Br.smaller Cos. Regulatory News (BSV)

8 Jun 2005 10:49

British Smaller Companies VCT PLC08 June 2005 BRITISH SMALLER COMPANIES VCT PLC UNAUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2005 British Smaller Companies VCT plc ("the Company") today announces its unauditedpreliminary results for the year ended 31 March 2005. • Further significant growth in net asset value The growth in net asset value for Ordinary shareholders over the year to 31March 2005, before dividend distributions paid and proposed, was 21.4%. Theequivalent growth over the last three years is 39.5%. • Post year end realisation at enhanced valuation Since the year end, the Company has realised its investment in Harlands of HullLimited for cash proceeds in excess of the carrying value at 31 March 2005. TheCompany will initially receive £1.55 million from this £500,000 investment madein September 2003 representing over 3 times cash return in 20 months. Furthercash proceeds may be received dependent upon certain conditions being met. Thecarrying value at the year end was £1.42 million. • Total dividend for the year of 4.8p per share A final dividend of 2.2p per Ordinary share is being proposed for payment on 5August 2005 to holders of Ordinary shares on the register at 17 June 2005. Whenadded to the two interim dividends already paid in the year, the total dividendfor the year ended 31 March 2005 is 4.8p per Ordinary share. This is free ofincome tax to eligible shareholders. • Total return increases to 113.4p per Ordinary share The total return, arrived at by adding cumulative dividends paid and proposed todate to the net asset value at the reporting date, is now 113.4p per Ordinaryshare for shareholders who subscribed in the initial public offering. Thiscompares to a net cost to those shareholders of 80p per share after allowing for20% income tax relief on their original subscription. • Introduction of dividend reinvestment scheme A dividend reinvestment scheme was approved by shareholders on 7 January 2005.This enables shareholders to increase their total holding in the Company withoutincurring any cost. At the current time, participation will enable shareholders,subject to individual circumstances, to qualify for 40 per cent tax relief onthe amount reinvested. Shareholders wishing to continue to receive theirdividends as cash can still do so and benefit from the tax free income. Financial highlights Unaudited Audited Year ended Year ended 31 March 2005 31 March 2004 Loss for the financial year £(45,000) £(755,000)Unrealised gain on valuation of investments £2,392,000 £2,746,000Total recognised gains for the year £2,347,000 £1,991,000Loss per Ordinary share (0.29)p (4.88)pTotal recognised gains per Ordinary share 15.30p 12.87pTotal dividend paid and proposed for year 4.8p 4.8pTotal cumulative dividends paid and proposed 29.0p 24.2pNet asset value per Ordinary share 84.4p 73.5pTotal return to date 113.4p 97.7p For further information, please contact: David Hall YFM Private Equity Limited Tel: 0113 294 5039Alan Davies YFM Private Equity Limited Tel: 0113 294 5000Jonathan Becher Teather & Greenwood Limited Tel: 0207 426 3269Michael Bellamy Teather & Greenwood Limited Tel: 0207 426 9547 Chairman's Statement It is pleasing to be able to report further significant growth in the net assetvalue of your Company and to propose a third and final dividend distribution inrespect of the year ended 31 March 2005. Successful realisations in the year andthe flotation of Cozart plc, together with a continued general upward trend in the performance of the unquoted portfolio, has seen net asset value grow, on alike-for-like basis and before distributions, 21.4% over the year as a whole.This brings the cumulative increase on the same basis over the past three yearsto 39.5%. In that period, a total of 10.45 pence per Ordinary share has beenproposed and paid to shareholders as a tax free dividend. Investment Portfolio Allowing for the retention of a suitable level of liquid funds to meet follow-onfunding requirements from the existing portfolio and selective new investmentopportunities, your Company has been fully invested for some time now. The levelof investment activity in any year will be dependent upon cash generated fromrealisations that the Board allocates for such purposes. A total of just over£400,000 was invested in the year to 31 March 2005. Following the realisation of Amino Technologies plc and the lightening of someother AIM stock