Interim Results
Finsbury Worldwide Pharm Tst PLC
15 November 2005
NEWS RELEASE
Embargo for 7:30am - 15 November 2005
FINSBURY WORLDWIDE PHARMACEUTICAL TRUST PLC
Preliminary Results for the six months ended 30 September 2005
Finsbury Worldwide Pharmaceutical Trust PLC today announces its interim results
for the six months ended 30 September 2005.
Financial Highlights
Six months to Year to % Change
30 September 31 March
2005 2005
Shareholders' Funds £293.6m* £226.4m* +29.7
Net Asset Value per share 536.9p* 414.7p* +29.5
Fully Diluted Net Asset
Value per share 524.9p 414.7p +26.6
Share price 526.0p 430.0p +22.3
Warrant price 108.8p 82.0p +32.7
(Discount)/Premium (2.0)% 3.7% -
Datastream World
Pharmaceutical Index (total
return, sterling adjusted) 7,195.0 6,173.2 +16.6
FTSE All-Share (total
return) 3,071.9 2,704.5 +13.6
Gearing 12% 11% -
#Annual Total Expense Ratio
(including performance fees) 1.5% 0.8% -
#Annual Total Expense Ratio
(excluding performance fees) 1.4% 1.5% -
* Restated, see note 2b
# Excludes the deferred fee payable to M and I Investors, INC
Chairman, Ian Ivory, commented:
• The NAV increased by 29.5% to 536.9p, compared with the Datastream
Pharmaceutical Index, which increased by 16.6%.
• During the last six months the share price has consistently traded
close to NAV and ongoing demand from investors has enabled the Board to
recently issue more shares at a small premium to NAV.
• 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.
Attached: * Chairman's Statement
* Statement of Total Return
* Balance Sheet
* Cash Flow Statement
* Notes to the Financial Statements
For further information please contact:
Ian Ivory, Finsbury Worldwide Pharmaceutical Trust PLC 01828 640383
Alastair Smith, Close Finsbury Asset Management Limited 020 7426 6240
Jo Stonier/Eleanor Mitchell, Quill Communications 020 7763 6976
Chairman's Statement
Performance
The growth in the net asset value ('NAV') of your Company over the six months to
30 September 2005 was very strong both in absolute and relative terms. The NAV
increased by 29.5% to 536.9p, compared with the Datastream Pharmaceutical Index,
which increased by 16.6%.
The growth was particularly affected by the continuing expansion of the new
leaders in the pharmaceutical sector, such as Amgen and Genentech. Those
companies are now both capitalised at over US$90billion and this compares
favourably with some of the traditional pharmaceutical companies such as Merck
where continuing problems have reduced their capitalisation to below
US$60billion.
Share Capital
During the last six months the share price has consistently traded close to NAV
and ongoing demand from investors has enabled the Board to recently issue more
shares at a small premium to NAV. The total issued up to the date of writing was
750,000 shares, raising a total of £3.9m.
In addition, at the first exercise date of the Warrants a total of 101,082
Warrants were exercised, raising £469,020. The remaining 10.8m Warrants are
exercisable annually on 31 July up to 2009 at an exercise price of 464.0p. If
all of the Warrants are exercised, this will raise an additional £50m.
Investment Strategy
The Board has become increasingly aware of the short-term volatility of share
prices within its chosen sector. The Board has considered alternatives to expand
the investment strategy not only to protect the Company from excess sector
volatility, but also to seek additional return from these market gyrations.
One potential course of action would be to increase the focus on short-term
trading of our core positions, but this is considered to be expensive and
contrary to our style of long-term investing based on company fundamentals. Our
preferred alternative is for the Company to utilise options contracts in
instances where OrbiMed feels these instruments will mitigate risk or enhance
return. For example, put options could be purchased to protect the Company
against short-term market declines. Alternatively, covered call writing could
allow the Company to collect additional current income and provide some
'cushion' against market declines.
