EPG.L Regulatory News (EPG)

16 Aug 2006 13:05

EP GLOBAL OPPORTUNITIES TRUST plc PRELIMINARY ANNOUNCEMENT OF INTERIM RESULTS ¢â‚¬¢ Net Asset Value per share increased from 156.2 pence as at 31 December 2005 to 158.8 pence as at 30 June 2006, an increase of 1.7%.¢â‚¬¢ Investment in Japanese equities was reduced to around 10 per cent of assets and investment in the US was increased to just over 20 per cent.¢â‚¬¢ Despite recent market volatility, the Board believes that patience and sound stock selection, based on value, will in due course prove to be rewarding.The Directors announce the unaudited statement of results for the 6 months to30 June 2006 as follows:-INCOME STATEMENTfor the 6 months to 30 June 2006 6 months to 6 months to to 30 June 2006 30 June 2005 Revenue Capital Total Revenue Capital Total ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Gains on investments - 534 534 - 2,594 2,594 Dividends and interest 1,043 - 1,043 552 - 552 Investment management fee (202) - (202) (99) - (99) Other expenses (128) - (128) (118) - (118) Net return before 713 534 1,247 335 2,594 2,929 taxation Taxation (139) - (139) (50) - (50) Net return after taxation 574 534 1,108 285 2,594 2,879 pence pence pence pence pence pence Return per Ordinary share* 1.70 1.58 3.28 1.25 11.41 12.66 The total column of this statement is the profit and loss account of theCompany. The supplementary revenue and capital return columns are both preparedunder guidance published by the Association of Investment Companies.* The revenue return per Ordinary share for the 6 months to 30 June 2006 isbased on earnings of ‚£574,000 and on 33,747,811 Ordinary shares being theweighted average number of Ordinary shares in issue during the period. The capital return per Ordinary shares for the 6 months to 30 June 2006 isbased on net capital gains of ‚£534,000 and on 33,747,811 Ordinary shares beingthe weighted average number of Ordinary shares in issue during the period.All revenue and capital items derive from continuing operations.RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDSFor the 6 months ended 30 June 2006 6 months to Year to 6 months to 30 June 2006 31 December 30 June 2005 2005 ‚£'000 ‚£'000 ‚£'000 Opening Shareholders' funds 52,241 26,130 26,130 Issue of Shares 4 110 7 Premium on issues of Shares 655 16,350 750 Expenses of Share issue - (343) - Net return after taxation for the 1,108 10,085 2,879 period Dividends paid (271) (91) (91) Closing Shareholders' funds 53,737 52,241 29,675 BALANCE SHEETas at 30 June 2006 30 June 31 December 30 June 2006 2005 2005 ‚£'000 ‚£'000 ‚£'000 Fixed Assets Investments 51,757 49,812 29,406 Current assets Debtors 151 112 151 Cash at bank 2,039 2,479 219 2,190 2,591 370 Creditors - amounts falling due 210 162 101 within one year Net current assets 1,980 2,429 269 Total net assets 53,737 52,241 29,675 Capital and Reserves Called up share capital 338 334 231 Capital redemption reserve 1 1 1 Share premium account 17,754 17,099 1,842 Special reserve 20,506 20,506 20,506 Capital reserve - realised 8,887 5,439 1,373 - unrealised 5,635 8,549 5,397 Revenue reserve 616 313 325 Total equity Shareholders' funds 53,737 52,241 29,675 Pence pence pence Net asset value per Ordinary share 158.8 156.2 128.7 including current period revenue (note 1) SUMMARISED STATEMENT OF CASH FLOWS 6 months to 30 June 2006 6 months to 30 June 2005 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Net cash inflow from operating 582 195 activities Capital expenditure and financial investment Purchases of investments (15,025) (6,494) Sales of investments 13,635 5,026 Exchange losses on settlement (20) - Net cash outflow from capital expenditure and financialinvestments (1,410) (1,468) Dividends paid (note 2) (271) (91) Net cash outflow before (1,099) (1,364)financing Financing Proceeds of share issues net 659 757 of issue expenses Net cash inflow from financing 659 757 Decrease in cash (440) (607) Notes to this announcement:This unaudited interim financial information does not constitute statutoryaccounts. This information has been prepared on the basis of the accountingpolicies used in the statutory accounts of the Company for the year ended 31December 2005. The statutory accounts for the year ended 31 December 2005received an unqualified audit opinion.1. Net asset value per Ordinary shareThe net asset value per Ordinary share is based on total net assets at 30 June2006 of ‚£53,737,000 (31 December 2005: ‚£52,241,000, 30 June 2005: ‚£29,675,000)and on 33,848,180 Ordinary shares (31 December 2005: 33,444,010, 30 June 2005:23,065,339) being the issued share capital at that date. Net asset valuescalculated include current period revenue.2. Dividends paidThe Company issued 404,170 Ordinary shares after 31 December 2005. These issueswere prior to the record date for the final dividend of the year ended 31December 2005 and therefore were entitled to receive that dividend. The totalamount paid by the Company was therefore ‚£271,000, ‚£3,000 higher than theamount recorded as proposed in the annual report.3. Status of the CompanyIt is the intention of the Directors to conduct the affairs of the Company sothat they satisfy the conditions for approval as an investment trust companyset out in Section 842 of the Income and Corporation Taxes