Interim Results
Close Brothers Aim Vct PLC
04 October 2002
CLOSE BROTHERS AIM VCT PLC ('the Company')
Interim results for the six months ended 31 August 2002
Financial Highlights:
Ordinary Shares 'C' Shares
Six months to Six months to
31 August 2002 31 August 2002
Total loss per share (12.3)p (5.0)p
Net dividends per share - 0.5p
Net asset value per share 74.6p 81.0p
Net assets £7.50m £16.19m
Shareholder value since launch
Ordinary Shares 'C' Shares
Gross dividends for the period to 28 February 1999 3.75p -
Net dividends for the year to 29 February 2000 12.25p -
Net dividends for the year to 28 February 2001 32.25p 1.25p
Net dividends for the year to 28 February 2002 4.00p 2.00p
Net interim dividend to 31 August 2002 - 0.50p
52.25p 3.75p
Net asset value at 31 August 2002 74.64p 81.03p
Total shareholder value 126.89p 84.78p
i) Dividends paid before 5 April 1999 were paid inclusive of
the tax credit
ii) The above table excludes the tax benefits investors
received upon subscription.
Michael Reeve, Chairman, commented: 'The stockmarket is currently dominated by
fear and uncertainty, something that has not diminished in the past six months.
Ultimately this will have to change if the performance of companies is to be
reflected in their share prices. Although frustrated by the fall in the net
asset value that this has caused, your board and managers have been encouraged
by the level of progress that many companies are still making, which has been
substantially confirmed by the results seen in the last few weeks. The economic
outlook, less buoyant than it was a year ago, is still one of slow and steady
growth. Those companies, who deliver consistently good results, should see
their valuations improve from present levels'.
The Manager of the Company, Andrew Buchanan of Close Investment Limited, said: '
Although it is disappointing that the performance of the Company has been
adversely affected by current market conditions, it is pleasing to see that
despite this, both the Ordinary Share and 'C' Share portfolios have once again
outperformed the AIM index. It is with this in mind that we are confident of
continuing to deliver value to our shareholders through the maximisation of
investment opportunities in even more high quality companies.'
For further information, please contact:
Andrew Buchanan Justin Griffiths/John West
Close Investment Limited Tavistock Communications
Tel: 020 7426 4000 Tel: 020 7600 2288
Notes to Editors:
1) The Close AIM VCT is managed by Close Investment Limited and
administered by Close Venture Management.
2) Close Investment Limited and Close Venture Management are
subsidiaries of Close Brothers Group plc and are regulated by the FSA.
3) The financial information set out in the announcement does
not constitute the Company's statutory accounts for the six months ended 31
August 2002 or 2001. The financial information for the year ended 28 February
2002 is derived from the statutory accounts delivered to the Registrar of
Companies. 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
In my statement accompanying last year's report and accounts I said we expected
conditions to remain challenging. They certainly have with further accounting
irregularities following the collapses of Enron and Worldcom, and more recently,
the fear of a war with Iraq. As I write this statement, the latter is still a
prime concern and the prospect of a return to more settled stockmarket
conditions is still in the future. All this was unhelpful for share prices
across the world, and in the six months to 31 August 2002 the FT All Share index
fell by 17%, the AIM index by 23%. Against this background the net asset values
of Ordinary and 'C' portfolios fell by 13.8% and 5.8 % to 75p and 81p
respectively. It is disappointing to have to report another negative return
even though both portfolios have once again outperformed the AIM index. The 'C'
share portfolio fared better than that of the Ordinary share as a result of the
lower investment level in AIM traded companies and the consequent higher level
of cash.
In June and July the more established companies in the Ordinary Portfolio such
as Mears, MacLellan and Inventive Leisure saw their share prices come under
pressure because their previous good performance made them a source of funds for
institutions seeking to raise cash. At the other end of the scale it is now
difficult for an unprofitable company to raise cash as the market is assuming
that all new technologies will fail to find any customer. This is in marked
contrast to the conditions two years ago when valuations assumed that all new
technologies would succeed. It does mean that the ratio of risk and reward in
the pricing of potential investments is more realistically balanced. However,
for existing investments needing cash to survive it is a dangerous environment
and we are seeing survival achieved at a cost of massive dilution to existing
shareholders. The good news is that the flow of investments during the summer
never stopped, although our managers turned down many on grounds of quality.
