Interim Results
Schroder Split Investment Fund PLC
16 June 2006
16 June 2006
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 2006.
Highlights Six months ended Six months ended 30 Year ended 31
30 April 2006 April 2005 October 2005
Net asset value
Zero Dividend Preference Share 137.33p 127.42p 132.34p
Ordinary Share 127.11p 89.26p* 102.99p*
Mid market price
Zero Dividend Preference Share 140.50p 133.00p 137.75p
Ordinary Share 112.50p 78.00p 87.00p
Total return to shareholders Six months to 30 April Six months to 30 April Year ended
2006 2005 31 April 2005
£'000 £'000 £'000
Zero Dividend Preference Shares 1,371 1,265 2,614
Ordinary Shares ** 11,490 3,497* 10,390*
* Restated in line with IFRS - for details please refer to notes.
** Represents increase in net assets attributable to ordinary shareholders and
dividends paid to ordinary shareholders during the period.
Chairman's Statement
Performance
During the six-month period ended 30 April 2006 group assets produced a strong
total return of 16.3%. The total return for the equity portfolio for the period
was 18.2% compared to a total return of 17.3% for the FTSE All-Share Index and
14.9% for the FTSE 350 Higher Yield Index.
This good performance continues the pattern of recent years. From launch in 2002
to 30 April 2006 the Group has performed well, with group assets producing a
total return of 59.1% over the period, outperforming both the FTSE All-Share
Index, which returned 42.1%, and the FTSE 350 Higher Yield Index, which returned
51.6% over the same period.
The ordinary shares produced a total return of 34.3% during the six-month period
to 30 April 2006, with the discount narrowing from 15.5% to 11.5%.
Dividends
As previously announced, your Board has declared an increased second interim
dividend for the year ended 31 October 2006 of 1.6p (2005:1.5p). This follows an
increased first interim dividend for the year of 1.6p (2005:1.5p).
The Board expects, on the basis of current forecasts for income receivable, that
we will be able to declare dividends for the final two quarters of the current
year amounting to at least the same as the dividends paid in the last two
quarters of the previous financial year, which totalled 3.7p per share.
International Financial Reporting Standards
The Group is now required to prepare its accounts in accordance with
International Financial Reporting Standards (IFRS). This has resulted in some
significant changes in the Group's financial statements and these are explained
in greater detail in the notes. The first of these is to value the investments
at bid rather than mid-market prices. The second change is to account for the
cost of equity dividends in the period in which the dividend is liable to be
paid rather than accruing the costs at the balance sheet date.
In addition, because the Group has a planned initial life, all shareholder
entitlements are classified as liabilities. This has changed the presentation of
the financial statements but has no impact on the rights and obligations of the
Group or its shareholders. Prior year comparatives have been restated to reflect
these changes.
Outlook
The period since the end of April 2006 has been disappointing for equity
markets. From the period 30 April to 8 June 2006, the FTSE All-Share fell by
8.1%, Group's assets fell by 11.5% and the ordinary share price fell by 11.6%
(to 99.5p per share). However, we believe that the Group's investment model
remains conservative and the portfolio defensively positioned with our gearing
balanced by our holdings in bond funds. This should help performance to continue
to be relatively resilient in volatile markets.
John Padovan
Chairman
16 June 2006
Investment Manager's Review
Equity Portfolio (approximately 80% of Gross Assets)
The market rose very sharply during the six months driven by continued strong
profit growth, in particular those areas benefiting from demand from China.
Corporate merger and acquisition activity continued to support the market. These
trends benefited the portfolio, in particular the takeovers for BAA, P&O and AB
Ports. At the same time there were mounting signs of a slow down in UK consumer
spending and rising bad debts.
Looking forward some of the largest companies offer the best value. Many of
these have been dismissed as too big to be bid targets and the FTSE 100 in
aggregate has now underperformed the FTSE 250 by a material amount in the last
three years. The effect is particularly marked in the very largest companies
for which valuations relative to medium and small sized companies are near 20
year lows. The portfolio is now predominantly exposed to these larger
companies.
Fixed Interest Portfolio (approximately 20% of Gross Assets)
Government and other investment grade bonds performed relatively poorly in the
six months to end-April due to rising interest rates. High yield bonds did
relatively well over this period as a result of strength in the global economy
and low default rates. The fund was well-positioned for these developments, with
lower-than-normal exposure to interest rates and higher-than-normal exposure to
high yield bonds.
