TIDMBNS
Baronsmead VCT 4 plc
Half-yearly Report
Baronsmead VCT 4 plc
Half-yearly report for the six months ended
30 June 2010
Investment Objective
Baronsmead VCT 4 is a tax efficient listed company which aims to achieve
long-term investment returns for private investors.
Investment policy
To invest primarily in a diverse portfolio of UK growth businesses, whether
unquoted companies or traded on AIM.
Investments are made selectively across a range of sectors in companies that
have the potential to grow and enhance their value.
Dividend policy
The Board of Baronsmead VCT 4 has the objective to sustain a progressive
dividend policy for shareholders but this depends primarily on the level of
profitable realisations and it cannot be guaranteed. There will be variations
in the amount of dividends paid year on year.
Secondary market in the shares of Baronsmead VCT 4
The existing shares of the Company are listed on the London Stock Exchange and
can be bought and sold using a stockbroker in the same way as shares of any
other listed company.
Qualifying investors* who invest in the existing shares of the Company can
benefit from:
Tax free dividends;
Realised gains are not subject to capital gains tax (although any realised
losses are not allowable);
No minimum holding period; and
No need to include VCT dividends in annual tax returns.
The UK tax treatment of VCTs is on a first in first out basis and therefore tax
advice should be obtained before shareholders dispose of their shares and also
if they deferred a capital gain in respect of new shares acquired prior to 6
April 2004.
* UK income tax payers, aged 18 or over, who acquire no more than GBP200,000
worth of VCT shares in a tax year.
www.baronsmeadvct4.co.uk
Financial Headlines
3.0p Interim dividend of 3.0p per share (unchanged from prior year)
payable on 15 September 2010 to shareholders on the register at 20 August 2010.
4.7% NAV per share increased by 4.7 per cent over the six month period to
30 June 2010 from 90.63p to 94.86p before payment of the 3.0p interim dividend.
143.5p NAV total return to ordinary shareholders for every 100p invested since
launch.
8.4% Dividend yield of 8.4 per cent tax free to qualifying shareholders
(gross equivalent yield for a higher rate taxpayer is 12.5 per cent). This is
based on the 3.0p interim dividend payable in September 2010 plus the 4.0p
dividend paid in December 2009 divided by the mid ordinary share price of
83.25p at 30 June 2010.
Summary Since Launch
Performance Summary to 30 June 2010
Total return and share price* 1 year 3 year 5 year Since launch
% % % %
Net asset value| 8.9 (9.3) 18.2 43.5
Share price| 6.6 (7.9) 23.0 24.3
FTSE All-share 21.1 (16.2) 18.7 35.4
* Source: ISIS EP LLP and AIC.
| These returns for Baronsmead VCT 4 ignore up front tax relief and the impact
of receiving dividends tax free.
Cash Returned to Shareholders
The Board is also aware that shareholders are concerned that the original
capital subscribed into Baronsmead VCT 4 has been maintained. The table below
shows the cash returned to shareholders dependent on their subscription cost,
including their income tax reclaimed on subscription.
Year subscribed Net Cumulative
Subscription Income tax cash Dividends Net annual Gross
price reclaim invested paid/ yield| yield|
p p p declared* % %
p
2002 100.0 20.0 80.0 41.0 6.0 8.9
2006 (C Shareholders) 100.0 40.0 60.0 18.8 7.3 10.8
2010 (March) 95.9 28.8 67.1 3.0 -^ -^
* Includes proposed interim dividend of 3.0p to be paid on 15 September 2010.
| Net annual yield represents the cumulative dividends paid expressed as an
annualised percentage of the net cash invested.
| The gross equivalent yield if the dividends had been subject to higher rate
tax (32.5 per cent on dividend income at 30 June 2010). As from the tax year
2010/11, a new additional rate of tax on dividend income of 42.5 per cent came
into force for those who earned more than GBP150,000. For those Shareholders who
would otherwise pay this higher rate of tax on dividends, the future gross
equivalent yield will be higher than the figures shown.
^ The table above excludes returns for shareholders who subscribed in the
Joint Offer with Baronsmead VCT 3 plc as those returns are not yet meaningful.
Chairman's Statement
I am very pleased to present my first report since becoming Chairman following
the retirement of Philip Dunne at the 8th Annual General Meeting held in May
2010. On behalf of the Board and shareholders, our grateful thanks go to Philip
who led the Board with great success from the formation of Baronsmead VCT 4 in
late 2001.
The 4.7 per cent growth in Net Asset Value ("NAV") per share continues the
positive trend since November 2008 with increasing profits from many of our
portfolio companies. The 3p interim dividend matches that of the last three
years.
Results
In the six months to 30 June 2010, the NAV per share increased by 4.7 per cent
from 90.63p to 94.86p before payment (due on 15 September 2010) of a 3p per
share interim dividend. This dividend arises both from the capital profits 2p
and net revenues of 1p per share. The increase in NAV per share is primarily
due to the 9.2 per cent increase in the value of the unquoted portfolio. The
FTSE All-Share Index decreased 7.9 per cent over the same period.
