Reduction In Carrying Value Of Certain Venture Finance Investments
Update On Banking Facilities
Board Change
30 June 2008
ANNUAL REPORT
Further to the announcement made on 13 June 2008, the Board of General Capital confirms that it will today post the 2007 Annual Report to shareholders.
The report contains a Chairman and Chief Executive's Statement which updates the Chairman and Chief Executive's Statement released with the preliminary results on 28 March, 2008.
The Annual General Meeting has been convened for Tuesday 5 August, 2008 at the offices of Pinsent Masons, City Point, One Ropemaker Street, London EC2Y 9AH.
REDUCTION IN CARRYING VALUE OF CERTAIN VENTURE FINANCE INVESTMENTS
In the announcement on the 13 June 2008 it was stated that the Board believed that a reduction of the carrying values would be required for ten Venture finance accounts, together with a small increase in the Group's collective impairment provision. The additional provision proposed against the Venture finance book to the figures announced on 28 March 2008 was expected to be approximately £6 million.
The Board now confirms that an adjustment has now been made in the 2007 accounts to reflect this item at the level indicated. Accordingly, Group consolidated net assets after adjustment for the above impairment provision, and the related release of the corporation tax charge now stand at £14.8 million.
The Board reiterates that it has determined to discontinue writing new Venture finance business for the foreseeable future and will work to reduce the related cost base. So far as the existing Venture finance portfolio is concerned, the Group will continue to assist its clients in their efforts to re-finance and thereby to recover outstanding balances and fees due to the Group.
BANKING FACILITIES
Following the review, and subject to final documentation, the Group now has committed senior debt facilities from HBOS plc and NM Rothschild & Sons Limited in place until 31 December 2009.
The write down of the carrying values of the Venture finance portfolio referred to above, whilst not affecting the Group's short term cash position, did, as predicted in the announcement dated 13 June 2008, cause a breach of three of the Group's banking covenants relating to interest cover and gross and net receivables cover.
Following a satisfactory review of the Group's trading and asset position by a "Big 4" firm of independent accountants, the Group has secured agreement from its banks to continue to provide its existing facilities, to revise the terms for compliance with the above covenants and to treat the write down as an exceptional accounting adjustment.
New covenants have now been agreed, subject only to final documentation, with HBOS plc and NM Rothschild & Sons Ltd, to reflect better the on-going emphasis of the Group's business. The Group has agreed to return to its bankers at least £5 million from net proceeds received from Venture finance clients by 31 January 2009, which is in line with the Group's new trading forecasts. Accordingly, the Group now expects to be able to operate within its banking facilities for the foreseeable future.
BOARD CHANGE
Following the decision to discontinue writing new business in the Venture finance division, Mr. Mark Edworthy has decided not to seek re-election as a director at the forthcoming Annual General Meeting. He has, however, agreed to remain available to the Group on a consultancy basis, as and when the Group requires his input on certain advances made in the past. The Board thanks Mr. Edworthy for his continuing support.
FUTURE BUSINESS FOCUS
The Board continues to believe that the tightening in the availability of credit from primary lenders continues to create opportunities for secondary lenders such as General Capital. Consequently, the Commercial Asset finance division and Property finance division will continue to write new business within credit guidelines revised appropriately to reflect the current economic climate and outlook.
OUTLOOK
The Board believes that it has a sufficiently experienced and motivated management team, adequate funding, as well as an attractive market position for its lending products, to prosper, and accordingly looks forward to generating increasing revenues and further profitable growth from the Commercial Asset finance and Property divisions in the years to come.
For further information:
| General Capital Group Plc |
|
| Steve Hartley, CEO | Tel: +44 (0) 1603 610610 |
| www.generalcapital.co.uk | |
| Collins Stewart Europe Ltd | |
| Mark Connelly / Adam Cowen | Tel: +44 (0) 20 7523 8350 |
| www.collins-stewart.com |
Media Enquiries:
| Abchurch Communications | Tel: +44 (0) 20 7398 7700 |
| Heather Salmond / George Parker | Tel: +44 (0) 20 7398 7719 |
| george.parker@abchurch-group.com | www.abchurch-group.com |