RNS Number:4856T
Merrill Lynch FTSE100 Stpd Gwth&Inc
30 April 2008
Merrill Lynch FTSE 100 Stepped Growth and Income Limited
Preliminary Profits Announcement
For the year from 1st January, 2007 to 31st December, 2007
This announcement is not the Company's statutory financial statements. All the
figures are based on the annual financial statements for the year from 1st
January, 2007 to 31st December, 2007. The audit on these financial statements
has not yet been completed.
Investment Manager's Report
Growth Shares
The Growth Shares are designed to offer investors a capital growth amount of
70.00 pence per growth share and to return a capital amount of 100.00 pence per
growth share, as long as the Underlying Index has not fallen by more than 40.00%
of the Initial Index Reference Level. If the Index has fallen more then 40.00%
an amount of 5.00% is reduced from 70.00% for each of the remaining six monthly
periods (first six month period ended on 16th December, 2002, and so on until
16th June, 2009) to the Final Reference Date.
As of 31st December, 2007, the FTSE 100 Index closed at 6,456.90, an increase of
3.80% from the level of the Index at the beginning of the year. The Net Asset
Value of the Growth Shares was #1.55 as of 31st December, 2007, resulting in an
increase of 5.44% for the year (relative to a Net Asset Value of #1.47 at 31st
December, 2006), and an increase of 61.46% since inception (relative to the
initial Net Asset Value of #0.96).
Income Shares
The Income Shares pay a fixed dividend of 4.00 pence per Income Share,
semi-annually in arrears as long as the Underlying Index has not fallen by more
than 40.00% of the Initial Index Reference Level at any time up to the close of
trading on the Final Reference Date. If the Underlying Index has fallen by more
than 40.00% of the Initial Index Reference Level at any time up to the close of
trading on the Final Reference Date then all the subsequent coupons (4.00 pence)
will cease after that date.
As of 31st December, 2007, the FTSE 100 Index closed at 6,456.90, an increase of
3.80% from the level of the Index at the beginning of the year. The Net Asset
Value of the Income Shares was #1.02 as of 31st December, 2007, resulting in an
decrease of 2.86% for the year (relative to a Net Asset Value of #1.05 at 31st
December, 2006), and an increase of 6.25% since inception (relative to the
initial Net Asset Value of #0.96).
Market Review
The first half of 2007 saw the FTSE 100 Index rise 6.2% and break through the
6,700 mark, which was led primarily by strong inflation for raw materials.
Prices in commodities continued their 2006 rally and on the back of this
inflation the year was dominated by firms in the Basic Resources, Oil & Gas and
Chemical sectors with Amec, the top performer in the Index up 98.9% on the year.
The ongoing discussions between Rio Tinto and BHP Billiton saw both firms make
substantial headway with Rio up 95.6% and BHP up 65.4%.
Market Review (continued)
Away from commodities the Financial Services and Banks sectors started the year
strongly but fell away sharply in the second half of the year as concerns
regarding the credit crunch started to take effect. On the up side ICap and
London Stock Exchange Group were up on the year 51.8% and 51.1% respectively.
The best performing bank during the period was Standard Chartered up 23.6%, the
only bank to finish the year up. Lloyds down 17.4%, Barclays 31.0%, Royal Bank
of Scotland 33.2 %, HBOS 35.1% and Alliance & Leicester 43.1 % were amongst the
largest losers in the Index based on raising concerns regarding the scale of
writedown's on sub prime mortgages and mortgage backed securities.
Despite the decline in the Index during July & August the Index rallied to reach
the years high of 6,722 on 31st Oct but this was followed by a 4% fall in the
Index through November as more liquidity concerns were raised amongst banks and
financial institutions across the globe.
The Food & Beverages Sector saw some gains as acquisition talk heightened in the
first half of the year, with Scottish & Newcastle up 32.5% on the year and
Diageo up 7.7%. On the down side the year saw Tate & Lyle lose 42.1% on
declining sales expectations.
Elsewhere Vodafone gained 32.7% after a poor 2006 and Thomas Cook gained 23.8%
as demand for holidays continued to grow despite the deteriorating credit
conditions. British Land Co fell 44.9% as demand for commercial property
significantly fell in the second half of the year.
