TIDMIEI
Invesco English and International Trust plc
Annual Financial Report Announcement
for the Financial Year Ended 31 March 2010
FINANCIAL INFORMATION AND PERFORMANCE STATISTICS
The Benchmark Index of the Company is the RBS Hoare Govett Smaller Companies
plus AIM (excluding Investment Trusts)
Performance Statistics
At At
31 March 31 March %
2010 2009 Change
Shareholders' funds (GBP'000) 49,460 41,502 +19.2
Gearing: actual 100% 100%
effective 100% 100%
Net asset value per ordinary share:
- balance sheet 233.6p 171.0p +36.6
- after charging proposed
dividends (capital NAV) 233.6p 164.0p +42.4
Mid-market price per ordinary share(1) 221.8p 139.5p +59.0
Discount per ordinary share: 5.1% 18.4%
Capital return:
Benchmark Index(1) 3,077.0 1,850.3 +66.3
FTSE Small Cap Index(1) 2,354.1 1,443.6 +63.1
Portfolio performance(1) +42.2
(1) Source: Thomson Datastream and Invesco
Accounting year end
31 March 31 March %
2010 2009 Change
Gross income (GBP'000)
- excluding refunds of VAT on management
fees and interest thereon 1,086 1,332 -18.5
Net revenue available for ordinary shares (GBP'000) 547 2,011
Total expense ratio 1.7% 1.3%
Return per ordinary share
Revenue return 2.5p 7.6p
Capital return 71.8p (141.6)p
Total return 74.3p (134.0)p
Dividend per ordinary share
Final proposed - 1.3p
Special paid/proposed 3.0p 5.7p
Total 3.0p 7.0p
CHAIRMAN'S STATEMENT
Future of the Company
On 10 June 2010 the Board announced that it intended to put forward to
shareholders proposals to liquidate the Company, with shareholders to be given
the opportunity either to realise their investment for cash or to elect to
continue their investment by rolling over into the Invesco Perpetual UK Smaller
Companies Growth Fund, a UK open ended fund which shares the same management
team as your Company.
This announcement resulted from a review of the options available to the
Company following the receipt in April 2010 of redemption requests in respect
of a significant number of shares. In 2005 shareholders approved a
reorganisation of the Company, which put in place a creation and redemption
facility so that once a quarter shareholders could invest or divest shares in
the Company at a price near to NAV. The reorganisation has been successful in
ensuring that the price at which the shares trade in the stock market has
generally been at a narrow and stable discount. However, the relative
narrowness of the discount has deterred secondary market buyers for the stock,
and so generally sellers have used the redemption mechanism. This has led to
considerable shrinkage in the size of the Company. The size of the redemption
request received in April led Directors to suspend the redemption process and
to a review of options to accommodate the interests of all shareholders.
A circular to shareholders is in the course of preparation which will give
details of the proposals and will contain notice(s) of the general meeting(s)
required for their implementation.
In view of the liquidation and reconstruction proposals, the accounts for the
year ended 31 March 2010 have been prepared on a break-up basis. The Company's
investments have been valued at an estimate of fair value on realisation and a
provision of GBP645,000, representing the estimated expenses of liquidation, has
been made in these accounts.
Markets
The year under review saw markets worldwide make a strong recovery from the
slump in prices caused by the global economic crisis and recession. With
unprecedented fiscal and monetary boosts, governments and central banks around
the world ensured that the global economy avoided a 1930's style depression. A
number of emerging markets, most notably China, have been able to continue to
grow strongly, and GNP growth in the US is expected to exceed 3% in 2010.
However, the debts taken on by governments as they delivered fiscal stimuli
have raised concerns over the creditworthiness of a number of countries, and
therefore of those banks with large exposures to those nations. Furthermore,
the tax increases and spending cuts which governments are now having to
introduce to restore public finances are likely to undermine economic growth in
the near term.
Performance
During the year the FTSE All-Share Index rose by 46.7% and the benchmark index
the RBS Hoare Govett Smaller Companies plus AiM (excluding investment trusts)
index by 66.3%. The net asset value (`NAV') per share of the Company increased
by 42.4% and the share price by 59% as the discount narrowed. The recovery in
the market was led by those stocks which had suffered the most in the previous
slump, particularly those which had high levels of debt, or which were
perceived to be especially exposed to the economic cycle. the Company has
tended to invest in well financed businesses and has been cautious about the
likely pace of economic recovery and so has tended to have less exposure to
these types of stock, which is why, despite the strong absolute return, the
portfolio performance lagged that of the benchmark index.
At the beginning of the year, the Company had no bank facility; and although
one was put in place during the year, given the uncertainty over the future of
the Company, it was essentially undrawn during the year.
