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Gartmore Balanced (GTB)

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Friday 01 November, 2002

Gartmore Balanced

Final Results


STOCK EXCHANGE ANNOUNCEMENT

GARTMORE BALANCED ASSETS TRUST PLC

(FORMERLY GARTMORE SPLIT CAPITAL OPPORTUNITIES TRUST PLC)

RESULTS FOR THE YEAR TO 31st JULY 2002

------------------------------------------

The Directors announce the Group's unaudited results for the year to 31st July
2002.

GROUP TOTAL RETURN (UNAUDITED)

------------------------------

                                               YEAR TO 31 JULY 2002         

                                           REVENUE      CAPITAL        TOTAL
                                                                            
                                                                      RETURN
                                                                            
                                             £'000        £'000        £'000
                                                                            
INCOME AND CAPITAL PROFITS                                                  
                                                                            
Dividends and other income                   5,077           54        5,131
                                                                            
Net loss on investments                          -     (37,016)     (37,016)
                                                                            
                                            ------       ------       ------
                                                                            
RETURN BEFORE EXPENSES, FINANCE              5,077     (36,962)     (31,885)
                                                                            
COSTS AND TAXATION                                                          
                                                                            
----------------------------------      ----------                          
                                                                            
                                                   )                        
                                                                            
Continuing                                   5,077 )                        
                                                                            
Discontinued:-                                   - )                        
                                                                            
The Gartmore Scotland                              )                        
                                                                            
Investment Trust PLC                               )                        
                                                                            
----------------------------------      ----------                          
                                                                            
EXPENSES                                                                    
                                                                            
Management fees                              (150)        (225)        (375)
                                                                            
Other expenses                               (335)        (200)        (535)
                                                                            
                                            ------       ------       ------
                                                                            
RETURN BEFORE FINANCE COSTS                  4,592     (37,387)     (32,795)
                                                                            
AND TAXATION                                                                
                                                                            
----------------------------------      ----------                          
                                                                            
                                                   )                        
                                                                            
Continuing                                   4,592 )                        
                                                                            
Discontinued:-                                   - )                        
                                                                            
The Gartmore Scotland                              )                        
                                                                            
Investment Trust PLC                               )                        
                                                                            
----------------------------------      ----------                          
                                                                            
FINANCE COSTS                                                               
                                                                            
Interest payable                             (628)        (941)      (1,569)
                                                                            
                                            ------       ------       ------
                                                                            
RETURN BEFORE TAXATION                       3,964     (38,328)     (34,364)
                                                                            
TAXATION                                      (77)           77            -
                                                                            
                                            ------       ------       ------
                                                                            
RETURN AFTER TAXATION                        3,887     (38,251)     (34,364)
                                                                            
NON EQUITY MINORITY INTEREST                     -      (3,350)      (3,350)
                                                                            
                                            ------       ------       ------
                                                                            
RETURN TO EQUITY SHAREHOLDERS                3,887     (41,601)     (37,714)
                                                                            
APPROPRIATED TO                                                             
                                                                            
EQUITY SHAREHOLDERS                                                         
                                                                            
Dividends - Ordinary shares                (1,376)            -      (1,376)
                                                                            
                                            ------       ------       ------
                                                                            
TRANSFERRED TO/(FROM) RESERVES               2,511     (41,601)     (39,090)
                                                                            
                                            ------       ------       ------
                                                                            
TOTAL RETURN PER ORDINARY SHARE               8.5P      (90.7)P      (82.2)P
                                                                            
                                           =======      =======      =======

GROUP TOTAL RETURN COMPARATIVE (AUDITED)

----------------------------------------

                                               YEAR TO 31 JULY 2001         

                                           REVENUE      CAPITAL        TOTAL
                                                                            
                                                                      RETURN
                                                                            
                                             £'000        £'000        £'000
                                                                            
INCOME AND CAPITAL PROFITS                                                  
                                                                            
Dividends and other income                   8,285            -        8,285
                                                                            
Net loss on investments                          -     (20,839)     (20,839)
                                                                            
