Final Results

North Atlantic Smlr Co Inv Tst PLC
06 May 2004

NORTH ATLANTIC SMALLER COMPANIES INVESTMENT TRUST PLC



UNAUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JANUARY 2004



FINANCIAL HIGHLIGHTS


                                                                                  2004         % change         2003
                                                                            (unaudited)                    (audited)

Revenue

Gross income (£'000)                                                             2,736                        3,275
Net revenue after tax (£'000)                                                     (685)                      (4,897)
Basic return per Ordinary Share - revenue (pence)                                (5.62)                      (41.09)
                           - capital (pence)                                    215.77                      (185.14)

Assets

Total assets less current liabilities (£'000)                                  144,612             9.0      132,651
Net asset value per 5p Ordinary Share:
      Basic (pence)                                                              1,177            19.9          982
      Fully Diluted (pence)                                                        723            20.9          598

Mid-market price of the 5p Ordinary Shares at 31 January (pence)                 621.5            34.4        462.5

Discount to fully diluted net asset value                                         14.0%                        22.7%


Indices and exchange rates at 31 January

Standard & Poor's Composite Index                                              1,131.1            32.2        855.7
Russell 2000                                                                     580.8            56.0        372.2
Sterling/US Dollar exchange rate                                                1.8203           (10.7)      1.6437
Standard & Poor's Composite Index - Sterling adjusted                            621.4            19.4        520.6
Russell 2000 - Sterling adjusted                                                 319.1            40.9        226.4
FTSE All Share Index                                                           2,187.1            27.0      1,722.3





North Atlantic Smaller Companies Investment Trust PLC



During the year ended 31 January 2004, the basic net asset value of the Company
rose by 19.9%; thereby out-performing the Sterling adjusted Standard & Poor's
Composite Index which rose by 19.4%. The Company's share price also rose
sharply, increasing from 462.5p to 621.5p over the same period.



The Revenue account showed a much reduced loss for the year of £685,000 after
taxation (2003: loss £4,897,000).  Consistent with the Company's long term
policy, the Directors are not recommending a dividend for the current year.



Quoted Investments

The United States portfolio suffered from the weakness of the dollar to the
pound which fell from $1.6437 to $1.8203 at the year end.  Denison, LKQ and
Sterling Construction performed notably well, although, this was to some extent
offset by the weakness in Lesco.  American Opportunity Trust performed
marginally worse than the Standard & Poor's index, having substantially
outperformed in previous years.



Very substantial profits were, however, made in the United Kingdom.  Stocks that
did particularly well include Charter (now sold), Jarvis Porter, Paramount,
Primary Health Properties, Whatman, Mentmore and Oryx International Growth.  In
addition, Biocompatibles and Infast were sold at values significantly higher
than shown in last year's Annual Report.



Unquoted investments

The value of the unquoted portfolio was severely hit by the decline of the
United States dollar, which is estimated to have cost circa £4million, or 20p
per share.  Notwithstanding this, the year was not a bad one. LKQ successfully
floated, Atrium was sold, whilst Worldport benefited from the successful
mitigation of its tax liabilities.  The outlook for the current year is also
favourable.  Denison has been sold.  An unusually large percentage of our
unquoted portfolio finds itself in discussions which may lead to our liquidating
our positions at current valuations or higher.  Waterbury, Hi-tech, Santa Maria
Foods and Nationwide are all considering offers significantly in excess of our
carrying values.   Executive Air Support is in the process of being sold at an
uplift in excess of 100% of our valuation.  Finally, although AllianceOne had a
somewhat disappointing year in 2003, the outlook for the current year is good
and a satisfactory exit is anticipated in 2005.



In the UK, it was necessary to write down the value of GEI as it failed to meet
expectations; however, we nonetheless expect the company to be sold at our
current valuation.  The current year should, however, see a good performance for
the portfolio.  Nationwide Accident and Wagamama (both of which are performing
extremely well) are in discussions to achieve investor liquidity at substantial
premiums to our current valuations.



Outlook

Both the United States and the United Kingdom equity markets have had a
substantial recovery since the low in the market in March 2003.  I am pleased to
report that the Company has fully participated in this despite the fact that
approximately a third of our assets is in unquoted investments.



Regrettably, equity valuations are no longer cheap and as storm clouds start to
gather on the economic front, the Company has reduced its equity positions and
repaid debt.  Indeed, at the time of writing, the Company has a modest net cash
position which is expected to increase still further when the recently announced
offer for Mentmore by Safestore Acquisition Limited is completed and if some or
all of the above-mentioned approaches and discussions bear fruit.



