Final Results
Foreign & Colonial Eurotrust PLC
03 November 2006
Date: 3 November 2006
Contact: Peter Jarvis
F&C Management Limited
020 7628 8000
FOREIGN & COLONIAL EUROTRUST PLC
Unaudited Preliminary Statement of Results
for the year ended 30 September 2006
HIGHLIGHTS
• Net asset value per share rose by 17.0% from 624.9p to 731.2p, compared with
a rise of 16.0% in the FTSE World Europe ex UK Index (sterling adjusted).
• Share price rose by 18.7% from 560.0p to 664.5p.
• The Board is recommending an unchanged final dividend of 1.7p per share and
will pay a special dividend of 7.3p, to give a combined dividend of
9.0p. This compares with last year's combined dividend of 7.5p.
SUMMARY OF RESULTS
30 September 2006 30 September 2005 % Change
Net assets £406.69m *£391.35m +3.9
Net asset value per share 731.20p *624.89p +17.0
Earnings per share 8.73p 6.97p +25.3
Dividends per share 9.00p 7.50p +20.0
Share price 664.50p 560.00p +18.7
* Restated to reflect changes in accounting policies (see note 1).
Extracts from the Chairman's Statement
Capital Performance | Over the year to 30 September 2006, Continental European
markets made good progress despite a background of moderating global growth,
rising interest rates and all time high commodities prices. Your Company's net
asset value per share rose by 17.0% from 624.9p to 731.2p compared with a rise
of 16.0% in the FTSE World Europe ex UK Index (sterling adjusted). The
Company's share price rose by 18.7% from 560.0p to 664.5p. The discount
narrowed during the year with the strong performance of markets and further
repurchases of shares. The results incorporate the impact of new accounting
standards.
Revenue | Our gross income for the year increased, reflecting the higher income
generated from the portfolio of stocks, in turn reflecting the significant
increase in corporate earnings over the year. Expenses have also increased as
the management fee has risen in line with the increased value of the portfolio.
The net revenue return attributable to shareholders has increased by 7.8% from
£4.7m to £5.0m.
Dividend | As in previous years, the Board is declaring a special dividend and
is proposing a final dividend. The Board is recommending an unchanged final
dividend of 1.7p per share and will pay a special dividend of 7.3p, to give a
combined dividend of 9.0p. This compares with last year's combined dividend of
7.5p and reflects the increased net revenue available for distribution. The
combined dividend appears higher than earnings per share as it is based on the
number of shares in issue today rather than the average outstanding during the
year, which is the case for earnings per share. The total amount distributed is
slightly less than the Company's net earnings for the year.
Gearing | The effective gearing of the Company was 6.5% at 30 September 2006,
reflecting our positive stance on the market taken during 2006. It is the policy
of the Board that the level of gearing should not exceed 20%.
Share Buy-Backs | The Company bought back and cancelled 7,007,702 shares during
the financial year, and a further 235,587 shares have been bought back and
cancelled since the year end. The Board will again propose to the Annual
General Meeting that the Company be granted powers to make further repurchases
as appropriate. We continue to monitor the level of discount to net asset value
at which your shares trade and believe that share buy-backs are an important
factor in addressing supply/demand imbalances while at the same time increasing
the net asset value per share.
Douglas McDougall
November 2006
INCOME STATEMENT
for the year ended 30 September 2006 2005
Revenue Capital Total* Revenue Capital Total*
Restated+ Restated+
£'000s £'000s £'000s £'000s £'000s £'000s
Gains on investments - 56,792 56,792 - 87,270 87,270
Exchange gains/(losses) (9) 55 46 (1) (484) (485)
Income 11,621 - 11,621 10,011 - 10,011
Management fee (2,498) - (2,498) (2,330) - (2,330)
Other expenses (655) (45) (700) (739) (27) (766)
Net return before finance costs and taxation 8,459 56,802 65,261 6,941 86,759 93,700
Finance costs (1,216) - (1,216) (347) - (347)
Return on ordinary activities before taxation 7,243 56,802 64,045 6,594 86,759 93,353
Taxation on ordinary activities (2,200) - (2,200) (1,914) (36) (1,950)
Return attributable to equity shareholders 5,043 56,802 61,845 4,680 86,723 91,403
Return per ordinary share - pence 8.73 98.28 107.01 6.97 129.10 136.07
* The total column of this statement is the profit and loss account of the
Company.
+ Restated to reflect changes in accounting policies (see note 1).
All revenue and capital items in the above statement derive from continuing
operations.
