26th Sep 2006 07:02
Elderstreet VCT PLC26 September 2006 Elderstreet VCT plc Interim Statement for the six months ended 30 June 2006 CHAIRMAN'S STATEMENT The period to 30 June 2006 has seen a mixed performance within the Company'sinvestment portfolio, with strong results by some of the more mature investmentsbeing countered by difficulties affecting some of the younger companies. Ordinary Share Issue With the attractive level of income tax relief available on VCT investments inthe 2005/06 tax year, the Company took the opportunity to undertake a smallissue of Ordinary shares. The Company issued 1,401,471 Ordinary shares at aprice of 68.9p per share. The issue raised net proceeds of £966,000 and givesthe Company a larger asset base over which to share its fixed running costs anda greater level of liquid funds to be able to participate in more new investmentopportunities. Net Asset Value At 30 June 2006, the Company's Net Asset Value per Ordinary share ("NAV") stoodat 67.2p, an increase of 4.1p or 4.3% since 31 December 2005 (after adjustingfor dividends paid during the period). At 30 June, the Net Asset Value per 'C' share stood at 89.0p, a decrease of 4.1pper 'C' share (4.4%) over the period after adjusting for the dividend paid. Venture capital investments During the period, the Company made one new investment and three follow oninvestments totalling £317,000 and spread between the Ordinary and 'C' Sharepools. The Ordinary share pool made two realisations during the period. Part of theholding in AIM-quoted Computer Software Group plc was sold, giving rise to again of £274,279 against previous carrying value. In addition, the remainder ofthe holding in Milkround plc was sold, producing a gain of £25,000. Of the investments held throughout the period, Computer Software Group accountedfor a sizable unrealised gain of £822,000. The company successfully completedseveral acquisitions during the period and is establishing strong positions in anumber of niche software sectors. Of the other AIM stocks held by the company,Interquest Group plc and Mediasurface plc both performed well producing gains of£127,000 and £85,000 respectively. Within the unquoted portfolio, several of the investee companies encountereddifficulties, causing the Board to make some provisions. Trading at OldburyAluminium Limited suffered as a result of unusually large fluctuations in theprice of aluminium and The National Solicitors Network Limited produced somepoor results suggesting that future development of the business will bedifficult. Provisions of £182,000 and £375,000 respectively were made againstthese investments. Overall the investment portfolio gave rise to unrealised gains of £311,000 overthe period in respect of the Ordinary Share pool and a small unrealised loss of£72,000 in respect of the 'C' Share pool. Listed fixed income securities The listed fixed income securities portfolio held by the Ordinary Share pool wasvalued at £1.0 million at the period end. These funds continue to be managed bySmith and Williamson Investment Management Limited. Results and Dividend The Company's Ordinary Share pool had a revenue surplus of £53,000 (2005:£23,000), equivalent to 0.4p per share. The 'C' Share pool had a revenuesurplus of £14,000 (2005: 13,000) equivalent to 0.9p per 'C' share. The Boarddoes not intend to pay and interim dividend for either the Ordinary or 'C'Shares. Repurchase of shares The Company continues to operate a policy of buying in for cancellation anyshares that become available, to ensure that there is liquidity in the marketfor any Shareholders wishing to dispose of their holding. During the period the Company purchased 283,067 Ordinary Shares, at an averageprice of 55.0p per share, for cancellation. No 'C' Shares were purchased. Outlook With the 'C' Share investment portfolio still very much in its infancy, it maybe some time before any significant progress amongst its investments becomesapparent. The Ordinary Share portfolio, however, contains a good spread ofbusinesses at varying levels of maturity which should give it a better chance ofdelivering some good returns to Shareholders in the short and medium term. David BrockChairman UNAUDITED SUMMARISED BALANCE SHEETas at 30 