ANGLO & OVERSEAS Plc
PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE PERIOD TO 31 JULY 2007
HIGHLIGHTS
- Net asset value total return in period of 12.3%.
- Net asset value total return since launch in 2005 of 33.7%.
- Recommended final dividend of 1.58p. Total dividend for period of 2.20p,
an increase of 14.6%.
The Directors announce the audited statement of results for the period from 29
July 2006 to 31 July 2007 as follows:-
CHAIRMAN'S STATEMENT
Results
After the strong performance seen in the previous period I am pleased to be
able to report a continuation of positive returns to shareholders.
During the period to 31 July 2007 the net asset value per share rose to 131.0p
from 118.4p at the previous period end date of 28 July 2006. This represents
an increase of 10.7%. The total return in the period amounted to 12.3%, after
including dividends paid in the period.
Although the Company's portfolio is not managed by reference to any stock
market index, as your Directors have decided not to adopt a formal benchmark,
we continue to believe it would be useful to highlight the performance of your
Company against market indices for comparison purposes.
The total return from the FTSE All-Share Index over the same period was 12.2%,
while the corresponding total return from the FTSE All-World ex UK Index was
13.6%. The total return from the average of these indices over the period
under review was 12.9%.
Since the Company's launch in July 2005 the net asset value total return has
amounted to 33.7%. The total return from the FTSE All-Share Index since launch
was 32.8%, while the return from the FTSE All-World ex UK Index was 22.0%. The
total return from the average of those indices since launch was 27.4%,
resulting in a net asset value total return 6.3% higher than this composite
index.
Investment strategy
During the period there was relatively little change to the geographic
allocation of the Company's assets. At 31 July 2007 UK exposure accounted for
over half of the Company's assets having increased from 49% to 54% during the
period. Exposure to European companies remained around 25%, while US exposure
rose from 11% to 15%. The increases in UK and US exposure were funded from the
sale of Japanese stocks and the reduction in cash balances.
During the period, the UK portfolio has had no exposure to the Oil & Gas or
Mining sectors. While these sectors form a large part of the FTSE All-Share
Index, the Investment Manager, Edinburgh Partners Limited (`Edinburgh
Partners'), continues to believe that these sectors are approaching peak
earnings, while operating costs are continuing to rise. Similarly, in the
international portfolio, while the Investment Manager has found more value in
selected US stocks, the portfolio remains underweight in the US, relative to
global equity indices.
Share price and discount
As at 31 July 2007 the Company's share price was 118.25p. This represented a
discount to net asset value per share (excluding income) of 9.1%. This
compares with a discount of 6.7% at the previous period end and an average
discount over the period of 5.2%.
Your Board continues to believe that the shares of your Company should trade
in a relatively narrow range around net asset value. The Company's discount
widened in the period under review, particularly towards the end of the
period, as it did for the investment trust sector generally, due principally
to increased stock market volatility, following the strong rise in share
prices seen over the last few years.
The Company's strategy to achieve the narrowing of the discount is to continue
to keep existing and potential investors informed through presentations made
by Edinburgh Partners and over the longer term through superior investment
performance. In addition private investors can purchase shares in the Company
through a savings plan operated by Edinburgh Partners, details of which can be
found on the Company's web site (www.angloandoverseas.com) or on Edinburgh
Partners' website (www.edinburghpartners.com).
The Company is permitted to buy back its own shares. During the period under
review the Company repurchased a total of 1,087,611 shares which are currently
held as treasury stock. The shares repurchased during the period represented
over 1% of the shares in issue at the start of the period. In total since the
Company's launch in July 2005 to the date of this announcement a total of
1,444,285 shares have been repurchased at an average cost of 116.2p.
The authority to repurchase shares will expire at the Annual General Meeting
on 8 November 2007 and a Special Resolution will be proposed for its renewal.
This will allow the Company to repurchase up to 14.99% of its shares in the
open market and for the shares to be either cancelled or placed in treasury.
The authority will be used when supply exceeds demand and where the Directors
consider it to be in the best interests of shareholders. No shares will be
repurchased if it would dilute the net asset value of the remaining shares.
