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UK Select Trust Ld (UKT)

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Friday 05 September, 2008

UK Select Trust Ld

Interim Results (Amended)

RNS Number : 8189C
UK Select Trust Limited
05 September 2008
 

The  follwing replaces the Interim Results released on 29 August at 16:13 under RNS Number 3521C.

A number of cosmetic amendments have been made that do not affect the figures.

The full amended text appears below.






UK Select Trust Limited



Half-Yearly Report for the six months ended 30 June 2008



UK Select Trust Limited
 
Contents
 
Trust Information                                                                                                                                 2
 
Taxation                                                                                                                                                 2
 
Objectives                                                                                                                                             2
 
Financial Highlights                                                                                                                            3
 
Cautionary Note                                                                                                                                   3
 
Directors and Advisors                                                                                                                      4
 
Interim Management Report                                                                                                              5
 
Responsibility Statement                                                                                                                    8
 
The Portfolio and Sector Distribution                                                                                               9
 
Income Statement                                                                                                                               11/12
 
Balance Sheet                                                                                                                                       13
 
Reconciliation of Movements in Equity Shareholders’ Funds                                                     14
 
Cash Flow Statement                                                                                                                           15
 
Notes to the Financial Statements                                                                                                    16
 


 



Trust information


UK Select Trust Limited's shares are listed on the London Stock Exchange. They can be bought or sold by investors through a stockbroker or by asking a professional adviser e.g. lawyer, accountant or bank manager to do so on their behalf.


UK Select Trust Limited's share price is published daily under Investment Companies in the Share Information Service in the Financial Times. In addition it is published every Monday on the business pages of The Guernsey Press and Star and Jersey Evening Post.


Taxation


UK Select Trust Limited is exempt from Guernsey income tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinances 1989 to 1997. As a result all cash dividends are paid without the deduction of tax to non-Guernsey resident shareholders, who may thus obtain some deferral of their liability. With effect from 1st January 2005, as permitted by the Income Tax (Guernsey) (Amendment) Law 2004, dividends have been paid gross to Guernsey resident shareholders who are responsible for their own tax liability relating to the dividend. As an alternative to taking a cash dividend, shareholders can elect to take shares in lieu of dividend, a scrip dividend, which is calculated on the gross cash equivalent. Guernsey resident shareholders who elect to take the scrip alternative will not incur liability to Guernsey income tax provided the additional shares received are held for investment purposes. So far as UK shareholders are concerned, an election to take a scrip dividend should not normally give rise to immediate liability to UK income tax. Shareholders should consult their own professional advisers if they are in any doubt as to the precise tax consequences of taking the cash dividend or scrip alternative.  


Objectives UK Select Trust Limited


UK Select Trust Limited is registered in Guernsey and is qualified as a UK Investment Trust Company. The Company invests over 80% of its gross assets by value in the UK and the investment policy aims to provide a total return to shareholders in excess of the net total return on the FTSE All Share Index and a progressive dividend policy.



Financial Highlights






Six months ended


Six months ended


Year ended





30 June 2008


30 June 2007


31 December 2007










Net asset value per share



154.57p


165.25p


158.27p

Equity shareholders' interest (1)



£31.94m


£34.40m


£32.78m

Revenue return on ordinary activities for the financial year after taxation

£0.68m


£0.35m


£0.82m

Capital (loss)/return on ordinary activities for the financial year after taxation 

(£0.91)m


£2.74m


£0.97m

Revenue return per ordinary share


3.30p


1.69p


3.96p

Capital (loss)/return per ordinary share


(4.40)p


13.16p


4.67p

Dividend per ordinary share (2)



0.90p


0.85p


3.40p

Share Price



132.50p


155.50p


128.00p

Net asset value total return



(1.03)%


10.19%


5.70%

FTSE All-Share total return



(11.16)%


7.56%


5.32%










 

(1) During the period the Company purchased 202,916 ordinary shares of 10p from the market to be held in Treasury. 152,117 ordinary shares of 10p each from the shares held in Treasury were reissued during the period. 169,212 shares remain in Treasury at 30 June 2008. These are held for reissue and the Company does not intend to cancel these.


(2) The dividend figures include the proposed dividend for the relevant financial period.


Dividends  

    An interim dividend of 0.90p per share will be recommended for 2008 (Six months ended 30 June 2007: 0.85p). The Company will normally pay the final dividend in May each year.


Cautionary Note and Forward Looking Statements


The Interim Management Report (IMR) has been prepared solely to provide additional information to shareholders to assess the UK Select Trust Limited's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.


The IMR contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward looking information.


Directors and Advisors


JM Le Pelley, Age 59, Non-executive Chairman. He joined the board in 1983. Other Directorships include European Value and Income Fund Limited and AcenciA Debt Strategies Limited.


