Albion En. Vct Regulatory News (AAEV)

7 Jul 2008 07:00

Close Enterprise VCT PLC

As required by the UK Listing Authority's Disclosure and Transparency Rule 4.1, Close Enterprise VCT PLC today issues the full text of the Annual Report and Financial Statement for the period ended 31 March 2008. 

This announcement was approved by the Board of Directors on 4 July 2008.

Please click on the following link to view the full report and accounts for the period to 31 March 2008: 

http://www.rns-pdf.londonstockexchange.com/rns/4150Y_-2008-7-4.pdf

 

Alternatively you may view the Annual Report and Financial Statements at: www.closeventures.co.uk by clicking on the 'Our Funds' section.

31 March 2008

Pence per share

Net asset value total return to shareholders since launch:

Total dividends paid during the period ended 31 March 2008

0.7

Net asset value as at 31 March 2008 (i)		94.0
Total return to 31 March 2008		94.7

In addition to the dividends summarised above, the Directors have declared a first dividend for the new financial year of 0.4 pence per share (to be paid out of revenue profits) to be paid on 15 August 2008 to shareholders on the register at 18 July 2008. This dividend will be paid to shareholders who subscribed in the 2006/2007 offer only.

Notes

Compares to the net asset value per share of 94.5 pence (after costs) immediately following the closing of the 2006/2007 Offer. 

Investment Objectives

The aim of Close Enterprise VCT is to provide investors with a regular and predictable source of income, combined with the prospect of longer term capital growth. The Company intends to achieve this by investing up to 50 per cent. of the net funds raised in an asset-based portfolio of lower risk, ungeared businesses, principally operating in the leisure sector and related areas (the ''Asset-Based Portfolio''). The balance of the net funds raised, other than funds retained for liquidity purposes, will be invested in a growth portfolio of higher growth businesses across a variety of sectors of the UK economy. These will range from lower risk, income producing businesses to higher risk technology companies (the ''Growth Portfolio''). Funds awaiting investment in Qualifying Investments or retained for liquidity purposes will be held in gilts, on deposit or invested in floating rate notes, in the latter two cases with banks with a Moody's credit rating of 'A' or above.

The Company's investment portfolio will thus be structured to provide a balance between income and capital growth for the longer term. The Asset-Based Portfolio is designed to provide stability and income whilst still maintaining the potential for capital growth. The Growth Portfolio is intended to provide highly diversified exposure through its portfolio of investments in unquoted UK companies.

Financial Calendar

Annual General Meeting 14 August 2008

Announcement of interim results for the six months ended 30 September 2008 November 2008

Record date for first dividend 18 July 2008

Payment of first dividend 15 August 2008

Payment of second dividend January 2009

 Income Statement

 

	From 7 November 2006 to 31 March 2008
	Revenue	Capital	Total
Note	£’000	£’000	£’000
Losses on investments 3	–	(262)	(262)
Investment income 4	1,065	–	1,065
Investment management fees	(117)	(352)	(469)
Other expenses	(175)	–	(175)
	––––––––––	––––––––––	––––––––––
Return/(loss) on ordinary activities before tax	773	(614)	159
Tax (charge)/ credit on ordinary activities 5	(214)	114	(100)
	––––––––––	––––––––––	––––––––––
Return/(loss) attributable to shareholders	559	(500)	59
	––––––––––––––––––––	––––––––––––––––––––	––––––––––––––––––––
Basic and diluted return per share (pence) 7	2.8	(2.5)	0.3
	––––––––––––––––––––	––––––––––––––––––––	––––––––––––––––––––

 

The total column of this Income Statement represents the profit and loss account of the Company. The supplementary revenue and capital columns have been prepared in accordance with the Association of Investment Trust Companies' Statement of Recommended Practice.

All revenue and capital items in the above statement derive from continuing operations.

There are no recognised gains or losses other than the results for the period disclosed above. Accordingly a statement of total recognised gains and losses is not required.

