TIDMUKT
RNS Number : 3416H
Threadneedle UK Select Trust Ltd
16 August 2016
Threadneedle UK Select Trust Limited (the "Company")
16 August 2016
Announcement of Half-Yearly Results
Half-Yearly Results
The financial information set out in this announcement is the
full unedited unaudited half-yearly financial report of the Company
for the period ended 30 June 2016, as approved by the Board of
Directors today. The half-yearly financial report will be uploaded
onto the section of the investment manager's website
(http://www.threadneedle.co.uk/en/Intermediary/Funds/Investment-Companies/UK-Select-Trust-Limited/)
and sent to shareholders shortly.
Enquiries:
JTC Fund Solutions (Guernsey) Limited
Secretary
Tel: + 44 (0) 1481 702400
Threadneedle UK Select Trust Limited
Half-Yearly Report and Condensed Unaudited Financial
Statements
for the period 1 January 2016 to 30 June 2016
Threadneedle UK Select Trust Limited
Contents
Introductory Information 3
Financial Highlights 3
Cautionary Note and Forward Looking Statements 3
Directors and Advisors 4
Investment Objective and Policy 5
Chairman's Statement 6
Investment Manager's Report 7
The Portfolio 9
Industry Classification Benchmark Sector Distribution 10
Interim Management Report 11
Condensed Statement of Comprehensive Income 12
Condensed Statement of Financial Position 14
Condensed Statement of Net Assets Attributable to Shareholders
15
Condensed Statement of Cash Flows 16
Notes to the Condensed Financial Statements 17
Introductory information
Threadneedle UK Select Trust Limited's (the "Company") ordinary
shares are traded on the Main Market of the London Stock
Exchange.
The Company'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.
Financial Highlights
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
Net asset value
per share 190.80p 189.15p 189.40p
Equity Shareholders'
interest (1) GBP42.54m GBP41.76m GBP41.94m
Revenue return on
ordinary activities
for the financial
period/year after
taxation GBP0.80m GBP0.52m GBP0.90m
Capital return on
ordinary activities
for the financial
period/year after
taxation GBP0.12m GBP1.30m GBP1.41m
Revenue return per
ordinary share 3.62p 2.35p 4.05p
Capital return per
ordinary share 0.54p 5.86p 6.40p
Dividend per
ordinary share
(2) 1.95p 1.90p 4.45p
Share Price (3) 157.00p 177.50p 166.5p
Net asset value
total return
(4) 1.4% 4.5% 5.7%
FTSE All-Share
total return 4.3% 3.0% 1.0%
Ongoing Charges
(5) 1.4% 1.4% 1.4%
(1) At the start of 2016, the Company held 2,159,026 ordinary
shares of 10p each in treasury. During the period the Company
purchased no ordinary shares. From the shares held in Treasury,
153,932 ordinary shares of 10p each were issued as scrip during the
period. 2,005,094 ordinary shares were held in treasury as at 30
June 2016. These have been held for re-sale in order to satisfy
general market demand and / or to satisfy elections under the scrip
dividend scheme.
(2) This dividend is the first interim dividend declared for the
year (31 December 2015: includes second dividend declared for the
year).
(3) Source: Daily Official List mid market closing price.
(4) Source: Datastream/Columbia Threadneedle Investments. Basis:
Gross net income reinvested.
(5) The ongoing charge expense excludes performance fee,
withholding tax and finance costs.
Dividends
Basic earnings per share for the half year amounted to 4.16p (30
June 2015: 8.21p) of which revenue earnings per share for the half
year amounted to 3.62p (30 June 2015: 2.35p). The Board has
declared an interim dividend of 1.95p per share (six months ended
30 June 2015: 1.90p), which will be paid on 31 October 2016 to
shareholders on the register as at 19 August 2016. The Company
intends to continue with the policy of paying a second interim
dividend each year to shareholders in May of the following
year.
Cautionary Note and Forward Looking Statements
The Investment Manager's Report (IMR) has been prepared solely
to provide additional information to shareholders to assess the
Company'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 Investment Manager in good faith based
on the information available to it up to the time of its approval
of that 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
D J Warr (Chairman), resident in Guernsey, Non-executive
chairman. He is a fellow of the Institute of Chartered Accountants
in England and Wales and joined the Board in 2006. He is also a
non-executive director of Breedon Aggregates Limited, Hadrian's
Wall Secured Investments Limited, Acorn Income Fund Limited and
Aberdeen Frontier Markets Investment Company Limited.
J G West FCA, resident in the UK, Non-executive and Senior
independent director. He joined the board in 1997. He is a
chartered accountant, who has spent his career in asset management.
He is currently the Chairman of CQS New City High Yield Fund
Limited and a director of a number of public and private companies,
including BlackRock Income Strategies Trust plc, JP Morgan Income
and Capital Trust Plc and Aberdeen Smaller Companies High Income
Trust. He is also Chairman of Associated British Foods Pension Fund
Limited and former chief executive of Lazard Asset Management
Limited.
