RNS Number:2554J
St.David's Inv Tst PLC
26 March 2003
ST. DAVID'S INVESTMENT TRUST PLC
PRELIMINARY ANNOUNCEMENT OF ANNUAL RESULTS
for the year ended 30 November 2002
Chairman's Statement
2002 was an annus horriblis for markets, split capital investment trusts and in
particular their Shareholders. Following a short rally at the end of 2001 led by
technology stocks, markets drifted in a depressed trading range before finally
succumbing to downward pressures in the second half of 2002. As a result, we
have seen the UK market fall to levels last seen in 1995. The FTSE All-Share
index fell by 39% from its peak in 2000, including a 20% fall in the year under
review. Since then the FTSE 100 index has fallen to a level less than half its
all-time high.
In this environment geared investment structures have come under extraordinary
pressure. This has been exacerbated by the higher cost of repaying debt, as
further damage has arisen from the increased cost of interest rate swap breakage
costs caused by falling interest rates. The split capital investment trust
sector suffered its particular problems which were intensified by a lack of
confidence worsened by adverse publicity, regulatory and parliamentary
investigations and market illiquidity. For those funds with an exposure to the
sector the effects have been very severe, with 19 trusts currently suspended and
a large number forced to de-gear dramatically.
You will be aware that your Company has been far from immune from these events
and your Board reported in March 2002 that the Company had breached the
financial covenants of its loan facilities. Following further market weakness in
the second half of 2002 the situation deteriorated to the extent that the
Company's liabilities exceeded its assets in August 2002, and this is still the
case.
When the assets of the Company fell to less than 50% of its paid up share
capital, in accordance with Section 142 of the Companies Act 1985 the Directors
convened an Extraordinary General meeting. At this meeting Shareholders did not
dissent from the Board's opinion that, so long as the Company had the support of
its bankers, it would not be in the interest of Shareholders to wind up the
Company.
The Investment Manager's review in the Annual Report & Accounts more fully
explains how these various circumstances affected your Company's investment
portfolio.
Throughout the year we have worked closely with the Investment Manager, together
with the Company's lending bank, The Royal Bank of Scotland ("RBS"), to try and
resolve the Company's serious problems. RBS continues to support the Company as
an on-going entity and I would like to express the Board's thanks to RBS for
their continuing support of St. David's through these extremely trying times.
At the last Annual General meeting in March 2002 it was announced that various
cost saving measures, including the temporary waiving of the Investment
Manager's fee and the halving of the basic Directors' fees, had been implemented
and these continue. As I reported at the Interim stage, the Board had
reconsidered its expectation of future returns in the light of the serious
decline in value of the assets of the Company, and concluded that it was no
longer appropriate to charge 60% of the management expenses and bank interest
payable to capital reserves and 40% to revenue account. Accordingly, with effect
from the commencement of the year, 25% of management expenses and interest have
been charged to capital reserves and 75% to the revenue account.
I also reported in August 2002 that the decision had been made to reduce the
level of debt by #26.7 million to #59 million which involved paying interest
rate swap breakage costs of #2.5 million by selling most of the fixed interest
portfolio and #10 million of the equity portfolio. Since then the Board has been
working hard with its advisers and RBS on a number of further options, whilst
closely monitoring cashflow and expenses. Recently the Company has renegotiated
the terms of its junior loan facility of #8 million, maturing on 28 November
2003. A cash offset arrangement will be put in place and #4 million of this
facility, which has an interest rate of 8.11% p.a., will be converted into a
variable rate loan, with an interest rate of approximately 5.15% p.a. Interest
rate swap breakage costs of #0.1 million will be incurred.
