Monthly Archives: April 2016

The Royal Bank of Scotland Q1 Results

Yesterday, Friday 29th April, The Royal Bank of Scotland, announced its Q1 2016 results.

A loss of £968m.

70% owned by the UK Tax Payer, some interesting figures are buried in the results.

£4.2bn pension payment made to the main scheme. So that only can be a good thing for the employees and pensioners of RBS.

Customer deposits are at £352 billion.
Net loans & advances to customers are at £317 billion.

Thus more deposits than outstanding loans.

Slide 19 is the interesting one, of how is shows how RBS is reducing its exposure to certain sectors:-
Oil & Gas
Mining and Minerals
Emerging Markets

So one can detect, that the bank fears that these sectors are in contraction, and thus reducing loans to these sectors is a mechanism to reduce the risk at RBS.

The Balance Sheet of Royal Dutch Shell.

One can not under-estimate the size of the Anglo Dutch energy giant Shell.

A market values that now towers over £100 Billion Company.

Shell A

Shell B

The Balance Sheet is vast

Page 110 of the Annual report (pre BG takeover)
Non-current assets US$

Intangible assets $7,076m
Property, plant and equipment $192,472m
Joint ventures and associates $31,558m
Investments in securities $4,115m
Deferred tax $8,131m
Retirement benefits $1,682m
Trade and other receivables $8,304m
Inventories $19,70m
Trade and other receivables $58,470m
Cash and cash equivalents $21,607m

Total assets $353,116m = £253,293m

That is £253 Billion

It’s income: $421,105m = £302,062m

Yes it’s income was £302 Billion.

To put things in context the Balance Sheet and Income of Shell is now larger than Exxon Mobil

Over 6% Yield.

The Legal and General High Income Trust, has currently paying out to investors an eye watering 6% to hold units in this fund.


The fund is holding investments worth £1,216.7 million [£1.2 billion]

To give out over 6% to investors, it has to hold plenty of investment securities that are giving over 6%. (Yielding over 6%)

Look at the top 10 holdings, they are all debt instruments issued by companies paying out a fixed income:-

Johnston Press 8.625% 01/06/2019 1.53% of the fund
Jaguar Land Rover 3.875% 01/03/2023 1.28% of the fund
Infinis 7% 15/02/2019 1.18% of the fund
SoftBank Group 5.25% 30/07/2027 1.15% of the fund
VWR Funding 4.625% 15/04/2022 1.11% of the fund
MHGE Parent 8.5% 01/08/2019 1.11% of the fund
Palace Entertainment Holding 8.875% 15/04/2017 1.03% of the fund
BC Mountain 7% 01/02/2021 1.03% of the fund
Kerling 10.625% 01/02/2017 1.02% of the fund
Affinity Gaming 9% 15/05/2018 0.94% of the fund

One can see that some of the debt securities that this fund holds are paying over 8%. So it shows how this fund from Legal and General is able to pay out this delicious 6% dividend to its investors.

The FTSE TechMark All Share Index

The FTSE TechMark All Share Index is a London Index of technology companies that are listed on the London Stock Exchange. It has world class companies like BT PLC, the most innovative and dynamic telecommunications and media groups in the world. Other names in the index are Oxford Instruments, GlaxoSmithKline and Astra Zeneca.

The full list of companies that make up the FTSE TechMark All Share Index are:

BT Group

HSBC April 2016 Dividend.

Today on the 20th April HSBC Holdings, one of the largest banks in the world pays it shareholders the Fourth interim dividend for 2015.

It is paying out 14.7908p per share ($0.21)

The issued share capital of HSBC Holdings plc with voting rights was 19,747,057,258 ordinary shares.

Thus it is paying out to shareholders:

19,747,057,258 x £0.147908 = £2,920,747,745

today, £2.920 BILLION leaves the account of HSBC Holdings and is paid to its shareholders.

Global Electricity Production

The world is hooked on electricity. Our modern world depends on it. It is a primary resource.

