RNS Number:9257J
British Smaller Tech Cos VCT PLC
18 March 2005
18 March 2005
BRITISH SMALLER TECHNOLOGY COMPANIES VCT PLC
Unaudited preliminary results for the year ended 31 December 2004
* Two successful flotations and a major trade sale in the year
* 31% increase in net asset value (before distributions); 25% increase
after dividend distribution
* Dividend declared of 2.5 pence per share
British Smaller Technology Companies VCT plc ("the Company"), the venture
capital trust specialising in growing smaller technology companies across a
range of industrial sectors, today announces its unaudited preliminary results
for the year ended 31 December 2004.
Financial Highlights:
Unaudited Restated
Year ended Year ended
31 December 31 December
2004 2003
Income #114,000 #88,000
Profit (loss) before and after tax #796,000 #(1,500,000)
Earnings (loss) per share 5.79p (10.91)p
Dividend per share 2.50p -
Total recognised gains (losses) #2,190,000 #(1,243,000)
Net assets #7,507,000 #5,988,000
Net asset value per share 54.6p 43.6p
Announcing the results, the Chairman, Sir Andrew Hugh Smith, said he was pleased
to report that the Company's performance in the second half of the year had
continued to build on the progress made in the first half. The improved net
asset value per share and the significant improvement in the liquidity of the
portfolio were, in large part, a result of two successful flotations and one
major trade sale. Sir Andrew said, "We now have a core portfolio of companies
that are demonstrating growth."
Investments
Cash proceeds from realisations were, in total, #2.33 million in the year, the
majority of which resulted from the disposal of Amino Technologies plc. The
Company had first invested in Amino back in July 2000 and this business floated
on AIM in June 2004. Towards the end of the year, the Board decided it was in
the best interests of shareholders to realise the capital gain by disposing of
its holding, realising a total gain of #826,000.
A total of #277,000 was invested during the year in support of two existing
portfolio companies that were raising additional funds to finance further growth
opportunities. The Board is confident the Company has sufficient liquid
resources to support the development of other portfolio companies where it is
merited.
David Hall, Managing Director of the Company's Investment Adviser, YFM Private
Equity Limited, said, "The majority of active companies in the portfolio have
continued their progress along the value chain. It is particularly encouraging
to note the increase in the number of companies that have matured to the point
of market adoption. It is at this stage of consistent sales and some
profitability that companies become cash generative and attract the attention of
trade buyers, or exhibit characteristics for an IPO, providing an exit
opportunity for this Company."
Financial Results and Dividend
The Company reported a profit for the year of #796,000, with earnings per share
of 5.79p. Net asset value, before the proposed dividend distribution, increased
31% over the year as a whole. Sir Andrew said that this reflected the improved
market conditions and business confidence in the technology sector.
The Company has taken the necessary steps to enable realised capital gains to be
distributed as tax free dividends to eligible shareholders. A dividend of 2.5
pence per share is being recommended for payment on 3 June 2005 to shareholders
on the Register at 1 April 2005. The net asset value at 31 December 2004 is 54.6
pence per share.
Dividend Reinvestment Scheme and Extraordinary General Meeting
The Board is recommending a dividend reinvestment scheme that will enable
shareholders to increase their total holding in the Company in a cost efficient
way and, subject to individual circumstances, qualify for the VCT tax reliefs
that are applicable to subscriptions for new shares in venture capital trusts.
An Extraordinary General Meeting to authorise the directors to establish such a
scheme will be convened to follow immediately after the Annual General Meeting.
If authorised, this scheme will enable shareholders to reinvest the dividend
just declared to take advantage of the 40% tax relief available on VCT
subscriptions.
Shareholders
The Company appointed Teather and Greenwood to act as its broker in furtherance
of its active policy to continue to refine its overall shareholder
strategy. As a firm, Teather and Greenwood is widely experienced in the
investment company market and has a particular focus on the VCT sector.
