TIDMBAV
RNS Number : 9305P
Baronsmead VCT 5 PLC
23 February 2016
Baronsmead VCT 5 plc
Report and Accounts for the year ended 31 December 2015
Financial Headlines
-- Net asset value ("NAV") per share increased 15.4 per cent. to
90.41p in the year to 31 December 2015 before deduction of
dividends.
-- Dividends totalled 4.0p for the year to 31 December 2015.
-- Net annual dividend yield of 4.9 per cent. equivalent to a
gross annual yield of 6.6 per cent. for higher rate taxpayers.
-- NAV total return of 154.6p to shareholders for every 100.0p invested at launch.
Our Investment Objective
Baronsmead VCT 5 is a tax efficient listed company which aims to
achieve long-term investment returns for private investors,
including tax-free dividends.
Investment Policy
-- To invest primarily in a diverse portfolio of UK growth
businesses, whether unquoted or traded on AIM.
-- Investments are made selectively across a range of sectors in
companies that have the potential to grow and enhance their
value.
Dividend policy
The Board seeks to maintain a minimum level of annual dividends
of 4.0p per share. The ability to meet this objective depends
significantly on the level and timing of profitable realisations
and it cannot be guaranteed.
Chairman's Statement
I am pleased to report that the Company had another good year.
Before payment of 4.0p a share in dividends the NAV increased
12.05p to 90.41p (15.4 per cent.).
In February 2016, the Company raised GBP3.85 million (before
costs) from existing shareholders.
The increase in the NAV and the dividends paid over the year can
be summarised as follows:
p per
ordinary
share
---------------------------- ----------
NAV as at 1 January 2015
(after deducting the final
dividend of 2.0p for the
year to 31 December 2014) 78.36
---------------------------- ----------
Valuation uplift (15.4
per cent.) 12.05
---------------------------- ----------
NAV as at 31 December 2015
before dividends 90.41
---------------------------- ----------
Interim dividend paid on
18 September 2015 2.00
---------------------------- ----------
Second interim dividend
paid on 18 December 2015 2.00
---------------------------- ----------
NAV as at 31 December 2015 86.41
============================ ==========
Over the period the value of the unquoted portfolio increased by
15 per cent. And the Company's investments in AIM-traded companies
and Wood Street Microcap also increased by 25 per cent. including
income received in the period over the year.
Dividends
This year approximately 33 per cent. of the increase in the NAV
of 12.05p per share has been paid to shareholders: an interim
dividend of 2.0p in September 2015 and a second interim in lieu of
a final dividend of 2.0p in December 2015.
Recent profitable realisations underpin the ability of the
Company to continue to pay dividends in line with its dividend
policy. The 4.0p per share dividend for the year equates to an
annual yield of 4.9 per cent. based on the 31 December 2015 mid
price of 81.0p per share. For higher rate taxpayers this is the
equivalent of 6.6 per cent.
The level of future dividends will depend upon the continued
achievement of profitable realisations as well as the need to meet
the fiscal rules for VCTs and are likely to vary from time to
time.
Investment and Divestment Activity
This has been an active year for new investments with a total of
GBP3.7 million invested in 13 new investments and 5 follow on
funding rounds. The Company invested GBP2.4 million in unquoted
investments (3 new, 1 follow-on and 2 acquisition vehicles); and
GBP1.3 million in AIM-traded investments (8 new and 4
follow-on).
A number of profitable realisations were made from the quoted
portfolio, the most significant being from the sale of the
Company's investment in Accumuli and the partial realisation of the
Company's holding in Anpario.
A total of GBP4.8 million was realised from the full or partial
sale of investments and from loan note redemptions. There was a
successful sale of the Company's unquoted investment in Luxury For
Less. A loss was, though, realised on Impetus Automotive
Solutions.
While it is disappointing to realise losses and make provisions
against underperforming investments, it is in the nature of the
type of investments the Company makes that some investments will
fail to achieve their full potential. On the other hand the Company
has achieved some notable successes on other investments across the
unquoted and quoted portfolios with the proceeds of GBP4.8m
representing a return of approximately 2.4 times cost of
GBP2.0m.
The tables below provide details of the Company's investments
and divestments during the year. The tables on below of the
Company's full Annual Report & Accounts for the year ended 31
December 2015 show the values of the Company's investments as at 31
December 2014 and 31 December 2015.
