TIDMSVC2
Financial highlights
Per ordinary share (pence) 30.06.09 31.12.08 30.06.08
Net asset value 33.4 36.4 44.3
Dividends
Dividend paid (1) - 1.0 1.0
Cumulative dividend (2) 6.9 6.9 6.9
Total return per share (3)
SPARK VCT 2 plc 40.3 43.3 51.2
Return including tax benefits (5) 60.3 63.3 71.2
Total return per 100p invested (4)
Original investors in SPARK VCT 3 plc 52.3 56.7 65.4
Return including tax benefits (5) 72.3 76.7 85.4
(1)Dividend paid in the financial period ended on the date stated.
(2)Cumulative dividends paid by SPARK VCT 2 plc.
(3)Net asset value plus cumulative dividend per share to original shareholders in
SPARK VCT 2 plc since the launch of the Company (then called Quester VCT 4 plc)
in November 2000.
(4)Total return to former shareholders in SPARK VCT 3 plc, launched in December
2001 (under the name Quester VCT 5 plc), which was merged with SPARK VCT 2 plc in
November 2008.The share exchange ratio for former shareholders in SPARK VCT 3 plc
was 1.4613.The total return stated is applicable only to subscribers of shares in
Quester VCT 5 plc at the time of launch of the Company in 2001-2. It does not
represent the return to subsequent subscribers or purchasers of shares.
(5)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 Chairmans statement, the Investment
managers report, the fund summary and note 7 to the condensed financial statements.
Chairman's statement
Overview
The Company's principal objective for 2009 has been to ensure that the
portfolio remains stable. Against this background, it gives some satisfaction
to be able to report that the emphasis placed by the Manager on ensuring
appropriate cost control and management of cash resources within the portfolio
companies appears to have been successful so far in enabling companies to
survive the recession.
In this first half of 2009, the commercial performance of businesses within
the portfolio has generally been 'on plan' following the downward revision to
expectations at the end of last year. The development stage companies, which
have reached substantial revenue generation and are cash-flow positive, have
in most cases shown a satisfactory performance despite the recession.The
recent trading results of Elateral Holdings Limited are most encouraging.
Among the early stage venture capital investments that are beginning to show a
degree of maturity, progress has generally been in line with expectations and
in a number of cases gives cause for greater confidence in the prospect of an
ultimately thriving business and a successful investment return. Cases in
point are Oxford Immunotec Limited and Celona Technologies Limited.
A number of the early stage companies in the TMT sector in which investment
has been made more recently have been impacted by the recession, with initial
sales progress being slower than anticipated. Where the Manager has judged the
companies nevertheless to have good long-term prospects, management support
and, where necessary, follow-on funding have been provided.The early stage
life sciences companies have made generally good progress in their scientific
and technical development. Highlights are set out in the Investment manager's
report.
The funding environment for all early stage companies continues to be very
uncertain. At present it is difficult to obtain from new investors the
additional equity capital needed to support the development of venture-backed
companies, and where such finance is available the terms on which it is
offered tend to involve much reduced pre-money valuations. In accordance with
the International Private Equity and Venture Capital Valuation Guidelines,
where a company has recently raised new funding or is expected to do so in the
relatively near future, it has been necessary for the carrying value of the
investment at 30 June 2009 to be reduced to reflect the actual or expected
terms of the round.As a result, some of the most promising investments in the
portfolio are reported at reduced valuations as at 30 June 2009, as compared
with last year end.
Overall, a valuation reduction of GBP2,022,000 has been recorded for the half
year in respect of venture capital investments, including a net reduction of
GBP2,151,000 for the unquoted investments and a net appreciation in value of
GBP129,000 for the quoted investments. Details of the main valuation changes are
given in the Investment manager's report.
Results for the six months ended 30 June 2009
The movement in net assets and net assets per share in the six months to 30
June 2009 is summarised in the table below.
