New Star Inv Regulatory News (NSI)

4 Oct 2006 15:41

NEW STAR INVESTMENT TRUST PLC PRELIMINARY ANNOUNCEMENT OF FINAL RESULTSThe Directors announce the unaudited statement of consolidatedresults for the year ended 30th June 2006 as follows: CHAIRMAN'S STATEMENTYour Company's net assets rose by 29.2% to ‚£104.1 million over theyear to 30th June 2006. This compares with a 15.9% rise in the FTSE All-ShareIndex.From inception in May 2000 to 30th June 2006, the net asset valueper share rose 47.5% against a 0.2% fall in the FTSE All-Share Index, withyour Company outperforming in each of its six reporting periods. Initially,its high weightings in bonds and hedge funds generated outperformance butgains over the last five years have resulted from the portfolio's exposure toequity markets through investments in retail funds and other quotedsecurities, particularly the parent of your management company, New Star AssetManagement Group.Net revenue for the year under review was ‚£50,000, which compareswith ‚£69,000 during the previous year. Your Directors recommend the payment ofa final dividend of 0.1p net per Ordinary share (annual dividend of 0.1p in2005).Global equities produced healthy returns during the year, with theMSCI World Index returning 13.9% in sterling terms. Liquidity was abundant,with inflation-adjusted Group of Seven (G7) money supply growth running inexcess of industrial output growth, increasing the cash available forfinancial investment.Apart from a temporary increase in risk aversion in October,investor sentiment was firm during late 2005 and early 2006. Equitiesbenefited from healthy corporate profits growth, cash takeovers and sharebuy-backs. There was, however, a setback between the middle of May and themiddle of June 2006 in response to fears that the trade-off between economicgrowth and inflation was deteriorating.Bonds were also strong in late 2005 but sentiment turned in early2006 as central banks tightened monetary policies. The US Federal Reserveraised interest rates in eight quarter point moves to 5.25% during the yearalthough this was insufficient to prevent the dollar falling 5.5% against theeuro and 3.2% against the pound. The European Central Bank responded torevived eurozone economic growth by raising its repo rate in three quarterpoint moves to 2.75% while the Japan monetary authorities ended their policyof quantitative easing.One reason for central bank nervousness about inflation was highercommodity prices. Oil rose 28.2% over the year, copper gained 108.6% and goldrose 39.8%. Another reason for nervousness was the rise in industrial capacityusage above its long-term average, giving manufacturers more scope to pass onhigher raw material costs.Within the G7, Japan made the biggest country contribution toglobal equity market returns, gaining 31.8% as investors grew increasinglyconfident about its prospects. The resource-heavy Canadian market gained 28.0%while Germany gained 26.7% and France gained 23.9%. The US, however,underperformed, rising 5.5% in sterling terms.Among the global sectors, banks gained 18.2%, making the biggestsector contribution to global returns. Other big contributors includedmaterials, up 35.9%, diversified financials, up 23.8%, energy, up 20.6%, andcapital goods, up 18.5%. By contrast, semiconductors fell 7.5% and healthcareequipment fell 3.7%.At the year end, economists were predicting a growth slowdown in late 2006 orearly 2007. Inflation has edged higher and central banks in Europe and Japanare likely to tighten their monetary policies further although the US FederalReserve appears to be near to pausing in its programme of interest rate rises.Liquidity conditions have recently become less favourable, with the gapbetween G7 inflation-adjusted money supply growth and industrial outputshrinking. Equity valuations, however, appear reasonable and should providesome support for stockmarkets along with increasing takeover activity. In suchan