Interim Results
May 23 2003 - 10:22AM
UK Regulatory
RNS Number:5117L
American Opportunity Trust PLC
23 May 2003
American Opportunity Trust PLC
Unaudited Interim Results for the six months ended 31 March 2003
Chairman's Statement
Performance: Diluted NAV:93.0p, +4.5%. Benchmark Index: +0.1%
It is pleasing to be able to report that the net asset value rose during the
first half of this year after quite a protracted period of decline. The last
three years have been difficult ones for investors generally and markets around
the world have declined significantly since the peak of the "tech" bubble in the
spring of 2000. For the record, our net asset value rose by 4.0p or 4.5% to
93.0p during the period to 31 March 2003. Not only is it important to achieve an
actual improvement, our first priority, but it is also encouraging to report
that we did rather better than our benchmark, the Russell 2000 Index, which rose
marginally by 0.1%.
During the period we reduced our exposure to equities by approximately #1
million. Although the rise in the value of our holdings meant that, at the end
of March, we had #5 million or 33% of our portfolio invested in 13 equities, our
exposure to Treasury bills rose by #1 million to #10 million or 66% of our
portfolio. Our policy to invest in a portfolio of put options resulted in
further exposure to 12 equities; we have earned circa #1.5 million in premia on
writing them against which must be set those options under water - circa #0.5
million.
Outlook:
Over the last three years the US stock market, as measured by the Standard and
Poors Composite Index, has fallen by 43%. Both the duration and extent of this
fall are considerable by comparison with most bear markets, which should suggest
that the worst of it is over and it may be. However there are issues which
continue to concern investors.
The most important issue of concern is that of corporate profits; they seem to
be under pressure from at least three directions. The first and most worrying
is the prospect of deflation within the US economy, a quite natural occurrence
in the wake of a major financial bubble. The "tech" bubble was a very major one
and there is a possibility of deflation in America; in such circumstances,
companies would find it difficult to achieve sales growth, let alone profits
growth. Secondly there are quite severe cost pressures emanating from the
increased costs of regulation and litigation, insurance and pensions, etc.
Thirdly there is the pressure from the accounting profession to understate
profits in the name of conservatism. With the stock market apparently valued at
a price earnings ratio in the high teens (depending on the profits forecast
used), little or no profits growth would appear to make the stock market
unattractive for investors.
However, there are also some positive developments. American companies are quick
to cut costs and restore lost profitability, the dollar has declined a lot in
recent months, America's demographics are strong and there is the prospect of
another tax cut. So all is not gloom and doom! Furthermore, after such a
severe fall in the market, there are plenty of companies whose profits prospects
are good and whose shares are reasonably valued; they should rise in value as
their profits grow. In a portfolio that typically contains between twenty and
thirty holdings (when fully invested), it should not be too difficult to
identify some of them and thence to succeed in making some money for
shareholders. That certainly is our aim.
R A Hammond Chambers
Chairman
23 May 2003
CONSOLIDATED STATEMENT OF TOTAL RETURN
(*incorporating the revenue account) for the six months ended 31 March
2003 2002
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Gains on investments - 855 855 - 3,241 3,241
Exchange differences on currency and - (10) (10) - (173) (173)
capital items
Dividends and interest 89 - 89 330 - 330
Trading losses (143) - (143) (65) - (65)
Fee payable to manager (55) - (55) (114) - (114)
Other expenses (84) - (84) (97) - (97)
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Net return before finance costs and (193) 845 652 54 3,068 3,122
taxation
Premium on repurchase of CULS - - - - (6) (6)
Interest payable and similar charges (11) - (11) (99) - (99)
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Return on ordinary activities before (204) 845 641 (45) 3,062 3,017
taxation
Taxation on ordinary activities - - - (2) - (2)
___________________________________________________________________
Return on ordinary activities after (204) 845 641 (47) 3,062 3,015
taxation
Proposed dividend to Ordinary shareholders - - - - - -
___________________________________________________________________
Transfer (from)/to reserves (204) 845 641 (47) 3,062 3,015
___________________________________________________________________
___________________________________________________________________
Return per Ordinary share:
Basic (pence) (1.70) 7.04 5.34 (0.39) 25.51 25.12
Diluted (pence) + 5.32 4.04 + 18.61 18.32
* The revenue column of this statement is the consolidated revenue account of
the Group.
** The accounts have been prepared using accounting standards and policies
adopted at the previous year end.
+ In order to comply with Financial Reporting Standard No.14; Earnings per
Share, returns per share which are not diluted have not been shown.
All revenue and capital items in the above statement derive from continuing
operations.
