1st Quarter Results
(Thomson Reuters ONE) - M&G High Income Investment Trust P.L.C.First Interim Results31 August 2009Performance during the periodThe Company's revenue earnings per Package Unit were 1.46p. In respect of the review period,the Company declared an interim dividend of 1.20p per Income Share which was unchanged fromthe amount declared at the same stage last year. On a net asset value (NAV) basis, eachPackage Unit produced a total return of 11.7% over the three months to 31 August 2009. Thiswas 1.4% below the 13.1% total return on the FTSE All-Share Index over the same period. TheFTSE 350 Higher Yield Index returned 12.7% over the same period. At the period end, thePackage Unit mid-market price was at an 8.6% discount to the NAV and on a mid-market pricebasis each Package Unit delivered a total return of 9.6%.The under-performance over the period was a continuation of the defensive performance of boththe Company's bond and equity portfolios. The equity market was focused on economic recoveryin this period and although our bond portfolio rose, it lagged the stronger returns fromequities. Our equity portfolio performed in line with the All Share Index over this period.Income statement (unaudited) For the three months ended For year ended 31 August 2009 31 August 2008 31 May 2009 Revenue Capital Total Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000 £000 £000 £000 -------- -------- ------ -------- -------- ------- -------- ------- --------Net gains /(losses) on - 20,936 20,936 - (3,853) (3,853) - (8,160) (8,160)investmentsIncome 3,078 - 3,078 1,108 - 1,108 7,248 - 7,248Investment (159) (324) (483) (58) (118) (176) (373) (758) (1,131)management feeOther expenses (46) - (46) (39) - (39) (176) - (176) ------- ------- ------ ------- ------- ------- ------ -------- --------Net returnbefore finance 2,873 20,612 23,485 1,011 (3,971) (2,960) 6,699 (8,918) (2,219)cost and taxFinance costs: - (2,818) (2,818) - (659) (659) - (5,779) (5,779)AppropriationsFinance costs: (491) - (491) (1,499) - (1,499) (6,779) - (6,779)Dividends ------- ------- ------ ------- ------- ------- ------ -------- --------Net return onordinary 2,382 17,794 20,176 (488) (4,630) (5,118) (80) (14,697) (14,777)activitiesbefore taxTax onordinary - - - - - - - - -activities ------- ------- ------ ------- ------- ------- ------ -------- --------Net return onordinary 2,382 17,794 20,176 (488) (4,630) (5,118) (80) (14,697) (14,777)activitiesafter tax ------- ------- ------ ------- ------- ------- ------ -------- --------Return perZero Dividend - 1.43p 1.43p - 1.23p 1.23p - 5.21p 5.21pPreferenceShareRevenueearnings / 1.46p 9.06p 10.52p 1.89p (1.87)p 0.02p 6.04p (9.98)p (3.94)preturn perIncome ShareReturn per - - - - (6.78)p (6.78)p - (3.27)p (3.27)pCapital ShareTotal returnper Income and 1.46p 9.06p 10.52p 1.89p (8.65)p (6.76)p 6.04p (13.25)p (7.21)pGrowth UnitTotal returnper Package 1.46p 10.49p 11.95p 1.89p (7.42)p (5.53)p 6.04p (8.04)p (2.00)pUnitThe total column of this statement is the profit and loss account ofthe Company. The revenue return and capital return columns aresupplementary to this and are prepared under the guidance publishedby the Association of Investment Companies.All items in the above statement derive from continuing operations.No operations were acquired or discontinued during the period.A statement of Total Recognised Gains and Losses is not required asall gains and losses of the Company have been reflected in the abovestatement.The Company's Zero Dividend Preference and Income shares meet thedefinition of a liability under FRS 25 and therefore Capital sharesare the Company's only equity shares. This does not affect therights and benefits of each class. The breakdown of the net assetsattributable to shareholders in terms of the share