Half-yearly Report
MERRILL LYNCH GREATER EUROPE INVESTMENT TRUST plc
Half yearly financial results for the six months ended 29 February 2008
For further information please contact:
Jonathan Ruck Keene 020 7743 2178
Managing Director, Investment Company Division
BlackRock Investment Management (UK) Limited
James Macmillan 020 7743 2289
Fund Manager
BlackRock Investment Management (UK) Limited
Nigel Webb 020 7743 2302
Public Relations
BlackRock Investment Management (UK) Limited
OR
William Clutterbuck 020 7379 5151
The Maitland Consultancy
Chairman's Statement
The volatility in European equity markets experienced towards the end of the
Company's financial year continued during the period under review. The driving
force behind much of this volatility was the impact on markets by the now
familiar "credit crunch". Against this difficult background, the net asset
value per share for the period fell by 5.4% (compared with a fall of 1.9%
for the FTSE World Europe ex UK Index) and the share price fell by 5.2%
(all percentages in sterling terms with income reinvested). These falls would
have been greater but for the appreciation of the Euro against the pound
during the period.
Tender offer and discount
The Directors exercised their discretion to operate the half yearly tender
offer on 30 November 2007 which was undersubscribed with 4,726,178 shares
(3.94% of the shares in issue excluding treasury shares) being tendered. The
tender price calculated as at close of business on 30 November 2007 was
186.23p per share.
It was announced on 11 March 2008 that the Directors will implement the May
tender offer which on this occasion will have a calculation date of 2 June
2008, being the first business day following 31 May. The tender will be for up
to 20% of the shares in issue at the prevailing net asset value subject to a
discount of 2%. A circular will be posted on 28 April 2008.
During a volatile six month period when investment trust discounts have
widened, the Company's has averaged 3.5% reflecting the benefit of regular
tender offers.
Company name
At a General Meeting held on 15 April 2008, shareholders resolved to change
the Company's name to BlackRock Greater Europe Investment Trust plc with
effect from 25 April 2008. The change follows the merger of Merrill Lynch
Investment Managers with BlackRock. BlackRock has borne the costs in changing
the Company's name.
VAT
As reported last October, the Board welcomed the success of the Association of
Investment Companies ("AIC") and JPMorgan Claverhouse Investment Trust plc who
won their lengthy test case against HM Revenue and Customs ("HMRC")
challenging the imposition of VAT on management services supplied to
investment trusts. HMRC has now accepted the European Court of Justice's
judgement on 28 June 2007 that management services supplied to investment
trusts should be exempt from VAT.
Total VAT incurred by the Company on management fees since inception is
estimated at £400,000 and the prospective saving for the Company is
estimated at £136,000 per annum. The Investment Manager has submitted claims
to recover from HMRC any amounts repayable as a result of the AIC and JPMorgan
Claverhouse case. Given the volume of claims HMRC has to process, it is likely
to be many months before any amounts are refunded. The amounts involved are
not expected to have a significant impact on the Company's net asset value.
Outlook
The problems in global credit markets provide for a particularly uncertain
outlook at the present time. The Board has a positive view with regard to
European equity values in the medium term.
John Walker-Haworth
16 April 2008
Interim Management Report and Responsibility Statement
Principal risks and uncertainties
The principal risks faced by the Company can be divided into various areas as
follows:
* Performance;
* Income/dividend;
* Regulatory;
* Operational; and
* Financial.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Accounts for the year ended 31 August 2007. A
detailed explanation can be found on pages 14 and 15 of the Annual Report and
Accounts which is available on the website maintained by the Investment
Manager, BlackRock Investment Management (UK) Limited, at www.blackrock.co.uk/
its.
In the view of the Board, there have not been any changes to the fundamental
nature of these risks since the previous report and these principal risks and
uncertainties are equally applicable to the remaining six months of the
financial year as they were to the six months under review.
Related party transactions
The Investment Manager is regarded as a related party and details of the
management fees payable are set out in note 4. As a result of the
Company's performance relative to the FTSE World Europe ex UK Index, a
performance fee of £201,000 has been accrued in the period.
