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Gartmore Global Tst (HGL)

  Print      Mail a friend       Annual reports

Tuesday 05 September, 2006

Gartmore Global Tst

Interim Results

                           GARTMORE GLOBAL TRUST PLC                           

              Unaudited Results for the six months to 31 July 2006               


• Net Asset Value per Ordinary share, with debt at fair value, increased from
264.20p to 267.49p, a rise of 1.2%. This compares with a decrease of 1.0% in
the Company's benchmark index.

• Mid-market price per Ordinary share increased from 239.25p to 243.00p, a rise
of 1.6%.

• Interim dividend increased to 2.00p per Ordinary share.

• The discount remained at around 8% throughout the period.

Chairman's Statement


I am pleased to report that over the six months to 31 July 2006, the Net Asset
Value per Ordinary share, with debt at fair value, increased from 264.20p to
267.49p, a rise of 1.2%. This performance compares favourably with a decrease
of 1.0% in the Company's composite benchmark index.

Over the same period, the mid-market price of the Company's Ordinary shares
increased by 1.6% to 243.00p and the discount, with debt at fair value,
generally remained around the 8% target.

Investment Strategy

Following the introduction of the revised investment strategy in 2005; namely
the implementation of a more focussed portfolio, the reactivation of the
trading subsidiary and the introduction of the discount control mechanism,
opinion on the progress of your Company was sought from a number of major
shareholders after the AGM in May this year. Responses received have generally
been positive and your Board values this support of its efforts to enhance
shareholder value.

Revenue and Dividends

The Group revenue return per Ordinary share for the six months to 31 July 2006
was 3.66p, compared with 3.07p for the corresponding period last year.

The Board has declared a first interim dividend of 2.00p per Ordinary share,
which will be paid on 31 October 2006 to shareholders on the register on 4
October 2006. This represents an increase of 11% on the 1.80p declared in
respect of the period to 31 July 2005.

Share Buy-backs

During the six-months to 31 July 2006, the Company repurchased 1,345,000
Ordinary shares for cancellation at a cost of £3,303,000. The prices paid
represented an average discount of around 8.2% to the Net Asset Value then
prevailing, with debt at fair value.


During the period to 31 July 2006, gearing levels, net of cash, did not exceed

Unquoted Investments

In accordance with your Board's decision to reduce the proportion of the
portfolio invested in unquoted stocks, at 31 July 2006 the unquoted portfolio
represented 1.9% of the Group's Total Assets, compared with 2.2% at the
beginning of the current financial year.

Investment Manager

It was reported in the 2006 year-end accounts that the ownership of Gartmore,
our investment advisors, was uncertain. Since then, it has been announced that
Hellman & Friedman LLC, a private equity firm, together with members of
Gartmore's senior fund management and executive team, reached agreement to
acquire Gartmore from Nationwide Mutual Insurance Company. Your Board will
continue to keep the relationship with Gartmore under review in the light of
this change, but is pleased to note that Brian O'Neill, the fund manager, has
committed his long term future to Gartmore by becoming an equity participant.


The managers believe that the outlook for the global economy remains good.
While volatility may continue in the short term, they believe that the outlook
for stockmarkets is favourable. Your Board feels that, subject to the usual
caveats, the Company can continue to outperform its benchmark and is
well-positioned to deliver positive returns.

Manager's Review(extracts)

Investment Approach

The investment policy seeks to achieve capital growth from a concentrated
portfolio of international stocks. The core of the portfolio comprises 40
stocks which at 31 July 2006 represented 81.4% of the portfolio, with the top
10 representing 29.0% and unlisted investments representing 2.1%.

The Company seeks to achieve capital growth through long-term investment.
However, there will inevitably be periods when stock markets decline. In such
circumstances, the Company's trading subsidiary, Engandscot Limited, is used to
enhance returns. During the period, a small but positive return of £159,000 was

Benchmark Index

The Company's selected benchmark index is a composite, comprising 50% FTSE-All
Share Index and 50% Morgan Stanley Capital International Index ex. UK (in
sterling terms), as this is broadly representative of the geographical areas in
which the Company invests. The manager aims to outperform this benchmark by 2%
with a target tracking error of 4-5%.

During the six month period to 31 July 2006, the tracking error was below the
target level and the Net Asset Value per ordinary share, with prior charges
stated at market value, outperformed the benchmark index by 2.2%.


The Company was modestly geared to equities over the period under review. The
geographical distribution is little changed since start of the period, although
profit taking in holdings such BP, BATS and Standard and Chartered has seen the
UK weighting drop below 39% of the total portfolio, having been at 40.2% at 31
January 2006.

Portfolio liquidity at 31st July was £15.8m, compared with a carrying value of
£16.4m for the Company's fixed debt.

