RNS Number:0553L
British Assets Trust PLC
14 May 2003
BRITISH ASSETS TRUST PLC
To: RNS
From: British Assets Trust plc
Date: 14 May 2003
Interim Results in respect of the six months ended 31 March 2003
Financial Highlights
* Net asset value total return of -2.9 per cent compared with
a return of -0.9 per cent for the benchmark index
* Dividend yield 6.2 per cent
* Discount 4.6 per cent
Total Return
The Company's net asset value total return, that is with dividends re-invested,
was -2.9 per cent over the six month period to 31 March 2003. This compared with
a return of -0.9 per cent for the composite benchmark index of 75 per cent FTSE
All-Share Index and 25 per cent FTSE World (ex UK) Index. The total return for
the FTSE All-Share Index was -1.9 per cent.
The dividend yield as at 31 March 2003 was 6.2 per cent being one of the highest
available from a global investment trust. The Company's discount of share price
to net asset value at the end of the period was 4.6 per cent.
Stockmarkets recovered slightly in the last quarter of 2002 but fell back at the
start of 2003. In January, UK equities recorded their worst performance since
1974, largely due to forced selling by life companies, as they had to avoid
breaching solvency requirements. Concern over the war with Iraq also contributed
to global stockmarket weakness.
As was the case in the year ended 30 September 2002, gearing continued to be the
main reason for the Company's underpeformance although there was some weakness
in stock selection. Asset allocation was positive, reflecting good returns from
the Company's corporate bond portfolio which increased in value by 7.8 per cent
against a backdrop of falling stockmarkets.
Activity
During the period there were only limited asset allocation shifts. The key one
was the repayment of the yen loan, referred to below, which was funded from cash
and the sale of corporate bonds. Towards the end of March, we took advantage of
the rally in global stockmarkets as the war in Iraq got underway to reduce the
Company's exposure to North America and rebuild cash levels.
Gearing
At the end of the period the Company's gearing, net of cash, was 32.3 per cent
of which 8.8 per cent was accounted for by the corporate bond portfolio.
Gearing was reduced during the period by the repayment of the Company's yen loan
which had a Sterling value of #22.4 million at the time of repayment. The loan
had been drawn down under a three year committed revolving credit facility which
expired during the period.
The nominal value of the Company's remaining borrowings totals #120 million
which comprises two #60 million Bonds, maturing in 2008 and 2031. The Board
regularly reviews the Company's gearing level and at present market levels does
not consider it to be in the best interests of shareholders to de-gear the
Company to any material extent. As stated in previous years' Annual and Interim
Reports the Board believes, and continues to believe, that the prospects for
equities are such that they will exceed the cost of financing the borrowings,
thereby enhancing returns for shareholders.
Earnings and Dividends
Earnings per share for the six months to 31 March 2003 were 1.84p (2002 -
#1.88p). A first interim dividend of 1.304p per Ordinary Share (2002 - 1.304p)
was paid on 11 April 2003 and the Board has declared a second interim dividend
of 1.304p per Ordinary Share (2002 - 1.304p), which will be paid on 11 July 2003
to shareholders on the register on 13 June 2003.
At 30 September 2002 the level of dividend cover provided by the Revenue Reserve
was 98 per cent. At the Annual General Meeting held on 19 December 2002,
shareholders approved the cancellation of the Company's Share Premium Account
and Capital Redemption Reserve. The Company is in the process of seeking Court
approval for the cancellation of these reserves and, if granted, a new special
reserve of #14.7 million will be created which may be treated as profits
available to the Company for the purpose of paying future dividends and buying
back shares. Following the creation of this reserve, the level of dividend cover
provided by the Company's distributable reserves will be in the region of 160
per cent of the annual dividend cost, which the Board believe provides
sufficient flexibility for future dividend payments.
Outlook
Whilst helpful, the swift resolution of the Iraqi conflict is unlikely to prove
a panacea for global markets. The fall in the oil price is welcome, given its
impact on global demand. Equity markets continue to offer value against cash and
bonds but investors remain cautious against a backdrop of uncertain global
growth and a slow recovery in corporate profits.
