Final Results
Murray VCT 4 PLC
12 May 2005
Murray VCT 4 PLC
Preliminary results for the year ended 28 February 2005
The Directors announce preliminary results, subject to the conclusion of the
audit process, of Murray VCT 4 PLC for the year ended 28 February 2005.
• 46 investments in the unlisted portfolio, with a total cost of £27.0
million.
• Net Asset Value of 75.7p per share.
• Proposed final dividend of 0.6p per share.
• Total return since launch, being the sum of dividends paid plus Net Asset
Value, of 86.3p per share.
• New Management and Administration Deed signed with Murray Johnstone
Limited.
Investment activity
Further unlisted investment during the year ended 28 February 2005 totalled
£6.15 million. At 28 February 2005 the portfolio stood at 46 investments with a
total cost of £27.0 million.
In addition to follow-on financings, the following new investments have been
made since the publication of the Interim Report:-
• Working People Group (September 2004) - £216,000 - Working People Group
trades as Driver Hire and provides temporary labour to the logistics market
throughout the UK from its base in Bingley, Yorkshire.
• Cello Group* (October 2004) - £750,000 - Cello is based in London and aims
to consolidate niche businesses in the marketing and media industry.
• 1st Dental Laboratories* (November 2004) - £300,000 - 1st Dental is based
in Harrogate and provides dental laboratory services from locations
throughout the UK.
• Careforce Group* (November 2004) - £500,000 - Careforce is based in
Hertford and provides domiciliary care services.
• Augean* (December 2004) - £500,000 - Augean is based near Wetherby and
provides waste management services.
• Avanti Screen Media* (December 2004) - £196,000 - Avanti provides media
advertising via screens in retail and other outlets from its London base.
• Sanastro (December 2004) - £750,000 - Sanastro is a B2B publishing company
which is based in London.
• Tanfield* (December 2004) - £500,000 - Tanfield is based in Co Durham and
is a specialist engineering and manufacturing group.
* Quoted on AIM
Portfolio developments
In the Interim Report, the early repayment of loan stock by Black Teknigas was
reported; since then, Link-Up Mitaka has also repaid its loan stock (£204,000)
ahead of the schedule agreed at the time of the investment together with
interest which had been rolling up in addition to the paid yield.
Further proceeds of £234,000 were received from Conveco during the period since
publication of the Interim Report. This brings to £2,073,000 the total capital
recovered from the investment, which together with interest paid of £236,000
compares with the total cost of the investment of £2,386,000; it is expected
that further recoveries will be made as the final retention money associated
with the sale are finalised.
Since the period end, the Company has sold the investment in First Line for a
consideration of £631,000, including a deferred element of £61,000, which
compares to the cost of the investment of £641,000. Income of £246,000 has been
received over the life of the investment.
Exits from the majority of the portfolio of private equity investments are not
being actively sought, but will be pursued in cases where the Manager believes
that the potential upside from the investment is limited.
Performance
The Net Asset Value (NAV) at 28 February 2005 was 75.7p per share ('pps')
compared with 73.7pps at 29 February 2004.
The Manager has increased the Company's exposure to the Alternative Investment
Market ('AIM') during the course of the year and the Board is pleased to report
that, to date, this policy has been successful.
Over the full year, the value of the unlisted portfolio is broadly unchanged
when new investments and realisations are taken into account. This has been
achieved despite a full provision having been taken against the cost of Tuscan
Energy Group, one of the largest holdings by value at 29 February 2004, and a
substantial reduction in the value of Synexus, compared to the value at the
Interim stage. That value had been based on a prospective sale of the business,
which was anticipated to complete within a few months following the interim
announcement, but the sale could not complete when the proposed purchaser
encountered difficulties with its own market value.
The Company has suffered a significant reduction in its income during the year.
The majority of this reduction is accounted for by provisions taken against the
accumulated income due from Tuscan Energy, which arose in earlier years and was
carried on the balance sheet into the reporting year and against which a
provision has now been taken to reflect the fact that the amounts are unlikely
to be recovered. Provisions have also been taken against income due from
investments where the Manager believes that there is some doubt as to the
recoverability of the income; it is important to emphasise that these provisions
do not indicate that the amount is being forgiven and the Manager will pursue
recovery of these amounts before and during an exit from the investment. A
further factor has been the early repayment of loan stocks by some companies
during the year. The effect of these reductions in income has been to reduce the
level of final dividend being proposed.
