BMPG.L Regulatory News (BMPG)

To: RNS

Date: 27 January 2020

From: BMO Managed Portfolio Trust PLC

LEI: 213800ZA6TW45NM9YY31

Interim Results

The Board of BMO Managed Portfolio Trust PLC announces the unaudited interim results of the Company for the six month period to 30 November 2019.

Income shares - financial highlights and performance summary for the six months

·; Dividend yield(1) of 4.4% at 30 November 2019, compared to the yield on the FTSE All-Share Index of 4.2%. Dividends are paid quarterly. First two interim dividends increased by 3.7% compared to the prior year.

·; Net asset value total return(2) per Income share of +6.3% for the six months, outperforming the FTSE All-Share Index total return (+5.8%) by +0.5%.

Growth shares - financial highlights and performance summary for the six months

·; Net asset value total return(2) per Growth share of +4.6% for the six months, underperforming the FTSE All-Share Index total return (+5.8%) by -1.2%.

·; NAV total return Compound Annual Growth Rate of +10.3% over 10 years compared with a return of +8.2% from the FTSE All-Share Index.

Notes:

(1) Dividend yield - See Alternative Performance Measures. Based on dividends at the expected minimum annual rate of 6.1 pence per Income share for the financial year to 31 May 2020 and the Income share price of 137.50p at 30 November 2019.

(2) NAV total return - See Alternative Performance Measures. The return to shareholders calculated on a per share basis by adding dividends paid in the period to the increase or decrease in the NAV in the period. The dividends are assumed to have been re-invested in the form of net assets on the date on which shares were quoted ex-dividend.

Chairman's Statement

Highlights

• Net asset value total return of +6.3% for the Income shares and +4.6% for the Growth shares compared to the FTSE All-Share Index total return of +5.8%

• NAV total return compound annual growth rate over 10 years of +9.8% for the Income shares and +10.3% for the Growth shares compared with a return of +8.2% from the FTSE All-Share Index

• First two interim dividends increased from 1.35 pence to 1.4 pence per Income share

• Income share dividend yield of 4.4% at 30 November 2019

Investment performance

For the six months to 30 November 2019, the net asset value (NAV) total return was +6.3% for the Income shares and +4.6% for the Growth shares. The total return for the benchmark index for both portfolios, the FTSE All-Share Index, was +5.8%. The long-term track record continues to show the NAV total return for both portfolios outperforming the benchmark index over 3, 5 and 10 years to 30 November 2019, with NAV total return growth over 10 years achieving a compound annual return of +9.8% for the Income shares and +10.3% for the Growth shares.

In line with our stated objectives we have again been able to increase our interim dividends. At 30 November 2019 the dividend yield of the Income shares was 4.4% (based on the expected minimum annual dividend of 6.1 pence per Income share for the current financial year) as compared to the yield on the FTSE All-Share Index of 4.2%.

The period under review saw a decent positive return from the UK equity market however this masked some significant volatility caused by massive political uncertainty in the UK, particularly in the latter few months. A feature was sterling, which had been weak for a prolonged period, but then began to rise sharply in October as the likelihood of a "no deal Brexit" diminished. It ended the six months gaining 2.6% and 3.7% against the dollar and euro respectively, a marked change of trend for the currency.

Globally, concerns over prospects for growth led to three cuts in interest rates by the US Federal Reserve, a modest return to the policy of Quantitative Easing by the European Central Bank and a further stimulus package from the Bank of Japan.

Equity markets responded positively to these measures, although due to strength of the UK currency the returns from overseas markets were diluted when translated back into sterling. Against this background both portfolios made gains over the period with the Income portfolio slightly ahead and the Growth portfolio slightly behind the total return of the FTSE All-Share Index.

Once again, a theme amongst the top contributors to performance from individual holdings in the Growth portfolio was technology with HgCapital Trust and long-time holding Polar Capital Technology Trust experiencing share price gains of 19% and 16% respectively. The secular growth theme of healthcare saw the best performance with Biotech Growth Trust gaining 20% and Worldwide Healthcare Trust ahead by 17%.

In the Income portfolio the healthcare theme was also evident amongst the best performers with Swiss based HBM Healthcare Investments achieving a 21% rise in share price. Other top contributors were specialist healthcare property REIT Assura which rose 21% and consistent long-term outperformer Invesco Perpetual UK Smaller Companies Investment Trust whose share price gained 18%.

(All share prices are total return)

Revenue and dividends

The Company's net revenue for the six months was £1.50 million which is equivalent to 3.40p per Income share (compared to 3.27p per Income share for the corresponding period in 2018). 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 2020, each of 1.4p per Income share (1.35p per Income share in the corresponding period in the year to 31 May 2019).

In the absence of unforeseen circumstances, the Board intends to pay three interim dividends, each of 1.4p per Income share and the aggregate dividends for the current financial year to 31 May 2020 will be at least 6.1p per Income share (2019: 5.95p per Income share). The amount of the fourth interim dividend will be determined when a clearer view of income for the year emerges. A minimum expected annual rate of 6.1p per Income share represents a yield on the Income share price at 30 November 2019 of 4.4%.

