Final Results

Finsbury Worldwide Pharm Tst PLC 31 May 2006 31 May 2006 Finsbury Worldwide Pharmaceutical Trust PLC today announces preliminary results for the year ended 31 March 2006. Financial Highlights (Unaudited) *Restated % Year ended (Audited) change 31 March 2006 Year ended 31 March 2005 Shareholders' Funds £334.8m £226.4m +47.9 Net Asset Value per share (basic) 583.0p 414.7p +40.6 Net Asset Value per share (diluted) 564.1p 414.7p +36.0 Share price 575.0p 430.0p +33.7 (Discount)/premium of share price to basic Net (1.4%) 3.7% - Asset Value Datastream World Pharmaceutical Index (total 7,787.8 6,173.2 +26.2 return, sterling adjusted) FTSE All-Share (total return) 3,462.2 2,704.5 +28.0 #Total Expense Ratio (incl. performance 1.5% 0.8% - fees) #Total Expense Ratio (excl. performance 1.4% 1.5% - fees) * Restated see note 1 and note 5 # Excludes the deferred fee paid to M and I Investors, Inc. on 24 January 2006 - ENDS - The following are attached: • Chairman's Statement • Income Statement • Reconciliation of Movements in Shareholders' Funds • Balance Sheet • Cash Flow Statement • Notes to the Financial Statements For further information please contact: Alastair Smith Close Finsbury Asset Management Limited 020 7426 6240 Jo Stonier/Eleanor Clarke Quill Communications 020 7758 2230 Ian Ivory Chairman (care of the Company Secretary) 020 7426 6219 Chairman's Statement Review of the Year and Performance The year under review has been a good one for the Company and the net asset value ('NAV') per share rose by 40.6% compared to the benchmark increase of 26.2%. On a 3 year view the increase in the NAV, on a total return basis, has been 59.6% compared to the benchmark increase of 33.0%. The enthusiasm your Board has for the pharmaceutical sector remains undiminished and during the year the earnings growth expected of the major biotechnology companies came through strongly as earlier discoveries were translated into profits. The smaller biotechnology companies have also performed well and several have been bought by larger organisations anxious to fill their product pipelines. It is expected that the growth will continue for the foreseeable future as the ongoing demand for current and new drugs is accelerated by the demographics in the developed world. The growth expected will be irregular as drugs continue to have both positive and negative surprises but we have confidence in OrbiMed's ability to anticipate the events and take advantage of them. The weakness of the US dollar will continue to affect the sterling value of the portfolio. The majority of the Company's assets are in US dollars. Capital During the year the discount at which the shares can trade never rose as high as 6.0% so no shares were repurchased. Indeed the strength of the Company's shares enabled 2.7 million new shares to be issued at a premium to NAV raising £15.0 million for the Company. At the regular warrant exercise date of 31 July a total of 101,082 warrants were exercised raising a further £469,000. The NAV at 31 March 2006 of 583.0p remains considerably in excess of the exercise price of 464.0p. The final opportunity to exercise the warrants is on 31 July 2009. The Company actively uses gearing to enhance the returns on the portfolio. During the year the total amount of debt increased from £24.4 million to £49.5 million or an increase from 10.8% to 14.8% as a ratio of total net assets. The debt drawn down is in proportion to the currency spread of the portfolio, so no currency views are taken. Derivatives Shareholders will have been aware at the interim stage the Board authorised a prudent allocation in derivatives investing using options strategies. This is to protect the Company's assets from the volatility so often experienced in the sector and the initial exposure was limited to 1.0% of the Company's gross assets. This exposure has proved to be highly beneficial producing a profit of £1.4 million. Your Board is now convinced of the benefit of this type of investing and is proposing that the exposure is increased to a maximum of 5.0% of the overall assets. A resolution to amend the investment objective of the Company to this effect will therefore be proposed at the AGM. Revenue and Dividends/Return on Investments The total return for the year was £93.6 million (2005: loss of £28.6 million) and the Board is recommending a dividend of 1.7p (2005: 1.3p). The Company continues to charge all the investment management fees to capital and at 31 March 2006 the total expense ratio (excluding performance and deferred fees) was 1.4% (31 March 2005: 1.5%). The dividend will be payable on 18 July 2006 to equity shareholders on the register of members on 9 June 2006. The shares will go ex-dividend on 7 June 2006. Chairman's Statement (continued) Outlook Your Board continues to believe that the prospects for the pharmaceutical and biotechnology sectors remain good and that OrbiMed are best placed to achieve returns for the Company. The longer-term returns for the Company have been compounded at 18.0% since launch in 1995. This said, growth will not be achieved every year and since the year end there has been a decline in the NAV principally due to a short term sell off in the biotechnology sector and a