Final Results

ACM European Enhanced Inc.Fund PLC 30 April 2002 Final Results ACM European Enhanced Income Fund PLC 30 April 2002 ACM European Enhanced Income Fund Plc Final Results for Year Ended 31 December 2001 Enquiries: ACM Mark Hamilton 020 7470 0100 The Company presents its report together with the audited financial statements for the year ended 31 December 2001. DIVIDENDS The following dividends were proposed and paid in the period: Ex Date Paid Date Amount £ £ Per Share 12-01-01 29-01-01 1,121,732 0.0225 23-03-01 10-04-01 1,229,731 0.0225 22-06-01 10-07-01 1,229,731 0.0225 21-09-01 09-10-01 956,458 0.0175 SIGNIFICANT EVENTS SINCE THE YEAR END The Company paid a dividend on the 28 January 2002 of £956,458, in aggregate, at a rate of £0.0175 per Share, the Shares went ex-dividend on the 11 January 2002. Fund Manager's review Investment Objective and Policies The Company's investment objective is to provide a high level of income from investment in European corporate and sovereign fixed income securities. As a secondary objective, the Company seeks to provide capital growth, which is expected to arise principally through enhancement of the credit rating of specific securities bought by the Company and also general re-rating of European high yield debt as the European high yield debt market matures. The Company may borrow an amount of up to 25% of its net asset value at any time. InvESTMENT RESULTS The following table provides performance data for the Company for the six- and 12-month periods ended 31 December 2001. For comparison, we have included a custom blended benchmark consisting of 50% Merrill Lynch European Currency High Yield Index hedged into euros and 50% Lehman Brothers European Corporate Bond Index. This is then leveraged by 25% and converted into British pounds sterling. This blended benchmark represents an unmanaged measure of the markets and instruments in which the Company is able to invest. The performance presented below is reported in British pounds sterling. INVESTMENT RESULTS* Periods Ended 31 December 2001 Total Returns 6 Months 12 Months ACM European Enhanced Income Fund -2.48% -14.46% Plc Custom Benchmark** 2.09% -4.70% * The Company's investment results are total returns for the periods shown and are based on the net asset value (NAV) as of 31 December 2001. All fees and expenses related to the operation of the Company have been deducted. Past performance is no guarantee of future results. ** The custom benchmark is comprised of equal 50% weightings of two indices, which are leveraged by 25% and converted into British pounds sterling. The unmanaged Merrill Lynch European Currency High Yield Index (hedged into euros) is comprised of corporate bonds with maturities greater than or equal to one year. The Lehman Brothers European Corporate Bond Index is a measure of fixed-rate securities with at least one year remaining until maturity. An investor cannot invest directly in an index, and its results are not indicative of the performance for any particular investment, including an investment in the Company. The Company underperformed its benchmark during the 12-month period ended 31 December 2001. The Company's overweighted allocation to the European high yield sector, in addition to sector and security selection relative to the benchmark, were primary reasons for the Company's underperformance. Our decision to overweight the high yield sector was based on an expectation for a more muted slowdown in Euro-zone growth. The larger-than-expected drop in economic growth, exacerbated by the events of September 11, had a severe impact on high yield valuations, causing default rates to rise in 2001. Defaulted securities held by the Company included Global Telesystems and Enron which have been sold from the Company's portfolio. The Company's exposure to the European cable television operators early in the period detracted from performance. Slower growth and lower cash flow combined with difficult global financial markets paralyzed cable companies and rendered their business plans unachievable. Cable bond prices fell dramatically as their access to liquidity disappeared. However, the Company's performance was enhanced due to its exposure to Euronet, a high-yield ATM operator dealing primarily in Eastern and Western Europe. In July 2001, Euronet became the first independent ATM operator and transaction processor to operate ATMs in the U.K. from a processing center located in Budapest, Hungary. In addition, Euronet provides ATM services in post office locations to many small