Interim Results

Mercury Keystone Inv Trust PLC 28 April 2000 MERCURY KEYSTONE INVESTMENT TRUST plc INTERIM RESULTS FOR THE SIX MONTHS ENDED 31ST MARCH 2000 * Increase in net asset value per share of 9.7% from 1179.66p to 1294.52p for the six months ended 31st March 2000. * Interim dividend of 10.00p declared (1999: 10.00p). The Chairman, John Stancliffe, comments: 'The Board remains convinced that the Company's policy of investing in the UK equity market provides attractive opportunities to generate long-term investment gains for the Company's shareholders. However, it believes that an investment trust should diversify shareholders' funds in the same way as if investing for them individually. Shares should be chosen on a prudent basis, spreading funds more evenly between those companies selected on their merits by the Investment Manager rather than according to their market weighting. 'The Board has therefore endorsed the policy that, while the Company's objective is to provide its shareholders with growth of capital and income, the portfolio should be structured to achieve diversification rather than to focus on risk relative to an Index. 'There have been some significant adjustments to markets in recent weeks, with perhaps further adjustment to take place. This process is regarded as healthy and is already resulting in the emergence of some attractive values. However, in taking advantage of these opportunities, the Company's portfolio is being positioned to include more higher growth companies whose shares have lower yields. The Board has considered the effect that this policy would have on income and takes this opportunity to reassure shareholders that it considers it important at least to maintain the Company's dividend and that reserves are sufficient for the foreseeable future. The Board has declared an interim dividend of 10.00p per ordinary share, unchanged from the same period last year.' Commenting upon the outlook for the Company, Alistair Lennard of Mercury Asset Management Ltd noted: 'Market volatility has increased substantially over the course of the last two years and with the pace of economic change accelerating and the increasingly concentrated composition of the UK equity market, this volatility is likely to continue. Against this background the Company has positioned itself strategically in companies which we believe have market positions which will benefit over time from these changes as well as in companies where we believe the stockmarket has not recognised the sustainability of their profit and cashflow.' CONSOLIDATED REVENUE STATEMENT for the six months ended 31st March 2000 Six months Six months Year ended ended 31st ended 31st 30th Sept March 2000 March 2000 1999 £'000 £'000 £'000 (unaudited) (unaudited) (audited) (restated) (restated) Income (Note 2) 3,910 3,716 7,870 Investment management fee (Note 3) (395) (374) (748) Operating expenses (148) (91) (207) Finance costs (768) (759) (1,522) ------ ------ ------ Return on ordinary activities before taxation 2,599 2,492 5,393 Taxation on ordinary activities (20) (122) (172) ------ ------ ------ Return on ordinary activities after taxation 2,579 2,370 5,221 Dividends in respect of non-equity shares (6) (4) (10) ------ ------ ------ Return attributable to equity shareholders 2,573 2,366 5,211 Dividends in respect of equity shares (Note 1) (1,425) (1,430) (4,291) ------ ------ ------ Transfer to reserves 1,148 936 920 ====== ====== ====== TOTAL RETURN PER ORDINARY SHARE Six months Six months Year ended ended 31st ended 31st 30th Sept March 2000 March 2000 1999 (unaudited) (unaudited) (audited) Earnings per share 18.00p 16.54p 36.44p Capital return per ordinary share 105.59p 183.69p 149.55p ------- ------- ------- Total return per ordinary share 123.59p 200.23p 185.99p ======= ======= ======= Dividend per ordinary share 10.00p 10.00p 30.00p ======= ======= ======= CONSOLIDATED BALANCE SHEET as at 31st March 2000 Six months Six months Year ended ended 31st ended 31st 30th Sept March 2000 March 2000 1999 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Fixed assets Listed investments at market valuation 221,672 204,757 205,346 Unlisted investments at directors' valuation 173 625 420 ------- ------- ------- 221,845 205,382 205,766 Current assets Debtors 1,800 2,529 1,169 Cash at bank 5,087 11,296 6,397 ------- ------- ------- 6,887 13,825 7,566 Creditors: amounts falling due within one year 4,522 5,876 4,888 ------- ------- ------- Net current assets 2,365 7,949 2,678 ------- ------- ------- Total assets less current liabilities 224,210 213,331 208,444 Creditors: amounts