29th Apr 2005 15:35
Britannic Global Income Trust PLC29 April 2005 Britannic Global Income Trust PLC29 April 2005Announcement BeginsChairman's Statement The strong performance from the UK equity market over the past year has resultedin the assets of your company now exceeding the bank debt for the first time inthree years. This is a significant improvement on the situation which existedthree years ago when assets were £4 million below the bank debt of £15 million.Your Board expects the Company to wind-up at the end of November 2005 and sothese are likely to be the last set of Annual Accounts. Performance The equity portfolio gave a total return of 17.3% which was slightly lower thanthe total return of 19.3% on the FTSE 350 Higher Yield Index. On the other handthe split capital portfolio produced a total return of 51.5% compared to 43.9%on the Datastream Highly Geared Ordinary Index. Asset Value The net asset value of the ordinary shares remains at nil and there is noprospect of that situation changing. However, due to substantial improvements inthe portfolio mentioned above, the Zero Dividend Preference (ZDP) shares had anet asset value of 10.9p per share on 28th February 2005, after deductingexpenses of a wind-up. Although this is a considerable improvement in the nilvalue at the end of last year, there is no prospect that the full entitlementdue to ZDP shareholders at the end of November 2005 will be achieved. Income & Dividends With the reduction in the portfolio, as repayments of bank borrowing were made,the investment income for the year fell from £1.43m to £1.18m. However, this wassufficient to cover running costs and interest charges. No dividends were paidduring the year and there is no prospect of dividends being paid in the run upto the expected wind-up. Bank Borrowing At the start of the year, the Board agreed with the Bank's request to repay£2.8m of the bank loan. As a result of additional requests from the Bank torepay a further £2.2.m during the year, the loan was reduced to £10m at theyear-end. The Board has agreed with the Bank that the remaining bank loan willbe repaid in instalments of £2.5m in March, June, September and November 2005together with associated loan breakage costs estimated at £243,000. The Marchrepayment has been made, reducing the current level of loan to £7.5m. Share Listing As mentioned above, the ZDP shares now have an asset value and thereforeapproval was sought to restore the listing of ZDP shares which have beensuspended since July 2002. This was granted with effect from 17th March 2005.As the ordinary shares do not have, nor are likely to have any economic value,the Board do not intend to remove the suspension on these shares and intend tode-list these shares. This will give rise to a small saving in listing fees.Due to investment transaction activity during the period to 28 February 2005undertaken to maximise shareholder value the Company will not be seekingapproval as an investment trust for that period. This investment activity hasalso resulted in the Company losing Investment Company status, which the Board,having taken advice from its advisors, believes will not have a detrimentaleffect on the Company. Basis of Preparation of Accounts Since it is expected that the Company is likely to be wound up during thecurrent year, the group accounts for the year ended 28 February 2005 have beenprepared on a break up basis. Under the break up basis, adjustments are made toreduce the balance sheet values to their recoverable amount, reclassify fixedassets and long-term liabilities as current assets and liabilities and providefor further liabilities that may arise. Additional costs have been provided forloan breakage costs, costs associated with liquidating the portfolio and wind upcosts for the Company. These costs are currently estimated to amount to £493,000of which half are accounted for by break costs in respect of repayment of thebank loan. Costs Your managers have taken no management fee since 1 May 2003 and are takingreduced secretarial fees of £5,000 per quarter compared to the agreed £20,000.Following discussion with the Bank, the Board have agreed to re-instate theManagement fee of 0.25% per quarter on total assets less current liabilities andalso to re-instate the secretarial fee to £20,000 per quarter. These fees willaccrue and are