Interim Results
North Atlantic Smlr Co Inv Tst PLC
11 October 2006
NORTH ATLANTIC SMALLER COMPANIES INVESTMENT TRUST PLC
UNAUDITED PRELIMINARY RESULTS FOR THE SIX MONTHS ENDED 31 JULY 2006
FINANCIAL HIGHLIGHTS
31 July 31 January
2006 2006
(unaudited) (audited) % Change
Net asset value per Ordinary Share:*
Basic (pence) 1,602 1,597 0.3
Diluted (pence) 1,102 1,063 3.7
Mid-market price of the 5p Ordinary Shares (pence) 1,015.5 1,022.5 (0.7)
Discount to fully diluted net asset value* 7.8% 3.8%
Standard & Poor's Composite Index - Sterling adjusted 683.8 720.2 (5.1)
Russell 2000 - Sterling adjusted 375.2 412.5 (9.0)
US Dollar/ Sterling exchange rate 1.8671 1.7774 (5.0)
* Including retained revenue for the period.
NORTH ATLANTIC SMALLER COMPANIES INVESTMENT TRUST PLC
CHIEF EXECUTIVE'S REVIEW
FOR THE SIX MONTHS ENDED 31 JULY 2006
During the six month period to 31 July 2006, the fully diluted net asset value
of the Company rose by 3.7% as compared to a fall in the Sterling adjusted
Standard and Poor's Composite Index of 5.1%. Net income for the period amounted
to £961,000 (2005: £248,000). Consistent with policy, no dividend will be paid.
Listed equities
The quoted portfolio in the United States suffered from the weakness of the
United States Dollar which fell by 5.0% during the period under review.
Sterling Construction Inc. and W-H Energy Services Inc. performed well although
this was to some extent offset by the weakness of LESCO, Inc. following
disappointing results.
In the United Kingdom, Oryx International Growth Fund Limited continued to
perform well. Georgica PLC was an outstanding success rising nearly 40% during
the period under review. The remainder of the UK portfolio performed acceptably
with the notable exception of Communisis PLC which fell by approximately 30%
during the period. Parkdean Holidays PLC was taken over at a good premium to
our cost. Overall the UK portfolio made a positive contribution during the
period.
Unlisted equities
The unquoted portfolio benefited from the pending Initial Public Offering
('IPO') of Nationwide Accident Repair Services PLC. This has now happened and I
am pleased to report that the shares have subsequently performed well. This
holding including cash proceeds received in the IPO is now worth approximately
£17.5 million against our cost of £3.0 million. The holding in Wembley PLC was
liquidated for cash.
Post balance sheet events
Since 31 July, the Board has reassessed the carrying value of a number of our
unquoted investments as a result of various acquisition discussions.
Consequently, the Board, for purposes of its 30 September valuation, has
increased the valuation of the unquoted portfolio by approximately 112p per
share. As announced on 9 October 2006, the estimated basic net asset value
(excluding current period revenue) as at 30 September 2006 was 1,735.5p per
share and the estimated fully diluted net asset value (also excluding current
period revenue) was 1,190.9p per share.
Outlook
The outlook for the balance of the year is encouraging. Although no new
investments were made in the period, we expect to close a number of new unquoted
investments prior to the year-end. Public equities which have been weak in
recent months are starting to create opportunities which we hope to capitalise
on given the Trust's substantial cash resources.
C H B Mills
Chief Executive
11 October 2006
CONSOLIDATED INCOME STATEMENT
for the six months ended 31 July
Six months to Six months to
31 July 2006 31 July 2005
(unaudited) (unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investments
Gains on investments - 7,248 7,248 - 31,808 31,808
Exchange differences - (226) (226) - (203) (203)
Net investment result - 7,022 7,022 - 31,605 31,605
Income 2,861 - 2,861 1,705 - 1,705
Expenses
Investment management fee (1,220) (575) (1,795) (962) (552) (1,514)
Interest payable and (80) - (80) (126) - (126)
similar charges
Share based remuneration (161) - (161) (184) - (184)
Other expenses (415) - (415) (184) - (184)
Total expenses (1,876) (575) (2,451) (1,456) (552) (2,008)
Profit before taxation 985 6,447 7,432 249 31,053 31,302
Taxation (24) - (24) (1) - (1)
Transfer to reserves 961 6,447 7,408 248 31,053 31,301
Attributable to:
Equity holders of the 977 6,928 7,905 248 31,053 31,301
parent
Minority interest (16) (481) (497) - - -
961 6,447 7,408 248 31,053 31,301
Return per Ordinary Share: pence pence
Basic 59.09 240.66
Diluted 39.70 156.14
The total column of this statement is 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.
