29th Apr 2005 11:26
Elderstreet VCT PLC29 April 2005 ELDERSTREET VCT PLC (FORMERLY ELDERSTREET DOWNING VCT PLC)PRELIMINARY ANNOUNCEMENT OF RESULTSFOR THE YEAR ENDED 31 DECEMBER 2004 FINANCIAL HIGHLIGHTS 2004 pence Net asset value per share 62.9pCumulative dividends since launch per share 29.5pTotal return (Net asset value per share plus cumulative dividends) 92.4p The statement to shareholders by the Chairman, David Brock, includes the following comments: Introduction The year to 31 December 2004 has seen some improvement in the general climatefor small businesses, which, together with a focussed approach by the InvestmentManager, has contributed to an increase in the Company's Net Asset Value. Net Asset Value At 31 December 2004, the Net Asset Value per share ("NAV") was 62.9p, a rise of9.4p or 16.6% (before distributions) since the previous year end. Venture capital investments The Company made two new investments and three follow on investments during theyear. At the year-end, the venture capital portfolio comprised investments in26 companies with a cost of £8.1 million and valuation of £8.0 million. The new investments made during the year are summarised as follows: Cost £'000 New investmentsCareforce Groups plc Domiciliary care provider 190Baldwin and Francis Flameproof switchgear manufacturer 150 Follow-on investmentsBerkeley Scott Group plc Recruitment agency 146Mediasurface plc Software developer 147Snacktime Ltd Vending machine operator 150The National Solicitors Network Ltd Services for solicitors 150 933There were no realisations during the year other than redemptions of loan stockby Berkeley Scott and UM Holdings. The Board have reviewed the valuations of the unquoted investments at theyear-end and made a number of adjustments. Wessex Advanced Switching ProductsLimited has continued to produce strong results, which has given rise to avaluation increase of £215,000. Henry J Beans and The National SolicitorsNetwork have both made progress in recovering from difficulties and provisionsmade previously of £200,000 and £250,000 have been released. AIM stocks have also shown good increases in valuations over the year. A numberof successful acquisitions by Computer Software Group plc have contributed to animprovement in its share price, and the value of the Company's investment hasrisen by £414,000. Berkeley Scott's successful floatation on AIM in December2004 helped the valuation of the investment increase by £280,000. Overall the Venture Capital Portfolio showed unrealised gains of £1.298 millionover the year. Results and Distribution The profit on ordinary activities after taxation was £1,415,000 (2003 loss:£846,000). An interim distribution of 1p per share was paid on 29 October 2004. Your Boardis proposing to pay a final distribution of 2p per share on 21 June 2005 toshareholders on the register at 20 May 2005. "C" Share issue In February 2005, the Company launched a "C" Share issue to allow investors tobenefit from the 40% income tax relief now available on new investments intoVCTs. Supply of new VCT products has exceeded demand by many times for 2004/05tax year and, as a result, the level of funds raised has been disappointing,with approximately £1.5 million raised to date. Although the 'C' Share fundswill be operated as a separate pool, the running costs of the VCT are now sharedacross the Ordinary and 'C' shareholders, so there are benefits for Shareholderseven though the levels of funds raised is lower than hoped. Directorate On 26 January 2005, Barry Dean joined the Board as a non-executive director.Barry is a Chartered Accountant, with over 25 years' experience in the venturecapital industry and will be a valuable addition to the Board. VCT qualifying status Qualifying investments now represent 80% of total investments (including cash)thereby continuing to exceed the Venture Capital Trust qualifying criteria of aminimum of 70%. The Board, with the assistance of PricewaterhouseCoopers,continue to monitor the Company's compliance with the VCT legislation. Share repurchase The Board is conscious that the Company's share price is affected by theilliquidity of its shares in the market, resulting from the requirement thatshareholders must retain their shares for at least five years in order to retaintheir tax benefits. In line with accepted practice with VCTs, the Company has apolicy of purchasing its own shares. During the year the Directors used thispower to acquire 246,100 shares at an average price of 47.0p per share. ASpecial Resolution to continue with this policy is proposed for the forthcomingAGM. Annual General Meeting The Annual General Meeting of the Company will be held at 32 Bedford Row, LondonWC1R 4HE at 10:30am on 16 June 2005. Outlook Although there have been no significant exits during 2004, many of the portfoliocompanies have progressed well, resulting in higher valuations. The Board isencouraging the Investment Manager to continue to work closely with