Interim Management Statement
13 Februar 2009 - 4:38PM
UK Regulatory
TIDMGIR
GARTMORE IRISH GROWTH FUND PLC
INTERIM MANAGEMENT STATEMENT (UNAUDITED)
This interim management statement covers the period from 1 October 2008 to 31
December 2008. It has been produced for the sole purpose of providing
information to the Company's shareholders in accordance with the requirements
of the UK Listing Authority's Disclosure and Transparency Rules. It should not
be relied upon for any other purpose.
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.
Manager's Comments
The period under review saw unprecedented upheavals in national and
international financial markets. The sub-prime crisis in the United States has
resulted in major bank failures, and the American government was forced to make
strenuous efforts to stop contagion which, at one stage, appeared to threaten
systemic failure of the American banking system.
That contagion had obviously spread to the United Kingdom, Ireland, Iceland and
other European countries. In the UK and Ireland the governments found it
necessary to nationalise failing financial institutions and to recapitalise
major banks.
Many closed-ended funds saw steep falls in their net asset values and we
suffered with the rest. In the quarter ended 31 December 2008 the Company's
diluted net asset value fell by 13.3% by comparison with a fall of 19% in the
ISEQ Index (adjusted for sterling). Published economic data in the UK and
Ireland continues to deteriorate and the prospects of dividend cuts and of
falling earnings have worsened.
Our holding in CRH, Ireland's biggest building materials group, performed
better than most other holdings, in part due to the anticipation of increased
infrastructure spend in the United States at the initiative of a new President.
The group reported challenging conditions across its major markets, but adhered
to its 2008 profit forecasts citing encouraging performance from its operations
in Poland and the Ukraine.
A major investment in the packaging products manufacturer Smurfit Kappa has so
far proved somewhat disappointing, adversely affecting the Company's returns.
Despite this we believe that, given the group's broad international operating
base, the improvements which have been made in operating efficiencies are not
reflected in the current share price and that there is considerable scope for
positive earnings surprises.
We trimmed our investment in Aer Lingus during the quarter on concerns that the
airline is losing market share in its long-haul business. However, we acquired
a new stake in Ryanair in the belief that it will enjoy significant benefits
from the steep fall in the oil price, and that its continuing success in
winning business from higher-cost airlines offers scope for profits to beat
market forecasts.
We are naturally cautious on the near-term economic outlook in Ireland, but, in
time, factors such as the country's low rate of corporation tax and favourable
demographics should support the longer-term case for investment. At the stock
level, despite the disappointments so far, we believe that a number of the
multi-nationals are trading at attractive levels and that our holdings in
companies such as CRH, Smurfit Kappa and Dragon Oil should deliver good returns
for investors prepared to look beyond short-term volatility.
Gearing
The Company's loan and overdraft facilities expired during the period under
review 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, and in current market circumstances the
Manager has no need for gearing. However, efforts to negotiate new loan
facilities continue in the expectation that they may be required when the
markets turn. Meanwhile, should he 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.
Material Events and Transactions
Over the three months to 31 December 2008 the Company repurchased 603,750
Ordinary shares at prices ranging from 375.75p per share to 458.46p per share
excluding expenses (at discounts to net asset value, including current period
revenue, of between 7.52% and 17.63%). Subsequent to the end of the period
under review, the Company has repurchased 239,150 Ordinary shares at prices
ranging from 382.11p to 447.92p per share, excluding expenses (at discounts to
net asset value, including current period revenue, of between 12.50% and
16.64%). The shares in issue now total 11,145,142, none of which are held in
Treasury. The Company will continue, as and when appropriate, to exercise its
powers to buy back shares, with the objective of enhancing the NAV per share
and to provide a degree of liquidity in the quote.
10 Largest Equity Holdings at 31 December 2008
Company Market value % of net
GBP'000 assets
CRH 8,017 13.9
Smurfit Kappa 4,765 8.3
Dragon Oil 3,598 6.2
Allied Irish Banks 3,137 5.4
Total Produce 2,901 5.0
Ryanair 2,850 4.9
Fyffes 2,633 4.6
Irish Life & Permanent 2,328 4.0
DCC 2,276 3.9
FBD Holdings 2,206 3.8
Sectoral Spread of Investments at 31 December 2008
% of net
assets
Cyclical Services 22.1
Non-Cyclical Consumer Goods 18.9
Financials 18.0
Basic Industries 13.9
General Industrials 11.6
Resources 9.4
Information Technology 4.0
Non-Cyclical Services 0.5
Net current assets 1.6
100.0
Financial Position As at 31.12 As at 30.09
.08 .08
(unaudited) (unaudited)
GBPm GBPm
Investments 56.8 70.8
Cash and other net current assets/(liabilities) 1.0 (0.7)
Net assets 57.8 70.1
Net assets attributable to Ordinary shares* 57.8 70.1
Pence Pence
Net asset value per Ordinary share* 507.40 584.91
* Includes current period revenue.
Maximum Exposure Limits
The maximum holding in any single investment (Company or Group) is limited to
15% of gross assets at the time of investment.
Performance*
As at % increase/(decrease) over
31.12.08* 3 months 1 year 3 years 5 years 10 years
*
Net asset value per 507.40 (13.3) (40.5) (25.3) 27.3 134.2
Ordinary share**
Share price - Ordinary 446.25 (14.1) (41.4) (31.7) 24.3 189.8
shares
Discount 12.1
* Source: Thomson Financial Datastream. Basis: Capital performance only, debt
at par.
** Includes current period revenue with effect from 31 March 2008. Prior period
figures are exclusive of current period revenue and are therefore not directly
comparable.
Price and Performance Information
The Company's Ordinary shares are listed on the London and Irish Stock
Exchanges and the price is published in the Financial Times and The Daily
Telegraph under `Investment Companies'. Real-time share price information is
available via BT landline on 09058 171 690. Calls are charged at 75p per minute
at all times.
The Company's net asset value is calculated daily and can be viewed on the
London Stock Exchange website at http://www.londonstockexchange.com and via a
link from the Company's website at http://www.gartmoreirishgrowthfund.com.
Information on the Company is available on the Gartmore internet site, http://
www.gartmore.co.uk . The Company's discrete area on the site can be accessed
via the "Fund range" menu or directly using http://
www.gartmoreirishgrowthfund.com. This information includes the latest annual
and interim reports, fact sheets, together with access to the latest regulatory
news announcements and net asset values.
Further information can be obtained from Gartmore Investment Limited, as
follows:
Free investor helpline: 0800 289 336
Internet address: http://www.gartmore.co.uk
Email address: helpline@gartmore.com
The Directors are not aware of any significant events or transactions which
have occurred between 31 December 2008 and the date of publication of this
statement which have had a material impact on the financial position of the
Company. For latest performance information, please refer to the Company's
website.
The information provided in this statement should not be considered as a
financial promotion.
By order of the Board
Capita Sinclair Henderson Limited
Company Secretary
13 February 2009
END
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