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UK Select Trust Ld (UKT)

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Tuesday 24 August, 2010

UK Select Trust Ld

Announcement of Results

RNS Number : 5485R
UK Select Trust Limited
24 August 2010
 



 

For immediate release on 24 August 2010

 

 

UK Select Trust Limited

(the "Company")

 

Registered No:  475

 

Announcement of Results 

 

The financial information set out in this announcement is the full unedited Half-Yearly Report and Condensed Unaudited Financial Statements for the period 1 January 2010 to 30 June 2010 ("Statements") of the Company as approved by the Board of Directors on 24 August 2010.  The Statements will be delivered to shareholders during August 2010.

 

This announcement was approved by the Board of Directors on 24 August 2010.

 

 

To view a PDF version of this announcement in its entirety, including graphs, please click on, or paste the following URL into your web brower:

 

http://www.rns-pdf.londonstockexchange.com/rns/5485R_-2010-8-24.pdf

 

  

 

Enquiries:

 

Kleinwort Benson (Channel Islands) Fund Services Limited

Company Secretary

 

Telephone number :  01481 727111

Fax number: 01481 728317

 

24 August 2010

 

Dorey Court

Admiral Park

St Peter Port

Guernsey

GY1 3BG

 

 

 

 

 

 

UK Select Trust Limited

 

 

 

 

 

 

 

 

 

 

Half-Yearly Report and Condensed Unaudited Financial Statements

 for the period 1 January 2010 to 30 June 2010

 

 

 

 

 

 

 

 

 

 

 

 

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

8



The Portfolio and Sector Distribution

9



Condensed Statement of Comprehensive Income

13



Condensed Statement of Financial Position

15



Condensed Reconciliation of Movements in Equity Shareholders' Funds

16



Condensed Statement of Cash Flows

17

 
 

Notes to the Condensed Financial Statements

18

 

 

 

 

 

Trust information

 

UK Select Trust Limited's ordinary 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 (the "Company") is registered in Guernsey and complies with the definition of a UK Investment Trust Company.  The Company invests over 80% of its gross assets by value in companies listed on the London Stock Exchange 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 2010


30 June 2009

31 December 2009









Net asset value per share



137.63p


120.35p

 149.84p

Equity Shareholders' interest (1)



£28.45m


£24.75m

£30.83m

Revenue return on ordinary activities for the financial period/year after taxation

£0.32m


£0.10m

£ 0.75m

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

£(2.25)m


£3.22m

£9.17m

Revenue return per ordinary share


1.53p


0.48p

3.61p

Capital (deficit)/ return per ordinary share


(10.87)p


15.57p

44.42p

Dividend per ordinary share (2)



0.90p


0.90p

3.75p

Share Price



120.25p


109.50p

 128.25p

Net asset value total return (3)



(5.17)%(6)


12.92%(5)

45.89%(4)

FTSE All-Share total return



(6.15)%


(3.37)%

30.12%

 

 

 

 

 

 

 

 

 (1) During the period the Company purchased 100,000 ordinary Shares of 10p from the market to be held in Treasury. From the Shares held in Treasury, 191,737 ordinary Shares of 10p each were reissued during the period. At 30 June 2010, 162,665 Shares remain in Treasury. 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.

 

(3) Source: Datastream. Basis: Income reinvested and net of expenses.

 

(4) Based on the audited Annual Financial Reports for the years ended 31 December 2008 and 31 December 2009.

 

(5) Based on the audited Annual Financial Report for the year ended 31 December 2008 and the unaudited Net Asset Value as at 30 June 2009 released to market.

 

(6) Based on the audited Annual Financial Report for the year ended 31December 2009 and the unaudited Net Asset Value as at 30 June 2010 released to market.

 

Dividends 

 

An interim dividend of 0.90p per share will be paid on 5 November 2010 to shareholders on the register at 25 August 2010 (Six months ended 30 June 2009: 0.90p).  The Company intends to continue with the policy of paying a second interim dividend each year to Shareholders in May of the following year in place of a final dividend.

 

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, (Born 1949),  Non-executive Chairman.  He joined the board in 1983.  Other Directorships include AcenciA Debt Strategies Limited.

