RNS Number:0969Q
Electra Kingsway VCT 2 PLC
24 January 2007
Electra Kingsway VCT 2 Plc
Unaudited Preliminary Results for the Year ended 30 September 2006
Financial Highlights
Year ended 30 September 2006 2005
Restated
Net assets #36.9m #33.1m
Net asset value per share 108.02p 96.96p
Dividend paid per share 1.00p -
Cumulative Return to shareholders since launch
Dividends paid per share 1.00p -
Net asset value plus dividends paid per share 109.02p 96.96p
A copy of the Chairman's Statement, Investment Manager's Report and Unaudited
Preliminary Announcement is attached.
This unaudited preliminary announcement for the year ended 30 September 2006
does not constitute the statutory financial statements of the Company for the
year ended 30 September 2006 within the meaning of Section 240 of the Companies
Act 1985. Those financial statements have not yet been delivered to the
Registrar, nor have they been reported upon yet by the auditors.
The Report and Accounts will be sent to shareholders shortly and will thereafter
be available from the Company's registered office at Paternoster House, 65 St
Paul's Churchyard, London EC4M 8AB. The Annual General Meeting will be held on
26 March 2007 at the later of 1.30pm or the conclusion of the Annual General
Meeting of Electra Kingsway VCT Plc to be held at 1.00pm on the same day at 65
St Paul's Churchyard, London EC4M 8AB.
For further information:
Nick Ross:
Electra Kingsway VCT 2 Plc - telephone 020 7214 4200
Chairman's Statement
Results
It has been a year of good progress for the Fund. The Net Asset Value at the
year end was 108.02p per share, compared with the 94.5p starting NAV. The rate
of investment remains on track, with over #8.6m invested in qualifying companies
and a further #4.3m invested since the year end. The number of new deals under
consideration is high, and the Fund is on course to meet its qualification
deadline in September 2007.
Investment portfolio
Although it is still early days in the life of the Fund, the initial qualifying
investments are showing good early progress and are satisfactorily diversified.
As between unquoted and AIM stocks, the portfolio is currently on target for a
70:30 split. Investments in unquoted companies are favoured over AIM companies
as the entry valuation multiples tend to be lower and more due diligence can be
conducted. In addition the investments are structured with more downside
protection with the investment manager usually taking a board seat. The AIM
market offers some significant challenges for investors mainly due to the high
volatility.
Dividends
The dividend policy of the Fund is to distribute surplus income and capital
profits in the form of tax free dividends. In line with this policy, the Board
declared an interim dividend of 1p per ordinary share, which was paid to
shareholders on 4 August 2006.
Shareholder communication
The Company will communicate regularly with its investors through both the
interim and annual reports, and through regular newsletters and transaction
updates. Further information can be obtained from the Investment Manager's
website at www.electraquoted.com. If shareholders have any enquiries in relation
to dividend cheques, share certificates and changes of address, they should be
addressed in writing to the Registrar.
Budget changes
Investors may be aware the Chancellor has introduced new legislation on the VCT
industry, which came into effect on 5 April 2006. Most of the changes have no
impact on this Fund as they relate to new monies raised in 2006 and beyond. One
change was introduced retrospectively and concerns the use of non-interest
bearing accounts to meet the 70% investment test after year three. I am pleased
to report that the Investment Manager has never had to resort to such
arrangements, and the Fund is on track to meet its investment objectives.
Outlook
The Fund has started well, with several qualifying investments trading well and
offering good upside potential. The Investment Manager reports a strong
potential deal pipeline, therefore the Board remains confident of the outlook.
Rupert Pennant-Rea, Chairman
Investment Manager's Review
Investment Overview
The net asset value at 30 September was 108.02p per share which, when including
the dividend paid to date, represents an uplift of 15.4% over the initial net
asset value of the Fund. The Fund invested #8.6m in qualifying investments and
#7.6m in non-qualifying investments in line with the investment policy set out
in the Prospectus. The balance of the Fund was held in liquidity funds, which
will be drawn down as further qualifying investments are made. One of the key
investment targets for the Fund is to ensure that 70% is invested in qualifying
investments by the end of the third year. Including investments that have been
made since the year end, and the level of activity within the Investment
Manager's deal pipeline, the Fund remains on target to reach this level.
Performance
Within the qualifying portfolio, 11 investments have been made of which eight
are unquoted companies and three are AIM quoted. Both portfolios have performed
well to date, with the overall qualifying portfolio up 42.1%. Within the
unquoted portfolio the main upside has come from Gyro International and Find
Portal which were both written up in value in response to synergistic
acquisitions, improving operating performance and comparative market valuations.
