Br.smaller Cos. Regulatory News (BSV)

5 Oct 2006 12:03

British Smaller Companies VCT PLC05 October 2006 05 October 2006 BRITISH SMALLER COMPANIES VCT PLC Unaudited interim results for the 6 months to 30 September 2006 British Smaller Companies VCT plc ("the Company") today announces its unauditedinterim results for the six months to 30 September 2006. Chairman's Statement For the fourth successive set of interim results I am pleased to be able toreport continued and significant growth in the net asset value per share of yourCompany. For the six months to 30 September 2006, the total return of theOrdinary shares, which takes into account both the current net asset value andthe cumulative total of dividend distributions, has increased by 3.1% to 132pence per share and over the last twelve months the increase in total return hasbeen 9.2 pence per share. The total return of the C shares is 102 pence pershare The continued growth has resulted from the significant realisation of oneinvestment, coupled with sustained profitability from many of the portfoliocompanies, both unquoted and quoted. Your Company has continued to strengthenits cash reserves whilst at the same time actively supporting the share buy backpolicy and maintaining dividend payments on the Ordinary shares. Your Board andits Investment Adviser, YFM Private Equity, are focused on selectivelyincreasing the investment rate to build on the returns achieved to date. The interim dividend payment has been maintained at 1.5 pence per Ordinaryshare. In line with last year, no interim dividend is proposed in respect of theC shares. The dividend will be paid on 6 November 2006 to shareholders on theregister at 13 October 2006. Investment Portfolio The first six months of this financial year saw a further major realisationadding to the two successful ones included in my previous report. In September,your Company realised its investment in Secure Mail Services Limited. Theoriginal investment of £0.4 million generated a total return of £1.3 million ofwhich £1.2 million was received on completion. There is the possibility offurther deferred consideration being received dependant upon future performance. The underlying value of the Ordinary shares' portfolio increased by £0.43million in the period, reflecting the continued progress of the investments. Ofparticular note has been the successful continuation of the store openingprogramme of GOoutdoors, with the recent addition of the Stockport store takingthe number of stores to 6. Further expansion is planned over the next twelvemonths. The progress of Tekton Group Limited has also been pleasing; itsperformance has exceeded plan since we invested in December last year. The strong market conditions that have assisted our programme of realisationshave, however, kept asset prices relatively high and your Board has resisted thetemptation to invest at unrealistic entry valuations. Your Board remains focusedon adding to your Company's investment portfolio and currently has a number ofinvestment opportunities under review. Nonetheless, the Board will remainselective in determining which of these opportunities it will pursue. Financial Results and Dividend The net asset value of the Ordinary shares at 30 September 2006 was 98.5 penceper share, and 101.5 pence per share for the C shares. Taking account of thedividends paid to date on the Ordinary shares, the total return for eligiblefounder shareholders at the balance sheet date was 132 pence per share and forthe C shareholders was 102 pence per share. The Ordinary shares recorded a pre-tax profit of £0.59 million after takingaccount of unrealised valuation gains of £0.50 million. The C share poolrecorded a small pre-tax loss after taking account of unrealised valuation losses of £2,000. The interim dividend has not been recognised in the accounts under IFRS as the contractual obligation did not exist at the balance sheet date. In respect of the C shareholders, it has been your Board's intention that oncethe initial target of 70% of funds raised has been invested, the C shares willbe converted into Ordinary shares in line with the Prospectus dated 7 January2005. In the meantime, the Ordinary shares and C shares are maintained, andaccounted for, in separate pools with dividend distributions determined by theperformance of each pool independent of the other. As at 30 September 2006 the Cshare pool was 31.4% invested. We are looking to make further