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27 Sep 2010 12:01
NEW STAR INVESTMENT TRUST PLC
Final Results
This announcement constitutes regulated information.
AUDITED RESULTS
FOR THE YEAR ENDED 30th JUNE 2010
New Star Investment Trust plc (the `Company'), whose objective is to achievelong-term capital growth, announces its consolidated results for the year ended30th June 2010.FINANCIAL HIGHLIGHTS 30th 30th % June June Change 2010 2009 PERFORMANCE Net assets (£'000) 67,972 58,746 15.7 Net asset value per Ordinary 95.70p 82.71p 15.7share Mid-market price per 70.00p 58.00p 20.7Ordinary share Discount of price to net 26.9% 29.9% N/Aasset value FTSE World Index (total 510.67 415.61 22.9return, sterling adjusted) FTSE All-Share Index (total 3,370.06 2,781.88 21.1return) 1st July 2009 1st July 2008 to 30th June to 30th June 2010 2009 REVENUE Return per Ordinary (0.40)p 0.92pshare Dividend per Ordinary - 0.70pshare TOTAL RETURN Net assets 16.6% (38.6%) FTSE All-Share Index 21.1% (20.5%)CHAIRMAN'S STATEMENT
MARKET BACKDROP AND PERFORMANCE
Your Company generated positive returns during the year to 30th June 2010, withnet assets rising 15.7% to £68.0 million although this gain marginally laggedthe FTSE All-Share Price Index, which rose 17.1%. This underperformance did,however, mask a significant relative recovery over the second half of the year,when net assets rose 1.9% while the FTSE All-Share Price Index declined 7.9%.At the year end, the net asset value per Ordinary share was 95.70p. Thiscompares with the launch price of 100p in May 2000. The FTSE All-Share PriceIndex over the same period fell 15.3%.The net revenue loss for the year under review was £281,000 against a £655,000revenue profit the previous year mainly as a result of a strategic move tolower income producing investments principally in emerging markets. YourDirectors do not recommend the payment of a final dividend. A 0.70p dividendper Ordinary share was paid in 2009.Global equities recovered strongly over the year, with the FTSE World TotalReturn Index rising 22.9% in sterling terms although there was a 2.5% retreatduring the second half. Having bounced from their March 2009 bear-market low,shares maintained their upward momentum for most of the year in response tocentral bank quantitative easing, the rebuilding of bank balance sheets throughshare issues and evidence of a global economic recovery from the third quarterof 2009, fuelled by strong emerging markets growth. The UK economy lagged,staying in recession during the summer, but it returned to growth in the fourthquarter and that growth was maintained in the first quarter of 2010. Strongergrowth was generated by the US and developing economies in Asia and investorswere cheered by central bank signals that the priority was to restore monetaryexpansion to entrench economic growth, and official short-term interest rateswere held at historically low levels.There were, however, renewed bouts of nervousness during the second half of theyear under review, particularly in the final quarter. Investors grew concernedthat the US economic recovery was insufficiently strong to generate the levelsof job creation that would sustain it. In the eurozone, meanwhile, Greece'sparlous economic and fiscal situation led to a joint European Central Bank/International Monetary Fund rescue package. The Greek crisis led savers towithdraw deposits from domestic banks and sell Greek government bonds amidsigns that the country's planned austerity package was producing socialinstability. Contagion spread to other peripheral eurozone economies with weakeconomic and fiscal conditions such as Spain, Portugal, Italy and Ireland. Theeurozone fiscal crisis took its toll of the euro, which fell 12.6% against thedollar over the year and 4.1% against the pound.As a result of the revival in investors' risk appetites, riskier, more volatileequities such as small and medium-sized companies outperformed larger stocks.In the US, the Russell 2000 Index of smaller companies rose 32.0% in sterlingterms while the larger stocks in the Russell 1000 Index rose 24.3%. The revivalin risk appetite was also apparent in bond markets. As a result,sterling-denominated high-yield bonds returned 62.8% and emerging marketgovernment bonds returned 29.3% while government bonds in the Group of Seven(G7) major economies returned 15.7%.Within the G7, the resource-heavy Canadian market was the strongest, returning34.6% principally as a result of the Canadian dollar's rise, while US equitiesreturned 27.0% and UK equities returned 21.1%. By contrast, Japan generatedlosses in local currency terms, producing an 11.7% positive return for sterlinginvestors solely as a result of yen strength. The eurozone's G7 members alsounderperformed, with Italy, France and Germany, up 1.9%, 13.7% and 14.6%respectively.The strongest sectors were those that stood to benefit most from globaleconomic recovery and Asian expansion. Basic materials rose 35.1%, industrialstocks returned 32.6% and consumer goods and services rose 31.6% and 31.2%respectively. By contrast, defensive areas underperformed, with utilities,telecommunications and healthcare up 13.2%, 17.6% and 22.1% respectively. Theother notable underperformer was energy, which returned 14.8%, dragged down byBP's oil spill in the Gulf of Mexico; over the year BP shares fell 30.1%.Over the summer of 2009, the pace of global economic recovery was slowing andleading indicators such as analysts' profit expectations and forward-lookingbusiness surveys suggested that the pace of expansion would continue toslacken. In the eurozone, sentiment was particularly fragile, with contagionspreading from Greece's deepening crisis. The world did not, however, appear tobe facing a "double dip" recession. Monetary conditions still favoured economicgrowth albeit at a slower pace while US corporate capital spending and consumersentiment were continuing to improve. The impact of such trends on markets islikely to depend on liquidity conditions, which were tightening in early 2010.Sentiment may also be negatively affected by investors' perceptions about thetiming of the abandonment of ultra-loose central bank monetary policies. Insuch an environment, asset selection will be critical in generating returns.
Your Company's unaudited net asset value at 31st August 2010 was 97.90p.
BOARD
On 30th October 2009 James Roe retired as a director due to ill health. The Board will miss his guidance and we thank him for his valuable contribution over a number of years.
