TIDMAIT
RNS Number : 9306V
Active Capital Trust PLC
20 January 2012
To: RNS
From: Active Capital Trust plc
Date: 20 January 2012
Active Capital Trust plc
Half-Yearly Financial Report for the six months ended 30
November 2011
Chairman's Statement
I am pleased to report on the progress made by the Company over
the six month period to 30 November 2011. This period was not good
for UK equity markets and the small companies sector in particular.
The FTSE AIM index fell by 21.8% over this period and the FTSE
Small Cap Index (Ex Investment Companies) fell by almost as much
with a 19.3% loss. Against this background, it is pleasing to note
that the portfolio performed well with Net Asset Value per share
posting a positive result by increasing from 20.23 pence to 22.02
pence, an increase of 8.9% over the period representing
outperformance of the AIM Index of over 30%.
Portfolio Update
The Company is undertaking an orderly realisation of assets with
a view of maximising the value of realisations on behalf of
shareholders. The progress of the largest investments are discussed
in some detail below, together with their values at the period
end:
AI Claims Solutions
Value GBP3,815,000 33.6% of portfolio
The year to 30 June 2011 saw AI increase revenues by 28% to
GBP118 million and achieved record adjusted profits of GBP3.8
million. The current economic environment is having an impact on AI
with motor accident frequencies being below historic levels and
average vehicle hire periods being down. This has resulted in
market expectations for the profits for the current year being
reduced to GBP3 million. AI has positioned itself as an ethical
supplier of services to the motor claims market and the strategy of
seeking to keep claim costs to a minimum has resulted in the
company being able to achieve significantly better payment terms
than the sector average and has recently announced a further block
settlement from a group of insurers which amounted to GBP5 million
with no diminution in the carrying value of this debtor book.
The sector in which the Company operates is coming under
increased scrutiny from Government as a result of the high costs of
motor insurance and commissions paid to insurers for personal
injury claims and other motor related claims. The Company's
Investment Manager believe that the basis on which AI operates
places them in an interesting and strategically valuable position
within this sector as AI is delivering a service that keeps the
costs of claims to a minimum.
AorTech International
Value GBP 2,566,000 22.8% of portfolio
This holding has performed very well over the period, more than
doubling in value to now be the second largest holding in the
portfolio. The increase in value has been driven by the company
relocating its operations from Australia to the Rogers/ Minneapolis
area of North America. This move has brought the company close to
its existing and potential customer base and should improve the
commercial opportunities for the company.
Another important development has been in reaching agreement to
re-acquire the Intellectual Property ("IP") rights to the company's
polymer heart valve. The interim results recorded a profit for the
company and an improved cash position. The benefits of AorTech's
technology was recognised by a broker's research note upgrading St
Jude, a major US medical devices company, as a result of the
significant improvement in heart pacemaker leads insulated with
AorTech's material. The potential realisation value of AorTech will
be based on the value of its IP portfolio rather than traditional
discounted cash flow or price earnings ratio valuation bases and
the Board of AorTech recognises that this IP will be of increasing
interest to other medical companies.
Cambridge Sensors
Value GBP2,150,000 19.0% of portfolio
Trading at Cambridge Sensors, the largest unquoted holding, is
in line with budget for the current year. A number of positive
developments are currently under way including the company taking
over control of their US distribution from the previous
distributor.
This company has now recruited a direct sales force which will
sell direct to the customer base and enable the supply of not only
the glucose sensors but also related consumables such as lancets
and disinfection wipes. This is a major step forward and will
improve margins and add to shareholder value in moving the US
business from being a pure sensor company into a broader diabetes
company.
In the UK, further primary care trusts have been added and the
penetration has increased. The business is built on the number of
patients using the CSL meters and strips and from a standing start
only a year or so ago, the monthly distribution of meters is
increasing positively. At the start of the current financial year,
some 400 meters were being issued and this has now broken through
the 1,000 mark, meter issuance is forecast to increase to 5,000 per
month by the end of 2012. As meter issue increases this acts as a
drag on profits as meters are issued free of charge however payback
is fairly fast and strip sales are generating attractive
margins.
The strategy of moving all production into non-coded strips is
continuing and the technical problems would appear to have been
resolved and the next generation of meter is now with the
manufacturer for development.
Cash remains strong and the company has sufficient internal
resources to pursue the current development plans.
In the report to shareholders the company stated that it was
open to offers for a trade sale and opportunities in this area will
become an increasing area of focus of the Board as the business
continues to meet its targets.
IS Solutions
Value GBP1,300,000 11.5% of portfolio
The interim results for IS Solutions were positive with a
significant growth in recurring revenues and operating profits up
by some 44%.
The strategic move into web analytics is showing ongoing
strength given the relationship with SAS and the investment in
Celebrus (formerly Speed-Trap), this and strong order book suggests
that market expectations for the current full year should be
achieved.
Directors have been ongoing buyers of the company's shares over
the past few months indicating their belief in the prospects for
the company.