Investment strategy
The Board continues to review the performance of the investment portfolio and
the investment strategy with the Manager. Progress has been made on the agreed
prime objectives in respect of the existing portfolio, although it may be some
time yet before the benefits of portfolio management are seen in improved
realisations. The Manager continues to press for the resumption of yield
payments to the Company from the portfolio companies which have been unable to
meet their obligations due to their performance. The aim of these objectives is
to generate value and, ultimately, achieve successful disposals from a stronger
position in an improved market. Where it is believed that future potential from
an investment justifies it, further financial support will be given. It will
also be the aim to sell underperforming investments and to recycle the proceeds
into opportunities which show greater growth potential.
The Company is not fully invested and will continue to invest in new unquoted
and AIM investment opportunities as they arise. Where possible, new investment
activity will be targeted on larger companies through co-investment with other
private equity funds. While many of the unlisted holdings are not yet mature
enough to actively seek exits, these will be pursued where any offer is
particularly attractive.
Valuation process
Investments held by Murray VCT 4 in unlisted companies are valued at fair value
in accordance with the British Venture Capital Association guidelines. In line
with normal market practice for investment companies and investment trusts,
investments listed on AIM are valued at their mid-market price, discounted to
reflect any trading restrictions.
Dividends and returns to date
The Board declared an interim dividend for the year ended 28 February 2005 of
0.5pps (2004 - 0.5pps), which was paid to Shareholders on 10 December 2004. The
Board is proposing a final dividend of 0.6pps (2004 - 1.2pps), to be paid on 22
July 2005 to Shareholders on the register at close of business on 22 June 2005.
Since the Company's launch, most Shareholders will have received 10.6pps in
tax-free dividends. The total return since launch is 86.3pps, being the sum of
dividends paid plus NAV, for a Shareholder who subscribed at launch at an
effective initial investment cost of 80pps.
The most important measures for a VCT are the long term record of income and
capital gains dividend payments and the timing of these payments over the life
of the Company. In the short term, the NAV on its own is a less important
measure of performance as the underlying investments are long-term in nature and
not readily realisable.
Share buy-back policy
During the year, a total of 752,728 shares were bought back for cancellation at
a weighted average price of 52.25pps. Purchases of shares will continue to be
made within guidelines established from time to time by the Board, at prices
below the prevailing NAV per share. Under the rules of the UK Listing Authority,
the maximum price at which the Company can acquire shares is 5% above the
average market value of the shares over the five business days immediately
preceding the purchase. Shares purchased in this way will be cancelled and the
Company will only deal with member firms of the London Stock Exchange. Share
purchases will be funded from distributable reserves and to the extent that
shares are purchased at a discount to NAV, the NAV of the remaining shares will
increase.
Constitution of the Board
As announced on 22 March 2005, Mr W E Holt resigned as a Director on 21 March
2005; the Directors would like to take this opportunity to thank Mr Holt for his
guidance and support during his time in office.
Also as announced on 22 March 2005, having attained the age of 70, Mr A E
Whitworth will stand down as Chairman after the Annual General Meeting to be
held on 7 July 2005 and, at that time, Mrs Fiona Wollocombe will take his place
as Chairman of the Company. Mr Whitworth is willing to remain a Director of the
Company and will be standing for annual re-election at the Annual General
Meeting.
The Manager
You will be aware that the Company announced on 8 February 2005 that it had
given notice, under the terms of its management contract, with the intention of
awarding the management contract to Close Venture Management at the end of the
notice period. The Board subsequently entered into negotiations with Murray
Johnstone Limited ('Murray Johnstone'), the existing Manager, and further to the
announcement made on 24 March 2005, the Board is pleased to announce that the
Company has today entered into a new Management and Administration Deed with
Murray Johnstone Limited, which confirms Murray Johnstone's continuing
appointment for the portfolio management and company secretarial responsibility
for the Company. The notice of termination served on Murray Johnstone, which was
to expire on 8 August 2005, has now been withdrawn.
