Shires Income’s results statement for the year ended 31 March 2015 says the company generated a return on net assets of 9.7% for the year, ahead of a 6.6% return on the FTSE All-Share Index. The company’s shares did not keep pace with the net asset value however and the return to shareholders was 4.9%. the full year dividend will be 1.25p – this was covered 1.06x by earnings. Subject to unforeseen circumstances it is proposed to continue to pay quarterly interim dividends of 3.00p each and the Board will decide on next year’s final dividend having reviewed the full year results.
The report says Pearson delivered 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. Although Pfizer’s bid for AstraZeneca ultimately failed, it did demonstrate the inherent value in the business and the Company benefitted 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. They also say Aberdeen Smaller Companies High Income Trust has been the Company’s most successful investment over the last five years. However, this year it has been less so despite the actual performance of the trust being ahead of its benchmark. The decline in its share price was caused by a move in the discount that the shares trade at relative to its net asset value.
SHRS : Shires Income beats UK index