RNS Number:4350L
Electra Kingsway VCT PLC
22 May 2003
ELECTRA KINGSWAY VCT PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2003
FINANCIAL HIGHLIGHTS
Funds raised by 30 April 2003 #18.9 million
Net Asset Value per share at 31 March 2003 93.6p
Dividend per share * 0.75p
PERFORMANCE SUMMARY
2003 2002
pence pence
Capital Value
Net asset value per share (net of issue expenses) (see Note 1) 93.6p 94.0p
Total assets (net of issue expenses) #15.8 m #8.9m
Earnings
Earnings per ordinary share (see Note 2) 0.79p 0.26p
Notes
1 Based on 16,914,898 (2002: 9,516,503) ordinary shares in issue at
31 March 2003.
2 Based on a weighted average of 15,970,116 ordinary shares in
issue during the six months to 31 March 2003 (period to 31 March 2002:
2,329,992).
* Paid 20 February 2003 to shareholders on the register at 22 November 2002.
Chairman's Statement
Introduction
I am pleased to report that the net asset value per share at 31 March 2003 was
93.6p, only marginally below the net issue price of 95p in September 2001. This
compares favourably with the FTSE All-Share Index, which fell by 26.5% over the
same period. Your Company's performance reflects the cautious approach of the
Investment Manager, particularly the prudent policy of investing the majority of
the funds raised in fixed income securities and cash deposits.
At 31 March 2003 the Fund's portfolio was valued at #15.7 million: #2.6 million
in qualifying investments, #1.0 million in funds managed by Electra Partners,
#7.9 million in fixed income securities and #4.2 million in cash deposits. Over
the next 18 months, the fixed income securities and cash deposits will gradually
be invested in qualifying companies.
Investments
In the period under review, your Company completed two qualifying investments,
Signature Brands and Centurion Electronics and made a commitment to invest in
Berkeley Morgan (completed April 2003). Signature Brands, an unquoted company,
was seeking expansion finance and Centurion Electronics was an AIM flotation.
Berkeley Morgan, listed on Ofex, bought back a number of shares for cancellation
and subsequently issued new shares to the Fund. All three investments are in
established and profitable companies and further details are set out in the
Investment Manager's Report. In addition, the Investment Manager increased the
Fund's holdings in Electra Investment Trust and Electra Active Management, in
line with its investment policy.
At the EGM last November, the Board gained permission to raise additional funds
through a share offer. Despite the difficult market for fund-raising, a total of
#3.1 million was raised by 30 April 2003. The VCT industry as a whole had
another disappointing year, raising less than #35 million. The industry awaits
the outcome of the Treasury review on ways to improve access to capital for
smaller companies which may have a significant impact on future VCT funding.
Outlook
The Investment Manager has a promising short-list of potential investments that
are close to completion and the Fund is on course to meet its investment
objectives. I hope to bring you further encouraging news in the months ahead.
Rupert Pennant-Rea, Chairman, 22 May 2003
Investment Manager's Review
During the period to 31 March 2003, Electra Kingsway VCT completed two further
qualifying investments, Signature Brands and Centurion Electronics, at a total
cost of #1.25 million. In addition, the Fund made a commitment to invest
#741,000 in Berkeley Morgan, an investment which completed after the reporting
period.
Since the launch of the Fund, we have reviewed a number of investment
opportunities and have, to date, invested or committed to invest in five
qualifying companies. Due diligence continues on a number of short-listed
potential investments. However, it must be stressed that, given the difficult
economic environment, we have taken a cautious approach to committing funds.
Signature Brands
Signature Brands is a retailer of women's fashion wear operating under four
distinct brands: Dannimac, Four Seasons, Giant and Paul Costelloe. It was
incorporated in 1999 when Ashley Meyer, Chairman and Chief Executive, led a
management buy-out of Four Seasons. The company then proceeded to acquire three
under-performing brands, aiming to return them to profitability by implementing
tighter in-house design and cost controls. Dannimac and Four Seasons are
principally women's rainwear collections and sales are dependent upon the
British weather. Paul Costelloe is a designer brand aimed at 35-45 year old
women. The brand has received critical acclaim for its recent collections and
has good growth potential. Giant is a young women's fashion brand aimed at 18-30
year olds and was acquired from the Receiver after it encountered financial
difficulties.
The company designs its own ranges and outsources manufacturing to companies in
Hong Kong and Portugal. The majority of garments are sold through concessions in
department stores such as John Lewis and House of Fraser. The last full year
results recorded pre-tax profits of #382,000, however, the forthcoming results
will reflect a 12 month contribution from Giant and the benefits of the
turnaround strategy. The Fund invested #750,000 as part of a #1.8 million
funding round in October 2002.