As at 30 November 2002 the portfolio had the following asset allocation and
given the volatility in markets, the asset allocation as at 28 February 2003
(the last practical date of calculation) is also set out:
30 November 2002 28 February 2003
#m % #m %
Equities 35.9 69.7 31.3 64.2
Investment Company Income Shares* 2.4 4.7 1.9 3.9
Fixed Interest (including Convertible Preference shares) 7.5 14.5 7.8 15.9
Cash at bank and in hand 5.7 11.1 7.8 16.0
Total 51.5 100.0 48.8 100.0
* Valued at bid price
The assets shown above compare with debt of #60.3 million (including interest
rate swap breakage costs and indexation of the RPI loans which would be payable
on immediate repayment of #5.6 million) at 30 November 2002, and #61.8 million
(including interest rate swap breakage costs and indexation of the RPI loans of
#7.1 million) as at 28 February 2003. The interest rate swap breakage costs are
a contingent liability and are not included in the Company's balance sheet.
The Company is a member of the Association of Investment Trust Companies
("AITC") and has in the past released monthly information to the AITC regarding
the Company's total assets and prior charges. In future, the Company will
release to the UK Listing Authority on a monthly basis the Company's total
assets and total borrowings together with the estimated interest rate swap
breakage costs for the prior month-end. Net asset values in respect of the four
classes of share capital have not been published recently as there are currently
no assets attributable to them.
As announced at the Interim stage and at the Extraordinary General meeting
pursuant to Section 142 of the Companies Act 1985 held on 2 September 2002, the
Directors do not envisage the payment of any dividends to Shareholders in the
foreseeable future as the Company continues not to meet the distribution tests
set out in the Companies Act 1985 and income generated from the portfolio is
being used to cover expenses and interest payments on outstanding borrowings.
Cashflow projections are being carefully monitored and continue to indicate that
there should be sufficient revenues to pay the interest on the bank debt and
expenses at reduced levels. In the event that that this no longer proved to be
the case, uninvested capital cash would be utilised or assets in the Company's
portfolio would need to be realised in order to satisfy such payments. Our
Financial Statements for the year ended 30 November 2002 have been prepared on
the basis of providing for the accrued dividend on the Preferred Annuity shares
since 1 January 2002, the last date payment was made, but their Shareholders
should be aware that the outstanding dividends are unlikely to be paid due to
the restrictions on the ability of the Company to distribute; this would,
however, be taken into account in the event of the Company considering any
restructuring proposals.
The Board acknowledges the frustration caused by the lack of positive news on
the resolution of the many complex issues facing the Company. With the current
level of volatility and unease in markets, discussions on any form of
refinancing and restructuring involve difficult and by definition lengthy
exploratory processes. With the November 2003 repayment date for one class of
zero dividend preference shares looming, the Board and its advisers are wholly
focused on the need to find and put restructuring proposals to Shareholders
where at all practically possible. Your Directors are attempting to find a way
of re-creating some value for all Shareholders in the future, albeit at much
reduced levels from their respective entitlements.
As part of our overall drive to save running costs, my long-serving colleagues,
Roly Arthur and Sir David Rowe-Ham will be retiring from the Board at the
forthcoming Annual General Meeting. I would like to take this opportunity of
thanking them for their considerable contributions over the many years.
