RNS Number:7887M
Capital For Companies VCT PLC
25 June 2003
THE FOLLOWING REPLACES THE FINAL RESULTS ANNOUNCMENT RELEASED TODAY UNDER RNS
NUMBER 7819M. THE SECOND COLUMN OF THE FINANCIAL HEADLINES TABLES IS HEADED
YEAR ENDED 31 MARCH 2002 AND NOT 31 MARCH 2003 AS PREVIOUSLY STATED. ALL OTHER
DETAILS REMAIN UNCHANGED. A FULL AMENDED VERSION APPEARS BELOW:
CAPITAL FOR COMPANIES VCT PLC
FINAL RESULTS
Preliminary results for the year ended 31 March 2003.
Capital for Companies VCT plc (the "Company") the venture capital trust
specialising in investing in companies trading on the Alternative Investment
Market of the London Stock Exchange ("AIM"), today announces its preliminary
results for the 12 months to 31 March 2003.
FINANCIAL HEADLINES Year ended Year ended
31 March 2003 31 March 2002
Realised losses on sale of investments (#365,000) (#470,000)
Revenue return before tax #245,000 #282,000
Revenue return per share 1.40p 1.62p
Loss on ordinary activities before tax (#390,000) (#539,000)
Losses per share (2.37p) (3.32p)
Total recognised losses per ordinary share (21.35p) (15.73p)
Total dividend (including interim) (#331,000) (#637,000)
Dividend per share 2.00p 4.10p
Net assets #10.5m #14.4m
Net asset value per share 64.33p 87.54p
Qualifying investments (value) #5.1m #7.0m
Number of qualifying investments 35 34
Commenting on the results William M. Cran, Chairman, said, "At the year end the
Company had 35 qualifying investments in AIM and unquoted companies costing #7.6
million and with a valuation of #5.1 million. During the year the Company
realised #897,000 from the sale of qualifying investments of which #358,000
represented gains on these sales.
We have previously reported that in respect of funds raised prior to 31 March
2000 over 70% has been invested in qualifying companies. In respect of funds
raised in the period to 31 March 2002, the Board remains confident of exceeding
the 70% test by 31 March 2004."
For further information contact:
Barry Anysz Capital for Companies VCT plc 0113 243 8043
Jonathan Wragg Capital for Companies VCT plc 01484 607722
Chairman's Statement
Introduction
I am pleased to present my first Statement as Chairman of Capital for Companies
VCT. Since taking over from Richard de Zouche in December, equity markets have
continued the volatile trend experienced over the past few years, dominated by
negative sentiment from terrorism, the recent Iraqi conflict and weak global
growth. When Capital for Companies VCT was launched in 1996 it was difficult to
envisage the dramatic increase in equity markets in the latter part of that
decade and the subsequent sharp decline experienced since the technology bubble
burst in early 2000. Any economic downturn over a prolonged period such as we
have experienced over the past couple of years has a particularly marked effect
on smaller companies.
Our benchmark AIM Index comprising over 700 companies, many of which are
involved in the technology sector, has fallen by nearly 77% in the 2 years to 31
March 2003. Over the year to 31 March 2003 the AIM Index has declined by over
35% whilst the FTSE 100 Index has decreased by nearly 32% and the FTSE techMARK
100 has fallen by 75%.
Whilst our own performance has beaten all of the above indices we have
nevertheless experienced a decline in net asset value (NAV) of 27% during the
year to 31 March 2003. Our superior performance was achieved through our
conservative investment policy and by retaining a relatively high proportion of
gilts in the portfolio.
Net Asset Value
NAV at 31 March 2003 was 64.3 pence per share (2002 - 87.5 pence per share)
after providing for a dividend of 2.0 pence per share (2002 - 4.1 pence per
share) during the year.
Investments
At the year end the Company had 35 qualifying investments in AIM and unquoted
companies costing #7.6 million and with a valuation of #5.1 million. During the
year the Company realised #897,000 from the sale of qualifying investments of
which #358,000 represented gains on these sales. Unfortunately, 3 investments
were written-off during the year incurring losses of #1,025,000. Further losses
of #368,000 were incurred on the realisation of #1.7 million from the
non-qualifying portfolio including unit trusts which were adversely affected by
the downturn in the larger equity markets.
Net losses incurred from all realisations and write-offs during the year
amounted to #1,035,000, of which #670,000 had been provided for in previous
years leaving #365,000 to pass through the profit and loss account this year.
We continue to invest in established companies in growth industries. During the
year we invested over #1.4 million in 8 VCT qualifying companies, 6 of which
were new to the portfolio.
