RNS Number:0966O
US Growth & Income Fund Ld
29 July 2003
Principal objective
The Company's principal investment objective was to provide a high level of
income payable quarterly from investment in split capital investment trusts and
other closed-end funds, as well as the potential for capital appreciation from
investment in US growth companies. The Board considers that this objective is no
longer appropriate. As described in the Chairman's Statement and in note 1 to
the financial statements, the Board considers that whilst the Company has
sufficient liquid assets to meet its liabilities for the foreseeable future, the
ongoing expenses of the Company exceed its forecast revenue. Accordingly, the
Directors have concluded that it is in the best interest of the Company and its
shareholders to propose that the Company be placed in voluntary liquidation.
Financial highlights
As at 30 April 2003 As at 30 April 2002
pence #'000 pence #'000
per share per share
Capital
Total assets 501 51,519
Total liabilities (464) (41,574)
Net assets 37 9,945
IAS 39 adjustments 111 3,485
Adjustments to prepare financial statements on a 20 -
break up basis
Net assets excluding IAS 39 and break up basis 168 13,430
adjustments
Net asset value per ordinary share
excluding IAS 39 and break up basis adjustments 0.28p 22.39p
after IAS 39 adjustments 0.10p 16.58p
after break up basis adjustments* 0.06p 16.58p
Mid market price per ordinary share 0.76p 10.00p
Revenue
Net (loss) for the period (6) (8,797)
Basic and diluted (loss) per ordinary share (0.01)p (14.66)p
Distributable return per ordinary share 0.14p 2.21p
Total dividends per ordinary share 0.00p 1.50p
*The above net asset value per ordinary share is reconciled to the published net
asset value reported to the London Stock Exchange on 8 May 2003 in note 10 to
the financial statements.
Chairman's statement
Based on mid market prices, the total assets of the company at 30 April 2003
were #0.597 million. This compares with #2.040 million at 30 October 2002. On
bid prices, the total assets have fallen from #1.579 million to #0.486 million,
whilst on a break up basis, total assets were #0.501 million. The amount owed
to Bank of Scotland was #0.418 million at 30 April 2003 with #1.082 million
having been repaid during the period.
Following the disposal of the US equity portfolio last July, the Company's
assets consisted of the Income Portfolio being a number of split capital
investment trusts. During recent months sentiment within the split capital
investment trust sector has remained poor. Generally, the market for these types
of investment has remained very illiquid, although some of the more distressed
stocks have seen stake building by arbitrageurs.
Dividends from trusts have in many cases been severely reduced or suspended
altogether as income generating assets have had to be sold to pay down bank
debt, and the allocation of expenses has been shifted from capital towards
revenue.
Despite the general illiquidity, the Investment Manager has taken the
opportunity to sell a number of the holdings. Cash raised has been applied to
pay down bank debt, which left the outstanding bank loan at #0.418 million at 30
April 2003. Following further disposals, including the take over of the
dominant holding, on 9 June 2003 it was announced that the Company had repaid
all outstanding bank debt.
Whilst the Company has sufficient liquid assets to meet its liabilities for the
foreseeable future, the ongoing expenses of the Company exceed its forecast
revenue. This will result in a gradual erosion of the remaining asset value.
Accordingly, the Directors have concluded that it is in the best interests of
the Company and its Shareholders to propose that the Company be placed into
voluntary liquidation. The Directors had requested that the Investment Manager
sell the remainder of the realisable securities in the portfolio and this was
completed on 18 July 2003.
The estimated net asset value of the Company as at 18 July 2003 was
approximately #45,000 and the estimated Net Asset Value per Ordinary Share at
this date was 0.075p. If the proposals are passed, it is hoped that, after the
costs of liquidation have been met, there will be sufficient assets available
for the liquidator to make a small payment to shareholders, but this is unlikely
to exceed 0.06p per Ordinary Share.
