RNS Number:3696R
Global High Yield Bond Trust Ld
28 October 2003
NEWS RELEASE
UNAUDITED RESULTS
SIX MONTHS ENDED 31 JULY 2003
For Immediate Release: 27 October 2003
Six Months to Six Months to
31 July 2003 31 July 2002
Net revenue return after taxation # 137,000 # (115,000)
31 July 2003 31 Jan 2003
Net (liabilities) #(40,769,000) #(47,147,000)
Net asset value per preference share Nil Nil
CHAIRMAN'S STATEMENT
I present the interim accounts for the Global High Yield Bond Trust Limited ("GHYBT") for the six months ended 31st
July 2003.
The last six months have seen a marked improvement in the prospects for GHYBT and the Board is encouraged by the
improvement in asset prices and the fact that the mid-market value of GHYBT's assets is now in excess of the
principal owed to the Class A Floating Rate Note holders.
The reason for this improvement is detailed more fully in the investment manager's report but predominately relates
to the global economic picture. This has improved considerably, with strong buying interest in high yield bonds as
investors seek to inject more opportunity for capital appreciation and associated risk into their portfolios. It
should also be noted that a re-rating of high yield bonds in Europe has occurred. Twelve months ago it appeared that
the high yield market had almost capitulated but now there is evidence of new issues being brought to the market on
the back of investor demand.
Notwithstanding our optimism that the Class A Floating Rate Note holders may receive back their capital as a result
of capital asset performance, the Board is still of the view that it is most unlikely that the preference
shareholders will receive dividends in the future or any capital at the end of the life of GHYBT. 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 # 8.659 million as at the balance sheet date, would be the
principal liability.
Over the next six months the Board and its advisers consider that the current asset performance is likely to be
maintained and that it may improve further if market sentiment remains favourable.
Rupert Evans (Chairman)
The unaudited interim 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 six months ended 31 July 2003
Six Months to 31 July 2003 Six Months to 31 July 2002
Notes Revenue Capital Total Revenue Capital Total
# '000 # '000 # '000 # '000 # '000 # '000
(Losses)/Gains on
Investments
- Realised (9,838) (9,838) (13,756) (13,756)
gain/(Loss)
- Unrealised 19,510 19,510 (8,661) (8,661)
gain/(Loss)
Exchange rate (3,447) (3,447) (898) (898)
loss/gain
Income 2 8,324 8,324 10,260 10,260
Investment management 3 0 0 (83) (83)
fee
Administration (185) (185) (141) (141)
expenses
Net return before 8,139 6,225 14,364 10,036 (23,315) (13,279)
finance costs and
taxation
Interest payable and 4 (8,002) (8,002) (10,151) (10,151)
similar charges
Return attributable 137 6,225 6,362 (115) (23,315) (23,430)
to redeemable
preference
Shareholders before
and after tax
Dividends 5 - - - -
Transfer To (137) (137) 115 115
Preference Share
Reserve
Transfer to reserves 0 6,225 6,225 0 (23,315) (23,315)
Reserves as at 31 6 (75,900) (75,894) 6 (48,671) (48,665)
January 2003
Reserves as at 31 6 (69,675) (69,669) 6 (71,986) (71,980)
July 2003
Return per redeemable 6 0.5p 22.4p 22.9p (0.4)p (83.8)p (84.2)p
preference share
* The revenue column of this statement is the profit and loss account of the Company.
No operations were acquired or discontinued in the period
UNAUDITED BALANCE SHEET AT 31 JULY 2003
31 July 2003 31 Jan 2003
Notes # '000 # '000
Fixed assets
Investments at Market Value -Euro Denominated 76,725 69,645
Investments at directors valuation - Sterling denominated 10,730 9,466
Investments at directors valuation - Dollar denominated 52,210 44,236
7 139,665 123,347
Current Assets
Debtors 8 4,917 5,020
Cash at Bank 2,479 2,105
7,396 7,125
Creditors: amounts falling due within one year 9 (4,509) (4,755)
Net Current assets 2,887 2,370
Total assets less current liabilities 10 142,552 125,717
Long term Liabilities (183,321) (172,864)
Net Assets (40,769) (47,147)
Share Capital and reserves
Called up Share Capital 13 27,831 27,831
Capital reserve - Realised 12 (47,316) (37,478)
Capital reserve - Unrealised 12 (22,359) (38,422)
Other Reserves 12 (290) (306)
Preference share reserve 12 1,359 1,222
Revenue Reserve 11 6 6
Shareholders Funds (40,769) (47,147)
Unaudited Statement of Cash Flows for the six months to 31 July 2003
For the six months ended 31 July 2003
Six months ended Six months ended
Notes 31 July 2003 31 July 2002
# '000 # '000 # '000 # '000
Net cash inflow from operating activities 14 8,930 11,231
Returns on investments and servicing of
finance
Interest payable (7,846) (10,015)
Dividends 0 0
(7,846) (10,015)
Capital expenditure and financial
investment
Purchase of investments 0 (4,739)
Sale of investments 2,507 10,236
Net cash outflow from financial investments 2,507 5,497
Financing
Redemptions of Floating Rate (3,217) (1,084)
Note/Capitalisation of Interest
Net cash inflow from financing
Increase/(Decrease) in cash and cash 374 5,630
equivalents
Reconciliation of net cashflow to movement
in net funds
Increase/(Decrease) in cash and cash 374 5,630
equivalents
Net funds at start of period 2,105 2,958
Net funds at 31 July 2003 2,479 8,588
NOTES TO THE PRELIMINARY ANNOUNCEMENT
1. Reconciliation of net revenue before finance costs to net cash inflow/(outflow) from operating activities
31 July 2003 31 July 2002
#'000 #'000
Net return before finance costs 8,139 10,036
Decrease in debtors 103 3,285
Decrease in creditors (246) (2,207)
Exchange losses/(gains) 935 118
Net cash inflow/(outflow) from operating activities 8,930 11,231
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 July 2003, the Class A Floating Rate Note par value ratio coverage
test result was 107.53%, 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 July 2003, the investments were valued at #134.0 million using bid prices, compared to
#139.7 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 July 2003 was #8.659 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 July 2003, unamortised issue costs amounted to # 1.641 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 October 2003 determination date, euro 9.243m
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 20 October 2003:
Principal amount of Notes outstanding (EUR)
A Notes 189,477,000
B Notes 32,541,556
C Notes 23,427,865
D Notes 12,004,311
There was no dividend paid on the redeemable preference shares for the period.
As at the close of business on the 20 Oct 2003, the Class A Floating Rate Note par value ratio coverage test stood at
108.78 %. The improvement of the Class A Floating Rate Note par value ratio coverage test since the balance sheet
date was primarily due to the effect of the redemption of Class A Floating Rate A notes on the 20th October 2003.
This information is provided by RNS
The company news service from the London Stock Exchange
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