In future, the management fee will be largely dependent upon the uplift in NAV
achieved each year with a minimum fee, substantially below the historic fee,
payable where an increase is not achieved. The Board believes these
arrangements, which align the interests of Shareholders and the Manager, are in
the best interests of the Shareholders. The key features of the new investment
management agreement with Murray Johnstone are included in a separate statement,
which is also being released today, and will be disclosed in the Annual Report.
During the period immediately following the announcement of 8 February 2005, a
number of Shareholders wrote to the Company expressing views which were critical
of the amount of information which was contained in the Company's Annual Report.
The Board and the Manager have considered those views and, as a result, a
greater level of disclosure has been provided in this Statement and will also be
provided in the Annual Report.
Outlook
Since Autumn 2004 there have been significant changes to the senior management
team of the Manager and intense negotiations regarding changes in the management
contract. That difficult period is past and the Manager's priority is to
continue the improvement in NAV which has been achieved over the course of the
year.
The Manager will continue to make new investments, on a selective basis, arising
out of the deal flow through the regional network of offices, provided the
pricing of new opportunities remains attractive.
Murray VCT 4 PLC
Profit and Loss Account
For the year ended 28 February 2005
Year ended Year ended
28 February 2005 29 February 2004
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment income and deposit interest 1,093 - 1,093 1,518 - 1,518
Investment management fees (284) (426) (710) (358) (536) (894)
Other expenses (220) - (220) (221) - (221)
_______ _______ _______ _______ _______ _______
Operating profit 589 (426) 163 939 (536) 403
Profit/(loss) on realisation of investments - 714 714 - (32) (32)
Amounts written off fixed asset investments - (569) (569) - - -
_______ _______ _______ _______ _______ _______
Profit on ordinary activities before taxation 589 (281) 308 939 (568) 371
Tax on ordinary activities (158) 132 (26) (254) 174 (80)
_______ _______ _______ _______ _______ _______
Profit on ordinary activities after taxation 431 (149) 282 685 (394) 291
Dividends (413) - (413) (655) - (655)
_______ _______ _______ _______ _______ _______
Balance transferred to/(from) reserves 18 (149) (131) 30 (394) (364)
_______ _______ _______ _______ _______ _______
Earnings per share (pence) 1.1 (0.4) 0.7 1.8 (1.0) 0.8
_______ _______ _______ _______ _______ _______
Statement of Total Recognised Gains and Losses
For the year ended 28 February 2005
Year ended Year ended
28 February 2005 29 February 2004
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Profit on ordinary activities after taxation 431 (149) 282 685 (394) 291
Unrealised gain/(loss) on
revaluation of investments - 690 690 - (1,777) (1,777)
Current taxation attributable 158 (132) 26 254 (174) 80
to unrealised losses on investments _______ _______ _______ _______ _______ _______
Total recognised gains and
losses relating to the year 589 409 998 939 (2,345) (1,406)
_______ _______ _______ _______ _______ _______
Note of Historical Cost Profits and Losses
For the year ended 28 February 2005
Year ended Year ended
28 February 2005 29 February 2004
£'000 £'000
Profit on ordinary activities before taxation 308 371
Realisation of revaluation losses of previous years (1,331) (675)
_______ _______
Historical cost loss on ordinary (1,023) (304)
activities before taxation _______ _______
Historical cost loss for the year retained after
taxation and dividends (1,153) (836)
_______ _______
MURRAY VCT 4 PLC
BALANCE SHEET
As at 28 February 2005
28 February 2005 29 February 2004
£'000 £'000 £'000 £'000
Fixed assets
Investments 27,386 22,350
Current assets
Debtors 1,382 1363
Cash and overnight deposits 260 5461
_______ _______
1,642 6824
Creditors
Amounts falling due within one year 472 807
_______ _______
Net current assets 1,170 6,017
_______ _______
Net assets 28,556 28,367
_______ _______
Capital and reserves
Called up share capital 3,774 3,849
Share premium account 17,235 17,236
Revaluation reserve (5,214) (6,952)
Capital redemption reserve 111 36
Profit and loss account 12,650 14,198
_______ _______
Equity Shareholders' funds 28,556 28,367
_______ _______
Net Asset Value per 75.7 73.7
Ordinary share (pence)
MURRAY VCT 4 PLC
CASH FLOW STATEMENT
For the year ended 28 February 2005
28 February 2005 29 February 2004
£'000 £'000 £'000 £'000
Operating activities
Investment income received 1,007 1,200
Deposit interest received 13 9
Investment management fees paid (627) (1,145)
Secretarial fees paid (50) (80)
Cash paid to and on behalf of Directors (53) (53)
Other cash payments (94) (118)
_______ _______
Net cash inflow/(outflow) from operating activities 196 (187)
Taxation - -
Financial investment
Purchase of investments (11,834) (9,064)
Sale of investments 7,387 6,251
_______ _______
Net cash outflow from financial investment (4,447) (2,813)
Equity dividends paid (649) (770)
_______ _______
Net cash outflow before financing (4,900) (3,770)
Financing
Issue of Ordinary shares (1) 154
Repurchase of Ordinary shares (300) (41)
_______ _______
Net cash (outflow)/inflow from financing (301) 113
_______ _______
Decrease in cash (5,201) (3,657)
_______ _______
This preliminary announcement has been prepared on the same basis as that set
out in the statutory Financial Statements for the prior year.