Gyro International is a specialist brand and marketing agency with a strong
business to business focus and represents a wide range of blue chip companies
including Oracle, Sun Microsystems, Sony and MCI. Find Portal owns and operates
one of the UK's leading financial services directory websites. The key to the
potential for the company is the rapid growth in online advertising,
particularly for financial products. There has been significant activity in the
comparison website marketplace, with some extremely high valuations being paid
for such companies due to the scalability of the model.
Among the AIM holdings the best performer was Worthington Nicholls, which rose
39% in response to good underlying trading and a good synergistic acquisition.
Jelf Group, a financial consultancy, also rose strongly in the period, up 70%.
Hill Station experienced an extremely volatile period rising strongly and then
giving up most of the gains as the company announced integration delays.
Following the year end, additional funds were invested to ensure the company had
sufficient working capital throughout its integration period.
New Investments
Jelf Group is an independent full service financial consultancy working
primarily with businesses. It provides insurance healthcare financial services
and commercial financial solutions. In 2004 it floated on AIM in order to
achieve additional scale through acquisitions. In 2006, after reporting good
progress, the company sought to raise further monies to finance the acquisition
of a larger company. The fund invested #250,160 alongside Electra Kingsway VCT 3
for a combined stake of 1.9%.
Find Portal owns and operates one of the UK's leading internet financial
services directory websites, which has the most complete A to Z listing of any
UK directory website. The company was incorporated in 2005 and has demonstrated
a successful record of profits growth. The key has been the rapid growth of
online advertising and the attractiveness of the internet for the marketing of
financial products. In September 2006 the company completed the bolt-on
acquisition of Defaqto a company which provides an online service to the IFA
market. In total the Fund has invested #2.15m alongside Electra Kingsway VCT 3.
The carrying value of the investment was increased to reflect the improvement in
profitability and the high prices being paid for other comparison websites.
Munro Global specialises in providing market research services in the UK with
offices in London and Newcastle. The transaction was a management buy-in and the
vendor was the retiring founder. The investment provides both the opportunity
for promoting new initiatives for organic growth and also further acquisitions
as the market research industry is generally very fragmented. For the year ended
February 2006, FDS Group's sales were in excess of #6 million. The Fund invested
#875,000 alongside Electra Kingsway VCT 3. Each fund holds a stake of 24.95%.
Worthington Nicholls installs and maintains air conditioning units in the UK
hotel and retail markets. The company successfully floated on AIM in June 2006,
raising #7.5 million of new money to fund acquisitions and #12.5 million of
replacement capital to reduce the founding family's holding. Soon after its
flotation, the company announced the acquisition of Project Air, a specialist
installer of air conditioning systems to the retail sector. Given the timing of
this recent acquisition, its full impact will be seen in the year ending
September 2007. Due to the shortage of qualified air conditioning providers, the
company had already contracted an estimated 100% and 50% respectively of its
2006 and 2007 turnover at flotation. The future of the company is linked to
European Union legislation enforcing air conditioning standards and the age of
the UK's hotel and retail estate. On flotation, the Fund invested #1,000,000
alongside Electra Kingsway VCT 3. Each fund holds a stake of 3.08%.
Conquest Business Media is a leading UK business-to-business publisher
concentrating in the manufacturing and related sectors. The company publishes
The Manufacturer and British Industry in the UK as well as US Manufacturer in
the US. The development of the brand has enabled the company to diversify into
conferences and exhibitions, although over 85% of revenues are from publishing.
The transaction was a management buyout and the Fund had invested #750,000
alongside Electra Kingsway VCT Plc. Each fund holds a stake of 21.7%.
Hill Station is a super premium brand dairy ice cream company that merged with
Granelli and Loseley to form a larger ice cream manufacturer serving the own
label and branded market. The key was that four manufacturing facilities would
be consolidated into the existing Loseley operations in Cwmbran in South Wales.
Hill Station was listed on AIM in 2004 and the Fund alongside Electra Kingsway
VCT Plc invested #1.5m for a combined 16% interest in the company. After the
year end, the Fund invested a further #375,000 to provide additional working
capital.
Outlook
The Fund has got off to a promising start with some good early investment
performance and remains on target to reach its 70% investment qualification by
the end of September 2007.