Dividend
The Directors declared a special dividend of 3p per share in November 2009
following the reimbursement of VAT (and interest thereon) previously paid on
management fees. Following this and the making of a provision for liquidation
expenses, there is little or no net income for shareholders for the year. The
Directors are not, therefore, proposing a final dividend for the year to 31
March 2010.
However, the Directors have declared an interim dividend of 1.3p per share for
the current year beginning 1 April 2010 payable on 3 September 2010 to those
shareholders on the register as at 6 August 2010.
Outlook
While the austerity measures announced by the recently elected coalition
government in the UK are likely to dampen short term growth prospects, equity
valuations remain attractive in the medium term. This is particularly true for
small companies where the continuing lack of investor interest has created some
real value. The acceleration in takeover activity by overseas businesses of UK
small companies is one signpost of this opportunity and therefore, while this
Company will no longer exist, the prospects for good performance from UK small
companies is promising.
Annual General Meeting
The Annual General Meeting has been convened for 10 September 2010. Resolutions
will be proposed to approve four Items of Special Business. Firstly, an
Ordinary Resolution to renew the Directors' authority to allot new shares,
secondly a Special Resolution to disapply pre-emption rights. Thirdly, a
Special Resolution seeking to give Directors the authority to buy-back up to
14.99% of the Company's issued ordinary shares. Lastly, a Special Resolution
permitting the Company to convene general meetings on 14 days' notice.
The Directors have considered the resolutions to be proposed at the Annual
General Meeting and consider them to be in the best interests of the Company.
They therefore recommend shareholders to vote in favour of all the resolutions.
John Sands
Chairman
26 July 2010
Manager's Report
Introduction
In my report last year I wrote that there was considerable valuation support
for equities and that there would be good returns to be had, so it is pleasing
to see strong absolute performance from Invesco English & International for the
year under review.
Portfolio
Again sales exceeded purchases during the year as cash was raised to meet
redemptions. The largest sales were Healthcare Locums, the medical temping
business which has been a successful long term investment for the Company; and
Just Retirement, the enhanced annuity provider which was taken over at a
healthy premium to the price at which the shares had been trading before the
bid. Sizeable purchases included Collins Stewart, the investment bank, where
the value of the fund management business does not appear to be reflected in
the company's overall valuation; and TT Electronics, a sensor manufacturer
where new management are already refocusing the business and improving margins.
In a strong market, it is unsurprising that the portfolio contained a number of
stocks which more than doubled. Alexander Mining, the mining technology company
was up over four-fold from 2.4p to 12.75p; while IQE, the complex semiconductor
wafer manufacturer, was up 189% to 16.25p. Sterling Energy, a sizeable
investment for the Company, increased from 56p to 142p as new management and a
refinancing restored confidence. The weaker performers included Ark
Theraputics, whose lead drug was rejected by the European Regulator. Ark fell
by some 72% over the year. Landkom, the Ukrainian farming business, halved as
the scale of the task facing the new management under Vitaliy Stotsyk became
apparent. However, given that 40% more land has been planted for 2010 than for
2009, that costs per hectare have been reduced by 35% and that early forward
sales of oil seed rape are at dollar prices 40% up on those achieved in 2009, a
strong recovery in the share price is likely.
Performance Attribution for the Year Ended 31 March 2010
Absolute
%
Net asset value capital return 42.4
Benchmark capital return 66.3
Relative performance (23.9)
Analysis of Relative Performance
Portfolio capital return 42.2
Less benchmark capital return (66.3)
Portfolio under outperformance (24.1)
Net gearing effect -
Costs to capital - interest -
Costs to capital - expenses (net of VAT refunds) (0.2)
Effect of share buy backs 0.4
Total (23.9)
Performance attribution analyses the Company's performance relative
to its benchmark.
Portfolio (under)/outperformance measures the relative effect of the
Company's investment portfolio against that
of its benchmark.
Net gearing effect measures the impact of borrowings and cash
on the Company's relative performance.
Costs to capital reduce the level of assets and therefore
result in a negative effect for relative
performance.
Effect of share buy backs measures the effect of shares bought back
on the Company's relative performance.
From the above table, it can be seen that the net asset value return of 42.4%
underperformed the return of 66.3% by 23.9% and the portfolio return of 42.2%
was behind the benchmark return of 66.3%, giving an underperformance for the
year of 24.1%. The effect of other factors for the year comprised the 0.2%
negative impact of management fee allocated to capital and the 0.4% positive
impact from share buy backs. As the Company was not geared during the year,
there was neither any gearing effect nor interest costs.
