GARTMORE EUROPEAN INVESTMENT TRUST p.l.c.
ANNOUNCEMENT OF RESULTS AND DIVIDEND
FOR THE YEAR TO 30 SEPTEMBER 2003
The Directors announce the Company's unaudited results for the year to 30
September 2003 as follows:-
HIGHLIGHTS
- Diluted Net Asset Value per Ordinary share increased over the year to 30
September by 19.9% to 310.25p, by comparison with an increase of 23.1% in the
FTSE World Index - Europe (ex UK) in sterling terms
- Mid-market price per Ordinary share increased over the year by 14.2% to
259.75p
- Proposed dividend of 3.0p per Ordinary share
- Diluted Net Asset Value per Ordinary share increased by 11.4% and 141.6% over
the last five and ten years respectively, compared with a decrease of 9.1% and
an increase of 63.6% in the FTSE World Index - Europe (ex UK) in sterling terms
over the same periods
- Net revenue after taxation rose from �1,748,000 to �1,935,000
CHAIRMAN'S STATEMENT
Performance
Despite high market volatility for much of the early part of the review year, I
am pleased to report that much improved global stock market conditions since
the end of the Iraq war helped your Company to deliver strong performance over
the year as a whole.
The net asset value per share (fully diluted) rose by 19.9% over the year. The
Company's performance has lagged behind our benchmark, the FTSE World Europe
(ex-UK) Index, which rose by 23.1% (in sterling terms), although it is worth
noting that our holdings were relatively defensively positioned for much of the
year, a stance adopted by the Managers with the support of the Board. While our
Managers' focus remained very much on `quality' cash-generative stocks such as
Royal Dutch Petrol, the market's surge of optimism in the latter months of the
review year saw some investors become less discriminating in their stock
selection. Against this backdrop, some proven `quality' names were left
trailing behind as some investors' sentiment seemed more driven by optimism
than realism. However, it is testament to the proven longer-term stock-picking
skills of our Manager that over the last five years the diluted net asset value
has risen by 11.4%, significantly ahead of the benchmark index which fell by
9.1% over the same period.
Revenue, Dividends and Borrowings
Gross revenue in the year to 30 September 2003 decreased marginally, by 2.4% to
�3.6 million. However, net revenue after taxation increased by 10.7%. General
expenses have reduced considerably over the previous year, mainly as a result
of savings arising from the direct appointment of the Company's custodian.
Management fees have also fallen as the average value of the Company's total
assets was lower than the previous year.
The Board is recommending a final dividend of 3.0p, in line with that paid last
year. This will result in a transfer of �251,000 into revenue reserves.
The multi-currency borrowing facility was used modestly throughout the year.
The Company had no borrowings at the year-end, compared with borrowings of �3.5
million at 30 September 2002.
Corporate activities
As reported previously, your Board remains committed to a policy of enlarging
the Company. Whilst a number of opportunities have presented themselves during
the year, none were on terms sufficiently favourable to the Company's
shareholders to proceed with.
As the share price remained at a discount to the diluted NAV throughout the
period there have been no opportunities to issue shares, other than those
issued as a result of the exercise of warrants. Your Board hopes that further
shares will be issued when the shares once again trade at a premium.
Warrantholders
I would like to remind warrantholders that their last opportunity to subscribe
for Ordinary shares at 220p will be on 2 February next year. A letter giving
further details of the exercise procedure has been sent to warrantholders with
this report.
Market Background
European stock markets tracked their global counterparts sharply lower in
volatile market conditions ahead of the war in Iraq. However, with economic and
corporate news largely disappointing, global central banks delivered a
succession of interest rate cuts, thus sowing some of the seeds of a recovery
as soon as the geo-political environment began to improve. Following a poor
first quarter of 2003, the unexpectedly early, and largely successful,
conclusion to major combat operations triggered a relief rally in global stock
markets.
As the year progressed, corporate and economic news began to show a more
encouraging trend. This was particularly so in the US, but evidence also began
to emerge that Continental European economies, helped by the lowest interest
rates for a generation, were also showing more convincing signs of responding
to the improving operating backdrop.
Outlook
Following another turbulent spell for investors, we can be fairly confident
that the European economy will begin 2004 in better shape than a year earlier.
