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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Framlington Cap | LSE:FRNC | London | Ordinary Share | GB0006333545 | CAP 25P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 157.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
Framlington Income & Capital Trust PLC Preliminary Announcement for Year Ended 31 March 2006 Chairman's Statement In writing to shareholders I am aware that we are now entering the last two full years of the Trust's life. In my recent annual statements, I have sought to remind capital shareholders of the highly leveraged nature of their investment and I make no apology for doing so once again. Over the financial year, capital shareholders have once again enjoyed significant further capital appreciation. Against this reducing timescale your Board has considered the possibility of a shift in investment strategy in order to protect the net asset value per share, should the UK equity market suffer a major setback. The Board has concluded that such a change could, however, be in conflict with the stated objective of the Trust. In arriving at this decision, shareholder opinion and feedback have been taken into account. Capital shareholders should be prepared therefore for periods of higher volatility such as we are currently experiencing. The earnings outcome of 6.10 pence per share for the year to 31 March 2006 compares with earnings for the previous year of 5.76 pence, an increase of 5.9%. The Board considers that it would be appropriate to pay out to income shareholders a proportion of the revenue reserve brought forward from prior years, whilst remaining conscious of the need to retain a reasonable, albeit reducing, sum over the final period of the Trust's life. The Board has decided therefore to declare a final dividend of 2.5 pence per share. This means that £ 119,000 of the revenue reserve will be utilised, while still retaining a sum of £395,000. This final dividend, if approved by shareholders at the annual general meeting, means that the dividend for the year will be 6.4 pence per share, representing an increase of 8.5%. Subject to such approval, the final dividend will be paid on 1 August 2006 to income shareholders on the register on 30 June. At the closing price of 41.50 pence per share on 22 May and on the basis of the above dividend, the running yield on the income shares was 15.4% while the yield to redemption was 7.5%. This latter figure takes account of the fact that the income shares carry the right to be redeemed at the projected winding up in September 2008 at 30p per share including a premium of 5p per share. Total assets less current liabilities have risen from £92.6m on 31 March 2005 to £110.5m on 31 March 2006; representing an increase of 19.3% during the year. Over the same period the fully diluted net asset value of the Trust's capital shares has increased by 38.1% to 259.94p. In the year to 31 March 2006 the portfolio showed a total return of 26.8% compared with 28.0% for the FTSE All-Share Index. The year saw very strong performance in mining and resources stocks, many of which are not natural investments for this Trust due to their low yield. As usual we also monitor our performance against both the FTSE Small Cap (excluding Investment Companies) and the FTSE 350 Higher Yield. The total return of these two indices was 23.5% and 26.0% respectively. As I noted last year, the Board recognises the contribution made by Paul Branigan as manager of the Trust's portfolio, especially during the last three years. It was announced on 25 January that Paul has decided to pursue his career elsewhere in the investment management industry and he leaves us both with our thanks and our best wishes for the future. We welcome Richard Peirson, who brings with him a wealth of experience together with a proven performance record. His review of the year is set out in the report and accounts. Shareholders will notice certain changes in the accounts this year as a result of our adoption of the Statement of Recommended Practice "Financial Statements of Investment Trust Companies" issued by the AITC in December 2005. The main changes are that we now value the Trust's investments at bid, rather than mid, market value, and that dividends paid to shareholders are accounted for in the period in which they are paid and not that to which they relate. There have also been some changes in presentation so that the Income Statement, which replaces the Statement of Total Return, no longer reflects dividends paid and these appear only in the reconciliation of movement in shareholders' funds. As shareholders will be aware from my interim statement, the Trust's manager is now owned by AXA Investment Managers and the Board is pleased with the transition to new ownership. Prior to this change, however, the Board was aware of the uncertainty surrounding the future of Framlington Group. Consequently an agreement was reached, reducing the term of the management agreement from 12 months to 3 months for a period of one year. This reduced term will end on 1 September 2006, when the agreement will revert to 12 months for the remaining life of the Trust. It is now a requirement that every listed company includes an operational financial statement or a business review in its annual report. The Board has chosen the latter course of action and this can be found in the directors' report in the report and accounts. Amongst the matters addressed you will find details on a number of issues including gearing, key performance indicators and risks associated with an investment in the Trust. The Board decided to review the role of its appointed broker against the background of the reducing life of the Trust. As a result of this exercise we are pleased to announce that Winterflood Securities have now been retained as advisers. This is an important new appointment for the Trust. The UK equity market has enjoyed a very strong recovery during the past three years and the Trust's portfolio has benefited accordingly, with net assets (total assets less current liabilities) rising by