RNS Number:5401T
British Smaller Tech Cos VCT PLC
25 March 2002
For Immediate Release
BRITISH SMALLER TECHNOLOGY COMPANIES VCT PLC
Preliminary results for the year ended 31 December 2001
Total amount invested reaches £9.8m
Follow-on funding being made at more favourable prices
Potential for significant capital appreciation
British Smaller Technology Companies VCT plc ("the Company"), the venture
capital trust specialising in growing smaller technology companies, today
announces its preliminary results for the 12 months to 31 December 2001.
Financial highlights
2001 2000
Income £229,000 £558,000
Net revenue return before tax £(244,000) £92,000
Net revenue return after tax £(244,000) £73,000
Total return per share (20.14)p 7.45p
Net assets £11.02m £13.8m
NAV per share 80.2p 100.4p
Commenting on the results, the Chairman, Sir Andrew Hugh Smith, said the
difficult economic environment had adversely affected emerging companies as a
whole, including the Company's investees. IT and telecoms companies were hit
particularly hard, but life science and healthcare related companies did better
and valuations in these sectors increased as awhole.
Although the Company had adopted a conservative approach to valuations, the
reduction in net asset value, at about 20%, was somewhat less than the 38% fall
in the FTSE AIM index and the 43% slump in the FTSE Techmark100 index over the
same period.
He said, "although it is disappointing to have to report such a fall in net
asset value, your Board remains encouraged by the developing portfolio" and
added "lower valuations mean that follow-on funding rounds are being made at
more favourable prices."
Investments
The Company's portfolio has continued to grow during the period under review.
During the year, more than £4m was invested in 18 companies. Of this, £1.65m
was "follow-on" funding to 10 existing portfolio companies while £2.45m went to
eight new investee companies.
This brings the total number of investments at 31 December 2001 to 26 and the
total amount invested to nearly £9.8m.
Given the likelihood that a number of companies in the portfolio will be looking
for further rounds of fundraising, existing liquid resources have been reserved
for these purposes. Since the year-end, a further £228,000 has been invested in
three existing portfolio companies.
Of the total portfolio, three companies have been written up to a value above
cost, 10 are valued at cost and 13 have been partially or fully provided
against. Of the latter group, two - Millware Corporation Ltd and Power X Ltd -
are in administrative receivership.
Dividend
The Board is not recommending the payment of a final dividend. Sir Andrew said
that the significant fall in revenue was due to the move towards being
fully-invested. Revenue would continue to fall "until such time as the
investments mature and produce capital gains that can be distributed back to
shareholders." It is unlikely that dividends will be paid until the first
realisations begin to emerge.
Warrants
This is the first year in which warrants can be exercised. The first such date
was 22 March and the second falls on 30 April. Unexercised warrants can be
exercised on those same dates in each of the next two years, after which time
they will lapse.
Outlook
Commenting on the Company's prospects, Sir Andrew said there were a number of
signs of an improvement in the economic situation in the UK and the US.
"We have grounds for optimism, therefore, that we will see an improving trend in
the economic climate and in business confidence," he said. "We retain a high
level of confidence in many of our portfolio investments."
"A number of the existing portfolio will come back to the market for additional
funds in the months ahead. ... your Board is confident that the potential for
significant capital appreciation of the portfolio remains intact."
Portfolio overview
Phil Cammerman, Managing Director of Yorkshire Fund Managers Limited, the
Company's investment adviser, said that, "whilst there will be areas that are
less affected than others, 2002 is also likely to be characterised by a slower
than anticipated adoption of new products, services and techniques."
The fund has invested in companies with products, including software, that are
either patent protectable or have a clear market advantage and which, in the
long term, can provide significantly increased value. Of the 25 unquoted
investments, 11 are currently revenue generating. Of these, six continue to see
their services being adopted at growth rates of more than 50% a year. A further
seven companies have products that are at or near market readiness.
"The healthcare sector is expected to remain reasonably buoyant over the coming
year and there are signs of recovery in others," he said. "In the short-term,
the emphasis for companies with emerging technologies is likely to be in cost
containment, distribution channel development and focused sales efforts."
For further information, please contact:
Phil Cammerman
Yorkshire Fund Managers Ltd Tel: 0113 294 5050
David Hardy/ Simon Ellis
Binns & Co Tel: 0207 786 9600
Simon Mountford
Simon Mountford Communications Tel: 01347 844844
CHAIRMAN'S STATEMENT
This third Annual Report to the shareholders of British Smaller Technology
Companies VCT plc covers the year to 31 December 2001.
It was a year that suffered from an exceptionally unfavourable environment,
which was inevitably reflected in financial markets, most sharply in the case of
small and emerging companies. In the UK, the FTSE AIM index fell 38% and the
FTSE Techmark100 index 43% during 2001. Such reductions have to be taken into
account in our own valuations of portfolio
companies. Although we have adopted a conservative approach to these valuations
the reduction in net asset value is somewhat less at 20%.
Activity in the world economy, led by the United States, was in a period of
decline. The full effects of the decline in valuations of the IT and Telecom
sectors were felt and business confidence and investment spending fell very
sharply. This was accentuated by the events of 11 September.
