RNS Number:5826P
Springboard PLC
10 September 2003
SPRINGBOARD PLC
10 September 2003
SPRINGBOARD PLC
UNAUDITED PRELIMINARY RESULTS
FINANCIAL YEAR HIGHLIGHTS
NAV reduced by 16.4% since 31 December 2002 to 140 pence per share, a 24.4% fall
over the year.
After the initial early losers within the portfolio, clear evidence of the
successful companies is emerging, with core portfolio generating sales of #34
million in the last year and 11 companies now profitable or intermittently
profitable.
Reduced investment in start-up companies and development of investment strategy
to focus on producing earlier returns.
Cash reserves of #7.37million (2002: #9.94m) sufficient to support the existing
portfolio and anticipated investment rates.
Proposals intended to lead to the creation of distributable reserves and to
obtain authority to buy-back shares to be set out in the Report and Accounts and
put to shareholders at the AGM.
CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT
Results and Overview
In the year ended 30 June 2003 the group incurred a loss of #4.78 million
compared with a loss of #3.44 million in the previous year. Income, which
includes interest receivable and other operating income totalled #0.98 million
(2002: #1.56m) and costs were #1.55 million (2002: #1.82m). The value of our
investments was reduced by a net #5.38 million of which #4.21million is
reflected in the profit and loss account and the balance charged to the
revaluation reserve.
The net asset value ('NAV') is reduced from 185p per share a year ago to 140p
per share at 30 June 2003. This is a reduction of 24.4% over the year and 16.4%
over the second half.
We are disappointed with this performance since, at the start of the financial
year, we felt that our portfolio was well positioned to perform strongly. With
the benefit of hindsight we were over optimistic about the momentum that some
businesses had established and a few businesses were not sufficiently developed
to withstand the inevitable shocks that a faltering economy can deliver. In the
initial stages of a start-up company there is a very fine line between success
and failure.
During the period we saw the failure of 4 businesses that we had not
anticipated, resulting in a write off of #1.68 million. In addition provisions
of #3.56 million have been made against the core holdings to reflect the status
of the portfolio based on the results in the year under review, the largest
being #1.56 million against the value of Businesshealth, which we referred to at
the time of our interim results and was as a result of its capital
reconstruction.
Last year we produced a full report on our portfolio companies and many of our
shareholders met some of our portfolio CEOs at the AGM in December and there was
genuine enthusiasm about the prospects for these companies. It is worth pointing
out that the prospects for the majority of these companies, including those
where we have provided against part of the investment, remain undiminished. The
'losses' have not been crystallised and the majority of our portfolio CEOs have
no intention of seeking a sale for their businesses until they have achieved
their potential. As clearer evidence of performance and profitability becomes
available these provisions may be written back and eventually the companies will
be valued on the basis of maintainable earnings. A full review of the
performance of the portfolio is set out in the Chief Investment Officer's Review
and I would encourage you to read it in full.
Despite our firm belief in the potential of our investee companies and that they
will produce attractive value for our shareholders over the long term, we
recognise that our shareholders may not wish to see continued losses in getting
there. We have therefore slowed our investment in new ventures until we can
demonstrate more clearly that the returns make the short term and inevitable
diminution in value worth suffering. We have therefore concentrated over the
past 12 months on increasing our shareholdings in those of our companies that
are already successful and will expand this investment strategy to acquiring
shares in other companies that have the same characteristics of being well
managed, high growth and with low capital requirements.
This year has been one of incredibly hard work for all of the CEOs of our
portfolio companies. As a group they were already successful business people and
are used to hard work. For many of them living on the knife-edge between success
and failure for extended periods of time without the resources of a large
corporate owner is a new and not always pleasant experience. Our consolation is
to know that most start-up businesses have to go through this period and that
the majority will prosper. In the meantime we thank them for their hard work and
commitment. We expect to see many of the directors of our investee companies and
their partners at our AGM again this year when the shareholders will have the
opportunity to meet them. Details of the timing of and arrangements for the AGM
will be set out in the forthcoming Report and Accounts.
