Final Results
North Atlantic Smlr Co Inv Tst PLC
24 May 2006
NORTH ATLANTIC SMALLER COMPANIES INVESTMENT TRUST PLC
AUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 JANUARY 2006
FINANCIAL HIGHLIGHTS
2006 % change 2005
Revenue
Gross income (£'000) 4,052 3,671
Net revenue after tax attributable to Shareholders (£'000) 876 23
Basic return per Ordinary Share - revenue (pence) 6.66 0.18
- capital (pence) 339.44 224.16
Assets
Total assets less current liabilities (£'000) 221,122 24.6 177,457
Net asset value per 5p Ordinary Share:
Basic (pence) 1,597 19.7 1,334
Fully diluted (pence) 1,063 23.6 860
Mid-market price of the 5p Ordinary Shares at 31 January 1,022.5 28.7 794.5
(pence)
Discount to fully diluted net asset value 3.8% 7.6%
Indices and exchange rates at 31 January
Standard & Poor's Composite Index 1,280.1 8.4 1,181.3
Russell 2000 733.2 17.5 624.0
Sterling/US Dollar exchange rate 1.7774 5.8 1.8861
Standard & Poor's Composite Index - Sterling adjusted 720.2 15.0 626.3
Russell 2000 - Sterling adjusted 412.5 24.7 330.8
FTSE All-Share Index 2,928.6 20.0 2,441.2
North Atlantic Smaller Companies Investment Trust PLC
Chairman's Statement
I am glad to report that during the year ended 31 January 2006 the fully diluted
net asset value of the Trust rose by 23.6% thereby outperforming the rise in the
Standard and Poor's Composite Index (Sterling adjusted) which rose by 15.0%.
The Trust's share price also rose sharply, increasing from 794.5p to 1,022.5p
over the same period. It is pleasing to note that since Christopher Mills
became our Chief Executive in 1984, the share price has risen by over twenty
times in Sterling and by rather more in United States Dollars.
The revenue account showed a profit of £876,000 after taxation (2005: restated
profit £23,000). Consistent with the Trust's long term policy the Directors are
not recommending a dividend for the current year.
During the year the Trust redeemed for cancellation 225,000 Convertible Loan
Notes. The price paid was at a discount to net asset value and therefore
benefited all Shareholders.
Quoted Investments
The United States quoted portfolio benefited from the strength of the United
States Dollar which rose from $1.8861 to $1.7774 at the year-end, although this
gain has subsequently been reversed. The portfolio performed exceptionally well
and in particular, Sterling Construction Inc. nearly trebled during the year
whilst W-H Energy Services Inc. more than doubled. It is interesting to note
that both these investments originated out of the Private Equity Portfolio and,
based on cost, have in aggregate now appreciated approximately ten times in
value.
The United Kingdom portfolio also performed well assisted by the takeover of
East Surrey Holdings PLC, the sale of the holding in Simon Group PLC to a
strategic buyer and a takeover approach for Parkdean Holidays PLC shortly after
purchase. Highway Insurance Holdings PLC and Wichford PLC made substantial
contributions to the performance and the holdings were reduced into strength in
the share price. Communisis PLC was the only major disappointment. Recent
purchases of Gleeson (MJ) Group PLC, Georgica PLC and SSL International PLC have
performed satisfactorily.
Unquoted Portfolio
It was a relatively eventful year for the unquoted portfolio. Waterbury Inc.,
Hi-Tech Holdings Inc. and Ramen Holdings Limited were all taken over at very
considerable premiums to cost. During the year, the Board adopted 'Fair Value
Accounting' which required a number of carrying values of the unquoteds to be
reappraised resulting in uplifts in valuation in Primesco Inc., Jaffer Holdings
Corporation and Nationwide Accident Repair Services PLC.
The principal disappointment was United Industries PLC. The company, which has
fundamentally good businesses, was overwhelmed by its pension liabilities and
had to be written off during the year.
Two new major unquoted investments were made during the year: the management
buyouts of Paramount Restaurants Limited and Dowding and Mills PLC. The Trust
also considerably increased its investment in Mister Car Wash inc. on highly
favourable terms.
