Interim Results
February 24 2005 - 2:00AM
UK Regulatory
RNS Number:9646I
Eclipse VCT plc
24 February 2005
ECLIPSE VCT PLC
Unaudited interim results for the period ended 30 November 2004
Financial highlights 30 November 2004
* Net assets
#23,682,000
* Net asset value per share
95.9p
* Revenue return after tax
#195,000
* Revenue return per share*
1.4p
* Total return per share*
1.6p
*Based on weighted average of 13,629,300 shares in issue during the period
For further information, please contact:
Simon Rogerson
Octopus Asset Management 020 7255 7961
Chairman's Statement
I am pleased to present my first interim report to shareholders. I am delighted
with the positive feedback we have received over the launch period and would
like to thank all of our shareholders for their support.
Fund Launch
Eclipse was the most successful VCT launched in 2004 (by funds raised), raising
over #23 million as at 30 November 2004. Since then, the Company has continued
to raise further funds and closed at the end of January 2005, having raised
almost #31 million.
I am pleased that this success was reflected not only in the level of funds
raised but also in the fact that our peers voted Eclipse the "New Venture
Capital Fund of the Year 2004" in the recent Investor AllStars Awards.
It was decided to close the fund below the initial target of #40 million. This
was to enable the Manager to launch a follow-on fund this tax year - Eclipse 2 -
so that the Manager is able to invest #2 million per company (the #1 million
maximum per VCT), thereby enabling Eclipse to participate in later-stage and
larger companies.
Net Asset Value per share ("NAV")
The period under review covers the launch of the Company so few investments were
made.
As at 30 November 2004, Eclipse had made two investments in qualifying companies
representing just over 3% of the Company by NAV. These two investments were both
trading at a premium to initial cost at the end of the period.
The NAV had increased from 95p at launch to 95.9p, which largely reflects
interest earned on the funds raised. In accordance with our risk averse
approach, this uninvested cash will remain in money market deposits, earning
interest on behalf of investors, until we identify suitable investment
opportunities.
Dividend
Eclipse's stated policy is to maximise dividend distributions to its
shareholders. One of the benefits of the VCT structure is that these dividends
can be paid out tax-free.
The first dividend is expected to be paid in respect of the financial period
ending 31 May 2005. This will be declared in August 2005 and paid in October
2005. Initially, dividends will be paid from interest earned on money market
deposits and income from portfolio companies. Later on, dividends will be paid
out of the proceeds from the sale of investments.
Chairman's Statement (continued)
Share Price and Buy-Back Facility
The Company's mid market share price currently stands at 100p and, as is normal
with a VCT in its early stages, there have been very few transactions.
Eclipse has a share buy-back facility, proposing to buy-back shares at no more
than a 10% discount to the prevailing NAV. This should assist the marketability
of the shares and help prevent the shares from trading at a wide discount to
NAV.
In the period under review, the Company repurchased 8,311 shares at a price of
95p. Shareholders should note that if they sell their shares within three years
of the original purchase they forfeit any income tax relief obtained. If you
need to sell your shares, please contact Octopus Asset Management on 020 7255
7960.
VCT Qualifying Status
As you may be aware, Eclipse must be 70% invested in qualifying companies by 31
May 2007 in order to comply with VCT regulations.
As at 30 November 2004, the Company had invested just over 3% in qualifying
companies and as at 22 February this figure had risen to 10%.
The Directors will continue to monitor the Company's progress towards meeting
the Inland Revenue's conditions for VCT approval and have retained Grant
Thornton UK LLP, one of the UK's leading firms of accountants, to advise in this
area. In light of the current deal flow, we are confident that Eclipse will
comfortably meet the relevant conditions by its deadline of 31 May 2007.
Outlook
Most of the fundamentals for the UK economy remain favourable. The prospect of
higher interest rates seems to have receded and inflation and unemployment
remain low, providing a positive environment in which to invest in UK smaller
companies.
There remain, however, some concerns about the general level of consumer debt,
which may have a dampening effect on the UK economy. The managers are conscious
of this factor and will continue to be rigorous in their approach to assessing
companies.
The managers continue to see a healthy pipeline of investment opportunities and
anticipate making several additional investments in the forthcoming months.
Chris Lyttelton
Chairman
22 February 2005
Investment Manager's Review
Personal Service
At Octopus, we pride ourselves not only on our team's track record but also on
our personalised customer service. We believe in open communication and our
regular updates are designed to keep you involved and informed.