S A Farnon, resident in Guernsey, Non-executive director and
Audit Committee Chairman. She joined the board in 2012. She is a
chartered accountant and was a banking and finance Partner with
KPMG Channel Islands from 1990 until 2001, Head of Audit KPMG
Channel Islands and a former member of The States of Guernsey
Public Accounts Committee. She is a former Commissioner of The
Guernsey Financial Services Commission and currently a
non-executive director of Ravenscroft Limited, HICL Infrastructure
Fund Limited, Breedon Aggregates Limited, Standard Life Investments
Property Income Trust Limited and Apax Global Alpha Limited.
R P King, resident in Guernsey, Non-executive director and Risk
Committee Chairman. He joined the board in 2014. He is a
non-executive director for a number of open and closed ended
investment funds and companies including Chenavari Capital
Solutions Limited and Weiss Korea Opportunities Fund Limited. Prior
to becoming an independent non-executive director, he worked in the
offshore finance industry specialising in the operational
administration of offshore open and closed ended investment
funds.
Advisors
Secretary, Administrator and Registered Office Registrar
JTC Fund Solutions (Guernsey) Limited Capita Registrars
(Guernsey) Limited
Ground Floor Mont Crevelt House
Dorey Court Bulwer Avenue
Admiral Park St Sampson
St Peter Port Guernsey GY2 4LH
Guernsey GY1 2HT 0870 162 3100
01481 702400
Investment Manager Broker and adviser
Threadneedle Asset Management Limited Canaccord Genuity
Limited
78 Cannon Street 88 Wood Street
London EC4N 6AG London
United Kingdom EC2V 7QR
020 7464 5000 020 7523 8000
Banker and Custodian Auditor
HSBC Bank plc Deloitte LLP
8 Canada Square Regency Court
London E14 5HQ Glategny Esplanade
020 7991 888 St Peter Port
Guernsey GY1 3HW
01481 724011
Investment Objective and Policy
The Company's investment policy (as published in the Annual
Financial Report for the year ended 31 December 2015) which the
Company follows regarding asset allocation, risk diversification
and gearing is set out below.
Objective
The Company's investment objective is to provide shareholders
with a total return in excess of the total return on the FTSE
All-Share Index, together with a progressive dividend policy.
Investment Policy
The Company is permitted to invest in any security listed or
quoted on any UK stock exchange provided that no less than 80 per
cent of its gross assets at the time an investment is made are
invested in constituents of the FTSE All-Share index.
There are no minimum or maximum limits on the number of
investments in the portfolio but it is expected that the portfolio
will generally comprise shares and securities in 50 to 90
companies. The Company seeks to manage risk in part through heeding
the following investment restrictions:
-- The top five holdings in the Company's portfolio may not
exceed 40 per cent of the total value of the portfolio.
-- The top three sectors represented in the portfolio may not
exceed 50 per cent of the total value of the portfolio.
-- The securities of no one company may represent more than 10
per cent of the value of the Company's portfolio measured at the
time of acquisition and subsequently, when additions are made to
the holding.
-- The Company will not hold more than 5 per cent of the issued
share capital (or voting shares) in any one company.
-- While the Company may hold shares in other investment
companies (including investment trusts), the Company will not
invest more than 10 per cent, in aggregate, of the value of its
total assets in other listed closed-ended investment funds (save to
the extent that such closed-ended investment funds have published
investment policies to invest no more than 15 per cent of their
total assets in such other listed closed-ended investment
funds).
Cash
The Company intends to be fully invested in normal market
conditions but may hold up to 20 per cent of net asset value in
cash on deposit (or in short-term money market instruments) during
periods in which the Investment Manager believes markets are
overvalued or expects them to fall.
Gearing
Gearing may be used selectively in order to leverage the
Company's portfolio to enhance returns where the Board, in
conjunction with the Investment Manager, considers it appropriate
to do so. The Company's gearing stood at 7.05 per cent as at 30
June 2016.
Derivatives
Subject to the Board's prior approval, the Investment Manager is
permitted to invest in options and other derivatives for the
purposes of efficient portfolio management only.
Investment Process
The Investment Manager's investment approach is driven by stock
selection, with a focus on risk and reward. Reward is derived from
valuation and profit opportunity. In terms of risk, it is the level
of business risk rather than index weight that determines position
size in the portfolio, with portfolio risk minimised through
diversification. Considerable emphasis is placed on identifying
companies which are well managed, have sustainable franchises,
strong balance sheets and cash flow generation, and which trade on
attractive valuations relative to peers and history.
Chairman's Statement
Review of Performance
I am pleased to present your Company's Interim Report for the
six months to 30 June 2016.
In the period, the net asset value total return was 1.4%,
compared with the 4.3 % total return from the FTSE All-Share Index,
the benchmark against which the Investment Manager's performance is
measured. A more detailed explanation of the investment performance
during the period is provided in the Investment Manager's Report on
pages 7 and 8.
Share Price and Discount
During the period under review, the share price decreased by
5.7% from 166.5p to 157.0p and the discount at which the shares
trade, relative to their net asset value, was 17.7% at the end of
the period compared with 12.1% at the start of the period.
During the six months to 30 June 2016, the Company did not buy
back any shares. 153,932 shares were issued from Treasury as scrip
to satisfy the elections, by shareholders, for shares in lieu of
the dividend paid in the period. At the period end, the Company
held 2,005,094 shares in Treasury.
