Final Results

RNS Number:7002U
Phoenix VCT PLC
27 January 2004


Phoenix VCT plc

Preliminary Results for the period ended 31 October 2003

Financial Highlights


Funds Raised by 31 October 2003                                          #10.0m

Net Asset Value per share at 31 October 2003                             100.7p

Unaudited Net Asset Value per share at 31 December 2003                  103.3p

Maiden proposed dividend                                                  0.15p

For further information, please contact:

Justin Jordan
Octopus Asset Management
Tel: [phone]


Extracts from the Chairman's Statement

I am delighted to present my first annual report to shareholders in Phoenix.
Phoenix listed on 8 January 2003, and as at 31 October 2003 had raised over
#10.0m before expenses. I would like to welcome all shareholders and thank them
for their support.

Net Asset Value (NAV)
As at 31 October 2003, Phoenix had made eight investments in AIM listed
companies, representing some 18% of the funds raised in the share issue. All
eight investments are up in absolute terms with an average gain to 31 October
2003 of 36%. In addition, each individual investment had outperformed the AIM
index since the date of purchase. This is a testament to the Manager's rigorous
investment process.

Because of this strong performance, the NAV per share has increased from its
original 95p net of expenses at 8 January 2003 to 100.7p at 31 October 2003.

Post the year-end, as at 31 December 2003, the Company had made 12 investments,
or #2.1m by book cost. I am pleased to say that these 12 investments are now
worth over #3.1m at that date, i.e. have risen in value by over #1m.

Net of disposals, these investments represent 21% of the funds raised by book
cost. As at 31 December 2003, the NAV has increased to 103.3p per share, with
all investments continuing to show healthy gains in absolute terms. In
accordance with the Company's prospectus dated 28 November 2002, the balance of
the Company's assets, almost 80% of funds raised remains invested in money
market deposits.

Dividend
The board propose a dividend of 0.15p per share to be paid on 31 March 2004 to
shareholders on the register on 12 March 2004. This amount was impacted by
sustained low interest rates during the period, and the low average number of
shares in issue during the period. Your board aim to produce a regular income
stream by way of dividend income from investment income, crystallising capital
gains and dividend income received. Post the year-end the Company has
crystallised gains of over #135,000. These capital gains will be paid to
shareholders by way of dividend income within 12 months.

Share Price and Buy-Back facility
The Company's mid-market share price currently stands at 100p and as is normal
with a VCT in its early stages, there have been very few transactions. We will
be asking shareholders at the annual general meeting to renew the board's powers
to purchase shares in the market for cancellation. Phoenix has a share buy-back
facility; usually buying back shares at no more than a 10% discount to the
prevailing NAV. This should assist the marketability of the shares and help
prevent the shares from trading at a wide discount to NAV. In the period under
review, the Company repurchased 7,500 shares at 90p per share. Shareholders
should note that if they sell their shares within three years of original
purchase they forfeit any tax reliefs obtained. If you need to sell your shares,
for whatever reason, please contact Octopus on 020 7255 7960.

VCT qualifying status
The Company's progress towards meeting the Inland Revenue's conditions for VCT
approval is carefully monitored by the directors. In addition, the Company has
retained Grant Thornton to advise in this area. Given the healthy deal flow of
qualifying investment opportunities that we are experiencing, we believe that
Phoenix will comfortably exceed the relevant conditions by its deadline of 31
October 2005.

VCT legislation changes
The Company welcomes the recent proposals published by H M Government, which
would change the taxation benefits available to investors in venture capital
trusts with effect from 6 April 2004. The changes as proposed would effectively
increase the income tax relief available to shareholders from current 20% to 40%
but abolish Capital Gains Tax deferral relief. These reliefs will only apply to
new VCT shares issued after 6 April 2004. Once these changes have been
clarified, the Company currently intends to make a further offer for
subscription in respect of the tax year starting on 6 April 2004.