environment, careful stock selection will remain important.Mr Martin Boase will be retiring as a director of your Company atthe forthcoming Annual General Meeting on 16 November 2006. He has served as adirector of your Company since its inception in 2000 and your directors wouldlike to thank him on behalf of all shareholders for his services and helpduring this period.Your Company's unaudited net asset value at 31st August 2006 was141.43p.James RoeChairman4th October 2006 INVESTMENT MANAGER'S REPORTYour Company's strategy is to invest in funds managed by New StarAsset Management, both long-only and hedge, in New Star Asset Management Groupshares and in other retail funds.Within the portfolio, all but one of the 21 New Star retail fundsand hedge funds produced positive returns during the year under review. Eightof the 14 pooled funds were in the top quartile when measured against theirrespective peer groups while a further two were above the median.Among the pooled funds, the strongest absolute and relativeperformance was generated by the New Star Global Financials Fund, which gained37.5% and outperformed its benchmark by 17.7 percentage points. Other strongabsolute performers included the Korean Portfolio, which gained 37.3%, theChina Portfolio, which gained 34.5%, the European Growth Fund, which gained29.2%, and the New Star Global Strategic Capital Unit Trust, which gained26.6%.Among the hedge funds, the best performers were New Star FireflyHedge Fund, which rose 18.2%, New Star Financials Hedge Fund, which rose18.1%, New Star European Hedge Fund, which gained 14.7%, and New Star ApolloHedge Fund, which gained 14.2%.A further significant factor in your Company's outperformance wasthe shareholding in New Star Asset Management Group, which performed stronglyfollowing the admission of the company's shares to the Alternative InvestmentMarket in November 2005. By the end of the year under review, the shares hadrisen 73.9% from their placing price.Portfolio activity included the sale of Cox Insurance after atakeover. Your Company also took partial profits on holdings in five largerNew Star managed funds: European Growth Fund, UK Alpha Fund, UK Hedge Fund, UKGemini Hedge Fund and UK Growth Fund.The proceeds were mostly reinvested in the European Hedge Fund andsix younger New Star funds, Accelerator Hedge Fund, Firefly Hedge Fund, GlobalFinancials Fund, Hidden Value Fund, Pan-European Equity Fund and UK SpecialSituations Fund. In addition, a holding was purchased in Skandia Global BestIdeas Fund.As a result, your Company ended the year under review with 53.3% ofits invested assets in retail funds, 24.9% in hedge funds, 20.5% in itsholding in New Star Asset Management Group and 1.3% in other equities andinvestment trust shares. Geographically, 71.4% of the portfolio was exposed tothe UK, 22.1% was exposed to Europe excluding the UK and the balance wasinvested elsewhere.After the stockmarket correction from mid-May to mid-June, equityprices recovered in the closing days of the year under review. Liquidityconditions were tightened but price earnings multiples remained modest andtakeover and share buyback activity was buoyant. In early 2006, higher riskasset classes were inflated by liquidity flows, pushing valuations in someareas to extremes. Sentiment may, therefore, turn as central banks tightenmonetary policy, leading to sector rotation into more defensive areas of themarkets.New Star Asset Management Limited4th October 2006 UNAUDITED CONSOLIDATED INCOME STATEMENT for the year ended 30th June 2006 Year ended Year ended 30th June 2006 30th June 2005 Revenue Capital Total Revenue Capital Total return return return return ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 INVESTMENT INCOME 414 - 414 341 - 341Other operating income 84 - 84 104 - 104 _______ _______ _______ _______ _______ _______Total income 498 - 498 445 - 445 GAINS AND LOSSESON INVESTMENTSGains on fair valuethroughprofit or lossassets - 