Last checked at 
24 Aug 2009 07:00
Financial highlightsPer ordinary share (pence) 30.06.09 31.12.08 30.06.08Net asset value 24.3 26.8 28.7DividendsDividend paid (1) - 2.8 2.8Cumulative dividend (2) 53.7 53.7 53.7Total return (3)SPARK VCT plc 78.0 80.5 82.4Return including tax benefits (6) 98.0 100.5 102.4Total return to former shareholders of:Quester VCT 2 plc per 100p invested inshares of that company (4) 63.9 66.5 68.4Return including tax benefits (6) 83.9 86.5 88.4Quester VCT 3 plc per 100p invested inshares of that company (5) 37.7 40.1 41.9Return including tax benefit (6) 57.7 60.1 61.9
(1) Dividend paid in the financial period ended on the date stated.
(2) Cumulative dividends paid by SPARK VCT plc.
(3) Net asset value plus cumulative dividend per share to ordinary shareholders in SPARK VCT plc since the launch of the Company (then called Quester VCT plc) in April 1996.
(4) Total return to former shareholders in Quester VCT 2 plc, launched inMarch 1998, which merged with SPARK VCT plc (then called Quester VCT plc) inJune 2005, the share exchange ratio for former shareholders in Quester VCT 2plc being 1.0249.(5) Total return to former shareholders in Quester VCT 3 plc, launched inFebruary 2000, which merged with SPARK VCT plc (then called Quester VCT plc)in June 2005, the share exchange ratio for former shareholders in Quester VCT3 plc being 0.9816.
(6) Return after 20% income tax relief but excluding capital gains deferral.
The Directors do not recommend an interim dividend.
The Interim management report comprises the Chairman's statement, the Investment manager's report, the fund summary and note 8 to the condensed financial statements.
Chairman's statementINTRODUCTION
This is my first report to shareholders since your new Board was confirmed in office at the Annual General Meeting in May 2009.
Since then, your Board has been gaining a deeper understanding of the portfolio, in particular the unquoted venture investments, assessing the Manager's and other service providers' performance and considering the Company's strategy both in the short and the long term. We are also addressing certain issues that arose in the period before we took office, as shareholders requested at the Annual General Meeting.
SPARK Ventures plc, the parent company of the Company's manager, SPARK Venture Management Limited, recently announced a proposal for a management buyout of its investment fund management business, which includes the contract for the provision of investment management services to the Company. SPARK Ventures plc also announced proposals for a change to its investment strategy, including the cessation of new investments on its own account. The latter proposals have been approved by its shareholders but the vote to approve the proposed buyout of its fund management business
was adjourned. Following third party expressions of interest in acquiring SPARK Ventures plc it has also entered into an offer period. Presently, the
outcome of these developments is uncertain.Your Board continues to monitor the situation closely, with a view to ensuring that the interests of shareholders in the Company are best served. We will update shareholders further once we
arein a position to do so.PERFORMANCE
Shareholders will be aware that financial markets remain deeply troubled. Despite the rise in some quoted equity prices since March 2009, corporate liquidity remains very tight and trading in very many sectors remains subdued. Early stage companies of the sort to which much of venture capital trust investment is restricted are suffering an unusually difficult time. Slow trading tends to delay their break even point and often forces them to raise more capital, bank finance of all sorts is severely restricted, and equity investors are wary.In the portfolio, many of the less established, early stage companies are currently operating at a severely reduced level of activity while others remain vulnerable to slower than expected sales growth and a consequent need for more capital than previously anticipated to support market development. Even solid companies with proven business models frequently find that in raising fresh capital they have to accept lower valuations than those that were placed on them as recently as twelve months ago. Over the six months to 30 June 2009, the focus of the Manager has been on working with the portfolio companies, with a particular emphasis on cost control and rates of cash burn.There have been no realisations in the 6 months to 30 June 2009. In view of the poor visibility on future realisations, no new investments have been made in the period under review and we do not anticipate any new investments being made prior to the next Annual General Meeting.With these factors in mind we have reviewed the carrying values of our unquoted portfolio.The result of this review, and of changes elsewhere in the portfolio, has reduced net asset value from 26.8 pence per share on 31 December 2008 to 24.3 pence per share on 30 June 2009. Clearly such a reduction is disappointing. However, in the case of Sift Group Limited,the valuation change reflects a general fall in comparable valuation measures, rather than a dramatic deterioration in that company's performance. The reductions in the valuations of Isango! Limited and We7 Limited have been made against the background of difficult trading in very tough markets and the upcoming requirement in each company to raise the next round of venture capital finance and the possibility that such finance will only be available on more stringent terms than hitherto. As announced in the Interim Management Statement on 19 May 2009, Skinkers Limited had earlier in the year faced a similar requirement for additional finance at a significantly reduced valuation which has resulted in the lower valuation. Further information on the valuation changes is given in the Investment manager's report on pages 6 to 8.Such a reduction in the net asset per share, following several years of similar attrition, can never be good news for shareholders but we are convinced that all parties will benefit from a realistic approach to valuations in these present difficult times.
