Final Results - Replacement
British Empire Sec & Gen Tst PLC
13 November 2006
BRITISH EMPIRE SECURITIES AND GENERAL TRUST plc
This announcement replaces 9842L released at 13.37 today which inadvertently
omitted to state details of the proposed dividend payment dates and which are
now stated in Note 2 to this announcement of Final Results.
No other changes have been made to announcement 9842L.
Preliminary Announcement of Annual Results for the year ended 30 September 2006
• Net asset value ('NAV') on a total return basis increases by 14.3%
• NAV outperforms MSCI World Index by 5.6 percentage points
• Shares are at a premium of 3.5% to NAV at the year end
Chairman's Statement
The past year has been another good one for your Company and for the value of
your investments. Our net asset value per share increased by 14.3% compared
with an increase of 12.1% in our benchmark, the Datastream Global Growth
Investment Trust Index, 8.7% in the MSCI World Index and 14.7% in the FTSE All
Share Index, all on a total return basis.
Over 3 years the net asset value total return per share has grown by 104.1%
At the interim stage, we indicated our caution about market valuations and
decided to bank some of the profits from well performing investments where we
believed upsides were limited and the investment was trading closer to fair
value. The market shake-out in May allowed us to use some of the liquidity to
go back into the market for shares which we felt were again standing at
discounts to valuation. Market levels are now close to their year's high and we
have again been taking some profits, leading to a higher level of liquidity
available for investment at the year end.
Our income levels have remained strong as a combination of increasing dividends
from our invested companies and income from our liquidity work their way
straight through to our bottom line. As Shareholders know, we are obliged to pay
a minimum of 85% of our net income to Shareholders by way of dividend if we are
to retain our all-important investment trust status. In recent years the higher
yields from our gilt investments have persuaded us to pay part of the dividend
as a special dividend to reflect the possibility that, were we to become fully
invested in equities again, yields on our portfolio might fall, leading to a
possible reduction in our total dividends in future. On this basis we are this
year again recommending a special dividend of 1.0p (2005: 1.4p) per share. In
addition, your Directors, taking into account the favourable prospects for the
longer term growth of dividends on our investments and the fact that our opening
revenue reserves were strong, are recommending a final dividend of 3.2p per
share (2005: 1.6p) which, together with the interim dividend of 0.8p (2005:
0.6p) brings the total ordinary and special dividends for the year to 5.0p, an
increase of 39% on last year's total of 3.6p.
These are our first full year accounts to be prepared under International
Financial Reporting Standards. The move to bid pricing resulted in a reduction
in the value of our investments of some 2p per share. Other than this and the
requirement to show this year's final and special dividends in next year's
accounts (which I am unconvinced adds to the clarity of our figures) there is
little in the adoption of IFRS to bring to Shareholders' attention. However,
the additional work, particularly on the transitional figures, has imposed
considerable extra effort on our administrators, Phoenix Administration, our
auditors and our audit committee and I am grateful to them all for rising to
the challenge.
Your Board has been strengthened this year with the appointment of Steve Bates
who brings wide industry experience to our deliberations. As Chairman I feel we
have the balance of the Board about right. All members make thoughtful and
often incisive contributions to our discussions and I am grateful to them for
the time and effort which they put into our meetings. The annual evaluation of
our Board and its committees has very much supported my view. I very much hope
that Shareholders will support the election of Steve Bates to the Board for the
first time, together with the re-election of Strone Macpherson who retires this
year in accordance with the Company's Articles of Association. In addition,
having served for over ten years I am also standing for re-election. The Board
does not believe that in an Investment Trust where experience of the investment
cycle is essential to the Board's deliberations, length of service of itself
should disqualify a Director. We do recognize the need, however, to refresh the
Board periodically.
John Pennink has again performed excellently in the management of your Company's
investment portfolio. He has good touch, a deep understanding of what drives
markets and a singular focus on finding value in markets which are ever better
researched. Consequently we had no hesitation in renewing our management
contract with Asset Value Investors. £1000 invested when John took over full
time management of the portfolio four years ago would now be worth £2,912 while
your dividends have increased from 1.70p per share to 5.0p per share - enough
said. I commend the Investment Manager's Review for your reading.
As Chairman I believe your Board's primary focus should be on the Company's
investments and investment performance and so it is. Your Board also looks at
wider areas of risk and reviews the policies on areas such as gearing, hedging
and management of share premium or discount at least annually and more
frequently if appropriate. Our shares have been trading at a premium throughout
the year and we have considered whether to issue new shares into this market
strength. Given our high levels of liquidity and the difficulty in finding new
under-valued investments which meet our investment philosophy we decided not to
undertake such issuance at the moment, but it remains open to us in the future.