Geoffrey Howard-SpinkChairman24th September 2010
INVESTMENT MANAGER'S REPORT
Your Company's strategy is to invest in a diversified portfolio of open-endedfunds, investment trusts, exchange-traded funds (ETFs) and hedge funds selectedfrom across the market place as well as certain selected special situations.The portfolio is spread across diverse asset classes from UK and overseasequities and bonds to commercial property, commodities and private equity.A number of changes were made to the portfolio during the year under review.Your Company participated in two fund launches: Henderson European SpecialSituations, a retail fund, and Aberforth Geared Income Trust, a split capitalinvestment trust, in which ordinary shares were purchased. In addition,holdings were taken in Atlantis China, M&G Optimal Income, Polar Capital GlobalTechnology and the Aquilus Inflection Fund, a deep value long/short equity fundwith a European bias.Disposals included Henderson International Property, Loomis Sayles MultisectorIncome, Skandia Global Best Ideas and Skandia UK Strategic Best Ideas. Inaddition the holdings in the Gold Bullion Securities ETF and Prusik Asia werereduced.A significant number of the holdings generated strong positive returns over theyear under review. In the commodities area, Gold Bullion Securities rose 45.9%while Blackrock Gold & General rose 41.6%. In emerging markets, GWI BrazilFund, which had fallen sharply the previous year, recovered 49.6%, NeptuneRussia returned 44.85% and Investec Africa returned 29.98%. Of the fundspurchased during the year, Atlantis China and Polar Global Technology, whichwere both purchased in August 2009, had gained 36.4% and 24.5% respectively bythe year end. The weak areas within the portfolio included Prusik Asia, whichfell 4.6%, Artemis UK Special Situations, which rose 11.9% and the investmentin Corndon.As a result of the portfolio changes and market movements, your Company endedthe year with 53.1% of its assets in retail funds, 6.4% in ETFs, 5.2% ininvestment trusts, 3.7% in hedge funds, 4.3% in other securities and 27.3% incash. Geographically, the biggest non-cash exposures were emerging markets, at17.3%, the UK, at 13.6%, Europe excluding the UK, at 8.6%, and the Pacificexcluding Japan, at 7.2%. In asset class terms, the biggest non-cash holdingswere in equities, at 45.5%, commodities, at 12.2%, and private equity, at 4.8%.By the year end, global stock markets had retreated 12.5% from their mid-Aprilpeak in sterling terms, with some markets suffering sharp falls in response torenewed investor nervousness. Sentiment was particularly fragile in theeurozone and on the eastern periphery of the European Union, with Portugueseand Spanish banks needing increased levels of central bank support as contagionspread from the deepening economic crisis in Greece. Within the Group of Seven(G7), the weakest countries were Italy, down 21.8%, and France, down 18.8%.Among smaller developed markets, Greece and Spain were down 31.2% and 23.5%respectively while the weakest emerging markets included Romania, down 30.9%,Hungary, down 28.4% and Poland, down 22.8%.There were fears among some investors that the global economy might soon fallback into recession but monetary indicators such as the inflation-adjustedmoney supply in the G7 implied that a growth slowdown rather than a return toeconomic contraction was likely in the short term. Positive factors includedreduced nervousness in the interbank markets, improved trends in the US jobsmarket, reduced risk aversion among bank lending officers and fairly firm datafrom forward-looking business sentiment indicators.The slowdown in the rate of growth in the inflation-adjusted G7 money supplywhen combined with maintained economic growth, albeit at more lacklustre level,may result in a less benign liquidity environment for financial markets. Afterthe strong gains from the bottom of the bear market in March 2009, this impliesthat market conditions are likely to be more challenging over the comingmonths.Brompton Asset Management LLPInvestment Manager24th September 2010SCHEDULE OF TWENTY LARGEST INVESTMENTS at 30th June 2010 30th June 2010 Holding Activity Bid-market Percentage value of portfolio £'000 BlackRock Gold & Investment Fund 6,066 12.40General Income Fund
New Star European Investment Fund 5,828 11.92 Special Situations Fund
Investec Africa Fund Investment Fund 4,256 8.70 Occam Umbrella Asia Investment Fund 3,900 7.98Focus Fund Atlantis China Fund Investment Fund 2,729 5.58
M&G Optimal Income Fund Investment Fund 2,519 5.15
Polar Capital Global Investment Fund 2,483 5.08 Technology Fund
Trojan Investment Fund Investment Fund 2,469 5.05
Lyxor Gold Bullion Exchange Traded 2,250 4.60Securities ETF Fund Artemis UK Special Investment Fund 2,227 4.55Situations Fund iShares FTSE/Xinhua Exchange Traded 2,111 4.32China 25 ETF Fund
Aquilus Inflection Fund Investment Fund 1,919 3.92
Neptune Russia & Investment Fund 1,574 3.22Greater Russia Fund Henderson Private Investment 1,404 2.87Equity Investment Trust Company The Sierra Investment Investment Fund 1,300 2.66Fund BH Global Investment Investment 1,174 2.40Limited Company GWI Brazil Fund Investment Fund 1,060 2.17 Aberforth Geared Income Investment 958 1.96Trust Company Prusik Asia Fund Investment Fund 951 1.94 Corndon Limited 12% Convertible 570 1.17Convertible Security 47,748 97.64 Balance held in 12 1,154 2.36investments Total investments 48,902 100.00 The investment portfolio can be further £'000 analysed as follows: Equities (including 4,074 Investment Companies) Convertible securities 570 Other investments 44,258 48,902
All the Company's investments are either unlisted or are unit trusts/OEIC funds with the exception of Henderson Private Equity Investment Trust, iShares FTSE/Xinhua China 25 ETF, BH Global Investment Limited, Midas Capital,Lyxor Gold Bullion Securities ETF, Immedia Broadcasting and Hanson Westhouse Holdings. SCHEDULE OF TWENTY LARGEST INVESTMENTS at 30th June 2009 30th June 2009 Holding Activity Bid-market Percentage value of portfolio £'000
BlackRock Gold & General Investment 4,284 10.92 Income Fund
Fund
Natixis Loomis Sayles Investment 3,305 8.42 Multisector Income Fund Fund
Investec Africa Fund Investment 3,275 8.35 Fund Lyxor Gold Bullion Exchange 3,053 7.78Securities ETF Traded Fund
Occam Umbrella Asia Focus Investment 3,032 7.73 Fund