payable following the full repayment of the outstanding bankdebt. The Bank has informed the Board that they will re-instate their margin of1.1% on the loan with effect from 1st March 2005. Wind-up The Bank loan is expected to be repaid in full on 20th November 2005 and theZDP's are due to be repaid on 30th November 2005. With this in mind and notingthat the surplus net assets are only adequate to pay a fraction of theentitlement of the ZDP's, your Board expects that, barring unforeseencircumstances, the Company will be wound up on 30th November 2005. Outlook The management of the portfolio until November 2005 will be affected by therequirement to repay the Bank loan in tranches of £2.5m (as mentioned above) andthe realisation of the balance of the portfolio as the expected wind-up dateapproaches. At the same time your Board will seek to realise value in respect ofthe Company's tax losses. Although there is some current uncertainty concerningpossible interest rate rises, the result of the General Election and the stateof the economy in the USA, the underlying earnings growth and corporate activityin the UK give support to UK market levels in the medium term. Peter KennedyChairman Group Statement of Total Return Year ended 28 February 2005 Year ended 29 February 2004 (unaudited) (audited) Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000Realised losses oninvestments - (8,393) (8,393) - (18,868) (18,868)Unrealised gainson investments - 11,137 11,137 - 22,454 22,454 ------- ------- -------- ------- ------- -------Total gains oninvestments - 2,744 2,744 - 3,586 3,586Investment income 1,179 - 1,179 1,430 - 1,430Investmentmanagement fee - - - (8) (3) (11)Estimatedliquidation costs (250) - (250) - - -Other expenses (124) - (124) (114) - (114) ------- ------- -------- ------- ------- -------Net return onordinaryactivities beforefinance costs andtaxation 805 2,744 3,549 1,308 3,583 4,891Interest payableand similarcharges (571) (581) (1,152) (691) (229) (920) ------- ------- -------- ------- ------- -------Return on ordinaryactivities beforetax 234 2,163 2,397 617 3,354 3,971Tax on ordinary - - - - - -activities ------- ------- -------- ------- ------- -------Return on ordinaryactivities aftertax 234 2,163 2,397 617 3,354 3,971Non equityminority interests - (2,225) (2,225) - (2,047) (2,047) ------- ------- -------- ------- ------- -------Returnattributable tomembers of theparent company 234 (62) 172 617 1,307 1,924Dividends in respect - - - - - -of equity shares ------- ------- -------- ------- ------- -------Transfer to/(from)reserves 234 (62) 172 617 1,307 1,924 ======= ======= ======== ======= ======= =======Return per ordinaryshare:Basic (p) 0.33 (0.08) 0.25 0.87 1.83 2.70 balance sheets as at 28 February 2005 as at 29 February 2004 (unaudited) (audited) Group Company Group Company £'000 £'000 £'000 £'000Fixed assetsInvestments - - 14,132 14,132Current assetsInvestments 12,271 12,271Debtors 2,527 2,527 143 143Cash at bank and in hand 377 363 1,095 1,081 -------- -------- -------- -------- 15,175 15,161 1,238 1,224Creditors: amounts fallingdue within one year 13,131 40,128 15,722 15,772Net current assets /(liabilities) 2,044 (24,967) (14,484) (14,548) -------- -------- -------- --------Total assets less currentliabilities 2,044 (24,967) (352) (416)Creditors: amounts falling dueafter more than one year Amounts due to subsidiary - - - 24,722 -------- -------- -------- --------Net assets / (liabilities) 2,044 (24,967) (352) (25,138) ======== ======== ======== ========Capital and reservesOrdinary share capital 713 713 713 713Capital reserve - unrealised 9,092 9,042 (2,044) (2,094)Capital reserve - realised (38,389) (38,389) (27,190) (27,190)Revenue reserve 3,676 3,667 3,442 3,433 -------- -------- -------- --------Total equity shareholders'funds (24,908) (24,967) (25,079) (25,138) ======== ========Non equity minorityinterests 26,952 24,727 -------- -------- 2,044 (352) ======== ========Net asset per ordinary share(p) (34.96) (35.20) group cash flow statement For the year ended For the year ended 28 February 2005 29 February 2004 Unaudited Audited £'000 £'000 £'000 £'000Operating activitiesInvestment income received 1,249 1,460Deposit interest received 21 28Investment management fee paid - (26)Secretarial Fee Paid (25) (28)Other cash payments (76) (64) -------- ----------Net cash inflow from