Directors' responsibility statement
The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority
require the Directors to confirm their responsibilities in relation to the
preparation and publication of the Interim Management Report and Financial
Statements.
The Directors confirm to the best of their knowledge that:
* the condensed set of financial statements contained within the half yearly
financial report has been prepared in accordance with the Accounting
Standards Board's Statement 'Half Yearly Financial Reports'; and
* the interim management report includes a fair review of the information
required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency
Rules.
The half yearly financial report was approved by the Board on 15 April 2008
and the above responsibility statement was signed on its behalf by the
Chairman, John Walker-Haworth.
Investment Manager's Report
The Company's results were disappointing in the six months to
29 February 2008, as markets have entered a new phase characterised by
greater risk aversion and concern over the health of the global financial
system. The Company's share price decreased by 5.2%, predominantly
reflecting a 5.4% decline in the underlying net asset value. By comparison
the FTSE World Europe ex UK Index declined by 1.9% in sterling, falling by
almost 14% in local currency but countered by an average 12% increase in
the value of European currencies, predominantly the Euro, against the pound.
During the period, the Company benefited from its ability to invest in the
stock markets in Emerging Europe as the MSCI Emerging Europe Index returned
9.3% in sterling terms, significantly ahead of returns in developed Europe.
Over the period, on average, around 15% of the Company's net assets were
invested in Emerging Europe, and the Company's holding in the BlackRock
Eurasian Frontiers Hedge Fund had a positive contribution to performance,
along with selected investments in Israel and Russia. The Company continued to
make use of flexible gearing but suffered due to modest gearing in a declining
market.
The market environment has become much more challenging in the wake of the
deepening gloom emanating from the US financial sector, as market participants
come to grips with the degree of write-downs and losses resulting from the
credit crisis. The US sub-prime mortgage market caused the initial setbacks
over a year ago but in the last six months the knock-on effects have been felt
throughout the entire global financial system, predominantly due to the
interconnected nature of the credit markets. This has meant that European
financial institutions are directly impacted, whether as owners of underlying
assets that have become impaired, or because their sources of funding have
dried up, or due to changing behaviour on the part of their underlying
clients.
Despite the significant challenge to the global economy, growth rates have so
far only moderated slightly in most of the developed markets. The US has seen
the greatest slowdown in activity, and more recently evidence has been
building of a deceleration in European activity. Growth in the emerging
economies has remained robust, helped partly by the fact that they enjoy
positive demographics, increasing wealth effects, but also because they have
access to large natural resources.
European companies have reported reasonable earnings growth in 2007 with
non-financial profits driven by robust global economies, while financial
institutions have reported a wide variety of outcomes, ranging from
substantial dollar losses to material profits.
The oil price has continued to defy gravity and any concerns about a slowing
global economy, with Brent crude rising almost US$30 per barrel during the six
month period and breaching the US$100 per barrel mark at the end of February.
During the period, stock selection has had a negative impact on performance.
This was predominantly down to the exposure to financial stocks, notably
Fortis, Société Générale, Credit Suisse and Intesa Sanpaolo, which were
affected by the malaise in the credit markets. Additionally, selected names in
the DIY, technology hardware and telecom sectors detracted from performance
due to company specific profit warnings. Stocks which contributed positively
to performance included ArcelorMittal, which continued to deliver stronger
than expected earnings due to robust steel prices and the benefits of its
global presence, Telefonica whose earnings mix showed the benefit of its
geographical diversification, especially in Latin America, and Fresenius SE,
which demonstrated strong results, a rarity in a health care sector that has
seen continued downwards revisions to earnings.
Investment Activity
During the period, the Company increased exposure to the Benelux countries,
Italy and Switzerland, reducing holdings in Germany, France and Greece.
Within Emerging Europe, the Company added fresh positions in Poland and
Turkey, increasing the exposure to the region to over 16% of net assets.
From a sectoral perspective the Company's key exposures were to banks,
materials, telecoms, oil & gas and pharmaceuticals. Over the last six months
the main changes have been an increase in exposure to the telecoms sector,
where valuations are attractive, and energy, especially in Emerging Europe.