Fund Skandia UK Strategic Best Investment 2,610 6.65Ideas Fund Fund M&G Optimal Income Fund Investment 2,139 5.45 Fund Prusik Asia Fund Investment 2,013 5.13 Fund Artemis UK Special Investment 1,990 5.07Situations Fund Fund Trojan Investment Fund Investment 1,985 5.06 Fund
iShares FTSE/Xinhua China Exchange 1,835 4.68 25 ETF
Traded Fund
Henderson Private Equity Investment 1,183 3.02 Investment Trust Company
Neptune Russia & Greater Investment 1,087 2.77Russia Fund Fund The Sierra Investment Investment 1,000 2.55Fund Fund Corndon Limited Equity 1,000 2.55 BH Global Investment Investment 992 2.53Limited Company New Star International Investment 893 2.28Property Fund Fund Synergy Fund Limited Investment 817 2.08 Fund Skandia Global Best Ideas Investment 726 1.85Fund Fund GWI Brazil Fund Investment 711 1.82 Fund 37,930 96.69 Balance held in 11 1,298 3.31investments Total investments 39,228 100.00 The investment portfolio can be £'000 further analysed as follows: Equities 2,681 Convertible securities 458 Other investments 36,089 39,228
All the Company's investments are either unlisted or are unit trusts/OEIC funds with the exception of Henderson Private Equity Investment Trust, iShares FTSE/Xinhua China 25 ETF, BH Global Investment Limited, Midas Capital, Lyxor Gold Bullion Securities ETF, Immedia Broadcasting and Hanson Westhouse Holdings.
BUSINESS REVIEWThe following business review is designed to provide information primarilyabout theCompany's business and results for the year ended 30th June 2010. The BusinessReview should be read in conjunction with the Chairman's Statement above and the InvestmentManager's Report above, which provide a review of the year's performance of the Company and the outlook for the future.
STATUS
The Company is an investment company under section 833 of the Companies Act2006. It conducts its operations in accordance with the requirements ofsections 1158/1159 Corporation Tax Act 2010 (`section 1158') (formerly section842 Income and Corporation Taxes Act 1988) so as to gain exemption under thosesections from liability to United Kingdom capital gains tax. Approval by HMRevenue & Customs (`HMRC') under section 1158 can only be obtained annually andis only granted subject to no subsequent enquiry into the Company's corporationtax self-assessment. The Directors are of the opinion that the Company continues to conduct its affairs in a manner which will enable it to continue to apply for exemption under section 1158.The Company is listed on the London Stock Exchange. It therefore conducts itsaffairs in accordance with the Listing Rules and Disclosure and TransparencyRules published by the Financial Services Authority.
The Company is incorporated and registered in England and Wales and is domiciled in the United Kingdom. The Company number is 3969011.
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 investment opportunities through investment in equity, bond, commodity, real estate, currency and other markets. The Company's assets may have significant weightings 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 relevant markets. The Company may invest up to 15% of its net assets in direct investments 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 the United States, the United Kingdom, Europe ex UK, Asia ex Japan, Japan or EmergingMarkets and to any individual industry sector will be limited to 50% of the Company's net assets, such values being assessed at the time of investment 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 asset value 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 single investment, such values being assessed at the time of investment.
Derivative instruments and forward foreign exchange contracts may be used for the purposes of efficient portfolio management and currency hedging. Derivatives may also be used outside of efficient portfolio management to meet the Company's investment objective. The Company may take outright short positions in relation to up to 30% of its net assets, with a limit on short sales of individual stocks of up to 5% of its net assets, such values being assessed at the time of investment.
The Company may borrow up to 30% of net assets for short term funding or long term 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.
FINANCIAL REVIEW
Assets
Net assets at 30th June 2010 amounted to £67,972,000 compared with £58,746,000at 30th June 2009. In the year under review the net asset value per Ordinaryshare increased by 15.7% from 82.71p to 95.70p.
Costs
Total expenses for the year amounted to £763,000 (2009: £411,000 net of a VATrecovery credit of £170,000). In the year under review the investmentmanagement fee amounted to £496,000 (2009: £311,000). No performance fee waspayable in respect of the year under review as the Company did not outperformthe hurdle rate. Further details on the Company's expenses may be found innotes 3 and 4.
Revenue
The Company's gross revenue totaled £437,000 (2009: £1,272,000) mainly as aresult of a strategic move to lower income producing investments in emergingmarkets and lower interest rates. After deducting expenses, the revenue lossfor the year was £281,000 (2009 revenue profit: £655,000).
Dividends
Dividends do not form a central part of the Company's investment policy. The Directors have not declared a final dividend (2009: final dividend of 0.70p).
Funding
The primary source of the Company's funding is shareholder funds. The Company is typically ungeared.
VAT reclaimNo VAT is charged on investment management fees. In 2009 the Company receivedVAT refunds totaling £170,000, together with interest of £35,000, in respect ofVAT paid on management fees between 2001 and 2007.
Payment of suppliers
The Company seeks to obtain the best possible terms for all business and, therefore,there is no single payment of supplier policy. In general the Company agrees with its suppliers the terms on which business will take place. There were no trade creditors at 30th June 2010 (2009: nil).
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.
Going concern
The Directors believe that it is appropriate to continue to adopt the goingconcern basis in preparing the accounts as the assets of the Company consistmainly of securities which are readily realisable and, accordingly, the Companyhas adequate financial resources to continue in operational existence for theforeseeable future. In reaching this view, the Directors reviewed the level ofexpenditure of the Company against the cash and asset liquidity within theportfolio.