and rural areas where there is no traditional access to banking services. The Company's holdings in British Telecom, Sonera of Finland and Royal KPN of the Netherlands (a telecommunications operator) also enhanced performance for the period as a result of significant changes in their business practices. These companies replaced senior management, announced the disposal of non-core assets and issued new equity shares to address balance sheet problems. By credit quality, the Company's holdings of lower rated BBB securities within the investment grade sector and single B-rated securities within the high yield sector also dampened performance as higher rated AAA and AA quality issuers significantly outperformed for the period. We structured the investments of the Company in the expectation of a moderate growth environment in 2001, however, as a result of the Euro-zone economic slowdown, BBB and B-rated corporate issuers performed poorly. The Company reduced its quarterly dividend to 1.75 pence per share effective as of September 2001. MARKET REVIEW European growth decelerated in conjunction with the global economic slowdown already underway. European economic growth further slowed to an annual rate of 1.3% in the third quarter of 2001, down from a rate of 1.7% and 2.5% in the second and first quarters, respectively. Reduced business investment and falling exports were the chief detractors from growth, while consumer spending was the main contributor. The events of September 11 sent shock waves through global financial markets, undermining consumer and investor confidence. In an effort to restore confidence and provide liquidity in the markets, global central banks quickly responded by cutting interest rates. Domestic confidence and export prospects have been reduced as a result of weak conditions in the U.S. Since September 11, European official interest rates have been reduced 100 basis points to 3.25%, bringing the total amount of monetary easing to 150 basis points for 2001, lagging behind the U.S. Federal Reserve's 450 basis point adjustment. Inflation continued to fall, reaching an annual rate of 2.1% in November, down from 2.7% in August and down from its high in May of 3.4%. The European investment grade corporate bond market returned 6.45% for the 12-month period ended 31 December 2001 as measured by the Lehman Brothers European Corporate Bond Index. For the first half of 2001, European corporate bond markets suffered relative to government bond markets as the unanticipated slowdown in the Euro-zone negatively impacted corporate earnings and cash flow, hurting their creditworthiness. During the summer, several investment grade European telecommunications operators were on the brink of 'junk status,' dampening the performance of the entire sector. However, major changes in business strategy at Royal KPN and Sonera this past summer had a significantly positive impact on high-grade telecommunications performance and helped these companies outperform in the second half of 2001. Cyclical issuers were severely impacted by mounting evidence of the sharp slowdown in the global economy and its potential impact on growth. Defensive issuers such as energy and energy-related companies were also negatively impacted after the U.S. energy company, Enron, filed for bankruptcy. The European high yield market, measured by the unmanaged Merrill Lynch European Currency High Yield Index (hedged into euros), returned -10.67% for the 12-month period under review, reflecting its heavy weighting in the battered cable and telecommunications sectors. Concerns of rising defaults, particularly in the media and telecommunications industry, equity market volatility and a weak global economy, negatively affected performance in this sector. In addition, the events of September 11 prompted a 'flight to quality' by investors as the increased risk of a global recession pushed the market lower. This sector fell by more than 11% in September--already weakened by high default rates during the summer. However, the European high yield sector rebounded in the remaining months of 2001, recovering all of its September losses by November due to the strengthening global financial markets, the return of investors' appetite for risk and strong supply/demand technicals. In the currency market, British pounds sterling (GBP) reached a high against the euro of 0.5972 //GBP at the end of May 2001, gaining from the yearly low of 0.6431//GBP in mid January. Better relative economic performance helped the British pounds sterling against