Trading Update
30 January 2009
General Capital Group plc (AiM: GENC) today announces a further update on the trading statement of 9 December 2008. In that announcement it was stated that a number of parties had made preliminary offers to acquire the loan portfolio of the Venture Finance subsidiary of General Capital ("GCVF") and were due to commence their due diligence exercise. Negotiations with each of these parties have now ceased and no firm bid has been made. Whilst further parties have expressed interest in some or all of the portfolio, there are no current discussions which the Board believes will lead to a satisfactory bid for this portfolio. As a consequence the Company will continue with its efforts to pursue the debtors and recover individual balances.
GCVF's balances are being continually reviewed, which together with further deterioration in general market conditions and asset values, reduces the opportunities for, and the likely quantum of any recovery. Where it is considered of value, legal action is being taken against corporate and personal debtors and guarantors. The Board expects to make a further provision in the accounts to 31 December 2008 of approximately £10 million against these GCVF balances, bringing the total provision to £18 million against booked but unrecovered balances of £24 million. All the balances provided against were advanced during the period between 2004 and 31 December 2007. The provision will be included in the GCVF subsidiary accounts for the year ended 31 December 2007 which are expected to be approved shortly.
GCVF also holds a number of warrant and equity positions, the majority of which were acquired at par or for nil consideration. However, the general fall in share prices has led to the IFRS carrying value of these positions at 31 December 2008 falling to £2 million and therefore an additional provision of £1.7 million will also be included in the interim accounts for the 12 months to 31 December 2008.
Whilst the Company continues to attempt to recover funds from debtors, it has sold holdings in Arrow Mobile Communications plc in December 2008 and Helius Energy plc in January 2009, realising the proceeds of £650,000.
In July 2007, the Company entered into a 10 year cap and enhanced collar hedge agreement with one of its banks. Movements in interest rates and fair value IFRS accounting of financial instruments will require a provision to be posted in the interim accounts for the 12 months to 31 December 2008 of £1.3 million.
Discussions with the Company's bankers continue on a constructive basis. The Company will provide a further update to the market when appropriate.
For further information:
| General Capital Group Plc |
|
| Steve Hartley, Chief Executive | Tel: +44 (0) 1603 610610 |
| steve.hartley@generalcapital.co.uk | 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 |