WELSH INDUSTRIAL INVESTMENT TRUST PLC
INTERIM RESULTS
6 MONTHS ENDED 5 OCTOBER 2007
CHAIRMAN'S INTERIM STATEMENT
The revenue profit before taxation for the half year ended 5th October 2007 was
�41,000 against �27,000 for the comparable period last year. As a result,
revenue earnings per share were 3.0p against 2.0p last time. The variance in
revenue profit between the two periods was virtually exclusively as a result of
increased bank interest from �10,000 to �20,000.
There was also a gain on the capital account of �80,000 for the six months ended
5th October 2007 against a loss of �228,000 in the corresponding period last
year. The movement is largely attributable to a substantial increase in the
value of our investment in SpaceandPeople plc offset by a fall in Image Scan
Holdings plc and Transense Technologies plc. Details of the Company's ten
largest investments as at the period end can be found in note 8 of these interim
financial statements.
As a result the Group's net asset value per share at 5th October, 2007 has risen
to 575.4p from 572.8p six months earlier, representing a rise of 0.45% against a
rise in the FTSE All Share Index of 1.66%.
The Company's assets and liabilities continue to consist of financial
instruments which include investments comprising listed and unlisted equity
shares, investments comprising listed and unlisted fixed income securities,
contracts for future movements in share indices, cash, liquid resources and
short term debtors and creditors that arise directly from its investing
activities and the Company's cumulative preference shares. The main risks
arising from these financial instruments continue to be market risk, liquidity
risk and currency risk. The Board has agreed policies for managing each of these
risks and these have remained substantially unchanged since year end.
These interim financial statements, which have been prepared in accordance with
the applicable set of accounting standards, gives a true and fair view of the
assets, liabilities, financial position and profit or loss of the Group as
required by DTR 4.2.4., and have been prepared in accordance with IAS 34 -
Interim Financial Reporting.
We continue to seek further growth opportunities for investment. As in previous
years the Board is proposing no interim dividend.
RESPONSIBILITY STATEMENT
I confirm to the best of my knowledge:
(a) the condensed set of financial statements have been prepared in accordance
with IAS 34:
(b) the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and
(c) the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related party transactions and changes
therein).
By order of the Board
A P Stirling
Chairman
4 December 2007
WELSH INDUSTRIAL INVESTMENT TRUST PLC
INTERIM RESULTS
UNAUDITED CONSOLIDATED INCOME STATEMENT
FOR THE HALF YEAR ENDED 5 OCTOBER 2007
Six months to Six months to Year ended
5 October 2007 5 October 2006 5 April 2007
Revenue Capital Total Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000
Income:
Dividend and
interest income 116 - 116 80 - 80 163 - 163
Other operating
income (30) - (30) (11) - (11) (2) - (2)
----- ----- ----- ----- ----- ----- ----- ----- -----
86 - 86 69 - 69 161 - 161
Gains on
investments
held at fair
value - 80 80 - (228) (228) - 837 837
----- ----- ----- ----- ----- ----- ----- ----- ------
Total income
And gains on
investments 86 80 166 69 (228) (159) 161 837 998
----- ----- ----- ----- ----- ----- ----- ----- ------
Expenses
Other operating
Expenses (43) - (43) (40) - (40) (82) - (82)
Finance costs (2) - (2) (2) - (2) (4) - (4)
----- ----- ----- ----- ----- ----- ----- ----- ------
(45) - (45) (42) - (42) (86) - (86)
----- ----- ----- ----- ----- ----- ----- ----- ------
Profit/(loss)
before taxation 41 80 121 27 (228) (201) 75 837 912
Taxation - - - - - - - - -
----- ----- ----- ----- ----- ----- ----- ----- ------
Profit/(loss)
For the period 41 80 121 27 (228) (201) 75 837 912
===== ===== ===== ===== ===== ===== ===== ===== ======
Basic & diluted Earnings
Per Ordinary share (note 5) 8.9p (14.9p) 67.6p
===== ===== ======
The total column of this statement represents the Group's Income Statement,
prepared in accordance with IFRS.
