Br.small Co.2 Regulatory News (BSC)

1 Apr 2008 16:31

British SmallerTechCompaniesVCT2PLC01 April 2008 BRITISH SMALLER TECHNOLOGY COMPANIES VCT 2 PLC UNAUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007 British Smaller Technology Companies VCT2 plc ("the Company") today announcesits unaudited preliminary results for the year ended 31 December 2007. Chairman's Statement In my first Chairman's Statement I am pleased to report a continuation of thesuccessful realisations of previous years and an increase in dividends over theprevious year. The total return for the Company has however decreased from 90.7pence per share to 89.5 pence per share following some reductions in the valueof existing investments. Investment Portfolio During the year the Company realised its remaining holding in Cozart plcgenerating proceeds of £2.91 million. Cozart plc, a medical diagnostics companyspecialising in testing devises for drugs of abuse, became an investment in 2004on its admission to the Alternative Investment Market (AIM). The total proceedsreceived from our investment in Cozart amounted to £3.17 million (including theproceeds of £2.91 million) compared with an original cost of £0.9 million,generating a total return of 3.5 times. This year has also seen the receipt of the remaining deferred consideration inrespect of the realisation of the investment in Voxar Limited amounting to £0.05million. It is pleasing to note that following the sale of Tamesis Limited to Patsystemsplc in 2005, Tamesis Limited has achieved its earn-out conditions and thatconsequently the Company has received shares in Patsystems plc to the value of£0.29 million. A further 96,084 shares with a value of £0.03 million were issuedin final settlement of the earn-out in February 2008. A total of £2.56 million has been invested during the year, which comprised£1.54 million of new investments and £1.02 million of follow-on investments. The follow-on investments included £0.65 million into Digital Healthcare Limitedto support the marketing roll-out in the USA, £0.25 million into ImmunobiologyLimited and £0.1 million into Silistix Limited, both in support of furtherproduct development, and £0.02 million into Tissuemed Limited for marketingactivities. The new investments during the year comprised unquoted investments of £0.39million into London-based Harvey Jones Limited, a kitchen manufacturer andretailer; £0.35 million into Goole-based RMS Group Holdings Limited, a portoperator and stevedoring business; £0.25 million into Ellfin Home Care Limited,a domiciliary care business and £0.25 million into Cater Plus Limited, aWatford-based contract caterer for the care home sector. In addition, £0.3million has been invested into specialist engineering business PressureTechnologies plc on its admission to AIM. The nature of these investmentsreflects the Company's continued approach to broadening its investment strategyto encompass later stage, more mature investments that are capable of producingmore certain income and capital growth. Financial Results and Dividend The result for the financial year ended 31 December 2007 was a loss of £0.2million, equivalent to 1.22 pence per share. The prior year comparison was aprofit of £1.52 million (9.0 pence per share). The operating loss has decreased26.7% year on year, with increased income being partially offset by the increasein Fund Manager's fees resulting from the higher average net asset valuethroughout the year. The performance of the Company continues to benefit fromthe reduced cost base following the acquisition of British Smaller TechnologyCompanies VCT plc in December 2005. Shareholders have begun to see the benefitof these economies through improved dividend distributions. In 2007, dividends of 3.5 pence per share were paid including a special interimdividend of 1.5 pence per share which was declared following the successfulrealisation of Cozart plc. The board is now proposing a final dividend of 1.5pence per share. If approved, this dividend will be paid on 16 May 2008 toshareholders on the register at 11 April 2008. The final dividend has not beenrecognised in the accounts under International Financial Reporting Standards asthe contractual obligation did not exist at the balance sheet date. The net asset value as at 31 December 2007 was 79.0 pence per share, a decreaseof 0.7 pence per share on the 79.7 pence per share reported at 30 June 2007. The4.7 pence decrease from the net asset value at 31 December 2006 of 83.7 penceper share is in large part attributed to the payment of dividends amounting to3.5 pence per share. Cash and cash equivalents at the end of the year amounted to £4.3 million,representing 33% of net asset value. The board considers this sufficient to takeadvantage of selective new investment opportunities and support the currentportfolio with a view to maximising value. Further realisations will enhancecash reserves and enable further distributions to shareholders in the form oftax free dividends. Shareholder Relations The board continues to run shareholder workshops where investors are invited tomeet members of the board, representatives from YFM Private Equity Limited, theCompany's Fund Manager and the CEOs of one or more of the portfolio investments.The workshops held during 2007 were well attended, as was the latest event heldin February 2008. The board remains committed to these events. Following the