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ESCIF Securities Ld (ECFZ)

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Tuesday 21 June, 2005

ESCIF Securities Ld

Interim Results

ESCIF Securities Ld
21 June 2005


ESCIF SECURITIES LIMITED

PRELIMINARY ANNOUNCEMENT OF THE INTERIM RESULTS

The Directors announce the unaudited interim results for the period 1 October
2004 to 31 March 2005 as follows:-

Statement of Operations for the period 1 October 2004 to 31 March 2005

 01.10.03                                                                       01.10.04         01.10.03
    to                                                                             to              to
 30.09.04                                                                       31.03.05         31.03.04
  £'000                                                                          £'000            £'000
  1,031     Accrual under loan note 2007                                           546              504
 (1,031)    Capital growth attributed to zero dividend preference shares          (546)            (504)
      -                                                                              -                -
    527     Movement in provision against subordinated loan note &               1,474              583
            contribution of assets from parent
    527     Net profit for the period                                            1,474              583

Statement of changes in equity for the period 1 October 2004 to 31 March 2005

 01.10.03                                                                       01.10.04        01.10.03
    To                                                                             To              to
 30.09.04                                                                       31.03.05        31.03.04
   £'000                                                                          £'000           £'000

  (5,854)   Net liabilities at 1 October                                         (5,327)         (5,854)
     527    Net profit for the period                                             1,474           583
  (5,327)   Net liabilities carried forward                                      (3,853)         (5,271)

The figures to 31 March 2005 and 31 March 2004 are unaudited. The figures for
the year to 30 September 2004 are taken from the Company's full financial
statements for that year, which carry an unqualified audit report.



Balance Sheet as at 31 March 2005
  30.09.04                                                                      31.03.05          31.03.04
    £'000                                                                         £'000             £'000
            Assets
    7,122   Unsecured subordinated loan note 2007                                 9,142             6,651
    7,122                                                                         9,142             6,651
            Liabilities
  (12,449)  Zero dividend preference shares                                     (12,995)          (11,922)
   (5,327)                                                                       (3,853)           (5,271)
            Represented by:
        -   Ordinary share capital                                                    -                 -
   (5,327)  Reserves                                                             (3,853)           (5,271)
   (5,327)                                                                       (3,853)           (5,271)

   141.49   Net asset value per zero dividend preference share (as per           147.71            135.51
            IAS 33) (pence)
    80.94   Available assets per zero dividend preference share (as per          103.90            75.59
            Articles) (pence)

The figures at 31 March 2005 and at 31 March 2004 are unaudited. The figures at
30 September 2004 are taken from the Company's full financial statements for
that financial year, which carry an unqualified audit report.
                                                                                                           
Notes to the preliminary announcement

1. The preliminary announcement has been prepared in conformity with The
Companies (Guernsey) Law, 1994 and International Financial Reporting Standards
issued by the International Accounting Standards Board and interpretations
issued by the International Financial Reporting Interpretations Committee, on
the same basis as in the prior year's financial statements.  The following
accounting policies have been applied consistently in dealing with items which
are considered material in relation to the Company's preliminary announcement.

2. Going concern of the Parent company

The Parent would expect to be in a position to continue in operational existence
past 30 September 2007 (the date on which the zero dividend preference shares
mature) if the investments of the Group generate a positive return in excess of
19.7% per annum based on market mid prices and 20.1% based on market bid prices
in the period to 30 September 2007. This calculation is as at 31 March 2005 is
based on £3.5m of bank borrowings and does not take into account of any
liquidation costs.

It is the view of the directors of the Parent that it is unlikely the required
investment return could be met, but they are of the opinion that the Parent is
able for the time being to operate within the terms of the loan facility, and to
meet its obligations there under as they fall due.

3. Unsecured subordinated loan note

On 8 September 2000 an unsecured subordinated loan note with a nominal value of
£8,798,000 was issued by Exeter Smaller Companies Income Fund Limited to ESCIF
Securities Limited.  The loan note is interest free and is repayable on 30
September 2007.

In addition, the Company entered into a Contribution agreement with the Parent
whereby the Parent will contribute such amounts as permitted by its own
available net assets as may be available at the time as will result in the
Company having sufficient assets to satisfy the then current or, as the case may
be, final capital entitlement of the zero dividend preference shares.

The unsecured loan note and the contribution agreement are accounted for as a
single transaction under IAS 39.

Due to the fall in value of the Parent's portfolio a provision equal to the net
liabilities of the Parent has been made against the subordinated loan and
contribution of assets as follows:

                                              Gross            Provision                Net
                                              £'000                £'000              £'000

Subordinated loan note - issue value          8,798                    -              8,798
Accrual under loan note 2007                  4,197               (3,853)               344

                                             12,995               (3,853)             9,142

This is the directors' best estimate of the net present value of the expected
future cash flows under this loan.


4. Zero dividend preference shares

01.10.2003                                                    01.10.2004          01.10.2003
     to                                                           To                  to
30.09.2004                                                    31.03.2005          31.03.2004
   £'000                                                         £'000               £'000

   11,418   Brought forward                                     12,449              11,418

    1,031   Attributable capital growth                            546                 504
   12,449   Carried forward                                     12,995              11,922

In accordance with the articles of association of the Company, the holders of
the zero dividend preference shares ('ZDP') are entitled on a winding up to an
amount equal to 100p per ZDP share as increased daily at such compound rate as
would give a final capital entitlement of 183.24p on 30 September 2007. The
value of the zero dividend preference shares depends on the value of the
Company's assets, which in turn depends on the value of the Parents assets.  Due
to a fall in the value of the Parent's assets, the value of these shares is
lower than the pre-determined capital entitlement. At 31 March 2005 the accrued
value was £12,995,221.

Due to the fall in value of the Parent company's portfolio, the net assets
available for the ZDP shareholders amounted to £9,141,463.  This is the accrued
value of £12,995,221 less the net liabilities of the parent company of
£3,853,758. At 31 March 2005, the fair value of the ZDP shares was £8,798,000
based on a market offer price of 100 pence per share.

5. Reconciliation of zero dividend preference share net asset value to published
net asset value                                                                   
                                                                                  Pence
Net asset value reported to the London Stock Exchange on 1  £'000             per share                     
April 2005                                                  9,387                106.69
Principal and finance costs on zero dividend preference
shares not represented by available assets
                                                            3,608                 41.01
Provision for subordinated loan note loss                  (3,853)               (43.80)

Net asset value per financial statements                    9,142                103.90

6. The Company is a wholly owned subsidiary of Exeter Smaller Companies Income
Fund Limited and therefore no return per ordinary share has been shown.

7. The financial information of the Company for the period 1 October 2004 to 31
March 2005 has also been consolidated into the results of Exeter Smaller
Companies Income Fund Limited for this period.

8. Because the performance of the Company may be influenced by the performance
of the Parent, it is recommended that this document is read in conjunction with
the Parent's preliminary announcement of interim results, which was issued on 21
June 2005.

9. The preliminary announcement of the interim results was approved by the board
of Directors on 21 June 2005.


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            The company news service from the London Stock Exchange                                                                                                                                                                          

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