Interim Results
17 November 2006 - 8:01AM
UK Regulatory
RNS Number:2312M
Arc Growth Company VCT plc
17 November 2006
Interim Statement to 31 August 2006
ARC Growth Company VCT plc (the "Company")
Chairman's Statement
I am pleased to present the second interim report to shareholders. The activity
level of the Company has increased during the half year under review and we have
now made six investments and realised two of them, Talisker Pharma and BFresh,
above investment cost.
Fund launch
The Company was launched in February 2005 which was late in the seasonal cycle
of Venture Capital Trust marketing, especially in a year which was flooded with
VCT offerings. Consequently, we sought to raise further funds in the year
ending 5 April 2006 and were pleased that a further #517,595 was raised.
Net Asset Value ('NAV')
The progress of the investments the Company has made is beginning to be
reflected in the Company's performance which has seen the NAV per share rise
from 94.6p at 28 February 2006 (after reflecting the fundraising costs of 5.5%)
to 107.6p at 31 August 2006 which represents a net return in the period of 13p
per share.
As at close of business on 10 October 2006, the NAV per share was 117.3p due to
the strong rise in the Arc Fund Management Holdings plc shares which we hold and
are quoted on AIM. This represents a net return of 22.7p per share for the
Company since 1 March 2006.
This is excellent progress but shareholders should not assume we can sustain
this rate of growth.
Dividends
The Company's policy is to maximise dividends to its shareholders. One of the
benefits of the Company's structure is that these dividends are paid tax-free
whether they arise from income or capital gains. We are not declaring a
dividend for the half-year to 31 August 2006 but shall consider proposing a
final dividend for the year ending 28 February 2007 if the positive trend in
performance continues.
The Company's VCT qualifying status
As you may be aware, the Company must be 70% invested in qualifying companies by
the end of its third accounting period to comply with VCT regulations. The
board of the Company is conscious of this absolute rule and will monitor
progress towards this rule regularly.
Outlook
It is encouraging that the Investment Manager, Arc Fund Management Limited, is
looking at an increasing flow of investment opportunities. Whilst the board has
asked them to be conservative in their investment approach, we do want the focus
to continue to be on investment opportunities that are capable of reasonably
early realisation.
Richard Hargreaves
Chairman
Arc Growth Company VCT plc
for the half year ended 31 August 2006
Unaudited income 6 Months to 31 August 2006 8 months to 31 August 2005* 14 Months to 28 February 2006*
statement
Revenue Capital Total Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Bank interest 20 - 20 7 - 7 27 - 27
Interest Receivable on 10 - 10 - - - - - -
amount due from Manager
Loan Stock interest 2 - 2 - - - - - -
Investment management 16 - 16 21 - 21 37 - 37
(fee)/clawback
Other expenses (35) - (35) (27) - (27) (63) - (63)
Investment Gains /
(Losses)
Realised - 48 48 - - - - - -
Unrealised - 155 155 - - - - - -
Profit before tax 13 203 216 1 - 1 1 - 1
Taxation (2) - (2) - - - - - -
Profit after tax 11 203 214 1 - 1 1 - 1
Transfer to reserves (11) (203) (214) (1) - (1) (1) - (1)
- - - - - - - - -
Return per share 0.66p 13.02p 13.68p 0.08p - 0.08p 0.13p - 0.13p
All revenue and capital items in the above Statement derive from continuing operations.
The Company has only one class of business and derives its income from investments made in shares and securities and
from bank and money market funds.
Arc Growth Company VCT plc
Unaudited balance sheet 31 August 2006 31 August 2005* 28 February 2006*
as at 1 March 2006 #'000 #'000 #'000 #'000 #'000 #'000
Fixed asset investments 803 - 110
Current assets
Debtors 156 35 140
Cash at bank 901 1,061 898
1,057 1,096 1,038
Current Liabilities
Creditors 84 24 76
Net current assets 973 1,072 962
Net assets 1,776 1,072 1,072
Called up equity share 165 113 113
capital
Share premium 1,396 958 958
Revenue reserve 12 1 1
Capital reserve - 48 - -
realised
Capital reserve - 155 - -
unrealised
Total equity 1,776 1,072 1,072
shareholders' funds
Net asset value per 107.56p 94.58p 94.63p
share
Arc Growth Company VCT plc
for the half year ended 31 August 2006
Unaudited cash flow 6 Months to 31 August 2006 8 Months to 31 August 2005* 14 Months to 28 February
2006*
statement
#'000 #'000 #'000 #'000 #'000 #'000
Net cash inflow from 3 (10) (63)
operating activities
Net cash outflow from financial (489) - (110)
investment
Management of liquid
resources :
Financing :
Issue of own shares 518 1,133 1,133
Share issue expenses (28) (62) (62)
Total financing 490 1,071 1,071
Increase in cash 4 1,061 898
resources
Balance brought forward 898 - -
Balance carried forward 902 1,061 898
* These figures are
audited.
Notes
1. This interim financial information and the unaudited interim accounts
for the half-year ended 31 August 2006 from which it has been extracted, which
are the responsibility of the directors and were approved by them on 11 October
2006, do not constitute statutory accounts within the meaning of Section 240 of
the Companies Act 1985 and have not been delivered to the Registrar of
Companies.
2. The Company is an investment company as defined in Section 266 of the
Companies Act 1985. The financial statements have been prepared under the
historical cost convention, modified to include the revaluation of fixed asset
investments, and in accordance with applicable accounting standards in the UK
and with the Statement of Recommended Practice "Financial statements and
investment trust companies" issued in January 2003 and revised in December 2005.
