REG-Gartmore Irish: Annual Financial Report
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GARTMORE IRISH GROWTH FUND PLC
ANNUAL FINANCIAL REPORT
The Directors present the results of the Company for the year ended
31 March 2009.
OVERVIEW
- Over the year to 31 March 2009 the NAV fell by 49.2% to 444.91p, compared
with falls (in sterling terms) of 58.7% in the ISEQ Index and 59.3% in the
Davy Mid-Cap Index
- Proposed final dividend of 1.27p, an increase of 20% on the previous year
- Proposed special dividend of 10.88p, primarily relating to recovery of VAT
paid on management fees
INVESTMENT OBJECTIVE
The Company seeks to provide shareholders with long-term capital growth
through investment in quoted companies which are either incorporated in the
Republic of Ireland or Northern Ireland or, if elsewhere, derive the majority
of their turnover or profits from the Republic of Ireland or Northern Ireland.
INVESTMENT POLICY
It is considered that the Company, through the securities in which it invests,
offers an attractive and relatively direct means of investing in Ireland,
thereby giving exposure to:
- a favourable demographic structure; and
- a low corporate taxation economy in the Republic of Ireland which is
attractive to investors into the region.
Asset Allocation:
The Company invests in quoted companies which are either incorporated in the
Republic of Ireland or Northern Ireland or, if elsewhere, derive the majority
of their turnover or profits from the Republic of Ireland or Northern Ireland.
The majority of investments will be in equities, although other forms of
equity-related securities, including warrants and convertibles, may be held.
Cash and derivative instruments (such as futures and options) may be used for
efficient portfolio management and as part of investment strategy, subject to
the prior consent of the Board.
The Company's investments are not limited by reference to market
capitalisation, sector or weightings within the Republic of Ireland or
elsewhere. However, a sizeable part of the portfolio is usually held in stocks
of companies incorporated in the Republic of Ireland since they represent a
majority of the Company's eligible investment universe.
Risk Diversification:
Portfolio risk is managed by investing in a diversified spread of investments.
There are generally approximately 40 holdings at any one time, and no single
holding will represent more than 15% of the net assets of the Company or more
than 15% of the investee company's issued share capital at the time of
acquisition.
The Company will not invest more than 15% of its gross assets in other listed
investment companies (including investment trusts).
Gearing:
The Manager is authorised to gear the portfolio to make additional
investments. Gearing can fluctuate between zero and 25% of shareholders'
funds, with timing determined on the basis of market circumstances and
investment opportunities. The level of gearing is regularly monitored by the
Board. Alternatively, cash can be held when the Manager has negative views on
share prices.
Previously, gearing has been achieved through the use of flexible borrowing
facilities. In the recent turbulence in banking markets in Ireland and in
other countries, the Company has not been able to renew its borrowing
facilities on acceptable terms. The Board has accordingly authorised the
Manager to use contracts for difference ("CFDs") for gearing purposes. The use
of CFDs is subject to the limits which applied when bank loan facilities were
used, and total gearing remains subject to a maximum of 25% of shareholders'
funds.
PERFORMANCE
Performance is compared with the Davy Mid-Cap Index, the ISEQ Index, the Hoare
Govett Smaller Companies Index (ex Investment Companies), the FTSE All-Share
Index and the FTSE Europe ex UK Index.
CHAIRMAN'S STATEMENT
Investors in Irish equities have had a difficult year, with Ireland among a
number of countries severely affected by the global banking crisis and the
downturn in world markets. However, the Irish stock market's partial rebound
during the final stages of the Company's fiscal year offers some hope for
encouragement.
Ireland entered a recession in 2008, with the economy contracting by 2.3% over
the year. Policy responses have been substantial, with the government
introducing a series of measures to support Irish banks. Meanwhile, the
European Central Bank reduced interest rates by a total of 2.75% between
October and March to 1.5%.
In sterling terms, the net asset value ("NAV") of the Company's Ordinary
shares fell by 49.2% over the year to 31 March 2009. This compares with falls
in sterling terms of 58.7% for the ISEQ Index and 59.3% for the Davy Mid-Cap
Index. The UK market proved more resilient, although returns were still poor,
the FTSE All-Share Index losing 32.2% while the Hoare Govett Smaller Companies
(excluding Investment Companies) Index fell 37.2%.
The Company's generally low exposure to Ireland's banks and effective use of
its ability to hold cash proved beneficial. However, the overall negative
capital return amounted to 463.43p per share. Conversely, higher than normal
cash balances and rising equity dividend yields resulted in higher investment
income than in the previous twelve-month period.
Costs are charged in a fully transparent manner to revenue. The revenue return
for shareholders in the year was 12.84p. The revenue received in the year
includes £1,074,000 (including interest) relating to the recovery of VAT paid
on management fees. Excluding this VAT refund, the revenue return per share
amounted to 3.89p. The Directors are recommending a final dividend of 1.27p, a
20% increase on last year. In addition, a special dividend of 10.88p is being
recommended, primarily in connection with the VAT refund. If approved by
shareholders, both dividends will be paid on 21 September 2009 to shareholders
on the register on 21 August 2009.
The Company's share price stood at 349.0p at 31 March 2009, representing a
discount to NAV of 21.6%, compared with a discount of 11.5% at 31 March 2008.
In spite of ongoing buy-back policies, many investment trusts have experienced
a widening of discounts in these very difficult markets. The NAV fell by 49.2%
while the share price declined by 55.0%. The Company repurchased 2,019,200 of
its shares during the year. Shares are bought back with the objective of
reducing the share price discount to NAV whilst enhancing the NAV per share
for the benefit of continuing shareholders, and the Company intends to make
further purchases when stock becomes available at attractive prices.
The Company's loan and overdraft facilities expired during the year and we
found the terms offered for renewal unacceptable. In the difficult financial
environment which prevailed for most of last year we had made limited use of
those facilities. Efforts to negotiate new loan facilities continue in the
expectation that they may be required when the markets turn. Meanwhile, should
it wish to do so, the Manager may obtain geared exposure in the portfolio
through the use of derivatives, such as contracts for difference, as permitted
by the Company's investment policy. Under a contract for difference, exposure
to an underlying asset's price movements is obtained on payment of a margin,
rather than of the full market price of the relevant stock.
The Company's current investment objective is to invest in quoted companies
which are either incorporated in the Republic of Ireland or Northern Ireland
or, if elsewhere, derive the majority of their turnover or profits from the
Republic of Ireland or Northern Ireland. An unwritten presumption was that
this would include the ability to invest in any company listed on the ISEQ
Index, as these requirements are also a prerequisite for inclusion in the ISEQ
Index. It has come to the Board's attention that in exceptional situations a
change of circumstances can mean that a company that had previously fallen
within the Company's remit might cease to be eligible for investment, albeit
that it remains a constituent of the ISEQ Index. The Board is therefore
proposing that the Company's investment objective be clarified to include the
ability to invest in any company listed in the ISEQ Index and a resolution to
approve this will be put to shareholders at the Annual General Meeting.
Furthermore, the Board in conjunction with its advisers is conducting a review
of the Company's position. The Board recognises that this review takes place
against volatile worldwide markets, but remains confident in the expertise of
Gartmore Investment Limited in managing the portfolio. A range of options are
being carefully considered to enhance liquidity and returns and I expect to be
able to make an announcement on the Board's conclusions and recommendations
before the Annual General Meeting scheduled for 3 September 2009.
Sean Fitzpatrick resigned as a Director in December. Sean was a valued member
of the Board, and we extend our thanks to him for his advice and counsel
during his time as a Director.
Following a difficult year, there is reason to believe that much of the bad
news has been fully reflected by the Irish stock market. The market's rebound
during March 2009, during which the ISEQ Index gained almost 10% making it one
of the best performing European markets this year, suggests that Irish shares
have the potential to offer improved value once investor sentiment stabilises.
Harry Sheridan
Chairman
26 June 2009
MANAGER'S REVIEW
Manager
The portfolio has been managed by Gervais Williams since the Company's
inception in 1995. The portfolio has a strong track record of outperformance
of comparative indices, through a range of macro-economic environments, while
at the same time maintaining a conservative risk profile.
The activities and performance of the Company are reviewed and discussed at
regular meetings between the Directors and the Manager. Investment strategy is
determined, inter alia, in the light of prevailing equity market conditions.
Investment Philosophy
The Company typically invests in a limited number of stocks quoted on the
Irish Stock Exchange. However, investment is also permitted in companies which
are incorporated or operate substantial businesses in Ireland, but which are
quoted elsewhere such as on NASDAQ, the London Stock Exchange and AIM.
Investment Strategy
The Manager's investment strategy is to maximise NAV, but with an eye to
absolute risk within the portfolio. In this regard, it is noteworthy that the
Company has no formal benchmarks. The Manager seeks to outperform comparative
indices, such as the ISEQ, the Davy Mid-Cap, the FTSE All-Share, the Hoare
Govett Smaller Companies (ex Investment Companies) and the FTSE Europe ex UK.
Investors should note that the size of the weighting of individual stocks in
an index is not a measure of their absolute risk. Therefore, the investment
process tends to give the index weightings no more than interested
consideration.
Instead, the Manager makes the maximum use of fundamental research from
internal and external sources, (including brokerage contacts), and places
particular emphasis on the value of regular and frequent meetings with the
management of listed companies. These visits form an important part of his
assessment of factors such as the rigour of a company's business plan, the
quality of its management and the strength of companies' franchises. They also
afford the Manager the opportunity to question companies' senior management on
other key investment issues, such as how they plan to deal with competitive
industry pressures, or their plans to capitalise on new opportunities.
