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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Arc Growth | LSE:AGCV | London | Ordinary Share | GB00B067NY94 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 35.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number : 6285G
Arc Growth Company VCT plc
24 October 2008
FOR IMMEDIATE RELEASE 24 October 2008
Arc Growth Company VCT plc
Interim Accounts
The directors are pleased to announce the results of the Company for the six months ended 31 August 2008.
Chairman's Statement - Interim management report
The period under review has been a turbulent one for the Company.
The disappointing response to the C Issue which raised only £266,905 has had a dramatic impact on the Company. Apart from failing to
provide sufficient further funds to broaden the portfolio as planned, it was the catalyst for the decision by the Investment Manager, Arc
Fund Management Limited ('AFM'), to resign with effect from 15th July 2008.
The rapid deterioration of all stock markets has seen a serious downward spiral in the valuation of listed stocks, particularly on AIM
and PLUS. The impact of the worldwide financial crisis which is behind this has started to have similar negative effects on general economy
and unquoted investments are not immune to this.
During the period, the Company suffered its first investment failures, one of which was reflected in the provisions made in the audited
Accounts to 29 February 2008.
Unfortunately, this trend has continued during the period under review and subsequently, with both Consolidated Vending plc and Global
E-Networks Holdings plc appointing Administrative Receivers. Accordingly, your Board has elected to make full provisions against each of
these investments in these interim results.
The outcome of these actions, together with the share price deterioration of the AIM-Listed holdings, has seen a reduction in the
Company's NAV to 79.1p per share, excluding the 7p per share dividend for the year ended 28 February 2007 which has now been paid in full.
In the light of the current investment climate, your Board has taken a very cautious view on the use of the C Issue funds. To date, only
one investment of £25,000 in SPDG Technologies plc (now renamed Aquario plc) has been made.
However, the Company has continued to be more than 70%-invested in qualifying stocks and met the other qualifying tests set by HMRC.
Risk and uncertainties
Under the Disclosure and Transparency Directive, the Board is now required in the Company's half year results, to report on principal
risks and uncertainties facing the Company over the remainder of the financial year.
The Board has concluded that the key risks facing the Company over the remainder of the financial period are as follows:
i. investment risk associated with investing in small and immature businesses;
ii. investment risk arising from extremely volatile stockmarket conditions and their potential effect on investment valuation;
and
iii. failure to maintain approval as a VCT.
In the case of (i) the Board is satisfied with the Company's approach. It follows a rigorous process in vetting and careful structuring
of new investments and, after an investment is made, close monitoring of the business. In respect of (ii), the Company seeks to hold a
diversified portfolio. However, the Company's ability to manage the risk is quite limited, primarily due to the restrictions arising from
the VCT regulations.
The Company's compliance with the VCT regulations is continually monitored by the Company Secretary, who reports regularly to the Board
on the current position. The Company also retains James Cowper to provide regular reviews and advice in this area. The Board considers that
this approach reduces the risk of a breach of the VCT regulations to a minimal level.
Outlook
The turbulence in world markets continues, making the future extremely unpredictable. The directors are diligently monitoring the
remaining investments but realise that external forces can take matters outside their control. Thus, whilst the Board believes that the
current portfolio valuation is realistic, it cannot rule out further provisions in the next audited accounts. However, it remains hopeful
that certain well-performing investments made lead to an upward revaluation in the near future.
Planning for the future
The resignation of AFM and the consequent unavoidable decision of the Board to manage the Company itself for the immediate future has
necessitated a review of its costs.
Without an investment manager, the costs cap of 3.6% of NAV no longer applies as there is no source for claw back of the excess.
The Board has set itself the objective of seeking to operate as close as possible to the cap limit as if it applied. However, given the
timing of the resignation and the reduction in NAV during the year, it will not be possible for the Company to achieve their target for the
year ending 29 February 2009.
The Board is currently in detailed negotiations with a third party which already manages VCTs with a view to them becoming Investment
Manager of the Company. Unfortunately due the time constraints placed by the Stock Exchange on announcing these results, we are not able to
disclose the party concerned or the details of the arrangement under discussion. However, once we are in a position to do so,, we will write
to you again setting out the full details of the proposed new arrangements, As part of this exercise, the number of directors will be
reduced, the remaining directors will reduce their respective fees by 50% and Woodside Secretaries Limited will reduce its annual fees for
administrative services by £6,000 to £15,000 plus VAT.
The Board is also reviewing all costs incurred by the Company but there are fixed costs relating to a company listed on the London Stock
Exchange which cannot be reduced.
This is a most unsatisfactory position to be in but the Board is committed to finding the best solution for shareholders. All options
for the future management of the Company, including the appointment of a replacement investment manager, will be considered.
We shall keep you informed of developments.