investments in theC share portfolio and will consider whether it would be to the advantage of bothOrdinary and C shareholders to convert at an earlier stage. The changes in respect of venture capital trusts announced by the Chancellorearlier this year were enacted in July 2006. Further detailed guidance inrespect of the impact of these changes is still awaited. In particular, thechanges impact dividend re-investment schemes and, as a result, it remainsimpractical to continue your Company's Scheme. Consequently, unless, and until,rules are published to deal with the problem, the Scheme remains suspendedpending further clarification. The interim dividend of 1.5 pence per Ordinary share will therefore be paid in cash. Shareholder Relations and Fundraising Following the full subscription of the previous Offer, which I reported in myprevious statement, your Board has decided to recommend a further Issue ofOrdinary shares. Your Board will be seeking to raise up to £15 million. Afurther fundraising will allow your Company to benefit further from increasingthe scale of your Company which will allow costs to be spread across a widerasset base and to take advantage of the expected increasing proprietaryinvestment flow arising from the national office network of YFM Private Equity.Details of the Offer will be sent to shareholders in the near future. The Company continues to operate a share buy back policy to enable shareholdersto obtain some liquidity in an otherwise illiquid market where there is a needto dispose of their stock. This policy is kept under review to ensure that anydecisions taken are in the best interests of shareholders as a whole. Inaccordance with this policy, the Company has purchased for cancellation a totalof 609,560 shares during the period, at an average price of 88.75 pence pershare. These purchases are made with funds taken from the Special Reserve and donot adversely impact on the Company's ability to distribute tax free dividendsto shareholders. Your Board has appointed PKF (UK) LLP to replace PricewaterhouseCoopers LLP asauditors to the Company. A resolution to confirm this appointment will be put tothe next Annual General Meeting. Outlook The current economic climate has supported a strong market for corporateactivity which has enabled your Company to add to its recent record ofsuccessful realisations, continuing to support and maintain the dividend policyon the mature Ordinary share portfolio. The underlying performance of theremainder of the portfolio continues to show pleasing progress. Your Company iswell positioned to take advantage of selective investment opportunities as theyarise and through the proposed fundraising will add to its investment capacityover the next few years. This will strengthen the Company's ability tocapitalise on the anticipated flow of opportunities arising from any tighteningof the economic conditions. Sir Andrew Hugh Smith5 October 2006 Income StatementFor the 6 months ended 30 September 2006 Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 September 2006 30 September 2005 31 March 2006 Ord C Ord C Ord C Shares Shares Total Shares Shares Total Shares Shares Total £000 £000 £000 £000 £000 £000 £000 £000 £000 NotesIncome 193 22 215 157 18 175 413 38 451 Administrative expenses: Investment advisory fee (172) (14) (186) (150) (6) (156) (314) (18) (332)Other expenses (122) (9) (131) (107) (4) (111) (202) (13) (215) ------ ------ ------ ------ ----- ------ ------ ------ ------ (294) (23) (317) (257) (10) (267) (516) (31) (547) Gains on realisation ofinvestments(net) 194 - 194 209 - 209 806 1 807 Unrealised gains (losses)on investments held at fairvalue (net) 495 (2) 493 1,283 5 1,288 1,477 95 1,572 ------ ------ ------ ------ ----- ------ ------ ------ ------ Profit (loss)on ordinaryactivities beforetaxation 588 (3) 585 1,392 13 1,405 2,180 103 2,283 Taxation 2 - - - - - - - - - ------ ------ ------ ------ ----- ------ ------ ------ ------ Profit (loss)for the periodfrom continuing operations 588 (3) 585 1,392 13 1,405 2,180 103 2,283 ------ ------ ------ ------ ----- ------ ------ ------ ------Basic and dilutedearnings(loss) per share 3 3.73p (0.29)p 3.43p 9.28p 1.08p 8.67p 14.55p 8.38p 13.89p ------ ------ ------ ------ ----- ------ ------ ------ ------ Balance SheetAs at 30 September 2006 Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 September 2006 30 September 2005 31 March 2006 Ord C Ord C Ord C Notes Shares Shares Total