Investments have been made across the broad spectrum of the Irish equity
market, although selected cyclical stocks most geared to the robust domestic
economy feature prominently among the Company's holdings. Some of the most
attractive opportunities are found in smaller businesses where the prospects
are seen to be improving after periods of indifferent performance.
The Manager is willing to take significant risk, but only where the scope for
high absolute return is considered relatively good. We rarely find an
opportunity that justifies an investment that exceeds 10% of the total value
of the portfolio.
Schedule of NAV Since Launch
Date NAV Since NAV Since
Basic pps Launch % Diluted pps Launch %
07/06/95 96.79 - 97.32 -
31/03/96 116.05 19.90 113.38 16.50
31/03/97 154.11 59.22 145.09 49.09
31/03/98 246.07 154.23 221.73 127.84
31/03/99 207.60 114.48 190.75 96.00
31/03/00 291.86 201.54 273.83 181.37
31/03/01 272.28 181.31 260.68 167.86
31/03/02 253.62 162.03 253.62 160.60
31/03/03 233.26 141.00 233.26 139.68
31/03/04 441.96 356.62 441.96 354.13
31/03/05* 550.24 468.49 550.24 465.39
31/03/06 792.58 718.87 792.58 714.41
31/03/07 1,012.46 946.04 1,012.46 940.34
31/03/08 875.75 804.79 875.75 799.87
31/03/09 444.91 359.67 444.91 357.16
* restated for the adoption of International Financial Reporting Standards
("IFRS").
Manager's Review
Little exposure to Irish banks and our decision to maintain a net cash
position for much of the year helped the portfolio to resist the worst of the
Irish market's declines. A number of stocks in which we chose to take large
positions showed resilience, the building-materials supplier, CRH, and low
cost airline, Ryanair, being among these. However, not all of our selections
made good progress. In particular, our holdings in the paper-packaging
company, Smurfit Kappa Group, and fruits importer and distributor, Fyffes,
disappointed.
While our largest single holding at the start of the Company's fiscal year was
in Allied Irish Banks, we reduced this position during the spring and summer.
However, taking account of the Irish government's rescue package and what we
saw as overly depressed stock valuations, we began to rebuild our exposure to
banks during the latter stages of the year. Since the end of the review
period, we have extended our exposure to both Allied Irish Banks and Bank of
Ireland, as we believe that both have the potential to strengthen their
capital bases and profit from buying back some of their own bonds at sharply
discounted levels.
CRH showed considerable resilience over the year, despite an increasingly
difficult international environment for construction. Sales held up well, with
strategic acquisitions and cost cuts helping to improve overall operating
efficiency. Our substantial position in this company was a positive
contributor to returns and we believe the prospects are good. While we would
not be surprised to see further pressure on the company's European operations,
we expect CRH to be a prime beneficiary of US Government investment into
infrastructure. At the same time, the company is a good example of one with
the potential to acquire market share from weaker competitors.
Our investments in a number of Irish food producers proved less successful in
the main, the sector as a whole being dragged lower by the weak Irish stock
market. Fyffes, in particular, disappointed after the company warned on
profits in late August, having failed to achieve the higher selling prices it
had anticipated. The company also cited significantly higher prices charged by
growers, unfavourable currency movements and higher fuel costs as factors
behind its rising cost base. Even so, we exploited periods of price weakness
to add to our exposure, as we believe that Fyffes has sufficient pricing power
to make higher selling prices hold, while lower oil prices should help to
reduce freight costs.
Our investment in Smurfit Kappa Group proved disappointing too, amid concerns
about a slowing demand for corrugated cardboard products and the company's
debt position. However, in view of the scope for a stock market recovery, we
added to our holding late in 2008. In February 2009, the company announced
better-than-expected results, and we are encouraged that the shares ended the
year recovering strongly.
Ireland's airlines benefitted from sharply lower fuel costs during the latter
half of the year. However, the benefits were not universally apparent. While
shares in Ryanair registered strong gains, having reached a low point in
October, Aer Lingus Group remained weak amid signs that it is losing market
share in its long-haul business. Ryanair has set itself apart by implementing
aggressive marketing and cost-reduction strategies. In recognition of these
disparate fortunes, we reduced our exposure to Aer Lingus during the final
quarter of 2008, at the same time initiating a position in Ryanair.
Investor Relations
During the Company's year, Gartmore undertook an intensive programme to
promote the Company and generate interest from stockbrokers, private client
fund managers, funds of funds and institutions. This programme included
one-to-one meetings and presentations with approximately 500 regional
stockbrokers, IFAs and private client fund managers in London, Edinburgh,
Bristol, Exeter, Dublin, Belfast, Birmingham, Harrogate, Sevenoaks and
Tunbridge Wells. In addition, the Manager circulated ad-hoc update e-mails to
a wide range of investment trust investors and trade journalists.
Investment Outlook
We continue to identify attractive investment opportunities and are finding
value particularly among Ireland's export orientated corporates. Consequently,
attractively valued, well managed companies deriving a high proportion of
their revenues from overseas continue to feature prominently in the Company's
portfolio (for example, CRH, Fyffes, Ryanair, Total Produce). The investment
portfolio's relatively concentrated nature, with our ten largest holdings
accounting for 64% of total assets less current liabilities as at 31 March
2009, reflects our aim to avoid those with poorer prospects for share price
gain.
Many Irish listed companies are now valued at low levels when account is taken
of their ability to generate cash and grow, and I am encouraged by the recent
sharp market rebound. I believe that the best of the Irish businesses will
emerge stronger from the downturn, while the fundamentally weak will lose
market share or fail. Moreover, I see opportunities for successful quoted
businesses to purchase remarkably cheap assets.
Gervais Williams
Gartmore Investment Limited
26 June 2009
FINANCIAL STATISTICS
At 31 March At 31 March
2009 2008
Net assets attributable to Ordinary £48.799m £113.739m
shares
Net asset value per Ordinary share 444.91p 875.75p
Capital return per Ordinary share (463.43)p (149.60)p
Revenue return per Ordinary share 12.84p 1.05p
Revenue and capital return per
Ordinary share (450.59)p (148.55)p
Dividend per Ordinary share 1.27p 1.06p
Special dividend per Ordinary share* 10.88p -
* Relates primarily to VAT refunded on investment management fees
RECORD SINCE LAUNCH
Net
Net Asset Share (Discount)/ Revenue Expense Gearing
Date Assets Value* Price Premium Earnings Ratio ** Ratio
£'000 pps pps % pps % %
07/06/95 20,835 97.32 - - - - -
31/03/96 24,982 113.38 95.5 (15.8) 1.35 1.4 12.4
31/03/97 33,173 145.09 132.5 (8.7) 0.41 1.5 20.9
31/03/98 52,970 221.73 197.0 (11.2) 0.03 1.2 10.8
31/03/99 44,688 190.75 155.0 (18.7) 1.08 1.7 -
31/03/00 62,826 273.83 220.5 (19.5) 0.18 1.2 14.0
31/03/01 58,695 260.68 223.5 (14.3) 0.59 1.5 3.8
31/03/02 58,621 253.62 223.5 (11.9) 0.97 1.7 -
31/03/03 45,485 233.26 197.5 (15.3) 1.30 1.9 1.5
31/03/04 59,718 441.96 393.0 (11.1) 1.75 1.7 17.9
31/03/05*** 78,476 550.24 609.5 10.8 1.00 1.4 8.9
31/03/06 113,038 792.58 740.0 (6.6) 1.98 1.3 3.4
31/03/07 144,296 1,012.46 996.5 (1.6) (2.74) 1.2 -
31/03/08 113,739 875.75 775.0 (11.5) 1.05 1.5 -
31/03/09 48,799 444.91 349.0 (21.6) 12.84 2.3# -
* Diluted
** Excluding exchange gains/losses
*** Adjusted following the adoption of IFRS
# Excluding VAT refunded on investment management fees, but reflecting the
effect of costs on a significantly reduced portfolio value
SECTOR SPREAD OF PORTFOLIO as at 31 March 2009
Republic
of
Ireland UK Total
£'000 % £'000 % £'000 %
Food Producers &
Processors 7,828 15.3 - - 7,828 15.3
Travel & Leisure 6,444 12.6 - - 6,444 12.6
Construction & Building
Materials 5,945 11.6 - - 5,945 11.6
Oil & Gas 5,569 10.9 22 0.1 5,591 11.0
Support Services 5,196 10.2 - - 5,196 10.2
Food & Drug Retailers 3,657 7.2 - - 3,657 7.2
Non Life Insurance 2,572 5.0 - - 2,572 5.0
Software & Computer
Services 2,240 4.4 - - 2,240 4.4
Electronic & Electrical
Equipment - - 1,889 3.7 1,889 3.7
Banks 1,623 3.2 - - 1,623 3.2
General Financial 1,322 2.6 - - 1,322 2.6
Media & Photography 29 0.1 702 1.3 731 1.4
Life Insurance 455 0.9 - - 455 0.9
Health Care, Equipment &
Services 412 0.8 - - 412 0.8
Telecommunication 311 0.6 - - 311 0.6
Services
Mining 253 0.5 - - 253 0.5
Cash - - 4,588 9.0 4,588 9.0
Total 43,856 85.9 7,201 14.1 51,057 100.0
PORTFOLIO SECTOR DISTRIBUTION
% of portfolio (including cash) as at 31 March 2009
%
Cyclical Services 24.2
Non-Cyclical Consumer Goods 23.4
Financials 11.7
Basic Industries 11.6
Resources 11.4
Information Technology 4.4