The revenue and capital columns are supplementary to this and are prepared under
guidance published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing
operations.
The profit for the period is attributable to equity shareholders of the Parent
Company.
WELSH INDUSTRIAL INVESTMENT TRUST PLC
INTERIM RESULTS
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF YEAR ENDED 5 OCTOBER 2007
Half year ended 5 October 2007
Ordinary
share Capital Retained
capital reserve Earnings Total
�'000 �'000 �'000 �'000
Balance at 5 April 2007 67 7,383 282 7,732
Profit for the period - 80 41 121
Ordinary dividend paid (Note 4) - - (85) (85)
------- ------- ------- -------
Balance at 5 October 2007 67 7,463 238 7,768
======= ======= ======= =======
Half year ended 5 October 2006
Ordinary
share Capital Retained
capital reserve Earnings Total
�'000 �'000 �'000 �'000
Balance at 5 April 2006 67 6,546 292 6,905
Profit for the period - (228) 27 (201)
Ordinary dividend paid (Note 4) - - (85) (85)
Movement on reserves - 12 (12) -
------- ------- ------- -------
Balance at 5 October 2006 67 6,330 222 6,619
======= ======= ======= =======
Year ended 5 April 2007
Ordinary
share Capital Retained
capital reserve Earnings Total
�'000 �'000 �'000 �'000
Balance at 5 April 2006 67 6,546 292 6,905
Profit for the period - 837 75 912
Ordinary dividend paid (Note 4) - - (85) (85)
------- ------- ------- -------
Balance at 5 April 2007 67 7,383 282 7,732
======= ======= ======= =======
WELSH INDUSTRIAL INVESTMENT TRUST PLC
INTERIM RESULTS
UNAUDITED BALANCE SHEET
AS AT 5 OCTOBER 2007
5 October 5 October 5 April
2007 2006 2007
Assets �'000 �'000 �'000
Non current assets
Investments held at fair value 7,090 5,190 6,655
------- ------- -------
Total non current assets 7,090 5,190 6,655
------- ------- -------
Current assets
Accrued income and prepaid expenses 16 7 12
Other current assets 62 44 95
Cash and cash equivalents 684 1,456 1,056
------- ------- -------
Total current assets 762 1,507 1,163
------- ------- -------
Total assets 7,852 6,697 7,818
------- ------- -------
Current liabilities
Trade and other payables (39) (33) (41)
Current tax payable - - -
------- ------- -------
Total current liabilities (39) (33) (41)
------- ------- -------
Total assets less current liabilities 7,813 6,664 7,777
Non current liabilities
8.75% Cumulative Preference shares (45) (45) (45)
------- ------- -------
Net assets 7,768 6,619 7,732
======= ======= =======
Capital and reserves
Ordinary share capital (note 6) 67 67 67
Capital reserve 7,463 6,330 7,383
Retained earnings 238 222 282
------- ------- -------
Total equity attributable to equity
Holders of the parent 7,768 6,619 7,732
======= ======= =======
Basic & diluted net asset value
per ordinary share (Note 7) 575.4p 490.3p 572.8p
======= ======= =======
WELSH INDUSTRIAL INVESTMENT TRUST PLC
INTERIM RESULTS
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
FOR THE HALF YEAR ENDED 5 OCTOBER 2007
Half Half
year ended year ended Year ended
5 October 5 October 5 April
2007 2006 2007
�'000 �'000 �'000
Cashflow from operating activities
Dividend income received 71 56 99
Other investment income 25 14 39
Deposit interest received 20 10 25
Share dealing loss (32) (2) (8)
Other income 2 - -
Other operating expenses (52) (39) (67)
------- ------- -------
Net cash flows from operating activities 34 39 88
======= ======= =======
Cash flows from investing activities
Purchase of investments (850) (299) (1,093)
Sale of investments 528 1,498 1,849
------- ------- -------
(322) 1,199 756
======= ======= =======
Cash flows from financing activities
Preference dividends paid - - (4)
Equity dividends paid (84) (83) (85)
------- ------- -------
(84) (83) (89)
======= ======= =======
(Decrease)/increase in cash and
cash equivalents (372) 1,155 755
Cash and cash equivalents at start of period 1,056 301 301
------- ------- -------
Cash and cash equivalents at end of period 684 1,456 1,056
======= ======= =======
WELSH INDUSTRIAL INVESTMENT TRUST PLC
INTERIM RESULTS
PRINCIPAL ACCOUNTING POLICIES
The Group's principal accounting policies have not changed from the audited
financial statements for the year ended 5th April 2007 and are as follows:
(a) Basis of accounting
The financial statements of the Group and the Company have been prepared in
accordance with International Financial Reporting Standards ("IFRS") as adopted