withdrawal of the share buy back policy in 2006, the share pricehas remained at a discount to net asset value of approximately 45%, reflectingthe long term nature of VCT shares and a relatively illiquid secondary market.The board will keep under review the policy regarding share buy-backs, but forthe time being it believes utilising cash to support the existing portfolio witha view to increasing value, making selective new investments under the revisedinvestment strategy, which has continued to show evidence of success, andreturning value to shareholders in the form of tax free dividends is theappropriate way forward. The Annual General Meeting of the Company will be held at 12.30 pm on 13 May2008 at 23 Berkeley Square, Mayfair, London W1J 6HE. The Board In December 2007 the Company announced that, with effect from 31 December 2007,Sir Andrew Hugh Smith was to retire as Chairman and non-executive director ofthe Company. The board would like to thank Sir Andrew for his considerable contributionthroughout his time as Chairman and wishes him well for the future. Outlook The changes relating to VCTs announced in the Budget earlier this year,particularly the reduction in the number of employees to 50, being part of thetest for a qualifying company, will have some impact on the VCT industry but,with the board and its Fund Manager already focussing primarily on this market,the changes are expected to have less of an impact on the Company than someothers. The outlook for the next financial year should see further investment activity,a proportion of which is likely to result from further funding requirements ofthe companies in the portfolio as well as new investments. Continued interest ina number of portfolio companies is encouraging, indicating the possibility ofother realisations during 2008. The board remains focussed on continuing to actively support the investments inthe portfolio, maximising and realising value wherever possible and isoptimistic about the growth prospects over the medium to long term. Richard LastChairman 1 April 2008 Unaudited Income Statementfor the year ended 31 December 2007 Notes 2007 2006 £000 £000 Income 339 220Administrative expenses: Fund Management fee (404) (371) Other expenses (213) (228) ------- ------- (617) (599) Operating loss (278) (379) Gain on realisation of investments 1,501 1,421(Losses) gains on investments held at fair value (1,426) 473 ------- -------(Loss) profit on ordinary activities before taxation (203) 1,515 ------- -------Taxation - - ------- -------(Loss) profit for the year from continuing operations (203) 1,515 ------- -------Basic and diluted (loss) earnings per ordinary share 3 (1.22p) 9.00p ------- ------- Unaudited Balance Sheetat 31 December 2007 Notes 2007 2006 £000 £000Assets Non-current assetsFinancial assets at fair value through profit or loss 8,743 9,008 ------- -------Current assetsTrade and other receivables 228 335Cash and cash equivalents 4,337 4,984 ------- ------- 4,565 5,319Liabilities Current liabilitiesTrade and other payables (157) (391) ------- -------Net current assets 4,408 4,928 ------- -------Net assets 13,151 13,936 ------- -------Shareholders' equityShare capital 1,664 1,664Share premium 69 69Capital redemption reserve 88 88Merger reserve 5,525 5,525Other reserve 2 2Retained earnings 5,803 6,588 ------- -------Total Shareholders' equity 13,151 13,936 ------- -------Net asset value per Ordinary share 4 79.0p 83.7p ------- ------- Unaudited Statement of Changes in Shareholders' Equity Share Share premium Merger *Other Retained Total capital account reserve reserves earnings equity £000 £000 £000 £000 £000 £000 Balance at 31 December 2005 1,731 69 5,525 23 5,492 12,840Profit for the year - - - - 1,515 1,515Purchase of own shares (67) - - 67 (419) (419) ------- ------- ------- ------- ------- -------Balance at 31 December 2006 1,664 69 5,525 90 6,588 13,936Loss for the year - - - - (203) (203)Dividends - - - - (582) (582) ------- ------- ------- ------- ------- -------Balance at 31 December 2007 1,664 69 5,525 90 5,803 13,151 ------- ------- ------- ------- ------- ------- The above table includes prior year comparatives. *Other reserves include the capital redemption reserve and other reserve, whichare non-distributable. The Merger reserve was created to account for the difference between the nominaland fair value of shares issued as consideration for the acquisition of theassets and liabilities of British Smaller Technology Companies VCT plc. Thereserve was created after meeting the criteria under section 131 of theCompanies Act 1985 for merger relief. The merger reserve is a non-distributablereserve. Included within retained earnings is £1,381,000 (2006: £1,211,000) in respect ofunrealised gains in respect of investments held at fair value through profit orloss. These gains are not distributable under the Companies Act 1985 andprovisions of the Companies Act 2006. Unaudited Cash Flow Statementfor the year ended 31 December 2007 Notes 2007 2006 £000 £000 Net cash outflows from operating activities 5 (314) (393) ------- -------Cash flows from investing activitiesCosts of acquisition - (172) ------- -------Acquisition net of cash acquired - (172)Purchase of financial assets at fair valuethrough profit or loss (2,852) (276)Proceeds from sale of financial assets at fair valuethrough profit or loss 3,116 2,875 ------- -------Net cash from investing activities 