Baronsmead Vt Regulatory News (BVT)

18 May 2005 12:15

Baronsmead VCT 2 PLC18 May 2005 Baronsmead VCT 2 plc To: Company AnnouncementsFrom: Baronsmead VCT 2 plcDate: 18 May 2005 Unaudited Results - Year Ended 31 March 2005 Highlights • NAV per ordinary share increased by 18.4% to 120.63p before deduction of dividends • NAV per C share increased by 1.3% to 96.23p before deduction of dividends • C share issue fully subscribed by 14 January 2005 - 22 million shares issued • The total return since launch in 1998 on the ordinary shares is now 70.7%, which is equivalent to an annualised return of 7.9% since launch • Dividends totalling 5.0p per ordinary share paid/proposed maintains the average annual tax free dividend at over 4.5p per ordinary share since launch. • Dividend of 1.0p per C share proposed Clive Parritt, the Chairman said: "OVERVIEW Since launch seven years ago your company has achieved good investmentperformance and met the twin objectives of creating capital growth and payingattractive tax free dividends. The sale of Fat Face in April 2005 is a fineexample of how a portfolio company can generate good value for investors and soenhance returns for shareholders in Baronsmead VCT 2. Our offer of 22 million new C shares in winter 2004/2005 was fully subscribed by14 January 2005. We are delighted to welcome the 1,473 new shareholders.Baronsmead VCT 2 is now the largest VCT in the marketplace with a net assetvalue of over £65m. RESULTS AND DIVIDENDS In the year to 31 March 2005, the fully diluted Net Asset Value (NAV) perordinary share increased by 18.4% from 101.88p to 120.63p. The increase in theFTSE All-Share index (total return) was 15.6% over the comparable period to 31March 2005. Dividends totalling 5p a share for ordinary shareholders (2.3p interim dividendpaid in December 2004 and the proposed final dividend of 2.7p payable on 28 Juneto shareholders on the register on 25 May 2005) reduce the NAV per ordinaryshare at the year-end to 115.63p per ordinary share. I am delighted that performance over the last year has been excellent. This isa tribute to the managers. As shareholders are aware, the managers'remuneration arrangements are designed to enable them to share in the successthey create for shareholders. The results for 2004/2005 trigger a performancefee of 3.39p per ordinary share (excluding VAT) which is based on the managersreceiving 20% of the total return in excess of a hurdle set at base rate plus2%. Since the year end (on 29 April 2005) Fat Face has been sold, enablingBaronsmead VCT 2 to realise its total investment for £5.2m. This has enabledthe Board to declare a first interim dividend of 5p per ordinary share for thefinancial year 2005/06, payable on 6 June 2005. The changes in the net asset value per ordinary share as a result of thedividends paid/proposed are set out in the table below. Pence per Ordinary Share Dividends Changes in NAV(p) Net Asset Value (before dividends) 120.63 Less - Interim Dividend 2004/05 Paid 2.3 Less - Final Dividend 2004/05 Proposed 2.7 5.00 Net Asset Value at 31 March 2005 115.63 Less - First Interim Dividend 2005/06 declared 5.0 5.00 Resulting Net Asset Value per Ordinary Share 110.63 The C share issue raised net funds of £20.9m. A first dividend of 1.0p isproposed arising from the income earned on cash and fixed interest securities inthe last few months of the year. Three AiM-traded investments were made by 31March 2005 and the £20.1m balance of the portfolio is held in gilts, a moneymarket OEIC and cash. Over 70% of this capital is to be invested in a portfolioof qualifying holdings by 31 March 2007. At the year end the net asset valueper C share was 95.23p. To assist shareholders in the understanding of the financial statements we haveincluded a non-statutory operating report. LONG TERM PERFORMANCE Since 1998 the total return for founder ordinary shareholders in Baronsmead VCT2 is 70.7%, net of all costs. This is calculated by combining the growth in NAVwith reinvested dividends per ordinary share of 33.9p. This performance places the achievements of your company ahead of most other 'generalist' VCTs, which have a similar strategy investing across a range ofunquoted and AiM companies. The FTSE All-Share index over the comparable periodsince launch is up only a meagre 6% and so the performance of your companyremains substantially ahead of this index too. The positive differentialincreases further if the benefits from the available VCT tax reliefs are alsotaken into account. THE PORTFOLIO In the year under review, 15 new investments were made and three investmentssold taking the net portfolio to 66 companies. The relative health of