Half Yearly Report

RNS Number : 7999Q

Securities Trust of Scotland PLC

09 November 2012

 



Securities Trust of Scotland plc

Half-yearly financial report

Six months to 30 September 2012

A copy of the half yearly financial report has been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.Hemscott.com/nsm.do

A copy of this half-yearly financial report can shortly be downloaded at www.securitiestrust.com

FINANCIAL SUMMARY

Key data	As at 30 September 2012	As at 31 March 2012	% change
Net asset value per share (cum income)	123.02p	119.75p	+2.7
Net asset value per share (ex income)	121.45p	118.00p	+2.9
MSCI World High Dividend Yield Index	564.00	556.70	+1.3
Share price	127.50p	122.00p	+4.5
Premium	3.64%	1.88%

 

Total returns‡	Six months ended 30 September 2012	Six months ended 30 September 2011
Net asset value per share*	5.1%	(6.0%)
Benchmark**	4.2%	(5.4%)
Share price	6.6%	(1.7%)

Income	Six months ended 30 September 2012	Six months ended 30 September 2011
Revenue return per share	2.77p	3.17p

Ongoing charges#	Six months ended 30 September 2012	Six months ended 30 September 2011
Ongoing charges	0.9%	0.8%
Performance fee	-	0.3%
Ongoing charges plus performance fee	0.9%	1.1%

Source: Martin Currie Investment Management Limited

‡ The combined effect of any dividend paid, together with the rise or fall in the share price, net asset value or index.

* The net asset value is exclusive of income with dividends re-invested.

** Prior to 1 August 2011, the company's benchmark was the FTSE All-Share index and the MSCI World High Dividend Yield index thereafter.

# Ongoing charges have replaced the total expense ratio. They are calculated using average net assets over the period.  The ongoing charges figure has been calculated with the AIC's recommended methodology.            

Annual total returns with dividends reinvested over 12 month periods to 30 September

Annual total returns‡	2012	2011	2010	2009	2008
Securities Trust of Scotland share price	27.7%	9.4%	15.8%	6.9%	(30.4%)
Benchmark***	15.7%	2.6%	12.5%	10.8%	(22.3%)
Securities Trust of Scotland net asset value per share	18.3%	3.3%	14.6%	6.6%	(28.8%)

Source: Martin Currie Investment Management Limited

‡ The combined effect of any dividends paid, together with the rise or fall in the share price, net asset value or benchmark.

*** Prior to 1 August 2011, the Trust's benchmark was the FTSE All-Share index and the MSCI World High Dividend Yield index thereafter.

INTERIM MANAGEMENT REPORT

Chairman's statement

Over the six months to 30 September 2012, Securities Trust of Scotland continued to build upon the positive momentum that has been growing since the company moved to a global equity income portfolio on 1 August 2011.

I am pleased to report that over the period, investment returns were ahead of benchmark. The net asset value total return was 5.1% compared with the benchmark's return of 4.2%. The share price total return was 6.6%, reflecting a continued and increased premium for the company.

The company's strong progress has also been recognised externally, with a nomination in the International Income category at the Investment Company of the Year awards later this month. This follows on from being awarded the Best Growth & Income Trust award from Investment Trusts magazine earlier in the year.

The manager's review outlines how despite their positive returns over the period, global markets remain volatile with much continuing uncertainty.

Revenues and dividends

The revenue return per share for the six months to 30 September was 2.77p, a fall of 12.6% compared with the six months to 30 September 2011.  This primarily reflects the absence of the one-off additional revenue return from the transitional impact of the change in mandate last year (as disclosed in the annual report). A first interim dividend payment of 1.15p per share for the financial year to 31 March 2013 has already been declared and paid on 3 September to shareholders who were on the register on 17 August 2012. Your board has also declared a second interim dividend of 1.15p per share, also unchanged year-on-year. This will be paid on 13 December 2012 to shareholders who were on the register on 23 November 2012. At 30 September the company's shares offered a net yield of 3.7%. 

Borrowing

The loan facility was increased by £3million to £14million in September 2012, reflecting the investment appreciation and share issuance. The loan facility has been fully drawn down during the 6 months to 30 September 2012.  The company maintained the level of gearing between 8% and 9% during the period. This allowed the manager to enhance returns for shareholders over the period.

