TIDMNST
RNS Number : 4699W
New Star Financial Opp Fd Ltd
29 July 2009
New Star Financial Opportunities Fund Limited
Announcement of Half Yearly Results for the six months to 31 May 2009
COMPANY INFORMATION
Directors
Julian Tregoning (Chairman)
George Baird
Christopher Fish
Nigel Taylor
Investment Manager
New Star Asset Management Limited
a member of the Henderson Global Investors Group
201 Bishopgate, London EC2M
3AE
Administrator, secretary and registered office
Elysium Fund Management Limited
PO Box 650, 2nd Floor, No. 1 Le Truchot,
St. Peter Port, Guernsey GY1 3JX
Telephone: 01481 810100 Facsimile: 01481 810120
Registrar
Capita Registrars (Guernsey) Limited
Longue Hougue House, St. Sampsons,
Guernsey GY2 4JN
Auditors
KPMG Channel Islands Limited
PO Box 20, 20 New Street, St. Peter Port,
Guernsey GY1 4AN
Prime Broker
Credit Suisse Securities (Europe) Limited
2nd Floor, One Cabot Square,
Canary Wharf, London E14 4QJ
Bankers
HSBC Bank PLC
13 High Street, St. Peter Port, Guernsey GY1 3AT
Registered number
Registered in Guernsey No. 37630
COMPANY INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Company is to provide Shareholders with a high
level of income and the potential for capital and income growth.
INVESTMENT POLICY
The Company will seek to achieve its investment objective by investing
predominantly in the equity, debt or other securities of listed European and UK
financial companies. The Company may invest up to 25 per cent of its total
assets (at the time of purchase) in financial companies listed outside Europe
and the UK.
The Company also may invest up to 10 per cent of its total assets (at the time
of purchase) in unquoted financial securities and limited partnerships, which
themselves invest in financial companies.
Individual holdings will be limited to 7.5 per cent of the total assets (at the
time of purchase) and the Company will not invest more than 10 per cent of the
total assets (at the time of purchase) in other investment companies.
Apart from normal hedging activities, the Company may enter into short sale
transactions which shall be limited to 20 per cent of the total assets in
aggregate with a limit on short sales of individual stocks of 5 per cent of
total assets.
The Company will maintain gearing in most market conditions, with borrowing
limited to 50 per cent of total assets at the time of drawdown, other than for
short-term settlement for cash flow purposes.
BENCHMARK
The benchmark for measuring the Company's investment performance is the Dow
Jones STOXX 600 Financials Index.
CAPITAL STRUCTURE
The Company has 38,132,932 Ordinary Shares of 0.1p each in issue. The Ordinary
Shares are geared by a credit facility, being a prior charge on capital.
FINANCIAL HIGHLIGHTS
+--------------------------------------------+------------------------------------------+
| PERFORMANCE - TOTAL RETURN | % change |
+--------------------------------------------+------------------------------------------+
| | |
+--------------------------------------------+------------------------------------------+
| Net Asset Value | (0.5) |
+--------------------------------------------+------------------------------------------+
| Ordinary Share price | (5.3) |
+--------------------------------------------+------------------------------------------+
| Dow Jones STOXX 600 Financials Index* | 12.9 |
+--------------------------------------------+------------------------------------------+
| FTSE Financials Index | 11.9 |
+--------------------------------------------+------------------------------------------+
| | |
+--------------------------------------------+------------------------------------------+
| * Sterling equivalent | |
+--------------------------------------------+------------------------------------------+
| | |
+--------------------------------------------+------------------------------------------+
+--------------------------+------------------+--------------------+----------------------+
| ORDINARY SHARES | As at 31 May | As at 30 November | % Change |
| | 2009 | 2008 | |
+--------------------------+------------------+--------------------+----------------------+
| | | | |
+--------------------------+------------------+--------------------+----------------------+
| Net Asset Value | 32.25p | 34.28p | (5.9) |
+--------------------------+------------------+--------------------+----------------------+
| Mid-market price | 27.50p | 31.00p | (11.3) |
+--------------------------+------------------+--------------------+----------------------+
| Discount | 14.7% | 9.6% | |
+--------------------------+------------------+--------------------+----------------------+
| | | | |
+--------------------------+------------------+--------------------+----------------------+
+--------------------------+------------------+--------------------+----------------------+
| REVENUE | 1 December 2008 | 1 December 2007 to | |
| | to | | |
+--------------------------+------------------+--------------------+----------------------+
| | 31 May 2009 | 31 May 2008 | % Change |
+--------------------------+------------------+--------------------+----------------------+
| | | | |
+--------------------------+------------------+--------------------+----------------------+
| Earnings per Ordinary | 1.70p | 3.35p | (49.3) |
| Share | | | |
+--------------------------+------------------+--------------------+----------------------+
| Dividends paid per | 1.85p | 2.35p | (21.3) |
| Ordinary Share | | | |
+--------------------------+------------------+--------------------+----------------------+
| | | | |
+--------------------------+------------------+--------------------+----------------------+
| CAPITAL | | | |
+--------------------------+------------------+--------------------+----------------------+
| | | | |
+--------------------------+------------------+--------------------+----------------------+
| Loss per Ordinary Share | (1.87)p | (10.59)p | 82.3 |
+--------------------------+------------------+--------------------+----------------------+
| | | | |
+--------------------------+------------------+--------------------+----------------------+
| | | | |
+--------------------------+------------------+--------------------+----------------------+
CHAIRMAN'S STATEMENT
In the last annual report I remarked that I hoped that there would be a little
light at the end of the proverbial tunnel when I came to write this Statement
and I am pleased to say that there is some light with the Dow Jones STOXX 600
Financials Index (GBP) rising 15.1% and closing the period under review at
146.70 points. This conceals the extent of the volatility we endured as the
Index fell to 82.34 points on the 6 March. Against this background, the net
asset value total return of your company fell 0.5%. This disappointing result
was driven largely by the large weighting to corporate bonds which were bought
as a defensive measure in 2008 and fell in value dramatically and unexpectedly
as the financial crisis developed.
