Information  X 
Enter a valid email address

Perpetual Inc&Growth (PLI)

  Print      Mail a friend       Annual reports

Thursday 24 May, 2001

Perpetual Inc&Growth

Final Results

Perpetual Income&Growth Inv Tst PLC
24 May 2001


Chairman's Statement

During the twelve months to 31st March 2001, the net asset value (NAV) per
share increased by 15.0%, compared with a fall in the FT-SE All-Share Index of
12.8%. The share price increased by 29%. As a result of this performance the
Company was ranked third in its peer group - the AITC UK Growth and Income
Investment Trusts.

There is a full investment report from the Manager in the following section.
You will see that the investment of the Company's portfolio has, over the last
twelve months, been conducted against a background of extraordinary and very
volatile stock market conditions. The start of the period saw the unwinding of
the excesses that had built up within the Technology Media and Telecoms
('TMT') sectors. As a result many of the so-called 'old economy' sectors
performed strongly as investors sold off TMT stocks. In an environment where
cuts in interest rates were expected, the Manager has favoured the most
economically and interest rate sensitive areas of the market and concentrated
investment in consumer cyclical and defensive sectors.

The Manager believes that with the likelihood of further interest rate cuts
along with stable consumer expenditure and increased spending by government,
the UK economy remains reasonably robust, with moderate growth and low
inflation, despite concerns about the effect of the slowdown in the US. In
such an environment, the Manager intends to maintain exposure to economically
and interest rate sensitive stocks and we believe such a policy offers a good
basis for continued superior investment performance.

Since the year end the Company has maintained its good performance with the
NAV per share increasing by 11.6% to 23rd May 2001, compared with a rise in
the FT-SE All-Share Index of 5.4% over the same period of time.

There is one matter I wish to draw your attention to in relation to the
forthcoming Annual General Meeting: we are seeking to renew shareholder
authority for the Company to be able to repurchase its own shares if a
suitable opportunity arises.

The Board have proposed a final dividend of 2.75p per share to be paid on 18th
July 2001 to shareholders on the register at the close of business on 22nd
June 2001, with an ex-dividend date of 20th June. This proposed final dividend
means that the total dividend for the year to 31st March 2001 is 4.65p per
share: an increase of 3.3% compared to 2000. It remains the Company's
objective to generate increasing real dividends for shareholders over the
longer term. However, in the current economic climate, the Board views the
prospects for dividend growth from UK equities in general as less than in
recent years and is taking a correspondingly conservative line with the latest
year's proposed pay out.

Sir Patrick Sheehy

Chairman                                        24th May 2001

Manager's Review

Investment Review

During the period under review, the UK enjoyed a stable economic environment
of steady growth and low inflation, which provided a supportive backdrop for
the equity market. The monetary policy committee's decision to hold interest
rates at 6% for most of the year was testament to the fact that both consumer
and business confidence remained robust and also that some of the excesses in
the regional housing market and stock market were unwinding.

As the period progressed there were growing concerns about the pace of growth
in the USA and the effect of a slowdown on other world economies. In the UK,
the indications were that the downturn in activity would be less pronounced
than in the US. Indeed, consumer spending over the Christmas period remained
strong, more than 4% higher than a year earlier. Nevertheless, considerable
uncertainty surrounded the knock-on effect on the UK and European economies of
a slowing US economy.

This concern, coupled with the fact that inflation remained well within the
Bank of England's target range, led to a 0.25% interest rate reduction in
February 2001 (two further 0.25% cuts have been made since the end of the
review period).

The bubble in the technology, media and telecommunications (TMT) sectors which
had been building from late 1999, burst in mid-March 2000. We had very little
exposure to this area of the market, preferring to build up our holdings of
so-called 'old economy' stocks. Consequently the fund performed strongly
during the year under review, as some of the significant rating disparities in
the market narrowed.

Investment Strategy

Our strategy throughout the review period remained that of concentrating on
economic, industry and corporate fundamentals within a pragmatic valuation
framework. During the review period, we took two main views. First, that
growth prospects were not as weak as many expected. Second, that interest-rate
reductions, both in the US and the UK, were likely. These views led us to
favour the most economically and interest rate sensitive areas of the market.

Among the economically sensitive areas of the market the fund had holdings
across industrial and consumer cyclical sectors which included banks, building
materials and construction, retailers and engineering stocks. We also retained
an exposure to other so-called defensive sectors including tobacco, utilities
and aerospace. Overall the market became much more risk averse over the course
of the year which led investors to seek earnings visibility in the face of an
increasingly uncertain economic environment.

Current Prospects

We feel that the UK economy remains in generally good condition, with
prospects for a continuation of sound economic growth and low inflation. There
are obvious concerns about the impact of a slowing US economy on UK growth,
but we think that these have been exaggerated.

One important reason for this view is that the US, UK and European central
banks still have opportunities to reduce interest rates. In particular, the
low rate of underlying inflation in the UK gives scope for the Bank of England
to cut interest rates further. Furthermore, Government spending targets are
increasing over the next 6-12 months and tax cuts remain a powerful weapon for
the Treasury.

The outlook remains one in which we envisage maintaining our exposure to
economically and interest rate sensitive stocks. We expect this to continue to
produce attractive returns on both an absolute and relative basis.