Share issues

As I reported in the annual report, demand for shares in the company has been extremely strong since the move to a global equity income mandate. During 2012, the company has consistently traded at a premium, which, as at 30 September 2012, was 3.6% on a cum-income basis.

To help meet the demand for shares the company has the ability to issue up to 10 million new shares prior to the 2013 AGM. The company has issued 3.25million shares between June and September 2012.

Outlook

With the uncertainty in global markets set to continue, the company will continue to focus on good quality stocks in which the manager has a high degree of conviction. Your board will continue to remain focused on ensuring that shareholders continue to benefit over the longer term.

Neil Donaldson

Chairman

9 November 2012

Risk and mitigation

With assistance from the manager, the board has drawn up a risk matrix, which identifies the key risks to the company. These key risks fall broadly under the following categories and the implementation of specific mitigating measures and procedures has taken place in order to reduce the probability and impact of each risk to the greatest extent possible.

The board considers the key ongoing risks to be:

·      Regulatory change	·      Failure to manage the discount
·      Maintaining market liquidity	·      Investment underperformance
·      Loss of s1158-1159 status	·      Gearing/interest rate risk
·      Operational disruption at the manager's premises	·      Foreign exchange risk
·      Regulatory, accounting/internal control breach	·      Counterparty and operational risk
·      Loss of investment team or portfolio manager

Further details of these risks and how the board manages them can be found in the 2012 annual report and on the company's website www.securitiestrust.com

Directors' responsibility

In accordance with Chapter 4 of the Disclosure and Transparency Rules, and to the best of their knowledge, each director of Securities Trust of Scotland, confirms that the financial statements have been prepared in accordance with the applicable set of accounting standards and give a true and fair view of the assets, liabilities, financial position and net return of the company. Furthermore, each director certifies that the interim management report includes an indication of important events that have occurred during the first six months of the financial year, and their impact on the financial statements, together with a description of the principal risks and uncertainties that the company faces. In addition, each director of Securities Trust of Scotland confirms that, with the exception of the management and secretarial fees, there have been no related party transactions during the six months to 30 September 2012.

By order of the board

Neil Donaldson, Chairman

Edinburgh 9 November 2012

Manager's Review

Global equity markets continue to follow a volatile but rising trend. In the first half, we witnessed markets fall in April and May before recovering through to the end of September. High dividend yielding stocks have outperformed over the period as a whole, but struggled to keep up with the broader market in August and September. The MSCI World High Dividend Yield index, the benchmark, rose by 4.2% over the first half, as telecoms, healthcare and consumer staples stocks outperformed at the expense of industrial and material stocks.

As I said in the last annual report, the key driver of these market swings is investor confidence. This confidence, or lack of, is being fuelled in turn by the big macroeconomic concerns of the day - the eurozone crisis, the strength of the US recovery, and slowing growth in China - and how policymakers deal with each of these issues. A taster of future US policy direction came from the 1 August Federal Open Market Committee (FOMC) meeting statement, which highlighted decelerating growth in the first half of 2012 and the Committee's pledge to 'provide additional accommodation as needed'. This language was echoed in the Federal Reserve chairman's speech at the Jackson Hole Economic Symposium at the end of August. Then, in mid-September, we saw the launch of 'QE3' (the third round of quantitative easing), with the FOMC announcing its intention to purchase an additional US$40 billion of agency mortgage-backed securities per month. The Federal Reserve said it will continue this programme until it sees substantial improvement in the labour market. Meanwhile, in Europe, European Central Bank (ECB) President Mario Draghi unveiled the details of a new sovereign-debt-purchase programme, in which the ECB will purchase short-dated bonds of any country, with no limit as long as certain conditions are met. Japan's central bank followed suit by announcing that it would boost the size and duration of its government-bond-buying programme, which is designed to encourage borrowing and spending. So the major central banks have, in effect, offered concerted largesse to buy time for economies to return to growth.