Shares Shares Total Shares Shares Total £000 £000 £000 £000 £000 £000 £000 £000 £000 AssetsNon-current assets Financial assets at fair value throughprofit or loss 9,831 431 10,262 10,661 - 10,661 10,382 427 10,809 ------ ----- ------- ------- ----- ------- ------- ------ ------- Current assets Trade and otherreceivables 468 38 506 121 4 125 448 10 458Cash and cashequivalents 5,159 832 5,991 3,284 1,211 4,495 4,531 864 5,395 ------ ------ ------ ------ ------ ------ ------ ------ ------ 5,627 870 6,497 3,405 1,215 4,620 4,979 874 5,853 LiabilitiesCurrent liabilities Trade andother payables (79) (24) (103) (85) (18) (103) (101) (14) (115) ------ ------ ------ ------ ----- ------ ------ ------ ------ Net current assets 5,548 846 6,394 3,320 1,197 4,517 4,878 860 5,738 ------ ------ ------ ------ ------ ------ ------ ------ ------ Net assets 15,379 1,277 16,656 13,981 1,197 15,178 15,260 1,287 16,547 -------- ------ ------- ------- ------ ------- ------- ------ ------- Shareholders' equityShare capital 1,562 629 2,191 1,490 629 2,119 1,566 629 2,195Share premiumaccount 723 555 1,278 18 555 573 781 555 1,336Capital redemptionreserve 178 - 178 100 - 100 117 - 117Special reserve 3,330 - 3,330 3,471 - 3,471 3,330 - 3,330Retained earnings 9,586 93 9,679 8,902 13 8,915 9,466 103 9,569 ------ ------ ------ ------ ----- ------ ------ ------ ------Total Shareholders'equity 15,379 1,277 16,656 13,981 1,197 15,178 15,260 1,287 16,547 ------- ------ ------- ------- ------ ------- ------- ------ ------- Net asset valueper share 4 98.5p 101.5p 98.7p 93.9p 95.1p 94.0p 97.5p 102.2p 97.9p ------ ------ ------ ------ ----- ------ ------ ------ ------ Unaudited Statement of Changes in Shareholders' EquityFor the 6 months ended 30 September 2006 Share Capital Share premium redemption Special Retained Total Capital account reserve reserve earnings equity £000 £000 £000 £000 £000 £000 Balance at 31 March 2006 2,195 1,336 117 3,330 9,569 16,547 Profit for the period - - - - 585 585 Dividends - - - - (475) (475) Purchase of own shares (61) (535) 61 - - (535) Issue of Ordinary shares 57 477 - - - 534 ------ ------ ----- ------ ------ ------- Balance at 30 September 2006 2,191 1,278 178 3,330 9,679 16,656 ------- ------ ----- ------ ------ ------- Summarised Cash Flow StatementFor the 6 months ended 30 September 2006 Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 September 2006 30 September 2005 31 March 2006 Ord C Ord C Ord C Shares Shares Total Shares Shares Total Shares Shares Total £000 £000 £000 £000 £000 £000 £000 £000 £000Net cash outflow fromoperating activities (76) (17) (93) (95) 13 (82) (54) 2 (52) ------ ----- ----- ------ ----- ----- ----- ----- -----Net cash from (used in)investing activities 1,230 - 1,230 1,856 - 1,856 2,619 (330) 2,289 ------ ------ ----- ------ ----- ------ ------ ----- ------Net cash from (used in) financing (509) (9) (518) (463) 946 483 1 947 948 ------ ------ ----- ------ ----- ------ ------ ----- ------Net increase (decrease) incash and cash equivalents 645 (26) 619 1,298 959 2,257 2,566 619 3,185 Cash and cash equivalents atthe beginning of the period 4,531 864 5,395 1,970 246 2,216 1,970 246 2,216 Effect of market valuechanges in cashequivalents (17) (6) (23) 16 6 22 (5) (1) (6) ------ ------ ------ ------ ------ ----- ------ ----- -----Cash and cash equivalents atthe end of the period 5,159 832 5,991 3,284 1,211 4,495 4,531 864 5,395 ------ ------ ------ ------ ------ ------ ------ ----- ------ Notes to the Financial StatementsFor the 6 months ended 30 September 2006 1. The interim financial statements, which have been approved bythe directors, are unaudited and do not constitute full financial statements asdefined in section 240 of the Companies Act 1985. The comparative figures forthe year ended 31 March 2006 do not constitute full financial statements andhave been extracted from the Company's financial statements for the year ended31 March 2006. Those accounts were reported upon without qualification by theauditors and have been delivered to the Registrar of Companies. The financial statements for the year ended 31 March 2006 were prepared inaccordance with the International Financial Reporting Standards (IFRS), whichcomprise standards and interpretations approved by the International AccountingStandards Board (IASB) and the International Accounting Standards Committee(IASC) as adopted by the European Union and those parts of the Companies Act1985 applicable to companies reporting under IFRS. The comparatives for the six months ended 30 September 2005 were previouslypresented in accordance with UK accounting standards. The Board decided to adoptIFRS for the financial statements for the year ended 31 March 2006. Theeffective date of transition to IFRS was therefore 1 April 2004. Consequently,the comparatives for the six months ended 30 September 2005 have been restatedin accordance with IFRS. The impact of the adoption of IFRS was explained in thefinancial statements for the year ended 31 March 2006 which have been filedwith the Registrar of Companies and sent to shareholders in July 2006. 