A statement of total recognised gains and losses is not required as all gains
and losses of the Company have been reflected in the above statement.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Called up Share Capital Total equity
share premium redemption Capital Revenue shareholders'
capital account reserve reserves reserve funds
£'000s £'000s £'000s £'000s £'000s £'000s
Balance at 30 September 2004
as previously reported 16,998 123,749 1,813 183,271 3,529 329,360
Add: accrued dividends at
30 September 2004 - - - - 3,672 3,672
Less: investment valuation restatement - - - (220) - (220)
Balance at 30 September 2004 restated 16,998 123,749 1,813 183,051 7,201 332,812
Movements during the year ended
30 September 2005
Dividends paid - - - - (3,646) (3,646)
Shares purchased by the Company (1,341) - 1,341 (29,215) - (29,215)
Return attributable to equity
shareholders as previously reported - - - 86,848 4,680 91,528
Less: investment valuation restatement - - - (125) - (125)
Balance at 30 September 2005 restated 15,657 123,749 3,154 240,559 8,235 391,354
Movements during the year ended
30 September 2006
Dividends paid - - - - (4,417) (4,417)
Shares purchased by the Company (1,752) - 1,752 (42,092) - (42,092)
Return attributable to equity
shareholders - - - 56,802 5,043 61,845
Balance at 30 September 2006 13,905 123,749 4,906 255,269 8,861 406,690
BALANCE SHEET
At 30 September 2006 2005
Restated*
£'000s £'000s £'000s £'000s
Fixed assets
Listed investments 437,827 403,303
Current assets
Debtors 306 24,083
Taxation recoverable 360 416
Cash at bank and short-term deposits 3,923 14,907
4,589 39,406
Creditors: amounts falling due within one year
Foreign currency loans (30,517) (23,853)
Other (5,209) (27,502)
(35,726) (51,355)
Net current liabilities (31,137) (11,949)
Net assets 406,690 391,354
Capital and reserves
Called-up share capital 13,905 15,657
Share premium account 123,749 123,749
Capital redemption reserve 4,906 3,154
Capital reserves 255,269 240,559
Revenue reserve 8,861 8,235
392,785 375,697
Total equity shareholders' funds 406,690 391,354
Net asset value per ordinary share - pence 731.20 624.89
* Restated to reflect changes in accounting policies (see note 1).
The geographical distribution of investments at 30 September 2006 was:
Switzerland - 20.1%, France - 18.3%, Germany - 11.4%, Italy - 8.8%, Spain - 7.3%, Sweden - 6.7%,
Netherlands - 5.9%, Greece - 5.5%, Finland - 4.9%, Norway - 4.8%, Belgium - 2.4%, Ireland - 2.4%,
Austria - 0.9%, Denmark - 0.6%.
SUMMARY CASH FLOW STATEMENT
for the year ended 30 September 2006 2005
£'000s £'000s
Net cash inflow from operating activities 8,307 7,144
Cash outflow from servicing of finance (1,225) (436)
Total tax paid (2,161) (1,904)
Net cash inflow from financial investment 47,754 15,144
Equity dividends paid (4,417) (3,646)
Net cash inflow before use of liquid resources and financing 48,258 16,302
Decrease/(increase) in short-term deposits 13,884 (13,992)
Net cash outflow from financing (59,199) (2,736)
Increase/(decrease) in cash 2,943 (426)
Reconciliation of net cash flow movement to movement in net debt
Increase/(decrease) in cash 2,943 (426)
(Decrease)/increase in short-term deposits (13,884) 13,992
Increase in short-term loans (6,782) (2,590)
Movement in net debt resulting from cash flows (17,723) 10,976
Exchange movement 75 (475)
Movement in net debt (17,648) 10,501
Net debt brought forward (8,946) (19,447)
Net debt carried forward (26,594) (8,946)
Notes
1 ACCOUNTING POLICIES
Changes in accounting policies
With effect from 1 October 2005, the Company has adopted the following Financial
Reporting Standards (FRS):
FRS 21 (Events after the Balance Sheet date)
Dividends paid by the Company are accounted for in the period in which the
Company is liable to pay them. Previously, the Company accrued dividends in the
period in which the net revenue, to which those dividends related, was accounted
for.
FRS 25 (Financial Instruments: Disclosure and Presentation) and FRS 26
(Financial Instruments: Measurement)
The Company has designated its assets as being measured at 'fair value through
profit and loss'. The fair value of fixed asset listed investments is deemed to
be the bid value of those investments at the close of business on the relevant
date. Previously, all listed investments were valued at mid value.
There have been no other changes to significant accounting policies during the
year.
