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UK Select Trust Ld (UKT)

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Wednesday 26 August, 2009

UK Select Trust Ld

Half Yearly Report

RNS Number : 0469Y
UK Select Trust Limited
26 August 2009
 

 


UK Select Trust Limited


 



Half-Yearly Report and Condensed Unaudited Financial Statements 

 for the six months ended 30 June 2009



 



UK Select Trust Limited


Contents


Trust Information
2
 
 
Objectives
2
 
 
Financial Highlights
3
 
 
Cautionary Note
3
 
 
Directors and Advisors
4
 
 
Chairman’s Statement
5
 
 
Interim Management Report
6
 
 
Responsibility Statement
9
 
 
The Portfolio and Sector Distribution
10
 
 
Condensed Income Statement
14
 
 
Condensed Balance Sheet
16
 
 
Condensed Reconciliation of Movements in Equity Shareholders’ Funds
17
 
 
Condensed Cash Flow Statement
18
 
 
Notes to the Unaudited Financial Statements
19

 

 



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.


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 2009
 
30 June 2008
31 December 2008
 
 
 
 
 
 
 
Net asset value per share
 
120.35p
 
154.57p
 106.97p
Equity shareholders' interest (1)
 
£24.75m
 
£31.94m
£22.17m
Revenue return on ordinary activities for the financial period/year after taxation
£0.10m
 
£0.68m
£ 1.04m
Capital return/(loss) on ordinary activities for the financial year after taxation
£3.22m
 
£(0.91)m
(£11.22)m
Revenue return per ordinary share
 
0.48p
 
3.30p
5.04p
Capital return/(loss) per ordinary share
 
15.57p
 
(4.40)p
(54.25)p
Dividend per ordinary share (2)
 
0.90p
 
0.90p
3.63p
Share Price
109.50p
 
132.50p
 86.25p
Net asset value total return
12.92%
 
(1.03)%
(30.70)%
FTSE All-Share total return
(3.37)%
 
(11.16)%
(29.93)%
 
 
 
 
 
 

 

(1) During the period the Company purchased 446,709 ordinary shares of 10p from the market to be held in Treasury. 281,018 ordinary shares of 10p each from the shares held in Treasury were reissued during the period. 270,433 shares remain in Treasury at 30 June 2009. 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 paid for 2009 (Six months ended 30 June 2008: 0.90p). 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, Non-executive Chairman. He joined the board in 1983. Other Directorships include AcenciA Debt Strategies Limited.


DR Maltwood, 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, 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, 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,  Non-executive Director.  He joined the board in 2006.He is an Executive Director of Intertrust International Management Limited, Guernsey based fiduciary services business.  He is a fellow of the Institute of Chartered Accountants in England and Wales.  He is also Non Executive Chairman of FRM Diversified Alpha Limited and a Non-executive Director of Marwyn Materials Limited, Invista Foundation Property Trust Limited, Hemisphere Defensive (USD) Limited and Unigestion (Guernsey) Limited.   


Advisors 

 

Secretary and Registered Office
Registrars
Corporate Services (Guernsey) Limited
Capita Registrars (Guernsey) Limited
(resigned 18 August 2009)
Longue Hougue Road
Dorey Court
St Sampson
Admiral Park
Guernsey GY2 4JN
St Peter Port
0870 162 3100
Guernsey GY1 3BG
 
01481 727111
 
 
 
Kleinwort Benson (Channel Islands)
Stockbrokers 
Fund Services Limited (appointed 18 August 2009)
Intelli Corporate Finance Limited
Dorey Court
29 Rutland Square
Admiral Park
Edinburgh
St Peter Port
EH1 2BW
Guernsey GY1 3BG
0131 222 9400
01481 727111
 
 
 
Investment Manager
Bankers and Custodian
Scottish Widows Investment Partnership Limited
HSBC Bank plc
Edinburgh One
8 Canada Square
Morrison Street
London E14 5HQ
Edinburgh EH3 8BE
 
0131 655 8500
 
 
 
Auditors
 
Deloitte LLP
 
Regency Court
 
Glatengy Esplanade
 
St Peter Port
 
Guernsey GY1 3HW
 
01481 724011
 

 

  


Chairman's Statement


Review of Performance


I am pleased to report that the Company produced an excellent result for the six months to 30 June 2009 with the net asset value rising by 12.92% on a total return basis. Strong stock selection was the driver of this performance and the key contributors are discussed in the Interim Management Report. This was in spite of the continuation of the volatile equity market environment which characterised much of 2008.  


