INVESCO City and Commercial Trust plc
Preliminary Announcement of
Unaudited Interim Results
For the half-year ended 31 July 2003
Highlights
* Total Return of 21.0% versus FTSE Investment Companies Index 26.3%.
* Net Asset Value up 49.3%.
* Mid Market price up by 45.7% from 35.0p to 51.0p.
* Gearing down from 297% to 215%.
* Interim Dividend maintained at 1.5p per ordinary share.
Performance Statistics
31 July 31 January %
2003 2003 Change
Capital Return:
Net assets (�'000) 8,702 5,827 +49.3
NAV per ordinary share - basic 68.2p 45.7p +49.3
FTSE - Actuaries All-Share Index 2,045.8 1,722.3 +18.8
Mid-market price per ordinary share 51.0p 35.0p +45.7
Discount per ordinary share 25.2% 23.4%
Gearing 215 297
Total Return:
Gross Assets before expenses and +21.0%
taxation
FTSE Investment Companies Index +26.3%
(Source datastream)
Chairman's Statement
During the first six months of your Company's year, gains were recorded in all
major stock markets. The rally in equity markets was driven by renewed investor
confidence following the fall of the Iraqi regime. Further interest rate cuts
in the US, UK and Europe, also boosted hopes of a recovery in the global
economy.
In the period under review, the Total Return of your Company was 21.0% which
compares with the Total Return of 26.3% in the FTSE Investment Companies Index.
After taking into account the Company's gearing, however, the net asset value
increased by 49.3%, whilst the share price increased by 45.7% over the same
period.
The Directors have declared an interim dividend of 1.5p (2002: 1.5p) per
ordinary share to be paid on 7 November 2003 to shareholders registered on 17
October 2003.
The recovery in markets over the last few months has brought the valuation of
equities more into line with their historic relationship to bonds. However, for
equity markets to extend these gains, clear signs of a recovery in world
economies and corporate profits will be required. Although there are tentative
signs of recovery in the USA, the UK will have below trend growth this year and
the European and Japanese economies are yet to show any tangible signs of
improvement.
Against the background of improving markets the Managers have reduced the level
of gearing from 297% to 215% by buying back part of the Company's 5.06% RPI
Debenture Stock and holding cash deposits. Your Board will consider further
purchases of RPI Debenture Stock as and when opportunities occur, with the aim
of moderating the impact of the Company's structural gearing in case of a
market setback.
I.P. Sedgwick
Chairman
7 October 2003
Statement of Total Return
(Incorporating the Revenue Account)
Six months to 31 July 2003
(Unaudited)
Revenue Capital Total
�'000 �'000 �'000
Gains/(losses) on investments - realised - (1,358) (1,358)
- unrealised - 4,621 4,621
Income
UK dividends 291 - 291
Deposit interest 26 - 26
Gross return 317 3,263 3,580
Investment management fee-note 1 (26) (26) (52)
Other expenses (59) - (59)
Net return before finance costs
and taxation 232 3,237 3,469
Increase in value of
RPI 5.06% Debenture Stock - (113) (113)
Increase in value of hedge on �5 million
RPI 5.06% Debenture Stock 1 57 58
Loss on RPI buy backs - (13) (13)
Interest payable and similar charges (135) (200) (335)
Return on ordinary activities
before taxation 98 2,968 3,066
Tax on ordinary activities (4) 4 -
Return on ordinary activities after
tax for the financial period
(attributable to equity
shareholders) 94 2,972 3,066
Dividend in respect of equity shares - note 2 (191) - (191)
Transfer (from)/to reserves (97) 2,972 2,875
Return per ordinary share:-note 3
Basic 0.7p 23.3p 24.0p
Diluted n/a
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)
Six months to 31 July 2002 Year to
31 January
2003
(Unaudited) (Audited)
Revenue Capital Total Total
�'000 �'000 �'000 �'000
Gains/(losses) on investments - - 363 363 (1,562)
realised
- unrealised - (5,703) (5,703) (7,468)
Income
UK dividends 478 - 478 910
Deposit interest 53 - 53 110
Gross return 531 (5,340) (4,809) (8,010)
Investment management fee-note 1 (46) (46) (92) (182)
Other expenses (66) 1 (65) (154)
Net return before finance costs
and taxation 419 (5,385) (4,966) (8,346)
Decrease/(increase) in value of
RPI 5.06% Debenture Stock - 55 55 (130)
(Decrease)/increase in value of hedge - (17) (17) 58
on �5 million RPI 5.06% Debenture
Stock
Profit on RPI buy backs - - - 194
Interest payable and similar charges (201) (270) (471) (929)
Return on ordinary activities
before taxation 218 (5,617) (5,399) (9,153)
Tax on ordinary activities (8) 8 - -
Return on ordinary activities after
tax for the financial period
(attributable to equity
shareholders) 210 (5,609) (5,399) (9,153)
Dividends in respect of equity shares (191) - (191) (446)
- note 2
Transfer to/(from) reserves 19 (5,609) (5,590) (9,599)
Return per ordinary share:-note 3
Basic 1.6p (44.0)p (42.4)p (71.7)p
Diluted 1.6p n/a
Balance Sheet
At At At
31 July 31 January 31 July
2003 2003 2002
(Unaudited) (Audited) (Unaudited)
�'000 �'000 �'000
Fixed assets
Investments listed at market value 16,812 17,163 23,651
16,812 17,163 23,651
Current assets
Increase in value of RPI hedge 219 161 85
Prepayments and accrued income 82 43 86
Cash at bank 1,831 2,200 2,007
2,132 2,404 2,178
Creditors: amounts falling due within
one year
Amounts due to brokers - 1,928 -
Accruals and deferred income 18 90 54
Proposed dividend 191 255 191
209 2,273 245
Net current assets 1,923 131 1,933
Total assets less current liabilities 18,735 17,294 25,584
Creditors: amounts falling due after
