Half-yearly Report
28 November 2008
London Stock Exchange Announcement
Finsbury Worldwide Pharmaceutical Trust PLC
Unaudited Interim Results For the Six Months Ended 30 September 2008
INVESTMENT POLICY AND BENCHMARK
Finsbury Worldwide Pharmaceutical Trust PLC invests worldwide in
pharmaceutical and biotechnology companies with the objective of achieving a
high level of capital growth.
Performance is measured against the Datastream World Pharmaceutical &
Biotechnology Index (total return, sterling adjusted).
In order to achieve its investment objective, the Company invests in a
diversified portfolio of pharmaceutical, biotechnology and related securities
on a worldwide basis. It uses gearing and derivative transactions to mitigate
risk and also to enhance capital returns. The Company does not hedge its
foreign currency exposure.
The Board seeks to manage the Company's risk by imposing various investment
limits and restrictions.
- The Company will not invest more than 15% of its assets in other UK listed
investment companies
- The Company will not invest more than 15% of the investment portfolio in any
one individual stock at the time of acquisition
- At least 60% of the investment portfolio will normally be invested in larger
companies (i.e. with a market capitalisation of at least US$5bn)
- At least 20% of the investment portfolio will normally be invested in
smaller companies (i.e. with a market capitalisation of less than US$5bn)
- Investment in unquoted securities will not exceed 10% of the investment
portfolio
- The Company's gearing policy is that it may borrow up to the lower of £70m
or 20% of the Company's net asset value
- Derivative (using options) transactions can be used to mitigate risk or
enhance capital returns and exposure will be restricted to 5% of the
investment portfolio.
Performance 30 31
September March
2008 2008 % Change
Shareholders' funds £254.7m £224.8m +13.3
Net asset value per share - 584.1p 486.6p +20.0
basic
Net asset value per share -
diluted (for warrants) 560.3p 482.4p +16.1
Share price 515.0p 457.0p +12.7
Warrant price 44.5p 27.5p +61.8
Discount of share price to
diluted net asset value per
share 8.1% 5.3% -
Benchmark Index* 7,643.7 7,049.7% +8.4
Gearing# 12.4% 1.8% -
Total expense ratio 1.2% 1.3% -
(annualised)
* Datastream World Pharmaceutical and Biotechnology Index, total return,
sterling adjusted.
# Calculated using the Association of Investment Companies' definition (prior
charges as a percentage of net assets).
Capital Structure
Shares
At 30 September 2008 the Company had in issue 43,607,481 shares of 25p each
(30 September 2007: 48,643,468, 31 March 2008: 46,190,161).
During the half year, a total of 2,595,750 shares were bought back by the
Company. On 24 July 2008, a total of 2,679,750 shares held in treasury were
cancelled. The Board has confirmed that any shares held in treasury will be
cancelled on or as soon as practicable following the Annual General Meeting
each year. At 30 September 2008, 812,000 of the Company's shares were held as
treasury shares. Since the end of the half year a further 560,900 shares have
been repurchased. As at 25 November 2008 the Company had 43,046,581 shares in
issue.
Interim Dividend
The Company has not declared an interim dividend (2007: nil).
Warrants
On 31 July 2008, 13,070 warrants were exercised at the exercise price of 464p
per share.
At 30 September 2008 the Company had in issue 10,745,610 warrants to subscribe
for shares of 25p each (30 September 2007: 10,758,680, 31 March 2008:
10,758,680).
The final remaining exercise date for the Company's warrants is 31 July 2009.
CHAIRMAN'S STATEMENT
Performance
In my first Chairman's Statement, I am delighted to report that despite the
severe effects of the economic slowdown on global financial markets the
Company has performed well, both in relative and absolute terms during the
period under review. The six month period has been an extremely challenging
one for stock markets as a whole and, against a background of turbulent market
conditions particularly towards the end of the summer, the Datastream World
Pharmaceutical & Biotechnology Index, measured in sterling terms on a total
return basis, rose by 8.4% as the healthcare sector was able to provide some
insulation from the significant declines seen in other equity sectors. Against
this background of difficult market conditions, I am pleased to report that
the Company's undiluted net asset value per share rose by 20.0% over the same
period, an outperformance of some 11.6%. This outperformance was derived
principally from the Company's holdings in biotechnology stocks which
performed strongly when compared to larger capitalisation pharmaceutical
stocks, the latter having been held back due to a combination of weak drug
development pipelines, low R&D productivity and the prospect of an increase in
patent expirations commencing in 2010. The Company's performance was also
helped by a strengthening U.S. dollar; during the half year it appreciated
10.3% against sterling.