Richard Hargreaves, Chairman
24 October 2008
ARC GROWTH COMPANY VCT PLC
Directors
Richard Lawrence Hargreaves
Kevin Thomas Morley
David George Lowe
Details of advisers
Secretary and Registered Office
Graham K Urquhart FCIS
4th Floor
150-152 Fenchurch Street
London EC3M 6BB
Solicitors
Fladgate LLP, Solicitors
25 North Row
London W1K 6DJ
Company Registered Number
05323692
Registrars
Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen
West Midlands B63 3DA
VCT Monitoring
James Cowper
3 Wesley Gate
Queen's Road
Reading
Berkshire RG1 4AP
Independent Auditors
Spofforths LLP
1 Horsham Gate
North Street
Horsham
West Sussex RH13 5PJ
Sponsor, Financial Adviser and Stockbrokers
Beaumont Cornish Limited
2nd Floor Bowman House
29 Wilson Street
London EC2M 2SJ
Bankers
The Royal Bank of Scotland plc
London St Mary Axe Branch
54 Lime Street
London EC3
ARC GROWTH COMPANY VCT PLC
Investment Portfolio at 31 August 2008
Valuation % of
Security Cost 31-Aug-08 Net assets
£ £
AIM/PLUS Listed Investments
Arc Fund Management Holdings plc 74,260 53,950 3.35
Consolidated Vending plc 164,400 - -
Snacktime plc 150,000 104,167 6.47
Vicorp Group plc 47,279 14,184 0.88
435,939 172,301 10.70
Unquoted Investments
B Fresh Limited Loan Stock 54,000 - -
Clicknow Ltd 150,000 150,000 9.32
Dateline Holdings plc 150,900 150,900 9.38
Famous Retail Ltd 100,000 - -
Global E Networks 100,000 - -
Laser Broadcasting 150,000 150,000 9.32
M2FX plc 258,295 272,619 16.94
Rainbow Rewards Holdings Limited 166,447 203,827 12.67
Sarah Arnett Limited 200,000 109,999 6.84
Smart Implant Holdings 150,000 - -
SPDG Technologies plc 175,000 175,000 10.88
1,654,642 1,212,345 75.35
Gilts
4.75% Treasury Stock 149,490 149,842 9.31
Total Investments 2,240,071 1,534,488 95.36
Net Current Assets 74,672 4.64
Shareholders Funds 1,609,160 100.00
ARC Growth Company VCT plc
Income Statement
Unaudited Unaudited Audited
6 months ended 31 Aug 2008 6 months ended 31 Aug 2007 Year ended 29 Feb 2007
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Ordinary Shares
Investment income (2) - (2) 19 - 19 35 - 35
Investment management 27 - 27 3 - 3 28 - 28
(fee)/clawback
Other expenses (82) - (82) (40) - (40) (106) - (106)
Realised gains on investment - (3) (3) - 214 214 - 197 197
disposals
Unrealised appreciation in - (270) (270) - 50 50 - (520) (520)
investment values
Return on ordinary activities (57) (273) (330) (18) 264 246 (43) (323) (366)
before tax
Tax charge on ordinary - - - 1 - 1 - - -
activities
Return on ordinary activities (57) (273) (330) (17) 264 247 (43) (323) (366)
after tax
Return per share (3.25p) (15.42p) (18.67p) (0.97p) 14.95p 13.98p (2.41p) (18.29p) (20.69p)
"C" Shares
Investment income 2 - 2 - - - - - -
Investment management 4 - 4 - - - - - -
(fee)/clawback
Other expenses (11) - (11) - - - - - -
Realised gains on investment - - - - - - - - -
disposals
Unrealised appreciation in - - - - - - - - -
investment values
Return on ordinary activities (5) - (5) - - - - - -
before tax
Tax charge on ordinary - - - - - - - - -
activities
Return on ordinary activities (5) - (5) - - - - - -
after tax
Return per share (2.03p) - (2.03p) - - - - - -
Total
Investment income - - - 19 - 19 35 - 35
Investment management 31 - 31 3 - 3 28 - 28
(fee)/clawback
Other expenses (93) - (93) (40) - (40) (106) - (106)
Realised gains on investment - (3) (3) - 214 214 - 197 197
disposals
Unrealised appreciation in - (270) (270) - 50 50 - (520) (520)
investment values
Return on ordinary activities (62) (273) (335) (18) 264 246 (43) (323) (366)
before tax
Tax charge on ordinary - - - 1 - 1 - - -
activities
Return on ordinary activities (62) (273) (335) (17) 264 247 (43) (323) (366)
after tax
Return per share (5.28p) (15.42p) (20.70p) (0.97p) 14.95p 13.98p (2.41p) (18.29p) (20.69p)
ARC Growth Company VCT plc
Reconciliation of movements in shareholders' funds
Unaudited Unaudited Audited
6 Months ended 6 Months ended Year Ended
31-Aug-08 31-Aug-07 29-Feb-08
Ord. "C" Ord. Ord.
Shares Shares Total Shares Shares
£'000 £'000 £'000 £'000 £'000
Shareholders' funds at 1 March 1,810 - 1,810 2,183 2,183
2008
Total gains and losses (330) (5) (335) 247 (366)
recognised in period
Net proceeds of share issue - 250 250 - -
Dividends paid (117) - (117) (7)
Shareholders' funds at 31 1,363 245 1,608 2,430 1,810
August 2008
Arc Growth Company VCT plc
Balance Sheet
Unaudited Unaudited Audited
6 Months ended 6 Months ended Year Ended
31-Aug-08 31-Aug-07 29-Feb-08
Ord. "C" Ord. Ord.
