RNS Number:4239M
Royal London Growth & Inc Trust PLC
17 June 2003
ROYAL LONDON GROWTH & INCOME TRUST PLC
Unaudited interim results for the six months ended 31 March 2003
Chairman's Statement
We present the Interim Report and Accounts for your Company covering the half
year ended 31 March 2003.
During the half year, the net asset value per geared ordinary share fell by
14.2% to 27.8 pence per share. The Directors have declared an interim dividend
of 1.1 pence per geared ordinary share to be paid on 21 July 2003 to those
shareholders appearing on the Register of Members at the close of business on 27
June 2003. This dividend compares with 1.1 pence per geared ordinary share, paid
for the similar period last year.
Since April there has been a strong rally in equity markets. After a poor start
to 2003 we passed the third anniversary of this global bear market with investor
confidence still in a fragile state. The impending crisis surrounding Iraq has
now past and oil prices have come down to a lower level. However, political
conditions in much of the Middle East remain less than stable.
While the events in the Middle East were a useful excuse for investor inaction,
they were not the sole cause of market weakness. The major countries are all
experiencing a slowdown in activity. In particular consumer spending appears to
be fragile in the United States, bearing in mind the importance of the U.S.
consumer in maintaining levels of demand in the global economy. In Britain there
is increased uncertainty on the back of tax increases and concerns about
pensions. Nevertheless many companies have been able to hold their forecasts for
the current year, and in some cases we are seeing an improvement in profit
margins.
Since the launch of the Company 60% of financing costs and investment management
expenses have been charged to the capital account. This allocation was based
upon the requirements of the Investment Trust Statement of Recommended Practice
which permits the allocation of such expenses based upon the expected long-term
split of returns in the form of capital gains and income of the investment
portfolio. This has had the benefit of enabling the Company to pay a relatively
high dividend, but at the cost of capital depletion.
The Directors are now of the belief that in an environment of lower returns,
with income yields accounting for a greater proportion of the total return, that
the basis for allocating such costs should be revised to reflect a revised view
of the expected long-term split of returns of the investment portfolio between
capital gains and income. Accordingly the Directors have decided with immediate
effect to change the basis of allocation so that 40%, rather than 60%, of the
financing costs and investment management are charged to capital.
This is we believe a more prudent way of treating the Company's expenses in
relation to its investment policy. Shareholders should be aware that this will
also mean a significant fall in the amount of the net income available for
distribution in the form of dividends. Future dividends to geared ordinary
shareholders will be substantially lower as a result of this change. However,
this will be offset by an improvement in the Company's ability to conserve its
capital under most market circumstances.
Your Board maintains a careful overview of your Company's asset allocation,
advised by Royal London Asset Management Limited, your investment manager. For
most of this period 40% or more of the investments were in bonds issued
primarily by UK based companies. These have proved to be more stable then
equities, and have helped to add a defensive quality to the investment
portfolio. This position will however be less appropriate should we return to an
environment in which stock markets appreciate on a substantial basis.
At this year's Annual General Meeting shareholders once again voted to renew the
facility whereby the Company can buy back its own stock. We report elsewhere
that we have been active in the period under review, and have continued since
the end of the accounting period. As well as buying geared ordinary shares, your
Board has also authorised the re-purchase and cancellation of Convertible
Unsecured Loan Stock, thus reducing some of the financial cost associated with
these instruments. It is the Board's intention that this policy will continue.
Your Board through its Management Engagement Committee, entirely consisting of
the independent Directors, has reviewed the performance and contractual
arrangements of your investment manager, Royal London Asset Management Limited,
and your corporate administrator, BNP Paribas Fund Services UK Limited and its
wholly owned subsidiary, BNP Paribas Secretarial Services Limited. In all cases
your Board continues to be satisfied with the services provided, and keeps this
under review.
