RNS Number:5482T
Allianz Dresdr 2 Endw Policy TstPLC
02 November 2005
For Immediate Release 2nd November 2005
ALLIANZ DRESDNER SECOND ENDOWMENT POLICY TRUST plc
PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS
For the year ended 30th September 2005
Investment Review - 2006 Pool
A summary of the results for the 2006 Pool for the year ended 30th September
2005 is set out on page 4. The net asset value has increased from 157.3p per
2006 Share at 30th September 2004 to 163.5p per 2006 Share at 30th September
2005, an increase of 3.9%.
The 2006 Pool currently has investments in policies from a total of 50
with-profits funds. During the year the 2006 Pool realised proceeds of policy
maturities amounting to #7.4 million. The average annualised return on these
policies was 5.78% since purchase. This calculation does not include windfalls
arising from demutualisations or the distribution of orphan assets.
Investment Review - 2009 Pool
A summary of the results for the 2009 Pool for the year ended 30th September
2005 is set out on page 5. The net asset value has risen from 120.5p per 2009
Share at 30th September 2004 to 129.4p per 2009 Share at 30th September 2005, an
increase of 7.4%.
The 2009 Pool currently has investments in policies from a total of 56
with-profits funds. During the period the 2009 Pool realised proceeds of policy
maturities amounting to #1.3 million. The average annualised return on these
policies was 4.24% since purchase. This calculation does not include windfalls
arising from demutualisations or the distribution of orphan assets.
Valuation Method
The historic valuation methodology using underlying values as determined by
actual transaction discount rates witnessed at auction was discontinued during
the year due to a dearth of auction data. The Board, after consultation with
the Actuarial Committee, approved a change in the Company's basis of valuation
to an estimate of fair value which took effect from the 31st December 2004
valuation point. The valuation of policies now uses data derived from LPVC
Ltd's own pricing information with a floor of 100% of surrender value.
Outlook
The cuts in bonus rates that we have seen in recent years have in many cases
probably now run their course. Bonus rate cuts were caused in part by the need
to correct for the overpayment of bonuses during the years of strong investment
returns in the 1990s, and in part by the poor returns from equities in the early
years of this century. Life office solvency, as measured by Free Asset
Ratios, has seen a significant improvement since the equity market's recent low
in March 2003, albeit that equity exposure in with-profits life funds is now
much lower than historically. In order to provide an illustration of likely
returns in a scenario where bonus rates increase we have added projected final
Net Asset Values at 120% of current bonus rates.
For 2006 Shareholders, the financial year to 30th September 2006 will see the
realisation of the assets of the Company attributable to the 2006 Pool.
Investors in this class should note that almost all the remaining policies will
mature over the next twelve months. The maturity proceeds are being used, in
the first instance, to repay the remaining bank debt, with the excess being
invested principally in UK gilts, to ensure sufficient eligible investment
income to maintain investment trust status for tax purposes. The Board and its
advisers are considering a number of possible options in connection with the
distribution of the assets of the 2006 Pool to 2006 Shareholders, and will send
out the appropriate documentation before the end of the financial year. The
Board of Standard Life has now confirmed that it intends to recommend to members
that Standard Life should demutualise and float on the stock market, subject to
satisfactory completion of legal, regulatory and other requirements.
Accrued guaranteed benefits
Guaranteed benefits are attached to the policy portfolio (comprising sums
assured and reversionary bonuses declared to date) and these have continued to
grow as reversionary bonuses have been declared over the year. Stated as a
projected final net asset value after projected expenses - including the cost of
borrowings - they represented 141.2p and 106.6p per 2006 and 2009 Share
respectively as at 30th September 2005.
Share buybacks and borrowings
No shares were bought back during the year for either the 2006 or 2009 share
class. The Board intends to seek renewed authority from shareholders to buy
back up to 15% of the issued share capital of the Company at the forthcoming
Annual General Meeting. In view of the increasing number of policies in the
2006 Pool maturing during the year debt has been reduced, where appropriate.
During the year #5.9m of borrowings relating to the 2006 Pool were repaid and a
further #1.3m since the year end. After taking cash and fixed interest
securities into account, the 2006 Pool is now ungeared. Borrowings net of cash
and fixed interest securities held represented 17.9% of total net assets for the
2009 Pool at the year end.
Projected final net asset values
The Company publishes projected final net asset values on a regular basis.