The most important conclusion to draw from these actions is that they will create a scarcity of income. Interest rates and asset yields are likely to remain lower for longer, which means that the attractiveness of equity yields increases. The company is focused on investing in quality franchises, at attractive valuations, that exhibit growth. We also focus on the higher-yielding areas of the market - the aforementioned policy actions should ensure that these areas remain attractive for the foreseeable future.

Portfolio review

Performance

For the first half of the year, the portfolio outperformed its benchmark by just under 1.0%. By region, the range of relative performance was narrow. The portfolio outperformed Europe by 1.2% and underperformed North America by 1.0%; the other regions were within this range. By sector, the range was also narrow. Energy and staples outperformed by 0.5% and 0.4%, respectively, and telecoms and financials underperformed by 0.4% and 0.3%. Meanwhile, seven individual stocks had an impact of over 0.2%. On the positive side, the largest contributors were Lawson, the Japanese convenience-store operator, Inmarsat, the global mobile-satellite-service provider, and Total, the global energy company. Lawson and Inmarsat have delivered good results this year, and Total was a well-timed purchase, having been bought after the Elgin spill. Meanwhile, not holding AT&T and Verizon was a negative for the portfolio, as both performed strongly on a return of pricing power to the US telecoms providers. We have been repurchasing AT&T on the back of this positive change. Elsewhere, MAN Group and Intel - stocks we have now sold - were weak.

Activity

We purchased Total, the French integrated oil company, for several reasons, including its volume growth after a lacklustre few years, driven by deepwater West Africa, then LNG and oil sands; strong earnings and cashflow momentum helped by the higher-margin new projects; and a portfolio transition driven by focusing on exploration.

Key sales over the period included Seadrill and Dupont. Both companies are high-quality cyclicals where we felt that valuations looked stretched after strong performances. At Seadrill, the Norwegian rig-operating company, we had seen day rates hit record highs and were skeptical as to how long this could continue. In the case of Dupont, the US chemicals giant, we felt that after a strong performance there were better opportunities elsewhere.

The portfolio is positioned with a neutral stance. This means we are underweight in the most defensive areas of the market, but also the most cyclical areas. Our main exposure is to companies where we expect consistent and persistent dividend growth in the mid-single digits. Quality remains our focus, followed by growth and value. We expect the underlying portfolio to have dividend growth around the mid-single-digit level over the next 12 months.

Outlook

We remain confident in our neutral stance on markets. The biggest driver is the economic backdrop which, although showing some signs of improvement, remains largely negative. Company margins are high, and cashflow generation is strong, but confidence is low. This is a positive for market dividend growth in the short term, but we are looking for rising capital expenditure and M&A activity to signal a return of confidence in corporate boardrooms. Valuations remain neutral for markets after their rally this year, while the most positive supports for equities are the attractiveness of dividend yields and the high levels of cash that many investors appear to be holding. We aim to capitalise on both of these by being fully invested and focused on companies that offer growing dividends.

Alan Porter

9 November 2012

PORTFOLIO SUMMARY Portfolio distribution
By region (excluding cash and fixed interest)	As at 30 September 2012	As at 31 March 2012
	(%)	(%)
Developed Europe	47	45
North America	43	43
Developed Asia Pacific ex Japan	7	8
Japan	3	3
Global emerging markets	-	1
	100	100

By sector (excluding cash and fixed interest)	As at 30 September 2012	As at 31 March 2012
	(%)	(%)
Healthcare	20	18
Financials	14	15
Consumer goods	14	11
Oil & gas	13	10
Consumer services	11	12
Industrials	11	11
Telecommunications	11	9
Utilities	2	6
Basic materials	2	5
Technology	2	3
	100	100

By asset class	As at 30 September 2012	As at 31 March 2012
	(%)	(%)
Equities	111	109
Less borrowings	(11)	(9)
	100	100