Although it may be premature to call an end to the gloom now pervading the
markets, many companies are making progress on all fronts apart from share price
of which they have little control. Amongst the more profitable holdings Mears
and MacLellan are both demonstrating the resilience of the market for
outsourcing services in both the Private and Public sectors. Metnor Group
continues to grow its galvanizing businesses despite the virtual disappearance
of its telecoms customers. Inter Link Foods has produced yet another set of
sparkling figures. Honeycombe, the north western pub operator, whilst still
suffering from the level of debt taken on in its latest acquisition, has now
recovered from the effects of foot and mouth, which had affected trade.
Inventive Leisure is still seeing excellent growth in its vodka bars. The one
major disappointment was the announcement that Stenoak Associated Services had
gone into liquidation. We had already sold most of the holding at a profit, but
were left with a rump after it became apparent that the Company had been
over-trading.
Many of the unprofitable companies in the portfolio have however made good
progress despite the valuation afforded to them by the market. Comeleon, the
specialist printer is nearing breakeven on current levels of turnover, and Ideal
Shopping, the TV shopping channel nearly wiped out by a fire in the spring of
2001 has grown its sales to profitability. Hearing Enhancement has now changed
its focus to providing a service to the deaf rather than simply selling hearing
devices for mobiles. The worst performing shares have been in the telecoms and
medical device areas, where the market overall remains sceptical and is unlikely
to change its view until a company is generating cash at the operating level.
AMS, the wound care company, is well on the way to achieving this.
Portfolio Activity
Ordinary Share Portfolio
In the first six months of the current financial year your managers made one
investment in an existing holding at a total cost of £50,000, and committed to
invest in a new holding for £200,000. Comeleon, whose specialist printing start
up operation has made good progress in sales, raised money to improve its
production process which will enable it to tackle the US market in a low risk
manner and reduce its costs. The other investment committed for was AIT, a
computer software company that was refinancing itself after a total change in
management. The company has a good customer list and the upside in the event of
a successful turnaround would be significant. In line with our policy of
maintaining a balanced portfolio and realising profits as appropriate, two part
disposals have been made in Metnor and Inter Link Foods realising a net profit
of £126,000. At the end of the period, the Inland Revenue cover of 85% was
comfortably in excess of the 70% limit.
'C' Share Portfolio
Eight qualifying investments in the period at a cost of £2.176 million were made
bringing the total cost of investments to £7.7 million and a commitment to
invest in AIT as above for £400,000. The 'C' share portfolio is now 55%
invested, with the first tranche already past 70%. We do not anticipate any
problems reaching the 70% threshold before the February 2004 deadline. Of the
six new investments in companies not detailed in the section on the ordinary
portfolio, all are profitable or due to achieve profitability in the next twelve
months. They are in sectors as diverse as dental laboratories, specialist
software for airport air traffic control, outsourcing of services to
pharmaceutical companies and on board vehicle weighing systems for trucks and
refuse carts. The two part sales were profit taking in Inter Link Foods and PM
Group, a new holding which went to a substantial premium on listing.
Dividends
It is unlikely that there will be a capital dividend for the year to 28 February
2003 in respect of either the ordinary or the 'C' shares unless there is a
turnaround in stockmarket sentiment. An interim revenue dividend of 0.5p per
share is being declared for the 'C' shares in view of the interest earned on the
high cash balances. This will be payable on 15 November to 'C' shareholders on
the register on 18 October. No interim dividend is being declared in respect of
the ordinary shares.
Outlook
The stockmarket is currently dominated by fear and uncertainty, something that
has not diminished in the past six months. Ultimately this will have to change
if the performance of companies is to be reflected in their share prices.
Although frustrated by the fall in the net asset value that this has caused,
your board and managers have been encouraged by the level of progress that many
companies are still making, which has been substantially confirmed by the
results seen in the last few weeks. The economic outlook, less buoyant than it
was a year ago, is still one of slow and steady growth. Those companies, who
deliver consistently good results, should see their valuations improve from
present levels.
