RNS Number:6885H
Electra Kingsway VCT PLC
21 January 2005
Electra Kingsway VCT Plc
This announcement replaces the Final Results announcement previously released
today at 10.01am under RNS number 6450H.
Set out below is the amended Preliminary Announcement for the year ended 30
September 2004 for Electra Kingsway VCT Plc, which contains the correction of
the performance of the FTSE All-Share Index in the year and the deletion of the
AIM Index comparison, which was initially included in error.
Preliminary Results for the Year Ended 30 September 2004
Financial Highlights
Year ended 30 September 2004 2003
Net assets #24.3m #20.5m
Net asset value per share 111.86p 103.52p
Dividend per share
Revenue - 0.90p
Cumulative return to shareholders since launch
Dividends per share 1.65p 1.65p
Net asset value plus dividends per share 113.51p 105.17p
Unaudited net asset value per share as at 31 December 2004 117.1p
Net asset value per share as at 30 September Net asset value plus cumulative dividends per share as
at 30 September
2002 93.30p 2002 94.05p
2003 103.52p 2003 105.17p
2004 111.86p 2004 113.51p
A copy of the Chairman's Statement and Preliminary Announcement are attached.
For further information:
Nick Ross Electra Kingsway VCT Plc
020 7831 6464
Chairman's Statement
In my third annual statement to shareholders I am pleased to report that your
Company has made good progress since its launch in 2001. At the year end total
funds raised were #22m which - considering the difficult market conditions -
compares well with the target of #25m. The Investment Manager has built a
diversified portfolio whose good early performance is expected to continue as
the investments mature. The Fund reached its 70% qualification hurdle in the
year and is now in a position to return any realised profits to shareholders in
the form of tax free dividend payments.
The audited net asset value of the Company at the year end was 111.9p per share,
up from 103.5p at the start of the year, an increase of 8%. During the same
period the FTSE All-Share Index rose by 12%.
The unaudited net asset value as at 31 December 2004 was 117.10p per share,
reflecting the updated prices in the AIM portfolio.
Portfolio Activity
The portfolio performed well on all levels. The qualifying AIM stocks rose in
the period led by BioProgress and Media Square. The unquoted qualifying
portfolio was up 18%; this included increases in the carrying values of Nectar
Taverns and Berkeley Morgan and a provision against Signature Brands and Keycom
which had both fallen behind plan. The two non-qualifying funds, Electra
Investment Trust and Electra Active Management, were up 24% in the year.
In addition after the year end Berkeley Morgan announced a recommended cash
offer from Personal Group. This transaction is expected to complete in the early
part of 2005 and should enable a significant capital distribution to be made to
shareholders.
During the year the Company completed investments in nine qualifying companies,
bringing the total to 17. Most have good growth potential and are either trading
profitably or are close to cash breakeven, with the result that the portfolio is
now well diversified with significant upside potential.
At the year end the Fund had #5.6m in cash and corporate bonds awaiting
investment into qualifying companies.
Dealflow remains strong, with a further two new investments completed after the
year end. The Fund is therefore close to being fully invested and the Investment
Manager expects it to be fully invested by June 2005.
Share Price and Discount Management
Under the general authority granted by shareholders at the Annual General
Meeting held in February 2004, the Company made on-market purchases and
cancelled 42,000 shares during the year. The Directors believe that this
facility enhances market liquidity in the Company's shares and will be seeking
to renew this general authority at the Annual General Meeting to be held on 14
March 2005.
Dividends
Although no final dividend is proposed as the revenue account only generated a
small surplus, the Board anticipates that following disposals from the capital
account a dividend will be paid in respect of the year ended 30 September 2005.
Prospects
The current market environment remains favourable and the portfolio offers
significant upside potential as the investments start to mature. In due course
this will enable your Company to start distributing realised investment gains in
the form of tax free dividends.
Rupert Pennant-Rea, Chairman
20 January 2005
Investment Manager's Review
Investment Overview
In the year to 30 September 2004 the unaudited total return to shareholders rose
from 105.17p to 113.51p. Since the year end further progress has been made and
the unaudited total return to shareholders has risen to 118.75p at 31 December
2004. Over the year the Fund completed nine qualifying investments and reached
its 70% qualification hurdle. As at 30 September 2004 the total investment in
qualifying companies was #11.5m spread between 17 investments. Given that
current dealflow remains strong, the Fund is expected to be fully invested by
June 2005.
Realisations in the year have included BioProgress which has been a very
successful investment for the Fund making a return of 410% on its original cost.
Although the company has significant growth opportunities we had some concern
over the short term profitability.
