Interim Results
11 August 2004 - 7:27PM
UK Regulatory
Press Release 11 August 2004
LIFE OFFICES OPPORTUNITIES TRUST PLC
Results for the six months to 30 June 2004
The investment objective of Life Offices Opportunities Trust Plc ("LOOT") is to
achieve long term capital growth from a diversified portfolio of with-profits
life assurance policies. The Trust, with net assets of �28.2 million, is
managed by SVM Asset Management ("SVM"), the independent Edinburgh based
investment boutique.
Salient Points
* Net asset value per share declined 2.9% to 119.9p during the period under
review.
* With-profits funds appear to have reached a position of relative stability,
following a disappointing period for assets and returns. The interim bonus
statements have started with no changes from the Norwich Union and follow a
stable period for the asset markets.
* Most companies have come out with figures in line with expectations, even
if some inconsistencies remain. This is with the exception of Standard Life
whose discussions with the FSA led to a business review and announcement
that it will demutualise in 2006.
* Although LOOT is one of the higher geared trusts in the sector, the
underlying policy guarantees and lack of volatility in the assets mean the
risks are lower than some other asset classes.
* Board believes that the Trust is well placed for future asset growth.
End
For further information please contact:
Brian Moretta SVM Asset Management 0131 226 6699
Roland Cross Broadgate 020 7726 6111
LIFE OFFICES OPPORTUNITIES TRUST PLC
CHAIRMAN'S STATEMENT
For the six months to 30 June 2004
Commenting on the results for the six months to 30 June 2004, Chairman, John
Brumwell, said:
The first half of 2004 has seen your Company's assets decline with further
bonus cuts from life offices, in particular Standard Life. No further policies
have been bought and policies have continued to mature as expected. Over the
six month period, the net asset value per share fell 2.9 per cent to 119.9p.
The investment objective of your Company is to achieve long term capital growth
and no dividend is payable.
The biggest drama in the sector this year has been Standard Life's discussions
with the FSA which led to a business review and announcement that it will
demutualise in 2006. While solvency on a realistic basis seems reasonable, the
company is not as strong as was previously portrayed. The immediate consequence
has been a sharp reduction in bonuses to levels that are more sustainable than
previously. In the medium term, the company will behave in a more commercial
manner and some of the risks for with-profits policyholders should be reduced.
As yet there is little indication of what the demutualisation benefits are
likely to be.
With the exception of Standard Life, most companies have come out with figures
in line with expectations, even if some inconsistencies remain on the bases
used. This also appears to have triggered some interest in corporate activity.
It appears potential buyers are reassured by the new measures, although the
interest to date seems to extend only to closed funds. Swiss Re has purchased
two companies, Zurich Life and LAHC, and Royal & Sun Alliance has recently
announced that it has sold its life businesses to Resolution Life. While deals
such as these will bring scale and help keep administration costs down, they
will have little financial effect on with-profits funds.
The FSA has also been expressing an interest in investment trusts, largely as a
consequence of the problems with split capital trusts. There is now a
requirement to give additional risk warnings where significant gearing is in
place. Your Company is one of the higher geared trusts in the sector and is
likely to remain so for a couple of years until policy maturities exceed
outstanding premiums. However, the underlying policy guarantees and lack of
volatility in the assets mean the risks are lower than some other asset
classes.
After a disappointing period for assets and returns, with-profits funds appear
to have reached a position of relative stability. The interim bonus statements
have started with no changes from Norwich Union and follow a stable period for
the asset markets. In the short term we expect only small bonus changes and a
more normal period of performance. Looking further out bonuses will continue to
experience small reductions, though they are much closer to sustainable levels,
and in some cases are below them. We believe that your Company is well placed
and will benefit from future asset growth".
Life Offices Opportunities Trust plc
Summarised Statement of Total Return (unaudited)
6 months to 30 June 2004 6 months to 30 June 2003
Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000
Gains on sale of - 141 141 - 222 222
investments
Movement in unrealised - (286) (286) - (5,378) (5,378)
appreciation
-------- -------- -------- -------- -------- --------
Gains on investments - (145) (145) - (5,156) (5,156)
Income 2 - 2 2 - 2
Investment management fees - (168) (168) - (178) (178)
Other expenses (47) (112) (159) (50) (118) (168)
-------- -------- -------- -------- -------- --------
Return before interest and (45) (425) (470) (48) (5,452) (5,500)
taxation
Bank overdraft interest - (378) (378) - (290) (290)
-------- -------- -------- -------- -------- --------
Transfer to reserves (45) (803) (848) (48) (5,742) (5,790)
-------- -------- -------- -------- -------- --------
Return per ordinary Share (0.19)p (3.41p) (3.60p) (0.21p) (24.58p) (24.59p)
Balance Sheet (unaudited)
As at As at
30 June 30 June
2003
2004
�'000 �'000
Endowment policies 41,024 41,435
Net current liabilities (12,790) (11,228)
---------- ----------
Ordinary shareholders funds 28,234 30,207
---------- ----------
Net asset value per ordinary share 119.89p 128.27p
Summarised Group Cash Flow Statement 6 months to 6 months to
(unaudited)
30 June 30 June
2004 2003
�'000 �'000
Net cash flow from operating activities (334) (541)
Returns on investment and servicing (378) (290)
finance
Capital expenditure and financial 23 242
investment
---------- ----------
Decrease in cash (689) (589)
---------- ----------
Life Offices Opportunities Trust plc Cont'd
Notes
1. The results reflect the adoption in the accounts of the 2003 Statement of
Recommended Practice (SORP) issued by the Association of Investment Trust
Companies.
2. Returns per Ordinary Share are based on 23,550,000 shares in issue during
the period (30 June 2003 - same). The number of shares in issue at 30 June
2004 was 23,550,000. (30 June 2003 - same).
3. The above figures do not constitute full group accounts in terms of Section
240 of the Companies Act 1985. The accounts for the year to 31 December 2003,
which were unqualified, have been lodged with the Registrar of Companies. The
interim report will be mailed to shareholders in mid August 2004. Copies will
be available for inspection at 7 Castle Street, Edinburgh, the registered
office of the Company.
ENDS
END
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