Final Results
NEW STAR INVESTMENT TRUST PLC
FINAL RESULTS
This announcement constitutes regulated information.
AUDITED RESULTS
FOR THE YEAR ENDED 30th JUNE 2011
New Star Investment Trust plc (the `Company'), whose objective is to achieve
long-term capital growth, announces its consolidated results for the year ended
30th June 2011.
FINANCIAL HIGHLIGHTS
30th June 30th June %
2011 2010 Change
PERFORMANCE
Net assets (£ `000) 75,484 67,972 11.1
Net asset value per Ordinary share 106.28p 95.70p 11.1
Mid-market price per Ordinary share 73.13p 70.00p 4.5
Discount of price to net asset value 31.2% 26.9% N/A
FTSE World Index (total return, sterling 624.88 510.67 22.4
adjusted)
FTSE All-Share Index (total return) 4,233.69 3,370.06 25.6
1st July 2010 to 1st July 2009 to
30th June 2011 30th June 2010
REVENUE
Return per Ordinary share (0.38)p (0.40)p
Dividend per Ordinary share - -
TOTAL RETURN
Net assets 11.1% 16.6%
CHAIRMAN'S STATEMENT
MARKET BACKDROP AND PERFORMANCE
Your Company generated positive returns during the year to 30 June 2011, with
net assets rising 11.1% to £75.5 million. Over the year, the FTSE All-Share
Total Return Index rose 25.6% while the FTSE World Total Return Index rose
22.4%. At the year end, the net asset value per ordinary share was 106.28p.
The principal reason for the Company's underperformance relative to equity
markets was its cautious approach. This was reflected in its significant
allocation to cash, which stood at 20.5% of the portfolio in the weeks
immediately after year end, and its holdings in fixed income securities and
hedge funds. Financial markets remained nervous at the year end, principally as
a result of the eurozone crisis and fiscal imbalances elsewhere in the
developed world. This cautious stance is, therefore, likely to be maintained.
With exceptionally low interest rates still depressing returns on the Company's
cash deposits, the net revenue loss for the year was £273,000 after a £281,000
loss the previous year. Your Directors do not recommend the payment of a final
dividend.
After weakness over the summer of 2010 as investors worried about the health of
US economic growth, equities made consistent progress during the first half of
the year under review. One factor was the Federal Reserve's willingness to
respond to weak job creation data, which threatened to undermine the US
economic recovery. After a series of dovish speeches, Ben Bernanke, the Fed
chairman, announced a second programme of quantitative monetary easing in
November. This announcement combined with positive economic news, raised
investors' risk appetites. Other factors included strong growth in emerging
markets.
Equities made less consistent progress in the second half, however, as a result
of economic and geopolitical concerns. A significant correction in late
February and early March was followed by more extended weakness in May and
June. Initially, investors were concerned about rising oil prices as civil war
broke out in Libya. The early spring sell-off then intensified after Japan's
earthquake and tsunami caused widespread loss of life and damage to Japan's
industrial infrastructure. Then, towards the year end, inflationary concerns
and the developing eurozone crisis affecting Greece, Ireland and Portugal began
to weigh on sentiment. The European Central Bank (ECB) and the International
Monetary Fund cooperated to provide rescue packages for all three countries.
The ECB felt compelled, however, to respond to rising inflation in the core
eurozone countries. Thus, after almost two years of inactivity, it became the
first major central bank to tighten monetary policy when it raised its main
policy interest rate by a quarter point to 1.25% in April. By contrast, the US
and UK central banks remained on hold, leading to currency weakness, with the
dollar and the pound down 15.5% and 9.3% respectively against the euro.
With investors' risk appetites continuing to recover from the credit crisis,
riskier smaller stocks outperformed larger stocks over the year. In the US, the
Russell 2000 Index of smaller companies gained 26.5% in sterling terms while
the Russell 1000 Index of larger stocks gained 20.6%. Investors' appetite for
risk was also apparent in bond markets, where sterling-denominated high-yield
bonds returned 7.5% in sterling, emerging market government debt returned 4.1%
and Group of Seven (G7) government bonds returned 2.1%.
Within the G7, currency movements shaped relative returns from equity markets,
with Germany and France doing best in sterling terms, up 37.4% and 33.5%
respectively. The UK, up 25.6%, came next, followed by Canada and Italy, up
23.6% and 23.0% respectively. Japan, up 5.6%, was the weakest country as a
result of its earthquake while currency weakness reduced the US return to
22.6%. Among smaller developed economies, the oil-focussed Norwegian market, up
39.3%, was particularly strong while Greece's fiscal crisis left its shares
down 1.75%. Emerging markets, up 19.4%, lagged developed markets, with India,
down 2.8%, conspicuously weak. There was, however, strength in Eastern Europe,
where stocks rose 36.8%.
At the sector level, basic materials did best, aided by the 46.5% rise in the
price of industrial commodities as measured by Thomson Reuters. Energy stocks
returned 30.5%, with Brent Crude gaining 46.4% to $110.82 per barrel. The other
strong sectors were industrials and consumer goods, up 27.6% and 25.7%
respectively. By contrast, utilities and financial stocks were weak, gaining
10.6% and 13.5% respectively, while technology gained 16.5%.
