PREMIER UTILITIES TRUST PLC
Preliminary unaudited announcement
in respect of the year ended 31 December 2007
COMPANY HIGHLIGHTS FOR 31 DECEMBER 2006 TO 31 DECEMBER 2007
- Total assets +25.0% (total return)
- Ordinary shares:
Net Asset Value +33.1%
Mid Price +38.2%
- Zero Dividend
Preference shares (ZDP):
Net Asset Value +7.0%
Mid Price +6.6%
- Since launch on 4 November 2003, the cover on ZDP shares have risen from 23%
to 142% and the terminal assets for the Ordinary shares has risen by 515%
- The Chairman stated 'Although general equity markets are likely to remain highly volatile for the time being,
utilities should be a relative "safe port in a storm", based on the experience of 2007.'
INCOME STATEMENT
(Unaudited)
Year ended 31 December 2007
Revenue Capital Total
�000 �000 �000
Gains on investments held at fair value through profit or loss:
Realised - 10,298 10,298
Unrealised - 5,361 5,361
Income:
Dividends 2,424 - 2,424
Interest 194 - 194
Management and performance fee (733) (1,661) (2,394)
Other expenses (337) - (337)
Net return before finance costs and taxation 1,548 13,998 15,546
Finance costs (19) (1,660) (1,679)
Net return on ordinary activities before taxation 1,529 12,338 13,867
Taxation on ordinary activities (186) - (186)
Net return on ordinary activities after taxation 1,343 12,338 13,681
Total
Return per ordinary share (pence): 75.40
INCOME STATEMENT
(Audited)
Year ended 31 December 2006
Revenue Capital Total
�000 �000 �000
Gains on investments held at fair value through profit or loss:
Realised - 10,441 10,441
Unrealised - 1,751 1,751
Income:
Dividends 2,142 - 2,142
Interest 225 - 225
Management and performance fee (624) (1,420) (2,044)
Other expenses (316) - (316)
Net return before finance costs and taxation 1,427 10,772 12,199
Finance costs (4) (1,551) (1,555)
Net return on ordinary activities before taxation 1,423 9,221 10,644
Taxation on ordinary activities (158) - (158)
Net return on ordinary activities after taxation
attributable to equity shares 1,265 9,221 10,486
Total
Return per ordinary share (pence): 57.79
BALANCE SHEET
as at 31 December 2007
(Unaudited) (Audited)
Year
Year ended ended
31
31 December December
2007 2006
�000 �000
Non current assets
Investments held at fair value through
the Income statement 71,758 60,789
Current assets
Debtors 413 1,346
Cash at bank 6,139 1,465
6,552 2,811
Creditors - amounts falling due within one year
Creditors (2,927) (2,306)
Net current assets 3,625 505
Total assets less current liabilities 75,383 61,294
Creditors - amounts falling due after
more than one year:
Zero dividend preference shares (25,379) (23,719)
Net assets 50,004 37,575
Capital and reserves
Equity share capital 181 181
Redemption reserve 10 10
Capital reserve - realised 17,658 10,681
Capital reserve - unrealised 13,949 8,588
Special reserve 17,474 17,474
Revenue reserve 732 641
Total shareholders' funds 50,004 37,575
NAV per ordinary share (pence) 275.60 207.10
NAV per zero dividend preference share (pence) 132.57 123.90
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 31 December 2007
(Unaudited)
Capital Capital
Share Redemption reserve reserve Special Revenue
capital reserve realised unrealised reserve reserve Total
�'000 �'000 �'000 �'000 �'000 �'000 �'000
Balance at
31
December
2006 181 10 10,681 8,588 17,474 641 37,575
Return on
ordinary
activities
after
taxation - - 6,977 5,361 - 1,343 13,681
Dividends
paid - - - - - (1,252 ) (1,252 )
Balance at
31
December
2007 181 10 17,658 13,949 17,474 732 50,004
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 31 December 2006
(Audited)
Capital Capital
Share Redemption reserve reserve Special Revenue
capital reserve realised unrealised reserve reserve Total
�'000 �'000 �'000 �'000 �'000 �'000 �'000
Balance at
31
December
2005 181 10 3,211 6,837 17,474 601 28,314
Return on
ordinary
activities
after
taxation - - 7,470 1,751 - 1,265 10,486
Dividend
paid - - - - - (1,225 ) (1,225 )
Balance at
31
December
2006 181 10 10,681 8,588 17,474 641 37,575
CASH FLOW STATEMENT
for the year ended 31 December 2007
(Unaudited) (Audited)
Year
Year ended ended
31
31 December December
2007 2006
�000 �000
Operating activities
Income received from investments 2,230 2,336
Interest received 173 213
Investment management fees paid (2,095) (878)
Other cash payments (254) (305)
Net cash inflow from operating activities 54 1,366
Servicing of finance
Interest paid (19) (4)
Taxation
Overseas tax paid (190) (149)
Financial investments
Purchases of investments (47,667) (67,999)
Sales of investments 53,558 68,930
Futures and options 462 (1,198)
Net cash inflow/(outflow) from financial investments 6,353 (267)
Equity dividends paid (1,524) (953)
Increase/(decrease) in cash 4,674 (7)
NOTES
1. These financial statements are prepared in accordance with United Kingdom
Generally Accepted Accounting Practice ("UK GAAP') and with the Statement of
Recommended Practice 2003, revised in December 2005 regarding the Financial
Statements of Investment Trust Companies ("SORP") issued by the AIC. These
accounts are unaudited and do not constitute statutory accounts. The
preliminary announcement is prepared on the same basis as set out in the
previous year's annual accounts.