Largest holdings	30 September 2012	As at 30 September 2012	31  March 2012	As at 31 March 2012
	Market value	% of total	Market value	% of total
	£000	portfolio	£000	portfolio
Pfizer	6,359	4.6	5,441	4.2
Chevron	6,163	4.4	4,406	3.4
Royal Dutch Shell ('B' Shares)	5,296	3.8	5,186	4.0
Vodafone Group	5,034	3.6	4,365	3.3
Abbott Laboratories	4,919	3.5	4,213	3.2
Nestlé	4,866	3.5	-	-
Philip Morris International	4,795	3.4	4,675	3.6
Sanofi	4,748	3.4	3,641	2.8
Total	4,607	3.3	-	-
Novartis	4,387	3.1	3,913	3.0

UNAUDITED INCOME STATEMENT

		Six months to 30 September 2012			Six months to 30 September 2011
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£000	£000	£000	£000	£000	£000
Gains/(losses) on investments	6	-	3,525	3,525	-	(8,655)	(8,655)
Currency (losses)/gains		1	(286)	(285)	19	73	92
Income	3	3,445	-	3,445	3,663	-	3,663
Investment management fee		(125)	(233)	(358)	(50)	(93)	(143)
Performance fee		-	-	-	-	(372)	(372)
Other expenses		(200)	-	(200)	(286)	-	(286)
Net return before finance costs and taxation		3,121	3,006	6,127	3,346	(9,047)	(5,701)
Finance costs		(45)	(89)	(134)	(68)	(127)	(195)
Net return on ordinary activities before taxation		3,076	2,917	5,993	3,278	(9,174)	(5,896)
Taxation on ordinary activities	5	(275)	-	(275)	(95)	-	(95)
Return attributable to ordinary redeemable shareholders		2,801	2,917	5,718	3,183	(9,174)	(5,991)
Return per ordinary redeemable share	2	2.77p	2.88p	5.65p	3.17p	(9.15p)	(5.98p)

		(Audited)
		Year to
		31 March 2012
		Revenue	Capital	Total
	Note	£000	£000	£000
Gains/(losses) on investments	6	-	2,738	2,738
Currency (losses)/gains		(17)	(135)	(152)
Income	3	6,353	-	6,353
Investment management fee		(102)	(189)	(291)
Performance fee		-	(372)	(372)
Other expenses		(541)	-	(541)
Net return before finance costs and taxation		5,693	2,042	7,735
Finance costs		(109)	(202)	(311)
Net return on ordinary activities before taxation		5,584	1,840	7,424
Taxation on ordinary activities	5	(354)	-	(354)
Return attributable to ordinary redeemable shareholders		5,230	1,840	7,070
Return per ordinary redeemable share	2	5.22p	1.83p	7.05p

The total columns of this statement are the profit and loss accounts of the company. 

The revenue and capital items are presented in accordance with the Association of Investment Companies (AIC) SORP.

All revenue and capital items in the above statement derive from continuing operations.

No operations were acquired or discontinued in the period.

A Statement of Total Recognised Gains and Losses is not required as all gains and losses of the company have been reflected in the above statement.

UNAUDITED BALANCE SHEET

		As at 30 September 2012		As at 30 September 2011		(Audited) As at 31 March 2012
	Note	£000	£000	£000	£000	£000	£000
Non-current assets
Investments at fair value through profit or loss
Listed on Exchanges in the UK			36,285		34,987		38,538
Listed on Exchanges abroad			103,457		80,514		92,088
	6		139,742		115,501		130,626
Current assets
Loans and receivables	7	525		726		718
Cash at bank		4,179		4,330		-
		4,704		5,056		718
Creditors
Amounts falling due within one year	8	(17,107)		(11,250)		(11,282)
Net current liabilities			(12,403)		(6,194)		(10,564)
Net assets			127,339		109,307		120,062
Capital and reserves
Called up ordinary share capital			1,035		1,003		1,003
Capital redemption reserve			78		78		78
Special distributable capital reserve			113,364		109,411		109,411
Capital reserve			9,630		(4,301)		6,713
Revenue reserve			3,232		3,116		2,857
			127,339		109,307		120,062
Net asset value per ordinary redeemable share	2		123.02p		109.02p		119.75p

