Interim Results
PRELIMINARY ANNOUNCEMENT OF INTERIM RESULTS
FOR THE SIX MONTHS TO 30 JUNE 2004 (unaudited)
The Directors recommend an interim dividend of 2.80p on the ordinary shares for
the six months to 30 June 2004. The unaudited results for the period were as
follows:
Consolidated Statement of Total Return
Group statement of total return
For the six months 30 June 2004 (unaudited)
Six months to Six months to
30 June 2004 30 June 2003
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 '000
Total capital gains from
investments - 6,696 6,696 - 12,157 12,157
UK dividends 4,274 - 4,274 3,936 - 3,936
Special dividends 25 - 25 - - -
Overseas dividends 1,039 - 1,039 1,089 - 1,089
Interest from securities 168 - 168 123 - 123
Total 5,506 6,696 12,202 5,148 12,157 17,305
Bank deposit interest 211 - 211 311 - 311
Trustee and other fees 7,351 - 7,351 6,724 - 6,724
Other income 66 - 66 141 - 141
Gross revenue and capital 13,134 6,696 19,830 12,324 12,157 24,481
gains
Administrative expenses (6,077) - (6,077) (5,921) - (5,921)
Return, including profit on 7,057 6,696 13,753 6,403 12,157 18,560
ordinary activities before
interest payable and
taxation
Interest payable (1,225) - (1,225) (1,226) - (1,226)
Return, including profit on 5,832 6,696 12,528 5,177 12,157 17,334
ordinary activities before
taxation
Taxation (531) - (531) (534) - (534)
Return, including profit 5,301 6,696 11,997 4,643 12,157 16,800
attributable to ordinary
shareholders
Dividends on ordinary shares (3,281) - (3,281) (3,114) - (3,114)
Transfer to reserves 2,020 6,696 8,716 1,529 12,157 13,686
Earnings per ordinary share 4.5p 5.7p 10.2p 4.0p 10.4p 14.4p
Company summary
Global Growth Investment Trust
Corporate Objectives
To achieve long term capital growth in real terms and steadily increasing
income. The aim is to achieve a higher rate of total return than the FTSE
Actuaries All Share Index through investing in a portfolio diversified both
geographically and by industry.
Manager & fee
Law Debenture is an independently run company whose portfolio investments are
managed by Henderson Global Investors Limited under a contract terminable by
either side on 12 months' notice.
Investment fee: 0.25% p.a. of average portfolio value (excluding cash).
The balance sheet is managed by Law Debenture.
Trustee and related services
Corporate Objectives
To develop our position as the leading independent provider of professional
trustee, fiduciary and related services to the wholesale markets and to
occupational pension schemes.
Offices
London, New York, Hong Kong, Jersey, Cayman Islands.
Services provided
Commercial trusts
Corporate solutions
Debt finance
Structured finance
Project finance
Dual listed companies
Delegated and successor trusteeships
Escrow arrangements
Treasury management
Pension scheme trustee
Agent for service of process
Company secretarial services, including provision of directors
Investor services administration
Financial summary of The Law Debenture Corporation p.l.c.
Highlights
At At At
30 June 30 June 31 December
2004 2003
2003
Share price (p)…………………………... 210.00 197.00 221.75
NAV per share (p)………………………. 213.62 182.20 206.10
Discount / (Premium) (%)………………. 1.72 (7.51) (7.06)
Earnings per share (p)…………………... 4.53 4.00 6.91
Dividends per share (p)…………………. 2.80 2.66 6.90
Performance to 30 June 2004
6 months 12 months
% %
Share price ……………………………... (5.30) 6.60
NAV total return..………………………. 5.00 20.37
FTSE All Share total return 2.83 16.89
Management Commentary
Performance
Over the six months to 30 June 2004, our net asset value total return was 5.00%
compared to the FTSE Actuaries All-Share Index total return of 2.83%.
Earnings and dividends
Earnings per share for the six months rose by 13.25%, a rate of increase which
is unlikely to be sustained over the full year. The board has declared an
interim dividend of 2.80p per share, which is an increase of 5.26% over the
previous interim dividend of 2.66p. Barring unforeseen circumstances, the
directors expect to recommend that the final dividend will at least equal that
paid in respect of 2003.
Investment trust
The first half of the company's year was marked by investment markets
encountering a higher interest rate environment. The effect was for the index
of share prices to trade in a narrow range. Globally, interest rates moved up
as the fear or deflation receded. In the UK, short interest rates rose from
3.75% to 4.5% as the Bank of England responded to the buoyant housing market,
which is responsible for the significant increase in personal indebtedness.
After the period end, the Federal Reserve began to raise rates in the USA.
In the UK, many companies have been benefiting from economic growth. Dividend
growth has been better than expected and dividend cover has increased.
Corporate debt has fallen as better profits have come through. Operating
margins for many have been improved. In Continental Europe, however, corporate
profit performance has been less strong and our exposure to this area has been
marginally reduced.
Overall equity valuations appear undemanding, but problems associated with high
levels of consumer debt have yet to be resolved.
Trustee related services
Trustee and related services revenue rose by 9.3% benefiting from a rise in
special fees, particularly in New York. Profit before tax was £2,191,000
compared with £1,627,000 for the previous half year, an increase of 34.7%,
helped by the reorganisation of our UK operations in 2003.
Although the market for commercial trust services remains extremely
competitive, Law Debenture continues to secure prominent appointments. These
include our appointment as note and security trustee for the £1.6 billion
securitisation by Tubelines, which owns the concession to manage and update
parts of the London Underground, and as common representative for the first
securitisation by the Portuguese government.
We are also the security trustee for the recently launched pan-European
lottery, which is a partnership between Camelot, the Spanish state lottery
company Loterias y Apuestas del Estado and the French company La Francaise des
Jeux, which is predominantly state owned.
