TIDMPNL
RNS Number : 4248U
Personal Assets Trust PLC
25 November 2019
To: RNS
From: Personal Assets Trust plc
LEI: 213800Z7ABM7RLQ41516
Date: 25 November 2019
Interim Report for the Six months ended 31 October 2019
(Unaudited)
Financial Summary
-- Personal Assets Trust ("PAT") is an independent investment
trust run expressly for private investors.
-- The Company's investment policy is to protect and increase
(in that order) the value of shareholders' funds per share
over the long term.
-- Over the six months to 31 October 2019 PAT's net asset value
per share ("NAV") rose by 2.5% to GBP415.16. PAT's share
price rose by GBP11.50 to GBP419.50 over the same period,
being a premium of 1.0% to the Company's NAV at that date.
-- During the period, PAT continued to maintain a high level
of liquidity.
% as at % as at
31 October 30 April
2019 2019
US TIPS 32.1 27.8
US Treasuries 3.4 3.8
UK Index-Linked Gilts 3.0 3.3
UK T-Bills 14.6 18.7
Gold Bullion 9.0 8.1
UK cash 3.2 2.4
Net current assets / (liabilities) 2.2 (0.1)
----------------------------------------- ----------------------------------- -----------------------------
Total 67.5 64.0
-- Over the six months PAT's shares continued to trade close
to NAV. We issued 263,388 new Ordinary shares (adding GBP111.0
million of new capital) at a small premium.
-- Dividends are paid in July, October, January and April of
each year. The first interim dividend of GBP1.40 per Ordinary
share was paid to shareholders on 12 July 2019 and the second
interim dividend of GBP1.40 was paid on 11 October 2019.
A third interim dividend of GBP1.40 per Ordinary share will
be paid to shareholders on 10 January 2020 and a fourth
interim dividend of GBP1.40 per Ordinary share is expected
to be paid in April 2020, making a total for the year of
GBP5.60 per Ordinary share.
Key Features
As at As at
31 October 30 April
2019 2019
Market Capitalisation GBP1,114.1m GBP976.0m
Shareholders' Funds GBP1,102.5m GBP968.6m
Shares Outstanding 2,655,663 2,392,275
Liquidity (see fourth bullet
point above) 67.5% 64.0%
------------------------------- ------------ ------------
Share Price GBP419.50 GBP408.00
NAV per Share GBP415.16 GBP404.88
FTSE All-Share Index 3,993.46 4,067.98
------------------------------- ------------ ------------
Premium to NAV 1.0% 0.8%
------------------------------- ------------ ------------
Earnings per Share GBP3.63 GBP4.97 (1)
Dividend per Share GBP2.80 GBP5.60 (1)
(1) Full Year.
Important Developments During the Period
As noted in the 2019 Annual Report it is expected that Robin
Angus, the Company's Executive Director, will retire following the
Annual General Meeting in July 2020. The Board has therefore
reached agreement to appoint Troy Asset Management ("Troy") as the
Company's Investment Manager with effect from 1 May 2020. Troy has
served as Investment Adviser to the Company since 2009.
The Board will continue to work closely with Troy, as it has
done in the past, to achieve long term success for the Company.
There will be no changes to the basis of fee payable to Troy or the
notice period under the new arrangement and the following matters
will continue to be expressly reserved to the Board: (a) the
introduction
of gearing within the portfolio and the gearing levels
thereafter; (b) matters relating to the buyback and issuance of the
Company's shares; (c) matters relating to shareholder
communication; (d) investment in any new asset class; and (e) such
other matters as the Board may reasonably intimate from time to
time.
In addition, in August 2019 the Company acquired a freehold
office at 28 Walker Street in Edinburgh, having rented its current
office since 1990. The property establishes a permanent presence
for the Company and its subsidiary, PATAC, which employs 12 staff
and provides secretarial and administrative, alternative investment
fund manager ("AIFM") and discount management services to the
Company and six other investment trust clients.
Directors' Responsibility Statement in Respect of the Interim
Report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting' as adopted
by the EU;
-- the Important Developments During the Period and the
Investment Adviser's Report include a fair review of the
information required by the Disclosure Guidance and Transparency
Rules ("DTR") 4.2.7R, being an indication of important events that
have occurred during the first six months of the financial year and
their impact on the condensed set of financial statements;
-- the Statement of Principal Risks and Uncertainties is a fair
review of the information required by DTR 4.2.7R; and
-- the condensed financial statements include a fair review of
the information required by DTR 4.2.8R, being related party
transactions that have taken place in the first six months of the
current financial year and that have materially affected the
financial position or performance of the Company during the period,
and any changes in the related party transactions described in the
last Annual Report that could do so.