holdings to crystallise gains, there was a total of £1.97million of cash and liquid investments at 31 March 2005. Of this, £333,000 isallocated for the proposed final dividend. The balance provides sufficientreserves to meet the operational requirements of your Company and estimatedfunding requirements for the current portfolio whilst still providing enoughcash to meet selected investment opportunities as they arise. I am pleased to announce that, following the year end, your Company's investmentin Harlands of Hull Limited has been successfully realised through the tradesale of that company to Clondalkin Group. Your Company invested £500,000 inSeptember 2003 to support a management buy-out in Harlands of Hull Limited, aleading UK specialist manufacturer of self-adhesive labels. An initial cashpayment of £1.55 million has been received in respect of the sale, with up to afurther £157,000 cash payment due dependent upon certain conditions being met.The carrying value of this investment in the balance sheet at 31 March 2005 was£1.42 million. Financial Results and Dividend The reported result in the profit and loss account for the year was a loss of£45,000. However, after allowing for the net capital appreciation in theinvestment portfolio that is taken straight to the revaluation reserve (beingunrealised gains above cost), the total recognised gain for the year underreview was £2.3 million, equivalent to 15.3 pence per Ordinary share. The directors are proposing a final dividend for the year of 2.2 pence perOrdinary share. Following the interim and special interim dividend already paidin November 2004 and February 2005 respectively, the final dividend, ifapproved, will take total distributions in respect of the year to 31 March 2005to 4.8 pence per Ordinary share, which is tax free to eligible shareholders. Thefinal dividend will be payable on 5 August 2005 to holders of Ordinary shares onthe register at 17 June 2005. The net asset value, after providing for the proposed dividend, is 84.4 penceper Ordinary share. After taking account of the total dividends paid andproposed to date of 29 pence per Ordinary share, the return to 31 March 2005 forqualifying founder shareholders amounts to 113.4 pence per Ordinary sharecompared with their initial net subscription of 80 pence per Ordinary share. Shareholders and Fundraising Following our appointment of new brokers, Teather & Greenwood, toward the end of2004, I am pleased to report that the discount of the Company's share price toits net asset value has narrowed, thus providing better liquidity for thoseshareholders who wish to, or need to, dispose of their stock. The share price isgenerally at a 10% discount to net asset value, reflecting the Board's statedpolicy of buying back shares in the market for cancellation at that level. TheBoard has agreed to continue this policy where it is, in its opinion, in theremaining shareholders' interests to do so. During the year just ended, a totalof 318,000 Ordinary shares were purchased in the market for cancellation. In furtherance of implementing policies and schemes for the benefit ofshareholders, the Extraordinary General Meeting on 7 January 2005 approved theintroduction of a dividend reinvestment scheme. This enables shareholders toincrease their total holding in the Company without incurring dealing costs,issue costs or stamp duty. Subject to individual circumstances, these sharesshould qualify for the 40 per cent tax relief that is applicable tosubscriptions for new shares in venture capital trusts. In relation to the 2005dividend, this scheme will apply only to holders of Ordinary shares. Shareholders will be aware that a C Share issue, at a price of £1 per share, wasmade by your Company on 7 January 2005. I have to report that the level ofsubscriptions received to date has so far been disappointingly low. Includingallotments since the year end, the total subscribed under the C share offer iscurrently £1.25 million, of which just under £250,000 had been allotted at 31March 2005. As these are a separate class of shares, to be converted intoOrdinary shares at a future date, the net asset value is reported separately onthe balance sheet. The C shares do not qualify for any dividend distribution in respect of the financial year to 31 March 2005. The directors have decided to extend the Offer until 23 June 2005 and are keeping under review the date on which the C Shares will be converted into Ordinary shares. Your