Final Results

Personal Assets Trust PLC
15 May 2003

Personal Assets Trust plc

To:            RNS

From:          Personal Assets Trust plc

Date:          15 May 2003







Preliminary Results for the year to 30 April 2003


The Directors of Personal Assets Trust (PAT) are pleased to announce the Group's
unaudited preliminary results for the year to 30 April 2003.


The key points are as follows:


  • PAT is run to meet the requirements of individual investors who wish to
    commit a significant proportion of their capital to an investment trust.


  • The Company has experienced an increasing demand for its ISA and
    Investment Plan. During the year the Company issued 105,453 new Ordinary
    Shares, raising a net £20 million.


  • Over the year to 30 April 2003 PAT's net asset value per share
    outperformed its benchmark by 21.7 per cent. Its fall of 8.4 per cent to
    £186.32 compares to a fall of 24.7 per cent in the FTSE All-Share Index.
    PAT's share price fell by £15.75 during the year and at 30 April 2003 was
    £193.75.


  • Since PAT became independently managed in 1990 the Board has chosen to
    measure PAT's performance over rolling three-year periods. Over the three
    years to 30 April 2003 the net asset value per share fell by 6.7 per cent
    compared to the FTSE All-Share Index's fall of 37.0 per cent, an
    outperformance of 48.0 per cent.


  • In a year when the UK equity market fell, PAT continued to manage its
    effective liquidity actively (30 April 2003: 19 per cent, 30 April 2002: 50
    per cent).


  • The Directors intend PAT's annual dividend rate to grow at least in line
    with inflation. Two interim dividends have been declared during the year,
    totalling £2.90 per ordinary share. Together these represent an increase of
    3.6 per cent over the corresponding payments for the previous year and
    compare to inflation of 3.1 per cent. The second interim dividend of £1.50
    per share will be paid on 23 May 2003.


         The Board's stated policy is never to cut the dividend rate, so that
    shareholders can be confident that each half-yearly payment will at least
    equal the previous one. Therefore, the first interim dividend for the year
    to 30 April 2004, expected to be paid in November 2003, will be at least
    £1.50 per share and total dividends for the year to 30 April 2004 will be
    not less than £3.00 per share.


    The Chairman, Robert White, said:

'For the fourth successive year, our benchmark (the FTSE All-Share Index) has
fallen in value, this time by a large percentage. Yet again, Personal Assets has
outperformed its benchmark - this year by a truly remarkable 22% - while our
preferred three year span for measuring our results reveals an astonishing
outperformance of no less than 48%. While all too conscious that our
shareholders have got no richer over this period, we are at least glad that
(unlike many other investment vehicles) Personal Assets has kept most of their
money intact.

After such a miserable period for equities, it would be nice to think that a
silver lining for stock markets was visible at last. As you will read in the
report opposite, the Investment Manager is far from convinced. The slightly
happier note, however, is that our dividend is up by 3.6%. This is in line with
our policy of increasing the dividend each year by an amount higher than the
rate of inflation (currently 3.1%). In bear markets dividends tend to assume
greater importance in investors' minds - a healthy corrective to the way in
which they are ignored during bull phases.

This year we reached a milestone undreamt of when Ian in 1990 took over as
Investment Director of a trust then capitalised at some £51/2 million. For the
first time ever, our shareholders' funds have exceeded £100 million and our year
end market capitalisation was £108 million. This reflects the issue during the
year of £20 million worth of new shares. We thought, last year, that £16 million
of new investment was an impressive enough figure. Despite the unpropitious
background, however, we continue through our zero-charge ISAs and Investment
Plans to attract new money at a rate much greater than that of any other
investment trust in the sector. Our Investment Plans in total now represent over
44% of Personal Assets' shares in issue.

It is said that bear markets throw up what the auditors miss. They also expose
how some of the capital structures of more optimistic times were built on sand.
The investment trust industry has been done a great disservice over the past
year by the collapse of some split capital trusts. In the final wild stages of a
market bubble the prospect of a day of reckoning is overlooked. Few seemed to
raise an eyebrow, before flotation, at the borrowing levels of many of these
trusts. In consequence, however, the whole sector has been tarred by the same
brush and inevitably the Government seems minded to introduce greater and more
intrusive supervision and control. The AITC, our trade body, has so far fought
successfully against the least desirable of these proposals.

It is easy enough to conclude that the financial world has brought all this new
regulation on itself. However, there is also an argument that extra regulation
achieves nothing other than imposing huge costs on investors, managers and
advisors alike. The principles of personal responsibility and 'caveat emptor'
have fallen victim to today's compensation culture. There is something
ludicrous, even obnoxious, in the idea of major financial institutions rolling
over and paying 'compensation' for unproven 'mis-selling', fearful of incurring
the displeasure of an all powerful Government body. Meanwhile, confidence in all
financial institutions has been undermined. It will not quickly be restored -
not the best background to pensions shortfalls which threaten many of the
population with poverty in old age instead of the prosperous retirement to which
they had looked forward.