M A F Reeve
Chairman 4 October 2002
INVESTMENT PORTFOLIOS
at 31 August 2002
The ten largest holdings in each portfolio are listed below:
Ordinary Share Portfolio
Company Activity Value % of
£000 portfolio
Inter Link Foods Food producer, mainly cakes. 605 8.1
MacLellan Contract cleaning. 554 7.4
Metnor Group Steel galvanising and engineering. 455 6.1
Mears Building maintenance contractor. 455 6.1
Inventive Leisure Owner and operator of bars and nightclubs. 436 5.8
Honeycombe Owner and operator of pubs. 322 4.3
Tandem Manufacturer and distributor of bicycles. 250 3.3
Clipper Ventures Global yacht race organiser. 240 3.2
Stagecoach Theatre Arts Performing arts schools for youngsters. 223 3.0
Ideal Shopping Selling through television, home shopping & catalogues. 217 2.9
Total 3,757 50.1
Other holdings in companies 2,321 31.0
Total equity portfolio 6,078 81.1
Other investments (floating rate notes) 996 13.3
7,074 94.4
Net current assets 420 5.6
Total fund value 7,494 100.0
'C' Share Portfolio
Company Activity Value % of
£000 portfolio
Inter Link Foods Food producer, mainly cakes. 582 3.6
PM Group Systems and software for the haulage and waste 554 3.4
industry.
Stagecoach Theatre Arts Performing arts schools for youngsters. 446 2.8
1st Dental Laboratories Dental Laboratories business. 434 2.7
Lloyds British Testing Provision of lifting equipment services in the UK. 405 2.5
Fitzhardinge Real estate consultancy. 401 2.4
Clarity Commerce Software solutions to the hospitality and leisure 391 2.4
industry.
Comeleon Provider of advanced imaging technologies 387 2.4
Pilat Media Group Media software business. 380 2.3
Oasis Healthcare Provider of dental care services to private and NHS 335 2.1
patients.
Total 4,315 26.7
Other holdings in companies 3,373 20.8
Total equity portfolio 7,688 47.5
Other investments (floating rate notes) 6,001 37.1
13,689 84.6
Net current assets 2,496 15.4
Total fund value 16,185 100.0
Unaudited Statement of Total Return
(incorporating the profit and loss account)
for the six months to 31 August 2002
ORDINARY SHARES
Unaudited Unaudited Audited
Six months to Six months to Year to
31 August 2002 31 August 2001 28 February 2002
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Losses on
investments - (1,182) (1,182) - (1,389) (1,389) - (2,333) (2,333)
Income 66 - 66 112 - 112 156 - 156
Investment management
fees (note 2) (24) (73) (97) (35) (95) (130) (64) (178) (242)
Other expenses (25) - (25) (21) - (21) (45) - (45)
Return on ordinary
activities before tax 17 (1,255) (1,238) 56 (1,484) (1,428) 47 (2,511) (2,464)
Tax on ordinary activities - - - (2) 2 - 52 - 52
Return attributable to
Shareholders 17 (1,255) (1,238) 54 (1,482) (1,428) 99 (2,511) (2,412)
Dividends (note 3) - - - (50) - (50) (50) (351) (408)
Transfer to/(from) 17 (1,255) (1,238) 4 (1,482) (1,478) (49) (2,862) (2,813)
reserves
Return per ordinary
share (notes 4 and 6) 0.2p (12.5)p (12.3)p 0.5p (14.7)p (14.2)p 1.0p (25.0)p (24.0)p
All revenue and capital items in the above statement derive from continuing operations.
Unaudited Statement of Total Return
(incorporating the profit and loss account)
for the six months to 31 August 2002
'C' SHARES
Unaudited Unaudited Audited
Six months to Six months to Year to
31 August 2002 31 August 2001 28 February 2002
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Losses on investments - (953) (953) - (647) (647) - (1,358) (1,358)
Income 201 - 201 439 - 439- 716 - 716
Investment management
fees (note 2) (49) (147) (196) (60) (162) (222) (112) (319) (431)
Other expenses (49) - (49) (35) - (35) (81) - (81)
Return on ordinary
activities before tax 103 (1,100) (997) 344 (809) (465) 523 (1,677) 1,154
Tax on ordinary activities - - - -(93) 44 (49) (90) 60 (39)
Return attributable to
Shareholders 103 (1,100) (997) 251 (765) (514) 424 (1,617) (1,193)
Dividends (note 3) (100) - (100) (200) - (200) (400) - (400)
Transfer to/(from)
reserves 3, (1,100) (1,097) 51 (765) (714) 24 (1,617 (1,593)
Return per ordinary share
(notes 4 and 6) 0.5p (5.5)p (5.0)p 1.3p (3.9)p (2.6)p 2.1p (8.1)p (6.0)p
All revenue and capital items in the above statement derive from continuing operations.