We also believe that the see-through discount on our equity portfolio is in
excess of 10% which more than compensates for the premium on the shares.
Your Board is also very conscious of its obligation to ensure that there are
proper control systems in place to safeguard your funds. We have reviewed these
systems and the performance of our service providers and consider that there are
robust controls in place. There is further detail later in the Report.
For the future we are remaining cautious. Interest rate tightening takes time
to work its way through to the real economy and we at least are not clear that
the full effects have yet been seen in the US and UK economies, or that
policymakers' objectives have been met. The recent softening in the oil price
is welcome both as a stimulus and in easing inflationary pressures. However, we
believe that our investment philosophy of seeking out under-valued investments
remains valid and we shall continue to invest in line with that philosophy as
opportunities arise.
Our marketing over the past three years has been targeted towards increasing our
individual Shareholder base and I am delighted that private Shareholders now
account for over 50% of the ownership of the Company. The Directors would like
to invite all Shareholders to a buffet lunch after the AGM. If you would like
to attend please reply on the enclosed card. I look forward to renewing my
acquaintance with many of you then and to welcoming some of our many new
Shareholders to the meeting.
Iain Samuel Robertson CBE
Chairman
13 November 2006
Unaudited Consolidated Income Statement of the Group for the year ended 30
September 2006
Income
2006 2006 2006 2005 2005 2005
Revenue Capital Total Revenue Capital Total
return return return return
£'000 £'000 £'000 £'000 £'000 £'000
Investment income 16,626 - 16,626 13,110 - 13,110
Gains on investments held at fair - 85,053 85,053 - 188,196 188,196
value
Losses on Index Stock - (7) (7) - (764) (764)
Gains on forward sales of Euro - - - - 1,221 1,221
Realised exchange losses - (2,343) (2,343) - (610) (610)
16,626 82,703 99,329 13,110 188,043 201,153
Expenses
Investment management fee
(including irrecoverable VAT) (2,006) (3,685) (5,691) (1,404) (3,265) (4,669)
Other expenses
(including irrecoverable VAT) (1,221) - (1,221) (1,147) - (1,147)
Profits before finance costs and 13,399 79,018 92,417 10,559 184,778 195,337
tax
Finance costs (2,391) (8) (2,399) (2,361) (7) (2,368)
Profit before tax 11,008 79,010 90,018 8,198 184,771 192,969
Taxation (2,488) 1,105 (1,383) (1,584) 922 (662)
Profit for the period 8,520 80,115 88,635 6,614 185,693 192,307
Earnings per ordinary share
Basic - ordinary shares (see note 5.32p 50.05p 55.37p 4.13p 116.00p 120.13p
3)
The total column of this statement represents the Group's Income Statement,
prepared in accordance with IFRS. The revenue return and capital return columns
are supplementary to this and are prepared under the guidance published by the
Association of Investment Companies.
All items in the above statement derive from continuing operations.
All income is attributable to the equity holders of British Empire Securities
and General Trust plc. There are no minority interests.
The accompanying notes are an integral part of the financial statements.
