RNS Number:7788G
Royal London UK Eqty&Income Tst PLC
31 October 2007
Royal London UK Equity & Income Trust plc (the "Company")
Unaudited Preliminary Announcement of the Final Results for the year ended
31 August 2007
Extracts from the Chairman's Statement
This is my sixth annual Chairman's Statement and I am pleased to be able to
report continued progress by your Company. These Financial Statements were
prepared in accordance with International Financial Reporting Standards as they
were for the first time last year.
During the year under review the net asset value ("NAV") per Ordinary share,
probably the best indicator of your Company's progress, has risen from 35.0p to
41.6p. Whilst your Board pays more attention to absolute, rather than relative,
performance, it is pleasing to note that, once again, Royal London Asset
Management Limited (the "Investment Manager") has succeeded in outperforming, in
total return terms, the reference composite benchmark, excluding the effects of
gearing. This outperformance is substantially enhanced when the Company's high
level of gearing is taken into account. I should like, on your behalf, to
congratulate the Investment Manager on another successful outcome in what has
been a difficult and volatile year in securities markets, particularly in the
bond markets.
I should also like to draw shareholders' attention to the fact that, for the
first time in the Company's life, your Investment Manager has made extensive use
of derivative strategies. I am pleased to say that, so far, implementation of
these strategies has been beneficial, both in terms of providing income from
premia received and providing a partial protection of capital against market
falls. The capital structure of the Group has remained unchanged during the year
under review. With borrowings of #50 million, the Company's loan to value ratio
at the year end stood at 40.1%, which was, once again, a modest improvement on
the previous year (2006: 43.4%).
As anticipated in my Interim Statement the full year's revenue covered the
Annuity dividend adequately and, thanks in part to the successful derivatives
strategy pursued, the Board has been able to approve a special dividend of 0.75p
per Ordinary share. This dividend will be paid on 7 December 2007 to Ordinary
shareholders on the Company's register of members at the close of business on 9
November 2007.
As at 31 August 2007 the breakdown of the Group's assets was as follows:
Market Value Market Value
Asset Allocation Asset Exposure
#'000 % #'000 %
Growth Portfolio 87,084 70.4 76,979 62.3
Bond Portfolio 25,907 21.0 25,907 21.0
Income Portfolio 6,088 4.9 6,088 4.9
Total Portfolio 119,079 96.3 108,974 88.2
Cash (net current assets) 4,534 3.7 14,639 11.8
123,613 100.0 123,613 100.0
Shareholders will be well aware of the fact that the Zero Dividend Preference
("ZDP") shares issued by Royal London UK Equity & Income Securities plc (the
"Subsidiary") and the bank loan are both redeemable in September 2008. As per
the Company's Articles of Association, the Annuity shares have a redemption date
of 14 September 2021, whilst the Ordinary shares issued by the Company have no
fixed life; any divergence from this would require shareholder approval in a
Class Meeting. The sole Annuity shareholder has confirmed to the Board that it
expects the Company to continue in existence until the aforementioned redemption
date of its shares.
Your Board has recently appointed Landsbanki Securities (UK) Limited
("Landsbanki") (formerly Teather & Greenwood) to act as the Company's Broker.
My fellow Directors and I will be working closely with Landsbanki over the
coming year to formulate a strategy to refinance the ZDP shares and the bank
loan.
I should like to thank all those involved with the Group for their efforts
during the year. Your Board has agreed the Investment Manager's current asset
allocation and concurs with its assertion that, over the medium term, equities
should continue to outperform both bonds and cash. In the short term, however,
the current equity exposure within the Company has been reduced by the
Investment Manager until the financial and economic outlook becomes clearer.
The Company's Annual General Meeting ("AGM") will be held at the offices of the
Investment Manager at 55 Gracechurch Street, London EC3V 0UF on Wednesday, 19
December 2007 at 12 noon. Full details of the business to be conducted at the
AGM are set out in the Notice of Meeting which will be sent to shareholders.