June 2006 30 Jun 30 Jun 2005 31 Dec 2006 2005 £'000 £'000 £'000 Investments 9,309 8,906 9,248 Net current assets 2,286 1,483 1,384 Net assets 11,595 10,389 10,632 Capital and reservesCalled up share capital 838 793 782Capital redemption reserve 67 42 52Share premium 2,230 1,386 1,388Special reserve 6,209 6,246 6,401Capital reserve - realised 1,652 - 1,658Capital reserve - unrealised 433 1,909 237Revenue reserve 166 13 114 Equity shareholders' funds 11,595 10,389 10,632 Net asset value per Ordinary 67.2p 62.4p 65.1pshare Net asset value per 'C' share 89.0p 95.1p 94.1p RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS FUNDS 30 Jun 30 Jun 31 Dec 2006 2005 2005 £'000 £'000 £'000 Opening shareholder's funds 10,632 9,498 9,498Issue of shares 966 1,542 1,542Share issue costs (53) (81) (77)Purchase of own shares (157) (168) (274)Total recognised gains/ 534 (112) 231(losses) for the periodDistributions paid (327) (290) (288) Closing shareholder's funds 11,595 10,389 10,632 INCOME STATEMENTfor the six months ended 30 June 2006 Six months ended 30 Jun 2006 Revenue Capital Total £'000 £'000 £'000 Income 186 - 186 Gains/(losses) on investments - 529 529 186 529 715 Investment management fees (22) (68) (90)Other expenses (91) - (91) Return on ordinary activities before taxation 73 461 534 Taxation (5) 5 - Return attributable to equity shareholders 68 466 534 Return per Ordinary share 0.4p 3.7p 4.1p Return per 'C' share 0.9p (5.1p) (4.2p) Six months ended Year ended 30 Jun 2005 31 Dec 2005 Revenue Capital Total Total £'000 £'000 £'000 £'000 Income 141 - 141 269 Gains/(losses) on investments - (96) (96) 305 141 (96) 45 574 Investment management fees (17) (52) (69) (155)Other expenses (88) - (88) (188) Return on ordinary activities before taxation 36 (148) (112) 231 Taxation - - - - Return attributable to equity shareholders 36 (148) (112) 231 Return per Ordinary share 0.2p 0.9p 1.1p 1.7p Return per 'C' share 0.9p (0.6p) 0.3p 0.9p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the six months ended 30 June 2006 Six months ended 30 Jun 2006 Revenue Capital Total £'000 £'000 £'000 Return attributable to equity shareholders 68 466 534 Total recognised gains/(losses) for the period 68 466 534 Six months ended Year ended 30 Jun 2005 31 Dec 2005 (as restated) Revenue Capital Total Total £'000 £'000 £'000 £'000 Return attributable to equity shareholders 36 (148) (112) 231 Total recognised gains/(losses) for the period 36 (148) (112) 231 UNAUDITED CASHFLOW STATEMENTfor the six months ended 30 June 2006 Six Six months months Year ended ended ended 30 June 30 June 31 Dec 2006 2005 2005 Note £'000 £'000 £'000 Cash outflow from operating activities and returns oninvestments 1 (55) (22) (89) Capital expenditurePurchase of investments (318) (1,392) (3,207)Sale of investments 100 358 2,231 Net cash outflow from capital expenditure (218) (1,034) (976) Equity dividends paid (327) (290) (288) Net cash outflow before financing (600) (1,346) (1,353) Financing Proceeds from share issue 966 1,542 1,542Share issue costs (62) (41) (77)Purchase of own shares (144) (163) (274)Net cash inflow from financing 760 1,338 1,191 Increase/(decrease) in cash 160 (8) (162) Notes to the cashflow statement: 1 Cash (outflow)/inflow from operating activitiesand returns on investmentsNet revenue before taxation 73 36 42Expenses charged to capital (68) (52) (116)Increase in other debtors (50) (3) (24)(Decrease)/increase in other creditors (10) (3) 9 Net cash (outflow)/inflow from operating activities (55) (22) (89) 2 Analysis of net fundsBeginning of period 1,352 1,514 1,514Net cash inflow/(outflow) 160 (8) (162) End of period 1,512 1,506 1,352 SUMMARY OF INVESTMENT PORTFOLIOas at 30 June 2006 Cost Valuation % of portfolio £'000 £'000 by valueOrdinary Share pool Top ten venture capital investmentsComputer Software Group plc * 733 1,960 19.1Wessex Advanced Switching Products Limited 51 1,176 11.5Snacktime Limited 750 750 7.3Fords Packaging Systems Limited 83 667 6.5European Telecommunications & Technology Ltd 450 558 5.5UM (Holdings) plc 54 485 4.7Mediasurface plc * 374 398 3.9Oldbury Aluminium Alloys Group Ltd 450 301 2.9The National Solicitors Network Limited 856 275 2.7Interquest Group plc 250 264 2.6 4,051 