The Board continues to monitor the discount to net asset value
at which the shares trade. Other than in the case of very
substantial buybacks, which would be unsustainable for the Company
at its present size, it is unlikely that share buybacks in
themselves would minimise the discount. The Board however remains
hopeful that, through a combination of strong investment
performance and improving market sentiment, the share price will
once again more closely reflect the underlying net asset value. The
Board is also mindful that at the Company's 2017 Annual General
Meeting and in accordance with the Company's Articles of
Incorporation, shareholders will have an opportunity to vote on the
Company's continuation.
Gearing
As more fully described in Note 6 to the Financial Statements,
the Company has a GBP5 million revolving loan facility with Lloyds
Bank Plc. At the period end, the Company had utilised GBP3million
of this facility.
Dividend
Earnings per share for the half year amounted to 4.16p (30 June
2015: 8.21p). The Board has declared an interim dividend of 1.95p
per share (30 June 2015: 1.90p).
D J Warr
Chairman
16 August 2016
Investment Manager's Report
Performance Review
In a highly volatile period for equities, the portfolio produced
a positive return of 3.1%. Underperformance against the FTSE
All-Share (which returned 4.3%) was driven by sector total
allocation, where positive effects from our underweight in
financials were offset by detraction from our overweight in
consumer discretionary and our underweight in energy. Financials
and consumer discretionary saw sharp falls towards the end of the
period as investors worried about the prospects for both sectors
following the Brexit vote. By contrast, energy stocks rallied on
firming commodity prices. However, we feel that much of the gains
in mining companies are due to the stocks having previously been
oversold rather than any significant shift in fundamentals. For
this reason, we remain comfortable with our zero weighting in
mining stocks.
In contrast to sector allocation, our stock selection was
particularly supportive in consumer discretionary and industrials.
Strong stock-level performers included Royal Dutch Shell, which not
only benefited from the rally in the oil price but also rose
sharply after the Brexit vote, as sterling weakness should boost
the value of its overseas earnings. Consumer-goods giant Unilever
and tobacco business Imperial Brands also rallied as investors
moved towards non-cyclical stocks. With the Brexit vote heightening
concerns over the financial sector, our zero weightings in Lloyds,
Aviva and Royal Bank of Scotland added to relative returns.
Laggards included Crest Nicholson and Derwent London, as doubts
emerged over the prospects for the UK construction industry in the
wake of the Brexit vote. The uncertainty surrounding the financial
sector led to falls in the share prices of Legal & General and
St. James's Place. Amid stronger oil prices, our zero weighting in
BP detracted from relative returns.
Portfolio Activity
Key activity during the period included opening and then
building up a holding in building-materials business CRH. The
company provides good exposure to infrastructure construction, and
we believe that it should be able to produce increasing returns. We
also took advantage of share-price weakness to open a position in
broadcaster ITV. Though the company faces short-term weakness due
to worries over advertising revenues, we are encouraged by
management's confidence in the company's outlook. ITV continues to
sell a significant amount of content and has an attractive free
cashflow yield. Another addition to the portfolio was automotive
company Inchcape, whose long-term outlook is supported by its
exposure to premium brands. We feel that the Volkswagen emissions
scandal last year caused the market to be overly cautious on the
stock, especially as it is supported by a very strong free cashflow
yield. We also added to core positions such as Prudential.
Among the main sales during the period was HSBC. We exited our
position as we feel that the bank faces relative diseconomies of
scale, and we favour other companies in the sector. We also sold
our holding in Phoenix Group, as we looked to reduce our exposure
to life insurance.
Investment Manager's Report (continued)
Market Background
UK equities rose 4.3% during the six-month period under review,
but this figure masked some big swings, particularly following the
turn of the year. Despite interest-rate "lift off" in the US in
December, Bank of England Governor Mark Carney reiterated that UK
rates were likely to remain low "for some time". In January,
equities at home and overseas were rattled by low and volatile oil
prices, weakening Chinese economic growth and concerns over its
global impact, and the question of how central banks would respond
to these issues.
Markets subsequently rallied in mid-February, helped by an
improvement in commodity prices and some better economic data from
China. During the spring, the firming of commodity prices helped
stabilise UK equities, despite data showing that growth in the UK
had slowed in the first quarter.
The referendum on the UK's membership of the EU, which took
place on 23 June, was a later source of instability, putting
downward pressure on sterling. When a leave result was announced,
markets took another sharp downward lurch, before rallying at the
end of June.
Outlook
The decision to leave the EU has created significant economic
and political uncertainty. A mild UK recession is likely and indeed
the Bank of England has responded meaningfully to reduce interest
rates and expand QE. Across the globe, the authorities are using
various stimulus measures to try and deliver economic growth, and
in some cases government bond yields are now in negative territory.
Therefore, equities that can deliver reliable, well-covered
dividend streams should continue to be sought after.
We are still wary of other macroeconomic issues. At present,
China is wrestling with its own banking crisis, policy fatigue is
widespread, global growth is slowing and debt levels are
heightened. The UK's Brexit vote is also likely to cause further
political and economic challenges for Europe.
Following the leave vote, larger caps and defensive stocks have
been far more resilient in these choppy markets. While investors
may be tempted to sell down domestics and buy more dollar earners,
we would argue it is probably now too late to make this adjustment
given the scale of the outperformance of defensive large caps
versus cyclical domestic stocks since the vote.
