Half-yearly report - interim results
18 Dicembre 2006 - 4:02PM
UK Regulatory
WELSH INDUSTRIAL INVESTMENT TRUST PLC
INTERIM RESULTS
6 MONTHS ENDED 5 OCTOBER 2006
CHAIRMAN'S INTERIM STATEMENT
Dear Shareholder,
The revenue profit before taxation for the half year ended 5 October, 2006 was
�27,000 against �75,000 for the comparable period last year. As a result,
revenue earnings per share were 2.0p against 5.6p last time.
The variance in revenue profit is virtually exclusively as a result of other
operating income falling to a loss of �11,000 this half-year from a profit of
�48,000 in 2005, this latter amount including a non-recurring profit of �21,000.
There was a loss on the capital account of �228,000 for the six months ended 5
October, 2006 against a profit of �177,000 in the corresponding period last
year. This was mainly due to falls in the prices of some of our AIM holdings.
Since 5 October, 2006 however all of these have now recovered with
SpaceandPeople plc hitting new highs and Transense Technologies now above the
level at the start of the financial year.
The net asset value per share at 5 October, 2006 was 490.3p against 511.5p six
months earlier. This represents a fall of 4.14% against a drop in the FTSE All
Share Index of 0.34%.
Details of the Company's ten largest investments as at 5 October, 2006 can
be found in note 6.
The Board has decided to increase cash and cash equivalents and thus reduce the
size of the invested portfolio. The cash element has increased from �301,000 as
at 5 April, 2006 to �1.46 million as at 5 October, 2006 which represents 22% of
the net asset value.
As in previous years the Board is proposing no interim dividend.
A P Stirling
Chairman
18 December, 2006
WELSH INDUSTRIAL INVESTMENT TRUST PLC
INTERIM RESULTS
UNAUDITED CONSOLIDATED INCOME STATEMENT
FOR THE HALF YEAR ENDED 5 OCTOBER 2006
Six months to Six months to Year ended
5 October 2006 5 October 2005 5 April 2006
Revenue Capital Total Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000
Income:
Dividend and
interest income 80 - 80 71 - 71 185 - 185
Other operating
income (11) - (11 48 - 48 41 - 41
----- ----- ----- ----- ----- ----- ----- ----- -----
69 - 69 119 - 119 226 - 226
Gains on
investments
held at fair
value - (228) (228) - 177 177 - 821 821
----- ----- ----- ----- ----- ----- ----- ----- ------
Total income
And gains on
investments 69 (228) (159) 119 177 296 226 821 1,047
----- ----- ----- ----- ----- ----- ----- ----- ------
Expenses
Other operating
Expenses (40) - (40) (42) - (42) (85) - (85)
Finance costs (2) - (2) (2) - (2) (4) - (4)
----- ----- ----- ----- ----- ----- ----- ----- ------
(42) - (42) (44) - (44) (89) - (89)
----- ----- ----- ----- ----- ----- ----- ----- ------
Profit/(loss)
before taxation 27 (228) (201) 75 177 252 137 821 958
Taxation - - - - - - - - -
----- ----- ----- ----- ----- ----- ----- ----- ------
Profit/(loss)
For the period 27 (228) (201) 75 177 252 137 821 958
===== ===== ===== ===== ===== ===== ===== ===== ======
Earnings per
Ordinary share (note 2) (14.9)p 18.7p 71.0p
===== ===== ======
WELSH INDUSTRIAL INVESTMENT TRUST PLC
INTERIM RESULTS
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF YEAR ENDED 5 OCTOBER, 2006
Half year ended 5 October, 2006
Ordinary
share Capital Retained
capital reserve Earnings Total
�'000 �'000 �'000 �'000
Balance at 5 April, 2006 67 6,546 292 6,905
Profit for the period - (228) 27 (201)
Ordinary dividend paid (Note 3) - - (85) (85)
Transfer on inter-company movement - 12 (12) -
------- ------- ------- -------
Balance at 5 October, 2006 67 6,330 222 6,619
======= ======= ======= =======
Half year ended 5 October, 2005
Ordinary
share Capital Retained
capital reserve Earnings Total
