Aberdeen Growth VCT I PLC To achieve long term capital appreciation principally through investment in fast growing unquoted and AIM quoted companies in the United Kingdom. Interim Report and Financial Statements 31 July 2003
Analysis of Unlisted and AIM Portfolio As at 31 July 2003 FTSE Actuaries industrial sector 000 % Unlisted Software & Computer Services 870 13.0 Media & Photography 716 10.7 Oil & Gas 671 10.0 Transport 405 6.0 Health 378 5.6 Telecommunication Services 375 5.6 Water 366 5.5 Electronic & Electrical Equipment 350 5.2 Construction & Building Materials 250 3.7 Leisure, Entertainment & Hotels 172 2.6 4,553 67.9 AIM Media & Photography 814 12.2 Software & Computer Services 400 6.0 Support Services 389 5.8 Food Producers 283 4.2 Leisure, Entertainment & Hotels 194 2.9 General Retailers 35 0.5 Engineering 35 0.5 2,150 32.1 Total 6,703 100.0 Deal type No. of deals 000 % Unlisted Development capital 14 3,837 57.2 Management buy-out 1 376 5.6 Management buy-ins 1 340 5.1 4,553 67.9 AIM Development capital 9 2,150 32.1 Total 25 6,703 100.0 Aberdeen Murray Johnstone regional office No. of deals 000 % Unlisted Glasgow 8 2,362 35.2 Birmingham 3 831 12.4 Manchester 3 689 10.3 Aberdeen 2 671 10.0 4,553 67.9 AIM London 9 2,150 32.1 Total 25 6,703 100.0 2 Aberdeen Growth VCT I PLC
Investment Review For the six months ended 31 July 2003 Investment activity During the period ended 31 July 2003, 8 unlisted and AIM investments were made at a total cost of 1.6 million, taking the total number of investments to 25 and the amount invested to 7.4million, equivalent to a qualifying investment level of 44%. Since the period end, one further new investment has been completed, taking the total number of investments to 26 and the amount invested to 7.7 million, representing a qualifying investment level of 46%. A 70% investment level is required before 31 January 2004 in order to achieve VCT qualifying status. The following new investments have been made since the publication of the 2003 Annual Report: Essential Viewing Systems Limited (May 2003) - 349,998: Based in Glasgow, Essential Viewing Systems is a developer of advanced delivery technology for video-over-mobile phones, the internet and TV. Mining Communications Limited (May 2003) 340,000: Based in London, Mining Communications is a publisher of magazines and journals for the mining industry. Elam-T Limited (June 2003) 350,000: Based in Enfield, Elam-T is a manufacturer of flat panel displays. Axeon Limited (August 2003) 350,000: Based in Aberdeen, Axeon is a developer of semiconductor intellectual property. Portfolio developments The Company s portfolio is growing steadily and now comprises a total of 26 investments in a wide range of sectors. Approximately 5.8 million has been invested in 17 unlisted, private companies and approximately 1.9 million is invested in 9 companies quoted on AIM. All of the investments are, from your Company s point of view, immature although there is a spread of investments in businesses from those which are at an early stage of their development through to more established companies. Progress is being made broadly in line with the plans submitted at the time of investment; however, in some instances reductions in valuations have been necessary reflecting the difficult economic conditions prevailing at present. It will be some time before the Manager expects any of the holdings to be actively marketed for sale, although that does not preclude the consideration of earlier approaches if the price is attractive. The AIM holdings are also in companies at varying degrees of maturity and most are performing in line with expectations. This part of the portfolio is also affected by the additional consideration that their valuations are subject to market sentiment and, encouragingly, equity markets have recovered from the low points experienced earlier this year. Performance Market conditions continue to be difficult and, despite the apparent rallies in certain stock market indices, there is still considerable evidence of reduced investor confidence in the stock market and of weakening corporate profits. Although there has been a continuation in the strength of the housing market and consumer activity has remained strong, growth forecasts indicate no strong acceleration in demand and recent upward revisions to unemployment levels raise questions as to the durability of this growth. There has been no sharp reduction in inflation and it seems unlikely that there will be further cuts in interest rates in the short term. These conditions continue to have an adverse impact on corporate performance and therefore on the valuations of some of the investments in the Company s portfolio. Aberdeen Growth VCT I PLC 3