Mergers & acquisitions will continue to be a key theme, as
overseas companies see the weaker pound as an opportunity to dust
down UK bid targets. UK investors who can maintain a longer-term
focus and withstand some turbulent times will likely be rewarded
with exciting opportunities.
Chris Kinder
Portfolio Manager
Columbia Threadneedle Investments*
16 August 2016
*Columbia Threadneedle Investments is the global brand name of
the Columbia and Threadneedle group of companies.
The Portfolio as at 30 June 2016
Market Market
Company Value Company Value
GBP'000 GBP'000
1 Royal Dutch Shell 2,076 43 Derwent London 375
2 Imperial Tobacco 1,797 44 Stagecoach 351
3 GlaxoSmithKline 1,709 45 Grainger 345
4 BT Group 1,663 46 Burberry Group 335
5 Unilever 1,617 47 PZ Cussons 260
6 AstraZeneca 1,602 48 Essentra 258
Reckitt Benckiser
7 Group 1,585 49 Wetherspoon 245
British American
8 Tobacco 1,397 50 Greene King 238
9 Prudential 1,302 51 Standard Chartered 238
10 Smith & Nephew 1,123 52 Barclays 229
11 Reed Elsevier 1,105 53 Bellway 228
12 Legal and General 1,072 54 Headlam Group 219
London Stock
13 Exchange Group 1,067 55 ARM Holdings 209
14 Diageo 1,064 56 RPC Group 204
15 Rio Tinto 1,024 57 Intermed Cap 187
Intercontinental
16 Hotels 854 58 Ultra Electronics 180
17 Wolseley 852 59 Hunting 173
18 Wood Group (John) 837 60 Aggreko 172
19 CRH 804 61 Inchcape 149
20 Johnson Matthey 798 62 IMI 124
21 GKN 797 63 Melrose Industries 95
22 Compass Group 771 64 De La Rue 73
23 Sage Group 753 65 Rolls Royce RTS 6
24 ITV 739
25 BAE Systems 739
Daily Mail &
26 General 645
--------
27 Berendsen 634 Total Valuation 42,955
========
28 St James's Place 625
29 Rentokil 624
30 Merlin Ent. 606
31 Carnival 606
32 Royal Mail 577
33 Crest Nicholson 549
RSA Insurance
34 Group 531
35 Pearson 499
36 Rolls Royce Holdings 481
37 Smiths Group 463
38 Booker Group 447
39 Smith (DS) 434
40 FDM Group 428
41 Schroders 390
42 Breedon Aggregates 376
Industry Classification Benchmark ("ICB") Sector Distribution at
30 June 2016
Total Total
30 June 30 June
2016 2015
Classification % %
----------------------------------- -------- --------
Oil and Gas
Oil and gas producers 4.9 5.6
Oil Equipment, Services
and Distribution 2.4 2.3
7.3 7.9
----------------------------------- -------- --------
Industrials
Construction and materials 2.7 0.7
Aerospace and defence 3.3 3.8
General industrials 2.6 3.8
Industrial engineering 0.5 1.9
Support services 6.2 6.8
Industrial transportation 1.4 1.4
16.7 18.4
----------------------------------- -------- --------
Basic Materials
Chemicals 1.9 1.9
Industrial metals and
mining 2.4 2.8
------------------------------------ -------- --------
4.3 4.7
----------------------------------- -------- --------
Consumer goods
Automobiles and parts 1.9 2.0
Beverages 2.5 2.3
Household goods and home
construction 6.1 6.1
Tobacco 7.5 5.6
Personal goods 5.2 4.5
23.2 20.5
----------------------------------- -------- --------
Consumer Services
General retailers 0.4 -
Travel and leisure 8.6 8.2
Food and drug retailers 1.1 2.0
Media 7.0 5.5
------------------------------------ -------- --------
17.1 15.7
----------------------------------- -------- --------
Health Care
Pharmaceuticals and biotechnology 7.8 6.9
Health care equipment
and Services 2.6 2.0
10.4 8.9
----------------------------------- -------- --------
Telecommunications
Fixed line telecommunications 3.9 4.4
3.9 4.4
----------------------------------- -------- --------
Technology
Software and computer
services 2.8 3.6
Technology hardware and
equipment 0.5 -
----------------------------------- -------- --------
3.3 3.6
----------------------------------- -------- --------
Financials
Banks 1.1 4.4
Financial services 3.9 5.1
Real estate 1.7 2.1
Non-life insurance 1.3 2.0
Life assurance 7.1 4.2
15.1 17.8
----------------------------------- -------- --------
Net current (liabilities)/
assets (1.3) (1.9)
------------------------------------ -------- --------
Net assets 100.0 100.0
==================================== ======== ========
Note: The distribution of investments is based
on the valuations at 30 June 2016 and at 30
June 2015. All of the investments are listed
or quoted on the London Stock Exchange.