the euro during the first half of 2001. However, comments from Prime Minister Tony Blair in the early summer regarding the favorable political climate for the U.K. to join the Euro-zone helped to strengthen the euro, which ended the year at 0.6111 //GBP. OUTLOOK Given the brighter outlook for a global recovery, central banks around the world should gradually shift into a tightening mode. In Europe, monetary authorities should also begin to tighten, but only by the end of 2002 as the European Central Bank (ECB) did not reduce rates as aggressively as the U.S. Federal Reserve. Although the European policy response to the economic downturn has been weak, business and consumer confidence reports suggest the European economy is beginning to stabilize and the ECB's reluctance to act earlier in 2001 should lead to a less robust recovery in 2002. European sentiment and production data indicate that Europe will follow the U.S. closely in the recovery of 2002. While the U.S. can achieve 4%--or higher--growth rates, Europe is limited by its structural rigidity to a 2.5% 'speed limit' which will likely be reached in the second half of 2002. In the near-term, yield curves will likely continue to flatten thanks to stronger signs of economic growth in the U.S. and Europe. In light of the improving economic environment, we believe the medium term opportunities in European fixed income markets will remain in the non-government sectors. We expect the euro to remain steady versus the dollar as Europe's structural rigidity holds down growth. Given the growth and increased complexity of the European bond markets, we have recently appointed co-portfolio managers for the Company. One manager will specialize primarily in investment grade bonds, while the second will focus on the high yield debt market. Working as a team with our extensive credit research group, we believe this structure will enhance our ability to capture opportunities going forward. Looking ahead, we will structure the Company's portfolio with an emphasis on those credits which can benefit from the better economic environment, as well as those issuers engaged in balance sheet improvements beneficial to bondholders. We will also look to take advantage of selective opportunities among the so-called 'fallen angels' to add value to the Company's portfolio. Statement of Total Return For the year ended 31 December 2001 Notes Revenue Capital 2001 2000 £ £ Total Total £ £ Net losses on investments during the 3 0 (10,368,908) (10,368,908) (7,836,213) year Net losses on foreign exchange 4 0 (397,511) (397,511) (873,024) Net investment losses for the year 0 (10,766,419) (10,766,419) (8,709,237) Gross Income 5 4,773,538 0 4,773,538 5,978,112 Withholding tax 1(b) 0 0 0 (16,868) Expenses 6 (658,632) (222,185) (880,817) (1,486,202) Net income for the year 4,114,906 (222,185) 3,892,721 4,475,042 Return on ordinary activities 4,114,906 (10,988,604) (6,873,698) (4,234,195) Distributions 8 (4,537,652) 0 (4,537,652) (3,736,813) Income equalisation 9 96,000 0 96,000 0 Net decrease in Shareholders' funds (326,746) (10,988,604) (11,315,350) (7,971,008) from investment activities Notes 2001 2000 Total Total £ £ Net assets at the start of the year 41,121,568 0 Amounts received on sale of Shares 3,984,000 49,854,743 Less: Issue costs 1(h) 0 (762,167) Net proceeds on sale of Shares 3,984,000 49,092,576 Net decrease in Shareholders' Fund from investment (11,315,350) (7,971,008) activities Net assets at the end of the year 33,790,218 41,121,568 Balance Sheet as at 31 December 2001 Notes 2001 2000 Total Total £ £ Portfolio of investments 1(e) 36,167,697 47,775,723 Net current assets Debtors 10 1,522,155 1,629,850 Cash and bank balances 11 1,035,878 2,097,712 2,558,033 3,727,562 Less Bank overdraft 11 0 322,644 Creditors (less than one year) 12 (4,935,512) (10,059,073) (4,935,512) (10,381,717) Net current liabilities (2,377,479) (6,654,155) Net assets 33,790,218 41,121,568 Shareholders' funds 33,790,218 41,121,568 Number of Shares in issue 54,654,743 49,854,743 Net Asset Value per Share £0.62 £0.82 Cashflow Statement For the year ended 31 December 2001 Notes 2001 2000 £ £ Net cash inflow from operating activities 13 3,995,539 2,657,081 Servicing of finance Interest paid (358,604) (524,652) Net cash outflow from servicing of finance (358,604) (524,652) Capital expenditure and financial investment Acquisition of investments (67,403,581) (147,838,475) Sale of investments 68,642,699 92,226,539 Net cash inflow (outflow) from capital expenditure and financial investment 