Final Results
Proven VCT PLC
16 May 2002
ProVen VCT plc
Preliminary Announcement of Results for the year to 28 February 2002
Chairman's Statement (extracted from Report & Accounts)
This is the second annual report presented to the shareholders of ProVen VCT,
covering the year ended 28 February 2002. Whilst the year under review saw the
continuation of difficult equity markets worldwide, towards the end of the
period there was a modest improvement in the environment for investment in
unquoted companies, and the investment manager continues to report evidence of
more realistic pricing expectations in investment opportunities being generated.
The investment rate achieved in the second half was similar to that in the
first half, and with six further investments completed since the year end, the
investment manager is continuing the progress towards the achievement of the
investment target required by the VCT legislation.
New Investments
During the year the investment manager invested £2.4 million in the qualifying
venture capital investment portfolio and £1.0 million in non-qualifying unquoted
investments. At the balance sheet date, the portfolio of venture capital
investments totalled fifteen (of which twelve are qualifying). This brings your
company almost halfway towards the target of 70% in qualifying investments that
is required by the Venture Capital Trust regulations. Investment activity has
continued since the year-end, with a further £1.1 million invested in qualifying
holdings.
Revenue and Dividends
Net revenue before tax for the year was £719,000 and the revenue return per
share was 2.4p. During the financial year under review, ProVen VCT paid an
interim dividend of 1.0p per share. The directors are proposing a final
dividend for the year of 1.3p per share, payable on 8 August 2002, which will
bring the total distribution for the year to 2.3p per share. The small decline
in the total dividend for the year is consistent with the increasing size of the
unquoted investment portfolio, which will normally have a lower yield than the
portfolio of fixed income investments. Shareholders should expect therefore the
annual dividend will reduce again in the coming year.
Net Asset Value
Shareholders' funds as at 28 February 2002 stood at £19.4 million. The net
asset value per share (NAV) at 28 February 2002 was 88.4p compared to 96.0p at
28 February 2001, after deducting the dividends paid and proposed. This decline
is equivalent to 7.8% over the year, after adding back the effect of the
dividends, and compares well to the drop in the FTSE AiM index of 36%.
Share Buy Backs
During the year, your company purchased 26,000 shares in the market for
cancellation, at a total cost of £22,036. Each purchase was made at a discount
to the then net asset value. In order to maintain the company's ability to
purchase its own shares where this is in the interests of shareholders, the
board will at the forthcoming annual general meeting once again be seeking
shareholder approval to renew its authority to purchase shares in the market.
To facilitate this policy, the cancellation of the company's share premium
account was confirmed by an Order of the High Court dated 23 January 2002 and a
Special Reserve has been created which can be utilised to purchase shares in the
market for cancellation.
Board Change
Stephen Edwards resigned from the board on 14 March 2002 and has been replaced
by Gordon Power, Chief Executive of the investment manager, ProVen Private
Equity Limited.
Prospects
Over the early life of the company, the investment manager invested slowly,
believing that potential investment opportunities were priced too highly. As a
result your company avoided some of the excessive valuations placed on unquoted
investments, and technology stocks in particular. The relatively high cash
retention that resulted from this policy has benefited your company, whose
performance compares well with that of the UK quoted equity indices over that
same period. We are now entering a period in which we expect relatively heavy
investment leading up to the third anniversary of inception of the VCT. A
number of larger, promising investments are already in process, nonetheless
market conditions remain unpredictable and your board continues to take a
cautious view of the future.
In the last quarter of this financial year the climate for investment in
unquoted companies showed signs of significant improvement when compared with
earlier periods following the VCT's launch in 2000. This last quarter has seen
a stabilising of stock markets with the FTSE AiM index reducing by 6% compared
to 36% in the full year and the more mature FTSE AllShare reducing by 2%
compared to 14% in the full year. The reduction in market volatility should
provide the investment manager with a better economic background against which
to invest the remaining qualifying portfolio in the third year of the company's
life. Whilst it is too early to anticipate the outcome of the existing
investments there are grounds to hope that on balance the winners will outweigh
the losers. The objective of the company remains the generation of tax-free
capital and income returns to shareholders over the next five to ten years.