Outlook
The fundamentals of the UK economy remain favourable, with reasonable GDP
growth, subdued inflation and unemployment near record lows. The manager is
conscious of rising UK interest rates and continually monitors its effect on
existing and potential investments.

The Manager is currently seeing a healthy pipeline of qualifying AIM companies
raising funds at reasonable valuations and anticipates the company making
several additional investments in the forthcoming months.


Stephen Hazell-Smith
Chairman
27 January 2004


Manager's Review


Since launch, the Manager has met over 100 AIM listed companies as potential
investments for the Company.


The vast majority of these companies did not satisfy the Manager's rigorous
investment process and merit investment. The Manager seeks to assess the
potential market for a company's product or service and its management team's
ability to capitalise on opportunities available within this marketplace. The
Manager seeks to analyse the fundamental value of companies relative to forecast
rates of earnings and profit growth and return on capital employed. All too
often in the past - particularly in the "dotcom" era - investors ignored the
fundamental ratings of companies and subsequently suffered poor returns.


As at 31 October 2003, Phoenix had made eight investments in AIM listed
companies, representing some 18% of the Company's assets by book cost. All eight
investments are up in absolute terms with an average gain to 31 October 2003 of
36%. In addition, each individual investment has outperformed the AIM index
since the date of purchase.


It is worth noting that all eight investments at 31 October 2003 are profitable
businesses with multi million pound revenues. These, and other established
profitable AIM companies, will form the core of Phoenix's portfolio.


Valuation of Investments

All investments are in companies whose shares are traded on AIM; these are
stated at middle market prices.


Review of Investments


Cardpoint

Cardpoint is a provider of approximately 1,900 fee based cash points in the UK.
Phoenix invested #53,099 as part of a heavily oversubscribed fundraising to
enable the company to purchase a larger rival. In July 2003, Cardpoint entered
the mobile phone top up market with the purchase of a business with some 3,000
terminals throughout the UK.


In the year to September 2003, the business had sales of #12.2m with pre tax
profits of #50,000, retained losses of #0.6m and net assets of #6.9m. As at 31
October 2003, Phoenix held 100,187 ordinary shares, representing 0.31% of the
company's equity.


To date, Cardpoint has exceeded the manager's expectations and looks set for
strong growth in revenues and profitability in 2004. Further information on
Cardpoint can be found on the company's website www.cardpointplc.com


Centurion Electronics

Centurion designs, markets and distributes in-car DVD entertainment systems.
This profitable company has distribution agreements to sell "Plug & Play", the
retail range, with a number of high street retailers such as Halfords, Argos and
Motorworld and OEM agreements for the professional range with Fiat, Nissan and
Toyota. Phoenix invested #200,000 to support expansion of this business across
Continental Europe.


In the year to September 2003, the business had sales of #6.2m with pre tax
profits of #1.2m, retained profits of #0.7m and net assets of #4.3m. As at 31
October 2003, Phoenix held 317,460 ordinary shares, representing 1.37% of the
company's equity.


Post the year-end, in December 2003, Phoenix sold over 50% of its holding in
Centurion Electronics, having more than doubled its money in less than four
months, crystallising capital profits of #122,622. This profit will be repaid to
shareholders within 12 months by way of capital dividends.


Further information on Centurion Electronics can be found on the company's
website www.centurionsystems.co.uk



Media Square

Media Square is a profitable media company engaged in all forms of marketing
communications. It serves more than 20 large clients throughout the UK, such as
Argos, GUS and Marks & Spencer.


Phoenix invested #150,000 in this business, which is well placed to grow its
revenues and profit substantially from both acquisitions and a general upturn in
advertising spend in the UK.


In the year to October 2002, the business had sales of #4.9m with pre tax losses
of #0.9m, retained losses of #0.9m and net assets of #0.8m. In its interim
results to April 2003, the company returned to profitability and we anticipate
considerable growth in revenues and profits over the next two years.


As at 31 October 2003, Phoenix held 1,875,000 ordinary shares, representing
2.66% of the company's equity.


