Interim Results

Merrill Lynch Greater Europe IT PLC 18 April 2007 MERRILL LYNCH GREATER EUROPE INVESTMENT TRUST plc Interim results for the six months ended 28 February 2007 â€¢ The unaudited net asset value ('NAV') per share rose by 11.1% over the six months to 28 February 2007 (with net income reinvested). â€¢ The share price (with net income reinvested) increased by 12.5% over the six months to 28 February 2007. â€¢ NAV was 185.48p undiluted and 185.48p diluted (incorporating treasury shares) at 16 April 2007. â€¢ Share price was 178.50p at 16 April 2007. For further information please contact: Jonathan Ruck Keene 020 7743 2178 Managing Director, Investment Trust 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 The Chairman, John Walker-Haworth, commented: 'I am pleased to report that despite the market volatility experienced just prior to the period end, the Company has posted a satisfactory set of results for the six months to 28 February 2007. During the period the Company's unaudited net asset value per share increased by 11.1% (compared with a return of 11.2% for the FTSE World Europe ex UK Index) and the share price increased by 12.5% (all percentages calculated in sterling terms with net income reinvested). 'Tender Offer and Discount 'The Company held its fourth semi-annual tender offer on 30 November 2006. As with the previous offers, this was for up to 20% of the shares in issue at the prevailing net asset value less 2%. Valid tenders for 5,509,887 shares were received at a price of 162.14p per share, representing 4.1% of the Company's shares in issue at the time. All shares tendered on this occasion have been placed in treasury and the 3,466,164 shares which were previously held in treasury have been cancelled in line with the Directors' policy. Further information is given in note 8. 'The Directors have resolved to exercise their discretion to implement the next tender offer which has a calculation date of 31 May 2007. Under the terms of the offer shareholders may tender for purchase all or part of their holdings of shares for cash. The price at which shares will be purchased will be the prevailing net asset value per share as at the close of business on 31 May, subject to a discount of 2% (to cover the likely costs of the tender offer). The tender offer will be for a maximum of 20% in aggregate of the shares in issue as at 31 May. 'The current discount of 3.8% compares favourably with the Company's peer group average of 5.1% reflecting a combination of continued good performance and the tender process initiative. 'Company Name 'Following the completion of the merger of Merrill Lynch Investment Managers with BlackRock in September last year, the name of the Company is being kept under review, and we expect to put forward proposals to shareholders in relation to this later in the year. 'Outlook 'We continue to have a positive view on the prospects for equities throughout Continental Europe. This is supported by attractive growth in companies' profits and improving domestic demand.' Commenting upon the outlook for the Company, James Macmillan of BlackRock Merrill Lynch Investment Managers, the Investment Manager, noted: 'Business and consumer confidence continues to improve in Continental Europe pointing to sustained momentum in economic growth during 2007. Encouragingly growth has been driven by improving trends in domestic demand as well as robust export demand, and this has been due to lower unemployment and tighter labour markets, especially in the laggard economies such as Germany and Italy. Even though we have seen an increase in interest rate rises, the monetary policy environment remains accommodating and the combination of cheaply available finance, strong earnings and attractive valuations should allow the market to make progress against what may be a more challenging international backdrop. 'We remain positive on the prospects for the Emerging Europe region, where we are also seeing a discernible shift away from reliance on revenues generated from exports and more focus on domestic revenues. In our view the surge in domestic consumer spending, bolstered by increasingly affordable credit, has the potential to insulate the region's economies from softer global demand growth. This is especially evident in Russia which we expect to become less reliant on oil and gas earnings as burgeoning consumer demand for goods and services, business investment and state spending inject new life into broad swathes of the economy, including the consumer, retailing, financial and construction sectors.' INCOME STATEMENT for the six months ended 28 February 2007 Revenue Return Â£'000 Six months Six months Year ended ended ended 28 February 28 February 31 