CONSOLIDATED BALANCE SHEET
31 March 2003 30 September 2002 31 March 2002
#'000 #'000 #'000
(Unaudited) (Audited) (Unaudited)
Fixed asset investments 15,148 15,232 19,305
Current assets
Investments held by subsidiary undertaking 34 177 26
Debtors 532 270 340
Cash at bank 482 61 694
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1,048 508 1,060
__________________________________________________
Creditors: amounts falling due within one year
Bank loans and overdrafts - (186) -
Other creditors and accruals (1,128) (1,137) (1,551)
__________________________________________________
(1,128) (1,323) (1,551)
__________________________________________________
Net current liabilities (80) (815) (491)
__________________________________________________
Total assets less current liabilities 15,068 14,417 18,814
Creditors: amounts falling due after more than one year
Convertible Unsecured Loan Stock 2003/2006
- Series 1 (1,937) (1,937) (1,937)
__________________________________________________
- Series 2 (297) (287) (371)
__________________________________________________
(2,234) (2,224) (2,308)
__________________________________________________
12,834 12,193 16,506
__________________________________________________
__________________________________________________
Capital and reserves:
Called up share capital 1,500 1,500 1,500
Share premium account 6,088 6,088 6,088
Capital redemption reserve 535 535 535
Capital reserve - realised 7,532 10,399 13,930
- unrealised (2,595) (6,307) (5,616)
Revenue reserve (226) (22) 69
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Equity shareholders' funds 12,834 12,193 16,506
__________________________________________________
__________________________________________________
Net asset value per ordinary share
Basic (pence) 106.9 101.6 137.5
Diluted (pence) 93.0 89.0 113.7
CONSOLIDATED CASHFLOW STATEMENT
For the six months ended 31 March 2003 2002
#'000 #'000
Net cash outflow from operating activities (146) (44)
__________________________________________________
Net cash outflow from servicing of finance (1) (134)
__________________________________________________
Taxation paid in the period - -
__________________________________________________
Capital expenditure and financial investment
Purchases of investments (22,366) (23,178)
Sales of investments (including option premiums) 23,165 31,520
__________________________________________________
Net cash inflow from capital expenditure and financial investment 799 8,342
__________________________________________________
Equity dividends paid - (132)
__________________________________________________
Net cash inflow before financing 652 8,032
Financing
Purchase of CULS for cancellation - (125)
Decrease in fixed term borrowings - (6,993)
__________________________________________________
Net cash outflow from financing - (7,118)
__________________________________________________
Increase in cash 652 914
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__________________________________________________
Notes
1.The above results for the six months to 31 March 2003 are unaudited and have
been prepared on a basis consistent with the accounting policies set out within
the audited financial statements for the year ended 30 September 2002.
2.No dividend is proposed for the six months ended 31 March 2003 (2002: nil).
3.The calculation of the basic revenue and capital returns per Ordinary share
are based on the (deficits)/gains shown in the table below, and on 12,002,756
shares in issue throughout.
Six months to 31 March Six months to 31 March
2003 2002
(Deficit)/gain (Deficit)/gain
# #
Revenue (204,000) (47,000)
Capital 845,000 3,062,000
The diluted revenue and capital returns per share figures are calculated using
the same revenue and capital returns as for the basic return calculations.
However, the calculation for the six months ended 31 March 2003 assumes the full
conversion of the Series 1 Convertible Unsecured Loan Stock 2003/06. It does
not assume the conversion of the Series 2 Convertible Unsecured Loan Stock 2003/
06 or the 1,525,000 management options as the average share price during the
period was less than the conversion or exercise price (six months ended 31 March
2002 - assumes all converted).
4.The consolidated net asset values per share include current period revenue.
The basic net asset value is calculated using 12,002,756 shares (30 September
2002: 12,002,756; 31 March 2002: 12,002,756) being the number of shares in issue
at the period end. The diluted net asset value per Ordinary share at 31 March
2003 has been calculated on the basis that full conversion of the Series 1 Loan
Stock units outstanding at the period end had occurred, resulting in a total
issued share capital of 15,876,940 (30 September 2002: 15,876,940) Ordinary
Shares. The conversion price of the Series 2 Loan Stock and the exercise price
of the 1,525,000 management options were above the diluted net asset value at
both 31 March 2003 and 30 September 2002 and so they are not included in the
calculation. The diluted net asset value per Ordinary share as at 31 March 2002
takes into account the full conversion of the Series 1 and 2 Convertible
Unsecured Loan Stock outstanding at the period end and also assumes the
conversion of 1,525,000 management options.
5.The financial information set out above does not constitute the full statutory
financial statements as defined in Section 240 of the Companies Act 1985. The
financial information for the six months ended 31 March 2003 and 31 March 2002
has not been audited.
The information for the year ended 30 September 2002 has been extracted from the
statutory financial statements for the year to 30 September 2002, which
contained an unqualified auditors' report, have been lodged with the Registrar
of Companies, and did not contain a statement required under Section 237(2) or
(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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