RNS Number:1921Z
Royal London UK Eqty&Income Tst PLC
28 May 2004
ROYAL LONDON UK EQUITY & INCOME TRUST PLC
Preliminary announcement of unaudited interim results for the half year ended 29
February 2004
Chairman's Statement
The last six months have seen a continuation of the recovery in stock markets,
which started in March 2003. Growing optimism about the strength of the global
economic recovery continued to be the major factor affecting sentiment.
I am pleased to report that your Company's equity, bond and income portfolios
have performed well in absolute terms during the period under review and that
their performance has been considerably enhanced by the retention of the
Company's substantial gearing. The UK equity market has had a good six months -
the FTSE All-Share Index rising by 8.65% to give a total return of 9.79%. The
Company's equity portfolio has risen by 8.90% on a total return basis.
The corporate bond portfolio has performed exceptionally well, registering a
gain of 4.73% during the half year and outperforming the Barclays Non-Gilt Over
10 Year Index by no less than 2.38%. The income portfolio is now a very small
part of the overall portfolio and returned 10.57% over the period.
The structure of your Company has not changed since I last reported to you, with
total borrowings remaining at #50 million and a latest loan to value ratio of
51.20%. The Company has continued to operate within its covenant agreements.
During the six months under review, 285,000 Zero Dividend Preference ("ZDP")
shares issued by Royal London UK Equity & Income Securities plc were bought by
its parent, Royal London UK Equity & Income Trust plc. These ZDP shares are
presently being held as an investment, with the option to cancel them at a later
stage if deemed appropriate. At the time of writing this report, there remain
13,424,100 ZDP shares in issue (including those held as investments).
Dividend
Your Company remains unable to declare or pay a dividend due to its inability to
meet the requirements of Section 265 of the Companies Act 1985 as your Company's
assets remain less than 1.5 times its liabilities.
Portfolio
At 29 February 2004, the breakdown of the assets of Royal London UK Equity &
Income Trust plc and Royal London UK Equity & Income Securities plc (the
"Group") was as follows:
Market value %
#'000
UK Equity Portfolio 59,509 59.7
UK Bond Portfolio 29,334 29.4
Income Portfolio 4,694 4.7
Cash (Net Liquidity) _6,218 _6.2
99,755 100.0
Source: Royal London Asset Management Limited
Outlook
Your Manager believes that 2004 is likely to see higher global economic growth.
This recovery is likely to act as a catalyst for equity out-performance over the
coming twelve months as the improved economic background feeds into corporate
earnings. Overall, your Board believes that your Company is well positioned to
benefit from these trends.
Jonathan Carr
Chairman
28 May 2004
Group Statement of Total Return (unaudited)
(incorporating the revenue account)
for the half year ended 29 February 2004
(Unaudited) (Unaudited) (Audited)
Notes Half year ended Half year ended Year ended
29 February 2004 28 February 2003 31 August 2003
Revenue Capital Total Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Total capital
gains/(losses)
from - 4,919 4,919 - (13,223) (13,223) - (4,585) (4,585)
investments
Income from
fixed asset
investments 2,142 - 2,142 2,424 - 2,424 5,133 - 5,133
Other interest
receivable and
similar income 78 - 78 52 - 52 100 - 100
-------- ------- -------- -------- ------- -------- -------- -------- --------
Gross revenue
and capital
gains/(losses) 2,220 4,919 7,139 2,476 (13,223) (10,747) 5,233 (4,585) 648
Investment
management fee (227) (341) (568) (208) (312) (520) (422) (633) (1,055)
Other
administrative
expenses (220) - (220) (186) - (186) (369) - (369)
------- ------- ------- ------- ------- ------- -------- -------- --------
Net return/
(loss) on
ordinary
activities
before 1,773 4,578 6,351 2,082 (13,535) (11,453) 4,442 (5,218) (776)
interest
payable and
taxation
Interest (651) (977) (1,628) (1,120) (1,680) (2,800) (1,775) (2,663) (4,438)
payable
------- ------- ------- ------- ------- ------- ------- ------- -------
Net return/
(loss) on
ordinary
activities
before 1,122 3,601 4,723 962 (15,215) (14,253) 2,667 (7,881) (5,214)
taxation
Tax on net
return/(loss)
on ordinary - - - - - - - - -
activities
------- ------- ------- ------- ------- ------- ------- ------- -------
Net return/
(loss) on
ordinary
activities
after taxation 1,122 3,601 4,723 962 (15,215) (14,253) 2,667 (7,881) (5,214)
Provision for
redemption of
ZDP shares in - (669) (669) - (741) (741) - (1,396) (1,396)
subsidiary
Gain on
repurchase and
redemption of
ZDP shares - 63 63 - 3,426 3,426 - 3,426 3,426
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
1,122 2,995 4,117 962 (12,530) (11,568) 2,667 (5,851) (3,184)
Dividends and
appropriations
attributable
to annuity
shareholders:
Appropriation
of dividend
attributable
to annuity
shareholders (1,275) - (1,275) (1,275) - (1,275) (2,550) - (2,550)
-------- -------- -------- -------- -------- -------- -------- -------- --------
(1,275) - (1,275) (1,275) - (1,275) (2,550) - (2,550)
-------- -------- ------- -------- -------- ------- -------- -------- --------
Transfer (153) 2,995 2,842 (313) (12,530) (12,843) 117 (5,851) (5,734)
(from)/to
reserves ====== ====== ====== ====== ====== ====== ====== ====== ======
(Loss)/return
per share on
an FRS 4
basis:
Ordinary 1 (0.22p) 4.28p 4.06p (0.45p) (17.90p) (18.35p) 0.17p (8.36p) (8.19p)
Annuity 1 4.25p - 4.25p 4.25p - 4.25p 8.50p - 8.50p
ZDP (in 1 - 5.03p 5.03p - 4.59p 4.59p - 9.47p 9.47p
subsidiary)
The revenue column of this statement represents the profit and loss account of
the Group.
