RNS Number:9507O
Leggmason Inv Inc & Grwth Tst PLC
22 August 2003
LEGGMASON INVESTORS INCOME & GROWTH TRUST PLC
Unaudited annual results for the year ended
30 April 2003
LEGGMASON INVESTORS INCOME & GROWTH SECURITIES PLC
Unaudited annual results for the year ended
30 April 2003
CHAIRMAN'S STATEMENT
As we are all aware the last twelve months proved to be an extraordinarily bad
year for equity stock markets that fell to their lowest levels since 1995. The
impact of these falls on the condition of your Company has been very
significant.
In falling markets split capital investment trust companies have been required
to repay debt which in turn has prompted a decline in capital values and a fall
in dividend income. Your Company has not been immune from these dynamics.
At the beginning of the financial year there was some optimism that with a
market rise after the terrible events of 11 September 2001 there could be a
prospect of recovery in the portfolio of your Company. However, the FTSE All -
Share Index declined to its lowest point on 12 March 2003. This Index had fallen
by 36.6% from the April 2002 position.
At 30 April 2002 the total gross assets less the current liabilities were #97.5m
and the Company had #52m of debt. As markets and thus the value of your
Company's portfolio reduced, your Company breached its banking covenants and was
obliged to sell some of its investments to repay much of the debt due to the
Banks. At 30 April 2003 bank debts had been reduced to #17.5m but this exceeded
the value of the gross assets of only #9.1m.
The Board suspended the shares of the Company on 8 October 2002, when the gross
assets first fell to a value marginally less than the amount of the outstanding
debt. This was done as it was felt inappropriate for the shares to trade whilst
the Company's assets were less than its borrowings.
Given the financial position of the Company the Board is in regular contact with
the Lending Banks. All options are, and will be, considered and regrettably this
must include the prospect of winding up the Company. As this prospect clearly
exists the Board has taken the conservative stance of not preparing the accounts
on a going concern basis. The portfolio has accordingly been valued on a bid
basis as at 30 April 2003, although following the market rise the current net
realisable values are expected to be slightly above this.
Debt and the Banks
Notwithstanding the deteriorating financial position of your Company, the Banks
have remained supportive and have not recalled the outstanding debt despite
having the legal ability to do so. However the Company has continued to repay
the bank debt through the sale of the equity portfolio of predominantly FTSE 100
shares and from the sale of part of the portfolio of investments in split
capital investment companies. The repayment schedule - and the cost of interest
and swap breakage costs incurred whenever debt is repaid - was as follows;
Date Debt repayment Repayment costs Balance outstanding
# # #
52,000,000
29 May 2002 5,000,000 299,225 47,000,000
10 July 2002 5,000,000 365,436 42,000,000
9 August 2002 19,612,725 1,587,275 22,387,275
18 October 2002 1,200,000 94,500 21,187,275
21 November 2002 2,400,000 210,567 18,787,275
14 February 2003 700,000 75,931 18,087,275
21 March 2003 592,000 58,754 17,495,275
29 May 2003 900,000 97,706 16,595,275
18 July 2003 1,683,000 159,220 14,912,275
The costs of running the Company during the last twelve months have been kept to
a minimum but, in view of the financial position of the Company, Legg Mason
Investments (Europe) Limited, the Fund Manager has received no fees since July
2002 and the Directors have also foregone all remuneration since 8 October 2002.
The Board has been in constant contact with the Banks, who to date have chosen
to allow the Company to continue its operation, with the prospect of benefiting
from dividend income and from any rises in the market value of the Company's
investment portfolio of split capital investment trust companies. The Banks do
however have the right to change their position at any time. It is perhaps worth
noting that the largest holding in Real Estate CULS has currently risen 33%
since lows in March 2003. Similarly, two other significant holdings European
Assets and Exeter Financials have risen 39% and 47% respectively over that
period.
As the amount of debt due to the Banks exceeds the value of the investment
portfolio, it is likely that any rise in the market value will be utilised to
repay debt. Since 30 April 2003, for example the Company has sold shares in 4 of
its remaining 26 investments held in investment companies realising some #2.25m.