Outlook
It is likely that the Company will go into liquidation later this year, which
is symptomatic of a lack of investor interest in UK small companies. Indeed,
since the redemption and creation facility was put in place a little over five
years ago the number of UK small company investment trusts has declined by over
two thirds. This is unfortunate because smaller companies have historically
delivered better returns than the market as a whole. For example, since I took
over as manager of the trust in November 1991 to 31 March this year, the
extended HGSC (including AiM) index has increased by 157%, compared to a return
of 123% by the FTSE 100. By way of comparison, the share price of Invesco
English & International has increased by some 258% over that period. A thriving
small company sector delivers the winning companies of tomorrow; it drives
innovation, job creation and an entrepreneurial culture. I am convinced that
good returns can be made from UK small companies from these levels, despite the
likely sluggish economic environment.
Andy Crossley
Invesco Asset Management Limited
26 July 2010
INVESTMENTS IN ORDER OF VALUATION
YEAR ENDED 31 March 2010
Ordinary shares unless stated otherwise
Market Percentage
Value of
Portfolio
INVESTMENT Sector GBP'000 %
Biocompatibles Health Care Equipment & Services 1,276 2.5
Advanced Medical Health Care Equipment & Services 1,237 2.4
SolutionsAIM
RWSAIM Support Services 1,137 2.2
Hill & Smith Industrial Engineering 1,025 2.0
H & TAIM Financial Services 1,016 2.0
Chemring Aerospace & Defense 993 2.0
New Britain Palm Oil Food Producers 945 1.9
Sterling EnergyAIM Oil & Gas Producers 916 1.8
Altona EnergyAIM Mining 853 1.7
Avocet MiningAIM Mining 836 1.6
Dignity General Retailers 742 1.5
SDL Software & Computer Services 728 1.4
IQEAIM Technology Hardware & Equipment 724 1.4
Collins Stewart Financial Services 686 1.4
FairpointAIM Financial Services 680 1.4
Esprit CapitalUQ Venture Capital Partnership 650 1.3
SQS Software Software & Computer Services 638 1.3
QualityAIM
Wetherspoon (J.D.) Travel & Leisure 632 1.3
Pace Technology Hardware & Equipment 623 1.2
AbcamAIM Pharmaceuticals & Biotechnology 614 1.2
Penna Consulting Support Services 600 1.2
Hilton Food Food Producers 592 1.2
Mears Support Services 588 1.2
Novae Non-life Insurance 580 1.2
Education Support Services 548 1.1
DevelopmentAIM
Synergy Health Health Care Equipment Services 541 1.1
City of London Financial Services 540 1.1
Investment TrustAIM
Staffline Support Services 524 1.0
RecruitmentAIM
Latchways Support Services 515 1.0
BATM Advanced Technology Hardware & Equipment 511 1.0
JKX Oil & Gas Oil & Gas Producers 507 1.0
CVSAIM General Retailers 497 1.0
SportingbetAIM Travel & Leisure 489 1.0
Igas EnergyAIM Oil & Gas Producers 484 1.0
Vectura Pharmaceuticals & Biotechnology 468 0.9
Trading EmissionsAIM Financial Services 454 0.9
Halma Electronic & Electrical Equipment 453 0.9
Landkom Food Producers 446 0.9
InternationalAIM
Proximagen Pharmaceuticals & Biotechnology 446 0.9
NeuroscanAIM
Mitie Support Services 435 0.9
Renewable Energy Electricity 429 0.9
HoldingsAIM
HargreavesAIM Support Services 427 0.9
Prodesse Financial Services 422 0.8
InvestmentsAIM
Abbey ProtectionAIM Non-life Insurance 412 0.8
Euro GoldfieldsAIM Mining 405 0.8
Vitec Industrial Engineering 400 0.8
RegenersisAIM Technology Hardware & Equipment 398 0.8
TT Electronics Electronic & Electrical Equipment 398 0.8
System C Software & Computer Services 394 0.8
HealthcareAIM
Psion Technology Hardware & Equipment 394 0.8
Greggs Food & Drug Retailers 389 0.8
Development Real Estate Investment & Services 387 0.8
Securities
Green CO2AIM Support Services 380 0.7
INVESTMENTS IN ORDER OF VALUATION
continued
Market Market Percentage
Value Value of
Portfolio
INVESTMENT Sector GBP'000 GBP'000 %
Faroe PetroleumAIM Oil & Gas Producers 378 0.7
Renold Industrial Engineering 378 0.7
BowlevenAIM Oil & Gas Producers 373 0.7
Cove EnergyAIM Oil & Gas Producers 371 0.7
Hutchison China Pharmaceuticals & Biotechnology 367 0.7
