TIDMVICT
RNS Number : 2566O
Victory VCT PLC
14 September 2011
ViCTory VCT PLC
HALF-YEARLY REPORT
for the six months ended 31 July 2011
Contents
Page
---------------------------------------------- -----
Overview 1
Board Review 2
Fund Manager's Review 4
Investment Portfolio 8
Ten Largest Holdings 11
Sector Allocation 11
Principal Risks and Uncertainties 12
Statement of Directors' Responsibilities 13
Income Statement 14
Reconciliation of Movements in Shareholders'
Funds 16
Condensed Balance Sheet 17
Cash Flow Statement 18
Notes to the Financial Statements 19
Shareholder Information 24
Corporate Information
OVERVIEW
Corporate Objective
The objective of ViCTory VCT PLC (the "Company") is to provide
shareholders with an attractive and competitive investment return
from a portfolio of companies whose shares are primarily traded on
the Alternative Investment Market ("AIM"). The Manager's continuing
objective is to manage the current portfolio so as to maximise
returns for investors for the qualifying period and beyond.
Key data
for the six months to 31 July 2011
31/07/11 31/07/10 31/01/11
(unaudited) (unaudited) (audited)
Restated*
Total Net Asset Value ("NAV") GBP18.5m GBP18.3m GBP20.7m
Shares in issue 39,642,549 43,557,324 43,557,324
NAV per share 46.7p 42.0p 47.5p
Share price 39.0p 33.5p 40.5p
Market capitalisation GBP15.5m GBP14.6m GBP17.6m
Share price discount to NAV 16.5% 20.2% 14.7%
Total return for the period
(assuming re-invested dividends) 2.6% 0.2% 12.9%
FTSE AIM All-Share total return
index -7.7% 3.3% 42.2%
Total expense ratio 3.3% 3.4% 2.9%
Dividends declared/paid during 2.0p - -
the period
* Restated - see note 10 on page 22.
Table of investor returns to 31 July 2011
FTSE
NAV total AIM
return
NAV total with All-Share
return
with dividends total
dividends not return
Launch date re-invested re-invested index
29 January
ViCTory VCT 2001 -42.60% -38.46% -33.79%
Singer & Friedlander 28 September
AIM VCT 1998 -69.97% -41.49% 13.56%
Singer & Friedlander 29 February
AIM 2 VCT 2000 -56.01% -51.57% -64.94%
Singer & Friedlander
AIM 3 VCT ('C' 4 April
shares) 2005 -37.05% -33.95% -14.66%
BOARD REVIEW
Overview
The markets have been more challenging over the six months to 31
July 2011. However, during the period the total return was
positive, outperforming the benchmark by 10.5%. Moreover, the
restructuring of the portfolio continued and is now close to
completion. As a result, the resilience of the portfolio has
increased, and we are better placed to weather the kind of
financial storm that has been unleashed in August. During the
period:
-- The NAV total return was 2.6%, which compares to -7.7% for
the FTSE AIM All-Share Total Return Index (the "Index").
-- The company paid a 2p dividend, its first since January
2009.
-- An interim dividend of 1p has been declared for the
period.
-- Five new qualifying investments made during the period,
totaling GBP1.2m, creating room to make further adjustments to the
qualifying portfolio.
Performance and Dividend
The NAV total return was 2.6%, which compares to -7.7% for the
Index. There were two significant factors behind this
outperformance. First, the resources sector began to underperform,
with the result that the portfolio significantly outperformed the
Index, which is heavily weighted towards resource stocks. Second,
the Manager has focused on selling holdings with weak balance
sheets and those without a strong competitive position, and this
has made the portfolio more robust in the face of stormier economic
conditions. Towards the end of the period investor appetite for
small and microcap companies began to wane, and this was
exacerbated by the steep erosion of market confidence during
August.
In line with the stated intention to pay dividends of 5-6% of
year end NAV each year, the Board has declared an interim dividend
of 1p payable on 18 October 2011 to shareholders on the register on
23 September 2011.
Merger Proposals and Corporate Matters
On 7 July 2011 the Board announced that discussions were being
held concerning a possible merger with Amati VCT 2 plc ("Amati 2").
The Board sees numerous commercial benefits arising from the merger
and these will be outlined fully in a Prospectus and Circular,
which, will be posted to shareholders with this report (subject to
UKLA approval).
The proposed merger would be effected by way of a scheme of
reconstruction, whereby Amati 2 is placed in members' voluntary
liquidation and all of its assets and liabilities are transferred
to ViCTory in exchange for new shares in ViCTory.
In addition to the merger, the Company is also proposing to
launch an offer for subscription of new shares (with an enhanced
share buy back and re-investment facility for existing
shareholders), and introduce a dividend re-investment scheme.
