RNS Number:3260I
Springboard PLC
06 March 2003
Springboard plc
Interim results
Chairman's Statement
Springboard's net asset per share decreased by 9.5% in the first half of the
year, which compares with a decline in the AIM index of 21% over the same
period.
The unaudited net assets at 31 December 2002 were #22.1 million (168p per share)
and were categorised as follows:
At 31 Dec 2002 At 30 June 2002
#'m Pence / #'m Pence /
share share
Unquoted investments 12.9 98.2 13.5 102.4
Cash 8.3 62.8 9.9 75.6
Other assets 0.9 6.7 1.0 7.3
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Totals 22.1 167.7 24.4 185.3
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Portfolio review
During the six months to 31 December 2002 we invested #1.6m, which includes one
new investment, one small follow on investment, and the draw down of #1.4m by 11
portfolio companies against existing loan facilities. The core portfolio now
comprises investments in 21 companies at a cost of #13.4m and carrying value of
#12.8m.
We have revalued the portfolio in line with the valuation policy set out in the
2002 Annual Report. It is disappointing to report a reduction in the carrying
value of the portfolio of #2.1m (before new investments), of which #1.3m is
reflected in the profit and loss account and the balance as an adjustment to the
revaluation reserve.
We have reduced the carrying value of one of our investments by #1.6m,
representing 11.9p per share, as this company has experienced delays in certain
larger potential contracts. The company is, however, currently undertaking a
restructuring following which we anticipate it will be both profitable and cash
flow positive. The company is well placed to achieve its business plan and we
continue to have confidence that in time our investment should realise the
expected returns.
In addition, we have made full provisions against three of our smaller
investments, as we do not believe they can establish profitable and scaleable
business models although all three continue to trade and some value may be
realised in due course.
We continue to focus our efforts, as do the portfolio company CEOs, on ensuring
that our investee companies reach profitability and become cash generative. At
31 December 2002, 4 of our investee companies were profitable, with another 7
trading at broadly cash flow neutral or intermittently profitable. The average
equity valuation of these 11 businesses is #1.56 million, and we hold on average
21.5% of the equity of each. A number of the portfolio companies have continued
to operate within a difficult trading environment, with weak demand extending
the decision making cycle. Although market conditions mean that it is taking
longer than we were anticipating for some of the companies to reach
profitability, progress is being made across the majority of the portfolio and
the trend is overwhelmingly positive. Monthly losses are being reduced and the
portfolio CEOs continue to demonstrate a remarkable resilience and ability to
adapt to trading conditions. We currently anticipate that a further 11 portfolio
companies will become profitable in 2003.
We have 3 companies, with a carrying value of #2.7m, which are at a crucial
stage of their development. One business, which is demonstrating strong trading,
is currently defending litigation that could materially impact part of that
business. A second is in the process of renegotiating the consideration payable
in respect of an acquisition. We have confidence that valuable businesses can
be created upon satisfactory resolution of the key issues facing these companies
and will update shareholders at the earliest opportunity. The third business is
re-evaluating its strategy in light of increased competition in that market and
it is too early to indicate how that might impact on our valuation of that
business.
On the whole our portfolio has minimal capital investment requirements and as
our investee companies move towards profitability and become cash positive, the
overall funding requirement of the portfolio is low. At 31 December 2002, we had
cash balances of #8.3m, of which #1.1m is committed to investments, a proportion
of which may not be utilised as cash required to achieve break even in some
instances may actually be less than previously anticipated.
New Investment
In December we invested #0.15m (of a #0.35m commitment) to establish Codima
Technologies, a network management software company, alongside CEO Christer
Mattsson. Codima commenced trading by acquiring certain assets of two software
businesses from an administrator. Christer is a serial entrepreneur with
extensive experience of establishing and developing multi-national software and
technology companies. We expect Codima to generate revenues in the first
quarter of 2003 and we believe this business has significant potential.
We continue to see a reasonable flow of investment opportunities and are
increasingly convinced that the very best start-up companies require only
limited amounts of funding. We are therefore confident that our cash resources
are perfectly adequate to fund our existing companies and those new management
teams that fit our very stringent criteria.
Trading
The Company incurred a trading loss of #0.16m in the six months to 31 December
2002 (2001: profit #0.01m) including interest receivable of #0.17m (2001:
#0.35m). The trading loss was mainly due to a reduction in interest receivable
and fees as we reduced corporate finance activities, offset in part by a
reduction in overheads by some #30,000 per month. After provisions for the
impairment in value of the portfolio of #1.31m, the net loss before taxation for
the period was #1.48m (2001: #0.82m).
Outlook
Your board continues to believe that there is a great deal of potential to
create value from the portfolio in the medium term. As we have stated
previously, the portfolio has been acquired predominantly at low equity
valuations on founders' terms. Value is therefore created once investments
reach break even and are in a position to repay loans. We have backed some
outstanding management teams who will be capable of running large businesses,
once they have grown beyond the unpredictable early years. Our portfolio
companies continue to make progress, have aligned their cost bases and plans to
the current difficult market conditions, and require little further funding to
reach profitability.
Furthermore the difficult economic background, aligned with low base rates is
making acquisition opportunities affordable for many of our investee businesses
and we continue to look for appropriate bolt on opportunities to accelerate
development or to establish the foundations for new businesses.