Economic growth was slowing in early 2011 and there were signs of further
softness over the summer. Business surveys covering new orders were slightly
improved in the US, Japan and the UK but eurozone figures were deteriorating.
Money supply trends looked healthy in the US, where banks were becoming more
confident about lending. Monetary conditions also improved in Japan, where
industry rebounded after the earthquake. Money supply statistics were, however,
deteriorating in the eurozone and its smaller peripheral members are likely to
continue being the most significant sources of global economic and financial
instability.
Inflation, meanwhile, may remain a key concern as a result of rising commodity
prices and the lax central bank monetary policies. Eurozone inflation rose
significantly above the ECB's comfort zone, leading to a further quarter point
rise in its policy rate to 1.5% shortly after the year end despite the crisis
in the weaker peripheral countries. UK inflation, meanwhile, remained
persistently above the Bank of England's 2% target although the Bank was
unwilling to raise rates for fear of reducing the UK's already anaemic economic
growth further.
Your Company's unaudited net asset value at 31 August 2011 was 101.6p.
Geoffrey Howard-Spink
Chairman
14 September 2011
INVESTMENT MANAGER'S REPORT
Your Company's strategy is to invest in a diversified portfolio of open-ended
funds, investment trusts, exchange-traded funds (ETFs) and hedge funds selected
from across the market place as well as certain selected special situations.
The portfolio is spread across diverse asset classes from UK and overseas
equities and bonds to commercial property, commodities and private equity.
A number of adjustments were made to the portfolio during the year under
review. Your Company participated in one fund launch: Fundsmith Equity, a
global open-ended fund established by Terry Smith, the former chief executive
of Collins Stewart, the stockbroker. Two other open-ended fund additions were
the PFS Brompton UK Recovery Unit Trust and the Wells Fargo China Equity Fund.
The Company added a new hedge fund holding, the SW Mitchell Small Cap European
Fund, which has a long-short equity strategy but does not employ leverage.
Within its listed equity portfolio it subscribed to the flotation of Vallar
(now called Bumi), the special purpose vehicle established by Nat Rothschild to
invest in the mining sector. It also made two small investments in unquoted
securities: All Star Leisure, an operator of upmarket bowling alleys, and a
property company specialising in purchasing and redeveloping distressed leisure
industry assets, principally hotels. The principal disposals over the year were
GWI Brazil, the iShares China ETF and Prusik Asia.
Significant gains were made by a number of the holdings during the year under
review. Among the portfolio's investment trust holdings, the Henderson Private
Equity Investment Trust gained 108.4% following the board's announcement that
the fund would be liquidated and the proceeds distributed to shareholders.
Other strong performers included Henderson European Special Situations, up
32.3%, Neptune Russia & Greater Russia, up 30.0%, Polar Technology, up 28.3%,
and Artemis UK Special Situations, up 27.2%. Of the funds purchased during the
year, PFS Brompton UK Recovery returned 19.4% from its purchase in August 2010
to the year end, SW Mitchell Small Cap European returned 10.7% from its
purchase in January 2011 and Vallar, bought in July 2010, returned 16%. The
weak areas in the portfolio included the BH Global hedge fund, down 4.8%,
Investec Africa, up 1.0%, BlackRock Gold & General, up 7.0%, and M&G Optimal
Income, up 9.2%.
As a result of portfolio changes and market movements, your Company ended the
year with 57.6% of its assets in retail funds, 6.9% in investment trusts, 5.0%
in hedge funds, 3.3% in ETFs, 8.3% in other investments and 20.5% in cash.
Geographically, the biggest non-cash holdings were in the UK, at 19.9%,
specialist and global equities, at 18.4%, emerging markets, at 13.4%, and
Europe excluding the UK, at 10.2%. In asset class terms, the biggest non-cash
holdings were in equities and equity funds, at 52.0%, commodities, at 12.0%,
hedge funds, at 6.5%, and private equity, at 6.2%.
Global stockmarkets traded in a range for most of the second half of the year
under review before breaking upwards in sterling terms shortly after the year
end to top the peak reached in the summer of 2007 before the credit crisis.
They fell significantly in the weeks after the year end as a result of the
gathering fiscal crises in the US and the eurozone and slowing economic growth.
There were, however, indications that economic momentum might recover later in
the year in some parts of the developed world.
The major central banks, with the exception of the European Central Bank, were
continuing to pursue accommodative monetary policies and this was reflected in
steady growth of inflation-adjusted money supply in the main industrial
economies. Of the major markets, Japan was recovering lost ground, with data
for production, bank lending and money supply all pointing towards a resumption
of economic growth. In Europe the eurozone's weaker economies were
deteriorating, while UK economic growth appeared lacklustre at best. In the US
the numbers of hours worked by private sector workers was improving, although
the job creation statistics looked lacklustre. Chinese data, meanwhile, were
suggesting that China's inflation should stabilise later this year.
In fixed income markets, the eurozone crisis was the principal cause of
concern, with the yield premiums on Italian bonds relative to German bonds
edging higher and approaching those of Spain, precipitating intervention by the
ECB in early August.
