11th Apr 2008 10:36
Aberdeen Growth VCT1 PLC11 April 2008 Aberdeen Growth VCT I PLC The Directors announce the Company's results for the year ended 31 January 2008.Among the highlights are: • NAV total return on Ordinary Shares relatively stable at 79.72p per share (pps) at year end, fractionally down 1.8% over the year. • Net Asset Value (NAV) of Ordinary Shares at year end of 69.8pps. • Further repositioning of the portfolio during the year towards later stage, yielding assets. • Strong level of new investment activity; 10 new unlisted investments and 15 new AIM/PLUS investments completed during the reporting period. • Successful exits from unlisted companies during the year plus receipt of deferred consideration generated a gain of 1.9pps. • Net realised gains from AIM/PLUS stocks of 2.9pps for the year. • Further dividends proposed of 2.0pps bring total for year to 4.0pps. Performance The NAV total return per Ordinary Share at 31 January 2008 was 79.72pps, amodest decrease of 1.8% over the equivalent figure at January 2007. The fullyear position has fallen back from the advance achieved at the half year, due tothe decline in the AIM market in the second half of the year when the FTSE AIMAll-Share Index fell by 18.9%. In context, this performance has been achievedagainst a background of extreme market volatility in recent months and during ayear in which the Manager has been repositioning the portfolio towards a higherproportion of unlisted investments. The Board considers this to be a commendableachievement and the majority of the assets in the invested portfolio are now inwell managed, growing, later-stage private companies which are not directlyaffected by quoted market sentiment, and where performance remains generallyencouraging. The most important measure for a VCT is NAV total return being the long termrecord of income and capital gains dividend payments plus the current NAV. Inthe short term, the NAV on its own is a less important measure of theperformance as the underlying investments are long-term in nature and notreadily realisable. The NAV per Ordinary Share at 31 January 2008, before payment of a dividend inrespect of the year then ended, was 69.8p compared with 73.8p at 31 January2007; however dividends totalling 2.5pps had been paid during the year whicheffectively reduced the opening NAV by that amount. The effect of paying theproposed final dividend of 2.0pps will be to reduce the NAV to 67.8pps. Dividend policy The Board is recommending the payment of a final dividend of 2.0pps on 27 June2008 to Shareholders on the register on 30 May 2008. The proposed final dividendwill comprise 1.5p in respect of revenue and 0.5p in respect of capital. With aninterim capital dividend of 2.0pps having been paid on 16 November 2007, thetotal dividend in respect of the year ended 31 January 2008 will, therefore, be4.0pps. The Board intends to pay regular dividends from realised gains and hopes thatthe level of payment will be increased over time, but this cannot be guaranteed.All dividends are, of course, paid tax-free to Shareholders and, to an investorwho subscribed at launch, a net dividend of 4.0pps is equivalent to a yield of5.3% to a higher-rate taxpayer from an equity investment; if the initial taxrelief of 20% is taken into account, the effective annual yield rises to 6.7%.Since the Company's launch, and after receipt of the final dividend,Shareholders will have received 11.92pps in tax-free dividends. Outlook The new unlisted investments made over the course of the year are generallytrading well and should form the basis of successful realisations in futureperiods, although it is too early to predict the quantum and timing of thoserealisations. The Manager continues to be extremely selective in the choice ofAIM investments and those holdings should provide realised gains in due course.AIM investments are actively traded with profit taken when it is available inthe market and this policy will continue into the future. There is a continual need to re-invest following the realisation of successfulinvestments. The Company is well placed to achieve this given the Manager'sextensive network and local relationships throughout the UK from whichinvestments can be sourced. As part of the ongoing repositioning of theportfolio, the Manager will continue to focus on the market for later stageprivate equity transactions, seeking to invest in well priced and yieldingassets in an attempt to drive future growth in the level of total return. Aberdeen Growth VCT I PLCINCOME Statement*For the year ended 31 January 2008 Year ended Year ended 31 January 2008 31 January 2007 (audited) (audited) Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments (406) (406) - 1,373 1,373Income from investments 761 - 761 