This situation has given rise to a number of adverse effects on emerging
companies as a whole and for some investee companies in our portfolio. Where
companies had reached the trading stage, the level of activity in their sector,
particularly those involved in IT and telecoms, had almost invariably fallen
well below historical levels, while the decline in confidence made it more
difficult to gain acceptance of innovative products. Consequently, these
companies' sales progress fell well below planned levels and cash was being
consumed more rapidly than expected. The opposite has been the case in the life
sciences and healthcare related sectors where valuations as a whole have
increased.
Where companies sought to raise additional funds they met a serious shrinkage of
available investment capital, intense competition for such funds as were
available and a sharp decline in valuations. In these conditions some companies
were unable to raise the funds required to continue operating and were forced
into receivership or liquidation.
Investments
During the year a total of £4.1m was invested in 18 companies, £1.65m as
follow-on funding to 10 existing portfolio companies and £2.45m in 8 new
companies. This brings the total amount of monies invested to just under £9.8m
at 31 December 2001 compared with the total net funds raised from shareholder
subscriptions of £13.1m. Given the likelihood that a number of companies in the
portfolio will be looking for further rounds of fund raising, your Board has
decided to reserve existing liquid resources for these purposes. Since the year
end a further £228,000 has been invested in three existing portfolio companies.
Of the total portfolio of 26 companies, three are written up to a value above
cost, 10 are valued at cost and 13 have been partially or fully provided
against, of which two, Millware Corporation Limited and Power X Limited, are in
administrative receivership.
Although it is disappointing to have to report such a fall in the net asset
value, your Board remains encouraged by the developing portfolio. The general
market conditions and sentiment have depressed both valuations and reported
trading results but, nevertheless, lower valuations mean that follow-on funding
rounds are being made at more favourable prices. There is an inherently high
level of risk in a venture capital portfolio of this nature and a relatively
high casualty rate, accompanied by commensurately high returns for those
companies that succeed. The use of conservative principles of valuation also
ensures that, in general, disappointing performance is reflected in valuations
well before success is recorded. The performance of the portfolio to date is,
therefore, not completely unexpected, taking into account the particularly
unfavourable environment.
I am pleased to report that we are comfortably ahead of the qualifying targets
set out by the venture capital trust legislation that requires at least 70% of
investments to be held in qualifying companies and at least 30% of those
qualifying holdings to be in the form of Ordinary shares.
Financial Results and Dividend
The revenue return after tax for the year was a net loss of £244,000 on gross
revenue of £229,000. In the previous year the net revenue return after tax was a
net profit of £73,000 on revenue of £558,000. No dividend can be paid.
The significant fall in revenue is due to the move toward a fully invested
position and the nature of the underlying investments. Whilst waiting for
venture capital investments to materialise, liquid funds are invested in a
portfolio of Government securities. When the venture capital investments are
made they are inevitably into early stage, often pre-revenue,
companies where any dividends are unlikely to be received for some time. Thus,
as the fund moves toward full investment, the income to your Company will fall
until such time as the investments mature and produce capital gains that can be
distributed back to shareholders. Your Company is now approaching that initial
fully invested stage and it is unlikely that further dividends will be paid
until the first realisations begin to emerge.
The net asset value at 31 December 2001 was 80.2p per Ordinary share compared to
100.4p at the end of the previous year. The main reason for the fall was the
reduction in venture capital investment valuations. Gilt investment values
increased marginally by a net £45,000, or 0.3p per Ordinary share.
Shareholder Liquidity
Due to the nature of the venture capital trust legislation and the tax
advantages attached to subscribing for VCT shares that are not available for
purchases of such shares in the market, the liquidity of Shareholders' holdings
in VCT companies is severely restricted. This can present Shareholders with
major problems where they have overriding reasons for selling their shares
within the initial qualifying period and can have a false adverse effect on the
trading price of VCT shares in the market.
Your Board and its Investment Adviser, Yorkshire Fund Managers Limited, have
been looking at ways in which these problems can be addressed to aid
Shareholders who find themselves in this position. To this end we are interested
to hear from Shareholders that wish to buy additional shares so that we can try
to match them with those who wish to sell their shares. We are also working
closely with the market makers to create better liquidity.
Warrants
Through a separate notice sent out on 20 February 2002, Shareholders and
Warrantholders will be aware that this is the first year in which the Warrants
can be exercised. The first such date of 22 March has just passed with the
second date falling on 30 April. Unexercised Warrants can be exercised on those
same dates in each of the next two years, after which time they will lapse.
Outlook
Over the past few weeks there have been a number of signs of an improvement in
the economic situation in the UK and the US; if sustained this is likely to
spread to the Euro zone. We have grounds for optimism, therefore, that we will
see an improving trend in the economic climate and in business confidence. We
retain a high level of confidence in many of our portfolio investments and our
Investment Adviser is committing much effort to assisting managements to meet
their business plans and to bring their products to market.
A number of the existing portfolio will come back to the market for additional
funds in the months ahead and it will be necessary to assess carefully which
merit further support. Inevitably, there will be further casualties but your
Board is confident that the potential for very significant capital appreciation
of the portfolio remains intact.