DIVIDENDS
In January 2009, your Company paid a fourth interim dividend of 1.10p in respect
of the year ended 30 November 2008, making a total for that year of 4.40p per
share. In April a first interim dividend of 0.75p was paid in respect of the
current year, and a second interim of the same amount will be paid on 31 July
2009. As I indicated in the last annual report, your board proposes to pay total
dividends of 3.0p for the current year, and I am happy to confirm that this
continues to be our intention.
MANAGEMENT
Following the completion of the acquisition of New Star Asset Management Group
PLC, the ultimate parent company of the Company's Manager, by Henderson Group
plc in April 2009, the Board was pleased to announce the appointment of the
financials investment manager, Guy de Blonay, to manage the Company's portfolio.
The Board wishes to thank Nick Brind, our previous Portfolio Manager, for all he
did for the Company since taking over the Company's portfolio in 2003.
Given all that has happened in the Financials sector over the period of this
report and given the appointment of Mr de Blonay, your Directors decided it was
appropriate to include a full Investment Manager's Report in this Half-Yearly
Report; it follows this Statement.
FUTURE STRATEGY
Your Board is currently undertaking a process of shareholder consultation to
determine the optimum strategy for the fund under Henderson's management and
with Mr de Blonay as Portfolio Manager, and I hope to be able to report the
outcome of our deliberations very shortly.
RELATED PARTY TRANSACTIONS
Details of related party transactions are contained in the annual report. There
have been no material transactions with our related parties during the six-month
period under review.
OUTLOOK (INCLUDING PRINCIPAL RISKS AND UNCERTAINTIES) FOR THE SIX MONTHS TO 30
NOVEMBER 2009
It is probably fair to say that the risks many economies faced earlier this year
of a systemic collapse of the banking system and the issues surrounding solvency
have been alleviated. The main hurdle now faced by many economies is creating a
sustainable recovery from the current severe recessionary environment. It,
however, is our view that fundamental value remains for the Financials sector
despite the lingering risks of credit quality, capitalisation, politics and
regulation, and we believe that the Company's portfolio remains generally
well-positioned to take advantage of the growth opportunities that will emerge
in the months ahead. Going forward global diversification will be a key theme,
and, within the limit of 25% that may be invested outside the UK and continental
Europe, we have made initial investments in Asia and the USA with that in mind.
Julian Tregoning
Chairman
29 July 2009
INVESTMENT MANAGER'S REPORT
BACKGROUND
The six months under review have been a tale of two halves. The first half
contained the worst elements of the financial crisis with banks taking
centre-stage over worries about capital, large write-downs, nationalisations and
the end of the ban on short-selling the sector. Concerns about Western European
bank exposure to Eastern Europe increased as rating agencies downgraded the
outlook for some countries and this triggered further steep declines in share
prices by mid-February. Pessimism about further credit losses and lack of
capital for financial institutions persisted, with markets hitting a nadir in
early March. Insurance companies suffered steep share price declines as
investors began to question their valuations if all assets were marked to the
prevailing market prices.
The second half began in early March. Sentiment began to turn as comments from
large financial companies such as Citigroup and Barclays indicated that they had
been profitable in the first two months of the year. Subsequently, financials
embarked on a strong rally from early March to the end of the period under
review, driven by the shift in sentiment from a doomsday scenario -
nationalisation of the banking sector - to a more rational outlook. Confidence
grew that policymakers had managed to avoid a systemic collapse of the banking
system and a deflationary depression through their monetary, fiscal and
financial policies. These factors helped to create a floor for credit and equity
markets.
Since March 2009 bank fundamentals have improved: the inter-bank market has
began to work more efficiently, primarily due to the liquidity provided by
central banks and governments, which has brought down borrowing costs
significantly for banks. For example, 3-month sterling LIBOR has come down from
120 basis points to around 40 basis points in the last six months. Whilst short
term rates have reduced costs, banks have also been re-pricing assets - loans to
their customers - to reflect the higher credit risk environment arising from
increasing unemployment, falling collateral values and the global economic
downturn. For many banks the higher asset yields have offset deposit spread
compression. So it is reasonable to assume that the favourable increases in net
interest margins will continue for the medium term.
By late April capital markets had begun to reopen and the calendar second
quarter was a particularly active period for capital raising both to strengthen
balance sheets and to repay government support money. In the US alone, the
financial sector raised US$89bn in 95 deals in the second quarter. Importantly,
this capital was raised without the vast discounts to market share prices that
some analysts were expecting.
PERFORMANCE
In light of the above, the performance of your Company has been mixed over the
first six months of this financial year. The Company's equity portion has
rallied strongly since the lows seen in March. In contrast, the performance of
the Company's fixed-income portfolio has been more subdued, although there have
been a few holdings that have performed very well. Whereas liquidity has
returned more easily to the equity market, there is still a certain element of
reservation from fixed-income investors and the poor performance of this asset
class accounts for our poor performance against the Index.
The Company's fixed-income portfolio was negatively affected by The Royal Bank
of Scotland's announcement that it had reached an agreement with the UK
government to replace the GBP5bn of preference shares it held with new ordinary
shares. This increased investors' fears that the coupons might be deferred or
not paid on certain debt securities issued by banks. This adversely affected
valuations despite the fact that only one holding within the Company's
fixed-income portfolio has announced that coupons have been suspended. The
remainder of the Company's fixed-income portfolio continues to provide an
important income stream, but some valuations are still suffering from
illiquidity.