Brian North
Chairman
6 March 2003
PORTFOLIO ANALYSIS
Sector Number Valuation % by value
#'000
Electronic equipment 1 887 6.94
Food producers 1 344 2.69
Healthcare 1 1,105 8.65
Media 4 2,601 20.35
Other financial 1 12 0.09
Software 7 3,778 29.57
Support Services 5 3,688 28.87
Telecoms 1 363 2.84
21 12,778 100.00
Valuation Method
Cost 10 4,852 37.97
Third party 4 3,466 27.13
Earnings 2 2,130 16.67
Market price 1 96 0.75
Written down 4 2,234 17.48
21 12,778 100.00
Maturity
Profitable 4 2,755 21.56
Profitable by 31/12/03 11 7,098 55.55
Not anticipating profitability 6 2,925 22.89
prior to 31/12/03
21 12,778 100.00
NB: All figures exclude non-core investments valued at #144,000.
CONSOLIDATED BALANCE SHEET
As at 31 December As at 30 June
(unaudited) (audited)
2002 2001 2002
#000 #000 #000
Fixed Assets
Tangible Assets 187 282 237
Investments 12,922 10,050 13,476
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13,109 10,332 13,713
Current Assets
Debtors 1 812 850 954
Cash at bank and in hand 8,260 12,695 9,938
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9,072 13,545 10,892
Creditors: Amounts falling due (115) (203) (225)
within one year
----- ----- -----
Net current assets 8,957 13,342 10,667
----- ----- -----
Net assets 22,066 23,674 24,380
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Capital and Reserves
Called up share capital 1,316 1,316 1,316
Share premium 28,623 28,623 28,623
Profit and loss account (10,365) (6,265) (8,888)
Revaluation reserve 2,492 - 3,329
----- ----- -----
22,066 23,674 24,380
----- ----- -----
Net assets per share 2 168p 180p 185p
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CONSOLIDATED PROFIT AND LOSS ACCOUNT
Half year ended 31 December Year ended 30 June
(unaudited) (audited)
(Restated)
2002 2001 2002
Notes #000 #000 #000
Income
Fee income 74 224 342
Rental income 160 149 224
Interest income from fixed asset 176 191 307
investments
----- ----- -----
410 564 873
Other operating income - 54 128
Staff costs (297) (486) (862)
Goodwill written off - (92) (92)
Administrative expenses (452) (478) (952)
Impairment of investments (1,313) (736) (3,062)
----- ----- -----
Operating loss (1,652) (1,174) (3,967)
(Loss) profit on realisation of - (35)
investments
Interest receivable 175 353 558
----- ----- -----
Loss on ordinary activities before (1,477) (821) (3,444)
taxation
Tax - - -
----- ----- -----
Loss on ordinary activities after (1,477) (821) (3,444)
taxation
Minority interests - 3 3
----- ----- -----
Loss for the financial year (1,477) (818) (3,441)
----- ----- -----
Loss per share 3 (11.2p) (6.2p) (26.2p)
----- ----- -----
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Half year ended 31 December Year ended 30 June
(unaudited) (audited)
2002 2001 2002
#000 #000 #000
Loss for the financial period (1,477) (818) (3,441)
Changes to unrealised surplus on revaluation (837) - 3,329
of investments
----- ----- -----
Total gains and losses recognised in the (2,314) (818) (112)
period
----- ----- -----
CONSOLIDATED CASHFLOW STATEMENT
Half year ended 31 Year ended 30
December June
(unaudited) (audited)
2002 2001 2002
Notes #000 #000 #000
Net cash outflow from operating activities 4a (253) (563) (1,082)
Returns on investments and servicing of finance 175 353 562
Investments (1,596) (2,563) (5,160)
Loans repaid - - 150
Capital expenditure (4) (3) (6)
Receipts on sale of fixed assets - - 3
Acquisitions - (11) (11)
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Net cash outflow before management of liquid (1,678) (2,787) (5,544)
resources and financing
Management of liquid resources 1,624 2,561 5,277
----- ----- -----
Decrease in cash in the period 4b (54) (226) (267)
----- ----- -----
NOTES
1. Debtors include #0.35m (2001: #0.35m) in respect of a repayable rent
deposit on Springboard's offices in London.
2. Net assets per share is based on the net assets and number of ordinary
shares at the period end.
3. The loss of 11.2 pence per share for the six months to 31 December 2002
is based on the loss for the period of #1.48m (2001: loss of #0.82m) and
13,156,000 (2001: 13,156,000) ordinary shares, being the weighted average number
of shares in issue during the period.
4. Cash flow information
a) Net cash outflow from operating activities
Half year ended 31 December Year ended
(unaudited)
30 June
(audited)
2002 2001 2002
#000 #000 #000
Operating loss (1,652) (1,174) (3,967)
Depreciation 54 48 94
Goodwill written off - 149 92
Profit on sale of tangible fixed assets - 3 2
Investment fees settled for non cash - - (11)
consideration
Increase in provisions 1,313 736 3,062
Decrease (increase) in working capital 32 (325) (354)
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Net cash outflow from operating activities (253) (563) (1,082)
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b) Analysis of net funds
30 June 2002 Cash flow 31 December 2002
#000 #000 #000
Cash at bank 149 (54) 95
Short term deposits 9,789 (1,624) 8,165
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9,938 (1,678) 8,260
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5. Basis of Preparation
The results for the half years ended 31 December 2002 and 31 December 2001 are
unaudited. The results for the year ended 30 June 2002 are derived from the full
accounts for that period, on which the auditors gave an unqualified opinion and
did not contain a statement under Section 237 (2) or (3) of the Companies Act
1985. These accounts have been filed with the Registrar of Companies.
6. Interim Report
A copy of the interim report will be sent to shareholders and will be available
to the public at the Company's registered office and on the company's web site,
www.springboardplc.com.
For further enquiries please contact:
Stephen Ross Springboard plc Tel: 020 7004 2600
Clive Carver Williams de Broe Plc Tel: 020 7588 7511
This information is provided by RNS
The company news service from the London Stock Exchange
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