More recently, bond markets have been affected by general market volatility, and
there has been a flight to quality from corporate bonds into government bonds,
which has not favoured our positioning. However we believe this is temporary,
that interest rates will continue to rise and that the global economic growth
will not be seriously affected. As a consequence we are maintaining in the bond
segment lower exposure to interest rate risk and higher exposure to high yield
bonds.
Outlook
Since the period under review the FTSE All-Share has fallen by 8% following a
very strong rise over the last three years. The portfolio is not immune to
short term falls. However, it is positioned relatively cautiously with its
investments predominantly in the largest companies which are trading on the
lowest valuations and have the highest dividend yields.
Schroder Investment Management Limited
16 June 2006
Consolidated Income Statement (unaudited)
Six months ended Six months ended
30 April 2006 30 April 2005 (restated*)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Net gains on investments# - 11,473 11,473 - 3,539 3,539
Investment Income 2,055 - 2,055 1,973 - 1,973
Investment management fee (123) (184) (307) (94) (141) (235)
Other administrative expenses (88) - (88) (147) - (147)
Return before finance costs and 1,844 11,289 13,133 1,732 3,398 5,130
taxation
Interest payable+ (109) (163) (272) (147) (221) (368)
Provision for redemption of the
Zero Dividend Preference
shares in the subsidiary - (1,371) (1,371) - (1,265) (1,265)
Dividends on Ordinary Shares
Fourth interim dividend of 2.20p (906) - (906) (824) - (824)
per share (2.00p: year ended 31
October 2005)**
First interim dividend of 1.60p (658) - (658) (618) - (618)
per share (1.50p: year ended 31
October 2005)
Second interim dividend of - - - - - -
1.50p: year ended 31 October
2005
Third interim dividend of 1.50p: - - - - - -
year ended 31 October 2005
Return on ordinary activities 171 9,755 9,926 143 1,912 2,055
before taxation
Taxation on ordinary activities (71) 71 - (73) 73 -
Increase in net assets
Attributable to Ordinary
Shareholders 100 9,826 9,926 70 1,985 2,055
Return per Ordinary Share 4.04p 23.85p 27.89p 3.67p 4.82p 8.49p
Return per Zero Dividend - 4.99p 4.99p - 4.60p 4.60p
Preference Share in the
subsidiary
The total column of this statement is the Income Statement of the Group under
IFRS.
All revenue and capital items derive from continuing operations.
# 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.
+ Interest payable includes fair value adjustment on interest rate swap (as
detailed in Note 1).
Comparative figures have been extracted from the unaudited interim accounts for
the six months ended 30 April 2005, and have been restated in accordance with
IAS 10 in respect of dividends, and IAS 32 and 39 in respect of Financial
Instruments as disclosed in the notes.
The classification of called-up share capital and reserves as liabilities (as
detailed in Note 1) means that the provision for redemption of the Zero Dividend
Preference Shares and the dividends on Ordinary Shares are treated as finance
charges.
** The fourth interim dividend of 2.20p per share was declared in respect of 31
October 2005 and the fourth interim dividend of 2.00p per share was declared in
respect of 31 October 2004.
Consolidated Balance Sheet (unaudited)
As at As at As at
30 April 2006 30 April 2005 31 October 2005
(Unaudited) (Unaudited & (Unaudited &
restated**) restated**)
£'000 £'000 £'000
Non-current assets: Investments
Held at fair value through profit or loss:
- equity investments 81,804 65,133 72,033
- fixed interest investments 18,406 18,246 18,480
100,210 83,379 90,513
Current assets
Debtors 918 701 193
Short term deposits 1,483 1,075 571
Cash at bank 3 1 12
2,404 1,777 776
Current Liabilities
Other payables (332) (1,126) (226)
Net current assets 2,072 651 550
Total assets less current liabilities 102,282 84,030 91,063
Non-current liabilities:
Loan facility (12,100) (12,100) (12,100)
Interest rate swap (94) (154) (181)
Amount owed to Group undertaking (37,720) (35,000) (36,349)
Net assets attributable to ordinary shareholders 52,368 36,776 42,433
Liabilities in respect of net assets attributable to
Ordinary Shareholders are
Represented by:
Called up share capital 412 412 412
Share purchase reserve 37,574 37,565 37,565
Capital reserves 12,908 (2,422) 3,082
Revenue reserve 1,474 1,221 1,374
52,368 36,776 42,433
Funds attributable to :
Ordinary Shares 52,368 36,776 42,433
Zero Dividend Preference Shares in the subsidiary 37,720 35,000 36,349
90,088 71,776 78,782
Net asset value per:
Ordinary Share 127.11p 89.26p 102.99p
Zero Dividend Preference Share in the subsidiary 137.33p 127.42p 132.34p
** Comparative figures have been extracted from the unaudited interim accounts
for six months ended 30 April 2005 and the statutory accounts for the year ended
31 October 2005 and have been restated in accordance with IAS 10 in respect of
dividends and IAS 32 and 39 in respect of Financial Instruments as disclosed in
Note 1.
