RNS No 2938b
ABERDEEN PREFERRED INCOME TRUST PLC
13th October 1998
ABERDEEN PREFERRED INCOME TRUST PLC
Preliminary Announcement of Unaudited Group Results
for the six months ended 31 August 1998
The Group's capital structure consists of Ordinary
shares, with gearing provided by RPI-Linked
Debenture Stock, bank borrowings, Zero Dividend
Preference Shares and Subordinated Loan Stock. The
six months to 31 August 1998 covered in my interim
report have been very significant in the development
of your Company and a summary reconciliation of the
movement in equity shareholders' funds is provided
in the Notes section.
On 12 March 1998 proposals were announced to extend
the life of our subsidiary, Aberdeen Preferred
Securities PLC, to 31 March 2003 and to vary the
rights of the zero dividend preference shares. The
Company also raised #64.4m (before expenses) by the
issue of Ordinary Shares and Debenture Stock under a
Placing and Open Offer and an increase in bank debt
from #2 million to #12 million. Under the Share
Placing, 36,225,063 Ordinary shares were
conditionally placed with institutional and other
investors, subject to claw-back to satisfy valid
applications made by Qualifying Shareholders under
the Open Offer. Additionally, we placed #11 million
(nominal) of Debenture Stock. The issue prices were
145p per Ordinary share and 108p per #1 nominal of
Debenture Stock plus accrued interest. The #12m of
borrowings were fixed at a rate of 7.22% until 31
December 2002.
This exercise prolonged the life of the Trust and
effectively made your Ordinary shares undated by
maintaining the dated gearing in the form of the
Zeros in a subsidiary. At the same time it allowed
us to announce both an increase in anticipated
dividends and a rise in asset value.
In July we placed Subordinated Loan Stock, Zero
Dividend Preference Shares and Ordinary shares,
raising approximately #90m before expenses, in
conjunction with an offer to acquire all the
stepped preference shares, zero dividend preference
shares, income shares and capital shares of The
Scottish National Trust Plc not already owned by the
Company. On 20 August 1998 this offer closed with
over #70m of acceptances from the various classes of
shares. Our Managers have subsequently taken out
further borrowing of #55m which is currently
floating with the intention to fix the said amount
for just over 4 years in due course. At the time of
this placing and offer our stated object was to
invest at a yield of over 8.8% in bonds,
convertibles and investment trusts and to borrow at
below 7.6%. We are encouraged that both these aims
will be comfortably achieved as our Managers have
invested well during the current turbulent markets
and refrained from fixing our borrowings as they
anticipated rates falling.
In our offer document of 16 July 1998 we announced
our intention, in the absence of unforeseen
circumstances, to pay the following dividends.
In respect of the
financial year Amount
Dividend ending 28 February Month of Payment (net)
Second interim 1999 November 1998 3.625p
Third interim 1999 January 1999 4p
Fourth interim 1999 April 1999 4p
First interim 2000 August 1999 4p
Second interim 2000 November 1999 4p
We continue to believe that this forecast will be
achieved and have declared a dividend of 3.625p net
paid on 18 August 1998 and will declare a
second interim dividend of 3.625p payable in November
1998.
The net asset value per Ordinary share ('NAV') at
the period end was 134.55p compared with 116.14p at
28 February 1998, a rise of 15.8%.
Economy & Outlook
The early part of the period covered by the
statement saw the major western world markets
hitting new highs followed by sharp corrections in
the last three months as investors and policy makers
started to focus on the health of the banking
systems in the developed world in addition to the
problems of emerging markets.
The last few weeks in the fixed interest market have
seen the yield on long gilts falling to 4.5%, a forty
year low, while yields at the short end fell by
almost 1.25% in anticipation of a markedly easier
monetary stance in coming months. Bonds in emerging
markets have fallen sharply and this weakness has
permeated into high yield bonds in the US and
quickly transferred to the UK market. The sharp
movements in spreads have caused considerable
distress to some hedge funds and problems at Long
Term Capital Management were sufficiently important
for the US Federal Reserve to organise a rescue
operation. The unwinding of the massively geared
positions will inevitably distort markets and
investors may be presented with a number of
interesting spread differences on a longer term
view.