In anticipation of these developments the Board has decided to
change the Company's Registrar from Capita Registrars to The City
Partnership (UK) Limited with effect from 16 September 2011. This
will enable all enquiries regarding the Company to be directed
through City Partnership, who also act as Company Secretary, and
who will act as Receiving Agent for the proposed forthcoming Share
Offer. They can be contacted on 0131 243 7210 or by email at
vct-enquiries@amatiglobal.com . Amati maintains an informative
website for the Company - www.amatiglobal.com - on which monthly
investment updates, performance information, and all relevant
documentation and contact details can be found.
Christopher Moorsom (Chairman)
James Hambro
Mike Killingley
David Page
Directors of ViCTory VCT PLC
13 September 2011
FUND MANAGER'S REVIEW
Market Review
The six month period from February to July showed little overall
direction in markets. At a macro level, the period encompassed some
momentous events, all of which contributed to market sentiment. The
most significant were the swathe of uprisings across the Middle
East, which began in February; the tragic earthquake in Japan
during March; the renewed crisis in the Eurozone over the solvency
of Greece during May; and finally the pantomime in Washington
concerning the raising of the US debt ceiling, which in turn
spilled over into a crisis of confidence in stock markets during
early August.
These events have cast a range of economic shadows. The
uprisings in the Middle East caused the oil price to spike upwards
sharply as supplies from some countries were disrupted, which acted
as a brake on the global economy. The Japanese earthquake had a
widespread impact on some key industrial supply chains, causing
some industries to slow, and tending to result in slower economic
growth than forecast in the first half of this year. Both the
series of crises surrounding Greece's inability to service its
financing requirements and the lack of political consensus in the
US to start tackling its budget deficit are serving to cause
investors to question the very structure of the financial landscape
as it is currently mapped out, and thus to become more cautious.
Meanwhile China has been making strenuous efforts to dampen down
inflation with a long series of steps aimed at restricting
credit.
By May it became evident that forecasts for economic growth were
unlikely to be met in much of Europe and the US. Talk of companies
seeing a slowdown in business appeared during May and June. More
importantly, commodity prices rolled over, in some cases sharply
from May onwards, while interest rate expectations in both the UK
and the US fell significantly as it became clear that economic
conditions were too fragile to withstand rate rises, and looked
like they would continue to be so for a long time.
Performance
The volatility of the portfolio remained low relative to the
wider AIM market with the NAV total return finishing at 2.6%, as
compared to - 7.7% for the FTSE AIM All-Share Total Return Index.
The biggest contributor to performance was from the largest
holding, Lo-Q, which sells queue management systems to theme parks.
The company announced strong results and an expanding customer base
internationally. Other leading contributors to performance were
IDOX, a software company focused on the UK public sector, which
also announced robust trading, and Tasty, the restaurant operator,
which doubled in price during the period under review on the back
of success with its chain of Wildwood restaurants in the London
area. Positive share price gains followed impressive trading news
from Tikit Group, RPC Group, Elementis and Hargreaves Services.
The largest negative in the portfolio was AssetCo, a qualifying
holding which provides international fire and rescue services. Its
share price collapsed several times as the market was given
successive pieces of bad news about the company's financial
structure. Whilst it is fortunate that we declined the initial
re-financing of the company, we decided not to sell the holding at
what seemed to be a distressed price. The situation then
deteriorated further and we decided to exit, but too late to
preserve much value. A company that we continue to like a good
deal, Asian Citrus Holdings, was also weak during the period,
despite a positive trading statement showing profits boosted by
increased production and high unit prices. We attribute this to
weakening sentiment towards China generally, but see this stock as
something of a safe haven strategically in an increasingly
unpredictable world economy, and have added to the position.
Several other companies detracted from performance, including
Sterling Resources, which lost ground after disappointing results
from a North Sea well, and which we subsequently sold; Tristel,
makers of infection control and hygiene products, which fell after
profits did not meet expectations; and Parseq, supplier of
specialist mobile and online banking software, which fell back
after announcing that trading would be below market expectations,
despite a major contract win with O2, which had precipitated an
earlier rally in the share price.
Portfolio Activity
The process of restructuring the portfolio has now come a long
way since it began in March last year. Changes to the qualifying
portfolio in particular can take a long time, as it requires both
liquidity in stocks being sold, and opportunities to make new
qualifying investments which fit our criteria. One of our
objectives was to increase the size of companies held across the
portfolio, and in particular to reduce the weighting in equity
holdings capitalised at less than GBP15m, this latter measure
reducing from around 24% when we took on the portfolio to around 9%
at the period end. The non-qualifying portfolio comprises mainly
more liquid holdings in significantly larger companies, which
address investment themes and sectors not generally found as
qualifying investments. Despite the severe uncertainties facing the
global economy at the moment, we still wish to have exposure to the
emerging economies of China and India, where we believe the long
term dynamics can remain favourable.