How much does the world produce ?

23,536 TWh is the total number. That is 100% of world production.

How are the largest producers ?

China at 5649 TWh = 24%
USA at 4297 TWh = 18%
India at 1208 TWh =5%

The UK produces 335 TWh which is 1.4% of global production.

The Worlds Largest Banks

The top four largest banks based on assets on the balance sheet:

$3,420 Billion = £2,401 Billion: The Industrial & Commercial Bank of China
$2,826 Billion = £1,984 Billion: The China Construction Bank
$2,740 Billion = £1,924 Billion: The Agricultural Bank of China
$2,589 Billion = £1,817 Billion: The  Bank of China.

All Chinese.

The UK’s HSBC is in 6th position (just behind JP Morgan) with assets of $2,409 Billion = £1,691 Billion. To put that into context, The Hong Kong and Shanghai Banking Corporation’s assets are still larger than the annual GDP of the UK.

Syrian Oil

The civil war in Syria is causing a terrible humanitarian crisis. Yet Syria should be a very wealthy country as it has 2,500 Million barrels of oil under this land.

(the UK has 3,000 Million barrels of oil). What is the potential value of this oil ?

2,500 Million = 2,500,000,000

Crude trades at $39.27 a barrel. That is a £27.59.

2,500,000,000 x £27.59 = £68,975,000,000

That is £65,975 Million which is £68 Billion.

The Proven Oil Reserves of BP

BP, is one of the UK’s largest companies, it is a UK Oil Giant.


It has proven oil reserves of :-

17,523 million barrels of oil

This information can be found here:-

Interesting to know the value of BP’s oil wealth

Crude oil is trading at about $36.89 a barrel

That is £26.16 a barrel

17,523 million barrels = 17,523,000,000

17,523,000,000 x £26.16 a barrel = £458,401,680,000

So at today’s oil price, BP’s own reserves are worth £458,401,680,000.

That is £458 Billion. That is about 33% of UK GDP…..

The 2016 Japanese Budget.

Japan’s public finances are totally unbelieveable. the scale of the public sector debt is so massive, it is almost too painful to comprehend. Japan as a nation is crippled with debt.

Some quick facts.

Total budget in 2016 for the Japanese government is (YEN) 96,721.8 Billion YEN. That is £608.068 Billion.

24.4% of this expenditure is National Debt payments. That is 23,612.1 Billion YEN = £148.444 Billion

So, that only leaves 75.6% of government expenditure available for the country, such as social security, education, healthcare, military etc etc.

Government revenues (income via taxation) generate 62,289.8 Billion YEN. Expenditure is 96,721.8 Billion YEN. That leaves a deficit of 34,432 Billion YEN (£216.466 Billion)

To match government expenditure to government income (Revenue), the Japanese government has to borrow. That is 35.6% of government revenue.

So the Japanese government has to borrow in 2016 an additional 34,432 Billion YEN by issuing Government Bonds to fund its spending commitments.

Japan’s government is borrowing today to finance its operations today, and has such massive structural debt, that 24.4% of today’s expenditure is to service its cumulative current debt mountain. Now today it is adding to the debt burden by an additional 34,432 Billion YEN (by borrowing 35.6% of its national budget).

Thus the debt mountain is getting larger. The logic is mind boggling.

HM Government Borrowings: March 2016

Another month, guess what, take a lucky guess, it is the same old story, HM Government, spends more money than it receives via taxes and duties. Another deficit month, thus to bridge the gap, needs to borrow on the bond market.

In March 2016, the HM Government had to borrow money to meet the difference between tax revenues and public sector expenditure. The term for this is The PSNCR: The Public Sector Net Cash Requirement.

