Proven Growth Regulatory News (PGOO)

2 Jun 2006 16:49

Proven Growth & Income VCT PLC02 June 2006 ProVen Growth & Income VCT plc Unaudited Preliminary Announcement of Results for the Year Ended 28 February2006 FINANCIAL HIGHLIGHTS 2006 2005 pence penceOrdinary SharesNet asset value (per share) 134.3 118.9 Cumulative paid distributions since launch 15.4 8.9 Total return (net asset value plus paid cumulative distributions) 149.7 127.8 Interim dividend (per share) 3.0 3.0Second interim distribution (per share) to be paid on 14 July 2006 3.5 3.5 6.5 6.5 2006 2005 pence pence'C' SharesNet asset value (per share) 94.9 n/a Cumulative paid dividends since launch - n/a Total return (net asset value plus paid cumulative dividends) 94.9 n/a Second interim dividend (per share) - n/a The Statement to Shareholders by the Chairman, Andrew Davison, includes thefollowing: Introduction I am pleased to present the Annual Report for ProVen Growth and Income VCT plcfor the year ended 28 February 2006 and would like to welcome the new 'C'Shareholders to the Company. The year has been a very active one for yourCompany and one in which a solid performance has once again been achievedproducing an increase in Net Asset Value of 18.4%. Change of name Following approval by Shareholders in July 2005 in order to recognise thebroader investment focus, the Company changed its name from ProVen Media VCT plcto ProVen Growth and Income VCT plc. 'C' Share Issue When your Company was launched in 2001, the VCT fundraising market was limited,mainly as a result of lower tax reliefs on VCT investments. Therefore, sinceits launch, your Company has been a relatively small VCT. With the 40% incometax relief available on new VCT investments in the 2005/06 tax year, yourCompany took advantage of the opportunity to raise further funds by way of a 'C'share issue. The fundraising was extremely successful and sold out before the closing date,raising net funds of £23.6 million after taking account of the issue costs. TheBoard congratulates the Investment Manager, who promoted the fundraising, andlooks forward to the process of investing the new funds. At the Company's year end of 28 February 2006, the offer had raised net funds of£2.5 million, so these accounts only show a fraction of the total fundseventually raised. As a substantially bigger Company, the high costs of operating as a VCT can nowbe spread over a much larger asset base, which will be advantageous to bothOrdinary shareholders and the new 'C' shareholders. Net Asset Value At 28 February 2006, the Company's Net Asset Value ("NAV") per Ordinary Sharestood at 134.3p, an increase of 21.9p or 18.4% compared to the NAV at 28February 2005 after adjusting for the dividends of 6.5p per share paid duringthe year. The Total Return to original shareholders (NAV plus dividends paid todate) now stands at 149.7p compared to an original investment net of income taxrelief of 80p per share. The NAV of the Company's 'C' shares at 28 February 2006 stood at 94.9p, anincrease of 0.4p or 0.4% compared to the initial NAV (after deducting shareissue costs for the 'C' shares) of 94.5p. Format of Accounts For this accounting period, your Company is required to adopt FRS 21, underwhich dividends have to be accounted for in the period in which they are liableto be paid rather than the period in respect of which they are declared. As aresult comparative figures presented in this statement have been restated. Itshould be noted that this change does not alter the current or historic valuesfor Total Return. Under FRS 26, the Company is now also required to valuequoted investments at bid prices instead of mid-market prices that were usedpreviously. This has resulted in a small reduction in the level of thesevaluations. The Company has also adopted the new Statement of Recommended Practice forInvestment Trusts ("SORP"), which came into effect in December 2005 and other UKFinancial Reporting Standards which have been introduced as part of theconvergence programme of the UK towards International Accounting Standards. Themain noticeable change arising is that the "Statement of Total Return" has beenrenamed as the "Income Statement" and our investments are now categorised as "Fair value through profit or loss" assets. Venture Capital Investments During the year the Company invested £1 million in qualifying investments and£90,000 in non-qualifying investments. The Company also achieved a number of profitable exits producing proceeds of£1.7 million and realised gains in the year of £291,000 or gains of £837,000against original cost. In reviewing the investment valuations at the year end the Board has agreed anumber of valuation increases and decreases. There have been substantialincreases in the valuations of the Company's two largest investments,Mergermarket Limited and Espresso Broadband Limited. Overall the unrealisedvaluation movement on the portfolio has been an increase of £1.1 million overthe year. Results and Dividends The revenue return on ordinary activities after taxation for the year for theOrdinary Share pool was £48,000 (2005:£23,000) and for the 'C' shares was £9,000(2005: n/a). On 4 November 2005 an interim capital distribution of realised gains of 3p pershare (2005: 3.0p per share) was paid to shareholders. The Board is proposingto pay a second interim distribution comprising of a capital distribution of3.0p per share together with a revenue dividend of 0.5p per share for the yearended 28 February 2006, on 14 July 2006 to Shareholders on the register at 16June 2006. These