Performance during the year was adversely impacted by a relatively high level of
cash that was maintained within the portfolio. In my last Annual Report I noted
that interest rates were likely to rise and this would inhibit equity markets.
Whilst this was generally correct in the United States, the United Kingdom
market performed well.
Outlook
It remains difficult to find attractive value situations although by no means
impossible. I would also anticipate that the existing portfolio will benefit
from corporate activity.
This should help to mitigate the negative impact of excessive consumer and
government debt which must at some stage adversely impact consumer expenditure
and, with it, economic growth. I also remain concerned that massive increases
in commodity prices and rising wages in China and India may shatter the illusion
of non-inflationary growth through cheap imports leading to job losses in the
manufacturing sector offset by non-job creation (particularly in the UK) in the
public sector.
Nevertheless I would hope that the Trust will continue to make progress in the
year ending 31 January 2007. In the unquoted portfolio I expect that Santa
Maria Foods Inc., Nationwide Accident Repair Services PLC and Jaffer Holdings
Corporation will be sold or go public and this should help offset any downturn
in the stock markets.
Peregrine Moncreiffe resigned as a Director on 27 March 2006. Peregrine has
been a Director since 1993 and I will miss his wise counsel and contribution.
I am pleased to welcome Oliver Grace to the Board with effect from 16 May 2006.
Enrique Foster Gittes
Chairman
24 May 2006
CONSOLIDATED INCOME STATEMENT
for the year ended 31 January
2006 2005
(restated)*
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investments
Gains on investments - 46,593 46,593 - 28,303 28,303
Exchange differences - (422) (422) - 661 661
Net investment results - 46,171 46,171 - 28,964 28,964
Income 4,052 - 4,052 3,671 - 3,671
Expenses
Investment management fee (1,981) (1,155) (3,136) (1,777) (930) (2,707)
Interest payable and (253) - (253) (979) - (979)
similar charges
Share based remuneration (368) - (368) (222) - (222)
Other expenses (594) - (594) (650) - (650)
Total expenses (3,196) (1,155) (4,351) (3,628) (930) (4,558)
Profit before taxation 856 45,016 45,872 43 28,034 28,077
Taxation (13) - (13) (20) - (20)
Transfer to reserves 843 45,016 45,859 23 28,034 28,057
Attributable to:
Equity holders of the 876 44,674 45,550 23 28,034 28,057
parent
Minority interest (33) 342 309 - - -
843 45,016 45,859 23 28,034 28,057
Return per Ordinary Share: pence pence
Basic 346.10 224.34
Diluted 227.13 140.68
* Details of the restatement are shown in notes 1 and 6.
The total column of this statement represents the Group's income statement,
prepared in accordance with IFRS. The supplementary revenue and capital return
columns are both prepared under guidance published by the Association of
Investment Trust Companies.
The financial statements have been prepared in accordance with the accounting
policies in note 1.
All items in the above statement derive from continuing operations.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 January
Share Share Capital
Share CULS options premium reserve -
capital reserve reserve account realised
£'000 £'000 £'000 £'000 £'000
2006
31 January 2005 647 - - 629 141,956
Opening reserves adjusted for IAS 2 (see - - 396 - -
note 6c)
Restated as at 31 January 2005 * 647 - 396 629 141,956
Restatement of opening reserves for IAS - 52 - - -
32 and 39 (see note 1(a))
647 52 396 629 141,956
Total recognised income and expenses for - - 368 - 22,738
the year
Arising on conversion of CULS 19 (3) - - -
Premium paid on repurchase of CULS - (1) - - (2,129)
Arising on acquisition of majority of - - - - 6,381
AOT
31 January 2006 666 48 764 629 168,946
Share Share Capital
Share CULS options premium reserve -
capital reserve reserve account realised
£'000 £'000 £'000 £'000 £'000
2005
31 January 2004 613 - - 629 118,383
Opening reserves adjusted for IAS 2 (see - - 174 - -
note 6b)
Restated as at 31 January 2004 * 613 - 174 629 118,383
Total recognised income and expenses for - - 222 - 23,573
the year
Arising on conversion of CULS 34 - - - -
31 January 2005 647 - 396 629 141,956
* Restated - see transition statements (note 6).