�'000 �'000 �'000 �'000
Balance at 5 April, 2005 67 5,725 240 6,032
Profit for the period - 177 75 252
Ordinary dividend paid (Note 3) - - (85) (85)
------- ------- ------- -------
Balance at 5 October, 2005 67 5,902 230 6,199
======= ======= ======= =======
Year ended 5 April, 2006
Ordinary
share Capital Retained
capital reserve Earnings Total
�'000 �'000 �'000 �'000
Balance at 5 April, 2005 67 5,725 240 6,032
Profit for the period - 821 137 958
Ordinary dividend paid (Note 3) - - (85) (85)
------- ------- ------- -------
Balance at 5 April, 2006 67 6,546 292 6,905
======= ======= ======= =======
WELSH INDUSTRIAL INVESTMENT TRUST PLC
INTERIM RESULTS
UNAUDITED BALANCE SHEET
AS AT 5 OCTOBER, 2006
5 October 5 October 5 April
2006 2005 2006
Assets �'000 �'000 �'000
Non current assets
Investments held at fair value 5,190 5,953 6,596
------- ------- -------
Total non current assets 5,190 5,953 6,596
------- ------- -------
Current assets
Accrued income and prepaid expenses 7 7 19
Other current assets 44 54 73
Cash and cash equivalents 1,456 263 301
------- ------- -------
Total current assets 1,507 324 393
------- ------- -------
Total assets 6,697 6,277 6,989
------- ------- -------
Current liabilities
Trade and other payables (33) (33) (39)
Current tax payable - - -
------- ------- -------
Total current liabilities (33) (33) (39)
------- ------- -------
Total assets less current liabilities 6,664 6,244 6,950
Non current liabilities
8.75% Cumulative Preference shares (45) (45) (45)
------- ------- -------
Net assets 6,619 6,199 6,905
======= ======= =======
Capital and reserves
Ordinary share capital (note 4) 67 67 67
Capital reserve 6,330 5,902 6,546
Retained earnings 222 230 292
------- ------- -------
Total equity 6,619 6,199 6,905
======= ======= =======
Basic net asset value per ordinary share 490.3p 459.2p 511.5p
(Note 5) ======= ======= =======
WELSH INDUSTRIAL INVESTMENT TRUST PLC
INTERIM RESULTS
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
FOR THE HALF YEAR ENDED 5 OCTOBER 2006
Half Half
year ended year ended Year ended
5 October 5 October 5 April
2006 2005 2006
�'000 �'000 �'000
Cashflow from operating activities
Investment income received 70 104 177
Deposit interest received 10 3 8
Share dealing (loss) / fit (2) 1 -
Other income - 2 2
Other cash payments (39) (47) (94)
------- ------- -------
Net cash flows from operating activities 39 63 93
======= ======= =======
Cash flows from investing activities
Purchase of investments (299) (440) (923)
Sale of investments 1,498 355 852
------- ------- -------
1,199 (85) (71)
======= ======= =======
Cash flows from financing activities
Preference dividends paid - - (4)
Equity dividends paid (83) (83) (85)
------- ------- -------
(83) (83) (89)
======= ======= =======
Increase/(decrease) in cash and
cash equivalents 1,155 (105) (67)
Cash and cash equivalents at start of period 301 368 368
------- ------- -------
Cash and cash equivalents at end of period 1,456 263 301
======= ======= =======
WELSH INDUSTRIAL INVESTMENT TRUST PLC
INTERIM RESULTS
PRINCIPAL ACCOUNTING POLICIES
The Group's principal accounting policies are as follows:
(a) Basis of accounting
The financial statements of the Group and the Company have been prepared in
accordance with International Financial Reporting Standards ("IFRS") as
adopted by the European Union. These comprise standards and interpretations
approved by the International Accounting Standards Board ("IASB"), together
with interpretations of the International Accounting Standards and Standing
Interpretations Committee approved by the International Accounting Standards
Committee ("IASC") that remain in effect, to the extent that IFRS have been
adopted by the European Union.
