Interim Results
Finsbury Worldwide Pharm Tst PLC
21 November 2006
NEWS RELEASE
21 November 2006
FINSBURY WORLDWIDE PHARMACEUTICAL TRUST PLC
Preliminary Results for the six months ended 30 September 2006
Finsbury Worldwide Pharmaceutical Trust PLC today announces its interim results
for the six months ended 30 September 2006.
Financial Highlights
30 September 31 March % Change
2006 2006
Shareholders' Funds £299.0 m £334.8m -10.7
Basic Net Asset Value per share 519.0p 583.0p -11.0
Fully Diluted Net Asset Value per share 510.3p 564.1p -9.5
Share price 492.0p 575.0p -14.4
Warrant price 109.5p 178.5p -38.7
Discount to basic Net Asset Value 5.2% 1.4% -
Benchmark Index * 7,763.5 7,787.8 -0.3
FTSE All-Share (total return) 3,522.6 3,462.2 +1.7
Gearing # 15% 15% -
+Total Expense Ratio (including
performance fees) 1.3% 1.5% -
+Total Expense Ratio (excluding
performance fees) 1.3% 1.4% -
* Datastream World Pharmaceutical and Biotechnology Index, total return,
sterling adjusted. Formerly named, the Datastream World Pharmaceutical Index,
which contained pharmaceutical and biotechnology stocks.
#Prior charges as a percentage of net assets.
+ Excludes the deferred fee paid to M and I Investors, Inc on 24 January 2006.
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:
Ian Ivory, Chairman, Finsbury Worldwide Pharmaceutical Trust PLC 01828 640383
Tracey Lago, Company Secretary, Close Investments Limited 020 7426 6219
Chairman's Statement
Performance
After particularly strong asset growth in the year to 31 March 2006 where the
net asset value ('NAV') grew by 40.6%. It is disappointing to have to report
that the NAV fell back by 11% in the six months to 30 September 2006. Over the
same period the Datastream World Pharmaceutical & Biotechnology Index fell by
0.3%. Company performance was impacted by two factors. Firstly, the value of the
Dollar compared to Sterling fell from $1.73 to $1.87, a drop of 8% with currency
translation losses further contributing to the fall in NAV. Secondly, smaller
biotechnology stocks, which account for 37% of the portfolio, were relatively
weak compared to the larger capitalisation issues. Further information on the
performance is given in the Review of Investments in the Interim Report.
Share Capital
During the last six months shares have been trading between a modest premium and
low discount. In the six months to 30 September 2006, 150,000 shares were
allotted at a 2.4% premium raising a total of £822,750.
In addition, the second exercise date of the Warrants occurred at which time a
total of 32,731 Warrants were exercised, raising £151,872. The remaining 10.8m
Warrants are exercisable annually on 1 August up to and including 2009 at an
exercise price of 464.0p per share. If all of the Warrants are exercised this
will raise an additional £50m for the Company.
Investment Strategy
The Company will maintain a high weighting in smaller biotechnology companies.
These companies continue to make significant discoveries relative to their size
and appear to represent better value than some of the larger pharmaceutical
companies with more mature drug portfolios.
Furthermore, there has been an upturn in merger and acquisition activity with a
significant number of smaller biotechnology companies being acquired by larger
pharmaceutical companies. The Company has benefited from this activity. The
recent election successes for the Democrats has caused some short term weakness
in the sector but this was not unexpected and does not impact on our fundamental
long term view.
In the Annual Report, we indicated the best and worst contributors to the
performance and these are shown below as at 30 September 2006 expressed as a
contribution per share.
Contribution by Investment (excluding derivatives)
Top and bottom five contributors to NAV performance for the six months to 30
September 2006
Contribution Contribution
for the six per Share
months
£'000 (p)*
Top Five Contributors
Serono 2,181 3.79
Anormed 1,069 1.86
Pfizer 850 1.48
Icos 759 1.32
Schering-Plough 742 1.29
---------
9.74
=========
Bottom Five Contributors
CV Therapeutics (4,164) (7.23)
Adolor (3,824) (6.64)
Medimmune (3,729) (6.47)
Gen-Probe (3,283) (5.70)
Tanox (3,159) (5.48)
---------
(31.52)
=========
*based on 57,604,881 Ordinary shares in issue as at 30 September 2006
As indicated in my last interim report and as proposed to shareholders at the
Annual General Meeting held in July, we are continuing to make investments in
options contracts, which are limited to 5% of overall assets. We are very
pleased that the investments made in options in the six months to 30 September
2006 have, to some degree, balanced the volatility in the sector and
additionally have generated £1,874,000 of value to the Company.