Your Board, of course, welcome your attendance at the forthcoming AGM, not least
because it provides a forum for shareholders to put questions to the Directors
and the Investment Manager. Should you have a query that requires a detailed or
technical response, I would urge you to submit that query to the Company
Secretary in advance of the AGM to ensure that it is properly addressed.
Contact details of the Company Secretary can be found at the foot of this
announcement. For those of you who are unable to attend the meeting in person,
the Board would encourage you to submit your proxy votes by the prescribed
deadline of close of business on Monday, 17 December 2007.
Jonathan Carr
Chairman
31 October 2007
Unaudited Consolidated Income Statement
for the year ended 31 August 2007
(Unaudited) (Audited)
For the year ended For the year ended
31 August 2007 31 August 2006
Note Revenue Capital Revenue Capital
return return Total return return Total
#'000 #'000 #'000 #'000 #'000 #'000
Income from investments
held at fair value through
profit or loss 4,879 - 4,879 4,774 - 4,774
Other income 337 - 337 62 - 62
---------- ---------- ---------- ---------- ---------- ----------
Total revenue 5,216 - 5,216 4,836 - 4,836
---------- ---------- ---------- ---------- ---------- ----------
Gains on investments held
at fair value through
profit or loss - 8,331 8,331 - 12,788 12,788
Exchange losses - (6) (6) - - -
---------- ---------- ---------- ---------- ---------- ----------
Total income 5,216 8,325 13,541 4,836 12,788 17,624
---------- ---------- ---------- ---------- ---------- ----------
Expenses
Management fee (437) (656) (1,093) (409) (614) (1,023)
Provision for performance - (78) (78) - (174) (174)
fee
Other expenses (400) - (400) (434) - (434)
---------- ---------- ---------- ---------- ---------- ----------
(837) (734) (1,571) (843) (788) (1,631)
---------- ---------- ---------- ---------- ---------- ----------
Profit before finance costs
and tax 4,379 7,591 11,970 3,993 12,000 15,993
---------- ---------- ---------- ---------- ---------- ----------
Finance costs:
Interest payable (1,303) (1,954) (3,257) (1,301) (1,951) (3,252)
Annuity share
appropriations (8.50p per
share) (2,550) - (2,550) (2,550) - (2,550)
Provision for redemption of
ZDP shares in subsidiary - (1,730) (1,730) - (1,589) (1,589)
----------- ----------- ----------- ----------- ----------- -----------
(3,853) (3,684) (7,537) (3,851) (3,540) (7,391)
----------- ----------- ----------- ----------- ----------- -----------
Profit before tax 526 3,907 4,433 142 8,460 8,602
Taxation (3) - (3) (1) - (1)
----------- ----------- ----------- ----------- ----------- -----------
Net profit 523 3,907 4,430 141 8,460 8,601
=========== =========== =========== =========== =========== ===========
Articles basis:
Earnings per Ordinary share 3 0.75p 5.58p 6.33p 0.20p 12.09p 12.29p
====== ====== ====== ====== ====== ======
Earnings per Annuity share 3 8.50p - 8.50p 8.50p - 8.50p
====== ====== ====== ====== ====== ======
Earnings per ZDP share in 3
subsidiary - 13.27p 13.27p - 12.19p 12.19p
====== ====== ====== ====== ====== ======
The total column represents the Income Statement of the Group, prepared in
accordance with IFRS. The revenue and capital return columns are supplementary
to this and prepared under guidance published by the Association of Investment
Companies.
All the items in the above statement derive from continuing operations.
No operations were acquired or discontinued during the year.