(b) Basis of preparation
The financial statements have been prepared under the historical cost
convention, exceptfor the revaluation of certain financial instruments. The
principal accounting policies adopted are set out below. Where presentational
guidance set out in the Statement of Recommended Practice ("the SORP") for
investment trusts issued by the Association of Investment Trust Companies ("the
AITC") in April 2006 is consistent with the requirements of IFRS, the directors
have sought to prepare the financial statements on a basis compliant with the
recommendations of the SORP.
(c) Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and its subsidiary undertakings made up to 5 October 2006. All
intra-group transactions, balances, income and expenses are eliminated on
consolidation.
(d) Presentation of Income Statement
In order to better reflect the activities of an investment trust company and
in accordance with guidance issued by the AITC, supplementary information
which analyses the Income Statement between items of a revenue and capital
nature has been presented alongside the Income Statement. Net capital returns
may not be distributed by way of a dividend. The net revenue is the measure
the directors believe appropriate in assessing the Group's compliance with
certain requirements set out in section 842 of the Income and Corporation
Taxes Act 1988. As permitted by section 230 of the Companies Act 1985, the
Company has not presented its own income statement.
(e) Segmental reporting
A business segment is a group of assets and operations that are subject to
risks and returns that are different from those of other business segments.
The group comprises of one business segment only - the Investment Trust
This is consistent with internal reporting. All revenues are derived
from operations within the United Kingdom and consequently no separate
geographical segment information is provided.
(f) Dividend and interest income
Income from listed securities, treasury stocks and interest receivable on
bank deposits is accounted for on a receivable basis.
(g) Expenses
All expenses and interest payable are accounted for on an accruals basis.
All expenses are charged through the income Statement except the expenses which
are incidental to the disposal of an investment are deducted from the disposal
proceeds of the investment.
(h) Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from profit before tax as reported in the income statement
because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible. The Group's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the balance sheet
date.
In line with the recommendations of the SORP, the allocation method used to
calculate tax relief on expenses presented against capital returns in the
supplementary information in the income statement is the "marginal basis".
Under this basis, if taxable income is capable of being offset entirely by
expenses presented in the revenue column of the income statement, then no tax
relief is transferred to the capital return column.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised.
Investment trusts which have approval under section 842 of the Income
Corporation Taxes Act 1988 are not liable for taxation on capital gains.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the assets to be
recovered.
Deferred tax is calculated at the rates that are expected to apply in the
period when the liability is settled or the asset realised. Deferred tax is
charged or credited in the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.
(i) Investments
Purchases and sales of listed investments are recognised on the trade date, the
date on which the Group commit to purchase or sell the investment. All
investments are designated upon initial recognition as held at fair value, and
are measured at subsequent reporting dates at fair value, which is either the
bid price or the last traded price, depending on the convention of the exchange
on which the investment is quoted. Fair values for unquoted investments, or
for investments for which there is only an inactive market, are established by
taking into account the guidelines issued by the British Venture Capital
Association as follows:
(i) Investments which have been made in the last 12 months are valued at
cost in the absence of overriding factors;
(ii) Investments in companies at an early stage of development are also
valued at cost in the absence of overriding factors;
(iii) Where investments have gone beyond the stage in their development in the
guidelines above, the shares may be valued by having regard to a suitable
price - earnings ratio to that company's historic post-tax earnings or the
net asset value of the investment; and
(iv) Where a value is indicated by a material arm's length market
transaction by a third party in the shares of a company, that value may be
used.
Gains and losses on the disposal of investments and permanent impairments in
the value of investments are dealt with in capital reserves - realised, and
unrealised gains and losses on the revaluation of investments are dealt with in
capital reserves - unrealised.
Year end exchange rates are used to translate the value of investments which
are denominated in foreign currencies.
Fixed income and equity investments together with interests in Group
undertakings are regarded as financial fixed assets as they are held for long -
term investment purposes.
(j) Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are short
term, highly liquid investments that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value.
(k) Dividends payable
All dividends are recognised in the period in which they are approved by
shareholders.
(l) Trade and other payables
Other payables are not interest-bearing and are stated at their nominal value.
(m) Capital reserves
The capital reserve comprises of both realised and unrealised elements.
Capital Reserve - Realised.
The following are accounted for in this reserve:
- gains and losses on the realisation of investments.