                                            ------       ------       ------
                                                                            
RETURN BEFORE EXPENSES,                      8,285     (20,839)     (12,554)
                                                                            
FINANCE COSTS AND TAXATION                                                  
                                                                            
----------------------------------       ---------                          
                                                                            
                                                   )                        
                                                                            
Continuing                                   6,132 )                        
                                                                            
Discontinued:-                               2,153 )                        
                                                                            
The Gartmore Scotland                              )                        
                                                                            
Investment Trust PLC                               )                        
                                                                            
----------------------------------       ---------                          
                                                                            
EXPENSES                                                                    
                                                                            
Management fees                              (546)        (229)        (775)
                                                                            
Other expenses                               (429)        (331)        (760)
                                                                            
                                            ------       ------       ------
                                                                            
RETURN BEFORE FINANCE COSTS                  7,310     (21,399)     (14,089)
                                                                            
AND TAXATION                                                                
                                                                            
----------------------------------       ---------                          
                                                                            
                                                   )                        
                                                                            
Continuing                                   5,707 )                        
                                                                            
Discontinued:-                               1,603 )                        
                                                                            
The Gartmore Scotland                              )                        
                                                                            
Investment Trust PLC                               )                        
                                                                            
----------------------------------       ---------                          
                                                                            
FINANCE COSTS                                                               
                                                                            
Interest payable                             (543)        (815)      (1,358)
                                                                            
                                            ------       ------       ------
                                                                            
RETURN BEFORE TAXATION                       6,767     (22,214)     (15,447)
                                                                            
TAXATION                                     (248)          248            -
                                                                            
                                            ------       ------       ------
                                                                            
RETURN AFTER TAXATION                        6,519     (21,966)     (15,447)
                                                                            
NON EQUITY MINORITY INTEREST                 (615)        (372)        (987)
                                                                            
                                            ------       ------       ------
                                                                            
RETURN TO EQUITY SHAREHOLDERS                5,904     (22,338)     (16,434)
                                                                            
APPROPRIATED TO                                                             
                                                                            
EQUITY SHAREHOLDERS                                                         
                                                                            
Dividends - Ordinary shares                (5,161)            -      (5,161)
                                                                            
                                            ------       ------       ------
                                                                            
TRANSFERRED TO/(FROM) RESERVES                 743     (22,338)     (21,595)
                                                                            
                                            ------       ------       ------
                                                                            
TOTAL RETURN PER ORDINARY SHARE              12.9p      (48.7)P      (35.8)P
                                                                            
                                           =======      =======      =======

The Revenue column shown above represents the Revenue Account of the Group.

Management fees and finance costs of Gartmore Balanced Assets Trust PLC are
allocated 40% to revenue and 60% to capital.

Group revenue return per Ordinary share has been calculated on the return to
equity shareholders of £3,887,000 (2001: £5,904,000) and 45,877,600 (2001:
45,877,600) Ordinary shares in issue throughout the period.

Group capital return per Ordinary Share has been calculated in accordance with
FRS4 on the adverse return for the period of £41,601,000 (2001: £22,338,000).

                                                             2002         2001
                                                                              
                                                            £'000        £'000
                                                                              
Capital return per FRS4 Basis                            (41,601)     (22,338)
                                                                              
Deficiency re unsecured Zero Coupon Loan Note 2004         15,152            -
                                                                              
Deficiency re subscription undertaking                      6,960            -
                                                                              
                                                          -------      -------
                                                                              
Capital return per Articles Basis                        (19,489)     (22,338)
                                                                              
                                                          =======      =======

The Group capital return per Ordinary share calculated in accordance with the
Articles basis is negative 42.5p (2001: negative 48.7p)

GROUP BALANCE SHEET                                            AT           AT
                                                                              
-------------------                                      31-07-02     31-07-01
                                                                              
                                                            £'000        £'000
                                                                              
FIXED ASSETS                                                                  
                                                                              
Listed investments at valuation                            26,881       70,274
                                                                              
CURRENT ASSETS                                                                
                                                                              
Debtors: Amounts receivable within one year                 1,780          644
                                                                              
Cash at bank                                                1,845        3,789
                                                                              
                                                          -------      -------
                                                                              
                                                            3,625        4,433
                                                                              
Creditors: Amounts falling due within one year              (438)      (2,899)
                                                                              