Unaudited Statement of Changes in Equity
Group and Company (Unaudited)
for the year ended 31 August 2007
Ordinary Share
called up premium Other capital
share account Hedging reserves Revenue
capital reserve reserve Total
#'000 #'000 #'000 #'000 #'000 #'000
At 31 August 2006 700 72,300 (473) (48,855) 850 24,522
Net profit from ordinary - - - 3,907 523 4,430
activities after tax
Special dividend of 1.00p - - - - (700) (700)
paid to Ordinary shareholders
in respect of the year ended
31 August 2006 (note 2)
Movement in fair value of - - 867 - - 867
interest rate swap
======= ======= ======= ======= ======= ======
At 31 August 2007 700 72,300 394 (44,948) 673 29,119
======= ======= ======= ======= ======= ======
Group and Company (Audited)
for the year ended 31 August 2006
Ordinary Share
called up premium Other capital
share account Hedging reserves Revenue
capital reserve reserve Total
#'000 #'000 #'000 #'000 #'000 #'000
At 31 August 2005 700 72,300 (1,733) (57,315) 2,459 16,411
Net profit from ordinary
activities after tax - - - 8,460 141 8,601
Special dividend of 2.50p
paid to ordinary shareholders
in respect of the year ended - - - - (1,750) (1,750)
31 August 2006 (note 2)
Movement in fair value of
interest rate swap - - 1,260 - - 1,260
======= ======= ======= ======= ======= ======
At 31 August 2006 700 72,300 (473) (48,855) 850 24,522
======= ======= ======= ======= ======= ======
Unaudited Balance Sheets
at 31 August 2007
(Unaudited) (Unaudited) (Audited) (Audited)
Group Company Group Company
2007 2007 2006 2006
Note #'000 #'000 #'000 #'000
Non current assets
Listed investments
designated as held at
fair value through profit
or loss 118,429 118,429 115,637 115,637
Unlisted investments
designated as held at
fair value through profit
or loss 650 650 650 650
Subsidiary undertakings
designated as held at
fair value through profit
or loss - 50 - 283
--------------- --------------- --------------- ---------------
Total non current assets 119,079 119,129 116,287 116,570
--------------- --------------- --------------- ---------------
Current assets
Cash and cash equivalents 5,129 5,121 2,153 2,145
Other receivables 1,546 1,546 1,837 1,837
------------ ------------ ------------ ------------
6,675 6,667 3,990 3,982
------------ ------------ ------------ ------------
Total assets 125,754 125,796 120,277 120,552
------------ ------------ ------------ ------------
Current liabilities
Other payables (2,141) (2,141) (2,596) (2,596)
Total assets less current
liabilities 123,613 123,655 117,681 117,956
------------ ------------ ------------ ------------
Non current liabilities
Annuity shares (22,500) (22,500) (22,500) (22,500)
Bank loan (50,000) (50,000) (50,000) (50,000)
Interest rate swap - - (473) (473)
facility
Amounts due to subsidiary
undertakings - (21,539) - (20,042)
Zero dividend preference
shares (21,497) - (19,767) -
Provision for liabilities
and charges (497) (497) (419) (419)
-------------- -------------- -------------- --------------
(94,494) (94,536) (93,159) (93,434)
-------------- -------------- -------------- --------------
Net assets 29,119 29,119 24,522 24,522
======= ======= ======= =======
Capital and reserves
Ordinary called up share
capital 700 700 700 700
Share premium account 72,300 72,300 72,300 72,300
Hedging reserve 394 394 (473) (473)
Retained earnings:
Other capital reserves (44,948) (44,948) (48,855) (48,855)
Revenue reserve 673 673 850 850
------------- ------------- ------------- -------------
Total equity 29,119 29,119 24,522 24,522
========= ======= ========= =========
Net asset value per share
Ordinary share 5 41.60p 41.60p 35.03p 35.03p
======== ======== ======== ========
Annuity share 5 75.00p 75.00p 75.00p 75.00p
======== ======== ======== ========
ZDP share in subsidiary 5 164.87p - 151.60p -
======== ======== ======== ========
The accounts were approved by the Board of Directors and authorised for issue on
