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UK Select Trust Ld (UKT)

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Thursday 13 September, 2007

UK Select Trust Ld

Interim Results & Dividend

UK Select Trust Limited
13 September 2007





UK SELECT TRUST LIMITED


Statement of Total Return of the Company


The unaudited results below cover the six months ended 30 June 2007



                              Six months ended             Six months ended                Year ended         
                                30 June 2007                 30 June 2006               31 December 2006      
                                 unaudited                     unaudited                     audited          
                       Revenue   Capital     Total   Revenue   Capital     Total   Revenue   Capital     Total  
                         £'000     £'000     £'000     £'000     £'000     £'000     £'000     £'000     £'000  
                                                                                                      
Gains on investments         -     2,966     2,966         -     1,454     1,454         -     6,110     6,110  
Income                     567         -       567       625         -       625     1,041         -     1,041  
Investment management 
fee                        (24)      (73)      (97)      (21)      (64)      (85)      (43)     (130)     (173) 
Performance fees           (13)      (37)      (50)       (9)      (25)      (34)      (20)      (60)      (80) 
Other expenses            (140)        -      (140)     (145)        -      (145)     (250)        -      (250) 
                        -------   -------   -------   -------   -------   -------   -------   -------   -------  
Net return before                                                                                                
finance costs              390     2,856     3,246       450     1,365     1,815       728     5,920     6,648  
                                                                                                      
Interest payable           (39)     (116)     (155)      (38)     (114)     (152)      (74)     (223)     (297) 
                        -------   -------   -------   -------   -------   -------   -------   -------   -------  
Return on ordinary                                                                                              
activities for the                                                                                               
financial period                                                                                                
before taxation            351     2,740     3,091       412     1,251     1,663       654     5,697     6,351  
                                                                                                      
Taxation                     -         -         -        (3)        -        (3)       (6)        -        (6) 
                        -------   -------   -------   -------   -------   -------   -------   -------   -------  
Return on ordinary                                                                                              
activities for the                                                                                               
financial period 
after taxation             351     2,740     3,091       409     1,251     1,660       648     5,697     6,345  
                                                                                                      
Dividend                  (500)        -      (500)     (466)        -      (466)     (642)        -      (642) 
                        -------   -------   -------   -------   -------   -------   -------   -------   -------  
Transfer (from)/ to                                                                                            
reserves                  (149)    2,740     2,591       (57)    1,251     1,194         6     5,697     5,703  
                        =======   =======   =======   =======   =======   =======   =======   =======   =======
Return per ordinary  
share                      1.69p    13.16p    14.85p     1.97p     6.03p     8.00p     3.12p    27.44p    30.56p        
                                                                         
                        =======  ========   =======   =======   =======   =======   =======   =======   =======

 

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.


Balance Sheet
at 30 June 2007  
 
                                   30 June 2007  30 June 2006  31 December 2006
                                      unaudited     unaudited           audited
                                          £'000         £'000             £'000  
                                                                                 
Investments at valuation                 39,780        31,201            36,494  
Net current (liabilities)/assets         (5,377)          977            (4,655) 
Creditors: amounts falling due                                                   
after more than one year                      -        (5,200)                -  
                                        -------       -------           -------  
Net assets                               34,403        26,978            31,839  
                                        -------       -------           -------  
                                                                                 
Equity shareholders' funds                                                       
Called up share capital                   2,082         2,077             2,083  
Capital reserves                         28,892        21,386            26,178  
Revenue reserve                           3,429         3,515             3,578  
                                        -------       -------           -------  
                                         34,403        26,978            31,839  
                                        -------       -------           -------  
                                                                                 
Net assets per 10p ordinary share       165.25p       129.87p           152.85p 
                                        -------       -------           -------


The interim report has been prepared on the basis of the accounting policies set
out in the Company's annual financial statements for the year ended 31 December 
2006.



Reconciliation on Movements in Equity Shareholders' Funds

At 30 June 2007
                             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 2007            5,422        4,308     11,079        5,369    3,578    2,083     31,839  
Shares repurchased                                                                              
during the period                -            -       (201)           -        -      (15)      (216) 
Realised surplus on                                                                               
disposal of investments          -            -      3,273            -        -        -      3,273  
Increase in unrealised                                                                               
appreciation on valuation                                                                             
of investments                   -            -          -           48        -        -         48  
Transaction costs                -            -       (355)           -        -        -       (355) 
Investment management fee                                                                           
attributable to capital          -            -        (73)           -        -        -        (73) 
Performance fee attributable                                                                             
to capital                       -            -        (37)           -        -        -        (37) 
Loan interest attributable                                                                             
to capital                       -            -       (116)           -        -        -       (116) 
Premium arising on share                                                                                    
elections:                                                                               
  - 2006 final dividend        175            -          -            -        -       14        189  
Retained loss                    -            -          -            -     (149)       -       (149) 
                             ======       ======    =======       ======   ======   ======    =======
At 30 June 2007              5,597        4,308     13,570        5,417    3,429    2,082     34,403  
                             ======       ======    =======       ======   ======   ======    =======

The Directors have decided to declare an interim dividend of 0.85p (2006: 0.85p)
for the year ending 31 December 2007 to ordinary
shareholders who are registered at the close of business on 21 September 2007.