The Company's equity portfolio in general has performed strongly since the lows
seen in early March but the hedging, which helped to offset the falls early in
the year, was not reduced until late April. This meant that the Company did not
participate as strongly in the first few weeks of the rally as it might have
done.
STRATEGY AND PORTFOLIO POSITIONING
Having taken over management of the investment portfolio in mid-April, it became
clear that to benefit from the current outlook for global financials the Company
would need to take a slightly different direction. In light of this, there has
been a move to increase the exposure to regions outside Europe and the UK, and
it is our intention to continue this trend.
The risk/reward trade-off of holding banks has improved considerably as the
extreme volatility of 2008 has faded. In our view banks can potentially return
to profitability sooner than expected. The key area of opportunity for banks in
the near term would appear to be the high revenue potential from capital markets
as companies seek capital, trading intensifies and mergers and acquisitions
activity recovers. In particular, those companies that opportunistically
purchased key investment banking franchises around the time of Lehman's collapse
are favourably positioned to profit from strong market share growth and
integration synergies.
Emerging markets also are providing an interesting opportunity for
stock-picking. The investment rationale follows from the favourable
macro-economic backdrop and the large fiscal stimulus packages within the
region. Banks in Hong Kong, China and Singapore did not suffer from the
financial crisis to the same extent as their western peers: they were less
exposed to structured products, are generally better capitalised and their
domestic markets are not stymied by an over-indebted consumer. Chinese banks
continue to enjoy positive loan growth and are gradually improving their
business mix to higher margin products.
OUTLOOK
Investors are closely following the second quarter earnings season and
monitoring management guidance to establish any long-term trends. This should
reveal if the sector is sufficiently re-capitalised to absorb expected loan
impairments and take advantage of the growth opportunities. In developed
markets, profitability will depend on the ability of banks to grow their margins
in a more favourable yield curve environment and their level of exposure to
capital markets. Across all countries there remain considerable opportunities to
expand simple banking products although this opportunity is strongest in
emerging markets. A genuine bull market in emerging markets is possible and
there is a realistic chance of earnings upgrades if the global macro-economic
environment continues to heal.
An area to watch closely will be regulation. Potentially, it could lead to banks
taking much less risk, further de-leveraging and a structural shift away from
the global banking model. Forecasts for normalised profits will depend strongly
on levels of capital and permitted leverage. On the other hand, the potential
for a change in accounting policy could provide a boost to many banks' balance
sheets if there is a system-wide acknowledgement that some "available for sale"
assets should be accounted for at amortised costs rather than via mark to market
accounting.
Whilst the sector has strong fundamental opportunities, the key factor to a
sustainable recovery will come from the macro-economic environment. Provided the
'stressed' scenarios - as used in the various government stress tests of banking
systems - are not exceeded there are many companies currently trading on
attractive valuation multiples. The risk, however, is that the US consumer
remains troubled by rising unemployment and a stagnant housing market or that
corporate confidence recovers only slowly. In such an environment the road to
improving profitability may prove slower than recent optimism has suggested.
Guy de Blonay
29 July 2009
RESPONSIBILITY STATEMENT OF THE DIRECTORS
in respect of the Unaudited Half-Yearly Consolidated Financial Report
In accordance with the Disclosure and Transparency Rules 4.2.7R and 4.2.8R, we
confirm that, to the best of our knowledge:
a) The condensed set of unaudited consolidated half-yearly financial statements
has been prepared in accordance with International Accounting Standard 34,
Interim Financial Reporting, as adopted by the European Union, as required by
the Disclosure and Transparency Rule 4.2.4R;
b) The Chairman's Statement includes a fair review of the information required
to be disclosed under the Disclosure and Transparency Rule 4.2.7R, interim
management report. This includes: (i) an indication of important events that
have occurred during the first six months of the financial year, and their
impact on the condensed set of unaudited financial statements presented in the
half-yearly financial report and (ii) a description of the principal risks and
uncertainties for the remaining six months of the financial year; and
c) The Chairman's Statement includes a fair review of the information required
to be disclosed under the Disclosure and Transparency Rule 4.2.8R (disclosure of
related party transactions and changes therein).