23,111 23,111 - 13,813 13,813Gains on index futurecontracts - 134 134 - 271 271Gains/(losses) onforwardcurrency contracts - 308 308 - (518) (518)Other exchangegains/(losses) - 22 22 - (60) (60) _______ _______ _______ _______ _______ _______ 498 23,575 24,073 445 13,506 13,951 EXPENSESManagement fees (208) - (208) (140) - (140)Other expenses (206) (3) (206) (217) - (217) _______ _______ _______ _______ _______ _______ PROFIT BEFOREFINANCE COSTS ANDTAX 84 23,572 23,656 88 13,506 13,594Finance costs - - - - - - _______ _______ _______ _______ _______ _______ PROFIT BEFORE TAX 84 23,572 23,656 88 13,506 13,594Tax (34) - (34) (19) - (19) _______ _______ _______ _______ _______ _______PROFIT FOR THE YEAR 50 23,572 23,622 69 13,506 13,575 ======= ======= ======= ======= ======= =======EARNINGS PER SHAREFrom continuingoperations Ordinaryshares (pence) 0.07 33.19 33.26 0.10 19.01 19.1 ======= ======= ======= ======= ======= =======The total column of this statement represents the Group's IncomeStatement, prepared in accordance with IFRS. The supplementary revenue returnand capital return columns are both prepared under guidance published by theAssociation of Investment Trust Companies. All items in the above statementderive from continuing operations. No operations were acquired or discontinuedduring the year.All income is attributable to the equity holders of the parentcompany. There are no minority interests. UNAUDITED CONSOLIDATED BALANCE SHEET as at 30th June 2006 30th June 30 June 2006 2005 Notes ‚£'000 ‚£'000 NON-CURRENT ASSETSInvestments at fair value through profit 103,364 78,051or loss _________ _________ CURRENT ASSETSOther receivables 707 1,196Cash and cash equivalents 229 1,928 _________ _________ 936 3,124 _________ _________TOTAL ASSETS 104,300 81,175 CURRENT LIABILITIESOther payables (187) (613) _________ _________ NET ASSETS 104,113 80,562 _________ _________ CAPITAL AND RESERVESCalled up share capital 710 710Share premium 21,573 21,573Special reserve 56,908 56,908Retained earnings 24,922 1,371 _________ _________TOTAL EQUITY 104,113 80,562 ========= ========= pence penceNET ASSET VALUE PER ORDINARY SHARE 146.59 113.43(PENCE) ========= ========= UNAUDITED CONSOLIDATED CASH FLOW STATEMENTS for the year ended 30th June 2006 Year ended Year ended 30th June 30th June 2006 2005 Group Group ‚£'000 ‚£'000 CASH FLOWS FROM OPERATINGACTIVITIESProfit before tax 23,656 13,594Adjustments for: (Gains)/losses on (25,313) (12,524)investments _________ _________Operating cash flowsbefore movements in workingcapital (1,657) 1,070Decrease/(increase) in 489 (1,078)receivables(Decrease)/increase in (426) 517payables _________ _________ Net cash from operatingactivities before income (1,594) 509taxesIncome taxes paid (34) (19) _________ _________NET CASH FROM OPERATINGACTIVITIES (1,628) 490 _________ _________ CASH FLOWS FROM FINANCINGACTIVITIESDividend paid (71) (177) _________ _________NET CASH USED IN FINANCINGACTIVITIES (71) (177) _________ _________ NET (DECREASE)/INCREASE INCASH AND CASH EQUIVALENTS (1,699) 313Cash and cash equivalentsat beginning of period 1,928 1,615 _________ _________ CASH AND CASH EQUIVALENTSAT END OF PERIOD 229 1,928 ========= ========= UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30th June 2006 Share Share Special Retained Total capital premium reserve earnings ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000AT 30TH JUNE 2005 710 21,573 56,908 1,371 80,562Profit for the year - - - 23,622 23,622Dividend paid - - - (71) (71) _______ _______ ______ _______ _______ AT 30TH JUNE 2006 710 21,573 56,908 24,922 104,113 ======= ======= ====== ======= ======= UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30th June 2005 Share Share Special Retained Total capital premium reserve earnings ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000AT 30TH JUNE 2004 710 21,573 56,908 (12,027) 67,164Profit for the year - - - 13,575 13,575Dividend paid - - - (177) (177) _______ _______ ______ _______ _______ AT 30TH JUNE 2005 710 21,573 56,908 1,371 80,562 ======= ======= ====== ======= ======= EXPLANATION OF TRANSITION TO IFRSsThis is the first period that the Group has presented its financialstatements under IFRS. The following disclosures are required in the year oftransition. The last financial statements under UK GAAP were for the yearended 30th June 2005, and the date of transition to IFRS was therefore 1stJuly 2004.a) Reconciliation of equity at 1st July 2004 (date of transition to IFRSs) Notes Previously Effect of reported transition Restated UK GAAP to IFRSs IFRSs ‚£'000 ‚£'000 ‚£'000GROUP NON-CURRENT ASSETSInvestments at fair value 1 65,662 (135) 65,527 __________ __________ _________ CURRENT ASSETSOther receivables 118 - 118Cash and cash equivalents 1,615 - 1,615 __________ __________ _________ 1,733 - 1,733 __________ __________ _________ TOTAL ASSETS 67,395 (135) 67,260 __________ __________ _________ CURRENT LIABILITIESOther payables 2 (273) 177 (96) __________ __________ _________ (273) 177 (96) __________ __________ _________ NET ASSETS 67,122 42 67,164 __________ __________ _________ EQUITY ATTRIBUTABLE TO EQUITYHOLDERSCalled-up share capital 710 - 710Share premium 21,573 - 21,573Special reserve 56,908 - 56,908Retained earnings:Capital 1 (12,298) (135) (12,433)Revenue 2 229 177 406 __________ __________ _________ TOTAL EQUITY 67,122 42 67,164 ========== ========== ========= Notes Previously Effect of reported transition Restated UK GAAP to IFRSs IFRSs ‚£'000 ‚£'000 ‚£'000COMPANY NON-CURRENT ASSETSInvestments at fair value 1 65,662 (135) 65,527 __________ __________ _________ CURRENT ASSETSOther receivables 121 - 121Cash and cash equivalents 1,606 - 1,606 __________ __________ _________ 1,727 - 1,727 __________ __________ _________ TOTAL ASSETS 67,389 (135) 67,254 __________ __________ _________ CURRENT LIABILITIESOther payables 2 (273) 177 (96) __________ __________ _________ (273) 177 (96) __________ __________ _________ NET ASSETS 67,116 42 67,158EQUITY ATTRIBUTABLE TO EQUITYHOLDERSCalled-up share capital 710 - 710Share premium 21,573 - 21,573Special reserve 56,908 - 56,908Retained earnings:Capital 1 (12,298) (135) (12,433)Revenue 2 223 177 400 __________ __________ _________ TOTAL EQUITY 67,116 42 67,158 ========== ========== =========Notes to the reconciliation of equity at 1st July 20041. Investments are designated as held at fair value under IFRSs andare carried at bid prices which total their fair value of ‚£65,527,000.Previously, under UK GAAP they were carried at mid prices. The aggregatedifferences, being a revaluation downwards of ‚£135,000, also decrease retainedearnings.2. No provision has been made for the final dividend on the Ordinary sharesfor the year ended 30th June 2004 of ‚£177,000. Under IFRSs this is notrecognised until approved by the shareholders.b) Reconciliation of equity at 30th June 2005 Notes Previously Effect of reported transition Restated UK GAAP to IFRS IFRSs ‚£'000 ‚£'000 ‚£'000GROUP NON-CURRENT ASSETSInvestments at fair value 1 78,119 (68) 78,051 __________ __________ _________ CURRENT ASSETSOther receivables 1,196 - 1,196Cash and cash equivalents 1,928 - 1,928 __________ __________ _________ 3,124 - 3,124 __________ __________ _________ TOTAL ASSETS 81,243 (68) 81,175 __________ __________ _________ CURRENT LIABILITIESOther payables 2 (684) 71 (613) __________ __________ _________ (684) 71 (613) __________ __________ _________ NET ASSETS 80,559 3 80,562 __________ __________ _________ EQUITY ATTRIBUTABLE TO EQUITYHOLDERSCalled-up share capital 710 - 710Share premium 21,573 - 21,573Special reserve 56,908 - 56,908Retained earnings:Capital 1 1,141 (68) 1,073Revenue 2 227 71 298 __________ __________ _________ TOTAL EQUITY 80,559 3 80,562 ========== ========== ========= Notes Previously Effect of reported transition Restated UK GAAP to IFRSs IFRSs ‚£'000 ‚£'000 ‚£'000COMPANY NON-CURRENT ASSETSInvestments at fair