Note of Historical Cost Profits and Losses

 

	31 March 2008 £’000
Profit on ordinary activities before taxation	773
Less: unrealised losses on investments	(262)
Historical cost profit on ordinary activities before taxation	511
Historical cost profit for the year after taxation and dividends	272

 

Balance Sheet 

	Note	31 March 2008 £’000
Fixed asset investments
Qualifying		2,847
Non-qualifying		1,474
Total fixed asset investments		4,321
Current Assets
Debtors		141
Cash at bank		14,363
Creditors: amounts falling due within one year		14,504     (221)
Net current assets		14,283
Net assets		18,604
Capital and reserves
Called up share capital		9,897
Special reserve		8,787
Realised capital reserve		(238)
Unrealised capital reserve		(262)
Revenue reserve		420
Total equity shareholders’ funds		18,604
Net asset value per share (pence)	8	94.0

 

Reconciliation of movement in shareholders’ funds

	Called-up share capital £’000	Share premium £’000	Special reserve £’000	Realised capital reserve £’000	Unrealised capital reserve £’000	Revenue reserve £’000	Total £’000
As at 7 November 2006	-	-	-	-	-	-	-
Issue of share capital	9,897	9,897	-	-	-	-	19,794
Issue costs	-	(1,089)	-	-	-	-	(1,089)
Cost of cancellation of share premium account	-	-	(21)	-	-	-	(21)
Cancellation of share premium account	-	(8,808)	8,808	-	-	-	-
Capitalised investment management and performance fees	-	-	-	(352)	-	-	(352)
Tax relief on costs charged to capital	-	-	-	114	-	-	114
Unrealised losses on investments	-	-	-	-	(262)	-	(262)
Revenue return attributable to shareholders	-	-	-	-	-	559	559
Dividends paid	-	-	-	-	-	(139)	(139)
	–––––-–––––	-––––––––––	-––––––––––	––––––––––	––––––––––	––––––––––	––––––––––
As at 31 March 2008	9,897	-	8,787	(238)	(262)	420	18, 604
	–––––-–––––	-––––––––––	-––––––––––	––––––––––	––––––––––	––––––––––	––––––––––

Cash flow Statement

	Note	From 7 November 2006 to 31 March 2008 £’000
Operating activities
Investment income received		138
Deposit interest received		903
Investment management fees paid		(408)
Other cash payments		(239)
Net cash inflow from operating activities	9	394
Capital expenditure and financial investments
Purchase of investments		(4,575)
Net cash outflow from investing activities		(4,575)
Equity dividends paid	6	(139)
Net cash outflow before financing		(4,320)
Financing
Issue of ordinary share capital		19,794
Expenses of issue of ordinary share capital		(1,111)
Net cash inflow from financing		18,683
Cash inflow in the year		14,363

Notes to the Financial Statements

 

 

1. Accounting convention

The financial statements have been prepared in accordance with the historical cost convention, modified to include the revaluation of investments, in accordance with applicable United Kingdom law and accounting standards and with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies" ("SORP") issued by the Association of Investment Trust Companies ("AITC") in January 2003 and revised in December 2005. 

 

2. Accounting policies

Investments

Quoted and unquoted equity investments

In accordance with FRS 26 "Financial Instruments Measurement", quoted and unquoted equity investments are designated as fair value through profit or loss ("FVTPL").  Unquoted investments' fair value is determined by the Directors in accordance with the International Private Equity and Venture Capital Valuation Guidelines (IPEVCV guidelines).

Fair value movements on equity investments and gains and losses arising on the disposal of investments are reflected in the capital column of the Income Statement in accordance with the AITC SORP and realised gains or losses on the sale of investments will be reflected in the realised capital reserve, and unrealised gains or losses arising from the revaluation of investments will be reflected in the unrealised capital reserve.

Unquoted loan stock

Unquoted loan stock is classified as loans and receivables in accordance with FRS 26 and carried at amortised cost using the Effective Interest Rate method ("EIR") less impairment. Movements in the amortised cost relating to interest income are reflected in the revenue column of the Income Statement, and hence are reflected in the Revenue reserve, and movements in respect of capital provisions are reflected in the capital column of the Income Statement and are reflected in the Realised capital reserve following sale, or in the Unrealised capital reserve on revaluation. 

Loan stocks which are not impaired or past due are considered fully performing in terms of contractual interest and capital repayments and the Board does not consider that there is a current likelihood of a shortfall on security cover for these assets. For unquoted loan stock, the amount of the impairment is the difference between the asset's carrying value and the present value of estimated future cash flows, discounted at the effective interest rate.

