New Star Inv Regulatory News (NSI)

10 Mar 2006 10:40

NEW STAR INVESTMENT TRUST PLCPRELIMINARY ANNOUNCEMENT OF UNAUDITED INTERIM RESULTSThe Directors announce the unaudited statement of consolidated results for thesix months ended 31st December 2005 as follows: FINANCIAL HIGHLIGHTS At launch 31 December 30th June % 2nd May % 2005 2005 change 2000 change (restated) Performance Net asset value per Ordinary 134.60p 113.43p 18.7 99.58 35.2 share Mid-market value per Ordinary 122.00p 112.50p 8.4 100.00p 22.0 share Discount of price to net asset 9.4% 0.8% - (0.4%) - value FTSE World Index 172.72 149.83 15.3 197.72 (12.) FTSE All-Share Index 2,847.02 2,560.17 11.2 3.026.79 (5.9) Six months ended Six months ended 31st December 31st December 2005 2004 (restated) REVENUE Return per Ordinary share 0.31p 0.19p Dividend per Ordinary share - - TOTAL RETURN Total Assets total return 18.8% 8.2% FTSE All-Share total return 12.8% 9.7% CHAIRMAN'S STATEMENT Your Company's total assets rose 18.7% during the six months to 31st December2005 to ‚£95.6 million which compares with an 11.2% rise in the FTSE All-ShareIndex. This took the net asset value per Ordinary share to 134.6p. Thiscompares with the launch price of 100p in May 2000. The FTSE All-Share Indexover the same period fell by 5.9%.Net revenue before tax for the period was ‚£250,000. In common with previousyears, your directors are not recommending the payment of an interim dividendto shareholders.This is the first time that your Company is reporting under the newInternational Financial Reporting Standards. The effect of the change inaccounting standards on your Company is small and is mainly the differencebetween the mid and bid market prices of the assets. This difference at 31stDecember 2005 was equivalent to 0.2p per Ordinary share.Global equities performed well during the period under review, with the FTSEWorld Index returning 15.3% in sterling terms. Liquidity remained abundant,with inflation-adjusted Group of Seven (G7) money supply growth running inexcess of industrial output growth, increasing the cash available forinvestment in financial assets.Sentiment was firm during the early summer, with investors believing USmonetary policy would soon moderate in response to higher oil prices. Sharesretreated in August following Hurricane Katrina and fell again in October onfears that the trade-off between economic growth and inflation wasdeteriorating. There was, however, a rebound towards the year end in responseto increased takeover activity, lower oil prices and less hawkish commentaryfrom the US Federal Reserve.The Fed raised its Fed Funds Target Rate in four quarter point moves to 4.25%during the period while the European Central Bank raised its repo rate aquarter point to 2.25% after more than two years of stability. The Bank ofEngland, however, cut base rates a quarter percentage point to 4.5% in responseto lacklustre economic growth.Within the G7, Japan made the second largest country contribution to globalmarket returns, gaining 39.2% as investors grew confident that deflation wasfinally ending. The resource-heavy Canadian market gained 26.4% while Germanyrose 19.7%. Other G7 markets underperformed.Among the sectors, financials gained 19.5%, making the biggest sectorcontribution to global returns. Other strong sectors included cyclical areassuch as materials, up 28.9%, transport, up 26.2%, and automobiles, up 23.5%. Bycontrast, telecommunications services gained just 2.5% and media gained 3.6%.The highlight of the period for your Company was the admission of the shares ofNew Star Asset Management Group PLC to the Alternative Investment Market. Thisled to a material uplift to the value of your Company's holding in New Starequivalent to 7.8p per Ordinary share over the six months.Portfolio activity included the sale of Cox Insurance after a takeover. YourCompany also took partial profits on holdings in four larger New Star managedfunds: the European Growth Fund, the UK Alpha Fund, the UK Gemini Hedge Fundand the UK Growth Fund. The proceeds were reinvested in five younger funds, theAccelerator Hedge Fund, the Firefly Hedge Fund, the Global Financials Fund, theHidden Value Fund and the UK Special Situations Fund.As a result, your Company ended the period with 46.7% of its invested assets inretail funds, 35.2% in hedge funds and the remaining 18.2% in its holding inNew Star Asset Management, investment