Interim Management Report
To the best of the knowledge of the directors:
-- the condensed set of financial statements has been prepared
in accordance with International Accounting Standard 34 'Interim
Financial Reporting' and gives a true and fair view of the assets,
liabilities, financial position and profit or loss of the
Company;
-- the Chairman's Statement, Investment Manager's Report and
Notes to the Financial Statements are incorporated herein by
reference and include a fair review of the development and
performance of the Company and a description of the principal risks
and uncertainties that it faces for the next six months, as
required by DTR 4.2.7R of the FCA's Disclosure and Transparency
Rules; and
-- There were no related party transactions in the period, nor
any changes in related party transactions described in the last
annual report, that could have a material effect on the financial
position of the Company in the period, other than as disclosed in
the financial statements. Details of related parties are set out in
note 9 to the financial statements, all as required by DTR 4.2.8R
of the FCA's Disclosure and Transparency Rules.
By order of the Board
D J Warr
16 August 2016
Condensed Statement of Comprehensive Income
for the six months ended 30 June 2016 (unaudited)
Six months ended 30 Six months ended
June 2016 30 June 2015
Notes Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income
Dividend and other
revenue 3 1,072 - 1,072 834 - 834
Net gains on financial
assets
at fair value through
profit or loss 5 - 237 237 - 1,436 1,436
Net foreign exchange
gains - - - - 1 1
------- ------- ------- ------- ------- -------
1,072 237 1,309 834 1,437 2,271
------- ------- ------- ------- ------- -------
Expenses
Investment management
fees 9 26 76 102 27 82 109
Performance
fee 9 6 19 25 9 28 37
Administration
fees 9 54 - 54 53 - 53
Registrar's
fees 15 - 15 8 - 8
Auditor's
fees 12 - 12 14 - 14
Directors' fees
and expenses 9 57 - 57 60 - 60
Other expenses 96 - 96 132 - 132
------- ------- ------- ------- ------- -------
Total operating
expenses before
finance costs 266 95 361 303 110 413
------- ------- ------- ------- ------- -------
Operating profit
before finance
costs 806 142 948 531 1,327 1,858
Finance costs
Interest and
other finance
cost payable 6 7 22 29 8 25 33
------- ------- ------- ------- ------- -------
Profit for the
period 799 120 919 523 1,302 1,825
Basic and diluted
earnings per ordinary
share 4 3.62p 0.54p 4.16p 2.35p 5.86p 8.21p
------- ------- ------- ------- ------- -------
The total column of this statement is the condensed statement of
comprehensive income of the Company, with the revenue and capital
columns representing voluntary 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 17 to 22 are an integral part of these
condensed financial statements.
Condensed Statement of Comprehensive Income (continued)
for the six months ended 30 June 2016 (unaudited)
Year ended 31 December 2015
Notes Revenue Capital Total
GBP'000 GBP'000 GBP'000
Income
Dividend revenue 3 1,507 - 1,507
Net gains on financial
assets at fair value
through profit or
loss 5 - 1,698 1,698
Net foreign exchange
gains - 1 1
---------- ---------- ---------
1,507 1,699 3,206
---------- ---------- ---------
Expenses
Investment management
fees 9 53 159 212
Performance fees 9 26 78 104
Administration
fees 9 108 - 108
Registrar's
fees 16 - 16
Auditor's fees 26 - 26
Directors' fees and
expenses 9 115 - 115
Other expenses 252 - 252
---------- ---------- ---------
Total operating expenses
before finance costs 596 237 833
---------- ---------- ---------
Operating profit
before finance costs 911 1,462 2,373
Finance costs
Interest and other
finance cost payable 6 16 48 64
---------- ---------- ---------
Profit for the year 895 1,414 2,309
========== ========== =========
Basic and diluted
earnings per ordinary
share 4 4.05p 6.40p 10.45p
---------- ---------- ---------
The total column of this statement is the condensed statement of
comprehensive income of the Company, with the revenue and capital
columns representing voluntary 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 17 to 22 are an integral part of these
condensed financial statements.
Condensed Statement of Financial Position
as at 30 June 2016 (unaudited)
30 June 30 June 31 December
Notes 2016 2015 2015
GBP'000 GBP'000 GBP'000
Assets
Cash and cash
equivalents 2,744 2,366 2,266
Other receivables
and accrued income 221 84 94
Financial assets
at fair value through
profit or loss 5 42,955 42,554 42,827
----------- ----------- ------------
Total assets 45,920 45,004 45,187
----------- ----------- ------------
Liabilities
Due to brokers 205 78 -
Other payables
and accrued
expenses 173 163 247
Borrowings 6 3,000 3,000 3,000
Total liabilities 3,378 3,241 3,247
----------- ----------- ------------
Net assets attributable
to shareholders 42,542 41,763 41,940
----------- ----------- ------------
Represented
by
Share capital 7 2,430 2,430 2,430
Treasury share
reserve 7 (3,631) (3,991) (3,879)
Reserves 43,743 43,324 43,389
----------- ----------- ------------
Net assets attributable
to shareholders 42,542 41,763 41,940
----------- ----------- ------------
Number of ordinary
shares in issue (net
of treasury shares) 7 22,296,998 22,079,681 22,143,066
Net asset value per
share 8 190.80 189.15 189.40p
----------- ----------- ------------
These financial statements were approved by the Board of
directors on 16 August 2016 and signed on behalf of the Board
by:
D J Warr
The Notes on pages 17 to 22 are an integral part of these
condensed financial statements.