398 - 398Other income 37 - 37 19 - 19Investment management fees (50) (449) (499) (49) (442) (491)Other expenses (237) (237) (219) - (219) -Net return/(loss) on ordinary activities 511 (855) (344) 149 931 1,080before tax Tax on ordinary activities (115) 115 - - - - Profit/(loss) attributable to equity 396 (740) (344) 149 931 1,080Shareholders Earnings per Ordinary Share (pence) 1.76 (3.29) (1.53) 0.66 4.12 4.78 * The total column of this statement is the Profit and Loss Account of theCompany. A Statement of Total Recognised Gains and Losses has not been prepared as allgains and losses are recognised in the Income Statement. Aberdeen Growth VCT I PLC REconciliation of movements in shareholders' funds For the year ended 31 January 2008 Year ended Year ended 31 January 2008 31 January 2007 (audited) (audited) £'000 £'000 Opening Shareholders' funds 16,601 16,943Total (loss)/profit for the year (344) 1,080Repurchase and cancellation of shares - (241)Dividends paid - revenue (112) (273)Dividends paid - capital (450) (908)Closing Shareholders' funds 15,695 16,601 ABERDEEN GROWTH VCT I PLC BALANCE SHEET As at 31 January 2008 31 January 2008 31 January 2007 (audited) (audited) £'000 £'000 £'000 £'000Investments at fair value through profit or 15,156 12,015loss Current assetsDebtors 440 638Cash and overnight deposits 136 4,000 576 4,638 CreditorsAmounts falling due within one year (37) (52) Net current assets 539 4,586 Net assets 15,695 16,601 Capital and reservesCalled up share capital 2,248 2,248Share premium account 10,535 10,535Capital reserve - realised (2,992) (2,157)Capital reserve - unrealised (2,684) (2,779)Distributable reserve 7,942 8,392Capital redemption reserve 212 212Revenue reserve 434 150Equity Shareholders' funds 15,695 16,601 Net Asset Value per Ordinary Share (pence) 69.8 73.8 ABERDEEN GROWTH VCT I PLCCASH FLOW STATEMENTFor the year ended 31 January 2008 Year ended Year ended 31 January 2008 31 January 2007 (audited) (audited) £'000 £'000 £'000 £'000Operating activitiesInvestment income received 601 523Deposit interest received 56 17Investment management fees paid (499) (593) Secretarial fees paid (71) (85) Directors' expenses paid (77) (71) Other cash payments (97) (103) Net cash outflow from operating activities (87) (312) Financial investmentPurchase of investments (7,628) (6,358) Sale of investments 4,413 11,790Net cash (outflow)/inflow from financial (3,215) 5,432investment Equity dividends paid (562) (1,181) Net cash (outflow)/inflow before financing (3,864) 3,939 FinancingShare repurchases - (241)Net cash outflow from financing (241) - (Decrease)increase in cash (3,864) 3,698 Notes Accounting Policies - UK Generally Accepted Accounting Practice (a) Basis of preparation The Financial Statements have been prepared under the historical costconvention, modified to include the revaluation of investments, and inaccordance with the Statement of Recommended Practice 'Financial Statements ofInvestment Trust Companies' (the SORP) issued in 2005. (b) Income Dividends receivable on equity shares and unit trusts are treated as revenue forthe period on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before theyear end are treated as revenue for the period. Provision is made for anydividends not expected to be received. The fixed returns on debt securities andnone equity shares are recognised on a time apportionment basis so as to reflectthe effective interest rate on the debt securities and shares. Provision is madefor any fixed income not expected to be received. Interest receivable from cashand short term deposits and interest payable are accrued to the end of the year. (c) Expenses All expenses are accounted for on an accruals basis and charged to the incomestatement. Expenses are charged through the revenue account except as follows: • expenses which are incidental to the acquisition and disposal of aninvestment are charged to capital; and • expenses are charged to realised capital reserves where a connectionwith the maintenance or enhancement of the value of the investments can bedemonstrated. In this respect, the investment management fee has been allocated10% to revenue and 90% to realised capital reserves to reflect the Company'sinvestment policy and prospective income and capital growth. (d) Taxation Deferred taxation is recognised in respect of all timing differences that haveoriginated but not reversed at the Balance Sheet date, where transactions orevents that result in an obligation to pay more tax in the future or right topay less tax in the future have occurred at the Balance Sheet date. This issubject to deferred tax assets only being recognised if it is considered morelikely than not that there will be suitable profits from which the futurereversal of the underlying timing