Qualifying Portfolio
Sales amongst the qualifying investments included: Mediwatch,
the urological diagnostic company, and ILX Group, an e-learning
software and consulting services provider, both of which were
capitalised at less than GBP15m. Combined with the disposals of
qualifying investments last year, these reduced our weighting of
qualifying investments towards the lower limit, at which point we
held off from looking at other disposals pending making further
qualifying investments.
Fortunately, a number of new, attractive qualifying investment
opportunities emerged to bolster the percentage of assets held in
qualifying investments once more. There were five new qualifying
investments in the period, two in secondary offerings (where
companies already quoted on AIM raise further funds), and three in
Initial Public Offerings ("IPOs") on AIM. The two secondary
offerings were: Futura Medical, a developer of innovative sexual
healthcare products that is expected to begin to enjoy royalty
revenues from licensing deals for its three lead products; and
Deltex Medical Group, supplier of the Cardio-Q, a monitoring device
used for optimising the fluid management of patients undergoing
major surgery. Deltex was recently recommended by the National
Institute of Clinical Excellence (NICE) on the basis that its use
produces faster recovery times, potentially saving the NHS up to
GBP1bn annually. The three IPOs in which we participated were
Ubisense Group, a company specialising in geo-spatial location
systems, where we followed an initial investment made in the
company at the pre-IPO stage; Music Festivals, a vehicle managed by
Vince Power, which owns a number of music festivals, notably
Benicassim in Spain, and Hop Farm in the UK, and in which we
invested primarily through a convertible loan; and Manroy, an
equipment supplier primarily to the UK and US military.
Non-Qualifying Portfolio
We raised cash from a number of disposals, including Kiotech
International, a supplier of feed additives to the agriculture and
aquaculture industries, which we think is a strong company, but too
small for the non-qualifying portfolio; Gooch & Housego, the
optical components and systems specialist which had risen sharply
in value, to the point where its rating looked too stretched; and
NCC, the IT and software specialists, which likewise had risen
strongly.
The most significant additions to the non-qualifying portfolio
were in two Indian companies: Eros International and OPG Power
Ventures. Eros is the largest producer and distributor of
'Bollywood' films, a market that is growing rapidly on the back of
increased consumer spending and the rise of a prosperous middle
class in India. OPG Power Ventures is a developer and operator of
electricity generating assets, with a current generation capacity
of 107MW and adequate funding to expand this to 1,250MW by 2015.
India is experiencing a severe shortage of electricity generating
capacity, and we believe OPG is well placed to help fill some of
the gap. We also took a position in the AIM IPO of Waterlogic, a
manufacturer and distributor of water purifying and dispensing
systems, in the belief that the company's recent innovation, a
product called the Firewall UV system, provides an exceptional
opportunity over the coming years.
Outlook
The recent market turmoil reflects the build up of very
significant macro-economic and political risks, which are difficult
to analyse and predict. At the root of these risks lies excess
debt. The credit crunch of 2008 was caused by excess debt in the
private sector, with much of the focus being on over-leveraged
banks. This has now morphed into a problem of excess debt in the
public sector, where its trajectory is much less predictable,
because nations, even more so than large banks, cannot become
bankrupt. Something else has to happen, but it is not clear what.
Whilst the 2008 crisis itself was responsible for pushing up
government debt levels in Western markets to unprecedented levels,
as governments bailed out the banking sector whilst experiencing a
significant fall in tax revenue, the real difficulty is that there
is a forty year underlying trend in place of rising government debt
and rising budget deficits in most developed economies. This very
long-term trend has been called the "Debt Supercycle", and there
appears to be no reverse gear. Instead, successive generations have
devised ways of postponing the problem of reducing deficits. Hence
we have arrived at a situation where over-leveraged government
finances have little capacity to deal with a recession, and less
still to deal with deflation. As a consequence, both Europe and the
US appear locked into close to zero interest rates for the
foreseeable future, in order to ward off the spectre of deflation,
with few levers left to pull in order to stimulate the economy,
other than quantitative easing (the technical term for printing
money).
This leaves an acute dilemma for investors. The stock market
will be prone to sudden panic attacks, as we have seen during
August, and these may well get worse. However, many of the
companies we analyse and hold have been trading exceptionally well,
have very strong balance sheets, and good prospects. In addition
the non-qualifying investments we have made bring us exposure to
the major Far Eastern economies, where we see stronger prospects
for growth. It would take a severe and protracted financial
meltdown for such equity investments to fare worse than cash or
government bonds from here over a medium term time-frame.
Therefore, although we expect further bumps on the road, we believe
that good equity investments will prove their worth over time,
particularly if it turns out that inflation remains high, as we
suspect it will.
