RNS Number:9377I
Aberdeen Preferred Income Trust PLC
11 April 2000
ABERDEEN PREFERRED INCOME TRUST PLC
PRELIMINARY ANNOUNCEMENT OF UNAUDITED GROUP RESULTS
for the year ended 28 February 2000
The last financial year has seen us achieving our anticipated dividends
totalling 17.2p net, an increase of 12.8% from the previous year's 15.25p net,
with an expectation of the Company at least maintaining the current quarterly
dividend of 4.4p net making 17.6p net for the year to 28 February 2001.
I wrote to you on 28 April 1999 following the announcement by OLIM Convertible
Trust of the terms of a scheme of reconstruction of their trust. Under the
scheme OLIM shareholders had the opportunity of rolling over their investment
into new Aberdeen Preferred Income Trust ("AbPref") shares. In conjunction
with the scheme Abpref and Aberdeen Preferred Securities ("Securities")
carried out a placing of 2,706,360 units at a placing price of 739p per unit
(each unit consisting of three AbPref Ordinary shares and one Securities Zero
dividend preference share). Pursuant to the scheme and placing, a total of
11,067,218 Ordinary shares and 3,688,916 Zero dividend preference ("ZDP")
shares were issued.
In order to restore the gearing level of the Trust we borrowed a further #14
million in two tranches of #7 million at rates of 6.76% and 6.78% fixed until
28 June 2002 and 30 September 2002. At the end of the year the gearing of the
Ordinary shares was 249%.
The net asset value of the Ordinary shares was affected in the year both by
the market reaction to the increases in Base Rate and by the swing in the
market away from the so called old economy companies towards the technology
companies which offer little or no yield and tend not to be held by those
investment trusts which make up approximately half our investment portfolio.
Nevertheless, we have taken steps in the year to broaden our investment
exposure away from the traditional high income investment trusts investing
principally in the 350 high yielding UK companies. As a result of our gearing
the net asset value per Ordinary share fell from 141.23p to 114.52p as at 28
February 2000. Since the year-end we have seen something of a reverse in this
swing in favour of the old economy companies resulting in a recovery in the
net asset value to 122.70p at 6 April 2000.
Our last financial year has witnessed a dramatic change in the pace of world
economic activity. Throughout the period a regular stream of upgrades to GDP
forecasts in all the major economies, led principally by accelerating domestic
demand, resulted in expectations for world growth moving above 3%, from only
2% when the Company was launched to roll over its predecessor in 1997. Indeed,
over the last six months the world economy has moved from recovery to
expansion and this has necessitated central banks in both the US and UK to
reverse the interest rate falls that had occurred early in 1999. The European
Central bank has joined in tightening their monetary stance. Despite strong
growth, tight labour markets (at least in the UK and US) and rising commodity
prices, especially oil, core inflation remained under control albeit with
headline numbers trending upwards. With this background bond yields in
western economies have risen sharply from excessively low levels seen at the
worst of the autumn 1998 crisis.
The current cycle of rising interest rates in the UK seems unlikely to be
prolonged, and the divergence in the valuation of value stocks relative to
growth stocks is already showing signs of reversing. Therefore, our Manager
believes there are grounds for optimism that the recent falls in income share
prices will in time be corrected bringing a consequent recovery in our assets.
In the meantime, the Company's Ordinary shares continue to offer a net yield
in excess of 12%.
We continue to follow a hybrid portfolio strategy in that we invest in a mix
of bonds, preference shares and high yielding split capital income shares to
support our investment objectives. Most leading economies continue to go from
strength to strength with (consensus) forecasts rising again in the US, Japan,
UK and parts of Europe; there is a very reasonable chance that the US, UK and
the Euro zone will all experience further interest rate rises. However we do
believe that income shares and bonds are currently offering very attractive
returns and remain optimistic about the outlook for our portfolio.
