RNS Number:2446H
INVESCO Tokyo Trust PLC
20 July 2001
INVESCO Tokyo Trust plc
Preliminary Announcement
Unaudited Final Results
for the Year Ended 31 May 2001
Chairman's Statement
Over the course of the last financial year the Company's net asset value fell
from 62.9p to 43.1p, a fall of 31.5%. This compares with a decrease of 17.9%
in our sterling adjusted benchmark index, the Tokyo Stock Exchange (First
Section) Index (TOPIX), which is very disappointing and which reflects a
number of factors. Principal amongst these has been the emphasis within the
portfolio for much of the relevant period on "new Japan" companies. These are
companies which exhibit strong growth characteristics and are largely found in
the fields of technology, telecommunications, the internet, specialist retail
and other service-related areas. Notwithstanding their perceived strong
growth characteristics and sound long-term prospects such stocks
underperformed their "old economy" counterparts over the year under review. In
addition, the portfolio was adversely impacted by specific weakness in key
stocks, for example NTT DoCoMo, Rohm and Murata Manufacturing all of which
fell significantly during the year.
In the past twelve months Japan has endured difficult economic conditions.
The global economy has slowed, particularly in the manufacturing sector, where
many Japanese companies which have a large business exposure have been faced
with a fall in demand as inventories started to rise. This inventory
correction was sufficiently rapid that Japanese industrial production slowed
significantly as a result. Secondly, monetary policy has lacked clear
direction. The Bank of Japan having firstly raised the call money rate in
August 2000, then resumed its zero interest rate policy in March 2001 with
some quantitative easing as it recognised the rate at which the economy was
slowing and markets were falling. Thirdly, the political situation was also
lacking in direction for some time. Since April 2001, however, the election
of Mr Koizumi has changed the political scene in that, backed by overwhelming
public support, he is proposing a programme of far-reaching reforms. Despite
the continued resistance of certain vested interests it appears that material
change may at last be on the agenda.
Japan may be about to enter a new era, but progress will be painful as the
reforms needed to create lasting change are likely at first to have a negative
impact on the economy, before stimulating a sustainable long-term recovery.
Revenue and Dividends
In line with the Company's stated objective of providing long-term capital
growth no ordinary share dividend is recommended.
Annual General Meeting
Two items of special business are to be proposed at the Annual General Meeting
as special resolutions. First, your Directors are seeking renewal of the
authority to issue new ordinary shares of the Company. This authority
provides the Directors with a degree of flexibility to increase the assets of
the Company by the issue of new shares, should favourable opportunities arise.
The powers authorised will not be exercised at an issue price below net
asset value per share so that the interests of existing shareholders are not
diluted.
Second, your Directors wish to renew the share buy-back authority granted to
them at the Annual General Meeting held on 18 September 2000.
The renewal of both of these authorities is required or they will expire at
the conclusion of the Annual General Meeting.
The Annual General Meeting of the Company will be held at the offices of
INVESCO Asset Management Limited on 11 September 2001. This will be an
opportunity to meet the Board of Directors and also to hear from the Company's
investment manager, who will speak about the Company's performance and
prospects. Following the presentation there will be an opportunity to meet
the Board informally over refreshments.
Antony Dick
Chairman
18 July 2001
Statement of Total Return (incorporating the revenue account)
for the year ended 31 May
Notes 2001 2000
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
(Losses)/gains on investments -(21,741)(21,741) - 29,800 29,800
Exchange gains/(losses) - 54 54 - (975) (975)
Income 1 356 - 356 254 14 268
Investment management fee 2 (44) (397) (441) (65) (582) (647)
Other expenses 3 (283) (38) (321) (335) (15) (350)
Net return before finance
costs and taxation 29 (22,122)(22,093) (146) 28,242 28,096
Interest payable and similar 4 (7) (63) (70) (11) (94) (105)
charges
Return on ordinary activities 22(22,185)(22,163) (157) 28,148 27,991
before tax
Tax on ordinary activities 5 (87) 44 (43) (70) 35 (35)
Return on ordinary activities
after tax for the financial (65)(22,141)(22,206) (227) 28,183 27,956
year
Transfer (from)/to reserves (65)(22,141)(22,206) (227) 28,183 27,956
Return per Ordinary Share:
Basic 6 (0.06)p(19.73)p(19.79)p(0.20)p 25.12p 24.92p
The revenue column of this statement is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued in the year.