Brompton Asset Management LLP
Investment Manager
14 September 2011
SCHEDULE OF TWENTY LARGEST INVESTMENTS
At 30th June 2011
30th June
2011
Holding Activity Bid-market Percentage
value of portfolio
£ `000
Henderson Euro Special Situations Investment Fund 7,711 12.71
Fund
BlackRock Gold & General Income Investment Fund 6,485 10.69
Fund
Occam Umbrella Asia Focus Fund Investment Fund 4,378 7.21
Investec Africa Fund Investment Fund 4,299 7.08
Polar Capital Global Technology Investment Fund 3,216 5.30
Fund
Atlantis China Fund Plc Investment Fund 3,191 5.26
Henderson Private Equity Investment Investment 3,006 4.95
Trust Company
Artemis UK Special Situations Fund Investment Fund 2,852 4.70
Trojan Investment Fund Investment Fund 2,797 4.61
M&G Optimal Income Fund Investment Fund 2,738 4.51
Aquilus Inflection Fund Investment Fund 2,578 4.25
Gold Bullion Securities ETF Exchange Traded 2,528 4.16
Fund
Bumi Resources Quoted Equity 2,320 3.82
Neptune Russia & Greater Russia Investment Fund 2,055 3.39
Fund
Fundsmith Equity Fund Investment Fund 1,626 2.68
PFS Brompton UK Recovery Unit Trust Investment Fund 1,429 2.35
The Sierra Investment Fund Investment Fund 1,183 1.95
BH Global Limited Investment 1,118 1.84
Company
SW Mitchell Small Cap European Fund Investment Fund 1,112 1.83
Aberforth Geared Income Trust Investment 1,093 1.80
Company
57,715 95.09
Balance held in 11 investments 2,977 4.91
Total investments 60,692 100.00
The investment portfolio can be further analysed as
follows:
£ `000
Equities (including Investment 9,165
Companies)
Convertible securities 130
Loan 498
Other investments 50,899
60,692
All the Company's investments are either unlisted or are unit trusts/OEIC funds
with the exception of Henderson Private Equity Investment Trust, BH Global
Limited, Mam Funds, Gold Bullion Securities ETF, Immedia Broadcasting, Hanson
Westhouse Holdings and Bumi Plc.
SCHEDULE OF TWENTY LARGEST INVESTMENTS
At 30th June 2010
30th June
2010
Holding Activity Bid-market Percentage
value of portfolio
£ `000
BlackRock Gold & General Income Investment Fund 6,066 12.40
Fund
New Star European Special Investment Fund 5,828 11.92
Situations Fund
Investec Africa Fund Investment Fund 4,256 8.70
Occam Umbrella Asia Focus Fund Investment Fund 3,900 7.98
Atlantis China Fund Investment Fund 2,729 5.58
M&G Optimal Income Fund Investment Fund 2,519 5.15
Polar Capital Global Technology Investment Fund 2,483 5.08
Fund
Trojan Investment Fund Investment Fund 2,469 5.05
Gold Bullion Securities ETF Exchange Traded 2,250 4.60
Fund
Artemis UK Special Situations Fund Investment Fund 2,227 4.55
iShares FTSE/Xinhua China 25 ETF Exchange Traded 2,111 4.32
Fund
Aquilus Inflection Fund Investment Fund 1,919 3.92
Neptune Russia & Greater Russia Investment Fund 1,574 3.22
Fund
Henderson Private Equity Investment Investment 1,404 2.87
Trust Company
The Sierra Investment Fund Investment Fund 1,300 2.66
BH Global Limited Investment 1,174 2.40
Company
GWI Brazil Fund Investment Fund 1,060 2.17
Aberforth Geared Income Trust Investment 958 1.96
Company
Prusik Asia Fund Investment Fund 951 1.94
Corndon Limited 12% Convertible Convertible 570 1.17
Security
47,748 97.64
Balance held in 12 investments 1,154 2.36
Total investments 48,902 100.00
The investment portfolio can be further analysed as
follows:
£ `000
Equities (including Investment 4,074
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 Limited, Midas Capital, Gold Bullion Securities
ETF, Immedia Broadcasting and Hanson Westhouse Holdings.
BUSINESS REVIEW
The following business review is designed to provide information primarily
about the Company's business and results for the year ended 30th June 2011. The
Business Review should be read in conjunction with the Chairman's Statement and
the Investment Manager's Report, 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 Act
2006. It conducts its operations in accordance with the requirements of
sections 1158/1159 Corporation Tax Act 2010 (`section 1158') so as to gain
exemption under those sections from liability to United Kingdom capital gains
tax. Approval by HM Revenue & Customs (`HMRC') under section 1158 can only be
obtained annually and has been granted for the financial year ended 30th June
2010, but is only granted subject to no subsequent enquiry into the Company's
corporation tax self-assessment. The Directors are of the opinion that the
Company continues to conduct its affairs in a manner which will enable it to
apply for exemption under section 1158.
The Company is listed on the London Stock Exchange. It therefore conducts its
affairs in accordance with the Listing Rules and Disclosure and Transparency
Rules published by the Financial Services Authority.
