Interim Results
Murray VCT 4 PLC
15 October 2002
Murray VCT 4 PLC
Interim Results for the Six Months to 31 August 2002
The Directors announce the unaudited interim results of Murray VCT 4 PLC for the
six months to 31 August 2002.
Highlights
• Interim dividend of 1.0p per share declared.
• Total dividends paid and declared since launch of 6.3p per Ordinary share
- over 7% of the effective initial investment cost returned to investors.
• Portfolio 42% invested in qualifying investments.
• Net Asset Value 88.2p per share as at 31 August 2002 before interim
dividend.
Investment activity
Further unlisted investment during the six months to 31 August 2002, totalled
£3.41 million. At 31 August 2002, the portfolio stood at 24 investments, having
a total cost of £15.4 million and representing a qualifying investment level of
40%. Since the period end, further investments have been completed, taking the
portfolio to 25 companies at a total cost of £16.3 million. Reflecting the trend
of deals available, the Directors' valuation as at 31 August 2002 comprised:
48.6% development capital; 38.2% management buy-outs; and 13.2% acquisition
finance.
The following new investments have been made since the publication of the annual
report:
Transys Projects Limited (May 2002) - £825,000: Based in Birmingham, Transys
supplies engineering services to the rail industry, predominantly in the UK.
Transrent Holdings Limited (June 2002) - £348,774: Operating from Stafford,
Transrent is one of the fastest growing companies in the UK trailer rental
market, providing finance packages and transport solutions for all types of
hauliers from single unit operators to major blue chip organisations.
House of Dorchester Limited (September 2002) - £650,000: Based in Hampshire,
House of Dorchester is a manufacturer of premium quality chocolates producing a
variety of own brand and personalised individual and packaged chocolates and
bars for a wide diversity of customers.
Performance
The strength of sterling, combined with UK interest rates that are now
relatively high in international terms, has made the environment for
manufacturing companies particularly difficult for some considerable time. These
conditions, in the context of the relentless falls in stock markets around the
world, continue to have an adverse impact on valuations in the investment
portfolio.
The Net Asset Value (NAV) per share at 31 August 2002, before payment of the
interim dividend, was 88.2p compared with 88.6p at 28 February 2002. This
decrease in NAV of 0.5% compares with significant reductions in stock market
indices generally and, in particular, the FTSE SmallCap Index which fell by
15.8% over the period and the FTSE AIM Index and FTSE techMark 100 Index which
fell by 26.4% and 34.6% respectively.
Portfolio developments
Economic conditions remain extremely difficult and, in addition, banking terms
are becoming noticeably more robust. We have supported a number of companies in
the portfolio with additional investment but there have been several
disappointments with the failures of Cool Beans and Interak. The first had
already been fully provided against before its failure; however the downturn in
trading at Interak and the failure to secure adequate banking facilities for the
future meant that we could not justify further investment. In light of the
substantial fall in stock markets, further reductions in valuations have been
necessary.
Trade sales will be pursued and, although current market conditions greatly
hamper this process a limited number of sales should occur where conditions and
underlying performance offer attractive exits. The unlisted portfolio comprises
entirely private equity minority stakes, which by their nature are illiquid and
can be sold only as part of a planned process.
Dividends and returns to date
In the Annual Report for the year ended 28 February 2002, the Board proposed a
final dividend of 1.5p per share. The dividend was paid on 22 July 2002 to
shareholders on the register at close of business on 28 June 2002. The Board now
declares an interim dividend of 1p per share to be paid on 10 December 2002 to
shareholders on the register on 15 November 2002.
Since the Company's launch, most shareholders will have received 6.3p in tax
free dividends. To an investor who took advantage of the initial tax relief ,
this represents a return of over 7% of the effective initial investment cost of
80p per share. This is equivalent to an annual dividend yield of 4.34% from a
conventional listed equity for a higher rate taxpayer. This yield ignores the
benefit of capital gains tax deferrals which some shareholders may have
received. This compares with the FTSE SmallCap yield of 2.8% and FTSE All-Share
yield of 3.28%. The total return of 93.5p, being the sum of dividends paid plus
NAV, compares with the initial net subscription cost of 80p, for a shareholder
who subscribed at launch.
Dividend reinvestment
Shareholders may opt to reinvest their dividends in new Murray VCT 4 shares and
enjoy the same tax reliefs as were available on their initial investments. Full
details of the terms and conditions applicable to the reinvestment of dividends
are available from the Manager.
Valuation process
Murray VCT 4's investments in unlisted companies are valued in accordance with
the British Venture Capital Association guidelines. Investments are normally
valued at cost, or cost less a provision, until they have been held for at least
one year. As a result, should performance be ahead of plan, which may imply an
increase in the value of the investment, this would not be reflected for at
least 12 months; on the other hand, any material underperformance would be
immediately reflected in a reduced valuation. Listed equities and AIM stocks are
valued at their mid-market price, discounted where necessary to reflect any
trading restrictions.
