RNS Number : 1562H
Rensburg AIM VCT Plc
31 October 2008
RENSBURG AIM VCT PLC
Half-Yearly Financial Report for the six months ended 31 August 2008
Rensburg Aim VCT plc ("the Company"), the venture capital trust specialising in investing in companies trading on the AIM market of the
London Stock Exchange ("AIM"), today announces its Half-Yearly Financial Report for the six months ended 31 August 2008.
FINANCIAL HIGHLIGHTS 6 months 6 months 12 months
ended ended ended
31 August 31 August 29 February
2008 2007 2008
Net assets £23,561,000 £33,564,000 £27,916,000
Net asset value per share 57.79p 80.32p 67.44p
(Loss)/profit on ordinary (£2,813,000) £1,563,000 (£2,912,000)
activities after tax as per
Income Statement
(Loss)/earnings per share as (6.84p) 3.71p (6.96p)
per Income Statement
Dividends paid during the 3.00p 3.00p 7.00p
period (including special
dividends)
Total dividends paid since 28.00p 21.00p 25.00p
inception
Total dividends declared since 29.00p 25.00p 28.00p
inception
Commenting on the results, William M. Cran, Chairman, said:
"The net asset value at 31 August 2008 was 57.79 pence per share, which, after allowing for the dividend of 3.0 pence per share paid
during the period, has decreased by 9.9% over the past six months, thereby outperforming the FTSE AIM All-Share Index by some 11.5%."
"The Company made four qualifying investments during the period at a cost of £2,098,000."
"In line with our previous policy, we intend to pay an ordinary interim dividend of 1.0 pence per share."
"The qualifying portfolio, which cost £17.3 million, was valued at £13.6 million at 31 August 2008 and represents 57.8% of the net
assets of the Company."
For further information contact:
Barry Anysz Rensburg Aim VCT plc 0113 245 4488
Interim Management Report
Introduction
In the Report & Financial Statements published on 30 May 2008, I commented that 'global stock markets have recovered some of their
poise, but we are clearly not yet out of the woods'. How true this has proved, as the credit crunch, caused by the crisis in the worldwide
banking sector, has since fed into virtually every economy and industry. Even the resources sector has succumbed in the past few weeks to
the realisation that a significant and widespread downturn, if not a recession, is looming. The share price falls in some of the largest
global companies have been magnified in the small companies sector which has had to cope with the additional problems of illiquidity and a
flight to other asset classes.
This is best illustrated by the performance of the following indices. During the six months to 31 August 2008, the FTSE 100 Index and
the FTSE All-Share Index only fell 4.2% and 4.8% respectively, whereas the FTSE AIM All-Share Index fell by 21.4%.
Net Asset Value ("NAV")
The NAV as at 31 August 2008 was 57.79 pence per share, which, after allowing for the final dividend of 3.0 pence per share that was
paid during the period, has decreased by 9.9% over the past six months, thereby outperforming the FTSE AIM All-Share Index by 11.5%.
Results
The loss on ordinary activities after tax for the six months to 31 August 2008 was £2,813,000 (31 August 2007: profit of £1,563,000).The loss per share was 6.84 pence compared with earnings per share in the six months to 31 August 2007 of 3.71 pence.
Qualifying Investments
The Company made four qualifying investments during the period at a cost of £2,098,000. Three of these investments were in companies new
to the portfolio and one represented an additional investment in an existing portfolio company.
The Company made one realisation during the period, resulting in total proceeds of £116,000 and a net gain of £83,000 over historic
cost. However, one investment was written off, resulting in a loss of £123,050 on historic cost.
The qualifying portfolio, which cost £17.3 million, was valued at £13.6 million at 31 August 2008 and represents 57.8% of the net assets
of the Company.
Non-qualifying Investments
During the six months to 31 August 2008, £550,000 of quoted equities were acquired and £473,000 of quoted equities were sold, realising
a loss over historic cost of £27,000. The Company also realised £1,000,000 from the sale of fixed interest securities, incurring a £26,000
historic loss. Further realisations included £2,064,000 from the sale of unit trust investments, resulting in a gain over historic cost of
£212,000.