Julian Tregoning
Chairman
For and on behalf of the Board
29 July 2009
CONSOLIDATED INCOME STATEMENT
For the six months ended 31 May 2009 (unaudited)
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| | 1 December 2008 | 1 December 2007 | 1 December 2007 |
+-----------------+-----------------------------+-----------------------------+-------------------------------+
| | to 31 May 2009 | to 31 May 2008 | to 30 November 2008 |
| | (Unaudited) | (Unaudited) | (Audited) |
+-----------------+-----------------------------+-----------------------------+-------------------------------+
| | Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total |
| | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| INVESTMENT | | | | | | | | | |
| INCOME | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| Net losses on | - | (429) | (429) | - | (4,427) | (4,427) | - | (17,134) | (17,134) |
| investments | | | | | | | | | |
| held at fair | | | | | | | | | |
| value through | | | | | | | | | |
| profit or loss | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| Net | - | (147) | (147) | - | 728 | 728 | - | 2,413 | 2,413 |
| (losses)/gains | | | | | | | | | |
| on derivative | | | | | | | | | |
| instruments | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| Exchange gains | - | 178 | 178 | - | 758 | 758 | - | 1,084 | 1,084 |
| on capital | | | | | | | | | |
| items | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| Other income | 697 | - | 697 | 1,445 | - | 1,445 | 2,351 | - | 2,351 |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| Total income | 697 | (398) | 299 | 1,445 | (2,941) | (1,496) | 2,351 | (13,637) | (11,286) |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| EXPENSES | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| Management fee | - | (47) | (47) | - | (98) | (98) | - | (170) | (170) |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| Other expenses | - | (180) | (180) | - | (177) | (177) | - | (354) | (354) |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| NET RETURN | 697 | (625) | 72 | 1,445 | (3,216) | (1,771) | 2,351 | (14,161) | (11,810) |
| BEFORE FINANCE | | | | | | | | | |
| COSTS AND | | | | | | | | | |
| TAXATION | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| FINANCE COSTS | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| Interest | - | (89) | (89) | - | (598) | (598) | - | (1,006) | (1,006) |
| payable | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| Finance charge | - | - | - | - | (94) | (94) | - | (94) | (94) |
| attributable to | | | | | | | | | |
| ZDP Shares | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| Ordinary and | - | - | - | - | (320) | (320) | - | (308) | (308) |
| ZDP Share | | | | | | | | | |
| repayment costs | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| | - | (89) | (89) | - | (1,012) | (1,012) | - | (1,408) | (1,408) |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| NET RETURN | 697 | (714) | (17) | 1,445 | (4,228) | (2,783) | 2,351 | (15,569) | (13,218) |
| BEFORE TAXATION | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| TAXATION | (50) | - | (50) | (107) | - | (107) | (114) | - | (114) |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| TOTAL RETURN | 647 | (714) | (67) | 1,338 | (4,228) | (2,890) | 2,237 | (15,569) | (13,332) |
| ATTRIBUTABLE TO | | | | | | | | | |
| ORDINARY | | | | | | | | | |
| SHAREHOLDERS | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| | pence | pence | pence | pence | pence | pence | pence | pence | pence |
| | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| Basic return | 1.70 | (1.87) | (0.17) | 3.35 | (10.59) | (7.24) | 5.73 | (39.89) | (34.16) |
| per Ordinary | | | | | | | | | |
| Share | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
| Return per ZDP | - | - | - | - | 0.38 | 0.38 | - | 0.38 | 0.38 |
| Share | | | | | | | | | |
+-----------------+---------+---------+---------+---------+---------+---------+---------+----------+----------+
The consolidation refers to comparative periods only and comprises the Company
and its subsidiary, up to the date of the subsidiary's winding-up on 4 February
2008.
All items in the above statement are derived from continuing operations except
for items relating to ZDP Shares.
The accompanying notes are an integral part of this statement.
CONSOLIDATED STATEMENT OF CHANGES IN NET EQUITY
For the six months ended 31 May 2009 (unaudited)
+--------------------------------------+------------------+---------------+---------------+---------------+---------+
| | | Distributable | Distributable | Non- | |
+--------------------------------------+------------------+---------------+---------------+---------------+---------+
| | Share | reserves | reserves | distributable | |
| | | | | | |
+--------------------------------------+------------------+---------------+---------------+---------------+---------+
| | capital | - | - | reserves | Total |
| | | revenue | other | | |
+--------------------------------------+------------------+---------------+---------------+---------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------------+------------------+---------------+---------------+---------------+---------+
| SIX MONTHS ENDED 31 MAY 2009 (UNAUDITED) | | | |
+-------------------------------------------------------------------------+---------------+---------------+---------+
| AT 1 DECEMBER 2008 | 42 | 2,188 | 20,386 | (9,546) | 13,070 |
+--------------------------------------+------------------+---------------+---------------+---------------+---------+
| Net increase/(decrease) in net | - | 647 | - | (714) | (67) |
| assets from operations | | | | | |
+--------------------------------------+------------------+---------------+---------------+---------------+---------+
| Cancellation of shares held in | (4) | - | 4 | - | - |
| treasury | | | | | |
+--------------------------------------+------------------+---------------+---------------+---------------+---------+
| Dividends paid | - | (705) | - | - | (705) |
+--------------------------------------+------------------+---------------+---------------+---------------+---------+
| | | | | | |
+--------------------------------------+------------------+---------------+---------------+---------------+---------+
| AT 31 MAY 2009 | 38 | 2,130 | 20,390 | (10,260) | 12,298 |
+--------------------------------------+------------------+---------------+---------------+---------------+---------+
| | | | | | |
+--------------------------------------+------------------+---------------+---------------+---------------+---------+
+--------------------------------------+----------+----------+----------+----------+----------+
| SIX MONTHS ENDED 31 MAY 2008 (UNAUDITED) | | | |
+------------------------------------------------------------+----------+----------+----------+
| AT 1 DECEMBER 2007 | 15,375 | 1,686 | 20,961 | 6,023 | 44,045 |
+--------------------------------------+----------+----------+----------+----------+----------+
| Net increase/(decrease) in net | - | 1,338 | - | (4,228) | (2,890) |
| assets from operations | | | | | |
+--------------------------------------+----------+----------+----------+----------+----------+
| Reduction in value of Ordinary | (15,314) | - | 15,314 | - | - |
| shares | | | | | |
+--------------------------------------+----------+----------+----------+----------+----------+
| Shares bought back for cancellation | (19) | - | (13,005) | - | (13,024) |
+--------------------------------------+----------+----------+----------+----------+----------+
| Shares bought back to be held in | - | - | (2,884) | - | (2,884) |
| treasury | | | | | |
+--------------------------------------+----------+----------+----------+----------+----------+
| Dividends paid | - | (896) | - | - | (896) |
+--------------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+--------------------------------------+----------+----------+----------+----------+----------+
| AT 31 MAY 2008 | 42 | 2,128 | 20,386 | 1,795 | 24,351 |
+--------------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+--------------------------------------+----------+----------+----------+----------+----------+
+--------------------------------------+----------+----------+----------+----------+----------+
| YEAR ENDED 30 NOVEMBER 2008 (AUDITED) | | | |
+------------------------------------------------------------+----------+----------+----------+
| AT 1 DECEMBER 2007 | 15,375 | 1,686 | 20,961 | 6,023 | 44,045 |
+--------------------------------------+----------+----------+----------+----------+----------+
| Net increase/(decrease) in net | - | 2,237 | - | (15,569) | (13,332) |
| assets from operations | | | | | |
+--------------------------------------+----------+----------+----------+----------+----------+
| Reduction in value of Ordinary | (15,314) | - | 15,314 | - | - |
| shares | | | | | |
+--------------------------------------+----------+----------+----------+----------+----------+
| Shares bought back for cancellation | (19) | - | (13,005) | - | (13,024) |
+--------------------------------------+----------+----------+----------+----------+----------+
| Shares bought back to be held in | - | - | (2,884) | - | (2,884) |
| treasury | | | | | |
+--------------------------------------+----------+----------+----------+----------+----------+
| Dividends paid | - | (1,735) | - | - | (1,735) |
+--------------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+--------------------------------------+----------+----------+----------+----------+----------+
| AT 30 NOVEMBER 2008 | 42 | 2,188 | 20,386 | (9,546) | 13,070 |
+--------------------------------------+----------+----------+----------+----------+----------+
| | | | | | |
+--------------------------------------+----------+----------+----------+----------+----------+
The consolidation refers to comparative periods only and comprises the Company
and its subsidiary, up to the date of the subsidiary's winding-up on 4 February
2008.
