Final Results
Elderstreet VCT PLC
29 April 2005
ELDERSTREET VCT PLC (FORMERLY ELDERSTREET DOWNING VCT PLC)
PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2004
FINANCIAL HIGHLIGHTS
2004
pence
Net asset value per share 62.9p
Cumulative dividends since launch per share 29.5p
Total return (Net asset value per share plus cumulative dividends) 92.4p
The statement to shareholders by the Chairman, David Brock, includes the following comments:
Introduction
The year to 31 December 2004 has seen some improvement in the general climate
for small businesses, which, together with a focussed approach by the Investment
Manager, has contributed to an increase in the Company's Net Asset Value.
Net Asset Value
At 31 December 2004, the Net Asset Value per share ('NAV') was 62.9p, a rise of
9.4p or 16.6% (before distributions) since the previous year end.
Venture capital investments
The Company made two new investments and three follow on investments during the
year. At the year-end, the venture capital portfolio comprised investments in
26 companies with a cost of £8.1 million and valuation of £8.0 million.
The new investments made during the year are summarised as follows:
Cost
£'000
New investments
Careforce Groups plc Domiciliary care provider 190
Baldwin and Francis Flameproof switchgear manufacturer 150
Follow-on investments
Berkeley Scott Group plc Recruitment agency 146
Mediasurface plc Software developer 147
Snacktime Ltd Vending machine operator 150
The National Solicitors Network Ltd Services for solicitors 150
933
There were no realisations during the year other than redemptions of loan stock
by Berkeley Scott and UM Holdings.
The Board have reviewed the valuations of the unquoted investments at the
year-end and made a number of adjustments. Wessex Advanced Switching Products
Limited has continued to produce strong results, which has given rise to a
valuation increase of £215,000. Henry J Beans and The National Solicitors
Network have both made progress in recovering from difficulties and provisions
made previously of £200,000 and £250,000 have been released.
AIM stocks have also shown good increases in valuations over the year. A number
of successful acquisitions by Computer Software Group plc have contributed to an
improvement in its share price, and the value of the Company's investment has
risen by £414,000. Berkeley Scott's successful floatation on AIM in December
2004 helped the valuation of the investment increase by £280,000.
Overall the Venture Capital Portfolio showed unrealised gains of £1.298 million
over the year.
Results and Distribution
The profit on ordinary activities after taxation was £1,415,000 (2003 loss:
£846,000).
An interim distribution of 1p per share was paid on 29 October 2004. Your Board
is proposing to pay a final distribution of 2p per share on 21 June 2005 to
shareholders on the register at 20 May 2005.
'C' Share issue
In February 2005, the Company launched a 'C' Share issue to allow investors to
benefit from the 40% income tax relief now available on new investments into
VCTs. Supply of new VCT products has exceeded demand by many times for 2004/05
tax year and, as a result, the level of funds raised has been disappointing,
with approximately £1.5 million raised to date. Although the 'C' Share funds
will be operated as a separate pool, the running costs of the VCT are now shared
across the Ordinary and 'C' shareholders, so there are benefits for Shareholders
even though the levels of funds raised is lower than hoped.
Directorate
On 26 January 2005, Barry Dean joined the Board as a non-executive director.
Barry is a Chartered Accountant, with over 25 years' experience in the venture
capital industry and will be a valuable addition to the Board.
VCT qualifying status
Qualifying investments now represent 80% 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 246,100 shares at an average price of 47.0p per share. A
Special Resolution to continue with this policy is proposed for the forthcoming
AGM.
Annual General Meeting
The Annual General Meeting of the Company will be held at 32 Bedford Row, London
WC1R 4HE at 10:30am on 16 June 2005.
Outlook
Although there have been no significant exits during 2004, many of the portfolio
companies have progressed well, resulting in higher valuations. The Board is
encouraging the Investment Manager to continue to work closely with the investee
companies to support further progress and, in some cases, work towards possible
exits.