These projections are based on a range of future bonus rate levels, which will
reflect, inter alia, the investment returns earned by the underlying
with-profits funds. Projected final net asset values as at 30th September 2005
are given in the table below.
120% Current 100% Current 80% Current 50% Current No Further
Bonus Rates Bonus Rates Bonus Rates Bonus Rates Bonuses
Projected final net asset
value at 30th September 2006
(2006 Pool) 173.2p 168.0p 162.9p 155.2p 141.2p
Projected final net asset
value at 31st December 2009
(2009 Pool) 152.5p 144.3p 136.7p 125.7p 106.6p
Projected final net asset values are calculated using the principal bases and
assumptions set out at the end of this document. These illustrations are given
to provide an indication of the sensitivity of the projected final net asset
value to bonus rate changes. They should not be taken as forecasts of
particular degree of change in rate levels.
Earnings and dividend
The Company is managed with the objective of providing returns to investors
entirely in the form of capital growth. The continuing deficit on the revenue
account is consistent with this objective. Consequently, no dividend will be
payable on either class of share.
Status
The Company operates as an approved investment trust within the meaning of
Section 842 of the Income and Corporation Taxes Act 1988. Such approval is
expected to be granted for the year ended 30th September 2004 and for the
accounting year under review. The Company is not a close company.
Annual General Meeting
The Annual General Meeting will be held on Wednesday 14th December 2005 at 12:
30pm.
155 Bishopsgate By Order of the Board
London EC2M 3AD P W I Ingram
Company Secretary
For further information, please contact:
Simon White, Head of Investment Trusts
RCM (UK) Limited
Tel: 020 7065 1539
RESULTS
STATEMENT OF TOTAL RETURN (Unaudited)
For the year ended 30th September 2005
2006 Pool
Revenue* Capital Total
#'000s #'000s #'000s
Net gains on investments - 2,127 2,127
Income from investments 91 - 91
Other income 19 - 19
Investment management and advisory fees (553) - (553)
Expenses of administration (121) - (121)
Net return before finance costs and taxation (564) 2,127 1,563
Finance costs of borrowings (320) - (320)
Return on ordinary activities before taxation (884) 2,127 1,243
Taxation - - -
Transfer (from) to reserves (884) 2,127 1,243
Return per 2006 Share (4.41)p 10.59p 6.18p
* The revenue column of this statement is the profit and loss account of the 2006 Pool.
The return per share is calculated on a weighted average number of 2006 Shares in issue during the year of
20,073,064.
BALANCE SHEET 2006 Pool
As at 30th September 2005 (Unaudited) #'000s
Fixed Asset Investments 33,503
Net Current Liabilities ** (689)
Total Assets less Current Liabilities 32,814
Creditors: amounts falling due after more than one year -
Total Net Assets attributable to 2006 Shareholders 32,814
Called up Share Capital 1,004
Share Premium Account -
Capital Redemption Reserve 4
Special Reserve 19,128
Capital Reserve : realised 14,241
: unrealised 11,480
Revenue Reserve (13,043)
Shareholders' Funds (all equity) 32,814
Net Asset Value per 2006 Share 163.5p
The net asset value is based on 20,073,064 2006 Shares in issue at the year end.
** Includes medium term loan of #1,300,000 maturing in less than one year
RESULTS
STATEMENT OF TOTAL RETURN (Unaudited)
For the year ended 30th September 2005
2009 Pool
Revenue* Capital Total
#'000s #'000s #'000s
Net gains on investments - 2,520 2,520
Income from investments 76 - 76
Other income 15 - 15
Investment management and advisory fees (458) - (458)
Expenses of administration (92) - (92)
Net return before finance costs and taxation (459) 2,520 2,061
Finance costs of borrowings (301) - (301)
Return on ordinary activities before taxation (760) 2,520 1,760
Taxation - - -
Transfer (from) to reserves (760) 2,520 1,760
Return per 2009 Share (3.85)p 12.76p 8.91p
* The revenue column of this statement is the profit and loss account of the 2009 Pool.
The return per share is calculated on a weighted average number of 2009 Shares in issue during the year
of 19,745,000.
