Final Results

RNS Number : 0586S

North Atlantic Smlr Co Inv Tst PLC

11 May 2009

 



NORTH ATLANTIC SMALLER COMPANIES INVESTMENT TRUST PLC

UNAUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JANUARY 2009

FINANCIAL HIGHLIGHTS

			2009  unaudited	% change	2008 audited
Revenue
Gross income (£'000)			4,285	(17.7)	5,208
Net revenue after tax attributable to Shareholders of the Parent (£'000)			538	(57.7)	1,272
Basic return per Ordinary Share - revenue (pence)			3.64	(58.9)	8.86
		− capital (pence)	(372.41)	(1,669.2)	(21.05)
Assets
Total assets less current liabilities (£'000)			178,120	(25.2)	238,166
Net asset value per 5p Ordinary Share:
	Basic (pence)		1,204	(25.3)	1,611
	Diluted (pence)		944	(21.9)	1,209
Mid-market price of the 5p Ordinary Shares at 31 January (pence)			618.5	(39.7)	1,025.0
Discount to diluted net asset value			34.5%	19.3	15.20%
Indices and exchange rates at 31 January
Standard & Poor's 500 Composite Index			825.9	(40.1)	1,378.6
Russell 2000			443.5	(37.8)	713.3
US Dollar/Sterling exchange rate			1.4417	(27.5)	1.9880
Standard & Poor's 500 Composite Index - Sterling adjusted			568.0	(18.1)	693.4
Russell 2000 - Sterling adjusted			305.1	(15.0)	358.8
FTSE All-Share Index			2,078.9	(30.7)	3,000.1

  North Atlantic Smaller Companies Investment Trust PLC

Chairman's statement

The year ended 31 January 2009 saw a decline in the diluted net asset value of 21.9% as compared to a fall in the FTSE Small Cap Index of 40.9% and a fall in the Standard & Poor's Composite Index of 18.1%. The fall in the Standard & Poor's Composite Index would have been 40.1% but for the weakness in Sterling.

The revenue account showed a profit after taxation of £538,000 (2008: £1,121,000). Consistent with the Company's long-term policy, the Directors are not recommending the payment of a dividend (2008: nil).

During the year, the Company redeemed 630,000 units of Convertible Unsecured Loan Stock 2013 for cancellation at a discount to net asset value.

A commentary on the quoted and unquoted portfolios can be found in the investment managers' report below.

board changes    

More than ten years have passed since I became Chairman of the Company. I have decided that the Annual General Meeting in June will be my last as Chairman. However, I will remain a Non-Executive Director for the balance of my term - and beyond, if shareholders so choose. We are fortunate that the Hon. Peregrine Moncreiffe, who rejoined the Board in November 2008, has agreed to become Chairman following the Annual General Meeting. Peregrine was first appointed as a Director of the Company in 1993 but resigned in 2006 for personal reasons. We are delighted to welcome him back and announce his re-appointment. Unfortunately Philip Swinstead tendered his resignation as a Director of the Company on 15 January 2009 due to the pressure of his other business commitments. The Board thanks Philip for his valuable contribution and services to the Company.

outlook    

It gives me little pleasure to reflect on my comments of last year when I reported in my Statement that 'the subprime crisis is the first of a series of problems which will hit the banking industry, with excessive debt on leverage buyouts and reckless loans to value on commercial real estate, becoming significant issues…'

These problems have now surfaced with a vengeance with all major economies facing a sharp period of recession with a real risk that it will be both prolonged and deep. The banking system has effectively frozen, consumers are desperately trying to reduce expenditure either to reduce debt or preserve their savings as interest rates fall effectively to zero. A collapse in world trade, which is already evident, will only compound problems and it is most unlikely that equity markets will perform in the current environment. 

Fortunately, the Company has substantial cash and other liquid assets amounting to circa £25.5 million and little debt, so appears well placed to benefit from the inevitable opportunities that will arise over the coming twelve months.

Enrique Foster Gittes

Chairman

11 May 2009

North Atlantic Smaller Companies Investment Trust PLC

Investment managers' report

quoted portfolio

The United States portfolio performed extremely well during the year ended 31 January 2009 as a direct result of the takeover of its largest holding, WH Energy Services. The other large holding, Sterling Construction, also performed well, significantly outperforming the indices as investors focused on companies which will benefit from continued infrastructure spending.