INVESTMENT OBJECTIVE AND POLICY
Investment Objective
The Company's investment objective is to achieve long-term capital growth.
Investment Policy
The Company's investment policy is to allocate assets to global 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
Emerging Markets and to any individual industry sector will be limited to 50%
of the Company's net assets, such values being assessed at the time 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 at
the 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 may
be invested in other closed-ended investment funds except where such funds have
themselves published investment policies to invest no more than 15% of their
total assets in other listed closed-ended investment funds.
FINANCIAL REVIEW
Assets
Net assets at 30th June 2011 amounted to £75,484,000 compared with £67,972,000
at 30th June 2010. In the year under review, the net asset value per Ordinary
share increased by 11.1% from 95.70p to 106.28p.
Costs
Total expenses for the year amounted to £822,000 (2010: £763,000). In the year
under review the investment management fee amounted to £552,000 (2010: £
496,000). No performance fee was payable in respect of the year under review as
the Company did not outperform the hurdle rate.
Revenue
The Company's gross revenue totalled £402,000 (2010: £437,000) mainly as a
result of a strategic move to lower income producing investments in emerging
markets and low interest rates. After deducting expenses and adding back
taxation the revenue loss for the year was £273,000 (2010: £281,000).
Dividends
Dividends do not form a central part of the Company's investment objective. The
Directors have not declared a final dividend for the year ended 30th June 2011
(2010: nil).
Funding
The primary source of the Company's funding is shareholder funds. The Company
is typically ungeared.
VAT
No VAT is charged on investment management fees but is payable at standard rate
on other services provided to the Company.
Payment of suppliers
The Company seeks to obtain the best possible terms for the business it
conducts, 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 2011 (2010: nil).
Future developments
While the future performance of the Company is dependent, to a large degree, on
the performance of international financial markets, which, in turn, are subject
to many external factors, the Board's intention is that the Company will
continue to pursue its stated investment objective in accordance with the
strategy outlined above.
Going concern
The Directors believe that it is appropriate to continue to adopt the going
concern basis in preparing the accounts as the assets of the Company consist
mainly of securities which are readily realisable or cash and, accordingly, the
Company has adequate financial resources to continue in operational existence
for the foreseeable future. In reaching this view, the Directors reviewed the
anticipated level of expenditure of the Company for the next twelve months
against the cash and asset liquidity within the portfolio.
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 %
2011 2010 Change
PERFORMANCE
Net assets (£ `000) 75,484 67,972 11.1
Net asset value per share 106.28p 95.70p 11.1
Share price 73.13p 70.00p 4.5
Discount 31.2% 26.9% N/A
Total return per share 10.58p 13.69p N/A
FTSE World Index (total return, sterling 624.88 510.67 22.4
adjusted)
FTSE All-Share Index (total return) 4,233.69 3,370.06 25.6
MANAGEMENT ARRANGEMENTS
In common with most investment trusts, the Company does not have any executive
directors or employees. The day-to-day management and administration of the
Company, including investment management, accounting and company secretarial
matters, and custodian arrangements are delegated to specialist companies.
Investment management services
The Company's investments are managed by Brompton Asset Management LLP
(`Brompton'). This relationship is governed by an agreement dated 23rd December
2009. The portfolio manager is Gill Lakin.
Brompton receives a management fee, payable quarterly in arrears, equivalent to
3/16 per cent of total assets after the deduction of the value of any
investments managed by the Investment Manager or its associates (as defined in
the investment management agreement). The investment management agreement may
be terminated by either party giving three months 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 3 month 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 £552,000
(2010: £496,000). No performance fee was accrued or paid in respect of the year
ended 30th June 2011 (2010: £nil).
Secretarial, administration and accounting services
Secretarial services, general administration and accounting services for the
Company are undertaken by Phoenix Administration Services Limited.
Custodian services
On 1st January 2010 Brown Brothers Harriman & Co was appointed as the
independent custodian to the Company.
RELATED PARTY TRANSACTIONS
Mr Duffield is the senior partner of Brompton Asset Management Group LLP the
ultimate parent of Brompton.
The investment management fee payable to Brompton in relation to the year ended
30th June 2011 was £552,000. No performance fee was payable in respect of the
year ended 30th June 2011.
During the year the Group's investments included funds managed by the
Investment Manager or by associates of the Investment Manager. At 30th June
2011, the Company held one such investment. No investment management fees were
payable by the Company in respect 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 can be summarised 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
investment returns. 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 to
a reduction in the Company's net asset value. A proportion of the Company's
portfolio is invested in investments denominated in foreign currencies and
movements in exchange rates can significantly affect their sterling value. It
is the Board's policy to hold an appropriate spread of investments in order to
reduce the risk arising from factors specific to a particular investment or
sector. The Investment Manager takes account of foreign currency risk and
interest 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 an
important 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
board is kept informed of any personnel changes to the investment team employed
by the Investment Manager.