Another significant event during the year was the publication of the 'Higgs
Report' on non-executive directors. Among its remarkable conclusions was one
that suggested a Board would be the stronger if it were constantly changing and
its members hardly knew each other. Another proposed the appointment of a senior
non-executive director as a rival to the Chairman. You will not be surprised to
read that your Board does not believe this is how Personal Assets should be run.
At least Higgs provides that as long as we explain why we are not implementing
the proposals we need not do so.'


The Investment Director, Ian Rushbrook, said


'The year to 30 April 2003 was an extraordinary one for Personal Assets. We
achieved our best ever annual result against our benchmark, the FTSE All-Share
Index, outperforming it by an astonishing and almost certainly unrepeatable
21.7%. Yet shareholders actually lost money on their investment in Personal
Assets during the year, and Robin Angus pours scorn on anything other than
absolute returns. So perhaps it's worth mentioning that shareholders were in
aggregate £20m better off than if they had invested in funds which matched the
FTSE All-Share. (And precious few funds managed to achieve even that . . . !)

Over the last couple of years, comments from Chairmen and Managers such as 'the
gearing reduced our performance by x%' have been appearing in investment trust
Reports & Accounts with ever greater frequency. It's almost as if they believed
that such gearing was ex machina and had nothing to do with their own Board and
management decisions to create the gearing in the first place and then to
maintain it in falling markets. In contrast, we view our level of liquidity or
gearing as probably the most fundamental decision we have to make on behalf of
the shareholders of Personal Assets - much more so than which individual stocks
we should buy or sell. This is why it always made me uneasy when Robin Angus
used to insist on writing about stocks in his Quarterlies. I feared that, far
from being truly informative, it actually obscured the reality of what Personal
Assets was doing.

We started the year with liquidity of 50%, increasing this during the first
quarter to over 60%. Through transactions in FTSE 100 Futures contracts we then
reduced it in pre-planned stages each time the market moved downwards. As a
result, by our 30 April 2003 year end we were only (!) 19% liquid. In total, we
succeeded in adding over £4 million to shareholders' funds through our use of
FTSE 100 Futures contracts to manage our liquidity during the year.

That, however, is history. As always, the key question is just where the market
is going from here. My former Senior Partner at Ivory & Sime, Eric Ivory, once
said, 'Now is always the most difficult time to make an investment decision.'
His comment was far more profound than I at first appreciated. So let me begin
by stating the obvious. The level of valuation of equities affects the levels of
both supply and demand; and when supply exceeds demand, then (as in all free
markets) prices go down.

Likely future selling from life and pension funds and the lack of any apparent
demand from other equity investors suggests that the UK equity market still has
further to fall.

Moreover, and contrary to the view of many investment professionals, we believe
that if future inflation is going to be lower and more stable than in the past
then equity valuations should be lower than historic averages. This is because
in a low-inflation environment equities lose their fundamental advantage over
fixed interest securities of providing investors with protection against
inflation. Yet, although the UK market has fallen for the fourth year running,
equity valuations are still considerably higher than historic averages. This
bodes ill for equities. Bear markets do not end until equity valuations become
sufficiently attractive to tempt new investors. We are nowhere near such levels.

Therefore, although we are now much less liquid than previously, it isn't
because we are any more enchanted with the prospects for equities. It simply
reflects the fact that the UK equity market fell by around 25% during the year
and we wanted to reduce our liquidity risk. This saved us from being badly
caught out by April's 9.0% rise in the FTSE All-Share (the largest monthly
percentage increase for over 10 years), but such a rise doesn't make us any less
bearish for the medium term. Instead, it suggests that it might be advisable for
us to increase our liquidity significantly at current or higher market levels.
However, a word of caution is needed following a remarkable year of
outperformance. If shareholders think we will get it right all the time, they
are wrong. Despite behaving rationally (or even because of it - over the short
term the market often defies reason), we will doubtless make many mistakes. We
hope you can live with this. I certainly relish the challenge.'







    For further information contact:


    Ian Rushbrook

    Investment Director

Tel: [phone]


The Group's Statement of Total Return, Balance Sheet and Cash Flow Statement
follow.








