Annual Financial Report
To: RNS
From: Investors Capital Trust plc
Date: 7 May 2009
Results for the year ended 31 March 2009
· Total distributions for the year to 31 March 2009 of 5.35p per share
Chairman's Statement as follows:
Investment Objective and Policy
The Company's investment objective is to provide an attractive return to shareholders in the form of dividends and/or capital distributions, together with prospects for capital growth.
The Company's investment portfolio is managed in two parts. The first part comprises investments in UK equities and equity related securities (the Equities Portfolio) and the second part investments in fixed interest and other higher yielding stocks and securities (the Higher Yield Portfolio). At 31 March 2009, 50.2 per cent. of total assets was allocated to the Equities Portfolio and 27.4 per cent. to the Higher Yield Portfolio. The remaining 22.4 per cent. was held as cash and cash equivalents reflecting the Manager's cautious view of markets. This allocation will vary as a result of market movements and circumstances.
Investment Performance
At the time of writing my interim report to shareholders in November last year I indicated that 'investor concerns are now shifting to the wider economy and what is likely to be the worst downturn in decades for both the US and European economies'. The last year was indeed characterised by an increasingly uncertain outlook for the global economy and ongoing instability in financial markets. Recognising the fragility of the current economic situation and the need to avoid a systemic collapse of the financial system, governments around the world have committed enormous sums to bank rescue and economic stimulus packages, Central Banks have reduced interest rates to close to zero and, in both the US and UK, the need for further monetary stimulus has forced the Federal Reserve and the Monetary Policy Committee of the Bank of England to adopt the more radical policy of quantitative easing. Against a background of the worst financial crisis for decades, the values of risk assets, including equities and credit, have fallen sharply.
During the year, the Company's Equities Portfolio produced a total return of -26.1 per cent. which, while disappointing, was ahead of the -29.7 per cent. total return of the FTSE All-Share Capped 5% Index. The Higher Yield Portfolio returned -10.5 per cent.
The Company's net asset value total return for the A and B shares for the year was -27.6 per cent, after the cost of finance, which compares with the -29.7 per cent. return for the FTSE All-Share Capped 5% Index.
Capital Structure
The Company has two classes of shares: A shares and B shares. The net asset value attributable to the A shares and to the B shares is the same. The rights of each class are identical, save that only the A shares are entitled to receive dividends, while the B shares instead receive a capital distribution at the same time as, and in an equal amount to, each dividend. For certain shareholders there will be tax and other advantages in receiving a capital distribution rather than a dividend. Shares may be held and traded within units, each unit comprising three A shares and one B share.
The dividend yield on the A shares is increased due to the existence of the B shares. The B shares are innovative securities that provide returns in the form of quarterly capital distributions rather than dividends. These capital distributions fall to be taxed in accordance with rules relating to the taxation of chargeable gains. The attractions of the B shares have been enhanced by the changes to the UK capital gains tax regime from 6 April 2008, in particular the introduction of a single flat rate (18 per cent.) of capital gains tax. A fact sheet that provides more details on the B shares is available from the Company's website (www.investorscapital.co.uk). The 'Capital Structure' section of the Annual Report also provides further information on the A and B shares.
The Company has the ability to borrow in pursuit of its investment objectives. The Company has a £33.5m loan facility with Lloyds TSB Scotland plc for a term to 28 September 2012. The Company has entered into an interest rate swap to fix the all-in rate of interest on the loan at 5.86 per cent. per annum. During the year, the impact of this borrowing has been partly offset by the Company's holding of cash.
As a consequence of falling interest rates, the value of the swap was an unrealised liability of £3.4m at 31 March 2009, compared to £0.7m a year previous. This increase in the unrealised swap liability reduced the Company's net asset value by 2.1 pence per share during the year. This liability would be expected, in the normal course, to reverse as the swap moves to its 2012 maturity.
Earnings
The Company achieved total revenue income of £7.0m for the year. The yield on the Equities Portfolio was 5.8 per cent. at 31 March 2009, equivalent to a yield relative to the FTSE All-Share Capped 5% Index of 116 per cent.