Unaudited Consolidated and Company Statements of Changes in Equity for the year
ended 30 September 2006
Ordinary Capital Share Capital Capital Merger Revenue Total
share redemption premium reserve reserve reserve reserve
capital reserve realised unrealised
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Group
For the year to
30 September 2005
Restated
(see note 7(a) )
Balance at 30 16,008 2,927 28,078 246,363 82,214 41,406 12,478 429,474
September 2004
Profit for the - - - 105,491 80,202 - 6,614 192,307
period
Ordinary - - - - - - (3,042) (3,042)
dividends paid
Balance as at 30 16,008 2,927 28,078 351,854 162,416 41,406 16,050 618,739
September 2005
For the year to
30 September
2006
Balance at 30 16,008 2,927 28,078 351,854 162,416 41,406 16,050 618,739
September 2005
Profit for the - - - 144,369 (64,254) - 8,520 88,635
period
Ordinary - - - - - - (3,842) (3,842)
dividends paid
Special dividend - - - - - - (2,241) (2,241)
paid
Balance as at 30 16,008 2,927 28,078 496,223 98,162 41,406 18,487 701,291
September 2006
Company
For the year to
30 September 2005
Restated
(see note 7(a))
Balance at 30 16,008 2,927 28,078 246,363 83,999 41,406 10,693 429,474
September 2004
Profit for the - - - 105,491 80,201 - 6,615 192,307
period
Ordinary - - - - - - (3,042) (3,042)
dividends paid
Balance as at 30 16,008 2,927 28,078 351,854 164,200 41,406 14,266 618,739
September 2005
For the year to
30 September 2006
Balance at 30 16,008 2,927 28,078 351,854 164,200 41,406 14,266 618,739
September 2005
Profit for the - - - 144,369 (64,256) - 8,522 88,635
period
Ordinary - - - - - - (3,842) (3,842)
dividends paid
Special dividend - - - - - - (2,241) (2,241)
paid
Balance as at 16,008 2,927 28,078 496,223 99,944 41,406 16,705 701,291
30 September 2006
Unaudited Consolidated and Company Balance Sheets as at 30 September 2006
Company Group
Restated Restated
(see note 7(a)) (see note 7(a))
2006 2005 2006 2005
£'000 £'000 £'000 £'000
Non-current assets
Investments held at fair value through 733,205 651,258 731,173 649,224
profit or loss
Current assets
Investments - - 5 5
Sales for future settlement 1,738 2,426 1,738 2,426
Other receivables 3,586 2,893 3,586 2,893
Cash and cash equivalents 9,242 2,404 9,245 2,410
14,566 7,723 14,574 7,734
Total assets 747,771 658,981 745,747 656,958
Current liabilities
Purchases for future settlement (9,423) (3,754) (9,423) (3,754)
Other payables (5,827) (5,255) (3,803) (3,232)
(15,250) (9,009) (13,226) (6,986)
Total assets less current liabilities 732,521 649,972 732,521 649,972
Non-current liabilities
10 3/8 per cent Debenture Stock 2011 (8,515) (8,515) (8,515) (8,515)
8 1/8 per cent Debenture Stock 2023 (14,879) (14,871) (14,879) (14,871)
Index Stock (7,518) (7,702) (7,518) (7,702)
Provision for deferred tax (318) (145) (318) (145)
Net assets 701,291 618,739 701,291 618,739
Equity attributable to equity
Shareholders
Ordinary share capital 16,008 16,008 16,008 16,008
Capital redemption reserve 2,927 2,927 2,927 2,927
Share premium 28,078 28,078 28,078 28,078
Capital reserve realised 496,223 351,854 496,223 351,854
Capital reserve unrealised 99,944 164,200 98,162 162,416
Merger reserve 41,406 41,406 41,406 41,406
Revenue reserve 16,705 14,266 18,487 16,050
Total equity (see note 4) 701,291 618,739 701,291 618,739
Net asset value per ordinary share - 438.08p 386.51p 438.08p 386.51p
basic
(see note 4)
Number of shares in issue 160,080,089 160,080,089 160,080,089 160,080,089
Unaudited Consolidated and Company Cash Flow Statements for the year ended 30
September 2006
Company Group
Restated Restated
(see note 7 (see note 7
(c)) (c))
2006 2005 2006 2005
£'000 £'000 £'000 £'000
Net cash inflow from operating activities (see 15,455 6,348 15,452 6,352
below)
Financing activities
Dividends paid (6,083) (3,042) (6,083) (3,042)
Buyback of Equity Index Stock (191) (348) (191) (348)
Cash outflow from financing activities (6,274) (3,390) (6,274) (3,390)
Increase in cash and cash equivalents 9,181 2,958 9,178 2,962
Exchange movements (2,343) (610) (2,343) (610)
Change in cash and cash equivalents 6,838 2,348 6,835 2,352
Cash and cash equivalents at beginning of year 2,404 56 2,410 58
Cash and cash equivalents at end of year 9,242 2,404 9,245 2,410
(see note 5)
Reconciliation of profit before taxation to net cash inflow from operating
activities
Profit before taxation 90,018 192,969 90,018 192,969
Losses on Index Stock held at fair value 7 764 7 764
Profits on forward currency contracts - (1,221) - (1,221)
Losses on exchange movements 2,343 610 2,343 610
Gains on investments held at fair value through (85,051) (188,196) (85,053) (188,196)
profit or loss
Purchases of investments (553,088) (420,652) (553,088) (420,652)
Sales of investments 562,549 421,682 562,549 421,682
Net proceeds from forward currency contracts - 1,221 - 1,221
Increase in other receivables (590) (1,027) (590) (1,028)
Increase in creditors 13 694 13 694
Taxation (754) (503) (754) (498)
Amortisation of Debenture issue expenses 8 7 8 7
Decrease in value on investments - current - - 1 -
assets
Purchase of investments - current assets - - (2) -
Net cash inflow from operating activities 15,455 6,348 15,452 6,352
Notes to the Accounts
1. Accounting policies
The financial statements of the Group and the Company have been prepared in
accordance with International Financial Reporting Standards ('IFRS'). These
comprise standards and interpretations approved by the International Accounting
Standards Board ('IASB'), together with interpretations of the International
Accounting Standards and Standing Interpretations Committee approved by the
International Accounting Standards Committee ('IASC') that remain in effect, to
the extent that IFRS have been adopted by the European Union.
