28th Mar 2006 14:02
Neptune-Calculus Income &Growth VCT28 March 2006 Neptune-Calculus Income and Growth VCT plc Preliminary Results for the period ended 31 December 2005 Financial Highlights Period to 31 December 2005Return per ordinary share 8.9pNet assets per ordinary share 101.71p As at 22 March 2006Unaudited net asset value per ordinary share 108.4p For further information Philip Stephens Neptune-Calculus Income and Growth VCT plc 0207 518 8052 John Glencross Neptune-Calculus Income and Growth VCT plc 0207 518 8052 Chairman's Statement I am delighted to report on our first period of activity which ended on 31stDecember 2005. The report covers the period from 30 November 2004, when thecompany was incorporated. The company commenced trading in February 2005 andmade its first investment on 22 June 2005. As reported at the interim stage weraised £3.7 million which was a broadly satisfactory outcome in thecircumstances of a new entrant to the VCT market. As mentioned below, thecompany has launched a C share offer. Investment performance In our original prospectus we stated our intention to be a generalist VCTcompany investing in a diversified portfolio of unquoted companies in the UKincluding AIM traded stocks. The objective is to avoid investing in companieswhere the risk profile is regarded as being unacceptably high or where theprospective time to realisation is unacceptably long. As you may be aware, thecompany must have invested at least 70 per cent. of the funds raised from theissue of ordinary shares in VCT qualifying investments by 31 December 2007 andmaintain this thereafter. At 31 December 2005 we had invested £396,000 in threequalifying companies representing 11 per cent. of the net funds raised. Thethree companies are Debtmatters Group plc and Cellcast plc, both AIM quotedcompanies, and PharmaSmart plc, which is unquoted. Full details of theseinvestments and the investment performance of the qualifying investments aregiven in the Investment Manager's Review (qualifying investments). Since theperiod end we have invested in a further two AIM quoted companies. The balance of the funds raised described as non-qualifying investments has beenmanaged by Neptune Investment Management Limited and their report follows. Total income for the period amounted to £104,000 which was largely derived frominterest earned on uninvested funds. This position will change as the funds areprogressively invested and the revenues will be derived mainly from dividends onour quoted investments. Net assets per ordinary share have risen from 94.5 penceat commencement of trading to 101.7 pence at 31 December 2005. Unrealised gainson investments in the period amounted to £303,000. A first dividend at 1p pershare was paid to entitled shareholders in October 2005. Since the period end,the company has realised gains of approximately £151,000, equating to 3.97 penceper ordinary share. The Directors' policy is to pay, when possible, dividendsout of income and realised gains. The company does not intend to propose a finaldividend in respect of the period just ended, but it is our current intention todeclare an interim dividend to ordinary shareholders at the time of presentingour interim report for 2006. In October 2005 the company launched an offer for subscription of new C ordinaryshares to raise additional funds for investment. To date the subscription valueof shares allotted under this offer amounts to £3.8 million. The total value ofvalid applications received to date, which includes subscriptions for shareswhich have not yet been allotted, is £4.7 million. The offer will close on 4thApril 2006 or such later time as the Board and its advisers may agree. The Annual General Meeting will be held on 1 June 2006 and I hope that many ofour shareholders will be able to attend. Outlook The outlook for the company is excellent. Good progress has been achieved in ourinvestment programme. We have enjoyed some initial success in the portfolio ofqualifying investments, having already realised a significant profit on oneinvestment since the period end. Our investments in the Neptune Income Fund andNeptune Quarterly Income Fund and our managed portfolio of UK income generatingshares have risen in line with the overall strength in the UK market and I ampleased to report that the unaudited net asset value per ordinary share(excluding current period net revenue) as at 22 March 2006 was 108.4 pence . We are pleased with the results of the C share offer which