Interim Results
City of Oxford Geared Inc Tst PLC
24 October 2001
The City of Oxford Geared Income Trust Plc
Announcement of interim results for the six months to 30th September 2001.
Chairman's Statement
Over the six months to 30th September total assets, including accrued income,
fell by 11.3%. This compares with a fall in the All Share Index of 13.68%. In
comparison, the FTSE350 High Yield Index , which remains a relatively pure
play on the old economy, fell by 9.33%. A second interim dividend of 2.86p
per Geared Ordinary share and 2.05p per Income share has been declared by the
Directors, payable on 20th November 2001 to shareholders on the register as at
2nd November 2001.
In the last Annual Report I suggested that there was a genuine risk of a
protracted downturn. Indeed at the time, opinion was divided on whether there
would actually be a recession in the US or whether the aggressive monetary
easing implemented by the Federal Reserve Bank would be sufficient to secure a
swift economic recovery. Six months later, in the light of deteriorating
economic statistics and the terrorist attacks of September 11, the discussion
has moved on to how deep the recession will be, what form it will take and how
potent the recovery will be.
It has become clear from the co-ordinated reductions in short-term interest
rates worldwide combined with the large fiscal stimulus recently introduced in
the US, that whatever action needed to attempt to prevent a Japanese style
downturn will be taken. It is therefore likely that even if the downturn is
more severe than many thought six months ago, a recovery, albeit weak, could
arrive sooner. However, the entrenched problems that I have previously
referred to in the US of high consumer debt and a large trade deficit should
ensure that global economic growth will remain below its long term trend for
some time.
Against this background, stockmarket volatility has remained very high. In
general, the last six months has seen the UK market search for companies with
good earnings visibility and strong balance sheets and this resulted in good
relative performance from many defensive industries such as water, food, pubs
and pharmaceuticals. Whilst the company's portfolio has good exposure to most
of these areas we have also raised weightings in out of favour sectors such as
engineering, media and telecoms which would benefit from renewed investor
interest in companies that are more sensitive to changes in the economy.
Historically, the Company's portfolio has had up to 30% invested in split
capital shares. However, we had become increasingly concerned at the very high
level of new issuance, aggressive accounting policies, unstable balance sheets
and, most importantly, the increasing level of cross-shareholdings in the
sector. As a result we made significant sales of stocks exhibiting these
characteristics in the early Spring, although this was somewhat hampered by
poor liquidity. We continue to believe there is nothing inherently wrong with
split capital trusts which are structured sensibly and have transparent
portfolios. At the end of September, of £18.8m (14.2%) invested in split
capital trusts less than £2m (1.5%) was exposed to those which remained of
concern to us. In view of concerns this year about the sector, the Board have
taken the decision to publish full details of the portfolio, which may be
found at the end of this announcement.
With equities looking reasonably cheap against gilts on a historical basis it
is not surprising to see equity markets bounce from their lowest levels. We
continue to have a defensively orientated portfolio since any economic
recovery is likely to be sluggish, while corporate earnings will struggle to
show significant growth. As short rates decline and the demand for income
intensifies we believe the outlook remains positive for high yielding
equities.