There were “only” 3 auctions of Gilts (UK Government Bonds) by the UK Debt Management Office ( to raise cash for HM Treasury :-

10-Mar-2016 0 1/8% Index-linked Treasury Gilt 2036 £1,053.1500 Million
08-Mar-2016 3¾% Treasury Gilt 2052 £1,374.9700 Million
02-Mar-2016 1½% Treasury Gilt 2021 £3,849.9170 Million

When you add the cash raised:-

∑(£1,053.1500 Million + £1,374.9700 Million + £3,849.9170 Million) =  £6,278.04 Million

£6,278.04 Million = £6.278 Billion

On another way of looking at it, is in the 31 days in March, HM Government borrowed:-

£202 million each day for the 31 days.

We are fortunate, while the global banking and financial markets still has the confidence in HM Government to buy the Gilts (Lend money to the UK), the budget deficit keeps rising. What is also alarming, is the dates these bond mature 2021, 2036 and 2052. All long term borrowings, we are mortgaging our futures, but at least “We are in it together….

The BT Pension Fund: Assets

BT is the most dynamic Telecoms, Broadband, TV and Communications company.
It has a massive pension fund that pays out pensions to 199,000 retired BT employees each month. It holds over £40billion in investment assets to pay these deserving former employees.

It’s top 30 investments are

UK Treasury Index linked/fixed interest £9,131m 21.3% of total net assets
Hermes Investment Funds plc Pooled Investment Vehicle £1,591m 3.8% of total net assets
Kemble Water Holdings Ltd UK equities/fixed interest £535m 1.3% of total net assets
Brevan Howard Fund Limited Pooled Investment Vehicle £449m 1.0% of total net assets
Milton Park Property £435m 1.0% of total net assets
Bridgewater Pure Alpha Fund II, Ltd Pooled Investment Vehicle £386m 0.9% of total net assets
MKP Partners funds Pooled Investment Vehicle £385m 0.9% of total net assets
Goldman Sachs Group Inc and funds Overseas equities/fixed interest/Pooled Investment Vehicle £356m 0.8% of total net assets
Lone Star funds Pooled Investment Vehicle £336m 0.8% of total net assets
Hermes GPE Infrastructure Fund LP Pooled Investment Vehicle £334m 0.8% of total net assets
Network Rail Ltd Index linked £303m 0.7% of total net assets
Fallago Rig Windfarm Limited UK equities/fixed interest £271m 0.6% of total net assets
Kings Cross Central LP Pooled Investment Vehicle £199m 0.4% of total net assets
Commercial Mortgage Investments Limited Loans £192m 0.4% of total net assets
Riverstone/Carlyle Renewable & Alternative Energy Fund II LP Pooled Investment Vehicle £192m 0.4% of total net assets
US Treasury Index linked/fixed interest £184m 0.4% of total net assets
Bluewater Property £159m 0.4% of total net assets
Hermes GPE PEC II LP Pooled Investment Vehicle £147m 0.3% of total net assets
Lloyds Bank plc UK equities/fixed interest £146m 0.3% of total net assets
26/28 Hammersmith Grove Property £130m 0.3% of total net assets
Microsoft Corporation Inc Overseas equities/fixed interest £130m 0.3% of total net assets
Clarkes Village Property £123m 0.3% of total net assets
Castlecourt Property £122m 0.3% of total net assets
Visa Inc Overseas equities £122m 0.3% of total net assets
Merck & Company Inc Overseas equities/fixed interest £121m 0.3% of total net assets
Wells Fargo & Company Inc Overseas equities/fixed interest £112m 0.3% of total net assets
Wal-Mart Stores Inc Overseas equities/fixed interest £111m 0.3% of total net assets
Crystal Peaks Property £105m 0.2% of total net assets
Intel Corporation Overseas equities/fixed interest £104m 0.2% of total net assets
Royal Victoria Place Property £103m 0.2% of total net assets

Total £17,014m is the top 30 investments.

Interesting to see that the fund has to hold investments that pay out an income so that this investment income can pay the pensions to the former BT employees each month. A monthly obligation that has to me met by the investments in the fund.



The Value of the FTSE-100.

The UK Flagship Index is the FTSE-100.

