RNS Number:1048F
Electra Kingsway VCT 3 Plc
23 June 2006
Financial Highlights
(unaudited)
Period ended 31 March 2006
Net assets #23.3m
Net asset value per ordinary share 94.19p
A copy of the Chairman's Statement and Preliminary Announcement are attached.
For further information:
Nick Ross, Electra Kingsway VCT 3 Plc 020 7214 4200
Chairman's Statement
Results
I would like to take this opportunity to welcome Shareholders and to thank them
for supporting the launch of the Company. In a very busy year for VCT
fundraising, we are particularly pleased to have raised #35 million which
provides an excellent platform from which to invest in smaller companies. As is
fairly typical for VCT fundraising, the majority of the subscription funds were
received in the last few weeks of March and the first week of April. As a
consequence, the Balance Sheet at 31 March 2006 reflected a net asset value of
#23.3 million and does not take into account shares allotted after the period
end.
Portfolio Activity
At 31 March 2006, the Fund was invested in two liquidity funds which will be
drawn down as and when the Investment Manager identifies suitable qualifying
investments. In addition, and as set out in the Prospectus, the Fund has
invested in Electra Private Equity and will invest in Electra Active Management,
which are both managed by Electra Partners. These Funds will provide a good
exposure to both the UK private equity and smaller company markets. Your Fund
will usually co-invest alongside Electra Kingsway VCT and Electra Kingsway VCT
2. I am pleased to be able to report that one qualifying investment has been
made in Jelf Group, details of which are set out in the Investment Manager's
Report.
March 2006 Budget
In March 2006, the Chancellor announced a number of changes to VCT legislation,
the majority of which affect new VCTs raised in the 2006/7 tax year and
thereafter. The majority of changes will have no implications for the Fund.
Investor Helpline
Shareholders having questions concerning the Fund should call 020 7411 4700, the
shareholder helpline, which is maintained by Downing Corporate Finance. In
addition, information in relation to the Fund, which will include annual reports
and newsletters can be found on the Investment Manager's website,
www.electraquoted.com.
Outlook
I look forward to being able to report to you on the progress of the Fund and
believe that, given a favourable economic backdrop, good returns can be made for
investors through investing in a portfolio of smaller companies.
Stuart Stradling, Chairman
22 June 2006
Investment Manager's Review
One qualifying investment was made in the period, Jelf Group, which is an AIM
listed financial consultancy that specialises in providing insurance, healthcare
and financial services to corporate clients. The Fund helped finance a "bolt-on
" acquisition and the Fund invested #250,160 alongside Electra Kingsway VCT 2
for a combined equity stake of 3.8%. The current pipeline for potential
investments remains good as the Fund will usually be co-investing alongside the
two other Electra Kingsway VCT Funds that are managed by Electra Partners.
It is worth reiterating that the investment strategy is to focus on profitable
unquoted companies where the Investment Manager can add value by acquiring them
at a discount to the quoted market, introducing a leveraged financing structure,
increasing scale through bolt-on acquisitions and strengthening the relevant
management team. Companies listed on AIM are also considered as potential
investments. However, as a general rule, new issues tend to be overvalued and we
prefer companies that have a good track record and are raising money for
acquisitions. Although it is difficult to anticipate the eventual split between
unquoted and AIM companies, we would expect the majority to be unquoted. With
regard to sector orientation, the Investment Manager will concentrate on
establishing a broad portfolio of investments diversified by industry
sub-sectors. Certain sectors, such as early stage technology, bioscience and
mineral exploration will tend to be avoided as they are characterised by
unprofitable companies.
Current economic conditions remain favourable for investing in smaller
companies. There are a few hot spots that we will seek to avoid, such as
commodity and mineral companies and in general we think that the average PE
multiple on new AIM flotations tends to be too high. Additionally, the corporate
Mergers and Acquisitions market remains and should provide good exit
opportunities for our unquoted investments. Shareholders should also be aware
that the Fund's investment strategy is long-term and, given the three year
period that it takes to invest the Fund, and the ensuing time that it takes for
investee companies to mature, the uplift in asset value is expected to start
accelerating after year four.
Portfolio Summary
(unaudited)
Qualifying Investments Cost at 31 March Valuation at 31 March % of Portfolio
by
2006 2006 Value
# # %
Jelf Group 250,160 379,960 6.93
250,160 379,960 6.93
Non Qualifying Investments
Electra Private Equity 5,150,708 5,103,400 93.07
5,150,708 5,103,400 93.07
5,400,868 5,483,360 100.00
Cash 23,727,670
Total 29,211,030
Income Statement
(unaudited)
For the period 23 August 2005 to
31 March 2006
(unaudited)
Revenue Capital Total
# # #
Unrealised gains on investment - 82,492 82,492
Income 94,269 - 94,269
94,269 82,492 176,761
Investment management fees (27,132) (81,396) (108,528)
Other expenses (144,422) - (144,422)
Return on Ordinary Activities before Taxation (77,285) 1,096 (76,189)
Tax on ordinary activities - - -
Return on Ordinary Activities after Taxation (77,285) 1,096 (76,189)
Return to Shareholders per Ordinary Share (2.12)p 0.03p (2.09)p
The amounts dealt with in the Income Statement are all derived from continuing
activities.
No operations were acquired or discontinued in the period.
Reconciliation of Total Shareholders' Funds
For the period 23 August 2005 to
31 March 2006
(unaudited)
#
Total Return (76,189)
Share issue expenses charged to Share Premium account (1,362,239)
Ordinary shares issued 24,768,196
Movements in Total Shareholders' Funds 23,329,768
Total Shareholders' Funds at start of period -
Total Shareholders' Funds 23,329,768
Balance Sheet
As at 31 March 2006
(unaudited)
As at 31 March 2006 (unaudited)
# #
Fixed Assets
Investments 5,483,360
Current Assets
Debtors and prepayments 111,574
Cash at bank 23,727,670
23,839,244
Current Liabilities
Creditors: amounts falling due within one year
Other creditors 5,867,836
5,867,836
Net Current Assets 17,971,408
Total assets less current liabilities 23,454,768
Creditors: amounts falling due after more than
one year
125,000
Net Assets 23,329,768
Capital and Reserves
Called-up share capital 247,682
Share premium 23,158,275
Realised capital reserve (81,396)
Unrealised capital reserve 82,492
Revenue reserve (77,285)
Total Equity Shareholders' Funds 23,329,768
Net Asset Value per Ordinary Share 94.19p
As at 31 March 2006
Number of Ordinary Shares in issue at end of period 24,768,196
Cash Flow Statement
(unaudited)
For the period 23 August 2005 to 31 March 2006
(unaudited)
# #
Operating Activities
Investment income received 15,277
Bank deposit interest received 51,683
Investment management fees paid (5,397)
Other cash payments (77,816)
Net Cash Outflow from Operating Activities
(16,253)
Investing Activities
Acquisition of investments (4,151,203)
Net Cash Outflow from Investing Activities
(4,151,203)
Cash Outflow before Financing and Management of Liquid
Resources
(4,167,456)
Financing
Issue of ordinary shares 24,767,996
Expenses of the issue of ordinary shares (1,362,239)
Issue of loan notes 25,575
Cash held pending issue of ordinary shares 4,463,794
Net Cash Inflow from Financing 27,895,126
Increase in Cash for the Period 23,727,670
This information is provided by RNS
The company news service from the London Stock Exchange
END
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