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Share Name | Share Symbol | Market | Type |
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Media 6 | EU:EDI | Euronext | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 13.40 | 10.00 | 13.00 | 0.00 | 16:40:00 |
12 December 2003 EDINBURGH LEVERAGED INCOME TRUST PLC PRELIMINARY RESULTS FOR THE 18 MONTHS TO 31 AUGUST 2003 Edinburgh Leveraged Income Trust and its subsidiary ELIT Zeros 2008 plc, managed by Edinburgh Fund Managers, is akin to a split capital investment trust but with no fixed life for the ordinary shares. For further information please contact: Rod MacRae, Tel: 0131 313 1000 Director - Edinburgh Fund Managers plc David Binnie, Tel: 0131 313 1000 Investment Manager - Edinburgh Fund Managers plc Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise. Investors may not get back the amount they originally invested. EDINBURGH LEVERAGED INCOME TRUST PLC Chairman's Statement Overall this has been another very difficult period for the Company, as for many other split capital investment trusts. During the period the bank covenants were breached and the value of the Company's assets fell below its liabilities. Since then the Company has continued to be managed with the support of the bank. No dividends have been paid to shareholders. However it has been a period of contrasting fortunes. In March this year, with equity markets in disarray around the world, the board took the decision to extend the accounting period by six months. We felt that with much uncertainty over the valuation of our portfolio at such a time and the consequent increase in costs of an audit it was in shareholders interests to defer an audit. Since then markets have rallied strongly, with the FTSE All Share Index rising by 17.4% over the 6 months to 31 August 2003. The shares of many split capital trusts have demonstrated the benefits of gearing and have risen strongly during the 6 month period. The deficit of assets to liabilities has been reduced to £2.2m at the end of August and is currently £1.7m. Review of the period The economic background was generally unhelpful for much of the period. The world economy was sluggish at best and slow to respond to the low level of interest rates. As a result corporate profits have been under pressure. Geopolitical uncertainty was another major feature of the period as the growing prospect of war in Iraq unsettled investors and helped drive equity prices even lower. Many of these issues have improved dramatically in recent months. The war in Iraq was quickly over and economic and corporate data have, for the most part, improved markedly in recent months. Recent figures suggest that economic recovery is well underway in the US and even in Europe the news is more encouraging than for some time. All of this is providing some support for the market rally since March. Performance The investment background was adverse for most of the period with the All Share Index falling more than 35% to the low point in March 2003 although the subsequent rally reduced the overall decline for the 18 month period to 16.3%. The performance of the split capital market was much worse and many split caps were de-listed while others reduced or cancelled dividends. During the period under review the company reduced bank borrowings from £27.4m to £8.7m. Total assets less current liabilities (excluding bank loan) over the 18 month period fell from £53.0m to £6.5m as at 31 August 2003. Banking covenants The Board announced in July 2002 that the Company was in breach of its assets to bank loan covenant ratio. In addition the assets of the Company had fallen to less than 50% of its paid up share capital and so, in accordance with section 142 of the Companies Act, the directors convened an extraordinary general meeting in August 2002. The company entered into an agreement with Bank of Scotland to pursue a strategy which the bank supported. Under this strategy the company decided to sell the remainder of its small capital portfolio and to repay the bank the majority of its cash balances. The running costs of the Company were reduced substantially and Edinburgh Fund Managers and the Directors agreed to waive in full their management and secretarial fees and directors' fees, respectively, for the foreseeable future. Interest and other costs of the Company are being charged 100% to income. This strategy was explained to shareholders at the extraordinary general meeting. The Board, in conjunction with the Manager, has continued to work closely with the Company's bankers, who remain supportive, to resolve the