James Williams
Chairman
17 June 2003
Statement of Total Return
(incorporating the revenue account)
for the half year ended 31 March 2003 (unaudited)
(Unaudited)
Half year ended 31 March 2003
Notes Revenue Capital Total
#'000 #'000 #'000
Total capital losses from investments - (2,559) (2,559)
Income from fixed asset investments 3,321 - 3,321
Other interest receivable and similar income 38 - 38
----------- ---------- ---------
Gross revenue and capital gains/(losses) 3,359 (2,559) 800
Management fee (229) (344) (573)
Other administrative expenses (243) - (243)
---------- ---------- ---------
Net return/(loss) on ordinary activities before 2,887 (2,903) (16)
interest payable and taxation
Interest payable 1 (1,570) (2,355) (3,925)
Breakage costs on early repayment of loan - - -
Capital return attributable to 9% Convertible - (29) (29)
Unsecured Loan Stock 2020
--------- ---------- ---------
Net return/(loss) on ordinary activities before 1,317 (5,287) (3,970)
taxation
Taxation on net return on ordinary activities - - -
--------- ---------- --------
Available for geared ordinary shareholders 1,317 (5,287) (3,970)
--------- ---------- --------
Dividends - geared ordinary shares
Interim 2003: 1.10p (2002: 1.10p) 2 (1,197) - (1,197)
Adjustment to 2002 final paid 2 17 - 17
Final 2002: 1.10p - - -
--------- ---------- ---------
(1,180) - (1,180)
--------- ---------- ---------
Transfer to/(from) reserves 137 (5,287) (5,150)
====== ====== ======
Return/(loss) per geared ordinary share 3 1.19p (4.78p) (3.59p)
====== ====== ======
The revenue column of this statement represents the revenue account of the
Company.
Statement of Total Return
(incorporating the revenue account)
for the half year ended 31 March 2003 (unaudited)
(Unaudited) (Audited)
Half year ended 31 March 2002 Year ended 30 September 2002
Notes Revenue Capital Total Revenue Capital Total
#000 #000 #000 #000 #000 #000
Total capital gains/(losses) from - 11,178 11,178 - (21,877) (21,877)
investments
Income from fixed asset 3,293 - 3,293 6,689 - 6,689
investments
Other interest receivable and 53 - 53 89 - 89
similar income
----------- ---------- --------- ----------- ------------ ------------
Gross revenue and capital gains/ 3,346 11,178 14,524 6,778 (21,877) (15,099)
(losses)
Management fee (289) (433) (722) (539) (809) (1,348)
Other administrative expenses (196) - (196) (366) - (366)
---------- ---------- --------- ----------- ------------ ------------
Net return/(loss) on ordinary
activities before interest
payable and taxation 2,861 10,745 13,606 5,873 (22,686) (16,813)
Interest payable 1 (1,609) (2,414) (4,023) (3,193) (4,788) (7,981)
Breakage costs on early repayment (248) (372) (620) (248) (372) (620)
of loan
Capital return attributable to 9%
Convertible Unsecured Loan Stock
2020 - (38) (38) - (76) (76)
--------- ---------- --------- ----------- ------------ ------------
Net return/(loss) on ordinary 1,004 7,921 8,925 2,432 (27,922) (25,490)
activities before taxation
Taxation on net return on - - - - - -
ordinary activities
--------- ---------- -------- ----------- ------------ ------------
Available for geared ordinary 1,004 7,921 8,925 2,432 (27,922) (25,490)
shareholders
--------- ---------- -------- ----------- ----------- ------------
Dividends - geared ordinary
shares
Interim 2003: 1.10p (2002: 1.10p) 2 (1,245) - (1,245) (1,245) - (1,245)
Adjustment to 2002 final paid 2 - - - - - -
Final 2002: 1.10p - - - (1,235) - (1,235)
--------- ---------- --------- ------------ ------------ ------------
(1,245) - (1,245) (2,480) - (2,480)
--------- ---------- --------- ----------- ------------ ------------
Transfer (from)/to reserves (241) 7,921 7,680 (48) (27,922) (27,970)
====== ====== ====== ====== ======= =======
Return/(loss) per geared ordinary 3 0.89p 6.99p 7.88p 2.15p (24.68p) (22.53p)
share
====== ====== ====== ====== ======= =======
The revenue columns of this statement represent the revenue accounts of the
Company.
