Final Results

Taverners Trust PLC 01 July 2003 THE TAVERNERS TRUST PLC PRELIMINARY ANNOUNCEMENT OF UNAUDITED ANNUAL RESULTS for the year ended 30 April 2003 Chairman's Statement I last wrote to shareholders before Christmas 2002 in order to detail an unhappy period of underperformance in the life of the Taverners Trust which I am sorry to say continued albeit to a lesser degree until the end of March. In fact the Trust's Net Asset Value bottomed on 14 March 2003 at 70.1p just before the commencement of the war in Iraq. The last two weeks of March saw the nadir of our fortunes relative to the benchmark. From then on, the measures already taken and referred to in my interim statement to position the fund in regional brewers and other companies paying sensible dividends stabilised the portfolio. At the same time we reduced our exposure in particular to the more volatile Alternative Investment Market. Since the end of March the Trust's Net Asset Value has risen by 22% in line with the benchmark index which is up by 21%. This rise in Net Asset Value has also brought in its train a most welcome 29% improvement in the Trust's share price from 50p to 64.5p. Most of our larger holdings have contributed to this advance; a big move by Enterprise Inns, where we have had to take some profit because the holding threatened to become over large, accounted for over 15% of the advance and we were also helped by recoveries from a low base by Luminar and Georgica. Over the year on which we are reporting the Trust's Net Asset Value declined by 37% while the broader based Leisure and Hotels index was down by 25%. To lose over a third of the value held by investors in this way is seriously unfortunate and we can only apologise for this decline in value. Sadly we are not alone in having to report a fall of this dimension. Most of this decline occurred before the end of the 2002 calendar year and I explained in my interim statement that these difficulties stemmed from the Trust's failure to exit fully the town centre managed pubcos and in particular from our remaining large investment in SFI Group whose shares were eventually suspended after a long decline. Over the second half of the year on which we are reporting, ie. from 31 October 2002 to 30 April 2003, the Trust's NAV declined by 13.7% while the benchmark remained almost static falling by only 1.6%. As explained above the underperformance lasted approximately six months from the end of September 2002. During February the Trust repaid £500,000 of its three million pound bank loan in order to reduce its gearing ratio; the market was still falling, our cash was strong, break costs were low and it was felt that this action was an appropriate precautionary response in case of a further sharp deterioration in the indices. Christmas trading statements confirmed the pattern established during the autumn whereby the managed retailers trading in town centres continued to suffer, while regional brewers and tenancies reported less difficulty although most stated that trade was challenging. Food oriented pubs did well and the economy proved more resilient away from London and the South East. Another of our town centre holdings Po Na Na failed to make needed disposals and went into receivership after our year end, yet another accident that need not have occurred as success tempted the company to operate larger units beyond their core late night bars which were cash generative. Over the winter months of 2002/3 following the autumn disasters on the High Streets both the pubco and regional brewery sub-sectors were totally out of favour with investors until the market slowly became aware that investment in the regional brewers remained as solid in this downturn as it has been in the past. We increased our holdings in Hardys and Hansons and to a lesser extent Burtonwood Brewery. Hardys, a debt free company which has benefited from proactive management and the closure of the other two regional breweries in the Nottingham area, has rewarded us with a 15% improvement in share price; Burtonwood is also well ahead having acquired the freeholds of 94 leased pubs and disposed of a clutch of non-viable small houses. Opinion is divided as to whether the recent rise in the market presages a return to bull market conditions or whether we are rather in the middle of a strong bear market rally. We are also mindful that the full effects of the recent market upheaval and slowing economy may not as yet have worked through to consumer expenditure and may well impact our sector. However in recent weeks we have returned to some of the stronger town centre retailers whose shares look to us to be standing at unjustifiably low levels after the collapse. Obviously