These have been funded by a reduction in the Company's exposure to banks,
materials and automobiles.
At the end of the period the Company continued to have a bias towards Germany,
Switzerland, France and Italy. Within Emerging Europe key country exposures
were Russia and Turkey, along with the BlackRock Eurasian Frontiers Hedge Fund
which provides diversified exposure to the region.
Outlook
In the current unsettled climate it is difficult to have any certainty about
the near term direction of corporate earnings, and it is probable that market
estimates for the current year are too high and will be subject to downward
revision as the year progresses. However, in the absence of a global
recession, we believe that valuations are low enough in an absolute and
historical sense to enable stock markets to develop favourably, especially
when attention turns towards reductions in interest rates. This is likely to
be a feature later in 2008 when the European Central Bank should be in a
position to focus less on the threats of inflation and more on the need to
stimulate domestic demand. The strength of the Euro is easing a good deal of
the current inflationary pressure and is acting as a brake on economic growth
for the Eurozone region; this is likely to be alleviated in the medium term
as the relative growth rates for the major economies become more balanced and
the Euro's strength moderates.
We remain positive on the medium term prospects for Emerging Europe, although
we are mindful of the potential for more volatility in the months ahead. The
global credit market remains tight, and economic data from the US supports the
argument for a slowdown. While the region is relatively insulated from any
direct contagion from the US, increased risk aversion may weigh on sentiment.
Fundamentally, regional equities remain attractive. Valuations are
particularly compelling in Russia and Turkey. Although high risk, the outlook
for both countries is good for 2008, and we see the current weakness as an
ideal buying opportunity. We also continue to look for value in Central Europe.
James Macmillan & Sam Vecht
BlackRock Investment Management (UK) Limited
16 April 2008
Key Holdings
29 February 2008
Seven Largest European Investments
Intesa Sanpaolo - 3.6% (2007: 3.6%) is the leading bank in Italy, created last
year following the merger of Intesa and San Paolo. In our view the Italian
banking sector offers compelling risk/reward in the context of a more
challenging environment for banks in general. We see considerable upside in
the value of the group as it benefits from ongoing structural growth in the
underdeveloped Italian banking market as well as the realisation of merger
synergies over the next two years. The bank has one of the strongest
management teams in the sector, a conservative risk profile and a very strong
balance sheet which supports above average dividend paying potential over the
medium term.
Novartis - 3.5% (2007: 3.3%) is a Swiss based pharmaceutical company engaged
in the development and manufacture of pharmaceuticals and nutritional
products. After a couple of product setbacks, expectations are now low for
future growth relative to what the company expects to deliver. The valuation
is attractive relative to the growth prospects and relative to history.
Nokia - 3.4% (2007: 3.7%) is the world's leader in mobile handset devices,
based in Finland. It has recently pulled away from competition, due to a
significantly superior product portfolio and mis-execution by others. This has
led to rising profits and valuation. The company has also started to benefit
from the rise in mobile data spending, mainly by selling more 3G phones. It
also operates a smaller network infrastructure business, which is undergoing a
restructuring.
Roche - 3.4% (2007: 2.7%) is a Swiss based pharmaceuticals and diagnostics
company. Roche has the best earnings growth in the sector but only trades at a
small premium to its peers. Roche is strong in specialty pharmaceuticals with
lower risk of pricing pressure and limited patent risk.
Banco Santander - 3.1% (2007: 2.4%) is a leading bank in Spain and Latin
America, especially Brazil, which accounts for around 40% of its earnings. We
see considerable scope for earnings growth from the group's Brazilian banking
business. Following the acquisition of ABN Amro's business, Santander has
become one of the leading banks in Brazil, a market which offers considerable
long term growth potential given the currently low penetration of banking
services. The outlook for the group's Spanish businesses is more challenging
as that country sees a slowdown in activity levels but Santander has
manageable exposure to the more problematic areas and a very strong balance
sheet.