Centurion Electronics
Centurion specialises in the design, marketing and distribution of DVD and video
systems for the in-car entertainment market. The company's main market has been
the UK where last year it was estimated that the market for such in-car vision
products increased ten-fold over the number of units sold in 2001. The company
has two main product ranges: firstly, an entry level product sold as a 'plug and
play' device through retail outlets such as Halfords and Dixons; secondly a
top-end professional product sold to motor manufacturers and distributors either
as a 'standard fit' or 'optional extra'. Manufacturers who offer such
professional products include BMW, Fiat and Mazda.
The prospects for the company are encouraging as new customers on the
manufacturing side include Toyota and Nissan and on the retailing side include
CD Bramall, generating a strong current year order book. The year end results
highlighted a consistent growth trend and record a pre-tax profit of #435,000.
The Fund invested #500,000 in November 2002 as part of a financing to fund the
company's growing working capital requirement.
Berkeley Morgan
Berkeley Morgan is an independent financial intermediary operating under two
divisions. The Investment Division is the amalgamation of three IFA businesses
specialising in pensions and mortgages and a service company providing
compliance and training services to IFAs. The Protection Division comprises four
separate IFAs providing a range of products including health insurance, general
insurance and life assurance.
The company has grown through the successful integration of a number of bolt-on
acquisitions with the management team demonstrating a good track record in
controlling expenses and costs. The IFA market remains fragmented and
consolidation is likely to continue for the next few years which may provide an
exit opportunity for the Fund. Electra Kingsway VCT invested #741,000 in a
transaction that entailed a buy-back of shares by the company and the issue of
new shares to the Fund. In its last published annual accounts the company
declared a pre-tax profit of #1.2 million.
Other Funds
During the period a total of #840,000 was invested in Electra Investment Trust
and Electra Active Management, which are both funds managed by Electra Partners.
Electra Investment Trust is an investment trust specialising in private equity.
Electra Active Management is an OEIC investing in quoted smaller companies where
a catalyst has been identified to maximise shareholder value.
Bond Portfolio
The value of the bond portfolio at the end of the period was #7.9 million. The
investment strategy has been to invest in fixed income securities matching
redemption periods to the Fund's anticipated qualifying investment programme.
The majority of the bonds are "A" rated or higher and at 31 March 2003 the
portfolio comprised 15 corporate bonds with an average running yield of 4.6%.
Electra Quoted Management Limited, 22 May 2003
Portfolio Summary
Cost at Valuation at 31 % of Portfolio
acquisition March 2003 by value
#'000 #'000 %
Qualifying Investments:
Advanced Medical Solutions Plc 500,000 455,882 3.97
Nectar Taverns Plc 750,000 750,000 6.53
Signature Brands Group Plc 750,000 750,000 6.53
Centurion Electronics Plc 500,000 625,000 5.44
2,500,000 2,580,882 22.47
Non-Qualifying Investments:
Electra Investment Trust Plc 640,460 624,375 5.43
Electra Active Management Plc 450,000 366,212 3.19
1,090,460 990,587 8.62
Fixed Income Securities
Coca Cola 6.5% (21.05.03) 804,188 792,884 6.90
Diageo 9.0% (31.05.05) 552,000 548,275 4.77
Dexia 8.375% (16.06.04) 527,500 526,450 4.58
McDonalds 6.25% (07.12.05) 525,000 522,400 4.55
ASIF II 6.5% (26.11.04) 519,950 520,325 4.53
Lloyds TSB Bank 7.375% (11.03.04) 519,600 516,625 4.50
BMW (UK) 6.5% (10.08.04) 517,000 515,825 4.49
Vodafone 7.5% (19.03.04) 517,750 515,650 4.49
IBM 6.0% (28.06.04) 512,250 512,500 4.46
Depfa Finance 7.125% (11.11.03) 516,100 510,000 4.44
Abbey National 5.25% (21.01.04) 501,500 505,950 4.40
Morgan Stanley 6.75% (22.08.03) 512,650 505,300 4.40
Toyota 6.25% (04.08.03) 507,250 504,024 4.39
Republic of Iceland 8.75% (12.05.03) 519,750 502,825 4.38
General Electric 6.5% (26.11.04) 416,200 416,560 3.63
7,968,688 7,915,593 68.91
11,559,148 11,487,062 100.00
Cash 4,234,078
Total 15,721,140
UNAUDITED STATEMENT OF TOTAL RETURN (incorporating the revenue account)
FOR THE SIX MONTHS ENDED 31 MARCH 2003
Six months ended Period from 12 September 2001 to
31 March 2003 31 March 2002
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Gains/losses on investments
- realised - (87,928) (87,928) - - -
- unrealised - 66,070 66,070 - (52,454) (52,454)
Income 348,529 - 348,529 91,581 - 91,581
Investment management fees (32,189) (96,568) (128,757) (17,618) (52,853) (70,471)
Other expenses (156,181) - (156,181) (67,797) - (67,797)
Return on ordinary activities before tax 160,159 (118,426) 41,733 6,166 (105,307) (99,141)
Tax on ordinary activities (33,769) 18,349 (15,420) (1,233) 1,233 -
Return on ordinary activities after tax 126,390 (100,077) 26,313 4,933 (104,074) (99,141)
Return per ordinary share 0.79p (0.63p) 0.16p 0.26p (4.52p) (4.26p)
The amounts dealt with in the Statement of Total Return are all derived from
continuing activities.
