Final Results
29 Abril 2003 - 12:53PM
UK Regulatory
Guinness Flight Venture Capital Trust
Chairman's statement
Results and dividends
At 28 February 2003 the net asset value per share stood at 70.59p, a decline of
15.0% over the year. This compares to falls of 28.7% and 32.6% for the FTSE All
Share and FTSE AiM indices respectively. The net revenue deficit for the year
was �178,000 and the board is not recommending that a final dividend be paid.
Background and performance
The year under review was one of considerable volatility as regards the
economic outlook and geopolitical concerns. At the core of the problem was
continuing uncertainty as to economic prospects, particularly in the US.
Commentators were divided between those who expected a typical recessionary
cycle to work itself out aided by strong monetary and fiscal stimulus and those
who feared that imbalances in the global economy, evidenced by the large US
current account deficit, would increase the deflationary forces already
prevalent. Corporate accounting concerns and increasing tensions over Iraq
contributed to this uncertainty, and it is perhaps not surprising that quoted
equity markets experienced excessive turbulence.
As I have noted before, the performance of the wider equity market impacts the
company's asset value since a considerable proportion of the valuations of our
unquoted companies are based on average price-earnings ratios for the relevant
quoted company sector. As an example, the multiple applied in valuing our
largest single holding, (Bridgefilms (Sooty)) is 29% lower than last year, and
this year's valuation is lower although the company has increased its earnings.
Indeed, the underlying trading results at the majority of our unquoted holdings
have held up well.
A major disappointment, to which we referred at the interim stage, was Bond IT.
The poor performance of this adhesives company led to liquidators being
appointed and within the unquoted portfolio this had the largest negative
impact. We also disposed of our holding in Keen, realising a loss of �201,000
versus last year's valuation, and despite the earnings of Higher Nature holding
up well the valuation of the holding has been reduced as a result of a
comparable earnings ratio contraction. On a more upbeat note, the major
positive contributors among the unquoted portfolio included Mawdsleys, where a
return to profitability and a major contract win has led to an increased
valuation, and IST Limited, where improved trading together with a value
enhancing US acquisition has also led to an uplift.
The travails of the quoted markets took their toll on our AiM portfolio. The
fall in value of �1.6m over the year reflected, in particular, substantial
market deratings of Oasis Healthcare and of UBC Media. In each of these cases,
however, the company's trading performance and, we believe, the company's
prospects remain strong. Our quoted liquid-reserve portfolio also proved a
major disappointment. Cable & Wireless, Logica, Scapa and William Baird
(acquired by Jacques Vert), all deemed by the managers to represent strong
recovery prospects, continued to perform poorly through the year end, although
some have improved their performance since then. Further comment on the
investment portfolio is contained in the manager's and adviser's review.
Share Buy Backs
During the year, share buy backs totalling 309,664 ordinary shares took place
at a cost of �157,231. Each of these share buy backs took place at prices which
enhanced net asset value per share for remaining shareholders.
Outlook
Whilst the economic outlook remains so uncertain it is difficult to be anything
other than cautious in the short term. Investors may have been looking for a
strong rally in quoted equity markets with the war in Iraq seemingly won; so
far this has not happened to any great extent. We continue to work towards
making further realisations from our unquoted portfolio. In this regard we take
some comfort from the current underlying trading performance of many of the
portfolio companies.
Annual General Meeting
We look forward to seeing as many shareholders as are able to attend at the
annual general meeting on 10 June 2003 at 11.00 a.m.
Mark Hoffman 29 April 2003
Statement of Total Return
(incorporating the Revenue Account)
for the year ended 28 February 2003
2003 2002
Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000
Losses on investments - (3,140) (3,140) - (1,909) (1,909)
Income from investments 128 - 128 360 - 360
Interest receivable 19 - 19 76 - 76
Investment management (135) (406) (541) (145) (434) (579)
fee
Other expenses (190) - (190) (221) - (221)
Return on ordinary (178) (3,546) (3,724) 70 (2,343) (2,273)
activities before
taxation
Taxation on ordinary - - - (44) 44 -
activities
Return attributable to (178) (3,546) (3,724) 26 (2,299) (2,273)
equity shareholders
Dividends in respect of - - - (88) - (88)
equity shares
Transfer from reserves (178) (3,546) (3,724) (62) (2,299) (2,361)
Basic and diluted (0.61)p (12.15)p (12.76)p 0.09p (7.80)p (7.71)p
return per ordinary
share
The revenue column is the profit and loss account of the Company.
All revenue and capital items derive from continuing operations. No operations
were acquired or discontinued in the year.Balance Sheet
as at 28 February 2003
28 February 28 February
2003 2002
�'000 �'000
Fixed assets
Investments
Listed 2, 247 3,771
Unlisted 17,940 16,812
20,187 20,583
Current assets
Investments - 2,783
Debtors 255 230
Cash 97 845
352 3,858
Creditors: amounts falling due within one year 80 101
Net current assets 272 3,757
Total assets less current liabilities 20,459 24,340
Capital and reserves
Share capital 2,898 2,929
Special reserve 25,842 25,999
Capital redemption reserve 71 40
Capital reserve - realised (5,632) 432
Capital reserve - unrealised (2,649) (5,167)
Revenue reserve (71) 107
Total equity shareholders' funds 20,459 24,340
Net asset value per ordinary share 70.59p 83.09p
Number of ordinary shares 28,982,991 29,292,655
Cash Flow Statement
for the year ended 28 February 2003
2003 2002
�'000 �'000
Net cash outflow from operating activities (879) (475)
Taxation
UK tax received 17 24
Investing activities
Purchases of investments (3,498) (3,855)
Sales of investments 954 6,250
Purchases of current asset investments - (5,000)
Sales of current asset investments 2,815 2,500
Costs charged to capital - (93)
Net cash inflow/(outflow) from investing 271 (198)
activities
Equity dividends paid - (194)
Net cash outflow before financing and management (591) (843)
of liquid resources
Management of liquid resources
Cash withdrawn from deposit - 1,400
Financing activities
Gross payments on cancellation of shares (157) (183)
Net cash flow (748) 374
Reconciliation of net cash flow to movement in
net funds
Net cash flow (748) 374
Cash withdrawn from short term deposit - (1,400)
(748) (1,026)
Net funds at 1 March 845 1,871
Net funds at 28 February 97 845
The statutory accounts for the year ended 28 February 2003 will be finalised on
the basis of the financial information presented by the directors in this
preliminary announcement and will be delivered to the Registrar of Companies
following the Company's annual general meeting. The audit report on the
statutory financial statements has yet to be signed. The comparative financial
information is based on the statutory accounts for the year ended 28 February
2002. These accounts, upon which the auditors issued an unqualified opinion,
have been delivered to the Registrar of Companies.
The above financial information is prepared on the basis of the accounting
policies set out in the financial statements for the year ended 28 February
2002.
The Annual Report and Accounts for the year to 28 February 2003 will be posted
to shareholders in due course.
For further information please contact:
Martin Slade
Investec Investment Management Limited 020 7597 2000
END