Final Results

Close Brothers Aim Vct PLC 30 April 2004 CLOSE BROTHERS AIM VCT PLC PRELIMINARY RESULTS 30 April 2004 Close Brothers AIM VCT PLC ('the Company'), which invests in companies listed on the Alternative Investment Market, across a variety of sectors, today announces preliminary results for the year ended 29 February 2004. Financial Highlights: Ordinary Shares 'C' Shares Year to Year to 29 February 2004 29 February 2004 Total return per share 33.62 pence 27.07 pence Net dividends per share 0.25 pence 0.50 pence Net asset value per share 90.22 pence 97.13 pence Net assets £8.95 million £19.31 million Shareholder value per share since launch (per £1 paid per share excluding tax benefits): Ordinary Shares 'C' Shares Pence per share Pence per share Gross dividends for the period to 28 February 1999* 3.75 - Net dividends for the year to 29 February 2000 12.25 - Net dividends for the year/period to 28 February 2001 32.25 1.25 Net dividends for the year to 28 February 2002 4.00 2.00 Net dividends for the year to 28 February 2003 0.50 1.00 Net dividends for the year to 29 February 2004 0.25 0.50 ------- ------- Total dividends (capital and revenue) 53.00 4.75 Net asset value at 29 February 2004 90.22 97.13 ------- ------- Total return 143.22 101.88 ======= ======= *Dividends paid before 5 April 1999 were paid to qualifying shareholders inclusive of the associated tax credit. The Ordinary Shares were first listed on 17 March 1998 The 'C' Shares were first listed on 23 October 2000 For further information, please contact: Andrew Buchanan / Patrick Reeve Justin Griffiths / John West Close Investment Limited Tavistock Communications Tel: 020 7655 3100 Tel: 020 7920 3150 Notes to Editors: 1) Close Brothers AIM VCT PLC is managed by Close Investment Limited. 2) Close Investment Limited is a subsidiary of Close Brothers Asset Management Limited which 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 29 February 2004 or 28 February 2003, but is derived from those accounts. Statutory accounts for 2003 have been delivered to the Registrar of Companies. The auditors have reported on these accounts, their report was unqualified and did not contain statements under s237(2) or (3)Companies Act 1985. The auditors have not yet reported on the statutory accounts for 2004. CHAIRMAN'S STATEMENT The year ended 29 February 2004 was a good one for the company. The market mood, which was at its lowest ebb at the end of February 2003, started to improve in March last year and gathered momentum in the smaller company and AIM markets as 2003 progressed. This confidence manifested itself in an increased number of flotations and fundraisings as the backlog of primary issues which had built up over the previous eighteen months began to unwind. The net asset value of the Ordinary Shares increased by approximately 59% and that of the 'C' Shares, which included more cash, by approximately 38%. These increases more than made up for the decrease in values experienced in the previous year. They may be compared with an increase in the AIM index (dividends reinvested) of 65% although it should be borne in mind that the AIM index includes companies which do not qualify as VCT investments, and that resource companies (which do not qualify for VCT investments) were the main drivers of the second half performance of the index. At the end of the year, the Ordinary Share portfolio was 83% invested in qualifying investments and the 'C' Share portfolio 73% so invested. Dividends Shareholders are reminded that as the portfolios become fully invested, income will decline thus limiting the scope for revenue dividends. The board is recommending a final revenue dividend of 0.25p per Ordinary Share (2003: 0.5p revenue dividend for the year) and a final revenue dividend of 0.5p per 'C' Share (2003: 1.00p revenue dividend for the year). It is the Board's policy to declare capital dividends when able which unfortunately is not the case for either the 'C' Shares or Ordinary Shares in respect of the year under review, although the potential for paying them in future has improved considerably since this time last year. Cancellation of shares and management of the discount During the year under review the Board exercised its power to buy 104,500 Ordinary Shares and 69,000 'C' Shares at an average price of 58.1p and 63.2p respectively. The Board has been concerned at the large disparity between the market value of the shares and their corresponding net asset value which has widened over the years. It is taking active steps on behalf of shareholders to manage this discount with a view to reducing it substantially. Meanwhile, I would like to draw the attention to the request in the circular sent to shareholders in January, that shareholders wishing to sell their holding should first contact the Company which will endeavour to facilitate such sales. At the forthcoming AGM shareholders' consent will again be sought to renew the Board's power to make such purchases. Conversion of 'C' Shares into Ordinary Shares As set out in the 'C' Share prospectus