New Star Inv Regulatory News (NSI)

NEW STAR INVESTMENT TRUST PLC This announcement constitutes regulated information. UNAUDITED RESULTS FOR THE YEAR ENDED 30TH JUNE 2014 New Star Investment Trust plc (the `Company'), whose objective is to achievelong-term capital growth, announces its consolidated results for the year ended30th June 2014. FINANCIAL HIGHLIGHTS 30th June 30th June % 2014 2013 Change PERFORMANCE Net assets (£ `000) 76,227 73,320 4.0 Net asset value per Ordinary share 107.33p 103.23p 4.0 Mid-market price per Ordinary share 71.50p 67.50p 5.9 Discount of price to net asset value 33.4% 34.6% N/A NAV performance 4.0% 7.7% IMA Mixed Investment 40% - 85% Shares 8.0% 15.0%(total return) MSCI AC World Index (total return, sterling 9.6% 21.2%adjusted) MSCI UK Index (total return) 12.3% 15.7% 1st July 2013 to 1st July 2012 to 30th June 2014 30th June 2013 REVENUE Return per Ordinary share 0.11p (0.05)p Dividend per Ordinary share - - TOTAL RETURN Net assets 4.0% 7.7% CHAIRMAN'S STATEMENT Performance Your Company's net asset value rose 3.97% over the year to 30th June 2014. Thistook the year-end NAV per ordinary share to 107.33p. By comparison, theInvestment Management Association's Mixed Investment 40-85% Shares index gained8.03%. Your directors believe this benchmark comparison is appropriate becauseyour Company has since inception been invested in a broad range of assetclasses. Equity markets were buoyant, with the MSCI AC World Total Return Indexand the MSCI UK Total Return Index rising 9.62% and 12.31% respectively overthe financial year while UK government bonds returned 2.33%. Furtherinformation is provided in the Investment Manager's report. Increased investment income helped the Company to a net revenue profit beforetaxation. Outlook Investor expectations about central bank monetary policy are likely to drivefinancial markets as the Federal Reserve gradually reduces and then halts theexceptional measures taken to restore economic stability in the wake of theglobal financial crisis of 2007-09. Such measures may affect the performance ofUS equities and your Company is focussed on other markets with lower valuationsand greater recovery potential and where interest rates are likely to stay lowfor a longer period. Such markets include Europe excluding the UK, Asiaexcluding Japan and some emerging markets. Gearing and dividends Your Company has no borrowings and ended its financial year with cashrepresenting 14.65% of its net asset value. Your Company is likely to maintaina significant cash position. Your Company has a small revenue deficit in itsretained revenue reserve; your directors do not recommend the payment of afinal dividend. Discount During the year under review, your Company's shares continued to trade at asignificant discount to their net asset value. Your directors have exploredvarious possibilities with a view to reducing this discount but no satisfactorysolution has yet been found. This position is, however, kept under continualreview by your directors. Investment in Brompton funds From the outset of your Company in 2000, one of its principal aims has been toinvest in the in-house funds of its investment manager. During the year underreview, investments were taken in three multi-asset funds within the FPBrompton Multi-Manager OEIC - Global Growth, Global Balanced and GlobalConservative. Such investments are excluded when the investment management feeis calculated. The Alternative Investment Fund Managers Directive The Alternative Investment Fund Managers Directive (AIFMD) is a European Uniondirective creating a EU-wide framework for the regulation of managers ofAlternative Investment Funds (AIFs), which include investment trusts. Thedirective requires all AIFs to appoint an Alternative Investment Fund Manager(AIFM), which can be the company itself or a third-party manager. Your Boardhas decided to take advantage of the reduced reporting requirements availableif it becomes its own AIFM. This approach minimises the cost to shareholders ofimplementing the directive without affecting the management of your Company. New reporting requirements Various changes have been made to the annual report in response to legislativechanges to reporting requirements. There is a new strategic report and changesto the directors' remuneration report as well as expanded reports from theAudit Committee and the Auditors outlining the major risks to the financialstatements and how they are have been covered. These changes aim to provideshareholders with greater information. Annual meeting The Annual General Meeting will be held on Thursday, 6th November 2014 at 11.00a.m. Net asset value Your Company's unaudited net asset value at 31st August 2014 was 108.87p. INVESTMENT MANAGER'S REPORT Market review From the point when the Federal Reserve first confirmed its intention to tapermonetary expansion in December 2013, it stayed true to its course and reducedasset purchases at each subsequent policy-setting meeting over the first halfof 2014. At the end of the year under review, US quantitative easing, thedefining central bank policy of the post-credit crisis years, was expected tohalt entirely in October. The first US interest rate increase is widelyexpected to occur in mid-2015. Equity and bond markets fell initially in May2013 when tapering was first announced but both major asset classessubsequently recovered and rose during the year under review. This was becauseinvestors became convinced that monetary policy would remain highlyaccommodative for some time and that the pace of future interest rate increaseswould be slow. In January, doubts emerged over the strength of US economic growth butinvestors ultimately shrugged off the weather-related 2.9% annualisedcontraction in first quarter gross domestic product as economic data improved.During the second half of your Company's financial year, the US economygenerated an average of more than 200,000 net new jobs per month. This was thestrongest period of job creation since the credit crisis, taking unemploymentdown to 6.1%. Janet Yellen, the Fed chairman, remained sanguine on theinflation outlook although strong employment growth may ultimately result inpressure on wage-inflation particularly if productivity growth remains weak.Your company has almost no exposure to US equities which gained 10.53% insterling during the year. The majority of the cash is held in US dollars fordefensive reasons as the US dollar can prove a "safe-haven" asset in times ofstress in financial markets. The US dollar fell 11.30% against sterling duringthe year. The low allocation to US equities and the significant investment inUS dollars both hurt performance during the year. Geo-political events, however, rather than global economic trends dominatedmarkets over the first half of 2014. Escalating conflicts in the Middle Eastand the Ukraine fostered a general flight to "safe-haven" assets such as goldand government bonds. European equity markets were adversely impacted