Unaudited Statement of Total Return
(incorporating the profit and loss account)
for the six months to 31 August 2002
TOTAL
Unaudited Unaudited Audited
Six months to Six months to Year to
31 August 2002 31 August 2001 28 February 2002
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Losses on investments - (2,135) (2,135) - (2,036) (2,036) - (3,691) (3,691)
Income 267 - 267 551 - 551 872 - 872
Investment management
fees (note 2) (73) (220) (293) (95) (257) (352) (176) (497) (673)
Other expenses (74) - (74) (56) - (56) (126) - (126)
Return on ordinary
activities before tax 120 (2,355) (2,235) 400 (2,293) (1,893) 570 (4,188) (3,618)
Tax on ordinary
Activities - - - - 46 (49) (47) 60 (13)
Return attributable to
Shareholders 120 (2,355) (2,235) 305 (2,247) (1,942) 523 (4,128) (3,605)
Dividends (note 3) (100) - (100) (250) - (250) (450) (351) (801)
Transfer to/(from)
reserves 20 (2,355) (2,335) 55 (2,247) (2,192) 73 (4,479) (5,008)
Unaudited Balance Sheet
At 31 August 2002
ORDINARY SHARES
Unaudited Unaudited Audited
31 August 2002 31 August 2001 28 February 2002
£'000 £'000 £'000
Fixed asset investments
Qualifying investments 6,078 8,645 7,387
Non-qualifying investments 996 996 995
7,074 9,641 8,382
Current assets
Debtors 25 92 195
Short term money market deposits 408 473 565
433 565 760
Creditors: due within one year (13) (123) (410)
Net current assets 420 442 350
Net assets 7,494 10,083 8,732
Represented by:
Called up share capital 5,020 5,030 5,020
Special reserve 4,480 4,496 4,480
Capital redemption reserve 30 20 30
Capital reserve
realised 70 185 16
unrealised (2,187) 333 (878)
Revenue reserve 81 19 64
Total shareholders' funds 7,494 10,083 8,732
Net asset value per ordinary share 74.6 pence 100.2 pence 86.97 pence
Unaudited Balance Sheet
At 31 August 2002
'C' SHARES
Unaudited Unaudited Audited
31 August 2002 31 August 2001 28 February 2002
£'000 £'000 £'000
Fixed asset investments
Qualifying investments 7,688 4,456 6,607
Non-qualifying investments 6,001 11,988 8,992
13,689 16,444 15,599
Current assets
Debtors 43 131 82
Short term money market deposits 2,695 1,989 1,984
2,738 2,120 2,066
Creditors: due within one year (242) (366) (367)
Net current assets 2,496 1,754 1,699
Net assets 16,185 18,198 17,298
Represented by:
Called up share capital 9,988 10,005 10,000
Special reserve 8,962 8,999 8,978
Capital Redemption reserve 17 - 5
Capital reserve
realised (723) (188) (633)
unrealised (2,105) (688) (1,095)
Revenue reserve 46 70 43
Total shareholders' funds 16,185 18,198 17,298
Net asset value per ordinary share 81.0 pence 90.9 pence 86.5 pence
Unaudited Balance Sheet
At 31 August 2002
TOTAL
Unaudited Unaudited Audited
31 August 2002 31 August 2001 28 February 2002
£'000 £'000 £'000
Fixed asset investments
Qualifying investments 13,766 13,101 13,994
Non-qualifying investments 6,997 12,984 9,987
20,763 26,085 23,981
Current assets
Debtors 68 223 277
Short term money market deposits 3,103 2,462 2,549
3,171 2,685 2,826
Creditors: due within one year (255) (489) (777)
Net current assets 2,916 2,196 2,049
Net assets 23,679 28,281 26,030
Represented by:
Called up share capital 15,008 15,035 15,020
Special reserve 13,442 13,495 13,458
Capital redemption reserve 47 20 35
Capital reserve
realised (653) (3) (617)
unrealised (4,292) (355) (1,973)
Revenue reserve 127 89 107
Total shareholders' funds 23,679 28,281 26,030
This interim report was approved by the Board of Directors on 4 October 2002
Signed on behalf of the Board of Directors by
M A F Reeve
Chairman
Unaudited Cashflow Statement
for the six months to 31 August 2002
ORDINARY SHARES
Unaudited Unaudited Audited
Six months to Six months to Year to
