RNS Number:1027P
St.David's Inv Tst PLC
27 August 2003
ST. DAVID'S INVESTMENT TRUST PLC
UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 MAY 2003
Chairman's Statement
The interim report for the six months ended 31 May 2003 covers a period in which
volatility in markets remained the central theme.
The new calendar year failed to inspire confidence in the markets and the London
Stock Exchange tested new lows in the first quarter, with the FTSE 100 falling
before the Iraq war to 3287 on 12 March. In April, following the cessation of
major hostilities in Iraq, markets bounced, with the FTSE 100 and FTSE All-Share
both rising by 9%, the largest monthly percentage gain for the FTSE All-Share in
10 years. May also saw improvement, which has been maintained through June and
July and the FTSE 100 Index appears to have found support above 4000.
With the improvement in sentiment in April the Investment Manager took the
opportunity to switch out of our most defensive holdings, such as National Grid
and BAT, into more cyclical stocks such as Diageo, Lloyds TSB, BOC and HSBC,
with strong yields and greater potential for capital appreciation. #1.7 million
of net cash was invested in the market. At last the split capital trust sector
appears to have bottomed out, with income share values and yields stabilising.
Our convertible preference share holdings continue to provide attractive yields
(average 7.0 % net), whilst their defensive nature provides some protection
against a market downturn.
In these conditions the Company's gross assets have risen to #51.9 million at 31
May 2003 compared with #51.3 million and #48.3 million on 30 November 2002 and
28 February 2003 respectively. At 31 May 2003 the portfolio was valued at #50.9
million allocated as shown below, which compares with #51.5 million and #48.8
million on 30 November 2002 and 28 February 2003 respectively. The position at
31 July 2003 (the last practical date of calculation) is also set out:
31 May 2003 31 July 2003
#m % #m %
Equities 34.5 67.8 36.7 69.6
Investment Company Income shares (at 2.0 3.9 2.4 4.6
bid-prices)
Fixed Interest (including Convertible 8.3 16.3 8.3 15.8
Preference shares)
Net cash uninvested 6.1 12.0 5.3 10.0
Total 50.9 100.0 52.7 100.0
At the end of the reporting period the Company had total bank debt of #62.5
million (including potential interest rate swap breakage costs and indexation of
RPI loans of #7.8 million, which would be incurred on immediate repayment). On
31 July 2003 the equivalent figures were #61.7 million (including potential
interest rate swap breakage costs and indexation of RPI loans of #7.0 million).
St. David's continues to have the support of its lending bank, The Royal Bank of
Scotland, principally because the Company's revenues after expenses still exceed
its current debt service costs. This is, however, only possible as a result of
the Manager extending the waiver of its investment management and secretarial
fees.
The Board and its advisers continue to explore options for restructuring the
share capital and refinancing the Company.
As I said in my previous statement, this is a difficult and time consuming
process, although proposals will need to be put to Shareholders by 31 October
2003 if a winding-up resolution under the Company's current Articles of
Association is to be avoided. With no net assets currently attributable to any
of the four classes of Shareholders, the Board does not believe that it is in
the best interests of Shareholders or its bankers for the Company to be wound up
at depressed market levels. The portfolio's heavy weighting in above average
yielding quality equities provides a useful platform in a recovering market to
meet its banking liabilities. This, coupled with a restructuring and refinancing
exercise, may create some value for all Shareholders, although at levels much
lower than their entitlements under the current Articles.
Once again I thank Shareholders for their patience; the Board will be writing to
them in due course to set out proposals for the Company's future.
