Maven Income 1 Regulatory News (MIG1)

14 Oct 2008 16:33



Aberdeen Income and Growth VCT PLC

Interim Announcement for the six months ended 31 August 2008 (unaudited) 

This Interim Management Report covers a period when equity markets generally have seen a downward trend in the face of tighter credit conditions and with many commentators predicting negative growth in the UK economy for the second half of the calendar year. Prices are likely to remain unstable given these economic conditions. Your Company has a limited exposure to the AIM market, representing 16.5% of net assets at 31 August 2008, where there has been continued volatility that has affected the results for the period under review. Despite these significant and adverse influences, the NAV at the reporting period end is almost unchanged from the position at the end of February, after adjusting for the dividend paid in July 2008. This is primarily due to the more robust performance of the private equity portfolio, which continues to mature and enhance its value.

Highlights

NAV total return of 100.8p per share (pps) at period end, down 0.8% over the period; the AIM All-share Index fell by 21.4% over the same period.

NAV at period end of 69.7pps.

Realised gains on the disposal of unlisted holdings of £1,089,000 equivalent to 3.1pps.

Performance

The NAV total return at 31 August 2008 was 100.8pps, a fractional decrease of 0.8% over the equivalent figure at 29 February 2008.

The Net Asset Value (NAV) per Ordinary Share at 31 August 2008, after payment of the final dividend of 2.3pps in respect of the year ended 29 February 2008, was 69.7pps compared with 72.8pps at 29 February 2008. 

Dividends

The Board intends to pay regular dividends from realised gains and hopes that the level of payment will be increased over time but this cannot be guaranteed. All dividends are, of course, paid tax-free to Shareholders and the net dividend of 5.8p paid in respect of the year ended 29 February 2008 is equivalent to a yield of 7.7% to a higher rate taxpayer from an equity investment; if the initial tax relief of 20% is taken into account the effective annual yield rises to 9.7%. Since the Company's launch and after receipt of the interim dividend, Ordinary Shareholders will have received 32.1p per share in tax-free dividends, of which 22.6p will have been paid since September 2004.

The Directors have declared an interim revenue dividend of 1.0p per share to be paid on 12 December 2008 to Shareholders on the register at close of business on 14 November 2008.

VCT qualifying status

The VCT qualifying status of your Company is monitored on a continuous basis to ensure that all of the criteria required to maintain VCT status are being achieved.

Investment activity

During the six-month period ended 31 August 2008, six new unlisted and AIM quoted investments were completed and a total of £2.0 million was invested, of which £1.5 million was in unlisted companies and £500,000 was in AIM quoted companies. At the period end, the portfolio stood at 73 unlisted and AIM investments at a total cost of £29.0 million. Since 31 August 2008, one further AIM investment has been made at a cost of £16,000.

The following investments have been completed during the period:

 

 

Investment	Date	Activity	Investment cost £'000	Website
Unlisted
Broomco (4136)	July 2008	Provider of CCTV and air condition services throughout UK	89	No website available
MoneyPlus Group	July 2008	Provider of debt management services to individuals	135	www.moneyplusgroup.co.uk
Nessco Group Holdings	June 2008	Telecommunication services provider	472	www.nessco.co.uk
PSCA International	May 2008	Producer of publications aimed at public sector officials	154	www.publicservice.co.uk
TC Communications Holdings	May 2008	Marketing and communications services agency	199	www.tccommunications.co.uk
Training for Travel Group	April 2008	Provider of assessment, tuition and or training in travel services	446	www.trainingfortravel.com
Total unlisted investment			1,495
AIM
Betbrokers	March 2008	Provider of independent betting brokerage services	110	www.betbrokers.com
Brookwell	June 2008	Close-ended investment company established to acquire AIM quoted and listed securities from financial institutions	202	www.brookwelllimited.com
OPG Power Ventures	May 2008	Develops, owns and manages power generation plants in India	98	www.opgpower.org
Optare	July 2008	Bus manufacturer and low emission technology group	49	www.elcb.co.uk
Praesepe	July 2008	Pursues acquisition and consolidation opportunities in the low-stake, high-volume gaming sector in the United Kingdom and Europe	49	www.aldgatecapital.com
Total AIM investment			508
Total investment			2,003

Aberdeen Income and Growth VCT has co-invested with Aberdeen Growth Opportunities VCT, Aberdeen Growth Opportunities VCT 2, Aberdeen Growth VCT I, Gateway VCT, Guinness Flight Venture Capital Trust and Talisman First Venture Capital Trust, in some or all of the above transactions and is expected to continue to do so with these as well as other clients of the Manager. The advantage is that, together, the funds are able to underwrite a wider range and size of transaction than would be the case on a stand alone basis.