All items in the above statement derive from continuing operations.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 July
Share Share Capital
Share CULS options premium reserve
capital reserve reserve account - realised
£'000 £'000 £'000 £'000 £'000
Six months ended 31 July 2006
(unaudited)
31 January 2006 666 48 764 629 168,946
Total recognised income and expenses - - 161 - 2,075
for the period
Arising on conversion of CULS 23 (3) - - -
31 July 2006 689 45 925 629 171,021
Year ended 31 January 2006 (audited)
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 - 52 - - -
IAS 32 and 39
647 52 396 629 141,956
Total recognised income and expenses - - 368 - 22,738
for 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 in AOT
31 January 2006 666 48 764 629 168,946
Six months ended 31 July 2005
(unaudited)
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 - 52 - - -
IAS 32 and 39
647 52 396 629 141,956
Total recognised income and expenses - - 184 - 18,627
for the period
Arising on conversion of CULS 19 (3) - - -
31 July 2005 666 49 580 629 160,583
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 July (continued)
Capital
reserve Revenue Minority
- unrealised reserve Total interest Total
£'000 £'000 £'000 £'000 £'000
Six months ended 31 July 2006
(unaudited)
31 January 2006 46,724 (5,132) 212,645 8,205 220,850
Total recognised income and 4,853 977 8,066 (497) 7,569
expenses for the period
Arising on conversion of CULS - - 20 - 20
31 July 2006 51,577 (4,155) 220,731 7,708 228,439
Year ended 31 January 2006
(audited)
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 (3,555) (3) (3,506) - (3,506)
IAS 32 and 39
30,995 (5,640) 169,035 - 169,035
Total recognised income and 21,936 876 45,918 309 46,227
expenses for 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
Six months ended 31 July 2005
(unaudited)
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 (3,555) (3) (3,506) - (3,506)
IAS 32 and 39
30,995 (5,640) 169,035 - 169,035
Total recognised income and 12,426 248 31,485 - 31,485
expenses for the period
Arising on conversion of CULS - - 16 - 16
31 July 2005 43,421 (5,392) 200,536 - 200,536
CONSOLIDATED BALANCE SHEET
31 July 31 January 31 July
2006 2006 2005
(unaudited) (audited) (unaudited)
£'000 £'000 £'000
Non current assets
Investments at fair value through profit or loss 212,977 214,822 198,955
Current assets
Investments held for trading in Subsidiary Companies 1,103 382 527
Trade and other receivables 2,955 7,039 2,469
Cash and cash equivalents 15,526 6,429 6,775
19,584 13,850 9,771
Total assets 232,561 228,672 208,726
Current liabilities
Bank loans and overdrafts (1,540) (4,975) (4,914)
Investments held for trading - derivatives (323) (239) (18)
Trade and other payables (2,007) (2,336) (2,976)
(3,870) (7,550) (7,908)
Total current assets less current liabilities 228,691 221,122 200,818
Non current liabilities
CULS (252) (272) (282)
Total liabilities (4,122) (7,822) (8,190)
Net assets 228,439 220,850 200,536
Represented by:
Share capital 689 666 666
Equity component of CULS 45 48 49
Share options reserve 925 764 580
Share premium account 629 629 629
Capital reserve - realised 171,021 168,946 160,583
Capital reserve - unrealised 51,577 46,724 43,421
Revenue reserve (4,155) (5,132) (5,392)
Equity attributable to equity holders of the parent 220,731 212,645 200,536
Minority interest 7,708 8,205 -
Total equity 228,439 220,850 200,536
Net asset value per Ordinary Share: pence pence pence
Basic 1,602 1,597 1,506
Diluted 1,102 1,063 994
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31 July
Six months to Six months to
31 July 31 July
2006 2005
(unaudited) (unaudited)
£'000 £'000
Cash flows from operating activities
Investment income received 1,563 962
Bank deposit interest received 216 278
Sale of investments by Subsidiary undertaking 31 2
Investment manager's fees paid (2,282) (1,309)
Other cash payments (562) (190)
Cash expended from operations (1,034) (257)
Bank interest paid (83) (98)
Loan renewal expenses - (9)
Net cash outflow from operating activities (1,117) (364)
Cash flows from investing activities
Purchases of investments (97,167) (88,955)
Sales of investments 110,789 67,230
Net cash inflow/(outflow) from investing activities 13,622 (21,725)
Cash flows from financing activities
Repayment of fixed term borrowings (3,459) -
Net cash outflow from financing activities (3,459) -
Increase/(decrease) in cash and cash equivalents for the period 9,046 (22,089)
Cash and cash equivalents at the start of the period 6,429 28,862
Revaluation of foreign currency balances 51 2
Cash and cash equivalents at the end of the period 15,526 6,775
Notes:
1. Basis of preparation
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 figures for the six months ended 31 July 2006 have been prepared on a basis
consistent with the accounting policies adopted in the audited financial
statements for the year ended 31 January 2006.