Meanwhile corporate bonds in the UK at all positions
on the credit curve from AAA to B offer the best
relative value for a decade and this has everything
to do with the technical position in the market
rather than a substantial deterioration in the
credit outlook. A world depression seems to be
unrealistic assuming sensible policies within the G7
countries and it should be possible to avoid even a
recession in the western world. In the more likely
environment of a period of slower growth and lower
short term interest rates, corporate bonds are
likely to outperform government bonds.
We believe that our well balanced portfolio is
positioned to deliver our investment objectives of
providing a high and growing income with the
prospect of capital appreciation from its
convertible and income share element.
Derek Morgan
Chairman
13 October 1998
The unaudited results were:
Group Statement of Total Return (incorporating the revenue
account of the Group*) for the six months to 31 August 1998
Six months ended
31 August 1998
(unaudited)
Revenue Capital Total
#'000 #'000 #'000
Losses on investments - (7,559) (7,559)
Income 5,914 - 5,914
Investment management fee (450) (256) (706)
Other expenses (139) - (139)
----- ----- -----
Net return before finance
costs and taxation 5,325 (7,815) (2,490)
Interest payable and
similar charges
Loans and debentures (611) (702) (1,313)
Zero dividend preference
shares of subsidiary - (1,061) (1,061)
----- ----- -----
Return on ordinary
activities before tax 4,714 (9,578) (4,864)
Tax on ordinary activities (989) 135 (854)
----- ----- -----
Return on ordinary
activities after tax 3,725 (9,443) (5,718)
Dividends and other
appropriations
Appropriations in respect
of Zero dividend
preference shares in - - -
subsidiary
Dividends in respect of
equity shares (3,366) - (3,366)
----- ----- -----
Transfers to/(from)reserves 359 (9,443) (9,084)
===== ===== =====
Return per Ordinary share
(pence) 6.84 (17.34) (10.50)
===== ===== =====
Period ended
31 August 1997 (note 2)
(unaudited)
Revenue Capital Total
#'000 #'000 #'000
Gains on investments - 2,056 2,056
Income 4,036 - 4,036
Investment management fee (398) (25) (423)
Other expenses (176) - (176)
----- ----- -----
Net return before finance
costs and taxation 3,462 2,031 5,493
Interest payable and
similar charges
Loans and debentures (400) (179) (579)
Zero dividend preference
shares of subsidiary - - -
----- ----- -----
Return on ordinary
activities before tax 3,062 1,852 4,914
Tax on ordinary activities (671) 22 (649)
----- ----- -----
Return on ordinary
activities after tax 2,391 1,874 4,265
Dividends and other
appropriations
Appropriations in respect
of Zero dividend
preference shares in subsidiary - (1,927) (1,927)
Dividends in respect of
equity shares (1,644) - (1,644)
----- ----- -----
Transfers to/(from)reserves 747 (53) 694
===== ===== =====
Return per Ordinary share
(pence) 11.07 (0.25) 10.82
===== ===== =====
* The Statements of total return presented above are in
accordance with the Statement of Recommended Practice for
Financial Statements of Investment Trust Companies.
Consolidated Balance Sheet of the Group as at 31 August 1998
31 August 31 August 28 February
1998 1997 1998
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Fixed assets
Investments 279,976 51,708 63,483
------- ------ ------
Current assets
Debtors 3,710 727 1,402
Cash at bank and in hand 71,641 - -
------- ------ ------
75,351 727 1,402
Current liabilities
Bank loans and overdrafts - (304) (2,192)
Creditors: amounts falling
due within one year (66,440) (1,456) (1,932)
------- ------ ------
(66,440) (1,760) (4,124)
------- ------ ------
Net current assets /(liabilities) 8,911 (1,033) (2,722)
------- ------ ------
Total assets less current
liabilities 288,887 50,675 60,761
Creditors: amounts falling
due after one year
RPI Debenture Stock 2007 (19,269) (7,044) (7,271)
Subordinated loan stock 2023 (18,770) - -
Bank loan 2002 (12,000) - -
Zero dividend preference
shares (see note 7) (80,388) (24,064) (25,442)
------- ------ ------
Total net assets 158,460 19,567 28,048
======= ====== ======
Share capital and reserves
Called-up share capital 11,776 2,415 2,415
Share premium account 133,715 3,570 3,576
Merger reserve 15,958 15,958 15,958
Capital reserves
Realised 2,936 2,808 2,590
Unrealised 4,751 2,303 13,179
Accrued finance costs (13,767) (10,871) (12,402)
Revenue reserve 3,091 3,384 2,732
------- ------ ------
Total equity shareholders' funds 158,460 19,567 28,048
======= ====== ======
Net asset value per share
(pence):
Ordinary share 134.55 81.03 116.14
======= ====== ======
1 The interim financial accounts have been prepared in accordance
with applicable accounting standards under the historical cost
convention as modified to include the revaluation of fixed asset
investments and on the basis of the accounting policies set out
in the statutory financial statements of the Company for the
period ended 28 February 1998.
