Half-yearly Report
NEWS RELEASE
To: City Editors
For immediate release
27 November 2009
London Stock Exchange Announcement
Finsbury Worldwide Pharmaceutical Trust PLC
Unaudited Interim Report For the Six Months Ended 30 September 2009
INVESTMENT POLICY AND BENCHMARK
Finsbury Worldwide Pharmaceutical Trust PLC invests worldwide in
pharmaceutical, biotechnology and related companies in the healthcare sector
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).
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 10% of its gross
assets in other UK listed investment companies (including listed investment
trusts). It will not invest more than 15% of the portfolio in any one
individual stock at the time of acquisition. 60% of the portfolio will normally
be invested in larger companies (i.e. with a market capitalisation of at least
US$5bn). 20% of the 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 portfolio at the time of acquisition. 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 portfolio. Please refer to the Annual Report and
Accounts for further details.
CAPITAL STRUCTURE
Shares
At 30 September 2009 the Company had in issue 47,927,769 shares of 25p each (30
September 2008: 43,607,481, 31 March 2009:41,361,431).
During the half year, a total of 4,179,872 shares were bought back by the
Company 1,342,175 of which were cancelled and 2,837,697 were held in treasury.
This equates to 10.1% of the issued share capital as at 31 March 2009. On 20
July 2009, a total of 3,985,397 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 2009, 1,909,750 of the Company's shares were held as treasury shares.
Since the end of the half year a further 1,886,569 shares have been repurchased
for treasury and, as at 24 November 2009, the Company had 46,083,348 shares in
issue excluding those shares held in treasury.
Warrants
On 31 July 2009, the final exercise date for the Company's warrants, the
remaining 10,745,610 warrants were exercised at the exercise price of 464p per
share raising £49.9m.
Subscription Shares
On 4 September 2009 a total of 9,730,960 subscription shares were allotted to
Ordinary shareholders on the register at 5.00 p.m. on 3 September 2009, by way
of a bonus issue on the basis of one subscription share for every five Ordinary
shares held at that date.
Each subscription share confers the right, but not the obligation, to subscribe
for one Ordinary share on each of 31 October, 31 January, 30 April and 31 July
(or if such date is not a business day, on the next following business day)
between (and including) 31 October 2009 and 31 July 2014, each a subscription
date. The subscription price, equal to the published unaudited NAV per Ordinary
share as at 5.00 p.m. on 3 September 2009 (including current period revenue) of
607.44 pence per share plus a percentage premium to such amount, rounded up to
the nearest whole penny, is as follows:
* if exercised on any subscription date between (and including) 31 October
2009 and 31 July 2010, a premium of 1 per cent. (614 pence);
* if exercised on any subscription date between (and including) 1 August 2010
and 31 July 2012, a premium of 5 per cent. (638 pence); and
* if exercised on any subscription date between (and including) 1 August 2012
and 31 July 2014, a premium of 15 per cent. (699 pence).
On 31 October 2009, 42,148 subscription shares were exercised at the exercise
price of 614p per share raising £259,000.
CONTINUATION VOTE
The next continuation vote of the Company will be held at the Annual General
Meeting in 2014 and every five years thereafter.
Performance
Six months to One year to
30 September 31 March
2009 2009
Share price (total return)# +8.7% +21.3%
Net asset value per share (total +8.3% +24.7%
return)#
Benchmark index (total return) +10.0% +14.9%
30 September 31 March Six months
% Change
2009 2009
Shareholders' funds £309.3m £263.0m +17.6
Net asset value per share - 640.1p 600.5p +6.6
diluted
(dilution for subscription shares/
warrants)
Share price (basic) 592.5p 550.5p +7.6
Subscription share/warrant price
Discount of share price to diluted 7.4% 8.3% -
net asset value per share
Benchmark Index * 8,913.2 8,101.0 +10.0
Gearing ** 5.1% 11.5% -
Total expense ratio (excluding 1.0% 1.2% -
performance fees)
# Source - Morningstar. Net asset value diluted for subscription shares/
warrants and treasury shares.
* 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).
Chairman's Statement
Performance
The performance of global markets was particularly strong over the period with
a return of approximately 25% in sterling terms. This was due, in part, to a
rerating of financial and resources stocks. However, the pharmaceutical sector
underperformed this recovery with the benchmark Datastream World Pharmaceutical
& Biotechnology Index (total return, sterling adjusted) returning 10% over the
corresponding period. This compares to the net asset value total return of 8.3%
and a share price total return of 8.7%. This underperformance compared to
global markets in the six month period followed a significant outperformance by
the Company and the sector during the Company's previous financial year ended
31 March 2009 where the Company's diluted net asset value per share rose by
24.7% compared to a fall of approximately 22.2% in the MSCI World Index
measured in sterling terms. I would therefore highlight that, overall, during
the 18 month period to 30 September 2009 the performance of the Company and the
sector has been both stronger and less volatile than that of the wider market.
