RNS Number:3375N
eTechnology VCT
09 July 2003
THIS IS FOR ANNOUNCEMENT PURPOSES ONLY AND CONTAINS
THE FULL TEXT OF THE ANNUAL REPORT AND ACCOUNTS.
Financial Summary
Year ended Year ended
31 March 2003 31 March 2002
per ordinary share per ordinary share
Net asset value before distributions 56.54p 67.69p
Net asset value after distributions 56.54p 67.69p
Total return for the period (11.16)p (9.9)p
Chairman's Statement
We are pleased to report the third annual results for your Company for the year
ended 31 March 2003. The Company was launched to invest specifically in venture
capital opportunities within the technology sector and to provide further
exposure to the technology sector by also investing in listed technology markets
until such time as the funds were required for venture capital investment.
Throughout the year your Board, working closely with its adviser Cavendish Asset
Management Limited ("CAM"), has remained cautious amid the continuing pessimism
worldwide in the technology and telecommunications marketplace. The position in
respect of our view across the wider technology sector is more fully set out in
the Investment Manager's Report on pages 6-9.
The results for the year show an operating return of #40,000 (2002 loss of
#48,000). The year shows an overall loss before taxation of #1,518,000 (2002
loss #1,344,000) including #19,000 of realised capital losses and #1,427,000 of
unrealised losses. The net assets at the year end were #7,693,000 representing
56.54p per share (2002 #9,211,000 representing 67.69p per share).
Our activities in direct investments in qualifying companies have continued with
mixed results. The ongoing difficulties in internet related businesses led us
to provide fully for our investment in CableNet International, a provider of
supply chain synchronisation software and services to manufacturers. Industry
is not yet ready to take such large steps in changing its traditional working
patterns. We have decided to reduce the carrying value of the investment in
Jacobs Rimell to reflect more realistically its value as a business. We have
taken the opportunity to provide in full against the original cost of our
investment in Boxmind Ltd as the company is facing ongoing difficulties. The
balance of the portfolio is in various stages of development but undoubtedly
progress has been hampered by the continuing lack of confidence and
opportunities in the markets in which the technology and telecommunications
businesses operate. More detail of the ten largest investments can be found on
pages 11 and 12.
Your Board has continued to retain PricewaterhouseCoopers to advise, monitor and
report on the Company's progress in meeting the qualifying investment
requirements laid down in the VCT legislation. We remain confident that all the
relevant conditions were met as required by 31 March 2003, and continue to be
met on an ongoing basis. In order to ensure compliance with the legislation,
out of the total cash balance of #1,709,000, funds amounting to #1,684,000 have
been placed in a non-interest bearing account pending utilisation of the
majority of the funds in qualifying direct investments.
We reported in December 2002 that the Board had decided to take steps to
commence a process of application to the Court to cancel the Company's share
premium account with a view to restructuring the reserves. This process has for
the time being been put on hold and will be revisited in the light of the
performance of the underlying investment portfolio and achievement of exits.
The Company has continued to comply as far as practicable with current published
guidance on best practice in corporate governance. A statement covering the key
matters relevant to the Company is set out on pages 15 and 16.
The Annual General Meeting of the Company is to be held at the Company's offices
at 10.00am on 9 September 2003, and attached to the Report and Accounts is the
Notice convening the meeting. Shareholders should note that Grant Thornton were
appointed auditors of the Company during the year and a resolution is proposed
at the AGM to appoint them for the coming year.
Your Board are still of the view that over the longer term the portfolio of
investments will start to bear fruit for the future and deliver growth in value.
We are determined to make the most of the investments in what continues to be
a difficult sector.
Michael Teacher
CHAIRMAN
8 July 2003
Directors
Michael Teacher (Aged 56)
Michael is Chief Executive of Unipoly Holdings Ltd, a diversified industrial
group with an annual turnover of approximately #400 million. He was formerly
Chief Executive of Hillsdown Holdings PLC, a #3 billion turnover listed UK
company with in excess of 20,000 employees working at over 100 sites throughout
the UK and Europe. He had five years venture capital experience as Chief
Executive, founder and minority shareholder of Hillsdown Investment Trust, the
venture capital arm of Hillsdown Holdings PLC. He is currently executive in
Residence at Cass Business School, advising the Dean and academic staff on
general business matters and is a director of Networks by Wireless Ltd.