                                                          -------      -------
                                                                              
NET CURRENT ASSETS                                          3,187        1,534
                                                                              
                                                          -------      -------
                                                                              
TOTAL ASSETS LESS CURRENT LIABILITIES                      30,068       71,808
                                                                              
Creditors: Amounts falling due after more than           (13,200)     (19,200)
                                                                              
one year                                                                      
                                                                              
                                                          -------      -------
                                                                              
NET ASSETS                                                 16,868       52,608
                                                                              
                                                          =======      =======
                                                                              
CAPITAL AND RESERVES                                                          
                                                                              
Called-up share capital                                       459          459
                                                                              
Special reserve                                            42,509       42,509
                                                                              
Capital reserve - realised                               (20,596)      (8,516)
                                                                              
Capital reserve - unrealised                             (48,297)     (18,776)
                                                                              
Revenue reserve                                             3,813        1,302
                                                                              
                                                          -------      -------
                                                                              
EQUITY SHAREHOLDERS' (SHORTFALL)/FUNDS                   (22,112)       16,978
                                                                              
Non equity minority interest entitlement                   38,980       35,630
                                                                              
                                                          -------      -------
                                                                              
CAPITAL EMPLOYED                                           16,868       52,608
                                                                              
                                                          =======      =======
                                                                              
NET ASSET VALUE PER SHARE (AS PER FRS 4):                                     
                                                                              
ORDINARY SHARES                                           (48.2)p        37.0p
                                                                              
ZERO DIVIDEND PREFERENCE SHARES                            121.9P       111.4p
                                                                              
AVAILABLE ASSETS PER SHARE (AS PER ARTICLES):                                 
                                                                              
ORDINARY SHARES                                               Nil        37.0p
                                                                              
ZERO DIVIDEND PREFERENCE SHARES                             52.8p       111.4p
                                                                              

NOTES:

1. The Net Asset Values are calculated as per FRS4 as follows:

(i) Per Ordinary Share - on net liabilities of £22,112,000 (2001: assets of £
16,978,000) and 45,877,600 (2001: 45,877,600) shares in issue at the year-end.

(ii) Per GBAT Securities PLC Zero Dividend Preference (ZDP) share - on assets
of £38,980,000 (2001: £35,628,000) and 31,971,000 (2001: 31,971,000) shares in
issue.

A reconciliation of this basis to the Articles basis is shown below:

                                           2002       2002       2001      2001
                                                                               
                                          £'000      £'000      £'000     £'000
                                                                               
                                       Ordinary        ZDP   Ordinary       ZDP
                                                                               
Assets attributable per FRS4 basis     (22,112)     38,980     16,978    35,628
                                                                               
Deficiency re unsecured loan note        15,152   (15,152)          -         -
                                                                               
Deficiency re subscription                6,960    (6,960)          -         -
undertaking                                                                    
                                                                               
                                        -------    -------    -------   -------
                                                                               
Available assets per Articles basis           -     16,868     16,978    35,628
(subject to note 2 below)                                                      
                                                                               
                                        =======    =======    =======   =======
                                                                               
Available assets per share                  Nil      52.8p      37.0p    111.4p

2. In the current market the realisable values of shares in split capital
investment trusts are very uncertain and may be significantly lower than their
mid market prices (see also note 3). However because of the uncertainty
regarding these investments and the market, the Directors believe it is not
possible to estimate a reliable realisable value. As an illustration of that
uncertainty, but not as an indication of realisable value, the bid value of the
split capital investment trust investments at 31st July 2002 was approximately
20% lower than the mid value included above. The bid value of the other listed
investments was less than 1% lower than mid value.