The non-qualifying portfolio, which cost £10.3 million, was valued at £9.9 million at 31 August 2008 and represents 42.0% of the net
assets of the Company. Investments in Rensburg Fund Management Unit Trusts, which are included in the non-qualifying portfolio, represent
11.1% of the net assets of the Company.
Net current assets make up 0.2% of the total net assets of the Company at 31 August 2008 and include £197,000 of cash.
Interim Dividend
In line with our previous policy, we intend to pay an ordinary interim dividend of 1.0 pence per share (2007: ordinary interim dividend
1.0 pence per share and special dividend 3.0 pence per share) on 19 December 2008 to shareholders on the register at 5 December 2008.Including the current proposed ordinary interim dividend, the Company will have distributed a total of 29.0 pence per share since it was
established.
VCT Status
The Board continues to be mindful of maintaining the Company's VCT qualifying status. H.M. Revenue and Customs has confirmed that the
Company has full approval and the Company continues to meet the relevant conditions to maintain full approval. The net funds raised in any
one accounting period is disregarded in assessing whether the Company has satisfied the requirement that at least 70% of its total
investments are qualifying investments until the first accounting period that ends three years after the raising of the additional funds. In
the case of Rensburg Aim VCT, we have until February 2009 to invest 70% of the funds raised in the 2006 offer. Your Board therefore expects
that the Company should maintain its VCT qualifying status in the future.
Share buy-backs
During the six months to 31 August 2008, the Company repurchased 625,812 ordinary shares at a cost of £358,000. At 31 August 2008, the
middle share price was 45.5 pence per share, representing a discount of 21.3% to NAV.
VAT on Management Fees
As mentioned in the Report & Financial Statements to 29 February 2008, shareholders will be pleased to note that, following the JP
Morgan Claverhouse case ruling, VAT is no longer charged on the management fees payable to our investment manager. As a result our annual
costs will fall by an estimated £85,000 in the current financial year. We have also been advised that we may have a claim in respect of some
of the VAT paid in recent years. However, at this point in time there is still uncertainty regarding both the quantum and timing of any
receipt. Due to this uncertainty no associated contingent asset has been recognised, however, disclosure has been made in the notes to the
Financial Statements at 31 August 2008.
Risks and uncertainties
In accordance with DTR 4.2.7R of the Disclosure and Transparency Rules, the directors have considered the principal risks and
uncertainties for the remaining six months of the year.
The directors believe that the principal risk faced by the Company is the loss of its approval as a venture capital trust arising from a
breach of the requirements of section 274 of the Income Tax Act 2007. This would mean that shareholders might have to repay the income tax
relief they obtained on their investment in the Company and that the Company would lose its exemption from tax on any capital gains. The
Manager reports to the Board at each meeting on the Company's compliance with the qualifying tests and the Board is advised on VCT issues by
PricewaterhouseCoopers LLP.
Other significant risks include a serious or prolonged fall in the stock market which would adversely affect the Company's performance,
value, distributable reserves and the liquidity of underlying investments; consistent underperformance by the Manager; and the Company's
shares failing to achieve a rating which reflects performance. The Board seeks to mitigate these risks by monitoring the Manager's
performance at each board meeting and discussing appropriate action where considered necessary.
Share buy-backs and Tender offer
As stated above we have continued to support the market in our shares by buying shares from market makers. Although we have previously
stated our intention to buy shares back at a discount of 10% to our NAV the market makers have widened the discount to reflect the current
uncertainty in the market and the illiquidity, both of our underlying AIM investments and our ordinary shares. Although we would have liked
to maintain this policy the Board believes in these extreme market conditions it is not in the interests of the Company and its shareholders
to do so and is therefore suspending buy-backs until further notice.
Furthermore, we are mindful of our stated intention to make a tender offer to shareholders (for up to 30% of each holding) following the
2009 AGM, subject to market conditions at the time. Clearly, in today's volatile market, the Board will keep this matter under review, and
if market conditions continue to be adverse, the Board will postpone the tender offer to try and maximise eventual returns to shareholders.In the meantime the Board will endeavour to maintain its policy of paying an interim and final dividend each year.
