INVESCO Geared Opportunities Trust plc
Preliminary Announcement
Unaudited Interim Results
For the Six Months Ended 31 October 2003
Chairman's Statement
In my statement in the Report and Accounts for the year ended 30 April 2003, I
had to report a fall of 29.9% in the total assets less current liabilities of
the Company during the year. However, I was able to tell shareholders at the
Annual General Meeting that between the Company's year end and the date of the
last declared net asset value on 25 June, the total net assets less current
liabilities of the Company had increased by 12.6%. I am now able to report that
the early progress in the period has been continued and for the interim period
as a whole the total assets less current liabilities of the Company have risen
by 27.1%.
There is no single benchmark against which the Company's investment performance
should be measured. However, the Board considers the performance of the FTSE
All-Share Index, the FTA Government All Stock Index and the Merrill Lynch
Sterling High Yield Index when assessing the performance of the Trust's
portfolio. The Board considers the Merrill Lynch Sterling High Yield Index
normally to be more relevant to the fixed interest component of the Company's
portfolio for comparison purposes than the FTA Government All Stock Index. The
total returns for those indices for the six months ended 31 October 2003 are
respectively 14.2%, -1.4% and 17.0%, which compare with the total return on the
portfolio that we calculate to be 28.2%.
Clearly this performance is pleasing and results both from the rise in the UK
equity market and the out performance of the Company's portfolio. The Trust's
net asset value of the Geared Ordinary Shares at the end of the interim period,
after deducting prior charges at par, was 45.5p and the middle market share
price at the close of business that day was 38p which was a discount of 17%. Of
course this also means that the claim of the Convertible Unsecured Loan Stock
as at the same date is entirely covered by the total assets less current
liabilities.
A second interim dividend of 2.275p per Geared Ordinary Share has been declared
in respect of the financial period ending 31 October 2003 and will be paid on
30 January 2004 to shareholders on the register on 30 December 2003. The first
interim dividend of 2.275p was paid on 31 October 2003 in accordance with our
indicated timetable.
The gearing of the Company means that the change in the net asset value of the
Ordinary Shares will be greater than the change in total assets less current
liabilities. At 31 October 2003, the cover on the CULS and Zero Dividend
Preference Shares was 1.3 and 2.3 times respectively.
There has been a strong recovery of the UK equity market from the levels
reached in March. This was an overdue recovery from a heavily oversold level.
The US has experienced strong economic growth in the third quarter and the UK
economy is expanding sufficiently not to undermine the recovery made by the UK
equity market. I remain hopeful that the Company can make further progress
during the rest of its financial year.
Philip Stephens
Chairman
17 December 2003
Statement of Total Return
(Incorporating the Revenue Account)
Six months to 31
October 2003
(Unaudited)
Revenue Capital Total
�'000 �'000 �'000
Gains/(losses) on investments - - (920) (920)
realised
ts - unrealised - 12,382 12,382
Exchange difference - (1) (1)
Income
UK dividends 808 - 808
UK unfranked investment income 380 - 380
Deposit interest 25 - 25
Other income 4 - 4
Gross Return 1,217 11,461 12,678
Investment management fee - note 1 (75) (140) (215)
Other expenses (124) (4) (128)
Net return before finance costs
and taxation 1,018 11,317 12,335
Interest payable (316) (586) (902)
Return on ordinary activities
before tax 702 10,731 11,433
Tax on ordinary activities - - -
Return on ordinary activities after
tax for the financial period
(attributable to equity 702 10,731 11,433
shareholders)
Appropriations in respect of
non-equity
shares (733) - (733)
Dividends in respect of equity
shares
- note 2 (844) - (844)
Transfer (from)/to reserves (142) 9,998 9,856
Return per Geared Ordinary Share
- note 3 3.8p 57.8p 61.6p
Return per Zero Dividend Preference
Share - note 3 - 5.6p 5.6p
The revenue column of this statement is the profit and loss account of the
Company. All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued in the
period.