Corporate Structure
During the year we confirmed our commitment to develop the business towards
investment trust status, when it is clear that this structure is more attractive
for our shareholders than the present AIM company status. For those shareholders
who are unaware of the implications of Investment Trust status they are set out
below.
An investment trust does not pay tax on its capital gains but cannot distribute
them to shareholders. It can only make distributions from the excess of income
over costs. There are a number of well established Investment Trusts investing
in venture capital and these should be not confused with Venture Capital Trusts
('VCTs') which have similar corporate tax advantages as Investment Trusts (and
also confer tax benefits on individual holders), but are severely restricted in
their investment polices.
Our present status allows capital gains to be distributed and we are in the
position where we will not pay tax on these gains for some time due to the
accumulated tax losses, primarily resulting from earlier failures. In due course
it would be attractive for Springboard to convert to an Investment Trust to
shelter gains, but there are no immediate advantages due to the unutilised
losses, Comparison with established Investment Trusts in the meantime is not
inappropriate.
In the light of the recent movement in the Company's share price it is worth
describing how we believe Investment Trusts are valued. Generally investments
trusts are valued at a discount to their NAV, the size of which can discount can
be 50% or more but can sometimes be very low or even negative (i.e. when an
investment company's shares trade at a premium to the underlying NAV). The level
of the discount (or premium) is a function of a number of factors:
* the liquidity in the trust's underlying assets;
* the future expectations of the growth in the underlying assets which
is in itself related to the stage of the economic cycle;
* the long term performance of the fund manager;
* the dividend yield on the shares;
* the existence of a share buyback program or the likelihood of a new
share issue; and finally
* the size of the trust and the liquidity in its own shares.
These combination of factors tend to emerge over time and the underlying
performance of an Investment Trust's shares should therefore be more gradual
than those in trading companies where so much of the valuation is dependent on
the current year's earnings. We would not generally expect shares in an
investment companies to have the volatility that can sometimes be suggested by
financial web sites and feel more comfortable with shareholders buying shares on
the basis of the above factors rather than the expectations of short term
performance. One other factor that heavily penalises those buying and selling
our shares on a short-term view is the market makers 'bid offer' spread, over
which we have no control, which can be around 10%.
The accumulated losses that we have incurred, have wiped out the reserves from
which any distributions can be made, although we have cash in our balance sheet.
We therefore intend to propose a restructuring of the balance sheet which, if
approved and put into effect, should bring forward the Company's ability to make
distributions to shareholders. In addition we are also proposing to seek
shareholders' authority for the Company to be able to buy back its own shares.
Further details of these proposals are set out in the Financial Review and full
details will be provided in the Report and Accounts.
Board Changes
As part of our strategic development we have made some board changes. At the
close of the AGM, Brian North will retire as Chairman and hand over to Stephen
Ross and we have taken the unusual step of producing a joint Chairman's and
Chief Executive's Report. As the business becomes more clearly an investment
business, Simon Smith's role of Chief Investment Officer has become more
important and we are delighted that Simon has agreed to take over the role of
CEO. Simon and Stephen will continue to work in close partnership with Gerard
Downes and we do not believe any change in style or strategy will be evident to
our portfolio companies.
Reporting and Disclosure
This year we have changed the format of the Report and Accounts and chosen to
focus on the earnings of the portfolio companies by introducing the concept of
'look through earnings'. We have looked at the earnings or losses for each
company in our portfolio and calculated that portion which is attributable to
our shareholding. As this report is publicly available, we believe it is
commercially sensitive to present each company's results, as one might see in a
limited partnership fund, and we have therefore reported earnings by sector. We
have again shown details of every core investment, which represent 99% of the
continuing portfolio by value, unlike some venture capital investment trusts
which report only the top 10 out of many (sometimes hundreds) of investments.
This policy, combined with an invitation to meet our CEOs at the AGM gives our
shareholders the opportunity to understand the businesses themselves and make
their own judgements on future value.
