Final Results

Close Brothers Venture Cap Tst PLC 06 July 2006 6 July 2006 CLOSE BROTHERS VENTURE CAPITAL TRUST PLC ('the Company') Preliminary results for the year ended 31 March 2006 Close Brothers Venture Capital Trust PLC ('the Company'), which invests in unquoted companies providing a high level of asset backing for the capital value of the investment, today announces preliminary results for the year ended 31 March 2006. The announcement has been approved by the Board of Directors on 5 July 2006. Financial Highlights 31 March 2006 31 March 2005 (restated*) Dividends paid per ordinary share (pence) 11.75 9.75 Revenue return per ordinary share (pence) 5.96 5.87 Capital return per ordinary share (pence) 1.56 5.91 Net asset value per ordinary share (pence) 116.49 120.64 Shareholder value created per share since launch*: Ordinary 'C' shares shares (Pence) (Pence) Gross revenue dividends paid during the year ended 31 March 1997 2.00 - Gross revenue dividends paid during the year ended 31 March 1998 5.20 2.00 Gross interim dividends and net final dividend paid during the year ended 31 March 1999 11.05 8.75 Net revenue and capital dividends paid during the year ended 31 March 2000 3.00 2.70 Net revenue and capital dividends paid during the year ended 31 March 2001 8.55 4.80 Net revenue dividends paid during the year ended 31 March 2002 7.60 7.60 Net revenue and capital dividends paid during the year ended 31 March 2003 7.70 7.70 Net revenue and capital dividends paid during the year ended 31 March 2004 8.20 8.20 Net revenue and capital dividends paid during the year ended 31 March 2005 9.75 9.75 Net revenue and capital dividends paid during the year ended 31 March 2006 11.75 11.75 ---------------------------- Total dividends paid to date 74.80 63.25 Net asset value 116.49 116.49 ---------------------------- Total return to 31 March 2006 191.29 179.74 ---------------------------- *The change in presentation of the above table in comparison to prior periods reflects the adoption of FRS 21 which requires only dividends paid or approved by shareholders to be disclosed in each period. See note 5 to this announcement for further explanation. For further information, please contact: Patrick Reeve Clemmie Carr/John West Close Venture Management Limited Tavistock Communications Tel: 020 7422 7830 Tel: 020 7920 3150 Notes 1) Close Brothers Venture Capital Trust PLC is managed by Close Venture Management Limited. 2) Close Venture Management Limited is authorised and regulated by the Financial Services Authority. 3) The financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 31 March 2006 or 2005, but is derived from those accounts. The restated financial information for the year ended 31 March 2005 is derived from the statutory accounts for that year (see note 5). These statutory accounts prior to the restatement changes as described in note 5 below have been delivered to the Registrar of Companies. The financial information for the year ended 31 March 2006 has been derived from the statutory accounts for the year which will be delivered to the Registrar of Companies shortly. The auditors reported on those accounts; their report was unqualified and did not contain statements under s237 (2) or (3) Companies Act 1985. 4) There were no changes in equity other than those arising from capital transactions with owners and distributions to owners. 5) Changes in accounting policies With effect from 1 April 2005, the Company adopted the new Financial Reporting Standards ('FRS') 21-26, that have been issued by the Accounting Standards Board as part of the convergence process between United Kingdom Generally Accepted Accounting Practice with International Financial Reporting Standards ('IFRS'). In the case of FRS 25 and 26, the Company applied the exemption from restating 2005 comparative figures on transition at 1 April 2005. The effects of the relevant accounting policies are disclosed in the respective notes below; restatement and adjustment of the relative comparative figures are detailed below. Investments In accordance with FRS 26 'Financial Instruments Measurement', equity investments are designated as fair value through profit or loss ('FVTPL'). The total column of the Statement of Total Return represents the Company's profit and loss account. Unquoted investments' fair value is determined by the Directors in accordance with the International Private Equity and Venture Capital Valuation Guidelines. Fair value movements on equity investments and gains and losses arising on the disposal of investments are reflected in the capital column of the Statement of Total Return in accordance with the AITC SORP. Unquoted loan stock is designated as loans and receivables in accordance with FRS 26 and carried at amortised cost using the Effective Interest Rate ('EIR') method. Movements in the amortised cost relating to interest income are reflected in the revenue column of the Statement of Total Return and movements in respect of capital provisions are reflected in the capital column of the Statement of Total Return. Loan stock accrued interest is recognised in the Balance Sheet as part of the carrying value of loans and receivables at the end of each reporting period. Investments are recognised as financial assets on legal completion of the investment contract and are de-recognised on legal completion of the sale of an investment. Under the terms of the transitional provisions contained within FRS 26, the opening balances for revenue and unrealised capital reserves at 1 April 2005 in relation to the carrying values of loans and receivables and equity investment valuations have been adjusted to reflect the impact of the adoption of FRS 26. The adoption of FRS 26 has resulted in a increase in the revenue reserve as at 1 April 2005 as a result of the adjustment