Portfolio Performance

Of the Company's largest investments, the best performances arose from takeover
activity. Kerr-McGee was the subject of a take-over bid and the stock (which
formed approximately 2.8% of the Company's portfolio) increased in value by 25%
in sterling terms over the period. BAA, which formed approximately 1.4% of the
Company's portfolio, was the subject of a take-over bid from Ferrovial and the
stock gained 49% over the period.

After a period of underperformance from the Company's UK property stocks,
British Land and Hammerson recovered strongly, both up approximately 19%. This
helped to offset weaker performances from some of the other UK holdings,
though, given the outperformance of the UK market, the Company's underweight
position detracted from overall performance relative to the benchmark. While
the performance of the Japanese market and, in particular, one of our holdings
(the JPMF Japanese Investment Trust) was disappointing, two of our holdings,
Canon and Japan Tobacco, up 14% and 17% respectively, did particularly well. A
strong performance was also posted by DBS Bank, up over 8%. In Europe, Syngenta
(a crop protection company) and Nestle were the best performers, up 11% and 6%

Despite the strength of the oil price (Brent crude increased by 12%) the
performance of the Company's energy holdings was mixed. Aside from Kerr McGee,
BG, one of the Company's larger holdings, did well, up 13%, but Suncor Energy,
down 3%, was disappointing, as was the largest holding, BP, falling 4.6% over
the period. Similarly, the strength in commodity markets did little for two of
the Company's larger holdings, with Companhia Vale do Rio down 14% and Freeport
McMoRan Copper & Gold, down 19%, both in sterling terms, although the latter
company did raise its dividend significantly.


Despite some risk of a pick-up in the rate of inflation, the global economic
background is still positive for stock markets. Corporate profitability is
still robust, although some slowdown in the rate of earnings growth is likely.
While markets may remain unsettled for a while longer, we remain optimistic and
are looking to increase our exposure to equity markets in the coming weeks.

Performance Attribution

Over the six months to 31 July 2006, the Net Asset Value per Ordinary share,
with debt at fair value, increased by 1.2%, compared with a rise of 1.0% in the
Benchmark index, comprising 50% FTSE All-Share Index and 50% MSCI World Index
ex UK (in sterling terms). The following analysis explains the factors, which
contributed to the Company's relative performance.

Portfolio Performance                                     
Performance of listed portfolio                      +0.9%
Performance of unquoted portfolio                    -0.3%
Performance of benchmark index                       -1.0%
Portfolio outperformance                             +1.6%
Other Factors                                             
Share buy-backs                                      +0.2%
Retained revenue                                     +0.4%
Management fee and finance costs allocated to        -0.4%
Fair value of prior charges                          +0.4%
Net Asset Value outperformance                       +2.2%

Portfolio Analysis

                                   At 31 July 2006       At 31 January 2006   
                                         £'000         %       £'000         %
United Kingdom                          51,991      38.6      55,470      40.5
North America                           34,739      25.8      34,615      25.2
Continental Europe                      21,021      15.6      19,923      14.5
Pacific Rim                             13,031       9.7      14,501      10.6
Japan                                    9,386       7.0       9,420       6.9
Other markets                            5,105       3.8       3,893       2.8
                                       _______    ______     _______     _____
Total Investments                      135,273     100.5     137,822     100.5
Net Current Assets                      15,769      11.7      15,684      11.5
                                       _______    ______     _______     _____
Total Assets less Current              151,042     112.2     153,506     112.0
Non-Current Liabilities                                                       
Debenture stock                       (15,385)    (11.5)    (15,400)    (11.3)
Cumulative preference stock            (1,000)     (0.7)     (1,000)     (0.7)
                                       _______    ______     _______    ______
Net Assets                             134,657     100.0     137,106     100.0
                                        ======     =====      ======     =====
Attributable to:                                                              
Ordinary shares                        134,657     100.0     137,106     100.0
                                       _______    ______     _______    ______
Equity Shareholders' Funds             134,657     100.0     137,106     100.0
                                        ======     =====      ======     =====

Consolidated Income Statement                   Six months to 31 July 2006     
                                                  Revenue    Capital      Total
                                                   Return     Return     Return
                                                    £'000      £'000      £'000
Income and Capital Profits                                                     
Dividends and other income                          2,438          -      2,438
Gains on investments held at fair value                 -        850        850
Net exchange gain on currency deposits                  -         57         57
Net dealing profit                                    159          -        159
                                                 ________   ________   ________
Total Income                                        2,597        907      3,504
Management fees                                     (157)      (314)      (471)
Other expenses                                      (171)       (19)      (190)
                                                 ________   ________   ________
Operating Expenses before Finance Costs             (328)      (333)      (661)
and Tax                                                                        
                                                 ________   ________   ________
Return before Finance Costs and Tax                 2,269        574      2,843
                                                 ________   ________   ________
Finance Costs                                                                  
Interest payable                                    (200)      (399)      (599)
Appropriations to holders of the                     (19)          -       (19)
Cumulative Preference stock                                                    
                                                 ________   ________   ________
Total Finance Costs                                (219 )      (399)      (618)
                                                 ________   ________   ________
Return before Tax                                   2,050        175      2,225
Tax                                                 (255)        175       (80)
                                                  _______   ________   ________
Return after Tax                                    1,795        350      2,145
                                                   ======    =======    =======
Earnings per Ordinary share (pence)                  3.66       0.71       4.37
                                                    =====     ======     ======

