1st Quarter Results
(Thomson Reuters ONE) - M&G Equity Investment Trust P.L.C.First Interim Results30 September 2009Performance during the periodThe first quarter of the 2009/10 year has begun well with the gearing of the Company workingpositively as both equity and bond returns were well ahead of the cost of debt.On a net asset value (NAV) basis, each Package Unit produced a positive total return of 23.3%over the three months to 30 September 2009. This was better than the 22.4% positive totalreturn on the FTSE All-Share Index over the same period.The Company's revenue earnings per Package Unit were 0.91p. In respect of the review period,the Company declared a first interim dividend of 1.25p per Income Share which is equal to thedividend declared in respect of the same period last year. The September annualised rate ofinflation was negative 1.4% as measured by the Retail Prices Index (RPI). At the period end,the Package Unit mid-market price was at a 7.1% discount to the NAV and on a mid-market pricebasis each Package Unit delivered a positive total return of 20.3%.Income statement (unaudited) For the three months ended For year ended 30 September 2009 30 September 2008 30 June 2009 Revenue Capital Total Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000 £000 £000 £000 -------- -------- ------ -------- -------- ------- -------- ------- --------Net gains /(losses) on - 28,796 28,796 - (14,264) (14,264) - (36,811) (36,811)investmentsIncome 1,963 - 1,963 2,746 - 2,746 10,431 - 10,431Investment (103) (239) (342) (126) (295) (421) (417) (974) (1,391)management feeOther expenses (44) - (44) (57) - (57) (210) - (210) ------- ------- ------ ------- ------- ------- ------ -------- --------Net returnbefore finance 1,816 28,557 30,373 2,563 (14,559) (11,996) 9,804 (37,785) (27,981)costs and taxFinance costs: - (2,638) (2,638) - (2,748) (2,748) - (11,737) (11,737)AppropriationsFinance costs: (3,449) - (3,449) (4,187) - (4,187) (10,625) - (10,625)DividendsFinance costs:Interestpayable and (224) (523) (747) (302) (706) (1,008) (982) (2,939) (3,921)similarcharges ------- ------- ------ ------- ------- ------- ------ -------- --------Net return onordinary (1,857) 25,396 23,539 (1,926) (18,013) (19,939) (1,803) (52,461) (54,264)activitiesbefore taxTax onordinary (18) 18 - (12) 12 - (90) 90 -activities ------- ------- ------ ------- ------- ------- ------ -------- --------Net return onordinary (1,875) 25,414 23,539 (1,938) (18,001) (19,939) (1,893) (52,371) (54,264)activitiesafter tax ------- ------- ------ ------- ------- ------- ------ -------- --------Return perZero Dividend - 16.25p 16.25p - 1.60p 1.60p - (11.53)p (11.53)pPreferenceShareRevenueearnings per 0.91p - 0.91p 1.31p - 1.31p 5.09p (0.10)p 4.99pIncome ShareReturn per - - - - (10.51)p (10.51)p - (12.06)p (12.06)pCapital ShareTotal returnper Package 0.91p 16.25p 17.16p 1.31p (8.91)p (7.60)p 5.09p (23.69)p (18.60)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 (capital) shareholders' funds(unaudited)For the three months ended 30.09.09 30.09.08 £000 £000 ---------- ----------Return on ordinary activities after tax 23,539 (19,939)Net revenue return on ordinary activities 1,875 1,938after taxRepurchase and Issue of Package Units 59 33(including related costs)Net gains attributable to IncomeShareholders and Zero Dividend Preference (25,473) -Shareholders ---------- ----------Net movement in net assets attributable - (17,968)to Equity shareholdersOpening net assets attributable to Equity - 20,684shareholders ---------- ----------Closing net assets attributable to Equity - 2,716shareholders ---------- ----------Balance sheet(unaudited)As at 30.09.09 30.09.08 30.06.09 £000 £000 £000 ------- ------- -------Fixed assetsPortfolio of investments - Non 193,229 200,003 166,476derivative securities ------- ------- -------Current assetsDebtors 3,104 2,490 1,967Cash at bank and short-term deposits 2,472 7,064 696 ------- ------- ------- 5,576 9,554 2,663 ------- ------- -------Total financial assets 198,805 209,557 169,139Creditors: Amounts falling due within (2,733) (2,051) (354)one year ------- ------- -------Total assets less current liabilities 196,072 207,506 168,785Creditors: Amounts falling after morethan one year7.376% Debenture 2011 (39,980) (53,955) (39,977) ------- ------- ------Net assets attributable to all 156,092 153,551 128,808shareholders ------- ------- -------Other creditors: Amounts falling dueafter more than one year(Share classes defined as liability)Zero Dividend Preference Shares (149,197) (141,938) (120,038)Income Shares (6,895) (8,897) (8,770) ------- ------- -------Total creditors: Amounts falling due (196,072) (204,790) (168,785)after more than one year ------- ------- -------Net assets attributable to Equity - 2,716 -shareholders ------- ------- -------Total Share Capital and Reserves attributable to Equityshareholders comprise (unaudited)Called up share capital 1,737 1,717 1,725Share premium account 35,085 35,037 35,044Capital redemption reserve 486 486 486Special reserve 7,115 7,117 7,115Capital reserve (44,423) (41,641) (44,370) ------- ------- -------Total Share Capital and Reserves - 2,716 -attributable to equity 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 30.09.09 30.09.08 30.06.09 Net asset value per 82.69p Zero Dividend 85.89p 69.61p Preference Share Net asset value per 3.97p 5.18p 5.08p Income Share Net asset value per - 1.58p - Capital Share Net asset value per 89.86p 89.45p 74.69p Package UnitCash flowstatement(unaudited) For the three For the year months ended ended 30.09.08 30.09.09 30.06.09 £000 £000 £000 £000 £000 £000 -------- -------- ------ -------- -------- -------Net cashinflow from 2,132 5,318 11,561operatingactivitiesServicing offinanceDividendspaid (3,449) (4,187) (10,625)(non-equity)Annualmonitoring (1) - (3)feeInterest paidon debenture - (1) (3,370)stock ------- ------ ------- (3,450) (4,188) (13,998)FinancialinvestmentCapital - 705 705distributionsPurchase of (9,454) (10,467) (62,207)investmentsSale of 11,441 13,647 76,641investments ------- ------ ------- 1,987 3,885 15,139FinancingPartialrepayment of - - (14,000)DebentureStockCost of earlypartialredemption of - - (648)DebentureStockRepurchase ofPackage Units(including - (459) (461)relatedcosts)Issue ofpackage units(including 1,108 711 1,306relatedcosts) ------- ------- 1,108 252 (13,803) ------- ------- -------Net increase 1,777 5,267 (1,101)in cash ------- ------- -------Notes to the Condensed Financial Statements1. Principal activityThe Company was incorporated on 3 January 1996 and is a split capitalinvestment trust company. The affairs of the Company have beenconducted 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, note 10 tothe financial statements discloses the amount of the Capital Reservethat is Investment Holding Gain or Loss.3. Investments: At fair value through profit or loss 30.09.09 30.09.08 30.06.09 Capital Capital Capital £000 £000 £000 ------- ------- -------Realised losses on sales ofinvestments (4,388) (5,639) (30,110)Increase in unrealised appreciation /(depreciation) 33,184 (9,330) (7,406)Capital distributions - 705 705 ------- ------- -------Net gains / (losses) on investments 28,796 (14,264) (36,811) ------- ------- -------4. Income 30.09.09 30.09.08 30.06.09 Revenue Revenue RevenueIncome from investments £000 £000 £000 ------- ------- -------Interest on debt securities 395 443 1,684Property Income dividends 37 22 92Overseas dividends - 6 7Stock dividends 161 - 258UK dividends 1,367 2,190 8,211 ------- ------- ------- 1,960 2,661 10,252 ------- ------- -------Other income ------- ------- -------Bank interest 1 3 21Deposit interest - 63 85HM Revenue & Customs interest [a] - 10 10Underwriting commission 2 9 63 ------- ------- ------- 3 85 179 ------- ------- ------- ------- ------- -------Total income 1,963 2,746 10,431 ------- ------- -------Total income comprises: ------- ------- -------Dividends 1,565 2,218 8,568Interest 396 519 1,800Other income 2 9 63 ------- ------- ------- 1,963 2,746 10,431 ------- ------- -------[a] Interest in relation to the VAT recoverable.5. Investment management fee 30.09.09 30.09.08 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 ------------ ----------- ----------- ------------ ----------- -----------Investmentmanagementfee 103 239 342 126 295 421 ------------ ----------- ----------- ------------ ----------- ----------- 30.06.09 Revenue Capital Total £'000 £'000 £'000 ------------ ----------- ----------- Investmentmanagementfee 417 974 1,391 ------------- ------------ ------------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 to0.75% per annum, of the mid market value of the Company's totalassets less its current liabilities at the beginning of the relevantmonth.In certain circumstances a performance related fee may be payable atthe end of the Company's financial year. The conditions and basisupon which such a fee is paid are disclosed in the Company's AnnualReport and Financial Statements.6. 