John Cousins
Chairman
27 August 2003
Statement of Total Return
------------------------------ --------------- ----------------
Six months ended Six months ended
31 May 2003 31 May 2002
(unaudited) (audited)
------ ------ ------ ------- ------- ------
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
------------------------------ ------ ------ ------ ------- ------- ------
Gains/losses on investments - 259 259 - (34,414) (34,414)
Exchange gains/(losses) 180 180 (265) (265)
Income 1,782 - 1,782 6,936 - 6,936
Investment management fee - - - (200) (67) (267)
Other expenses (214) - (214) (244) - (244)
------------------------------ ------ ------ ------ ------- ------- ------
Net return before finance 1,568 439 2,007 6,492 (34,746) (28,254)
costs and taxation
Interest payable and similar (1,172) (391) (1,563) (1,947) (649) (2,596)
charges
Indexation of loan - (702) (702) - 201 201
Breakage costs on bank loans - (78) (78) - - -
------------------------------ ------ ------ ------ ------- ------- ------
Return on ordinary activities 396 (732) (336) 4,545 (35,194) (30,649)
before taxation
Taxation on ordinary - - - - - -
activities ------ ------ ------ ------- ------- ------
------------------------------
Return on ordinary activities 396 (732) (336) 4,545 (35,194) (30,649)
after taxation
Dividend attributable to (2,143) - (2,143) (2,136) - (2,136)
Preferred Annuity
Shareholders
Other appropriation for - 1,025 1,025 - 1,024 1,024
discount on redemption of
Preferred
Annuity shares
Capital gains attributable to
Zero Dividend Preference
("ZDP") shares - (3,539) (3,539) - (3,241) (3,241)
------------------------------ ------ ------ ------ ------- ------- ------
Return on ordinary activities (1,747) (3,246) (4,993) 2,409 (37,411) (35,002)
attributable to Ordinary
Shareholders
Dividends in respect of equity - - - - - -
shares ------ ------ ------ ------- ------- ------
------------------------------
Transfer (from)/to reserves (1,747) (3,246) (4,993) 2,409 (37,411) (35,002)
============================== ====== ====== ====== ======= ======= ======
Return per share (pence) on an
Articles basis:
ZDP 2003 shares - - - - (130.65) (130.65)
============================== ====== ====== ====== ======= ======= ======
ZDP 2008 share - - - - - 48.97 - 48.97
============================== ====== ====== ====== ======= ======= ======
Preferred Annuity share 10.00 (10.00) - 9.97 (8.27) 1.70
============================== ====== ====== ====== ======= ======= ======
Ordinary share (2.16) 1.96 (0.20) 2.98 - 2.98
============================== ====== ====== ====== ======= ======= ======
The revenue column of this statement represents the revenue account of the
Company.
The statement of total return is presented as recommended by the 'Statement of
Recommended Practice for Financial Statements of Investment Trusts Companies'.
All revenue and capital items in the above statement derive from continuing
operations, subject to the matters set out in Note 1. No operations were
acquired or discontinued during the period
The returns per share on a Financial Reporting Standard 4 ("FRS 4") basis are
set out in the notes to the financial statements.
Balance Sheet
----------------------------------- --------- --------- ---------
At At At
31 May 2003 31 May 2002 30 Nov 2002
(unaudited) (unaudited) (audited)
--------- --------- ---------
#'000 #'000 #'000
----------------------------------- --------- --------- ---------
Fixed assets
Investments 44,760 110,455 45,787
----------------------------------- --------- --------- ---------
Current assets
Debtors 1,395 2,640 1,854
Cash at bank and in hand 7,191 9,027 5,728
----------------------------------- --------- --------- ---------
8,586 11,667 7,582
Creditors: amounts falling due (65,514) (91,589) (63,224)
within one year --------- --------- ---------
-----------------------------------
Net current liabilities (56,928) (79,922) (55,642)
----------------------------------- --------- --------- ---------
Net (liabilities)/assets (12,168) 30,533 (9,855)
=================================== ========= ========= =========
Share capital and reserves
Called-up share capital 46,554 46,554 46,554
Share premium account 1,000 1,000 1,000
Special reserve 130,375 130,375 130,375
Other reserves:
Redemption reserve 24,282 19,375 21,768
Capital reserve - realised (105,332) (55,850) (92,879)
Capital reserve - unrealised (108,558) (113,717) (117,931)
Revenue reserve (489) 2,796 1,258
----------------------------------- --------- --------- ---------
Shareholders' funds (12,168) 30,533 (9,855)
=================================== ========= ========= =========
Attributable under an Articles
basis to:
Non-equity interests:
ZDP 2003 share - 19,522 -
ZDP 2008 share - 8,215 -
Preferred Annuity share - - -
Equity interests:
Ordinary share - 2,796 -
Shortfall in assets (12,168) - (9,855)
----------------------------------- --------- --------- ---------
Total (12,168) 30,533 (9,855)
=================================== ========= ========= =========
Net asset value per share on an
Articles basis (pence):
ZDP 2003 share - 102.68 -
=================================== ========= ========= =========
ZDP 2008 share - 38.86 -
=================================== ========= ========= =========
Preferred Annuity share - - -
=================================== ========= ========= =========
Ordinary share - 3.46 -
=================================== ========= ========= =========
The net asset value attributable and net asset value per share on a FRS 4 basis
are set out in the notes to the financial statements.
