Final Results

Ivory & Sime UK Smlr.Co's Trust PLC 10 May 2002 Ivory & Sime UK Smaller Companies Trust plc To: RNS From: Ivory & Sime UK Smaller Companies Trust plc Date: 10 May 2002 RESULTS FOR YEAR TO 31 MARCH 2002 Investment Objective To achieve capital growth by investing primarily in a portfolio of smaller companies quoted on the London Stock Exchange. The benchmark index is the FTSE SmallCap (ex Investment Companies) Index. Results • Net asset value fell by 12.2% compared with a fall of 11.6% in the benchmark index • Unchanged dividend for the year of 4.0p per share The net asset value per share for the year ended 31 March 2002 fell by 12.2 per cent compared with a fall of 11.6 per cent in the FTSE SmallCap(ex Investment Companies) Index over the same period. The events of September 11 2001 adversely affected world stock markets and disrupted business activity in the developed economies, affecting already fragile business confidence. The story relating to the performance of the portfolio has a familiar ring - a relatively strong contribution from the 'old' economy stocks offset by disappointments amongst the Technology, Media and Telecommunications ('TMT') Sectors. Whilst volatile stockmarkets and a difficult macroeconomic environment have not been helpful, all too often growth expectations have also failed to materialise. Earnings Group earnings per Ordinary Share decreased from 4.61 pence to 4.17 pence. Dividend The Board has proposed a final dividend of 3.00 pence per share, making a total dividend of 4.00 pence per share, which is unchanged from the previous year. The final dividend is payable on 5 July 2002 to shareholders on the register on 7 June 2002. Shareholder Value During times when outperformance has been difficult to achieve, the Board has encouraged the Managers to communicate their strategy to shareholders and a regular dialogue has been maintained. In particular, now that the AITC's its campaign has ended there is an even greater need for the Managers to promote the merits of the Company. The Board, in conjunction with the Managers, is evaluating further proposals in respect of marketing activity. The Board will seek to renew the Company's share buy-back authority at the forthcoming Annual General Meeting. No shares have been bought back since the authority was first obtained in 2000, but the Board views the retention of this flexibility to be prudent. Investment Policy and Gearing The last 18 months have seen trying conditions for investors in businesses that have a growth bias. Despite this, the Managers believe it is appropriate to remain overweight in areas, which may be temporarily out of favour, but which are well placed to capitalise on a changing economic and stockmarket environment. The Board sets the broad parameters in respect of gearing whilst its tactical use lies with the Managers. The Board has been sympathetic to the Managers' reasons for holding a high proportion of cash over the last 6 months, but acknowledges that gearing should be used over the longer term to enhance shareholder returns. The Managers have indicated that they believe the stockmarket cycle is at or near a turning point and have therefore reduced cash holdings within the portfolio. The Board is encouraged by the rate at which the Managers are finding new ideas. Since the end of the year, the level of gearing has increased from a net cash position to 4 per cent, as the Managers have begun to invest the Company's £7 million term loan which was held in a gilt at the end of the year and therefore treated as uninvested. Outlook The Managers do not consider it surprising that stockmarkets have tracked sideways for a number of months. Although monetary policymakers have acted in a co-ordinated manner and cut interest rates, there is normally a time lag of between 12 and 18 months before such measures impact the real economy. Similarly, although many companies have taken vigorous action to reduce their costs, the full impact of these measures on the profit line will not become clear until the interim reporting season in September 2002 at the earliest. However, it would appear that business conditions have now stabilised. It is still too early to herald a bright new dawn but the portents are favourable that the business environment will be one which permits a resumption in positive returns from 'growth style 'companies. If that proves to be the case, the Managers believe the Company is well positioned to benefit. Group Statement of Total Return (Incorporating the Revenue Account) For the Year Ended 31 March 2002 Year Ended 31 March 2002 £'000 £'000 £'000 Revenue Capital Total Losses on investments - (5,632) (5,632) Realised exchange differences - - - Warrants purchased for cancellation - - - Income 1,639 - 1,639 Investment management and secretarial fees (230) (327) (557) Other expenses (199) - (199) --------- --------- --------- Net return before finance costs and taxation 1,210 (5,959) (4,749) Interest payable (189) (351) (540) --------- --------- --------- Return on ordinary activities before taxation 1,021 (6,310) (5,289) Tax on ordinary activities (109) 109 - --------- --------- --------- Return attributable to equity shareholders 912 (6,201) (5,289) Dividends in respect of equity shares (875) - (875) --------- --------- --------- Transfer to/(from) reserves 37 (6,201) (6,164) --------- --------- --------- Return per share: Basic 4.17p (28.35)p (24.18)p Diluted (FRS 14) - - - Group Statement of Total Return (Incorporating the Revenue Account) For the Year Ended 31 March 2002 Year Ended 31 March 2001 £'000 £'000 £'000 Revenue Capital Total Losses on investments - (25,093) (25,093) Realised exchange differences - 8 8 Warrants purchased for cancellation - (36) (36) Income 1,857 - 1,857 Investment management and secretarial fees (308) (459) (767) Other expenses (220) - (220) --------- --------- --------- Net return before finance costs and taxation 1,329 (25,580) (24,251) Interest payable (301) (560) (861) --------- --------- --------- Return on ordinary activities before taxation 1,028 (26,140) (25,112) Tax on ordinary activities (33) 33 - --------- --------- --------- Return attributable to equity shareholders 995 (26,107) (25,112) Dividends in respect of equity shares (875) - (875) --------- --------- --------- Transfer to/(from) reserves 120 (26,107) (25,987) --------- --------- --------- Return per share: Basic 4.61p (120.86)p (116.25)p Diluted (FRS 14) 4.59p (120.32)p (115.73)p Group Balance Sheet As at 31 March 2002 2002 2001 £'000 £'000 Fixed assets Investments 49,958 51,742 Current assets Debtors 212 216 Cash at bank and on deposit 1,838 11,335 --------- --------- 2,050 11,551 Creditors: Amounts falling due within one year (861) (5,982) --------- --------- Net current assets 1,189 5,569 --------- --------- Total assets less current liabilities 51,147 57,311 Creditors: Amounts falling due after more than one year (7,000) (7,000) --------- --------- Net assets 44,147 50,311 --------- --------- Capital and reserves Called-up share capital 10,936 10,936 Share premium account 3,935 3,935 Other reserves: Capital reserve - realised 41,155 43,536 - unrealised (12,923) (9,103) Revenue reserve 1,044 1,007 --------- --------- Equity shareholders' funds 44,147 50,311 --------- --------- Net asset value per share 201.86p 230.04p Group Cash Flow Statement for the Year Ended 31 March 2002 2002 2001 £'000 £'000 Operating activities Investment income received 1,224 1,663 Deposit interest received 355 171 Underwriting commission received 5 23 Dealing activities in dealing subsidiary - 25 Investment management fees paid (503) (706) Secretarial fees paid (54) (61) Other cash payments (203) (215) --------- --------- Net cash inflow from operating activities 824 900 --------- --------- Servicing of finance Interest paid (596) (811) --------- --------- Net cash outflow from servicing of finance (596) (811) --------- --------- Taxation Tax recovered 7 - --------- --------- Capital expenditure and financial investment Purchase of investments (26,967) (37,218) Disposals of investments 23,110 40,751 --------- --------- Net cash (outflow)/inflow from capital expenditure and (3,857) 3,533 Financial investment --------- --------- Equity dividends paid (875) (799) --------- --------- Net cash (outflow)/inflow before financing (4,497) 2,823 --------- --------- Financing Exercise of warrants - 746 Warrants purchased for cancellation - (36) Loans drawn down - 5,000 Loans repaid (5,000) - --------- --------- Net cash (outflow)/inflow from financing (5,000) 5,710 --------- --------- (Decrease)/increase in cash (9,497) 8,533 --------- --------- Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash in the year (9,497) 8,533 Loans drawn down - (5,000) Loan repaid 5,000 - --------- --------- Changes in net debt resulting from cash flows (4,497) 3,533 Currency gains - 8 --------- --------- Movement in net debt (4,497) 3,541 --------- --------- Net debt at 1 April 2001 (665) (4,206) --------- --------- Net debt at 31 March 2002 (5,162) (665) --------- --------- Notes 1. Basic earnings per Ordinary Share are based on a weighted average of 21,870,260 Ordinary Shares in issue during the year (2001 - 21,602,046). 2. Final dividend of 3.00p (2001 - 3.00p) will be paid on 5 July 2002 to shareholders on the Register on 7 June 2002. 3. There were 21,870,260 Ordinary Shares in issue at 31 March 2002 (2001 - same). 4. These are not statutory accounts in terms of Section 240 of the Companies Act 1985. Statutory accounts for the year to 31 March 2001, which were unqualified, have been lodged with the Registrar of Companies. The statutory accounts for the year to 31 March 2002 are unqualified and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. 5. The Annual General Meeting will be held at One Charlotte Square, Edinburgh on Wednesday 19 June 2002 at 12.30pm. Managed by Friends Ivory + Sime plc For further information please contact: Stephen Grant Gordon Hay Smith Friends Ivory + Sime plc: Tel. 0131 465 1000 This information is provided by RNS The company news service from the London Stock Exchange

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