No operations were acquired or discontinued in the period.
UNAUDITED BALANCE SHEET AT 31 MARCH 2003
2003 2002
#'000 #'000 #'000 #'000
Fixed Assets
Investments 11,487,062 8,103,976
Current assets
Debtors and prepayments 418,287 296,337
Outstanding settlements 500,000 -
Cash at bank and in hand 4,234,078 3,332,173
Creditors: amounts falling due within one year
Outstanding settlements - 2,653,106
Other creditors 809,590 137,843
809,590 2,790,949
Net current assets 4,342,775 837,561
Net assets 15,829,837 8,941,537
Capital and reserves
Called up share capital 169,149 95,165
Share premium 15,902,904 8,945,513
Capital reserve - realised (302,460) (51,620)
Capital reserve - unrealised (72,086) (52,454)
Revenue reserve 132,330 4,933
Total equity shareholders' funds 15,829,837 8,941,537
Net asset value per ordinary share 93.59p 93.96p
Number of Ordinary Shares in issue at 31 March 16,914,898 9,516,503
Reconciliation of Total Shareholders' Funds (unaudited)
Six months Period
ended 12 Sept 2001
31 March to 31 March
2003 2002
#'000 #'000
Total Return 26,313 (99,141)
Share issue expenses charged to Share Premium Account (55,060) (475,825)
Ordinary shares issued 1,157,175 9,516,503
Movements in Total Shareholder's Funds 1,128,428 8,941,537
Total Shareholder's Funds at 1 October 14,701,409 -
Total Shareholder's Funds at 31 March 15,829,837 8,941,537
UNAUDITED CASHFLOW STATEMENT FOR THE SIX MONTHS ENDED
31 MARCH 2003
Six months Period
ended From
31 March 12 Sept 01 to
2003 31 March 02
#'000 #'000
Operating Activities
Investment income received 451,650 101,250
Bank deposit interest received 59,132 19,929
Investment management fees paid (202,528) -
Other cash payments (216,930) (425)
Net Cash Inflow from Operating Activities 91,324 120,754
Investing Activities
Acquisition of investments (6,331,584) (5,829,259)
Disposal of investments 4,121,175 -
Net Cash Outflow from Investing Activities (2,210,409) (5,829,259)
Dividend
Equity dividend paid (118,183) -
Cash Outflow before Financing and Management of Liquid Resources (2,237,268) (5,708,505)
Financing
Issue of ordinary shares 1,157,175 9,516,503
Expenses of the issue of ordinary shares (55,060) (475,825)
Cash held pending issue of ordinary shares 645,252 -
Net Cash Inflow from Financing 1,747,367 9,040,678
(Decrease)/Increase in Cash for the Period (489,901) 3,332,173
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. Return to Shareholders per Ordinary Share
The revenue return per ordinary share is based on the net revenue from ordinary
activities after taxation of #126,390 (2002: #4,933) and on 15,970,116 (2002:
2,329,992) ordinary shares, being the weighted average number of ordinary shares
in issue during the period.
The capital return per ordinary share is based on net capital losses of #100,077
(2002: #104,074) and on 15,970,116 (2002: 2,329,992) ordinary shares, being the
weighted average number of ordinary shares in issue during the period.
2. The above summary of results for the six months ended 31 March 2003
does not constitute statutory financial statements within the meaning of Section
240 of the Companies Act 1985 and has not been delivered to the Registrar of
Companies.
3. A copy of the interim report for the six months ended 31 March 2003 will
be posted to shareholders shortly and will be available to the public at the
registered office of the Company at 65 Kingsway, London WC2B 6QT.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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