The Company continues to be significantly exposed to the exchange rate
prevailing between the U.S. dollar and sterling. During the period the exchange
rate moved from 1.4334 to 1.5994, a strengthening of sterling when compared to
the U.S. dollar of 11.6%. This adversely affected the Company's results. It
remains the policy of the Company not to hedge against currency exposure.
The slight underperformance when compared to our benchmark index during the
period can be attributed, in part, to our investment manager's strategy of
weighting the portfolio towards the biotechnology sector rather than
traditional `big pharma' companies. During this volatile period the performance
of biotechnology companies lagged big pharma companies. Additional factors were
the decline in mergers and acquisitions (M&A) activity during the period in
contrast to late 2008 and early 2009, together with the continued political
debate in the U.S. market surrounding healthcare reform.
Further information on the investment performance and the outlook for the
Company is given in the Review of Investments which follows this report.
Warrant conversion and issue of subscription shares
On 31 July all of the outstanding warrants were exercised and 10,745,610 new
shares were issued by the Company raising £49.9m.
On 4 September the Company allotted 9,730,960 subscription shares by way of a
bonus issue to existing shareholders. Each share confers the right but not the
obligation to subscribe for one ordinary share for each subscription share held
on each of 31 October, 31 January, 30 April and 31 July between 31 October 2009
and 31 July 2014. The subscription price is fixed by reference to the net asset
value per share prevailing at close of business on 3 September 2009 which was
607.44p per share plus a percentage premium to this amount as follows:
i. If exercised between 31 October 2009 and 31 July 2010, a premium of 1 per
cent (614 pence);
ii. If exercised between 1 August 2010 and 31 July 2012, a premium of 5 per
cent (638 pence); and
iii. If exercised between 1 August 2012 and 31 July 2014, a premium of 15 per
cent (699 pence).
On 31 October 2009, 42,148 subscription shares were exercised at the exercise
price of 614p per share raising £259,000.
Discount management policy and Share buyback policy
The Board continued to implement its policy of active discount management and
to buy back shares for treasury when the share price discount to net asset
value per share is greater than 6%. During the six months under review the
Company repurchased 1,342,175 shares for cancellation and 2,837,697 shares for
treasury at a total cost of £22.4m (including expenses). This equates to 10.1%
of the issued share capital as at 31 March 2009. The Board considers that this
figure was abnormally high principally as a consequence of the exercise of all
of the remaining 10,745,610 of the Company's warrants on 31 July 2009.
On 20 July, a total of 3,985,397 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.
Revenue and Dividends
The revenue return for the period was £1,175,000 (six months ended 30 September
2008: return of 614,000) and no interim dividend is declared (six months ended
30 September 2008: nil).
VAT
I am pleased to report that during the period the Company's previous Manager,
Close Investments Limited (Close), submitted a claim to HM Revenue and Customs
for the repayment of £255,000 which equates to 0.5p per share. This amount is
in respect of VAT previously paid by the Company to Close and which is now
reclaimable by the Company following the ruling by the European Court of
Justice in October 2007. In view of the fact that the timing of the recovery of
this amount remains uncertain no receivable amount has been recorded in the
Company's financial statements as at 30 September 2009.
Alternative Investment Fund Manager (`AIFM') Directive
The AIFM Directive is draft legislation currently being considered in Europe
which will regulate `alternative investment funds'. It potentially affects all
investment companies, including this Company. The Board supports the
initiatives being taken by the Association of Investment Companies to ensure
that the Directive is tailored to accommodate the investment company structure.
The Board will keep shareholders informed of developments concerning the
Directive as they arise.
Outlook
Market conditions in 2009 have been a welcome contrast to those experienced
overall in 2008 and our outlook for the sector remains positive. This is
principally against a background of new product development and an expected
recovery in M&A activity in the sector as large pharmaceutical companies take
advantage of depressed valuations in the biotechnology sector of the healthcare
market. In addition the appointment of a new U.S. Food and Drug Administration
(FDA) commissioner is expected to improve the regulatory environment in the
U.S. market.
Our focus remains on the selection of stocks with strong prospects for capital
enhancement and we continue to believe that the long term investor in our
sector will be well rewarded.
