Final Results

British Assets Trust PLC 14 November 2006 BRITISH ASSETS TRUST PLC Date: 14 November 2006 Unaudited results for the year ended 30 September 2006 • Dividend increase of 3.0 per cent • Share price total return of 9.2 per cent • Net asset value total return of 10.9 per cent Chairman's Statement: 'I am pleased to report another year of growth in the Company's net asset value per share for the year ended 30 September 2006. The net asset value total return, with net dividends reinvested, was 10.9 per cent, but perhaps more importantly the Company is now in a position to be able to start to grow its dividend for the first time since 2001. As explained in more detail below, the Board is proposing a dividend increase of 3.0 per cent in respect of the year, which maintains a premium yield above other comparable investment trusts. The Company's net asset value total return of 10.9 per cent compares with a return of 13.2 per cent from the composite benchmark index of 75 per cent FTSE All-Share Index and 25 per cent FTSE World (ex UK) Index. Despite the underperformance during the year, the Company is still ahead of its benchmark for the three year period ended 30 September 2006 with a net asset value total return of 61.6 per cent which compares to a return of 60.5 per cent from the composite index. Although gearing and share buy backs helped performance, this was more than offset by underperformance against local stockmarket indices, particularly in the UK and Japan. The majority of the return for the year occurred in the first six months and the Company outperformed the benchmark index by 0.5 per cent over this period. However, during the second half of the year there was an increase in market volatility as investors became increasingly concerned about the deteriorating outlook for growth and inflation. In the US, the Federal Reserve raised interest rates eight times during the year. On a more positive note, mergers and acquisitions activity remained strong and investors have continued to benefit from strong growth in both ordinary dividends and special dividends paid by companies. The Board is disappointed with the poor stock selection this year and has been assured that the Managers are addressing this issue. In particular, the Board has been advised that the Managers are looking to strengthen their UK team. It is hoped this will result in improved performance in this important part of the overall portfolio. The Company's share price total return for the year was 9.2 per cent with the discount ending the year at 10.5 per cent. There were no significant asset allocation changes during the year. Gearing At the end of the year the Company's gearing net of cash was 20.3 per cent, which compares to 19.8 per cent as at 30 September 2005. The level of gearing is represented by 13.6 per cent in equities and 6.7 per cent in corporate bonds. Earnings and Dividends The Company's revenue earnings for the year were 6.3p per Ordinary Share (2005 - 4.8p). A first interim dividend of 1.304p per Ordinary Share was paid on 7 April 2006 and second and third interim dividends, of 1.33p per Ordinary Share each, were paid on 7 July and 6 October 2006 respectively. Over the past two years the Company has benefited from strong dividend growth from its investee companies, particularly in the UK, and from the receipt of special dividends. The revenue account has also benefited from the effect of share buy backs, which reduce the number of shares on which the Company's own dividend is payable. Having not increased the rate of dividend since 2001, the Board announced an increase of 2.0 per cent in the second and third interim dividends earlier in the year. The Board has reviewed the revenue outcome for the year and recommends a final dividend of 1.522p per Ordinary Share in respect of the year ended 30 September 2006, payable on 5 January 2007 to shareholders on the register on 8 December 2006. This brings the total dividend in respect of the year to 5.486p per Ordinary Share, an increase of 3.0 per cent from the previous year. The Board is cognisant of the Company's higher than average dividend yield, which it regards as one of the key attractions for shareholders. As at 30 September 2006 the dividend yield was 4.1 per cent, which was some 24 per cent higher than the average of the AIC Global Growth & Income Sector. Subject to any unforseen circumstances, the Board would hope to be able to increase the dividend again in respect of the year ended 30 September 2007, thereby achieving its stated aim of having a progressive dividend policy. Share Buy Backs The Company continued to buy back shares for cancellation during