Interim Results

Schroder Split Investment Fund PLC 01 June 2007 1 June 2007 UNAUDITED INTERIM RESULTS The Directors of Schroder Split Investment Fund plc ('the Company') and its subsidiary Schroder Split ZDP plc (together 'the Group') announce the unaudited preliminary results of the Group for the six months ended 30 April 2007. Highlights As at 30 April 2007 As at 30 April 2006 As at 31 October 2006 Per Ordinary Share Net asset value 137.93p 127.11p 131.20p Share price 127.00p 112.50p 114.50p Six ended Six ended Year ended 31 October 2006 30 April 2007 30 April 2006 Revenue return 4.45p 4.04p 8.10p Total return 11.73p 27.89p 35.17p Total dividends 3.40p 3.20p 8.10p As at 30 April 2007 As at 30 April 2006 As at 31 October 2006 Zero Dividend Preference Share Net asset value 147.97p 137.33p 142.59p Share price 148.25p 140.50p 146.00p Six ended Six ended Year ended 30 April 2007 30 April 2006 31 October 2006 Total return 5.38p 4.99p 10.26p CHAIRMAN'S STATEMENT Performance During the six month period ended 30 April 2007, our net assets produced a total return of 6.8%. This combines the returns of the equity and bond portfolios, both of which performed well in relative terms. In particular, our UK equities returned 8.9%, which compares to a total return of 8.6% for the FTSE All-Share Index and 5.6% for the FTSE 350 Higher-Yield Index. Our long-term performance also remains strong. From launch in 2002 to 30 April 2007, net assets have produced a total return of 69.8%, outperforming the FTSE All-Share Index, which returned 60.1% over the same period. At the period end, the hurdle rate for the Ordinary Shares to reach the prevailing share price of 127.0p stood at -4.1% per annum. The asset cover on the Zero Dividend Preference Shares has improved from 2.20 at 31 October 2006 to 2.30 at the period end. Dividends As previously announced, your Board has declared an increased second interim dividend for the year ending 31 October 2007 of 1.7p (2006:1.6p). This follows the payment of an increased first interim dividend for the year of 1.7p (2006: 1.6p). Your Board expects, on the basis of current forecasts for income receivable, that we will be able to declare dividends for the full year ended 31 October 2007 amounting to at least the same as the dividends paid in respect of the year ended 31 October 2006, which totalled 8.1p per share. Share Price Performance During the period under review, the share price discount to net asset value of the Ordinary Shares narrowed significantly, falling to 7.9% from 12.7% at 31 October 2006. Meanwhile, the share price premium to net asset value of the Zero Dividend Preference Shares reduced as the shares moved closer to maturity, falling to 0.2% from 2.4% during the same period. Since the period end, the discount of the Ordinary Shares and premium of the Zero Dividend Preference Shares has fallen further to 4.9% and 0.1% respectively as at 24 May 2007. Outlook As the Group approaches the end of its initial planned life we appear to be well placed to deliver on the stated objectives for its two share classes. Your Board is considering a number of options for the future of the Group taking into account the interests of all shareholders. An announcement regarding the Board's proposals will be made later in the year. As this will be my final Chairman's Statement in advance of putting forward such proposals, I would like to take the opportunity on behalf of the Board to thank shareholders for their support since the Group's launch in 2002. John Padovan Chairman 1 June 2007 INVESTMENT MANAGER'S REVIEW EQUITY PORTFOLIO (approximately 83% of Gross Assets) Market Background Equity markets continued to show robust returns, with the FTSE All-Share Index recording a total return of 8.6% over the reporting period. The backdrop has continued to be favourable for equities. Global growth momentum has slowed, but this has been confined primarily to the United States and Japan in contrast to most of Europe and the Emerging Markets. Interest rates continued to rise in Europe, and the Bank of England increased rates twice over the reporting period to 5.25%. Looking at sector performance, there was a change in leadership from basic materials towards a more broad-based performance profile, with industrials, consumer services, telecoms and utilities taking the lead. The materials sector suffered from a general deterioration of resource prices caused by a general fear of a global economic slowdown. The main driver of the broad-based nature of performance was increased corporate M&A activity and private equity funds. Performance and Portfolio Activity Equity performance has been strong in absolute terms, and has also outpaced that of the FTSE All-Share Index and the FTSE 350 High Yield Index. In particular, the stock selection in the consumer goods and services sector has generated significant positive returns, whereas the oil sector suffered from a fall in the oil price. The major sector exposures have remained fairly stable over the reporting period, with the strongest weightings still within financials and consumer services. In general, changes made over the reporting period were biased towards more defensive areas with stable earnings and high dividend profiles. FIXED INTEREST PORTFOLIO (approximately 17% of Gross Assets) Over the review period, the funds' lower-than-average duration strategy benefited performance, as did individual stock selection, particularly from short term exposure to new issues in the market. Thanks to a supportive backdrop of rising equity markets and low default rates, high yield credit continued to perform well over the last six months. In contrast, however, government and investment-grade bonds struggled somewhat over the period as concerns over UK interest rates continued to dominate the market. OUTLOOK Within the reporting period, market participants had to cope with increased market volatility, prompted by increased concerns over the US sub-prime mortgage market and the possible knock-on impact on consumer spending. Global equity markets were further impacted by a series of weak economic data that spurred fears of slower growth and potentially higher inflation. Despite the recent volatility in global equity markets, we still believe a soft landing scenario in the US is the most likely outcome. Against this backdrop, we believe that UK equities can still produce attractive returns supported by domestic drivers and, in particular, ample liquidity in the hands of corporate managers and private equity funds. We continue to see plenty of opportunity to invest in well-managed, soundly financed and growing companies that offer well-covered dividends. We acknowledge the potential headwinds from weaker macro-economic data and have taken this into account in the stock selection process. Turning to fixed interest assets, we believe we are nearing the end of the upswing in the current interest rate cycle in both the UK and Europe, which is normally a time when government bonds start to perform well. Schroder Investment Management Limited 1 June 2007 Consolidated Income Statement Six months ended Six months ended 30 April 2007 30 April 2006 (unaudited) (unaudited) Revenue Capital Total Revenue Capital Total Return Return Return Return Return Return Note Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Net gains on investments# - 4,825 4,825 - 11,473 11,473 Income 2,272 - 2,272 2,055 - 2,055 Investment management fee 2 (133) (199) (332) (123) (184) (307) Administrative expenses (118) - (118) (88) - (88) Net return before finance costs and 2,021 4,626 6,647 1,844 11,289 13,133 taxation Interest payable+ 3 (134) (202) (336) (109) (163) (272) Provision for redemption of Zero Dividend Preference Shares in the subsidiary - (1,477) (1,477) - (1,371) (1,371) Dividends on Ordinary Shares Fourth interim dividend of 3.30p (1,360) - (1,360) (906) - (906) per share (2.20p: year ended 31 October 2006)* First interim dividend of 1.70p per 4 (700) - (700) (658) - (658) share (1.60p: year ended 31 October 2006) Net return on ordinary activities (173) 2,947 2,774 171 9,755 9,926 before taxation Taxation on ordinary activities (53) 53 - (71) 71 - (Decrease)/increase in net assets attributable to Ordinary Shareholders (226) 3,000 2,774 100 9,826 9,926 Net return per Ordinary Share 5 4.45p 7.28p 11.73p 4.04p 23.85p 27.89p Net return per Zero Dividend Preference Share in the subsidiary 5 - 5.38p 5.38p - 4.99p 4.99p The Total Return column of this statement is the Income Statement of the Group under IFRS. The Revenue Return and Capital Return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. # Net gains on investments represent realised and unrealised profits or losses arising on the disposal or revaluation of investments held at a fair value through profit and loss and special dividends classified as capital. + Interest payable includes a fair value adjustment on the interest rate swap. * The fourth interim dividend of 3.30p per share was declared in respect of 31 October 2006 and the fourth interim dividend of 2.20p per share was declared in respect of 31 October 2005. All revenue and capital items derive from continuing operations. The classification of called-up share capital and reserves as liabilities in accordance with IFRS means that the provision for redemption of the Zero Dividend Preference Shares and the dividends on Ordinary Shares are treated as finance charges. Movement in Liabilities in Respect of Net Assets Attributable to Ordinary Shareholders Group and Company Share Share Capital Revenue Capital Purchase Reserves Reserve Reserve Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Balance at 31 October 2005 412 37,565 3,082 1,374 42,433 Dividends paid in respect of 31 October 2005 - - - (906) (906) First interim dividend of 1.60p per Ordinary Share - - - (658) (658) paid 31 March 2006 Net gains on investments - - 11,473 - 11,473 Other transfers to reserves - 9 (1,647) 1,664 26 Balance at 30 April 2006 (unaudited) 412 37,574 12,908 1,474 52,368 Balance at 31 October 2005 412 37,565 3,082 1,374 42,433 Dividends paid in respect of 31 October 2005 - - - (906) (906) First interim dividend of 1.60p per Ordinary Share - - - (658) (658) paid 31 March 2006 Second interim dividend of 1.60p per Ordinary Share - - (658) (658) paid 30 June 2006 - Third interim dividend of 1.60p per Ordinary Share - - - (658) (658) paid 29 September 2006 Net gains on investments - - 14,534 - 14,534 Other transfers to reserves - (3,383) 3,339 (35) 9 Balance at 31 October 2006 (audited) 412 37,574 14,233 1,833 54,052 Balance at 31 October 2006 412 37,574 14,233 1,833 54,052 Dividends paid in respect of 31 October 2006 - - - (1,360) (1,360) First interim dividend of 1.70p per ordinary share - - - (700) (700) paid 30 March 2007 Net gains on investments - - 4,825 - 4,825 Other transfers to reserves - - (1,825) 1,834 9 Balance at 30 April 2007 (unaudited) 412 37,574 17,233 1,607 56,826 The classification of called up share capital and reserves as liabilities in accordance with IFRS means that there are no shareholders' funds and accordingly neither a Reconciliation of Movements in Shareholders' Funds nor a Statement of Changes in Equity are presented. This statement has been provided to explain the movement in the balances that represent liabilities in respect of assets attributable to Ordinary Shareholders. Balance Sheets At At At 30 April 2007 30 April 2006 31 October 2006 (unaudited) (unaudited) (audited) Group Company Group Company Group Company Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Non-current assets Investments held at fair value through profit or loss: - equity investments - - 81,804 81,804 84,792 84,792 - fixed interest investments - - 18,406 18,406 18,442 18,442 Held to maturity: subsidiary undertaking - - 50 - 50 - 100,210 100,260 103,234 103,284 Current assets Investments held at fair value through profit or loss: - equity investments 87,731 87,731 - - - - - fixed interest investments 18,198 18,198 - - - - Held to maturity: subsidiary undertaking 50 - - - - - Debtors 1,042 1,042 918 918 407 407 Interest rate swap 18 18 - - - - Short term deposits 2,981 2,981 1,483 1,483 2,082 2,082 Cash at bank 16 16 3 3 17 17 Total current assets 109,986 110,036 2,404 2,404 2,506 2,506 Current Liabilities Other payables (417) (467) (332) (382) (414) (464) Loan facility (12,100) (12,100) - - - - Amount owed to group undertaking - (40,643) - - - - Zero Dividend Preference Shares in the - - - - - subsidiary (40,643) Net current assets 56,826 56,826 2,072 2,022 2,092 2,042 Total assets less current liabilities 56,826 56,826 102,282 102,282 105,326 105,326 Non-current liabilities: Loan facility - - (12,100) (12,100) (12,100) (12,100) Interest rate swap - - (94) (94) (8) (8) Amount owed to Group undertaking - - - (37,720) - (39,166) Zero Dividend Preference Shares in the - - (37,720) - (39,166) - subsidiary Net assets attributable to Ordinary 56,826 56,826 52,368 52,368 54,052 54,052 Shareholders Balance Sheets (continued) At At At 30 April 2007 30 April 2006 31 October 2006 (unaudited) (unaudited (audited) Group Company Group Company Group Company Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Liabilities in respect of net assets attributable to Ordinary Shareholders are represented by: Called-up share capital 412 412 412 412 412 412 Share purchase reserve 37,574 37,574 37,574 37,574 37,574 37,574 Capital reserves 17,233 17,233 12,908 12,908 14,233 14,233 Revenue reserve 1,607 1,607 1,474 1,474 1,833 1,833 56,826 56,826 52,368 52,368 54,052 54,052 Funds attributable to: Ordinary Shares 56,826 52,368 54,052 Zero Dividend Preference Shares 40,643 37,720 39,166 in the subsidiary 97,469 90,088 93,218 Net asset value per: Ordinary Share (Note 6) 137.93p 127.11p 131.20p Zero Dividend Preference Share in the 147.97p 137.33p 142.59p subsidiary (Note 6) The Group has an initial planned life to 30 November 2007 and as a result non-current assets and non-current liabilities are now classified as current assets and current liabilities respectively. Cash Flow Statements Group and Company Six months ended 30 Six months ended Year ended April 2007 30 April 2006 31 October 2006 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Cash flow from operating activities Total return before taxation 2,774 9,926 11,610 Adjustment for - gains on investments held at fair value (4,825) (11,473) (14,534) through profit or loss - interest payable 336 272 559 - dividends on ordinary shares 2,060 1,564 2,880 - decrease in investments 2,130 1,860 1,829 - provision for redemption of Zero Dividend 1,477 1,371 2,817 Preference Shares in the subsidiary Operation cash inflow before movement in 3,952 3,520 5,161 working capital Increase in receivables (634) (695) (230) Increase in payables 9 3 13 Net cash inflow from operating 3,327 2,828 4,944 Activities before financing Financing activities Ordinary equity dividends paid (2,060) (1,564) (2,880) Interest paid on bank loan (369) (361) (548) Net cash used in financing activities (2,429) (1,925) (3,428) Net increase in cash and cash equivalents 898 903 1,516 Cash and cash equivalents at start of the 2,099 583 583 period Cash and cash equivalents at end of the period 2,997 1,486 2,099 Notes to the Preliminary Announcement 1 Basis of preparation The Group financial statements consolidate the accounts of the Company and its wholly-owned subsidiary, Schroder Split ZDP plc. The Company has an initial planned life to 30 November 2007. The Company's Articles of Association require that, inter alia, unless released from the obligation by shareholders, the Directors shall convene an extraordinary general meeting on 30 November 2007, at which an ordinary resolution will be proposed to wind up the Company. The future of the Group has not been voted on by shareholders and accordingly these accounts have been prepared on a going concern basis, but the existence of the obligation in the Articles of Association means that there is a material uncertainty which casts significant doubt about the Company's ability to continue as a going concern. The interim financial information does not include any adjustments that would result if the Company's shareholders voted to place the Company into liquidation. In particular, no provision has been made for transaction costs in respect of future portfolio realisations or the costs of winding up the Company as such costs are not contractually committed at 30 April 2007. These interim financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS'), which comprise standards and interpretations approved by the International Accounting Standards Board (' IASB') and International Accounting Standards Committee ('IASC') as adopted by the European Union. 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 and 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 SORP. IAS 34 'Interim Financial Reporting' has not been applied early and, consequently, the full requirements of that standard have not been adopted. 2 Investment management fee The Investment Manager was entitled to a fee at an annual rate of 0.75% (plus VAT) payable by reference to the value of the Company's assets under management at the end of the relevant quarter. The Manager's periodic charge in respect of Schroder funds in which the Company invests are rebated to the Company so that no double charging occurs. These fees are apportioned on 60:40 basis between the capital and revenue accounts respectively. For the six months ended 30 April 2007, a total fee of Â£332,000 including VAT has been accrued under the terms of the management agreement. 