Final Results
Keystone Investment Trust plc
Annual Financial Report Announcement
for the Financial Year Ended 30 September 2008
Financial Information and Performance Statistics
Performance Statistics
The Benchmark Index of the Company is the FTSE All-Share Index
At At
30 September 30 September %
2008 2007 Change
Assets
Net assets attributable to ordinary 144,908 179,197 -19.1
shareholders (£'000)
Net asset value per ordinary share 1083.9 1340.4p -19.1
- with income reinvested -17.4
Share price (mid-market) of ordinary shares 940.0p 1190.0p -21.0
- with income reinvested -18.0
FTSE All-Share Index -25.1
- with income reinvested -22.2
Discount of share price to net asset value
per ordinary share (%):
- debt at par 13.3 11.2
- debt at fair value 10.2 8.5
Total borrowings as % of net assets
attributable to ordinary shareholders 27.5 22.2
Effective gearing - equity exposure as % of
net assets attributable to ordinary 98 114
shareholders
Revenue
Net revenue available for ordinary 6,745 5,566
shareholders (£'000)
Dividends per ordinary share - Interim 17p 15p
- Final 27p 25p
- Total 44p 40p +10.0
Total expense ratio:
- excluding performance fee 0.9% 1.0%
- including performance fee 0.9% 1.0%
Chairman's Statement
In the year to 30 September 2008, the Company's share price provided a total
return of -18.0%. The total return of the net asset value per share was -17.4%.
In the same period, the total return of the Company's benchmark for the purpose
of performance measurement, the FTSE All-Share Total Return Index, was -22.2%.
All these figures are with income reinvested. The discount of the share price
relative to net asset value per share widened slightly from 11.2% at the end of
September 2007 to 13.3% at 30 September 2008.
Performance 6 Months One Year Since Appointment of
Current Manager on 1
January 2003
Share Price Total Return -9.5% -18.0% 124.3%
NAV Total Return per share -6.8% -17.4% 102.5%
FTSE All-Share Total Return -13.5% -22.2% 59.7%
Index
Source: Fundamental Data
Gearing and investment guidelines
The Company's borrowings, in the form of long-term debentures, amount to £40
million. The effective gearing of the Company is determined by the extent to
which these borrowings are invested in shares, rather than held in cash
deposits. During the course of the year the Board decided that the limits for
gearing should be lowered, and in May that there should be no gearing at all.
As a result, at the year-end £42.9 million was held in cash and certificates of
deposit, more than offsetting the borrowings. Equity exposure decreased during
the year from 114% of net assets to 98%.
Since the year-end, gearing has again been introduced to allow the fund manager
opportunities to buy stocks. The present position is that the Manager must make
no net purchases which would take equity exposure above 107.5% of net assets,
and has to make sales if, as a result of market movements, equity exposure goes
higher than 115% of net assets. It is up to the investment manager to decide on
exposure subject to those limits.
During the year up to £4 million was allowed to be held in corporate bonds. At
the year-end, just under £2 million was held in bonds. Since then the Board has
decided to increase the amount that may be held in corporate bonds to £8
million, in order to enable the Manager to exploit opportunities that the
recent market turmoil has created.
The guidelines for cash deposits and certificates of deposit were reviewed by
the Board and in May the list of approved banks was restricted to six banks.
At regular intervals the Board has considered whether it would be in
shareholders' interests to attempt to buy back and cancel the outstanding
debentures. Each time we have concluded that it would not.
Dividends
The Board has declared a final dividend of 27p per share (2007: 25p), giving a
total dividend for the year of 44p per share, compared with 40p last year, an
increase of 10%. Based on the share price at year-end, this total dividend
represents a dividend yield of 4.7%. While the primary objective of the Company
is long-term growth in capital, the Board will continue to pay attention to the
importance of dividend to some of the Company's shareholders. This emphasis is
in tune with the Manager's focus on investing in companies which can maintain
and increase dividends. Earnings per share in this year were 50.4p (2007:
41.6p). The dividend will be paid on 22 December 2008 to shareholders on the
register on 21 November 2008.