Group Balance Sheet (unaudited)
at 29 February 2004
(Unaudited) (Unaudited) (Audited)
29 February 2004 28 February 2003 31 August 2003
Notes #'000 #'000 #'000
Fixed asset investments
Listed investments 93,537 84,293 86,849
------------ ------------ ------------
Current assets
Debtors and prepayments 935 863 1,563
Cash at bank 6,545 2,041 8,987
------------ ------------ ------------
7,480 2,904 10,550
Creditors: amounts falling due (1,262) (923) (2,086)
within one year
------------ ------------ ------------
Net current assets 6,218 1,981 8,464
------------ ------------ ------------
Total assets less current 99,755 86,274 95,313
liabilities
Creditors: amounts falling due (50,000) (50,000) (50,000)
after more than one year
------------ ------------ ------------
Total net assets 49,755 36,274 45,313
======= ======= =======
Capital and reserves
Called-up share capital 1,000 1,000 1,000
Share premium 94,500 94,500 94,500
Capital reserve - realised (15,685) (8,253) (12,027)
Capital reserve - unrealised (53,034) (70,140) (59,687)
Revenue reserve 6,826 3,999 5,704
------------ ------------ ------------
Shareholders' funds 33,607 21,106 29,490
Minority interest - ZDP shares 16,148 15,168 15,823
------------ ------------ ------------
49,755 36,274 45,313
======= ======= =======
Attributable on an Articles
basis:
Annuity shareholders (Non-equity) 27,700 21,106 26,425
Ordinary shareholders (Equity) 5,907 - 3,065
------------ ------------ ------------
Total 33,607 21,106 29,490
======= ======= =======
Net asset value per share on an
Articles basis:
Annuity share 2 92.33p 70.35p 88.08p
Ordinary share 2 8.44p - 4.38p
ZDP share in subsidiary 2 122.90p 112.99p 117.87p
Attributable on an FRS 4 basis:
Annuity shareholders (Non-equity) 27,700 25,150 26,425
Ordinary shareholders (Equity) 5,907 (4,044) 3,065
------------ ------------ ------------
Total 33,607 21,106 29,490
======= ======= =======
Net asset value per share on an
FRS 4 basis:
Annuity share 3 92.33p 83.83p 88.08p
Ordinary share 3 8.44p (5.78p) 4.38p
ZDP share in subsidiary 3 122.90p 112.99p 117.87p
Approved by the Board of Directors on 28 May 2004
Jonathan Carr
Chairman
Group Cash Flow Statement (unaudited)
for the half year ended 29 February 2004
(Unaudited) (Unaudited) (Audited)
Half year ended Half year ended Year ended
29 February 2004 28 February 2003 31 August 2003
#'000 #'000 #'000 #'000 #'000 #'000
Net cash inflow from operating 1,577 2,110 4,021
activities
Servicing of finance
Interest paid (1,647) (3,140) (4,759)
-------------- -------------- --------------
(1,647) (3,140) (4,759)
Financial Investment
Acquisition of investments (8,593) (10,007) (14,556)
Sale of investments 6,502 25,242 36,445
-------------- -------------- --------------
Net cash (outflow)/inflow from (2,091) 15,235 21,889
financial investment
-------------- -------------- --------------
Net cash (outflow)/inflow (2,161) 14,205 21,151
before financing
Financing
Purchase of ZDP shares (281) (3,826) (3,826)
Issue expenses paid - (443) (443)
Loan repayment - (20,000) (20,000)
-------------- -------------- --------------
Net cash outflow from financing (281) (24,269) (24,269)
-------------- -------------- --------------
Decrease in cash (2,442) (10,064) (3,118)
======== ======== ========
Reconciliation of net cash flow
to movement in net debt
Decrease in cash as above (2,442) (10,064) (3,118)
Net cash outflow from loans - 20,000 20,000
repaid
------------ ------------ ------------
(2,442) 9,936 16,882
Net debt at start of period (41,013) (57,895) (57,895)
------------ ------------- -------------
Net debt at end of period (43,455) (47,959) (41,013)
======== ======== ========
NOTES TO THE ACCOUNTS (for the half year ended 29 February 2004)
1. (Loss)/return per share
(Loss)/return per ordinary share on an FRS4 basis
The revenue loss per ordinary share is based on the net revenue loss for the
half year ended 29 February 2004 of #153,000 (half year ended 28 February 2003:
loss of #313,000; year ended 31 August 2003: gain of #117,000) and on 70,000,000
(half year ended 28 February 2003 and year ended 31 August 2003: 70,000,000)
ordinary shares, being the number of ordinary shares in issue during the half
year ended 29 February 2004.