Portfolio developments

There were two significant realisations from the unlisted investment portfolio during the period which resulted in gains of £1,089,000 equivalent to 3.1p per share. The investment in ID Support Services Holdings was sold generating a gain of £487,000 which is a return, including the interest received during the life of the investment, of 1.8 times the cost of £746,000 over the fifteen month holding period.

The holdings in PSCA International were also sold for proceeds of £1,121,000 resulting in a gain of £603,000. Over the life of the investment, including the income received and earlier repayments of loan stock, a total return of 2.2 times the original cost of £518,000 was achieved.

In addition to these two successful sales, a further £800,000 was received by the Company, the most significant proportion of which related to repayments of loan stock at par from Lime Investments and from Homelux Nenplas.

Conditions in the AIM market continued to be volatile during the reporting period and there were few opportunities to actively trade the portfolio. 

A strategic decision was taken to dispose of four AIM holdings to an active investor that will aggregate the holdings from a number of managers and seek to realise them at higher values than could be achieved individually. The holdings were realised at market value, resulting in realised losses of £650,000; however, the carrying value at 29 February 2008 had already recognised almost all of this reduction and, therefore, the impact on the NAV was minimal.

In addition, one holding was sold at a loss under the compulsory purchase provisions when an offer for that company was accepted by its shareholders and a loss was incurred on the disposal of a further holding where its technology failed to be adopted by the market with inevitable consequences on its share price.

In contrast, net realised gains of £91,000 were generated from actively traded stocks during the period. The FTSE AIM All-share index decreased over the period by 21.4% and has now fallen by over 27% since August 2007; in comparison the performance of the Company's portfolio showed a decline of 18.4% for the six month period. The underlying performance of the businesses in the AIM portfolio remains sound and is expected to remain so. It is anticipated that this will be reflected in positive share price movements when market conditions improve, although the timing is uncertain.

The table below gives details of all realisations during the reporting period:

	Year first invested	Complete/ partial exit	Cost of shares disposed of £'000	Sales proceeds £'000	Realised gain/ (loss) £'000
Unlisted
ID Support Services Holdings	2007	Complete	746	1,233	487
PSCA International	2002	Complete	518	1,121	603
Others			801	800	(1)
Total unlisted disposals			2,065	3,154	1,089
AIM
1st Dental Laboratories	2004	Complete	177	53	(124)
AT Communications	2005	Complete	44	29	(15)
Autoclenz	2005	Complete	185	70	(115)
Citel Technologies	2001	Complete	166	1	(165)
Fountains	2004	Complete	136	156	20
Imprint	2005	Complete	204	78	(126)
Optare	2007	Partial	27	80	53
Synarbor	2004	Complete	447	51	(396)
Others			126	144	18
Total AIM disposals			1,512	662	(850)
Total disposals			3,577	3,816	239

Subsequent to the period end, complete and partial disposals of four AIM quoted holdings generated a net realised gain of £53,000.

Risk and uncertainties 

The Board has reviewed the principal risks and uncertainties facing the Company in the second half of its financial year; these are unchanged from those it faced at the start of the year, being the risks involved in investment in small and unquoted companies. In order to reduce the exposure to investment risk, the Company has invested in a broadly-based portfolio of investments in unlisted and AIM quoted companies in the United Kingdom. The Company remains compliant with the regulations governing venture capital trusts and the Manager closely monitors the position of the Company to ensure that it complies with the various tests at all times. 

Outlook

The performance of the quoted markets generally during the period has been volatile and events since the period end affecting the banking market have caused further uncertainty. It appears that these conditions will prevail for some time given the continuing speculation over the future of the economy. Opportunities to invest in companies seeking to achieve an IPO on AIM have, therefore, been limited and little change is expected in the short term.

Whilst the Company's AIM quoted investments have obviously suffered as a result of the extended period of volatility which continues to affect the equity markets, most of the underlying businesses in which that portfolio is invested are performing in line with the Manager's expectations and the Directors are confident that this will be demonstrated by increasing share prices when markets recover. Shareholders should also take comfort from the composition of the unlisted portfolio, which is now largely invested in a number of mature private companies which are paying a regular yield while continuing to demonstrate reasonable growth potential and whose values are not directly affected by the short term fluctuations of the quoted markets. 