The Company's revenues for the period were lower than initially forecast due to the growing number of dividend cuts within the UK equity market, most notably from the banking sector. The Company also held a higher than expected level of liquidity throughout the period reflecting the uncertain market backdrop. Interest income earned from cash balances was less than anticipated due to the exceptionally low level of interest rates which prevailed during the second half of the year.
The outlook for corporate earnings and consequently dividend income has deteriorated markedly throughout the last year. In recent years the substitution of debt for equity, often referred to as de-equitisation, has been a powerful theme in capital markets. Given the uncertain outlook for the economy many companies are re-evaluating their balance sheet structure. Faced with the need to de-leverage, together with the increased cost of accessing credit markets, many companies are coming to the conclusion that it makes sense to reduce dividends in order to maximise cash retention within the business. Should this trend become established, further dividend cuts could be more severe than investors currently anticipate.
Other key factors which affect the level of UK market dividends are the US dollar /Sterling exchange rate and the price of crude oil. The recent depreciation of Sterling has provided somewhat of a cushion for UK earnings and dividends, as over one third of UK market dividends come from companies which report in US dollars. Crude oil prices have fallen sharply during the past year to the current level of around $50 a barrel, and further weakness from these levels would cast doubt on the sustainability of dividends from the oil majors. The UK integrated oil companies, BP and Royal Dutch Shell, account for over a quarter of the total dividends from the UK market.
Income from the Higher Yield Portfolio, which comprised predominantly investment grade corporate bonds, was broadly at the level anticipated. However as a result of the deteriorating economic situation we anticipate an increase in the market rate of defaults on corporate bonds in the coming year, increasing the risk of loss of principal and coupon.
After allowing for the fourth quarter dividend, the Company had revenue reserves of £0.9m at 31 March 2009.
Dividends and Capital Returns
Dividends to A shareholders and capital distributions to B shareholders are paid quarterly in August, November, February and May each year. In respect of the distributions for the Company's first three quarters, the dividends paid on the A shares and capital distributions on the B shares were 1.325p per share for each quarter. A fourth quarter dividend will be paid to A shareholders and capital distribution to B shareholders of 1.375p per share on 8 May 2009. This results in an unchanged dividend/capital distribution of 5.35p per share in respect of the year to 31 March 2009. This represents a distribution yield for A and B shareholders of 9.0 per cent. based on the share price of 59.5p as at 31 March 2009 and compares with the yield on the FTSE All-Share Capped 5% Index of 5.0 per cent at that date. For shareholders that hold units, the estimated distribution yield was also 9.0 per cent. based on a unit price of 237p as at 31 March 2009.
The Company operates a distribution reinvestment scheme, details of which are available from the Company's Registrars, to enable B shareholders to reinvest their capital distributions in further B shares if they wish.
Discount and buy backs
The Company's A and B share price discount to net asset value was 1.6 per cent. at 31 March 2009 and reflects a tightening of the discount compared to the prior year. Over the year, the price of the Company's A shares and B shares traded at an average discount to net asset value per share of 3.5 per cent. and 3.3 per cent. respectively. The Company has a stated buy back policy and, in accordance with this policy, the Company bought back net 2.1m A shares and 0.6m B shares during the year at an average discount of over 5 per cent. to net asset value, thereby adding value for existing shareholders.
Since the year end, the Company has bought back a further 240,000 A shares and 80,000 B shares. The Company is not alone among investment trusts in buying back its own shares in the recent difficult market conditions.
Directors
It was with deep regret that the Board announced in March the death of Mr Micky Ingall. He had served as a non-executive Director of the Company since its launch in 2007 and had been a Director of the predecessor company since 1999. The Board would like to record its sincere appreciation of the valuable contribution that Mr Ingall made to the Company.
The Board has appointed Mr Iain McLaren as a non-executive Director. Mr McLaren retired from KPMG in 2008 having been a partner for 27 years and senior partner in Scotland from 1999 to 2004. He is currently a non-executive director and chairman of the audit committee of Cairn Energy plc and a non-executive director of Baillie Gifford Shin Nippon plc. It is proposed that Mr McLaren takes over from me as Chairman of the Company's audit committee following the conclusion of the 2009 Annual General Meeting.