Martin Smith
Chairman
24 November 2009
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 two and in the Review of Investments
beginning on page five. The principal risks faced by the Company fall into nine
broad categories: objective and strategy; level of discount/premium; market
price; liquidity; investment portfolio performance and financial instruments;
operational and regulatory; industry; currency; and loan facility. Information
on each of these areas is given in the Business Review within the Annual Report
and Accounts for the year ended 31 March 2009. 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 24 November 2009 and the above
responsibility statement was signed on its behalf by:
Martin Smith
Chairman
Review of Investments
Performance
The broad markets saw a tremendous rebound during the six month period ending
30 September 2009, coming off one of the worst global financial crises in
decades. The MSCI World Index rose approximately 25% in sterling terms during
this period. Defensive sectors, such as Healthcare, underperformed during this
broader market recovery. Testimony to this muted rebound was the performance of
the Datastream World Pharmaceutical & Biotechnology Index, up 10% during the
comparable period.
Over the six month period under review, currency movements had a notable effect
on portfolio and individual company performance. The sterling/dollar rate of 31
March 2009 was 1.4334; it was 1.5994 at 30 September 2009. A move of +11.6%.
Other currency rates (sterling/euro, sterling/yen) were relatively stable
during the period.
On a total return basis the Company was up 8.7% in share price terms and 8.3%
in net asset value per share terms in the period. Our strategy of emphasising
investments in the biotechnology sector to a greater extent than traditional
"big pharma" companies contributed to the underperformance during this volatile
period in market history. This is indicated by an analysis of the top and
bottom contributors to performance. Global big pharmas such as Novartis and
Roche are at the top, as are specialty pharma companies Shire and Shionogi.
Conversely, major U.S. biotechs Genzyme, Gilead and Biogen-Idec comprise the
majority of the bottom contributors. Bristol-Myers Squibb was the largest
negative contributor overall, but this was primarily due to currency movements.
The stock appreciated c.3% in USD terms in the period; however, this move was
more than offset in USD depreciation versus sterling of 11.6%.
Not to be missed was the contribution from our investments in Japanese generic
manufacturers. The three major players - Sawai, Towa, and Nichi-iko - were all
positive in the period and their cumulative contribution was significant.
It is also worth noting the contribution of our debt and fixed income
investments. Given the financial market dislocations caused by the financial
crisis, we were able to identify several investment opportunities in distressed
corporate and convertible bonds that have generated substantial gains for the
Company. Specifically the convertible debt of Incyte and the bonds of Elan
performed well during the period.
Sector Developments
A decline in mergers and acquisitions activity (M&A) in the sector was evident
this past six months, in stark contrast to the period immediately before it.
Recall that early 2009 marked the closing of the Genentech acquisition by Roche
and the announcement of two mega-mergers in big pharma, specifically Pfizer/
Wyeth and Merck/Schering Plough. While we do not expect any more meaningful
mergers in the near term, we do expect the pace of acquisitions to accelerate
significantly, with the focus on biotechnology assets as the key targets for
large cap acquirers.
Also contributing to the headwinds for healthcare equities during this period
has been the ongoing political debate of healthcare reform in the U.S., the
largest pharmaceutical market globally. Uncertainty has reigned and has kept
generalist funds out of healthcare for much of 2009. However, November and
December will be a critical time in the potential passing of healthcare
legislation. Moreover, based on discussions to date, investor concerns about a
complete federal government takeover of the U.S. pharmaceutical market are
consistently overblown. It is our view that the pharma/biotech sectors are not
the primary target of President Obama's reform plans. In fact, the likelihood
of a dramatic increase in insured patients (and thus consumption of
pharmaceutical products) far outweighs any significant pricing pressure. We
would consider the passage of a healthcare reform bill in the U.S. to be a
"win" for pharma and could be an important catalyst for appreciation in pharma
stocks globally.
In the context of the global financial crisis, pharmaceutical and biotechnology
companies have traded satisfactorily. There has been no meaningful disruption
in the market place for these goods and services. However, President Obama, in
his State-of-the-Union address (of 24 February 2009) proposed major changes in
delivery of healthcare in the U.S. These proposed changes have created investor
uncertainty which has contributed to the underperformance of the sector since
February relative to global markets.
The U.S. Food and Drug Administration (FDA), long considered a negative factor
to the drug sector given the absence of a full time commissioner and an era of
extreme caution in regards to drug safety, has eased considerably. Objective
data supports this view. In the first nine months of 2009, the FDA has approved
24 novel drugs. This compares to just 14 in the same period of 2008 (a 70%
increase year-over-year) and 11 in 2007. We expect this "kinder and gentler
FDA" to continue. Notable approvals over the past six months include Onglyza
for diabetes (from Bristol-Myers Squibb) and Simponi for rheumatoid arthritis
(from Johnson & Johnson). Novartis had a particularly solid score card, with
four separate new drug approvals:
* Ixario - a vaccine for the prevention of Japanese Encephalitis
* Affinitor - an oral compound for kidney cancer
* Ilaris - an anti-body for auto-immune disease (CAPS)
* Extavia - a follow-on biologic for multiple sclerosis
Strategy Review
We believe that current valuations in both biotech and particularly pharma,
which are near historical lows, represent a rare investment opportunity. As
global markets recover and the financial crisis abates, we expect depressed
valuations in the healthcare sector to recover. Our expectation is of
significant price/earnings multiple expansion at the larger biotechnology
companies as investors properly discount the future earnings growth potential
of these companies. For pharma, we expect multiple expansion to be triggered by
continued M&A activity, clarity on health care reform in the U.S., and stable
cash flow generation despite a growth curve below that of their biotech
counterparts.
