Oil companies Cove Energy and Nautical Petroleum were both acquired this year at a significant premium to their share prices.
“Our original purchase price for Cove was 20p in 2009, and the company was taken over by the Thai state-owned oil company, PTT, for 240p,” said manager Georgina Brittain.
“We first acquired stock in Nautical Petroleum around the 45p to 55p level; Cairn Energy bought the company at 450p/share.”
Brittain blamed the trust’s underperformance against the FTSE Small Cap (ex ITs) index on market movements – the dramatic fall in equities in August 2011 – and the strong performance of two significant stocks in the index which she does not own, Pace and IP Group.
Poor performers within the trust included Exillon Energy, an oil exploration and production company that disappointed on production figures and was de-rated, and Cape, a provider of blue-collar insulation and industrial services to the oil and gas, mining and construction industries which had a number of profit warnings.
However, the performance of the trust has improved since the year-end with a rise in net asset value of 10% and the share price up 14.7% (1 August to 22 October 2012), compared with an 11.9% rise in the benchmark.
The board is recommending a final dividend of 9p per share, which is fully covered by revenue received during the year. This is an increase on last year’s dividend of 8.5p.
Looking ahead, Brittain added: “We continue to be excited by the available opportunities, and aim to be fully invested up to our gearing limit. While the economic backdrop remains tough, these well-positioned companies should continue to grow and to outperform.”