At the period end, over 70 per cent of the ordinary capital raised (net of
launch costs) prior to 31 December 2007 was invested in VCT qualifying
investments and the five other VCT qualifying tests had also been met.
Long term performance
The interim dividend will take the cumulative dividends paid (tax free for
qualifying shareholders) for founder shareholders in 2001 to 41p per share on
their original GBP1 investment, during which time there were two major Stock
Market downturns.
The fund raisings by Baronsmead VCT 4 in 2001 and 2006 have achieved positive
absolute returns. The comparable returns for the FTSE All-Share Index over
several time periods are set out above and comparable returns with other VCTs
can be seen on the website of the Association of Investment Companies ("AIC")
who publish monthly data, www.theaic.co.uk.
The benefit of VCT tax reliefs on the dividends is set out in the table titled
'Cash returned to shareholders'. Over the longer term, the benefit can be very
significant: had this tax relief not been available, then a higher rate tax
payer would have needed to receive another 20p per share in dividends since
inception to have had the same after tax income from Baronsmead VCT 4. The tax
relief will be of increased value from the 2010/2011 tax year to shareholders
whose income exceeds GBP150,000 p.a as the highest dividend tax rate has
increased from 32.5 per cent to 42.5 per cent.
Portfolio review
The current portfolio comprises fifty-nine companies from a total of over one
hundred investments made since the outset. Five companies were acquired in the
period, four were sold and one AIM investment was written off. 52 per cent by
value is invested in unquoted companies, 17 per cent in AIM & listed companies
and the balance of 31 per cent in cash or government securities. The largest
unquoted investment, Nexus Vehicle Holdings, and the largest AIM investment,
IDOX, represented 7.0 and 1.6 per cent of Net Asset Value respectively.
Each quarter the Board subjects the whole portfolio to a rigorous review. In
the last three quarters, the number of companies in the portfolio showing
steady or improving performance has increased to 97 per cent. The investment
strategy is aimed at companies less susceptible to general economic conditions,
which can be seen by the robust performance of the unquoted portfolio during
the recessionary period. A number of AIM companies have also been acquired by
trade buyers from the portfolio signalling good value within their sectors. The
portfolio as a whole has limited exposure to public spending.
Unquoted portfolio
The value of the current portfolio of unquoted investments is 31 per cent
higher than original cost. Sixteen companies are valued at or higher than cost
whilst two are valued below cost. These period end figures exclude two unquoted
company realisations, Active Assistance in March 2010 for 2.8 times cost and
Occam DM at 1.5 times cost in May 2010.
The first investment in Active Assistance was in March 2008. The business
provides a national live-in care service for adults and children with spinal
cord injuries and neurological conditions. The sale involved a merger with
another health care business, First Call Care Services, to create a national
provider of both live-in and live-out care to individuals with complex long
term conditions.
Occam DM was the longest standing unquoted investment in the portfolio since
first investing in July 2004. It is a leading provider of marketing management
software and direct marketing solutions with a blue chip client base in both
the public and private sectors. The business was sold to St Ives Group in May
2010 having been valued at 25 per cent of cost in December 2009. The Chairman
of Occam DM commented "We were acutely aware of the rapidly changing
marketplace and, with ISIS' support and backing, we have been able to transform
the company into one of the leading direct marketing solutions businesses".
AIM-traded & listed portfolio
This share portfolio was down 4 per cent over the six months under review as
the UK quoted markets lost some of their earlier recovery due to concerns about
government deficits and economic growth.
Realised profits totalled GBP204,000 with the main success coming from the
disposal of 50 per cent of the shares held in Advanced Computer Software at 2.1
times cost at the time of flotation in July 2008.
New investment
Unquoted investment totalled GBP3.5 million in the six months under review
comprising investment in Surgi C, Inspired Thinking Group and Getting Personal
plus two further round financings into Independent Living Services and Nexus
Vehicle Holdings.
Surgi C, the UK's leading independent distributor of spinal implants is based
in Birmingham. The business has grown strongly as a result of an increasing
product portfolio and the high levels of education and support it provides to
spinal surgeons. www.surgi-c.com
Birmingham based Inspired Thinking Group (ITG) provides services that help
large marketing departments operate more efficiently, including improved
procurement of artwork and print management. The new funding was used to
acquire Total Marketing Service, a provider of workflow management systems to
marketing departments.
Getting Personal is a leading online retailer, based in Manchester, which sells
personalised and unique gifts. The business was established in November 2005
with just one product, a personalised calendar.
www.gettingpersonal.co.uk now sells over 4,000 items ranging from personalised
cards, notebooks, mugs and chocolate to non-personalised items for general
gifting.
Existing portfolio company Nexus Vehicle Holdings www.nexusrental.com, a
leading provider of vehicle rental, used further funding to acquire Adapted
Vehicle Hire, which is a niche rental business providing adapted vehicles for
the disabled driver market.