Performance of the Fund
In the unquoted qualifying portfolio two investments were increased in value and
two have had provisions made against them. Berkeley Morgan, a specialist IFA,
was an investment made by the Fund in 2002 which has performed well. As at 30
September 2004, it has been valued on a comparative industry earnings multiple
leading to a 92% uplift on cost. Since the year end the company has agreed to
recommend a cash offer from Personal Group, an industry competitor. Nectar
Taverns, a managed pub company, has also performed in line with expectations
resulting in a valuation uplift also based on a comparative industry earnings
multiple. Both Signature Brands and Keycom had disappointing years and it was
necessary to make provisions against their carrying values. There were no other
valuation changes to the unquoted qualifying portfolio.
The AIM portfolio, which comprised eight investments at the year end, was up 55%
on cost. The main performers were BioProgress and Centurion Electronics. Both
saw significant price increases, as a result of which we realised over #1.4m of
gains at an average uplift of 4.4x cost. During the year Lastminute.com acquired
Online Travel at a price that initially gave the Fund a reasonable uplift on its
original investment in Online Travel. The offer, however, was a paper one and in
the months after the transaction the price of Lastminute.com fell. Due to the
Fund being in its pre-qualification period for VCT clearance it was prudent to
hold onto the shares.
New Qualifying Investments
James & James
James & James is a business to business publisher of international environmental
magazines and directories. It has established leading titles in certain energy,
waste and conservation sectors. The core products are three bi-monthly
advertising-led magazines: Renewable Energy World, Co-Generation & On-site Power
Generation and Waste Management World.
Media Square
The company specializes in market communications consultancy and retail
marketing production support. It was floated on AIM in 2001 with the objective
of acquiring similar companies, achieving scale and obtaining operational
synergies.
Music Copyright Solutions ("MCS")
MCS administers and owns music copyright. The company drives revenues by the
collection and payment of music royalties and the creation of rights by
commissioning specific work. MCS focuses largely on products for film and TV
production companies.
Happy Times
Happy Times is the owner and operator of three children's nurseries in London
and was seeking funding to facilitate the roll out of two further sites in the
London area. The dynamics of the market, particularly in the affluent Boroughs
of London, remain favourable.
Immedia Broadcasting
Immedia designs and operates live radio stations providing tailored commercial
programming to retail outlets. It provides two distinct services: a free radio
proposition to CTN and convenience stores where advertising slots are sold to
the large confectionery and drinks companies; the second service is a bespoke
radio station, tailored to meet the requirements of the client.
Quadnetics
Quadnetics specializes in the design and implementation of CCTV systems for
large municipal councils. It is set to benefit from the conversion of existing
analogue systems to digital technology and a strong export market in the US. It
recently acquired Look CCTV, which specializes in the installation of CCTV
cameras in buses.
Hallmarq
Hallmarq has developed an MRI scanner for use in the equine market. Lameness in
horses is a common injury yet diagnosis is difficult. The company has contracts
with a number of the leading equine veterinary practices around the world. The
key attraction of the model is that the company receives a payment based on the
volume of usage.
ePOINT
ePOINT specializes in the design and supply of interactive terminals for
consumer use in the digital imaging, retail/leisure and healthcare markets.
Growth is forecast to derive predominantly from the roll-out of digital photo
kiosks and from the success of interactive gaming terminals in pubs.
Brady
The company supplies an integrated software package for the trading, risk
assessment, settlement and physical delivery of metal commodities. It has a
market leading position within a niche sector with good opportunities for
organic growth. The company recently acquired OpVal which enables it to enter
the energy trading sector with a complimentary product range.
Non-qualifying Investments
Electra Investment Trust, a private equity fund, announced a 20% uplift in its
NAV for the year ended 30 September 2004 and completed a #100m tender offer
during the year.
Electra Active Management specializes in smaller quoted stocks investing in
undervalued opportunities where a value catalyst can lead to good investment
returns. The fund has continued to outperform its benchmark the FTSE SmallCap
(Total Return) Index in the year.
Bond Portfolio
At the end of the financial year the Fund had #2.9m invested in a portfolio of
corporate bonds with short term maturity dates and good credit ratings. Bond
maturities are matched to the investment profile of the qualifying portfolio
thus enabling the Fund to finance further investments into the qualifying
portfolio.
