Final Results
August 16 2002 - 7:38AM
UK Regulatory
RNS Number:0706A
Australian Opp Inv Tst PLC
16 August 2002
AUSTRALIAN OPPORTUNITIES INVESTMENT TRUST PLC
Preliminary Results for the year ended 31 May 2002
Highlights -
* Fully diluted NAV up 37% from 68.7 pence to 94.3 pence.
* Dividend, interest and other income increased by 23%.
* Proposed dividend increase from 0.40 pence to 1.60 pence.
* Proposed change in investment objectives to invest in convertible
securities worldwide.
* Proposed change in name to Stocks Convertible Trust PLC.
* Post balance sheet event -
Company's two largest holdings comprising over 50% of total assets propose to
merge, bringing large cost savings, which should benefit their share prices.
Chairman's Statement
In the year to 31 May 2002 the fully diluted net asset value (NAV) rose by 37.3% to 94.3 pence
compared with a rise of
8.9% in the sterling adjusted Australian Small Capitalisation Index, the Company's benchmark, which
is a most pleasing
performance, particularly in a year when the majority of world stockmarkets fell. Over the same
period the Australian
dollar strengthened by 7.8% from A$2.8026 to A$2.5849 and the New Zealand dollar strengthened by
12.1% from NZ$3.4763
to NZ$3.0549.
Dividend, interest and other income rose over the period by 22.8% from #753,000 to #925,000, largely
due to the payment
of a special dividend by Trust Company of Australia, while total expenses remained unchanged at
#307,000. As a result
the return per share rose from 0.5 pence to 2.3 pence. The Directors therefore propose a net
dividend of 1.60 pence per
share, compared with 0.40 pence the previous year.
The Australian economy grew strongly by 4.2% in the year to March 2002, compared with the OECD
average of 0.4% in
calendar 2001, driven primarily by domestic consumption and to a lesser extent by inventory
accumulation and capital
investment. However, the balance of payments current account deficit deteriorated from A$4.7 billion
to A$5.5 billion
(2.7% of GDP) in the March 2002 quarter as demand for Australian commodity exports weakened. The
annual rate of
inflation fell from 5.9% to 2.9% as the initial impact of the introduction of the Goods and Services
Tax dropped out of
the figures. The Reserve Bank has recently raised interest rates twice in steps of 0.25% to 4.75% to
restrain the
strength of domestic demand. Looking ahead it is expected that economic growth will settle at around
3.5%. The New
Zealand economy has also performed well growing by 2.9% in the year to March, again largely
supported by domestic
consumption. However, the balance of payments current account deficit continued to improve from
around 8% of GDP in
early 2000 to 3.2% currently. The Reserve Bank has recently lifted short term interest rates by
0.75% to 5.5% to steady
domestic demand.
In contrast to most other world markets the Australian stockmarket as measured by the All Ordinaries
Index traded
within a narrow range of 3200 and 3400 and ended the Company's financial year virtually unchanged at
3325 (+0.2%). The
Small Capitalisation Index, the Company's benchmark, was more volatile with highs and lows of 1432
and 1809, but it
also ended the period virtually unchanged at 1708 (+0.5%). The New Zealand 40 Capital Index recorded
highs and lows of
1764 and 2150, ending the period at 2139, a rise of 5.5%. Since the end of the Company's financial
year major world
stock markets have fallen by around 15%, whereas the Australian market has only declined by about
9%. However, the
currency has been far more volatile. The Australian dollar, having strengthened by nearly 8% against
sterling up to the
end of May 2002, has now weakened in sympathy with the US dollar by over 10% from A$ 2.5849 to
A$2.8896, which is below
the level at which it stood at the end of May 2001.
Over six years ago the Company's investment policy was re-directed to Australia, focusing
particularly on investment
companies, financial service companies and to a lesser extent small industrial companies. Since then
the Company has
participated in the restructuring or liquidation of a number of investment companies and more
recently in the merger of
Permanent Trustee Company and Trust Company of Australia, the Company's two largest investments.
With the reduction of
opportunities in the original investment remit, the investment policy of the Company has been
gradually widened first
by including New Zealand, then by allowing up to 10% of its assets to be invested in special
situations worldwide and
subsequently at the last Annual General Meeting by increasing this percentage to 25% with an
emphasis on convertible
securities. Opportunities within the original investment remit have continued to decline as is
evidenced by the rise in
liquidity, which at the end of the Company's financial year stood at 8% of total assets, compared
with net borrowing,
excluding the convertible loan stock, of nearly 10% at the end of the previous year. Liquidity will
now rise
substantially further with the merger of the Company's two largest investments.
The Directors therefore consider that it would be appropriate for a new investment objective now to
be adopted. The
turmoil in world equity and to a lesser extent in world corporate bond markets has created
opportunities in the
convertible bond market, where securities are frequently mispriced, with the equity element of the
convertible being
attributed no value while the equity shares carry a market price. It is therefore proposed that the
Company's
investment objective be revised in order to recognise the aim to create the potential for dividend
yield as well as
long term capital appreciation by concentrating on investment in convertible securities anywhere in
the world. It is
also proposed that the name of the Company be changed to Stocks Convertible Trust PLC to reflect
this change in policy.
Resolutions to this effect will be included in the business of the Annual General Meeting.