For further information please contact:
Julie Dent 0131 465 1000
ISIS Asset Management plc
Unaudited Statement of Total Return (Incorporating the revenue account)
for the 6 Months ended 31 March 2003
2003 2003 2003
Revenue Capital Total
#'000 #'000 #'000
Losses on investments - (11,697) (11,697)
Exchange differences - (470) (470)
Income 8,446 - 8,446
Investment management fee:
Basic (212) (636) (848)
Performance - - -
Other expenses (356) - (356)
--------- --------- ---------
Net return before finance costs & taxation 7,878 (12,803) (4,925)
Finance Costs:
6.625% Bonds 2008 (505) (1,514) (2,019)
6.25% Bonds 2031 (474) (1,422) (1,896)
Other (29) (86) (115)
--------- --------- ---------
Return on ordinary activities before tax 6,870 (15,825) (8,955)
Tax on ordinary activities (369) 256 (113)
--------- --------- ---------
Return attributable to equity shareholders 6,501 (15,569) (9,068)
Dividends in respect of equity shares (9,216) - (9,216)
--------- --------- ---------
Transfer from reserves (2,715) (15,569) (18,284)
--------- --------- ---------
Return per Ordinary Share (p) 1.84 (4.41) (2.57)
Unaudited Statement of Total Return (Incorporating the revenue account)
for the 6 Months ended 31 March 2002
2002 2002 2002
Revenue Capital Total
#'000 #'000 #'000
Gains on investments - 45,447 45,447
Exchange differences - 1,813 1,813
Income 8,578 - 8,578
Investment management fee:
Basic (286) (858) (1,144)
Performance - (766) (766)
Other expenses (335) - (335)
--------- --------- ---------
Net return before finance costs & taxation 7,957 45,636 53,593
Finance Costs:
6.625% Bonds 2008 (505) (1,514) (2,019)
6.25% Bonds 2031 (474) (1,422) (1,896)
Other (36) (108) (144)
--------- --------- ---------
Return on ordinary activities before tax 6,942 42,592 49,534
Tax on ordinary activities (295) 195 (100)
--------- --------- ---------
Return attributable to equity shareholders 6,647 42,787 49,434
Dividends in respect of equity shares (9,193) - (9,193)
--------- --------- ---------
Transfer (from) / to reserves (2,546) 42,787 40,241
--------- --------- ---------
Return per Ordinary Share (p) 1.88 12.11 13.99
Statement of Total Return (Incorporating the revenue account)
for the Year ended 30 September 2002
2002 2002 2002
Revenue Capital Total
#'000 #'000 #'000
Losses on investments - (147,328) (147,328)
Exchange differences - 1,825 1,825
Income 18,408 - 18,408
Investment management fee:
Basic (563) (1,690) (2,253)
Performance - (766) (766)
Other expenses (832) - (832)
________ ________ ________
Net return before finance costs & taxation 17,013 (147,959) (130,946)
Finance Costs:
6.625% Bonds 2008 (1,010) (3,028) (4,038)
6.25% Bonds 2031 (944) (2,832) (3,776)
Other (72) (217) (289)
________ ________ ________
Return on ordinary activities before tax 14,987 (154,036) (139,049)
Tax on ordinary activities (710) 441 (269)
________ ________ ________
Return attributable to equity shareholders 14,277 (153,595) (139,318)
Dividends in respect of equity shares (18,791) - (18,791)
________ ________ ________
Transfer from reserves (4,514) (153,595) (158,109)
________ ________ ________
Return per Ordinary Share (p) 4.04 (43.47) (39.43)
Unaudited Balance Sheet As At As At As At
31.03.03 30.09.02 31.03.02
#'000 #'000 #'000
Fixed Assets
Investments 418,228 457,471 663,488
Current Assets
Debtors 9,134 5,865 6,047
Cash at bank and on deposit 21,026 23,333 20,304
--------- --------- ---------
30,160 29,198 26,351
Creditors:
Amounts falling due within one year (13,429) (11,271) (15,817)
Yen Loan - (22,199) (22,519)
----------- ---------- ----------
Net Current Assets / (Liabilities) 16,731 (4,272) (11,985)
----------- --------- ---------
Total Assets less Current Liabilities 434,959 453,199 651,503
Creditors: amounts falling due after more than one
year:
6.625% Bonds 2008 (59,684) (59,653) (59,621)