 

DR Maltwood, (Born 1938),  Non-executive Director.  He joined the board in 1997 after a career in stockbroking in Jersey. He has held a number of positions including the Chairman and Director of a number of quoted companies.

 

G Ross Russell, (Born 1933),  Non-executive Director.  He joined the board in 1995.  He is Chairman of Forsight 3 Venture Capital Trust Plc and former Chairman of the Chartered Institute of Securities and Investment and Deputy Chairman of the London Stock Exchange.


JG West FCA, (Born 1947),  Non-executive Director.  He joined the board in 1997.  He is the Chairman of Gartmore Fledgling Trust Plc, Canaccord Genuity Limited, 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, (Born 1953),  Non-executive Director and Audit Committee Chairman.  He is a fellow of the Institute of Chartered Accountants in England and Wales and joined the Board in 2006.  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 and Unigestion (Guernsey) Limited.     

 

Advisors 

 

Secretary and Registered Office

Registrars

Kleinwort Benson (Channel Islands)

Capita Registrars (Guernsey) Limited

Fund Services Limited

Longue Hougue Road

Dorey Court

St Sampson

Admiral Park

Guernsey GY2 4JN

St Peter Port

0870 162 3100

Guernsey GY1 3BG

(calls cost 10p per minute plus network extras,

01481 727111

lines are open 8:30am to 5:30pm Monday-Friday)



Investment Manager

Stockbrokers

Scottish Widows Investment Partnership Limited

Canaccord Genuity Limited

Edinburgh One

Cardinal Place

Morrison Street

7th Floor

Edinburgh EH3 8BE

80 Victoria Street

0131 655 8500

London SW1E 5JL


0207 050 6500



Auditors

Bankers and Custodian

Deloitte LLP

HSBC Bank plc

Regency Court

8 Canada Square

Glategny Esplanade

London E14 5HQ

St Peter Port

Guernsey GY1 3HW

01481 724011

 

 

Chairman's Statement

 

Review of Performance

 

The period of six months to 30 June 2010 saw the net asset value fall by 5.17% on a total return basis, as compared with the total return of the FTSE All-Share Index of a negative 6.15%. This relative performance was achieved despite the continuing volatility in the world equity markets and was driven by strong stock selection, the details of which can be found in the Interim Management Report.

 

Share Price and discount

 

The share price traded 6.24% lower over the six months under review while the discount at which your Shares trade relative to their net asset value closed the period at 12.63%.

 

Gearing

 

The Company operates a small overdraft facility, however, during the period under review no borrowings were utilised.

 

Dividend

 

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

 
Prospects

 

The second quarter corporate earning season is now drawing to a close and in the main has reflected positive trading conditions across many industries. However, these are backward looking and investors focus is now shifting to a raft of deteriorating macro economic leading indicators which point to a sharp slowdown in global economic activity in the second half of the year.

 

The Investment Manager's cautious outlook for corporate earnings is reflected in the Company's current portfolio positioning which favours companies with strong balance sheets and command stable, rather than cyclical, profit streams.

 

 

 

 

 

J M Le Pelley

Chairman

24 August 2010

 

 

 

 
 
Interim Management Report

 

Global Background

 

Two main global themes emerged during the past half year. First, significant worries arose over Greece's large fiscal deficit. Greek bond yields rose sharply, which made debt roll-over prohibitively expensive. Sovereign debt fears led to concerns about bank funding (banks generally must pay a premium over sovereign debt to fund themselves, reflecting the riskiness of banks relative to a country as a whole). A rescue plan from the IMF and other Eurozone countries allowed Greece to issue new bonds at affordable levels, but there remain long-term doubts about the country's ability to service its debts. Greece announced severe public spending cuts during the period. Combined with bank funding problems, the result will be that the Greek economy will contract sharply this year.  Spain, Portugal, Ireland and the UK (amongst others) also announced austerity measures, partly out of fear of contagion effects. The combined effect will be lower than anticipated European economic growth in the near-term. Partly offsetting this will be a strong export performance from those countries, such as Germany, that have benefitted from improved competitive positions as a result of Euro weakness.

