Foreign and Colonial plans dividend increase in 2016

Foreign and Colonial’s 7.7% NAV return for the first six months of 2016 compared favourably to returns of its peers although it lagged the 12.0% rise in the FTSE All World Index over the period.  Shareholder returns were 3.0% as uncertainty over Brexit led to a general widening in discounts across the sector, with the discount widening to 11.2%.

Underlying equity market returns were broadly flat in local currency terms over the first half. Sterling fell to a 30 year low against the dollar after the Brexit referendum. The portfolio is largely invested in overseas assets and therefore benefited from Sterling’s weakness. Their private equity portfolio also posted healthy returns during the six months, gaining 13.7% and generating GBP36m of net cash flow. Low interest rates over the period presented an opportunity for the Company to extend the maturity of its borrowings and they introduced a total of GBP75m of long term sterling denominated funding.

Their net revenue return per share rose 26% in the first half in comparison to the first six months of 2015 as income from investments posted strong gains.  They say this improvement in the revenue account is to be welcomed and, if maintained, will allow them to cover the dividend sooner than they had originally expected. FRCL paid an interim dividend of 2.3p per share in February 2016 and a final dividend of 2.7p in respect of 2015 in May.  The first interim dividend of 2.35p for 2016 will be paid on 1 August. Another real rise in dividends is planned for 2016, which would be the forty-sixth consecutive annual increase.

FRCL : Foreign and Colonial plans dividend increase in 2016