Following an extended spell of cost-cutting and wider restructuring, we believe
that European companies are also now in better condition to compete on the
global stage. Against this backdrop, I am confident that your Company's
Managers will continue to demonstrate considerable acumen in selecting
companies well-placed to continue to deliver strong returns as the trading
environment improves.
Directors
As you will see in the Report of the Directors, Mr Hugh Jenkins will be
retiring at the forthcoming Annual General Meeting. I should like to take this
opportunity to thank Hugh for his immense contribution to the Company and to
wish him a long and happy retirement.
With the retirement of Mr W Campbell Allan at the AGM in January of this year
and Hugh's retirement early next year your Board felt that a search should be
undertaken to identify two new directors to augment the Board. I am delighted
to welcome Mr Alexander Comba and Mr Rodney Dennis to the Board and I look
forward to working with them in the years to come.
Special Business of the Annual General Meeting
At the Annual General Meeting the Directors will again seek to renew the
authorities previously granted to allot and buy back shares. Authority will
also be sought to buy back shares to be held by the Company in Treasury for
subsequent resale or cancellation. The passing of these resolutions will give
the Board flexibility to add shareholder value should the opportunity arise. I
hope you will give these resolutions your support.
DIVIDEND
The Directors recommend a final dividend of 3.0p (3.0p) per Ordinary share of
50p each for the year ended 30 September 2003 which will result in a transfer
of �251,000 (�64,000) into revenue reserves. The shares will be marked
ex-dividend on 17 December 2003 and the dividend is proposed to be paid on 30
January 2004 to shareholders on the Register on 19 December 2003.
STATEMENT OF TOTAL RETURN
Year to 30 September 2003
Revenue Capital Total
Return
�'000 �'000. �'000
Income and Capital Profits
Dividends and other income 3,618 - 3,618
Net profit on investments - 32,727 32,727
-------- ----------- -----------
Return before Expenses, Finance Costs 3,618 32,727 36,345
and Taxation
Expenses
Management fee (372) (1,117) (1,489)
Other fees and expenses (524) - (524)
-------- ----------- -----------
Return before Finance Costs and 2,722 31,610 34,332
Taxation
Finance Costs
Interest payable (26) (62) (88)
Exchange gain on currency loans - 338 338
-------- ----------- -----------
Return on Ordinary Activities before 2,696 31,886 34,582
Taxation
Taxation (761) 384 (377)
-------- ----------- -----------
Return to Equity Shareholders after 1,935 32,270 34,205
Taxation
-------- ----------- -----------
Appropriated to Equity Shareholders
Dividends - Ordinary shares (3.0p per (1,684) - (1,684)
share)
-------- ----------- -----------
Transferred to Reserves 251 32,270 32,521
-------- ----------- -----------
Total Return per Ordinary share 3.45p 57.48p 60.93p
Diluted Earnings per Ordinary share 3.08p
STATEMENT OF TOTAL RETURN (COMPARATIVE)
Year to 30 September 2002
Revenue Capital Total
Return
�'000 �'000. �'000
Income and Capital Profits / (Losses)
Dividends and other income 3,706 - 3,706
Net loss on investments - (45,603) (45,603)
-------- ----------- -----------
Return before Expenses, Finance Costs 3,706 (45,603) (41,897)
and Taxation
Expenses
Management fees (449) (2,236) (2,685)
Other fees and expenses (671) - (671)
-------- ----------- -----------
Return before Finance Costs and 2,586 (47,839) (45,253)
Taxation
Finance Costs
Interest payable (59) (151) (210)
Exchange gain on currency loans - 426 426
-------- ----------- -----------
Return on Ordinary Activities before 2,527 (47,564) (45,037)
Taxation
Taxation (779) 380 (399)
-------- ----------- -----------
Return to Equity Shareholders after 1,748 (47,184) (45,436)
Taxation
-------- ----------- -----------
Appropriated to Equity Shareholders
Dividends - Ordinary shares (3.0p per (1,684) - (1,684)
share)
-------- ----------- -----------
Transferred to/(from) Reserves 64 (47,184) (47,120)
-------- ----------- -----------
Total Return per Ordinary share 3.11p (84.07)p (80.96)p
Diluted Earnings per Ordinary share 2.78p
NOTES
The revenue column above for each year represents the Revenue Account of the
Company.
All revenue and capital items derive from continuing activities.
No operations were acquired or discontinued during the year.