portfoliocompanies is measured quarterly in terms of profitability as well as other nonfinancial bench-marks. At the year end, 53 of the 66 portfolio companies werereporting higher or steady profits. This year the principal contributor to the increase in our net asset value camefrom the unquoted portfolio. Americana and Staffline each showed increases invalue of more than £1.4m, after taking account of the repayment of loan stockinvestments. Both are testament to the successful combination of talentedmanagement teams and active involvement by the managers. AssA too, likeStaffline, experienced a good recovery following changes at board level andincreased in value by more than £1m. The sale of Brownsword, the flotation ofVectura and Ardana plus some profitable realisations of AiM stocks all added togood progress in realising value for shareholders. As reported previously, JobOpportunities went into administration and provisions were made against Spaformand Hawksmere, illustrating that not all ambitions have been fulfilled. At 31 March 2004 the valuation of Fat Face was £1.9m. Increasing this to itsultimate sale value provided an uplift of £3.3m. £450,000 of loan stock hadbeen repaid previously, so that the final cash returned including interest anddividends received over the period of ownership, represented 11.9 times theoriginal cost of the investment. The business grew from 28 to 98 stores overthe five years of the investment and illustrates how talented entrepreneurs, theintroduction of professional managers and active involvement by your manager ateach stage can achieve outstanding results. As the CEO of Fat Face said "Ourpartnership with ISIS Equity Partners has been a fantastic success and togetherwe have taken the Fat Face brand to new levels" MEETING SHAREHOLDER NEEDS Shareholders approved a C share fund raising issue in July 2004 and theextension of the life of your Company from 2008 to 2011. The prospectus issuedin September was well received by commentators, advisers and their clients sothat we were the first VCT in the financial year 2004/05 to be fully subscribed.We were also pleased that the average cost to new shareholders was less than4.5%, which was one of the least expensive fund raisings across the VCT sector. In May 2004 the board stated that it would aim to sustain annual dividends atthe historic level from launch of 4.5p per ordinary share, while alsomaintaining a net asset value of at least 100p per ordinary share. Clearly theability to meet these twin objectives will depend significantly on the level andtiming of profitable realisations. With the first interim dividend for2005-2006 the yield objective has already been exceeded which is an excellentstart. Ultimately, if an active secondary market in VCT shares is to beachieved, it will be important to show secondary investors that, in addition totax free dividends and gains, the dividend flow is likely to be maintained. OUTLOOK The last year has seen good performance across the portfolio which has beentranslated into higher investment returns. The task now is to sustain this andthe board's role is to monitor progress and encourage the manager to maintainand further improve that performance. Significant cash returns for ordinaryshareholders have been generated and we shall plan to extend this to Cshareholders in two years time when their shares convert. In the meantime, animportant priority is for potential purchasers of the ordinary shares toappreciate the yield characteristics of Baronsmead VCT 2 shares so that existingshareholders can benefit from the resultant increase in the share price." David Thorp, ISIS Equity Partners : 0207 506 1100Robert Coulter, F&C Asset Management plc: 0131 465 1000 UNAUDITED NON-STATUTORY OPERATING REPORT FOR THE YEAR ENDED 31 MARCH 2005 Ordinary C Ordinary shares shares Total shares 2005 2005 2005 2004 £'000 £'000 £'000 £'000 Profit on sale of investments in year 1,595 - 1,595 1,258(total) (Profit)/loss already included in valuation at start of (131) - (131) 662year Profit on sale of investments in current year 1,464 - 1,464 1,920 Increase in portfolio valuation in the 8,219 128 8,347 6,306year Permanent diminution in value as a result of investments (1,452) - (1,452) -liquidated Deduct losses already included in valuation at start of 810 - 810 -yearRealised write offs of investments in current (642) - (642) -year Investment income 1,511 383 1,894 1,256 Investment management fee (including performance fee) (2,673) (172) (2,845) (778) Other expenses (272) (57) (329) (284) Total return before tax for shareholders 7,607 282 7,889 8,420 Taxation 29 (29) - 1 Total return after tax for shareholders 