Our corporate services business, which is complementary to our trustee
business, continues to develop strongly. Our expertise in managing complex
voting structures is recognised by the market. New business this year has
exceeded our expectations.
The uncertainties surrounding company pension schemes continue to provide
opportunities for our pension trustee business and we expect the business to
grow in response to concerns regarding the security of pension scheme benefits.
We have had a strong flow of enquires in the current year. Our recent
appointments have included the pension scheme of a speciality engineering
company with scheme assets of over £1 billion.
Overseas our New York office has had a very good six months because of its role
as successor trustee in respect of corporate bankruptcies, including MCI
WorldCom. The growing sophistication of capital markets in Asia has boosted
demand for innovative products and our Hong Kong office continues to see an
encouraging flow of enquiries.
Group statement of total return
For the six months 30 June 2004 (unaudited)
Six months to Six months to
30 June 2004 30 June 2003
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 '000
Total capital gains from
investments - 6,696 6,696 - 12,157 12,157
UK dividends 4,274 - 4,274 3,936 - 3,936
Special dividends 25 - 25 - - -
Overseas dividends 1,039 - 1,039 1,089 - 1,089
Interest from securities 168 - 168 123 - 123
Total 5,506 6,696 12,202 5,148 12,157 17,305
Bank deposit interest 211 - 211 311 - 311
Trustee and other fees 7,351 - 7,351 6,724 - 6,724
Other income 66 - 66 141 - 141
Gross revenue and capital 13,134 6,696 19,830 12,324 12,157 24,481
gains
Administrative expenses (6,077) - (6,077) (5,921) - (5,921)
Return, including profit on 7,057 6,696 13,753 6,403 12,157 18,560
ordinary activities before
interest payable and
taxation
Interest payable (1,225) - (1,225) (1,226) - (1,226)
Return, including profit on 5,832 6,696 12,528 5,177 12,157 17,334
ordinary activities before
taxation
Taxation (531) - (531) (534) - (534)
Return, including profit 5,301 6,696 11,997 4,643 12,157 16,800
attributable to ordinary
shareholders
Dividends on ordinary shares (3,281) - (3,281) (3,114) - (3,114)
Transfer to reserves 2,020 6,696 8,716 1,529 12,157 13,686
Earnings per ordinary share 4.5p 5.7p 10.2p 4.0p 10.4p 14.4p
Group Net Assets
30 June 2004 30 June 2003* 31 December
2003*
(unaudited) (unaudited)
(audited)
£'000 £'000
£'000
Fixed Assets
Tangible 1,198 1,397 1,327
Investments 284,952 244,024 280,573
286,150 245,421 281,900
Current
Assets
Debtors 8,584 8,912 8,461
Short term cash investments 12,235 12,969 3,167
Bank balances & short term 5,881 6,609 11,099
deposits
26,700 28,490 22,727
Current (14,167) (12,195) (14,516)
liabilities
Net current assets 12,533 16,295 8,211
Total assets less current 298,683 261,716 290,111
liabilities
Long term liabilities (48,707) (48,966) (48,991)
Net assets 249,976 212,750 241,120
Net asset value per share 213.6p 182.2p 206.1p
Notes
1. These are not statutory accounts in terms of section 240 of the Companies
Act and are unaudited . The figures and financial information for the year
ended 31 December 2003 have been extracted from the 2003 report and
accounts which have been filed with the Registrar or Companies. Those
accounts included an unqualified auditors' report and did not contain a
statement under Section 237 of the Companies Act 1985.
2. The calculations of NAV and revenue returns are based on:
NAV: actual shares in issue at period end 117,018,396 (2003:
117,071,660)
Revenue: average shares in issue during the 117,097,964 (2003:
period 117,052,619)
* Restated to reflect implementation of UITF38 (ESOT shares).
Group cash flow statement
For the six months 30 June 2004 (unaudited)
30 June 2004 30 June 2003
£'000 £'000 £'000 £'000
Net cash inflow from 7,444 6,503
operating activities
Servicing of Finance
Debenture interest paid (1,224) (1,225)
Bank interest paid - (1)
(1,224) (1,226)
Taxation 31 (13)
Financial Investment
Purchase of own shares (369) -
Purchase of investments (23,844) (21,110)
Sales of investments 26,197 21,104
1,984 (6)
Fixed Assets
Purchases (36) (263)
Payment of Ordinary Dividend (4,961) (4,960)
Management of Liquid
resources
Decrease in short term (9,066) (2,479)
deposits and investments
Financing
Proceeds of increase in 508 63
share capital
Decrease in cash for period (5,320) (2,381)
Analysis of the Investment Portfolio
by Geographical Location
United North Europe Japan Pacific Total
Kingdom America £000 £000 £000 £000
£000 £000
Investments 1 Jan 197,740 19,349 35,171 8,795 19,518 280,573
Purchases 9,685 9,160 4,998 - - 23,843
Sales (7,898) (9,132) (9,167) - - (26,197)
Appreciation 8,765 149 (1,424) 1,319 (2,076) 6,733
Valuation 208,292 19,526 29,578 10,114 17,442 284,952
30 June
% of Total 73.1 6.9 10.4 3.5 6.1 100.0
By Sector (excluding cash)
As at As at
30 Jun 2004 31 Dec 2003
Resources 11.3 11.7
Basic Industries 8.4 7.2
General Industrials 5.4 5.5
Cyclical Consumer Goods 0.3 0.9
Non-Cyclical Consumer Goods 16.1 14.2
Cyclical Services 15.7 14.6
Non-Cyclical Services 5.1 5.6
Utilities 2.8 2.7
Information Technology 1.1 1.7
Financials 33.8 35.9
100.0 100.0
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