BALANCE SHEET 2009 Pool
As at 30th September 2005 (Unaudited) #'000s
Fixed Asset Investments 31,199
Net Current Assets -
Total Assets less Current Liabilities 31,199
Creditors: amounts falling due after more than one year (5,650)
Total Net Assets attributable to 2009 Shareholders 25,549
Called up Share Capital 197
Share Premium Account 18,925
Capital Redemption Reserve 3
Special Reserve -
Capital Reserves : realised 4,937
: 7,549
unrealised
Revenue Reserve (6,062)
Shareholders' Funds (all equity) 25,549
Net Asset Value per 2009 Share 129.4p
The net asset value is based on 19,745,000 2009 Shares in issue at the year end.
RESULTS
STATEMENT OF TOTAL RETURN (Unaudited)
For the year ended 30th September 2005
Company
Revenue* Capital Total
#'000s #'000s #'000s
Net gains on investments - 4,647 4,647
Income from investments 167 - 167
Other income 34 - 34
Investment management and advisory fees (1,011) - (1,011)
Expenses of administration (213) - (213)
Net return before finance costs and taxation (1,023) 4,647 3,624
Finance costs of borrowings (621) - (621)
Return on ordinary activities before taxation (1,644) 4,647 3,003
Taxation - - -
Transfer (from) to reserves (1,644) 4,647 3,003
* The revenue column of this statement is the profit and loss account of the Company.
BALANCE SHEET Company
As at 30th September 2005 (Unaudited) #'000s
Fixed Asset Investments 64,702
Net Current Liabilities (689)
Total Assets less Current Liabilities 64,013
Creditors: amounts falling due after more than one year (5,650)
Total Net Assets attributable to ordinary shareholders 58,363
Called up Share Capital 1,201
Share Premium Account 18,925
Capital Redemption Reserve 7
Special Reserve 19,128
Capital Reserves : realised 19,178
: unrealised 19,029
Revenue Reserve (19,105)
Shareholders' Funds (all equity) 58,363
RESULTS
STATEMENT OF TOTAL RETURN
For the year ended 30th September 2004
2006 Pool
Revenue* Capital Total
#'000s #'000s #'000s
Net gains on investments - 1,094 1,094
Income from investments 100 - 100
Other income 10 - 10
Investment management and advisory fees (567) - (567)
Expenses of administration (118) - (118)
Net return before finance costs and taxation (575) 1,094 519
Finance costs of borrowings (476) - (476)
Return on ordinary activities before taxation (1,051) 1,094 43
Taxation - - -
Transfer (from) to reserves (1,051) 1,094 43
Return per 2006 Share (5.24) p 5.45 p 0.21 p
* The revenue column of this statement is the profit and loss account of the 2006 Pool.
The return per share is calculated on a weighted average number of 2006 Shares in issue during the year of
20,073,064.
BALANCE SHEET 2006 Pool
As at 30th September 2004 #'000s
Fixed Asset Investments 38,644
Net Current Assets 127
Total Assets less Current Liabilities 38,771
Creditors: amounts falling due after more than one year (7,200)
Net assets attributable to 2006 Shareholders 31,571
Called up Share Capital 1,004
Share Premium Account -
Capital Redemption Reserve 4
Special Reserve 19,128
Capital Reserve : realised 11,184
: unrealised 12,410
Revenue Reserve (12,159)
Shareholders' Funds (all equity) 31,571
Net Asset Value per 2006 Share 157.3p
The net asset value is based on 20,073,064 2006 Shares in issue at the year end.
RESULTS
STATEMENT OF TOTAL RETURN
For the year ended 30th September 2004
2009 Pool
Revenue* Capital Total
#'000s #'000s #'000s
Net gains on investments - 998 998
Income from investments 76 - 76
Other income 12 - 12
Investment management and advisory fees (437) - (437)
Expenses of administration (91) - (91)
Net return before finance costs and taxation (440) 998 558
Finance costs of borrowings (280) - (280)
Return on ordinary activities before taxation (720) 998 278
Taxation - - -
Transfer (from) to reserves (720) 998 278
Return per 2009 Share (3.65) p 5.06 p 1.41 p
* The revenue column of this statement is the profit and loss account of the 2009 Pool.
The return per share is calculated on a weighted average number of 2009 Shares in issue during the year
of 19,745,000.
