Final Results
May 02 2003 - 12:03PM
UK Regulatory
News Release
2 May 2003
SVM OFEX FUND PLC
- Results for the year to 31 March 2003 -
KEY POINTS
* Net asset value declined 34.4% to 55.6p per share, compared to a 34.8% fall
in the AIM Index and a 33.6% decline in the FTSE Small Cap Index over the
same period
* Since inception the Fund has outperformed both the AIM and and FTSE
SmallCap indices falling 42.6% compared to declines of 66.4% and 46.1%
respectively
* Significant trading progress was achieved by several portfolio companies
during the year. Six of the larger investments have reported strong sales
growth, with three now being profitable.
* The first trade sale was achieved for the Fund with Squaresum, which was
acquired by AIM-listed CODASciSys at a premium to the then share price and
to the Fund's original investment cost.
* 15% increased weighting in AIM stocks and 18% held in unquoted stocks,
resulting in one third of the Fund's portfolio now being outside the OFEX
market.
* Successful fundraising and AIM listing achieved in April 2003 by the OFEX
market operator, OFEX Holdings plc. This has attracted several mainstream
institutional shareholders.
* Outlook is becoming more positive for both the market and the Fund, which
the Board believes will benefit from a revival of interest in early stage
companies.
* Annual General Meeting will be held in London on Friday 6 June 2003.
- Ends -
For further information, please contact:
David Stevenson SVM Asset Management 0131 226 6699
Roland Cross Broadgate 020 7726 6111
SVM OFEX FUND PLC
Chairman's Statement
Unaudited results for the year to 31 March 2003
Commenting on the results for the year ended 31 March 2003, Chairman, Peter
Dicks, said:
The year under review has been a difficult one for equity markets, with
sentiment towards early stage companies particularly badly affected. The lack
of confidence amongst investors reflects a challenging trading environment for
young companies, brought about by slowing growth within the UK economy. Tighter
spending by companies and consumers makes rapid sales growth difficult to
achieve, with an immediate impact on fragile cashflows. Only those companies
with a compelling product or service, will continue to make progress.
The Fund's performance for the year reflects the weak stockmarket environment,
with net asset value per share down 34.4% to 55.6p. Its benchmark, the FTSE
Fledgling Index fell 21.9%, however the broader pattern in smaller companies is
more clearly evidenced by the AIM and FTSE SmallCap indices, which fell 34.8%
and 33.6% respectively. Since its inception, the Fund has outperformed both the
AIM and FTSE SmallCap indices, falling 42.6% against declines of 66.4% and
46.1% respectively.
Portfolio
The fall in net asset value contrasts with the significant trading progress
achieved by several portfolio companies during the year. Six of the larger
investments, together accounting for almost one third of the Fund, have
reported strong sales growth, and three are now profitable. However, this
trading performance translated into share price gains in only two cases, with
the remainder of these companies suffering more than ten per cent declines.
Small selling volumes continue to have a disproportionate impact on share
prices, with liquidity remaining tight not only on the OFEX market but right
across the smaller companies universe.
On a more positive note, the Fund achieved its first trade sale during the
year, with accounting software supplier Squaresum acquired by AIM listed
CODASciSys, at a premium to the then share price and also the Fund's original
investment cost.
The portfolio remained nearly fully invested for most of the period,
maintaining a cash balance which averaged less than ten per cent. A number of
follow-on investments were made in existing portfolio companies, focusing on
those where growth prospects are still achievable, albeit delayed by the slower
economic environment. During the year, one of the Fund's larger investments,
hospital equipment manufacturer Dawmed, was promoted from OFEX to AIM. This
increased the weighting in AIM stocks to 15% at the period end, and with 18%
held in unquoted stocks, the Fund now has one third of its portfolio outwith
the OFEX market.
Whilst disappointed by the lack of market interest in smaller companies during
the year, the Board believes the business growth being achieved by several
companies within the portfolio will eventually be recognised by a wider
investor audience. This could occur on OFEX, more senior stockmarkets such as
AIM, or as a result of a trade sale.
In April 2003 the OFEX market operator, OFEX Holdings plc, achieved a
successful fundraising and AIM listing, attracting several mainstream
institutional shareholders. Following this, it is to be hoped that the OFEX
market will enjoy a higher profile amongst investors, and the Board remains
positive about the outlook for both the market and the Fund, with some small
signs that interest in early stage companies is beginning to return.
AGM
The Fund's Annual General Meeting will be held in London on Friday 6 June 2003
and details of the resolutions to be proposed are given in the Notice of
Meeting. The AGM will be at 12.30pm and will be preceded at 12 Noon by a
presentation from the Managers, who will review the portfolio and investment
policy, and answer questions from shareholders. Copies of the presentation will
be available upon request to all shareholders and will be put on the Managers'
website (www.svmonline.co.uk)."
Peter Dicks
Chairman
2 May 2003
Summarised Statement of Total Return
(unaudited)
Year to 31 March 2003 Period to 31 March 2002
Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000
Gains on sale of - 12 12 - (78) (78)
investments
Movement in - (1,498) (1,498) - (765) (765)
unrealised
depreciation
------- ------- ------- ------- ------- -------
Losses on - (1,486) (1,486) - (843) (843)
investments
Income 12 - 12 216 - 216
Investment - (32) (32) - (66) (66)
management fees
Other expenses (79) - (79) (114) - (114)
------- ------- ------- ------- ------- -------
Return on (67) (1,518) (1,585) 102 (909) (807)
ordinary
activities
before taxation
Taxation - (8) (8) (19) 13 (6)
------- ------- ------- ------- ------- -------
Transfer from (67) (1,526) (1,593) 83 (896) (813)
reserves
------ ------- ------- ------- -------- -------
Return per (1.22p) (27.94p) (29.16p) 1.45p (15.62p) (14.17p)
ordinary Share
As at As at
31 March 31 March
2003 2002
�'000 �'000
Balance Sheet
(unaudited)
Investments 2,696 3,971
Net current assets 342 660
------- -------
Ordinary shareholders funds 3,038 4,631
------- -------
Net asset value per ordinary 55.65p 84.82p
share
Summarised Cash Flow Statement
(unaudited)
Net cash flow from operating (102) 42
activities
Taxation (14) -
Capital expenditure and financial (211) (4,814)
investment
Financing - 5,444
------- -------
(Decrease) / increase in cash (327) 672
------- -------
Notes
1. The above results cover the year to 31 March 2003. The comparative figures
are for the period from incorporation on 4 October 2000 to 31 March 2002. The
results reflect the adoption in the accounts of the Statement of Recommended
Practice (SORP) issued by the Association of Investment Trust Companies.
2. Returns per Ordinary Share are based on 5,460,000 shares in issue during the
year (31 March 2002 - 5,739,151). The number of shares in issue at 31 March
2003 was 5,460,000. (31 March 2002- 5,460,000).
3. The above figures do not constitute full accounts in terms of Section 240 of
the Companies Act 1985. The accounts for the period from incorporation to 31
March 2002, which were unqualified, have been lodged with the Registrar of
Companies. The report will be mailed to shareholders in early May 2003. Copies
will be available for inspection at 7 Castle Street, Edinburgh, the registered
office of the Company.
ENDS
K:SVMRELEASESOFEXprelim May 03.doc
END