published in 2000, 'C' Shares will be converted into Ordinary Shares on 31 May 2004 on the basis of a calculation of the respective net asset value of the two share classes as at 29 February 2004. In line with the Company's Articles of Association the Directors are proposing to do this in two stages. As at stage one, the 'C' Shareholders will receive additional new 'C' Shares in a ratio of 0.077 for 1 in order to align the net asset values of the two classes of shares. The total 'C' Shares will then be re-designated as Ordinary Shares and convert on a one for one basis. Thus, for every 'C' Share held, the holder will end up with 1.077 Ordinary Shares. Following this conversion, ignoring any further purchases of shares by the company for cancellation, there will be approximately 31.3 million Ordinary Shares in issue. The new Ordinary Shares will commence trading on 1 June 2004. The 'C' Share certificates will cease to be valid from 1 June 2004 and new Ordinary Share certificates will be sent to the 'C' Shareholders as soon as practicable thereafter, and by no later than 21 June 2004. The Alternative Investment Market - AIM Last year I drew attention to some of the fears about the future of AIM particularly in the face of European Community legislation. These have not arisen in the period under review and the recovery in investor sentiment has led to rising share prices which have in turn produced an increasing number of good new issues. As at 29 February 2004 there were 761 companies traded on AIM, and with 34 joining in March, it is likely there will be over 800 by the end of April. It is to be hoped that this trend continues and the flow should be helped by the taxation changes for VCTs announced in the Budget. The noticeable feature of AIM is that it has continued to grow in terms of the number of companies traded on it throughout the six years of the Company's life and has been able to raise new capital for companies whatever the market conditions. AIM seems set for a good future because it meets real demands from both companies and investors. The proposed EU legislation is some way off, and, as AIM gathers strength, it becomes likely that it will evolve and adapt despite this. Changes in taxation benefits In December 2003 the Treasury published proposals, which if implemented, would change the tax benefits available to investors in VCTs. The Chancellor in his budget in March 2004 published amendments to these proposals which are now incorporated in the Finance Bill are and likely to become law in July of this year. The main proposals are that after 6 April 2004 capital gains tax deferral relief for investments in VCTs will be withdrawn, the rate of income tax relief for investments in qualifying VCT shares will increase from 20% to 40% and the upper limit for this relief is increased from £100,000 to £200,000. These changes are to be welcomed as they are likely to reverse the decline over the last two years in the amounts raised by VCTs just at a time when it is likely that there will be an increase in the financial requirements of qualifying companies on AIM. Further Share Issues Shareholders will have received my letter dated 16 January 2004 outlining proposals for the offer for subscription of up to £15 million new 'D' Shares, the continuation of the Company as a venture capital trust until at least the Annual General Meeting to be held in 2009 and various other Company related matters. These were the subject of special resolutions which were passed at the Extraordinary General Meeting held in February of this year. As at 5 April £3.34 million 'D' Shares were allotted. This was a satisfactory outcome bearing in mind that many potential investors are waiting for the new tax benefits to come into effect. It is the Board's intention to issue further 'D' Shares, up to a total of 15 million, later in the year after conversion of the 'C' Shares into Ordinary Shares has taken place and when the proposed taxation changes outlined above become law upon the Finance Act being given Royal Assent. At the same time the Board intends to make a tender offer to Ordinary shareholders (including the holders of the converted 'C' Shares) for up to 10% of their shares at a price closer to the net asset value of the Company. Meanwhile, for those seeking to invest sooner and who are prepared to assume that the proposals contained in the Finance Bill will become law in the summer, the Board will be seeking shareholders' permission at the AGM to issue up to a further 20% of the enlarged Ordinary Share capital of the Company, of which 10% will be offered for subscription, by way of a 'top-up', immediately,. The Board believes that shareholders who participate in either the Ordinary Share top up or the further 'D' Share issue will qualify for the 40% income tax relief announced in the budget in respect of such investment. Outlook It is encouraging that the 'C' portfolio is now in overall surplus. The same would have been true of the Ordinary portfolio had not some profitable holdings been sold prior to the year