RNS Number:4455K
Quarterly High Income Trust PLC
28 April 2003
NEWS RELEASE
AUDITED RESULTS
TWELVE MONTHS ENDED 31 DECEMBER 2002
For Immediate Release: 28 April 2003
2002 2001
Dividends paid & proposed per Ordinary Share Nil 6.00p
Basic net asset value per Ordinary Share (accounting basis) * (61.84)p (3.46)p
Basic net asset value per Ordinary Share (Articles of Association
basis) * Nil Nil
Net asset value per Zero Dividend Preference Share (accounting basis)
* 131.48p 122.02p
Net asset value per Zero Dividend Preference Share (Articles of
Association basis) * (86.16)p 109.86p
Net return before tax #(57,871,000) #(70,660,000)
Net return after tax #(57,856,000) #(70,763,000)
Total return per Ordinary Share (58.38)p (70.59)p
* The Articles of Association basis is the more relevant measure of Net Asset
Value in the present circumstances of the Company.
This preliminary announcement does not constitute statutory accounts under
Section 240 of the Companies Act 1985. The statutory accounts will be delivered
to the Registrar of Companies in due course.
The auditors have reported on those statutory accounts; their reports were
unqualified and did not contain statements under Section 237(2) or (3) of the
Companies Act 1985.
CHAIRMAN'S STATEMENT
Introduction
The Company is in an extremely difficult financial position. In light of the
current market conditions generally and the split capital investment trust
sector in particular, your Board does not envisage performance improving.
The net asset value for the Ordinary Shareholders has remained at nil throughout
the year whilst the net asset value for Zero Dividend Preference Shareholders
fell from 109.86p as at 1 January 2002 to nil as at 31 December 2002.
Consequently, it is highly unlikely that the Zero Dividend Preference
Shareholders will receive anything on a winding-up in April 2007.
Asset Performance
The net assets attributable to the Ordinary Shares at 31 December 2002 amounted
to #(64.3)m, equivalent to a deficit of 61.84p per share (31 December 2001: a
deficit of 3.46p per share), a reduction of 58.38p per share for the year. Thus
the Company's total return per Ordinary Share was a loss of 58.38p (12 months to
31 December 2001: a loss of 70.59p per share). This reflected a fall in net
assets over the period of 178% from #32.4m to a position of net liabilities of
#25.4m as at 31 December 2002.
This very disappointing result was due to a number of related factors. First
markets during the period were weak with the FTSE All Share Index falling by 25%
in the year to 31 December 2002. Second the effects of falling markets on the
Company's net assets were exaggerated by the financial gearing inherent within
the Company's capital structure and third the split-capital sector itself
suffered from a significant loss of investor sentiment further reducing the
value of the Company's assets.
Earnings and Dividends
Earnings after tax for the year totalled #1,640,000 (12 months to 31 December
2001: #10,553,000) equivalent to 1.58p per Ordinary Share (12 months to 31
December 2001: 10.16p per share). Due to the Company's inability to comply with
the sections of The Companies Act governing the payment of dividends, no
dividends have been proposed or paid during the year. The Board does not
envisage any dividends being proposed for the foreseeable future.
Banking Covenant
During July 2002, the Board managed to complete negotiations with the banks and
now have an on-demand facility which will continue until October 2003. It was
the intention of the Board to try to negotiate an ongoing solution during the
year but due to the deteriorating state of the markets this has been impossible.
However the Board will continue to persevere in achieving this if there is an
opportunity to do so.
Going Concern
The Company's bankers have been supportive of the Company. The Directors have
therefore prepared the accounts on a going concern basis. This assumes that the
Company will continue for the foreseeable future. However, at the current time,
no agreement beyond October 2003 has been reached, and this creates a
fundamental uncertainty for the future viability of the Company. If the Company
were not a going concern, net assets at 31 December 2002 would need to be
reduced to take into account provisions for the following items: break costs of
the interest rate swap that was taken out to fix the rate of interest payable
under the bank loan, totalling #2.975million as at that date; unamortised loan
issue costs of #188,000; a reduction in the valuation of the Company's
investment portfolio to reflect the present wide spreads and lack of liquidity
in the market; and an allowance for further winding up costs of the Company.
Background and Outlook
The Company's investment portfolio is mainly invested in geared ordinary shares
of other split capital closed-ended funds. The performance of the Company
highlighted above was a consequence of high gearing in falling markets which has
resulted in a significant deterioration in the financial position of many of the
companies in which we invest. It is clear world markets are weak, with
volatility at extreme levels and the macroeconomic outlook uncertain.
The Board hopes that the next six months will be less volatile and will allow it
to assess the prospects for the Company beyond the life of the agreement in
place with the banks. The Board additionally acknowledges that the likelihood of
any return to Ordinary or Zero Dividend Preference Shareholders is very remote.