becauseRussia is a major regional energy supplier, with German industry, for example,heavily dependent on Russian gas exports. The eurozone economy remained fragiledespite the 16.77% gain from Europe ex-UK equity markets during the Company'sfinancial year. The European Central Bank (ECB) cut interest rates twice duringthe year, in November 2013 and again in June 2014, when further measures werealso introduced to improve liquidity. Inflation remained perilously low,falling to just 0.3% immediately after the Company's year end. German andFrench 10-year government bond yields ended the year under review significantlylower than US and UK yields because interest rates were expected to stay lowerfor longer in the region. The ECB remained under pressure to do more andindicated that radical monetary measures were within its remit. The Ukraine crisis and attendant trade sanctions resulted in sharp falls inRussian equities. Russia's place in the global financial system means the powerstruggle in the Ukraine is being resolved in capital markets as well as througharmed conflict. The Bank of Russia raised interest rates to defend the roubleand deter capital flight but could not prevent the 14.49% decline in the roubleagainst sterling during the financial year. Asia ex-Japan and emerging market equities underperformed developed economypeers although there were encouraging signs of stabilisation in China duringthe first half of 2014. The overall level of debt in the Chinese banking systemremained a concern but the People's Bank of China announced small-scale,targeted measures to improve liquidity and support key sectors of the economy.The exclusion of loans to smaller companies from banks' loan-to-deposit ratiosis one such measure and this should improve access to capital for thesebusinesses. Indian equities, however, recovered strongly on the election ofNarendra Modi as prime minister, gaining 13.01% in sterling. Portfolio review The net asset value of the New Star Investment Trust rose 3.97% during the yearunder review. Your company ended the year with significant investments in cash,gold and gold securities while having the majority of its investments in globalequities. By comparison, the Investment Management Association's MixedInvestment 40-85% Shares Index, which measures a peer group of funds with amulti-asset approach to investing and a typical investment in global equitiesin the 40-85% range, rose 8.03% during the year. The MSCI AC World Total ReturnIndex and the MSCI UK Total Return Index gained 9.62% and 12.31% respectively,reflecting a year of gains for equity markets. UK equities outperformed as UKeconomic growth gathered pace and sterling strengthened in anticipation of arise in UK interest rates. The Aberforth Geared Income Trust was once again the best-performing fundduring the year, returning 44.15% as UK smaller companies benefitted from theimprovement in the domestic economy. Almost all the gain was delivered in thefirst half, however, as the rise in sterling proved a headwind as the yearprogressed. Artemis UK Special Situations and PFS Brompton UK Recovery alsobenefited from the strong performance of UK small and medium-sized companies,rising 14.64% and 14.52% respectively. Standard Life European Income and Henderson European Special Situations rose10.98% and 10.19% respectively as signs of economic stabilisation in theeurozone and expectations of further supportive measures from the ECBoutweighed the impact of escalating violence in the Ukraine and the attendantrounds of trade sanctions. Neptune Russia and Greater Russia was, however,directly impacted, falling 8.09%. Russian equities fell 11.79% in one day inearly March as the crisis broke. Your Company increased its investment in thisfund in late March. Your Company's investments in developing economy equity investments generallyunderperformed developed economy equity markets and the IMA 40-85% SharesIndex. First State Indian Equity did best, rising 22.36% and outperforming the13.01% rise in Indian equities in sterling. Indian equity markets recoveredstrongly as Narendra Modi was elected prime minister with a mandate to reformIndia politically and economically. By contrast, Liontrust Asia Income andAberdeen Asia Pacific fell 0.18% and 3.05% respectively. The overall allocationto emerging market equities was reduced during the year through taking profitsin the Investec Africa holding and the outright disposal of Atlantis ChinaHealthcare. The overall investment in Chinese equities was reduced on concernsregarding the economic impact of rising non-performing loans on Chineseeconomic growth. The investment in Wells Fargo China, which returned 4.29%, wasretained. The gold price fell 4.46% during your Company's financial year but recovered6.43% in sterling in the second half as investors sought "safe-haven" assets.The Company's investment in Gold Bullion Securities fell 2.55% in sterling. Thestabilisation in the gold price was, however, supportive for gold equities andBlackrock Gold & General rose 9.63%. During the year, the Company's total allocation to cash fell from 20.42% to14.65%. Although cash was increased through the receipt of liquidation proceedsfrom the Henderson Private Equity Investment Trust and the Brompton UK QuantFund, the Company invested a total of £6.9 million at launch in three FPBrompton multi-asset funds, Global Growth, Global Balanced and GlobalConservative. The £3.3 million investment in FP Brompton Global Conservative,which has a lower-risk investment approach than your Company, justified themodest overall reduction in cash. All three funds delivered positive returnsfrom their respective launch dates to the Company's year end. Thebest-performing of the six Brompton multi-asset funds was FP Brompton GlobalIncome, which returned 9.11% over the year as higher-yielding investmentsattracted investors in a low interest rate environment. Outlook Markets are likely to remain highly sensitive to changes in expectationsregarding monetary policy as the Fed seeks gradually to reduce and then haltaltogether the extraordinary measures it adopted to increase liquidity in theaftermath of the credit crisis. In early autumn 2014, investors remainedsanguine in the face of these developments. Volatility was extremely low, bondyields were close to historic lows and US equities reached new all-time highs.While the health of the US economy is important for equity markets generally,your Company remains focused on equity markets such as Europe ex-UK, Asiaex-Japan and some emerging markets where valuations are lower, recoverypotential is greater and monetary policy is likely to remain supportive forlonger. The second half of the financial year was a challenging period for investors asgeo-political threats took precedence over more fundamental considerations ofprice and expected return. In such circumstances, your Company's diversifiedapproach across asset classes and significant exposure to cash provides adegree of protection from