BALANCE SHEET 2009 Pool
As at 30th September 2004 #'000s
Fixed Asset Investments 29,224
Net Current Assets 215
Total Assets less Current Liabilities 29,439
Creditors: amounts falling due after more than one year (5,650)
Net assets attributable to 2009 Shareholders 23,789
Called up Share Capital 197
Share Premium Account 18,925
Capital Redemption Reserve 3
Special Reserve -
Capital Reserves : realised 4,620
: unrealised 5,345
Revenue reserve (5,301)
Shareholders' Funds (all equity) 23,789
Net Asset Value per 2009 Share 120.5p
The net asset value is based on 19,745,000 2009 Shares in issue at the year end.
RESULTS
STATEMENT OF TOTAL RETURN
For the year ended 30th September 2004
Company
Revenue* Capital Total
#'000s #'000s #'000s
Net gains on investments - 2,092 2,092
Income from investments 176 - 176
Other income 22 - 22
Investment management and advisory fees (1,004) - (1,004)
Expenses of administration (209) - (209)
Net return before finance costs and taxation (1,015) 2,092 1,077
Finance costs of borrowings (756) - (756)
Return on ordinary activities before taxation (1,771) 2,092 321
Taxation - - -
Transfer (from) to reserves (1,771) 2,092 321
* The revenue column of this statement is the profit and loss account of the Company.
BALANCE SHEET Company
As at 30th September 2004 #'000s
Fixed Asset Investments 67,868
Net Current Assets 342
Total Assets less Current Liabilities 68,210
Creditors: amounts falling due after more than one year (12,850)
Net Assets attributable to ordinary shareholders 55,360
Called up Share Capital 1,201
Share Premium Account 18,925
Capital Redemption Reserve 7
Special Reserve 19,128
Capital Reserves : realised 15,804
: unrealised 17,755
Revenue Reserve (17,460)
Shareholders' Funds (all equity) 55,360
CASH FLOW STATEMENT (Unaudited)
For the year ended 30th September 2005 and comparative period
2006 Pool
Year ended Year ended
30th September 2005 30th September 2004
#'000s #'000s
Net cash outflow from operating activities (373) (541)
Servicing of finance
Interest paid (318) (446)
Taxation
UK income tax repaid - 1
Investing activities
Payments to acquire investments (973) (1,073)
Receipts on disposal of investments 7,906 3,181
Net cash inflow from investing activities 6,933 2,108
Net cash inflow before financing 6,242 1,122
Financing
(Decrease) increase in medium term loans (5,900) 3,250
Repayment of Loan Notes with Dresdner RCM
Endowment Policy Trust 2003 plc - (4,653)
Net cash outflow from financing (5,900) (1,403)
Increase (decrease) in cash 342 (281)
CASH FLOW STATEMENT (Unaudited)
For the year ended 30th September 2005 and comparative period
2009 Pool
Year ended Year ended
30th September 2005 30th September 2004
#'000s #'000s
Net cash outflow from operating activities (390) (443)
Servicing of finance
Interest paid (297) (288)
Taxation
UK income tax repaid - 1
Investing activities
Payments to acquire investments (895) (934)
Receipts on disposal of investments 1,400 1,470
Net cash inflow from investing activities 505 536
Net cash outflow before financing (182) (194)
Financing
Decrease in medium term loans - -
Net cash outflow from financing - -
Decrease in cash (182) (194)
CASH FLOW STATEMENT (Unaudited)
For the year ended 30th September 2005 and comparative period
Company
Year ended Year ended
30th September 2005 30th September 2004
#'000s #'000s
Net cash outflow from operating activities (763) (984)
Servicing of finance
Interest paid (616) (734)
Taxation
UK income tax repaid - 2
Investing activities
Payments to acquire investments (1,868) (2,007)
Receipts on disposal of investments 9,306 4,651
Net cash inflow from investing activities 7,438 2,644
Net cash inflow before financing 6,059 928
Financing
(Decrease) increase in bank loans (5,900) 3,250
Repayment of Loan Notes with Dresdner RCM
Endowment Policy Trust 2003 plc - (4,653)
Net cash outflow from financing (5,900) (1,403)
Increase (decrease) in cash 159 (475)
The financial information set out in the announcement does not constitute the
Company's statutory accounts for the year ended 30th September 2005. The
financial information for the year ended 30th September 2004 is derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies. The auditors reported on those accounts; their report was
unqualified and did not contain a statement under section 237(2) or (3) of the
Companies Act 1985. The statutory accounts for the year ended 30th September
2005 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. This
announcement has been prepared using the same accounting policies as those
adopted in the annual accounts for the year ended 30th September 2004.
