Interim Results

Murray VCT 4 PLC 15 October 2003 Murray VCT 4 PLC Interim Results for the Six Months to 31 August 2003 The Directors announce the unaudited interim results of Murray VCT 4 PLC for the six months to 31 August 2003. Investment activity Further unlisted investment during the six months ended 31 August 2003 totalled £1.6 million. At 31 August 2003, the portfolio stood at 31 investments having a total cost of £22.3 million. In addition to follow-on fundings, the following new investment has been made since the publication of the Annual Report:- Mining Communications Limited (May 2003) - £750,000: Based in London, Mining Communications is a publisher of magazines and journals for the mining industry. Portfolio developments At this relatively early stage of building the portfolio, it is not expected that exits will occur. However, in July, Black Teknigas repaid around a third of its loan stock ahead of schedule amounting to £112,500, including a premium of 12.5%, which is included in the Company's income for the period. Performance Market conditions show little signs of improvement and this is evident in increasing reports of weakening profits. The strength of sterling, combined with UK interest rates that, despite recent falls to historically low levels, remain relatively high compared to our international competitors, has made the environment for small companies particularly tough for some considerable time. Sterling did depreciate against the euro in the earlier part of the year and this provided a more favourable backdrop for UK exports to Europe, but exchange rates with the US moved in the opposite direction. Economic data in the UK over the last few months has been mixed, with unemployment continuing at levels last seen in the mid 1970s, inflation remaining relatively low, despite the continuing strength of the housing market, but declining levels of manufacturing output. Growth in the UK is low and is expected to remain so during the remainder of 2003 and 2004, although there are some signs of an upturn in the global economy which would offer some relief. Consumer spending is being fuelled by increased debt, with net lending secured on personal dwellings reaching its highest level since records began. These conditions continue to have an impact on the valuations of the Company's investment portfolio and on income accrual for the period under review. The Net Asset Value (NAV) per share at 31 August 2003, before payment of the interim dividend, was 78.0p compared with 79.0p at 28 February 2003. The decrease in NAV of 1.3% compares with the increase in stock market indices generally in expectation of substantial earnings growth. The level of income has also fallen due to a combination of reduced yield from funds held awaiting investment in unlisted companies, performance and the mix of the unlisted portfolio. Sentiment reflected in the market indices seems to be at odds with many commentators' concerns about the sustainability of consumer spending and corporate profits in a climate of low growth, currency strength and potential rises in interest rates. What has been very clear to some considerable time, through the monthly management accounts which are received from investee companies and the board meetings which the Manager attends, is that market conditions are very difficult and small companies in particular have been exposed to these difficulties. Investment strategy The Company is not yet fully invested and new investments will continue until an investment level of around 85% is achieved. In addition, the Manager is concentrating on intense portfolio management to help the investee companies manage through current market conditions, the aim being to restore value and ultimately achieve successful disposals from a position of strength when market conditions recover. In these circumstances, it is not only capital valuations which are under pressure but also the ability of the investee companies to pay dividends and interest to investors. The Manager is working to assist certain companies to enable them to resume payments to the Company. Valuation process Murray VCT 4's investments in unlisted companies are valued at fair value in accordance with the British Venture Capital Association guidelines. Investments are normally valued at cost, or cost less a provision, until they have been held for at least one year. As a result, should performance be ahead of plan, which may imply an increase in the value of the investment, this would not be reflected for at least 12 months; on the other hand, any material underperformance would be immediately reflected in a reduced valuation. Mature companies are valued by applying a multiple to the fully taxed prospective earnings to determine the enterprise value of the company. Dividends and returns to date The Board declares an interim dividend of 0.5p per share ('pps') for the year ending 29 February 2004 (2003 - 1pps), payable on 12 December 2003 to Shareholders on the register at 14 November 2003. Future dividends from capital gains will depend on the achievement of further realisations. Since the Company's launch, most Shareholders will have received 8.3pps in tax free dividends. To an investor who took advantage of all available tax reliefs and deferrals, this represents a return of 10.4% of the effective initial investment cost of 80pps. The total return since launch is 85.8pps, being the sum of dividends paid plus current NAV, for a Shareholder who subscribed at launch. 