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UK Select Trust Ld (UKT)

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Thursday 07 September, 2006

UK Select Trust Ld

Div Ann. & Interim Results

UK Select Trust Limited
07 September 2006


                                                                                                                      
  UK SELECT TRUST LIMITED                                                                                               
             
  Statement of Total Return of the Company                                                                              
                
  The unaudited results below cover the six months ended 30 June 2006                                                   
                                   


                 Six months   Six months  Year ended                                                                  
                     ended        ended                                                                               
                 30-Jun-06    30-Jun-05    31-Dec-05                                                                  
                 unaudited    unaudited      audited                                                                  
                   Revenue      Capital        Total    Revenue    Capital     Total    Revenue    Capital      Total 
                     £'000        £'000        £'000      £'000      £'000     £'000      £'000      £'000      £'000 
  Gains on               -        1,454        1,454          -      3,796     3,796          -      9,132      9,132 
  investments                                                                                                         
  Income               625            -          625        887          -       887      1,517          -      1,517 
  Investment          (21)         (64)         (85)       (28)       (85)     (113)       (52)      (156)      (208) 
  management fee                                                                                                        
  Performance          (9)         (25)         (34)          -          -         -       (16)       (49)       (65) 
  fees                                                                                                                
  Other              (145)            -        (145)      (131)        (9)     (140)      (493)       (12)      (505) 
  expenses                                                                                                            
                   -------      -------       ------     ------     ------    ------     ------     ------     ------
  Net return           450        1,365        1,815        728      3,702     4,430        956      8,915      9,871 
  before                                                                                                              
  finance                                                                                                             
  costs                                                                                                               
  Interest            (38)        (114)        (152)       (37)      (111)     (148)       (74)      (221)      (295) 
  payable                                                                                                             
                   -------      -------       ------     ------     ------    ------     ------     ------     ------
  Return on                                                                                                           
  ordinary                                                                                                            
  activities                                                                                                          
  for the                                                                                                             
  financial                                                                                                           
  period                                                                                                              
  before                                                                                                              
  taxation             412        1,251        1,663        691      3,591     4,282        882      8,694      9,576 
  Taxation             (3)            -          (3)          -          -         -        (2)          -        (2) 
                   -------      -------       ------     ------     ------    ------     ------     ------     ------
  Return on                                                                                                           
  ordinary                                                                                                            
  activities                                                                                                          
  for the                                                                                                             
  financial                                                                                                           
  period                                                                                                              
  after                                                                                                               
  taxation             409        1,251        1,660        691      3,591     4,282        880      8,694      9,574 
  Dividend           (466)            -        (466)      (810)          -     (810)    (1,134)          -    (1,134) 
                   -------      -------       ------     ------     ------    ------     ------     ------     ------
  Transfer to         (57)        1,251        1,194      (119)      3,591     3,472      (254)      8,694      8,440 
  / (from)                                                                                                            
  reserves                                                                                                            
                   =======      =======       ======     ======     ======    ======     ======     ======     ======
  Return per         1.97p        6.03p        8.00p      1.80p      9.34p    11.14p      2.48p     24.44p     26.92p 
  ordinary                                                                                                            
  share            =======      =======       ======     ======     ======    ======     ======     ======     ======

The total column of this statement is the profit and loss account of the 
Company, with the revenue and capital columns representing supplementary 
information. 
 
All revenue and capital items in the above statement derive from continuing 
operations. 
 
The June 2005 figures have been restated to reflect the prior year adjustment
made in the 2005 Annual Accounts, to account for dividends in line with
Financial Reporting Standard 21 'Events after the balance sheet date' (FRS 21). 

                                                                                
                  
  Balance Sheet                                                                
  at 30 June 2006                                                              
                                           30-Jun-06    30-Jun-05    31-Dec-05 
                                           unaudited    unaudited      audited 
                                               £'000        £'000        £'000 
  Investments at valuation                    31,201       45,749       30,728 
  Net current assets                             977          279          502 
  Creditors: amounts falling due after                                         
  more than one year                         (5,200)      (5,200)      (5,200) 
                                             -------      -------      -------
  Net assets                                  26,978       40,828       26,030 
                                             -------      -------      -------
  Equity shareholders' funds                                                   
  Called up share capital                      2,077        3,812        2,073 
  Capital reserves                            21,386       33,309       20,385 
  Revenue reserve                              3,515        3,707        3,572 
                                             -------      -------      -------
                                              26,978       40,828       26,030 
                                             -------      -------      -------
  Net assets per 10p ordinary share          129.87p      107.09p      125.54p 
                                             -------      -------      -------
                                                                                                                      


  Reconciliation on Movements in Equity Shareholders' Funds                                                             
  At 30 June 2006                                                                                                     
                                                                                                                      