Dr Paul Jourdan
CEO and Founder
Amati Global Investors
13 September 2011
INVESTMENT PORTFOLIO
as at 31 July 2011
Number Book % of
of cost Valuation Fund shares
FTSE Sector shares GBP GBP % in issue
-------------------- ----------- ----------- ----------- ------ ---------
Oil & Gas 387,993 404,881 2.2
-------------------- ----------- ----------- ----------- ------ ---------
Deo Petroleum plc@ 403,518 181,583 157,372 0.9 0.9
Egdon Resources plc
@ 1,650,060 206,410 247,509 1.3 1.3
Basic materials 697,934 837,600 4.5
-------------------- ----------- ----------- ----------- ------ ---------
Anglo Pacific Group
plc@ 160,000 461,703 512,000 2.8 0.1
Elementis plc@ 200,000 236,231 325,600 1.7 0.0
Industrials 4,849,913 4,224,289 22.8
-------------------- ----------- ----------- ----------- ------ ---------
Avingtrans plc* 503,333 528,333 302,000 1.6 2.0
Bglobal plc*@ 674,117 256,164 91,006 0.5 0.7
Corac Group plc*@ 1,240,962 186,144 161,325 0.9 0.5
Green Compliance
plc @ 43,210,000 440,231 518,520 2.8 2.4
Hargreaves Services
plc@ 39,956 258,755 425,531 2.3 0.1
Hightex Group plc* 2,505,000 175,353 125,250 0.7 1.3
Manroy plc
(Placing)*@ 190,138 180,631 180,631 1.0 1.0
Microsaic Systems
plc @ 713,828 228,486 171,319 0.9 1.9
Quadnetics Group
plc* 136,588 341,381 275,908 1.5 0.8
RPC Group plc@ 102,720 264,659 366,505 2.0 0.1
RTC Group plc* 537,500 220,375 43,000 0.2 4.0
SKIL Ports &
Logistics
Limited@ 95,452 238,630 193,767 1.0 0.2
Sportsweb.com*# 58,688 352,128 316,915 1.7 11.4
Symphony
Environmental
Technologies plc* 2,680,770 428,379 442,327 2.4 2.1
Waterlogic plc@ 96,073 139,306 158,520 0.9 0.1
Zytronic plc* 215,126 610,958 451,765 2.4 1.4
Consumer goods 1,470,563 1,619,280 8.7
-------------------- ----------- ----------- ----------- ------ ---------
Asian Citrus
Holdings Limited@ 834,000 408,496 450,360 2.4 0.1
China Food Company
plc 8% Convertible
Loan Note#@ 624 624,000 636,570 3.4 45.2(**)
New Britain Palm
Oil Limited@ 27,000 162,067 255,150 1.4 0.0
Sorbic
International plc
10% Convertible
Loan Stock#@ 276 276,000 277,200 1.5 23.2(**)
Health care 1,575,727 2,158,042 11.7
-------------------- ----------- ----------- ----------- ------ ---------
Deltex Medical
Group plc*@ 700,000 199,500 157,500 0.9 0.5
Futura Medical
plc*@ 275,222 185,775 214,673 1.2 0.4
Omega Diagnostics
Group plc* 1,000,000 200,000 145,000 0.8 1.2
Sinclair IS Pharma
plc @ 1,429,471 425,678 414,547 2.2 0.4
Synergy Health plc* 94,000 142,567 893,000 4.8 0.2
Tristel plc*@ 740,715 422,207 333,322 1.8 1.9
Consumer services 6,992,200 3,494,108 18.9
-------------------- ----------- ----------- ----------- ------ ---------
Cello Group plc* 225,000 257,625 78,750 0.4 0.3
Conexion Media
Group plc* 1,080,883 183,750 4,864 - 1.4
Coolabi plc* 2,535,883 354,516 171,172 0.9 4.6
Dods Group plc* 2,000,000 595,868 145,000 0.8 1.3
Ebiquity plc* 345,500 729,005 317,860 1.7 0.6
Entertainment One
Limited@ 180,918 121,458 331,080 1.8 0.1
Eros International
plc@ 140,000 332,465 310,800 1.7 0.1
Expansys plc*@ 775,000 449,500 12,400 0.1 0.1
Fuse 8 plc* 20,999 209,990 5,250 - 0.2
Imagesound plc*# 1,250,000 92,188 200,000 1.1 2.0
Just Car Clinics
Group plc* 228,577 77,716 70,859 0.4 1.7
Lilestone Holdings
Limited*# 1,616,786 1,238,655 - - 4.0
Music Festivals
plc*@ 59,527 38,692 38,692 0.2 0.4
Music Festivals plc
8% Convertible
Loan Note 2016*#@ 340,000 340,000 346,878 1.9 6.4(**)
Ovidia Investments# 134,307 518,312 - - 0.4
Prezzo plc 1,342,500 151,327 825,637 4.5 0.6
Skywest Airlines
Limited@ 734,000 146,488 183,500 1.0 0.4
Tasty plc* 779,688 540,377 405,438 2.2 1.6
UBC Media Group
plc* 2,296,384 614,268 45,928 0.2 1.3
Utilities 185,767 127,839 0.7
-------------------- ----------- ----------- ----------- ------ ---------
OPG Power Ventures
plc@ 199,749 185,767 127,839 0.7 0.1
Financials 1,095,139 1,141,055 6.1
-------------------- ----------- ----------- ----------- ------ ---------
Brookwell Limited
Redeemable
Preference
shares@ 116,201 116,201 81,341 0.4 0.8
Fulcrum Utility
Services Limited
@ 5,167,557 620,193 775,134 4.2 3.3
London Capital
Group Holdings
plc@ 389,836 358,745 284,580 1.5 0.7
Technology 2,151,679 3,810,543 20.6
-------------------- ----------- ----------- ----------- ------ ---------
Camaxys# 1,592,656 254,825 - - 0.0
IDOX plc @ 3,608,951 270,902 866,148 4.7 1.1
Lo-Q plc 749,200 749,806 1,311,100 7.1 4.4
Parseq plc* 4,039,075 116,123 191,856 1.0 0.9
Tikit Group plc* 318,626 366,420 901,712 4.9 2.2
Ubisense Group
plc*@ 242,030 393,603 539,727 2.9 1.1
