RNS Number:9880O
Framlington Global Fin & Inc Fd Ld
22 August 2003
FRAMLINGTON GLOBAL FINANCIAL & INCOME FUND LIMITED
PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE SIX MONTHS TO 31 MAY 2003
CHAIRMAN'S STATEMENT
The six months under review have seen some of the lowest points in world markets
since the Fund was launched. The effects of this are set out more fully in the
Investment Manager's report. As a result of the application of International
Accounting Standards, which I have commented upon before, the ordinary shares
continue to have a negative net asset value albeit that there has been a slight
improvement in the situation since 30 November 2002. In practice, this
represents a nil net asset value attributable to ordinary shareholders together
with a consequent reduction to the ZDP share net asset value.
Total assets halved during the period primarily as a result of the need to make
further repayments in respect of the bank loan so as to avoid the possibility of
a breach in the banking covenants. A total of #4 million was repaid and break
costs of #294,000 were incurred as a consequence. As at 21 August 2003 the asset
cover ratio stood at 263% and the specified asset ratio at 251%, which compared
with minimum covenant levels of 170% and 120% respectively. Your Board and
Manager continue to monitor the banking covenant position on a regular basis.
In my report accompanying the Annual Report to 30 November 2002 I drew attention
to the fact that changes in assets values and the need to make repayments in
respect of the bank loan had meant that the allocation of the investment
portfolio between financial stocks and income stocks had changed materially from
the original 50:50 allocation. At 31 May 2003 this allocation was 88% and 12%
respectively and, at 21 August, was approximately 85% financial stocks and 15%
income stocks. Your board continues to be reluctant to restore the 50:50 balance
by committing further funds to the income sector. As explained more fully in the
Investment Manager's report the Fund's exposure to split capital income shares
has been reduced with a view to reducing the risk of further capital erosion and
the proceeds have been invested in corporate loan stocks. In view of the
disposals made since 30 June 2003 and of the minimal bid value of the residual
holdings of split capital income shares, your board has concluded that they
should now be fully provided against in the net asset value of the Fund.
We continue to use the powers granted to repurchase zero dividend preference
shares and during the period bought back 1,721,000 shares at a total cost of
#509,000; an average of 29.6p per share. The total cost of repurchase was
#1,456,000 less than the accrued entitlement of the shares on the dates of
repurchase and provided an uplift to the assets available to remaining ZDP
shareholders of 10.4p per share. Your board intends to continue with its
programme of repurchases as it believes that such action is beneficial to the
remaining shareholders.
Your Board is mindful of the current size of the Fund together with the fact
that it has two classes of shareholder. Accordingly, your Board, together with
its advisers, have considered the options available to the Fund and have sought
to ascertain the views of major shareholders of each class as to their wishes
for the future of the Fund. Following these discussions with those shareholders,
your Board's current intention is to continue with the existing investment
strategy and to seek to improve the financial position of the Fund. Your Board
will continue to keep the strategic options under review and welcomes any
feedback from shareholders in this regard
John Hallam
Chairman
22 August 2003
CONSOLIDATED STATEMENT OF OPERATIONS
6 months to 6 months to Year to
31 May 2003 31 May 2002 30 Nov 2002
#000s #000s #000s
Income
Dividends receivable 216 2,431 3,026
Bond interest receivable - 65 80
Bank interest receivable 13 195 281
Sundry income - - 10
Total income 229 2,691 3,397
Expenses
Audit fees 7 10 26
Directors' fees and expenses 18 23 46
Administration fees 35 35 68
Registration fees 8 9 (2)
Investment management fees 34 456 607
Custodian fees 1 9 18
Bank charges 7 9 19
Miscellaneous expenses 9 (6) 23
Directors and officers insurance 21 1 11
Legal fees 8 - 40
Interest payable 114 1,364 1,982
Swap breakage costs 294 - 1,655
Total expenses 556 1,910 4,493
Net (loss)/Profit before investment result (327) 781 (1,096)
Net realised loss on sales of investments (15,417) (9,592) (25,375)
Net realised gain/(loss) on currency exchange 52 (46) (471)
Movement in unrealised depreciation on
investments 15,018 (8,070) (12,451)
Finance costs on zero dividend preference shares (262) (447) (828)
Gain on repurchases of zero dividend preference
shares 1,456 - 3,077
Net profit/(loss) for the period 520 (17,374) (37,144)
Basic and diluted return/(deficit) per ordinary share 0.65p (21.72p) (46.43p)
The figures to 31 May 2003 and to 31 May 2002 are unaudited. The figures for the
year to 30 November 2002 are taken from the Company's full accounts for that
year, which carry an unqualified report of the auditors and have been filed with
the Guernsey Financial Services Commission.