will enable us tospread the fixed overhead costs over a larger pool of assets and improve thepotential for paying dividends. We look forward to reporting further progress in the current year towards thetarget of 70 per cent. of funds being invested in qualifying investments. TheManagers are seeing a good flow of potential investments and are able toexercise a proper degree of selectivity with the aim of maximising returns andtherefore future dividends. Philip Stephens 28 March 2006 Investment Manager's review (qualifying investments) Portfolio developments Calculus Capital Limited advises the company in respect of qualifyinginvestments made by the company. As at 31 December, 2005, the company hadinvested in three qualifying companies. The three investments made during theperiod were Debtmatters Group plc, PharmaSmart plc and Cellcast plc. Of these,PharmaSmart and Cellcast were made in the period 1 July 2005 to 31 December2005. Since the period end, the company has made a further two investments andhas sold part of its holding in one. Debtmatters Group plc Business Description: Debtmatters is a profitable AIM quoted company whichprovides permanent solutions to consumers in debt via Individual VoluntaryArrangements (IVAs). In June 2005, the company raised approximately £3 millionbefore expenses via a placing on AIM of 4,615,385 shares at 65p, primarily forworking capital and marketing purposes. IVAs are legally binding agreementswhich were introduced by the UK Government. The advantage to the lender is thatit generally recovers more than it would through other means. The benefit tothe borrower is that it is an alternative to bankruptcy. The company investedon the same terms as the other funds managed by Calculus Capital Limited.Reasons for investment: The UK Department of Trade and Industry reported thatin 2004 the number of personal insolvencies, including bankruptcies andvoluntary arrangements, rose by 31 per cent. to 46,650 in the UK compared tothe previous year. The Debtmatters businesses have been profitable for the lasttwo years.Date of investment: June 2005 Latest audited 31 March 2005 accounts:Cost: £124,800 Turnover: £1,730,468Valuation as at 31December 2005: £322,560 Profit before £375,394 tax:Valuation method: AIM bid price Profit after £273,372 tax:Equity and votingrights held: 0.78% Shareholders' £252,863 funds PharmaSmart plc Business description: PharmaSmart, which is unquoted, provides services to theUK pharmaceutical industry to support their sales and marketing activities viaits two operating subsidiaries, IHS and PharmaPoint. IHS is a leading providerof staff in the pharmaceutical recruitment sector and provides both permanentand temporary staff. The UK market for permanent and temporary recruitmentservices is worth about £20 million per year and IHS is on the preferredsupplier list for 19 of the 20 leading pharmaceutical companies in the UK. Thecompany is currently expanding into recruitment services for the UK healthcaresector. PharmaPoint is operating in a new market of providing specialist staffand teams to undertake special promotional and marketing projects, such as newproduct launches, in the prescription pharmaceuticals sector. These staff aremainly medically qualified. The service enables pharmaceutical clients tostrengthen their sales and marketing teams as and when required whilst givinggreater flexibility and control over cost bases. PharmaSmart raised £500,000 viaa placing of shares and convertible loan notes. The company invested on the sameterms as other Funds managed by Calculus Capital Limited.Reasons for investment: The Directors believe that IHS is capable of becoming adominant provider of recruitment services to its sector and is well placed tomove into the healthcare sector, and PharmaPoint enables pharmaceutical clientsto strengthen their sales and marketing teams as and when required. Date of investment: July 2005 Latest 31 December unaudited 2004 consolidated accounts:Cost: £125,000* Turnover: £2,123,948Valuation asat 31 December2005: £125,000 Profit before £50,696 tax:Valuationmethod: Fair value Profit after £50,696 tax: (equal to cost)Equity andvoting rightsheld: 0.94% Shareholders' £7,126 funds * The investment comprised £50,000 in ordinary shares and £75,000** in unsecuredconvertible loan notes. *\* The company's holding represents 37.5 per cent. of the unsecured convertibleloan notes. Cellcast plc Business description: Cellcast is an AIM quoted company which produces liveinteractive