These investments have been sold as opportunities have arisen to realise value.
The funds raised have been used to repay bank debt.
Investment Portfolio
As at 30 April 2003 the percentage of the investment portfolio per ABN Amro
("ABNA") rating is shown below:
Composition of the % held
portfolio
ABNA rating
A 84%
B 3%
C 2%
Cash 11%
Total 100%
At 1 August 2003 the bid value of the remaining assets is #8m.
Many of the holdings have the potential to recover strongly in rising markets,
however a high level of risk also attaches to this portfolio. Your Board has
also considered the possibility that the prospective dividend income from these
investments may become insufficient to cover the costs of operating the Company
and of paying the interest on bank debt.
Dividends
Throughout the year the Company was unable to pay a dividend as asset values
were less than the amount prescribed by Section 265 of the Companies Act 1985.
This requires assets to be 1.5 times liabilities. It is not expected that a
resumption of dividends can reasonably be contemplated in the foreseeable
future.
Outlook
After the Iraqi conflict markets have staged an uncertain recovery and some
liquidity has returned to the split capital investment trust market as investors
have been prepared to assume risk in return for the potential of high rewards
that geared shares can offer. This has nominally increased the value of your
Company's investment in split capital investment trust companies. However, the
levels to which the portfolio has fallen combined with the obligation to repay
bank debt means that any recovery in markets is unlikely to benefit the
Company's equity shareholders.
Ken Greatbatch
Chairman
21 August 2003
LEGGMASON INVESTORS INCOME & GROWTH TRUST PLC
GROUP STATEMENT OF TOTAL RETURN
(incorporating the revenue account)
for the year ended 30 April 2003
For the year ended 30 April 2003 For the year ended 30 April 2002
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Total capital losses on - (54,301) (54,301) - (77,111) (77,111)
investments
Income from fixed asset 3,347 - 3,347 10,867 - 10,867
investments
Other interest receivable 162 - 162 623 - 623
and similar income
--------- ---------- ---------- ------------ ---------- ------------
Gross revenue and capital 3,509 (54,301) (50,792) 11,490 (77,111) (65,621)
losses
Investment management fee (94) (31) (125) (358) (836) (1,194)
Other administrative (296) - (296) (377) - (377)
expenses
Liquidation costs - - (1,216) (1,216) - - -
Breakage costs
Liquidation costs - Other - (70) (70) - - -
------------ ------------ ------------ ------------ ---------- ----------
Net return/(loss) on
ordinary activities before
interest payable and
taxation 3,119 (55,618) (52,499) 10,755 (77,947) (67,192)
Interest payable and (1,524) (3,038) (4,562) (1,194) (2,785) (3,979)
similar charges
----------- ----------- ----------- ----------- ---------- ------------
Net return/(loss) on
ordinary activities before
taxation 1,595 (58,656) (57,061) 9,561 (80,732) (71,171)
Taxation on net return/
(loss) on ordinary
activities 3 - 3 (54) - (54)
----------- ----------- ----------- ----------- ---------- ------------
Net return/(loss) on
ordinary activities after
taxation 1,598 (58,656) (57,058) 9,507 (80,732) (71,225)
Capital losses attributable - 9,772 9,772 - - -
to the bank loan
Provision for redemption of - (1,394) (1,394) - (945) (945)
ZDP shares in subsidiary
Capital losses attributable - 17,339 17,339 - - -
to ZDP shares in subsidiary
---------- ---------- ----------- ------------ --------- ----------
1,598 (32,939) (31,341) 9,507 (81,677) (72,170)
Dividends and other
appropriations:
Redeemable preference
shares
Compounding entitlement - (616) (616) - (444) (444)
Capital losses - 29,038 29,038 - 22,022 22,022
First interim dividend of - - - (300) - (300)
nil (2002: 0.3p)
Second interim dividend of - - - (1,800) - (1,800)
nil (2002: 1.8p)