Share Price and discount


The share price traded 26.6% 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 9.3%.  


Gearing


Although the Company has a borrowing facility of £2,000,000, it did not utilise any borrowings during the period under review.


Dividend


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


Prospects


Following the sharp rally in equity markets investors now need evidence of recovering end demand in order to propel share prices higher. At present, the majority of companies exposed to the economic cycle are supporting their earnings through self help and cost cutting with very few management teams pointing to an improved outlook for their sales line.  


While the worst of the financial crisis may be behind us, it remains unclear as to how long it will take for the unprecedented monetary and fiscal easing to translate into economic recovery.  The investment manager will continue actively to seek out opportunities for the Company to add value for all shareholders.




J M Le Pelley

Chairman 

26 August 2009


 



  Interim Management Report 


Introduction


The FTSE All Share Index recorded a gain of 0.81% over the six months under review. This performance masked some extremely volatile equity market conditions in the period characterised by two very different quarters. The fall out from the financial crisis continued to weigh heavily on investor sentiment through the first quarter of the year sending share prices sharply lower. However, these losses were reversed through the second quarter as equity markets drew encouragement from several macro economic leading indicators showing signs of a stabilisation in activity levels.  


The start of the year saw renewed weakness in the financials sector as concerns mounted over the potential scale of bad debts facing the banking industry. However, the co-ordinated global monetary and fiscal response of pumping liquidity into the financial system continued in an attempt to revive debt markets which had effectively closed to the vast majority of the corporate sector. As a result, many companies were forced to turn to the equity market for funding and an unprecedented number of equity capital raisings were completed in the first half of the year.


Tentative signs of economic stabilisation in the major Western economies combined with the relentless economic expansion in China provided a platform for equity markets to rally through the second quarter. The low yields available on sovereign debt and cash added weight to the relative attraction of equities as an asset class while the gradual thawing of debt markets lured investors further up the risk curve in search of returns.


The growing belief that the worst of the financial crisis had passed heralded a change in sector leadership within the equity market. The banking sector was one of the best performers through the second quarter as investor focus shifted away from the carrying value of assets on the balance sheet to the strong underlying trading conditions being reported, particularly within investment banking.  


The resource based sectors were also strong performers during the period as commodity prices recovered sharply on the expectation that mounting inflationary pressures would be the likely outcome of the various monetary and fiscal stimulus packages implemented to stimulate demand. Mining stocks were among the largest gainers as the global growth theme returned and consolidation rumours swirled around the sector.



Performance


The Company produced a very strong performance in the period with the net asset value posting an increase of 12.92% at the total return level. This was driven by strong stock selection and the active management of the portfolio to capture the trading opportunities presented by the volatility in equity markets. The Company has remained debt free through the first half of the year and this position is being closely monitored.


The dislocation in debt markets provided the Company with the opportunity to acquire several investment grade corporate bonds offering a combined yield to maturity of over 8%. Marks and Spencer, British American Tobacco and WPP were among the blue chip bonds acquired and spreads have narrowed significantly since purchase providing an excellent return for the portfolio.

 

The largest positive contributor to performance was the Company's holding in KSK Power Ventur. KSK is a leading player in the delivery of captive and merchant power plants in India and was established in 2001 to take advantage of the rapid growth in power demand in the deregulating Indian power market. The group commands a fully integrated business model through its access to extensive local coal reserves providing the group with a significant competitive cost advantage over many of its rivals, forced to import coal from Indonesia.



Interim Management Report (continued)


Performance (continued)


The structural growth story in energy demand within emerging markets such as India has been a key theme running through the Company's portfolio for the last three years. Great Eastern Energy has been another successful holding and looks well placed to continue to benefit from the growing demand for energy in India. The company operates a portfolio of coal bed methane licences which will supply gas into the local market in West Bengal. Potential customers for Great Eastern's gas are currently paying significantly higher prices for their fuel requirements, providing a clear arbitrage opportunity to switch to Great Eastern's locally supplied, and hence cheaper, gas.  


The Company participated in a number of equity issues announced during the period which benefited performance. Several of these capital raisings were forced on companies due to the prevailing conditions in debt markets and as a result were priced at distressed valuations. Wolseley, Liberty International and Taylor Wimpey all fell into this category and the three holdings have subsequently been sold at profits ranging from 30% to 110%. The Company also supported equity issues from existing holdings, Berkeley Group and KSK Power, which both raised money to fund growth opportunities and these positions have been retained.  