sharp reversal in the value of the U.S. dollar. Your Board constantly looks for ways of enhancing the returns for shareholders and in 2004 warrants were introduced, in January 2006 we began investing in derivatives and in the future we may put further ideas to shareholders. The Company increasingly sees itself as a more flexible investor than a traditional investment trust and shareholders will notice that the annual report have been redesigned accordingly. Annual General Meeting The Annual General Meeting of the Company will be held at the offices of Close Finsbury Asset Management Limited on Friday, 14 July 2006 from 12 noon. I hope as many shareholders as possible will attend. This will provide an opportunity to hear from Mr Samuel D Isaly of OrbiMed, the Company's Investment Advisers, on the period under review, recent developments in the pharmaceutical sector and the prospects for the future. Ian Ivory Chairman 31 May 2006 Income Statement for the year ended 31 March 2006 (Unaudited) Restated (Audited)* Revenue Capital Total Revenue Capital Total 2006 2006 2006 2005 2005 2005 £'000 £'000 £'000 £'000 £'000 £'000 Gains/(losses) on investments held at fair value through profit or loss - 98,824 98,824 - (27,929) (27,929) Exchange (losses)/gains on currency balances - (1,621) (1,621) - 84 84 Income from investments held at fair value through profit or loss (note 2) 2,961 - 2,961 1,973 - 1,973 Investment management and performance fees (note 3) - (3,192) (3,192) - (896) (896) Other expenses (961) (745) (1,706) (807) 247 (560) -------------------------------------------------------------------------------------------------------------- Net return/(loss) before finance charges and taxation 2,000 93,266 95,266 1,166 (28,494) (27,328) Finance charges - (1,300) (1,300) - (955) (955) -------------------------------------------------------------------------------------------------------------- Net return/(loss) on ordinary activities before taxation 2,000 91,966 93,966 1,166 (29,449) (28,283) Taxation on net return/(loss) on ordinary activities (605) 266 (339) (422) 122 (300) -------------------------------------------------------------------------------------------------------------- Net return/(loss) on ordinary activities after taxation 1,395 92,232 93,627 744 (29,327) (28,583) -------------------------------------------------------------------------------------------------------------- Earnings/(loss) per Ordinary share - basic (note 4) 2.5p 166.1p 168.6p 1.7p (67.2p) (65.5p) -------------------------------------------------------------------------------------------------------------- Earnings/(loss) per Ordinary share - diluted (note 4) 2.5p 162.3p 164.8p 1.7p (67.2p) (65.5p) -------------------------------------------------------------------------------------------------------------- * Restated see note 1 and note 5 The total column of this statement is the profit and loss account of the Company. The revenue and capital columns are supplementary to this and are prepared under guidance by the Association of Investment Trust Companies. All revenue and capital items in the above statement derive from continuing operations. The Company has no recognised gains and losses other than those shown above and therefore no separate statement of total recognised gains and losses has been presented. No operations were acquired or discontinued in the year. Reconciliation of Movements in Shareholders' Funds For the year ended 31 March 2006 Called-up Capital share Share Warrant Capital redemption Revenue capital premium reserve reserve reserve reserve Total At 31 March 2006 £'000 £'000 £'000 £'000 £'000 £'000 £'000 ------------------------------------------------------------------------------------------------------------------------ At 31 March 2005 as previously stated 13,648 101,790 7,528 101,467 375 862 225,670 Add back 2005 final dividend - - - - - 710 710 ------------------------------------------------------------------------------------------------------------------------ At 31 March 2005 (restated) 13,648 101,790 7,528 101,467 375 1,572 226,380 Net return from ordinary activities - - - 92,232 - 1,395 93,627 Dividends paid in respect of year ended 31 March 2005 - - - - - (710) (710) Exercise of Warrants 25 444 - - - - 469 Transfer from Warrant reserve following exercise of Warrants - 70 (70) - - - - Issue of own shares 683 14,309 - - - - 14,992 ------------------------------------------------------------------------------------------------------------------------ At 31 March 2006 14,356 116,613 7,458 193,699 375 2,257 334,758 ------------------------------------------------------------------------------------------------------------------------ Called-up Capital share Share Warrant Capital redemption Revenue capital premium reserve reserve reserve reserve Total At 31 March 2005 £'000 £'000 £'000 £'000 £'000 £'000 £'000 ------------------------------------------------------------------------------------------------------------------------ At 31 March 2004 as previously stated 9,823 46,763 - 130,794 375 828 188,583 Add back 2004 final dividend - - - - - 511 511 ------------------------------------------------------------------------------------------------------------------------ At 