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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Longbow | LSE:LGIV | London | Ordinary Share | GB00B60PTW11 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.00 | - |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMLGIV
RNS Number : 3130N
Longbow Growth and Income VCT
31 August 2011
Longbow Growth and Income VCT plc
Half-yearly report
For the period ended 30 June 2011
Contents
Financial Summary & Investment Policy 1
Chairman's Statement 2
Directors' Responsibility Statement 3
Statement of Principal Risks and Uncertainties 3
Related Parties 4
Income Statement 6
Balance Sheet 7
Reconciliation of Movements in Shareholders' Funds 7
Cash Flow Statement 8
Notes to the Interim Financial Statements 9
Corporate Information 10
Financial Summary
Hot Features
Premium
30 June
Period ended 2011
------------------------------- -------------
Net assets GBP1,022,903
------------------------------- -------------
Net asset value per share 91.94p
------------------------------- -------------
Investment income GBPNil
------------------------------- -------------
Return on ordinary activities
before tax
------------------------------- -------------
- Revenue GBP(42,685)
------------------------------- -------------
- Capital GBP22,972
------------------------------- -------------
- Total GBP(19,713)
------------------------------- -------------
Return per share
------------------------------- -------------
- Revenue (3.84)p
------------------------------- -------------
- Capital 2.07p
------------------------------- -------------
- Total (1.77)p
------------------------------- -------------
Dividend per share declared
in respect of the period
------------------------------- -------------
- Revenue Nil
------------------------------- -------------
- Capital Nil
------------------------------- -------------
- Total Nil
------------------------------- -------------
Share price at end of period 100.00p
------------------------------- -------------
Investment Policy
The investment objective of Longbow Growth and Income VCT plc ("Longbow VCT" or "Company") is to provide its shareholders with attractive returns over the medium to long term through investing principally in unquoted UK developing companies with a focus on the life enhancement and wellbeing sectors.
In order to achieve its objective, the Company will focus on providing development and expansion funding to unquoted companies within these sectors. Risk will be spread by investing in a diversified range of companies from the life enhancement and wellbeing sectors across the UK with a particular emphasis on leveraging the Manager's existing relationship with Alliance Boots.
The Company will, within a 3 year period from Admission, have (and subsequently maintain) at least 70 per cent. of the value of its investments represented by VCT-qualifying investments and the maximum amount invested by the Company in any single company or other listed closed ended investment fund will be limited to 15 per cent. of the value of the Company's investments at the time of investment.
The Company will also have the ability to invest in a range of non VCT-qualifying investments.
The Company's investment manager is Longbow Capital LLP ("Longbow Capital" or "Investment Manager").
Chairman's Statement
On behalf of the board of directors, I should like to welcome you as a shareholder of Longbow Growth and Income VCT plc ("Longbow VCT" or "Company") and thank you for your investment in the Company.
Offer for Subscription
Longbow VCT's offer for subscription closed on 30 June 2011 having raised GBP1.16million (of which GBP1.1m had been invested in the Company's shares as at 30 June 2011 with the balance being invested in the Company's shares on 5 July 2011) thereby achieving the minimum subscription of GBP1million. Although we had hoped that we would have raised more, it proved to be an unexpectedly difficult year for VCT fundraising. Several VCT offers were withdrawn because of a poor response and several others, including a few from major players in the sector, raised a similar sum to that which we raised.
Investment Activity
At time of writing, our investment manager, Longbow Capital LLP ("Longbow Capital"), has identified several investment opportunities across the portfolio of companies in which other Longbow funds have invested; due diligence is being undertaken now on one of these opportunities which may lead to our first investment being made before the end of the year. The other opportunities, if supported, would result in the Company's funds being substantially invested within the next two or three years. If that were to happen, Longbow VCT would then hold a reasonably mature portfolio with the prospect of successful realisations significantly earlier than is usual in the VCT sector. It was this possibility which contributed in large measure to our willingness to commit to a minimum subscription of GBP1million for Longbow VCT.
Against this potentially attractive outcome, our investment manager has reported a reorganisation of its staff. This is an unwelcome development: Longbow Capital has, however, assured the Company's Board of Directors that there will be no weakening of the investment management capacity. This development will be monitored closely.
Outlook
As described above, the Investment Manager has presented a programme of activity which is both encouraging and consistent with the investment outlook presented in the prospectus for the offer for subscription. That said, current market conditions and the general economic outlook are challenging.
