Interim Results
Finsbury Technology Trust PLC
12 July 2006
For immediate release
12 July 2006
FINSBURY TECHNOLOGY TRUST PLC
Preliminary results for the six months ended 31 May 2006
Finsbury Technology Trust PLC today announces preliminary results for the six
months ended 31 May 2006.
31 May 2006 30 November % Change
2005
Shareholders' Funds * £58.0m £62.0m -6.5
Net Asset Value per Ordinary share 232.4p 237.2p -2.0
Share price 210.5p 220.3p -4.4
Discount 9.4% 7.1% -
Dow Jones World Technology Index
(sterling adjusted, total return) 215.8 235.4 -8.3
* The cost of share buy-backs in the six months ended 31 May 2006 reduced
shareholders' funds by £2.6m.
The Company has not declared an interim dividend (2005: nil).
For and on behalf of
Close Finsbury Asset Management Limited - Company Secretary
12 July 2006
- ENDS -
The following are attached:
* Chairman's Statement * Balance Sheet
* Income Statement * Cash Flow Statement
* Reconciliation of Movements in * Notes to the interim financial
Shareholders' Funds statements
For further information please contact:
David Quysner, Chairman 020 7534 1500
Alastair Smith, Close Finsbury Asset Management Ltd 020 7426 6240
Mark Pope, Close Finsbury Asset Management Ltd 020 7426 6294
Michael Bourne, Reabourne Technology Investment Management Ltd 020 7422 7801
Eleanor Mitchell/Jo Stonier, Quill Communications 020 7758 2230
Chairman's Statement
Performance
During the six months ended 31 May 2006 the Company's net asset value per share
fell from 237.2p to 232.4p, a decline of 2.0 per cent. This compares with a fall
of 8.3 per cent. in the Company's benchmark, the Dow Jones World Technology
Index, which is measured in sterling terms on a total return basis. The
Company's share price fell by 4.4 per cent. from 220.3p to 210.5p but also
outperformed the benchmark. There was a slight widening of the discount of share
price to net asset value per share over the period from 7.1 per cent. to 9.4 per
cent.
Results and Dividend
There was a loss of 4.5p per share for the six months ending 31 May 2006
compared to a return of 4.0p per share for the corresponding period last year.
This was made up of a revenue loss of 2.1p per share (2005: loss of 1.7p per
share) and a capital loss of 2.4p per share (2005: return of 5.7p per share).
The Company's investments typically provide a very low yield and accordingly no
dividend is payable in respect of the six months ended 31 May 2006 (2005: Nil).
The Board
As I mentioned in my statement in the latest annual report, Dr David Potter, who
served as a director from the Company's inception in 1995, did not stand for
re-election at the Annual General Meeting in April 2006. The Board is currently
reviewing its composition but it is expected that a new appointment will be made
during the course of this year.
Discount Management Policy and Buy-Back Authority
As part of proposals put to shareholders in December 2005, the Board adopted a
discount management policy under which the Company will buy back shares, for
cancellation, at prices representing a discount of not less than 7.0 per cent.
to net asset value per share, where there is demand in the market for it to do
so. Shareholders will note that the discount may exceed 7.0 per cent., as at the
half-year end, but that there may be no unmet demand from selling shareholders
at this level. Under the discount management policy a total of 1,445,000 shares
have been purchased for cancellation since the year end, at an average discount
to net asset value per share of 8.3 per cent. and at a total cost of £3.2
million.
Changes in Accounting Policies - UK GAAP
The Company's financial statements are prepared in accordance with UK generally
accepted accounting principles ("GAAP"), the rules of which have recently
changed. Consequently, the Company has changed its accounting policy for the
valuation of listed investments, and these are now stated at 'bid' rather than
the previous 'mid-market' prices. Further details of these changes and the
associated impact on the results of the Company are referred to in the attached
notes to the financial statements.
Outlook
In recent weeks there has been a significant correction in world markets and
this has inevitably affected the Company's portfolio. However, the Board
believes that the medium to long-term outlook for technology investment remains
positive and that the sector can generate attractive returns for the longer-term
investor.