Total Statement of Operations
For the year ended 31st December, 2007
Total Total
01.01.2007 01.01.2006
to 31.12.2007 to 31.12.2006
# 000's # 000's
Income on medium term notes
- Interest (Libor + margin) 2,174 1,856
Receipts under "Swap and Option" transaction
- Payment in lieu of
distributions 1,940 1,940
- Money due for distributor
and sponsor fees 200 201
Payments under "Swap and Option" transaction
- Interest (Libor + margin) (2,174) (1,856)
Distributor and sponsor fees (200) (201)
Other bank interest received 41 1
------------ ------------
Net realised gains on
investment activities 1,981 1,941
Movement in unealised gains on "Swap and
Option" transactions 415 731
Movement in unrealised
gains/losses on debt
securities 63 19
------------ ------------
Movement in net unrealised
gains on investments 478 750
------------ ------------
Net gains on investment
activities 2,459 2,691
------------ ------------
Finance costs
Distributions to holders of
preference shares (1,940) (1,940)
------------ ------------
Retained gain for the year 519 751
============ ============
All activities consist of ongoing operations.
The Company has no other recognised gains or losses other than those shown above and
accordingly no separate
Statement of Total Recognised Gains and Losses has been presented.
Total Statement of Operations (continued)
31st December, 2007
Growth Growth Income Income
Shares Shares Shares Shares
01.01.2007 01.01.2006 01.01.2007 01.01.2006
to 31.12.2007 to 31.12.2006 to 30.06.2007 to 31.12.2006
# 000's # 000's # 000's # 000's
Income on medium term notes
- Interest
(Libor +
margin) 856 731 1,318 1,125
Receipts under "Swap and Option" transaction
- Payment in
lieu of
distributions - - 1,940 1,940
- Money due
for
distributor
and sponsor
fees 79 79 121 122
Payments under "Swap and Option" transaction
- Interest
(Libor +
margin) (856) (731) (1,318) (1,125)
Distributor
and sponsor
fees (79) (79) (121) (122)
Other bank
interest
received 16 1 25 -
-------- -------- -------- ---------
Net realised
gains on
investment
activities 16 1 1,965 1,940
Movement in unrealized gains on "Swap and
Option"
transactions 1,221 1,069 (806) (338)
Movement in
unrealised
gains/losses
on debt
securities 25 7 38 12
-------- -------- -------- ---------
Movement in
net unrealised
gains/losses
on investments 1,246 1,076 (768) (326)
-------- -------- -------- ---------
Net gains on
investment
activities 1,262 1,077 1,197 1,614
-------- -------- -------- ---------
Finance costs
Distributions
to holders of
preference
shares - - (1,940) (1,940)
-------- -------- -------- ---------
Retained
gain/(loss)
for the year 1,262 1,077 (743) (326)
======== ======== ======== =========
All activities consist of ongoing operations.
The Company has no other recognised gains or losses other than those shown above and accordingly no separate
Statement of Total Recognised Gains and Losses has been presented.
Total Statement of Assets and Liabilities
As at 31st December, 2007
Total Total
31.12.07 31.12.06
# 000's # 000's
ASSETS
Investments at fair value through profit or loss
Debt securities 36,010 35,947
Swap and option contract 13,020 12,605
Debtors 277 263
Cash 52 476
---------- ------------
Total assets 49,359 49,291
========== ============
EQUITY
Ordinary share capital - -
---------- ------------
LIABILITIES
Creditors 277 728
---------- ------------
Total liabilities (Excluding net assets
attributable to holders of preference
shares) 277 728
Net assets attributable to holders
of preference shares 49,082 48,563
---------- ------------
Total equity and liabilities 49,359 49,291
========== ============
Total Statement of Assets and Liabilities (continued)
As at 31st December, 2007
Growth Growth Income Income
Shares Shares Shares Shares
31.12.07 31.12.06 31.12.07 31.12.06
# 000's # 000's # 000's # 000's
ASSETS
Investments at fair value through profit or loss
- Debt securities 14,179 14,154 21,831 21,793
- Swap and option contract
at fair value 10,244 9,023 2,776 3,582
Debtors 78 73 199 190
Cash 23 190 29 286
-------- -------- -------- --------
Total assets 24,524 23,440 24,835 25,851
======== ======== ======== ========
EQUITY
Ordinary share capital - - - -
-------- -------- -------- --------
LIABILITIES
Creditors 78 256 199 472
-------- -------- -------- --------
