Interim Results
August 11 2003 - 11:32AM
UK Regulatory
INVESCO Continental Smaller Companies Trust plc
Preliminary Announcement
Interim Results
Six Months to 30 June 2003
Chairman's Statement
After what had been one of the most difficult periods in recent stock market
history, the start of 2003 appeared to be offering more of the same. Tensions
in the Middle East continued, the consumer showed signs of nervousness and
earnings continued to disappoint. However, a swift resolution to the Iraqi War
and the continued easing of monetary policy provided sufficient impetus for a
change in sentiment by mid March and this continued through the second quarter
of the year.
During the period the Net Asset Value of the company rose by 14.3% as compared
to a rise of 17.2% in the HSBC Smaller Europe (ex UK Index). Larger companies
as represented by FTSE Europe Ex UK Index rose by 8.4%.
Although the performance of the Company against the benchmark continues to be
disappointing, the portfolio has been balanced both to take advantage of rises
triggered by improving economic outlook and to weather the worst excesses of
external shocks in what continues to be a very volatile environment.
Gearing
The Trust remained ungeared throughout almost the entire period. Towards the
end of the period the net cash position was reduced to a slightly geared
position and it is the intention to remain up to 10% geared until we have
greater confidence in the economic fundamentals.
Outlook
There is no doubt the tone of markets has improved from the low points
experienced at the end of 2002 and there is cause for optimism now that the
Iraqi War is over. Companies have improved their balance sheets and, whilst
valuations are no longer as compelling as they have been, your Board remains
optimistic that the environment for smaller European companies will continue to
improve as the world economy returns to a more robust footing.
Ian Dalziel
11 August 2003
Performance Statistics
At At
30 June 31 December %
2003 2002 Change
Capital - Sterling
Total assets less current 24,518 21,451 +14.3
liabilities (�'000)
Ordinary Shares:
Net asset value 46.6p 40.8p +14.3
Mid-market price 34.25p 30.0p +14.2
Discount per Ordinary Share 26.5% 26.4%
HSBC Smaller Europe (ex UK) Index 117.42 100.15 +17.2
Capital - Euro
Total assets less current 35,231 32,911 +7.1
liabilities (Euro'000)
Ordinary Shares:
Net asset value Euro0.67 Euro0.63 +7.1
Mid-market price Euro0.49 Euro0.46 +6.5
HSBC Smaller Europe (ex UK) Index 124.77 114.04 +9.4
(Euro)
Euro sterling exchange rate �0.696 �0.652 +6.7
Statement of Total Return
(Incorporating the Revenue Account)
Six Months to 30 June
2003
(Unaudited)
Revenue Capital Total
�'000 �'000 �'000
(Losses)/gains on investments - - (2,672) (2,672)
realised
- unrealised - 5,511 5,511
(Losses)/gains on foreign currency - 63 63
revaluation
Income
Overseas dividends 432 - 432
Deposit interest - - -
432 2,902 3,334
Investment management fee (32) (96) (128)
Other expenses (99) - (99)
Net return before finance costs and 301 2,806 3,107
taxation
Interest payable and similar charges - - -
Return on ordinary activities before 301 2,806 3,107
tax
Tax on ordinary activities (40) - (40)
Transfer (from)/to reserves 261 2,806 3,067
Return per ordinary share: 0.50p 5.33p 5.83p
The Revenue column of this statement is the profit and loss account of the
Company. All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued in the
period.