PERFORMANCE MEASUREMENT AND KEY PERFORMANCE INDICATORS
In order to measure the success of the Company in meeting its objectives and to evaluate the performance of the Investment Manager, the directors take into account the following key performance indicators.
30th June 30th June % 2010 2009 Change Net assets (£000) 67,972 58,746 15.7 Net asset value per share 95.70p 82.71p 15.7 Share price 70.00p 58.00p 20.7 Discount 26.9% 29.9% N/A Total Return per share 13.69p (52.30)p N/A FTSE World Index (total 510.67 415.61 22.9return, sterling adjusted) FTSE All-Share Index (total 3,370.06 2,781.88 21.1return) MANAGEMENT ARRANGEMENTSIn 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 were managed by New Star Asset Management Limited (`New Star'), a subsidiary of Henderson Global Investors Plc, until 31st December 2009. The Company's investments during the period included funds managed by subsidiaries of Henderson Global Investors Plc.
On 1st January 2010 Brompton Asset Management LLP (`Brompton') replaced NewStar as Investment Manager. The portfolio manager, Simon Akroyd, transferredfrom New Star to Brompton. This relationship is governed by an agreement dated23rd December 2009.Brompton (and prior to that New Star) receives a management fee, payablequarterly in arrears, equivalent to 3/16 per cent of total assets after thededuction of the value of any investments managed by the Investment Manager orits associates (as defined in the investment management agreement). Theinvestment management agreement may be terminated by either party giving threemonths written notice to expire on the last calendar day of any month.With effect from 1st September 2008, the Investment Manager has also been entitled to a performance fee of 15 per cent of the growth in net assets over a hurdle of 3month Sterling LIBOR plus 1 per cent per annum, payable six monthly in arrears, subject to a high watermark. The aggregate of the Company's management fee and performance fee are subject to a cap of 4.99 per cent of net assets in any financial year (with any performance fee in excess of this cap capable of being earned in future years).During the year under review the investment management fee amounted to £496,000(2009:£311,000). No performance fee was accrued or paid in respect of the year ended30th June 2010 (2009: £nil).
Secretarial, administration and accounting services
Secretarial services, general administration and accounting services for theCompany have been undertaken by Phoenix Administration Services Limited since1st January 2010. Prior to 1st January 2010, these services were undertaken
byNew Star and HSBC.Custodian services
On 1st January 2010 Brown Brothers Harriman & Co was appointed as the independent custodian to the Company. Prior to 1st January 2010, HSBC was the custodian.
RELATED PARTY TRANSACTIONS
On 1st January 2010 Brompton replaced New Star as Investment Manager. Mr Duffield is the senior partner of Brompton Asset Management Group LLP.
The investment management fee payable to Brompton in relation to the year ended30th June 2010 was £261,000. No performance fee was payable in respect of theyear ended 30thJune 2010.During the year the Group's investments included funds managed by the Investment Manager or by associates of the Investment Manager. At 30th June 2010 the Company held1 such investment. No investment management fees were payable by the Company inrespect of this investment.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks associated with the Company that have been identified by the Board, together with the steps taken to mitigate them, are as follows:
Investment strategy
Inappropriate long-term strategy, asset allocation and manager selection might lead to the underperformance of the Company.
The Company's strategy is kept under regular review by the Board. Investment performance is discussed at every Board meeting and the Directors receive a monthly report which details the Company's asset allocation, investment selection and performance.
Business conditions and general economy
The Company's investment returns are influenced by general economic conditions in the UK and globally. Factors such as interest rates, inflation, investor
sentiment and the availability and cost of credit could adversely affect investmentreturns. The Board regularly considers the economic environment in which the Company operates.
The portfolio is managed with a view to mitigating risk by investing in a spread 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 movements affecting the value of the portfolio, although hedging techniques may be employed 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 Investment Manager of key staff could adversely affect investment returns. The Board receives a monthly financial report which includes information on performance and a representative of the Investment Manager attends each Board meeting. The Boardis kept informed of any personnel changes to the investment team employed by theInvestment Manager.Tax and regulatory risksA breach of sections 1158 to 1165 Corporation Tax Act 2010 (formerly section842 of the Income and Corporation Taxes Act 1988) could lead to a loss ofinvestment trust status, resulting in capital gains realised within theportfolio being subject to United Kingdom capital gains tax. A breach of theUKLA Listing Rules could result in suspension of the Company's shares, while abreach of company law could lead to criminal proceedings, or financial orreputational damage. The Board employs Brompton as Investment Manager andPhoenix Administration Services Limited as Secretary and administrator to helpmanage the Company's legal and regulatory obligations. The Board receives amonthly financial report which includes information on the Company's compliancewith section 1158.OperationalDisruption 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.Details of how the Board monitors the services provided by the InvestmentManager, Administrator and its other suppliers, and the key elements designedto provide effective internal control, are explained further in the internalcontrols section of the Corporate Governance Statement.
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. TheCompany's portfolio is managed in accordance with the investment objective andpolicy; environmental, social and community matters are considered to theextent that they potentially impact on the Company's investment returns.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Annual Report and the Groupfinancial statements in accordance with applicable United Kingdom law and thoseInternational Financial Reporting Standards ("IFRS") as adopted by the EuropeanUnion.Under Company Law, the directors must not approve the Group financialstatements unless they are satisfied that they present fairly the financialposition of the Group and the financial performance and cash flows of the Groupfor that period. In preparing those Group financial statements the directorsare required to:
• select suitable accounting policies in accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;
• present information, including accounting policies, in a manner that provides relevant,reliable, comparable and understandable information;
• provide additional disclosures when compliance with the specific requirementsin IFRSs is insufficient to enable users to understand the impact of particulartransactions, other events and conditions on the Group's financial position and financial performance;
• state that the Group has complied with IFRSs, subject to any material departures disclosed and explained in the financial statements; and
• prepare a Directors' Report and Directors' Remuneration Report which comply with the requirements of the Companies Act 2006.
