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Active Cap Trust Plc (AIT)

  Print      Mail a friend       Annual reports

Tuesday 17 July, 2007

Active Cap Trust Plc

Final Results

Active Capital Trust PLC
17 July 2007

To:                RNS

From:              Active Capital Trust plc

Date:              17 July 2007

Results for the year to 31 May 2007

The Board of Active Capital Trust plc announces the unaudited results of the
Company for the year ended 31 May 2007.

•         Net asset value increase of 19.5% over the year to 31 May 2007

•         Share price increase of 20.8% over the year to 31 May 2007

Chairman's Statement as follows:

'I am pleased to present my Statement for the year ended 31 May 2007.  During
the first half of the Company's financial year the AiM market, where the
majority of our investments are traded, had a poor period in both absolute terms
and relative to other UK small company markets.  It is therefore pleasing to be
able to report that for the second year running we have achieved basic net asset
per share growth in excess of 20%.

I believe this positive return is an indication of the growth potential within
our portfolio, which led your Board to recommend the corporate restructuring
which concluded last summer, to enable shareholders to capture more of the
potential return.

Results for the year to 31 May 2007

Over the year the total assets of Active Capital Trust were reduced from £146.2
million to £121.2 million.  This planned reduction was as a result of the tender
offer to shareholders which returned £32.2 million at 129.8 pence per share, the
impact of further share buy backs of some £6.2 million, revenue losses and other
costs of £3.9 million offset by capital growth from the portfolio of £17.3
million.  The resulting impact of these items was an increase in net asset value
per share of 30.4 pence per share from 140.3 pence to 170.7 pence, a 21.7%
increase.  After taking into account the potential dilution from the founder
shares, the increase in net asset value per share was 19.5%, with a diluted net
asset value of 167.6 pence per share.

Revenue is derived from fixed interest securities, deposit income and dividends
from investments.  This revenue amounted to £0.9 million compared to £1.42
million in the previous year and, after the deduction of investment management
fees and other direct costs, a pre-interest revenue loss of £1.28 million was
incurred (2006 - £1.16 million).  After interest on both loans and tax is
deducted, the revenue loss for the year was £3.09 million or 5.22 pence per
share, compared to the 4.04 pence in 2006.

The movement in revenue return per share can principally be attributed to the
restructuring, as some of the more mature, higher yielding investments were sold
and financed the Tender Offer, which together with share buy backs reduced the
number of shares in issue from 82.7 million to 53.4 million, resulting in
revenue return per share being calculated on the average number of shares in
issue of 59.2 million.

Portfolio Performance

The past year has seen significant changes to the capital structure with over
£38 million returned to shareholders in a combination of the Tender Offer and
subsequent share buy backs.  We started the year with 82.7 million shares in
issue and concluded the year with 53.4 million, a reduction of over 35%

The changes in the number of shares in issue obscure how the portfolio has
performed over the period.  However, if the capital return attributable to
shareholders of £17.3 million is added to capital returned by share buy backs of
some £6.2 million, this provides total growth of £23.5 million which when
compared to opening total assets of £146.2 million less the funds returned early
in the financial year as part of the Tender Offer of £32.2 million (£114.0
million net), provides growth of 20.6% over the year.  This is similar to the
performance of the FTSE Small Cap (ex Investment Companies) Index of 21.7% over
the year but is significantly better than the 8.1% increase in the FTSE AIM
All-Share Index where the vast majority of your Company's portfolio companies
are traded.

Targeted Return and Founder Shares

It is the objective of the Company to provide shareholders with long term
capital growth and to return the initial capital subscribed by shareholders
together with a Targeted Return of 7.5% per annum by 31 May 2012.  Once Ordinary
Shareholders have received this return, the Founder Shares, which were issued to
the Investment Managers by way of a performance incentive, participate in 20% of
the excess capital.  As at 31 May 2007, the total value of the initial capital
plus Targeted Return amounted to 155 pence per share.  The net asset value per
Ordinary Share before providing for the potential dilution effects of Founder
Shares amounted to 170.7 pence, a 10.1% premium to the Targeted Return.  As a
result of providing for the potential dilution effects of the Founder Shares,
the diluted net asset value per Ordinary Share is 167.6 pence.

