RNS Number:5391Y
Electra Kingsway VCT PLC
18 June 2007
Electra Kingsway VCT Plc ("the Company" or "the Fund")
Interim Results for the six months ended 31 March 2007
Financial Highlights (Unaudited)
Ordinary Shares
Six months ended 31 March 2007 2006
Net Assets #20.3m #21.6m
Net Asset Value per ordinary share 100.09p 102.44p
Cumulative Return to Ordinary Shareholders since Launch
Dividends paid per ordinary share 10.65p 8.15p
Net Asset Value plus dividends paid per ordinary share 110.74p 110.59p
Percentage uplift since inception 16.6% 16.4%
An interim dividend of 1.5p per ordinary share will be paid on 7 August 2007, to
ordinary shareholders on the Company's Register of Members at close of business
on 6 July 2007.
'C' Shares
Period ended 31 March 2007
Net Assets #3.0m
Net Asset Value per 'C' share 94.02p
A copy of the Chairman's Statement, Investment Manager's Report and Preliminary
Announcement are attached.
These unaudited interim results for the period ended 31 March 2007 do not
constitute the Statutory Financial Statements of the Company for the period
ended 31 March 2007 within the Meaning of Section 240 of the Companies Act 1985.
The figures and financial information in respect of the period ended 30
September 2006 have been delivered to the Registrar of Companies and included
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.
Copies of the Interim Accounts to 31 March 2007 will be sent to shareholders
shortly and will thereafter be available from the Company's registered office.
For further information:
Nick Ross, Electra Kingsway VCT Plc: 0207 214 4200
Chairman's Statement
Results - Ordinary Shares
The Net Asset Value ('NAV') at 31 March 2007 was 100.1p. Including dividends
already paid, the total return of the Fund since inception has been 16.6%. Over
the 12 months to end March 2007, however, the NAV plus the dividend paid in the
period rose only fractionally. This was disappointing, and was primarily a
result of volatility in the AIM holdings.
The portfolio has 20 investments, and most are trading profitably with good
growth prospects. There are also some signs that the difficult holdings are
starting to improve. For example, Media Square recently announced the disposal
of a non-core business, which realised proceeds of #10m. This has reduced the
company's net debt and should remove concerns that it was too highly leveraged.
During the period to end March, investment activity was confined to small
follow-on investments to provide working capital to portfolio companies. These
totalled #0.9m, and were financed from disposals of the Fund's investments in
Electra Active Management. At the end of March, the value of the portfolio was
split 61% in unquoted companies and 39% in AIM listed companies.
'C' Share Issue
Shareholders approved the launch of a 'C' share issue at the EGM in February
2007. Although market conditions for new funding were generally subdued, the
offer has so far raised #8.6m, which is a reasonable result.
The 'C' share issue is beneficial for ordinary shareholders, as it increases the
size of the Company and lowers the running costs per share. It also allows the
Company to continue investing, which will lead to a larger and more diversified
investment portfolio. I would like to take this opportunity to welcome new
investors to the Fund and thank them for their support. At end March 2007 the '
C' share portfolio comprised a small investment in Emote, a publisher of
interactive computer games, and a larger holding in Electra Private Equity.
Given the strength of the Investment Manager's dealflow and the ability of the '
C' shares to co-invest with the other Electra Kingsway VCTs, I look forward to
reporting on progress when we announce the full year results in December.
Dividend - Ordinary Shares
The Board has approved the payment of an interim dividend of 1.5p per ordinary
share, which will be paid on 7 August 2007 to ordinary shareholders on the
Register of Members at the close of business on 6 July 2007. This payment will
increase the total dividend payout since inception to 12.15p per share.
VCT Qualifying Status
The six standard VCT industry tests were met during the period. The most
significant of these is the requirement for qualifying investments to amount to
at least 70% of the total funds available for investment. At end March the
Company's Ordinary Share Pool had 83% of its investments in qualifying
companies, based on the tax valuation rules for qualifying companies.
Share Buyback Policy
The Company operates a share buyback policy at a 10% discount to the last
published NAV. During the six months to end March, the Company bought back
526,097 ordinary shares for cancellation, at an average price of 92p per
ordinary share.
March 2007 Budget
The 2007 Budget contained further changes to the VCT regulations, which will
have some impact on the industry. The two principal changes were the
introduction of two new conditions for investment in qualifying companies.