August 2007 2006 2006 Notes (unaudited) (unaudited) (audited) Gains on investments held at fair value through - - - profit or loss Income 3 959 876 5,958 Investment management fees 4 (117) (116) (241) Operating expenses 5 (366) (351) (768) ---------- ---------- ---------- Net return before finance costs and taxation 476 409 4,949 Finance costs (94) (109) (180) ---------- ---------- ---------- Return on ordinary activities before taxation 382 300 4,769 Taxation on ordinary activities (71) (80) (1,373) ---------- ---------- ---------- Return on ordinary activities after taxation 311 220 3,396 ====== ====== ====== Return per ordinary share - basic and diluted 0.24p 0.16p 2.53p ====== ====== ====== The total column of this statement represents the profit and loss account of the Company. The supplementary revenue and capital return columns are both prepared under guidance published by the Association of Investment Companies. The Company has 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. INCOME STATEMENT for the six months ended 28 February 2007 Capital Return Â£'000 Six months Six months Year ended ended ended 28 February 28 February 31 August 2007 2006 2006 Notes (unaudited) (unaudited) (audited) Gains on investments held at fair value through 23,116 40,157 38,614 profit or loss Income 3 - - - Investment management fees 4 (936) (1,461) (1,432) Operating expenses 5 - - - ---------- ---------- ---------- Net return before finance costs and taxation 22,180 38,696 37,182 Finance costs (378) (435) (719) ---------- ---------- ---------- Return on ordinary activities before taxation 21,802 38,261 36,463 Taxation on ordinary activities 219 - 645 ---------- ---------- ---------- Return on ordinary activities after taxation 22,021 38,261 37,108 ======= ======= ======= Return per ordinary share - basic and diluted 17.28p 28.00p 27.65p ======= ======= ======= The total column of this statement represents the profit and loss account of the Company. The supplementary revenue and capital return columns are both prepared under guidance published by the Association of Investment Companies. The Company has 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. INCOME STATEMENT for the six months ended 28 February 2007 Total Â£'000 Six months Six months Year ended ended ended 28 February 28 February 31 August 2007 2006 2006 Notes (unaudited) (unaudited) (audited) Gains on investments held at fair value through 23,116 40,157 38,614 profit or loss Income 3 959 876 5,958 Investment management fees 4 (1,053) (1,577) (1,673) Operating expenses 5 (366) (351) (768) ---------- ---------- ---------- Net return before finance costs and taxation 22,656 39,105 42,131 Finance costs (472) (544) (899) ---------- ---------- ---------- Return on ordinary activities before taxation 22,184 38,561 41,232 Taxation on ordinary activities 148 (80) (728) ---------- ---------- ---------- Return on ordinary activities after taxation 22,332 38,481 40,504 ======= ======= ======= Return per ordinary share - basic and diluted 17.52p 28.16p 30.18p ======= ======= ======= The total column of this statement represents the profit and loss account of the Company. The supplementary revenue and capital return columns are both prepared under guidance published by the Association of Investment Companies. The Company has 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 Share Capital Special Capital Revenue capital premium redemption reserve reserve reserve Total account reserve Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 For the six months ended 28 February 2006 At 31 August 2005 140 - 24 136,153 43,140 2,882 182,339 Net profit from ordinary activities - - - - 38,261 220 38,481 Share buy backs - - - (10,287) - - (10,287) Share buy back costs - - - (171) - - (171) Share issues - 28 - 334 - - 362 Dividends paid* - - - - - (2,247) (2,247) ------ ------ ------ ----------- --------- --------- ----------- At 28 February 2006 140 28 24 126,029 81,401 855 208,477 ==== ==== ==== ======== ====== ====== ======== For the year ended 31 August 2006 At 31 August 2005 140 - 24 136,153 43,140 2,882 182,339 Net profit from ordinary activities - - - - 37,108 3,396 40,504 Share buy backs (6) - 6 (15,588) - - (15,588) Share buy back costs - - - (293) - - (293) Share issues - 151 - 1,407 - - 1,558 Dividends paid* - - - - - (2,247) (2,247) ------ ------ ------ ----------- --------- --------- ----------- At 31 August 2006 134 151 30 121,679 80,248 4,031 206,273 ==== ==== ==== ======== ====== ====== ======== For the six months ended 28 February 2007 At 31 August 2006 134 151 30 121,679 80,248 4,031 206,273 Net profit from ordinary activities - - - - 22,021 311 22,332 Share buy backs (4) - 4 (8,934) - - (8,934) Share buy back