Post the year-end, the fund invested a further #20,000 to part finance an
acquisition by Media Square of a smaller rival, Preprint Imaging.


Further information on Media Square can be found on the company's website
www.mediasquare.co.uk



Deal Group Media

Deal Group Media is a rapidly expanding, profitable internet advertising agency.
The company sells advertising space on internet portal sites to customers such
as the AA, First Direct, John Lewis and Comet. These companies pay on a
success-only basis - i.e. they only pay when a visitor buys a product or service
as a result of seeing the advertisement.


Phoenix invested #250,000 as part of a larger fund raising of #1.2 million to
expand the business. Like Media Square, this company is well placed to benefit
from a general upturn in advertising spend in the UK.


In the year to May 2003, Deal Group Media had sales of #7.4m with pre tax
profits of #0.6m, retained profits of #0.5m and net assets of #8.1m. As at 31
October 2003, Phoenix held 7,331,378 ordinary shares, representing 2.09% of the
company's equity.


Further information on Deal Group Media can be found on the company's website
www.dealgroupmedia.co.uk



Top Ten Holdings

Top Ten Holdings runs a chain of 16 bingo clubs in Wales and North West England.
This is a successful business, which is already very profitable. Top Ten's
management has a successful track record of acquiring bingo clubs and improving
profitability by increasing weekly attendances and the average spend per
customer.


Phoenix invested #200,000 as part of a larger fund raising of #5.8 million to
enable the company to acquire an additional 8 bingo clubs in the North East.


In the year to March 2003, the business had sales of #8.2m with pre tax profits
of #0.6m, retained profits of #0.4m and net assets of #6.8m. As at 31 October
2003, Phoenix held 4,000,000 ordinary shares, representing 1.06% of the
company's equity.


Further information on Top Ten Holdings can be found on the company's website
www.toptenbingo.co.uk



Air Music & Media

Air Music & Media produces and distributes budget-priced CDs and DVDs, typically
retailing for under #5. All sales are via music trade wholesalers, distributors
and retailers. Products are sold globally with customers in over 55 countries.


Based in Hertfordshire, this company has grown strongly and has acquired a
number of competitor businesses in recent years, mainly in the UK and North
America.


Phoenix invested #200,000 as part of a larger #2 million funding round. This
money was used to purchase a rival UK budget-priced CD producer. We believe
there are considerable cross-selling opportunities between Air Music & Media and
this newly acquired business. In addition, by combining the purchasing,
logistics and finance operations of the two businesses, we believe that the
enlarged company will increase its profit margins.


In the year to March 2003, the business had sales of #8.0m with profits of
#0.9m, retained profits of #0.6m and net assets of #4.7m. As at 31 October 2003,
Phoenix held 2,666,667 ordinary shares, representing 1.36% of the company's
equity.


Further information on Air Music & Media can be found on the company's website
www.airmusicandmedia.com



Glisten

Glisten, based in Blackburn, is a manufacturer of chocolate and sugar based
confectionery, edible decorations and confectionery ingredients.


We expect Glisten to grow sales organically as it expands its product range, and
to continue to make strategic acquisitions. Phoenix invested #368,940 to provide
additional working capital to this company and potentially finance further
strategic acquisitions.


In the year to June 2003, the business had sales of #15.6m with profits of
#1.36m, retained profits of #1.0m and net assets of #6.0m. As at 31 October 2003
, Phoenix held 223,600 ordinary shares, representing 2.51% of the company's
equity.


Further information on Glisten can be found on the company's website
www.glisten.plc.uk



Armour Group

Armour is the UK market leader in the design and manufacture of electronic leads
and fitting solutions for in-car audio, telecommunications and DVD systems,
under the "Autoleads" brand.


Phoenix invested #400,000 as part of a larger #5 million funding round to
finance the purchase of a home audio leads business. Armour and the business it
acquired have lots of similarities in terms of product manufacture, retailers
and end customers. We believe there are considerable cross-selling opportunities
between the two businesses.