The prospectus also anticipated a second fundraising round in the 2011/12 tax year which would look to build on the presentation of the Company's investment proposition to the IFA community in tax year 2010/11. That proposition was well received by VCT commentators and a significant number of IFAs. The failure to convert such support into applications to invest has been attributed to the uncertainty of whether Longbow VCT would achieve its minimum and thereby be launched. IFAs are understandably reluctant to introduce their clients to a VCT which may not go ahead. That bridge, however, has been crossed and the challenge now is to determine whether a further fundraising may be undertaken more successfully in 2011/12 or 2012/13. Much of the speculation about investment appetite for tax-driven product in the current year is centred on Enterprise Investment Schemes as a result of the steps taken by the Government to improve the taxation profile of such Schemes and there is a school of thought that 2011/12 may also be a difficult fundraising year for VCTs. We continue to monitor the market's discussions on this point as we consider our fundraising plans and the best way to realise the full potential of the Company given its current size.
Although our first annual general meeting is some way in the future - May/June 2012 - I look forward to meeting you then and, hopefully, reporting on the satisfactory execution of the investment programme outlined by our investment manager.
Michael J Walker
Chairman 31 August 2011
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 period ended 30 June 2011 and their impact on the condensed set of financial statements
-- The "Statement of Principal Risks and Uncertainties" on page 3 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
-- 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 period ended 30 June 2011 and that have materially affected the financial position or performance of the VCT during that period.
By Order of the Board
The City Partnership (UK) Limited
Company Secretary 31 August 2011
Statement of Principal Risks and Uncertainties
The Company's assets will consist of equities and fixed interest investments, cash and liquid resources. Its principal risks will be, therefore, market risk, interest rate risk, credit risk and liquidity risk. All assets and liabilities are denominated in sterling, hence there is no currency risk.
Market risk
The Board will manage the market risk inherent in the Company's portfolio by maintaining an appropriate spread of market risk and by ensuring full and timely access to relevant information from the Investment Manager. The Investment Manager reviews the investment performance and financial results, as well as compliance with the Company's investment objectives. The Board will seek to ensure that an appropriate proportion of the Company's portfolio is invested in cash and readily realisable securities which are sufficient to meet any funding commitments which may arise. The Company will not use derivative instruments to hedge against market risk. It is highly probable that the equity and fixed interest stocks of the Company's unquoted investee companies will be very seldom traded and, as such, their prices will be more uncertain than those of more frequently traded stocks.
Interest rate risk
Some of the Company's financial assets will be interest bearing, some of which are likely to be at fixed rates and some at variable. As a result, the Company is exposed to interest rate risk due to fluctuations in prevailing levels of market interest rates. The Board will seek to mitigate this risk through regular monitoring of the Company's interest bearing investments. The Company will not use derivative instruments to hedge against interest rate risk.
Credit risk
Credit risk is managed by settling all transactions on the basis of delivery against payment.
Liquidity risk
The investments in equity and fixed interest stocks of unquoted companies that the Company will hold are not traded and thus are not readily realisable. At times the Company may be unable to realise its investments at their carrying values because of an absence of willing buyers. The Company's ability to sell investments may also be constrained by the requirements set down for VCTs. To counter such liquidity risk, sufficient cash and money market funds will be held to meet running costs and other commitments. The Company aims to invest its surplus funds in high quality liquidity funds which are all accessible on an immediate basis.
Other risks faced by the Company include economic, investment, financial and regulatory risks:
Economic risk - events such as a downturn in the life enhancement and wellbeing sectors or a tightening of credit facilities may adversely affect the Company's investee companies and make successful divestments less likely.
Investment risk - the adoption of inappropriate investment policies, sourcing too few investment opportunities of the required standard, and taking investment decisions without having undertaken sufficiently robust due diligence.
Financial risk - poor financial controls which may lead to the misappropriation of assets or inappropriate financial decisions and breaches of regulations through deficient financial reporting.
Regulatory risk - failure to comply with any of the regulations to which the Company is subject which include the provisions of the Companies Act 2006, the UKLA listing rules, applicable Accounting Standards and HMRC VCT regulations.
The Board has adopted a risk management programme whereby it continually identifies the principal risks faced by the Company and reviews both the nature and effectiveness of the internal controls adopted to protect the Company from such risks as far as is possible.
Related Parties
Longbow Capital has been appointed as the Company's investment manager and administrator. Longbow Capital receives (i) an annual management fee of 2.00% of the net asset value of the Company, (ii) an annual administration fee of 0.3 per cent. (plus VAT, if any, at the applicable rate) of the gross amount raised under the Offer and subject to a minimum annual fee of GBP45,000, to be increased annually in line with the retail prices index and (iii) a performance related incentive fee which is described in more detail below. The Investment Manager also bears any excess of the total modified annual running costs over a cap of 3.5% of the Company's average net asset value.