To maintain the qualifying level of the Company, the Manager continues to invest selectively from its flow of introductions sourced by its regional network of offices. The private company portfolio is still relatively young, but is maturing and a number of successful realisations may be possible which will result in a continuing need to re-invest the proceeds in due course in accordance with the VCT Regulations.

Aberdeen Income and Growth VCT PLC
Summary of Investment Changes
For the six months ended 31 August 2008
	Valuation  29 February 2008		Net investment/ (disinvestment)	Appreciation/ (depreciation)	Valuation  31 August 2008
	£'000	%	£'000	£'000	£'000	£'000
Unlisted investments
Equities	5,317	20.6	(1,259)	152	4,210	17.0
Preference shares	1,602	6.2	(43)	-	1,559	6.3
Loan stock	10,450	40.5	(357)	53	10,146	41.0
	17,369	67.3	(1,659)	205	15,915	64.3
AIM investments
Equities	5,141	19.9	(154)	(916)	4,071	16.5
Listed investments
Fixed income	2,492	9.7	1,291	(8)	3,775	15.3
Total investments	25,002	96.9	(522)	(719)	23,761	96.1
Other net assets	800	3.1	169	-	969	3.9
Net assets	25,802	100.0	(353)	(719)	24,730	100.0

 

Aberdeen Income and Growth VCT PLC
Investment Portfolio Summary
As at 31 August 2008
	Valuation	Cost	% of net	% of equity	% of equity held by other
Investment	£'000	£'000	assets	held	clients*
Transys Holdings	2,721	2,721	11.0	31.7	40.1
House of Dorchester	1,725	910	7.0	44.2	-
Funeral Services Partnership	1,160	970	4.7	6.9	23.0
MoneyPlus Group	950	950	3.8	17.5	57.5
Homelux Nenplas	838	391	3.4	8.9	36.1
Martel Instruments Holdings	796	796	3.2	11.3	22.1
Camwatch	786	786	3.2	12.1	30.4
Oliver Kay Holdings	771	771	3.1	4.9	15.1
Energy Services Investment Company (ESIC)	745	745	3.0	28.5	51.5
Atlantic Foods Group	664	522	2.7	2.9	5.9
Steminic (trading as MS Industrial Services)	546	546	2.2	9.3	35.7
Adler & Allan Holdings	499	499	2.0	2.2	38.8
Nessco Group Holdings	472	472	1.9	6.2	31.6
Training For Travel Group	446	446	1.8	5.1	24.9
Silkwater Holdings (trading as Cyclotech)	425	348	1.7	4.8	15.3
PLM Dollar Group	402	402	1.6	4.6	26.2
ELE Advanced Technologies	371	192	1.5	11.3	-
Countcar	273	21	1.1	6.9	19.6
Sanastro	268	750	1.1	9.6	3.5
TC Communications Holdings	199	199	0.8	4.1	31.2
Driver Hire Investments Group	198	203	0.8	1.1	43.6
PSCA International	154	154	0.6	-	-
Enpure Holdings	137	100	0.6	0.4	79.2
Broomco (4136)	89	89	0.4	0.6	1.6
Lime Investments	83	83	0.3	26.6	53.4
Buildstore	52	105	0.2	0.6	6.8
Other unlisted investments	145	8,939	0.6
	15,915	23,110	64.3
AIM
Strategic Retail	560	700	2.3	2.0	2.0
Concateno	514	332	2.1	0.7	1.8
Avanti Communications Group	307	283	1.3	0.5	0.9
System C Healthcare	242	311	1.0	0.6	0.7
Cello Group	207	310	0.8	0.8	0.3
Plastics Capital	191	281	0.8	-	2.7
AMZ Holdings (formerly Amazing Holdings)	176	251	0.7	0.8	1.4
Animalcare Group (formerly Ritchey)	142	147	0.6	1.4	3.2
Axeon	138	176	0.6	0.7	2.9
Hasgrove	136	168	0.5	0.7	1.3
Brookwell	132	202	0.5	-	-
Optare (formerly Darwen Group)	120	109	0.5	1.1	8.9
Neuropharm Group	120	100	0.5	0.2	0.5
Brulines (Holdings)	100	77	0.4	0.3	0.5
Betbrokers	99	110	0.4	0.4	-
Mattioli Woods	96	48	0.4	0.2	-
Formation Group	95	105	0.4	0.3	1.0
Melorio	92	98	0.4	0.3	2.5
Individual Restaurant Company	79	133	0.3	0.3	0.7
Craneware	71	46	0.3	0.2	1.6
OPG Power Ventures	69	81	0.3	0.1	0.4
Neutrahealth	52	91	0.2	0.6	1.3
Praesepe (formerly Aldgate Capital)	51	49	0.2	1.2	10.6
Hexagon Human Capital	47	73	0.2	0.2	0.5
St Helen's Capital	37	50	0.1	1.2	3.6
Tangent Communications	36	98	0.1	0.5	0.9
Mount Engineering	33	35	0.1	0.2	2.3
Essentially Group	33	49	0.1	0.2	2.8
Other AIM investments	96	1,410	0.4
	4,071	5,923	16.5
Listed fixed income
Treasury 4% 7/3/09	1,652	1,653	6.7
Treasury 4.75% 7/6/10	501	499	2.0
Treasury 5.75% 31/12/09	1,622	1,622	6.6
	3,775	3,774	15.3
Total investments	23,761	32,807	96.1
*Other clients of the Aberdeen Asset Management Group.