After careful research and deliberation, we now intend to use options contracts
in a controlled and guided basis to take account of the volatility of this
sector. Use of options will initially be restricted to not more than 1% of the
portfolio exposure, which the Board does not consider to be a material change in
investment policy. At the year-end, such exposure will be evaluated and,
providing the Board is confident that this use is adding value, the Board will
formally propose to shareholders, at the next annual general meeting, an
amendment to the Company's investment policy to increase this level to a maximum
of 5% of portfolio exposure. Our primary objective is reduction in the
volatility of our NAV, but we also seek incremental return in the process. The
use of options contracts is permitted by our Articles of Association, but the
Board considers that it is important to draw shareholder attention to this
modest alteration in investment policy.
Revenue and Dividends
Capital growth remains the key focus for the Company and, since launch in 1995
the compound rate of return has been 17.4% per annum. In contrast, the average
dividend yield of the shares 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, but we
expect to be in a position to pay a small dividend in 2006.
Outlook
The industry continues to be driven by the introduction of new drugs and this
will continue to shape the future leaders of the sector. Many of the traditional
major drug companies have found it difficult to introduce sufficient new drugs
to enable them to maintain their historical positions and this has been
reflected by the emergence of many new companies, many of which have still to
earn a profit.
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
Statement of Total Return
Incorporating the revenue account for the six months ended 30 September 2005
(Unaudited) (Unaudited) (Audited and Restated*)
Six months ended Six months ended Year ended
30 September 2005 30 September 2004 31 March 2005
------------ ------- ------- ------- ------- ------- ------- ------- ------- -------
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
------------ ------- ------- ------- ------- ------- ------- ------- ------- -------
Gains/
(losses)
on
investments - 70,379 70,379 - (2,809) (2,809) - (27,929) (27,929)
Exchange
(losses)/
gains on
currency
balances - (990) (990) - (592) (592) - 84 84
Income 1,407 - 1,407 809 - 809 1,973 - 1,973
Investment
management
and
performance
fees - (1,503) (1,503) - (55) (55) - (896) (896)
Operating
expenses (466) (599) (1,065) (323) 30 (293) (807) 247 (560)
------------ ------- ------- ------- ------- ------- ------- ------- ------- -------
Return/
(loss)
on ordinary
activities
before
finance
costs and
taxation 941 67,287 68,228 486 (3,426) (2,940) 1,166 (28,494) (27,328)
Interest
payable and
similar
charges - (553) (553) - (417) (417) - (955) (955)
------------ ------- ------- ------- ------- ------- ------- ------- ------- -------
Return/
(loss)
on ordinary
activities
before
taxation 941 66,734 67,675 486 (3,843) (3,357) 1,166 (29,449) (28,283)
Taxation on
ordinary
activities (292) 121 (171) (158) 50 (108) (422) 122 (300)
------------ ------- ------- ------- ------- ------- ------- ------- ------- -------
Net
return/
(loss)
on ordinary 649 66,855 67,504 328 (3,793) (3,465) 744 (29,327) (28,583)
activities
------------ ------- ------- ------- ------- ------- ------- ------- ------- -------
Return/
(loss)
per Ordinary
share (note
3) 123.6p (8.9p) (65.5p)
------------ ------- ------- ------- ------- ------- ------- ------- ------- -------
All revenue and capital items in the above statement derive from continuing
operations
No operations were acquired or discontinued during the year
The Total column represents the Company's Profit and Loss account
* See note 2a
Balance Sheet
As at 30 September 2005
(Unaudited) (Unaudited) (Audited and
Restated*)
30 September 30 September 31 March
2005 2004 2005
£'000 £'000 £'000
-------------------------- ----------- ---------- ----------
Non current assets
Investments at fair
value 327,232 223,135 253,347
-------------------------- ----------- ---------- ----------
Current assets
Debtors 454 429 438
Cash 5,107 6,529 -
-------------------------- ----------- ---------- ----------
5,561 6,958 438