If you have any questions about this review, or if it would help to speak to one
of the fund managers, please do not hesitate to contact us on 020 7255 7960.
Introduction
We are delighted with the success of the Company launch. As at 31 January 2005,
the Company had raised almost #31 million, making it the most successful VCT
launched in 2004 (by funds raised).
Team
Owing to the Company's success, we have continued to add to the team and have
recruited two further members, Joseph Bergin and Andrew Cavaghan.
Joseph has over ten years of venture capital experience at 3i, both in the UK
and Europe, and has an excellent track record in making investments and taking
them to exit. Joseph will focus on identifying investment opportunities and
managing portfolio companies in the North of England.
Andrew used to manage a generalist venture capital fund on behalf of GLE, where
he also had primary responsibility for deal origination.
Investments
The portfolio of investments within the Company will comprise a number of AIM
listed and unquoted investments. Approximately 20% of the Company will be
invested in AIM listed companies.
Once we have made an investment, we take an active approach in monitoring its
performance. This includes regular meetings with management teams and, in the
case of most unquoted investments, attending board meetings of the relevant
company's directors.
As the period under review relates to the Company's launch, we had only made two
investments as at 30 November 2004, totalling #990,000.
fountains plc
fountains, established in 1957, is an existing support services company listed
on AIM. fountains is involved in vegetation management, specifically forestry
services, grounds maintenance and landscaping for local authorities and utility
companies across the UK. The company is profitable, cash generative and dividend
paying. Our investment of #240,000 was part of a #5 million fund raising to
allow the company to make further acquisitions within the sector.
Post our investment, fountains reported a 20% increase in profit before tax of
#1.44 million on sales of #36.1 million for the year to 30 September 2004. The
company continues to trade in line with our expectations, and we expect that a
number of acquisitions will be completed later in 2005.
Cello Group plc
Cello is a marketing services company, focusing on market research and direct
marketing in the healthcare and charity sectors. Eclipse invested #750,000 as
part of a larger #15 million AIM fund raising to finance the acquisition of
three smaller, profitable marketing businesses. The management teams of these
three businesses have all been heavily incentivised to continue to grow their
respective businesses and the Cello management team has significant experience
of building similar companies through acquisition.
Our investment in Cello Group is trading at a premium to the original cost.
Investment Manager's Review (continued)
Since the end of the period under review, we have completed a further 4
investments.
Augean
Augean was floated on AIM in September 2004 to acquire and manage businesses in
the UK waste management sector. Eclipse invested #500,000 as part of a #100
million fund raising in November 2004. Augean was established by David Williams,
who was previously Chairman of Waste Recycling Plc, a highly successful company
within the same industry. The funds raised are being used to acquire two
companies, Atlantic Waste Holdings and Zero Waste Holdings, which own two
landfill sites licensed to receive all categories of hazardous waste, together
with associated activities.
We're confident that the quality of the team, combined with the attractive
commercial and legislative drivers, make this an exciting investment
opportunity. The shares are trading at a significant premium to the original
cost.
TDX
TDX is an unquoted company established by a strong management team to address
the consumer debt management market in the UK. Eclipse invested as part of a
larger but undisclosed fund raising by the company to support its growth plans.
This company is at an earlier stage in its development than we would typically
consider but we believe the potential upside is significant.
Matt Cooper, a director of Eclipse and Chairman of Octopus has joined the Board
of TDX and we retain additional observer rights.
Gyro International Ltd
Octopus has led and arranged a #3 million fund raising to support a partial MBO
of Gyro and provide additional funding to support growth. In the last financial
year the Gyro Group of companies had revenues of approximately #12 million and
had significant profits. Eclipse invested #1 million for a minority stake and
arranged a syndicate of three other VCTs to provide the balance of #2 million.
Gyro was founded in 1991 and has established offices in London, Geneva,
Stockholm, Amsterdam, New York and San Francisco and has recently opened in
Dublin. A Hamburg office is expected to open shortly as a result of increasing
levels of business activity in Germany.
The company provides an integrated suite of marketing services including brand
strategy, direct marketing, on and off-line advertising, media planning, web
marketing and event management.
Gyro's single focus is the technology and financial services sectors and it is
known for providing innovative solutions for clients, who benefit from high
returns on investment. Gyro's clients include Sony, Sun Microsystems, Oracle,
Deutsche Bank, American Express and Orange.