Venture Net
capital current
investments assets Total Pence per
GBP'000 GBP'000 GBP'000 Share
Net asset value at 31 December
2008 20,489 8,106 28,595 36.4
Income - 61 61 0.1
Operating expenses - (458) (458) (0.6)
Net gain on disposal 10 - 10 -
Net loss on revaluation of
investments (2,022) - (2,022) (2.6)
Net investment by the Company 568 (568) - -
Net assets before dividends and
share buy-backs 19,045 7,141 26,186 33.3
Dividend paid - - - -
Share buy-backs - (86) (86) 0.1
Net asset value at 30 June 2009 19,045 7,055 26,100 33.4
As a result of the valuation changes and the impact of net operating costs,
net assets per share, before taking account of share buy-backs, fell by some
8% in the half year, from 36.4p at 31 December 2008 to 33.5p at 30 June 2009.
The total return to shareholders from the launch of the Company in November
2000 to 30 June 2009, inclusive of all dividends paid, now amounts to 40.5p
per share before taking account of tax reliefs.
The total return to original shareholders in SPARK VCT 3 plc from its launch
in December 2001 (under the name Quester VCT 5 plc) to 30 June 2009, inclusive
of all dividends paid, amounts to 52.6p per 100p originally invested, before
taking account of tax reliefs.
In the absence of realisations of investments during the half year, the Board
does not recommend an interim dividend.
Outlook
The environment for achieving exits from venture capital investments continues
to be very difficult and market conditions are not conducive to the achievement
of satisfactory sale prices for even the most promising businesses. Against
this background, and given the recessionary economic conditions, the Company's
financial resources are being concentrated on the development of existing
portfolio companies. It has retained a substantial amount of cash, which is
available for this purpose. In order to maintain flexibility in the application
of resources, the Board will seek to minimise the level of share buy¬-backs.
A cautious approach is being taken to the consideration of new investment
opportunities, pending greater visibility on the availability of cash from
realisation of existing investments.
For the year as a whole, it would at this stage be unwise to indicate any
expectation of a positive return for shareholders, either in the form of a
dividend or capital growth. Nevertheless the approach taken by the Manager
appears to have been successful so far in enabling companies to survive the
recession. In recent months it has been encouraging to see tangible progress
in the development of some of the key companies, with improving sales and
order books and the prospects of an improving M&A market.
The Company has suffered from difficult times over the last two or three years
and shareholders have seen a substantial decline in net asset value per
share.A good deal of patience will still be required, but the Board believes
there are now grounds for cautious optimism over the longer-term prospects.
In the last Annual report we indicated the Board would be reviewing the future
direction of the Company so as to ensure that returns, when they arise, are
delivered to shareholders in the most effective way, while at the same time
ensuring that the ongoing activities of the Company are appropriately funded.
Shareholders should expect to receive a further communication on this before
the year end.
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 are in a position to do so.
Board
With much regret, we have recently accepted the resignation from the Board of
Patrick Seely, who has stepped down for reasons of a family illness with
effect from 19 August 2009.
Having previously served as a director of SPARK VCT 3 plc, Patrick became a
director of the Company upon completion of the merger in November 2008. Over
the relatively brief period of his appointment, Patrick has given wise advice
at all times and made a most valuable contribution to the Company's affairs.
I would like to express the Board's warmest thanks to him.
Robert Wright
Chairman
21 August 2009
Directors' responsibility statement
The Directors confirm to the best of their knowledge that:
- the condensed 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 interim management report includes a fair review of the information
required by Disclosure and Transparency Rule 4.2.7R of important events that
have occurred during the first six months of the financial year and their
impact on the condensed financial statements, and a description of the
principal risks and uncertainties for the remainder of the financial year; and
- the condensed financial statements (note 7) include 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 have
continued to be focused on working with the portfolio companies, with a
particular emphasis on cost control and rates of cash burn, against the
background of the risk of slower than expected revenue growth and the reduced
availability of venture capital finance.