Outlook
In recent weeks financial markets appear to have stabilised as the worst fears of depression and deflation have subsided. The scale of the fiscal and monetary response over the last eighteen months, particularly from the US, has been without parallel, providing some comfort that the worst of the financial crisis may be behind us. The outlook for markets remains uncertain; however valuation metrics suggest risk assets such as equities and credit have rarely looked more attractive.
Manager's Review as follows:
Economic and Market Review
At the time of writing last year's report we set out a cautious assessment of the prospects for the global economy. We believed that the necessary reduction in leverage in the financial system together with the recapitalisation of the banking industry was likely to be a slow process which would dampen economic growth and put downward pressure on the value of both real and financial assets. While this has proven to be the case, the severity of the financial crisis deepened markedly in September last year when the US government was forced to seize control of Freddie Mac and Fannie Mae, the two government sponsored mortgage agencies. In the weeks that followed, the iconic Lehman Brothers became the first major bank to collapse since the start of the credit crisis. Many commentators believe that the failure of US authorities to act to prevent Lehman's bankruptcy was a policy error of enormous magnitude. By allowing a major banking institution to collapse with little regard for its creditors, US authorities risked a total breakdown of confidence in the banking sector. Indeed, in the wake of Lehman's demise, fears of a systemic financial collapse intensified sending markets into a mood of near panic. In response, the US government hastily put together the $700 billion Trouble Asset Relief Program, which would be the first of several large tax-payer funded initiatives aimed at stabilising financial markets. Meanwhile in the UK, a continued deterioration in wholesale money markets, a key source of bank funding, forced the UK government to part-nationalise The Royal Bank of Scotland, HBOS and Lloyds TSB as part of a £350 billion rescue package for the UK banking industry. Co-ordinated interest rate cuts from six of the world's key central banks followed in an attempt to breathe life back into credit markets.
By November the market's focus was turning to the impact of the financial crisis on the real economy as official statistics confirmed that the US, UK and Eurozone economies were slowing rapidly. Fears of a deep and protracted recession pushed crude oil prices, which had hit a high of $147 in July 2008 to a low of almost $32 a barrel in December. Central banks around the world continued to reduce aggressively interest rates. By January this year UK base rates had fallen to 0.5 per cent, the lowest level in the 315 year history of the Bank of England. However, with little sign of improvement in the growth of credit both the Federal Reserve and the Bank of England have, in recent months, embarked on quantitative easing, often referred to as 'printing money'. In the UK, the combination of the sharp economic downturn combined with a banking crisis has left public sector finances precariously weak and there remains a risk that currency and bond markets lose confidence in policy decisions. There is less of a risk of a funding crisis in the US as the US dollar still benefits from reserve currency status.
Despite our cautious assessment of global economic prospects, the UK equity market began the Company's year on a reasonably firm footing. This was to prove short-lived as the ongoing dislocation in credit markets began to weigh heavily on investor confidence. In September the 10 year gilt yield and the equity dividend yield crossed over for the first time since March 2003, a move that would normally be seen as strongly supportive for equities. However gilt yields continued to fall sharply to levels not seen since the early 1960's while the equity market continued to slide as investors worried about the impact of recession, deflation and the consequent impact on corporate earnings and dividends. For the year as a whole the FTSE All-Share Capped 5% Index total return was minus 29.7 per cent.
Within fixed interest markets, government bonds benefited from central banks' actions to reduce interest rates to close to zero. However, the vast increase in government budget deficits and consequent implications for future issuance curtailed the performance of longer dated maturities. As with equities, corporate bonds were hit hard by the deteriorating economic circumstances with the debt of financial issuers suffering most acutely. The total return on investment grade credit during the year was -5.9 per cent. compared to -23.0 per cent. for non investment grade corporate bonds.