differences can be deducted. Timingdifferences are differences arising between the Company's taxable profits andits results as stated in the Financial Statements which are capable of reversalin one or more subsequent periods. Deferred tax is measured on a non-discounted basis at the tax rates that areexpected to apply in the periods in which timing differences are expected toreverse, based on tax rates and laws enacted or substantively enacted at theBalance Sheet date. The tax effect of different items of income/gain and expenditure/loss isallocated between capital reserves and revenue account on the same basis as theparticular item to which it relates using the Company's effective rate of taxfor the period. (e) Investments In valuing unlisted investments the Directors follow the criteria set out below.These procedures comply with the revised International Private Equity andVenture Capital Valuation Guidelines for the valuation of private equity andventure capital investments. Investments are recognised at their trade date andare valued at fair value, which represent the Directors' view of the amount forwhich an asset could be exchanged between knowledgeable willing parties in anarm's length transaction. This does not assume that the underlying business issaleable at the reporting date or that its current shareholders have anintention to sell their holding in the near future. A financial asset or liability is generally derecognised when the contract thatgives rise to it is settled, sold, cancelled or expires. 1. For investments completed within the 12 months prior to the reportingdate and those at an early stage in their development, fair value is determinedusing the Price of Recent Investment Method, except that adjustments are madewhen there has been a material change in the trading circumstances of thecompany or a substantial movement in the relevant sector of the stock market. 2. Whenever practical, recent investments will be valued by reference to amaterial arm's length transaction or a quoted price. 3. Mature companies are valued by applying a multiple to their fully-taxedprospective earnings to determine the enterprise value of the company. a. To obtain a valuation of the total ordinary share capital held bymanagement and the institutional investors, the value of third party debt,institutional loan stock, debentures and preference share capital is deductedfrom the enterprise value. The effect of any performance related mechanisms istaken into account when determining the value of the ordinary share capital. b. Preference shares, debentures and loan stock are valued using the Priceof Recent Investment Method. When a redemption premium has accrued, this willonly be valued if there is a reasonable prospect of it being paid. Preferenceshares which carry a right to convert into ordinary share capital are valued atthe higher of the Price of Recent Investment Method basis and the price/earningsbasis, both described above. 4. Where there is evidence of impairment, a provision may be taken againstthe previous valuation of the investment. 5. In the absence of evidence of a deterioration, or strong defensibleevidence of an increase in value, the fair value is determined to be thatreported at the previous Balance Sheet date. 6. All unlisted investments are valued individually by Aberdeen PrivateEquity's Portfolio Management Team. The resultant valuations are subject todetailed scrutiny and approval by the Directors of the Company. 7. In accordance with normal market practice, investments listed on AIM/PLUS or another recognised stock exchange are valued at their bid market price. (f) Gains and losses on investments When the Company revalues its investments during the year, any gains or lossesarising are credited/charged to the income statement. Movement in reserves Share Capital Capital Special Capital Revenue reserves - reserves - redemption reserve premium distribut-able reserve account realised unrealised reserve £'000 £'000 £'000 £'000 £000 £'000At 1 February 2007 10,535 (2,157) (2,779) 8,392 212 150Losses on sales ofinvestments - (501) - - - - Investment management fees - (449) - - - - Net increase in value of investments - - 95 - - - Dividends paid - - (450) - (112) - Tax effect of capital items - 115 - - - -Profit on ordinaryactivities - - - - - 396 As at 31 January 2008 10,535 (2,992) (2,684) 7,942 212 434 Returns per Ordinary Share The returns per Ordinary Share are based on the following figures: Year ended Year ended 31 January 2008 31 January 20087 £'000 £'000Weighted average number of Ordinary 22,483,497 22,601,544Shares in issue Revenue return £396,000 £149,000Capital return (£740,000) £931,000Total return (£344,000) £1,080,000 Net Asset Value per Ordinary Share Net Asset Value per Ordinary