3. During the period under review, the Company issued 450,135 new Ordinary
Shares of 10 pence each on 31 March 2006 and a further 67,460 such Ordinary
Shares on 5 April 2006, at a price of #1 per share.
4. Since the year end, a further 116,465 shares have been issued at #1 per
share.
5. Investments portfolio
Book cost Valuation
Company #'000 #'000
Traded on AIM
Arc Fund Management 100 120
100 120
Unquoted
Consolidated Vending 218 354
Rainbow Rewards 79 79
Simultane 100 100
Traction Technology 150 150
547 683
Total 647 803
6. Copies of the Interim Report to Shareholders have been sent to
shareholders and are available at the Company's Registered Office: 22 Lovat
Lane, London EC3R 8EB or from Woodside Corporate Services, 21-22 Grosvenor
Street, London W1K 4QJ.
7. The revenue return per share is based on profit from ordinary activities
after tax of #214,118 and on 1,564,868 ordinary shares of 10p, being the
weighted average number of shares in issue during the period. The net assets
per share is based on total net assets of #1,775,868 and 1,651,092 ordinary
shares of 10p in issue at the period end.
Independent review report to Arc Growth Company VCT PLC
Introduction
We have been instructed by the company to review the financial information for
six months ended 31 August 2006 which comprises a statement of total return,
balance sheet, cash flow statement and associated notes numbered 1 to 7. We have
read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information.
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the Company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the Company for
our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of management and applying analytical
procedures to the financial information and underlying financial data and based
thereon, assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit. Accordingly, we do not express an audit opinion on the
financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 August 2006.
Spofforths LLP
Chartered Accountants
Investment Portfolio
As at 31 August 2006, Arc Growth Company VCT plc had invested in six companies,
and intends to continue to invest in smaller private companies with good growth
prospects.
The investments made so far are as follows:
1. Consolidated Vending plc ('CV') Cost : #218,400 Valuation : #354,148
On 8 February 2006 the Company invested #60,000 in B Fresh Limited ("B Fresh")
by way of a #54,000 convertible loan at an interest rate of 7% per annum plus an
investment of #6,000 for 0.81% of its issued share capital. B Fresh is a vending
machine company which sells miniature toiletries in gyms and budget hotels.
Consolidated Vending plc ('CV') was established by Arc as an acquisition vehicle
to acquire an established vending business, SNAP Digital Imaging Ltd., a
business which provides instant photographs for passports, driving licences and
photo ID cards. CV acquired 100% of B Fresh on 23 June 2006 in consideration for
the issue of 32,200,000 CV shares of 0.1p. In exchange B Fresh shareholders
received 31.25% of shares then in issue in CV. The Directors believe that this
will benefit B Fresh as they have now joined a larger vending group.
On the same date, the Company invested a further #158,000 in CV for an interest
of 6.0% of its then issued share capital.
The board of CV intends to seek an admission to trading on AIM in due course.
2. Traction Technology Holdings plc Cost : #149,600 Valuation : #149,600
On 14 June 2006 the Company invested #149,600 in Traction Technology Holdings
plc. Traction Technology designs, develops and manufactures environmentally
friendly vehicle propulsion systems utilising both hybrid and all-electric
technology. Traction Technology has installed and tested its medium duty system
in an Optare Solo bus on the London Transport Bus cycle which later became the
first vehicle to be awarded the Government's Low Carbon Bus status.
3. Simultane Limited Cost :#100,000 Valuation : #100,000
On 5 June 2006, the Company invested #100,000 in Simultane Limited for an
interest of 14.3% of its issued share capital. Simultane is a Brighton-based
clothing store and fashion label. The company's wholesale label 'Arnett for
Simultane' is available at Liberty as well as other outlets throughout the UK
and Ireland. It has just been accepted at Harvey Nichols which is seen as one
of the premier UK outlets for this kind of merchandise
4. Arc Fund Management Holdings plc Cost : #100,000 Valuation : #119,656
Arc is the holding company of our Investment Manager. It is a City-based
investment boutique which has a fund management division, specialising in
tax-efficient funds such as Approved EIS and VCT Funds, as well as a property
fund. It also has a stockbroking and corporate finance division. Arc listed on
AIM in July 2006 and its share price has risen from a Listing price of 5.85p to
7p on 31 August 2006, and has risen significantly since that date.
5. Rainbow Rewards Holdings Limited Cost : #78,947 Valuation : #78,947
The Company's investment of 150,000 Ordinary Shares represents 0.5% of its
issued share capital
Rainbow Rewards is a provider of cash rewards to credit card holders for loyalty
to merchants who are members of the system. It is the brainchild of Kerry
Packer's ex-chief financial officer and has launched in Denver, Colorado and
Portland, Oregon. Rainbow plans to seek admission to AIM in 2007.
6. Talisker Pharma Limited Cost : #50,000 Realised Value : #102,581
The investment of #50,000 acquired an interest of approximately 1% of Talisker,
which is an early stage pharmaceutical company specialising in the central
nervous system market and intends to operate in drug licensing and development.
Talisker received a formal offer on 1 July 2006 from EUSA Pharma Inc ("EUSA"), a
US based pharmaceutical Company. EUSA acquired 100% of the share capital of
Talisker. The return is estimated to be over 100 per cent. With #95,585 on
completion and #6,996 will be held in escrow for 12 months.
The directors of Arc Growth Company VCT plc are actively pursuing further
suitable VCT qualifying investments.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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