J S Cousins
Chairman
26 March 2003
Statement of Total Return
Year ended Year ended
30 November 2002 30 November 2001**
(unaudited) (audited)
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Losses on investments - (69,459) (69,459) - (88,329) (88,329)
Exchange losses - (383) (383) - (783) (783)
Income 9,130 - 9,130 20,486 - 20,486
Investment management fee (200) (67) (267) (544) (991) (1,535)
Other expenses (471) - (471) (645) - (645)
Net return before finance costs and taxation 8,459 (69,909) (61,450) 19,297 (90,103) (70,806)
Interest payable and similar charges (3,309) (1,103) (4,412) (2,451) (4,454) (6,905)
Indexation of loan - (562) (562) - (942) (942)
Breakage costs on loans - (2,470) (2,470) - (833) (833)
Return on ordinary activities before taxation 5,150 (74,044) (68,894) 16,846 (96,332) (79,486)
Taxation on ordinary activities - - - - - -
Return on ordinary activities after taxation 5,150 (74,044) (68,894) 16,846 (96,332) (79,486)
Dividend attributable to Preferred Annuity (4,279) - (4,279) (540) - (540)
Shareholders
Accrued redemption discount - Preferred Annuity shares - 2,038 2,038 - 258 258
Compounding entitlement of Zero Dividend Preference - (6,647) (6,647) - (5,098) (5,098)
shares
Return on ordinary activities attributable to Ordinary 871 (78,653) (77,782) 16,306 (101,172) (84,866)
Shareholders
Dividends in respect of equity shares - - - (16,174) - (16,174)
Transfer to/(from) reserves 871 (78,653) (77,782) 132 (101,172) (101,040)
Return per share (pence) on an
Articles of Association ("Articles") basis *:
Zero Dividend Preference share 2003 ("ZDP 2003") - (233.33) (233.33) - (13.75) (13.75)
Zero Dividend Preference share 2008 ("ZDP 2008") - (87.83) (87.83) - (18.33) (18.33)
Preferred Annuity share 19.97 (15.75) 4.22 2.52 - 2.52
Ordinary share 1.08 (1.56) (0.48) 20.16 (113.58) (93.42)
* The returns per share on a Financial Reporting Standard 4 ("FRS 4") basis are
set out in note 3.
** The figures for 2001 have been restated to reflect the change in investment
trust accounting best practice which no longer requires the provision for
shortfall in assets to be shown in the Statement of Total Return. This has no
impact on the assets available for Shareholders or the total return per share.
The revenue column of this statement represents the revenue account of the
Company.
The accompanying notes are an integral part of these financial statements.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued in the year.
Balance Sheet
At At
30 November 2002 30 November 2001
(unaudited) (audited)
#'000 #'000
Fixed assets
Investments 45,787 147,323
Current assets
Debtors 1,854 4,558
Cash at bank 5,728 2,237
7,582 6,795
Creditors: amounts falling due within one year
Bank loans (54,700) -
Indexation of loans (2,549) -
Bank overdraft - (2,069)
Other creditors (5,975) (5,650)
(63,224) (7,719)
Net current liabilities (55,642) (924)
Total assets less current liabilities (9,855) 146,399
Creditors: amounts falling due after one year
Bank loans - (81,094)
Indexation of loans - (1,987)
Net (liabilities) / assets (9,855) 63,318
Share capital and reserves
Called-up share capital 46,554 46,554
Share premium account 1,000 1,000
Special reserve 130,375 130,375
Other reserves :
Redemption Reserve 21,768 17,159
Capital reserve - realised (92,879) (38,525)
Capital reserve - unrealised (117,931) (93,632)
Revenue reserve 1,258 387
Total shareholders' (deficit) / funds (9,855) 63,318
Attributable under an Articles of Association basis to:
Non-equity interests
ZDP 2003 shares - 44,363
ZDP 2008 shares - 18,568
Preferred Annuity shares - -
Equity interests
Ordinary shares - 387
Shortfall in assets available for repayment of bank loan (9,855) -
Total (9,855) 63,318
Net asset value per share (pence)*
ZDP 2003 share - 233.33
ZDP 2008 share - 87.83
Preferred Annuity share - -
Ordinary share - 0.48
* The net asset value per share presented in this balance sheet is prepared in
accordance with the Articles which restricts the net asset value per share to
nil. A reconciliation of the net asset value attributed to each class of share
calculated on an FRS4 basis is presented in note 4. The calculation bases for
net asset values attributable and net asset values per share are also set out in
note 4.