As mentioned, we expect a meaningful uptick in acquisitions in the near term
and our M&A theme remains unabated. With pharma research and development
productivity still lagging and the pending flood of patent expirations looming,
pharma is still hungry for acquisitions. Depressed valuations in small and
mid-cap biotechnology stocks create an opportunity for pharmaceutical companies
and we expect them to seize these opportunities.
Our investment focus on the long term growth potential of generic
pharmaceutical companies in Japan remains strong. The penetration of generic
drugs in Japan is well below that of other developed pharmaceutical markets.
While there are hurdles, growth is accelerating as cost pressures are forcing
payors to look for alternative means to contain drug and healthcare spending in
that country, the second largest pharmaceutical market globally. The newly
elected government in Japan has created some uncertainty in terms of policy
going forward, but we believe this will abate as the pressures facing those of
the new administration are the same as the old. We expect both new and existing
legislation will foster increased generic usage that could see the market size
for Japanese generic drugs double in only three years.
Additionally, our recent focus on opportunistic investments in debt and
so-called "structured finance" investments, continues to identify attractive
opportunities. We recently participated in a structured finance transaction
that allowed us to invest in a new hepatitis C drug from Vertex
Pharmaceuticals. We project a 20%+ annualised return from this investment, but
perhaps more importantly this transaction also provides "downside protection":
if the drug fails to achieve a successful commercial launch then Vertex will
repay our investment at par value. It is this combination of upside potential
and downside protection that often makes such structured finance investments
compelling opportunities.
The number of direct equity holdings in the portfolio has remained relatively
concentrated at approximately 35. The approximate geographic distribution of
the assets is 70% North America, 20% Europe and 10% Far East including Japan.
Consistent with the Company's mandate, we are currently invested 65% in larger
companies and 35% in smaller capitalisation companies. Our large capitalisation
holdings are weighted slightly in favour of the biotechnology sector versus
traditional "big pharma" companies and we have added to our medical device
portfolio with increased exposure to companies such as Allergan, Abbott
Laboratories and Johnson & Johnson. Our smaller capitalisation holdings focus
on biotechnology companies but also include a selection of generic
pharmaceuticals, diagnostics companies and specialty pharmaceutical
investments.
Contribution by Investment - Excluding Options
Contribution Contribution
per Share (p)
*
for the six
months
£'000
Top Five contributors
Novartis 3,582 8.41
Shire 1,856 4.35
Par Pharmaceutical 1,752 4.11
Shionogi & Company 1,724 4.05
Roche 1,703 4.00
24.92
Bottom Five contributors
Bristol-Myers Squibb (1,879) (4.41)
Biogen Idec (1,718) (4.03)
Gilead Sciences (1,564) (3.67)
OSI Pharmaceuticals (1,536) (3.60)
Genzyme (1,496) (3.51)
(19.22)
*based on the weighted average number of the Company's shares in issue during
the six months ended 30 September 2009 (42,611,585)
Source: Frostrow Capital LLP
Samuel D Isaly
OrbiMed Capital LLC
Investment Manager
24 November 2009
Portfolio as 30 September 2009
Security Country Market % of
value investments
£'000
Roche Switzerland 25,063 7.5
Johnson & Johnson USA 23,577 7.1
