Crown Place Regulatory News (CRWN)

24 Jun 2005 10:54

Murray VCT 3 PLC24 June 2005 24 June 2005 MURRAY VCT 3 PLC Preliminary announcement of final results for the year ended 28 February 2005 Murray VCT 3 PLC ("the Company"), managed by Close Venture Management Limited,today announces preliminary results for the year ended 28 February 2005. Theannouncement has been approved by the Board of Directors on 24 June 2005. Key Facts 28 February 29 February % change 2005 2004Assets Net Assets £16,947,000 £23,140,000 (26.8)% Cumulative returns to Shareholders sincelaunchTotal return (without tax reliefs)note1 68.3p 81.0p (15.7)%Total return (with tax reliefs)notes 1 and 2 88.3p 101.0p (12.6)% Ordinary shares Net Asset Value 42.4p 56.1p (24.4)%Share price 40.5p 32.0p 26.6%Discount to Net Asset Value 4.5% 43.0%Ordinary shares issued during year - 751,328Ordinary shares bought back duringyear 1,326,118 450,549Ordinary shares in issue at periodend 39,952,670 41,278,788 Proposed Dividends per share 1.0p 2.0p Note 1: Sum of current Net Asset Value and dividends paid to date.Note 2: Income tax relief at 20%. For further information, please contact: Patrick Reeve/ Emil Gigov Derek Douglas/ David GaffneyClose Venture Management Limited Beattie Communications GroupTel: 020 7422 7830 Tel: 01324 602 550 www.closeventures.co.uk Notes to the Financial Statements1) Murray VCT 3 PLC is managed by Close Venture Management Limited. 2) Close Venture Management Limited is part of Close Brothers Group plc and is regulated by the FSA. 3) Accounting policies The financial information set out in the announcement does not constitute theCompany's statutory accounts for the year ended 28 February 2005, as defined inSection 240 of the Companies Act 1985. Statutory accounts for the year ended 29February 2004 have been delivered to the Registrar of Companies. The Auditorshave reported on those accounts; their report was unqualified and did notcontain statements under section 237(2) or (3) of the Companies Act 1985.Statutory accounts for the year ended 28 February 2005 have not yet beenapproved, audited or filed with the Registrar of Companies. The financialinformation for the year ended 29 February 2004 is derived from the statutoryaccounts delivered to the Registrar of Companies. Although the Company is no longer an investment company, as investment companystatus was revoked in order to permit the distribution of capital profits, theDirectors believe that the presentation of the profit and loss account and thestatement of total recognised gains and losses is enhanced by showing thereturns attributable to revenue and to capital. The Profit and Loss Account and the Statement of Total Recognised Gains andLosses have been prepared in accordance with Schedule 4 of the Companies Act1985 and Financial Reporting Standard No.3: "Reporting Financial Information".As mentioned above, for illustrative purposes non-statutory informationcomprising revenue and capital accounts has also been presented. 4) Earnings per share and net asset values Earnings per Ordinary share for the year ended 28 February 2005 have beencalculated using the weighted average number of Ordinary shares in issue duringthe period of 40,774,635 (2004: 40,717,317). The net asset value per Ordinaryshare has been calculated based on Equity Shareholders' funds and on 39,952,670Ordinary shares (29 February 2004: 41,278,788), being the number of shares inissue at the period end. Chairman's Statement Introduction This has been a year of major change for the Company. The Board remainscommitted, after a number of years of disappointing investment performance and,therefore, poor returns for shareholders, to restoring shareholder value. Therecent change of investment manager and the prospect of a merger with Murray VCTPLC and Murray VCT 2 PLC, will be two significant steps in that direction. Amerger would create a successor company with net assets of circa £38 million(based on the net assets of the companies as at 28 February 2005). Change of Investment Manager In late 2004, the Board unanimously agreed that a change of investment managerwas required. At the same time, but independently the Boards of Murray VCT PLC &Murray VCT2 PLC unanimously reached the same conclusion, sharing as they do anumber of common investments. The investment performance record over a number of years had been consistentlypoor in relative and absolute terms. Board initiatives to promote an improvementin investment performance by insisting on new and aditional manager resources,reducing investment management fees (from 2.5% to 1.75%) and reducing the noticeperiod of the investment manager (from 12 months to 6 months) had not resultedin any enhancement in net asset value. After a review of the options available to the Company, including considerationof other possible managers in this specialist sector and their performancerecords, the Board unanimously agreed to seek a new investment manager, andapproached Close Venture Management ("CVM"). In addition, it was agreed that theexploration of a merger, only competent since the autumn of 2004 should bedeferred until satisfactory new management