7,636 253 7,889 8,421 Dividends paid and proposed (2,086) (220) (2,306) (3,476) Transferred to reserves 5,550 33 5,583 4,945 Total return per ordinary share/ C share in year 18.18p 1.65p 20.54p Unaudited Profit and Loss Account of the Companyfor the year ended 31 March 2005 Ordinary shares 2005 2005 2005 Revenue Capital Total £'000 £'000 £'000 Profit on realisation of investments - 822 822Income 1,511 - 1,511Investment management fee (255) (2,418) (2,673)Other expenses (272) - (272) ---------- ----------- ----------- Profit/(loss) on ordinary activities before taxation 984 (1,596) (612) Tax on ordinary activities (177) 206 29 ---------- ----------- ----------- Profit/(loss) on ordinary activities after taxation 807 (1,390) (583) Dividends paid and proposed (792) (1,294) (2,086) ----------- ----------- ----------- Retained gain/(loss) transferred to/(from) reserves 15 (2,684) (2,669) ---------- ---------- ----------- Return per ordinary share 1.92p (3.31)p (1.39)p ______ ______ _____ Unaudited Statement of Total Recognised Gains and Lossesfor the year ended 31 March 2005 Ordinary shares 2005 2005 2005 Revenue Capital Total £'000 £'000 £'000 Profit/(loss) on ordinary activities after taxation 807 (1,390) (583)Unrealised gain on revaluation of investments - 8,219 8,219 ---------- ----------- -----------Total recognised gain during the year 807 6,829 7,636 ---------- ----------- -----------Total recognised gain per ordinary share 1.92p 16.26p 18.18p Unaudited Profit and Loss Account of the Companyfor the year ended 31 March 2005 C shares 2005 2005 2005 Revenue Capital Total £'000 £'000 £'000 Income 383 - 383Investment management fee (43) (129) (172)Other expenses (57) - (57) ---------- ----------- ----------- Profit/(loss) on ordinary activities before taxation 283 (129) 154 Tax on ordinary activities (54) 25 (29) ---------- ----------- ----------- Profit/(loss) on ordinary activities after taxation 229 (104) 125 Dividends paid and proposed (220) - (220) ----------- ----------- ----------- Retained gain/(loss) transferred to/(from) reserves 9 (104) (95) ---------- ---------- ----------- Return per C share 1.49p (0.68)p 0.81p ______ ______ _____ Unaudited Statement of Total Recognised Gains and Lossesfor the year ended 31 March 2005 C shares 2005 2005 2005 Revenue Capital Total £'000 £'000 £'000 Profit/(loss) on ordinary activities after taxation 229 (104) 125Unrealised gain on revaluation of investments - 128 128 ---------- ----------- -----------Total recognised gain during the year 229 24 253 ---------- ----------- -----------Total recognised gain per C share 1.49p 0.16p 1.65p Unaudited Profit and Loss Account of the Companyfor the year ended 31 March 2005 Total 2005 2005 2005 Revenue Capital Total £'000 £'000 £'000 Profit on realisation of investments - 822 822Income 1,894 - 1,894Investment management fee (298) (2,547) (2,845)Other expenses (329) - (329) ---------- ----------- ----------- Profit/(loss) on ordinary activities before taxation 1,267 (1,725) (458) Tax on ordinary activities (231) 231 - ---------- ----------- ----------- Profit/(loss) on ordinary activities after taxation 1,036 (1,494) (458) Dividends paid and proposed (1,012) (1,294) (2,306) ----------- ----------- ----------- Retained gain/(loss) transferred to/(from) reserves 24 (2,788) (2,764) ---------- ---------- ----------- Return per ordinary share/C share 1.81p (2.61)p (0.80)p ______ ______ _____ Unaudited Statement of Total Recognised Gains and Lossesfor the year ended 31 March 2005 Total 2005 2005 2005 Revenue Capital Total £'000 £'000 £'000 Profit/(loss) on ordinary activities after taxation 1,036 (1,494) (458)Unrealised gain on revaluation of investments - 8,347 8,347 ---------- ----------- -----------Total recognised gain during the year 1,036 6,853 7,889 ---------- ----------- -----------Total recognised gain per ordinary share/C share 1.81p 11.95p 13.76p Audited Profit and Loss Account of the Companyfor the year ended 31 March 2004 Ordinary shares 2004 2004 2004 Revenue Capital Total £'000 £'000 £'000 Profit on realisation of investments - 1,920 1,920Income 1,256 - 1,256Investment management fee (195) (583) (778)Other expenses (284) - (284) ---------- ----------- ----------- Profit on ordinary activities before taxation 777 1,337 2,114 Tax on ordinary activities (131) 132 1 ---------- ----------- ----------- Profit on ordinary activities after taxation 646 1,469 2,115 Dividends paid and proposed (492) (2,984) (3,476) ----------- ----------- ----------- Retained gain/(loss) transferred to/(from) reserves 154 (1,515) (1,361) ---------- ---------- ----------- Return per ordinary share 1.58p 3.58p 5.16p ______ ______ _____ Audited Statement of Total RecognisedGains and Losses for the year ended 31 March 2004 2004 2004 2004 Revenue Capital Total £'000 £'000 £'000 Profit on ordinary activities after taxation 646 1,469 2,115Unrealised profit on revaluation of investments - 6,306 6,306 ---------- ----------- -----------Total recognised gain during the year 646 7,775 8,421 ---------- ----------- -----------Total recognised gain per ordinary share 1.58p 18.96p 20.54p Unaudited Balance Sheet Audited As at As at 31 March 2005 31 March 2004 Ordinary shares C shares Total £'000 £'000 £'000 £'000Fixed AssetsUnquoted investments 23,698 - 23,698 18,986Quoted on the Alternative Investment 16,497 818 17,315 13,004Market (AiM)Fixed interest securities 6,004 17,994 23,998 4,174Listed investments 481 - 481 476Quoted on OFEX 127 - 127 94 _______ _______ _____ _______ 46,807 18,812 65,619 36,734 Net current assets 1,124 2,139 3,263 4,909 ______ ______ _____ ______ Net assets 47,931 20,951 68,882 41,643 ______ ______ _____ ______ Financed by:Shareholders' funds 47,931 20,951 68,882 41,643 ______ ______ _____ ______ Net asset value per share: Basic 115.63p 95.23p 101.88p Ordinary/C shares in issue 41,453,426 22,000,000 40,874,019 Unaudited Summarised Statement of Cash Flows Audited Year to Year to 31 March 2005 31 March 2004 Ordinary shares C shares Total £'000 £'000 £'000 £'000 Net cash inflow from operating activities 235 3 238 377Taxation - - - (163)Capital expenditure and financial investment (1,034) (18,684) (19,718) (1,750)Equity dividends paid (967) - (967) (3,476) ----------- ----------- ----------- -----------Net cash outflow before financing (1,766) (18,681) (20,447) (5,012)Financing 1,010 21,270 22,280 (21) ----------- ----------- ----------- -----------(Decrease)/increase in cash (756) 2,589 1,833 (5,033) ----------- ----------- ----------- -----------Reconciliation of net cash flow to movement in netcash (Decrease)/increase in cash (756) 2,589 1,833 (5,033)Opening net cash 4,856 - 4,856 9,889 ----------- ----------- ----------- -----------Net cash at 31 March 2005 (31 March 2004) 4,100 2,589 6,689 4,856 ----------- ----------- ----------- ----------- Reconciliation of net revenue before taxation to net cash inflow/(outflow) fromoperating activities Profit/(loss) on ordinary activities before taxation (612) 154 (458) 2,114Profit on realisation of investments (822) - (822) (1,920)(Increase)/decrease in debtors (53) (302) (355) 134Increase in creditors 1,722 151 1,873 49 ----------- ----------- ----------- -----------Net cash inflow from operating activities 235 3 238 377 ----------- ----------- ----------- ----------- Notes 1. The unaudited results which cover the year to 31 March 2005 have been prepared under the historical cost convention, modified to include the revaluation of fixed asset investments. These financial statements are presented in accordance with the Investment Trust Companies SORP (including the provision of additional information) except where departures are necessary to comply with schedule 4 of the Companies Act 1985 as a result of the fact that the Company has relinquished its investment company status under the Act. 2. There were 41,453,426 ordinary shares in issue at 31 March 2005 (31 March 2004: 40,874,019). 1,899,407 ordinary shares were issued during the year. The Company bought back 1,320,000 ordinary shares for cancellation during the year. There were 22,000,000 C shares in issue at 31 March 2005 (31 March 2004:Nil). 3. Returns for the period to 31 March 2005 are based on a weighted average of 41,995,911 (31 March 2004: 40,996,280) ordinary shares in issue during the year, and a weighted average of 15,323,042 C shares (31 March 2004: Nil) in issue during the year. 4. The final dividends of 2.7 pence per ordinary share and 1 pence per C share will be paid on 28 June 2005 to shareholders on the register on 25 May 2005, subject to the approval of shareholders at the Annual General Meeting on 20 June 2005. 5. These are not full accounts in terms of Section 240 of the Companies Act 1985. Full audited accounts for the year to 31 March 2004 contain an unqualified audit report and have been lodged with the Registrar of Companies. The auditors' report on the full financial statements for the year to 31 March 2005 has yet to be signed. The annual report for the year to 31 March 2005 will be sent to shareholders shortly and will then be available for inspection at Exchange House, Primrose Street, London, the registered office of the Company. 6. The Annual General Meeting will be held on 20 June 2005. This information is provided by RNS The company news service from the London Stock Exchange