Source - LSE Regulatory
ABERFORTH SMALLER COMPANIES TRUST plc HALF YEARLY REPORT For the Six Months to 30 June 2008 Aberforth Smaller Companies Trust plc (ASCoT) invests only in small UK quoted companies and is managed by Aberforth Partners LLP. The investment objective of ASCoT is to achieve a net asset value total return (with dividends reinvested) greater than on the Hoare Govett Smaller Companies Index (Excluding Investment Companies) over the long term. All data throughout this Half Yearly Report is to, or as at, 30 June 2008 as applicable. CHAIRMAN'S STATEMENT For the six months to 30 June 2008, Aberforth Smaller Companies Trust plc (ASCoT) recorded a negative total return on its net asset value per share of 12.6%, compared with a negative total return of 14.2% from the Hoare Govett Smaller Companies Index (Excluding Investment Companies) (HGSC (XIC)), your Company's investment benchmark. Larger companies, as represented by the FTSE All-Share Index, registered a negative total return of 11.2%. While it is always disappointing to report negative returns, ASCoT did out-perform its benchmark during a period when smaller companies under-performed larger companies. Your Managers' Report provides greater insight into ASCoT's performance, as well as that of small and large companies. However, it seems clear that the stockmarket is trying to take valuations to levels that price in the impact of a UK recession on companies' earnings and dividends. Since the end of May last year (about the peak in stockmarket levels for small companies) the negative total return from ASCoT's net asset value per share has been 28.1%, while the trailing P/E valuation of the portfolio (weighted average and excluding loss makers) has decreased by approximately 40% and its dividend yield has increased by around 65%. This is a very significant and rapid adjustment. The issue, of course, is whether these much lower valuations adequately reflect the risks ahead. Your Board and Managers believe they probably do and have begun to employ borrowings to gear the portfolio. The pace of deployment and its amount will depend on many factors but it is likely that it will be quite slowly increased from its modest current level of 106%. Experience suggests that stockmarkets largely adjust ahead of recessions, but also that timing 'the bottom' with accuracy is impossible! Your Board is very pleased to announce a first interim dividend of 6.00p per share, which represents an increase of 27.7% compared with the equivalent payment last year. While underlying growth in dividends from ASCoT's portfolio remains good, Shareholders should not extrapolate this increase as your Board is seeking to rebalance the relative weight of the first and second interim dividends to approximately one-third and two-thirds respectively (though this should not be taken as a forecast). In addition, the recovery of VAT and associated interest, more of which later in this Statement, will serve to inflate this year's earnings on a non-recurring basis. The first interim dividend will be paid on 21 August 2008 to Shareholders on the register on 1 August 2008. For Shareholders participating in ASCoT's Dividend Reinvestment Plan (DRiP), the last date for submission of Forms of Election is 31 July 2008. Details of the DRiP are available from your Secretaries on request or from their website www.aberforth.co.uk. Shareholders will recall from the Annual Report that VAT is no longer imposed on management fees and that your Board had reached agreement with your Managers for recovery of all VAT paid by ASCoT since 2001. This amounted to #4.7m and has been included in ASCoT's net assets since late 2007 as a receivable. This sum, plus associated interest of #0.5m, was received in early June and comprises both that recovered by your Managers from HMRC and a repayment directly from your Managers of VAT previously offset by them. Your Managers have also been pursuing claims for the recovery of VAT paid in earlier periods and I am delighted to report that ASCoT received a further #0.7m in relation to VAT incurred on management fees from 1991 to 1996, plus associated interest of #0.5m, in late June. In total, therefore, #6.4m has been received, which, together with the fact that ASCoT no longer suffers VAT on its management fees, is an excellent outcome for Shareholders. At the Annual General Meeting held on 4 March 2008, Shareholders passed all the resolutions. Of particular note were the resolution, proposed every three years, that ASCoT should continue as an investment trust, and the resolution renewing the authority to buy-in up to 14.99% of ASCoT's Ordinary Shares. Since