Investment Review (continued) The Net Asset Value (NAV) per share at 31 July 2003, was 64.9p compared with 60.9p at 31 January 2003; an increase of 6.6% over the period. The AIM portfolio increased in value by 42.2% over the period; in comparison, the FTSE AIM index rose by 17.3% for the six months to the end of July, while the FTSE 100 index and the FTSE techmark 100 index rose by 21.4% and 33.1% respectively. Aberdeen Growth VCT I s investments in unlisted companies are valued in accordance with the British Venture Capital Association guidelines. Investments are normally valued at cost, or cost less a provision, until they have been held for at least one year. As a result, should performance be ahead of plan, which may imply an increase in the value of the investment, this would not be reflected for at least 12 months; on the other hand, material underperformance would be immediately reflected in a reduced valuation. AIM holdings are valued at their closing mid-market price. Listed equities are valued at their mid-market price, discounted where necessary to reflect any trading restrictions. Dividends It was stated in the Company s Prospectus that in the early years, dividends, if any, would be small until such times as capital realisations had occurred. A final dividend of 0.69p per share was paid to Shareholders on 6 June 2003. The timing of realisations and resulting distributions of capital gains will be unpredictable and the dividend stream is likely to vary from year to year. The Board does not intend to declare an interim dividend for the year ending 31 January 2004. Dividend reinvestment Shareholders may opt to reinvest their dividends in new Aberdeen Growth VCT I shares and enjoy the same tax reliefs as were available on their initial investments. Full details of the terms and conditions applicable to the reinvestment of dividends are available from the Manager. Outlook The results reported here reflect continuing poor market conditions, which the Board and the Manager expect to continue for the foreseeable future. The portfolio is becoming well diversified with investments, which the Manager believes have good prospects but it is likely to be some time before those prospects can be demonstrated in profitable realisations. Aberdeen Growth VCT I is not yet fully invested and the Manager will continue to make new investments until an investment level of around 85% is achieved. The falls in stock market indices over the last three years have led to more realistic pricing expectations in the private equity market; however, although there is a continuing strong flow of suitable transactions being generated by the Aberdeen Murray Johnstone Private Equity regional network of offices, the market has been, and is expected to remain, challenging. The transaction process has become more protracted through vendor resistance to price reductions and the Manager s caution regarding future prospects. This has had an impact on the investment rate to date and the Manager intends to maintain a cautious approach to investment for the foreseeable future. Nevertheless, the Manager is confident that the 70% qualifying investment level will be achieved by the third anniversary of the launch of the Company, as is required under VCT legislation. By order of the Board Aberdeen Asset Management PLC 23 September 2003 Secretary 4 Aberdeen Growth VCT I PLC
Summary of Investment Changes For the six months ended 31 July 2003 Valuation Net Valuation 31 January investment Appreciation 31 July 2003 (disinvestment) (depreciation) 2003 000 % 000 000 000 % Unlisted investments Equities 1,535 10.3 505 (486) 1,554 9.8 Fixed income 2,157 14.5 849 (7) 2,999 18.8 3,692 24.8 1,354 (493) 4,553 28.6 AIM investments Equities 1,291 8.7 221 638 2,150 13.5 Listed investments Equities 9,109 61.0 (2,729) 904 7,284 45.7 Fixed income 999 6.7 704 (19) 1,684 10.5 Total investments 15,091 101.2 (450) 1,030 15,671 98.3 Other net assets (179) (1.2) 452 3 276 1.7 Total assets* 14,912 100.0 2 1,033 15,947 100.0 * Total assets represents equity Shareholders funds Aberdeen Growth VCT I PLC 5