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. Dividend re-investment The Board has decided to terminate the dividend re-investment scheme with immediate effect. The rules of the scheme require the issue of new shares under the scheme at the prevailing Net Asset Value per share on the date of re-investment. However, at present, the Company's shares stand at a substantial discount to the Net Asset Value and therefore the Board believes that it is not in Shareholders' interests for their dividends to continue to be re-invested. Therefore, Shareholders who had previously elected to reinvest their dividends will receive any future distributions by cheque or bank transfer. Outlook The Company now has a portfolio of investments in 31 companies and the Manager believes that a number of these have good prospects, which should respond to an improvement in the economic environment but it is likely to be some time before those prospects can be demonstrated in profitable realisations. For the most part, they are immature investments, from the Company's point of view, and even where they are in established businesses, the Manager expects to develop them over a number of years before they are mature enough to seek an exit. The Manager does not expect to attract offers while the companies are immature and would not respond to an offer unless it is extremely attractive. The immediate priority of the Manager is to concentrate efforts with a view to improving performance and planning for exits in the medium to long term. The investment process has become more protracted due to vendor resistance to price reductions and the Manager's caution regarding future prospects. While this has had an impact on the rate of new investment, the Manager intends to continue to maintain a prudent approach to investment for the foreseeable future. MURRAY VCT 4 SUMMARY OF INVESTMENT CHANGES For the six months ended 31 August 2003 Net Valuation investment Appreciation Valuation 28 February Transfers (disinvestment) (depreciation) 31 August 2003 2003 £'000 % £'000 £'000 £'000 £'000 % Unlisted investments Equities 3,454 11.4 634 234 (453) 3,869 12.9 Preference 541 1.8 1 5 (3) 544 1.8 shares Loan stock 10,360 34.1 (635) 1,230 128 11,083 37.1 ------------ ------ ---------- --------- ------ ------ 14,355 47.3 - 1,469 (328) 15,496 51.8 ------------ ------- --------- --------- ------ ------ Listed investments Listed fixed6,924 22.8 - (490) (98) 6,336 21.2 income ------ ------ ------- ---------- --------- ------ ------ Total 21,279 70.1 - 979 (426) 21,832 73.0 investments------ ------ ------- ---------- --------- ------ ------ Other net 9,102 29.9 - (1,032) - 8,070 27.0 assets ------ ------ ------- ---------- --------- ------ ------ Total assets* 30,381 100.0 - (53) (426) 29,902 100.0 ------ ------ ------- ---------- --------- ------ ------ * Total assets represents equity Shareholders' funds MURRAY VCT 4 PLC INVESTMENT PORTFOLIO SUMMARY As at 31 August 2003 % of Valuation total Unlisted investments Nature of business £'000 assets Conveco Convenience store 1,816 6.1 operator TLC (Tender Loving Operator of day care 1,321 4.4 Childcare) nurseries CCM Motorcycles Motorcycle manufacturer 1,008 3.4 Tuscan Energy Group Oil production 850 2.8 Transys Projects Supplier of engineering 825 2.8 services and equipment to UK rail industry PSCA International Government sector 750 2.5 publishing Mining Communications Publisher of mining 750 2.5 related journals and magazines TMI Foods Manufacturer of cooked 750 2.5 bacon and vegetable products ScotNursing Provider of temporary and 750 2.5 agency nursing and care staff Synexus Management of clinical 695 2.3 trials Other investments valued individually at less than 5,981 20.0 £690,000 ------- ------ 15,496 51.8 Listed fixed income investments European Investment Bank 6% 26/11/2004 2,558 8.5 Treasury 6.75% 26/11/ 1,035 3.5 2004 Treasury 8.5% 7/12/2005 984 3.3 Treasury 6.5% 7/12/2003 706 2.4 Treasury 7.5% 7/12/2006 548 1.8 Treasury 5% 7/6/2004 505 1.7 ------- ------ 6,336 21.2 ------- ------ Total investments 21,832 73.0 ------- ------ MURRAY VCT 4 PLC INDEPENDENT REVIEW REPORT TO MURRAY VCT 4 PLC Introduction We have been instructed by the Company to review the financial information for the six months ended 31 August 2003 which comprises the Profit and Loss Account, Statement of Total Recognised Gains and Losses, Balance Sheet, Cash Flow Statement and the related notes 1 to 3. We have read the other information contained in the Interim Report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the Company in accordance with guidance contained in Bulletin 1999/4 'Review of interim financial information' issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed. Directors' responsibilities The Interim Report, including the financial information contained therein, is the responsibility of, and has been approved by the Directors. The Directors are responsible for preparing the Interim Report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 'Review of interim financial information' issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 August 2003. Ernst & Young LLP 15 October 2003 Glasgow Murray VCT 4 PLC Profit and Loss Account For the six months ended 31 August 2003 Six months to Six months to Year ended 31 August 2003 31 August 2002 28 February 2003 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Income Investment income and deposit 611 1,040 1,919 interest Investment management fees (453) (505) (1,002) Other expenses (111) (83) (164) ---------- ---------- ----------- Operating profit 47 452 753 Profit/(loss) on realisation of 2 (38) 147 investments ---------- ---------- ----------- Profit on ordinary activities before 49 414 900 taxation Tax on ordinary activities (6) (123) (260) ---------- ---------- ----------- Profit on ordinary activities after 43 291 640 taxation Ordinary dividends on equity shares: Interim 0.5p (2003 - 1.0p) (193) (385) (385) Final nil (2003 - 1.5p) - - (576) Over accrual in prior years - 2 2 ---------- ---------- ----------- Balance transferred from reserves (150) (92) (319) ---------- ---------- ----------- Earnings per share (pence) (note 3) 0.1 0.8 1.7 ---------- ---------- ----------- Statement of Total Recognised Gains and Losses For the six months ended 31 August 2003 Six months to Six months to Year ended 31 August 2003 31 August 2002 28 February 2003 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Profit on ordinary activities after 43 291 640 taxation Unrealised loss on revaluation of (428) (604) (3,705) investments Current taxation attributable to 6 102 260 unrealised gains and losses on ---------- ----------- ---------- investments Total recognised gains and losses (379) (211) (2,805) relating to the period ---------- ----------- ---------- Murray VCT 4 PLC Balance Sheet As at 31 August 2003 31 August 31 August 28 February 2003 2002 2003 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Fixed assets Investments 21,832 33,181 21,279 Current assets Debtors 1,047 1,047 877 Cash and overnight deposits 7,505 94 9,118 ----------- ----------- ------------ 8,552 1,141 9,995 Creditors Amounts falling due within 482 789 893 one year ----------- ----------- ------------ Net current assets 8,070 352 9,102 ----------- ----------- ------------ 29,902 33,533 30,381 ----------- ----------- ------------ Capital and reserves Called up share capital 3,858 3,846 3,846 Share premium account (note 17,236 17,101 17,155 2) Revaluation reserve (note 2) (6,204) (2,632) (5,727) Capital redemption reserve 27 19 27 (note 2) Profit and loss account (note 14,985 15,199 15,080 2) ----------- ----------- ------------ Equity Shareholders' funds 29,902 33,533 30,381 ----------- ----------- ------------ Net Asset Value per Ordinary 77.5 87.2 79.0 share (pence) (note 3) ----------- ----------- ------------ Murray VCT 4 PLC Cash Flow Statement For the six months ended 31 August 2003 Six months to Six months to Year ended 31 August 2003 31 August 2002 28 February 2003 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Operating activities Investment income 420 880 2,055 received Deposit interest received 1 3 10 Miscellaneous income 4 - - received Investment management fees (474) (415) (964) paid Secretarial fees paid (32) (31) (63) Cash paid to and on behalf (32) (21) (40) of Directors Other cash payments (58) (41) (74) ----------- ---------- --------- Net cash (outflow)/inflow (171) 375 924 from operating activities Taxation - 36 36 Financial investment Purchase of investments (4,326) (7,430) (13,407) Sale of investments 3,307 7,388 22,268 ----------- ---------- --------- Net cash (outflow)/inflow (1,019) (42) 8,861 from financial investment Equity dividends paid (577) (576) (960) Net cash (outflow)/inflow (1,767) (207) 8,861 before financing Financing Issue of Ordinary shares 154 90 90 Repurchase of Ordinary - (132) (176) shares ----------- ---------- --------- Net cash inflow/(outflow) 154 (42) (86) from financing ----------- ---------- --------- (Decrease)/increase in (1,613) (249) 8,775 cash ----------- ---------- --------- Murray VCT 4 PLC Notes to the Financial Statements 1. Accounting policies The financial information contained in this report has been prepared on the basis of the accounting policies set out in the Annual Report for the year ended 28 February 2003. The results for the year ended 28 February 2003 are abridged from the full accounts for that year, which received an unqualified report from the Auditors and have been filed with the Registrar of Companies. 2. Movement in reserves Share Capital Profit premium Revaluation redemption and loss account reserve reserve account £'000 £'000 £'000 £'000 As at 1 March 2003 17,155 (5,727) 27 15,080 Issue of Shares 81 - - - Transfer of realised - (78) - 78 profits to profit and loss account Tax effect of transfer - 23 - (23) of profits to profit and loss account Taxation attributable - 6 - - to unrealised loss on investment Net decrease in value - (428) - - of investments Retained loss for the - - - (150) period ------- -------- -------- ------- As at 31 August 2003 17,236 (6,204) 27 14,985 ------- -------- -------- ------- 3. Earnings and NAV per share Earnings per Ordinary share has been calculated using the average number of shares in issue during the period of 38,479,307. The Net Asset Value per Ordinary share at 31 August 2003 has been calculated using the number of shares in issue at that date of 38,583,295. A full copy of the interim report will be printed and issued to shareholders. The results for the six months ended 31 August 2003 will be filed with the Registrar of Companies. Copies of this announcement will be available at the registered office of the Company, One Bow Churchyard, Cheapside, London EC4M 9HH and at Aberdeen's office at 123 St Vincent Street, Glasgow G2 5EA. By Order of the Board MURRAY JOHNSTONE LIMITED SECRETARY 15 October 2003 This information is provided by RNS The company news service from the London Stock Exchange

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