 

The second main theme has been the state of the Chinese economy. China has been in a residential house building (and house price) boom that prompted a desire from the government to cool conditions in this sector (but not a desire to cool other parts of the economy). Rather than raise interest rates, there have been announcements of a series of restrictions on the number of houses individuals could own, combined with limits on loan-to-value ratios for home-loans and background talk about introducing property taxes in some cities (mainland China currently has no equivalent to property rates or council tax, so that the opportunity cost of holding empty flats is surprisingly low). The outcome of these targeted restraints is eagerly awaited by markets. If these fail to cool the housing market, then interest rates must rise and this will cool the Chinese (and possibly the global) economy at a time when investors are worried about economic growth levels.  

 

The UK Economy and Stock Market

 

For the period under review, the UK economy grew very modestly, following a protracted period of economic shrinkage. 

 

The stock market first anticipated recovery from recession as early as the second quarter of 2009. Firms that had high levels of leverage and low price to book values performed best in this initial phase of stock market recovery, largely out of relief from the growing fear of corporate bankruptcy. Subsequently, as it became apparent that economic growth would remain muted for some time, stocks that were able to consistently grow their revenue and earnings became favoured (sometimes too favoured, in light of the long-term fundamentals). 

 

Companies exposed to government spending are very much under scrutiny at present, in light of the UK government's announcement of planned spending cuts aimed at reducing the budget deficit. Firms reliant on government for contracts are thusvulnerable and the share prices of many have fallen steeply in anticipation of tough business conditions for years to come. However, some firms reliant on government work claim that they can help government to reduce spending and boost efficiency. They thus argue that they will benefit from government spending cuts, although we suspect that there will be pressure on these firms' margins, nevertheless.

 

 

The Portfolio

 

The Company performed ahead of the FTSE all-share during the period with net asset value declining -5.17%.  This was driven by strong stock selection in what continued to be a volatile trading environment.

 

No single stock has been more volatile than BP.  The fallout from the Macondo well spill has been widely reported, with the share price volatility driven both by financial and political implications.  The Company

Interim Management Report (continued)

 

The Portfolio (continued)

 

took advantage of this volatility to successfully trade in and out of BP at varying levels and it was one of the biggest positive contributors to performance in the first half.

 

The structural shortage of power supply in India and other emerging markets has been a key theme running through the portfolio for the past few years.  We continue to see this as a multi-year trend, driven by the strong GDP outlook and consistent power shortages in the region.  Indus Gas, the Indian E&P stock was the single biggest positive contributor to fund performance; Great Eastern Energy was another positive.  In late April we took part in the IPO of the Indian energy Company Essar, a Company that promptly entered the FTSE 100 the following month.  Despite listing in a tough market, Essar has rallied since the offering and was another big positive during the period.

 

We have identified a number of stocks that should be able to generate solid total returns even in an environment of constrained economic growth. They typically exhibit stable growth prospects and the careful selection of new projects by their management teams. Barriers to entry that protect these businesses typically include powerful brands or regulatory controls.

 

The Company has increased positions in these stable growers such as National Grid, Scottish and Southern Energy and GlaxoSmithKline and funded these by reducing exposure in cyclical names such as Lloyds Banking Group and Rio Tinto.  This rotation proved beneficial to the performance of the Company in June as the market retreated.

 

Outlook

 

The outlook for UK economic growth remains constrained by the twin headwinds of government austerity and bank de-leveraging.

 

With severe cuts in government spending planned in all but a few departments, new entrants to the job market will find employment opportunities limited. Unemployment will rise unless private sector hiring can exceed public sector retrenchment.

 

Appetite for lending will be constrained as banks continue to "right-size" themselves in response to funding constraints. At the same time, appetite for new loans from sound borrowers will be limited, as consumers reduce debt and build savings to protect against the risk of unemployment.

 

Although it is tempting to think that weak UK economic growth must translate into poor stock market returns (and that high economic growth in a number of emerging markets must translate into high equity returns), this is not borne out by long-term studies. Where a share price is modest but the firm is well-run, with a sound balance sheet and barriers to entry in its business, future returns from the Shares are potentially attractive. And indeed, the portfolio is positioned with this in mind. 

