Final Results
Close Brothers Venture Cap Tst PLC
18 June 2002
18 June 2002
CLOSE BROTHERS VENTURE CAPITAL TRUST PLC ('the Company')
• Preliminary results for the year ended 31 March 2002
• Resolution to continue as a VCT for a further five years
• Proposed increase in borrowing powers
• Proposed Tender Offer to purchase up to 10% of the Company's shares
Financial Highlights:
Year ended Year ended
31 March 2002 31 March
2001
Total return per share 11.7 pence 8.8 pence
Net dividends per share 7.50 pence 7.50 pence
Net asset value per share 106.24 pence 101.95 pence
Shareholder value created for each class of share since launch:
Ordinary 'C'
Shares Shares
pence per share pence per share
Gross dividends for the year ended 31 March 1997 5.00 -
Gross dividends for the year ended 31 March 1998 6.00 5.00
Gross first and second interim dividends and net final dividend for
the year ended 31 March 1999
7.75 6.25
Net revenue and capital dividends for the year ended 31 March 2000 8.55 4.50
Net revenue and capital dividends for the year ended 31 March 2001 7.50 7.50
Net revenue dividends for the year ended 31 March 2002 7.50 7.50
Net asset value at 31 March 2002 106.24 106.24
Total 148.54 136.99
* Dividends paid before 5 April 1999 were paid to qualifying shareholders inclusive of the associated
tax credit. The dividends for the year to 31 March 1999 were maximised in order to take advantage of
this tax credit.
* The capital dividend of 2.55 pence in the year to 31 March 2000 enabled the Ordinary Shares and the
C Shares to merge on an equal basis.
Commenting on the results, David Watkins, Chairman, said: 'The progress of the
Company's investment portfolio during the year has been encouraging. As the
portfolio has matured, not only have the values risen, but also the level of
income generated by investments has increased substantially too. It is
particularly pleasing to note that, in market conditions that have not been
easy, the Company's net asset value per Share has risen by over 4 per cent to
106.24 pence, which, when combined with the dividend of 7.5 pence, has resulted
in an overall total return of 11.7 pence per Share. The Company is now shown to
have the highest total return of all VCTs launched in the 1995/6 and 1996/7 tax
years+.'
+ Source: Allenbridge
'Looking forward, the board intends to continue its strategy of a progressive
dividend policy and of building on the current level of pay out of 7.5 pence per
annum, by utilising profits generated from both revenue and from realised
capital profits.'
In addition to the announcement of the preliminary results, the board is also
proposing to shareholders that the Company continues as a VCT for a further five
years, the Company's borrowing powers be increased and that a Tender Offer be
made by which the Company may purchase or procure purchases of up to 10% of the
Company's shares at a price of 100 pence per share.
Patrick Reeve, Managing Director of Close Venture Management, said: 'We are
extremely happy with the performance of the Close Brothers VCT in that it
continues to meet our investment objectives of minimising risk to investors
whilst maintaining an attractive yield. It is also worth noting that this
particular VCT has a unique investment policy in that it invests in such asset
based areas as the hotel, care home and residential development sectors -
sectors that, following the 1998 budget, were forbidden from being invested in
by new VCTs. Additionally, as new VCTs cannot replicate this structure, we
decided to launch an Open Ended Investment Company (OEIC)* to invest alongside
the Close Brothers VCT in order to offer new investors the opportunity to take
advantage of the attractive returns already enjoyed by our existing
shareholders.'
For further information, please contact:
Patrick Reeve/ Ole Bettum Justin Griffiths/ John West
Close Venture Management Tavistock Communications
Tel: 020 7426 4000 Tel: 020 7600 2288
* The OEIC launched to invest alongside the Close Brothers VCT is called the
Healthcare & Leisure Property Fund. Investors who would like more information
can call 0800 917 7107.
Notes to Editors:
1) Close Brothers Venture Capital Trust PLC is managed by Close
Venture Management.
2) Close Venture Management is a subsidiary of Close Brothers
Group plc and is regulated by the FSA.