David Quysner
Chairman
12 July 2006
Income Statement
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
31 May 2006 31 May 2005 30 November
2005
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Return Return £'000 Return Return £'000 Return Return £'000
£'000 £'000 £'000 £'000 £'000 £'000
----------- ------- ------- ------- ------- ------ ------- ------- ------- -------
(Losses)/
gains
on
investments
held at fair
value
through
profit or
loss - (544) (544) - 1,615 1,615 - 5,543 5,543
Exchange
losses on
currency
balances - (75) (75) - (22) (22) - (147) (147)
Income (note
2) 61 - 61 105 - 105 326 - 326
Investment
management
fees (note
3) (320) - (320) (327) - (327) (658) - (658)
Other
expenses (262) - (262) (221) - (221) (851) - (851)
----------- ------- ------- ------- ------- ------ ------- ------- ------- -------
Net
(loss)/
return
before
finance
costs and
taxation (521) (619) (1,140) (443) 1,593 1,150 (1,183) 5,396 4,213
Interest
payable and
similar
charges (12) - (12) (22) - (22) (39) - (39)
----------- ------- ------- ------- ------- ------ ------- ------- ------- -------
(Loss)/
return
on ordinary
activities
before
taxation (533) (619) (1,152) (465) 1,593 1,128 (1,222) 5,396 4,174
Taxation
charge on
ordinary
activities - - - (8) - (8) (28) - (28)
----------- ------- ------- ------- ------- ------ ------- ------- ------- -------
Transfer
(from)/to
reserves (533) (619) (1,152) (473) 1,593 1,120 (1,250) 5,396 4,146
----------- ------- ------- ------- ------- ------ ------- ------- ------- -------
(Loss)/
return
per Ordinary
share -
pence
(note 4) (2.1p) (2.4p) (4.5p) (1.7p) 5.7p 4.0p (4.5p) 19.6p 15.1p
----------- ------- ------- ------- ------- ------ ------- ------- ------- -------
The total columns of this statement represent the Company's Income statement.
The revenue return and capital return columns are supplementary to this and are
prepared under guidance published by the Association of Investment Trust
Companies.
Reconciliation of Movements in Shareholders' Funds
For the six months ended 31 May 2006
Called up Share Capital
share premium redemption Capital Revenue
capital account reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
----------------- -------- -------- --------- -------- -------- -------
As at 30
November 2005 6,539 23,488 365 40,444 (8,803) 62,033
Adjustment to
bid valuations - - - (194) - (194)
----------------- -------- -------- --------- -------- -------- -------
Total as at 30
November 2005
(as adjusted) 6,539 23,488 365 40,250 (8,803) 61,839
----------------- -------- -------- --------- -------- -------- -------
Net loss from
ordinary
activities - - - (619) (533) (1,152)
Shares
purchased and
cancelled (294) - 294 (2,642) - (2,642)
----------------- -------- -------- --------- -------- -------- -------
As at 31 May
2006 6,245 23,488 659 36,989 (9,336) 58,045
----------------- -------- -------- --------- -------- -------- -------
For the year ended 30 November 2005
Called up Share Capital
share premium redemption Capital Revenue
capital account reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
----------------- -------- -------- --------- -------- -------- -------
As at 30
November 2004 6,904 23,488 - 38,214 (7,553) 61,053
Net
return/(loss)
from ordinary
activities - - - 5,396 (1,250) 4,146
Shares
purchased and
cancelled (365) - 365 (3,166) - (3,166)
----------------- -------- -------- --------- -------- -------- -------
At 30 November
2005 6,539 23,488 365 40,444 (8,803) 62,033
----------------- -------- -------- --------- -------- -------- -------
For the six months ended 31 May 2005
Called up Share Capital
share premium redemption Capital Revenue
capital account reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
----------------- -------- -------- --------- -------- -------- ------
As at 30
November 2004 6,904 23,488 - 38,214 (7,553) 61,053
Net
return/(loss)
from ordinary
activities - - - 1,593 (473) 1,120
----------------- -------- -------- --------- -------- -------- -------
At 31 May 2005 6,904 23,488 - 39,807 (8,026) 62,173
----------------- -------- -------- --------- -------- -------- -------
Balance Sheet
as at 31 May 2006
(Unaudited) (Unaudited) (Audited)
31 May 31 May 30 November
2006 2005 2005
£'000 £'000 £'000
-------------------- ----------- ------------ -------------
Fixed assets
Investments held at fair value
through profit or loss 57,986 62,266 61,743
-------------------- ----------- ------------ -------------
Current assets