Portfolio Review
The total return of the Company's Equity Portfolio was minus 26.1 per cent over the year to 31 March 2009 representing a 3.6 per cent out-performance relative to the FTSE All-Share Capped 5% Index, the Company's benchmark. The Equities Portfolio has a bias towards companies which have strong balance sheets, above average visibility of earnings, strong cash flow and good dividend cover. This 'defensive' positioning contributed to the out-performance of the Equities Portfolio as investors sought businesses that were better placed to weather the deteriorating economic environment.
During a year that saw the UK equity market decline by almost a third in value there were few holdings that recorded an absolute gain. The portfolio benefited from the substantial exposure to the pharmaceutical sector as both holdings, AstraZeneca and GlaxoSmithKline, delivered positive returns. The portfolio also benefited from the strong relative performance from both tobacco holdings, Imperial Tobacco and British American Tobacco which continued to offer a resilient trading outlook. The portfolio was also well served by its exposure to the utilities and aerospace sectors. The Company had a relatively modest exposure to the banking sector as we were, and remain, concerned about the impact of an economic recession on banks' highly leveraged balance sheets. We believe that dividends will be a key driver of long term equity returns and the Equities Portfolio remains focused on those companies that we believe can offer greater surety of income although we acknowledge that the extent of the global economic downturn suggests that corporate earnings and dividends will be under some considerable pressure in the year ahead.
Over the past year, the Higher Yield Portfolio has been invested in a broad based portfolio of predominantly investment grade corporate bonds with exposure to both financial and non financial issues. During the early stages of the financial crisis evidence suggested that regulators would seek to protect bond holders due to the importance of credit markets to the financial system as a whole. This position changed with the collapse of Lehman and consequently the debt of financial issuers fell sharply in value with many corporate bonds losing their investment grade status. The debt of non-financial issuers, in particular non investment grade issues, was impacted by the widespread deterioration in credit quality and a corresponding increase in defaults. The overall return on the Company's Higher Yield Portfolio during the year was -10.5 per cent.
The Company held a larger then usual cash balance throughout the year reflecting our caution over the prospects for markets generally. This served to reduce the effective gearing and offer some protection to the net asset value.
Outlook
There is little doubt that the near term outlook for global economic growth and corporate profits remains extremely challenging. However in the longer term the scale and speed of the fiscal and monetary response to the current financial crisis, particularly from the US, gives some encouragement that the global economy can avoid the economic stagnation that blighted the Japanese economy for a decade during the post asset bubble era of the 1990's. Interest rates are close to zero, monetary policy has moved into unconventional territory with authorities 'printing money' and the process of recapitalising the banking industry is underway. Nevertheless the unwinding of leverage from the credit boom will take years and require a rebalancing of the economy from consumption to saving, suggesting the economic recovery, when it arrives, may be relatively subdued. Against this background dividends are likely to provide an important component of total return an we expect that investors will continue to reward companies which have strong balance sheets and demonstrate dividend resilience.
