ANGLO & OVERSEAS PLC
PRELIMINARY ANNOUNCEMENT OF INTERIM RESULTS
The Directors announce the unaudited statement of results for the period from
29 July 2006 to 31 January 2007 as follows:-
HIGHLIGHTS
- Net asset value total return including dividends was 12.0%. Net asset value
increase of 10.8%.
- Interim dividend increased to 0.62p per share.
- Share price discount to net asset value (excluding income) narrowed from 6.7%
to 3.3% in period.
Chairman's Statement
Results
I am pleased to report that the net asset value per share as at 31 January 2007
had risen to 131.2p from 118.4p at the previous period end date of 28 July
2006. This represents an increase of 10.8%. Including the final dividend of
1.32p for the period ended 28 July 2006 which was paid in November 2006, this
represents a total return of 12.0%.
While the Company's portfolio is not managed by reference to any stock market
index, as the Directors have decided not to adopt a formal benchmark, we
believe some comparisons may be useful. The total return (i.e. capital
appreciation plus dividends) from the FTSE All-Share Index over the same period
was 7.6%, while the corresponding total return from the FTSE All-World ex UK
Index was 9.6%. The total return from the average of these indices over the
period was 8.6%.
Share price and discount
The Company's share price had increased from 108.75p at 28 July 2006 to 126.25p
at 31 January 2007, which represents an increase of 16.1%. When compared to the
net asset value per share (excluding income) it represents a discount of 3.3%,
an improvement on the position at the previous period end when the discount to
net asset value per share (excluding income) was 6.7%.
As we have highlighted previously, your Board believes it is extremely
important that the shares of your Company trade in a relatively narrow range
around asset value. To achieve this objective during the period, in August and
September 2006, the Company repurchased 517,500 shares at an average price of
110p per share, with the shares all placed in treasury. In total the Company
now holds 824,174 shares in treasury, representing just under 1% of the
Company's total share capital in issue.
Revenue and dividend
Investment income increased during the period reflecting both investment in
higher yielding stocks and dividend increases from portfolio companies. Net
revenue in the comparative period benefited from the Investment Manager,
Edinburgh Partners, waiving its management fee to 31 July 2006. The net revenue
return per ordinary share was 0.64p per share as against 0.72p in the prior
period.
I am pleased to report that the Company will pay an increased dividend of 0.62p
per share on 8 May 2007 to shareholders on the register as at 20 April 2007.
The ex-dividend date will be 18 April 2007.
Investment overview
The UK economy has remained remarkably resilient in the face of rising interest
rates. While this resilience has occurred in the resource sector and
commodities in particular, it also applied to property prices, consumer
confidence and still modest levels of bad debts.
However it is clear that economies have been stronger for longer for quite a
long time now and strains are beginning to show. Inflation is once again a
topic of debate and interest rates are unlikely to change direction until there
are clear and long-lasting signs that inflation is back on target. For this to
occur, some of the excesses will have to be squeezed out and this is likely to
be seen in speculative froth being blown off commercial property and more
affordable levels of consumer expenditure. A weaker oil price and pressure
coming off energy costs will feed through to easier comparisons later in the
year.
While UK equity prices are often supported by yield considerations, businesses
that will prosper in this environment are likely to be driven by self help
strategies, rather than any economic tailwind. Profit warnings are increasing
and it is inconceivable that all the bid stories will be consummated. Overall,
investors are not taking sufficient consideration of potential negatives.
The UK sits within a wider global picture which carries many similar
characteristics. The starting point has to be the US consumer who is now using
savings to continue recent consumption patterns. Overlaid on this is the high
level of corporate profitability in the US which has never been sustained. The
likely out-turn is slower US and global economic growth combined with lower
profit margins for companies. This suggests that the profit outlook for the
corporate sector is less encouraging than it has been for some time. Our
Manager's analysis suggests valuations are on the expensive side of fair value
and, at the higher risk end, valuations are distinctly stretched. One is simply
no longer being sufficiently rewarded for taking on incremental risk. Whilst
markets may in general be on the expensive side, and risk has to be watched
closely, it is still the case that there is enough potential to keep the
portfolio fairly fully invested and this position is expected to continue.
During the period there was relatively little change in the geographic
distribution of the Company's assets and there continues to be a relatively
equal exposure between UK and overseas equities within the portfolio. During
the period a key feature has been the increasing size of investee companies,
given Edinburgh Partners' assessment of where valuation opportunities currently
exist for shareholders in Anglo & Overseas.
Outlook
Despite the less optimistic near-term outlook, we still anticipate reasonable
returns over the medium term and, should a set back in markets occur, we have
the flexibility to take advantage of any opportunities created.
