GARTMORE DISTRIBUTION TRUST PLC
Announcement of Interim Results
for the six months to 31 October 2003
The Directors announce the Group's results for the six months to 31 October
2003 as follows:-
Overview
* In aggregate, 84.2% of GDT Securities PLC Zero Dividend Preference shares
in issue at 30 April 2002 have been redeemed at their accrued
pre-determined capital entitlement.
* GDT Securities PLC Zero Dividend Preference shares are 34% covered for full
repayment on 30 April 2004. Total Assets (at bid prices) need to rise by
290% if these shares are to be paid their full pre-determined capital
entitlement on that date.
* Holders of Ordinary shares will receive no return unless the Zero Dividend
Preference shareholders have been paid in full.
Chairman's Statement
During the period under review it is encouraging to note that the total assets
of the Company rose from �5.1million to �7.5 million. This reflects a recovery
in the split capital investment trust market and in the underlying value of the
Company's remaining income share holdings. After reaching a multi-year low in
mid-March 2003, the UK equity market rebounded strongly over the period after
an early resolution to the main conflict in Iraq. A revival in merger and
acquisition activity combined with encouraging signs that the global economic
background is improving have provided a further fillip for share prices.
As the UK equity market rebounded, sentiment in the income share market has
improved, albeit from a low base. This reflects the recovery in underlying net
asset values whilst the spectre of further dividend cuts has receded. In turn,
liquidity constraints have become less acute as new investors have entered the
market to capitalise on valuation anomalies.
Despite this improvement in liquidity, spreads between mid and bid prices on
all but the most highly rated `AAA' trusts are still substantial. We are,
therefore, continuing to value the Company's remaining income share portfolio
each month based on bid prices. The Company's investment portfolio now
comprises income shares of which 70% are rated Category `A' trusts. Of these,
41% are `AAA' or `AA' rated, which means that these funds have no more than 5%
of their assets invested in other split capital investment trusts, and 29% are
`A' rated (between 5% and 10% in other splits).
The recovery in the income share market has meant that the price of the Zeros
rose from 23.5p as at 30 April 2003 to 40p as at 31 October 2003, an increase
of 70%. The net asset value of the Zeros rose from 31.2p to 45.4p over the
review period, an increase of 45%.
In view of the Zeros ultimate redemption date of 30 April 2004, the Managers
have accelerated their realisation programme, subject to ongoing liquidity
constraints. The Managers continue to employ a rigorous investment process with
the aim of ascertaining a realistic assessment of the fair realisable value of
the remaining holdings, and when such values are attainable. During the review
period, proceeds from the realisation of income share holdings amounted to �1.2
million.
We would expect the value of the Company's remaining income shares to respond
positively to any further improvement in the broader UK equity market and the
Managers will continue to seek appropriate realisation opportunities in the run
up to 30 April 2004.
Based on current market conditions, it is unlikely that the pre-determined
capital entitlement of the Zero Dividend Preference shares, of 131.30p at 30
April 2004, will be achieved. I would like to reiterate the statement that I
made in the Annual Report, that consideration is being given by the Board to
all strategic options which may be in the best interests of all shareholders
prior to the Zero shareholders' ultimate redemption date of 30 April 2004. The
conclusions to these considerations will be circulated to all shareholders at
the appropriate time.
Group Total Return
Six Months to 31 October 2003
Revenue Capital Total Return
�'000 �'000. �'000
Income and Capital Profits/(Losses)
Dividends and other income 701 - 701
Net profit on investments - 1,734 1,734
------------ ------------ ------------
Return before Expenses and Taxation 701 1,734 2,435
Expenses
Management fees - - -
Other expenses (90) - (90)
------------ ------------ ------------
Return before and after Taxation 611 1,734 2,345
Non Equity Minority interest - (931) (931)
------------ ------------ ------------
Return to Equity Shareholders 611 803 1,414
------------ ------------ ------------
Transferred to Reserves 611 803 1,414
------------ ------------ ------------
Return per Ordinary share 0.6p* 0.7p 1.3p
Notes
* Distributable reserves are insufficient to meet the full redemption value of
the Zero Dividend Preference shares. Therefore, in accordance with s264 of the
Companies Act 1985, the Company is prevented from making a distribution to its
Ordinary shareholders. In addition, despite being an investment company, the
Company is prevented from making a distribution to its Ordinary shareholders
under s265 of the Companies Act 1985 as its assets are less than one and a half
times the aggregate of its liabilities.
