Final Results

New India Investment Trust PLC 16 June 2006 NEW INDIA INVESTMENT TRUST PLC PRELIMINARY ANNOUNCEMENT OF ANNUAL UNAUDITED CONSOLIDATED RESULTS for the period ended 31 March 2006 Chairman's Statement I am pleased to report that the Company achieved a strong absolute performance in the 13 months under review. In absolute capital terms, growth during the period has been strong with the undiluted net asset value ('NAV') of the Group increasing by 69.1% from 93.7p (restated) on 28 February 2005 to 158.5p on 31 March 2006. When taking into account the effect of the Warrants in issue the diluted NAV increased over the period by 55.9%. During the period the share price rose by 47.5% from 94.3p to 139.0p and on 31 March 2006 the shares were trading at a discount to diluted NAV of 4.9%. Nevertheless, in relative terms, the Group lagged its benchmark, the MSCI India Index (sterling adjusted) which rose by 80.4% in the 13-month period in capital terms. The reasons for this will be set out in the Manager's review in the Annual Report. However, the underperformance is not unexpected in the context of the Manager's conservative investment style which has proven to be very satisfactory over the longer term for other Aberdeen managed mandates in this region. After starting 2005 on a tepid note, the Indian stock market rebounded to become one of the world's best-performing exchanges for the year, due to a combination of robust corporate earnings and record inflows. The economy, too, went from strength to strength, despite the adverse influence of high commodity prices and increased interest rates, a performance which, I believe, says much about the resilience of this current growth cycle. The gains of the previous year continued into 2006, with the benchmark MSCI India index setting a record high of 513.2. Although these subsequent advances have sparked disquiet that the market may be over-extended, your Board is confident that the Manager has assembled a portfolio of quality companies which offer attractive value, coupled with sound fundamentals. During the period the Company's accounting reference date was extended by one month in order to align the Company's year end with quarter end reporting dates. There has been a significant reduction in the level of dividend income received in the period reflecting the lower yields attaching to Indian companies following the implementation of the Company's new investment objective of capital growth with dividend yield being of secondary importance. As a result the Board does not intend to recommend any final dividend for the period. Portfolio Activity Over the 13 months, your Manager took advantage of Infosys Technologies' weak share price to introduce it to the portfolio. This Indian software services giant has maintained its position as an industry leader, with a professional management team, a consistent earnings record and a healthy balance sheet. Your Manager also initiated a position in Goodlass Nerolac, a manufacturer of industrial paints. The company is well-managed, and offers strong bottom-line growth given its exposure to the boom in housing. Against these additions, your Manager reduced Tata Consultancy Services and Satyam Computer, following strong share price surges. The top 5 contributors to the increase in NAV were Satyam Computers (9.7p), HDFC (6.3p), Hero Honda (5.9p), ICICI (5.1p) and GlaxoSmithKline (4.6p). International Accounting Standards As indicated in the Interim Report last November, the Company adopted International Financial Reporting Standards ('IFRS') with effect from 1 March 2005. Further information relating to the prior year restatements can be found in the notes to the accounts. Gearing The Group is permitted to borrow up to 25% of its net assets (measured when new borrowings are incurred). The Group has arranged a £10m multi currency revolving credit facility with ING Bank which is available for drawing in the future, subject to satisfaction of certain conditions precedent, when the Manager believes that it is in shareholders' interests to do so. The Board is responsible for the gearing policy of the group and will review future gearing levels with the Manager on a regular basis. Investment Manager Shareholders voted overwhelmingly in favour of the appointment of Aberdeen Asset Management Asia Limited ('AAM Asia') as Manager at the Company's EGM held in December 2004 resulting in the appointment of AAM Asia for an initial two year period. The Board will undertake an in-depth review of the performance of the Manager at the expiry of that initial term but is mindful that there is an annual obligation to review the appointment of the Manager. The Board confirms that, given the long-term track record and the strength and depth of the investment team in the region, in its opinion, the continuing appointment of AAM Asia, on the terms agreed, is in the interests of shareholders as a whole. Continuation Given the long term prospects for the Indian economy, your Board recommends that shareholders vote in favour of Resolution 9 