capital andreserves is given in note 10.Reconciliation of movements in equity shareholders' funds (unaudited)For the three months ended 31.08.09 31.08.08 £000 £000 ---------- ----------Return on ordinary activities after tax 20,176 (5,118)Net revenue return on ordinary activities (2,382) 488after taxNet (gains) / losses attributable to (17,794) 1,001Income Shareholders ---------- ----------Net movement in net assets attributable - (3,629)to Equity shareholdersOpening net assets attributable to Equity - 3,629shareholders ---------- ----------Closing net assets attributable to Equity - -shareholders ---------- ----------Balance sheet (unaudited)As at 31.08.09 31.08.08 31.05.09 £000 £000 £000 ------- ------- -------Fixed assetsPortfolio of investments 223,051 66,997 198,335 ------- ------- -------Current assetsDebtors 2,220 744 2,353Cash at bank and short-term deposits 1,217 1,351 3,842 ------- ------- ------- 3,437 2,095 6,195 ------- ------- -------Total financial assets 226,488 69,092 204,530Creditors: Amounts falling due within (894) (160) (1,644)one year ------- ------- -------Total assets less current liabilities 225,594 68,932 202,886[a]Creditors: Amounts falling after morethan one yearShare classes defined as liability: Zero Dividend Preference Shares (121,815) (30,326) (119,243) Income Shares (103,779) (38,606) (83,643) ------- ------- -------Net assets attributable to Equity - - -shareholders ------- ------- -------Total Share Capital and Reserves attributable to Equityshareholders comprise (unaudited) ------- ------- -------Capital shares - - - ------- ------- -------[a] Total assets less current liabilities represents the net assetsattributable to all shareholders.The net assets attributable to shareholders have been calculated inaccordance with the Company's Articles of Association and the netasset values (per share) applicable to each class of shareholding asshown below.The Company's Zero Dividend Preference and Income shares meet thedefinition of a liability under FRS 25 and therefore Capital sharesare the Company's only equity shares. This does not affect therights and benefits of each class. The breakdown of the net assetsattributable to shareholders in terms of the share capital andreserves is given in note 10.The Condensed Financial Statements have been prepared in accordancewith the Statement: Half Yearly Financial Reports issued by theAccounting Standards Board. As at 31.08.09 31.08.08 Net asset value per Zero Dividend 62.01p 56.63p Preference Share Net asset value per 52.82p 72.09p Income Share Net asset value per - - Capital Share Net asset value per 52.82p 72.09p Income & Growth Unit Net asset value per 114.83p 128.72p Package Unit Cash flow statement (unaudited) For the three For the year months ended ended 31.08.09 31.08.08 31.05.09 £000 £000 £000 £000 £000 £000 -------- -------- ------ -------- -------- -------Net cashinflow from 2,750 1,584 4,866operatingactivitiesServicing offinanceDividendspaid (1,884) (1,499) (5,426)(non-equity)FinancialinvestmentCapital - 297 298distributionsPurchase of (29,182) (3,775) (37,665)investmentsSale of 25,937 1,930 34,921investments ------- ------ ------- (3,245) (1,548) 2,446FinancingRepurchase ofPackage Units(including (286) - (1,596)relatedcosts)Shares issued - - 6,046for cashShare issue - - (416)costs ------- ------ ------- (286) - 4,038 ------- ------- -------Net(decrease) / (2,625) (1,463) 1,028increase incash ------- ------- -------Notes to the Condensed Financial Statements1. Principal activityThe Company was incorporated on 23 December 1996 and is a splitcapital investment trust company. The affairs of the Company havebeen conducted with the objective of enabling it to seek HM Revenue &Customs approval as an investment trust for the purposes of Section842 of