Longbow Capital also agreed to underwrite all the costs of the Offer in return for an initial fee of 5.5 per cent. of the gross funds raised such that the initial net asset value per Ordinary Share of the Company will be equal to 94.5p (excluding the impact of any dilution attributable to the issue of additional Ordinary Shares in relation to the early investor entitlements). Out of this fee, Longbow will be responsible for paying all of the costs of the Offer including any initial intermediary commissions and VAT but excluding any trail commissions.
During the period ended 30 June 2011, the Company has incurred investment management fees of GBP4,798 (exclusive of VAT), administration fees of GBP10,356 (exclusive of VAT) and it is estimated that the Investment Manager owes the Company GBP35,427 (exclusive of VAT) in respect of the cap on the Company's annual running costs. Under the Company's agreement with the Investment Manager, this sum is paid by deduction from the Investment Manager's fee for the year ending 31 December 2012 (or, in the event that the Investment Manager's fee will be insufficient, the balance will be paid by the Investment Manager as soon as audited accounts are available for the year ended 31 December 2011). The Company also incurred a fee of GBP55,984 in respect of its agreement with Longbow Capital whereby Longbow Capital would underwrite all the costs of the Offer.
Performance Related Incentive Fee
After Distributions of 100p (per Ordinary Share issued under the Offer and remaining in issue at the date of calculation) have been paid to its shareholders by the Company, Longbow Capital will become entitled to a performance related incentive fee which will be calculated at the rate of 20 per cent. of Distributions in excess of 100p until total Distributions reach 130p (per Ordinary Share issued under the Offer and remaining in issue at the date of calculation) and 30 per cent. above that level. No payment of the performance related incentive fee will be made to Longbow Capital until Distributions exceed 100p (per Ordinary Share issued under the Offer and remaining in issue at the date of calculation). ( In the foregoing, "Distributions" are amounts paid by way of dividends, tender offers, share buybacks, proceeds on a sale or liquidation of the Company, return of capital and any other proceeds or value received, or deemed to be received, by the Company's shareholders in respect of Ordinary Shares, excluding any income tax relief on subscription.)
Income Statement (unaudited)
for the period ended 30 June 2011
Period ended 30 June
2011
---------------------------------- ------------------------------
Revenue Capital Total
---------------------------------- --------- -------- ---------
GBP GBP GBP
---------------------------------- --------- -------- ---------
Realised/unrealised movements on
investments - - -
---------------------------------- --------- -------- ---------
Income - - -
---------------------------------- --------- -------- ---------
Recovery from Investment Manager
re cap on annual running costs 8,856 26,571 35,427
---------------------------------- --------- -------- ---------
Investment Manager's fees (1,199) (3,599) (4,798)
---------------------------------- --------- -------- ---------
Other expenses (50,342) - (50,342)
---------------------------------- --------- -------- ---------
Return on ordinary activities
before tax (42,685) 22,972 (19,713)
---------------------------------- --------- -------- ---------
Taxation on ordinary activities - - -
---------------------------------- --------- -------- ---------
Return attributable to
equity shareholders (42,685) 22,972 (19,713)
---------------------------------- --------- -------- ---------
Transfer to reserves (42,685) 22,972 (19,713)
---------------------------------- --------- -------- ---------
Return (pence) per share (3.84) 2.07 (1.77)
---------------------------------- --------- -------- ---------
The total column of this statement represents the profit and loss account of the Company. All revenue and capital items in the above statement derive from continuing operations. The Company has only one class of business and derives its income from investments made in shares, securities and bank deposits. The Company has no gains and losses other than those recognised in the Income Statement above and has not therefore prepared a separate statement of total recognised gains and losses.
