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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 |
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Framlington Income & Capital Trust PLC
Preliminary Announcement for year ended 31 March 2008
Chairman's Statement
Shareholders will need no words from me to describe the change in the economic
and investment environment since my last annual statement. The economic
background has deteriorated since then and the nature and extent of the
downturn is proving a challenge for investors. As a consequence of much tougher
market conditions your portfolio showed a negative return for the first time in
5 years.
The Trust has now entered the final stage of its projected life. The articles
of association provide that between April and September 2008, capital
shareholders will decide by ordinary resolution whether to wind up the Trust.
An EGM will be convened for the end of September 2008 and the board considers
that it is likely that the capital shareholders will vote by a simple majority
to put the Trust into liquidation.
As promised in my interim statement, the Board has carefully examined the
possibility of offering a continuation vehicle. However, following consultation
with a number of shareholders, it appears that there is insufficient interest
from enough investors to make this viable. The Board has also investigated a
number of other options both with AXA Framlington and other leading investment
houses. While the establishment of a successor closed end fund has been ruled
out, the Board still hopes to offer a tax efficient option for those
shareholders who do not want to receive cash. At the same time the Board intend
to ensure that shareholders suffer no extra costs as result of such an
exercise.
In view of the likely winding up of the Trust in September 2008, the directors
have prepared the accounts on a basis other than going concern. This has not
had any significant impact on the primary statements presented as investments
continue to be valued at bid prices at the balance sheet date; there are no
contracts where early termination would incur significant penalties and for
which, therefore, provision is required; and provision has not been made for
costs of liquidation as, at present, these are not a contractual obligation of
the Trust. The directors are satisfied that the Trust can continue to meet its
liabilities as they fall due.
The Board decided in early 2008 to appoint a legal advisor and a liquidator.
After meeting with a number of potential candidates, the Board decide to
appoint Dickson Minto as the Trust's legal adviser.
The liquidation process involves appointing two licensed insolvency
practitioners to act as joint liquidators. They are appointed at a general
meeting of shareholders by formal resolution. The board will recommend to
shareholders the appointment of two representatives of Deloitte & Touche LLP.
The directors' powers will cease on the appointment of the liquidators, whose
main role is to liquidate the Trust and, if appropriate, implement any scheme
of reconstruction approved by the shareholders. They will retain sufficient
liquid assets to settle creditor claims and the costs of liquidation.
The board remains mindful of the requirements of the two classes of
shareholders and the balance which needs to be achieved between the differing
demands of income and capital growth.
At 12 June, the Trust's cash position was £10.2 million, representing 10.5% of
gross assets. As the date of the likely liquidation of the Trust draws closer,
cash balances will increase in order to repay the Trust's debt of £32.8
million.
The earnings outcome of 7.57 pence per share for the year to 31 March 2008
compares favourably with earnings for the previous year of 6.61 pence, being an
increase of 14.5%. Following the practice of previous years, the Board believes
that it is appropriate to pay out a proportion of the remaining revenue reserve
while retaining a small balance until the liquidation of the Trust, when that
balance will be paid out to income shareholders. The Board has therefore
decided to declare a final dividend of 2.90 pence per income share. This final
dividend, if approved by shareholders at the annual general meeting, means that
the total dividend for the year will be 8.00 pence per share, representing an
increase of 14.3%.
Net assets fell from £86.5 million on 31 March 2007 to £65.6 million on 31
March 2008 representing a decrease of 24% during the year. Over the same period
the fully diluted net asset value of the Trust's capital shares has decreased
by 28.3% to 212.17 pence.
During the year to March 2008 the portfolio showed a negative total return of
12% compared with a fall in the FTSE All-Share Index of 7.7%, measured on the
same basis. This was clearly a disappointing result and was largely due, as
explained in more detail in the Investment Manager's report, to our overweight
position in smaller companies and underweight position in the low yielding
mining sector that performed so strongly. As usual we also monitor our
performance against both the FTSE Small Cap (excluding Investment Companies)
and the FTSE 350 Higher Yield. The total returns of these two indices were
-29.0% and -12.2% respectively.
Shareholders will be aware of the successful outcome of the challenge to HM
Revenue & Customs launched by JPMorgan Fleming Claverhouse Investment Trust plc
and the Association of Investment Companies on the payment of VAT on management
fees. The Manager has submitted claims for the repayment of the VAT previously
paid to HM Revenue & Customs in respect of the Trust's management fees and the
board's discussions with the Manager are continuing.
The medium term outlook for the UK market remains uncertain. The impact of the
credit crunch remains difficult to evaluate. Rising commodity and food prices
are pressurising inflation thus limiting the scope for further cuts in interest
rates; however, the weak exchange rate is providing a boost to manufacturers
and equity valuations are relatively undemanding.
Since this is likely to be my last annual statement I would like to thank
Richard Peirson and the investment, company secretarial and administrative
teams at AXA Framlington, as well as their predecessors, for their skilled and
conscientious management of the portfolio over the life of the Trust. I would
also like to thank my Board colleagues for their hard work on behalf of the
Trust over the past few years.