Board On 3 May 2005, Stephen Noar joined the Board as a non-executive director.Stephen, a dentist by profession, was the founder chairman and chief executiveof Denplan Limited until its successful trade sale in 2003; in the followingyear winning the Financial Times Venturer of the Year Award. He is well known tothis Board through his involvement with the other VCTs in the British SmallerCompanies stable. I am delighted that Stephen has agreed to join the Board as hebrings a wealth of experience to our investment work. This is the final part of the Board restructuring that took effect from October2004 and provides a range of complimentary skills within a tight, butsufficiently flexible, framework. Stephen's appointment is subject to hiselection by shareholders at the forthcoming Annual General Meeting. Outlook The portfolio continues to provide significant growth as the underlyingcompanies move toward maturity and exit potential. The challenge for ourInvestment Adviser is to maintain this momentum in an economic climate thatshows signs of uncertainty and potential slowdown. Your Board will be workingwith the YFM Private Equity team to critically assess the new investmentopportunities that are presented to us, whilst ensuring that the existingportfolio is focused on delivering shareholder value. Your Board's aim is to balance this continued growth with providing shareholderswith a steady, attractive, tax free dividend income. The introduction of thedividend reinvestment scheme will enable eligible shareholders who wish to takeadvantage of the available income tax relief to reinvest their proceeds in anappropriate way and provide additional funds for investment, whilst allowingthose shareholders who require cash returns to still benefit from a tax freeincome. Sir Andrew Hugh SmithChairman Unaudited Profit and Loss Accountfor the year ended 31 March 2005 Unaudited Audited Notes 2005 2004 £000 £000 Income 396 364Administrative expenses: Investment advisory fee (272) (250) Other expenses (262) (214) ------ ------ (534) (464)Gain on realisation of investments 229 111Impairment of investments (136) (766) ------ ------Loss on ordinary activities before taxation (45) (755)Tax on loss on ordinary activities 2 - - ------ ------Loss for the financial year (45) (755)Dividends paid and proposed (732) (741) ------ ------Sustained loss for the year (777) (1,496) ====== ======Loss per Ordinary share basic and diluted 4 (0.29)p (4.88)p ====== ====== Notes All activity has arisen from continuing operations. There was no income orexpenditure in the year in respect of the C shares. Consequently the aboveresults relate only to the Ordinary shares. Unaudited Statement of Total Recognised Gains and Lossesfor the year ended 31 March 2005 Unaudited Audited 2005 2004 £000 £000 Loss for the financial year (45) (755)Unrealised gain on valuation of investments 2,392 2,746 ------ ------Total recognised gains for the year 2,347 1,991 ====== ====== Unaudited Note of Historical Cost Profits and Lossesfor the year ended 31 March 2005 Unaudited Audited 2005 2004 £000 £000 Loss for the financial year (45) (755)Realisation of investment gains (losses) of previous years 315 (194) ------ ------Historical cost loss on ordinary activities before taxation 270 (949) ------ ------Historical cost profit (loss) for the year after taxation and dividends (462) (1,690) ====== ====== Unaudited Balance Sheetat 31 March 2005 Ordinary Unaudited Audited Shares C Shares Total Total Notes 2005 2005 2005 2004 £000 £000 £000 £000Fixed AssetsInvestment portfolio 11,045 - 11,045 9,216 ------ ------ ------ ------Current AssetsDebtors 160 - 160 101Investments 1,656 - 1,656 2,656Cash 314 246 560 184 ------ ------ ------ ------ 2,130 246 2,376 2,941Creditors: amounts payable within one year (418) (9) (427) (805) ------ ------ ------ ------Net Current Assets 1,712 237 1,949 2,136 ------ ------ ------ ------Total Net Assets 12,757 237 12,994 11,352 ====== ====== ====== ====== Capital and Reserves Called-up share capital 1,512 125 1,637 1,544Share premium account - 112 112 -Capital redemption reserve 75 - 75 43Revaluation reserve 7,116 - 7,116 5,039Special reserve 3,661 - 3,661 3,871Profit and loss account 393 - 393 855 ------ ------ ------ ------Equity shareholders' funds 12,757 237 12,994 11,352 ====== ====== ====== ======Net asset value per share 6 84.4p 95.0p 84.6p 73.5p ====== ====== ====== ====== Unaudited Cash Flow Statementfor the year ended 31 March 2005 