to the treatment of loan stock investment now held at amortised cost as determined by the EIR method. Dividends In accordance with FRS 21 'Events after the balance sheet date', dividends declared by the Company are accounted for in the period in which the dividend has been approved. Comparatives for revenue reserves at 31 March 2005 have been restated in recognition of a change in accounting policy. The adoption of FRS 21 has resulted in a decrease in the distribution liability as a result of the de-recognition of proposed dividends thereon and an increase in the revenue reserves as at 31 March 2005. A reconciliation of reserves incorporating the restatements and adjustments required by the adoption of FRS 21 and FRS 26 is illustrated below: Reconciliation of revenue reserves £'000 Revenue reserves previously reported at 31 March 2005 630 Restatement as required by adoption of FRS 21 - change in accounting for dividends 1,058 ----------------- Restated revenue reserves at 31 March 2005 1,688 Adjustment as required by adoption of FRS 26 - change in valuation of loan stock investments to amortised cost using the EIR method 27 ----------------- Revenue reserves as at 1 April 2005 as adjusted 1,715 ----------------- Reconciliation of realised capital reserves £'000 Realised capital reserves previously reported at 31 March 2005 3,478 Restatement as required by adoption of FRS 21 - change in accounting for dividends 646 ----------------- Realised capital reserves as at 1 April 2005 as adjusted 4,124 ----------------- The restatements and adjustments to reserves at 31 March 2005 and 1 April 2005 as described in note 5 above are noted in the reconciliation of reserves as follows: Special Capital Realised Unrealised Revenue reserve redemption capital capital reserve reserve reserve reserve £'000 £'000 £'000 £'000 £'000 At 31 March 2005 14,110 1,914 3,478 3,510 630 FRS 21 prior year adjustment - - 646 - 1,058 ---------------------------------------------- Restated opening reserves as at 31 March 2005 14,110 1,914 4,124 3,510 1,688 Adjustment at 1 April 2005 for FRS 26 - - - - 27 ---------------------------------------------- Adjusted opening reserves at 1 April 2005 14,110 1,914 4,124 3,510 1,715 Cancellation of shares - - - - - Capitalised fees and expenses - - (539) - - Tax effect of capitalised fees and expenses - - 162 - - Realised gains on investments - - - - - Increase in unrealised appreciation - - - 939 - Distributions - - (1,543) - - Retained net revenue - - - - (536) ---------------------------------------------- At 31 March 2006 14,110 1,914 2,204 4,449 1,179 ---------------------------------------------- With the exception of the revised accounting policies as described above, this announcement has been prepared on the basis of the accounting policies as stated in the previous years' financial statements. CHAIRMAN'S STATEMENT I am pleased to report that your Company's investment portfolio continues to show progress. Overall, including amounts previously reserved for investment, some £2.3m was invested in existing investee companies while £3.7m was invested in new companies. In addition, following the year end, the Company's two nursing home investments, Applecroft and Barleycroft Care Homes (based in Dover and Romford respectively) were sold for an aggregate capital profit of over £1m and a total rate of return on the investments of approximately 20% per annum. Your Company's net asset value per share is now 116.5 pence per share and the Company has recorded a Total Return of 7.5 pence per share for the year. Under the new accounting standards recently introduced, dividends are recognised in the year in which they are declared, rather than in respect of the year in which they are proposed. Total dividends paid in the financial year amounted to 11.75 pence. This included the final dividend of 4.75 pence for the previous financial year, along with the first interim dividend of 4.5 pence, and an additional second interim dividend which was specifically paid as a result of these changes. From now on, it is your Board's intention to pay first and second interim dividends, to be announced at the time of the final and interim results. Following the disposals referred to above, the Company's capital reserves continue to grow and it is now your Company's intention to pay out annual dividends of 10 pence per share paid out from both revenue and realised capital profits, for so long as its realised reserves enable it to do so. This further enhances the Company's established pattern of dividends and I am sure will be most welcome to shareholders. Review of investments and prospects Our key investment areas continue to be the hotel, care home, leisure and residential property development sectors. In the hotel sector both the former Days Inn Hotel at the Mailbox development in Birmingham (now rebranded under the Ramada brand) and in particular the 183 bedroom Express by Holiday Inn at Stansted Airport, performed well and showed a further uplift in value. We believe that both hotels have yet further capacity for growth. Against this, we have made provisions against the value of our three star hotels, The Bear at Hungerford, The Bell at Sandwich and the Crown at Harrogate. Each of these represents a turnaround opportunity, including refurbishment and the introduction of new management to existing long established and well respected hotels. Whilst the prospects of these units, we believe, remain strong and while their trading income has grown considerably, the turn-around processes are each taking longer than we initially anticipated. Until their trading potential is proven, we feel that it is prudent to make provisions against cost. Following the sale of the two nursing home investments, the Company does not currently have any nursing home