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 January (continued)
Capital
reserve - Revenue Minority
unrealised reserve Total interest Total
£'000 £'000 £'000 £'000 £'000
2006
31 January 2005 34,550 (5,241) 172,541 - 172,541
Opening reserves adjusted for IAS 2 (see - (396) - - -
note 6c)
Restated as at 31 January 2005 * 34,550 (5,637) 172,541 - 172,541
Restatement of opening reserves for IAS (3,555) (3) (3,506) - (3,506)
32 and 39 (see note 1(a))
30,995 (5,640) 169,035 - 169,035
Total recognised income and expenses for 21,936 876 45,918 309 46,227
the year
Arising on conversion of CULS - - 16 - 16
Premium paid on repurchase of CULS - - (2,130) - (2,130)
Arising on acquisition of majority of (6,207) (368) (194) 7,896 7,702
AOT
31 January 2006 46,724 (5,132) 212,645 8,205 220,850
Capital
reserve - Revenue Minority
unrealised reserve Total interest Total
£'000 £'000 £'000 £'000 £'000
2005
31 January 2004 30,089 (5,486) 144,228 - 144,228
Opening reserves adjusted for IAS 2 (see - (174) - - -
note 6b)
Restated as at 31 January 2004 * 30,089 (5,660) 144,228 - 144,228
Total recognised income and expenses for 4,461 23 28,279 - 28,279
the year
Arising on conversion of CULS - - 34 - 34
31 January 2005 34,550 (5,637) 172,541 - 172,541
* Restated - see transition statements (note 6).
CONSOLIDATED BALANCE SHEET
2006 2005
(Restated)*
£'000 £'000
Non current assets
Investments at fair value through profit or loss 214,822 -
Investments at valuation - 149,282
214,822 149,282
Current assets
Investments held for trading in Subsidiary Companies 382 -
Investments held in Subsidiary Company - 137
Investments held for trading (239) (369)
Trade and other receivables 7,039 858
Cash and cash equivalents 6,429 28,862
13,611 29,488
Total assets 228,433 178,770
Current liabilities
Bank loans and overdrafts (4,975) -
Trade and other payables (2,336) (1,313)
(7,311) (1,313)
Total assets less current liabilities 221,122 177,457
Non current liabilities
Bank loans - (4,566)
CULS (272) (350)
(272) (4,916)
Total liabilities (7,583) (6,229)
Net assets 220,850 172,541
* Details of the restatement are shown in notes 1 and 6.
CONSOLIDATED BALANCE SHEET (continued)
2006 2005
(Restated)*
£'000 £'000
Represented by:
Share capital 666 647
Equity component of CULS 48 -
Share options reserve 764 396
Share premium account 629 629
Capital reserve - realised 168,946 141,956
Capital reserve - unrealised 46,724 34,550
Revenue reserve (5,132) (5,637)
Equity attributable to equity holders of the parent 212,645 172,541
Minority interest 8,205 -
Total equity 220,850 172,541
Net asset value per Ordinary Share: pence pence
Basic 1,597 1,334
Diluted 1,063 860
* Details of the restatement are shown in notes 1 and 6.