General Industrials 3.7
Non-Cyclical Services 0.6
Cash 9.0
Total 100.0
PORTFOLIO as at 31 March 2008
Class of Market
Company % of Portfolio Share Value
£'000
Republic of Ireland
1 (3) CRH 11.6 (5.6) Ord 5,944
2 (15) Dragon Oil 8.6 (2.8) Ord 4,414
3 (7) Total Produce 7.2 (4.3) Ord 3,657
4 (5) DCC 6.8 (5.3) Ord 3,488
5 (-) Ryanair Holdings 6.4 (-) Ord 3,244
6 (-) FBD Holdings 5.0 (-) Ord 2,572
7 (4) Fyffes 4.8 (5.3) Ord 2,466
8 (16) Origin Enterprises 3.8 (2.6) Ord 1,945
9 (6) Grafton Group 3.3 (4.8) Ord 1,660
10 (-) Worldspreads Group 3.2 (-) Ord 1,655
11 (-) Greencore Group 2.6 (-) Ord 1,312
12 (2) Glanbia 2.4 (6.9) Ord 1,248
13 (17) Datalex 2.3 (2.5) Ord 1,169
14 (-) Norkom Group 2.1 (-) Ord 1,072
15 (-) Irish Continental
Group 1.8 (-) Ord 923
16 (24) TVC Holdings 1.7 (1.2) Ord 864
17 (14) Kerry Group 1.7 (2.9) `A' Ord 857
18 (1) Allied Irish Banks 1.7 (13.9) Ord 852
19 (-) Bank of Ireland 1.5 (-) Ord 771
20 (22) Island Oil & Gas 1.3 (1.5) Ord 636
21 (12) Aer Lingus 1.2 (3.0) Ord 622
22 (-) IFG Group 0.9 (-) Ord 457
23 (-) Irish Life & Permanent 0.9 (-) Ord 455
24 (28) Clearstream Technology 0.8 (0.3) Ord 412
25 (31) Petroceltic
International 0.7 (0.1) Ord 368
26 (26) Zamano 0.6 (0.6) Ord 311
27 (29) Galantas Gold
Corporation 0.3 (0.2) Ord 160
28 (25) Providence Resources 0.3 (0.6) Ord 152
29 (11) Kenmare Resources 0.2 (3.0) Ord 93
30 (18) Newcourt Group 0.1 (2.4) Ord 48
31 (32) Prime Active Capital 0.1 (0.1) Ord 29
32 (36) Fortfield Investments 0.0 (0.0) Ord -
Total Republic of Ireland 85.9 43,856
UK
33 (38) Andor Technology 3.7 (1.0) Ord 1,889
34 (37) UTV Media 1.3 (1.9) Ord 702
35 (39) Lansdowne Oil & Gas 0.1 (0.1) Ord 22
Total UK 5.1 2,613
Cash 9.0 4,588
Total 100.0 51,057
Previous year ranking and percentages of portfolio in brackets.
EXTRACTS FROM THE REPORT OF THE DIRECTORS
Business Review
The Business Review has been prepared in accordance with the Companies Act
2006 and should be read in conjunction with the Chairman's Statement, the
Manager's Review and the portfolio analyses.
The purpose of the Business Review is to provide a review of the business of
the Company by:
- analysing development and performance using appropriate Key Performance
Indicators ("KPIs");
- outlining the principal risks and uncertainties affecting the Company;
- setting out the Company's environmental, social and ethical policy;
- providing information about persons with whom the Company has contractual or
other arrangements which are essential to the business of the Company;
- outlining the main trends and factors likely to affect the future
development, performance and position of the Company's business
- describing how the Company manages these risks; and
- explaining the future business plans of the Company.
Nature and Status
The Group comprises Gartmore Irish Growth Fund PLC ("the Company") and it's
trading Subsidiary, Gartmore Irish Smaller Companies Investment Limited. The
Company is an investment trust company and was incorporated and registered in
England and Wales on 6 March 1995. It is a member of The Association of
Investment Companies ("AIC"). It is registered as a public limited company and
is an investment company as defined by Section 833 of the Companies Act 2006.
Its shares are listed on the London and Irish Stock Exchanges. The Subsidiary
engages in investment dealing.
The Company was approved by HM Revenue & Customs as an investment trust under
Section 842 of the Income and Corporation Taxes Act 1988 ("ICTA") in respect
of the year ended 31 March 2008. This approval is subject to there being no
subsequent enquiry under corporation tax self-assessment. The Company has been
approved as an investment trust for all previous years. Since 31 March 2008,
the Company has directed its affairs so as to be able to continue to qualify
for approval by HM Revenue and Customs as an investment trust, ensuring, inter
alia, that not more than 15% of the Company's eligible investment income
(after expenses) arising in an accounting period is retained by the Company.
Qualifying as an investment trust company confers certain advantages,
including an exemption from the payment of capital gains taxes on profits on
investments.
The close company provisions of ICTA do not apply to the Company.
The Company's shares are eligible investments for inclusion in Individual
Savings Accounts and it is the intention of the Directors to manage the
affairs of the Company so that this eligibility will be maintained.
Investment Objective and Policy
The Company's investment objective and policy and further details on the
Manager's investment strategy are set out above. Information regarding the
Company's risk management is shown in note 24 to the financial statements.
Performance
The results for the year and the net revenue are set out in the Consolidated
Income Statement.
The net asset value ("NAV") per Ordinary share at 31 March 2009 was 444.91p
compared to 875.75p at 31 March 2008.
The Board reviews performance by reference, inter alia, to a number of key
performance indicators, including:
- asset performance;
- peer group performance;
- discount management;
- financial position;
- total expense ratio; and
- dividend policy.
However, the key measure of success for shareholders is the growth in the NAV
and the share price of the Company. The Directors consider that there is no
single appropriate benchmark of the Company's performance since none is
closely connected with the makeup of the portfolio. However, the movement of
the NAV is reviewed against the movement of the ISEQ Index, the Davy Mid-Cap
Index, the FTSE All-Share Index, the Hoare Govett Smaller Companies Index (ex
Investment Companies) and the FTSE Europe ex UK Index to provide a
comprehensive review of the Company's performance against competitors, as the
Board is conscious that shareholders have alternative markets in which to
invest.
The NAV per share fell by 49.2% in the year under review (2008: a decrease of
13.5%) compared with a sterling adjusted decrease in the ISEQ Index of 58.7%
(2008: a decrease of 22.6%). The mid-market price of the Company's Ordinary
shares fell by 55.0% (2008: a fall of 22.2%). Positive contributors to
performance included the Company's investments in CRH and Ryanair, which
showed considerable resilience even as the broad stock market fell back
sharply. Net cash balances, which were held through most of the year, also
benefitted returns. Conversely, investments in Fyffes and Smurfit Kappa Group
detracted from returns.
It is also relevant to consider performance over a longer period. The
Company's investment policy was varied in 2002 to allow the inclusion in the
portfolio of the largest quoted companies in the investment universe;
previously they had been excluded. In the period since 31 March 2002, the NAV
per share has increased by 75.4% compared with a decrease in the ISEQ Index of
36.0% and an increase in the Davy Mid-Cap Index of 25.6%. Over the same
period, the FTSE All-Share Index decreased by 22.4%, with the Hoare Govett
Smaller Companies Index down 3.5% and the FTSE Europe ex UK Index down 5.3%.
The mid-market price of the Company's Ordinary shares increased by 56.2% over
this period
For more information regarding the Company's performance, please refer to the
Chairman's Statement, the Manager's Review and the financial statistics.
Financial Position
The Company's net assets at 31 March 2009 amounted to £48.8 million, compared
with £113.7 million at 31 March 2008. £10.7 million of this reduction resulted
from the buy-back of shares. All of the Company's investments are listed on
recognised exchanges and are realisable in normal market conditions.
There were no borrowings at 31 March 2009.
Share Capital
At the year end the Company's issued share capital comprised 10,968,342
Ordinary shares, none of which were held in Treasury (2008: 12,987,542 and
zero respectively). At general meetings of the Company, the holders of the
Ordinary shares are entitled to one vote for every share held.
During the year 2,019,200 shares were bought back for cancellation at prices
ranging from 314.99p to 770.00p per share (excluding expenses) at discounts to
NAV (including current period revenue) of between 7.52% and 24.31% and
representing 15.55% of the shares in issue on 1 April 2008. Since 31 March
2009, no further shares have been bought back for cancellation.
No shares were issued during the year, but the Directors favour increasing the
number of shares in issue if this can be achieved at prices that will not
dilute the interests of existing shareholders. Increasing the size of the
Company could improve the liquidity of its shares in the market and would
dilute the impact of fixed costs.
Discount Management
At the year end, the Company's share price stood at a discount of 21.6% to NAV
compared with a discount of 11.5% a year ago. During the year, the discount
ranged from 5.95% to 23.33% (using the NAV including current period revenue).
The Board has been willing to buy stock for cancellation, or to be held in
Treasury, and during the year shares purchased have been cancelled. This had
the dual benefits of increasing short-term demand for the Company's shares and
resulting in a modest uplift in the NAV. The Company will continue, as and
when appropriate, to exercise its powers to buy back shares.
