RNS Number:8205I
Noble VCT PLC
29 November 2007
Noble VCT plc
Preliminary results for the period ended 30 September 2007
Chairman's Interim Statement
I am pleased to present the unaudited interim report for the six months to the
end of September 2007. A summary of the main financial results for the period is
as follows:
* Equity Shareholders' Funds #23.5m
* Net Asset Value per share 76.09p
* Return per share (4.66)p
* Dividend of 2p per share paid in August
Review of Performance
It is disappointing for me to have to record that during the six months to the
end of September last, the Company's net asset value per share declined by
5.57%, this is before taking into account the cost of the August dividend
payment which was paid out of reserves. The major reason for the decline in net
asset value was the performance of the Company's AIM investments and over the
same period the AIM index itself fell by some 2.5%. There were encouraging
increases in the value of Vicorp, Optimisa, SMT Group and Earthport, together
with realised net gains on disposals of #660k. However, it was particularly
disappointing to see these more than offset by further unrealised losses on
investments in Aquilo, Business Control Solutions Group, ID Data and e.g.
Solutions. Our investment adviser, Noble Fund Managers (Noble), is reviewing the
Company's quoted investments to assess prospects for growth in the current
business and financial market environment and plans to increase the proportion
of unquoted investments held. During the six months to the end of September
2007, one new unquoted investment amounting to #850k was made into Onyx
Scientific, a Sunderland based company providing chemical services to some of
the largest pharmaceutical companies in Europe and the US. Noble has also been
working for some time on exit opportunities with the management teams in several
of the Company's unquoted investments and it is hoped that the benefit of this
will become evident in the coming months. During the six month period some 32
new and follow on investments were made, 26 were in AIM listed companies and
amounted to #4.7m and 6 were in unquoted companies and amounted to #1.3m. At the
end of September in excess of #2m remained available for investment.
Fulfilling Our Future Objectives
The Directors believe that the Company's portfolio of investments should have
the potential to provide shareholders with both an increasing net asset value
and a regular flow of dividends from realised profits. The fact that this has
not been achieved over the six months to the end of September last may, in part,
be attributable to market turbulence and also to the timing of exits from a
number of our unquoted investments. The Directors have believed for some time
that an increasing amount of investment should be directed towards unquoted,
later stage companies; some progress has been made in this but not as much had
been hoped. The Directors and Noble recognise that the challenges facing
investors in small cap companies are increasing and, if the Company is to
achieve the goals it has been set, it is important that it has access to the
best possible fund management services. It is the intention of the Directors to
maintain clear investment objectives for the fund and for the fund manager to
demonstrate outstanding skills in managing the Company's investments. To this
end the Directors have been working closely with Noble to keep their investment
mandate appropriate to the changing economic circumstances and Noble itself is
vigorously recruiting at the most senior levels to ensure that it is suitably
resourced to meet the demands ahead. Notwithstanding this the Directors will
continue to review the Company's fund management arrangements over the coming
months. The Directors believe that integral to this is that they are in a
position to recommend full discretion being given to the fund manager.
Additionally, the Directors will review the present performance incentives to
ensure that they suitably encourage the individuals managing the Company's
investments to do so in a manner which should work to enhance the benefit to
shareholders. The Directors intend that these important matters should all be
addressed by the time the audited results for the year to the end of March 2008
are reported upon.
With a view to the longer term, the Directors have been pursuing a strategy
aimed at progressing the Company towards a substantial increase in its funds
under management. This is considered important in order that the fund manager
can be given a mandate which incorporates diversity in asset allocation and at
the same time ensures that each class of asset in which the Company invests has
the potential to enhance the overall return on the fund. A substantial increase
in funds under management would also assist in relation to the creation of a
strong secondary market in the Company's shares; until this is achieved, too
much emphasis is placed upon the maintenance by the Company of a share buy back
scheme, which in operation works against the intent of increasing the Company's
funds under management. The Company's present net asset value of less than #25m
is believed by the Directors and Noble to be significantly below the amount
appropriate if the fund manager is to be in a position to optimise investment
returns and stimulate the secondary market in the Company's shares. The
Directors will be addressing this as a priority over the coming months.
