RNS Number:2298Z
Quilter Global Enhanced Income Tst
29 July 2002
NEWS RELEASE
UNAUDITED RESULTS
YEAR ENDED 31 MARCH 2002
For Immediate Release: 29 July 2002
Period from
Year ended 24 December 1999 to 31
March 2001
31 March 2002
Net Asset Value per Ordinary Share (Alternative Basis)* (113.65)p 39.75p
Net Asset Value per Ordinary Share (Statutory Basis) (115.13)p 38.16p
Net Revenue before taxation £662,000 £2,063,000
Net Revenue after taxation £296,000 £2,014,000
Total Return per Ordinary Share (150.92)p (50.75)p
CHAIRMAN'S REPORT
This is the second annual report of Quilter Global Enhanced Income Trust PLC
(the "Company"). During the last financial year stock market conditions have
continued to prove extremely difficult. This along with the impact of gearing
and the poor performance of split capital investment trusts in general has led
to the Company becoming insolvent.
Performance
During the year, the gross assets (total assets less current liabilities,
excluding bank loan and CULS, using mid market prices) of the Trust have fallen
by 58.0% (from £58.58m to £24.57m) compared with a fall of 9.8% in the FTSE
Investment Companies Index, 4.1% for the MSCI World Index (Sterling-adjusted)
and a fall of 43.3% for the Datastream Highly Geared Ordinary Share Index.
Capital Structure
As stated in the Interim Report, the Company's balance sheet on 30 September
2001 showed an excess of liabilities over assets. As a result of this, the
Company suspended payments of dividends and interest payments on the Geared
Ordinary Shares and Convertible Unsecured Loan Stock 2010 (the "Stock")
respectively.
Furthermore, as at 30 September 2001 the total investments had a value of £45.87
million compared with the total amount borrowed from Bank of Scotland of £32.38
million, resulting in a value to loan ratio of 1.42 times compared with 1.65
times level required by the facility agreement. This breach on the main covenant
entitled the Bank of Scotland to call for repayment of the entire facility at
any time.
As an interim solution, the Board agreed to repay the Euro and Japanese Yen
tranches of the multi-currency bank facility during December 2001. £10.49m was
repaid with total break costs of £0.61m, leaving, at that time, £22.15m in debt
of which 75% was denominated in Sterling and 25% in US dollars. At the same
time, the Board were finalising plans to restructure the Company for the long
term benefit of Shareholders and Stockholders.
On 26 February 2002, the Directors put forward reorganisation proposals. These
involved the outstanding Stock being cancelled and converted into a new class of
Income Shares, the existing Geared Ordinary Shares being consolidated on a 10
for 1 basis into New Ordinary Shares and £12.5 million being raised through the
Placing of a new class of Preference Shares. The Directors believed at that time
that the Proposals were in the best interests of Shareholders as they offered
the opportunity to continue their investment in the Company and to continue to
receive a dividend stream, albeit at a substantially reduced level from that
envisaged at the Company's launch, with the prospect of some capital growth over
the long term.
Unfortunately, from the date of publication of the Prospectus, a further
material deterioration in the Split Capital Investment Trust sector meant that
the Company was not able to proceed with the planned reorganisation and placing.
By 31 March 2002, the Company's gross assets had fallen to £21.67 million (on an
estimated net realisable value basis) compared to liabilities of £46.81m
(including a provision for liquidation costs). In addition, the dividend cuts
and suspensions suffered on certain of the Company's holdings within its
portfolio further compromised the new structure's ability to pay dividends going
forward. Consequentially the reorganisation proposals were withdrawn.
Post Balance Sheet Events
As at the time of writing, the Company remains insolvent and the Board,
following discussions with the Bank of Scotland and the Law Debenture Trust
Corporation p.l.c (the Trustee of the Company Stock), decided that a controlled
realisation of the Company's assets would take place in order to realise as much
value as possible from the Company's portfolio. This course of action is being
pursued rather than the Bank of Scotland taking possession of the Company's
assets, pursuant to the breach of banking covenants; however this does not
preclude the Bank of Scotland exercising its rights under the bank loan
covenants at any time in the future. The realisation commenced on 11 June 2002
and it is intended that this process will be completed within nine months. For
this period, it has been agreed between the Bank of Scotland and the Board, that
costs should be restrained as much as possible. Mr Charles Arthur and Mr Mark
Mathias both resigned as Directors on 10 June 2002 and the two remaining Board
Members have agreed to forego directors' fees during the realisation process. It
should also be noted that the Board has worked without a fee from July 2001 and
that the Investment Manager has worked without a fee from July 2001 to June
2002.
It is saddening to see that the aspirations of the parties involved in the
Company have not been realised given their huge efforts.
Basis of Preparation of Accounts
As a consequence of the decision to effect a controlled realisation of the
Company's assets, the accounts have been prepared on a realisation basis. The
Company is not considered to be a going concern as defined in the Companies Act
1985. This means that the Board has valued the assets and liabilities of the
Company based on estimated net realisable value and made appropriate provisions
for future costs to be incurred up to the expected completion date of the
realisation exercise. The comparative figures represent the results of the
Company on a going concern basis.
Valuation of Investments
The investments that remain unrealised as at 24 July 2002 have fallen further in
value from that at which they were held at 31 March 2002. Using the same basis
for valuing investments at estimated net realisable value, the effect of further
market movements is to reduce the value of investments by £3.8m as at 24 July
2002.