                                                             2002         2001
                                                                              
                                                            £'000        £'000
                                                                              
Shares of split capital investment trusts                  12,454       49,697
                                                                              
Other listed investments                                   14,427       20,577
                                                                              
                                                          -------      -------
                                                                              
Valuation of investments at 31st July                      26,881       70,274
                                                                              
                                                          =======      =======

3. The Company will continue in operational existence past 1 November 2004 if
either the investments of the Group generate a return in excess of 36.7% per
annum in the period to 1 November 2004, or prior to that date the ZDP
shareholders formally vote in favour of a proposal to re-structure their
obligations such that their final entitlement does not mature on 1 November
2004.

It is the view of the Directors that the likelihood of achieving the required
investment return is remote and that any such re-structuring proposals would
not be developed until nearer the critical date.

Given this position the Directors have concluded that although they believe
that the going concern basis remains appropriate there is a fundamental
uncertainty regarding the ability of the Company to continue in operational
existence for the foreseeable future.

If the financial statements had not been prepared on a going concern basis it
would have been necessary to value the Company's investments at their net
realisable values which, in the current difficult market conditions may be
significantly lower than their mid market prices (see note 2). It would also be
necessary to accrue for winding-up costs including breakage costs that would be
incurred in respect of the early termination of the bank loans. These have not
been quantified because of their uncertainty. The bank loans would also have to
be reclassified from creditors falling due after one year to creditors falling
due within one year.

GROUP STATEMENT OF CASH FLOWS                                                 
                                                                              
-----------------------------                                                 
                                                                              
                                                          Year to      Year to
                                                                              
                                                         31-07-02     31-07-01
                                                                              
                                                            £'000        £'000
                                                                              
OPERATING ACTIVITIES                                                          
                                                                              
Net dividends and interest received                         5,187        7,883
                                                                              
from investments                                                              
                                                                              
Interest received on deposits                                 136          307
                                                                              
Other income                                                   15           13
                                                                              
Expenses paid allocated to revenue                          (490)      (1,112)
                                                                              
Expenses paid allocated to capital                          (223)        (563)
                                                                              
                                                          -------      -------
                                                                              
Net cash inflow from operating activities                   4,625        6,528
                                                                              
                                                          -------      -------
                                                                              
SERVICING OF FINANCE                                                          
                                                                              
Interest paid                                             (1,579)      (1,463)
                                                                              
Dividends paid                                            (2,638)      (5,046)
                                                                              
Payment to minorities                                           -     (29,434)
                                                                              
                                                          -------      -------
                                                                              
Net cash outflow from servicing of finance                (4,217)     (35,943)
                                                                              
                                                          -------      -------
                                                                              
TAXATION                                                                      
                                                                              
Income tax recovered                                          110            -
                                                                              
FINANCIAL INVESTMENT                                                          
                                                                              
Acquisitions of investments                              (17,405)     (48,778)
                                                                              
Disposals of investments                                   20,943       78,088
                                                                              
                                                          -------      -------
                                                                              
                                                            3,531       29,310
                                                                              
                                                          -------      -------
                                                                              
Cash inflow/(outflow) before management of liquid           4,056        (105)
resource and financing                                                        
                                                                              
                                                          -------      -------
                                                                              
FINANCING                                                                     
                                                                              
Bank Loans                                                (6,000)            -
                                                                              
Formation costs                                                 -         (13)
                                                                              
                                                          -------      -------
                                                                              
Net cash outflow from financing                           (6,000)         (13)
                                                                              
                                                          -------      -------
                                                                              
NET CASH OUTFLOW                                          (1,944)        (118)
                                                                              
                                                          -------      -------
                                                                              

CHAIRMAN'S STATEMENT

For the year to 31st July 2002

This is the third Annual Report of Gartmore Balanced Assets Trust PLC, formerly
Gartmore Split Capital Opportunities Trust PLC.