NET ASSETS
The movement in net assets is summarised in the table below:
Venture Bonds capital and net investments current GBP'000 assets Total Pence per GBP'000 GBP'000 ShareNet asset value at 31 December 18,435 11,296 29,731 26.82008Net gain on disposal of 60 - 60 -investmentsNet loss on revaluation of (2,445) (17) (2,462) (2.2)investmentsIncome - 131 131 0.1Operating expenses - (483) (483) (0.4)Net investment (8) 8 - -
Net assets before dividends and 16,042 10,935 26,997 24.3
sharebuy-backsDividend paid - - - -Share buy-backs - (56) (56) -
Net asset value at 30 June 2009 16,042 10,879 26,921 24.3
STRATEGY
The reaction of some investors to the current global financial crisis has been to liquidate venture portfolios at whatever reduced prices they can obtain. Such a policy seems short sighted to your Board and one which would not best serve shareholders' interests especially in view of the special tax status applicable to the Company as a venture capital trust.
As required by the Articles of Association, shareholders will be asked at the next Annual General Meeting to consider a resolution on the continuation of
the Company as a venture capital trust (a "Continuation Vote").The Board believes many of our investors, in particular those that rolled over capital gains on their initial investment into one of the former Quester VCT's, would be significantly disadvantaged were the Company to cease to qualify as a VCT, by reason of winding up or otherwise. In such circumstances, some investors
might find that their tax liabilities would exceed the exit proceeds available to them.
Accordingly, one principle of strategy that appears clear to your Board is that it will be in the best interests of shareholders to maintain the Company as a qualifying VCT.Your Board continues to review the strategic options for the
Company which will not only include the investment focus and management of the portfolio but also how realisation proceeds and cash surpluses may best be returned to shareholders.
On the question of continued VCT qualification I am glad to report that on 30 June 2009 75.3% of total investments were in qualifying holdings. VCT legislation requires a minimum of 70% of total investments to be in such qualifying holdings and we will continue to monitor the position carefully.
Whilst your Board will be recommending that shareholders support the Continuation Vote, we have agreed with the Manager not to make any new venture investments, other than in exceptional circumstances, at least until the Continuation Vote has taken place.The Company will, however, continue to support its more promising investments with follow on funding where appropriate.
DIVIDENDS AND SHARE PRICE
One of the obvious attractions of VCT investment is the possibility of tax free dividends and your Board is considering a policy of annual dividends, whether or not short term profits have been made, providing the Company has sufficient liquidity and distributable reserves. We will address this issue at the year end thus giving shareholders the opportunity to vote upon any dividend that may be recommended.