 

 

Scottish Widows Investment Partnership

 

24 August 2010

 

Scottish Widows Investment Partnership (SWIP) is one of the UK's largest asset management companies, and is part of the Lloyds Banking Group. Our main aim is to deliver consistent, superior returns for our clients. We achieve this through a rigorous investment process, which relies heavily on high-quality, fundamental research, and the experience and skills of our investment team. Our clients benefit from our investment intelligence and the experience of our fund management teams; our disciplined and sustainable investment process based on proprietary fundamental research; and our analysts' and fund managers' ability to share information, discuss investment ideas and make effective decisions quickly.

 

We manage funds worth more than £136 billion* for a wide range of UK and international clients, including individual investors, investment trusts, charities, financial institutions, corporate and local-government pension funds. These funds are invested across all major asset classes, including UK and international equities, property, bonds and cash. We also offer clients specialist expertise in multi-manager, smaller companies and socially responsible investment, and build dynamic multi-asset investment solutions for institutional clients. When it comes to client service, we have a presence that stretches around the world: from the UK to continental Europe, the US and Asia. This international dimension keeps us close to our clients, enhancing our ability to deliver excellent client service and build lasting relationships. We believe that the combination of our talented investment team, thorough process and close proximity to our clients is an enviable combination and gives us a great opportunity to deliver a high-quality investment management service.

 

 

Source: SWIP, 30 June 2010

           

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 2010 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      

     

24 August 2010

 

 

 

 

 

The Portfolio as at 30 June 2010
 


Company

Market Value

Activity

 

 

 

 



£'000


 

 

 

 





 

 

 

 

 1

National Grid Plc

2,223

One of the world's largest utility companies.

2

HSBC Holdings Plc

2,040

Large UK - based financial services group.

3

Glaxosmithkline Plc

1,974

Large Anglo-American pharmaceutical company.

4

Scottish & Southern Energy Plc

1,790

British company specialising in the production, relay and distribution of electricity and gas supply.

Royal Dutch Shell Plc

1,787

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

6

Vodafone Group Plc

1,779

The largest mobile telecommunications network in the world.

 

 

7

BG Group Plc

1,338

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

8

British American Tobacco Plc

1,232

The world's most international tobacco group.

 

9

BP Plc

1,042

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

10

KSK Power Venture Plc

979

Engaged in emerging opportunities in the power development market.

 

11

AstraZeneca Plc

964

One of the world's largest pharmaceutical companies.

12

RSA Insurance Group Plc

874

One of the world's leading insurance groups, providing personal and commercial insurance products and services worldwide.

 

13

Rio Tinto Plc

858

One of the global leaders in the extraction and processing of the earth's mineral resources.

14

Great Eastern Energy Corporation Plc

843

Indian based energy provider.

15

Xstrata Plc

789

Coal, copper, zinc and alloys mining company.

 

 

16

Essar Energy Plc

781

Indian-focussed energy company with assets in the existing power and oil and gas businesses.

17

Indus Gas Ltd

714

Oil and gas exploration and development company based in India.

 

18

Lloyds Banking Group Plc

674

Financial services group providing a range of banking and financial services, primarily in the United Kingdom, to personal and corporate customers.

19

Imperial Tobacco Group Plc

614

One of the world's largest international tobacco companies.

 

20

Ryanair Holdings Plc

612

Irish-based budget airline

 

21

Berkeley Group Holdings Plc

590

UK based housebuilder and developer.

 

22

 

Resolution Ltd

572

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

 

23

Thomas Cook Group Plc

439

Principally engaged in the provision of leisure travel services.

24

Dolphin Capital Investors

403

Real estate holding & development.

25

Trading Emissions Plc

377

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

26

Hardy Oil & Gas Plc

352

AIM-listed oil and gas exploration company.

27

Cadogan Petroleum Plc

208

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

The Portfolio as at 30 June 2010 (continued)
 

28

Petroceltic International Plc

188

A leading upstream oil and gas exploration company focussed on the Mediterranean and North Africa area.

29

Petra Diamonds Ltd

174

The group's principal activity is exploring for and mining diamonds in Africa.

 

30

Aurora Russia Ltd

130

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

 

31

Arden Partners Plc

106

Institutional stockbroker specialising in small, midcap and AIM companies.

32

Leed Petroleum Plc

100

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

 

33

Resaca Exploitation Inc

88

US-based independent oil and gas exploration company.

34

Ingenious Media Active Capital Ltd

84

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

35

BHP Billiton Plc

72

The world's largest diversified natural resources company.