Sir Andrew Hugh Smith
Chairman
25 March 2002
Statement of Total Return
(incorporating the Revenue Account)
For the year ended 31 December 2001
Year ended Year ended
31 December 31 December
2001 2000
Notes Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Net (losses) gains on
investments - (2,391) (2,391) - 1,044 1,044
Income 229 - 229 558 - 558
Investment advisory fee (304) (131) (435) (298) (129) (427)
Other expenses (169) - (169) (169) - (169)
-------
------- ------- ------- ------- -------
Net return on ordinary
activities before taxation (244) (2,522) (2,766) 91 915 1,006
Tax on ordinary activities 2 - - - (18) 18 -
------- ------- ------- ------- ------- ------
Net return on ordinary
activities after taxation (244) (2,522) (2,766) 73 933 1,006
Dividends in respect of 3 - - - - - -
equity shares
------- ------- ------- ------- ------- ------
Transfer (from) to
reserves (244) (2,522) (2,766) 73 933 1,006
==== ==== ==== ==== ==== ====
Return per Ordinary share
Basic and fully diluted 4 (1.78)p (18.36)p (20.14)p 0.54p 6.91p 7.45p
Notes
The revenue column of this statement is the profit and loss account of the
Company.
All activity has arisen from continuing operations.
There is no difference between the net revenue return on ordinary activities
before taxation and the transfer (from) to revenue reserves for the financial
year and their historic cost equivalents.
Balance Sheet
at 31 December 2001
Notes 2001 2000
£000 £000
Fixed Assets
Investment portfolio 8,242 6,577
------- --------
Current Assets
Investments 2,571 5,767
Debtors 23 146
Cash 215 1,357
------ -------
2,809 7,270
Creditors: amounts
payable within one year (34) (44)
------ ------
Net Current Assets 2,775 7,226
------- -------
Total Net Assets 11,017 13,803
===== =====
Capital and Reserves
Called-up share 1,373 1,375
capital
Share premium account 11,336 11,336
Warrant reserve 338 338
Capital redemption
reserve
2 -
Capital reserve
Realised (499) (481)
Unrealised (1,431) (1,073)
--------- ---------
Revenue reserve (1,930) 592
(102) 162
===== ====
Equity shareholder's funds 11,017 13,803
===== =====
Net asset value per 5
Ordinary share 80.2p 100.4p
===== ======
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2001
Year ended Year ended
31 December 2001 31 December 2001
£000 £000
Net cash (outflow) inflow from operating activities (296) 74
------ ------
Taxation
Tax repayments received 34 -
------ ------
Investing activities
Purchase of investments (4,101) (4,433)
------ ------
Equity dividends to shareholders - (110)
------ ------
Net cash outflow before management of liquid
resources and financing (4,363) (4,469)
------ ------
Management of liquid resources
Purchase of fixed interest government stocks - (6,590)
Proceeds from the sale of fixed interest government 3,241 10,933
stocks
------ ------
Net cash inflow from management of liquid resources 3,241 4,343
------ ------
Financing
Issue of ordinary shares - 1,210
Issue expenses - (59)
Purchase of own shares (20) (80)
Deferred commission payments - (1)
------ ------
Net cash (outflow) inflow from financing (20) 1,070
------ ------
(Decrease) increase in cash (1,142) 944
==== ====
Notes To The Financial Statements
1. Basis of Reporting
This preliminary announcement does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985. The announcement has been
agreed with the Company's auditors for release. The financial information has
been prepared on a basis consistent with the previous year.
Comparative figures for the year ended 31 December 2000 have been extracted from
the statutory accounts on which the auditors gave an unqualified report and
which did not contain a statement under Sections 237(2) or 237(3) of the
Companies Act 1985. Those accounts have been filed with the Registrar of
Companies. The statutory accounts for the year ended 31 December2001 will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting.
2.Taxation Charge
2001 2000
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Corporation tax
payable at 20% - - - 18 (18) -
==== ==== ==== ==== ==== ====
3. Dividends
There is no proposed dividend in the year (2000: £nil).
4. Return per Ordinary share
The basic return per Ordinary share is based on net loss from ordinary
activities after tax of £244,000 (2000: £73,000 net profit) and on 13,734,000
shares (2000: 13,505,000), being the weighted average number of shares in issue
during the year.
There is no difference between the basic return per Ordinary share and the fully
diluted return per Ordinary share.
5. Net asset value per Ordinary share
The net asset value per Ordinary share is calculated on attributable assets of
£11,017,000 (2000: £13,803,000) and 13,728,842 shares in issue at the year end
(2000:13,752,176)
6. Annual General Meeting
Copies of the full financial statements for the year ended 31 December 2001 are
expected to be posted to shareholders on 27 March 2002 and 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. The Company's AGM is due to
be held at 12.00 noon on 10 May 2002 at 42 Brook Street, London, W1K 5BB.
This information is provided by RNS
The company news service from the London Stock Exchange
British Smaller Tech Co's Vct (LSE:BSR)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
British Smaller Tech Co's Vct (LSE:BSR)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024