Although the Company is no longer an investment company, as investment company
status was revoked in order to permit the distribution of capital profits, the
Directors believe that the presentation of the profit and loss account and the
statement of total recognised gains and losses is enhanced by showing additional
non-statutory information on the returns attributable to revenue and to capital.
The Profit and Loss Account and Statement of Total Recognised Gains and Losses
have been prepared in accordance with Schedule 4 of the Companies Act 1985 and
Financial Reporting Standard No. 3 'Reporting Financial Information'. As
mentioned above, for illustrative purposes, non-statutory information comprising
revenue and capital accounts has also been presented.
In respect of the year ended 28 February 2005, earnings per Ordinary share have
been calculated using the average number of shares in issue during the year of
38,112,746. Net Asset Value per Ordinary share as at 28 February 2005 has been
calculated using the number of share in issue at that date of 37,743,567.
A summary of investment changes for the year ended 28 February 2005 and a
portfolio summary as at 28 February 2005 are attached.
The results for the year ended 28 February 2005, which are subject to final
audit, will be filed with the Registrar of Companies.
A full copy of the Annual Report and Financial Statements will be printed and
issued to Shareholders.
The financial information contained within this Preliminary Announcement does
not constitute the Company's statutory Financial Statements as defined in
Section 240 of the Companies Act 1985. The statutory Financial Statements for
the year ended 28 February 2003 have been delivered to the Registrar of
Companies and contained an audit report which was unqualified and did not
constitute statements under Sections 237(2) or (3) of the Companies Act 1985.
The Annual General Meeting will be held on 7 July 2005, commencing at 2.15 p.m.
Copies of this announcement will be available to the public at the registered
office of the Company, One Bow Churchyard, Cheapside, London EC4M 9HH and at the
office of Aberdeen Asset Managers Limited, 123 St Vincent Street, Glasgow G2
5EA.
By Order of the Board
Murray Johnstone Limited
Secretary
12 May 2005
MURRAY VCT 4 PLC
SUMMARY OF INVESTMENT CHANGES
For the year ended 28 February 2005
Valuation Net investment/ Appreciation/ Valuation
29 February 2004 Transfers (disinvestment) (depreciation) 28 February 2005
£'000 % £'000 £'000 £'000 £'000 %
Unlisted investments
Equities 3,574 12.6 - 1,007 (384) 4,197 14.7
Preference shares 702 2.5 - 80 10 792 2.8
Loan stocks 12,184 43.0 - (1,296) 42 10,930 38.2
_______ _______ _______ _______ _______ _______ _______
16,460 58.1 - (209) (332) 15,919 55.7
AIM investments
Equities 516 1.8 - 3,447 1,233 5,196 18.2
Listed investments
Equities - - - - - - -
Fixed income 5,374 18.9 - 963 (66) 6,271 22.0
_______ _______ _______ _______ _______ _______ _______
Total investments 22,350 78.8 - 4,201 835 27,386 95.9
Other net assets 6,017 21.2 - (4,847) - 1,170 4.1
_______ _______ _______ _______ _______ _______ _______
Total assets 28,367 100.0 - (646) 835 28,556 100.0
_______ _______ _______ _______ _______ _______ _______
MURRAY VCT 4 PLC
INVESTMENT PORTFOLIO SUMMARY
As at 28 February 2005
28 February 2005 29 February
% of 2004
Valuation total Bookcost Valuation
Nature of business £'000 assets £'000 £'000
Unlisted investments
TLC (Tender Loving Operator of day care nurseries 1,516 5.3 1,516 1,321
Childcare)
PSCA International Producer of publications aimed at public 1,211 4.2 750 1,125
sector officials