Debtors 86 2,398 3,080
Cash at bank 165 - 2,432
-------------------- ----------- ------------ -------------
251 2,398 5,512
Creditors
Amounts falling due within one year (192) (2,491) (5,222)
-------------------- ----------- ------------ -------------
Net current assets/(liabilities) 59 (93) 290
-------------------- ----------- ------------ -------------
Net assets 58,045 62,173 62,033
-------------------- ----------- ------------ -------------
Capital and reserves
Called up share capital 6,245 6,904 6,539
Share premium account 23,488 23,488 23,488
Capital redemption reserve 659 - 365
Capital reserve - realised 47,242 43,934 40,053
Capital reserve - unrealised (10,253) (4,127) 391
Revenue reserve (9,336) (8,026) (8,803)
-------------------- ----------- ------------ -------------
Total Equity Shareholders' funds 58,045 62,173 62,033
-------------------- ----------- ------------ -------------
Net asset value per Ordinary share
(note 5) 232.4p 225.1p 237.2p
-------------------- ----------- ------------ -------------
Cash Flow Statement
for the six months ended 31 May 2006
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
31 May 31 May 30 November
2006 2005 2005
£'000 £'000 £'000
--------------------- ------------- ------------- -------------
Net cash outflow from
operating activities (1,081) (423) (779)
Servicing of finance
Bank overdraft and loan
interest paid (12) (19) (39)
Taxation
Tax recovered 1 9 8
Financial investment
Purchases of investments (18,079) (26,729) (47,362)
Sales of investments 19,636 24,270 53,180
--------------------- ------------- ------------- -------------
Net cash inflow/(outflow)
from financial investment 1,557 (2,459) 5,818
Financing
Purchase of Ordinary shares (2,642) - (3,166)
Drawdown of loans - 2,000 -
--------------------- ------------- ------------- -------------
Net cash (outflow)/inflow
from financing (2,642) 2,000 (3,166)
--------------------- ------------- ------------- -------------
(Decrease)/increase in cash
during the period (2,177) (892) 1,842
--------------------- ------------- ------------- -------------
Reconciliation of net cash flow to
movement in net (debt)/funds
(Decrease)/increase in cash
as above (2,177) (892) 1,842
Cash inflow from financing - (2,000) -
Exchange movements (75) (22) (147)
--------------------- ------------- ------------- -------------
Movement in net
(debt)/funds (2,252) (2,914) 1,695
Net funds at start of
period 2,417 722 722
--------------------- ------------- ------------- -------------
Net funds/(debt) at end of
period 165 (2,192) 2,417
--------------------- ------------- ------------- -------------
Notes to the interim financial statements
1. Accounting Policies
Changes in presentation
The company has adopted the provisions of the Revised SORP (statement of
recommended practice, dated December 2005) and revised UK Accounting
Standards, which have resulted in some changes to the presentation of the
Company's accounts.
The Statement of Total Return is now called the Income Statement. Dividends,
if they were to become payable to equity shareholders, will no longer be
reflected in the Income Statement, although they will continue to be shown in
the Reconciliation of Movements in Shareholders' Funds which is now presented
as a primary statement.
Changes in accounting policies
The company has changed its accounting policy for the valuation of listed
investments, in accordance with the provisions of FRS 26 - Financial
instruments: Recognition and Measurement ("FRS 26"). This change in policy and
the associated impact on the results of the Company are referred to below. As
permitted by FRS 26, comparatives have not been restated for the change in
basis of valuation from mid to bid and therefore listed investments shown at
31 May 2005 and 30 November 2005 are stated at middle market prices.
Valuation of fixed asset investments
Following the introduction of FRS 26, listed investments have been designated
by the Board as held at fair value through profit or loss and accordingly are
valued at fair value, deemed to be bid market prices. The market value of
listed investments for previous periods, have not been restated.
The adoption of bid market prices at 1 December 2005 decreased the value of
investments by £194,000. The effect of this change in accounting policy is to
decrease the value of investments at 31 May 2006 by £157,000 and increase the
net return on ordinary activities after taxation for the period then ended by
£37,000.