On the assumption that the ultimate return of capital to shareholders completes
in May 2012, the amount to be paid to Ordinary Shareholders has to grow to 222
pence before the Founder Shares share in any excess.

Gearing and Impact on Shareholders

The Company's portfolio of investments is financed by a combination of
Shareholders' Funds and bank borrowings.  In total, the Company utilised £30
million of borrowing facility during the year and the direct cost of bank
borrowing, together with other direct costs on these funds such as investment
management fees, resulted in a total cost of borrowing of some £2.2 million.
Over the year however, the portion of our Total Assets financed by bank
borrowings contributed £6.2 million using the average portfolio gain of 20.6%
discussed above.  This gain from gearing contributed some £4 million to
shareholders over the year and represents 7.5 pence per share growth in net
asset value for the shares in issue at the year end.

Share Buy Backs

In addition to the capital returned to shareholders by the Tender Offer, the
Company utilised the powers to buy back shares during the year.  A total of
4,475,000 shares were bought in for cancellation during the period, representing
7.7% of the shares in issue immediately after the Tender Offer.  Most of these
share buy backs took place in the second half of our financial year.  The total
cost of the share buy backs amounted to £6.2 million, an average cost per share
of 139 pence at an average discount to net asset value at the time of purchase
of 12%, contributing some £0.8 million to the remaining shares in issue at or
about 1.6 pence per share of performance.

Portfolio Structure and Strategy

Active Capital Trust was launched in May 2001 to provide growth companies with
the capital required to finance their business plans.  The majority of these
companies that have been invested in had been on the AiM market.  Since launch,
the net asset value per share has grown from 98.4 pence to 170.7 pence on an
undiluted basis.  This growth represents a total gain of 73.5% since launch
which compares well against the 32.9% growth in the FTSE Small Cap (ex
Investment Companies) Index and the 20.8% growth in the FTSE All-Share Index.
The performance is however even better against the FTSE AIM All-Share Index
which has fallen by 0.6% in the period.

This demonstrates that Active Capital Trust has been able to add value to a
portfolio of mainly AiM shares by a combination of good long term stock
selection, the use of gearing and, more recently, implementation of share buy

Last year your Board recommended, and shareholders supported, the reconstruction
of the Company which returned 30% of the capital to shareholders and extended
the period before the ultimate return of capital from 2007 to 2012.  The driver
behind this strategy was seen to capture for shareholders the upside in the
portfolio which the Investment Managers were forecasting and to allow new
investments to be made from funds realised from maturing investments.

During the first half of the financial year the AiM market went through a rough
patch, and only started recovering in the second half.  This market factor meant
that there was little opportunity to realise holdings at target values during
the first half.  However as markets improved, the Managers were able to realise
profits from the portfolio, the largest of which was a partial sale of Tanfield,
realising £7.1m at a £6.5m profit.  It is anticipated that as the portfolio
continues to mature the Managers will continue to sell down investments that
have achieved targets, enabling the portfolio to continue to be refreshed with
new opportunities and ideas.  Balancing the requirement to bring new investments
into the portfolio from which future capital growth should be provided, the
Company will continue to consider share buy backs as a mechanism for returning
excess capital to shareholders and to enhance asset values by purchasing at
discount levels to net asset value.


The year to May 2007 was particularly eventful with a significant return of
capital coupled with strong asset value performance.  Many of our portfolio
stocks are event driven and we look forward to seeing how our companies perform
and develop over the coming year.  The asset value per share is now above our
targeted return levels and your Investment Managers believe that there remains
strong growth potential in the portfolio.'