  

Aberdeen Income and Growth VCT PLC
Income Statement
	Six months ended 31 August 2008 (unaudited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Investment income and deposit interest	870	-	870
Investment management fees	(31)	(122)	(153)
Other expenses	(86)	-	(86)
(Losses)/gains on investments	-	(719)	(719)
Profit/(loss) on ordinary activities before taxation	753	(841)	(88)
Tax on ordinary activities	(205)	37	(168)
Profit/(loss) on ordinary activities after taxation	548	(804)	(256)
Earnings per share (pence)	1.5	(2.2)	(0.7)

Aberdeen Income and Growth VCT PLC
Income Statement
	Six months ended 31 August 2007 (unaudited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Investment income and deposit interest	771	-	771
Investment management fees	(58)	(234)	(292)
Other expenses	(105)	-	(105)
(Losses)/gains on investments	-	744	744
Profit/(loss) on ordinary activities before taxation	608	510	1,118
Tax on ordinary activities	(168)	168	-
Profit/(loss) on ordinary activities after taxation	440	678	1,118
Earnings per share (pence)	1.2	1.9	3.1

  

Aberdeen Income and Growth VCT PLC
Income Statement
	Year ended 29 February 2008 (audited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Investment income and deposit interest	1,677	-	1,677
Investment management fees	(67)	(270)	(337)
Other expenses	(221)	-	(221)
(Losses)/gains on investments	-	(360)	(360)
Profit/(loss) on ordinary activities before taxation	1,389	(630)	759
Tax on ordinary activities	(395)	343	(52)
Profit/(loss) on ordinary activities after taxation	994	(287)	707
Earnings per share (pence)	2.8	(0.8)	2.0
A Statement of Total Recognised Gains and Losses has not been prepared, as all gains and losses are recognised in the Income Statement.
All items in the above statement are derived from continuing operations. The Company has only one class of business and derives its income from investments made in shares, securities and bank deposits.
The total column of this statement is the Profit and Loss Account of the Company.
The accompanying Notes are an integral part of the Financial Statements.

Aberdeen Income and Growth VCT PLC
Reconciliation of movements in Shareholders' funds
	Six months ended 31 August 2008	Six months ended  31 August 2007	Year ended 29 February 2008
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Opening Shareholders' funds	25,802	28,745	28,745
Total (loss)/profit for the year	(256)	1,118	707
Dividends paid - revenue	(816)	(284)	(461)
Dividends paid - capital	-	(2,134)	(3,189)
Closing Shareholders' funds	24,730	27,445	25,802
The accompanying Notes are an integral part of the Financial Statements.