end. The risk analysis of both portfolios has shown a significant improvement and the flow of new issues which qualify as VCT investments shows no sign of slowing. We therefore look to the future with some degree of confidence. Michael Reeve Chairman 30 April 2004 Close Brothers AIM VCT PLC Statement of Total Return (incorporating the revenue account) for the year ended 29 February 2004 Ordinary Shares 'C' Shares Total 29 February 2004 29 February 2004 29 February 2004 Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 ----------------------------------------------------------------------------------------------------- Gains on investments - 3,465 3,465 - 5,558 5,558 - 9,023 9,023 Investment income 113 - 113 323 - 323 436 - 436 Investment management (45) (137) (182) (99) (297) (396) (144) (434) (578) fee Other expenses (48) - (48) (91) - (91) (139) - (139) ---------------------------------------------------------------------------------------------------- Return on ordinary activities before tax 20 3,328 3,348 133 5,261 5,394 153 8,589 8,742 Tax on ordinary activities - - - (14) 14 - (14) 14 - --------------------------------------------------------------------------------------------------- Return attributable to equity shareholders 20 3,328 3,348 119 5,275 5,394 139 8,603 8,742 Equity dividends (25) - (25) (99) - (99) (124) - (124) --------------------------------------------------------------------------------------------------- Transfer (from)/to reserves (5) 3,328 3,323 20 5,275 5,295 15 8,603 8,618 ==================================================================================================== Return per share (pence) Basic 0.2 33.4 33.6 0.6 26.5 27.1 0.5 28.8 29.3 Diluted 0.2 30.3 30.5 0.5 24.1 24.6 0.4 26.2 26.6 The revenue column of this statement represents the profit and loss account of the Company. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. Close Brothers AIM VCT PLC Statement of Total Return (incorporating the revenue account) for the prior year ended 28 February 2003 Ordinary Shares 'C' Shares Total 28 February 2003 28 February 2003 28 February 2003 Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 -------------------------------------------------------------------------------------------------------------- Losses on investments - (2,872) (2,872) - (2,931) (2,931) - (5,803) (5,803) Investment income 110 - 110 392 - 392 502 - 502 Investment management (43) (129) (172) (93) (281) (374) (136) (410) (546) fee Other expenses (49) - (49) (95) - (95) (144) - (144) ------------------------------------------------------------------------------------------------------------- Return/(loss) on ordinary activities before tax 18 (3,001) (2,983) 204 (3,212) (3,008) 222 (6,213) (5,991) Tax on ordinary activities - - - - - - - - - ------------------------------------------------------------------------------------------------------------- Return/(loss) attributable to equity shareholders 18 (3,001) (2,983) 204 (3,212) (3,008) 222 (6,213) (5,991) Equity dividends (51) - (51) (200) - (200) (251) - (251) ------------------------------------------------------------------------------------------------------------- Transfer (from)/to reserves (33) (3,001) (3,034) 4 (3,212) (3,208) (29) (6,213) (6,242) ============================================================================================================= Return/(loss) per share (pence) Basic 0.2 (29.9) (20.0) (29.7) 1.0 (16.1) (15.1) 0.7 (20.7) Diluted 0.2 (27.2) (18.1) (27.0) 0.9 (14.6) (13.7) 0.7 (18.8) The revenue column of this statement represents the profit and loss account of the Company. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. Close Brothers AIM VCT PLC Balance Sheet as at 29 February 2004 Ordinary 'C' Total Shares Shares 29 February 29 February 29 February 2004 2004 2004 £'000 £'000 £'000 -------------------------------------------------------------------------------- Fixed asset investments Qualifying investments 7,449 14,437 21,886 Non-qualifying investments - 4,505 4,505 -------------------------------------------------------------------------------- Total fixed asset investments 7,449 18,942 26,391 Current assets Debtors 485 54 539 Cash at bank and in hand 1,062 510 1,572 -------------------------------------------------------------------------------- 1,547 564 2,111 Creditors: amounts falling due within one year (51) (195) (246) Net current assets 1,496 369 1,865 -------------------------------------------------------------------------------- Total assets 8,945 19,311 28,256 ================================================================================ Capital and reserves Called up share capital 4,957 9,941 14,898 Special reserve 4,405 8,903 13,308 Capital redemption reserve 93 64 157 Realised capital reserve (190) (1,365) (1,555) Unrealised capital reserve (346) 1,701 1,355 Revenue reserve 26 67 93 -------------------------------------------------------------------------------- Total equity shareholders' funds 8,945 19,311 28,256 ================================================================================ Net asset value per share (pence) 90.22 97.13 94.83 Close Brothers AIM VCT PLC Balance Sheet as at 28 February 2003 Ordinary 'C' Total Shares Shares 28 February 28 February 28 February 2003 2003 2003 £'000 £'000 £'000 -------------------------------------------------------------------------------- Fixed asset investments Qualifying investments 4,673 6,111 10,784 Non-qualifying investments 997 6,000 6,997 -------------------------------------------------------------------------------- Total fixed asset investments 5,670 12,111 17,781 Current assets Debtors 43 441 484 Cash at bank and in hand 40 1,700 1,740 -------------------------------------------------------------------------------- 83 2,141 2,224 Creditors: amounts falling due within one year (76) (186) (262) Net current assets 7 1,955 1,962 -------------------------------------------------------------------------------- Total assets 5,677 14,066 19,743 ================================================================================ Capital and reserves Called up share capital 5,004 9,981 14,985 Special reserve 4,460 8,953 13,413 Capital redemption reserve 46 24 70 Realised capital reserve (206) (864) (1,070) Unrealised capital reserve (3,658) (4,075) (7,733) Revenue reserve 31 47 78 -------------------------------------------------------------------------------- Total equity shareholders' funds 5,677 14,066 19,743 ================================================================================ Net asset value per share (pence) 56.73 70.46 65.87 Close Brothers AIM VCT PLC Cash Flow Statement for the year to 29 February 2004 Ordinary Shares 'C' Shares Total Year to Year to Year to 29 February 29 February 29 February 2004 2004 2004 £'000 £'000 £'000 Operating activities Dividend income received 86 70 156 Investment income received 10 195 205 Deposit interest received 24 51 75 Other income received - 5 5 Investment management fees paid (176) (382) (558) Other cash payments (66) (98) (164) ------------------------------------------------------------------------------- Net cash outflow from operating activities (122) (159) (281) Taxation UK income tax repaid - - - Capital expenditure and financial investment Purchase of qualifying investments (354) (2,445) (2,799) Purchase of non-qualifying investments - (1) (1) Disposals of qualifying investments 614 58 672 Disposals of non-qualifying investments 996 1,500 2,496 ------------------------------------------------------------------------------- Net cash inflow/(outflow) from investing activities 1,256 (888) 368 Equity dividends paid Revenue dividends paid on ordinary shares (51) (100) (151) Capital dividends paid - - - on ordinary shares ------------------------------------------------------------------------------- Net cash inflow/ (outflow) before financing 1,083 (1,147) (64) Financing Redemption of shares net of expenses (61) (43) (104) ------------------------------------------------------------------------------- Net cash outflow from (61) (43) (104) financing ------------------------------------------------------------------------------- Increase/(decrease) in cash in the year 1,022 (1,190) (168) Close Brothers AIM VCT PLC Cash Flow Statement for the year to 28 February 2003 Ordinary Shares 'C' Shares Total Year to Year to Year to 28 February 28 February 28 February 2003 2003 2003 £'000 £'000 £'000 ------------------------------------------------------------------------------- Operating activities Dividend income received 57 28 85 Investment income 54 316 370 received Deposit interest 10 66 76 received Other income received - - - Investment management (222) (469) (691) fees paid Other cash payments (34) (62) (96) ------------------------------------------------------------------------------- Net cash outflow from operating (135) (121) (256) activities Taxation UK corporation tax repaid - - - Capital expenditure and financial investment Purchase of qualifying investments (340) (2,965) (3,305) Purchase of non-qualifying investments - - - Disposals of qualifying investments 315 132 447 Disposals of non-qualifying investments - 3,001 3,001 ------------------------------------------------------------------------------- Net cash (outflow)/ inflow from investing activities (25) 168 143 Equity dividends paid Revenue dividends paid on ordinary shares - (100) (100) Capital dividends paid on ordinary shares (351) (200) (551) ------------------------------------------------------------------------------- Net cash outflow before financing (511) (253) (764) Financing Redemption of shares net of expenses (14) (31) (45) ------------------------------------------------------------------------------- Net cash outflow from financing (14) (31) (45) ------------------------------------------------------------------------------- Decrease in cash in the year (525) (284) (809) =============================================================================== This information is provided by RNS The company news service from the London Stock Exchange

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