Two further small investments were made into portfolio company Independent
Living Services, an acute domiciliary care provider based in Scotland, firstly
to fund a small acquisition and secondly to repurchase shares.
www.ilsscotland.com
The volume of qualifying AIM opportunities also increased from the depressed
levels of 2009. Some GBP481,000 was invested in qualifying holdings and GBP460,000
in non-qualifying shareholdings. Three investments in the latter category were
market purchases in support of the strategy to take more influential stakes by
the combined Baronsmead VCTs in a smaller number of AIM investments, where a
likely exit strategy to a trade buyer can be envisaged.
After the period end, GBP3.5 million was invested by the five Baronsmead VCTs in
Netcall PLC of which Baronsmead VCT 4 provided GBP687,500. Based in St Ives, this
AIM-traded company provides software and communication solutions into the call
centre market, mainly its 'Queuebuster' label. The fund-raising is primarily
for the acquisition of Telephonetics, which specialises in speech recognition
software.
Investment and tax planning
On 18 January 2010 the Company issued a Joint Offer for Subscription with
Baronsmead VCT 3 to raise GBP16m in aggregate. This Offer became fully subscribed
and closed on 17 March with over 70 per cent of the funds raised have been
invested by the existing shareholders of the Baronsmead VCTs.
As the Company raised GBP7.56m net of expenses through the Joint Offer it has
sufficient cash resources to fund all of its operations for at least the next
12 months. As a result, the Directors do not intend, at this stage, to raise
further funds through issuing new shares in the current tax year. As many of
the Company's shareholders are also shareholders in the other Baronsmead VCTs
they will be informed of any offers that those VCTs may make available during
the course of the current tax year.
The Company operates a policy of buying back shares in to Treasury in
accordance with the resolutions passed by the shareholders. Treasury shares may
be re-issued at a discount to NAV provided it is at a narrower discount to NAV
than when they were acquired. During the six months to 30 June 2010, 875,000
shares were bought back into Treasury at an average discount of approximately
10.2 per cent to NAV. As a result, as at 30 June 2010 the Company held
4,668,593 Treasury shares. The Company may re-issue shares out of Treasury in
order to rectify imbalances in the demand and supply of shares that occur from
time to time. Amongst other things, depending on the number of shares available
at the time, the Company may re-issue Treasury shares to ensure there are
sufficient shares available for the Company's Dividend Reinvestment Plan.
Board Succession
In the last annual report, Philip Dunne alerted shareholders that if at the
General Election he was re-elected as a Member of Parliament and the
Conservatives formed a Government he would be obliged to resign as a Director.
Following the events of 6 May, Philip duly did not stand for re-election at the
Baronsmead VCT 4 AGM held on the 20 May and retired from the Board.
I was delighted to accept the Board's invitation to become the second Chairman.
I have followed the private equity sector since 1994 while working for Coutts
Bank in wealth management. In particular I became heavily involved as a VCT
adviser to private investors in the earlier years of VCTs before joining the
Boards of Baronsmead VCT 3 and Baronsmead VCT 4 in 2001. On appointment I
resigned as Senior Independent Director and Chairman of the Audit and Risk
Committee, which positions were accepted by Alan Pedder and Ian Kirkpatrick
respectively.
In the knowledge that Philip Dunne may have been required to retire from the
Board, an independent recruitment process led us to the appointment of a new
director, Robin Williams. He is uniquely qualified to help us continue building
our Company as he has extensive experience of both public and private companies
as executive and non-executive director.
Recent HM Revenue & Customs / HM Treasury announcements regarding VCTs
The Manager, in conjunction with our trade association, the AIC and other VCT
Managers, has worked hard over many years to inform HMRC and HM Treasury of the
positive economic impact from unquoted private equity backed companies.
The resulting AIC report "Supporting enterprise and growth: the role of Venture
Capital Trusts" published in March 2010 is based on evidence submitted by 15
VCT Managers and has helped the Government understand the economic return to
the state, generated from the investment made in VCTs through providing tax
relief. Most notably, it states "of the 303 investee companies who provided
data, the net employment impact since VCT investment has been a 48 per cent
increase in the total workforce to over 25,402 employees." The percentage
increase in employment was slightly higher for the twenty-four companies from
within the Baronsmead portfolios that were used in the survey.
The changes in VCT legislation within the 22 June 2010 Budget had in fact been
announced a year earlier but will only probably be enacted for the fiscal year
starting on 6 April 2011.
Outlook
The unquoted portfolio is demonstrating good resilience during the current
period of economic uncertainty, which will take time to dissipate as the
overhang of government debt is digested and suitably reduced. Entrepreneurial
companies, such as those backed by Baronsmead VCT 4, are seen by most
commentators to be an important element in economic rejuvenation. There is a
solid platform within our portfolio companies for further growth and we have
the funds to invest.