Cash Flow Statement (unaudited)
------------------------------------ ------------ ------------
Six months Six months
ended ended
31 May 2003 31 May 2002
------------ ------------
#'000 #'000
------------------------------------ ------------ ------------
Net cash inflow from operating activities 1,577 7,561
Net cash outflow from servicing of finance (1,635) (3,485)
Net cash inflow from financial investment 1,341 3,625
Equity dividends paid - (3,437)
------------------------------------ ------------ ------------
Net cash inflow before financing 1,283 4,264
Net cash outflow from financing - (376)
------------------------------------ ------------ ------------
Increase in cash 1,283 3,888
==================================== ============ ============
Reconciliation of net return before finance costs
and taxation to net cash inflow from operating activities
Net revenue before interest payable and 1,568 6,492
taxation
(Increase)/decrease in accrued income (73) 1,346
Decrease/(increase) in other debtors 10 (6)
Increase/(decrease) in other creditors 72 (204)
Management expenses taken to capital - (67)
reserves ------------ ------------
------------------------------------
Net cash inflow from operating activities 1,577 7,561
==================================== ============ ============
Reconciliation of net cash flow to movement
in net debt
Increase in cash 1,283 3,888
RPI Indexation of loans (702) 201
Exchange movements 180 (265)
------------------------------------ ------------ ------------
Movement in net debt during the period 761 3,824
Opening net debt (51,521) (82,913)
------------------------------------ ------------ ------------
Closing net debt (50,760) (79,089)
==================================== ============ ============
Represented by:
Cash at bank 7,191 9,027
Bank overdraft - (4,933)
Debt falling due after one year (57,951) (83,183)
------------------------------------ ------------ ------------
(50,760) (79,089)
==================================== ============ ============
Notes:
1. Fundamental uncertainty
(a) Going concern
Since the year-end, the Company has remained in breach of its banking covenants,
and the outstanding borrowings owed to the Bank, totalling approximately #65
million as at 31 May 2003, remain repayable on demand. All cash generated by the
portfolio after the payment of interest and expenses is being retained with a
view to reducing Bank debt.
The Bank has confirmed in writing to the Company on 13 August 2003 that, subject
to certain conditions, including those 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 #12.2m as at 31 May 2003 however, and if the
Bank were to require repayment of its 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 6.
Additionally, the ZDP 2003 shares fall due for redemption on 30 November 2003.
Currently, these shares have no assets attributable to them, and if this remains
the case at the date of redemption the directors will be required, under Article
4(B) of the Articles of Association, to convene an extraordinary general meeting
on 1 December 2003 to propose a winding up resolution.
The Board and its advisers continue to explore options for restructuring the
share capital and refinancing the Company. It is anticipated that the Board will
be writing to Shareholders in due course to set out proposals for the Company's
future.
Having given due consideration to the events as described in above, and given
the nature of the Company and its investments, the Directors are satisfied that
it is appropriate to continue to adopt the going concern basis of preparation
for the interim report as they believe this remains the most appropriate basis
to adopt in the circumstances.
