Interim Results
NEW STAR INVESTMENT TRUST PLC
PRELIMINARY ANNOUNCEMENT OF UNAUDITED INTERIM RESULTS
The Directors announce the unaudited statement of consolidated results for the
six months ended 31st December 2006 as follows:
FINANCIAL HIGHLIGHTS
31st December 2006 30th June 2006 % change
PERFORMANCE
Net assets (£'000) 112,473 104,113 8.0
Net asset value per Ordinary 158.36p 146.59p 8.0
share
Mid-market price per Ordinary 134.50p 144.25p (6.8)
share
Discount of price to net asset 15.1% 1.6% -
value
FTSE World Index 122.17 114.10 7.1
FTSE All-Share Index 3,221.42 2,967.58 8.6
Six months ended Six months ended
31st December 2005
31st December 2006
REVENUE
Return per Ordinary share 0.60p 0.31p
Dividend per Ordinary share - -
TOTAL RETURN
Total assets total return 8.0% 18.8%
FTSE All-Share total return 10.0% 12.8%
CHAIRMAN'S STATEMENT
Your Company's total assets rose 8.0% to £112.5 million during the six months
to 31st December 2006. This compares with an 8.6% rise in the FTSE All-Share
Index. This rise took the net asset value per Ordinary share to 158.4p, which
compares with the launch price of 100p in May 2000. The FTSE All-Share Index
over the same period rose by 8.3%.
Net revenue before tax for the period was £461,000. In common with previous
years, your directors are not recommending the payment of an interim dividend
to shareholders.
Global equities grew solidly during the period under review, with the FTSE
World Index returning 7.1% in sterling terms. There were four main factors
behind this strength. First, having reached a peak over the summer, oil prices
fell 16.1% over the half year. Secondly, after 17 consecutive rises, the US
Federal Reserve said it would peg its Fed Funds Target Rate in August and it
remained on hold for the rest of 2006. This pause reflected expectations that
US economic growth would slow down and inflationary pressures would ease and
meant investors took rate rises in the eurozone and in the UK in their stride.
Thirdly, corporate profit growth was buoyant in response to healthy economic
growth, particularly in Continental Europe and the Far East. Lastly, asset
prices benefited from the "carry trade", involving investors, such as hedge
funds, borrowing in low-yielding weak currencies such as the yen and investing
in higher-yielding assets.
Within the Group of Seven industrial nations, the eurozone countries
collectively made the biggest contribution to global market returns after the
US, with Germany up 13.3%, Italy up 10.7% and France up 9.6%. While the UK
marginally outperformed the average, the US and Canada lagged, rising 6.3% and
2.5% respectively, while Japan fell 1.4%.
Among the sectors, financials gained 9.2%, making the biggest sectoral
contribution to global returns. Other strong sectors included
telecommunications services, up 15.8%, utilities, up 15.2%, and consumer
discretionary stocks, up 9.8%. By contrast, energy fell 0.8%, healthcare gained
2.4% and industrials gained 4.3%.
Your Company ended the period under review with 53.8% of its invested assets in
retail funds, 19.4% in hedge funds and the remaining 26.8% in its holding in
New Star Asset Management, investment trust shares and equities.
In recent weeks, economic prospects have become more mixed, with monetary
conditions suggesting the US economy would experience a further economic growth
slowdown in 2007. The liquidity environment for financial markets had also
become less benign, with analysts suggesting that the bond market in particular
could be affected by central bank monetary tightening. Within this mixed
picture, corporate spending trends, after a number of years of weak investment,
may be more buoyant than consumer trends, suggesting that sector rotation away
from consumer-related sectors and into sectors that benefit from industrial
spending may be a significant feature of 2007.
Your Directors welcome Mr Marcus Gregson to your Board. Mr Gregson was formerly
head of HSBC Private Bank (UK) Limited.
The unaudited net asset value at 31st January 2007 was 162.0p per Ordinary
share.