Novartis Switzerland 22,631 6.8
Schering-Plough USA 18,502 5.5
Bristol-Myers Squibb USA 11,174 3.4
Genzyme USA 10,980 3.3
Wyeth USA 10,557 3.2
Amgen USA 10,204 3.1
Gilead Sciences USA 9,755 2.9
Elan # Ireland 9,626 2.9
Top 10 investments 152,069 45.7
Shire UK 8,992 2.7
Teva Pharmaceutical Israel 8,219 2.5
Industries
Biogen Idec USA 7,831 2.3
Abbott Laboratories USA 7,322 2.2
Merck KGaA Germany 7,226 2.2
Sawai Pharmaceutical Japan 6,860 2.0
Mylan USA 6,694 2.0
Towa Pharmaceutical Japan 6,591 2.0
Dendreon ^ USA 6,552 2.0
Vertex USA 6,501 2.0
Pharmaceuticals
Top 20 investments 224,857 67.6
Nichi-Iko Japan 6,402 1.9
Pharmaceutical
Alexion USA 6,265 1.9
Pharmaceuticals
Cubist USA 5,905 1.8
Pharmaceuticals
Shionogi & Company Japan 5,894 1.8
BioMarin USA 5,862 1.8
Pharmaceutical
Endo Pharmaceuticals USA 5,831 1.7
Allergan USA 5,545 1.7
United Therapeutics USA 5,204 1.6
Gen-Probe USA 5,060 1.5
Sinopharm Hong Kong 4,750 1.4
Top 30 investments 281,575 84.7
NPS Pharmaceutical USA 4,638 1.4
OSI Pharmaceuticals USA 4,184 1.3
Momenta USA 3,745 1.1
Pharmaceuticals
VWR Funding 10.25% 15 USA 3,627 1.1
/07/2015
Intermune USA 3,423 1.0
Hospira USA 3,203 1.0
Vertex Milestone USA 3,152 1.0
Monetization (LuxCo)
Angiotech USA 3,151 0.9
Pharmaceuticals FRN
01/12/2013
Nektar Therapeutics USA 3,125 0.9
3.25% 28/09/2012
Pharma 10 Cinacalcet USA 2,660 0.8
Royalty 15.5% 30/03/
2017
Top 40 investments 316,483 95.2
Genmab Denmark 2,563 0.8
Medicines USA 2,536 0.8
Genomic Health USA 2,379 0.7
Allos Therapeutics USA 2,255 0.7
KV Pharmaceutical USA 1,907 0.6
2.5% 16/05/2033
Salix Pharmaceuticals USA 1,479 0.4
5.5% 15/08/2028
Incyte 4.75% 01/10/ USA 763 0.2
2015
Nippon Chemiphar Japan 752 0.2
Total equities and 331,117 99.6
fixed interest
investments
Options - (Put & 1,315 0.4
Call)
Total investments 332,432 100.0
# includes Elan Finance 7.75% 15/11/11 & Elan Corp. 8.75% 15/10/16 equating to
0.8% & 0.7% of investments respectively.
^ includes Dendreon 4.75% 15/06/14 equating to 0.9% of investments.
Income Statement
For the six months ended 30 September 2009
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 September 2009 30 September 2008 31 March 2009
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains on - 15,192 15,192 - 47,367 47,367 - 76,505 76,505
investments
held at fair
value through
profit or loss
Exchange gains - 5,516 5,516 - (3,090) (3,090) - (12,042) (12,042)
/(losses) on
currency
balances
Income from 1,886 - 1,886 1,208 - 1,208 4,018 - 4,018
investments
held at fair
value through
profit or loss
(note 2)
Investment (60) (924) (984) (55) (1,052) (1,107) (116) (2,436) (2,552)
management,
management and
performance
fees (note 3)
Other expenses (261) (219) (480) (289) - (289) (588) - (588)
Net return 1,565 19,565 21,130 864 43,225 44,089 3,314 62,027 65,341
before finance
charges and
taxation
Finance (6) (121) (127) (8) (150) (158) (29) (543) (572)
charges
Net return on 1,559 19,444 21,003 856 43,075 43,931 3,285 61,484 64,769
ordinary
activities
before
taxation
Taxation on (384) 168 (216) (242) 88 (154) (866) 360 (506)
net return/
(loss) on
ordinary
activities
Net return on 1,175 19,612 20,787 614 43,163 43,777 2,419 61,844 64,263
ordinary
activities
after taxation
Return per 2.8p 46.0p 48.8p 1.4p 96.4p 97.8p 5.5p 141.4p 146.9p
share - basic
(note 4)
Return per 2.8p 46.0p 48.6p 1.4p 95.2p 96.6p 5.5p 138.2p 143.6p
share -
diluted (note
4)
The "Total" column of this statement is the Income Statement of the Company.
The "Revenue" and "Capital" 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 have been
presented.
No operations were acquired or discontinued during the period.