On behalf of the Board,
Hamish Buchan, Chairman
22 November 2019
For further information, contact:
Sebastian Lyon
Investment Adviser
Tel: 0207 499 4030
Robin Angus
Executive Director
Tel: 0131 538 6601
Steven Davidson
Company Secretary
Tel: 0131 538 6603
Investment Adviser's Report
Over the half year to 31 October 2019 the net asset value per
share ("NAV") of Personal Assets Trust ("PAT") rose by 2.5% while
the FTSE All-Share Index ("FTSE") fell by 1.8%. After a decade of
low interest rates, investors must weave a treacherous path through
high valuations, low growth and heightened political risk. We
continue to tread carefully. Our exposure to risk assets is modest
with only a third of the portfolio committed to equities. Our
preference remains for sustainable and robust business franchises
which are moderately valued but offer growth in a low growth world.
The dangers of too much capital chasing too few opportunities is
there for all to see, be it the egregious valuations of IPOs of
loss making business models like Uber and Lyft or the recent
material write down of WeWork's valuation. We choose to invest in
financially productive companies that pay us to invest in them.
The performance of PAT and the stock market over the past six
months indicate that this has been a benign period. Despite the
modest fall in the FTSE, the environment has been relatively
supportive amid falling bond yields and a resilient US stock
market. Performance was driven by core holdings in Microsoft,
Coca-Cola, Nestlé, Procter & Gamble and Franco-Nevada. The last
of these was buoyed by the rising price of gold bullion, up 18%
over the period in sterling terms. Our small holding in A.G. Barr
was the biggest detractor following the announcement of weaker
trading. Sterling's rally from its early September lows has been a
headwind, although most of our US dollar exposure is hedged back
into sterling.
Portfolio turnover was modest. We chose to sell our small
holding in GlaxoSmithKline into recent strength and reduce the
holding in Sage Group following a very strong recovery this year.
We added two new holdings in Medtronic and Alphabet (parent company
of Google). We have had a longstanding preference for medical
device companies over pharmaceuticals for their consistency of
returns and lack of exposure to patent expiries. Demand for medical
interventions such as stents and heart valves has grown steadily as
populations in developed countries get older and emerging markets
modernise healthcare provision. Shares in Medtronic have not taken
part in the re-rating enjoyed by high quality businesses in the
past five years, partly because of over-optimistic management
guidance. It is evident that management have learned from past
mistakes and guidance is now realistic. The company today is in
good shape with a strong pipeline of products. Sales from robotics
and data analytics are just beginning to be realised.
Alphabet had de-rated to just over 10x cash flow in June when we
bought the shares. Revenues will be cyclical but the business has
the capacity to grow at attractive rates throughout the cycle. The
company has eight platforms with over 1bn users, most of which are
far from being fully 'monetised'. This testifies to the company's
long-term approach and its focus on its users rather than
short-term financial targets. Over $100bn in cash in the balance
sheet offers options other companies lack. Management have been
vocal in their admiration for Berkshire Hathaway (a longstanding
PAT holding); valuation sensitive buybacks seem the most likely
destination for much of the cash and a $25bn repurchase is
underway.
Since the end of August there has been a resurgence in
structurally challenged or cyclical 'value' stocks, including those
confronted by ongoing technological change and the erosion of
pricing power. An upturn in the global economy could support a more
sustained period of positive performance for such businesses, but
as yet we see few signs of it. We have experienced these bouts of
stock market rotation before, most recently in late 2016 and early
2017. Such snap-backs usually throw up opportunities for us in our
favoured sectors and enable us to increase PAT's equity
allocation.
As regards specific political events such as Brexit, the UK
general election or the US 2020 presidential election, short-term
tactical decision-making is likely to fail. We try to take account
of, and protect against, substantive risks to the portfolio. This
requires an appreciation and understanding of multifarious
political outcomes. However, we spend a much greater part of our
time identifying and analysing businesses which should perform well
regardless of the wider political and macroeconomic backdrop.