Performance

Against a background of sustained weakness in the UK equity market and acute
difficulties in the split capital investment trust sector, the year under
review was an extremely difficult period for the Company. The total return on
the Company's assets was -45.8%, which was largely attributable to a fall of
58.5% in the value of the Company's portfolio of income shares. While a decline
of this magnitude is clearly very disappointing it reflects the overall
performance of the split capital investment trust income share sector, which
fell by 68.4% as measured by the HSBC Income Share Index. The total return on
the equity portfolio was -19.1%, which compares with a fall of 20.8% on the
FTSE All-Share Index. The difference between the performance of the equity
portfolio, which now comprises just over 50% of the Company's assets, when
compared to the income share portfolio, bears out the Board's decision in July
2001 to retain the equity investments received as a result of the in specie
transfer of assets following the wind-up of the Company's former subsidiary,
the Gartmore Scotland Investment Trust PLC rather than re-invest them into the
split capital investment trust sector.

Ordinary Shares

As a result of the fall in value of the Company's assets, combined with the
negative effects of gearing provided by the bank debt and the Zero Dividend
Preference (ZDP) shares, which rank ahead of the Ordinary shares, there is no
asset value currently attributable to the Ordinary shares. The value of the
Company's assets would have to increase by more than 36.7% per annum for any
underlying value to accrue to the Ordinary shares at November 2004. The
mid-market closing price of the Ordinary shares fell to 2.0p over the year
under review.

Zero Dividend Preference Shares

The net asset value, adjusted, subject to the uncertainty of the valuation of
investments as outlined in note 2 above, to reflect the value of the underlying
assets available, of the ZDP shares issued by GBAT Securities PLC (formerly
GSCOT Securities PLC), the Company's subsidiary, fell by 52.6% to 52.8p, whilst
the mid-market closing price of the ZDP shares fell by 83.7% to 16.5p over the
period under review. At 31st July 2002, the consolidated net assets of the
group were insufficient to cover the full final capital entitlement of the ZDP
shares of 149.35p with cover having fallen to 0.4 times, implying a shortfall
of £22.1 million. This means that the total assets need to grow by 36.7% per
annum between 31st July 2002 and the ZDP shares redemption date for the full
entitlement to be met. The Company's obligation in respect of the ZDP shares
and, because these shares have been issued by a subsidiary, the related
supporting intercompany arrangements, have been treated throughout the
financial statements in accordance with the requirements of Financial Reporting
Standard 4 - Capital Instruments. This requires the obligations under the loan
and subscription agreements to be accounted for in full rather than on the
basis of assets available. However, the intercompany agreements have the effect
that the obligations of Gartmore Balanced Assets Trust PLC can be discharged
upon its winding-up without further recourse, subject to any restructuring of
those obligations which might be approved by shareholders in the future, by the
assets available to the group if such assets are less than the sum that is
required to meet the full ZDP shareholders' entitlement upon the winding up of
GBAT Securities PLC. The winding up of GBAT Securities PLC is due to occur on
1st November 2004. The sharp fall in share price of the ZDP shares reflects the
deterioration in asset cover and the very poor investor sentiment for ZDP
shares that derive from companies that have high levels of investments in other
companies in the split capital sector.

Dividends

Following the payment of a first interim dividend of 3.0p per Ordinary share,
the Board of Directors suspended payment of further dividends. This suspension
was necessary because the fall in net assets led to the failure, as at 31st
January 2002, of the Company to satisfy the requirements of section 264 of the
Companies Act, being that dividends may only be paid if net assets are not less
than the aggregate of called-up share capital and undistributable reserves The
subsequent further deterioration in the Company's financial position has
exacerbated the deficiency in net assets. The Board has therefore concluded
that no dividend payments can be made in the foreseeable future.

Recommended Proposals

In the light of the Company's financial position, the Board of Directors sought
shareholder approval, at extraordinary general meetings and a separate general
meeting of ZDP shareholders held on 9th September 2002, for proposals designed
in anticipation of the possibility of the winding-up of the Group in November
2004, when the bank borrowings and ZDP shares are due to be repaid. The
proposals included the modification of the Company's investment policy and
authority for GBAT Securities PLC to purchase ZDP shares in the market. The
former is designed to produce the maximum total return realistically achievable
over the period to November 2004 through the realisation of the relatively
illiquid portfolio of split capital investment trust income shares and
reinvestment in more marketable large and mid-capitalisation equities, fixed
interest securities, including sterling-denominated investment grade corporate
bonds, and cash. All of the resolutions put to shareholders at the
extraordinary general meetings and the class meeting were duly passed.