Investment Portfolio As at 31 July 2003 Unlisted investments AMGas % of Valuation total Nature of business 000 assets Manufacturer of gas sensors for application in oil and gas exploration 371 2.3 Businesshealth Group Provider of health management services 63 0.4 Citel Technologies Telephony hardware developer 375 2.3 Elam-T Developer of flat screen technologies 350 2.2 Essential Viewing Systems Video streaming 350 2.2 Inovas Software developer 200 1.2 IS Holdings Provider of biometric software solutions 320 2.0 Llanllyr Water Company Extraction and bottling of mineral spring water 366 2.3 Mercury Inns Group Operator of freehold food-led pubs and consultancy services 172 1.1 Mining Communications Publisher of mining related journals and magazines 340 2.1 Palgrave Brown (Holdings) Manufacturer of timber products 250 1.6 PLM Dollar Group Operator of commercial helicopter fleet 119 0.8 PSCA International Government sector publishing 376 2.4 ScotNursing Provider of temporary and agency nursing and care staff 315 2.0 Transrent Holdings Provider of trailer and transport solution services 286 1.8 Tuscan Energy Group Oil production 300 1.9 4,553 28.6 AIM investments Blooms of Bressingham Operator of retail garden centres 35 0.2 Cardpoint Operator of low-cost network of ATMs 573 3.6 Corac Group Provider of oil free engineering products 35 0.2 Glisten Manufacturer of confectionary 283 1.8 Hartford Operator of restaurants and wine bars 194 1.2 Intelligent Environments Supply and production of integrated e-financial products 400 2.5 Lloyds British Testing Provider of lifting equipment services 186 1.2 Tikit Group Provider of consultancy services and software solutions 203 1.3 UBC Media Group Provider of content to various media platforms 241 1.5 2,150 13.5 Listed equity investments Aberdeen Adventurous Managed Fund - Income 871 5.5 Aberdeen Emerging Markets - Accumulation 701 4.4 Aberdeen Global Funds Euro High Yield Bond - Accumulation 606 3.8 Aberdeen Global Funds Euro High Yield Bond - Income 986 6.2 Aberdeen International World Bond 2,024 12.7 Aberdeen Mid Cap - Income 460 2.9 Aberdeen Progressive Growth 1,141 7.1 Aberdeen UK Growth - Income 495 3.1 7,284 45.7 Listed fixed income investments Treasury 7.75% 8/9/2006 832 5.2 Treasury 5% 7/6/2004 852 5.3 1,684 10.5 Total investments 15,671 98.3 6 Aberdeen Growth VCT I PLC
Independent Review Report to Aberdeen Growth VCT I PLC Introduction We have been instructed by the Company to review the financial information for the six months ended 31 July 2003, which comprises the Statement of Total Return, Balance Sheet, Cash Flow Statement and the related notes 1 to 3. We have read the other information contained in the Interim Report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the Company in accordance with guidance contained in Bulletin 1999/4 Review of interim financial information issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our work, for this report, or for the conclusions we have formed. Directors responsibilities The Interim Report, including the financial information contained therein, is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Interim Report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review of work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 Review of interim financial information issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data, and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 July 2003. Ernst & Young LLP 23 September 2003 Glasgow Aberdeen Growth VCT I PLC 7
Statement of Total Return (unaudited) (Incorporating the Revenue Account of the Company*) For the six months ended 31 July 2003 Six months to Six months to Year to 31 July 2003 31 July 2002 31 January 2003 Revenue Capital Total Revenue Capital Total Revenue Capital Total 000 000 000 000 000 000 000 000 000 Realised (losses)/gains on sales (345) (345) 5 5 (4,133) (4,133) Unrealised gains/(losses) 1,375 1,375 (3,498) (3,498) (1,385) (1,385) Gains/(losses) on investments 1,030 1,030 (3,493) (3,493) (5,518) (5,518) Income from investments 212 212 206 206 370 370 Other income 5 5 4 4 17 17 Currency gains 3 3 Investment management fees (16) (140) (156) (13) (120) (133) (25) (225) (250) Other expenses (102) (102) (86) (18) (104) (173) (19) (192) Net return/(loss) on ordinary activities before taxation 99 893 992 111 (3,631) (3,520) 189 (5,762) (5,573) Tax on ordinary activities (14) 12 (2) (13) 11 (2) (19) 16 (3) Return/(loss) attributable to equity Shareholders 85 905 990 98 (3,620) (3,522) 170 (5,746) (5,576) Ordinary dividends on equity shares (169) (169) Transfer to/(from) reserves 85 905 990 98 (3,620) (3,522) 1 (5,746) (5,745) Return/(loss) per Ordinary share (pence) 0.3 3.7 4.0 0.4 (14.8) (14.4) 0.7 (23.5) (22.8) * The revenue column of this statement is the profit and loss account of the Company. 8 Aberdeen Growth VCT I PLC