Generally, the commercial performance of businesses within the portfolio has
been 'on plan' following the downward revision of expectations at the end of
last year. However, the economic and therefore funding environment continues
to be very uncertain. Even where business development has been progressing
well, there has been greater difficulty in obtaining from new investors the
additional equity capital needed to support the development of venture-backed
companies, and where such finance is available the terms on which it is
offered tend to involve substantially reduced pre-money valuations. As a
result, all but one of the valuation movements reported for the six months
have been downward, and there has been increasing pressure for additional
equity capital to be provided by the Fund and other existing investors.
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 to believe that
achievement of significant profitable exits will not be possible before 2011
at the earliest. There were no realisations during the six months to 30 June
2009.
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
Significant business developments within the portfolio are summarised below:
- Celldex Therapeutics, Inc. has recently announced agreement to acquire
CuraGen Corporation, another NASDAQ-listed company with a portfolio of
oncology-focused antibodies complementary to Celldex's existing targeted
immunotherapy platform.This transaction, which is due to complete in the
third quarter, also provides cash resources to enable Celldex to advance
its clinical development programmes into 2012.
- Celona Technologies Limited has now begun to see real progress in winning
contracts from major telecoms companies and others for its data migration
software. Recent contracts have been won and negotiated in much shorter
timeframes. Revenues in the year to March 2009 showed a fivefold increase
over the previous year, and current contracts already commenced will
deliver a substantial proportion of budgeted revenues in the current year.
- Elateral Limited had an excellent year to 31 March 2009 delivering 44%
revenue growth, ahead of budgeted expectations.The company won a number of
new customer contracts including Ciena, Linksys, NetApp, Toyota and Symantec.
At the same time, it renewed and extended its relationship with a number of
existing customers including SAP, Coca Cola and New Balance and celebrated its
10th year in partnership with British Telecom.
- Isango! Limited an early stage online travel website company offering users
an authoritative source of travel experiences such as holiday tours,
sightseeing, attractions and activities, was impacted in autumn 2008 by the
downturn in the travel sector. More recently, while revenues have improved
somewhat and the company has recently launched its new website which broadens
the range of its travel and holiday offering, growth continues to be slower
than had been expected.
- Oxford Immunotec Limited has been building its marketing effort in the
United States following the July 2008 grant of FDA approval for its innovative
diagnostic test for tuberculosis, T-SPOT®.TB. The new test has been well
received by clinicians. With the benefit of feedback from the initial phase of
the marketing a new business model, using a new laboratory to process the
tests, is being adopted and should help accelerate sales growth.Very recently,
the company has secured additional funding (see 'Follow-on investments' below)
which will support this next phase of its development.
- 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.
- Vivacta Limited, which specialises in point-of-care diagnostic tests,
announced the successful completion of development of its first test, for
TSH (thyroid function) together with prototype commercial readers. This has
triggered the raising of a new financing round (see 'Follow-on investments'
below) which it is expected will fund the company through to regulatory
approval of the TSH test.
In relation to Gemini Holdings Limited, the fresh milestones set by the SPARK
management 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.
Follow-on investments
The six months to 30 June 2009 saw significant follow-on investment in five
companies:
Company Sector GBP'000
Follow-on investments completed
in the six months to 30 June 2009:
Celona Technologies Limited TMT 81
Secerno Limited TMT 82
Skinkers Limited TMT 37
Xention Limited Healthcare 244
Xtera Communications, Inc. TMT 123
Other 11
578
The amounts invested during the six months to 30 June 2009 in Celona
Technologies Limited and Xention Limited represented the second
tranches of funding originally agreed in March 2008 and December 2008
respectively, as referred to in the last Annual report.
The additional funding of Secerno Limited, which specialises in the supply of
software and appliances to protect against internal and external threats to
databases, has been provided to support 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 a modest amount 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.
In the case of Xtera Communications, Inc. the follow-on investment, made
alongside a range of US and other syndicate partners, reflected a requirement
for additional equity capital as a result of the credit crunch, with a
reduction in the availability of trade credit. Participation by the Fund in
this round has served to protect the value of its existing investment.