further potential shocks to global markets. SCHEDULE OF TWENTY LARGEST INVESTMENTS at 30th June 2014 30th June 2014 Holding Activity Bid-market Percentage value of £ `000 invested portfolio Henderson Euro Special Situations Investment Fund 7,912 12.19Fund Fundsmith Equity Fund Investment Fund 5,071 7.81 Artemis UK Special Situations Fund Investment Fund 3,859 5.95 FP Brompton Global Conservative Investment Fund 3,352 5.17Fund BlackRock Gold & General Fund Investment Fund 3,347 5.16 Aberforth Geared Income Trust Investment Company 3,332 5.14 Trojan Investment Fund Investment Fund 3,048 4.70 Aquilus Inflection Fund Investment Fund 2,631 4.05 Neptune Russia & Greater Russia Investment Fund 2,517 3.88Fund Investec Africa Fund Investment Fund 2,367 3.65 Polar Capital Global Technology Investment Fund 2,053 3.16Fund Gold Bullion Securities ETF Exchange Traded 2,051 3.16 Fund FP Brompton Global Opportunities Investment Fund 1,982 3.05Fund FP Brompton Global Income Fund Investment Fund 1,961 3.02 FP Brompton Global Growth Fund Investment Fund 1,961 3.02 First State Indian Subcontinent Investment Fund 1,936 2.98Fund PFS Brompton UK Recovery Unit Trust Investment Fund 1,925 2.97 FP Brompton Global Equity Fund Investment Fund 1,725 2.66 Standard Life Investment European Investment Fund 1,692 2.61Income Fund FP Brompton Global Balanced Fund Investment Fund 1,679 2.59 56,401 86.92 Balance held in 18 investments 8,489 13.08 Total investments 64,890 100.00 The investment portfolio can be further analysed asfollows: £ `000 Equities (including Investment 6,373Companies) Loan 56 Investment funds and ETF's 58,461 64,890 All the Company's investments are either unlisted or are unit trusts/OEIC fundswith the exception of Aberforth Geared Income Trust, BH Global Limited, MitonGroup, Gold Bullion Securities ETF, Immedia Group Plc and Asia ResourceMinerals. SCHEDULE OF TWENTY LARGEST INVESTMENTS at 30th June 2013 30th June 2013 Holding Activity Bid-market Percentage value of £ `000 invested portfolio Henderson Euro Special Situations Investment Fund 7,180 12.31Fund Investec Africa Fund Investment Fund 4,730 8.11 Fundsmith Equity Fund Investment Fund 4,720 8.09 Artemis UK Special Situations Fund Investment Fund 3,340 5.73 BlackRock Gold & General Fund Investment Fund 3,049 5.23 Trojan Investment Fund Investment Fund 2,966 5.09 Aquilus Inflection Fund Investment Fund 2,625 4.50 Brompton UK Quant Fund Investment Fund 2,487 4.26 Aberforth Geared Income Trust Investment Company 2,446 4.19 Gold Bullion Securities ETF Exchange Traded 2,137 3.66 Fund IFDS Brompton Income Fund Investment Fund 1,851 3.17 IFDS Brompton Diversified Fund Investment Fund 1,821 3.12 Polar Capital Global Technology Investment Fund 1,789 3.07Fund PFS Brompton UK Recovery Unit Trust Investment Fund 1,681 2.88 IFDS Brompton Global Growth Fund Investment Fund 1,600 2.74 Standard Life Investment European Investment Fund 1,582 2.71Income Fund First State Indian Subcontinent Investment Fund 1,568 2.69Fund Neptune Russia & Greater Russia Investment Fund 1,466 2.51Fund Fidelity Global Inflation Linked Investment Fund 1,369 2.35Bond Fund Aberdeen Asia Pacific Fund Investment Fund 1,317 2.26 51,724 88.67 Balance held in 16 investments 6,602 11.33 Total investments 58,326 100.00 The investment portfolio can be further analysed asfollows: £ `000 Equities (including Investment 6,084Companies) Loan 144 Investment funds and ETF's 52,098 58,326 All the Company's investments are either unlisted or are unit trusts/OEIC fundswith the exception of Aberforth Geared Income Trust, BH Global Limited, MitonGroup, Gold Bullion Securities ETF, Immedia Group Plc and Bumi Plc. STRATEGIC REVIEW The strategic review is designed to provide information primarily about theCompany's business and results for the year ended 30th June 2014. The strategicreview should be read in conjunction with the Chairman's Statement and theInvestment Manager's Report, which provide a review of the year's investmentactivities of the Company and the outlook for the future. STATUS The Company is incorporated and registered in England and Wales and isdomiciled in the United Kingdom. The Company number is 3969011. The Company is an investment company under section 833 of the Companies Act2006. It is an Approved Company under the Investment Trust (Approved Company)(Tax) Regulations 2011 (the `Regulations') for accounting periods commencing onor after 30th June 2012, and conducts its affairs in accordance with thoseRegulations so as to continue to gain exemption from liability to UnitedKingdom capital gains tax. HM Revenue & Customs granted the Company approval as an investment trust undersection 1158 Corporation Tax Act 2010 for the financial year ended 30th June2013, subject to no subsequent enquiry into the Company's corporation taxself-assessment being raised. The Company is listed on the London Stock Exchange and conducts its affairs inaccordance with the Listing Rules issued by the UK Listing Authority, and theDisclosure and Transparency Rules issued by the Financial Conduct Authority. INVESTMENT OBJECTIVE AND POLICY Investment Objective The Company's investment objective is to achieve long-term capital growth. Investment Policy The Company's investment policy is to allocate assets to global investmentopportunities through investment in equity, bond, commodity, real estate,currency and other markets. The Company's assets may have significantweightings to any one asset class or market, including cash. The Company will invest in pooled investment vehicles, exchange traded funds,futures, options, limited partnerships and direct investments in relevantmarkets. The Company may invest up to 15% of its net assets in directinvestments in relevant markets. The Company will not follow any index with reference to asset classes,countries, sectors or stocks. Aggregate asset class exposure to any one of theUnited States, the United Kingdom, Europe ex UK, Asia ex Japan, Japan orEmerging Markets and to any individual industry sector will be limited to 50%of the Company's net assets, such values being assessed at the time ofinvestment and for funds by reference to their published investment policy or,where appropriate, the underlying investment exposure. The Company may invest up to 20% of its net assets in unlisted securities(excluding unquoted pooled investment vehicles) such values being assessed atthe time of investment. The Company will not invest more than 15% of its net assets in any singleinvestment, such values being assessed at the time of investment. Derivative instruments and forward foreign exchange contracts may be used forthe purposes of efficient portfolio management and currency hedging.Derivatives may also be used outside of efficient portfolio management to meetthe Company's investment objective. The Company may take outright shortpositions in relation to up to 30% of its net assets, with a limit on shortsales of individual stocks of up to 5% of its net assets, such values beingassessed