Jon Pither

For further information contact:
Bill Brown
Investment Manager
Bluehone Investors LLP          020 7496 8929

Michael Campbell
Company Secretary               0207 628 8000
F&C Asset Management plc

Unaudited Income Statement

                                                                    Year to 31 May 2007

                                                                  Revenue Capital   Total
                                                                    £'000   £'000   £'000

Gains on investments                                                    -  17,186  17,186
Realised exchange differences                                           -       -       -
Income                                                                900       -     900
Investment management fee                                         (1,733)       - (1,733)
Other expenses                                                      (449)       -   (449)

Return on ordinary activities
before finance costs and taxation                                 (1,282)  17,186  15,904

Finance costs                                                     (1,802)      78 (1,724)

                                                                  (3,084)  17,264  14,180

Taxation on ordinary activities                                       (5)       -     (5)

Return attributable to
ordinary shareholders                                             (3,089)  17,264  14,175

Transfer (from)/to reserves                                       (3,089)  17,264  14,175

Return per ordinary share:
           - basic                                                (5.22)p  29.15p  23.93p
           - diluted                                              (4.26)p  23.79p  19.53p

Audited Income Statement
                                                                     Year to 31 May 2006

                                                              Revenue       Capital           Total
                                                                £'000         £'000           £'000

Gains on investments                                                -        24,428          24,428
Realised exchange differences                                       -             2               2
Income                                                          1,418             -           1,418
Investment management fee                                     (2,119)             -         (2,119)
Other expenses                                                  (457)             -           (457)

Return on ordinary activities
before finance costs and taxation                             (1,158)        24,430          23,272

Finance costs                                                 (2,175)           511         (1,664)

Return on ordinary activity before tax                        (3,333)        24,941          21,608

Tax on ordinary activities                                       (10)             -            (10)

Return attributable to
ordinary shareholders                                         (3,343)        24,941          21,598

Transfer (from)/to reserves                                   (3,343)        24,941          21,598

Return per ordinary share:
            - basic                                           (4.04)p        30.14p          26.10p
            - diluted                                         (4.04)p        30.14p          26.10p

Unaudited Balance Sheet
                                                                                          As at          As at
                                                                                         31 May         31 May
                                                                                           2007           2006
                                                                                          £'000          £'000
Fixed Assets
            Listed investments                                                           11,687         13,009
            Quoted on the Alternative Investment                                         95,942         94,365
            Quoted on OFEX                                                                  278            470
            Unquoted investments                                                          4,873          4,743
            Unquoted corporate bonds                                                      2,750             26
            UK government securities                                                          -         19,989
                                                                                       ________       ________
                                                                                        115,530        132,602

Net current liabilities                                                                 (4,284)       (16,523)
                                                                                       ________       ________

Total assets less current liabilities                                                   111,246        116,079

Creditors: amounts falling due after more than one                                     (20,000)              -
                                                                                       ________       ________
Net assets                                                                               91,246        116,079
                                                                                       ________       ________

Financed by:
            Shareholders' funds                                                          91,246        116,079
                                                                                       ________       ________

Net asset value per ordinary share:
(see note 5) - basic                                                                     170.7p         140.3p

             - diluted                                                                   167.6p         140.3p

Unaudited Reconciliation of Movements in Shareholders' Funds
for the year ended 31 May 2007
                                           Called up                             Capital                      Total
                                               Share    Special     Capital   Redemption    Revenue  Share-holders'
                                             Capital    Reserve    Reserves      Reserve    Reserve           Funds
                                               £'000      £'000       £'000        £'000      £'000           £'000

Opening shareholders' funds                       91     75,979      48,006            -    (7,997)         116,079
Ordinary shares purchased for                   (29)   (38,621)           -           29          -        (38,621)
Costs associated with the tender offer             -      (387)           -            -          -           (387)
Return attributable to ordinary                    -                 17,264            -    (3,089)          14,175
shareholders                                                  -
Closing shareholders' funds                       62     36,971      65,270          29    (11,086)          91,246

Audited Reconciliation of Movements in Shareholders' Funds
for the year ended 31 May 2006
                                           Called up                             Capital                      Total
                                               Share    Special     Capital   Redemption    Revenue  Share-holders'
                                             Capital    Reserve    Reserves      Reserve    Reserve           Funds
                                               £'000      £'000       £'000        £'000      £'000           £'000

Opening shareholders' funds                       91     75,979      23,065            -    (4,654)          94,481
Return attributable to ordinary                    -                 24,941            -    (3,343)          21,598
shareholders                                                  -
Closing shareholders' funds                       91     75,979      48,006           -     (7,997)         116,079