Robert Owen
Chairman
12 August 2010
Table of Investments and Realisations
Investments in the six months to 30 June 2010
Number Company Location Nature of business Activity Book cost
GBP'000
Unquoted investments
New
1 Getting Personal Limited Manchester Consumer Markets On-line retail of 988
personalised gifts
2 Inspired Thinking Group Limited Birmingham Business Services Marketing services & 796
work flow systems
3 Surgi C Limited Birmingham Healthcare & Education Distribution of spinal implants 1,102
Follow on
1 Independent Living Services Limited Alloa Healthcare & Education Care at home services 122
2 Nexus Vehicle Holdings Limited Pudsey Business Services Vehicle rental provider 499
to corporates
Paper consideration
1 Crew Clothing Company Limited* London Consumer Markets Branded clothing retailer 51
2 Independent Living Services Limited* Alloa Healthcare & Education Care at home services 150
Total Unquoted investments 3,708
AIM-traded & listed investments
New
1 Bglobal plc Darwen Business Services Smart metering 176
2 Strategic Thought Group plc Maidenhead IT & Media Risk management software 35
Follow on
1 Electric Word plc London IT & Media Business to business publisher 31
2 Green Compliance plc Cirencester Business Services Small business compliance 156
3 Jelf Group plc Bristol Financial Services Financial solutions consultancy 210
4 Proactis Holdings plc Wetherby IT & Media Procurement software 219
5 Tasty plc London Consumer Markets Restaurant operator 114
Total AIM-traded & listed investments 941
Total investments in the period 4,649
* Paper consideration from rolled up interest reinvested.
Realisations in the six months to 30 June 2010
Number Company First 31 December Realised Overall multiple
investment 2009 profit/(loss) return*
date valuation this period
GBP'000 GBP'000
Unquoted realisations
1 Active Assistance Trade sale Mar 08 1,155 414 2.8
2 Occam DM Ltd Trade sale Jul 04 90 255 1.5
Total Unquoted realisations 1,245 669
AIM-traded & listed realisations
1 Character Group plc Trade sale Feb 08 88 44 0.9
2 INVU plc Trade sale May 07 2 (1) -
3 Inverness Medical Inc. Part sale Aug 09 28 0 1.3
4 Advanced Computer Software plc Part sale Jul 08 540 13 2.1
658 56
Written off
1 Payzone plc May 03 0 0 -
0 0
Total AIM-traded & listed realisations 658 56|
Total realisations in the period 1,903 725
* Includes interest/dividends received, loan note redemptions and partial
realisations accounted for in prior periods.
| Proceeds of GBP6,000 were also received in respect of an investment which had
been written off in a prior period.
Investment Portfolio
By Sector*
Business Services 38%
Consumer Markets 18%
Financial Services 5%
Healthcare & Education 9%
IT & Media 30%
Total Assets*
Unquoted - loan stock 37%
Unquoted - ordinary and preference shares 15%
AIM & Listed 17%
Fixed interest 27%
Net current assets 4%
Time Investments Held*
Less than 1 year 11%
Between 1 and 3 years 28%
Between 3 and 5 years 49%
Greater than 5 years 12%
* at 30 June 2010 valuation
Company Nature of business Book 31 30 June % of % of % of
cost GBP December 2010 Net Equity held Equity
'000 2009 valuation Assets by held
valuation GBP'000 Baronsmead by
GBP'000| VCT 4 plc all
funds*
Unquoted
Nexus Vehicle Holdings Limited Business Services 2,367 2,511 3,975 7.0 12.6 57.4
Reed & Mackay Limited Business Services 1,211 3,145 3,697 6.5 9.5 40.0
Crew Clothing Company Limited Consumer Markets 983 1,300 1,962 3.5 5.7 24.1
Quantix Limited IT & Media 1,193 1,862 1,886 3.3 11.4 48.0
CableCom Networking Holdings Limited IT & Media 1,381 1,848 1,854 3.3 10.6 48.0
Fisher Outdoor Leisure Holdings Limited Consumer Markets 1,423 1,777 1,777 3.1 10.5 44.0
CSC (World) Limited IT & Media 1,606 1,250 1,687 3.0 8.8 40.0
Carnell Contractors Business Services 1,499 2,639 1,663 2.9 8.3 37.5
Independent Living Services Limitied Healthcare & Education 1,073 1,566 1,637 2.9 16.2 68.1
Kafevend Holdings Limited Consumer Markets 1,252 1,445 1,582 2.8 15.8 66.5
Credit Solutions Limited Financial Services 1,032 1,127 1,128 2.0 8.6 35.0
MLS Limited IT & Media 781 1,138 1,126 2.0 5.3 22.5