The Board is concerned about the extreme discount between net asset value and the share price available to those shareholders wishing to sell. We are not opposed in principle to share buy-backs but, for the immediate future, given the recessionary economic conditions and in order to enable resources to be concentrated on the development of existing portfolio companies, the Board will use this mechanism with caution. We will also examine other mechanisms of providing liquidity to shareholders.
CONCLUSION
Your Board is very conscious that shareholders have seen a substantial decline in the net asset value per share and in the quoted market share price over the last three years. This has been exacerbated by the current crisis in financial markets with M&A markets subdued and early stage companies struggling.
Nevertheless we believe that the future, whilst always uncertain, may offer more opportunities than are now evident and will be doing everything in our power to ensure the success of this Company.
We shall assiduously evaluate strategic alternatives and strive to adopt one that is in shareholders' best long term interests.
Robin FieldChairman21 August 2009
Directors' responsibility statement
The Directors confirm to the best of their knowledge that:
- the condensed set of financial statements contained within the Half-Yearly Financial Report have been prepared in accordance with the Accounting Standards Board's Statement 'Half-Yearly Financial Reports'; and
- the Chairman's statement includes a fair review of the information requiredby Disclosure and Transparency Rule 4.2.7R of important events that haveoccurred during the first six months of the financial year and their impact onthe condensed financial statements, and a description of the principal risksand uncertainties for the remainder of the financial year; and
- the condensed financial statements (note 8) includes a fair review of the information concerning related parties transactions as required by Disclosure and Transparency Rule 4.2.8R.
The half yearly financial report was approved by the Board on 21 August 2009 and the above responsibility statement was signed on its behalf by the Chairman.
Investment manager's report
Over the six months to 30 June 2009, members of the SPARK management team havecontinued to be focused on working with the portfolio companies, with aparticular emphasis on cost control and rates of cash burn, against thebackground of the risk of slower than expected revenue growth and the reducedavailability of venture capital finance.Generally, the commercial performance of businesses within the portfolio hasbeen "on plan" following the downward revision to expectations at the end oflast year. Nevertheless, the economic and therefore funding environmentcontinues to be very uncertain, with the result that all but one of thevaluation movements have been downwards in the period. Of these downwardrevaluations, a substantial proportion by value have been triggered becausevaluation metrics generally are still declining in the capital markets -whether this is reflected in the refinancing terms or in comparablerevenue/earnings multiples.The more developed companies within the portfolio represent a reasonablystable base - in particular, Elateral Holdings Limited, Imagesound Limited andSift Group Limited.Among the less established, early stage companies, however,more are currently obliged to operate in "survival" mode while others remainvulnerable to slower than expected sales growth and a consequent need for morecapital than previously anticipated to support the market development phase.
Against this background, it is important that the Fund retains resources to continue developing the value of the more promising portfolio companies and to maintain its position in follow-on funding rounds.
With the M&A market effectively being closed, we continue tobelieve that achievement of significant profitable exits will not be possiblebefore 2011 at the earliest. There were no realisations during the six monthsto 30 June 2009, although 225,000 was returned in cash by one of theportfolio companies, Community Internet Europe Limited, following the sale ofa subsidiary.
In view of the above, and given the currently poor visibility on the generation of cash proceeds from realisations, no new investments were made during the six months to 30 June 2009.
Progress of investments
The six months to 30 June 2009 saw significant follow-on investment in two companies in the portfolio. Agreement was reached in two other cases for follow-on investment to be completed during the current quarter.
Company Sector
'000
Follow-on investments completed in the six months to 30 June 2009:Secerno Limited TMT 202Skinkers Limited TMT 122Other companies (2) 28 352Follow-on investments committed, for completion in the quarter to 30 September 2009:UniServity Limited TMT 83Vivacta Limited Healthcare 142 225
The additional funding of Secerno Limited, which specializes in the supply of software and appliances to protect against internal and external threats to
databases, has been provided to support that its market development phase.This followed an earlier follow-on round in mid-2008 but at a lower valuation(anticipated in the financial statements at 31 December 2008). Skinkers Limited,a software company delivering information broadcast solutions to large enterprises, faced a similar requirement for additional finance, as its sales cycle had been impacted by the downturn in the financial services sector. The Fund contributed in a follow-on round at a significantly reduced valuation,
as part of arrangements which also involved the spin-off of the smaller consumer activity (Livestation) and the focusing of the company on its mainstream activities.
