Final Results
T&G AIM VCT PLC
17 March 2004
T&G AIM VCT PLC - FINAL RESULTS TO 31ST DECEMBER 2003
17TH MARCH 2004
FINANCIAL HIGHLIGHTS
Ordinary Share
Year ended Period ended
31 December 2003 31 December 2002+
Total return per share 0.1 p 2.9 p
Net asset value per share 97.0 p 96.8 p
Net assets £2,768,219 £2,771,200
Share price (mid-market price) 77.5 p 100.0 p
Amount invested in qualifying investments (cost) £582,981 £210,000
+ The comparative figures for 2002 cover a reporting period of 14 months.
'C' Share
Period ended
31 December 2003+
Total return per share 1.2 p
Net asset value per share 95.3 p
Net assets £554, 547
Share price (mid-market price) 100.0 p
Amount invested in qualifying investments (cost) £26,959
+ The 'C' Shares were launched on 8 October 2003
INVESTMENT MANAGER'S REPORT
Investments
By the end of December 2003, £1,679,045 (2002: £1,002,149) from the Ordinary
Share pool of capital had been invested in preference shares, gilt-edged
securities and a European Investment Bank bond. These fixed interest securities
accounted for 61% (2002: 36%) of total Ordinary Share net assets. Investments in
qualifying securities accounted for 21% of total Ordinary Share net assets and
5% of total 'C' Share net assets at the end of December 2003. All investments
are in the UK. The remaining funds in each class of share continue to earn
interest in a deposit account.
Holdings in four qualifying AIM investments were added to the Ordinary Share
portfolio during 2003 - Micap plc, Monstermob Group plc, Immedia Broadcasting
plc and Smart Approach Group plc. The 'C' Shares participated alongside the
Ordinary Shares investing in Monstermob Group plc and Immedia Broadcasting plc.
After the year end both classes of share invested in Cytomyx Holdings plc, (in
the case of the Ordinary Shares in the form of a top-up to the existing holding)
to fund international expansion of their drug discovery related products and
technology.
Micap's principal activity is the development, production and licensing of
micro encapsulation technology based on yeast organisms, which can be used in
food flavourings, agrochemicals and in pharmaceuticals for faster drug release.
Since the period end the company has won its first pharmaceutical licence in a
deal with SkyePharma Plc.
Monstermob develops ring tones, games and competitions in the fast-growing and
lucrative mobile content and services market. The company is profitable, has a
market brand, and key industry partner agreements delivering products to over
2.7m customers. Since the period end the company announced that it had entered
into an agreement with Dixons to become their exclusive provider of non-network
mobile content.
Immedia Broadcasting provides radio programmes, including music,
info-commercials and staff training content for shops and convenience stores
including Lloyds Pharmacy.
Smart Approach provides software and the associated training of X-ray
surveillance equipment to airport employees. Future potential new business areas
include the maritime sector as well as government departments.
Outlook
The short-term market conditions lead us to anticipate a buoyant new issues
market. Modest domestic economic growth in the UK and relatively low inflation
levels achieved by most developed countries support a favourable outlook for
most smaller companies. Low price to earnings ratios and favourably priced
acquisitions will also boost suitable qualifying issues of existing AIM or OFEX
stocks which offer relevant new equity. As always geopolitical events could have
a detrimental effect here.
The managers are currently looking at four additional qualifying investments in
the security, airport runway, smoke alarm and financial software areas.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present my annual statement to shareholders for the full year
ended 31 December 2003.
Since the launch of the Company in 2002, £3,436,979 has been raised, including
the proceeds of the 'C' Share offer which closed on 30 September 2003 having
raised £581,600. Market sentiment has continued to improve since I last reported
to you, the FTSE All-Share Index having risen 12% in the 6 months ended 31
December 2003 and the FTSE SmallCap and FTSE AIM indices also having shown
strong rises.
Portfolio Activity
During the period under review your Investment Manager has maintained a highly
selective approach with regard to building up the qualifying investment
portfolios. Four new qualifying investments were added to the Ordinary Share
portfolio at a total cost of £372,981, while the 'C' Shares participated
alongside two of these investments at a total cost of £26,958. These new
investments are described in the Investment Manager's review.