Sebastian Lyon, Investment Adviser
On behalf of the Board,
Robin Angus, Executive Director
22 November 2019
Portfolio as at 31 October 2019
S/holders' Valuation Bought/(sold) Gain/ (loss)
Funds in period in period
Security Country Equity Sector % GBP'000 GBP'000 GBP'000
Equities
Microsoft USA Technology 4.3 47,095 - 4,507
Nestlé Switzerland Food Producer 3.0 32,760 - 3,455
Unilever UK Food Producer 2.8 30,846 1,970 (341)
Coca-Cola USA Beverages 2.8 30,339 (3,910) 3,772
British American
Tobacco UK Tobacco 2.6 29,214 4,424 (3,048)
Philip Morris USA Tobacco 2.3 25,175 - (1,389)
Berkshire Hathaway USA Insurance 1.9 20,931 - (274)
Financial
American Express USA Services 1.8 19,941 - 155
Household
Procter & Gamble USA Products 1.8 19,860 (2,656) 3,404
Alphabet USA Technology 1.6 17,326 15,481 1,845
Franco-Nevada Canada Mining 1.2 13,374 - 3,553
Diageo UK Beverages 1.2 12,943 - (280)
Medtronic USA Healthcare 1.0 11,865 9,544 2,321
Colgate Palmolive USA Personal Products 1.0 11,128 (4,328) (348)
Imperial Oil Canada Oil & Gas 0.9 10,499 (1,844) (1,937)
Sage Group UK Technology 0.9 10,365 (10,235) 1,030
A.G. Barr UK Beverages 0.7 7,392 (1,363) (4,295)
Société
BIC France Consumer Goods 0.5 5,366 - (1,249)
GlaxoSmithKline UK Pharmaceuticals - - (9,585) (319)
Total Equities 32.3 356,419 (2,502) 10,562
-------------------------------------------------------- ----------- ---------- -------------- -------------
US TIPS USA 32.1 354,549 85,074 60
US Treasuries USA 3.4 37,557 18 378
UK Index-Linked
Gilts UK 3.0 32,748 671 (19)
UK T-Bills UK 14.6 160,422 (20,174) -
Property UK 0.2 1,628 1,628 -
Gold Bullion 9.0 99,380 6,033 14,515
Total Investments 94.6 1,042,703 70,748 25,496
----------------------------------- ------------------- ----------- ---------- -------------- -------------
UK cash 3.2 35,383 n/a n/a
Overseas cash 0.0 137 n/a n/a
Net current assets 2.2 24,315 n/a n/a
----------------------------------- ------------------- ----------- ---------- -------------- -------------
TOTAL PORTFOLIO 100.0 1,102,538 n/a n/a
----------------------------------- ------------------- ----------- ---------- -------------- -------------
Geographic Analysis of Investments and Currency Exposure As At
31 October 2019
UK USA Canada France Switzerland Total
% % % % % %
Equities 8 19 2 1 3 33
Inflation-Linked
Securities 3 32 - - - 35
T-Bills 15 - - - - 15
Treasuries - 3 - - - 3
Gold Bullion - 9 - - - 9
Cash 3 - - - - 3
Property 0 - - - - 0
Net current assets 2 - - - - 2
----------------------- --- ---- ------- ------- ------------ ------
Total 31 63 2 1 3 100
----------------------- --- ---- ------- ------- ------------ ------
Net currency exposure
% 76 18 2 1 3 100
Condensed Group Income Statement
For the six months ended 31 October 2019
(Unaudited)
Six months ended
31 October 2019
Revenue Capital
Return Return Total
GBP'000 GBP'000 GBP'000
Investment income 12,087 - 12,087
Other operating income 847 - 847
Gains on investments held at fair
value through profit or loss - 25,496 25,496
Foreign exchange losses - (3,537) (3,537)
Total income 12,934 21,959 34,893
Expenses (2,418) (2,176) (4,594)
Return before taxation 10,516 19,783 30,299
Taxation (1,341) 1,025 (316)
Return for the period 9,175 20,808 29,983
Return per share GBP3.63 GBP8.25 GBP11.88
The "Return for the Period" is also the "Total Comprehensive
Income for the Period", as defined in IAS1 (revised), and no
separate Statement of Comprehensive Income has been presented.
The "Total" column of this statement represents the Group's
Income Statement, prepared in accordance with International
Financial Reporting Standards ("IFRSs").
The Revenue Return and Capital Return columns are supplementary
to this and are prepared under guidance published by the
Association of Investment Companies.
All items in the above statement derive from continuing
operations.
