RNS Number:7609N
Baronsmead VCT 4 PLC
11 February 2008
To: RNS
From: Baronsmead VCT 4 plc
Date: 11 February 2008
Investment Objective
To achieve long-term capital growth and generate tax-free dividends for private
investors.
Audited Preliminary Results - Year Ended 31 December 2007
+ 4.5% NAV per ordinary share increased to 125.06p before deduction of
dividends. After dividends totalling 7.0p per ordinary share in
the year to 31 December 2007, the NAV was 118.06p
+ 6.0% NAV per C share increased to 101.84p before deduction of dividends.
After dividends totalling 3.5p per C share in the year to 31 December
2007, the NAV was 98.34p
+ 53.9% NAV total return since launch in 2001
+ 6.2% Dividend yield, tax-free to qualifying ordinary shareholders (gross
equivalent yield for a higher rate taxpayer is 9.1 per cent) based
on 7.0p dividends divided by the mid ordinary share price of 113.5p
at the year end
The Chairman, Philip Dunne said:
"Baronsmead VCT 4 delivered another year of growth during 2007, although growth
within the unquoted portfolio was off set by a decline in value of the AiM
portion of the portfolio. This particularly impacted the second half of the
year, as the fall in UK economic confidence accelerated after credit markets
tightened in August 2007. Four profitable unquoted company exits demonstrated
the ability of the private equity disciplines to generate significant uplifts in
value.
With ordinary share dividends of 7p, the record of dividend payments since
launch in December 2001 has been sustained. The dividend yield grew to 6.2%,
tax free to most ordinary shareholders
RESULTS
In the year to 31 December 2007, the Net Asset Value (NAV) per ordinary share
increased by 4.5% from 119.71p to 125.06p before deduction of dividends. The
interim dividend of 3p per ordinary share was paid in September 2007 and the
proposed final dividend of 4p per ordinary share is payable in March 2008.
The C share capital raised in February 2006 generated a 6.0% NAV total return
and the NAV per C share increased to 101.84p before deduction of dividends. The
interim dividend of 1.5p per C share was paid in September and the proposed
final dividend of 2p per C share is payable in March 2008.
LONG TERM PERFORMANCE
The two standard measurements for monitoring investment performance are based
either on the NAV plus dividends paid (known as "NAV total return") or the
movement in share price plus dividends paid (known as "share price total
return"). The latter is particularly relevant to investors who buy in the
secondary market. Other measures include dividend yield and cash returned to
shareholders. These different measures of performance are described below and
most are stated before the inclusion of VCT tax reliefs. These reliefs were
designed to redress both the VCT constraints as well as the higher risks that
relate to smaller unquoted and AIM-traded companies.
NAV total return to Ordinary shareholders since launch in December 2001 amounts
to 54% which represents an annual compound growth rate of 7.5 per cent and is
stated net of all running costs. The NAV total return for C shareholders at the
year end is 9%.
Share price total return in the last five years has been 57.4%, which represents
an annualised tax-free return of 9.5%.
The results set out above compare favourably with other VCTs and fuller
comparisons have recently been facilitated by the Association of Investment
Companies (AIC) who publish monthly data on their website, www.theaic.co.uk.
Dividends and yield. By 31 December 2007 dividends totalling 24p per share had
been paid/proposed to founder shareholders over the last six years. Based on
the mid share price of 113.5p at the period end, the dividend yield is currently
6.2% and is tax-free for UK private investors. The Board's intention is to
sustain this record in the medium term, but this will depend on the level of
profitable realisations and it cannot be guaranteed.
Cash returned to shareholders arises from dividends paid and the initial income
tax relief that qualifying shareholders can retain beyond the initial holding
period. Subscribers in 2001 will have received dividends of 24p per share plus
up to 20p initial income tax relief, while C share subscribers will have
received 5p dividends per share and up to 40p income tax relief (provided these
shares are retained for more than three years).
THE PORTFOLIO
The portfolio increased to 62 investments with 15 new investments made and 8
investments fully realised during the period. New investments totalled �7.5
million across 3 new unquoted and 12 AiM-traded investee companies. The
portfolio is split approximately 65: 35 by value between unquoted and AiM/full
list investments and the largest investments in each category are 3.9% and 2.4%.
