PREMIER HIGH INCOME TRUST PLC
PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS
David Hankinson, Chairman of the Company, today commented:
The last twelve months have continued to be extremely difficult for equity
investors and it is against this backdrop that I have to report a fall in the
total assets less current liabilities of the company from �36,432,000 to �
30,396,000. Due to the gearing afforded by both the Zero Dividend Preference
shares and the bank debt, this translates into a fall in the Net Asset Value of
the Ordinary shares of 58.81%. The Net Asset Value of the Zero Dividend
Preference shares has risen by 8.00%, in accordance with their predetermined
entitlement.
As at the 30 June, the Net Asset Values of the Ordinary shares and the Zero
Dividend Preference shares were 26.94p and 126.59p respectively. Clearly if
there is no improvement in equity markets between now and the end of the
Company's life in June 2005, then the value of the Ordinary shares will fall as
the value of the Zero Dividend Preference shares rises. Based on market values
as at 30 June 2002, this would mean a fall in the value of the Ordinary shares
to 1.11p and a rise in the Zero Dividend Preference shares to 159.44p.
During the period under review investors in UK equities have seen the major
indices, where the bulk of your Company's assets are invested, fall by
approximately 17%. Against this backdrop, it is therefore unsurprising that the
Net Asset Value of the Ordinary shares has fallen so heavily. Despite the
falls, it is pleasing to report that the equity managers were able to
outperform the market once again, having limited their losses to some 10.7%.
Elsewhere in the portfolio, performance for the Global Bond investments has
been satisfactory with a rise of 9.647% while the benchmark, the JP Morgan
British Government Bond Index rose by 7.46% and the Merrill Lynch Sterling
Corporate Index rose by 9.658%.
Many investment trusts in the split capital sector suffered very heavy falls as
the combination of high levels of gearing and falling equity markets decimated
asset values. As a result, the main index of geared ordinary shares fell by
some 59% during the year. This fall was largely reflected in the portfolio of
split capital shares held within your Company, where assets fell from �4.67m to
�1.81m, a fall of 61%. Investment in other split capital investment trusts now
represents just 5.9% of total assets less current liabilities, and your Board
has no current plans to increase this allocation.
There has been much comment in recent months about the level of debt inherent
in split capital investment trust structures. Your Company does employ debt
within its structure and currently has a �5.66m loan with JP Morgan Chase on a
floating rate basis. This level of debt is within the existing banking
covenants and does not currently give your Board cause for concern.
I am able to report that the income account has held up relatively well during
the year. This has meant that your Company has been able to declare a fourth
interim dividend of 1.85p making a total of 7.25p for the period under review.
Clearly the numerous cuts and suspensions of dividends that have occurred in
the split capital market, as well as a number of high profile dividend cuts
from leading UK companies, give your Board some cause for concern. Whilst there
are no immediate plans to reduce the level of dividends payable to
shareholders, your Board will be keeping this matter under close scrutiny over
the coming months.
In common with many investment trusts, your Board has been exploring ways in
which it can add value for shareholders and I will be writing to you shortly
with a proposal to allow the Board to introduce buy back powers for the Zero
Dividend Preference shares.
Looking forward, any improvement in the value of the Ordinary shares will
continue to depend on a recovery in equity markets, which have declined further
since the end of the financial year. Even if economic conditions continue to
improve, recent experience can give no assurance that this will be reflected in
increased investor confidence and stronger equity performance. On a positive
note, any surprises are likely to be pleasant ones.
