Final Results
11 Enero 2008 - 9:26AM
UK Regulatory
FINAL RESULTS M&G Income Investment Company Limited
Performance during the period.
The Company's revenue earnings per Package Unit were 6.24p, an increase of
12.6%. In respect of the year, the Company declared
eleven dividends of 0.17p per Ordinary Share (0.34p per Package Unit) and one
dividend of 1.07p per Ordinary Share (2.14p per
Package Unit). Total dividends were 2.94p per Ordinary Share (5.88p per Package
Unit), compared with 2.78p per Ordinary Share (5.56p
per Package Unit) in the previous year. This represents an increase of 5.8%,
which is ahead of the latest annualised increase in the UK's
rate of inflation of 4.2% as measured by the Retail Prices Index (RPI). As at
the year end, the yield on the Company's Package Units was
5.1%, compared with the yield of 2.8% on the FTSE All-Share Index.
On a net asset value (NAV) basis, each Package Unit produced a total return of
8.1% over the year to 31 October 2007. This was below
the return of 13.6% on the FTSE All-Share Index over the same period. Virtually
the entire shortfall occurred in the second half of the
year, an exceptionally challenging period for income fund managers.
This return is disappointing and reflects the convergence of several negative
factors. Firstly, high yield stocks underperformed the FTSE
All-Share Index by 4.2% in this period. Secondly, mid-cap stocks, where we are
overweight, underperformed large-cap stocks by 6.9%
in the last six months of the period. In both cases, this reflected a narrow
market driven by low yielding mining stocks, which fall outside
the Company's investment criteria and consequently the portfolio has little
exposure in this area. In contrast, higher yielding financial stocks were very
weak and we are fully weighted in this area. Thirdly, return was affected by
the dull performance of bonds over the period. The M&G High Yield Corporate
Bond Fund was up 1.7% and our portfolio of corporate bonds increased 2.2%,
notably better than the ML Sterling Non-Gilts All Stocks Index's return of
-0.4%, but well below the return from equities. This combination of events is
unusual and the fund is soundly based and well positioned to recover lost
ground particularly if bonds stabilise and should the strong relative
performance of mining stocks reverse.
The market price discount to NAV widened over the year from 6.5% to 8.5%, the
market price at the year end being 116.5p and the NAV
127.35p. On a mid-market price basis, the total return on the Company's Package
Units was 6.0%. The Company's gearing at the year end was 10.9% of total assets
less current liabilities, compared with 10.2% at the same time last year. In
line with the policy stated in the Company's Prospectus, there was no
investment in other split capital investment companies.
Income statement (audited)
for the year ended 31 2007 2006
October
Revenue Capital Total Revenue Capital Total
�000 �000 �000 �000 �000 �000
-------------- ------------- -------------- -------------- -------------- --------------
Net gains on investments - 9,749 9,749 - 26,935 26,935
Income 11,055 - 11,055 10,087 - 10,087
Investment management fee (1,338) (892) (2,230) (1,233) (822) (2,055)
Other expenses (287) - (287) (295) - (295)
-------------- ------------- -------------- -------------- -------------- --------------
Net return before finance 9,430 8,857 18,287 8,559 26,113 34,672
costs and tax
Finance costs: - (8,919) (8,919) - (8,314) (8,314)
Appropriations
Finance costs: Dividends (8,036) - (8,036) (7,704) - (7,704)
Interest payable and (883) (589) (1,472) (881) (587) (1,468)
similar charges
-------------- ------------- -------------- -------------- -------------- --------------
Net return on ordinary 551 (651) (140) (26) 17,212 17,186
activities before tax
Tax on ordinary activities - - - - - -
-------------- ------------- -------------- -------------- -------------- --------------
Net return on ordinary 551 (651) (140) (26) 17,212 17,186
activities after tax
-------------- ------------- -------------- -------------- -------------- --------------
Return per Zero Dividend - 3.78p 3.78p - 3.50p 3.50p
Share
Earnings / return per 3.12p (0.24)p 2.88p 2.77p 6.21p 8.98p
Income Share
Earnings / return per 6.24p 3.30p 9.54p 5.54p 15.92p 21.46p
Package Unit
The total column of this statement is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued during the year.
A statement of Total Recognised Gains and Losses is not required as all gains
and losses of the Company have been reflected in the above statement.
Statement of movements in net assets attributable to shareholders (audited)
For the year ended 31 October 2007 2006
�000 �000
-------------- --------------
Return on ordinary activities (140) 17,186
after tax
Add finance costs: 8,919 8,314
Appropriations
Net movement in fair value of 146 406
swap
Repurchase of Package Units (1,409) (1,086)
(including related costs)
-------------- --------------
Net movement in net assets 7,516 24,820
attributable to shareholders
Opening net assets 218,353 193,533
attributable to shareholders
(all non-equity)
-------------- --------------
Closing net assets 225,869 218,353
attributable to shareholders
(all non-equity)
-------------- --------------
Balance sheet (audited)
As at 31 October 2007 2006
�000 �000
-------------- --------------
Fixed assets
Portfolio of investments 247,473 240,433
-------------- --------------
Current assets
Debtors 2,941 2,258
Cash at bank and short-term 1,465 1,822
deposits
-------------- --------------
4,406 4,080
-------------- --------------
Total financial assets 251,879 244,513
Other creditors: Amounts (26,010) (1,235)
falling due within one year
-------------- --------------
Total assets less current 225,869 243,278
liabilities
Creditors: Amounts falling due - (24,925)
after more than one year
-------------- --------------
Net assets attributable to 225,869 218,353
shareholders (all non-equity)
-------------- --------------
Net assets attributable to
Shareholders (audited)
As at 31 October 2007 2006
�000 �000
-------------- --------------
Zero Dividend Shareholders 123,789 115,490
Ordinary Shareholders 102,080 102,863
-------------- --------------
Net assets attributable to 225,869 218,353
shareholders (all non-equity)
-------------- --------------
Net asset value per Zero 52.53p 48.76p
Dividend Share
Net asset value per Ordinary 37.41p 37.36p
Share
Net asset value per Package 127.35p 123.48p
Unit
Cash flow statement (audited)
for the year ended 31 October 2007 2007 2006 2006
�000 �000 �000 �000
-------------- -------------- -------------- --------------
Net cash inflow from operating 8,015 7,967
activities
Servicing of finance
Dividends paid (non-equity) (8,009) (7,680)
Annual monitoring fee paid (5) (5)
Interest paid on bank loan (1,443) (1,458)
-------------- --------------
(9,457) (9,143)
Financial investment
Capital distributions 185 1,793
Purchases of investments (61,356) (67,924)
Sales of investments 63,665 68,978
-------------- --------------
2,494 2,847
Financing
Repurchase of Package Units (1,409) (1,086)
(including related costs)
-------------- --------------
Net increase in cash (357) 585
-------------- --------------
Note
The results for 2006 are based on financial statements which carry an audit
report which is unqualified and includes no matters of adverse comment.
The 2007 figures have been extracted from the audited financial statements
which will carry an unqualified audit report with no matters of adverse
comment.
The Annual Report and Financial Statements will be posted to shareholders on or
before 25 January 2008 and the Annual General Meeting will be held at 12.10pm
on 26 February 2008 at Dorey Court, Admiral Park, St. Peter Port, Guernsey, GY1
3BG.
There will also be an additional presentation to shareholders unable to make
The Annual General Meeting. This will be held at Governor's House, Laurence
Pountney Hill, London EC4R 0HH on 28 February 2008, at 11.00am.
Kleinwort Benson (Channel Islands) Fund Services Limited
Company Secretary
END
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