2. The Directors have declared a fourth interim dividend of 2.5p net per
Ordinary share payable on 31 March 2008 to holders of Ordinary shares on the
register at 7 March 2008.
3. The total return per Ordinary share is based on 18,143,433 Ordinary shares
in issue during the year (2006: 18,143,433 Ordinary shares in issue during the
year).
4. The net asset value per Zero Dividend Preference share of 132.57p at 31
December 2007 has been calculated in accordance with the Articles of
Association.
5. At 31 December 2007 there were 18,143,433 Ordinary shares of 1p each and
19,143,433 Zero Dividend Preference shares of 1p each in issue.
6. The annual report will be mailed to shareholders on or around 18 March
2008. It will not be advertised in newspapers, but copies will be available
from that date at the Company's Registered Office at Eastgate Court, High
Street, Guildford, Surrey GU1 3DE.
7. The Annual General Meeting will be held at the offices of Premier Asset
Management Ltd, Eastgate Court, High Street, Guildford GU1 3DE on Tuesday 29
April 2008 at 2.00pm.
8. Statutory accounts for the year ended 31 December 2006 have been reported
on by the Company's auditors and delivered to the Registrar of Companies. The
report of the auditors was unqualified and did not contain a statement under
Section 237 (2) or (3) of the Companies Act 1985.
CHAIRMAN'S STATEMENT
Performance
I am pleased to report that your Company enjoyed another good year in the
twelve months to 31 December 2007. The Company's total assets rose by 23% after
dividend payments made to Ordinary shareholders totalling approximately �1.3m,
resulting in a total return on the assets of 25.0%. The performance of the
Company's assets was particularly good when considered against a backdrop of
significant volatility in global stockmarkets.
The Global utility sector out-performed the broader equity markets. The FTSE
Global Utilities Index rose by 22.5% whilst the FTSE Global Telecoms Index in
Sterling rose by 24.8%. Your Company does not have a formal benchmark, instead
performance is compared to a range of indices. In the context of these indices
the performance of your Company's assets over the period was highly
satisfactory both in absolute and relative terms.
The total assets less current liablities of the Company rose by 23% or �14.1m. After allowing for an
accrual on the Company's Zero Dividend Preference shares of �1.7m or 8.67p per
share, net assets attributable to the Company's Ordinary shares rose by �12.4m
or 68.5p per share to 275.6p. This represents an increase over the previous
year's closing net asset value of 33.1%. Since launch cover on the Company's
ZDP shares has risen from 23% to 142% whilst the terminal assets attributable
to the Ordinary shares have risen from �7.2m to �44.3m, an increase of 515%.
The hurdle rate is the amount by which the total assets of the Company are
required to grow (or decline) in order to achieve predetermined values for the
Ordinary shares. The hurdle rate required to achieve the closing price of the
Ordinary shares at the period end, which was 236p, is -0.7 %.
The performance of the Company's Ordinary shares generally reflected the good
performance of the assets and over the period the share price increased from
170.75p to 236.0p. The total return per Ordinary share was 75.4p. The Company's
Zero Dividend Preference share price rose by 8.5p to 137.5p. Thus the package
discount of Ordinary and ZDP shares ended the year at 8.2%, a small improvement
on the package discount at the previous year end.