During the year the IASB issued IFRIC10 Interim Financial Reporting and
Impairment Standard (effective 1 November 2006) and IFRS7 Financial
Instruments: Disclosures (effective 1 January 2007). The Directors do not
anticipate that the adoption of these Standards will have a material impact on
the financial statements in the period of initial application.
The functional currency of the Group is pounds sterling because this is the
currency of the primary economic environment in which the Group operates. The
financial statements are also presented in pounds sterling.
(a) Basis of preparation
The principal accounting policies adopted are set out below. Where
presentational guidance set out in the Statement of Recommended Practice ('the
SORP') for investment trusts issued by the Association of Investment Companies
('the AIC') in January 2003 (revised in December 2005) is consistent with the
requirements of IFRS, the directors have sought to prepare the financial
statements on a basis compliant with the recommendations of the SORP.
(b) Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiary) made up to
30 September each year. Control is achieved where the Company has the power to
govern the financial and operating policies of an entity so as to obtain
benefits from its activities. All intra-group transactions, balances, income
and expenses are eliminated on consolidation.
(c) Presentation of Income Statement
In order to reflect better the activities of an investment trust company and in
accordance with guidance issued by the AIC, supplementary information which
analyses the Income Statement between items of a revenue and capital nature has
been presented alongside the 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. Additionally,
the net revenue is the measure the directors believe appropriate in assessing
the Company's compliance with certain requirements set out in section 842 of the
Income and Corporation Taxes Act 1988.
(d) Income
Dividends receivable on equity shares are recognised as revenue for the year on
an ex-dividend basis. Where an ex-dividend date is not available, dividends
received on or before the year end are treated as revenue for the year. Interest
income is accrued on a time basis, by reference to the principal outstanding and
at the effective interest rate applicable, which is the rate that discounts
estimated future cash receipts through the expected life of the financial asset
to the asset's net carrying amount. Interest receivable from cash and short
term deposits is accrued to the end of the year.
(e) Expenses
All expenses and interest payable are accounted for on an accruals basis.
Expenses have been treated as revenue except as follows:
• The base management fee of 0.30% has been treated as revenue. The remainder
of the base management fee at the rate of 0.25% (or 0.30% if the Company out-
performs its benchmark index or under-performs by no more than 5%) together with
the performance element of the management fee are charged to capital;
• expenses which are incidental to the purchase or sale of an investment are
recognised within the Income Statement as a capital item;
• expenses are presented as capital where a connection with the maintenance or
enhancement of the value of investments can be demonstrated.
(f) Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on the taxable profit for the year. Taxable
profit differs from profit before tax as reported in the Income Statement
because it excludes items of income or expense that are taxable or deductible in
other years and it further excludes items that are never taxable or deductible.
The Group's liability for current tax is calculated using tax rates that were
enacted or substantively enacted by the balance sheet date.
In line with the recommendations of the SORP, the allocation method used to
calculate tax relief on expenses presented against capital returns in the
supplementary information in the Income Statement is the 'marginal basis'.
Under this basis, if taxable income is capable of being offset entirely by
expenses presented in the revenue return column of the Income Statement, then no
tax relief is transferred to the capital return column.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the balance sheet liability method. Deferred
tax liabilities are recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Deferred tax is charged or credited in the Income Statement,
except when it relates to items charged or credited directly to equity, in which
case the deferred tax is also dealt with within equity.
Investment trusts which have approval as such under section 842 of the Income
and Corporation Taxes Act 1988 are not liable for taxation on capital gains.
(g) Investments held at fair value through profit or loss
When a purchase or sale is made under a contract, the terms of which require
delivery within the timeframe of the relevant market, the investments concerned
are recognised or derecognised on the trade date.