Reconciliation of Movement in Shareholders' Funds
For the year ended 31 May
2001 2000
#'000 #'000
Revenue return for the year (65) (227)
Capital return for the year (22,141) 28,183
Proceeds from liquidation of Drayton Far Eastern Trust - 556
Issue of shares 5 3
Net movement in Shareholders' funds (22,201) 28,515
Opening Shareholders' funds 70,612 42,097
Closing Shareholders' funds 48,411 70,612
The accompanying notes are an integral part of this statement
Balance Sheet
at 31 May 2001
Notes 2001 2000
#'000 #'000
Fixed assets
Investments 7 44,301 77,319
Current assets
Debtors 410 3,112
Cash at bank 3,923 1,792
4,333 4,904
Creditors: amounts falling due within one year 223 11,611
Net current assets/(liabilities) 4,110 (6,707)
Total assets less current liabilities 48,411 70,612
Capital and reserves
Called-up share capital 11,222 11,221
Share premium account 33,079 33,075
Other reserves
Special reserve 20,000 20,000
Capital reserve - realised (16,105) (22,377)
Capital reserve - unrealised 391 28,804
Revenue reserve (176) (111)
Equity shareholders' funds 48,411 70,612
Net asset value per share:
Ordinary
Basic 43.1p 62.9p
Diluted 8 43.1p 61.6p
The accompanying notes are an integral part of this statement
These financial statements were approved by the Board of Directors on 18 July
2001.
Cash Flow Statement
for the year ended 31 May 2001
2001 2000
#'000 #'000
Cash flow from operating activities (435) (724)
Servicing of finance
Interest paid (82) (97)
Taxation
Income tax recovered 67 31
Capital expenditure and financial investment 12,153 (4,782)
Cash inflow/(outflow) before management of liquid resources 11,703 (5,572)
and financing
Management of liquid resources (762) 251
Financing (9,551) 6,259
Increase in cash 1,390 938
2001 2000
#'000 #'000
Reconciliation of net cash flow to movement in net funds
Increase in cash 1,390 938
Cash outflow/(inflow) from increase/(decrease) in liquid 762 (251)
resources
Cash outflow/(inflow) from decrease/(increase) in debt 9,556 (5,701)
Change in net funds/(debt) resulting from cash flows 11,708 (5,014)
Translation difference 54 (973)
Movement in net funds/(debt) in the year 11,762 (5,987)
Net debt at beginning of year (7,839) (1,852)
Net funds/(debt) at 31 May 3,923 (7,839)
Notes to the Financial Statements
for the year ended 31 May 2001
1. Income
2001 2000
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Income from investments
UK fixed interest income - - - - 14 14
Overseas dividends 285 - 285 236 - 236
285 - 285 236 14 250
Other income
Deposit interest 71 - 71 18 - 18
Total income 356 - 356 254 14 268
Total income comprises:
Dividends 285 - 285 236 - 236
Interest 71 - 71 18 14 32
356 - 356 254 14 268
2. Investment management fee
2001 2000
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Investment management fee 44 397 441 65 582 647
(i) INVESCO Asset Management Limited acts as Manager and Secretary to
the Company under an agreement dated 2 June 1995 and subsequently revised on
30 July 1997. This agreement is terminable by either party upon expiry of not
less than one year's written notice. The fee is calculated at the rate of 0.75
per cent. per annum (plus VAT) by reference to the total gross assets of the
Company at the end of each respective calendar quarter. The gross assets for
this purpose exclude the value of any investment in other funds managed by the
Manager. At 31 May 2001 #90,000 (2000: #154,000) was due to the Manager for
payment in respect of management fees.
(ii) The Manager also receives #57,000 (2000: #55,300) per annum for
secretarial and administrative services. At 31 May 2001 #14,300 (2000: #
13,800) was due to the Manager for payment in respect of secretarial and
administrative services.
(iii) The Manager is responsible for the provision of custodial services
to the Company. Such services are currently provided by a third party
custodian. Charges incurred by the Manager for these services are recovered
from the Company in full, with the exception of custody fees relating to UK
equities which are borne by the Manager. During the year the Company was
charged #35,400 (2000: #23,200) for such services, of which #24,000 (2000: #
17,600) was accrued at the year end.