A Reconciliation of Movements in Shareholders' Funds and a Statement in Changes
in Equity have not been presented as Ordinary Shares, Capital and Reserves are
now classified as liabilities (see Note 1). Details of the movements in capital
reserves are given in the Notes.
Consolidated Cash Flow Statement
(unaudited)
Six months ended 30 Six months ended Year ended 31 October
April 2006 30 April 2005 2005
(unaudited) (unaudited & restated) (audited & restated)
£'000 £'000 £'000
Cash flow from operating activities
Total return before tax 11,490 3,497 10,390
Adjustment for:
- gains on investments held at fair value (11,473) (3,539) (10,719)
through profit or loss
- interest payable 272 368 769
- provision for redemption of Zero 1,371 1,265 2,614
Dividend Preference Shares
1,660 1,591 3,054
Operating cash inflow/(outflows) before (271) (1,138)
movements in working capital 1,860
Increase in receivables (695) (549) (13)
Increase/(decrease) in payables 3 6 (9)
Net cash inflow from operating activities
before financing 2,828 777 1,894
Financing activities
Ordinary dividends paid (1,564) (1,442) (2,678)
Interest paid on bank loans (361) (365) (739)
Net cash used in financing activities (1,925) (1,807) (3,417)
Net increase/(decrease) in cash and cash 903 (1,030) (1,523)
equivalents
Cash and cash equivalents at start of the 583 2,106 2,106
period
Cash and cash equivalents at the end of the 1,486 1,076 583
period
Notes to the Preliminary Announcement
1 Basis of accounting and accounting policies
(a) Basis of accounting
The financial statements of the Group are now prepared in accordance with
International Financial Reporting Standards ('IFRS'). IFRS comprise standards
and interpretations approved by the International Accounting Standards Board ('
IASB'), together with interpretations of the International Accounting Standards
and Standing Interpretations Committee approved by the International Accounting
Standards Committee ('IASC') that remain in effect, to the extent that they have
been adopted by the European Union.
This interim financial information has been prepared on the basis of the
recognition and measurement requirements of accounting standards adopted by the
EU as of 30 April 2006 and effective at 31 October 2006, the Group's first
annual reporting date at which it is required to use accounting standards
adopted by the EU. Based on these standards, the Directors have applied the
accounting policies, as set out below, which they expect to apply when the first
annual financial statements are prepared in accordance with the accounting
standards adopted by the EU for the year ending 31 October 2006. IAS 34 'Interim
Financial Reporting' has not been applied early and, consequently, the full
requirements of that standard have not been applied.
However, the accounting standards adopted by the EU, that will be effective in
the annual financial statements for the year ending 31 October 2006, are still
subject to change and to additional interpretations and therefore cannot be
determined with certainty. Accordingly, the accounting policies for that annual
period will be determined finally only when the annual financial statements are
prepared for the year ending 31 October 2006.
The Group financial statements consolidate the accounts of the Company and its
wholly-owned subsidiary, Schroder Split ZDP plc. These financial statements have
been prepared in accordance with the accounting policies set out in the most
recent set of financial statements with the following exceptions which have
arisen from the adoption of IFRS. Where presentational guidance set out in the
Statement of Recommended Practice ('the SORP') for investment trusts issued by
the Association of Investment Trust Companies ('the AITC') in January 2003 and
revised in December 2005 is consistent with the requirement of IFRS, the
Directors have sought to prepare the interim financial statements on a basis
compliant with the SORP.