to allow the Company to continue as an investment trust. Shareholders should continue to be aware of the dilutive impact of the Warrants in the event of any early liquidation of the Company. Annual General Meeting Ambassador Rozental and Mr Twiston-Davies will be retiring by rotation at the Annual General Meeting to be held at One Bow Churchyard, Cheapside, London EC4 on Wednesday 20 September 2006 at 10.00 a.m. Your Board, having reviewed their proposed re-elections, strongly recommends shareholders to vote in favour of their reappointment. In addition to the ordinary business of the meeting, Shareholders will be asked to approve the continuation of the Company as an investment trust; authorise the Board to buy back up to 14.99% of the Company's issued share capital; authorise the issue of new shares representing 5% of the present issued share capital; authorise the issue for cash of shares representing up to 5% of the present issued share capital otherwise than by a pro rata issue to existing Shareholders (ie pre-emption); and, to authorise the Board to sell shares held as treasury shares. In respect of the issue of shares from treasury, the Board's policy is kept under review but remains broadly unchanged from last year. The Board would only expect to sell shares from treasury at a maximum discount of 3% to the prevailing diluted NAV at the time of issue. Your Board recommends that Shareholders vote in favour of these resolutions and intends to do so in respect of its own shareholdings. There will be a presentation by the Managers and an opportunity to meet the Directors over coffee following the AGM. Outlook The Indian economy has made remarkable progress over the past few years. The present expansion is encouraging being driven by manufacturing and consumption, with correspondingly reduced dependence on agriculture. In addition, growth continues to be underpinned by a high personal savings rate and robust investment that offers some insulation against the impact of high oil prices and increased borrowing costs. I am also encouraged by the government's efforts to redress structural shortcomings, rein in public spending, and pursue market liberalisation. Although the record in implementing reforms has been patchy, given the delicate political balance within the coalition government, the potential benefits are now less disputed. These include a more efficient allocation of resources and increased foreign direct investment. After scaling record highs and tripling in value over the past three years, the recent sharp correction in share prices comes as no surprise, and is indeed healthy. As a result the unaudited undiluted NAV of the Company has fallen to 114.1p as at 15 June 2006. The Board will consider the use of gearing at a time recommended by the Manager. My optimism for the Indian market is based upon the plethora of high quality companies, a capital market that offers breadth and depth, a stable legal and regulatory framework, and a demographic advantage in the form of its young, dynamic workforce. Nonetheless it would be foolish not to acknowledge the enormous political and bureaucratic hurdles that the development of India still faces. 16 June 2006 William Salomon Chairman GROUP INCOME STATEMENT Period from 1 March 2005 Year ended to 31 March 2006 28 February 2005 (unaudited) (audited) Revenue Capital Total Revenue Capital Total Return Return Return Return Return Return £'000 £'000 £'000 £'000 £'000 £'000 Investment income Interest income 20 - 20 204 - 204 Dividend income 1,155 - 1,155 1,547 - 1,547 Stock dividends - - - 106 - 106 _______ _______ _______ _______ _______ _______ Total revenue 1,175 - 1,175 1,857 - 1,857 _______ _______ _______ _______ _______ _______ Gains on held-at-fair-value investments - 31,332 31,332 - 4,470 4,470 Currency losses - (7) (7) - (429) (429) _______ _______ _______ _______ _______ _______ 1,175 31,325 32,500 1,857 4,041 5,898 _______ _______ _______ _______ _______ _______ Expenses Management fees (625) - (625) (530) - (530) Other operating expenses (550) - (550) (639) - (639) _______ _______ _______ _______ _______ _______ Profit before finance costs and tax - 31,325 31,325 688 4,041 4,729 _______ _______ _______ _______ _______ _______ Finance costs (1) - (1) (23) - (23) _______ _______ _______ _______ _______ _______ Profit before tax (1) 31,325 31,324 665 4,041 4,706 Taxation (11) - (11) (264) - (264) _______ _______ _______ _______ _______ _______ Profit for the period (12) 31,325 31,313 401 4,041 4,442 _______ _______ _______ _______ _______ _______ Earnings per Ordinary share (pence) Basic and diluted (0.03) 65.50 65.47 0.84 8.45 9.29 _______ _______ _______ _______ _______ _______ The total column of this statement represents the Income Statement of the Group, prepared in accordance with IFRS. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Trust Companies. All items in the above statement derive from continuing operations. All income is attributable to the equity holders of New India Investment Trust PLC. BALANCE SHEETS Group Company Group Company As at As at As at As at 31 March 31 March 28 February 28 February 2006 2006 2005 2005 (unaudited) (unaudited) (audited) (audited) £'000 £'000 £'000 £'000 Non-current assets Investments held at fair value through profit and loss 75,712 75,733 42,754 44,285 _________ _________ _________ _________ Current assets Cash and cash equivalents 392 192 2,425 722 Other receivables 82 1 76 51 _________ _________ _________ _________ Total current assets 474 193 2,501 773 _________ _________ _________ _________ Total assets 76,186 75,926 45,255 45,058 Current liabilities Other payables (389) (129) (455) (258) _________ _________ _________ _________ Total assets less current liabilities 75,797 75,797 44,800 44,800 Non-current liabilities Deferred tax - - - - _________ _________ _________ _________ Net assets 75,797 75,797 44,800 44,800 _________ _________ _________ _________ Capital and reserves Ordinary share capital 11,958 11,958 11,953 11,953 Share premium account 11,766 11,766 11,752 11,752 Special reserve 17,981 17,981 17,981 17,981 Warrant reserve 4,020 4,020 4,026 4,026 Warrant exercise reserve 9 9 3 3 Capital redemption reserve 4,089 4,089 4,089 4,089 Capital reserve 24,522 24,459 (6,803) (6,828) Retained earnings 1,452 1,515 1,799 1,824 _________ _________ _________ _________ Net assets attributable to Ordinary Shareholders 75,797 75,797 44,800 44,800 _________ _________ _________ _________ Net asset value per Ordinary share (pence): Basic 158.47 158.47 93.70 93.70 _________ _________ _________ _________ Diluted 146.12 146.12 - - _________ _________ STATEMENTS OF CHANGES IN EQUITY Group - Period from 1 March 2005 to 31 March 2006 (unaudited) Share Warrant Capital Share premium Special Warrant exercise redemption Capital Revenue Retained capital account reserve reserve reserve reserve reserve reserve earnings Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 28 February 11,953 11,752 17,981 4,026 3 4,089 1,799 - 44,800 2005 (6,803) Dividends paid and - - - - - - - (335) - (335) declared Net profit on ordinary - - - - - - - 31,313 31,313 activities after taxation Issue of share capital 5 14 - (6) 6 - - - - 19 upon exercise of warrants Transfer from retained - - - - - - 31,325 - (31,325) - earnings to capital reserve Transfer from retained - - - - - - - (12) 12 - earnings to revenue reserve ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ Balance at 31 March 11,958 11,766 17,981 4,020 9 4,089 24,522 1,452 - 75,797 2006 ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ Year ended 28 February 2005 Share Warrant Capital (audited) Share premium Special Warrant exercise redemption Capital Revenue Retained capital account reserve reserve reserve reserve reserve reserve earnings Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 28 February 11,953 11,752 17,981 4,026 3 4,089 (10,844) 1,733 - 40,693 2004 Dividends paid and - - - - - - - (335) - (335) declared Net profit on ordinary - - - - - - - - 4,442 4,442 activities after taxation Transfer from retained - - - - - - 4,041 - (4,041) - earnings to capital reserve Transfer from retained - - - - - - - 401 (401) - earnings to revenue reserve ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ Balance at 28 February 11,953 11,752 17,981 4,026 3 4,089 (6,803) 1,799 - 44,800 2005 ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ Company - Period from 1 March 2005 to 31 March 2006 (unaudited) Share Warrant Capital Share premium Special Warrant exercise redemption Capital Revenue Retained capital account reserve reserve reserve reserve reserve reserve earnings Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 28 February 11,953 11,752 17,981 4,026 3 4,089 (6,828) 1,824 - 44,800 2005 Dividends paid and - - - - - - - (335) - (335) declared Net profit on ordinary - - - - - - - - 31,313 31,313 activities after taxation Issue of share capital 5 14 - (6) 6 - - - - 19 upon exercise of warrants Transfer from retained - - - - - - 31,287 - (31,287) - earnings to capital reserve Transfer from retained - - - - - - - 26 (26) - earnings to revenue reserve ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ Balance at 31 March 11,958 11,766 17,981 4,020 9 4,089 24,459 1,515 - 75,797 2006 ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ Year ended 28 February 2005 Share Warrant Capital (audited) Share Premium Special Warrant Exercise Redemption Capital Revenue Retained Capital Account Reserve Reserve Reserve Reserve Reserve reserve Earnings Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 28 February 11,953 11,752 17,981 4,026 3 4,089 (10,844) 1,733 - 40,693 2004 Dividends paid and - - - - - (335) - (335) declared Net profit on ordinary - - - - - - - - 4,442 4,442 activities after taxation Transfer from retained - - - - - - 4,016 - (4,016) - earnings to capital reserve Transfer from retained - - - - - - - 426 (426) - earnings to revenue reserve ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ Balance at 28 February 11,953 11,752 17,981 4,026 3 4,089 (6,828) 1,824 - 44,800 2005 ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ CASH FLOW STATEMENTS Period from 1 March 2005 Year ended to 31 March 2006 28 February 2005 (unaudited) (audited) Group Company Group Company £'000 £'000 £'000 £'000 Operating activities Profit before tax 31,324 31,319 4,706 4,706 Add back interest payable 1 1 23 23 Gains on investments held at fair value through profit (31,332) (31,293) (4,470) (4,417) or loss Net losses on foreign exchange 7 6 429 401 Net (purchases)/sales of investments held at fair (1,626) (155) 7,847 6,263 value through profit or loss Decrease in amounts due from brokers - - 947 947 (Increase)/decrease in other receivables (6) 50 46 71 Decrease in amounts due to brokers (125) - (437) (562) Increase/(decrease) in other payables 187 4 54 (18) Overseas withholding tax suffered (5) (5) (126) (126) ____________ ____________ ___________ ___________ Net cash (outflow)/ inflow from operating activities before interest and corporation tax (1,575) (73) 9,019 7,288 Interest paid (1) (1) (31) (31) Corporation tax paid (134) (134) (19) (19) ____________ ____________ ___________ ___________ Net cash (outflow)/inflow from operating activities (1,710) (208) 8,969 7,238 Financing activities Exercise of Warrants 19 19 - - Dividends paid (335) (335) (335) (335) Repayment of borrowings - - (6,998) (6,998) ____________ ____________ ___________ ___________ Net cash outflow from financing activities (316) (316) (7,333) (7,333) ____________ ____________ ___________ ___________ Net (decrease)/increase in cash and cash equivalents (2,026) (524) 1,636 (95) Cash and cash equivalents at the start of the period 2,425 722 739 739 Effect of foreign exchange rate changes (7) (6) 50 78 Cash and cash equivalents at the end of the period 392 192 2,425 722 ____________ ____________ ___________ ___________ Notes: 1. Accounting policies The Group's financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRSs') as adopted by the European Union. The Company's financial statements have been prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 1985. The principal accounting policies adopted by the Group and by the Company are set out below. The Company has taken advantage of the exemption provided under Section 230 of the Companies Act 1985 not to publish its individual income statement. (a) Basis of preparation This is the first period in which the Group has prepared its financial statements under IFRSs and the comparatives have been restated from UK Generally Accepted Accounting Practice ('UK GAAP') to comply with IFRSs. The Group issued its interim report in November 2005 incorporating its preliminary IFRS financial statements for the year ended 28 February 2005. The accounting policies which follow set out those policies which apply in preparing the financial statements for the period from 1 March 2005 to 31 March 2006. There are no differences between the accounting policies applied in the Group and the Company. The Group and Company financial statements are presented in Sterling, which is the currency of the primary environment in which the Group operates. All values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated. Where presentational guidance set out in the Statement of Recommended Practice ('SORP') for investment trusts issued by the Association of Investment Trust Companies ('AITC') and revised in December 2005 is consistent with the requirements of IFRS, the financial statements have been prepared in accordance with the SORP. (b) Group accounts The Group financial statements consolidate the financial statements of the Company and its subsidiary, New India Investment Company (Mauritius) Limited. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights, currently exercisable or convertible potential voting rights, or by way of contractual agreement. The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. (c) Presentation of Group Income Statement In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AITC, supplementary information which analyses the Group Income Statement between items of revenue and capital nature has been presented alongside the Group Income Statement. In accordance with the Company's status as a UK investment company under Section 266 of the Companies Act 1985, net capital returns may not be distributed by way of dividend. (d) Segmental reporting The Directors are of the opinion that the Group is engaged in a single segment of business being investment business. (e) Income Dividends receivable on equity shares are recognised in the Group Income Statement on the ex-dividend date. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Group's right to receive payment is established. Where a Group company has elected to receive dividends in the form of additional shares rather than in cash, the amount of the cash dividend is recognised in the Group Income Statement. Provision is made for any dividends not expected to be received. Interest receivable from cash and short-term deposits is accrued to the end of the financial period. (f) Expenses and interest payable All expenses, including interest expenses, are accounted for on an accruals basis. Expenses are charged to revenue except as follows: - expenses which are incidental to the acquisition or disposal of an investment are charged to the capital column of the Group Income Statement; and - expenses are charged to the capital column of the Group Income Statement where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. (g) Taxation The charge for taxation is based on the net revenue for the financial period. Deferred tax Deferred tax is recognised in respect of all temporary differences at the balance sheet, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the balance sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Deferred tax assets and liabilities are measured at the rates applicable to the legal jurisdictions in which they arise. (h) Investments designated as held at fair value through profit or loss Purchases of investments are recognised on a trade date basis and designated upon initial recognition as held at fair value through profit or loss. Sales of assets are also recognised on a trade date basis. The fair value of the financial instruments is based on their quoted bid price at the balance sheet date, without deduction for any estimated future selling costs. Unquoted investments are held at fair value, as measured by the Directors using appropriate valuation methodologies such as earnings multiples, recent transactions and net assets. Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Group Income Statement as 'Gains/(Losses) on held-at-fair-value investments'. Also included within this caption are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase. (i) Cash and cash equivalents Cash comprises cash in hand and banks and short term deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk or changes in value. (j) Other receivables and payables Other receivables do not carry any interest and are short-term in nature and are accordingly stated at their nominal value. Other payables are non interest bearing and are stated at their nominal value. (k) Dividends payable Final dividends are recognised from the date on which they are declared and approved by Shareholders. (l) Foreign currency Overseas monetary assets and liabilities are converted into Sterling at the rate of exchange ruling at the balance sheet date. Transactions during the period involving foreign currencies are converted at the rate of exchange ruling at the transaction date. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss and recognised in the Group Income Statement. 3. Return per Ordinary share The earnings per Ordinary share is based on the net income after taxation of £31,313,000 (year ended 28 February 2005 (restated) - £4,442,000) and on 47,824,328 (28 February 2005 - 47,812,050) Ordinary shares, being the weighted average number of Ordinary shares in issue during the period. The earnings per Ordinary share detailed above can be further analysed between revenue and capital as follows: Period from 1 March 2005 Year ended to 31 March 2006 28 February 2005 Revenue Capital Total Revenue Capital Total Net profit (£'000) (12) 31,325 31,313 401 4,041 4,442 Weighted average number of 47,824,328 47,824,328 47,824,328 47,812,050 47,812,050 47,812,050 Ordinary shares in issue Return per Ordinary share (0.03) 65.50 65.47 0.84 8.45 9.29 (pence) 4. Net asset value per share The basic net asset value per Ordinary share is based on a net asset value of £75,797,000 (28 February 2005 - £44,800,000*) and on 47,830,750 (28 February 2005 - 47,812,050) Ordinary shares, being the number of Ordinary shares in issue at the period end. The diluted net asset value per Ordinary share has been calculated by reference to the total number of Ordinary shares in issue at the period end and on the assumption that those Warrants which are not exercised at the period end, amounting to 12,814,390 Warrants as at 31 March 2006, were exercised on the first day of the financial period at 100p per share, giving a total of 60,645,140 Ordinary shares. No calculation has been shown as at 28 February 2005 as the exercise price of the Warrants, being 100p, exceeded the basic net asset value per Ordinary share. 5. The financial information set out above does not constitute the Company's statutory accounts for the period ended 31 March 2006 or the year ended 28 February 2005. The financial information for 2005 is derived from the statutory accounts for 2005, which have been delivered to the Registrar of Companies. The auditors have reported on the 2005 accounts; their report was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. The statutory accounts for 2006 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies in due course. 6. The Annual Report will be posted to Shareholders in due course and further copies may be obtained from the registered office, One Bow Churchyard, Cheapside, London EC4M 9HH. Aberdeen Asset Management PLC Secretaries 16 June 2006 This information is provided by RNS The company news service from the London Stock Exchange

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