Final Results
February 12 2002 - 7:53AM
UK Regulatory
RNS Number:3428R
Life Offices Opportunities Tst PLC
12 February 2002
12 February 2002
LOOT CONTINUES TO PROGRESS IN DIFFICULT YEAR
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 total assets of £48 million, is managed
by Scottish Value Management ('SVM'), the independent Edinburgh based investment
boutique.
Results for the year ended 31 December 2001
Salient Points
• Net asset value per share increased by 4% to 160.7p (154.4p - 2000)
• Few announcements of new restructuring announced during the year except
for GE Capital acquiring National Mutual, and Equitable Life being bought by
Halifax
• Demutualisation announcements of 2000, benefited the Trust with a
prospective payment from Scottish Provident of £1m
• Assets underlying with-profits funds performed poorly in 2001
• First year that the Trust has scheduled policy maturities, which despite
bonus cuts have still provided good returns on their purchase price
• Portfolio continues to be well placed and should benefit from both asset
growth and restructuring in the future.
End
For further information please contact:
Brian Moretta Scottish Value Management 0131 226 6699
Roland Cross Broadgate 020 7726 6111
LIFE OFFICES OPPORTUNITIES TRUST PLC
Chairman's Statement for the year ended 31 December 2001
Commenting on the results, Chairman, John Brumwell, said:
"I am pleased to report that your Company has continued to make progress in 2001
against a difficult background. Over the year, the net asset value per share
increased by 4.0% to 160.7p. This contrasts favourably with a fall in the FTSE
All-Share Index of 13.3%. The investment objective of your Company is to achieve
long term capital growth and no dividend is payable.
The portfolio comprises a spread of endowments, with an emphasis on offices we
believe can benefit from the restructuring of the life industry. During 2001 no
further policies were purchased. There have been few announcements of
restructuring this year. National Mutual has agreed to demutualise and be
purchased by GE Capital. Equitable Life has also demutualised and has been
bought by Halifax. The main events have been the completion of the three big
demutualisation announcements of 2000 - Friends Provident, Scottish Life and
Scottish Provident. The benefits to your Company from Friends Provident were
over £200,000 in shares, with the prospective payment from Scottish Provident
set at roughly £1m.
For the second year running, the assets underlying with-profits funds performed
poorly. Although bonds and property offset equity markets to some degree,
statements at the time of writing suggest an overall fall of about 10% in
with-profits funds. Paradoxically, the increased requirement to hold bonds by
funds, partly due to guaranteed annuities, has helped performance for many
companies this year. It is also clear that several offices were actively
switching out of equities in the first half of the year. Although many offices
have seen their free assets shrink over the year, the only apparent casualty
appears to be Royal Sun Alliance, who have closed their with-profits fund to new
business. This may be a special case, as they have been trying to sell the life
business for some time and are keen to apply their limited capital to non-life
insurance.
The stockmarket falls in September were spectacular and did raise concerns for
the solvency of the industry. It seems now that offices were still in a position
to meet policyholder expectations at the bottom, though their ability to write
new business would have been impaired had the market remained there. The
subsequent stockmarket recoveries have removed these concerns, though there will
be a long-term effect on how the industry operates. Financial strength is now a
much stronger factor in investment decisions and the offices that are strong
will see their market share grow in the future. Some of these offices have taken
advantage of the more recent strength in markets to raise debt to fund further
with-profits growth. While the need for this largely arises from the heavy new
business strain of with-profits bonds, it is reassuring that these companies see
a future for with-profits life assurance.
Over the year, the industry has been the subject, directly and indirectly, of
several official investigations. While some of these, such as the Sandler
investigation, have still to produce their results, the industry has been
proactive in producing proposals for improved disclosure. While these are an
improvement over what has gone before, it is unlikely they will satisfy everyone
and disclosure will have to be enhanced further in the future.
This year was the first year that your Company had scheduled policy maturities.
While bonuses have been cut since they were purchased, they still gave a good
return on their purchase prices. We believe that the balance of the portfolio
continues to be well placed and should benefit from both asset growth and
restructuring in the future."
Life Offices Opportunities Trust Cont'd/...
Summarised Group Statement of Total Return
Year to 31 December 2001 Year to 31 December 2000
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments
- 2,731 2,731 - 4,381 4,381
Income 58 - 58 5 - 5
Investment management fees - (375) (375) - (359) (359)
Other expenses (115) (250) (365) (131) (239) (370)
-------- -------- -------- -------- -------- --------
Return before interest and (57) 2,106 2,049 (126) 3,783 3,657
taxation
Bank overdraft interest - (569) (569) - (426) (426)
-------- -------- -------- -------- -------- --------
Transfer (from) / to reserves (57) 1,537 1,480 (126) 3,357 3,231
===== ===== ===== ===== ===== =====
Return per ordinary Share (0.24p) 6.48p 6.24p (0.52p) 13.78p 13.26p
Group Balance Sheet as at as at
31 December 2001 31 December 2000
£'000 £'000
Endowment policies 48,340 45,049
Net current liabilities (5,255) (3,444)
Bank loan (5,000) (5,000)
----------- -----------
Ordinary shareholders funds 38,085 36,605
====== ======
Net asset value per ordinary share 160.70p 154.45p
Summarised Group Cash Flow Statement
Year to Year to
31 December 31 December
2001 2000
£'000 £'000
Net cash outflow from operating activities (889) (695)
Interest / taxation paid (563) (424)
Capital expenditure and financial investment (560) (625)
Financing (511) (403)
---------- ----------
Decrease in cash (2,523) (2,147)
====== ======
Notes
1. Returns per Ordinary Share are based on 23,700,000 ordinary
shares in issue during the year (2000 - 24,358,356). The number of
shares in issue at 31 December 2001 was 23,700,000. (2000 - 23,700,000).
2. 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 2000, on which the auditor issued an unqualified report,
have been lodged with the Registrar of Companies. The annual report and
accounts will be mailed to shareholders and will be lodged with the
Registrar of Companies during February 2002. Copies will be available
for inspection at 7 Castle Street, Edinburgh, the registered office of
the Company.
ENDS
This information is provided by RNS
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