Eni - 3.1% (2007: 2.3%) is an Italian based company and a unique asset in the
European oil sector as its conglomerate structure comprises a utilities-style
downstream gas division, a first class oil service company (Saipem) and an
integrated standard oil and gas business. The company's recent strategy
presentation reaffirmed our positive view on the stock. The company should be
able to show production growth of 3% to 4% per annum for 2008-2011 underpinned
by a solid exploration and production (E&P) project portfolio which should
increase the visibility of Eni's production growth over the coming years.
Lastly, we view Eni as attractively valued and the shares offer an attractive
dividend yield.
Allianz - 2.8% (2007: 2.6%) is one of Europe's leading insurance groups which
in our view is materially undervalued. We see considerable resilience in the
earnings power of this German company arising from the strength of the group's
non-life franchise and ongoing execution of efficiency programmes. We also see
ample strategic optionality within the group as management seek to optimise
returns in the banking business. Allianz enjoys strong and improving free cash
flow which we believe offers scope for above average dividend growth in the
medium term.
Three Largest Emerging European Investments
BlackRock Eurasian Frontiers Hedge Fund - 3.7% (2007: 3.1%) is a hedge fund
generating its returns from Eastern European, Middle Eastern and "frontier"
markets through a variety of strategies. The fund has returned -3.8% during
the review period.
Surgutneftegaz - 1.4% (2007: nil) is one of Russia's largest oil producers
which trades at a discount to peers and has a strong reserve replacement
record. The company is closely aligned with the Russian government which we
believe will be beneficial.
Integra - 1.1% (2007: nil) is Russia's second largest independent oil services
company and is a direct beneficiary of increasing capital expenditure by
Russian oil companies. The company is currently seeing revenue growth of 30%
per year, which is well above that for the sector.
All percentages reflect the value of the holding as a percentage of total
investments. Percentages in brackets represent the value of the holding as at
31 August 2007.
INCOME STATEMENT
for the six months ended 29 February 2008
Revenue Return £'000 Capital Return £'000 Total £'000
Six months Six months Year Six months Six months Year Six months Six months Year
ended ended ended ended ended ended ended ended ended
29 28 31 29 28 31 29 28 31
February February August February February August February February August
Notes 2008 2007 2007 2008 2007 2007 2008 2007 2007
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
(Losses)/
gains on
investments
held at
fair value
through
profit
or loss - - - (10,396) 23,116 34,318 (10,396) 23,116 34,318
Income from
investments
held at
fair value
through
profit or
loss 3 1,037 956 6,642 - - - 1,037 956 6,642
Other
income 3 17 3 7 - - - 17 3 7
Investment
management
and
performance
fees 4 (105) (117) (252) (565) (936) (1,472) (670) (1,053) (1,724)
Operating
expenses 5 (346) (366) (775) - - - (346) (366) (775)
---- ---- ---- ----- ----- ---- ----- ----- -----
Net return
before
finance
costs and
taxation 603 476 5,622 (10,961) 22,180 32,846 (10,358) 22,656 38,468
Finance
costs (70) (94) (212) (280) (378) (850) (350) (472) (1,062)
---- ---- ---- ----- ----- ---- ----- ----- -----
Return on
ordinary
activities
before
taxation 533 382 5,410 (11,241) 21,802 31,996 (10,708) 22,184 37,406
Taxation on
ordinary
activities (143) (71) (1,587) (152) 219 310 (295) 148 (1,277)
---- ---- ---- ----- ----- ---- ----- ----- -----
Return on
ordinary
activities
after
taxation 7 390 311 3,823 (11,393) 22,021 32,306 (11,003) 22,332 36,129
=== ==== ===== ====== ====== ====== ====== ====== ======
Return per
ordinary
share -
basic and
diluted 7 0.33p 0.24p 3.06p (9.70p) 17.28p 25.87p (9.37p) 17.52p 28.93p
===== ===== ===== ====== ====== ====== ====== ====== ======
The total column of this statement represents the Income Statement of the
Company. The supplementary revenue and capital return columns are both prepared
under guidance published by the Association of Investment Companies. The
Company had no recognised gains or losses other than those disclosed in the
Income Statement and the Reconciliation of Movements in Shareholders' Funds.