264 2,427 ------- -------Cash flows used in financing activitiesPurchase of own shares and associated warrants - (419)Dividends paid (582) (346) ------- -------Net cash used in financing activities (582) (765) ------- -------Net (decrease) increase in cash and cash equivalents (632) 1,269equivalentsCash and cash equivalents at beginning of the year 4,984 3,834Effect of market value changes in cash equivalents (15) (119) ------- -------Cash and cash equivalents at the end of the year 4,337 4,984 ------- ------- Notes to Financial Statementsfor the year ended 31 December 2007 1. Accounting Policies This preliminary announcement does not constitute statutory accounts within themeaning of Section 240 of the Companies Act 1985. The information for the year ended 31 December 2006 is an extract from thestatutory accounts to that date which have been delivered to the Registrar ofCompanies. Those accounts included an audit report which was unqualified andwhich did not contain a statement under Section 237(2) or (3) of the CompaniesAct 1985. The accounting policies set out in those accounts have continued to befollowed. The statutory accounts for the year ended 31 December 2007, upon whichthe auditors have still to report, will be delivered to the Registrar followingthe Company's annual general meeting. The accounts have been prepared on a going concern basis and in accordance withthe International Financial Reporting Standards (IFRS) as adopted by theEuropean Union, and those parts of the Companies Act 1985 applicable tocompanies reporting under IFRS. The financial statements are prepared in accordance with IFRS andinterpretations in force at the reporting date. The Company has not adopted anystandards or interpretations in advance of the required implementation dates. Itis not expected that adoption of standards or interpretations which have beenissued by the International Accounting Standards Board but have not been adoptedwill have a material impact on the financial statements. 2. Dividends Amounts recognised as distributions to equity holders in the period: 2007 2006 £000 £000 Final dividend for the year ended 31 December 2006 of 2p (2005: £nil) per share 332 -Special interim dividend for the year ended 31 December 2007 of 1.5p (2006: £nil) per share 250 - ------- ------- 582 - ------- ------- The Special interim dividend of 1.5p was declared on 23 October 2007 and paid on30 November 2007 to shareholders on the register on 2 November 2007. A final dividend of 1.5p per Ordinary share in respect of the year to 31December 2007, amounting to £250,000, is proposed. This dividend has not beenrecognised in the year ended 31 December 2007 as the obligation did not exist atthe balance sheet date. 3. (Loss) Earnings per Ordinary Share The (loss) earnings per Ordinary share is based on the loss from ordinaryactivities after tax of £203,000 (2006 profit: £1,515,000) and 16,641,000 (2006:16,878,000) shares being the weighted average number of shares in issue duringthe year. The only potentially dilutive shares are those shares which, subject to certaincriteria being achieved in the future, may be issued by the Company to meet itsobligations under the investment management agreement. No such shares have beenissued or are currently expected to be issued. There are, therefore, consideredto be no potentially dilutive shares in issue at 31 December 2007 or 31 December2006. Consequently, basic and diluted earnings per share are the same for theyears ended 31 December 2007 and 31 December 2006. 4. Net Asset Value per Ordinary Share The net asset value per Ordinary share is calculated on attributable assets of£13,151,000 (2006: £13,936,000) and 16,641,257 (2006: 16,641,257) shares inissue at the year end. 5. Reconciliation of Net (Loss) Profit on Ordinary Activities beforeTaxation to Net Cash Outflow from Operating Activities 2007 2006 £000 £000 (Loss) Profit on ordinary activities before taxation (203) 1,515 ------- -------Decrease in accruals (7) (49)(Increase) decrease in prepayments and accrued income (29) 35Gains on realisation of investments in the year (1,501) (1,421)Losses (Gains) on investments held at fair value 1,426 (473) ------- -------Net cash outflow from operating activities (314) (393) ------- ------- 6. Total Return per Ordinary Share The total return per Ordinary share takes into account the closing net assetvalue per share and cumulative dividends paid per share at the balance sheetdate to eligible founder shareholders. For the year ended 31 December 2007 2006 2005 2004 2003 Net asset value per Ordinary share 79.0p 83.7p 74.2p 97.1p 84.6pCumulative dividend paid per Ordinary share 10.5p 7.0p 7.0p - - ------- ------- ------- ------- -------Total Return per Ordinary share 89.5p 90.7p 81.2p 97.1p 84.6p ------- ------- ------- ------- ------- 7. Annual Report Copies of the full financial statements for the year ended 31 December 2007 willbe available to the public at the registered office of the Company at SaintMartins House, 210-212 Chapeltown Road, Leeds, LS7 4HZ. For further information, please contact: David Hall YFM Private Equity Limited Tel: 0161 832 7603 Alan Davies YFM Private Equity Limited Tel: 0113 294 5000 Jonathan Becher Teather & Greenwood Limited Tel: 0207 426 3269 Michael Bellamy Teather & Greenwood Limited Tel: 0207 426 9547 This information is provided by RNS The company news service from the London Stock Exchange