As at 31st March 2001
                                                            2001   2000       %
Total net assets (£'000)                                 276,529 240,258  15.1%
Net asset value per share -basic                          156.6p 136.2p   15.0%
- diluted                                                 147.4p 130.2p   13.2%
Share Price                                               133.5p 103.5p   29.0%
FT-SE Actuaries All-Share Index                           2711.4 3110.6 (12.8%)
Dividends per share - interim                              1.90p  1.84p
- final                                                    2.75p  2.66p
- total                                                    4.65p  4.50p    3.3%
Earnings per share - basic                                  5.0p   5.2p  (3.8%)
- diluted                                                   4.8p   5.1p  (5.9%)
Net yield based on dividends per share and share price at   3.5%   4.3% (18.6%)
31st March
FT-SE Actuaries All-Share Index yield                       2.5%   2.1%   19.0%
Expense ratio (excluding performance fee) *                1.09%  1.09%
Expense ratio (including performance fee) *                1.72%  1.09%

* This is the total expenses, excluding interest, incurred by the Company,
including those charged to capital, as a percentage of average net assets
(shareholders' funds)

STATEMENT OF TOTAL RETURN (incorporating the revenue account)

Year ended 31st March 2001

                                2001                           2000           
                   Revenue   Capital     Total   Revenue    Capital      Total
                     £'000     £'000     £'000     £'000      £'000      £'000
  on investments                                                              
  realised               -    10,864    10,864         -     39,261     39,261
  unrealised             -    30,216    30,216         -   (63,318)   (63,318)
  foreign                -     (144)     (144)         -        172        172
  Income            10,682         -    10,682    11,383          -     11,383
  Investment         (795)   (3,477)   (4,272)     (742)    (1,730)    (2,472)
  management fee                                                              
  Other expenses     (163)      (10)     (173)     (266)       (10)      (276)
  Net return         9,724    37,449    47,173    10,375   (25,625)   (15,250)
  before finance                                                              
  costs and                                                                   
  Interest           (852)   (1,987)   (2,839)     (708)    (1,653)    (2,361)
  payable and                                                                 
  similar charges                                                             
  Return on          8,872    35,462    44,334     9,667   (27,278)   (17,611)
  before tax                                                                  
  Tax                (110)        90      (20)     (447)        130      (317)
  on ordinary                                                                 
  Return on          8,762    35,552    44,314     9,220   (27,148)   (17,928)
  after tax for                                                               
  the financial                                                               
  Dividends in     (8,212)         -   (8,212)   (7,939)          -    (7,939)
  respect of                                                                  
  equity shares                                                               
  Transfer             550    35,552    36,102     1,281   (27,148)   (25,867)
  Return per ordinary                                                         
  Basic               5.0p     20.1p     25.1p      5.2p    (15.4p)    (10.2p)
  Diluted             4.8p     19.5p     24.3p      5.1p    (15.0p)     (9.9p)

The revenue column of this statement is the Profit and Loss account of the

All revenue and capital items in the above statement derive from continuing

A final dividend of 2.75p per share is proposed.


As at 31st March 2001
                                                                2001       2000
                                                               £'000      £'000
Fixed assets
Investments                                                  329,394    285,328
Current assets
Debtors                                                        5,344      7,503
Creditors: amounts falling due within one year              (28,209)   (22,573)
Net current liabilities                                     (22,865)   (15,070)
Total assets less current liabilities                        306,529    270,258
Creditors: amounts falling due after more than one year     (30,000)   (30,000)
Net assets                                                   276,529    240,258
Capital and reserves
Called-up share capital                                       17,661     17,644
Share premium account                                        151,185    151,033
Capital reserves
realised                                                      93,711     88,375
unrealised                                                    10,478   (19,738)
Revenue reserve                                                3,494      2,944
Equity shareholders' funds                                   276,529    240,258
Net asset value per ordinary share:
Basic                                                         156.6p     136.2p
Diluted                                                       147.4p     130.2p


Year ended 31st March 2001
                                                              2001         2000
                                                             £'000        £'000
Net cash inflow from operating activities                    6,579        7,715
Servicing of finance
Bank interest paid                                           (852)        (708)
Net cash outflow from servicing of finance                   (852)        (708)
ACT paid                                                         -        (273)
UK income tax suffered at source                                35          167
Overseas withholding tax suffered at source                   (20)         (11)
Taxation (paid)/recovered                                       15        (117)
Financial investment
Purchase of investments                                  (243,951)    (161,854)
Sale of investments                                        239,526      151,298
Net cash outflow from financial investment                 (4,425)     (10,556)
Equity dividends paid                                      (8,048)      (5,745)
Issue of ordinary share capital                                169          478
Issue of debenture                                               -       30,000
Net cash inflow from financing                                 169       30,478
Increase/(decrease) in cash                                (6,562)       21,067

Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash in the year                    (6,562)       21,067
Cashflow from issue of debenture                                 -     (30,000)
Exchange movements                                           (144)          172
Net debt at 1st April 2000                                (37,988)     (29,227)
Net debt at 31st March 2001                               (44,694)     (37,988)

The preliminary announcement has been prepared on the basis of the accounting
policies as stated in the 2000 accounts.

The Board approved this preliminary statement, which has been agreed with the
auditors, on 24th May 2001. The financial information set out above is
unaudited. This information does not constitute the Company's statutory
accounts for the years ended 31st March 2001 or 2000, but is derived from
those accounts. Statutory accounts for 2000 have been delivered to the
Registrar of Companies and those for 2001 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
s237(2) or (3) Companies Act 1985.

Copies of this statement will be available from the Company's registered
office at 11 Devonshire Square, London, EC2M 4YR.


a d v e r t i s e m e n t