the investeecompanies to support further progress and, in some cases, work towards possibleexits. Exits from existing investments and the proceeds of the 'C' share issue willprovide a greater level of funds for new investments. There now appears to begreater deal flow of new investment opportunities than for some time, howeverthe quality of these opportunities varies widely, so careful selection will bethe key to success. UNAUDITED PROFIT AND LOSS ACCOUNTFor the year ended 31 December 2004 Year ended Year ended 31 December 31 December 2004 2003 £'000 £'000 Investment income 363 291 Investment management fees (143) (131) Other expenses (166) (173) Operating profit/(loss) 54 (13) Net movement on permanent diminution provision 1,361 (621) Loss on realisation of investments - (212) Profit/(loss) on ordinary activities before taxation 1,415 (846) Tax on ordinary activities - - Profit/(loss) on ordinary activities after taxation 1,415 (846) Dividends (439) (297) Retained profit/(loss) for the year 976 (1,143) Basic and diluted earnings/(loss) per share 9.6p (5.6p) Basic and diluted earnings/(loss) per share is based on the profit on ordinaryactivities after taxation of £1,415,000 (2003: loss: £846,000), but beforededuction of distributions of £439,000 (2003: £297,000), in respect of14,791,121 ordinary shares (2003: 14,977,940), being the weighted average numberof ordinary shares in issue during the year. UNAUDITED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESfor the year ended 31 December 2004 Year ended Year ended 31 December 2004 31 December 2003 £'000 £'000 Profit/(loss) on ordinary activities after 1,415 (846)taxation Revaluations - non-permanent diminutions (62) 597 Total recognised gains/(losses) for the 1,353 (249)year Recognised losses brought forward (1,931) (1,682) Recognised losses carried forward (578) (1,931) UNAUDITED NOTE OF HISTORICAL COST PROFITS AND LOSSESfor the year ended 31 December 2004 Year ended Year ended 31 December 2004 31 December 2003 £'000 £'000 Profit/(loss) on ordinary activities after taxation 1,415 (846) Net movement on permanent diminution (1,361) 621provision Realisation of revaluation gains from (743) (897)previous years Historical cost loss on ordinary activities after (689) (1,122)taxation Dividends (439) (297) Retained historical cost loss for the year (1,128) (1,419) Historical cost (loss)/profit brought forward (672) 747 Historical cost loss profit carried forward (1,800) (672) UNAUDITED BALANCE SHEETas at 31 December 2004 As at As at 31 Dec 31 Dec 2004 2003 £'000 £'000 £'000 £'000 Fixed AssetsVenture capital investments 7,967 6,203 Current AssetsDebtors 48 41Cash at bank and in hand 1,514 2,356 1,562 2,397 Creditors: amounts falling due within one (324) (192)year Net current assets 1,238 2,205 Net assets 9,205 8,408 Capital and reserves Called up share capital 732 744Capital redemption reserve 25 13Revaluation reserve 1,908 1,227Special reserve 6,540 6,424 Equity shareholders' funds 9,205 8,408 Net asset value per share 62.9p 56.5p Net asset value per ordinary share is based on net assets at the year-end, andon 14,639,300 ordinary shares (2003: 14,885,400), being the number of ordinaryshares in issue at the year-end. The Special Reserve is a distributable reserve that allows the Company to makemarket purchases of its own shares and to pay dividends. UNAUDITED CASHFLOW STATEMENT for year ended 31 December 2004 Year ended Year ended 31 Dec 31 Dec 2003 2004 £'000 £'000 £'000 £'000 Net cash inflow from operating 44 113activities Corporation tax - - Capital expenditurePurchase of venture capital investments (933) (846)Sale of fixed income securities - 800Sale of venture capital investments 468 1,116 Net cash (outflow)/inflow from capital (465) 1,070expenditure Equity dividends paid (296) (450) Net cash (outflow)/inflow before financing (717) 733 FinancingPurchase of own shares (125) (79)Net cash outflow from financing (125) (79) (Decrease)/increase in cash (842) 654 Reconciliation of net cash flow to movement in net funds 2004 2003 £'000 £'000 (Decrease)/increase in cash during the year (842) 654Net funds at 1 January 2004 2,356 1,702 Net funds at 31 December 2004 1,514 2,356 Announcement based on draft accounts (unqualified audit report) The financial information set out in the announcement does not constitute theCompany's statutory accounts for the year ended 31 December 2004 or 31 December2003. The statutory accounts for the year ended 31 December 2004 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 31 December 2003 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 2003. A copy of the full annual report and financial statements for the year ended 31December 2004 will be printed and posted to shareholders. Copies will also beavailable to the public at the registered office of the Company at 69 EcclestonSquare, London SW1V 1PJ. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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