Balance Sheet
At 31 March 2003 (unaudited)
(Unaudited) (Unaudited) (Audited)
31 March 2003 31 March 2002 30 September 2002
Notes #000 #000 #000
Fixed asset investments
Listed in United Kingdom 123,940 167,106 132,072
------------- ------------- -------------
Current assets
Debtors 3,231 2,665 2,598
Cash at bank 2,093 2,029 1,562
------------- ------------- -------------
5,324 4,694 4,160
Creditors: amounts falling due (3,011) (2,195) (2,551)
within one year
------------- ------------- -------------
Net current assets 2,313 2,499 1,609
------------- ------------- ------------
Total assets less current 126,253 169,605 133,681
liabilities
Creditors: amounts falling due after
more than one year
Bank loan (40,949) (40,938) (40,944)
9% Convertible Unsecured Loan Stock (54,882) (56,381) (56,401)
2020
------------- ------------- -------------
(95,831) (97,319) (97,345)
------------- ------------- ------------
Total net assets 30,422 72,286 36,336
======= ======= =======
Share capital and reserves
Called-up share capital 1,094 1,132 1,122
Special reserve 110,266 111,322 111,022
Capital redemption reserve 39 1 11
Capital reserve - realised (47,984) (21,575) (30,284)
Capital reserve - unrealised (33,790) (19,061) (46,195)
Revenue reserve 797 467 660
--------------- --------------- ---------------
Total shareholders' funds 30,422 72,286 36,336
======== ======== ========
Net asset value per geared ordinary 4 27.8p 63.8p 32.4p
share
Net asset value per unit of 9%
Convertible Unsecured Loan Stock
2020 5 99.7p 99.6p 99.7p
Net asset value per geared unit 155.3p 227.2p 164.5p
Approved by the Board of Directors on 17 June 2003
Cash Flow Statement
for the half year ended 31 March 2003 (unaudited)
(Unaudited) (Unaudited) (Audited)
Half year ended Half year ended 31 Year ended
March 2002
31 March 2003 30 September 2002
#000 #000 #000
Net cash inflow from operating activities 2,069 2,100 5,329
Net cash outflow from servicing of finance (3,933) (4,754) (8,690)
Net tax recovered 62 - 10
Net cash inflow from financial investment 4,761 10,922 12,792
Equity dividends paid (1,218) (1,132) (2,377)
------------ ------------ -----------
Net cash inflow before financing 1,741 7,136 7,064
Net cash outflow from financing (1,210) (10,000) (10,395)
------------ ------------ -----------
Increase/(decrease) in cash 531 (2,864) (3,331)
====== ====== =======
Reconciliation of operating revenue to net
cash inflow from operating activities
Net revenue before interest payable and 2,887 2,861 5,873
taxation
(Increase)/decrease in accrued income (436) (301) 358
(Increase)/decrease in other debtors (32) (4) 1
Decrease in creditors (6) (23) (94)
Management charge taken to other reserves (344) (433) (809)
----------- ----------- -----------
Net cash inflow from operating activities 2,069 2,100 5,329
====== ====== =======
Reconciliation of net cash flow to movements
in net debt
Increase/(decrease) in cash as above 531 (2,864) (3,331)
Cash outflow from repayment of loans - 10,000 10,000
Cash outflow from buy back of 9% Convertible 542 - 18
Unsecured Loan Stock 2020
----------- ----------- ------------
Change in net debt resulting from cash flows 1,073 7,136 6,687
Decrease/(increase) in debt due to non-cash 972 (44) (88)
movements
------------ ------------ ------------
Movement in net debt in the period 2,045 7,092 6,599
Net debt at start of period (95,783) (102,382) (102,382)
----------- ----------- ------------
Net debt at end of period (93,738) (95,290) (95,783)
======= ======= =======
Represented by:
Cash at bank and short term deposits 2,093 2,029 1,562
Debt falling due after more than one year (95,831) (97,319) (97,345)
----------- ----------- ------------
(93,738) (95,290) (95,783)
====== ====== =======
Notes to the accounts
for the half year ended 31 March 2003
1. Interest Payable
Half year ended Half year ended Year ended
31 March 2003 31 March 2002 30 September 2002
Revenue Capital Total Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
On bank loans 561 842 1,403 590 886 1,476 1,155 1,731 2,886
On 9% Convertible 1,009 1,513 2,522 1,019 1,528 2,547 2,038 3,057 5,095
Unsecured Loan Stock 2020
-------- -------- -------- -------- -------- -------- -------- -------- --------
1,570 2,355 3,925 1,609 2,414 4,023 3,193 4,788 7,981
===== ===== ===== ===== ===== ===== ===== ===== =====
2. Dividends
An interim dividend of 1.1 pence per geared ordinary share for the year ending
30 September 2003 will be paid on 21 July 2003 to those shareholders appearing
on the Register of Members at the close of business on 27 June 2003.