Total investments 19,406,915 17,817,637 96.2
-------------------- ----------- ----------- ----------- ------ ---------
Net current assets 695,296 3.8
-------------------- ----------- ----------- ----------- ------ ---------
Net assets 19,406,915 18,512,933 100.0
-------------------- ----------- ----------- ----------- ------ ---------
* Qualifying holdings.
Part qualifying holdings.
# Unquoted holdings.
@ These investments are also held by other funds managed by
Amati.
**These figures represent percentage of loan stock held.
All holdings are in ordinary shares unless otherwise stated.
Note to the above table:
As at the period end, the percentage of the Company's portfolio
held in qualifying holdings for the purposes of Section 274 of the
Income and Corporation Taxes Act 2007 is 82.13%.
TEN LARGEST HOLDINGS
as at 31 July 2011
Valuation Fund
Company Sector GBP %
-------------------------- ------------------- ---------- -----
Lo-Q plc Technology 1,311,100 7.1
Tikit Group plc Technology 901,712 4.9
Synergy Health plc Health care 893,000 4.8
IDOX plc Technology 866,148 4.7
Prezzo plc Consumer services 825,637 4.5
Fulcrum Utility Services
Limited Financials 775,134 4.2
China Food Company plc Consumer goods 636,570 3.4
Ubisense Group plc Technology 539,727 2.9
Green Compliance plc Industrials 518,520 2.8
Anglo Pacific Group plc Basic materials 512,000 2.8
-------------------------- ------------------- ---------- -----
Representing approximately 42.1% of shareholders'
funds.
SECTOR ALLOCATION
as at 31 July 2011
FTSE Sector Fund %
-------------------- -------
Industrials 22.8
Technology 20.6
Consumer services 18.9
Health care 11.7
Consumer goods 8.7
Financials 6.1
Basic materials 4.5
Oil & Gas 2.2
Utilities 0.7
Net current assets 3.8
100.0
PRINCIPAL RISKS AND UNCERTAINTIES
The Company's assets consist of equity and fixed interest
investments and cash. Its principal risks include market risk,
credit risk and liquidity risk. Other risks faced by the Company
include economic, investment and strategic, regulatory,
reputational, operational and financial risks as well as the
potential for loss of approval as a VCT. These risks, and the way
in which they are managed, are described in more detail in Notes 22
to 25 to the Financial Statements in the Company's Report and
Financial Statements for the year ended 31 January 2011. The
Company's principal risks and uncertainties have not changed
materially since the date of that report.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
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;
-- the Board Review and Fund Manager's Review (constituting the
interim management report) includes a true and fair review of the
information required by DTR4.2.7R 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;
-- the Statement of Principal Risks and Uncertainties on page 12
is a fair review of the information required by DTR4.2.7R, being a
description of the principal risks and uncertainties for the
remaining six months of the year; and
-- the financial statements include a fair review of the
information required by DTR4.2.8R 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.
For and on behalf of the Board
C J L Moorsom
Chairman
13 September 2011
INCOME STATEMENT
for the six months ended 31 July 2011
Six months ended Six months ended Year ended
31 July 2011 31 July 2010 31 January 2011
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Restated* Restated* Restated*
Return on
investments - 156 156 - 161 161 - 2,710 2,710
Income 6 124 - 124 131 - 131 248 - 248
Investment
management
fee (42) (125) (167) (38) (114) (152) (80) (239) (319)
Other expenses (138) - (138) (161) - (161) (277) - (277)
(Loss)/profit
on ordinary
activities
before
taxation (56) 31 (25) (68) 47 (21) (109) 2,471 2,362
Taxation on
ordinary
activities 8 - - - - - - - - -
(Loss)/profit
on ordinary
activities
after
taxation (56) 31 (25) (68) 47 (21) (109) 2,471 2,362
Basic and
diluted
(loss)/return
per Ordinary
share 4 (0.13)p 0.07p (0.06)p (0.16)p 0.11p (0.05)p (0.25)p 5.67p 5.42p
--------------- ----- -------- -------- -------- ---------- ---------- ---------- -------- -------- --------
The total column is the profit and loss account of the Company,
with the revenue and capital columns representing supplementary
information under the Statement of Recommended Practice, "Financial
Statements of Investment Trust Companies and Venture Capital
Trusts" ("SORP") revised in January 2009.