consumers have welcomed the fact that the Iraq war has ended yet there is also a sense that the resultant feel-good factor is somewhat fragile. As we witnessed in the sharp but shortlived stockmarket decline in 1998 the late night town centre market has proved less resilient to the downturn than the community public house. Looking forward to the autumn we will be entering a period when comparatives for the town centre operators will be weak. In June 2002 we had the Jubilee and then the World Cup; both these events were negative for the late night operators but positive for community houses with large screens. Moreover all of the regional brewers who have reported recently have said that trade is for the present holding up well. If confidence is truly returning we may even see a resurgence in the town centre later in the year. For a second year we have decided to dip a little into our revenue reserve in order to repeat our small dividend of 0.5p per share. If approved by shareholders at the Annual General Meeting, the dividend will be payable on 18 September 2003 to Ordinary shareholders on the register on the record date 25 July 2003. L J Ross Chairman 1 July 2003 Statement of Total Return Year ended Year ended 30 April 2003 30 April 2002 (unaudited) (audited) Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 --------------------------- ------- ------ ------ ------- ------ ----- (Losses)/gains on - (6,865) (6,865) - 2,059 2,059 investments Income 507 - 507 519 - 519 Investment management fee (123) (123) (246) (150) (150) (300) Other expenses (228) - (228) (202) - (202) Exchange losses - (2) (2) - - - --------------------------- ------- ------ ------ ------- ------ ----- Net return before finance 156 (6,990) (6,834) 167 1,909 2,076 costs and taxation Interest payable and (98) (114) (212) (103) (100) (203) similar charges --------------------------- ------- ------ ------ ------- ------ ----- Return on ordinary 58 (7,104) (7,046) 64 1,809 1,873 activities before taxation Taxation on ordinary (2) - (2) (2) 2 - activities --------------------------- ------- ------ ------ ------- ------ ----- Return on ordinary 56 (7,104) (7,048) 62 1,811 1,873 activities after taxation Dividends in respect of (80) - (80) (80) - (80) equity shares --------------------------- ------- ------ ------ ------- ------ ----- Transfer (from)/to (24) (7,104) (7,128) (18) 1,811 1,793 reserves --------------------------- ------- ------ ------ ------- ------ ----- Return per Ordinary share (pence): Basic 0.35 (44.58) (44.23) 0.39 11.36 11.75 --------------------------- ------- ------ ------ ------- ------ ----- The revenue column of this statement represents the revenue account of the Company. All revenue and capital items in the above statement derive from continuing operations. Balance Sheet As at As at 30 April 30 April 2003 2002 (unaudited) (audited) ---------- --------- £'000 £'000 -------------------------------------- ---------- --------- Fixed assets Investments 14,568 22,438 -------------------------------------- ---------- --------- Current assets Debtors 45 215 Cash at bank and in hand 500 - -------------------------------------- ---------- --------- 545 215 Creditors: amounts falling due within one (330) (242) year -------------------------------------- ---------- --------- Net current assets/(liabilities) 215 (27) -------------------------------------- ---------- --------- Total assets less current liabilities 14,783 22,411 Creditors: amounts falling due after more (2,500) (3,000) than one year -------------------------------------- ---------- --------- Net assets 12,283 19,411 -------------------------------------- ---------- --------- Capital and reserves Called-up share capital 3,984 3,984 Share premium account 10,536 10,536 Other reserves: Warrant reserve 981 981 Capital reserve - realised 750 1,922 Capital reserve - unrealised (4,100) 1,832 Revenue reserve 132 156 -------------------------------------- ---------- --------- Shareholders' funds 12,283 19,411 -------------------------------------- ---------- --------- Net asset value per Ordinary share (pence): Basic 77.08 121.81 -------------------------------------- ---------- --------- Fully-diluted n/a 118.27 -------------------------------------- ---------- --------- Cash Flow Statement Year ended Year ended 30 April 2003 30 April 2002 £'000 £'000 £'000 £'000 ----------------------------------- ------- ------ ------ ------ Net cash inflow from operating 8 47 activities Servicing of finance Bank and loan interest paid (216) (203) ----------------------------------- ------- ------ ------ ------ Net cash outflow from servicing of (216) (203) finance Financial investment Purchases of investments (6,087) (3,960) Sales