Seneca Growth Regulatory News (HYG)

29 Apr 2005 10:22

BioScience VCT plc29 April 2005 BioScience VCT plc29 April 2005 Preliminary Results for the year ended 31 December 2004 Financial highlights (figures as at 31 December 2004): 2004 2003Net assets £6,299,000 £6,911,000Net revenue before tax £(6,000) £48,000(Loss)/revenue return per share* (0.1)p 0.5pNet asset value per share 82.9p 93.9pMid-market share price at end of year 80p 70p * based on weighted average of 7,535,445 shares in issue in 2004. The Chairman of BioScience VCT plc, Dr Paul Nicholson, included the followingpoints in his statement to shareholders: I am pleased to present my third annual report to shareholders in BioScienceVCT. Investment policy As I have stressed in my previous statements, we follow a rigorous investmentapproach that is designed to identify companies that we believe combine a highquality management team with a strong scientific heritage. During 2004, we madeinvestments into several unquoted companies and one AIM-listed company, as wellas adding to our stake in one of our existing investments. The fund did not make as many investments in 2004 as had been anticipated,despite considering a large number of opportunities. Our team met with themanagement teams of 34 companies, of which we invested into 4 companies. Anumber of others are still under consideration for investment. The principalreason for the deliberately cautious approach to concluding investments wasthat, whilst the UK stock market as a whole was buoyant in 2004, many unquotedhealthcare companies suffered from the dearth of institutional investorinterest, a situation which may not change in the near future. The Board tookthe view during 2004 that it was crucial when considering potential investmentsthat the future funding needs of potential investee companies formed animportant part of the assessment process. The Board has therefore sought tofocus the fund in the following way: • Seek to ensure that potential investee companies are raisingsufficient funds to meet their needs for a reasonable period of time • Seek to invest alongside co-investors who have sufficient investablefunds to make a meaningful contribution to future potential funding rounds • Examine funding opportunities into companies that are at the pre-IPOstage of development • Ensure that investee companies are being run from the outset ofinvestment by the fund with a specific focus on the likely exit for investorsthrough a trade sale of the company or an IPO. Net Asset Value ("NAV") The NAV at 31 December 2004 was 82.9p, a fall of 11p when compared with theequivalent figure at the end of 2003. The reduction in the NAV was causedprimarily by a revaluation of two of our unquoted investments. One of therevaluations was due to the impact of a follow-on round of financing that wascarried out at a valuation that was significantly lower than our previousinvestment. The other revaluation was made in order to take a prudent approachgiven the poor funding environment for unquoted biotech companies. UnderBritish Venture Capital Association rules for valuing investments into unquotedcompanies, we are obliged to value the whole of our investment at the shareprice used in the most recent third-party funding round. The net revenue loss for 2004 was £6,000. The reduction in the revenue returncompared with 2003 was driven by the fall in interest income that was earned asfunds continued to be moved out of the money markets into investments. Thedirectors do not propose the payment of a dividend for 2004. In theshort-term, it is likely that the availability of dividend payments will berestricted by the limited income that is generated by the Company's portfolio ofinvestments. However, in the medium-term, we will seek to realise capital gainsfrom investment disposals for distribution to shareholders. In order to allowthe Company to distribute capital gains to shareholders, the directors willdispense with the Company's investment company status at the appropriate time.This will not have any impact on VCT status. Share price The company's mid-market share price stood at 80p at the end of 2004 and, as isnormal with a VCT in the first few years, there have been only a small number oftransactions in the shares. We will be asking shareholders at the annualgeneral meeting to renew the board's powers to purchase shares in the market forcancellation. This should assist the marketability of the shares and helpprevent the shares from trading at a wide discount to NAV. During 2004, werepurchased 3,000 shares for cancellation at a price of 75p and 3,000 shares ata price of 70p. The Board is also seeking your authority to renew the shareholder approval toissue further shares up to 10% of the existing share capital. However, we donot anticipate any immediate use of this authority. Share premium account In addition, we are also asking shareholders to approve the cancellation of partof the share premium account. In order to do this, providing shareholdersapprove the necessary resolution at the AGM, we will seek approval from the HighCourt to make the change to our balance sheet structure. The cancellation ofthe share premium account will allow us to continue making share buybacks whichat present are restricted by the limited availability of distributable reserves. VCT qualifying status The company's compliance with