All revenue and capital items derive from continuing
operations.
No operations were acquired or discontinued during the
period.
There were no other recognised gains or losses in the
period.
The difference between the reported return on ordinary
activities before tax and the historical profit is due to the fair
value movement on investments. As a result a note on historical
cost profit and losses has not been prepared.
The accompanying notes are an integral part of the
statement.
* Restated - see note 10 on page 22.
DIVIDENDS PAID
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2011 2010 2011
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------ ------------ -----------
Final dividend for the 795 - -
year ended 31 January 2011
of 2.0p per Ordinary share
- paid on 26 July 2011
795 - -
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 31 July 2011
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2011 2010 2011
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Restated*
Opening shareholders' funds
(as previously stated) 20,692 17,803 18,330
Prior period adjustment - 527 -
Opening shareholders' funds
(restated) 20,692 18,330 18,330
(Loss)/profit for the period (25) (21) 2,362
Share buybacks during the
period (1,359) - -
Dividends paid (795) - -
Closing shareholders' funds 18,513 18,309 20,692
* Restated - see note 10 on page 22.
The accompanying notes are an integral part of the
statement.
CONDENSED BALANCE SHEET
as at 31 July 2011
31 July 31 July 31 January
2011 2010 2011
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
Restated*
Fixed assets
Investments held at fair
value 17,818 14,103 19,215
Current assets
Debtors 310 820 1,381
Cash at bank 719 3,679 249
1,029 4,499 1,630
Current liabilities
Creditors: amounts falling
due within one year (334) (293) (153)
Net current assets 695 4,206 1,477
Total assets less current
liabilities 18,513 18,309 20,692
---------------------------- ----- ------------ ------------ -----------
Capital and reserves
Called up share capital 9 1,982 2,178 2,178
Share premium account 9 2,955 2,955 2,955
Reserves 9 13,576 13,176 15,559
Equity shareholders' funds 18,513 18,309 20,692
Net asset value per share 5 46.70p 42.03p 47.51p
---------------------------- ----- ------------ ------------ -----------
* Restated - see note 10 on page 22.
The accompanying notes are an integral part of the balance
sheet.
CASH FLOW STATEMENT
for the six months ended 31 July 2011
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2011 2010 2011
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
------------------------------ ----- ------------ ------------ -----------
Operating activities
Investment income received 116 162 275
Investment management fees (172) (98) (256)
Other operating costs (153) (132) (312)
Net cash outflow from
operating activities 11 (209) (68) (293)
Financial investment
Purchase of investments (2,140) (2,686) (9,057)
Disposals of investments 3,857 6,612 10,198
Net cash inflow from
financial investment 1,717 3,926 1,141
Dividends
Payment of dividends (795) - -
Net cash inflow before
financing 713 3,858 848
Financing
Share buy backs (see note
10) (243) (155) (575)
Net cash outflow from
financing (243) (155) (575)
Increase in cash 470 3,703 273
------------------------------ ----- ------------ ------------ -----------
Reconciliation of net cash
flow to movement in net cash
Net cash at start of period 249 (24) (24)
Net cash at end of period 719 3,679 249
Increase in cash during the
period 470 3,703 273
------------------------------ ----- ------------ ------------ -----------
The accompanying notes are an integral part of the
statement.
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 31 July 2011
1. The unaudited half-yearly financial results cover the six
months ended 31 July 2011 and have been prepared in accordance with
applicable accounting standards and adopting the accounting
policies set out in the statutory accounts for the year ended 31
January 2011 and in accordance with the SORP.
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 434 of the Companies Act 2006. Statutory
accounts for the year ended 31 January 2011, which were
unqualified, have been lodged with the Registrar of Companies. No
statutory accounts in respect of any period after 31 January 2011
have been reported on by the Company's auditors or delivered to the
Registrar of Companies.
3. Copies of the half-yearly report are being sent to all
shareholders. Further copies are available free of charge from The
City Partnership (UK) Limited, secretary to the Company by
telephoning 0131 243 7210 or email
vct-enquiries@amatiglobal.com.