one year:
RPI 5.06% Debenture Stock 10,033 11,467 15,748
Total net assets 8,702 5,827 9,836
Capital and reserves
Called-up share capital 3,189 3,189 3,189
Share premium account 9,119 9,119 9,118
Warrant premium reserve 73 73 74
Other reserves:
Capital reserve-realised 1,032 2,738 4,956
-unrealised (5,179) (9,857) (8,166)
Revenue reserve 468 565 665
Equity Shareholders' funds 8,702 5,827 9,836
Net asset value per Ordinary Share-note 5
Basic 68.2p 45.7p 77.1p
Diluted n/a n/a n/a
Cash Flow Statement
Six months Year Six months
to to to
31 July 31 January 31 July
2003 2003 2002
(Unaudited) (Audited) (Unaudited)
�'000 �'000 �'000
Cash flow from operating activities 93 717 326
Returns on investments and servicing of (335) (929) (471)
finance
Capital expenditure and financial
investment
Purchase of investments - (2,540) (1,730)
Sale of investments 3,613 5,131 1,524
Equity dividends paid (255) (701) (510)
Net cash inflow/(outflow) before
management of
liquid resources and financing 3,116 1,678 (861)
Management of liquid resources 363 677 868
Financing (3,485) (2,339) 7
(Decrease)/increase in cash in the period (6) 16 14
Cash outflow from decrease in
liquid resources (363) (677) (868)
Net funds at beginning of period 2,200 2,861 2,861
Net funds at end of period 1,831 2,200 2,007
Reconciliation of Movement in Shareholders' Funds
Six months to Year to Six months
to
31 July 31 January 31 July
2003 2003 2002
(Unaudited) (Audited) (Unaudited)
�'000 �'000 �'000
Revenue return for the period (97) (81) 19
Capital return for the period 2,972 (9,518) (5,609)
Net proceeds from issue of shares - 7 7
Net movement in Shareholders' funds 2,875 (9,592) (5,583)
Opening Shareholders' funds 5,827 15,419 15,419
Closing Shareholders' funds 8,702 5,827 9,836
Notes to the preliminary announcement:
1. Investment management fees and interest payable on borrowings are allocated
50% to capital reserve-realised and 50% to revenue reserve. The interest rate
differential under the RPI swap arrangement is allocated 97.6% to capital
reserve-realised and 2.4% to revenue reserve.
2. The Directors have declared an interim dividend of 1.5p per ordinary share
in respect of the six months ending 31 July 2003 payable on 7 November 2003 to
ordinary shareholders registered on
17 October 2003.
3. Basic revenue return per ordinary share is based on the net revenue on
ordinary activities after taxation and on 12,755,082 (31 January 2003:
12,752,183; 31 July 2002: 12,749,236) weighted average number of shares in
issue during the period.
Basic capital return per ordinary share is based on net capital gains on
ordinary activities after taxation and on 12,755,082 (31 January 2003:
12,752,183; 31 July 2002: 12,749,236) weighted average number of shares in
issue during the period.
As the ordinary share price is less than the warrant exercise price, the
warrants are considered non-dilutive and therefore no diluted return per
ordinary share has been calculated, as was the case at 31 January 2003. For 31
July 2002 returns per weighted average ordinary share have been calculated by
assuming 54,916 shares were issued under warrants for no consideration on 1
February 2002. This produces a weighted average of 12,804,152 shares. There is
no effect on profit.
4. During the period, �1,223,285 (31 January 2003: �3,571,107; 31 July 2002:
nil) RPI 5.06% Debenture Stock was purchased by the Company for cancellation.
The amount of RPI 5.06% Debenture Stock in issue at the period end is �
7,842,438 (31 January 2003: �9,065,723; 31 July 2002: �12,636,830).
5. The basic net asset value per ordinary share of 25p has been calculated
after deducting the RPI Debenture Stock at par together with the accumulated
growth in its value to 31 July 2003 of �2,190,028 (31 January 2003: �2,401,473;
31 July 2002: �3,111,581). The basic net asset value per ordinary share has
been calculated on 12,755,082 (31 January 2003: 12,755,082; 31 July 2002:
12,755,082) shares in issue at the period end.
No diluted net asset value is shown as the warrant exercise price of 100p is
higher than the share price for all the period ends shown.
6. Under the terms of the Trust Deed, dated 8 February 1993, the Company
procures that except with the sanction of an Extraordinary Resolution of the
RPI Debenture Stockholders:
(i) the Adjusted Net Assets (effectively net assets but excluding the RPI
Debenture Stock from liabilities) will at all times exceed 130% of the
principal amount for the time being of the RPI Debenture Stock; and
(ii) the aggregate principal amount at any time outstanding in respect of
moneys borrowed shall not exceed 200% of the Adjusted Total of Capital and
Reserves (effectively equity shareholders funds).
7. During the period no warrants were exercised (31 January 2003 and 31 July
2002: 6,871 warrants were exercised for 6,871 ordinary shares of 25p each at
100p per share). As at 31 July 2003, there were 1,471,725 warrants in issue (31
January 2003: 1,471,725; 31 July 2002: 1,471,725).
8. The financial information for the period to 31 July 2003 has been prepared
on the basis consistent with the accounting policies adopted by the Company in
its statutory accounts for the year ended 31 January 2003.
9. The foregoing financial information at 31 January 2003 is an abridged
version of the Company's full accounts which carry an unqualified Auditor's
Report and which have been filed with the Registrar of Companies.
By order of the Board
INVESCO Asset Management Limited
Secretaries
7 October 2003
END
