RNS Number:7254V
Framlington Global Fin & Inc Fd Ld
23 February 2004
FRAMLINGTON GLOBAL FINANCIAL & INCOME FUND LIMITED
PRELIMINARY ANNOUNCEMENT OF RESULTS OF THE YEAR ENDED 30 NOVEMBER 2003
CHAIRMAN'S STATEMENT
The second half of the financial year saw some improvements in markets from
which your Fund derived some benefits. While the ordinary shares continue to
have a negative net asset value, in practice a nil value, the position of the
ZDP shareholders has improved over the year with the assets available to them
being 74.81p per share at 30 November 2003 compared with 63.82p a year earlier;
an increase of 17.2%. As at 20 February 2004, the net asset value per share had
risen to 82.36 pence.
As I reported to you at the interim stage, #4 million of the bank loan was
repaid so as to avoid the possibility of a breach of the banking covenants, with
#294,000 of swap break costs being incurred as a result. This action, when
combined with market movements has resulted in the Fund having a more stable
position and as at 13 February 2004 the asset cover ratio stood at 2.52:1 and
the specified asset ratio at 2.43:1 compared with minimum covenant levels of
1.70:1 and 1.20:1 respectively. Your Board and Manager continue tomonitor the
banking covenant on a regular basis.
I have referred in previous reports to the impact that changing markets and bank
loan repayments have had upon the allocation of the investment portfolio between
financial stocks and income stocks.We have now sold all the remaining split
capital income shares that had any residual value and have written off the
remainder. Some fixed interest securities have been purchased with a consequence
that the year end portfolio was made up of 86% financial stocks and 14% bonds.
This is significantly different from the original 50:50 allocation but your
Managers believe that to rebalance would not be in the overall interests of
shareholders as the current allocation offers the greatest opportunity for
growth in net asset values, which in turn would facilitate the recommencement of
dividend payments.
The process of buying back zero dividend preference shares has been continued
and, during the financial year under review, a total of 2,146,000such shares
was repurchased at a cost of #756,000, an average of 35.23p per share. The total
cost of repurchases was #1,715,000 less than the accrued entitlement of the
shares on the dates of repurchase and provided an uplift in the assets available
to the remaining ZDP shareholders of 14.3p per share. Any further material
repurchase of shares will require the consent of our bankers.
Your board continues to give careful consideration to the need to balance the
interests of the two classes ofshareholders. During the life of the Fund,
dividends totalling 10.25p per share have been paid to ordinary shareholders. It
was originally intended that all of the gross income should be distributed to
the ordinary shareholders and as at 30 November2003 this would have totalled
12.8p per share. It should be noted, however, that the ordinary shareholders do
not have any form of prior claim over the undistributed balance which, on a
winding up, would accrue to the zero dividend preference shareholders.
As I have explained before, dividend payments to ordinary shareholders can only
be funded from the sale of assets and your Board is still of the view that to do
so would be imprudent and not in the long-term interests of either class of
shareholders. We also have to be mindful of the structure of the Fund and its
subsidiary and that the payment of dividends by the Fund might imperil its
ability to meet its obligations to creditors, including its subsidiary, as they
fall due.
Havingtaken account of the various matters described in the preceding
paragraphs your Board does not intend to declare a further dividend at this
time.
While your Board intends to keep all strategic options under review, its current
intention is to continue with the existing investment strategy and to seek to
improve the financial position of the company. However, we welcome all feedback
from shareholders in this regard.
John Hallam
Chairman
23 February 2004
Framlington Global Financial & Income Fund
Consolidated Statement of Operations
for the year ended 30 November 2003
Year to Year to
30 Nov 2003 30 Nov 2002
#000s #000s
Income
Dividends receivable 257 3,026
Bond interest receivable 28 80
Bank interest receivable 18 281
Sundry income - 10
Total income 303 3,397
Expenses
Swap breakage costs 294 1,655
Interest payable 182 1,982
Administration fees 66 68
Management fees 58 607
Directors & officers insurance 47 11
Directors' fees and expenses 36 46
Miscellaneous expenses 26 23
Audit fees 18 26
Registration fees 15 (2)
Legal fees 9 40
Bank charges 7 19
Custodian fees 2 18
Total expenses 760 4,493
Net loss before investment result (457) (1,096)
Net realised loss on sales of investments (16,971) (25,375)
Net realised gain/(loss) on currency exchange 22 (471)
Movement in unrealised appreciation/(depreciation) on investments 16,935 (12,451)
Finance costs on zero dividend preference shares (468) (828)
Gain on repurchases of Zero Dividend Preference shares 1,715 3,077
Net profit/(loss) for theyear 776 (37,144)
Basic and diluted deficit per ordinary share 0.97p (46.43p)
All items in the above statement are derived from continuing operations.
