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