CONSOLIDATED BALANCE SHEET
at at at
31 May 2003 31 May 2002 30 Nov 2002
#000s #000s #000s
Assets
Available for sale investments at valuation 4,242 60,127 8,573
Current assets:
Cash and cash equivalents 736 8,740 1,632
Debtors 30 580 108
Total assets 5,008 69,447 10,313
Liabilities
Current liabilities:
Creditors 39 898 160
Non-current liabilities:
Long term loan 2,000 40,000 6,000
Zero dividend preference shares 4,902 10,633 6,607
Interest rate swap liability 201 1,033 355
Total liabilities 7,142 52,564 13,122
Total net (liabilities)/assets (2,134) 16,883 (2,809)
Represented by:
Share capital (ordinary shares) 20,000 20,000 20,000
Share premium (ordinary shares) 12,948 12,948 12,948
Reserves (35,082) (16,065) (35,757)
Issued capital and reserves (2,134) 16,883 (2,809)
Net asset value per share outstanding of:
Attributable net assets (as per IAS)
Ordinary shares (2.67p) 21.10p (3.51p)
ZDP shares 115.90p 106.33p 111.03p
Available net assets (as per Articles)
Ordinary shares - 21.10p -
ZDP shares 65.45p 106.33p 63.82p
Shares outstanding:
Ordinary shares 80,000,000 80,000,000 80,000,000
ZDP shares 4,229,700 10,000,000 5,950,700
The figures to 31 May 2003 and to 31 May 2002 are unaudited. The figures for the
year to 30 November 2002 are taken from the Company's full accounts for that
year, which carry an unqualified report of the auditors and have been filed with
the Guernsey Financial Services Commission.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
6 months to 6 months to Year to
31 May 2003 31 May 2002 30 Nov 2002
#000s #000s #000s
Equity at start of period (2,809) 40,204 40,204
Revaluation of opening investments to fair value
on first time adoption of IAS 39 - (2,034) (2,034)
Unrealised loss of revaluation of interest rate
rate swap on first time adoption of IAS 39 - (1,810) (1,810)
Net profit/(loss) for the period 520 (17,374) (37,144)
Realised loss on interest rate swap removed from
equity and reported in net loss for the period 294 - 1,655
Unrealised (loss)/gain on revaluation of interest
rate swap in period (139) 777 (200)
Dividends paid - (2,880) (3,480)
Equity at end of period (2,134) 16,883 (2,809)
The figures to 31 May 2003 and to 31 May 2002 are unaudited. The figures for the
year to 30 November 2002 are taken from the Company's full accounts for that
year, which carry an unqualified report of the auditors and have been filed with
the Guernsey Financial Services Commission.
CONSOLIDATED CASH FLOW STATEMENT
6 months to 6 months to Year to
31 May 2003 31 May 2002 30 Nov 2002
#000s #000s #000s
Operating activities
Dividends received 254 2,664 3,736
Bond interest received - 65 80
Bank interest received 20 228 343
Other income received - - 10
Expenses paid (188) (696) (1,091)
Interest paid (169) (1,356) (2,454)
Swap breakage cost paid (294) - (1,655)
Net cash (outflow)/inflow from operating activities (377) 905 (1,031)
Investing activities
Purchases of investments (332) (20,563) (21,217)
Sales of investments 4,322 21,043 52,904
Net cash inflow from investing activities 3,990 480 31,687
Financing activities
Repurchases of zero dividend preference shares (509) - (1,308)
Repayment of long term loan (4,000) - (34,000)
Dividends paid - (2,880) (3,480)
Net cash outflow from financing activities (4,509) (2,880) (38,788)
Decrease in cash and cash equivalents (896) (1,495) (8,132)
The figures to 31 May 2003 and to 31 May 2002 are unaudited. The figures for the
year to 30 November 2002 are taken from the Company's full accounts for that
year, which carry an unqualified report of the auditors and have been filed with
the Guernsey Financial Services Commission.
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END
IR SEFFIESDSEIA