The directors are responsible for keeping proper accounting records that aresufficient to show and explain the Group's transactions and disclose withreasonable accuracy at any time the financial position of the Company andenable them to ensure that the financial statements comply with the CompaniesAct 2006 and Article 4 of the IAS Regulation. They are also responsible forsafeguarding the assets of the Company and hence for taking reasonable stepsfor the prevention and detection of fraud and other irregularities.The directors are responsible for the maintenance and integrity of thecorporate and financial information included in the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financialstatements may differ from legislation in other jurisdictions.
STATEMENT UNDER DISCLOSURE AND TRANSPARENCY RULE 4.1.12
The Directors of the Company each confirm to the best of their knowledge that:
(a) the financial statements have been prepared in accordance with applicableaccounting standards, give a true and fair view of the assets, liabilities, financialposition and profit or loss of the Group; and(b) this Annual Report includes a fair review of the development and performance of thebusiness and the position of the Company and the Group, together with a descriptionof the principal risks and uncertainties they face.AUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 30th June 2010 Year ended Year ended 30th June 2010 30th June 2009 Revenue Capital Total Revenue Capital Total Return Return £'000 Return Return £'000 Notes '000 £'000 £'000 £'000 INVESTMENT INCOME 2 420 - 420 1,049 - 1,049 Other operating 2 17 - 17 223 - 223income 437 - 437 1,272 - 1,272 GAINS AND LOSSES ON INVESTMENTS Gains / (losses) on 9 - 9,397 9,397 - (36,822) (36,822)investments at fair value through profit or loss Losses on index - - - - (672) (672)future contracts Losses on forward - - - - (302) (302)currency contracts Other exchange - 659 659 - (167) (167)gains / (losses) Trail commission - 120 120 - 129 129 437 10,176 10,613 1,272 (37,834) (36,562) EXPENSES Management fees 3 (496) - (496) (311) - (311) VAT recovery 3 - - - 170 - 170 Other expenses 4 (267) - (267) (268) (2) (270) (763) - (763) (409) (2) (411) PROFIT/(LOSS) (326) 10,176 9,850 863 (37,836) (36,973)BEFORE FINANCE COSTS AND TAX Finance costs (1) - (1) (77) - (77) PROFIT/(LOSS) (327) 10,176 9,849 786 (37,836) (37,050)BEFORE TAX Tax 5 46 (172) (126) (131) 40 (91) PROFIT/(LOSS) FOR (281) 10,004 9,723 655 (37,796) (37,141)THE YEAR EARNINGS PER SHARE Ordinary shares 7 (0.40) 14.09 13.69 0.92 (53.22) (52.30)(pence)
The Company did not have any income or expense that was not included in `profit for the year'. Accordingly, the `profit for the year' is also the `Total comprehensive income for the year', as defined in IAS1 (revised) and no separate Statement of Comprehensive Income has been presented.
The total column of this statement represents the Group's profit and loss
account, prepared in accordance with IFRS. The supplementary Revenue Return and Capital Return columns are both prepared under guidance published by the Association of Investment Companies. All revenue and capital items in the above statement derive from continuing operations.
No operations were acquired or discontinued during the year.
All income is attributable to the equity holders of the parent company. There are no minority interests.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30th June 2010 Share Share Special Retained Total capital premium reserve earnings £'000 Note £'000 £'000 £'000 £'000 AT 30TH JUNE 2009 710 21,573 56,908 (20,445) 58,746 Total comprehensive - - - 9,723 9,723income for the year Dividend paid 8 - - - (497) (497) AT 30TH JUNE 2010 710 21,573 56,908 (11,219) 67,972
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 30th June 2009 Share Share Special Retained Total capital premium reserve earnings £'000 Note £'000 £'000 £'000 £'000 AT 30TH JUNE 2008 710 21,573 56,908 17,214 96,405 Total comprehensive - - - (37,141) (37,141)income for the year Dividend paid 8 - - - (518) (518) AT 30TH JUNE 2009 710 21,573 56,908 (20,445) 58,746CONSOLIDATED BALANCE SHEET at 30th June 2010 30th June 30th June 2010 2009 Notes £'000 £'000 NON-CURRENT ASSETS Investments at fair value 9 48,902 39,228through profit or loss CURRENT ASSETS Other receivables 11 68 94 Cash and cash equivalents 12 19,672 20,189 19,740 20,283 TOTAL ASSETS 68,642 59,511 CURRENT LIABILITIES Other payables 13 (230) (421) TOTAL ASSETS LESS CURRENT 68,412 59,090LIABILITIES NON-CURRENT LIABILITIES Deferred tax liability 5 (440) (344) NET ASSETS 67,972 58,746 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 (11,219) (20,445) TOTAL EQUITY 67,972 58,746 NET ASSET VALUE PER ORDINARY 16 95.70 82.71SHARE (pence) COMPANY BALANCE SHEET at 30th June 2010 30th June 30th June 2010 2009 Notes £'000 £'000 NON-CURRENT ASSETS Investments at fair value 9 48,902 39,228through profit or loss CURRENT ASSETS Other receivables 11 955 974 Cash and cash equivalents 12 18,289 18,814 19,244 19,788 TOTAL ASSETS 68,146 59,016 CURRENT LIABILITIES Other payables 13 (230) (421) TOTAL ASSETS LESS CURRENT 67,916 58,595LIABILITIES NON-CURRENT LIABILITIES Deferred tax liability 5 (440) (344) NET ASSETS 67,476 58,251 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 (11,715) (20,940) TOTAL EQUITY 67,476 58,251CASH FLOW STATEMENTS for the year ended 30th June 2010 Year Year Year Year ended ended ended ended 30th 30th 30th 30th June June June June 2010 2010 2009 2009 Group Company Group Company Note £'000 £'000 £'000 £'000 CASH FLOWS FROM OPERATING ACTIVITIES Profit / (loss) before 9,850 9,849 (36,973) (37,004)finance costs and tax Adjustments for: (Gains) / losses on (9,562) (9,562) 46,340 46,340investments OPERATING CASH FLOWS 288 287 9,367 9,336BEFORE MOVEMENTS IN WORKING CAPITAL Rolled-up interest (112) (112) - - Decrease in receivables 19 19 8 3 Decrease in payables (112) (112) (347) (8) NET CASH FROM OPERATING 83 82 9,028 9,331ACTIVITIES BEFORE FINANCE COSTS AND INCOME TAXES Taxation (102) (109) (78) (78) NET CASH FROM OPERATING 17 (19) (27) 8,950 9,253ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid (497) (497) (518) (518) Interest paid (1) (1) (77) (77) NET CASH USED IN (498) (498) (595) (595)FINANCING ACTIVITIES NET (DECREASE) / (517) (525) 8,355 8,658INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash 20,189 18,814 11,834 10,156equivalents at beginning of Year CASH AND CASH 19,672 18,289 20,189 18,814EQUIVALENTS AT END OF YEAR NOTES TO THE ACCOUNTSfor the year ended 30th June 2010
1. ACCOUNTING POLICIES
These financial statements are presented in pounds sterling, the Group's functional currency, because that is the currency of the primary economic environment in which the Group operates, rounded to the nearest thousand.