In accordance with IFRS recognition and measurement principles all the Group's
investments are classified as investments designated at fair value through
profit or loss and are described in these financial statements as investments
held at fair value.
All investments are designated as held at fair value upon initial recognition
and are measured at subsequent reporting dates at fair value, which is either
the bid price or the last traded price, depending on the convention of the
exchange on which the investment is quoted.
Fair values for unquoted investments, or investments for which the market is
inactive, are established by using various valuation techniques. These may
include recent arm's length market transactions, the current fair value of
another instrument which is substantially the same, discounted cash flow
analysis and option pricing models. Where there is a valuation technique
commonly used by market participants to price the instrument and that technique
has been demonstrated to provide reliable estimates of prices obtained in actual
market transactions, that technique is utilised. Where no reliable fair value
can be estimated for such instruments, they are carried at cost subject to any
provision for impairment.
Investments held by the subsidiary undertaking are classified as 'held for
trading' and are valued at fair value in accordance with the policies above for
listed and unlisted holdings. Profits or losses on investments 'held for
trading' are taken to revenue.
Foreign exchange gains and losses for fair value through profit or loss
investments are included within the changes in its fair value.
(h) Movements in fair value
Changes in fair value of not held for trading investments are recognised in the
Income Statement as a capital item. On disposal, realised gains and losses are
also recognised in the Income Statement as capital items.
(i) Cash and cash equivalents
Cash comprises cash in hand and at bank 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 of changes in value.
(j) Dividends payable
Interim and final dividends are recognised in the period in which they are paid.
(k) Foreign currency translation
Transactions in currencies other than sterling are recorded at the rates of
exchange prevailing on the date of the transaction. At each balance sheet date,
monetary items that are fair valued and are denominated in foreign currencies
are retranslated at the rates prevailing on the balance sheet date. Foreign
exchange differences arising on translation are recognised in the Income
Statement.
(l) Equities Index Unsecured Loan Stock 2013
In accordance with the IFRS recognition and measurement principles the Equities
Index Unsecured Loan Stock 2013 is classified as a financial liability
designated at fair value through profit or loss and is valued at the closing
offer price. Changes in its fair value are recognised in the Income Statement
as a capital item. On cancellation, realised gains and losses are also
recognised through the Income Statement as capital items. Prior to the adoption
of IFRS the capital value was determined by reference to the level of the FTSE
All-Share Index at the close of business. Interest paid on the Index Stock is
charged to the Income Statement as a revenue item.
(m) Finance costs
Finance costs are accounted for on an accruals basis and are recognised through
the Income Statement as revenue items. This does not comply with the Statement
of Recommended Practice for Financial Statements of Investment Trust Companies,
which would require the finance costs of the Debenture Stocks and the Index
Stock to be allocated between revenue and capital in the same proportions as the
Management Fee. However, the Directors consider that the treatment adopted,
which is consistent with previous years, is the most appropriate given the
liquidity of the Company and the nature of the Index Stock.
(n) Debenture pricing
The 8 1/8 per cent Debenture Stock 2023 and 10 3/8 per cent Debenture Stock 2011
are valued at par and secured by a floating charge over all assets of the
Company. Costs in relation to arranging the debt finance of the 8 1/8 per cent
Debenture Stock 2023 have been capitalised and are amortised over the term of
the finance.
2. Dividends 2006 2005
£'000 £'000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 30 September 2005 of 1.60p (2004 - 1.30p) per 2,561 2,081
Ordinary Share
Special dividend for the year ended 30 September 2005 of 1.40p (2004 - nil) per 2,241 -
Ordinary Share
Interim dividend for the year ended 30 September 2006 of 0.80p (2005 - 0.60p) per 1,281 961
Ordinary Share
6,083 3,042
Set out below is the final and special dividend proposed on Ordinary Shares in
respect of the financial year; payable on 5 January 2007 to shareholders whose
names appear on the register at the close of business on 15 December 2006 (ex-
dividend 13 December 2006); which is the basis on which the requirements of
section 842 of the Income and Corporation Taxes Act 1998 are considered.
Interim dividend for the year ended 30 September 2006 of 0.80p (2005 - 0.60p) per 1,281 961
Ordinary Share
Proposed final dividend for the year ended 30 September 2006 of 3.20p (2005 - 5,122 2,561
1.60p) per Ordinary Share
Proposed special dividend for the year ended 30 September 2006 of 1.00p (2005 - 1,601 2,241
1.40p) per Ordinary Share
8,004 5,763
International Accounting Standard (IAS) 10 'Events after the Balance Sheet date'
requires dividends to be recognised in the period in which they are paid.
