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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 six months ended 30 September 2007
Chairman's Statement
I am writing my shareholder statement at a time of heightened market
volatility. The summer months have proved challenging for investors and this
has inevitably been reflected in the absolute performance of the portfolio over
the period.
As at 30 September 2007 the fully diluted net asset value of the capital shares
was 276.57 pence per share as compared with 295.88p at 31 March 2007, a
reduction of 6.5%. The total return on the portfolio over the six month period
to 30 September 2007 was -1.0%. This compares with a total return of +2.7% from
the FTSE All-Share Index, -8.8% from the FTSE Small Cap (excluding Investment
Companies) and +2.3% from the FTSE 350 Higher Yield. The underperformance of
smaller companies, where we have always been overweight, proved to be a
headwind for the portfolio. In addition, our underweight position in resources
stocks, a low yielding area, on which we commented in the last Report &
Accounts, was responsible for most of the underperformance compared with the
broader market.
I have previously commented on our continuing policy of remaining fully
invested during the remaining life of the Trust. Against the background of
increased market volatility, however, the manager has retained a little more
liquidity and has started to reduce less marketable holdings when opportunities
arise. As always, the board remains conscious of balancing the interests of
both classes of shareholders. As at 30 September 2007 cash represented 6% of
total assets and as at 20 November it was 8%.
The revenue account for the six month period shows earnings per income share of
3.74 pence. A second interim dividend of 1.75 pence per share will be paid on
14 December 2007 to shareholders on the register of members on 30 November
2007. The Board has again increased the level of interim payment for the first
half of the financial year in order to spread a greater proportion of the
dividend over the course of the year. This should not be taken as an indication
of the final dividend for the year to 31 March 2008.
I have referred in previous statements to the challenge to HM Revenue and
Customs by the AIC and another investment trust on the payment by investment
trusts of VAT on their management fees. I am pleased to report that, following
a judgment by the European Court of Justice in June, the Revenue has now
accepted that fund management services supplied to investment trusts are exempt
from VAT. This means that we will no longer have to pay VAT on our management
fees; during our last financial year the amount of VAT paid was £160,000. We
shall also be able to recover a proportion of the VAT paid over a number of
years. We are currently discussing the amounts involved with the Manager but,
as it may take some time for confirmation of entitlement to any refunds and the
timing of any repayments to be determined, we have not recognised any amounts
due to the Trust in these accounts.
Principal Risks and Uncertainties
We reported on the principal risks and uncertainties faced by the Trust in the
Annual Report and Accounts for the year ended 31 March 2007. These fall into
two main categories: investment and strategy; and legal and regulatory. There
have not been any changes to the nature of these risks since the previous
report and we do not anticipate any changes in the coming six months, although
I have referred elsewhere in this statement to the recent increased market
volatility which affects the value of the Trust's portfolio.
Economic background.
The liquidity crisis which developed in the UK financial sector during the
summer months was but a symptom of a much more widespread credit tightening. It
will inevitably take time before the full consequences of this change in the
monetary environment are understood. In the meantime the fallout from events in
the banking sector is likely to continue. It is still unclear if the damage to
bank balance sheets will be enough to cause lending to corporates or consumers
to be seriously impaired.
As the housing market slows down in the UK we would expect this to be reflected
in the retail sales figures and we are therefore anticipating a broader
economic slowdown. This likely to be accompanied by falling interest rates
which should in turn provide some support for equities. Global growth outside
the US, however, should remain strong and provide attractive opportunities for
many of the companies in which we are invested. Many of these companies provide
well above average yields which should provide some support during these
difficult times. Valuations are not excessive but sector and stock selection,
as always, remain critical.
The possibility of providing capital shareholders with a successor investment
vehicle continues to remain the subject of review. It is too early to be more
specific until we have a clearer picture of both the economic backdrop and
market outlook for 2008 and beyond; together with an indication of the level of
demand from existing and potential investors.
Simon Meredith Hardy
Chairman
21 November 2007
Income statement
Six months to 30 September 2007
(unaudited)
Revenue Capital Total
Return Return
£000s £000s £000s
Realised gains - 8,329 8,329
Unrealised losses - (11,928) (11,928)
Income 2,378 - 2,378
Investment management fee (233) (350) (583)
Other expenses (118) - (118)
Net return/(loss) before finance costs 2,027 (3,949) (1,922)
and taxation
Interest payable and similar (565) (848) (1,413)
charges
Return/(loss) on ordinary activities 1,462 (4,797) (3,335)
before taxation
Taxation on ordinary activities - - -
Return/(loss) attributable to 1,462 (4,797) (3,335)
equity shareholders
Return per income share 3.74p
Loss per capital share (19.32)p
Six months to 30 September Year to 31 March 2007
2006 (audited)
(unaudited)
Revenue Capital Total Revenue Capital Total
Return Return Return Return
£000s £000s £000s £000s £000s £000s
Realised gains - 3,157 3,157 - 7,486 7,486
Unrealised (losses)/ - (2,821) (2,821) - 3,807 3,807
gains
Income 2,167 - 2,167 4,404 - 4,404
Investment (216) (323) (539) (451) (676) (1,127)
management fee
Other expenses (109) - (109) (240) - (240)
Net return before 1,842 13 1,855 3,713 10,617 14,330
finance costs and
taxation
Interest payable and (565) (848) (1,413) (1,128) (1,692) (2,820)
similar charges
Return/(loss) on 1,277 (835) 442 2,585 8,925 11,510
ordinary activities
before taxation
Taxation on ordinary - - - - - -
Activities
Return/(loss) 1,277 (835) 442 2,585 8,925 11,510
attributable to
equity shareholders
Return per income 3.26p 6.61p
share
(Loss)/return per (3.36p) 35.94p
capital share
All revenue and capital items in the above derive from continuing operations.