In the short-term the NAV on its own is not, in the Board's view, the most
critical measure of performance as the underlying investments are long-term in
nature and not readily realisable. Valuations of the unlisted investments tend
to be conservative and therefore the true potential value will not be reflected
until an investment is realised. The most important measures for a VCT are the
long term record of dividend payments and the timing of these payments over the
life of the Company.
Board of Directors
As previously announced, Sir Gavin Laird (69), who will reach age 70 prior to
the next annual general meeting of the Company, resigned as Chairman with effect
from 11 October 2002, but remains on the Board as a Director. The Board
gratefully acknowledges Sir Gavin's contribution as Chairman during his period
in office.
Mr A E Whitworth (67), who has served as a Director since 19 January 2000, was
appointed Chairman, also with effect from 11 October 2002.
Outlook
The portfolio includes a core of investments whose prospects should be good but,
given the current backdrop of poor economic and market conditions, it could be
some time before those prospects can be demonstrated in profitable realisations.
The Manager is continuing to work with the portfolio companies to improve
performance with a view to maximising the proceeds from eventual exits.
Murray VCT 4 is not yet fully invested, however the Manager will continue to
make new investments, where possible in larger companies, until an investment
level of around 85% is achieved. The recent falls in stock market indices have
led to more realistic pricing expectations in the private equity market. This,
together with the continuing strong deal flow being generated by the Aberdeen
Murray Johnstone network of seven offices, ensures a continual flow of
opportunities in which the Company can invest.
MURRAY VCT 4
SUMMARY OF INVESTMENT CHANGES
For the six months ending 31 August 2002
Valuation Net investment Appreciation Valuation
28 February 2002 (disinvestment) (depreciation) 31 August 2002
£'000 % £'000 £'000 £'000 %
Unlisted investments
Equities 3,048 8.9 750 (233) 3,565 10.7
Preference shares 449 1.3 289 (31) 707 2.1
Loan stock 5,732 16.8 2,342 (490) 7,584 22.6
9,229 27.0 3,381 (754) 11,856 35.4
Listed investments
Fixed income 24,671 72.2 (3,458) 112 21,325 63.6
Total investments 33,900 99.2 (77) (642) 33,181 99.0
Other net assets 270 0.8 82 - 352 1.0
Total assets* 34,170 100.0 5 (642) 33,533 100.0
*Total assets represents equity shareholders' funds
MURRAY VCT 4 PLC
INVESTMENT PORTFOLIO SUMMARY
As at 31 August 2002
% of
Valuation total
Unlisted investments Nature of business £'000 assets
CCM Motorcycles Motorcycle manufacturer 1,115 3.3
Conveco Convenience store operator 1,000 3.0
TLC (Tender Loving Childcare) Operator of day care nurseries 978 2.9
Synexus Management of clinical trials 927 2.8
Transys Supplier of engineering services and equipment to UK Rail
Industry 825 2.5
Visual Gold Creative design and animation services 698 2.1
Mercury Inns Operator of freehold food-led pubs and consultancy
services 644 1.9
ELE Advanced Technologies Precision engineering 641 1.9
First Line Supplier and distributor of automotive parts to
aftermarket 641 1.9
Link Up Mitaka Provider of language translation services 601 1.8
Other investments valued individually at less than £600,000 3,786 11.3
11,856 35.4
Listed fixed income investments
Treasury 5% 7/6/2004 6,346 18.9
Treasury 8.5% 7/12/2005 5,124 15.3
Treasury 6.5% 7/12/2003 3,819 11.4
European Investment Bank 6% 26/11/2004 3,621 10.8
Treasury 8% 10/6/2003 2,415 7.2
21,325 63.6
Total investments 33,181 99.0
MURRAY VCT 4 PLC
INDEPENDENT REVIEW REPORT TO MURRAY VCT 4 PLC
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 31 August 2002 which comprises the Profit and Loss Account,
Statement of Total Recognised Gains and Losses, Balance Sheet, Cash Flow
Statement and the related notes 1 to 4. We have read the other information
contained in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not express
an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 August 2002.