Summarised Unaudited Cash Flow Statement
                                                                         Year to                Year to
                                                                     31 May 2007            31 May 2006
                                                                           £'000                  £'000

Net cash outflow from operating activities                                 (982)                (1,585)
Servicing of finance                                                     (1,570)                (2,175)
Taxation                                                                       -                      -
Capital expenditure and financial investment                              36,004                 16,285

Net cash inflow before financing                                          33,452                 12,525


Ordinary shares purchased for cancellation
in tender offer                                                         (32,382)                      -
Ordinary shares purchased for cancellation                               (6,239)                      -
Costs associated with the tender offer                                     (387)                      -

Net cash outflow from financing                                         (39,008)                      -

(Decrease)/increase in cash                                              (5,556)                 12,525

Reconciliation of net cash flow to movement in net debt

(Decrease)/increase in cash in the year                                  (5,556)                 12,525
Opening net debt                                                        (16,681)               (29,719)
Currency gains                                                                 -                      2
Change in fair valuation of interest rate swap                                78                    511

Closing net debt                                                        (22,159)               (16,681)

Reconciliation of operating profit to net cash flow from operating activities

Total return before finance costs and taxation                            15,904                 23,272
Gains on investments                                                    (17,186)               (24,428)
Exchange differences                                                           -                    (2)
(Decrease)/increase in prepayments, accrued income and other
debtors                                                                      337                  (104)
(Decrease) in creditors                                                     (32)                  (313)
Tax on investment income                                                     (5)                   (10)

Net cash outflow from operating activities                                 (982)                (1,585)


1.      The financial statements have been prepared under UK Generally Accepted
Accounting Practice ('UK GAAP') and in accordance with guidelines set out in the
Statement of Recommended Practice revised December 2005, for investment trusts,
issued by the Association of Investment Companies.

The preliminary announcement is prepared on the same basis as set out in the
previous year's Annual Accounts.

2.        Basic return per ordinary share is based on a weighted average of
59,218,063 ordinary shares in issue (2006: 82,746,118).

The founder shares give rise to potential dilution, depending upon the future
net asset value of the Company exceeding the Target Return and repayment of the
Targeted Return to ordinary shareholders by May 2012.  The diluted return
figures for 2007 are based on the net returns at 31 May 2007 and assuming, for
calculation purposes, 13,361,841 contingently issuable ordinary shares.

Diluted return per ordinary shares is based on a weighted average of 72,579,904
ordinary shares in issue (2006: 82,746,118).

3.    Income for the year to 31 May 2007 is derived from:

                                                  Year to 31 May 2007                 Year to 31 May 2006
                                                                £'000                               £'000

Equity investment                                                 587                                 983
Fixed interest investment                                         102                                  57
Deposit interest                                                  211                                 378
                                                                  900                               1,418

4.    No dividend will be paid in respect of the year to 31 May 2007 (2006:nil).

5.    The Basic NAV per ordinary share is calculated on ordinary shareholders'
funds of £91,238,000 (2006:£116,071,000) and 53,447,364 (2006: 82,746,118)
ordinary shares.  Founder shareholders' funds represent £8,000 (2006:  same).

Diluted NAV                                                         As at              As at
                                                              31 May 2007        31 May 2006
                                                                    £'000              £'000

Basic net assets attributable to ordinary  shareholders            91,238            116,071

Founder shares                                                          8                  8

Net assets                                                         91,246            116,079

Net assets in excess of targeted return attributable to
founder shareholders                                              (1,678)                  -

Diluted net assets attributable to ordinary shareholders           89,568            116,079

Diluted Net Asset Value per Ordinary Share                         167.6p             140.3p

6.    These are not statutory accounts in terms of Section 240 of the Companies
Act 1985.  The full audited accounts for the year to 31 May 2006, which were
unqualified, have been lodged with the Registrar of Companies.  The annual
report for the year to 31 May 2007 will be sent to shareholders shortly and will
then be available for inspection at Exchange House, Primrose Street, London,
EC2A 2NY, the registered office of the Company.

7.    The Annual General Meeting will be held on 9 October 2007.

                      This information is provided by RNS
            The company news service from the London Stock Exchange                   EW