Fred Carr - Chairman
Consolidated Statement of Total Return
(incorporating the Revenue Account) of the Group
for the six months to 30th September 2001 (unaudited)
Six months ended
30 September 2001 (unaudited)
Revenue Capital Total
£'000 £'000 £'000
(Losses)/gains on investments - (16,372) (16,372)
Income 4,425 - 4,425
Investment management fee (167) (389) (556)
Other expenses (72) - (72)
Net return before finance costs and taxation 4,186 (16,761) (12,575)
Interest payable (521) (1,217) (1,738)
Return on ordinary activities before taxation 3,665 (17,978) (14,313)
Taxation (134) 134 -
Return on ordinary activities after taxation 3,531 (17,844) (14,313)
Dividends and other appropriations in
respect of non-equity shares (2,368) 6,129 3,761
Return attributable to Geared Ordinary 1,163 (11,715) (10,552)
shareholders
Interim dividends paid to Geared
Ordinary shareholders (992) - (992)
Transfer to equity reserves 171 (11,715) (11,544)
Return per Geared Ordinary Share 6.70p (67.52) p (60.82) p
Return per Income Share 4.81p (16.19)p (11.38)p
Dividends per Geared Ordinary Share 5.72p
Dividends per Income Share 4.10p
Six months ended Year ended
30 September 2000 (unaudited) 31 March 2001 (audited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains - 4,478 4,478 - 4,668 4,668
on investments
Income 4,042 - 4,042 7,894 - 7,894
Investment (166) (384) (550) (328) (765) (1,093)
management fee
Other (78) - (78) (147) - (147)
expenses
Net return 3,798 4,094 7,892 7,419 3,903 11,322
before finance
costs and taxation
Interest (522) (1,217) (1,739) (1,041) (2,428) (3,469)
payable
Return on 3,276 2,877 6,153 6,378 1,475 7,853
ordinary activities
before taxation
Taxation (78) 78 - (147) 147 -
Return on 3,198 2,955 6,153 6,231 1,622 7,853
ordinary activities
after taxation
Dividends (2,145) (1,704) (3,849) (4,178) (3,470) (7,648)
and other
appropriations
in respect of
non-equity
shares
Return 1,053 1,251 2,304 2,053 (1,848) 205
attributable
to Geared Ordinary
shareholders
Interim (992) - (992) (2,009) - (2,009)
dividends paid to
Geared Ordinary
shareholders
Transfer to 61 1,251 1,312 44 (1,848) (1,804)
equity reserves
Return per 6.07p 7.21p 13.28p 11.83p (10.65)p 1.18p
Geared Ordinary
Share
Return per 4.35p - 4.35p 8.48p - 8.48p
Income Share
Dividends 5.72p 11.58p
per Geared
Ordinary Share
Dividends 4.10p 8.30p
per Income Share
Consolidated Balance Sheet
as at 30 September 2001
(unaudited)
30 September 30 September 31 March
2001 2000 2001
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Listed Investments 132,300 153,250 141,876
Current assets
Debtors 3,898 3,570 3,823
Cash at bank 2,735 2,696 10,964
6,633 6,266 14,787
Creditors: amounts falling due
within one year 3,319 5,190 3,723
Net current assets 3,314 1,076 11,064
135,614 154,326 152,940
Creditors amounts falling due
after more than one year (47,550) (47,550) (47,550)
Net assets 88,064 106,776 105,390
Capital and reserves
Called up share capital 5,152 5,152 5,152
Share premium 98,991 98,991 98,991
Redemption reserve 8,078 4,462 6,228
Capital reserve - realised (6,415) (3,328) (4,043)
Capital reserve - unrealised (18,410) 1,296 (1,088)
Revenue reserve 668 203 150
Total shareholders' funds 88,064 106,776 105,390
Total shareholders' funds comprise equity
and non-equity interest as follows:
Equity shareholders' funds 171 14,831 11,715
Non-equity shareholders' funds:
Income shareholders 41,739 49,406 49,370
Zero dividend preference 46,154 42,539 44,305
shareholders
Total shareholders' funds 88,064 106,776 105,390
Net Asset Value per Income Share 84.72p 100.28p 100.20p
Net Asset Value per Zero Dividend
Preference Share 126.72p 116.79p 121.64p
Net Asset Value per Geared Ordinary 0.98p 85.48p 67.52p
Share
Consolidated Cash Flow Statement
for six months to 30 September 2001
Six months to Six months to Year ended
30 September 30 September 31 March
2001 2000 2001
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Cash inflow from operating 3,756 3,386 6,184
activities
Taxation
UK taxation received - - 89
Return on investments and
servicing of finance
Interest paid (1,700) (1,730) (3,498)
Capital expenditure and
financial investment
Purchases of investments (50,171) (23,743) (70,168)
Sales of investments 42,972 21,603 78,192
(7,199) (2,140) 8,024
Dividends paid (3,086) (3,086) (6,098)
Cash (outflow)/inflow (8,229) (3,570) 4,701
before management of liquid
resources and financing
Management of liquid
resources
Money market deposits 5,000 2,428 (3,470)
withdrawn/(placed)
Financing
Gross proceeds from issue - - -
of shares
Issue expenses paid - - (3)
Bank loans drawn down - - -
- - (3)
(Decrease)/increase in cash ( 3,229) (1,142) 1,228
Reconciliation of net cash
flow to movement in net debt
(Decrease)/increase in cash (3,229) (1,142) 1,228
Cash used to (5,000) (2,428) 3,470
(decrease)/increase liquid
resources
Change in net debt (8,229) (3,570) 4,698
Net debt at start of period (36,586) (41,284) (41,284)
Net debt at end of period (44,815) (44,854) (36,586)
Liquid resources comprise short term money market deposits.