Revenue and Dividend
There was a significant increase in the revenue generated from the portfolio
in the period under review. The net revenue generated was 2.81p, which
compared to 2.38p per share in the prior period, an increase of 18.1%. Net
revenue in the comparative period benefited from Edinburgh Partners waiving
its management fee from the launch of the Company to 31 July 2006.
The increase in revenue during the period under review resulted from both
dividend increases from portfolio companies and investment in higher yielding
stocks.
As a result of the increased revenue generated during the period. I am pleased
to be able to report that your Board is recommending a final dividend of
1.58p, which together with the interim dividend of 0.62p per share paid in May
2007 totals 2.20p and represents an increase of 14.6% on the dividend of 1.92p
for the prior accounting period. Your Directors have noted that many
shareholders value a steady increase in the income from their investments,
while being clearly aware that the investment policy pursued by the Investment
Manager is driven to where they consider the best value to be rather than
income considerations.
Subject to the approval of shareholders at the Annual General Meeting on 8
November 2007 the proposed final dividend of 1.58p will be paid on 14 November
2007 to shareholders on the register as at 26 October 2007. The ex-dividend
date will be 24 October 2007.
The Board notes the recent judgment of the European Court of Justice that the
investment management fees of investment trusts should be exempt from VAT in
the same way as unit trusts and OEICs. While the UK Government can appeal this
judgment, the Board will monitor the position and, if possible, will seek to
reclaim VAT charged on investment management fees.
Outlook
Global equity markets have remained resilient despite the dampening effect of
rising interest rates on the consumer and tighter liquidity in the financial
sector. While recent action by the Federal Reserve in the US has attempted to
restore confidence, it is likely that economic growth will slow going forward.
In my March statement in the interim accounts, I highlighted the fear that
investors had not priced riskier assets with sufficient caution. The fall-out
in the US sub-prime mortgage market has resulted in large losses for some
investors, with Ben Bernanke, chairman of the US Federal Reserve, forecasting
that the total default loss could reach US$100bn. While this will gradually
work its way out of the system, the beneficial impact going forward is that
risk spreads have widened and lending has returned to more rational levels.
Nevertheless, we remain convinced that economic cyclicality will return and
slower growth rates will have a significant impact in companies which have
high levels of operational gearing.
Equity markets are exhibiting more volatility than they have for some time and
it will inevitably be a bumpy ride for investors. The Company's' portfolio is
constructed from a valuation perspective and we still see good opportunities
for long term investors in companies where balance sheets are strong and
valuations reasonable. We expect our Investment Manager to remain relatively
fully invested.
Robert Alcock
Chairman
3 October 2007
INCOME STATEMENT (AUDITED)
for the period from 29 July 2006 to 31 July 2007
29 July 2006 to 31 July 12 May 2005 to 28 July 2006
2007
Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000
Gains on investments - 11,119 11,119 - 14,976 14,976
Foreign exchange losses on
capital items
- (416) (416) - (70) (70)
Income 3,452 - 3,452 2,744 - 2,744
Investment management fee (274) (273) (547) - - -
Other expenses (496) (42) (538) (402) - (402)
Net return before taxation 2,682 10,388 13,070 2,342 14,906 17,248
Taxation (191) - (191) (213) - (213)
Net return after taxation 2,491 10,388 12,879 2,129 14,906 17,035
pence pence pence pence pence pence
Return per Ordinary Share * 2.81 11.69 14.50 2.38 16.63 19.01
The total column of this statement is the profit and loss account of the
Company. The supplementary revenue and the capital return columns are prepared
under guidance published by the Association of Investment Companies ("AIC").
A separate Statement of Total Recognised Gains and Losses has not been
prepared as all such gains and losses are included in the Income Statement.
All revenue and capital items derive from continuing operations.
* The revenue return per Ordinary Share for the period ended 31 July 2007 is
based on earnings of �2,491,000 (2006: �2,129,000) and on 88,841,774 (2006:
89,646,481) Ordinary Shares being the weighted average number of Ordinary
Shares in issue during the period (excluding Treasury Shares).