Expenses
The Company's total management expenses were 0.9% of average net assets in the
year ended 30 September 2008 (2007: 1%). There were no performance fees
payable.
The Manager
During the year the Board again reviewed all aspects of the service provided by
the Manager and the terms of the Manager's appointment. We remain satisfied
with the service and the current terms of appointment.
VAT on Management Fees
As I reported in the last annual financial report, in late 2007 a test case
found that investment trust management fees were exempt VAT. Following this the
current manager ceased to charge VAT on management fees and it became possible
for your Board to take steps to recover at least part of this back VAT from
both the current and previous managers. Due to the continuing uncertainty
concerning the amounts that the Company will eventually recover, no adjustment
has been put through these financial statements. Your Board will continue to
monitor the situation and advise shareholders as the position develops.
Outlook
It has become commonplace to describe present conditions as unprecedented, but
they are. Market falls accelerated in October, after the year-end. No-one
doubts now that we are faced with recession. The corollary of an awful economic
environment, described in the Manager's report, is that valuations improve as
share prices drop, and the difficulty is in deciding whether the falls which
have taken place in the share prices of individual companies already discount
prospects for economies and profits, bad though they may be. This is the
investment manager's job, and so far it has been done well. The Board firmly
supports the approach which he describes in his report: committed to the long
term, and to evaluation of the fundamental attractions of companies. Given
current levels of valuations, we have felt it appropriate to allow, again, very
modest gearing.
Last year we wrote about economic and financial issues to worry about, and
warned that after several years of double-figure returns it was not surprising
that markets were becoming more difficult. But the scale of the difficulties
has been fairly breathtaking. We are as confident as we were when we appointed
Invesco Asset Management that we have in Mark Barnett an investment manager who
will steer through the difficulties and will fulfil the Company's objectives:
to provide, for the investor with a long-term outlook, strong returns from its
portfolio of equities.
Special Business at the Annual General Meeting (AGM)
As special business of the AGM, the Board will propose four resolutions:
Share issuance
First, the Board is asking for the usual authority to issue up to an aggregate
nominal amount of £334,219 in new ordinary shares, this being 5% of the
Company's issued ordinary share capital. This will allow Directors to issue
shares within the prescribed limits should any favourable opportunities arise
to the advantage of shareholders. The powers authorised will not be exercised
at a price below net asset value so that the interests of existing shareholders
are not diluted. This authority will expire at the AGM in 2009.
Second, the Directors are also asking for the authority to issue new ordinary
shares pursuant to a rights issue, or otherwise than in accordance with a
rights issue, of up to an aggregate nominal amount of £334,219 (5% of the
Company's issued ordinary share capital) of new ordinary shares disapplying
pre-emption rights. This will allow for shares to be issued to new shareholders
without having to be offered to existing shareholders first, thus broadening
the shareholder base of the Company. This authority will expire at the AGM in
2009.
Share Buybacks
Third, the Board is seeking to renew the authority to purchase up to 2,003,982
of the Company's own shares, this being 14.99% of the issued ordinary shares,
subject to the restrictions referred to in the notice of the AGM. This
authority will expire at the AGM in 2009.
Amendments to the Articles of Association
Finally, the Directors are seeking the approval of a number of further
amendments to the existing Articles of Association of the Company, primarily to
reflect the provisions of the Companies Act 2006 which came into force in April
and October 2008. An explanation of the main changes proposed in the amended
Articles of Association is set out in the Notice of the AGM which is included
in the Annual Financial Report.
The remaining provisions of the Companies Act 2006 are expected to come into
force in October 2009. In addition, various regulations that relate to certain
of these provisions have yet to be finalised. Consequently, it will be
necessary for the Company to undertake a further review of its Articles of
Association in due course in order to reflect these other provisions. It is
anticipated that this will take place in 2009.