DR Maltwood, Age 70, Non-executive Director. He joined the board in 1997 after a career in stockbrocking in Jersey. He has held a number of positions including the Chairman and Director of a number of quoted companies.


G Ross Russell, Age 75, Non-executive Director. He joined the board in 1995. He is a Director of Forsight 3 Venture Capital Trust Plc and former Chairman of the Securities & Investment Institute and Deputy Chairman of the London Stock Exchange.

JG West FCA, Age 61, Non-executive Director. He joined the board in 1997. He is the Chairman of Gartmore Fledgling Trust Plc, Jupiter Second Enhanced Trust Plc, New City High Yield Fund Limited, and a Director of a number of public and private companies including British Assets Trust Plc and JP Morgan Income and Capital Trust plc. He is a former chief executive of Lazard Asset Management Limited.


D Warr, Age 54, Non-executive Director. He joined the board in 2006. He is an Executive Director of Fortis Reads International Management Limited, a Guernsey based fiduciary services business wholly owned by Fortis Plc. He is a fellow of the Institute of Chartered Accountants in England and Wales and has worked for the Fortis Reads Group since 1972 specialising in Trust and Corporate work. He is also Non-executive Chairman of FRM Diversified Alpha Limited and a Non-executive Director of Marwyn Value Investors Limited, Marwyn Materials Limited, Invista Foundation Property Trust Limited, Hemisphere Defensive HF (USD) Limited and Unigestion (Guernsey) Limited.  

 

Advisors
 
Secretary and Registered Office                                                     Registrars
Corporate Services (Guernsey) Limited                                            Capita Regitrars (Guernsey) Limited
Dorey Court                                                                                          Longue Hougue Road
Admiral Park                                                                                         St Sampson
St Peter Port                                                                                          Guernsey GY2 4JN
Guernsey GY1 3BG                                                                              0870 162 3100
01481 727111                                                                                         Calls cost 10p per minute plus network charges
 
Investment Manager                                                                           Stockbrokers
Scottish Widows Investment Partnership Limited                         Dresdner Kleinwort (resigned 30 June 2008)
Edinburgh One                                                                                     PO Box 560
Morrison Street                                                               20 Fenchurch Street
Edinburgh EH3 8BE                                                                             London EC3P 3DB
0131 655 8500                                                                                        0207 623 8000
 
Auditors                                                                                                Bankers and Custodian
Deloitte & Touche LLP                                                                       HSBC Bank plc
Regency Court                                                                                     8 Canada Square
Glatengy Esplanade                                                                             London E14 5HQ
St Peter Port
Guernsey GY1 3HW
01481 724011


   


Interim Management Report 


Introduction


The Company performed strongly in the first half of the year with a 1.03% fall in net asset value comparing favourably to the 11.16% decline in the FTSE All-Share Index.  


The six month period under review has been an extraordinary one for equity markets. The escalating financial crisis and mounting inflationary pressures added up to a toxic combination which sent global equity markets sharply lower. Following a five year bull market run, we have now entered a period of capital conservation.   


The 11.1% fall in the FTSE All Share Index was mild in comparison with the major emerging market equity centres. The Indian and Chinese stock markets posted falls of 41% and 27% respectively as inflated company valuations started to unravel. The leading US and European equity indices retraced by between 10% and 15% in the first half of the year.


The deteriorating economic outlook in the UK and the other major Western economies dominated the headlines during the period. Consumer facing sectors such as banks, retailers and house-builders were the worst performing areas of the market as investors abandoned companies exposed to discretionary spending. Consumer confidence indicators recorded precipitous falls as fears mounted over the employment outlook, while increasing mortgage and utility bills squeezed household budgets. At the other end of the performance spectrum, mining and oil stocks powered higher as resilient emerging market demand sustained a strong commodity pricing environment.


The dislocation in the banking system is the major issue affecting the outlook for equities. Following a prolonged period of excessive lending, the major banks have started the de-leveraging process which will involve a material downsizing of balance sheets. This will inevitably act as a brake on economic growth as tighter lending conditions will force many companies to re-appraise growth plans. The level of merger and acquisition activity, which has been a major positive for equity markets over the past three years, is likely to recede as funding for deals becomes more difficult to obtain.  


Key drivers of performance


The largest positive contributor to performance was Hardy Oil & Gas which climbed 63% higher on positive drilling results. The Indian power infrastructure company, KSK Power Ventur, also recorded a strong gain with a strong set of results and positive outlook sending its shares 29% higher.


The largest negative contributors to performance were Silverjet and Berkeley Group. Silverjet was placed into administration during the period as spiralling fuel costs outweighed the strong demand for its business proposition. House-builder, Berkeley Group, suffered from difficult market conditions and the general negative investor sentiment towards the industry. The company continues to out-perform its competition and commands a strong balance sheet from which to capitalise on the distressed selling of land from weaker competitors.  Interim Management Report (continued)


Portfolio activity


The main transactions during the period reflected our caution over the short term outlook for equity markets. In the main we have been favouring strongly capitalised companies with strong cash flow which are operating in stable end markets. Major purchases have therefore included pharmaceuticals giant, AstraZeneca and power generator, Scottish & Southern Energy. These companies offer stable earnings, strong cash generation and attractive dividend yields.