Balance Sheet (unaudited) As at 31 July 2003 31 July 31 July 31 January 2003 2002 2003 000 000 000 Fixed assets Investments 15,671 17,160 15,091 Current assets Debtors 329 112 118 Cash and short-term deposits 83 125 119 412 237 237 Creditors Amounts falling due within one year 136 248 416 Net current assets/(liabilities) 276 (11) (179) 15,947 17,149 14,912 Capital and reserves Called up share capital 2,455 2,451 2,449 Share premium 10,535 10,492 10,492 Distributable reserve 10,330 10,350 10,335 Capital reserves - realised (5,039) (330) (4,569) Capital reserves - unrealised (2,425) (5,913) (3,800) Capital redemption reserve 4-3 Revenue reserve 87 99 2 Equity Shareholders funds 15,947 17,149 14,912 Net Asset Value per Ordinary share (pence) 64.9 69.9 60.9 Aberdeen Growth VCT I PLC 9
Cash Flow Statement (unaudited) For the six months ended 31 July 2003 Six months to Six months to Year ended 31 July 2003 31 July 2002 31 January 2003 000 000 000 Operating activities Investment income received 146 213 373 Deposit interest received 4 3 4 Other income 12 Investment management fees paid (199) (258) (388) Secretarial fees paid (45) (68) (98) Cash paid to and on behalf of Directors (67) (14) (37) Other cash payments (44) (63) (69) Net cash outflow from operating activities (205) (187) (203) Financial investment Purchase of investments (6,757) (4,606) (13,482) Sale of investments 7,061 4,805 13,710 Net cash inflow from financial investment 304 199 228 Equity dividends paid (169) (95) (96) Net cash outflow before use of liquid resources and financing (70) (83) (71) Financing Issue of Ordinary shares 51 28 49 Expenses of share issue (20) 20 (19) Net cash inflow from financing 31 48 30 Decrease in cash (39) (35) (41) 10 Aberdeen Growth VCT I PLC
Notes to the Financial Statements 1. Accounting policies The financial information contained in this report has been prepared on the basis of the accounting policies set out in the Annual Report and Financial Statements for the year ended 31 January 2003. The results for the year ended 31 January 2003 are abridged from the full accounts for that year, which received an unqualified report from the Auditors and have been filed with the Registrar of Companies. 2. Returns per Ordinary share The returns per Ordinary share have been calculated using the weighted average number of shares in issue during the period of 24,505,628. The Net Asset Value per Ordinary share has been calculated using the number of shares in issue at 31 July 2003 of 24,554,945. Share Capital Capital Capital premium Distributable reserve - reserve - redemption Revenue account reserve realised unrealised reserve reserve 3. Movements in reserves 000 000 000 000 000 000 As at 1 February 2003 10,492 10,335 (4,569) (3,800) 3 2 Issue of shares 43 Loss on sale of investments (345) Currency gains 3 Increase in unrealised appreciation 1,375 Investment management fees (140) Tax effect of capital items 12 Retained profit for the period 85 Repurchase and cancellation of shares (5) 1 As at 31 July 2003 10,535 10,330 (5,039) (2,425) 4 87 Aberdeen Growth VCT I PLC 11
Corporate Information Directors C L Nicolson (Chairman) M J Gilbert J E Lawrence MBE P A Lee A D MacLellan Manager Aberdeen Asset Managers Limited Customer Services Department: 0500 00 00 40 Secretary Aberdeen Asset Management PLC 123 St Vincent Street Glasgow G2 5EA E-mail: company.secretary@invtrusts.co.uk Registrar Capita Registrars The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Shareholder Helpline: 0870 162 3100 Bankers J P Morgan Chase Bank Auditors Ernst & Young LLP Solicitor S J Berwin Stockbroker UBS Warburg Registered Office One Bow Churchyard London EC4M 9HH Registered in England and Wales Company No. 4135802 Aberdeen Asset Managers Limited 123 St Vincent Street, Glasgow, G2 5EA Telephone: 0141 306 7400 Fax: 0141 306 7401 Authorised and regulated by the Financial Services Authority Member of the Aberdeen Asset Management Group of Companies