costs - - - (136) - - (136) Dividends paid** - - - - - (2,605) (2,605) ------ ------ ------ ----------- ---------- --------- ----------- At 28 February 2007 130 151 34 112,609 102,269 1,737 216,930 ==== ==== ==== ======== ======= ====== ======== * Final dividend in respect of the period ended 31 August 2005 of 1.60p per share declared on 17 October 2005 and paid on 28 November 2005. ** 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. The transaction costs incurred on the acquisition and disposal of investments are included within the capital reserve and amounted to Â£450,000 for the six months ended 28 February 2007 (six months ended 28 February 2006: Â£509,000; year ended 31 August 2006: Â£1,111,000). BALANCE SHEET as at 28 February 2007 28 February 28 February 31 August 2007 2006 2006 (unaudited) (unaudited) (audited) Notes Â£'000 Â£'000 Â£'000 Investments held at fair value through profit or loss 240,890 232,742 215,221 Current assets Debtors 1,689 1,310 4,140 Cash - - 4,038 ---------- ---------- ---------- 1,689 1,310 8,178 Creditors - amounts falling due within one year Bank overdrafts (19,335) (22,805) (11,703) Other creditors (6,314) (2,770) (5,350) ---------- ---------- ---------- (25,649) (25,575) (17,053) ---------- ---------- ---------- Net current liabilities (23,960) (24,265) (8,875) ---------- ---------- ---------- Total assets less current liabilities 216,930 208,477 206,346 Provision for liabilities and charges - - (73) ---------- ---------- ---------- Net assets 216,930 208,477 206,273 ======== ======== ======== Capital and reserves 8 130 140 134 Share capital Share premium account 151 28 151 Capital redemption reserve 34 24 30 Capital reserve - realised 75,088 35,782 54,039 Capital reserve - unrealised 27,181 45,619 26,209 Special reserve 112,609 126,029 121,679 Revenue reserve 1,737 855 4,031 ---------- ---------- ---------- Total equity shareholders' funds 216,930 208,477 206,273 ======== ======== ======== Undiluted net asset value per share 7 173.92p 156.80p 158.38p ======== ======== ======== Diluted net asset value per share (diluted for treasury shares) 7 - 156.69p - ======== ======== ======== SUMMARISED CASH FLOW STATEMENT for the six months ended 28 February 2007 Six months Six months Year ended ended ended 28 February 28 February 31 August 2007 2006 2006 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Net cash (outflow)/inflow from operating activities (9) (84) 2,661 Returns on investment and servicing of finance (496) (544) (875) Taxation received/(paid) 46 39 (147) Capital expenditure and financial investment: (136,656) (125,925) (226,064) Purchase of investments Proceeds from sale of investments 137,101 124,306 241,731 Realised losses on foreign currency transactions (73) (53) (90) ------------ ------------ ------------ Net cash inflow/(outflow) from capital expenditure and financial investment 372 (1,672) 15,577 ------------ ------------ ------------ Equity dividends paid (2,605) (2,247) (2,247) Financing Issue of ordinary shares - 362 1,558 Purchase of ordinary shares (8,934) (10,287) (15,588) Tender offer costs (44) (7) (239) ------------ ------------ ------------ Net cash outflow from financing (8,978) (9,932) (14,269) ------------ ------------ ------------ (Decrease)/increase in cash (11,670) (14,440) 700 ======= ======== ======== RECONCILIATION OF NET RETURN BEFORE FINANCE COSTS AND TAXATION TO NET CASH FLOW FROM OPERATING ACTIVITIES Six months Six months Year ended ended ended 28 February 28 February 31 August 2007 2006 2006 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Net return before finance costs and taxation 22,656 39,105 42,131 Gains on investments held at fair value (23,116) (40,157) (38,614) Decrease/(increase) in debtors 106 32 (182) Increase in creditors 461 1,059 272 Tax on investment income included within gross income (116) (123) (946) ----------- ----------- --------- Net cash (outflow)/inflow from operating activities (9) (84) 2,661 ====== ====== ===== Notes to the interim announcement 1. Principal activity The Company conducts its business so as to qualify as an investment trust company within the meaning of section 842 of the Income and Corporation Taxes Act 1988. 2. Basis of preparation The interim financial statements have been prepared on the basis of the accounting policies set out in the Company's financial statements at 31 August 2006. 