the year. 14,800,000 Ordinary Shares, equivalent to 4.6 per cent of the shares in issue as at 30 September 2005, were bought back for a total consideration of £19.4 million. These buy backs enhanced the net asset value by 0.65p per share and, as stated above, provided a benefit to the revenue account by reducing the number of shares on which dividends are payable The Company will seek to renew its share buy back authority at the forthcoming Annual General Meeting. Board Composition As previously reported, Mr James Long was appointed a Director on 1 May 2006. The Board has already benefited from his significant skills and experience. Accounting Standards As reported at the interim stage, recent changes to UK accounting standards require the Company's investments to be valued at bid prices and not middle market prices as had previously been the case. In addition, dividends paid by the Company are only recognised in the accounts when paid to shareholders. The third interim and final dividends, which are payable after the end of the year are, therefore, not provided for in these accounts. Comparative figures in respect of these changes have been adjusted accordingly in the accounts. Outlook Against a backdrop of slowing global growth it is likely to be more difficult for equities to make substantial gains in the months ahead. However, dividend growth is likely to remain strong and mergers and acquisition activity and buybacks should continue to provide some support for markets.' W R E Thomson Chairman Enquiries: Julie Dent/Gordon Hay Smith F & C Asset Management plc - 0131 465 1000 Unaudited Income Statement for the Year ended 30 September 2006 Notes 2006 2006 2006 Revenue Capital Total £'000 £'000 £'000 Gains on investments - 33,150 33,150 Exchange differences - 177 177 Income 2 23,353 257 23,610 Investment management fee: Basic (512) (1,537) (2,049) Performance - - - Other expenses (826) - (826) ______ ______ ______ Net return before finance costs & taxation 22,015 32,047 54,062 Finance costs (1,954) (5,860) (7,814) ______ ______ ______ Return on ordinary activities before tax 20,061 26,187 46,248 Tax on ordinary activities (305) - (305) ______ ______ ______ Return attributable to shareholders 19,756 26,187 45,943 ______ ______ ______ Return per share 3 6.3p 8.3p 14.6p The total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies. Audited Income Statement for the Year ended 30 September 2005 2005 2005 2005 Notes Revenue Capital Total (restated*) (restated*) (restated*) £'000 £'000 £'000 Gains on investments - 91,844 91,844 Exchange differences - 198 198 Income 2 19,479 1,167 20,646 Investment management fee: Basic (460) (1,380) (1,840) Performance - (1,588) (1,588) Other expenses (1,090) - (1,090) ______ ______ ______ Net return before finance costs & taxation 17,929 90,241 108,170 Finance Costs (1,954) (5,860) (7,814) ______ ______ ______ Return on ordinary activities before tax 15,975 84,381 100,356 Tax on ordinary activities (270) - (270) ______ ______ ______ Return attributable to shareholders 15,705 84,381 100,086 ______ ______ ______ Return per share 3 4.8p 25.5p 30.3p * see notes 1 & 9 Unaudited Reconciliation of Movements in Shareholders' Funds Year to Audited Year to 30 September 30 September 2005 2006 £'000 £'000 Opening shareholders' funds as previously reported 452,841 386,179 Adjustment mid to bid (see Notes 1 and 9) (771) (512) Dividends accrued 8,788 9,211 _______ _______ Opening shareholders' funds (restated) 460,858 394,878 Share buy-backs (19,395) (16,335) Dividends paid (17,016) (17,771) Return attributable to shareholders 45,943 100,086 ______ ______ Closing shareholders' funds 470,390 460,858 ______ ______ Unaudited Balance Sheet as at 30 September Audited 2006 2005 (restated*) £'000 £'000 Non-current assets Investments 566,081 552,354 ________ ________ Current assets Debtors 5,430 6,321 Cash at bank and on deposit 24,140 28,303 ________ ________ 29,570 34,624 Creditors: amounts falling due within one year (6,014) (6,962) ________ ________ Net current assets 23,556 27,662 ________ ________ Total assets less current liabilities 589,637 580,016 Creditors: amounts falling due after more than one year (119,247) (119,158) ________ ________ Net Assets 470,390 460,858 ________ ________ Capital and reserves Called-up share capital 77,128 80,828 Capital reserve - realised 246,431 255,862 Capital reserve - unrealised 101,351 85,128 Capital redemption reserve 11,213 7,513 Revenue reserve 34,267 31,527 ________ _______ Equity shareholders' funds 470,390 460,858 ________ _______ Net asset value per share 152.5p 142.5p * see notes 1 & 9 Unaudited Summarised Statement of Cash Flows