3. Earnings per Ordinary Share 2006 2006 2006 2005 2005 2005
Revenue Capital Total Revenue Capital Total
Basic 5.32p 50.05p 55.37p 4.13p 116.00p 120.13p
The total basic earnings per Ordinary Share is based on Group net gains for the
financial year of £88,635,000 (2005: £192,307,000 as restated) and on
160,080,089 (2005: 160,080,089) Ordinary Shares, being the weighted average
number of Ordinary Shares in issue during the year.
The total basic earnings per Ordinary Share figures detailed above can be
further analysed between revenue and capital, as below.
The basic revenue earnings per Ordinary Share is based on Group revenue after
taxation for the financial year of £8,520,000 (2005: £6,614,000) and on
160,080,089 (2005: 160,080,089) Ordinary Shares, being the weighted average
number of Ordinary Shares in issue during the year.
The basic capital earnings per Ordinary Share is based on Group net gains for
the financial year of £80,115,000 (2005: £185,693,000 as restated) and on
160,080,089 (2005: 160,080,089) Ordinary Shares, being the weighted average
number of Ordinary Shares in issue during the year.
4. Net asset value
The net asset value per share and the net asset value attributable to the
Ordinary Shares at the year end are calculated in accordance with their
entitlements in the Articles of Association and were as follows:
Net asset values Net asset values
attributable attributable
Company Group
Restated Restated
(see note 7(a)) (see note 7(a))
2006 2005 2006 2005
p p p p
Ordinary Shares 438.08 386.51 438.08 386.51
(basic)
Net asset values Net asset values
attributable attributable
Company Group
Restated Restated
(see note7(a)) (see note 7(a))
2006 2005 2006 2005
£'000 £'000 £'000 £'000
Ordinary Shares 701,291 618,739 701,291 618,739
(basic)
The movement during the year of the Group assets attributable to the Ordinary
Shares were as follows:
2006 2005
Ordinary shares (basic) Ordinary shares
(basic)
£'000 £'000
Total net assets attributable at beginning of year (as restated - 618,739 429,474
see notes 6 and 7(a))
Total profit for the year 88,635 192,307
Dividends appropriated in the year (6,083) (3,042)
Net assets attributable at end of year 701,291 618,739
Basic net asset value per Ordinary Share is based on net assets and on
160,080,089 (2005: 160,080,089) Ordinary Shares being the number of Ordinary
Shares in issue at the year end.
At the year end the net asset value per share adjusted to include the Debenture
Stocks at market value rather than par was 433.66p (2005: 381.78p as restated).
5. Analysis of cash and cash equivalents at end of year
At 1 October 2005 Cash flow Exchange At 30 September 2006
movement
£'000 £'000 £'000 £'000
Group
Cash at bank and on deposit 2,410 9,178 (2,343) 9,245
Company
Cash at bank and on deposit 2,404 9,181 (2,343) 9,242
6. Restatement of opening balances as at 30 September 2004
At 1 October 2005 the Company adopted International Financial Reporting
Standards. In accordance with IFRS 1 (First Time Adoption of International
Financial Reporting Standards) the following is a reconciliation of the balances
as at 30 September 2004 previously reported under the applicable UK Accounting
Standards and with the SORP to the restated IFRS results.
