Monthly report
February 14 2003 - 9:30AM
UK Regulatory
RNS Number:5228H
Anglo & Overseas Trust PLC
14 February 2003
ANGLO & OVERSEAS TRUST PLC
REPORT FOR THE MONTH OF JANUARY 2003
REVIEW
January can be summed up in one world, "Iraq". After a firm start equity markets
declined sharply on uncertainty about what happens next and our net asset value
per share fell 9.5% and our share price fractionally less.
UK
The UK equity market as measured by the FTSE All-Share Index fell by a
disappointing 9.1% in capital terms over the month. Large companies
underperformed, with the FTSE 100 Index falling by 9.5%, the FTSE Mid 250 Index
by 7.0% and the FTSE Small Cap Index by 5.0%.
The best performing sectors over the month were Construction & Building
Materials, Steel & Other Metals and IT Hardware, although Telecoms and
Pharmaceuticals also performed well. The worst performing sector over the month
was Life Assurance, driven down by increased concerns regarding the strength of
balance sheets in declining equity markets and the sustainability of dividend
payouts to shareholders. Banks were also weak, but several "defensive" sectors
such as Personal Care & Household and Food Producers also underperformed.
We took advantage of recent weakness to establish new holdings in Morrison (Wm)
Supermarkets, Capita and Rank. We sold our positions in British Land, Brambles
Industries and Abbey National.
USA
U.S. equity markets declined in the first month of the new year, falling 4.7% in
sterling capital terms. The new fiscal stimulus proposal released by the White
House was not enough to offset increasing geopolitical tensions, continued
weakness in the U.S. dollar, and the lack of clarity in the outlook for U.S.
goods.
President Bush outlined a fiscal stimulus package intended to encourage consumer
spending, boost the economic recovery, promote investment by individuals and
businesses, and deliver critical help to the unemployed.
The fourth quarter reporting season started, as the market saw some of the
world's biggest companies release their earnings information. Poor visibility on
future sales and earnings seems to have kept many buyers on the sidelines. A few
companies have warned that the coming quarters will be weak. Some companies have
even set a new policy of not providing guidance to analysts and investors.
Meanwhile, the U.S dollar fell to a three-year low against the euro and
continued its decline against the Japanese yen. The lowest interest rates in
four decades, falling consumer confidence, and the lack of corporate profit
growth have led some overseas and domestic investors to seek returns elsewhere.
On the positive side, the weakness in the dollar should improve the fortunes of
U.S. exporters.
December and January are traditionally two of the strongest months for the broad
market S&P 500. The 6.0% decline in December looked like it could be reversed in
the first days of trading in January. However, this did not hold true as the S&P
500 fell 2.7% for the month in US dollar capital terms.
We added Gap Stores as a turnaround idea. The balance sheet has been stabilised
and the earnings have stopped declining. Our thesis is that margin improvement
from very depressed levels could drive eps from the current trough of $.23
towards the normal level of $.74. Margins and earnings do not need to return to
prior peaks for the stock to work. Risks include the difficulties inherent in
retail turnarounds, (retail success requires expansion), the inability to
improve margins as hoped due to the already high sales per square foot at the
stores, and the execution skills of new management, which remains untested in
retail.
JAPAN
The downward trend continued for the sixth month running, and TOPIX closed near
its post-bubble lows. Domestically, life insurers and banks continue to dump
shareholdings and industrial production data for December showed a second month
of weakening. Overseas, with the spectre of military conflict and a high oil
price, investors fled equity markets worldwide. The one bright spot was
corporate quarterly earnings. During the month we established a position in
trading company Mitsui & Co which we expect to show strong earnings growth over
the next few years as the benefits of tighter management controls flow through.
We also added holdings in Fuji Photo Film, which is benefiting on the back of
growing demand for LCD flat panels and Ricoh, which is well positioned in the
lucrative and growing market for digital printers and copiers. We switched the
holding in Nomura into Nikko Cordial on valuation grounds.
EUROPE
European markets declined over January. As in the previous month a combination
of dollar weakness and geopolitical uncertainties provided the excuse.