James Roe
Chairman
28th February 2007
CONSOLIDATED INCOME STATEMENT
for the six months to 31st December 2006
(unaudited)
Six months ended Six months ended
31st December 2006 31st December 2005
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
INVESTMENT INCOME 704 - 704 408 - 408
Other operating income 15 - 15 58 - 58
Total income 719 - 719 466 - 466
GAINS AND LOSSES ON
INVESTMENTS
Gains on fair value - 7,522 7,522 - 15,168 15,168
through profit or loss
assets
Gains on index futures - - - - 135 135
contracts
Gains/(losses on forward - 478 478 - (417) (417)
currency purchases
Other exchange gains - 8 8 - 6 6
719 8,008 8,727 466 14,892 15,358
EXPENSES
Management fees (133) - (133) (92) - (92)
Other expenses (104) - (104) (124) - (124)
PROFIT BEFORE FINANCE 482 8,008 8,490 250 14,892 15,142
COSTS AND TAX
Finance costs (21) - (21) - - -
Profit before tax 461 8,008 8,469 250 14,892 15,142
Tax (38) - (38) (33) - (33)
PROFIT FOR THE PERIOD 423 8,008 8,431 217 14,892 15,109
EARNINGS PER SHARE
From continuing 0.60 11.27 11.87 0.31 20.96 21.27
operations Ordinary
shares (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 31st December 2006
Share Share Special Retained Total
capital premium reserve earnings £'000
£'000 £'000 £'000 £'000
AT 30th JUNE 2006 710 21,573 56,908 24,922 104,113
Profit for the period - - - 8,431 8,431
Dividends paid - - - (71) (71)
AT 31st DECEMBER 2006 710 21,573 56,908 33,282 112,473
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31st December 2005
Share Share Special Retained Total
capital premium reserve earnings £'000
£'000 £'000 £'000 £'000
AT 30th JUNE 2005 710 21,573 56,908 1,371 80,562
Profit for the period - - - 15,109 15,109
Dividends paid - - - (71) (71)
AT 31st DECEMBER 2005 710 21,573 56,908 16,409 95,600
CONSOLIDATED BALANCE SHEET
at 31st December 2006
31st December 31st December 30th June
2006 2005 2006
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
NON-CURRENT ASSETS
Investments at fair value 110,976 94,206 103,364
through
profit or loss
CURRENT ASSETS
Other receivables 1,110 9 707
Cash and cash equivalents 571 1,606 229
1,681 1,615 936
TOTAL ASSETS 112,657 95,821 104,300
CURRENT LIABILITIES
Other payables (184) (221) (187)
NET ASSETS 112,473 95,600 104,113
EQUITY ATTRIBUTABLE TO
EQUITY HOLDERS
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 2 33,282 16,409 24,922
TOTAL EQUITY 112,473 95,600 104,113
NET ASSET VALUE PER 158.36 134.60 146.59
ORDINARY SHARE (PENCE)
CONSOLIDATED CASH FLOW STATEMENT
for the six months to 31st December 2006
(unaudited)
Six months Six months
ended ended
31st December 31st December
2006 2005
Notes £'000 £'000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax 8,490 15,142
Adjustments for:
Gains on investments (7,612) (16,155)
Operating cash flows before movements in 878 (1,013)
working capital
Increase/(decrease) in receivables (403) 1,187
Decrease in payables (19) (392)
Net cash from operating activities 456 (218)
before income
taxes
Income taxes paid (38) (33)
NET CASH FROM OPERATING ACTIVITIES 3 418 (251)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (71) (71)
Interest paid (5) -
NET CASH USED IN FINANCING ACTIVITIES (76) (71)
NET INCREASE/(DECREASE) IN CASH 342 (322)
AND CASH EQUIVALENTS
Cash and cash equivalents at beginning 229 1,928
of period
CASH AND CASH EQUIVALENTS AT END OF 571 1,606
PERIOD
NOTES TO THE ACCOUNTS
for the six months ended 31st December 2006
1. Accounting Policies
The consolidated accounts on pages 8 to 11 comprise the unaudited financial
results of the Group for the six months to 31st December 2006, and do not
constitute statutory accounts under section 240 of the Companies Act 1985. Full
statutory accounts for the year to 30th June 2006 included an unqualified audit
report and were filed with the Registrar of Companies on 21st November 2006.
The auditors report contained no statement under section 237(2) or 237(3) of
the Companies Act 1985.
The interim financial report has been prepared in compliance with IAS34:
Interim Financial Reporting.
The same accounting policies have been followed in the interim financial report
as compared to the accounts for the year ended 30th June 2006.
2. Retained earnings and capital reserve
The components of retained earnings are set out below:
31st December 31st December 30th June
2006 2005 2006
£'000 £'000 £'000
Capital reserve - realised (10,868) (13,267) (11,595)
Capital reserve - unrealised 43,521 29,232 36,240
Revenue reserve 629 444 277
33,282 16,409 24,922
3. 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.
Purchases and sales of investments are considered to be operating activities of
the company, given its purpose, rather than investing activities. However, the
cash flows associated with these activities are presented below:
Six months ended Six months ended
31st December 31st December 2005
2006
£'000 £'000
Proceeds on disposal of fair value through 4,248 9,117
profit and loss investments
Purchases of fair value through profit and (5,441) (9,375)
loss investments
(1,193) (258)
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