Simon Meredith Hardy
Chairman
16 June 2008
Income statement
for the year ended 31 March 2008 (unaudited)
Revenue Capital Total
£000s £000s £000s
Realised gains - 9,726 9,726
Unrealised losses - (28,227) (28,227)
Income 4,714 - 4,714
Investment management fee (392) (588) (980)
Other expenses (229) - (229)
Net return/(loss) before finance costs 4,093 (19,089) (14,996)
and taxation
Interest payable and similar charges (1,131) (1,696) (2,827)
Return/(loss) on ordinary activities 2,962 (20,785) (17,823)
before taxation
Taxation on ordinary activities - - -
Return/(loss) attributable to equity 2,962 (20,785) (17,823)
shareholders
Return per income share 7.57p
Loss per capital share (83.71)p
for the year ended 31 March 2007 (audited)
Revenue Capital Total
£000s £000s £000s
Realised gains - 7,486 7,486
Unrealised gains - 3,807 3,807
Income 4,404 - 4,404
Investment management fee (451) (676) (1,127)
Other expenses (240) - (240)
Net return before finance costs and 3,713 10,617 14,330
taxation
Interest payable and similar charges (1,128) (1,692) (2,820)
Return on ordinary activities before 2,585 8,925 11,510
taxation
Taxation on ordinary activities - - -
Return attributable to equity 2,585 8,925 11,510
shareholders
Return per income share 6.61p
Return per capital share 35.94p
The accompanying notes form an integral part of these financial statements.
All revenue and capital items in this statement derive from continuing
operations. No operations were acquired or discontinued in the year.
The total column of this statement is the income statement of the Trust. The
revenue return and capital return are supplementary to this and are prepared
under guidance published by the Association of Investment Companies. A
statement of total recognised gains and losses is not required as all the gains
and losses of the Trust have been recognised in the above statement.
Reconciliation of Movement in Shareholders' Funds for the year ended 31
March (unaudited)
Called up Share Capital Capital
Share Premium Reserve Reserve Revenue
Capital Account Unrealised Realised Reserve Total
£000s £000s £000s £000s £000s £000s
Balance at 31 March 15,991 1,208 28,888 30,197 1,373 77,657
2006
Dividends paid - - - - (978) (978)
during year re 2006
Return attributable - - 3,807 5,118 2,585 11,510
to equity
shareholders in
2007
Dividends paid - - - - (1,703) (1,703)
during year re 2007
Balance at 31 March 15,991 1,208 32,695 35,315 1,277 86,486
2007
Dividends paid - - - - (1,037) (1,037)
during year re 2007
Return attributable - - (28,227) 7,442 2,962 (17,823)
to equity
shareholders in
2008
Dividends paid - - - - (1,996) (1,996)
during year re 2008
Balance at 31 March 15,991 1,208 4,468 42,757 1,206 65,630
2008
Balance Sheet
As at 31 March £000s 2008 £000s 2007
£000s £000s
(unaudited) (audited)
Fixed assets investments held at
fair value through profit or loss
Listed 88,351 116,340
Current assets
Debtors 931 942
Cash at Bank 9,641 2,549
10,572 3,491
Creditors: amounts falling due (33,293) (543)
within one year
Net current (liabilities)/assets (22,721) 2,948
Total assets less current 65,630 119,288
liabilities
Creditors: amounts falling due
after more than one year
Debenture stock and bank loans - (32,802)
Net assets 65,630 86,486
Capital and reserves
Called up share capital 15,991 15,991
Share premium account 1,208 1,208
Capital reserves
Capital reserve - unrealised 4,468 32,695
Capital reserve - realised 42,757 35,315
47,225 68,010
Revenue reserve 1,206 1,277
Total equity shareholders' funds 65,630 86,486
Net asset value per share
Income shares 33.08p 33.26p
Capital shares
Fully-diluted 212.17p 295.88p
Cash Flow Statement
For the year ended 31 March £000s 2008 £000s 2007
(unaudited) (audited)
£000s £000s
Net cash inflow from operating 4,098 3,780
activities
Servicing of finance
Interest paid (2,820) (2,828)
Capital expenditure and financial
investment
Net sales of investment 9,488 1,830
Investment management fee paid from (641) (663)
capital
Net cash inflow from investment 8,847 1,167
activities
Dividends
Dividends paid (3,033) (2,681)
Increase/(decrease) in cash in the 7,092 (562)
year
1. The financial information set out in the announcement does not constitute
the Trust's statutory accounts for the years ended 31 March 2008 or 2007.
2. The financial information for the year ended 31 March 2007 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.
3. The statutory accounts for the year ended 31 March 2008 have not been
approved or audited and will be finalised on the basis of the financial
information presented by the directors in this preliminary announcement and
then delivered to the Registrar of Companies.
4. The articles of association provide that between April and September 2008,
capital shareholders will decide by ordinary resolution whether to wind up
the Trust. An EGM will be convened for the end of September 2008 and the
board considers that it is likely that the capital shareholders will vote
by a simple majority to put the Trust into liquidation. In view of
the anticipated winding up of the Trust in September 2008, in
accordance with Financial Reporting Standard 18 Accounting Policies, the
directors have prepared the accounts on a basis other than going concern.
This has not had any significant impact on the primary statements presented
as investments continue to be valued at bid prices at the balance sheet
date; there are no contracts where early termination would incur
significant penalties and for which, therefore, provision is required; and
provision has not been made for costs of liquidation as, at present, these
are not a contractual obligation of the Trust. The directors are satisfied
that the Trust can continue to meet its liabilities as they fall due.
5. The financial information has been prepared on the basis of the accounting
policies set out in the Company's financial statements for the year ended
31 March 2007 which will also be adopted in the financial statements for
the year ended 31 March 2008.
6. The board has recommended the payment of a final dividend of 2.90 pence per
share in respect of the year ended 31 March 2008. If approved by
shareholders at the annual general meeting, the dividend will be paid on 30
July 2008 to income shareholders on the register on 27 June 2008.
END
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