Preliminary Results
May 23 2003 - 11:28AM
UK Regulatory
RNS Number:5123L
Advent VCT PLC
23 May 2003
Advent VCT plc
23 May 2003
RESULTS FOR THE YEAR ENDED 31 MARCH 2003.
The Board of Advent VCT plc announces the results of the company for the year
ended 31 March 2003.
Highlights
- The investment in Dencare Management Group Ltd was sold to Oasis
Healthcare plc in January 2003 for Oasis ordinary shares quoted on AIM and cash
proceeds of #1.2 million.
- The investment in Jamies Bars plc was acquired by Hartford Group plc
through a share for share offer in September 2002.
- During the period, the Company made follow-on investments totalling
#0.8 million in four existing portfolio companies.
- Market conditions have resulted in a full provision against the
investment in Rodaris Pharmaceuticals Ltd. Partial provisions have been
introduced or increased against the cost of six investments.
Year ended Year ended
31 March 2003 31 March 2002
- Revenue return per ordinary share 0.1p (0.2)p
- Total return per ordinary share (42.3)p (20.8)p
- Net asset value per ordinary share 48.2p 90.5p
- A final dividend is not being recommended.
Chairman's Statement
The year under review has seen the Company continue to suffer from very
difficult market conditions. The persistent negative market sentiment towards
the technology sector has led to a lack of both funding and liquidity
opportunities, which, together with a significant downturn in the market sectors
which many of the portfolio companies address, has resulted in heavy downward
pressure on the value of the portfolio. As a consequence the net asset value per
share of the Company has fallen from 90.5p to 48.2p during the year.
Portfolio developments
The progress of the portfolio in the period under review can only be described
as very disappointing. The Company's portfolio is primarily invested in
companies in the technology sector and both quoted and private markets alike
have provided extremely hostile conditions in which to operate. Companies
looking to raise further funding rounds have found few willing investors, and
the terms of investment in such rounds have continued to harden with lower
valuations and preferential terms. Market conditions have also precluded exit
opportunities and, as a result, the Company has had to ration carefully the use
of its limited cash resources. In certain instances, by not participating in
follow-on funding rounds valuations have suffered. Throughout the period, the
Manager has been working closely with portfolio companies to ensure that they
are able to withstand the current environment without needing further funding
by, for example, restructuring their cost base.
No new investments have been made in the period and further support for the
portfolio has been limited to #0.8 million in cash across four companies.
There has been one partial realisation in the period with the acquisition of
Dencare Management Group Ltd by Oasis Healthcare Group plc in January 2003 for
consideration consisting of cash and Oasis shares. The deal was concluded at a
small premium to the Company's initial investment cost, and there is the
opportunity for further upside in the holding of Oasis shares.
In September 2002, the Hartford Group plc, an AIM quoted company, acquired
Jamies Bars plc in an all-share transaction, which resulted in the Company
receiving Hartford stock which it holds at 31 March 2003.
Subsequent to the year-end, the Company's holding in RiboTargets Holdings plc
was acquired by British Biotech plc on 22 April 2003. The transaction was in the
form of a 50:50 merger and the Company received British Biotech shares as
consideration. The Board and the Manager were strongly opposed to the terms of
the transaction that, in their opinion, did not properly recognise the
respective value that each merger partner was contributing to the combined
entity, and resulted in a significant reduction in the valuation of the
Company's holding. However, the Company's shareholding was too small to block
the deal and the valuation of the holding has been reduced to reflect the terms
of the transaction.
These three transactions resulted in a reduction in the net asset value of #5.6
million or 18p per share.
In addition to these adjustments, provisions have also been introduced or
increased in seven further companies. All quoted stocks in the portfolio have
seen reductions in their values largely in line with general stock market
movements in the period.
Dividend
The Company has made no significant gains or revenue in the year and
consequently, the Board is not recommending a final dividend.
Balance Sheet
The net asset value per share at 31 March 2003 was 48.2p per share compared with
90.5p per share at 31 March 2002.
The venture capital investments have been valued in accordance with the BVCA
guidelines, under which, inter alia, unquoted investments are not normally
revalued above cost for at least 12 months after the date of investment and then
only by reference to subsequent third-party transaction prices or the
achievement of sustainable profitability by the company concerned.
Purchase of Own Shares
In May 2002, the Company repurchased and cancelled 100,000 shares. The Company
has made occasional market purchases of its own shares to provide an additional
measure of liquidity in the market for the Company's shares, as well as
enhancing the net asset value for the remaining shareholders. However
repurchases can only be made when the cash position of the Company allows and it
is therefore impractical for the Company to make any such purchases in the
foreseeable future. Partly as a consequence of this, the Company's share price
remains at a substantial discount to net asset value. The Board have noted this
with concern.
Outlook
This has been a very poor year for the portfolio, and there does not appear to
be an imminent likelihood of recovery in the sectors to which the portfolio is
exposed, or in markets generally. Until such a recovery occurs, a revival in the
portfolio's fortunes is unlikely. There are some portfolio companies such as DNA
Research Innovations Ltd, Pelikon Ltd and WAA Ltd, which are making good
progress, but this cannot mask the overall erosion in the Company's value and
the natural disappointment of shareholders at the lack of returns from their
investment. I can only assure you that the Board and the Manager are taking
steps to ensure that the portfolio is able to benefit from any upturn in market
conditions.