The sector is very influenced by the US dollar because the majority of
investment opportunities arise in the US and the underlying revenue streams of
these investments are predominantly US dollars. Accordingly your Board continues
to adopt the policy not to hedge the US dollar. We do however draw all
borrowings in US dollars to mitigate some of the exposure.
Revenue and Dividends
Capital growth remains the key focus for the Company and, since launch in 1995
the compound rate of return has been 15.5%. In contrast, the average dividend
yield of the shares of the Company has been well below 1.0%. The Company
continues to capitalise 100% of the management fees and charge all other
expenses to the revenue account; this allows the payment of a small annual
dividend to shareholders. The Board feels that this is the most appropriate
accounting policy and as in former years, no interim dividend is being proposed,
however we expect to be in a position to pay a small dividend in 2007.
Outlook
The industry continues to be driven by the introduction of new drugs, with
various product approvals being made in recent months. The Board remains very
impressed by the team at OrbiMed and its ability to identify future major drugs
and trends. The industry will continue to evolve and the portfolio will reflect
these changes. We believe the outlook for the sector in general and your Company
in particular remains excellent and we look forward to further significant
growth in the years to come.
Ian Ivory
Chairman
21 November 2006
Income Statement
For the six months ended 30 September 2006
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 September 2006 30 September 2005 31 March 2006
------- ------- ------- ------- ------- ------- ------- ------- -------
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 - (36,517) (36,517) - 70,379 70,379 - 98,824 98,824
value through
profit or
loss
Exchange
gains/
(losses)
on currency - 2,544 2,544 - (990) (990) - (1,621) (1,621)
balances
Income from
investments
held at fair
value through
profit or
loss 1,656 - 1,656 1,407 - 1,407 2,961 - 2,961
(note 3)
Investment
management
and
performance - (1,527) (1,527) - (1,503) (1,503) - (3,192) (3,192)
fees (note 4)
Operating
expenses (518) - (518) (466) (599) (1,065) (961) (745) (1,706)
------------ ------- ------- ------- ------- ------- ------- ------- ------- -------
Net
return/(loss)
before
finance
charges and 1,138 (35,500) (34,362) 941 67,287 68,228 2,000 93,266 95,266
taxation
Finance - (1,228) (1,228) - (553) (553) - (1,300) (1,300)
charges
------------ ------- ------- ------- ------- ------- ------- ------- ------- -------
Net
return/(loss)
on ordinary
activities
before
taxation 1,138 (36,728) (35,590) 941 66,734 67,675 2,000 91,966 93,966
Taxation on
net
return/(loss)
on ordinary
activities (351) 155 (196) (292) 121 (171) (605) 266 (339)
------------ ------- ------- ------- ------- ------- ------- ------- ------- -------
Net
return/(loss)
on ordinary
activities
after 787 (36,573) (35,786) 649 66,855 67,504 1,395 92,232 93,627
taxation
------------ ------- ------- ------- ------- ------- ------- ------- ------- -------
Return/(loss)
per Ordinary
share - basic
(note 2) 1.4p (63.5)p (62.1)p 1.2p 122.4p 123.6p 2.5p 166.1p 168.6p
------------ ------- ------- ------- ------- ------- ------- ------- ------- -------
Return/(loss)
per Ordinary
share -
diluted (note
2) 1.3p (63.5)p (62.2)p 1.2p 121.8p 123.0p 2.5p 162.3p 164.8p
------------ ------- ------- ------- ------- ------- ------- ------- ------- -------
The total column of this statement is the profit and loss account of the
Company. The revenue and capital return columns are supplementary to this and
are prepared under guidance published by the Association of Investment
Companies, formerly 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 have been
presented.
No operations were acquired or discontinued during the year.