 

36

Candover Investments Plc

48

UK-based investment firm that specialises in corporate buyouts.

 

37

Resaca Exploitation Inc (DI)

14

US-based independent oil and gas exploration company.

 

38

Newfound N.V.

10

Developer and operator of up-market holiday resorts.

 

39

Eatonfield Group Plc

3

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

 


Total Valuation

   27,865

These holdings represent 100% of the total valuation.

 




 

 

 

 

 
The Portfolio as at 30 June 2010 (continued)

 

Sector Distribution as at 30 June 2010







Total

Total



30 June 2010

30 June 2009

Sector Classification


%

%

Resources




Oil and Gas


    26.2

    29.1



    26.2

    29.1

Basic industrials




Construction and building materials


   2.1

     -  

Mining


   6.7

   6.9

Electronics and electrical equipment


     -  

   5.9



   8.8

    12.8

Non-cyclical consumer goods




Tobacco


   6.5

   3.7

Pharmaceuticals and biotechnology


    10.3

   5.3



    16.8

   9.0

Cyclical services




Support services


     -  

   1.2

Leisure, entertainment and hotels


   3.7

    11.2

Food and Drug Retailers


     -  

   3.0



   3.7

    15.4

Non-cyclical services




Telecommunication services


   6.3

     -  



   6.3

     -  

Utilities




Aerospace and defence


     -  

   3.0

Utilitiles other


    17.5

     -  



    17.5

   3.0

Information and technology




Software and computer services


     -  

   4.3



     -  

   4.3

Financials




Banks


   9.5

    13.3

Specialty and other finance


   4.5

     -  

Real Estate


   1.4

   1.6

Investment companies


   0.2

   4.3

Non life insurance


   3.1

     -  

Life assurance


     -  

   2.0



    18.7

    21.2

Net current assets


   2.0

   5.2

Total assets less current liabilities


   100.0

   100.0

Borrowings


     -  

     -  

Net assets


   100.0

   100.0

 
The Portfolio as at 30 June 2010 (continued)

Sector Distribution as at 30 June 2010 (continued)

 

 

1

Resources

  26.2%

2

Basic industrials

  8.8%

3

Non-cyclical consumer goods

  16.8%

4

Cyclical services

  3.7%

5

Non-cyclical services

  6.3%

6

Utilities

  17.5%

7

Financials

  18.7%

 

By sector as a percentage

 

 To view the graphs relating to Sector Distribution, please view the PDF version of the announcement:

 

http://www.rns-pdf.londonstockexchange.com/rns/5485R_-2010-8-24.pdf 

 

 

 

 

Condensed Statement of Comprehensive Income

for the six months ended 30 June 2010 (unaudited)






 

Six months ended 30 June 2010

 

Six months ended 30 June 2009




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   


-


2,040


2,040


-


4,532


4,532

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

5


-


(4,227)


(4,227)


-


(1,242)


(1,242)

Net foreign exchange (loss)/gain



-


(1)


(1)


-


-


-




-


(2,188)


(2,188)


-


3,290


3,290

Income















Other income


3


511


-


511


290


-


290

















Expenses
















Investment management fees



19


57


76


14


43


57

Performance fee




-


-


-


8


23


31

Administration fees




50


-


50


72


-


72

Registrars' fees


    


14


-


14


7


-


7

Auditors' fees





7


-


7


5


-


5

Directors' fees


    10   


42


-


42


41


-


41

Other expenses


61


-


61


44


-


44

Total operating expenses before finance costs



193


57


250


191


66


257














Operating profit/(loss) before finance costs and tax



318


(2,245)


(1,927)


99


3,224


3,323

















Finance costs















Interest payable




1


3


4


-


-


-














Profit/(loss) before tax



317


(2,248)


(1,931)


99


3,224


3,323

Taxation









-


-


-















Net Profit/(loss)



317


(2,248)


(1,931)


99


3,224


3,323















Basic return/(deficit) per Ordinary Share

4


1.53p


(10.87p)


(9.34p)


0.48p


15.57p


16.05p

The total column of this statement is the Condensed Statement of Comprehensive Income 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 18 to 23 are an integral part of these condensed financial statements.