Previously Effect of Restated
reported transition to 30 September
30 September IFRS 2004
2004
Notes (£'000) (£'000) (£'000)
Group
Investments 1 461,541 (3,377) 458,164
Current assets 4,714 - 4,714
Creditors: amounts falling due within one year 2 (4,820) 2,081 (2,739)
Total assets less current liabilities 3 461,435 (1,296) 460,139
Creditors: amounts falling due after more than (30,334) (331) (30,665)
one year
Net assets 431,101 (1,627) 429,474
Capital and reserves
Called up Ordinary share capital 16,008 - 16,008
Capital redemption reserve 2,927 - 2,927
Share premium 28,078 - 28,078
Capital reserve - realised 246,363 - 246,363
Capital reserve - unrealised 1,3 85,922 (3,708) 82,214
Merger reserve 41,406 - 41,406
Revenue reserve 2 2,081 12,478
10,397
Total equity 431,101 (1,627) 429,474
Net asset value per Ordinary Share - Basic 269.30p (1.02)p 268.28p
Company
Investments 1 463,576 (3,377) 460,199
Current assets 4,702 - 4,702
Creditors: amounts falling due within one year 2 (6,843) 2,081 (4,762)
Total assets less current liabilities 461,435 (1,296) 460,139
Creditors: amounts falling due after more than 3 (30,334) (331) (30,665)
one year
Net assets 431,101 (1,627) 429,474
Capital and reserves
Called up Ordinary share capital 16,008 - 16,008
Capital redemption reserve 2,927 - 2,927
Share premium 28,078 - 28,078
Capital reserve - realised 246,363 (3,708) 246,363
Capital reserve - unrealised 1,3 87,707 - 83,999
Merger reserve 41,406 2,081 41,406
Revenue reserve 2 8,612 - 10,693
Total equity 431,101 (1,627) 429,474
Net asset value per Ordinary Share - Basic 269.30p (1.02)p 268.28p
Notes to the reconciliation
1. Investments are designated as held at fair value through profit or loss under
IFRS and are carried at bid prices which total £458,164,000 for the Group and
£460,199,000 for the Company. They were carried at mid prices previously under
UK GAAP. The aggregate differences, being a revaluation downwards of £3,377,000
also decreased Capital reserve - unrealised.
2. No provision has been made for the final dividend on the Ordinary Shares for
the year ended 30 September 2004 of £2,081,000. Under IFRS, the final dividend
is not recognised until paid.
3. The Equities Index Unsecured Loan Stock 2013 is designated as held at fair
value through profit or loss under IFRS and carried at the offer price with a
fair value of £7,286,000. Previously the capital value was determined by
reference to the level of the FTSE All-Share Index. The difference, being a
revaluation downwards of £331,000 also decreased Capital reserve - unrealised.
7. (a) Restatement of opening balances as at 30 September 2005
At 1 October 2005 the Company adopted International Financial Reporting
Standards. In accordance with IFRS 1 (First Time Adoption of International
Financial Reporting Standards) the following is a reconciliation of the balances
as at 30 September 2005 previously reported under the applicable UK Accounting
Standards and with the SORP to the restated IFRS results.
Previously Effect of Restated 30
reported 30 transition to September 2005
September IFRS
2005
Notes (£'000) (£'000) (£'000)
Group
Investments 1 652,456 (3,232) 649,224
Current assets 7,734 - 7,734
Creditors: amounts falling due within one year 2 (11,788) 4,802 (6,986)
Total assets less current liabilities 648,402 1,570 649,972
Creditors: amounts falling due after more than 3 (31,366) 278 (31,088)
one year
Provision for deferred tax (145) - (145)
Net assets 616,891 1,848 618,739
Capital and reserves
Called up Ordinary share capital 16,008 - 16,008
Capital redemption reserve 2,927 - 2,927
Share premium 28,078 - 28,078
Capital reserve - realised 351,854 - 351,854
Capital reserve - unrealised 1,3 165,370 (2,954) 162,416
Merger reserve 41,406 - 41,406
Revenue reserve 2 4,802 16,050
11,248
Total equity 616,891 1,848 618,739
Net asset value per Ordinary Share - Basic 385.36p 1.15p 386.51p
Company
Investments 1 654,490 (3,232) 651,258
Current assets 7,723 - 7,723
Creditors: amounts falling due within one year 2 (13,811) 4,802 (9,009)
Total assets less current liabilities 648,402 1,570 649,972
Creditors: amounts falling due after more than 3 (31,366) 278 (31,088)
one year
Provision for deferred tax (145) - (145)
Net assets 616,891 1,848 618,739
Capital and reserves
Called up Ordinary share capital 16,008 - 16,008
Capital redemption reserve 2,927 - 2,927
Share premium 28,078 - 28,078
Capital reserve - realised 351,854 - 351,854
Capital reserve - unrealised 1,3 167,154 (2,954) 164,200
Merger reserve 41,406 - 41,406
Revenue reserve 2 4,802 14,266
9,464
Total equity 616,891 1,848 618,739
Net asset value per Ordinary Share - Basic 385.36p 1.15p 386.51p
Notes to the reconciliation
1. Investments are designated as held at fair value through profit or loss under
IFRS and are carried at bid prices which total £649,224,000 for the Group and
£651,258,000 for the Company. They were carried at mid prices previously under
UK GAAP. The aggregate differences, being a revaluation downwards of £3,232,000
also decreased Capital reserve - unrealised.