3) The financial information set out in this announcement does
not constitute the company's statutory accounts for the years ended 31 March
2002 or 2001, but is derived from those accounts. Statutory accounts for 2001
have been delivered to the Registrar of Companies and those for 2002 will be
delivered shortly. The auditors have reported on these accounts, their reports
were unqualified and did not contain statements under s237(2) or (3) Companies
Act 1985.
4) Audited Financial Statements for the year will be sent to
shareholders shortly.
CHAIRMAN'S STATEMENT
Introduction
The progress of the Company's investment portfolio during the year has been
encouraging. As the portfolio has matured, not only have the values risen, but
also the level of income generated by investments has increased substantially.
This has allowed the Company's total dividend to be maintained at last year's
level of 7.5 pence, despite the fact that, unlike last year, no payments are
being made out of realised capital profits. Looking forward, the board intends
to continue its strategy of a progressive dividend policy and of building on the
current level of pay out, by utilising profits generated both from revenue and
from profits on disposal of investments.
Although no investments were made in new companies during the year, two
investments with a cost of £2.15 million were disposed of and a further £4.6
million was invested in existing investee companies, either under arrangements
in respect of amounts reserved for investment, or where further funds were
deemed justified to enhance the overall value. It is particularly pleasing to
note that, in market conditions that have not been easy, the Company's net asset
value per Share has risen by over 4 per cent to 106.2 pence, which, when
combined with the revenue return, has resulted in an overall total return of
11.7 pence per Share. This builds on strong returns over previous year and the
Company is now shown to have the highest total return of all VCTs launched in
the 1995/6 and 1996/7 tax years (Source: Allenbridge).
Review of Investments
Our key investment areas continue to be the hotel, residential property
development and care home sectors, with other asset-based areas continuing to be
reviewed, as characterised by our investment in our Cambridge cinema and our
Beaconsfield health and fitness club.
In the hotel sector, despite the tragic events of 11 September last year, our
units have continued to perform well. Following the receivership of Premier
Hotels Limited, our partner in Premier VCT (Bristol) which operates the Express
by Holiday Inn in central Bristol, we elected to take full control of the
Company by buying Premier's stake. This means that the investment is no longer
qualifying for VCT purposes, and we are in the process of disposing of the unit.
Its continued strong performance has led to another increase in its carrying
value and, if negotiations currently underway bear fruition, we will see a
further increase in its value on sale. The receiver of Premier Hotels Limited
continues to hold the remaining 50% of Premier VCT (Mailbox), which owns and
operates the 90 room Days Inn hotel in the Mailbox development in central
Birmingham. This unit continues to be valued at slightly below cost, though we
remain optimistic for its future prospects. The 50 room Hawkwell House Hotel in
Oxford continues to perform well, and we, in conjunction with the other 50%
shareholder Regal Hotels PLC, have recently put the unit on the market with a
view to a sale.
There are currently a variety of interesting potential new investments in the
hotel sector which are under review, and the Manager considers that, despite the
challenging environment for hotels overall, carefully selected and well managed
units can be a continuing source of profits for the Company.
In the residential development sector, which is restricted to 20 per cent. of
the portfolio, we currently have four companies established with separate
developers. During the year we sold our holding in Portland Homes (Woodside
Green) at a small profit, and the proceeds were re-invested in our other
residential development companies. These have continued to be a useful source
of income for the Company, with particularly good results from Country &
Metropolitan VCT, which develops residential units in and around Yorkshire.
In the care home sector our principal area of investment during the year
continued to be homes for people with learning disabilities in East Anglia. The
first four of such homes in which we have invested, in Witham in Essex, in Bury
St Edmunds, in Thetford in Norfolk and in Ipswich are performing well, with the
first showing a substantial increase in value over last year. Our fifth home in
March, in Cambridgeshire opened during the year and we continue to review
further opportunities in the sector. We disposed of one of our homes for the
frail and elderly, the Harnham Croft nursing home in Salisbury, where
performance continued to be disappointing and we recorded a small loss on sale
of £128,000. The 55 bed nursing home in Hornchurch, however, is now full and
performing in accordance with our original expectations; the value of the home
has been written up accordingly and is now valued at above cost.