the AGM, that authority has been utilised and 1,909,788 shares had been bought in to the end of June at a total cost of #11.1m. All shares bought in have been, and will be, cancelled rather than held in treasury. Shares bought in to date have enhanced ASCoT's net asset value by approximately #2.2m by virtue of the weighted average discount on purchases being 16.2%. Your Board keeps under careful review the circumstances under which the buy-in authority is used in the context of its overall objective of seeking to sustain as low a discount as seems possible. David R Shaw Chairman 18 July 2008 MANAGERS' REPORT INVESTMENT BACKGROUND Over ASCoT's first half, returns from major equity markets were generally negative, as the implications of the credit crisis for real economic activity were digested. In the UK, the FTSE All-Share produced a total return of - 11.2%. With sterling having depreciated by 7% against the euro, this performance ranked amongst the weakest of the major markets on a constant currency basis. As is common when the appetite for risk dwindles, small companies performed more poorly, with the HGSC (XIC) down by 14.2% in total return terms. By mid March, stockmarkets seemed to have come to terms with the first-order effects of the credit crunch. Central banks, particularly the Fed, succeeded in restoring a degree of confidence, through a combination of interest rate reductions and less conventional measures, including the rescue of Bear Stearns and Northern Rock. The extreme stress in credit markets during the fourth quarter of last year has abated, though there is evidence of lingering caution: the gap between base rates and LIBOR, the rate at which banks lend to each other, remains significantly above the level that prevailed before the credit crisis. With the banks unable or unwilling to increase their lending, economies are set to endure further de-leveraging, an essentially deflationary process that has implications for real economic activity. This second-order effect of the credit crisis started to weigh on equity markets towards the end of the first half. It is most obvious in the housing markets, with the US leading the way. According to the S&P Case Shiller index, US house prices are now 18% below their peaks of two years ago. Meanwhile, in the UK, where the peak was reached as recently as August last year, prices are already down by almost 10%. The risks of these falls to consumer spending and, by extension, to overall economic activity in both countries are obvious. Moreover, in a potentially stagflationary turn of events, this has come at a time when the room for manoeuvre on the part of monetary authorities is limited by the stubborn inflationary threat of rapidly rising commodity prices, most notably the oil price, which has appreciated by 40% since the start of the year. These price movements were evident in the UK's May inflation release, which revealed that the year-on-year change in the CPI had moved to 3.3%, thus triggering another letter from the Governor to the Chancellor. This measure of inflation excludes oil prices, which leaves a 7.8% rise in food prices principally to blame. The RPI, which takes oil prices into account, showed an increase of 4.3%. With short dated gilt yields above long, the yield curve has inverted, which has traditionally been considered an indicator of imminent economic slowdown. INVESTMENT PERFORMANCE Against this background of mounting concern about the outlook for the real economy, equities suffered. ASCoT was not immune, recording a total return of -12.6%. This was, however, ahead of the HGSC (XIC)'s total return of - 14.2%. The following table and subsequent paragraphs explain how this out- performance was achieved. Performance Attribution Analysis For the six months ended 30 June 2008 Basis Points Stock selection 49 Sector selection 107 ----- Attributable to the portfolio of investments 156 (calculated on a mid-price basis) Impact of mid-price to bid price 13 Cash/gearing (3) Purchase of Ordinary Shares 29 Management fee (net of the VAT refund) (28) Other expenses (2) ----- Total attribution based on bid prices 165 ----- Note: 100 basis points = 1%. Total attribution is the difference between the total return of the net asset value and the Benchmark Index(i.e. net asset value = -12.55%; Benchmark Index = -14.20%; difference is +1.65% being +165 basis points). The net effect of ASCoT's sector positioning was favourable. In broad terms, the portfolio retains its relatively low exposure to sectors reliant on the domestic economy. These include Real Estate and General Financials, both of which are close to the epicentre of the