Netcall
Value GBP1,300,000 6.9% of portfolio
Results for the year to June 2011 met with market expectations
with EBITDA increased by 156% to GBP2.75m. Importantly, the cost
savings from the acquisition which were anticipated to amount to
GBP1.5m have been exceeded and cash generation was strong at
GBP2.2m resulting in a net cash position at the year end of just
under GBP6 million representing just over one quarter of the
current market capitalisation of the company.
The company is utilising the excess cash by commencing dividend
payments and has started a fairly aggressive share buyback
programme with just over one per cent of the company's shares
having been purchased in the quarter to December. We have recently
seen a response to both the positive trading and share buyback
activity with the share price progressing towards our target for
this company. The Investment Manager has taken advantage of this
and has started selling the holding after the period end.
Taken together, these holdings represent some 94% of the
portfolio.
Realisation Progress and Plans
The change in strategy for Active Capital to become a
realisation vehicle for shareholders was undertaken in August 2009.
At that date, the net asset value per share was 51 pence and to
date, 49 pence per share has been distributed which together with
the current portfolio value of 22 pence represents growth of some
40%. Over the same period, the AIM index has increased by around
17% despite the significant drop experienced over the last six
months. This indicates the value added by the strategy of exiting
our investments at target values based on fundamental analysis of
the value of each underlying company. The Company's Investment
Manager believe that there remains significant potential for
further asset value growth from the portfolio and this is based on
specific exit planning strategies based on deep knowledge of the
underlying business plans of each portfolio company. The Investment
Manager continues to work towards achieving these realisations
within the anticipated timetables agreed with shareholders.
Jon Pither
Chairman
For further information contact:
Bill Brown/Robert Mitchell
Investment Manager
Bluehone Investors LLP 020 7831 5088
Derek Osborne
Company Secretary
F&C Asset Management plc 0207 628 8000
Unaudited Income Statement
Six months ended 30 November
2011
Notes Revenue Capital Total
GBP'000 GBP'000 GBP'000
Gains on investments 1,094 1,094
Income 72 - 72
Investment management fee 5 (96) - (96)
Other expenses (150) - (150)
Return on ordinary activities
before taxation (174) 1,094 920
Tax on ordinary activities - - -
---------- --------- ---------
Return attributable to ordinary
shareholders (174) 1,094 920
Transfer (from)/to reserves (174) 1,094 920
Return per ordinary share:
Basic (0.34)p 2.13p 1.79p
The total column of this statement is the Profit and Loss
Account of the Company. The supplementary revenue and capital
columns are both prepared under guidance published by the
Association of Investment Companies Unaudited Income Statement
Notes Six months ended 30 November
2010
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Gains on investments - 37 37
Income 68 - 68
Investment management fee 5 (432) - (432)
Other expenses (168) - (168)
Return on ordinary activities (532) 37 (495)
before taxation
Tax on ordinary activities - - -
----------- ------- ----------
Return attributable to ordinary
shareholders (532) 37 (495)
Transfer (from)/to reserves (532) 37 (495)
Return per ordinary share:
Basic (1.03)p 0.07p (0.96)p
Audited Income Statement
Year ended 31 May 2011
Notes Revenue Capital Total
GBP'000 GBP'000 GBP'000
Gains on investments - 595 595
Liquidation distribution - (8) (8)
Income 159 - 159
Investment management fee 5 (503) - (503)
Other expenses (417) - (417)
Return on ordinary activities (761) 587 (174)
before taxation
Tax on ordinary activities 3 - 3
-------- ------- -------
Return attributable to ordinary
shareholders (758) 587 (171)
Transfer (from)/to reserves (758) 587 (171)
Return per ordinary share:
Basic (1.47)p 1.14p (0.33)p
Unaudited Balance Sheets
As at As at As at
30 November 30 November 31
2011 2010 May
2011
Audited
GBP'000 GBP'000 GBP'000
Current assets
Investments 11,341 13,919 10,247
Debtors - 490 -
Cash at bank and on deposit 575 444 763
----------- ----------- -------
11,916 14,853 11,010
Creditors: amount falling
due within one year
Other creditors (588) (654) (602)
----------- ----------- -------
(588) (654) 10,408
Net assets 11,328 14,199 10,408
----------- ----------- -------
Shareholders' funds 11,328 14,199 10,408
----------- ----------- -------
Net asset value per ordinary
share:
Basic 22.0p 27.6p 20.2p
Unaudited Reconciliation of Movements of Shareholders' Funds
Six months Six months Year ended
ended ended
30 November 30 November 31
2011 2010 May
2011
Audited
GBP'000 GBP'000 GBP'000
Opening shareholders' funds 10,408 21,381 21,381
Return attributable to ordinary shareholders 920 (495) (171)
Return of capital to ordinary shareholders - (6,687) (10,802)
-----------
Closing shareholders' funds 11,328 14,199 10,408
----------- ----------- ----------
Summarised Unaudited Statement of Cash Flows
Six months Six months Year
ended ended ended
30 November 30 November 31
2011 2010 May
2011
Audited
GBP'000 GBP'000 GBP'000
Net cash flow from operating activities (188) (215) (15)
Taxation - - 3
Capital expenditure and financial
investment - 1,278 5,509
Return of capital to shareholders - (6,687) (10,802)
Decrease in cash (188) (5,624) (5,305)
Reconciliation of Net Cash Flow to Movement
in Net Debt
Six months Six months Year
ended ended ended
30 November 30 November 31
2011 2010 May
2011
Audited
GBP'000 GBP'000 GBP'000
Decrease in cash (188) (5,624) (5,305)
Opening net cash 763 6,068 6,068
------------ ------------ ---------
Closing net cash 575 444 763
Reconciliation of Operating Profit to Net Cash Flow from
Operating Activities
Six months Six months Year ended
ended ended 30 31 May
30 November November 2011
2011 2010 Audited
GBP'000 GBP'000 GBP'000
Net return before finance costs
and taxation (920) (495) (174)
Gain on investments - (37) (595)
Changes in working capital and other
non-cash items 732 317 754
------------- ----------- -----------
Net cash flow from operating activities (188) (215) (15)
------------- ----------- -----------
Principal Risks and Uncertainties
The Company's assets consist mainly of listed and quoted
securities and its principal risks are therefore market related.