Shareholders should note that the terms of the new Articles of Association with
all the proposed changes highlighted are available for inspection at 30
Finsbury Square , London, EC2A 1AG from 17 November 2008 until the close of the
AGM on 15 December 2008.
Your Directors have carefully considered all the resolutions proposed in the
Notice of the AGM and consider them all to be in the best interest of the
Company and its shareholders. The Directors therefore recommend that
shareholders vote in favour of each resolution.
My fellow Directors and I look forward to seeing investors at the AGM of the
Company on 15 December 2008, where there will be an opportunity to meet and
question the investment manager.
Richard Oldfield
Chairman
17 November 2008
Manager's Report
Market Review
The UK equity market, as measured by the FTSE All-Share Index, fell by 22.2%
over the year ending September 2008. All areas of the market incurred losses,
although large companies fared relatively better than small and mid sized ones.
The best performing areas of the market included traditionally defensive
sectors such as electricity, tobacco and pharmaceuticals. Meanwhile, cyclical
sectors such as general retailers, construction and banks performed poorly.
This reflected increasing investor fears towards economically sensitive sectors
as the effect of the credit crunch fed through to the wider economy from its
beginnings in the financial services industry.
During the year, the UK economy continued to face a number of significant
challenges: a much weaker residential housing market; upward pressure on
domestic inflation from rising fuel, electricity and food prices; and latterly,
an increase in the level of unemployment. However, this economic news was
over-shadowed by the paralysis that was witnessed in the banking system. The
ability and willingness of the banks and building societies to extend credit
has progressively diminished this year, to the point where the mortgage market
has seen a substantial fall in new loans created and a number of these
financial institutions have suffered a crisis of confidence. In fact, we have
recently faced the very real possibility of a systemic banking collapse
following similar problems in the United States and Continental Europe. It is
not too strong to say that these events are unprecedented in recent economic
history.
In response to the deteriorating economic outlook, the Bank of England lowered
UK interest rates to 5.00%. This reduction occurred slowly and in three steps,
as the Monetary Policy Committee cited the difficulty of balancing increased
risks to economic growth with concerns over stoking further inflationary
pressures.
Given this economic backdrop, it is unsurprising that the equity market
performed so poorly. In fact, the level of investor nervousness gripped all
asset markets and the desire to move into cash excluded all other sentiment in
a very difficult year for the UK stock market.
Portfolio Strategy & Review
The Company's net asset value, including dividends, fell by 17.4% during the 12
months to the end of September 2008, compared to a fall in the total return of
22.2% from the FTSE All-Share index.
Given the difficult market conditions described above, your Manager was unable
to avoid posting a negative return during the year. Returns relative to the
benchmark, however, show a respectable out-performance. The primary factor
aiding relative performance has been the defensive strategy for the portfolio,
motivated by an increasingly cautious view of the economic outlook. The
portfolio has been positioned for over a year in resilient businesses, such as
GlaxoSmithKline and AstraZeneca in the pharmaceuticals sector, power generators
Drax and British Energy, and tobacco company BAT. Operationally, all of these
businesses have performed robustly as expected and, whilst in some instances
this has not prevented share price declines, the shares have provided
substantial out-performance of the market. Similarly, minimal exposure towards
cyclical sectors such as banks, retailers and house builders has also assisted
relative returns, as many shares within these sectors have suffered very steep
declines. Furthermore, your Board elected to remove gearing from the Trust in
May 2008 and, on review, this has proved to be a very sensible decision.