All items in the above statement derive from continuing operations. No
operations were acquired or discontinued during the period.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Share Capital Capital Capital
Share premium redemption Special reserve - reserve - Revenue
capital account reserve reserve realised unrealised reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
For the six
months ended
29 February 2008
At 31 August 2007 125 151 39 103,213 86,050 26,504 5,249 221,331
Return for the
period - - - - 17,233 (28,626) 390 (11,003)
Shares
purchased (5) - 5 (8,802) - - - (8,802)
Share purchase
costs - - - (143) - - - (143)
Dividends paid ** - - - - - - (2,876) (2,876)
---- ---- ---- ------ ------- ------ ----- -------
At 29 February
2008 120 151 44 94,268 103,283 (2,122) 2,763 198,507
==== ==== === ====== ======= ====== ===== =======
For the six
months ended
28 February 2007
At 31 August 2006 134 151 30 121,679 54,039 26,209 4,031 206,273
Return for the
period - - - - 21,049 972 311 22,332
Shares
purchased (4) - 4 (8,934) - - - (8,934)
Share purchase
costs - - - (136) - - - (136)
Dividends paid * - - - - - - (2,605) (2,605)
---- ---- ---- ------- ------ ------ ----- -------
At 28 February
2007 130 151 34 112,609 75,088 27,181 1,737 216,930
==== ==== === ======= ====== ====== ===== =======
For the year
ended
31 August 2007
At 31 August 2006 134 151 30 121,679 54,039 26,209 4,031 206,273
Return for the
year - - - - 32,011 295 3,823 36,129
Shares
purchased (9) - 9 (18,187) - - - (18,187)
Share purchase
costs - - - (279) - - - (279)
Dividends paid * - - - - - - (2,605) (2,605)
---- ---- ---- ------- ------ ------ ----- -------
At 31 August
2007 125 151 39 103,213 86,050 26,504 5,249 221,331
==== ==== === ======= ====== ====== ===== =======
* Final dividend in respect of the year ended 31 August 2006 of 2.00p per share
declared on 16 October 2006 and paid on 30 November 2006.
** Final dividend in respect of the year ended 31 August 2007 of 2.40p per
share declared on 16 October 2007 and paid on 6 December 2007.
The transaction costs incurred on the acquisition and disposal of investments
are included within the capital reserve and amounted to £554,000 for the six
months ended 29 February 2008 (six months ended 28 February 2007: £450,000;
year ended 31 August 2007: £800,000).
BALANCE SHEET
as at 29 February 2008
29 February 28 February 31 August
2008 2007 2007
Notes £'000 £'000 £'000
(unaudited) (unaudited) (audited)
Fixed assets
Investments held at fair value
through profit or loss 214,197 240,890 237,326
------- ------- -------
Current assets
Debtors 10,277 1,689 7,121
Cash 259 - 49
------ ----- -----
10,536 1,689 7,170
------ ----- -----
Creditors - amounts falling
due within one year
Bank overdrafts (12,997) (19,335) (19,783)
Other creditors (12,622) (6,314) (2,954)
------- ------ -------
(25,619) (25,649) (22,737)
------- ------ -------
Net current liabilities (15,083) (23,960) (15,567)
------- ------ -------
Total assets less current
liabilities 199,114 216,930 221,759
Provision for liabilities
and charges (607) - (428)
------- ------- -------
Net assets 198,507 216,930 221,331
======= ======= =======
Capital and reserves
Share capital 8 120 130 125
Share premium account 151 151 151
Capital redemption reserve 44 34 39
Special reserve 94,268 112,609 103,213
Capital reserve - realised 103,283 75,088 86,050
Capital reserve - unrealised (2,122) 27,181 26,504
Revenue reserve 2,763 1,737 5,249
------- ------- -------
Total equity shareholders' funds 198,507 216,930 221,331
======= ======= =======
Net asset value per ordinary share 7 172.44p 173.92p 184.68p
======= ======= =======
SUMMARISED CASH FLOW STATEMENT
for the six months ended 29 February 2008
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2008 2007 2007
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Net cash (outflow)/inflow from operating
activities (283) (9) 3,354
Returns on investment and servicing of
finance (290) (496) (1,086)
Taxation (paid)/recovered (127) 46 (455)
