Final Results - Year Ended 31 March 2000

Shires Income PLC 25 May 2000 PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2000 * Earnings per share, at 19.56p, were 8.0% higher than the 18.11p reported last year, due to higher dividend receipts from equity investments and higher dealing profits. * Proposed final dividend of 5.75p per share bringing total dividends for the year to 18.65p, which, excluding a special dividend of 0.65p last year, represents a rise of 3.6% over the figure for last year, 18.0p. * Total return on net assets was -1.3%, below the FTSE All-Share Index return which was boosted by low-yielding Technology and Service stocks. * The FTSE 350 Higher Yield Index provided a more accurate performance indication of the type of share the Company invests in, returning -1.7%. * Over the five years to 31 March 2000 the total return on the Company's net assets was 128.4%, the highest return of any conventional investment trust in the AITC's High Income category. * After the success of the 5% Index-Linked Debenture Stock issued in 1990, a new Index-Linked Debenture Stock was issued in December 1999 with a coupon of 3.4375%. * On 14 January, shareholders passed a Special Resolution to allow the Company to finance the purchase of its own shares out of capital profits. Shires Income plc with total assets of £172 million aims to provide shareholders with a high level of income together with growth of both income and capital from a portfolio of mainly UK equities. For further information please contact: David Williams, Managing Director Glasgow Investment Managers 0141 572 2700 Roland Cross, Director Broadgate Marketing 020 7726 6111 Shires Income plc - Annual Report 2000 Chairman's Statement Background Two themes influenced the behaviour of the UK stockmarket in the year under review. Firstly, in the second and third quarters of 1999 the outlook for UK interest rates dominated market sentiment, initially leading cyclical stocks higher as reductions were announced then depressing the very same sectors as concern about the appearance of inflationary pressures created expectations of higher rates. Secondly, in the fourth quarter of 1999, as investors came to realise that the 'millennium bug' would not be a major problem, they became interested in the prospects for telecommunications, media and information technology stocks. The FTSE All-Share Index returned 9.9% over the year to 31 March 2000, of which the Non-Cyclical Service and Information Technology groups of sectors contributed over 7%. Investment Returns The Company's Total Return on Net Assets was -1.3%. The main reason for the underperformance relative to the All-Share Index, the Company's benchmark, was that the shares in the Non-Cyclical Service and Information Technology sector groups, which made a substantial contribution to the index return, offered an average yield over the year of 1.0%. The Company's dividend objective restricts the proportion of the portfolio that can be invested in low-yielding equities. Although it is not the Company's benchmark, the FTSE 350 Higher Yield Index, which offered an average yield of 3.2% over the year, provided a more accurate indication of the performance of the kind of share in which the Company was invested. That index returned -1.7% in the twelve months to 31 March 2000. The return to shareholders, at -6.7%, was behind the return on net assets because the discount at which the share price stood to net assets widened from 6.6% to 11.9% in the course of the year. Earnings and Dividends Earnings per share, at 19.56p, were 8.0% higher than the 18.11p reported last year, due to higher dividend receipts - including special dividends - from equity investments, higher dealing profits and a rise in net income from Glasgow Investment Managers. A final dividend of 5.75p per ordinary share is being recommended by the Board, to bring total dividends for the year to 18.65p. If approved, the final dividend will be paid on 31 July 2000 to shareholders on the register at close of business on 7 July 2000. Comparison with the level of dividends paid last year is complicated by the fact that total dividends paid then