Interim Results

GARTMORE DISTRIBUTION TRUST PLC Announcement of Interim Results for the six months to 31st October 2002 The Directors announce the Group's unaudited results for the six months to 31st October 2002 as follows:- Chairman's Statement During the period under review the total assets of the Group fell from £116.04 million to £10.46 million. This is largely due to the payment of £91.19 million to Zero Dividend Preference (ZDP) shareholders following the realisation of the Equity Portfolio. The remaining assets fell by £14.8 million owing to a substantial fall in value of the income share holdings. Since shareholders approved the controlled realisation of the Group's investment portfolio on 26th June 2002, the combination of asset disposals and income generated from the portfolio has enabled a further redemption of ZDP Shares to take place. On 28th November 2002 the Group redeemed 20.8 per cent of each ZDP Shareholder's current holding of ZDP shares, with each ZDP Shareholder receiving 115.32p in respect of each ZDP Share redeemed, being the accrued capital entitlement of such ZDP Shares as at that date. If the Group were in a position to redeem the remaining predetermined entitlement of the ZDP Shareholders as at 28th November 2002, the total assets required would be £ 19.04 million. This compares with total assets at that date of £5.70 million. The ZDP Shares have been trading at a substantial discount to their net asset value reflecting the uncertainty surrounding both the quantum and timing of further redemption payments. If it is in the interests of all shareholders, the Board will consider exercising its power to buy back shares. The Directors will exercise this discretion in such a way as to ensure that the interests of the remaining ZDP Shareholders are not prejudiced by such market purchases. As the predetermined entitlement of the ZDP Shares is still accruing at a daily rate to reach 131.3p by 30th April 2004 and in light of the continued weakness in UK equity markets, the Board considers it unlikely that Ordinary Shareholders will receive any future capital or income return. The income share market has continued to come under considerable pressure, in part due to the persistent weakness of the broader equity market, but also because of the severe financial difficulties that have affected a number of highly geared split capital investment trusts. This has resulted in very poor liquidity in the income share market with wide spreads emerging between mid and bid prices on all but the more highly rated Category 'A' trusts. Reflecting this, we are reporting the value of the Company's portfolio based on bid prices, which we consider is the most appropriate basis of valuation given the current environment. As at 31st October 2002, 99.3% of the investment portfolio comprised Category 'A' trusts, of which 14.7% were `AAA' rated (from splits with no cross holdings in other split capital trusts), 29.5% `AA' rated (between 0% and 5% in other splits) and 55.1% `A' rated (between 5% and 25% in other splits). The sector's problems have led to many income shares appearing undervalued and the Managers have been careful not to dispose of shares at unjustifiably low prices. The Managers have employed a rigorous investment process designed to maximise the amount realised while obtaining fair and realistic prices in order to optimise the return to shareholders. Sales during the period included investments in Edinburgh Pacific, Jupiter Dividend & Growth, St David's, Govett Asian Income & Growth, Quarterly High Income and Investec Extra Income. Sentiment in the split capital investment trust sector remains fragile. Although further dividend cuts cannot be ruled out, it is significant that income shares from split capital trusts which hold more than 25% of their assets in other splits (i.e. non 'A' rated) now comprise only 1% of the sector. A sustained upturn in the wider UK equity market will be critical in re-establishing investor confidence in the sector. While certain specific problems remain, the majority of the investment portfolio now consists of good quality income shares that should respond positively to any improvements in the broader equity market. Roger Adams and Paul Myners have resigned as Directors. I would like to thank them both for their service to the Company and to offer Roger, who resigned owing to serious health problems, our very best wishes. Group Total Return Six months to 31st October 2002 Revenue Capital Total Return £'000 £'000. £'000 Income and Capital Profits/(Losses) Dividends and other income 1,712 - 1,712 Net loss on investments - (14,881) (14,881) ------------ ------------ ------------ Return before expenses, interest and 1,712 (14,881) (13,169) taxation Expenses Management fees (12) (12) (24) Other expenses (123) - (123) ------------ ------------ ------------ Return before interest and taxation 1,577 (14,893) (13,316) Interest payable Bank loan interest - - - ------------ ------------ ------------ Return to Shareholders 1,577 (14,893) (13,316) Appropriated to minority interests GDT Securities Zero: Repayment premium - (1,077) (1,077) reserve ------------ ------------ ------------ Return on ordinary activities to Equity 1,577 (15,970) (14,393) Shareholders Appropriated to Equity Shareholders Dividends: On the Ordinary shares - 0.0p - - - ------------ ------------ ------------ Transferred to/(from) Reserves: Ordinary shares 1,577 (15,970) (14,393) ------------ ------------ ------------ Total Return per Ordinary share 1.4p (14.5p) (13.1p) Note Management fees and financing costs are allocated 50% to revenue and 50% to capital. Group Total Return (comparative) Six months to 31st October 2001 Revenue Capital Total Return £'000 £'000. £'000 Income and Capital Profits/(Losses) Dividends and other income 8,237 - 8,237 Net loss on investments - (54,373) (54,373) ------------ ------------ ------------ Return before expenses, interest and 8,237 (54,373) (46,136) taxation Expenses Management fees (294) (294) (588) Other expenses (132) (743) (875) ------------ ------------ ------------ Return before interest and taxation 7,811 (55,410) (47,599) Interest payable Bank loan interest (1,331) (1,331) (2,662) ------------ ------------ ------------ Return to Shareholders 6,480 (56,741) (50,261) Appropriated to minority interests GDT Securities Zero: Repayment premium - (4,908) (4,908) reserve ------------ ------------ ------------ Return on ordinary activities to Equity 6,480 (61,649) (55,169) Shareholders Appropriated to Equity Shareholders Dividends: On the Ordinary shares - 6.0p (6,592) - (6,592) ------------ ------------ ------------ Transferred to/(from) Reserves: Ordinary shares (112) (61,649) (61,761) ------------ ------------ ------------ Total Return per Ordinary share 5.9p (56.1)p (50.2)p Note Expenses and financing costs are allocated 50% to revenue and 50% to capital. Group Balance Sheet At At 31st October 30th April 2002 2002 £'000 £'000 Current Assets Listed investments 5,262 58,323 Debtors 219 2,827 Short-term deposits - 47,748 Cash at bank 5,028 8,134 ------------ ------------ 10,509 117,032 Creditors: amounts falling due within one year (54) (994) ------------ ------------ Net Assets 10,455 116,038 ------------ ------------ Capital and Reserves Called-up share capital 1,098 1,098 Other reserves: Special reserve 159,993 159,993 Capital reserve - realised (127,700) (115,914) Capital reserve - unrealised (50,340) (45,083) Revenue reserve 3,533 1,955 Equity Shareholders' Funds: ------------ ------------ Ordinary shares (13,416) 2,049 Minority interest: GDT Securities Zero 23,871 113,989 ------------ ------------ Capital Employed 10,455 116,038 ------------ ------------ Net Asset Value per share (as per FRS4): GDT Securities Zero 114.5p 109.4p Ordinary shares (12.2p) 1.9p Available Assets per share (as per Articles): GDT Securities Zero 50.2p 109.4p Ordinary shares Nil 1.9p Group Cash Flow Six months Six months to to 31st October 31st October 2002 2001 £'000 £'000 Revenue Activities Dividends and other income received 2,906 8,809 Expenses paid, allocated to revenue (285) (338) ------------ ------------ 2,621 8,471 ------------ ------------ Servicing of Finance Interest paid, allocated to revenue - (1,382) ------------ ------------ Investment Activities Acquisitions of investments - (77,386) Disposals of investments 37,727 77,887 Expenses and interest paid, allocated (12) (1,559) to capital ------------ ------------ 37,715 (1,058) ------------ ------------ Equity Share Dividend paid Ordinary shares - (6,371) ------------ ------------ Financing Redemption of GDT Securities ZDP shares (91,190) - ------------ ------------ Net Cash Outflow (50,854) (340) ------------ ------------ Reconciliation of Net Cash Outflow To Movement in Net Debt Balance brought forward 55,882 (64,013) Net cash outflow (50,854) (340) ------------ ------------ Balance at 31st October 5,028 (64,353) ------------ ------------ Comprising: Fixed loan - (72,056) Short-term deposits - 7,630 Bank balances 5,028 73 ------------ ------------ 5,028 (64,353) ------------ ------------ Notes to the Accounts The accounts comprise the unaudited results of the Group, for the six months to 31st October 2002, and do not constitute statutory accounts under the Companies Act 1985. Full statutory accounts for the year to 30th April 2002 included an unqualified audit report and have been filed with the Registrar of Companies. There have been no changes in accounting policies since 30th April 2002. Listed investments, which are treated as current assets, have been valued at bid prices. Management fees, which have been waived with effect from 13th May 2002, and loan interest payable are allocated 50% to revenue and 50% to capital. Total return per Ordinary share has been calculated on the negative return to equity shareholders of £14,393,000 (negative return of £55,169,000) and 109,842,768 Ordinary shares (109,842,768) in issue throughout the period. Listed investments are all listed in the UK. FRS 4 requires the accounts to be presented in a way that reflects the financial obligations of the Company to its subsidiary, GDT Securities PLC, Accordingly, Net Asset Values per share have been calculated as per FRS4 on attributable assets and shares in issue at the period end as follows: At At 31st October 30th April 2002 2002 £'000 £'000 20,845,631 (104,423,106) GDT Securities 23,871 113,989 Zeros 109,842,768 (109,842,768) Ordinary (13,416) 2,049 shares ------------ ------------ 10,455 116,038 ------------ ------------ Interim Report The Interim Report for the six months to 31st October 2002 will be posted to shareholders shortly. Copies will be available from the Registered Office of the Company: Gartmore House, 8 Fenchurch Place, London EC3M 4PB. Gartmore Distribution Trust PLC Gartmore Investment Limited - Secretaries 29th November 2002

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