Consequently, the financial statements for the half-year ended 30 April 2003
have not been prepared on a "going concern" basis. The Company's investments
have been valued at their net realisable values and provision has been made for
the estimated costs of winding up the Company, including net operating costs up
to the date of the Extraordinary General Meeting to approve the resolution to
place the Company into voluntary liquidation.
A notice convening an Extraordinary General Meeting at which shareholders will
be asked to approve the Company's voluntary liquidation, will be issued with the
Interim Report for the half year ended 30 April 2003 which will be sent to
shareholders shortly.
Francis John Roper
Chairman
29 July 2003.
Statement of operations of the Company
for the period 1 November 2002 to 30 April 2003
1 November 2002 1 November 2001
to to
30 April 2003 30 April 2002
Notes #'000 #'000
Income 2
Dividends 85 1,257
Bank interest 1 72
Total income 86 1,329
Expenses 2
Management fee (8) (289)
Interest payable (37) (1,429)
Custodian and safekeeping fees (5) (10)
Administration fees (30) (33)
Liquidator's fee (10) (7)
Directors' fees (5) (16)
Miscellaneous expenses (30) (49)
Total expenses (125) (1,833)
Net loss before investment result (39) (504)
Net realised and unrealised losses on foreign (2) (212)
exchange
Net realised (losses)/gains on investments (9,147) 1,492
Movement in unrealised appreciation/ 9,182 (9,573)
(depreciation) on investments
Net profit/(loss) for the period (6) (8,797)
Basic and diluted (loss) per ordinary share 4 (0.01)p (14.66)p
The accompanying notes are an integral part of the financial statements.
Balance sheet
as at 30 April 2003
30 April 2003 30 April 2002
Notes #'000 #'000
Assets
Non-current assets
Available-for-sale investments 473 35,642
Current assets
Cash and cash equivalents 14 13,895
Debtors 14 1,982
Total assets 501 51,519
Liabilities
Current liabilities
Creditors (46) (116)
Bank loan 5 (418) -
Non-current liabilities
Bank loan 5 - (40,000)
Interest rate swap liability - (1,458)
Total liabilities (464) (41,574)
Net assets 37 9,945
Represented by:
Share capital 6 15,000 15,000
Share premium 7 42,750 42,750
Reserves 7 (57,713) (47,805)
Issued capital and reserves 37 9,945
Equivalent to a net asset value per share 0.06p 16.58p
outstanding of:
8
Shares outstanding at 30 April: 60,000,000 60,000,000
The accompanying notes are an integral part of the financial statements.
Statement of changes in equity
for the period 1 November 2002 to 30 April 2003
1 November 2002 1 November 2001
to to
30 April 2003 30 April 2002
Notes #'000 #'000
Net (loss) for the period (6) (8,797)
Dividends paid 3 - (2,175)
(6) (10,972)
Movement in hedge reserve
Movement in unrealised loss on cash flow hedge - 2,738
Equity at the beginning of the period 43 24,790
Investments revalued from mid to bid at 1 November - (2,415)
2001
Fair value of interest rate swap at 1 November 2001 - (4,196)
Equity at the end of the period 37 9,945
The accompanying notes are an integral part of the financial statements.
Cash flow statement
for the period 1 November 2002 to 30 April 2003
1 November 2002 1 November 2001
to to
30 April 2003 30 April 2002
Notes #'000 #'000
Operating activities
Dividends received 83 1,681
Interest received 1 72
Operating expense payments (77) (413)
Interest paid (37) (1,430)
Net cash outflow from operating activities 9 (30) (90)
Investing activities
Purchase of investments (788) (42,852)
Sale of investments 1,878 51,185
Net cash inflow from investing activities 1,090 8,333
Financing
Dividends paid - (2,175)
Repayment of bank loan (1,082) -
Net cash outflow from financing activities (1,082) (2,175)
(Decrease)/increase in cash and cash equivalents (22) 6,068
The accompanying notes are an integral part of the financial statements.