3. Income Six months Six months Year ended ended ended 28 February 28 February 31 August 2007 2006 2006 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Income from investments: - UK dividends 33 - - - Overseas dividends 923 873 5,952 Interest receivable and other income: - Deposit and cash fund interest 3 3 6 ------ ------ -------- Total 959 876 5,958 ==== ==== ===== 4. Investment management fees Six months ended 28 February 2007 (unaudited) Revenue Capital Total Â£'000 Â£'000 Â£'000 Investment management fees 103 414 517 Performance fees - 412 412 Irrecoverable VAT thereon 14 110 124 ------ ------- -------- Total 117 936 1,053 ==== ==== ===== Six months ended 28 February 2006 (unaudited) Revenue Capital Total Â£'000 Â£'000 Â£'000 Investment management fees 103 413 516 Performance fees - 887 887 Irrecoverable VAT thereon 13 161 174 ------ -------- -------- Total 116 1,461 1,577 ==== ===== ===== Year ended 31 August 2006 (audited) Revenue Capital Total Â£'000 Â£'000 Â£'000 Investment management fees 215 860 1,075 Performance fees - 415 415 Irrecoverable VAT thereon 26 157 183 ------ -------- -------- Total 241 1,432 1,673 ==== ===== ===== 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 Â£412,000 (excluding VAT) 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 for the 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. 5. Operating expenses Six months Six months Year ended ended ended 28 February 28 February 31 August 2007 2006 2006 (unaudited) (unaudited) (audited) Â£'000 Â£'000 Â£'000 Administration fee 176 141 330 Custody fee 28 41 76 Other administrative costs 162 169 362 ------- ------- ------- 366 351 768 ==== ==== ==== 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 28 February 28 February 31 August 2007 2006 2006 (unaudited) (unaudited) (audited) Net revenue attributable to ordinary shareholders (Â£'000) 311 220 3,396 Net capital gains attributable to ordinary shareholders (Â£'000) 22,021 38,261 37,108 ----------- ---------- ---------- Net total return (Â£'000) 22,332 38,481 40,504 ----------- ---------- ---------- Equity shareholders' funds (Â£'000) 216,930 208,477 206,273 ----------- ---------- ---------- The weighted average number of ordinary shares in issue during the period, on which the return per ordinary share was calculated, was: 127,468,768 136,641,791 134,222,051 The actual number of ordinary shares in issue at the end of each period, on which the net asset value was calculated, was: 124,729,045 132,955,096 130,238,932 The number of ordinary shares in issue, including treasury shares, on which the fully diluted net asset value was calculated, was: 130,238,932 139,725,096 133,705,096 Net asset value per share 173.92p 156.80p 158.38p Return per share Calculated on weighted average shares: Revenue return 0.24p 0.16p 2.53p Capital return 17.28p 28.00p 27.65p ---------- ---------- ---------- 17.52p 28.16p 30.18p ====== ====== ====== Calculated on actual shares: Revenue return 0.25p 0.16p 2.61p Capital return 17.66p 28.78p 28.49p ---------- ---------- ---------- 17.91p 28.94p 31.10p ====== ====== ====== As at 28 February 2007 the Company had 5,509,887 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 as a result. At 28 February 2006 the Company had 6,770,000 shares held in treasury which if sold out of treasury would have resulted in a diluted net asset value of 156.69p. No fully diluted return per share has been disclosed as calculations indicate that the treasury shares did not have a potentially dilutive effect at that date. At 30 August 2006 there were 3,466,164 shares held in treasury and there was no dilution to the Company's net asset value or return per share. 8. Share capital and shares held in treasury Number of Number of ordinary treasury Nominal shares shares value in issue in issue Total Â£ At 31 August 2006 130,238,932 3,466,174 133,705,096 133,705 Shares transferred into treasury pursuant to tender offer on 30 November 2006 (5,509,887) 5,509,887 - - Shares cancelled from treasury pursuant to tender offer on 30 November 2006 - (3,466,164) (3,466,164) (3,466) ---------------- -------------- ---------------- ----------- At 28 February 2007 124,729,045 5,509,887 130,238,932 130,239 =========== ========= =========== ======== 9. Publication of non statutory accounts The financial information contained in this interim announcement does not constitute statutory financial statements as defined in section 240 of the Companies Act 1985. The financial information for the six months ended 28 February 2007 and 28 February 2006 has not been audited. The information for the year ended 31 August 2006 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 financial statements 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 2007 in October 2007. The annual report should be available by the end of October 2007, with the Annual General Meeting being held on 28 November 2007. 33 King William Street London EC4R 9AS 18 April 2007 This information is provided by RNS The company news service from the London Stock Exchange

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