Looking ahead to the quarter ending 30 September 2009, in the caseof Vivacta Limited, the Fund has committed its share of a new round, structured as an extension of the Series B round completed in November 2007, which it is expected will fund the company through to regulatory approval of the first of its point-of-care diagnostic tests, for TSH (thyroid function). The Fund has alsoagreed to provide bridge finance to UniServity Limited ahead of a third-party funding round being planned for later in the year.
Significant recent business developments within the portfolio are summarised below:
- Elateral Limited: had an excellent year to 31 March 2009 delivering 44%revenue growth, ahead of budgeted expectations. The company won a number ofnew customer contracts including Ciena, Linksys, NetApp, Toyota and Symantec.At the same time, it renewed and extended its relationship with a number ofexisting customers including SAP, Coca Cola and New Balance and celebrated its10th year in partnership with British Telecom.- Imagesound Limited: has seen sales on target for music services, but fallenbehind on hardware sales. Nevertheless, margins have remained robust keepingthe company profitable.- Isango! Limited: an early stage online travel website company offering usersan authoritative source of travel experiences such as holiday tours,sightseeing, attractions and activities, was impacted in autumn 2008 by thedownturn in the travel sector. More recently, while revenues have improved somewhat and the company has recently launched its new website which broadensthe range of its travel and holiday offering, growth continues to be slower
than had been expected.
- Sift Group Limited: has performed solidly in anticipating revenues for theyear ahead of 2008. However, margins have been squeezed and although profitsare expected, they will be lower than the last year.
- UniServity Limited: is close to signing its first sales in the US market which would be a major step in the development of the business, particularly as the number of new contracts currently coming up for tender in the UK is low.The company is awaiting the results of a trial in China, following the framework agreement for the promotion of the company's web-based learning platform in that country.
In relation to Gemini Holdings Limited, the fresh milestones set by the SPARKmanagement team (following the company's initial difficulties) were not met. The decision was therefore taken to provide no further support for this company and to seek to recover as much as possible of the cash invested.
Valuation changes
The valuations of the unquoted investments have been reviewed as at 30 June 2009 on the basis of the International Private Equity and Venture Capital Valuation Guidelines, having regard mainly to (i) prices of recent financing rounds and/or the terms of financing rounds expected in the relatively near
future, (ii) earnings multiples and (iii) industry valuation benchmarks and/or M&A valuation criteria.
The net reduction in valuation of unquoted venture capital investments isas follows:Company GBP'000Elateral Holdings Limited 207Isango! Limited (750)Sift Group Limited (731)Skinkers Limited (563)We7 Limited (408)Others (2) (114) (2,359)
In the case of Sift Group Limited, the valuation change reflects a general fall in comparable valuation measures given the current business and market conditions, rather than a dramatic deterioration in the business performance.
Among the early stage companies in the TMT sector, Skinkers Limited has recently raised additional finance at a lower valuation. The reductions in the valuations of Isango! Limited and We7 Limited have been made against the background of difficult trading in very tough markets and the upcoming requirement in each company to raise the next round of venture capital finance and the possibility that such finance will only be available on more stringent terms than hitherto.
The recent trading results of Elateral Holdings Limited have supported an upward revaluation of the investment on the basis of an earnings multiple.
Movements in valuation of the quoted venture capital investments over the sixmonths produced a net reduction of 86,000 in the overall valuation of thisportfolio.Bond portfolio
During the half year the bond portfolio was reduced by 1.0 million upon the maturity of one of the holdings, the proceeds being reinvested in a global treasury fund.