The allocation policy between ordinary and C shares is approved quarterly by
the Board giving due consideration to the constraints of the VCT legislation.
Baronsmead VCT 4 has met each of the six VCT tests throughout the period to 31
December 2007. The most significant of these tests is the need to ensure at
least 70% of the fund is invested in VCT qualifying investments. At the period
end, over 81% of the share capital raised (net of launch costs) prior to 31
December 2005 was invested in VCT qualifying investments.
The 'direction of travel' or relative health of portfolio companies is measured
quarterly in terms of profitability as well as other non-financial benchmarks.
At the period end 87% of the portfolio companies were reporting improved or
steady progress and few at this stage appear to be affected by the impact of
tightening conditions in credit markets.
The Manager's report also comments specifically on the strong performance of the
unquoted portfolio as well as the down rating across the AiM portfolio.
Investment sales totalled �7.6 million realising significant net profits of �4.3
million, representing a multiple of 2.3 times cost.
MAKING FURTHER INVESTMENTS IN BARONSMEAD VCT 4
The record of share price total returns and the availability of ISA style tax
reliefs illustrate some of the merits for UK private investors of acquiring
existing shares in Baronsmead VCT 4. The Manager sent a guide to all
shareholders in September 2007 titled 'How to acquire additional shares in the
generalist Baronsmead VCTs', which provides more information about how to
purchase or subscribe for more shares and how the different VCT tax reliefs
apply.
Following revisions to VCT legislation in the Finance Acts 2006 and 2007, the
detailed way in which new share capital can be deployed has become clearer and
as a consequence the Board is able to increase the financial planning
opportunities available to ordinary shareholders by offering them the ability to
subscribe for new 'top up' shares.
In August 2007 top-up offers of up to Euro2.5 million (approximately �1.7 million)
were made to ordinary and C shareholders. The offers closed on 28 September
2007. The share offers raised �735,000 from 95 ordinary shareholders and
�577,000 from 63 C shareholders. Further top-up offers to raise up to
approximately Euro1.4 million and Euro1.7 million have also been made to the ordinary
and C shareholders on the share register as at the date of this report. Full
terms and conditions of these offers are contained in the offer documents.
In the year to 31 December 2007, the Dividend Reinvestment Plan (DRIP) acquired
a total of 239,973 ordinary shares for c.280 ordinary shareholders (some 16% of
ordinary shareholders). This scheme is expected to become available to C
shareholders following the conversion of C shares into ordinary shares.
1,225,000 ordinary shares were bought back during the year and retained for
re-issue in a Treasury account. 215,000 C shares were bought back during the
year and cancelled.
NEW LISTING REGULATION
Listed companies are now required to state their investment policies in full.
In this way existing and prospective shareholders can understand the investment
opportunity which the Company offers and identify how risk spreading is
achieved. The Board reviews the investment policy on a regular basis to ensure
that it remains appropriate in the prevailing market conditions and a summary is
set out on the inside front cover.
New Disclosure and Transparency rules were introduced earlier in 2007 and as a
result interim management statements will now be produced following the 31 March
and 30 September quarter ends. The two statutory reports and two quarterly fact
sheets will continue to be published by Baronsmead VCT 4 and sent direct to
shareholders either electronically, by post or contained on the Company's
website, www.baronsmeadvct4.co.uk
ANNUAL GENERAL MEETING
We now have approximately 2,800 shareholders and our task as a Board is to
ensure that we meet and understand your requirements. I look forward to
welcoming as many shareholders as possible to the AGM on 25 March 2008 at 12
noon followed by a presentation by Hawksmere, a provider of professional
training seminars and conferences, lunch and a shareholder workshop finishing by
3.30 p.m.
OUTLOOK
The UK stock market is currently anticipating difficult economic conditions
following the unprecedented contraction of credit markets since summer 2007.
There has been a marked downgrade in share prices of smaller quoted companies.
Unquoted companies have been less directly affected. Current market conditions
offer better value buying opportunities for Baronsmead VCT 4, which has the
necessary cash resources to take advantage.
The impact of the tighter credit markets is beginning to hamper debt raising in
both personal and corporate markets. However debt levels within our portfolio
companies are relatively low and new transactions are being structured so that
there is greater flexibility to withstand an economic downturn. Realisations
have been strong and the Manager is working to sustain a flow of exits so that
the dividend record can be maintained.