Condensed Group Income Statement
For the six months ended 31 October 2018
(Unaudited)
Six months ended
31 October 2018
Revenue Capital
Return Return Total
GBP'000 GBP'000 GBP'000
Investment income 9,026 - 9,026
Other operating income 527 - 527
Gains on investments held at fair
value through profit or loss - 42,166 42,166
Foreign exchange losses - (25,110) (25,110)
Total income 9,553 17,056 26,609
Expenses (2,187) (1,869) (4,056)
Return before taxation 7,366 15,187 22,553
Taxation (873) 557 (316)
Return for the period 6,493 15,744 22,237
Return per share GBP2.88 GBP6.98 GBP9.86
Condensed Group Income Statement
For the year ended 30 April 2019
(Audited)
Year ended
30 April 2019
Revenue Capital
Return Return Total
GBP'000 GBP'000 GBP'000
Investment income 16,180 - 16,180
Other operating income 1,112 - 1,112
Gains on investments held at
fair value through profit or
loss - 63,327 63,327
Foreign exchange losses - (20,495) (20,495)
Total income 17,292 42,832 60,124
Expenses (4,477) (3,815) (8,292)
Return before taxation 12,815 39,017 51,832
Taxation (1,400) 538 (862)
Return for the period 11,415 39,555 50,970
Return per share GBP4.97 GBP17.20 GBP22.17
Condensed Group Statement of Financial Position
As at 31 October 2019
(Unaudited) (Unaudited) (Audited)
31 October 31 October 30 April
2019 2018 2019
GBP'000 GBP'000 GBP'000
Non-current assets
Investments held at fair value
through profit or loss 1,042,703 883,355 946,459
Net current assets 59,835 22,874 22,120
Net assets 1,102,538 906,229 968,579
Total equity 1,102,538 906,229 968,579
Net asset value per Ordinary GBP415.16 GBP395.50 GBP404.88
share
Condensed Group Statement of Changes in Equity
For the six months ended 31 October 2019
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2019 2018 2019
GBP'000 GBP'000 GBP'000
Opening equity shareholders'
funds 968,579 858,893 858,893
Return for the period 29,983 22,237 50,970
Ordinary dividends paid (7,018) (6,300) (12,850)
Issue of Ordinary shares 110,994 31,399 71,566
Closing equity shareholders'
funds 1,102,538 906,229 968,579
Condensed Group Cash Flow Statement
For the six months ended 31 October 2019
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2019 2018 2019
GBP'000 GBP'000 GBP'000
Net cash inflow from operating
activities 2,635 1,953 4,991
Net cash outflow from investing
activities (94,851) (32,766) (80,632)
Net cash outflow before financing
activities (92,216) (30,813) (75,641)
Net cash inflow from financing
activities 103,977 24,297 58,716
Net increase/(decrease) in cash
and
cash equivalents 11,761 (6,516) (16,925)
Cash and cash equivalents at the
start of
the period 23,605 40,763 40,763
Effect of exchange rate changes 154 (158) (233)
Cash and cash equivalents at the
end of
the period 35,520 34,089 23,605
1. The condensed consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standard ('IFRS') IAS 34 'Interim Financial Reporting' and the
accounting policies set out in the statutory accounts of the Group
for the year ended 30 April 2019. The condensed consolidated
financial statements do not include all of the information required
for a complete set of IFRS financial statements and should be read
in conjunction with the consolidated financial statements of the
Group for the year ended 30 April 2019, which were prepared under
full IFRS requirements.
2. The return per Ordinary share figure is based on the net
profit for the six months of GBP29,983,000 (six months ended 31
October 2018: net profit of GBP22,237,000; year ended 30 April
2019: net profit of GBP50,970,000) and on 2,523,148 (six months
ended 31 October 2018: 2,254,221; year ended 30 April 2019:
2,299,470) Ordinary shares, being the weighted average number of
Ordinary shares in issue during the respective periods.
3. In respect of the year ending 30 April 2020 the Board has
declared a first interim dividend of GBP1.40 per Ordinary share,
which was paid on 12 July 2019 and a second interim dividend of
GBP1.40 per Ordinary share, which was paid on 11 October 2019. A
third interim dividend of GBP1.40 per Ordinary share will be paid
to shareholders on 10 January 2020 and a fourth interim dividend of
GBP1.40 per Ordinary share is expected to be paid in April 2020,
making a total for the year of GBP5.60 per Ordinary share. In
respect of the year ended 30 April 2019 the Board declared four
interim dividends of GBP1.40 per Ordinary share. This gave a total
dividend for the year ended 30 April 2019 of GBP5.60 per Ordinary
share.