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 January
2006 2005
(Restated)*
£'000 £'000
Cash flows from operating activities
Investment income received 2,391 1,859
Bank deposit interest received 428 511
Underwriting commission received 14 -
Other income 3 24
Sale of investments by Subsidiary undertaking 36 34
Investment manager's fees paid (2,894) (2,361)
Other cash payments (713) (916)
Cash expended from operations (735) (849)
Bank interest paid (205) (1,204)
CULS interest paid (32) (35)
Loan renewal expenses (9) -
Net cash outflow from operating activities (981) (2,088)
Cash flows from investing activities
Purchases of investments (182,869) (71,210)
Sales of investments 162,596 102,557
Realised gain on forward fx contracts 764 -
Net cash (outflow)/inflow from investing activities (19,509) 31,347
Cash flows from acquisition
Cost of AOT acquisition (1,945) -
Net cash outflow from acquisition (1,945) -
Cash flows from financing activities
Repayment of fixed term borrowings - (14,321)
Repurchase premium on CULS cancellation (2,140) -
Net cash outflow from financing activities (2,140) (14,321)
(Decrease)/increase in cash and cash equivalents for the year (24,575) 14,938
Cash and cash equivalents at the start of the year 28,862 13,776
Cash and cash equivalents acquired on acquisition 2,040 -
Revaluation of foreign currency balances 102 148
Cash and cash equivalents at the end of the year 6,429 28,862
* These values have been adjusted for the adoption of IFRS from those presented
in the statutory financial statements for the year ended 31 January 2005.
Notes:
1. Accounting policies
North Atlantic Smaller Companies Investment Trust PLC ('NASCIT') is a Company
incorporated in England and Wales under the Companies Acts 1948 to 1967. The
consolidated preliminary announcement for the Group for the year ended 31
January 2006 comprises the Company and its Subsidiaries - Consolidated Venture
Finance Limited and American Opportunity Trust PLC (together referred to as the
'Group').
(a) Basis of preparation/statement of compliance
The consolidated annual financial statements of the Group and the financial
statements of the Company have been prepared in conformity with International
Financial Reporting Standards ('IFRS'), which comprise standards and
interpretations approved by the International Accounting Standards Board, and
International Financial Reporting Interpretations Committee interpretations
approved by the International Accounting Standards Committee that remain in
effect, and to the extent that they have been adopted by the European Union.
They have also been prepared in accordance with applicable requirements of
England and Wales company law, and reflect the following policies which have
been adopted and applied consistently. These are the Group's first audited
results prepared in conformity with IFRS and IFRS 1: First Time Adoption has
been applied. All accounting policies are consistent with the policies used in
the previous UK Generally Accepted Accounting Principles ('GAAP') financial
statements, with the exception of those referred to in the transition statements
(note 6). The preliminary announcement has also been prepared in accordance
with the Statement of Recommended Practice ('SORP') for investment trust
companies except to any extent where it conflicts with IFRS.
Explanations of how the transition to IFRS has affected the reported financial
position and financial performance of the Group are provided in note 6.
The Group has taken advantage of the exemption under IFRS 1 to only adopt IAS
39: 'Financial Instruments: Recognition and Measurement' ('IAS 39') and IAS 32:
'Financial Instruments: Disclosure and Presentation' ('IAS 32') from 1 February
2005, rather than the date of transition of 1 February 2004. Therefore the
comparative financial statements have not been restated for these standards.
Instead, the opening reserves at 1 February 2005 have been restated to take
account of IAS 39 and IAS 32.
The net effect is to reduce net assets at that date by £3,506,000. This is
comprised as follows;
£'000
Use of bid prices for quoted* holdings rather than previous methods
- in Parent Company (3,555)
- in Subsidiary (3)
Creation of CULS reserve to recognise the equity component of the Convertible 52
Unsecured Loan Stock
Reduction in net assets on implementation of IAS 39 (3,506)
* The valuations of unquoted investments have not been restated to fair value
prior to the current reporting period therefore no adjustment has been made to
the opening reserves as at 1 February 2005 in this respect.
Applying this reduction to the net assets at 31 January 2005 as currently shown
in the balance sheet results in revised figures as follows:
Net assets
£169,035,000
Net asset value per Ordinary Share:
Basic 1,307p
Diluted 843p
(b) Convention
The financial statements are presented in Sterling rounded to the nearest
thousand. The financial statements have been prepared on a going concern basis
under the historical cost convention, except for the measurement at fair value
of investments and derivatives classified as fair value through profit or loss.