Portfolio Summary
Performance % of
Cost at in year ended 30 Valuation at Portfolio by
30 September September 30 September Value
2006 2006 2006
# # # %
Qualifying Investments
Find Portal 2,150,000 2,124,985 4,274,985 20.32
Worthington Nicholls 1,000,000 390,000 1,390,000 6.61
Gyro International 375,000 969,979 1,344,979 6.40
Munro Global 875,000 - 875,000 4.16
Hill Station 758,085 63,174 821,259 3.90
Amber Taverns 750,000 - 750,000 3.57
Ma Hubbards 750,000 - 750,000 3.57
Conquest Business Media 750,000 - 750,000 3.57
Sanastro 600,000 - 600,000 2.85
Jelf Group 250,160 174,640 424,800 2.02
Keycom 296,000 (120,000) 176,000 0.84
8,554,245 3,602,778 12,157,023 57.81
Non Qualifying Investments
Electra Private Equity 3,550,253 841,588 5,197,500 24.71
Electra Active Management 4,000,000 (508,441) 3,676,683 17.48
7,550,253 333,147 8,874,183 42.19
16,104,498 3,935,925 21,031,206 100.00
Other Assets
Liquidity Funds 15,695,000
Cash 156,731
15,851,731
Total 36,882,937
Qualifying Investments
(Information on the investments below is extracted from their latest audited
accounts.)
Find Portal Year ended May 2006
#'m
Cost #2,150,000
Valuation #4,274,985 Sales 3.0
Basis of Valuation Fair Value Loss before tax (1.4)
Equity held 17.28% Retained loss (1.4)
Business An internet financial directory Net liabilities (0.7)
Worthington Nicholls Year ended September 2005
#'m
Cost #1,000,000
Valuation #1,390,000 Sales 10.1
Basis of Valuation Bid market price (AIM) Loss before tax (0.8)
Equity held 3.08% Retained loss (0.7)
Business Air conditioning contractor Net assets 0.8
Gyro International Year ended October 2005
#'m
Cost #375,000
Valuation #1,344,979 Sales 13.3
Basis of Valuation Fair Value Profit before tax 0.2
Equity held 4.00% Retained loss (0.1)
Business Business to business creative Net assets 3.8
agency
Munro Global Year ended February 2006
#'m
Cost #875,000
Valuation #875,000 Sales 6.1
Basis of Valuation Price of recent investment Profit before tax 0.2
Equity held 24.95% Retained profit 0.1
Business Market research company Net assets 0.7
Hill Station 15 months ending July 2005
#'m
Cost #758,085
Valuation #821,259 Sales 1.2
Basis of Valuation Bid market price (AIM) Loss before tax (0.8)
Equity held 8.0% Retained loss (0.7)
Business Ice cream manufacturer Net assets 0.8
Conquest Business Media Year ended December 2005
#'m
Cost #750,000
Valuation #750,000 Sales 6.0
Basis of Valuation Price of recent investment Loss before tax (0.2)
Equity held 21.70% Retained loss (0.2)
Business Business to business Net liabilities (1.0)
publishing
Amber Taverns Period ended April 2006
#'m
Cost #750,000
Valuation #750,000 Sales 0.9
Basis of Valuation Price of recent investment Loss before tax (0.4)
Equity held 16.50% Retained loss (0.4)
Business Acquisition of portfolio of Net assets 1.0
managed pubs in NE England
Ma Hubbards Year ended April 2006
#'m
Cost #750,000
Valuation #750,000 Sales 2.3
Basis of Valuation Price of recent investment Loss before tax (0.3)
Equity held 25.00% Retained loss (0.3)
Business Acquisition of portfolio of Net assets 0.5
managed pubs in the Midlands
Sanastro Year ended November 2005
#'m
Cost #600,000
Valuation #600,000 Sales 5.0
Basis of Valuation Price of recent investment Profit before tax 0.3
Equity held 7.6% Retained profit 0.2
Business Publisher of financial Net assets 7.4
newsletters
Jelf Group Year ended November 2005
#'m
Cost #250,160
Valuation #424,800 Sales 11.5
Basis of Valuation Bid market price (AIM) Profit before tax 1.0
Equity held 0.96% Retained profit 0.7
Business Regional IFA network Net assets 4.4
Unaudited Income Statement
Year ended 30 September 2006
For the year ended 30 September 2006 For the period 20 August 2004 to 30
September 2005
Restated
Revenue Capital Total Revenue Capital Total
# # # # # #
Unrealised gains on investments - 3,935,925 3,935,925 - 990,783 990,783
Income 1,323,893 - 1,323,893 557,765 - 557,765
1,323,893 3,935,925 5,259,818 557,765 990,783 1,548,548
Investment management fees (208,797) (626,390) (835,187) (99,517) (298,551) (398,068)
Other expenses (308,919) - (308,919) (311,014) - (311,014)
(517,716) (626,390) (1,144,106) (410,531) (298,551) (709,082)
Return on Ordinary Activities
before Taxation 806,177 3,309,535 4,115,712 147,234 692,232 839,466
Tax on ordinary activities - - - - - -
Return on Ordinary Activities after
Taxation 806,177 3,309,535 4,115,712 147,234 692,232 839,466
Dividend per share 1p (2005: nil) (341,728) - (341,728) - - -
Transfer to reserves 464,449 3,309,535 3,773,984 147,234 692,232 839,466
Basic and diluted return to
Shareholders per Ordinary Share 2.36p 9.68p 12.04p 0.80p 3.75p 4.55p
The amounts dealt with in the Income Statement are all derived from continuing
activities.