6,834 66.2 Other venture capital investments 3,423 1,194 11.7 Listed fixed income securities 1,027 1,019 10.0 Net current assets (including cash) 1,186 1,186 11.6 Ordinary Share Pool - Total 9,687 10,233 100.0 'C' Share pool Venture capital investmentsInterquest Group plc * 100 105 7.6Oldbury Aluminium Alloys Group Limited 100 67 4.9Ovum plc 60 52 3.8Smart Education Limited 115 48 3.5 375 321 19.9 Net current assets (including cash) 1,100 1,100 80.2 'C' Share Pool - Total 1,475 1,372 100.0 Company Total 11,162 11,595 All venture capital investments are unquoted unless otherwise stated. * Quoted on the Alternative Investment Market ("AIM") NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 1. Accounting policies Basis of accounting The Company has prepared its financial statements under UK Generally AcceptedAccounting Practice ("UK GAAP"). Where presentation guidance set out in theStatement of Recommended Practice "Financial Statements of Investment TrustCompanies" revised December 2005 ("SORP") is inconsistent with the requirementsof UK GAAP, the Directors have sought to prepare the financial statements on abasis compliant with the recommendations of the SORP. The financial statements are prepared under the historical cost conventionexcept for the revaluation of certain financial instruments. Presentation of Income Statement In order to better reflect the activities of an investment trust company and inaccordance with guidance issued by the AITC, supplementary information whichanalyses the income statement between items of a revenue and capital nature hasbeen presented alongside the income statement. The net revenue is the measurethe directors believe appropriate in assessing the Company's compliance withcertain requirements set out in Section 842 Income and Corporation Taxes Act1988. Investments Listed fixed income investments and investments quoted on the AlternativeInvestment Market ("AIM") are designated as "fair value through profit or loss"assets and are initially measured at cost. Thereafter the investments aremeasured at subsequent reporting dates at fair value, which is the bid pricewith illiquidity discounts applied where deemed appropriate. In respect of unquoted instruments, fair value is established by using theInternational Private Equity and Venture Capital Valuation Guidelines. Where noreliable fair value can be estimated for such unquoted equity investments theyare carried at cost, subject to any provision for impairment. Where an investeecompany has gone into receivership or liquidation the investment, although notphysically disposed of, is treated as being realised. Gains and losses arising from changes in fair value are included in the incomestatement for the year as a capital item and transaction costs on acquisition ordisposal of the investment expensed. It is not the Company's policy to exercise either significant or controllinginfluence over investee companies. Therefore the results of these companies arenot incorporated into the revenue account except to the extent of any incomeaccrued. Income Dividend income from investments is recognised when the shareholders' rights toreceive payment has been established, normally the ex dividend date. Interest income is accrued on a timely basis, by reference to the principaloutstanding and at the effective interest rate applicable, which is the ratethat exactly discounts estimated future cash receipts through the expected lifeof the financial asset to that asset's net carrying amount, and only where thereis reasonable certainty of collection. Expenses All expenses are accounted for on an accruals basis. In respect of the analysisbetween revenue and capital items presented within the income statement, allexpenses have been presented as revenue items except as follows: • Expenses which are incidental to the disposal of an investment are deducted from the disposal proceeds of the investment. • Expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated and accordingly the investment management fee and finance costs have been allocated 25% to revenue and 75% to capital, in order to reflect the directors expected long-term view of the nature of the investment returns of the Company. Deferred taxation Deferred taxation is provided in full on timing differences that result in anobligation at the balance sheet date to pay more tax, or a right to pay lesstax, at a future date, at rates expected to apply when they crystallise based oncurrent tax rates and law. Timing differences arise from the inclusion of itemsof income and expenditure in taxation computations in periods different fromthose in which they are included in financial statements. 