Third interim dividend of - - - (1,800) - (1,800)
nil (2002: 1.8p)
Reversal of third interim 1,800 - 1,800 - - -
dividend 2002
------------ ------------ ------------ ------------ ---------- ------------
1,800 28,422 30,222 (3,900) 21,578 17,678
------------ ------------ ------------ ------------ ---------- ------------
Net return/(loss) 3,398 (4,517) (1,119) 5,607 (60,099) (54,492)
attributable to ordinary
shares
Ordinary shares
First interim dividend of
nil (2002: 2.25p) - - - (1,928) - (1,928)
Second interim dividend of - - - (1,928) - (1,928)
nil (2002: 2.25p)
Third interim dividend of - - - (857) - (857)
nil (2002: 1.00p)
Fourth interim dividend of - - - - - -
nil (2002: nil)
------------ ------------ ------------ ------------ ---------- ------------
- - - (4,713) - (4,713)
------------ ------------ ------------ ------------ --------- -----------
Transfer to/(from) reserves 3,398 (4,517) (1,119) 894 (60,099) (59,205)
======= ======= ======= ======= ====== ======
Return/(loss) per share: Pence Pence Pence Pence Pence Pence
Articles basis
Return/(loss) per ordinary 3.96 (5.27) (1.31) 6.54 (70.13) (63.59)
share
Return/(loss) per - (28.42) (28.42) 3.90 (21.58) (17.68)
redeemable preference share
(Loss)/return per ZDP share - (106.30) (106.30) - 6.30 6.30
in the subsidiary
FRS4 basis
Return/(loss) per ordinary 3.96 (70.01) (66.05) 6.54 (95.26) (88.72)
share
Return/(loss) per - (0.05) (0.05) 3.90 (0.04) 3.86
redeemable preference share
Return per ZDP share in - 9.29 9.29 - 6.30 6.30
subsidiary
The revenue columns of this statement represent the revenue accounts of the
Group
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the year.
LEGGMASON INVESTORS INCOME & GROWTH TRUST PLC
BALANCE SHEETS
at 30 April 2003
Group Company Group Company
2003 2003 2002 2002
#'000 #'000 #'000 #'000
Fixed asset investments
Listed in the United Kingdom 7,494 7,489 74,217 74,212
Subsidiary undertaking - 13 - 13
-------- ---------- ---------- -----------
7,494 7,502 74,217 74,225
-------- ---------- --------- ------------
Current assets
Debtors and prepayments 611 611 1,089 1,089
Cash at bank 965 960 24,255 24,250
-------- ---------- ----------- -----------
1,576 1,571 25,344 25,339
Current liabilities
Creditors: amounts falling due within one (18,842) (18,842) (2,075) (2,075)
year
---------- ---------- ---------- -----------
Net current (liabilities)/ assets (17,266) (17,271) 23,269 23,264
---------- ---------- ---------- -----------
Total assets less current liabilities (9,772) (9,769) 97,486 97,489
Creditors: amounts falling due after more - (17,342) (52,000) (67,948)
than one year
---------- ---------- --------- ----------
Total net (liabilities)/assets (9,772) (27,111) 45,486 29,541
====== ====== ====== ======
Capital and reserves
Called-up share capital 22,425 22,425 22,425 22,425
Share premium account 97,064 97,064 97,050 97,050
Special reserve 17,550 17,550 17,550 17,550
Capital reserve (realised) (104,776) (104,776) (29,412) (29,412)
Capital reserve (unrealised) (63,891) (63,891) (79,191) (79,191)
Revenue reserve 4,517 4,517 1,119 1,119
---------- ---------- ---------- -----------
Shareholders' funds (27,111) (27,111) 29,541 29,541
Minority interest - ZDP shares 17,339 - 15,945 -
---------- --------- --------- ----------
(9,772) (27,111) 45,486 29,541
===== ===== ===== ======
Total shareholders' funds in accordance
with the Articles of Association are
attributable to:
Ordinary shares - - 1,119 1,119
Redeemable preference shares - - 28,422 28,422
Minority interest - - 15,945 -
---------- ---------- --------- ---------
- - 45,486 29,541
===== ===== ===== =====
Total shareholders' funds under FRS4 are
attributable to:
Equity shareholders (87,020) (87,020) (30,418) (30,418)
Non-equity shareholders 77,248 59,909 75,904 59,959
---------- ---------- --------- ----------
(9,772) (27,111) 45,486 29,541
===== ===== ===== =====
Net asset value per share in accordance Pence Pence Pence Pence