the Inland Revenue's conditions for VCT approvalis monitored by the Board. As a result of the limited availability ofinvestment opportunities during 2004 into companies that the Board believed hadthe appropriate combination of attractive prospects, a sensible valuation, and asuitable future funding profile, the company has placed a sum of money into anon-interest bearing account in order to meet with those VCT regulations whichrequire that 70% of investments are in qualifying companies at the end of thecompany's third accounting period. (Money on non-interest bearing account isnot considered to be an investment for these purposes). However, we have beenadvised that as a result of this, the VCT could be infringing certain other VCTregulations. Your Board and our advisers are presently discussing the matterwith the Inland Revenue and we are confident that the current situation will berectified shortly. We will provide shareholders with an update as soon as weare in a position to do so. Prospects The general environment for investing in bioscience companies in the UK has beencharacterised in recent months by a comparatively limited availability ofcapital. Despite the large number of early-stage bioscience companies, therelatively small number of investors who are active at present in the biosciencesector means that the ability for bioscience companies to secure access tosufficient capital on reasonable terms to meet their ongoing needs is oftendifficult. As described above, the consequence of this is that when examininginvestment opportunities for BioScience VCT, we have a particular focus on aparticular company's likely requirements for further investment in the future. We are evaluating a number of potential investment opportunities and expect toconclude several of these in the near future. Dr Paul Nicholson Chairman Statement of Total Return (incorporating the Revenue Account) For the period ended 31 December 2004 Year ended 31 December 2004 Year ended 31 December 2003 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000 Realised gains on investments - - - - 35 35 Unrealised (loss)/gains on investments - (677) (677) - 117 117Income 222 - 222 229 - 229Investment management fee (52) (157) (209) (50) (150) (200)Other expenses (176) - (176) (131) - (131) ------ ----- ----- ----- ----- -----Return on ordinary activitiesbefore tax (6) (834) (840) 48 2 50Tax on ordinary activities - - - (9) 9 - ------ ----- ----- ------ ----- -----Return on ordinary activitiesafter tax (6) (834) (840) 39 11 50Dividends - - - (37) - (37) ------ ----- ----- ------ ----- -----Transfer (from)/to reserves (6) (834) (840) 2 11 13 ------ ----- ----- ------ ----- -----Return per share (0.1)p (11.1)p (11.2)p 0.5p 0.2p 0.7p Balance sheet 31 December 2004 31 December 2003 £000 £000 £000 £000Fixed asset investments 1,387 857Current assets Investments - 5,969 Debtors 210 9 Cash at bank 4,742 243 ------ ------ 4,952 6,221 Creditors (amounts falling due within oneyear) (40) (167) ------ ------ 6,054Net current assets 4,912 ------ ------Net assets 6,299 6,911 ------- ------- Called-up equity share capital 3,798 3,679Share premium 3,422 3,312 Capital redemption reserve 5 2Capital reserve - realised (365) (208) - unrealised (553) 124Revenue reserve (8) 2 ------- -------Total equity shareholders' funds 6,299 6,911 ------- -------Net asset value per share 82.9p 93.9p Cash flow statementFor the period ended 31 December 2004 31 December 2004 31 December 2003 £000 £000 £000 £000Net cash outflow from operating (454) (74)activitiesFinancial investment:Purchase of investments (1,207) (617)Sale of investments - 50 ----- ----- Net cash outflow from financialinvestment (1,207) (567)Net cash inflow from management ofliquid resources: Decrease in cash deposits 5,969 565 Dividends paid - equity (37) (54)Net cash inflow/(outflow) before 4,271 (130)financingFinancing:Issue of ordinary shares 244 183Share issue expenses (12) (9) Repurchase of ordinary shares (4) (3) ----- ------Total financing 228 171 ------ ------Increase in cash resources 4,499 41 ------ ------ Investment Portfolio Summary As at 31 December 2004 Investments 31 December 2004 Total cost Carrying value £000'sUnlisted investments Scancell Ltd 500 375 Insense Technologies Ltd 100 100 Angel Biotechnology Ltd 450 119 DxS Ltd 263 263 Purely Proteins Ltd 300 300AIM-listed investments Cobra Biomanufacturing plc 136 64 Dawmed Systems plc 101 72 Evolutec Group plc 75 74Listed investments GTC Biotherapeutics Inc 15 20 1,940 1,387 The above summary of results for the period ended 31 December 2004 does notconstitute statutory financial statements within the meaning of Section 240 ofthe Companies Act 1985 and has not been delivered to the Registrar of Companies. Statutory financial statements will be filed with the Registrar of Companiesin due course; the auditors' report on those financial statements under S235 ofthe Companies Act 1985 is unqualified and does not contain a statement underS237(2) or (3) of the Companies Act 1985. A copy of the full annual report and financial statements for the period ended31 December 2004 is expected to be posted to shareholders shortly and will beavailable to the public at the registered office of the company at Kett House,Station Road, Cambridge, CB1 2JY. This information is provided by RNS The company news service from the London Stock Exchange