Proven Vct Regulatory News (PVN)

29 Sep 2005 12:54

Proven VCT PLC29 September 2005 PROVEN VCT PLC INTERIM REPORT FOR THE SIX MONTHS ENDED 31 AUGUST 2005 FINANCIAL SUMMARY Six months ended Six months Year 31 August ended ended 2005 31 August 28 February 2004 2005Revenue return per share 0.3p 0.6p 1.9p Total return per share 2.6p 5.4p 14.6p Dividend per share 3.0p 3.0p 6.5p Cumulative dividends per share 18.7p 12.2p 15.7p Net asset value per share 106.3p 100.8p 106.7p Net asset value plus cumulative dividends per 125.0p 113.0p 122.4pshare Mid-market price per share 92p 88p 93p Shareholders' funds (£000) 25,966 22,908 23,998 CHAIRMAN'S STATEMENT Introduction I have pleasure in presenting the interim report for your company for the sixmonths ended 31 August 2005. Despite the wider concerns in the internationaleconomy from the continued conflict in the Middle East and rising oil prices,the total return on the FTSE All Share Index has increased by 9% during theperiod under review. Your company continued to comply with the requirements ofthe VCT regulations during the period. Investment Portfolio Details of your company's investment activity are provided in the accompanyingInvestment Manager's Review. The board has prudently reduced the value of SPCInternational to take account of current market circumstances although itremains optimistic about the longer term prospects for the company. At 31 August 2005 your company's unquoted and listed portfolio comprised 22investments at a total cost of £15.0 million and a valuation of £19.0 million.In addition, your company had net current assets of £7.0 million. Net Asset Value & Dividends The net asset value total return per share at 31 August 2005 was 125.0pcomprising a net asset value per share of 106.3p and dividends paid or proposedof 18.7p. This represents an increase of 2% over the net asset value totalreturn at 28 February 2005 and an increase of 32% over the initial net assetvalue at launch of 95p per share. This compares favourably with the total returnon the FTSE All Share Index from initial listing to 31 August 2005 of just 1.0%. Your company will be paying an interim dividend of 3p per share for the period.This will be paid on 4 November 2005 to shareholders on the register at 14October 2005. In each of the last two years your company has paid out dividendstotalling 6.5p per year, equivalent to a tax free return of 16.25% pa forinvestors who took full advantage of available tax reliefs on initialsubscription in 2000. Share Capital Issues & Buy Backs During the period your company issued a further 2,863,080 shares representingthe net proceeds of the offers for subscription in the tax years 2004/2005 and2005/2006. Your company also purchased 931,477 shares in the market at a total cost of£900,000, representing a discount of 10% to the net asset value at 28 February2005. Shareholders are reminded that if they wish to sell their shares in thecompany they should contact Downing Corporate Finance. Prospects The investment portfolio of your company continues, on the whole, to performwell, reflecting the underlying quality of the portfolio companies' products andservices, their management teams and the contribution made to the companies bythe investment manager. Together with the track record of success for the VCT to date and theavailability of new funds for investment, this gives your board grounds to beconfident of the future prospects for your company. Andrew Davison 29 September 2005 INVESTMENT MANAGER'S REVIEW Introduction This review covers the six month period ended 31 August 2005 during which thenet asset value total return of the company increased by 2%. The companycontinued to comply with the VCT regulations during the period. Portfolio Activity During the period under review we have been proactive about realising value fromthe existing portfolio. Several potential new investment opportunities are alsocurrently under review although no new or follow on investments were made duringthe period. In March, Notability Solutions Limited was sold generating a total return of 2.4times the initial investment in only two years. In August, Copyright PromotionsGroup was sold generating a significant return on the initial investment. Wecontinue to hold a small portion of loan notes which will be redeemed later thisyear. The success of this disposal demonstrates the value added by ourinvestment executives after the initial investment. We identified theopportunity to appoint a new Chairman to the board of the company who has workedwith a strong incumbent management team to improve company performance. This hasultimately provided a strong return for shareholders. On a slightlydisappointing, though not unexpected, note Bond-IT, an investment from 2000,finally went into liquidation. This has had no current period effect on the netasset value