Sadly, the United Kingdom portfolio could not avoid the carnage of the UK Small Cap sector despite in many cases, such as Castle Support Services, Communisis and Nationwide Accident, results significantly exceeding market expectations.

As to our major holdings, Ashtead Group was sold before the share price fell a further 50% and Whatman was taken over. 

The UK quoted portfolio has no direct exposure to the banking industry and its exposure to housebuilding is limited to MJ Gleeson, a company which has no debt.

unquoted portfolio

It was an extremely busy year for the unquoted portfolio. On the positive side, Motherwell Bridge was sold for an £18 million profit and for £4 million above last year's value. Trident Private Equity II performed well, returned capital to the Company and is now fully invested. Worldport was liquidated at above cost and Primesco and Craegmoor were sold. 

Against this, it was necessary to write off Crucible and Jaffer at a cost to the Company of approximately £5 million.

It was also necessary to review the value of the Company's property holdings in view of the sharp fall in property values and this cost the Company a further £7.9 million during the year. 

The only new unquoted was an investment in AssetCo Abu Dhabi which is described in greater detail in the Annual Report.

Harry Gittes, our Chairman, has decided to step down but has kindly agreed to remain on the Board as a Non-Executive Director. He has been an outstanding Chairman for the past ten years and on behalf of the Board I would like to thank him for all of his hard work.

Christopher HB Mills

Chief Executive & Investment Manager

North Atlantic Value LLP

Joint Manager

11 May 2009

  UNAUDITED CONSOLIDATED INCOME STATEMENT

for the year ended 31 January

	2009 unaudited			2008 audited
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Investments
(Losses)/gains on investments	-	(54,325)	(54,325)	-	3,300	3,300
Exchange gains/(losses)	-	7,042	7,042	-	(540)	(540)
Net investment results	-	(47,283)	(47,283)	-	2,760	2,760
Income	4,285	-	4,285	5,208	-	5,208
Expenses
Investment management fee	(2,475)	(110)	(2,585)	(2,512)	(1,237)	(3,749)
Other expenses	(733)	-	(733)	(954)	-	(954)
Share based remuneration	(50)	-	(50)	(255)	-	(255)
Interest payable and similar charges	(487)	-	(487)	(366)	-	(366)
Total expenses	(3,745)	(110)	(3,855)	(4,087)	(1,237)	(5,324)
Share of net return of associate	-	(7,677)	(7,677)	-	(4,223)	(4,223)
Profit before taxation	540	(55,070)	(54,530)	1,121	(2,700)	(1,579)
Taxation	(2)	-	(2)	-	-	-
Transfer to reserves	538	(55,070)	(54,532)	1,121	(2,700)	(1,579)
Attributable to:
Equity holders of the parent	538	(55,070)	(54,532)	1,272	(3,021)	(1,749)
Minority interest	-	-	-	(151)	321	170
	538	(55,070)	(54,532)	1,121	(2,700)	(1,579)
Return per Ordinary Share:			pence			pence
Basic			(368.77)			(12.19)
Diluted			(284.47)			(8.73)

The total column of this statement represents the Group's income statement, prepared in accordance with IFRS. The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies ('AIC').

All items in the above statement derive from continuing operations.

  UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 January

			Share	Share	Capital
	Share	CULS	options	premium	reserve -
	capital	reserve	reserve	account	realised
	£'000	£'000	£'000	£'000	£'000
2009 - unaudited
31 January 2008	739	34	1,341	629	180,033
Income and expenses as shown in the consolidated income statement	-	-	-	-	24,924
Total recognised income and expense for the year	-	-	-	-	24,924
Share options expense	-	-	90	-	-
Exercise of Management Options	-	-	(83)	-	-
Premium paid on repurchase of CULS	-	-	-	-	(5,325)
Arising on conversion of CULS	1	(5)	-	-	-
31 January 2009	740	29	1,348	629	199,632
			Share	Share	Capital
	Share	CULS	options	premium	reserve -
	capital	reserve	reserve	account	realised
	£'000	£'000	£'000	£'000	£'000
2008 - audited
31 January 2007	689	43	1,086	629	183,887
Income and expenses as shown in the consolidated income statement	-	-	-	-	4,802
Total recognised income and expense for the year	-	-	-	-	4,802
Share options expense	-	-	255	-	-
Arising on deconsolidation of AOT	-	-	-	-	(6,181)
Premium paid on repurchase of CULS	-	-	-	-	(2,475)
Arising on conversion of CULS	50	(9)	-	-	-
31 January 2008	739	34	1,341	629	180,033

  UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 January (continued)

	Capital
	reserve -	Revenue		Minority
	unrealised	reserve	Total	interest	Total
	£'000	£'000	£'000	£'000	£'000
2009 - unaudited
31 January 2008	58,128	(2,930)	237,974	-	237,974
Income and expenses as shown in the consolidated income statement	(79,994)	538	(54,532)	-	(54,532)
Total recognised income and expense for the year	(79,994)	538	(54,532)	-	(54,532)
Share options expense	-	-	90	-	90
Exercise of Management Options	-	-	(83)	-	(83)
Premium paid on repurchase of CULS	-	-	(5,325)	-	(5,325)
Arising on conversion of CULS	-	-	(4)	-	(4)
31 January 2009	(21,866)	(2,392)	178,120	-	178,120
	Capital
	reserve -	Revenue		Minority
	unrealised	reserve	Total	interest	Total
	£'000	£'000	£'000	£'000	£'000
2008 - audited
31 January 2007	60,476	(4,908)	241,902	7,740	249,642
Income and expenses as shown in the consolidated income statement	(7,823)	1,272	(1,749)	170	(1,579)
Total recognised income and expense for the year	(7,823)	1,272	(1,749)	170	(1,579)
Share options expense	-	-	255	-	255
Arising on deconsolidation of AOT	5,475	706	-	(7,910)	(7,910)
Premium paid on repurchase of CULS	-	-	(2,475)	-	(2,475)
Arising on conversion of CULS	-	-	41	-	41
31 January 2008	58,128	(2,930)	237,974	-	237,974

  UNAUDITED CONSOLIDATED BALANCE SHEET 

as at 31 January

	2009 unaudited	2008 audited
	£'000	£'000
Non current assets
Investments at fair value through profit or loss	147,505	231,820
Investments accounted for using the equity method	11,228	18,928
	158,733	250,748
Current assets
Investments held for trading in Subsidiary Companies	-	308
Trade and other receivables	3,989	4,169
Cash and cash equivalents	25,514	8,504
	29,503	12,981
Total assets	188,236	263,729
Current liabilities
Bank loans and overdrafts	(7,874)	(9,356)
Investments held for trading - derivatives	(838)	(612)
Trade and other payables	(1,240)	(15,595)
	(9,952)	(25,563)
Total assets less current liabilities	178,284	238,166
Non current liabilities
CULS	(164)	(192)
	(164)	(192)
Total liabilities	(10,116)	(25,755)
Net assets	178,120	237,974
Represented by:
Share capital	740	739
Equity component of CULS	29	34
Share options reserve	1,348	1,341
Share premium account	629	629
Capital reserve - realised	199,632	180,033
Capital reserve - unrealised	(21,866)	58,128
Revenue reserve	(2,392)	(2,930)
Total equity attributable to equity holders of the parent	178,120	237,974
Net asset value per Ordinary Share:	pence	pence
Basic	1,204	1,611
Diluted	944	1,209

  UNAUDITED CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 January

	2009  unaudited	2008  audited
	£'000	£'000
Cash flows from operating activities
Investment income received	3,202	4,147
Bank deposit interest received	376	690
Other income	100	78
Sale of investments by Subsidiary	-	(220)
Investment manager's fees paid	(3,626)	(3,772)
Other cash payments	(466)	(705)
Cash (expended)/received from operations	(414)	218
Bank interest paid	(457)	(282)
CULS interest paid	(19)	(23)
Net cash outflow from operating activities	(890)	(87)
Cash flows from investing activities
Purchases of investments	(153,593)	(171,086)
Sales of investments	172,624	167,098
Net cash inflow/(outflow) from investing activities	19,031	(3,988)
Cash flows from financing activities
Repayment of fixed term borrowings	(2,777)	(554)
Increase in fixed term borrowings	-	7,113
Repurchase of CULS for cancellation	(5,357)	(2,485)
Management options exercised	(83)	-
Net cash (outflow)/inflow from financing activities	(8,217)	4,074
Increase/(decrease) in cash and cash equivalents for the year	9,924	(1)
Cash and cash equivalents at the start of the year	8,504	9,497
Arising on deconsolidation of AOT	-	(1,091)
Revaluation of foreign currency balances	7,086	99
Cash and cash equivalents at the end of the year	25,514	8,504

  Notes:

1. North Atlantic Smaller Companies Investment Trust PLC ('NASCIT') is a Company incorporated and registered in England and Wales under the Companies Acts 1948 to 1967. The consolidated preliminary announcement for the Group for the year ended 31 January 2009 comprises the results of the Company and its Subsidiary - Consolidated Venture Finance Limited (together referred to as the 'Group').