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 30.09.09 30.09.08 30.06.09 Revenue Revenue RevenueDividends (payable to Income £000 £000 £000Shareholders) ------- ------- -------Fourth interim 2009: 2p paid 18September 2009 (2008: 2p) 3,449 3,418 3,418Special Dividend: 0.45p paid 19September 2008 - 769 769First interim 2009: 1.25p paid 19December 2008 (2008: 1.2p) - - 2,146Second interim 2009: 1.25p paid 20March 2009 (2008: 1.2p) - - 2,146Third interim 2009: 1.25p paid 19June 2009 (2008: 1.2p) - - 2,146 ------- ------- ------- 3,449 4,187 10,625 ------- ------- -------On 16 November 2009 the Board declared a first interim dividend of1.25p (2008: 1.25p) per Income Share totalling £2,171,000 (2008:£2,146,000), payable on 18 December 2009 to Income Shareholders onthe register at the close of business on 27 November 2009. Theex-dividend date is 25 November 2009.The dividend will also be payable to holders of Package Units.8. Earnings / returns per share 30.09.09 30.09.08 30.06.09a) Return per ZeroDividend Preference ------- ------- -------ShareAppropriations £2,638,000 £2,748,000 £11,737,000Gains / (losses)offset against ZeroDividend PreferenceShares (note 8c) £25,416,000 - £(31,515,000)Net capital returnattributable to ZeroDividend Preferenceshareholders £28,054,000 £2,748,000 £(19,778,000)Weighted averageshares in issue duringthe period 172,614,182 171,271,247 171,579,496 ------- ------- -------Return per share 16.25p 1.60p (11.53)p ------- ------- ------- 30.09.09 30.09.08 30.06.09b) Revenue earnings ------- ------- -------per Income ShareNet revenue returnon ordinaryactivities after tax £(1,875,000) £(1,938,000) £(1,893,000)Finance costs:Dividends £3,449,000 £4,187,000 £10,625,000 ------- ------- -------Revenue returnattributable toIncome shareholders £1,574,000 £2,249,000 £8,732,000Weighted averageshares in issueduring the period 172,614,182 171,271,247 171,579,496 ------- ------- -------Revenue earnings pershare 0.91p 1.31p 5.09p ------- ------- ------- ------- ------- -------Capital returnattributable toIncome Shareholders(note 8c) £(2,000) - £(172,000)Weighted averageshares in issueduring the period 172,614,182 171,271,247 171,579,496 ------- ------- -------Capital return perIncome share - - (0.10)p ------- ------- ------- 30.09.09 30.09.08 30.06.09c) Return per ------- ------- -------Capital ShareNet capital returnon ordinaryactivities after tax £25,414,000 £(18,001,000) £(52,371,000)Losses offsetagainst IncomeShares £2,000 - £172,000(Gains) / lossesoffset against Zero £(25,416,000) - £31,515,000Dividend PreferenceShares ------- ------- -------Net capital returnattributable toCapital shareholders - £(18,001,000) £(20,684,000)Weighted averageshares in issueduring the period 172,614,182 171,271,247 171,579,496 ------- ------- -------Return per share - (10.51)p (12.06)p ------- ------- -------d) Package unitsThe earnings and returns per Package Unit are calculated by referenceto its component shares.9. Share capital (equity and non-equity) 30.09.09 30.09.08 30.06.09Allotted, called up and fully paid: £000 £000 £000 ------- ------- -------173,701,139 (2008: 171,651,139) ZeroDividend Preference Shares of 1p each 1,737 1,717 1,725173,701,139 (2008: 171,651,139)Income Shares of 1p each 1,737 1,717 1,725173,701,139 (2008: 171,651,139)Capital Shares of 1p each 1,737 1,717 1,725 ------- ------- -------During the period the Company issued 1,250,000 shares of each classat an issue price of 76.24p per Zero Dividend Preference Share, 9.72pper Income Share and 5.12p per Capital Share. The issue price was ata premium of 1% to the Net Asset Value of the Package Units.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 £38,850,000 (2008: same)consisting of 1,295,000,000 (2008: same) shares of each class.10. Capital and reserves attributable to all classes of shareholder 30.09.09 30.09.08 30.06.09As at £000 £000 £000 ------- ------- -------Called up share capital 5,211 5,150 5,174Share premium account 142,207 140,566 141,137Capital redemption reserve 1,463 1,463 1,463Zero Dividend Preference Sharesappropriation reserve 99,957 88,330 97,319Special reserve 25,007 25,009 25,007Capital reserves (124,648) (115,692) (150,062)Revenue reserve 6,895 8,725 8,770 ------- ------- -------Net assets attributable to allshareholders 156,092 153,551 128,808 ------- ------- -------Zero Dividend Preference Shares 149,197 141,938 120,038Income Shares 6,895 8,897 8,770 ------- ------- -------Total non-equity shares 156,092 150,835 128,808Capital Shares (equity) - 2,716 - ------- ------- -------Net assets attributable toshareholders 156,092 153,551 128,808 ------- ------- -------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 any Investment Holding Gains in respect of suchsecurities currently included within Capital Reserves may be regardedas distributable under Company Law.At the balance sheet date, the value of the Investment HoldingGains/Losses within Capital Reserves was a loss of £10,815,000 (2008:a loss of £45,923,000).11. Abridged resultsThe abridged balance sheet for the year ended 30 June 2009 is basedon financial statements which carry an audit report that isunqualified and includes no matters of adverse comment.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: 17.11.2009 - 17:19 Uhr
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