On the subject of disclosure it is worth explaining why our share price is no
longer in the FT. We took the view that paying for this service was not an
effective use of shareholders funds when share prices are now widely available
more cheaply and on a timelier basis. You can view Springboard's share price in
many places on the internet. Two of the easiest sites to find the price and
other company related information are: www.londonstockexchange.com and
www.hemscott.net or you can link to the Stock Exchange site though our own web
site www.springboardplc.com. You can also obtain the share price by calling the
FT Cityline on 0906 843 1535, which is a premium rate service. It is worth
pointing out that we have less than 300 shareholders and often weeks can go by
with no trade in the shares. This move does not affect the share liquidity in
any way and is not a reflection of the level of corporate governance or openness
in this business.
On a personal note the board would like to thank Brian North for his support and
guidance over the first five years of the Company's life and are confident that
he leaves the Company well positioned to realise the potential value of the
portfolio.
Brain North
Chairman
Stephen Ross
Chief Executive
CHIEF INVESTMENT OFFICER'S REVIEW
In spite of the disappointing decline in net asset value over the period, the
year under review has been a year of progress for many of our core holdings,
against what has continued to be a difficult economic background. In any early
stage venture capital portfolio it takes a while before the successful companies
emerge and in the last year we have developed a much clearer picture of which
those businesses are. It should be remembered that Springboard itself was a
start-up in 1998, and that our investments have mainly occurred since the fund
raising in 2000. As a result, Springboard had an immature portfolio of start-up
investments at a time when economic conditions were deteriorating, hence our
decision to slow new investment and allow the existing portfolio time to mature
and become cash generative. We believe the current financial year will see
further significant progress and we aim to have most of the core portfolio
profitable and self-funding by the end of this period.
The first quarter of 2003 was adversely affected by global events and this made
signing new contracts particularly difficult for our investee companies. However
as we entered the second quarter there was evidence of an improved trading
climate, which has continued throughout the year. Although our net asset value
has declined, it reflects the results for the last year, rather than the
potential of the portfolio. During this period we have reduced the carrying
value of 17 of our investments by #5.64 million and uplifted the value of 3
investments by #0.26 million. #3.56 million of the downward adjustment has been
made against businesses that remain in the portfolio which have developed at a
slower rate than was originally anticipated and where we believe that their
medium term potential remains unchanged. We now have ten core businesses and one
non-core business that are profitable or intermittently profitable, six of which
reported a pre-tax profit for the last six months. Overall the funding
requirement of the portfolio is relatively modest and in a number of cases we
have brought in investors alongside us. However we continue to seek
opportunities to increase shareholdings in businesses where we believe our
shareholder value can be enhanced.
For reporting purposes only, we have allocated our investments into five groups.
Support Services, Media, Software Services, Other Groups and Non-core, and have
provided shareholders with 'look through earnings,' taken from the unaudited
management accounts of each company at our year-end. This we believe will give a
much clearer view of the portfolio's development without compromising the
underlying investments. These figures show that core businesses (which have
largely been formed by Springboard over the last three years) have generated
sales of #34 million in the last year and have made a pre-tax loss of #5.9
million. This loss was struck after #2.2 million of start-up expenses at the
recent investments Tree Top Media, Codima and MeetingZone; and #3.1 million of
exceptional charges or losses, subsequently largely eradicated, at Tenzen,
Businesshealth and The Funding Corporation.
If Springboard were to account for this loss pro-rata our shareholdings, the
contribution would have been sales of over #5.5 million and a loss of #1.4
million. We would expect a significant improvement in this position in the
current year. In addition to our equity holdings we have outstanding loans to
the portfolio companies valued at #5.3 million.
Support Services
Year end Springboard's
30 June 2003 look through
earnings
#'000 #'000
Turnover 13,098 2,461
Pre tax profit (loss) (1,693) (335)
MeetingZone, a telephone conferencing business, has made excellent progress.
During its first financial year monthly revenue growth was 50%, and in the early
part of its second years trading, monthly revenues have continued to grow at
around 30%. The company has attracted over 3000 end users of its services
including a number of FTSE 100 customers. We anticipate profitability in the
early part of 2004, well within the funding timetable set at its launch.
Businesshealth, a preventative healthcare company, has continued to make steady
progress and following new contract wins and a capital reorganisation the
business expects to be profitable from October. At the Employee Benefits Awards
2003 Businesshealth won three awards for its services including the overall
Grand Prix award for the most effective healthcare strategy.