1,239,118 (55,611,936) Dividends paid 8 (4,537,652) (3,736,813) Financing Amounts received on sale of Shares 3,984,000 49,092,576 Income equalisation 9 96,000 0 Increase (Decrease) in short term loans (5,157,591) 9,898,812 Net cash inflow (outflow) from financing (1,077,591) 58,991,388 Increase (Decrease) in cash (739,190) 1,775,068 Closing cash balance 11 1,035,878 1,775,068 Opening cash balance 1,775,068 0 Movement in cash balance (739,190) 1,775,068 1. Accounting policies a. Basis of accounting The financial statements are prepared under the historical cost convention as modified by the inclusion of securities at valuation. The financial statements are prepared in sterling (£). b) Income recognition Income on interest bearing securities is accounted for on an accruals basis and bank deposit interest is accounted for on a receipts basis. Income is shown gross of any withholding tax. The Company accretes discounts and amortises premiums as adjustments to interest income. c) Realised gains and losses on investments Realised gains and losses on sales of investments are calculated on the FIFO basis of the investment in local currency. The associated foreign exchange movement between the date of purchase and the date of sale on the sale of investments is included in other gains or losses in the Statement of Total Return. d) Unrealised gains and losses on investments Unrealised gains and losses on investments arising during the year are reflected as a component of net gains or losses on investments in the Statement of Total Return. e) Valuation of securities Assets listed or traded on a regulated market are valued at the official close of business prices at the year end. If for specific assets the official close of business prices do not, in the opinion of the Administrator, reflect their fair value or if prices are unavailable, the values are calculated with care and in good faith by the Administrator, approved for that purpose by the Custodian, in consultation with the Investment Manager, on the basis of the probable realisation values for such assets as at the close of business as at the year end. f) Foreign exchange Foreign currency assets and liabilities, including investments, are translated into sterling at the exchange rate prevailing at the year end. The foreign exchange gain or loss based on the translation of the original cost of the investments, together with the gain or loss arising on the translation of other assets and liabilities, is included in other gains or losses in the Statement of Total Return. Foreign currency forward exchange contracts are revalued to a forward rate as at their close of business price at the year end. The resulting unrealised gain or loss between this rate and the contract rate is included in other gains or losses in the Statement of Total Return and is shown as a debtor or creditor in the Balance Sheet. g) Distribution policy It is intended that substantially all of the net income of the Company is distributed as dividends. Dividends will, if declared, be declared and paid quarterly in or about January, April, July and October of each year. h) Issue costs Issue costs incurred directly in connection with the issue of the Shares are deducted from the consideration received in the Statement of Movements in Shareholders' Funds. Shareholders who subscribed for Shares in the issue which took place on 29 January 2001 incurred a 3% commission on the issue price at Net Asset Value per Share, a portion of which remained in the Company. 2. Taxation Under current law and practice, the Company qualifies as an investment undertaking as defined in Section 739B (1) of the Taxes Consolidation Act, 1997, as amended. It is not chargeable to Irish tax on its income or capital gains. However, a tax can arise on the happening of a 'chargeable event' in the Company. A chargeable event includes any distribution payments to Shareholders or any encashment, redemption or transfer of Shares. Any tax arising on a chargeable event is a liability of the Shareholder, albeit that it is paid by the Company (although if the Company fails to deduct the tax or the correct amount of tax, it becomes ultimately a liability of the Company). No tax will arise on a chargeable event in respect of a Shareholder who is an Exempt Irish Investor (as defined in Section 739D of the Taxes Consolidation Act, 1997, as amended) or who is neither Irish resident nor ordinarily resident in Ireland at the time of the chargeable event provided that the necessary signed declaration is in place. 