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 17.


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. The cash at bank is subject to floating rates. No 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 increases the Company's potential exposure to gearing risk.   During the period ended 30 June 2009 the Company did not use its loan facility and therefore had a nil balance outstanding at the period end. The Company is also required to ensure that the borrowing does not at any time exceed 45% of the Adjusted Gross Asset Value.

  


Interim Management Report (continued)


Outlook


The unprecedented wave of monetary and fiscal stimulus initiatives announced around the world over the past eighteen months will inevitably precipitate inflationary pressures as demand starts to recover. On this basis we continue to favour companies with pricing power exposed to the global growth theme where rising commodity prices remains a central plank of our strategy. Industries including mining, oil and gas and emerging market power are very well paced to continue benefiting from the structural growth opportunity in developing economies such as China and India.  

The portfolio also continues to favour companies in a strong financial position which are not being penalised by expensive debt and have the opportunity to acquire competitors, weakened by the financial crisis, at an interesting time in the economic cycle.  The fund remains underweight domestic sales reflecting our view that the UK economy is in a relatively weak global position through its high borrowings and bleak employment outlook.  

The key risk to equity markets remains a further deterioration in macro economic data as we move through the second half of the year. This would send a strong signal to investors that the corporate profits cycle has not yet troughed and would likely prompt a switch back out of risk assets including equities into cash and sovereign debt. The outlook statements from companies in the upcoming corporate earnings season will be pivotal in determining the direction of equity markets through the third and fourth quarters.  


 

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 2009 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        

   

26 August 2009



Scottish Widows Investment Partnership ('SWIP') is one of the largest asset management companies in the UK. They actively manage funds across a broad range of asset types and are major investors in global and pan-European equity markets, as well as property, fixed interest and cash. SWIP manages money for a large number of investors with a wide variety of investment objectives. The investor's needs can be met by investing in SWIP's diverse fund range or through a bespoke portfolio. SWIP's flexible investment style also enables them to meet their client objectives in all market conditions. They have a rigorous investment process, which emphasises their own independent fundamental research. This gives them a depth of information and insight that is not available to the market generally.


With £82.7 billion* of funds as at 30 June 2009 under management and the backing of their parent company, Lloyds Banking Group plc, clients can have confidence in their stability and position of strength. Their size and market leadership have also allowed them to attract and retain one of the UK's strongest and most experienced investment teams. SWIP believes that the expertise of their investment teams and the comprehensive research that they conduct is key to providing consistently superior returns for their clients.


*Source: SWIP    



 

  


The Portfolio as at 30 June 2009



Company

Market Value

Activity







£'000














 1

BG Group Plc

1,761


Formerly British Gas. Involved in oil and gas transmission and distribution as well as power generation.

2

HSBC 

1,687

Large UK - based financial services group.

3

Barclays Bank Plc

1,596

Large UK - based financial services group.

4

Xstrata

1,564

Coal, copper, zinc and alloys mining company.

5

KSK Power Ventur Plc

  1,457

Engaged in emerging opportunities in the power development market.

6

AstraZeneca

1,310

One of the world's largest pharmaceutical companies



7

BP

1,151

One of the world's largest energy companies, providing fuel, energy and pertrochemicals.

8

Vodafone

1,061

The largest mobile telecommunications network in the world.


9

Royal Dutch Shell

1,036

One of the world's largest energy companies which explore, produce and market oil, gas and chemicals.

10

Berkeley Group Holdings Plc

  927

UK-based housebuilder and developer


11

WPP

911

Communications services company providing advertising, media and consultancy services.

12

Hardy Oil and Gas Plc

  889

AIM listed oil and gas exploration company.


13

Great Eastern Energy Corporation

761

US-based energy provider.

14

BAE Systems

747

Global defence, security and aerospace company.

15

Unilever

733

Consumer nutrition, hygiene and personal care goods



16

British American Tobacco

710

The world's most international tobacco group.

17

Venture Production

647

Petroleum and natural gas exploration company.


18

Indus Gas

609

Oil and gas exploration and development company based in India.

19

Friends Provident Plc

   464

International financial services provider.


20

Kingfisher

416

Europe's largest home improvement retailer.