MedicineAIM
Brewin Dolphin Financial Services 363 0.7
Inspired GamingAIM Travel & Leisure 363 0.7
BTG Pharmaceuticals & Biotechnology 356 0.7
RPC General Industrials 350 0.7
AugeanAIM Support Services 349 0.7
EmisAIM Software & Computer Services 347 0.7
Innovision Research & Technology Hardware & Equipment 342 0.7
TechnologyAIM
Allergy Pharmaceuticals & Biotechnology 338 0.7
TherapeuticalsAIM
Alexander MiningAIM Mining 331 0.7
IP Financial Services 328 0.7
EnergybuildAIM Mining 307 0.6
Office2office Support Services 306 0.6
MP EvansAIM Food Producers 304 0.6
Serica EnergyAIM Oil & Gas Producers 300 0.6
Fidessa Software & Computer Services 295 0.6
Management Consulting Support Services 291 0.6
Ambrian CapitalAIM Financial Services 290 0.6
Titanium ResourcesAIM Mining 287 0.6
Filtronic Technology Hardware & Equipment 281 0.6
TelosUQ Software & Computer Services
Class `B' Common -
Series A1 Red Prf 115
NPV
Series A2 Red Prf 162
NPV
277 0.6
Zenergy PowerAIM Electronic & Electrical Equipment 275 0.6
Helical Bar Real Estate Investment & Services 270 0.5
Games Workshop Leisure Goods 270 0.5
Hardy Underwriting - Non-life Insurance 269 0.5
Bermuda
Shore CapitalAIM Financial Services 264 0.5
AEA Technology Support Services 259 0.5
Helius EnergyAIM Electricity 257 0.5
SynairgenAIM Pharmaceuticals & Biotechnology 253 0.5
RurelecAIM Electricity 249 0.5
Norseman GoldAIM Mining 248 0.5
VeltiAIM Software & Computer Services 245 0.5
Nationwide Support Services 240 0.5
AccidentAIM
CPP Support Services 235 0.5
Geiger Counter Nonequity Investment Instruments 234 0.5
Xcite EnergyAIM Oil & Gas Producers 231 0.5
DatacashAIM Support Services 226 0.5
Sarantel `A' Technology Hardware & Equipment 223 0.4
sharesAIM
Ark Therapeutics Pharmaceuticals & Biotechnology 222 0.4
Sepura Technology Hardware & Equipment 220 0.4
Oxford CatalystsAIM Chemicals 220 0.4
MonitiseAIM Mobile Telecommunications 220 0.4
MorsonAIM Support Services 211 0.4
Micro Focus Software & Computer Services 201 0.4
Domino Printing Electronic & Electrical Equipment 194 0.4
SyntopixAIM Pharmaceuticals & Biotechnology 191 0.4
Market Market Percentage
Value Value of
Portfolio
INVESTMENT Sector GBP'000 GBP'000 %
Plethora Solutions Pharmaceuticals & Biotechnology 190 0.4
Indian EnergyAIM Electricity 188 0.4
Renewable Energy Electricity 182 0.4
GenerationAIM
ACM ShippingAIM Industrial Transportation 181 0.4
Brooks MacdonaldAIM Financial Services 173 0.3
RM Software & Computer Services 172 0.3
United Business Media 165 0.3
Medicine
EnergetixAIM Industrial Engineering 164 0.3
Brown (N) General Retailers 164 0.3
EndaceAIM Software & Computer Services 163 0.3
CyanAIM Technology Hardware & Equipment 145 0.3
IofinaAIM Oil & Gas Producers 141 0.3
James HalsteadAIM Construction & Materials 136 0.3
WynnstayAIM Food Producers 132 0.3
Rockhopper Oil & Gas Producers 131 0.3
ExplorationAIM
InterbulkAIM Industrial Transportation 130 0.3
AvingtransAIM Industrial Engineering 125 0.2
International Financial Services 120 0.2
BrandsAIM
Renovo Pharmaceuticals & Biotechnology 120 0.2
Plant Health CareAIM Chemicals 111 0.2
GetechAIM Oil Equipment, Services & 104 0.2
Distribution
Vatukoula ColdAIM Mining 104 0.2
Sabien TechnologyAIM Electronic & Electrical Equipment 78 0.2
Mission MarketingAIM Media 77 0.1
SynchronicaAIM Software & Computer Services 67 0.1
ITISAIM Technology Hardware & Equipment 52 0.1
Brookwell Equity Investment Instruments 52 0.1
Somero EnterprisesAIM Industrial Engineering 45 0.1
Puma BrandenburgAIM Real Estate Investment & Services
Ordinary 1p 18
Ordinary 10p 18
36 0.1
EnfisAIM Electronic & Electrical Equipment 27 0.1
Foreverblue Technology Hardware & Equipment 11 -
TechnologiesUQ
OxagenUQ Pharmaceuticals & Biotechnology - -
Enterworks Software & Computer Services - -
Total Value of 50,289 100.0
Investments
The total number of holdings in the portfolio (excluding those with nil value)
at the year end was 136 (2009: 135) and the holding in AIM stocks was 39.2%
(2009: 52.3%) as a percentage of the portfolio.