2 The comparative period consolidated statement of total return
comprises a consolidation of the statement of total return for
Aberdeen Preferred Income Trust PLC for the period from 14
October 1996 (date of incorporation) to 31 August 1997 and for
Aberdeen Preferred Securities PLC for the period from 1 December
1996 to 31 August 1997. Aberdeen Preferred Income Trust PLC
commenced trading on 27 March 1997.
3 The basic revenue return per share is based on earnings of
#3,725,000 (1997: #2,391,000) and on 54,453,413 (1997:21,594,639)
Ordinary shares of 10p each being the weighted average number of
shares in issue for the period. The basic capital return per
share is based on net capital losses of #9,443,000 (1997:
#53,000) and on 54,453,413 (1997:21,594,639) Ordinary shares of
10p each being the weighted average number of shares in issue for
the period.
4 Basic net asset value per Ordinary share is based on net assets
of #158,460,000 (31 August 1997: #19,567,000 and 28 February
1998: #28,048,000), and on 117,767,312 (31 August 1997 and 28
February 1998: 24,150,042) Ordinary shares, being the number of
Ordinary shares in issue at the end of the period.
5 On 8 April 1998, inter alia, 36,225,063 Ordinary shares were
allotted and issued in connection with a placing.
6 On 26 August 1998, inter alia, 24,209,957 Ordinary shares were
allotted and issued in connection with the offers for shares in
The Scottish National Trust PLC and 33,182,250 Ordinary shares
were allotted and issued in connection with a placing.
7 Following the issue of the unsecured subordinated loan note 2003
on 16 April 1998 by Aberdeen Preferred Securities PLC to Aberdeen
Preferred Income Trust PLC the Zero dividend preference shares
require to be treated as debt rather than a minority interest in
the Group's financial statements. In the Group statement of
total return the financing cost of the Zero dividend preference
shares is now shown under interest payable and similar charges
rather than dividends and other appropriations.
8 Reserves
Share Merger Realised Unrealised Accrued
Premium reserve reserve reserve Finance
account Costs
As at 28
February 1998 3,576 15,958 2,590 13,179 (12,402)
Net gain (loss)
on investments - - 869 (8,428) -
Expenses allocated
to capital - - (654) - -
Tax allocation
thereon - - 135 - -
Transfer to
share premium account (12) - 12 - -
Accrued
redemption on
Zero dividend
preference shares - - - - (1,061)
Indexation on
debenture stock - - - - (304)
Premium on
allotment of
Ordinary shares 134,992 - - - -
Issue costs
relating to
issue of
Ordinary shares (4,841) - - - -
Reorganisation
costs of Zero
dividend
preference shares - - (16) - -
------- ------ ------ ------ ------
As at
31 August 1998 133,715 15,958 2,936 4,751 (13,767)
======= ====== ====== ====== ======
9 The interim financial statements for the six months ended
31 August 1998 are unaudited and do not constitute
statutory accounts. The comparable financial information
for the period ended 28 February 1998 has been abridged
from accounts that have been filed with the Registrar of
Companies and on which the report of the auditors was
unqualified.
10 Summary Reconciliation of shareholders' funds #'000
Opening equity shareholders' funds 28,048
Issue of Ordinary shares 144,353
Issue and reorganisation costs (4,857)
Net loss on investments (7,559)
Capitalised expenses net of taxation (519)
Accrual for Zero dividend preference shares'
redemption (1,061)
Indexation on debenture stock (304)
Net retained revenue 359
-------
Closing equity shareholders' funds 158,460
=======
11 Copies of the Interim Report will be posted in due course
and further copies may be obtained from the registered
office, One Bow Churchyard, Cheapside, London EC4M 9HH
13 October 1998 Aberdeen Asset
Management PLC
Secretaries
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