at the time of investment. The Company may borrow up to 30% of net assets for short term funding or longterm investment purposes. No more than 10%, in aggregate, of the value of the Company's total assets maybe invested in other closed-ended investment funds except where such funds havethemselves published investment policies to invest no more than 15% of theirtotal assets in other listed closed-ended investment funds. Information on the Company's portfolio of assets with a view to spreadinginvestment risk in accordance with its investment policy is given above. PRINCIPAL RISKS AND UNCERTAINTIES The principal risks associated with the Company that have been identified bythe Board, together with the steps taken to mitigate them can be summarised asfollows: Investment strategy Inappropriate long-term strategy, asset allocation and manager selection mightlead to the underperformance of the Company. The Company's strategy is kept under regular review by the Board. Investmentperformance is discussed at every Board meeting and the Directors receive amonthly report which details the Company's asset allocation, investmentselection and performance. Business conditions and general economy The Company's investment returns are influenced by general economic conditionsin the UK and globally. Factors such as interest rates, inflation, investorsentiment and the availability and cost of credit could adversely affectinvestment returns. The Board regularly considers the economic environment inwhich the Company operates. The portfolio is managed with a view to mitigating risk by investing in aspread of different asset classes and geographic regions. Portfolio risks - Market price, foreign currency and interest rate risks The downward valuation of investments contained in the portfolio would lead toa reduction in the Company's net asset value. A proportion of the Company'sportfolio is invested in investments denominated in foreign currencies andmovements in exchange rates can significantly affect their sterling value. Itis the Board's policy to hold an appropriate spread of investments in order toreduce the risk arising from factors specific to a particular investment orsector. The Investment Manager takes account of foreign currency risk andinterest rate risk when making investment decisions. The Company does not normally hedge against foreign currency movementsaffecting the value of the portfolio, although hedging techniques may beemployed in appropriate circumstances. Investment Manager The quality of the management team employed by the Investment Manager is animportant factor in delivering good performance and the loss by the InvestmentManager of key staff could adversely affect investment returns. The Boardreceives a monthly financial report which includes information on performance,and a representative of the Investment Manager attends each Board meeting. TheBoard is kept informed of any personnel changes to the investment team employedby the Investment Manager. Tax and regulatory risks A breach of The Investment Trusts (Approved Companies)(Tax) Regulations 2011(the `Regulations') could lead to a loss of investment trust status, resultingin capital gains realised within the portfolio being subject to United Kingdomcapital gains tax. A breach of the UKLA Listing Rules could result insuspension of the Company's shares, while a breach of company law could lead tocriminal proceedings, or financial or reputational damage. The Board employsBrompton as Investment Manager and Phoenix Administration Services Limited asSecretary & Administrator, to help manage the Company's legal and regulatoryobligations. The Board receives a monthly financial report which includesinformation on the Company's compliance with the Regulations. Operational Disruption to, or failure of, the Investment Manager's or Administrator'saccounting, dealing or payment systems or the Custodian's records could preventthe accurate reporting and monitoring of the Company's financial position. TheCompany is also exposed to the operational risk that one or more of itssuppliers may not provide the required level of service. MANAGEMENT ARRANGEMENTS In common with most investment trusts, the Company does not have any executivedirectors or employees. The day-to-day management and administration of theCompany, including investment management, accounting and company secretarialmatters, and custodian arrangements are delegated to specialist companies.Investment management services The Company's investments are managed by Brompton Asset Management LLP (the`Investment Manager'). This relationship is governed by an agreement dated 23rdDecember 2009. The portfolio manager is Gill Lakin. Brompton receives a management fee, payable quarterly in arrears, equivalent toan annual 0.75 per cent of total assets after the deduction of the value of anyinvestments managed by the Investment Manager or its associates (as defined inthe investment management agreement). The investment management agreement maybe terminated by either party giving three months written notice to expire onthe last calendar day of any month. With effect from 1st September 2008, the Investment Manager has also beenentitled to a performance fee of 15 per cent of the growth in net assets over ahurdle of 3 month Sterling LIBOR plus 1 per cent per annum, payable six monthlyin arrears, subject to a high watermark. The aggregate of the Company'smanagement fee and performance fee are subject to a cap of 4.99 per cent of netassets in any financial year (with any performance fee in excess of this capcapable of being earned in future years). During the year under review the investment management fee amounted to £491,000(2013: £493,000). No performance fee was accrued or paid in respect of the yearended 30th June 2014 (2013: £nil). Secretarial, administration and accounting services Company secretarial services, general administration and accounting servicesfor the Company are undertaken by Phoenix Administration Services Limited (the`Administrator'). Custodian services Brown Brothers Harriman & Co is the independent custodian to the Company. RELATED PARTY TRANSACTIONS Mr Duffield is the senior partner of Brompton Asset Management Group LLP theultimate parent of the Investment Manager. The investment management fee payable to the investment manager in relation tothe year ended 30th June 2014 was £491,000 (2013: £493,000). No performance feewas payable in respect of the year ended 30th June 2014 (2013: £nil). During the year the Group's investments included eight funds managed by theInvestment Manager or by associates of the Investment Manager. At 30th June2014, the Company held seven such investments. No investment management feeswere payable directly by the Company in respect of these investments. FINANCIAL REVIEW Assets Net assets at 30th June 2014 amounted to £76,227,000 compared with £73,320,000at 30th June 2013. In the year under review, the net asset value per Ordinaryshare increased by 4% from 