nearly 70% over this period. The recent correction in global equity markets has damaged investor confidence. Levels of share price valuations are being challenged as investors seek to reduce their overall levels of perceived risk exposure. This sell off, while led by mining and commodity stocks, has been indiscriminate. Furthermore it would appear to have been fuelled by the unwinding of significant derivative positions, leading to increased volatility. It is however worth reminding ourselves that a deflation of the commodity bubble, together with a drop in the oil price, would have a benign economic effect. The Board considers that there is value to be found in the UK equity market and remains confident of the Manager's ability to position the portfolio for changing and more difficult market conditions. Simon Meredith Hardy Chairman 25 May 2006 Income Statement for the year ended 31 March 2006 (unaudited) Revenue Capital Total £000s £000s £000s Realised gains - 8,194 8,194 Unrealised gains - 11,903 11,903 Income 4,151 - 4,151 Investment management fee (407) (611) (1,018) Other expenses (230) - (230) Net return before finance costs and 3,514 19,486 23,000 taxation Interest payable and similar (1,128) (1,692) (2,820) charges Return on ordinary activities before 2,386 17,794 20,180 taxation Taxation on ordinary activities - - - Return attributable to equity 2,386 17,794 20,018 shareholders Return per income share 6.10p Return per capital share 71.66p for the year ended 31 March 2005 (audited) Revenue Capital Total Restated* Restated* Restated* £000s £000s £000s Realised gains - 2,735 2,735 Unrealised gains - 10,044 10,044 Income 3,973 - 3,973 Investment management fee (349) (523) (872) Other expenses (237) - (237) Net return before finance costs and 3,387 12,256 15,643 taxation Interest payable and similar (1,132) (1,692) (2,824) charges Return on ordinary activities before 2,255 10,564 12,819 taxation Taxation on ordinary activities - - - Return attributable to equity 2,255 10,564 12,819 shareholders Return per income share 5.76p Return per capital share 42.55p * Restated for changes in accounting policies. All revenue and capital items in this statement derive from continuing operations. No operations were acquired or discontinued in the year. Reconciliation of Movement in Shareholders Funds Share Capital Capital Share Premium Reserve Reserve Revenue Capital Account Unrealised Realised Reserve Total £000s £000s £000s £000s £000s £000s Balance brought forward 31 March 2004 (as 15,991 1,208 6,999 23,786 568 48,552 previously reported) Add back accrued - - - - 783 783 dividend at 31 March 2004 Less investment - - (58) - - (58) valuation restatements Balance at 31 March 2004 15,991 1,208 6,941 23,786 1,351 49,277 (restated) Dividends paid during - - - - (783) (783) year re 2004 Return attributable to - - 10,201 520 2,255 12,976 equity shareholders in 2005 (as previously stated) Less investment - - (157) - - (157) valuation restatements Dividends paid during - - - - (1,467) (1,467) year re 2005 Balance at 31 March 2005 15,991 1,208 16,985 24,306 1,356 59,846 (restated) Dividends paid during - - - - (842) (842) year re 2005 Return attributable to - - 11,903 5,891 2,386 20,180 equity shareholders in 2006 Dividends paid during - - - - (1,527) (1,527) year re 2006 Balance at 31 March 2006 15,991 1,208 28,888 30,197 1,373 77,657 Summarised Balance Sheet as at 31 March £000s 2006 Restated* 2005 (unaudited) £000s (audited) £000s Restated* £000s Fixed assets Investment portfolio Listed - Full listing 106,853 90,249 - Aim listing - 1,043 106,853 91,292 Current assets Debtors 992 1,044 Cash at bank 3,111 830 4,103 1,874 Creditors: amounts falling due (497 ) (518 ) within one year Net current assets 3,606 1,356 Total assets less current 110,459 92,648 liabilities Creditors: amounts falling due after more than one year Debenture stock and bank loans (32,802) (32,802) Net assets 77,657 59,846 Called up share capital 15,991 15,991 Capital reserves Share premium account 1,208 1,208 Capital reserves - unrealised 28,888 16,985 Capital reserves - realised 30,197 24,306 60,293 42,499 Revenue reserve 1,373 1,356 Shareholders' funds 77,657 59,846 Net asset value per share Income shares 33.51p 33.46p Capital shares Fully-diluted 259.94p 188.27p * Restated for changes in accounting policies. Cash Flow Statement for the year ended 31 March 2006 2005 (unaudited) (audited) £000s £000s £000s £000s Net cash inflow from operating 3,582 3,178 activities Servicing of finance Interest paid (2,820) (2,839) Capital expenditure and financial investment Net sales 4,471 2,254 Investment management fee charged to (584) (507) capital Net cash inflow from investment 3,887 1,747 activities Equity Dividends Dividends paid (2,368) (2,250) Increase/(decrease) in cash in the 2,281 (164) year Reconciliation of operating profit to net cash inflow from operating activities: 2006 2005 (unaudited) (audited) £000s £000s Net revenue from operating activities 3,514 3,387 before interest payable and taxation Decrease/(increase) in debtors 52 (245) Increase in creditors 16 36 Net cash inflow from operating 3,582 3,178 activities The financial information set out in the announcement does not constitute the Trust's statutory accounts for the years ended 31 March 2006 or 2005. The financial information for the year ended 31 March 2005 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under s237(2) or (3) Companies Act 1985. The statutory accounts for the year ended 31 March 2006 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the company's annual general meeting. The financial information has been prepared on the basis of the accounting policies set out in the Trust's financial statements for the year ended 31 March 2005, except that the Trust's investments have been designated as being measured as "fair value through profit and loss" and valued at bid market value at close of business on the balance sheet date; and dividends payable are accounted for in the period in which they are paid, not in the period to which they relate. END
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