Share as at 31 January 2008 has been calculatedusing the number of Ordinary Shares in issue at that date of 22,483,497(2007:22,483,497). Principal risks and uncertainties The Company's invest in financial instruments, comprising securities and otherinvestments, cash balances, overnight deposits and debtors and creditors thatarise directly from its operations, for example, in respect of sales andpurchases awaiting settlement, and debtors for accrued income. The Company maynot enter into derivative transactions in the form of forward foreign currencycontracts, futures and options without the written permission of the Directors.No derivative transactions were entered into during the year. The main risks the Company faces from its financial instruments are: (i) marketprice risk, being the risk that the value of investment holdings will fluctuateas a result of changes in market prices caused by factors other than interestrate or currency movement; (ii) interest rate risk; and (iii) liquidity risk. Inline with the Company's investment objective, the portfolio comprises UKsecurities and therefore has no exposure to foreign currency risk. The Manager'shas policies in place for managing these risks and they have been appliedthroughout the year. Additional risks faced by the Company, and the mitigationapproach adopted by the Board, are as follows: • investment objective: the Board's aim is to maximise absolute returns to Shareholders while managing risk by ensuring an appropriate diversification of investments; • investment policy: inappropriate stock selection leading to underperformance in absolute and relative terms is a risk which the Manager mitigates by operating within investment guidelines and regularly monitoring performance against the peer group. The regulations affecting venture capital trusts are central to the Company's investment policy; • discount volatility: due to lack of liquidity in the secondary market, venture capital trust shares tend to trade at discounts to net asset values which the Board seeks to manage, through the Manager and the Company's Broker by ensuring that sufficient information on the Company is available to potential buyers of its shares; and • regulatory risk: the Company operates in a complex regulatory environment and faces a number of related risks. A breach of section 842AA of the Income and Corporation Taxes Act 1988 could result in the Company being subject to capital gains tax on the sale of its investments. A breach of the VCT Regulations could result in the loss of VCT status and consequent loss of tax reliefs currently available to Shareholders. A serious breach of other regulations, such as the UKLA Listing Rules or the Companies Act, would lead to suspension from the Stock Exchange, loss of VCT status and reputational damage. The Board receives quarterly reports from the Manager in order to monitor compliance with regulations. The Board considers all of the above risks and the measures in place to managethem at least twice each year. Other information The Annual General Meeting will be held on 18 June 2008, commencing at 10.30 a.m. This Announcement has been prepared on the same basis as the Annual Report andFinancial Statements for the year ended 31 January 2007. The Annual Report andFinancial Statements for the year ended 31 January 2008 will be filed with theRegistrar of Companies and issued to Shareholders in due course. The financial information contained within this Announcement does not constitutethe Company's statutory Financial Statements as defined in Section 240 of theCompanies Act 1985. The statutory Financial Statements for the year ended 31January 2007 have been delivered to the Registrar of Companies and contained anaudit report which was unqualified and did not constitute statements underSections 237(2) or (3) of the Companies Act 1985. Copies of this announcement will be available to the public at the office ofAberdeen Asset Managers Limited, 149 St Vincent Street, Glasgow; at theregistered office of the Company, One Bow Churchyard, Cheapside, London and onthe Company's website at www.agvct.co.uk Directors' responsibility statement The Directors confirm that, to the best of their knowledge: • the Financial Statements have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets, liabilities and financial position of the Company as at 31 January 2008 and for the year to that date; and • the Directors' Report includes a fair review of the development and performance of the Company, together with a description of the principal risks and uncertainties that it faces. By Order of the Board ABERDEEN ASSET MANAGEMENT PLC SECRETARIES 11 April 2008 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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