These purchases and the reduction in the Company's gearing have been funded by a reduction in our exposure to companies with high levels of net debt which are operating in difficult industry conditions. HBOS, Bellway and Close Brothers were among the largest sales during the period.


Principal risks and uncertainties


The major risks associated with the Company are credit, liquidity and market risk. The Company has established policies to manage these risks. Further information on the principal long term risks and uncertainties of the Company is included in our latest annual report in Note 19.


The related party transactions entered into in the first six months of this financial year have not had a material effect on the performance of the Company. Details of the related party transactions are shown in Note 10 to the Half-yearly report.


There are a number of potential risks and uncertainties which would have a material impact on the Company's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historic results, the key risks identified have been outlined as follows:


Regulatory risk: The Company operates in a complicated regulatory environment and faces a number of regulatory risks. Breaches of regulations, such as the UK Listing Authority Listing Rules and the Companies (Guernsey) Law, 2008, could lead to a number of serious outcomes and reputational damage. The Board monitors compliance with regulations by reviewing internal control reports.


Interest rate risk: The Company's interest rate sensitive assets and liabilities mainly comprise of cash at bank and a bank loan. The cash at bank and loan are subject to floating rates and the loan is considered to be part of the investment strategy of the Company. No other hedging is undertaken in respect of this interest rate risk. As such the Board does not believe the Company suffers any material interest rate risk.


Gearing risk: The use of the long-term loan facility increase the Company's potential exposure to gearing risk. In order to mitigate this, for the six months ended 30 June 2008, the Company reduced its level of borrowing to £2,000,000; the Company is also required to ensure that the borrowing does not at any time exceed 45% of the Adjusted Gross Asset Value.


Share price and discount


The share price traded 3.5% higher over the six months under review while the discount at which your shares trade relative to their net asset value closed the period at 14.7%. The widening in the Company's discount resulted from the highly volatile equity market conditions and was a phenomenon seen across the investment trust sector.

 

 

Interim Management Report (continued)


Gearing


The investment manager adopted a more cautious stance towards the UK equity market, reflected in the decision to reduce the Company's gearing level to an average of 5% from 16% at the start of the period under review.


Dividend


The board is pleased to announce an interim dividend of 0.90p per share.


Outlook


The re-building of confidence in the banking system will be pivotal in restoring positive sentiment towards equity markets. There is mounting evidence that the worst has now passed for the banking sector with the magnitude of write downs starting to abate. However, the strengthening of capital positions for the major financial institutions will be a long and painful process and as a result we retain our cautious stance towards equities.


As we move through the second half of the year we anticipate an easing in inflationary pressures which will allow the Monetary Policy Committee to cut interest rates. Earnings forecasts, however, continue to look optimistic for 2009 and we expect to see more disappointments on company profit guidance unfold through the second half of the year.


The portfolio will continue to be shaped by long-term fundamental research complimented by short term opportunities which present themselves in any kind of stock market conditions.




JM Le Pelley

Chairman




Responsibility Statement


We confirm that to the best of our knowledge:


  • the half-yearly report has been prepared in accordance with IAS 34 'Interim Financial Reporting';

  • the interim management report includes a fair review of the important events during the first six months of 2008 and provides a fair review of the risks and uncertainties faced by the Company in the remaining six months of the year, as required by Disclosure and Transparency Rules ('DTR') 4.2.7R; and

  • the interim management report includes a fair review of related party transactions and changes therein, as required by DTR 4.2.8R.



By order of the Board



JM Le Pelley





D Warr

Directors        

   

     


The Portfolio as at 30 June 2008

 

 
Company
Market Value
Activity
 
 
 
 
 
 
£'000
 
 
 
 
 
 
 
 
 
 
 
 
 
1
Royal Dutch Shell Plc
   2,288
One of the largest private sector energy companies in the world.
2
BP Plc
2,237
The largest integrated oil company in the UK.
3
Vodafone Group Plc
 2,229
Vodafone is the largest mobile telecommunications network in the world.
4
BG Group Plc
   1,878
Formerly British Gas. Involved in oil and gas transmission and distribution as well as power generation.
5
AstraZeneca Plc
   1,871
One of the world's largest pharmaceutical companies.
6
BHP Billiton Plc
   1,861
World's largest mining company.
 