 

Floating rate notes

In accordance with FRS 26 "Financial Instruments: Recognition and Measurement", floating rate notes are designated as fair value through profit or loss ("FVTPL"). Floating rate notes are valued at market bid price at the balance sheet date.

 

Warrants, convertibles and unquoted equity derived instruments

Warrants, convertibles and unquoted equity derived instruments are only valued if their exercise or contractual conversion terms would allow them to be exercised or converted as at the balance sheet date, and if there is additional value to the Company in exercising or converting as at the balance sheet date. Otherwise these instruments are held at nil value. The valuation techniques used are those used for the underlying equity investment.

 Investments are recognised as financial assets on legal completion of the investment contract and are de-recognised on legal completion of the sale of an investment.

Dividend income is not recognised as part of the fair value movement of an investment, but is recognised separately as investment income through the Revenue reserve when a share becomes ex-dividend.

Loan stock accrued interest is recognised in the Balance Sheet as part of the carrying value of the loans and receivables at the end of each reporting period.

It is not the Company’s policy to exercise control or significant influence over investee companies. Therefore in accordance with the exemptions under FRS 9 “Associates and joint ventures”, those undertakings in which the Company holds more than 20 per cent. of the equity are not regarded as associated undertakings.

Investment income

Quoted and Unquoted equity income

Dividend income is included in revenue when the investment is quoted ex-dividend.

Unquoted loan stock income

The fixed returns on non-equity shares and debt securities are recognised on a time apportionment basis using an effective interest rate over the life of the financial instrument.

Bank interest income

Interest income is recognised on an accruals basis using the rate of interest agreed with the bank.

 

Floating rate note income

Floating rate note income is recognised on an accruals basis using the interest rate applicable to the floating rate note at that time.

 Unrealised capital reserves

The following are disclosed in this reserve:

·; increases and decreases in the valuation of investments against cost held at the period end.

Special reserve

This reserve was created on the cancellation of the Company’s share premium account, is distributable and amongst other purposes can be used for making market purchases and effecting tender offers of Ordinary Shares, offsetting of losses to enable the Company to pay dividends, or can be used for the same purposes that the Company could use a share premium account.

Dividends

In accordance with FRS 21 “Events after the balance sheet date”, dividends declared by the Company are accounted for in the period in which the dividend has been paid or approved by shareholders in an Annual General Meeting.

 

Investment management fees and other expenses

 

All expenses have been accounted for on an accruals basis. Expenses are charged through the Revenue account except the following which are charged through the realised capital reserve:

75 per cent. of Management fees are allocated to the capital account to the extent that these relate to an enhancement in the value of the investments and in line with the Board's expectation that over the long term 75 per cent. of the Company's investment returns will be in the form of capital gains; and

expenses which are incidental to the purchase or disposal of an investment are charged through the Realised capital reserve.

Under the terms of the Management Agreement, total expenses including management fees and excluding performance fees will not exceed 3.5 per cent. of net asset value per annum.

Taxation

 

Taxation is applied on a current basis in accordance with FRS 16 "Current tax". Taxation associated with capital expenses is applied in accordance with the SORP. In accordance with FRS 19 "Deferred tax", deferred taxation is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.

The specific nature of taxation of venture capital trusts means that it is unlikely that any deferred tax will arise. The Directors have considered the requirements of FRS 19 and do not believe that any provision should be made.

Performance incentive fee

In the event that a performance incentive fee crystallises, the fee will be allocated between Revenue and Realised capital reserves based upon the proportion to which the calculation of the fee is attributable to revenue and capital returns.

Reserves

Realised capital reserves

The following are disclosed in this reserve:

gains and losses compared to cost on the realisation of investments;

expenses, together with the related taxation effect, charged in accordance with the above policies; and

dividends paid to equity holders.