UNAUDITED STATEMENT OF CASH FLOW

		Six months to				Six months to				(Audited) Year to
		30 September 2012				30 September 2011				31 March 2012
	Note	£000		£000		£000		£000		£000		£000
Net cash inflow from operating activities	9			2,616				2,663				4,278
Servicing of finance
Finance costs				(155)				(232)				(370)
Taxation
Overseas withholding tax suffered				-				(95)				-
Taxation recovered				(62)				-				(28)
Capital expenditure and financial investment
Payments to acquire investments		(23,768)				(90,929)				(122,790)
Receipts from disposal of investments		21,029				98,345				126,674
Net cash (outflow)/inflow from investing activities				(2,739)				7,416				3,884
Equity dividends paid	4			(2,426)				(2,356)				(4,662)
Net cash (outflow)/inflow before use of liquid resources and financing					(2,766)				7,396			3,102
Financing
Repurchase of ordinary share capital		-				-				(76)
Issue of ordinary share capital		3,985				-				-
Net movement in short-term borrowings		3,000				(3,200)				(3,240)
Net cash inflow/(outflow) from financing				6,985				(3,200)				(3,316)
Increase/(decrease) in cash for the period				4,219				4,196				(214)
Reconciliation of net cash flow to movements in net debt
Increase/(decrease) in cash as above		4,219				4,196				(214)
Net movement in short-term borrowings		(3,000)				3,200				3,240
Change in net debt resulting from cash flows				1,219				7,396				3,026
Opening net debt				(11,040)				(14,066)				(14,066)
Closing net debt				(9,821)				(6,670)				(11,040)

 

UNAUDITED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

		Called up ordinary share capital	Capital redemption reserve		Special distributable capital reserve			Capital reserve			Revenue reserve			Total
For the six months to 30 September 2012	Note	£000	£000		£000			£000			£000			£000
As at 31 March 2012		1,003	78		109,411			6,713			2,857			120,062
Return attributable to shareholders		-	-		-			2,917			2,801			5,718
Ordinary shares issued during the year		32	-		3,953			-			-			3,985
Dividends paid	4	-	-		-			-			(2,426)			(2,426)
Balance at 30 September 2012		1,035	78		113,364			9,630			3,232			127,339
For the six months to 30 September 2011
As at 31 March 2011		1,003	78			109,411			4,873			2,289			117,654
Return attributable to shareholders		-	-			-			(9,174)			3,183			(5,991)
Dividends paid	4	-	-			-			-			(2,356)			(2,356)
Balance at 30 September 2011		1,003	78			109,411			(4,301)			3,116			109,307
For the year ended 31 March 2012 (Audited)
As at 31 March 2011		1,003	78	109,411			4,873			2,289			117,654
Return attributable to shareholders		-	-	-			1,840			5,230			7,070
Dividends paid	4	-	-	-			-			(4,662)			(4,662)
Balance at 31 March 2012		1,003	78	109,411			6,713			2,857			120,062

The revenue reserve represents the amount of the company's reserves distributable by way of dividend.

NOTES TO THE FINANCIAL STATEMENTS

1 Accounting policies

(a)  The financial statements have been prepared on a going concern basis and in accordance with UK Generally Accepted Accounting Practice (UK GAAP) and the Statement of Recommended Practice for Financial Statements of Investment Trust Companies and Venture Capital Trusts' (SORP), issued in January 2009.

Dividends - In accordance with FRS 21: 'Events after the balance sheet date', dividends are included in the financial statements in the period in which they are paid.

Functional currency - In accordance with FRS 23: 'The effects of changes in foreign currency', the company is required to nominate a functional currency, being the currency in which the company predominately operates. The board has determined that sterling is the company's functional currency, which is also the currency in which the financial statements are prepared.

(b)  Income from equity investments is determined on the date on which the investments are quoted ex-dividend, or where no ex-dividend date is quoted, when the company's right to receive payment is established. Income from fixed interest securities is recognised on an effective yield basis. UK dividends received are accounted for at the amount receivable and are not grossed up for any tax credit. Other income includes any taxes deducted at source. Gains and losses arising from the translation of income denominated in foreign currencies are recognised in the revenue reserve. Scrip dividends are treated as unfranked investment income; any excess in value of shares received over the amount of the cash dividend is recognised in capital reserves. Income from underwriting commission and traded options is recognised as earned.

