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
• The unaudited net asset value ('NAV') per share rose by 11.1% over the six months to 28 February 2007 (with
net income reinvested).
• The share price (with net income reinvested) increased by 12.5% over the six months to 28 February 2007.
• NAV was 185.48p undiluted and 185.48p diluted (incorporating treasury shares) at 16 April 2007.
• 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 £'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 £'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 £'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 £'000 £'000 £'000 £'000
£'000 £'000 £'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 £450,000 for the six
months ended 28 February 2007 (six months ended 28 February 2006: £509,000; year
ended 31 August 2006: £1,111,000).
BALANCE SHEET
as at 28 February 2007
28 February 28 February 31 August
2007 2006 2006
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'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)
£'000 £'000 £'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)
£'000 £'000 £'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)
£'000 £'000 £'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
£'000 £'000 £'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
£'000 £'000 £'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
£'000 £'000 £'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 £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)
£'000 £'000 £'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 (£'000) 311 220 3,396
Net capital gains attributable to ordinary
shareholders (£'000) 22,021 38,261 37,108
----------- ---------- ----------
Net total return (£'000) 22,332 38,481 40,504
----------- ---------- ----------
Equity shareholders' funds (£'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 £
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
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