Final Results
September 02 2004 - 1:37PM
UK Regulatory
To: Stock Exchange For immediate
release:
02 September 2004
PRIVATE INVESTORS CAPITAL TRUST plc
Annual results for the year ended 31 May 2004
Chairman's statement
REVIEW
Over my years as Chairman of PICT I have found that sitting down with pen in
hand to review the previous twelve months there is inevitably the temptation to
talk of unusual and unforeseen events. However last year did finally see the
global economic and market recovery that had been predicted in both 2001 and
2002, only to be thwarted respectively by the attack on the World Trade Towers
and the war in Iraq. In the period under review there were no such major
events although the significant economic and market recovery that occurred took
place against a background of geopoliticalunrest. At last, economic and
company fundamental trends proved stronger than issues of investor sentiment.
Having been frustrated in their expectations of recovery in the two previous
years market participants were caught by surprise at the strength of recovery in
the United States in particular. North American businesses are benefiting
from low and stable US interest rates and from pent up demand both domestically
and overseas. China, now a member of the World Trade Organisation, is adding
a new dimension to global supply and demand. In this environment we expect our
companies to do well, and indeed the net asset value of PICT and the share price
have both risen over the year. To be able to report a positive return to
shareholders after three consecutive years of negative figures is a great
relief. However when viewed against PICT's benchmark which is 50% FTSE All
Share Index and 50% FT World Index ex UK we have failed to outperform in net
asset value terms. The benchmark showed a gain of 10.5% over the year to 31st
May 2004 against the increase of 8.7% in the net asset value. The discount did
however fall from 21% to 17% and the share price total return was 13.5% over the
same period.
The underperformance of our investments has not been through their lack of
continued profitability but rather due to the spectacular performance of other
companies recovering from collapsed profits or indeed substantial losses in the
previous two years. As you are aware, PICT invests in consistently growing
companies where the scope for dramatic earnings recovery is therefore limited.
In the calendar year to date we have been encouraged by something of a
turnaround in this trend as the recovery effect has faded and high quality
growth stocks have moved back towards centre stage.
DIVIDENDS
The company has declared a second interim dividend of 2.8p making a total
dividend for the year of 5.5p, an increase of 3.8%. The dividend was paid on
20th August 2004 to shareholders registered on 6th August 2004. The dividend
has risen by more than the rate of inflation each year since adoption of the
current investment policy in 1994.
CORPORATE STRATEGY
Last year the Board proposed giving the shareholders the opportunity to vote
each year for the continuation of the Company. It was believed that this,
combined with the marketing plan initiated by Adam & Company, would result in
lowering PICT's discount and improving its liquidity. Despite the considerable
effort expended by your Board and managers the discount between the share price
and net asset value has remained unacceptably wide and liquidity has not
improved. The Board has therefore held discussions with the Company's major
shareholders, and has concluded that it will not be recommending that PICT
continues in its current form.
Accordingly, the Board announced on 10th August 2004 that it believed the
diverse demands of shareholders are best served by offering shareholders the
choice of an open-ended vehicle with a similar investment objective to the
Company, an existing investment trust also in the AITC's Global Growth sector,
as well as a cash exit at close to NAV. The Board is working with its advisers
to formulate detailed proposals which are expected to be dispatched to
shareholders shortly after the Annual General Meeting ("AGM"). The meetings to
consider these reconstruction proposals will be held by November.
Notwithstanding the above, the terms of the Company's articles still require us
to put a resolution to shareholders by 30th September 2004 to convene an
Extraordinary General Meeting ("EGM") on 17th December 2004 to consider the
winding-up of the Company. This resolution is set out as Resolution 8 in the
notice of the AGM at the back of this document. In the event that this
Resolution 8 is not passed and the reconstruction proposals are approved, no EGM
will be held as the Company will, following the reconstruction, cease to exist.
In the event that this Resolution 8 is not passed and the reconstruction
proposals are not approved the time available to prepare the documentation
convening an EGM for 17 December 2004 would be very limited, potentially
incurring unnecessary cost. This problem, should it occur, can be most
effectively overcome by providing for a small delay in holding the EGM. To
achieve this the Directors are recommending that shareholders vote at the AGM in
favour of Resolution 8 in order to release the Directors from convening an EGM
on 17th December 2004. This will provide for a temporary continuation if
necessary and, should shareholders not approve the reconstruction proposals, the
Board undertakes to convene an EGM to consider the winding-up of the Company by
the end of January 2005.
THE BOARD
The reporting period has involved your Board in a considerable amount of
activity. It has been necessary to spend time on matters of Corporate
Governance with the introduction of new legislation, as well as on corporate
matters more specific to PICT. During this time I have as Chairman been ably
supported by your Board of Directors. There have been changes here too as
Robin Stormonth-Darling retired after a decade of wise advice and valued
comment. Sarah Bates, who joined us in his stead, has proved a huge asset over
the last few months and it is to be regretted that her role as a Director of
PICT appears likely to be considerably shorter than that of her predecessor.
PROSPECTS
Your Board and managers remain diligent in their guardianship of the investments
under their care. Rising interest rates and a high oil price are not the ideal
background for equity markets. Given this and the likely need to raise cash
within a relatively short investment timeframe, it has been decided to raise a
cash balance which, at present is equal to approximately 20% of PICT's asset
value. The remainder of the portfolio continues to be invested in good quality
international growth stocks.
