Royal London Uk Equity Trust Share Discussion Threads

[praipus] 28/1/2007 21:20

daily NAV





Notes.
1. The management own 30 million annuity shares with a redemption date of 14th September, 2021....however...
2. There are plans to redeem the annuity shares on the 14th September, 2008 at an amount equivalent to a yield of at least 8.2% - this would reduce the amount attributable to ordinary shareholders by 8.7p! ( this seems unfair but the RLU ord. holders reward will presumably be the reinstatement of the dividend).
3. RLUZ zeroe's (13,039,100) wind up on the 14th September, 2008, at £1.7989, presumably roll over options could be agreed by shareholders nearer the time.
4. The RLU ordinary shares (70 million) are undated.

[praipus] 01/12/2006 14:01

Part of special dividend apparently.

[peenut] 01/12/2006 10:30

CHECK THIS GUY OUT!!!

[praipus] 01/12/2006 10:28

RLU have to my amazement paid a dividend did everyone else apart from know they had been resumed already?

[praipus] 17/5/2006 14:15

Seems to be withstanding the downward pressure well.

[praipus] 15/5/2006 13:12

Perhaps the Annuity shares should be converted to ordinaries or enfranchised so as no to prejudice the current ordinary holders.

[praipus] 10/5/2006 11:45

Net Asset Value(s)

RNS Number:7345C
Royal London UK Eqty&Income Tst PLC
10 May 2006

ROYAL LONDON UK EQUITY & INCOME TRUST PLC (the "Company")



As at close of business on 5 May 2006, the unaudited net asset value ("NAV") per
share class of

the Company calculated in accordance with the AITC formula was:



NAV per Ordinary Share excluding current financial year revenue items = 41.29
pence*

NAV per Annuity Share = 75.00 pence



ROYAL LONDON UK EQUITY & INCOME SECURITIES PLC (the "Subsidiary")



As at close of business 5 May 2006, the NAV per Zero Dividend Preference

share of the Subsidiary, a wholly owned subsidiary of the Company = 147.55
pence.



*Notes:

1. The investments are valued at bid and the bank loan is included at fair
value.
2. Consent of the Annuity Shareholders to a winding up prior to their redemption
date of 14

September 2021 may require that Annuity Shareholders are paid an amount
equivalent to

at least the yield of 8.2% per annum. For illustrative purposes only, if a
voluntary winding-up

of the Company were to occur on 14 September 2008, when the Zero Dividend
Preference

Shares of the Subsidiary are to be repaid, a payment of 95.3p per Annuity
Share would be

required in order to achieve the yield of 8.2% per annum on the Annuity
Shares which would

reduce the amount attributable to the Ordinary Shareholders by 8.7p per
Share.





10 MAY 2006


This information is provided by RNS
The company news service from the London Stock Exchange
END

Read this a few times now and I still cant understand how a board could get away with damaging the NAV of the ordinary shareholders to the benefit of the Anuuity class of share when they hold/control all of them....do they not have a duty to look after the ordinary shareholders?

[praipus] 25/4/2006 22:13

Nephin,

If you do not mind my asking how did you get to hear about RLU?

Regards, Praipus.

[praipus] 25/4/2006 11:21

Nephin,

Christmas card list....so generous.....

The answer is grearing. Annuities and ZPD's rank before the Ords. As soon as they are covered all the growth goes to the Ords. To illustrate this take a look at:-



and look at the NRY figures which show the amount the attributable asset value per share will increase by assuming different level's of growth or decline in the underlying assets assuming senior debt/stock is covered.

For example RLU if the company assets reduce by 2.5% the attributable NAV reduces by 17%!!!

However if the assets increase by 10% the assets attributable to the ords increases by 56%!!!!

The same example with ECWC for 2.5% decline = 27.72% reduction in assets value per capital share...scarey and explains to some extent the discount!

And for 5 % and 10% increase in gross assets = 18.43% and 38.43% growth in attributable asset value per capital share respectively.

Hope I have not confused things and if other posters can see mistakes in my obsevations please say.

Regards, Praipus

[nephin] 24/4/2006 17:54

Praipus:

I am sorry to be a nuisance yet again but there is something that I cannot quite grasp here: I notice that their top ten holdings constitute a range of top quality FT 100 shares which have only risen gradually over the last 10 months but the share price of this share has more than doubled over the same period, how has this happened?

I'm sorry to keep on but I need to understand the culture of this type of share as against an ordinary I.T.

