RNS Number:2699S
Aberdeen Preferred Income Trust PLC
Aberdeen Preferred Securities PLC
10 October 2000
Part 2
PART 4 - INTERIM RESULTS
ABERDEEN PREFERRED INCOME TRUST PLC
ANNOUNCEMENT OF UNAUDITED GROUP INTERIM RESULTS
for the six months ended 31 August 2000
Chairman's Statement
The Company has met its dividend target, with a second interim dividend
declared on 19 September 2000 of 4.4p net per share (1999/2000 second interim
- 4.4p) making a total for the first half of 8.8p net per share (1999/2000 -
8.4p), a rise of 4.8 per cent. This second interim dividend is payable on 17
November 2000 to shareholders on the register on 29 September 2000. Over the
period the net asset value of the Ordinary Shares has risen to 117.67p from
114.52p on 28 February 2000, an increase of 2.8 per cent. The Directors have
also declared a third interim dividend of 4.4p per share (1999/2000 third
interim - 4.4p) payable on 18 January 2001 to shareholders on the register on
3 November 2000.
The first half of the Company's year was dominated by the prevailing, and
expected, level of interest rates. In the UK there was little overall change
in yields on medium and long-dated Government bonds. The strong rises in UK
short term interest rates seen in the previous six months were less marked
with base rates unchanged since the end of February, with interest focused on
whether any further rises would prove necessary. Longer dated bonds drew
comfort from pre-emptive action by central banks, the relatively benign
inflation background and the light supply as Government deficits progressed
to surplus in the US and UK.
Corporate bond markets, in contrast to Government bonds, were subjected to
considerable over supply. This has led to significant widening in their
spread relationship to Government bonds particularly in the last few months.
Investment grade spreads are on average more than 35 basis points wider than
a year ago.
Equities in the UK performed well over the period, and this trend has
continued, with most indices posting returns in excess of 6 per cent. since
the end of August. Despite this convertible stocks have produced a very mixed
performance, with take-over and other corporate activity being the most
beneficial factors in this sector of the market.
Income shares fell slightly over the period; having outperformed initially
they failed to participate in the equity rally in July and August. The strong
performance of their underlying equity investments has served to make their
hurdle rates less demanding. During the period we continued the
diversification of our income share portfolio through increased investment in
companies with significant international exposure.
The Manager believes that there remains relative value in corporate bonds and
that the peak in short term interest rates is not likely to be far from
current levels, at least in the UK. Central bank policy is managing to
provide the correct background for sustainable growth levels despite earlier
fears in some quarters of a hard landing in the US. While inflation levels in
most countries have increased somewhat, there are few signs of a return to
the figures witnessed in previous cycles. Although UK Government bonds have
little scope for any substantial reduction in yield there are excellent
returns to be obtained in the corporate bond markets, where outstanding real
value can be achieved in both investment grade and higher yielding
securities. Opportunities are rarer in the convertible market but volatile
share prices could provide prospects for investment in this sector. At
current levels the Euro is again looking undervalued and the rapidly
expanding bond market in this currency is likely to throw up some of the
better opportunities in the periods ahead. In this environment the Manager
believes that the hurdle rates of most income shares continue to offer good
value.