As regards our other areas for investment, the Cambridge Picture House cinema
has now been open for 30 months and is performing according to plan, while the
health club owned by Odyssey Glory Mill, which opened in April 2001, continues
to perform above expectations. It now has a membership of over 3,900, although
its value has fallen slightly since last year, in line with a general softening
of values in the health and fitness market.
Results and Dividend
As at 31 March 2002 the net asset value was £41.5 million or 106.24 pence per
share, which compares with a net asset value at 31 March 2001 of £39.9 million
or 101.95 pence per Ordinary Share. Net income before taxation was £3.4 million
(2001: £3.2 million) enabling the board to declare a net final revenue dividend
of 4.9 pence per share, making 7.5 pence for the full year (2001: 6.25 revenue
dividend and a special capital dividend of 1.25 pence per share). The increase
in management fees over the period reflects provisions made in respect of the
management performance incentive, which now amounts to £598,000 and which
reflects the out performance of the Company against its original targets.
The final dividends for the year ended 31 March 2002 will be paid on 2 August
2002 to shareholders registered on 28 June 2002.
Members Resolution at the Annual General Meeting
Under the terms of the Company's Articles of Association, members have the
opportunity, at the time of this year's Annual General Meeting, and every five
years thereafter, to confirm that they wish the Company to continue as a venture
capital trust, and Shareholders will note that an appropriate resolution is
included in the business to be considered at the Annual General Meeting. Given
the performance of the Company, and in particular the strong tax free dividend
stream it generates, the board hopes that shareholders will vote for the VCT to
continue. If a majority of shareholders vote to support the continuation of the
Company's activities the Board is proposing a Tender Offer by which the Company
may purchase or procure purchasers for up to 10 per cent. of the Company's
shares at a price of 100 pence per share. Further details of this, along with
proposals to increase the Company's borrowing powers, are included in a circular
which is being sent to shareholders.
David Watkins
Chairman 18 June 2002
THE PORTFOLIO OF INVESTMENTS
The following is a summary of qualifying investments made at 31 March 2002,
comprising amounts invested and scheduled for investment, and after including
the revaluations referred to in the Chairman's statement above:
Investee Company Investment
Investment at Revaluation Total Reserved for
Cost investment
£'000 £'000 £'000 £'000
Care Homes
Broadoaks VCT Ltd 1,450 94 1,544 135
Churchcroft VCT Ltd 1,550 390 1,940 -
Drummond Court VCT Ltd 1,500 303 1,803 -
Fryers Walk VCT Ltd 1,575 236 1,811 -
Hornchurch VCT Ltd 2,850 28 2,878 -
Lombardy Court VCT Ltd 1,275 19 1,294 -
Hotels
Hawkwell VCT Ltd 3,380 727 4,107 -
Premier VCT (Mailbox) Ltd 3,000 (243) 2,757 1,000
Residential Development
Chase Midland VCT Ltd 1,600 - 1,600 -
Country & Metropolitan VCT Ltd 3,000 - 3,000 -
Saxon VCT Ltd 2,200 - 2,200 -
Youngs VCT Ltd 1,200 - 1,200 -
Other Investments
City Screen (Cambridge) Ltd 1,210 (61) 1,149 -
Odyssey Glory Mill Ltd 3,000 1,190 4,190 1,000
Total 28,790 2,683 31,473 2,135
Non-qualifying investments
Investee Company Investment
Investment at Revaluation Total
Cost
£'000 £'000 £'000
Hotel
Premier VCT (Bristol) Limited 4,321 1,784 6,105
Residential Development
Cathedral Homes Ltd 40 - 40
Total 4,361 1,784 6,145
Further details of Qualifying Investments, including details of the other
shareholder in each of the investee companies and the current amounts invested
and reserved for investment, are given below.
Care Homes
1. Broadoaks VCT Limited
Broadoaks VCT has been established to develop and operate a 30 bed purpose-built
home for residents with learning disabilities in March, Cambridgeshire. The
home opened in April 2002.
Date of investment: September 2000
Other 50% shareholder: InterCare Residential Limited
Amount invested at 31 March 2002: £1.45 million
Further amount reserved for investment: £135,000
2. Churchcroft VCT Limited
Churchcroft VCT owns a 34 bed purpose-built home for residents with learning
disabilities in Witham, Essex. The home is trading satisfactorily.