Capital expenditure and financial
investment
Purchase of investments (92,297) (136,656) (230,290)
Proceeds from sale of investments 112,101 137,101 237,238
Realised (losses)/gains on foreign
currency transactions (339) (73) 138
---- ---- ----
Net cash inflow from capital expenditure
and financial investment 19,465 372 7,086
------ ------ ------
Equity dividends paid (2,876) (2,605) (2,605)
------ ------ ------
Financing
Purchase of ordinary shares (8,802) (8,934) (18,187)
Share purchase costs (91) (44) (176)
------ ------ ------
Net cash outflow from financing (8,893) (8,978) (18,363)
------ ------ ------
Increase/(decrease) in cash 6,996 (11,670) (12,069)
===== ======= =======
RECONCILIATION OF NET RETURN BEFORE FINANCE COSTS AND TAXATION TO NET CASH FLOW
FROM OPERATING ACTIVITIES
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2008 2007 2007
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Net return before finance costs and
taxation (10,358) 22,656 38,468
Losses/(gains) on investments held at
fair value 10,396 (23,116) (34,318)
Decrease in accrued income 128 106 104
Decrease in other debtors 57 - 10
(Decrease)/increase in creditors (331) 461 81
Tax on investment income included within
gross income (175) (116) (991)
---- ---- ----
Net cash (outflow)/inflow from operating
activities (283) (9) 3,354
==== ==== =====
Notes to the HALF YEARLY FINANCIAL announcement
1. Principal activity
The principal activity of the Company is that of an investment trust company
within the meaning of section 842 of the Income and Corporation Taxes Act
1988.
2. Basis of preparation
The half yearly financial statements have been prepared on the basis of the
accounting policies set out in the Company's financial statements as at 31
August 2007.
The accounts have been prepared under the historical cost convention,
modified to include the revaluation of investments and in accordance with
applicable Accounting Standards, pronouncements on half yearly reporting
issued by the Accounting Standards Board and the Statement of Recommended
Practice "Financial Statements of Investment Trust Companies" ("SORP" dated
January 2003, revised in December 2005).
3. Income
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2008 2007 2007
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Investment income:
- UK dividends 57 33 33
- Overseas dividends 980 923 6,609
----- --- -----
1,037 956 6,642
Other income:
- Deposit interest 17 3 7
----- --- -----
Total income 1,054 959 6,649
===== === =====
4. Investment management and performance fees
Six months ended 29 February 2008
(unaudited)
Revenue Capital
return return Total
£'000 £'000 £'000
Investment management fees 105 417 522
Performance fees - 201 201
VAT (Written back)/charged - (53) (53)
--- --- ---
Total 105 565 670
=== === ===
Six months ended 28 February 2007
(unaudited)
Revenue Capital
return return Total
£'000 £'000 £'000
Investment management fees 103 414 517
Performance fees - 412 412
VAT (Written back)/charged 14 110 124
--- --- -----
Total 117 936 1,053
=== === =====
Year ended 31 August 2007
(audited)
Revenue Capital
return return Total
£'000 £'000 £'000
Investment management fees 223 891 1,114
Performance fees - 409 409
VAT (Written back)/charged 29 172 201
--- ----- -----
Total 252 1,472 1,724
=== ===== =====
The investment management fee is levied quarterly, based on the value of the
market capitalisation of the Company on the last day of each month. The
investment management fee is allocated 80% to the capital reserve - realised
and 20% to the revenue reserve. A performance fee of £201,000 (six months ended
28 February 2007: £412,000; year ended 31 August 2007: £409,000) has also been
accrued, which has been calculated based on the outperformance of the Company's
share price relative to the FTSE World Europe ex UK Index over a three year
rolling period. The performance fee has been allocated 100% to the capital
reserve - realised, as performance has been predominantly generated through
capital returns of the investment portfolio.
