Interim Results
Close Brothers Venture Cap Tst PLC
14 December 2005
Close Brothers Venture Capital Trust PLC
Interim results for the six months to 30 September 2005
14 December 2005
Close Brothers Venture Capital Trust PLC ('the Company'), which invests in
qualifying unquoted companies providing a high level of asset backing for the
capital value of the investment, today announces interim results for the six
months ended 30 September 2005.
Financial highlights
The following is an analysis of dividends paid in respect of each class of
shares since their respective launches, together with net asset value.
Ordinary shares 'C' shares(ii)
Shareholder value created per share since (Pence) (Pence)
launch(i):
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 and capital 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 period ended 30 September
2005 4.75 4.75
---------- ---------
Total dividends paid or declared to 30
September 2005 67.80 56.25
Net asset value 117.61 117.61
---------- ---------
Total return to 30 September 2005 185.41 173.86
---------- ---------
(i)The change in presentation of the above table in comparison to prior periods
reflects the adoption of FRS 21 which requires only approved dividends to be
recognised during each period.
(ii)The 'C' Shares were raised in 1997 and were converted into Ordinary Shares
on 31 May 2000. A 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.
Note 1: following the cessation of tax credits on 5 April 1999, dividends paid
by VCTs no longer benefit from tax credits for qualifying UK
shareholders.
Note 2: the above table does not take into account the income tax relief of 20%
nor the capital gains tax deferral relief of 40% upon subscription for shares in
the Company.
Notes to Editors:
1) Close Brothers Venture Capital Trust PLC is managed by Close Venture
Management Limited.
2) Close Venture Management Limited is regulated by the Financial Services
Authority.
3) The financial information set out in the announcement does not
constitute the Company's statutory accounts for the six months ended 30
September 2005 and 2004. The financial information for the year ended 31 March
2005 is derived from the statutory accounts delivered to the Registrar of
Companies. This financial information has been restated in line with the
changes in accounting policies set out in Note 1 to this announcement.
The auditors reported on those accounts; their report was unqualified
and did not contain a statement under s237 (2) or (3) of the Companies Act 1985.
Chairman's statement
During the 6 months to 30 September 2005, the Company made further strong
progress in replacing the investments successfully disposed of during the
previous financial year. A total of £2.0 million was invested or reserved for
investment during the period in five new and one existing investee companies.
The principal new investments were £350,000 into two freehold cinemas, in Exeter
and Brixton, London with our partners City Screen Limited and £1 million in The
Weybridge Club Limited, with a further £150,000 reserved for investment, to
develop a health and fitness club on a 30 acre freehold site in Weybridge,
Surrey. £460,000 was invested in three further pub companies building up
freehold portfolios in the South West, Central and North West England.
The investment programme subsequent to the half year has continued, with a
further £3.6 million invested, including £2.5 million invested or reserved for
investment in the Crown Hotel, Harrogate, which will undergo a major
refurbishment.
The performance of the portfolio overall continues to be encouraging, although
in line with the market there has been a continued slow down in sales from our
residential development companies. The performance of the Express by Holiday Inn
Hotel at Stansted has been particularly strong, and the former Days Inn at the
Mailbox Centre in Birmingham has recently been rebranded as a Ramada.
As a result of the disposal programme in the year to 31 March 2005, income has
fallen slightly with a result that revenue profits before tax were £1.43 million
as opposed to £1.46 million for the 6 months to 30 September 2004. Nevertheless,
in line with the Company's progressive dividend policy, the Board has declared a
net interim dividend of 4.5 pence per share (2004: 4.25 pence per share).
The current financial period is the transition period for the introduction of
new Financial Reporting Standards (FRS), which have been issued by the
Accounting Standards Board to begin the process of converging UK standards with
International Financial Reporting Standards. The main impact has been to change
the way that dividends and investments are recognised in the accounts. The
comparative historic figures in this report have been restated to reflect these
accounting changes.
It is the Company's intention to declare a second interim dividend in March 2006
payable in April 2006 in place of a final dividend for the year.
Results and dividend
As at 30 September 2005 the net asset value of the Company was £42.20 million or
117.6 pence per share, which compares with a net asset value at 31 March 2005 of
£43.29 million as restated (or £41.60 million as previously published) and 120.6
pence per share as restated (or 115.9 pence per share as previously published).
Net revenue income before taxation was £1.43 million (2004: £1.46 million). The
Board has declared a first interim dividend of 4.5 pence per share, including
1.5 pence out of realised capital reserves, for the six months to 30 September
2005 (2004: 4.25 pence per share). The first interim dividend will be paid on 20
January 2006 to shareholders registered on 23 December 2005.