It is the Boards intention to convert C shares into ordinary shares around the
third anniversary of the C share placing, namely in January 2009.
Our Managers, ISIS, who were originally a wholly owned subsidiary of F&C Asset
Management plc have now become wholly owned by their executives, which your
Board welcomes."
Enquiries: David Thorp 0207 506 5631 ISIS EP LLP
Rhonda Nicoll 0131 718 1000 F&C Asset Management plc
Baronsmead VCT 4 plc
Audited Income Statement
Year to 31 December 2007
Ordinary Shares
Revenue Capital Total
�'000 �'000 �'000
Unrealised gains on investments - 1,134 1,134
Realised gains on investments - 273 273
Income 1,535 - 1,535
Investment management fee (290) (871) (1,161)
Other expenses (265) - (265)
Profit on ordinary activities before taxation 980 536 1,516
Tax on ordinary activities (218) 249 31
Profit on ordinary activities after taxation 762 785 1,547
Return per ordinary share: 2.41p 2.49p 4.90p
Audited Reconciliation of Movements in Shareholders' Funds
Ordinary Shares 2007
�'000
Opening shareholders' funds 39,361
Profit for the year 1,547
Increase in share capital 708
Purchase of shares (1,381)
Dividends paid (2,049)
Closing shareholders' funds 38,186
Baronsmead VCT 4 plc
Audited Income Statement
Year to 31 December 2007
C Shares
Revenue Capital Total
�'000 �'000 �'000
Unrealised gains on investments - 717 717
Realised gains on investments - 178 178
Income 876 - 876
Investment management fee (117) (352) (469)
Other expenses (140) - (140)
Profit on ordinary activities before taxation 619 543 1,162
Tax on ordinary activities (182) 151 (31)
Profit on ordinary activities after taxation 437 694 1,131
Return per C share: 2.17p 3.44p 5.61p
Audited Reconciliation of Movements in Shareholders' Funds
C Shares 2007
�'000
Opening shareholders' funds 19,421
Profit for the year 1,131
Increase in share capital 550
Purchase of shares (189)
Dividends paid (500)
Closing shareholders' funds 20,413
Baronsmead VCT 4 plc
Audited Income Statement
Year to 31 December 2007
Total
Revenue Capital Total
�'000 �'000 �'000
Unrealised gains on investments - 1,851 1,851
Realised gains on investments - 451 451
Income 2,411 - 2,411
Investment management fee (407) (1,223) (1,630)
Other expenses (405) - (405)
Profit on ordinary activities before taxation 1,599 1,079 2,678
Tax on ordinary activities (400) 400 -
Profit on ordinary activities after taxation 1,199 1,479 2,678
Audited Reconciliation of Movements in Shareholders' Funds
Total 2007
�'000
Opening shareholders' funds 58,782
Profit for the year 2,678
Increase in share capital 1,258
Purchase of shares (1,570)
Dividends paid (2,549)
Closing shareholders' funds 58,599
Baronsmead VCT 4 plc
Audited Income Statement
Year to 31 December 2006
Ordinary Shares
Revenue Capital Total
�'000 �'000 �'000
Unrealised gains on investments - 5,678 5,678
Realised gains on investments - 506 506
Income 1,299 - 1,299
Investment management fee (290) (1,964) (2,254)
Other expenses (240) - (240)
Profit on ordinary activities before taxation 769 4,220 4,989
Tax on ordinary activities (146) 172 26
Profit on ordinary activities after taxation 623 4,392 5,015
Return per ordinary share: 1.94p 13.69p 15.63p
Audited Reconciliation of Movements in Shareholders' Funds
Ordinary Shares 2006
�'000
Opening shareholders' funds 36,367
Profit for the year 5,015
Increase in share capital 189
Purchase of shares (603)
Dividends paid (1,607)
Closing shareholders' funds 39,361
Baronsmead VCT 4 plc
Audited Income Statement
Year to 31 December 2006
C Shares
Revenue Capital Total
�'000 �'000 �'000
Unrealised gains on investments - 346 346
Realised gains on investments - 64 64
Income 693 - 693
Investment management fee (92) (343) (435)
Other expenses (124) - (124)
Profit on ordinary activities before taxation 477 67 544
Tax on ordinary activities (136) 110 (26)
Profit on ordinary activities after taxation 341 177 518