The Directors announce the unaudited statement of results for the year
1 July 2001 to 30 June 2002 as follows:
STATEMENT OF TOTAL RETURN
(*incorporating the revenue account)
1 July 2001 to 1 July 2000 to
30 June 2002 30 June 2001
Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000
Losses on investments - (5,555) (5,555) - (111) (111)
Foreign exchange (losses)/ - (90) (90) - 103 103
gains on capital items
Dividends and interest 1,722 - 1,722 2,032 - 2,032
Other income 52 - 52 40 - 40
Investment management fee (77) (232) (309) (88) (263) (351)
Other expenses (152) - (152) (136) - (136)
Net return before
finance costs and taxation 1,545 (5,877) (4,332) 1,848 (271) 1,577
Interest payable and similar (75) (225) (300) (96) (287) (383)
charges
Return on ordinary activities
before taxation 1,470 (6,102) (4,632) 1,752 (558) 1,194
Taxation on ordinary activities (99) 99 - (107) 107 -
Return on ordinary activities
after taxation for the year 1,371 (6,003) (4,632) 1,645 (451) 1,194
Appropriations in respect of:
- Zero Dividend Preference - (1,513) (1,513) - (1,393) (1,393)
shares
Return attributable to Ordinary 1,371 (7,516) (6,145) 1,645 (1,844) (199)
shareholders
First interim dividend paid of (350) - (350) (350) - (350)
1.80p
(2001: 1.80p)
Second interim dividend paid of (350) - (350) (350) - (350)
1.80p
(2001: 1.80p)
Third interim dividend paid of (350) - (350) (350) - (350)
1.80p
(2001: 1.80p)
Fourth interim dividend (360) - (360) (360) - (360)
proposed of 1.85p
(2001: 1.85p)
Transfer (from) to/ reserves (39) (7,516) (7,555) 235 (1,844) (1,609)
Return per: pence pence pence pence pence Pence
Ordinary share 7.05 (38.63) (31.58) 8.46 (9.48) (1.02)
Zero Dividend Preference share - 9.82 9.82 - 9.04 9.04
BALANCE SHEET
As at As at
30 June 30 June
2002 2001
�'000 �'000
Investments 27,540 33,963
Net current assets 2,856 2,469
Total assets less current liabilities 30,396 36,432
Creditors - amounts falling due after
more than one year (5,657) (5,651)
Net assets 24,739 30,781
Net asset value per:
Ordinary share 26.94p 65.41p
Zero Dividend Preference share 126.59p 117.22p
CONSOLIDATED STATEMENT OF CASHFLOWS
1 July 2001 to 1 July 2000 to
30 June 2002 30 June 2001
�'000 �'000
Net cash inflow from operating activities 1,407 1,564
Servicing of finance
Interest paid (294) (377)
Net cash outflow from servicing of finance (294) (377)
Capital expenditure and financial investments
Purchase of investments (10,739) (20,151)
Sale of investments 11,573 22,375
Exchange (losses)/ gains on settlement (11) 5
Exchange losses on forward currency contracts (25) (12)
Net cash inflow from capital
expenditure and financial investments 798 2,217
Equity dividends paid (1,410) (1,411)
Net cash inflow before and after financing 501 1,993
Increase in cash 501 1,993
NOTE
1. The unaudited financial information does not constitute statutory accounts
as defined in section 240 of the Companies Act 1985. Statutory accounts for
the period ended 30 June 2001 have been delivered to the Registrar of
Companies. The Auditors have reported on those accounts; their report was
unqualified and did not contain statements under section 237(2) or (3) of the
Companies Act 1985. The statement of total return, summarised balance sheet
and statement of cash flows have been prepared using the accounting standards
and policies adopted at 30 June 2001, with the exception of the adoption of
Financial Reporting Standard 19: Deferred Taxation. This change in accounting
policy for deferred tax has not changed the Company's profit after taxation for
the year nor the shareholders' funds, and has not affected the Company's cash
flows. Statutory accounts for the year ended 30 June 2002 have not yet been
approved, audited or filed with the Registrar of Companies.
2. The Directors have declared a fourth interim dividend of 1.85p(2001: 1.85p)
net per Ordinary share, payable on 31 August 2002 to the holders of Ordinary
shares on the Register at 9 August 2002. The Directors do not recommend the
payment of a final dividend.
3. The revenue return per Ordinary share is based on earnings of �1,371,000
(2001:�1,645,000) and on 19,455,570 (2001: 19,455,570) Ordinary shares in issue
throughout the year.
4. The capital return per Ordinary share is based on net capital losses of �
7,516,000 (2001: losses of �1,844,000) and on 19,455,570 (2001: 19,455,570)
Ordinary shares in issue throughout the year.
5. An amount of �457,000 (2001: �550,000) has been charged to capital in
respect of management fees, other expenses and interest in accordance with
accounting policy.
6. It is the intention of the Directors to conduct the affairs of the Company
so that it satisfies the conditions for approval as an investment trust company
set out on Section 842 of the Income and Corporation Taxes Act 1988.
7. There are 15,402,326 (2001: 15,402,326) Zero Dividend Preference shares in
issue. The Zero Dividend Preference shareholders are entitled to receive
159.44p per share on 30 June 2005. In accordance with Financial Reporting
Standard No: 4, the accrued compound growth entitlement of �1,513,000 (2001: �
1,393,000) which takes into account the allocation of share issue expenses to
the Zero Dividend Preference shareholders, has been charged against the capital
reserve.
The net asset value per Zero Dividend Preference share of 126.59p (2001:
117.22p) at 30 June 2002 has been calculated in accordance with the Articles of
Association.
For further information, please contact:
Mike O'Shea, Premier Fund Managers Limited - 01483 306090
END
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