(c) Basis of consolidation
The Group financial statements consolidate the financial statements of the
Company and its wholly owned Subsidiary undertaking, Consolidated Venture
Finance Limited, drawn up to 31 January 2006. In addition, the consolidated
income statement and consolidated cashflow statement include the financial
results of American Opportunity Trust PLC ('AOT') since 16 September 2005, the
date that the Company purchased an additional holding in AOT, taking its total
holding to 60.49% on an undiluted basis and greater than 50% on a diluted basis.
The consolidated balance sheet at 31 January 2006 includes the AOT balance
sheet at that date.
As permitted by Section 230 of the Companies Act 1985, the Company has not
presented its own income statement. The amount of the Company's profit for the
financial year dealt with in the accounts of the Group is £45,271,000 (2005:
£27,818,000).
(d) Segmental reporting
The Directors are of the opinion that the Group is engaged in a single segment
of business, being investment business. The Group invests in smaller companies
principally based in countries bordering the North Atlantic Ocean.
(e) Investments
From 1 February 2004 to 31 January 2005
Investments are included in the balance sheet on the following basis:
(i) Quoted at market value on a recognised stock exchange
With the exception of the investments in AOT and Oryx (see (ii) below),
securities quoted on recognised stock exchanges are valued at the mid-market
prices and exchange rates ruling at the balance sheet date. Where securities
are hedged by unexpired traded call options written by the Company, the market
value is reduced by the prevailing market value of such options at the year-end
date. Unexpired traded put options are held in other creditors and accruals.
Unexpired traded put and call options written by the Company are revalued to the
prevailing market value at the year-end date.
(ii) Listed at Directors' valuation
The Directors value the Group's investments in AOT and Oryx, both being
investment companies, based on its share of the fully diluted net assets of each
at the year-end. This valuation method is not in accordance with the
requirements of the 2003 Statement of Recommended Practice: Financial Statements
of Investment Trust Companies ('SORP') but has been adopted as the Company is a
significant shareholder in AOT and Oryx. In the Directors' opinion, such
investments are more properly valued at fully diluted net asset value as to
apply significant discounts is misleading.
(iii) Unlisted at market value
US Treasury Bills are valued at market value having been adjusted for the
movements in exchange rates between the dates of purchase and the year-end.
Accrued income arising from them is included in debtors.
(iv) Unquoted at Directors' estimate of fair value
Unquoted investments included at Directors' estimate of fair value are valued at
original cost in local currency translated into Sterling at the exchange rate
ruling on the balance sheet date unless, in the opinion of the Directors, a
change is warranted. Revaluations above cost are normally only made when
independently validated. This will be as a result of a material third party
transaction in the securities of the company under consideration although, in
certain circumstances, a valuation produced by an independent source may be
adopted. Revaluations downwards will be made in circumstances where a material
third party transaction in the securities of the company under consideration has
taken place at a lower price or where underlying trading or market conditions
are such that a significant diminution is value is judged to have occurred.
(v) Current asset investments
Investments held as current assets are valued individually at the lower of cost
and market value at the balance sheet date.
From 1 February 2005 to 31 January 2006
All investments held by the Company are designated as 'fair value through profit
or loss'. Investments are initially recognised at cost, being the fair value of
the consideration given.
After initial recognition, investments are measured at fair value, with
unrealised gains and losses on investments recognised in the income statement
and (apart from those on current asset investments) allocated to capital.
Realised gains and losses on investments sold are calculated as the difference
between sales proceeds and cost.
Investments are included in the balance sheet on the following basis:
(vi) Quoted at market value on a recognised stock exchange.
Securities quoted on recognised stock exchanges are valued at the market bid
price and exchange rates ruling at the balance sheet date.
As the Company acquired a majority shareholding in AOT during the year, the
portfolio valuation of the Group includes the shareholdings owned directly by
AOT rather than the shareholding in AOT owned by the Company.
(vii) Unlisted at market value
Treasury Bills are valued at market value having been adjusted for movements in
exchange rates between the dates of purchase and the year-end. Accrued income
arising from them is included in debtors.