 

Condensed Statement of Comprehensive Income (continued)

for the six months ended 30 June 2010 (unaudited)

 





 

Year ended 31 December 2009


 



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


-


2,551


2,551


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

5


-


6,701


6,701


Net foreign exchange (loss)/gain

    


-


22


22





-


9,274


9,274


Income











Other income

3


1,075


-


1,075


 











Expenses










Investment management fees



33


100


133


Performance fee




-


-


-


Administration fees




95


-


95


Registrars' fees





19


-


19


Auditors' fees




12


-


12


Directors' fees and expenses


10


84


-


84


Other expenses





84


-


84


Total operating expenses before finance costs



327


100


427


 











Operating profit/(loss) before finance costs and tax



748


9,174


9,922












Finance costs










Interest payable


2


5


7











Profit/(loss) before tax



746


9,169


9,915


Taxation



-


-


-











Net Profit/(loss)



746


9,169


9,915











Basic return/(deficit) per Ordinary Share

4


3.61p 


44.42p


48.03p


 

The total column of this statement is the Condensed Statement of Comprehensive Income 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 18 to 23 are an integral part of these condensed financial statements.

 

 

 

 

 

Condensed Statement of Financial Position

As at 30 June 2010 (unaudited)

 

 


Notes


 

 

30 June 2010


 

 

30 June 2009


31 December 2009





£'000


£'000


£'000

Assets








Non-current assets








Financial assets at fair value through profit or loss

5


27,865


23,451


29,729

Total non-current assets




27,865


23,451


29,729










Current assets









Receivable from brokers




-


996


120

Other receivables



180


527


425

Cash at bank



537


203


1,113

Total current assets




717


1,726


1,658










Total assets




28,582


25,177


31,387










Liabilities









Current Liabilities









Payable to brokers




-


4


389

Other payables




136


428


120

Bank overdraft




-


-


46

Total current liabilities




136


432


555










Total liabilities




136


432


555










Net assets attributable to holders of equity Shares



28,446


24,745


30,832










Equity Shareholders' funds









Share Capital


7


2,083


2,083


2,083

Own Shares held in Treasury


7


(269)


(397)


(380)

Reserves



26,632


23,059


29,129




28,446


24,745


30,832









Number of ordinary Shares in issue (net of Treasury Shares)

7


20,667,819


20,560,051


20,576,082









Net asset value per share

8


137.63p


120.35p


149.84p

 

These financial statements were approved by the Board of Directors on 24 August 2010 and signed on behalf of the Board by:

 

 

JM Le Pelley        D Warr

Director Director

The Notes on Pages 18 to 23 are an integral part of these condensed financial statements.

 

 

 

 

 

 

Condensed Reconciliation of Movements in Equity Shareholders' Funds

For the six months ended 30 June 2010 (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 2010

2,083

(380)

5,411

4,308

10,788

4,574

4,048

30,832

Shares repurchased during the period

-

(123)

-

-

-

-

-

(123)

Cash dividends:









-2009 2nd interim dividend

-

-

-

-

-

-

(331)

(331)

Scrip dividends

-

234

-




(234)

-

Net profit

-

-



1,978

(4,227)

317

(1,932)

At 30 June 2010

2,083

(269)

5,411

4,308

12,766

347

3,800

28,446

 

There are no other recognised Income and Expenses for the six months ended 30 June 2010

 

For the year ended 31 December 2009 (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 2009

2,083

(168)

5,422

4,308

8,320

(1,847)

4,053

22,171

Opening adjustment *

-

-

-

-

-

(280)

-

(280)

Shares repurchased during the year

-

(528)

-

-

-

-

-

(528)

Cash dividends:









-2008 final dividend

-

-

-

-

-

-

(331)

(331)

-2009 interim dividend

-

-

-

-

-

-

(104)

(104)

Scrip dividends

-

316

**(11)

-

-

-

(316)

(11)

Net profit

-

-

-

-

2,468

6,701

746

9,915

At 31 December 2009

2,083

(380)

5,411

4,308

10,788

4,574

4,048

30,832

 
 
*opening adjustment made to correct the Capital reserve unrealised position.

