Final Results
British Smaller Companies VCT PLC
12 June 2007
BRITISH SMALLER COMPANIES VCT PLC
UNAUDITED PRELIMINARY RESULTS
FOR THE YEAR ENDED
31 MARCH 2007
British Smaller Companies VCT plc ('the Company') today announces its unaudited
preliminary results for the year ended 31 March 2007.
Chairman's Statement
For the fourth successive year, I am pleased to be able to report further growth
in the net asset value per share of your Company. For the year to 31 March 2007,
the total return, which takes into account both this net asset value and
cumulative dividend distributions, has increased by 8.3 pence per share to 136.3
pence per share, an increase of 6.5%; with the five year increase amounting to
57.4%. There has also been a pleasing increase in the total return of the C
shares of 9.1 pence per share.
This year has seen a continuation of the successful realisations delivered in
previous years that has not only delivered a significant part of the growth in
the year, but has enabled your board to continue its dividend policy resulting
in our recommendation to pay a final dividend of 3 pence per Ordinary share.
Investment Portfolio
This year saw further realisations totalling £2.21 million (£1.96 million in
respect of the Ordinary shares and £0.25 million in respect of the C shares).
The most significant realisation was of the unquoted investment in Tekton
Limited (previously known as Intuita Limited). This company was sold to a
vehicle backed by the private equity investor Inflexion. Your Company's
investment of £0.4 million was realised for £0.9 million having held the
investment for less than thirteen months. The opportunity was taken to invest
£0.2 million of these proceeds in the enlarged group alongside the management.
The opportunity was also taken to realise some of the AiM portfolio with a total
of £0.3 million realised in the year.
A total of £1.4 million was invested into 3 businesses in the year; £1.1 million
from the Ordinary share pool and £0.3 million from the C share pool. Two of
these investments were in companies at the time of their successful admission to
AiM, all of which have traded at a premium to their admission price. The other
was in unquoted company Cater Plus Services Limited, an established business
based in Watford that provides catering services to the care home sector.
Further information about these new investments can be found in the Investment
Adviser's Review. This contains a summary of all businesses in the current
portfolio and a note of their website addresses to enable shareholders to get
further information if they wish to do so.
Financial Results and Dividend
The net asset value of the Ordinary shares at 31 March 2007 was 101.3 pence per
share, and 110.8 pence per share for the C shares. Taking account of the
dividends paid to date on the Ordinary shares, the total return for eligible
founder Ordinary shareholders at the balance sheet date was 136.3 pence per
share and the C shareholders 111.3 pence per share.
The Ordinary shares recorded a pre-tax profit of £1.23 million after taking
account of unrealised valuation gains of £1.04 million. The C share pool also
recorded pre-tax profits, delivering £0.1 million for the year.
The performance of both the Ordinary and C shares has been pleasing with
increases in valuation and profitable performances delivered in both pools. Your
board announced its intention to merge the two pools on the closing of this
year's fundraising offers. As a consequence the C shares were converted to
Ordinary shares on 9 May 2007 with the issue of 1.1247 Ordinary shares for every
C share held.
An interim dividend of 1.5 pence per share was declared on the Ordinary shares
and paid in November 2006. No interim dividend was paid on the C shares. Your
Board is now proposing a final dividend of 3.0 pence per share on the Ordinary
shares. If approved, these dividends will be paid on 8 August 2007 to
shareholders on the register at 22 June 2007. The final dividend has not been
recognised in the accounts under IFRS as the contractual obligation did not
exist at the balance sheet date.
Shareholders and Fundraising
Shareholders will be aware that, on 8 December 2006, your Board published
proposals offering investors the opportunity to subscribe for up to 15 million
new Ordinary shares in the Company at an offer price of 102.5 pence per share.
These proposals were by way of two offers closing on 5 April 2007 and 30 April
2007 respectively. Both Ordinary and C shareholders, were given priority to
apply for shares in the first twelve weeks of the Offers. I am pleased to report
that the Offers raised a total of £9.7 million before expenses. Your board
regards this as a very creditable result and your Company has begun to take
advantage of the opportunities that are available as a result of the additional
investment capacity. It is anticipated that this increase in the size of your
Company will deliver the reduction in the Total Expense Ratio that was envisaged
in the fundraising documents.
