Final Results
North Atlantic Smlr Co Inv Tst PLC
15 May 2007
NORTH ATLANTIC SMALLER COMPANIES INVESTMENT TRUST PLC
AUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JANUARY 2007
FINANCIAL HIGHLIGHTS
2007 % change 2006
Revenue
Gross income (£'000) 3,951 4,052
Net revenue after tax attributable to Shareholders of the 224 876
Parent (£'000)
Basic return per Ordinary Share - revenue (pence) 1.65 6.66
- capital (pence) 229.52 339.44
Assets
Total assets less current liabilities (£'000) 250,549 13.3 221,122
Net asset value per 5p Ordinary Share:
Basic (pence) 1,755 9.9 1,597
Diluted (pence) 1,217 14.5 1,063
Mid-market price of the 5p Ordinary Shares at 31 January 1,153.0 12.8 1,022.5
(pence)
Discount to diluted net asset value 5.3% 3.8%
Indices and exchange rates at 31 January
Standard & Poor's 500 Composite Index 1,438.2 12.4 1,280.1
Russell 2000 800.3 9.2 733.2
US Dollar/Sterling exchange rate 1.9574 (10.1) 1.7774
Standard & Poor's 500 Composite Index - Sterling adjusted 734.8 2.0 720.2
Russell 2000 - Sterling adjusted 408.9 (0.9) 412.5
FTSE All-Share Index 3,211.8 9.7 2,928.6
North Atlantic Smaller Companies Investment Trust PLC
Chairman's Statement
I am glad to report that during the year ended 31 January 2007, the fully
diluted net asset value of the Trust rose by 14.5% thereby outperforming the
rise in the Standard & Poor's 500 Composite Index (Sterling adjusted) which rose
by only 2.0%.
The revenue account showed a profit of £171,000 after taxation (2006: £843,000).
Consistent with the Trust's long term policy, the Directors are not
recommending a dividend for the current year.
During the year, the Trust redeemed for cancellation 215,000 units of CULS. The
price paid was at a discount to net asset value and, therefore, benefited all
Shareholders.
Quoted Portfolio
The United States portfolio suffered from the weakness of the Dollar, which fell
from $1.7774 to $1.9574 at the year-end. The performance of the portfolio was
mixed, with strength in Sterling Construction Inc. being offset by a substantial
fall in LESCO, Inc. which, however, is in the process of being taken over at a
substantial premium to the year-end valuation.
The performance of the United Kingdom portfolio was encouraging with Georgica
PLC, Gleeson (MJ) Group PLC and SSL International PLC all performing well.
During the year, substantial new investments were made in Inspired Gaming Group
PLC and BBA Aviation Group PLC, both of which have performed satisfactorily
since purchase.
Unquoted Portfolio
This was an outstanding year for the unquoted portfolio. Nationwide Accident
Repair Services PLC went public and has subsequently performed well in the
aftermarket resulting in an overall profit of around £18.5million. The sale of
Paramount Restaurants Limited during the year was the culmination of a four year
process, which yielded a profit in excess of £4million. In North America, Santa
Maria Foods Inc. was sold for approximately four times over purchase price. The
fair value of DM Technical Services Limited has increased due to an anticipated
IPO in 2007. The fair value of Mister Car Wash Inc. was increased during the
year under review in anticipation of the sale of the business which has now
occurred.
Two major new unquoted investments were made during the period, Hampton Trust
Group and Motherwell Bridge Limited, as well as some minor investments primarily
in property trusts. Early indications on these investments are most
encouraging.
Outlook
World markets remain buoyed by massive excess liquidity which makes it difficult
to find attractive opportunities. It is my view that excess market optimism is
overlooking some real problems in the major world economies, where interest
rates and inflation are rising. Notwithstanding this, I would hope that the
year ending January 2008 will see further progress not least of all from the
unquoted portfolio which continues to offer the potential for further
significant appreciation.