For further information, please contact:
Rodger McNair Tel: 0131 718 1000
Fund Manager to Investors Capital Trust plc
Michael Campbell
Company Secretary to Investors Capital Trust plc Tel: 0131 718 1000
Consolidated Income Statement (audited)
|
|
|
Year to 31 March 2009 |
||
|
|
|
£'000 |
£'000 |
|
|
|
Note |
Revenue |
Capital |
£'000 |
|
|
|
Return |
Return |
Total |
|
|
|
|
|
|
|
Capital losses on investments |
|
|
|
|
|
Losses on investments held at fair value through profit or loss |
|
- |
(28,951) |
(28,951) |
|
Exchange differences |
|
- |
(2,440) |
(2,440) |
|
Revenue |
|
|
|
|
|
Investment Income |
|
6,960 |
- |
6,960 |
|
|
|
|
|
|
|
Total income |
|
6,960 |
(31,391) |
(24,431) |
|
|
|
|
|
|
|
Expenditure |
|
|
|
|
|
Investment management fee |
|
(211) |
(491) |
(702) |
|
Other expenses |
|
(383) |
- |
(383) |
|
|
|
|
|
|
|
Total expenditure |
|
(594) |
(491) |
(1,085) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before finance costs and tax |
|
6,366 |
(31,882) |
(25,516) |
|
|
|
|
|
|
|
Net finance costs |
|
|
|
|
|
Interest on bank loan and interest rate swap |
|
(592) |
(1,381) |
(1,973) |
|
|
|
|
|
|
|
Total finance costs |
|
(592) |
(1,381) |
(1,973) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before tax |
|
5,774 |
(33,263) |
(27,489) |
|
Tax |
|
(620) |
524 |
(96) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the year attributable to equity shareholders |
|
5,154 |
(32,739) |
(27,585) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
2 |
4.07p |
(25.84p) |
(21.77p) |
Consolidated Income Statement (audited)
|
|
|
Period to 31 March 2008* |
||
|
|
|
£'000 |
£'000 |
|
|
|
|
Revenue |
Capital |
£'000 |
|
|
Note |
Return |
Return |
Total |
|
|
|
|
|
|
|
Capital losses on investments |
|
|
|
|
|
Losses on investments held at fair value through profit or loss |
|
- |
(8,727) |
(8,727) |
|
Exchange differences |
|
- |
(734) |
(734) |
|
Revenue |
|
|
|
|
|
Investment Income |
|
8,314 |
554 |
8,868 |
|
|
|
|
|
|
|
Total income |
|
8,314 |
(8,907) |
(593) |
|
|
|
|
|
|
|
Expenditure |
|
|
|
|
|
Investment management fee |
|
(314) |
(734) |
(1,048) |
|
Other expenses |
|
(418) |
- |
(418) |
|
|
|
|
|
|
|
Total expenditure |
|
(732) |
(734) |
(1,466) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before finance costs and tax |
|
7,582 |
(9,641) |
(2,059) |
|
|
|
|
|
|
|
Net finance costs |
|
|
|
|
|
Interest on bank loan and interest rate swap |
|
(642) |
(1,497) |
(2,139) |
|
|
|
|
|
|
|
Total finance costs |
|
(642) |
(1,497) |
(2,139) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before tax |
|
6,940 |
(11,138) |
(4,198) |
|
Tax |
|
(685) |
670 |
(15) |
|
|
|
|
|
|
|
Profit/(loss) for the period attributable to equity shareholders |
|
6,255 |
(10,468) |
(4,213) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
2 |
4.68p |
(7.83p) |
(3.15p) |
*The Company was incorporated on 15 January 2007 and commenced business on 1 March 2007.
Balance Sheets (audited)
as at 31 March 2009
|
|
|
2009 |
2008 |
|||
|
|
|
Company |
Group |
Company |
Group |
|
|
|
Note |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Non-current assets |
|
|
|
|
|
|
|
Investments held at fair value through profit or loss |
|
87,911 |
87,661 |
119,618 |
119,368 |
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Other receivables |
|
1,599 |
1,599 |
3,207 |
3,207 |
|
|
Cash and cash equivalents |
|
24,403 |
24,403 |
29,623 |
29,623 |
|
|
|
|
26,002 |
26,002 |
32,830 |
32,830 |
|
|
Total assets |
|
113,913 |
113,663 |
152,448 |
152,198 |
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Other payables |
|
(939) |
(689) |
(2,980) |
(2,730) |
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
Bank loan |
|
(33,476) |
(33,476) |
(33,469) |
(33,469) |
|
|
Interest rate swap |
|
(3,412) |
(3,412) |
(744) |
(744) |
|
|
|
|
(36,888) |
(36,888) |
(34,213) |
(34,213) |
|
|
Total liabilities |
|
(37,827) |
(37,577) |
(37,193) |
(36,943) |
|
|
Net assets |
|