(b) Valuation of investments
The lack of liquidity in the market for income shares issued by investment
companies has raised concerns about the appropriateness of the Company carrying
such investments at middle market prices. Consequently, with effect from 30
November 2002 the investment company income shares have been valued on a bid
price basis in this interim report.
The effect of this treatment is to reduce the valuation by approximately #1m.
The prior year comparatives at 31 May 2002 are therefore at middle market value
as opposed to bid market value used in the current year.
2. Income
The breakdown of income for the periods to 31 May 2003 and 2002 was as follows:
31 May 2003 31 May 2002
#'000 #'000
Income from investments
UK dividend income (net) 1,503 4,238
Unfranked investment income 192 2,529
--------- ---------
1,695 6,767
--------- ---------
Other income
Deposit interest 87 167
Underwriting commission - 2
--------- ---------
87 169
--------- ---------
Total income 1,782 6,936
========= =========
3. Dividends
No interim dividend (2002 - nil) has been declared for the period. Dividends on
Preferred Annuity shares have been accrued, but whilst the Company remains in
breach of Sections 264 and 265 of the Companies Act it is unable to pay these
amounts.
4. Return per share
There was a shortfall in assets attributable under the Articles of Association
at the period end. Details of the shortfall are shown below.
Articles 2003 2002
Basis
Revenue Capital Total Revenue Capital Total
Return per p p p p p p
share
ZDP 2003 - - - - (130.65) (130.65)
share ======= ======= ====== ======= ======= =======
ZDP 2008 - - - - (48.97) (48.97)
share ======= ======= ====== ======= ======= =======
Preferred 10.00 (10.00) - 9.97 (8.27) 1.70
Annuity ======= ======= ====== ======= ======= =======
share
Ordinary (2.16) 1.96 (0.20) 2.98 - 2.98
share ======= ======= ====== ======= ======= =======
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 FRS 4.
A reconciliation showing the different entitlements under the Articles and FRS 4
is presented below:
ZDP 2003 ZDP 2008
31 May 2003 31 May 2002 31 May 2003 31 May 2002
Capital return #'000 #'000 #'000 #'000
per ZDP share
Attributable 2,394 2,200 1,145 1,041
gain on a FRS4
basis
Movement in (2,394) (27,041) (1,145) (11,394)
provision for -------- -------- -------- --------
shortfall in
assets
Capital loss on - (24,841) - (10,353)
an Articles ======== ======== ======== ========
basis
Weighted average 19,013,292 19,013,292 21,139,935 21,139,935
number of shares ======== ======== ======== ========
for the period
Capital loss per - (130.65) - (48.97)
ZDP share ======== ======== ======== ========
(pence)
Capital return 12.59 11.57 5.42 4.92
per ZDP share ======== ======== ======== ========
(pence) on a
FRS4 basis
Ordinary Preferred Annuity
31 May 2003 31 May 2002 31 May 2003 31 May 2002
Capital return #'000 #'000 #'000 #'000
per Ordinary
and
Preferred
Annuity share
Attributable (3,246) (37,411) (1,025) (1,024)
loss on FRS 4
basis
Movement in 3,539 38,435 - -
provision for
shortfall in
assets on ZDP
shares
Movement in 2,313 - - -
provision for
shortfall in
assets
Discount on (1,025) (1,024) 1,025 1,024
redemption of
Preferred
Annuity shares
Shortfall in - - (2,143) (1,771)
assets to meet --------- -------- -------- --------
accrued Annuity
dividend
entitlements
Capital return 1,581 - (2,143) (1,771)
on an Articles ========= ======== ======== ========
basis
Weighted average 80,867,553 80,867,553 21,429,913 21,429,913
number of shares ========= ======== ======== ========
for the period
Capital return 1.96 - (10.00) (8.27)
per share ========= ======== ======== ========
(pence) on an
Articles basis
Capital return (4.01) (46.26) (4.78) (4.78)
per share ========= ======== ======== ========
(pence) on a
FRS4 basis
The revenue return per Preferred Annuity share on an Articles and FRS 4 basis is
based on dividends accrued of #2,143,000 (31 May 2002 - #1,771,000) and on
21,429,913 shares (31 May 2002 - 21,429,913) being the number of Preferred
Annuity Shares in issue during the period.