103.23p to 107.33p. Costs Total expenses for the year amounted to £709,000 (2013: £730,000). In the yearunder review the investment management fee amounted to £491,000 (2013: £493,000). No performance fee was payable in respect of the year under review asthe Company has not outperformed the cumulative hurdle rate. Revenue The Group's gross revenue increased to £786,000 (2013: £695,000). Afterdeducting expenses and taxation the revenue profit for the year was £77,000(2013: loss of £35,000). Dividends Dividends do not form a central part of the Company's investment objective. TheDirectors have not declared a final dividend for the year ended 30th June 2014(2013: nil). Funding The primary source of the Company's funding is shareholder funds. The Companyis typically ungeared. VAT No VAT is charged on investment management fees but is payable at standard rateon other services provided to the Company. Future developments While the future performance of the Company is dependent, to a large degree, onthe performance of international financial markets, which, in turn, are subjectto many external factors, the Board's intention is that the Company willcontinue to pursue its stated investment objective in accordance with thestrategy outlined above. Further comments on the outlook for the Company forthe next 12 months are set out in the Chairman's Statement. PERFORMANCE MEASUREMENT AND KEY PERFORMANCE INDICATORS In order to measure the success of the Company in meeting its objectives and toevaluate the performance of the Investment Manager, the Directors review andcompare, at each meeting the net asset value, the income and costs and theshare price of the Company. The Directors take into account a number ofdifferent indicators as the Company does not have a formal benchmark. 30th June 30th June % 2014 2013 Change PERFORMANCE Net assets (£ `000) 76,227 73,320 4.0 Net asset value per share 107.33p 103.23p 4.0 Share price 71.50p 67.50p 5.9 Discount of price to net asset value 33.4% 34.6% N/A Total return per share 4.09p 7.40p NAV performance 4.0% 7.7% IMA Mixed Investment 40% - 85% Shares 8.0% 15.0%(total return) MSCI AC World Index (total return, sterling 9.6% 21.2%adjusted) MSCI UK Index (total return) 12.3% 15.7% The Directors consider the asset allocation of the Company and monitor thelevel of the discount of share price to net asset value. The InvestmentManager's report discusses performance. ENVIRONMENTAL, SOCIAL AND COMMUNITY ISSUES The Company has no employees, with day-to-day management and administration ofthe Company being delegated to the Investment Manager and the Administrator.The Company's portfolio is managed in accordance with the investment objectiveand policy; environmental, social and community matters are considered to theextent that they potentially impact on the Company's investment returns.Additionally, as the Company has no premises, properties or equipment, it hasno carbon emissions to report on. GENDER DIVERSITY The Board of Directors comprises three male Directors. The Board's primaryconsideration when appointing new Directors is their experience and ability tomake a positive contribution to the Board's decision making, regardless ofgender. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 30th June 2014 Year ended Year ended 30th June 2014 30th June 2013 Revenue Capital Revenue Capital Return Return Total Return Return Total Notes £ `000 £ `000 £ `000 £ `000 £ `000 £ `000 INVESTMENT INCOME 2 778 - 778 688 - 688 Other operating income 2 8 - 8 7 - 7 786 - 786 695 - 695 GAINS AND LOSSES ONINVESTMENTS Gains on investments at 9 - 3,545 3,545 - 4,996 4,996fairvalue through profit orloss Other exchange (losses)/ - (726) (726) - 109 109gains Trail rebates - 11 11 - 34 34 786 2,830 3,616 695 5,139 5,834 EXPENSES Management fees 3 (491) - (491) (493) - (493) Other expenses 4 (218) - (218) (237) - (237) (709) - (709) (730) - (730) PROFIT/(LOSS) BEFORE 77 2,830 2,907 (35) 5,139 5,104FINANCECOSTS AND TAX Finance costs - - - - - - PROFIT/(LOSS) BEFORE TAX 77 2,830 2,907 (35) ,139 5,104 Tax 5 - - - - 149 149 PROFIT/(LOSS) FOR THE 77 2,830 2,907 (35) 5,288 5,253YEAR EARNINGS PER SHARE Ordinary shares (pence) 7 0.11p 3.98p 4.09p (0.05) 7.45 7.40 The total column of this statement represents the Group's profit and lossaccount, prepared in accordance with IFRS, as adopted by the European Union.The supplementary Revenue Return and Capital Return columns are both preparedunder guidance published by the Association of Investment Companies. Allrevenue and capital items in the above statement derive from continuingoperations. The Company did not have any income or expense that was not included in `profitfor the year'. Accordingly, the `profit for the year' is also the `Totalcomprehensive income for the year', as defined in IAS1 (revised) and noseparate Statement of Other Comprehensive Income has been presented. No operations were acquired or discontinued during the year. All income is attributable to the equity holders of the parent company. Thereare no minority interests. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30th June 2014 Share Share Special Retained capital premium reserve earnings Total £ `000 £ `000 £ `000 £ `000 £ `000 AT 30TH JUNE 2013 710 21,573 56,908 (5,871) 73,320 Total comprehensive income for - - - 2,907 2,907the year AT 30TH JUNE 2014 710 21,573 56,908 (2,964) 76,227 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30th June 2013 Share Share Special Retained capital premium reserve earnings Total £ `000 £ `000 £ `000 £ `000 £ `000 AT 30TH JUNE 2012 710 21,573 56,908 (11,124) 68,067 Total comprehensive income for the - - - 5,253 5,253year AT 30TH JUNE 2013 10 21,573 56,908 (5,871) 73,320 CONSOLIDATED BALANCE SHEET at 30th June 2014 Notes 30th June 30th June 2014 2013 £ `000 £ `000 NON-CURRENT ASSETS Investments at fair value through profit or loss 9 64,890 58,326 CURRENT ASSETS Other receivables 11 361 251 Cash and cash equivalents 12 11,171 14,969 11,532 15,220 TOTAL ASSETS 76,422 73,546 CURRENT LIABILITIES Other payables 13 (195) (226) TOTAL ASSETS LESS CURRENT LIABILITIES 76,227 73,320 NON-CURRENT LIABILITIES Deferred tax liability 5 - - NET ASSETS 76,227 73,320 EQUITY ATTRIBUTABLE TO EQUITY HOLDERS Called-up share capital 14 710 710 Share premium 15 21,573 21,573 Special reserve 15 56,908 56,908 Retained earnings 15 (2,964) (5,871) TOTAL EQUITY 76,227 73,320 NET ASSET VALUE PER ORDINARY SHARE (Pence) 16 107.33 103.23 CONSOLIDATED CASH FLOW STATEMENTS for the year ended 30th June 2014 Year Year ended ended 30th June 30th June 2014 2013 Note Group Group £ `000 £ `000 NET CASH INFLOW FROM OPERATING 88 22ACTIVITIES INVESTING ACTIVITIES Purchase of Investments (10,363) (15,008) Sale of Investments 7,203 12,665 NET CASH OUTFLOW FROM INVESTING (3,160) (2,343)ACTIVITIES NET CASH OUTFLOW BEFORE FINANCING (3,072) (2,321) DECREASE IN CASH (3,072) (2,321) RECONCILIATION OF NET CASH FLOW TOMOVEMENT IN NET FUNDS Decrease in cash resulting from cash (3,072) (2,321)flows