Surgi C Limited Healthcare & Education 1,102 - 1,102 1.9 9.8 42.5
Playforce Holdings Limited Business Services 1,033 1,106 1,039 1.8 9.7 44.0
Getting Personal Limited Consumer Markets 988 - 988 1.8 8.3 37.5
Inspired Thinking Group Limited Business Services 796 - 796 1.4 5.0 22.5
Empire World Trade Limited Business Services 1,296 658 707 1.2 | |
TVC Group Limited IT & Media 1,233 341 602 1.1 13.0 59.3
Total Unquoted 22,249 23,713 29,208 51.5
AIM
IDOX plc IT & Media 738 863 926 1.6 2.5 9.7
Green Compliance plc Business Services 406 500 750 1.3 2.6 14.4
WIN plc IT & Media 397 367 597 1.1 4.2 19.0
Advanced Computer Software plc IT & Media 263 1,081 564 1.0 0.4 2.2
Brulines Group plc Business Services 646 715 564 1.0 1.8 9.6
Proactis Holdings plc IT & Media 619 307 477 0.8 5.4 26.5
Jelf Group plc Financial Services 727 220 448 0.8 1.4 6.3
Begbies Traynor Group plc Financial Services 217 569 308 0.6 0.6 2.5
Electric Word plc IT & Media 284 257 304 0.5 3.2 22.3
InterQuest Group plc Business Services 310 259 304 0.5 1.8 7.2
Mount Engineering plc Business Services 385 275 303 0.5 2.3 13.4
Tasty plc Consumer Markets 469 161 291 0.5 2.5 17.1
Kiotech International plc Healthcare & Education 275 298 275 0.5 2.2 15.8
Ffastfill plc IT & Media 251 297 260 0.5 0.9 6.5
Craneware plc IT & Media 71 184 223 0.4 0.2 1.1
IS Pharma plc Healthcare & Education 246 239 198 0.4 1.0 5.9
EG Solutions plc IT & Media 375 101 172 0.3 3.1 14.2
Sanderson Group plc IT & Media 387 132 170 0.3 1.8 6.9
Adventis Group plc IT & Media 291 223 161 0.3 2.6 20.7
Bglobal plc Business Services 176 - 158 0.3 0.5 2.7
Driver Group plc Business Services 438 294 156 0.3 2.3 10.4
Praesepe plc Consumer Markets 525 185 155 0.3 0.7 3.8
| The total investment valuation at 31 December 2009 per the table above does
not agree to the audited accounts due to purchases and sales since that date.
* All funds managed by the same investment manager, ISIS EP LLP including
Baronsmead VCT 4.
| Following a restructuring, the effective ownership percentage is dependent on
final exit proceeds.
Company Nature of Book 31 30 June % of % of % of
business cost GBP DecemBer 2010 Net Equity Equity
'000 2009 valuation Assets held by held by
valuation GBP'000 Baronsmead all
GBP'000| VCT 4 plc funds*
AIM
(continued)
Plastics Business 473 184 142 0.3 1.8 10.0
Capital plc Services
Dods (Group) IT & Media 313 91 125 0.2 0.8 4.4
plc
Autoclenz Business 400 122 122 0.2 3.1 12.3
Holdings plc Services
Cohort plc Business 179 138 118 0.2 0.3 1.4
Services
Quadnetics Business 185 101 101 0.2 0.4 2.1
Group plc Services
Prologic plc IT & Media 233 93 78 0.1 3.1 15.0
Brainjuicer IT & Media 50 59 73 0.1 0.4 1.9
Group plc
Real Good Food Consumer 340 11 72 0.1 0.4 2.3
Company (The) Markets
plc
Marwyn Value Financial 64 62 60 0.1 1.5 6.9
Investors plc Services
STM Group plc Financial 140 58 49 0.1 0.5 3.8
Services
Clarity IT & Media 50 40 46 0.1 0.3 6.2
Commerce
Solutions plc
Tangent Business 180 73 45 0.1 0.8 4.7
Communications Services
plc
Strategic IT & Media 35 - 35 0.1 0.4 2.1
Thought Group
plc
Independent IT & Media 15 19 23 0.0 0.1 0.1
Media
Distribution
plc
Zoo Digital IT & Media 233 7 12 0.0 0.1 0.9
Group plc
Mission IT & Media 143 26 10 0.0 0.1 0.7
Marketing
Group (The)
plc
Total AIM 11,529 8,611 8,875 15.7
Listed
Chime IT & Media 369 372 302 0.5 0.2 1.5
Communications
plc
Vectura Group Healthcare 245 383 228 0.4 0.2 1.3
plc &
Education
Total Listed 614 755 530 0.9
New York Stock
Exchange
Inverness Healthcare 157 224 136 0.2 0.0 0.0
Medical Inc. &
Education
Total New York 157 224 136 0.2
Stock Exchange
Interest
bearing
securities
UK T-Bill 05/ 9,497 - 9,497 16.8
07/10
UK T-Bill 06/ 5,995 - 5,995 10.6
09/10
Total interest 15,492 - 15,492 27.4
bearing
securities
50,041 33,303 54,241 95.7
Total
investments
Net current 2,421 4.3
assets
Net assets 56,662 100.0
| The total investment valuation at 31 December 2009 per the table above does
not agree to the audited accounts due to purchases and sales since that date.
* All funds managed by the same investment manager, ISIS EP LLP including
Baronsmead VCT 4.