Cash Flow Statement
Year ended Year ended
30 November 2002 30 November 2001
(unaudited) (audited)
#'000 #'000 #'000 #'000
Net cash inflow from operating activities 10,691 17,922
Servicing of finance
Bank and loan interest paid (4,585) (6,882)
Breakage costs on bank loans (2,470) -
Dividends paid on Preferred Annuity shares (905) -
Net cash outflow from servicing of finance (7,960) (6,882)
Financial investment
Purchase of investments (22,194) (113,992)
Sale of investments 55,612 115,340
Net cash inflow from financial investment 33,418 1,348
Equity dividends paid (3,436) (16,781)
Net cash inflow / (outflow) before financing 32,713 (4,393)
Financing
Proceeds from issue of new shares - 33,929
Expenses paid in respect of issue of new shares (376) (1,458)
Drawdown of loans - 8,000
Repayment of loans (26,698) (38,118)
Net cash (outflow) / inflow from financing (27,074) 2,353
Increase / (decrease) in cash 5,639 (2,040)
Reconciliation of net cash flow to movements
In net debt
Increase / (decrease) in cash as above 5,639 (2,040)
Cash outflow from decrease in loans 26,698 30,118
RPI Indexation of loans (562) (942)
Exchange movements (383) (783)
Movement in net debt in the year 31,392 26,353
Net debt at 30 November 2001 (82,913) (109,266)
Net debt at 30 November 2002 (51,521) (82,913)
Breakage costs of #833,000 for the year ended 30 November 2001 have been
included within 'Expenses paid in respect of issue of new shares' as they relate
to the restructuring of the Company that was undertaken within that year.
Notes:
1. Fundamental Uncertainties
(a) Going concern
On 18 March 2002 the Company announced that it had breached its loan facility
covenants and was in negotiations with its lending bank, The Royal Bank of
Scotland ("RBS"). This announcement was followed by a statement on 25 March 2002
that the Company had taken significant cost reduction measures in the light of
its difficulties. On 15 August 2002, the Company repaid Euro28.5 million (#18.2
million) and #8.5 million loans of the total bank debt of #86 million, together
with associated interest rate swap breakage costs of #2.5 million.
Nevertheless, the Company has remained in breach of its covenants since that
date, and the outstanding borrowings owed to the Bank, totalling approximately
#62 million at 28 February 2003 (including approximately #7 million interest
rate swap breakage costs which would be payable on repayment) remain repayable
on demand. As discussed in the Chairman's Statement cash generated by the
portfolio after the payment of interest and expenses will be retained with a
view to reducing bank debt.
The Bank has confirmed in writing on 21 March 2003, that subject to certain
conditions, including relating to further repayments of bank borrowing and
restrictions on certain payments, the Bank has no current intention of demanding
immediate repayment of outstanding borrowings.
The Company had net liabilities of #9.9 million at 30 November 2002; however, if
the Bank were to require repayment of the debt, the Company would be unable to
meet this obligation and the going concern basis of preparation would not be
appropriate. Potential adjustments to the accounts in such an event are
described in note 5.
(b) Valuation of investments
Owing to a continued lack of liquidity in the market for income shares issued by
investment companies, this raises concerns about the appropriateness of the
Company carrying such investments in the financial statements at middle market
prices. Consequently, the investment company income shares in the Company's
portfolio have been valued in these financial statements on a bid price basis.
The effect of this treatment is to reduce the valuation by #0.3 million.
In light of the events as described and given the nature of the Company and its
investments, the Directors are satisfied that it is appropriate to adopt the
going concern basis of accounts as they believe this is the most appropriate
basis to adopt in the circumstances.
2. Income 2002 2001
#'000 #'000
Income from UK listed investments
UK dividend income 5,817 12,143
Unfranked investment income 1,778 4,788
Interest on fixed interest securities 1,249 3,289
8,844 20,220
Deposit interest 279 266
Underwriting commission 7 -
Total income 9,130 20,486
Total income comprises:
Dividends 7,595 16,931
Interest 1,528 3,555
Other income 7 -
9,130 20,486
3. Return per share 2002 2001
Revenue Capital Total Revenue Capital Total
Articles Basis p p p p p p
ZDP 2003 share - (233.33) (233.33) - (13.75) (13.75)
ZDP 2008 share - (87.83) (87.83) - (18.33) (18.33)
Preferred Annuity share 19.97 (15.75) 4.22 2.52 - 2.52
Ordinary share 1.08 (1.56) (0.48) 20.16 (113.58) (93.42)
The returns per share have been prepared in accordance with the Articles.