Graham Ross Russell
Chairman
Statement of Total Return
(incorporating the Revenue Account)of the company for the year ended 31 March
2003
Year ended 31 March 2003 Year ended 31 March 2002
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Losses on investments - (12,932) (12,932) - (5,924) (5,924)
Income 313 - 313 390 - 390
Investment management (96) (287) (383) (199) (598) (797)
fees
Other expenses (139) - (139) (186) - (186)
------- ------- ------ ------- ------- ------
Return on ordinary 78 (13,219) (13,141) 5 (6,522) (6,517)
activities
before taxation
Tax on ordinary (46) 46 - (66) 66 -
activities
------- ------- ------ ------- ------- ------
Return attributable 32 (13,173) (13,141) (61) (6,456) (6,517)
to equity
shareholders
Ordinary dividends on
equity shares:
- final proposed nil - - - - - -
(2002: nil)
------- ------- ------ ------- ------- ------
Transfer to/ (from) 32 (13,173) (13,141) (61) (6,456) (6,517)
reserves, after
aggregate dividends
paid and proposed of
nil (2002: nil)
------- ------- ------ ------- ------- ------
Return per ordinary 0.1p (42.4)p (42.3)p (0.2)p (20.6)p (20.8)p
share
------- ------- ------ ------- ------- ------
Balance Sheet at 31 March 2003
2003 2002
#'000 #'000
FIXED ASSETS
Investments 13,653 27,651
CURRENT ASSETS
Debtors 330 339
Money market and other deposits 1,027 338
Cash 4 7
------ ------
1,361 684
CREDITORS: amounts falling due within one year (102) (218)
------ ------
NET CURRENT ASSETS 1,259 466
------ ------
TOTAL ASSETS LESS CURRENT LIABILITIES 14,912 28,117
====== ======
CAPITAL AND RESERVES
Called-up share capital 1,548 1,553
Share premium account 20,493 20,493
Capital redemption reserve 27 22
Distributable reserve 7,510 7,574
Other reserves
- Capital reserve - realised (2,941) (2,783)
- Capital reserve - unrealised (11,735) 1,280
Revenue reserve 10 (22)
------ ------
Equity shareholders' funds 14,912 28,117
====== ======
Net asset value per ordinary share 48.2p 90.5p
------ ------
Cash Flow Statement for the year ended 31 March 2003
2003 2002
CASH FLOW FROM OPERATING ACTIVITIES AND RETURNS ON INVESTMENT: #'000 #'000
Investment income received 214 287
Deposit and similar interest received 9 31
Investment management fees paid (705) (850)
Secretarial fees paid - (57)
Other cash payments (186) (57)
------- -------
NET CASH OUTFLOW FROM OPERATING ACTIVITIES AND RETURNS ON INVESTMENT (668) (646)
------- -------
TAXATION RECOVERED 76 30
------- -------
FINANCIAL INVESTMENT:
Purchase of unquoted investments and investments quoted on AIM (847) (2,308)
Proceeds on sale of unquoted investments 1,247 -
Redemption and sale of listed fixed income investments 942 2,480
------- -------
NET CASH INFLOW FROM FINANCIAL INVESTMENT 1,342 172
------- -------
EQUITY DIVIDENDS PAID:
Tax credits recovered on behalf of shareholders - -
------- -------
NET CASH INFLOW FROM PAYMENT OF EQUITY DIVIDENDS - -
------- -------
NET CASH INFLOW/(OUTFLOW) BEFORE LIQUID RESOURCE MANAGEMENT AND FINANCING 750 (444)
------- -------
MANAGEMENT OF LIQUID RESOURCES:
Movement in money market and other deposits (689) 702
FINANCING:
Repurchase and cancellation of ordinary shares (64) (301)
------- -------
DECREASE IN CASH (3) (43)
------- -------
Reconciliation of movements in shareholders' funds
2003 2002 2003 2002
#'000 #'000 per share p per share p
Opening shareholders' funds 28,117 34,935 90.5 110.9
------ ------ ------- -------
Return attributable to equity shareholders:
- revenue 32 (61) 0.1 (0.2)
- capital (13,173) (6,456) (42.4) (20.6)
------ ------ ------- -------
- total (13,141) (6,517) (42.3) (20.8)
Repurchase and cancellation of shares (64) (301) - 0.4
------ ------ ------- -------
Net reduction to shareholders' funds (13,205) (6,818) (42.3) (20.4)
------ ------ ------- -------
Closing shareholders' funds 14,912 28,117 48.2 90.5
------ ------ ------- -------
The audit report on the full financial statements has yet to be signed. The
preliminary announcement is prepared on the same basis as set out in the
previous year's annual accounts. The preliminary announcement does not represent
the Company's statutory accounts. The statutory accounts for the year ended 31
March 2002 have been delivered to the Registrar and included the report of the
auditors which was unqualified and did not contain a statement under either
section 237(2) or section 237(3) of the Companies Act 1985. This preliminary
announcement was approved by the Board on 22 May 2003.
23 May 2003
Contacts for information:
Advent Fund Managers Limited:
Sir David Cooksey 020 7931 2100
Les Gabb
Capital MS&L :
Annabel O'Connor 020 7878 3181
Teather & Greenwood:
Jonathan Becher 020 7426 9000
This information is provided by RNS
The company news service from the London Stock Exchange
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