Outlook
At the present time it is difficult to be optimistic about the future as we are still in the depths of a banking crisis which is
affecting the global economy, with an imminent threat of recession. Against this background smaller companies struggle to thrive, although
the individual results from many of our AIM investments continue to be favourable. However this does not appear to benefit their share
prices, hence the remorseless drop in valuations over recent weeks. Encouragingly, as most of the AIM investments have little bank debt they
should survive, but it may take a long while for their shares to recover or for the VCT's NAV to substantially improve.
Our investments in non-qualifying investments, which mostly include companies in the FTSE 100 Index, have also come under fire,
especially those in the banking sector, which we have held for their dividend yield. Their recovery may also take some time. At 30 September
2008, the NAV was 51.48 pence per share, a 10.9% decline on the NAV at 31 August 2008, reflecting the turmoil experienced by the FTSE AIM
All-Share Index, which itself declined 22.5% during the month.
Shareholder Communications
Our website at www.rensburgaimvct.co.uk provides shareholders with information on the Company, including the latest announced NAV and
share price. Our share price is also quoted daily in the Financial Times under 'Investment Companies'.
William M. Cran
Chairman
31 October 2008
Responsibility statement of the directors in respect of the half-yearly financial report
We confirm that to the best of our knowledge:
The condensed set of financial statements has been prepared in accordance with the "Statement: Half-Yearly Financial Reports" issued by
the UK Accounting Standards Board and the half-yearly financial report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication
of important events that have occurred during the first six months of
the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties
for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the
current financial year and that have materially affected the financial
position or performance of the entity during that period; and any
changes in the related party transactions described in the last annual
report that could do so.
William M. Cran (Non-executive chairman)
Barry A. Anysz (Non-executive director)
Richard G. Battersby (Non-executive director)
Peter C. Smart (Non-executive director)
31 October 2008
Income Statement
for the six months ended 31 August 2008
6 months 6 months 12 months
Ended Ended ended
31 August 31 August 29 February
2008 2007 2008
£000 £000 £000
Income 425 585 903
Unrealised (losses)/gains on (2,704) 1,152 (4,159)
fair value investments
Realised (losses)/gains on (104) 596 1,718
disposal of fair value
investments
Impairment of - - (451)
available-for-sale investments
Impairment of loans and - (94) (94)
receivables
Unrealised fair value losses (113) - (11)
on loans and receivables
Investment management fee (235) (611) (681)
Other expenses (82) (65) (137)
-------- -------- --------
(Loss)/profit on ordinary (2,813) 1,563 (2,912)
activities before tax
Taxation - - -
-------- -------- --------
(Loss)/profit on ordinary (2,813) 1,563 (2,912)
activities after tax
-------- -------- --------
(Loss)/earnings per ordinary (6.84p) 3.71p (6.96p)
share
-------- -------- --------
Statement of Total Recognised Gains and Losses
for the six months ended 31 August 2008
6 months 6 months 12 months
Ended Ended Ended
31 August 31 August 29 February
2008 2007 2008
£000 £000 £000
(Loss)/profit on ordinary (2,813) 1,563 (2,912)
activities after tax
Unrealised gain on revaluation 44 64 821
of available-for-sale
investments
-------- -------- --------
Total recognised (2,769) 1,627 (2,091)
(losses)/gains during the
period
-------- -------- --------
Total recognised (6.73p) 3.86p (5.00p)
(losses)/gains per ordinary
share
-------- -------- --------
Reconciliation of Movements in Shareholders' Funds
for the six months ended 31 August 2008
6 months 6 months 12 months
Ended Ended Ended
31 August 31 August 29 February
2008 2007 2008
£000 £000 £000
Opening shareholders' funds 27,916 33,649 33,649
(Loss)/profit on ordinary (2,813) 1,563 (2,912)
activities after tax
Dividends paid (1,228) (1,259) (2,921)
Unrealised gain on revaluation 44 64 821
of available-for-sale
investments
Purchase of own shares (358) (453) (721)
-------- -------- --------
Closing shareholders' funds 23,561 33,564 27,916
-------- -------- --------
Balance Sheet
as at 31 August 2008