The net capital gain per ordinary share is based on the net capital gains, after
deduction of appropriations attributable to Zero Dividend Preference ('ZDP')
shares, of #2,995,000 (half year ended 28 February 2003: loss of #12,530,000;
year ended 31 August 2003: loss of #5,851,000) and on 70,000,000 (half year
ended 28 February 2003 and year ended 31 August 2003: 70,000,000) ordinary
shares being the number of ordinary shares in issue during the half year ended
29 February 2004.
Revenue return per annuity share
The revenue return per annuity share is based on appropriations of #1,275,000
(half year ended 28 February 2003: #1,275,000; year ended 31 August 2003:
#2,550,000) and on 30,000,000 (half year ended 28 February 2003 and year ended
31 August 2003: 30,000,000) annuity shares, being the number of annuity shares
in issue during the half year ended 29 February 2004.
Return per ZDP share in the subsidiary
The capital return per ZDP share in the subsidiary is based on appropriations of
#669,000 (half year ended 28 February 2003: #741,000; and year ended 31 August
2003: #1,396,000), and on 13,305,089 (half year ended 28 February 2003:
16,146,622; and year ended 31 August 2003: 14,741,705) ZDP shares being the
weighted average number of ZDP shares in issue during the half year ended 29
February 2004.
2. Net asset value per share on an Articles basis
The net asset value per annuity share is based on net annuity shareholders'
funds of #27,700,000 (28 February 2003: #21,106,000; and 31 August 2003:
#26,425,000) and on 30,000,000 annuity shares, being the number of annuity
shares in issue at the end of each period.
The net asset value per ordinary share is based on net ordinary shareholders'
funds of #5,907,000 (28 February 2003: Nil; and 31 August 2003: #3,065,000) and
on 70,000,000 ordinary shares, being the number of ordinary shares in issue at
the end of each period.
The net asset value per ZDP share is based on net ZDP shareholders' funds of
#16,148,000 (28 February 2003: #15,168,000; and 31 August 2003: #15,823,000) and
on 13,139,100 (28 February 2003 and 31 August 2003: 13,424,100) ZDP shares,
being the number of ZDP shares in issue, on a Group basis, at 29 February 2004.
3. Net asset value per share on an FRS 4 basis
The net asset value per annuity share is based on net annuity shareholders'
funds of #27,700,000 (28 February 2003: #25,150,000; and 31 August 2003:
#26,425,000) and on 30,000,000 annuity shares, being the number of annuity
shares in issue at the end of each period.
The net asset value per ordinary share is based on net ordinary shareholders'
funds of #5,907,000 (28 February 2003: loss of #4,044,000; and 31 August 2003:
#3,065,000) and on 70,000,000 ordinary shares, being the number of ordinary
shares in issue at the end of each period.
The net asset value per ZDP share is based on net ZDP shareholders' funds of
#16,148,000 (28 February 2003: #15,168,000; and 31 August 2003: #15,823,000) and
on 13,424,100 (28 February 2003 and 31 August 2003: 13,424,100) ZDP shares,
being the number of ZDP shares in issue at 29 February 2004.
4. 2003 Accounts
The figures and financial information for the year ended 31 August 2003 are
extracted from the latest published accounts of the Group and do not constitute
statutory accounts for that year. Those accounts have been delivered to the
Registrar of Companies and included the report of the Auditors which was
unqualified and did not contain a statement under either section 237(2) or 237
(3) of the Companies Act 1985.
The interim report will be issued to shareholders in early June 2004 and further
copies will be available from the Company's registered office at 55 Moorgate,
London EC2R 6PA.
BNP Paribas Secretarial Services Limited
28 MAY 2004
This information is provided by RNS
The company news service from the London Stock Exchange
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