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. This information is provided by RNS The company news service from the London Stock Exchange

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