RNS Number:7617B
Quarterly High Income Trust PLC
27 September 2002
NEWS RELEASE
UNAUDITED INTERIM RESULTS
6 MONTHS ENDED 30 JUNE 2002
For Immediate Release 27 September 2002
6 months ended 6 months ended
30 June 2002 30 June 2001
Dividend Per Ordinary Share for 2nd Quarter - 3.0p
1st Quarter and Special Dividend Paid - 3.0p
Net Asset Value Per Ordinary Share (34.83)p 38.52p
Net Revenue Before Tax #2,158,000 #6,698,000
Net Revenue After Tax #1,565,000 #6,130,000
Total Return Per Ordinary Share (31.38)p (28.61)p
CHAIRMAN'S STATEMENT
I present the interim report of The Quarterly High Income Trust PLC for the six
months ended 30 June 2002.
Asset Performance
The net assets attributable to the Ordinary Shares at 30 June 2002 amounted to #
(36.2)m, equivalent to a deficit of 34.83p per share (31 December 2001: a
deficit of 3.45p per share), a reduction of 31.38p per share for the period.
Thus the Company's total return per Ordinary Share was a loss of 31.38p (6
months to 30 June 2001: a loss of 28.61p per share). This reflected a fall in
net assets over the period of 96.3%. The net assets attributable to the Ordinary
Shares as at 13 September 2002 amounted to #(59.7)m, equivalent to a deficit of
57.43p per share, owing to further market weakness in July and August.
This very disappointing result was due to a number of related factors. First
markets during the period were weak with the FTSE All Share Index falling by
-8.93% in the six months to the end of June 2002. Second the effects of falling
markets on the Company's net assets were exaggerated by the financial gearing
inherent within the Company's capital structure and third the split-capital
sector itself suffered from a significant loss of investor sentiment further
reducing the value of the Company.
Earnings and Dividends
Earnings for the period totalled #1,565,000 (6 months to 30 June 2001:
#6,130,000) equivalent to 1.51p per Ordinary Share (6 months to 30 June 2001:
5.90p per Ordinary Share). Due to the Company's inability to comply with the
sections of The Companies Act governing the payment of dividends, no dividends
have been proposed or paid during the period. The board does not envisage any
dividends being proposed for the foreseeable future. Additionally it is clear
that the board will need to revise its accounting charge to capital over the
next period. It is very likely to be a very high charge to revenue and hence the
revenue account returns should decrease dramatically in future.
Banking Covenant
During July 2002, the board managed to complete negotiations with the bank and
now have an on-demand facility but the banks have given a letter of comfort to
the effect that the facility is envisaged to last a year until 30 June 2003.
During this time, if the outlook for the Company improves significantly, the
board will endeavour to negotiate a lasting solution.
In exchange for the concessions, the Company has agreed to pay all dividend
receipts and capital realisations back to the banks as and when they arise so
reducing the borrowing of the Company over time.
Background and Outlook
The Company's investment portfolio is mainly invested in geared ordinary shares
of other split-capital closed-end funds. The performance of the Company
highlighted above was consequence of high gearing in falling markets which has
resulted in a significant deterioration in the financial position of many of the
companies in which we invest. It is clear world markets are weak, with
volatilities at extreme levels and the macroeconomic outlook uncertain. Many
investors have remained out of the markets whilst the corporate scandals of
Enron, Worldcom and others have been played out and have helped to depress any
buyer led rallies.
The board hopes that the next six months will see some form of stability
returning to the market helping it to assess more realistically the prospects
for the Company, although the prospects of any return to the Zero Dividend
Preference Shareholders must be doubtful.