Shareholders have already started to see some benefit through the reduction in
the discount of the Company's quoted share price to its net asset value. Over
the last six months, this has reduced from a 50% discount to around 13% at the
current time.
Outlook
Looking ahead, Sir Andrew said, "Following a gradual improvement in business
confidence over the past couple of years, the trend has continued into the early
part of 2005."
Although he commented that the medium term outlook was more fragile than he
would like, he went on to say that he expects 2005 to continue to present
opportunities for businesses within the portfolio and the Company is well
positioned to add further value over the coming year.
For further information, please contact:
David Hall, YFM Private Equity Limited Tel: 0113 294 5050
Michael Bellamy, Teather and Greenwood Limited Tel: 0207 426 9547
Jonathan Becher, Teather and Greenwood Limited Tel: 0207 426 3269
Chairman's Statement
I am pleased to report that the second half of 2004 has shown a continuation of
the progress seen in the first part of the year. Increased confidence in the
technology sector has shown through with an increasing number of trade buyers
and a strong stock market appetite for innovative companies, and has provided a
healthy environment for the growing businesses within your Company's portfolio.
The improved market conditions and business confidence have been reflected in
the performance of your Company over the past year. Net asset value, before
dividend distribution, has risen 31% over the year as a whole. In part, this has
reflected improved trading performance by a number of our investments but, just
as importantly, we have seen a significant improvement in the liquidity of the
portfolio with two successful flotations and one major trade sale. We now have a
core portfolio of companies that are demonstrating growth within their own
businesses.
Operations
The total amount invested during the year was #277,000. In addition to the
follow-on investment in Vibration Technology Limited that I reported on in my
interim statement, your Company has invested an additional #150,000 in Digital
Healthcare Limited to support its further development. Digital Healthcare's
software and technology is already used to screen over half a million people
worldwide and its new advanced digital imaging software, iP(R), was approved by
the National Screening Committee in October 2004.
In all, there were three realisations during the year, Amino Technologies plc,
Voxar Limited and Sirus Pharmaceuticals Limited. These resulted in total cash
proceeds of #2.33 million and a realised gain to the profit and loss account, of
#1.37 million. This, together with the cost restructuring that was implemented
from the start of 2004, has significantly improved the liquidity of the Company.
The disposal of Sirus Pharmaceuticals Limited has led to your Company acquiring
a stake in the purchaser, Arakis Limited.
Liquid resources (cash plus gilt investments) stood at just under #2.2 million
at the financial year end, of which #344,000 is recommended for dividend
distribution. Your Board feels that the balance provides adequate liquid
resources to fund the portfolio in order to maximise longer term value.
Financial Results
I reported in my interim statement that the Board had decided to revoke
investment company status in order to enable realised capital profits to be
distributed in the form of tax free dividends. This formality was completed on
12 November 2004.
Following this revocation of investment company status, we are now required to
present a profit and loss account in Companies Act format.
The financial result for the year under review was a profit before dividends of
#0.8 million compared to a loss for the prior year, as restated, of #1.5
million.
A further #1.06 million has been recognised through the revaluation reserve
representing unrealised gains above cost at 31 December 2004. After realisation
of the Warrant reserve, the total recognised gain in the year was #2.19 million,
equivalent to 15.9 pence per ordinary share.
Now that the Company is able to distribute realised capital gains, your Board is
recommending a dividend payment of 2.5 pence per share which, if approved, will
be paid on 13 June 2005 to shareholders on the Register at 29 March 2005. It is
the Board's intention to distribute capital profits to shareholders but, since
it seems likely that capital profits will fluctuate sharply between one year and
another, the Board proposes to distribute such profits over a period after they
are earned so that shareholders' income flow is less irregular.
The Warrants issued to shareholders at the time of subscription to this
Company's shares have now lapsed and no further shares were purchased by the
Company in the second half of the year. Thus there have been no changes to the
issued share capital since my last report.