Revenue return per Ordinary share is based on net revenue loss on ordinary
shares after taxation of #1,747,000 (31 May 2002 - gain of #2,409,000) and on
80,867,549 (31 May 2002 - 80,867,549) Ordinary shares, being the weighted
average number of Ordinary shares in issue during the period.
FRS4 Basis 2003 2002
Revenue Capital Total Revenue Capital Total
Return per p p p p p p
share
ZDP 2003 - 12.59 12.59 - 11.57 11.57
share ======= ======= ====== ======= ======= ======
ZDP 2008 - 5.42 5.42 - 4.92 4.92
share ======= ======= ====== ======= ======= ======
Preferred 10.00 (4.78) 5.21 9.97 (4.78) 5.19
Annuity ======= ======= ====== ======= ======= ======
share
Ordinary (2.16) (4.01) (6.17) 2.98 (46.26) - 43.28
share ======= ======= ====== ======= ======= ======
The capital return per ZDP 2003 share is based on the attributable asset gain
calculated in accordance with FRS 4 of #2,394,000 (31 May 2002 - #2,200,000) and
on 19,013,292 shares (31 May 2002 - 19,013,292) being the weighted average
number of ZDP 2003 shares in issue during the period.
The capital return per ZDP 2008 share is based on attributable asset gain
calculated in accordance with FRS 4 of #1,145,000 (31 May 2002 - #1,041,000) and
on 21,139,934 shares (31 May 2002 - 21,139,934) being the weighted average
number of ZDP 2008 shares in issue during the period.
The revenue return per Preferred Annuity share is based on a dividend
entitlement of #2,143,000 (31 May 2002 - #2,136,000) and on 21,429,913 (31 May
2002 - 21,429,913) being the weighted average number of Preferred Annuity shares
in issue during the period.
The capital return per Preferred Annuity share is based on the appropriation for
discount on redemption of #1,025,000 (31 May 2002 - #1,024,000) and on
21,429,913 (31 May 2002 - 21,429,913) being the weighted average number
Preferred Annuity shares in issue during the period.
5. Net asset value per share
The net asset value per share and the net asset values attributable to
Shareholders 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 was as follows:
Net asset value Net asset value
per share attributable attributable
31 May 2003 31 May 2002 30 Nov 2002 31 May 2003 31 May 2002 30 Nov 2002
p p p #'000 #'000 #'000
ZDP 2003 - 102.68 - - 19,522 -
share ========= ========= ========= ========= ========= =========
ZDP 2008 - 38.86 - - 8,215 -
share ========= ========= ========= ========= ========= =========
Preferred - - - - - -
Annuity ========= ========= ========= ========= ========= =========
share
Ordinary - 3.46 - - 2,796 -
share ========= ========= ========= ========= ========= =========
The attributable asset value of the ZDP 2003 shares calculated in accordance
with the Articles of Association is nil (31 May 2002 - 102.68p; 30 November 2002
- nil). The net asset value disclosed above reflects the shortfall in funding of
the attributable asset value amounting to #58,020,000 (31 May 2002 -
#33,797,000; 30 November 2002 - #55,626,000), and is calculated on 19,013,292
(31 May 2002 - 19,013,292; 30 November 2002 - 19,013,292) ZDP 2003 shares in
issue at the period end.
The attributable asset value of the ZDP 2008 shares calculated in accordance
with the Articles of Association is nil (31 May 2002 - 38.86p; 30 November 2002
- nil). The net asset value disclosed above reflects the shortfall in funding of
the attributable asset value amounting to #24,680,000 (31 May 2002 -
#14,222,000; 30 November 2002 - #23,535,000), and is calculated on 21,139,935
(31 May 2002 - 21,139,935; 30 November 2002 - 21,139,935) ZDP 2008 shares in
issue at the period 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 (31 May 2002 - #21,430; 30 November 2002 - #21,430), and is calculated
on 21,429,913 (31 May 2002 - 21,429,913; 30 November 2002 - 21,429,913)
Preferred Annuity shares in issue at the period end.