Portfolio of Investments
A summary of the Company's investments at 30 September 2005 is set out below:
Investment Cumulative Carrying/
at cost movement in fair value
carrying 30
value September
2005
Sector and
investment £'000 £'000 £'000
------------------------- -------- ----------- ----------
Hotels
Kew Green VCT (Stansted) Limited 4,000 1,103 5,103
Premier VCT (Mailbox) Limited 4,600 2,142 6,742
The Bear Hungerford Limited 1,700 - 1,700
The Place Sandwich VCT Limited 1,000 5 1,005
-------- ----------- ----------
Total investment in the hotel sector 11,300 3,250 14,550
-------- ----------- ----------
Care Homes
Applecroft Care Home Limited 1,925 92 2,017
Barleycroft Care Home Limited 2,275 19 2,294
-------- ----------- ----------
Total investment in the care home sector 4,200 111 4,311
-------- ----------- ----------
Leisure
Churchill Taverns VCT Limited 180 1 181
City Screen (Cambridge) Limited 1,210 297 1,507
City Screen (Liverpool) Limited 200 (22) 178
CS (Brixton) Limited 250 1 251
CS (Exeter) Limited 100 - 100
CS (Greenwich) Limited 900 - 900
GB Pub Company Limited 180 1 181
The Bold Pub Company Limited 1,390 57 1,447
The Independent Beer Company Limited 150 3 153
The Independent Pub Company (VCT) Limited 290 (46) 244
The Weybridge Club Limited 1,000 8 1,008
-------- ----------- ----------
Total investment in the leisure sector 5,850 300 6,150
-------- ----------- ----------
Residential property development
Chase Midland VCT Limited 1,600 - 1,600
Country & Metropolitan VCT Limited 3,000 - 3,000
Prime VCT Limited 2,200 (51) 2,149
Youngs VCT Limited 1,200 - 1,200
-------- ---------- ----------
Total investment in the residential
property development sector 8,000 (51) 7,949
Total qualifying investments 29,350 3,610 32,960
-------- ---------- ----------
Non qualifying investments
Premier VCT (Mailbox) Limited -
Preference shares 2 - 2
-------- ---------- ----------
Total non-qualifying investments 2 - 2
-------- ---------- ----------
Total investments 29,352 3,610 32,962
-------- ---------- ----------
Statement of total return (Unaudited)
for the six months to 30 September 2005
Six months to Six months to Year ended
30 September 30 September 31 March 2005
2005 2004
(restated)* (restated)*
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains
on investments - (87) (87) - 758 758 - 2,684 2,684
Investment income 1,639 - 1,639 1,693 - 1,693 3,384 - 3,384
Investment management fees (120) (361) (481) (97) (292) (389) (263) (788) (1,051)
Administration expenses (86) - (86) (129) (129) (232) - (232)
------------------------------------------------------------------------------------------------------------------------
Return/(loss) on ordinary
activities before
interest and tax 1,433 (448) 985 1,467 466 1,933 2,889 1,896 4,785
Finance charge - - - (5) (16) (21) (5) (16) (21)
------------------------------------------------------------------------------------------------------------------------
Return/(loss) on ordinary
activities before tax 1,433 (448) 985 1,462 450 1,912 2,884 1,880 4,764
Tax (charge)/credit on
ordinary activities (437) 67 (370) (422) 92 (330) (778) 241 (537)
------------------------------------------------------------------------------------------------------------------------
Return/(loss) attributable
to shareholders 996 (381) 615 1,040 542 1,582 2,106 2,121 4,227
Amounts recognised as
distributions to equity
shareholders in the period (1,059) (646) (1,705) (628) (1,345) (1,973) (1,632) (1,865) (3,497)
------------------------------------------------------------------------------------------------------------------------
Transfer (from)/to reserves (63) (1,027) (1,090) 412 (803) (391) 474 256 730
------------------------------------------------------------------------------------------------------------------------
Basic and diluted return
per share (pence) 2.8 (1.1) 1.7 2.9 1.5 4.4 5.9 5.9 11.8
------------------------------------------------------------------------------------------------------------------------
*Comparative figures have been extracted from the unaudited interim accounts for
the period ended 30 September 2004 and the statutory accounts for the year ended
31 March 2005 and have been restated in accordance with FRS 21 in respect of
declared dividends and FRS 26 in respect of accrued interest on loans and
receivables as disclosed in note 2.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued during the period.
The Company has no recognised gains or losses other than those disclosed above.
Accordingly a statement of total recognised gains or losses is not required.