Dividend Reinvestment Scheme and Extraordinary General Meeting
Following feedback from shareholders, your Board is recommending a dividend
reinvestment scheme that will enable shareholders to elect to receive additional
shares by reinvesting their cash dividends. Dividend reinvestment enables
shareholders to increase their total holding in the Company without incurring
dealing costs, issue costs or stamp duty. Subject to individual circumstances,
these shares should qualify for the VCT tax reliefs that are applicable to
subscriptions for new shares in venture capital trusts.
An Extraordinary General Meeting to authorise the directors to establish such a
scheme will be convened to follow immediately after the Annual General Meeting.
If authorised, this scheme will enable shareholders to reinvest the dividend
just declared to take advantage of the 40% tax relief available on VCT
subscriptions.
Shareholders
Your Board is continually looking at ways to improve shareholder liquidity. In
furtherance of this strategy, I am pleased to tell you that the Board has
appointed Teather & Greenwood to act as broker to the Company. The firm is
widely experienced in the investment company market and has a particular focus
on the VCT sector, acting for a number of venture capital trusts. Teather &
Greenwood are assisting the Board and our Investment Adviser, YFM Private Equity
Limited, in refining its overall shareholder strategy. Initial benefits have
already been seen by shareholders through a reduction in the discount of the
Company's quoted share price to its net asset value. Over the last six months
this has reduced from a 50% discount to around 13% at the current time.
Outlook
Following a gradual improvement in business confidence over the past couple of
years, the trend has continued into the early part of 2005. Overall market
conditions remain favourable, although the economic outlook for the medium term
is more fragile than we would like.
I expect 2005 to continue to present opportunities for businesses within our
portfolio and, with sufficient liquid resources at our disposal to support them,
your Company is well positioned to add further value over the coming year.
Sir Andrew Hugh Smith
Chairman
Unaudited Profit and Loss Account
for the year ended 31 December 2004
Unaudited Restated
Notes 2004 2003
#000 #000
Income 114 88
Administrative expenses:
Investment management fee (235) (435)
Other expenses (263) (216)
------ ------
(498) (651)
Profit (loss) on realisation of investments 1,365 (3)
Impairment of investments (185) (934)
------ ------
Profit (loss) on ordinary activities before
taxation 796 (1,500)
Tax on profit (loss) on ordinary activities 2 - -
------ ------
Profit (loss) for the financial year 796 (1,500)
Dividends (344) -
------ ------
Retained profit (deficit) for the year 452 (1,500)
Basic and diluted earnings (loss) per
Ordinary share 5 5.79p (10.91)p
Notes
All activity has arisen from continuing operations.
Unaudited Statement of Total Recognised Gains and Losses
Unaudited Restated
2004 2003
#000 #000
Profit (loss) for the financial year 796 (1,500)
Unrealised gains on valuation of investments 1,059 257
Realisation of Warrant reserve on lapse of
Unexercised Warrants 335 -
------ ------
Total recognised gains (losses) for the year 2,190 (1,243)
====== ======
Unaudited Note of Historical Cost Profits and Losses
Unaudited Restated
2004 2003
#000 #000
Profit (loss) on ordinary activities before taxation 796 (1,500)
Realisation of investment gains of previous years 22 40
------ ------
Historical cost profit (loss) on ordinary activities
before taxation 818 (1,460)
------ ------
Historical cost profit (loss) on ordinary activities
after taxation and dividends 474 (1,460)
====== ======
Unaudited Balance Sheet
at 31 December 2004
Unaudited Restated
Notes 2004 2003
#000 #000
Fixed Assets
Investments 5,617 5,445
------ ------
Current Assets
Debtors 159 24
Investments 2,085 534
Cash 99 19
------ ------
2,343 577
Creditors: amounts payable within one year (453) (34)
------ ------
Net Current Assets 1,890 543
------ ------
Total Net Assets 7,507 5,988
====== ======
Capital and Reserves
Called-up share capital 1,375 1,375
Share premium account 9 11,354
Capital redemption reserve 3 2
Revaluation reserve 2,279 1,242
Special reserve 3,028 -
Warrant reserve - 335
Other reserve 4 3