Shares Shares Total Shares Shares
£'000 £'000 £'000 £'000 £'000
Fixed asset investments 1,359 175 1,534 1,532 1,714
Current assets
Debtors 73 11 84 28 89
Cash and cash equivalents 72 81 153 881 165
145 92 237 909 254
Current Liabilities
Creditors (141) (22) (163) (11) (158)
Net current assets 4 70 74 898 96
Net assets 1,363 245 1,608 2,430 1,810
Called up equity share capital 177 133 310 177 177
Share premium - - - 1,492 1,492
Special distributable reserve 1,375 117 1,492 - -
Revenue reserve (99) (5) (104) (9) (42)
Capital Reserve (90) - (90) 770 183
Total equity shareholders' 1,363 245 1,608 2,430 1,810
funds
Net Assets per share 77.16p 91.94p 79.10p 107.56p 102.42p
Arc Growth Company VCT plc
Cash Flow Statement
Unaudited Unaudited Audited
6 Months ended 6 Months ended Year Ended
31-Aug-08 31-Aug-07 29-Feb-08
Ord. "C" Ord. Ord.
Shares Shares Total Shares Shares
£'000 £'000 £'000 £'000 £'000
Net cash inflow from operating
activities
Return on ordinary activities (330) (5) (335) 246 (366)
before tax
Adjusted for:
Realised gains on investment 3 - 3 (214) (197)
disposals
Unrealised appreciation in 270 - 270 (50) 520
investment values
Decrease (increase) in debtors 16 (11) 5 158 97
(Decrease) / increase in (17) 22 5 (3) 145
creditors
Net cash generated from (58) 6 (52) 137 199
operating activities
Taxation
Corporation tax paid - - - 1 (1)
Cash flows from investing
activities
Purchases of investments (13) (225) (238) (825) (1,831)
Sales proceeds of investments 95 50 145 677 914
Net cash generated from 82 (175) (93) (148) (917)
investing activities
Equity Dividend (117) - (117) - (7)
Cash flows from financing
activities
Issue of own shares - 267 267 - -
Share issue expenses - (17) (17) - -
Net cash generated from - 250 250 - -
financing activities
Net (decrease)/increase in (93) 81 (12) (10) (726)
cash and cash equivalents
Reconciliation of net cash flow to movements in cash and cash
equivalents
Net increase in cash and cash (93) 81 (12) (10) (726)
equivalents
Cash and cash equivalents at 1 165 - 165 891 891
March 2008
Cash and cash equivalents at 72 81 153 881 165
31 August 2008
Arc Growth Company VCT plc
Notes to the accounts for the six months ended 31 August 2008
1. The unaudited interim results cover the six months to 31 August 2008 and have been drawn up in accordance with the Accounting
Standard Board's (ASB) Statement on Half-yearly Financial Reports (July 2007) and adopting the accounting policies set out in the statutory
accounts for the year ended 29 February 2008 which were prepared under UK GAAP and in accordance with the Statement of Recommended Practice
for investment companies issued by the Association of Investment Trust Companies in January 2003, revised December 2005.
2. The financial information set out in this report has not been audited and does not comprise full financial statements within the
meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 29 February 2008, which were unqualified, have been
lodged with the Registrar of Companies. No statutory accounts in respect of any period after 29 February 2008 have been reported on by the
Company's auditors or delivered to the Registrar of Companies.
3. Copies of the Interim Report to Shareholders have been sent to shareholders and are available at the Company's Registered Office:
4th Floor, 150-152 Fenchurch Street, London EC3M 6BB
4. During the period under review, the Company did not issue any new Ordinary Shares of 10 pence each but did issue 266,905C Shares
of 50 pence each.
5 The revenue return per share is based on loss from ordinary activities after tax of £344,759 and on 1,767,557 ordinary
shares of 10p each and 238,698 C Shares of 50p each being the weighted average number of shares in issue during the
period. The net assets per share is based on total net assets of £1,609,160 and 1,767,557 ordinary shares of 10p and
266,905 C Shares of 50p each in issue at the period end.
6. Related party transactions
There are no related party transactions that have materially effected the financial position or performance of the company during the
period and there have not been any changes to the related part transactions described in the statutory accounts to 29 February 2008 that
could do so.
Responsibility statement of the Directors in respect of the half-yearly financial report
We confirm to the best of our knowledge:
* the condensed set of financial statements have been prepared in accordance with the Statement Half-yearly financial reports issued
by the UK Accounting Standards Board;
* 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 the important events that have occurred during the
first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year; and
* 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 may have materially effected 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
Graham Urquhart FCIS
Secretary
24 October 2008
For further information please contact:
Graham Urquhart, Director 0203 216 2000
Roland Cornish, 0207 628 3396
Chairman, Beaumont Cornish
This information is provided by RNS
The company news service from the London Stock Exchange
END
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