as the investment was fully provided against. In the quoted portfolio, further disposals of shareholdings in both Cardpointand Miva Inc (formerly FindWhat) were made realising profits of £480,000. In addition, we are currently at an advanced stage with a number of portfoliocompanies on realisation and refinancing strategies which could result infurther profits for shareholders. We are optimistic that some, if not all, ofthese will conclude during the current financial year. Portfolio Valuation At 31 August 2005 the company's unquoted and listed portfolio comprised 22investments at a total cost of £15.0 million and a valuation of £19.0 million.In addition, the company had net current assets of £7.0 million. The increase innet current assets reflects the realisations described above and the £3.0million raised from shareholders during the recent fund raising. The portfolio continues on the whole to perform very well. The board hasincreased the valuations for several of the companies, most notablyMergermarket, which has increased in value by £1.0 million, LFR and NectarTaverns. Offsetting this, the board has prudently reduced the value of SPCInternational to take account of current market circumstances, although weremain optimistic for the longer term prospects of the company. Prospects The VCT industry has benefited from the £500 million raised either side of the2005 tax year end. We expect there to be further significant funds raised in theremainder of the 2005/2006 tax year. This lifts the profile of the industry andthe possible opportunities for both investments and realisations. We continue to be pleased with the overall performance of the portfoliocompanies and of their future prospects. The funds raised by the VCT in the lasttwo years provide further opportunities for portfolio diversification and wewill look to invest these funds in the coming months. We expect theseinvestments to be mainly in unquoted companies (as opposed to AIM companies)where we believe the best potential for strong returns exists and where we canleverage our expertise of working closely with management to generate furthersignificant returns for shareholders. Beringea Limited 29 September 2005 INVESTMENT PORTFOLIO At 31 August 2005 Book Cost Valuation % of net assets £000 £000Qualifying holdingsMergermarket Limited 780 2,942 11.3Espresso Broadband Limited 1,365 2,708 10.4Nectar Taverns plc 1,000 2,096 8.1SPC International Limited 1,173 1,788 6.9Ma Potter's Limited 700 1,755 6.8LFR plc (t/a Loch Fyne Restaurants) 1,000 1,284 5.0Ashford Colour Press Limited 1,000 1,261 4.9UBC Media Group plc * 1,101 1,119 4.3Chiaros Holdings Limited (t/a TMI) 800 1,064 4.1Cardpoint plc * 212 599 2.3Pilat Media Global plc * 250 547 2.1Zenith Group Limited 853 268 1.0Oasis Healthcare plc * 670 262 1.0JVTV Limited 200 200 0.8Sports Holdings Limited 800 137 0.5Linguaphone plc 703 99 0.4VI Group plc * 207 74 0.2I D Data plc * 262 5 -GB Industries Limited 1,134 - - Total qualifying holdings 14,210 18,208 70.1** Non-qualifying holdingsBaby Innovations S.A. (t/a Steribottle) 604 604 2.4Miva Inc # (formerly Findwhat.com) 116 89 0.3Copyright Promotions Group Limited 54 54 0.2 Total non-qualifying holdings 774 747 2.9 Total investment portfolio 14,984 18,955 73.0 Net current assets 7,011 27.0 Shareholders' funds 25,966 100.0 * Investment traded on the Alternative Investment Market ('AIM') # Investment traded on the US NASDAQ Market ** Expressed as a percentage of the company's net assets at 31 August 2005 asdistinct from total investments (as defined in the Venture Capital Trustregulations). UNAUDITED STATEMENT OF TOTAL RETURN (incorporating the Revenue Account) For the six months ended 31 August 2005 Six months ended 31 August 2005 Revenue Capital Total £000 £000 £000Gains/(losses) on investments- realised - 1,616 1,616- unrealised - (789) (789)Income 286 - 286Investment management fee (95) (286) (381)Other expenses (94) - (94)Return on ordinary activities before taxation 97 541 638 Tax (charge)/credit on ordinary activities (14) 14 - Return on ordinary activities after taxation 83 555 638 Dividends - (732) (732) Transfers to/(from) reserves 83 (177) (94) Return per ordinary shareBasic and fully diluted 0.3p 2.3p 2.6p Six months ended Year ended 31 August 2004 28 February 2005 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000Gains/(losses) on investments- realised - 254 254 - 1,000 1,000- unrealised - 1,026 1,026 - 2,248 2,248Income 328 - 328 866 - 866Investment management fee (73) (218) (291) (152) (456) (608)Other expenses (96) - (96) (188) - (188) Return on ordinary activities before taxation 159 1,062 1,221 526 2,792 3,318 Tax (charge)/credit on ordinary activities (28) 28 - (92) 92 - Return on ordinary activities after taxation 131 1,090 1,221 434 2,884 3,318 Dividends (227) (455) (682) (508) (956) (1,464) Transfers