programming which integrates mobile entertainment into themulti-channel television environment through audience participation via theirmobile and/or fixed line phone. These formats and applications generatetelephony-based pay-to-play and pay-to-participate income streams throughrevenue sharing agreements with broadcasters and telecom companies. Cellcastcurrently broadcasts approximately 100 hours of live UK television per dayacross 15 channels on the Sky Digital platform in the UK and has recently putin place agreements allowing Top Up TV to broadcast its programming on theFreeview platform, also in the UK. In addition, Cellcast also distributesproprietary applications and programming on many major overseas channels andplatforms and collaborates with broadcasters in Europe, the Middle East, Indiaand South America. The company invested on the same terms as other fundsmanaged by Calculus Capital Limited.Reasons for investment: Cellcast is an established company which is growingrapidly. The Directors believe it has developed its operations on the back ofits experience in the fast developing interactive digital broadcasting marketin the UK, has a dynamic and experienced management team and excellentopportunities to grow its international operations. Date of investment: September 2005 Latest 31 December unaudited 2004 consolidated accountsCost: £145,753 Turnover £8,197,875Valuation asat 31 December2005: £112,908 Profit before £(706,339) tax:Valuationmethod: AIM bid price Profit after £(713,392) tax:Equity andvoting rightsheld: 0.72% Shareholders' £286,552 funds Developments since the period end Since the period end, the company has sold 124,000 shares in Debtmatters Groupplc at an average price per share of £1.88 compared with an initial cost pershare of £0.65. The shares sold represented 64.58 per cent. of the company'soriginal holding. Since the period end, the company has made the following investments: £125,000 was invested in Cagney Group Plc which is quoted on AIM. Cagney hasbeen incorporated to acquire marketing services businesses as part of a broaderbased strategy of becoming a fully integrated marketing services group,principally servicing the UK domestic market. £125,000 was invested in Croma Group plc which is quoted on AIM. Croma designs,manufactures and supplies surveillance and defence related products to the UK,Ministry of Defence, the armed forces, government agencies, the police, customsand coastguard and similar organisations. The company invested on the same terms as other funds managed by CalculusCapital Limited. As at the period end, £395,553 had been invested in qualifying holdingsrepresenting approximately 11 per cent. of the net funds raised. As at 22 March2006 this figure had risen to £564,953 representing approximately 15.75 percent. of the net funds raised from the issue of ordinary shares. Outlook The Manager continues to see a healthy pipeline of qualifying unquoted and AIMcompanies raising funds at reasonable valuations. The company is building adiversified portfolio of good quality qualifying investments which the Managerbelieves will deliver sustained long term performance in due course. John Glencross Calculus Capital Limited 28 March 2006 Investment Manager's review (non qualifying investments) Portfolio developments Neptune Investment Management Limited advises the company in respect of nonqualifying investments made by the company. As at 31 December, 2005, £590,000was invested in the Neptune Income Fund and £588,000 was invested in the NeptuneQuarterly Income Fund. The initial cost of each investment was £520,000. Theobjective of each fund is to produce high income increasing at least in linewith inflation from a managed portfolio chiefly invested in UK equities. For theperiod under review the Neptune Quarterly Income Fund and the Neptune IncomeFund had broadly the same portfolio. The investment in the Neptune Income Fund was made at the end of June 2005 andthe investment in the Neptune Quarterly Income Fund was made in July 2005. Fromthose dates to 31 December 2005 the value of the investments increased by anaverage of 11.3 per cent. benefiting from Neptune's view that the retail sectorwould produce better results than market expectations. At the time the Neptune Fund investments were made, a setback in the UK marketahead of the results season was envisaged. However it became clear with thecommencement of the results season and the appetite for income stocks that therewould be no