Framlington Global Financial & Income Fund
Consolidated Balance Sheet
as at 30 November 2003 and 30 November 2002
2003 2002
#000s #000s
Assets
Available for sale investments at valuation 4,889 8,573
Current assets:
Cash and cash equivalents 18 1,632
Debtors 83 108
Total assets 4,990 10,313
Liabilities
Current liabilities:
Creditors 64 160
Non-current liabilities:
Long term loan 2,000 6,000
Zero dividend preference (ZDP) shares 4,604 6,607
Interest rate swap liability 80 355
Total liabilities 6,748 13,122
Total net liabilities (1,758) (2,809)
Represented by:
Share capital (ordinary shares)20,000 20,000
Share premium (ordinary shares) 12,948 12,948
Reserves (34,706) (35,757)
Issued capital and reserves (1,758) (2,809)
Net asset value per share outstanding of:
Attributable net assets (as per IAS) ordinary shares (2.20p) (3.51p)
ZDP shares 121.02p 111.03p
Available net assets ordinary shares - -
(as per Articles of Association ZDP shares 74.81p 63.82p
Shares outstanding at 30 November:
ordinary shares 80,000,000 80,000,000
ZDP shares 3,804,700 5,950,700
Framlington Global Financial & Income Fund
Balance Sheet
as at 30 November 2003 and 30 November 2002
2003 2002
#000s #000s
Assets
Available for sale investments at valuation 4,889 8,573
Investment in subsidiary undertaking - -
Current assets:
Cash and cash equivalents 18 1,632
Debtors 83 108
Total assets 4,990 10,313
Liabilities
Current liabilities:
Creditors 64 160
Non-current liabilities:
Long term loan 2,000 6,000
Originated loan from subsidiary 4,604 6,607
Interest rate swap liability 80 355
Total liabilities 6,748 13,122
Total net liabilities (1,758) (2,809)
Represented by:
Share capital (ordinary shares) 20,000 20,000
Share premium (ordinary shares) 12,948 12,948
Reserves (34,706) (35,757)
Issued capital and reserves (1,758) (2,809)
Net asset value per ordinary share outstanding of: (2.20p) (3.51p)
Shares outstanding at 30 November:
Ordinary shares 80,000,000 80,000,000
Framlington Global Financial & Income Fund
Consolidated Statement of Changes in Net Equity
for the year ended 30 November 2003
Year to Year 3 Nov 2000 to
30 Nov 2003 30 Nov 2002
#000s #000s
Net equity at the start of the period (2,809) 40,204
Revaluation of opening investments to fair valueon first
time adoption of IAS 39 - (2,034)
Unrealised loss on revaluation of interest rate swap on first
time adoption of IAS 39 - (1,810)
Net gain/(loss) for the year 776 (37,144)
Realised loss on interest rate swap removed from equity
and reported in net loss for the year 294 1,655
Unrealised loss on revaluationof interest rate swap in year (19) (200)
Dividends paid - (3,480)
Net equity at the end of the period (1,758) (2,809)
Framlington Global Financial & Income Fund
Consolidated Cash Flow Statement
for the year ended 30 November 2003
Year to 3 Nov 2000Year to
30 Nov 2003 30 Nov 2002
#000s #000s
Operating activities
Dividends received 318 3,736
Bond interest received 15 80
Bank interest received 27 343
Other income received - 10
Expenses paid (358) (1,091)
Interest paid (237) (2,454)
Swap breakage costs paid (294) (1,655)
Net cash outflow from operating activities (529) (1,031)
Investing activities
Purchases ofinvestments (1,717) (21,217)
Sales of investments 5,366 52,904
Net cash inflow from investing activities 3,649 31,687
Financing activities
Repurchases of zero dividend preference shares (756) (1,308)
Repayment of long term loan (4,000) (34,000)
Dividends paid - (3,480)
Net cash outflow from financing activities (4,756) (38,788)
Decrease in cash and cash equivalents (1,636) (8,132)
ANNUAL REPORT AND ACCOUNTS
The report and accounts of the Company for the year ended 30 November 2003 are to be posted to shareholders shortly.
Copies will also be available from the Company's Registered Office: HSBC House, Lefebvre Street, St Peter Port,
Guernsey GY1 2JP.
This preliminary announcement, and the report and accounts for the year ended 30 November 2003, have been prepared on
the same basis as set out in the previous year's annual accounts.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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