At the year end, the Ordinary Share qualifying portfolio comprised six
investments at a total cost of £582,981 (2002: £209,999). The 'C' Share
qualifying portfolio comprised two investments at a total cost of £26,958.
While it is very early days for the 'C' Share pool of capital, the Ordinary
Share qualifying portfolio is now becoming well diversified across industry
sectors - although the pace of investment has been very slow.
Approximately 76% (£2,104,202) of the Ordinary Share net assets and 92%
(£511,010) of the 'C' Share net assets by value were held in cash and listed
fixed interest investments as at 31 December 2003.
Results and Dividend
The net movement on the Ordinary Share qualifying portfolio has been a rise in
value of £25,745 (2002: £73,659) and on the 'C' Share portfolio, a rise of £660.
The Ordinary Share fixed interest portfolio gave rise to income of £96,062
(2002: £33,046) during the year and unrealised capital losses of £40,680 (2002:
£10,247).
At 31 December 2003 the net asset value per Ordinary Share was 97.0p per and
95.3p per 'C' Share compared with their 95.0p and 94.5p respective launch
prices. This has been a satisfactory performance for a VCT in its early years
and is a direct reflection of the caution with which the Investment Manager has
proceeded in an environment where the number of attractive qualifying new issues
has been limited.
Gross revenue for the Ordinary Shares in the period was £104,295 (2002:
£150,930) and for the 'C' Shares was £9,830. Net return after taxation was
£3,893 (2002: £50,420) and £4,935 respectively. The Company's respective
revenue accounts show a debit of £10,895 (2002: £31,475) and a credit of £4,679,
therefore I will not be recommending that a dividend be paid.
Share Price
The Company's closing mid-market price on 31 December was 77.5p (2002: 100p) and
100p for the Ordinary and 'C' Shares respectively. This represented a discount
of 20% and a premium of 5% against their respective net asset values.
In common with other VCTs, there is limited secondary trading activity in the
shares of the Company. However, the Board has established a discretionary
buyback facility to allow for shares to be bought back and cancelled in certain
circumstances. During the period the Company purchased 9,000 Ordinary Shares at
76p per share. The shares were subsequently cancelled.
Prospects
The recent recovery seen by stockmarkets looks set to continue, creating a
background against which the qualifying portfolio can achieve capital growth.
In mind of the requirement to be 70% invested in 'qualifying investments' by 31
December 2004, the Investment Manager will clearly need to increase the pace of
investment. I am encouraged that the IPO market has improved considerably since
I last reported and am hopeful that this objective will be achieved.
A.E.B. Wiegman
Chairman
16th March 2004
THE PORTFOLIO OF INVESTMENTS
The following are the details of qualifying investments at 31 December 2003.
All of these are UK Equity Investments.
Company Original Market value Percentage of
Cost 31 December qualifying
2003 portfolio
value
£'000 £'000
Ord 'C' Ord 'C' Ord 'C'
Share Share Share Share Share Share
Lloyds British Testing plc 130 - 113 - 16.5% -
Lloyds British Testing provides a comprehensive lifting
equipment service in the UK. Through a network of 19
branch locations, the group provides inspection, training,
testing, certification and maintenance services to a broad
range of customers in the chemicals, coal, power
generation, nuclear, constructions, mechanical
engineering, steel, rail, marine and a range of other
sectors.
In the six months to 30 June 2003 the company generated
turnover of £8.3 million (an increase of 2.7% compared to
£8.1 million for the comparable period in 2002). Profits
after tax and interest were £203,700 (an increase of 3.7%
compared to £196,300 for the comparable period in 2002).
Cytomyx Holdings plc 80 - 253 - 37.0% -
Cytomyx provides outsourced research and development
facilities to the pharmaceutical industry. Clients of the
Group include a number of leading pharmaceutical and
biotechnology companies. The recent acquisition of
Clinomics Biosciences Inc. which provides tissue derived
products and serves will be a key driver for the company.
In the year ended 30 September 2003 the Company grew its
revenues by more than 500%, from £930,180 to £5,101,315.
