Interim Results
Advance Focus Fund Ltd
12 June 2006
ADVANCE FOCUS FUND LIMITED
PRELIMINARY ANNOUNCEMENT OF INTERIM RESULTS
FOR THE SIX MONTHS TO 31 MARCH 2006
CHAIRMAN'S STATEMENT
I am pleased to report positive performance of the portfolio over the six months
ended 31 March 2006. The net asset value increased from 111.3p per share at the
start of the period to 131.2p as at 31 March 2006. This represents an increase
of 17.9%, against an increase in the FTSE All-Share Total Return Index of 12.7%.
The revenue return for the period was 1.0p per share. The directors do not
intend to declare an interim dividend at this stage, but a final dividend will
be considered in the light of the results for the year.
The period under review was a good one for the UK stockmarket, driven in recent
months by corporate activity and the strength of resource related stocks in
response to soaring commodity prices. The second half of the period saw strong
performance from certain holdings within the Company's portfolio. However, the
market has fallen back in recent weeks and this has inevitably had some impact
on the value of the portfolio. The Company's net asset value per share as at 9
June 2006 was 124.8p. Tightening liquidity has made the market sensitive to any
hints of less positive news, but the basic economic scenario still looks
satisfactory.
The Manager has constructed a diverse portfolio of stocks, each facing its
challenges, but often dependent on company-specific factors, rather than general
business trends, and all holdings have the potential for significant upside.
Encouragingly, the Manager has recently been booking profits from some
situations which have already matured and the directors are confident that this
progress will continue.
Christopher Clark
12 June 2006
INCOME STATEMENT
6 months to 6 months to 6 months to 6 months to 6 months to 6 months to
31 March 31 March 31 March 31 March 31 March 31 March
2006 2006 2006 2005 2005 2005
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments
Realised - 2,208 2,208 - 1,385 1,385
Unrealised - 2,461 2,461 - 140 140
4,669 4,669 - 1,525 1,525
Capital losses on currency - - - - (70) (70)
movements
Income - from investments 505 - 505 - - -
- bank interest 15 - 15 35 - 35
Investment management fees (147) - (147) - (110) (110)
Performance fee - (173) (173) - (66) (66)
Other expenses (118) - (118) (97) - (97)
Return on ordinary 255 4,496 4,751 (62) 1,279 1,217
activities
Return per redeemable 1.00p 17.58p 18.58p (0.38)p 7.85p 7.47p
preference share
The total column of this statement is the profit and loss account of the company.
All capital and revenue items in the above statement derive from continuing
operations. No operations were acquired or discontinued during the period.
A Statement of Total Recognised Gains and Losses is not required as all gains
and losses of the Company have been reflected in the above statement.
SUMMARISED BALANCE SHEET
At At At
31 March 31 March 30 September
2006 2005 2005
£'000 £'000 £'000
Fixed assets - Investments at market 31,986 8,458 28,683
value
Current assets 1,291 9,683 1,871
Current liabilities (133) (35) (483)
Net current assets 1,158 9,648 1,388
Performance fee provision (173) (66) -
Total net assets 32,971 18,040 30,071
Share capital 252 163 269
Capital redemption reserve 17 - -
Share premium account 19,052 7,614 19,052
Special purchase reserve 6,218 8,069 8,069
Capital reserves 7,327 2,584 2,831
Revenue reserve 105 (390) (150)
Equity shareholders' funds 32,971 18,040 30,071
Net asset value per redeemable
preference share 131.16p 110.67p 111.97p
Net asset value per redeemable
preference share on a portfolio bid
price valuation basis 131.16p 110.67p 111.27p
No. of redeemable preference shares in 25,137,453 16,300,000 26,855,495
issue
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
6 months to 6 months to Year ended
31 March 31 March 30 Sept
2006 2005 2005
£'000 £'000 £'000
Profit for financial period/ year 4,751 1,217 1,703
Placing of Company's own preference shares* - - 11,545
Purchase of Company's own preference shares (1,851) - -
2,900 1,217 13,248
Opening shareholders' funds 30,071 16,823 16,823
Closing shareholders' funds 32,971 18,040 30,071
* net of share issue expenses
CASH FLOW STATEMENT
6 months to 6 months to
31 March 2006 31 March 2005
£'000 £'000
Operating Activities
Cash inflow from investment income and bank interest 449 21
Cash outflow from management expenses (277) (251)
Cash inflow from exchange gains - 144
Cash inflow from disposal of investments 8,412 9,363
Cash outflow from purchase of investments (7,188) (1,437)
Net Cash flow from Operating Activities 1,396 7,840
Financing
Repurchase of share capital (1,851) -
Net cash flow from financing (1,851) -
(Decrease) /Increase in Cash (455) 7,840
NOTES
The Company is a closed-ended investment company incorporated and resident in
Guernsey.
Accounting policy
These financial statements have been presented using UK GAAP. They have been
modified since the last reporting period, as a result of changes to UK
accounting standards to harmonise with International Financial Reporting
Standards (IFRS). Investments have been valued on a bid price basis with effect
from the start of the Company's current financial year, commencing 1 October
2005. As at 30 September 2005 securities were valued at their mid market prices.
The difference between bid and mid price valuations as at 30 September 2005 was
0.65% of the portfolio. As at 31 March 2005 all investments held were open-ended
funds which were valued at NAV. Prior periods have not been restated.
Return per redeemable preference share
The return per redeemable preference share is based on the weighted average of
25,577,012 redeemable preference shares (2005; 16,300,000 redeemable preference
shares) in issue during the period.
Purchase of own shares
During October and November 2005 the company purchased 1,718,042 of its own
shares for cancellation at an aggregate cost of £1,851,000.
Dividend
The directors do not recommend an interim dividend.
Performance
Any bid price data for the comparative periods in this report is actual. For
statistical data published from month to month at points occurring before 1
January 2006, the Company uses a standard conversion ratio to convert mid price
valuations to bid, in accordance with the recommendations of the Association of
Investment Trust Companies.
Performance Fee
The manager is entitled to an annual performance fee of 10% of any out
performance over the Benchmark of the Company. The fee is conditional upon the
NAV per share being greater than 111.79p and having increased since the end of
the last period in which a performance fee was payable. The performance fee is
capped at 2.5% of the Company's net assets, at the point at which the fee
calculation is made.
Status of this report
These financial statements are not the Company's statutory accounts. They are
unaudited. The interim report will be sent to shareholders and copies will be
made available to the public at the registered office of the Company and at the
address of the UK administration agent.
The interim report was approved by the Board on 12 June 2006.
SECRETARY AND ADMINISTRATOR
Legis Corporate Services Limited
1 Le Marchant Street
St. Peter Port
Guernsey
GY1 4HP
UK ADMINISTRATION AGENT
Cavendish Administration Limited
Crusader House
145-157 St John Street
London
EC1V 4RU
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