Despite high valuations, we are optimistic for our Equity Portfolio during the
current year.  Charter rose over 40% in February, prior to our sale.  Dowding &
Mills is up 50% and Sterling Construction a further 50%.  The impact of these
realisations will also significantly boost the Company's liquid resources.



The American, and to a lesser extent the United Kingdom, economies have been
bolstered by excessive money supply growth and highly accommodating low interest
rate policies.  In the United States, lower taxation has also fuelled consumer
expenditures, whereas in the United Kingdom, higher taxes have been funnelled
into a public spending boom.



The economic impact has been predictable - stronger than expected economic
growth coupled with burgeoning consumer debt, rising house prices, excessive
government borrowing and increased trade deficits.  In the United States, this
had led to a significant decline in the US dollar whose value is now almost
totally dependent on the willingness of China and Japan to finance the current
account deficit.



The dilemma facing investors is to what extent the United States attempts to put
its house in order post the November Presidential elections.  A rise in US
interest rates seems almost inevitable in the short term but whether such a rise
will be sufficient to comfort foreign investors that the currency is attractive,
given the continuing flood of dollars required to support US imports is another
matter.



The problems facing the next US administration will be compounded by the anaemic
growth in the non-farm payroll despite the current economic recovery, coupled
with the rapidly increasing costs of Medicare and Social Security.



Against this background, we believe that equities are fully priced and will not
perform particularly well in the months ahead.  It is, therefore, our intention
to repay the Company's debt as it falls due and build up cash balances in
anticipation of funding attractive opportunities.





Enrique Foster Gittes

Chairman

5 May 2004





CONSOLIDATED STATEMENT OF TOTAL RETURN (UNAUDITED)

(incorporating the revenue account*) for the year ended 31 January

                                                                2004                              2003
                                                   Revenue      Capital        Total   Revenue   Capital     Total
                                                (unaudited)  (unaudited)  (unaudited) (audited) (audited) (audited)
                                                     £'000        £'000        £'000     £'000     £'000     £'000

Gains/(losses) on investments                            -       25,541       25,541         -   (21,036)  (21,036)
Exchange differences                                     -        1,173        1,173         -     2,361     2,361
Dividends and interest                               2,736            -        2,736     3,275         -     3,275
Investment management fee                           (1,528)        (395)      (1,923)   (2,397)        -    (2,397)
Cost of purchase and cancellation of options             -            -            -    (3,508)        -    (3,508)
Other expenses                                        (545)           -         (545)     (599)        -      (599)

Net return before finance costs and
 taxation                                              663       26,319       26,982    (3,229)  (18,675)  (21,904)

Premium paid on repurchase of CULS                       -            -            -         -    (3,387)   (3,387)
Interest payable and similar charges                (1,335)           -       (1,335)   (1,637)        -    (1,637)


Return on ordinary activities before
 taxation                                             (672)      26,319       25,647    (4,866)  (22,062)  (26,928)

Taxation on ordinary activities                        (13)           -          (13)      (31)        -       (31)


Return on ordinary activities after
 taxation                                             (685)      26,319       25,634    (4,897)  (22,062)  (26,959)

Dividend                                                 -            -            -         -         -         -


Transfer (from)/to reserves                           (685)      26,319       25,634    (4,897)  (22,062)  (26,959)


Return per Ordinary share:                           pence        pence        pence     pence     pence     pence
Basic                                                (5.62)      215.77       210.15    (41.09)  (185.14)  (226.23)
Diluted#                                             (3.24)      132.04       128.80    (24.03)  (109.16)  (133.19)



* The revenue column of this statement is the consolidated profit and loss
account of the Group.

# Although Financial Reporting Standard No. 14: Earnings per share states that
Returns per Share which are not diluted are not disclosed, they have been shown
here for information.

All revenue and capital items in the above statement derive from continuing
operations.


CONSOLIDATED BALANCE SHEET (UNAUDITED)

at 31 January


                                                                                           2004                2003
                                                                                     (unaudited)           (audited)
                                                                                          £'000               £'000

Fixed Assets
Investments                                                                             142,634             124,097
Investment in unconsolidated subsidiary                                                   8,555               7,414

                                                                                        151,189             131,511

Current assets
Investments held in subsidiary company                                                       48                 175
Debtors                                                                                     549               3,448
Cash at bank                                                                             13,776               9,282

                                                                                         14,373              12,905

Creditors: amounts falling due within one year
Bank loans and overdrafts                                                                19,248               9,935
Other creditors and accruals                                                              1,702               1,830


                                                                                         20,950              11,765

Net current (liabilities)/assets                                                         (6,577)              1,140