the Income and Corporation Taxes Act 1988.2. Accounting policiesThe interim financial statements have been prepared in accordancewith the historical cost convention, as modified by the revaluationof investments, in accordance with applicable United KingdomAccounting and Financial Reporting Standards, and the Statement ofRecommended Practice: 'Financial Statements of Investment TrustCompanies and Venture Capital Trusts' (SORP) issued by theAssociation of Investment Companies (AIC) in January 2009.During the period, the company has adopted the AIC SORP issued inJanuary 2009 resulting in the reclassification of Capital Shares(being the most sub-ordinate of the share classes) as equity, inaccordance with FRS 25. The Zero Dividend Preference Shares andIncome Shares continue to meet the definition of a liability underFRS 25 and have been treated as such. This has resulted inpresentational changes to the Balance Sheet. In addition, the capitalreserves have been reclassified as Capital Reserves - Investmentholding gains and Other capital gains.3. Investments: At fair value through profit or loss 31.08.09 31.08.08 31.05.09 Capital Capital Capital £000 £000 £000 ------- ------- -------Realised gains / (losses) on sales ofinvestments 517 164 (5,729)Increase in unrealised appreciation /(depreciation) 20,419 (4,314) (2,729)Capital distributions - 297 298 ------- ------- -------Net gains / (losses) on investments 20,936 (3,853) (8,160) ------- ------- -------4. Income 31.08.09 31.08.08 31.05.09 Revenue Revenue RevenueIncome from investments £000 £000 £000 ------- ------- -------Interest on debt securities 358 85 839Property Income dividends 40 - 40Overseas dividends - - 33Stock dividends 74 - 261UK dividends 2,573 995 6,012 ------- ------- ------- 3,045 1,080 7,185 ------- ------- -------Other income ------- ------- -------Bank interest 1 23 43HM Revenue & Customs interest [a] - 5 5Underwriting commission 32 - 15 ------- ------- ------- 33 28 63 ------- ------- ------- ------- ------- -------Total income 3,078 1,108 7,248 ------- ------- -------Total income comprises: ------- ------- -------Dividends 2,687 995 6,346Interest 359 113 887Other income 32 - 15 ------- ------- ------- 3,078 1,108 7,248 ------- ------- -------[a] Interest in relation to the VAT recoverable.5. Investment management fee 31.08.09 31.08.08 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 ------------ ----------- ----------- ------------ ----------- -----------Investmentmanagementfee 159 324 483 58 118 176 ------------ ----------- ----------- ------------ ----------- ----------- 31.05.09 Revenue Capital Total £'000 £'000 £'000 ------------ ----------- ----------- Investmentmanagementfee 373 758 1,131 ------------- ------------ ------------The Company's investment manager is M&G Investment Management Limited(MAGIM). The investment management contract between the Company andMAGIM may be terminated by either party giving not less than oneyear's written notice of termination, although in certaincircumstances it may be terminated with immediate effect.MAGIM receives an annual fee, payable monthly in advance, equal tothe following tiered rates per annum of the mid market value of theCompany's total assets less its current liabilities at the beginningof the relevant month.1% on the first £75m0.9% on the next £125m0.8% on the excess over £200m6. Finance costs: AppropriationsThis constitutes an appropriation of reserves in respect of thepremium to issue proceeds payable to holders of Zero DividendPreference Shares on redemption. The appropriation for the yearrepresents the increase in redemption value of the amounts originallysubscribed.7. Finance costs: Dividends 31.08.09 31.08.08 31.05.09 Revenue Revenue RevenueDividends (payable to Income £000 £000 £000Shareholders) ------- ------- -------Fifth interim: 0.25p paid 25 August2009 (2008: 0p) 491 - -Fourth interim: 2.2p paid 22 August2008 (2007: 2.2p) - 1,178 1,178Special Dividend: 0.6p paid 22August 2008 (2007: nil) - 321 321First interim: 1.2p paid 25 November2008 (2007: 1.2p) - - 643Second interim: 2.2p paid 25February 2009 (2008: 1.2p) [a] - - 1,178Special Dividend: 0.9p paid 25February 2009 (2008: 0.6p) [a] - - 482Third interim: 1.2p paid 22 May 2009(2008: 1.2p) - - 1,624Fourth interim: 1.0p payable 25August 2009 (2008: 2.2p) [a] - - 1,353 ------- ------- ------- 491 1,499 6,779 ------- ------- -------[a] This is a change in the distribution pattern of dividendpayments, with a second quarterly dividend of 2.20p and a specialdividend of 0.90p reflecting the decision of the Board to pay out themajority of the current revenue reserves ahead of the rollover of M&GIncome Investment Company Limited into the Company. The ex-dividenddate for both dividends was 29th October 2008 and they were paid toIncome Shareholders on the register at the close of business on 31October 2008. Also on 19 March 2009 the Board declared a fourthinterim dividend of 1.0p per Income Share, in respect of the yearending 31 May 2009, representing substantially all of the revenuereserves of the Company before the rollover of M&G RecoveryInvestment Company Limited completed. This dividend was paid on 25August 2009 to Income Shareholders on the register at the close ofbusiness on 27 March 2009. The ex-dividend date was 25 March 2009.The dividends were also paid to holders of Income & Growth Units andPackage Units.On 14 October 2009 the Board declared a first interim dividend of1.2p (2008: 1.2p) per Income Share totalling £2,357,000 (2008:£643,000), payable on 25 November 2009 to Income Shareholders on theregister at the close of business on 23 October 2009. The ex-dividenddate is 21 October 2009.The dividend will also be payable to holders of Income & Growth Unitsand Package Units.8. Earnings / returns per share 31.08.09 31.08.08 31.05.09a) Return per ZeroDividend Preference ------- ------- -------ShareAppropriations £2,818,000 £659,000 £5,779,000Weighted average sharesin issue during theperiod 196,492,328 53,552,179 110,848,036 ------- ------- -------Return per share 1.43p 1.23p 5.21p ------- ------- ------- 31.08.09 31.08.08 31.05.09b) Revenue earnings per ------- ------- -------Income ShareNet revenue return onordinary activitiesafter tax £2,382,000 £(488,000) £(80,000)Finance costs:Dividends £491,000 £1,499,000 £6,779,000 ------- ------- -------Revenue returnattributable toshareholders £2,873,000 £1,011,000 £6,699,000Weighted average sharesin issue during theperiod 196,492,328 53,552,179 110,848,036 ------- ------- -------Revenue earnings pershare 1.46p 1.89p 6.04p ------- ------- ------- ------- ------- -------Capital returnattributable to IncomeShareholders (note 8c) £17,794,000 £(1,001,000) £(11,068,000)Weighted average sharesin issue during theperiod 196,492,328 53,552,179 110,848,036 ------- ------- -------Capital return perIncome share 9.06p (1.87)p (9.98)p ------- ------- ------- 31.08.09 31.08.08 31.05.09c) Return per Capital ------- ------- -------ShareNet capital return onordinary activitiesafter tax £17,794,000 £(4,630,000) £(14,697,000)(Gains) / losses offsetagainst Income Shares £(17,794,000) 1,001,000 £11,068,000 ------- ------- -------Net capital returnattributable to Capitalshareholders - £(3,629,000) £(3,629,000)Weighted average sharesin issue during theperiod 196,492,328 53,552,179 110,848,036 ------- ------- -------Return per share - (6.78)p (3.27)p ------- ------- -------d) Package unitsThe earnings and returns per Package Unit are calculated by referenceto its component shares.9. Share capital (equity and non-equity) 31.08.09 31.08.08 31.05.09Allotted, called