5th Apr 2007 11:13
Elderstreet VCT PLC05 April 2007 ELDERSTREET VCT PLCPRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006 FINANCIAL HIGHLIGHTS 2006 2005 pence penceOrdinary SharesNet asset value (per share) 76.1 65.1 Cumulative paid distributions from launch to 31 December 2006 (per share) 31.5 29.5 Total return (net asset value plus cumulative distributions paid per share) 107.6 94.6 Final proposed distribution (per share) to be paid on 15 June 2007 3.5 2.0 'C' SharesNet asset value (per share) 98.6 94.1 Cumulative paid dividends from launch to 31 December 2006 (per share) 1.0 - Total return (net asset value plus cumulative distributions paid per share) 99.6 94.1 Final proposed dividend (per share) to be paid on 15 June 2007 3.5 1.0 The Statement by the Chairman, David Brock, contains the following: Introduction I am pleased to present the Annual Report for Elderstreet VCT plc for the yearended 31 December 2006 and also to welcome former shareholders of ElderstreetMillennium Venture Capital Trust plc ("EMVCT") who have become members of theCompany following the merger with EMVCT. Merger On 21 December 2006, your Company made an offer for the entire share capital ofEMVCT. The offer was well received by EMVCT shareholders, and was declaredunconditional on 22 January 2006. By 15 March 2007, over 90% of EMVCTshareholders had formally accepted the offer. The Company is now in the processof compulsorily acquiring the remaining EMVCT shares. The merger has provided your Company with greater diversity within itsinvestment portfolio and an increased asset base over which the Company's fixedrunning costs can be borne. Directorate As part of the merger arrangements, Hugh Aldous, who was a non-executivedirector of EMVCT, joined the board with effect from 1 March 2007. Hugh is apartner of RSM Robson Rhodes LLP and also chairman of The Eastern European Trustplc and a director of Henderson TR Pacific Investment Trust plc, Innospec Inc.and a number of other companies, including Smart Education Limited. Hugh'sextensive experience in the Investment Trust and VCT sector will be a valuableaddition to the Board. Ordinary Share issue During the year, the Company undertook a small fundraising to allow investors totake advantage of the 40% income tax relief that was available on investmentsinto VCTs during the 2006/07 tax year. 1,401,471 Ordinary Shares were issued at68.89p per share. The net proceeds, after taking into account share issue costsof £53,000, were £913,000. Net Asset Value At 31 December 2006, the Company's Net Asset Value ("NAV") per Ordinary Sharestood at 76.1p, an increase of 13.0p or 20.0% since 31 December 2005 (afteradjusting for the dividend of 2p per share paid during the year). The TotalReturn to original shareholders (NAV plus dividends paid to date) now stands at107.9p compared to the original net of income tax relief cost of 80p per share. The NAV of the Company's 'C' shares at 31 December 2006 stood at 98.6p, anincrease of 5.5p or 5.9% since 31 December 2005 (after adjusting for thedividend of 1p paid during the year). The Total Return to original 'C'shareholders (NAV plus dividends paid to date) stands at 99.6p compared to theoriginal net of income tax relief cost of 60p per share. Venture Capital Investments The Company's investment portfolio made good progress over the year, with someprofitable realisations and strong increases in valuations of a number ofinvestments. The Company made two new investments and four follow-oninvestments during the year at a total cost of £837,000. Two full investment disposals and one part disposal were made, generatingrealised gains of £498,000. Good performances by a number of the Company'sinvestments, in particular the AIM-quoted investments, gave rise to unrealisedgains of £1.5 million. Results and Dividends The total return on ordinary activities for the year was as follows: Revenue Capital Total £'000 £'000 £'000 Ordinary Share 109 1,818 1,927'C' Share 26 58 84 135 1,876 2,011 Your Board is proposing to pay the following final dividends for the year: Ordinary Shares 3.5p per share'C' Shares 3.5p per share Subject to shareholder approval at the AGM, both dividends will be paid on 15June 2007 to Shareholders on the register at 27 April 2007. 