Robert Alcock
Chairman
14 March 2007
INCOME STATEMENT (UNAUDITED)
For the period 29 July 2006 to 31 January 2007
Period 29 July 2006 to Period 12 May 2005* to Period 12 May 2005* to
31 January 2007 31 January 2006 28 July 2006
Revenue Capital Total Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000
Gains on - 12,394 12,394 - 11,495 11,495 - 14,976 14,976
investments
Exchange - (269) (269) - (76) (76) - (70) (70)
losses on
capital
items
Income 1,007 - 1,007 871 - 871 2,744 - 2,744
Investment (135) (135) (270) - - - - - -
management
fee
Other (257) (24) (281) (203) - (203) (402) - (402)
expenses
Net return 615 11,966 12,581 668 11,419 12,087 2,342 14,906 17,248
before
taxation
Taxation (46) - (46) (22) - (22) (213) - (213)
Net return 569 11,966 12,535 646 11,419 12,065 2,129 14,906 17,035
after
taxation
pence pence pence pence pence pence pence pence pence
Return per 0.64 13.46 14.10 0.72 12.73 13.45 2.38 16.63 19.01
Ordinary
Share**
The total column of this statement is the profit and loss account of the
Company. The capital and revenue return columns are prepared in accordance with
guidance issued by the Association of Investment Companies (AIC).
All revenue and capital items in the above statement derive from continuing
operations.
A separate Statement of Recognised Gains and Losses has not been prepared as
all such gains and losses are included in the Income Statement.
* The Company was incorporated on 12 May 2005, but did not commence
operations until 29 July 2005.
** The return per Ordinary Share for the period from 29 July 2006 to 31
January 2007 is based on the net revenue return after taxation of �
569,000 (2006: �646,000) and the net capital return after taxation of
�11,966,000 (2006: �11,419,000) and on 88,935,113 (2006: 89,716,758)
Ordinary Shares, being the weighted average number of Ordinary Shares
in issue during the period (excluding treasury shares).
The return per Ordinary Share for the period from 12 May 2005 to 31
July 2006 is based on the net revenue return after taxation of �
2,129,000 and the net capital return after taxation of �14,906,000 and
on 89,646,481 Ordinary Shares, being the weighted average number of
Ordinary Shares in issue during the period (excluding treasury
shares).
BALANCE SHEET (UNAUDITED)
As at 31 January 2007
As at 31 As at 31 As at 28
January 2007 January 2006 July 2006
�'000 �'000 �'000
Non-current assets
Investments at fair value through 112,899 95,334 101,443
profit or loss
Current assets
Debtors 681 301 663
Cash at bank and short term 3,515 6,211 4,949
deposits
4,196 6,512 5,612
Creditors - amounts falling due
within one year
Creditors 467 139 1,221
Redeemable Preference Shares - 50 -
467 189 1,221
Net current assets 3,729 6,323 4,391
Total net assets 116,628 101,657 105,834
Capital and reserves
Called-up share capital 8,972 8,972 8,972
Special reserve 80,652 80,702 80,652
Capital redemption reserve 50 - 50
Capital reserve - realised 13,528 1,577 6,173
- unrealised 13,344 9,842 8,733
Revenue reserve 987 646 1,591
Own shares held in treasury (905) (82) (337)
Total shareholders' funds 116,628 101,657 105,834
Pence pence pence
Net asset value per Ordinary Share 131.19 113.40 118.36
including current period revenue
STATEMENT OF CASH FLOWS (UNAUDITED)
For the period 29 July 2006 to 31 January 2007
Period 29 July Period 12 May Period 12 May
2006 2005 2005
to 31 January to 31 January to 28 July
2007 2006 2006
�'000 �'000 �'000
Operating activities
Investment income received 1,058 600 2,216
Bank deposit interest received 14 92 119
Investment Management fees paid (131) - -
Administration fees paid (51) (26) (76)
Other cash payments (189) (99) (302)
Net cash inflow from operating 701 567 1,957
activities
Capital expenditure and financial
investment
Purchases of investments (28,840) (38,847) (67,095)
Sales of investments 28,681 12,974 39,384
Exchange gains/(losses) on 34 (45) (59)
settlement
Net cash outflow from capital (125) (25,918) (27,770)
expenditure and financial
investment
Net cash inflow/(outflow) before 576 (25,351) (25,813)
financing and equity dividends
Equity dividends paid (1,173) - (538)
Net cash outflow before financing (597) (25,351) (26,351)
Financing
Proceeds of share issue - 31,757 31,757
Costs of share issue - (50) (50)
Amounts paid up on Redeemable - 13 -
Preference Shares
Own shares purchased and held in (568) (82) (337)
treasury
Net cash (outflow)/inflow from (568) 31,638 31,370
financing