Portfolio
as at 30 September 2001
Fixed Income Market value £ % of portfolio
1,500,000 Northern Rock 8.399 1,689,825 1.28
Perpetual
1,500,000 Royal Bank of Scotland 1,669,275 1.26
8.375 Jan 29 07
1,500,000 Diageo Finance 9.0 May 1,660,500 1.26
31 05
1,500,000 Innogy 8.375 Aug 02 06 1,634,850 1.24
1,500,000 DWR Cymru Finance 1,566,975 1.18
6.907 Mar 31 21
1,500,000 Aggregate Ind 7.250 1,498,500 1.13
May 31 16
1,500,000 AN Structured Issues 1,492,500 1.13
9.785 10 May 2004
680,000 Halifax 8.750 Jul 10 06 763,130 0.58
690,000 Powergen 8.5 Jul 03 06 762,485 0.58
675,000 Lloyds TSB Group 8.500 747,259 0.56
Mar 29 06
660,000 Railtrack 9.125 Mar 25 06 730,686 0.55
500,000 Societe Generale 9.125 563,650 0.43
Perpetual
450,000 Bank of Scotland 8.375 498,870 0.38
Perpetual
450,000 National Westminster 495,630 0.37
8.125 Dec 29 11
430,000 HSBC Bank 9.250 490,458 0.37
Perpetual Subordinated
422,000 Anglian Water 8.250 461,183 0.35
Nov 29 06
450,000 Real Estate 429,750 0.32
Opportunities 7.500
May 31 11
370,000 MEPC 12.000 Jun 30 06 426,888 0.32
400,000 Werretown Supermarket 417,580 0.32
6.453 Oct 04 25
17,999,994 13.61
UK Equities
923,802 BP 5,182,529 3.92
723,029 Lloyds TSB 4,692,458 3.55
204,665 GlaxoSmithKline 3,924,451 2.97
734,607 Shell Transport & 3,718,948 2.81
Trading
865,077 Scottish Power 3,523,026 2.66
1,763,900 Lattice 2,725,226 2.06
423,796 Boots 2,643,428 2.00
520,369 Gallaher Group 2,355,971 1.78
812,300 Cable & Wireless 2,267,292 1.71
652,836 British Telecom 2,218,794 1.68
302,463 HSBC 2,163,367 1.64
653,085 Safeway 2,084,974 1.58
298,940 Prudential 2,079,875 1.56
277,100 HBOS 2,040,149 1.54
1,240,034 Northern Foods 1,886,340 1.43
509,500 Kelda 1,881,329 1.42
973,760 Rank 1,831,837 1.38
313,926 AWG 1,828,619 1.38
658,523 GKN (New) 1,796,912 1.36
164,624 Rio Tinto 1,756,538 1.33
391,819 Smith WH 1,726,472 1.30
200,410 CGNU 1,675,428 1.27
425,432 Bellway 1,663,439 1.26
267,709 Six Continents 1,645,741 1.24
634,300 Marks & Spencer 1,618,290 1.22
51,179 AstraZeneca 1,616,233 1.22
213,300 Standard Chartered 1,436,576 1.09
189,200 Alliance & Leicester 1,424,676 1.08
697,011 Friends Provident 1,348,716 1.01
221,600 British Sky 1,313,534 0.99
Broadcasting
835,896 Iceland 1,270,562 0.96
949,344 Rolls-Royce 1,235,381 0.93
405,000 Bradford & Bingley 1,200,825 0.91
264,000 Cadbury Schweppes 1,159,620 0.88
447,500 Tate & Lyle 1,141,125 0.86
259,180 National Grid 1,113,826 0.84
146,775 Diageo 1,051,276 0.79
384,215 Railtrack 1,006,144 0.76
1,199,206 Tullow Oil 935,381 0.71
510,700 C D Bramall 932,028 0.70
568,631 Wincanton 918,339 0.69
153,334 RMC Group 879,370 0.66
119,615 Britannic 876,180 0.66
155,133 Paterson Zochonis 810,570 0.61
505,400 Dixon Motors 801,059 0.61
1,154,702 Stagecoach 783,696 0.59
484,500 Wilson (Connolly) 782,468 0.59
430,600 Yule Catto & Co 725,561 0.55
525,000 Carlton Communications 694,943 0.53
408,000 Silentnight 673,200 0.51
415,000 Tomkins 628,725 0.48
107,077 BTG 616,496 0.47
250,000 Westbury 603,750 0.46
179,500 Vardy (Reg) 550,168 0.42
144,000 Allied Domecq 546,480 0.41
588,500 Thistle Hotels 532,593 0.40
101,538 Whitbread 476,467 0.36
275,800 BAE Systems 475,755 0.36
189,900 EMI Group 451,240 0.34