In adopting IFRS, the Company has applied certain new accounting policies as
detailed below:
i. IAS 32 Financial Instruments: Disclosure and
Presentation, requires that Ordinary Shares, in addition to the Zero Dividend
Preference Shares issued in the subsidiary, are now classed as liabilities, to
reflect the rights and obligations attaching to those shares, specifically in
connection with the planned initial life of the Company to November 2007. It
should be noted that these changes are purely presentational, and the rights and
obligations of both share classes remain unchanged;
ii. IAS 39: Financial Instruments: Recognition and
Measurement, and the new SORP, require that investments, previously valued at
mid-market prices, are now valued at bid price.
iii. IAS 39 also requires that any derivative contracts are
carried in the balance sheet at their fair value, and any movements in that
value are included in profit or loss. The Company uses an interest rate swap to
fix it's otherwise LIBOR linked quarterly interest payments, at an equivalent of
6.05% per annum. The swap contract, which previously had been accounted for off
balance sheet, as permitted under UK GAAP, is now accounted for on the balance
sheet at its fair value, represented by a creditor, if the swap is 'in favour of
the lender', or a debtor, if 'in favour of the Company'. Changes in fair value
are treated as finance charges or credits, and accordingly are included 60%
within capital and 40% within revenue, in conformity with the Company's stated
accounting policy for finance charges.
iv. IAS 10: Events after the Balance Sheet Date, requires
that dividends declared or proposed by the Company are accounted for in the
period in which the Company is liable to pay them. Previously, the Company
accrued dividends in the period in which the net revenue, to which those
dividends related, was accounted for.
(b) Presentation of Income Statement
In order to better reflect the activities of an investment trust company, and in
accordance with guidance issued by the AITC, supplementary information which
analyses the Income Statement between items of a revenue and capital nature has
been presented alongside the Income Statement. In accordance with the Company's
status as a UK investment company under s266 of the Companies Act 1985, net
capital returns may not be distributed by way of a dividend. Additionally, the
net revenue is the measure the Directors believe appropriate in assessing the
Company's compliance with the requirements set out in Section 842 of the Income
and Corporation Taxes Act 1988.
(c) Investments
Investment are recognised and derecognised on a trade date when a purchase or
sale of an investment is under a contract whose terms require delivery of the
investment within the timeframe established by the market concerned.
All the Group's Investments are defined as investments designated as fair value
through profit or loss.
For the purpose of the parent company's balance sheet, the investment in the
subsidiary is classified as held to maturity. The Company holds its investments
in the subsidiary at cost.
(d) Financial Instruments
Interest rate swap
The Group uses an interest rate swap to manage its exposure to interest rate
movements on its sterling bank borrowings.
A contract with a nominal value of £12.1 million has fixed interest payments at
a rate of 5.385% and floating interest receipts at 3 months LIBOR for periods up
until November 2007.
The fair value of the swap entered into at 30 April 2006 is estimated as £94,000
in favour of the lender (31 October 2005: £181,000 in favour of the lender, 30
April 2005: £154,000 in favour of the lender). Changes in the fair value of the
swap is treated as finance charge, and charged 60% to capital and 40% to
revenue.
Zero Dividend Preference Shares
The Zero Dividend Preference shares in the subsidiary, due to redeem on 30
November 2007 at 154.59p, have been classified as liabilities, as they represent
a contractual agreement on behalf of the Group to deliver to their holders a
fixed and determinable amount at the redemption date. They are accordingly
accounted for at amortised cost using the effective interest rate method.
(e) Dividends Payable
Dividends paid to ordinary shareholders are now classified as finance costs, due
to the fact that the Ordinary Shares are now classed as liabilities in
accordance with IAS 32. The cost to the Company of these dividends will continue
to be allocated 100% to the revenue account, as to change the basis of this
allocation would affect the rights and benefits attributable to the different
share classes.
2. (a) Restatement of balances as at 31 October 2005
On 1 November 2005 the Group adopted International Financial Reporting Standards. In accordance with
IFRS1 (First Time Adoption of International Financial Reporting Standards) the following is a
reconciliation of the financial position and result previously reported under applicable UK Accounting
Standards and the SORP for investment trusts issued in 2003, as at 31 October 2005, to the restated
IFRS financial position and results.