The net asset value per Ordinary share is based on revenue reserves and on
80,867,549 (31 May 2002 - 80,867,549; 30 November 2002 - 80,867,549) Ordinary
shares, being the number of Ordinary shares in issue at the period end. Under
the Articles of Association the Ordinary shares are usually entitled to the
revenue reserves (31 May 2002 - #2,796,000; 30 November 2002 - #1,258,000) of
the Company giving a net asset value of nil (31 May 2002 - 3.46p; 30 November
2002 - 1.56p), however, currently the revenue reserve is negative and is also
deemed not to be distributable hence Ordinary Shareholders are attributed a net
asset value of nil.
31 May 2003 31 May 2002 30 Nov 2002
Shareholders' funds #'000 #'000 #'000
reconciliation of
FRS 4 Basis to the Articles
Basis
Equity shares - Ordinary under (94,889) (45,244) (89,037)
FRS4
Provision for ZDP 82,700 48,019 79,161
entitlement
Provision for Annuity 21 21 21
entitlement
Shortfall in assets 12,168 - 9,855
--------- -------- ---------
Total equity funds - 2,796 -
--------- -------- ---------
Non-equity shares - Preferred 21 21 21
Annuity under FRS 4
Provision for Preferred (21) (21) (21)
Annuity entitlement --------- -------- ---------
shortfall
- - -
--------- -------- ---------
Non-equity shares - ZDP 2003 58,020 53,319 55,626
under FRS 4
Provision for ZDP entitlement (58,020) (33,797) (55,626)
shortfall --------- -------- ---------
- 19,522 -
--------- -------- ---------
Non-equity shares - ZDP 2008 24,680 22,437 23,535
under FRS 4
Provision for ZDP entitlement (24,680) (14,222) (23,535)
shortfall --------- -------- ---------
- 8,215 -
--------- -------- ---------
Total Non-equity shares - - 27,737 -
ZDP's --------- -------- ---------
Total Shareholders' funds - 30,533 -
========= ======== =========
The net asset value per share and the net asset values attributable to equity
shareholders at the year end calculated in accordance with FRS 4 were as
follows:
Net asset value Net asset value
per share attributable Attributable
31 May 2003 31 May 2002 30 Nov 2002 31 May 2003 31 May 2002 30 Nov 2002
p p p #'000 #'000 #'000
ZDP 2003 305.15 280.43 292.56 58,020 53,319 55,626
share ========= ======== ======== ======== ======== ========
ZDP 2008 116.75 106.14 111.33 24,680 22,437 23,535
share ========= ======== ======== ======== ======== ========
Preferred 0.10 0.10 0.10 21 21 21
Annuity ========= ======== ======== ======== ======== ========
share
Ordinary (117.34) (55.95) (110.10) (94,889) (45,244) (89,037)
share ========= ======== ======== ======== ======== ========
The attributable asset value of the ZDP 2003 shares calculated in accordance
with FRS 4 is 305.15p (31 May 2002 - 280.43p; 30 November 2002 - 292.56p). The
net asset value is calculated on an attributable asset value amounting to
#58,020,000 (31 May 2002 - #53,319,000; 30 November 2002 - #55,626,000), and is
calculated on 19,013,292 (31 May 2002 - 19,013,292; 30 November 2002 -
19,013,292) ZDP 2003 shares in issue at the period end.
