Br.small Co.2 Regulatory News (BSC)

14 Aug 2007 11:14

British SmallerTechCompaniesVCT2PLC14 August 2007 14 August 2007 BRITISH SMALLER TECHNOLOGY COMPANIES VCT 2 PLC Unaudited interim results for the 6 months to 30 June 2007 British Smaller Technology Companies VCT 2 plc ("the Company"), the venturecapital trust specialising in growing smaller technology companies across arange of industrial sectors, today announces its unaudited interim results forthe six months to 30 June 2007. Chairman's Statement The first six months to 30 June 2007 has been characterised by furthersuccessful fundraisings by the VCT market as a whole, continued interest frombuyers in a number of our investments, further development of out policy ofinvesting in more mature businesses and maintenance of the recently resumeddividend policy. The overall result has seen an increase in the net asset valueover that reported at the end of the same period last year but a reduction of 2pence per share, after taking account of the dividend, from 31 December 2006. Operations The first half of this year has seen your Company complete £1.06 million ofinvestments. These comprised £0.94 million of new investments and £0.12 millionof funding for existing portfolio investments. The new investments were £0.39million in Harvey Jones Limited (kitchen retailer), £0.25 million in Cater PlusServices Limited (provider of catering services to the care home sector) and£0.3 million in Pressure Technologies plc (specialist engineering business).This level of activity has maintained after the end of the period with a newinvestment of £0.35 million in Hull-based shipping and logistics supportbusiness RMS Limited. The further investments in the period saw £0.1 millioninvested in Silistix Limited and a small investment into a £1 million fundingpackage for Tissuemed Limited. Shortly after the end of the period further investments have been made inDigital Healthcare Limited and Immunobiology Limited. The investment in DigitalHealthcare supports its US expansion strategy, however as is sometimes the casethis funding round was entered into at a lower valuation than previous rounds.This has been taken into account in the half year valuation exercise that hasplayed a large part in the reduction of the overall value of the portfolio. There were no realisations in the period but there remains significant interestin some of the investments in the portfolio which may well lead to furtherrealisations in the second half of the year. The ability demonstrated by some of the portfolio companies to continue to raisefunds in support of their development provides encouragement in the medium termoutlook. The acquisition interest in the portfolio gives confidence for thesecond half of the year and the continuing strategy to invest in later stagecompanies is intended to deliver a greater balance between income and growthover the medium term. Financial Results The results for the six months ended 30 June 2007 produced an operating loss of£166,000 or 1.0 pence per share (30 June 2006: loss of £188,000 or 1.1 pence pershare). The reduction in the operating loss arises as a result of the continued costreductions that have arisen following the acquisition of British SmallerTechnology Companies VCT in December 2005. Income generation, whilst broadly inline with the same period in 2006, has increased by £80,000 from the latter halfof 2006. There are £149,000 of losses arising from unrealised valuationmovements, which combine with the operating loss and a small loss on realisationof gilts resulting in a loss for the period of £345,000 (2.07 pence per share). Cash and cash equivalents at the period end were £3.1 million, representing 23%of net asset value. Your board considers that this is sufficient to support thecurrent portfolio and to continue to pursue its investment strategy in selectivenew opportunities. Further realisations would enhance this cash reserve as wellas generating the ability to continue to distribute an appropriate proportion toshareholders as a tax free dividend. Shareholder Relations In addition to the required statutory announcements your board continues to runshareholder workshops where investors are invited to meet members of the board,representatives from YFM Private Equity Limited, the Investment Adviser and theCEOs of one or more of the portfolio investments. In the last six months twoworkshops were held with a total nearing 150 investors and their advisersattending. Your board remains committed to this program. I have previously reported that your board withdrew the Company's share buy backpolicy for an indefinite period during 2006. The share price has remained at adiscount of approximately 45% to the announced net asset value. This reflectsthe long term nature of VCT shares and the effects of the VCT legislation thatonly offers the 30% income tax rebate on the subscription to a new issue ofshares leading to an illiquid after market. However, your board has been able to resume dividend payments which are receivedacross the whole shareholder base, and continues to support the existingportfolio companies and pursue its investment strategy which has a stronger biastowards later stage businesses. Outlook The immediate outlook for the second half of the year should see furtherinvestment activity. The interest in some of the portfolio is encouragingindicating the possibility of realisations during the latter part of 2007. Aproportion of the portfolio remains at an early stage of development and maywell require further funding which brings its own risks. Nonetheless andparticularly taking into consideration the broadening of the investmentstrategy, the board remains optimistic about the growth prospects over themedium to longer term. Sir Andrew Hugh Smith 14 August 2007 Income Statement For 6 months ended 30 June 2007 Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000 NotesIncome 152 149 220 ------- ------- -------Administrative expenses:Investment advisory fee (205) (190) (371)Other expenses (113) (147) (228) ------- ------- ------- (318) (337) (599) ------- ------- -------Operating