Dividends and Total Expense Ratio
The net revenue return for the year, after expenses and taxation, amounted to
£1,541,000, compared with a net revenue return of £144,000 for the previous
year. £1,074,000 of this year's increase arises from the recovery during the
year of VAT paid on past management fees, together with related interest. The
Company's total expense ratio to average net assets ("TER") for the year was
2.3% (excluding the VAT recovery but reflecting the effect of costs on a
significantly reduced portfolio value) (2008: 1.5%). The Directors are
recommending a final dividend for the year of 1.27p per share (2008: 1.06p).
In addition, a special dividend of 10.88p primarily relating to the VAT
recovery is also being proposed. These dividends will be paid, if approved, on
21 September 2009 to shareholders on the register on 21 August 2009.
Corporate Social Responsibility and Socially Responsible Investment
The Company has no employees and the Board is comprised entirely of
non-executive Directors. As an investment trust, the Company has no direct
impact on the environment. In carrying out its activities and in relationships
with suppliers and the community, the Company aims to conduct itself
responsibly, ethically and fairly.
The Company has delegated responsibility for making and holding investments to
the Manager. The Company's policy is that, subject to an overriding
requirement to pursue the best financial interests of the Company and its
shareholders, the Manager should take account of social, environmental and
ethical factors.
Principal Risks and Uncertainties
The principal risks and the Company's policies for managing these risks and
the policy and practice with regard to financial instruments are summarised in
note 24 to the financial statements.
The following additional risks and uncertainties have been identified and are
discussed below, with an outline of how the Board recognises and seeks to
control these risks.
Poor Company and Market Performance
Since the Company is an investment company, returns to shareholders depend
upon the performance of the companies and the stock markets in which it
invests. Until recently the trend had been positive for some time, but, as
experienced in recent unsettled markets, this can change over time.
Consequently, there is potential for the Company to suffer periods of low or
negative returns. Investment risk is spread by holding a diversified portfolio
of approximately 40 holdings. In accordance with the Listing Rules, the Board,
acting in its capacity as the management engagement committee, reviews
performance and the continuing engagement of the Manager on an ongoing basis.
The basis of the Board's reappointment of the Manager is explained below.
Limited Investment Universe
The scale of the Irish and Northern Irish economies is relatively modest when
compared to those of the Eurozone or the UK. The Company has a limited
universe of stocks within which it can invest, with the largest holdings
tending to be between 3% and 15% of the value of the portfolio. The Company is
therefore subject to the uncertainties relating to a relatively small number
of holdings, including the risks of volatility. Additionally, since the
portfolio has no precise correlation with the various comparator indices,
performance can be expected to deviate significantly from those indices. The
focused nature of the portfolio offers shareholders the prospect of
significant capital gain if the positive trends anticipated deliver good
investment returns.
Gearing
The Company has the ability to gear to up to 25% of the Group's net assets.
The use of debt magnifies movements in the asset value of the Company, be they
positive or negative. The level of gearing is regularly monitored by the
Board.
Previously, gearing has been achieved through the use of flexible borrowing
facilities. In the recent turbulence in banking markets in Ireland and in
other countries, the Company has not been able to renew its borrowing
facilities on acceptable terms. The Board has accordingly authorised the
Manager to use contracts for difference ("CFDs") for gearing purposes. The use
of CFDs is subject to the limits which applied when bank loan facilities were
used, and total gearing remains subject to a maximum of 25% of shareholders'
funds.
Third Party Advisers
Like most investment trust companies, the Company has no employees. All of the
Directors are non-executive. The Company relies on services provided by third
parties, including, in particular, the Manager, Gartmore Investment Limited,
Capita Sinclair Henderson Limited, who provide company secretarial and
accounting services, and The Northern Trust Company, who act as custodian. The
Company reviews the internal control procedures of its service providers on a
regular basis.
Regulatory Breaches
Relevant legislation and regulations which apply to the Company include the
Companies Act 1985 and the Companies Act 2006 (as enacted) (the "Companies
Acts"), the ICTA and the Listing Rules of the Financial Services Authority
("FSA"). The Company has noted the recommendations of the Combined Code on
Corporate Governance and the AIC Code of Corporate Governance and the relevant
AIC Guide for investment companies. A breach of ICTA could result in the
Company losing its status as an investment trust company and becoming subject
to capital gains tax, whilst a breach of the Listing Rules might result in
censure by the FSA. At each Board meeting the status of the Company is
considered and discussed, so as to check that all regulations are being
adhered to by the Company and its service providers.
There have been no breaches of laws or regulation during the period under
review and up to the date of this report.
Life of the Company
The Company's Articles of Association contain a requirement for shareholders
to vote on the continuation of the Company every three years. Under this
provision, if that resolution is not passed the Directors will, within three
months thereafter, convene an Extraordinary General Meeting at which a special
resolution for winding up will be proposed. Shareholders voted for the Company
to continue as an investment trust at the Annual General Meeting in 2008. The
next continuation vote will accordingly be put to shareholders at the Annual
General Meeting to be held in 2011.
Future Trends
While slowing economic growth and euro strength in relation to both sterling
and the US dollar constitute headwinds in the near term, favourable local
demographics combined with low corporate taxes remain attractive attributes
for equity investors. Substantial infrastructure spending over the next few
years is set to continue. Meanwhile, following a disappointing year,
considerable value has emerged in the Irish stock market, with many shares now
trading at very modest levels.
Third Party Advisers
The Company's investments are managed by Gartmore Investment Limited under an
Investment Management Agreement dated 8 July 2002. The notice period to be
given by either party is twelve months. The management fee is calculated
monthly in arrears at the rate of 1.0% per annum on the value of total assets
less current liabilities. No compensation is payable in the event of
termination of the agreement with the requisite notice. However, in the event
that the Company terminates the agreement, the Manager will be entitled to any
fees due up to the date of termination, and compensation would be payable to
the Manager in the event that the Company terminated the agreement without
notice. The Agreement is reviewed by the Board annually.
Under an agreement dated 24 May 1995, company secretarial services and the
general administration of the Group are undertaken by Capita Sinclair
Henderson Limited for an annual fee, which in respect of the year ended 31
March 2009 was £51,000 (including VAT up to 1 October 2008). This fee is
adjusted annually in accordance with the Retail Price Index and is payable
monthly in arrears. The Secretarial and Administration Services Agreement may
be terminated by either party at twelve months' notice.
Continuing Appointment of the Manager and Secretary
In accordance with the Listing Rules published by the FSA, the Board, acting
in its capacity as a management engagement committee, has reviewed the
performance of the Manager in managing the Company's portfolio. The review
considered the Company's investment performance over the financial year as
well as the longer-term performance. The Committee also reviewed the
appropriateness of the terms of the Investment Management Agreement, in
particular, the length of notice period, the management fee structure and the
Manager's internal control environment. The quality and adequacy of services
provided by Capita Sinclair Henderson Limited, including company secretarial
and accounting, were reviewed at the same time.
Following review, it is the Directors' opinion that the continuing appointment
of the Manager and the Secretary on the terms agreed is in the best interests
of the Company and its shareholders.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable United Kingdom law and
those International Financial Reporting Standards adopted by the European
Union.
Company law requires the Directors to prepare financial statements for each
financial year which present fairly the financial position of the Company and
of the Group and the financial performance and cash flows of the Company and
of the Group for that period. In preparing these financial statements, the
Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and estimates that are reasonable and prudent;
- present information, including accounting policies, in a manner that
provides relevant reliable, comparable and understandable information;
- state whether applicable International Financial Reporting Standards have
been followed, subject to any material departures disclosed and explained in
the financial statements; and
- provide additional disclosures when compliance with the specific
requirements of IFRS is insufficient to enable users to understand the impact
of particular transactions, other events and conditions on the entity's
financial position and financial performance.
The Directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy, at any time, the financial position of the
Company and of the Group and to enable them to ensure that the financial
statements comply with the Companies Act 1985 and Article 4 of the IAS
Regulations. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors, to the best of their knowledge, state that:
- the financial statements, prepared in accordance with International
Financial Reporting Standards as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and profit/(loss)
of the Company and the Group; and
- this Annual Report includes a fair review of the development and performance
of the business and the position of the Company and the Group, together with a
description of the principal risks and uncertainties that it faces.
The Directors confirm that, so far as they are each aware, there is no
relevant audit information of which the Company's Auditor is unaware; and each
Director has taken all the steps that ought to have been taken as a Director
to make himself aware of any relevant audit information and to establish that
the Company's Auditor is aware of that information.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website. The
work carried out by the Auditor does not include consideration of the
maintenance and integrity of the website and accordingly the Auditor accepts
no responsibility for any changes that have occurred to the financial
statements when they are presented on the website. Visitors to the website
need to be aware that legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
By order of the Board
Harry Sheridan
Chairman
26 June 2009
INDEPENDENT AUDITORS' REPORT
The Company's financial statements for the year ended 31 March 2009 have been
audited by Ernst & Young LLP. The text of the Auditors' report can be found in
the Company's Annual Report and Accounts at www.gartmoreirishgrowthfund.com or
www.gartmore.co.uk.