Return per C share: 1.71p 0.88p 2.59p
Audited Reconciliation of Movements in Shareholders' Funds
C Shares 2006
�'000
Opening shareholders' funds -
Profit for the year 518
Increase in share capital 19,003
Dividends paid (100)
Closing shareholders' funds 19,421
Baronsmead VCT 4 plc
Audited Income Statement
Year to 31 December 2006
Total
Revenue Capital Total
�'000 �'000 �'000
Unrealised gains on investments - 6,024 6,024
Realised gains on investments - 570 570
Income 1,992 - 1,992
Investment management fee (382) (2,307) (2,689)
Other expenses (364) - (364)
Profit on ordinary activities before taxation 1,246 4,287 5,533
Tax on ordinary activities (282) 282 -
Profit on ordinary activities after taxation 964 4,569 5,533
Audited Reconciliation of Movements in Shareholders' Funds
Total 2006
�'000
Opening shareholders' funds 36,367
Profit for the year 5,533
Increase in share capital 19,192
Purchase of shares (603)
Dividends paid (1,707)
Closing shareholders' funds 58,782
Baronsmead VCT 4 plc
Audited Balance Sheet
As at 31 December 2007
2007 2007 2007
Ordinary C
Shares Shares Total
�'000 �'000 �'000
Fixed assets
Traded on AiM 9,317 2,707 12,024
Quoted on FTSE SmallCap 273 - 273
Interest bearing securities 4,877 11,695 16,572
Unquoted investments 19,203 4,101 23,304
33,670 18,503 52,173
Net current assets 4,516 1,910 6,426
Net assets 38,186 20,413 58,599
Financed by:
Shareholders' funds 38,186 20,413 58,599
Net asset value per share:
Basic 122.06p 100.34p -
Treasury 121.68p - -
Ordinary shares in issue 31,285,827 20,344,440 -
Listed ordinary shares 32,715,827 20,344,440 -
Treasury shares 1,430,000 -
Baronsmead VCT 4 plc
Audited Balance Sheet
As at 31 December 2006
2006 2006 2006
Ordinary C
Shares Shares Total
�'000 �'000 �'000
Fixed assets
Traded on AiM 12,235 993 13,228
Interest bearing securities 6,678 16,423 23,101
Unquoted investments 19,286 948 20,234
38,199 18,364 56,563
Net current assets 1,162 1,057 2,219
Net assets 39,361 19,421 58,782
Financed by:
Shareholders' funds 39,361 19,421 58,782
Net asset value per share:
Basic 123.21p 97.11p -
Treasury 123.12p - -
Ordinary shares in issue 31,945,938 20,000,000 -
Listed ordinary shares 32,150,938 20,000,000 -
Treasury shares 215,000 -
Baronsmead VCT 4 plc
Summarised Audited Statement of Cash Flows
For the year ended 31 December 2007
2007 2007 2007
Ordinary C
Shares Shares Total
�'000 �'000 �'000
Net cash (outflow)/inflow from operating activities (1,253) 183 (1,070)
Capital expenditure and financial investment 5,832 863 6,695
Equity dividends paid (2,049) (500) (2,549)
Net cash inflow before financing 2,530 546 3,076
Financing (334) 550 216
Increase in cash 2,196 1,096 3,292
Reconciliation of net cash flow to movement in net
cash
Increase in cash 2,196 1,096 3,292
Opening cash position 2,365 1,031 3,396
Closing cash position 4,561 2,127 6,688
Reconciliation of profit on ordinary activities before
taxation to net cash (outflow)/inflow from operating
activities
2007 2007 2007
Ordinary C
Shares Shares Total
�'000 �'000 �'000
Profit on ordinary activities before taxation 1,516 1,162 2,678
Profit on realisation of investments (273) (178) (451)
Unrealised gains on investments (1,134) (717) (1,851)
Increase in debtors (255) (22) (277)
Decrease in creditors (1,107) (62) (1,169)
Net cash (outflow)/inflow from operating activities (1,253) 183 (1,070)
Baronsmead VCT 4 plc
Summarised Audited Statement of Cash Flows
For the year ended 31 December 2006
2006 2006 2006
Ordinary C
Shares Shares Total
�'000 �'000 �'000
Net cash (outflow)/inflow from operating activities (62) 82 20
Capital expenditure and financial investment 1,803 (17,954) (16,151)
Equity dividends paid (1,607) (100) (1,707)
Net cash inflow/(outflow) before financing 134 (17,972) (17,838)
Financing (414) 19,003 18,589
(Decrease)/increase in cash (280) 1,031 751
Reconciliation of net cash flow to movement in net
cash