2. Taxation charge: Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 30 September 2006 30 September 2005 31 March 2006 Ord C Ord C Ord C Shares Shares Total Shares Shares Total Shares Shares Total £000 £000 £000 £000 £000 £000 £000 £000 £000 Profit (loss) on ordinaryactivities multiplied bystandard small companyrate of corporationtax in the UK of 19%(2005:19%) 112 (1) 111 264 2 266 414 20 434 Effect of: UK dividends received (16) - (16) (14) - (14) (48) - (48)Non taxable losses(profits) on investments (131) 1 (130) (283) (1) (284) (434) (18) (452)Excess management expenses 35 - 35 33 (1) 32 68 (2) 66 ------ ------ ------ ------ ------ ----- ------ ----- -----Current tax charge for the period - - - - - - - - - ------ ------ ------ ------ ------ ----- ------ ----- ----- The Company has no provided, or unprovided, deferred tax liability in eitheryear. Deferred tax assets in respect of losses have not been recognised as managementcurrently believe that there will not be sufficient taxable profits againstwhich the assets can be recovered. Due to the Company's status as a venture capital trust, and the continuedintention to meet the conditions required to comply with Section 842AA of theIncome and Corporation Taxes Act 1988, the Company has not provided deferred taxon any capital gains or losses arising on the revaluation or realisation ofinvestments. 3. The earnings per share is based on the net profit from ordinaryactivities after tax attributable to shareholders of £585,000 (30 September2005: net profit £1,405,000 and 31 March 2006: net profit £2,283,000) and on17,051,000 shares (30 September 2005: 16,198,000 and 31 March 2006: 16,432,000),being the weighted average number of shares in issue during the period. The earnings per Ordinary share is based on the net profit from ordinaryactivities after tax attributable to shareholders of £588,000 (30 September2005: net profit £1,392,000 and 31 March 2006: net profit £2,180,000) and on15,792,000 shares (30 September 2005: 15,000,000 and 31 March 2006: 14,979,000),being the weighted average number of Ordinary shares in issue during the period. The (loss) earnings per C share is based on the net loss from ordinaryactivities after tax attributable to C shareholders of £3,000 (30 September2005: net profit £13,000 and 31 March 2006: net profit £103,000)and on 1,259,000 shares(30 September 2005: 1,198,412 and 31 March 2006:1,228,000), being the weighted average number of C shares in issueduring the period. The Company has no securities that would have a dilutive effect and hence basicand diluted return per share are the same. 4. The net asset value per share is calculated on attributableassets of £16,656,000 and 16,880,040 shares in issue at the period end (30September 2005: assets of £15,178,000 and 16,154,140 shares, 31 March 2006:assets of £16,547,000 and 16,912,836 shares). The net asset value per Ordinary share is calculated on attributable assets of£15,379,000 and 15,621,364 shares in issue at the period end (30 September 2005:assets of £13,981,000 and 14,895,463 shares, 31 March 2006: assets of£15,260,000 and 15,654,160 shares). The net asset value per C share is calculated on attributable assets of£1,277,000 and 1,258,676 shares in issue at the period end (30 September 2005:assets of £1,197,000 and 1,258,676 shares, 31 March 2006: assets of £1,287,000and 1,258,676 shares). The Company has no securities that would have a dilutive effect and hence basicand diluted net asset values per share are the same. For further information, please contact: David Hall, YFM Private Equity Limited Tel: 0161 819 3195Jonathan Becher, Teather & Greenwood Limited Tel: 0207 426 3269Michael Bellamy, Teather & Greenwood Limited Tel: 0207 426 9547 This information is provided by RNS The company news service from the London Stock Exchange