- ends -
For further information, please contact:
Isobel Hunter
Adam and Company Investment 0131 225 8484
Management Limited
PRIVATE INVESTORS CAPITAL TRUST plc
Statement of total return (incorporating the revenue account*) for the
year ended 31 May 2004
Unaudited
Revenue Capital Total
�'000 �'000 �'000
(Losses)/gains - realised - (784) (784)
on investments
- unrealised - 2,522 2,522
Currency gains - 73 73
Income 582 - 582
Investment management fee (94) (281) (375)
Other expenses (588) - (588)
_______ _______ _______
Net return before finance costs and (100) 1,530 1,430
taxation
Interest payable and similar charges (42) (127) (169)
_______ _______ _______
Return on ordinary activities before (142) 1,403 1,261
taxation
Taxation on ordinary activities (24) - (24)
_______ _______ _______
Return on ordinary activities after (166) 1,403 1,237
taxation for the financial year
Dividends (302) - (302)
_______ _______ _______
Transfer to reserves (468) 1,403 935
_______ _______ _______
Return per share-basic (3.01)p 25.41p 22.40p
Return per share-diluted (2.05)p 22.28p 20.23p
* The revenue column of this statement is the profit and loss account of the
company. Following the decision of the board not to adopt the going concern
basis for the preparation of these financial statements, several accounting
adjustments have been required. The impact of these adjustments is to reduce
net asset value as at 31 May 2004 by �731,000 and net income for the year by
�502,000.
The financial information contained within this preliminary announcement does
not constitute the company's statutory financial statements as defined in
section 240 of the Companies Act 1985 for the years ended 31 May 2004 or 2003,
but is derived from those financial statements. Statutory financial statements
for 2003 have been delivered to the Registrar of Companies and those for 2004
will be delivered following the company's annual general meeting.
The terms of the preliminary announcement were approved by the board on 2
September 2004.
PRIVATE INVESTORS CAPITAL TRUST plc
Statement of total return (incorporating the revenue account*) for the
year ended 31 May 2003
Unaudited
Revenue Capital Total
�'000 �'000 �'000
Losses on - realised - (919) (919)
investments
- unrealised - (4,742) (4,742)
Currency gains - 69 69
Income 523 - 523
Investment management fee (42) (126) (168)
Other expenses (102) - (102)
_______ _______ _______
Net return before finance costs and 379 (5,718) (5,339)
taxation
Interest payable and similar charges (27) (81) (108)
_______ _______ _______
Return on ordinary activities before 352 (5,799) (5,477)
taxation
Taxation on ordinary activities (18) - (18)
_______ _______ _______
Return on ordinary activities after 334 (5,799) (5,465)
taxation for the financial year
Dividends (293) - (293)
_______ _______ _______
Transfer to/(from) reserves 41 (5,799) (5,758)
_______ _______ _______
Return per share-basic 6.04p (104.83)p (98.79)p
Return per share-diluted 5.29p (85.68)p (80.39)p
* 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 year.
PRIVATE INVESTORS CAPITAL TRUST plc
BALANCE SHEET
As at 31 May 2004 As at 31 May 2003
(Unaudited) (Audited)
�000 �000 �000 �000
Investments at market
value
Listed on UK stock 10,111 9,575
exchange
Listed on stock exchanges 11,053 10,174
overseas
_______ _______
21,164 19,749
Current assets
Debtors 982 64
Cash at bank - 1,471
_______ _______
982 1,535
Creditors
Amounts falling due within (4,475) (1,230)
one year
_______ _______
Net current (3,493) 305
(liabilities)/assets
_______ _______
17,671 20,054
Creditors
Amounts falling due after - (3,115)
one year
_______ _______
Net assets 17,671 16,939
_______ _______
Capital and reserves
Called-up ordinary capital 5,457 5,532
Share premium account 6,694 6,694
Capital redemption reserve 180 105
Capital reserve- Realised 1,924 3,246
Capital reserve- 3,541 1,019
Unrealised
Revenue reserve (125) 343
_______ _______
Equity shareholders' funds 17,671 16,939
_______ _______
Net asset value per share- 323.85p 306.23p
basic
Net asset value per share- 313.83p 299.40p
diluted
PRIVATE INVESTORS CAPITAL TRUST plc
STATEMENT OF CASH FLOW
Year to Year to
31 May 2004 31 May 2003
(Unaudited) (Audited)
�000 �000 �000 �000
Net cash inflow from operating 253 230
activities
Servicing of finance
Interest paid (130) (103)
_______ _______
Net cash outflow from (130) (103)
servicing of finance
Taxation
Tax paid (23) -
_______ _______
(23) -
Capital expenditure and
financial investment
Payments to acquire (5,325) (2,061)
investments
Receipts from disposal of 4,743 2,824
investments
_______ _______
Net cash (outflow)/inflow for (582) 763
capital expenditure and
financial investment
Equity dividends paid (300) (288)
_______ _______
Net cash (outflow)/inflow (782) 602
before financing
Financing
Repayment of currency loans (904) (912)
Drawdown of currency loans - 997
Buyback of shares (203) -
_______ _______
Net cash outflow from (1,107) 85
financing
_______ _______
(Decrease) / increase in cash (1,889) 687
_______ _______
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