2. All revenue and capital items in the Income Statement derive fromcontinuing operations. 3. The Company has only one class of business and derives its income frominvestments made in shares, securities and bank deposits. 4. The comparative figures were in respect of the six months ended 30 June2005 and the year ended 31 December 2005 respectively. 5. Net Asset Value per share calculations are based on the following: Ordinary 'C' Shares SharesRevenue return per share based on:Net Assets (£'000) 10,223 1,372 Number of shares in issue at period end 15,221,819 1,542,202 6. Return per share calculations are based on the following: Ordinary 'C' Shares SharesRevenue return per share based on:Net revenue after taxation (£'000) 53 15 Weighted average number of ordinary shares in issue 14,856,483 1,542,202 Capital return per share base on:Net capital return/(loss) for the financial year (£'000) 544 (78) Weighted average number of ordinary shares in issue 14,856,483 1,542,202 7. Distributions 30 Jun 2006 31 Dec 2005 Per Revenue Capital Total Total Share Pence £'000 £'000 £'000 £'000 Paid in year2005 Final Ordinary distribution 2.0 - 311 311 -2005 Final 'C' share dividend 1.0 16 - 16 -2004 Final Ordinary distribution 3.0 - - - 288 16 311 327 288 8. Capital and Reserves Capital Capital Capital redemption reserve reserve Share Special reserve Share Revenue premium - - Capital reserve unrealised realised Reserve £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 2006 782 6,401 52 1,388 237 1,658 114Issue of new shares 71 - - 895 - - -Share issue costs - - - (53) - - -Shares repurchased (15) (157) 15 - - - -Expenses capitalised - - - - - (68) -Tax on capital expenses - - - - - 5 -Realised gains - - - - - 299 -Unrealised gains - - - - 230 - -Transfer between reserves - (35) - - (34) 69 -Retained net revenue for the period - - - - - - 68Dividends paid in period - - - - - (311) (16) At 30 June 2006 838 6,209 67 2,230 433 1,652 166 Analysed as:Ordinary Shares £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 2006 705 6,401 52 - 268 1,667 88Issue of new shares 71 - - 895 - - -Share issue costs - - - (53) - - -Shares repurchased (15) (157) 15 - - - -Expenses capitalised - - - - - (59) -Tax on capital expenses - - - - - 2 -Realised gains - - - - - 299 -Unrealised gains - - - - 302 - -Transfer between reserves - (35) - - (34) 69 -Retained net revenue for the period - - - - - - 53Dividends paid in period - - - - - (311) - At 30 June 2006 761 6,209 67 842 536 1,667 141 'C' Shares £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 2006 77 - - 1,388 (31) (9) 26Expenses capitalised - - - - - (9) -Tax on capital expenses - - - - - 3 -Realised gains - - - - - - -Unrealised gains - - - - (72) - -Retained net revenue for the period - - - - - - 15Dividends paid in period - - - - - - (16)At 30 June 2006 77 - - 1,388 (103) (15) 25 The Special Reserve is a distributable reserve that allows the Company to makemarket purchases of its own shares and to pay distributions. The OrdinaryCapital reserve - realised and Revenue Reserves are also distributable reserves. 9. The unaudited financial statements set out herein do not constitutestatutory accounts within the meaning of Section 240 of the Companies Act 1985and have not been delivered to the Registrar of Companies. The figures for theyear ended 31 December 2005 have been extracted from the financial statementsfor that year, which have been delivered to the Registrar of Companies; theauditors' report on those financial statements was unqualified. 10.Copies of the unaudited interim results will be sent to shareholders shortly.Further copies can be obtained from the Company's Registered Office. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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