CONSOLIDATED INCOME STATEMENT for the year ended 31 March 2009
2009 2008
Revenue Capital Revenue Capital
Return Return Total Return Return Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Losses on
investments at
fair value
through profit
or loss 11 - (55,133) (55,133) - (19,851) (19,851)
Exchange gains - 607 607 - 1,060 1,060
Net investment
result - (54,526) (54,526) - (18,791) (18,791)
Dividends 1,836 - 1,836 1,387 - 1,387
Interest 171 - 171 368 - 368
Interest
received on
VAT refunded 141 - 141 - - -
Other income - - - 113 - 113
Total income 2 2,148 - 2,148 1,868 - 1,868
Expenses
Investment
management fee 3 (732) - (732) (1,309) - (1,309)
Recovery of
VAT on
management
fees 933 - 933 - - -
Cost of
investment
transactions 11 - (1,052) (1,052) - (1,711) (1,711)
Other expenses 4 (376) - (376) (358) - (358)
Total expenses (175) (1,052) (1,227) (1,667) (1,711) (3,378)
Net return/
(deficit)
before finance
costs and
taxation 1,973 (55,578) (53,605) 201 (20,502) (20,301)
Finance costs 6 (23) - (23) (50) - (50)
Net return/
(deficit)
before
taxation 1,950 (55,578) (53,628) 151 (20,502) (20,351)
Taxation 7 (409) (31) (440) (7) (44) (51)
Net return/
(deficit)
after taxation
for the period 1,541 (55,609) (54,068) 144 (20,546) (20,402)
pence pence pence pence pence pence
Basic &
diluted return
per Ordinary
share 10 12.84 (463.43) (450.59) 1.05 (149.60) (148.55)
The Total column of this statement represents the Income Statement
of the Group prepared in accordance with International Financing Reporting
Standards ("IFRS"). The supplementary Revenue and Capital return columns are
both prepared under guidance published by the Association of Investment
Companies.
All items in the above statement derive from continuing operations.
The Notes form an integral part of these financial statements.
CONSOLIDATED BALANCE SHEET as at 31 March 2009
As at 31 As at 31
March March
2009 2008
Note £'000 £'000
Non-current assets
Investments at fair value through
profit or loss 11 46,469 110,074
Current assets
Trade and other receivables 14 406 1,172
Cash and cash equivalents 4,588 7,293
4,994 8,465
Total assets 51,463 118,539
Current liabilities
Trade and other payables 15 (2,594) (4,749)
(2,594) (4,749)
Total assets less current
liabilities 48,869 113,790
Non-current liabilities
Deferred tax liabilities 16 (70) (51)
Total liabilities (2,664) (4,800)
Net assets 48,799 113,739
Capital and reserves
Share capital 17 2,742 3,247
Share premium account 18 1,101 1,101
Special reserve 18 16,645 16,645
Capital redemption reserve 18 3,036 2,531
Capital reserve 18 22,869 89,220
Retained earnings 18 2,406 995
Total equity 48,799 113,739
Net asset value per Ordinary share 19 444.91p 875.75p
These financial statements were approved by the Board of Directors and were
authorised for issue on 26 June 2009 and were signed on its behalf by:
Harry Sheridan
Chairman
The Notes form an integral part of these financial statements.
COMPANY BALANCE SHEET as at 31 March 2009
As at 31 As at 31
March March
2009 2008
Note £'000 £'000
Non-current assets
Investments at fair value through
profit or loss 11 46,469 110,074
Investment in Subsidiary 13 - -
Current assets
Trade and other receivables 14 406 1,172
Cash and cash equivalents 4,588 7,293
4,994 8,465
Total assets 51,463 118,539
Current liabilities
Trade and other payables 15 (2,594) (4,749)
Amount due to Subsidiary 13 (567) (557)
(3,161) (5,306)
Total assets less current
liabilities 48,302 113,233
Non-current liabilities
Deferred tax liabilities 16 (70) (51)
Total liabilities (3,231) (5,357)
Net assets 48,232 113,182
Capital and reserves
Share capital 17 2,742 3,247
Share premium account 18 1,101 1,101
Special reserve 18 16,645 16,645
Capital redemption reserve 18 3,036 2,531
Capital reserve 18 22,869 89,220
Retained earnings 18 1,839 438
Total equity 48,232 113,182
These financial statements were approved by the Board of Directors and were
authorised for issue on 26 June 2009 and were signed on its behalf by:
Harry Sheridan
Chairman
The notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 March 2009
Share Capital Own
Share premium Special redemption Capital shares Retained
capital account reserve reserve reserve held earnings Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
31 March 2008 3,247 1,101 16,645 2,531 89,220 - 995 113,739
Net (deficit)/
return after
taxation for the
period - - - - (55,609) - 1,541 (54,068)
Shares purchased
for cancellation (505) - - 505 (10,742) - - (10,742)
Dividends paid - - - - - - (130) (130)
31 March 2009 2,742 1,101 16,645 3,036 22,869 - 2,406 48,799
31 March 2007 3,753 1,101 16,645 2,025 123,038 (3,241) 975 144,296
Net (deficit)/
return after
taxation for the
period - - - - (20,546) - 144 (20,402)
Shares purchased
for Treasury - - - - - (5,319) - (5,319)
Treasury shares
cancelled (347) - - 347 (8,560) 8,560 - -
Shares purchased
for cancellation (159) - - 159 (4,712) - - (4,712)
Dividends paid - - - - - - (124) (124)
31 March 2008 3,247 1,101 16,645 2,531 89,220 - 995 113,739
The notes form an integral part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY for the year ended 31 March 2009
Share Capital Own
Share premium Special redemption Capital shares Retained
capital account reserve reserve reserve held earnings Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
31 March 2008 3,247 1,101 16,645 2,531 89,220 - 438 113,182
Net (deficit)/
return after
taxation for the
period - - - - (55,609) - 1,531 (54,078)
Shares purchased
for cancellation (505) - - (505) (10,742) - - (10,742)
Dividends paid - - - - - - (130) (130)
31 March 2009 2,742 1,101 16,645 3,036 22,869 - 1,839 48,232
31 March 2007 3,753 1,101 16,645 2,025 123,038 (3,241) 337 143,658
Net (deficit)/
return after
taxation for the
period - - - - (20,546) - 225 (20,321)
Shares purchased
for Treasury - - - - - (5,319) - (5,319)
Treasury shares
cancelled (347) - - 347 (8,560) 8,560 - -
Shares purchased
for cancellation (159) - - 159 (4,712) - - (4,712)
Dividends paid - - - - - - (124) (124)
31 March 2008 3,247 1,101 16,645 2,531 89,220 - 438 113,182
The notes form an integral part of these financial statements.
CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 March 2009
Year to 31 Year to 31
March March
2009 2008
Note £'000 £'000
Cash flows from operating activities
Consolidated net deficit before tax (53,628) (20,351)
Adjustments to reconcile net deficit
before tax to net cash flows from
operating activities:
Add back: Losses on investments* 56,185 21,562
Less: Exchange gains (607) (1,060)
Add back: Finance costs 23 50
Decrease in trade and other payables (219) (34)
Decrease/(increase) in trade and
other receivables 267 (137)
Purchases of investments (74,437) (125,532)
Sales of investments 80,629 123,369
Revaluation of foreign currency
balances 505 1,081
Net cash flows generated from/(used
in) operating activities 8,718 (1,052)
Taxation
Taxation paid (6) -
Cash flows from financing activities
Equity dividends paid (130) (124)
Share purchases for Treasury and
cancellation (11,279) (9,346)
Interest on bank loan and overdraft (8) (40)
Net cash flows used in financing
activities (11,417) (9,510)
Decrease in cash and cash
equivalents 20 (2,705) (10,562)
Cash and cash equivalents at 1 April
2008 7,293 17,855
Cash and cash equivalents at 31
March 2009 4,588 7,293
* Includes cost of investment transactions
The notes form an integral part of these financial statements.
COMPANY CASH FLOW STATEMENT for the year ended 31 March 2009
Year to 31 Year to 31
March March
2009 2008
Note £'000 £'000
Cash flows from operating activities
Company net deficit before tax (53,628) (20,300)
Adjustments to reconcile net deficit
before tax to net cash flows from
operating activities:
Add back: Losses on investments * 56,185 21,562
Less: Exchange gains (607) (1,060)
Add back: Finance costs 23 50
Decrease in trade and other payables (219) (34)
Decrease/(increase) in trade and
other receivables 267 (137)
Purchases of investments (74,437) (125,532)
Sales of investments 80,629 123,369
Revaluation of foreign currency
balances 505 1,081
Net cash flows generated from/(used
in) operating activities 8,718 (1,001)
Taxation
Taxation paid (6) -
Cash flows from financing activities
Equity dividends paid (130) (124)
Share purchases for Treasury and
cancellation (11,279) (9,346)
Loan to subsidiary undertaking - (51)
Interest on bank loan and overdraft (8) (40)
Net cash flows used in financing
activities (11,417) (9,561)
Decrease in cash and cash
equivalents 20 (2,705) (10,562)
Cash and cash equivalents at 1 April
2008 7,293 17,855
Cash and cash equivalents at 31
March 2009 4,588 7,293
* Includes cost of investment transactions
The notes form an integral part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting Policies
Gartmore Irish Growth Fund PLC is a Company incorporated in Great Britain and
registered in England and Wales under the Companies Act 1985. The consolidated
Annual Report for the Group for the year ended 31 March 2009 comprises the
results of the Company and its Subsidiary, Gartmore Irish Smaller Companies
Investment Limited (together referred to as the "Group"). The Company is
registered as a public limited company and is an investment company as defined
by Section 833 of the Companies Act 2006. The Subsidiary also engages in
investment activity and underwriting.