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.
(a) Basis of preparation: The financial statements have been prepared on a going concern basis. The principal accounting policies adopted are set out below.
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 Statement of Comprehensive Incomeand Balance Sheet include the Accounts of the Company and its subsidiary made up to 30th June 2010. No Statement of Comprehensive Income is presented for the parentcompany as permitted 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 status as a UK investment company under section 833 of the Companies Act 2006, net capital returns may not be distributed by way of a dividend. Additionally, the net revenue is the measure the directors believe appropriate in assessing the Group's compliance with certain requirements set out in section 1158 of the Corporation Tax Act 2010.
(d) Use of estimates: The preparation of financial statements requires theGroup to make estimates and assumptions that affect items reported in theBalance Sheet and Consolidated Statement of Comprehensive Income and thedisclosure of contingent assets and liabilities at the date of the financialinstruments. Although these estimates are based on the Directors' bestknowledge of current facts, circumstances and, to some extent, future eventsand actions, the Group's actual results may ultimately differ from thoseestimates, 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, the amount of cash dividend isrecognised as income. Any excess in the value of the shares received over theamount of cash dividend is credited to the capital reserve.(f) Expenses: Expenses are accounted for on an accruals basis. Management fees,administration and other expenses, with the exception of the transactioncharges 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) Investment 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 valueAll investments are classified as held at fair value through profit or loss oninitial recognition and are measured at subsequent reporting dates at fair value,which is either the bid price or the last traded price, depending on the conventionof the exchange on which the investment is quoted. Investments in units of unit trusts or shares in OEICs are valued at the closing bid price released by the relevant investment manager. Unquoted investments are valued by the directors at the balance sheet date based on recognised valuation methodologies, in accordance with International Private Equity and Venture Capital ('IPEVC')Valuation Guidelines such as dealing prices or third party valuations where available,net asset values and other information as appropriate.
The Company's investment in its subsidiary company, JIT Securities Limited, is valued at cost in the Company's Balance Sheet.
(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 treatment of certain items for accounting andtaxation purposes. Full provision is made for deferred taxation under theliability method on all temporary differences not reversed by the Balance Sheetdate.(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 exchange applicableat the transaction date. Foreign currency differences including exchange gains andlosses are dealt with in the capital reserve.
(j) Capital reserve: The following are accounted for in this reserve:
- gains and losses on the realisation of investments together with the related taxation effect;
- foreign exchange gains and losses, including those on settlement, together with the related taxation effect;
- unrealised gains and losses on investments; and
- trail commission and 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 redemption and/or purchase of shares in issue.
(l) Cash and cash equivalents: Cash and cash equivalents comprise current deposits, overdrafts with banks and bank loans and are subject to an insignificant risk of changes in value. Cash and cash equivalents may be held for the purpose of either asset allocation or managing liquidity.
(m) Dividends payable: Dividends are recognised from the date on which they are irrevocably committed to payment.
(n) Segmental Reporting: The Directors consider that the Group is engaged in a single segment of business with the primary objective of investing in securities to generate long term capital growth for its shareholders.
Consequently no business segmental analysis is provided.
(o) Accounting developments: At the date of authorisation of these financial statements, the following Standards which have not been applied in these financial statements were in issue but were not yet effective (and in some cases had not yet been adopted by the European Union):
International Accounting Standards Accounting periods(IAS/IFRSs) beginning on or after IFRS 1 Amendments to IFRS 1 - 1st January 2010Additional Exemptions for First-time Adopters IFRS 1 Amendments to IFRS 1 - 1st July 2010Limited Exemption from Comparative IFRS 7 disclosures
IFRS 2 Amendments to IFRS 2 - Group 1st January 2010 Cash settled Share-based Payment
Transactions IFRS 9 Financial Instruments: 1st January 2013Classification & Measurement
IAS 24 Related Party Disclosures 1st January 2011 (revised)
The Directors anticipate that the adoption of these standards/interpretations in future periods will have no material impact on the consolidated financial statements. 2. INVESTMENT INCOME Year ended Year ended 30th June 30th June 2010 2009 £'000 £'000 INCOME FROM INVESTMENTS UK net dividend income 23 319 Unfranked investment income 182 570 Fixed interest income 160 105 Interest on convertible loan stock 55 55 420 1,049 OTHER OPERATING INCOME Bank interest receivable 17 188 VAT reclaim interest received from HMRC - 35 17 223 TOTAL INCOME COMPRISES Dividends 205 889 Interest 215 160 Other income 17 223 437 1,2723. MANAGEMENT FEES Year ended Year ended 30th June 2010 30th June 2009 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Investment 496 - 496 311 - 311management fee Performance - - - - - -fee 496 - 496 311 - 311
At 30th June 2010 there were amounts outstanding of £129,000 (2009: £203,000) for investment management fees.