Ordinary Unaudited Audited Shares C Shares Total Total Notes 2005 2005 2005 2004 £000 £000 £000 £000 Net cash outflow from operating activities (212) - (212) (58) ------ ------ ------ ------Investing activitiesPurchase of fixed asset investments (401) - (401) (858)Proceeds from disposal of fixed asset investments 1,107 - 1,107 2,159 ------ ------ ------ ------Net cash inflow from investing activities 706 - 706 1,301 ------ ------ ------ ------ Equity dividends paid to shareholders (1,140) - (1,140) (93) ------ ------ ------ ------Net cash (outflow) inflow before management of liquid resources and financing (646) - (646) 1,150 ------ ------ ------ ------Management of liquid resourcesPurchase of fixed interest government stocks (106) - (106) (2,733)Proceeds from the sale of fixed interest government stocks 1,056 - 1,056 1,485 ------ ------ ------ ------Net cash inflow (outflow) from management of liquidresources 950 - 950 (1,248) ------ ------ ------ ------FinancingPurchase of own shares (174) - (174) (35)Issue of C shares - 250 250 -Costs of C share issue - (4) (4) - ------ ------ ------ ------Net cash inflow (outflow) from financing (174) 246 72 (35) ------ ------ ------ ------Increase (decrease) in cash in the year 130 246 376 (133) ====== ====== ====== ====== Notes to Financial Statementsfor the year ended 31 March 2005 1. Basis of reporting This preliminary announcement, which has been prepared on a basis consistentwith the previous year, does not constitute statutory accounts within themeaning of Section 240 of the Companies Act 1985. The information for the year ended 31 March 2004 is an extract from thestatutory accounts to that date which have been delivered to the Registrar ofCompanies. Those accounts included an audit report which was unqualified andwhich did not contain a statement under Section 237(2) or (3) of the CompaniesAct 1985. The statutory accounts for the year ended 31 March 2005, upon whichthe auditors have still to report, will be delivered to the Registrar followingthe Company's annual general meeting. The balance sheet and cash flow includes the C shares issued and allotted at thereporting date. The assets, liabilities and cash flows of the Company have beenanalysed as between the two classes of share. 2. Tax on Ordinary activities 2005 2004 £000 £000Corporation tax payable at 19% (2004: 19%) - - ------ ------3. Dividends 2005 2004 £000 £000First interim paid - 1.5p per Ordinary share(2004: nil) 230 -Second interim paid - 1.1p per Ordinary share(2004: nil) 169 -Final proposed - 2.2p per Ordinary share (2004:4.8p) 333 741 ------ ------ 732 741 ====== =======4. Loss per Ordinary Share The loss per Ordinary share is based on net loss from ordinary activities aftertax of £45,000 (2004: £755,000) and 15,343,000 (2004: 15,457,000) shares, beingthe weighted average number of shares in issue during the year. Under FRS14 'Earnings per share' any potentially dilutive shares are not deemeddilutive in the event that a loss has been incurred. Consequently, the basic anddiluted loss per share for the year ended 31 March 2005 and 2004 are the same. 5. Total recognised gains per Ordinary Share The total recognised gains per Ordinary share is based on total recognised gainsfor the year of £2,347,000 (2004: £1,991,000) and 15,343,000 (2004: 15,457,000)shares, being the weighted average number of shares in issue during the year. 6. Net Asset Value per Share The net asset value per Ordinary share is calculated on attributable assets of£12,757,000 (2004: £11,352,000) and 15,117,838 (2004: 15,435,838) shares inissue at the year end. The Company has no securities that would have a dilutiveeffect in either period and hence the basic and diluted net asset value pershare are the same. The net asset value per C share is calculated on attributable assets of £237,000(2004: £nil) and 249,575 (2004: nil) shares in issue at the year end. TheCompany has no securities that would have a dilutive effect in either period andhence the basic and diluted net asset value per share are the same. 7. Annual General Meeting Copies of the full financial statements for the period ended 31 March 2005 willbe available to the public at the registered office of the Company at SaintMartins House, 210-212 Chapeltown Road, Leeds, LS7 4HZ . The Company's AGM isdue to be held at 12.45 pm on 26 July 2005 at 23 Berkeley Square, London, W1J6HE. This information is provided by RNS The company news service from the London Stock Exchange