BMPI.L Regulatory News (BMPI)

To: RNS

Date: 26 January 2018

From: F&C Managed Portfolio Trust plc

Interim Results

The Board of F&C Managed Portfolio Trust plc announces the unaudited interim results of the Company for the six month period to 30 November 2017.

Chairman's Statement

Highlights

· Net asset value total return of 2.0% for the Income shares and 6.3% for the Growth shares, both of which outperformed the FTSE All-Share Index total return of -0.2%

· First two interim dividends increased to 1.3 pence per Income share

· Income share dividend yield of 3.9% at 30 November 2017

Investment performance

For the six months to 30 November 2017, the net asset value (NAV) total return was 2.0% for the Income shares and 6.3% for the Growth shares. The total return for the benchmark index for both portfolios, the FTSE All-Share Index, was -0.2%.

Once again the past six months have been eventful, particularly in the context of the political environment in the UK. A surprise general election in June produced an inconclusive result and served only to add to the climate of uncertainty caused by the prolonged negotiations over Brexit. Though this did affect UK equity markets initially, the driving factor for global equity markets has been the synchronised nature of the strengthening recovery which has become increasingly apparent around the world. This is particularly true of the US where the Federal Reserve has started the process of raising interest rates. This policy has been well flagged so as not to create undue volatility in either equity or bond markets.

Against this background it is encouraging that both portfolios were ahead of the FTSE All-Share Index over the period. This maintains their long term record of strong performance.

For the Growth Portfolio two themes were evident in the outperformers. First was exposure to Japanese and Asia Pacific markets which performed strongly. In the case of Japan the stock market moved ahead following the re-election of Prime Minister Abe in October. This was of benefit to long time holding Baillie Gifford Japan Trust where the focus on medium and small growth companies in Japan has been the driver to the trust's 27% share price gain. Schroder Asian Total Return Investment Company rose 20% helped by strong performances from a number of markets in the Asia Pacific region. The second theme was the portfolio's continuing exposure to the biotechnology and technology sectors. Leading the gainers was Syncona which was ahead by 24% over the period where a key factor was the successful listing on NASDAQ of one of its major holdings. Allianz Technology Trust gained 18% and fully benefitted from the strong performance of the wider technology sector. Herald Investment Trust is another long time holding in the portfolio and in this case its exposure to smaller technology companies in the UK was behind a 19% rise in the share price. The main laggards in the portfolio were Woodford Patient Capital Trust which fell 9% due in part to poor performance from its largest holding and a widening of the share price discount to asset value and Perpetual Income & Growth Investment Trust which was 6% lower also due to poor share price performance from a large holding in Provident Financial and a widening in the discount.

For the Income Portfolio the best performer was BB Biotech which rose 15%. Listed in Zurich, this £2.8bn portfolio is principally invested in a number of the major US biotechnology companies also with exposure to some medium sized and smaller companies. A series of new products has underpinned strong earnings growth for companies in the sector where valuations are attractive relative to the broader US market. CC Japan Income and Growth Trust gained 15% and benefitted from the buoyant Japanese stock market. Recent new issue Jupiter Emerging & Frontier Income Trust was 13% ahead over the period and has got off to a strong start due to good stock selection. The trust has a 4% dividend yield. The Bankers Investment Trust was also a notable performer rising 11%. The trust has a global mandate and benefitted from favourable asset allocation and strong stock selection from an experienced manager and team. Although the dividend yield is only just over 2%, it has a record of increasing the dividend for 50 successive years. Most of the laggards were either in the UK Equity Income or Infrastructure sectors. Edinburgh Investment Trust was down 8% and as has been mentioned earlier Perpetual Income & Growth Investment Trust was 6% lower. Exposure to larger companies in the FTSE 100 with significant overseas earnings was a headwind due to the unexpected 5% rise in the value of sterling relative to the dollar. Encouragingly both trusts raised their dividend by 5% and have dividend yields of around 3.6%. HICL Infrastructure fell 7% following threats by the Labour party to unwind PFI contracts and Renewables Infrastructure Group was down 5% as a result of falling power prices. The attraction for holding them is secure and modestly growing dividends with yields which are around 5% and 6% respectively.