First, an investee company may receive no more than #2 million from VCTs in a 12
month period. Secondly, investee companies or groups may have no more than 50
full-time employees at the date of investment. These changes were implemented to
bring the industry into line with EU legislation on state aid. The important
thing to note is that they affect only new money raised after 6 April 2007, and
will have no impact on your Fund as it stands.
Outlook
The ordinary share portfolio is fully invested and well diversified. As long as
economic conditions remain benign, the Fund's investments should continue to
improve
Rupert Pennant-Rea, Chairman
18 June 2007
Investment Manager's Review
Portfolio Performance - Ordinary Shares
The headline Net Asset Value ('NAV') showed a small decrease in the period.
However, the quality of the portfolio has improved considerably, with a number
of companies reporting good underlying profits growth which should lead to
higher capital valuations over time. In particular, Advanced Medical Solutions
announced strong results and saw its share price increase significantly.
Similarly, Brady moved ahead after announcing good results and new contracts for
its Trinity 600 trading software. Music Copyright Solutions rose more than five
fold after reporting an investment by a Far East syndicate, which removed
financial uncertainty and endorsed the company's strategy of building up its
music copyright library. The unquoted portfolio comprised one major write-down
in the period, Hallmarq. The company develops and sells MRI scanners to the
equine market. Despite a good early level of sales and its market leader status,
the company fell behind budget. After the appointment of a new Chief Executive
we invested further monies in a larger fundraising round where the price was set
at a significant discount. The company still has everything to play for and
should start to show a significant improvement in trading. The Fund's holding in
Electra Private Equity made a strong contribution in the period, rising by 18.6%
on the back of good final results.
Portfolio Activity - Ordinary Shares
During the period, a total of #930,000 was invested in four small follow-on
investments, mainly providing additional working capital. In order to finance
these investments. #1.4m was realised from the sales of shares in Electra Active
Management. There were no other purchases or sales in the period for the
ordinary shares
'C' Share Issue
Despite a much reduced investor appetite for VCTs the Fund raised #8.6m through
its C share offer. This will bring the total net assets for the Fund up to
approximately #30m, which is a good size for a Venture Capital Trust. In the
period funds were invested in Electra Private Equity and a new unquoted company,
Emote Games. The company is a publisher of interactive games content and has a
strong working relationship with Sony. The video game industry is entering
another growth cycle, driven by new games hardware releases. In particular,
network enabled gaming devices have proliferated, thus creating a good
opportunity for content owners to publish and distribute product.
Portfolio Summary - Ordinary Share Pool
(Unaudited)
Performance
Cost at 31 March Valuation at in period ended 31 March % of Portfolio
2007 2007 by Value
31 March 2007
#'000 #'000 #'000 %
Qualifying Investments:
Defaqto (Find Portal) 1,100 2,274 - 11.47
Gyro 375 1,345 - 6.79
Conquest 975 1,026 51 5.18
Sanastro 1,000 1,000 - 5.05
Media Square 1,578 983 (542) 4.97
Happy Times 1,079 971 (108) 4.90
Advanced Medical Solutions 500 912 265 4.60
Hill Station 1,133 778 (419) 3.93
Music Copyright Solutions 500 765 603 3.86
Keycom 1,705 751 - 3.79
Amber Taverns 750 750 - 3.79
Ma Hubbards 750 750 - 3.79
Brady 750 556 333 2.80
Hallmarq 1,300 554 (801) 2.79
Quadnetics 400 543 166 2.74
First Dental 750 388 (13) 1.96
Signature Brands 750 375 - 1.89
Centurion Electronics 1,197 135 (218) 0.68
Immedia 275 35 (8) 0.18
e-Point 550 - - -
17,417 14,891 (691) 75.16
Non-Qualifying Investments:
Electra Private Equity 1,862 4,426 694 22.34
Electra Active Management 408 494 12 2.50
2,270 4,920 706 24.84
19,687 19,811 15 100.00
Other Assets:
Liquidity Funds 1
Cash 236
237
Total 20,048