CONSOLIDATED STATEMENT OF NET ASSETS
As at 31 May 2009 (unaudited)
+--------------------------------------+----------------+----------------+------------------+
| | 31 May 2009 | 31 May 2008 | 30 November 2008 |
+--------------------------------------+----------------+----------------+------------------+
| | (Unaudited) | (Unaudited) | (Audited) |
+--------------------------------------+----------------+----------------+------------------+
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------------+----------------+----------------+------------------+
| NON-CURRENT ASSETS | | | |
+--------------------------------------+----------------+----------------+------------------+
| Investments held at fair value | 20,001 | 35,566 | 19,686 |
| through profit or loss | | | |
+--------------------------------------+----------------+----------------+------------------+
| | | | |
+--------------------------------------+----------------+----------------+------------------+
| CURRENT ASSETS | | | |
+--------------------------------------+----------------+----------------+------------------+
| Amounts due on derivative financial | - | 536 | 1,738 |
| instruments | | | |
+--------------------------------------+----------------+----------------+------------------+
| Trade and other receivables | 721 | 2,143 | 447 |
+--------------------------------------+----------------+----------------+------------------+
| Cash and cash equivalents | 1,246 | 7,896 | 3,602 |
+--------------------------------------+----------------+----------------+------------------+
| | 1,967 | 10,575 | 5,787 |
+--------------------------------------+----------------+----------------+------------------+
| | | | |
+--------------------------------------+----------------+----------------+------------------+
| TOTAL ASSETS | 21,968 | 46,141 | 25,473 |
+--------------------------------------+----------------+----------------+------------------+
| | | | |
+--------------------------------------+----------------+----------------+------------------+
| CURRENT LIABILITIES | | | |
+--------------------------------------+----------------+----------------+------------------+
| Investments at fair value | - | - | 206 |
+--------------------------------------+----------------+----------------+------------------+
| Amounts due on derivative financial | 560 | 62 | 30 |
| instruments | | | |
+--------------------------------------+----------------+----------------+------------------+
| Prime broker facility | 8,516 | 20,688 | 12,061 |
+--------------------------------------+----------------+----------------+------------------+
| Trade and other payables | 594 | 1,040 | 106 |
+--------------------------------------+----------------+----------------+------------------+
| | 9,670 | 21,790 | 12,403 |
+--------------------------------------+----------------+----------------+------------------+
| | | | |
+--------------------------------------+----------------+----------------+------------------+
| NET ASSETS | 12,298 | 24,351 | 13,070 |
+--------------------------------------+----------------+----------------+------------------+
| | | | |
+--------------------------------------+----------------+----------------+------------------+
| CAPITAL AND RESERVES | | | |
+--------------------------------------+----------------+----------------+------------------+
| Called-up share capital | 38 | 42 | 42 |
+--------------------------------------+----------------+----------------+------------------+
| Distributable reserves - revenue | 2,130 | 2,128 | 2,188 |
+--------------------------------------+----------------+----------------+------------------+
| Distributable reserves - other | 20,390 | 20,386 | 20,386 |
+--------------------------------------+----------------+----------------+------------------+
| Non-distributable reserves | (10,260) | 1,795 | (9,546) |
+--------------------------------------+----------------+----------------+------------------+
| | | | |
+--------------------------------------+----------------+----------------+------------------+
| TOTAL EQUITY SHAREHOLDERS' FUNDS | 12,298 | 24,351 | 13,070 |
+--------------------------------------+----------------+----------------+------------------+
| | pence | pence | pence |
+--------------------------------------+----------------+----------------+------------------+
| NET ASSET VALUE PER ORDINARY SHARE | 32.25 | 63.86 | 34.28 |
+--------------------------------------+----------------+----------------+------------------+
| | | | |
+--------------------------------------+----------------+----------------+------------------+
| Number of Ordinary Shares in issue | 38,132,932 | 38,132,932 | 38,132,932 |
| at period end excluding shares held | | | |
| in treasury | | | |
+--------------------------------------+----------------+----------------+------------------+
The consolidation refers to comparative periods only and comprises the Company
and its subsidiary, up to the date of the subsidiary's winding-up on 4 February
2008.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 31 May 2009 (Unaudited)
+-------------------------------------+------------------+----------------+-----------------+
| | 1 December 2008 | 1 December | 1 December 2007 |
| | to | 2007 to | to |
+-------------------------------------+------------------+----------------+-----------------+
| | 31 May 2009 | 31 May 2008 | 30 November |
| | | | 2008 |
+-------------------------------------+------------------+----------------+-----------------+
| | (Unaudited) | (Unaudited) | (Audited) |
+-------------------------------------+------------------+----------------+-----------------+
| | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------------+------------------+----------------+-----------------+
| | | | |
+-------------------------------------+------------------+----------------+-----------------+
| OPERATING ACTIVITIES | | | |
+-------------------------------------+------------------+----------------+-----------------+