Annual General Meeting
The annual general meeting will be held at 11.00 a.m. on 7 August 2002 at 42
Craven Street, London, WC2N 5NG. I look forward to meeting those shareholders
that are able to attend.
Andrew Davison
Chairman
16 May 2002
Statement of Total Return (incorporating the revenue account)
for the year ended 28 February 2002
Year ended Period ended
28 Feb 28 Feb
2002 2001
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
(Losses)/gains on investments
- realised - (137) (137) - 119 119
- unrealised - (1,289) (1,289) - 219 219
Income 1,060 - 1,060 1,096 - 1,096
Investment management fee (122) (365) (487) (86) (258) (344)
Other expenses (219) - (219) (214) - (214)
Return on ordinary activities
before taxation 719 (1,791) (1,072) 796 80 876
Tax (charge)/credit on ordinary (197) 118 (221) 84 (137)
activities (79)
Return on ordinary activities 522 (1,673) (1,151) 575 164 739
after taxation
Dividends (505) - (505) (527) - (527)
Transfer to/(from) reserves 17 (1,673) (1,656) 48 164 212
Return per ordinary share 2.4p (7.6p) (5.2p) 2.8p 0.8p 3.6p
Basic and diluted
Balance Sheet
28 February 2002 2001
£000 £000
Fixed assets
Investments unquoted 3,535 2,212
Investments - AIM traded 2,960 2,024
Fixed Interest - listed 11,492 14,026
Fixed Interest - unlisted 1,300 2,908
Total fixed assets 19,287 21,170
Net current assets/(liabilities) 119 (86)
Total assets less current liabilities 19,406 21,084
Capital and reserves
Called-up share capital 1,097 1,099
Reserves 18,309 19,985
Total equity shareholders' funds 19,406 21,084
Net asset value per ordinary share 88.4p 96.0p
Cash Flow Statement
for the year to 28 February 2002
Year ended Period ended
28 February 28 February
2002 2001
£000 £000
Net revenue from operating activities
Net revenue from ordinary activities before tax 719 796
Decrease/(increase) in debtors 84 (279)
Increase in creditors 41 169
Management fees charged to capital (365) (258)
Net cash inflow from operating activities 479 428
Corporation tax paid (138) -
Financial investment
Purchase of investments (23,229) (54,795)
Sale of investments 23,686 33,963
Net cash inflow/(outflow) from financial investment 457 (20,832)
Equity dividends paid (747) -
Financing
Issue of redeemable preference shares - 50
Issue of ordinary shares - 21,970
Share issue expenses - (1,098)
Redemption of preference shares - (50)
Buy-back of 26,000 ordinary shares (22) -
Net cash (outflow)/inflow from financing (22) 20,872
Increase in cash in period 29 468
Analysis of cash balance
At 28 February 2001 468 -
Net cash inflow for the period 29 468
At 28 February 2002 497 468
Notes
1 The financial information set out above does not
constitute the company's statutory accounts for the year to 28 February 2002,
but is derived from those accounts. The auditors have reported on those
accounts; their report was unqualified and did not contain statements under s237
(2) or (3) Companies Act 1985. The accounts have yet to be approved by
shareholders and delivered to the Registrar of Companies.
2 The Revenue column of the Statement of Total Return is the
revenue account of the company. The prior year comparatives cover the 58 week
period ended 28 February 2001.
3 Returns per ordinary share are based on the revenue and capital
returns on ordinary activities after taxation and on 21,954,944 (2001:
20,720,492) ordinary shares, being the weighted average number of shares in
issue during the year. There were 21,944,502 (2001: 21,970,502) ordinary shares
in issue at 28 February 2002.
4 The directors recommend a dividend of 1.3p per share to be
paid on 8 August 2002 to shareholders on the Register of Members at the close of
business on 5 July 2002.
5 Unlisted investments have been valued at directors' valuation in
accordance with the guidelines of the British Venture Capital Association.
Investments traded on the Alternative Investment Market have been valued at
market value.
6 The audited accounts will be posted to shareholders by 31 May
2002 and copies of this announcement are available at the company's registered
office: 42 Craven Street, London WC2N 5NG.
ENDS
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