Condensed Statement of Net Assets Attributable to
Shareholders
for the six months ended 30 June 2016 (unaudited)
Equity Treasury Capital Capital
share share Share redemption Capital reserve- Revenue
capital reserve premium reserve reserve-realised unrealised reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2016 2,430 (3,879) 11,307 4,308 17,511 5,472 4,791 41,940
Shares
repurchased
during
the period - - - - - - - -
Dividends - - - - - - (317) (317)
Shares
issued
for scrip
dividends - 248 - - (248) - - -
Net profit - - - - (378) 498 799 919
--------- --------- --------- ------------ ------------------ ------------ --------- --------
At 30
June 2016 2,430 (3,631) 11,307 4,308 16,885 5,970 5,273 42,542
--------- --------- --------- ------------ ------------------ ------------ --------- --------
There were no other recognised income and expenses for the six
months ended 30 June 2016
For the six months ended 30 June 2015 (unaudited)
Equity Treasury Capital Capital
share share Share redemption Capital reserve- Revenue
capital reserve premium reserve reserve-realised unrealised reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2015 2,192 (3,724) 11,307 4,308 16,714 5,296 4,425 40,756
Shares
repurchased
during
the period - (516) - - - - - (516)
Dividends - - - - - - (302) (295)
Shares
issued
for scrip
dividends - 249 - - (249) - - -
Net profit - - - - 717 585 523 1,825
At 30
June 2015 2,430 (3,991) 11,307 4,308 17,182 5,881 4,646 41,763
--------- --------- --------- ------------ ------------------ ------------ --------- --------
There were no other recognised income and expenses for the six
months ended 30 June 2015
The Notes on pages 17 to 22 are an integral part of these
condensed financial statements.
Condensed Statement of Cash Flows
for the six months ended 30 June 2016 (unaudited)
Six months ended Year ended
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Payment on purchase of
financial investments (4,169) (2,404) (5,232)
Proceeds from sale of
financial investments 4,369 5,313 8,053
Dividends received from
investments 1,055 842 1,507
Investment management
fee paid (104) (104) (209)
Other operating expenses (325) (366) (615)
Net cash inflow from
operating activities 826 3,281 3,504
--------- -------- ------------
Cash flows from financing
activities
Interest paid (31) (68) (84)
Share repurchase - (516) (596)
Share subscriptions - - -
Equity dividends paid (317) (302) (529)
Decrease in long term
loan - (1,000) (1,000)
Net cash outflow from
financing activities (348) (1,886) (2,209)
--------- -------- ------------
Net increase in cash and
cash equivalents 478 1,395 1,295
Effect of exchange rate
changes on cash and cash
equivalents - 1 1
Cash and cash equivalents
at the beginning of the
period/year 2,266 970 970
Cash and cash equivalents
at the end of the period/year 2,744 2,366 2,266
--------- -------- ------------
The Notes on pages 17 to 22 are an integral part of these
condensed financial statements.
Notes to the Condensed Financial Statements (unaudited)
1. General information
The Company is an authorised closed-ended investment company
incorporated under The Companies (Guernsey) Law, 2008, as amended,
with its registered office situated at Ground Floor, Dorey Court,
Admiral Park, St Peter Port, Guernsey GY1 2HT. The Company's shares
have been admitted to the Official List of the UK Listing Authority
with a premium listing and to trading on the London Stock
Exchange's Main Market for listed securities.
The Company has no employees.
The information presented for the year ended 31 December 2015
does not constitute the statutory financial statements of the
Company. The 31 December 2015 annual financial report was made
public on 18 April 2016. The auditor's report on those financial
statements was unqualified and did not contain a statement under
Section 263(2) of The Companies (Guernsey) Law, 2008, as amended. A
copy of the 2015 annual financial report can be found on
www.columbiathreadneedle.co.uk.
2. Accounting Policies
a. Basis of presentation
The financial statements of the Company are prepared in
accordance with International Financial Reporting Standards
("IFRS"), as adopted by the European Union.
The condensed set of financial statements included in this
half-yearly report for the six months ended 30 June 2016 has been
prepared in accordance with IAS 34 'Interim Financial Reporting' as
adopted by the European Union.
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 2015, as described in those financial
statements.
c. Going Concern
Having reassessed the principal risks for the next twelve
months, the directors considered it appropriate to adopt the going
concern basis of accounting in preparing the interim financial
information.
The directors have arrived at this opinion by considering, inter
alia, the following factors:
-- the Company has sufficient liquidity to meet all on-going expenses;
-- 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;
-- as at 30 June 2016, the Company had GBP3 million of external
borrowings, but was under no obligation to repay any borrowing
facilities. As at the date of approval of the annual financial
report the Company had in place a two year GBP5 million loan
facility with Lloyds Bank Plc expiring on 26 March 2017, of which
GBP3 million had been utilised; and
-- having reassessed the principal risks as described in the
annual financial report for the year ended 31 December 2015, the
directors consider that these risks have not substantially changed
in respect of the current financial year.
Notes to the Condensed Financial Statements (unaudited)
(continued)
d. Segment Reporting
The Board of directors is of the opinion that the Company is
organised in one main operating segment, namely the management of
the Company's investments in order to achieve the Company's
investment objectives as described in note 1 to the financial
statements.