Audited Year to 30 Year to 30 September 2006 September 2005 £'000 £'000 Net cash inflow from operating activities 19,048 17,118 Servicing of finance (5,738) (7,725) Taxation 39 30 Capital expenditure and financial investment 18,728 37,264 Equity dividends paid (17,016) (17,771) ________ _______ Net cash inflow before financing 15,061 28,916 Financing (19,395) (16,346) ________ _______ (Decrease)/increase in cash (4,334) 12,570 ________ _______ Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash in the year (4,334) 12,570 Currency gains/(losses) 171 (55) Increase in 6.625 per cent Bonds 2008 liability (63) (63) Increase in 6.25 per cent Bonds 2031 liability (26) (27) Opening net debt (90,855) (103,280) ________ _______ Closing net debt (95,107) (90,855) ________ _______ Reconciliation of net revenue before finance costs and taxation to net cash inflow from operating activities Net revenue before finance costs and taxation 54,062 108,170 Gains on investments (33,150) (91,844) Exchange differences (177) (198) Decrease/(increase) in accrued income and repayments 205 (130) (Decrease)/increase in other creditors (1,588) 1,423 Tax on investment income (304) (303) ________ _______ Net cash inflow from operating activities 19,048 17,118 ________ _______ Notes 1. The unaudited results have been prepared on the basis of the accounting policies set out in the statutory accounts of the Company for the year ended 30 September 2005 apart from the following in accordance with FRS 21 and FRS 26 which are effective from accounting periods commencing on or after 1 January 2005. Comparative figures have been restated accordingly. • Dividends proposed by the Directors are recognised in the periods in which they are paid. • Quoted investments, which were previously valued at mid prices, are now valued at bid prices. This has the effect of reducing the valuation of the investment portfolio by £771,000 as at 30 September 2005. 2. Total income of £23,610,000 (2005: £20,646,000) includes special dividends of £4,636,000 (2005: £2,249,000) of which £4,379,000 (2005: £1,082,000) is recognised through revenue and £257,000 (2005: £1,167,000) is recognised through capital. 3. Return per Ordinary Share is based on a weighted average of 315,715,159 (2005: 330,374,885) Ordinary Shares in issue. 4. The proposed final dividend of 1.522p per Ordinary Share, will be paid on 5 January 2007 to ordinary shareholders on the register at close of business on 8 December 2006. The last date for receipt of mandate instructions for those shareholders who wish to join the Dividend Reinvestment Plan is 15 December 2006. 5. The Company had 308,512,282 (2005: 323,312,282) Ordinary Shares in issue as at 30 September 2006. 6. During the year, the Company purchased for cancellation 14,800,000 Ordinary Shares with an aggregate nominal value of £3.7 million for a total consideration of £19.4 million representing 4.6% of the Ordinary Shares in issue at the previous year end. 7.7. The Company's geographic exposure as a percentage of ordinary shareholders' funds at 30 September 2006 was as follows (comparative figures are for 30 September 2005). 2006 2005 (restated) UK 85.0 83.2 North America 12.3 13.4 Europe (ex UK) 6.2 5.9 Japan 6.1 6.1 Pacific (ex Japan) 4.0 4.0 Corporate Bonds 6.7 7.3 Gearing (20.3) (19.9) _____ _____ Total 100.0 100.0 _____ _____ 8. The following table provides a breakdown of the estimated contributions to the total return for the year: Attribution of Return Market/benchmark return 13.2% Stock selection UK equities -1.7 Overseas equities -0.7 Regional asset allocation 0.0 Corporate bonds -0.5 Gearing 0.8 Buy Backs 0.4 Expenses -0.6 ____ British Assets Trust total return 10.9% ____ 7.9. Reconciliation of net asset value per Ordinary Share As at 30.9.05 Net asset value per Ordinary Share 142.5p Less third interim and final dividends declared (FRS21) (2.6p) Add Adjustment to valuation of investments from bid to mid basis 0.2p (FRS26) ______ Comparable net asset value per Ordinary Share excluding adjustments 140.1p required by FRS21 and FRS26 ______ 10. These are not full statutory accounts in terms of Section 240 of the Companies Act 1985. The full audited accounts for the year to 30 September 2005, which received an unqualified report from the auditors, have been lodged with the Registrar of Companies. The 2006 annual report will be sent to shareholders during November 2006 and will be available for inspection at 80 George Street, Edinburgh EH2 3BU, the registered office of the Company. This information is provided by RNS The company news service from the London Stock Exchange

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