31 August 31 August 29 February
2008 2007 2008
£000 £000 £000
Investments
Fair value through profit and loss account 22,165 32,566 25,980
Available-for-sale 1,271 819 1,225
Loans and receivables 82 106 195
-------- -------- --------
23,518 33,491 27,400
Current assets
Debtors 104 208 95
Cash at bank and in hand 197 354 744
-------- -------- --------
301 562 839
Creditors
Amounts falling due within one year (258) (274) (323)
-------- -------- --------
Net current assets 43 288 516
-------- -------- --------
Provisions for liabilities and charges - (215) -
-------- -------- --------
Net assets 23,561 33,564 27,916
------- -------- --------
Capital and reserves
Called-up share capital 2,038 2,089 2,070
Share premium 7,035 7,035 7,035
Capital redemption reserve 294 243 264
Available-for-sale reserve 402 (398) 357
Other reserves 4,789 5,053 4,912
Profit and loss account 9,003 19,542 13,278
-------- -------- --------
Shareholders' funds 23,561 33,564 27,916
-------- -------- --------
Net asset value per share 57.79p 80.32p 67.44p
-------- -------- --------
Cash Flow Statement
for the six months ended 31 August 2008
6 months 6 months 12 months
Ended Ended Ended
31 August 31 August 29 February
2008 2007 2008
£000 £000 £000
Operating activities
(Loss)/profit on ordinary (2,813) 1,563 (2,912)
activities before tax
(Increase)/decrease in debtors (9) (73) 40
(Decrease)/increase in (65) 147 (19)
creditors
Unrealised losses/(gains)on 2,704 (1,152) 4,159
fair value investments
Realised losses/(gains)on fair 104 (596) (1,718)
value investments
Impairment of - - 451
available-for-sale investments
Impairment of loans and - 94 94
receivables
Unrealised fair value losses 113 - 11
on loans and receivables
-------- -------- --------
Net cash inflow/(outflow) from 34 (17) 106
operating activities
-------- -------- --------
Capital expenditure and
financial investment
Purchases of (2) (130) (231)
available-for-sale investments
Purchases of fair value (2,646) (2,770) (5,345)
through profit and loss
investments
Purchases of loans and - - (100)
receivables
Proceeds from the disposal of 3,653 4,130 9,103
fair value through profit and
loss investments
-------- -------- --------
Net cash inflow from capital 1,005 1,230 3,427
expenditure and financial
investment
-------- -------- --------
Dividends
Equity dividends paid (1,228) (1,259) (2,921)
-------- -------- --------
Financing
Buy-back of ordinary shares (358) (453) (721)
-------- -------- --------
Net cash outflow from (358) (453) (721)
financing
-------- -------- --------
Decrease in cash (547) (499) (109)
-------- -------- --------
Notes to the Cash Flow Statement
6 months 6 months 12 months
Ended Ended Ended
31 August 31 August 29 February
2008 2007 2008
£000 £000 £000
Analysis of change in net
funds
Opening net cash 744 853 853
Net cash outflow for the (547) (499) (109)
period
-------- -------- --------
Closing net cash 197 354 744
-------- -------- --------
Notes to the Financial Statements
1. Basis of Preparation
The financial statements have been prepared on a going concern basis under the
historical cost convention, modified to include the revaluation of fixed asset
investments in accordance with UK Generally Accepted Accounting Practice. There have
been no material changes to the accounting policies previously applied by the Company.
In accordance with Section 229(2) of the Companies Act 1985, the Company is exempt
from preparing consolidated financial statements. As such, the Company is not required
to prepare its financial statements in accordance with International Financial
Reporting Standards as adopted by the European Union.
2. Related Party Transactions
Throughout the half-year Rensburg Sheppards Investment Management Limited ("RSIM") has
provided investment management and secretarial services to the Company as described in
the Annual Report and Financial Statements to 29 February 2008. Details of the amounts
charged to the Income Statement in the half year are shown in Note 3. The outstanding
balance accruing to RSIM at 31 August 2008 was £226,000.
During the half-year the Company purchased for a cost of £440,013 a further qualifying
investment in Essentially Group Limited, a company for which Richard Battersby acts as
a Non-executive Director. At 31 August 2008 the total investment made by the Company
in Essentially Group Limited had a cost of £940,037 (31 August 2007: £500,025) and a
value of £749,365 (31 August 2007: £491,935). Richard Battersby owns 0.3% of the
equity of Essentially Group Limited.