Reconciliation of Movements in Shareholders' Funds
For the six months ended 30 September 2006
Six months Called-up Share Capital
ended share premium Warrant Capital redemption Revenue
30 September capital account reserve reserve reserve reserve Total
2006 £'000 £'000 £'000 £'000 £'000 £'000 £'000
-----------------------------------------------------------------------------------------------------------------------
At 31 March
2006 14,356 116,613 7,458 193,699 375 2,257 334,758
Net
(loss)/return
from ordinary
activities
after tax - - - (36,573) - 787 (35,786)
Dividends paid
in respect of
year ended 31
March 2006 - - - - - (979) (979)
Exercise of
warrants 8 144 - - - - 152
Transfer from
warrant
reserve
following
exercise of
warrants - 21 (21) - - - -
Issue of own
shares 37 785 - - - - 822
------------------------------------------------------------------------------------------------------------------------
At 30
September 2006 14,401 117,563 7,437 157,126 375 2,065 298,967
------------------------------------------------------------------------------------------------------------------------
Six months Called-up Share Capital
ended share premium Warrant Capital redemption Revenue
30 September capital account reserve reserve reserve reserve Total
2005 £'000 £'000 £'000 £'000 £'000 £'000 £'000
-----------------------------------------------------------------------------------------------------------------------
At 31 March
2005 13,648 101,790 7,528 101,467 375 1,572 226,380
Net return
from ordinary
activities
after tax - - - 66,855 - 649 67,504
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) - - - -
------------------------------------------------------------------------------------------------------------------------
At 30
September 2005 13,673 102,304 7,458 168,322 375 1,511 293,643
-----------------------------------------------------------------------------------------------------------------------
Called-up Share Capital
share premium Warrant Capital redemption Revenue
Year ended capital account reserve reserve reserve reserve Total
31 March 2006 £'000 £'000 £'000 £'000 £'000 £'000 £'000
-----------------------------------------------------------------------------------------------------------------------
At 31 March
2005 13,648 101,790 7,528 101,467 375 1,572 226,380
Net return
from ordinary
activities
after tax - - - 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
------------------------------------------------------------------------------------------------------------------------
Purchase transaction costs for the six months ended 30 September 2006 were
£83,000 (six months ended 30 September 2005: £75,000; year ended 31 March 2006:
£218,000).
Sales transaction costs for the six months ended 30 September 2006 were £133,000
(six months ended 30 September 2005: £54,000; year ended 31 March 2006:
£221,000).
Balance Sheet
As at 30 September 2006
-------------------------- ----------- ---------- ----------
(Unaudited) (Unaudited) (Audited)
30 September 30 September 31 March
2006 2005 2006
£'000 £'000 £'000
-------------------------- ----------- ---------- ----------
Investments held at fair
value through profit or
loss 326,811 327,232 378,044
-------------------------- ----------- ---------- ----------
Current assets
Debtors 1,427 454 500
Cash at bank 22,714 5,107 6,490
-------------------------- ----------- ---------- ----------
24,141 5,561 6,990
Creditors
Amounts falling due within
one year (51,985) (39,150) (50,276)
-------------------------- ----------- ---------- ----------
Net current liabilities (27,844) (33,589) (43,286)
-------------------------- ----------- ---------- ----------
Total net assets 298,967 293,643 334,758
-------------------------- ----------- ---------- ----------
Capital and reserves
Called up share capital 14,401 13,673 14,356
Share premium account 117,563 102,304 116,613
Warrant reserve 7,437 7,458 7,458
Capital reserves 157,126 168,322 193,699
Capital redemption reserve 375 375 375
Revenue reserve 2,065 1,511 2,257
-------------------------- ----------- ---------- ----------
Total equity shareholders'
funds 298,967 293,643 334,758
-------------------------- ----------- ---------- ----------
Net Asset Value per
Ordinary share - basic
(note 5) 519.0p 536.9p 583.0p
-------------------------- ----------- ---------- ----------
Net Asset Value per
Ordinary share - diluted
(note 5) 510.3p 524.9p 564.1p
-------------------------- ----------- ---------- ----------
Cash Flow Statement
For the six months ended 30 September 2006
------------------------- ---------- ----------- -----------
(Unaudited) (Unaudited) (Audited)
30 September 30 September 31 March
2006 2005 2006
£'000 £'000 £'000
------------------------- ---------- ----------- -----------
Net cash outflow from operating
activities (1,101) (483) (4,594)
------------------------- ---------- ----------- -----------
Servicing of finance
Interest paid (1,135) (530) (1,322)
------------------------- ---------- ----------- -----------
Taxation 141 11 59
Taxation recovered
Financial investment
Purchases of investments (27,177) (32,851) (120,620)
Sales of investments 49,092 29,347 94,747
------------------------- ---------- ----------- -----------
Net cashflow from financial
investments 21,915 (3,504) (25,873)
------------------------- ---------- ----------- -----------
Equity dividends paid (979) (710) (710)
------------------------- ---------- ----------- -----------
Net cash inflow/(outflow) before
financing 18,841 (5,216) (32,440)
------------------------- ---------- ----------- -----------
Financing
Shares issued from exercise of
warrants 152 469 469
Issue of Ordinary shares 822 - 14,992
(Decrease)/increase in short term
loans (3,566) 9,904 25,140
------------------------- ---------- ----------- -----------
Net cash (outflow)/inflow from
financing (2,592) 10,373 40,601
------------------------- ---------- ----------- -----------
Increase in cash in the period 16,249 5,157 8,161
------------------------- ---------- ----------- -----------
Notes to the Financial Statements
1. Basis of Preparation
The financial statements have been prepared under the historical cost
convention, modified to include the revaluation of investments and in accordance
with applicable accounting standards and with the Statement of Recommended
Practice 'Financial Statements of Investment Trust Companies' dated December
2005.