The Company's share price rose over the period by 12.7% as the
discount of share price to the diluted net asset value per share widened
slightly from 5.3% at 31 March 2008 to 8.1% at the interim stage.
The difficult market environment has continued post the half year end and the
Company's net asset value per share and share price fell by c.5% in October
compared to a small rise in the benchmark index. Early November, however, has
seen a recovery in the Company's performance. It is pleasing to note that for
the calendar year to 31 October 2008, the Company's share price performance
(total return) was ranked fifth out of 247 UK listed investment companies
(source: Winterflood Securities Limited).
Share Capital
The Company continues to exercise its power to buy-back shares in order to
support the discount control mechanism and enhance net asset value per share.
During the six months under review the Company repurchased a total of
2,595,750 shares at a cost of £12.6m (including expenses) to be held in
treasury. On 23 July 2008, all of the shares held in treasury, totalling
2,679,750 shares, were cancelled; the Board confirms that any shares held in
treasury will be cancelled following the Annual General Meeting each year. As
at 30 September 2008, the Company held 812,000 shares in treasury.
The annual exercise date for the Company's warrants occurred on 31 July 2008,
at which time a total of 13,070 warrants were exercised, raising £61,000. The
remaining 10.7m warrants have a final exercise date of 31 July 2009 at an
exercise price 464.0p per share which compares to the current share price of
482.0p per share.
Revenue and Dividends
The revenue return for the period was £614,000 (six months ended 30 September
2007: £674,000) and no interim dividend is declared (six months ended 30
September 2007: nil).
VAT
The position with regard to the repayment of VAT remains as described in the
Chairman's Statement in the Annual Report & Accounts for the year ended 31
March 2008. We continue to work towards a settlement with the Company's
previous Manager, Close Investments Limited, and will report on developments
as they arise.
Outlook
Market turbulence has resulted in unprecedented write-downs in financial
assets and losses for many of the world's largest banks leading to a shortage
of liquidity within the financial sector. When this is combined with the
prospect of a deflationary environment and with many governments and
individuals still financially over-stretched, a further slowdown in economic
growth may be expected. Against this background, merger and acquisition
activity within the pharmaceutical and biotechnology sectors is expected to
continue and will be a key strategic focus for the Company. On balance, it is
not expected that Barack Obama's victory in the U.S. Presidential Election
will be a significant factor for the industry in the future. Your Board
remains cautious in its outlook but it continues to believe that the
underlying secular trends are positive for the healthcare sector overall and
that current market circumstances will offer interesting buying opportunities.
Martin Smith
Chairman
25 November 2008
INTERIM MANAGEMENT REPORT
Risks and Uncertainties
A review of the half year, including reference to the risks and uncertainties
that existed during the period, and the outlook for the Company can be found
in the Chairman's Statement beginning on page 2 and in the Review of
Investments beginning on page 5 of the interim report. The principal risks faced
by the Company fall into eight broad categories: objective and strategy; level of
discount/premium; market price; liquidity; investment portfolio performance
and financial instruments; operational and regulatory; industry; currency.
Information on each of these areas is given in the Business Review within the
Annual Report and Accounts for the year ended 31 March 2008. In the view of
the Board these principal risks and uncertainties are applicable to the
remaining six months of the financial year as they were to the six months
under review.
Related Parties Transactions
During the first six months of the current financial year, no transactions
with related parties have taken place which have affected the financial
position or the performance of the Company during the period.
Directors' Responsibilities
The Directors are responsible for preparing the interim report in accordance
with applicable law and regulations. The Directors confirm that to the best of
their knowledge the condensed set of financial statements, within the interim
report, have been prepared in accordance with the Accounting Standards Board's
Statement `Half Yearly Financial Reports' and that the Chairman's Statement
and the Interim Management Report include a fair review of the information
required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules.