21

Marks & Spencer

414

Retailer of clothing, food and home products


22

Dolphin Capital Investors

365

Real Estate Holding and Development.

23

Trading Emissions

360

UK Listed fund investing in a range of tradable environmental permits.

24

Healthcare Locums

299

Specialist healthcare recruitment company.

25

Resolution Asset Management

291

Offer a broad spectrum of funds to cater for the differing investment needs.

26

Ingenious Media Plc

214

Advisory and investment firm is now Europe's largest private investor in the media sector.

27

Bat International Finance

196

International tobacco company.


28

ZincOx Resources Plc

150 

British based zinc mining company

29

Leed Petroleum

131

Oil and gas exploration and production company focussed on the Gulf of Mexico.

30

Cadogan Petroleum

123

An independent oil and gas exploration, development and production company.

31

Arden Partners

112

Institutional stockbroker specialising in small, midcap and AIM companies.

32

British Sky Broadcasting

98

Operate a pay television broadcast service, broadband and telephony services in the UK and Ireland.

  The Portfolio as at 30 June 2009 (continued)


33

Aurora Russia

73

Investment vehicle established to make investments in small and mid-sized Russian companies.

34

Resaca Exploitation

60

US - based independent oil and gas exploitation company.


35

Legal and General

42

UK - based financial services company.


36

Eatonfield Group

33

Commercial and residential property developer with a focus on Wales and the North of England.

37

Candover Investments

23

UK Based investment firm that specialises in corporate buyouts.


38

Bowleven

20

Exploration, developing and producing oil and gas.

39     

Newfound NV

10

Developer and operator of up-market holiday resorts.











Total Valuation

  23,451 

These holdings represent 100% of the total valuation.



















Sector Distribution as at 30 June 2009













1

Resources

33.9%







2

Basic industrials

14.9%






3

General industrials

0.0%






4

Non-cyclical consumer goods

0.0%





5

Cyclical services

17.9%





6

Non-cyclical services

0.0%





7

Utilities

3.5%





8

Information technology

5.0%





9

Financials

24.8%





  The Portfolio as at 30 June 2009 (continued)


Sector Distribution as at 30 June 2009



Total



30-Jun



2009

Sector Classification

 

%

Resources



Oil and Gas


  29.1 

Oil Equipment and Services


  -  

Metals


  -  

 

 

  29.1 

Basic industrials



Construction and building materials


  -  

Mining


  6.9 

Chemicals


  -  

Electronics and electrical equipment


  5.9 

 

 

  12.8 

General industrials



Industrial transportation


  -  

Automobiles and parts


  -  

 

 

  -  

Non-cyclical consumer goods



Tobacco


  3.7 

Pharmaceuticals and biotechnology


  5.3 

 

 

  9.0 

Cyclical services



Support services


  1.2 

Leisure, entertainment and hotels


  11.2 

Food and Drug Retailers


  3.0 

 

 

  15.4 

Non-cyclical services



Telecommunication services


  -  

 

 

  -  

Utilities



Aerospace & defence


  3.0 

Utilitiles other


  -  

 

 

  3.0 

Information and technology



Software and computer services


  4.3 

 

 

  4.3 




  The Portfolio as at 30 June 2009 (continued)


Sector Distribution as at 30 June 2009 (continued)


Financials



Banks


  13.3 

Specialty and other finance


  -  

Real Estate


  1.6 

Investment companies


  4.3 

Life assurance


  2.0 

 

 

  21.3 

Net current assets/(liabilities)

 

  5.2 

Total assets less current liabilities

 

  100.0 

Borrowings

 

  -  

Net assets

 

  100.0 

  Condensed Income Statement 

for the six months ended 30 June 2009 (unaudited)

 

 
 
 
 
 
 
Six months ended 30 June 2009
 
 
Six months ended 30 June 2008
 
 
 
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
 
-
 
4,532
 
4,532
 
-
 
1,772
 
1,772
Net changes in unrealised (depreciation)/appreciation on financial assets and liabilities held at fair value through profit or loss
5
 
-
 
(1,242)
 
(1,242)
 
-
 
(2,462)
 
(2,462)
Net foreign exchange gain
 
 
-
 
-
 
-
 
-
 
-
 
-
 
 
 
-
 
3,290
 
3,290
 
-
 
(690)
 
(690)
Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income
 
3
 
290
 
-
 
290
 
944
 
-
 
944
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment management fees
 
 
14
 
43
 
57
 
21
 
62
 
83
Performance fee
 
 
 