Reconciliation of Movements in Shareholders' Funds
For the six months ended 30 September 2009
(Unaudited) Called-up Share Warrant Capital Capital Revenue Total £
share premium reserve reserve redemption reserve '000
Six months ended capital £ account £'000 £'000 reserve £ £'000
'000 £'000 '000
30 September 2009
At 31 March 2009 11,105 117,706 7,417 118,709 3,678 4,402 263,017
Net return from - - - 19,612 - 1,175 20,787
ordinary
activities after
taxation
Dividends paid in - - - - - (1,982) (1,982)
respect of year
ended 31 March
2009
Proceeds from 2,686 54,590 (7,417) - - - 49,859
warrant exercise
Subscription 97 (97) - - - - -
shares issued
Shares purchased (1,332) - - (22,360) 1,332 - (22,360)
including
expenses
At 30 September 12,556 172,199 - 115,961 5,010 3,595 309,321
2009
(Unaudited) Called-up Share Warrant Capital Capital Revenue Total £
share premium reserve reserve redemption reserve '000
Six months ended capital £ account £'000 £'000 reserve £ £'000
'000 £'000 '000
30 September 2008
At 31 March 2008 11,772 117,639 7,426 81,611 3,008 3,327 224,783
Net return from - - - 43,163 - 614 43,777
ordinary
activities
Dividends paid in - - - - - (1,344) (1,344)
respect of year
ended 31 March
2008
Proceeds from 3 58 - - - - 61
exercise of
warrants
Transfer from - 9 (9) - - - -
warrant reserve
following
exercise of
warrants
Shares purchased (670) - - (12,582) 670 - (12,582)
including
expenses
At 30 September 11,105 117,706 7,417 112,192 3,678 2,597 254,695
2008
(Audited) Called-up Share Warrant Capital Capital Revenue Total £
share premium reserve reserve redemption reserve '000
Year ended capital £ £'000 £'000 reserve £ £'000
'000 account '000
31 March 2009 £'000
At 31 March 2008 11,772 117,639 7,426 81,611 3,008 3,327 224,783
Net return from - - - 61,844 - 2,419 64,263
ordinary
activities after
taxation
Dividends paid in - - - - - (1,344) (1,344)
respect of year
ended 31 March
2008
Proceeds from 3 58 - - - - 61
exercise of
warrants
Transfer from - 9 (9) - - - -
warrant reserve
following
exercise of
warrants
Shares purchased (670) - - (24,746) 670 - (24,746)
including
expenses
At 31 March 2009 11,105 117,706 7,417 118,709 3,678 4,402 263,017
Balance Sheet
As at 30 September 2009
(Unaudited) (Unaudited) (Audited)
30 September 30 September 31 March
2009 2008
2009
£'000 £'000
£'000
Fixed assets
Investments held at fair value through 331,117 284,207 294,928
profit or loss
- 11,133 10,321
M & A Basket - OTC Swap
331,117 295,340 305,249
Current assets
Debtors 793 441 1,307
Derivative (options) - financial 1,315 - -
investments
- 5,458 9,979
Cash at bank
2,108 5,899 11,286
Current liabilities
Creditors: amounts falling due within (8,143) (45,796) (12,381)
one year
- (748) (954)
Derivative (options) - financial
investments (15,761) - (40,183)
Bank overdraft
(23,904) (46,544) (53,518)
Net current liabilities (21,796) (40,645) (42,232)
Total net assets 309,321 254,695 263,017
Capital and reserves
Called up share capital 12,556 11,105 11,105
Share premium account 172,199 117,706 117,706
Warrant reserve - 7,417 7,417
Capital reserves 115,961 112,192 118,709
Capital redemption reserve 5,010 3,678 3,678
Revenue reserve 3,595 2,597 4,402
Total equity shareholders' funds 309,321 254,695 263,017
Net asset value per share - basic 645.4p 584.1p 635.9p
(note 5)
Net asset value per share - diluted 640.1p 560.3p 600.5p
(note 5)
Cash Flow Statement
For the six months ended 30 September 2009
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended
ended
30 September 30 September
31 March
2009 2008
2009
£'000 £'000
£'000
Net cash inflow/(outflow) from 253 (210) (61)
operating activities
Servicing of finance
Interest paid (127) (168) (582)
Taxation 169 24 91
Taxation recovered
Financial investment
Purchases of investments and (151,327) (143,872) (251,520)
derivatives
Sales of investments and 135,054 132,902 257,286
derivatives
Net cash (outflow)/inflow from (16,273) (10,970) 5,766
financial investment
Equity dividends paid (1,982) (1,344) (1,344)
Net cash (outflow)/inflow before (17,960) (12,668) 3,870
financing
Financing
Proceeds from exercise of warrants 49,859 61 61
Purchase of own shares (22,972) (13,236) (25,068)
Drawdown/(repayment) of short term - 24,725 (14,813)
loans
Net cash inflow/ (outflow) from 26,887 11,550 (39,820)
financing
Increase/(decrease) in cash in the 8,927 (1,118) (35,950)
period
Reconciliation of net cash flow
movements to net debt
Increase/(decrease) in cash as 8,927 (1,118) (35,950)
above
(Increase)/decrease in debt - (24,726) 14,813
Change in net debt resulting from 8,927 (25,844) (21,137)
cash flows
Exchange movements 5,516 (3,090) (12,042)
Movement in net debt in the period 14,443 (28,934) (33,179)
Net (debt)/funds at beginning of (30,204) 2,975 2,975
period
Net debt at period end (15,761) (25,959) (30,204)
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 January 2009. All of the Company's operations are of a
continuing nature.