76,086 |
76,086 |
115,255 |
115,255 |
|
|
|
|
|
|
|
|
|
|
Share capital |
5 |
134 |
134 |
138 |
138 |
|
|
Share premium |
|
22 |
22 |
22 |
22 |
|
|
Capital redemption reserve |
5 |
5 |
5 |
1 |
1 |
|
|
Buy back reserve |
5 |
89,227 |
89,227 |
91,306 |
91,306 |
|
|
Special capital reserve |
|
31,189 |
31,189 |
32,809 |
32,809 |
|
|
Capital reserves |
|
(46,725) |
(46,725) |
(11,284) |
(11,284) |
|
|
Revenue reserve |
|
2,234 |
2,234 |
2,263 |
2,263 |
|
|
Equity shareholders' funds |
|
76,086 |
76,086 |
115,255 |
115,255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value per A share |
6 |
60.46p |
60.46p |
89.62p |
89.62p |
|
|
Net asset value per B share |
6 |
60.46p |
60.46p |
89.62p |
89.62p |
|
Consolidated and Company Cash Flow Statement (audited)
for the year to 31 March 2009
|
|
|
|
|
|
Year to 31 March 2009 |
Period to 31 March 2008* |
|
|
£'000 |
£'000 |
|
|
|
|
|
Cash flows from operating activities |
|
|
|
Loss before finance costs and tax |
(25,516) |
(2,059) |
|
Adjustments for: |
|
|
|
Losses on investments held at fair value through profit or loss |
28,951 |
8,727 |
|
Exchange differences |
2,440 |
734 |
|
Decrease/(increase) in receivables |
143 |
(1,567) |
|
(Decrease)/increase in payables |
(78) |
187 |
|
Purchases of investments |
(51,317) |
(208,086) |
|
Sales of investments |
53,262 |
80,709 |
|
|
7,885 |
(121,355) |
|
Tax paid |
(15) |
- |
|
Net cash inflow/(outflow) from operating activities |
7,870 |
(121,355) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
Bank loan drawn down |
- |
33,461 |
|
Dividends paid on A shares |
(5,183) |
(3,992) |
|
Capital returns paid on B shares |
(1,620) |
(1,304) |
|
Interest on bank loan and interest rate swap |
(1,482) |
(2,131) |
|
Issue of new shares |
- |
135,225 |
|
Issue of shares from treasury |
60 |
1,372 |
|
Shares purchased for cancellation |
(544) |
(738) |
|
Shares purchased for treasury |
(1,629) |
(10,351) |
|
Net cash (outflow)/inflow from financing activities |
(10,398) |
151,542 |
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
(2,528) |
30,187 |
|
Currency losses |
(2,692) |
(564) |
|
Opening cash and cash equivalents |
29,623 |
- |
|
Closing cash and cash equivalents |
24,403 |
29,623 |
*The Company was incorporated on 15 January 2007 and commenced business on 1 March 2007.
Consolidated and Company Statement of Changes in Equity (audited)
for the year to 31 March 2009
|
|
Share Capital |
Share Premium |
Capital Redemption Reserve |
Buy Back Reserve |
Special Capital Reserve |
Capital Reserve - Investments sold |
Capital Reserve - Investments held |
Revenue Reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2008 |
138 |
22 |
1 |
91,306 |
32,809 |
220 |
(11,504) |
2,263 |
115,255 |
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued from treasury |
- |
- |
- |
94 |
- |
(34) |
- |
- |
60 |
|
Shares bought back for cancellation |
(1) |
- |
1 |
(544) |
- |
- |
- |
- |
(544) |
|
Shares bought back for treasury |
- |
- |
- |
(1,629) |
- |
- |
- |
- |
(1,629) |
|
Shares cancelled from treasury |
(3) |
- |
3 |
- |
- |
- |
- |
- |
- |
|
Gain/(loss) for the year |
- |
- |
- |
- |
- |
(15,935) |
(16,804) |
5,154 |
(27,585) |
|
Dividends paid on A shares |
- |
- |
- |
- |
- |
- |
- |
(5,183) |
(5,183) |
|
Capital returns paid on B shares |
- |
- |
- |
- |
(1,620) |
- |
- |
- |
(1,620) |
|
Unrealised loss on revaluation of interest rate swap |
- |
- |
- |
- |
- |
- |
(2,668) |
- |
(2,668) |
|
At 31 March 2009 |
134 |
22 |
5 |
89,227 |
31,189 |
(15,749) |
(30,976) |
2,234 |
76,086 |
Consolidated and Company Statement of Changes in Equity (audited)
for the period from incorporation on 15 January 2007 to 31 March 2008*
|
|
Share Capital |
Share Premium |
Capital Redemption Reserve |
Buy Back Reserve |
Special Capital Reserve |
Capital Reserve - Investments sold |
Capital Reserve - Investments held |
Revenue Reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued, net of costs |
139 |