arrangements were in place. Accordingly, the Board announced its intention to terminate the managementagreement with Aberdeen Murray Johnstone ('AMJ') on 8 February 2005 and newmanagement arrangements with CVM commenced on 6 April 2005. Under the terms ofan agreement reached with AMJ the Company paid an agreed sum of £295,000 plusVAT in respect of management contract termination costs to Aberdeen MurrayJohnstone. The Board is delighted with the appointment of CVM, who have an outstandingtrack record in the VCT sector over many years, winning the accolade of "BestVCT Provider" at the Professional Adviser Awards in 2005. The Company nowparticipates in all relevant VCT qualifying investments made by CVM across itsportfolio of funds. CVM manages aggregate VCT funds of approximately £200million. Since the appointment of CVM, an extensive review of the Company's investmentportfolio has taken place. They have been actively engaging with investeecompanies in an effort to restore and develop shareholder value from the currentportfolio. The first task in repositioning the Company is to support andencourage those of the Company's investments with growth prospects and, wheredeemed necessary, to achieve an orderly realisation of those underperformingassets where the Company's resources may be more profitably employed elsewhere. Performance The Company's net asset value as at 28 February 2005 declined to 42.4 pence pershare, or £16.9 million from 56.1 pence per share or £23.1 million as at 28February 2004. The reported net asset value per share at 31 August 2004 was 56.4pence. As announced on 10 December 2004, this valuation was further revised downby 1.9 pence because an anticipated sale of an investee company did not takeplace. The disappointing decline in net asset value at the financial year end has beendriven by increased provisions against the Company's unquoted portfolio. Theseprovisions reflect the British Venture Capital Association's valuationguidelines, and in particular forward-looking judgements about the portfolio'sunderlying businesses. Portfolio A number of developments took place in the portfolio during the year.Investments in seven new companies were made, including four companies quoted onAIM. Investments in 10 companies were disposed of, realising proceeds of£4,269,000 against costs of £5,151,000. Following the year end, an investment inFirstLine was sold for £665,000, realising a small loss on cost but a gain onthe investment's valuation as at 31 August 2004, and £528,000 was received fromthe redemption of loan stock in Clamonta. We also sold our investment inAstraeus for £350,000 realising a loss of £200,000 on cost but releasing thefund from further capital commitments in respect of bank guarantees. Since the year end and following the appointment of ("CVM"), two new investmentshave been made comprising a follow-on investment in Grosvenor Healthcare, aprofitable and successful provider of occupational health services to largecorporates; and an investment in the GB Pub Company to enable the Company toacquire its first 2 freehold pubs. CVM is working on a number of otheropportunities for the Company. The Company now has £5.3 million in cash or gilts available for new investment. Dividends and charging to capital The Board is proposing to pay a 1p final dividend per share for the year ended28 February 2005, resulting in total dividends per share for the year of 1p.This final dividend will be paid out of capital and payment has been authorisedby the Inland Revenue. For the current financial year onwards, 75 per cent of management fees will becharged to capital, rather than the former policy of charging 60 per cent ofmanagement fees to capital. The new policy is in line with the VCT industrygenerally and should improve the prospects for the payment of revenue dividendsto shareholders in future years. Share Buy-Backs It will continue to be the Company's policy to buy in shares from thoseshareholders who wish to sell, within the overall constraints of ensuring thatsufficient resources are maintained for investment in existing and new investeecompanies. Proposed merger It is the view of the Board that a merger of the three VCTs will provideimmediate and long term benefits from a significant reduction in running costs;the creation of a broader investment portfolio in the enlarged successorcompany; and an increase in share liquidity. With the transfer of management to CVM now completed, work has begun to examinein detail the feasibility and advantages of merging the interests of the Companywith Murray VCT PLC and Murray VCT 2 PLC. It is currently envisaged that anymerger of the companies will be achieved through a scheme of reconstructionunder section 425 of the Companies Act 1985 but the actual process of the mergerwill be driven by cost and tax considerations. Murray VCT 3 PLC went into anoffer period from 23rd June 2005. The Board expects to report its conclusions on the proposed merger toshareholders at the time of the AGM. At the same time, the Board will also setin motion the process for a change of the Company's name. The actions of Mr Charles Clark ("Mr Clark") and the 