The credit of £53,000 relates to VAT arising on the performance fee accrued at
31 August 2007. Subsequent to the outcome of the JPMorgan Claverhouse case,
management fees are now exempt from VAT, and VAT on the performance fee has
been written back accordingly, as this amount had not been invoiced at the date
HMRC ceded the case.
5. Operating expenses
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2008 2007 2007
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Administration fee 149 176 318
Custody fee 48 28 89
Other administration costs 149 162 368
--- --- ---
346 366 775
=== === ===
6. Dividend
The Board has not declared an interim dividend, as dividends are considered
and paid annually in respect of each accounting year.
7. Net asset value and return per ordinary share
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2008 2007 2007
(unaudited) (unaudited) (audited)
Net revenue return attributable to
ordinary shareholders (£'000) 390 311 3,823
Net capital return attributable to
ordinary shareholders (£'000) (11,393) 22,021 32,306
------- ------ ------
Net total return (£'000) (11,003) 22,332 36,129
------- ------ ------
Equity shareholders' funds (£'000) 198,507 216,930 221,331
------- ------- -------
The weighted average number of ordinary
shares in issue during the period, on
which the return per ordinary share was
calculated, was: 117,480,880 127,468,768 124,871,436
----------- ----------- -----------
The actual number of ordinary shares in
issue at the end of each period, on
which the net asset value was
calculated, was: 115,117,791 124,729,045 119,843,969
----------- ----------- -----------
The number of ordinary shares in issue,
including treasury shares, on which
the fully diluted net asset value
was calculated, was: 119,843,969 130,238,932 124,729,045
----------- ----------- -----------
Net asset value per share 172.44p 173.92p 184.68p
======= ======= =======
Return per share
Calculated on weighted average shares:
Revenue return 0.33p 0.24p 3.06p
Capital return (9.70p) 17.28p 25.87p
------ ------ ------
Total (9.37p) 17.52p 28.93p
====== ====== ======
Calculated on actual shares:
Revenue return 0.34p 0.25p 3.19p
Capital return (9.90p) 17.66p 26.96p
------ ------ ------
Total (9.56p) 17.91p 30.15p
====== ====== ======
As at 29 February 2008, the Company had 4,726,178 shares held in treasury. As
the Company's share price at this date stood at a discount of greater than 2%,
shares could not be sold out of treasury and consequently there was no dilution
to the Company's net asset value or return per share.
No fully diluted return per share has been disclosed as the calculations for
all periods indicate that the treasury shares do not have a potentially
dilutive effect.
8. Share capital and shares held in treasury
Number of Number of
ordinary treasury Nominal
shares shares Total value
in issue in issue shares £
Authorised share capital
comprised:
Ordinary shares of 0.1p
each 900,000,000 - 900,000,000 900,000
----------- --------- ----------- -------
At 31 August 2007 119,843,969 4,885,076 124,729,045 124,729
Shares transferred into
treasury pursuant to
tender offer on
30 November 2007 (4,726,178) 4,726,178 - -
Shares cancelled from
treasury on 3 December
2007 - (4,885,076) (4,885,076) (4,885)
----------- --------- ----------- -------
At 29 February 2008 115,117,791 4,726,178 119,843,969 119,844
=========== ========= =========== =======
9. Publication of non statutory accounts
The financial information contained in this half yearly financial report
does not constitute statutory accounts as defined in section 240 of the
Companies Act 1985. The financial information for the six months ended
29 February 2008 and 28 February 2007 has not been audited.
The information for the year ended 31 August 2007 has been extracted from
the latest published audited financial statements, which have been filed
with the Registrar of Companies. The report of the Auditors on those
accounts contained no qualification or statement under sections 237(2) or
(3) of the Companies Act 1985.
10. Annual Results
The Company expects to announce the results for the year ending 31 August
2008 in October 2008. The annual report should be available by the end of
October 2008, with the Annual General Meeting being held on 25 November
2008.
33 King William Street
London
EC4R 9AS
16 April 2008
Friday, 5th July 2024
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