UQ Unquoted
AIM Alternative Investment Market (`AIM')
Related Party Transactions
Invesco Asset Management Limited (`IAML'), a wholly owned subsidiary of Invesco
Limited, acts as Manager and Secretary to the Company. Details of IAML's
services and fees are given in the Report of the Directors. Full details of
related transactions and balances with Directors of the Company are set out in
the Report of the Directors. In the previous year, the Company purchased
700,000 ordinary shares of 25p each in Management Consulting Group plc (`MCG').
Mr Alan Barber, a Director of the Company, is Executive Chairman of MCG.
Principal Risks and Uncertainties
The Company's fixed asset investments are principally comprised of securities
traded on the UK stockmarkets. The principal risk for investors in the Company
is a significant fall in the securities markets and/or a prolonged period of
decline in the markets relative to other forms of investment. If the Company is
geared at the time, a fall in the value of the assets of the Company will
normally have a larger negative affect on the NAV of the ordinary shares than
if the Company is not geared. Other significant risks include consistent
underperformance by the Manager or the market rating of the Company's shares
failing to reflect net asset value performance.
Investors should be aware that, in certain circumstances, ongoing redemptions
may lead to a more concentrated and less liquid portfolio; this in turn may
adversely affect the Company's performance and value. Furthermore, ongoing
redemptions may also adversely affect the secondary market liquidity in the
Company's shares.
While the Board obviously cannot influence market movements, it is vigilant in
monitoring and taking steps to mitigate the effects of falls in markets should
they occur. The performance of the Manager is carefully monitored by the Board,
and the continuation of its mandate is revisited each year. The Board has
established guidelines to ensure that the investment policy that it has
approved is pursued by the Manager. The Board and Manager maintain an active
dialogue with the aim of ensuring that the market rating of the Company's
shares reflects the underlying net asset value, and both buy back and issuance
facilities help the management of this process.
The Company is subject to various laws and regulations by virtue of its status
as an investment trust, and its listing on the London Stock Exchange. A breach
of s1158 CTA could lead to the Company being subject to capital gains tax on
profits arising from the sale of its investments. A serious breach of other
regulatory rules may lead to suspension from the Stock Exchange or a qualified
Audit Report. Other control failures, either by the Managers or any other of
the Company's service providers, may result in operational or reputational
problems, erroneous disclosures or loss of assets through fraud, as well as
breaches of regulations.
The Manager reviews the level of compliance with s1158 CTA and other financial
regulatory requirements on a daily basis. All transactions, income and
expenditure are reported to the Board. The Board regularly considers all risks,
the measures in place to control them and the possibility of any other risks
that could arise. The Board ensures that satisfactory assurances are received
from service providers. The Manager's Compliance and Internal Audit Officers
produce regular reports for review at the Company's Audit Committee.
Additionally, the Board with the Manager's advice will seek to ensure that the
redemption of shares adversely affects neither continuing investors' prospects
nor the Company's investment strategy.
DIRECTORS' RESPONSIBILITY STATEMENT
in relation to the Consolidated Financial Statements
The Directors are responsible for preparing the Annual Report and the
Consolidated Financial Statements in accordance with applicable United Kingdom
law and those International Financial Reporting Standards (`IFRSs') as adopted
by the European Union.
Under Company Law the Directors must not approve the Consolidated Financial
Statements unless they are satisfied that they present fairly the financial
position, financial performance and cash flows of the Group for that period. In
preparing the Consolidated Financial Statements the Directors are required to:
* select suitable accounting policies in accordance with IAS 8: Accounting
Policies, Changes in Accounting Estimates and Errors and then apply them
consistently;
* present information, including accounting policies, in a manner that provides
relevant, reliable, comparable and understandable information;
* provide additional disclosures when compliance with the specific requirements
in IFRSs is insufficient to enable users to understand the impact of particular
transactions, other events and conditions on the Group's financial position and
financial performance;
* state that the Group has complied with IFRSs, subject to any material
departures disclosed and explained in the financial statements; and
* make judgements and estimates that are reasonable and prudent.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and enable
them to ensure that the Consolidated Financial Statements comply with the
Companies Act 2006 and Article 4 of the lAS Regulation. They are also
responsible for safeguarding the assets of the Group and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors of the Company each confirm to the best of their knowledge, that:
* the financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit of the Company; and
* this annual financial report includes a fair review of the development and
performance of the business and the position of the Company together with a
description of the principal risk and uncertainties that it faces.