Portfolio activity was even lower than usual during the period under review, as
your Manager felt that the strategy in place at the start of the year continued
to be appropriate for the deteriorating economic environment. A new position
was initiated in oil & gas producer BG. The company has developed two strong
areas of operation - a valuable portfolio of existing oil & gas assets with
increasing production output and a very strong position in the rapidly maturing
LNG (liquefied natural gas) market. Furthermore, the company owns a 25% stake
in a very large discovery of oil off the coast of Brazil. With a strong track
record and a high-quality management team, BG is viewed as a very attractive
long-term growth stock. A new position was also started in financials company
Provident Financial. The company, which specialises in lending to customers
with a poor credit history, is operating in a strong growth area as more and
more families are refused credit by the mainstream banking system.
Outlook
Since the Company's year end, the UK stock market and economic environment has
deteriorated much further. The Bank of England has participated in a globally
co-ordinated 0.5% interest rate cut, the Treasury has launched a partial
nationalisation of the major UK clearing banks, the UK economy has recorded its
first negative quarterly GDP number for 16 years and the FTSE All Share was
down a further 12% in October. The speed and severity of these events is
unprecedented and does not make the job of your portfolio manager any easier in
predicting the future.
In a period of such uncertainty and volatility in a world which has suffered
from too much complexity and too much debt, it is important to remain true to
the principles and processes which have worked well in the past. Your Manager
remains a fundamental investor, focused on identifying undervalued businesses
which can be bought and held for the long-term. Your Manager is looking for
companies that can maintain and grow dividends into the future and are led by
directors who can share their vision for the businesses they manage and who
view the equity in their companies as a precious and rare resource. Above all,
your Manager believes that patience is an essential component in stock market
investing, as the value of a company almost never emerges in the time frame
which is originally envisaged. With this in mind, it is therefore worthwhile
looking at the current fear in the UK market as an opportunity.
There are some extremely good opportunities to buy shares in undervalued
companies in this market. These businesses will be able to withstand the
recessionary conditions that are developing in the major economies. They share
a number of similar characteristics: they offer geographical diversification;
they operate in defensive industries such as tobacco, pharmaceuticals,
telecommunications and oil; they carry minimal financial risk due to proven
cash generative business models and strong balance sheets; and they have
attractive valuations with dividend yields in excess of the market average with
little or no risk of dividend cuts. These companies are virtually all to be
found in the large cap end of the market and are the type of investments which
will dominate the structure of the portfolio for the foreseeable future.
Indeed, the Board has recently allowed the Manager to take advantage of these
market movements by increasing the gearing limit from zero to 7.5%.
Given the current extent of undervaluation in these sectors, your Manager
believes that it is not necessary to increase the risk profile of the type of
shares that the Company buys in order to generate attractive returns over the
medium term.
Mark Barnett
Fund Manager
17 November 2008
Principal Risks and Uncertainties
The principal Risks and Uncertainties that could affect the Company's business
can be divided into various areas:
* Investment Objective and Policy
* Investment Process
* Market Movements and Portfolio Performance
* Gearing and
* Regulatory
A detailed explanation of these principal risks and uncertainties can be found
in the Annual Financial Report for the year ended 30 September 2008, which will
be available on the Company's website shortly.
Statement of Directors' Responsibilities
in respect of the preparation of financial statements
The Directors are responsible for preparing the annual financial report in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare financial
statements in accordance with United Kingdom Generally Accepted Accounting
Practice. The financial statements are required by law to give a true and fair
view of the state of affairs of the Company and of the profit or loss of the
Company for that period.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject to
any material departures disclosed and explained in the financial statements;
and
• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The Directors, to the best of their knowledge, state that:
• the financial statements, prepared in accordance with United Kingdom
Generally Accepted Accounting Practice, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company; and
• the Report of the Directors includes a fair review of the development and
performance of the business and the position of the Company together with a
description of the principal risks and uncertainties that it faces.
The Directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that the financial statements comply with the
Companies Act 1985 (as and when updated by the Companies Act 2006). They are
also responsible for safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection of fraud and other
irregularities.
Richard Oldfield
Chairman
Signed on behalf of the Board of Directors
17 November 2008
Investments by Sector
at 30 September 2008
UK Listed ordinary shares unless stated otherwise
Market
Value % of
£'000 Portfolio
Basic Materials
UK Coal 1,726 1.0
1,726 1.0
Consumer Goods
British American Tobacco 9,001 5.1
Imperial Tobacco 7,640 4.3
Reynolds American US common stock 6,699 3.7
Tate & Lyle 1,392 0.8
Landkom International 366 0.2
25,098 14.1
Consumer Services
Tesco 4,637 2.6
Tui Travel 3,580 2.0
Informa 2,229 1.3
British Airways 1,337 0.8
Carnival 1,252 0.7
ITV 881 0.5
Local Radio 85 -
14,001 7.9
Financials
Provident Financial 2,712 1.5
Hiscox 2,555 1.4
A J Bell Unquoted 1,650 0.9
Climate Exchange 1,181 0.7
Just Retirement 1,177 0.7
Impax Environment 1,114 0.6
Trading Emissions 889 0.5
Helpline 738 0.4
Macau Property Opportunities Fund 354 0.2
12,370 6.9
Health Care
Glasoxmithkline 6,348 3.6
Astrazeneca 4,533 2.6
Protherics 1,345 0.8
Fusion 684 0.4
Vectura 558 0.3
BTG 555 0.3
XTL Biopharmaceutical Ordinary Shares & 499 0.3
ADRs
Puricore 465 0.3
Xcounter Ab 314 0.2
Renovo 249 0.1
Lombard Medical Technologies 87 -
Napo Pharmaceutical 1 -
15,638 8.9
Industrials
Capita 4,420 2.5
Rolls Royce 2,899 1.6
Bunzl 1,611 0.9
Homeserve 1,608 0.9
BAE Systems 1,353 0.8
Balfour Beatty 1,188 0.7
Rexam 1,099 0.6
14,178 8.0
Market
Value % of
Sector/Company £'000 Portfolio
Oil & Gas
BG 6,401 3.6
BP 6,178 3.5
Royal Dutch Shell `A' & `B' 5,164 2.9
Shares
Petrofac 1,900 1.1
19,643 11.1
Technology
Sage 2,437 1.4
Arm Holdings 877 0.5
Mirada 11 -
3,325 1.9
Telecommunications
Vodafone 5,032 2.8
BT 5,009 2.8
10,041 5.6
Utilities
British Energy 7,168 4.0
Drax 5,360 3.0
National Grid 3,875 2.2
Scottish & Southern Energy 3,112 1.8
Pennon 2,819 1.6
Centrica 2,352 1.3
24,686 13.9
Total Equity Investments 140,706 79.3
Fixed Interest Coupon Maturity Date
British Energy 7.00 22 March 2022 535 0.3
First Hydro Finance 9.00 31 July 2021 515 0.3
Linde Finance Floating 8.125 14 July 2066 495 0.3
NTL Cable 9.75 15 April 2014 419 0.2
1,964 1.1
Total Listed Fixed Asset 142,670 80.4
Investments
Certificates of Deposit
RBS 5.88% 28 November 2008 14,989 8.4
Bank of Scotland 5.880% 28 9,993 5.6
November 2008
Barclays 5.65% 28 November 2008 9,991 5.6
Total Investments 177,643 100.0
Income Statement
For the year ended 30 September
2008 2007
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains on - (31,285) (31,285) - 14,045 14,045
investments
(Loss)/gain on - (35) (35) - 22 22
certificates of
deposit
Foreign exchange (loss)/ - (983) (983) - 1,011 1,011
gain
Income 8,159 - 8,159 7,099 - 7,099
Investment management fees (280) (839) (1,119) (368) (1,095) (1,463)
Other expenses (290) - (290) (314) - (314)
Net return before finance
costs and taxation 7,589 (33,142) (25,553) 6,417 13,983 20,400
Finance costs (772) (2,277) (3,049) (773) (2,279) (3,052)
Return on ordinary
activities
before tax 6,817 (35,419) (28,602) 5,644 11,704 17,348
Tax on ordinary activities (72) - (72) (78) - (78)
Return on ordinary
activities
after tax for the 6,745 (35,419) (28,674) 5,566 11,704 17,270
financial year
Return per ordinary share
Basic 50.4p (265.0)p (214.6)p 41.6p 87.5p 129.1p
The total column of this statement represents the Company's profit and loss
account, prepared in accordance with UK Accounting Standards. The supplementary
revenue and capital columns are both prepared under guidance published by the
Association of Investment Companies. All items in the above statement derive
from continuing operations and the Company has no other gains or losses
therefore no statement of recognised gains or losses is presented. No
operations were acquired or discontinued in the year.