3. Dividend and other revenue
Six months ended Year ended
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Dividend revenue
from investments
designated at fair
value through profit
or loss:
Dividends 1,072 833 1,507
Other Income - 1 -
--------- -------- ------------
Total income 1,072 834 1,507
--------- -------- ------------
4. Basic return per ordinary share
Six months
Six months ended ended Year ended
31 December
30 June 2016 30 June 2015 2015
Revenue Capital Total Revenue Capital Total Revenue Capital Total
pence pence pence pence pence Pence pence pence pence
Return 3.62 0.54 4.16 2.35 5.86 8.21 4.05 6.40 10.45
======== ======== ====== ======== ======== ====== ======== ======== ======
Revenue return per ordinary share is based on the net revenue on
ordinary activities of GBP799,000 (six months ended 30 June 2015:
GBP523,000. Year ended 31 December 2015: GBP895,000) and on
22,062,441 ordinary shares, being the weighted average number of
ordinary shares in issue during the period, net of treasury shares
(six months ended 30 June 2015: 22,227,231. Year ended 31 December
2015: 22,097,140).
Capital return per ordinary share is based on a net capital
profit for the financial period of GBP120,000 (Six months ended 30
June 2015: capital profit GBP1,302,000. Year ended 31 December
2015: capital profit GBP1,414,000) and on the weighted average
number of ordinary shares in issue as stated above.
Earnings per ordinary share are based on a total profit for the
financial period of GBP919,000 (six months ended 30 June 2015:
profit GBP1,825,000. Year ended 31 December 2015: profit
GBP2,309,000) and on the weighted average number of ordinary shares
in issue as stated above.
Notes to the Condensed Financial Statements (unaudited)
(continued)
5. Financial assets at fair value through profit or loss
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2016 2015 2015
% of % of
Fair net Fair net Fair % of
Value assets Value assets Value net assets
GBP'000 GBP'000 GBP'000
Financial assets
at fair value through
profit or loss
* Listed or quoted equity securities 42,955 100.97 42,554 101.90 42,827 102.11
42,955 100.97 42,554 101,90 42,827 102.11
-------- -------- -------- -------- -------- ------------
Six months ended Year ended
30 30
June June 31 December
2016 2015 2015
Net gains on financial GBP'000 GBP'000 GBP'000
assets at fair value
through profit or loss
Realised (losses)/gains (261) 855 1,552
Unrealised gains 498 581 176
-------- -------- ----------------------
237 1,436 1,698
-------- -------- ----------------------
Fair value measurements
The Company adopted the amendment to IFRS 13, effective 1
January 2014. IFRS 13 establishes a fair value hierarchy that
prioritises the inputs to valuation techniques used to measure fair
value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities
(Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). The three levels of the fair value
hierarchy under IFRS 13 are as follows:
Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities;
Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices); and
Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are
not based on observable market data (that is, unobservable
inputs).
The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on
the basis of the lowest level input that is significant to the fair
value measurement in its entirety. For this purpose, the
significance of an input is assessed against the fair value
measurement in its entirety. If a fair value measurement uses
observable inputs that require significant adjustment based on
unobservable inputs, that measurement is a level 3 measurement.
Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgment, considering factors
specific to the asset or liability.
Notes to the Condensed Financial Statements (unaudited)
(continued)
5. Financial assets at fair value through profit or loss (continued)
The determination of what constitutes 'observable' requires
significant judgment by the Company. The Company considers
observable data to be that market data that is readily available,
regularly distributed or updated, reliable and verifiable, not
proprietary, and provided by independent sources that are actively
involved in the relevant market.
The following tables present the Company's financial assets and
liabilities by level within the valuation hierarchy:
Percentage Percentage Percentage
30 June of net 30 of net 31 December of net
2016 assets June assets 2015 assets
2015
Level 1 fair GBP'000 % GBP'000 % GBP'000 %
value assets
Investments
valued at
fair value 42,955 100.97 42,554 101.90 42,827 102.11
Level 2 fair
value assets
Investments
valued at
fair value - - - - - -
Total fair
value financial
assets 42,955 100.97 42,554 101.90 42,827 102.11
========== =========== ======== =========== ============== ===========
6. Loan facility
On 26 March 2014 the Company entered into a one year GBP5
million revolving loan facility with Lloyds Bank Plc (the "Bank"),
secured on the assets of the Company, for investment purposes. On
19 March 2015 the loan facility was extended until 26 March 2017.
As at 30 June 2016, GBP3,000,000 of the loan facility was being
utilised. Interest is payable at a rate of Sterling LIBOR plus
1.1%, payable quarterly in arrears, and the borrowing is held at
amortised cost. Loan interest of GBP25,800 was paid during the
period. A fee of 0.39% per annum is payable on the undrawn amount
of this facility, resulting in GBP1,040 being paid for the period
under review. GBP1,900 of the GBP10,000 loan arrangement fee was
amortised over the period and also included in finance costs. In
addition, the Company is required to comply with the following
covenants imposed by the Bank:
-- the Company is required to ensure that the borrowing does not
at any time exceed 20% of the Adjusted Gross Asset Value*;
-- the Company is required to maintain the Net Worth (meaning
net asset value adjusted for such items as intangible assets and
unrealised gains or losses accrued since the date of the audited
annual financial reports) at not less that GBP20,000,000;
-- the Company is required to ensure that the investment
portfolio includes holdings in not less than 25 separate
businesses; and
-- the Company is required not to change its investment policy
without the written permission of the Bank.