6.25% Bonds 2031 (59,250) (59,237) (59,223)
----------- ---------- ----------
(118,934) (118,890) (118,844)
----------- --------- ---------
Net assets 316,025 334,309 532,659
---------- --------- ---------
Equity Shareholders' Funds 316,025 334,309 532,659
---------- --------- ---------
Net Asset Value per Share 89.4p 94.6p 150.7p
Summarised Unaudited Statement of Cash Flows
Six months to Six months to Year
to
31 March 31 March 30 September
2003 2002 2002
#'000 #'000 #'000
Net cash inflow from operating activities 6,405 3,978 12,954
Servicing of finance (3,983) (4,007) (10,000)
Taxation 11 60 111
Financial investments 27,960 (41,441) (32,404)
Equity dividends paid (9,590) (9,759) (18,968)
Net cash inflow/(outflow) before financing 20,803 (51,169) (48,307)
Financing (22,429) 2,650 2,629
Decrease in cash (1,626) (48,519) (45,678)
Reconciliation of net cash flow to movement in net debt
Decrease in cash (1,626) (48,519) (45,678)
Costs in relation to issue of 6.25% Bonds 2031 - - 21
Currency (losses)/gains (681) 58 246
Yen loan repaid 22,429 - -
(Increase)/decrease in yen loan liability (230) 1,755 2,075
Increase in 6.625% Bonds 2008 Liability (31) (31) (63)
(Increase)/decrease in 6.25% Bonds 2031 Liability (13) 9 (26)
Movement in net debt 19,848 (46,728) (43,425)
Net debt at 1 October (117,756) (74,331) (74,331)
Net debt at 31 March/30 September (97,908) (121,059) (117,756)
Reconciliation of net revenue before finance costs and
taxation to net cash inflow from operating activities
Net revenue before finance costs and taxation 7,878 7,957 17,013
Investment Management fee charged to capital (636) (1,624) (2,888)
Tax on investment income (109) (114) (327)
Changes in working capital and other non-cash items (728) (2,241) (844)
Net cash inflow from operating activities 6,405 3,978 12,954
Notes:
1. The unaudited interim results have been prepared on the basis of the
accounting policies set out in the statutory accounts of the Company for the
year ended 30 September 2002.
2. Earnings for the first six months should not be taken as a guide to the
results of the full year.
3. Basic return per Ordinary Share is based on 353,362,282 Ordinary Shares in
issue during the period (2002 - same).
4. The second interim dividend of 1.304p per Ordinary Share will be paid on 11
July 2003 to shareholders on the register on 13 June 2003.
The last date for receipt of mandate instructions for those shareholders who
wish to join the Dividend Reinvestment Plan is 20 June 2003.
5. There were 353,362,282 Ordinary Shares in issue at 31 March 2003 (2002 -
same)
6. The following table provides a breakdown of the estimated contributions to
the total return for the period:
Attribution of Return Percentage Points
Market/benchmark return -0.9
Asset allocation 1.0
Stock selection
UK equities 0.0
Overseas equities -0.7
Corporate bonds -0.2
Gearing -1.8
Expenses -0.3
______
British Assets Trust total return -2.9
______
7. The Company's geographic exposure as a percentage of shareholders'
funds at 31 March 2003 was as follows (comparative figures are for 30
September 2002).
31 March 2003 30 September 2002
UK 91.6 92.4
North America 17.9 20.3
Europe 8.0 7.3
Japan 2.9 3.2
Far East (ex Japan) 3.1 3.2
Corporate Bonds 8.8 10.4
Liquidity 5.3 5.4
Borrowings (37.6) (42.2)
____ ____
100.0 100.0
8. These are not statutory accounts in terms of Section 240 of the Companies Act
1985 and are unaudited. Statutory accounts for the year ended 30 September
2002, which received an unqualified audit report, have been lodged with the
Registrar of Companies. No statutory accounts in respect of any period after
30 September 2002 have been reported on by the Company's auditors or
delivered to the Registrar of Companies. A full interim report will be sent
to shareholders in May 2002.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DXLFFXEBBBBL