Derek Morgan
Chairman
The unaudited results were:
Group Statement of Total Return
(incorporating the revenue account of the Group*)
for the half year ended 31 August 2000
Six months ended
31 August 2000 (unaudited)
Revenue Capital Total
#'000 #'000 #'000
Gains on investments - 10,428 10,428
Income 16,341 - 16,341
Investment management fee (891) (593) (1,484)
Other expenses (424) - (424)
_______ _______ _______
Net return before finance
costs And taxation 15,026 9,835 24,861
Interest payable and
similar charges
Interest (2,577) (1,709) (4,286)
Indexation of Debenture - (206) (206)
Zero dividend preference - (4,219) (4,219)
shares of subsidiary
_______ _______ _______
Return on ordinary 12,449 3,701 16,150
activities before tax
Tax on ordinary activities (1,507) 753 (754)
_______ _______ _______
Return on ordinary 10,942 4,454 15,396
activities after tax
Dividends in respect of (11,337) - (11,337)
equity shares
______ _______ _______
Transfers (from)/to (395) 4,454 4,059
reserves
====== ====== =======
Return per share (pence):
Ordinary 8.49 3.46 11.95
====== ====== ======
Six months ended 31 August 1999
(unaudited) (restated)
Revenue Capital Total
#'000 #'000 #'000
Gains on investments - 10,908 10,908
Income 15,837 - 15,837
Investment management fee (1,053) (701) (1,754)
Other expenses (406) - (406)
_______ _______ _______
Net return before finance 14,378 10,207 24,585
costs and taxation
Interest payable and
similar charges
Interest (2,366) (1,560) (3,926)
Indexation of Debenture - (121) (121)
Zero dividend preference - (3,688) (3,688)
shares of subsidiary
_______ _______ _______
Return on ordinary 12,012 4,838 16,850
activities before tax
Tax on ordinary activities (825) 552 (273)
activities
_______ _______ _______
Return on ordinary 11,187 5,390 16,577
activities after tax
Dividends in respect of (10,379) - (10,379)
equity shares
______ _______ _______
Transfers to reserves 808 5,390 6,198
====== ======= =======
Return per share (pence):
Ordinary 9.09 4.38 13.47
====== ====== ======
* The statements of Total Return presented above are in accordance with the
Statement of Recommended Practice for Financial Statements of Investment
Trust Companies
Summarised Consolidated Balance Sheet as at 31 August 2000
31 August 2000 31 August 1999 28 February
(unaudited) (unaudited) 2000
#'000 #'000 (audited)
#'000
Fixed assets
Investments 377,900 405,682 351,769
_______ _______ _______
Current assets
Debtors 21,335 13,228 45,599
Cash at bank and in hand - 67 -
_______ _______ _______
21,335 13,295 45,599
Creditors: amounts (23,618) (13,887) (30,254)
falling due within one
year
______ _______ _______
Net current (2,283) (592) 15,345
(liabilities)/assets
______ _______ _______
Total assets less 375,617 405,090 367,114
current liabilities
Creditors: amounts
falling due after one
year
excluding Zero dividend
preference shares
RPI-Linked Debenture (20,192) (19,822) (19,976)
Stock 2007
Subordinated loan stock (18,810) (18,789) (18,800)
2023
Bank loans (81,000) (81,000) (81,000)
_______ _______ ________
(120,002) (119,611) (119,776)
_______ _______ ________
Zero dividend (104,016) (95,825) (99,798)
preference shares _______ _______ ________
Total net assets 151,599 189,654 147,540
======= ======= ========
Share capital and
reserves
Called-up share capital 12,883 12,883 12,883
Share premium account 149,888 149,704 149,907
Merger reserve 15,958 15,958 15,958
Capital reserves:
Realised (including (23,401) (12,694) (13,146)
accrued financial
costs)
Unrealised (3,692) 23,031 (18,420)
Revenue reserve (37) 772 358
________ _______ _______
Total equity 151,599 189,654 147,540
shareholders' funds ======== ======= =======
Net asset value per
share (pence):
Ordinary 117.67 147.21 114.52
====== ====== ======
Consolidated Cash Flow Statement for the six months to 31 August 2000
31 August 2000 31 August
(unaudited) 1999 (unaudited)
#'000 #'000
Net cash inflow from operating 14,616 13,234
activities
Net cash outflow from (4,223) (3,784)
servicing of finance
Net tax recovered 279 387
Net cash inflow/(outflow) from 6,118 (44,081)
financial investment
Equity dividends paid (11,337) (9,421)
______ ______
Net cash inflow/(outflow) 5,453 (43,665)
before financing
Net cash inflow from financing - 32,883
Increase/(decrease) in cash 5,453 (10,782)
===== ======
Reconciliation of operating
revenue to net cash inflow
from operating activities
Net revenue before finance 15,026 14,378
costs and taxation
Decrease in accrued income 1,648 884
Increase in other debtors (25) (2)
Increase in other creditors 47 20
Capitalised expenses taken to (595) (701)
non-distributable reserves
UK income tax deducted at (1,479) (1,338)
source
Overseas withholding tax (6) (7)
suffered ______ ______
14,616 13,234
====== ======
Reconciliation of net cash
flow to movements in net debt
Increase/(decrease) in cash as 5,453 (10,782)
above
Cash inflow from increase in
net debt - (20,248)
_____ ______
5,453 (31,030)
Increase in debt (4,444) (6,047)
______ ______
Movement in net debt in the 1,009 (37,077)
period
Net debt at 1 March (240,090) (182,340)
_______ _______
Net debt at 31 August (239,081) (219,417)
======= =======
Represented by:
Cash at bank - 67
Bank overdraft (15,063) (4,048)
Debt falling due after more (224,018) (215,436)
than one year ________ ________
(239,081) (219,417)
======== ========
1. The breakdown of income for the periods to 31 August 2000 and 31 August
1999 was as follows:
31 August 31 August
2000 1999
#'000 #'000
Income from investments
Franked investment income (net) 7,502 8,517
Unfranked investment income (gross) 8,720 7,087
Foreign income dividends - 46
______ ______
16,222 15,650
______ ______
Other income
Underwriting income - 39
Deposit interest 119 148
______ ______
119 187
______ ______
Total income 16,341 15,837
====== ======
With effect from 1 March 2000 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. The change, which has no effect
on the net income after taxation for the period, has been made to comply
with FRS 16 "Current tax"; comparative figures have been restated. The
effect of this change in presentation is to decrease franked investment
income and the tax charge by equal amounts of #833,000 (1999 -
#1,192,000) resulting in no change in the net income after taxation for
the period for either 2000 or 1999.