investments. We are nevertheless looking at a number of potential investment opportunities in the south of England. In the leisure sector, meanwhile, we have made considerable progress in building up a portfolio of companies owning and operating public houses around the UK and have also invested in two new health and fitness club projects. The first, the Weybridge Club, is currently developing a club on a thirty-acre freehold site in Weybridge, Surrey. The second, Tower Bridge Healthclub, has developed a leasehold club just next to Tower Bridge on the south bank of the River Thames. The club opened in May and already has over 1,500 members. Our residential development companies, meanwhile, continue to operate satisfactorily in a quiet market. New accounting standards During the year, the Company adopted the new Financial Reporting Standards ('FRS') 21-26, which have been issued with the intention to move to more internationally consistent accounting treatment and disclosure. The effect of these changes is disclosed in full in note 5 to this announcement. The main effects of these changes on the accounts is to classify loan stock investments as 'loans and receivables' which are valued at amortised cost, and to account for dividends during the period in which they are declared. Results and dividends As at 31 March 2006 net asset value was £41.80m or 116.50 pence per share which compares with a re-stated net asset value at 31 March 2005 of £43.29m or 120.60 pence per share (which is stated before accruing for the final dividend of 4.75 pence per share). Revenue return before taxation was £2.68m compared to £2.88m for the previous period. The Board now declares a first dividend of 5 pence per share, including 2.50 pence paid out of realised capital reserves. This dividend will be paid on 4 August 2006 to shareholders registered on 14 July 2006. John Kerr Director 5 July 2006 STATEMENT OF TOTAL RETURN (incorporating the revenue account) Year ended 31 March 2006 Year ended 31 March 2005 (Restated)* Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments - 939 939 - 2,684 2,684 Investment income 3,044 - 3,044 3,384 - 3,384 Investment management fees (180) (539) (719) (263) (788) (1,051) Other expenses (183) - (183) (232) - (232) ------------------------------------------------------ Return on ordinary activities before interest and tax 2,681 400 3,081 2,889 1,896 4,785 Finance charge - - - (5) (16) (21) ------------------------------------------------------ Return on ordinary activities before tax 2,681 400 3,081 2,884 1,880 4,764 Tax on ordinary activities (544) 162 (382) (778) 241 (537) ------------------------------------------------------ Return attributable to shareholders 2,137 562 2,699 2,106 2,121 4,227 Dividends (2,673) (1,543) (4,216) (1,633) (1,864) (3,497) ------------------------------------------------------ Transfer (from)/ to reserves (536) (981) (1,517) 473 257 730 ------------------------------------------------------ Basic and diluted return per share (pence) 5.96 1.56 7.52 5.87 5.91 11.78 *Comparative figures have been restated in accordance with FRS 21 in respect of dividends as disclosed in note 5 to this announcement. The total column of this Statement of Total Return represents the profit and loss account of the Company in accordance with FRS 26. There are no recognised gains and losses other than the results for either year disclosed above. Accordingly a statement of total recognised gains and losses is not required. BALANCE SHEET 31 March 2006 31 March 2005 (Restated)* £'000 £'000 Fixed asset investments Qualifying investments 36,022 29,075 Non-qualifying investments 262 2 ------------------------------ Total fixed asset investments 36,284 29,077 Current assets Debtors 18 267 Cash at bank 5,842 14,737 ------------------------------ 5,860 15,004 Creditors: amounts falling due within one year (349) (796) ------------------------------ Net current assets 5,511 14,208 ------------------------------ Total assets less current liabilities 41,795 43,285 ------------------------------ Capital and reserves Called up share capital 17,939 17,939 Special reserve 14,110 14,110 Capital redemption reserve 1,914 1,914 Realised capital reserve 2,204 4,124 Unrealised capital reserve 4,449 3,510 Revenue reserve 1,179 1,688 ------------------------------ Total equity shareholders' funds 41,795 43,285 ------------------------------ Net asset value per share (pence) 116.5 120.6 * Comparative figures have been restated in accordance with FRS 21 in respect of declared dividends as disclosed in note 5 to this announcement. CASH FLOW STATEMENT Year ended Year ended 31 March 2006 31 March 2005 £'000 £'000 Operating activities Investment income 2,706 2,693 Dividend income 21 197 Deposit income 427 433 Other income 2 13 Investment management fees paid (1,006) (1,284) Administrative expenses paid (216) (218) ------------------------------ Net cash inflow from operating activities 1,934 1,834 Servicing of finance Finance interest - (31) Taxation UK corporation tax paid (517) (743) VAT repaid/(paid) 22 (53) Capital expenditure and financial investment Purchase of investments (6,173) (7,683) Disposal of investments 55 20,125 ------------------------------ Net cash (outflow)/inflow from investing activities (6,118) 12,442 Equity dividends paid Dividends paid on ordinary shares (4,216) (3,497) ------------------------------ Net cash (outflow)/inflow before financing (8,895) 9,952 Financing Repayment of loan facilities - (950) ------------------------------ Net cash outflow from financing - (950) ------------------------------ (Decrease)/increase in cash (8,895) 9,002 ------------------------------ This information is provided by RNS The company news service from the London Stock Exchange

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