 
7
Rentokil Initial Plc
 1,428
Business services company specialising in hygiene, safety and security.
 
8
GlaxoSmithKline Plc
   1,388
Large Anglo-American pharmaceutical company.
 
9
Great Eastern Energy Corporation Plc
   1,229
US based energy provider.
 
 
 
10
KSK Power Ventur Plc
   1,139
Engaged in emerging opportunities in the power development market.
 
11
Scottish & Southern Energy
   1,137
One of the largest energy companies in the UK.
 
12
Balfour Beatty Plc
   1,080
Serves the international markets for rail, road and utility systems, building and complex structures.
 
13
Indus Gas Ltd
   1,029
AIM listed international oil and gas exploration and development company.
14
Unilever Plc
      955
Multinational owner and provider of consumer product brands.
15
Hardy Oil and Gas Plc
      952
AIM listed oil and gas exploration company.
 
 
16
Royal Bank of Scotland Group Plc
    793
Financial services.
 
 
 
 
17
Berkeley Group Holdings Plc
      743
Property developer, with over 95% of its development taking place on brownfield sites.
 
18
Dolphin Capital LLC
      732
Leading investor in the residential resort sector in south-east Europe.
19
Babcock International Group Plc
      703
Leading support services company in the UK.
 
20
Friends Provident Plc
      682
International financial services provider.
 
21
Rio Tinto Plc
      668
The largest coal miner in the world.
 
22
Persimmon Plc
   557
UK's leading housebuilder.
 
 
 
23
Candover Investments Plc
      509
UK based investment firm that specialises in corporate buyouts.
 
24
Leed Petroleum Plc
      502
Oil and gas exploration and production company focused on the Gulf of Mexico.
25
Aurora Russia Ltd
      492
Investment vehicle established to make investments in small and mid-sized Russian companies.
 
26
Barclays Bank Plc
      484
Global banking and financial services provider.
 
27
Greenko Group Plc
      423
India-based clean-energy company.
 
28
Newfound NV
      412
Developer and operator of up-market holiday resorts.
 
 
 
The Portfolio as at 30 June 2008 (continued)
 
 
Company
Market Value
 Activity
 
 
£’000
 
 
 
 
 
29
Trinity Capital Plc
        395
Real estate investor in India.
 
 
 
30
Arden Partners Plc
      394
Institutional stockbroker specialising in small, midcap and AIM companies.
 
31
Imperial Tobacco Plc
      381
Tobacco company.
 
 
 
 
32
Lonmin Plc
      356
Producer of platinum metals.
 
33
ZincOx Resources Plc
355
AIM listed producer of zinc products.
 
 
34
Johnson Matthey Plc
      342
Speciality chemicals company focused on catalysts and precious metals.
 
35
Eatonfield Group Plc
      324
Commercial and residential property developer with a focus on Wales and the North of England.
 
36
Healthcare Locums Plc
      309
Specialist healthcare recruitment company.
 
 
37
Aggreko Plc
      245
Global leader in the rental of temporary power, temperature control and oil-free compressed air systems.
 
38
Rugby Estates Investment Trust Plc
      150
Property developer.
 
 
 
 
39
American Leisure Group Ltd
        92
Vacation resort company.
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Valuation
   33,744
These holdings represent 100% of the total valuation.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sector Distribution as at 30 June 2008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
Resources
 
30.0%
 
 
 
 
2
Basic industrials
 
17.6%
 
 
 
 
3
General industrials
0.0%
 
 
 
 
4
Non-cyclical consumer goods
13.6%
 
 
 
 
5
Cyclical services
9.5%
 
 
 
 
6
Non-cyclical services
6.6%
 
 
 
 
7
Utilities
8.0%
 
 
 
 
8
Financials
14.7%
 


 

 

  Income Statement 

for the six months ended 30 June 2008 (unaudited)

 

 

 

 
 
 
 
 
 
Six months ended 30 June 2008
 
 
Six months ended 30 June 2007
 
 
 
Notes
 
Revenue
 
Capital
 
Total
 
Revenue
 
Capital
 
Total
 
 
 
 
 
£’000
 
£’000
 
£’000
 
£’000
 
£’000
 
£’000
Gains/(losses) on investments
 
 
 
 
 
 
 
 
 
 
 
 
 
Net realised gains on financial
assets and liabilities held at fair value through profit or loss                 
5
 
-
 
1,772
 
1,772
 
-
 
2,876
 
2,876
Net changes in unrealised (depreciation)/appreciation on financial assets and liabilities held at fair value through profit or loss
5
 
-
 
(2,462)
 
(2,462)
 
-
 
90
 
90
Net foreign exchange gain
 
 
-
 
-
 
-
 
-
 
-
 
-
 
 
 
-
 
(690)
 
(690)
 
-
 
2,966
 
2,966
Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income
 
3
 
944
 
-
 
944
 
567
 
-
 
567
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment management fees
 
 
21
 
62
 
83
 
24
 
73
 
97
Performance fee
 
 
 
11
 
32
 
43
 
13
 
37
 
50
Administration fees
 
 
 