operatingactivities 1,169 1,370Returns on investments and servicingof financeLoan & overdraft interest paid (972) (948)Capital expenditure and financialinvestmentPurchase of investments (5,067) (12,640)Sale of investments 9,152 12,455 -------- ----------Net cash inflow / (outflow) forcapital expenditure and financialinvestment 4,085 (185) --------- ---------Cash inflow before financing 4,282 237FinancingLoan Repayment (5,000) - -------- ----------Net cash outflow from financing (5,000) - --------- ---------(Decrease) / Increase in cash (718) 237 ========= ========= Notes: 1. The financial statements have been prepared under the historical costconvention, modified to include the revaluation of fixed asset investments. Theaccounts have been prepared in accordance with applicable accounting standardsand with the Statement of Recommended Practice "Financial Statements ofInvestment Trust Companies" issued in 2003. As explained in the Chairman's Statement, the company is expected to no longerqualify as an investment trust under Section 842 of the Income and CorporationTaxes Act 1988. It should not, therefore, prepare its accounts under theStatement of Recommended Practice: 'Financial Statements of Investment TrustCompanies' (SORP) or take advantage of the provisions of the Companies Act 1985(the Act) applicable to investment companies, but in accordance with the normalcompany accounting provisions of the Act. However the Company's activity has notchanged. Accordingly the Board of Directors of the Company believes that it ismore meaningful to continue to disclose the financial performance of the groupin accordance with the SORP. Under the SORP the financial performance of the Group is presented in aStatement of Total Return in which the revenue column is the profit and lossaccount of the Group. The revenue column excludes the following capital itemswhich, the Companies Act 1985 and accounting standards would ordinarily requireto be included in the profit and loss account: 28 February 29 February 2005 2004 £'000 £'000 Net profit on the disposal of investments 1,987 699Investment management fee - (3)Interest payable and other charges (581) (229)Non-equity minority interests (2,225) (2,047) Whilst other adjustments to reserves would be required in order to comply fullywith the Act, these have not been included as they would have no impact on theCompany's net asset value. The Directors consider that these exclusions are necessary for shareholders'appreciation of the results and to give a true and fair view. The exclusionshave no effect either on the total return or balance sheet totals nor do theyhave an effect on shareholders' funds or non-equity minority interests. The financial statements have been prepared on the break up basis. Under thebreak up basis, adjustments are made to reduce the balance sheet values to theirrecoverable amount, reclassify fixed assets and long-term liabilities as currentassets and liabilities and provide for further liabilities that may arise. 2. The statement of total return (incorporating the revenue account), balancesheet and cashflow statement set out above do not represent full accounts inaccordance with Section 240 of the Companies act 1985. The statutory accountsfor the year to 29 February 2004 have been filed with the Registrar of Companiesand contained an unqualified audit report and did not contain statements underSection 237 (2) or (3) of the Company's Act 1985. The financial statements forthe year to 28 February 2005 will be delivered to the Registrar of Companiesfollowing the Company's Annual General Meeting which will be held at theCompany's registered office on 26 May 2005. 3. Investment management fees and loan finance costs have been allocated asfollows: From 1 March 2002 to 14 May 2002: 75% to capital 25% to revenueFrom 15 May 2002 to 28 February 2005: 25% to capital 75% to revenue 4. The Group accounts include the consolidation of Britannic Global IncomeSecurities PLC. Copies of the Annual Report will be posted to shareholders on 4 May 2005 andwill be available to the public at Britannic Investment Managers Limited,Britannic Court, 50 Bothwell St, Glasgow G2 6HR. For further information contact: Britannic Asset Management Press Office (Press Enquiries) 0141-222-8226 Announcement Ends This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BTG