(Decrease)/increase in cash (note (1,165) 6,287 5,019
3)
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (UNAUDITED)
For the period 29 July 2006 to 31 January 2007
Period 29 July Period 12 May Period 12 May
2006 2005 to 31 2005 to 28
to 31 January January 2006 July 2006
2007
�'000 �'000 �'000
Opening shareholders' funds 105,834 - -
Issue of shares - 8,972 8,972
Premium on issue of shares - 80,752 80,752
Costs of share issue - (50) (50)
Cost of own shares bought into (568) (82) (337)
treasury
Net return after taxation 12,535 12,065 17,035
Dividends paid (1,173) - (538)
Closing shareholders' funds 116,628 101,657 105,834
20 Largest Investments: United Kingdom
Company Industrial Classification Valuation
�'000
Royal Bank of Banks 2,914
Scotland
Vodafone Mobile Telecommunications 2,881
HSBC Banks 2,035
Northern Rock Banks 2,031
Brammer Support Services 1,957
GlaxoSmithKline Pharmaceuticals & Biotechnology 1,897
Rexam General Industrials 1,881
Lloyds TSB Banks 1,861
Yell Media 1,841
HBOS Banks 1,778
Wilson Bowden Household Goods 1,738
Balfour Beatty Construction & Materials 1,730
Menzies (John) Support Services 1,683
Next General Retailers 1,660
Hays Support Services 1,656
Morrison (WM.) Food & Drug Retailers 1,624
Supermarkets
Bradford & Bingley Banks 1,623
Compass Travel & Leisure 1,592
Domestic & General Non Life Insurance 1,588
Cadbury Schweppes Food Producers 1,553
Total - top 20 United Kingdom investments (32.2% of 37,523
total net assets)
20 Largest Investments: International
Company Industrial Classification Country Valuation
�'000
Randstad Support Services Netherlands 2,216
Nexity Real Estate France 2,092
KPN Fixed Line Telecommunications Netherlands 1,862
Dell Technology & Hardware United States 1,833
Equipment
AGFA Gevaert Electronic & Electrical Belgium 1,827
Equipment
E.ON General Industrials Germany 1,816
Deutsche Beteiligungs Equity Investment Instrument Germany 1,735
Credit Agricole Banks France 1,716
Telefonica Fixed Line Telecommunications Spain 1,622
KDDI Mobile Telecommunications Japan 1,621
Deutsche Post Industrial Transportation Germany 1,596
Ahold Food & Drug Retailers Netherlands 1,556
Swiss Life Life Insurance Switzerland 1,538
Symantec Software & Computer Services United States 1,519
Itochu Support Services Japan 1,511
Portugal Telecom Fixed Line Telecommunications Portugal 1,487
Novartis Pharmaceuticals & Switzerland 1,406
Biotechnology
Depfa Bank Banks Germany 1,406
Bank of America Banks United States 1,398
Countrywide Financial General Financial United States 1,377
Total - top 20 International investments (28.4% of 33,134
total net assets)
Geographical distribution of assets
Valuation
%
Equities United Kingdom 51.9
Europe 27.4
USA 11.7
Japan 4.8
Asia 1.0
Total Equities 96.8
Cash and other net 3.2
assets
Total assets 100.0
Notes:
1. Financial information
These accounts are unaudited and are not the Company's statutory accounts, as
defined in Section 240 of the Companies Act 1985. This information has been
prepared on the basis of accounting policies used in the statutory accounts of
the Company for the period ended 28 July 2006. The statutory accounts for the
period ended 28 July 2006 received an unqualified audit opinion.
2. Status of the Company
It is the intention of the Directors to conduct the affairs of the Company so
that it satisfies the conditions for approval as an investment trust company
set out in Section 842 of the Income and Corporation Tax Act 1988.
3. Reconciliation of net cash flow to movement in net cash
Period 29 July Period 12 May Period 12 May
2006 2005 to 31 2005 to 28
to 31 January January July
2007 2006 2006
�'000 �'000 �'000
(Decrease)/increase in cash in (1,165) 6,287 5,019
period
Unrealised foreign exchange loss (269) (76) (70)
Change in net cash (1,434) 6,211 4,949
Net cash at 28 July 2006 4,949 - -
Net cash at 31 January 2007 3,515 6,211 4,949
4. Dividends
The Directors have declared an interim dividend in respect of the current
financial year of 0.62p (2006:0.60p) per share, to be paid on 8 May 2007 to
shareholders on the register as at 20 April 2007. The ex-dividend date will be
18 April 2007.
Under FRS 21: `Events after the Balance Sheet Date', interim dividends are
recognised within the period in which they are paid. Therefore no dividend has
been accrued within the interim financial statements.
Enquiries:
Sandy Nairn}
Kenneth Greig} Edinburgh Partners Limited, telephone: 0131 270 3800
END
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