58
 
-
 
58
 
48
 
-
 
48
Registrars’ fees
 
 
7
 
-
 
7
 
4
 
-
 
4
Auditors’ fees
 
 
 
 
8
 
-
 
8
 
5
 
-
 
5
Directors’ fees
 
    10       
 
41
 
-
 
41
 
33
 
-
 
33
Other expenses
 
72
 
-
 
 72
 
50
 
-
 
50
Total operating expenses before finance costs
 
 
218
 
94
 
312
 
177
 
110
 
287
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss) before finance costs and tax
 
 
726
 
(784)
 
(58)
 
390
 
2,856
 
3,246
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Finance costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest payable
 
 
 
42
 
127
 
169
 
39
 
116
 
155
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
 
684
 
(911)
 
(227)
 
351
 
2,740
 
 3,091
Taxation
 
 
-
 
-
 
-
 
-
 
-
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Profit
 
 
684
 
(911)
 
(227)
 
351
 
2,740
 
3,091
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted return per Ordinary Share
4
 
3.30p
 
(4.40)p
 
(1.10)p
 
1.69p
 
13.16p
 
14.85p

 

The total column of this statement is the Income Statement 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. All income is attributable to the ordinary shareholders of the Company.

The notes on pages 16 to 22 are an integral part of these financial statements.


Income Statement (continued)


 
 
 
 
 
 
Year ended 31 December 2007
 
 
 
 
Notes
 
Revenue
 
Capital
 
Total
 
 
 
 
 
 
£’000
 
£’000
 
£’000
 
Gains/(losses) on investments
 
 
 
 
 
 
 
 
Net realised gains on financial
assets and liabilities held at fair value through profit or loss                  
5
 
-
 
3,515
 
3,515
 
Net changes in unrealised (depreciation)/appreciation on financial assets and liabilities held at fair value through profit or loss
5
 
-
 
(2,088)
 
(2,088)
 
Net foreign exchange gain
          
 
-
 
1
 
1
 
 
 
 
-
 
1,428
 
1,428
 
Income
 
 
 
 
 
 
 
 
 
 
Other income
3
 
1,241
 
-
 
1,241
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
Investment management fees
 
 
47
 
143
 
190
 
Performance fee
 
 
 
20
 
62
 
82
 
Administration fees
 
 
 
80
 
-
 
80
 
Registrars’ fees
 
 
 
 
12
 
-
 
12
 
Auditors’ fees
 
 
 
11
 
-
 
11
 
Directors’ fees
 
10
 
73
 
-
 
73
 
Other expenses
 
 
 
 
91
 
-
 
91
 
Total operating expenses before finance costs
 
334
 
205
 
539
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss) before finance costs and tax
 
 
907
 
1,223
 
2,130
 
 
 
 
 
 
 
 
 
 
 
Finance costs
 
 
 
 
 
 
 
 
 
Interest payable
 
83
 
251
 
334
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
 
824
 
972
 
1,796
 
Taxation
 
 
-
 
-
 
-
 
 
 
 
 
 
 
 
 
 
Net Profit
 
 
824
 
972
 
1,796
 
 
 
 
 
 
 
 
 
 
Basic and diluted return per Ordinary Share
4
 
3.96p
 
4.67p
 
8.63p
 


The total column of this statement is the Income Statement 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. All income is attributable to the ordinary shareholders of the Company.

The notes on pages 16 to 22 are an integral part of these financial statements.



Balance Sheet 

As at 30 June 2008 (unaudited)




Notes




30 June 2008




30 June 2007



31 December 2008





£'000


£'000


£'000

Non-current assets








Financial assets at fair value through profit or loss

5


33,744


39,780


36,289

Total non-current assets




33,744


39,780


36,289










Current assets









Receivable from brokers




597


-


1,466

Other receivables



87


108


233

Cash at bank



23


111


336

Total current assets




707


219


2,035





 


 


 

Total assets




34,451


39,999


38,324





 


 



Liabilities


















Current Liabilities









Payables




514


396


343

Total current liabilities




514


396


343









Non-current liabilities









Borrowings

6


2,000


5,200


5,200

Total non-current liabilities




2,000


5,200


5,200









Total liabilities




2,514


5,596


5,543










Net assets attributable to holders of equity shares



31,937


34,403


32,781










Equity shareholders' funds




 


 


 

Share Capital


7


2,083


2,083


2,083

Own shares held in treasury


7


 (245)


 -


(176)

Reserves



30,099


32,320


30,874




31,937


34,403


32,781









Number of ordinary shares in issue (net of treasury shares)

7


20,661,272


20,830,484


20,712,071









Net asset value per share

8


154.57p


165.25p


158.27p


JM Le Pelley                    D Warr

Director                        Director





The notes on pages 16 to 22 are an integral part of these financial statements.