Signed on behalf of the Board of Directors
John Sands
Chairman
26 July 2010
Consolidated INCOME Statement
for the year ended 31 march
2010 2009
Revenue Capital Total Revenue Capital Total
Return Return Return Return Return Return
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains/(losses) on
investments
held at fair value - 16,121 16,121 - (38,152) (38,152)
Income 1,369 - 1,369 1,687 - 1,687
Investment (203) (203) (406) (233) (233) (466)
management fee
VAT recoverable on 381 171 552 978 978 1,956
management fees
Other expenses (996) (6) (1,002) (348) (9) (357)
Profit/(loss) before
finance
costs and taxation 551 16,083 16,634 2,084 (37,416) (35,332)
Finance costs (3) (3) (6) (55) (55) (110)
Profit/(loss) before 548 16,080 16,628 2,029 (37,471) (35,442)
tax
Tax (1) - (1) (18) - (18)
Profit/(loss) for 547 16,080 16,627 2,011 (37,471) (35,460)
the year
Return per ordinary 2.5p 71.8p 74.3p 7.6p (141.6)p (134.0)p
share
The total column of this statement represents the Group's profit and loss
account, prepared in accordance with International Financial Reporting
Standards as adopted by the European Union. The supplementary revenue return
and capital return columns are prepared in accordance with the Statement of
Recommended Practice published by the Association of Investment Companies. All
items in the above statement derive from continuing operations and the Group
has no other gains or losses. No operations were acquired or discontinued in
the year.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the YEAR ENDED 31 MARCH
Capital
Share Share SPECIAL Redemption Capital Revenue Total
Capital Premium RESERVE Reserve Reserve Reserve Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Shareholders'
funds
at 31 March 7,915 17,825 - 14,139 36,534 9,658 86,071
2008
Profit/(loss) - - - - (37,471) 2,011 (35,460)
for the year
Ordinary (1,308) - - 1,308 (6,945) (1,801) (8,746)
shares
cancelled
Dividends
paid on
ordinary
shares - - - - - (363) (363)
Shareholders'
funds
at 31 March 6,607 17,825 - 15,447 (7,882) 9,505 41,502
2009
Profit for - - - - 16,080 547 16,627
the year
Cancellation - (17,825) 33,529 (15,704) - - -
of share
premium
Ordinary (777) - (4,586) 777 - (1,798) (6,384)
shares
cancelled
Dividends
paid on
ordinary
shares - - - - - (2,285) (2,285)
Shareholders'
funds
at 31 March 5,830 - 28,943 520 8,198 5,969 49,460
2010
COMPANY STATEMENT OF CHANGES IN EQUITY
for THE YEAR ENDED 31 MARCH
Capital
Share Share SPECIAL Redemption Capital Revenue Total
Capital Premium RESERVE Reserve Reserve Reserve Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Shareholders'
funds
at 31 March 7,915 17,825 - 14,139 36,672 7,418 83,969
2008
Profit/(loss) - - - - (37,471) 2,011 (35,460)
for the year
Ordinary (1,308) - - 1,308 (6,945) (1,801) (8,746)
shares
cancelled
Dividends
paid on
ordinary
shares - - - - - (363) (363)
Shareholders'
funds
at 31 March 6,607 17,825 - 15,447 (7,744) 7,265 39,400
2009
Profit for - - - - 16,080 547 16,627
the year
Cancellation - (17,825) 33,529 (15,704) - - -
of share
premium
Ordinary (777) - (4,586) 777 - (1,798) (6,384)
shares
cancelled
Dividends
paid on
ordinary
shares - - - - - (2,285) (2,285)
Shareholders'
funds
at 31 March 5,830 - 28,943 520 8,336 3,729 47,358
2010
CONSOLIDATED and COMPANY BALANCE SHEETs
as at 31 march
2010 2009 2010 2009
Group Group Company Company
GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Investments held at fair
value
through profit or loss - 39,220 - 40,182
Current assets
Investments held at fair
value
through profit or loss 50,289 - 51,251 -
Other receivables 366 2,566 366 2,566
Cash and cash equivalents - 352 - 352
50,655 2,918 51,617 2,918
Total assets 50,655 42,138 51,617 43,100
Current liabilities
Other payables (1,181) (636) (4,245) (3,700)
Overdraft (14) - (14) -
(1,195) (636) (4,259) (3,700)
Net assets 49,460 41,502 47,358 39,400
Issued capital and reserves
attributable to equity
holders
Ordinary share capital 5,830 6,607 5,830 6,607
Share premium - 17,825 - 17,825
Special reserve 28,943 - 28,943 -
Capital redemption 520 15,447 520 15,447
reserve
Capital reserve 8,198 (7,882) 8,336 (7,744)
Revenue reserve 5,969 9,505 3,729 7,265
Total Shareholders' funds 49,460 41,502 47,358 39,400
Net asset value per 233.6p 171.0p 223.7p 162.3p
ordinary share
These financial statements were approved and authorised for issue by the Board
of Directors on 26 July 2010.
