Final Results
Elderstreet Downing VCT PLC
29 April 2004
ELDERSTREET DOWNING VCT PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2003
FINANCIAL HIGHLIGHTS
2003
pence
Net asset value per share 56.5p
Cumulative dividends since launch per share 26.5p
Total return (Net asset value per share plus cumulative 83.0p
dividends)
The statement to shareholders by the Chairman, David Brock, includes the following comments:
Introduction
The year to 31 December 2003 saw a clear change in investor sentiment and,
throughout the latter part of the year, there was a steady increase in stock
market indices. However, as is often the case, the change in conditions has not
been immediately reflected in the valuation of unquoted businesses.
Consequently, there has not been any significant movement in the Company's Net
Asset Value ('NAV').
Net Asset Value
At 31 December 2003, the NAV was 56.5p, a fall of 2.4p or 4.0% (before taking
into account dividends) since the previous year end.
Venture capital investments
The Company made one new investment and five follow on investments during the
year. At the year-end, the venture capital portfolio comprised investments in
26 companies with a cost of £8.4 million and valuation of £6.2 million.
The new addition to the portfolio during the year was an investment of £400,000
in Snacktime Limited, a business which operates agreement-free vending machines.
The company has an aggressive expansion plan and has made satisfactory
progress to date.
The realisations and redemptions during the year are summarised as follows:
Cost Proceeds Historical MV at
Profit / 31/12/02
(loss)
£'000 £'000 £'000 £'000
Full disposals
Glisten plc 32 50 18 40
InterLink Foods plc 93 232 139 197
Partial Disposals
Hartest Holdings plc 14 12 (2) 9
World Travel Holdings 182 4 (178) 63
Redemptions
Rosebowl Ltd 250 250 - 250
UM (Holdings) Ltd 110 110 - 110
The National Solicitors Network Ltd 100 100 - 100
Computer Software Group plc 33 33 - 33
Wessex Advanced Switching Products Ltd 324 324 324
Liquidations etc. 1,022 - (1,022) 109
2,160 1,115 (1,045) 1,235
The Board have reviewed the valuations of the unquoted investments at the
year-end and made a number of adjustments.
Computer Software Group Plc, an AIM quoted software business, has made a number
of successful acquisitions during the year. The company's share price has
increased significantly giving rise to an increase in valuation of £507,000 over
the year. Fords Packaging Systems Limited and Wessex Advanced Switching
Products Limited have both performed well and have been valued upwards by
£400,000 and £174,000 respectively.
A number of other businesses in the portfolio have been restructured or provided
for during the year and, overall, the value of the venture capital portfolio
fell by £24,000. However, a prudent view has been taken in respect of a number
of investments in the technology sector and, given recent trends and market
activity, I am optimistic that we may be able to reverse the trend of reducing
valuations during the next year.
Directorate
Following his departure from Elderstreet, Chris Kay has today given notice to
the Company of his intention to resign from the Board at the forthcoming AGM.
I would like to thank Chris for his contribution since the Company's inception
in 1998. Barnaby Terry has now taken Chris' responsibilities as head of VCT
management at Elderstreet Private Equity Limited. It is not the Board's
intention to appoint a replacement Director a replacement at this time.
Continuation as a VCT
As stated in the Company's prospectus in 1998, the Company will put a resolution
to shareholders at the forthcoming AGM for the Company to continue as a VCT.
The Board have reviewed the state of the Company and its portfolio and, as a
result of the fact that the majority of the Company's investments are in
unquoted businesses and not readily realisable, the Directors feel it is clearly
in the best interests of Shareholders for the Company to continue as a VCT. The
Board, therefore, recommends that shareholders vote in favour of the resolution
at the AGM on 17 June 2004.
Results and Dividend
The loss on ordinary activities after taxation was £846,000 (2002: £776,000).
An interim dividend of 1.0p per share was paid on 10 October 2003. Your Board
is proposing to pay a final dividend of 1.0p per share on 21 June 2004 to
shareholders on the register at 14 May 2004.
VCT qualifying status
Qualifying investments now represent 74% of total investments (including cash)
thereby continuing to exceed the Venture Capital Trust qualifying criteria of a
minimum of 70%. The Board, with the assistance of PricewaterhouseCoopers,
continue to monitor the Company's compliance with the VCT legislation.
Share repurchase
The Board is conscious that the Company's share price is affected by the
illiquidity of its shares in the market, resulting from the requirement that
shareholders must retain their shares for at least five years in order to retain
their tax benefits. In line with accepted practice with VCTs, the Company has a
policy of purchasing its own shares. During the year the Directors used this
power to acquire 197,100 shares at an average price of 42.0p per share. A
Special Resolution to continue with this policy is proposed for the forthcoming
AGM.
Directors' authority to allot shares
Shareholders may be aware of the proposed changes to the VCT rules recently
announced, which increase the level of income tax relief available on new
investments made in VCTs. In view of these changes, the Board may give
consideration to issuing more shares by way of a top-up fundraising at an
appropriate point in the future. Naturally, all Shareholders will be notified
should the Board decided to pursue this. In order to allow the Company the
flexibility to consider this option, resolutions will be put at Shareholders at
the AGM to give Directors the authority to issue up to 4,912,000 Ordinary
Shares, being approximately 33 per cent of the Company's issued share capital at
today's date.
Annual General Meeting
The sixth Annual General Meeting of the Company will be held at 32 Bedford Row,
London WC1R 4HE at 9:30am on 17 June 2004.
Publication of share price
The Company's share price continues to be quoted in the Financial Times on a
daily basis in the 'Investment Companies' sector, under the abbreviation '
EldDnVCT'. The share price can also be found on various financial websites with
the TIDM/EPIC code 'EDV'.