Borrowing

At 30 November 2019 the Income portfolio had total borrowings of £5 million (7.6% 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 2019 the average premium to NAV for the Income shares and for the Growth shares was 0.9% and 0.0% respectively. At 30 November 2019, the Income shares stood at a premium to NAV of 0.5% and the Growth shares at a discount of 0.8% to NAV.

Share conversion facility

Shareholders have the opportunity to convert their Income shares into Growth shares or their Growth shares into Income shares annually subject to minimum and maximum conversion thresholds which may be reduced or increased at the discretion of the Board. At the start of November 2019 the conversion proceeded, for those shareholders who had elected to do so. The ability to convert without incurring capital gains tax should be an attractive facility for shareholders and the next conversion date (subject to minimum and maximum thresholds) will be in October 2020. Details will be provided when the Company's annual report is published in late July 2020.

Outlook

It appears the actions taken by the US Federal Reserve and other central banks has had the desired effect and prospects for growth in 2020 have modestly improved such that the economic cycle appears likely to be extended and the chances of a recession pushed out until 2021 at the earliest. Whilst for most developed countries growth remains moderate by historic standards, inflation is subdued and interest rates will remain low. This is an encouraging backdrop for equity markets. Since the end of the period under review much has changed for the UK and following a decisive general election it appears the uncertainty caused by Brexit is likely to wane. Post the Brexit Referendum in 2016 the UK equity market has been out of favour with global institutions and has underperformed most other major markets. The UK equity market offers very attractive value not only relative to other global equity markets but also in a historical context. In this regard smaller companies or those with mainly domestic revenues could benefit most from a reduction of uncertainty and perhaps slightly better growth from the UK economy. Since the end of the period under review both new and existing holdings which have significant exposure in the areas identified above have either been introduced or increased.

Looking forward there are certain factors which could unsettle markets: China/US trade tensions being unresolved, or an EU/UK trade deal not being concluded. However, should the policy adopted by monetary authorities continue in the same vein, then that provides a positive background for equity markets to make modest progress.

Colin S McGill

Chairman

24 January 2020

Unaudited Condensed Income Statement

Six months to 30 November 2019

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

The supplementary revenue and capital columns are prepared under 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 2018

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

The supplementary revenue and capital columns are prepared under 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 2019

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

The supplementary revenue and capital columns are prepared under 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 2019

Unaudited Condensed Balance Sheet

As at 30 November 2018

Condensed Balance Sheet (audited)

As at 31 May 2019

Unaudited Condensed Statement of Cash Flows

Six months to 30 November 2019

Unaudited Condensed Statement of Cash Flows

Six months to 30 November 2018

Condensed Statement of Cash Flows (audited)

Year to 31 May 2019

Unaudited Condensed Statement of Changes in Equity

Six months to 30 November 2019

Unaudited Condensed Statement of Changes in Equity

Six months to 30 November 2018

Condensed Statement of Changes in Equity (audited)

Year to 31 May 2019

Statement of Principal Risks and Uncertainties

Most of the Company's principal risks and uncertainties 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 Uncertainties and Viability Statement" within the Strategic Report in the Company's 2019 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. These include risks in relation to failures at service providers or loss or sabotage of data through cyber threats or business continuity failure.

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 and the Statement of Principal Risks and Uncertainties (together constituting the Interim Management 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 financial statements;

·; the Statement of Principal Risks and Uncertainties shown above is a fair review of the principal risks and uncertainties for the remainder of the financial year; and

·; the Interim Report includes 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

Colin S McGill

Director

24 January 2020

Notes

1. Accounting policies

The condensed financial statements 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 and the Statement of Recommended Practice ("SORP") "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued by The Association of Investment Companies ("AIC").

The accounting policies applied for the condensed financial statements are set out in the Company's annual report for the year ended 31 May 2019.

2. Income

3. Investment management and performance fees

During the period, the Company incurred investment management fees of £447,000 (30 November 2018: £443,000; 31 May 2019: £862,000) of which £222,000 was payable to BMO Investment Business Limited at the period end.

At 30 November 2019 the adjusted total return of the Income portfolio for the period since 31 May 2019 (being the date a performance fee was last payable) exceeded that of the FTSE All-Share Index and a performance fee of £25,000 was accrued in the Income portfolio at 30 November 2019 (30 November 2018: £60,000; 31 May 2019: £73,000).

At 30 November 2019 the adjusted total return of the Growth portfolio since 31 May 2019 (being the date a performance fee was last recognised) did not exceed that of the FTSE All-Share Index and no performance fee has been recognised (30 November 2018: £113,000; 31 May 2019: £257,000).

As the NAV per Growth share at 31 May 2019 was less than the Watermark NAV at 31 May 2018 (the date a performance fee was last payable in the Growth portfolio) payment of the performance fee of £257,000 which was accrued in the Growth portfolio at 31 May 2019 is deferred until the end of the next financial year when the NAV per share for the Growth portfolio is in excess of the Watermark NAV. If the Watermark NAV is not reached by the end of the fourth financial year subsequently, it will no longer be payable.

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 were 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 2019 is as follows:

The return per share for the comparative six months to 30 November 2018 is as follows: