Half-yearly Report
NEW STAR INVESTMENT TRUST PLC
STATEMENT OF RESULTS FOR THE SIX MONTHS ENDED 31ST DECEMBER 2008
The Directors announce the unaudited statement of condensed results for the six
months ended 31st December 2008 as follows:
FINANCIAL HIGHLIGHTS
31st December 2008 30th June 2008 % change
PERFORMANCE
Net assets (£'000) 61,771 96,405 (35.9)
Net asset value per Ordinary 86.97p 135.74p (35.9)
share
Mid-market price per Ordinary 59.00p 105.50p (44.1)
share
Discount of share price to net 32.2% 22.3% -
asset value
FTSE World Index 103.75 116.42 (10.9)
FTSE All-Share Index 2,209.29 2,855.69 (22.6)
Six months ended Six months ended
31st December 2007
31st December 2008
REVENUE
Return per Ordinary share 1.13p 0.62p
Dividend per Ordinary share - -
TOTAL RETURN
Net assets total return (35.9%) (13.7%)
FTSE All-Share total return (21.1%) (2.1%)
CHAIRMAN'S STATEMENT
The six months to 31st December 2008 was a disappointing period for your
Company, with total assets falling 35.9% to £61.8 million. This compares with a
22.6% fall in the FTSE All-Share Index. At the period end, the net asset value
per Ordinary share was 86.97p. This compares with the launch price of 100p in
May 2000. The FTSE All-Share Index over the same period fell by 25.7%.
Net revenue before tax for the period was £989,000. In common with previous
years, your directors are not recommending the payment of an interim dividend
to shareholders.
Global equities were weak and volatile during the period under review, with the
MSCI World Total Return Index falling 8.0% in sterling terms. The worst
markdowns came in the autumn as bad news from the financial sector assailed
investors and the developed world went into recession, dragging down economic
growth rates in emerging markets. The official response was radical as
governments injected capital into troubled banks and provided emergency funding
to revive inter-bank lending. Leading central banks, meanwhile, responded with
exceptional monetary easing. Over the six months, the Federal Reserve reduced
its fed funds target rate from 2% to 0.25%, the Bank of England cut the rate
from 5% to 2% and the European Central Bank, which had mistakenly tightened its
repo rate to 4.25% in July, did a quick reversal and cut it to 2.5%.
Latin American emerging markets fared worst, falling 38.4% in sterling terms,
principally as a result of falling commodity prices. Over the half year, oil
prices fell 71.9% to $39.5 per barrel having peaked at $145.6 in early July,
while the Reuters Industrial Commodities Index fell 53.0%. A further reason for
regional weakness was investor flight from riskier securities towards perceived
safe haven asset classes.
Other relatively weak areas within global stock markets included the UK, down
21.1%, Asia excluding Japan, down 16.2%, and Europe excluding the UK, down
13.4%. By contrast, Japanese and US equities were relatively robust, with Tokyo
gaining 3.8% and Wall Street falling 2.0%. Such relative strength was, however,
due to currency changes, with the pound falling 27.8% against the dollar and
38.2% against the yen. The US currency benefited from its safe haven status
while the yen benefited from the unwinding of the "carry trade", which had
involved investors borrowing in low-yielding currencies such as the yen and
investing in higher yielding asset classes.
Investor flight towards safer securities in the face of deteriorating economic
conditions was apparent in sector returns and in the diverging fortunes of big
and smaller companies. Basic materials fell 42.1%, energy fell 28.5%, financial
stocks fell 15.8% and industrial stocks fell 14.1%. By contrast, healthcare
gained 20.5%, telecommunications gained 7.2% and consumer services gained 5.9%.
Blue chip stocks in the UK's FTSE 100 Index fell 19.6% while small and
medium-sized companies fell 34.1% and 29.2% respectively.
With risk aversion increasing despite monetary easing in the US and the UK,
government bonds benefited from a "flight to quality", with UK gilts returning
15.4%. By contrast, lower-quality bonds underperformed, with high-yielding UK
corporate bonds falling 19.8%.
Your Company's portfolio was significantly reshaped during the period under
review. Purchases included the BH Global Hedge Fund, the Blackrock Gold &
General Fund, a Chinese equities exchange-traded fund ("ETF"), the GWI Brazil
Fund, the Gold Bullion Securities ETF and the Occam Asia Focus Fund. In
addition, the Company traded in the New Star Indian Equity Fund and in ETFs
giving exposure to US financial sector companies, house builders and oil
services companies. A number of New Star funds were sold during the period,
including the New Star Eastern European, Korean and Smaller Companies
Portfolios, European Leaders, Financials Hedge, Global Financials, Global
Strategic Capital, Hidden Value, Pan-European Equity and UK Growth while the
International Property Fund holding was reduced.
Your Company ended the period with 70.9% of its invested assets in retail
funds, 3.0% in investment trusts, 5.2% in hedge funds and the remaining 20.9%
in other securities.
In early 2009, the developed world was in recession. This was reflected in a
de-rating of global equities, which were trading on a trailing earnings
multiple of 9.8 at 31st December 2008 as measured by Datastream against 31.0 in
April 2000. The market's dividend yield, meanwhile, rose in November to a
26-year high of 4.6% and ended 2008 at 4.0%. The unprecedented official
response to the financial crisis and recessionary conditions may lead to some
revival of economic momentum in 2009 but the sclerosis in credit markets, weak
consumer and business confidence and rising unemployment may dampen economic
confidence for a considerable time.
The high dispersion of returns between sectors and individual stocks is likely
to persist in response to these challenging economic circumstances. In such an
environment, careful stock selection will be particularly important.
The un-audited net asset value at 31st January 2009 was 85.52p per Ordinary
share.
James Roe
Chairman
26th February 2009
INTERIM MANAGEMENT REPORT
Performance
In the six months to 31st December 2008 the net asset value per share declined
35.9% to 86.97p. In the same period the share price fell 44.1% to 59.0p. This
compares to declines of 22.6% and 10.9% respectively in the FTSE All-Share
Index and the FTSE World Index. Further details of the Company's performance
may be found in the Chairman's Statement.
Investment policy
On 1st October 2008 shareholders approved a new investment policy. Under the
new investment policy the Company will allocate its assets actively to global
investment opportunities while spreading investment risk through investment in
equity, bond, commodity, real estate, currency and other asset classes.
Aggregate asset class exposure to any one of the United States, the United
Kingdom, Europe ex UK, Asia ex Japan, Japan or Emerging Markets and to any
individual industry sector will be limited to 50% of the Company's net assets.
It is anticipated that under the new investment policy a lower proportion of
the Company's assets will be invested in funds managed by New Star. Full
details of the new investment policy may be found in the annual accounts for
the year ended 30th June 2008 and the Notice of Annual General Meeting dated
5th September 2008.
Share capital
At 31st December 2008, the Company had 71,023,695 1p ordinary shares in issue.
There were no changes to the issued share capital of the Company during the
period.
Risk Management
The principal risks and uncertainties that the Company faces in the management
of the portfolio are:
Inappropriate strategy: inappropriate long-term strategy, asset allocation and
manager selection might lead to the underperformance of the Company. The
Company's strategy is kept under regular review by the Board and in September
2008 the Company proposed the adoption of a new, more flexible, investment
policy. This new investment policy was approved by shareholders on 1st October
2008.
Business conditions and general economy: the Company's investment returns are
influenced by general economic conditions in the UK and globally. Factors such
as interest rates, inflation, investor sentiment and the availability and cost
of credit could adversely affect investment returns.
Foreign currency risk: a proportion of the Group's portfolio is invested in
investments denominated in foreign currencies and movements in exchange rates
can significantly affect their sterling value. The Manager takes account of
foreign currency risk when making investment decisions. The Company does not
normally hedge against foreign currency movements affecting the value of the
investment portfolio, although hedging techniques may be employed in
appropriate circumstances.
Interest rate risk: the Manager takes account of interest rate risk when making
investment decisions
Market price risk: the downward movement of shares contained in the portfolio
would lead to a reduction in the Company's net asset value per share. It is the
Board's policy to hold an appropriate spread of investments in order to reduce
any risk arising from factors specific to a particular investment or sector.
Manager: the quality of the management team employed by the Manager is an
important factor in delivering good performance and the loss by New Star of key
staff could adversely affect investment returns.
Related parties
During the period, Mr Duffield was chairman and a shareholder of New Star Asset
Management Group PLC, the holding company of New Star Asset Management Limited.
The Company's investments are managed by New Star Asset Management Limited. The
management fee is payable quarterly in arrears and is calculated at a rate of 3
/16% per quarter of the total assets of the Company and its subsidiaries after
the deduction of the value of any New Star managed assets (as defined in the
management agreement). Since 1st September 2008, the Manager has also been
entitled to a performance fee of 15% of the growth in net assets over a hurdle
of 3 month Sterling LIBOR plus 1% per annum, payable six monthly in arrears,
subject to a high water mark. The aggregate of the Company's management fee and
performance fee are subject to a cap of 4.99% of net assets in any financial
period (with any performance fee in excess of this cap capable of being earned
in subsequent periods). The performance fee will be charged 100% to capital, in
accordance with the Board's expectation of how any outperformance will be
generated. In the six months ended 31st December 2008, New Star Asset
Management Limited received investment management fees of £88,000 (2007: £
139,000) from the Company. Either party may terminate the appointment of the
Manager by giving not less than three months written notice to expire on the
last day of any calendar month.
The Company's investments include funds managed by subsidiaries of New Star
Asset Management Group PLC ("New Star Group").
On 30th January 2009 the New Star Group announced the terms of a recommended
acquisition of the New Star Group by Henderson Group PLC ("Henderson"). It is
anticipated that the acquisition, which is subject to the approval of the
shareholders of both the New Star Group and Henderson, will be completed by the
end of March 2009. The combined group is expected to be the fifth largest UK
retail fund manager with in excess of £15 billion under management.
Auditors
The half-yearly financial report has been reviewed, but not audited, by Ernst &
Young pursuant to the Auditing Practices Board guidance on the Review of
Interim Financial Information.
Responsibility Statement
We confirm that to the best of our knowledge:
* The condensed set of financial statements contained within the half yearly
report to 31st December 2008 has been prepared in accordance with
International Financial Reporting Standards.
* The interim management report includes a fair review of important events
that have occurred during the first six months of the financial year and
their impact on financial statements
* The interim management report includes a description of the principal risks
and uncertainties for the remaining six months of the year.
* The interim management report includes a fair review of the information
concerning related party transactions as required by DTR 4.2.8R of the
FSA's Disclosure and Transparency Rules.
New Star Asset Management Limited
26th February 2009
INDEPENDENT REVIEW REPORT
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31st
December 2008 which comprises the consolidated income statement, consolidated
statement of changes in equity, consolidated balance sheet, consolidated cash
flow statement and related explanatory notes 1 to 10. We have read the other
information contained in the half yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies with
the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained
in ISRE 2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company, for our work, for this
report, or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and Transparency
Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31st December 2008 is not prepared,
in all material respects, in accordance with International Accounting Standard
34 as adopted by the European Union and the Disclosure and Transparency Rules
of the United Kingdom's Financial Services Authority.
Ernst & Young LLP
London
26th February 2009
SCHEDULE OF TOP TWENTY INVESTMENTS
At 31st December 2008
Schedule of investments Activity Value % of
£'000 portfolio
New Star UK Alpha Fund Investment fund 5,418 11.18
Blackrock Gold & General Income Fund Investment fund 3,749 7.74
New Star Euro High Yield Fund Investment fund 3,607 7.45
Natixis Loomis Sayles Multisector Income Investment fund 3,255 6.72
Fund
Lyxor Gold Bullion Securities Investment fund 3,253 6.72
Investec Africa Fund Investment fund 3,179 6.57
New Star European Growth Fund Investment fund 3,070 6.34
Skandia UK Strategic Best Ideas Fund Investment fund 2,694 5.56
Synergy Fund Limited B1 Investment fund 1,959 4.04
Global Property Fund Investment fund 1,921 3.97
New Star Global Fund - British Lion Investment fund 1,578 3.26
Portfolio
iShares FTSE / Xinhua China 25 Investment fund 1,547 3.19
New Star Heart of Africa Fund Investment fund 1,394 2.88
Occam Umbrella Asia Focus Fund Investment fund 1,389 2.87
New Star International Property Fund Investment fund 1,278 2.64
New Star Global Fund - China Investment fund 1,004 2.07
The Sierra Investment Fund Investment fund 1,000 2.06
Corndon Limited Investment fund 1,000 2.06
New Star Global Fund - UK Smaller Investment fund 990 2.04
Companies Portfolio
New Star Private Equity Investment Trust Investment company 884 1.82
44,169 91.18
Balance held in 15 investments 4,271 8.82
Total investments 48,440 100.0
All investments, listed above, are unlisted with the exception of New Star
Private Equity Investment Trust and iShares FTSE / Xinhua China 25.
CONSOLIDATED INCOME STATEMENT
for the six months to 31st December 2008
Six months ended
31st December 2008
(unaudited)
Notes Revenue Capital Total
return return £'000
£'000 £'000
INCOME
Investment income 918 - 918
Other operating income 163 - 163
Total income 2 1,081 - 1,081
GAINS AND LOSSES ON
INVESTMENTS
Losses on investments at - (34,928) (34,928)
fair value through profit or
loss
Gains on index future - 25 25
contracts
Losses on forward currency - (302) (302)
contracts
Other exchange gains / - 285 (23)
(losses)
1,081 (34,920) (33,839)
EXPENSES
Investment Management fees 3 (88) - (88)
VAT refund 4 170 - 170
Other expenses (103) (1) (103)
LOSS BEFORE FINANCE COSTS 1,060 (34,921) (33,861)
AND TAX
Finance costs (71) - (71)
LOSS BEFORE TAX 989 (34,921) (33,932)
Tax (50) (216) (266)
LOSS FOR THE PERIOD 805 (34,921) (34,116)
EARNINGS PER SHARE
Ordinary shares (pence) 5 1.13 (49.17) (48.04)
The total column of this statement represents the Group's Income Statement,
prepared in accordance with IFRS. The supplementary revenue return and capital
return columns are both prepared under guidance published by the Association of
Investment Companies. All items in the above statement derive from continuing
operations. No operations were acquired or discontinued during the period.
All income is attributable to the equity holders of the parent company. There
are no minority interests.
CONSOLIDATED INCOME STATEMENT
for the six months to 31st December 2007 and the year ended 30th June 2008
Six months ended Year ended
31st December 2007 30th June 2008
(unaudited) (audited)
Notes Revenue Capital Total Revenue Capital Total
return return
£'000 return return £'000
£'000 £'000
£'000 £'000
INCOME
Investment income 701 - 701 1,029 - 1,029
Other operating 108 - 108 376 - 376
income
Total income 2 809 - 809 1,405 - 1,405
GAINS AND INVESTMENT
LOSSES ON
INVESTMENTS
Losses on - (16,431) (16,431) - (27,203) (27,203)
investments at fair
value through profit
or loss
Gains on index - - - - - -
future contracts
Losses on forward - (23) (23) - (24) (24)
currency contracts
Other exchange gains - (23) (23) - 191 191
/ (losses)
809 (16,477) (15,668) 1,405 (27,036) (25,631)
EXPENSES
Investment 3 (139) - (139) (263) - (263)
Management fees
VAT refund 4 - - - - - -
Other expenses (121) - (121) (241) (1) (242)
LOSS BEFORE FINANCE 549 (16,477) (15,928) 901 (27,037) (26,136)
COSTS AND TAX
Finance costs (60) - (60) (60) - (60)
LOSS BEFORE TAX 489 (16,477) (15,988) 841 (27,037) (26,196)
Tax (50) (216) (266) (170) (208) (378)
LOSS FOR THE PERIOD 439 (16,693) (16,254) 671 (27,245) (26,574)
EARNINGS PER SHARE
Ordinary shares 5 0.62 (23.50) (22.88) 0.94 (38.36) (37.42)
(pence)
The total column of this statement represents the Group's Income Statement,
prepared in accordance with IFRS. The supplementary revenue return and capital
return columns are both prepared under guidance published by the Association of
Investment Companies. All items in the above statement derive from continuing
operations. No operations were acquired or discontinued during the period.
All income is attributable to the equity holders of the parent company. There
are no minority interests.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31stDecember 2008
(Unaudited)
Share Share Special Retained Total
Capital Premium Reserve Earnings £'000
£'000 £'000 £'000 £'000
At 30th June 2008 710 21,573 56,908 17,214 96,405
Loss for the period - - - (34,116) (34,116)
Dividends paid - - - (518) (518)
At 31st December 2008 710 21,573 56,908 (17,420) 61,771
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31stDecember 2007
(Unaudited)
Share Share Special Retained Total
Capital Premium Reserve Earnings £'000
£'000 £'000 £'000 £'000
At 30th June 2007 710 21,573 56,908 44,498 123,689
Loss for the period - - - (16,254) (16,254)
Dividends paid - - - (710) (710)
At 31st December 2007 710 21,573 56,908 27,534 106,725
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the yearended 30th June 2008
(Audited)
Share Share Special Retained Total
Capital Premium Reserve Earnings £'000
£'000 £'000 £'000 £'000
At 30th June 2007 710 21,573 56,908 44,498 123,689
Loss for the year - - - (26,574) (26,574)
Dividends paid - - - (710) (710)
At 30th June 2008 710 21,573 56,908 17,214 96,405
CONSOLIDATED BALANCE SHEET
at 31st December 2008
31st December 31st December 30th June
2008 2007 2008
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
NON-CURRENT ASSETS
Investments at fair value 48,440 96,264 85,568
through
profit or loss
CURRENT ASSETS
Other receivables 8,744 77 118
Cash and cash equivalents 6,728 11,434 11,834
15,472 11,511 11,952
TOTAL ASSETS 63,912 107,775 124,443
Other payables (2,141) (1,050) (1,115)
NET ASSETS 61,771 106,725 96,405
CAPITAL AND RESERVES
Called-up share capital 710 710 710
Share premium 21,573 21,573 21,573
Special reserve 56,908 56,908 56,908
Retained earnings 6 (17,420) 27,534 17,214
TOTAL EQUITY 61,771 106,725 96,405
NET ASSET VALUE PER 7 86.97 150.27 135.74
ORDINARY SHARE (PENCE)
CONSOLIDATED CASH FLOW STATEMENT
for the sixmonths ended 31st December 2008
Notes Six months Six months Year
ended ended
ended
31st December 31st December
30th June
2008 2007
2008
(unaudited) (unaudited)
(audited)
£'000 £'000
CASH FLOWS FROM OPERATING
ACTIVITIES
Loss before finance costs and (33,861) (15,928) (26,136)
tax
Adjustments for:
Losses on investments 37,128 21,904 32,600
Operating cash flows before 3,267 5,976 6,464
movements in working capital
(Increase) /decrease in (8,635) 1,320 1,324
receivables
Increase in payables 1,026 87 514
Net cash from operating (4,342) 7,383 8,302
activities
before income taxes
Income taxes paid (175) (55) (221)
NET CASH FROM OPERATING 8 (4,517) 7,328 8,081
ACTIVITIES
CASH FLOWS FROM FINANCING
ACTIVITIES
Dividends paid (518) (710) (710)
Interest paid (71) (67) (60)
NET CASH USED IN FINANCING (589) (777) (770)
ACTIVITIES
NET (DECREASE) / INCREASE IN (5,106) 6,551 7,311
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at 11,834 4,883 4,523
beginning of period
CASH AND CASH EQUIVALENTS AT 6,728 11,434 11,834
END OF PERIOD
NOTES TO THE INTERIM FINANCIAL REPORT
for the six months ended 31 December 2008
1. Accounting Policies
The consolidated Interim Financial Report above comprise the unaudited
financial results of the Company and its subsidiary, JIT Securities Limited,
for the six months to 31st December 2008, and do not constitute statutory
accounts under the Companies Act 1985. Full statutory accounts for the year to
30th June 2008 included an unqualified audit report, did not contain any
statements under section 237(2) or section 237(3) of the Companies Act 1985 and
have been filed with the Registrar of Companies.
The interim financial report has been prepared in compliance with International
Financial Reporting Standards (IFRS) adopted by the International Financial
Reporting Interpretations Committee of the IASB (IFRIC). And are presented in
pounds sterling, as this is the principal currency in which the Group's
transactions are undertaken.
The same accounting policies have been followed in the interim financial report
as compared to the accounts for the year ended 30th June 2008, which are
prepared in accordance with IFRSs as adopted by the European Union.
2. Total Income
For the six For the six For the year
months ended months ended ended
31st December 31st December
30th June
2008 2007
2008
£'000 £'000 £'000
Income from listed
investments
UK net dividend income 308 391 460
UK unfranked investment 555 310 569
income
Fixed interest income 27 - -
Interest on convertible 28 - 2
loan stock
918 701 1,029
Other Operating Income
Bank interest receivable 155 108 374
HMRC interest received 8 - -
163 108 376
Total Income Comprises
Dividends 918 701 1,031
Other income 163 108 374
1,081 809 1,405
3. Investment management fees
For the six For the six 30th June
months ended months ended
31st December 31st December 2008
2008 2007
£'000 £'000 £'000
Investment management fee 88 139 263
Performance fee - - -
88 139 263
The management fee is payable quarterly in arrears and is calculated at a rate
of 3/16% per quarter of the total assets of the Company and its subsidiaries
after the deduction of the value of any New Star managed investments (as
defined in the management agreement). With effect from 1st September 2008, the
Manager has also been entitled to a performance fee of 15% of the growth in net
assets over a hurdle of 3 month Sterling LIBOR plus 1% per annum, payable six
monthly in arrears, subject to a high watermark. The aggregate of the Company'
management fee and any performance fee are subject to a cap of 4.99% of net
assets in any financial year (with any performance fee in excess of this cap
capable of being earned in subsequent periods). The performance fee will be
charged 100% to capital, in accordance with the Board's expectation of how any
outperformance will be generated.
4. VAT recoverable
The Association of Investment Companies and JPMorgan Claverhouse Investment
Trust lodged a join appeal in 2004 for the payment of management and
performance fees ("fees") by investment trusts to be treated as exempt from
VAT. In June 2007 the European Court of Justice ("ECJ") found in favour of the
appellants, declaring that investment trusts should be treated as special
investment funds and thus exempt from VAT on fees. Her Majesty's Revenue and
Customs ("HMRC") has announced that it will not appeal against this decision,
enabling the Manager (New Star Asset Management Limited) and its former manager
(Jupiter Asset Management Limited) to reclaim a proportion of VAT paid on
behalf of the Company to HMRC.
As result of claims lodged with HMRC, the Company has to date received a refund
of £30,000 from the former manager (Jupiter Asset Management Limited) in
respect of the period 1st January 2001 to 31st March 2001 and this sum has been
recognised in these accounts. The Manager is negotiating with HMRC regarding a
refund of VAT paid on fees in the period 1st April 2001 to 30th June 2007.
Taking into account HMRC's acceptance of the ECJ decision and the status of
negotiations between HMRC and the Manager, the Directors believe it is
virtually certain that the Company will receive a refund from the Manager of £
140,000 in respect of the period 1st April 2001 to 30th June 2007 and this sum
has been recognised in these accounts.
5. Return per ordinary share
31st December 31st December 30th June
2008 2007 2008
£'000 £'000 £'000
Revenue return 805 439 671
Capital return (34,921) (16,693) (27,245)
Total return (34,116) (16,254) (26,574)
Weighted average number 71,023,695 71,023,695 71,023,695
of shares in issue
Revenue return 1.13p 0.62p 0.94p
Capital return (49.17)p (23.50)p (38.36)p
Total return (48.04)p (22.88)p (37.42)p
6. Retained earnings
The components of retained earnings are set out below:
31st December 31st December 30th June
2008 2007 2008
£'000 £'000 £'000
Gains on investments sold 498 3,046 4,269
Investment holding gains (19,237) 23,688 11,913
Revenue reserve 1,319 800 1,032
(17,420) 27,534 17,214
7. Net asset value per ordinary share
31st December 31st December 30th June
2008 2007 2008
£'000 £'000 £'000
Net assets attributable to 61,771 106,725 96,405
ordinary shareholders
Ordinary shares in issue at 71,023,695 71,023,695 71,023,695
end of period
Net asset value per 86.97p 150.27p 135.74p
ordinary share
8. Notes to the cash flow statement
Cash and cash equivalents comprise cash at bank and other short-term highly
liquid investments with a maturity of three months or less.
Cash flows from operating activities
Included within the cash flows from operating activities are the cash flows
associated with the purchases and sales of investments, as these are not
considered to be investment activities, given the purpose of the Company. Cash
flows from operating activities can therefore be analysed as follows:
31st December 31st December 30th June
2008 2007 2008
£'000 £'000 £'000
Proceeds on disposal of 41,202 19,451 23,611
fair value through profit
and loss investments
Purchases of fair value (46,252) (13,977) (17,054)
through profit and loss
investments
Net cash flows from (5,050) 5,474 6,557
investment transactions
Cash flows from other 533 1,854 1,524
operating activities
Net cash from operating (4,517) 7,328 8,081
activities
9. Related party transactions
The Company's investments are managed by New Star Asset Management Limited.
During the period, Mr Duffield was chairman and a shareholder of New Star Asset
Management Group PLC, the holding company of New Star Asset Management Limited.
On 1st September 2008 the Company entered into a new management agreement with
New Star Asset Management Limited. Details of the management fee payable to New
Star Asset Management Limited may be found in Note 3 above. The Company's
investments include funds managed by subsidiaries of New Star Asset Management
Group PLC. There were no other related party transactions during the period
that materially affected the financial position or performance of the Group.
10. Comparative information
The financial information contained in the half year report to 31st December
2008 do not constitute statutory accounts under the Companies Act 1985. The
financial information for the six months to 31st December 2008 and 2007 has not
been audited.
The information for the year ended 30th June 2008 has been extracted from the
latest published audited financial statements. The audited financial statements
for the year ended 30th June 2008 have been filed with the Registrar of
Companies. The report of the auditors on those accounts was unqualified and did
not contain any statements under section 237(2) or section 237(3) of the
Companies Act 1985.
11. Website
The Company's accounts for the six months ended 31st December 2008 may be found
at:
www.newstaram.com/alternative-investments/closed-end-funds
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