Statement of Total Return
Incorporating the Revenue Account of the Company for the year ended 30 September
2004
For the year ended 30 September 2004 For the year ended 30 September 2003
Revenue Capital Total Revenue Capital Total
# # # # # #
Unrealised gains on - 1,537,719 1,537,719 - 2,117,035 2,117,035
investments
Realised gains on - 446,996 446,996 - 61,369 61,369
investments
Income 506,514 - 506,514 668,134 - 668,134
506,514 1,984,715 2,491,229 668,134 2,178,404 2,846,538
Investment management fees (136,621) (409,863) (546,484) (87,703) (263,109) (350,812)
Other expenses (329,146) - (329,146) (344,339) - (344,339)
Return on Ordinary 40,747 1,574,852 1,615,599 236,092 1,915,295 2,151,387
Activities before Taxation
Tax on ordinary activities (15,793) 17,015 1,222 (54,579) 49,991 (4,588)
Return on Ordinary 24,954 1,591,867 1,616,821 181,513 1,965,286 2,146,799
Activities after Taxation
Dividend - - - (178,243) - (178,243)
Transfer to Reserves 24,954 1,591,867 1,616,821 3,270 1,965,286 1,968,556
Return per Ordinary Share 0.12p 7.61p 7.73p 1.03p 11.08p 12.11p
All revenues and capital in the above statement derive from continuing
activities.
The Revenue column of this statement is the Profit and Loss Account of the
Company.
Reconciliation of Total Shareholders' Funds
Year ended 30 Year ended 30
September 2004 September 2003
# #
Total Return 1,616,821 2,146,799
Dividend on ordinary shares - (178,243)
Ordinary shares issued 2,373,319 4,090,587
Repurchase of ordinary shares (41,248) (34,624)
Share issue expenses charged to Share Premium account (130,533) (224,981)
Movements in Total Shareholders' Funds 3,818,359 5,799,538
Total Shareholders' Funds at start of year 20,500,947 14,701,409
Total Shareholders' Funds at 30 September 2004 24,319,306 20,500,947
Balance Sheet
As at 30 September 2004
As at 30 September 2004 As at 30 September 2003
# # # #
Fixed Assets
Investments 21,435,048 16,517,969
Current Assets
Debtors 268,968 372,802
Cash at bank 2,743,683 3,898,192
3,012,651 4,270,994
Creditors: amounts falling due within one year
Creditors 128,393 288,016
Net Current Assets 2,884,258 3,982,978
Net Assets 24,319,306 20,500,947
Capital and Reserves
Called-up share capital 217,413 198,048
Share premium account 13,774,184 11,551,185
Capital redemption reserve 857 435
Special reserve 7,010,003 7,051,251
Realised capital reserve 303,694 (340,843)
Unrealised capital reserve 2,978,990 2,031,660
Revenue reserve 34,165 9,211
Total Equity Shareholders' Funds 24,319,306 20,500,947
Net Asset Value per Ordinary Share 111.86p 103.52p
2004 2003
Number of ordinary shares in issue at 30 September 21,741,190 19,804,760
Cash Flow Statement
For the year ended For the year ended
30 September 2004 30 September 2003
# # # #
Operating Activities
Investment income received 514,297 761,125
Bank interest received 121,362 128,673
Investment management fees paid (609,690) (458,124)
Other cash payments (346,121) (316,337)
Net Cash (Outflow)/Inflow from Operating (320,152) 115,337
Activities
Taxation (3,393) (10,195)
Capital Expenditure and Financial Investments
Sale of investments 6,103,049 7,075,679
Acquisition of investments (8,968,429) (11,719,307)
Net Cash Outflow from Capital Expenditure and
Financial Investments (2,865,380) (4,643,628)
Equity Dividends Paid (178,243) (118,183)
Cash Outflow before Financing (3,367,168) (4,656,669)
Financing
Issue of ordinary shares 2,373,319 4,090,587
Repurchase of ordinary shares (30,127) (34,624)
Expenses of the issue of ordinary shares (130,533) (224,981)
Net Cash Inflow from Financing 2,212,659 3,830,982
Decrease in Cash for the Period (1,154,509) (825,687)
The figures and financial information for the year ended 30 September 2004 do
not constitute the statutory Financial Statements for that period. Those
Financial Statements have not yet been delivered to the Registrar, nor have the
Auditors yet reported on them. The figures and financial information for the
year ended 30 September 2003 do not constitute the statutory financial
statements for that year. Those financial statements have been delivered to the
Registrar and include the Auditors' Report which was unqualified and did not
contain a statement under either Section 237(2) or Section 237(3) of the
Companies Act 1985.
The Report and Accounts for the year ended 30 September 2004 will be sent to
shareholders shortly and will thereafter be available from the Company's
registered office at 65 Kingsway, London WC2B 6QT. The third Annual General
Meeting of the Company will be held on Monday 14 March 2005 at 65 Kingsway,
London WC2B 6QT.
This information is provided by RNS
The company news service from the London Stock Exchange
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