(c)  Interest receivable and payable and management expenses are treated on an accruals basis.

(d)  The management fee and interest costs are allocated 65% to capital and 35% to revenue in accordance with the board's expected long-term split of returns in the form of capital gains and income, respectively. The performance fee is wholly allocated to capital.  All other expenses are wholly allocated to capital.

(e)  Gains and losses on realisation of investments and changes in the fair value of investments which are readily convertible to cash, without accepting adverse terms, together with exchange adjustments to overseas currencies are taken to capital reserve.

(f)   Foreign currencies are translated at the rates of exchange ruling on the balance sheet date. Investments are recognised initially as at the trade date of a transaction. Subsequent to this, the disposal of an investment is accounted for once again as at the trade date of a transaction.

(g)  Revenue received and interest paid in foreign currencies is translated at the rates of exchange ruling on the transaction date. Any exchange differences relating to revenue items are taken to the revenue account.

(h)  The company's investments are classified as 'financial assets at fair value through profit or loss' and are therefore valued at bid price. Gains and losses arising from changes in fair value are included in the capital return for the period.

(i)   All financial assets and liabilities are recognised in the financial statements.

(j)   Deferred tax is recorded in accordance with Financial Reporting Standard 19 (Deferred Tax). Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date. A deferred tax asset is only recognised to the extent that it is regarded as recoverable. Due to the company's status as an investment trust company, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the company has not provided for deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.

(k)  Transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the income statement.

(l)   Share buybacks are funded through the capital reserve.

(m) The company can use derivative financial instruments to manage risk associated with foreign currency fluctuations arising on the investments in currencies other than sterling. This is achieved by the use of forward foreign currency contracts. Derivative financial instruments are recognised initially at fair value on the contract date and subsequently remeasured to the fair value at each reporting date. The resulting gain or loss is recognised as revenue or capital in the income statement depending on the nature and motive of each derivative transaction. The fair values of the derivative financial instruments are included within non-current assets or within current assets or current liabilities depending on the nature and motive of each derivative transaction.

2.  Revenue returns and net asset value

	Six months to 30 September 2012	Six months to 30 September 2011	Year to 31 March 2012
Revenue Return
Revenue return attributable to ordinary redeemable shareholders	£2,801,000	£3,183,000	£5,230,000
Average number of shares in issue during the period	101,300,482	100,259,771	100,259,771
Revenue return per ordinary redeemable share	2.77p	3.17p	5.22p
Capital return
Capital return attributable to ordinary redeemable shareholders	£2,917,000	(£9,174,000)	£1,840,000
Average number of shares in issue during the period	101,300,482	100,229,771	100,229,771
Capital return per ordinary redeemable share	2.88p	(9.15p)	1.83p
Total return
Total return per ordinary redeemable share	5.65p	(5.98p)	7.05p

Net asset value per share
Net assets attributable to shareholders	£127,338,939	£109,307,000	£120,062,000
Number of shares in issue at period end	103,509,771	100,259,771	100,259,771
Net asset value per share including income	123.02p	109.02p	119.75p

3. Income from listed investments

	Six months to 30 September 2012 £000	Six months to 30 September 2011 £000	Year to 31 March 2012 £000
Franked income - equities	972	2,523	3,551
Franked income - fixed interest and convertibles	62	93	62
Unranked income - equities	2,408	1,034	2,721
Unfranked income - fixed interest and convertibles	-	10	10
	3,442	3,660	6,344
Other income
Interest on deposits	3	3	9
	3,445	3,663	6,353

4. Dividends

	Six months to 30 September 2012 £000	Six months to 30 September 2011 £000	Year to 31 March 2012 £000
Year ended 31 March 2011 - fourth interim dividend of 1.20p	-	1,203	1,203
Year ended 31 March 2012 - first interim dividend of 1.15p	-	1,153	1,153
Year ended 31 March 2012 - second interim dividend of 1.15p	-	-	1,153
Year ended 31 March 2012 - third interim dividend of 1.15p	-	-	1,153
Year ended 31 March 2012 - fourth interim dividend of 1.25p	1,253	-	-
Year ended 31 March 2013 - first interim dividend of 1.15p	1,173	-	-
	2,426	2,356	4,662