A F Bushell
Chairman
15 August 2002
Financial Highlights
31 May 2002 31 May 2001 % Change
Fully-diluted consolidated net
asset value per ordinary share (A$) 2.4376 1.9282 26.41
Sterling/Australian $ - Exchange Rate 2.5849 2.8026 7.77
Fully-diluted consolidated net
asset value per ordinary share (pence) 94.3 68.7 37.26
Share price per ordinary share (pence) 58.50 49.50 18.18
Consolidated Statement of Total Return incorporating the revenue account
for the year ended 31 May 2002
2002 2001
Revenue * Capital Total Revenue Capital
Total
#'000 #'000 #'000 #'000 #'000
#'000
Gains on investments - 4,234 4,234 - 295
295
Exchange differences - 81 81 - 164
164
Trading loss of subsidiary (15) - (15) (273) -
(273)
Income 925 - 925 753 -
753
Investment management fee (61) (100) (161) (63) -
(63)
Other expenses (246) (109) (355) (244) (6)
(250)
Net return before
finance costs and taxation 603 4,106 4,709 173 453
626
Interest payable and similar
charges (283) - (283) (362) -
(362)
Return/(deficit) on ordinary
activities before tax 320 4,106 4,426 (189) 453
264
Tax on ordinary activities (58) 32 (26) (20) -
(20)
Return/(deficit) on ordinary
activities after tax for the
financial year 262 4,138 4,400 (209) 453
244
Dividends in respect of equity
shares (192) - (192) (56) -
(56)
Transfer to / (from) reserves 70 4,138 4,208 (265) 453
188
Return / (loss) per
ordinary share:
Basic 2.1p 33.4p 35.5p (1.5p) 3.3p
1.8p
Diluted 2.2p 22.2p 24.4p (0.3p) 2.3p
2.0p
All revenue and capital items in the above statement derive from continuing
operations.
* The revenue account in this statement represents the profit and loss account
of the Group for the financial year.
Consolidated Balance Sheet as at 31 May 2002
2002 2001
#'000 #'000 #'000 #'000
Fixed assets
Investments 15,812 15,241
Current assets
Debtors 766 469
Investments 2 17
Cash at bank and short-term deposits 1,177 27
1,945 513
Creditors: amounts falling due within (567) (1,866)
one year
Net current assets / (liabilities) 1,378 (1,353)
Total assets less current liabilities 17,190 13,888
Creditors: amounts falling due after
more than one year
Convertible loan stock (6,127) (6,114)
11,063 7,774
Capital and reserves
Called up share capital 3,003 3,503
Share premium account 2,516 2,515
5,519 6,018
Capital reserve - realised 7,513 7,747
Capital reserve - unrealised (826) (4,278)
Capital redemption reserve 500 -
Revenue reserve (1,643) (1,713)
Equity shareholders' funds 11,063 7,774
Net asset value per share:
Ordinary
- Basic 92.1p 55.5p
- Fully-diluted 94.3p 68.7p
Consolidated Cash Flow Statement for the year ended 31 May 2002
2002 2001
#'000 #'000 #'000 #'000
Net cash inflow from operating
activities 683 344
Returns on investments and servicing
of finance (335) (311)
Taxation (32) (22)
Financial investment 3,318 1,581
3,634 1,592
Equity dividends paid (56) (315)
3,578 1,277
Financing (2,371) (1,327)
Increase / (decrease) in cash 1,207 (50)
Reconciliation of net cash flow to
movement in net debt
Increase / (decrease) in cash in the year 1,207 (50)
Cash outflow from movement in debt 1,451 1,327
Change in net debt resulting from
cash flows 2,658 1,277
Exchange movements 81 164
Other non-cash flow movements (13) (11)
Opening net debt (7,676) (9,106)
Closing net debt (4,950) (7,676)
Notes
The statutory accounts for the year ended 31 May 2002 will be finalised on the
basis of the financial information presented by the Directors in this
preliminary announcement and will be delivered to the Registrar of Companies
following the Company's Annual General Meeting. Copies will be sent to
shareholders shortly and will also be available for collection from the
Company's Registered Office at 77A High Street, Brentwood, Essex CM14 4RR.
The above results at 31 May 2001 are an abridged version of the Company's full
accounts which received an audit report that was unqualified and did not contain
statements under S237(2) or (3) of the Companies Act 1985 and which have been
filed with the Registrar of Companies.
The calculation of the basic Revenue Return per ordinary share of 25 pence each
is based on net revenue on ordinary activities after taxation of #262,000 (2001:
deficit #209,000) divided by 12,410,679 ordinary shares (2001: 14,009,693) being
the weighted average number of ordinary shares in issue during the year.
The calculation of the basic Capital Return per ordinary share of 25 pence each
is based on the net capital profit for the financial year of #4,138,000 (2001:
profit #453,000) divided by 12,410,679 ordinary shares (2001: 14,009,693) being
the weighted average number of ordinary shares in issue during the year.
The Diluted Returns per ordinary share of 25 pence each have been calculated on
the assumption that the Convertible Subordinated Unsecured Loan Stock 2007 was
fully converted on the first day of the financial year, giving a weighted
average of 18,629,506 ordinary shares (2001: 20,229,506) and based on net
revenue on ordinary activities after taxation of #414,000 (2001: deficit
#58,000) and net capital profit of #4,138,000 (2001: profit #453,000). The
anti-dilutive Revenue Return of 2.2p (2001: anti-dilutive (0.3p)) includes the
savings of finance costs on the loan stock.
The Directors have proposed the payment of a final dividend of 1.60p (2001:
0.40p) per ordinary share payable on 14 October 2002 to shareholders registered
on 30 August 2002.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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