In the year to August 2003, Armour had sales of #16.1m, with profits of #1.35m,
retained profits of #0.9m and net assets of #9.7m. As at 31 October 2003,
Phoenix held 888,889 ordinary shares, representing 1.69% of the company's
equity.


Further information on Armour Group can be found on the company's website
www.autoleads.co.uk



Post the year-end, as at 31 December 2003, the Company had made 4 additional
investments in the following companies:



Clapham House Group

Clapham House Group is a newly formed company, led by a former Pizza Express
management team. The group was formed to acquire established restaurant
businesses in the UK, with a view to expanding them rapidly. Phoenix invested
#90,000 as part of the initial #14.75m raised.


Further information on Clapham House Group can be found on the company's website
www.claphamhousegroup.com


In December 2003, Phoenix took advantage of a strong rise in the company's
shares to sell its entire holding in Clapham House Group, crystallising a 14.5%
profit in just over a month.



Dawmed

Rotherham based Dawmed is effectively two separate businesses: Firstly, an
established medical device company which designs, manufactures, sells,
distributes and services for washer disinfector equipment. This equipment is
used to decontaminate surgical instruments and medical equipment in hospitals.
Its prime customers in the UK are NHS Hospital Trusts and private hospitals.


Secondly, a newly developed "bench top" washer-disinfector-drier for instrument
decontamination, primarily aimed at the 40,000 healthcare practices in the UK.


Phoenix invested #101,250 as part of a #0.5m fundraising to provide additional
working capital to market its new "bench top" washer in the UK.


Further information on Dawmed can be found on the company's website
www.dawmed.com



AS Fare

AS Fare, based in Southampton, is the UK's leading manufacturer of ladders and
associated gantries for the UK rescue services. Phoenix invested #130,000 as
part of this company raising #2.4m to expand its business and potentially
acquire companies in the same sector.


Further information on AS Fare can be found on the company's website
www.as-fire.co.uk



Inditherm

Inditherm designs and manufactures heating solutions using the company's
innovative low voltage polymer. The technology provides a flexible heating
surface that can produce uniform working heat output to +140degreesC, powered by
a low voltage (typically 24v) power supply. Applications of the technology are
widespread, although the company has principally focused on industrial
applications.


Phoenix invested #200,000 as part of a larger #5m fundraising to develop a
greater business infrastructure together with the working capital necessary to
support the business growth.


Further information on Inditherm can be found on the company's website
www.inditherm.co.uk



In total, at 31 December 2003, the Company had made 12 investments representing
21% of the fund by book cost, net of disposals. I am delighted to say that the
NAV has increased to 103.3p per share, with all investments continuing to show
healthy gains in absolute terms. In accordance with the Company's prospectus,
the balance of the Company's assets, some 80% of fund remains invested in money
market deposits.


Outlook


The fundamentals of the UK economy remain favourable, with reasonable GDP
growth, subdued inflation and unemployment near record lows. The manager is
conscious of rising UK interest rates and continually monitors its effect on
existing and potential investments.


The Manager is currently seeing a healthy pipeline of qualifying AIM companies
raising funds at reasonable valuations and anticipates the company making
several additional investments in the forthcoming months.



Justin Jordan

Fund Manager

Octopus Asset Management Limited

27 January 2004



Statement of total return (incorporating the revenue account)


For the period ended 31 October 2003


                                      Revenue     Capital        Total
                                         #000        #000         #000
Unrealised gains on
investments                                 -         652          652
Income                                    153           -          153
Investment management fee                (31)         (93)        (124)
                                         (98)           -          (98)
                                       ------      ------       ------
Other expenses
Return on ordinary
activities                                24          559          583
before tax
Tax on ordinary activities                (4)           4            -
                                       ------      ------       ------
Return on ordinary
activities                                20          563          583
after tax
Dividends                                (15)           -          (15)
                                       ------      ------         ------
Transfer to reserves                       5          563          568
                                       ------      ------         ------
Return per share                         0.3p         9.5p         9.8p


The revenue column of this statement is 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 and securities and from bank
deposits.


