EUT.L Regulatory News (EUT)

23 Mar 2005 12:06

EUROPEAN UTILITIES TRUST PLCPRELIMINARY ANNOUNCEMENT OF INTERIM RESULTSThe Directors announce the unaudited statement of results for the six monthsended 31 January 2005 as follows:STATEMENT OF TOTAL RETURN(incorporating the revenue account of the Company) 1 August 2004 1 August 2003 to 31 January 2005 to 31 January 2004 Revenue Capital Total Revenue Capital Total ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Gains on investments - 4,986 4,986 - 2,623 2,623 Dividends and interest 310 - 310 372 - 372 Investment management (46) (46) (92) (65) (65) (130)fee Other expenses (113) - (113) (161) - (161) Exchange (losses) / - (154) (154) - 245 245 gains on capital items Return on ordinary activities before finance costs and 151 4,786 4,937 146 2,803 2,949 taxation Interest payable and (53) (53) (106) (129) (129) (258)similar charges Return on ordinary activities before taxation 98 4,733 4,831 17 2,674 2,691 Taxation on ordinary (19) - (19) (11) - (11)activities Return on ordinary activities after taxation 79 4,733 4,812 6 2,674 2,680 Appropriations in respect of non- equity shares: - Zero Coupon - (294) (294) - (462) (462)Preference Return attributable to 79 4,439 4,518 6 2,212 2,218 equity shares Dividends in respect of equity shares: - Interim dividend of (178) - (178) 1.97p payable 25 April 2005 (210) - (210) Transfer (from) / to (99) 4,439 4,340 (204) 2,212 2,008reserves pence pence pence pence pence pence Return per Ordinary 0.87 49.04 49.91 0.06 20.77 20.83 Income share Return per Zero Coupon Preference Share - 8.98 8.98 - 10.61 10.61 SUMMARISED BALANCE SHEET As at As at As at 31 January 31 July 2004 31 January 2005 (audited) 2004 (unaudited) (unaudited) ‚£'000 ‚£'000 ‚£'000 Investments at market value 27,493 21,711 31,732 Net current assets / (liabilities) 131 1,125 (9,240) Total assets less current liabilities 27,624 22,836 22,492 Loan (3,572) (3,418) - 24,052 19,418 22,492 Less: net assets attributable to Zero Coupon Preference shares (8,483) (8,189) (10,375) Add: current period loss 99 - 204 Total net assets for the purposes of calculating net asset value per Ordinary Income share 15,668 11,229 12,321 As at As at As at 31 January 31 July 31 January 2005 2004 2004 Net asset value per Ordinary Income 173.07p 124.04p 115.69pshare* Net asset value per Zero Coupon 259.04p 250.06p 238.51pPreference share * The total net assets and the net asset values per Ordinary Income shareexclude current period revenue for the unaudited values at 31 January 2005 and2004.The net asset value per Ordinary Income share is calculated using shares inissue of 9,052,500 (31 July 2004: 9,052,500; 31 January 2004: 10,650,000).The net asset value per Zero Coupon Preference share is calculated using sharesin issue of 3,275,000 (31 July 2004: 3,275,000; 31 January 2004: 4,350,000).SUMMARISED STATEMENT OF CASHFLOWS 1 August 2004 1 August 2003 to 31 January 2005 to 31 January 2004 ‚£'000 ‚£'000 Net cash inflow from operating 243 146 activities Net cash outflow from servicing (105) (260)of finance Net tax recovered 3 - Net cash inflow from financial 286 505 investments Equity dividends paid (410) (482) Net cash outflow from financing (255) - Decrease in cash (238) (91) The above unaudited financial information which does not constitute statutoryfinancial statements as defined in Section 240 of the Companies Act 1985, hasbeen prepared on the basis of the accounting policies used in the statutoryaccounts of the Company for the year ended 31 July 2004, which received anunqualified audit opinion, have been filed with the Registrar of Companies anddid not contain a statement required under Section 237 (2) or (3) of theCompanies Act 1985.The Board has declared an interim net dividend of 1.97p (2004: 1.97p) on theOrdinary Income shares, to be paid on 25 April 2005 to holders on the registerat the close of business on 8 April 2005.The interim report will be sent to shareholders in April and will be availableto members of the public from the Registered Office at 23 Cathedral Yard,Exeter EX1 1HB.CHAIRMAN'S STATEMENTDear ShareholderI am pleased to report that your Company has got off to a very good start toits extended life, thanks to a strong performance during the period underreview by the European utility sector, most notably in the UK, where a seriesof positive regulatory reviews sustained equity prices at appreciably higherlevels.Over the six months to 31 January 2005 the Company's total assets rose from ‚£22.84m to ‚£27.62m or 20.93%. After deducting the bank loan and allowing for theaccrual to the Zero Coupon Preference shares, net assets attributable to theOrdinary Income shares rose from ‚£11.23m to ‚£15.67m, an increase of 39.54%. Netasset value per Ordinary Income share rose from 124.04p to 173.07p while thenet asset value attributable to each Zero Coupon Preference share went from250.06p to 259.04p, an increase of 3.59%.At the start of the period there was quite a wide divergence in the stockmarket performance of the two share classes. Extension of the Company's lifewas accompanied by a fall in the market price of the Ordinary Income shares,whereas the Zero Coupon Preference shares performed well, as the market came toappreciate that they are a well covered issue backed by an attractive assetclass. However, when the assets began to rise, the Ordinary Income sharesrecovered all the ground lost earlier and by 31 January 2005 were showing again of 33% since the start of the period. Crucially, the terminal capitalattributable to the Ordinary Income shares rose from ‚£6.58m to ‚£11.21m and thusthe hurdle rate by which the total assets of the Company need to rise everyyear to repay the post-reconstruction value of the Ordinary Income shares fellfrom 17.82% to 2.00%. This is reflected in the terminal cover for the ZeroCoupon Preference shares, which went up from 151.26% to 187.35%, while totaldebt cover, including the bank loan, increased from 140.48% to 168.34%.Interim DividendEarnings per share in the period under review amounted to 0.87p. Nevertheless,your Board has declared an unchanged interim dividend of 1.97p per OrdinaryIncome share, which will be paid on 25 April 2005 to shareholders on theregister as at 8 April 2005 To make this possible, ‚£99,000 is being taken fromthe Revenue Reserve, which stood at ‚£207,000 at the start of the period. As wetraditionally receive considerably more income in the second half of ouraccounting year, your Board expects to have made up the shortfall by the end ofthe year.OutlookCorporate earnings growth in Europe remains relatively robust, and there seemsto be little imminent threat of a downward correction to equity markets.Nonetheless, interest rates may have to be raised, albeit gradually and to dothat without impacting asset values will not be easy. In Europe the balancingact is made more difficult by problematic growth in Germany and signs ofincipient overheating in other countries. The European Central Bank could facesome very tricky decisions in coming months. Despite this rather gloomyeconomic assessment, European equities, especially in the utility sector withits strong cash flows, still look relatively cheap. Therefore, if there shouldbe a downturn, your Company's investments ought to fare better than most.DirectorsRebecca Thomas has stepped down as a Director of your Company, having moved toNew Zealand with her family. Her experience in investment management will begreatly missed. We wish her well in her new life and welcome Charles Wilkinsonto the Board as a new Director. He is shortly to retire as a senior partner ofLawrence Graham, where he has had extensive experience of giving legal adviceto investment trusts. I am certain Charles will make a very positivecontribution to the Board over coming years.Lord InchyraChairman23 March 2005ENDEUROPEAN UTILITIES TRUST PLC