3. Net gains/(losses) on investments The net gains/(losses) on investments during the year comprise: Notes 2001 2000 £ £ Proceeds from sales of investments during the year 68,642,699 92,226,539 Original cost of investments sold during the year (80,422,301) (94,395,029) Net losses realised on investments sold during the year 1(c) (11,779,602) (2,168,490) Net change in unrealised appreciation (depreciation) at the end 1(d) 1,410,694 (5,667,723) of the year Net losses on investments during the year (10,368,908) (7,836,213) 4. Net losses on foreign exchange 2001 2000 £ £ Net realised and unrealised foreign exchange losses (397,511) (873,024) 5. Gross income Notes 2001 2000 £ £ Interest on securities 1(b) 4,704,166 5,932,742 Bank interest 1(b) 36,962 45,370 Income from new Shares issued 1(h) 32,410 0 4,773,538 5,978,112 6. Expenses The Company charges 25% of the investment management fees, operational expenses and borrowing expenses in each year to capital (such expenses amounted to £222,185 for the year ended 31 December 2001 and £296,693 for the period ended 31 December 2000) and 75% of such fees and expenses to its income account. Thus, on realisation of Shares, Shareholders may not receive back the full amount invested. In addition, the set up expenses of the Company, other than those defined as issue costs, were written off as incurred. 2001 2001 2001 2000 £ £ £ £ Revenue Capital Total Total Payable to the Administrator Administration fee (41,273) (13,849) (55,122) (65,794) Payable to the Custodian Custody fee (13,182) (4,493) (17,675) (27,116) Payable to the Investment Manager Investment management fee (241,649) (81,812) (323,461) (417,477) Other expenses Audit fee (5,379) (1,793) (7,172) (17,156) Loan interest (269,309) (89,295) (358,604) (524,652) Legal fees (42,917) (14,306) (57,223) (94,902) Directors' remuneration (15,008) (5,003) (20,011) (30,746) Printing & postage (21,609) (7,203) (28,812) (3,431) Set up expenses 0 0 0 (289,190) Miscellaneous (8,306) (4,431) (12,737) (15,738) (362,528) (122,031) (484,559) (975,815) Total expenses (658,632) (222,185) (880,817) (1,486,202) 7. Related party transactions Investment Manager The Investment Manager (Alliance Capital Management L.P.) is entitled to an annual investment management fee of 0.65% of the Company's average weekly Net Asset Value (having added back the amount borrowed at any time under the Company's borrowing facility with Deutsche Bank AG London). The Investment Manager is entitled, subject to approval of the Directors, to receive from the Company an amount not to exceed $45,000 annually exclusive of VAT, if any, thereon, to cover certain ancillary expenses incurred by the Investment Manager in connection with its provision of investment management services to the Company. Such compensation amounted to £30,936 (or $45,000) for the year ended 31 December 2001. The Investment Management Agreement may be terminated by the Investment Manager or the Company giving not less than 90 days' notice in writing. Alliance Capital Management L.P. has not entered into transactions in relation to a placing and/or a new issue in which a connected person with the Investment Manager has a material interest as a member of the underwriting syndicate. Administrator Deutsche International Fund Services (Ireland) Limited has been appointed to act as Administrator pursuant to the Administration Agreement. For this service, the Company pays to the Administrator an annual fee, accrued daily based on the average weekly Net Asset Value and payable monthly in arrears at the following rates: Rate NAV 0.15% p.a. 0 - £30 million 0.10% p.a. £30 million - £60 million 0.075% p.a. £60 million + The Administrator receives a minimum fee of £4,500 per month. The Administrator is also entitled to an annual fee of £20 per Shareholder for registrar maintenance, £15 for each share registry entry, £10 for each dividend payment, £15 for each statement issued and £7 for each payment by telegraphic transfer. The Administrator is also reimbursed by the Company, as appropriate, for all reasonable costs, expenses and disbursements incurred by it in the performance of its duties for the Company. Custodian Deutsche International Custodial Services (Ireland) Limited has been appointed Custodian to the Company pursuant to the Custodian Agreement. For this service, the Company pays to the Custodian a fee of 0.025% per annum of the average weekly Net Asset Value of the Company. The Custodian's fee is paid monthly in arrears and is accrued daily based on the average weekly Net Asset Value of the Company. In addition, the Custodian is entitled to a transaction charge of £20 per transaction. The Custodian is also reimbursed by the Company for all reasonable out-of-pocket expenses, including sub-custody fees and expenses which are charged at normal commercial rates. 