RNS Number:5259L
Global High Yield Bond Trust Ld
23 May 2003
UNAUDITED RESULTS
YEAR ENDED
31 JANUARY 2003
Abridged accounts for the preliminary results for the year ended 31 January 2003
are unaudited. The financial information set out in the announcement does not
constitute the statutory financial statements for The Global High Yield Bond
Trust ("the Company") for the years ended 31 January 2003 or 31 January 2002.
The financial information for the year ended 31 January 2002 is derived from
the statutory financial statements for that year which have been delivered to
Her Majesty's Greffier. The auditors reported on those financial statements;
their report was unqualified and did not contain a statement that, in the
opinion of the auditors, proper accounting records had not been kept, returns
adequate for their audit were not received from branches, the Company's
financial statements were not in agreement with the accounting records and
returns, or that the auditors were unable to obtain all the information and
explanations which, to the best of their knowledge and belief, were necessary
for the purposes of their audit. The statutory financial statements for the year
ended 31 January 2003 will be finalised on the basis of the financial
information presented by the directors in this preliminary announcement and will
be delivered to Her Majesty's Greffier following the Company's Annual General
Meeting.
Year Ended Year Ended
31 January 2003 31 January 2002
Net revenue return after taxation #(1,471,000) #3,006,000
Net (liabilities) #(47,147,000) #(18,477,000)
Net asset value per preference share Nil Nil
CHAIRMAN'S STATEMENT
I present the preliminary announcement for The Global High Yield Bond Trust
Limited ("GHYBT") for the year ended 31 January 2003.
The last year has seen a serious deterioration in the global macroeconomic
picture. Equity markets worldwide have fallen and higher yielding bonds have
decreased substantially in value. Both these asset classes have fallen in value
principally because of the threat to growth in all the main economies stemming
both from a reduction in spending by consumers and a reduction in capital
expenditure by businesses. This has had a marked impact on the companies in
which GHYBT invests.
The Company is required to satisfy par value ratio coverage tests on each class
of Floating Rate Note as described in the Offering Circular. If at any time, the
Class A Floating Rate Note par value ratio coverage test were to fall below the
event of default level, Financial Security Assurance (U.K.) Limited (FSA) as
guarantor of the Class A Floating Rate Notes, would be entitled to direct the
trustee to declare each class of Floating Rate Note immediately due and payable
at its principal amount together with any accrued interest. The preliminary
announcement has been prepared on a going concern basis, however there is
fundamental uncertainty over the appropriateness of this basis as a result of
the current value of the Class A Floating Rate Note par value ratio coverage
test compared to the event of default level. If the circumstances described
above were to arise, the Company would no longer be a going concern, and the
adjustments described in note 2 of the preliminary announcement would need to be
made to present the preliminary announcement on a break up basis.
As stated in the interim report, there is a risk that GHYBT could default on its
obligations to holders of Class A Floating Rate Notes as defined in the original
Offering Circular of April 2000. It should be borne in mind that in the event of
liquidation of GHYBT, a number of additional costs would crystallise. Of these,
the breakage costs of the swap agreement, estimated at # 8.340 million, would be
the principal liability. Shareholders should also be aware that due to the
ongoing failure of the par value ratio coverage tests, GHYBT is redeeming
portions of the Class A Floating Rate Notes on the semi-annual payment dates
and, provided an event of default is avoided, it will continue to do so for the
foreseeable future. The most recent redemption of Class A Floating Rate Notes
occurred after the balance sheet date, on the April 2003 payment date, and the
effect of this redemption upon the Company's capital structure is described in
note 3 of the preliminary announcement.
As regards the preference shares of GHYBT, it is the opinion of the board that
the payment of further dividends will not be possible during the remaining life
of GHYBT.
Turning to the future, the directors have the interests of all the Noteholders
and Shareholders of GHYBT under regular review and will monitor and investigate
all possibilities which may maximise the returns to all classes of Noteholders
and Shareholders over the longer term.
Rupert Evans (Chairman)
The unaudited financial statements are attached.