company's issues. This strategy has been developed over the course of the period and most recently the bank has confirmed that, barring any significant deterioration in markets, it does not intend to call for the repayment of the loan for the period to mid- December 2004 and has revised the loan repayment terms and total expenditure limits and has given scope for the reinvestment of surplus cash into higher quality investment trusts. I would like to pay tribute to the supportive and constructive attitude of the bank throughout our many discussions. The manager On 24 October 2003 our investment manager, Edinburgh Fund Managers plc, was acquired by Aberdeen Asset Management PLC. The board is pleased to see a resolution of the uncertainty and has had assurances that the support provided to the Company will continue. The Board and the Annual general meeting Sadly I have to report the death of Roger Hulett in November after a brave battle with illness. As well as a lifetime's knowledge of the investment trust sector, Roger brought to the Board a common sense approach and a sense of humour. We will miss him. The annual general meeting will be held on 30 March 2004 and a notice of the business to be conducted at the meeting is included at the end of this report. Outlook The economic situation, though not without risk, appears to be improving. A world-wide economic recovery is getting under way. If the geopolitical situation also remains relatively stable then the background for equity markets should be attractive. Accordingly the prospects for the stronger split capital investment trusts, which make up the bulk of the Company's remaining portfolio, should improve. However these remain highly geared investments and they can be expected to perform badly in the event of any fall in the broad stock market. While the situation of the Trust has improved markedly from the dark days during the last 18 months, I have to stress that shareholders should not count on any recovery of their capital. Despite our best efforts on their behalf, this remains unlikely. Richard Martin Chairman GROUP STATEMENT OF TOTAL RETURN (audited) 18 months to 31 August 2003 Revenue Capital Total £'000 £'000 £'000 Realised loss on investments - (15,734) (15,734) Movement in unrealised depreciation - (12,492) (12,492) ______ ______ ______ Total capital losses on investments - (28,226) (28,226) Investment income 2,342 - 2,342 Interest receivable 230 - 230 Other income 1 - 1 Investment management fee (30) - (30) Administrative expenses (258) - (258) ______ ______ ______ Net return before finance costs and 2,285 (28,226) (25,941) taxation Interest payable (1,232) (663) (1,895) ______ ______ ______ Return on ordinary activities before 1,053 (28,889) (27,836) taxation Taxation - - - ______ ______ ______ Return on ordinary activities after 1,053 (28,889) (27,836) taxation Non-equity minority interests - (1,292) (1,292) ______ ______ ______ Return attributable to members of the parent company 1,053 (30,181) (29,128) Dividends and appropriations in respect of convertible income shares (23) - (23) ______ ______ ______ Return attributable to equity 1,030 (30,181) (29,151) shareholders Dividends in respect of equity shares - - - ______ ______ ______ Transfer to/(from) reserves 1,030 (30,181) (29,151) ______ ______ ______ Basic return per ordinary share 2.18p (64.01p) (61.83p) ______ ______ ______ Adjusted return per ordinary share 1.01p (64.01p) (63.00p) ______ ______ ______ The revenue account of this statement represents the profit and loss account of the group. All revenue and capital items in the above statement derive from continuing operations. GROUP STATEMENT OF TOTAL RETURN (audited) Period 3 January 2001 to 28 February 2002 Revenue Capital Total £'000 £'000 £'000 Realised loss on investments - (2,588) (2,588) Movement in unrealised depreciation - (27,230) (27,230) ______ ______ ______ Total capital losses on investments - (29,818) (29,818) Loss on sale of UK Treasury Bill - (10) (10) Investment income 6,000 - 6,000 Interest receivable 301 - 301 Other income 8 - 8 Investment management fee (207) (384) (591) Administrative expenses (284) - (284) ______ ______ ______ Net return before finance costs and taxation 5,818 (30,212) (24,394) Interest payable (632) (1,173) (1,805) ______ ______ ______ Return on ordinary activities before taxation 5,186 (31,385) (26,199) Taxation (313) 313 - ______ ______ ______ Return on ordinary activities after taxation 4,873 (31,072) (26,199) Non-equity minority interests - (1,560) (1,560) ______ ______ ______ Return attributable to members of the parent company 4,873 (32,632) (27,759) Dividends and appropriations in respect of convertible income shares (15) - (15) ______ ______ ______ Return attributable to equity shareholders 4,858 (32,632) (27,774) Dividends in respect of equity shares (3,631) - (3,631) ______ ______ ______ Transfer to/(from) reserves 1,227 (32,632) (31,405) ______ ______ ______ Basic return per ordinary share 10.30p (69.21p) (58.91p) ______ ______ ______ Adjusted return per ordinary share 9.52p (69.21p) (59.69p) ______ ______ ______ The revenue column of this statement represents the profit and loss account of the group. All revenue and capital items in the above statement derive from continuing operations. BALANCE SHEET (audited) As at 31 August 2003 As at 28 February 2002 Group Company Group Company £'000 £'000 £'000 £'000 Fixed Assets Investments 4,416 4,367 48,132 48,083 Investment in subsidiary - - - - ______ ______ ______ ______ 4,416 4,367 48,132 48,083 Current Assets Debtors 119 145 496 501 Cash and short term deposits 2,118 342 2,488 2,483 AAA money market funds - - 3,000 3,000 ______ ______ ______ ______ 2,237 487 5,984 5,984 Creditors: Amounts falling due 8,895 17,764 1,090 10,370 within one year ______ ______ ______ ______ Net Current (6,658) (17,277) 4,894 (4,386) Assets/(Liabilities) ______ ______ ______ ______ (2,242) (12,910) 53,026 43,697 Creditors: Amounts falling due after more than one year - - 27,432 27,432 ______ ______ ______ ______ (2,242) (12,910) 25,594 16,265 ______ ______ ______ ______ Capital And Reserves Ordinary share capital 472 472 472 472 Convertible income shares 86 86 86 86 Special reserve 47,468 47,468 47,468 47,468 Capital reserve - realised (23,091) (23,091) (5,402) (5,402) Capital reserve - unrealised (39,722) (39,721) (27,230) (27,229) Revenue reserve 1,910 1,876 857 870 ______ ______ ______ ______ (12,877) (12,910) 16,251 16,265 ______ ______ ______ ______ Non-Equity Minority Interests 10,635 9,343 ______ ______ (2,242) 25,594 ______ ______ Equity Shareholders' Funds (14,522) 14,051 Adjusted net asset value per equity share (27.31p) 34.47p Convertible Income 1,645 2,200 Shareholders' Funds Adjusted net asset value per convertible income share - - GROUP CASHFLOW STATEMENT (audited) 18 months to Period 3 January 2001 31 August 2003 to 28 February 2002 £000 £000 £000 £000 Net cash inflow from operating activities 2,533 5,158 Servicing of finance Interest paid (1,500) (1,370) Loan Breakage costs (663) - Non-equity dividends paid - (192) ______ ______ Net cash outflow from servicing of finance (2,163) (1,562) Financial investment Purchase of investments (354) (100,763) Sale of investments 15,789 22,868 ______ ______ Net cash inflow from financial investment 15,435 (77,895) Management of liquid resources 3,000 11,611 Equity dividends paid (428) (3,396) ______ ______ Net cash inflow before financing 18,377 (66,084) Financing Issue of preference shares to minority shareholders - 36 Issue of ordinary share capital - 45,402 Expenses of share issue - (1,298) Loan repayable on 3 March 2008 - 27,432 Repayment of borrowings (18,747) - ______ ______ Net cash outflow from financing (18,747) 71,572 ______ ______ Decrease in cash (370) 5,488 ______ ______ Notes: 1. The accounts are prepared in accordance with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies". The same accounting policies have been applied throughout the period. 2. There will be no interim dividend payable per ordinary share. There will be no interim dividend payable per convertible income share. 3. The investments include £4,367,000 of holdings of highly geared split capital investment trusts. These are carried in the financial statements at mid market value in accordance with the company's accounting policies. The market for such shares is very illiquid and the prices at which the securities could be realised is uncertain. Solely as an indication, the equivalent bid prices from these holdings at the balance sheet date was £3,443,000, approximately 21% lower than mid market prices. 4. The statement of total return and the balance sheet set out above do not represent full statutory accounts in accordance with Section 240 of the Companies Act 1985. 5. Full statutory accounts for the period to 28 February 2002 were submitted with Companies House on 28 May 2002. 6. The annual report will be posted to shareholders in December 2003 and copies will be available at the registered office of the company - Donaldson House, 97 Haymarket Terrace, Edinburgh EH12 5HD. for Edinburgh Leveraged Income Trust plc, Edinburgh Fund Managers plc, SECRETARY END
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