The Company continues to operate a share buy back policy to enable shareholders
to obtain some liquidity in an otherwise illiquid market where there is a need
to dispose of their stock. This policy is kept under review to ensure that any
decisions taken are in the best interests of shareholders as a whole. In
accordance with this policy, the Company purchased for cancellation a total of
1,039,560 shares during the year, at an average price of 88.68 pence per share.
The existing buy back authority which currently expires on 31 January 2008 is
proposed to be extended to 1 August 2008. A resolution to this effect will be
proposed at the Company's AGM on 1 August 2007.
Outlook
Your Company has achieved further profitable realisations and has begun to
increase the rate of new investment that is developing a portfolio containing
maturing and growing investments with the emphasis remaining on unquoted
investments.
There remains a focus on continuing to actively support the investments in the
portfolio maximising and realising value wherever possible. The current market
has enabled further new investment to take place with your board increasing new
investments as a result of the number of opportunities that it has seen. In
recent years there has been a much higher level of investment in the younger,
developing businesses. As these businesses are continuing to grow, your board,
through its investment adviser, believes it is well placed to continue to take
advantage of this growing source of opportunities.
The changes relating to VCTs announced in the Budget, particularly the reduction
in the number of employees to 50 being part of the test for a qualifying
company, will have some impact on the industry but, with your Board and its
Investment Adviser already focusing primarily on this market, the changes are
expected to have less of an impact on your Company than some others.
Sir Andrew Hugh Smith
12 June 2007
Unaudited Income Statement
for the year ended 31 March 2007
Notes Ord shares C shares Total Ord shares C shares Total
2007 2007 2007 2006 2006 2006
£000 £000 £000 £000 £000 £000
Income 327 41 368 413 38 451
Administrative expenses:
Investment advisory fee (352) (29) (381) (314) (18) (332)
Other expenses (216) (18) (234) (202) (13) (215)
------ ------ ------ ------ ------ ------
(568) (47) (615) (516) (31) (547)
Gain on realisation of investments 423 80 503 806 1 807
Gains on investments held at fair value 1,043 39 1,082 1,477 95 1,572
------ ------ ------ ------ ------ ------
Profit on ordinary activities
before taxation 1,225 113 1,338 2,180 103 2,283
Taxation - - - - - -
------ ------ ------ ------ ------ ------
Profit for the year from continuing
operations 1,225 113 1,338 2,180 103 2,283
------ ------ ------ ------ ------ ------
Basic and diluted earnings per share 3 7.82p 8.98p 7.91p 14.55p 8.38p 13.89p
====== ====== ====== ====== ====== ======
Unaudited Balance Sheet
at 31 March 2007
Notes Ord shares C shares Total Ord shares C shares Total
2007 2007 2007 2006 2006 2006
£000 £000 £000 £000 £000 £000
Assets
Non-current assets
Financial assets at fair value
through profit or loss 11,056 571 11,627 10,382 427 10,809
------ ------ ------ ------ ------ ------
Current assets
Trade and other receivables 501 11 512 448 10 458
Cash and cash equivalents 4,042 825 4,867 4,531 864 5,395
------ ------ ------ ------ ------ ------
4,543 836 5,379 4,979 874 5,853
Liabilities
Current liabilities
Trade and other payables (205) (13) (218) (101) (14) (115)
------ ------ ------ ------ ------ ------
Net current assets 4,338 823 5,161 4,878 860 5,738
------ ------ ------ ------ ------ ------
Net assets 15,394 1,394 16,788 15,260 1,287 16,547
====== ====== ====== ====== ====== ======
Shareholders' equity
Share capital 1,519 629 2,148 1,566 629 2,195
Share premium account 1,258 555 1,813 781 555 1,336
Capital redemption reserve 221 - 221 117 - 117
Special reserve 2,408 - 2,408 3,330 - 3,330
Retained earnings 9,988 210 10,198 9,466 103 9,569
------ ------ ------ ------ ------ ------
Total shareholders'equity 15,394 1,394 16,788 15,260 1,287 16,547