(viii) Unquoted at directors' estimate of fair value
Unquoted investments included at Directors' estimate of fair value are valued at
what the Directors consider to be their fair value and follow the European
Private Equity and Venture Capital Association ('EVCA') guidelines. This
valuation incorporates all factors that market participants would consider in
setting a price. Valuations in local currency are translated into Sterling at
the exchange rate ruling on the balance sheet date.
(ix) Current asset investments
Investments held by the Subsidiary undertaking are classified as 'held for
trading' and are valued at fair value in accordance with the policies set out in
1.e(vi) and 1.e(viii) above for quoted and unlisted holdings respectively.
Profits or losses on investments 'held for trading' are taken to revenue.
(f) Investments held as current assets
Investments held as current assets have been included in the accounts at fair
value.
(g) Options
Where option transactions are entered into, either for hedging or investment
purposes, the premiums received are taken to the income statement and included
as capital, and the gains or losses arising on their revaluations are recognised
in the income statement and included as capital likewise (see note 1(a)).
Premiums received are included in the transfer to Capital reserve - realised and
gains or losses on revaluation to Capital reserve - unrealised.
(h) Foreign currency
The currency of the primary economic environment in which the Group Companies
operate (the functional currency) is pounds sterling ('Sterling'), which is also
the presentational currency of the Group. Transactions involving currencies
other than Sterling, are recorded at the exchange rate ruling on the transaction
date. At each balance sheet date, monetary items and non-monetary assets and
liabilities that are fair valued, which are denominated in foreign currencies,
are retranslated at the closing rate of exchange.
Exchange differences arising on settlement of monetary items and from
retranslating at the balance sheet date:
- investments and other financial instruments measured at fair value
through profit or loss, and
- other monetary items, are included in the income statement and
allocated as capital if they are of a capital nature or as revenue if they are
of a revenue nature.
Exchange differences allocated to capital are included in the transfer to
Capital reserve - realised or Capital reserve - unrealised as appropriate.
(i) Trade date accounting
All 'regular way' purchases and sales of financial assets are recognised on the
'trade date' i.e. the day that the entity commits to purchase or sell the asset.
Regular way purchases, or sales, are purchases or sales of financial assets that
require delivery of the asset within a time frame generally established by
regulation or convention in the market place.
(j) Income
Dividends receivable on quoted equity shares are taken into account on the
ex-dividend date. Where no ex-dividend date is quoted, they are brought into
account when the Company's right to receive payment is established. Other
investment income and interest receivable are included in the financial
statements on an accruals basis. Dividends received from UK registered companies
are accounted for net of imputed tax credits.
(k) Expenses
All expenses are accounted for on an accruals basis and are allocated wholly to
revenue with the exception of Performance Fees which are allocated wholly to
capital as the fee is payable by reference to the capital performance of the
Company, and transaction costs which are allocated to capital.
(l) Share based payments
In accordance with IFRS 2: Share Based Payments, an expense is now recognised in
the financial statements relating to the value of share options awarded under
the 2002 Executive Share Option Scheme to the Chief Executive and employees of
North Atlantic Value LLP.
The accounting charge is based on the fair value of each grant, measured at the
grant date, and is spread over the vesting period. The deemed expense is
transferred to the Share options reserve.
(m) Cash and cash equivalents
Cash in hand and at banks and short-term deposits which are held to maturity are
carried at cost. Cash and cash equivalents are defined as cash in hand, demand
deposits and short-term, highly liquid investments readily convertible to known
amounts of cash and subject to insignificant risk of changes in value. Bank
overdrafts that are repayable on demand, which form an integral part of the
Group's cash management, are included as a component of cash and cash
equivalents for the purpose of the statement of cash flows.
(n) Bank loans and borrowings
All bank loans and borrowings are initially recognised at cost, being the fair
value of the consideration received, less issue costs where applicable. After
initial recognition, all interest bearing loans and borrowings are subsequently
measured at amortised cost. Any difference between cost and redemption value has
been recognised in the income statement over the period of the borrowings on an
effective interest basis.
