Information  X 
Enter a valid email address

UK Select Trust Ld (UKT)

  Print      Mail a friend

Tuesday 13 March, 2007

UK Select Trust Ld

Final Results & Proposed Div

UK Select Trust Limited
13 March 2007


To:       Quotations Department, The Stock Exchange, London


From:     UK Select Trust Limited


FINAL RESULTS AND PROPOSED DIVIDEND


The unaudited figures for the year ended 31 December 2006 are as follows:

Return                                                                                      *
                                                        31 December 2006           31 December 2005
                                                                 £'000's                    £'000's

Dividends and interest                                             1,041                      1,517

Revenue return on ordinary activities after
taxation                                                             648                        880
Amount absorbed by dividends                                       (642)                    (1,134)
Amount transferred to/( from)
revenue reserves -                                                     6                      (254)
Capital return on ordinary activities

After taxation                                                     5,697                      8,694

Interim and proposed final dividend per ordinary
share for the financial year                                       3.25p                      3.10p
Revenue earnings per ordinary share                                3.12p                      2.48p
Capital earnings per ordinary share                               27.44p                     24.44p
Total earnings per ordinary shares                                30.56p                     26.92p

Balance Sheet
                                                       31 December 2006           31 December 2005
                                                                £'000's                    £'000's

Market value of investments                                      36,494                     30,728
Total net assets (ex-dividend)                                   31,839                     26,030
Net asset value per ordinary share
10p each (ex-dividend)                                          152.85p                    125.54p


The directors propose that ordinary shareholders should be offered the right to
elect to receive new ordinary shares in lieu of the cash final dividend.


The Directors have decided to recommend a final dividend of 2.40p (2005: 2.25p)
for the year ended 31 December 2006, making a total dividend of 3.25p (2005:
3.10p).


The final dividend will be payable on 4 May 2007 on such of the ordinary shares
in respect of which the holders had not, prior to 18 April 2007, elected to
receive an allotment of new ordinary shares.


The record date for the final dividend in respect of the year ended 31 December
2006 is 23 March 2007.


Shares will be marked ex-dividend on 21 March 2007.


Chairman's Statement


Review of 2006 Performance


2006 was another excellent year for UK equities and also for the shareholders of
UK Select Trust Limited.  It gives me pleasure to report that the total return
of 24.8% produced by the Company comfortably exceeded the FTSE All-Share index,
which returned 16.8% on a total return basis.


The Company's portfolio continued to be managed on a very active basis during
the year.  Strong stock selection augmented by the positive impact of gearing
has enabled the Company to outperform its benchmark significantly for the second
consecutive year.


Share Price and discount


The share price has increased by 19% over the year while the discount at which
your shares trade relative to their net asset value closed the financial year at
8.8%.  The Board is continuing its policy of share buy backs to help manage the
discount.


Gearing



The investment manager's positive stance towards the UK equity market resulted
in the Company employing an average gearing level of 14% during the year.



Earnings and dividend per share



Earnings per share for the year amounted to 3.12p (2005: 2.48p) and, on behalf
of the Board, I am pleased to recommend a final dividend 2.40p (2005: 2.25p).
This is in addition to the interim dividend of 0.85p (2005: 0.85p), bringing the
total dividend for the year to 3.25p (2005: 3.10p).



Treasury Shares



Guernsey company law has recently been amended to allow a company to hold shares
which it has bought back to be held 'in treasury', and subsequently to be sold
or transferred instead of being cancelled.  If your Company has permission to do
this it will be able to use those treasury shares for the scrip dividends and
thus reduce or avoid the biannual payments to the UK Listing Authority which it
has had to pay on the listing of new shares issued as scrip dividend.  This
requires an amendment to the Company's Articles of Association to authorise the
Company to hold a proportion of its share capital in treasury and resolutions
seeking shareholders' approval will be put to the Annual General Meeting.   If
the authority to hold treasury shares is approved by shareholders, the Company
will also have greater flexibility in managing its share capital which may help
to control the discount or premium to net asset value at which its ordinary
shares may trade from time to time.



Prospects



The rise of share prices over the past four years has left many stock market
commentators nervous about the short term prospects for the UK stock market.
While some expect the rate of corporate profits growth to slow through 2007,
many companies remain well positioned to deliver further progress in both
earnings and dividends.



The Board remains confident that the investment manager's selection process will
continue to identify companies with strong business models and trading on
attractive valuations which will deliver superior investment returns over the
long term for shareholders.



The rise of share prices over the past four years has left many stock market
commentators nervous about the short-term prospects for the UK stock market.
While share price volatility in the early months of 2007 has increased sharply,
many companies remain well positioned to deliver further progress in both
earnings and dividends.