====== ====== ====== ====== ====== ======
Net asset value per share 4 101.3p 110.8p 102.1p 97.5p 102.2p 97.9p
====== ====== ====== ====== ====== ======
Unaudited Statement of Changes in Equity
Share Share Capital Special Retained Total
capital premium redemption reserve earnings equity
account reserve
£000 £000 £000 £000 £000 £000
Balance at 31 March 2005 1,637 112 75 3,661 7,842 13,327
Profit for the year - - - - 2,283 2,283
Dividends - - - - (556) (556)
Purchase of own shares (42) - 42 (331) - (331)
Issue of C share capital 504 505 - - - 1,009
Issue costs of C share capital - (62) - - - (62)
Issue of Ordinary share capital 90 788 - - - 878
Issue costs of Ordinary share capital - (47) - - - (47)
Issue of share capital on DRIS* 6 40 - - - 46
------ ------ ------ ------ ------ ------
Balance at 31 March 2006 2,195 1,336 117 3,330 9,569 16,547
Profit for the year - - - - 1,338 1,338
Dividends - - - - (709) (709)
Purchase of own shares (104) - 104 (922) - (922)
Issue of Ordinary share capital 57 517 - - - 574
Issue costs of Ordinary share capital - (40) - - - (40)
------ ------ ------ ------ ------ ------
Balance at 31 March 2007 2,148 1,813 221 2,408 10,198 16,788
====== ====== ====== ====== ====== ======
The above table includes prior year comparatives.
*DRIS being the Dividend Re-investment Scheme.
The special distributable reserve was created following approval of the Court
and the resolution of the Shareholders to cancel the Company's share premium
account and is available for use for other corporate purposes of the Company.
Included within retained earnings, in respect of unrealised gains on investments
held at fair value through profit or loss is £6,803,000 (2006:£6,622,000). These
gains are not distributable under the Companies Act 1985.
Unaudited Cash Flow Statement
for the year ended 31 March 2007
Ord shares C shares Total Ord shares C shares Total
2007 2007 2007 2006 2006 2006
£000 £000 £000 £000 £000 £000
Net cash (outflow) inflow from
operating activities (262) (5) (267) (54) 2 (52)
------ ------ ------ ------ ------ ------
Cash flows from (used in)investing activities
Purchase of fixed asset investments (1,111) (269) (1,380) (899) (330) (1,229)
Proceeds from sale of fixed asset investments 1,943 255 2,198 3,518 - 3,518
------ ------ ------ ------ ------ ------
Net cash from (used in) investing activities 832 (14) 818 2,619 (330) 2,289
------ ------ ------ ------ ------ ------
Cash flows(used in)from financing activities
Issue of C shares - - - - 1,009 1,009
Costs of C share issue - (3) (3) - (62) (62)
Issue of Ordinary shares 574 - 574 878 - 878
Costs of Ordinary share issue (80) - (80) - - -
Purchase of own Ordinary shares (796) - (796) (367) - (367)
Dividends paid (703) (6) (709) (510) - (510)
------ ------ ------ ------ ------ ------
Net cash (used in) from financing activities (1,005) (9) (1,014) 1 947 948
------ ------ ------ ------ ------ ------
Net(decrease) increase in
cash and cash equivalents (435) (28) (463) 2,566 619 3,185
Cash and cash equivalents at the
beginning of the year 4,531 864 5,395 1,970 246 2,216
Effect of market value changes in
cash equivalents (54) (11) (65) (5) (1) (6)
------ ------ ------ ------ ------ ------
Cash and cash equivalents at the
end of the year 4,042 825 4,867 4,531 864 5,395
====== ====== ====== ====== ====== ======
Notes to Financial Statements
for the year ended 31 March 2007
1. Accounting Policies
This preliminary announcement does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985.
The information for the year ended 31 March 2006 is an extract from the
statutory accounts to that date which have been delivered to the Registrar of
Companies. Those accounts included an audit report which was unqualified and
which did not contain a statement under Section 237(2) or (3) of the Companies
Act 1985. The accounting policies set out in those accounts have continued to be
followed. The statutory accounts for the year ended 31 March 2007, upon which
the auditors have still to report, will be delivered to the Registrar following
the Company's annual general meeting.