Balance Sheet (unaudited)
as at 30 June 2011
30 June
2011
------------------------------ ----------
GBP
------------------------------ ----------
Fixed assets
------------------------------ ----------
Investments -
------------------------------ ----------
Current assets
------------------------------ ----------
Debtors 209,515
------------------------------ ----------
Liquidity funds and cash
at bank 855,267
------------------------------ ----------
Creditors: amounts falling
due within one year (41,879)
------------------------------ ----------
Net current assets 1,022,903
------------------------------ ----------
Net assets 1,022,903
------------------------------ ----------
Capital and reserves
------------------------------ ----------
Called up share capital 11,126
------------------------------ ----------
Share premium account 1,031,490
------------------------------ ----------
Capital reserve - realised 22,972
------------------------------ ----------
Capital reserve - unrealised -
------------------------------ ----------
Revenue reserve (42,685)
------------------------------ ----------
Total Equity shareholders'
funds 1,022,903
------------------------------ ----------
Net asset value per share,
pence 91.94
------------------------------ ----------
Reconciliation of Movements in Shareholders' Funds (unaudited)
for the period ended 30 June 2011
Period ended
----------------------- -------------
30 June 2011
----------------------- -------------
GBP
----------------------- -------------
Opening shareholders'
funds 100
----------------------- -------------
Capital per share
issue 1,098,500
----------------------- -------------
Expenses of offer (55,984)
----------------------- -------------
Return for the period (19,713)
----------------------- -------------
Closing shareholders'
funds 1,022,903
----------------------- -------------
Cash Flow Statement (unaudited)
for the period ended 30 June 2011
Period ended 30 June
2011
GBP GBP
Operating activities
Investment income
received -
Interest received -
Investment manager's
fees paid (4,798)
Administration fees
paid (12,427)
Cash paid to and
on behalf of directors -
Other cash payments (24)
Net cash outflow
from operating activities (17,249)
Financial investment
Purchase of investments -
Sale of investments -
Net cash outflow
from financial
Investment -
Corporation tax
& dividends
Corporation tax
paid -
Equity dividends
paid -
---------
Net cash outflow
from tax & dividends -
Net cash outflow
before financing (17,249)
Financing
New share issue 928,500
Share issue expenses (55,984)
Cancellation of
share premium a/c
Net cash inflow
from financing 872,516
Increase/(decrease)
in cash 855,267
=========
Notes to the Interim Financial Statements
1. Accounting Policies
The financial information for the period ended
30 June 2011 has not been audited and comprises
non-statutory accounts as defined in sections
434 to 436 of the Companies Act 2006. Statutory
accounts will be prepared and audited for
the Company's first accounting reference period
ending 31 December 2011.
2. Return per Share
The return per share has been calculated based
on a weighted average number of shares in
issue for the period ended 30 June 2011 of
1,112,592.
3. Net Asset Value per Share
The net asset value per share has been calculated
based on 1,112,592 shares being the number
of shares in issue as at 30 June 2011.
4. During the period ended 30 June 2011 the Company
issued 1,112,592 Ordinary Shares - 100 on
incorporation and 1,112,492 in accordance
with the terms of the Public Offer. During
the period the Company did not buy back any
shares.
5. Copies of this half-yearly report will shortly
be mailed to shareholders and will be available
to the public at the Company's registered
office.
Corporate Information
Directors (all non-executive Longbow Growth and Income
& independent) VCT plc
----------------------------- --------------------------------------
Incorporated in England
and Wales
----------------------------- --------------------------------------
Michael J Walker (Chairman) with registered number:
7423739
----------------------------- --------------------------------------
Duncan Abbot
----------------------------- --------------------------------------
Peter Arthur Reporting Calendar
----------------------------- --------------------------------------
For the year ending 30 December
2011:
----------------------------- --------------------------------------
All of the registered
office:
----------------------------- --------------------------------------
Level 13 Results announced: Interim - August
Broadgate Tower 2011
20 Primrose Street Annual - March
London 2012
EC2A 2EW
----------------------------- ------------------- -----------------
Investment Manager Secretary
----------------------------- --------------------------------------
Longbow Capital LLP The City Partnership (UK)
Limited
----------------------------- --------------------------------------
27-28 Eastcastle Street Thistle House
----------------------------- --------------------------------------
London 21 Thistle Street
----------------------------- --------------------------------------
W1W 8DH Edinburgh
----------------------------- --------------------------------------
EH2 1DF
----------------------------- --------------------------------------
Telephone: 0131 243 7210
----------------------------- --------------------------------------
Auditors Registrars
----------------------------- --------------------------------------
Scott-Moncrieff The City Partnership (UK)
Limited
----------------------------- --------------------------------------
Chartered Accountants Thistle House
----------------------------- --------------------------------------
Exchange Place 3 21 Thistle Street
----------------------------- --------------------------------------
Semple Street Edinburgh
----------------------------- --------------------------------------
Edinburgh EH2 1DF
----------------------------- --------------------------------------
EH3 8BL Telephone: 0131 243 7210
----------------------------- --------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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