To: Stock Exchange For immediate
release:
30 March 2006
PREMIUM TRUST plc
Interim results for the period to 28 February 2006
Chairmans statement
The companys net asset value (NAV) total return per unit was 11.9% in the six
months to 28 February 2006, compared with 10.5% for the benchmark index a
composite of the FTSE All-Share index (80%) and the FTSE Government Securities
All Stocks index (20%). Over the period both the equity and the fixed interest
portfolios outperformed their benchmark. Gearing was a positive contributor to
performance as both equity and fixed interest markets rose.
These are the first set of the companys accounts to be drawn up under both the
revised Statement of Recommended Practice for Financial Statements of Investment
Trust Companies (SORP) and a number of new Financial Reporting Standards (FRSs).
This has required the restatement of the prior years figures. An explanation
of the impact of these changes is included within the notes to this
announcement.
In addition, given the fixed life of the company and on the advice of our
auditors, the financial statements for this period have been prepared on a break-
up basis. Accordingly, an estimate of the costs of liquidation has been
accrued.
The companys unit share price rose by 12.7% in the six-month period. The
components of this return range from a gain of 160.4% for the capital shares to
a comparatively pedestrian 4.0% for the zero dividend preference (ZDP) shares.
The capital shares retained a positive NAV throughout the period, moving from
just 1.3p per share at 31 August 2005 to 17.0p at 28 February 2006. The NAV of
the income shares reflected their declining final entitlement which will stand
at 47.7p per share on 31 December 2006 and, over the period, the income share
NAV reduced by 0.4%. Nonetheless, recognising the improved cover of its final
entitlement, the income share price rose by 17.6% over the period to 50.0p, a
4.2% premium to its NAV per share at 28 February 2006. The ZDP shares also stood
at a premium at this date, of 2.0% and, with the capital shares trading at a
discount of 26.3%, the discount of the combined package price relative to the
companys NAV narrowed, from 3.2% at 31 August 2005 to 2.6% at 28 February 2006.
Having declared a first interim dividend of 1.25p per income share, a second
interim dividend of that amount payable on 28 April to income shareholders on
the register on 7 April - makes an unchanged total of 2.50p per income share for
the six months to 28 February 2006. It remains the current intention of the
directors to declare dividends totalling not less than 5.25p per income share in
respect of the year to 31 August 2006. Although dividends for the year to date
have not been covered by the revenue return, the companys revenue reserves as
at 28 February 2006 (after adjusting for the second interim dividend and
provision for liquidation costs) stood at 1.27 p per income share, equivalent to
46 % of the minimum intended dividend for the remainder of the financial year.
The company has a fixed life, ending on 31 December 2006 and, given current
market conditions, it is the Boards intention to remain virtually fully
invested, with approximately 80% of assets in equities and 20% in cash and fixed
interest securities, until that date. Following representations from a number of
major shareholders it is clear that, given the relatively small size of the
company, they favour a straightforward liquidation at the end of the companys
life. However, the directors are in discussion with the companys advisers with
a view to the possibility of offering shareholders one or more rollover
vehicles, subject to the cost of establishing any such vehicles being borne by
those shareholders who wish to rollover and/or the investment managers of the
successor fund(s). Following advice from the companys lawyers and auditors, it
is the Boards intention to charge the net costs of any reconstruction or,
indeed, the costs of liquidation to income.
I envisage providing full details of the options to be made available to
shareholders at wind-up by no later than the date of announcement of the
companys preliminary results for the year to 31 August 2006, scheduled for 28
September.
Managers review
Apart from a brief oil price induced hiatus last October, the UK equity market
has continued in its upward trend. Economic news has been relatively benign in
recent months, with rapid increases in utility bills for both consumer and
industrial users being the main negative. This generally positive economic
backdrop has combined with takeover bids both actual and rumoured to buoy
the market. There has been a steady stream of bids, often for cash and
frequently offering a significant premium to the undisturbed price. The
portfolio benefited from this trend, as its holding in O2, a mobile telephone
company, was taken over at a significant premium. With no shortage in the
availability of debt and bond finance to fund deals, more takeovers can be
expected. Size appears not to be a barrier there are even rumours that
Vodafone, the third largest company in the FTSE 100 index, is attracting
interest from private equity funds.