Management fees and loan finance costs are allocated 25% to revenue and 75% to
capital. In accordance with the Statement of Recommended Practice for the
Financial Statements of Investment Trust Companies, performance fees (when
payable) are allocated to capital reserve, together with the tax relief in
respect of such allocations.
Total Return per Ordinary share has been calculated on the return for the year
of �34,205,000 (negative return of �45,436,000) and a weighted average of
Ordinary shares in issue during the year of 56,140,499 (56,124,222).
Revenue Return per Ordinary share has been calculated on a revenue return to
Ordinary shareholders of �1,935,000 (�1,748,000) and a weighted average of
Ordinary shares in issue during the year of 56,140,499 (56,124,222).
Capital Return per Ordinary share has been calculated on a capital return to
Ordinary shareholders of �32,270,000 (negative capital return of �47,184,000)
and a weighted average of Ordinary shares in issue during the year of
56,140,499 (56,124,222).
BALANCE SHEET
At At
30 September 30 September
2003 2002
�'000 �'000
Fixed Assets
Listed investments at valuation 177,907 155,142
Unlisted investments in subsidiaries 345 337
-------- --------
178,252 155,479
Current Assets
Debtors - amounts receivable within one 1,610 2,668
year
Short-term deposits 4,576 60
Cash at bank 1,333 1,057
-------- --------
7,519 3,785
Creditors:
Amounts payable within one year (5,289) (11,334)
----------- -----------
Net Current Assets/(Liabilities) 2,230 (7,549)
----------- -----------
Net Assets 180,482 147,930
----------- -----------
Capital and Reserves
Called-up share capital 28,073 28,066
Share premium 26,417 26,389
Warrant reserve 1,706 1,710
Merger reserve 61,344 61,344
Other reserves:
Capital reserve - realised 55,545 71,025
Capital reserve - unrealised 4,741 (43,009)
----------- -----------
177,826 145,525
Revenue reserve 2,656 2,405
----------- -----------
Shareholders' Funds 180,482 147,930
----------- -----------
Net Asset Value per Ordinary share 321.45p 263.54p
----------- -----------
Diluted Net Asset Value per Ordinary 310.25p 258.73p
share
----------- -----------
NOTES
The Net Asset Value per Ordinary share is calculated on net assets of �
180,482,000 (�147,930,000) and 56,145,767 (56,131,524) Ordinary shares in issue
at the year end.
CASH FLOW STATEMENT
Year to Year to
30 September 30 September
2003 2002
�'000 �'000
Revenue Activities
Dividends and interest received from 2,809 2,901
investments
Interest received on deposits 139 77
Other income 21 -
Expenses paid, allocated to revenue (846) (212)
-------- --------
2,123 2,766
-------- --------
Servicing of Finance
Bank overdraft interest (5) (9)
Bank revolving credit facility interest (83) (201)
--------- ---------
(88) (210)
--------- ---------
Taxation Recovered
Income tax 434 586
-------- --------
Investment Activities
Acquisitions of investments (386,564) (483,450)
Disposals of investments 395,415 490,646
Expenses paid, allocated to capital (1,957) (2,236)
------------ ------------
6,894 4,960
------------ ------------
Equity Dividends
Ordinary shares (1,684) (1,683)
--------- ---------
Financing
Shares issued 31 43
Exchange gain on currency loans 338 426
---------- ----------
369 469
---------- ----------
Net Cash Inflow 8,048 6,888
--------- ---------
Annual General Meeting
The Company's Annual General Meeting for 2004 will be held at Gartmore House, 8
Fenchurch Place, London EC3M 4PB on Monday, 26 January 2004, at 12.30 p.m.
The Directors and the Managers will be available to answer questions and
discuss the Company's performance after the Meeting.
Annual Report and Accounts
The Report and Accounts for the year ended 30 September 2003 will be posted to
shareholders shortly. Copies will be available from the offices of Gartmore
Investment Limited, Gartmore House, 8 Fenchurch Place, London EC3M 4PB.
NOTE
The above financial information does not constitute statutory accounts under
the Companies Act 1985. The Results and Balance Sheet for the year to 30
September 2003 are taken from the Company's latest Financial Statements which
are subject to final audit and have not yet been delivered to the Registrar of
Companies. The comparative financial information is based on the full statutory
accounts for the year ended 30th September 2002, which included an unqualified
audit report and have been filed with the Registrar of Companies.
GARTMORE INVESTMENT LIMITED
SECRETARIES
11 December 2003
END