8
 
23
 
31
 
11
 
32
 
43
Administration fees
 
 
 
72
 
-
 
72
 
58
 
-
 
58
Registrars’ fees
 
 
 
7
 
-
 
7
 
7
 
-
 
7
Auditors’ fees
 
 
 
 
5
 
-
 
5
 
8
 
-
 
8
Directors’ fees
 
10
 
41
 
-
 
41
 
41
 
-
 
41
Other expenses
 
44
 
-
 
44
 
72
 
-
 
72
Total operating expenses before finance costs
 
 
191
 
66
 
257
 
218
 
94
 
312
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit/(loss) before finance costs and tax
 
 
99
 
3,224
 
3,323
 
726
 
(784)
 
(58)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Finance costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest payable
 
 
 
-
 
-
 
-
 
42
 
127
 
169
 
 
 
 
 
 
 
 
 
 
 
 
 
Profit before tax
 
 
99
 
3,224
 
3,323
 
684
 
(911)
 
(227)
Taxation
 
 
-
 
-
 
-
 
-
 
-
 
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Profit
 
 
99
 
3,224
 
3,323
 
684
 
(911)
 
(227)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted return per Ordinary Share
4
 
0.48p
 
15.57p
 
16.05p
 
3.30p
 
(4.40)p
 
(1.10)p

 

 

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 19 to 24 are an integral part of these financial statements.


 

Condensed Income Statement (continued)

for the six months ended 30 June 2009 (unaudited)







Year ended 31 December 2008

 




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


-


(5,526)


(5,526)


Net changes in unrealised (depreciation)/appreciation on financial assets and liabilities held at fair value through profit or loss

5


-


(5,409)


(5,409)


Net foreign exchange gain

   


-


-


-





-


(10,935)


(10,935)


Income











Other income

3


1,449


-


1,449













Expenses










Investment management fees



38


115


153


Performance fee




 -


 -


 -


Administration fees




84


-


84


Registrars' fees





19


-


19


Auditors' fees




21


-


21


Directors' fees


10


82


-


82


Other expenses





105


-


105


Total operating expenses before finance costs


349


115


464













Operating profit/(loss) before finance costs and tax



1,100


(11,050)


(9,950)












Finance costs










Interest payable


58


174


232











Profit before tax



1,042


(11,224)


(10,182)


Taxation



-


-


-











Net Profit



1,042


(11,224)


(10,182)











Basic and diluted return per Ordinary Share

4


5.04p


(54.25)p


(49.21)p



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 19 to 24 are an integral part of these financial statements.



Condensed Balance Sheet 

As at 30 June 2009 (unaudited)




Notes




30 June 2009




30 June 2008


31 December 2008





£'000


£'000


£'000

Non-current assets








Financial assets at fair value through profit or loss

5


23,451


33,744


19,989

Total non-current assets




23,451


33,744


19,989










Current assets









Receivable from brokers




996


597


1,153

Other receivables



527


87


 76

Cash at bank



203


23


1,298

Total current assets




1,726


707


2,527





 


 


 

Total assets




25,177


34,451


22,171





 


 



Liabilities


















Current Liabilities









Payable to brokers




4


-


224

Payables




428


514


121

Total current liabilities




432


514


345









Non-current liabilities









Borrowings

6


-


2,000


  -

Total non-current liabilities




-


2,000


  -









Total liabilities




432


2,514


345










Net assets attributable to holders of equity shares



24,745


31,937


22,171










Equity shareholders' funds




 


 


 

Share Capital


7


2,083


2,083


2,083

Own shares held in treasury


7


 (397)


(245)


(168)

Reserves



23,059


30,099


20,256




24,745


31,937


22,171









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

7


20,560,051


20,661,272


20,725,742









Net asset value per share

8


120.35p


154.57p


106.97p


These financial statements were approved by the Board of Directors on 26 August 2009 and signed on behalf of the Board by:



JM Le Pelley                    D Warr

Director                            Director

    

The notes on pages 19 to 24 are an integral part of these financial statements.