Additionally, agreement has been reached in three cases for follow-on
investment to be completed during the current quarter:
Company Sector GBP'000
Follow-on investments committed,
for completion in the quarter to
30 September 2009:
Oxford Immunotec Limited Healthcare 534
UniServity Limited TMT 117
Vivacta Limited Healthcare 91
742
In relation to Oxford Immunotec Limited, the Fund has committed to a further
investment as part of an externally led round: reflecting the current market
conditions in venture capital generally, the terms involve a reduction in the
pre-money valuation attributed to this investment. In the case of 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. The Fund has also
agreed to provide bridge finance to UniServity Limited ahead of a third-party
funding round being planned for later in the year.
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 quoted venture capital investments (shares traded on AIM, the Frankfurt
stock exchange and NASDAQ) have been valued at their bid prices at 30 June
2009.
Overall, a valuation reduction of GBP2,022,000 has been recorded for
the half year, including a net valuation reduction of GBP2,151,000 in respect
of unquoted venture capital investments and a net appreciation of GBP129,000 in
respect of the quoted investments.
As indicated earlier, it is currently very difficult to obtain from new
investors the additional equity capital needed to support the development of
venture-backed companies, and where such finance is available the terms on
which it is offered tend to involve substantially reduced pre-money
valuations. Following the International Private Equity and Venture Capital
Valuation Guidelines, where a company has recently raised new funding or is
expected to do so in the releatively near future, the carrying value of the
investment at 30 June 2009 has been reduced to reflect the actual or expected
terms of the round. The reductions in the valuation of the holdings in Celona
Technologies Limited and Oxford Immunotec Limited have been made for this
reason.
Similar considerations have applied in relation to a number of 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.
Among the development stage companies, the recent trading results of Elateral
Holdings Limited have supported an upward revaluation of the investment on the
basis of an earnings multiple.
The net reduction in valuation of unquoted venture capital investments is as
follows:
Company GBP'000
Celona Technologies Limited (613)
Elateral Holdings Limited 113
Isango! Limited (563)
Oxford Immunotec Limited (596)
Skinkers Limited (169)
We7 Limited (167)
Others (3) (156)
(2,151)
Movements in valuation of the quoted venture capital investments over the six
months were as follows:
Company GBP'000
Allergy Therapeutics plc AIM 62
Celldex Therapeutics, Inc NASDAQ (144)
MediGene AG FRANKFURT (87)
Portrait Software plc AIM 275
Others (3) 23
129
Outlook
The actions that have been taken to position the portfolio companies to face
the problems of the recession appear so far to have achieved their
objectives.The combination of a reduced base of operating costs within the
companies and, more recently, some signs of improving order books and early
signs of potential corporate acquisition interest give grounds for belief that
portfolio companies may be witnessing a slowing in the decline of their
markets.The progress achieved so far would, however, be vulnerable to setback
if there were to be a further loss of confidence within the business community
generally.
SPARK Venture Management Limited
Manager
21 August 2009
Fund summary as at 30 June 2009
% of
Industry Cost(1) Valuation Equity % fund by
sector GBP'000 GBP'000 held value
Fifteen largest venture capital
investments
Workshare Limited TMT 2,947 3,066 10.2% 11.8%
Xention Limited Healthcare 2,438 2,059 6.9% 7.9%
Xtera Communications, Inc. Healthcare 3,191 1,779 1.3% 6.8%