Reconciliation of Movements in Shareholders' Funds
For the year ended 30 September
Share Capital Capital Capital
Share Premium Redemption Reserve- Reserve- Revenue
Capital Account Reserve Realised Unrealised Reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance as at
1 October 2006 6,685 1,258 466 110,926 40,714 6,690 166,739
Final dividend - - - - - (2,807) (2,807)
for 2006
Net return on
ordinary
activities - - - 24,878 (13,174) 5,566 17,270
Interim dividend - - - - - (2,005) (2,005)
Balance as at
30 September 6,685 1,258 466 135,804 27,540 7,444 179,197
2007
Final dividend - - - - - (3,342) (3,342)
for 2007
Net return on
ordinary
activities - - - 3,984 (39,403) 6,745 (28,674)
Interim dividend - - - - - (2,273) (2,273)
Balance as at
30 September 6,685 1,258 466 139,788 (11,863) 8,574 144,908
2008
The accompanying notes are an integral part of this statement
Balance Sheet
For the year ended 30 September
2008 2007
£'000 £'000
Fixed assets
Investments held at fair value through profit or 142,670 203,889
loss
Current assets
Certificates of deposits 34,973 5,004
Debtors 1,164 1,464
Cash and cash funds 7,967 10,713
44,104 17,181
Creditors: amounts falling due within one year (2,052) (2,074)
Net current assets 42,052 15,107
Total assets less current liabilities 184,722 218,996
Creditors: amounts falling due after more than one (39,814) (39,799)
year
Provisions - -
Net assets 144,908 179,197
Capital reserves
Share capital 6,685 6,685
Share premium account 1,258 1,258
Capital redemption reserve 466 466
Other reserves:
Capital reserve - realised 139,788 135,804
Capital reserve - unrealised (11,863) 27,540
Revenue reserve 8,574 7,444
Shareholders' funds 144,908 179,197
Net asset value per ordinary share
Basic 1083.9p 1340.4p
These financial statements were approved and authorised for issue by the Board
of Directors on 17 November 2008.
Signed on behalf of the Board of Directors
Richard Oldfield
Chairman
Cash Flow Statement
For the year ended 30 September
2008 2007
£'000 £'000
Cash inflow from operating activities 6,068 4,679
Servicing of finance (3,035) (3,036)
Capital expenditure and financial investment 802 11,008
Equity dividends paid (5,615) (4,812)
Net cash (outflow)/inflow before management of
liquid resources and financing (1,780) 7,839
Management of liquid resources 10,700 (8,750)
Increase/(decrease) in cash 8,920 (911)
Reconciliation of net cash flow to movement in net
debt
Increase/(decrease) in cash 8,920 (911)
Cashflow from movement in liquid resources (10,700) 8,750
Exchange movements (966) 924
Debenture stock non-cash movement (15) (15)
Movement in net debt in the year (2,761) 8,748
Net debt at beginning of year (29,086) (37,834)
Net debt at end of year (31,847) (29,086)
Notes to the Financial Statements
1. Accounting policies
A summary of the principal accounting policies, all of which have been applied
consistently throughout the current and previous year, is set out below.