31 August 2001 31 August 2001 28 February 2002
£'000 £'000 £'000
Operating activities
Dividend income received 25 32 66
Investment income received 33 55 68
Deposit interest received 6 12 20
Other income received - 5 5
Investment management fees paid (103) (143) (260)
Other cash payments (26) (21) (52)
Net cash outflow from operating activities (65) (60) (153)
Taxation
UK corporation tax repaid - 88 151
Investing activities
Purchase of qualifying investments (50) (965) (1,797)
Purchase of non-qualifying investments - - -
Disposals of qualifying investments 309 530 1,543
Disposals of non-qualifying investments - 1,001 1,001
Net cash inflow from investing activities 259 566 747
Equity dividends paid
Revenue dividends paid on ordinary shares - (100) (150)
Capital dividends paid on ordinary shares (351) (504) (504)
Net cash (outflow)/inflow before financing (157) (10) 91
Financing
Redemption of shares net of expenses - (19) (28)
Net cash outflow from financing - (19) (28)
(Decrease)/increase in cash and cash equivalents (157) (29) 63
Unaudited Cashflow Statement
for the six months to 31 August 2002
'C' SHARES
Unaudited Unaudited Audited
Six months to Six months to Year to
31 August 2001 31 August 2001 28 February 2002
£'000 £'000 £'000
Operating activities
Dividend income received 10 - 8
Investment income received 191 297 582
Deposit interest received 18 85 129
Other income received - 4 7
Investment management fees paid (203) (182) (402)
Other cash payments (46) (43) (78)
Net cash (outflow)/inflow from operating activities (30) 161 246
Taxation
UK corporation tax paid - - 2
Investing activities
Purchase of qualifying investments (2,176) (2,843) (5,715)
Purchase of non-qualifying investments - (5,990) (5,998)
Disposals of qualifying investments 132 - 16
Disposals of non-qualifying investments 3,001 2,996 5,994
Net cash inflow/(outflow) from investing activities 957 (5,837) (5,703)
Equity dividends paid
Revenue dividends paid on ordinary shares (200) (156) (356)
Net cash inflow/(outflow) before financing 727 (5,832) (5,811)
Financing
Issue of equity net of expenses - 7,134 7,134
Redemption of shares net of expenses (16) - (8)
Cancellation of share premium - - (18)
Net cash (outflow)/inflow from financing (16) 7,134 7,108
Increase in cash and cash equivalents 711 1,302 1,297
Unaudited Cashflow Statement
for the six months to 31 August 2002
TOTAL
Unaudited Unaudited Audited
Six months to Six months to Year to
31 August 2001 31 August 2001 28 February 2002
£'000 £'000 £'000
Operating activities
Dividend income received 35 32 74
Investment income received 224 352 650
Deposit interest received 24 97 149
Other income received - 9 12
Investment management fees paid (306) (325) (662)
Other cash payments (72) (64) (130)
Net cash (outflow)/inflow from operating activities (95) 101 93
Taxation
UK corporation tax repaid - 88 153
Investing activities
Purchase of qualifying investments (2,226) (3,808) (7,512)
Purchase of non-qualifying investments - (5,990) (5,998)
Disposals of qualifying investments 441 530 1,559
Disposals of non-qualifying investments 3,001 3,997 6,995
Net cash inflow/ (outflow) from investing activities 1,216 (5,271) (4,956)
Equity dividends paid
Revenue dividends paid on ordinary shares (200) (256) (506)
Capital dividends paid on ordinary shares (351) (504) (504)
Net cash inflow/ (outflow) before financing 570 (5,842) (5,720)
Financing
Issue of equity net of expenses 7,134 7,134
Redemption of shares net of expenses (16) (19) (36)
Cancellation of share premium - - (18)
Net cash (outflow)/inflow from financing (16) 7,115 7,080
Increase in cash and cash equivalents 554 1,273 1,360
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