The buy backs of the Company's geared ordinary shares after 30 September 2002
but before the record date of the final dividend for the year ended on that
date, results in a write back of #17,000 for dividends accrued in the year ended
30 September 2002 but not in the event payable.
3. Return/(loss) per geared ordinary share
Revenue return per geared ordinary share is based on earnings attributable to
geared ordinary shares of #1,317,000 (half year ended 31 March 2002: #1,004,000;
year ended 30 September 2002: #2,432,000) and on the weighted average number of
geared ordinary shares in issue of 110,729,935 (half year ended 31 March 2002:
113,220,127; year ended 30 September 2002: 113,158,786).
Capital loss per geared ordinary share is based on the net capital losses
attributable to geared ordinary shares of #5,287,000 (half year ended 31 March
2002: gains of #7,921,000; year ended 30 September 2002: losses of #27,922,000)
and on the weighted average number of geared ordinary shares in issue of
110,729,935 (half year ended 31 March 2002: 113,220,127; year ended 30 September
2002: 113,158,786).
4. Net asset value per geared ordinary share
Net asset value per geared ordinary share is based on net assets attributable to
geared ordinary shares of #30,422,000 (31 March 2002: #72,286,000; 30 September
2002: #36,336,000) and on the 109,448,239 geared ordinary shares in issue at 31
March 2003 (31 March 2002: 113,220,127; 30 September 2002: 112,220,127).
5. Net asset value per #1.00 nominal of 9% Convertible Unsecured Loan Stock 2020
('CULS')
Net asset value per #1.00 nominal of CULS is based on net assets attributable to
loan stock holders of #54,882,000 (31 March 2002: #56,381,000; 30 September
2002: #56,401,000) and on the 55,042,337 loan stock units in issue at 31 March
2003 (31 March 2002: 56,610,063; 30 September 2002: 56,592,337).
6. Re-purchase of geared ordinary shares and 9% Convertible Unsecured Loan Stock
2020 ('CULS')
Since 30 September 2002 the Company has re-purchased for cancellation 2,771,888
geared ordinary shares of one penny each at a cost of #756,000, leaving a
balance of 109,448,239 geared ordinary shares for the purposes of calculating
net asset value per geared ordinary share. In addition, the Company also
re-purchased for cancellation 1,550,000 CULS at a cost of #1,458,000, leaving a
balance of 55,042,337 for the purposes of calculating net asset value per loan
stock unit.
On 1 April, 17 April and 1 May 2003, a further 687,304 geared ordinary shares
were re-purchased at a cost of #162,000, leaving a balance of 108,760,935 geared
ordinary shares.
7. 2002 accounts
The figures and financial information for the year ended 30 September 2002 are
extracted from the latest published accounts of the Company and do not
constitute statutory accounts for that period. Those accounts have been
delivered to the Registrar of Companies and included the report of the Auditors
which was unqualified and did not contain a statement under either section 237
(2) or 237(3) of the Companies Act 1985.
The interim report will be issued to shareholders in July 2003 and further
copies will be available from the Company's registered office.
For further information, please contact:
Royal London Asset Management Limited
Tel: 020 7506 6500
or
BNP Paribas Secretarial Services Limited
Tel: 020 7410 5971
This information is provided by RNS
The company news service from the London Stock Exchange
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