2. No provision has been made for the final ordinary and special dividends on
the Ordinary Shares for the year ended 30 September 2005 of £2,561,000 and
£2,241,000 respectively. Under IFRS, the final ordinary and special dividends
are not recognised until paid.
3. The Equities Index Unsecured Loan Stock 2013 is designated as held at fair
value through profit or loss under IFRS and carried at the offer price with a
fair value of £7,702,000. Previously the capital value was determined by
reference to the level of the FTSE All-Share Index. The difference, being a
revaluation upwards of £278,000 also increased Capital reserve - unrealised.
7. (b) Reconciliation of the Consolidated Statement of Total Return to the Consolidated
Income Statement for the year ended 30 September 2005
Under IFRS the Income Statement is the equivalent of the Statement of Total
Return reported previously.
Group Notes £'000 Basic EPS impact
pence
Total transfer to reserves per the Statement of Total 185,790 -
Return
Add back dividends paid and proposed 1 5,763 -
Investments held at fair value changed from mid to 2 3,377 2.11
bid basis at 30 September 2004
Investments held at fair value changed from mid to 2 (3,232) (2.02)
bid basis at 30 September 2005
Equity Index Stock held at fair value changed from 3 331 0.21
Index value to offer basis at 30 September 2004
Equity Index Stock held at fair value changed from 3 278 0.17
Index value to offer basis at 30 September 2005
Net profit per the Income Statement 192,307 0.47
Notes to the reconciliation
1. Interim, final and special ordinary dividends declared and paid during the
period are dealt with through the Statement of Changes in Equity.
2. The portfolio valuations at 30 September 2004 and 30 September 2005 are
required to be valued at fair value under IFRS. These values are lower than the
previous valuations by £3,377,000 and £3,232,000 respectively.
3. The Equity Index Stock valuation at 30 September 2004 and 30 September 2005
is required to be valued at fair value under IFRS. The value at 30 September
2004 is lower than the previous valuation by £331,000 and the value at 30
September 2005 is higher than the previous valuation by £278,000.
7. (c) Reconciliation of the Cash Flow Statements for the year ended 30
September 2005
Previously Effect of Adjusted cash flows
reported cash transition to
flows IFRS
Notes £'000 £'000 £'000
Group
Net cash inflow from operating 1 6,339 13 6,352
activities
Servicing of finance 1 (2,357) 2,357 -
Taxation 1 119 (119) -
Capital expenditure financial 2,251 (2,251) -
investment
Equity dividends paid 2 (3,042) 3,042 -
Net cash inflow before financing 3,310 3,042 6,352
Financing 2 (348) (3,042) (3,390)
Increase in cash and cash 2,962 - 2,962
equivalents
Company
Net cash inflow from operating 1 6,335 13 6,348
activities
Servicing of finance 1 (2,357) 2,357 -
Taxation 1 119 (119) -
Capital expenditure financial 2,251 (2,251) -
investment
Equity dividends paid 2 (3,042) 3,042 -
Net cash inflow before financing 3,306 3,042 6,348
Financing 2 (348) (3,042) (3,390)
Increase in cash and cash 2,958 - 2,958
equivalents
Notes to the reconciliation
1. Bank interest, debenture interest, Equity Index Stock interest, taxation and
capital expenditure and financial investment have now been analysed within
operating activities.
2. Ordinary dividends paid are now analysed within financing.
8. The financial information set out in the announcement does not constitute
the Company's statutory accounts for the years ended 30 September 2006 or 2005.
The financial information for the year ended 30 September 2005 is derived from
the statutory accounts for that year which have been delivered to the Registrar
of Companies. The auditors reported on those accounts; their report was
unqualified and did not contain a statement under s237 (2) or (3) of the
Companies Act 1985. The statutory accounts for the year ended 30 September 2006
will be finalised on the basis of the financial information presented by the
Directors in the preliminary announcement, will be audited and delivered to the
Registrar of Companies in due course. The preliminary announcement is not
prepared on the same basis as set out in the previous year's annual accounts due
to the adoption of IFRS as detailed in Notes 6 and 7. This preliminary
announcement was approved by the Board of Directors on 13 November 2006.
9. Copies of the Annual Report will be posted to shareholders in due course and
further copies may be obtained from the Registered Office, Bennet House, 54 St
James's Street, London SW1A 1JT. The Annual General Meeting will be held at 12
noon on Thursday 14 December 2006.
Phoenix Administration Services Limited
Company Secretary
13 November 2006
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