INVESTEC EUROPEAN GROWTH & INCOME TRUST LIMITED
Following the acquisition by Red Apple Investments, LLC ("Red Apple") and
related parties, of a controlling interest of 80.75 per cent of the Ordinary
Shares in the capital of the Company at the end of last year and as indicated
in the Offer Document circulated on behalf of Red Apple and related parties, Mr
Eitan Milgram was appointed a Director of the Company as a representative of
Red Apple and Mr Robert Goldsmith was appointed a Director to represent the
interest of the holders of Zero Dividend Preference Shares. In addition, Mr
Jossef Barath was appointed a Director.
At the same time Mr Christian de Labriffe and Mr Patrick von Stauffenberg who
had served as Directors since inception of the Company tendered their
resignations. I would like to express the appreciation of the Board for the
considerable efforts that both Mr de Labriffe and Mr von Stauffenberg made on
behalf of the Company during the period they served as Directors.
In order to protect the capital of the Company the Directors resolved to reduce
the Company's gearing to nil by repaying all amounts due to Bank of Scotland
and Dresdner Bank AG.
As a result of representations received from funds managed by Weiss Asset
Management, LLC, Weiss Capital, LLC (representing 80.75 per cent of the
Ordinary Share capital in issue) and Starlight Investments Limited who
represent 38.4 per cent of the Zero Dividend Preference Share capital in issue,
the Directors have appointed Collins Stewart as its financial advisors in order
to bring forward to Shareholders proposals for the winding-up of the Company.
Given the reduction in the size of the gross assets in the Company, following
the decision to repay the bank indebtedness the Directors are mindful that the
costs associated with continuing the operation of the Company will impact
adversely on the residual capital value to the detriment of both classes of
Shareholder. The Directors believe that it will be in the best interests of
both classes of Shareholder if the Company was placed into member's voluntary
liquidation. It is expected that a circular will be posted to all Shareholders
in the immediate future with a view to convening the necessary meetings to
implement proposals to place the Company into liquidation as soon as possible.
The Directors have authorised the Investment Manager to implement a programme
for the disposal of the remaining portfolio of investments.
Peter Harwood
Chairman
30 June 2004
Top Twenty Investments by Value
as at 31 March 2004
Holding Description Market Bid % Total assets
less
Value £ current
liabilities
6,338,000 UK Treasury 7.25% Dec 7 2007 6,903,920 15.74
2,900,000 German (Federal Republic) 3.5% Oct 10 1,981,164 4.52
2008
25,000 Continental 534,920 1.22
18,000 Royal Dutch Petroleum 465,180 1.06
45,000 Endesa 445,321 1.02
80,000 Fortum 445,054 1.01
40,000 ENI 437,565 1.00
22,000 TDC 436,673 1.00
18,000 Corio 432,804 0.99
95,000 Italcementi 419,244 0.95
8,000 Vinci 417,773 0.95
16,000 Delhaize 403,330 0.92
130,000 TIM 399,853 0.91
4,000 Total 399,585 0.91
60,000 Statoil 398,225 0.91
35,000 Nokia 390,358 0.89
65,000 Banco Santander Central Hispano 384,641 0.88
8,000 Société Générale 371,770 0.85
30,000 Deutsche Post 365,685 0.83
22,000 Tietoenator 364,669 0.83
16,397,734 37.39
Statement of Operations
for the six months ended 31 March 2004 6 months to 6 months to Year to
31 Mar 2004 31 Mar 2003 30 Sept
2003
£ £ £
Income 467,115 898,952 1,941,858
Dividends
Interest on bonds 158,263 29,282 29,282
Bank interest 228,424 717,421 1,203,236
Total income 853,802 1,645,655 3,174,376
Expenses (48,701) (129,509) (193,970)
Investment management and
administration fees
Audit fees (19,875) (8,000) (31,538)
Directors' fees (19,361) (22,125) (40,848)
Interest payable and similar charges (1,823,834) (2,247,960) (4,472,161)
Other expenses (283,429) (136,039) (217,487)
Total expenses (2,195,200) (2,543,633) (4,956,004)