credit crunch. Moreover, it has had very little exposure to housebuilding, recruitment and regional press, areas of the stockmarket that suffered particularly acutely in the first half. On the other hand, the portfolio is over-weight in capital goods sectors, such as Electronics, Engineering and Aerospace & Defence. These tend to generate their sales and profits overseas and are therefore more insulated from the problems confronting the domestic economy. Less helpfully, ASCoT retains its under-weight positions in Oil and Mining sectors. This is not a reflection of scepticism about the fundamental story of emerging market demand, but is motivated by the often lofty valuations that the stockmarket is willing to attribute to constituents of these sectors at the current time. Stock selection was also favourable. The most significant factor in this regard was corporate activity. Entering 2008, your Managers thought it likely that tighter credit conditions would constrain M&A. This has proved the case in the large company world, where big deals such as Alliance Boots would appear to be off the agenda for private equity houses. However, activity further down the size spectrum, generally below the FTSE 250, has proved pleasantly robust. The portfolio has a relatively high exposure to this area of the stockmarket, reflecting particularly low valuations on offer there. Over the first half, ASCoT has seen six bids completed for its holdings. At the end of June, another five holdings were in talks. Three more holdings had been approached, though the talks came to nothing. The buyers, or potential buyers, have been a mix of trade and private equity. Underlining the gap between the intrinsic values of many businesses and the valuations currently accorded to them by the stockmarket, the premiums that they have been prepared to pay have been considerably above the customary range. In turn, enterprise valuations in relation to operating profits have held up: the range for the six completed deals was 14x to 19x, which compares with an average of under 8x historic operating profits for the portfolio at the end of June. Somewhat surprisingly given credit conditions, de-equitisation, a term used to describe the trend over recent years to replace equity with debt financing, was still in evidence across the UK stockmarket in the first half, albeit at a reducing rate. A handful of large takeovers and the perennial share buy-back programmes from BP and Shell have so far offset the banks' multi billion pound rights issues. This latter phenomenon has clearly been an issue for the large company world, but if share prices sustain their current momentum your Managers will have to dust off their banking analyses. There have also been several rescue rights issues within the HGSC (XIC). The companies involved have tended to have a domestic focus. ASCoT has a holding in one of these and participated in the fund raising. Given the gloomier outlook for the economy, further rights issues and equity funded deals are inevitable. Dividend payments are a more prosaic form of de-equitisation but over the long term are crucial to equity returns. Once again, the dividend experience of companies within ASCoT's portfolio has been remarkably good. There were 99 holdings at the end of June, a useful cross-section of the small company universe. Of those companies, it was the policy of 22 not to pay a dividend, while a further four had been listed for less than two years, preventing growth calculations. Of the remaining 73, three cut their dividends, six left them unchanged and 64 reported increases. Of the 73, the median rate of dividend growth was 13%, though this median does not necessarily reflect ASCoT's actual receipts, as it is diluted by the other 26 holdings and because the portfolio is managed actively, with a specific rate of dividend growth not targeted. Nevertheless, this rate of growth is considerably above both the rate of inflation and the long term average achieved by equities. INVESTMENT OUTLOOK ASCoT and the UK stockmarket as a whole have enjoyed several years of strong profit and dividend growth. This run has extended into the first half of 2008. Clouds are, however, gathering on the horizon as the credit crunch begins to exercise its malign influence, through the housing market, on the domestic economy. If the inflationary pressures of rising commodity prices do indeed compel the Bank of England to raise interest rates this year, as the futures markets are expecting, the risk of outright recession would seem high. The implications of this turn of events for corporate profitability and dividend growth are clearly not