LONDON (Alliance News) - Shires Income PLC Monday said it outperformed its benchmark in its recently-completed financial year, driven by its overweight position in the life insurance sector and underweight position in the struggling mining sector.
Shires, which aims to provide shareholders with a high level of income, together with growth of both income and capital from a portfolio substantially invested in UK equities, reported a 9.7% increase in its net asset value total return in the year ended March 31, while the FTSE All-Share Index rose by 6.6%. The total return from the trust's share price was 4.9%.
"Pearson delivered a pleasing performance over the year as the repositioning of the business began to bear fruit. The portfolio is overweight Life Insurance, and this was beneficial as the holdings in Prudential and Chesnara both performed well. In line with previous years there was an underweight position relative to the mining sector and this was again beneficial as these businesses struggled in the face of the decline in commodity prices," Chairman Anthony B. Davidson said in a statement.
"Although Pfizer's bid for AstraZeneca ultimately failed, it did demonstrate the inherent value in the business and the company benefited from this. Other investments that performed well include Schroders, Provident Financial and Close Brothers. Whilst they are all financial companies they have very different fundamental drivers," Davidson added.
Shires added that while Aberdeen Smaller Companies High Income Trust had been its most successful investment over the last five years, this was less so in the recent year despite the actual performance of the trust being ahead of its benchmark. It said that a decline in its share price was caused by an widening of the discount at which that the shares trade to net asset value.
Shires will pay a dividend of 12.25 pence per share for the full year.
"As I have commented previously, the portfolio contains a broad spread of businesses with attractive medium and longer term prospects across many different industries. The investment strategy remains the same with a focus on ownership of businesses with sustainable competitive advantages and reliable management teams. These factors give us the confidence to be cautiously optimistic," Davidson said.
Shares in Shires were trading down 0.1% at 252.00 pence Monday morning.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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Shires Inc. (SHRS)