New purchases in January were Clariant (chemicals), SAP (software) and Suez
(utilities).
Positions were sold in Valeo (engineering), Metro (retail), Royal Dutch
(energy), Pechiney (metals), and Arcelor (metals).
On balance money was withdrawn from the region as part of a rebalancing towards
other areas.
NET ASSET VALUE 31/01/03 31/12/02
prior charges at nominal value 174.36p 192.58p
prior charges at market value 155.97p 174.95p
MID-MARKET SHARE PRICE
Ordinary Share 141.00p 155.50p
Dividend Yield (%) 2.8 2.5
DISTRIBUTION OF ASSETS at market value 31/01/03 31/12/02
Market exposure
% %
EQUITIES
United Kingdom 48.7 47.9
U.S.A. 29.4 28.5
Latin America 0.6 0.6
Japan 3.8 3.4
Belgium 0.3 -
Denmark 0.6 0.8
Eire 0.1 -
Finland 0.9 0.9
France 1.6 1.9
Germany 2.1 2.0
Italy 1.8 2.0
Netherlands 0.9 1.1
Norway 0.1 0.1
Portugal 0.4 0.4
Spain 0.8 0.8
Sweden 0.8 0.8
Switzerland 2.9 2.5
TOTAL PORTFOLIO 95.8 93.7
Net Current Assets/(Liabilities) 4.2 6.3
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TOTAL 100.00 100.00
---------- ----------
Based on total assets less current liabilities of #250.7 million (#269.8 million).
GEARING
Borrowings and Gearing at 31/01/03 31/12/02
#000's #000's
Debenture Stock 2020 33,405 34,391
Debenture Stock 2012 34,650 33,649
----------- -----------
68,055 68,040
===== =====
37.3% 33.7%
===== =====
Based on net asset value of #182.7 million (#201.8 million).
LARGEST HOLDINGS (market value #95.0 million equal to 39.5% of total portfolio)
#'000's % of
portfolio
GlaxoSmithKline 9,502 4.0
BP 8,156 3.4
HSBC Holdings 8,033 3.3
Vodafone Group 7,479 3.1
Royal Bank of Scotland 5,933 2.5
Shell Transport & Trading 5,559 2.3
AstraZeneca 4,330 1.8
Imperial Tobacco 3,455 1.4
Scottish and Southern Energy 3,272 1.4
Bank of America 3,030 1.3
BT Group 2,967 1.2
Microsoft 2,934 1.2
Exxon Mobil 2,834 1.2
Johnson & Johnson 2,606 1.1
Tate & Lyle 2,561 1.1
Citigroup 2,543 1.0
HBOS 2,402 1.0
Unilever 2,396 1.0
Pfizer 2,331 1.0
United Technologies 2,247 0.9
General Electric Co. of America 2,216 0.9
3M Company 2,144 0.9
Barclays 2,094 0.9
MG Equity Partners 2,002 0.8
Total Fina Elf 1,946 0.8
FINANCIAL CALENDAR
Final Dividend Announced
27 February 2003
For further information, contact James Fox at Deutsche Investment Trust Managers
Limited on 020-7545-6000.
For additional copies, changes of address or details of our Private Investors'
Plan, low cost ISA, PEP Transfer and Dividend Reinvestment Scheme (a scheme
through which shareholders, who hold their shares on the Company's main
register, can use their dividends to purchase further shares) contact Mark Pope
on 020-7545-0520, e-mail address: mark.pope@db.com. Further details of Anglo &
Overseas Trust including the latest annual, interim and monthly reports can be
found on the Deutsche Asset Management website located at
www.deutsche-its.co.uk.
Issued by Anglo & Overseas Trust PLC and approved by Deutsche Investment Trust
Managers Limited, regulated by the Financial Services Authority and manager of
Anglo & Overseas Trust PLC. Investors should be aware that past performance is
not necessarily a guide to future returns, the price of shares and the income
from them can fall as well as rise and investors may not get back the amount
they invested. Fluctuations in exchange rates may also affect the value of your
investment. Anglo & Overseas Trust PLC may invest in shares traded in emerging
markets which may at times be illiquid and/or volatile.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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