The interim report has not been reviewed by the Company's auditors.
The interim report was approved by the Board on 25 November 2008 and the above
responsibility statement was signed on its behalf by:
Martin Smith Chairman
REVIEW OF INVESTMENTS (Companies held in the investment portfolio are shown in
bold type)
Performance
Amidst a collapsing broader equity market triggered by the worst global
financial crisis in decades, we are pleased to report that the Company posted
a strong increase of 20.0% in its undiluted net asset value per share during
the period, well ahead of the benchmark increase of 8.4%.
Our strategy of emphasising investments in the biotechnology sector to a
greater extent than traditional "big pharma" companies paid dividends during
this period as the biotechnology sector increased while pharmaceutical stocks
declined slightly on average. Our top individual contributors to performance
reflect the success of several different investment strategies: ImClone
Systems is an example of our focus on mergers and acquisition ("M&A")
candidates, Vertex Pharmaceuticals' performance reflects investor enthusiasm
for their exciting novel treatment for Hepatitis C, and both Schering-Plough
and Amgen reflect contrarian "value play" investments in stocks which were
indiscriminately sold by the market because of overblown concerns about key
marketed products.
Contribution by Investment - Excluding Options
Top and bottom five contributors to net asset value performance over the six
months to 30 September 2008
Contribution for Contribution
the six months per Share
Top Five Contributors £'000 (p)*
ImClone Systems 7,344 16.40
Schering-Plough 3,720 8.31
Tepnel Life Sciences 3,220 7.19
Vertex Pharmaceuticals 3,059 6.83
Amgen 3,027 6.76
45.49
Bottom Five Contributors
Roche Holdings (1,454) (3.25)
Amylin (1,177) (2.63)
BioMarin Pharmaceutical (1,135) (2.53)
Par Pharmaceutical (1,075) (2.40)
Biogen Idec (650) (1.45)
(12.26)
*based on the weighted average number of the Company's shares in issue during
the six months ended 30 September 2008 (44,783,068)
Source: Frostrow Capital LLP
Sector Developments
The market's performance during the period proved somewhat parabolic, with
depressed conditions at the beginning and end of the period interposed by a
strong rally in July. The spring months proved treacherous, particularly for
smaller capitalisation companies as investor risk appetite diminished amidst
the credit crisis. Financial market conditions were difficult for
biotechnology companies, and the pace of total financing raised by the biotech
sector declined nearly 65% from the previous year.
During July however, the healthcare sector rallied strongly thanks to a
combination of resurgent M&A activity and strong fund flows driven by
increasingly favorable investor sentiment towards the sector. This rotation
into healthcare generally, and biotechnology in particular, is reminiscent of
the 1990/1991 economic slowdown, a period with many parallels to today's
declining housing market, financial market stresses, rising corporate and
individual default rates and poor economic growth. The biotechnology sector
posted extraordinary gains during this period, with the Amex Biotechnology
Index increasing 46% in 1990 and over 190% in 1991 (both in US$ terms).
Markets declined towards the end of the summer months as the credit crisis
accelerated and the financial markets generally started to unravel. However
the healthcare sector has been able to offer a modest degree of insulation
from the precipitous declines seen in other equity sectors thanks to several
fundamental underpinnings of the industry: products which are generally
non-discretionary consumer purchases, historically low valuations, continuing
robust levels of M&A activity providing support for biotech companies in
particular, and an unexpectedly quiet election cycle with fewer attacks on
"big pharma" companies than we have come to expect during U.S. Presidential
election years. In fact we believe that Barack Obama's victory in the U.S.
Presidential race will not be a crucial determinant of industry fortunes in
the coming years, as he favours increased healthcare coverage (favourable to
industry) and increased government influence on drug prices (unfavourable to
industry).