The total value of the companies listed is:

£1,709,249.67 million

That is £1.7 TRILLION or £1,709 Billion.

That is how much cash is needed to all the companies listed on FTSE-100. That figures is significantly larger than the annual GDP of the UK.

Market Capital  (£m) Name
£84,406.34 HSBC Holdings
£74,476.55 British American Tobacco
£69,459.22 Royal Dutch Shell A
£68,868.02 SABMiller
£67,675.43 GlaxoSmithKline
£63,920.45 BP
£62,455.99 Royal Dutch Shell B
£57,874.83 Vodafone
£49,398.97 AstraZeneca
£48,360.41 Lloyds Banking Group
£47,433.80 Reckitt Benckiser Group
£47,251.11 Diageo
£43,778.05 BT Group
£40,615.07 Unilever
£37,214.81 National Grid
£36,976.02 Imperial Brands
£33,018.71 Prudential
£26,682.48 Associated British Foods
£25,598.67 Rio Tinto
£25,543.40 Royal Bank of Scotland Group
£25,287.80 Barclays
£22,790.18 Shire
£20,865.73 WPP
£20,699.64 Glencore
£20,018.89 Compass Group
£18,475.69 Aviva
£17,671.50 Sky
£16,051.80 CRH
£16,035.74 BAE Systems
£15,840.54 BHP Billiton
£15,384.94 Tesco
£14,881.35 SSE
£14,432.17 RELX
£14,384.84 Standard Chartered
£14,241.76 ARM Holdings
£13,811.36 Legal & General Group
£12,401.32 Rolls-Royce Holdings
£11,795.87 Experian
£11,463.16 Centrica
£11,228.39 International Consolidated Airlines
£10,132.27 Smith & Nephew
£9,969.89 Wolseley
£9,821.88 London Stock Exchange Group
£9,793.82 ITV
£9,344.33 Old Mutual
£8,496.28 Land Securities Group
£8,490.24 Next
£8,471.24 Kingfisher
£7,824.68 Paddy Power Betfair
£7,621.25 Carnival
£7,291.87 Pearson
£7,179.99 British Land
£7,143.41 Whitbread
£6,890.22 Capita
£6,865.39 Standard Life
£6,738.89 Fresnillo
£6,677.56 Sage Group
£6,659.88 Anglo American
£6,643.51 Bunzl
£6,557.50 InterContinental Hotels Group
£6,557.55 Marks & Spencer Group
£6,513.55 Mediclinic International
£6,438.38 Persimmon
£6,279.35 United Utilities Group
£6,237.29 Hargreaves Lansdown
£6,157.48 Taylor Wimpey
£6,013.78 Easyjet
£5,989.59 Schroders
£5,843.52 Burberry Group
£5,830.47 Randgold Resources
£5,823.82 TUI AG
£5,661.05 Barratt Developments
£5,504.00 Worldpay Group
£5,407.77 DCC
£5,372.83 Admiral Group
£5,267.19 Sainsbury (J)
£5,204.81 Coca Cola HBC AG
£5,196.37 Johnson Matthey
£5,109.50 Direct Line Insurance Group
£5,098.87 Intertek Group
£5,085.15 Severn Trent
£4,923.40 GKN
£4,877.30 Dixons Carphone
£4,847.58 Mondi
£4,826.82 St. James’s Place
£4,819.03 RSA Insurance Group
£4,763.33 Babcock International Group
£4,755.00 Royal Mail
£4,627.75 Merlin Entertainments
£4,617.35 Morrison (Wm) Supermarkets
£4,527.66 Travis Perkins
£4,513.39 Informa
£4,475.79 Antofagasta
£4,458.59 Hammerson
£4,436.13 Rexam
£4,422.12 Berkeley Group Holdings
£4,381.50 3i Group
£4,312.12 Provident Financial
£4,280.78 Ashtead Group
£4,214.94 Inmarsat
£4,191.67 Intu Properties