Profit and loss account 809 (8,323)
------ ------
Equity shareholders' funds 7,507 5,988
====== ======
Net asset value per Ordinary share 5 54.6p 43.6p
====== ======
Unaudited Cash Flow Statement
for the year ended 31 December 2004
Unaudited Restated
2004 2003
#000 #000
Net cash outflow from operating activities (444) (550)
------ ------
Investing activities
Purchase of fixed asset investments (277) (247)
Proceeds from disposal of fixed asset investments 2,334 -
------ ------
Net cash inflow (outflow) from investing activities 2,057 (247)
------ ------
Net cash inflow (outflow) before management of liquid
resources and financing 1,613 (797)
------ ------
Management of liquid resources
Purchase of fixed interest Government stocks (2,774) -
Proceeds from the sale of fixed interest
Government stocks 1,233 742
------ ------
Net cash (outflow) inflow from management of liquid
resources (1,541) 742
------ ------
Financing
Issue of Ordinary shares on exercise of Warrants 10 3
Purchase of own shares (2) -
------ ------
Net cash inflow from financing 8 3
------ ------
Increase (decrease) in cash in the year 80 (52)
====== ======
Notes To Financial Statements
for the year ended 31 December 2004
1. Basis of reporting
This preliminary announcement, which has been prepared on a basis consistent
with the previous year, does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985.
In order to enable the Company to make capital distributions, the Company has
revoked its investment company status. A consequence of the revocation is that
the Company is now required to prepare accounts in accordance with the
requirements of Schedule 4 of the Companies Act 1985 and not in accordance with
the Statement of Recommended Practice 'Financial Statements of Investment Trust
Companies' as was previously the case.
The information for the year ended 31 December 2003 is an extract from the
statutory accounts to that date which have been delivered to the Registrar of
Companies, restated following the revocation of investment company status as
described in the Chairman's Statement. Those accounts included an audit report
which was unqualified and which did not contain a statement under Section 237(2)
or (3) of the Companies Act 1985. The statutory accounts for the year ended 31
December 2004, upon which the auditors have still to report, will be delivered
to the Registrar following the Company's annual general meeting.
2. Tax on Ordinary activities
Unaudited Restated
2004 2003
#000 #000
Corporation tax payable at 19%
(2003: 19%) - -
------ ------
3. Dividends
Unaudited Restated
2004 2003
#000 #000
Final proposed - 2.5p per share (2003:Nil) 344 -
------ ------
344 -
====== ======
4. Earnings (loss) per Ordinary Share
The earnings (loss) per Ordinary share is based on the profit from ordinary
activities after tax of #796,000 (2003: #1,500,000 loss) and 13,752,000 (2003:
13,748,000) shares being the weighted average number of shares in issue during
the year.
The only potentially dilutive shares are those shares which, subject to certain
criteria being achieved in the future, may be issued by the Company to meet its
obligations under the investment management agreement. No such shares have been
issued, or are expected to be issued at this time. There are therefore
considered to be no potentially dilutive shares in issue at 31 December 2004.
Consequently, basic and diluted earnings per share are the same for the year
ended 31 December 2004.
Under FRS 14, 'Earnings per share', any potentially dilutive shares are deemed
anti-dilutive in the event that a loss has been incurred. Consequently, the
basic and diluted loss per share for the year ended 31 December 2003 are the
same.
5. Net Asset Value per Ordinary Share
The net asset value per Ordinary share is calculated on attributable assets of
#7,507,000 (2003: #5,988,000) and 13,751,576 (2003: 13,748,442) shares in issue
at the year-end.
6. Annual General Meeting
The Company's AGM is due to be held at 1.00pm on 27 May 2005 at 23 Berkeley
Square, London, W1J 6HE. Copies of the full financial statements for the period
ended 31 December 2004 will be available to the public at the registered office
of the Company at Saint Martins House, 210-212 Chapeltown Road, Leeds, LS7 4HZ
thereafter.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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