to/(from) reserves (96) 635 539 (74) 1,928 1,854 Return per ordinary shareBasic and fully diluted 0.6p 4.8p 5.4p 1.9p 12.7p 14.6p All revenue and capital items in the above statement are from continuingoperations. Other than shown above, the company had no recognised gains andlosses. The company has only one class of business and derives its income frominvestments made in shares and securities and from bank deposits. UNAUDITED BALANCE SHEET At 31 August 2005 31 August 31 August 28 February 2005 2004 2005 £000 £000 £000Fixed assetsInvestments - unquoted 16,260 15,973 18,171Investments - AIM quoted 2,606 3,742 3,234Investments - other listed 89 770 268 18,955 20,485 21,673 Net current assets 7,011 2,423 2,325 Net assets 25,966 22,908 23,998 Capital & reservesShare capital 1,221 1,137 1,125Reserves 24,745 21,771 22,873 Equity shareholders' funds 25,966 22,908 23,998 Net asset value per share 106.3p 100.8p 106.7p UNAUDITED CASH FLOW STATEMENT For the six months ended 31 August 2005 Six months Six months ended Year ended 31 August ended 31 August 2004 28 February 2005 £000 2005 £000 £000Net revenue from operating activitiesNet revenue from ordinary activities before tax 97 159 526Decrease/(increase) in debtors 146 (31) (176)Increase/(decrease) in creditors 7 30 56Capitalised interest receipts - - (175)Management fees charged to capital (286) (218) (456) Net cash outflow from operating activities (36) (60) (225) Financial investmentPurchases of investments - (443) (787)Sales of investments 3,076 1,410 2,809 Net cash inflow from financial investment 3,076 967 2,022 Corporation tax paid - - - Equity dividends paid (787) (760) (1,439) Net cash inflow before financing 2,253 147 358 FinancingIssue of ordinary shares 3,097 1,054 1,054Share issue expenses (137) (58) (58)Purchase of ordinary shares for cancellation (943) (149) (328) Net cash inflow from financing 2,017 847 668 Increase in cash in period 4,270 994 1,026 Analysis of cash balanceAt start of period 3,129 2,103 2,103Net cash inflow for the period 4,270 994 1,026 At end of period 7,399 3,097 3,129 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 1 The unaudited interim financial statements for the six months ended31 August 2004 and 31 August 2005 do not constitute statutory accounts withinthe meaning of Section 240 of the Companies Act 1985 and have not been deliveredto the Registrar of Companies. The results for the year ended 28 February 2005have been extracted from the financial statements for that year, which have beendelivered to the Registrar of Companies; the auditors' report on those financialstatements under Section 235 of the Companies Act 1985 was unqualified. 2 True and fair override The company is no longer an investment company within the meaning of Section 266of the Companies Act 1985, having revoked investment company status in July 2004in order to pay a capital dividend. However, the company continues to conductits affairs as a venture capital trust for taxation purposes under s842AA of theIncome and Corporation Taxes Act 1988. The financial statements are prepared in accordance with applicable accountingstandards and with the Statement of Recommended Practice "Financial Statementsof Investment Trust Companies" (SORP). This is consistent with the presentationadopted in previous periods. Ordinarily, the absence of Section 266 status wouldrequire the company to adopt a different presentation of the accounts than thatrecommended by the SORP. However, the directors consider it appropriate tocontinue to present the accounts in accordance with the SORP. The departure hasno effect on the total return or balance sheet. 3 The financial information contained in this interim report has beenprepared on the basis of the accounting policies set out in the Annual Report2005. Unquoted investments are valued in accordance with International PrivateEquity And Venture Capital Valuation Guidelines These guidelines were issued inMarch 2005 and have been endorsed by the British Venture Capital Association.AIM quoted investments are valued at mid market prices discounted, wherenecessary, to reflect any lack of liquidity. 4 Returns per ordinary share are based on 24,214,531 ordinary shares,being the weighted average number of shares in issue during the period. Therewere 24,422,115 ordinary shares in issue at 31 August 2005. 5 Earnings for the period should not be taken as a guide to the resultsfor the full year. 6 The directors will be paying a dividend of 3p per share for the periodended 31 August 2005 to be paid on 4 November 2005 to shareholders on theregister at 14 October 2005. 7 Copies of the Interim Report will be mailed to shareholders and areavailable from the Registered Office of the company at 39 Earlham Street, LondonWC2H 9LT. This information is provided by RNS The company news service from the London Stock Exchange