value 1 78,119 (68) 78,051 __________ __________ _________ CURRENT ASSETSOther receivables 1,199 - 1,199Cash and cash equivalents 1,919 - 1,919 __________ __________ _________ 3,118 - 3,118 __________ __________ _________TOTAL ASSETS 81,237 (68) 81,169 __________ __________ _________ CURRENT LIABILITIESOther payables 2 (166) 71 (95) __________ __________ _________ (166) 71 (95) __________ __________ _________NET ASSETS 81,071 3 81,074 __________ __________ _________ EQUITY ATTRIBUTABLE TO EQUITYHOLDERSCalled-up share capital 710 - 710Share premium 21,573 - 21,573Special reserve 56,908 - 56,908Retained earnings:Capital 1 1,659 (68) 1,591Revenue 2 221 71 292 __________ __________ _________TOTAL EQUITY 81,071 3 81,074 ========== ========== =========Notes to the reconciliation of equity at 30th June 20051. Investments are designated as held at fair value under IFRS andare carried at bid prices which total their fair value of ‚£78,051,000.Previously, under UK GAAP they were carried at mid prices. The aggregatedifferences, being a revaluation downwards of ‚£68,000, also decrease retainedearnings.2. No provision has been made for the final dividend on the Ordinary sharesfor the year ended 30th June 2005 of ‚£71,000. Under IFRS this is notrecognised until approved by the shareholders.c) Reconciliation of the Statement of Total Return to the Income StatementUnder IFRSs the Income Statement is the equivalent of the Statement of TotalReturn reported previously. Notes 30th June 2005 ‚£'000 Total transfer to reservesper the Statement of Total Return 13,437Revaluation of investmentsat 1st July 2004 1 135 Revaluation of investmentsat 30th June 2005 1 (68) Add back 2005 dividend 2 71proposed _________Net profit per the Income 13,575Statement =========Notes to the reconciliation of profit or loss1. The portfolio valuations at 1st July 2004 and 30th June 2005 are requiredto be valued at fair value under IFRS. These values are lower than previousvaluations by ‚£135,000 and ‚£68,000 respectively.2. Ordinary dividends declared and paid during the period are dealt withthrough the Statement of Changes in Equity.d) Reconciliation of the Cash Flow Statement as at 30th June 2005 Notes Previously Effect of reported transition Restated UK GAAP to IFRS IFRSs ‚£'000 ‚£'000 ‚£'000 Net cash from operating 1 (541) 1,031 490activitiesNet cash from capital 1 1,031 (1,031) -expenditure and financial investmentEquity dividends paid 2 (177) 177 -Financing 2 - (177) (177) __________ __________ _________Increase in cash 313 - 313 ========== ========== =========1. Investing activities are considered to be operating activities of thecompany.2. Ordinary dividends paid are now analysed within financing.The Directors have declared a final dividend of 0.1p net (2005:0.1p) per Ordinary share payable on 20th November 2006 to shareholders on theregister at the close of business on 27th October 2006. The ex-dividend dateis 25th October 2006.The above financial information for the year ended 30th June 2006does not constitute statutory accounts as defined in section 240 of theCompanies Act 1985 and has been prepared on the basis of the accountingpolicies set out in the statutory accounts of the Group for the year ended30th June 2005 as modified to comply with IFRSs.The comparative financial information is based on the statutoryfinal statements for the year ended 30th June 2005. Those financialstatements, upon which the auditors issued an unqualified opinion, have beendelivered to the Registrar of Companies. Statutory financial statements forthe year ended 30th June 2006 will be delivered to the Registrar of Companies.The annual report will be sent to shareholders in October and willbe available to members of the public from the registered office at 1Knightsbridge Green, London SW1X 7NE. The Annual General Meeting of theCompany will be held on 16th November 2006 at 12 noon at 1 KnightsbridgeGreen, London SW1X 7NE.ENDSNEW STAR INVESTMENT TRUST PLC