AIM, Listed and NYSE Portfolio Concentration Analysis at 30 June 2010
Investment ranking % of
by valuation Book cost Valuation Quoted
GBP'000 GBP'000 Portfolio
Top Ten 4,607 5,242 54.9
11-20 3,073 2,422 25.4
21-30 3,137 1,374 14.4
30+ 1,483 503 5.3
Total 12,300 9,541 100.0
Independent Review Report to Baronsmead VCT 4 plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2010 which comprises the Income Statement, Reconciliation of Movement in
Shareholders' Funds, Balance Sheet and Statement of Cash Flows and the related
explanatory notes. We have read the other information contained in the
half-yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed
set of financial statements.
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Disclosure
and Transparency Rules ("the DTR") of the UK's Financial Services Authority
("the UK FSA"). Our review has been undertaken so that we might state to the
Company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company for our review work, for
this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FSA.
As disclosed in note 1, the annual financial statements of the Company are
prepared in accordance with UK Accounting Standards and applicable law (UK
Generally Accepted Accounting Practice). The condensed set of financial
statements included in this half-yearly financial report has been prepared in
accordance with the Statement Half-Yearly Financial Reports as issued by the UK
Accounting Standards Board.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and consequently does
not enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2010 is not prepared, in all
material respects, in accordance with the Statement Half-Yearly Financial
Reports as issued by the UK Accounting Standards Board and the DTR of the UK
FSA.
Simon Pashby
for and on behalf of KPMG Audit Plc Chartered Accountants, Edinburgh
12 August 2010
Responsibility statement of the Directors in respect of the half-yearly
financial report
We confirm that to the best of our knowledge:
the condensed set of financial statements has been prepared in accordance with
the Statement 'Half-yearly financial reports' issued by the UK Accounting
Standards Board;
the Chairman's Statement (constituting the interim management report) includes
a fair review of the information required by DTR 4.2.7R of the Disclosure and
Transparency Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact on the
condensed set of financial statements;
the Statement of Principal Risks and Uncertainties below is a fair review of
the information required by DTR 4.2.7R being a description of the principal
risks and uncertainties for the remaining six months of the year; and
the financial statements include a fair review of the information required by
DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
By Order of the Board,
R Owen
Chairman
12 August 2010
Unaudited Income Statement
For the six months to 30 June 2010
Six months to 30 June 2010 Six months to 30 June 2009 Year to 31 December 2009*
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Unrealised gains on investments - 1,366 1,366 - 1,849 1,849 - 2,460 2,460
Realised gains/(losses) on investments - 731 731 - (42) (42) - 1,339 1,339
Income 1,179 - 1,179 563 - 563 1,322 - 1,322
Recoverable VAT - - - 1 (3) (2) 1 (3) (2)
Investment management fee (167) (502) (669) (151) (454) (605) (301) (903) (1,204)
Other expenses (167) - (167) (174) - (174) (393) - (393)
Profit on ordinary activities
before taxation 845 1,595 2,440 239 1,350 1,589 629 2,893 3,522
Taxation on ordinary activities (210) 210 - (34) 34 - (123) 123 -
Profit on ordinary activities
after taxation 635 1,805 2,440 205 1,384 1,589 506 3,016 3,522
Return per share:
Basic 1.11p 3.17p 4.28p 0.39p 2.64p 3.03p 0.97p 5.77p 6.74p
*These figures are audited.
Unaudited Reconciliation of Movement in Shareholders' Funds
For the six months to 30 June 2010
Six months to 30 June 2010 Six months to 30 June 2009 Year to
GBP'000 GBP'000 31 December
2009
GBP'000*
Opening shareholders' funds 47,216 47,896 47,896
Profit for the period 2,440 1,589 3,522
Issue of shares 8,165 601 602
Expenses of share issue & buy backs for treasury (443) (42) (48)
Purchase of shares for treasury (716) (1,111) (1,109)
Dividends paid - - (3,647)
Closing shareholders' funds 56,662 48,933 47,216
*These figures are audited.
Notes
The unaudited interim results which cover the six months to 30 June 2010 have
been prepared in accordance with applicable accounting standards and adopting
the accounting policies set out in the statutory accounts of the Company for
the period to 31 December 2009.
Return per ordinary share is based on a weighted average of 57,060,828 ordinary
shares in issue (30 June 2009 - 52,515,200, 31 December 2009 - 52,305,453).
Earnings for the six months to 30 June 2010 should not be taken as a guide to
the results of the full financial year to 31 December 2010.
During the six months to 30 June 2010 the Company issued, pursuant to the offer
for subscription, 6,012,140 ordinary shares at an offer price of 95.5p per
share and 2,497,970 ordinary shares at an offer price of 97.0p which raised GBP
8,165,000, before costs. During this period the Company purchased 875,000
ordinary shares to be held in Treasury at a cost of GBP716,000. At 30 June 2010
the Company holds 4,668,593 ordinary shares in Treasury. Excluding Treasury
shares, there were 59,734,236 ordinary shares in issue at 30 June 2010 (30 June
2009 - 52,099,126 ,31 December 2009 - 52,099,126).