Performance Outlook
The UK economy is experiencing high levels of uncertainty created by the current
global credit crisis, slowing US economy and increasing energy costs. The
Company's present investment portfolio provides some spread of risk across
sectors of the UK economy and through investments in unquoted as well as AIM
listed companies.
It will take fund management of the highest calibre for any VCT to provide its
shareholders with both dividend income and growth in net asset value per share
on a sustained basis. Consequently, the Directors are reviewing all the key
issues which will impact on this and have set clear goals for future
performance. The Company's present portfolio provides a robust platform upon
which to build and it is the Directors belief that upper quartile investment
returns should be considered the minimum level acceptable in the future.
I appreciate that shareholders may have questions or concerns about a wide range
of issues in relation to the Company and the VCT sector in general. I am always
happy to receive comment and to try to answer questions from shareholders either
via email at j.greg@btconnect.com or by letter addressed to me at the Company's
offices detailed at the end of this report.
John Gregory
Chairman
29 November 2007
Income Statement
(incorporating the Revenue Account*)
for the six months ended 30 September 2007
Six months ended 30 September Six months ended 30 September Year ended 31 March 2007
2007 (unaudited) 2006 (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
-------- -------- ------ -------- -------- ------- -------- -------- ------
(Losses)/
gains - (1,252) (1,252) - (988) (988) - 408 408
on
investments
Income 198 - 198 199 - 199 448 - 448
Investment (67) (202) (269) (74) (223) (297) (149) (443) (592)
management
fees
Other (122) - (122) (124) - (124) (261) - (261)
expenses -------- -------- ------ -------- -------- ------- -------- -------- ------
Return on
ordinary 9 (1,454) (1,445) 1 (1,211) (1,210) 38 (35) 3
activities
before tax -------- -------- ------ -------- -------- ------- -------- -------- ------
Tax on (1) - (1) 1 - 1 - -
ordinary
activities -------- -------- ------ -------- -------- ------- -------- -------- ------
Return on 8 (1,454) (1,446) 2 (1,211) (1,209) 38 (35) 3
ordinary
activities -------- -------- ------ -------- -------- ------- -------- -------- ------
after tax
Return per 0.03p (4.69)p (4.66)p 0.01p (3.83)p (3.82)p 0.12p (0.11)p 0.01p
A share of
10p -------- -------- ------ -------- -------- ------- -------- -------- ------
* The revenue column of this statement is the profit and loss account of the
Company.
Distributions paid
Six months Six months
ended 30 ended 30 Year ended 31
September 2007 September 2006 March 2007
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
----------- ----------- ----------
Dividends on A Shares
Interim
dividend for
the year ended
30 March 2007
of 2.25p per
share paid on
24 April 2006 - 713 713
Interim
dividend for
the year ended
31 March 2007
of 1p per
share paid on
20 December
2006 - - 314
Interim
dividend for
the year
ending 31
March 2008 of
2p per share
paid on 13
August 2007 622 - -
Reconciliation of movements in shareholders' funds
The movements during the period of the assets attributable to the shares were as
follows:
Six months Six months
ended 30 ended 30 Year ended 31
September 2007 September 2006 March 2007
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
---------- ---------- ---------
Opening
shareholders'
funds 25,709 22,449 22,449
Purchase of
own shares (171) (188) (445)
Capital
subscribed 57 4,865 4,864
Expenses of
issue - (131) (135)
Total
recognised
gains and
losses for the
period (1,446) (1,209) 3
Dividends (622) (713) (1,027)
---------------------- ---------- ---------- ---------
Closing
shareholders'
funds 23,527 25,073 25,709
---------------------- ---------- ---------- ---------
Balance Sheet
as at 30 September 2007
30 September 2007 30 September 2006 31 March 2007
(unaudited) (unaudited) (audited)
#'000 #'000 #'000 #'000 #'000 #'000
------- ------- ------ ------- ------ -------
Fixed assets
Investments 21,487 17,979 20,139
Current assets
Debtors 59 130 303
Cash at bank 2,158 7,186 5,877
------- ------ ------
2,217 7,316 6,180
Creditors
(amounts
falling due
within one
year) (177) (222) (610)
------- ------ ------
Net current
assets 2,040 7,094 5,570
------- ------- -------
Total net
assets 23,527 25,073 25,709
