Final Results
28 Juin 2007 - 1:36PM
UK Regulatory
RNS Number:2110Z
Arc Growth Company VCT plc
28 June 2007
ARC Growth Company VCT plc (the "Company")
Preliminary announcement of results for the year ended 28 February 2007
ARC Growth Company VCT plc announces preliminary results for the period ended 28
February 2007.
Date of issue: 25 June 2007.
Chairman's Statement
During the past year, the VCT has made exciting progress towards its objective
of maximising capital returns for shareholders
Funds raised
The VCT was listed in June 2005 and raised a further #634,045 during the year
under review making total subscriptions #1.77m.
Net Asset Value ('NAV')
At 28 February 2007, the VCT had made seven investments and realised one of
them. The net asset value per share of 123.5p is an exceptional performance for
a VCT at such an early stage of its development. It compares with an initial
asset value per share of 94.5p after fund raising costs.
Portfolio Progress
In addition to realising its first investment in Talisker Pharma Ltd at double
its investment cost, the VCT has seen three of its investee companies obtain
listings on AIM. As a consequence, each of these investments has seen a
significant improvement in value. Prior to the listing of Traction Technology
Holdings plc in late December 2006, the Company recouped its initial investment
by means of a prospectus offer at a price of 28 pence per share, which generated
a profit of #135,000 after deal costs.
Due to the relative illiquidity of the AIM stocks held, the directors have taken
a cautious approach to their holding values and have discounted the value of
these investments by 25% of their bid values as at 28 February 2007.
The net effect of these successful investments is that the VCT has one of the
highest NAVs of all VCTs launched in the same period.
Dividends
The VCT's policy is to maximise dividends to its shareholders. One of the
benefits of the VCT structure is that these dividends are paid tax-free whether
they arise from income or capital gains. Thanks to the realised capital profit
the VCT has achieved, the directors are recommending a maiden final dividend of
7p per share. The timing of the payment of the dividend will be subject to the
Company being granted Court approval to reduce the Share Premium Account and
create a distributable reserve, the necessary resolutions for which will be
proposed at the forthcoming EGM of the Company to be held on the same day as the
2007 AGM at which the C Issue will be approved.
VCT qualifying status
The VCT must be 70% invested in qualifying companies by the end of its third
accounting period to comply with VCT regulations. The Board is conscious of this
absolute rule and will monitor progress towards it as time goes by. As at 28
February 2007, the VCT had invested 28.2% in qualifying companies. James Cowper,
Accountants & Business Advisers, have been appointed to monitor progress against
this requirement. Following the three investments after the Balance Sheet Date,
the Company now has invested 55.3% in qualifying investments. The directors
consider this to be a very satisfactory position as the timescale for the
70%-qualifying investment requirement approaches.
Share price and buy-back facility
The VCT's mid-market share price currently stands at 100p and, as is normal with
a VCT in its early stages, there have been no transactions. We will be asking
shareholders at the annual general meeting to grant the Board the power to
purchase shares in the market for cancellation. This would allow us to buy-back
shares at a 10% discount to the prevailing NAV. This should assist the
marketability of the shares and help prevent the shares from trading at a wide
discount to NAV.
Further fundraising
The Board recognises that the VCT is too small to pay an adequate management fee
to its manager because of the 3.6% cap on total annual running costs and the
impact of fixed costs such as audit and Stock Exchange fees. Our Manager also
specialises in investing in deals which will easily pass the revised VCT rules
which will require the amount raised from EIS and VCT sources in any one year to
be no more than #2m after 1 July 2007. As a result the Board has decided to
issue a prospectus to raise further funds in the form of "C" Shares. We expect
to issue the prospectus shortly and investors will have the chance to re-invest
the dividend we are now declaring in a preferential way.
Outlook
During the accounting year ended 28 February 2007, the VCT has performed
outstandingly well and we are delighted to be able to declare a maiden dividend.
This has been achieved by an opportunistic approach to investments that look
likely to achieve an early cash exit or IPO.
The Board does not want to restrain the Investment Manager from this opportunism
but is conscious that we now hold a number of relatively illiquid AIM stocks and
need to adopt a clear policy on their gradual realisation. We also want to see a
steady broadening of the type of investment as the VCT develops.
Since the year end, the Investment Manager has continued to seek suitable
investment opportunities and further investments have been made recently in
Smart Implant Holdings plc, ClickNow Holdings plc and M2FX plc. Deal flow
remains healthy and further investments can be expected by the end of the half
year to 31 August 2007.
The Board remains committed to its objective of maximising capital returns for
its shareholders over the longer term and is delighted with the early progress
towards this objective
Richard Hargreaves
Chairman
25 June 2007
Arc Growth Company VCT plc ('the Company')
Income statement
for the year ended 28 February 2007
Year to 28 February 2007 Period to 28 February 2006
------------------------ --------------------------
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Bank and other
interest 57 - 57 27 - 27
Investment
management (fee)
/ clawback 24 - 24 37 - 37
Other expenses (73) - (73) (63) - (63)
Realised gains
on investment
disposals - 119 119 - - -
Unrealised
appreciation in
investment
values - 387 387 - - -
------ ------ ------ ------ ------ ------
Return on
ordinary
activities
before tax 8 506 514 1 - 1
Tax charge on
ordinary
activities (1) - (1) - - -
------ ------ ------ ------ ------ ------
Return on
ordinary
activities after
tax 7 506 513 1 - 1
Transfer to
reserves (7) (506) (513) (1) - (1)
------ ------ ------ ------ ------ ------
- - - - - -
------ ------ ------ ------ ------ ------
Return per
ordinary share 0.37p 30.63p 31.00p 0.13p - 0.13p
------ ------ ------ ------ ------ ------
The total column of this Income Statement represents the profit and loss account
of the Company. The supplementary revenue and capital columns have been prepared
in accordance with the Association of Investment Trust Companies' Statement of
Recommended Practice.