The capital return per Ordinary Share for the period ended 31 July 2007 is
based on net capital gains of �10,388,000 (2006: �14,906,000) and on
88,841,774 (2006: 89,646,481) Ordinary Shares being the weighted average
number of Ordinary Shares in issue during the period (excluding Treasury
Shares).
BALANCE SHEET (AUDITED)
as at 31 July 2007
As at 31 As at 28
July 2007 July 2006
�'000 �'000
Fixed assets:
Investments at fair value 115,447 101,443
Current assets:
Debtors 457 663
Short-term investments - cash on deposit - 3,339
Cash at bank 99 1,610
556 5,612
Creditors - amounts falling due within one 298 1,221
year
Net current assets 258 4,391
Net assets 115,705 105,834
Capital and reserves:
Called-up share capital 8,972 8,972
Special reserve 80,652 80,652
Capital redemption reserve 50 50
Capital reserve - realised 19,812 6,173
- unrealised 5,482 8,733
Distributable revenue reserve 2,357 1,591
Own shares held in treasury (1,620) (337)
Total equity shareholders' funds 115,705 105,834
pence pence
Net asset value per Ordinary Share 130.99 118.36
including current period revenue**
**Based on total net assets of �115,705,000 (2006: 105,834,000) and 88,330,096
(2006: 89,417,707) being the number of Ordinary Shares in issue as at 31 July
2007, excluding those shares held in treasury.
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS (AUDITED)
for the period 29 July 2006 to 31 July 2007
Total
equity
Called-up Capital Capital Capital Distributable Own shares share-
share Special redemption reserve reserve revenue held in holders
capital reserve reserve realised unrealised reserve treasury funds
�'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000
Period ended 31 July 2007
As at 29 July 2006 8,972 80,652 50 6,173 8,733 1,591 (337) 105,834
Cost of own
shares bought
into treasury - - - - - - (1,283) (1,283)
Unrealised
appreciation
on investments - - - - (3,251) - - (3,251)
Net gain on
realisation of
investments - - - 14,370 - - - 14,370
Foreign exchange
losses on
capital items - - - (416) - - - (416)
Dividends paid
in the period - - - - - (1,725) - (1,725)
Investment
Management
fee (including VAT) - - - (315) - (315)
Retained net
return for the period - - - - - 2,491 - 2,491
As at 31 July 2007 8,972 80,652 50 19,812 5,482 2,357 (1,620) 115,705
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS (AUDITED)
for the period 12 May 2005 to 28 July 2006
Total
Distri- Own equity
Called-up Share Capital Capital Capital butable shares share-
share premium Special redemption reserve reserve revenue held in holders
capital accoumt reserve reserve realised unrealised reserve treasury funds
�'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000
Period ended 28 July 2006
As at 12 May 2005 - - - - - - - - -
Issue of shares 8,972 - - - - - - - 8,972
Premium on issue of shares - 80,752 - - - - - - 80,752
Cost of share issue - (50) - - - - - - (50)
Transfer on cancellation
of share premium account - (80,702) 80,702 - - - - - -
Cost of own
shares bought
into treasury - - - - - - - (337) (337)
Repurchase and
cancellation of
preference shares - - (50) 50 - - - - -
Unrealised
appreciation
on investments - - - - - 8,803 - - 8,803
Net gain on
realisation of
investments - - - - 6,173 - - - 6,173
Foreign exchange
losses on
capital items - - - - - (70) - - (70)
Dividends paid
in the period - - - - - - (538) - (538)
Retained net
return for the period - - - - - - 2,129 - 2,129
As at 28 July 2006 8,972 - 80,652 50 6,173 8,733 1,591 (337) 105,834
SUMMARISED STATEMENT OF CASH FLOWS (AUDITED)
for the period 29 July 2006 to 31 July 2007
29 July 2006 to 12 May 2005 to
31 July 2007 28 July 2006
�'000 �'000
Net cash inflow from operating 2,250 1,957
activities
Taxation (61) -
Capital expenditure and financial investment
Purchases of investments (56,070) (67,095)