| Net return before finance costs and | 72 | (1,771) | (11,810) |
| tax | | | |
+-------------------------------------+------------------+----------------+-----------------+
| Adjustments to reconcile net return | | | |
| before finance costs and tax to net | | | |
| cash flows from operating | | | |
| activities: | | | |
+-------------------------------------+------------------+----------------+-----------------+
| Adjustment for losses on | 576 | 3,699 | 14,721 |
| investments | | | |
+-------------------------------------+------------------+----------------+-----------------+
| Adjustment for exchange gains | (178) | (758) | (1,084) |
+-------------------------------------+------------------+----------------+-----------------+
| (Increase)/decrease in receivables | (5) | 489 | 296 |
+-------------------------------------+------------------+----------------+-----------------+
| Increase/(decrease) in payables | 36 | (100) | (131) |
+-------------------------------------+------------------+----------------+-----------------+
| Purchase of investments | (9,016) | (12,451) | (17,372) |
+-------------------------------------+------------------+----------------+-----------------+
| Sale of investments | 8,396 | 45,670 | 54,656 |
+-------------------------------------+------------------+----------------+-----------------+
| Realised exchange (losses)/gains on | (3) | 184 | 184 |
| settlement | | | |
+-------------------------------------+------------------+----------------+-----------------+
| Exchange gains on currency | 181 | 574 | 900 |
+-------------------------------------+------------------+----------------+-----------------+
| Short investments | (175) | - | 251 |
+-------------------------------------+------------------+----------------+-----------------+
| Realised gains on derivative | 2,181 | 395 | 882 |
| instruments | | | |
+-------------------------------------+------------------+----------------+-----------------+
| CASH GENERATED FROM OPERATIONS | 2,065 | 35,931 | 41,493 |
+-------------------------------------+------------------+----------------+-----------------+
| | | | |
+-------------------------------------+------------------+----------------+-----------------+
| TAXATION | | | |
+-------------------------------------+------------------+----------------+-----------------+
| Tax paid | (50) | (107) | (20) |
+-------------------------------------+------------------+----------------+-----------------+
| | | | |
+-------------------------------------+------------------+----------------+-----------------+
| DIVIDENDS | | | |
+-------------------------------------+------------------+----------------+-----------------+
| Equity dividends paid | (705) | (896) | (1,735) |
+-------------------------------------+------------------+----------------+-----------------+
| | | | |
+-------------------------------------+------------------+----------------+-----------------+
| FINANCING ACTIVITIES | | | |
+-------------------------------------+------------------+----------------+-----------------+
| Interest paid | (121) | (496) | (966) |
+-------------------------------------+------------------+----------------+-----------------+
| Share repurchases | - | (13,024) | (13,024) |
+-------------------------------------+------------------+----------------+-----------------+
| Share purchases to be held in | - | (2,884) | (2,884) |
| treasury | | | |
+-------------------------------------+------------------+----------------+-----------------+
| ZDP Share repayment costs paid | - | (424) | (431) |
+-------------------------------------+------------------+----------------+-----------------+
| Repayment to ZDP Shareholders | - | (41,572) | (41,572) |
+-------------------------------------+------------------+----------------+-----------------+
| CASH USED IN FINANCING ACTIVITIES | (121) | (58,400) | (58,877) |
+-------------------------------------+------------------+----------------+-----------------+
| INCREASE/(DECREASE) IN CASH AND | 1,189 | (23,472) | (19,139) |
| EQUIVALENTS | | | |
+-------------------------------------+------------------+----------------+-----------------+
| CASH AND CASH EQUIVALENTS AT 1 | (8,459) | 10,680 | 10,680 |
| DECEMBER 2008 | | | |
+-------------------------------------+------------------+----------------+-----------------+
| CASH AND CASH EQUIVALENTS AT 31 MAY | (7,270) | (12,792) | (8,459) |
| 2009 | | | |
+-------------------------------------+------------------+----------------+-----------------+
| | | | |
+-------------------------------------+------------------+----------------+-----------------+
The consolidation refers to comparative periods only and comprises the cash flow
of the Company and its subsidiary, up to the date of the subsidiary's winding-up
on 4 February 2008.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 31 May 2009 (unaudited)
1GENERAL INFORMATION
New Star Financial Opportunities Fund Limited (the "Company") is a company
domiciled in Guernsey. The condensed unaudited consolidated financial statements
of the Company for the six months ended 31 May 2009 comprise the Company and for
the comparative periods the Company and its subsidiary, up to the date of the
subsidiary's winding-up on 4 February 2008.
Following recent changes to the Guernsey regulatory fund regime, the Company has
elected to be an "authorised" closed-ended investment scheme under the
Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended. This has
no impact on the operation of the Company.
These condensed unaudited consolidated half-yearly financial statements for the
six months ended 31 May 2009 were authorised for issuance on 29 July 2009.
2 SIGNIFICANT ACCOUNTING POLICIES
a) Statement of compliance
These condensed unaudited consolidated half-yearly results have been prepared in
accordance with International Financial Reporting Standards ("IFRS") for interim
financial reporting; IAS 34 Interim Financial Reporting. They do not include all
of the information required for full annual financial statements.
