Interim Results
February 04 2003 - 10:21AM
UK Regulatory
PREMIER HIGH INCOME TRUST PLC
PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS
The Directors present the Interim Report (unaudited) for the period from 1 July
to the 31 December 2002.
During the period under review, total assets less current liabilities fell by
14.4% to �26,009,000. This compares with a fall of 16.2% in the FTSE 350 index
during the same period.
At the individual share class level, the net asset value per Ordinary share has
fallen to 3.46p from 26.94p while the net asset value per Zero Dividend
Preference share has risen to 131.59p from 126.59p.
During the period your Company took advantage of the general weakness of zero
dividend preference shares in the market to purchase, for cancellation, 255,000
of your Company's Zero Dividend Preference shares at an average price of
96.84p. This represented a significant discount to the accrued asset value of
the Zero Dividend Preference shares and therefore enhanced the asset value for
remaining holders of both share classes. It is intended that the Company will
continue with share purchases as and when market conditions allow.
The main feature of the period under review has been the continued fall in
equity markets. The year 2002 saw the worst single-year performance since 1974
and the first time in forty years that markets have fallen for three successive
years. This has created an extremely difficult environment for your Company,
resulting in a heavy fall in the value of the Ordinary shares.
The second feature of the period has been the continued collapse in the value
of many split capital investment trust shares. Whilst your Company has not
invested as heavily as many into this sector, it has had some exposure. At the
time of my last report, exposure in this area was 5.9% of total assets less
current liabilities and this has now fallen to under 3%.
The investment portfolio remains invested broadly in line with the strategy set
out in the original prospectus, although market movements have impacted on the
original percentages. At 31 December 2002 the portfolio had some 69% of total
assets less current liabilities being allocated to UK equities, 21% to Global
Bonds, 3% to other split capital trusts and 7% in cash. The equity portfolio
comprises of stocks that are constituents of the FTSE 350 index, with some 69%
of the portfolio by value being invested in companies within the FTSE 100
index, and 31% invested in companies within the FTSE 250 index.
The investment strategy for the UK equity portfolio of concentrating on
fundamental quality stocks has remained unchanged, with the managers following
a disciplined sector and stock selection process. Over the period, performance
has been slightly ahead of the FTSE 350 index, with a fall of some 15.6%, which
gives some encouragement in these difficult times. It is also comforting to
report that the equity managers have out-performed their benchmark since the
inception of your Company.
Elsewhere, the performance of the fixed interest investments has been
comfortably ahead of benchmark over both the period under review and since
inception, which is again positive news.
One of the features of the heavy falls in the value of the investments in the
split capital sector has been a sharp fall in the level of income derived from
these investments. This, inevitably, has impacted on the level of income
received by your Company and means that the level of future dividends will be
determined almost exclusively by the level of income received on its equity and
fixed interest investments.
In view of potential event risk in the Middle and Far East, uncertainty over
residential property, corporate earnings and levels of private and corporate
indebtedness, it is likely that markets will remain cautious over the next few
months. However, assuming a clear resolution of Middle East event risk, your
Board believes that there is scope for share prices to recover later in the
year as the outlook for the global economy and corporate profits improves.
Your Board declared a first interim dividend of 1.8p in November, which, taken
together with the second interim dividend now declared of 1.8p, brings the
total for the first half of this financial year to 3.6p. To maintain the second
interim dividend at 1.8p, a further transfer has been made from reserves
accumulated in previous years.
It is the Board's intention to distribute all income after expenses, but there
can be no certainty that it will be possible to maintain dividends at the rate
of 7.25p per annum indefinitely.
