23rd Jul 2007 16:03
New Star Financial Opp Fd Ltd23 July 2007 New Star Financial Opportunities Fund Limited Announcement of Interim Results for the six months to 31 May 2007 Chairman's Statement I am pleased to report the unaudited interim results of the New Star FinancialOpportunities Fund for the six months ended 31 May 2007. Despite a sharpcorrection in equity markets at the end of February, they recovered quickly toend higher than where they had started. As a result, the period covered by thisreport was an excellent one for the Company with a total return for OrdinaryShareholders (based on the growth of the net asset value plus the two grossinterim dividends) of 17.5% compared with the FTSE Financials Index total returnof 7.7%. The primary driver of this performance has been the rise in total assets lesscurrent liabilities (before deduction of amounts due to ZDP Shareholders) of10.1% to £95million. This compared to a rise of 4.9% in the FTSE FinancialsIndex over the same period. Secondly as the Company's Ordinary Shares are gearedby prior ranking Zero Dividend Preference Shares ("ZDP Shares") their returnshave magnified the underlying rise in total assets. This last factor, thoughstill material, has become less of a driver of performance over the last fewyears as the level of gearing has continued to fall with the rise in totalassets. The distributable return per Ordinary Share was 2.61p and your Directors havedeclared two interim dividends of 1.10p each, the first paid on 30 April 2007and the second is due to be paid on 31 July 2007. After deducting the secondinterim dividend, your Company has revenue reserves of £0.97 million. Theincreased level of reserves from the Company's financial year end largelyreflects the higher incidence of dividend payments in the first six months ofthe year due to the fact that most European financial companies pay their finalor only dividend during this period. The broadening of the Company's investment strategy at the end of 2005 hascontinued to benefit performance. In particular, the reduction in exposure tofixed-income securities and increased exposure to equities has proved verybeneficial. At the time of the reconstruction the Company had approximately 40%of its assets invested in fixed-income securities and the fall in bond pricesover this period would have been very detrimental to performance had thisexposure been maintained. Nevertheless, against this background of rising interest rates and bond yields,financial stocks have performed poorly relative to the underlying equity marketas increased concerns regarding the outlook for the sector has underminedsentiment. At a sub-sector level, the poor performance of bank shares hasoccurred despite the increased merger & acquisition speculation that has risenfollowing the competing bids for ABN AMRO from Barclays and the consortium ofbanks led by The Royal Bank of Scotland Group. The poor performance of realestate stocks over the period is more understandable. The US sub-prime crisis that was in part a cause of the correction in equitymarkets at the end of February has increased risk aversion towards the Europeanfinancials sector as investors worry about the risk of any further fall-out incredit markets. It is likely that these and other concerns will not diminishquickly. The performance of the portfolio has been excellent and the majority of thecompanies within the investment portfolio continue to make good progress. As aresult your Directors remain confident about the future prospects of yourCompany, and I look forward to reporting to you in due course with regard to therepayment of the ZDP Shares in December and the consequences of this. Martyn Chambers 23 July 2007 CONSOLIDATED STATEMENT OF OPERATIONS For the six months ended 31 May 2007 (Unaudited) 1 December 2006 1 December 2005 to 31 May 2007 to 31 May 2006 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Net investment gainsRealised gains on investments - 4,721 4,721 - 4,657 4,657Movement in unrealised gains on - 4,107 4,107 - 2,931 2,931investmentsMovement in valuation of unexpired options - (206) (206) - - -Exchange gains/(losses) on capital items - 19 19 - (17) (17) - 8,641 8,641 - 7,571 7,571Income Income from investments 2,072 - 2,072 1,849 - 1,849Bank interest 80 - 80 28 - 28Exchange losses on income (2) - (2) - - - 2,150 - 2,150 1,877 - 1,877Expenses Management fee (185) (185) (370) (164) (164) (328)Finance charge attributable to ZDP Shares - (1,471) (1,471) - (1,363) (1,363)Administration fees (81) - (81) (78) - (78)Audit fee (13) - (13) (11) - (11)Directors' fees (44) - (44) (39) - (39)Taxation (177) - (177) (146) - (146)Miscellaneous expenses (46) - (46) (35) - (35) (546) (1,656) (2,202) (473) (1,527) (2,000) Total return for Ordinary Shares 1,604 6,985 8,589 1,404 6,044 7,448 pence pence pence pence pence penceBasic return per Ordinary Share 2.61 11.36 13.97 2.28 9.83 12.11Return per ZDP Share - 5.96 5.96 - 5.53 5.53 CONSOLIDATED STATEMENT OF CHANGES IN NET EQUITY For the six months ended 31 May 2007 (Unaudited) Distributable Distributable Other non- Share Share reserves reserves distributable capital premium - revenue - special reserves Total £'000 £'000 £'000 £'000 £'000 £'000 At 1 December 2006 15,375 3,623 1,392 17,338 10,109 47,837Net increase in net assets from - - 1,604 - 6,985 8,589operationsDividends paid - - (1,353) - - (1,353) At 31 May 2007 15,375 3,623 1,643 17,338 17,094 55,073 For the six months ended 31 May 2006 (Unaudited) At 1 December 2005 15,375 3,623 1,558 17,338 (609) 37,285Net increase in net assets from - - 1,404 - 6,044 7,448operationsDividends paid - - (1,230) - - (1,230) At 31 May 2006 15,375 3,623 1,732 17,338 5,435 43,503 CONSOLIDATED STATEMENT OF NET ASSETS As at 31 May 2007 31 May 2007 31 May 2006 30 November 2006 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000Non-current assets Investments at fair value 82,938 78,934 82,421 Current assets Trade and other receivables 1,420 704 1,693Cash and cash equivalents 12,182 1,312 4,364 13,602 2,016 6,057 Creditors - amounts falling due within one year Trade and other payables 1,525 400 2,170 ZPD Shares* 39,942 - - 41,467 400 2,170 Net current (liabilities)/assets (27,865) 1,616 3,887 Total assets less current liabilities 55,073 80,550 86,308Creditors - amounts falling due after more thanone year ZDP Shares* - 37,047 38,471 Net assets 55,073 43,503 47,837 Capital and reserves Called-up share capital 15,375 15,375 15,375Share premium account 3,623 3,623 3,623Distributable reserves - revenue 1,643 1,732 1,392 - special 17,338 17,338 17,338Other non-distributable reserves 17,094 5,435 10,109 Total equity shareholders' funds 55,073 43,503 47,837 pence pence penceNet asset value per Ordinary Share 89.81 71.44 78.28 Net asset value per ZDP Share 161.22 148.39 154.69 Number of Ordinary Shares in issue at period end 61,500,000 61,500,000 61,500,000 Number of ZDP Shares in issue at period end 24,675,000 24,675,000 24,675,000 * Amounts due to ZDP Shareholders are repayable on 11 December 2007 so are nowclassified as falling due within one year. CONSOLIDATED STATEMENT OF CASH FLOWS For the six months ended 31 May 2007 (Unaudited) 1 December 2006 to 1 December 2005 to 31 May 2007 31 May 2006 £'000 £'000 Operating activities Cash received from financial investments 1,764 1,471Interest received 36 28Operating expense payments (642) (567) Net cash inflow from operating activities 1,158 932 Investing activities Purchase of financial investments (16,497) (33,844)Sale of financial investments 24,530 33,290Realised losses on foreign currency transactions (13) -Net cash inflow/(outflow) from investing activities 8,020 (554) Financing activities ZDP issue expenses paid - (103)Dividends paid (1,353) (1,230) Net cash outflow from financing activities (1,353) (1,333) Increase/(decrease) in cash and cash equivalents 7,825 (955) NOTES: 1. Significant accounting policies New Star Financial Opportunities Fund Limited (the "Company") is a companydomiciled in Guernsey. The condensed consolidated interim financial statementsof the Company for the six months ended 31 May 2007 comprise the Company and itssubsidiary (together referred to as the "Group"). These condensed consolidated interim financial statements were authorised forissuance on 23 July 2007. a) Statement of compliance These condensed consolidated interim financial statements have been prepared inaccordance with International Financial Reporting Standards (IFRSs) for interimfinancial statements; IAS 34 Interim Financial Reporting. They do not includeall of the information required for full annual financial statements. b) Basis of preparation The consolidated financial statements have been prepared on a fair value basisfor financial assets and financial liabilities at fair value through profit orloss and derivative financial instruments. Other financial assets andliabilities and non-financial assets and liabilities are stated at amortisedcost. The financial statements are presented in Sterling rounded to the nearestthousand. The accounting policies have been consistently applied by the Group and areconsistent with those used in the financial statements for the year ended 30November 2006. 2. Reserves and distributions Under the terms of the Company's Articles of Association, distributions can bemade up to the total of accumulated gross income received less the runningcosts. For the period ended 31 May 2007, the amount available for distributionwas £1,604,000; 2.61 pence per share (31May 2006: £1,404,000; 2.28 pence pershare). Distributions of £1,353,000; 2.20 pence per share (31 May 2006:£1,230,000; 2.00 pence per share) have been distributed or declared of which£676,500; 1.10 pence per share represented a fourth interim dividend for theyear ended 30 November 2006. The retained surplus of £251,000 (31 May 2006:retained surplus £174,000) is included in distributable revenue reserves. On 18 June 2007, a second interim dividend of £676,500; 1.10 pence per share,relating to the year ending 30 November 2007, was declared. This dividend, whichis payable on 31 July 2007, has not been shown in the consolidated statement ofchanges in net equity. 3. Return per Share The basic revenue return per Ordinary Share is based on a net increase in netassets from operations of £1,604,000 (31 May 2006: £1,404,000) and on 61,500,000(31 May 2006: 61,500,000) shares in issue throughout the period. The basiccapital return per Ordinary Share is based on a net increase in assets fromoperations of £6,985,000 (31 May 2006: increase £6,044,000) and on 61,500,000(31 May 2006: 61,500,000) shares in issue throughout the period. The return perZDP Share is based on an annualised redemption yield of 8.65%. There are no potential Ordinary Shares in existence and therefore no dilutedreturns per share have been shown. 4. Net asset value per Share The net asset value per Ordinary Share is based on the net assets attributableto the Ordinary Shareholders of £55,235,000 (31 May 2006: £43,936,000; 30November 2006: £48,139,000) and on 61,500,000 (31 May 2006: 61,500,000; 30November 2006: 61,500,000) Ordinary Shares in issue at the end of the period.The net asset value per ZDP Share is based on the net assets attributable to ZDPShareholders of £39,780,000 (31 May 2006: £36,614,000; 30 November 2006:£38,169,000) and on 24,675,000 (31 May 2006: 24,675,000; 30 November 2006:24,675,000) ZDP Shares in issue at the end of the period. The ZDP Shares were issued in two tranches. Each tranche is accounted for on anamortised cost basis such that the carrying value for each tranche increasesfrom the net issue proceeds to the redemption amount of 168.48p per ZDP Share on11 December 2007 at a consistent daily rate. The difference between the carrying value of ZDP Shares and the net assetsattributable based on the redemption formula amounted to £162,000 at 31 May 2007(31 May 2006: £433,000, 30 November 2006: £302,000). This difference willdiminish over time, falling to nil at 11 December 2007. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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