No operations were acquired or discounted in the period.
The total column of this statement represents the Trust's Income Statement
prepared in accordance with UK GAAP. The revenue and capital columns are
supplementary to this and are published under guidance from the Association of
Investment Companies.
Reconciliation of Movements in Shareholders' Funds for the six months to 30
September 2007 (unaudited)
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 32,695 35,315 1,277 86,486
2007
Dividends paid - - - - (1,037) (1,037)
during the period
re previous year
Return attributable - - (11,928) 7,131 1,462 (3,335)
to equity
shareholders in the
period
Dividends paid - - - - (626) (626)
during the year re
current year
Balance at 30 15,991 1,208 20,767 42,446 1,076 81,488
September 2007
Summarised Balance Sheet
30 September 30 September 31 March 2007
2007 2006 £000s
£000s £000s (audited)
(unaudited) (unaudited)
Fixed asset investments held at 107,855 105,083 116,340
fair value through profit or
loss
Current assets 6,992 4,776 3,491
Creditors due within one year (33,359) (503) (543)
81,488 109,356 119,288
Creditors due after one year - (32,802) (32,802)
Net assets 81,488 76,554 86,486
Capital and reserves
Called up share capital 15,991 15,991 15,991
Share premium account 1,208 1,208 1,208
Capital reserves 63,213 58,250 68,010
Revenue reserve 1,076 1,105 1,277
Total equity shareholders' funds 81,488 76,554 86,486
Cash Flow Statement
Six months to Six months to Year to 31
30 Sept 2007 30 Sept 2006 March 2007
£000s £000s £000s
(unaudited) (unaudited) (audited)
Net cash inflow from operating 2,475 2,313 3,780
activities
Servicing of finance
Interest paid (1,393) (1,402) (2,828)
Capital expenditure and financial
investment
Net sales of investments 4,886 2,106 1,830
Investment management fee paid from (357) (325) (663)
capital
Net cash inflow from investment 4,529 1,781 1,167
activities
Equity dividends
Dividends paid (1,663) (1,546) (2,681)
Increase/(decrease) in cash in the 3,948 1,146 (562)
period
Directors' responsibility statement
The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority
require the Directors to confirm their responsibilities in relation to the
preparation and publication of the Interim Management Report and Financial
Statements.
The Directors confirm that, to the best of their knowledge:
* the financial statements for the six months ended 30 September 2007, which
have been prepared in accordance with applicable accounting standards and
with the Statement of Recommended Practice "Financial Statements of
Investment Trust Companies" ("the SORP") revised in December 2005, give a
true and fair view of the assets, liabilities, financial position and
profit of the Trust;
* the Interim Management Report includes a fair review of the information
required by DTR 4.2.7R in relation to the indication of important events
during the first six months, and of the principal risks and uncertainties
facing the Company during the second six months, of the year ending 31
March 2008; and
* the Interim Management Report includes adequate disclosure of the
information required by DTR 4.2.8R in relation to related party
transactions and any changes therein.
The half yearly financial report was approved by the Board on 21 November 2007
and the above responsibility statement was signed on its behalf by the
Chairman, Simon Meredith Hardy.
Notes
1. The Trust's figures for the six months to 30 September 2007 and the
comparative figures for the corresponding period in the previous financial
year are unaudited. The figures for the year to 31 March 2007 are extracted
from the latest published accounts and do not constitute statutory accounts
for that year. Those accounts carry an unqualified report from the auditors
and have been filed with the Registrar of Companies.
2. The half-yearly report has not been audited or reviewed by auditors
pursuant to the Auditing Practices Board guidance on Review of Interim
Financial Information.
3. The financial information has been prepared on the basis of the accounting
policies set out in the Trust's accounts for the year ended 31 March 2007.
4. The directors have declared an interim dividend of 1.75 pence per share
(2006 - 1.45 pence) payable on 14 December 2007 to shareholders on the register
at the close of business on 30 November 2007.
5. Related Parties Transactions
During the first six months of the current financial year, no transactions with
related parties have taken place which have materially affected the financial
position or the performance of the Trust during the period.
6. Copies of the 2007 annual report and the 2007 interim results are available
from the Trust's registered office, 155 Bishopsgate, London EC2M 3XJ.
END
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