Basis of preparation/statement of compliance
The consolidated annual financial statements of the Group have been prepared
under International Financial Reporting Standards ("IFRS"), which comprise
standards and interpretations approved by the International Accounting
Standards Board. The annual financial statements of the Company have been
prepared in accordance with IFRS as adopted by the European Union, and as
applied in accordance with provisions of the Companies Act 1985. The financial
statements have also been prepared in accordance with the Statement of
Recommended Practice ("SORP") (as amended December 2005) for investment trust
companies except to any extent where it conflicts with IFRS.
The accounting policies which follow set out those policies which apply in
preparing the financial statements for the year ended 31 March 2009. There are
no differences between the accounting policies applied to the Group or the
Company.
Convention
The financial statements are presented in sterling, being the currency of the
primary environment in which the Group operates, rounded to the nearest
thousand pounds (£'000), except where otherwise indicated.
The financial statements have been prepared on a going concern basis.
Investments have been measured at fair value and are classified as fair value
through profit or loss.
Basis of consolidation
The Group financial statements consolidate the financial statements of the
Company and its wholly-owned Subsidiary, Gartmore Irish Smaller Companies
Investment Limited, drawn up to 31 March 2009.
The Subsidiary is consolidated from the date of its acquisition, being the
date on which the Group obtained control, and will continue to be consolidated
until the date that such control ceases. Control comprises the power to govern
the financial and operating policies of the investee so as to obtain benefit
from its activities and is achieved through direct or indirect ownership of
voting rights. The financial statements of the Subsidiary are prepared for the
same reporting year as the Parent Company, using consistent accounting
policies. All inter-company balances and transactions, including unrealised
profits arising from them, are eliminated.
As permitted by Section 230 of the Companies Act 1985, the Company has not
presented its own Income Statement. The amount of the Company's return for the
financial year dealt with in the accounts of the Group is a deficit of
£54,078,000 (2008 deficit: £20,321,000).
Segmental reporting
The Directors are of the opinion that the Group is engaged in a single segment
of business, being investment business.
Income recognition
Dividends receivable on quoted equity shares are brought into account on the
ex-dividend date.
Dividends receivable on equity shares where no ex-dividend date is quoted are
brought into account when the Group's right to receive payment is established.
All other income is credited to the Consolidated Income Statement on an
accruals basis.
Underwriting commission
Underwriting commission is recognised as income in so far as it relates to
shares the Company is not required to take up. Where the Company is required
to take up a proportion of the shares underwritten, the same proportion of the
commission received is treated as a deduction from the cost of the shares
taken up, with the balance taken to income.
Expenses
All expenses are accounted for on an accruals basis. Expenses have been
treated as revenue costs except as follows:
- expenses which are incidental to the acquisition or disposal of an
investment are treated as capital costs and separately identified and
disclosed (see note 11); and
- expenses are treated as capital costs where a connection with the
maintenance or enhancement of the value of the investments can be
demonstrated.
Foreign currency transactions
Transactions involving currencies other than sterling are recorded at the
exchange rate ruling on the transaction date.
Investments and foreign currency balances are converted to sterling at the
rate of exchange ruling at the Balance Sheet date. Exchange gains and losses
are taken to the Consolidated Income Statement in the period in which they
arise.
Investments at fair value through profit or loss
Investments held as non-current assets are designated upon initial recognition
at 'fair value through profit or loss'. Investments held as current assets are
classified as 'held for trading' and are acquired for sale in the short-term.
Purchases of investments are recognised on a trade date basis and sales of
investments are recognised at the trade date of the disposal with proceeds
measured at fair value. Fair value of the investments is generally determined
by reference to stock exchange quoted bid prices as at the close of business
at the year-end, any movements in fair value being taken through the Income
Statement. Interest accrued on fixed interest rate securities at the date of
purchase or sale is accounted for separately, as accrued income or as an
income receipt, so that the value or purchase price or sale proceeds are shown
net of such items. Unrealised gains and losses are recognised in the Income
Statement. Realised gains and losses arising on the disposal of investments
are also taken to the Income Statement.
Taxation
Deferred tax is recognised in respect of all temporary differences at the
Balance Sheet date where transactions or events have occurred that result in
an obligation to pay more, or the right to pay less tax in the future. This is
subject to deferred tax assets being recognised only if it is considered more
likely than not that there will be suitable profits from which the future
reversal of the temporary differences can be deducted.
The tax effect of different items of income/gain and expenditure/loss is
allocated between capital and revenue on the same basis as the particular item
to which it relates, using the marginal method.
Capital reserve
The following are accounted for in this reserve:
- gains and losses on the realisation of investments;
- transaction costs;
- realised exchange differences of a capital nature;
- increases and decreases in the valuation of investments held at the
year-end; and
- unrealised exchange differences of a capital nature.
Dividends payable to shareholders
No equity dividend is accrued unless the shareholders' right to receive
payment is established in the period. Dividends proposed after the Balance
Sheet date are disclosed in note 8.
Cash and cash equivalents
Cash in hand and at banks and short-term deposits which are held to maturity
are carried at cost. Cash and cash equivalents are defined as cash in hand,
demand deposits and short-term, highly liquid investments readily convertible
to known amounts of cash and subject to insignificant risk of changes in
value. Bank overdrafts repayable on demand, if any, which form an integral
part of the Group's cash management, are included as a component of cash and
cash equivalents for the purpose of the Cash Flow Statements.
Bank loans and borrowings
All bank loans and borrowings are initially recognised at cost, being the fair
value of the consideration received, less direct issue costs where applicable.
After initial recognition, all interest-bearing loans and borrowings are
subsequently measured at amortised cost. Any difference between cost and
redemption value are recognised in the consolidated Income Statement over the
period of the borrowings on an effective interest basis. Any costs of
borrowing are expensed as incurred.
Financial instruments and hedging
The Company uses financial instruments such as put options to hedge its risks
associated with fluctuations in the investment portfolio. Gains or losses
arising from the changes in fair value of derivatives that do not qualify for
hedge accounting are taken directly to the Income Statement.
New standards and interpretations not applied
IASB and IFRIC have issued the following standards and interpretations which
are not effective for the year ended 31 March 2009 and have not been applied
in preparing these financial statements.
International Accounting Standards (IAS/IFRS) Effective date
IAS 1 Presentation of financial statements 1 January 2009
(revised)
IAS 23 Amendment - Borrowing costs 1 January 2009
IAS 27 Consolidated and separate financial I July 2009
statements (revised)
IAS 32 Amendment - Puttable financial 1 January 2009
instruments and Obligations existing on
liquidation
IAS 39 Amendment - Eligible hedged items I July 2009
IFRS 2 Amendment - Share based payments: 1 January 2009
vesting conditions and cancellations
IFRS 3 Business combinations (revised) I July 2009
IFRS 8 Operating segments 1 January 2009
International Financial Reporting Interpretations Committee (IFRIC)
IFRIC 16 Hedges of a net investment in foreign 1 October 2008
operation
IFRIC 17 Distribution of non-cash assets to 1 July 2009
owners
The Directors do not anticipate that the initial adoption of the above
standards, amendments and interpretations will have a material impact on the
Group's financial statements in the period of initial application.
2. Income
2009 2008
£'000 £'000
Income from investments:
UK net dividend income 51 126
Unfranked investment income 1,785 1,308
1,836 1,434
Other income:
Bank interest receivable 171 321
Interest received on VAT refunded by HMRC 129 -
Interest received on VAT refunded by 12 -
Manager
Dealing gains of Subsidiary - 94
Underwriting commission - 19
312 434
Total income 2,148 1,868
Total income comprises:
Dividends 1,836 1,387
Interest 312 368
Other income - 113
2,148 1,868
Income from investments:
Listed UK 51 173
Listed overseas 1,785 1,261
1,836 1,434
3. Investment Management Fee
2009 2008
Revenue Capital Revenue Capital
return return Total return return Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment 732 - 732 1,229 - 1,229
management fee
VAT thereon - - - 80 - 80
732 - 732 1,309 1,309
The investment management fee, payable to Gartmore Investment Limited, has
been calculated at 1.0% per annum of the gross asset value (less current
liabilities) of the Group held at each month end. At 31 March 2009, an amount
of £168,000 was outstanding for payment when due (2008: £372,000).
The Company ceased to pay VAT on its management fee from 1 August 2007 when HM
Revenue & Customs announced acceptance that VAT was not chargeable on
investment trust management fees. £933,000 of VAT paid on management fees in
past years plus interest of £141,000 was recovered during the year.
4. Other Expenses
2009 2008
Revenue Capital Revenue Capital
return return Total return return Total
£'000 £'000 £'000 £'000 £'000 £'000
Administration and
Secretarial
services 51 - 51 52 - 52
Directors' 108 - 108 100 - 100
remuneration
Auditor's
remuneration for:
- Audit 19 - 19 18 - 18
- Taxation 6 - 6 6 - 6
services
Other 192 - 192 182 - 182
376 - 376 358 - 358
As a result of HMRC's acceptance of the European Court of Justice's decisions
in the JP Morgan Fleming Claverhouse and Abbey National Plc cases, the Company
no longer pays VAT on its fund administration and company secretarial fees.
The Company is in discussions with the Administrator and Secretary regarding a
reclaim of VAT previously paid. The amount to be reclaimed is still to be
finalised and is therefore not dealt with in these financial statements.