We hope that the new Democrat administration will bring a welcome changing of
the guard at the U.S. Food and Drug Administration ("FDA"), where the
situation has gone from bad to worse as drugs under evaluation are
increasingly getting delayed or rejected. The bar for outright drug approval
is at historical highs, and 2008 is on track to have among the lowest level of
new drug approvals in history. An example of the current FDA morass is the
blood-thinning agent Prasugrel, being developed in the U.S. by Eli Lilly. The
FDA had an original deadline for rendering a decision last June, and notified
the company that it would require a 90 day extension to late September. The
revised deadline has come and gone with no word from the FDA about a decision.
Investors typically assume the worst in these situations and punish the stock
prices of companies caught up in these delays.
Strategy Review
Our M&A theme yielded strong results during the period and continues to be a
key strategic focus for the Company. The recent surge in acquisitions coupled
with high premiums for the acquired companies demonstrate continued strong
demand from "big pharma" companies as they look to smaller biotechs to offset
their generally low R&D productivity and pipeline gaps. As shown in the table
below, the past six months have seen over a dozen acquisitions of smaller drug
companies, with acquisition premiums ranging from 15% to 233%. In addition to
these smaller deals, there have been several blockbuster announcements such as
Teva's US$9 billion bid (including debt) for Barr Pharmaceuticals, Roche's
US$44 billion bid for 100% ownership of Genentech, and a bidding war for
ImClone between Bristol-Myers Squibb and Eli Lilly. Both ImClone and Genentech
were significant holdings when the deals were announced. Eventually Lilly
triumphed with a US$6.5 billion bid, and we expect the offer price for
Genentech, currently US$89, will also be raised before the acquisition process
is concluded by Roche.
Recent Biotechnology Acquisition Announcements
Announce Premium
Date Target Acquirer Deal Size Paid
06/10/08 ImClone Eli Lilly US$6.5 51%
billion
25/07/08 Acambis Sanofi Aventis US£275 65%
million
23/07/08 Arius Research Roche Holdings $119 million 15%
(CAD)
15/07/08 Lev ViroPharma US$443 49%
Pharmaceuticals million
10/07/08 Speedel Novartis US$880 94%
million
08/07/08 SGX Eli Lilly US$64 119%
Pharmaceuticals million
07/07/08 APP Fresenius US$3.6 29%
Pharmaceuticals billion
03/07/08 Jerini Shire US$521 73%
million
23/06/08 Barrier Stiefel US$148 136%
Therapeutics Laboratories million
09/06/08 Third Wave Hologic US$580 7%
Technologies million
05/06/08 Tercica Ipsen US$665 104%
million
29/05/08 Kosan Bristol-Myers US$190 233%
Squibb million
12/05/08 Iomai Intercell US$189 128%
million
22/04/08 Sirtris GlaxoSmithKline US$720 84%
million
11/04/08 Millennium Takeda US$8.8 53%
billion
Another key investment theme for the Company is our expectation for
significant price/earnings multiple expansion at the larger biotechnology
companies as investors properly discount the future earnings growth potential
of these companies. The second quarter was a strong period for these "big
biotechs", as companies such as Genentech, Genzyme and Biogen Idec announced
strong EPS growth and reiterated future EPS growth expectations of 20-25% per
year.
REVIEW OF INVESTMENTS (continued)
Finally, during the past few months we have taken advantage of the difficult
market conditions to add exposure to a selection of "fallen angels":
development stage companies with promising compounds that had fallen 50% or
more from their highs.
The number of holdings has remained relatively concentrated at approximately
35, exclusive of unquoted investments and options contracts. The approximate
geographic distribution of the assets is 80% North America, 15% Europe and 5%
Far East including Japan. Consistent with the Company's mandate, we are
currently invested 60% in larger companies and 40% in smaller capitalisation
companies. Our large capitalisation holdings are weighted slightly in favour
of the biotechnology sector versus traditional "big pharma" companies, while
our smaller capitalisation holdings emphasise biotechnology companies but also
include a selection of generic pharmaceuticals, diagnostics companies and
specialty pharmaceutical investments.