Outlook
Progress will depend greatly on the return of more favourable conditions inthe M&A markets, permitting the more mature investments in the portfolio to besold when better valuations can be achieved. Meanwhile, the development ofsome of the early stage companies continues to be dependent on success inwinning customer contracts and favourable conditions for the raising ofadditional venture capital to support the next phase of development, both ofwhich requirements carry significant risks at the present time.SPARK Venture Management LimitedManager21 August 2009
Fund summary as at 30 June 2009
Cost (1) % of Industry Valuation Equity fund sector GBP'000 GBP'000 % held by valueFifteen largest venture capitalinvestmentsElateral Holdings Limited TMT 1,009 1,990 23.4% 7.4%Imagesound plc TMT 2,848 1,920 11.7% 7.1%Sift Group Limited TMT 2,395 1,518 21.1% 5.6%Vivacta Limited Healthcare 1,067 1,336 7.3% 5.1%Cluster Seven Limited TMT 1,569 1,197 9.0% 4.4%UniServity Limited TMT 1,000 1,000 16.5% 3.7%Workshare Limited TMT 695 909 1.9% 3.4%Level Four Software Limited TMT 855 855 7.8% 3.2%Secerno Limited TMT 1,180 841 6.9% 3.1%Perpetuum Limited TMT 686 585 7.0% 2.2%Skinkers Limited TMT 1,178 529 9.7% 2.0%Haemostatix Limited Healthcare 502 502 12.5% 1.9%Antenova Limited TMT 1,307 495 4.7% 1.8%Lab M Holdings Limited (2) Healthcare 690 440 26.8% 1.6%We7 Limited TMT 816 408 13.1% 1.5% 17,797 14,525 54.0%Other venture capitalinvestmentsIsango! Limited TMT 1,000 250 9.1% 0.9%Community Internet Europe TMT 28 211 20.9% 0.8%LimitedMediGene Ag FRANKFURT Healthcare 316 174 0.1% 0.6%
Gemini Holdings Limited Healthcare 455 163 12.8% 0.6% Artisan Software Tools Limited TMT
120 120 28.4%
0.4%
(2)
Allergy Therapeutics plc AIM Healthcare 772 119 0.3% 0.4%Celldex Therapeutics, Inc. Healthcare 625 101 0.2% 0.4%NASDAQTeraview Limited Healthcare 1,172 100 4.8% 0.4%Other investments: valuations 481 279 1 .0%less than 100,000 (2) 4,969 1,517 5.5%Total venture capital 22,766 16,042 59.5%investmentsTotal unquoted venture capital 20,758 15,533 57.7%investmentsTotal quoted venture capital 2,008 509 1.8%investments 22,766 16,042 59.5%Listed fixed interest 1,854 1,881 7.0%investmentsTotal investments 24,620 17,923 66.5%Cash and other net assets 8,998 8,998 33.5%Net assets 33,618 26,921 100.0%
(1) Amounts shown as cost represent the original cost to the Company and/or the valuation attributed to the investment at the date of the merger in 2005, plus any subsequent acquisition cost, as reduced in certain cases (2) by amounts written off as representing an impairment in value.
(2) Cost reduced by amounts written off as representing an impairment in value.