A summary of the terms of the investment management agreement may be found in the Directors' Report.
Following a decision made by HM Revenue and Customs in November 2007,managementfees invoiced after this date have not incurred a VAT charge. £170,000 of VAT paid on management fees in past years was recovered during the year ended 30th June 2009.4. OTHER EXPENSES Year ended Year ended 30th June 30th June 2010 2009 £'000 £'000 Legal fees 52 82 Directors' remuneration 55 65 Administrative and secretarial fee 82 55 Auditors' remuneration - Audit 28 27 - Other 5 2 Other 45 39 267 270 Allocated to: - Revenue 267 268 - Capital - 2 267 2705. TAXATION(a) Analysis of tax charge for the year: Year ended Year ended 30th June 2010 30th June 2009 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 UK corporation - - - 138 35 173tax Overseas tax - - - 7 - 7 Double tax relief - - - (7) - (7) Tax relief to (76) 76 - - - -Income Irrecoverable 30 - 30 - - -income tax Total current tax (46) 76 30 138 35 173for the year Deferred tax - 96 96 (7) (75) (82) Total tax for the (46) 172 126 131 (40) 91year (note 5b)
(b)Factors affecting tax charge for the year:
The charge for the year can be reconciled to the profit /(loss) per the Consolidated Statement of Comprehensive Income as follows:
Year Year ended ended 30th June 30th June 2010 2009 £'000 £'000 Profit / (loss) before tax 9,849 (37,050)
Tax at the UK corporation tax rate of 2,758 (10,374) 28% (2009: 28%)
Effects of: Non-taxable UK dividend income (6) (89)
Gains and losses on investments that (2,774) 10,629 are not taxable
Movement in unrealised gains on 96 (75)non-qualifying offshore funds Irrecoverable income tax 29 - Overseas dividends which are not (9) -taxable Excess expenses not utilised 32 - Overseas tax - 7 Double tax relief - (7) Total tax for the year 126 91
Due to the Company's tax status as an investment trust and the intention to continue meeting the conditions required to obtain approval of such status in the foreseeable future, the Company has not provided tax on any capital gains arising on the revaluation or disposal of the majority of investments.
(c ) Provision for deferred tax:
Group and Company Year Year ended ended 30th June 30th June 2010 2009 £'000 £'000 Provision at start of year 344 426
Deferred tax charge/(credit) for the 96 (82) year
Provision at end of year 440 344 The deferred tax charge in the capital account of £96,000 (2009: credit of£75,000) of the Company relates to unrealised gains on non-distributing offshorefunds. There is no deferred tax charge in the revenue account (2009: credit of£7,000) relating to the reversal of the prior year tax charge on income taxable in the subsequent accounting period.
There is no unrecognised deferred tax asset (2009: nil) as a result of excess expenses.
6. REVENUE RETURN FOR THE YEAR
The revenue loss for the year dealt with in the accounts of the parent company was £(282,000) (2009: revenue profit of £624,000).
7. RETURN PER ORDINARY SHARE
Total return per Ordinary share is based on the Group total return on ordinaryactivities after taxation of £9,723,000 (2009: loss of £37,141,000) and on 71,023,695(2009:71,023,695) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year.Revenue return per Ordinary share is based on the Group revenue loss on ordinaryactivities after taxation of £(281,000) (2009: profit of £655,000) and on 71,023,695 (2009: 71,023,695) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year.Capital return per Ordinary share is based on net capital gains for the year of£10,004,000 (2009: capital losses of £37,796,000) and on 71,023,695 (2009:71,023,695) Ordinary shares, being the weighted average number of Ordinary
shares in issue during the year.8. DIVIDENDS ON EQUITY SHARES
Amounts recognised as distributions in the year:
Year Year ended ended 30th 30th June June 2010 2009 £'000 £'000
Dividends paid for the year ended 497 518
30th June 2009 of 0.70p (2008: 0.73p) per share The total dividend payable in respect of the financial year, which is the basison which the requirement of section 1159 of the Corporation Tax Act 2010(formerly section 842 of the Income and Corporation Taxes Act 1988) areconsidered, is set out below. Year Year ended ended 30th 30th June June 2010 2009 £'000 £'000 Final dividend for the year ended - 497 30th June 2009 of 0.70p
Revenue available for distribution (282) 624 by way of dividend
Year ended
The directors do not recommend the payment of a final dividend for the year ended 30th June 2010 (2009: £497,000).
9. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
Year ended Year ended 30th June 30th June 2010 2009 £'000 £'000 GROUP AND COMPANY 48,902 39,228 ANALYSIS OF INVESTMENT PORTFOLIO - GROUP AND COMPANY Listed* Unlisted Total £'000 £'000 £'000 Opening book cost 50,386 4,340 54,726
Opening investment holding losses (14,801) (697) (15,498)
Opening valuation 35,585 3,643 39,228 Movement in period Purchases at cost 15,113 - 15,113 Sales - Proceeds (14,165) (783) (14,948)
- Realised (losses) / gains on sales (3,565) 149 (3,416)
Investment holding gains / (losses) 13,500 (687) 12,813
Rolled-up interest - 112 112 Closing valuation 46,468 2,434 48,902 Closing book cost 47,769 3,706 51,475
Closing investment holding losses (1,301) (1,384) (2,685)
Rolled-up interest - 112 112 Closing valuation 46,468 2,434 48,902
* Listed investments include unit trust and OEIC funds.