Changes in the fair value of investments held at fair value through profit or
loss and gains and losses on disposal are recognised in the Income Statement
as "Gains or losses on investments held at fair value through profit or loss".
Also included within this caption are transaction costs in relation to the
purchase or sale of investments, including the difference between the purchase
price of an investment and its bid price at the date of purchase. The
transaction costs incurred on the acquisition and disposal of investments are
included within the Income Statement and allocated to the capital reserve
amounted to £77,000 for the six months ended 31 May 2006 (six months ended 31
May 2005: £120,000; year ended 30 November 2005: £270,000). All purchases and
sales are accounted for on a trade date basis.
Notes to the interim financial statements (continued)
In respect of unquoted investments, fair value is established by using
valuation techniques, which may include using recent arm's length market
transactions between knowledgeable, willing parties. Where there is a
valuation technique commonly used by market participants to price an
instrument, which has been demonstrated to provide reliable estimates of
prices obtained in actual market transactions, that technique is utilised.
Where the fair value cannot reliably be measured the investment will be
carried at the previous reporting date value unless there is evidence that the
investment has since been impaired, in which case the value will be reduced.
2. Income
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
31 May 31 May 30 November
2006 2005 2005
£'000 £'000 £'000
--------------- ------------- ------------ ----------
Income from investments 57 94 303
Interest receivable and 4 11 23
other income ------------- ------------ ----------
---------------
Total 61 105 326
--------------- ------------- ------------ ----------
3. Investment Management Fees
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
31 May 31 May 30 November
2006 2005 2005
£'000 £'000 £'000
--------------- ------------ ----------- -----------
Periodic fee 290 311 630
Performance fee - - -
Irrecoverable VAT 30 16 28
thereon ------------ ----------- -----------
---------------
Total 320 327 658
--------------- ------------ ----------- -----------
4. (Loss)/return per Ordinary share
The total loss per Ordinary share is calculated by dividing the net total loss
of £1,152,000 (six months ended 31 May 2005: return £1,120,000; year ended 30
November 2005: return £4,146,000) by 25,479,515 (six months ended 31 May 2005:
27,615,312; year ended 30 November 2005: 27,559,312) being the weighted
average number of Ordinary shares in issue during the periods. The (loss)/
return per Ordinary share can be further analysed as follows: the revenue loss
per Ordinary share is calculated by dividing the net revenue loss of £533,000
(six months ended 31 May 2005: £473,000; year ended 30 November 2005:
£1,250,000) by 25,479,515 (six months ended 31 May 2005: 27,615,312; year
ended 30 November 2005: 27,559,312)
Notes to the interim financial statements (continued)
being the weighted average number of Ordinary shares in issue during the
period. The capital loss per Ordinary share is calculated by dividing the net
capital loss of £619,000 (six months ended 31 May 2005: return of £1,593,000;
year ended 30 November 2005: return of £5,396,000) by the number of Ordinary
shares, as above.
5. Net Asset Value per Ordinary share
(Unaudited) (Unaudited) (Audited)
31 May 31 May 30 November
2006 2005 2005
£'000 £'000 £'000
------------- ------------ ------------- -------------
Net asset value per 232.4p 225.1p 237.2p
Ordinary share ------------ ------------- -------------
-------------
The net asset value per Ordinary share is based on the assets attributable to
ordinary shareholders of £58,045,000 (six months ended 31 May 2005:
£62,173,000; year ended 30 November 2005: £62,033,000) and on 24,980,312
Ordinary shares (31 May 2005: 27,615,312; 30 November 2005: 26,155,312) being
the number of Ordinary shares in issue at the end of the periods.
6. 2005 Accounts
The figures and financial information for the year ended 30 November 2005 are
extracted from the latest published accounts of the Company and do not
constitute the statutory accounts for the year.
Those accounts have been delivered to the Registrar of Companies and received
an audit report which was unqualified, did not include a reference to any
matters to which the auditors drew attention by way of emphasis without
qualifying the report, and did not contain a statement under either Section 237
(2) or 237 (3) of the Companies Act 1985.
The interim financial statements have not been audited nor reviewed by the
Company's auditors. They have been prepared using the accounting policies as
set out in Note 1 above.
Close Finsbury Asset Management Limited
Company Secretary
12 July 2006
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