falling due after one year 39,484 39,462 39,473 ------- ------- ------- Net assets 184,726 173,869 168,971 ======= ======= ======= Capital and reserves Called-up share capital 7,375 7,401 7,401 Share premium 1,258 1,258 1,258 Other capital reserves 169,665 159,914 155,032 Revenue reserve 6,428 5,296 5,280 ------- ------- ------- Total shareholders' funds 184,726 173,869 168,971 ======= ======= ======= Total shareholders' funds are attributable to: Equity shareholders 184,476 173,619 168,721 Non-equity shareholders 250 250 250 ------- ------- ------- 184,726 173,869 168,971 ======= ======= ======= Net asset value per ordinary share 1294.52p 1213.90p 1179.66p ======== ======== ======== GEARING RATIOS - % OF NAV Total borrowings 21.7% Net borrowings (total borrowings, less net current assets, excluding subsidiary investments, ie - effective gearing) 20.4% CONSOLIDATED CASH FLOW STATEMENT for the six months ended 31st March 2000 Six months Six months Year ended ended 31st ended 31st 30th Sept March 2000 March 2000 1999 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Net cash flow from operating activities 2,998 2,654 7,134 Returns on investments and servicing of finance (1,361) (1,362) (3,031) Taxation (paid)/recovered (138) (113) 59 Purchase of fixed asset investments (97,709) (53,300) (124,592) Proceeds from the sale of fixed asset investments 98,247 51,454 116,294 Dividends paid (2,861) (4,577) (6,007) Purchase of ordinary shares for cancellation (486) - - ------- ------- ------- Decrease in cash (1,310) (5,244) (10,143) ======= ======= ======= RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES Six months Six months Year ended ended 31st ended 31st 30th Sept March 2000 March 2000 1999 £'000 £'000 £'000 (unaudited) (unaudited) (audited) (restated) (restated) Net income before interest payable and taxation 3,367 3,251 6,915 Fees capitalised (391) (388) (767) Net sales of investments by subsidiary undertaking 20 117 138 (Increase)/decrease in accrued income (102) (537) 735 Increase in creditors 125 231 182 Tax on investment income included within gross income (1) (20) (48) Profit on investment dealing by subsidiary undertaking (20) - (21) ------- ------- ------- Net cash inflow from operating activities 2,998 2,654 7,134 ======= ======= ======= NOTES ON THE INTERIM STATEMENT 1. Dividend The Board has declared an interim dividend of 10.00p per ordinary share (1999: 10.00p), which will be paid on 19th June 2000 to shareholders who are on the register on 19th May 2000. The shares will be quoted ex-dividend on 15th May 2000. 2. Income Six months Six months Year ended ended 31st ended 31st 30th Sept March 2000 March 2000 1999 £'000 £'000 £'000 (unaudited) (unaudited) (audited) (restated) (restated) Income from investments: Dividends: UK listed 3,761 2,883 6,722 Overseas listed 2 - - Fixed interest: UK listed - 100 191 ------- ------- ------- 3,763 2,983 6,913 Interest receivable and other income: Deposit interest 127 733 936 Profit on investment dealing by subsidiary undertaking 20 - 21 ------- ------- ------- Total 3,910 3,716 7,870 ======= ======= ======= 3. Investment Management Fee REVENUE CAPITAL Six months ended Year ended Six months ended Year ended 31st March 30th Sept 31st March 30th Sept 2000 1999 1999 2000 1999 1999 £'000 £'000 £'000 £'000 £'000 £'000 (unaudited) (audited) (unaudited) (audited) Investment management fee 336 318 636 336 318 637 Performance related fee on the private equity portfolio - - - (4) 12 16 Irrecoverable VAT thereon 59 56 112 59 58 114 --- --- --- --- --- --- 395 374 748 391 388 767 === === === === === === 4. Taxation The financial information in this interim statement follows the requirements of FRS 16 'Current Tax' to show franked investment income net of the related tax credits. The figures for income and taxation in respect of prior periods have been restated accordingly. This change has no effect on the net income or net asset values previously reported for those periods. 5. Publication of Non-Statutory Accounts The financial information contained in this interim statement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the six months ended 31st March 2000 and 31st March 1999 has not been audited. The information for the year ended 30th September 1999 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies and restated to reflect the requirements of Financial Reporting Standard ('FRS') 16 'Current Tax'. The report of the auditors on those accounts contained no qualification or statement under sections 237(2) or (3) of the Companies Act 1985.

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