Samuel D Isaly
OrbiMed Capital LLC, Investment Manager
25 November 2008
INVESTMENT PORTFOLIO
as at 30 September 2008
Fair Value % of
Country £'000 Investments
Genentech USA 22,082 7.5
ImClone Systems USA 18,519 6.3
Pfizer USA 16,463 5.6
Genzyme USA 16,014 5.4
Novartis Switzerland 14,647 5.0
Abbott Laboratories USA 14,340 4.9
Bristol-Myers Squibb USA 12,867 4.4
Biogen Idec USA 11,635 3.9
Amgen USA 11,619 3.9
Vertex Pharmaceuticals USA 10,630 3.6
Top 10 Investments 148,816 50.5
Gen-Probe USA 10,235 3.5
Shionogi & Company Japan 8,850 3.0
Roche Holdings Switzerland 8,761 3.0
Onyx Pharmaceuticals USA 8,503 2.9
Gilead Sciences USA 8,503 2.9
Merck KGaA Germany 8,458 2.9
Shire UK 8,171 2.8
Tepnel Life Sciences* UK 7,770 2.6
BioMarin Pharmaceutical USA 5,945 2.0
Schering-Plough USA 5,751 1.9
Top 20 Investments 229,763 78.0
United Therapeutics USA 5,611 1.9
Xoma USA 5,406 1.8
Cubist Pharmaceuticals USA 4,625 1.6
NPS Pharmaceutical USA 4,522 1.5
Par Pharmaceutical USA 4,028 1.4
Sawai Pharmaceutical Japan 3,980 1.4
Intermune USA 3,685 1.3
OSI Pharmaceuticals USA 3,656 1.2
Amylin Pharmaceuticals USA 3,618 1.2
Genomic Health USA 3,244 1.1
Top 30 Investments 272,138 92.4
Towa Pharmaceutical Japan 3,064 1.0
Mylan USA 3,035 1.0
Exelixis USA 2,729 0.9
Nichi-Iko Japan 2,195 0.8
Pharmaceutical
Nippon Chemiphar Japan 1,046 0.4
Total Equities & 284,207 96.5
Warrants
M & A Basket OTC Swap - 11,133 3.8
Options - (Put & Call) - (748) (0.3)
Total Investments 294,592 100.0
*includes warrants
INCOME STATEMENT
for the six months ended 30 September 2008
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 September 2008 30 September 2007 31 March 2008
Revenue Capital Revenue Capital Revenue Capital
Return Return Total Return Return Total Return Return Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
INCOME STATEMENT
Gains/(losses) on - 47,367 47,367 - 15,373 15,373 - (16,666) (16,666)
investments held at fair
value through profit or
loss
Exchange (losses)/gains - (3,090) (3,090) - 1,024 1,024 - 1,332 1,332
on currency balances
Income from investments 1,208 - 1,208 1,363 - 1,363 3,404 - 3,404
held at fair value
through profit or loss
(note 2)
Investment management
and management fee (note
3) (55) (1,052) (1,107) (65) (1,244) (1,309) (122) (2,323) (2,445)
Other expense (289) - (289) (304) - (304) (708) - (708)
Net return/(loss) before
finance charges and
taxation 864 43,225 44,089 994 15,153 16,147 2,574 (17,657) (15,083)
Finance charges (8) (150) (158) (35) (658) (693) (51) (976) (1,027)
Net return/(loss) on 856 43,075 43,931 959 14,495 15,454 2,523 (18,633) (16,110)
ordinary activities
before taxation
Taxation on net
return/(loss) on
ordinary activities (242) 88 (154) (285) 140 (145) (782) 372 (410)
Net return/(loss) on
ordinary activities
after taxation 614 43,163 43,777 674 14,635 15,309 1,741 (18,261) (16,520)
Return/(loss) per share
- basic (note 4) 1.4p 96.4p 97.8p 1.3p 28.9p 30.2p 3.5p (37.1p) (33.6p)
Return/(loss) per share
- diluted (note 4) 1.4p 95.2p 96.6p 1.3p 28.5p 29.8p 3.5p (37.1p) (33.6p)
The total column of this statement is the Income Statement of the Company. The
revenue and capital return columns are supplementary to this and are prepared
under guidance published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing
operations.
The Company has no recognised gains and losses other than those shown above
and therefore no separate statement of total recognised gains and losses has
been presented.