Group Balance Sheet (unaudited) Previously Restated
reported
31 October 2005 Adjustment 31 October
2005
£'000 £'000 £'000
Non-current assets
Investments at fair value (a) 90,556 (43)
90,513
Current assets
Debtors 193 - 193
Cash at bank and short term deposits 583 - 583
776 - 776
Creditors: amounts falling due within one year
Other payables (c) (1,132) (226)
906
Net current (liabilities)/ (356) 906 550
assets
Total assets less current liabilities 90,200 863 91,063
Non current liabilities
Loan facility (12,100) - (12,100)
Interest rate swap (b) - (181) (181)
Zero Dividend Preference Shares in the subsidiary (36,349) - (36,349)
Net assets attributable to 41,751 682 42,433
Ordinary Shareholders
Liabilities in respect of net
assets attributable to
Ordinary Shareholders are
represented by:
Called up share capital 412 - 412
Share purchase reserve 37,565 - 37,565
Capital reserves (a) & (b) 3,234 (152) 3,082
Revenue reserve (b) & (c) 540 1,374
834
Net assets attributable to Ordinary 41,751 682 42,433
Shareholders
Net asset value per
Ordinary Share - pence 101.33p 102.99p
1.66p
Zero Dividend Preference Shares in the subsidiary 132.34p - 132.34p
Notes to the restatement of opening balances
a) Effect of revaluation of non-current investments from mid to
bid value
b) Effect of marking-to-market the interest rate swap, and charging the movement 60% as to capital and
40% to revenue.
c) Effect of now recognising dividends in the period when the Company becomes liable to pay them.
(b) Reconciliation of the Statement of Total Return to the Income Statement for the year to 31 October 2005.
Under IFRS, the Income Statement is the equivalent of the Statement of Total Return reported previously.
Consolidated Income Statement (unaudited)
Previously reported Restated
31 October 2005 Adjustments 31 October 2005
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains on
investments (a) - 10,724 10,724 - (5) (5) - 10,719 10,719
Investment Income 3,797 - 3,797 - - - 3,797 - 3,797
Investment
management fee (201) (303) (504) - - - (201) (303) (504)
Other
administrative (239) - (239) - - - (239) - (239)
expenses
Return before 3,357 10,421 13,778 - (5) (5) 3,357 10,416 13,773
finance costs and
taxation
Interest payable
(b) (295) (444) (739) (12) (18) (30) (307) (462) (769)
Provision for
redemption of the
Zero Dividend
Preference Share
in the subsidiary - (2,614) (2,614) - - - (2,614) (2,614)
-
Dividends paid - - - (2,678) - (2,678) (2,678) - (2,678)
(c)
Return before
taxation 3,062 7,363 10,425 (2,690) (23) (2,713) 372 7,340 7,712
Tax on ordinary
activities (149) 149 - - - - (149) 149 -
Increase in net
assets
attributable to
Ordinary
Shareholders 2,913 7,512 10,425 (2,690) (23) (2,713) 223 7,489 7,712
Dividends paid
and proposed (c) (2,760) - (2,760) 2,760 - 2,760 - - -
Transfer to
reserves 153 7,512 7,665 70 (23) 47 223 7,489 7,712
Return per
Ordinary Share
7.07p 18.23p 25.30p (0.03)p (0.05)p (0.08)p 7.04p 18.18p 25.22p
Return per Zero
Dividend
Preference Share
in the subsidiary - 9.52p 9.52p - - - - 9.52p 9.52p
Notes to the restatement of opening balances:
a) Effect of revaluation of non-current investments from mid to bid value.
b) Effect of marking-to-market the interest rate swap, and charging the movement 60% as to capital and 40% to
revenue.
c) Effect of accounting for dividends in the period they are liable to be paid and the reclassification as finance
costs.
3. (a) Restatement of balances as at 30 April 2005
On 1 November 2005 the Group adopted International Financial Reporting Standards. In
accordance with IFRS1 (First Time Adoption of International Financial Reporting
Standards) the following is a reconciliation of the financial position and result
previously reported under applicable UK Accounting Standards and the SORP for investment
trusts issued in 2003, as at and for the period ended 30 April 2005, to the restated IFRS
financial position and results.