up and fully paid: £000 £000 £000 ------- ------- -------196,448,306 (2008: 53,552,179) ZeroDividend Preference Shares of 1p each 1,964 536 1,967196,448,306 (2008: 53,552,179) IncomeShares of 1p each 1,964 536 1,967196,448,306 (2008: 53,552,179)Capital Shares of 1p each 1,964 536 1,967 ------- ------- -------During the period the Company repurchased and cancelled 300,000Package Units at an average cost of 91p per Package Unit costing£286,000.The Company's Zero Dividend Preference and Income Shares meet thedefinition of a liability under FRS 25 and therefore the CapitalShares comprise the Company's equity shares.The Company has authorised share capital of £29,850,000 (2008: same)consisting of 995,000,000 (2008: same) shares of each class.10. Capital and reserves attributable to shareholders 31.08.09 31.08.08 31.05.09As at £000 £000 £000 ------- ------- -------Called up share capital 5,893 1,607 5,902Share premium account 135,743 - 135,743Capital redemption reserve 15,615 15,555 15,606Zero Dividend Preference Sharesappropriation reserve 25,765 19,252 23,230Special reserve 36,713 37,170 36,716Capital reserves -Investment holding gains/(losses) 19,707 (2,297) (712) -Other capital reserves (18,778) (4,501) (16,153)Revenue reserve 4,936 2,146 2,554 ------- ------- -------Net assets attributable toshareholders 225,594 68,932 202,886 ------- ------- -------Zero Dividend Preference Shares 121,815 30,326 119,243Income Shares 103,779 38,606 83,643 ------- ------- -------Total non-equity shares 225,594 68,932 202,886Capital Shares (equity) - - - ------- ------- -------Net assets attributable toshareholders 225,594 68,932 202,886 ------- ------- -------Under the terms of the Company's Articles of Association sumsstanding to the credit of the Special Reserve are available fordistribution only by way of redemption or purchase of any of theCompany's own shares. The Company may only distribute accumulated'realised' profits.The Institute of Chartered Accountants of England and Wales hasissued guidance (TECH 01/08), stating that profits arising out of achange in fair value of assets, recognised in accordance with theAccounting Standards may be distributed provided the relevant assetscan be readily converted into cash. Securities listed on recognisedstock exchanges are generally regarded as being readily convertibleinto cash and hence unrealised profits in respect of such securitiescurrently included within Investment holding gains may be regarded asdistributable under Company Law.11. Abridged resultsThe abridged balance sheet for the year ended 31 May 2009 is based onfinancial statements which carry an audit report that is unqualifiedand includes no matters of adverse comment.Portfolio of investmentsAs at 31 August 2009Oil & gas producers 14.52BP 16,493 7.31Royal Dutch Shell 'B' 16,267 7.21Chemicals 1.00Johnson Matthey 1,920 0.85Yule Catto 343 0.15Mining 2.60Anglo American 3,635 1.61Lonmin 2,243 0.99Aerospace & defence 0.25BAE Systems 568 0.25Construction & materials 0.75Low & Bonar 1,028 0.46Marshalls 462 0.20Morgan Sindall 212 0.09Electronic & electrical equipment 0.30Halma 491 0.22Renishaw 187 0.08General industrials 0.40Smith (D.S.) 900 0.40Industrial engineering 0.71IMI 122 0.05Vitec Group 1,478 0.66Support services 4.92Acal 111 0.05Bunzl 2,080 0.92Davis Service Group 2,285 1.01De La Rue 715 0.32Electrocomponents 1,440 0.64Filtrona 2,426 1.08Hays 948 0.42Premier Farnell 247 0.11Smiths News 844 0.37Beverages 1.35Diageo 3,047 1.35Food producers 3.94Tate & Lyle 1,930 0.86Unilever 6,949 3.08Personal goods 0.83PZ Cussons 1,864 0.83Tobacco 3.73British American Tobacco 6,671 2.96Imperial Tobacco 1,729 0.77Pharmaceuticals & biotechnology 10.31AstraZeneca 8,680 3.85BTG 1,053 0.47GlaxoSmithKline 13,524 5.99Food & drug retailers 0.95Booker Group 