trust shares and equities.In recent weeks, liquidity conditions have deteriorated, with the gap betweenG7 inflation-adjusted money growth and industrial output shrinking. This couldthreaten asset classes that have attracted speculative inflows recently such asemerging markets and commodities. Developed market equities should, however,prove relatively resilient, with the earnings yield on equities above itsaverage since 1985. Other supportive factors include cash takeovers and sharebuy-backs.The un-audited net asset value at 3rd March 2006 was 149.16p per Ordinaryshare.James RoeChairman9th March 2006 CONSOLIDATED INCOME STATEMENT for the six months to 31st December 2005 (unaudited) Six months ended Six months ended 31st December 2005 31st December 2004 (restated) Revenue Capital Total Revenue Capital Total ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 INVESTMENT INCOME 408 - 408 315 - 315 Other operating income 58 - 58 34 - 34 Total income 466 - 466 349 - 349 GAINS AND LOSSES ON INVESTMENT Gains on fair value - 15,168 15,168 - 5,265 5,265 through profit or loss assets Gains on index futures - 135 135 - 136 136 contracts Losses on forward currency Purchases - (417) (417) - - - Other exchange gains - 6 6 - 167 167 466 14,892 15,358 349 5,568 5,917 EXPENSES Management fees (92) - (92) (71) - (71) Other expenses (124) - (124) (127) - (127) PROFIT BEFORE FINANCE COSTS AND TAX 250 14,892 15,142 151 5,568 5,719 Finance costs - - - - - - PROFIT BEFORE TAX 250 14,892 15,142 151 5,568 5,719 Tax (33) - (33) (19) - (19) PROFIT FOR THE PERIOD 217 14,892 15,109 132 5,568 5,700 EARNINGS PER SHARE From continuing operations Ordinary shares 21.27 8.03 9pence) The total column of this statement represents the Group's Income Statement,prepared in accordance with IFRS. The supplementary revenue return and capitalreturn columns are both prepared under guidance published by the Association ofInvestment Trust Companies. All items in the above statement derive fromcontinuing operations. All income is attributable to the equity holders of theparent company. There are no minority interests. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the six months ended 31 December 2005 Notes Share Share Special Retained Total Capital Premium Reserve earnings ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 AT 30 JUNE 2005 4(b) 710 21,573 56,908 1,371 80,562 (RESTATED) Profit for the period 15,109 15,109 Dividends paid (71) (71) 710 21,573 56,908 16,409 95,600 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the six months ended 31 December 2004 Notes Share Share Special Retained Total Capital Premium Reserve earnings ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 AT 30 JUNE 2005 4(A) 710 21,573 56,908 (12,027) 67,164 (RESTATED) Profit for the period 5,700 5,700 Dividends paid (177) (177) AT 31 DECEMBER 2004 710 21,573 56,908 (6,504) 72,687RESTATED CONSOLIDATED BALANCE SHEET as at 31st December 2005 31st 31st 30th June December December 2005 2005 2004 (restated) (unaudited) (unaudited & Restated) Notes ‚£'000 ‚£'000 ‚£'000 NON-CURRENT ASSETS Investments at fair value 94,206 69,131 78,051 Through profit or loss CURRENT ASSETS Other receivables 9 534 1,196 Cash and cash equivalents 1,606 3,183 1,928 1,615 3,717 3,124 TOTAL ASSETS 95,821 72,848 81,175 CURRENT LIABILITIES Other payables (221) (161) (613) NET ASSETS 95,600 72,687 80,562 EQUITY ATTRIBUTABLE TO EQUITY H OLDERS Called-up share capital 710 710 710 Share premium 21,573 21,573 21,573 Special reserve 56,908 56,908 56,908 Retained earnings 2 16,409 (6,504) 1,371 TOTAL EQUITY 95,600 72,687 80,562 pence pence Pence NET ASSET VALUE PER ORDINARY SHARE 134.60 102.34 113.43 CONSOLIDATED CASH FLOW STATEMENT for the six months to 31st December 2005 (unaudited) Six months Six months ended ended 31st December 31st December 2004 2005 Notes ‚£'000 ‚£'000 CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax 15,142 5,719 Adjustments for: (Gains)/losses on investments (16,155) (3,604) Operating cash flows before movements (1,013) 2,115 in working capital Decrease/(increase) in receivables 1,187 (416) (Decrease)/increase in payables (392) 65 Net cash from operating activities (218) 1,764before income taxes Income taxes paid (33) (19) NET CASH FROM OPERATING ACTIVITIES 3 (251) 1,745 CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid (71) (177) NET CASH USED IN FINANCING ACTIVITIES (71) (177) NET (DECREASE)/INCREASE IN CASH AND (322) 1,568 CASH EQUIVALENTS Cash and cash equivalents at beginning 1,928 1,615 of period CASH AND CASH EQUIVALENTS AT END OF 1,606 3,183 PERIOD NOTES TO THE ACCOUNTS for the six months ended 31 December 2005 1. Accounting PoliciesThese financial statements are presented in pounds sterling because that is thecurrency of the primary economic environment in which the Group operates.