 

Aberdeen Income and Growth VCT PLC
Balance Sheet
	31 August	31 August	29 February
	2008	2007	2008
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Fixed assets
Investments at fair value through profit or loss	23,761	24,735	25,002
Current assets
Debtors	652	1,040	617
Cash and overnight deposits	659	1,819	272
	1,311	2,859	889
Creditors
Amounts falling due within one year	342	149	89
Net current assets	969	2,710	800
Net assets	24,730	27,445	25,802
Capital and reserves
Called up share capital	3,546	3,546	3,546
Share premium account	17,235	17,235	17,235
Realised capital reserve	2,445	2,618	2,287
Unrealised capital reserve	(8,354)	(6,758)	(7,392)
Capital redemption reserve	339	339	339
Profit and loss account	9,519	10,465	9,787
Net assets attributable to Ordinary Shareholders	24,730	27,445	25,802
Net Asset Value per Ordinary Share (pence)	69.7	77.4	72.8
The accompanying Notes are an integral part of the Financial Statements.

 

Aberdeen Income and Growth VCT PLC
Cash Flow Statement
	Six months	Six months	Year ended
	ended 31 August 2008	ended 31 August 2007	29 February 2008
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Operating activities
Investment income received	850	618	1,355
Deposit interest received	10	56	74
Investment management fees paid	(77)	(621)	(789)
Secretarial fees paid	(14)	(25)	(50)
Directors' expenses paid	(30)	(31)	(57)
Other cash payments	(42)	(68)	(112)
Net cash inflow/(outflow) from operating activities	697	(71)	421
Financial investment
Purchase of investments	(3,899)	(8,974)	(15,640)
Sale of investments	4,405	6,360	12,219
Net cash inflow/(outflow) from financial investment	506	(2,614)	(3,421)
Equity dividends paid	(816)	(2,418)	(3,650)
Net cash inflow/(outflow) before financing	387	(5,103)	(6,650)
Net cash outflow from financing	-	-	-
Increase/(decrease) in cash	387	(5,103)	(6,650)
The accompanying Notes are an integral part of the Financial Statements.

 

Aberdeen Income and Growth VCT PLC 

Notes to the Financial Statements

1. Accounting policies

The financial information for the six months ended 31 August 2008 and the six months ended 31 August 2007 comprises non-statutory accounts within the meaning of Section 240 of the Companies Act 1985. The financial information contained in this report has been prepared on the basis of the accounting policies set out in the Annual Report and Financial Statements for the year ended 29 February 2008.

The results for the year ended 29 February 2008 are extracted from the full accounts for that year, which received an unqualified report from the Auditors and have been filed with the Registrar of Companies.

2. Movement in reserves

	Share premium account	Realised capital reserve	Unrealised capital reserve	Capital redemption reserve	Profit and loss account
	£'000	£'000	£'000	£'000	£'000
At 29 February 2008	17,235	2,287	(7,392)	339	9,787
Gains on sales of investments	-	243	-	-	-
Net decrease in value of investments	-	-	(962)	-	-
Investment management fees	-	(122)	-	-	-
Dividends paid	-	-	-	-	(816)
Tax effect of capital items	-	37	-	-	-
Profit on ordinary activities after taxation	-	-	-	-	548
As at 31 August 2008	17,235	2,445	(8,354)	339	9,519

3. Returns per Ordinary Share

The returns per Ordinary Share are based on the following figures:

	Six months ended
	31 August 2008
	£'000
Weighted average number of Ordinary Shares in issue	35,463,992
Revenue return	£548,000
Capital return	(£804,000)

Other information

The Net Asset Value per Ordinary Share has been calculated using the number of Ordinary Shares in issue at 31 August 2008 of 35,463,992.

A summary of investment changes for the six months under review and an investment portfolio summary as at 31 August 2008 are included above.

A full copy of the Interim Report and Financial Statements will be printed and issued to Shareholders. 

Copies of this announcement will be available to the public at the office of Aberdeen Asset Management PLC, 149 St Vincent Street, Glasgow G2 5NW and at the registered office of the Company, One Bow Churchyard, Cheapside, London EC4M 9HH.

 

Directors' responsibility statement 

The Directors confirm that, to the best of their knowledge:

the Financial Statements for the six months ended 31 August 2008 have been prepared in accordance with applicable accounting standards and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' ('the SORP') issued in December 2005;

the Interim Management Report includes a fair review of the information required by DTR 4.2.7R in relation to the indication of important events during the first six months, and of the principal risks and uncertainties facing the Company during the second six months, of the year ending 28 February 2009; and

the Interim Management Report includes adequate disclosure of the information required by DTR 4.2.8R in relation to related party transactions and any changes therein.

On behalf of the Board

Aberdeen Asset Management PLC

Secretary

14 October 2008

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