Creditors
Amounts falling due
within one year (39,150) (44,975) (27,405)
-------------------------- ----------- ---------- ----------
Net current liabilities (33,589) (38,017) (26,967)
-------------------------- ----------- ---------- ----------
Net assets 293,643 185,118 226,380
-------------------------- ----------- ---------- ----------
Capital and reserves
Share capital 13,673 9,823 13,648
Share premium account 102,304 46,763 101,790
Warrant reserve 7,458 - 7,528
Capital reserves -
realised 96,328 99,343 95,638
Capital reserves -
unrealised 71,994 27,658 5,829
Capital redemption
reserve 375 375 375
Revenue reserve 1,511 1,156 1,572
-------------------------- ----------- ---------- ----------
Total equity
shareholders' funds 293,643 185,118 226,380
-------------------------- ----------- ---------- ----------
Net Asset Value per
Ordinary share 536.9p 471.2p 414.7p
-------------------------- ----------- ---------- ----------
Fully diluted Net Asset
Value per Ordinary share 524.9p - 414.7p
-------------------------- ----------- ---------- ----------
* See note 2b
Cash Flow Statement
For the six months ended 30 September 2005
30 September 30 September 31 March
2005 2004 2005
£'000 £'000 £'000
------------------------- ---------- ----------- -----------
Net cash outflow from operating
activities (483) (822) (3,487)
------------------------- ---------- ----------- -----------
Servicing of finance
Interest paid (530) (408) (896)
------------------------- ---------- ----------- -----------
Net cash outflow from servicing of
finance (530) (408) (896)
------------------------- ---------- ----------- -----------
Taxation 11 26 157
Taxation recovered
------------------------- ---------- ----------- -----------
Financial investment
Purchases of investments (32,851) (22,824) (103,993)
Sales of investments 29,347 29,238 55,074
------------------------- ---------- ----------- -----------
Net cash (outflow)/inflow from
financial investments (3,504) 6,414 (48,919)
------------------------- ---------- ----------- -----------
Equity dividends paid (710) (511) (511)
------------------------- ---------- ----------- -----------
Net cash (outflow)/inflow before
financing (5,216) 4,699 (53,656)
------------------------- ---------- ----------- -----------
Financing
Shares issued from exercise of
warrants 469 - -
Issue of Ordinary shares - - 66,380
Increase/(decrease) in short term
loans 9,904 1,511 (11,798)
------------------------- ---------- ----------- -----------
Net cash inflow from financing 10,373 1,511 54,582
------------------------- ---------- ----------- -----------
Increase in cash in the period 5,157 6,210 926
------------------------- ---------- ----------- -----------
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' issued in January
2003.
The same accounting policies used for the year ended 31 March 2005 have been
applied with the following exceptions, which have arisen from new accounting
regulations, which apply for the year to 31 March 2006.
(a) Investments - Prior to 1 January 2005, listed investments were valued at
middle market prices. Following the introduction of FRS 26 - Financial
Instruments: Recognition and Measurement, listed investments are now valued at
fair value deemed to be bid market prices. Unlisted investments are fair valued
by the Board on the basis of the latest accounting and other relevant
information. The effect of this change is to decrease the value of listed
investments at 30 September 2005, and therefore the net return on ordinary
activities after taxation by £214,000. As permitted by FRS 26, comparatives have
not been restated for the change in basis of valuation from mid to bid prices.
However if investments at 31 March 2005 had been restated, this would have
resulted in a decrease in valuation of £151,000. As comparative were not
restated, the impact of the change in basis of valuation on investments at 31
March 2005 has been taken instead through the Statement of Total Return and
resulted in a decrease in gains on investments of £151,000 in the current period
to £70,379,000.
In accordance with FRS 26 purchase transaction costs are separately disclosed.
For the six months ended 30 September 2005 these costs amounted to £75,000 which
comprised stamp duty and brokers' commission.