Consolidated Income Statement (Comparative)      Six months to 31 July 2005   
                                                 Revenue    Capital      Total
                                                  Return     Return     Return
                                                   £'000      £'000      £'000
Income and Capital Profits                                                    
Dividends and other income                         2,334        394      2,728
Gains on investments held at fair value                -     12,794     12,794
Net exchange loss on currency deposits                 -        236        236
Net dealing profit                                    32          -         32
                                                ________   ________   ________
Total Income                                       2,366     13,424     15,790
Management fees                                    (143)      (287)      (430)
Other expenses                                     (141)       (18)      (159)
                                                ________   ________   ________
Operating Expenses before Finance Costs and        (284)      (305)      (589)
                                                ________   ________   ________
Return before Finance Costs and Tax                2,082     13,119     15,201
                                                ________   ________   ________
Finance Costs                                                                 
Interest payable                                   (200)      (401)      (601)
Appropriations to holders of the Cumulative         (19)          -       (19)
Preference stock                                                              
                                                ________   ________   ________
Total Finance Costs                                (219)      (401)      (620)
                                                ________   ________   ________
Return before Tax                                  1,863     12,718     14,581
Tax                                                (266)        136      (130)
                                                 _______   ________   ________
Return after Tax                                   1,597     12,854     14,451
                                                  ======    =======    =======
Earnings per Ordinary share (pence)                 3.07      24.72      27.79
                                                   =====     ======     ======

Consolidated Statement of Changes in Equity                                    
For the six months to 31                                                       
July 2006                                                                      
                                           Share    Capital                    
                                 Share   premium redemption  Retained          
                               capital   account    reserve  earnings     Total
                                 £'000     £'000      £'000     £'000     £'000
At 31 January 2006              12,519     9,251     31,464    83,872   137,106
Net return for the period            -         -          -     2,145     2,145
Equity dividends paid                -         -          -   (1,291)   (1,291)
Purchase of shares for           (336)         -        336   (3,303)   (3,303)
                               _______   _______    _______   _______    ______
At 31 July 2006                 12,183     9,251     31,800    81,423   134,657
                                ======    ======     ======    ======     =====

Consolidated Statement of Changes in Equity                                    
For the six months to 31                                                       
July 2005                                                                      
                                           Share    Capital                    
                                 Share   premium redemption  Retained          
                               capital   account    reserve  earnings     Total
                                 £'000     £'000      £'000     £'000     £'000
At 31 January 2005              13,009     9,251     30,974    58,422   111,656
Net return for the period            -         -          -    14,451    14,451
Equity dividends paid                -         -          -   (1,300)   (1,300)
Purchase of shares for            (37)         -         37     (273)     (273)
                               _______   _______    _______   _______    ______
At 31 July 2005                 12,972     9,251     31,011    71,300   124,534
                                ======    ======     ======    ======     =====


(i) Retained earnings comprise the capital reserve - realised, capital reserve-
unrealised and the revenue reserve.

Consolidated Balance Sheet                                  At               At
                                                       31 July       31 January
                                                          2006             2006
                                                         £'000            £'000
Non-Current Assets                                                             
Investments held at fair value through profit          135,273          137,822
or loss                                                                        
                                                      ________          _______
Current Assets                                                                 
Investments held at fair value                             106              445
Balances due from brokers                                    -            1,000
Other receivables                                          636              305
Cash and cash equivalents                               18,339           15,809
                                                      ________          _______
                                                        19,081           17,559
                                                      ________          _______
Total Assets                                           154,354          155,381
Current Liabilities                                                            
Balances due to brokers                                (2,954)          (1,366)
Other payables                                           (358)            (509)
                                                      ________          _______
                                                       (3,312)          (1,875)
                                                      ________          _______
Total Assets less Current Liabilities                  151,042          153,506
Non-Current Liabilities                                                        
8.25% Debenture stock                                 (15,385)         (15,400)
3.75% Cumulative Preference stock                      (1,000)          (1,000)
                                                      ________          _______
                                                      (16,385)         (16,400)
                                                      ________          _______
Net Assets                                             134,657          137,106
                                                       =======           ======
Equity attributable to Equity Holders                                          
Called-up share capital                                 12,183           12,519
Share premium account                                    9,251            9,251
Capital redemption reserve                              31,800           31,464
Retained earnings:                                                             
Capital reserve - realised                              35,444           34,486
Capital reserve - unrealised                            35,156           39,067
Revenue reserve                                         10,823           10,319
                                                      ________          _______
Total Equity                                           134,657          137,106
                                                       =======           ======
Net Asset Value per Ordinary share (pence)               276.3            273.8
                                                         =====            =====