by the European Union. These comprise standards and interpretations approved by
the International Accounting Standards Board ("IASB"), together with
interpretations of the International Accounting Standards and Standing
Interpretations Committee approved by the International Accounting Standards
Committee ("IASC") that remain in effect, to the extent that IFRS have been
adopted by the European Union.
(b) Basis of preparation
The financial statements have been prepared under the historical cost
convention, except for the revaluation of certain financial instruments. The
principal accounting policies adopted are set out below. Where presentational
guidance set out in the Statement of Recommended Practice ("the SORP") for
investment trusts issued by the Association of Investment Companies ("the AIC")
in April 2006 is consistent with the requirements of IFRS, the directors have
sought to prepare the financial statements on a basis compliant with the
recommendations of the SORP.
(c) Significant accounting judgements and key sources of uncertainty
The preparation of financial statements in conformity with IFRS requires
management to make judgments, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and other factors that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods. The most significant techniques for estimation are described in
the accounting policies below.
The principal accounting polices adopted in preparing these financial statements
are set out below. These policies have been consistently applied to all the
years presented, unless other wise stated.
(d) Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and its subsidiary undertakings made up to 5th October 2007. All
intra-group transactions, balances, income and expenses are eliminated on
consolidation.
(e) Presentation of Income Statement
In order to better reflect the activities of an investment trust company and in
accordance with guidance issued by the AIC, supplementary information which
analyses the Income Statement between items of a revenue and capital nature has
been presented alongside the Income Statement. Net capital returns may not be
distributed by way of a dividend. The net revenue is the measure the directors
believe appropriate in assessing the Group's compliance with certain
requirements set out in section 842 of the Income and Corporation Taxes Act
1988.
(f) Segmental reporting
A business segment is a group of assets and operations that are subject to
risks and returns that are different from those of other business segments. The
Group comprises of one business segment only - the Investment Trust, which
invests in debt and equity securities based mainly in the UK for medium to long
term capital growth. This is consistent with internal reporting. All revenues
are derived from operations within the United Kingdom. Consequently no separate
business or geographical segment information is provided.
(g) Dividend and interest income
Income from listed securities and treasury stocks is accounted for when the
right to receive is established and income from interest receivable on bank
deposits is accounted for on a receivable basis.
(h) Expenses
All expenses and interest payable are accounted for on an accruals basis. All
expenses are allocated to revenue through the Income Statement except the
expenses which are incidental to the disposal of an investment are deducted from
the disposal proceeds of the investment.
(i) Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the period. Taxable
profit differs from profit before tax as reported in the Income Statement
because it excludes items of income or expense that are taxable or deductible in
other years and it further excludes items that are never taxable or deductible.
The Group's liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet date.
In line with the recommendations of the SORP, the allocation method used to
calculate tax relief on expenses presented against capital returns in the
supplementary information in the Income Statement is the "marginal basis". Under
this basis, if taxable income is capable of being offset entirely by expenses
presented in the revenue column of the Income Statement, then no tax relief is
transferred to the capital return column.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised.