No operations were acquired or discontinued in the period.
Unaudited Statement of Total Recognised Gains and Losses
Year ended 30 September 2006
For the year ended 30 September 2006 For the period 20 August 2004 to 30
September 2005
Restated
Revenue Capital Total Revenue Capital Total
# # # # # #
Return on Ordinary Activities
after Taxation 806,177 3,309,535 4,115,712 147,234 692,232 839,466
Total recognised gains for the
year 806,177 3,309,535 4,115,712 147,234 692,232 839,466
Prior year adjustment - (83,011) (83,011) - - -
Total recognised gains since
last annual report 806,177 3,226,524 4,302,701 147,234 692,232 839,466
Unaudited Reconciliation of Total Shareholders' Funds
Year ended 30 September 2006
For the year ended 30 September 2006 For the period 20 August 2004 to 30
September 2005
Restated
# #
Total Return on Ordinary
Activities after Taxation 4,115,712 839,466
Share issue expenses charged to
Share Premium account - (1,880,960)
Ordinary shares issued - 34,199,456
Repurchase of ordinary shares (28,480) (12,437)
Dividends on ordinary shares (341,728) -
Movements in Total Shareholders'
Funds 3,745,504 33,145,525
Total Shareholders' Funds at
start of year (previously
#33,228,536 before deducting
prior year adjustment of
#83,011) 33,145,525 -
Total Shareholders' Funds 36,891,029 33,145,525
Unaudited Balance Sheet
As at 30 September 2006
As at 30 September 2006 As at 30 September 2005
Restated
# # # #
Fixed Assets
Investments held at fair value 21,031,206 11,755,624
Current Assets
Debtors 397,153 79,910
Other investments 15,695,000 21,300,000
Cash at bank 156,731 330,414
16,248,884 21,710,324
Current Liabilities
Creditors: amounts falling due
within one year 367,811 299,173
367,811 299,173
Net Current Assets 15,881,073 21,411,151
Total assets less current 33,166,775
liabilities 36,912,279
Creditors: amounts falling due
after more than one year 21,250 21,250
Net Assets 36,891,029 33,145,525
Capital and Reserves
Called-up share capital 341,528 341,849
Share premium - 31,976,502
Special reserve 31,958,601 -
Capital redemption reserve 466 145
Realised capital reserve (924,941) (298,551)
Unrealised capital reserve 4,926,708 990,783
Revenue reserve 588,667 134,797
Total Equity Shareholders'
Funds 36,891,029 33,145,525
Net Asset Value per Ordinary
Share 108.02p 96.96p
As at 30 September 2006 As at 30 September 2005
Number of Ordinary Shares in
issue 34,152,821 34,184,910
Unaudited Cash Flow Statement
Year ended 30 September 2006
For the year ended 30 For the period 20 August
September 2006 2004 to 30 September 2005
# # # #
Operating Activities
Investment income received 1,000,765 413,242
Bank deposit interest received 5,884 64,613
Investment management fees paid (790,355) (228,000)
Other cash payments (272,674) (194,346)
Net Cash (Outflow)/Inflow from
Operating Activities (56,380) 55,509
Investing Activities
Acquisition of investments (5,339,657) (10,764,841)
Net Cash Outflow from Investing
Activities (5,339,657) (10,764,841)
Equity Dividends Paid (341,728) -
Cash Outflow before Financing
and Management of Liquid
Resources (5,737,765) (10,709,332)
Management of Liquid Resources
Sale/(Purchase) of current
asset investments 5,605,000 (21,300,000)
Net cash Inflow/(Outflow) from
Management of Liquid Resources 5,605,000 (21,300,00)
Financing
Issue of ordinary shares - 34,199,456
Expenses of the issue of
ordinary shares - (1,880,960)
Repurchase of ordinary shares (40,918) -
Issue of loan notes - 21,250
Net Cash (Outflow)/Inflow from
Financing (40,918) 32,339,746
(Decrease)/Increase in Cash in
the Period (173,683) 330,414
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEWFMLSWSELF
Electra Kingsway Vct (LSE:EKW)
Historical Stock Chart
Von Apr 2024 bis Mai 2024
Electra Kingsway Vct (LSE:EKW)
Historical Stock Chart
Von Mai 2023 bis Mai 2024