Exchange movements (72) 109 Movement in net funds (3,798) (2,212) Net funds at 1st July 14,969 17,181 NET FUNDS AT END OF YEAR 17 11,171 14,969 RECONCILIATION OF PROFIT BEFOREFINANCECOSTS AND TAXATION TO NET CASH FLOWFROMOPERATING ACTIVITIES Profit before finance costs and 2,907 5,104taxation Gains on investments (3,545) (4,996) Exchange differences 726 (109) Capital trail rebates (11) (34) Net revenue gains/(loss) before 77 (35)finance costs and taxation Increase in debtors - (6) Decrease in creditors (31) (6) Taxation 31 35 Capital trail rebates 11 34 NET CASH INFLOW FROM OPERATING 88 22ACTIVITIES NOTES TO THE ACCOUNTS for the year ended 30th June 2014 1. ACCOUNTING POLICIES The financial statements of the Group have been prepared in accordance withInternational Financial Reporting Standards ('IFRS'). These comprise standardsand interpretations approved by the International Accounting Standards Board('IASB'), together with interpretations of the International AccountingStandards and Standing Interpretations Committee ('IASC') that remain ineffect, and to the extent that they have been adopted by the European Union. These financial statements are presented in pounds sterling, the Group'sfunctional currency, being the currency of the primary economic environment inwhich the Group operates, rounded to the nearest thousand. (a) Basis of preparation: The financial statements have been prepared on agoing concern basis. The principal accounting policies adopted are set outbelow. Where presentational guidance set out in the Statement of Recommended Practice('SORP') for investment trusts issued by the Association of InvestmentCompanies ('AIC') in January 2009 is consistent with the requirements of IFRS,the Directors have sought to prepare the financial statements on a basiscompliant with the recommendations of the SORP. (b) Basis of consolidation: The Consolidated Financial Statements include theAccounts of the Company and its subsidiary made up to 30th June 2014. NoStatement of Comprehensive Income is presented for the parent company aspermitted by Section 408 of the Companies Act 2006. (c) Presentation of Statement of Comprehensive Income: In order to betterreflect the activities of an investment trust company and in accordance withguidance issued by the AIC, supplementary information which analyses theConsolidated Statement of Comprehensive Income between items of a revenue andcapital nature has been presented alongside the Consolidated Statement ofComprehensive Income. In accordance with the Company's Articles of Association, net capital returnsmay not be distributed by way of a dividend. Additionally, the net revenue isthe measure the Directors believe is appropriate in assessing the Group'scompliance with certain requirements set out in section 1159 of the CorporationTax Act 2010. (d) Use of estimates: The preparation of financial statements requires theGroup to make estimates and assumptions that affect items reported in theConsolidated and Company Balance Sheets and Consolidated Statement ofComprehensive Income and the disclosure of contingent assets and liabilities atthe date of the financial instruments. Although these estimates are based onthe Directors' best knowledge of current facts, circumstances and, to someextent, future events and actions, the Group's actual results may ultimatelydiffer from those estimates, possibly significantly. (e) Revenue: Dividends and other such distributions from investments arecredited to the revenue column of the Consolidated Statement of ComprehensiveIncome on the day in which they are quoted ex-dividend. Interest on fixedinterest securities and deposits is accounted for on an effective yield basis.Where the Company has elected to receive its dividends in the form ofadditional shares rather than in cash and the amount of the cash dividend isrecognised as income, any excess in the value of the shares received over theamount recognised is credited to the capital reserve. Deemed Revenue from nonreporting funds is credited to the Revenue account. Deposit interest is takeninto account on a receipts basis. (f) Expenses: Expenses are accounted for on an accruals basis. Management fees,administration and other expenses, with the exception of transaction charges,are charged to the revenue column of the Consolidated Statement ofComprehensive Income. Transaction charges are charged to the capital column ofthe Consolidated Statement of Comprehensive Income. (g) Investments held at fair value: Purchases and sales of investments arerecognised and derecognised on the trade date where a purchase or sale is undera contract whose terms require delivery within the timeframe established by themarket concerned, and are initially measured at fair value. All investments are classified as held at fair value through profit or loss oninitial recognition and are measured at subsequent reporting dates at fairvalue, which is either the bid price or the last traded price, depending on theconvention of the exchange on which the investment is quoted. Investments inunits of unit trusts or shares in OEICs are valued at the bid price for dualpriced funds, or single price for non-dual priced funds, released by therelevant investment manager. Unquoted investments are valued by the Directorsat the balance sheet date based on recognised valuation methodologies, inaccordance with International Private Equity and Venture Capital ('IPEVC')Valuation Guidelines such as dealing prices or third party valuations whereavailable, net asset values and other information as appropriate. (h) Taxation: The charge for taxation is based on taxable income for the year.Withholding tax deducted from income received is treated as part of thetaxation charge against income. Taxation deferred or accelerated can arise dueto temporary differences between the treatment of certain items for accountingand taxation purposes. Full provision is made for deferred taxation under theliability method on all temporary differences not reversed by the Balance Sheetdate. No deferred tax provision is made against deemed reporting offshorefunds. (i) Foreign currency: Assets and liabilities denominated in foreign currenciesare translated at the rates of exchange ruling at the Balance Sheet date.Foreign currency transactions are translated at the rates of exchangeapplicable at the transaction date. Exchange gains and losses are taken to therevenue or capital column of the consolidated statement of comprehensive incomedepending on the nature of the underlying item. (j) Capital reserve: The following are accounted for in this reserve: - gains and losses on the realisation of investments together with the relatedtaxation effect; - foreign exchange gains and losses on capital transactions, including those onsettlement, together with the related taxation effect; - revaluation gains and losses on investments; and - trail rebates received from the managers of the Company's investments. The capital reserve is not available for