(All share prices are total return)

Revenue and dividends

The Company's net revenue for the six months was £1,421,000 which is equivalent to 3.36p per Income share (compared to 2.91p per Income share for the corresponding period in 2016). Income shares are entitled to all the dividends paid by the Company.

In line with our objective of increasing dividends over time, the Company has declared a first and second interim dividend in respect of the year to 31 May 2018, each of 1.3p per Income share (1.25p per share in the prior periods).

In the absence of unforeseen circumstances the Board intends to pay three interim dividends, each of 1.3p per Income share in the current financial year. The amount of the fourth interim dividend will be determined when a clearer view of income for the year emerges. The annual rate of 5.45p per Income share paid in the prior year represents a yield on the Income share price at 30 November 2017 of 3.9%.

Borrowing

At 30 November 2017 the Income Portfolio had total borrowings of £5 million (7.9% of gross assets) the investment of which helps to boost net income after allowing for the interest cost. The Growth Portfolio had no borrowings.

Discount to NAV and share buy-backs

In normal circumstances we aim to maintain our discount at not more than 5%, by buying back shares from time to time if necessary. In practice over the years the shares have generally traded close to NAV. During the six months to 30 November 2017 the average premium to NAV for the Income shares and for the Growth shares was 1.8% and 0.9% respectively. At 30 November 2017, the Income shares and the Growth shares stood at a premium to NAV of 1.4% and 1.3% respectively.

Outlook

The global outlook for equity markets remains constructive. That said it would be wrong to ignore that markets have had a remarkable run since the great financial crash nearly ten years ago and that geo-political risks abound. Valuations in certain markets, especially the US are elevated, stretched even. However neither age nor valuation are, when viewed in isolation, reasons why further positive returns cannot be achieved. The economic recovery has broadened out through Europe, Asia Pacific and many emerging markets. Globally corporate earnings growth is strong and looks likely to continue in robust fashion into 2018. Although monetary policy is tightening in the US this has been well flagged and is gradual, whilst elsewhere it remains stimulative and supportive of equity markets. There are risks, which warrant a cautious approach with regard to strategy and investment selections, where the focus will remain on the best quality investment companies for both portfolios.

Richard M Martin

Chairman

25 January 2018

Unaudited Condensed Income Statement

Six months to 30 November 2017

The total column of this statement is the Profit and Loss Account of the Company.

The supplementary revenue and capital columns are prepared under the guidance published by The Association of Investment Companies.

All revenue and capital items in the Income Statement derive from continuing operations.

Unaudited Condensed Income Statement

Six months to 30 November 2016

The total column of this statement is the Profit and Loss Account of the Company.

The supplementary revenue and capital columns are prepared under the guidance published by The Association of Investment Companies.

All revenue and capital items in the Income Statement derive from continuing operations.

Condensed Income Statement (audited)

Year to 31 May 2017

The total column of this statement is the Profit and Loss Account of the Company.

The supplementary revenue and capital columns are prepared under the guidance published by The Association of Investment Companies.

All revenue and capital items in the Income Statement derive from continuing activities.

Unaudited Condensed Balance Sheet

As at 30 November 2017

Unaudited Condensed Balance Sheet

As at 30 November 2016

Condensed Balance Sheet (audited)

As at 31 May 2017

Unaudited Condensed Statement of Cash Flows

Six months to 30 November 2017

Unaudited Condensed Statement of Cash Flows

Six months to 30 November 2016

Condensed Statement of Cash Flows (audited)

Year to 31 May 2017

Unaudited Condensed Statement of Changes in Equity

Six months to 30 November 2017

Unaudited Condensed Statement of Changes in Equity

Six months to 30 November 2016

Condensed Statement of Changes in Equity (audited)

Year to 31 May 2017

Statement of Principal Risks and Uncertainties

Most of the Company's principal risks that could threaten the achievement of its objective; strategy, future performance, liquidity and solvency are market related and comparable to those of other investment trusts investing primarily in listed securities.