135,086 |
- |
1,444 |
- |
(72) |
- |
- |
136,597 |
|
Gain/(loss) for the period |
- |
- |
- |
- |
- |
292 |
(10,760) |
6,255 |
(4,213) |
|
Dividends paid on A shares |
- |
- |
- |
- |
- |
- |
- |
(3,992) |
(3,992) |
|
Capital returns paid on B shares |
- |
- |
- |
- |
(1,304) |
- |
- |
- |
(1,304) |
|
Shares bought back |
(1) |
- |
1 |
(11,089) |
- |
- |
- |
- |
(11,089) |
|
Court conversion |
- |
(135,064) |
- |
100,951 |
34,113 |
- |
- |
- |
- |
|
Unrealised loss on revaluation of interest rate swap |
- |
- |
- |
- |
- |
- |
(744) |
- |
(744) |
|
At 31 March 2008 |
138 |
22 |
1 |
91,306 |
32,809 |
220 |
(11,504) |
2,263 |
115,255 |
*The Company was incorporated on 15 January 2007 and commenced business on 1 March 2007.
Investors Capital Trust plc
Principal Risks and Risk Management
The Company's assets consist mainly of listed equity and fixed interest securities and its principal risks are therefore market-related. More detailed explanations of these risks and the way in which they are managed are contained in the notes to the accounts.
Other risks faced by the Company include the following:
-
External - events such as terrorism, protectionism, inflation or deflation, economic recessions and movements in interest rates and exchange rates could affect share prices in particular markets.
-
Investment and strategic - incorrect strategy, asset allocation, stock selection and the use of gearing could all lead to poor returns for shareholders.
-
Regulatory - breach of regulatory rules could lead to suspension of the Company's Stock Exchange listing, financial penalties, or a qualified audit report. Breach of Section 842 of the Income and Corporation Taxes Act 1988 could lead to the Company being subject to tax on capital gains.
-
Operational - failure of the Manager's accounting systems or disruption to the Manager's business, or that of third party service providers, could lead to an inability to provide accurate reporting and monitoring, leading to a loss of shareholders' confidence.
-
Financial - inadequate controls by the Manager or third party service providers could lead to misappropriation of assets. Inappropriate accounting policies or failure to comply with accounting standards could lead to misreporting or breaches of regulations. Breaching loan covenants could lead to a loss of shareholders' confidence and financial loss for shareholders.
The Board seeks to mitigate and manage these risks through continual review, policy setting and reliance upon contractual obligations. It also regularly monitors the investment environment and the management of the Company's investment portfolio, and applies the principles detailed in the internal control guidance issued by the Financial Reporting Council.
Investors Capital Trust plc
Statement of Directors' Responsibilities in Respect of the Annual Financial Report
In accordance with Chapter 4 of the Disclosure and Transparency Rules, we confirm that to the best of our knowledge:
-
The financial statements contained within the Annual Report for the year ended 31 March 2009, of which this statement of results is an extract, have been prepared in accordance with applicable International Financial Reporting Standards, on a going concern basis, and give a true and fair view of the assets, liabilities, financial position and return of the Company;
-
The Chairman's Statement and Manager's Review include a fair review of the important events that have occurred during the financial year and their impact on the financial statements;
-
'Principal Risks and Risk Management' includes a description of the Company's principal risks and uncertainties; and
-
The Annual Report includes details of related party transactions, if any, that have taken place during the financial year.
On behalf of the Board
J Martin Haldane
Chairman
6 May 2009
Notes (audited)
This information is provided by RNS
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