Enrique Foster Gittes
Chairman
15 May 2007
CONSOLIDATED INCOME STATEMENT
for the year ended 31 January
2007 2006
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investments
Gains on investments - 31,469 31,469 - 46,593 46,593
Exchange differences - (43) (43) - (422) (422)
Net investment results - 31,426 31,426 - 46,171 46,171
Income 3,951 - 3,951 4,052 - 4,052
Expenses
Investment management fee (2,430) (1,266) (3,696) (1,981) (1,155) (3,136)
Interest payable and (145) - (145) (253) - (253)
similar charges
Share based remuneration (322) (109) (431) (368) - (368)
Other expenses (849) - (849) (594) - (594)
Total expenses (3,746) (1,375) (5,121) (3,196) (1,155) (4,351)
Profit before taxation 205 30,051 30,256 856 45,016 45,872
Taxation (34) - (34) (13) - (13)
Transfer to reserves 171 30,051 30,222 843 45,016 45,859
Attributable to:
Equity holders of the 224 31,171 31,395 876 44,674 45,550
parent
Minority interest (53) (1,120) (1,173) (33) 342 309
171 30,051 30,222 843 45,016 45,859
Return per Ordinary Share: pence pence
Basic 231.17 346.10
Diluted 157.25 227.13
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.
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
2007
31 January 2006 666 48 764 629 168,946
Total recognised income and expenses for - - 322 - 17,419
the year
Arising on conversion of CULS 23 (3) - - -
Premium paid on repurchase of CULS - (2) - - (2,359)
Loss on deemed disposal of AOT - - - - (119)
31 January 2007 689 43 1,086 629 183,887
Share Share Capital
Share CULS options premium reserve -
capital reserve reserve account realised
£'000 £'000 £'000 £'000 £'000
2006
31 January 2005 647 - - 629 141,956
Opening reserves adjusted for IFRS 2 - - 396 - -
Restated as at 31 January 2005 647 - 396 629 141,956
Restatement of opening reserves for IAS - 52 - - -
32 and 39
647 52 396 629 141,956
Total recognised income and expenses for - - 368 - 22,738
the year
Arising on conversion of CULS 19 (3) - - -
Premium paid on repurchase of CULS - (1) - - (2,129)
Arising on acquisition of majority - - - - 6,381
interest on AOT
31 January 2006 666 48 764 629 168,946
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
2007
31 January 2006 46,724 (5,132) 212,645 8,205 220,850
Total recognised income and expenses for 13,752 224 31,717 (1,173) 30,544
the year
Arising on conversion of CULS - - 20 - 20
Premium paid on repurchase of CULS - - (2,361) - (2,361)
Loss on deemed disposal of AOT - - (119) 708 589
31 January 2007 60,476 (4,908) 241,902 7,740 249,642
Capital
reserve - Revenue Minority
unrealised reserve Total interest Total
£'000 £'000 £'000 £'000 £'000
2006
31 January 2005 34,550 (5,241) 172,541 - 172,541
Opening reserves adjusted for IFRS 2 - (396) - - -
Restated as at 31 January 2005 34,550 (5,637) 172,541 - 172,541
Restatement of opening reserves for IAS (3,555) (3) (3,506) - (3,506)
32 and 39
30,995 (5,640) 169,035 - 169,035
Total recognised income and expenses for 21,936 876 45,918 309 46,227
the year
Arising on conversion of CULS - - 16 - 16
Premium paid on repurchase of CULS - - (2,130) - (2,130)
Arising on acquisition of majority (6,207) (368) (194) 7,896 7,702
interest in AOT
31 January 2006 46,724 (5,132) 212,645 8,205 220,850
CONSOLIDATED BALANCE SHEET
as at 31 January
2007 2006
£'000 £'000
Non current assets
Investments at fair value through profit or loss 225,644 214,822
Current assets
Investments held for trading in Subsidiary Companies 386 382
Trade and other receivables 18,595 7,039
Cash and cash equivalents 9,497 6,429
28,478 13,850
Total assets 254,122 228,672
Current liabilities
Bank loans and overdrafts (1,407) (4,975)
Investments held for trading - derivatives (29) (239)
Trade and other payables (2,137) (2,336)
(3,573) (7,550)
Total assets less current liabilities 250,549 221,122
Non current liabilities
Bank loans (664) -
CULS (243) (272)
(907) (272)
Total liabilities (4,480) (7,822)
Net assets 249,642 220,850
Represented by:
Share capital 689 666
Equity component of CULS 43 48
Share options reserve 1,086 764
Share premium account 629 629
Capital reserve - realised 183,887 168,946
Capital reserve - unrealised 60,476 46,724
Revenue reserve (4,908) (5,132)
Equity attributable to equity holders of the parent 241,902 212,645
Minority interest 7,740 8,205
Total equity 249,642 220,850