31 October 2007. They were signed on its behalf by:
Jonathan Carr
Chairman
Unaudited Group and Company Cash Flow Statement
for the year ended 31 August 2007
(Unaudited) (Audited)
2007 2006
#'000 #'000
Operating activities
Profit before tax 4,433 8,602
Add back finance costs 7,537 7,391
Gains on investments held at fair (8,325) (12,788)
value through profit or loss
Net sales of investments held at
fair value through profit or loss 5,636 3,890
Increase in receivables (117) (124)
Decrease/(increase) in amounts due 807 (218)
from brokers
(Increase)/decrease in amounts due (916) 209
to brokers
Increase in other payables 364 38
Increase in performance fee 78 174
provision
------------------ ------------------
Net cash inflow from operating
activities before interest and
taxation 9,497 7,174
Interest paid (3,257) (3,237)
Annuity dividends paid (2,550) (2,550)
Tax deducted from overseas income (8) (4)
------------------ ------------------
Net cash inflow from operating 3,682 1,383
activities
Financing activities
Equity dividends paid (700) (1,750)
------------------ ------------------
Net cash outflow from financing (1,750)
activities (700) ------------------
------------------
Increase/(decrease) in cash and 2,982 (367)
cash equivalents
========== ==========
Group Company Group Company
2007 2007 2006 2006
#'000 #'000 #'000 #'000
Reconciliation of net cash flow to
movements in net debt
Increase/(decrease) in cash and 2,982 2,982 (367) (367)
cash equivalents as above
Cash and cash equivalents at the 2,153 2,145 2,520 2,512
start of the year
Effect of foreign exchange rate (6) (6) - -
changes
----------------- -------------- ---------------- -------------
Cash and cash equivalents at the 5,129 5,121 2,153 2,145
end of the year
========== ======== ========== ========
Unaudited Notes to the Accounts
for the year ended 31 August 2007
1. Accounting Policies
The financial statements have been prepared on the basis of the accounting
policies set out in the Group's financial statements for the year ended 31
August 2006.
2. Dividends
Year ended Year ended
31 August 2007 31 August 2006
#'000 #'000
Amounts recognised as distributions to equity holders in the
year:
Special dividend of 1.00p per share for the year ended 31
August 2006 paid December 2006 (2006: 2.50p) 700 1,750
=========== ===========
A special dividend of 0.75p will be paid on 7 December 2007 to Ordinary
shareholders on the register on 9 November 2007. The ex dividend date will be
the 7 November 2007.
No provision has been made for the special dividend in these accounts as under
IFRS, dividends are not recognised until paid to shareholders.
The total dividends payable in respect of the financial year which form the
basis of Section 842 of the Income and Corporation Taxes Act 1988 are set out
below:
31 August 2007
#'000
Revenue available for distribution by way of dividends for the year 523
Special dividend for the year ended 31 August 2007 - 0.75p (based on 70,000,000
Ordinary shares in issue at 31 October 2007) (525)
---------------
Prior year reserves distributed (2)
=========
All current year revenue after taxation has been distributed.
3. Earnings per share
Year ended 31 August 2007 Year ended 31 August 2006
Revenue Capital Revenue Capital
return return Total return return Total
#'000 #'000 #'000 #'000 #'000 #'000
Earnings per Ordinary share are
based on the following figures:
Ordinary share 523 3,907 4,430 141 8,460 8,601
----------- ----------- ----------- ----------- ----------- ---------
Annuity share 2,550 - 2,550 2,550 - 2,550
----------- ----------- ----------- ----------- ----------- ---------
ZDP share in subsidiary - 1,730 1,730 - 1,589 1,589
----------- ----------- ----------- ----------- ----------- ---------
The weighted average number of shares are: Ordinary shares 70,000,000 (2006:
70,000,000); Annuity shares 30,000,000 (2006: 30,000,000); and ZDP shares in
subsidiary 13,039,100 (2006: 13,039,100).