included, as part of the second interim dividend, a Foreign Income Dividend ('FID') and a special dividend, 0.65p, made possible by paying part of the dividend as a FID. Excluding this, total dividends represent a rise of 3.6% over the figure for last year, 18.0p. Portfolio Profile In December 1999 the Company issued a further £15 million of Index-Linked Debenture Stock with both the coupon, initially 3.4375%, and the maturity value linked to the movement of the UK Retail Price Index. The Board considered that the first issue of Index-Linked Debenture Stock - in March 1990 - had been a success, providing low cost borrowing in an environment of low inflation, and that the current low yields in the market for gilt-edged index-linked securities represented an opportunity to replace the variable rate short-term bank borrowing which the Company has been employing with less expensive longer term finance. The proceeds of this issue have been used principally to raise exposure to UK Equity investment, to 111.9% of net assets at 31 March 2000 from 105.0% last year, and to repay bank borrowing. Overall gearing has risen from 22.3% to 29.0% of net assets. Glasgow Investment Managers ('GIM') Funds under management by GIM grew to £894 million at 31 March 2000 (1999 - £717 million) and profit before tax for the year rose to £1.3 million (1999 - £1.0 million). Last year I advised you that the Company had entered an agreement with the executive shareholders of GIM under which that company's employees would have the opportunity to increase the aggregate of their shareholdings in GIM to a maximum of 50.1% if specified profit targets were achieved. In the year to 31 March 2000 the specified profit target was exceeded and, as a result, the executives' aggregate shareholding in GIM will shortly rise to 50.1%. The Longer Term The Company continues to pursue its strategy to combine achievement of growth in capital and income with provision of a high level of income to shareholders. Over the five years to 31 March 2000 the total return on net assets was 128.4%, which compares with a return of 137.3% on the All-Share Index. This was the highest in the High Income category of the Monthly Information Service of the Association of Investment Trust Companies and would have ranked the Company second in the Income Growth category. At 31 March 2000 the yield on the Company's ordinary shares was 4.7%, well above the yield of 2.1% on the All-Share Index. As the business of Glasgow Investment Managers expands a growing flow of income from this source should permit a greater proportion of investment in lower-yielding equities with more obvious growth characteristics. Share Repurchase At the Extraordinary General Meeting held on 14 January 2000 shareholders passed a Special Resolution to adopt new Articles of Association of the Company. The new articles reflect current legislation and UK Listing Authority requirements, in particular the change in the law, which came into effect in November 1999, to make it possible for an investment company to finance the purchase of its own shares out of capital profits. As a result the Company may now use its capital reserves to buy back shares. It will not be necessary to reduce the share premium account and repurchase will no longer affect the Company's status as an investment company. Outlook After four rises in interest rates in the six months to February 2000, the combination of higher interest rates and Sterling appreciation is beginning to restrain economic activity, principally through its impact on manufacturing activity and consumer confidence. It now seems likely that the more optimistic projections of UK output growth in 2000 will not be realised. If as a result inflationary pressures prove weaker than most commentators fear, interest rates may peak earlier and at lower levels than currently discounted by financial markets, encouraging renewed interest in the longer established areas of the UK stockmarket where good value is presently available. Board I should like to extend a warm welcome to Joanna Davidson, who was appointed to the Board in March this year. The Annual Report will be mailed to shareholders