(b) Dividends - In accordance with FRS 21, Events after the Balance Sheet Date,
dividends are not accrued in the accounts unless they have been declared before
the balance sheet date. Dividends are therefore recognised in the period in
which they are declared and paid. As a result of this change, the accounts for
the year ended 31 March 2005 have been restated as per note 2 below.
2. Restatement in respect of Final Dividend
(a) Statement of Total Return for the year ended 31 March 2005 the Statement of
Total Return no longer reflects payment of dividends. These are now shown in the
Statement of Changes in Equity in the period in which they are declared and
paid. The Statement of Total Return for the year ended 31 March 2005 has been
restated accordingly.
(b) Balance Sheet as at 31 March 2005
£'000 Per Ordinary
share
Net assets at 31 March 2005 as previously stated 225,670 413.4p
------------ -----------
Add back 2005 final dividend declared on 710 1.3p
1 June 2005
------------ -----------
Restated net assets at 31 March 2005 226,380 414.7p
------------ -----------
3. Return/(loss) per Ordinary share
(Unaudited) (Unaudited) (Audited and
Restated*)
Six months Six months Year ended
ended 30 ended 30
September 2005 September 2004
£'000 £'000 31 March 2005
£'000
----------------------- ------------ ------------ -----------
The return per Ordinary share is
based on the following figures:
Revenue return 649 328 744
Capital return 66,855 (3,793) (29,327)
----------------------- ------------ ------------ -----------
Total return 67,504 (3,465) (28,583)
----------------------- ------------ ------------ -----------
Weighted average number
of Ordinary shares in
issue 54,624,083 39,290,000 43,649,878
Revenue return per
Ordinary share 1.2p 0.8p 1.7p
Capital return per
Ordinary share 122.4p (9.7p) (67.2p)
----------------------- ------------ ------------ -----------
Total return per
Ordinary share 123.6p (8.9p) (65.5p)
----------------------- ------------ ------------ -----------
*See note 2a
4. Income
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 September 30 September 31 March
2005 2004 2005
£'000 £'000 £'000
Investment income 1,394 804 1,821
Bank interest 13 3 152
Other income - 2 -
------- -------- -------
Total 1,407 809 1,973
------- -------- -------
5. Investment Management and Performance Fees
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 September 30 September 31 March
2005 2004 2005
£'000 £'000 £'000
Investment management fee 1,366 1,138 2,324
Performance fee accrual 137 (1,083) (1,430)
Irrecoverable VAT thereon - - 2
------- -------- -------
Total 1,503 55 896
------- -------- -------
6. Statement of Changes in Equity
Capital
Share Share Warrant Capital Redemption Revenue
Capital Premium Reserve Reserve Reserve Reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
------------------ -------- ------- ------- ------- -------- ------- -------
At 31 March
2005 (Restated,
see note 2b) 13,648 101,790 7,528 101,467 375 1,572 226,380
Shares issued
from exercise
of Warrants 25 444 - - - - 469
Transfer from
Warrant reserve
following exercise
of
Warrants - 70 (70) - - - -
Net Return
from ordinary
activities - - - 66,855 - 649 67,504
Final dividend
2005 declared
1 June 2005 - - - - - (710) (710)
------------------ -------- ------- ------- ------- -------- ------- -------
Net assets at
30 September
2005 13,673 102,304 7,458 168,322 375 1,511 293,643
------------------ -------- ------- ------- ------- -------- ------- -------
7. Net asset value per Ordinary Share and Issued Share Capital
Net asset value per Ordinary share is calculated on attributable assets at 30
September 2005 of £293,643,000 (31 March 2005: £226,380,000 as restated and 30
September 2004: £185,118,000) and 54,692,576 being the number of shares in issue
at 30 September 2005 (31 March 2005:54,591,494 and 30 September 2004:
39,290,000).
8. 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 2005 and 30
September 2004 has not been audited.
The information for the year ended 31 March 2005 has been extracted from the
latest published audited financial statements (and restated to reflect the
change to accounting policy disclosed in note 2). The audited financial
statements for the year ended 31 March 2005 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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