The FTSE 100 index has now breached the 6000 level. The areas which have done
best have been cyclical sectors such as metals, mining and specialist
financials. More defensive sectors such as telecommunications (both fixed and
mobile) have lagged the market. Despite the high oil price, large oil stocks
have underperformed as investors forecast that the oil price - and therefore
profits would fall in the near future. Smaller companies have continued to
outperform, and the FTSE Small Cap index is close to an all-time high. We are
nearing the end of the corporate results season and (so far, at least) there
have been few disasters. The heavily weighted banking sector enjoyed some modest
upgrades, as bad debts did not rise as much as the market had feared. One
positive feature being exhibited by a range of UK companies at the moment is the
strength of dividend growth. For example, Royal Bank of Scotland pleased the
market with a 25% dividend increase coupled with a share buy-back. Although
welcome, this dividend increase merely makes the Royal Banks payout ratio more
comparable to the sector average. However, other companies have also announced
dividends that have easily exceeded market expectations.
We have added several new holdings to the portfolio. The aerospace and defence
sector offers good medium-term growth prospects thanks to both civil and
military projects. We therefore established new holdings in both BAE Systems and
Smiths Group. We also took a holding in retailer Next after expectations of very
difficult trading pushed the share price down sharply, which presented us with a
good buying opportunity. The share price has subsequently recovered. We also
established a position in Admiral Group, a fast-growing insurance company. A
number of holdings were sold during the period: Burberry, where the holding was
small, having been received at the time of the companys demerger from GUS;
Centrica, where earnings are vulnerable to rising and volatile gas prices;
Alliance & Leicester, which is struggling to produce earnings growth and whose
dividend growth is slowing; and HBOS, which appeared relatively expensive
compared to two other stocks - Barclays and Royal Bank of Scotland - where we
invested the sale proceeds.
There has been no significant correction since the market bottomed three years
ago. At some point, one will come. The UK equity market has continued its steady
rise, and the FTSE 100 Index has breached 6000 for the first time in five years.
There is no doubt that profit and, more particularly, dividend growth, has been
strong and should continue. There are also a number of companies that are active
in buying back their shares. Bid speculation is also prevalent. Looking at
current valuations, the UK market now trades on a prospective price/earnings
ratio of 13x. However, this is the average P/E - the median P/E ratio is
actually over 15x. This difference is due to the relatively low ratings of some
of the markets largest stocks, in turn a reflection of the market opinion that
either their profits will fall or that they are too big to be taken over. Either
way, it is difficult to find much value in the UK market at present, other than
in some of its largest companies. Therefore, in the short term at least,
progress will be more difficult.
- ends -
For further information, please contact:
Ross Watson/Mike Woodward 0131 229 5252
Martin Currie Investment Management Ltd
rwatson@martincurrie.com/ mwoodward@martincurrie.com
PREMIUM TRUST plc
Income statement for the
six-month period ended 28 February 2006
Unaudited
Revenue Capital Total
�000 �000 �000
Gains on - realised - 1,189 1,189
investments
- unrealised - 2,819 2,819
Income - franked 495 54 549
- unfranked 85 - 85
Investment management fee (48) (71) (119)
Other expenses (101) - (101)
Estimated liquidation costs (254) - (254)
_______ _______ _______
Returns on ordinary activities before 177 3,991 4,168
finance costs
Finance costs: debt (82) (123) (205)
Finance costs: income shares (545) - (545)
Finance costs: appropriations in respect - (765) (765)
of income and ZDP shares
_______ _______ _______
Transfer (from)/ to reserves (450) 3,103 2,653
_______ _______ _______
The total column of this statement is the profit and loss account of the
company.
A Statement of Total Recognised Gains and Losses is not required, as all gains
and losses of the company have been reflected in the above statement.
On 30 March 2006, the Board declared a second interim dividend of 1.25p per
income share. The dividend will be paid on 28 April 2006 to shareholders on
the register on 7 April 2006. The total amount of the distribution, calculated
with reference to the number of income shares in issue at 30 March 2006, is
�248,000.
The financial information contained within this announcement does not constitute
the companys statutory financial statements as defined in section 240 of the
Companies Act 1985.
The terms of the preliminary announcement were approved by the board on 30 March
2006.