4. The (loss)/return per share is based on the loss attributable
to shareholders for the six months ended 31 July 2011 of GBP25,000
(31 July 2010: loss of GBP21,000, 31 January 2011: gain of
GBP2,362,000) and the weighted average number of shares in issue
during the period of 41,736,513 (31 July 2010: 43,557,324 restated,
31 January 2011: 43,557,324). There is no dilutive effect on the
return per share for the outstanding convertible securities (as
explained in note 12) therefore considered to be no difference
between basic and diluted return per share.
5. The net asset value per share at 31 July 2011 is based on net
assets of GBP18,513,000 (31 July 2010: GBP18,309,000 restated, 31
January 2011: GBP20,692,000) and the number of shares in issue of
39,642,549 (31 July 2010: 43,557,324 restated, 31 January 2011:
43,557,324). There is no dilutive effect on the net asset value per
share for the outstanding convertible securities (as explained in
note 12) therefore considered to be no difference between basic and
diluted net asset value per share.
6. Income
Six months Six months
ended ended Year ended
31 July 31 July 31 January
2011 2010 2011
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------ ------------ -----------
Income:
Dividends from UK
companies 82 86 152
Dividends from overseas
companies 2 - 14
UK loan stock interest 40 45 82
124 131 248
7. During the period ending 31 July 2011, a dividend in respect
of the year ending 31 January 2011 of 2.0 pence per share,
totalling GBP795,000, has been paid (31 July 2010: no dividend
paid, 31 January 2011: no dividend paid).
8. The effective rate of tax for the six months ended 31 July
2011 is 0%.
9. Unaudited reserves
Capital Total
capital
Share Share Merger Special redemption Capital Revenue &
capital** premium** reserve** reserve reserve** reserve reserve reserves
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ---------- ---------- ---------- -------- ----------- -------- -------- ---------
Opening
balance as at
1 February
2011 2,178 2,955 3,286 18,217 558 (6,626) 124 20,692
Transfer of
merger
investment
disposals - - (268) - - 268 - -
Profit/(loss)
for the
period - - - - - 31 (56) (25)
Share buybacks
during the
period (196) - - (1,359) 196 - - (1,359)
Dividends paid - - - (672) - - (123) (795)
Closing
balance as at
31 July 2011 1,982 2,955 3,018 16,186 754 (6,327) (55) 18,513
**These reserves are not distributable.
The merger reserve is a non-distributable reserve and was
created when the Company merged with Singer & Friedlander AIM
VCT and Singer & Friedlander AIM 2 VCT in February 2006. It
reflected the excess of the value of the investments acquired over
the nominal value of the ordinary shares issued. Following a
review, and in accordance with ICAEW Technical guidance on
distributable profits (Tech 2/10), it was identified that the
merger reserve should be released to the realised capital reserve
as the assets acquired as a consequence of the merger were
subsequently disposed of or permanently impaired. A further
transfer of GBP268,000 from the merger reserve to the realised
capital reserve has been made in the current period to reflect
disposals of investments during the period, that were in existence
at the date of the merger.
The realised and unrealised capital reserve have been
amalgamated under the revised SORP, as there is no requirement to
show realised and unrealised separately.
At 31 July 2011, the capital reserve constitutes realised losses
of GBP4,738,000 (31 July 2010: GBP1,849,000 restated, 31 January
2011: GBP3,930,000) and investment holding losses of GBP1,589,000
(31 July 2010: GBP7,501,000 restated, 31 January 2011:
GBP2,696,000).
Distributable reserves comprise the special reserve, the revenue
reserve and the capital reserve. At 31 July 2011, the amount of
reserves deemed distributable is GBP9,804,000 (31 July 2010:
GBP9,032,000 restated, 31 January 2011: GBP11,715,000), a net
movement in the period of negative GBP1,911,000. The net movement
is comprised of the loss on ordinary activities in the income
statement of GBP25,000, the transfer of investment losses to the
merger reserve of GBP268,000, the dividend paid of GBP795,000 and
the share buybacks of GBP1,359,000. Share buybacks during the
period include the buy back of shares with a nominal value of
GBP162,000 and cost of GBP1,097,000, that were previously disclosed
as having been made in prior periods but were reinstated as
described in note 10. The buybacks have now been reinstated
following the filing of relevant accounts as at 31 January 2011,
demonstrating sufficient distributable reserves.
10. Restatement
During the year ended 31 January 2011 it was identified that
buybacks totalling 3,240,564 shares had not been carried out in
accordance with the Companies Act. Under section 692(2) of the
Companies Act 2006 a buyback of shares must be financed from
distributable reserves. The relevant accounts filed for 31 January
2009 and 31 January 2010 did not show sufficient distributable
reserves under section 836 and therefore the buybacks have been
reversed in the comparatives. The effect of this on the 31 July
2010 balance sheet is to restate share capital and the capital
redemption reserve by GBP115,000 and increase the special reserve
by the cost of these buybacks, being GBP760,000. The payments made
in respect of these buybacks in each respective period are shown in
the cash flow statement. The cost of all of these buybacks
undertaken was shown as a debtor as at 31 January 2011 which has
been recovered now that the financial statements for the year ended
31 January 2011 have been filed, demonstrating sufficient
distributable reserves, allowing the buybacks to be reinstated.
