RNS Number:7678T
Czech & Slovak Inv.Corp.Inc
31 December 2003
CZECH & SLOVAK INVESTMENT CORPORATION INC.
STOCK EXCHANGE ANNOUNCEMENT OF
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2003
The Board has released the unaudited interim results of the Company for the six
months ended 30th September 2003.
The following are comments from the Chairman:
Chairman's Interim Statement
At 30 September 2003, the Fund's Net Asset Value ("NAV") per share was
US$3.06, as compared to US$3.78 at 31 March 2003. It is important to note that
the NAV has been affected by the last capital distribution which was made during
the period, on 24th April 2003 for US$ 1.00. The Fund has so far returned total
capital to the amount of US$3.60 per share to shareholders. Further returns of
capital will be made as the portfolio is realised with due consideration given
to the management of the remaining investments and negotiation of exits.
The Fund has not sold any of its seven remaining direct investments during the
period under review. However, the Manager and the Investment Advisers
continue to devote their efforts to working with the management and other
shareholders at the investee companies to generate exits. It is encouraging to
report that the improvement in the global economic backdrop in recent months
has resulted in renewed interest from potential buyers.
The Fund wrote down its investment in Mora Moravia to zero at 31 March 2003, due
to uncertainty about the solvency of the company and the intentions of the new
owner of the majority of the company's debt. The new owner is a Czech
industrialist who bought the debt in a tender from the state. The state had
taken over the debt following the failure and sale of IPB Bank. Following
several months of negotiations, a balance sheet restructuring of the company,
involving the capitalisation of debt bought by the Czech industrialist, is now
taking place and it is expected to be legally completed shortly. The Fund,
whilst inevitably having to accept a heavy dilution of its economic interest in
the company, is working with the other shareholders towards a joint sale. As a
result of the balance sheet restructuring, several potential buyers have
approached the company and I am pleased to inform you that negotiations are now
underway.
The Czech economy has performed reasonably well despite the global economic
slowdown in recent years and the sluggishness of the Eurozone economies, which
are the country's main trading partners. GDP growth is expected to be between 2-
3% for the year and interest rates and inflation are similar to those of the
European Union countries. The relative robustness of the Czech economy has been
due to two important factors, firstly, strong foreign direct investment flows,
and secondly a consumer spending and mortgage boom. In view of this, retailers
continue their roll-outs of new stores and shopping centres, and residential
property has soared in value, particularly in Prague, ahead of European Union
accession next year. Whilst unemployment continues to remain at around ten per
cent, wage levels have been constant and the country is attracting foreign
direct investment in an amount exceeding those in other central and eastern
Europe, which in turn has contributed to a strong crown. Perhaps the biggest
challenges for the Social Democrat-lead government are the revamping of the
legal system and the need to address a large budget deficit and introduce long
term pension and social security reform.
The renewed interest in the companies which the Fund holds and in the Czech
economy as a whole is encouraging, and I look forward to updating shareholders
on the progress we have made towards selling those companies in the Fund's year
end report and financial statements.
Iain O S Saunders
Chairman
31st December 2003
For further information, please contact:
Jonathan Latter
J.P. Morgan Fleming Asset Management (UK) Limited, 020 7742 6000
Secretary to the Company
Consolidated Cashflow Statement
for the period ended 30th September 2003 (unaudited)
30 Sep 2003 30 Sep 2002 31 Mar 2003
US$ US$ US$
Reconciliation of revenue return to net cash inflow/(outflow)
from operating activities
Revenue return before tax 1,207,835 538,297 425,705
Decrease/(increase) in debtors (65,063) 14,956 9,965
(Decrease)/increase in creditors (excluding tax) (53,888) (85,169) (102,656)
Net cash inflow/(outflow) from operating activities 1,088,884 468,084 333,014
Cash inflow/(outflow) from operating activities 1,088,884 468,084 333,014
Capital expenditure and financial investment
Distribution to shareholders (5,166,999) - -
Proceeds from sale of investments 228,168 - 2,659,418
Purchase of investments - Techno capitalisation - - (12,639)
Net cash (outflow)/inflow from capital
expenditure and financial investments (4,938,831) - 2,646,779
Cash (outflow)/inflow before use of liquid
resources and financing (3,849,947) 468,084 2,979,793
Management of liquid resources
Cash (deposited on)/withdrawn from short term fixed deposit (3,648,871) (1,037,797) (3,372,461)
(Decrease)/increase in cash in the period (7,498,818) (569,713) (392,668)
Consolidated Statement of Total Return
for the period ended 30th September 2003 (unaudited)
30 Sep 2003 30 Sep 2002 31 March 2003
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Notes US$ US$ US$ US$ US$ US$ US$ US$ US $
Gains/(loss) 8 - 289,092 289,092 (343,949) (343,949) - (5,080,096) (5,089,096)
on
investments
Income 2 1,717,315 - 1,717,315 1,207,087 - 1,207,087 1,452,741 - 1,452,741
Management 3 (167,743) - (167,743) (256,634) - (256,634) (515,908) - (515,908)
fee
Other 4 (171,625) - (171,625) (412,156) - (412,156) (511,128) - (511,128)
expenses
Return on 1,377,947 289,092 1,667,039 538,297 (343,949) 194,348 425,705 (5,080,096) (4,654,391)
ordinary
activities 13 (170,113) - (170,113) (116,360) - (116,360) (136,830) - (136,830)
before tax
Taxation
Return on 1,207,834 289,092 1,496,926 421,937 (343,949) 77,988 288,875 (5,080,096) (4,791,221)
ordinary
activities
after tax
Distribution - (5,166,999) (5,166,999) - - - - - -
to
shareholders
Transfer 1,207,834 (4,877,907) (3,670,073) 421,937 (343,949) 77,988 288,875 (5,080,096) (4,791,221)
to/(from)
reserves
Return 7 0.233 0.056 0.289 0.082 (0.067) 0.015 0.056 (0.983) (0.927)
per
ordinary
share
(US$)
Consolidated Balance Sheet
for the period ended 30th September 2003 (unaudited)
30 Sep 2003 30 Sep 2002 31 Mar 2003
Notes US$ US$ US$
Fixed assets
Investments
Unquoted 8 12,493,960 17,587,957 12,497,960
Quoted 8 580,512 2,808,515 515,588
13,074,472 20,396,472, 13,013,548
Current assets
Debtors 71,155 1,101 6,092
Bank balances 3,376,447 4,714,686 7,226,394
3,447,602 4,715,787 7,232,486
Creditors:
amounts falling due within one year (673,462) (724,366) (727,349)
Net current assets 2,774,140 3,991,421 6,505,137
Net assets 15,848,612 24,387,893 19,518,685
Capital and reserves
Called up share capital 10 50,035,240 50,035,240 50,035,240
Capital reserves - realised 11 (12,273,065) (274,575) (12,497,233)
Capital reserves - unrealised 11 (1,655,627) (9,207,063) (1,720,551)
Share redemption reserve 11 (17,340,253) (12,173,254) (12,173,254)
Revenue reserves 11 (2,917,683) (3,992,455) (4,125,517)
Total Equity Shareholders' fund 15,848,612 24,387,893 19,518,685
Net Asset Value per Share 7 3.06 4.72 3.78
The above financial information does not constitute statutory accounts as
defined in Section 240 of the Companies Act 1985. Statutory accounts for the
year ended 31st March 2003 have been delivered to the Registrar of Companies.
J.P. MORGAN FLEMING ASSET MANAGEMENT (UK) LIMITED
This information is provided by RNS
The company news service from the London Stock Exchange
END
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