However, the actual legal entitlement to the assets attributable to each class
of share under the Articles differs from the notional entitlement under FRS4. A
reconciliation showing the different entitlements under the Articles and FRS4 is
presented below:
ZDP 2003 ZDP 2003 ZDP 2008 ZDP 2008*
30 Nov 2002 30 Nov 2001 30 Nov 2002 30 Nov 2001
Capital return per ZDP share #'000 #'000 #'000 #'000
Attributable gain on a FRS 4 basis 4,507 4,142 2,140 956
Provision for shortfall in assets (48,870) (6,756) (20,707) (2,828)
Capital return on an Articles basis (44,363) (2,614) (18,567) (1,872)
Weighted average number of shares for the period 19,013,292 19,013,292 21,139,935 10,215,276
Capital return per ZDP share (pence) on an Articles (233.33) (13.75) (87.83) (18.33)
basis
Capital return per ZDP share (pence) on a FRS 4 basis 23.70 21.78 10.12 9.36
* as adjusted for the ZDP 2007 conversion.
Preferred Preferred
Ordinary Ordinary Annuity Annuity
30 Nov 2002 30 Nov 2001 30 Nov 2002 30 Nov 2001
Capital return per Ordinary and Preferred Annuity share #'000 #'000 #'000 #'000
Attributable loss on a FRS 4 basis (78,653) (101,172) (2,038) (258)
Increase in provision for shortfall in assets on ZDP shares 69,577 9,584 - -
Movement in provision for shortfall in assets to repay loans 9,855 - - -
Shortfall in assets to meet accrued dividend entitlement of - - (3,374) -
Preferred Annuity shares
Discount on redemption of Preferred Annuity shares (2,038) (258) 2,038 258
Capital return on an Articles basis (1,259) (91,846) (3,374) -
Weighted average number of shares for the period 80,867,549 80,867,549 21,429,913 21,429,913
Capital return per share (pence) on an Articles basis (1.56) (113.58) (15.75) -
Capital return per share (pence) on a FRS 4 basis (97.26) (125.11) (9.51) (1.20)
The revenue return per Preferred Annuity share on an Articles of Association and
a FRS 4 basis, is based on dividends accrued and paid of #4,279,000 (2001 -
#540,000) and on 21,429,913 (2001 - 21,429,913) being the weighted average
number of Preferred Annuity shares in issue during the year.
The revenue return per Ordinary share on an Articles and FRS 4 basis, is based
on net revenue on ordinary activities after taxation of #871,000 (2001 -
#16,306,000) and on 80,867,549 (2001 - 80,867,549) Ordinary shares, being the
weighted average number of Ordinary shares in issue during the year. However due
to the current shortfall in assets available for the repayment of the bank
loans, any earnings are no longer attributable to the ordinary shareholders,
hence giving a return per share of nil.
2002 2001
FRS4 Basis Revenue Capital Total Revenue Capital Total
Return per share
P p p p p p
ZDP 2003 share - 23.70 23.70 - 21.78 21.78
ZDP 2008 share - 10.12 10.12 - 9.36 9.36
Preferred Annuity share 19.97 ( 9.51) 10.46 2.52 (1.20) 1.32
Ordinary share 1.08 (97.26) (96.18) - (125.11) (125.11)
The capital return per ZDP 2003 share is based on the attributable asset gain
calculated in accordance with FRS4 of #4,507,000 (2001 - #4,142,000) and on
19,013,292 shares (2001 - 19,013,292) being the weighted average number of
shares in issue during the year.
The capital return per ZDP 2008 share is based on the attributable asset gain
calculated in accordance with FRS4 of #2,140,000 (2001 - #956,000) and on
21,139,934 shares (2001 - 10,215,276 adjusted for the 2007 ZDP conversion) being
the weighted average number of shares in issue during the year.