Condensed financial statements (unaudited) Income statement
Twelve months to 31 December 2008 (audited) Revenue Six months Total Revenue Six months Total Revenue Capital Total to to 30 June 30 June 2009 2008 (unaudited) (unaudited) Capital Capital Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000Loss onrevaluation ofinvestments atfairvalue throughprofitor loss 3 - (2,462) (2,462) - (1,084) (1,084) - (2,862) (2,862)Gain/(loss) ondisposal ofinvestments atfair valuethrough profit orloss 3 - 60 60 348 348 - (292) (292)
Income 131 - 131 458 - 458 784 - 784Recoverable VAT - - - - - - 322 - 322Investmentmanagementfee:annual fee (288) - (288) (448) - (448) (734) - (734)performance - - - (1,040) (1,040) (1,040) (1,040)incentivefeeOther expenses (195) - (195) (216) - (216) (415) - (415)Loss on ordinaryactivitiesbefore taxation (352) (2,402) (2,754) (1,246) (736) (1,982) (1,083) (3,154) (4,237)Tax on loss on - - - - - - - - -ordinaryactivitiesLoss on ordinaryactivitiesafter taxation (352) (2,402) (2,754) (1,246) (736) (1,982) (1,083) (3,154) (4,237)Basic and fullydiluted lossper share 4 (0.3)p (2.2)p (2.5)p (1.1 )p (0.7)p (1 .8)p (0.9)p (2.8)p (3.7)p
The 'Total' column of this statement is the profit and loss account of the Company; the supplementary revenue return and capital return columns have been prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations.
The Company has only one class of business and derives its income from investments made in shares and securities and from bank deposits.
There are no gains and losses for the period other than those passing throughthe income statement. The accompanying notes are an integral part of thisstatement.Balance sheet 30 June 31 December 30 June 2009 2008 2008 (unaudited) (audited) (unaudited) Notes GBP'000 GBP'000 GBP'000Fixed assets Investments at fair value throughprofit or loss 5 17,923 21,333 29,405Current assetsDebtors 1,747 1,936 1,535Cash at bank 7,618 6,965 5,767 9,365 8,901 7,302
Creditors: amounts falling due (367) (503) (4,481)
withinone yearNet current assets 8,998 8,398 2,821Net assets 26,921 29,731 32,226Capital and reservesCalled-up equity capital 5,538 5,553 5,608Share premium account 150 150 150Capital redemption reserve 746 731 676Special reserve 23,068 23,751 25,272Investment holding losses (6,697) (4,842) (2,931)Profit and loss account 4,116 4,388 3,451
Total equity shareholders' funds 26,921 29,731 32,226Net asset value per share 6 24.3p 26.8p 28.7p
The accompanying notes are an integral part of this statement.
Cash flow statement Notes Six months Twelve months Six months to to to 30 June 31 December 30 June 2009 2008 2008 (unaudited) (audited) (unaudited) GBP'000 GBP'000 GBP'000
Net cash outflow from operating 7 (299) (2,564)
(104)
activities
Financial investmentPurchase of venture capital investments (352) (3,299)
(2,429)
Purchase of listed equity and fixedinterest investments - (1,488)
(1,490)
Sale of venture capital investments 280 7,928
6,038
Sale/redemption of listed equity andfixed interest investments 1,000 8,269
2,253
Amounts recovered from investmentspreviously written off 80 410
410
Total net financial investment 1,008 11,820
4,782Equity dividends paid - (3,135) -FinancingBuy-back of ordinary shares (56) (573) (328)
Increase in cash for the period 653 5,548
4,350
Reconciliation of net cash flow tomovement in net fundsIncrease in cash for the period 653 5,548
4,350
Net funds at the start of the period 6,965 1,417
1,417
Net funds at the end of the period 7,618 6,965
5,767
The accompanying notes are an integral part of this statement. Net funds comprise cash at bank and on short-term deposit.