  

3. Losses on investments

	7 November 2006 to 31 March 2008
	£’000
Unrealised losses on investments held at fair value through profit and
loss account	(262)
	_______
Total	(262)
	_______

 

4. Investment income

	7 November 2006 to
	31 March 2008
	£’000
Income recognised on investments
held at fair value through profit and loss
Floating rate note interest	61
Bank deposit interest	913
	_______
	974
Income recognised on investments held at amortised cost
Return on loan stock investments	91
	_______
	1,065
	_______

 

5. Tax charge/(credit) on ordinary activities	7 November 2006 to 31 March 2008		Total £’000
	Revenue	Capital
	£’000	£’000
Return before taxation	773	(614)	159
Tax on profit at the standard rate of 30%	232	(184)	48
Factors affecting the charge
Non-deductible losses	–	79	79
Marginal relief	(18)	(9)	(27)
	214	(114)	100

The tax charge for the period is lower than the standard rate of corporation tax of 30 per cent. The differences are explained above.

Notes

 

(i) Venture Capital Trusts are not subject to corporation tax on capital gains.

(ii)  Tax relief on expenses charged to capital has been determined by allocating tax relief to expenses by reference to the applicable corporation tax rate of 30 per cent. and allocating the relief between revenue and capital in accordance with the SORP.

(iii) No deferred tax asset or liability has arisen in the year.

6. Dividends

	7 November 2006 to 31 March 2008
	Revenue	Capital	Total
	£’000	£’000	£’000
Dividend of 0.7p per share
paid on 28 December 2007	(139)	–	(139)
	(139)	–	(139)

 

In addition to the dividends summarised above, the Directors have declared a first dividend for the year ending 31 March 2009 of 0.4 pence per share to be paid on 15  August 2008 to shareholders who subscribed to the 2006/2007 Offer only and are on the register at 18 July 2008.

7.  Basic and diluted return per share

	7 November2006 to 31 March 2008
	Revenue	Capital	Total
Return attributable to equity shares (£’000)	559	(500)	59
Return attributable per Ordinary share (pence) (Basic and diluted)	2.8	(2.5)	0.3

Return per share has been calculated on 19,793,147 shares, being the weighted number of shares in issue for the period since the allotment of shares under the 2006/2007 Offer on 4th April 2007.

There are no convertible instruments, derivatives or contingent share agreements in issue for Close Enterprise VCT PLC hence there are no dilution effects to the return per share. The basic return per share is therefore the same as the diluted return per share.

8. Net asset value per share

	31 March 2008
Net asset value per share attributable (pence)	94.0

 

The net asset value per share at the period end is calculated in accordance with the Articles of Association and is based upon total shares in issue of 19,793,147 at 31 March 2008.

 9. Reconciliation of net return on ordinary activities before taxation to net cash inflow from operating activities

			Period ended 31 March 2008 £’000
Revenue return on ordinary activities before taxation				773
Investment management fee charged to capital				(352)
Movement in accrued amortised loan stock interest				(8)
Increase in debtors				(141)
Increase in creditors				122
Net cash inflow from operating activities				394

10. Post balance sheet events

Since 31 March 2008, the Company has completed the following investments:

Investment in Vibrant Energy Limited of £378,000

Investment in Churchill Taverns VCT Limited of £4,300

Investment in Dexela Limited of £430,000

The Company also purchased a Treasury Gilt at a cost of £12,000,000.

The allotment of 10,567,738 new Ordinary shares with a nominal value of 50p each took place on 4 April 2008, raising  net

proceeds after issue costs of £9,986,512.

11. Related party transactions

 

The Manager, Close Ventures Limited, is considered to be a related party by virtue of the fact that it is party to a management agreement from the Company (details disclosed on page 18 of the Annual Report and Financial Statements). During the period, services of a total value of £469,000 were purchased by the Company from Close Ventures Limited. At the financial period end, the amount due to Close Ventures Limited disclosed as accruals and deferred income was £62,000.

Patrick Reeve, a Director of the Company, is also the Managing Director of Close Ventures Limited which is the Manager of the Fund, and received Director's fees of £19,000. At the financial period end, the amount due to Close Ventures Limited in respect of these  fees, disclosed as accruals and deferred income was £5,000.

Fees of £120,000 were receivable by Close Investments Limited, a subsidiary of Close Brothers Group plc, as at 31 March 2008 in association with the issue costs of the Offer for Subscription in April 2008.

Maxwell Packe is the Chairman of the Board of Vibrant Energy Limited, a company in which Close Enterprise VCT plc invested after the period end.

4 July 2008

For further information, please contact:

Patrick Reeve of Close Ventures Limited

Tel: 0207 422 7830

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