The revenue column shown above represents the profit and loss account of the
Group.
All revenue and capital items derive from continuing activities.
Management fees (which were waived with effect from 13 May 2002) and all
administrative expenses are charged 100% to the Revenue account.
Group Total Return (comparative)
Six Months to 31 October 2002
Revenue Capital Total Return
�'000 �'000. �'000
Income and Capital Profits/(Losses)
Dividends and other income 1,712 - 1,712
Net loss on investments - (14,881) (14,881)
------------ ------------ ------------
Return before Expenses and Taxation 1,712 (14,881) (13,169)
Expenses
Management fees (24) - (24)
Other expenses (123) - (123)
------------ ------------ ------------
Return before and after Taxation 1,565 (14,881) (13,316)
Non Equity Minority interest - (1,077) (1,077)
------------ ------------ ------------
Return to Equity Shareholders 1,565 (15,958) (14,393)
------------ ------------ ------------
Transferred to/(from) Reserves: 1,565 (15,958) (14,393)
------------ ------------ ------------
Return per Ordinary share 1.4p (14.5)p (13.1)p
Group Balance Sheet At At
31 October 30 April
2003 2003
�'000 �'000
Current Assets
Listed investments at valuation 3,847 3,317
Debtors 179 269
Cash at bank 3,506 1,638
------------ ------------
7,532 5,224
Creditors: amounts falling due
within one year (43) (80)
------------ ------------
Net Assets 7,489 5,144
------------ ------------
Capital and Reserves
Called-up share capital 1,098 1,098
Other reserves:
Special reserve 159,993 159,993
Capital reserve - realised (151,582) (137,782)
Capital reserve - unrealised (27,717) (42,320)
Revenue reserve 4,982 4,371
------------ ------------
Equity Shareholders' Shortfall (13,226) (14,640)
Non Equity Minority Interest 20,715 19,784
Entitlement
------------ ------------
Capital Employed 7,489 5,144
------------ ------------
Net Asset Value/(deficit) per share
(as per FRS4):
Ordinary shares (12.0)p (13.3)p
Zero Dividend Preference Shares 125.5p 119.8p
Available Assets per share (as per
Articles):
Ordinary shares Nil Nil
Zero Dividend Preference Shares 45.4p 31.2p
Group Cash Flow Six Months Six Months
to to
31 October 31 October
2003 2002
�'000 �'000
Operating Activities
Net dividends 757 2,638
and interest received from investments
Interest received on deposits 41 268
Expenses paid, allocated to revenue (110) (297)
------------ ------------
Net cash inflow from operating 688 2,609
activities
------------ ------------
Financial Investment
Disposals of investments 1,180 37,727
------------ ------------
Net cash inflow from financial 1,180 37,727
investment
------------ ------------
Financing
Redemption of GDT Securities ZDP shares - (91,190)
------------ ------------
Net Cash Inflow/(Outflow) 1,868 (50,854)
------------ ------------
Reconciliation of Net Cash Inflow/
(Outflow)
to Movement in Net Cash Balances
Balance brought forward 1,638 55,882
Net cash inflow/(outflow) 1,868 (50,854)
------------ ------------
Balance at 31 October 3,506 5,028
------------ ------------
Comprising:
Cash at bank 3,506 5,028
------------ ------------
Notes to the Accounts
Full statutory accounts for the year to 30 April 2003 included an unqualified
audit report and have been filed with the Registrar of Companies.
There have been no changes to accounting policies since 30 April 2003. Listed
investments, which are treated as current assets, have been valued at bid
prices.
Total return per Ordinary share has been calculated on the return to Ordinary
shareholders of �1,414,000 (2002: negative return of �14,393,000) and
109,842,768 Ordinary shares (2002: 109,842,768) in issue throughout the period.
Listed investments are all listed in the UK.
FRS 4 requires the accounts to be presented in a way that reflects the
financial obligations of the Company to its subsidiary, GDT Securities PLC.
Accordingly, Net Asset Values per share have been calculated as per FRS4 on
attributable assets and shares in issue at the period end as follows:
At At
31 October 30 April
2003 2003
�'000 �'000
16,510,947 (104,223,106) 20,715 19,784
GDT Securities Zeros
109,842,768 (109,842,768) Ordinary (13,226) (14,640)
shares
------------ ------------
7,489 5,144
------------ ------------
Interim Report
The Interim Report for the six months to 31 October 2003 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.
Gartmore Distribution Trust PLC
Gartmore Investment Limited - Secretaries
27 November 2003
END