INVESTMENTS MANAGERS REVIEW



Introduction



For the fourth consecutive year, UK equities delivered positive returns, with
the FTSE All-Share index rising 16.8% on a total return basis. The continued
flow of merger and acquisition activity within the UK equity market, combined
with increasing corporate profits and dividends, pushed share prices higher
through 2006.



The Company's net asset value significantly outperformed the benchmark during
the period, returning 24.8% on a total return basis.  This performance relative
to the FTSE All-Share Index was attributable to strong stock selection and the
positive impact of the Company's gearing.



Global Background



The global economic environment remained broadly supportive for equity markets
through 2006 with accommodative monetary conditions fuelling a record number of
corporate transactions.  This activity helped to spur further gains across
global equity indices with emerging markets once again delivering the biggest
returns.  China, Russia and India were among the leading performers reflecting
the rapid expansion that these economies continued to experience through the
year.



The backdrop for equities, however, was not entirely positive during the period.
Geo-political unrest remained a prominent feature of news headlines with the
escalating crisis in the Middle East unsettling global financial markets.  The
spectre of a supply side shock pushed the oil price sharply higher with Brent
peaking at over $78 per barrel in early August before softening to $59 by the
end of the year.



In the US, the Federal Reserve ended a run of seventeen consecutive interest
rate hikes in August.  This shift to a neutral monetary policy stance was in
response to easing inflationary pressures as commodity prices started to retreat
from their mid year peak while the slow down in the US housing market continued
to gather pace.



The UK Stock Market



The FTSE All-Share Index recorded its fourth consecutive year of gains in 2006.
The FTSE 250 (mid cap) segment of the market once again led the way rising by
27.1% (excluding dividends) over the year.  This compared to returns of 18.2%
and 10.7% for the FTSE Small Cap and FTSE 100 Indices, respectively.



The positive sentiment towards UK equities was fuelled by a number of factors.
Corporate profits growth continued to support higher share prices with many
companies taking advantage of strong balance sheets to distribute surplus cash
flows in the form of higher dividends and share repurchase programmes.



The Company continued to benefit from its positive stance towards the Mining
sector.  Rising commodity prices resulted in both significant upgrades to
earnings and prodigious cash generation for the major mining companies.  Xstrata
recorded the FTSE 100's largest gain during the year adding 110% to its share
price.


Strong underlying trading conditions were accompanied by a frenzy of
consolidation activity with both trade and private equity buyers laying siege to
the UK stock market.  The Company's portfolio benefited from this theme with the
holdings in McCarthy & Stone, Wilson Bowden, Crest Nicholson, John Laing, Peach
Holdings and Gallaher all the subject of take-over bids during the year.



The UK economy expanded above trend in 2006 with GDP recording a rise of 2.7%.
Whilst exports came under pressure from the strength of sterling, consumer and
business spending remained strong.  The Monetary Policy Committee (MPC) kept
interest rates on hold at 4.5% through the first half of the year reflecting a
balanced outlook for inflation.  However, the second half of the year saw two
quarter point rate increases as stronger than expected wage inflation and a
buoyant housing market forced the MPC to take action.



Portfolio activity



The company established a number of new holdings in the year including Berkeley
Group, Imperial Tobacco, Gallaher, KSK Power Ventures, Land of Leather and
Scottish & Newcastle. These purchases were funded by the disposals of BHP
Billiton, Bovis Homes, Kazakhmys, ITV, RBS and Vernalis.



Portfolio construction continues to be shaped by rigorous fundamental analysis
at the stock-specific level. At present this translates into overweight
positions relative to the Company's benchmark in Pharmaceuticals, Financials and
Construction. The major underweight positions include Utilities, Real Estate and
Oil & Gas.



Outlook



The UK stock market has enjoyed a sustained recovery over the past four years.
The FTSE 100 Index has returned nearly 80% in capital terms since the low point
in March 2003, while the FTSE 250 has climbed an impressive 195%.  However, the
rate of corporate profits growth has kept pace with, and in many cases exceeded,
the corresponding share price increases.  As a result, many companies are still
trading on very attractive valuations relative to our view of their fair value.



The recent volatility in the stock markets through the early weeks of March has
presented the Company with several excellent buying opportunities in companies
where prospects remain very strong.



Merger and acquisition activity is likely to remain a prominent theme through
2007 with corporate finances in good shape and cheap finance still readily
available in the debt markets.  The Company's portfolio will continue to be
actively managed to exploit the stock opportunities identified by our investment
process.




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