The portfolio also includes unquoted securities representing 25% of
assets at 30 November 2011. Other risks faced by the Company
include liquidity, external, investment and strategic, regulatory,
operational, and financial risks. These risks, and the way in which
they are managed, are described in more detail under the heading
Principal Risks and Risk Management within the Business Review in
the Company's Annual Report for the year ended 31 May 2011. The
Company's principal risks and uncertainties have not changed since
the date of that report.
Statement of Directors' Responsibilities in Respect of the
Interim Report
We confirm that to the best of our knowledge:
-- the financial statements have been prepared in accordance
with the Statement 'Half-Yearly Financial Reports' issued by the UK
Accounting Standards Board and give a true and fair view of the
assets, liabilities, financial position and return of the
Company;
-- the Chairman's Statement (constituting the Interim Management
Report) together with the Statement of Principal Risks and
Uncertainties above include a fair review of the information
required by the Disclosure and Transparency Rules ("DTR") 4.2.7R,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
financial statements;
-- the financial statements include a fair review of the
information required by DTR 4.2.8R, being related party
transactions that have taken place in the first six months of the
financial year and that have materially affected the financial
position or performance of the Company during the period, and any
changes in the related party transactions described in the last
Annual Report that could do so.
On behalf of the Board,
Jon Pither
Director
Notes
1. The unaudited interim results cover the period for the six
months ended 30 November 2011 and have been prepared on the basis
of accounting policies set out in the statutory accounts of the
Company for the year ended 31 May 2011 and have been prepared on a
break-up basis.
The annual financial statements of the Company are prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice. The condensed set of financial statements included in
this half-yearly financial report has been prepared in accordance
with the Accounting Standards Board Statement "Half-Yearly
Financial Reports" and in accordance with guidelines set out in the
Statement of Recommended Practice issued in January 2009 for
Investment Trusts and Venture Capital Trusts, issued by the
Association of Investment Companies.
2. Earnings for the six months to 30 November 2011 should not be
taken as a guide to the results for the full year.
3. Return per ordinary share is based on a weighted average of
51,437,364 ordinary shares in issue (31 May 2011 and 30 November
2010 - same).
4. Net asset value per share is based on 51,437,364 (31 May 2011
and 30 November 2010 - same) ordinary shares in issue.
5. Investment Management Fee
Six months Six months Year ended
Ended 30 ended 30 31 May
November November 2011
2011 2010
GBP'000
GBP'000 GBP'000
Investment Management Fee
* basic fee 60 65 125
* realisation fee - 13 13
* equity appreciation fee 36 354 365
-----------
96 432 503
=========== =========== ===========
The realisation fee is at the rate of 1.0 per cent. In respect
of the net proceeds realised on the sale of investments during the
12 month period ended 30 June 2010, of which 40 per cent. of such
fee will be payable on receipt by the Company of the net proceeds
and 60 per cent. will be accrued and will only become payable if
and when at least 47 pence each per share has been returned to
shareholders. The realisation fee has now been paid in full as a
total of 49 pence per share has been returned to shareholders.
An accrual has been made for the equity appreciation fee. The
equity appreciation fee is equal to 5 per cent. of any value
returned to shareholders in excess of a hurdle return (and, for
this purpose, the hurdle return will be an amount equal to 52p per
share as increased at the rate of 7.5 per cent. per annum with
effect from 1 July 2009, such increase to be compounded daily)
which will only become payable when at least the hurdle return has
been returned to shareholders. As at 30 November 2011 the hurdle
return, after allowing for returns of capital already made to
shareholders of 49 pence per share, was 7.15 pence per share.
6. The results for the half-year ended 30 November 2011 and 30
November 2010, which have not been audited or reviewed by auditors,
constitute non-statutory accounts within the meaning of Section 434
of the Companies Act 2006. Statutory accounts for the year ended 31
May 2011, which received an unqualified audit report, have been
lodged with the Registrar of Companies. The Half-Yearly Financial
Report is available at the Company's website address,
www.activecapitaltrust.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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