Balance sheet

As at 31 October 2003

                                                                   #000
Fixed asset investments                                           2,474

Current assets
Investments                                                       7,467
Debtors                                                              18
Cash at bank                                                        203
                                                                  _____

                                                                  7,688
Creditors: amounts falling due within one year                      (47)
                                                                  _____

Net current assets                                                7,641
                                                                  _____

Net assets                                                       10,115
                                                                  _____

Called-up equity share capital                                    1,005
Share premium                                                     8,542
Capital reserve - realised                                          (89)
- unrealised                                                        652
Revenue reserve                                                       5
                                                                  _____
Total equity shareholders' funds                                 10,115

Net asset value per share                                         100.7p



Cash flow statement

For the period ended 31 October 2003

                                                             #000       #000
Net cash outflow from operating activities                               (55)

Financial investment:                                      (1,822)
                                                           ------
Purchase of investments

Net cash outflow from financial investment                            (1,822)
Management of liquid resources
Purchase of money market securities and cash deposits                 (7,467)
                                                                      ------
Net cash outflow before financing                                     (9,344)
Financing:
Issue of ordinary shares                                   10,036      9,554
                                                             (482)
                                                           ------
Share issue expenses                                                      (7)
Repurchase of shares
Net cash inflow from financing                                         9,547
                                                                      ------
Increase in cash at bank                                                 203
                                                                      ------
Analysis of cash balance
At start of period                                                         -
                                                                         203
                                                                      ------
Net cash inflow for the period
At end of period                                                         203
                                                                      ------


Notes to the preliminary results

The above summary of results for the period ended 31 October 2003 does not
constitute statutory financial statements within the meaning of Section 240 of
the Companies Act 1985 and has not been delivered to the Registrar of Companies.


Statutory financial statements will be filed with the registrar of Companies in
due course; the auditors' report on those financial statements under S235 of the
Companies Act 1985 is unqualified and does not contain a statement under S237(2)
or (3) of the Companies Act 1985.


The proposed final dividend for the period ended 31 October 2003, if approved by
shareholders, will be paid on 31 March 2004 to shareholders on the register at
the close of business on 12 March 2004.


Summary of investments at 31 October 2003

AIM Quoted Companies              Cost      Valuation          % of fund assets
                                  #000           #000

Cardpoint plc                       53             80                      0.8%
Centurion Electronics plc          200            360                      3.6%
Media Square plc                   150            260                      2.6%
Deal Group Media plc               250            303                      3.0%
Top Ten Holdings plc               200            360                      3.6%
Air Music & Media plc              200            220                      2.2%
Glisten plc                        369            393                      3.8%
Armour Group plc                   400            498                      4.9%

Total AIM Companies              1,822          2,474                     24.5%

Money market securities and cash
deposits                                        7,670                     75.8%
Debtors                                            18                      0.2%
Current Liabilities                               (47)                    (0.5%)

Net assets                                     10,115                    100.0%


Reserves

                 Share         Capital        Capital        Revenue
               premium         reserve      reserve -        reserve
                              realised     unrealised                    
                  #000            #000           #000           #000
Premium on
issue of
ordinary
shares           9,030
Share issue
expenses          (482)
Share               (6)
buy-back
Management
fee
capitalised
net of
associated                        (89)
taxation
Net increase
in
unrealised                                        652
appreciation
Return on
activities
after tax                                                         20
Dividends                                                        (15)

At 31
October          8,542            (89)            652              5
2003

A copy of the full annual report and financial statements for the period ended
31 October is expected to be posted to shareholders in late January 2004 and
will be available to the public at the registered office of the company at 14
Dover St, London W1S 4LW



                      This information is provided by RNS
            The company news service from the London Stock Exchange

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