Balance Sheet (Unaudited)
As at 30 September 2005
30 September 2005 30 September 2004 31 March 2005
(Restated)* (Restated)*
£'000 £'000 £'000
Fixed asset investments
Qualifying investments 32,960 29,668 29,148
Non-qualifying investments 2 62 2
-----------------------------------------------------------------------------------------------------------------------
Total fixed asset investments 32,962 29,730 29,150
Current assets
Debtors and accrued income 33 226 194
Cash at bank and in hand 10,061 12,808 14,737
-----------------------------------------------------------------------------------------------------------------------
10,094 13,034 14,931
Creditors: amounts due within one year (860) (601) (795)
-----------------------------------------------------------------------------------------------------------------------
Net current assets 9,234 12,433 14,136
Total assets less current liabilities 42,196 42,163 43,286
-----------------------------------------------------------------------------------------------------------------------
Capital and reserves
Called up share capital 17,939 17,939 17,939
Special reserve 14,110 14,110 14,110
Capital redemption reserve 1,914 1,914 1,914
Capital reserves realised 3,184 3,674 4,124
unrealised 3,423 2,901 3,510
Revenue reserve 1,626 1,625 1,689
-----------------------------------------------------------------------------------------------------------------------
Total equity shareholders' funds 42,196 42,163 43,286
-----------------------------------------------------------------------------------------------------------------------
Net asset value (pence per share) 117.6 117.5 120.6
-----------------------------------------------------------------------------------------------------------------------
*Comparative figures have been extracted from the unaudited interim accounts for
the period ended 30 September 2004 and the statutory accounts for the year ended
31 March 2005 and have been restated in accordance with FRS 21 in respect of
declared dividends and FRS 26 in respect of accrued interest on loans and
receivables as disclosed in note 2.
Cash flow statement for the six months to 30 September 2005
Unaudited Unaudited Audited
Six months to Six months to Year ended
30 September 2005 30 September 2004 31 March 2005
£'000 £'000 £'000
Operating activities
Investment income received 1,359 1,399 2,693
Dividend income received 12 65 197
Deposit interest received 260 190 433
Other income received 2 12 13
Investment management fees paid (627) (1,032) (1,284)
Administrative expenses paid (138) (121) (218)
----------------------------------------------------------------------------------------------------
Net cash inflow from operating activities 868 513 1,834
Servicing of finance Finance interest - (31) (31)
Taxation UK corporation tax paid (115) (355) (743)
VAT repaid/(paid) 5 (32) (53)
Capital expenditure and financial investment
Purchase of investments (3,785) (4,026) (7,683)
Disposal of investments 55 13,977 20,125
----------------------------------------------------------------------------------------------------
Net cash (outflow)/inflow from
investing activities (3,730) 9,951 12,442
Equity dividends paid
Dividends paid on ordinary shares (1,704) (1,973) (3,497)
----------------------------------------------------------------------------------------------------
Net cash(outflow)/inflow before financing (4,676) 8,073 9,952
Financing
Repayment of loan facilities - (1,000) (950)
-----------------------------------------------------------------------------------------------------
Net cash outflow from financing - (1,000) (950)
-----------------------------------------------------------------------------------------------------
(Decrease)/increase in cash (4,676) 7,073 9,002
-----------------------------------------------------------------------------------------------------
Notes to the interim results
1. Accounting policies
Change in accounting policies
Accounting policies consistent with revised UK GAAP, and specifically with
Financial Reporting Standards (FRS) 21-26 which have been issued by the
Accounting Standards Board to begin the process of converging UK standards with
International Financial Reporting Standards ('IFRS'), have been applied with
effect from 1 April 2005. The effects of the relevant accounting policies are
disclosed in the respective notes below, and restatement of the comparative
figures are detailed in note 2.
Investments
In accordance with FRS 26, equity investments are designated as fair value
through profit or loss account (FVTPL). Investments listed on recognised
exchanges are stated at market value based upon the bid price at the end of the
accounting period. Unquoted investments' fair value is determined by the
directors in accordance with the British Venture Capital Association (BVCA)
guidelines. Movements in valuation of equity investments and gains and losses
arising on the disposal of investments are reflected in the capital column of
the Statement of Total Return for the period.
Loan stock is designated as loans and receivables in accordance with FRS 26 and
valued at amortised cost less impairments. 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 for the period. Loan stock
accrued interest is recognised in the balance sheet as part of the carrying
value of the loans and receivables at the end of each 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.
It is not the Company's policy to exercise control or significant
influence over investee companies. Therefore the results of these companies are
not incorporated into the revenue account except to the extent of any income
accrued.
2. Adjustment to revenue and realised capital reserves as at 31 March 2005 and
30 September 2004
In accordance with FRS 21 'Events after the balance sheet date', comparatives
for revenue reserves at 31 March 2005 and 30 September 2004 have been restated
in recognition of a change in accounting policy.
The effect of the above changes as at 31 March 2005 and 30 September 2004 is a
decrease in the distribution liability as a result of the de-recognition of
proposed dividends thereon.
A reconciliation of reserves incorporating the adjustments and restatements
required by the adoption of the FRS 21 is as follows:
Reconciliation of revenue reserves 31 March 2005 30 September 2004
£'000 £'000
Revenue reserves previously
reported at period end 630 621
Adjustment as required by adoption of FRS 21
- change in recognition of dividends 1,059 1,004
-------- -------
Restated revenue reserves at period end 1,689 1,625
======== =======
Reconciliation of realised capital reserves 31 March 2005 30 September 2004
£'000 £'000
Realised capital reserves previously
reported at period end 3,478 3,154
Adjustment as required by adoption of FRS 21
- change in recognition of dividends 646 520
-------- -------
Restated capital reserves at period
end 4,124 3,674
======== =======
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