(o) Convertible unsecured loan stock 'CULS' 2013
Under IFRS, the CULS are deemed to comprise of an equity element and a debt
element, rather than just being treated as debt under previous UK GAAP. The
equity element is identified when the CULS were issued and reduces as the CULS
are either converted or bought back. A CULS reserve has been created to
recognise the equity component (see note 1(a)).
(p) Taxation
Tax on the profit or loss for the year comprises current and deferred tax.
Corporation tax is recognised in the income statement except to the extent that
it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years. The tax effect of
different items of expenditure is allocated between revenue and capital on the
same basis as the particular item to which it relates, using the Company's
effective rate of tax, as applied to those items allocated to revenue, for the
accounting period.
Deferred tax is provided, using the liability method, on all temporary
differences at the balance sheet date between the tax basis of assets and
liabilities and their carrying amount for financial reporting purposes. Deferred
tax liabilities are measured at the tax rates that are expected to apply to the
period when the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the balance sheet date.
2. The above results for the year to 31 January 2006 are audited.
3. The Directors do not recommend the payment of a dividend for the year (2005:
nil).
4. Consolidated return per Ordinary Share
Revenue Capital
*Net Per *Net Per
return Ordinary Share return Ordinary Share Total
£'000 Shares (pence) £'000 Shares (pence) (pence)
2006
Basic return per 876 13,161,125 6.66 44,674 13,161,125 339.44 346.10
Share
Option conversion** - 188,069 - 188,069
CULS*** 34 6,719,899 - 6,719,899
910 20,069,093 4.53 44,674 20,069,093 222.60 227.13
Revenue Capital
*Net Per *Net Per
return Ordinary Share return Ordinary Share Total
£'000 Shares (pence) £'000 Shares (pence) (pence)
2005
Basic return per 23 12,506,381 0.18 28,034 12,506,381 224.16 224.34
Share
Option conversion** - 37,346 - 37,346
CULS*** 37 7,425,672 - 7,425,672
60 19,969,399 0.30 28,034 19,969,399 140.38 140.68
Basic return per Ordinary Share has been calculated using the weighted average
number of Ordinary Shares in issue during the year.
* 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 IAS
33: Earnings per Share.
*** CULS assumed converted as the share price during the year was greater than
the conversion price.
5. Consolidated net asset value per Ordinary Share:
The basic net asset value per Ordinary Share is based on net assets of
£212,645,000 (2005: £172,541,000) and on 13,313,427 Ordinary Shares (2005:
12,932,672) being the number of Ordinary Shares in issue at the year-end.
The fully 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 (2005: 692,500) Share Options were exercised at the prevailing
exercise prices, giving a total of 20,737,052 issued Ordinary Shares (2005:
20,624,552).
6. Transition statements
These financial statements for the year ended 31 January 2006 are the first
prepared under IFRS. Notes 6a to 6c below show the effects of IFRS on the
results previously reported, and these IFRS figures are then used as
comparatives for the current year.
6a. Reconciliation of consolidated income
for the year ended 31 January 2005 (the last period presented under previous
GAAP)
Effect of
Previous transition to
GAAP IFRS IFRS
£'000 £'000 £'000
Investments
Gains on investments 28,303 - 28,303
Exchange differences 661 - 661
Net investment results 28,964 - 28,964
Income 3,671 - 3,671
Expenses
Investment management fee (2,707) - (2,707)
Interest payable and similar charges (979) - (979)
Share based remuneration (note 1) - (222) (222)
Other expenses (650) - (650)
Total expenses (4,336) (222) (4,558)
Profit before taxation 28,299 (222) 28,077
Taxation (20) - (20)
Profit after taxation 28,279 (222) 28,057
Return per Ordinary Share: pence pence pence
Basic 226.12 (1.78) 224.34
Diluted 141.79 (1.11) 140.68
Note to the reconciliation of consolidated income at 31 January 2005:
1. In accordance with IFRS 2, the fair value of share options awarded under the
Company's 2002 Executive Share Option Scheme is spread over the vesting period
of the options and a Share options reserve has been created accordingly.