The accounts have been prepared on a going concern basis and in accordance with
the International Financial Reporting Standards (IFRS) as adopted by the
European Union, and those parts of the Companies Act 1985 applicable to
companies reporting under IFRS.
The financial statements are prepared in accordance with IFRS and
interpretations in force at the reporting date. The Company has not adopted any
standards or interpretations in advance of the required implementation dates. It
is not expected that adoption of standards or interpretations which have been
issued by the International Accounting Standards Board but have not been adopted
will have a material impact on the financial statements.
2. Dividends
A final dividend of 3 pence per Ordinary share (£792,000) is proposed. This
dividend has not been recognised in the results for the year ended 31 March 2007
as the obligation did not exist at the balance sheet date.
3. Earnings (Loss) per Share
The earnings per share is based on net profit from ordinary activities after tax
of £1,338,000 (2006: £2,283,000) and 16,923,000 (2006: 16,432,000) shares, being
the weighted average number of shares in issue during the year.
The earnings per Ordinary share is based on net profit from ordinary activities
after tax of £1,225,000 (2006: £2,180,000) and 15,664,000 (2006: 14,979,000)
shares, being the weighted average number of shares in issue during the year.
The earnings per C share is based on net profit from ordinary activities after
tax of £113,000 (2006: £103,000) and 1,259,000 (2006: 1,228,000) shares, being
the weighted average number of shares in issue during the year.
The Company has no securities that would have a dilutive effect in either period
and hence the basic and diluted net asset values per share are the same.
Since the year end the company has issued 9,802,240 Ordinary shares and the
1,258,676 C shares have been converted into 1,415,585 Ordinary shares, taking
the total number of Ordinary shares in issue to 26,409,189. Had these
transactions occurred before the year end, they would have significantly
affected the number of shares used in the earnings per share calculation.
4. Net Asset Value per Share
The net asset value per share is calculated on attributable assets of
£16,788,000 (2006: £16,547,000) and 16,450,040 (2006: 16,912,836) shares in
issue at the year end.
The net asset value per Ordinary share is calculated on attributable assets of
£15,394,000 (2006: £15,260,000) and 15,191,364 (2006: 15,654,160) shares in
issue at the year end.
The net asset value per C share is calculated on attributable assets of
£1,394,000 (2006: £1,287,000) and 1,258,676 (2006: 1,258,676) shares in issue at
the year end.
The Company has no securities that would have a dilutive effect in either period
and hence the basic and diluted net asset values per share are the same.
Since the year end the company has issued 9,802,240 Ordinary shares and the
1,258,676 C shares have been converted into 1,415,585 Ordinary shares, taking
the total number of Ordinary shares in issue to 26,409,189. Had these
transactions occurred before the year end, they would have significantly
affected the number of shares used in the net asset value per share calculation.
5. Total Return per Ordinary Share
The total return per Ordinary share takes into account the closing net asset
value per share and cumulative dividends paid per share at the balance sheet
date to eligible founder shareholders.
For the year ended 31 March
2007 2006 2005 2004
Net asset value per Ordinary share 101.3p 97.5p 86.6p 78.3p
Cumulative dividend paid per Ordinary share 35.0p 30.5p 26.8p 19.4p
------ ------ ------ ------
Total Return per Ordinary share 136.3p 128.0p 113.4p 97.7p
====== ====== ====== ======
6. Annual Report
Copies of the full financial statements for the year ended 31 March 2007 will be
available to the public at the registered office of the Company at Saint Martins
House, 210-212 Chapeltown Road, Leeds, LS7 4HZ.
For further information, please contact:
David Hall YFM Private Equity Limited Tel: 0161 832 7603
Alan Davies YFM Private Equity Limited Tel: 0113 294 5000
Jonathan Becher Teather & Greenwood Limited Tel: 0207 426 3269
Michael Bellamy Teather & Greenwood Limited Tel: 0207 426 9547
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