**costs associated with the administration of the scrip dividends.

 
There are no other recognised Income and Expenses for the year ended 31 December 2009
 
The Notes on Pages 18 to 23 are an integral part of these condensed financial statements.
Condensed Statement of Cash Flows

For the six months ended 30 June 2010 (unaudited)

 

 

 

 

 



Six months ended


Year ended



30 June 2010


30 June 2009


31 December 2009


Notes

£'000


£'000


£'000

Cash flows from operating activities






Payment on purchase of investments


(34,673)


 

(37,386)


(87,472)

Proceeds from sale of investments


33,916


37,044


87,924

Cash received from investments


781


237


672

Other income


-


24


24

Investment management fee paid


(79)


(57)


(122)

Other cash payments


(17)


(162)


(287)








Net cash (outflow)/inflow from operating activities


(72)


(300)


739








Cash flows from financing activities







Interest paid


(4)


-


(7)

Share repurchase


(123)


(463)


(528)

Equity dividends paid


(331)


(332)


(435)








Net cash outflow from financing activities


(458)


(795)


(970)








Net decrease in cash and cash equivalents

(530)


(1,095)


(231)








Cash and cash equivalents at the beginning of the period/year


1,067


1,298


1,298








Cash and cash equivalents at the end of the period/year


537


203


1,067

 

The Notes on Pages 18 to 23 are an integral part of these condensed financial statements.

 

 

 

 

 

Notes to the Condensed Financial Statements (unaudited)

 

1.         General information

 

UK Select Trust Limited complies with the definition of an UK Investment Trust Company incorporated under The Companies (Guernsey) Law, 2008, with its registered office at Dorey Court, Admiral 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 companies listed on the London Stock Exchange 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 2009 does not constitute the statutory financial statements of the Company. A copy of the annual financial 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 and did not contain a statement under Section 263(2) of The Companies (Guernsey) Law, 2008.

 

2.         Accounting Policies

 

a.         Basis of presentation

 

The half-yearly report for the six months ended 30 June 2010 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 2009, 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 2009, as described in those financial statements.

 

c.         Going Concern

 

In the opinion of the Directors the Company has adequate resources to continue in operational existence for the foreseeable future.  For this reason the condensed financial statements have been prepared using the going concern basis. 

 

The Directors have arrived at this opinion by considering, inter-alia, the following factors:

 

·      the Company has sufficient liquidity to meet all ongoing expenses (net current asset position at 30 June 2010 of £581,000);

·      the portfolio of investments held by the Company consists of listed investments which are readily realisable and therefore the Company will have sufficient resources to meet its liquidity requirements; and

·      the Company currently has no external borrowings and therefore is under no obligation to repay any borrowing facilities for the foreseeable future.

 

 

 

 

 

 

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

 

3.         Other income

 


Six months ended


Year ended


30 June


30 June


31 December


2010


2009


2009


£'000


£'000


£'000

Dividend income and bond interest from investments designated at fair value through profit or loss:


Listed UK - gross

511


266


1,051


 

511


 

266


 

1,051







Other income from financial assets not at fair value through profit and loss:


Deposit interest arising on cash and cash equivalents

-


11


11

Underwriting commission

-


13


13








-


24


24

Total income

 

511


 

290


 

1,075







Total income comprises:

Dividends

511


266


1,051

Interest

-


11


11

Other income

-


13


13

Total income

 

511


 

290


 

1,075

 

4.         Basic return/(deficit) per ordinary share

 


Six months ended

Six months ended

Year ended


30 June 2010

30 June 2009

31 December 2009


Revenue

Capital

Total

Revenue

Capital

Total

Revenue

Capital

Total


£

£

£

£

£

£

£

£

£

Return/(deficit)

1.53p

(10.87)p

(9.34)p

0.48p

15.57p

16.05p

3.61p

44.42p

48.03p

 

Revenue return per ordinary share is based on the net revenue on ordinary activities of £317,000 (Six months ended 30 June 2009: £99,000. Year ended 31 December 2009: £746,000.) and on 20,684,456 ordinary Shares, being the weighted average number of ordinary Shares in issue during the period (Six months ended 30 June 2009: 20,707,544 . Year ended 31 December 2009: 20,640,813).

 

Capital deficit per ordinary share is based on a net capital deficit for the financial period of £2,248,000 (Six months ended 30 June 2009: capital return £3,224,000. Year ended 31 December 2009: capital return £9,169,000) and on 20,684,456 ordinary Shares, being the weighted average number of ordinary Shares in issue during the period (Six months ended 30 June 2009: 20,707,544. Year ended 31 December 2009: 20,640,813).