Reconciliation of Movements in Equity Shareholders' Funds 

For the six months ended 30 June 2008 (unaudited)


 
Equity share capital
Own shares held in treasury
Share premium
Capital redemption reserve
Capital reserve-realised
Capital reserve- unrealised
Revenue reserve
Total
 
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
At 1 January 2008
2,083
(176)
5,422
4,308
14,139
3,281
3,724
32,781
Shares repurchased during the period
-
(279)
-
-
-
-
-
(279)
Premiums arising on share elections:
 
 
 
 
 
 
 
 
-2007 final dividend
-
-
-
-
-
-
(531)
(531)
Dividend and scrips
-
210
-
-
-
-
-
210
Net profit
-
-
-
-
1,526
(2,462)
692
(244)
At 30 June 2008
2,083
(245)
5,422
4,308
15,665
819
3,885
31,937


There are no other recognised Income and Expenses for the six months ended 30 June 2008


For the year ended 31 December 2007


 
Equity share capital
Own shares held in treasury
Share premium
Capital redemption reserve
Capital reserve-realised
Capital reserve- unrealised
Revenue reserve
Total
 
£’000
£’000
£’000
£’000
£’000
£’000
£’000
£’000
At 1 January 2007
2,083
-
5,422
4,308
11,079
5,369
3,578
31,839
Shares repurchased during the year
-
(426)
-
-
-
-
-
(426)
Premiums arising on share elections:
 
 
 
 
 
 
 
 
-2006 final dividend
-
189
-
-
-
-
-
189
-2007 interim dividend
-
61
-
-
-
-
(1)
60
Dividend and scrips
-
-
-
-
-
-
(677)
(677)
Net profit
-
-
-
-
3,060
(2,088)
824
1,796
At 31 December 2007
2,083
(176)
5,422
4,308
14,139
3,281
3,724
32,781


There are no other recognised Income and Expenses for the year ended 31 December 2007


The notes on pages 16 to 22 are an integral part of these financial statements.  Cash flow statement 

For the six months ended 30 June 2008 (unaudited)








Six months ended


Year ended



30 June 2008


30 June 2007


31 December 2007


Notes

£'000


£'000


£'000

Cash flows from operating activities






Payment on purchase of investments


(61,687)


(49,675)


(120,860)

Proceeds from sale of investments


64,548


49,801


121,390

Cash received from investments


1,068


567


1,081

Other income


14


12


43

Investment management fee paid


(83)


(97)


(190)

Other cash payments


(105)


(249)


(395)








Net cash inflow from operating activities

9

3,755


359


1,069



 


 


 

Cash flows from financing activities







Interest paid


(269)


(142)


(301)

Share repurchase


(279)


(229)


(426)

Equity dividends paid


(320)


(299)


(428)

Repayment of long term loan


(3,200)


-


-








Net cash outflow from financing activities


(4,068)


(670)


(1,155)



 


 


 

Net decrease in cash and cash equivalents

(313)


(311)


(86)








Cash and cash equivalents at the beginning of the period


336


422


422








Cash and cash equivalents at the end of the period


23


111


336


The notes on pages 16 to 22 are an integral part of these financial statements.



Notes to the Financial Statements (unaudited)


1.     General information


UK Select Trust Limited is a UK Investment Trust Company incorporated under The Companies (Guernsey) Law, 1994, with its registered office at Dorey CourtAdmiral Park, St Peter Port, Guernsey. UK Select Trust Limited's shares are listed on the London Stock exchange.


The objective of the Company is to invest over 80% of its gross assets by value in the UK and the investment policy aims to provide a total return to shareholders in excess of the net total return on the FTSE All Share Index and a progressive dividend policy.


The half-yearly report has not been audited or reviewed by the auditors Deloitte and Touche LLP pursuant to the Auditing Practices Board guidance on 'Review of Interim Financial Information'.


The information presented for the year ended 31 December 2007 does not constitute the statutory financial statements of the Company. A copy of the annual report and audited financial statements for that year have been delivered to the Guernsey Financial Services Commission. The auditors' report on those financial statements was unqualified.


2.     Accounting Policies


a.    Basis of presentation


The half-yearly report for the six months ended 30 June 2008 has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. The half-yearly report should be read in conjunction with the annual financial statements for the year ended 31 December 2007, which have been prepared in accordance with International Financial Reporting Standards.


b.    Standards and interpretations


The accounting policies applied in the half-yearly report are consistent with those of the annual financial statements for the year ended 31 December 2007, as described in those financial statements.


At the date of authorisation of these statements, the following standards and interpretations were in issue but not yet effective:


 IFRS 8 'Operating Segments' (Effective for annual periods beginning on or after 1 January 2009); and


 Amendments to IAS 1: 'Presentation of financial statements - A revised presentation' (Effective for annual periods beginning on or after 1 January 2009).