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 intendsto make share purchases at a 10% discount to the latest published NAV whenappropriate. During the period the Company repurchased 523,607 Ordinary Sharesfor cancellation at an average price of 58.9p per share. No 'C' Shares werepurchased during the year. A Special Resolution to continue with this policy isproposed for the forthcoming AGM. Annual General Meeting The next Annual General Meeting of the Company will be held at 32 Bedford Row,London WC1R 4HE at 11:00 am on 13 June 2007. One item of Special Business is proposed to authorise the Company to make marketpurchases of its shares Outlook The successful completion of the merger with Elderstreet Millennium hasincreased the level of VCT qualifying investments in the Ordinary Share pool toin excess of 85% of its funds. This has the benefit that the Company is nowable to consider investment decisions which it might not have been able to takewere the Company, like many VCTs, close to the 70% level required to bemaintained at all times by the VCT regulations. Since the year end there has been further positive news from the Ordinary Shareinvestment portfolio, with offers being received for both Computer SoftwareGroup (the Company's largest investment) and Careforce at prices significantlyin excess of those at 31 December 2006. The effect of the increase invaluations of these investments, in addition to effect of the merger, hasproduced a further increase in the Ordinary Share NAV, which, at 31 March 2007,is estimated to be 83.5p per share. The C Share NAV has also seen an increasesince the year end and is estimated to be 107.6p at 31 March 2007. If the offer for Computer Software Group plc mentioned above were to proceed,the Ordinary share pool would receive a significant level of funds which wouldthen be available for reinvesting, along with the funds held by the C sharepool, which is continuing to build its initial portfolio. The InvestmentManager has, however, reported a recent improvement in deal flow so both sharepools may be in a good position to take advantage of these investmentopportunities. INCOME STATEMENT For the year ended 31 December 2006 Company position Year ended 31 December 2006 Year ended 31 December 2005 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Income 373 - 373 269 - 269 Gains on investments - 2,015 2,015 - 305 305 373 2,015 2,388 269 305 574 Investment management fees (48) (143) (191) (39) (116) (155) Other expenses (186) - (186) (188) - (188) Return on ordinary activities before tax 139 1,872 2,011 42 189 231 Tax on ordinary activities (4) 4 - (1) 1 - Return attributable to equityshareholders 135 1,876 2,011 41 190 231 Return per Ordinary share 0.7p 12.1p 12.8p 0.1p 1.6p 1.7p Return per 'C' share 1.7p 3.8p 5.5p 1.7p (2.6p) 0.9p Split as:Ordinary shares Year ended 31 December 2006 Year ended 31 December 2005 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Income 311 - 311 223 - 223 Gains on investments - 1,942 1,942 - 336 336 311 1,942 2,253 223 336 559 Investment management fees (42) (124) (166) (36) (106) (142) Other expenses (160) - (160) (173) - (173) Return on ordinary activities before tax 109 1,818 1,927 14 230 244 Tax on ordinary activities - - - - - - Return attributable to equity shareholders 109 1,818 1,927 14 230 244 'C' Ordinary shares Year ended 31 December 2006 Year ended 31 December 2005 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Income 62 - 62 46 - 46 Gains on investments - 73 73 - (31) (31) 62 73 135 45 (31) 15 Investment management fees (6) (19) (25) (3) (10) (13) Other expenses (26) - (26) (15) - (15) Return on ordinary activities before tax 30 54 84 28 (41) (13) Tax on ordinary activities (4) 4 - (1) 1 - (Loss)/return attributable to equity shareholders 26 58 84 27 (40) (13) The revenue and capital movements in the year for the Ordinary Shares and 'C'Shares relate to continuing operations. A Statement of Total Recognised Gains and Losses relating to each class of sharehas not been prepared as all gains and losses are recognised in the relevantIncome Statements as shown above. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDSfor the year ended 31 December 2006 Year ended Year ended 31 December 2006 31 December 2005 Ordinary 'C' Ordinary 'C' shares shares Total shares shares Total £'000 £'000 £'000 £'000 £'000 £'000 Opening shareholders' funds 9,180 1,452 10,632 9,498 - 9,498Issue of shares 966 - 966 - 1,542 1,542Share issue costs (53) - (53) - (77) (77)Purchase of own shares (310) - (310) (274) - (274)Total recognised gains for the year 1,927 84 2,011 244 (13) 231Distributions (309) (15) (324) (288) - (288) Closing shareholders' funds 11,401 1,521 12,922 9,180 1,452 10,632 BALANCE SHEETat 31 December 2006 Year ended Year ended 31 December 2006 31 December 2005 Ordinary 'C' Ordinary 'C' shares shares Total shares shares Total £'000 £'000 £'000 £'000 £'000 £'000 Fixed assetsInvestments 9,984 470 10,454 8,982 266 9,248 Current assetsDebtors 307 98 405 69 5 74Cash at bank and in 1,256 958 2,214 166 1,186 1,352hand 1,563 1,056 2,619 235 1,191 1,426 Creditors: amountsfalling due within oneyear (146) (5) (151) (37) (5) (42) Net current assets 1,417 1,051 2,468 198 1,186 1,384 Net assets 11,401 1,521 12,922 9,180 1,452 10,632 Capital and reservesCalled up share 749 77 826 705 77 782capitalCapital redemption 79 - 79 52 - 52reserveShare premium 842 1,388 2,230 - 1,388 1,388Special reserve 5,967 - 5,967 6,401 - 6,401Capital reserve - 1,963 10 1,973 1,667 (9) 1,658realisedCapital reserve - 1,605 8 1,613 268 (31) 237unrealisedRevenue reserve 196 38 234 87 27 114 Equity shareholder's 11,401 1,521 12,922 9,180 1,452 10,632funds Net asset value per 76.1p 98.6p 65.1p 94.1pshare CASH FLOW STATEMENTfor year ended 31 December 2006 Year ended Year ended 31 December 2006 31 December 2005 Ordinary 'C' Ordinary 'C' shares Shares Total shares Shares Total £'000 £'000 £'000 £'000 £'000 £'000 Net cash (outflow)/inflow from operating activities (82) 11 (71) (107) 18 (89) Taxation - - - - - - Capital expenditurePurchase of investments (660) (224) (884) (2,910) (297) (3,207)Sale of investments 1,456 - 1,456 2,231 - 2,231Net cash inflow/(outflow) from capital expenditure 796 (224) 572 (679) (297) (976) Equity dividends paid (309) (15) (324) (288) - (288) Net cash inflow/(outflow) before financing 405 (228) 177 (1,074) (279) (1,353) FinancingProceeds from share issue 966 - 966 - 1,542 1,542Share issue costs (50) - (50) - (77) (77)Purchase of own shares (231) - (231) (274) - (274)Net cash inflow/(outflow) from financing 685 - 685 (274) 1,465 1,191 Increase/(decrease) in cash 1,090 (228) 862 (1,348) 1,186 (162) Announcement based on draft accounts The financial information set out in the announcement does not constitute theCompany's statutory accounts in accordance with s240 CA85 for the year ended 31December 2006. The statutory accounts for the year ended 31 December 2006 willbe finalised on the basis of the financial information presented by theDirectors in this preliminary announcement and will be delivered to theRegistrar of Companies following the Company's Annual General Meeting. The financial information for the year ended 31 December 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. The financial information has been prepared on the basis ofthe accounting policies set out in the Company's financial statements for theyear ended 31 December 2005. A copy of the full Annual Report and financial statements for the year ended 31December 2006 will be printed and posted to Shareholders. Copies of the fullAnnual Report will be available to the public from the registered office of theCompany at 69 Eccleston Square, London SW1V 1PJ and will also be available fordownload from www.downing.co.uk. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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