
Net cash inflow/(outflow) before financing 27,336 1,979 (15,870)
Net cash outflow from financing activities (2,527) (1,819) (6,227)
Net increase/(decrease) in cash and cash 24,809 160 (22,097)
equivalents
Cash and cash equivalents at the start of the 304 15,391 15,391
period
Realised gains on foreign currency 871 5,045 7,010
Cash and cash equivalents at the period end 25,984 20,596 304
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 OCTOBER 2007
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2007 2006 2007
£'000 £'000 £'000
Opening equity shareholders' funds 192,416 189,351 189,351
(Loss)/profit for the period (2,716) 3,223 9,292
Ordinary dividends paid (1,626) (1,482) (3,019)
Issue of ordinary shares 938 1,180 1,311
Buy-backs of ordinary shares (1,839) (1,518) (4,519)
Closing equity shareholders' funds 187,173 190,754 192,416
Notes:
1) The return per ordinary share figure is based on the net loss for the six
months of £2,716,000 (six months ended 31 October 2006: net gain of £3,223,000;
year ended 30 April 2007: net gain of £9,292,000) and on 723,990 (six months
ended 31 October 2006: 740,561; year ended 30 April 2007: 737,371) ordinary
shares, being the weighted average number of ordinary shares in issue during the
period.
2) In respect of the year ending 30 April 2008 the Board has declared a first
interim dividend of £2.25 per ordinary share, which was paid on 26 October 2007.
In respect of the year ended 30 April 2007 the Board declared a first interim
dividend of £2.00 per ordinary share and a second interim dividend of £2.10 per
ordinary share. This gave a total dividend for the year ended 30 April 2007 of
£4.10 per ordinary share.
3) At 31 October 2007 there were 723,510 ordinary shares in issue (31 October
2006: 737,902; 30 April 2007: 726,921). During the six months ended 31 October
2007 the Company issued 3,573 ordinary shares from Treasury and bought 6,984
ordinary shares to be held in Treasury. At 31 October 2007, there were 27,366
ordinary shares held in Treasury (31 October 2006: 12,537; 30 April 2007:
23,955). The cost of the share buy-backs, including stamp duty, amounted to
£1,839,000.
4) The accounting policies adopted in the preparation of the interim financial
statements are consistent with those followed in the preparation of the annual
report and financial statements for the year ended 30 April 2007.
5) These are not statutory accounts in terms of section 240 of the Companies Act
1985 and are unaudited. The information for the year ended 30 April 2007 has
been extracted from the latest published financial statements, which received an
unqualified audit report and have been filed with the Registrar of Companies. No
statutory accounts in respect of any period after 30 April 2007 have been
reported on by the Company's auditors or delivered to the Registrar of
Companies.
For further information contact:
Ian Rushbrook
Managing Director
Tel: 0131 718 1000
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