31 March 2004 (restated) 9,823 46,763 - 130,794 375 1,339 189,094 Net (loss)/return from ordinary activities - - - (29,327) - 744 (28,583) Dividends paid in respect of year ended 31 March 2004 - - - - - (511) (511) Transfer to warrant reserve following issue of warrants - (7,528) 7,528 - - - - Issue of own shares 3,825 62,555 - - - - 66,380 ------------------------------------------------------------------------------------------------------------------------ At 31 March 2005 (restated) 13,648 101,790 7,528 101,467 375 1,572 226,380 ------------------------------------------------------------------------------------------------------------------------ Balance Sheet as at 31 March 2006 Restated* (Unaudited) (Audited) 2006 2005 £'000 £'000 ------------------------------------------------------------------------------- Investments held at fair value through profit or loss 378,044 253,347 Current assets Debtors 500 438 Cash at bank 6,490 - ------------------------------------------------------------------------------- 6,990 438 ------------------------------------------------------------------------------- Creditors Amounts falling due within one year (50,276) (27,405) ------------------------------------------------------------------------------- Net current liabilities (43,286) (26,967) ------------------------------------------------------------------------------- Total net assets 334,758 226,380 ------------------------------------------------------------------------------- Capital and reserves Called up share capital 14,356 13,648 Share premium account 116,613 101,790 Warrant reserve 7,458 7,528 Capital reserves 193,699 101,467 Capital redemption reserve 375 375 Revenue reserve 2,257 1,572 ------------------------------------------------------------------------------- Total equity shareholders' funds 334,758 226,380 ------------------------------------------------------------------------------- Net asset value per Ordinary share - basic (note 6) 583.0p 414.7p Net asset value per Ordinary share - diluted (note 6) 564.1p 414.7p ------------------------------------------------------------------------------- * Restated see note 1 and 5 Cash Flow Statement for the year ended 31 March 2006 (Unaudited) (Audited) 2006 2005 £'000 £'000 ------------------------------------------------------------------------------- Net cash outflow from operating activities (4,594) (3,487) Servicing of finance Interest paid (1,322) (896) ------------------------------------------------------------------------------- Taxation Taxation recovered 59 157 ------------------------------------------------------------------------------- Financial investments Purchases of investments (120,620) (103,993) Sales of investments 94,747 55,074 ------------------------------------------------------------------------------- Net cashflow from financial investment (25,873) (48,919) Equity dividends paid (710) (511) ------------------------------------------------------------------------------- Net cash outflow before financing (32,440) (53,656) Financing Issue of Ordinary shares 15,461 66,380 Increase/(decrease) in short term loans 25,140 (11,798) ------------------------------------------------------------------------------- Net cash inflow from financing 40,601 54,582 ------------------------------------------------------------------------------- Increase in cash for the year 8,161 926 ------------------------------------------------------------------------------- Notes: 1 Accounting Policies The principal accounting policies, all of which have been applied consistently throughout the year in the preparation of these preliminary results, are on the same basis as the statutory accounts of the Company, and are set out below: (a) Accounting Convention The financial statements have been prepared in accordance with applicable accounting standards and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' dated December 2005 (the 'Revised SORP'). (b) Changes in Presentation The Company has adopted the provisions of the Revised SORP, which has resulted in some changes to the presentation of the Company's accounts. What was previously the Statement of Total Return is now called the Income Statement and the total column is now the profit and loss account of the Company. Dividends payable to equity shareholders are no longer reflected in the Income Statement, although they continue to be shown in the Reconciliation of Movements in Shareholders' Funds which is now presented as a primary statement. (c) Changes in Accounting Policy The Company has changed its accounting policy for the valuation of listed investments and the recognition of dividends payable to equity shareholders in accordance with the provisions of FRS 26 - Financial instruments: Recognition and Measurement ('FRS 26') and FRS 21 - Events after the balance sheet date ('FRS 21') respectively. These changes in policy and the associated impact on the results of the Company are referred to below. (d) Valuation of Investments Investments - prior to 1 April 2005, listed investments were valued at middle market prices. 