Consolidated Cash Flow Statement                Six months to    Six months to
                                                      31 July          31 July
                                                         2006             2005
                                                        £'000            £'000
Cash flows from operating activities                                          
Return before finance costs and tax                     2,843           15,277
Adjustments for:                                                              
Decrease/(increase) in investments                      2,492          (8,049)
Decrease/(increase) in receivables                      1,054            (188)
Increase in payables                                    1,552              225
                                                      _______          _______
Net Cash Flows from Operating Activities                7,941            7,265
before Taxes                                                                  
                                                      _______          _______
Income taxes paid                                       (126)             (27)
                                                      _______          _______
Net Cash Flows from Operating Activities                7,815            7,238
                                                      _______          _______
Cash flows from Financing Activities                                          
Repurchase of Ordinary shares for                     (3,418)            (317)
Debenture interest paid                                 (614)            (617)
Cumulative Preference stock dividends paid               (19)             (19)
Equity dividends paid                                 (1,291)          (1,300)
                                                       ______          _______
Net Cash used on Financing Activities                 (5,342)          (2,253)
                                                       ______          _______
Cash flows from financing activities                                          
Net increase in Cash and Cash Equivalents               2,473            4,985
Cash and cash equivalents at 1 February                15,809           13,967
Effects of foreign exchange rate changes                   57              236
                                                       ______          _______
Cash and Cash Equivalents at 31 July                   18,339           19,188
                                                        =====           ======

Accounting Policies

The consolidated accounts comprise the unaudited financial results of the Group
for the six months to 31 July 2006. The accounts are presented in pounds
sterling, as this is the principal currency in which the Company's transactions
are undertaken.

The Consolidated accounts have been prepared in accordance with International
Financial Reporting Standards (IFRS) adopted by the International Accounting
Standards Board (IASB), and interpretations issued by the International
Financial Reporting Interpretations Committee of the IASB (IFRIC).

A summary of the principal accounting policies, all of which have been applied
consistently throughout the period, is set out below:

Revenue, Expenses and Interest Payable

Revenue includes dividends from investments quoted ex-dividend on or before the
balance sheet date, with the exception of dividends of a capital nature, which
are credited to the Capital column of the Income Statement. Income on fixed
income securities is recognised on a time apportionment basis according to the
period for which these investments are held. Deposit and other interest
receivable, expenses and interest payable are accounted for on an accruals

Management fees and the costs of long-term borrowings are allocated one-third
to revenue and two-thirds to capital. Tax relief in respect of such costs is
credited to capital to the extent that such relief can be utilised in reducing
the Company's overall liability to taxation.


All investments are classified as held at fair value through profit or loss.
Transaction costs are

expensed immediately through the income statement. All investments are measured
at fair value with changes in their fair value recognised in the income
statement. The fair value of listed investments is based on their quoted bid
market price at the balance sheet date without any deduction for estimated
future selling costs. The fair value of unquoted investments is based on the
market price on the balance sheet date where an organised market exists.
Otherwise, unquoted investments are valued by the Directors at the balance
sheet date based on dealing prices or stockbrokers' valuations where available,
net asset values or other relevant information.

Earnings per Ordinary share

Earnings per Ordinary share is calculated on the total return to Equity
shareholders of £2,145,000 (31 July 2005 - £14,451,000) and 49,011,547 (31 July
2005 - 51,996,660) Ordinary shares, being the weighted average number of shares
in issue during the period.

Net Asset Value per Ordinary share

The Net Asset Value per Ordinary share is calculated on net assets of £
134,657,000 (31 January 2006 - £137,106,000) and 48,730,163 (31 January 2006 -
50,075,063) Ordinary shares in issue at the period-end.

InterimReport and Accounts

The financial information contained in this preliminary announcement of interim
results is unaudited and does not constitute statutory accounts as defined in
Section 240 of the Companies Act 1985. Full statutory accounts for the year
ended 31 January 2006 included an unqualified audit report and were filed with
the Registrar of Companies on 22 May 2006.

The interim report and accounts for the six months to 31 July 2006 will be
posted to shareholders shortly. Copies will also be available from the
Company's registered office at Gartmore House, 8 Fenchurch Place, London EC3M

Gartmore Investment Limited


5th September 2006


a d v e r t i s e m e n t