The interim dividend of 3.0p per ordinary share (1.0p revenue and 2.0p capital)
will be paid on 15 September 2010 to shareholders on the register on 20 August
2010. The ex-dividend date is 18 August 2010.
The financial information contained in this Half-yearly Report does not
constitute statutory accounts as defined in Section 434 of the Companies Act
2006. The information for the year to 31 December 2009 has been extracted from
the latest published audited financial statements. The audited financial
statements for the year to 31 December 2009, which were unqualified, have been
filed with the Registrar of Companies. No statutory accounts in respect of any
period after 31 December 2009 have been reported on by the Company's auditors
or delivered to the Registrar of Companies.
Copies of the Half-yearly Report have been mailed to shareholders and are
available from the Registered Office of the Company at 100 Wood Street, London
EC2V 7AN.
Unaudited Balance Sheet
As at 30 June 2010
As at As at As at
30 June 30 June 31 December
2010 2009 2009
GBP'000 GBP'000 GBP'000*
Fixed assets
Unquoted investments 29,208 27,055 24,958
Traded on AIM & Listed (include NYSE) 9,541 9,350 9,680
Interest bearing securities 15,492 10,300 10,496
54,241 46,705 45,134
Current assets
Debtors 249 217 342
Cash at bank and on deposit 2,630 2,439 2,169
2,879 2,656 2,511
Creditors (amounts falling due within one year) (458) (428) (429)
Net current assets 2,421 2,228 2,082
Total assets less current liabilities 56,662 48,933 47,216
Net assets 56,662 48,933 47,216
Capital and reserves
Called-up share capital 6,440 5,589 5,589
Share premium account 21,192 14,323 14,318
Capital redemption reserve 8,622 8,622 8,622
Revaluation reserve 4,200 2,902 3,156
Capital reserve 15,800 17,437 15,759
Revenue reserve 408 60 (228)
Equity shareholders' funds 56,662 48,933 47,216
*These figures are audited.
As at As at As at
30 June 30 June 31 December
2010 2009 2009*
Net asset value per share 94.86p 93.92p 90.63p
Number of ordinary shares in issue 59,734,236 52,099,126 52,099,126
Treasury net asset value per share 94.02p 93.25p 89.92p
Number of ordinary shares in issue 59,734,236 52,099,126 52,099,126
Number of ordinary shares held in Treasury 4,668,593 3,793,593 3,793,593
Number of listed ordinary shares 64,402,829 55,892,719 55,892,719
*These figures are audited.
Unaudited Statement of Cash Flows
For the six months to 30 June 2010
Six months to Six months to Year to 31
30 June 2010 30 June 2009 December 2009
GBP'000 GBP'000 GBP'000*
Net cash inflow from operating 259 722 527
activities
Capital expenditure and financial (6,809) (74) 3,506
investment
Equity dividends paid - - (3,647)
Net cash (outflow)/inflow before (6,550) 648 386
financing
Net cash inflow/(outflow) from 7,011 (561) (569)
financing
Increase/(decrease) in cash 461 87 (183)
Reconciliation of net cash inflow/ 461 87 (183)
(outflow) to movement in net cash
Increase/(decrease) in cash
Opening net cash 2,169 2,352 2,352
Net cash at end of period 2,630 2,439 2,169
Reconciliation of operating profit
before taxation to net cash flow from 2,440 1,589 3,522
operating activities
Profit on ordinary activities before
taxation
Unrealised gains on investments (1,366) (1,849) (2,460)
Realised (gains)/losses on (731) 42 (1,339)
investments
Changes in working capital and other (84) 940 804
non-cash items
Net cash inflow from operating 259 722 527
activities
*These figures are audited.
Principal Risks and Uncertainties
The Company's assets consist of equity and fixed interest investments, cash and
liquid resources. Its principal risks are therefore market risk, credit risk
and liquidity risk. Other risks faced by the Company include economic, loss of
approval as a Venture Capital Trust, investment and strategic, regulatory,
reputational, operational and financial risks. These risks, and the way in
which they are managed, are described in more detail under the heading
Principal risks, risk management and regulatory environment within the Business
Review and Notes in the Company's Annual Report and Accounts for the year to 31
December 2009. The Company's principal risks and uncertainties have not changed
materially since the date of that report.
Related Parties
ISIS EP LLP ('the Manager') manages the investments of the Company. The Manager
also provides or procures the provision of secretarial, accounting,
administrative and custodian services to the Company. Under the management
agreement, the Manager receives a fee of 2.5 per cent per annum of the net
assets of the Company. This is described in more detail under the heading
Management within the Report of the Directors in the Company's Annual Report
and Accounts for the year to 31 December 2009. During the period, the Company
has incurred management fees of GBP669,000 and secretarial and accounting fees of
GBP55,000 payable to the Manager.