Group Balance Sheet (unaudited) Previously Restated
reported
30 April 2005 Adjustment 30 April 2005
£'000s £'000s £'000s
Non-current assets
Investments at fair value (a) 83,427 (48)
83,379
Current assets
Debtors 701 - 701
Cash at bank and short term deposits 1,076 - 1,076
1,777 - 1,777
Creditors: amounts falling due within one year
Other payables (c) (1,744) (1,126)
618
Net current assets 33 618 651
Total assets less current liabilities 83,460 570 84,030
Non current liabilities
Loan facility (12,100) - (12,100)
Interest rate swap (b) - (154) (154)
Zero Dividend Preference Shares in the subsidiary (35,000) - (35,000)
Net assets attributable to 36,360 416 36,776
Ordinary Shareholders
Liabilities in respect of net
assets attributable to
Ordinary Shareholders
(formerly equity
shareholders' funds)
represented by:
Called up share capital 412 - 412
Share purchase reserve 37,565 - 37,565
Capital reserves (a) & (b) (2,281) (141) (2,422)
Revenue reserve (b) & (c) 664 1,221
557
Net assets attributable to Ordinary 36,360 416 36,776
Shareholders
Net asset value per
Ordinary Share - pence 88.25p 89.26p
1.01p
Zero Dividend Preference Shares in the subsidiary 127.42p - 127.42p
Notes to the restatement of opening balances
a) Effect of revaluation of non-current investments from mid to
bid value.
b) Effect of marking-to-market the interest rate swap, and charging the movement 60% as to capital and 40% to revenue.
c) Effect of now recognising dividends in the period when the Company becomes liable to pay them.
(b) Reconciliation of the Statement of Total Return to the Income statement for the six months to 30 April 2005.
Under IFRS, the Income Statement is the equivalent of the Statement of Total Return reported previously.
Consolidated Income Statement (unaudited)
Previously reported Restated
30 April 2005 Adjustments 30 April 2005
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains on - 3,549 3,549 - (10) (10) - 3,539 3,539
investments (a)
Investment Income 1,973 - 1,973 - - - 1,973 - 1,973
Investment (94) (141) (235) - - - (94) (141) (235)
management fee
Other (147) - (147) - - - (147) - (147)
administrative
expenses
Return before 1,732 3,408 5,140 - (10) (10) 1,732 3,398 5,130
finance costs and
taxation
Interest payable (146) (219) (365) (1) (2) (3) (147) (221) (368)
(b)
Provision for
redemption of the
Zero Dividend
Preference Share
in the subsidiary - (1,265) (1,265) - - - - (1,265) (1,265)
Dividends paid (c) - - - (1,442) - (1,442) (1,442) - (1,442)
Return on ordinary 1,586 1,924 3,510 (1,443) (12) (1,455) 143 1,912 2,055
activities before
taxation
Tax on ordinary (73) 73 - - - - (73) 73 -
activities
Increase in net 1,513 1,997 3,510 (1,443) (12) (1,455) 70 1,985 2,055
assets
attributable to
Ordinary
Shareholders
Dividends paid and (1,236) - (1,236) 1,236 - 1,236 - - -
proposed (c)
Transfer to 277 1,997 2,274 (207) (12) (219) 70 1,985 2,055
reserves
Return per 3.67p 4.85p 8.52p - (0.03)p (0.03)p 3.67p 4.82p 8.49p
ordinary share
Return per Zero
Dividend
Preference Share
in the subsidiary - 4.60p 4.60p - - - - 4.60p 4.60p
Notes to the restatement of opening balances:
a) Effect of revaluation of non-current investments from mid to bid value.
b) Effect of marking-to-market the interest rate swap, and charging the movement 60% as to capital and 40% to revenue.
c) Effect of accounting for dividends in the period they are liable to be paid and the reclassification as finance
costs.
4. Restatement of balances as at 31 October 2004
On 1 November 2005 the Group adopted International Financial Reporting Standards. In
accordance with IFRS1 (First Time Adoption of International Financial Reporting
Standards) the following is a reconciliation of the opening balances as at 31 October
2004, previously reported under applicable UK Accounting Standards and the SORP for
investment trusts issued in 2003, to the restated IFRS results.