Since 31 March 2002, the Company has raised £4.9m through the realisation of
investments. As part of the new agreement with the Bank of Scotland, agreed in
June 2002, these funds have been partly used to repay the bank loan. As at 24
July 2002, £15.8m of the bank loan remains unpaid.
Nicholas Durlacher
Chairman
29 July 2002
The figures and financial information for the year ended 31 March 2002 do not
constitute the statutory financial statements for that year. Those financial
statements have not yet been delivered to the Registrar, nor have the auditors
yet reported on them.
For further information:
Derek Larcombe 020 7662 6262
Neil Winward 020 7662 6239
Quilter & Co. Limited
* Net Asset Value per Ordinary Share (Alternative Basis) is
calculated on a winding up basis.
Unaudited Statement of Total Return
(incorporating the revenue account*) for the year ended 31 March 2002
On a realisation basis On a going concern basis
Period from 24 December 1999 to 31
Year ended 31 March 2002 March 2001**
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Losses on investments - (24,428) (24,428) - (10,728) (10,728)
Provision for realisation - (2,834) (2,834) - - -
Income from investments
Investment income 3,631 - 3,631 3,151 - 3,151
Other income
Exchange (loss)/gain on bank loan - (92) (92) - 184 184
Bank interest 282 - 282 249 - 249
Total income and capital losses 3,913 (27,354) (23,441) 3,400 (10,544) (7,144)
Investment management fee (45) (105) (150) (169) (393) (562)
Administrative expenses (327) - (327) (221) - (221)
Anticipated administrative expenses
from 1 April 2002 to realisation
completion (252) (32) (284) - - -
Return on ordinary activities before
finance costs 3,289 (27,491) (24,202) 3,010 (10,937) (7,927)
Finance costs (1,678) (3,916) (5,594) (947) (2,210) (3,157)
Anticipated finance costs from 1 April
2002 to realisation completion (949) (2,214) (3,163) - - -
Return on ordinary activities for the
period before taxation 662 (33,621) (32,959) 2,063 (13,147) (11,084)
Taxation (366) 365 (1) (49) 49 -
Return on ordinary activities for the
period after taxation 296 (33,256) (32,960) 2,014 (13,098) (11,084)
Dividends
Dividends paid from 2001 reserves (519) - (519) (1,147) - (1,147)
Transfer to reserves (223) (33,256) (33,479) 867 (13,098) (12,231)
Reserves at beginning of period 867 (13,098) (12,231) - - -
Reserves at 31 March 644 (46,354) (45,710) 867 (13,098) (12,231)
Return per Geared Ordinary Share 1.36p (152.28)p (150.92)p 9.22p (59.97)p (50.75)p
Diluted return per Geared Ordinary
Share 2.88p (120.99)p (118.11)p 9.13p (46.13)p (37.00)p
* The revenue column of this statement is the profit and loss account of the Company.
Unaudited Balance Sheet
at 31 March 2002
On a realisation basis On a going concern basis
31 March 2002 31 March 2001
£'000 £'000 £'000 £'000
Fixed assets
Investments - 55,296
Current assets
Investments 17,604 -
Debtors 98 1,273
Cash at bank and in hand 3,967 2,697
21,669 3,970
Current liabilities
Creditors (1,361) (685)
Bank loan (23,408) -
Convertible Unsecured Loan Stock (18,598) -
(43,367) (685)
Net current (liabilities) / assets (21,698) 3,285
Total assets less current liabilities (21,698) 58,581
Creditors: amounts falling due after one year
Bank loan - (32,495)
Convertible Unsecured Loan Stock - (17,752)
- (50,247)
Provision for liabilities and charges (3,447) -
Net (liabilities) / assets (25,145) 8,334
Share capital and reserves
Called up ordinary share capital 2,184 2,184
Share premium account - 18,381
Capital reserve - realised (11,273) (2,605)
Capital reserve - unrealised (35,081) (10,493)
Special reserve 18,381 -
Revenue reserve 644 867
Total equity shareholders' funds (25,145) 8,334
Geared Ordinary Shares
- Basic net asset value per share (115.13)p 38.16p
- Alternative net asset value per share (113.65)p 39.75p
Unaudited Cash Flow Statement
for the year ended 31 March 2002
On a realisation basis On a going concern basis
Period from
Year ended 24 December 1999 to
31 March 2002 31 March 2001
£'000 £'000 £'000 £'000
Net cash inflow from operating activities 4,519 2,683
Servicing of finance
Interest paid (2,054) (2,673)
Loan breakage costs paid (614) -
(2,668) (2,673)
Financial investments
Purchase of investments (11,215) (95,700)
Sale of investments 21,645 28,629
Net cash inflow / (outflow) from financial investments 10,430 (67,071)
Equity dividends paid (519) (1,147)
Financing
Share issue - 21,839
Issue expenses - (1,802)
(Repayment) / proceeds of bank loan (10,492) 32,668
Convertible Unsecured Loan Stock proceeds - 18,200
(10,492) 70,905
Increase in cash 1,270 2,697
Reconciliation of net cashflow to movement in net funds:
Increase in cash 1,270 2,697
Net funds at beginning of period 2,697 -
Net funds at 31 March 3,967 2,697
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