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 are the Group's first unaudited results prepared in accordance with IFRS.Previous accounts were prepared in accordance with UK Generally AcceptedAccounting Principles (UK GAAP) including the Statement of RecommendedPractice: Financial Statements of Investment Trust Companies ("SORP"). Wherepresentational guidance set out in the SORP is consistent with the requirementsof IFRS, the directors have sought to continue to prepare the financialstatements on a basis compliant with the recommendations of the SORP.In preparing these accounts the following amendments to accounting andvaluation methods have been applied in order to comply with IFRS: * The Group's investments are defined by IFRS as investments designated as fair value through profit and loss. All investments are designated upon initial recognition as held at fair value, and are measured at subsequent reporting dates at fair value, which is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted. Investments in unit trusts or OEICS are valued at the closing price, the bid price or the single price as appropriate, released by the relevant investment manager; * Bookcost of investments excludes transaction costs on purchases; and * No equity dividend is accrued unless announced in the period. Except for the amendments required in connection with the adoption of IFRS aslisted above, the accounting policies have not varied from those described inthe Report and Accounts for the year ended 30 June 2005.The disclosures required by IFRS 1 'First Time Adoption of InternationalFinancial Reporting Standards' ('IFRS 1') concerning the transition from UKGAAP to IFRS are given in note 4 below.2. Retained earnings and capital reserveThe components of retained earnings that relate to revenue and capital are setout below: 31st December 31st December 30th June 2005 2004 2005 ‚£'000 ‚£'000 ‚£'000 Retained earnings - retained 444 361 298 earnings reserve Retained earnings - capital 15,965 (6,865) 1,073 reserve 16,409 (6,504) 1,371 3. Notes to the cash flow statementCash and cash equivalents comprise cash at bank and other short-term highlyliquid investments with a maturity of three months or less. Purchases and salesof investments are considered to be operating activities of the company, givenits purpose, rather than investing activities. However, the cash flowsassociated with these activities are presented below: 31st December 31st December 2005 2004 ‚£'000 ‚£'000 Proceeds on disposal of fair value through 9,117 8,175 profit and loss investments Purchases of fair value through profit and (9,375) (6,254)loss investments (258) 1,921 4. Explanation of transition to IFRSsThis is the first period that the Group has presented its financial statementsunder IFRS. The following disclosures are required in the year of transition.The last financial statements under UK GAAP were for the year ended 30 June2005. And the date of transition to IFRS was therefore 1 July 2004.(a) Reconciliation of equity at 1 July 2004 (date of transition to IFRS) Previously Effect of Restated reported Transition to IFRSs UK GAAP IFRS Notes ‚£'000 ‚£'000 ‚£'000 NON-CURRENT ASSETS Investments of fair value 1 65,662 (135) 65,527 CURRENT ASSETS Other receivables 118 - 118 Cash and cash equivalents 1,615 - 1,615 1,733 - 1,733 TOTAL ASSETS 67,395 (135) 67,260 CURRENT LIABILITIES Other payables 2 (273) 177 (96) (273) 177 (96) NET ASSETS 67,122 42 67,164 EQUITY ATTRIBUTABLE TO EQUITY HOLDERS Called-up share capital 710 - 710 Share premium 21,573 - 21,573 Special reserve 56,908 - 56,908 Retained Earnings Capital 1 (12,298) (135) (12,433) Revenue 2 229 177 406 TOTAL EQUITY 67,122 42 67,164 Notes to the reconciliation of equity at 1 July 20041. Investments are designated as held at fair value under IFRS and are carriedat bid prices which total their fair value of ‚£65,527,000. Previously, under UKGAAP they were carried at mid prices. The aggregate differences, being arevaluation downwards of ‚£135,000, also decrease retained earnings.2. No provision has been made for the final dividend on the ordinary shares forthe year ended 30 June 2004 of ‚£177,000. Under IFRS this is not recogniseduntil approved by the shareholders.