Statement of Total Return
(Incorporating the Revenue Account)
Year to
30 April
Six months to 31 October 2003
2002
(Unaudited) (Audited)
Revenue Capital Total Total
�'000 �'000 �'000 �'000
Gains/(losses) on - 197 197 (1,979)
investments - realised
- unrealised - (14,476) (14,476) (13,246
Exchange difference - 1 1 -
Income
UK dividends 1,001 - 1,001 2,072
UK unfranked investment 254 - 254 549
income
Deposit interest 25 - 25 28
Other income - - - -
Gross Return 1,280 (14,278) (12,998) (12,576)
Investment management fee - (77) (142) (219) (357)
note 1
Other expenses (104) - (104) (184)
Net return before finance
costs
and taxation 1,099 (14,420) (13,321) (13,117)
Interest payable (316) (586) (902) (1,809)
Return on ordinary
activities
before tax 783 (15,006) (14,223) (14,926)
Tax on ordinary activities - - - -
Return on ordinary
activities after
tax for the financial
period
(attributable to equity 783 (15,006) (14,223) (14,926)
shareholders)
Appropriations in respect of
non-equity
shares - (681) (681) (1,375)
Dividends in respect of
equity shares
- note 2 (844) - (844) (1,688)
Transfer to/(from) reserves (61) (15,687) (15,748) (17,989)
Return per Geared Ordinary
Share
- note 3 4.2p (84.6)p (80.3)p (80.5)p
Return per Zero Dividend
Preference
Share - note 3 - 5.1p 5.1p 10.4p
Balance Sheet
At At At
31 October 30 April 31 October
2003 2003 2002
(Unaudited) (Audited) (Unaudited)
�'000 �'000 �'000
Fixed Assets
Investments 47,930 38,265 40,794
Current assets
Amounts due from brokers - 661 626
Tax recoverable 30 30 30
Prepayments and accrued 373 861 483
income
Cash at bank 2,299 974 693
2,702 2,526 1,832
Creditors:
amounts falling due within one
year
Bank overdraft - - -
Amounts due to brokers (445) (299) (564)
Accruals and deferred income (132) (1,026) (1,049)
Proposed dividend (422) (422) (422)
(999) (1,747) (2,035)
Net current assets/ 1,703 779 (203)
(liabilities)
Total assets less current 49,633 39,044 40,591
liabilities
Creditors:
amounts falling due after more (21,200) (21,200) (21,200)
than one year
Total net assets 28,433 17,844 19,391
Capital and reserves
Called-up share capital 318 318 318
Share premium account 30,114 30,114 30,114
Other reserves:
Capital reserve - realised (1,006) 1,376 4,923
Capital reserve - unrealised (7,860) (20,240) (21,470)
Redemption reserve 6,740 6,007 5,313
Revenue reserve 127 269 193
Shareholders' funds 28,433 17,844 19,391
Analysis of Shareholders' funds
Equity interests (Geared 8,443 (1,413) 828
Ordinary Shares)
Non-equity interests (Zero 19,990 19,257 18,563
Dividend Preference Shares)
28,433 17,844 9,391
Net asset value per Share -
note 4
Geared Ordinary Share:
basic 45.5p - 4.5p
diluted 101.7p 67.9p 75.6p
Zero Dividend Preference Shares 150.9p 145.3p 140.1p
Cash Flow Statement
Six months Year to Six months
to to
31 October 30 April 31 October
2003 2003 2002
(Unaudited) (Audited) (Unaudited)
�'000 �'000 �'000
Cash inflow from operating 1,370 1,680 932
activities
Servicing of finance (1,803) (1,809) (902)
Taxation - 8 9
Capital expenditure and
financial investment
Purchase of investments (7,772) (28,028) (16,149)
Sale of investments 10,375 24,380 11,215
Equity dividends paid (844) (1,688) (844)
Net cash (outflow)/inflow
before management
of liquid resources 1,326 (5,457) (5,739)
Management of liquid resources (1,294) 3,983 4,253
Increase/(decrease) in cash 32 (1,464) (1,486)
Cash inflow/(outflow) from
decrease/(increase) in liquid 1,294 (3,993) (4,253)
resources
Translation difference (1) - 1
Movement in net funds in the 1,325 (5,457) (5,738)
period
Net debt at beginning of the (20,226) (14,769) (14,769)
period
Net debt at end of the period (18,901) (20,226) (20,507)
Reconciliation of Operating Profit to Operating Cash Flows
Six months Year to Six months
to to
31 October 30 April 31 October
2003 2003 2002
(Unaudited) (Audited) (Unaudited)
�'000 �'000 �'000
Net revenue before finance 1,018 2,340 1,099