Date of investment: June 1998
Other 50% shareholder: InterCare Residential Limited
Amount invested at 31 March 2002: £1.55 million
Further amount reserved for investment: Nil
3. Drummond Court VCT Limited
Drummond Court VCT is a 36 bed home for residents with learning disabilities in
Bury St. Edmunds, Suffolk. The home opened in 1999, and is trading above
expectations.
Date of investment: September 1998
Other 50% shareholder: InterCare Residential Limited
Amount invested at 31 March 2002: £1.5 million
Further amount reserved for investment: Nil
4. Fryers Walk VCT Limited
Fryers Walk VCT owns and operates a 34 bed home for residents with learning
disabilities in Thetford, Norfolk, which opened in 2001. It is currently
trading in line with expectations.
Date of investment: March 1999
Other 50% shareholder: InterCare Residential Limited
Amount invested at 31 March 2002: £1.575 million
Further amount reserved for investment: Nil
5. Hornchurch VCT Limited
This company was established to develop and operate a new nursing home at
Hornchurch in Essex, some three miles within the M25. The 55 bed home opened in
January 1998. After a slow build up in occupancy, the home is now approaching
100% full and is trading in line with initial expectations. The home has
consequently been revalued to a small premium over cost.
Date of investment: September 1996
Other 50% shareholder: ANS plc
Amount invested at 31 March 2002: £2.85 million
Further amount reserved for investment: Nil
6. Lombardy Court VCT Limited
The company owns and operates a 24 bed home for residents with learning
disabilities in the centre of Ipswich. The home opened in 2001 and is in the
process of filling.
Date of investment: January 2000
Other 50% shareholder: InterCare Residential Limited
Amount invested at 31 March 2002: £1.275 million
Further amount reserved for investment: Nil
Hotels
7. Hawkwell VCT Limited
This company owns and operates a 50 room three star hotel at Iffley in Oxford.
The hotel, which caters for a range of private and corporate clients and also
serves the strong conference market in the Oxford area, is performing well and
has recently been put on the market with a view to a sale.
Date of investment: July 1997
Other 50% shareholder: Regal Hotels plc
Amount invested at 31 March 2002: £3.38 million
Further amount reserved for investment: Nil
8. Premier VCT (Mailbox) Limited
This company was formed to build and operate a 90 room hotel operating under the
Days Inn brand at the Mailbox site in the centre of Birmingham. Cost increases
and a delay in opening led to a write down against cost. Nevertheless the hotel
is now performing in line with expectations.
Date of investment: December 1999
Other 50% shareholder: Premier Hotels Limited
Amount invested at 31 March 2002: £3 million
Further amount reserved for investment: £1 million
Residential Development
9. Chase Midland VCT Limited
The company has now completed construction of its fourth development comprising
11 homes in the Walmley, Sutton Coldfield area of Birmingham, all of which have
been sold or reserved. It is currently assessing a 4 unit development in
central Nottingham.
Date of investment: March 1997
Other 50% shareholder: Chase Midland plc
Amount invested at 31 March 2002: £1.6 million
Further amount reserved for investment: Nil
10. Country & Metropolitan VCT Limited
The company is close to completing its seventh development, a 21 apartment
scheme in the Moor Allerton area of Leeds and has commenced work on a 40 unit
scheme in the Rodley area of Leeds.
Date of investment: November 1996
Other 50% shareholder: Country & Metropolitan Homes plc
Amount invested at 31 March 2002: £3 million
Further amount reserved for investment: Nil
11. Saxon VCT Limited
This company is currently undertaking its fourth and fifth developments,
comprising an 11 unit scheme in Dorchester and a 2 home scheme in
Henley-on-Thames. A suitable follow on site is being sought.
Date of investment: September 1996
Other 50% shareholder: Saxon Developments Ltd
Amount invested at 31 March 2002: £2.2 million
Further amount reserved for investment: Nil
12. Youngs VCT Limited
Following a very successful first development of 8 apartments overlooking the
Isle of Wight at Lee-on-the-Solent, the Company is currently selling a 4 bedroom
house at Steep Marsh, near Petersfield and is converting a Grade II Listed hall
in Funtington, near Chichester, into 4 units.