loss (166) (188) (379) (Losses) gains on realisation of investments (30) 28 1,421 (Losses) gains on investments held at fair value (149) 179 473 ------- ------- -------(Loss) profit on ordinaryactivities before taxation (345) 19 1,515Taxation 2 - - - ------- ------- -------(Loss) profit for the periodfrom continuing operations (345) 19 1,515 ======= ======= =======Basic and diluted (loss)earnings per Ordinary share 3 (2.07)p 0.11p 9.00p ======= ======= ======= Balance Sheet As at 30 June 2007 Unaudited Unaudited Audited 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000 NotesAssetsNon-current assetsInvestments at fair value throughprofit or loss 9,964 9,588 9,008 ------- ------- -------Current assetsTrade and other receivables 241 193 335Cash and cash equivalents 3,108 2,733 4,984 ------- ------- ------- 3,349 2,926 5,319LiabilitiesCurrent liabilitiesTrade and other payables (55) (74) (391) ------- ------- -------Net current assets 3,294 2,852 4,928 ------- ------- -------Net assets 13,258 12,440 13,936 ======= ======= ======= Shareholders' equityShare capital 1,664 1,664 1,664Share premium 69 69 69Capital redemption reserve 88 88 88Merger reserve 5,525 5,525 5,525Other reserve 2 2 2Retained earnings 5,910 5,092 6,588 ------- ------- -------Total Shareholders' equity 13,258 12,440 13,936 ======= ======= =======Net asset value per Ordinary share 4 79.7p 74.8p 83.7p ======= ======= ======= Unaudited Statement of Changes in Shareholders' Equity For the 6 months ended 30 June 2007 Share Share Merger Other Retained Total capital premium reserve reserves* earnings equity account £000 £000 £000 £000 £000 £000 Balance at 31 December 2006 1,664 69 5,525 90 6,588 13,936Loss for the period - - - - (345) (345)Dividends paid - - - - (333) (333) ------- ------- ------- ------- ------- -------Balance at 30 June 2007 1,664 69 5,525 90 5,910 13,258 ======= ======= ======= ======= ======= ======= * Other reserves include the capital redemption reserve and other reserve. Summarised Cash Flow Statement For the 6 months ended 30 June 2007 Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000Net cash outflow from operatingactivities (273) (286) (393) ------- ------- -------Net cash (used in) from investingactivities (1,195) 27 2,427 ------- ------- -------Net cash (used in) financing (333) (765) (765) ------- ------- -------Net (decrease) increase in cash andcash equivalents (1,801) (1,024) 1,269 Cash and cash equivalents at thebeginning of the period 4,984 3,834 3,834 Effect of market value changes incash equivalents (75) (77) (119) ------- ------- -------Cash and cash equivalents at theend of the period 3,108 2,733 4,984 ======= ======= ======= Notes to the Financial Statements 1. The interim financial statements, which have been approved by thedirectors, are unaudited and do not constitute full financial statements asdefined in section 240 of the Companies Act 1985. The comparative figures forthe year ended 31 December 2006 do not constitute full financial statements andhave been extracted from the Company's financial statements for the year ended31 December 2006. Those accounts were reported upon without qualification by theauditors and have been delivered to the Registrar of Companies. The financial statements for the year ended 31 December 2006 were prepared inaccordance with the International Financial Reporting Standards (IFRS), asadopted by the European Union, and those parts of the Companies Act 1985applicable to companies reporting under IFRS. The financial statements are prepared in accordance with the 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. Taxation charge Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000(Loss) profit on ordinaryactivities multiplied by standard smallcompany rate of corporation tax in the UK of 19% (2006:19%) (66) 4 288 Effect of:UK dividends received (3) - (4)Non taxable losses (profits) on investments 34 (39) (360)Excess management expenses 35 35 76 ------- ------- -------Current tax charge for period - - - ======= ======= ======= The Company has no provided, or unprovided, deferred tax liability in eitheryear. Deferred tax assets in respect of losses have not been recognised as managementdo not currently believe that it is probable that sufficient taxable profitswill be available against which the assets can be recovered. Due to the Company's status as a venture capital trust, and the continuedintention to meet the conditions required to comply with Chapter 3 of Part 6 ofthe Income and Taxes Act 2007, the Company has not provided deferred tax on anycapital gains or losses arising on the revaluation or realisation ofinvestments. 3. The (loss) earnings per Ordinary share is based on the net loss from ordinaryactivities after tax of £345,000 (30 June 2006: net profit of £19,000 and 31December 2006: net profit of £1,515,000) and on 16,641,000 (30 June 2006:17,120,000 and 31 December 2006: 16,878,000) shares, being the weighted averagenumber of shares in issue during the period. The Company has no securities that would have a dilutive effect and hence basicand diluted (loss) earnings per Ordinary share are the same. 4. The net asset value per Ordinary share is calculated on attributable assetsof £13,258,000 (30 June 2006: £12,440,000 and 31 December 2006: £13,936,000) and16,641,257 (30 June 2006 and 31 December 2006: 16,641,257) shares in issue atthe period end. The Company has no securities that would have a dilutive effect and hence basicand diluted net asset value per Ordinary share are the same. 5. Copies of the interim report can be obtained from the Company's registeredoffice: Saint Martins House, 210-212 Chapeltown Road, Leeds, LS7 4HZ. For further information, please contact: David Hall, YFM Private Equity Limited Tel: 0161 832 7603Alan Davies, YFM Private Equity Limited Tel: 0113 294 5000Jonathan Becher, Teather & Greenwood Limited Tel: 0207 426 3269Michael Bellamy, Teather & Greenwood Limited Tel: 0207 426 9547 This information is provided by RNS The company news service from the London Stock Exchange