The attributable asset value of the ZDP 2008 shares calculated in accordance
with FRS 4 is 116.75p (31 May 2002 - 106.14p; 30 November 2002 - 111.33p). The
net asset value is calculated on an attributable asset value amounting to
#24,680,000 (31 May 2002 - #22,437,000; 30 November 2002 - #23,535,000), and is
calculated on 21,139,935 (31 May 2002 - 21,139,935, 30 November 2002 -
21,139,935) ZDP 2008 shares in issue at the period 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 is calculated on attributable asset value amounting to #21,430 (31
May 2002 - #21,430; 30 November 2002 - #21,430) and is calculated on 21,429,913
(31 May 2002 - 21,429,913, 30 November 2002 - 21,429,913) Preferred Annuity
Shares in issue at the period end.
The net asset value per Ordinary share is based on a deficit amounting to
#94,889,000 (31 May 2002 - #45,244,000; 30 November 2002 - #89,037,000) and is
calculated on 80,867,553 (31 May 2002 - 80,867,553; 30 November 2002 80,867,553)
Ordinary shares in issue.
6. Adjustments to the financial statements if prepared on a non-going concern
basis.
The interim financial information has been prepared on a going concern basis,
which the Directors believe is appropriate as at the date of approval of this
report. However, there is fundamental uncertainty regarding this assumption due
to the Company's financial position and need for continuing support from the
bank and its shareholders, as described in the Chairman's statement and in Note
1.
If the Company were no longer considered to be a going concern, there would be
certain adjustments required to this financial information.
(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 #7.8m as at 31 May 2003.
Additionally, further costs would be incurred in respect of the liquidation of
the Company. These costs are impossible to quantify until it is considered
appropriate to prepare the financial statements on a non-going concern basis.
(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 write-down is
impossible to quantify due to the volatile market conditions and the illiquid
nature of certain of the Company's investments.
7. The financial information for the six months ended 31 May 2003 and 31 May
2002 comprises non-statutory accounts within the meaning of Section 240 of the
Companies Act 1985. The financial information for the year ended 30 November
2002 has been abridged from published accounts that have been delivered to the
Registrar of Companies and on which the report of the auditors was unqualified.
Aberdeen Asset Management PLC
Secretaries
27 August 2003
Independent Review Report by Deloitte & Touche LLP to St. David's Investment
Trust PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 May 2003 which comprises the statement of total return,
the balance sheet, the cash flow statement and related notes 1 to 7. We have
read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information.
This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
polices and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of company's management and
applying analytical procedures to the financial information and underlying
financial data and, based thereon, assessing whether the accounting policies and
presentation have been consistently applied unless otherwise disclosed. A review
excludes audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom auditing standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Fundamental uncertainties
In forming our review conclusion, we have considered the adequacy of the
disclosures made in the financial information concerning the following
fundamental uncertainties.
Going concern
As described in Note 1, there is uncertainty as to the continuation of support
from the company's bankers and shareholders. The company's balance sheet shows
liabilities of #12.2m at 31 May 2003. Further, the company is required to
convene an extraordinary general meeting on 1 December 2003 in connection with
the redemption of the ZDP 2003 shares. The preparation of the interim financial
information on a going concern basis is dependent on the continuation of support
from the Company's bankers and Shareholders.
The financial statements do not include any adjustments that would arise if the
bankers were to withdraw their support or the shareholders voted to wind up the
company. If the company were no longer considered a going concern, provisions
would be required in relation to termination payments on the bank debt and
related swap arrangement, the likely loss on disposal of the company's
investments and other winding-up costs which have not been quantified. In view
of the significance of this uncertainty, we consider that it should be drawn to
your attention but our opinion is not qualified in this respect.
Valuation of investments
As described in Note 1, a lack of liquidity in the market of certain fixed asset
investments raises uncertainty as to the realisability of middle market prices
in current market conditions. The portfolio of income shares has therefore been
valued at bid prices. However, the financial statements do not include any
adjustments for potential shortfalls that would result from obtaining a value
materially below even bid market prices for any of these investments in the
event of their disposal. In view of the significance of this uncertainty, we
consider that it should be drawn to your attention but our opinion is not
qualified in this respect.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 May 2003.
Deloitte and Touche LLP
Chartered Accountants
London
27 August 2003
This information is provided by RNS
The company news service from the London Stock Exchange
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IR SEFFAWSDSESA