BTEM : British Empire hedges yen exposure
British Empire Securities delivered a return on net assets of 6.8% over the year to 30 September 2014 – ahead of the 5.1% return on the company’s benchmark (MSCI All Country World ex-US Index). Shareholders also saw the discount narrow resulting in a return to them of 8.9%. The dividend was maintained at 10.5p for the year. Since the year end, the Company has hedged part of its exposure to the Japanese yen. The Board has also changed the accounting treatment for expenses – now 70% of the annual management fee and 70% of the cost of servicing the Company’s debt will be allocated to capital and 30% allocated to revenue.
The portfolio manager’s report says that the largest contributors to performance during the year were Investor AB, Vivendi, Hyundai preference shares, NB Private Equity and Jardine Matheson. Of these, Hyundai preference shares were sold entirely during the year, realising a profit of 34% over cost, whilst Vivendi was reduced significantly as the majority of the holding was sold on a single digit discount to NAV, yielding a profit of 14% on cost. They also say the largest detractors from performance were Wm Morrison, Do an Holdings, Mitra Energy, Dundee Corporation and Immofinanz. Wm Morrison and Immofinanz were new investments made during the year, whilst the others have been in the portfolio for longer periods of time.