5. Directors' Remuneration
2009 2008
£'000 £'000
Total fees 108 100
H P Sheridan (Chairman) 26 23
R A M Baillie 17 15
G R Caldwell 17 15
W R Cotter 17 15
S P Fitzpatrick* 12 15
R A Milliken 19 17
* Resigned on 18 December 2008
6. Finance Costs
2009 2008
£'000 £'000
Interest on bank loan repayable
within one year 19 40
On bank overdraft 4 10
23 50
7. Taxation
2009 2008
Revenue Capital Revenue Capital
return return Total return return Total
£'000 £'000 £'000 £'000 £'000 £'000
a) Analysis of
charge in year:
Corporation tax
charge/(credit) 390 31 421 (44) 44 -
Total current tax
charge/(credit) for
year (see note 7b) 390 31 421 (44) 44 -
Deferred tax (note 19 - 19 51 - 51
16)
Total deferred tax
for year 19 - 19 51 - 51
Total tax charge 409 31 440* 7 44 51
for year
* Total tax charge (see note 7b)
b) Factors affecting current taxation charge:
The tax assessed on the net return for the year is lower than the rate of
corporation tax of 28% (2008: 30%). The differences are explained below:
2009 2008
£'000 £'000
Net return before taxation (53,628) (20,351)
Corporation tax 28% (2008: 30%) (15,016) (6,105)
Effects of:
Non taxable UK dividends (14) (38)
Expenses not deductible for tax purposes 4 -
Movement in deferred tax rate (3) -
Utilisation of brought forward losses (130) -
Proceeds from sale of redeemable shares 31* 44
Prior year adjustment 6 -
Non-taxable items in capital 15,562 6,150
Total tax charge for the year (7a) 440 51
*The corporation tax charge in the capital account of £31,000 (2008: £44,000)
(see note 18) arises on redemption proceeds taxable as overseas dividends.
Due to the Company's status as an investment trust, and the intention to
continue meeting the conditions required to obtain approval to retain that
status in the foreseeable future, the Company has not provided deferred tax on
any capital gains and losses arising on the revaluation or disposal of
investments.
2009 2008
£'000 £'000
c) Provision for deferred tax:
Accrued income taxable on receipt (see note 70 51
16)
8. Dividends
2009 2008
£'000 £'000
Amounts recognised as distributions to equity
holders within the period
Dividend for the year ended 31 March 2008 of 130 124
1.06p (2007: 0.9p) per share
Proposed distribution for the year ended 31 March 2009 is 1.27p per share,
amounting to £139,000, together with a proposed special distribution of 10.88p
per share, amounting to £1,193,000.
2009 2008
£'000 £'000
Net return after taxation per Company 1,531 225
accounts
Final dividend proposed of 1.27p (2008: (139) (138)
1.06p) per share
Special dividend proposed of 10.88p (2008: (1,193) -
nil) per share
Revenue retained for s842 purposes 199 87
9. Profit of Parent Company
As permitted by Section 230 of the Companies Act 1985, the Revenue Account of
the Company is not presented as part of these financial statements. The
consolidated net return after taxation for the financial year includes a
deficit of £54,078,000 (2008 surplus: £20,321,000) which is dealt with in the
financial statements of the Company.
10. Return per Ordinary share
2009 2008
Weighted Weighted
average average
Net Ordinary Per Net Ordinary Per
return shares share return shares share
£'000 pence £'000 pence
Revenue
Basic and diluted
return per share 1,541 11,999,305 12.84 144 13,734,236 1.05
Capital
Basic and diluted
return per share (55,609) 11,999,305 (463.43) (20,546) 13,734,236 (149.60)
Total
Basic and diluted
return per share (54,068) 11,999,305 (450.59) (20,402) 13,734,236 (148.55)
11. Listed Investments
2009 2008
£'000 £'000
Group and Company
Investments listed on a recognised investment 46,469 110,074
exchange
2009 2008
£'000 £'000
Group and Company
Opening book cost 115,746 97,219
Investment holding (losses)/gains (5,672) 27,466
Opening valuation 110,074 124,685
Movements in the year:
Purchases at cost 72,618 129,088
Sales
- proceeds (80,038) (122,137)
- realised (losses)/gains on sales (26,548) 11,576
Investment holding losses (29,637) (33,138)
Closing valuation 46,469 110,074
2009 2008
£'000 £'000
Group and Company
Closing book cost 81,778 115,746
Investment holding losses (35,309) (5,672)
46,469 110,074
2009 2008
£'000 £'000
Realised (losses)/gains on sales (26,548) 11,576
Investment holding losses (29,637) (33,138)
Losses on investments (after deduction of
transaction costs)* (56,185) (21,562)
* Transaction costs amounting to £1,052,000 (2008: £1,711,000) have been added
to losses on investments being acquisitions £868,000 (2008: £1,450,000) and
disposals £184,000 (2008: £261,000).
An analysis of the investment portfolio by broad industrial or commercial
sector and a list of the investments by market value are set out above.
12. Significant Interests
The Group and Company have a holding of 3% or more of the voting rights in the
following investments that are material in the context of the financial
statements:
Percentage
Name of Undertaking Class of Share of class held
Datalex Ordinary US$0.10 11.0
Andor Technology Ordinary £0.02 10.8
Worldspreads Group Ordinary €0.015 6.8
Clearstream Technology Ordinary €0.125 6.2
Island Oil & Gas Ordinary €0.01 5.7
Newcourt Group Ordinary €0.25 4.8
Total Produce Ordinary €0.01 4.3
Galantas Gold Ordinary €0.10 3.7
Fyffes Ordinary €0.06 3.7
13. Investment in Subsidiary
The Company owns the whole of the issued ordinary share capital (£1) of
Gartmore Irish Smaller Companies Investment Limited, a dealing company
registered in England and Wales. The Subsidiary has made loans to the Company
amounting to £567,000 (2008: £557,000).
14. Trade and Other Receivables
2009 2008
Group Company Group Company
£'000 £'000 £'000 £'000
Amounts falling due within one
year:
Prepayments and accrued income 137 137 28 28
Sales for future settlement 13 13 501 501
Dividends receivable 256 256 643 643
406 406 1,172 1,172
15. Trade and Other Payables
2009 2008
Group Company Group Company
£'000 £'000 £'000 £'000
Amounts falling due within one
year: Purchases for future
settlement 1,738 1,738 3,549 3,549
Payments in respect of share 148 148 696 696
buy-backs
Corporation tax payable 415 415 - -
Other payables 293 293 504 504
2,594 2,594 4,749 4,749
16. Deferred Tax
2009 2008
Group Company Group Company
£'000 £'000 £'000 £'000
Deferred taxation comprises:
Taxation on accrued income 70 70 51 51
The movement on the provision for deferred taxation is as
follows:
Beginning of year 51 51 - -
Movement in provision for the 19 19 51 51
year
End of year 70 70 51 51
17. Share Capital
2009 2008
£'000 £'000
Authorised:
40,000,000 Ordinary shares of 25p each 10,000 10,000
10,000 10,000
Ordinary shares of 25p
each
Number £'000
Allotted, called up and fully paid:
Shares at beginning of year 12,987,542 3,247
Shares purchased for cancellation (2,019,200) (505)
End of year 10,968,342 2,742
Of the shareholder authority granted at the Annual General Meeting held on 4
September 2008, there remained an unused authority to buy back a further
636,615 shares at the year-end.
The Company purchased 2,019,200 Ordinary shares for cancellation during the
year at a cost of £10,742,000 representing 15.55% of the Company's share
capital.
No Ordinary shares have been purchased for cancellation since the year end.
Duration
The Company had a seven-year life through to the Annual General Meeting in
2002 at which an ordinary resolution was passed that the Company should
continue as an investment trust. Under the Articles of Association a similar
resolution will be proposed at every third subsequent Annual General Meeting.
Accordingly, a resolution that the Company should continue as an investment
trust will be proposed at the Annual General Meeting to be held in 2011.
Capital management
The Company does not have any externally imposed capital requirements. The
capital of the Company is managed in accordance with its investment policy in
pursuit of its investment objectives detailed above.
18. Reserves
Capital
reserve
Capital Capital investment
Share Special redemption reserve holding Retained
premium reserve reserve realised losses earnings
£'000 £'000 £'000 £'000 £'000 £'000
Group
Beginning of
year 1,101 16,645 2,531 94,388 (5,168) 995
Net losses on
realisation of
investments - - - (26,548) - -
Investment
holding losses - - - - (29,637) -
Exchange gains - - - 61 546 -
Tax charge on
redemption
proceeds taxable
as overseas
dividends - - - (31) - -
Shares purchased
for cancellation - - 505 (10,742) - -
Dividends paid - - - - - (130)
Net surplus for
the year - - - - - 1,541
End of year 1,101 16,645 3,036 57,128 (34,259) 2,406
Capital
reserve
Capital Capital investment
Share Special redemption reserve holding Retained
premium reserve reserve realised losses earnings
£'000 £'000 £'000 £'000 £'000 £'000
Company
Beginning of
year 1,101 16,645 2,531 94,388 (5,168) 438
Net losses on
realisation of
investments - - - (26,548) - -
Investment
holding losses - - - - (29,637) -
Exchange gains - - - 61 546 -
Tax charge on
redemption
proceeds taxable
as overseas
dividends - - - (31) - -
Shares purchased
for cancellation - - 505 (10,742) - -
Dividends paid - - - - - (130)
Net surplus for
the year - - - - - 1,531
End of year 1,101 16,645 3,036 57,128 (34,259) 1,839
19. Net Asset Value per Ordinary Share
The net asset value per share and the net assets attributable at the year end
calculated in accordance with the Articles of Association were as follows:
Net asset value per
share attributable Net assets attributable
2009 2008 2009 2008
pence pence £'000 £'000
Ordinary shares
- basic and diluted 444.91 875.75 48,799 113,739
Net asset value per Ordinary share is based on net assets and on 10,968,342
(2008: 12,987,542) Ordinary shares being the number of Ordinary shares in
issue at the year end
20. Reconciliation of Net Cash Flow to Movement in Cash and Cash Equivalents
2009 2008
£'000 £'000
Decrease in cash in year (3,312) (11,622)
Exchange movement 607 1,060
(2,705) (10,562)
Cash and cash equivalents at beginning of 7,293 17,855
year
Cash and cash equivalents at end of year 4,588 7,293
21. Analysis of Changes in Cash and Cash Equivalents
At 1 April Cash Exchange At 31 March
2008 flow movement 2009
£'000 £'000 £'000 £'000
Cash in hand, at bank 7,293 (3,312) 607 4,588
22. Capital Commitments and Contingent Liabilities
At 31 March 2009 there were no contingent liabilities in respect of
outstanding underwriting commitments (2008: £nil).