Tax and regulatory risks
A breach of sections 1158 to 1165 Corporation Tax Act 2010 could lead to a loss
of investment trust status, resulting in capital gains realised within the
portfolio being subject to United Kingdom capital gains tax. A breach of the
UKLA Listing Rules could result in suspension of the Company's shares, while a
breach of company law could lead to criminal proceedings, or financial or
reputational damage. The Board employs Brompton as Investment Manager and
Phoenix Administration Services Limited as Secretary and administrator to help
manage the Company's legal and regulatory obligations. The Board receives a
monthly financial report which includes information on the Company's compliance
with section 1158.
Operational
Disruption to, or failure of, the Investment Manager's or Administrator's
accounting, dealing or payment systems or the Custodian's records could prevent
the accurate reporting and monitoring of the Company's financial position. The
Company is also exposed to the operational risk that one or more of its
suppliers may not provide the required level of service.
AUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30th June 2011
Year ended Year ended
30th June 2011 30th June 2010
Revenue Capital Revenue Capital
Return Return Total Return Return Total
Notes £ `000 £ `000 £ `000 £ `000 £ `000 £ `000
INVESTMENT INCOME 2 391 - 391 420 - 420
Other operating income 2 11 - 11 17 - 17
402 - 402 437 - 437
GAINS AND LOSSES ON
INVESTMENTS
Gains on investments at
fair value through 9 - 8,388 8,388 - 9,397 9,397
profit or loss
Other exchange (losses)/ - (414) (414) - 659 659
gains
Trail commission - 92 92 - 120 120
402 8,066 8,468 437 10,176 10,613
EXPENSES
Management fees 3 (552) - (552) (496) - (496)
Other expenses 4 (270) - (270) (267) - (267)
- (822) (763) (763)
(822) -
PROFIT BEFORE FINANCE
COSTS AND TAX (420) 8,066 7,646 (326) 10,176 9,850
Finance costs - - - (1) - (1)
PROFIT BEFORE TAX (420) 8,066 7,646 (327) 10,176 9,849
Tax 5 147 (281) (134) 46 (172) (126)
PROFIT FOR THE YEAR (273) 7,785 7,512 (281) 10,004 9,723
EARNINGS PER SHARE
Ordinary shares (pence) 7 (0.38) 10.96 10.58 (0.40) 14.09 13.69
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 Other 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 2011
Note Share Share Special Retained
capital premium reserve earnings Total
£ `000 £ `000 £ `000 £ `000 £ `000
AT 30TH JUNE 2010 710 21,573 56,908 (11,219) 67,972
Total comprehensive income for the - - - 7,512 7,512
year
AT 30TH JUNE 2011 710 21,573 56,908 (3,707) 75,484
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30th June 2010
Note Share Share Special Retained
capital premium reserve earnings Total
£ `000 £ `000 £ `000 £ `000 £ `000
AT 30TH JUNE 2009 710 21,573 56,908 (20,445) 58,746
Total comprehensive income for the - - - 9,723 9,723
year
Dividend paid 8 - - - (497) (497)
AT 30TH JUNE 2010 710 21,573 56,908 (11,219) 67,972
CONSOLIDATED BALANCE SHEET
At 30th June 2011
Notes 30th June 30th June
2011 2010
£ `000 £ `000
NON-CURRENT ASSETS
Investments at fair value through profit or loss 9 60,692 48,902
CURRENT ASSETS
Other receivables 11 61 68
Cash and cash equivalents 12 15,495 19,672
15,556 19,740
TOTAL ASSETS 76,248 68,642
CURRENT LIABILITIES
Other payables 13 (221) (230)
TOTAL ASSETS LESS CURRENT LIABILITIES 76,027 68,412
NON-CURRENT LIABILITIES
Deferred tax liability 5 (543) (440)
NET ASSETS 75,484 67,972
EQUITY ATTBIBUTABLE 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 (3,707) (11,219)
TOTAL EQUITY 75,484 67,972
NET ASSET VALUE PER ORDINARY SHARE (Pence) 16
106.28 95.70
CASH FLOW STATEMENTS
For the year ended 30th June 2011
Year Year Year Year ended
ended ended ended 30th June
30th June 30th June 30th June 2010
2011 2011 2010 Company
Note Group Company Group £ `000
£ `000 £ `000 £ `000
NET CASH OUTFLOW FROM OPERATING
ACTIVITIES (361) (390) (513) (521)
NET CASH OUTFLOW FROM SERVICING
OF FINANCE - - (1) (1)
FINANCIAL INVESTMENT
Purchase of Investments (8,247) (8,247) (15,113) (15,113)
Sale of Investments 4,845 4,845 14,948 14,948
NET CASH OUTFLOW FROM FINANCIAL
INVESTMENT (3,402) (3,402) (165) (165)
EQUITY DIVIDENDS PAID - - (497) (497)
NET CASH OUTFLOW BEFORE FINANCING (3,763) (3,792) (1,176) (1,184)
DECREASE IN CASH (3,763) (3,792) (1,176) (1,184)
RECONCILIATION OF NET CASH FLOW
TO MOVEMENT IN NET FUNDS
Decrease in cash resulting from (3,763) (3,792) (1,176) (1,184)
cash flows
Exchange movements (414) (415) 659 659
Movement in net funds
(4,177) (4,207) (517) (525)
Net funds at 1st July 19,672 18,289 20,189 18,814
NET FUNDS AT END OF YEAR 17 15,495 14,082 19,672 18,289
RECONCILIATION OF PROFIT BEFORE
FINANCE COSTS AND TAXATION TO NET
CASH FLOW FROM OPERATING
ACTIVITIES
Profit before finance costs and 7,646 7,643 9,850 9,849
taxation
Gains on investments (8,388) (8,388) (9,397) (9,397)
Exchange differences 414 415 (659) (659)
Capital trail commission (92) (92) (120) (120)
Net revenue loss before finance
costs and taxation (420) (422) (326) (327)
Rolled up interest - - (112) (112)
Increase in debtors (20) (20) 19 19
Decrease in creditors (9) (9) (112) (112)
Taxation (4) (31) (102) (109)
Capital trail commission 92 92 120 120
NET CASH OUTFLOW FROM OPERATING
ACTIVITIES (361) (390) (513) (521)
NOTES TO THE ACCOUNTS
For the year ended 30th June 2011
1. ACCOUNTING POLICIES
These financial statements are presented in pounds sterling, the Group's