No operations were acquired or discontinued during the period.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 30 September 2008
(Unaudited) Called-up Share Warrant Capital Capital
Six months ended share premium reserve reserve redemption Revenue
30 September capital account reserve reserve Total
2008 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 March 2008 11,772 117,639 7,426 81,611 3,008 3,327 224,783
Net return on
ordinary
activities - - - 43,163 - 614 43,777
Dividend paid in
respect of year
ended 31 March
2008 - - - - - (1,344) (1,344)
Proceeds from
exercise of
warrants 3 58 - - - - 61
Transfer from
warrant reserve
following
exercise of
warrants - 9 (9) - - - -
Shares purchased
including
expenses (670) - - (12,582) 670 - (12,582)
At 30 September 11,105 117,706 7,417 112,192 3,678 2,597 254,695
2008
(Unaudited) Called-up Share Warrant Capital Capital
Six months ended share premium reserve reserve redemption Revenue
30 September capital account reserve reserve Total
2007 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 March 2007 14,401 117,565 7,436 130,724 375 3,130 273,631
Net return from
ordinary
activities - - - 14,633 - 674 15,309
Dividends paid
in respect of of
year ended 31
March 2007 - - - - - (1,544) (1,544)
Proceeds from
exercise of
warrants 4 64 - - - - 68
Transfer from
warrant reserve
following
exercise of
warrants - 10 (10) - - - -
Shares purchased
including
expenses (946) - - (19,077) 946 - (19,077)
At 30 September 13,459 117,639 7,426 126,280 1,321 2,260 268,387
2007
(Audited)
Year ended 31 March 2008
Called-up Share Capital
share premium Warrant Capital redemption Revenue
capital account reserve reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At March 2007 14,401 117,565 7,436 130,724 375 3,130 273,631
Net (loss)/return from
ordinary activities - - - (18,261) - 1,741 (16,520)
Dividends paid in respect
of year ended 31 March
2007 - - - - - (1,544) (1,544)
Proceeds from exercise
of warrants 4 64 - - - - 68
Transfer from warrant
reserve following
exercise of warrants - 10 (10) - - - -
Shares purchased
including expenses (2,633) - - (30,852) 2,633 - (30,852)
At 31 March 2008 11,772 117,639 7,426 81,611 3,008 3,327 224,783
BALANCE SHEET
As at 30 September 2008
(Unaudited) (Unaudited) (Audited)
30 30 31
September September March
2008 2007 2008
£'000 £'000 £'000
Fixed assets
Investments held at fair 284,207 283,534 220,587
value through profit or loss
M&A Basket - OTC Swap 11,133 6,312 10,244
295,340 289,846 230,831
Current assets
Debtors 441 5,191 4,399
Cash at bank 5,458 1.971 7,050
Derivative (options) - - 83 -
financial instruments
5,899 7,245 11,449
Creditors
Amounts falling due within (45,796) (28,704) (17,035)
one year
Derivative (options) - (748) - (462)
financial instruments
(46,544) (28,704) (17,497)
Net current liabilities (40,645) (21,459) (6,048)
Total net assets 254,695 268,387 224,783
Share capital and reserves
Called-up share capital 11,105 13,459 11,772
Share premium account 117,706 117,639 117,639
Warrant reserve 7,417 7,426 7,426
Capital reserves 112,192 126,280 81,611
Capital redemption reserve 3,678 1,321 3,008
Revenue reserve 2,597 2,262 3,327
Total equity shareholders'
funds 254,695 268,387 224,783
Net asset value per share -
basic (note 5) 584.1p 551.7p 486.6p
Net asset value per share - 560.3p 535.9p 482.4p
diluted (note 5)
CASH FLOW STATEMENT
for the six months ended 30 September 2008
(Unaudited) (Unaudited) (Unaudited)
Six months Six months Year
ended ended ended
30 30 31
September September March
2008 2007 2008
£'000 £'000 £'000
Net cash outflow from
operating activities (210) (432) (332)
Servicing of finance
Interest paid (168) (644) (1,023)
Taxation
Taxation recovered 24 135 124
Financial investment
Purchases of investments (143,872) (98,888) (219,443)
Sales of investments 132,902 119,927 269,680
Net cash (outflow)/inflow
from financial investment (10,970) 21,039 50,237
Equity dividends paid (1,344) (1,544) (1,544)
Net cash (outflow)/inflow
before financing (12,668) 18,554 47,462
Financing
Shares issued from exercise 61 68 68
of warrants
Purchase of shares (13,236) (19,382) (30,618)
Increase/(decrease) in short 24,725 2,098 (10,308)
term loans
Net cash inflow/(outflow)
from financing 11,550 (17,216) (40,858)
(Decrease)/increase in cash
in the period (1,118) 1,338 6,604
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting Policies
The condensed financial statements have been prepared under the historical
cost convention, modified to include the valuation of investments at fair
value and in accordance with United Kingdom Generally Accepted Accounting
Practice and with the Statement of Recommended Practice `Financial Statements
of Investment Trust Companies' dated December 2005. All of the Company's
operations are of a continuing nature.