Year ended 31 August 2007 Year ended 31 August 2006
Revenue Capital Total Revenue Capital Total
Pence Pence Pence per Pence Pence Pence
per share per share share per share per share per share
Ordinary share 0.75p 5.58p 6.33p 0.20p 12.09p 12.29p
----------- ----------- ----------- ----------- ----------- ---------
Annuity share 8.50p - 8.50p 8.50p - 8.50p
----------- ----------- ----------- ----------- ----------- ---------
ZDP share in subsidiary - 13.27p 13.27p - 12.19p 12.19p
----------- ----------- ----------- ----------- ----------- ---------
4. Total Income
(a) Investment Income
Revenue return Revenue return
2007 2006
#'000 #'000
Franked
Dividends - listed 3,560 3,430
Dividends - special - 97
Unfranked
Dividends - listed 336 273
Interest - listed 983 974
------------- -------------
4,879 4,774
======== ========
(b) Other Income
Revenue return Revenue return
2007 2006
#'000 #'000
Deposit interest 105 57
Option premium income 232 -
Other income - 5
------------ ------------
337 62
======= =======
5. Net asset value per Ordinary share
Net asset value per Ordinary share is calculated in accordance with the Articles
of Association and is based on net assets attributable to Ordinary shares of
#29,119,000 on 31 August 2007 (2006: #24,522,000) and 70,000,000 (2006:
70,000,000) Ordinary shares in issue. There is no difference between this
calculation on an articles basis and the figures in these financial statements.
At 31 August 2007 At 31 August 2006
#'000 #'000
Net assets attributable to Ordinary shareholders at start of year 24,522 16,411
Total net gain on ordinary activities after taxation for the year 4,430 8,601
Special dividend paid to Ordinary shareholders (700) (1,750)
Movement in fair value of swap 867 1,260
------------ ------------
Net assets attributable to Ordinary shareholders at end of year 29,119 24,522
======= =======
Net asset value per Annuity share
Net asset value per Annuity share on an Articles basis is calculated in
accordance with the Articles of Association and is based on net assets
attributable to Annuity shares of 22,500,000 (2006: 22,500,000), and on
30,000,000 (2006: 30,000,000) Annuity shares in issue. There is no difference
between this calculation on an articles basis and the figures in these financial
statements.
At 31 August 2007 At 31 August 2006
#'000 #'000
Net assets attributable to Annuity shareholders at start of year 22,500 22,500
Current year annuity dividends payable (2,550) (2,550)
Dividend attributable to Annuity shareholders 2,550 2,550
------------ ------------
Net assets attributable to Annuity shareholders at end of year 22,500 22,500
======= =======
Net asset value per ZDP share in the subsidiary
Net asset value per ZDP share is calculated in accordance with the Articles of
Association and is based on net assets attributable to ZDP shares of #21,497,000
on 31 August 2007 (2006: #19,767,000) and 13,039,100 (2006: 13,039,100) ZDP
shares in issue.
At 31 August 2007 At 31 August 2006
#'000 #'000
Net assets attributable to ZDP shareholders at start of year 19,767 18,178
Capital return for the year 1,730 1,589
------------ ------------
Net assets attributable to ZDP shareholders at end of year 21,497 19,767
======= =======
6. Accounts
The above financial information for the year ended 31 August 2007 does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985. The comparative financial information is based on statutory accounts for
the year ended 31 August 2006. These accounts, upon which the Auditors issued
an unqualified opinion and did not contain statements under Section 237 (2) and
(3) of the Companies Act 1985, have been delivered to the Registrar of
Companies. Statutory accounts for the year ended 31 August 2007 will be
delivered to the Registrar of Companies in due course.
7. AGM
The AGM of Royal London UK Equity & Income Trust plc will be held on Wednesday,
19 December 2007 at 12 noon. Only Ordinary shareholders are entitled to attend
this meeting. The Annual Report and Accounts for the year ended 31 August 2007,
together with the Notice of Annual General Meeting will be posted to
shareholders shortly and will be available from the Company Secretary upon
request.
For further information, please contact:
Victoria Bunton
BNP Paribas Secretarial Services Limited
Secretary
Tel: 020 7410 2670
31 October 2007
This information is provided by RNS
The company news service from the London Stock Exchange
END
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