of investments 7,400 4,019 ----------------------------------- ------- ------ ------ ------ Net cash inflow from financial 1,313 59 investment Equity dividends paid (80) (72) ----------------------------------- ------- ------ ------ ------ Net cash inflow/(outflow) before 1,025 (169) financing Financing Part repayment of bank loan (500) - ----------------------------------- ------- ------ ------ ------ Net cashflow from financing (500) - ----------------------------------- ------- ------ ------ ------ Increase/(decrease) in cash 525 (169) ----------------------------------- ------- ------ ------ ------ Reconciliation of net cash flow to movements in net debt Increase/(decrease) in cash as 525 (169) above Cash outflow from decrease in 500 - loans ----------------------------------- ------- ------ ------ ------ Change in net debt resulting from 1,025 (169) cash flows Exchange movements (2) - ----------------------------------- ------- ------ ------ ------ Movement in net funds/(debt) for the 1,023 (169) year Net debt at 1 May (3,023) (2,854) ----------------------------------- ------- ------ ------ ------ Net debt at 30 April (2,000) (3,023) ----------------------------------- ------- ------ ------ ------ Notes: 1. Dividend The Directors have today declared a first and final dividend of 0.50p per Ordinary share for the year ended 30 April 2003 (2002 - 0.50p) which, if approved by Shareholders at the Annual General Meeting, will be payable on 18 September 2003 to Shareholders on the register on 25 July 2003. 2. Income 2003 2002 £'000 £'000 Income from investments UK dividend income 487 503 Overseas dividends 11 3 -------- -------- 498 506 -------- -------- Other income Deposit interest 8 9 Underwriting commission 1 4 -------- -------- 9 13 -------- -------- Total income 507 519 -------- -------- Total income comprises: Dividends 498 506 Interest 8 9 Other income 1 4 -------- -------- 507 519 -------- -------- Income from investments: Listed UK 413 426 Listed overseas 11 3 Unlisted 74 77 -------- -------- 498 506 -------- -------- 3. Return per Ordinary share 2003 2002 Revenue Capital Total Revenue Capital Total p p p p p p Basic 0.35 (44.58) (44.23) 0.39 11.36 11.75 ------- ------ ------ ------- ------ ------ The basic revenue return per Ordinary share is calculated on the net revenue on ordinary activities after taxation of £56,000 (2002 - £62,000) and on 15,936,000 (2002 - 15,936,000) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year. The basic capital return per Ordinary share is calculated on net capital losses for the year of £7,104,000 (2002 - £1,811,000 capital gain) and on 15,936,000 (2002 - 15,936,000) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year. Fully diluted returns calculated on the basis set out in Financial Reporting Standard 14 'Earning per share' ('FRS14') indicate that the exercise of Warrants in issue would have no dilutive effect on returns. 4. Net asset value per share The net asset value per share and the net asset values attributable to equity Shareholders at the year end calculated in accordance with the Articles of Association and FRS 4 were as follows: Net asset value Net asset values per share attributable attributable 2003 2002 2003 2002 p p £'000 £'000 Ordinary shares: Basic 77.08 121.81 12,283 19,411 -------- ------- ------- ------- Fully diluted n/a 118.27 -------- ------- The movements during the year of the assets attributable to the Ordinary shares were as follows: 2003 2002 £'000 £'000 Total net assets attributable at 1 May 2002 19,411 17,618 Total recognised (losses)/gains for the year (7,048) 1,873 Dividends appropriated in the year (80) (80) --------- --------- Total net assets attributable at 30 April 2003 12,283 19,411 --------- --------- 5. The financial information for the year ended 30 April 2003 comprises non-statutory accounts within the meaning of section 240 of the Companies Act 1985. The financial information for the year ended 30 April 2002 has been abridged from the published accounts that have been delivered to the Register of Companies and on which the report of the auditors is unqualified and does not contain a statement under section 237 (2) or (3) of the Companies Act 1985. The statutory accounts for 2003 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Register of Companies in due course. 6. Copies of the Annual Report will be posted to all Shareholders in due course and further copies may be obtained from the Registered Office, One Bow Churchyard, Cheapside, London EC4M 9HH. Aberdeen Asset Management PLC Secretaries 1 July 2003 This information is provided by RNS The company news service from the London Stock Exchange

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