Sales of investments 52,373 39,384
Exchange losses on settlement (334) (59)
Net cash outflow from capital expenditure
and financial investment (4,031) (27,770)
Equity dividends paid (1,725) (538)
Net cash outflow before financing (3,567) (26,351)
Financing:
Proceeds of share issues - 31,757
Costs of share issues - (50)
Own shares purchased and held in (1,283) (337)
treasury
Net cash (outflow)/inflow from (1,283) 31,370
financing
(Decrease)/increase in cash (4,850) 5,019
20 LARGEST INVESTMENTS
As at 31 July 2007
Industrial Classification Country Valuation % of
Company �'000 Total Net
Assets
United
Vodafone Group Mobile Telecommunications Kingdom 2,920 2.5
United
Treasury 5% 07/09/2014 Fixed Income Investment Kingdom 2,818 2.4
United
Rexam General Industrials Kingdom 2,817 2.4
United
Royal Bank of Scotland Banks Kingdom 2,533 2.2
United
Mothercare General Retailers Kingdom 2,470 2.1
Pharmaceuticals and United
GlaxoSmithKline Biotechnology Kingdom 2,353 2.0
Technology Hardware and
Dell Equipment United States 2,037 1.8
Gas, Water and
E.On Multiutilities Germany 2,034 1.8
United
HSBC Holdings Banks Kingdom 2,011 1.7
Fixed Line
Koninklijke KPN Telecommunications Netherlands 1,952 1.7
Ahold Food and Drug Retailers Netherlands 1,916 1.7
Depfa Bank Banks Germany 1,893 1.6
United
Domestic & General Non Life Insurance Kingdom 1,857 1.6
United
Menzies (John) Support Services Kingdom 1,853 1.6
United
SABMiller Beverages Kingdom 1,846 1.6
United
HBOS Banks Kingdom 1,842 1.6
United
Balfour Beatty Construction and Materials Kingdom 1,808 1.6
United
Lloyds TSB Banks Kingdom 1,786 1.6
United
Compass Travel and Leisure Kingdom 1,761 1.5
United
Yell Media Kingdom 1,744 1.5
Total - 20 Largest 42,251 36.5
investments
DISTRIBUTION OF INVESTMENTS
As at 31 July 2007 (% of total net assets)
Sector distribution as at 31 July % of Total Net
2007 Assets
Financials 30.0
Consumer Services 15.6
Industrials 13.9
Consumer Goods 11.2
Telecommunications 8.1
Technology 7.5
Healthcare 7.2
Fixed Income 2.4
Oil and Gas 2.1
Utilities 1.8
Cash and Other Net Assets 0.2
100.0
Geographical distribution as at 31 % of Total Net
July 2007 Assets
UK 53.5
Europe 25.2
USA 14.6
Japan 3.0
Fixed Income (UK) 2.4
Asia (excluding Japan) 1.1
Cash and Other Net Assets 0.2
100.0
The audited financial information set out above does not constitute the
Company's Statutory Accounts as defined in section 240 of the Companies Act
1985. The Income Statement, the Balance Sheet, the Reconciliation of Movement
in Shareholders' Funds and Summarised Statement of Cash Flows have been
prepared using the accounting standards and policies adopted in the Statutory
Accounts for the period ended 28 July 2006, which have been delivered to the
Registrar of Companies, and in accordance with the Statement of Recommended
Practice 2003 regarding the Financial Statements of Investment Companies (as
revised in December 2005). Statutory accounts for the period ended 31 July
2007 have been approved by the Board and audited and will be filed with the
Registrar of Companies following the Company's Annual General Meeting.
The results for the period ended 31 July 2007 will be circulated to
shareholders in the form of an Annual Report, copies of which will be
available at the Company's registered office and will be filed with the
Registrar of Companies.
The Company has received approval from the Inland Revenue as an authorised
investment trust under Section 842 of the ICTA 1988 for the period from
inception to 28 July 2006. In the opinion of the Directors, the Company
continues to direct its affairs so as to enable it to qualify for such
approval and the Company will continue to seek approval under Section 842 each
year.
END
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