Signed on behalf of the Board of Directors
John Sands
Chairman
CONSOLIDATED and COMPANY Cash Flow Statements
for the YEAR ended 31 march
2010 2009 2010 2009
Group Group Company Company
GBP'000 GBP'000 GBP'000 GBP'000
Cash flow from operating
activities
Profit/(loss) before tax 16,628 (35,442) 16,628 (35,442)
Taxation (1) (18) (1) (18)
Adjustments for:
Purchases of investments (20,612) (19,742) (20,612) (19,742)
Sales of investments 25,560 30,940 25,560 30,940
4,948 11,198 4,948 11,198
(Gains)/losses on (16,121) 38,152 (16,121) 38,152
investments
Financing costs 6 110 6 110
Operating cash flows before
movements in working 5,460 14,000 5,460 14,000
capital
Decrease/(increase) in 2,197 (2,094) 2,197 (2,094)
receivables
Increase/(decrease) in 652 (87) 652 (85)
payables
Net cash from operating
activities
before and after tax 8,309 11,819 8,309 11,821
Cash flows from financing
activities
Bank loans repaid - (2,750) - (2,750)
Shares redeemed/bought
back
and cancelled (6,384) (8,746) (6,384) (8,746)
Interest paid on (6) (110) (6) (110)
borrowings
Equity dividends (2,285) (363) (2,285) (363)
Net cash used in financing (8,675) (11,969) (8,675) (11,969)
activities
Net decrease in cash and
cash
equivalents (366) (150) (366) (148)
Cash and cash equivalents at
the beginning of the year 352 502 352 500
Cash and cash equivalents at
end of the year (14) 352 (14) 352
NOTES TO THE FINANCIAL STATEMENTS
1. Significant Accounting Policies
The financial statements of the Group and Company have been prepared in
accordance with International Financial Reporting Standards (`IFRS') as adopted
by the EU, and Standing Interpretation Committee and International Financial
Reporting Interpretation Committee interpretations issued by the International
Accounting Standards Board (`IASB') effective for the Group's reporting for the
year ended 31 March 2010 and the previous year.
2. Income
2010 2009
GBP'000 GBP'000
Income from investments
UK dividends 956 1,173
Overseas dividends 118 155
1,074 1,328
Other income
Interest on VAT recoverable on management fees (note 3) 283 355
Underwriting commissions 7 4
Income from money market fund 5 -
295 359
Total income 1,369 1,687
2010 2009
GBP'000 GBP'000
Total income comprises:
Dividends 1,074 1,328
Interest 283 355
Other income 12 4
1,369 1,687
Income from investments
Listed UK 774 795
Unlisted 300 533
1,074 1,328
3. Investment Management Fee
2010 2009
Revenue Capital Total Revenue Capital Total
Return Return Return Return Return Return
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment management fee 203 203 406 233 233 466
Details of the investment management agreement are disclosed in the Report of
the Directors. The balance due to the Manager at the year end in respect of the
investment management fee was GBP102,000 (2009: GBP79,000).
An amount of GBP552,000 (2009: GBP1,956,000) has been recognised in these accounts
in respect of VAT recoverable on management fees paid to the Manager, together
with GBP283,000 (2009: GBP355,000) of interest thereon. The VAT recoverable has
been credited to revenue and capital in the same proportion as originally
charged in the income statement.
4. Tax
(a) Current tax charge
2010 2009
Revenue Capital Total Revenue Capital Total
Return Return Return Return Return Return
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Overseas taxation 1 - 1 18 - 18
(b) Reconciliation of current tax charge
2010 2009
GBP'000 GBP'000
Total return on ordinary activities before taxation 16,628 (35,442)
Theoretical tax at UK Corporation Tax rate of 28% (2009: 28%) 4,656 (9,924)
Effects of:
- (gains)/losses on investments not taxable (4,514) 10,683
- UK dividends which are not taxable (268) (328)
- overseas dividends which are not taxable (16) -
- overseas dividends taxable 1 18
- movements in excess management expenses and
non-trading loan relationship debits (38) (437)
- expenses not deductible for tax purposes 180 6
Actual current tax amount 1 18
Given the Company's status as an Investment Trust and the intention to continue
meeting the conditions required to obtain approval in the foreseeable future,
the Company has not provided deferred tax on any capital gains and losses
arising on the revaluation or disposal of investments.