* Adjusted Gross Asset Value means the market value of Total
Gross Assets adjusted by deducting:
a) The value of unlisted investments;
b) The amount by which any single investment exceeds 7.5% of the
investment portfolio;
c) The amount by which the investment in a single ICB Investment
Sector exceeds 20% of the investment portfolio; and
d) The amount by which the largest 10 investments exceeds 50% of
the investment portfolio.
Notes to the Condensed Financial Statements (unaudited)
(continued)
7. Share capital
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Authorised
Unlimited number of shares - - -
-------- -------- --------------
The holders of the ordinary shares are entitled to receive
notice of and to attend and vote at General Meetings of the
Company. At such meetings on a show of hands each Shareholder shall
have one vote and on a poll each Shareholder shall have one vote
for each share held by them. The Company is not entitled to any
votes in respect of any ordinary shares held in treasury.
On a winding-up, any surplus assets remaining after the payment
of all creditors shall be divided amongst the shareholders in the
same proportion as the capital attributable to them on the
winding-up date.
30
30 June June 31 December
2016 2015 2015
Issued, called up and
fully paid: GBP'000 GBP'000 GBP'000
24,302,092 (2015: 24,302,092)
ordinary shares of 10p each
including 2,005,094
treasury shares (2015:
2,159,026) 2,430 2,430 2,430
================= =========== ============= =========
30 June 2016
Treasury Shares in Share
Share reserve issue Premium
Shares Cost Shares Cost Cost
Nominal GBP'000 Nominal GBP'000 GBP'000
Balance at 1
January
2016 2,159,026 3,879 24,302,092 2,430 11,307
Shares purchased and -
held in Treasury - - - -
Shares sold from Treasury
in lieu of dividends (153,932) (248) - - -
Balance at 30 June
2016 2,005,094 3,631 24,302,092 2,430 11,307
----------------- ----------------- ----------- ------------- ---------
31 December 2015
Treasury Shares in Share
Share reserve issue Premium
Shares Cost Shares Cost Cost
Nominal GBP'000 Nominal GBP'000 GBP'000
Balance at 1
January
2015 2,070,920 3,724 24,302,092 2,430 11,307
Shares purchased and
held in Treasury 343,000 596 - - -
Shares sold from Treasury
in lieu of dividends (254,894) (441) - - -
Balance at 31 December
2015 2,159,026 3,879 24,302,092 2,430 11,307
----------------- ----------------- ----------- ------------- ---------
Notes to the Condensed Financial Statements (unaudited)
(continued)
7. Share capital (continued)
On 13 May 2016, 153,932 shares with a value of GBP247,943 were
issued to shareholders who elected to receive them in lieu of a
first interim cash dividend for 2016. Ordinary shares of 10p each,
fully paid were issued to shareholders from the Treasury Share
reserve held by the Company.
8. Net asset value per share
The net asset value per ordinary share is based on net assets
attributable to the ordinary shareholders of GBP42,542,000 (six
months ended 30 June 2015: GBP41,763,000, year ended 31 December
2015: GBP41,940,000) and on 22,296,998 (six months ended 30 June
2015: 22,079,681, year ended 31 December 2015: 22,143,066) ordinary
shares, being the number of ordinary shares in issue at the end of
the period, net of shares held in treasury.
9. Related party transactions
The members of the Board of directors are listed on page 4 of
the half-yearly report. Fees earned and allowable expenses claimed
by the directors of the Company in the course of their duties are
disclosed on page 12.
Amerprise Financial Inc., the parent of the Investment Manager,
controlled the voting rights attached to 22.02% of the Company's
shares as at 30 June 2016. The Investment Manager exercises
discretion over these shares on behalf of its clients.
The Investment Manager earned investment management fees of
GBP101,800 (six months ended 30 June 2015: GBP108,800, year ended
31 December 2015: GBP212,000) during the period of which GBP54,200
(six months ended 30 June 2015: GBP54,200, year ended 31 December
2015: GBP52,000) was outstanding at the reporting date. In addition
GBP25,600 performance fees were accrued for the period (six months
ended 30 June 2015: GBP37,400, year ended 31 December 2015:
GBP104,000).
The Company has appointed JTC Fund Solutions (Guernsey) Limited
to provide secretarial, administrative and accounting services.
Secretarial and administration fees (including the accounting fee)
for the period ended 30 June 2016 totalled GBP54,000 (six months
ended 30 June 2015: GBP53,300, year ended 31 December 2015:
GBP107,500) of which GBP54,000 (six months ended 30 June 2015:
GBP53,300, year ended 31 December 2015: GBP53,800) was outstanding
at the period end.
10. Events after the reporting date
There have been no significant events after the reporting date
which in the opinion of the Board of directors requires disclosure
in the financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFMFLMFMSESA
(END) Dow Jones Newswires
August 16, 2016 10:15 ET (14:15 GMT)
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