the payment of dividends. (k)Special reserve: The special reserve can be used to finance the redemptionand/or purchase of shares in issue. (l) Cash and cash equivalents: Cash and cash equivalents comprise currentdeposits, overdrafts with banks and bank loans. Cash and cash equivalents maybe held for the purpose of either asset allocation or managing liquidity. (m) Dividends payable: Dividends are recognised from the date on which they areirrevocably committed to payment. (n) Segmental Reporting: The Directors consider that the Group is engaged in asingle segment of business with the primary objective of investing insecurities to generate long term capital growth for its shareholders.Consequently no business segmental analysis is provided. (o) Adoption of new and revised standards: The Group has adopted IFRS 13 FairValue Measurement, effective for annual periods beginning on or after 1 January2013. IFRS 13 establishes a single source of guidance under IFRS for all fairvalue measurements. IFRS 13 does not change when an entity is required to usefair value, but rather provides guidance on how to measure fair value underIFRS when fair value is required or permitted. It also replaces and expands thedisclosure requirements about fair value measurements in other IFRSs, includingIFRS 7 `Financial Instruments: Disclosures'. It does not introduce any newrequirements to measure an asset or a liability at fair value, change what ismeasured at fair value in IFRS, or address how to present changes in fairvalue. The adoption of this standard has therefore had no impact on the Group'sfinancial position. (p) Accounting standards issued but not yet effective: Standards issued but notyet effective up to the date of issuance of the Group's Financial Statementsare listed below. This listing of standards and interpretations issued arethose the Group reasonably expects will have an impact on disclosure, financialposition and/or financial performance, when applied at a future date. The Groupintends to adopt those standards (where applicable) when they become effective. The revised IFRS 10 Consolidated Financial Statement provides an exemption inrespect of consolidation for investment trusts when certain criteria are met.However, the one subsidiary does not meet these criteria and hence theaccounting policy for consolidation has not been affected. The revised IFRS 12 Disclosure of interests in other entities introduceddisclosure requirements to enable users of Financial Statements to evaluate thenature of, and risks associated with, its interests in other entities and theeffects of those interests on its financial position, financial performance andcash flows. New Star Investment Trust Plc's only subsidiary, JIT SecuritiesLimited, is immaterial to the Group and has been 100% owned by the Companysince inception, and hence the Financial Statements provide sufficienttransparency to comply with this standard. The revised IAS 27 Separate Financial Statements prescribes the accounting anddisclosure requirements for investments in subsidiaries, joint ventures andassociates when an entity prepares separate financial statements. Therequirements of the standard are met as these Financial Statements clearlydifferentiate between the Company and the Group, and disclose how thesubsidiary is accounted for in the Company's Financial Statements (i.e. at fairvalue through profit or loss). The revised IFRS 9 Financial Instruments replaces IAS 39 and applies to theclassification and measurement and impairment of financial assets and financialliabilities, and hedge accounting. The adoption of IFRS 9 will have an effecton the classification and measurement of the Groups financial assets, but willpotentially have no impact on the classification and measurement of financialliabilities. It will also introduce a new expected loss impairment modelrequiring more timely recognition of expected credit losses and a reformedmodel for hedge accounting with enhanced disclosure of risk managementactivity. The standard is effective for annual periods beginning on or after 1January 2018. IFRS 15 Revenue from Contracts with Customers recognises revenue to depict thetransfer of goods or services to customers in amounts that reflect theconsideration to which the company expects to be entitled in exchange for thosegoods or services. This standard will result in enhanced disclosure aboutrevenue, provide guidance for transactions that were not previously addressedcomprehensively and improve guidance for multiple-element arrangements. Thestandard is effective for years beginning on or after 1 January 2017. 2. INVESTMENT INCOME Year ended Year ended 30th June 30th June 2014 2013 £ `000 £ `000 INCOME FROM INVESTMENTS UK net dividend income 737 561 Unfranked investment income 41 127 778 688 OTHER OPERATING INCOME Bank interest receivable 8 7 TOTAL INCOME COMPRISES Dividends 778 688 Other income 8 7 786 695 3. MANAGEMENT FEES Year ended Year ended 30th June 2014 30th June 2013 Revenue Capital Total Revenue Capital Total £ `000 £ `000 £ `000 £ `000 £ `000 £ `000 Investment management fee 491 - 491 493 - 493 Performance fee - - - - - - 491 - 491 493 - 493 At 30th June 2014 there were amounts accrued of £116,000 (2013: £120,000) forinvestment management fees. 4. OTHER EXPENSES Year ended Year ended 30thJune 30th June 2014 2013 £ `000 £ `000 Legal fees 18 - Directors' remuneration 50 50 Administrative and secretarial fee 90 87 Auditors' remuneration - Audit 29 27 - Interim review 7 7 -Taxation compliance services 11 10 Other 13 56 218 237 Allocated to: - Revenue 218 237 - Capital - - 218 237 5. TAXATION a. Analysis of tax charge for the year: Year ended Year ended 30th June 2014 30th June 2013 Revenue Capital Total Revenue Capital Total £ `000 £ `000 £ `000 £ `000 £ `000 £ `000 UK corporation tax - - - - - - Overseas tax - - - - - - Tax relief to income - - - - - - Irrecoverable income tax - - - - - - Prior year adjustment - - - - - - Total current tax for the year - - - - - - Deferred tax - - - - (149) (149) Total tax for the year (note 5b) - - - - (149) (149) (b)Factors affecting tax charge for the year: The charge for the year can be reconciled to the profit per the ConsolidatedStatement of Comprehensive Income as follows: Year ended Year ended 30thJune 30th June 2014 2013 £ `000 £ `000 Profit before tax 2,907 5,104 Theoretical tax at the UK corporation tax rate of 22.5%* 654 1,212(2013: 23.75%) Effects of: Non-taxable UK dividend income (166) (133) Gains and losses on investments that are not taxable (634) (1,225) Movement in unrealised gains on non-qualifying offshore - (149)funds Excess expenses not utilised 152 146 Overseas dividends which are not taxable (6) - Total tax for the year - (149) * Under the Finance Act 2011, the rate of Corporation Tax was lowered to 21%from 23% on 1st April 2014. An average rate of 22.5% was applicable for theyear ended 30th June 2014. Due to the Company's tax status as an investment trust and the intention tocontinue meeting the conditions required to obtain approval of such status inthe foreseeable future, the Company has not provided tax on any capital gainsarising on the revaluation or disposal of the majority of investments. (c) Provision for deferred tax: Group and Company Year ended Year ended 30th June 30th June 2014 2013 £ `000 £ `000 Provision at start of year - 149 Deferred tax credit for the year - (149) Provision at end of year - - There is no deferred tax (2013: credit of £149,000) in the capital account ofthe Company. There is no deferred tax charge in the revenue account (2013:nil). No deferred tax provision has been made for deemed reporting offshorefunds. At the year end there is an unrecognised deferred tax asset of £195,000 (2013:£43,000) as a result of excess expenses. 