Reconciliation of movements in shareholders' funds
Share Share Capital Special Investment Profit Total capital premium redemp- reserve holding and account tion losses loss reserve accountSix months to 30 June GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'0002009At 1 January 2009 5,553 150 731 23,751 (4,842) 4,388 29,731Shares purchased for (15) - 15 (56) - - (56)cancellationRealisation of prioryears' net losses oninvestments - - - - 607 (607) -Transfer from specialreserve toprofit and loss account - - - (627) - 627 -Net loss on revaluationofinvestments - - - - (2,462) 2,462 -Loss on ordinaryactivities aftertaxation - - - - - (2,754) (2,754)Dividends - - - - - - -At 30 June 2009 5,538 150 746 23,068 (6,697) 4,116 26,921Twelve months to 31December2008At 1 January 2008 5,673 150 611 27,615 945 2,682 37,676Shares purchased for (120) - 120 (573) - - (573)cancellationRealisation of prioryears' net gainson investments - - - - (3,884) 3,884 -Transfer from specialreserve toprofit and loss account - - - (3,291) - 3,291 -Net loss on revaluationofinvestments - - - - (1,903) 1,903 -Loss on ordinaryactivities aftertaxation - - - - - (4,237) (4,237)Dividends - - - - - (3,135) (3,135)At 31 December 2008 5,553 150 731 23,751 (4,842) 4,388 29,731Six months to 30 June2008At 1 January 2008 5,673 150 611 27,615 945 2,682 37,676Shares purchased for (65) - 65 (328) - - (328)cancellationRealisation of prioryears' netgains on investments - - - - (3,429) 3,429 -Transfer from specialreserve toprofit and loss account - - - (2,015) - 2,015 -Net loss on revaluationofinvestments - - - - (447) 447 -Loss on ordinaryactivities aftertaxation - - - - - (1,982) (1,982)Dividends - - - - - (3,140) (3,140)At 30 June 2008 5,608 150 676 25,272 (2,931) 3,451 32,226
The accompanying notes are an integral part of this statement.
Notes
1. The financial information contained in this Half-Yearly FinancialReport has been prepared in accordance with the Statement of RecommendedPractise (SORP) 'Financial Statements of Investment Trust Companies andVenture Capital Trusts' and in accordance with the accounting policies set outin the Annual Report for the year ended 31 December 2008. As a change to thepresentation previously adopted in the Annual Report, the results for thehalf-year are presented in the form of an Income statement in three columns,"Revenue","Capital" and "Total", instead of a single column profit and lossaccount. The revaluation reserve has been renamed investment holding losses".Additionally, note 2 states the amount of the total reserves of the Companythat is available for distribution by way of a dividend.
The annual financial statements of the Company are prepared under the historical cost convention, except for the measurement at fair value of fixed asset investments, and in accordance with applicable UK accounting standards.
2. The total reserves available for distribution by way of a dividend is 20,487,000 (31 December 2008: 23,297,000, 30 June 2008 25,792,000), being made up of the Special reserve, Investment Holding losses and Profit and Loss account.
3. The overall loss on investments at fair value through profit or loss disclosed in the profit and loss account is analysed as follows:
Twelve Six months Six months months to to to 30.06.09 30.06.08 31.12.08 (unaudited) (unaudited) (audited) GBP'000 GBP'000 GBP'000Net loss on disposal (20) (62) (702)Recoveries made in respect ofinvestmentspreviously written off 80 410 410Write-off of investments - (637) (959)Net loss on revaluation of (2,462) (447) (1,903)investments (2,402) (736) (3,154)
'Net loss on disposal' represents the difference between proceeds received and the carrying values of those investments sold during the period.
The amounts reported under 'write-off of investments' represent the proportions of the carrying value that have, in the opinion of the Directors, suffered an impairment in value.
4 The revenue loss per share of 0.3p (31 December 2008: loss 0.9p and 30 June 2008: loss 1 .1 p) is based on the revenue loss on ordinary activities after tax of 352,000 (31 December 2008: loss 1,083,000 and 30 June 2008: loss 1,246,000) and on the weighted average number of ordinary shares in issue during the period of 110,781,028 (31 December 2008: 112,145,822 and 30 June 2008: 112,759,987).
The capital loss per share of 2.2p (31 December 2008: loss 2.8p and30 June 2008: loss 0.7p) is based on the capital loss on ordinary activitiesafter tax of 2,402,000 (31 December 2008: loss 3,154,000 and 30 June 2008:loss 736,000) and on the weighted average number of ordinary shares in issueduring the period of 110,781,028 (31 December 2008: 112,145,822 and 30 June2008: 112,759,987).