Net asset value per Ordinary Share: pence pence
Basic 1,755 1,597
Diluted 1,217 1,063
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 January
2007 2006
£'000 £'000
Cash flows from operating activities
Investment income received 2,628 2,391
Bank deposit interest received 630 428
Underwriting commission received - 14
Other income 24 3
Sale of investments by Subsidiary 18 36
Investment manager's fees paid (3,569) (2,894)
Other cash payments (998) (713)
Cash expended from operations (1,267) (735)
Bank interest paid (117) (205)
CULS interest paid (29) (32)
Loan renewal expenses (6) (9)
Net cash outflow from operating activities (1,419) (981)
Cash flows from investing activities
Purchases of investments (180,307) (182,869)
Sales of investments 189,613 162,596
Realised gain on forward currency contracts - 764
Cost of additional shares purchased in AOT - (1,945)
Net cash inflow/(outflow) from investing activities 9,306 (21,454)
Cash flows from financing activities
Repayment of fixed term borrowings (3,459) -
Increase in fixed term borrowings 673 -
Repurchase of CULS for cancellation (2,370) (2,140)
Management options exercised and repurchased (AOT) 480 -
Net cash outflow from financing activities (4,676) (2,140)
Increase/(decrease) in cash and cash equivalents for the year 3,211 (24,575)
Cash and cash equivalents at the start of the year 6,429 28,862
Cash and cash equivalents acquired on acquisition - 2,040
Revaluation of foreign currency balances (143) 102
Cash and cash equivalents at the end of the year 9,497 6,429
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 2007 comprises the results of the Company and its Subsidiaries
- Consolidated Venture Finance Limited, American Opportunity Trust PLC and LOT
Limited (together referred to as the 'Group').
2. The above results for the year to 31 January 2007 are audited.
3. The Directors do not recommend the payment of a dividend for the year (2006:
nil).
4. Consolidated return per Ordinary Share:
Revenue Capital Total
*Net Ordinary Per Share *Net Ordinary Per Share *Net Ordinary Per Share
return Shares pence return Shares pence return Shares pence
£'000 £'000 £'000
2007
Basic return 224 13,581,129 1.65 31,171 13,581,129 229.52 31,395 13,581,129 231.17
per Share
Options - 310,700 - 310,700 - 310,700
conversion**
CULS*** 30 6,092,348 - 6,092,348 30 6,092,348
Diluted 254 19,984,177 1.27 31,171 19,984,177 155.98 31,425 19,984,177 157.25
return per
Share
2006
Basic return 876 13,161,125 6.66 44,674 13,161,125 339.44 45,550 13,161,125 346.10
per Share
Options - 188,069 - 188,069 - 188,069
conversion**
CULS*** 34 6,719,899 - 6,719,899 34 6,719,899
Diluted 910 20,069,093 4.53 44,674 20,069,093 222.60 45,584 20,069,093 227.13
return per
Share
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.
5. Consolidated net asset value per Ordinary Share:
The basic net asset value per Ordinary Share is based on net assets of
£241,902,000 (2006: £212,645,000) and on 13,780,945 Ordinary Shares (2006:
13,313,427) 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 1,030,000
(2006: 1,030,000) Share Options were exercised at the prevailing exercise
prices, giving a total of 20,522,052 issued Ordinary Shares (2006: 20,737,052).
6. The financial information set out above does not constitute the Group's
statutory financial statements for the year ended 31 January 2007, but is
derived from and has been prepared on the same basis as those financial
statements. The information for the year ended 31 January 2006, has been
extracted from the latest published audited financial statements, which have
been filed with the Registrar of Companies. The Reports of the Auditors on the
financial statements for those two periods contained no qualification, reference
to any matters to which the Auditors drew attention by way of emphasis without
qualifying the report, or statement under sections 237(2) or (3) of the
Companies Act 1985.
7. The statutory financial statements for the year ended 31 January 2007 have
been audited and will be delivered to the Registrar of Companies following the
Company's Annual General Meeting. The Annual General Meeting will be held on
Wednesday 27 June 2007 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.
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