Where presentational guidance set out in the Statement of Recommended Practice
(SORP) for investment trusts issued by the Association of Investment Companies
(AIC) in January 2003 (revised December 2005) is consistent with the
requirements of IFRS, the Directors have sought to prepare the accounts on a
basis compliant with the recommendations of the SORP.
b) Basis of preparation
The condensed consolidated financial statements have been prepared on a fair
value basis for financial assets and financial liabilities at fair value through
profit or loss and derivative financial instruments.
The condensed consolidated financial statements are presented in Sterling
rounded to the nearest thousand. The functional currency of the Company is
Sterling as this is the currency of the primary economic environment within
which the Company operates.
The accounting policies have been consistently applied by the Company and are
consistent with those used in the financial statements for the year ended 30
November 2008.
These unaudited condensed consolidated half-yearly financial statements should
be read in conjunction with the last audited financial statements as at 30
November 2008.
3 TAXATION
The charge for the six months ended 31 May 2009 is GBP50,000 (six months ended
31 May 2008: GBP107,000; year ended 30 November 2008: GBP114,000). These amounts
represent irrecoverable withholding tax paid on overseas income.
The Company is domiciled in Guernsey and is exempt from paying tax on income or
capital gains of that jurisdiction under the terms of The Income Tax (Exempt
Bodies) (Guernsey) Ordinance 1989. The Company is liable to an exemption fee of
GBP600 per annum.
4 DISTRIBUTIONS
On 15 June 2009, a second interim dividend of GBP285,997; 0.75 pence per share
relating to the year ending 30 November 2009, was declared. This dividend which
is payable on 31 July 2009, has not been shown in the Consolidated Statement of
Changes in Net Equity.
5 RETURN PER SHARE
The basic revenue return per Ordinary Share is based on a net increase in net
assets from operations of GBP647,000 (31 May 2008: GBP1,338,000; 30 November
2008: GBP2,237,000) and on 38,132,932 Ordinary Shares (31 May 2008: 39,920,577;
30 November 2008: 39,026,754) being the weighted average number in issue
(excluding treasury shares) throughout the period. The basic capital return per
Ordinary Share is based on a net decrease in assets from operations of
GBP714,000 (31 May 2008: decrease of GBP4,228,000; 30 November 2008: decrease of
GBP15,569,000) and on 38,132,932 Ordinary Shares (31 May 2008: 39,920,577; 30
November 2008: 39,026,754) being the weighted average number in issue (excluding
treasury shares) throughout the period.
There are no potential Ordinary Shares in existence, therefore no diluted
returns per Share have been shown.
6NET ASSET VALUE PER SHARE
+--------------------------------------+----------------+----------------+----------------+
| | 31 May 2009 | 31 May 2008 | 30 November |
| | | | 2008 |
+--------------------------------------+----------------+----------------+----------------+
| | (Unaudited) | (Unaudited) | (Audited) |
+--------------------------------------+----------------+----------------+----------------+
| | pence | pence | pence |
+--------------------------------------+----------------+----------------+----------------+
| | | | |
+--------------------------------------+----------------+----------------+----------------+
| Net asset value per Ordinary Share | 32.25 | 63.86 | 34.28 |
+--------------------------------------+----------------+----------------+----------------+
| | | | |
+--------------------------------------+----------------+----------------+----------------+
The net asset value per Ordinary Share is based on the net assets attributable
to the Ordinary Shareholders of GBP12,298,000 (31 May 2008: GBP24,351,000; 30
November 2008: GBP13,070,000) and on 38,132,932 (31 May 2008: 38,132,932; 30
November 2008: 38,132,932) Ordinary Shares in issue (excluding treasury shares)
at the end of the period.
7 RELATED PARTY TRANSACTIONS
Apart from Management fees there were no significant related party transactions
during the period (31 May 2008: none; 30 November 2008: none). During the period
GBP47,000 (31 May 2008: GBP98,000; 30 November 2008: GBP170,000) was payable to
New Star Asset Management Limited. At the period end GBP37,000 (31 May 2008:
GBP32,000; 30 November 2008: GBP18,000) was outstanding and is included in trade
and other payables.