The same accounting policies used for the year ended 31 March 2009 have been
applied.
2. Income
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 September 30 September 31 March
2009 2008 2009
£'000 £'000 £'000
Investment income 1,517 1,149 3,925
Interest receivable 369 59 93
Total 1,886 1,208 4,018
3. Investment Management and Management Fees
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 September 30 September 31 March
2009 2008 2009
£'000 £'000 £'000
Investment management and 1,208 1,107 2,328
management fees
Performance fee accrual - - 224
Performance fee accrual as (224) - -
at 31 March 2009 written
back
Total 984 1,107 2,552
Notes to the Financial Statements (continued)
4. Return/(Loss) per Share
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended 30 ended 30
September 2009 September 2008 31 March 2009
£'000 £'000 £'000
The return per share is based on
the following figures:
Revenue return 1,175 614 2,419
Capital return 19,612 43,163 61,844
Total return 20,787 43,777 64,263
Weighted average number of 42,611,585 44,783,068 43,756,755
shares in issue for the period/
year - basic
Revenue return per share 2.8p 1.4p 5.5p
Capital return per share 46.0p 96.4p 141.4p
Total return per share 48.8p 97.8p 146.9p
Weighted average number of 41,413,882 45,332,435 44,764,156
shares in issue for the period -
diluted
Revenue return per share *2.8p 1.4p *5.4p
Capital return per share *46.0p 95.2p *138.2p
Total return per share - diluted *48.8p 96.6p *143.6p
* 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
2009 of £309,321,000 (30 September 2008: £254,695,000 and 31 March 2009: £
263,017,000) and 47,927,769 being the number of shares in issue at 30 September
2009 (30 September 2008: 43,607,481 and 31 March 2009: 41,361,431).
The diluted net asset value per share assumes all outstanding subscription
shares are exercised at 614p per share resulting in assets attributable to
equity shareholders of £369,069,000 and on the resultant number of shares of
57,658,729. The diluted net asset value per share as at 30 September 2008
assumed all outstanding warrants were exercised at 464p per share resulting in
assets attributable to equity shareholders of £304,555,000 (March 2009: £
312,877,000) and on the resultant number of shares of 54,353,091( March 2009:
52,107,041).
Notes to the Financial Statements (continued)
6. Transaction Costs
Purchase transaction costs for the six months ended 30 September 2009 were £
237,000 (six months ended 30 September 2008: £161,000; year ended 31 March
2009: £492,000).
Sales transaction costs for the six months ended 30 September 2009 were £
214,000 (six months ended 30 September 2008: £168,000; year ended 31 March
2009: £367,000).7. Subscription Shares
During the period a total of 9,730,960 subscription shares were issued at a
nominal value of one penny each, by way of a bonus issue on the basis of one
subscription share for every Ordinary share held. The Company classes these
subscription shares as equity shares. At the period end the Company's share
capital included 9,730,960 subscription shares.
8. Contingent Asset
On 31 October 2007 the Association of Investment Companies announced that HM
Revenue and Customs had confirmed to the Investment Management Association that
investment trust management fees should never have attracted Value Added Tax
(VAT). As a result, during the period the Company's previous Manager, Close
Investments Limited (Close), submitted a claim to HM Revenue and Customs for
the repayment of £255,000, which equates to 0.5p per share. This amount is in
respect of VAT previously paid by the Company to Close and which is now
reclaimable by the Company. In view of the fact that the timing of the recovery
of this amount remains uncertain, no receivable amount has been recorded in the
Company's financial statements as at 30 September 2009.
9. Publication of Non Statutory Accounts
The financial information contained in this preliminary announcement does not
constitute statutory accounts as defined in sections 434-436 of the Companies
Act 2006. The financial information for the half years ended 30 September 2009
and 30 September 2008 has not been audited or reviewed by the auditors.
The information for the year ended 31 March 2009 has been extracted from the
latest published audited financial statements. The audited financial statements
for the year ended 31 March 2009 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.
Capita Registrars - Share Dealings Service
A quick and easy share dealing service is available to existing shareholders
through the Company's Registrar, Capita Registrars, either to sell or buy more
shares. An online and telephone dealing facility is available providing
shareholders with an easy to access and simple to use service.
Type of Trade:
Share certificates: 1.0% of the value of the deal (on line)(Minimum £20.00, max £75.00)
1.50% of the value of the deal (telephone)(Minimum £25.00, max £102.50)
There is no need to pre-register and there are no complicated forms to fill in.
The online and telephone dealing service allows you to trade "real time" at a
known price which will be given to you at the time you give your instruction.