695 0.31Sainsbury (J.) 1,440 0.64General retailers 2.14Halfords Group 2,604 1.15Home Retail Group 1,503 0.67Kingfisher 188 0.08NEXT 352 0.16Topps Tiles 182 0.08Media 3.09British Sky Broadcasting Group 1,479 0.66Daily Mail & General Trust 'A' (non-voting) 952 0.42Pearson 1,786 0.79Reed Elsevier 2,747 1.22Travel & leisure 1.06Compass Group 342 0.15Ladbrokes 983 0.44William Hill 1,059 0.47Fixed line telecommunications 2.09BT Group 2,167 0.96Cable & Wireless 2,548 1.13Mobile telecommunications 5.28Vodafone Group 11,901 5.28Electricity 0.59Scottish & Southern Energy 1,330 0.59Gas, water & multi-utilities 4.69Centrica 2,846 1.26National Grid 2,649 1.17Northumbrian Water Group 593 0.26Pennon Group 210 0.09Severn Trent 2,130 0.94United Utilities 2,183 0.97Banks 6.32HSBC Holdings 14,266 6.32Non-life insurance 0.89Jardine Lloyd Thompson Group 415 0.18RSA Insurance Group 1,609 0.71Life insurance 3.53Aviva 1,933 0.86Friends Provident 386 0.17Legal & General Group 1,049 0.46Prudential 2,997 1.33Standard Life 1,601 0.71Real estate investment trusts 2.86Alpha Pyrenees Trust 109 0.05Great Portland Estates 718 0.32Land Securities Group 2,704 1.20Segro 2,918 1.29Financial services 1.50Close Brothers Group 2,421 1.07F&C Asset Management 34 0.01London Stock Exchange 180 0.08Provident Financial 766 0.34Equity investment instruments 0.36Blackrock Commodities Income Investment Trust 531 0.23Ecofin Water & Power Opportunities 290 0.13Ecofin Water & Power Opportunities (Subscription 4 -Shares)Software & computer services 1.79Sage Group 4,035 1.79Non-convertible preference shares 2.20Aviva 8.75% Cum. Irrd. Pref. 1,530 0.68General Accident 8.875% Cum. Irrd. Pref. 758 0.34Lloyds Banking Group 6.475% Non-cum. Irrd. Pref. 457 0.20Lloyds Banking Group 9.25% Non-cum. Irrd. Pref. 1,240 0.55Lloyds Banking Group 9.75% Non-cum. Irrd. Pref. 244 0.11Royal & Sun Alliance 7.375% Cum. Irrd. Pref. 227 0.10Standard Chartered 7.375% Non-cum. Irrd. Pref. 504 0.22'AAA' credit rated bonds 5.95Finland (Republic of) 9.375% 2010 673 0.30Treasury 4.75% 2010 3,814 1.69Treasury 4.75% 2015 4,832 2.14Treasury 5% 2012 4,100 1.82'AA' credit rated bonds 0.71BP Capital Markets 5.75% 2010 409 0.18GE Capital UK Funding FRN 2010 697 0.31Land Securities Capital Markets Var. Rate 2013 506 0.22'A' credit rated bonds 2.53E.ON International Finance 6.375% 2012 545 0.24France Telecom 5% 2016 313 0.14France Telecom 7.5% 2011 769 0.34France Telecom 8% 2017 309 0.14HSBC Holdings Var. Rate 2018 1,088 0.48London Merchant Securities 6.5% 2026 253 0.11London Stock Exchange Var. Rate 2016 805 0.36National Grid Gas 6% 2017 544 0.24UBS London 6.375% 2016 1,077 0.48'BBB' credit rated bonds 3.36Anheuser-Busch InBev 6.5% 2017 1,083 0.48AXA Var. Rate Perp. 553 0.24British Telecommunications Var. Rate 2016 800 0.35Compass 7% 2014 391 0.17Deutsche Telekom 7.125% 2012 927 0.41DWR Cymru Financing Var. Rate 2036 744 0.33Imperial Tobacco Finance 5.5% 2016 497 0.22Imperial Tobacco Finance 6.25% 2018 509 0.23Kingfisher 5.625% 2014 303 0.13Rentokil Initial 5.75% 2016 195 0.09Sutton Bridge Financing 8.625% 2022 306 0.14Thames Water Utilities Finance 4.75% 2010 307 0.14WPP Group 6% 2017 960 0.43Bonds with no credit rating 1.37Blue Circle Industries 10.75% 2013 580 0.26Brixton 5.25% 2015 578 0.26Heineken 7.25% 2015 851 0.38John Lewis 6.375% 2012 738 0.33Shaftesbury 8.5% 2024 308 0.14Total investments 223,051 98.87Net other assets 2,543 1.13Net assets attributable to all shareholders 225,594 100.00The interim report will not be advertised in the press, but copiesare available from the registered office,Laurence Pountney Hill, London, EC4R 0HH.J. P. McClellandSecretary---END OF MESSAGE---This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 20.10.2009 - 17:34 Uhr
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