Investment trusts which have approval under section 842 of the Income
Corporation Taxes Act 1988 are not liable for taxation on capital gains.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the assets to be
recovered.
Deferred tax is calculated at the rates that are expected to apply in the period
when the liability is settled or the asset realised. Deferred tax is charged or
credited in the Income Statement, except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also dealt with
in equity.
(j) Investments
Purchases and sales of listed investments are recognised on the trade date, the
date on which the Group commit to purchase or sell the investment. All
investments are designated upon initial recognition as held at fair value, and
are measured at subsequent reporting dates at fair value, which is either the
bid price or the last traded price, depending on the convention of the exchange
on which the investment is quoted. Fair values for unquoted investments, or for
investments for which there is only an inactive market, are established by
taking into account the International Private Equity and Venture Capital
Valuation Guidelines as follows:
(i) Investments which have been made in the last 12 months are valued at cost
in the absence of overriding factors;
(ii) Investments in companies at an early stage of development are also valued
at cost in the absence of overriding factors;
(iii) Where investments have gone beyond the stage in their development in (ii)
above, the shares may be valued by having regard to a suitable price-earnings
ratio to that company's historic post-tax earnings or the net asset value of the
investment; and
(iv) Where a value is indicated by a material arm's length market transaction
by a third party in the shares of a company, that value may be used.
Gains and losses on the disposal of investments and permanent impairments in the
value of investments are dealt with in capital reserves - realised, and
unrealised gains and losses on the revaluation of investments are dealt with in
capital reserves - unrealised.
Year end exchange rates are used to translate the value of investments which are
denominated in foreign currencies.
Fixed income and equity investments are regarded as financial fixed assets as
they are held for long-term investment purposes.
(k) Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are short
term, highly liquid investments that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of changes in value.
(l) Dividends payable
All dividends are recognised in the period in which they are approved by
shareholders.
(m) Trade and other payables
On initial recognition, trade and other payables are stated at fair value,
subsequently, they are carried at amortised cost.
(n) Capital reserves
The capital reserve comprises of both realised and unrealised elements.
Capital reserve - realised.
The following are accounted for in this reserve:
gains and losses on the realisation of investments.
realised exchange differences of a capital nature.
expenses and finance costs, together with the related taxation effect, charged
to this reserve in accordance with the above policies.
Capital reserve - unrealised.
The following are accounted for in this reserve:
increases and decreases in the valuation of investments held at the period-end.
unrealised exchange differences of a capital nature.
provisions charged against carrying value of investments held at the period end.
(o) Revenue reserve
All other income and expenses not recognised in the capital reserve are
recognised in this reserve. Distributions can only be made from the revenue
reserve.
WELSH INDUSTRIAL INVESTMENT TRUST PLC
INTERIM RESULTS
NOTES TO THE ACCOUNTS
1 COMPARATIVE INFORMATION
The financial information contained in this interim report does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
financial information for the half years ended 5th October 2007 and 5th October
2006 has not been audited, and the auditors have not reported on or reviewed
these interim financial statements. The information for the year ended 5th April
2007 has been extracted from the latest published audited financial statements.
The audited financial statements for the year ended 5th April 2007 have been
filed with the Registrar of Companies. The report of the auditors on those
financial statements contained no qualification or statement under section
237(2) or (3) of the Companies Act 1985.