Gross profit grew from £644,489 to £2,560,138 with good
progress towards the target of profitability by reducing
2002 losses of £886,195 to £414,051.
Smart Approach Group plc 120 - 66 - 9.7% -
Smart Approach is a world-class provider of computer based
training solutions for staff involved in protecting
high-risk environments, such as airports and airlines,
correctional establishments, law enforcement centres,
military bases and government buildings.
In the six month period to 30 September 2003 the Company
generated turnover of £731,000 and loss both before and
after taxation of £2,052,000.
MICAP plc 120 - 115 - 16.8% -
Micap's principal business activity is the development,
production and licensing of micro-encapsulation technology
based on single cell organisms, in particular yeast. These
organisms can be used as capsules to protect and deliver
actives including flavours, agrochemicals and
pharmaceuticals.
Since the period end a major US condiments producer has
placed an initial order for Micap encapsulated mustard for
use in table sauces. This is the first food-related order
Micap has received. Furthermore the company has recently
announced that SkyePharma will use its micro-encapsulation
technology for the delivery of hydrophic drugs for up to
10 pharmaceutical products. Micap will receive an initial
payment as well as ongoing royalties.
In the six months to 30 September 2003 the company
generated turnover on continuing operations of £0.28m
(2002: £0.07m). Losses after tax were £0.57m (2002: loss
£0.84m).
Monstermob Group plc 73 15 75 15 11.0% 54.8%
Monstermob markets mobile phone content such as ringtones,
competitions, wallpapers, voicemails, logos, alerts and
games. The company focuses on entertainment and
personalisation products that appeal to the most prolific
adopters of mobile content - the 14-30 age group.
Promotional partners include The Link and Dialaphone, and
since the period end Dixons, as well as certain
mass-circulation magazines and web partners.
Monstermob has built a profitable business and is building
recurring revenue streams. With a database of over 2.7
million customers, revenues were £6.6 million and
operating profit, £910,000 in the first half of 2003 (Full
Year 2002 revenue £7.9 million, operating profit
£310,000).
Immedia Broadcasting plc 60 12 61 13 9.0% 45.2%
Immedia designs and operates live radio stations providing
tailored commercial programming to retail outlets. Revenue
is derived through a combination of advertising revenues
and subscription fees. In February 2002, Immedia launched
its first fully operational live retail radio station,
Newsagents Radio, which now broadcasts its tailored
programming to approximately 2,300 convenience stores in
the UK. In April 2003, Immedia launched Lloydspharmacy
Live after signing a five year broadcast contract with
Lloyds Pharmacy to broadcast this station. On 1 December
2003, Immedia signed a contract with Dixons to provide a
radio station for up to 50 of its stores for an initial
trial period of three months. Since the period end the
company announced that Dixons has extended this trial.
Percentage of Equity held by T&G AIM VCT plc and other T&G Percentage of Percentage of Total
funds Equity held by T Equity held by
&G AIM VCT plc other funds of T Percentage
&G
Lloyds British Testing PLC 2.0% 2.0%
Cytomyx Holdings plc 1.5% 0.2% 1.7%
Smart Approach Group plc 1.3% 1.3%
MICAP plc 0.8% 0.2% 1.0%
Monstermob Group plc 0.3% 0.3% 0.6%
Immedia Broadcasting plc 0.6% 0.2% 0.8%
Statement of Total Return (incorporating the revenue account)
for the year ended 31 December 2003
Ordinary Shares 'C' Shares *
31 December 2003 31 December 2003
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
(Loss)/Gain on investments - (15) (15) - 1 1
Investment income 119 - 119 9 - 9
Investment management fees (1) (2) (3) - (1) (1)
Other expenses (97) - (97) (4) (4)
Return/(Loss) on ordinary activities before tax 21 (17) 4 5 - 5
Tax on ordinary activities - - - -
Return/(Loss) on ordinary activities after tax 21 (17) 4 5 - 5
Dividends proposed - -
Transfer to/(from) reserves 21 (17) 4 5 5
Return/(Loss) per share (pence) 0.7 (0.6) 0.1 1.1 0.1 1.2
Total Ordinary Shares +
31 December 2003 31 December 2002
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
(Loss)/Gain on investments - (14) (14) - 84 84
Investment income 128 - 128 67 - 67
Investment management fees (1) (3) (4) (1) (2) (3)
Other expenses (101) (101) (98) - (98)
Return/(Loss) on ordinary activities before 26 (17) 9 (32) 82 50
tax
Tax on ordinary activities -
Return/(Loss) on ordinary activities after 26 (17) 9 (32) 82 50
tax
Dividends proposed
Transfer to/(from) reserves 26 (17) 9 (32) 82 50
Return/(Loss) per share (pence) 0.8 (0.5) 0.3 (1.8) 4.7 2.9
+ The comparative figures for 2002 cover a reporting period of 14 months.