GROUP STATEMENT OF TOTAL RETURN

(Incorporating the Revenue Account)

FOR THE YEAR ENDED 30 APRIL 2003


                                                                                                  Year to

                                                                                               30 April 2003
                                                                                   Revenue        Capital          Total
                                                                                     £'000          £'000          £'000

(Losses)/ gains on investments                                                           -       (16,776)       (16,776)
Gains/ (losses) on derivative arrangements                                               -          4,214          4,214
Exchange differences                                                                     -          4,663          4,663
Income                                                                               2,588              6          2,594
Investment management fee                                                            (291)          (541)          (832)
Other expenses                                                                       (381)              -          (381)

Return on ordinary activities before tax                                             1,916        (8,434)        (6,518)

Tax on ordinary activities                                                           (210)            163           (47)

Return attributable to equity shareholders                                           1,706        (8,271)        (6,565)

Dividends in respect of ordinary shares                                            (1,541)              -        (1,541)

Transfer to/(from) reserves                                                            165        (8,271)        (8,106)

Return per ordinary £12.50 share                                                     £3.40       (£16.49)       (£13.09)













GROUP STATEMENT OF TOTAL RETURN

(Incorporating the Revenue Account)

FOR THE YEAR ENDED 30 APRIL 2003


                                                                                                 Year to

                                                                                              30 April 2002
                                                                                   Revenue        Capital          Total
                                                                                     £'000          £'000          £'000

(Losses)/gains on investments                                                            -        (2,890)        (2,890)
Exchange differences                                                                     -          1,265          1,265
Income                                                                               2,456             15          2,471
Investment management fee                                                            (260)          (482)          (742)
Other expenses                                                                       (330)              -          (330)

Return on ordinary activities before tax                                             1,866        (2,092)          (226)

Tax on ordinary activities                                                           (278)            145          (133)

Return attributable to equity shareholders                                           1,588        (1,947)          (359)

Dividends in respect of ordinary shares                                            (1,207)              -        (1,207)

Transfer to/(from) reserves                                                            381        (1,947)        (1,566)

Return per ordinary £12.50 share                                                     £3.88        (£4.75)        (£0.87)








GROUP BALANCE SHEET AT 30 APRIL                                                          2003                   2002

                                                                                       £'000s                 £'000s
Investments

Investments                        - equities                                          33,779                 45,627
                                   - fixed interest                                    38,926                 40,105
                                   - other investments                                 12,842                  3,279
                                   - preference shares                                  1,125                  1,125
                                                                                       86,672                 90,111

Net Current Assets                                                                     17,652                  2,319

Total Assets                                                                          104,324                 92,430

Equity Shareholders' Funds                                                            104,324                 92,430

Net Asset Value per Ordinary £12.50 Share                                             £186.32                £203.38



GROUP CASH FLOW STATEMENT AT 30 APRIL                                                   2003                 2002

                                                                                      £'000s               £'000s
Operating activities
Investment income received                                                             2,176                1,980

Deposit interest received                                                                232                  325

Other income                                                                              96                  179

Investment management fees                                                             (838)                (742)

Directors' fees                                                                         (73)                 (53)

Other cash payments                                                                    (272)                (295)

Net cash inflow from operating activities                                              1,321                1,394

Taxation                                                                               (113)                   53

Capital expenditure and financial investment
                                                                                         (8)                    -
Purchase of FTSE 100 Futures
                                                                                     (2,049)                    -
Disposal of FTSE 100 Futures
                                                                                    (78,897)             (59,830)
Purchase of investments
                                                                                      65,560               42,879
Disposal of investments
Net cash outflow from capital expenditure and financial investment                  (15,394)             (16,951)

Dividends paid on ordinary shares                                                    (1,339)              (1,079)

Financing

Allotment of new shares
                                                                                      20,000               15,996
Increase/(decrease) in cash

Reconciliation of net cash flow to movement in net funds                               4,475                (587)
Increase/(decrease) in cash                                                            4,475                (587)

Effect of foreign exchange rates                                                       6,442                (231)

Change in net funds                                                                   10,917                (818)

Net funds at beginning of year                                                         1,323                2,141

Net funds at end of year                                                              12,240                1,323







Notes:



 1. Return per ordinary share is based on a weighted average of 501,825 ordinary
    shares in issue during the year (2002 - 409,592).

 2. Net asset value per ordinary share is based on the 559,925 ordinary shares in
    issue as at 30 April 2003 (2002 - 454,472).

 3. During the year the Directors allotted 105,453 ordinary shares.

 4. At 30 April 2003 the sterling value of the US Treasury Strip, US Treasury
    Inflation Indexed Bond and US Equity exposure were protected by a forward
    currency contract.

 5. These are not full accounts in terms of Section 240 of the Companies Act
    1985. Full audited accounts for the year to 30 April 2002, which were
    unqualified, have been lodged with the Registrar of Companies. No full
    accounts in respect of any period after 30 April 2002 have been reported on
    by the Company's auditors or delivered to the Registrar of Companies.


 6. The Annual Report and Accounts will be posted to Shareholders during May
    2003. Copies will be available from the Company's registered office at 80
    George Street, Edinburgh, EH2 3BU.



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