VCT Legislation
Last year's Summer Budget introduced legislation designed to
ensure that VCTs comply with changes to the EU State aid rules as
well as remaining effective in giving small and growing businesses
access to finance. The rules introduced new criteria regarding the
age of companies that will be eligible as VCT qualifying
investments. There is now also a lifetime cap on the total amount
of State aided investment an investee company can receive and a
requirement that investment be used for growth and development
only. These measures were approved when the Finance (No.2) Act 2015
received Royal Assent on 18 November 2015.
The new rules will require the Investment Manager to adapt its
investment strategy to focus on the provision of development
capital to younger companies to enable them to grow their
businesses organically rather than through acquisition. Whilst the
full implications of the new rules are still being assessed by the
Investment Manager and its advisers, it is clear that the scale and
nature of the Company's new investments will change and some
elements of the investment portfolio will carry a higher risk.
The Board has reviewed the impact of the new rules with the
Investment Manager. The Board is of the view that the Investment
Manager has made sufficient adjustments to the investment focus to
adapt to the new investment environment and comply with the new VCT
rules. The Board is therefore confident in the Investment Manager's
ability to identify an adequate supply of new and attractive
investment opportunities which will continue to generate acceptable
returns, and comply with the new VCT rules.
Fundraising
On 10 February 2016, the Company launched on offer for
subscription to raise approximately GBP3.85m, before costs (being
the approximate sterling equivalent of the EUR5m limit that can be
raised without issuing a prospectus).
I am pleased to report that on 19 February, 2016, the Offer
became fully subscribed as a result of subscriptions received from
the Company's existing shareholders. On behalf of the Boards of
Directors, I would like to thank all of those who took part in the
Offer and also those who sought to subscribe but were unable to do
so due to the Offer becoming fully subscribed so quickly.
The funds raised under the Offer will be utilised by the Company
in accordance with the investment policy, to maintain liquidity and
enable payment of costs without reducing the overall amounts
available for investment.
Annual General Meeting
I look forward to meeting as many shareholders as possible at
our tenth Annual General Meeting to be held on 19 April 2016 at
11.30 am at Saddlers Hall, 40 Gutter Lane, London EC2V 6BR. This
will be followed by a shareholder workshop.
Outlook
The UK economy improved during 2015 but the impact of the recent
stock market volatility in the face of the downward growth trend in
China and the fall in the oil price is difficult to assess.
However, the environment for young growing companies in this
country remains positive while the sources of finance to assist
them to achieve that growth remain limited. This is encouraging
given the change in focus required by the new VCT rules described
above and should be able to provide new and exciting investment
opportunities for the Company.
In the meantime, the Company has an established and diverse
portfolio of investments that continue to perform well and should
be able to deliver strong and consistent returns over the medium
term while the newer portfolio is established.
John Davies
Chairman
23 February 2016
Manager's Review
The year has seen excellent performance from the both the
unquoted and quoted portfolios which are up 15 per cent. and 26 per
cent. respectively. The Wood Street Microcap investment grew by 19
per cent. During the year, 3 new unquoted (excluding 2 acquisition
vehicles) and 8 new quoted companies were added to the
portfolio.
PORTFOLIO REVIEW
Overview
The net assets GBP45.4 million were invested as follows:
NAV % of Number of % return
(GBPm) NAV investees in
Asset class the year
----------------------- -------- ----- ----------- ----------
Unquoted 9.9 22 18 15
----------------------- -------- ----- ----------- ----------
Quoted 26.3 58 43 24
----------------------- -------- ----- ----------- ----------
Wood Street Microcap 6.8 15 39 19
----------------------- -------- ----- ----------- ----------
Other Net Assets 2.4 5 - -
======================= ======== ===== =========== ==========
February 23, 2016 12:53 ET (17:53 GMT)
The Company's investment in Independent Community Care
Management (ICCM) Limited was sold to a trade buyer on 3 February
2016. The final proceeds received were approximately GBP80,000 less
than the 31 December 2015 valuation. The lower valuation was the
result of working capital adjustments agreed prior to completion
and further negative trading news during January 2016.
National Storage Mechanism
A copy of the Annual Report and Financial Statements will be
submitted shortly to the National Storage Mechanism ("NSM") and
will be available for inspection at the NSM, which is situated at:
http://www.morningstar.co.uk/uk/NSM
END
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on this announcement (or
any other website) is incorporated into, or forms part of, this
announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACSAKNDQOBKDCBB
(END) Dow Jones Newswires
February 23, 2016 12:53 ET (17:53 GMT)
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