2005 AGM As announced on 23 May 2005, Mr Clark, a shareholder in the Company (and also inMurray VCT PLC and Murray VCT 2 PLC) had been seeking support from shareholdersfor the removal of the Board and the appointment of new board members proposedby him. Mr Clark has also questioned the Board's decision to terminate themanagement arrangements with AMJ and the appointment of CVM. Neither Mr Clark, nor his proposed directors, contacted the Board regardingtheir proposed action before writing to shareholders, nor have they since, MrClark apparently preferring to conduct his campaign through the press andthrough comments to the markets. The Board (and the boards of Murray VCT PLC and Murray VCT 2 PLC) have nowwritten, through the Company's solicitors, to Mr Clark and his proposeddirectors making detailed enquiries of them. The Board is particularly keen toascertain what Mr Clark and the proposed directors' ambitions are for potentialchanges to the companies, and what has given rise to such an unusual shareholderaction. The Board is disappointed at this turn of events. Contrary to Mr Clark'sassertion in his circular of 18 May 2005, the Board never had sufficientinformation on the proposed management buyout by the Aberdeen Murray Johnstonemanagement team to be supportive or otherwise of this potential change. Inaddition, while some personnel changed following the failure of the managementbuyout, the majority of those involved in the investment process remained. The Board intends to call the annual general meeting of the Company afterresponses have been received from Mr Clark and the directors proposed by him.The Board will present any resolutions, then put forward by Mr Clark. The Boardshould then be in a position to make recommendations to shareholders and toprovide them with sufficient information on which they may base their votingdecisions. Prospects The further decline in the Company's net asset value in the period to 28February 2005 reinforces the Board's decision to change investment manager. Thetask of CVM will be to generate value for shareholders through proactiveportfolio management and sourcing new investments. This is not, however, a taskthat can be accomplished quickly; CVM will be measured on its ability to restorethe Company's fortunes over the medium term. The Board will continue to exercise its responsibilities for all of theCompany's shareholders in aiming to provide them with improved investmentprospects under CVM and a cost effective merger which will create an improvedsuccessor company. Once the proposed merger has taken place a new board of theenlarged entity will be required. The Board is not protective of its positionand will stand down when the new board assumes responsibility for the mergedentity. The Board is satisfied that a platform for improvement has been achieved andwill report fully to shareholders in advance of the annual general meeting oneach of the developments affecting the Company so that shareholders are in thebest position to make an informed view when voting on the business put forwardat that meeting. On behalf of the BoardPeter TimmsChairman24 June 2005 Investment Portfolio Summary As at 28 February 2005 -------- -------- Nature of Business Invested to Valuation date at cost £'000s as at February 2005 £'000s -------- --------UnquotedInvestmentsHeathcotesRestaurants Restaurants operator. 1,017 1,017Clamonta Manufacturer of aircraft engine 736 835 components.ELE AdvancedTechnologies Manufacturer of precision 750 689 engineering components for the industrial gas turbine, aerospace and automotive markets.TransrentHoldings Rental of commercial truck 672 672 trailers.First Line Investment sold. Valuation 750 665 represents future expected distributions.PSCA Magazine publisher. 628 628Sanastro B2B financial publishing. 550 550Carmichael Valuation represents expected 631 500 recovery from receivership.RMS EuropeLimited Stevedoring and ships agency 455 455 services.Synexus Patient recruitment for 968 418 clinical trials.J&S Marine Acoustic, electromechanical and 61 410 data network systems.MiningCommunications Magazine publisher. 560 405Tender LovingChildcare Operator of day care 1,584 391 nurseries.Astraeus Charter airline operator. 550 350GW 1016 Hotel holding company. 590 322Link Up Mitaka Translation services. 416 255Palgrave Brown Manufacturer of specialist 250 250 timber products including roof trusses, windows and doors.Sequoia Distributor of electronic 750 241 components and equipment.EnterpriseFood Sales, marketing and 300 233 procurement services to the baking industry.BoothDispensers Manufacture of vending. 227 227Working People Supplier of temporary 178 178 drivers.Forward Media Radio broadcast services. 500 175Voxsurf Supplier of messaging 676 113 software.Citel Telephony Internet Protocol 168 81 technology.PLM Dollar On-shore helicopter services. 199 66Conveco Investment sold. Valuation 758 48 represents future expected distributions.BusinessHealth Provision of occupational 1,198 8 health services and fitness -------- -------- testing equipment to health clubs. 