The Directors believe that other pronouncements, which are in issue but not yet operative or adopted by the Company, will not have a material impact on the financial statements of the Company.




Notes to the Financial Statements (unaudited)(continued)


3.    Other income



Six months ended


Year ended


30 June


30 June


31 December


2008


2007


2007


£'000


£'000


£'000


Dividends

  935 


  552 


  1,196 


Interest

  9 


  15 


  45 

Other income

-


-


-

Total income

  944 


  567 


  1,241 



4.    Basic and diluted return per ordinary share


 
Six months ended
Six months ended
 
Year ended
 
 
30 June 2008
30 June 2007
31 December 2007
 
Revenue
Capital
Total
Revenue
Capital
Total
Revenue
Capital
Total
 
£
£
£
£
£
£
£
£
£
 
 
 
 
 
 
 
 
 
 
Return/(loss)
3.30p
(4.40)p
(1.10)p
1.69p
13.16p
14.85p
3.96p
4.67p
8.63p

 


Revenue return per ordinary share is based on the net revenue on ordinary activities of £684,000 (Six months ended 30 June 2007: £351,000. Year ended 31 December 2007: £824,000.) and on 20,699,258 ordinary shares, being the weighted average number of ordinary shares in issue during the period (Six months ended 30 June 2007:20,819,714 . Year ended 31 December 2007: 20,803,667).


Capital loss per ordinary share is based on a net capital loss for the financial period of £911,000 (Six months ended 30 June 2007: return £2,740,000. Year ended 31 December 2007: return £972,000) and on 20,699,258 ordinary shares, being the weighted average number of ordinary shares in issue during the period (Six months ended 30 June 20007: 20,819,714. Year ended 31 December 2007: 20,803,667). 


Notes to the Financial Statements (unaudited)(continued)


5.    Investments






Six months ended

Six months ended

Year ended






30 June 2008

30 June 2007

31 December 2007






Fair Value

% of net assets

Fair Value

% of net assets

Fair Value

% of net assets

Financial assets at fair value through profit or loss


£'000


£'000


£'000




















Designated at fair value through profit or loss







- Listed equity securities


  33,744 

  105.70 

  39,780 

115.63

  36,289 

110.65






  33,744 

  105.70 

  39,780 

115.63

  36,289 

110.65







 

 










 Six months ended 


Year ended







 30 June 


 30 June 


31 December







2008


2007


2007







£'000


£'000


£'000












Opening book cost




  33,008 


  31,125 


  31,125 

Opening unrealised appreciation



  3,281 


  5,369 


  5,369 












Opening valuation




  36,289 


  36,494 


  36,494 












Movements in the period/year:








Purchases at cost




  61,824 


  49,978 


  121,906 

Sales - proceeds




  (63,679)


  (49,658)


  (123,538)

  - realised gains on sales



  1,772 


  2,876 


  3,515 

(Decrease)/Increase in unrealised appreciation

  (2,462)


  90 


  (2,088)












Closing valuation




  33,744 


  39,780 


  36,289 












Comprising:










Closing book cost




  32,924 


  34,325 


  33,008 

Closing unrealised appreciation



  820 


  5,455 


  3,281 












Closing valuation




  33,744 


  39,780 


  36,289 


Notes to the Financial Statements (unaudited)(continued)


6.    Borrowings


The Company has a revolving 5 year loan facility, secured on the assets of the Company, which is due to expire on 23 September 2012 with an aggregate principal amount of £5,200,000, for the purposes of future investment. During the six months to 30 June 2008, the balance of the loan was reduced to £2,000,000. Interest is payable at a rate of six month sterling LIBOR plus 0.6% and the borrowing is held at amortised cost. During the period, interest of £169,416 (Six months ended 30 June 2007: £142,362. Year ended 31 December 2007: £334,634) was paid. A fee of 0.30% per annum is payable on the undrawn amount of this facility (1). Further, the Company is required to comply with the following financial covenants imposed by the bank:


  • the Company is required to ensure that the borrowing does not at any time exceed 45% of the Adjusted Gross Asset Value;

  • the Company is required to maintain the Net Worth at not less that £20,000,000; and

  • the Company is required to ensure that the investment portfolio includes holdings in not less that 30 separate businesses.


(1)     The loan is secured on the assets of the Company.


7.    Share capital








30 June


30 June


31 December







2008


2008


2007







£'000


£'000


£'000












Authorised










100,000,000 ordinary shares of 10p each

  10,000 


10,000


  10,000 







250,000 5% cumulative preference restrictive voting shares of £1 each

  250 


250


  250 


















  10,250 



10,250


  10,250 


The holders of the five per cent cumulative preference restrictive voting shares shall be entitled, out of profits for dividend, to a fixed cumulative preferential dividend at the rate of five per cent per annum and in a winding-up or on a return of capital shall be entitled to repayment of capital in priority to the ordinary shareholders. The ordinary shareholders carry the right to receive any surplus income and in winding-up any surplus assets, after repayment of the preference capital and dividends as above.