with the Articles of Association
Ordinary share - - 1.31 1.31
Redeemable preference share - - 28.42 28.42
ZDP share in the subsidiary - - 106.30 -
Entitlement per share under FRS4 Pence Pence Pence Pence
Ordinary share (101.54) (101.54) (35.49) (35.49)
Redeemable preference shares 59.91 59.91 59.96 59.96
ZDP share in the subsidiary 115.59 - 106.30 -
This report was approved by the Board of Directors on 21 August 2003
LEGGMASON INVESTORS INCOME & GROWTH TRUST PLC
Group cash flow statement
For the year ended 30 April 2003
For the year ended For the year ended
30 April 2003 30 April 2002
#'000 #'000 #'000 #'000
Net cash inflow from operating activities 3,423 9,728
Servicing of finance
Interest paid (4,641) (3,964)
Taxation
Tax recovered 25 8
Financial Investment
Acquisition of investments (18,694) (95,953)
Sales of investments 31,102 48,411
----------- ------------
Net cash inflow/ (outflow) from financial 12,408 (47,542)
investment
Equity dividends paid - (8,741)
---------- ------------
Net cash inflow/ (outflow) before financing 11,215 (50,511)
Management of liquid resources and financing
Cash withdrawn from/(placed on) on short term 17,851 (17,853)
deposit
Financing
Gross proceeds from issue of ordinary shares - 75,000
Issue expenses - (1,124)
Loan repaid (34,505) -
------------ ------------
Net cash (outflow)/inflow from financing (34,505) 73,876
---------- ----------
(Decrease)/ increase in cash above (5,439) 5,512
===== =====
Reconciliation of net cash flow to movement in
net debt
(Decrease)/ increase in cash as above (5,439) 5,512
Cash (inflow)/ outflow from movement in liquid (17,851) 17,853
resources
Cash outflow from loan repaid 34,505 -
---------- -------------
11,215 23,365
Net debt at 1 May (27,745) (51,110)
----------- -------------
Net debt at 30 April (16,530) (27,745)
===== =====
LEGGMASON INVESTORS INCOME & GROWTH TRUST PLC
Notes to the Accounts
1. Going concern
The Bank of Scotland has indicated that it currently has no intention of
demanding immediate repayment of the outstanding loan. However, if the Bank were
to require repayment of the debt, the Group would be unable to meet this
obligation and therefore the directors have decided that the going concern basis
of accounting is not appropriate. As a result the accounts have been prepared on
a break-up basis and include accruals for breakage costs which would be payable
in the event of the early termination of the loan, and accruals for other costs
which would be payable in the event of the liquidation of the Group. In addition
the investments are valued at the amount that the directors would expect them to
realise in the event of liquidation.
2. Return/(loss) per ordinary share
Revenue return per ordinary share is calculated by dividing the net revenue
return attributable to the ordinary shares for the year of #3,398,000 (2002:
#5,607,000) by the number of ordinary shares in issue throughout the year of
85,700,000 (2002: 85,700,000).
The capital return per ordinary share is calculated by dividing the net capital
loss attributable to the ordinary shares of #4,517,000 (2002: #60,099,000) by
the number of ordinary shares in issue throughout the year of 85,700,000 (2002:
85,700,000).
Return/(loss) per redeemable preference share
Revenue return per redeemable preference share is calculated by dividing the net
revenue return attributable to the redeemable preference shares of nil (2002:
#3,900,000) by the number of redeemable preference shares in issue throughout
the year of 100,000,000 (2002: 100,000,000).
The capital loss per redeemable preference share is calculated by dividing the
compounding entitlement per the Articles of Association of #616,000 (2002:
#444,000) less the provision for shortfall of assets #29,038,000 (2002:
#22,022,000) by the number of redeemable preference shares in issue throughout
the year of 100,000,000 (2002:100,000,000).