functional currency, being 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 with
International Financial Reporting Standards ('IFRS'). These comprise standards
and interpretations approved by the International Accounting Standards Board
('IASB'), together with interpretations of the International Accounting
Standards and Standing Interpretations Committee ('IASC') that remain in
effect, 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 Investment
Companies ('AIC') in January 2009 is consistent with the requirements of IFRS,
the Directors have sought to prepare the financial statements on a basis
compliant with the recommendations of the SORP.
(b) Basis of consolidation: The Consolidated Statement of Comprehensive Income
and Balance Sheet include the Accounts of the Company and its subsidiary made
up to 30th June 2011. No Statement of Comprehensive Income is presented for the
parent company as permitted by Section 408 of the Companies Act 2006.
(c) Presentation of Statement of Comprehensive Income: In order to better
reflect the activities of an investment trust company and in accordance with
guidance issued by the AIC, supplementary information which analyses the
Consolidated Statement of Comprehensive Income between items of a revenue and
capital nature has been presented alongside the Consolidated Statement of
Comprehensive 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 1159 of the Corporation Tax Act 2010.
(d) Use of estimates: The preparation of financial statements requires the
Group to make estimates and assumptions that affect items reported in the
Consolidated and Company Balance Sheets and Consolidated Statement of
Comprehensive Income and the disclosure of contingent assets and liabilities at
the date of the financial instruments. Although these estimates are based on
the Directors' best knowledge of current facts, circumstances and, to some
extent, future events and actions, the Group's actual results may ultimately
differ from those estimates, possibly significantly.
(e) Revenue: Dividends and other such distributions from investments are
credited to the revenue column of the Consolidated Statement of Comprehensive
Income on the day in which they are quoted ex-dividend. Interest on fixed
interest securities and deposits is accounted for on an effective yield basis.
Where the Company has elected to receive its dividends in the form of
additional shares rather than in cash, the amount of the cash dividend is
recognised as income, and any excess in the value of the shares received over
the amount recognised is credited to the capital reserve. Deposit interest
receivable and trail commission is taken into account on a receipts basis.
(f) Expenses: Expenses are accounted for on an accruals basis. Management fees,
administration and other expenses, with the exception of the transaction
charges, are charged to the revenue column of the Consolidated Statement of
Comprehensive Income. Transaction charges are charged to the capital column of
the Consolidated Statement of Comprehensive Income.
(g) Investments held at fair value: Purchases and sales of investments are
recognised and derecognised on the trade date where a purchase or sale is under
a contract whose terms require delivery within the timeframe established by the
market concerned, and are initially measured at fair value.
All investments are classified as held at fair value through profit or loss on
initial 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
convention of 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 net asset value 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 the
taxation charge against income. Taxation deferred or accelerated can arise due
to temporary differences between the treatment of certain items for accounting
and taxation purposes. Full provision is made for deferred taxation under the
liability method on all temporary differences not reversed by the Balance Sheet
date.
(i) Foreign currency: Assets and liabilities denominated in foreign currencies
are translated at the rates of exchange ruling at the Balance Sheet date.
Foreign currency transactions are translated at the rates of exchange
applicable at the transaction date. Foreign currency differences including
exchange gains and losses 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;
- revaluation 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. 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):
Accounting periods
beginning on or
after
IAS 24 Related party Disclosures (revised) 1st January 2011
IFRS 7 Amendments enhancing disclosures about transfers of 1st July 2011
financial assets
IFRS 9 Financial Instruments: Classification & Measurement 1st January 2013
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
2011 2010
£ `000 £ `000
INCOME FROM INVESTMENTS
UK net dividend income 120 23
Unfranked investment income 271 182
Fixed interest income - 160
Interest on convertible loan stock - 55
391 420
OTHER OPERATING INCOME
Bank interest receivable 11 17
TOTAL INCOME COMPRISES
Dividends 391 205
Interest - 215
Other income 11 17
402 437
3. MANAGEMENT FEES
Year ended Year ended
30th June 2011 30th June 2010
Revenue Capital Total Revenue Capital Total
£ `000 £ `000 £ `000 £ `000 £ `000 £
`000
Investment management fee 552 - 552 496 - 496
Performance fee - - - - - -
552 - 552 496 - 496
At 30th June 2011 there were amounts outstanding of £139,000 (2010: £129,000)
for investment management fees.