TWENTY LARGEST HOLDINGS BY LIFE OFFICE (Unaudited)
AS AT 30th SEPTEMBER 2005 - 2006 POOL
Value
Value of % of
Life Office Policies Total
#'000s Investments
Standard Life 8,936 26.7
AVIVA (Norwich Union) 4,580 13.7
Legal & General 2,598 7.8
Prudential 2,310 6.9
Prudential (Scottish Amicable) 2,164 6.5
Scottish Provident 1,660 5.0
Scottish Widows 1,328 4.0
Clerical Medical 893 2.6
Scottish Life 689 2.1
Friends Provident 616 1.8
AXA Equity and Law 553 1.7
Guardian Assurance 522 1.6
Alba Life (Crusader) 500 1.5
Royal & Sun Alliance (Royal 487 1.4
Life)
Colonial Mutual 410 1.2
Scottish Mutual 392 1.2
AVIVA (Commercial Union) 347 1.0
London Life 270 0.8
Friends Provident (London & 212 0.6
Manchester)
AVIVA (Provident Mutual) 194 0.6
Total of twenty largest 29,661 88.7
holdings
Holdings in other offices 2,478 7.4
Total holdings of endowment 32,139 96.1
policies
FIXED INTEREST HOLDINGS
EIB 6.125% 07.12.2005 902 2.6
EIB 7.625% 07.12.2006 462 1.3
Total Fixed Interest Holdings 1,364 3.9
Total of Invested Funds 33,503 100.0
TWENTY LARGEST HOLDINGS BY LIFE OFFICE (Unaudited)
AS AT 30th SEPTEMBER 2005 - 2009 POOL
Value of % of
Life Office Policies Total
#'000s Investments
Standard Life 7,957 25.5
Legal & General 4,806 15.4
Prudential (Scottish Amicable) 3,042 9.8
Scottish Widows 2,065 6.6
AVIVA (Norwich Union) 1,765 5.7
Prudential 1,488 4.7
Scottish Life 1,257 4.0
Clerical Medical 1,130 3.6
Scottish Provident 881 2.8
Friends Provident 846 2.7
Colonial Mutual 415 1.3
Gresham Life 360 1.2
National Mutual Life 339 1.1
Royal & Sun Alliance (Royal Life) 283 0.9
Sun Life of Canada 211 0.7
AVIVA (Commercial Union) 194 0.6
AVIVA (Provident Mutual) 184 0.6
Guardian Assurance 179 0.6
Australian Mutual Provident 147 0.5
Britannic Assurance 145 0.5
Total of twenty largest holdings 27,694 88.8
Holdings in other life offices 2,443 7.8
Total holdings of endowment policies 30,137 96.6
FIXED INTEREST HOLDINGS
Finland (REP) 10.125% # Bds 22.06.08 537 1.7
Abbey National 5.375% Notes 30.12.09 30.12.09 525 1.7
Total Fixed Interest Holdings 1,062 3.4
Total of Invested Funds 31,199 100.0
ALLIANZ DRESDNER SECOND ENDOWMENT POLICY TRUST plc
Principal bases and assumptions used in projecting the final net asset values on
page 2.
The final net asset values for the 2006 Pool and the 2009 Pool have been
calculated at 30th September 2006 and 31st December 2009 respectively, on the
basis that:
1) All policies are held to maturity, no death claims or demutualisation
benefits are received and no further purchases or disposals of policies are
made;
2) The latest reversionary and terminal bonus rates declared at 30th
September 2005 continue to apply until maturity or are reduced immediately by
20%, 50% and 100% or increased by 20%;
3) The estimated mid-market gross redemption yields as at 30th September
2005, for policies of differing remaining terms, are assumed to remain
unchanged;
4) Annual expenses are assumed to be in line with recent experience, and
future annual inflation is assumed to be 3%. Interest rates over the Company's
remaining life are assumed to be consistent with the shape of the swap rate
yield curve at 30th September 2005; and
5) No further shares are issued or repurchased, nor are any dividends
paid.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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