The same accounting policies used for the year ended 31 March 2006 have been
applied.
2. Return/(loss) per Ordinary share
----------------------- ------------ ------------ -----------
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended 30 ended 30 ended
September 2006 September 2005 31 March 2006
£'000 £'000 £'000
----------------------- ------------ ------------ -----------
The return per Ordinary share is
based on the following figures:
Revenue return 787 649 1,395
Capital
(loss)/return (36,573) 66,855 92,232
----------------------- ------------ ------------ -----------
Total
(loss)/return (35,786) 67,504 93,627
----------------------- ------------ ------------ -----------
Weighted
average number
of Ordinary
shares in
issue for the
period - basic 57,566,950 54,624,083 55,522,713
Revenue return
per Ordinary
share 1.37p 1.19p 2.51p
Capital
(loss)/return
per Ordinary
share (63.53)p 122.39p 166.12p
----------------------- ------------ ------------ -----------
Total
(loss)/return
per Ordinary
share (62.16)p 123.58p 168.63p
----------------------- ------------ ------------ -----------
Weighted
average number
of Ordinary
shares in
issue for the
period -
diluted 58,288,352 54,892,366 56,832,543
Revenue return
per Ordinary
share 1.35p 1.18p 2.45p
Capital
(loss)/return
per Ordinary
share *(63.53)p 121.79p 162.29p
----------------------- ------------ ------------ -----------
Total
(loss)/return
per Ordinary
share -
diluted (62.18)p 122.97p 164.74p
----------------------- ------------ ------------ -----------
* dilution not applicable
3. Income
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 September 30 September 31 March
2006 2005 2006
£'000 £'000 £'000
Investment income 1,522 1,394 2,683
Interest receivable 134 13 278
----------- ------------ -----------
Total 1,656 1,407 2,961
----------- ------------ -----------
Notes to the Financial Statements (continued)
4. Investment Management and Performance Fees
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 September 30 September 31 March
2006 2006 2006
£'000 £'000 £'000
Investment management fee 1,458 1,366 2,993
Performance fee accrual paid - 137 136
Irrecoverable VAT thereon 69 - 63
----------- ------------ -----------
Total 1,527 1,503 3,192
----------- ------------ -----------
5. Net asset value per Ordinary Share and Issued Share Capital
Net asset value per Ordinary share is calculated on attributable assets at 30
September 2006 of £298,967,000 (30 September 2005: £293,643,000 and 31 March
2006: £334,758,000) and 57,604,881 being the number of shares in issue at 30
September 2006 (30 September 2005: 54,692,576 and 31 March 2006: 57,422,150).
The diluted net asset value per Ordinary share assumes all outstanding warrants
are exercised at 464.0p resulting in assets attributable to equity shareholders
of £348,955,000 (30 September 2005: £343,783,000, 31 March 2006: £384,898,000)
and on the resultant number of shares of 68,378,248 (30 September 2005:
65,498,674, 31 March 2006: 68,228,248).
6. Exchange Rates
The following spot foreign exchange rates were used to convert the investments
of the Company:
30 September 2006 : 1.8680
31 March 2006 : 1.7346
30 September 2005 : 1.7691
7. Publication of Non Statutory Accounts
The financial information contained in this interim report does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
financial information for the half years ended 30 September 2006 and 30
September 2005 has not been audited.
The information for the year ended 31 March 2006 has been extracted from the
latest published audited financial statements. The audited financial statements
for the year ended 31 March 2006 have been filed with the Registrar of
Companies. The report of the auditors on those accounts contained no
qualification or statement under section 237(2) or 237(3) of the Companies Act
1985.
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