good. However, the stockmarket, performing its discounting role, has already moved many share prices lower, with the FTSE All-Share as at 30 June 2008, in capital only terms, sitting 17% below its peak in October last year. This drop has left equities on ostensibly attractive valuations in relation to bonds, albeit running the risk of lower future profits. Small companies have been punished even more severely than large: the HGSC (XIC) is well into a bear market, now over 30% below its peak in May last year. On a historic PE of 9.8x, it is trading on a 6% discount to large companies. Intriguingly, this level of valuation may already be discounting a severe collapse in small company profits similar to declines experienced during the last recession in the early 1990s. Back then, small company profits started to fall sharply in 1991 and did not trough until the middle of 1993. However, the stockmarket discounted a recovery in profits and moved the PE of small companies up to over 18x by the end of 1993. With valuations thus taking the strain, it was possible to make good absolute returns from small companies in a period that saw profits decline by over one third. 30 June 30 June 2008 2007 Characteristics ASCoT Benchmark ASCoT Benchmark Number of Companies 99 484 107 487 Weighted Average Market #321m #536m #500m #627m Capitalisation Price Earnings Ratio (Historic) 9.2x 9.8x 16.9x 15.8x Net Dividend Yield (Historic) 3.7% 3.7% 2.1% 2.0% Dividend Cover (Historic) 2.9x 2.8x 2.8x 3.2x Timing a change in the mood of the stockmarket is never easy. At the end of June, ASCoT's portfolio retained a defensive disposition: almost one third by value was invested in companies with net cash on their balance sheets and it still had its relatively high exposure towards businesses with overseas profit streams. As such, its average historic PE was 9.2x, a modest 6% discount to the benchmark. So, for now, your Managers prefer to eschew the opportunity to push that PE downwards aggressively by increasing exposure in the vulnerable domestically oriented businesses, such as the housebuilders, many of which are valued on less than 5x historic earnings. However, at some point it will be right to invest again in these areas of the stockmarket. That process will not feel comfortable and the chances are high that timing will not be perfect. But, given how quickly sentiment can turn, the risks of being `too late' are as great, if not greater, than being `too early'. In the meantime, the introduction of a modest level of gearing to ASCoT is influenced by your Managers' contention that small companies are closer to the end of their de-rating than the beginning. Valuations for the asset class are attractive in absolute terms, with the historic PE 33% below its average over ASCoT's lifetime, and in relation to both bonds and large companies. With the valuation of ASCoT's portfolio even lower, there would appear an attractive opportunity to use gearing to add more to existing holdings and, through buying in ASCoT's own shares, to take advantage of a historically wide discount between the share price and net asset value. Aberforth Partners LLP Managers 18 July 2008 INVESTMENT PORTFOLIO Thirty Largest Investments as at 30 June 2008 Valuation % of No. Company #'000 Total 1 Hampson Industries 25,098 4.0 2 Greggs 18,304 2.9 3 Interserve 17,934 2.9 4 Shanks Group 16,864 2.7 5 BSS Group 14,543 2.3 6 Phoenix IT Group 14,022 2.3 7 Domino Printing Sciences 13,456 2.2 8 Premier Oil 12,835 2.1 9 Spirax-Sarco Engineering 12,519 2.0 10 Hiscox 12,328 2.0 Top Ten Investments 157,903 25.4 11 Delta 12,302 2.0 12 Spectris 12,125 2.0 13 Robert Wiseman Dairies 11,943 1.9 14 e2v technologies 11,731 1.9 15 Holidaybreak 11,375 1.8 16 Wilmington Group 11,267 1.8 17 UMECO 11,257 1.8 18 Huntsworth 11,029 1.8 19 CSR 10,446 1.7 20 Low & Bonar 10,334 1.7 Top Twenty Investments 271,712 43.8 21 RPC Group 10,269 1.7 22 Wincanton 10,193 1.6 23 Kofax 10,152 1.6 24 Anite 9,947 1.6 25 Senior 9,862 1.6 26 Nord Anglia Education 9,581 1.5 27 RM 8,840 1.4 28 Headlam Group 8,792 1.4 29 Brown (N.) Group 8,746 1.4 30 Beazley Group 8,618 1.4 Top Thirty Investments 366,712 59.0 Other Investments 290,570 46.9 Total Investments 657,282 105.9 Net Liabilities (36,697) (5.9) Total Net Assets 620,585 100.0 INTERIM MANAGEMENT REPORT RISKS AND UNCERTAINTIES A review of the half year and the outlook for the Company can be found in the Chairman's Statement and the Managers' Report. The Directors have established an ongoing process for identifying, evaluating and managing the key risks faced by the Company. The Board believes that the Company has a relatively low risk profile in the