8. Distributions It is intended that substantially all of the net income of the Company is distributed as dividends. Dividends will, if declared, be declared and paid quarterly in or about January, April, July and October of each year. The following dividends were paid during the year: 2001 2000* Date paid £ Date paid £ Distribution based on income from 29/1/01 (1,121,732) prior period Distribution based on income from 10/4/01 (1,229,731) 24/1/00 (371,617) current period 10/7/01 (1,229,731) 03/4/00 (1,121,732) 09/10/01 (956,458) 24/7/00 (1,121,732) 23/10/00 (1,121,732) Total Distribution (4,537,652) (3,736,813) * Represents for the period from 2 November 1999 to 31 December 2000. 9. Equalisation Income equalisation arrangements are applied at the Company level and are intended to ensure that the income per Share which is distributed in respect of the distribution period is not affected by changes in the number of Shares in issue during that period. The calculation of equalisation is based on net income. 10. Debtors 2001 2000 £ £ Accrued income 1,269,249 1,553,712 Unrealised gain on forward contracts 0 76,138 Unrealised gain on Index Swap (notional value EUR5,000,000) 252,906 0 1,522,155 1,629,850 11. Analysis of cash on the Balance Sheet 2001 2000 £ £ Cash and bank balances 1,035,878 2,097,712 Bank overdraft 0 (322,644) 1,035,878 1,775,068 All cash and bank balances are held with Deutsche Bank AG London. 12. Creditors All settlements are scheduled for less than one year. As at 31 December 2001, the Company had a loan outstanding, with Deutsche Bank AG London, of EUR 9,000,000 at a rate of 3.783%. The facility will be open for a period of five years renewable on such terms as may be mutually agreed between the Company and such banks and financial institutions as may be parties to the Facility Agreement at such time, although the facility is repayable earlier under certain circumstances. 2001 2000 £ £ Accrued expenses (108,435) (160,261) Loan (4,741,221) (9,898,812) Unrealised loss on forward contracts (85,856) 0 (4,935,512) (10,059,073) 13. Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities Notes 2001 2000 £ £ Net income 5,6 3,892,721 4,475,042 Interest on loan 6 358,604 524,652 4,251,325 4,999,694 Net gains/(losses) on foreign exchange 4 (397,511) (873,024) Decrease/(Increase) in debtors 10 107,695 (1,629,850) Increase in creditors 12 34,030 160,261 Net cash inflow from operating activities 3,995,539 2,657,081 14. Exchange rate The following sterling exchange rates as at 31 December 2001 have been used in this report: EUR 1.6346 DEM 3.1970 USD 1.4554 15. Soft commission arrangements There were no soft commission arrangements during the year under review. 16. Efficient Portfolio Management The Company entered into forward currency contracts to provide a cross currency hedge to protect against adverse movement in the exchange rates with the euro. While the base currency of the Company is sterling the policy of the Company is to invest in European markets, therefore hedging non-euro (sterling) to euro occurs. A forward exchange currency contract is a commitment to purchase or sell a non-euro currency at a future date at a negotiated forward rate. The gain or loss arising from the difference between the original contract and the closing of such contract is included in net gains or losses on investments. Fluctuations in the value of open forward exchange currency contracts are reflected for financial reporting purposes as a component of debtors or creditors. Risks may arise from the potential inability of a counterparty to meet the terms of a contract and from unanticipated movements in the value of a foreign currency relative to the euro. At 31 December 2001, the Company had outstanding forward exchange currency contracts as follows: £ £ £ Value on Unrealised Current Contract Origination Depreciation Value Amount Date GBP Forward Exchange Currency Buy Contract Euro, settling 28/01/02 7,530,072 4,695,000 4,609,144 (85,856) The Company utilizes swap contracts for efficient portfolio management. A swap is an agreement that obligates two parties to exchange a series of cash flows at specified intervals based upon or calculated by reference to changes in specified prices or rates for a specified amount of an underlying