Act 1988.Chairman's StatementInvestment PerformanceThe net asset value per share at the end of June 2006 was 158.8p. This was 1.7per cent above the level at the end of December 2005. While it is an unexcitingresult in absolute terms, it is encouraging that, having strongly outperformedmarkets when they were rising, we have not given back any of the outperformancein the more turbulent environment towards the end of the first half of 2006.For comparison purposes the FTSE All World Index declined by minus 2.9 per cent(total return minus 1.6 per cent).The share price was down 1.9 per cent to 151.5p in the six months to the end ofJune. The slightly lower share price is a result of the discount to the netasset value widening from 1.1 per cent at the end of 2005 to 4.6 per cent atthe end of June. We believe this was only a temporary widening resulting fromthe increased volatility of equity markets, as the share price has consistentlytraded around net asset value. The Board monitors the discount level carefullyand it is our intention to limit any discount that develops. We intend to takeaction to buy-in shares if there is an imbalance of supply over demand for ourshares in the market place, just as we have issued new shares when there hasbeen an excess demand for shares.The first half of 2006 proved to be a mixed period for equity markets. After astrong performance to the end of April, markets fell sharply. It is notsurprising that share prices were vulnerable to profit taking after a longperiod of rising prices. The US market was the laggard in terms of performancein the rising markets and, as a consequence, was less vulnerable to profittaking in the down turn. While the US equity market fell by slightly more than7 per cent from its May peak to the low in June, other major markets typicallydeclined by double this percentage. Most Asian markets, including Japan, fellback by between 15 and 20 per cent. Despite the set back in May and June,European markets, including the UK, ended June at levels higher than they wereat the end of 2005. The FTSE All-Share Index in the UK gained 4.2 per cent(total return 6.1 per cent) over the six month period. Japan, which had been byfar the best performing major market in 2005, put in the poorest performance ofthe major markets in the first half of 2006, with the Topix Index dropping byalmost 8 per cent in sterling terms.Investment PolicyWhile we have enjoyed firm equity markets over the last few years, there havebeen significant variations in the size of the gains in share prices indifferent geographical regions. When the Company started in late 2003, weinvested virtually nothing in North America, while up to 30 per cent of theassets were invested in Japan. At that time, share valuations in the US wereexpensive, while those in Japan looked particularly good value. The goodperformance of your Company since the launch has followed from the compositionof the portfolio which reflects these valuation differences.The excellent performance of the Japanese market in 2005 resulted in Japaneseshares becoming increasingly less attractive. By contrast, the underperformanceof the US market resulted in better value appearing in some US shares.Valuation analysis is the driving factor behind our investment policy. Thiscaused us to make significant changes to the portfolio in the run up in equitymarkets in the early part of this year. Japanese equities were reduced tonearer 10 per cent of assets and the investment in the US was increased to justover 20 per cent. Profits were also taken in some of the holdings in otherparts of Asia, as their valuations started to look more expensive and, inparticular, their risk/reward potential looked less appealing thanopportunities elsewhere.Revenue AccountThe revenue account for the first half of 2006 shows a healthy increasecompared to the same period last year. This is partly due to a steady increasein the dividends paid by the companies held but it has also been helped bychanges made to the portfolio. The overseas income has benefited from thereduced level of investment in Japan where yields are particularly low.The dividends received are a function of the investment policy, which in turnis driven by where our Investment Manager, Edinburgh Partners, perceives thebest value to be. In 2006, increasingly better value has been found in higheryielding investments. Should this change, we would not hesitate to invest inlower yielding shares if that is where the value is, even if this meanscurtailing our own dividend. This year, however, we are hopeful of being ableto recommend a further increase in the dividend.OutlookEquity markets that offered good value a couple of years ago had begun to lookon the expensive side by early 2006. The set back in May and June began toprice risk more sensibly and the hardest hit areas were those where theeuphoria had been most apparent. By late June, valuations were almost back tobeing as attractive as they were two years ago. While it may take some time forthe excesses to be fully worked off, we believe that patience and sound stockselection, based on value, will in due course prove to be rewarding.Teddy TullochChairman16 August 2006Enquiries:Kenneth GreigEdinburgh PartnersTelephone: 0131 270 3800ENDEP GLOBAL OPPORTUNITIES TRUST PLC