Date of investment: March 2000
Other 50% shareholder: Youngs Developments Ltd
Amount invested at 31 March 2002: £1.2 million
Further amount reserved for investment: Nil
Other Investments
13. City Screen (Cambridge) Limited
The company was formed to develop and operate a three screen 'art-house' cinema
in the centre of Cambridge. The cinema opened in August 1999 and cash
subsequently generated enabled the Company to pay a management fee of £50,000 to
each shareholder.
Date of investment: July 1999
Other 50% shareholder: City Screen Limited
Amount invested at 31 March 2002: £1.21 million
Further amount reserved for investment: Nil
14. Odyssey Glory Mill Limited
The company was formed to develop and operate a 32,000 square foot health and
fitness club on a five acre site outside Beaconsfield. The club opened in April
2001 and now has approximately 3,900 members.
Date of investment: December 1999
Other 50% shareholder: Odyssey Clubs Group Plc
Amount invested at 31 March 2002: £3 million
Further amount reserved for investment: £1 million
Close Brothers Venture Capital Trust PLC
Statement of Total Return
(incorporating the revenue account)
for the year ended 31 March 2002
Year ended 31 March 2002 Year ended 31 March 2001
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments - 2,306 2,306 - 1,388 1,388
Investment income 4,018 - 4,018 3,700 - 3,700
Investment management fees (519) (787) (1,306) (373) (407) (780)
Other expenses (85) (85) (170) (90) (90) (180)
Return on ordinary activities
before tax 3,414 1,434 4,848 3,237 891 4,128
Tax on ordinary activities (469) 214 (255) (763) 107 (656)
Return attributable to
shareholders 2,945 1,648 4,593 2,474 998 3,472
Dividends (2,930) - (2,930) (2,448) (489) (2,937)
Transfer to reserves 15 1,648 1,663 26 509 535
Return per share (pence) 7.5p 4.2p 11.7p 6.3p 2.5p 8.8p
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued in the year.
Close Brothers Venture Capital Trust PLC
Balance Sheet
at 31 March 2002
31 March 2002 31 March 2001
£'000 £'000
Fixed asset investments
Qualifying:
Scheduled for investment 33,608 37,147
less: uninvested (2,135) (4,500)
Net investments to date 31,473 32,647
Non-qualifying investments: 6,145 2,040
Total fixed asset investments 37,618 34,687
Current assets
Debtors and accrued income 700 225
Short term money market deposits 6,250 7,577
6,950 7,802
Creditors: due within one year (3,051) (2,552)
Net current assets 3,899 5,250
Total assets less current liabilities 41,517 39,937
Capital and reserves
Called up share capital 19,539 19,589
Special reserve 17,324 17,407
Capital redemption reserve 314 264
Realised capital reserve 27 503
Unrealised capital reserve 4,109 1,985
Profit and loss account 204 189
Total shareholders' funds 41,517 39,937
Net asset value per share 106.2p 101.9p
Close Brothers Venture Capital Trust PLC
Cash Flow Statement
for the year ended 31 March 2002
Year ended 31 March Year ended
2002
31 March 2001
£'000 £'000
Operating activities
Investment income received 3,102 3,107
Dividend income received 297 280
Deposit interest received 221 299
Other income received 250 50
Investment management fees paid (767) (714)
Other cash payments (175) (183)
Net cash inflow from operating activities 2,928 2,839
Taxation
UK corporation tax paid (574) (662)
Investing activities
Purchase of qualifying investments (4,646) (6,265)
Disposals of qualifying investments 2,021 6,759
Disposals of non-qualifying investments 2,000 1,215
Net cash (outflow)/ inflow from investing activities (625) 1,709
Equity dividends paid
Revenue dividends paid on ordinary shares (2,484) (2,174)
Capital dividends paid on ordinary shares (489) (612)
Net cash (outflow)/ inflow before financing (1,244) 1,100
Financing
Capital restructuring expenses - (6)
Redemption of own shares (83) (205)
Net cash outflow from financing (83) (211)
(Decrease)/ increase in cash and cash equivalents (1,327) 889
This information is provided by RNS
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