PREMIUM TRUST plc
Income statement for the
six-month period ended 28 February 2005
Restated*
Unaudited
Revenue Capital Total
�000 �000 �000
Gains on - realised - 388 388
investments
- unrealised - 2,950 2,950
Income - franked 446 - 446
- unfranked 107 - 107
Investment management fee (46) (69) (115)
Other expenses (84) - (84)
Estimated liquidation costs - - -
_______ _______ _______
Returns on ordinary activities before 423 3,269 3,692
finance costs
Finance costs: debt (82) (123) (205)
Finance costs: income shares (545) - (545)
Finance costs: appropriations in respect - (700) (700)
of income and ZDP shares
_______ _______ _______
Transfer (from)/ to reserves (204) 2,446 2,242
_______ _______ _______
* Details of the restatement are included within note 1 to this announcement.
PREMIUM TRUST plc
Income statement for the
year ended 31 August 2005
Restated
Unaudited
Revenue Capital Total
�000 �000 �000
Gains on - realised - 993 993
investments
- unrealised - 3,759 3,759
Income - franked 1,260 - 1,260
- unfranked 192 - 192
Investment management fee (94) (141) (235)
Other expenses (208) - (208)
Estimated liquidation costs - - -
_______ _______ _______
Returns on ordinary activities before 1,150 4,611 5,761
finance costs
Finance costs: debt (165) (247) (412)
Finance costs: income shares (1,040) - (1,040)
Finance costs: appropriations in respect - (1,445) (1,445)
of income and ZDP shares
_______ _______ _______
Transfer (from)/ to reserves (55) 2,919 2,864
_______ _______ _______
* Details of the restatement are included within note 1 to this
announcement.
PREMIUM TRUST plc
BALANCE SHEET
As at 28 February As at 28 February As at 31 August
2006 (unaudited) 2005 2005
restated* restated*
(unaudited) (unaudited)
�000 �000 �000 �000 �000 �000
Fixed assets
Investments at 37,211 34,253 35,435
market value
Current assets
Debtors 166 167 246
Cash at bank and 2,774 674 798
in hand
_______ _______ _______
2,940 841 1,044
Creditors
Amounts falling
due within one
year
Loans (7,000) - -
Accruals (427) (156) (173)
_______ _______ _______
Net current (4,487) 685 871
(liabilities)/ass
ets
_______ _______ _______
Total assets less
current liabiliti 32,724 34,938 36,306
es
Creditors
Amounts falling
due after one
year
Loans - (7,000) (7,000)
_______ _______ _______
Net asset value 32,724 27,938 29,306
attributable to
shareholders
_______ _______ _______
Net asset value
attributable to
shareholders (as
defined by the
Articles and on a
going concern
basis)
Per income share 48.00p 47.25p 48.19p
Per capital share 16.96p - 1.28p
Per zero dividend
preference share 97.80p 89.81p 93.75p
Per unit
(excluding
undistributed 162.76p 137.06p 143.22p
revenue reserve)
Undistributed
revenue reserve 3.80p 4.04p 4.79p
Company net asset 166.56p 141.10p 148.01p
value
* Details of the restatement are included within note 1 to this announcement.
PREMIUM TRUST plc
STATEMENT OF CASH FLOW
Six month period Six month period Year to 31 August
to 28 February to 28 February 2005
2006 (unaudited) 2005 (unaudited) (audited)
�000 �000 �000 �000 �000 �000
Operating activities
Net dividends and
interest received from 720 629 1,453
investments
Interest received from 16 33 56
deposits
Investment management (113) (109) (234)
fee
Bank charges (1) (2) (4)
Cash paid to and on (29) (31) (61)
behalf of directors
Other cash payments (77) (63) (133)
_______ _______ _______
Net cash inflow from
operating activities 516 457 1,077
Servicing of finance
Finance costs: debt (205) (205) (412)
Finance costs: (545) (545) (1,040)
shareholders funds
_______ _______ _______
Net cash outflow from
servicing of finance (750) (750) (1,452)
Capital expenditure
and financial
investment
Payments to acquire (3,628) (2,000) (4,216)
investments
Receipts from disposal 5,838 1,933 4,355
of investments
_______ _______ _______
Net cash 2,210 (67) 139
inflow/(outflow) from
capital expenditure
and financial
investment
_______ _______ _______
Increase/(decrease) in 1,976 (360) (236)
cash for the period
_______ _______ _______
Notes
1. Restatement
These statements have incorporated the requirements of FRS21 Events after the
Balance Sheet Date, FRS25 Financial Instruments: Disclosure and Presentation,
FRS26 Financial Instruments: Measurement and the Statement of Recommended
Practice of the AITC issued in 2005. There have been three significant changes
arising from these:
* Previously interim dividends were reported in the financial period to which
they related. FRS21 recommends that they are accounted as a liability in the
period in which they are approved
* In relation to FRS26, the companys investments are classified as
financial assets at fair value through profit or loss and are therefore valued
at bid price. In prior years, investments were valued at middle market price
* Under FRS25, the share capital of the company is classified as a liability
rather than equity. This classification arises from the fixed entitlements of
the income and zero dividend preference shares at 31 December 2006 and for the
capital shares from the approaching wind-up of the company.