asset or otherwise determined notional amount. The payment flows are usually netted against each other, with the difference being paid by one party to the other. Risks may arise as a result of the failure of the counterparty to the swap agreement. The loss incurred by the failure of a counterparty is generally limited to the net interest payment to be received by the Company, and/or the termination value at the end of the agreement. Therefore, the Company considers the creditworthiness of each counterparty to a swap agreement in evaluating potential credit risk. Additionally, risks may arise from unanticipated movements in interest rates or in the value of the underlying assets. Notional Termination £ Value Counterparty Date Unrealised EUR Appreciation Swap contract Merrill Lynch European High Yield 5,000,000 Merrill Lynch 19 January 2002 252,906 Index Swap International 17. Financial Instruments The main risks and policies relating to financial instruments are set out below. The financial instruments held by the Company are set out in the portfolio of investments. The Company has no financial liabilities other than short term creditors. Market Risk Potential investors should note that the investments of the Company are subject to market fluctuations and other risks inherent in investing in securities in Europe and there can be no assurances that any appreciation in value will occur. The value of investments can go down as well as up and an investor may not get back the amount invested. Liquidity Risk Liquidity risk exists when a particular instrument is difficult to purchase or sell. If a derivative transaction is particularly large or if the relevant market is illiquid (as is the case with many privately negotiated derivatives), it may not be possible to initiate a transaction or liquidate a position at an advantageous price. Foreign Exchange Risk Changes in exchange rates between currencies may also cause the value of the investment to diminish. A substantial portion of the portfolio of investments and other net assets of the Company are denominated in currencies other than in sterling and are included below: Currency Exposure as at 31 December 2001 Other Net Total Investments Assets/Liabilities £ £ £ Currency Euro 29,543,782 2,034,238 31,578,020 German Mark 1,891,536 18,497 1,910,033 Sterling 4,732,379 (4,430,214) 302,165 36,167,697 (2,377,479) 33,790,218 Currency Exposure as at 31 December 2000 Other Net Total Investments Assets/Liabilities £ £ £ Currency Euro 42,542,423 (6,245,292) 36,297,131 German Mark 2,400,967 30,989 2,431,956 Sterling 2,832,333 (439,902) 2,392,431 United States Dollar 0 50 50 47,775,723 (6,654,155) 41,121,568 Interest Rate Exposure The interest rate profile of the Company's financial assets (excluding short term debtors and creditors) at 31 December 2001 was: Financial Fixed rate Floating rate assets on which no financial assets financial assets Total interest is paid £ £ £ £ Currency Euro 29,543,782 28,010,165 1,532,638 979 German Mark 1,891,536 688,835 1,202,701 0 Sterling 4,732,379 3,970,127 762,252 0 36,167,697 32,669,127 3,497,591 979 Fixed rate Fixed rate financial assets financial assets Weighted average Weighted average interest rate period for which % rate is fixed % Currency Euro 8.47 6.55 German Mark 8.69 6.03 Sterling 10.13 8.34 The interest rate profile of the Company's financial assets (excluding short term debtors and creditors) at 31 December 2000 was: Financial Fixed rate Floating rate assets on which no financial assets financial assets Total interest is paid £ £ £ £ Currency Euro 42,542,423 41,911,727 628,496 2,200 German Mark 2,400,967 2,400,967 0 0 Sterling 2,832,333 2,832,333 0 0 47,775,723 47,145,027 628,496 2,200 Fixed rate Fixed rate financial assets financial assets Weighted average Weighted average interest rate period for which % rate is fixed % Currency Euro 8.94 9.72 German Mark 10.91 6.11 Sterling 10.05 8.47 18. Changes during the year Deutsche Bank AG London resigned its position as placing agent and sponsor on 31 July 2001. On 19 November 2001, HSBC Investment Bank Plc assumed the role of Corporate Broker. On 22 March 2001, the address of the registered office of the Company changed to Guild House, Guild Street, International Financial Services Centre, Dublin 1, Ireland. 19. Approval of annual report The annual audited report was approved by the Board of Directors on 12 April 2002. This information is provided by RNS The company news service from the London Stock Exchange

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