(iv) The Manager charges a dealing fee per transaction of #65 for
overseas investments and #60 for UK investments. This resulted in a charge of
#38,000 (2000: #15,000) to capital during the year.
3. Other expenses
2001 2000
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
General expenses 208 - 208 262 - 262
Directors' fees 56 - 56 56 - 56
Auditors' remuneration
- for audit services 16 - 16 15 - 15
- for other services 3 - 3 2 - 2
Transaction dealing charges (see - 38 38 - 15 15
note 2 (iv))
283 38 321 335 15 350
The Directors' fees authorised by the Articles of Association are #100,000 per
annum.
Of the Directors' fees disclosed above, #5,000 (2000: #5,000) was payable to
third parties in respect of making available the services of a Director; the
fee was assigned to INVESCO Asset Management Limited.
4. Interest payable and similar charges
2001 2000
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Term loans repayable within
1 year, not by instalments 7 63 70 11 94 105
5. Tax on net revenue from ordinary activities
2001 2000
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
United Kingdom taxation
Tax relief attributable to income
and expenses, allocated to capital 44 (44) - 35 (35) -
reserve - realised
Overseas tax 43 - 43 35 - 35
87 (44) 43 70 (35) 35
There is no liability to corporation tax for the year ended 31 May 2001 (2000:
Nil) as there were sufficient expenses to offset against gross taxable income
received in the year. The effective rate of tax is 20% (2000: 20%).
6. Return per ordinary share
Basic revenue return per ordinary share is based on net revenue return on
ordinary activities after taxation and on 112,212,521 (2000: 112,205,709)
ordinary shares, being the weighted average number of ordinary shares in issue
throughout the year.
Basic capital return per ordinary share is based on net capital return on
ordinary activities after taxation and on 112,212,521 (2000: 112,205,709)
ordinary shares, being the weighted average number of ordinary shares in issue
throughout the year.
Following the adoption of FRS 14 "Earnings per Share", as the ordinary share
price remained under the warrant exercise price, the warrants are considered
non-dilutive and therefore no diluted or fully-diluted return per ordinary
share has been calculated.
7. Investments
(a) Analysis of investments by listing status:
2001 2000
#'000 #'000
Listed on a recognised investment exchange 44,245 77,218
Unlisted investments 56 101
44,301 77,319
(b) Analysis of investment gains/(losses):
Listed Listed
UK overseas Unlisted Total
#'000 #'000 #'000 #'000
Opening book cost 509 47,674 332 48,515
Opening unrealised appreciation/ 979 28,056 (231) 28,804
(depreciation)
Opening valuation 1,488 75,730 101 77,319
Movements in the year:
Purchases at cost - 48,267 - 48,267
Sales - proceeds (294) (59,230) (20) (59,544)
- realised gains on sales 185 6,481 6 6,672
Decrease in unrealised appreciation (686) (27,696) (31) (28,413)
Closing valuation 693 43,552 56 44,301
Closing book cost 400 43,192 318 43,910
Closing unrealised appreciation/ 293 360 (262) 391
(depreciation)
693 43,552 56 44,301
2001 2000
#'000 #'000
Realised profits on sales 6,672 7,253
(Decrease)/increase in unrealised (28,413) 22,547
appreciation
(Losses)/profits on investments (21,741) 29,800
8. Net Asset Value
The ordinary share price remained under the warrant exercise price so that the
warrants are considered non-dilutive. Hence, at the year end the basic net
asset value and the diluted net asset value are the same. (2000: The diluted
net asset value per ordinary share is based on net assets at the year-end and
on the assumption that 22,412,615 being the outstanding warrants are exercised
at 55p each and converted into ordinary shares).
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 May 2001 or the year ended 31 May
2000. The financial information for 2000 is derived from the statutory
accounts for 2000, which have been delivered to the Registrar of Companies.
The auditors have reported on the 2000 accounts; their report was unqualified
and did not contain a statement under section 237 (2) or (3) of the Companies
Act 1985. The financial information for year ended 31 May 2001 is unaudited.
The statutory accounts for 2001 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.
The audited Report and Accounts will be posted to shareholders shortly.
Copies may be obtained during normal business hours from the Company's
Registered Office, 11 Devonshire Square, London, EC2M 4YR.
The Annual General Meeting will be held at the Company's Registered Office on
11 September 2001 at 12.00 noon.
By order of the Board
INVESCO Asset Management Limited - Secretary
18 July 2001
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