247,028 British Airways 444,972 0.34
255,604 British Vita 423,025 0.32
433,600 UK Coal 389,156 0.29
395,849 Royal Bank of Scotland 362,202 0.27
777,296 Corus Group 341,077 0.26
959,535 Senior 340,635 0.26
904,100 PIC International 316,435 0.24
247,300 Securicor 294,287 0.22
405,762 Scapa Group 265,774 0.20
103,188 Heywood Williams 155,298 0.12
54,000 Pendragon 105,570 0.08
53,400 P & O 99,458 0.08
40,116 British Airways 46,635 0.04
Convertible 9.75
15Jun05
95,528,920 72.20
Investment Trusts
2,105,952 Fleming Income & Capital 1,811,119 1.37
Investment Trust Ord Inc 25p
1,944,050 Leggmason Investors 1,759,365 1.33
International Untilities Trust
Ord 25p
1,200,000 Jupiter Split Trust Income 1,218,000 0.92
Shares Ord 5p
3,200,000 Gartmore SNT Income Shares 1,024,000 0.77
Gbp0.10
2,400,000 M&G Income Investment Trust 984,000 0.74
Geared Units
900,000 Jupiter Enhanced Income 841,500 0.64
Investment Trust Ord Inc Gbp0.25
900,000 Murray Extra Return Investment 837,000 0.63
Trust Income Shares 10p
1,150,000 Martin Currie Enhanced Income 833,750 0.63
Trust Ord 25p
600,000 Henderson Geared Income & Growth 741,000 0.56
Trust Income Ord 10p
1,100,000 Dresdner RCM Income Growth 726,000 0.55
Investment Trust Ord 5p
1,500,000 Aberforth Split Level Trust 701,250 0.53
Income Shares Ord 10p
1,842,319 European Growth & Income Trust 663,235 0.50
Units
750,000 Fleming Income & Growth 633,750 0.48
Investment Trust - Cap 4p Shs
2006
1,230,000 Fleming Worldwide Income 633,450 0.48
Investment Trust Ord Inc 25p
657,000 Ivory & Sime Optimum Income 607,725 0.46
Trust Ord 10p
1,800,000 M&G Recovery Investment Trust 603,000 0.46
Geared Ord Units
350,000 Lloyds Smaller Companies 586,250 0.44
Investment Trust Cap Shs 1p
173,912 Jos Holdings Capital 10p 569,562 0.43
600,000 Fleming Income & Growth 552,000 0.42
Investment Trust Inc 2006 12.5p
667,844 Murray Emerging Growth & Income 384,010 0.29
Trust Ord 5p
450,000 New Star Enhanced Income Trust 355,500 0.27
Ord Inc Shs Gbp0.01
200,000 Invesco Recovery Trust 2005 Ord 245,000 0.19
1p
400,000 Global High Yield Bond Trust Pfd 240,000 0.18
Red Pref Shs 100p
290,000 BFS US Special Opportunities 233,450 0.18
Trust Units
150,000 Leggmason Investors European 178,500 0.13
Utilities Ord Inc 25p
137,500 Asset Management Investment 173,250 0.13
Company Ord 25p
250,000 Special Utilities Investment 156,250 0.12
Trust Income Shares Ord 1p
200,000 Derby Trust Income Shares 25p 149,000 0.11
130,000 Framlington Income & Capital 133,250 0.10
Trust Cap 25p
385,520 Close FTSE 100 Trust Income 90,597 0.07
Shares Gbp0.10
138,000 BFS Equity Income & Bond Trust 82,110 0.06
Income Shares Ord 1p
100,000 Jos Holdings Income 20p 24,000 0.02
63,080 European Growth & Income Trust
Cap Shares 10p713 -
18,771,586 14.19
132,300,500 100.00
The above financial information does not constitute statutory accounts as
defined in Section 240 of the Companies Act 1985. Statutory accounts for the
period ended 31st March 2001 have been delivered to the Registrar of
Companies.
For further information please contact:
Heather Williams
Investec Investment Management Limited 020 7597 2000
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