on 31 May 2000 and the Annual General Meeting will be held at Trinity House, Tower Hill, London EC3N 4DH, on Friday, 30 June 2000. A J R IZAT (Chairman) SHIRES INCOME PLC CONSOLIDATED STATEMENT OF TOTAL RETURN (INCORPORATING THE REVENUE ACCOUNT) FOR THE YEAR ENDED 31 MARCH 2000 2000 1999 (restated) Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000 Gains/(Losses) - (8,805) (8,805) - 8,033 8,033 on investments Income from 6,923 - 6,923 6,275 - 6,275 investment activity Investment 3,905 - 3,905 3,215 - 3,215 management income Investment (2,561) - (2,561) (2,228) - (2,228) management expenses Net income 1,344 - 1,344 987 - 987 from investment management Management (615) (319) (934) (655) (301) (956) and administrative expenses GROUP OPERATING 7,652 (9,124) (1,472) 6,607 7,732 14,339 RETURN Associated 479 2,689 3,168 543 (1,810) (1,267) undertaking NET RETURN BEFORE FINANCE COSTS AND 8,131 (6,435) 1,696 7,150 5,922 13,072 TAXATION Part disposal - (443) (443) - (129) (129) of subsidiary undertaking Finance costs of borrowings: Group (1,576) (647) (2,223) (1,696) (1,360) (3,056) Associated (134) (134) (268) (136) (136) (272) undertaking RETURN ON ORDINARY ACTIVITIES BEFORE TAXATION 6,421 (7,659) (1,238) 5,318 4,297 9,615 Taxation 192 - 192 14 - 14 RETURN ON ORDINARY ACTIVITIES AFTER TAXATION FOR THE 6,229 (7,659) (1,430) 5,304 4,297 9,601 FINANCIAL YEAR Preference 2 - 2 2 - 2 dividend Minority 430 - 430 173 - 173 equity interest RETURN ATTRIBUTABLE TO EQUITY 5,797 (7,659) (1,862) 5,129 4,297 9,426 SHAREHOLDERS Dividends 5,529 - 5,529 5,283 - 5,283 on equity shares TRANSFER 268 (7,659) (7,391) (154) 4,297 4,143 TO/(FROM) RESERVES Return per ordinary share - undiluted 19.56p (25.83)p (6.27)p 18.11p 15.17p 33.28p - fully 17.57p 14.83p 32.40p diluted Dividends 18.65p 18.00p+ per ordinary share + Additionally, a special dividend of 0.65p per ordinary share was paid SHIRES INCOME PLC DISTRIBUTION OF ASSETS Valuation Movements during the year Valuation at 31 March Apprec- at 31 March 1999 Purchases Sales iation 2000 (restated) £m % £m £m £m £m % ASSOCIATED UNDERTAKING Shires Smaller Companies 10.4 7.3 - - 2.5 12.9 9.6 OTHER LISTED INVESTMENTS Ordinary shares 138.4 97.7 48.3 (41.0) (8.3) 137.4 102.3 Convertibles 13.7 9.7 - - 0.8 14.5 10.8 Other fixed interest 9.7 6.8 - (0.2) (1.8) 7.7 5.7 172.2 121.5 48.3 (41.2) (6.8) 172.5 128.4 Unlisted investments 0.8 0.6 - (0.4) 0.1 0.5 0.4 173.0 122.1 48.3 (41.6) (6.7) 173.0 128.8 Tangible fixed assets 0.3 0.2 0.2 0.2 Net current liabilities (9.1) (6.4) (0.8) (0.6) TOTAL ASSETS 164.2 115.9 172.4 128.4 (less current liabilities) Index-Linked Debenture Stocks (22.1) (15.6) (37.3) (27.8) Minority equity interest (0.4) (0.3) (0.8) (0.6) NET ASSETS 141.7 100.0 134.3 100.0 Representing: Share capital and reserves 139.1 134.3 Convertible Unsecured Loan Stock 2.6 - 141.7 134.3 Net asset value per share - undiluted 490.70p 452.82p - fully diluted 477.74p Notes 1. The revenue column of the Consolidated Statement of Total Return is the consolidated profit and loss account of the Group. 2. All revenue and capital items in the Consolidated Statement of Total Return derive from continuing operations. No operations were acquired or discontinued in the year. 3 The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 1999 and 2000 but is derived from those accounts. Statutory accounts for 1999 have been delivered to the Registrar of Companies and those for 2000 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985. SHIRES INCOME PLC ANALYSIS OF PORTFOLIO United North 2000 1999 Kingdom America Total Total % % % % EQUITIES AND CONVERTIBLES Resources 5.8 - 5.8 3.0 Basic Industries 3.7 - 3.7 4.0 General industrials 5.1 - 5.1 8.2 Non-Cyclical Consumer Goods 8.5 - 8.5 13.1 Cyclical services 21.5 - 21.5 20.8 Non-Cyclical services 10.7 - 10.7 11.4 Utilities 10.9 - 10.9 8.2 Financials 21.8 - 21.8 22.1 Information technology 3.5 - 3.5 - 91.5 - 91.5 90.8 FIXED INTEREST STOCKS 8.2 - 8.2 8.7 UNLISTED INVESTMENTS - 0.3 0.3 0.5 TOTAL PORTFOLIO - AT 31 MARCH 2000 99.7 0.3 100.0% - AT 31 MARCH 1999 99.7 0.3 100.0%

Companies

Shires Income (SHRS)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today