Year Year ended ended 30th 30th June June 2010 2009 £'000 £'000 ANALYSIS OF CAPITAL GAINS AND LOSSES Realised (losses) on sales of (3,416) (8,981)investments Increase/(decrease) in investment 12,813 (27,841)holding gains 9,397 (36,822)Transaction costs
The purchases and sales proceeds figures above include transaction costs on purchases of £13,000 (2009: £31,000) and on sales of £nil (2009: £16,000).
Significant movements in unquoted holdings
During the year capital repayments of £244,000 were received on Synergy Fund A1and £539,000 on Synergy Fund B1. The closing market value of these Funds were £132,000 (Synergy Fund A1) and £395,000 (Synergy Fund B1). Full provision hasbeen made for the equity investment in Corndon and the Sierra Leone Fund hasbeen written up to the last traded price.
10. INVESTMENT IN SUBSIDIARY UNDERTAKING
The Company owns the whole of the issued share capital (£1) of JIT Securities Limited, an investment company registered in England and Wales.
The financial results of the subsidiary are summarised as follows:
Year ended Year ended 30th June 30th June 2010 2009 £'000 £'000 Net assets brought forward 495 464 Profit for year 1 31 NET ASSETS CARRIED FORWARD 496 49511. OTHER RECEIVABLES 30th 30th 30th 30th June June June June 2010 2010 2009 2009 Group Company Group Company £'000 £'000 £'000 £'000 Prepayments and accrued 41 41 60 60income Taxation 27 - 34 - Amounts owed by - 914 - 914subsidiary undertakings 68 955 94 97412. CASH AND CASH EQUIVALENTS 30th 30th 30th 30th June June June June 2010 2010 2009 2009 Group Company Group Company £'000 £'000 £'000 £'000 Cash at bank 19,672 18,289 20,189 18,81413. OTHER PAYABLES 30th 30th 30th 30th June June June June 2010 2010 2009 2009 Group Company Group Company £'000 £'000 £'000 £'000 Accruals 230 230 342 342 Corporation tax payable - - 79 79 230 230 421 42114. CALLED UP SHARE CAPITAL 30th June 30th June 2010 2009 £'000 £'000 Authorised 3,050 3,050 305,000,000 (2009: 305,000,000) Ordinary shares of £0.01 each Issued and fully paid 710 710 71,023,695 (2009: 71,023,695) Ordinary shares of £0.01 each 15. RESERVES Share Special Retained premium reserve earnings account £'000 £'000 £'000 GROUP At 30th June 2009 21,573 56,908 (20,445) Decrease in investment - - 12,813holding losses Net losses on - - (3,416)realisation of investments Gains on foreign - - 659currency Trail commission - - 120 Deferred tax charge in - - (96)capital Tax relief to income - - (76)from capital Final dividend - - (497) Retained loss for year - - (281) At 30th June 2010 21,573 56,908 (11,219) Share Special Retained premium reserve earnings account £'000 £'000 £'000 COMPANY At 30th June 2009 21,573 56,908 (20,940) Decrease in investment 12,813holding losses Net losses on (3,416)realisation of investments Gains on foreign 659currency Trail commission 120 Deferred tax charge in (96)capital Tax relief to income (76)from capital Final dividend (497) Retained loss for year (282)
At 30th June 2010 21,573 56,908 (11,715)
The components of retained earnings are set out below:
30th June 30th June 2010 2009 £'000 £'000 GROUP Capital reserve-realised (8,925) (5,165) Capital reserve-revaluation (2,685) (16,449) Revenue reserve 391 1,169 (11,219) (20,445) COMPANY Capital reserve-realised (9,277) (5,428) Capital reserve-revaluation (2,685) (16,538) Revenue reserve 247 1,026 (11,715) (20,940)
16. NET ASSET VALUE PER ORDINARY SHARE
The net asset value per Ordinary share is calculated on net assets of £67,972,000 (2009: £58,746,000) and 71,023,695 (2009: 71,023,695) Ordinary shares in issue at the year end.
17. NOTES TO THE CASH FLOW STATEMENT
Cash and cash equivalents comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less.
Cash flows from operating activities
Included within the cash flows from operating activities are the cash flows associated with the purchases and sales of investments, as these are not considered to be investing activities given the objective of the Company.
Cash flows from operating activities can therefore be further analysed asfollows: 30th 30th 30th 30th June June June June 2010 2010 2009 2009 Group Company Group Company £'000 £'000 £'000 £'000 Proceeds on disposal of 14,948 14,948 69,304 69,304fair value through profit and loss investments Purchases of fair value (15,113) (15,113) (59,786) (59,786)through profit and loss investments Net cash flows from (165) (165) 9,518 9,518investment transactions Cash flows from other 146 138 (568) (265)operating activities Net cash from operating (19) (27) 8,950 9,253activities 18. FINANCIAL INFORMATION2010 Financial informationThe figures and financial information for 2010 are extracted from the AnnualReport and Accounts for the year ended 30th June 2010 and do not constitute thestatutory accounts for the year. The Annual Report and Accounts includes theReport of the Independent Auditors which is unqualified and does not contain astatement under either section 498(2) or section 498(3) of the Companies Act2006. The Annual Report and Accounts has not yet been delivered to the Registerof Companies.2009 Financial informationThe figures and financial information for 2009 are extracted from the publishedAnnual Report and Accounts for the year ended 30th June 2009 and do notconstitute the statutory accounts for that year. The Annual Report and Accountshas been delivered to the Registrar of Companies and includes the Report of theIndependent Auditors which was unqualified and did not contain a statementunder either section 237(2) or section 237(3) of the Companies Act 1985.
Annual Report and Accounts
The accounts for the year ended 30th June 2010 will be sent to shareholders inOctober 2010 and will be available on the Company website (www.nsitplc.com) orin hard copy format at the Company's registered office, I Knightsbridge Green,London SW1X 7QA.
The Annual General Meeting of the Company will be held on 17 November 2010 at 11.00am at 1 Knightsbridge Green, London SW1X 7QA.
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