2. The basic revenue return per Ordinary Share is based on net revenue on
ordinary activities after taxation of #10,942,000 (1999 - #11,187,000) and
on 128,834,529 (1999 - 123,100,258) Ordinary shares, being the weighted
average number of Ordinary shares in issue for the period.
The basic capital return per Ordinary share is based on net capital gains
of #4,454,000 (1999 - #5,390,000) and on 128,834,529 (1999 - 123,100,258)
Ordinary shares, being the weighted average number of Ordinary shares in
issue for the period.
3. The basic net asset value per Ordinary share is based on net
shareholders' funds at the period end and on 128,834,529 (31 August 1999
and 28 February 2000 - 128,834,529) Ordinary shares, being the number of
Ordinary shares in issue at the period end.
Reserves
Capital
reserve -
Share realised Capital
Premium Merger (including reserve -
account reserve Accrued unrealised
#'000 #'000 finance costs) #'000
#'000
As at 1 March 149,907 15,958 (13,146) (18,420)
2000
Unrealised
appreciation of - - - 14,728
fixed asset
investments
Net realised
losses on - - (4,300) -
investments
Expenses - - (2,302) -
allocated to
capital
Tax allocation
on allowable - - 753 -
expenses
Transfer from
share premium (19) - 19 -
account
Indexation on
Debenture stock - - (206) -
Accrued
redemption
premium and
amortisation of - - (4,219) -
issue costs of
Zero dividend
preference
shares
_______ ______ ________ _____
As at 31 August 149,888 15,958 (23,401) (3,692)
2000 ======= ====== ======== =====
5. Summary reconciliation of shareholders' funds
#'000
Opening equity shareholders' funds 147,540
Net gains on investments 10,428
Capitalised expenses net of taxation (1,549)
Accrued redemption premium and amortisation of issue costs of
Zero dividend preference shares (4,219)
Indexation on Debenture stock (206)
Net revenue deficit (395)
______
Closing equity shareholders' funds 151,599
6. The financial statements for the six months ended 31 August 2000 and
31 August 1999 comprise non-statutory accounts within the meaning of
Section 240 of the Companies Act 1985. The financial information for
the year ended 28 February 2000 has been abridged from published
accounts that have been delivered to the Registrar of Companies on
which the report of the auditors was unqualified.
7. Copies of the Interim Report will be posted to shareholders in due
course and further copies may be obtained from the registered office,
One Bow Churchyard, Cheapside, London EC4M 9HH.
Aberdeen Asset Management PLC
Secretaries
Independent review report by KPMG Audit Plc to
Aberdeen Preferred Income Trust PLC
Introduction
We have been instructed by the Company to review the financial information
set out above and we have read the other information contained in the interim
report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors' responsibilities
The Interim Report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The Listing
Rules of the Financial Services Authority require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where
they are to be changed in the next annual accounts in which case any changes,
and the reasons for them, are to be disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1994/4: Review of Interim financial information issued by the Auditing
Practices Board. A review consists principally of making enquiries of
management and applying analytical procedures to the financial information
and underlying financial data and, based thereon, assessing whether the
accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review is substantially less in scope than an audit
performed in accordance with Auditing Standards and therefore provides a
lower level of assurance than an audit. Accordingly we do not express an
audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications
that should be made to the financial information as presented for the six
months ended 31 August 2000.
KPMG Audit Plc
Chartered Accountants
Aberdeen
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