Revenue and dividends
Your Company pays quarterly dividends to its Ordinary shareholders in March,
June, September and December. Last year dividends were paid to investors
totalling �1.3m or 6.9p per Ordinary share. Revenue this period totalled �1.3m
or 7.4p per Ordinary share, a slight increase on income earned last year. As a
consequence of this, your Board has approved a fourth interim of 2.5p per
Ordinary share be paid in respect of the financial year ending 31 December
2007. This dividend will be paid on the 31 March 2008 to ordinary shareholders
on the register as at 7 March 2008. The shares will be marked ex-dividend on 5
March 2008. This payment will mean total dividends paid in respect of the year
to 31 December 2007 will be 7.0p per share.
VAT on investment trust fees
Until now UK investment trusts have had to pay UK value added tax ("VAT") on
the investment trust management fees paid to their investment advisors. As the
result of a recent legal action brought against HM Customs and Revenue, the
European Court of Justice has resolved that investment management fees paid to
investment managers by investment trusts should be exempt from VAT. This brings
them into line with unit trusts, open ended investment companies and other
investment funds. HMRC has recently accepted the Court's ruling and as such VAT
previously paid by your Company will be able to be reclaimed from the Manager.
As yet it is too soon to be able to quantify the likely financial outcome and
impact on your Company but your Board will continue to monitor the situation in
order to achieve a successful outcome. In future your Company will pay no
further VAT on management fees.
Shareholder relations
The Board and the Investment Manager welcome contact not only with existing
shareholders but also with potential new investors. The Investment Manager met
most of the Company's largest shareholders during 2007 and a number of new
shareholders joined the register.
Annual General Meeting
The Annual General Meeting is being held on Tuesday 29 April 2008 at 2 pm at
the offices of Premier Asset Management Ltd, Eastgate Court, High Street,
Guildford, Surrey GU1 3DE. In addition to the formal business of the meeting
there will, depending on shareholder numbers, be a presentation from the
Investment Manager. Shareholders will have an opportunity to meet with the
Directors and the Investment Manager informally after the meeting. I hope to
see as many of the shareholders as possible at the meeting.
Prospects
In recent years the Global utility sector has been the beneficiary of generally
low interest rates, low inflation and reasonable levels of economic growth,
particularly in emerging economies such as China and India. The recent
volatility in global stockmarkets, initially prompted by the US sub prime
crisis, has deepened into other credit markets and has led to a swift
re-pricing of risk. This has in turn led to a de-leveraging of assets resulting
in substantial stockmarket falls. In response, the US Federal Reserve has cut
interest rates by 1.25% since the Company's year end, an action designed to
underpin markets albeit at the substantial risk of fuelling inflation.
Much will depend now on whether the credit crisis precipitates a puncturing of
the asset bubble that has built up in global markets, a result of cheap and
freely available capital. The continuing securitisation and packaging of ever
less creditworthy assets, the pools of high risk assets using higher gearing to
pursue ever decreasing returns and the fundamental mispricing of risk, are
creating a highly volatile environment particularly in the developed world,
which could take some considerable time to unwind. It is more difficult to
predict at this stage what the medium term impact on the emerging markets and
global economy will be.
Although general equity markets are likely to remain highly volatile for the
time being, utilities should be a relative "safe port in a storm", based on the
experience of 2007. The sector's balance sheet remains very strong, a positive
legacy of the post Enron environment, whilst the essential nature of the
sector's revenue stream should provide some immunity against falling economic
growth. Furthermore, private equity funds still maintain a significant interest
in long duration assets such as pipelines, generation plant and gas storage
although higher debt costs and more limited access to credit may restrict
growth to a degree. Nevertheless, merger and acquisition activity should
continue, albeit not at the frenetic rates of previous years.
Your Company has started the year with a defensive stance as the coming year is
likely to be characterised by extreme volatility. Whilst presenting risks, this
will also present opportunities, and your Company, with its experienced
management team and sound capital structure, remains well placed to take
advantage of these.
Geoffrey Burns
Chairman
28 March 2008
Premier Utilities Trust PLC
Eastgate Court,
High Street,
Guildford,
Surrey
GU1 3DE
Enquiries:
Andrew Whalley (Telephone: 01483 400400)
Kevin Scutt (Telephone: 01483 400431)
Nigel Sidebottom (Telephone: 01483 400465)
END
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