 

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

 

5.         Investments






Six months ended

Six months ended

Year ended






30 June 2010

30 June 2009

31 December 2009






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


27,865

97.96

23,451

 94.87

 29,729

 96.42






27,865

97.96

23,451

94.87

29,729

 96.42


















 Six months ended


Year ended







 30 June


 30 June


31 December







2010


2009


2009







£'000


£'000


£'000












Opening book cost




25,155


22,116


   22,116

Opening unrealised appreciation/(depreciation)



4,574


 (2,127)


  (2,127)












Opening valuation




29,729


   19,989


  19,989












Movements in the period/year:








Purchases at cost




34,069


37,386


    87,135

Sales - proceeds




(33,746)


(37,214)


   (86,647)

   - realised gains on sales



2,040


4,532


2,551

(Decrease)/increase in unrealised appreciation/(depreciation)

(4,227)


(1,242)


6,701












Closing valuation




27,865


   23,451


  29,729












Comprising:










Closing book cost




27,538


    26,820


   25,155

Closing unrealised appreciation/(depreciation)



347


   (3,369)


  4,574












Closing valuation




27,865


23,451


  29,729

 
 

 

Notes to the Condensed 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 2009: £nil. Year ended 31 December 2009: £nil) 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







2010


2009


2009







£'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.  At 30 June 2010, no five per cent cumulative preference voting Shares had been issued (30 June 2009: none, 31 December 2009: none).  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 Financial Statements (unaudited) (continued)

 

7.         Share capital (continued)

 







30 June

 2010


31 December 2009







£'000


£'000

Issued, called up and fully paid:






20,830,484 ordinary Shares of 10p each




(2009: 20,830,484)




  2,083


    2,083























30 June 2010







Own Shares held in Treasury

Shares in issue







Shares

£'000

Shares

£'000

Balance at 1 January 2010



  254,402

    380

20,830,484

2,083

Shares purchased and held in Treasury

 100,000

    123

 -

 -

Shares issued in lieu of dividends from Treasury

   (191,737)

(234)

 -

 -

Balance at 30 June 2010




 162,665

  269

 

20,830,484

 

2,083

















31 December 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

  496,709

    528

      -

 -

Shares issued in lieu of dividends from Treasury

(347,049)

(316)

 -

 -

Balance at 31 December 2009



 254,402

    380

 

20,830,484

 

2,083











During the period no Shares were purchased for cancellation (Year ended 31 December 2009: nil).

 

 

 

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

 

7.         Share capital (continued)

 

On 12 February 2010, 100,000 Shares were purchased for Treasury at a total cost including expenses of £123,400.

 

On 28 May 2010, 191,737 Shares were issued to Shareholders who elected to receive them in lieu of a second interim cash dividend for 2009. 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 £28,446,000 (year ended 31 December 2009: £30,832,000) and on 20,667,819 (year ended 31 December 2009: 20,567,082) 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 £41,000 (year ended 31 December 2009: £81,000) of which £11,250 (year ended 31 December 2009: £16,250) was outstanding at the period end.  Allowable expenses claimed by Directors in the course of their duties amounted to £514 for the six months ended 30 June 2010 (year ended 31 December 2009: £3,173).

 

The Investment Manager, Scottish Widows Investment Partnership Limited exercises discretion over 28.91% (2009: 28.42%) of Shares in the Company, on behalf of their clients, and earned investment management fees of £76,237 (year ended 31 December 2009: £132,843) during the period of which £35,664 (2009: £38,564) was outstanding at the period end and a performance fee of £Nil (year ended 31 December 2009: £Nil) which was outstanding at the period end. The basis of calculation of these fees is detailed in note 4 of the annual financial statements.

 

The Company has appointed Kleinwort Benson (Channel Islands) Funds Services Limited to provide administrative and accounting services.  Administrative fees (including the accounting fee) for the period ended 30 June 2010 totalled £50,000 (year ended 31 December 2009: £95,000) of which £50,000 (year ended 31 December 2009: £35,000) was outstanding at the period end.

 

11.       Events after the reporting date

 

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

 

 


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