* The 'C' Shares were launched on 8 October 2003.
All revenue and capital items in the above statement derive from continuing
operations.
The revenue column of this statement is the profit and loss account of the
Company.
The Company has only one class of business and derives its income from
investments made in shares and securities and from bank deposits.
No operations were acquired or discontinued in the year.
Balance Sheet
As at 31 December 2003
Ordinary Shares 'C' Shares Total Ordinary Shares
31 December 31 December 31 December 31 December
2003 2003 2003 2002
£'000 £'000 £'000 £'000
Fixed assets
Investments 2,325 28 2,353 1,290
Current assets
Debtors 20 20 40 2
Cash at bank 462 511 973 1,490
482 531 1,013 1,492
Creditors: amounts falling due within one 39 4 43 11
year
Net current assets 443 527 970 1,481
Total assets less current liabilities 2,768 555 3,323 2,771
Capital and reserves
Called up equity share capital 29 6 35 29
Share premium - - 2,692
Capital redemption reserve+ - - - -
Special distributable reserve 2,685 544 3,229 -
Realised capital reserve (4) (1) (5) (2)
Unrealised capital reserve 69 1 70 84
Revenue reserve (11) 5 (6) (32)
Total equity shareholders' funds 2,768 555 3,323 2,771
Net asset value per ordinary share 97.0p 95.3p 96.7p 96.8p
+ The capital redemption reserve has a credit of £90 as a result of the
redemption of 9,000 ordinary shares during the year.
A.E.B. Wiegman
Chairman
Cash Flow Statement
for the year ended 31 December 2003
Ordinary Shares 'C'Shares* Total Ordinary
Shares+
31 December 2003 31 December 2003 31 December 2003 31 December 2002
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Operating activities
Investment income received 94 - 94 39
Deposit interest received 22 8 30 34
Investment management fees refunded/ 32 32 (35)
(paid)
Other cash payments (126) (3) (129) (63)
Net cash inflow/(outflow) from 22 5 27 (25)
operating activities
Financial investment
Purchase of investments (1,050) (27) (1,077) (1,206)
Net cash outflow from investing (1,050) (27) (1,077) (1,206)
activities
Net cash outflow before financing (1,028) (22) (1,050) (1,231)
Financing
Issue of ordinary shares - 565 565 2,864
Expenses on the issue of ordinary - (32) (32) (143)
shares
Net cash inflow from financing - 533 533 2,721
(Decrease)/Increase in cash and cash (1,028) 511 (517) 1,490
equivalents
+ The comparative figures for 2002 cover a reporting period of 14 months.
* The 'C' Shares were launched on 8 October 2003.
Notes:
1. The financial information included in this announcement as regards the
company does not constitute statutory accounts for the year ended 31 December
2003 within the meaning of Section 240 of the Companies Act 1985. Statutory
accounts of the company for the financial year ended 31 December 2003, upon
which the auditors of the company have given an unqualified report will be
delivered to the Registrar of Companies
2. Copies of the Audited Financial Statements will be sent to
shareholders and the UK Listing Authority.
3. Revenue return per ordinary share is based on the net revenue on
ordinary activities after taxation of £20,579 (2002: £31,995) in respect of
2,863,609 ordinary shares (2002: 1,727,388) being the weighted average number
of ordinary shares in issue during the year.
4. Revenue return per 'C' share is based on the net revenue on ordinary
activities after taxation of 4,769 in respect of £420,965 'C' shares being the
weighted average number of shares in issue during the period.
This information is provided by RNS
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