Specialist Hire Group, a plant hire company in the fork lift truck and crane
hire markets, was created to acquire the businesses of Rushlift Mechanical
Handling and A. Jardine & Sons. Using bank funding and a small amount of share
capital it has established a profitable business and the company continues to
look for acquisitions. Following our year-end it has acquired Rushlift
(Doncaster), which has been held outside the group by similar shareholders and
Reflexsource the original acquisition vehicle set up by management and
Springboard.
Directorbank, the UK's largest database of immediately available executives,
grew its revenues by 50% in the year although additional costs, that should show
benefits in the current year, reduced the growth in profits. In addition to its
existing contacts in the venture capital market, it has started to establish
itself as a provider of both executive and non-executive directors to public
companies.
Office Canopy Group is a technology business focussed on driving the cost out of
procuring commodity goods particularly in the office products sector. In 2003
OCG launched the Netstationers franchise operation to develop its trade in this
market. In the first 5 months since launch 19 UK franchises were sold and the
franchise channel is expected to deliver significant scale in the coming year.
Unfortunately Build Assured was unable to recover from the failure of its major
customer Miller Fisher and was unable to address its liabilities in respect of
its acquisition of Morrison Repairline from Anglian Water and was placed into
administration. We recovered #308,000 after our year-end, and expect to recover
a further #34,000, but had to make a write off of #748,000 against our carried
cost. We continue to review the circumstances leading to the failure of the
business with a view to making a further recovery. Caribiner failed to develop
as anticipated and was placed into receivership and Rescue IT has so far failed
to establish a scaleable business model and has been moved to non-core and our
investment written off.
Media
Year end Look through
30 June 2003 earnings
#'000 #'000
Turnover 4,730 1,625
Pre tax profit (loss) (1,537) (689)
Tree Top Media, a children's magazine company, has launched a number of titles
including DK Find Out under licence from Dorling Kindersley; Engie Bengy, one of
the up and coming children's character properties in the pre-school section;
Little Girl based on the Bang on the Door characters; Milkshake, based on the
Channel 5 TV programme, Strand, and I Love Pop. After a difficult initial
trading period the business achieved its first month of profitability after our
year-end.
Spark Learning is an educational publisher with hard copy and e-learning
revenues. Spark is a beneficiary of the Governments Curriculum Online initiative
where #100m per annum of funding is being channelled into educational software
from approved suppliers. Spark has signed partnership agreements with Harper
Collins, RM and the BBC. The company is intermittently profitable.
Redeye, a web intelligence monitoring company, monitors activity on web sites
for businesses such as William Hill and the AA. This information is then used to
develop marketing strategies and improve the success rates of Internet sites.
The company is intermittently profitable.
ICP Europe Publishing, a online business provider which manages a portfolio of
online titles for organisations such as the British Chamber of Commerce,
Business Links, banks and professional bodies. In addition ICP publishes a
business titles under its own brands in Biotechnology, Venture Capital and the
enterprise and growing business sectors. The company made a small profit in its
year-ended June 2003.
Jobs Financial advertises accountancy vacancies online for many of the UK's
leading recruitment businesses. The company is intermittently profitable.
Software Services
Year end Look through
30 June 2003 earnings
#'000 #'000
Turnover 1,130 345
Pre tax profit (loss) (2,124) (434)
Codima Technology was our only new investment in the current year, completed in
December 2002. Codima has made good progress in its first few months and has
acquired software assets to create a network solutions management company.
During its first few months it has established global distribution partners and
has established initial sales in Europe, Scandinavia and North America. Codima
is incurring the early start-up losses and after our year-end we broadened the
shareholder base and raised #650,000 of further funding of which we contributed
#250,000.
Accede Solutions is a supply chain collaboration services company. Initially
Accede offered a hosted solution, however customers preferred to host the
software on their own systems. Following a change in strategy, Accede secured
three significant contracts, with a major global OEM, a global contract
manufacturer and a UK component distributor, three of its initial target
markets. While good progress is being made, it is still early stages for the
company and further funding will be required to scale the opportunity.