For further information:
Neil Smith 020 7809 6151
Morley Fund Management
UNAUDITED STATEMENT OF TOTAL RETURN
(incorporating the revenue account*) of the Company for the year ended 31 January 2003
Year ended 31 January 2003 Year ended 31 January 2002
Revenue* Capital Total Revenue* Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
(Losses)on Investments (24,947) (24,947) (27,113) (27,113)
Exchange rate (losses)/gains (2,282) (2,282) 198 198
Income 19,321 19,321 25,380 25,380
Investment management fee (84) (84) (848) (848)
Administration expenses (383) (383) (342) (342)
Net return before finance costs and taxation 18,854 (27,229) (8,375) 24,190 (26,915) (2,725)
Interest payable and finance charges (20,325) (20,325) (21,184) (21,184)
Return attributable to redeemable preference (1,471) (27,229) (28,700) 3,006 (26,915) (23,909)
Shareholders before and after tax
Dividends 0 0 (2,853) (2,853)
Transfer to Preference Share Reserve 1,471 1,471 (153) (153)
Transfer to reserves 0 (27,229) (27,229) 0 (26,915) (26,915)
Reserves as at 31 January 2002 6 (48,671) (48,665) 6 (21,756) (21,750)
Reserves as at 31 January 2003 6 (75,900) (75,894) 6 (48,571) 48,665
Return per redeemable preference share (5.3)p (97.8)p (103.1)p 10.8p (96.7)p (85.9)p
*The revenue column of this statement is the profit and loss account of the
Company. No operations were acquired or discontinued during the year ended 31st
January 2003.
UNAUDITED BALANCE SHEET AT 31 January 2003
31 Jan 2003 31 Jan 2002
#'000 #'000
Fixed assets
Investments at market value - Euro Denominated 69,645 82,682
Investments at directors' valuation - Sterling denominated 9,466 13,159
Investments at directors' valuation - Dollar denominated 44,236 52,792
123,347 148,633
Current Assets
Debtors 5,020 8,977
Cash at Bank 2,105 2,958
7,125 11,935
Creditors: amounts falling due within one year (4,755) (8,042)
Net Current assets 2,370 3,893
Total assets less current Liabilities 125,717 152,526
Creditors: amounts falling due after more than one year (172,864) (171,003)
Net (Liabilities) (47,147) (18,477)
Capital and reserves
Called up share capital 27,831 27,831
Capital reserve - Realised (37,478) (20,472)
Capital reserve - Unrealised (38,422) (28,199)
Other reserves (306) (336)
Preference share reserve 1,222 2,693
Revenue reserve 6 6
Shareholders' Funds (47,147) (18,477)
Shareholders' funds attributable to:
Ordinary shareholders 6 6
Non-equity shareholders (47,153) (18,483)
(47,147) (18,477)
Net asset value per preference share 0p 0p
Unaudited Statement of Cash Flows for the Year to 31 January 2003
Year ended Year ended
31 Jan 2003 31 Jan 2002
#'000 #'000 #'000 #'000
Net cash inflow from operating activities 1 19,741 23,572
Returns on investments and servicing of finance
Interest payable (19,965) (20,965)
Dividends - (2,853)
Net cash outflows from servicing of finance (19,965) (23,818)
Capital expenditure and financial investment
Purchase of investments (4,760) (36,195)
Sale of investments 14,563 35,135
Net cash inflow from financial investments 9,803 (1,060)
Financing
Redemptions of Floating Rate Notes (10,432) -
Net cash outflows from financing (10,432) -
(Decrease) in cash and cash equivalents (853) (1,306)
Reconciliation of net cashflows to movement in
cash balances
(Decrease) in cash and cash equivalents (853) (1,306)
Cash Balances at 31 January 2002 2,958 0
Cash Balances at 31 January 2003 2,105 2,958
NOTES TO THE PRELIMINARY ANNOUNCEMENT
1. Reconciliation of net revenue before finance costs to net cash
inflow/(outflow) from operating activities
31 January 2003 31 January 2002
#'000 #'000
Net return before finance costs 18,854 24,190
Decrease in debtors 3,986 1,625
Decrease in creditors (3,316) (2,028)
Exchange losses/(gains) 217 (215)
Net cash inflow/(outflow) from operating activities 19,741 23,572
2. Par value coverage tests
The Company is required to satisfy par value ratio coverage tests on each class
of Floating Rate Note as described in the Offering Circular. Where these tests
are not satisfied on a determination date (10 April and 10 October each year),
the Floating Rate Notes must be redeemed on a pro rated basis within each class,
starting with the Class A Floating Rate Notes, from interest proceeds until the
earlier of the satisfaction of the tests or until the interest proceeds have
been distributed in full. Any unpaid interest on the Class B, Class C and/or
Class D Floating Rate Notes is deferred and added to the aggregate principal
amount of the Class B, Class C and/or Class D Floating Rate Notes in accordance
with the provisions of the Offering Circular. If at any time, the Class A
Floating Rate Note par value ratio coverage test were to fall below the event of
default level, Financial Security Assurance (U.K.) Limited (FSA) as guarantor of
the Class A Floating Rate Notes, would be entitled to direct the trustee to
declare each class of Floating Rate Note immediately due and payable at its
principal amount together with any accrued interest.