Ernst & Young LLP
Glasgow
15 October 2002
Murray VCT 4 PLC
Profit and Loss Account
For the six months ended 31 August 2002 (unaudited)
Six months to Six months to Year ended
31 August 31 August 28 February
2002 2001 2002
£'000 £'000 £'000
(restated)
Investment income 1,035 1,033 2,047
Other income 5 13 17
Investment management fees (505) (433) (854)
Other expenses (83) (86) (224)
Operating profit 452 527 986
(Loss) profit on realisation of investments (38) (13) 3
Profit on ordinary activities before taxation 414 514 989
Tax on ordinary activities (123) (178) (308)
Profit on ordinary activities after taxation 291 336 681
Ordinary dividends on equity shares:
Interim 1.0p (2001 - 1.0p) (385) (385) (385)
Final 1.5p (2001 - 1.8p) - - (578)
Over accrual in prior years 2 - -
Balance transferred from reserves (92) (49) (282)
Earnings per share (pence) 0.8 0.9 1.8
Statement of Total Recognised Gains and Losses
For the six months ended 31 August 2002 (unaudited)
Six months to Six months to Year ended
31 August 31 August 28 February
2002 2001 2002
£'000 £'000 £'000
(restated)
Profit on ordinary activities after taxation 291 336 681
Unrealised loss on revaluation of investments (604) (1,189) (2,463)
Taxation attributable to unrealised gains and losses on
investments 102 178 305
Total recognised losses relating to the year (211) (675) (1,477)
Murray VCT4 PLC
Balance Sheet
As at 31 August 2002 (unaudited)
31 August 31 August 28 February
2002 2001 2002
£'000 £'000 £'000
restated
Fixed assets
Investments 33,181 35,465 33,900
Current assets
Debtors 1,047 798 805
Cash and short-term deposits 94 461 343
1,141 1,259 1,148
Creditors
Amounts falling due within one year 789 1,234 878
Net current assets 352 25 270
33,533 35,490 34,170
Capital and reserves (Note 3)
Called up share capital 3,846 3,849 3,856
Share premium 17,101 32,718 17,021
Revaluation reserve (2,632) (919) (2,065)
Capital redemption reserve 19 - -
Profit and loss account 15,199 (158) 15,358
Equity shareholders' funds 33,533 35,490 34,170
Net Asset Value per Ordinary share (pence) 87.2 92.2 88.6
Murray VCT4 PLC
Cash Flow Statement (unaudited)
For the six months ended 31 August 2002
Six months to Six months to Year ended
31 August 31 August 28 February
2002 2001 2002
£'000 £'000 £'000
Operating activities
Investment income received 880 905 2,028
Deposit interest received 3 15 19
Investment management fees paid (415) (381) (807)
Secretarial fees paid (31) (30) (60)
Cash paid to and on behalf of Directors (21) (29) (56)
Other cash payments (41) (41) (114)
Net cash inflow from operating activities 375 439 1,010
Taxation 36 - (544)
Financial investment
Purchase of investments (7,430) (2,883) (4,444)
Sale of investments 7,388 2,679 4,420
Net cash outflow from financial investment (42) (204) (24)
Equity dividends paid (576) (690) (1,075)
Net cash outflow before financing (207) (455) (633)
Financing
Issue of Ordinary shares 90 118 178
Repurchase of Ordinary shares (132) - -
Net cash (outflow) inflow from financing (42) 118 178
Decrease in cash (249) (337) (455)
Murray VCT 4 PLC
Notes to the Financial Statements
1. Accounting policies
The financial information contained in this report has been prepared on the
basis of the accounting policies set out in the Annual Report for the year
ended 28 February 2002. The results for the year ended 28 February 2002 are
abridged from the full accounts for that year, which received an unqualified
report from the Auditors and have been filed with the Registrar of
Companies.
2. Changes in the presentation of financial statements
The comparative figures for the six months to 31 August 2001 have been restated
in line with the changes in the presentation required following the companies
revokation on 23 October 2001 of its investment company status, as disclosed in
the annual report to 28 February 2002.
The effect of the restatement has been to reduce the profit on ordinary
activities after taxation, equivalent to the revenue return on ordinary
activities after taxation under the previous presentation, by £209,000 in
respect of the six months to 31 August 2001 reflecting the net loss on
realisation of investments, investment management fees and other expenses
charged to the profit and loss account.
In the balance sheet, the revenue reserve and realised capital losses presented
in prior periods have been combined into the profit and loss account. The
revaluation reserve records revaluation amounts previously included in the
unrealised capital reserve.
3. Movement in reserves
Share Capital Profit
premium Revaluation redemption and loss
account reserve reserve account
£'000 £'000 £'000 £'000
As at 1 March 2002 17,021 (2,065) - 15,358
Issue of shares 80 - - -
Repurchase and cancellation of shares - - 19 (132)
Transfer of realised gains to profit and
loss account - (93) - 93
Tax effect of transfer of profits to profit
and loss account - 28 - (28)
Taxation attributable to unrealised loss on
investment - 102 - -
Net decrease in value of investments - (604) - -
Loss for the period - - - (92)
As at 31 August 2002 17,101 (2,632) 19 15,199
4. Earnings and NAV per share
Returns per ordinary share have been calculated using the average number of
shares in issue during the period of 38,486,729. Net asset values per ordinary
share have been calculated using the number of shares in issue at 31 August 2002
of 38,468,621.
A full copy of the interim report will be printed and issued to shareholders.
The results for the six months ended 31 August 2002 will be filed with the
Registrar of Companies.
Copies of this announcement will be available at the registered office of the
Company, One Bow Churchyard, Cheapside, London EC4M 9HH and at Aberdeen's office
at 123 St Vincent Street, Glasgow G2 5EA.
By Order of the Board
MURRAY JOHNSTONE LIMITED
SECRETARY
15 October 2002
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