The Directors announce the unaudited statement of results for the period 1 July
2002 to 31 December 2002 as follows:
STATEMENT OF TOTAL RETURN
(*incorporating the revenue account) for the period 1 July 2002 to 31 December
2002
Six months to Six months to
31 December 2002 31 December 2001
Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000
Losses on investments - (3,810) (3,810) - (4,184) (4,184)
Exchange gains on - 99 99 - 10 10
capital items
Dividends and interest 610 - 610 813 - 813
Other income 29 - 29 25 - 25
Investment management (32) (97) (129) (40) (118) (158)
fee
Other expenses (103) - (103) (75) - (75)
Net return before
finance costs and 504 (3,808) (3,304) 723 (4,292) (3,569)
taxation
Interest payable and (34) (104) (138) (41) (122) (163)
similar charges
Return on ordinary
activities
before taxation 470 (3,912) (3,442) 682 (4,414) (3,732)
Taxation on ordinary (27) 27 - (54) 54 -
activities
Return on ordinary
activities
after taxation for the 443 (3,885) (3,442) 628 (4,360) (3,732)
period
Appropriations in
respect of:
- Zero Dividend - (814) (814) - (747) (747)
Preference shares
Return attributable to 443 (4,699) (4,256) 628 (5,107) (4,479)
Ordinary shareholders
Dividend in respect of (700) - (700) (700) - (700)
Ordinary shares
Transfer from reserves (257) (4,699) (4,956) (72) (5,107) (5,179)
Return per: pence pence pence pence pence pence
Ordinary share 2.28 (24.15) (21.87) 3.23 (26.25) (23.02)
Zero Dividend - 5.29 5.29 - 4.85 4.85
Preference share
The revenue column of this statement is the revenue account of the Company.
SUMMARISED BALANCE SHEET
As at As at As at
31 December 30 June 31 December
2002 2002 2001
�'000 �'000 �'000
Investments 24,128 27,540 30,640
Net current assets 1,881 2,856 1,363
Total assets less current 26,009 30,396 32,003
liabilities
Creditors - amounts falling due
after
more than one year (5,660) (5,657) (5,654)
Net assets 20,349 24,739 26,349
Net asset value per:
Ordinary share 3.46p 26.94p 39.34p
Zero Dividend Preference share 131.59p 126.59p 121.85p
SUMMARISED STATEMENT OF CASHFLOWS
for the six months ended 31 December 2002
Six months to Six months to
31 December 2002 31 December 2001
�'000 �'000
Net cash inflow from operating 601 739
activities
Servicing of finance
Interest paid (135) (161)
Net cash outflow from servicing of (135) (161)
finance
Capital expenditure and financial
investments
Purchase of investments (7,406) (7,029)
Sale of investments 7,042 6,169
Exchange losses on settlement - (9)
Exchange gains on forward currency 159 35
contracts
Net cash outflow from capital
expenditure and financial investments (205) (834)
Equity dividends paid (710) (710)
Net cash outflow before financing (449) (966)
Financing
Repurchase of Zero Dividend Preference (53) -
shares for cancellation
Net cash outflow from financing (53) -
Decrease in cash (502) (966)
NOTE
1. The above financial information does not constitute statutory accounts as
defined in Section 240 of the Companies Act 1985.
2. The Directors have declared a second interim dividend of 1.80p (2001: 1.80p)
net per Ordinary share, payable on 28 February 2003 to the holders of Ordinary
shares on the Register at 14 February 2003.
3. The revenue return per Ordinary share is based on earnings of �443,000
(2001: �628,000) and on 19,455,570 (2001: 19,455,570) Ordinary shares in issue
throughout the period.
4. The capital return per Ordinary share is based on net capital losses of �
4,699,000 (2001: �5,107,000) and on 19,455,570 (2001: 19,455,570) Ordinary
shares in issue throughout the period.
5. An amount of �201,000 (2001: �240,000) 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. The Company purchased for cancellation 55,000 Zero Dividend Preference
shares at 96.25p per share on 12 December 2002 and a further 200,000 Zero
Dividend Preference shares at 97p per share on 17 December 2002. The total cost
of the shares purchased was �248,000 including expenses. At 31 December 2002 �
195,000 was owing to brokers in respect of these transactions.
There are now 15,147,326 (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 �814,000 (2001: �
747,000) 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 131.59p (2001:
121.85p) at 31 December 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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