2 INCOME
Half Half
year ended year ended Year ended
5 October 5 October 5 April
2007 2006 2007
Income from investments �'000 �'000 �'000
Dividend income (UK Listed) 71 56 99
Other UK investment income 25 14 39
Interest receivable: bank and brokers 20 10 25
----- ----- -----
116 80 163
----- ----- -----
Other operating income
Share dealing profit (loss) 1 (2) (8)
Unrealised (losses)/gains on trading
Securities held in subsidiary (32) (9) 6
Other 1 - -
----- ----- -----
(30) (11) (2)
----- ----- -----
Total income 86 69 161
===== ===== =====
Total income comprises:
Dividends 71 56 99
Interest 45 24 64
Other income (30) (11) (2)
----- ----- -----
86 69 161
===== ===== =====
3 FINANCE COSTS
Half Half
year ended year ended Year ended
5 October 5 October 5 April
2007 2006 2007
�'000 �'000 �'000
Dividends on non equity shares:-
8.75% cumulative preference 2 2 4
----- ----- -----
2 2 4
===== ===== =====
4 DIVIDENDS
Half Half
year ended year ended Year ended
5 October 5 October 5 April
2007 2006 2007
�'000 �'000 �'000
Amounts recognised as distributions to
equity holders in the period:
Final dividend for the year ended 5 April,
2007 of 6.3p (2006: 6.3p) per share 85 85 85
------- ------- -------
85 85 85
======= ======= =======
5 EARNINGS PER ORDINARY SHARE
Basic earnings per ordinary share is based on the net gain for the half year of
�121,000 (half year ended 5 October 2006: loss �201,000; year ended 5 April
2007: gain �912,000) and on 1,350,000 ordinary shares.
The earnings per ordinary share figures detailed above can be further analysed
between revenue and capital as follows:-
Half Half
year ended year ended Year ended
5 October 5 October 5 April
2007 2006 2007
�'000 �'000 �'000
Net revenue profit attributable to equity
holders of the parent 41 27 75
Net capital profit/(loss) attributable to
equity holders of the parent 80 (228) 837
------- ------- -------
Net total profit/(loss) 121 (201) 912
======= ======= =======
The weighted average number of ordinary shares in issue during the period was
1,350,000
Earnings per share Pence Pence Pence
Revenue 3.0 2.0 5.5
Capital 5.9 (16.9) 62.1
------- ------- -------
Total earnings per share 8.9 (14.9) 67.6
======= ======= =======
There are no potentially dilutive shares in issue
6 SHARE CAPITAL
(i) Ordinary
1,350,000 ordinary shares were in issue throughout the periods covered in this
statement.
(ii) Preference
In addition there were in issue 225,000 8.75% cumulative preference shares of
20p each. The preference dividend is cumulative and payable in one instalment on
5th April every year, and is deemed to accrue evenly from day to day. The voting
rights of the preference shareholders are restricted to resolutions to winding
up the company, or to vary the special rights attached to the preference shares,
in which event each shareholder is entitled to one vote. Upon the winding up of
the company the preference shareholders rank first in the return of capital,
being however restricted to the nominal amount paid up, together with any
arrears of the preference dividend.
7 NET ASSET VALUE PER ORDINARY SHARE
Net asset value per ordinary share is based on Equity attributable to equity
shareholders of �7.768,000 (half year ended 5 October 2006: 6,619,000; year
ended 5 April 2007: �7,732,000) and on 1,350,000 ordinary shares being the
number of ordinary shares in issue at each period end.
8 INVESTMENTS - SECURITIES
As at 5 October 2007 the Company's ten largest investments were:-
Market Value % of invested
�'000s portfolio
UK Listed Securities
British American Tobacco plc 512 7.2
Devro plc 177 2.5
London & Associated Properties plc 272 3.9
National Grid plc 237 3.3
Treasury Stock 6.25% 2010 192 2.7
Securities dealt in under AIM
Avesco Group plc 337 4.8
Image Scan Holdings plc 195 2.8
SpaceandPeople plc 2,295 32.4
Transense Technologies plc 182 2.6
Sucurities dealt in under PLUS Market
Wheelsure Holdings plc 180 2.5
----- ----
4,579 64.7
===== ====
10 RELATED PARTY TRANSACTIONS
During the period under review the Group paid management charges totalling
�9,000 excluding VAT (comparable period 2006: �9,000) to Security Change
Limited, a subsidiary undertaking of Gresham House plc, a substantial
shareholder of the Company, of which Mr A P Stirling is also a director. As at
5th October 2007 the Group owed �5,287 to Security Change Limited (5th October
2006: �nil).
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