(Loss)/ return per ZDP share in the subsidiary
The capital (loss)/return per ZDP share is calculated by dividing the
compounding entitlement per the Articles of Association of #1,394,000 (2002:
#945,000) less the provision for shortfall of assets of #17,339,000 (2002: nil)
by the number of ZDP shares in issue throughout the year of 15,000,000 (2002:
15,000,000).
3. Net asset value per share
The net asset value per share and the net assets attributable to each class
of share at the year end calculated in accordance with the Articles of
Association was as follows:
Net asset value per share Net asset value attributable
attributable
2003 2002 2003 2002
Pence Pence #000 #000
Ordinary shares - 1.31 - 1,119
Redeemable preference shares - 28.42 - 28,422
ZDP shares in subsidiary - 106.30 - 15,945
The net asset value per ordinary share disclosed above is based on the
residual assets of nil (2002: #1,119,000) and on 85,700,000 (2002:
85,700,000) ordinary shares in issue at the year end.
The net asset value per redeemable preference share disclosed above is based
on #51,061,000 (2002: #50,444,000) less the shortfall in funding of the
attributable asset value amounting to #51,061,000 (2002: #22,022,000) and on
100,000,000 (2002: 100,000,000) redeemable preference shares in issue at the
year end.
The net asset value per zero dividend preference share ('ZDP share')
disclosed above is based on #17,339,000 (2002: #15,945,000) less the
shortfall in funding of the attributable asset value amounting to
#17,339,000 (2002: nil) and on 15,000,000 (2002: 15,000,000) ZDP shares in
issue at the year end.
Although under the FRS4 basis there are positive amounts stated for
non-equity shareholders' funds, given the financial position of the Company
it is unlikely that those shareholders will receive any benefit or return
from their investment.
4. Accounts for the year ended 30 April 2003
The above financial information for the year ended 30 April 2003 does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985. The comparative financial information is based on statutory accounts for
the year ended 30 April 2002. These accounts, upon which the Auditors issued an
unqualified opinion, have been delivered to the Registrar of Companies and
include the report of the Auditors which was unqualified and did not contain a
statement under either Section 237(2) or Section 237(3) of the Companies Act
1985. Statutory accounts for the year ended 30 April 2003 will be delivered to
the Registrar of Companies in due course.
The annual report will be issued to shareholders in late August 2003 and further
copies will be available from the Company's registered office. The Company's
Annual General Meeting will be held on Tuesday, 30 September 2003 at 12.00 noon
at the offices of Legg Mason Investments (Europe) Limited, 32 Harbour Exchange
Square, London E14 9JX.
For further information, please contact:
Alan Kerr/Andrew Whalley
Legg Mason Investments (Europe) Limited
Tel: 020 7537 0000
LEGGMASON INVESTORS INCOME & GROWTH SECURITIES PLC
Unaudited annual results for the year ended 30 April 2003
Statement of Total Return (incorporating the revenue account)
for the year ended 30 April 2003
Year ended 30 April 2003 Period ended 30 April 2002
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Accrued redemption premium - 1,394 1,394 - 945 945
receivable from the parent
company
Provision for bad debt - (17,342) (17,342) - - -
--------- ------------ ------------ ------------ ------------ -----------
Gross revenue and capital - (15,948) (15,948) - 945 945
(losses)/ gains
Administrative expenses - - - - - -
------------ ------------- -------------- ------------ ------------ -----------
Net (loss)/ return on ordinary - (15,948) (15,948) - 945 945
activities before taxation
Tax on net (loss)/ return on - - - - -
ordinary activities
----------- ----------- ----------- ----------- ------------ -----------
Net (loss)/ return on ordinary - (15,948) (15,948) - 945 945
activities after taxation
Provision for redemption of ZDP - (1,394) (1,394) - (945) (945)
shares
Capital losses attributable to - 17,339 17,339 - - -
ZDP shares
---------- ---------- ------------ ------------ ------------ ------------
Loss attributable to ordinary - (3) (3) - - -
shares
======= ======= ======= ======= ======= ========
Pence Pence Pence Pence Pence Pence
(Loss)/ return per share:
Ordinary share - (5.00) (5.00) - - -
ZDP share - (106.30) (106.30) - 6.30 6.30
The revenue column of this statement represents the revenue account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued throughout the period.