North Atlantic Value LLP, the Company's Joint Manager, also acts as Manager to Oryx and Christopher Mills is on the board of Oryx. At 31 January 2009, the Company held shares with 29.45% of the total voting rights in Oryx. Oryx is recognised in the consolidated accounts as an Associate under the equity method of accounting. It is valued at NASCIT's share in the net assets of Oryx.

The consolidated financial statements have been prepared in conformity with IFRS to the extent that they have been adopted by the EU. They have also been prepared in accordance with the Statement of Recommended Practice ('SORP') for investment trust companies, except to any extent where it conflicts with IFRS.

2. The above results for the year to 31 January 2009 are unaudited.

3. The Directors do not recommend the payment of a dividend for the year (2008: nil).

4. Consolidated return per Ordinary Share:

	Revenue			Capital			Total
	*Net return £’000	Ordinary Shares	Per Share pence	*Net return £’000	Ordinary Shares	Per Share pence	*Net return £’000	Ordinary Shares	Per Share pence
2009 - unaudited
Basic return per Share	538	14,787,546	3.64	(55,070)	14,787,546	(372.41)	(54,532)	14,787,546	(368.77)
Options conversion**	-	201,023		-	201,023		-	201,023
CULS***	21	4,173,720		-	4,173,720		21	4,173,720
Diluted return per Share	559	19,162,289	2.92	(55,070)	19,162,289	(287.39)	(54,511)	19,162,289	(284.47)
2008 - audited
Basic return per Share	1,272	14,350,263	8.86	(3,021)	14,350,263	(21.05)	(1,749)	14,350,263	(12.19)
Options conversion**	-	377,878		-	377,878		-	377,878
CULS***	25	5,019,049		-	5,019,049		25	5,019,049
Diluted return per Share	1,297	19,747,190	6.57	(3,021)	19,747,190	(15.30)	(1,724)	19,747,190	(8.73)

Basic return per Ordinary Share has been calculated using the weighted average number of Ordinary Shares in issue during the year.

* Net return on ordinary activities attributable to Ordinary Shareholders.

** Excess of the total number of potential Shares on option conversion over the number that could be issued at average market price, as calculated in accordance with IAS 33: Earnings per Share.

*** CULS assumed converted as the share price during the year was greater than the conversion price. CULS are anti-dilutive whenever its interest saved (net of tax and other changes in income or expense) per Ordinary share obtainable on conversion, exceeds basic return per share.

5. Consolidated net asset value per Ordinary Share:

The basic net asset value per Ordinary Share is based on net assets of £178,120,000 (2008: £237,974,000) and on 14,795,548 Ordinary Shares (2008: 14,775,208) being the number of Ordinary Shares in issue at the year end.

The diluted net asset value per Ordinary Share is calculated on the assumption that the outstanding 2013 CULS are fully converted at par and that all 1,017,500 (2008: 1,030,000) Share Options were exercised at the prevailing exercise prices, giving a total of 19,679,552 issued Ordinary Shares (2008: 20,322,052).

6. A Circular will be sent to the holders of the Convertible Unsecured Loan Stock 2013 along with the Annual Financial Report convening a meeting of the loan stock holders on 30 June 2009 after the Annual General Meeting. The purpose of the meeting is to seek approval from the loan stock holders for the Company to purchase its own shares.

7. This preliminary statement is not the Company's statutory accounts. The statutory accounts for the financial year ended 31 January 2008 have been delivered to the Registrar of Companies and received an audit report which was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report, and did not contain statements under section 237(2) and (3) of the Companies Act 1985. The statutory accounts for the financial year ended 31 January 2009 have not yet been approved, audited or filed.

8. The statutory financial statements for the year ended 31 January 2009 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The Annual General Meeting will be held on 30 June 2009 at 12 noon 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.  

 

END

 

 

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