context of the investment trust industry. This belief arises from the fact that the Company has a simple capital structure; invests only in small UK quoted companies; has never been exposed to derivatives and does not presently intend any such exposure; and outsources all the main operational activities to recognised, well established firms. As the Company's investments consist of small UK quoted companies, the principal risks facing the Company are market related and include market price, interest rate and liquidity risk. Additional risks faced by the Company include investment objective, investment policy, share price discount, regulatory risk and operational/financial risk. An explanation of these risks and how they are managed can be found in the Directors' Report contained within the 2007 Annual Report. These principal risks and uncertainties have not changed from those disclosed in the 2007 Annual Report. DIRECTORS' RESPONSIBILITY STATEMENT The Directors confirm that, to the best of their knowledge: (i) the condensed set of financial statements has been prepared in accordance with the Statement `Half-yearly financial reports' issued by the UK Accounting Standards Board; and (ii) the half-yearly report includes a fair review of information required by: (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events during the first six months of the year and their impact on the financial statements together with a description of the principal risks and uncertainties for the remaining six months of the year; and (b) DTR 4.2.8R of the Disclosure and Transparency Rules, being disclosure of related party transactions and changes therein. On behalf of the Board David R Shaw Chairman 18 July 2008 The Income Statement, Reconciliation of Movements in Shareholders' Funds, Balance Sheet and the Cash Flow Statement are set out below:- INCOME STATEMENT (unaudited) For the six months to 30 June 2008 Revenue Capital Total # 000 # 000 # 000 Realised net gains on sales - 2,699 2,699 Movement in unrealised - (109,932) (109,932) appreciation ------- -------- -------- - Net losses on investments - (107,233) (107,233) Dividend income 12,455 5,047 17,502 Interest income 1,144 - 1,144 Other income 44 - 44 Investment management fee (783) (1,305) (2,088) Transaction costs - (1,883) (1,883) Other expenses (287) - (287) ------- -------- -------- Return on ordinary activities 12,573 (105,374) (92,801) before finance costs and tax Finance costs (51) (86) (137) ------- -------- -------- Return on ordinary 12,522 (105,460) (92,938) activities before tax Tax on ordinary activities (10) - (10) ------- -------- -------- Return attributable to 12,512 (105,460) (92,948) equity shareholders ======= ======== ======== Returns per Ordinary Share 12.71p (107.12p) (94.41p) On 18 July 2008, the Board declared a first interim dividend for the year to 31 December 2008 of 6.00p per Ordinary Share (2007 - 4.70p) payable on 21 August 2008. INCOME STATEMENT (unaudited) For the six months to 30 June 2007 Revenue Capital Total # 000 # 000 # 000 Realised net gains on sales - 72,930 72,930 Movement in unrealised - (33,181) (33,181) appreciation -------- -------- -------- Net gains on investments - 39,749 39,749 Dividend income 10,516 877 11,393 Interest income 191 - 191 Other income - - - Investment management fee (1,487) (2,478) (3,965) Transaction costs - (2,624) (2,624) Other expenses (220) - (220) -------- -------- -------- Return on ordinary activities 9,000 35,524 44,524 before finance costs and tax Finance costs (35) (59) (94) -------- -------- -------- Return on ordinary 8,965 35,465 44,430 activities before tax Tax on ordinary activities - - - -------- -------- -------- Return attributable to 8,965 35,465 44,430 equity shareholders ======== ======== ======== Returns per Ordinary Share 9.07p 35.89p 44.96p INCOME STATEMENT (unaudited) For the year to 31 December 2007 Revenue Capital Total # 000 # 000 # 000 Realised net gains on sales - 111,634 111,634 Movement in unrealised - (209,320) (209,320) appreciation -------- -------- -------- Net losses on investments - (97,686) (97,686) Dividend income 19,477 877 20,354 Interest income 258 - 258 Other income 15 - 15 Investment management fee (1,094) (1,823) (2,917) Transaction costs - (4,052) (4,052) Other expenses (438) - (438) -------- -------- -------- Return on ordinary activities 18,218 (102,684) (84,466) before finance costs and tax Finance costs (60) (99) (159) -------- -------- -------- Return on ordinary 18,158 (102,783) (84,625) activities before tax Tax on ordinary activities - - - -------- -------- -------- Return attributable to 18,158 (102,783) (84,625) equity shareholders ======== ======== ======== Returns per Ordinary Share 18.38p (104.03p) (85.65p) RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (unaudited) For the six months to 30 June 2008 Capital Capital Share Special reserve reserve Revenue capital reserve realised unrealised reserve Total # 000 # 000 # 000 # 000 # 000 # 000 Balance as at 31 December 2007 988 197,305 473,749 30,302 32,677 735,021 Return on ordinary activities - - 4,472 (109,932) 12,512 (92,948) after taxation Equity dividends paid - - - - (10,375) (10,375) Purchase of (19) (11,094) - - - (11,113) Ordinary Shares ------ ------ ------- ------- ------ ------- Balance as at 30 969 186,211 478,221 ( 79,630) 34,814 620,585 June 2008 ====== ======= ======= ======= ====== ======= For the six months to 30 June 2007 Capital Capital Share Special reserve reserve Revenue capital reserve realised unrealised reserve Total # 000 # 000 # 000 # 000 # 000 # 000 Balance as at 31 December 2006 988 197,305 367,212 239,622 28,204 833,331 Return on ordinary activities - - 68,646 (33,181) 8,965 44,430 after taxation Equity dividends paid - - - - (9,041) (9,041) ----- ------- ------- ------- ------ ------- Balance as at 30 988 197,305 435,858 206,441 28,128 868,720 June 2007 ===== ======= ======= ======= ====== ======= For the year to 31 December 2007 Capital Capital Share Special reserve reserve Revenue capital reserve realised unrealised reserve Total # 000 # 000 # 000 # 000 # 000 # 000 Balance as at 31 December 2006 988 197,305 367,212 239,622 28,204 833,331 Return on ordinary activities - - 106,537 (209,320) 18,158 (84,625) after taxation Equity dividends paid - - - - (13,685) (13,685) ----- ------ ------- ------- ------ ------- Balance as at 31 December 2007 988 197,305 473,749 30,302 32,677 735,021 ===== ======= ======= ======= ====== ======= BALANCE SHEET (unaudited) As at 30 June 2008 30 June 31 December 30 June 2008 2007 2007 # 000 # 000 # 000 Fixed assets: investments Investments at fair value 657,282 710,966 871,973 through profit or loss -------- ------- ------- Current assets Amounts due from brokers 380 - 428 Other debtors 3,466 6,354 2,608 Cash at bank - 18,018 - -------- ------- ------- 3,846 24,372 3,036 -------- ------- ------- Creditors (amounts falling due within one year) Bank overdraft (35,885) - (1,185) Amounts due to brokers (3,812) (239) (5,051) Other creditors (846) (78) (53) -------- ------- ------- (40,543) (317) (6,289) -------- ------- ------- Net current (liabilities)/ assets (36,697) 24,055 (3,253) -------- ------- ------- Total assets less 620,585 735,021 868,720 liabilities ======== ======= ======= Capital and reserves: equity interests Called up share capital 969 988 988 (Ordinary Shares) Reserves: Special reserve 186,211 197,305 197,305 Capital reserve-realised 478,221 473,749 435,858 Capital reserve-unrealisd (79,630) 30,302 206,441 Revenue reserve 34,814 32,677 28,128 -------- ------- ------- 620,585 735,021 868,720 ======== ======= ======= Net Asset Value per Share 640.44p 743.87p 879.18p Share Price 534.00p 587.00p 745.00p CASH FLOW STATEMENT (unaudited) For the six months to 30 June 2008 Six Six months to months to Year to 30 June 30 June 31 December 2008 2007 2007 # 000 # 000 # 000 Net cash inflow from 19,187 6,146 12,296 operating activities Taxation Taxation paid (10) - - Returns on investment and (17) (89) (152) servicing of finance Capital expenditure and financial investment Payments to acquire (166,745) (200,238) (311,732) investments Receipts from sales of 114,506 171,483 300,737 investments Net cash outflow from capital expenditure and financial (52,239) (28,755) (10,995) investment ------- ------- -------- (33,079) (22,698) 1,149 Equity dividends paid (10,375) (9,041) (13,685) ------- ------- -------- (43,454) (31,739) (12,536) Financing Purchase of Ordinary Shares (10,449) - - ------- ------- ------- Change in cash during the (53,903) (31,739) (12,536) period ======= ======= ======= Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities Net return before finance (92,801) 44,524 (84,466) costs and taxation Losses/(gains)on investments 107,233 (39,749) 97,686 Transaction costs 1,883 2,624 4,052 Decrease/(increase) in debtors 2,888 (1,239) (4,985) (Decrease)/increase in creditors (16) (14) 9 ------- ------- ------- Net cash inflow from 19,187 6,146 12,296 operating activities ======= ======= ======= NOTES TO THE FINANCIAL STATEMENTS 1. ACCOUNTING STANDARDS The financial statements have been prepared under the historical cost convention, as modified to include the revaluation of investments and in accordance with applicable accounting standards and the AIC's Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' issued in 2005. The total column of the Income Statement is the profit and loss account of the Company. All revenue and capital items in the Income Statement are derived from continuing operations. No operations were acquired or discontinued in the period. The same accounting policies used for the year ended 31 December 2007 have been applied. 