Results and Dividend
The total return on ordinary activities before tax in the year was a loss of
#390,000 (2002 - loss of #539,000). In addition unrealised losses on the
valuation of investments were #3.1 million (2002 - #2.0 million). The total
return after tax (including unrealised losses) was a loss of 21.4 pence per
share (2002 - 15.7 pence per share). The Company made a positive revenue return
on ordinary activities after tax of #230,000 (2002 - #262,000) equivalent to 1.4
pence per share (2002 - 1.6 pence per share). We intend to distribute all of
these revenue profits, together with a proportion of reserves, as a dividend.
In addition to the interim dividend of 1.0 pence per share we now propose,
subject to shareholders' approval, to pay a final dividend of 1.0 pence per
share (2002 - 2.1 pence per share) on 29 August 2003 to shareholders on the
register at close of business 1 August 2003. The total dividend for the year is
therefore 2.0 pence per share (2002 - 4.1 pence per share). As shareholders
will appreciate the losses have affected our ability to maintain our progressive
dividend policy but hopefully this will be restored as soon as trading
conditions permit. Including the current proposed final dividend we will have
paid a total of 31.0 pence per share to shareholders since inception of the VCT.
VCT Status
The Board continues to be mindful of achieving and maintaining its VCT
qualifying status. As shareholders will be aware we must invest at least 70% of
the net funds raised in any one accounting period into qualifying investments
within 3 years. As the Company raised funds over several accounting periods
there are separate 70% tests to be satisfied. We have previously reported that
in respect of funds raised prior to 31 March 2000 over 70% has been invested in
qualifying companies. In respect of funds raised in the period to 31 March 2002,
the Board remains confident of exceeding the 70% test by 31 March 2004.
Share Buy Back
During the year we repurchased 256,837 ordinary shares at a cost of #168,000.
Unfortunately the market for VCT shares continues to be virtually non-existent
with demand being concentrated on new share issues which attract valuable tax
breaks. In order to facilitate an exit for those shareholders who need to
realise their investment we intend to maintain the Company's ability to act as a
purchaser of its own shares, if this is in the interests of all shareholders.
We will therefore be asking shareholders to renew the Board's power to purchase
the Company's shares in the market.
Reduction in Share Premium Account
We intend to seek shareholders' consent to a reduction in the Company's share
premium account (currently #7,495,000) so as to enable us to credit an
equivalent amount to the existing special reserve which can be utilised to
purchase the Company's shares.
The necessary resolution to approve the reduction in the share premium account
is set out in the notice convening the AGM. The approval of the Court (which is
discretionary) is required for the reduction of the share premium account and
the Company intends to apply to the Court for confirmation following the passing
of the resolution at the AGM. In giving its confirmation, the Court will be
concerned to ensure that the interests of the Company's creditors are not
prejudiced. The Company will be required to give certain undertakings to the
Court, such as, for example, that the new reserve will not be treated as
representing realised profits of the Company and shall be treated as an
undistributable reserve for the purposes of section 264 of the Companies Act
1985, until all creditors of the Company as at the date of the reduction of the
share premium account have consented to the reduction or have been discharged or
otherwise secured. The Company will give such undertakings to the Court as it
may be advised are appropriate.
Share Issues
The Directors believe that it will be beneficial to have the authority to place
a small number of shares (not exceeding 5% of the existing share capital).
During the year we only issued 46,000 shares but when the economic climate
improves we would like to be able to continue our 'top up' policy, as this is an
effective and relatively inexpensive way of increasing the Company's capital
base. We also intend to increase our authorised share capital to allow us to
make further new issues.
Outlook
At 31 May 2003 our unaudited NAV was 67.6 pence per share after providing for
the payment of the dividend referred to above. The AIM Index was 13% higher
than at the year-end and whilst stock market conditions appear to have
stabilised recently it is difficult to be optimistic in the short term. However
we continue to believe that in the longer term there are substantial attractions
in owning a portfolio of small and medium sized growth companies which should do
well once the economy improves. We are aware that whilst many of our investee
companies share prices are considerably 'under water' their actual trading
performance has been relatively resilient. Once equity markets improve this
value should be recognised in higher share prices with a consequent benefit to
our shareholders.
We also remain hopeful that the present Government will recognise the valuable
role that small and medium sized companies play in the economy. Whilst VCTs
enjoy substantial tax benefits, our experience over the past few years shows
that there are substantial risks in investing in small and medium sized
companies. If the Government wants to see an adequate flow of funds into this
vital section of the economy further beneficial taxation encouragement needs to
be introduced. We therefore approved the British Venture Capital Association
2003 Budget proposals to increase the 'up front' income tax saving from 20% to
40% of any investment in new VCT shares. Unfortunately this proposal was not
adopted but we remain hopeful that it will be in the future. On the negative
side, we are concerned that the transfer of financial resources from the private
to the public sector may stifle corporate profitability which is the basis of a
sound and growing Stock Market. Also, the recent Higgs Report on changes in
corporate governance has been widely criticised and I share the concerns of
those who feel that this level of regulation will add nothing to the
effectiveness of the operation of this Company. The cost of full compliance
will add very substantially to the management expenses and thereby potentially
reduce shareholder returns, whilst not providing any additional protection for
them. These potential additional costs may have an impact on directors'
remuneration. Whilst there is no present intention to increase the current level
of directors' remuneration, the Board have proposed a resolution to increase the
limit of aggregate directors remuneration set by the Company's articles of
association to #75,000 to cover any necessary increase in these costs.
