Final Results

Ivory & Sime UK Smlr.Co's Trust PLC 09 May 2003 Ivory & Sime UK Smaller Companies Trust plc To: RNS From: Ivory & Sime UK Smaller Companies Trust plc Date: 9 May 2003 RESULTS FOR YEAR TO 31 MARCH 2003 Investment Objective To achieve capital growth by investing primarily in a portfolio of smaller companies quoted on the London Stock Exchange. The benchmark index is the FTSE SmallCap (ex Investment Companies) Index. Results • Net asset value fell by 31.5%, outperforming the benchmark index by 3.8 percentage points. • Unchanged dividend for the year of 4.0p per share. Results Over the year to 31 March 2003, the net asset value per share fell to 138.28 pence, a fall of 31.5 per cent, against a fall of 35.3 per cent in the FTSE SmallCap (ex Investment Companies) Index over the same period. In absolute terms the magnitude of the fall is clearly disappointing but some comfort is drawn from the fact that in the second half of the year the Company achieved a positive return of 3.4 per cent against a fall of 8.7 per cent in the comparative index. This relative improvement has been achieved by an emphasis on investment in businesses which are financially strong and important players in their chosen markets and trading at attractive valuation levels. In difficult circumstances the temptation is to try to apportion blame for weak stockmarkets on global instability, whereas reductions in corporate profitability were probably a far more significant contributor. For most of the Company's financial year, corporate profits have been under pressure. Businesses have tried to maintain their profit margins by cutting costs, in the face of static or declining revenues. Not surprisingly, business investment has suffered as a consequence. Latterly, concerns over employment prospects, uncertainty over levels of future pension fund returns and the impact of tax increases have affected consumer confidence. There are initial signs that consumer expenditure, which has sustained the economy to date, may be coming under pressure. Earnings Group earnings per Ordinary Share decreased from 4.17 pence to 3.57 pence. Dividend The Board has proposed a final dividend of 3.00 pence per share, making a total dividend for the year of 4.00 pence, which is unchanged from the previous year. The final dividend is payable on 4 July 2003 to shareholders on the register on 6 June 2003. The Company's dividend yield at 31 March 2003, of 3.8 per cent, is one of the highest available from a smaller company investment trust. The Board is conscious of the value of dividend income in the current uncertain environment. Shareholder Value During the year the Company bought back 200,000 Ordinary Shares for cancellation. The facility is operated within specific guidelines set by the Board and its principal aim is to enhance shareholder value. The Board will seek to renew the Company's share buy-back facility at the forthcoming Annual General Meeting. Investment Policy The Managers continue to favour a growth bias in the portfolio, but new opportunities have resulted in investment over a wider spectrum than hitherto. The Board regularly reviews the Company's gearing level and bank facilities. The Board has supported the Managers in maintaining a near neutral stance in respect of gearing during the year, taking the view that market volatility is not conducive to fully committing the gearing facility. Furthermore, the Board endorses the Managers' view that new ideas require additional amounts of due diligence in the current environment. Board As previously announced, Mr I Inglis has decided to retire at the conclusion of the Annual General Meeting which will be held on 24 June 2003. He has served on the Board since 1992. Outlook Regardless of the course of events in the Middle East, 2003 is likely to prove just as challenging a year as 2002. The current economic environment appears far from set fair and tales of corporate woe are likely to emanate from some sectors. However, valuation levels are very different from a year ago and the Managers, with the support of the Board, are optimistic that the current portfolio represents an appropriate spread of investment in companies with strong cashflows and balance sheets, strong business franchises and strong management. Group Statement of Total Return (Incorporating the Revenue Account) For the Year Ended 31 March 2003 Year Ended 31 March 2003 £'000 £'000 £'000 Revenue Capital Total Losses on investments - (13,306) (13,306) Income 1,381 - 1,381 Investment management and secretarial fees (189) (254) (443) Other expenses (236) - (236) --------- --------- --------- Net return before finance costs and taxation 956 (13,560) (12,604) Interest payable (176) (326) (502) --------- --------- --------- Return on ordinary activities before taxation 780 (13,886) (13,106) Tax on ordinary activities - - - --------- --------- --------- Return attributable to equity shareholders 780 (13,886) (13,106) Dividends in respect of equity shares (869) - (869) --------- --------- --------- Transfer from reserves (89) (13,886) (13,975) --------- --------- --------- Return per share: 3.57p (63.51)p (59.94)p Group Statement of Total Return (Incorporating the Revenue Account) For the Year Ended 31 March 2003 Year Ended 31 March 2002 £'000 £'000 £'000 Revenue Capital Total Losses on investments - (5,632) (5,632) Income 1,639 - 1,639 Investment management and secretarial fees (230) (327) (557) Other expenses (199) - (199) --------- --------- --------- Net return before finance costs and taxation 1,210 (5,959) (4,749) Interest payable (189) (351) (540) --------- --------- --------- Return on ordinary activities before taxation 1,021 (6,310) (5,289) Tax on ordinary activities (109) 109 - --------- --------- --------- Return attributable to equity shareholders 912 (6,201) (5,289) Dividends in respect of equity shares (875) - (875) --------- --------- --------- Transfer to/(from) reserves 37 (6,201) (6,164) --------- --------- --------- Return per share: 4.17p (28.35)p (24.18)p Group Balance Sheet As at 31 March 2003 2003 2002 £'000 £'000 Fixed assets Investments 35,247 49,958 --------- --------- Current assets Debtors 1,681 212 Cash at bank and on deposit 1,181 1,838 --------- --------- 2,862 2,050 Creditors: Amounts falling due within one year (1,144) (861) --------- --------- Net current assets 1,718 1,189 --------- --------- Total assets less current liabilities 36,965 51,147 Creditors: Amounts falling due after more than one year (7,000) (7,000) --------- --------- Net assets 29,965 44,147 --------- --------- Capital and reserves Called-up share capital 10,836 10,936 Capital redemption reserve 100 - Share premium account 3,935 3,935 Capital reserve - realised 31,062 41,155 - unrealised (16,923) (12,923) Revenue reserve 955 1,044 --------- --------- Equity shareholders' funds 29,965 44,147 --------- --------- Net asset value per share 138.28p 201.86p Group Cash Flow Statement for the Year Ended 31 March 2003 2003 2002 £'000 £'000 Operating activities Investment income received 1,342 1,224 Deposit interest received 127 355 Underwriting commission received 6 5 Investment management fees paid (390) (503) Secretarial fees paid (53) (54) Other cash payments (249) (203) --------- --------- Net cash inflow from operating activities 783 824 --------- --------- Servicing of finance Interest paid (504) (596) --------- --------- Net cash outflow from servicing of finance (504) (596) --------- --------- Taxation Tax recovered - 7 --------- --------- Capital expenditure and financial investment Purchases of investments (19,084) (26,967) Disposals of investments 19,126 23,110 --------- --------- Net cash inflow/(outflow) from capital expenditure and 42 (3,857) Financial investment --------- --------- Equity dividends paid (875) (875) --------- --------- Net cash outflow before financing (554) (4,497) --------- --------- Financing Ordinary Shares purchased for cancellation (103) - Loans repaid - (5,000) --------- --------- Net cash outflow from financing (103) (5,000) --------- --------- Decrease in cash (657) (9,497) --------- --------- Reconciliation of net cash flow to movement in net debt Decrease in cash in the year (657) (9,497) Loan repaid - 5,000 --------- --------- Movement in net debt (657) (4,497) --------- --------- Net debt at 1 April 2002 (5,162) (665) --------- --------- Net debt at 31 March 2003 (5,819) (5,162) --------- --------- Notes 1. Basic earnings per Ordinary Share are based on a weighted average of 21,864,796 Ordinary Shares in issue during the year (2002 - 21,870,260). 2. Final dividend of 3.00p (2002 - 3.00p) will be paid on 4 July 2003 to shareholders on the Register on 6 June 2003. 3. There were 21,670,260 Ordinary Shares in issue at 31 March 2003 (2002 - 21,870,260). During the year 200,000 Ordinary Shares of 50p each were repurchased for cancellation at an aggregate cost of £207,000. 4. These are not statutory accounts in terms of Section 240 of the Companies Act 1985. Statutory accounts for the year to 31 March 2002, which were unqualified, have been lodged with the Registrar of Companies. The statutory accounts for the year to 31 March 2003 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. 5. The Annual General Meeting will be held at 80 George Street, Edinburgh on Tuesday 24 June 2003 at 12.30pm. Managed by ISIS Asset Management plc For further information please contact: Stephen Grant Gordon Hay Smith ISIS Asset Management plc: Tel. 0131 465 1000 This information is provided by RNS The company news service from the London Stock Exchange

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