(a) Basis of accounting
The financial statements have been prepared in accordance with United Kingdom
Generally Accepted Accounting Practice (`UK GAAP') and with the Statement of
Recommended Practice (`SORP') `Financial Statements of Investment Trust
Companies', issued by the Association of Investment Trust Companies in December
2005.
2. Income
2008 2007
£'000 £'000
Income from investments
UK dividends 5,770 6,111
Overseas dividends 624 723
UK unfranked investment income - interest 1,443 263
7,837 7,097
Other income
Deposit interest 322 1
Underwriting commission - 1
322 2
Total income 8,159 7,099
3. Investment Management Fee
2008 2007
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management 280 839 1,119 313 940 1,253
fee
Performance related - - - - (7) (7)
fee - relating to 31
December 2006
Irrecoverable VAT - - - 55 162 217
thereon
280 839 1,119 368 1,095 1,463
Details of the management agreement are disclosed in the Report of the
Directors. Performance-related fees are based on a calendar year. No
performance fee has been provided for the year ended 31 December 2008
(31December 2007: nil).
With effect from November 2007 no VAT has been payable on management or
performance fees.
4. Return per ordinary share
Basic revenue, capital and total return per ordinary share is based on each of
the returns on ordinary activities after taxation and on 13,368,799 (2007:
13,368,799) shares being the number of shares in issue throughout the year.
5. Net asset value per ordinary share
The net asset value per ordinary share and the net assets attributable at the
year end were as follows:
Net Asset Value Net Assets
per share Attributable
2008 2007 2008 2007
Pence Pence £'000 £'000
Ordinary shares
- Basic 1083.9 1340.4 144,908 179,197
Net asset value per ordinary share is based on net assets at the year end and
on 13,368,799 (2007: 13,368,799) ordinary shares, being the number of ordinary
shares in issue at the year end.
6. Notes to the Cash Flow Statement
(a) Reconciliation of operating profit to operating cash flows
2008 2007
£'000 £'000
Total return before finance costs and taxation (25,553) 20,400
Adjustment for losses/(gains) on investments and
certificates of deposit 31,320 (14,067)
Adjustment for exchange losses/(gains) 983 (1,011)
Decrease/(increase) in debtors (470) 194
Decrease in creditors and provisions (140) (759)
Tax on unfranked investment income (72) (78)
Net cash inflow from operating activities 6,068 4,679
(b) Analysis of changes in net debt
Debenture
Stock
1 October Cash Exchange Non-cash 30 September
2007 Flow Movements Movement 2008
£'000 £'000 £'000 £'000 £'000
Cash 13 8,920 (966) - 7,967
Cash funds and 10,700 (10,700) - - -
short-term
deposits
Debentures (39,549) - - (15) (39,564)
5% Cumulative (250) - - - (250)
preference
shares
Net debt (29,086) (1,780) (966) (15) (31,847)
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 30 September 2008 or 2007. The financial
information for 2007 is derived from the statutory accounts for 2007 which have
been delivered to the Registrar of Companies. The auditors have reported on the
2007 statutory accounts and their report was unqualified and did not contain a
statement under s237(2) or (3) of the Companies Act 1985. The statutory
accounts for 2008 will be finalised on the basis of the information presented
by the Directors in this preliminary announcement and will be delivered to the
Registrar of Companies following the Company's Annual General Meeting.
The audited Annual Report and Accounts will be posted to shareholders shortly.
Copies may be obtained during normal business hours from the Company's
Registered Office, 30 Finsbury Square, London EC2A 1AG.
A final dividend of 27p per share is recommended for payment on 22 December
2008 to shareholders on the register of members on 21 November 2008.
The Annual General Meeting will be held at the Company's Registered Office on
Monday, 15 December 2008 at 11.00am.
By order of the Board
Invesco Asset Management Limited
17 November 2008
Friday, 10th January 2025
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