6b. Reconciliation of consolidated equity
as at 1 February 2004 (date of transition)
Effect of IFRS at
Previous transition to 1 February
GAAP IFRS 2004
£'000 £'000 £'000
Non current assets
Investments at valuation 151,189 - 151,189
Current assets
Investments held in Subsidiary Company 48 - 48
Trade and other receivables 549 - 549
Cash and cash equivalents 13,776 - 13,776
14,373 - 14,373
Total assets 165,562 - 165,562
Current liabilities
Bank loans and overdrafts (19,248) - (19,248)
Trade and other payables (1,702) - (1,702)
(20,950) - (20,950)
Total current assets less current liabilities 144,612 - 144,612
Non current liabilities
CULS (384) - (384)
(384) - (384)
Total liabilities (21,334) - (21,334)
Net assets 144,228 - 144,228
Represented by:
Share capital 613 - 613
Share options reserve (note 1) - 174 174
Share premium account 629 - 629
Capital reserve - realised 118,383 - 118,383
Capital reserve - unrealised 30,089 - 30,089
Revenue reserve (note 1) (5,486) (174) (5,660)
Issued capital and reserves 144,228 - 144,228
Net asset value per Ordinary Share pence pence pence
Basic 1,177 - 1,177
Diluted 723 - 723
Note to the reconciliation of consolidated equity at 1 February 2004:
1. In accordance with IFRS 2, the fair value of share options awarded under the
Company's 2002 Executive Share Option Scheme is spread over the vesting period
of the options and a Share options reserve has been created accordingly.
6c.Reconciliation of consolidated equity
as at 31 January 2005 (end of last period presented under previous GAAP)
Effect of IFRS at
Previous transition to 1 February
GAAP IFRS 2004
£'000 £'000 £'000
Non current assets
Investments at valuation 149,282 - 149,282
Current assets
Investments held in Subsidiary Company 137 - 137
Investments held for trading (369) (369)
Trade and other receivables 858 - 858
Cash and cash equivalents 28,862 - 28,862
29,488 - 29,488
Total assets 178,770 - 178,770
Current liabilities
Trade and other payables (1,313) - (1,313)
(1,313) - (1,313)
Total current assets less current liabilities 177,457 - 177,457
Non current liabilities
Bank loans (4,566) - (4,566)
CULS (350) - (350)
(4,916) - (4,916)
Total liabilities (6,229) - (6,229)
Net assets 172,541 - 172,541
Represented by:
Share capital 647 - 647
Share options reserve (note 1) - 396 396
Share premium account 629 - 629
Capital reserve - realised 141,956 - 141,956
Capital reserve - unrealised 34,550 - 34,550
Revenue reserve (note 1) (5,241) (396) (5,637)
Issued capital and reserves 172,541 - 172,541
Net asset value per Ordinary share pence pence pence
Basic 1,334 - 1,334
Diluted 860 - 860
Note to the reconciliation of consolidated equity at 31 January 2005:
1. In accordance with IFRS 2, the fair value of share options awarded under the
Company's 2002 Executive Share Option Scheme is spread over the vesting period
of the options and a Share options reserve has been created accordingly.
7. The financial information set out above does not constitute the Group's
statutory financial statements for the year ended 31 January 2006 but is derived
from and has been prepared on the same basis as those financial statements. The
information for the year ended 31 January 2005, other than that which has been
restated as described above, 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. Those statutory accounts were prepared under UK GAAP and in accordance
with the SORP.
8. The statutory financial statements for the year ended 31 January 2006 have
been audited and will be delivered to the Registrar of Companies following the
Company's Annual General Meeting. The Annual General Meeting will be held on 7
July 2006 at 12 noon in the Board Room, Ground Floor, Ryder Court, 14 Ryder
Street, London SW1Y 6QB. The Annual Report will be posted to shareholders and
those individuals on the Company's mailing list as soon as practicable after
printing and will also be available on request from the Company Secretary, J O
Hambro Capital Management Limited, Ground Floor, Ryder Court, 14 Ryder Street,
London SW1Y 6QB.
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