Wax Digital is an e-business solutions provider, delivering managed integration
solutions for large corporate clients. Key clients include Hagemeyer where they
are facilitating the exchange of electronic orders, invoices and other messages
between one of Britain's largest distribution groups and nearly 800 suppliers;
and Xerox who are integrating transactional exchange with customers in 15
European countries using a Wax solution. Wax has been intermittently profitable
and is expected to trade profitably in the current year.
Both Accede and Wax have been able to demonstrate very significant returns on
investment for customers.
Knowledge Process Software plc, an OFEX listed company, supplies software to
assist energy savings in process control environments, such as power stations,
oilfields and paper mills. After the year-end we completed a further investment
that increased our shareholding in the company.
Unfortunately we have been unable to establish a successful business model for
either Treasurydealer, where in spite of a proven and significant return on
investment, the banks seem cautious about buying the solution from a start-up
software company. We are now seeking a partner for the business where we have
written off our carried value; or Purple Voice, which had struggled to scale its
business, and we disposed of our investment to IPC Holdings inc following our
year-end at a discount to our carried cost.
Other Groups
Year end Look through
30 June 2003 earnings
#'000 #'000
Turnover 15,021 1,128
Pre-tax profit (loss) (560) 60
The Funding Corporation is believed to be the fastest growing finance company in
the UK, with over 350 employees being based at its Chester offices and a
nationwide sales team. The company has been trading profitably in the six months
ending June 2003 and has raised over #180 million of funding since we
established the company with its management in late 2000.
Latina Brands, an ethnic food company specialising in the cuisines of Latin
America, is progressing albeit slower than we would have initially anticipated.
Over the summer months the company expanded into the food service market, which
complements its retail sales. New Latin bread, sauce and rice products have been
introduced since the company's initial launch and their products are sold in
around 1,000 retail outlets in the UK.
Tenzen Group, an Automatic Identification and Data Capture company, has through
its subsidiary Zipher developed world-class packaging overprinting equipment,
and through its Claricom subsidiary, developed software to enable food factories
to eliminate date and traceability coding errors. The Tenzen Group had an
outstanding year, achieving profits substantially ahead of budget on sales up by
over 350% on the previous year, and establishing its products on a global stage.
Its success was achieved during a period when it was involved in a significant
court case relating to Zipher's intellectual property. The court ruled largely
in favour of Zipher after our year-end.
Our investment in the acquisition search vehicle Parallel Brand, which failed to
find a suitable acquisition, was written off.
Non-Core (results below based on the continuing businesses)
Year end Look through
30 June 2003 earnings
#'000 #'000
Turnover 11,019 382
Pre tax profit (loss) (4,851) (132)
The businesses grouped in this area have either failed to develop as we
anticipated and valuation adjustments have been established against the
holdings, or we have do not have the level of controls that we normally seek.
The carried value of these non-core investments is #0.12 million. There is no
commitment to fund any of these businesses although some show reasonable
promise. The investments include: -
J4B plc which provides funding information from over 150 public sector bodies
and is listed on OFEX. The company traded profitably in the first six months of
2003 and has sales of around #4 million per annum.
Strand Technology plc a software business selling to the IT healthcare market.
Strand was adversely affected by a contract in 2001 and made a creditors
voluntary arrangement, at the time we wrote off our entire investment. The
company's latest accounts show that it is making progress in recovering its
position.
Altrix Healthcare, a company providing drug testing in the workplace and has
contracts with companies such as Railtrack.
Zero Waste, a landfill company in which we have a small equity position, it
operates two landfill sites in the North of England.
Simon Smith
Chief Investment Officer
FINANCIAL REVIEW
We are disappointed to report a loss for the year and a decline in net asset
value, which principally result from adjustments to the value of the portfolio,
as we have reported. Although we are required to report as a trading company,
emphasising the profit and loss account, in assessing our performance and future
prospects I believe shareholders should have a good understanding of our balance
sheet.
Balance Sheet
Overall we had net assets of #18.44 million at 30 June 2003, equivalent to 140.1
pence per share (2002: 185.3p per share). The carrying value our portfolio of
investments was #10.46 million (79.5 p per share) including 3 companies valued
at #1.40 million held for resale. We have invested #2.50 million in the year,
received loan repayments of #0.14 million and made changes to valuations
including provisions for impairment of #5.38 million. We have illustrated the
changes to the portfolio during the year by individual investment in the table
that follows my report and discussed their performance and prospects in the
Chief Investment Officer's Review. I shall return later in my report to the
principles we have applied when valuing them.