4. At 31 October 2019 there were 2,655,663 Ordinary shares in
issue (31 October 2018: 2,291,336; 30 April 2019: 2,392,275).
During the six months ended 31 October 2019 the Company issued
263,388 new Ordinary shares.
5. The Board has considered the requirements of IFRS 8
'Operating Segments'. The Board is of the view that the Group is
engaged in a single segment of business, being that of investing in
equity shares, fixed interest securities and other investments, and
that therefore the Group has only a single operating segment.
6. The Group held the following categories of financial
instruments as at 31 October 2019:
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Investments 1,041,075 - 2,749 1,043,8245
Current assets - 23,760 - 23,760
=============== ========================= ================ ================ =================
Total 1,041,075 23,760 2,749 1,067,584
=============== ========================= ================ ================ =================
The above table provides an analysis of investments based on the
fair value hierarchy described below and which reflects the
reliability and significance of the information used to measure
their fair value. The levels are determined by the lowest (that is,
the least reliable or least independently observable) level of
impact that is significant to the fair value measurement for the
individual investment in its entirety as follows:
Level 1 reflects financial instruments quoted in an active
market.
Level 2 reflects financial instruments the fair value of which
is evidenced by comparison with other observable current market
transactions in the same instrument or based on a valuation
technique the variables of which include only data from observable
markets. The Company's forward currency contract has been included
in this level as fair value is achieved using the foreign exchange
spot rate and forward points which vary depending on the duration
of the contract.
Level 3 reflects financial instruments the fair value of which
is determined in whole or in part using a valuation technique based
on assumptions that are not supported by prices from observable
market transactions in the same instrument and not based on
available observable market data.
The Company's subsidiary has been included in this level as its
valuation is based on its net assets which rose from GBP783,000 at
30 April 2019 to GBP1,121,000 at 31 October 2019.
The property that the Company purchased during the period has
also been included in this level. The amount of GBP1,628,000 is
based on a professional valuation.
There were no transfers of investments between levels in the
period ended 31 October 2019.
The following table summarises the Group's Level 1 investments
that were accounted for at fair value in the period to 31 October
2019. Group (Level 1) GBP'000
Opening book cost 767,790
Opening fair value adjustment 178,669
===================================== =========
Opening valuation 946,459
Movement in the priod:
Purchases at cost 443,156
Effective yield adjustment 4,885
Sales - proceeds (378,921)
- gains on sales 16,017
Increase in fair value adjustment 9,479
===================================== =========
Closing valuation at 31 October 2019 1,041,075
===================================== =========
Closing book cost 852,927
Closing fair value adjustment 188,148
===================================== =========
Closing valuation at 31 October 2019 1,041,075
===================================== =========
Other aspects of the Group's financial risk management
objectives and policies are consistent with those disclosed in the
consolidated financial statements as at and for the year ended 30
April 2019.
The fair value of the Group's financial assets and liabilities
as at 31 October 2019 was not materially different from their
carrying values in the financial statements.
7. These are not full statutory accounts in terms of Section 434
of the Companies Act 2006 and are unaudited. Statutory accounts for
the year ended 30 April 2019, which received an unqualified audit
report and which did not contain a statement under Section 498 of
the Companies Act 2006, have been lodged with the Registrar of
Companies. No full statutory accounts in respect of any period
after 30 April 2019 have been reported on by the Company's auditors
or delivered to the Registrar of Companies.
Statement of Principal Risks and Uncertainties
The Board believes that the principal risks to shareholders,
which it seeks to mitigate through continual review of its
investments and through shareholder communication, are events or
developments which can affect the general level of share prices and
other financial assets, including, for instance, inflation or
deflation, economic recessions and movements in interest rates and
currencies.
Other risks faced, and the way in which they are managed, are
described in more detail under the heading Principal Risks and Risk
Management within the Strategic Report in the Company's Annual
Report for the year ended 30 April 2019.
The Company's principal risks and uncertainties have not changed
since the date of the Annual Report and are not expected to change
for the remaining six months of the Company's financial year.
Going Concern
The Directors believe, in the light of the controls and review
processes noted above and bearing in mind the nature of the Group's
business and assets, which are considered readily realisable if
required, that the Group has adequate resources to continue
operating for the foreseeable future. For this reason, they
continue to adopt the going concern basis in preparing the
financial statements.
Related Party Transactions
Details of related party transactions are contained in the
Annual Report for the year ended 30 April 2019. There have been no
material changes in the nature and type of the related party
transactions as stated within the Annual Report.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BUBDBSUDBGCD
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