(Decrease)/increase in cash (280) 1,031 751
Opening cash position 2,645 - 2,645
Closing cash position 2,365 1,031 3,396
Reconciliation of profit on ordinary activities before
taxation to net cash (outflow)/inflow from operating
activities
2006 2006 2006
Ordinary C
Shares Shares Total
�'000 �'000 �'000
Profit on ordinary activities before taxation 4,989 544 5,533
Profit on realisation of investments (506) (64) (570)
Unrealised gains on investments (5,678) (346) (6,024)
Decrease/(increase) in debtors 31 (282) (251)
Increase in creditors 1,102 230 1,332
Net cash (outflow)/inflow from operating activities (62) 82 20
Notes
1. The audited results which cover the year to 31 December 2007 have been
prepared under UK Generally Accepted Accounting Practice (UK GAAP).
Where presentational guidance set out in the Statement of Recommended Practice
("SORP") for investment trusts issued by the Association of Investment Companies
("AIC") in January 2003, revised December 2005, is consistent with the
requirements of UK GAAP, the Directors have sought to prepare the financial
statements on a basis compliant with the recommendations of the SORP.
In order to better reflect the activities of a VCT and in accordance with the
SORP, supplementary information which analyses the income statement between
items of a revenue and capital nature has been presented alongside the income
statement. The net Revenue profit is the measure the Directors believe
appropriate in assessing the Company's compliance with certain requirements set
out in Section 274 of the Income Tax Act 2007.
2. There were 31,285,827 ordinary shares in issue at 31 December 2007 (31
December 2006: 31,945,938). During the year the Company issued 564,889 ordinary
shares raising net proceeds of �708,000. The Company bought back 1,225,000
ordinary shares during the year at a cost of �1,381,000 to be held in Treasury.
The total number of ordinary shares listed at 31 December 2007 was 32,715,827
(31 December 2006: 32,150,938).
There were 20,344,440 ordinary shares in issue at 31 December 2007 (31
December 2006: 20,000,000). During the year the Company issued 559,440 C shares
raising net proceeds of �550,000. The Company bought back 215,000 C shares
during the year for cancellation at a cost of �189,000.
3. Revenue and capital returns for the ordinary shares for the year to 31
December 2007 are based on a weighted average of 31,558,217 (2006: 32,088,009)
ordinary shares in issue during the year.
Revenue and capital returns for the C shares for the year to 31
December 2007 are based on a weighted average of 20,146,505 (2006: 20,000,000) C
shares in issue during the year.
4. Income for the year is derived from:
2007 2006
Total Total
�'000 �'000
Dividend Income 288 296
Fixed interest investment 1,966 1,460
Deposit interest 157 236
2,411 1,992
5. The proposed final dividends of 4.0p per ordinary share (comprising
1.6p revenue dividend and 2.4p capital dividend) and 2.0p per C share
(comprising 1.1p revenue dividend and 0.9p capital dividend) will be paid on 28
March 2008, subject to shareholder approval, to eligible shareholders on the
registers on 22 February 2008.
6. These are not full accounts in terms of Section 240 of the Companies
Act 1985. Full audited accounts for the year to 31 December 2006 have been
lodged with the Registrar of Companies. The annual report for the year to 31
December 2007 will be sent to shareholders shortly and will then be available
for inspection at the offices of ISIS EP LLP, 100 Wood Street, London, the
registered office of the Company. Both the audited accounts for the year to 31
December 2007 and the year to 31 December 2006 contain unqualified audit
reports.
7. The Annual General Meeting will be held on 25 March 2008 at 12 noon.
This information is provided by RNS
The company news service from the London Stock Exchange
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