5. Taxation on ordinary activities

	Six months to 30 September 2011 £000			Six months to 30 September 2010 £000			Year to 31 March 2011 £000
Foreign tax			275			95			354

6. Investments

	As at 30 September 2012 £000	As at 30 September 2011 £000	As at 31 March 2012 £000
Fair value through profit or loss
Opening valuation	130,626	131,289	131,289
Opening investment holding gains	(11,914)	(20,145)	(20,145)
Opening cost	118,712	111,144	111,144
Add: additions at cost	26,479	90,856	122,790
Less: disposal proceeds received	(20,888)	(97,989)	(126,177)
Less: net gain on disposal of investments	(827)	12,952	10,955
Closing cost	123,476	116,963	118,712
Closing investment holding gains/(losses)	16,266	(1,462)	11,914
Closing valuation	139,742	115,501	130,626
Gains/(losses) on investments
Net (losses)/gains on disposal of investments	(827)	12,952	10,955
Movement in investment holdings unrealised gains/(losses)	4,352	(21,607)	(8,231)
Capital distribution	-	-	14
	3,525	(8,655)	2,738

Transaction costs

During the period expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss.  These have been expensed through capital and are included within gains and losses on investments in the income statement.  The total costs were as follows:

	Six months to 30 September 2012 £000	Six months to 30 September 2011 £000	Year to 31 March 2012 £000
Acquisitions	69	79	158
Disposals	39	56	103
	108	135	261

7. Loans and receivables

	As at 30 September 2012 £000	As at 30 September 2011 £000	As at 31 March 2012 £000
Dividends receivable	354	555	632
Special dividends to capital receivable	-	-	-
Interest accrued	-	1	-
Due from brokers	-	141	-
VAT receivable	33	-	-
Tax recoverable	70	8	35
Financial assets held for trading derivatives that are not designated in hedge accounting relationships:
Forward foreign currency contracts	-	8	3
Prepayments and other debtors	68	13	34
	525	726	718

8. Creditors - amounts falling due within one year

	As at 30 September 2012 £000	As at 30 September 2011 £000	As at 31 March 2012 £000
Interest accrued	1	22	-
Due to brokers	2,711	-	-
Sterling bank revolving loan	14,000	11,000	11,000
Bank overdraft	-	-	40
Financial liabilities held for trading derivatives that are not designated in hedge accounting relationships:
Forward foreign currency contracts	-	-	5
Other creditors	395	228	237
	17,017	11,250	11,282

The company has an £14,000,000 revolving loan facility with State Street Bank and Trust Company which expires on 28 September 2013. Under this agreement £14,000,000 was drawn at 28 September 2012 at a rate of 1.75375% with a maturity date of 27 December 2012.

The fair value of the sterling loan is not materially different from its carrying value. The interest rate is set at each roll-over date at LIBOR plus a margin.

9. Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities

	Six months to 30 September 2012 £000	Six months to 30 September 2011 £000	Year to 31 March 2012 £000
Net return before finance costs	6,127	(5,701)	7,735
Decrease in accrued income and other debtors	122	198	106
Increase/(decrease) in creditors	167	(488)	(471)
Net (losses)/gains on investments	(3,525)	8,655	(2,738)
Taxation withheld from income on investments	(275)	(1)	(354)
Net cash inflow from operating activities	2,616	2,663	4,278

10.  Analysis of net debt

	As at 31 March 2012 £000	Cash flow £000		30 September 2012 £000
Cash at bank	-	4,179	4,179
Bank overdraft	(40)	40	-
Bank borrowings - sterling revolving loan	(11,000)	(3,000)	(14,000)
Net debt	(11,040)	1,219	(9,821)

11. Interim report

The financial information contained in the half-yearly financial report does not constitute statutory accounts as defined in s434 - 436 of the Companies Act 2006. The financial information for the six months ended 30 September 2012 and 30 September 2011 has not been audited.

The information for the year ended 31 March 2012 has been extracted from the latest published audited financial statements which have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under s498 (2), (3) or (4) of the Companies Act 2006.

 

END

 

 

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