Net loss before investment result (1,341,398) (897,978) (1,781,628)
Realised loss on sale of investments (13,523,271) (7,539,336) (8,167,603)
Movement in unrealised profit 15,317,532 6,277,118 11,776,405
on revaluation of investments
Realised profit/(loss) on foreign (1,185,216) 4,841,281 5,592,891
currency
Movement in unrealised gain/(loss) 1,381,333 (5,342,924) (976,230)
on revaluation of bank loans
Movement in unrealised gain/(loss) (1,935) 427,096 239,481
on forward currency contracts
Realised loss on retranslation of bank - - (4,932,327)
loans
Gain on repurchase of Zero Dividend - 243,020 481,237
Preference Shares
Unrealised loss on ineffective cash flow - - (3,534,474)
hedge
Movement in unrealised gain on 563,068 - 78,257
revaluation
of ineffective cash flow hedges
Net profit/ (loss) for the period 1,210,113 (1,991,723) (1,223,991)
Basic and diluted return per Ordinary 1.83 (3.01) (1.85)
Share (p)
Balance Sheet
as at 31 March 2004 31 March 2004 31 March 2003 30 Sept 2003
£ £ £
Non-current assets 22,090,643 15,572,852 19,985,276
Available for sale investments
Current assets 21,400,196 54,320,880 24,682,782
Cash and cash equivalents
Debtors 735,751 264,807 24,294
Total assets 44,226,590 70,158,539 44,692,352
Current liabilities (363,002) (756,716) (561,384)
Creditors: amounts falling
due within one year
Non-current liabilities (28,601,504) (59,559,601) (29,982,837)
Bank loan
Zero Dividend Preference Shares (11,041,468) (10,492,600) (10,574,560)
Interest rate swap liability (5,819,753) (6,097,782) (6,629,713)
Total liabilities (45,825,727) (76,906,699) (47,748,494)
Net liabilities (1,599,137) (6,748,160) (3,056,142)
Represented by: 66,250 66,250 66,250
Share capital (Ordinary Shares)
Share premium (Ordinary Shares) 63,683,750 63,683,750 63,683,750
Reserves (65,349,137) (70,498,160) (66,806,142)
Issued capital and reserves (1,599,137) (6,748,160) (3,056,142)
Net Assets Value per share (as per (2.41) (10.19) (4.61)
IFRS):
Ordinary Shares (pence)
Zero Dividend Preference Shares 134.58 123.44 128.89
(pence)
Available Assets per share (as per nil nil nil
Articles):
Ordinary Shares (pence)
Zero Dividend Preference Shares 115.09 44.05 91.64
(pence)
The financial statements were approved by the Board of Directors on 30 June
2004.
Statement of Changes in Equity
for the six months ended 31 March 2004 6 months to 6 months to Year to
31 Mar 2004 31 Mar 2003 30 Sept
2003
£ £
£
Opening equity (3,056,142) (3,377,248) (3,377,248)
Net gain/(loss) for the period 1,210,113 (1,991,723) (1,223,991)
Dividends paid - - -
Movement in unrealised loss on revaluation 246,892 (1,379,189) (1,989,377)
of effective cash flow hedges
Movement in unrealised loss on revaluation - - 3,534,474
of ineffective cash flow hedge removed
from equity and reported in net loss for
the year
Closing equity (1,599,137) (6,748,160) (3,056,142)
Statement of Cash Flow
for the six months ended 31 March 2004
6 months to 6 months to Year to
31 Mar 2004 31 Mar 2003 30 Sept 2003
£ £ £
Operating activities 414,343 864,011 1,959,814
Dividends received
Bond interest received - 53,372 53,372
Bank interest received 228,424 717,421 1,203,236
Expenses paid (394,139) (283,744) (499,020)
Interest paid (1,532,835) (1,785,018) (3,662,900)
Net cash flow from operating (1,284,207) (433,958) (945,498)
activities
Investing activities (10,351,542) (12,525,853) (16,200,874)
Purchase of investments
Sale of investments 9,538,379 19,862,888 23,950,880
Net cash flow from investing (813,163) 7,337,035 7,750,006
activities
Financing activities - (52,606) (201,348)
Buy back of Zero Dividend Preference
Shares
Bank loans repaid - - (30,142,397)
Net cash flow from financing - (52,606) (30,343,745)
activities
(Decrease)/increase in cash and cash (2,097,370) 6,850,471 (23,539,237)
equivalents
Realised (loss)/gain on foreign (1,185,216) 4,841,281 5,592,891
currency
Cash and cash equivalents brought 24,682,782 42,629,128 42,629,128
forward
Cash and cash equivalents 21,400,196 54,320,880 24,682,782
END