The total loss per share of 2.5p (31 December 2008: loss 3.7p and 30 June 2008: loss 1 .8p) is based on the loss on ordinary activities after tax of 2,754,000 (31 December 2008: loss 4,237,000 and 30 June 2008: loss 1,982,000) and on the weighted average number of ordinary shares in issue during the period of 110,781,028 (31 December 2008: 112,145,822 and 30 June 2008: 112,759,987).
5 Movements in investments during the six months ended 30 June 2009 are asfollows: Venture capital investments Bonds Total GBP'000 GBP'000 GBP'000Cost at 1 January 2009 23,321 2,854 26,175Net loss/gain at 1 January 2009 (4,886) 44 (4,842)Valuation at 1 January 2009 18,435 2,898 21,333Movements in the period:Purchases at cost 352 - 352Disposals- proceeds (280) (1,000) (1,280)- net losses on (20) - (20)disposalNet loss on revaluation of (2,445) (17) (2,462)investmentsValuation at 30 June 2009 16,042 1,881 17,923Book cost at 30 June 2009 22,766 1,854 24,620Net (loss)/gain at 30 June 2009 (6,724) 27 (6,697)Valuation at 30 June 2009 16,042 1,881 17,923
Amounts shown as cost represent the valuation attributed to the investment at the date of the merger in 2005 or subsequent acquisition cost, less any reduction made on account of impairment in value.
6 The net asset value per share as at 30 June 2009 of 24.3p (31 December 2008: 26.8p and 30 June 2008: 28.7p) is based on net assets of 26,921,000 (31 December 2008: 29,731,000 and 30 June 2008: 32,226,000) divided by the 110,761,138 ordinary shares in issue as at that date (31 December 2008: 111,061,138 and 30 June 2008: 112,157,948). There is no dilution effect as at 30 June 2009 (31 December 2008: nil and 30 June 2008: nil).
7 Reconciliation of operating loss to cash flow from operating activities forthe period is as follows: Six months Twelve Six months to months to to 30.06.09 31.12.08 30.06.08 (unaudited) (audited) (unaudited) GBP'000 GBP'000 GBP'000Loss on ordinary activities (2,754) (4,237) (1,982)Loss on investments at fair value 2,402 3,154 736through profit or lossDecrease/(increase) in debtors 189 (1,759) 17(Decrease)/increase in creditors (136) 291 1,129Amortisation of fixed interest - (13) (4)
investments
Net cash outflow from operating (299) (2,564) (104)
activities
8 Spark Investors Limited (a fellow subsidiary of the Manager), of which AB Carruthers is a director, may from time to time be eligible to receive transaction fees and/or directors' fees from investee companies. During the period to 30 June 2009, fees of 13,000 attributable to the investments of the Company were received pursuant to these arrangements (year ended 31 December 2008: 31,000, period to 30 June 2008: 22,000).
During the six months to 30 June 2008 there were no transactions by Directors in shares of companies in which the Company has invested (31 December 2008: none; 30 June 2008 none).
9 This Half Yearly Financial Report has been neither audited norreviewed by the Company's auditors and does not constitute statutory accountswithin the meaning of Section 434 of the Companies Act 2006. The statutoryaccounts for the period ended 31 December 2008 have been delivered to theRegistrar of Companies and received an audit report which was unqualified, didnot include a reference to any matters to which the auditors drew attention byway of emphasis without qualifying the report and did not contain anystatements under Section 498(2) and (3) of the Companies Act 2006.
10 Interim management statements relating to the first and third quarters of the financial year will be released via the Regulatory News Service on or shortly before 18 May and 18 November each year.
11 Copies of the half yearly financial report are expected to be sent to shareholders on 25 August 2009. Further copies can be obtained from the Company's registered office and on the Company's website.
A copy of the above document is to be submitted to the UK Listing Authority, and will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility, which is situated at:
Financial Services Authority25 North ColonnadeCanary WharfLondon E14 5HS
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