Annual Report and Accounts
AIM Trust PLC
14 March 2003
THE AIM TRUST PLC
To: Company Announcements
From: The AIM Trust plc
Date: 14 March 2003
Unaudited Results for the year ended 31 January 2003
The Chairman, Jon Pither said:
'Introduction I I am sure I do not need to remind shareholders that we are
currently in a severe bear market. We have now experienced three full years of
equity values being in decline and there does not appear to be a great deal of
confidence around. Since the spring of the year 2000 when stock markets peaked
there has been a downward trend, initially caused by the bursting of the
technology bubble, then concerns over general economic conditions and latterly
from global terrorism. We are now experiencing a build up towards further
conflict in the Middle East and growing concerns over whether Western economies
will go into recession. Investors have reacted by reducing their equity
investments and as the valuations of larger companies have fallen the small
companies have followed with the additional problems associated with their lack
of liquidity.
This background has had a profound impact on the entrepreneurial enterprises,
traded on AiM. Many of these companies which are in the early stages of their
business plans have not only found their trading environment much harsher but
have also found it hard if not impossible to raise further capital as investors
have tended to shun this end of the market. Some promising companies have either
failed or suffered large declines in their valuations. Research has estimated
that some 80% of AiM companies trade below their issue prices and potentially a
third of AiM companies may need to raise further capital this year and many of
these will find it difficult. Business plans that seemed so sensible two or
three years ago are in danger of being delayed for want of investment funds.
Performance I This has been a very difficult environment in which to run a
portfolio of small companies. Over the year, the FTSE AIM Index fell by 33.1%,
the third consecutive year of large falls with 40.1% and 35.2% in the previous
two years.
I am disappointed to report that your Company's net asset value per share fell
by 57.1% during the period to 72.2 pence from 168.3 pence. At the gross asset
level, the fall from £107.8 million to £69.1 million represents a fall of 35.9%,
closer to the performance of the market as a whole demonstrating the impact of
gearing again in falling markets. The portfolio performed very much in line with
the market, however once costs such as interest charges and running costs are
taken into account, the portfolio did underperform.
Earnings and Dividends I The companies in which The AIM Trust is invested are
largely in their development phase and as a result, they do not ordinarily pay
significant dividends. Given the interest charges on our debt facilities and the
low level of dividend income, the Group made a loss per share of 0.03 pence,
compared to 1.41 pence in the previous year. As was the case last year, no
dividend will be paid this year.
Gearing Position I I explained last year that the Company had two debt
facilities totalling £40 million from The Royal Bank of Scotland and JPMorgan
Chase. After the falls in the market after September 11th 2001, the covenants
were re-negotiated with the banks to enable the Company to operate within their
constraints. The continuing falls in the market over the past 12 months has
necessitated your fund managers to apply cash realised from the portfolio as a
cash offset to maintain the asset cover ratios required by the gearing
covenants. As a result of this, cash and fixed interest holdings amounted to
some £28 million by the year-end.
We announced at the beginning of February that the £10 million loan from
JPMorgan Chase was transferred to The Royal Bank of Scotland with effect from
the year-end. The Company's total borrowings are now from the one bank and
although there has been no change to the ongoing interest costs, other terms in
respect of financial covenants and liquidity offset arrangements improved.
Share Price I A combination of falling asset values and a discount widening from
12.4% to 31.6% resulted in a two thirds fall in the share price over the year.
This is a disappointing outcome for shareholders and I hope that over the next
year we can succeed in narrowing the discount through further marketing of the
shares and hopefully a recovery in asset values.
Prospects I Last year, I discussed how the Company's portfolio comprised a
number of Venture Capital style companies. This remains the case at present,
however we have suffered from many of the problems of Venture Capital this year
without the advantages that public listing normally offers.
Venture Capital investments generally have regard to business risk and market
liquidity. Venture Capitalists benefit from having enhanced access, both in
terms of due diligence and ongoing trading information and open dialogue with
companies.
Over the past year, investors in small company markets have had to live with
both the business risks and lack of liquidity characterised by venture capital
companies. Corporates and advisers are now required to be cautious in explaining
trading issues with investors with the result that some of the formal statements
have been taken as a shock and the markets have reacted very negatively.
The economic environment in the UK is clearly much less attractive than it was
two years ago and there is certainly caution about investing money. That said,
when individual companies are looked at in isolation, their valuations do look
very attractive. We therefore think that the market as a whole will mark time
for the next few months but individual, special situations will have the chance
to outperform as valuations are released through corporate activity or change in
sentiment.'