4. OTHER EXPENSES
Year ended Year ended
30th June 30th June
2011 2010
£ `000 £ `000
Legal fees 26 52
Directors' remuneration 50 55
Administrative and secretarial fee 95 82
Auditors' remuneration
- Audit 26 28
- Other 16 5
Other 57 45
270 267
Allocated to:
- Revenue 270 267
- Capital - -
270 267
5. TAXATION
(a)Analysis of tax charge for the year:
Year ended Year ended
30th June 2011 30th June 2010
Revenue Capital Total Revenue Capital Total
£ `000 £ `000 £ `000 £ `000 £ `000 £
`000
UK corporation tax - - - - - -
Overseas tax - - - - - -
Tax relief to income (178) 178 - (76) 76 -
Irrecoverable income tax 49 - 49 30 - 30
Prior year adjustment (18) - (18) - - -
Total current tax for the year (147) 178 31 (46) 76 30
Deferred tax - 103 103 - 96 96
Total tax for the year (note 5b) (147) 281 134 (46) 172 126
(b)Factors affecting tax charge for the year:
The charge for the year can be reconciled to the profit per the Consolidated
Statement of Comprehensive Income as follows:
Year ended Year ended
30th June 30th June
2011 2010
£ `000 £ `000
Profit before tax 7,646 9,849
Theoretical tax at the UK corporation tax rate of 27.5%*
(2010: 28%) 2,103 2,758
Effects of:
Non-taxable UK dividend income (33) (6)
Gains and losses on investments that are not taxable (2,085) (2,774)
Movement in unrealised gains on non-qualifying offshore 103 96
funds
Irrecoverable income tax 49 29
Overseas dividends which are not taxable (8) (9)
Excess expenses not utilised 23 32
Prior year adjustment (18) -
Total tax for the year 134 126
* Under the Finance Act 2011, the rate of Corporation Tax was lowered to 26%
from 28% on 1st April 2011. An average rate of 27.5% was applicable for the
year ended 30th June 2011.
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 ended Year ended
30th June 30th June
2011 2010
£ `000 £ `000
Provision at start of year 440 344
Deferred tax charge for the year 103 96
Provision at end of year 543 440
The deferred tax charge of £103,000 (2010: £96,000) in the capital account of
the Company relates to unrealised gains on non-reporting offshore funds. There
is no deferred tax charge in the revenue account (2010: nil) 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 (2010: nil) as a result of excess
expenses.
6. COMPANY RETURN FOR THE YEAR
The total return for the year dealt with in the accounts of the parent company
was £7,509,000 (2010: £9,225,000).
7. RETURN PER ORDINARY SHARE
Total return per Ordinary share is based on the Group total return on ordinary
activities after taxation of £7,512,000 (2010: £9,723,000) and on 71,023,695
(2010: 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
ordinary activities after taxation of £(273,000) (2010: (£281,000)) and on
71,023,695 (2010: 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
£7,785,000 (2010: £10,004,000) and on 71,023,695 (2010: 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 ended Year ended
30th June 30th June
2011 2010
£ `000 £ `000
Dividends paid for the year ended
30th June 2010: nil (2009: 0.7p) per share - 497
The total dividend payable in respect of the financial year, which is the basis
on which the requirements of section 1159 of the Corporation Tax Act 2010
(formerly section 842 of the Income and Corporation Taxes Act 1988) are
considered, is set out below.
Year ended Year ended
30th June 30th June
2011 2010
£ `000 £ `000
Final dividend for the year ended
30th June 2011: nil (2010: nil) - -
Revenue available for distribution by way of dividend (275) (282)
The Directors do not recommend the payment of a final dividend for the year
ended 30th June 2011 (2010: nil).
9. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
Year ended Year ended
30th June 30th June
2011 2010
£ `000 £ `000
GROUP AND COMPANY 60,692 48,902
ANALYSIS OF INVESTMENT
PORTFOLIO - GROUP AND COMPANY
Listed* Unlisted Total
£ `000 £ `000 £ `000
Opening book cost 47,769 3,706 51,475
Opening investment holding losses (1,301) (1,272) (2,573)
Opening valuation 46,468 2,434 48,902
Movement in period
Purchases at cost 6,822 1,425 8,247
Sales
- Proceeds (4,416) (429) (4,845)
- Realised (losses)/gains on sales (5,740) 391 (5,349)
Investment holding gains/(losses) 14,717 (980) 13,737
Closing valuation 57,851 2,841 60,692
Closing book cost 44,435 5,093 49,528
Closing investment holding gains/(losses) 13,416 (2,252) 11,164
Closing valuation 57,851 2,841 60,692
* Listed investments include unit trust and OEIC funds.