Derek Morgan
Chairman
11 April 2000
The unaudited results were:
Group Statement of Total Return (incorporating the revenue account of the
Group*) for the year to 28 February 2000 (note 2)
Year ended
28 February 2000
(unaudited)
Revenue Capital Total
#'000 #'000 #'000
Losses on investments - (25,517) (25,517)
Income 31,900 - 31,900
Investment management fee (1,962) (1,305) (3,267)
Other expenses (785) - (785)
_______ _______ _______
Net return/(loss) before finance
costs and taxation 29,153 (26,822) 2,331
Interest (4,873) (3,226) (8,099)
Indexation of Debenture - (267) (267)
Zero dividend preference
shares of subsidiary - (7,661) (7,661)
_______ _______ _______
Return/(loss) on ordinary
activities before tax 24,280 (37,976) (13,696)
Tax on ordinary activities (2,169) 1,443 (726)
_______ _______ _______
Return/(loss) on ordinary
activities after tax 22,111 (36,533) (14,422)
Dividends in respect
of equity shares (21,717) - (21,717)
_______ _______ _______
Transfers to/(from) reserves 394 (36,533) (36,139)
======= ======= =======
Return/(loss) per share (pence):
Ordinary 17.56 (29.01) (11.45)
======= ======= =======
The audited results were:
Group Statement of Total Return (incorporating the revenue account of the
Group*) for the year to 28 February 1999 (note 2)
Year ended
28 February 1999
(audited)
(restated)
Revenue Capital Total
#'000 #'000 #'000
Gains on investments - 8,147 8,147
Income 18,421 - 18,421
Investment management fee (1,448) (917) (2,365)
Other expenses (340) - (340)
_______ _______ _______
Net return before finance
costs and taxation 16,633 7,230 23,863
Interest (2,798) (1,857) (4,655)
Indexation of Debenture - (716) (716)
Zero dividend preference
shares of subsidiary - (4,380) (4,380)
_______ _______ _______
Return on ordinary
activities before tax 13,835 277 14,112
Tax on ordinary activities (1,628) 1,273 (355)
_______ _______ _______
Return on ordinary
activities after tax 12,207 1,550 13,757
Dividends in respect of
equity shares (14,975) - (14,975)
_______ _______ _______
Transfers (from)/to reserves (2,768) 1,550 (1,218)
======= ======= =======
Return per share (pence)
Ordinary 14.22 1.80 16.02
======= ======= =======
* The Statements of total return presented above are in accordance with the
Statement of Recommended Practice for Financial Statements of Investment Trust
Companies
Balance Sheets as at 28 February 2000 (note 2)
Group Company Group Company
28 February 28 February 28 February 28 February
2000 2000 2000 2000
(unaudited) (unaudited) (unaudited) (unaudited)
#'000 #'000 #'000 #'000
Fixed assets
Investments 351,769 350,836 356,262 355,790
Subsidiary undertaking - - - 5,090
_______ _______ _______ _______
351,769 350,836 356,262 360,880
_______ _______ _______ _______
Current assets
Debtors 45,599 46,249 7,678 9,033
Cash at bank
and in hand - - 6,801 6,689
_______ _______ _______ _______
45,599 46,249 14,479 15,722
Creditors: amounts
falling due within
one year (30,254) (127,897) (15,278) (104,810)
_______ _______ _______ _______
Net current
assets/(liabilities) 15,345 (81,648) (799) (89,088)
_______ _______ _______ _______
Total assets less
current liabilities 367,114 269,188 355,463 271,792
Creditors: amounts
falling due after
one year excluding
Zero dividend
preference shares
RPI-linked Debenture
Stock 2007 (19,976) (19,976) (19,691) (19,691)
Bank loans (81,000) (81,000) (67,000) (67,000)
Subordinated Unsecured
Loan Stock 2023 (18,800) (18,800) (18,779) (18,779)
Amounts due under
subscription agreement - (1,872) - -
_______ _______ _______ _______
(119,776) (121,648) (105,470) (105,470)
_______ _______ _______ _______
Zero dividend
preference shares (99,798) - (83,671) -
_______ _______ _______ _______
Total net assets 147,540 147,540 166,322 166,322
======= ======= ======= =======
Share capital
and reserves
Called-up share
capital 12,883 12,883 11,777 11,777
Share premium account 149,907 149,907 133,695 133,695
Merger reserve 15,958 12,687 15,958 12,687
Capital reserves:
Realised (including
accrued finance costs) (13,146) (5,460) (17,726) (5,202)
Unrealised (18,420) (22,775) 22,654 13,356
Revenue reserve 358 298 (36) 9
_______ _______ _______ _______
Total equity
shareholders' funds 147,540 147,540 166,322 166,322
======= ======= ======= =======
Net asset value per
share (pence):
Ordinary 114.52 114.52 141.23 141.23
======= ======= ======= =======
1 The financial information set out above does not constitute the Company's
statutory accounts for the year ended 28 February 2000 or the year ended 28
February 1999. The financial information for 1999 is derived from the
statutory accounts for 1999, which have been delivered to the Registrar of
Companies. The Auditors have reported on the 1999 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 2000 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
in due course.
2 The Group accounts consolidate the accounts, on a merger accounting basis,
of the Company and its subsidiary Aberdeen Preferred Securities PLC. The
comparative figures in the financial statements cover the year to 28 February
1999.
3 The revenue return per Ordinary share is based on the net revenue on
ordinary activities after taxation of #22,111,000 (1999: #12,207,000) and on
125,943,828 (1999: 85,850,168) Ordinary shares, being the weighted average
number of Ordinary shares in issue during the year. The capital return per
Ordinary share is based on the net capital loss of #36,533,000 (1999: gain of
#1,550,000) for the year, after deductions in respect of the Zero dividend
preference shares, of #7,661,000 (1999: #4,380,000) and on 125,943,828 (1999:
85,850,168) Ordinary shares, being the weighted average number of Ordinary
shares in issue during the year.
4 Franked investment income is presented excluding attributable tax credits.
Previously, franked investment income was presented including attributable tax
credits, which were then also included within the charge for taxation. This
change in presentation, which has no effect on the revenue return on ordinary
activities after tax, has been made to comply with the recently issued FRS 16
"Current Tax." Comparative figures relating to franked investment income and
tax credits attributable to franked investment income for the year ended 28
February 1999 have been restated accordingly.
5 Net asset value per Ordinary share is based on the total equity
shareholders' funds and on 128,834,529 (1999: 117,767,312) Ordinary shares,
being the number of Ordinary shares in issue at the year end.
6 Copies of the Annual Report will be posted in due course and further copies
may be obtained from the registered office, One Bow Churchyard, Cheapside,
London EC4M 9HH
11 April 2000 Aberdeen Asset Management PLC
- Secretaries
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