Outlook
The last few years have presented challenging conditions for small and
developing companies and it has been difficult for most to make satisfactory
progress. As a consequence, and in line with most VCTs, your Company has
experienced a significant fall in its NAV. The recent change in investor
sentiment may now provide an opportunity for some of the stronger companies to
develop towards fulfilling their potential.
The venture capital portfolio is reasonably well balanced across a wide range of
industries, although it does have a significant exposure to the technology
sector. Generally prospects for companies within the Company's portfolio appear
brighter than for some time, the task of developing investee companies towards
successful outcomes will not be straightforward and will require continued close
monitoring and support from the Investment Manager.
UNAUDITED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2003
Year ended Year ended
31 December 31 December
2003 2002
£'000 £'000
Investment income 291 389
Investment management fees (131) (195)
Other expenses (173) (197)
Operating loss (13) (3)
Net movement on permanent diminution (621) (362)
provision
Loss on realisation of investments (212) (409)
Loss on ordinary activities before taxation (846) (774)
Tax on ordinary activities - (2)
Loss on ordinary activities after taxation (846) (776)
Dividends (297) (528)
Retained loss for the year (1,143) (1,304)
Loss per share (5.6p) (5.1p)
Loss per share is based on the loss on ordinary activities after taxation of
£846,000 (2002: £776,000), but before deduction of dividends of £297,000 (2002:
£528,000), in respect of 14,977,940 ordinary shares (2002: 15,095,363), being
the weighted average number of ordinary shares in issue during the year.
UNAUDITED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 December 2003
Year ended Year ended
31 December 2003 31 December 2002
£'000 £'000
Loss on ordinary activities after taxation (846) (776)
Revaluations - non-permanent diminutions 597 (1,087)
Total recognised losses for the year (249) (1,863)
Recognised (losses)/gains brought forward (1,682) 181
Recognised losses carried forward (1,931) (1,682)
UNAUDITED NOTE OF HISTORICAL COST PROFITS AND LOSSES
for the year ended 31 December 2003
Year ended Year ended
31 December 2003 31 December 2002
£'000 £'000
Loss on ordinary activities after taxation (846) (776)
Net movement on permanent diminution 621 362
provision
Realisation of revaluation gains from (897) (60)
previous years
Historical cost loss on ordinary activities after (1,122) (474)
taxation
Dividends (297) (528)
Retained historical cost loss for the year (1,419) (1,002)
Historical cost profit brought forward 747 1,749
Historical cost (loss)/profit carried forward (672) 747
UNAUDITED BALANCE SHEET as at 31 December 2003
As at As at
31 December 2003 31 December 2002
£'000 £'000 £'000 £'000
Fixed Assets
Venture capital investments 6,203 6,704
Listed fixed income securities - 805
6,203 7,509
Current Assets
Debtors 41 167
Cash at bank and in hand 2,356 1,702
2,397 1,869
Creditors: amounts falling due within one (192) (341)
year
Net current assets 2,205 1,528
Net assets 8,408 9,037
Capital and reserves
Called up share capital 744 754
Capital redemption reserve 13 3
Revaluation reserve 1,227 (267)
Special reserve 6,424 8,547
Equity shareholders' funds 8,408 9,037
Net asset value per share 56.5p 59.9p
Net asset value per ordinary share is based on net assets at the year-end, and
on 14,885,400 ordinary shares (2002: 15,082,500), being the number of ordinary
shares in issue at the year-end.
The Special Reserve is a distributable reserve that allows the Company to make
market purchases of its own shares and to pay dividends.
UNAUDITED CASHFLOW STATEMENT for year ended 31 December 2003
Year ended Year ended
31 December 2003 31 December 2002
£'000 £'000 £'000 £'000
Net cash inflow from operating 113 20
activities
Corporation tax
Income tax received - 36
Capital expenditure
Purchase of venture capital investments (846) (1,334)
Sale of fixed income securities 800 600
Sale of venture capital investments 1,116 799
Net cash inflow from capital 1,070 65
expenditure
Equity dividends paid (450) (528)
Net cash inflow/(outflow) before financing 733 (407)
Financing
Purchase of own shares (79) (3)
Net cash outflow from financing (79) (3)
Increase/(decrease) in cash 654 (410)
Reconciliation of net cash flow to movement in net funds
2003 2002
£'000 £'000
Increase/(decrease) in cash during the year 654 (410)
Net funds at 1 January 2003 1,702 2,112
Net funds at 31 December 2003 2,356 1,702
Announcement based on draft accounts (unqualified audit report)
The financial information set out in the announcement does not constitute the
Company's statutory accounts for the year ended 31 December 2003 or 31 December
2002. The statutory accounts for the year ended 31 December 2003 will be
finalised on the basis of the financial information presented by the directors
in this preliminary announcement and will be delivered to the Registrar of
Companies following the Company's Annual General Meeting.
The financial information for the year ended 31 December 2002 is derived from
the statutory accounts for that year which have been delivered to the Registrar
of Companies. The auditors reported on those accounts; this report was
unqualified and did not contain a statement under section 237(2) or (3) of the
Companies Act 1985. The financial information has been prepared on the basis of
the accounting policies set out in the Company's financial statements for the
year ended 31 December 2002.
A copy of the full annual report and financial statements for the year ended 31
December 2003 will be printed and posted to shareholders. Copies will also be
available to the public at the registered office of the Company at 69 Eccleston
Square, London SW1V 1PJ.
This information is provided by RNS
The company news service from the London Stock Exchange
Monday, 3rd February 2025
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