------- ------- -------
Capital and
reserves
Called up
share capital 3,092 3,145 3,108
Capital
redemption
reserve 222 163 199
Share premium
account 13,290 13,240 13,239
Special
reserve 12,403 14,141 12,575
Capital
reserves
(realised) 826 10 990
Capital
reserves
(unrealised) (5,925) (5,204) (4,013)
Revenue
reserves (381) (422) (389)
------- ------- -------
Equity
Shareholders'
Funds 23,527 25,073 25,709
------- ------- -------
Net asset
value per 76.09p 79.68p 82.70p
A share
We confirm that to the best of our knowledge the condensed set of financial
statements which has been prepared in accordance with the applicable set of
accounting standards and in accordance with Accounting Standard's Board
Statement on Half-yearly Financial Reports (July 2007):
- gives a true and fair view of the assets, liabilities, financial position and
return or loss
- includes an indication of the important events in the six months ended
30 September 2007 and their impact on the condensed set of financial
statements
- includes a description of the principal risks and uncertainties for the six
months to 31 March 2008
- includes related party transactions in the six months to 30 September 2007
John Gregory
Chairman
29 November 2007
Cash Flow Statement
for the six months ended 30 September 2007
Six months ended 30 Six months ended 30 Year ended 31 March
September 2007 September 2006 2007 (audited)
(unaudited) (unaudited)
#'000 #'000 #'000 #'000 #'000 #'000
------- ------ ------- ------- ------- -------
Operating
activities
Investment
income
received -
qualifying 188 96 261
Deposit and
similar
interest
received -
non 8 87 129
qualifying
Investment
management
fees paid (302) (267) (583)
Secretarial
fees paid (31) (53) (76)
Other cash
payments (78) (95) (167)
------- ------ ------- ------- ------- -------
Net cash
outflow (215) (232) (436)
from
operating
activities
Financial
investment
Sale of
investments 3,555 2,093 5,594
Purchase of
investments (6,331) (4,608) (8,623)
------- ------- -------
Net cash
outflow
from
financial (2,776) (2,515) (3,029)
investment
Taxation
UK
corporation 6 34 33
tax refund ------- ------- -------
6 34 33
Equity
dividends
paid
Dividends (565) (713) (1,027)
paid ------- ------- -------
Net cash
outflow
from
equity (565) (713) (1,027)
dividends ------ ------- -------
paid
Net cash
outflow
before
use of
liquid (3,550) (3,426) (4,459)
resources
and
financing
Financing
New share - 4,865 4,864
issue
Repurchase
of (169) (188) (445)
own shares
Share issue
expenses - (117) (135)
------- ------- -------
Net cash
(outflow)/
inflow from
financing (169) 4,560 4,284
------ ------- -------
(Decrease)/
increase (3,719) 1,134 (175)
in cash
------ ------- -------
Notes to the Interim Financial Statements for the six months ended 30 September
2007
1. The unaudited interim results cover the six months to 30 September 2007 and
have been drawn up in accordance with the Accounting Standard Board's (ASB)
statement on Half-yearly Financial Reports (July 2007) and adopting the
accounting policies set out in the statutory accounts for the year ended 31
March 2007 which were prepared under UK GAAP and in accordance with the
Statement of Recommended Practice for investment companies issued by the
Association of Investment Companies in January 2003, revised December 2005.
2. The financial information set out in this report has not been audited and
does not comprise full financial statements within the meaning of Section 240,
of the Companies Act 1985. Statutory accounts for the year ended 31 March 2007,
which were unqualified have been lodged with the Registrar of Companies. No
statutory accounts in respect of any period after 31 March 2007 have been
reported on by the Company's auditors or delivered to the Registrar of
Companies.
3. Copies of the Interim Report are being sent to all shareholders. Further
copies are available free of charge from the Company's registered office.
4. Return per A Share is based on the return on ordinary activities after
taxation. For the six months ended 30 September 2007 this return is based on
31,004,066 A Shares (30th September 2006: 31,610,400 A Shares), being the
weighted number of shares in issue during the period.
5. The net asset value per A share as at 30 September 2007 is based on
30,921,787 shares in issue.
6. Investments have been valued in accordance with International Private Equity
Venture Capital Valuation guidelines.