Shareholder Communications
Shareholders wishing to keep in touch with our progress should visit our website
at www.cfc-vct.co.uk. This contains publicly available information including
our annual and interim accounts, recent investments and also NAV and share
price. Our share price is also quoted in the Financial Times, Yorkshire Post
and Daily Express under 'Investment Companies'. On behalf of all shareholders I
would like to thank my fellow directors, our Manager and professional advisers
for their continued contributions over the past year.
William M. Cran
Chairman
25 June 2003
Investment Portfolio Analysis
as at 31 March 2003
% of total Unrealised
Book cost Valuation net assets gain/loss
#000 #000 (by value) #000
Investment
-------------------------------------------------------- -------------- -------------- --------------- -------------
Ten largest qualifying investments
Connaught Group plc 225 426 4.07 201
Huveaux plc 250 365 3.48 115
Glisten plc 250 356 3.40 106
PM Group plc 231 334 3.19 103
CRC Group plc 235 312 2.98 77
Primal Pictures Ltd 400 286 2.73 (114)
Radii Ltd 226 250 2.39 24
Hineycome Leisure plc 253 237 2.26 (16)
MacLellan Group plc 171 232 2.21 61
Spring Grove Property Maintenance plc 180 221 2.10 41
-------------- -------------- --------------- -------------
2,421 3,019 28.81 598
Other qualifying investments 5,194 2,085 19.91 (3,109)
-------------- -------------- --------------- -------------
Total qualifying investments 7,615 5,104 48.72 (2,511)
-------------- -------------- --------------- -------------
Non-qualifying investments
Fixed interest securities
6.5% Treasury Stock 2003 870 868 8.28 (2)
5% Treasury Stock 2004 2,001 2,039 19.46 38
-------------- -------------- -------------- --------------
2,871 2,907 27.74 36
-------------- -------------- -------------- --------------
Unit trusts
BWD Rensburg Equity Income Unit Trust 767 825 7.87 58
BWD Rensburg Blue Chip Growth Unit Trust 1,461 1,042 9.95 (419)
-------------- -------------- -------------- --------------
2,228 1,867 17.82 (361)
-------------- -------------- -------------- --------------
Other non-qualifying investments
Quoted equities 452 399 3.81 (53)
Non-qualifying AIM investments 8 18 0.17 10
-------------- -------------- -------------- --------------
460 417 3.98 (43)
-------------- -------------- -------------- --------------
Total non-qualifying investments 5,559 5,191 49.54 (368)
-------------- -------------- -------------- --------------
Total investments 13,174 10,295 98.26 (2,879)
-------------- -------------- -------------- --------------
Net current assets 182 1.74
-------------- -------------- -------------- --------------
Net assets 10,477 100.00
-------------- -------------- -------------- --------------
Profit and Loss Account
for the year ended 31 March 2003
2003 2003 2003 2002 2002 2002
Revenue Capital Total Revenue Capital Total
#000 #000 #000 #000 #000 #000
------------- ------------- ------------- ------------- ------------- -------------
Losses on disposals of - (365) (365) - (470) (470)
investments
Income 367 - 367 426 - 426
Investment management fee (76) (228) (304) (103) (311) (414)
Other expenses (46) (42) (88) (41) (40) (81)
------------- ------------- ------------- ------------- ------------- -------------
Profit/(loss) on ordinary
activities before tax 245 (635) (390) 282 (821) (539)
Tax on profit/(loss) on
ordinary
activities (15) 15 - (20) 20 -
------------- ------------- ------------- ------------- ------------- -------------
Profit/(loss) on ordinary
activities after tax 230 (620) (390) 262 (801) (539)
Equity dividends (230) (101) (331) (262) (411) (673)
------------- ------------- ------------- ------------- ------------- -------------
Retained loss for the year - (721) (721) - (1,212) (1,212)
------------- ------------- ------------- ------------- ------------- -------------
Earnings/(loss) per ordinary
share 1.40p (3.77)p (2.37)p 1.62p (4.94)p (3.32)p
------------- ------------- ------------- ------------- ------------- -------------
Statement of Total Recognised Gains and Losses
for the year ended 31 March 2003
2003 2003 2003 2002 2002 2002
Revenue Capital Total Revenue Capital Total
#000 #000 #000 #000 #000 #000
------------- ------------- ------------- ------------- ------------- -------------
Profit/(loss) on ordinary 230 (620) (390) 262 (801) (539)
activities
after tax
Unrealised losses on
revaluation
of investments - (3,119) (3,119) - (2,014) (2,014)
------------- ------------- ------------- ------------- ------------- -------------
Total recognised gains and