To deal online or by telephone all you need is your surname, shareholder
reference number, full postcode and your date of birth. Your shareholder
reference number can be found on your latest statement or certificate where it
will appear as either a `folio number' or `investor code'. Please have the
appropriate documents to hand when you log on or call, as this information will
be needed before you can buy or sell shares.
For further information on this service please contact:
www.capitadeal.com(online dealing) or 0871 664 0446†(telephone dealing).
†Calls cost 1 0p per minute plus network extras and may be recorded for
training purposes.
ALLIANCE TRUST SAVINGS LIMITED
An investment can be made in the Company through the Savings Scheme, Childrens'
First Steps Plan and ISA run by Alliance Trust Savings Limited. You can call
them on 01382 573737*, email: contact@alliancetrust.co.uk
*calls to this number are recorded for monitoring purposes and will be charged
on local rates, non-BT line charges may vary.
DISABILITY ACT
Copies of this interim report and other documents issued by the Company are
available from the Company Secretary. If needed, copies can be made available
in a variety of formats, including Braille, audio tape or larger type as
appropriate. You can contact the Registrar to the Company, Capita Registrars,
which has installed telephones to allow speech and hearing impaired people who
have their own telephone to contact them directly, without the need for an
intermediate operator, for this service please call 0800 731 1888. Specially
trained operators are available during normal business hours to answer queries
via this service. Alternatively, if you prefer to go through a
`typetalk'operator (provided by The Royal National Institute for Deaf People)
you should dial 18001 followed by the number you wish to dial.
Company Information
DIRECTORS
Martin Smith, (Chairman)
Josephine Dixon
Paul Gaunt
Professor Duncan Geddes
Dr David Holbrook
Samuel D Isaly
Anthony Townsend
COMPANY REGISTRATION NUMBER
3023689 (Registered in England)
The Company is an investment company as defined under Section 833 of the
Companies Act 2006.
REGISTERED OFFICE
One Wood Street,
London EC2V 7WS
Website: www.finsburywp.com
INVESTMENT MANAGER
OrbiMed Capital LLC
767 Third Avenue, 30th Floor, New York NY1 00172023 USA Telephone: +1
212-739-6400 www.orbimed.com
Registered under the U.S. Securities Exchange Commission.
MANAGER, ADMINISTRATOR AND COMPANY SECRETARY
Frostrow Capital LLP
25 Southampton Buildings, London WC2A 1AL
Telephone: 0203 008 4910 E-Mail: info@frostrow.com Website: www.frostrow.com
Authorised and regulated by the Financial Services Authority.
If you have an enquiry about the Company or if you would like to receive a copy
of the Company's monthly fact sheet by e-mail, please contact Frostrow Capital
using the above e-mail address.
AUDITORS
Ernst & Young LLP
1 More London Place
London SE1 2AF
STOCKBROKERS
Winterflood Investment Trusts The Atrium Building,
Cannon Bridge, 25 Dowgate Hill, London EC4R 2GA
Alliance Trust Savings Limited
PO Box 164,
Meadow House, 64 Reform Street, Dundee DD1 9YP
Customer Services: 01382 573737* E-mail: contact@alliancetrust.co.uk
Please contact Alliance Trust Savings Limited if you have a query concerning an
Alliance Trust Savings Scheme, First Steps Plan or ISA account.
*
Calls to this number are recorded for monitoring purposes and will be charged
at local rates, non-BT line charges may vary
REGISTRARS
Capita Registrars
Northern House, Woodsome Park, Fenay Bridge, Huddersfield,
West Yorkshire HD8 0LA
Telephone (in UK): 0871 664 0300†Telephone (from overseas): +44 208 639 3399
Facsimile: +44 (0) 1484 600911 E-Mail: ssd@capitaregistrars.com Website:
www.capitaregistrars.comPlease contact the Registrars if you have a query about
a certificated holding in the Company's shares.
†Calls cost 10p per minute plus network extras and may be recorded for training
purposes. Lines are open from 8.30 a.m.-5.30 p.m. Monday-Friday.
SHARE PRICE LISTINGS
The price of your shares can be found in various publications including the
Financial Times, The Daily Telegraph, The Times, The Scotsman and The Herald.
The Company's net asset value per share is announced daily on the TrustNet
website at www.trustnet.com
IDENTIFICATION CODES
Shares: SEDOL : 00338530
ISIN : GB00003385308
BLOOMBERG : FWP LN
EPIC : FWP
Subscription Shares: SEDOL : B3VMCB0
ISIN : GB00B3VMCB07
BLOOMBERG : FWPS LN
Enquiries:
Mark Pope - Tel: 0203 008 4913
Frostrow Capital LLP
25 Southampton Buildings
London WC2A AL
27 November 2009
END
Friday, 22nd November 2024
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