significant pullback in the equity market.. Therefore the decisionwas taken to invest in a direct stock portfolio of attractive income yieldingstocks to benefit from the strong dividend flow of the first quarter of 2006. Developments since the period end Since the period end the company has invested £1,508,324 in a portfolio of 30stocks with good dividend yields. Outlook The Neptune Income Funds and the direct investment portfolio have a full indexweighting in the oil sector in line with Neptune's view that oil prices willstay high throughout 2006. The non qualifying portfolio has also started theyear with an increased weighting in financials which is in line with Neptune'sview that UK banks, after a period of underperformance, look attractive. During 2005 the weighting of the Income Fund in the FTSE 100 was increased,rotating away from the FTSE 250. The FTSE 100 has underperformed the FTSE 250for the last 3 years, and it is believed that for the forthcoming year, the FTSE100 will outperform. Robin Geffen Neptune Investment Management Limited 28 March 2006 Statement of Total Return for the period 30 November 2004* to 31 December 2005 Revenue Capital Total £'000 £'000 £'000 Gains on investments at fair value - 303 303 Income 104 - 104Investment management fee (11) (33) (44)Other expenses (80) - (80) ------- -------- ---------- Return on ordinary activities beforetaxation 13 270 283 Taxation on ordinary activities - - - ------- -------- ---------- Return attributable to equityshareholders 13 270 283 ------- -------- ---------- ------- -------- ---------- Dividends paid (12) - (12) ------- -------- ---------- Retained profit transferred toreserves 1 270 271 ------- -------- ---------- Return per ordinary share 0.41 p 8.49 p 8.90p Notes The revenue column of this statement is the profit and loss account of thecompany. All revenue and capital items in the above statement derive from continuingoperations. * The company was incorporated on 30 November 2004 and commenced investing on 22June 2005. Reconciliation of Movements in Shareholders' Fundsfor the period 30 November 2004 to 31 December 2005 Share Share Special Capital Revenue Total capital premium reserve reserve reserve account £'000 £'000 £'000 £'000 £'000 £'000 Period ended 31 December 2005 30 November 2004 - - - - - - Issue of shares 379 - - - - 379 Premium onissue ofshares - 3,413 - - - 3,413 Expenses ofshare issue - (205) - - - (205) Transfer tospecialreserve - (3,187) 3,187 - - - Net returnafter taxationfor the period - - - 270 13 283 Dividendsdeclared andpaid - - - - (12) (12) ------- ------- ------ ------- ------- ------- 31 December2005 379 21 3,187 270 1 3,858 ------- ------- ------- ------- ------- ------- Balance Sheetas at 31 December 2005 £'000Fixed Assets Investments at fair value 1,739 Current Assets Debtors 95Cash at bank 2,208 ---------- 2,303 Creditors: Amounts falling duewithin one year Creditors (184) ---------- Net Current Assets 2,119 ---------- ----------Net Assets 3,858 ---------- ---------- Represented by: CALLED UP SHARE CAPITAL AND RESERVES Share capital 379Share premium 21Special reserve 3,187Capital reserve realised (33)Capital reserve unrealised 303Revenue reserve 1 ----------Total equity shareholders' funds 3,858 ---------- Net asset value per share 101.71p Cash Flow Statement Period ended 31 December 2005 £'000 Net cash inflow from operating activities 53 Capital expenditure and financial investmentPurchases of investments (1,436)Sales of investments - --------Net cash outflow from capital expenditure and financial investment (1,436) --------Net cash outflow before financing (1,383) --------FinancingEquity dividends paid (12)Proceeds of share issue 3,792Cost of share issue (189)Net cash inflow from financing 3,591 --------Increase in cash 2,208 -------- Preliminary statement of annual results This preliminary statement is not the company's statutory accounts. No statutoryaccounts have yet been delivered to the Registrar of Companies. The statutory accounts for the period ended 31 December 2005 have not yet beenapproved, audited or filed. The Report and accounts for the period ended 31 December will be sent toshareholders shortly and will thereafter be available from the company'sregistered office at 11 Lees place, London W1K 6LN. The first annual generalmeeting will be held on Thursday 1 June 2006 at St Magnus House, 3 Lower ThamesStreet, London EC3R 6HE. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Neptune-Calculus Income & Growth