Our second largest asset is cash, which at 30 June 2003 stood at #7.37 million,
equivalent to 56 pence per share. Against this, we have undrawn commitments of
#3.27 million, which are not shown on the face of the balance sheet. This year
we have included in commitments, not just the undrawn loan facilities committed
to the portfolio, but further amounts allocated to them where investment is
agreed in principle or foreseen with some likelihood, and a further #1.55
million in respect of the rental due on our properties until their break
clauses. Our uncommitted cash was therefore #4.1 million, adequate to pursue our
investment rate and strategy, and we remain ungeared.
Debtors of #0.77 million include cash rental deposits of #0.38 million, and
included in accruals is a provision for VAT as explained below.
Capital Reorganisation
In due course we would intend crystallising value in our portfolio through
realisations. To date, however, we have suffered from the early failures and
disappointments of a start-up portfolio and, including our own trading losses,
the deficit on the Company's profit and loss account at stands at #13.47
million. In order to bring forward the Company's ability to pay dividends, we
intend to propose a restructuring of the Company's balance sheet to create
distributable reserves, by reducing or cancelling the share premium account,
amounting to #28.6 million at 30 June 2003, and crediting some or all of it to
the profit and loss account. The actual amount that the Company may be able to
distribute in future, is of course dependent on the free cash flow which the
Company generates as well as the precise amount of distributable reserves
available at the relevant time and is also subject to the recommendations of the
Board. Full details of this process, which will require both shareholder
approval and subsequent confirmation by the High Court, will be set out in the
2003 Report and Accounts, and a special resolution is intended to be put at the
AGM.
We shall also be seeking authority at the AGM for the Company to buy back its
own shares. The effect of the Company buying its shares at a discount to NAV
would be to increase the NAV per remaining share that would of course be
beneficial to shareholders.
Profit and Loss Account
During the year we received from the portfolio companies investment interest
income of #0.3 million (2002: #0.31 million) and fees of #0.13 million (#0.34
million) for advisory and non-executive work. Interest receivable from bank
deposits amounted to #0.31 million (2002: #0.56 million) reflecting both lower
cash balances and interest rates.
Rental income for the year was #0.25 million, slightly ahead of last year, as we
continue to seek to maximise the utilisation and income from our London and
Wilmslow offices. We continue to review the options for the London office, which
has a break clause in October 2010, and on which we incur an average monthly
cost of some #10,000 net of rental income from our portfolio companies. Our
subtenant currently covers the costs of the Wilmslow office in full.
The total costs for the year amount to #1.55 million (2002: #1.81 million),
including a provision for VAT. Over the last few months we have been discussing
the appropriate VAT treatment of our income streams with HM Customs & Excise. We
are not alone in this debate, and in particular the treatment of non-executive
fees is being discussed on an industry-wide basis between the BVCA and Customs.
Whilst we have not yet reached agreement and no assessment has been made, we
have felt it prudent to provide for the potential cost of any historic
over-recovery.
The business is run with the same close attention to costs that we expect of our
portfolio companies. We have reduced our trading overhead year on year and the
will reduce it further following the proposed board changes.
Valuation
The BVCA published in July a new guideline to assist venture capital funds in
valuing their portfolios and to help investors in these funds make better
decisions about the funds. Whilst the new guidelines are effective from 1 August
2003, we have sought to apply their principles in our year-end valuation and
accounts.
Although I shall attempt to summarise the key points here, I would recommend
that shareholders review the full text, which is available from the BVCA's
website www.bvca.com, or we would be happy to email a pdf version to
shareholders if they would prefer. Shareholders can contact Antoinette McShane
at a.mcshane@springboardplc.com to request a copy.
The fundamental principle in the Guidelines is that investments should be valued
at 'Fair Value' which means the amount for which an asset could be exchanged
between knowledgeable, willing parties in an arm's length transaction.