payments will be made as a second interim dividend rather than a finaldividend for the year to 28 February 2006 in order that their payment does notneed to be delayed until after the Company's next AGM. Repurchase of Shares The Directors are conscious that the Company's share prices are affected by theilliquidity of its shares in the market resulting from the fact that investorspurchasing "second-hand" shares do not benefit from income tax relief on theirinvestment. The Directors continue to monitor the market in the Company's shares and willmake share purchases when appropriate. During the period the Companyrepurchased 333,216 Ordinary Shares of 1p each, at an average price of 105.3pper share, for cancellation. No 'C' Shares were purchased during the year.Generally share buybacks are undertaken at a 10% discount to the latest NAVpublished by the Company. A Special Resolution to allow the Board to continueto purchase shares for cancellation will be proposed at the forthcoming AGM. Annual General Meeting The Annual General Meeting of the Company will be held at 39 Earlham Street,London WC2H 9LT at 12:30pm on 21 September 2006. Outlook The year ahead will be a busy one for the Investment Manager. The continuedwork in moving towards realisations with the maturing investments in theOrdinary Share pool will be combined with the job of starting to build aportfolio of good quality investments in the 'C' Share pool. The Board has fullconfidence that the Investment Manager will continue to provide a high qualityservice in combining these roles. I look forward to updating Shareholders on the progress of both activities withthe interim statement to 31 August 2006. UNAUDITED INCOME STATEMENTfor the year ended 28 February 2006 Year ended 28 February 2006 Year ended 28 February 2005 (as restated) Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Income 233 - 233 215 - 215 Gains on "fair value through profit or loss" assets - 1,430 1,430 - 888 888 233 1,430 1,663 215 888 1,103 Investment management fees (35) (106) (141) (31) (92) (123) Other expenses (140) - (140) (158) - (158) Return on ordinary activities before tax 58 1,324 1,382 26 796 822 Tax on ordinary activities (1) 1 - (3) 3 - Return attributable to equity shareholders 57 1,325 1,382 23 799 822 Return per Ordinary share 0.7p 20.2p 20.9p 0.3p 11.6p 11.9p Return per 'C' share 0.4p - 0.4p n/a n/a n/a All Revenue and Capital items in the above statement derive from continuingoperations. UNAUDITED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Year ended 28 February 2006 Year ended 28 February 2005 (as restated) Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Return attributable to equity shareholders 57 1,325 1,382 23 799 822 Total recognised gains for the year 57 1,325 1,382 23 799 822 UNAUDITED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDSfor the year ended 28 February 2006 Year ended Year ended 28 February 2006 28 February 2005 (as restated) £'000 £'000 Opening shareholders' funds 7,989 7,720Adjustment for distribution provided for in 2004 - 248Issue of shares 2,630 -Share issue costs (145) -Purchase of own shares (353) (348)Total recognised gains for the year 1,382 822Distributions paid (429) (453) Closing shareholders' funds 11,074 7,989 UNAUDITED BALANCE SHEETat 28 February 2006 2006 2005 (as restated) £'000 £'000 £'000 £'000Fixed Assets "Fair value through profit or loss" assets 7,627 6,706 Current AssetsDebtors 123 84Current investments 400 900Cash at bank and in hand 7,189 462 7,712 1,446 Creditors: amounts falling due within one year (4,265) (163) Net current assets 3,447 1,283 Net assets 11,074 7,989 Capital and reservesCalled up share capital 195 67Capital redemption reserve 7 4Share premium 2,381 27Special reserve 5,457 5,810Capital reserve - realised 648 351Capital reserve - unrealised 2,236 1,637Revenue reserve 150 93 Total equity shareholders' funds 11,074 7,989 Net asset value per Ordinary share 134.3p 118.9p Net asset value per 'C' share 94.9p n/a UNAUDITED CASH FLOW STATEMENTfor year ended 28 February 2006 Year ended Year ended 28 February 2006 28 February 2005 £'000 £'000 £'000 £'000 Net cash outflow from operating activities (95) (130) Corporation tax - - Capital expenditurePurchase of investments (1,293) (1,000)Sale of investments 1,804 972Net cash inflow/(outflow) from capital expenditure 511 (28) Equity distributions paid (429) (453) Management of liquid resourcesPurchase of current investments held asliquidity funds - 900Withdrawal from liquidity funds 500 - 500 (900) Net cash outflow before financing 487 (1,511) FinancingProceeds from share issue 6,685 -Share issue costs (92) -Purchase of own shares (353) (303)Net cash inflow/(outflow) from financing 6,240 (303) Increase/(decrease) in cash 6,727 (1,814) NOTES 1. Accounting policies Basis of accounting The Company has prepared its financial statements under UK Generally AcceptedAccounting Practice ("UK GAAP"). Where presentation guidance set out in theStatement of Recommended Practice "Financial Statements of Investment TrustCompanies" revised December 2005 ("SORP") is inconsistent with the requirementsof UK GAAP, the Directors have sought to prepare the financial statements on abasis compliant with the recommendations of the SORP. Except as stated in note2, consistent accounting policies have been applied this year and in the prioryear. The financial statements are prepared under the historical cost conventionexcept for the revaluation of certain financial instruments. Presentation of Income Statement In order to better