R A Brooks
Chairman
For further information:
Neil Smith 020 7809 6151
Morley Fund Management
Audited Statement of Total Return (incorporating the revenue account)
For the year to 31 December 2002
Year ended 31 December 2002 Year ended 31 December 2001
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Losses on investments - (55,153) (55,153) - (78,224) (78,224)
Income from investments 4,266 - 4,266 14,663 - 14,663
Other income 998 - 998 877 - 877
Total income 5,264 (55,153) (49,889) 15,540 (78,224) (62,684)
Investment management fee 67 101 168 (489) (734) (1,223)
Administrative expenses (732) (34) (766) (636) (33) (669)
Finance costs (2,954) (4,430) (7,384) (2,434) (3,650) (6,084)
Net return before taxation 1,645 (59,516) (57,871) 11,981 (82,641) (70,660)
Taxation on ordinary activities (5) - (5) (1,428) 1,325 (103)
Net return after taxation 1,640 (59,516) (57,876) 10,553 (81,316) (70,763)
Appropriation to redemption reserve - (2,792) (2,792) - (2,591) (2,591)
Return attributable to Ordinary Shareholders 1,640 (62,308) (60,668) 10,553 (83,907) (73,354)
Dividends
Paid - - - (6,234) - (6,234)
Transfer to reserves 1,640 (62,308) (60,668) 4,319 (83,907) (79,588)
Reserves as at 1 January 5,141 (124,086) (118,945) 822 (40,179) (39,357)
Reserves as at 31 December 6,781 (186,394) (179,613) 5,141 (124,086) (118,945)
Return per Ordinary Share 1.58p (59.96)p (58.38)p 10.16p (80.75)p (70.59)p
Diluted return per Ordinary Share * - - - 10.16p (80.75)p (70.59)p
* All warrants lapsed on 1 May 2002 and so a diluted return per Ordinary Share
is not applicable.
Audited Balance Sheet
As at 31 December 2002
31 December 2002 31 December 2001
#'000 #'000 #'000 #'000
Fixed assets
Investments 10,725 73,832
Current assets
Debtors 280 1,407
Cash at bank and in hand 123 41,625
403 43,032
Creditors: amounts falling due within one year (76) (675)
Net current assets 327 42,357
Total assets less current liabilities 11,052 116,189
Creditors: amounts falling due after one year
Medium term loan (36,492) (83,753)
Net (liabilities) / assets (25,440) 32,436
Capital and reserves
Called up Ordinary Share capital 25,979 25,979
Called up Zero Dividend Preference Share capital 7,381 7,381
Share premium account 111,519 111,519
Other reserves
Redemption reserve 9,294 6,502
General capital reserves (92,441) (59,062)
Unrealised depreciation of investments (93,953) (65,024)
(65,581) (6,065)
Revenue reserve 6,781 5,141
Total shareholders' (deficit) / funds (25,440) 32,436
Total shareholders' (deficit) / funds comprise equity and
non-equity interests as follows:-
Equity (Ordinary Shareholders) (64,259) (3,591)
Non-equity (Zero Dividend Preference Shareholders) 38,819 36,027
(25,440) 32,436
Ordinary Shares
- Basic net asset value per share (accounting basis) (61.84)p (3.46)p
- Diluted net asset value per share (accounting basis) * - (3.45)p
- Basic net asset value per share (Articles of Association
basis) Nil Nil
- Market price 0.02p 3.00p
Zero Dividend Preference Shares
- Net asset value per share (accounting basis) 131.48p 122.02p
- Net asset value per share (Articles of Association basis) (86.16)p 109.86p
- Market price 0.25p 37.50p
* All warrants lapsed on 1 May 2002 and so a diluted net asset value per
Ordinary Share is not applicable.
Audited Cash Flow Statement
For the year to 31 December 2002
Year ended Year ended
31 December 2002 31 December 2001
#'000 #'000 #'000 #'000
Net cash inflow from operating activities 5,228 15,419
Servicing of finance
Interest payable (7,346) (6,040)
Financial investment
Purchases of investments - (72,317)
Sales of investments 8,222 112,403
Net cash inflow from financial investment 8,222 40,086
Equity dividends paid - (10,432)
Financing
Part repayment of medium term loan (47,606) -
(Decrease) / increase in cash (41,502) 39,033
Reconciliation of net cash flow to movement in cash at
bank and in hand:
(Decrease) / increase in cash (41,502) 39,033
Cash at bank and in hand at 1 January 41,625 2,592
Cash at bank and in hand at 31 December 123 41,625
By order of the Board
Aviva Company Secretarial Services Limited, Secretary
This information is provided by RNS
The company news service from the London Stock Exchange
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