Exits from existing investments and the proceeds of the 'C' share issue will
provide a greater level of funds for new investments. There now appears to be
greater deal flow of new investment opportunities than for some time, however
the quality of these opportunities varies widely, so careful selection will be
the key to success.
UNAUDITED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2004
Year ended Year ended
31 December 31 December
2004 2003
£'000 £'000
Investment income 363 291
Investment management fees (143) (131)
Other expenses (166) (173)
Operating profit/(loss) 54 (13)
Net movement on permanent diminution provision 1,361 (621)
Loss on realisation of investments - (212)
Profit/(loss) on ordinary activities before taxation 1,415 (846)
Tax on ordinary activities - -
Profit/(loss) on ordinary activities after taxation 1,415 (846)
Dividends (439) (297)
Retained profit/(loss) for the year 976 (1,143)
Basic and diluted earnings/(loss) per share 9.6p (5.6p)
Basic and diluted earnings/(loss) per share is based on the profit on ordinary
activities after taxation of £1,415,000 (2003: loss: £846,000), but before
deduction of distributions of £439,000 (2003: £297,000), in respect of
14,791,121 ordinary shares (2003: 14,977,940), 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 2004
Year ended Year ended
31 December 2004 31 December 2003
£'000 £'000
Profit/(loss) on ordinary activities after 1,415 (846)
taxation
Revaluations - non-permanent diminutions (62) 597
Total recognised gains/(losses) for the 1,353 (249)
year
Recognised losses brought forward (1,931) (1,682)
Recognised losses carried forward (578) (1,931)
UNAUDITED NOTE OF HISTORICAL COST PROFITS AND LOSSES
for the year ended 31 December 2004
Year ended Year ended
31 December 2004 31 December 2003
£'000 £'000
Profit/(loss) on ordinary activities after taxation 1,415 (846)
Net movement on permanent diminution (1,361) 621
provision
Realisation of revaluation gains from (743) (897)
previous years
Historical cost loss on ordinary activities after (689) (1,122)
taxation
Dividends (439) (297)
Retained historical cost loss for the year (1,128) (1,419)
Historical cost (loss)/profit brought forward (672) 747
Historical cost loss profit carried forward (1,800) (672)
UNAUDITED BALANCE SHEET
as at 31 December 2004
As at As at
31 Dec 31 Dec
2004 2003
£'000 £'000 £'000 £'000
Fixed Assets
Venture capital investments 7,967 6,203
Current Assets
Debtors 48 41
Cash at bank and in hand 1,514 2,356
1,562 2,397
Creditors: amounts falling due within one (324) (192)
year
Net current assets 1,238 2,205
Net assets 9,205 8,408
Capital and reserves
Called up share capital 732 744
Capital redemption reserve 25 13
Revaluation reserve 1,908 1,227
Special reserve 6,540 6,424
Equity shareholders' funds 9,205 8,408
Net asset value per share 62.9p 56.5p
Net asset value per ordinary share is based on net assets at the year-end, and
on 14,639,300 ordinary shares (2003: 14,885,400), 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 2004
Year ended Year ended
31 Dec 31 Dec 2003
2004
£'000 £'000 £'000 £'000
Net cash inflow from operating 44 113
activities
Corporation tax - -
Capital expenditure
Purchase of venture capital investments (933) (846)
Sale of fixed income securities - 800
Sale of venture capital investments 468 1,116
Net cash (outflow)/inflow from capital (465) 1,070
expenditure
Equity dividends paid (296) (450)
Net cash (outflow)/inflow before financing (717) 733
Financing
Purchase of own shares (125) (79)
Net cash outflow from financing (125) (79)
(Decrease)/increase in cash (842) 654
Reconciliation of net cash flow to movement in net funds
2004 2003
£'000 £'000
(Decrease)/increase in cash during the year (842) 654
Net funds at 1 January 2004 2,356 1,702
Net funds at 31 December 2004 1,514 2,356
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 2004 or 31 December
2003. The statutory accounts for the year ended 31 December 2004 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 2003 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 2003.
A copy of the full annual report and financial statements for the year ended 31
December 2004 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
Friday, 10th January 2025
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