losses during the year 230 (3,739) (3,509) 262 (2,815) (2,553)
------------- ------------- ------------- ------------- ------------- -------------
Total recognised gains and
losses per ordinary share 1.40p (22.75)p (21.35)p 1.62p (17.35)p (15.73)p
------------- ------------- ------------- ------------- ------------- -------------
Note of Historical Cost Profits and Losses
for the year ended 31 March 2003
2003 2002
#000 #000
------------- -------------
Loss on ordinary activities before tax (390) (539)
Realisation of revaluation (losses)/gains of previous years (670) 530
------------- -------------
Historical cost loss on ordinary activities before tax (1,060) (9)
------------- -------------
Historical cost loss for the year retained after taxation and dividends (1,391) (682)
------------- -------------
Balance Sheet
as at 31 March 2003
2003 2002
#000 #000
------------- -------------
Fixed assets
Investments 10,295 14,141
Current assets
Debtors 99 125
Cash at bank and on deposit 317 644
------------- -------------
416 769
Creditors (amounts falling due within one year) (234) (467)
------------- -------------
Net current assets 182 302
------------- -------------
Net assets 10,477 14,443
------------- -------------
Capital and reserves
Called-up share capital 1,629 1,650
Share premium account 7,495 7,457
Capital redemption reserve 70 45
Revaluation reserve (2,879) (430)
Special reserve 5,368 5,867
Profit and loss account (1,206) (146)
------------- -------------
Equity shareholders' funds 10,477 14,443
------------- -------------
Net asset value per share 64.33p 87.54p
------------- -------------
Cash Flow Statement
for the year ended 31 March 2003
2003 2002
#000 #000
------------- -------------
Operating activities
Loss on ordinary activities before tax (390) (539)
Decrease/(increase) in debtors 22 (33)
Decrease in creditors (54) (119)
Decrease in tax withheld at source 4 1
Loss on disposal of investments 365 470
------------- -------------
Net cash outflow from operating activities (53) (220)
------------- -------------
Taxation - -
------------- -------------
Capital expenditure and financial investment
Purchases of investments (2,258) (3,435)
Proceeds from sales/repayments of investments 2,620 1,531
------------- -------------
Net cash inflow/(outflow) from capital expenditure and financial
investment 362 (1,904)
------------- -------------
Dividends
Equity dividends paid (510) (490)
------------- -------------
Financing
Issue of ordinary shares 44 3,411
Expenses paid in connection with share issues (2) (204)
Buy-back of ordinary shares (168) (297)
------------- -------------
Net cash (outflow)/inflow from financing (126) 2,910
------------- -------------
(Decrease)/increase in cash (327) 296
------------- -------------
Analysis of changes in net funds
Net cash at 1 April 2002 644 348
Net cash (outflow)/inflow for the year (327) 296
------------- -------------
Net cash at 31 March 2003 317 644
------------- -------------
Notes:
1. Losses per share of 2.37p (2002: 3.32p) are based on the loss on
ordinary activities after tax of #390,000 (2002: #539,000) and on 16,434,110
(2002: 16,226,372) ordinary shares, being the weighted average number of shares
in issue during the year.
Total recognised losses per share of 21.35p (2002: 15.73p) are based on the
total recognised losses for the year of #3,509,000 (2002: #2,553,000) and on
16,434,110 (2002: 16,226,372) ordinary shares, being the weighted average number
of shares in issue during the year.
2. The preliminary figures for the year ended 31 March 2003 are based on
the full accounts of the Company. These figures have not yet been filed with the
Registrar of Companies. The auditors have reported on these figures and their
report was unqualified and did not contain a statement under Section 237(2) or
273(3) of the Companies Act 1985.
3. The comparative figures for the year ended 31 March 2002 do not
constitute statutory accounts within the meaning of Section 240 of the Companies
Act 1985. Statutory accounts for that period have been delivered to the
Registrar of Companies. The audit report on those accounts was unqualified and
did not contain a statement under Section 237(2) or 273(3) of the Companies Act
1985.
4. Copies of the annual report and accounts will be sent to shareholders
on 2 July 2003 and will be available from the Company's registered office at
Quayside House, Canal Wharf, Leeds LS11 5PU.
5. The AGM will be held at the Company's registered office at Quayside
House, Canal Wharf, Leeds, LS11 5PU at 10:30am on 30 July 2003.
End
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