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. In accordance with the exemption conferred by FRS 26, comparatives have not been restated for this change in accounting policy, and therefore listed investments shown at 31 March 2005 are stated at middle market prices. The effect of this change in accounting policy is to decrease the value of investments as at 31 March 2006 and decrease the net return on ordinary activities after taxation for the period ended by £183,000. Unquoted investments are valued by the Directors using primary valuation techniques such as earnings, multiples, recent transactions and net assets. Where 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. 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. All purchases and sales are accounted for on a trade date basis. (e) Investment Income Dividends receivable on equity shares are recognised on the ex-dividend date. Where no ex-dividend date is quoted, dividends are recognised when the Company's right to receive payment is established. Deposit interest is accounted for on an accruals basis. (f) Expenses All expenses are accounted for on an accruals basis. Expenses are charged through the income account (revenue) except as follows: Notes (continued): (1) Accounting Policies (continued) (f) Expenses (continued) (i) expenses which are incidental to the acquisition or disposal of an investment are categorised as fixed assets at fair value through profit or loss and are expensed as they are incurred and are charged to capital; and (ii) expenses are charged to the realised capital reserve where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect the investment management fee, including any performance fee and the indexation on the deferred fee agreement with the previous Investment Adviser, have been charged to the income statement in line with the Board's expected long-term split of returns, in the form of capital gains and income, from the Company's investment portfolio. (g) Finance costs/charges Finance costs are accounted for on an accruals basis. Finance costs are charged to the income statement in line with the Board's expected long-term split of returns, in the form of capital gains and income, from the Company's investment portfolio. Interest-bearing bank loans are overdrafts are recorded as the proceeds received, net of direct issue costs. Finance charges, if applicable, including interest payable and premiums on settlement or redemption, are accounted for on an accruals basis in the income statement using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. (h) Taxation The tax effect of different items of expenditure is allocated between capital and revenue using the marginal basis. Deferred taxation is provided for on all timing differences that have originated but not reversed by the balance sheet date other than those differences regarded as permanent. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the reversal of timing differences can be deducted. Any liability to deferred tax is provided for at the average rate of tax expected to apply. Deferred tax assets and liabilities are not discounted to reflect the time value of money. (i) Foreign Currency The results and financial position of the Company are expressed in pounds sterling, which is the functional and presentational currency of the Company. Sterling is the functional currency because it is the currency of the primary economic environment in which the Company operates. Transactions recorded in overseas currencies during the year are translated into sterling at the appropriate daily exchange rates. Assets and liabilities denominated in overseas currencies at the balance sheet date are translated into sterling at the exchange rates ruling at the date. Any gains or losses on the translation of foreign currency balances, whether realised or unrealised, are taken to the capital or the revenue column of the Income Statement, depending on whether the gain or loss is of a capital or revenue nature. (j) Dividends payable to Equity Shareholders Under FRS 21 dividends should not be accrued in the accounts unless they have been approved by shareholders before the Balance Sheet date. Dividends payable to equity shareholders are recognised in the Reconciliation of Movements in Shareholders' Funds when they have been approved by shareholders and become a liability of the Company. The net assets at 31 March 2005 and 31 March 2004 have been impacted as disclosed in note 5. The effect of this change is to increase net assets at 31 March 2005 by £710,000 (or 1.30p per share) (31 March 2004: £511,000 or 1.30p per share). Notes (continued): (1) Accounting Policies (continued) (k) Reserves Capital reserves The following are charged to this reserve: • gains and losses on the realisation of investments; • realised exchange differences of a capital nature; • expenses, together with the related taxation effect, in accordance with the above policies: • increases and decreases in the valuation of investments held at the year end; and • unrealised exchange differences of a capital nature. 