COMPANY PORTFOLIO
Forty largest investments at 31 May 2009
+------------+-------------------------+-+-----------------+-+--------------+--------------+
| Holding | Company | Sector | Security | Fair Value |
+------------+-------------------------+---------------------+--------------+--------------+
| | | | | GBP'000 |
| | | | | |
+------------+-------------------------+---------------------+--------------+--------------+
| 196,488 | HSBC Holdings | Banks | Ordinary | 1,093 |
+------------+-------------------------+---------------------+--------------+--------------+
| 325,000 | Personal Group Holdings | Non-Life | Ordinary | 827 |
| | | insurance | | |
+------------+-------------------------+---------------------+--------------+--------------+
| 150,000 | DnB NOR | Banks | Ordinary | 769 |
+------------+-------------------------+---------------------+--------------+--------------+
| 750,000 | Santander 3.375% | Fixed income | Bond | 662 |
+------------+-------------------------+---------------------+--------------+--------------+
| 23,818 | Julius Baer Holdings | General Financial | Ordinary | 620 |
+------------+-------------------------+---------------------+--------------+--------------+
| 2,444 | Banque Cant Vaudoise | Banks | Ordinary | 579 |
+------------+-------------------------+---------------------+--------------+--------------+
| 154,895 | Aviva | Life insurance | Ordinary | 518 |
+------------+-------------------------+---------------------+--------------+--------------+
| 750,000 | Investec 7.75% | Fixed income | Bond | 452 |
+------------+-------------------------+---------------------+--------------+--------------+
| 5,066 | Muenchener Rueckve | Non-Life | Ordinary | 437 |
| | | insurance | | |
+------------+-------------------------+---------------------+--------------+--------------+
| 550,000 | SVG Capital | Fixed income | Convertible | 436 |
| | | | Bond | |
+------------+-------------------------+---------------------+--------------+--------------+
| 487,961 | Sberbank Rossii | Banks | Ordinary | 428 |
+------------+-------------------------+---------------------+--------------+--------------+
| 500,000 | Intesa Sanpaolo 6.625% | Fixed income | Bond | 420 |
+------------+-------------------------+---------------------+--------------+--------------+
| 750,000 | Provident Financial | Fixed income | Bond | 411 |
| | 7.125% | | | |
+------------+-------------------------+---------------------+--------------+--------------+
| 300,000 | Randall & Quilter | Non-Life | Ordinary | 384 |
| | | insurance | | |
+------------+-------------------------+---------------------+--------------+--------------+
| 700,000 | Kensington Group 9% | Fixed income | Bond | 350 |
+------------+-------------------------+---------------------+--------------+--------------+
| 550,000 | Generali Finance 6.214% | Fixed income | Bond | 346 |
+------------+-------------------------+---------------------+--------------+--------------+
| 8,379 | Deutsche Bank | Banks | Ordinary | 344 |
+------------+-------------------------+---------------------+--------------+--------------+
| 269,072 | RSA Insurance Group | Non-Life | Ordinary | 338 |
| | | insurance | | |
+------------+-------------------------+---------------------+--------------+--------------+
| 149,876 | Marfin Popular | Banks | Ordinary | 335 |
+------------+-------------------------+---------------------+--------------+--------------+
| 350,000 | 3i Group 3.625% | Fixed income | Bond | 319 |
+------------+-------------------------+---------------------+--------------+--------------+
| 225,000 | Hansard Global | Life insurance | Ordinary | 307 |
+------------+-------------------------+---------------------+--------------+--------------+
| 350,000 | Standard Chartered | Fixed income | Bond | 296 |
| | 8.103% | | | |
+------------+-------------------------+---------------------+--------------+--------------+
| 23,422 | Standard Chartered | Banks | Ordinary | 294 |
+------------+-------------------------+---------------------+--------------+--------------+
| 500,000 | BNP Paribas 4.875% | Fixed income | Bond | 285 |
+------------+-------------------------+---------------------+--------------+--------------+
| 550,000 | F&C Asset Management | Fixed income | Bond | 283 |
| | 6.75% | | | |
+------------+-------------------------+---------------------+--------------+--------------+
| 800,000 | Prudential 6.5% | Fixed income | Bond | 277 |
+------------+-------------------------+---------------------+--------------+--------------+
| 500,000 | AXA 6.772% | Fixed income | Bond | 268 |
+------------+-------------------------+---------------------+--------------+--------------+
| 300,000 | RSA Insurance Group | Fixed income | Preference | 264 |
| | 7.375% | | | |
+------------+-------------------------+---------------------+--------------+--------------+
| 600,000 | Standard Life 5.314% | Fixed income | Bond | 256 |
+------------+-------------------------+---------------------+--------------+--------------+
| 4,612 | Deutsche Boerse | General Financial | Ordinary | 248 |
+------------+-------------------------+---------------------+--------------+--------------+
| 1,476 | Helvetia Holding | Non-Life | Ordinary | 247 |
| | | insurance | | |
+------------+-------------------------+---------------------+--------------+--------------+
| 250,000 | Liontrust Asset | General Financial | Ordinary | 246 |
| | Management | | | |
+------------+-------------------------+---------------------+--------------+--------------+
| 250,000 | Alliance & Leicester | Fixed income | Bond | 246 |
| | 9.625% | | | |
+------------+-------------------------+---------------------+--------------+--------------+
| 400,000 | Credit Agricole 5.136% | Fixed income | Bond | 245 |
+------------+-------------------------+---------------------+--------------+--------------+
| 450,000 | Legal & General Group | Life insurance | Ordinary | 242 |
+------------+-------------------------+---------------------+--------------+--------------+
| 66,000 | Sparebank 1 SMN | Banks | Ordinary | 241 |
+------------+-------------------------+---------------------+--------------+--------------+
| 250,000 | Intesa Sanpaolo 6.25% | Fixed income | Bond | 225 |
+------------+-------------------------+---------------------+--------------+--------------+
| 5,252 | BNP Paribas | Banks | Ordinary | 224 |
+------------+-------------------------+---------------------+--------------+--------------+
| 350,000 | Nordea Bank Finland | Fixed income | Bond | 220 |
| | 6.25% | | | |
+------------+-------------------------+---------------------+--------------+--------------+
| 4,339 | Gecina | Real Estate | Ordinary | 220 |
| | | Investment Trust | | |
+------------+-------------------------+---------------------+--------------+--------------+
| | TOTAL FOR FORTY LARGEST HOLDINGS BY MARKET VALUE | 15,202 |
+------------+--------------------------------------------------------------+--------------+
| | OTHER HOLDINGS | | | 4,799 |
+------------+---------------------------+-----------------+----------------+--------------+
| | TOTAL FAIR VALUE OF INVESTMENTS | 20,001 |
+------------+--------------------------------------------------------------+--------------+
| | | | | |
+------------+-------------------------+-+-----------------+-+--------------+--------------+
The Company holds the following short positions on unexpired derivatives:
The Company has a swap based on the DOW Jones Europe STOXX Bank Index with a
total notional value of GBP1,608,000. The unrealised loss on these contracts at
31 May 2009 was GBP518,000.
The Company also has six contracts for difference with a total notional value of
GBP419,000. The unrealised loss on these contracts at 31 May 2009 was GBP42,000.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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