Total liabilities (Excluding net assets
attributable
to holders of
preference
shares) 78 256 199 472
Net assets attributable to holders
of preference
shares 24,446 23,184 24,636 25,379
-------- -------- -------- --------
Total equity
and
liabilities 24,524 23,440 24,835 25,851
======== ======== ======== ========
Total Statement of Changes in Net Assets Attributable to Holders of Preference Shares
For the year ended 31st December, 2007
Total Total
01.01.2007 to 01.01.2006 to
31.12.2007 31.12.2006
# 000's # 000's
From Operations
Net realised gains on investment activities
applicable to holders of
preference shares 1,981 1,941
Net unrealised gains/losses on investments
applicable to holders of
preference shares 478 750
Distributions payable to holders
of preference shares (1,940) (1,940)
-------- ---------
Net increase resulting
from operations 519 751
-------- ---------
Total increase in net assets attributable to
holders of preference
shares for the year 519 751
Net assets attributable to holders of
preference shares at
beginning of the year 48,563 47,812
-------- ---------
Total net assets attributable to holders
of preference shares at
the end of the year 49,082 48,563
======== =========
Total Statement of Changes in Net Assets Attributable to Holders of Preference Shares (continued)
For the year ended 31st December, 2007
Growth Growth Income Income
Shares Shares Shares Shares
01.01.2007 to 01.01.2006 to 01.01.2007 to 01.01.2006 to
31.12.2007 31.12.2006 31.12.2007 31.12.2006
# 000's # 000's # 000's # 000's
From Operations
Net realised gains on investment activities
applicable to
holders of
preference
shares 16 1 1,965 1,940
Net unrealised gains/losses on investments
applicable to
holders of
preference
shares 1,246 1,076 (768) (326)
Distributions payable to holders
of preference
shares - - (1,940) (1,940)
--------- --------- --------- ---------
Net
increase/(decr
ease)
resulting from
operations 1,262 1,077 (743) (326)
--------- --------- --------- ---------
Total increase/(decrease) in net assets attributable
to holders of
preference
shares for the
year 1,262 1,077 (743) (326)
Net assets attributable to holders of
preference
shares at
beginning of
the year 23,184 22,107 25,379 25,705
--------- --------- --------- ---------
Total net assets attributable to holders
of preference
shares at the
end of the
year 24,446 23,184 24,636 25,379
========= ========= ========= =========
Total Statement of Cash Flows
For the year ended 31st December, 2007
Total Total
01.01.2007 to 01.01.2006 to
31.12.2007 31.12.2006
# 000's # 000's
Operating Activities
Investment income 2,160 1,833
Income from counterparty for Distributor
and Sponsor fees 200 200
Net Swap Option
(payments)/receipts (685) 572
Distributor and Sponsor fees (200) (200)
Other interest income 41 1
------------ ------------
Net cash inflow from Operating
Activities 1,516 2,406
------------ ------------
Distributions paid to holders of
preference shares (1,940) (1,940)
------------ ------------
(Decrease)/increase in cash (424) 466
Cash at start of year 476 10
------------ ------------
Cash at end of year 52 476
============ ============
Total Statement of Cash Flows (continued)
For the year ended 31st December, 2007
Growth Growth Income Income
Shares Shares Shares Shares
01.01.2007 to 01.01.2006 to 01.01.2007 to 01.01.2006 to
31.12.2007 31.12.2006 31.12.2007 31.12.2006
# 000's # 000's # 000's # 000's
Operating Activities
Investment
income 851 722 1,309 1,111
Income from counterparty for Distributor
and Sponsor
fees 79 79 121 121
Net Swap
Option
(payments)/rec
eipts (1,034) (797) 349 1,369
Distributor
and Sponsor
fees (79) (79) (121) (121)
Other interest
income 16 1 25 -
---------- --------- --------- ---------
Net cash (outflow)/inflow from
Operating
Activities (167) (74) 1,683 2,480
---------- --------- --------- ---------
Distributions paid to holders
of preference
shares - - (1,940) (1,940)
---------- --------- --------- ---------
(Decrease)/inc
rease in cash (167) (74) (257) 540
Cash/(overdraf
t) at start of
year 190 264 286 (254)
---------- --------- --------- ---------
Cash at end of
year 23 190 29 286
========== ========= ========= =========
This information is provided by RNS
The company news service from the London Stock Exchange
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