Interim Results
North Atlantic Smlr Co Inv Tst PLC
10 September 2004
NORTH ATLANTIC SMALLER COMPANIES INVESTMENT TRUST PLC
UNAUDITED PRELIMINARY RESULTS FOR THE SIX MONTHS ENDED 31 JULY 2004
FINANCIAL HIGHLIGHTS
31 July 31 January
2004 2004
(Unaudited) (Audited) % Change
Net asset value per 5p Ordinary Share (debt at par):
Basic (pence) 1,257 1,177 6.8
Fully Diluted (pence) 771 723 6.6
Net asset value per 5p Ordinary Share (debt at market
value)*:
Basic (pence) 844
Fully Diluted (pence) 770
Middle market quotation per 5p Ordinary Share (debt 657.5 621.5 5.8
at par) (pence)
Discount to fully diluted net asset value (debt at 14.7% 14.0%
par)
Discount to fully diluted net asset value (debt at 14.6%
market value)
Standard & Poor's Composite Index - Sterling adjusted 605.8 621.4 (2.5)
Russell 2000 - Sterling adjusted 303.2 319.1 (5.0)
Sterling/US Dollar exchange rate 1.8185 1.8203 0.1
* In accordance with AITC guidelines, from 1 July 2004 an additional net asset
value is now published with debt included at market value.
NORTH ATLANTIC SMALLER COMPANIES INVESTMENT TRUST PLC
CHIEF EXECUTIVE'S REVIEW
FOR THE SIX MONTHS ENDED 31 JULY 2004
During the six months to the end of July, the fully diluted net asset value of
your Trust rose by 6.6%. This compares with a fall in the Standard & Poors
Composite Index (sterling adjusted) of 2.5% over the same period.
Net income for the six months under review amounted to a loss of £162,000 (2003:
loss of £241,000).
Listed Equities
These performed well during the six months under review. The Trust's existing
holdings in Denison and Mentmore were both taken over at substantial profits
whilst a third investment, Paramount, announced it was in discussions which may
lead to an offer.
Unlisted Equities
With the exception of the sale of Executive Air Support at a profit of
approximately 100% to original investment cost, little realisation activity took
place during the period. I am, however, confident that the unquoted portfolio
will add meaningfully to the net asset value during the remainder of our
financial year. Wichford has recently listed on AIM at a substantial premium to
our cost. Wagamama has completed a recapitalisation at a price substantially
above our valuation as at 31 July 2004. Waterbury is close to being acquired at
a significant premium to our holding cost and Santa Maria is now contemplating
an IPO which should be completed in late October/early November.
Outlook
Equity markets appear to be directionless as concerns over rising interest
rates, higher oil prices and slow economic growth offset the benefit of rising
corporate profits. Nevertheless, your Trust should benefit from several
realisations in both the quoted and unquoted portfolios which continue to have
the potential to add 40-50p to the net asset value over the next few months and
I look to the future with some optimism.
C H B Mills
Chief Executive
10 September 2004
CONSOLIDATED STATEMENT OF TOTAL RETURN (UNAUDITED)
(incorporating the revenue account*) for the six months ended 31 July
2004 2003
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments - 10,147 10,147 - 8,973 8,973
Exchange differences - 237 237 - (501) (501)
Dividends and interest 1,543 - 1,543 1,559 - 1,559
Other income 38 - 38 (65) - (65)
Investment management fee (897) (412) (1,309) (760) - (760)
Other expenses (329) - (329) (245) - (245)
Net return before finance
costs and taxation 355 9,972 10,327 489 8,472 8,961
Interest payable and
similar charges (497) - (497) (717) - (717)
Return on ordinary
activities before taxation (142) 9,972 9,830 (228) 8,472 8,244
Taxation on ordinary
activities (20) - (20) (13) - (13)
Return on ordinary
activities after taxation (162) 9,972 9,810 (241) 8,472 8,231
Return per Ordinary share: pence pence pence pence pence pence
Basic (1.32) 81.38 80.06 (1.98) 69.76 67.78
Diluted# (0.72) 50.03 49.31 (1.11) 42.50 41.39
* 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 should not be disclosed, they have been
shown here for information.
All revenue and capital items in the above statement derive from continuing
operations.