R. A. Brooks
Chairman
25 September 2002
Unaudited Statement of Total Return (incorporating the revenue account)
For the six months ended 30 June 2002
Six months ended 30 June 2002 Six months ended 30 June 2001
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Losses on investments - (31,593) (31,593) - (32,823) (32,823)
Income from investments 2,894 - 2,894 8,097 - 8,097
Other income 828 - 828 158 - 158
Total income 3,722 (31,593) (27,871) 8,255 (32,823) (24,568)
Investment management fee - - - (283) (423) (706)
Administrative expenses (375) (5) (380) (87) (16) (103)
Net return before taxation and finance
costs 3,347 (31,598) (28,251) 7,885 (33,262) (25,377)
Finance costs (1,189) (1,784) (2,973) (1,187) (1,780) (2,967)
Net return before taxation 2,158 (33,382) (31,224) 6,698 (35,042) (28,344)
Taxation (593) 588 (5) (568) 454 (114)
Net return after taxation 1,565 (32,794) (31,229) 6,130 (34,588) (28,458)
Appropriation to redemption reserve - (1,370) (1,370) - (1,272) (1,272)
1,565 (34,164) (32,599) 6,130 (35,860) (29,730)
Dividends
Paid - - - (3,117) - (3,117)
Proposed - - - (3,117) - (3,117)
Transfer to / (from) reserves 1,565 (34,164) (32,599) (104) (35,860) (35,964)
Reserves as at 1 January 5,141 (124,086) (118,945) 822 (40,179) (39,357)
Reserves as at 30 June 6,706 (158,250) (151,544) 718 (76,039) (75,321)
Return per share
Basic 1.51p (32.89)p (31.48)p 5.90p (34.51)p (28.61)p
Diluted * - - - 5.90p (34.50)p (28.60)p
* Diluted return per ordinary share has not been shown for the six
months ended 30 June 2002 as all warrants lapsed on 1 May 2002.
Unaudited Balance Sheet
at 30 June 2002
30 June 2002 31 December 2001
#'000 #'000 #'000 #'000
Fixed assets
Investments 35,295 73,832
Current assets
Debtors 622 1,407
Cash at bank and in hand 50,029 41,625
50,651 43,032
Creditors: amounts falling due within one year (241) (675)
Net current assets 50,410 42,357
Total assets less current liabilities 85,705 116,189
Creditors: amounts falling due after one year (84,498) (83,753)
Net assets 1,207 32,436
Share capital and reserves
Called up ordinary share capital 25,979 25,979
Called up zero dividend preference shares 7,381 7,381
Capital reserves (38,859) (6,065)
Revenue reserve 6,706 5,141
Total shareholders' funds 1,207 32,436
Total shareholders' funds comprise equity and non-equity
interests as follows:
Equity (ordinary shareholders) (36,191) (3,591)
Non-equity (zero dividend preference shareholders) 37,398 36,027
1,207 32,436
Ordinary Shares
Basic Net Asset Value Per Share (34.83)p (3.45)p
Diluted Net Asset Value Per Share * - (3.46)p
Market Price 0.19p 3.00p
Zero Dividend Preference Shares
Net Asset Value Per Share (FRS4 basis) 126.66p 122.02p
Net Asset Value Per Share (Articles of Association) 4.09p 109.86p
Market Price 4.00p 37.50p
* Diluted Net Asset Value per share as at 30 June 2002 has not been
shown as all warrants lapsed on 1 May 2002.
Unaudited Cash Flow Statement
For the six months ended 30 June 2002
Six months ended Six months ended
30 June 2002 30 June 2001
#'000 #'000 #'000 #'000
Net cash inflow from operating activities 3,673 8,220
Servicing of finance
Interest payable (2,925) (2,945)
Financial investments
Purchases of investments - (56,087)
Sales of investments 7,656 63,582
Net cash inflow from financial investment 7,656 7,495
Equity dividends paid - (7,315)
Increase in cash 8,404 5,455
Reconciliation of net cashflow to movement in net funds:
Increase in cash 8,404 5,455
Net funds at 1 January 41,625 2,592
Net funds at 30 June 50,029 8,047
This information is provided by RNS
The company news service from the London Stock Exchange
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