(b) Reconciliation of equity at 30 June 2005 Previously Effect of Restated reported Transition to IFRSs UK GAAP IFRS Notes ‚£'000 ‚£'000 ‚£'000 NON-CURRENT ASSETS Investments of fair value 1 78,119 (68) 78,051 CURRENT ASSETS Other receivables 1,196 - 1,196 Cash and cash equivalents 1,928 - 1,928 3,124 - 3,124 TOTAL ASSETS 81,243 (68) 81,175 CURRENT LIABILITIES Other payables 2 (684) 71 (613) (684) 71 (613) NET ASSETS 80,559 3 80,562 EQUITY ATTRIBUTABLE TO EQUITY HOLDERS Called-up share capital 710 - 710 Share premium 21,573 - 21,573 Special reserve 56,908 - 56,908 Retained Earnings Capital 1 (1,141) (68) (1,073) Revenue 2 227 71 298 TOTAL EQUITY 80,559 3 80,562 Notes to the reconciliation of equity at 30 June 20051. Investments are designated as held at fair value under IFRS and are carriedat bid prices which total their fair value of ‚£78,051,000. Previously, under UKGAAP they were carried at mid prices. The aggregate differences, being arevaluation downwards of ‚£68,000, also decrease retained earnings.2. No provision has been made for the final dividend on the ordinary shares forthe year ended 30 June 2005 of ‚£71,000. Under IFRS this is not recognised untilapproved by the shareholders.(c) Reconciliation of equity at 31 December 2004 Previously Effect of Restated reported Transition to IFRSs UK GAAP IFRS Notes ‚£'000 ‚£'000 ‚£'000 NON-CURRENT ASSETS Investments of fair value 1 69,578 (447) 69,131 CURRENT ASSETS Other receivables 534 - 534 Cash and cash equivalents 3,183 - 3,183 3,717 - 3,717 TOTAL ASSETS 73,295 (447) 72,848 CURRENT LIABILITIES Other payables 2 (161) (161) (161) (161) NET ASSETS 73,134 (447) 72,687 EQUITY ATTRIBUTABLE TO EQUITY HOLDERS Called-up share capital 710 - 710 Share premium 21,573 - 21,573 Special reserve 56,908 - 56,908 Retained Earnings Capital 1 (6,418) (447) (6,865) Revenue 2 361 - 361 TOTAL EQUITY 73,134 (447) 72,687 Notes to the reconciliation of equity at 31 December 20041. Investments are designated as held at fair value under IFRS and are carriedat bid prices which total their fair value of ‚£69,131,000. Previously, under UKGAAP they were carried at mid prices. The aggregate differences, being arevaluation downwards of ‚£447,000, also decrease retained earnings.(d) Reconciliation of the Statement of Total Return to the Income StatementUnder IFRS the Income Statement is the equivalent of the Statement of TotalReturn reported previously. 30th June 31st December 2005 2004 Notes ‚£'000 ‚£'000 Total transfers to reserves 13,437 6,012 per the Statement Investments held at fair value 1 135 135 changed Investments held at fair value 1 (68) - changed Investments held at fair value 1 - (447)changed Add back 2005 dividend 2 71 - proposed NET PROFIT PER THE INCOME 13,575 5,700 STATEMENT Notes to the reconciliation of profit or loss1. The portfolio valuations at 1 July 2004, 30 June 2005 and 31 December 2004are required to be valued at fair value under IFRS. These values are lower thanprevious valuations by ‚£135,000, ‚£68,000 and ‚£447,000 respectively.2. Ordinary dividends declared and paid during the period are dealt withthrough the Statement of Changes in Equity.(e) Reconciliation of the Cash Flow Statement as at 31 December 2004 Previously Effect of Restated reported Transition IFRSs to UK GAAP IFRS Notes ‚£'000 ‚£'000 ‚£'000 Net cash operating 1 (253) 1,998 1,745 activities Net cash from capital 1 1,998 (1,998) _ expenditure and financial investment Equity dividends paid 2 (177) 177 _ Financing 2 - (177) (177) Increase in cash 1,568 - 1,568 1. Investing activities are considered to be operating activities of thecompany.2. Ordinary dividends paid are now analysed within financing.5. The financial information contained in this interim report does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985. The financial information for the year ended 30 June 2005 has beenextracted from published accounts that have been delivered to the Registrar ofCompanies and on which the report of the Auditors was unqualified. As describedabove these accounts have been restated for the six months ended 31 December2004 and the year ended 30 June 2005.ENDNEW STAR INVESTMENT TRUST PLC