UniServity Limited TMT 1,400 1,400 23.2% 5.4%
Oxford Immunotec Limited Healthcare 2,388 1,206 6.2% 4.6%
Elateral Holdings Limited(2) TMT 479 1,161 13.3% 4.4%
Vivacta Limited Healthcare 798 856 4.7% 3.3%
Level Four Software Limited TMT 795 795 7.3% 3.0%
Cluster Seven Limited TMT 845 765 5.8% 2.9%
Antenova Limited TMT 1,718 659 6.2% 2.5%
Sift Group Limited TMT 917 600 8.3% 2.3%
MediGene AG FRANKFURT Healthcare 797 529 0.4% 2.0%
Portrait Software plc TMT 1,186 490 3.3% 1.9%
Imagesound plc TMT 489 489 0.5% 1.9%
Celona Technologies Limited TMT 2,708 451 10.3% 1.7%
23,096 16,305 62.4%
Other venture capital
investments
Celldex Therapeutics, Inc NASDAQ Healthcare 1,537 423 0.7% 1.6%
Perpetuum Limited TMT 479 374 4.4% 1.4%
Secerno Limited TMT 476 351 3.4% 1.3%
Haemostatix Limited Healthcare 312 312 7.7% 1.2%
Allergy Therapeutics plc AIM Healthcare 795 239 0.6% 0.9%
Isango! Limited TMT 750 188 6.8% 0.7%
We7 Limited TMT 334 167 3.4% 0.6%
Skinkers Limited TMT 354 159 2.9% 0.6%
Quadnetics Group plc TMT 166 106 0.5% 0.4%
Celoxica Holdings plc TMT 192 104 3.7% 0.4%
Other investments: valuations
less than GBP100,000(2) 1,708 317 1.2%
7,103 2,740 10.3%
Total venture capital 30,199 19,045 72.7%
investments
Total unquoted venture capital 25,650 17,210 65.9%
investments
Total quoted venture capital 4,549 1,835 6.8%
investments
Total investments 30,199 19,045 72.7%
Cash and other net assets 7,055 7,055 27.3%
Net assets 37,254 26,100 100.0%
(1) Amounts shown as cost represent acquisition cost (in the case of investments
originally made by the Company) and/or the valuation attributed to the
investment at the date of the merger (in the case of investments originally
made by SPARK VCT 3 plc), 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.
Income Statement
Six months to Six months to Twelve months to
30 June 2009 30 June 2008 31 December 2008
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss on revaluation
of investments at
fair value through
profit or loss - (2,022) (2,022) - (379) (379) - (4,084) (4,084)
Gain/(loss) on
disposal of
investments at fair
value through
profit or loss 10 10 74 74 - (526) (526)
Income 61 - 61 129 - 129 235 - 235
Recoverable VAT - - - - - - 400 - 400
Investment (329) - (329) (283) - (283) (592) - (592)
management fee
Other expenses (129) - (129) (187) - (187) (661) - (661)
Loss on operating (397) (2,012) (2,409) (341) (305) (646) (618) (4,610) (5,228)
activities
Interest payable on - - - (3) - (3) (5) - (5)
loan notes
Loss on ordinary
activities before
taxation (397) (2,012) (2,409) (344) (305) (649) (623) (4,610) (5,233)
Tax on loss on - - - - - - - - -
ordinary activities
Loss on ordinary
activities after
taxation (397) (2,012) (2,409) (344) (305) (649) (623) (4,610) (5,233)
Basic and fully
diluted loss per
share 3 (0.5)p (2.6)p (3.1)p (0.7)p (0.7)p (1.4)p (1.1 )p (8.3)p (9.4)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 through
the income statement of the Company.
The accompanying notes are an integral part of this statement.
Balance sheet
30 June 31 December 30 June
2009 2008 2008
(unaudited) (audited) (unaudited)
Notes GBP'000 GBP'000 GBP'000
Fixed assets
Investments at fair value through
profit or loss 4 19,045 20,489 18,044
Current assets
Debtors 903 1,364 737
Cash at bank 6,310 7,139 2,099
7,213 8,503 2,836
Creditors: amounts falling due (158) (397) (331)
within one year
Net current assets 7,055 8,106 2,505
Creditors: amounts falling due in - - (99)
over one year
Net assets 26,100 28,595 20,450
Capital and reserves
Called-up share capital 780 785 462
Share premium account 339 339 339
Capital redemption reserve 84 79 72
Special reserve 20,305 21,196 21,528
Investment holding losses (11,154) (9,937) (5,113)
Merger reserve 12,615 12,615 -
Profit and loss account 3,131 3,518 3,162
Total equity shareholders'funds 26,100 28,595 20,450
Net asset value per share 5 33.4p 36.4p 44.3p
The accompanying notes are an integral part of this statement.
