Final Results

 | Source: Proven VCT Plc Proven VCT Plc

ProVen VCT plc
Unaudited Preliminary Announcement of Results for the Year Ended 28 February 2007
 
FINANCIAL HIGHLIGHTS
 
 
No 'C' shares had been allotted as at 28 February 2007.
 
 
The Statement to Shareholders by the Chairman, Andrew Davison, includes the following:
 
I am pleased to present the Annual Report for ProVen VCT plc for the year ended 28 February 2007 and welcome new shareholders who subscribed to the Company's recent 'C' Share issue to the Company.
 
Net Asset Value
At the year end, the Company's net asset value per Ordinary share ("NAV") stood at 108.3p, an increase of 31.5p per share or 28.3% over the year after adjusting for the dividends of 34.5p per Ordinary share which were paid during the year.
 
Total return (NAV plus cumulative dividends paid) to Ordinary Shareholders who invested at the outset of the Company now stands at 161.5p per share, compared to an original investment net of income tax relief of 80p per share.
 
Board change
Alexander Spiro Jr stepped down from the Board on 25 January 2007 as a result of his changing role within Beringea LLC, the group which provides investment management services to the Company.  I wish to thank Alexander for his strong support and perceptive and relevant contribution since joining the Board in May 2003 and wish him well in his future activities.
 
On the same date, David Eberly joined the Board as a non-executive director representing Beringea.  David is a Senior Managing Director and co-founder of Beringea LLC and also sits on the board of Beringea Limited, the Company's investment manager.  David has previously been a director of European Gateway Acquisition Corp. (1996-1998) and also Williams Controls Inc (2002-2003).  I am sure that, with his extensive experience in investment banking, David will be a valuable addition to the Board.
 
'C' Share issue
In November 2006 the Company launched a 'C Share fundraising.  No shares were issued before the 28 February 2007 year-end, with the first 'C' Shares being allotted on 6 March 2007.  I am pleased to report that at the date of this Report the Offer had raised £13.8 million.
 
The 'C' Share issue significantly increases the size of your Company, which is beneficial to all Shareholders as the fixed running costs of the Company will be spread over a larger asset base.
 
Venture Capital Investments
It has been an active year within the Company's investment portfolio with the highlight being the highly profitable exit that was achieved from the investment in Mergermarket Limited.  The investment, which originally cost £780,000, was sold for proceeds of £10.7 million.  This is one of the most successful investments made by this or any other VCT and the Board congratulates the Investment Manager on an excellent outcome.
 
Another successful exit was achieved from the restaurant chain, Ma Potters, and the Company also invested £1.6 million in one new and two follow-on investments.
 
In reviewing the investment valuations at the year end, the Board has agreed a number of valuation increases and decreases.  Overall the unrealised valuation movement on the portfolio has been an increase of £2.6 million.
 
Results and dividend
The return on activities after taxation for the year was £7,394,000 (2006: £1,782,000), comprising a revenue return of £199,000 and a capital return of £7,195,000.
 
On 7 December 2006, an interim capital dividend of 31p per Ordinary share (2006: 3.0p per share) was paid to Ordinary Shareholders. A second interim dividend of 15p per Ordinary Share (14p capital and 1p revenue) was paid on 5 April 2007.  Original Ordinary Shareholders have now received dividends totalling 68.2p per share since the Company's launch in 2000.
 
In view of the dividend paid on 5 April 2007, the Board is not proposing to pay a final dividend for the year.
 
Repurchase of Shares
The Directors are conscious that the Company's share prices are affected by the illiquidity of its shares in the market resulting from the fact that investors purchasing "second-hand" shares do not benefit from income tax relief on their investment.
 
The Directors continue to monitor the market in the Company's shares and will make share purchases when appropriate.  During the period the Company repurchased 719,459 Ordinary Shares, at an average price of 98.4p per share, for cancellation. Generally, share buybacks are undertaken at a 10% discount to the latest NAV published by the Company.  The Board intend to continue with this policy and will put a resolution to Shareholders at the AGM.
 
Annual General Meeting
The Annual General Meeting ("AGM") of the Company will be held at 39 Earlham Street, London WC2H 9LT at 2:15pm on 26 July 2007.  
 
Outlook
This has been an extremely successful year for your Company.  Working towards exits on the Company's more mature investments will remain an important element of the Investment Manager's role, however the year ahead presents a new set of challenges. 
 