2 Income from investments held at fair value through profit or loss (Unaudited) (Audited) 2006 2005 £'000 £'000 Income from investments 2,892 1,899 Interest receivable 69 74 ------------------------- ---------- ---------- Total income from investments held at fair value 2,961 1,973 ------------------------- ---------- ---------- 3 Investment Management and Performance Fees (Unaudited) (Audited) Revenue Capital Total Revenue Capital Total 2006 2006 2006 2005 2005 2005 £'000 £'000 £'000 £'000 £'000 £'000 Accrual of Performance fee - - - - (1,430) (1,430) Performance fee paid in the period - 136 136 - - - Management fee - 2,993 2,993 - 2,324 2,324 Irrecoverable VAT thereon - 63 63 - 2 2 -------------------- ------- ------- ------ ------- ------- -------- - 3,192 3,192 - 896 896 -------------------- ------- ------- ------ ------- ------- -------- Notes (continued): 4 Earnings/(loss) per Ordinary share (Unaudited) (Audited) 2006 2005 £'000 £'000 The return per Ordinary share is based on the following figures: Revenue return 1,395 744 Capital return 92,232 (29,327) ------------------------- ---------- ---------- Weighted average number of Ordinary shares in issue for the year - basic 55,522,713 43,649,878 ------------------------- ---------- ---------- Revenue return per Ordinary share 2.5p 1.7p Capital return per Ordinary share 166.1p (67.2p) ------------------------- ---------- ---------- Total earnings per share - basic 168.6p (65.5p) ------------------------- ---------- ---------- Weighted average number of Ordinary shares in issue for the year - diluted 56,832,543 43,649,878* ------------------------- ---------- ---------- Revenue return per Ordinary share 2.5p 1.7p Capital return per Ordinary share 162.3p (67.2p) ------------------------- ---------- ---------- Total earnings per share - diluted 164.8p (65.5p) ------------------------- ---------- ---------- * dilution not applicable 5 Final Dividends (i) Change in presentation and restatement The Income Statement and Balance Sheet (creditors), no longer reflect payment of dividends; these are now shown in the Reconciliation of Movements in Shareholders' Funds during the period in which they are approved by shareholders. The Income Statement, Revenue Reserve and Reconciliation of Movements in Shareholders' Funds, Balance Sheet (creditors) for the year ended 31 March 2005 have been restated accordingly. The effect on the Balance Sheet at 31 March 2005 £'000 Per Ordinary share ------------------------------- -------- ----------- Net assets as at 31 March 2005 as previously stated 225,670 413.4p Add back 2005 final dividend 710 1.3p ------------------------------- -------- ----------- Restated net assets as at 31 March 2005 226,380 414.7p ------------------------------- -------- ----------- The effect on the Balance Sheet at 31 March 2004 £'000 Per Ordinary share ------------------------------- -------- ----------- Net assets as at 31 March 2004 as previously stated 188,583 480.0p Add back 2004 final dividend 511 1.3p ------------------------------- -------- ----------- Restated net assets as at 31 March 2004 189,094 481.3p ------------------------------- -------- ----------- Notes (continued): 5 Final Dividends (continued) (ii) Proposed Final Dividend In respect of the year ended 31 March 2006, a final dividend of 1.7p per share has been declared and is subject to approval by shareholders at the forthcoming Annual General Meeting. The aggregate cost of this dividend based on the number of shares in issue at the balance sheet date is estimated to be £979,000, In accordance with FRS 21 this dividend will be reflected in the interim accounts as at 30 September 2006 when it has been approved by shareholders. Total dividends payable in respect of the financial year, which is the basis on which the requirements of s842 of the Income and Corporation Taxes Act 1988 are considered, are set out below: ------------------------------- -------- ----------- 2006 2005 £'000 £'000 ------------------------------- -------- ----------- Revenue available for distribution by way of dividend for the year 1,395 744 Dividends proposed for the year ended 31 March 2006 (979) (710) ------------------------------- -------- ----------- 416 34 ------------------------------- -------- ----------- 6 Net Asset Value per Ordinary share The net asset value per Ordinary share is based on the assets attributable to equity shareholders of £334,758,000 (2005: Restated £226,380,000) and on the number of Ordinary shares in issue at the year end of 57,422,150 (2005: 54,591,494). The diluted net asset value per Ordinary share assumes all outstanding warrants are exercised at 464p resulting in assets attributable to equity shareholders of £384,898,000 and on the resultant number of shares of 68,228,248. For the comparative period there is no dilution. 7 These accounts are not statutory accounts as defined by section 240 of the Companies Act 1985. Statutory accounts for the 12 months ended 31 March 2005 have been delivered to the Registrar of Companies and received an audit report which was unqualified and did not contain statements under Section 237 (2) and (3) of the Companies Act 1985. Statutory accounts for the 12 months ended 31 March 2006 will be delivered to the Registrar of Companies. The audit report is yet to be signed. Close Finsbury Asset Management Limited Company Secretary 31 May 2006 This information is provided by RNS The company news service from the London Stock Exchange

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