To establish fair value, the Guidelines require fund managers (the valuers) to
make reasonable assumptions and estimates for all the significant factors that
arms length parties to a transaction would be expected to consider, including
those which impact upon the expected cash flows and the expected risk of those
cash flows. There is no assumption that the underlying businesses or the
investments held are saleable at the reporting date or that there is an
intention to sell.
The Guidelines prescribes that where Fair Value cannot be reliably measured, the
investment should be reported at the carrying value at the previous reporting
date, unless there is evidence of impairment since that time, in which case the
carrying value should be reduced. This may be particularly appropriate for an
early stage technology business, where the inability to estimate future earnings
or cash flows and the difficulty of estimating the probability, and financial
impact of success may lead the fund manager to conclude that Fair Value can not
be reliably measured.
The Guidelines are much less prescriptive than those they supersede in that they
do not require that a particular method of valuation be used in specific
circumstances. Instead the Guidelines require that the methodologies used are
appropriate to the investment and consistently used from period to period and go
on to set out primary or secondary methodologies. The primary ones are earnings
multiple, price of a recent investment or net assets, though this is not an
exhaustive list and others may be used depending on the circumstances.
The valuation methodologies, which we have applied at the year-end, are set out
for each of our core investments in the Investment Portfolio Review in the
Report and Accounts. For the majority of investments we have been able to assess
Fair Value. Where this is not the case, the investment is carried at the
previous carrying value less an appropriate impairment provision.
Whilst the BVCA has introduced the new Guidelines and we have been mindful of
these, it would be wrong for shareholders to have the impression that this
year's basis of valuation is in some way incomparable with last as we also
endeavoured to produce a fair value for each investment then. Whilst we have
updated our valuation policy to reflect the new Guidelines, other than specific
impairment provisions, the basis of valuation has only changed for two companies
in the portfolio year on year where the specific circumstances warranted that
change.
Gerard Downes
Finance Director
INVESTMENT PORTFOLIO: Movements in the financial year
Net Book Value at Net Cash Valuation Net Book Value at
30 June 2002 Invested (Repaid) Adjustments 30 June 2003
#'000 #'000 #'000 #'000
SUPPORT SERVICES
Build Assured 1,138 (48) (748) 342
Businesshealth 2,564 102 (1,561) 1,105
Caribiner 294 63 (357) -
Directorbank 1,250 (50) (380) 820
Meetingzone 750 368 - 1,118
Office Canopy 263 100 - 363
Group
Rescue IT 134 6 (140) -
Specialist Hire 95 76 201 372
Group
__________ __________ __________ __________
6,488 617 (2,985) 4,120
__________ __________ __________ __________
MEDIA
ICP Europe 470 - - 470
Publishing
Jobs Financial 426 - (213) 213
Redeye 1,116 - (191) 925
Spark Learning 1,005 - - 1,005
Tree Top Media 352 768 (560) 560
__________ __________ __________ __________
3,369 768 (964) 3,173
__________ __________ __________ __________
SOFTWARE SERVICES
Accede 788 139 (464) 463
Solutions
Codima - 350 - 350
Technologies
Knowledge 136 - (89) 47
Process
Purple Voice 125 139 (214) 50
Treasurydealer 457 18 (475) -
Wax Digital 807 40 33 880
__________ __________ __________ __________
2,313 686 (1,209) 1,790
__________ __________ __________ __________
OTHER GROUPS
Funding 12 - - 12
Corporation
Latina Brands 194 225 (94) 325
Parallel Brand 37 60 (97) -
Tenzen 887 - 887
__________ __________ __________ __________
1,130 285 (191) 1,224
__________ __________ __________ __________
NON CORE 176 - (26) 150
__________ __________ __________ __________
TOTAL 13,476 2356 (5,375) 10,457
PORTFOLIO
__________ __________ __________ __________
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE 2003
2003 2002
#'000 #'000
Income
__________ __________
- Investment management fee income 125 342
- Rental income 245 224
- Interest income 302 307
__________ __________
672 873
Other operating income - 128
Staff costs (542) (862)
Goodwill written off - (92)
Administrative expenses (1,010) (952)
Impairment of investments (4,212) (3,062)