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 19 September 2007 and the record date is 21
September 2007.

The interim dividend will be payable on 16 November 2007.


Chairman's Statement

I am pleased to present your Company's interim report for the six months to 30
June 2007.

The UK stock market recorded further gains in the first half of the year with
the FTSE All-Share Index rising by 7.56% on a total return basis.  A combination
of strong stock selection and the use of gearing in a rising market delivered an
increase of 10.19% in your Company's net asset value.  The more significant
contributors to performance are discussed in the Investment manager's report.


Share price and discount

The share price has traded 13% higher over the period.  The discount at which
your shares trade relative to their net asset value stood at 5% at 30 June 2007.


Gearing

The investment manager's positive stance towards the UK equity market resulted
in the Company employing an average gearing
 level of 15.8% during the period.


Dividend

The board is pleased to maintain a dividend of 0.85p.


Outlook

Whilst the slow down in consumption within our domestic economy appears set to
continue as interest rate increases bite, the global economy is forecast to
continue to expand through the second half of 2007.  The investment manager will
remain focused on identifying companies which can benefit from this economic
growth and actively manage the Company's gearing to maximise shareholder
returns.

The current problems in the debt markets, referred to in the Investment
Manager's Report, appear unlikely to be resolved in the short term and this has
prompted the investment manager to de-gear the Company's balance sheet until
such time as volatility levels recede.


Investment Manager's Report

The positive factors which have driven share prices higher over the past four
years remained clearly evident in the first six months of 2007.

Relentless merger and acquisition activity, strong corporate results and
powerful demand from emerging economies such as India and China combined to
ensure a positive backdrop for global equity markets.

The continued strength in the rate of global economic expansion has inevitably
resulted in mounting inflationary pressures in all of the major economies.  The
UK has been no exception to this with the Monetary Policy Committee (MPC) forced
to raise interest rates by 0.25% in both January and May in response to above
target inflation data.  Since the end of the interim period the MPC has raised
interest rates for a third time this year to leave the base borrowing rate at
5.75% - the highest level since 2001.

This tightening of monetary policy has started to have the desired effect with
growing evidence that consumer spending is under increasing pressure.  This was
reflected in the sector performance during the first half of the year with
industries exposed to discretionary consumer spending firmly out of favour with
investors. Financials, General Retailers and House-builders were among the
weakest performers during the period.  In contrast, sectors exposed to the
global growth cycle yielded the strongest returns with Mining, Oil & Gas and
Chemicals among the best performers.

In terms of individual stock performance, the largest positive contributor was
KSK Power Ventur, an Indian developer and operator of power stations, which
secured a number of major hydro-electric projects during the period. Our holding
in Hardy Oil & Gas also proved favourable, as the company began the period with
new oil discoveries in India. The company also successfully completed a
fundraising to finance further growth aspirations in both India and Nigeria.

The largest negative contributor to performance during the period was Persimmon
which suffered from the market's concerns over interest rates hikes and their
potential impact on the demand for new housing. The long term fundamentals
driving the new build housing market in the UK remain very supportive and
Persimmon is in a very strong position to continue to deliver both impressive
profits and dividend growth.  The holding has been added to following the share
price weakness.

The portfolio continued to benefit from the merger and acquisition theme with
our holding in Imperial Chemical Industries the subject of a take-over approach
form Dutch rival Akzo Nobel.  The position in PFI Infrastructure Company also
received an approach during the period culminating in a recommended cash offer
from a private equity consortium.

Activity within the portfolio included new holdings in Meggitt, Rentokil, BT and
Cable & Wireless. The purchases were funded by the disposal of AstraZeneca,
following the acquisition of US biotechnology company MedImmune at a very
expensive valuation.

The portfolio's weighting in banks was also reduced during the period through
the sale of our holdings in HBOS and Northern Rock.

The portfolio continues to be shaped by rigorous fundamental research which
currently translates into a positive stance towards Telecommunications, Oil &
Gas and Household Goods whilst being negatively disposed to Financials, Media
and General Retail.

Since the end of the interim period there has been a marked increase in
volatility levels within financial markets.  This has been fuelled by the
escalating crisis in global debt markets with the tightening of lending criteria
by the banking sector significantly reducing the amount of liquidity in the
financial system.  This in turn has triggered a bout of forced selling of
equities as investment banks take the necessary action to de-leverage their
lending books.

It is difficult to assess the potential economic fall out from the current
malaise affecting the global financial system.  Until there is more clarity on
the extent of the problems the Company will be holding a higher than normal cash
position.



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