These risks, and the way in which they are managed, are described in more detail under the heading "Principal Risks and Viability Statement" within the Strategic Report in the Company's 2017 Annual Report.

The Company's principal risks and uncertainties have not changed materially since the date of that report and are not expected to change materially for the remainder of the Company's financial year.

The most important types of risk associated with financial instruments are credit risk, market price risk, liquidity risk, interest rate risk and foreign currency risk. Other risks faced by the Company include investment, custody and operational risks.

Statement of Directors' Responsibilities in Respect of the Interim Report

We confirm, that to the best of our knowledge:

· the condensed set of financial statements have been prepared in accordance with applicable UK Accounting Standards on a going concern basis and give a true and fair view of the assets, liabilities, financial position and return of the Company;

· the Chairman's Statement (constituting the Interim Management Report) together with the Statement of Principal Risks and Uncertainties shown above 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 financial statements; and

· the condensed set of 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

Richard M. Martin

Director

25 January 2018

Notes

1. Accounting Policies

The unaudited interim results have been prepared on a going concern basis in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, FRS 102, FRS 104 Interim Financial Reporting issued by the FRC in March 2015 and the Statement of Recommended Practice ("SORP") "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued by the AIC.

The accounting policies applied for the unaudited interim results are set out in the Company's annual report for the year ended 31 May 2017.

2. Income

3. Investment management and performance fee

There have been no changes to the terms of the management and performance fee arrangements with F&C Investment Business Limited, which are set out in detail in the Annual Report and Accounts to 31 May 2017.

During the period, the Company has incurred investment management fees of £419,000 (30 November 2016: £343,000; 31 May 2017: £730,000) of which £207,000 is payable to F&C Investment Business Limited at the period end.

At 30 November 2017 the adjusted total return of the Income Portfolio for the period since 31 May 2016 (being the date a performance fee was last payable) exceeded that of the FTSE All-Share Index and a performance fee of £85,000 has been accrued in the Income Portfolio. At 30 November 2017 the adjusted total return of the Growth portfolio since 31 May 2017 (being the date a performance fee was last payable) exceeded that of the FTSE All-Share Index and a performance fee of £240,000 has been accrued in the Growth Portfolio (30 November 2016: £5,000 - Income Portfolio and £nil - Growth Portfolio; 31 May 2017: £nil - Income Portfolio and £43,000 - Growth Portfolio).

4. Investments

* Fair value hierarchy

The Company's investments as disclosed in the balance sheet are valued at fair value. The fair value as at the reporting date has been estimated using the following fair value hierarchy:

· Level 1 - Quoted prices (unadjusted) in active markets for identical assets;

· Level 2 - Investments whose value is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables includes only data from observable markets; and

· Level 3 - Investments whose value is not based on observable market data.

There are no investments held which are valued in accordance with levels 2 or 3.

5. Return per share

The return per share for the six months to 30 November 2017 is as follows:

The return per share for the comparative six months to 30 November 2016 is as follows:

The return per share for the comparative year to 31 May 2017 is as follows:

6. Dividends

A second interim dividend in respect of the year to 31 May 2018 of 1.30p per Income share was paid on 5 January 2018 to shareholders on the register on 15 December 2017. This amount has not been accrued in the results for the six months to 30 November 2017.

For the financial year to 31 May 2017 interim dividends totalled 5.45p per Income share.

The Growth shares do not carry an entitlement to receive dividends.

7. Share capital

During the period, the Company sold 250,000 Income shares from treasury receiving net proceeds of £345,000. At 30 November 2017, the Company held 180,000 Income shares in treasury.

During the period, the Company issued 400,000 Growth shares and received net proceeds of £787,000. At 30 November 2017, the Company held no Growth shares in treasury.

8. Net asset value per share