Notes to the Financial Statements (unaudited)(continued)


7.    Share capital (continued)








30 June

 2008


31 December 2007







£'000


£'000

Issued, called up and fully paid:






20,830,484 ordinary shares of 10p each




(2007: 20,830,484)




  2,083 


  2,083 























30 June 2008







Own Shares held in treasury

Shares in issue







Shares

£'000

Shares

£'000

Balance at 1 January 2008




 (118,413)

  (176)

20,830,484

2,083

Shares purchased for cancellation



 - 

 - 

 - 

 - 

Shares issued in lieu of dividends



 - 

 - 

 - 

 - 

Shares purchased and held in treasury

 (202,916)

  (279)

 - 

 - 

Shares issued in lieu of dividends from treasury

  152,117 

  210 

 - 

 - 

Balance at 30 June 2008




 (169,212)

  (245)


20,830,484


2,083

















31 December 2007







Own shares held in treasury

Shares in issue







Shares

£'000

Shares

£'000

Balance at 1 January 2007




 - 

 - 

20,830,484

2,083

Shares purchased for cancellation



 - 

 - 

  - 

  - 

Shares issued in lieu of dividends



 - 

 - 

  - 

  - 

Shares purchased and held in treasury

 (310,000)

  (426)

  - 

 - 

Shares issued in lieu of dividends from treasury

191,587

250

 - 

 - 

Balance at 31 December 2007



 (118,413)

  (176)


20,830,484


2,083











During the period no shares were purchased for cancellation (Year ended 31 December 2007: nil).




Notes to the Financial Statements (unaudited)(continued)


7.    Share capital (continued)


On 13 March 2008, 39,500 shares were purchased for Treasury at a total cost including expenses of £55,862.

On 14 May 2008, 140,000 shares were purchased for Treasury at a total cost including expenses of £191,673.

On 12 June 2008, 23,416 shares were purchased for Treasury at a total cost including expenses of £30,884.


On 2 May 2008, 152,117 shares were issued to shareholders who elected to receive them in lieu of a final cash dividend for 2007. Ordinary shares of 10p each, fully paid were issued to shareholders from the Treasury reserves account held by the Company. 


8.    Net asset value per share


Net asset value per ordinary share is based on net assets attributable to the ordinary shareholders of £31,937,000 (year ended 31 December 2007: £32,781,000) and on 20,661,272 (year ended 31 December 2007: 20,712,071 ) ordinary shares, being the number of ordinary shares in issue at the end of the period.


9.    Cash flow statement








Six months ended


Year ended







30 June


30 June


31 December







2008


2007


2007







£'000


£'000


£'000












Net revenue before finance costs



  726 


  390 


  907 

Payment on purchase of Investments

  (61,687)


  (49,675)


  (120,860)

Proceeds from sale from Investments

  64,548 


  49,801 


  121,390 

Investment management fee charged to capital

  (62)


  (73)


  (143)

Exchange gain charged to capital



  (19)


  -  


  1 

Performance fee charged to capital



  (32)


  (37)


  (62)

Decrease in accrued income and other debtors

  145 


  8 


  (116)

Increase/(Decrease) in accrued expenses and other creditors

  136 


  (55)


  (48)







 


 


 

Net cash inflow from operating activities

  3,755 


  359 


  1,069 


Purchases and sales of investments and income generated from investments are considered to be operating activities of the Company, given its purpose, rather than investing activities.



Notes to the Financial Statements (unaudited)(continued)


10.    Related party transactions 


The members of the Board of Directors are listed on page 3 of the half-yearly report. Fees earned by the Directors of the Company during the period were £40,500 (year ended 31 December 2007: £73,000) of which £20,250 (year ended 31 December 2007: £20,250) was outstanding at the period end.


The investment manager, Scottish Widows Investment Partnership Limited has a 29.45% (2007: 29.45%) shareholding in the Company and earned investment management fees of £83,000 (year ended 31 December 2007: £190,408) during the period of which £83,000 (2007: £47,827) was outstanding at the period end and a performance fee of £42,624 (year ended 31 December 2007: £82,275) which was outstanding at the period end. The basis of calculation of these fees is detailed in note 3 of the annual financial statements.


The Company has appointed Corporate Services (Guernsey) Limited to provide administrative and accounting services. Administrative fees (including the accounting fee) for the period ended 30 June 2008 totalled £57,500 (year ended 31 December 2007: £80,172) of which £57,500 (year ended 31 December 2007: £36,672) was outstanding at the period end.


11.    Events after the balance sheet date


There have been no significant events after balance sheet date which in the opinion of the Board of Directors require disclosure in the financial statements.


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The company news service from the London Stock Exchange
 
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IR SSMSAISASEDU