__________ __________
Operating loss (5,092) (3,967)
Interest receivable 312 558
Loss on realisation of investments - (35)
__________ __________
Loss on ordinary activities before taxation (4,780) (3,444)
Tax - -
__________ __________
Loss on ordinary activities after taxation (4,780) (3,444)
Minority interests - 3
__________ __________
Loss for the financial year (4,780) (3,441)
__________ __________
Loss per share (36.3p) (26.2p)
All activity has arisen from continuing operations.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED
30 JUNE 2003
2003 2002
#'000 #'000
Loss for the financial year (4,780) (3,441)
Unrealised (deficit) surplus on revaluation of (1,163) 3,329
investments
_________ _________
Total gains and losses recognised since last annual (5,943) (112)
report and accounts
_________ _________
CONSOLIDATED BALANCE SHEET AT 30 JUNE 2003
2003 2002
#'000 #'000
Fixed assets
Tangible assets 148 237
Investments 9,060 13,476
__________ __________
9,208 13,713
__________ __________
Current assets
Assets held for resale 1,397 -
Debtors 775 954
Cash at bank and on deposit 7,371 9,938
__________ __________
9,543 10,892
Creditors: Amounts falling due within one year (314) (225)
__________ __________
Net current assets 9,229 10,667
__________ __________
Net assets 18,437 24,380
__________ __________
Capital and reserves
Called-up share capital 1,316 1,316
Share premium account 28,623 28,623
Profit and loss account (13,668) (8,888)
Revaluation reserve 2,166 3,329
__________ __________
Total capital employed 18,437 24,380
__________ __________
Net asset value per share 140.1p 185.3p
__________ __________
The accompanying notes are an integral part of this consolidated balance sheet.
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2003
2003 2002
#'000 #'000
Net cash outflow from (510) (1,082)
operating activities
__________ __________
Returns on investments and
servicing of finance
Interest received 312 562
__________ __________
Capital expenditure and
financial investment
Purchase of equity investments and (2,495) (5,160)
loans to investments
Disposal of investments - -
Loans repaid 139 150
Purchase of tangible fixed (13) (6)
assets
Receipts on sale of - 3
tangible fixed assets
__________ __________
Net cash outflow from capital (2,567) (5,013)
expenditure and financial investment
__________ __________
Acquisitions
Purchase of subsidiary - (11)
undertaking
__________ __________
Net cash outflow from acquisitions - (11)
__________ __________
Cash outflow before management of (2,567) (5,544)
liquid resources
__________ __________
Management of liquid resources
Cash taken from short term 9,789 5,277
deposits
__________ __________
Net cash inflow from management of 9,789 5,277
liquid resources
__________ __________
Increase (decrease) in 7,222 (267)
cash in the year
__________ __________
NOTES
Preparation of Preliminary Statement
The foregoing financial information has been prepared on the basis of the
accounting policies set out in Springboard plc's accounts for the year ended
2002 having regard for the Reporting and Valuation Guidelines published by the
BVCA in July 2003.
The financial information set out in this announcement does not constitute the
Company's statutory accounts for the years ended 30 June 2003 or 2002. The
financial information for the year ended 30 June 2002 is derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies. The auditors reported on those accounts; their
report was unqualified and did not contain a statement under s237(2) or (3)
Companies Act 1985. The statutory accounts for the year ended 30 June 2003 will
be finalised on the basis of the financial information presented by the
directors in this preliminary announcement and will be delivered to the
Registrar of Companies following the Company's annual general meeting.
Annual Report and Accounts
Copies of this preliminary announcement will be sent to shareholders, as will
copies of the Report and Accounts in due course.
Loss Per Share
The loss per share of 36.3p (2002: 26.2p) is calculated by reference to the loss
for the financial year of #4,780,000 (2002: #3,441,000) and to the weighted
average of 13,156,000 ordinary shares in issue during both years.
Cash Flow: Analysis of Funds
30 June 2002 Cash flow 30 June 2003
#'000 #'000 #'000
Cash at bank and in hand 149 7,222 7,371
Short term bank deposits 9,789 (9,789) -
__________ __________ __________
9,938 (2,567) 7,371
__________ __________ __________
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UUUCPBUPWGMB