Cash flow statement
Twelve
Six months months Six months
to to to
30 June 31 December 30 June
2009 2008 2008
(unaudited) (audited)(unaudited)
Note GBP'000 GBP'000 GBP'000
Net cash outflow from operating activities 6 (175) (1,954) (332)
Financial investment
Purchase of venture capital investments (578) (1,584) (979)
Purchase of listed equities and fixed
interest investments - (158) (159)
Sale of venture capital investments - 4,381 3,345
Sale/redemption of listed equity and fixed
interest investments - 2,933 190
Amounts recovered from investments
previously written off 10 97 82
Total net financial investment (568) 5,669 2,479
Equity dividends paid - (467) (464)
Financing
Funds received as part of merger - 3,792 -
Buy-back of ordinary shares (86) (395) (182)
Redemption of loan notes - (100) -
Repayment of redeemable loan notes - - (1)
Net interest on loan notes - (5)
Total financing (86) 3,292 (183)
(Decrease)/increase in cash for the period (829) 6,540 1,500
Reconciliation of net cash flow to
movement in net funds
(Decrease)/increase in cash for the period (829) 6,540 1,500
Net funds at the start of the period 7,139 599 599
Net funds at the end of the period 6,310 7,139 2,099
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
Six months to 30 June 2009
Capital
Share redemp- Investment Profit
Share premium tion Special holding Merger and loss
capital account reserve reserve losses reserve account Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2009 785 339 79 21,196 (9,937) 12,615 3,518 28,595
Shares purchased for (5) - 5 (86) - - - (86)
cancellation
Realisation of prior - - - - 805 - (805) -
years' net losses on
investments
Transfer from special
reserve to income
statement - - - (805) - - 805 -
Net loss on revaluation
of investments - - - - (2,022) - 2,022 -
Loss on ordinary
activities after
taxation - - - - - - (2,409) (2,409)
At 30 June 2009 780 339 84 20,305 (11,154) 12,615 3,131 26,100
Twelve months to 31
December 2008
At 1 January 2008 467 339 67 23,157 (4,701) - 2,416 21,745
Shares issued in
connection with the
merger 330 - - - - 12,615 - 12,945
Shares purchased for (12) - 12 (395) - - - (395)
cancellation
Realisation of prior
years' net gains on
investments - - - - (1,306) - 1,306 -
Transfer from special
reserve to income
statement - - - (1,566) - - 1,566 -
Net loss on revaluation
of investments - - - - (3,930) - 3,930 -
Loss on ordinary
activities after
taxation - - - - - - (5,233) (5,233)
Dividends paid - - - - - - (467) (467)
At 31 December 2008 785 339 79 21,196 (9,937) 12,615 3,518 28,595
Six months to 30 June
2008
At 1 January 2008 467 339 67 23,157 (4,701) - 2,416 21,745
Shares purchased for (5) - 5 (182) - - - (182)
cancellation
Realisation of prior - - - - (400) - 400 -
years' net gains on
investments
Transfer from special
reserve to income
statement - - - (1,447) - - 1,447 -
Net loss on revaluation
of investments - - - - (12) - 12 -
Loss on ordinary
activities after
taxation - - - - - - (649) (649)
Dividends paid - - - - - - (464) (464)
At 30 June 2008 462 339 72 21,528 (5,113) - 3,162 20,450
Notes
1 The financial information contained in this Half-Yearly Financial
Report has been prepared in accordance with the Statement of Recommended
Practice (SORP) "Financial Statements of Investment Trust Companies and
Venture Capital Trusts" and in accordance with the accounting policies set out
in the Annual Report for the year ended 31 December 2008. As a change to the
presentation previously adopted in the Annual Report, the results for the half
year are presented in the form of an Income statement in three columns,
'Revenue', 'Capital', and 'Total', instead of a single-column profit or loss
account. The revaluation reserve has been renamed 'Investment holding losses'.
Additionally note 2 states the amount of the total reserves of the Company
that 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 offixed asset
investments, and in accordance with the applicable UK accounting standards.