Going Concern
After making enquires, and bearing in mind the nature of the Company's business
and assets, the Directors consider that the Company has adequate resources to
continue in operational existence for the foreseeable future. In arriving at
this conclusion the Directors have considered the liquidity of the Company and
its ability to meet obligations as they fall due for a period of at least
twelve months from the date that these financial statements were approved. As
at 30 June 2010 the Company held cash balances & investments in UK Gilts with a
combined value of GBP18,122,000. Cash flow projections have been reviewed and
show that the Company has sufficient funds to meet both its contracted
expenditure and its discretionary cash outflows in the form of the share
buyback programme and dividend policy. The Company has no external loan finance
in place and therefore is not exposed to any gearing covenants.
SHAREHOLDER INFORMATION AND CONTACT DETAILS
Enquiries
Shareholders should contact the following regarding queries:
Basic contact details, ie change of address, joining the DRIP queries re: share
and tax certificates and bank mandate forms: Computershare (Company Registrar)
www-uk.computershare.com/investor
Investors who hold ordinary shares in their own name can check their holdings
on our Registrar's website
www-uk.computershare.com. Please note that to access this facility investors
will need to quote the reference number shown on their share certificate.
Alternatively, by registering for the Investors' Centre facility on
Computershare's website, investors can view details of all their holdings for
which Computershare is Registrar, as well as access additional facilities and
documentation. Please see www.investorcentre.co.uk for further information.
Shareholder Helpline
Tel: 0870 703 0137 (Calls charged at national rate).
The Shareholder Helpline is available on UK business days between Monday and
Friday, 8.30 am to 5 pm. The helpline contains automated self-service
functionality which is available 24 hours a day, 7 days a week. Using your
Shareholder Reference Number which is available on your share certificate or
dividend tax voucher, our self-service functionality will enable you achieve
the following things:
Automated Functions
- confirm the latest share price
- confirm your current share holding balance
- confirm payment history
- order a Change of Address, Dividend Bank Mandate or Stock Transfer Form
e-mail: web.queries@computershare.co.uk
For information on asset allocations, dividend policies, investment process,
DRIP mechanism, share price movements, the share price discount and selling
shares:
ISIS EP LLP (the Investment Manager) at www.isisep.com
e-mail: michael.probin@isisep.com; margaret.barff@isisep.com
Tel: Michael Probin 020 7506 5796; Margaret Barff 020 7506 5630.
The Baronsmead website (www.baronsmeadvcts.co.uk) links to helpful sites,
contains details of the team and some case studies of investments.
Share Price
The Company's shares are listed on the London Stock Exchange. The mid-price of
the Company's shares is given daily in the Financial Times in the Investment
Companies section of the London Share Service. Share price information can also
be obtained from many financial websites.
Trading Shares
The Company's shares can be bought and sold in the same way as any other quoted
company on the London Stock Exchange via a stockbroker.
The market makers in the shares of Baronsmead VCT 4 plc are:
Matrix Corporate Capital (the Company's broker)
020 3206 7000
Singer Capital MarketS
020 3205 7500
Winterflood
020 3400 0251
Financial Calendar
November 2010 - Quarterly fact sheet to 30 September 2010
February 2011 - Results for year to 31 December 2010 announced and annual
report and accounts sent to shareholders
May 2011 - Annual General Meeting
Corporate Information
Directors
Robert Owen (Chairman)
Ian Kirkpatrick|*
Alan Pedder CBE|?
Robin Williams
| Chairman of the Nomination Committee
* Chairman of the Audit & Risk Committee
| Chairman of the Management Engagement and Remuneration Committee
? Senior Independent Director
Secretary
Barry Lawson LLB, Solicitor
Registered Office
100 Wood Street
London EC2V 7AN
Investment Manager
ISIS EP LLP
100 Wood Street
London EC2V 7AN
Investor Relations
Michael Probin
020 7506 5796
Registered Number
04313537
Registrars and Transfer Office
Computershare Investor Services PLC
PO Box 82
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Tel: 0870 703 0137
Brokers
Matrix Corporate Capital LLP
One Vine Street
London W1J 0AH
Auditors
KPMG Audit Plc
Saltire Court
20 Castle Terrace
Edinburgh EH1 2EG
Solicitors
Norton Rose
3 More London Riverside
London SE1 2AQ
VCT Status Adviser
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
Website
www.baronsmeadvct4.co.uk
Additional Information
The information provided in this report has been produced in order for
shareholders to be informed of the activities of the Company during the period
it covers. ISIS EP LLP does not give investment advice and the naming of
companies in this report is not a recommendation to deal in them.
Baronsmead VCT 4 plc is managed by ISIS EP LLP which is Authorised and
regulated by the FSA. Past performance is not necessarily a guide to future
performance. Stock markets and currency movements may cause the value of
investments and the income from them to fall as well as rise and investors may
not get back the amount they originally invested. Where investments are made in
unquoted securities and smaller companies, their potential volatility may
increase the risk to the value of, and the income from, the investment.
END
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