There were no other recognised gains or losses other than the results for the
year as disclosed above. Accordingly a statement of total recognised gains and
losses is not required.
All revenue and capital items in the above statement derive from continuing
operations
The Company has only one class of business and derives its income from
investments made in shares and securities and from bank and money market funds.
Reconciliation of movements in shareholders' funds
2007 2006
#'000 #'000
Shareholders' funds at 1 March 2006 1,072 -
Total gains and losses recognised in period 513 1
Net proceeds of share issue 598 1,071
Dividends paid - -
---------- -----------
Shareholders' funds at 28 February 2007 2,183 1,072
---------- -----------
Arc Growth Company VCT plc ('the Company')
Balance Sheet
as at 28 February 2007
2007 2006
--------- ------- ------- ----------
#'000 #'000 #'000 #'000
Fixed asset investments 1,120 110
------- ----------
Current assets
Debtors 186 140
Cash and cash equivalents 891 898
---------- -------
1,077 1,038
Current Liabilities
Creditors 14 76
------- ----------
Net current assets 1,063 962
------- ----------
Net assets 2,183 1,072
------- ----------
Called up equity share capital 177 113
Share premium 1,492 958
Revenue reserve 8 1
Capital Reserve 506 -
------- ----------
Total equity shareholders' funds 2,183 1,072
------- ----------
Net asset value per share 123.51p 94.63p
------- ----------
Arc Growth Company VCT plc ('the Company')
Cash flow statement
for the year ended 28 February 2007
2007 2006
------- ------- ------- -------
#'000 #'000 #'000 #'000
Net cash inflow from operating activities
Profit / (Loss) on ordinary activities
before 514 1
tax
Adjusted for:
Realised gains on investment disposals (119) -
Unrealised appreciation in investment values (387) -
------- -------
Cash generated from operations before
changes 8 1
in working capital
Increase in debtors (46) (140)
(Decrease) / increase in creditors (63) 76
------- -------
Net cash generated from operating activities (101) (63)
Cash flows from investing activities
Purchases of investments (752) (110)
Sales proceeds of investments 248 -
------- -------
Net cash flow generated from investing
activities (504) (110)
Cash flows from financing activities
Financing :
Issue of own shares 634 1,133
Share issue expenses (36) (62)
------- -------
Total financing 598 1,071
------- -------
Net increase in cash and cash equivalents (7) 898
------- -------
Reconciliation of net cash flow to movements
in cash and cash equivalents
Net increase in cash and cash equivalents (7) 898
Cash and cash equivalents at 1 March 2006 898 -
------- -------
Cash and cash equivalents at 28 February 891 898
2007 ======= =======
Notes
1 Revenue return per share
Basic and diluted
The revenue return per share is based on profit from ordinary activities
after tax of #513,104 (2006 : #1,470) and on 1,655,169 ordinary shares of
10p (2006 : 1,133,497 shares), being the weighted average number of shares
in issue during the year. The net assets per share is based on total net
assets of #2,129,673 (2006 : #1,072,059) and 1,767,557 ordinary shares
(2006 :1,133,497 shares).
There are no potentially dilutive capital instruments in issue.
2 Dividend
The directors are proposing a dividend of 7p per share for the year ending
28 February 2007.
3 Accounts
The results set out above are not full accounts within the meaning of
section 240 of the Companies Act 1985 and have not been reported on but
have been agreed with the company's auditors.
The Annual Report and Accounts for the year ended 28 February 2007 will be
filed at the Registrar of Companies following the annual general meeting
and will be posted to shareholders shortly.
4 Announcement
A copy of this announcement will be available at the offices of the Company
for 14 days from the date of this announcement. This preliminary
announcement is not being posted to shareholders.
Details of advisers
Secretary and Registered Office
Graham K Urquhart FCIS
22 Lovat Lane
London EC3R 8EB
Registered Number
05323692
Solicitors
Fladgate Fielder
28 North Row
London W1K 6DJ
Investment Manager
Arc Fund Management Limited ("AFM")
22 Lovat Lane
London EC3R 8EB
Independent auditors
Spofforths LLP
1 Horsham Gates
North Street
Horsham
West Sussex, RH13 5PJ
Sponsor, Financial Adviser and Stockbrokers
Beaumont Cornish Limited
5th Floor, 10-12 Copthall Avenue
London EC2R 7DE
VCT Status Advisers
James Cowper
3 Wesley Gate
Queen's Road
Reading
Berkshire RG1 4AP
Bankers
Barclays Bank plc
United Kingdom House
180 Oxford Street
London W1D 1EA
Registrars
Neville Registrars Limited
Neville House,
18 Laurel Lane
Halesowen
West Midlands B63 3DA
This information is provided by RNS
The company news service from the London Stock Exchange
END
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