CONSOLIDATED BALANCE SHEET
31 July 31 January 31 July
2004 2004 2003
(Unaudited) (Audited) (Unaudited)
£'000 £'000 £'000
Fixed Assets
Investments 145,315 142,634 127,635
Investment in unconsolidated subsidiary 8,663 8,555 8,259
153,978 151,189 135,894
Current assets
Investments held in subsidiary company 36 48 161
Debtors 1,262 549 769
Cash at bank 13,161 13,776 15,383
14,459 14,373 16,313
Creditors: amounts falling due within one year
Bank loans and overdrafts 13,276 19,248 10,105
Other creditors and accruals 739 1,702 908
14,015 20,950 11,013
Net current assets/(liabilities) 444 (6,577) 5,300
Total assets less current liabilities 154,422 144,612 141,194
Creditors: amounts falling due after more than one year
Bank loans - - 13,985
Debenture loan - Convertible Unsecured Loan Stock 2013 384 384 384
154,038 144,228 126,825
Capital and reserves
Called-up share capital 613 613 613
Share premium account 629 629 629
Capital reserve - realised 129,854 118,383 118,061
Capital reserve - unrealised 28,590 30,089 12,564
Revenue reserve (5,648) (5,486) (5,042)
Equity shareholders' funds 154,038 144,228 126,825
CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
for the six months ended 31 July
2004 2003
£'000 £'000
Reconciliation of net return before finance costs and taxation to
net cash outflow from operating activities
Net revenue from ordinary activities before finance costs and
taxation 355 489
Expenses charged to capital (412) -
Dividends and interest reinvested (390) (54)
Increase in debtors and accrued income (129) (165)
Changes relating to investments of dealing subsidiary 20 9
Decrease in creditors and accruals (181) (859)
Tax on investment income (20) (13)
Net cash outflow from operating activities (757) (593)
Servicing of finance
Bank interest paid (788) (782)
Net cash outflow from servicing of finance (788) (782)
Investing activities
Purchases of fixed asset investments (35,549) (31,612)
Proceeds from sale of fixed asset investments 42,411 36,457
Repayment of loan made to Ryder Court Investments Limited - 2,667
Net cash inflow from investing activities 6,862 7,512
Net cash inflow before financing 5,317 6,137
Financing
Repayment of fixed term borrowings (6,000) -
Net cash outflow from financing (6,000) -
(Decrease)/increase in cash (683) 6,137
Notes:
1. Basis of preparation
The figures for the six months to 31 July 2004 have been prepared on a basis
consistent with the accounting policies adopted in the audited financial
statements for the year ended 31 January 2004.
2. Return per share
Revenue Capital
* Net return Ordinary Per share * Net Ordinary Per share
£'000 shares return shares
(pence) £'000 (pence)
Six months to
31 July 2004
Basic return per (162) 12,254,313 (1.32) 9,972 12,254,313 81.38
share
Option conversion ** - 292 - 292
Loan Stock 2013 *** 19 7,677,739 - 7,677,739
(143) 19,932,344 (0.72) 9,972 19,932,344 50.03
Six months to
31 July 2003
Basic return per (241) 12,144,440 (1.98) 8,472 12,144,440 69.76
share
Option conversion ** - - - -
Loan Stock 2013 *** 19 7,787,612 - 7,787,612
(222) 19,932,052 (1.11) 8,472 19,932,052 42.50
Basic return per share has been calculated using the weighted average number of
Ordinary Shares in issue during the period.
* 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 fair value as calculated in accordance with
Financial Reporting Standard No. 14: Earnings per Share.
*** Loan Stock assumed converted as share price during the year was greater than
the conversion price.
3. Distribution of fixed asset investments
31 July 2004 31 January 2004 31 July 2003
(Unaudited) (Audited) (Unaudited)
£'000 £'000 £'000
Listed at market value:
United Kingdom 60,396 61,953 48,492
Overseas 14,521 22,886 19,970
Listed at Directors' valuation 15,077 14,855 8,259
Total listed investments 89,994 99,694 76,721
Unlisted at market value 10,707 1,372 5,902
Unlisted at Directors' valuation 53,277 50,123 53,271
Total fixed asset investments 153,978 151,189 135,894
4. Performance fees
A performance fee is only payable if the investment portfolio has outperformed
the Sterling adjusted Standard & Poor's Composite Index at the end of the
financial year, and is limited to a maximum payment of 0.5% of Shareholders'
funds.
In accordance with the Statement of Recommended Practice 'Financial Statements
of Investment Trust Companies', an amount is included in these accounts for the
performance fee that would be payable based on investment performance to 31 July
2004.
As at 31 July 2004, a performance fee of £412,000 including irrecoverable VAT,
has been accrued for in the accounts (31 July 2003: nil; year ended 31 January
2004: £395,000 including irrecoverable VAT).
5. Consolidated net asset value per Ordinary Share
The basic net asset value per Ordinary Share is based on net assets of
£154,038,000 (31 January 2004: £144,228,000) and on 12,254,313 Ordinary Shares
(31 January 2004: 12,254,313) being the number of Ordinary Shares in issue at
the period end.
The fully diluted net asset values per Ordinary Share are 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 (31 January 2004:
20,624,552 Shares).
6. Financial information
The financial information shown in this interim report does not constitute full
statutory accounts as defined in Section 240 of the Companies Act 1985. The
financial information for the six months ended 31 July 2004 and 31 July 2003 has
not been audited.
The information for the year ended 31 January 2004 has been extracted from the
latest published audited financial statements, which have been filed with the
Registrar of Companies. The report of the auditors on those financial statements
contained no qualification or statement under sections 237(2) or (3) of the
Companies Act 1985.
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