Notes to the financial statements
1. Going Concern
Whilst the Company has sufficient liquid assets to meet its liabilities for the
foreseeable future, the ongoing expenses of the Company exceed its forecast
revenue. As this will result in a gradual erosion of the remaining asset value
the Directors have concluded that it is in the best interests of the Company and
its shareholders to propose that the Company be placed into voluntary
liquidation.
The Company's entire investment portfolio was sold by 18 July 2003 and the
remaining bank loan was repaid on 6 June 2003.
The financial statements have been prepared on a break up basis. Accordingly the
Company's investments have been valued at their net realisable value and
provision has been made for the remaining estimated net operating costs and the
estimated costs of winding up the Company.
2. Accounting Policies
a) Basis of preparation
The financial statements of the Company have been prepared in conformity with
International Accounting Standards (IAS) and applicable requirements of Guernsey
law. The financial statements have been prepared on an historical cost basis
except for the measurement at fair value of derivatives and available-for-sale
investments.
b) Income
Dividends receivable on quoted equity shares are taken into account on the
ex-dividend date. Other investment income and interest receivable are included
in the financial statements on an accruals basis. Dividends received from UK
registered companies are accounted for net of imputed tax credits. No
withholding tax is payable on Channel Island registered companies.
c) Expenses
All expenses are accounted for on an accruals basis. The Company's investment
management and administration fees, finance costs (including interest on the
Bank Facility) and all other expenses are charged through the statement of
operations.
Provision has been made for the remaining estimated net operating costs and the
estimated costs of winding up the Company.
d) Taxation
The Company has obtained exempt company status in Guernsey under the terms of
the Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 so that the Company is
exempt from taxation on income arising outside Guernsey and bank interest
receivable in Guernsey. The Company is therefore only liable to a fixed fee of
#600 per annum.
e) Formation expenses
The formation expenses, which represent the costs associated with the issuance
of the ordinary shares, amounted to #2,250,000. These expenses were written off
in full in the period ending 31 October 2001 against share premium.
Notes to the financial statements (continued)
f) Foreign currency translation
Transactions denominated in foreign currencies are translated into
Sterling at the rate of exchange ruling on the date of the transaction. Foreign
currency assets and liabilities are translated into Sterling at the rate ruling
on the balance sheet date. Gains and losses arising on revaluation of foreign
currency assets and liabilities are recorded in the statement of operations.
g) Cash and cash equivalents
Cash on hand and in banks and short term deposits which are held to maturity are
carried at cost. Cash and cash equivalents are defined as cash on hand, demand
deposits and short term highly liquid investments readily convertible to known
amounts of cash and subject to insignificant risk of changes in value.
For the purpose of the cash flow statement, cash and cash equivalents consist of
cash on hand and deposits in banks.
h) Trade date accounting
All 'regular way' purchases and sales of financial assets are recognised on the
'trade date', ie, the day that the entity commits to purchase or sell the asset.
Regular way purchases or sales are purchases or sales of financial assets that
require delivery of the asset within the time frame generally established by
regulation or convention in the market place.
i) Investments
All investments are classified as 'available-for-sale'. Investments are
initially recognised at cost, being the fair value of the consideration given,
including transaction costs associated with the investment.
After initial recognition, investments are measured at fair value, with
unrealised gains and losses on investments and impairment of investments
recognised in the statement of operations. Realised gains and losses on
investments sold are calculated as the difference between sales proceeds and
cost, or if previously re-valued, the valuation as at the last balance sheet
date.