2 The total reserves available for distribution by way of a dividend is
GBP12,282,000 (31 December 2008: 14,777,000, 30 June 2008: GBP19,577,000),
being made up of the special reserve and profit and loss account, net of
investment holding losses.
3 The revenue loss per share of 0.5p (30 June 2008: loss 0.7p, 31
December 2008: loss 1.1 p) is based on the revenue loss on ordinary activities
after tax of GBP397,000 (30 June 2008: loss GBP344,000, 31 December 2008: loss
GBP623,000) and on the weighted average number of ordinary shares in issue
during the period of 78,023,615 (30 June 2008:46,380,000,31 December 2008:
55,670,213).
The capital loss per share of 2.6p (30 June 2008: loss 0.7p, 31
December 2008: loss 8.3p) is based on the capital loss on ordinary activities
after tax of GBP2,012,000 (30 June 2008: loss GBP305,000,31 December 2008: loss
GBP4,610,000) and on the weighted average number of ordinary shares in issue as
above.
The total loss per share of 3.1 p (30 June 2008: loss 1.4p, 31
December 2008: loss 9.4p) is based on the loss on ordinary activities after
tax of GBP2,409,000 (30 June 2008: loss GBP649,000, 31 December 2008: loss
GBP5,233,000) and on the weighted average number of ordinary shares in issue
as above.
4 Movements in investments during the six months ended 30 June 2009 are
as follows:
Venture
capital
investments
GBP'000
Cost at 1 January 2009 30,426
Net loss at 1 January 2009 (9,937)
Valuation at 1 January 2009 20,489
Movements in the period:
Purchases at cost 578
Net loss on revaluation of investments (2,022)
Valuation at 30 June 2009 19,045
Book cost at 30 June 2009 30,199
Net loss at 30 June 2009 (11,154)
Valuation at 30 June 2009 19,045
Amounts shown as cost represent acquisition cost, less any reduction
made on account of impairment in value.
5 The net asset value per share as at 30 June 2009 of 33.4p (31
December 2008: 36.4p, 30 June 2008: 44.3p) is based on net assets of
GBP26,100,000 (31 December 2008: GBP28,595,000, 30 June 2008: 20,450,000) divided
by the 77,990,533 ordinary shares in issue at that date (31 December 2008:
78,534,876,30 June 2008: 46,168,525).There is no dilution effect in respect of
the period ended 30 June 2009 (31 December 2008: nil, 30 June 2008: nil).
6 Reconciliation of operating loss to net cash outflow from operating
activities
Twelve
Six months months Six months
to to to
30.06.09 31.12.08 30.06.08
(unaudited) (audited) (unaudited)
GBP'000 GBP'000 GBP'000
Loss on ordinary activities (2,409) (5,228) (646)
Loss on investments at fair value 2,012 4,610 305
through profit or loss
Decrease/(increase) in debtors 461 (1,224) (17)
(Decrease)/increase in creditors (239) (112) 29
Interest payable on loan notes - - (3)
Net cash outflow from operating (175) (1,954) (332)
activities
7 Spark Investors Limited (a fellow subsidiary of the Manager), of which
JR Patel 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 GBP11,668 attributable to the investments of the
Company were received pursuant to these arrangements (30 June 2008: GBP11,000,
31 December 2008: GBP26,000). During the six months to 30 June 2009 there were no
transactions by Directors in shares of companies in which the company has
invested (30 June 2008: none, 31 December 2008: none).
8 This Half Yearly Financial Report, has been neither audited nor
reviewed by the Company's auditors and does not constitute statutory accounts
within the meaning of Section 434 of the Companies Act 2006. The statutory
accounts for the period ended 31 December 2008 have been delivered to the
Registrar of Companies and received an audit report which was unqualified, did
not include a reference to any matters to which the auditors drew attention by
way of emphasis without qualifying the report and did not contain any
statements under Section 498(2) and (3) of the Companies Act 2006.
9 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.
10 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.
33 Glasshouse Tel: +44 (0)20 7851 7777 contact@sparkvct.com
Street London Fax: +44 (0)20 7851 7770 www.sparkvct.com
W1B 5DG
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