The revenue return per Preferred Annuity share is based on a accrued entitlement
of #4,279,000 (2001 - #540,000) and on 21,429,913 (2001 - 21,429,913) being the
weighted average number of Preferred Annuity shares in issue during the year.
The capital return per Preferred Annuity share is based on the appropriation for
discount on redemption of #2,038,000 (2001 - #258,000) and on 21,429,913 (2001 -
21,429,913) being the weighted average number of Preferred Annuity shares in
issue during the year.
The revenue return per Ordinary share is based on net revenue on ordinary
activities after taxation of #871,000 (2001 - #16,306,000) and on 80,867,549
(2001 - 80,867,549) Ordinary shares, being the weighted average number of
Ordinary shares in issue during the year.
The capital return per Ordinary share is based on net capital losses
attributable to Ordinary shares after appropriations in respect of the ZDP 2003
shares and ZDP 2008 shares, dividends and appropriation for discount on the
redemption of Preferred Annuity shares and provision for the shortfall in
assets, giving net capital losses of #78,653,000 (2001 - #101,172,000), and on
80,867,549 (2001 - 80,867,549) Ordinary shares, being the weighted average
number of shares in issue during the year.
4. Net asset value per share
The net asset value per share and the net asset values attributable to
Shareholders at the year end have been prepared in accordance with the Articles
which restricts the net asset value per Ordinary share to nil. The amounts
attributable to each class were as follows:
Net asset value Net asset values
per share attributable Attributable
2002 2001 2002 2001
p p #'000 #'000
ZDP 2003 share - 233.33 - 44,363
ZDP 2008 share - 87.83 - 18,568
Annuity share - - - -
Ordinary share - 0.48 - 387
The attributable asset value of the ZDP 2003 share calculated in accordance with
the Articles is nil (2001 - 233.33p).The net asset value disclosed above
reflects the shortfall in funding of the attributable asset value amounting to
#55,626,000 (2001 - #6,756,000), and is calculated on 19,013,292 (2001 -
19,013,292) ZDP 2003 shares in issue at the year end.
The attributable asset value of the ZDP 2008 share calculated in accordance with
the Articles is nil (2001 - 87.83p). The net asset value disclosed above
reflects the shortfall in funding of the attributable asset value amounting to
#23,535,000 (2001 - #2,828,000), and is calculated on 21,139,935 (2001 -
21,139,935) ZDP 2008 shares in issue at the year end.
The net asset value per Preferred Annuity share has been calculated based on the
prior capital entitlement of the Preferred Annuity shares of #0.001. The net
asset value disclosed above reflects the shortfall in funding amounting to
#21,430 (2001 - #21,430), and is calculated on 21,429,913 (2001 - 21,429,913)
Preferred Annuity shares in issue.
The net asset value per Ordinary share is based on revenue reserves and on
80,867,549 (2001 - 80,867,549) Ordinary shares, being the number of Ordinary
shares in issue at the year end. Under the Articles the Ordinary shares are
usually entitled to the revenue reserves of #1,258,000 (2001 - #387,000) of the
Company, giving a net asset value of 1.56p (2001 - 0.48p) ,however currently the
revenue reserve is deemed not to be distributable, hence Ordinary Shareholders
are attributed a net asset value of nil.