7. All revenue and capital items in the income statement derive from continuing
operations.
8. The effective rate of tax for the six months to 30 September 2007 is nil due
to the utilisation of losses brought forward from previous years. The charge for
the period relates to undercharge in previous years.
9. Related Party Transactions
John Gregory, the non-executive chairman of the Company is also a non-executive
director and shareholder of Maelor plc and a shareholder of Deltex Medical Group
plc.
Raymond Abbott, a non-executive director of the Company is also a director of
Alliance Trust Equity Partners which has an interest in High Integrity Solutions
Limited, Xention Ltd, Citel Ltd and Meridian Technique Ltd.
The transactions which the Company had with each of these investments during the
period to 30 September 2007 are detailed below:
Name of related party Transaction type Transaction amount
Deltex Medical Group plc Investment purchase #218,000
High Integrity Solutions Limited Investment purchase #100,000
Maelor plc Investment disposal proceeds #77,720
Summary of investments as at 30 September 2007
Cost Valuation Valuation as
#000 #000 % of net assets
------- -------- -----------
The Message Pad Limited 1,442 1,265 5.38%
Vicorp Group plc* 962 1,117 4.75%
AD.IQ Limited (formerly TXT4 Ltd) 900 900 3.83%
Onyx Scientific Limited 850 850 3.61%
High Integrity Solutions 800 800 3.40%
Xention Limited 650 702 2.98%
Optasia Medical Limited 650 650 2.76%
Integrated Environmental Solutions Limited 325 638 2.71%
Babel Media Limited 625 625 2.66%
Earthport plc* 497 604 2.57%
------- -------- -----------
7,701 8,151 34.65%
Other AIM listed investments 16,744 11,108 47.21%
Other unquoted investments 2,967 2,228 9.47%
------- -------- -----------
Total investments as at 30 September 2007 27,412 21,487 91.33%
------- -------- -----------
Net current assets 2,040 8.67%
-------- -----------
Shareholders' funds 23,527 100.00%
-------- -----------
*AIM listed investments
Top Ten Equity Investments
1. The Message Pad Limited
Year end June*** 2006 2005
---------------------------------------------------------------------------
First investment Jun 99 # million # million
Initial investment #250,000 Sales 5.4 4.9
Residual cost #1,442,017 Profit before tax (0.7) (0.6)
Valuation #1,264,848 Retained profit (0.6) (0.5)
Valuation basis latest funding Net assets 0.4 (0.1)
round
---------------------------------------------------------------------------
The Message Pad provides a variety of businesses and public sector bodies
with a professional, cost effective solution to their inbound telephony
requirements, using its proprietary technology - the intelligent Platform
for response (iPR). www.message-pad.com.
2. Vicorp Group plc**
Year end December*** 2006 2005
-------------------------------------------------------------------------
First investment Feb 05 # million # million
Initial investment #200,000 Sales 0.5 1.0
Residual cost #961,914 Profit before tax (2.1) (2.2)
Valuation #1,116,690 Retained profit (1.9) (2.0)
Valuation basis bid Net assets (1.0) 0.2
--------------------------------------------------------------------------
Vicorp Group plc is a leading provider of voice software tools and related
speech services to the speech automation market. The company is based
outside Slough. www.vicorp.com.
3. AD.IQ Limited (formerly TXT4 Ltd)
Year end December*** 2006 2005
--------------------------------------------------------------------------
First investment Mar 06 # million # million
Initial investment #500,000 Sales 1.4 1.0
Residual cost #900,064 Profit before tax (1.4) (0.9)
Valuation #900,064 Retained profit (1.4) (0.9)
Valuation basis cost Net assets (0.2) (1.0)
--------------------------------------------------------------------------
AD. IQ Limited (formerly TXT4 Limited) is a fast growing, London based
response management software business that is currently focused on the
provision of text back solutions for advertising led enquiries. This
solution enables customers to save money on call centers and gain verified
customer data together with a convenience to the consumer.
www.adiqglobal.com.