2. INVESTMENT MANAGEMENT FEE For the six months to 30 June 2008 Revenue Capital Total # 000 # 000 # 000 Investment management fee 1,048 1,747 2,795 VAT paid thereon - - - VAT refund (265) (442) (707) ------ ------ ------ Total for the six months to 30 783 1,305 2,088 June 2008 ====== ====== ====== For the six months to 30 June 2007 Revenue Capital Total # 000 # 000 # 000 Investment management fee 1,265 2,109 3,374 VAT paid thereon 222 369 591 VAT refund - - - ------ ------ ------ Total for the six months to 30 1,487 2,478 3,965 June 2007 ====== ====== ====== For the year to 31 December 2007 Revenue Capital Total # 000 # 000 # 000 Investment management fee 2,516 4,194 6,710 VAT paid thereon 336 560 896 VAT recoverable (1,758) (2,931) (4,689) ------ ------ ------ Total for the year to 31 December 1,094 1,823 2,917 2007 ====== ====== ====== The VAT recovered for the six months to 30 June 2008 above represents the repayment of VAT incurred in respect of management fees paid between 1991 and 1996. The VAT recoverable recognised during the year to 31 December 2007 above represents the repayment of all VAT paid on investment management fees since 1 January 2001 (including all VAT previously offset by the managers). 3.DIVIDENDS Six months to Six months to Year to 30 June 2008 30 June 2007 31 December 2007 # 000 # 000 # 000 Amounts recognised as distributions to equity holders in the period: Final dividend of 9.15p for the year - 9,041 9,041 ended 31 December 2006 First interim dividend of 4.70p for - - 4,644 the year ended 31 December 2007 Second interim dividend of 10.50p 10,375 - - for year ended 31 December 2007 ------- ------- -------- 10,375 9,041 13,685 ======= ======= ======== The first interim dividend of 6.0p (2007 - 4.70p) will be paid on 21 August 2008 to shareholders on the register on 1 August 2008. 4. RETURNS PER ORDINARY SHARE The returns per Ordinary Share are based on: Six months to Six months to Year to 30 June 2008 30 June 2007 31 December 2007 # 000 # 000 # 000 Returns attributable to Ordinary Shareholders (92,948) 44,430 (84,625) Weighted average number of shares in issue during the period 98,448,535 98,809,788 98,809,788 5. NET ASSET VALUES The net assets and the net asset value per share attributable to the Ordinary Shares at each period end are calculated in accordance with their entitlements in the Articles of Association and were as follows: 30 June 2008 31 December 2007 30 June # 000 # 000 # 000 Net assets attributable 620,585 735,021 868,720 Pence Pence Pence Net asset value attributable per Ordinary Share 640.44 743.87 879.18 As at 30 June 2008, the Company had 96,900,000 Ordinary Shares in issue (31 December 2007 and 30 June 2007 - 98,809,788). During the six months to 30 June 2008, the Company bought in and cancelled 1,909,788 shares at a total cost of #11,113,000. 6. FURTHER INFORMATION The foregoing do not comprise statutory accounts (as defined in section 434(3) of the Companies Act 2006) of the Company. The statutory accounts for the year ended 31 December 2007, which contained an unqualified Report of the Auditors, have been lodged with the Registrar of Companies and did not contain a statement required under section 237(2) or (3) of the Companies Act 1985 (as amended). All information shown for the six months to 30 June 2008 is unaudited. Certain statements in this announcement are forward looking statements. By their nature, forward looking statements involve a number of risks, uncertainties or assumptions that could cause actual results or events to differ materially from those expressed or implied by those statements. Forward looking statements regarding past trends or activities should not be taken as representation that such trends or activities will continue in the future. Accordingly, undue reliance should not be placed on forward looking statements. The Half Yearly Report is expected to be posted to shareholders during the week commencing 21 July 2008. Members of the public may obtain copies from Aberforth Partners LLP, 14 Melville Street, Edinburgh EH3 7NS or from its website at www.aberforth.co.uk. CONTACT: David Ross/Alistair Whyte - Aberforth Partners LLP - 0131 220 0733 Aberforth Partners LLP, Secretaries 18 July 2008 ANNOUNCEMENT ENDS
Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account.