For investments actively traded in organised financial markets, fair value is
generally determined by reference to Stock Exchange quoted market bid prices at
close of business on the year end date without adjustment for transaction costs
necessary to realise the asset. For investments held at 30 April 2003 fair value
has been determined by reference to the net realisable value obtained on the
disposal of those investments after the balance sheet date.
j) Loans and borrowings
All loans and borrowings are initially recognised at cost, being the fair value
of the consideration received, less issue costs where applicable. After initial
recognition, all interest bearing loans and borrowings are subsequently measured
at amortised cost. Amortised cost is calculated by taking into account any
discount or premium on settlement.
k) Derivative financial instruments
The Company used a derivative financial instrument, an interest rate swap, to
hedge its risks associated primarily with interest rate fluctuations. The
interest rate swap was classified as a cash flow hedge because it hedged
exposure to variability in cash flows attributable to the bank loan. The loss on
this hedging instrument was recognised directly in equity through the statement
of changes in equity, however, as this hedged transaction is no longer expected
to occur, the cumulative loss recognised in equity has been transferred to the
statement of operations. It is the Company's policy not to trade in derivative
financial instruments.
Fair value of derivatives
The fair value of the interest rate swap contract used was the present value of
the future interest cash flows.
l) Segmental reporting
The Directors are of the opinion that the Company is engaged in a single segment
of business, being investment business.
Notes to the financial statements (continued)
3. Reserves and distributions
Under the terms of the Company's Articles of Association distributions can be
made up to the total of accumulated gross income received. The distributable
return for the period ending 30 April 2003 was #86,466 (0.14 pence per share).
No distributions have been paid or declared. The retained amount of #86,466 has
been included in reserves.
4. Basic and diluted (loss) per ordinary share
1 November 2002 1 November 2001
to to
30 April 2003 30 April 2002
pence pence
(Loss) per ordinary share (0.01) (14.66)
The basic and diluted loss per ordinary share is based on a net loss of #6,171
(2002: a net loss of #8,797,986) and on 60,000,000 (2002: 60,000,000) ordinary
shares, being the weighted average number of ordinary shares in issue during the
period.
5. Bank loan
#'000
Floating rate loan 2008:
Balance at 1 November 2001 40,000
Repayment of bank loan on 7 June 2002 (20,000)
Repayment of bank loan on 18 July 2002 (18,349)
Repayment of bank loan on 25 October 2002 (151)
Repayment of bank loan on 17 April 2003 (1,000)
Repayment of bank loan on 28 April 2003 (82)
Balance at 30 April 2003 418
On 6 June 2003, the Company repaid the bank loan in full.
6. Share capital
30 April 2003 30 April 2002
#'000 #'000
Authorised
100,000,000 ordinary shares of 25p each 25,000 25,000
Allotted, issued and fully paid
60,000,000 ordinary shares of 25p each 15,000 15,000
Notes to the financial statements (continued)
7. Share premium and reserves
Share
Premium Reserves
#'000 #'000
Balance as at 1 November 2002 42,750 (57,707)
Net (loss) for the period - (6)
Balance as at 30 April 2003 42,750 (57,713)
8. Net asset value per share
30 April 2003 30 April 2002
Pence Pence
Net asset value per
ordinary share 0.06 16.58
The net asset value per ordinary share is based on the net assets attributable
to equity shareholders of #36,442 (2002:#9,945,011) and on 60,000,000
(2002:60,000,000) ordinary shares in issue at the balance sheet date.
9. Reconciliation of net cash outflow from operating activities
1 November 2002 1 November 2001
to to
30 April 2003 30 April 2002
#'000 #'000
Net loss before investment result (39) (504)
(Increase)/decrease in interest and dividends receivable (3) 424
Decrease in other debtors 2 1
Increase/(decrease) in other creditors and accruals 10 (11)
Net cash outflow from operating activities (30) (90)
Notes to the financial statements (continued)
10. Reconciliation of net asset value to published net asset value
Per share
#'000 pence
Published net asset value 168 0.28
Valuation of investments at bid prices (a) (111) (0.18)
Adjustment to value investments at net realisable 1 0.00
value
Provision for remaining net estimated running (21) (0.04)
costs and costs of winding up the Company
Net asset value per financial statements 37 0.06
a) In accordance with International Accounting Standards (IAS39),
investments have been valued at Stock Exchange quoted bid prices at the close of
business on the balance sheet date. However, in accordance with general business
practice, the net asset value reported each month reflects these investments
valued at Stock Exchange quoted mid prices.