Once again thank you in advance (I think that you'll have to go on the Christmas card list)

[jimbox1] 24/4/2006 17:42

Praipus

In answer to your post 163, I believe the crunch point will be September 2008, when the ZDP's must be repaid. If the company winds up then, the redemption value of the Annuity Shares will be 95.3p, which is above the present attributed net asset value of 75p. To provide this uplift to the annuity shareholders, the ordinary shareholders will lose 8.7p from their net asset value. If the company continues, then the premium redemption value for the annuity shareholders diminishes. Shame it's not possible to buy the annuity shares (listed in Jersey but not traded).

For the moment, we just have to deduct 8.7p from amount published as the net asset value attributable to the ords.

[praipus] 24/4/2006 14:30

I believe your money may be safer with RLU and ECWC than many other places.

Reasons for:

*Quality underlying holdings
*Markets ticking up
*Gearing
*Control holdings (i.e. were the fund has influence Ecofin with BWG)
*Market sentiment against them or lagging due to historical price movement i.e. RLU market down in 2000-2001 and Dividend suspended, ECWC take a look when they were first listed at a £1 they went in to the USA the market dived so did their NAV and the share price went to 25p UIL bought in !!!)
*Active institutional share holders (i.e. looking after your interests by proxy).
*ECWC assets in demand from Oil money and Private Equity.
*Share price discount to asset value gives some downside protection.

Reasons against
*Gearing
*Market sentiment

Sorry to go on but this is my favourite subject.
Regards
Praipus

[nephin] 24/4/2006 13:42

Thank you for the info fellows, I must put my hands up here and say that the one thing that pulled my attention to this share was the recent graph - it seemed too good to be true, is this share extremely risky because of its gearing, or is there another reason that escapes me?

Ecofin water seems to be another diamond, but is it?

[praipus] 24/4/2006 12:19

What options do you see for the annuity shares?

[jimbox1] 24/4/2006 11:19

Nephin, Praipus,

The Chairman made a statement about dividend policy in the recent interim results announcement:

"As far as the payment of dividends is concerned, Annuity dividend payments are now up to date – all the arrears having been cleared last year. In respect of the Ordinary shares a payment of 2.5p per share was paid in December 2005 which eliminated some 71 per cent of the Revenue Reserves. As I have been flagging for some time now your Board sees little prospect of meaningful dividends being available for Ordinary Shareholders in the foreseeable future and current Revenue projections confirm this."

It seems we should not be looking out for dividends on the ordinary shares any time soon, but if the bull market continues, the net asset value of the ords will rocket because of the gearing provided by the annuity shares and the ZDPs. The gearing works in reverse too, of course, so it's not exactly a widows and orphans investment, but I've taken a punt with a few RLU ords.

[praipus] 24/4/2006 09:45

Nephin,

Ordinary means undated with voting rights and usualy a dividend too.

That said I believe the Divdend has been suspended here on the Ordinaries and the Annuity shares though a one off payment was made in December I think.

You would be wise to check the RNS and obtain a copy of the annual report to check the facts.

The annuities are a bit strange as they are owned by the management who are also supposed to be serving the interests of ordinary and ZDP share holders. So they are probably in breach of something and liable to get repaid and out the way in due course.

The ZDP (Zero Dividend Preference) shares which accrue capital and not income get repaid in September, 2008.

So with the above in mind at some point these could get the dividend reinstated and the discount reduced and the share price fly.

Regards
Praipus

[nephin] 22/4/2006 15:22

Praipus:

Forgive my ignorance here but how does a Ordinary Income Share differ from a standard I.T.share, and will this share pay out a dividend on ordinary shares as well as annuity shares?

Thank you for your time in advance

Nephin

[linhur] 14/12/2005 23:18

Interesting AGM today when the board came under questioning from several shareholders.
It became clear that if the trust winds up before 2021 the Annuity shares will be paid more than 75p. eg if wind up in 2008 the Annuity shares will collect 95/96p! Small print in the prospectus.
RLAM asset managers are performing very well, particularly on the bond front.They are strong on pref shares, BBB and A rated bonds rather than AAA or AA rated bonds.Still 70% of funds in equities and expect large caps to do well in 2006.RLAM look a strong and effective team.

regards
Linhur

[rambutan2] 20/5/2005 13:08

make sure you understand before you buy in langland.
all is not what it seems.
at minumum get hold of an annual report and work out what liabilities which rank before ords are.

[langland] 19/5/2005 15:32

Can't understand why this is still at such a big discount to NAV compared to other splits.

[rambutan2] 06/2/2005 12:29

as ftse close to hitting that 5000 'in the money' point.

[currypasty] 04/2/2005 18:25

storming away now