The comparative accounting periods for the six-month period ended 28 February
2005 and the year ended 31 August 2005 have been restated for these changes.
2. Returns (as defined by the Articles and on a going concern basis)
The return and net asset value per ordinary share are calculated with reference
to the following figures:
Restated* Restated*
Revenue return Six months Six months Year ended 31
ended ended 28 August 2005
28 February February 2005
2006
�000 �000 �000
Revenue return
attributable to
unitholders per (450) (204) (55)
income
statement
Add back:
estimated 254 - -
liquidation
costs
Add back:
Finance costs- 545 545 1,040
shareholders
funds
_______ _______ _______
349 341 985
Average number
of units in 19,800,000 19,800,000 19,800,000
issue during
period
Revenue return 1.76p 1.72p 4.97p
per unit
Capital return
per share
Capital return
attributable to 3,103 2,446 2,919
unitholders
Add back:
appropriations
in respect of 765 700 1,445
income and ZDP
shares
_______ _______ _______
3,868 3,145 4,364
Average number
of units in 19,800,000 19,800,000 19,800,000
issue during
period
Capital return 19.53p 15.89p 22.04p
per unit
Total return 21.29p 17.61p 27.01p
per share
* Details of the restatement are included within note 1 to this announcement.
Net asset values (as defined by the Articles and on a going concern basis)
As at 28 Restated* Restated*
February 2006 As at 28 As at 31 August
February 2005 2005
Net asset value �000 �000 �000
Net assets
attributable to
shareholders 32,724 27,938 29,306
per balance
sheet
Add back:
estimated 254 - -
liquidation
costs
Undistributed
revenue reserve (753) (799) (949)
_______ _______ _______
32,225 27,139 28,357
_______ _______ _______
Entitlement for
ZDP
shareholders at 19,364 17,783 18,562
the period end
Entitlement for
income
shareholders at 9,504 9,356 9,542
the period end
Entitlement for
capital
shareholders at 3,357 - 253
the period end
_______ _______ _______
32,225 27,139 28,357
_______ _______ _______
Net asset value
per share
Net assets
attributable to
shareholders 165.27p 141.10p 148.01p
per balance
sheet
Add back:
estimated 1.29p - -
liquidation
costs
Undistributed
revenue reserve (3.80p) (4.04p) (4.79p)
_______ _______ _______
162.76p 137.06p 143.22p
_______ _______ _______
Entitlement for
ZDP
shareholders at 97.80p 89.81p 93.75p
the period end
Entitlement for
income
shareholders at 48.00p 47.25p 48.19p
the period end
Entitlement for
capital
shareholders at 16.96p - 1.28p
the period end
_______ _______ _______
162.76p 137.06p 143.22p
_______ _______ _______
* Details of the restatement are included within note 1 to this announcement.
3. Memorandum- net asset value attributable to shareholders
Is represented by:
Restated* Restated*
As at 28 As at 28 As at 31 August
February 2006 February 2005 2005
Net asset �000 �000 �000
value
Called-up 1,980 1,980 1,980
share
capital
Share 16,976 16,976 16,976
premium
Redemption
reserve- 9,108 9,180 9,145
income
shares
Redemption
reserve- 18,771 17,189 17,969
zero
dividend
preference
shares
Capital (25,111) (25,059) (25,395)
reserve-
realised
Capital 10,501 6,873 7,682
reserve-
unrealised
Revenue 499 799 949
reserve
_______ _______ _______
32,724 27,938 29,306
_______ _______ _______
* Details of the restatement are included within note 1 to this
announcement.
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