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LONDON (Alliance News) - Independent Investment Trust PLC on Thursday welcomed a return to form in its last financial year.
The investment trust said it produced a net asset value total return of 28.1% in the year ended November 30, while investments in the FTSE All-Share Index and The FTSE World Index would have produced total returns of 0.6% and 2.6%
"There have been three important contributors to our results: the early reduction in our energy stake and the resulting low exposure to energy companies, together with our lack of exposure to mining companies; our big housing stake and the additions made to it during the year; and the extraordinary performance of many of the initial public offerings in which we have participated since February 2014. Chief amongst these have been Fever-Tree, Gamma Communications and FDM," Chairman Douglas McDougall said.
"We are pleased with this result, which not only marks a welcome return to form for us, but which also completes - for the moment at least - the process of recovery from the disasters that befell us in 2007 and 2008," McDougall
The trust's net asset value fell by 19.6% in the year ended November 30, 2007, followed by a decline of 36% in the following year, amid the unfolding of the financial crisis.
Meanwhile, some shareholders may wish to reduce their holdings, the trust said, thanks to the revival in its performance. The discount at which shares in the trust traded to net asset value widened to 6.9% from 6.5% over the year to November 30.
"Subject to market conditions, we hope to be able to operate a rather more aggressive policy of buying back shares than is our wont for a period of about a month," the chairman said, starting from around the time of the trust's annual meeting of shareholders.
McDougall said "some modest discount" to net asset value would be necessary to protect the position of continuing shareholders.
"The managing director [Max Ward] has indicated that he may wish to realize part of his holding during this period, or earlier if there is natural demand at an acceptable price. The other directors have discussed this at length with him and are satisfied that there has been no weakening in his commitment to the long term success of the company. No other director intends to sell shares during this period or earlier," McDougall said.
The chairman outlined the risks facing the world economy, from slowing growth in China to "fragile" recoveries in Japan and Europe, the effects of monetary policy tightening in the US on emerging markets, and signs of slowing corporate profits.
"Any one of these issues has the scope to provide an unpleasant reaction in equity markets, but we are struck by the number of interesting new opportunities we are seeing in the UK market. Many of these are strongly cash generative businesses with apparently good growth prospects which are not especially dependent on the health of either the world or the UK economies for their prosperity. For as long as we can buy them at sensible prices, our inclination will be to ignore the more general worries," McDougall said.
Shares in the trust were down 1.6% at 385.65 pence on Thursday morning.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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