Proceeds from the recent disposals, along with the new funds raised by the 'C' Share offer, have produced a significant level of funds to be invested.  I am pleased to report that, since the year end, the Investment Manager has made a solid start in investing these funds. The Board is monitoring the deal flow that the Manager is generating and is satisfied that the level of opportunities being pursued is appropriate for the task in hand. 
 
I look forward to updating Shareholders on the progress in making new investments in the newly-introduced interim management statement (which the Company will prepare shortly for the period to 31 May 2007) and with the interim results to 31 August 2007.
 
 
BALANCE SHEET
as at 28 February 2007
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INCOME STATEMENT
for the year ended 28 February 2007 
 
The Income Statement above relates to the Ordinary shares and to the Company as a whole.  There are no movements relating to the 'C' shares to be disclosed within the Income Statement.
 
All Revenue and Capital items in the above statement derive from continuing operations.
 
A Statement of Total Recognised Gains and Losses relating to each class of share has not been prepared as all gains and losses are recognised in the relevant Income Statements as shown above.
 
 
 
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 28 February 2007
 
 
 
 
CASH FLOW STATEMENT
for the year ended 28 February 2007
 
 
 
Notes
 
Accounting policies
 
Basis of accounting
The Company has prepared its financial statements under UK Generally Accepted Accounting Practice ("UK GAAP") and in accordance with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies" revised December 2005 ("SORP").  
 
The financial statements are prepared under the historical cost convention except for the revaluation of certain financial instruments.
 
Presentation of Income Statement
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the Association of Investment Companies ("AIC"), supplementary information which analyses the income statement between items of a revenue and capital nature has been presented alongside the income statement. The net revenue is the measure the directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 842 Income and Corporation Taxes Act 1988.
 
Investments
All investments are designated as "fair value through profit or loss" assets and are initially measured at cost. Thereafter the investments are measured at subsequent reporting dates at fair value.
 
Listed fixed income investments and investments quoted on AIM are measured using bid prices with illiquidity discounts applied where deemed appropriate.
 
In respect of unquoted instruments, fair value is established by using International Private Equity and Venture Capital Valuation Guidelines. Where no reliable fair value can be estimated for such unquoted equity investments they are carried at cost, subject to any provision for impairment. Where an investee company has gone into receivership or liquidation the investment, although not physically disposed of, is treated as being realised.
 
Gains and losses arising from changes in fair value are included in the income statement for the year as a capital item and transaction costs on acquisition or disposal of the investment expensed.
 
It is not the Company's policy to exercise either significant or controlling influence over investee companies.  Therefore the results of these companies are not incorporated into the revenue account except to the extent of any income accrued.
 
Income
Dividend income from investments is recognised when the shareholders' rights to receive payment has been established, normally the ex dividend date.
 
Interest income is accrued on a timely basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount, and only where there is reasonable certainty of collection.
 
Expenses
All expenses are accounted for on accruals basis. In respect of the analysis between revenue and capital items presented within the income statement, all expenses have been presented as revenue items except as follows:
 
  •           Expenses which are incidental to the disposal of an investment are deducted from the disposal proceeds of the investment.
    •  
  •           Expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated and accordingly the investment management fee and finance costs have been allocated 25% to revenue and 75% to capital, in order to reflect the directors' expected long-term view of the nature of the investment returns of the Company.
    •  
    Taxation
    The tax effects of different items in the Income Statement are allocated between capital and revenue on the same basis as the particular item to which they relate using the Company's effective rate of tax for the accounting period.
     
    Due to the Company's status as a venture capital trust and the continued intention to meet the conditions required to comply with Section 842AA of the Income and Corporation Taxes Act (1988), no provision for taxation is required in respect of any realised or unrealised appreciation of the Company's investments which arises.
     
    Deferred taxation is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements.
      
     
     
    Announcement based on draft accounts (unqualified audit report)
     
    The financial information set out in this announcement does not constitute the Company's statutory accounts for the year ended 28 February 2007 or 28 February 2006.  The statutory accounts for the year ended 28 February 2007 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
     
    The financial information for the year ended 28 February 2006 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies.  The auditors reported on those accounts; this report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985.
     
    A copy of the full annual report and financial statements for the year ended 28 February 2007 will be printed and posted to shareholders. Copies will also be available to the public at the registered office of the Company at 39 Earlham Street, London WC2H 9LT.
     

    Recommended Reading