                                      Share       Capital      Capital       Capital    Revenue     Share             
                                    premium    redemption    reserve -     reserve -    reserve    Capital      Total 
                                                  reserve     realised    unrealised                                  
                                      £'000         £'000        £'000         £'000      £'000      £'000      £'000 
  At 1 January 2006                   5,205         4,297        6,813         4,070      3,572      2,073     26,030 
  Shares repurchased during the                                                                                       
  period                                  -            11        (136)             -          -       (11)      (136) 
  Realised surplus on disposal                                                                                        
  of investments                          -             -        3,876             -          -          -      3,876 
  Decrease in unrealised                                                                                              
  appreciation                                                                                                        
  on valuation of investments             -             -            -       (2,422)          -          -    (2,422) 
  Transaction costs                       -             -        (304)             -          -          -      (304) 
  Investment management fee                                                                                           
  attributable to capital                 -             -         (64)             -          -          -       (64) 
  Performance fee                                                                                                     
  attributable to capital                 -             -         (26)             -          -          -       (26) 
  Foreign exchange gain                   -             -            3             -          -          -          3 
  Loan interest attributable to                                                                                       
  capital                                 -             -        (114)             -          -          -      (114) 
  Premium arising on share                                                                                            
  elections:                                                                                                          
  - 2005 final dividend                 177             -            -             -          -         15        192 
  Retained revenue                        -             -            -             -       (57)          -       (57) 
                                     ======        ======        =====        ======     ======     ======     ====== 
  At 30 June 2006                     5,382         4,308       10,048         1,648      3,515      2,077     26,978 
                                     ======        ======       ======        ======     ======     ======     ====== 



The Directors have decided to declare an interim dividend of 0.85p (2005: 0.85p)
for the year ending 31 December 2006 to ordinary shareholders who are registered
at the close of business on 15 September 2006.   

The Directors propose that ordinary shareholders should be offered the right to 
elect to receive new ordinary shares in lieu of the cash interim dividend.   
Shares will go ex-dividend on 13 September 2006 and the record date is 
15 September 2006.   

The interim dividend will be payable on 17 November 2006.  



Chairman's Statement 
 
Review of Performance 

UK Select Trust Limited produced a net asset value total return of 6.39%* for
the six months ended 30th June 2006, which compares favourably with a total
return of 6.11%* for the FTSE All-Share Index. This out-performance was
generated from the positive impact of the Company's gearing into a rising market
while the underlying equity portfolio returned 5.67% during the period. The more
significant contributors to performance are discussed in the Investment
Manager's report.  

The Board is declaring an interim dividend of 0.85p per share. 
 

Share price and discount  

The share price recorded an increase of 7.6% during the period. The discount at
which your shares trade relative to their net asset value stood at 3.3% at the
end of the interim period.  


Gearing 

The investment manager retained a positive stance towards the UK equity market
during the first half of the year reflected in the Company's average gearing
level of 18.2% over the period. Gearing was reduced towards the end of the
period as several of the Company's holdings achieved their price targets and
were consequently sold. However, since the end of the interim period the gearing
level has been increased again with a number of investment opportunities
identified following the recent stock market weakness. Gearing currently stands
at 17.2%.  


Outlook 

The UK equity market continues to offer attractive value with the recent share
price falls providing some excellent buying opportunities for investors who are
willing to take a longer term view. Further corporate activity is anticipated in
the second half of the year which should also provide a boost to sentiment
following the quiet summer months. Your portfolio continues to be shaped by
rigorous fundamental analysis at the stock level.  

*Source: Datastream 
 
 
Investment Manager's Report 
 
Investment Manager's Report 
 
The UK stock market recorded further strong gains through the early stages of
2006 continuing the trend of the previous three years. An unprecedented number
of merger and acquisition transactions, strong corporate results and positive
economic data combined to propel share prices higher across a number of market
sectors in the first four months of the year. The unrelenting strength of
commodity markets also remained a prominent feature through the first quarter,
generating significant upgrades to earnings for companies within the mining
sector.  

This positive sentiment towards equity markets evaporated, however, during the
second quarter of the year following a stark warning from the new Governor of
the US Federal Reserve that inflationary pressures would be addressed through
further tightening of monetary policy. This fuelled fears of a sharp slowdown in
US, and indeed global, economic growth. and triggered an aggressive rotation
into the more defensive areas of the market at the expense of companies more
heavily exposed to the economic cycle. Against this unsettled backdrop
pharmaceuticals, consumer staples and tobacco companies out-preformed the
benchmark towards the end of the period while sectors such as resources,
financials and media sold off sharply thereby giving up their gains of the first
quarter.  

The portfolio's performance to a large degree mirrored the overall stock market
conditions with a strong first quarter cancelled out by a disappointing end to
the period. The Company benefited once again from the corporate activity theme
with the holding in retirement house-builder, McCarthy and Stone, the subject of
a bidding war with several private equity houses tabling cash offers. The shares
recorded a gain of 43% through the period under review. Other major contributors
to the performance of the Company included the holdings in Drax and BG Group
which both continued to benefit from surging power prices.  

The largest negative contributor to performance was the holding in software
company, Adamind which announced a very disappointing set of results and the
announcement of two major contract delays. The Company's long standing position
in leading directories business, Yell Group, also performed very poorly during
the period following completion of a major acquisition which was not well
received by the market.   

Portfolio activity remained high during the interim period with several new
holdings established for the Company, including Abbot Group, Gallaher, Sage and
City Lofts. These positions were funded by a number of sales including BAA,
Vernalis, Pendragon and Rolls Royce.  


END  


                      This information is provided by RNS
            The company news service from the London Stock Exchange