10,182AIM QuotedInvestmentsCello GroupPlc Market research, brand 300 378 advertising, direct marketing and database management.Augean GroupPlc Waste management. 211 299Tanfield GroupPlc Supplier of engineering 189 226 services and electric vehicles.Avanti ScreenMedia Plc Suppliers of retail television 148 223 services. -------- -------- 1,126Listed fixedincomeConversion9.5% 2005 2,128 2,218Treasury 7.5%2006 2,209 2,197Treasury 4.5%2007 579 577Treasury 8.5%12/2005 103 103------------------ --------------------- -------- -------- 5,095 --------Totalinvestments 16,403------------------ --------------------- -------- -------- Profit and Loss Account For the year ended 28 February 2005 Year ended Year ended 28 February 2005 29 February 2004 ------- ------ ------ ------- ------ ------ Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 ------- ------ ------ ------- ------ ------ ------- ------ ------ ------- ------ ------Investment income anddeposit interest 985 - 985 1,687 - 1,687 ------- ------ ------ ------- ------ ------ Investment managementfees (146) (439) (585) (300) (450) (750) ------- ------ ------ ------- ------ ------Other expenses (416) - (416) (208) - (208) ------- ------ ------ ------- ------ ------ Operating(loss)/profit(excluding exceptionalitems) 423 (439) (16) 1,179 (450) 210 ------- ------ ------ ------- ------ ------ Exceptional items ------- ------ ------ ------- ------ ------Investment Managementtermination fees (86) (260) (346) - - - ------- ------ ------ ------- ------ ------Other expenses inrespect of termination (101) - (101) - - - ------- ------ ------ ------- ------ ------ (187) (260) (447) - - - ------- ------ ------ ------- ------ ------ Operating(loss)/profit 236 (699) (463) 1,179 (450) 210 ------- ------ ------ ------- ------ ------ Profit on realisationof investments - 954 954 - 596 596 ------- ------ ------ ------- ------ ------Amounts written offfixed assetinvestments - (569) (569) - - - ------- ------ ------ ------- ------ ------(Loss)/profit onordinary activitiesbefore taxation 236 (314) (78) 1,179 146 1,325 ------- ------ ------ ------- ------ ------Tax on ordinaryactivities (56) 56 - (346) 147 (199) ------- ------ ------ ------- ------ ------(Loss)/profit onordinary activitiesafter taxation 180 (258) (78) 833 293 1,126 ------- ------ ------ ------- ------ ------Ordinary dividends onequity shares ------- ------ ------ ------- ------ ------ Final dividends - (400) (400) (743) (83) (826) ------- ------ ------ ------- ------ ------Over accrual in prioryears 6 - 6 19 - 19 ------- ------ ------ ------- ------ ------ Balance transferred(from)/to reserves 186 (658) (472) 109 210 319 ------- ------ ------ ------- ------ ------Earnings per share(pence) (Note 4) 0.4 (0.6) (0.2) 2.0 0.8 2.8 ------- ------ ------ ------- ------ ------ Statement of Total Recognised Gains and Losses For the year ended 28 February 2005 Year ended Year ended 28 February 2005 29 February 2004 ------ ------ ------ ------ ------ ------ Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 (Loss)/profit onordinary activitiesafter taxation 180 (258) (78) 833 293 1,126 ------ ------ ------ ------ ------ ------Unrealised loss onrevaluation ofinvestments (5,216) (5,216) - (3,112) (3,112))------------------- ------ ------ ------ ------ ------ ------- Current taxattributable tounrealised losses onloan relationships - - - 346 (147) 199------------------- ------ ------ ------ ------ ------ ------Total recognisedlosses relating 180 (5,474) (5,294) 1,179 (2,966)) (1,787)to the year ------ ------ ------ ------ ------ Balance sheet As at 28 February 2005 28 February 2005 29 February 2004 £'000 £'000 Fixed assets Investments 16,403 21,587 Current assetsDebtors 1,638 1,970Cash and overnight deposits 214 653 1,852 2,623 Creditors: Amounts falling due withinone year 1,308 1,070 Net current assets 544 1,553 Total net assets less currentliabilities 16,947 23,140 Capital and reservesCalled up share capital 3,995 4,128Revaluation reserve (15,287) (13,031)Capital redemption reserve 250 117Profit and loss account 27,989 31,926 Equity shareholders' funds 16,947 23,140 Net asset value per ordinary share(pence) 42.4 56.1 Cash flow statement for the Year ended 28 February 2005 ------------ ----------- Year ended Year ended 28 February 2005 29 February 2004 £'000 £'000 ------------ ------------ Operating activitiesInvestment income received 1,262 1,574Deposit interest received 15 7Other income 21 10Investment management fees paid (691) (809)Secretarial fees paid (57) (55) ------ ------Cash paid to and on behalf of Directors (52) (60)Other cash payments (122) (114) Net cash inflow from operatingactivities 376 553 Financial investmentPurchase of investments (10,380) (6,625)Sales of investments 11,201 8,516 Net cash inflow from investingactivities 371 1,891 Dividends paid Equity dividends paid on ordinary shares (820) (2,178) Net cash (outflow)/inflow beforefinancing (73) 266 FinancingIssue of Ordinary shares 472Repurchase of own Ordinary shares (366) (192) Net cash (outflow)/inflow from financing (366) 280(Decrease)/increase in cash (439) 546---------------------- ------------ ----------- This information is provided by RNS The company news service from the London Stock Exchange