3. Investment Management Fees
6 months 6 months 12 months
Ended Ended Ended
31 August 31 August 29 February
2008 2007 2008
£000 £000 £000
Investment 235 519 575
management fees
Irrecoverable value - 92 106
added tax
-------- -------- --------
235 611 681
-------- -------- --------
The investment management fees for the period to 31 August 2008 include a £Nil charge
for bonus provisions (31 August 2007: £215,000).
4. Contingent Asset
As mentioned in the Report & Financial Statements to 29 February 2008, shareholders
will be pleased to note that, following the JP Morgan Claverhouse case ruling, VAT is
no longer charged on the management fees payable to our manager. We have been advised
that we may have a claim in respect of some of the VAT paid in recent years. However,
at this point in time there is still uncertainty regarding both the quantum and timing
of any receipt. Due to this uncertainty, no associated contingent asset has been
recognised in the Financial Statements as at 31 August 2008.
5. Earnings per Share
The losses per share of 6.84p (year ended 29 February 2008: losses of 6.96p; six
months ended 31 August 2007: earnings of 3.71p) is based on the net losses after tax
of £2,813,000 (year ended 29 February 2008: losses of £2,912,000; six months ended 31
August 2007: profit of £1,563,000) and on 41,113,843 ordinary shares (year ended 29
February 2008: 41,860,416; six months ended 31 August 2007: 42,141,892), being the
weighted average number of shares in issue during the period.
6. Total Recognised Returns per Share
Total recognised losses per share of 6.73p (year ended 29 February 2008: losses per
share of 5.00p; 6 months ended 31 August 2007: gains per share of 3.86p) is based on
total recognised losses for the period of £2,769,000 (year ended 29 February 2008:
losses of £2,091,000; six months ended 31 August 2007: gains of £1,627,000) and on
41,113,843 (year ended 29 February 2008: 41,860,416; six months ended 31 August 2007:
42,141,892) ordinary shares, being the weighted average number of shares in issue
during the period.
7. Net Asset Value per Share
The net asset value per share at 31 August 2008 is based on net assets of £23,561,000
and on 40,768,349 ordinary shares, being the number of ordinary shares in issue on
that date.
8. Extraction of Financial Information
The information contained in the 29 February 2008 income statement, balance sheet and
cash flow statement does not constitute full financial statements and has been
extracted from the financial statements for the year ended 29 February 2008 which have
been delivered to the Registrar of Companies. The report of the auditors on these
financial statements was unqualified. The income statements, cash flow statements for
the six month periods and the balance sheets as at 31 August 2008 and 31 August 2007
are unaudited.
9. Information availability
This report is available on our website at www.rensburgaimvct.co.uk
Investment Portfolio Summary
as at 31 August 2008
Qualifying Investments Book % of total Unrealised
cost* Valuation net assets gain/(loss)
£000 £000 (by value) £000
Ten largest qualifying
investments
Connaught plc 700 1,458 6.19 758
Glisten plc 775 1,042 4.42 267
Tikit Group plc 578 978 4.15 400
Essentially Group Limited 940 749 3.18 (191)
Animalcare Group plc 500 498 2.11 (2)
Advanced Computer Software plc 500 493 2.09 (7)
IS Pharma plc 558 455 1.93 (103)
Pressure Technologies plc 235 442 1.88 207
Optare plc 600 435 1.84 (165)
Hasgrove plc 500 424 1.81 (76)
-------- -------- -------- --------
5,886 6,974 29.60 1,088
Other qualifying investments 11,393 6,656 28.25 (4,737)
-------- -------- -------- --------
Total qualifying investments 17,279 13,630 57.85 (3,649)
-------- -------- -------- --------
Non-qualifying investments
Fixed interest securities 1,695 1,349 5.73 (346)
Unit trusts 2,174 2,623 11.14 449
Quoted equities 6,422 5,897 25.03 (525)
Non-qualifying AIM investments 30 19 0.08 (11)
-------- -------- -------- --------
Total non-qualifying 10,321 9,888 41.98 (433)
investments
-------- -------- -------- --------
Total investments 27,600 23,518 99.83 (4,082)
-------- -------- -------- --------
Net current assets 43 0.17
-------- --------
Net assets 23,561 100.00
-------- --------
* Historic cost of investment less amounts written off which represent permanent diminutions in value.
This information is provided by RNS
The company news service from the London Stock Exchange
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