(c) Factors that may affect future tax charges
The Company has excess management expenses and excess non-trading loan
relationship debits of GBP55,565,000 (2009: GBP56,015,000) that are available to
offset future taxable revenue. A deferred tax asset has not been recognised in
respect of these amounts since it is considered too uncertain that there will
be sufficient future taxable revenue against which these amounts can be offset.
5. Dividends on Ordinary Shares
Dividends paid and recognised in the year:
2010 2009
pence GBP'000 pence GBP'000
Final paid in respect of previous year 1.3 303 1.3 363
Special paid in respect of previous year 5.7 1,325 - -
Special paid in respect of current year 3.0 657 - -
10.0 2,285 1.3 363
Set out below are the dividends payable in respect of the current financial
year which is the basis on which the requirements of Section 842 Income and
Corporation Taxes Act 1988 are considered.
2010 2009
pence GBP'000 pence GBP'000
Final proposed - - 1.3 303
Special dividend 3.0 657 5.7 1,325
3.0 657 7.0 1,628
6. Return per Ordinary Share
Total return per ordinary share is based on the total profit/ (loss) after tax,
revenue return per ordinary share is based on the revenue profit after tax and
capital return per ordinary share is based on capital profit/(loss) after tax
as shown in the income statement. All three returns are based on 22,386,061
(2009: 26,467,425) shares being the weighted average number of shares in issue
during the year.
7. Share Capital of the Group
(a) Called up share capital
2010 2009
GBP'000 GBP'000
Authorised
125,000,000 (2009: 125,000,000) ordinary shares of 25p each 31,250 31,250
50,000 (2009: 50,000) management shares of 100p each 50 50
100,000,000 (2009: 100,000,000) C shares of 50p each 50,000 50,000
100,000,000 (2009: 100,000,000) C1 shares of 50p each 50,000 50,000
131,300 131,300
Allotted, called up and fully paid
23,269,163 (2009: 26,376,125) ordinary shares of 25p each 5,817 6,594
50,000 management shares of 100p each (25p paid) 13 13
5,830 6,607
The management shares do not carry any right to participate in the Company's
profits and do not carry any right to receive notice of, or attend or vote at
any general meeting of the Company.
(b) Movements in ordinary share capital
Ordinary Total Ordinary Total
shares in Treasury Share shares Treasury Share
in
issue Shares Capital issue Shares Capital
Number Number Number GBP'000 GBP'000 GBP'000
In the year:
At 31 March 2009 24,276,125 2,100,000 26,376,125 6,069 525 6,594
Shares redeemed
and cancelled (3,052,812) - (3,052,812) (763) - (763)
Shares bought back
and cancelled (54,150) - (54,150) (14) - (14)
At 31 March 2010 21,169,163 2,100,000 23,269,163 5,292 525 5,817
After the year end:
At 31 March 2010 21,169,163 2,100,000 23,269,163 5,292 525 5,817
Shares bought back
and cancelled - - - - - -
At 26 July 2010 21,169,163 2,100,000 23,269,163 5,292 525 5,817
During the year the ordinary shares bought back or redeemed were at an average
price of 219.98p.
8. Net Asset Value of the Group
The net asset value per ordinary share is based on 21,169,163 shares (2009:
24,276,125), excluding Treasury shares.
Net asset value Net assets
per share attributable
2010 2009 2010 2009
Pence Pence GBP'000 GBP'000
Ordinary shares 233.6 171.0 49,460 41,502
This Annual Financial Report announcement is not the company's statutory
accounts. The statutory accounts for the period ended 31 March 2009 have been
delivered to the Registrar of Companies. The statutory accounts for the period
ended 31 March 2008 and for the year ended 31 March 2009 received an audit
report which was unqualified, did not include any reference to matters to which
the auditors drew attention by way of emphasis without qualifying the reports,
and did not contain a statement under s498 of the Companies Act 2006. The
financial information for 2009 is derived from the statutory accounts for 2009
which have been delivered to the Registrar of Companies. The 2010 accounts will
be filed with the Registrar of Companies in due course
The audited Annual Financial Report will be posted to shareholders shortly.
Copies may be obtained during normal business hours from the Company's
Registered Office, 30 Finsbury Square, London, EC2A 1AG. A copy of the Annual
Financial Report will be available shortly from Invesco Perpetual on the
following website:
www.invescoperpetual.co.uk/investmenttrusts.
The Annual General Meeting will be held at the Company's Registered Office on
10 September at 10:00am .
By order of the Board
Invesco Asset Management Limited - Secretary
26 July 2010
Contacts
Andrew Watkins Tel: 020 7065 4023
Tim Mitchell Tel: 020 7065 3182
END
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