costs and tax
Decrease/(increase) in debtors 458 (361) (9)
Increase/(Decrease) in 38 (67) (16)
creditors
Investment management fee (140) (232) (142)
charged to capital
Other fees charged to capital (4) - -
Net cash inflow from operating 1,370 1,680 932
activities
Reconciliation of Movement in Shareholders' Funds
Year to
Six months to Six months to 30 April
31 October 2003 31 October 2002
(Unaudited) (Unaudited)
2003
(Audited)
Non- Non-
Equity equity Equity equity
Interests Interests Total Interests Interests Total Total
�'000 �'000 �'000 �'000 �'000 �'000 �'000
Revenue return for
the period (142) - (142) (61) - (61) 15
Capital return for
the period 10,731 - 10,731 (15,006) - (15,006) (16,629)
Appropriations in respect
of non-equity (733) 733 - (681) 681 - -
interests
Net movement in
Shareholders' 9,856 733 10,589 (15,748) 681 (15,067) (16,614)
funds
Opening
Shareholders'
funds (1,413) 19,257 17,844 16,576 17,882 34,458 34,458
Closing
Shareholders'
funds 8,443 19,990 28,433 828 18,563 19,391 17,844
Notes to the interim accounts
1. Investment management fees and interest payable on borrowings are allocated
65% to capital and 35% to revenue.
2. The Directors have declared interim dividends totalling 4.55p (2002: 4.55p)
per Geared Ordinary Share in respect of the year ending 30 April 2004.
The first interim dividend was paid on 30 October 2003 to shareholders
registered on 12 October 2003 and the Directors have declared a second interim
dividend payable on 30 January 2004 to shareholders registered on 31 December
2003.
3. The revenue return per Geared Ordinary Share is based on the net revenue
return on ordinary activities after taxation and on 18,549,891 (2002:
18,549,891) Geared Ordinary Shares, being the number of Geared Ordinary Shares
in issue in the period.
The capital return per Geared Ordinary Share is based on the net capital return
on ordinary activities after taxation and the capital return due to Zero
Dividend Preference Shares and on 18,549,891 (2002: 18,549,891) Geared Ordinary
Shares in issue in the period.
The capital return per Zero Dividend Preference Share as at 31 October 2003 is
the daily compounded value from the issue price of 100p to the final capital
entitlement of 165p.
4. The undiluted net asset value per Geared Ordinary Share is based on net
assets of �8,443,000 after deducting the capital entitlement of 100p per share
on 13,249,960 Zero Dividend Preference Shares together with the accumulated
growth in their value to 31 October 2003 of �6,740,000 and 18,549,891 Geared
Ordinary Shares in issue.
The diluted net asset value per Geared Ordinary Share is based on the
assumption that the 21,200,000 outstanding CULS are wholly converted into
Geared Ordinary Shares at a rate of 50 Geared Ordinary Shares for every �100
nominal of CULS. CULS conversion is effective on the business day prior to a
voluntary winding up of the Company. It is expected that the holders of the
CULS will not wish to convert unless the net asset value per Geared Ordinary
Share rises above 200p.
The predetermined capital return to Zero Dividend Preference Shareholders of
165p on winding-up equals �21,862,000.
5. The financial information for the period to 31 October 2003 has been
prepared on the basis consistent with the accounting policies adopted by the
Company in its statutory accounts for the financial year ended 30 April 2003.
6. The foregoing financial information at 30 April 2003 is an abridged version
of the Company's full accounts which carry an unqualified Auditors' Report and
which have been filed with the Registrar of Companies.
7. It is the intention of the Directors to conduct the affairs of the Company
so that it satisfies the conditions for approval as an investment trust company
set out in section 842 of the Income and Corporation Taxes Act 1988.
By order of the Board
INVESCO Asset Management Limited
Secretaries
17 December 2003
END