The comparatives for the year ended 30 September 2005 have been restated to give
effect to the above changes. Notes 3 and 4 further explain these restatements.
2 DIVIDENDS
The Directors recommend a final dividend in respect of the year ended 30
September 2006 of 1.7p (2005 - 1.7p) and have declared a special dividend of
7.3p (2005 - 5.8p), both payable on 21 December 2006 to all shareholders on the
register at close of business on 17 November 2006.
3 RETURN PER ORDINARY SHARE
Revenue return
The revenue return per share is based on the revenue return attributable to
equity shareholders of £5,043,000 profit (2005: £4,680,000 profit).
Capital return
The capital return per share is based on the capital return attributable to
equity shareholders of £56,802,000 profit (2005: £86,723,000 profit, restated).
The capital return per share for the year ended 30 September 2005 has been
decreased by £125,000 (0.19 pence per share). This reflects the effect of the
reduction in valuation of investments at 30 September 2004 by £220,000 and 30
September 2005 by £345,000.
Both the revenue and capital returns per share as based on a weighted average of
57,792,436 ordinary shares in issue during the year (2005: 67,173,257).
4 RESTATEMENT OF OPENING BALANCES
Balance Sheet Previously reported Restated
30 September 2005 Adjustment 30 September 2005
£'000s £'000s £'000s
Fixed assets
Listed investments* 403,648 (345) 403,303
Current assets
Debtors 24,083 - 24,083
Taxation recoverable 416 - 416
Cash at bank and short-term deposits 14,907 - 14,907
39,406 - 39,406
Creditors: amounts falling due within one year
Foreign currency loans (23,853) - (23,853)
Other+ (32,199) 4,697 (27,502)
(56,052) 4,697 (51,355)
Net current liabilities (16,646) 4,697 (11,949)
Net assets 387,002 4,352 391,354
Capital and reserves
Called up share capital 15,657 - 15,657
Share premium account 123,749 - 123,749
Capital redemption reserve 3,154 - 3,154
Capital reserves* 240,904 (345) 240,559
Revenue reserve+ 3,538 4,697 8,235
Total equity shareholders' funds 387,002 4,352 391,354
Net asset value per share
- pence 617.94 6.95 624.89
Notes to the restatement of opening balances
* Effect of revaluation of fixed asset investments from middle market to bid
value.
+ Effect of not recognising the recommended final dividend and the declared
special dividend until after the balance sheet date.
4 RESTATEMENT OF OPENING BALANCES (continued)
Balance Sheet Previously reported Restated
30 September 2004 Adjustment 30 September 2004
£'000s £'000s £'000s
Fixed assets
Listed investments* 353,186 (220) 352,966
Current assets
Debtors 2,065 - 2,065
Taxation recoverable 304 - 304
Cash at bank and short-term deposits 1,281 - 1,281
3,650 - 3,650
Creditors: amounts falling due within one year
Foreign currency loans (20,728) - (20,728)
Other+ (6,748) 3,672 (3,076)
(27,476) 3,672 (23,804)
Net current liabilities (23,826) 3,672 (20,154)
Net assets 329,360 3,452 332,812
Capital and reserves
Called up share capital 16,998 - 16,998
Share premium account 123,749 - 123,749
Capital redemption reserve 1,813 - 1,813
Capital reserves* 183,271 (220) 183,051
Revenue reserve+ 3,529 3,672 7,201
Total equity shareholders' funds 329,360 3,452 332,812
Net asset value per share
- pence 484.41 5.08 489.49
Notes to the restatement of opening balances
* Effect of revaluation of fixed asset investments from mid to bid value.
+ Effect of not recognising the recommended final dividend and the declared
special dividend until after the balance sheet date.
5 FINANCIAL INFORMATION
The above financial information comprises non-statutory accounts within the
meaning of section 240 of the Companies Act 1985. The financial information for
the year ended 30 September 2005 has been extracted from published accounts
(except as restated) for the year ended 30 September 2005 that have been
delivered to the Registrar of Companies and on which the report of the auditors
was unqualified.
6 ANNUAL GENERAL MEETING
The Annual General Meeting will be held on Thursday 14 December at 10:30 am at
the offices of F&C Management at Exchange House, Primrose Street, London EC2A
2NY.
7 REPORT AND ACCOUNTS
The Report and Accounts will be posted to shareholders in mid November 2006.
Copies may be obtained thereafter during normal business hours from the
Company's Registered Office, Exchange House, Primrose Street, London EC2A 2NY.
By order of the Board
F&C Management Limited, Secretary
3 November 2006
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