The same accounting policies used for the year ended 31 March 2008 have been
applied.
2. Income
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 30 31 March
September September 2008
2008 2007 £'000
£'000 £'000
Investment income 1,149 1,152 3,032
Interest receivable 59 211 372
Total 1,208 1,363 3,404
3. Investment Management and Management Fees
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 September 2008 30 September 2007 31 March 2008
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investment
management and
management fees 55 1,052 1,107 65 1,244 1,309 122 2,323 2,445
4. Return/(loss) per Share
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 30 31 March
September September 2008
2008 2007 £'000
£'000 £'000
The return/(loss) per
share is based on the
following figures:
Revenue return 614 674 1,741
Capital return/(loss) 43,163 14,635 (18,261)
Total return/(loss) 43,777 15,309 (16,520)
Weighted average number of
shares in issue for the
period - Basic 44,783,068 50,710,624 49,231,108
Revenue return per share 1.4p 1.3p 3.5p
Capital return/(loss) per 96.4p 28.9p (37.1p)
share
Total return/(loss) per 97.8p 30.2p (33.6p)
share
Weighted average number of
shares in issue for the
period - diluted 45,332,435 51,325,484 49,675,682
Revenue return per share 1.4p 1.3p *3.5p
Capital return/(loss) per 95.2p 28.5p *(37.1p)
share
Total return/(loss) per 96.6p 29.8p *(33.6p)
share - diluted
*dilution not applicable
5. Net Asset Value per Share and Issued Share Capital
Net asset value per share is calculated on attributable assets at 30 September
2008 of £254,695,000 (30 September 2007: £268,387,000; 31 March 2008:
£224,783,000) and 43,607,481 being the number of shares in issue at 30
September 2008 (30 September 2007: 48,643,468; 31 March 2008: 46,190,161).
The diluted net asset value per share assumes all 10,745,610 outstanding
warrants are exercised at 464p per share resulting in assets attributable to
equity shareholders of £304,555,000 (30 September 2007: £318,307,000; 31 March
2008: £274,703,000) and on the resultant number of shares of 54,353,091 (30
September 2007: 59,402,148; 31 March 2008: 56,948,841).
NOTES TO THE FINANCIAL STATEMENTS (Continued)
6. Transaction Costs
Purchase transaction costs for the six months ended 30 September 2008 were
£161,000 (six months ended 30 September 2007: £165,000; year ended 31 March
2008: £349,000).
Sales transaction costs for the six months ended 30 September 2008 were
£168,000 (six months ended 30 September 2007: £218,000; year ended 31 March
2008: £395,000).
7. Publication of Non Statutory Accounts
The financial information contained in this interim report does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
financial information for the half years ended 30 September 2008 and 30
September 2007 has not been audited, or reviewed by the auditors.
The information for the year ended 31 March 2008 has been extracted from the
latest published audited financial statements. The audited financial
statements for the year ended 31 March 2008 have been filed with the Registrar
of Companies. The report of the auditors on those accounts was unqualified,
did not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying the report, and did not
contain statements under section 237(2) or 237(3) of the Companies Act 1985.
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