For further information please contact:
Bill Brown
Robert Mitchell Michael Campbell
Investment Managers Company Secretary
ISIS Asset Management plc ISIS Asset Management plc
0207 506 1100 0131 465 1000
The Summarised Consolidated Statement of Total Return and Balance Sheet follow:
Unaudited Consolidated Statement of Total Return
Year ended 31 January 2003
PDS '000 PDS '000 PDS '000
Revenue Capital Total
Gains on investments - (35,603) (35,603)
Realised exchange differences - 6 6
Income 1,457 - 1,457
Investment management fee (302) (907) (1,209)
Other expenses (432) - (432)
------ ------ ------
Return on ordinary activities before finance costs and 723 (36,504) (35,781)
taxation
Interest payable (732) (2,197) (2,929)
------ ------ ------
Return on ordinary activities before tax (9) (38,701) (38,710)
------ ------ ------
Tax on ordinary activities (4) - (4)
------ ------ ------
Return attributable to equity shareholders (13) (38,701) (38,714)
------ ------ ------
Transfer to reserves (13) (38,701) (38,714)
=== === ===
Return per share: (0.03)p (96.13)p (96.16)p
Unaudited Consolidated Statement of Total Return
Year ended 31 January 2002 (Audited)
PDS '000 PDS '000 PDS '000
Revenue Capital Total
Gains on investments - (92,754) (92,754)
Realised exchange differences - - -
Income 1,274 - 1,274
Investment management fee (504) (1,513) (2,017)
Other expenses (492) - (492)
------ ------ ------
Return on ordinary activities before finance costs and 278 (94,267) (93,989)
taxation
Interest payable (722) (2,166) (2,888)
------ ------ ------
Return on ordinary activities before tax (444) (96,433) (96,877)
Tax on ordinary activities (124) 121 (3)
------ ------ ------
Return attributable to equity shareholders (568) (96,312) (96,880)
Dividends in respect of equity shares - - -
------ ------ ------
Transfer from reserves (568) (96,312) (96,880)
=== === ===
Return per ordinary share: (1.41)p (239.22)p (240.63)p
Unaudited Group Balance Sheet
Audited
As at As at
31/01/03 31/01/02
PDS '000 PDS '000
Fixed Assets
Investments:
Listed 7,653 18,118
Quoted on AiM 30,815 72,219
Quoted on other markets 1,155 673
Unquoted 1,318 5,165
UK government securities 14,209 7,074
---------- ----------
55,150 103,249
Current assets
Investments held by dealing subsidiary 4 26
Debtors 233 147
Cash at bank and on deposit 13,956 4,678
------ ------
14,193 4,851
Creditors: amounts falling due within one year (280) (323)
------ ------
Net current assets 13,913 4,528
------ ------
Total assets less current liabilities 69,063 107,777
------ ------
Creditors: amounts falling due after more than one (40,000) (40,000)
year
------ ------
Net Assets 29,063 67,777
===== =====
Capital and reserves
Called-up share capital 10,066 10,066
Special reserve 27,808 27,808
Other reserves -
Capital reserve - realised 48,092 46,557
Capital reserve - unrealised (57,600) (17,364)
Capital redemption reserve 872 872
Revenue reserve (175) (162)
------ ------
Equity shareholders' funds 29,063 67,777
===== =====
Net asset value per share 72.2p 168.3p
Unaudited Consolidated Cash Flow Statement
Year ended 31 January
2003 2002
Audited
£'000 £'000
Net cash outflow from operating activities (318) (1,099)
Servicing of finance (2,931) (2,892)
Taxation 25 -
Capital expenditure and financial investment 12,496 8,443
Equity dividends paid - (403)
Net cash inflow before financing 9,272 4,049
Increase in cash 9,272 4,049
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash in the year 9,272 4,049
Net debt at 1 February (35,322) (39,371)
Currency gains 6 -
Net debt at 31 January (26,044) (35,322)
Year to Year to
31 January 31 January
2003 2002
Audited
£'000
Reconciliation of operating profit to net cash flow from operating activities
Net return before finance costs and taxation 723 278
Tax on investment income (4) (3)
Changes in working capital and other non-cash items (1,037) (1,374)
Net cash flow from operating activities (318) (1,099)
Notes
1. Return per Ordinary Share is based on 40,261,451 (2002: same)
Ordinary Shares in issue.
2. The Group results consolidate those of Target Dealing Company
Limited, a wholly owned subsidiary which deals in securities.
3. These are not full statutory accounts in terms of Section 240 of
the Companies Act 1985. The full audited accounts for the period to 31
January 2002, which were unqualified, have been lodged with the
Registrar of Companies. The accounts for the year ended 31 January 2003
are unaudited, however, we expect the auditors to issue an unqualified
opinion. A full annual report is expected to be sent to shareholders in
April 2003, and will be available for inspection at 100 Wood Street,
London EC2V 7AN, the registered office of the Company.
This information is provided by RNS
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