Company portfolio
As at 30 April 2003
Holding Net
realisable
value
#
Income portfolio
Property Income & Growth Ordinary Shares* 2,860,000 471,900
Exeter Smaller Companies Income Fund 1,800,200 180
Edinburgh Leveraged Income Trust Ordinary Shares 1,600,000 160
Edinburgh Leveraged Income Trust Conv Income Shares 325,000 33
Exeter Selective Assets Inv Trust Dividend Growth Shares 4,000 40
Quarterly High Income Trust 1,825,000 182
St Davids Investment Trust Ordinary Shares 1,600,000 160
Technology & Income Trust Conv Income Shares 8,209 1
Technology & Income Trust New Ordinary Shares 8,209 1
Aberdeen High Income Trust
(In Administrative receivership) 1,000,000 - ** Suspended 18/07/02
Aberdeen Preferred Income Stepped
(In Administrative receivership) 750,000 - ** Suspended 24/09/02
Aberdeen Preferred Income Trust
(In Administrative receivership) 1,000,000 - ** Suspended 24/09/02
BC Income & Growth Fund*
(In Insolvent liquidation) 2,000,000 - ** Suspended 05/07/02
Britannic Global Income Trust 1,200,000 - ** Suspended 25/07/02
Exeter Enhanced Income Fund
(In Insolvent liquidation) 1,500,000 - ** Suspended 06/08/02
Exeter Enhanced Redeemable Pref Shares
(In Insolvent liquidation) 750,000 - ** Suspended 06/08/02
Geared Income Investment Trust Income Shares
(In Administrative receivership) 4,425,000 - ** Suspended 15/07/02
Geared Income Investment Trust Ordinary Shares
(In Administrative receivership) 4,050,000 - ** Suspended 15/07/02
LeggMason Income & Growth Trust 2,000,000 - ** Suspended 08/10/02
LeggMason Investors Strategic Assets Trust Ordinary Shares (In
Insolvent liquidation)
2,500,000 - ** Suspended 19/09/02
Leveraged Income Fund
(In Insolvent liquidation) 2,500,000 - ** Suspended 17/07/02
Yeoman Investment Trust Units* 500,000 - ** Suspended 29/07/02
Total Investments 472,657
*These investments are advised by or managed by BC Asset Management Limited.
**These shares were suspended from the Official List of the UK Listing Authority
and ceased to trade on the London Stock Exchange on the dates mentioned.
Directors:
Francis John Roper (Chairman)
David Edward Peter Mashiter
George Thomas Yoxall
Manager and Investment Adviser:
BC Asset Management Limited
BC House, Ling Road
Poole, Dorset BH12 4NZ
Administrator, Registrar, Secretary and Registered Office:
Close Fund Services Limited
Trafalgar Court, Admiral Park
St Peter Port, Guernsey GY1 2JA
Channel Islands
Principal Banker:
The Governor and Company of the Bank of Scotland
The Mound
Edinburgh EH1 1YZ
Broker:
Hoare Govett Limited
250 Bishopsgate,
London EC2M 4AA
Auditors:
Ernst & Young LLP
14 New Street, St Peter Port
Guernsey GY1 4AF
Channel Islands
Custody Agent:
Close Bank Guernsey Limited
Trafalgar Court, Admiral Park
St Peter Port, Guernsey GY1 3EZ
Channel Islands
Legal Advisers in Guernsey:
Ozannes
1 Le Marchant Street, St Peter Port
Guernsey GY1 4HP
Channel Islands
Legal Advisers in England:
Stephenson Harwood
One, St Paul's Churchyard
London EC4M 8SH
Website address:
www.bcam.co.uk
US Growth & Income Fund Limited
Registered in Guernsey No. 37368
This information is provided by RNS
The company news service from the London Stock Exchange
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