Final Results
August 05 2004 - 11:22AM
UK Regulatory
PREMIER HIGH INCOME TRUST PLC
PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS
David Hankinson, Chairman of the Company, today commented:
In my last annual report to shareholders, I set out some of the key events that
had occurred during the first four years of your Company's existence. In
general, this period had been one of falling equity markets with a resulting
diminution in value for holders of the Ordinary shares and a reduction in cover
for holders of Zero Dividend Preference (ZDP) shares.
I highlighted that it would be necessary for equity markets to move ahead in
order for holders of the ZDP shares to receive their full entitlement at the
end of the Company's life. During the course of the last year, the improvement
in equity markets has meant that the assets of the Company have grown
sufficiently to enable the ZDP's to continue accruing at their pre-determined
rate, and their Net Asset Value has increased from 136.71p to 147.67p. In order
to reach their final level of 159.44p, the net assets of the company need to
grow by a further 6.4% by 30 June 2005.
For holders of the Company's Ordinary shares, the improvement in markets has
not been quite enough to offset the costs of servicing the ZDP's and the bank
debt. As a result, the Net Asset Value of these shares has fallen from 2.73p to
1.94p during the course of the year. In order for these shares to have any
value at 30 June 2005, the assets of the Company need to grow in excess of 6.4%
by 30 June 2005.
As referred to in Note 1 to the Annual Report, it is expected that shareholders
will have the opportunity on 30 June 2005 to vote on the continuation of the
Company. The outcome of this vote has not been anticipated.
Detailed comment on the performance of the various sections of the portfolio
over the last twelve months can be found within the Investment Manager's report
in the Annual Report.
Looking forward, the returns that shareholders can expect are very finely
balanced and are almost entirely dependent on the fortunes of the Company's
equity portfolio, which represents 72% of the Company's gross assets. The 18%
of the Company's gross assets represented by the bond portfolio has, as
mentioned in my last report, been moved to shorter dated issues in order to
reduce risk and it is unlikely that any growth will come from this area. The
small portion invested in the shares of other investment trust companies will
be gradually realised, as market conditions allow, between now and 30 June
2005. Once again, any growth in this portfolio will have a very limited effect
given that it represents only 3% of the Company's gross assets. At 30 June 2004
cash represented 7% of the Company's gross assets.
Your Board has discussed at length what action to take with regard to the
Company's assets for the forthcoming year. Having considered the various
options, the directors believe that it is appropriate to continue with the
strategy that was put forward at the outset, rather than to make changes at
this late stage. Clearly, if equity markets move ahead then this will benefit
both classes of shareholder who already need to see some growth in order to
receive either their pre-determined entitlement, or have any return other than
the dividends which may become due to them. If equity markets fall, then both
classes of shareholder will see a lower value at 30 June 2005 than that
available today.
For the final quarter, the Board is once again recommending a dividend of 1.5p,
bringing the total for the year to 6.0p, even though this level of distribution
required some use of retained revenue from previous years. In the coming year,
the Board will continue to distribute substantially all current income after
expenses as dividends and defer any further utilisation of retained revenue
until the final quarter.