LEGGMASON INVESTORS INCOME & GROWTH SECURITIES PLC
Unaudited annual results for the period ended 30 April 2003
Balance Sheet
at 30 April 2003
At 30 April 2003 At 30 April 2002
#'000 #'000
Fixed asset investments
Listed in the United Kingdom 5 5
---------- ----------
Current assets
Debtors - 15,948
Cash at bank 5 5
---------- -----------
5 15,953
---------- -----------
Total net assets 10 15,958
====== ======
Capital and reserves
Called-up share capital 13 13
Share premium 15,000 15,000
Reserve for redemption premium 2,339 945
Provision for bad debt (17,342) -
Unrealised reserve - -
Revenue reserve - -
----------- ------------
10 15,958
====== ======
Net asset value per share: Pence Pence
Ordinary share 20.00 25.00
ZDP share - 106.30
This report was approved by the Board of Directors on 21 August 2003.
LEGGMASON INVESTORS INCOME & GROWTH SECURITIES PLC
Unaudited annual results for the period ended 30 April 2003
Notes to the Accounts
1. Going concern
The Bank of Scotland has indicated that it currently has no intention of
demanding immediate repayment of the outstanding loan. However, if the
Bank were to require repayment of the debt, the Group would be unable to
meet this obligation and therefore the directors have decided that the
going concern basis of accounting is not appropriate. As a result the
accounts have been prepared on a break-up basis and include accruals for
breakage costs which would be payable in the event of the early
termination of the loan, and accruals for other costs which would be
payable in the event of the liquidation of the Group. In addition the
investments are valued at the amount that the directors would expect
them to realise in the event of liquidation.
2. Accounting period
The comparative figures cover the period from incorporation on 18 June 2001
to 30 April 2002.
3. (Loss)/return per share
Capital loss per ordinary share is based on capital losses of #2,500 (2002:
nil) and on the 50,000 ordinary shares in issue throughout the year (2002:
50,000).
Capital loss per ZDP share is based on net capital losses attributable to
those shares of #15,945,000 (2002: nil) and on the 15,000,000 ZDP shares in
issue throughout the year (2002: 15,000,000).
4. Net asset value per share
The net asset value per ordinary share is based on the net assets
attributable to the ordinary shares of #10,000 (2002: #12,500) and on 50,000
shares in issue on 30 April 2003 (2002: 50,000). The net asset value per ZDP
share is based on the funds attributable to the ZDP shares of nil (2002:
15,945,000) and on the 15,000,000 ZDP shares in issue at 30 April 2003
(2002: 15,000,000).
5. Accounts for the year ended 30 April 2003
The above financial information for the year ended 30 April 2003 does
not constitute statutory accounts as defined in Section 240 of the
Companies Act 1985. These accounts, upon which the Auditors issued an
unqualified opinion, have been delivered to the Registrar of Companies
and include the report of the Auditors which was unqualified and did not
contain a statement under either Section 237(2) or Section 237(3) of the
Companies Act 1985. Statutory accounts for the year ended 30 April 2003
will be delivered to the Registrar of Companies in due course.
The Company's Annual General Meeting will be held on Tuesday, 30
September 2003 immediately following the AGM of LeggMason Investors
Income & Growth Trust plc at the offices of Legg Mason Investments
(Europe) Limited, 32 Harbour Exchange Square, London E14 9JX.
The annual report will be sent to shareholders in late August 2003 and
will be available to members of the public from the Company's registered
office: 55 Moorgate, London EC2R 6PA.
For further information, please contact
Alan Kerr/Andrew Whalley
Legg Mason Investments (Europe) Limited
Tel: 020 7537 0000
This information is provided by RNS
The company news service from the London Stock Exchange
END
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