 

 

Condensed Reconciliation of Movements in Equity Shareholders' Funds 

For the six months ended 30 June 2009 (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 2009
2,083
(168)
5,422
4,308
 8,320
(1,847)
4,053
22,171
Shares repurchased during the period
-
(463)
-
-
-
-
-
(463)
 
 
 
 
 
 
 
 
 
Premium arising on share elections
 
 
 
 
 
 
 
 
-2008 final dividend
-
-
-
-
-
-
(332)
(332)
Dividend and scrips
-
234
-
-
-
-
(234)
-
 
 
 
 
 
 
 
 
 
Net profit
-
-
-
-
4,512
(1,242)
99
3,369
At 30 June 2009
2,083
(397)
5,422
4,308
12,832
(3,089)
3,586
24,745
 
 

There are no other recognised Income and Expenses for the six months ended 30 June 2009


For the year ended 31 December 2008 (audited)


 
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 year
-
(280)
-
-
-
(7)
-
(287)
 
 
 
 
 
 
 
 
 
Premium arising on share elections
 
 
 
 
 
 
 
 
-2007 final dividend
-
-
-
-
-
-
(316)
(316)
-2008 interim dividend
-
 -
-
-
-
-
(109)
(109)
Dividend and scrips
-
288
-
-
-
288
(288)
 288
 
 
 
 
 
 
 
 
 
Net profit
-
-
-
-
(5,819)
(5,409)
1,042
(10,186)
At 31 December 2008
2,083
(168)
5,422
4,308
 8,320
(1,847)
4,053
22,171
 
 

There are no other recognised Income and Expenses for the year ended 31 December 2008


The notes on pages 19 to 24 are an integral part of these financial statements.  Condensed Cash flow statement 

For the six months ended 30 June 2009 (unaudited)








Six months ended


Year ended



30 June 2009


30 June 2008


31 December 2008


Notes

£'000


£'000


£'000

Cash flows from operating activities






Payment on purchase of investments


(37,386)


(61,687)


(125,206)

Proceeds from sale of investments


37,045


64,548


131,109

Cash received from investments


237


1,068


1,373

Other income


24


14


54

Investment management fee paid


(57)


(83)


( 153)

Other cash payments


(162)


(105)


(263)








Net cash (outflow)/inflow from operating activities


(300)


3,755


6,914



 


 


 

Cash flows from financing activities







Interest paid


-


(269)


(326)

Share repurchase


(463)


(279)


( 1)

Equity dividends paid


(332)


(320)


(425)

Repayment of long term loan


-


(3,200)


(5,200)








Net cash outflow from financing activities


(795)


(4,068)


(5,952)



 


 


 

Net (decrease)/increase in cash and cash equivalents

(1,095)


(313)


962








Cash and cash equivalents at the beginning of the period


1,298


336


376








Cash and cash equivalents at the end of the period


203


23


1,298


The notes on pages 19 to 24 are an integral part of these financial statements.




Notes to the Condensed Set of Financial Statements (unaudited)


1.     General information


UK Select Trust Limited is a UK Investment Trust Company incorporated under The Companies (Guernsey) Law, 2008, 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 LLP pursuant to the Auditing Practices Board guidance on 'Review of Interim Financial Information'.


The information presented for the year ended 31 December 2008 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 2009 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 2008, 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 2008, 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 Condensed Set of Financial Statements (unaudited) (continued)


3.    Other income



Six months ended


Year ended


30 June


30 June


31 December


2009


2008


2008


£'000


£'000


£'000


Dividends

266


  935


   1,449


Interest

11


  9


      54

Other income

13


-


22

Total income

  290


   944


1,449



4.    Basic and diluted return per ordinary share



Six months ended

Six months ended


Year ended



30 June 2009

30 June 2008

31 December 2008


Revenue

Capital

Total

Revenue

Capital

Total

Revenue

Capital

Total


£

£

£

£

£

£

£

£

£











Return/(loss)

0.48p

15.57p

16.05p

3.30p

(4.40)p

(1.10)p

5.04p

(54.25)p

(49.21)p


Revenue return per ordinary share is based on the net revenue on ordinary activities of £99,000 (Six months ended 30 June 2008: £684,000. Year ended 31 December 2008: £1,042,000.) and on 20,707,544 ordinary shares, being the weighted average number of ordinary shares in issue during the period (Six months ended 30 June 2008:20,699,258 . Year ended 31 December 2008: 20,689,850).


Capital return per ordinary share is based on a net capital return for the financial period of £3,224,000 (Six months ended 30 June 2008capital loss £ 911,000. Year ended 31 December 2008: capital loss £11,224,000) and on 20,707,544 ordinary shares, being the weighted average number of ordinary shares in issue during the period (Six months ended 30 June 2008: 20,699,258. Year ended 31 December 2008: 20,689,850). 