Portfolio Summary - 'C' Share Pool
(Unaudited)
Performance
in period ended % of Portfolio
31 March 2007 by Value
Cost at Valuation at
31 March 2007 31 March 2007
#'000 #'000 #'000 %
Qualifying Investments:
Emote Games 57 57 - 6.64
57 57 - 6.64
Non-Qualifying Investments:
Electra Private Equity 820 801 (19) 93.36
820 801 (19) 93.96
877 858 (19) 100.00
Other Assets:
Liquidity Funds -
Cash 4,798
4,798
Total 5,656
Profit and Loss Account
For the six months ended For the six months
ended
31 March 2007 For the year ended
31 March 2006
(unaudited) 30 September 2006
(unaudited)
(audited)
#'000 #'000 #'000
Realised gains/(losses) on investments 49 (56) 75
Unrealised losses on investments (4) (249) (270)
Income 262 95 757
307 (210) 562
Investment management fees (262) (221) (470)
Other expenses (496) (167) (296)
(758) (388) (766)
Profit/(Loss) before tax (451) (598) (204)
Tax on ordinary activities - - -
Profit/(Loss) after tax (451) (598) (204)
Dividend per share nil
(31.03.2006: nil, 30.09.2006: 2.5p) - - (527)
Transfer to reserves (451) (598) (731)
Basic and diluted earnings per
Ordinary Share (2.10)p (2.78)p (0.97)p
Basic and diluted earnings per 'C' Share (0.61)p - -
Reconciliation of Total Shareholders' Funds
For the six months ended For the six months
ended
For the year ended
31 March 2007 31 March 2006 30 September 2006
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Total gains and losses for the period (451) (598) (204)
'C' Shares issued 3,138 - -
'C' Share issue expenses charged
to the share premium account (173) - -
Ordinary shares issued - - 73
Repurchase of ordinary shares (483) (487) (761)
Dividends on ordinary shares - - (527)
Movements in Total Shareholders' Funds 2,031 (1,085) (1,419)
Total Shareholders' Funds at start of 21,268 22,687 22,687
period
Total Shareholders' Funds 23,299 21,602 21,268
Balance Sheet
As at 31 March 2007 As at 31 March 2006 As at 30 September 2006
(unaudited) (audited)
(unaudited)
#'000 #'000 #'000 #'000 #'000 #'000
Fixed Assets
Investments held at fair value 20,669 21,287 20,215
Current Assets
Debtors 461 98 686
Cash at bank 5,034 76 129
Other investments 1 451 351
5,496 625 1,166
Current Liabilities
Creditors:
amounts falling due within one year 2,866 310 113
2,866 310 113
Net Current Assets 2,630 315 1,053
Net Assets 23,299 21,602 21,268
Capital and Reserves
Called-up share capital 235 211 209
Share premium 16,958 13,952 14,024
Special reserve 5,473 5,882 5,957
Capital redemption reserve 17 9 12
Revenue reserve 616 1,548 1,066
Total Equity Shareholders' Funds 23,299 21,602 21,268
Net Asset Value per Ordinary Share 100.09p 102.44p 101.97p
Net Asset Value per 'C' Share 94.02p - -
As at 31 March 2007 As at 31 March As at 30 September
2006 2006
Number of Ordinary Shares in issue at 20,330,554 21,086,962 20,856,651
end of period
Number of 'C' Shares in issue at end of 3,137,864 - -
period
Cash Flow Statement
For the six months ended For the six months ended For the year ended
31 March 2007 31 March 2006 30 September 2006
(unaudited) (unaudited) (audited)
#'000 #'000 #'000 #'000 #'000 #'000
Operating Activities
Investment income received 88 109 151
Bank deposit interest received 13 5 7
Investment management fees paid (213) (173) (383)
Other cash payments (168) (163) (296)
Net Cash Outflow from Operating (280) (222) (521)
Activities
Investing Activities
Purchases of investments (1,807) (2,122) (2,422)
Sales of investments 1,400 2,683 4,165
Net Cash (Outflow)/Inflow from (407) 561 1,743
Investing Activities
Equity Dividends paid - - (454)
Cash (Outflow)/Inflow before
Financing
and Management of Liquid Resources (687) 339 768
Management of Liquid Resources
Sales/(Purchases) of current asset
Investments 350 (50) 50
Net Cash Inflow/(Outflow) from
Management of Liquid
Resources 350 (50) 50
Financing
Issue of 'C' Shares 3,138 - -
Expenses of the issue of 'C' Shares (173) - -
Cash held pending the issue of 'C' 2,699 - -
Shares
Repurchase of ordinary shares (422) (262) (738)
Net Cash Inflow/(Outflow) from 5,242 (262) (738)
Financing
Increase in Cash for the Period 4,905 27 80
This information is provided by RNS
The company news service from the London Stock Exchange
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