Year ended Year ended
30th June 30th June
2011 2010
£ `000 £ `000
ANALYSIS OF CAPITAL GAINS AND LOSSES
Realised losses on sales of investments (5,349) (3,416)
Increase in investment holding gains 13,737 12,813
8,388 9,397
Transaction costs
The purchases and sales proceeds figures above include transaction costs on
purchases of £3,000 (2010: £13,000) and on sales of £3,000 (2010: nil).
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
2011 2010
£ `000 £ `000
Net assets brought forward 496 495
Profit for year 3 1
NET ASSETS CARRIED FORWARD 499 496
11. OTHER RECEIVABLES
30th June 30th June 30th June 30th June
2011 2011 2010 2010
Group Company Group Company
£ `000 £ `000 £ `000 £ `000
Prepayments and accrued income 61 61 41 41
Taxation - - 27 -
Amounts owed by subsidiary - 914 - 914
undertakings
61 975 68 955
12. CASH AND CASH EQUIVALENTS
30th June 30th June 30th June 30th June
2011 2011 2010 2010
Group Company Group Company
£ `000 £ `000 £ `000 £ `000
Cash at bank 15,495 14,082 19,672 18,289
13. OTHER PAYABLES
30th June 30th June 30th June 30th June
2011 2011 2010 2010
Group Company Group Company
£ `000 £ `000 £ `000 £ `000
Accruals 221 221 230 230
14. CALLED UP SHARE CAPITAL
30th June 30th June
2011 2010
£ `000 £ `000
Authorised
305,000,000 (2010: 305,000,000) Ordinary shares of £ 3,050 3,050
0.01 each
Issued and fully paid
71,023,695 (2010: 71,023,695) Ordinary shares of £0.01 710 710
each
15. RESERVES
Share Special Retained
Premium Reserve earnings
account £ `000 £ `000
£ `000
GROUP
At 30th June 2010 21,573 56,908 (11,219)
Increase in investment holding gains - - 13,737
Net losses on realisation of investments - - (5,349)
Losses on foreign currency - - (414)
Trail commission - - 92
Deferred tax charge in capital - - (103)
Tax charge in capital - - (178)
Retained loss for year - - (273)
At 30th June 2011 21,573 56,908 (3,707)
Share Special Retained
Premium Reserve earnings
account £ `000 £ `000
£ `000
COMPANY
At 30th June 2010 21,573 56,908 (11,715)
Increase in investment holding gains - - 13,737
Net losses on realisation of investments - - (5,349)
Losses on foreign currency - - (415)
Trail commission - - 92
Deferred tax charge in capital - - (103)
Tax relief to income from capital - - (178)
Retained loss for year - - (275)
At 30th June 2011 21,573 56,908 (4,206)
The components of retained earnings are set out below:
30th June 30th June
2011 2010
£ `000 £ `000
GROUP
Capital reserve-realised (14,791) (8,925)
Capital reserve-revaluation 10,966 (2,685)
Revenue reserve 118 391
(3,707) (11,219)
COMPANY
Capital reserve-realised (15,144) (9,277)
Capital reserve-revaluation 10,966 (2,685)
Revenue reserve (28) 247
(4,206) (11,715)
16. NET ASSET VALUE PER ORDINARY SHARE
The net asset value per Ordinary share is calculated on net assets of £
75,484,000 (2010: £67,972,000) and 71,023,695 (2010: 71,023,695) Ordinary
shares in issue at year end.
17. ANALYSIS OF CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
At 1st Exchange At 30th
July 2010 Cash movement June 2011
£ `000 flow £ `000
GROUP
Cash at bank and on deposit 19,672 (3,763) (414) 15,495
COMPANY
Cash at bank and on deposit 18,289 (3,792) (415) 14,082
18. FINANCIAL INFORMATION
2011 Financial information
The figures and financial information for 2011 are extracted from the Annual
Report and Accounts for the year ended 30th June 2011 and do not constitute the
statutory accounts for the year. The Annual Report and Accounts includes the
Report of the Independent Auditors which is unqualified and does not contain a
statement under either section 498(2) or section 498(3) of the Companies Act
2006. The Annual Report and Accounts has not yet been delivered to the Register
of Companies.
2010 Financial information
The figures and financial information for 2010 are extracted from the published
Annual Report and Accounts for the year ended 30th June 2010 and do not
constitute the statutory accounts for that year. The Annual Report and Accounts
has been delivered to the Registrar of Companies and includes the Report and
Independent Auditors which was unqualified and did not contain a statement
under 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 2011 will be sent to shareholders in
September 2011 and will be available on the Company website (www.nsitplc.com)
or in hard copy format at the Company's registered office, 1 Knightsbridge
Green, London SW1X 7QA.
The Annual General Meeting of the Company will be held on 17 November 2011 at
11.00 am at 1 Knightsbridge Green, London SW1X 7QA.
Latest directors dealings
- 2 hours ago Mortgage Advice Bureau (Holdings)
- 3 hours ago Mortgage Advice Bureau (Holdings)
- 3 hours ago Beowulf Mining
- 3 hours ago Critical Mineral Resources PLC
- 2 days ago PZ Cussons