Transys Projects Engineering services to the rail 1,200 4.2 825 894
industry
Heathcotes Restaurant chain and providers of 976 3.4 975 771
Restaurants outside catering
Synexus Management of clinical trials 927 3.2 927 927
TMI Foods Manufacturer of cooked bacon and 878 3.1 750 530
vegetable products
RMS Europe Provider of stevedoring and ships agency 771 2.7 771 -
services
Sanastro B2B financial publishing 750 2.6 750 -
ScotNursing Provider of temporary and agency nursing 750 2.6 750 750
care staff
Transrent Holdings Rental and sale of trailers 718 2.5 644 530
Room2 Retailer of textiles, furniture, 700 2.5 700 625
lighting & home accessories
First Line Automotive aftermarket parts 632 2.2 641 403
Enterprise Food Group Supply chain and management services 598 2.1 598 598
bakery
ELE Advanced Precision engineering 588 2.1 641 641
Technologies
Mining Communications Publisher of specialist trade journals. 563 2.0 750 750
Astraeus Charter airline 550 1.9 550 550
PLM Dollar Group On-shore helicopter services 402 1.4 402 402
Link-Up Mitaka Language management business. 398 1.4 398 601
House of Dorchester Chocolate manufacturer 325 1.1 650 650
GW1016 Operator of managed public houses 322 1.1 590 429
Black Teknigas Manufacturer of gas controls 311 1.1 180 420
Voxsurf Software development 221 0.8 662 221
Swan Plant Services Grounds maintenance plant hire 215 0.8 330 250
Driver Hire Supplier of temporary drivers 171 0.6 171 -
Citel Technologies Integrated solutions for the telephony 75 0.3 156 32
and communications sector
Unique Communications TV production and communications 66 0.2 798 66
Group consultancy
Conveco Convenience stores 48 0.2 758 1,903
Businesshealth Group Provider of health management services 37 0.1 548 135
Bibliotech Holding Provider of internet services to the - - 250 -
education sector
CCM Motorcycles Motorcycle manufacturer - - 2,124 -
GW 665 Animation developer - - 9 -
Interak Distributor of household items - - 530 -
Jupiter II Building products - - 600 86
Mercury Inns Group Public house management services - - 307 -
Tuscan Energy Group Oil production company - - 850 850
_______ _______ _______ _______
15,919 55.7 22,851 16,460
_______ _______ _______ _______
AIM investments
Cello Group Marketing and media services 946 3.3 751 -
Augean Waste management 711 2.5 501 -
Careforce Group Provider of domiciliary care services 690 2.4 501 -
Tanfield Group Technical solutions and manufacturing 601 2.1 501 -
group
Bond International Human resources software 508 1.8 186 300
Software
Public Recruitment Public sector staffing in healthcare and 432 1.5 467 -
Group education
1st Dental Provider of dental laboratory services 411 1.4 301 -
Laboratories
Fountains Land management services 296 1.0 251 -
Avanti Screen Media Provision of in-store media services to 213 0.8 141 -
the retail and leisure sector
Award International Sourcing and delivery of merchandising 210 0.8 350 -
materials
Asfare Manufacture and supply of equipment for 178 0.6 188 216
the emergency services
_______ _______ _______ _______
5,196 18.2 4,138 516
_______ _______ _______ _______
Listed fixed income investments
Treasury 7.25% 1,490 5.2 1,500 -
December 2007
Treasury 7.5% 2006 1,465 5.1 1,473 -
Conversion 9.5% 2005 1,197 4.2 1,197 -
Treasury 4.5% 2007 1,065 3.8 1,068 -
Treasury 8.5% 1,054 3.7 1,047 857
December 2005
EIB 6% 2004 - - - 2,530
Treasury 5% June 2004 - - - 968
Treasury 6.75% 2004 - - - 1,019
_______ _______ _______ _______
6,271 22.0 6,285 5,374
_______ _______ _______ _______
Total investments 27,386 95.9 33,274 22,350
_______ _______ _______ _______
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