The Group financial statements consolidate the financial statements of the
Company, its wholly owned Subsidiary Consolidated Venture Finance Limited, and
its majority owned Subsidiary American Opportunity Trust PLC (''AOT'') for the
six months ended 31 July 2006.
The Company purchased an additional holding in AOT on 16 September 2005 to take
its total holding to 60.49% on an undiluted basis and greater than 50% on a
diluted basis. Hence the comparative figures include AOT results from that date.
2. Return per Ordinary Share
Revenue Capital
*Net Per *Net Per
return Ordinary Share return Ordinary Share Total
£'000 Shares (pence) £'000 Shares (pence) (pence)
Six months to 31 July 2006
Basic return per 977 13,378,001 7.30 6,928 13,378,001 51.79 59.09
Share
Option conversion** - 284,594 - 284,594
CULS *** 32 6,329,051 - 6,329,051
1,009 19,991,646 5.05 6,928 19,991,646 34.65 39.70
Six months to 31 July 2005
Basic return per 248 13,006,299 1.91 31,053 13,006,299 238.75 240.66
Share
Option conversion** - 136,783 - 136,783
CULS *** 35 6,925,754 - 6,925,754
283 20,068,836 1.41 31,053 20,068,836 154.73 156.14
Basic return per Ordinary 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 have been issued at average market price as calculated in
accordance with IAS 33: Earnings per Share.
*** CULS assumed converted as the share price during the period was greater than
the conversion price.
3. 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 each
financial year, and is limited to a maximum payment of 0.5% of Shareholders'
Funds.
In accordance with the SORP, an amount is included in these financial statements
for the performance fee that could be payable based on investment performance to
31 July 2006.
At that date, a performance fee of £575,000, including irrecoverable VAT, has
been accrued for in the accounts (31 July 2005: £552,000 including irrecoverable
VAT), and is allocated 100% to capital.
4. Net asset value per Ordinary Share
The basic net asset value per Ordinary Share is based on net assets of
£220,731,000 (31 January 2006: £212,645,000; 31 July 2005: £200,536,000) and on
13,780,945 Ordinary Shares (31 January 2006: 13,313,427; 31 July 2005:
13,313,427) being the number of Ordinary Shares in issue at the period 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
(31 January 2006: 1,030,000; 31 July 2005: 1,030,000) Share Options were
exercised at the prevailing exercise prices, giving a total of 20,737,052 issued
Ordinary Shares (31 January 2006: 20,737,052; 31 July 2005: 20,962,052).
5. Transaction costs
During the six months ended 31 July 2006, the Group incurred transaction costs
of £99,000 (31 July 2005: £149,000) and £115,000 (31 July 2005: £7,000) on
purchases and sales of investments, respectively. These amounts are included in
gains on investments as disclosed in the income statement.
6. Financial information
The financial information contained in this preliminary announcement is not the
Group's statutory accounts. The financial information for the six months ended
31 July 2006 and 31 July 2005 is not a financial year and has not been audited.
The statutory accounts for the financial year ended 31 January 2006 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.
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