As a result of a deterioration in the par value of the portfolio, due to
defaults and sales of assets at prices below par since launch, the Class A
Floating Rate Note par value ratio coverage test of the Company has neared a
level that would constitute an event of default. As at 31 January 2003, the
Class A Floating Rate Note par value ratio coverage test result was 108.93%, and
an event of default would occur if this test result were to fall below 102%.
If an event of default were to occur and FSA were to direct the trustee to
declare each class of Floating Rate Note immediately due and payable, the
following adjustments would have to be made to show the financial statements on
a break-up basis:
a) Valuation of investments
It may be necessary to write down the carrying value of investments, on the
grounds of illiquidity, to their net realisable value. As at 31 January 2003,
the investments were valued at #122.6 million using bid prices, compared to
#123.3 million using mid-market prices. However due to the potential illiquidity
of some of the Company's investments, it is not guaranteed that these valuations
would be realised upon disposal and in addition there would be brokerage dealing
costs associated with the realisations.
b) Interest Rate Swap agreement
The fair value of the swap agreement as at 31 January 2003 was #8.340 million.
If the financial statements were to be prepared on a break-up basis, this amount
would be included as a liability of the Company.
c) Loan issue costs
Issue costs relating to the bank loan are currently being amortised over the
life of the loan. If the financial statements were to be prepared on a break-up
basis, the unamortised issue costs would need to be written off through the
Statement of Total Return. At 31 January 2003, unamortised issue costs amounted
to #1.780 million.
d) Wind-up costs
The costs associated with the winding-up of the Company are likely to include
professional fees (accountancy and legal fees) and the costs of terminating
existing operational contracts. Such contracts include the management,
administration, registrar and custody agreements. Under the circumstances, some
of these termination costs may be waived or reduced. At the present time, it is
not possible to quantify the costs involved with any reasonable degree of
accuracy.
3. Post Balance Sheet Events
As a result of the failure of par value ratio coverage tests as at the April
2003 determination date, Euro6.040m Class A Floating Rate Notes were redeemed in
accordance with the provisions of the Offering Circular. This partial redemption
of the Class A Floating Rate Notes resulted in there being insufficient funds to
pay the interest due on the Class B, C and D Floating Rate Notes. This interest
was deferred in accordance with the provisions of the Offering Circular. The
redemption had the following effect on the aggregate principal amount of
Floating Rate Notes outstanding as at 22 May 2003:
Principal amount of Notes outstanding (EUR)
A Notes 198,720,000
B Notes 31,699,707
C Notes 22,573,046
D Notes 11,510,543
There was no dividend paid on the redeemable preference shares for the period.
As at the close of business on the 22 May 2003, the Class A Floating Rate Note
par value ratio coverage test stood at 107.07%. The worsening of the Class A
Floating Rate Note par value ratio coverage test since the balance sheet date
was primarily due to the effect of defaults in the portfolio. Since the year-
end, the Company's holdings of Air Canada, Vantico and Cable Satisfaction had
all gone into default.
This information is provided by RNS
The company news service from the London Stock Exchange
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