In addition to the restatements in the share capital and
reserves noted above, the restatements also affected the total
shareholders' funds, ordinary shares in issue, net asset value and
return per share figures reported in the previous accounts, which
were restated accordingly.
11. Reconciliation of (loss)/profit on ordinary activities
before taxation to net cash outflow from operating activities
Six months Six months Year
ended ended ended
31 July 31 July 31 January
2011 2010 2011
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------ ------------ -----------
(Loss)/profit on ordinary
activities before taxation (25) (21) 2,362
Net gain on investments (156) (161) (2,710)
(Decrease)/increase in
creditors (13) 79 16
(Increase)/decrease in
debtors (15) 42 46
Amortisation of discount
on fixed interest securities - (7) (7)
------------ ------------ -----------
Net cash outflow from operating
activities (209) (68) (293)
12. Singer & Friedlander's option
In accordance with the arrangements agreed on the merger of the
Company with Singer & Friedlander AIM VCT and Singer &
Friedlander AIM2 VCT, Singer & Friedlander Investment
Management Limited were granted an option which provides that if by
the date of payment of the final dividend in respect of the
ordinary shares for the Company's accounting year ending 31 January
2013 cumulative dividends declared and paid on each ordinary share
(by reference to a record date after the merger) exceed a return of
8% (compounded annually) of the net asset value per ordinary share
Singer & Friedlander Investment Management Limited will be
entitled to subscribe at par for such number of additional ordinary
shares as shall in aggregate be equal to 15% of ordinary shares in
the Company as enlarged by such subscriptions. If the target
dividend rate 2013 will have been achieved by the payment of
dividends in 2014 and 2015 Singer & Friedlander Investment
Management Limited will be entitled to subscribe for such number of
additional ordinary shares as shall in aggregate be equal to 12.5%
(2014) and 10% (2015) of ordinary shares in the Company as enlarged
by such subscriptions.
This right is a share based payment under FRS20.
The value of dividends paid since the merger is 8.5p. In order
to exceed the targeted return which triggers Singer &
Friedlander Investment Management Limited's entitlement to
subscribe for additional shares, a further 38.7p of dividends would
require payment by 31 January 2013. Regardless of performance over
this period, the Directors would not sanction this level of
dividend within this period and thus do not foresee any
circumstances under which the option would crystalise. The option
is therefore valued at nil (31 July 2010: nil, 31 January 2011:
nil).
13. Related Parties
The Company retains Amati Global Investors Limited as its
Manager. Details of the agreement with the Manager are set out on
page 22 of the Annual Report & Financial Statements for the
year ended 31 January 2011.
Save as disclosed in this paragraph, there is no conflict of
interest between the Company, the duties of the Directors and their
interests.
SHAREHOLDER INFORMATION
Share price
The Company's shares are listed on the London Stock Exchange.
The mid-price of the Company's shares is given daily in the
Financial Times in the Investment Companies section of the London
Share Service.
Net asset value per share
The Company's net asset value per share as at 31 July 2011 was
46.7p. The Company normally announces its net asset value on a
weekly basis.
Financial calendar
September 2011 Half-yearly report for the six months to 31 July
2011 published
November 2011 Interim management statement released
31 January 2012 Year end
May 2012 Announcement of final results for the year ended 31
January 2012
June 2012 Annual General Meeting
CORPORATE INFORMATION
Directors Auditor
Christopher John Leon PKF (UK) LLP
Moorsom
James Daryl Hambro Farringdon Place
Mike Sedley Killingley 20 Farringdon Road
David Michael Page London
EC1M 3AP
all of: VCT Tax Adviser
27/28 Eastcastle Street PricewaterhouseCoopers
LLP
London 1 Embankment Place
W1W 8DH London WC2N 6RH
Secretary Bankers
The City Partnership (UK) The Bank of New York Mellon
Limited SA/NV
Thistle House London Branch
21 Thistle Street 160 Queen Victoria Street
Edinburgh EH2 1DF London EC4V 4LA
Manager Registrar (until 16 September
2011)
Amati Global Investors Capita Registrars
Limited
(Authorised and regulated The Registry
by the Financial
Services Authority) 34 Beckenham Road
76 George Street Beckenham
Edinburgh EH2 3BU Kent BR3 4TU
Registrar (from 19 September
2011)
The City Partnership (UK)
Limited
c/o Share Registrars
Suite E, First Floor
9 Lion and Lamb Yard
Farnham
Surrey GU9 7LL
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFEFILFFSEFU
Victory Vct (LSE:VICT)
Historical Stock Chart
From Apr 2024 to May 2024
Victory Vct (LSE:VICT)
Historical Stock Chart
From May 2023 to May 2024