reflect the activities of an investment trust company and inaccordance with guidance issued by the AITC, supplementary information whichanalyses the income statement between items of a revenue and capital nature hasbeen presented alongside the income statement. The net revenue is the measurethe directors believe appropriate in assessing the Company's compliance withcertain requirements set out in Section 842 Income and Corporation Taxes Act1988. Investments Listed fixed income investments and investments quoted on the AlternativeInvestment Market ("AIM") are designated as "fair value through profit or loss"assets and are initially measured at cost. Thereafter the investments aremeasured at subsequent reporting dates at fair value, which is the bid pricewith illiquidity discounts applied where deemed appropriate. The Companypreviously valued the investments using mid-price. The financial effect of thechange in valuation policy is that the investments are valued at £103,000 lessthan if they were valued at mid-price. In respect of unquoted instruments, fair value is established by usingInternational Private Equity and Venture Capital Valuation Guidelines. Where noreliable fair value can be estimated for such unquoted equity investments theyare carried at cost, subject to any provision for impairment. Where an investeecompany has gone into receivership or liquidation the investment, although notphysically disposed of, is treated as being realised. Gains and losses arising from changes in fair value are included in the incomestatement for the year as a capital item . It is not the Company's policy to exercise either significant or controllinginfluence over investee companies. Therefore the results of these companies arenot incorporated into the revenue account except to the extent of any incomeaccrued. Income Dividend income from investments is recognised when the shareholders' rights toreceive payment has been established, normally the ex dividend date. Interest income is accrued on a timely basis, by reference to the principaloutstanding and at the effective interest rate applicable, which is the ratethat exactly discounts estimated future cash receipts through the expected lifeof the financial asset to that asset's net carrying amount, and only where thereis reasonable certainty of collection. Expenses All expenses are accounted for on accruals basis. In respect of the analysisbetween revenue and capital items presented within the income statement, allexpenses have been presented as revenue items except as follows: • Expenses which are incidental to the disposal of an investment are deducted from the disposal proceeds of the investment. • Expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated and accordingly the investment management fee and finance costs have been allocated 25% to revenue and 75% to capital, in order to reflect the directors expected long-term view of the nature of the investment returns of the Company. Deferred taxation Deferred taxation is provided in full on timing differences that result in anobligation at the balance sheet date to pay more tax, or a right to pay lesstax, at a future date, at rates expected to apply when they crystallise based oncurrent tax rates and law. Timing differences arise from the inclusion of itemsof income and expenditure in taxation computations in periods different fromthose in which they are included in the financial statements. 2. Changes in accounting policies The Company is required to comply with a number of new UK Financial ReportingStandards (FRS), which now represent UK Generally Accepted Accounting Practice(UK GAAP), in preparing its financial statements for the year ended 28 February2006. These Standards have been introduced as part of the process of aligning UKaccounting principles with International Accounting Standards. As required by FRS 21 "Events after the Balance Sheet Date", dividends toshareholders are accounted for in the period in which the Company is liable topay them rather than in the period in respect of which they are declared. Thecomparative figures for the year ended 28 February 2006 have been re-statedaccordingly. The effect of the adoption of FRS 21 on the reported net assets ofthe company is as follows: 2005Net assets £'000 As previously reported 7,752Add: proposed dividends not accounted for until paid 237As restated 7,989 Announcement based on draft accounts (unqualified audit report) The financial information set out in this announcement does not constitute theCompany's statutory accounts for the year ended 28 February 2006 or 28 February2005. The statutory accounts for the year ended 28 February 2006 will befinalised on the basis of the financial information presented by the directorsin this preliminary announcement and will be delivered to the Registrar ofCompanies following the Company's Annual General Meeting. The financial information for the year ended 28 February 2005 is derived fromthe statutory accounts for that year which have been delivered to the Registrarof Companies. The auditors reported on those accounts; this report wasunqualified and did not contain a statement under section 237(2) or (3) of theCompanies Act 1985. A copy of the full annual report and financial statements for the year ended 28February 2006 will be printed and posted to shareholders. Copies will also beavailable to the public at the registered office of the Company at 39 EarlhamStreet, London WC2H 9LT. This information is provided by RNS The company news service from the London Stock Exchange