- realised exchange differences of a capital nature.
- expenses and finance costs, together with the related taxation effect,
charged to this reserve in accordance with the above policies.
Capital Reserve - Unrealised.
The following are accounted for in this reserve:
- increases and decreases in the valuation of investments held at the period-
end.
- unrealised exchange differences of a capital nature.
- provisions charged against carrying value of investments held at the period
end.
(n) Revenue reserve
All other income and expenses not recognised in the capital reserve are
recognised in this reserve. Distributions can only be made from the revenue
reserve.
WELSH INDUSTRIAL INVESTMENT TRUST PLC
INTERIM RESULTS
NOTES TO THE ACCOUNTS
1 COMPARATIVE INFORMATION
The financial information contained in this interim report does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
financial information for the half years ended 5 October 2006 and 5 October 2005
has not been audited. The information for the year ended 5 April 2006 has been
extracted from the latest published audited financial statements. The audited
financial statements for the year ended 5 April 2006 have been filed with the
Registrar of Companies. The report of the auditors on those financial
statements contained no qualification or statement under section 237(2) or (3)
of the Companies Act 1985.
2 EARNINGS PER ORDINARY SHARE
Basic return
Basic earnings per ordinary share is based on the net loss for the half year of
�201,000 (half year ended 5 October, 2005: gain �252,000; year ended 5 April,
2006: gain �958,000) and on 1,350,000 ordinary shares.
The earnings per ordinary share figures detailed above can be further analysed
between revenue and capital as follows:-
Half Half
year ended year ended Year ended
5 October 5 October 5 April
2006 2005 2006
�'000 �'000 �'000
Net revenue profit attributable to equity
holders of the parent 27 75 137
Net capital (loss)/profit attributable to
equity holders of the parent (228) 177 821
------- ------- -------
Net total (loss)/profit (201) 252 958
======= ======= =======
The weighted average number of ordinary shares in issue during the period was
1,350,000
Earnings per share Pence Pence Pence
Revenue 2.0 5.6 10.2
Capital (16.9) 13.1 60.8
------- ------- -------
Total earnings per share (14.9) 18.7 71.0
======= ======= =======
There are no potentially dilutive shares in issue
3 DIVIDENDS
Half Half
year ended year ended Year ended
5 October 5 October 5 April
2006 2005 2006
�'000 �'000 �'000
Amounts recognised as distributions to
equity holders in the period:
Final dividend for the year ended 5 April,
2006 of 6.3p (2005: 6.3p) per share 85 85 85
------- ------- -------
85 85 85
======= ======= =======
4 SHARE CAPITAL
(i) Ordinary
1,350,000 ordinary shares were in issue throughout the periods covered in this
statement.
(ii) Preference
In addition there were in issue 225,000 8.75% cumulative preference shares of
20p each. The preference dividend is cumulative and payable in one instalment on
5th April every year, and is deemed to accrue evenly from day to day. The
voting
rights of the preference shareholders are restricted to resolutions to winding
up the company, or to vary the special rights attached to the preference shares,
in which event each shareholder is entitled to one vote. Upon the winding up of
the company the preference shareholders rank first in the return of capital,
being however restricted to the nominal amount paid up, together with any
arrears of the preference dividend.
5 NET ASSET VALUE PER ORDINARY SHARE
Net asset value per ordinary share is based on Equity attributable to equity
shareholders of �6,619,000 (half year ended 5 October, 2005: 6,199,000; year
ended 5 April, 2006: �6,905,000) and on 1,350,000 ordinary shares being the
number of ordinary shares in issue at each period end.
6 TEN LARGEST INVESTMENTS
As at 5 October, 2006 the Company's ten largest investments were:-
Market Value % of invested
�'000s portfolio
Treasury Stock 6.25% 2010 196 3.24
British American Tobacco plc 428 8.12
London & Associated Properties plc 352 6.68
National Grid plc 207 3.92
Scottish Power plc 162 3.08
United Utilities plc 166 3.14
Image Scan Holdings plc 360 6.84
Investinmedia plc 164 3.11
SpaceandPeople plc 837 15.88
Transense Technologies plc 231 4.37
----- -----
3,103 58.38
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