2002 2001
Shareholders' funds reconciliation of FRS 4 basis to Articles basis #'000 #'000
Equity shares - Ordinary per FRS4 (89,037) (9,218)
Provision for ZDP entitlement 79,161 9,584
Provision for Annuity entitlement 21 21
Shortfall in assets available for repayment of bank loan 9,855 -
Total equity funds on an Articles basis - 387
Non-equity shares - Preferred Annuity on an FRS 4 basis 21 21
Provision for Annuity entitlement shortfall (21) (21)
Preferred Annuity funds on an Articles basis - -
Non-equity shares - ZDP 2003 on an FRS 4 basis 55,626 51,119
Provision for ZDP entitlement shortfall (55,626) (6,756)
ZDP 2003 funds on an Articles basis - 44,363
Non-equity shares - ZDP 2008 on an FRS 4 basis 23,535 21,396
Provision for ZDP entitlement shortfall (23,535) (2,828)
ZDP 2008 funds on an Articles basis - 18,568
Total non-equity shares - ZDP's - 62,931
Total Shareholders' funds - 63,318
The net asset value per share and the net asset values attributable to
Shareholders at the year end have been prepared in accordance with the Articles,
which restricts the net asset value per Ordinary share to nil. The amounts
attributable to each share class were as follows:
Net asset value Net asset values
per share attributable attributable
2002 2001 2002 2001
p p #'000 #'000
ZDP 2003 shares 292.56 268.86 55,626 51,119
ZDP 2008 shares 111.33 101.21 23,535 21,396
Annuity shares 0.10 0.10 21 21
Ordinary shares (110.10) 0.48 (89,037) 387
The attributable asset value of the ZDP 2003 shares calculated in accordance
with FRS 4 is 292.56p (2001 - 268.86p). The net asset value is calculated on an
attributable asset value amounting to #55,626,000 (2001 - #51,119,000), and is
calculated on 19,013,292 (2001 - 19,013,292) ZDP 2003 shares in issue at the
year end.
The attributable asset value of the ZDP 2008 shares calculated in accordance
with FRS 4 is 111.33p (2001 - 101.21p). The net asset value is calculated on a
attributable asset value amounting to #23,535,000 (2001 - #21,396,000), and is
calculated on 21,139,935 (2001 - 21,139,935) ZDP 2008 shares in issue at the
year end.
The net asset value per Preferred Annuity share has been calculated based on the
prior capital entitlement of the Annuity shares of #0.001.The net asset value is
calculated on the attributable asset value amounting to #21,430 (2001 - #21,430)
and is calculated on 21,429,913 (2001 - 21,429,913) Preferred Annuity shares in
issue at the year end.
The NAV per Ordinary share is based on a deficit amounting to #89,037,000 (2001
- #9,218,000) and is calculated on 80,867,549 (2001 - 80,867,549) Ordinary
shares in issue at the year end.
5. Adjustments to the financial statements if prepared on a non-going concern
basis
The financial statements have been prepared on a going concern basis, which the
Directors believe is appropriate as at the date of this announcement. However,
there is fundamental uncertainty regarding this assumption due to the Company's
financial position and need for continuing support from the Bank, as described
in note 1 above. If the Company were no longer considered to be a going concern,
there would be certain adjustments that would be required to be made to these
financial statements.
(a) Liquidation costs
Breakage costs would be incurred, payable to the Bank, in respect of the early
termination of the Bank debt and the related swap arrangements.The Directors
estimate that these would amount to approximately #5 million as at 30 November
2002. Additionally, further costs would be incurred in respect of the
liquidation of the Company. These costs are not possible to quantify at this
stage.
(b) Valuation of investments
The carrying value of investments would need to be written down to their net
realisable value. It is unlikely that the full bid valuation of each investment
could be recovered in the current market conditions. The writedown is not
possible to quantify due to the volatile market conditions and the illiquid
nature of certain of the Company's investments.
6. The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 November 2002 or 30 November 2001. The
financial information for 2001 is derived from the statutory accounts for 2001,
which have been delivered to the Registrar of Companies. The auditors have
reported on the 2001 accounts; their report was unqualified and did not contain
a statement under section 237(2) or (3) of the Companies Act 1985. The statutory
accounts for 2002 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 which will be held on Monday 28 April 2003 at One Bow Churchyard,
Cheapside, London EC4M 9HH.
7. Copies of the Annual Report will be posted to Shareholders shortly and
further copies may be obtained from the registered office, One Bow Churchyard,
Cheapside, London EC4M 9HH.
Aberdeen Asset Management PLC,
Secretaries
26 March 2003
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UNOBROSROUAR