6. COMPANY RETURN FOR THE YEAR The Company's total return for the year was £2,907,000 (2013: £5,253,000). 7. RETURN PER ORDINARY SHARE Total return per Ordinary share is based on the Group total return on ordinaryactivities after taxation of £2,907,000 (2013: £5,253,000) and on 71,023,695(2013: 71,023,695) Ordinary shares, being the weighted average number ofOrdinary shares in issue during the year. Revenue return per Ordinary share is based on the Group revenue profit onordinary activities after taxation of £77,000 (2013: (£35,000)) and on71,023,695 (2013: 71,023,695) Ordinary shares, being the weighted averagenumber of Ordinary shares in issue during the year. Capital return per Ordinary share is based on net capital gains for the year of£2,830,000 (2013: £5,288,000) and on 71,023,695 (2013: 71,023,695) Ordinaryshares, being the weighted average number of Ordinary shares in issue duringthe year. 8. DIVIDENDS ON EQUITY SHARES Amounts recognised as distributions in the year: Year ended Year ended 30th June 30th June 2014 2013 £ `000 £ `000 Dividends paid for the year ended 30th June 2014: nil (2013: nil) per share - - The total dividend payable in respect of the financial year, which is the basison which the requirements of section 1159 of the Corporation Tax Act 2010 areconsidered, is set out below. Year ended Year ended 30th June 30th June 2014 2013 £ `000 £ `000 Final dividend for the year ended 30th June 2014: nil (2013: nil) - - 9. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS Year ended Year ended 30th June 30th June 2014 2013 £ `000 £ `000 GROUP 64,890 58,326 ANALYSIS OF INVESTMENT PORTFOLIO - GROUP Listed* Unlisted Total £ `000 £ `000 £ `000 Opening book cost 48,997 4,808 53,805 Opening investment holding gains 7,619 (3,098) 4,521 Opening valuation 56,616 1,710 58,326 Movement in period Purchases at cost 10,354 9 10,363 Sales - Proceeds (6,917) (427) (7,344) - Realised gains on sales 666 64 730 Movement in investment holding gains for the year 3,025 (210) 2,815 Closing valuation 63,744 1,146 64,890 Closing book cost 53,101 4,454 57,555 Closing investment holding gains/(losses) 10,643 (3,308) 7,335 Closing valuation 63,744 1,146 64,890 * Listed investments include unit trust and OEIC funds. Year ended Year ended 30th June 30th June 2014 2013 £ `000 £ `000 ANALYSIS OF CAPITAL GAINS AND LOSSES Realised gains on sales of investments 730 1,624 Increase in investment holding gains 2,815 3,372 Net gains on investments attributable to ordinary 3,545 4,996shareholders Transaction costsThe purchases and sales proceeds figures above include transaction costs onpurchases of £nil (2013: £nil) and on sales of £nil (2013: £nil). 10. INVESTMENT IN SUBSIDIARY UNDERTAKING The Company owns the whole of the issued share capital (£1) of JIT SecuritiesLimited, an investment company registered in England and Wales. The financial position of the subsidiary is summarised as follows: Year ended Year ended 30th June 30th June 2014 2013 £ `000 £ `000 Net assets brought forward 500 499 Profit for year 1 1 NET ASSETS CARRIED FORWARD 501 500 11. OTHER RECEIVABLES 30th June 30th June 2014 2013 Group Group £ `000 £ `000 Amounts due from brokers 294 153 Prepayments and accrued income 53 53 Taxation 14 45 Amounts owed by subsidiary - -undertakings 361 251 12. CASH AND CASH EQUIVALENTS 30th June 30th June 2014 2013 Group Group £ `000 £ `000 Cash at bank 11,171 14,969 13. OTHER PAYABLES 30th June 30th June 2014 2013 Group Group £ `000 £ `000 Accruals 195 226 14. CALLED UP SHARE CAPITAL 30th June 30th June 2014 2013 £ `000 £ `000 Authorised 305,000,000 (2013: 305,000,000) Ordinary shares of £ 3,050 3,0500.01 each Issued and fully paid 71,023,695 (2013: 71,023,695) Ordinary shares of £0.01 710 710each 15. RESERVES Share Special Retained Premium Reserve earnings account £ `000 £ `000 £ `000 GROUP At 30th June 2013 21,573 56,908 (5,871) Increase in investment holding gains - - 2,815 Net gains on realisation of investments - - 730 Loss on foreign currency - - (726) Trail rebates - - 11 Retained revenue profit for year - - 77 At 30th June 2014 21,573 56,908 (2,964) The components of retained earnings are set out below: 30th June 30th June 2014 2013 £ `000 £ `000 GROUP Capital reserve-realised (10,381) (10,397) Capital reserve-revaluation 7,335 4,521 Revenue reserve 82 5 (2,964) (5,871) COMPANY Capital reserve-realised (10,733) (10,748) Capital reserve-revaluation 7,836 5,020 Revenue reserve (67) (143) (2,964) (5,871) 16. NET ASSET VALUE PER ORDINARY SHARE The net asset value per Ordinary share is calculated on net assets of £76,227,000 (2013: £73,320,000) and 71,023,695 (2013: 71,023,695) Ordinaryshares in issue at year end. 17. ANALYSIS OF CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR At 1st Cash Exchange At 30th July flow movement June2014 2013 £ `000 £ `000 GROUP Cash at bank and on deposit 14,969 (3,072) (726) 11,171 18. FINANCIAL INFORMATION 2014Financial information The figures and financial information for 2014 are unaudited and do notconstitute the statutory accounts for the year. The preliminary statement hasbeen agreed with the Company's auditors and the Company is not aware of anylikely modification to the auditor's report required to be included with theannual report and accounts for the year ended 30th June 2014. 2013Financial information The figures and financial information for 2013 are extracted from the publishedAnnual Report and Accounts for the year ended 30th June 2013 and do notconstitute the statutory accounts for that year. The Annual Report and Accounts(available on the Company's website www.nsitplc.com) has been delivered to theRegistrar of Companies and includes the Report and Independent Auditors whichwas unqualified and did not contain a statement under either section 498(2) orsection 498(3) of the Companies Act 2006. Annual Report and Accounts The accounts for the year ended 30th June 2014 will be sent to shareholders inOctober 2014 and will be available on the Company's website or in hard copyformat at the Company's registered office, 1 Knightsbridge Green, London SW1X7QA. The Annual General Meeting of the Company will be held on 6th November 2014 at11.00am at 1 Knightsbridge Green, London SW1X 7QA.