The Directors announce the unaudited statement of results for the year
1 July 2003 to 30 June 2004 as follows:
STATEMENT OF TOTAL RETURN
(*incorporating the revenue account)
1 July 2003 to 1 July 2002 to
30 June 2004 30 June 2003
Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000
Gains/(losses) on - 1,605 1,605 - (2,858) (2,858)
investments
Foreign exchange gains - 297 297 - (31) (31)
/ (losses) on capital
items
Dividends and interest 1,355 - 1,355 1,344 - 1,344
Other income 26 - 26 92 - 92
Investment management (63) (190) (253) (61) (184) (245)
fee
Other expenses (156) - (156) (188) - (188)
Net return before
finance costs and 1,162 1,712 2,874 1,187 (3,073) (1,886)
taxation
Interest payable and (66) (199) (265) (69) (209) (278)
similar charges
Return on ordinary
activities
before taxation 1,096 1,513 2,609 1,118 (3,282) (2,164)
Taxation on ordinary (26) 26 - (71) 71 -
activities
Return on ordinary
activities
after taxation for the 1,070 1,539 2,609 1,047 (3,211) (2,164)
year
Appropriations in
respect of:
- Zero Dividend - (1,707) (1,707) - (1,614) (1,614)
Preference shares
Return attributable to 1,070 (168) 902 1,047 (4,825) (3,778)
Ordinary shareholders
First interim dividend (292) - (292) (350) - (350)
paid of 1.50p
(2003: 1.80p)
Second interim (292) - (292) (350) - (350)
dividend paid of 1.50p
(2003: 1.80p)
Third interim dividend (292) - (292) (292) - (292)
paid of 1.50p
(2003: 1.50p)
Fourth interim (292) - (292) (292) - (292)
dividend proposed of
1.50p
(2003: 1.50p)
Transfer from reserves (98) (168) (266) (237) (4,825) (5,062)
Return per: pence pence pence pence pence pence
Ordinary share 5.50 (0.86) 4.64 5.38 (24.80) (19.42)
Zero Dividend - 11.61 11.61 - 10.66 10.66
Preference share
All revenue and capital items in the above statement derive from continuing
operations.
The revenue column of this statement is the revenue account of the Company.
SUMMARISED BALANCE SHEET
As at As at
30 June 30 June
2004 2003
�'000 �'000
Investments 26,214 25,718
Net current liabilities (4,148) (5,012)
Net assets 22,066 20,706
Net asset value per:
Ordinary share 1.94p 2.73p
Zero Dividend Preference share 147.67p 136.71p
SUMMARISED STATEMENT OF CASHFLOWS
1 July 2003 to 1 July 2002 to
30 June 2004 30 June 2003
�'000 �'000
Net cash inflow from operating activities 954 1,135
Servicing of finance
Interest paid (260) (260)
Net cash outflow from servicing of (260) (260)
finance
Capital expenditure and financial
investments
Purchase of investments (22,024) (16,006)
Sale of investments 23,342 14,795
Exchange (losses)/gains on settlement (7) 1
Exchange gains on forward currency 306 41
contracts
Net cash inflow/(outflow) from capital
expenditure and financial investments 1,617 (1,169)
Equity dividends paid (1,168) (1,352)
Net cash inflow/(outflow) before 1,143 (1,646)
financing
Financing
Purchase of Zero Dividend Preference (81) (585)
shares for cancellation
Net cash outflow from financing (81) (585)
Increase/(decrease) in cash 1,062 (2,231)
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
year ended 30 June 2003 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 summarised
statement of cash flows have been prepared using the accounting standards and
policies adopted at 30 June 2003. Statutory accounts for the year ended 30 June
2004 have not yet been approved, audited or filed with the Registrar of
Companies.
2. The Directors have declared a fourth interim dividend of 1.50p (2003: 1.50p)
net per Ordinary share, payable on 31 August 2004 to the holders of Ordinary
shares on the Register at 13 August 2004. The Directors do not recommend the
payment of a final dividend.
3. The revenue return per Ordinary share is based on earnings of �1,070,000
(2003: �1,047,000) and on 19,455,570 (2003: 19,455,570) Ordinary shares in
issue throughout the year.
4. The capital return per Ordinary share is based on net capital losses of �
168,000 (2003: losses of �4,825,000) and on 19,455,570 (2003: 19,455,570)
Ordinary shares in issue throughout the year.
5. An amount of �389,000 (2003: �393,000) has been charged to capital in
respect of management fees, other expenses and interest in accordance with the
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 in Section 842 of the Income and Corporation Taxes Act 1988.
7. There are 14,687,326 (2003: 14,757,326) 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 �1,707,000 (2003: �
1,614,000) 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 147.67p (2003:
136.71p) at 30 June 2004 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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