Group Balance Sheet (unaudited) Previously Restated
reported
31 October 2004 Adjustment 31 October
2004
£'000 £'000 £'000
Non-current assets
Investments at fair value (a) 78,261 (38)
78,223
Current assets
Debtors 797 - 797
Cash at bank and short term deposits 2,106 - 2,106
2,903 - 2,903
Creditors: amounts falling due within one year
Other payables (c) (1,243) (419)
824
Net current assets 1,660 824 2,484
Total assets less current liabilities 79,921 786 80,707
Non current liabilities
Loan facility (12,100) - (12,100)
Interest rate swap (b) - (151) (151)
Zero Dividend Preference Shares in the subsidiary (33,735) - (33,735)
Net assets attributable to 34,086 635 34,721
Ordinary Shareholders
Liabilities in respect of net
assets attributable to
Ordinary Shareholders
(formerly equity
shareholders' funds)
represented by:
Called up share capital 412 - 412
Share purchase reserve 37,565 - 37,565
Capital reserves (a) & (b) (4,278) (129) (4,407)
Revenue reserve (b) & (c) 387 1,151
764
Net assets attributable to Ordinary 34,086 635 34,721
Shareholders
Net asset value per
Ordinary Share - pence 82.73p 84.27p
1.54p
Zero Dividend Preference Shares in the subsidiary 122.82p - 122.82p
Notes to the restatement of opening balances:
a) Effect of revaluation of non-current investments from mid to bid value.
b) Effect of marking-to-market the interest rate swap, and charging the movement 60% as to capital and 40% to revenue.
c) Effect of now recognising dividends in the period when the Company becomes liable to pay them.
5. Reconciliation of movements in net assets attributable to ordinary shareholders (unaudited)
Share Share Capital Revenue Total
Capital Purchase Reserve Reserve
Reserve
£'000 £'000 £'000 £'000 £'000
Balance at 31 October 2005 412 37,565 3,234 540 41,751
Valuation adjustment from mid to bid - - (43) - (43)
Add back accrued dividends - - - 906 906
Revaluation of swap contract - - (109) (72) (181)
Balance at 31 October 2005 (restated) 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 share paid on 31 - - - (658) (658)
March 2006
Gains on investments - - 11,473 - 11,473
Other transfers to reserves - 9 (1,647) 1,664 26
Balance at 30 April 2006 412 37,574 12,908 1,474 52,368
Share Share Capital Revenue Total
Capital Purchase Reserve Reserve
Reserve
£'000 £'000 £'000 £'000 £'000
Balance at 31 October 2004 412 37,565 (4,278) 387 34,086
Valuation adjustment from mid to bid - - (38) - (38)
Add back accrued dividend - - - 824 824
Revaluation of swap contract - - (91) (60) (151)
Balance at 31 October 2004 (restated) 412 37,565 (4,407) 1,151 34,721
Dividends paid in respect of 31 October 2004 - - - (824) (824)
First interim dividend of 1.50p per share paid on - - - (618) (618)
31 March 2005
Gains on investments - - 3,539 - 3,539
Other transfers to reserves - - (1,554) 1,512 (42)
Balance at 31 October 2005 (restated) 412 37,565 (2,422) 1221 36,776
Share Share Capital Revenue Total
Capital Purchase Reserve Reserve
Reserve
£'000 £'000 £'000 £'000 £'000
Balance at 31 October 2004 412 37,565 (4,278) 387 34,086
Valuation adjustment from mid to bid - - (38) - (38)
Add back accrued dividend - - - 824 824
Revaluation of swap contract - - (91) (60) (151)
Balance at 31 October 2004 (restated) 412 37,565 (4,407) 1,151 34,721
Dividends paid in respect of 31 October 2004 - - - (824) (824)
First interim dividend of 1.50p per share paid on - - - (618) (618)
31 March 2005
Second interim dividend of 1.50p per share paid on - - - (618) (618)
30 June 2005
Third interim dividend of 1.50p per share paid on - - - (618) (618)
30 September 2005
Gains on investments - - 10,719 - 10,719
Other transfers to reserves - - (3,230) 2,901 (329)
Balance at 31 October 2005 (restated) 412 37,565 3,082 1,374 42,433
6. Comparative information
The results for the six months to 30 April 2006 and 30 April 2005, which are
unaudited, constitute non-statutory accounts within the meaning of Section 240
of the Companies Act 1985. The comparative figures for the financial year ended
31 October 2005 are not the Group's statutory accounts for that financial year.
Those accounts have been reported on by the Group's auditors and delivered to
the registrar of companies. The report of the auditors was unqualified and did
not contain a statement under section 237(2) or (3) of the Companies Act 1985.
This statement was approved by the Board of Directors on 16 June 2006.
The Interim Report for the period ended 30 April 2006 will be mailed to
shareholders at their registered addresses in July 2006 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)
16 June 2006
This information is provided by RNS
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