3 Interest payable The Company has drawn down a loan facility of Â£12.1m since the commencement of its operations. The loan is repayable in November 2007 and attracts variable interest payments of 3 month LIBOR plus a margin of 0.6644%. On the original drawdown date, the Company entered into a swap contract with the lender which expires on the loan's repayment date in November 2007. The effect of the swap is that the Company has been making, since inception of the loan, and will continue to make, fixed quarterly interest payments, at an equivalent annual rate of 6.05%. Accordingly, the Company's borrowings have been, and will continue to be, fixed. For the six months ended 30 April 2007, a total interest payable of Â£336,000 has been accrued under the terms of the management agreement. This includes the fair value adjustment on the interest rate swap. 4 Dividends The second interim dividend of 1.70 pence per ordinary share will be paid on 29 June 2007 to shareholders on the register at 25 May 2007. A first interim dividend of 1.70 pence per ordinary share has been paid on 30 March 2007. 5 Net returns per Share (a) Net return per Ordinary Share The basic revenue return attributable to Ordinary Shareholders for the period ended 30 April 2007 is Â£1,834,000 (30 April 2006: Â£1,664,000 and 31 October 2006: Â£3,339,000) and on 41,199,661 (30 April 2006: 41,199,661 and 31 October 2006: 41,199,661) Ordinary Shares, being the weighted average number of shares in issue in the period. The basic capital return attributable to Ordinary Shareholders for the period ended 30 April 2007 is Â£3,000,000 (30 April 2006: Â£9,826,000 and 31 October 2006: Â£11,151,000) and on 41,199,661 (30 April 2006: 41,199,661 and 31 October 2006: 41,199,661) Ordinary Shares, being the weighted average number of shares in issue in the period. The basic total return attributable to Ordinary Shareholders for the period ended 30 April 2007 is Â£4,834,000 (30 April 2006: Â£11,490,000 and 31 October 2006: Â£14,490,000) and on 41,199,661 (30 April 2006: 41,199,661 and 31 October 2006: 41,199,661) Ordinary Shares, being the weighted average number of shares in issue in the period. (b) Net return per Zero Dividend Preference ('ZDP') Share The capital return for ZDP Shares for the period ended 30 April 2007 is Â£1,477,000 (30 April 2006: Â£1,371,000 and 31 October 2006: Â£2,817,000) and is based on 27,467,332 (30 April 2006: 27,467,332 and 31 October 2006: 27,467,332) Zero Dividend Preference Shares, being the weighted average number of shares in issue in the period. The ZDP Shares carry no entitlement to income. 6 Net Asset Value per Share (a) Net Asset Value per Ordinary Share Net asset value per Ordinary Share is based on the net assets attributable to ordinary shares of Â£56,826,000 (30 April 2006: Â£52,368,000 and 31 October 2006: Â£54,052,000) and on 41,199,661 (30 April 2006: 41,199,661 and 31 October 2006: 41,199,661) Ordinary Shares in issue. (b) Net Asset Value per ZDP Share Net asset value per ZDP Share is based on the net assets attributable to the ZDP Shares of Â£40,643,000 (30 April 2006: Â£37,720,000 and 31 October 2006: Â£39,166,000) and on 27,467,332 (30 April 2006: 27,467,332 and 31 October 2006: 27,467,332) Zero Dividend Preference Shares in issue. 7 Comparative information The results for the six months to 30 April 2007 and 30 April 2006, which are unaudited, constitute non-statutory accounts within the meaning of Section 240 of the Companies Act 1985. The latest published accounts which have been delivered to the Registrar of Companies are for the year ended 31 October 2006; the report of the auditors thereon was unqualified and did not contain a statement under Section 237 of the Companies Act 1985. The abridged financial statements shown above for the year ended 31 October 2006 are an extract from those accounts. This statement was approved by the Board of Directors on 1 June 2007. Interim Report The Interim Report for the period ended 30 April 2007 will be mailed to shareholders at their registered addresses in June 2007 and, from the date of release, copies of the Annual Report and Accounts will be available to the public at the Company's registered office, 31 Gresham Street, London EC2V 7QA. Enquiries: Schroder Investment Management Limited Louise Richard (020 7658 6501) 1 June 2007 This information is provided by RNS The company news service from the London Stock Exchange

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