The Board considered that the modified investment policy made a change of name
appropriate. This was confirmed by shareholders at the extraordinary general
meetings held on 9th September 2002. Consequently the name of Gartmore Split
Capital Opportunities Trust PLC has been changed to Gartmore Balanced Assets
Trust PLC and that of GSCOT Securities PLC has been changed to GBAT Securities
PLC.

Partial prepayment of bank borrowings and amended banking covenants

As announced on 17th and 24th July 2002, two repayments totalling £6 million
out of the Group's £19.2 million bank borrowings have already been made.
Furthermore, the Company amended terms of its original credit agreement with
National Westminster Bank PLC. Under the new terms of the agreement the bank
has agreed to the buying-in of ZDP shares subject to a minimum net assets to
borrowings cover test of 238% and that its `qualifying assets' (being the
assets of the Company less certain specified investments including inter alia
investments in split capital investment trusts) are in excess of 125% of the
Group's borrowings immediately after any purchase of ZDP shares. The Company
has also agreed that, in addition to the existing minimum asset cover covenant,
its 'qualifying' assets will not be less than 110% of its borrowings at any
time.

Fundamental Uncertainty: Going Concern

The Company can continue in operational existence past 1 November 2004 if
either the investments of the Group generate a return in excess of 36.7% per
annum in the period to 1 November 2004, or prior to that date the ZDP
shareholders formally vote in favour of a proposal to re-structure their
obligations such that their final entitlement does not mature on 1 November
2004.

Although a number of factors including the new investment policy, the ZDP
buy-back powers sanctioned by shareholders on 9th September, that over 50% of
the portfolio at the year-end comprised liquid equities, and that the Company
has not breached any of its bank loan covenants provide support for the
Company's continued existence, the likelihood of achieving the required
investment return is remote and any re-structuring proposals would not be
developed until nearer the critical date.

Given this position the Directors have concluded that although they believe
that it remains appropriate for the financial statements to be prepared on a
going concern basis there is a fundamental uncertainty regarding the ability of
the Company to continue in operational existence for the foreseeable future.
Had the financial statements not been prepared on a going concern basis it
would have been necessary to value the Company's investments at their net
realisable values and to accrue for winding up costs including termination
costs that would be incurred in respect of the early termination of the bank
loans.

The Group's investments have been adversely affected by the continuing decline
in the market, especially in the income share sector, and shareholders should
be aware that, in the event of a forced sale of split capital investment trust
assets in the current difficult market conditions, the realisable value may be
significantly lower than mid market prices (see note 2).

Outlook

The Board considers that, with regard to the objective of maximising total
returns in the run-up to November 2004 and any potential continuation past that
date, the change in the Company's investment policy is in the best interests of
shareholders as a whole. Sentiment in the split capital investment trust market
remains very poor and the continuing lack of liquidity throughout the sector
makes it less likely that a portfolio of income shares will satisfy this
objective than a portfolio of more marketable securities. Consequently, the
Company will attempt to gradually dispose of the remaining income share
portfolio and retain its direct equity holdings, seeking further investment
opportunities amongst large and mid-capitalisation UK equities or where more
appropriate investing in fixed interest securities and cash.

ANNUAL REPORT

The Annual Report of the Group for the year to 31st July 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.

ANNUAL GENERAL MEETING

The Annual General Meeting for 2002 will be held at the Company's Registered
office on Monday 2nd December 2002, at 12.00 noon.

The group accounts shown above comprise the unaudited results of the Company
and its subsidiary, GBAT Securities PLC, for the year to 31 July 2002, and does
not constitute statutory accounts under the Companies Act 1985. The results and
balance sheet for the year to 31st July 2002 are taken from the Company's
latest financial statements which are subject to final audit and have not yet
been delivered to the Registrar of Companies. The comparative financial
information is based on the full statutory accounts for the period ended 31st
July 2001, which included an unqualified audit report and have been filed with
the Registrar of Companies.

GARTMORE INVESTMENT LIMITED

1st November 2002


                                                                                                          

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