Perpetual Income & Growth has reported a 10.7% return on net assets for the year to the end of March 2015 which compares well to a 6.6% return on the FTSE All-Share index over the same period. The return to shareholders was 10.1% as the discount widened slightly from 1.5% to 3%. The base dividend rose from 11.8p to 12.3p and the company is also paying an unchanged special dividend of 1.9p.
Mark Barnett’s manager’s report says the portfolio’s significant exposure to the financial sector was a key
contributor to the fund’s good performance, notably the holding in Legal & General which increased its dividend by over 20%. Tobacco companies, Reynolds American and Imperial Tobacco, delivered total share price returns of 51% and 32% respectively over the period. Other strong contributors to performance were BAE Systems and AstraZeneca.
Amongst the detractors to performance were the holdings in Thomas Cook, Babcock and Drax. Thomas Cook saw the share price retreat over the period due to weaknesses in the continental European businesses. Babcock saw its share price decline following the acquisition of Avincis, a helicopter services business. The market has been concerned about the price paid for the acquisition and the limited synergies available to the buyer. The impact of a falling oil price was felt through the holdings in UK power generators, especially Drax, as earnings forecasts were downgraded and sentiment turned negative.
PLI : Good year for Perpetual Income & Growth helped by L&G holding