23. Analysis of Net Assets by Location of Incorporation
Valuation at 31 Net Valuation at 31
March 2008 transactions Depreciation March 2009
£'000 % £'000 £'000 £'000 %
Equities
United Kingdom 3,557 3.1 38 (982) 2,613 5.3
Republic of 106,517 93.7 (34,006) (28,655) 43,856 89.9
Ireland
Total 110,074 96.8 (33,968) (29,637) 46,469 95.2
investments
Net current 3,716 3.3 (1,316) - 2,400 4.9
assets
Deferred tax (51) (0.1) (19) - (70) (0.1)
Net assets 113,739 100.0 (35,303) (29,637) 48,799 100.0
24. Analysis of Financial Assets and Liabilities
Background
The investment objective of the Company is to provide shareholders with
long-term capital growth through investment in quoted companies which are
either incorporated in the Republic of Ireland or Northern Ireland or, if
elsewhere, derive the majority of their turnover or profits from the Republic
of Ireland or Northern Ireland.
The Group's assets, excluding short-term debtors, are comprised of financial
instruments, which are largely investments in equity securities and cash
balances.
The Group has little exposure to credit and cash flow risk.
The principal risks which the Group faces in its portfolio management
activities are:
- market price risk, i.e. movements in the value of investment holdings caused
by factors other than interest rate or currency movements;
- foreign currency risk;
- interest rate risk; and
- liquidity constraints.
The Board's policies for managing these risks are summarised below and have
been applied by the Manager throughout the year:
Policy
The Directors monitor financial information on a regular basis at each Board
meeting. The Manager monitors the financial risks on a daily basis.
As required by International Accounting Standard No 32: Financial Instruments:
Disclosure and Presentation, an analysis of financial assets and liabilities,
which identifies the risk to the Group of holding such items, is given below:
(i) Market price risk
Market price risk arises mainly from uncertainty about future prices of
investments held by the Group. It represents the potential loss the Group
might suffer through holding market positions in the face of price movements.
Adherence to the investment objectives and the limits on investment set by the
Company mitigates the risk of excessive exposure to any one particular type of
security or issuer.
If the investment portfolio valuation fell by 5% from 31 March 2009 valuation,
with all other variables held constant, there would have been a reduction of
£2,323,000 (2008: £5,504,000) in the return before taxation and equity. An
increase of 5% in the investment portfolio valuation would have had an equal
and opposite effect in the return before taxation and equity.
(ii) Foreign currency risk
The Group's portfolio is invested largely in euro-denominated securities and
movements in the euro can significantly affect their sterling value. The Group
does not normally hedge against foreign currency movements affecting the value
of the investment portfolio, but takes account of this risk when making
investment decisions.
The Company's net asset value is published on a daily basis, in sterling, and
currency movements are included in the calculation.
The Company's currency exposure is shown below.
(iii) Interest rate risk
The Group finances its operations principally through its issued share capital
and reserves.
If the average bank interest rates as at 31 March 2009 had been 1% lower
throughout the year, with all other variables held constant, income before
taxation and equity would have been lower by £43,000 (2008: £73,000). If
interest rates had been higher throughout the year by 1% there would have been
an equal and opposite effect in the income before taxation and equity. The
calculations are based on funds invested in cash deposits as at 31 March 2009
and are not representative of the year as a whole.
The Company's exposure to interest rate risk is shown below.
(iv) Use of derivatives
No derivative contracts were entered into during the year.
(v) Liquidity constraints
The Group's assets are comprised largely of quoted securities which can be
sold to meet funding commitments if necessary.
Financial assets
The majority of the Group's fixed asset investments are listed on the Irish
Stock Exchange and the London Stock Exchange. These assets are discussed in
the Manager's Review and are listed above.
Maturity analysis
The Company does not have any assets or liabilities maturing in more than one
year, other than the deferred tax liability which is expected to reverse in
1-2 years.
The interest rate risk profile of the Group's and Company's financial assets
at 31 March 2009 was:
Financial
assets on which Floating rate
no interest is financial
Total paid assets
Group and Company £'000 £'000 £'000
Sterling
Investments 10,381 10,381 -
Current assets and cash 1,809 150 1,659
12,190 10,531 1,659
Euro
Investments 36,088 36,088 -
Current assets and cash 3,185 256 2,929
39,273 36,344 2,929
51,463 46,875 4,588
The interest rate risk profile of the Group's and Company's financial assets
at 31 March 2008 was:
Financial
assets on which Floating rate
no interest is financial
Total paid assets
Group and Company £'000 £'000 £'000
Sterling
Investments 20,796 20,796 -
Current assets and cash 1,886 405 1,481
22,682 21,201 1,481
Euro
Investments 85,654 85,654 -
Current assets and cash 6,579 767 5,812
92,233 86,421 5,812
US Dollar
Investments 3,624 3,624 -
Current assets and cash - - -
3,624 3,624 -
118,539 111,246 7,293
Financial liabilities
The Group finances its operations principally through its issued share capital
and reserves. There were no bank borrowings. Currency exposure of the Group's
and Company's financial liabilities as at 31 March 2009 was as follows:
Total Sterling Euro US$
£'000 £'000 £'000 £'000
Group
Creditors 2,594 856 1,738 -
Total Sterling Euro US$
£'000 £'000 £'000 £'000
Company
Creditors 3,161 1,423 1,738 -
Currency exposure of the Group's and Company's financial liabilities as at 31
March 2008 was as follows:
Total Sterling Euro US$
£'000 £'000 £'000 £'000
Group
Creditors 4,749 2,522 2,227 -
Total Sterling Euro US$
£'000 £'000 £'000 £'000
Company
Creditors 5,306 3,079 2,227 -
The interest rate risk profile of the financial liabilities of the Group and
Company at 31 March 2009 was as follows:
Weighted Weighted
Non- average average
interest Fixed interest period for
Total bearing rate rate which rate
£'000 £'000 £'000 % is fixed
Group
Other creditors 2,594 2,594 - - -
2,594 2,594 - - -
Weighted Weighted
Non- average average
interest Fixed interest period for
Total bearing rate rate which rate
£'000 £'000 £'000 % is fixed
Company
Other creditors 3,161 3,161 - - -
3,161 3,161 - - -
The interest rate risk profile of the financial liabilities of the Group and
Company at 31 March 2008 was as follows:
Weighted Weighted
Non- average average
interest Fixed interest period for
Total bearing rate rate which rate
£'000 £'000 £'000 % is fixed
Group
Other creditors 4,749 4,749 - - -
4,749 4,749 - - -
Weighted Weighted
Non- average average
interest Fixed interest period for
Total bearing rate rate which rate
£'000 £'000 £'000 % is fixed
Company
Other creditors 5,306 5,306 - - -
5,306 5,306 - - -
Fair Values of Financial Assets and Financial Liabilities
All of the financial assets and liabilities of the Group are held at fair
value.
25. Related Party Transactions
Under the terms of an agreement dated 8 July 2002, the Company has appointed
Gartmore Investment Limited to be the Manager. The fee arrangements for these
services are set out in the extract from the Report of the Directors above.
The total of the fees payable under the agreement are set out in note 3.
At 31 March 2009 an amount of £168,000 (2007: £372,000) was outstanding and
due to Gartmore Investment Limited. In addition an amount of £124,000 (2008:
nil) was outstanding and due from Gartmore Investment Limited, in respect of
VAT on past management fees (inclusive of interest).
In addition to the fees paid under the management agreement the Company also
pays Gartmore Investment Limited up to a maximum of £20,000 per annum for the
services provided in respect of Gartmore SAVEit and Gartmore Investment ISAit.
The fees included in the financial statements to 31 March 2009 were £18,000
(2008: £20,000).
Mr Sheridan, Chairman of Gartmore Irish Growth Fund PLC, was formerly Finance
Director of CRH plc. As disclosed above, the Group's investment in CRH plc
represents 11.6% of the Company's portfolio. The Board has delegated authority
for investment selection to the Manager and the Manager has selected this
investment independently in accordance with the investment strategy set out on
the inside front cover. The Board as a whole reviews the investment portfolio
on a regular basis and is satisfied that the investment was selected in an
objective manner and that no conflict of interest has arisen as a result of
the selection of this stock.
ANNUAL REPORT AND ACCOUNTS
The foregoing represents extracts from the full text of the Annual
Report and Accounts for the year ended 31 March 2009. The full Report is
available for download from the following websites:
www.gartmoreirishgrowthfund.com and www.gartmore.co.uk
Copies will be posted to shareholders shortly.
Capita Sinclair Henderson Limited
26 June 2009
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