 



Notes to the Condensed Set of Financial Statements (unaudited) (continued)


5.    Investments






Six months ended

Six months ended

Year ended






30 June 2009

30 June 2008

31 December 2008






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 securities


    23,451

94.87

  33,744

  105.70

   19,989

 90.16






   23,451

  94.87

  33,744

  105.70

   19,989

 90.16







 

 










 Six months ended 


Year ended







 30 June


 30 June


31 December







2009


2008


2008







£'000


£'000


£'000












Opening book cost




22,116


33,008


   33,008

Opening unrealised appreciation



  (2,127)


   3,281


   3,281












Opening valuation




  19,989


  36,289


  36,289












Movements in the period/year:








Purchases at cost




37,386


  61,824


   125,431

Sales - proceeds




  (37,214)


  (63,679)


  (130,796)

  - realised gains on sales



   4,532


1,772

   

   (5,526)

Increase/(decrease) in unrealised appreciation

(1,242)


(2,462)


  (5,409)












Closing valuation




   23,451


  33,744


   19,989












Comprising:










Closing book cost




26,820


  32,924


   22,116

Closing unrealised (depreciation)/appreciation



    (3,369)


     820


   (2,127)












Closing valuation




23,451


33,744


   19,989


Notes to the Condensed Set of 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 £2,000,000, for the purposes of future investment. 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 £nil (Six months ended 30 June 2008: £169,416. Year ended 31 December 2008: £231,502) 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







2009


2008


2008







£'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 Condensed Set of Financial Statements (unaudited) (continued)


7.    Share capital (continued)








30 June

 2009


31 December 2008







£'000


£'000

Issued, called up and fully paid:






20,830,484 ordinary shares of 10p each




(2008: 20,830,484)




   2,083


  2,083























30 June 2009







Own Shares held in treasury

Shares in issue







Shares

£'000

Shares

£'000

Balance at 1 January 2009




  (104,742)

   (168)

20,830,484

2,083

Shares purchased and held in treasury

 (446,709)

  (463)

 - 

 - 

Shares issued in lieu of dividends from treasury

  281,018

234

 - 

 - 

Balance at 30 June 2009




 (270,433)

  (397)


20,830,484


2,083

















31 December 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)

   (280)

  - 

 - 

Shares issued in lieu of dividends from treasury

216,587

288

 - 

 - 

Balance at 31 December 2008



 (104,742)

   (168)


20,830,484


2,083











During the period no shares were purchased for cancellation (Year ended 31 December 2008: nil).



 



Notes to the Condensed Set of Financial Statements (unaudited) (continued)


7.    Share capital (continued)


On 27 April 2009, 180,000 shares were purchased for Treasury at a total cost including expenses of £176,400.

On 5 June 2009266,709 shares were purchased for Treasury at a total cost including expenses of £286,712.


On 8 May 2009, 281,018 shares were issued to shareholders who elected to receive them in lieu of a final cash dividend for 2008. 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 £24,745,000 (year ended 31 December 2008: £22,171,000) and on 20,561,051 (year ended 31 December 2008: 20,725,742 ) ordinary shares, being the number of ordinary shares in issue at the end of the period.


10.    Related party transactions 


The members of the Board of Directors are listed on page 4 of the half-yearly report. Fees earned by the Directors of the Company during the period were £40,500 (year ended 31 December 2008: £81,000) of which £20,250 (year ended 31 December 2008: £20,250) was outstanding at the period end.


The investment manager, Scottish Widows Investment Partnership Limited  exercises discretion over 28.42% (2008: 29.28%) of shares in the Company, on behalf of their clients, and earned investment management fees of £57,129 (year ended 31 December 2008: £ 153,587) during the period of which £31,099 (2008: £27,958) was outstanding at the period end and a performance fee of £31,099 (year ended 31 December 2008: £Nil) which was outstanding at the period end. The basis of calculation of these fees is detailed in note 3 of the annual financial statements.


On 18 August 2009 Corporate Services (Guernsey) Limited resigned and the Company appointed Kleinwort Benson (Channel Islands) Funds Services Limited as provider of administrative and accounting services.  Administrative fees (including the accounting fee) for the period ended 30 June 2009 totalled £72,000 (year ended 31 December 2008: £84,000) of which £Nil (year ended 31 December 2008: £38,333) 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.


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