4. Onyx Scientific Limited
Year end March*** 2006 2005
---------------------------------------------------------------------------
First investment Jul 07 # million # million
Initial investment #850,000 Sales 3.3 2.8
Residual cost #850,000 Profit before tax 0.4 0.1
Valuation #850,000 Retained profit 0.4 0.1
Valuation basis cost Net assets 2.0 1.6
---------------------------------------------------------------------------
Onyx Scientific provides a wide range of chemical services to the life
sciences industry. In particular, its key focus is scaling up the synthesis
of new chemical entities from microgram's to kilogram's for pharmaceutical
companies. Onyx specialises in medicinal chemistry, pre-clinical
development and GMP scale-up, in addition to offering a comprehensive range
of analytical services. www.onyx-scientific.com.
5. High Integrity Solutions
Year end June* 2007 2006
--------------------------------------------------------------------------
First investment May 05 # million # million
Initial investment #500,000 Sales 0.9 0.6
Residual cost #800,000 Profit before tax (1.4) (1.8)
Valuation #800,000 Retained profit (1.2) (1.6)
Valuation basis cost Net assets (1.6) (0.5)
--------------------------------------------------------------------------
The Company provides a system and software development environment that
enables mission critical software build projects to be completed on time,
below budget and robustly. www.hisltd.com.
6. Xention Limited
Year end December*** 2006 2005
--------------------------------------------------------------------------
First investment Sep 03 # million* # million
Initial investment #363,637 Sales 0.1 -
Residual cost #650,000 Profit before tax (4.5) (3.7)
Valuation #702,501 Retained profit (4.0) (3.2)
Valuation basis Last round Net assets 6.6 4.0
--------------------------------------------------------------------------
Xention Limited (formerly Xention Discovery Limited) is a drug discovery
company focusing on ion channels, thus enabling the targeting of drug
candidates to health disorders. www.xention.com.
7. Optasia Medical Limited
Year end September 2007 2006
--------------------------------------------------------------------------
First investment Nov 06 # million # million
Initial investment #650,000 Sales n/a n/a
Residual cost #650,000 Profit before tax n/a n/a
Valuation #650,000 Retained profit n/a n/a
Valuation basis cost Net assets n/a n/a
---------------------------------------------------------------------------
Optasia Medical builds medical imaging-based Computer Assisted Detection
(CAD) solutions to help physicians make better decisions for taking care of
their patients. With Optasia Medical's tools, medical images can be
evaluated more rapidly and more accurately. www.optasiamedical.com.
8. Integrated Environmental Solutions Limited
Year end May*** 2006 2005
---------------------------------------------------------------------------
First investment Apr 98 # million # million
Initial investment #100,000 Sales 3.2 2.0
Residual cost #325,000 Profit before tax 0.3 0.2
Valuation #638,186 Retained profit 0.3 0.2
Valuation basis Last round Net assets 0.9 0.4
---------------------------------------------------------------------------
IES is a Glasgow based business that develops software for the integrated
analysis of building performance. IES's 'virtual environments' software
generates detailed analysis of every aspect of building in its planning
stages, from energy use to environmental impact, occupant comfort to
lighting.
9. Babel Media Limited
Year end May*** 2006 2005
---------------------------------------------------------------------------
First investment Jun 05 # million # million
Initial investment #500,000 Sales 8.8 6.6
Residual cost #625,000 Profit before tax 0.2 (0.2)
Valuation #625,000 Retained profit 0.2 (0.2)
Valuation basis cost Net assets 0.1 (0.6)
---------------------------------------------------------------------------
Babel Media Limited is a leading computer games testing business based in
Brighton. It has offices in Montreal and San Francisco. www.babelmedia.com.
10. Earthport plc**
Year end June*** 2006 2005
--------------------------------------------------------------------------
First investment Dec 06 # million # million
Initial investment #205,503 Sales 0.7 0.9
Residual cost #496,929 Profit before tax (2.1) (7.1)
Valuation #604,270 Retained profit (2.1) (7.1)
Valuation basis bid Net assets (4.8) (9.7)
--------------------------------------------------------------------------
Earthport plc is a specialist electronic payment company. The company has
invested over #60 million to become a high volume payment and collection
service. The company is based in London. www.earthport.com.
All results taken from most recent, audited annual report except where stated
* unaudited
** companies listed on AIM
*** Statutory accounts for 2007 not yet released
This information is provided by RNS
The company news service from the London Stock Exchange
END
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