Six Months to 30 June Year ended 31 December
2002 2002
(Unaudited) (Audited)
Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000
(Losses)/gains on investments - - (215) (215) - (8,567) (8,567)
realised
- unrealised - 75 75 - - -
(Losses)/gains on foreign currency - (336) (336) - (120) (120)
revaluation
Income
Overseas dividends 344 - 344 469 - 469
Deposit interest - - - 14 - 14
344 (476) (132) 483 (8,687) (8,204)
Investment management fee (54) (163) (217) (84) (252) (336)
Other expenses (125) (13) (138) (301) - (301)
Net return before finance costs 165 (652) (487) 98 (8,939) (8,841)
and taxation
Interest payable and similar (37) (109) (146) (63) (189) (252)
charges
Return on ordinary activities 128 (761) (633) 35 (9,128) (9,093)
before tax
Tax on ordinary activities (62) 26 (36) (46) - (46)
Transfer (from)/to reserves 66 (735) (669) (11) (9,128) (9,139)
Return per Ordinary Share 0.13p (1.40)p (1.27) (0.02)p (17.34) (17.36)
p p p
Balance Sheet
At At At
30 June 31 30 June
December
2003 2002 2002
(Unaudited) (Audited) (Unaudited)
�'000 �'000 �'000
Fixed Assets
Investments 24,610 21,092 34,742
Current assets
Amounts due from brokers 74 2 375
Tax recoverable 28 31 28
Prepayments and accrued 45 19 28
income
Cash at bank 219 448 1,346
366 500 1,777
Creditors: amounts falling
due within one year
Amounts due to brokers - 12 -
Accruals and deferred 110 129 261
income
Term loans 348 - 1,037
458 141 1,298
Net current (liabilities)/ (92) 359 479
assets
Total assets less current 24,518 21,451 35,221
liabilities
Creditors: amounts falling - - 5,300
due after more than one
year
Net assets 24,518 21,451 29,921
Capital and reserves
Called up share capital 526 526 526
Share premium account 32,109 32,109 32,109
Special reserve 20,000 20,000 20,000
Other reserves:
Capital reserve - realised (27,981) (25,277) (18,807)
Capital reserve - 570 (4,940) (3,017)
unrealised
Revenue reserve (706) (967) (890)
Equity Shareholders' funds 24,518 21,451 29,921
Net asset value per ordinary 46.6p 40.75p 56.85p
share
Reconciliation of Movement in Shareholders' Funds
Six months Year to Six months
to 30 June 31 to 30 June
December
2003 2002 2002
(Unaudited) (Audited) (Unaudited)
�'000 �'000 �'000
Revenue return for the period 261 (11) 66
Capital return for the period 2,806 (9,128) (735)
Net movement in Shareholders' 3,067 (9,139) (669)
funds
Opening Shareholders' funds 21,451 30,590 30,590
Closing Shareholders' funds 24,518 21,451 29,921
Cash Flow Statement
Six months Year to Six months
to 30 June 31 December to 30 June
2003 2002 2002
(Unaudited) (Audited) (Unaudited)
�'000 �'000 �'000
Net cash flow from operating activities 103 (261) (91)
Servicing of finance - (346) (128)
Taxation 20 15 23
Capital expenditure and financial investment
- Purchase of investments (6,226) (13,806) (9,975)
- Sale of investments 5,463 19,412 9,962
Net cash (outflow)/ inflow before (640) 5,014 (209)
financing
Management of liquid resources 265 421 (211)
Financing
- New unsecured e0.5m loan 348 - -
- Unsecured e1.6m loan - - 1,037
- Debt repaid during year - (5,632) (491)
(Decrease)/increase in cash (27) (197) 126
Cash movement from decrease in liquid (265) (421) 211
resources
Cash movement from increase/(decrease) (348) 5,632 (546)
in debt
Foreign exchange rate changes 63 (120) (336)
Net cash/(debt) at beginning of period 448 (4,446) (4,446)
Net (debt)/cash at end of period (129) 448 (4,991)
Notes to the interim accounts
1. The net asset value per ordinary share of 1p is calculated on the basis of
52,634,900 ordinary shares in issue.
2. The revenue return per ordinary share is based on the net revenue return on
ordinary activities after taxation and on 52,634,900 ordinary shares, being the
number of ordinary shares in issue throughout the period and the previous
periods.
The capital return per ordinary share is based on the net capital return on
ordinary activities after taxation and on 52,634,900 ordinary shares in issue
throughout the period and the previous periods.
3. It is the intention of the Directors to conduct the affairs of the Company
so that it satisfies the conditions for approval as an investment trust company
set out in section 842 of the Income and Corporation Taxes Act 1988.
4. The management fee is calculated at the rate of one quarter of one per cent.
(plus VAT) by reference to the value of total assets less current liabilities
(excluding any borrowing for investment purposes) at the end of each respective
calendar quarter.
5. Amounts of �96,206 (31 December 2002: �252,531, 30 June 2002: �163,018) has
been charged to capital in respect of 75% of management fees in accordance with
the Company's accounting policy.
6. A summary of the net assets stated in euro's is as follows:
30 June 31 30 June
December
2003 2002 2002
Euro'000 Euro'000 Euro'000
Investments 35,364 32,359 53,621
Net current (liabilities/ (133) 552 2,340
assets)
Total assets less current 35,231 32,911 55,961
liabilities
(excluding loans for investment
purposes)
Loans - - 9,781
Net assets (shareholders' 35,231 32,911 46,180
funds)
7. The foregoing information at 31 December 2002 is an abridged version of the
Company's full accounts which carry an unqualified Auditor's report and have
been filed with the Registrar of Companies.
By order of the Board
INVESCO Asset Management Limited
Secretaries
11 August 2003
END