The Capital Pubs Company 2 Ltd ("CPC2")
CPC2 is the latest pub investment vehicle set up by David Bruce, who has a long
and successful track record in the brewing and leisure industry. Eclipse
invested #400,000 on 31 January 2005 as part of a #10 million placing. To date
more than #6 million has been raised, and the Company, formed in January 2004,
has acquired three pubs.
Outlook
The challenge for all venture capital funds is to attract a strong flow of good
investment opportunities.
At Octopus, we have spent a considerable amount of time and effort over the last
few years in establishing and developing our network of deal introducers. The
number and the quality of the investment opportunities we are currently seeing
is testament to this hard work and we are confident that we will build an
attractive portfolio of investments for Eclipse.
If you have any questions on any aspect of your investment, please call one of
the team on 020 7255 7960.
Simon Rogerson
Chief Executive
Statement of Total Return (incorporating the Revenue Account)
For the period ended 30 November 2004
Revenue Capital Total
#'000 #'000 #'000
Unrealised gains on investments - 137 137
Income 298 - 298
Investment management fees (39) (119) (158)
Other expenses (63) - (63)
------ ------ ------
Return on ordinary activities before tax 196 18 214
Tax - - -
------ ------ ------
Return on ordinary activities after tax 196 18 214
Dividends - - -
------ ------ ------
Transfer to reserves 196 18 214
====== ====== ======
Return per share 1.4p 0.2p 1.6p
====== ====== ======
Balance Sheet as at
30 November 2004
#'000 #'000
Fixed asset investments 1,127
Current assets
Investments 22,170
Debtors 72
Cash 1,049
---------
23,291
Creditors (amounts falling due within one year) (22)
---------
Net current assets 23,269
---------
Net assets 24,396
=========
Share capital 2,471
Share premium 21,005
Shares awaiting issue 713
Capital redemption reserve 1
Capital reserve (unrealised) 18
Revenue reserve 188
---------
Total equity shareholders' funds 24,396
=========
Net asset value per share 95.9p
=========
Cash Flow Statement
For the period ended 30 November 2004 30-Nov-04 30-Nov-04
#'000 #'000
Net cash inflow from operating activities 28
Financial investment (purchase of investments) (990)
Net cash outflow from financial investment (990)
Management of liquid resources (Increase in cash deposits) (22,170)
Financing:
Issue of own shares 24,272
Share issue expenses (796)
Purchase of own shares (8)
Shares awaiting issue 713
Total financing 24,181
---------
Increase in cash resources 1,049
=========
Reconciliation of operating profit to net cash inflow from operating 30-Nov-04
activities
#'000
Profit on ordinary activities before tax 196
Increase in debtors (72)
Increase in creditors 22
Management fees charged to capital account (118)
-------
Net cash inflow from operating activities 28
=======
Notes to the interim results
1. Investment portfolio as at 30 November 2004 Cost Valuation
#'000 #'000
fountains plc 240 272
Cello Group plc 750 855
------- -------
Total 990 1,127
======= =======
2. Principal accounting policies
The following accounting policies have been applied consistently throughout
the period. Full details of principal accounting policies will be
disclosed in the Annual Report.
a) Basis of accounting
The financial statements have been prepared under the historical cost
convention, modified to include the revaluation of investments, in
accordance with applicable Accounting Standards in the United Kingdom
and with the Statement of Recommended Practice regarding the Financial
Statements of Investment Trust Companies.
b) Investments
Investments quoted on the AIM market are stated at mid-market prices.
Notes to the interim results (continued)
All of the Company's activities are continuing.
In line with the expected long-term split of returns from the investment
portfolio of the Company, the Directors have charged 75% of the investment
management fee to the capital reserve.
The unaudited interim statement for the period ended 30 November 2004 does
not constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985. The first financial statements of the Company will be
those for the financial period ending 31 May 2005, which will be delivered
to the Registrar of Companies in due course.
The Company was incorporated on 16 March 2004 and commenced operations
following the allotment of shares on the achievement of its minimum
subscription on 25 May 2004.
3. The calculation of the revenue and capital return per share is based on the
return on ordinary activities after tax for the period and on 13,629,300
ordinary shares, being the weighted average number of shares in issue
during the period from 25 May 2004 to 30 November 2004.
4. The calculation of net asset value per share is based on the net assets at
30 November 2004 and on 24,704,107 being the number of shares in issue at
the same date. It should be noted that the value of shares awaiting issue
are excluded from this calculation.
5. Copies of this statement are being sent to all shareholders. Copies are
available to the public at the registered office of the Company at 14 Dover
Street, London, W1S 4LW.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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