Total assets less current liabilities                                                   144,612             132,651

Creditors: amounts falling due after more than one year
Bank loans                                                                                    -              13,673
Debenture loan - Convertible Unsecured Loan Stock 2013                                      384                 393

                                                                                        144,228             118,585

Capital and reserves
Called-up share capital                                                                     613                 604
Share premium account                                                                       629                 629
Capital reserve - realised                                                              118,383             116,732
Capital reserve - unrealised                                                             30,089               5,421
Revenue reserve                                                                          (5,486)             (4,801)

Equity shareholders' funds                                                              144,228             118,585


Net asset value per Ordinary share:                                                       pence               pence
Basic                                                                                     1,177                 982
Fully diluted                                                                               723                 598



CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
for the year ended 31 January
                                                                                           2004                2003
                                                                                     (unaudited)           (audited)
                                                                                          £'000               £'000

Net cash outflow from operating activities                                                 (187)             (2,920)

Servicing of finance
Bank interest paid                                                                       (1,067)             (1,598)
CULS interest paid                                                                          (38)                (39)
Expenses of bank loan                                                                       (40)                  -


Net cash outflow from servicing of finance                                               (1,145)             (1,637)

Taxation
Tax recovered                                                                                 5                   -

Investing activities
Purchases of fixed asset investments                                                    (49,943)           (141,477)
Proceeds from sale of fixed asset investments (including option premiums)                56,287             155,873
Loan to Ryder Court Investments Limited                                                       -              (7,667)
Repayment of loan made to Ryder Court Investments Limited                                 2,667               5,000

Net cash inflow from investing activities                                                 9,011              11,729

Net cash inflow before financing                                                          7,684               7,172

Financing
Repayment of fixed term borrowings                                                       (3,009)             (2,500)
Cost of purchase of CULS for cancellation                                                     -              (3,415)

Net cash outflow from financing                                                          (3,009)             (5,915)

Increase in cash                                                                          4,675               1,257


Notes:

The above results for the year to 31 January 2004 are unaudited.


The Directors do not recommend the payment of a dividend for the year (2003:
nil).


Basic return per Ordinary share has been calculated using the weighted average
number of Ordinary Shares in issue during the year, being 12,197,459 (2003:
11,916,605).


Basic net asset value per Ordinary Share is based on net assets of £144,228,000
(2003: £118,585,000) and on 12,254,313 Ordinary Shares (2003: 12,081,382) being
the number of Ordinary Shares in issue at the year end.


The fully diluted net asset value per Ordinary share has been calculated on the
assumption that all of the outstanding 2013 Loan Stock is fully converted at par
and that all 692,500 Share Options are exercised at the prevailing exercise
prices, giving a total of 20,624,552 issued Ordinary shares (2003: 19,932,052).
The conversion price of the share options was above the diluted net asset value
at 31 January 2003 and so the diluted figures do not include the exercise of the
495,000 Share Options outstanding at that date.


At the Annual General Meeting held in July 1998, the Directors were given the
authority to purchase for cancellation up to 800,000 share options granted to Mr
Mills at any time prior to their expiry. The price to be paid was not to exceed
the difference between the fully diluted net asset value per share at the time
of buying in and the exercise price per share of the option. During the year
ended 31 January 2003, the Directors exercised this authority. Based on the
formula above, a total of £3,508,000 became payable to Mr Mills. As required, Mr
Mills used that amount net of taxation and expenses to purchase shares in the
Company.


The financial information set out above does not constitute the Company's
statutory financial statements for the year ended 31 January 2004 but is derived
from and has been prepared on the same basis as those financial statements. The
above results for the year ended 31 January 2003 are an abridged version of the
Company's full accounts which received an audit report that was unqualified and
did not contain any statements under section 237(2) or (3) Companies Act 1985.
The accounts for the year ended 31 January 2003 have been filed with the
Registrar of Companies.


The statutory financial statements for the year ended 31 January 2004 will be
finalised on the basis of the financial information presented by the Directors
in this preliminary announcement and will be delivered to the Registrar of
Companies following the Company's Annual General Meeting. The Annual General
Meeting will be held on 22 June 2004 at 3pm in the Board Room, Ground Floor,
Ryder Court, 14 Ryder Street, London SW1Y 6QB.  The Annual Report will be posted
to shareholders and those individuals on the Company's mailing list as soon as
practicable after printing and will also be available on request from the
Company Secretary, J O Hambro Capital Management Limited, Ground Floor, Ryder
Court, 14 Ryder Street, London SW1Y 6QB.




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