David Svendsen (Aged 54)
David was Managing Director of Microsoft Ltd from 1987 to 1998 and Chairman
until his retirement in February 2000. During this time he developed the
business in the UK and Ireland from a small start up company to be a leader in
its sector today. He has over 25 years of business management experience in a
wide range of companies in both the UK and Australia. He is a director of a
number of private companies and a member of the Advisory Board of GSC Partners
New York LLP, and was a member of the Investment Committee and Advisory Board of
E-Tec India.
Neil Metcalfe (Aged 40)
Neil has been involved in e-commerce since the early days of the internet. He is
fully conversant with such issues as ADSL, WAP, video conferencing, Interactive
Digital T.V., Intranet and Supply chain developments. He was Business Systems
Manager for John Brown Engineering between 1989 and 1994 and Group IT Manager
for Hillsdown Holdings PLC from 1994 to 1999 where he worked closely with
Michael Teacher. He is currently Managing Director of Data Information Advisory
Services Ltd, Commercial Director of Networks by Wireless Ltd (formerly Wireless
Lans Ltd) and a director of Cryotherapy International Ltd.
Graham Woolfman (Aged 46)
Graham is the Managing Director for Investment Banking at Cavendish Asset
Management Limited, which is an investment management and corporate advisory
company regulated by the FSA. For 15 years he was a partner and Head of the
Corporate Finance division within Levy Gee, which then became part of the
Numerica Group plc. He has over 17 years experience in corporate finance and
working with companies backed by private equity finance. Over the last five
years he has developed a speciality in technology related businesses. He is a
Director of LTG Development Capital Limited, a UK based venture capital
management company, and was until recently a director of Sadot Research and
Development Ltd, a venture capital company listed on the Tel Aviv and London
Stock Exchanges. He is a non-executive director of a number of unquoted
companies, representing shareholder interests and in an advisory capacity.
Directors and Advisers
DIRECTORS AUDITORS
M J Teacher Grant Thornton
D E Svendsen 1 Westminster Way
G J Woolfman Oxford
N M Metcalfe OX2 0PZ
All directors are non-executive
COMPANY SECRETARY INVESTMENT MANAGER
M A Lassman LLB FCA Cavendish Asset Management Limited
Chelsea House
Westgate
London
W5 1DR
Tel: 020 7467 4577
Email: info@etechvct.com
REGISTERED OFFICE REGISTRARS
19 Cavendish Square Northern Registrars Limited
London Northern House
W1A 2AW Woodsome Park
Fenay Bridge
Huddersfield
HD8 0LA
Tel: 01484 600 900
SOLICITORS VCT TAXATION ADVISERS
Howard Kennedy PricewaterhouseCoopers
19 Cavendish Square 1 London Bridge
London London
W1A 2AW SE1 9QL
Registered in England, Company No. 03930317
Investment Manager's Report
Investment Policy
Cavendish Asset Management Limited ("CAM") advises the Board on qualifying
venture capital investments, and has the discretion to manage the portfolio of
non-qualifying listed technology investments in line with policies set by the
Board, such policies also being varied based upon advice provided by CAM.
The objective for eTechnology VCT plc is to invest over the medium term in
technology companies which meet the Venture Capital Trust criteria. Investment
has not been restricted to any particular sector of the technology market, and
has included internet and e-commerce related opportunities.
eTechnology undertook to give exposure to the technology markets from the
outset, by investing in shares in non-qualifying listed technology companies and
unit trusts listed on the world's major stock markets. This policy was
maintained throughout the year ended 31 March 2003 although caution was
exercised in not increasing the proportion of funds invested in the quoted
technology sector beyond that held in the previous period. Some investments
were sold as and when necessary in order to finance the qualifying venture
capital investments.
Performance
The eTechnology portfolio managed by CAM declined 4.16% over the 12 month period
ended 31 March 2003. This is calculated on a time weighted basis and includes
the effect of cash movements over the reporting period. Over that same period,
NASDAQ fell 27.9%, the FTSE 100 fell by 31.5% and the FTSE Techmark fell by
45.5%. It should be pointed out that for most of the year only a small portion
of the eTechnology portfolio has been invested in equities. This is a product
of the consistently downbeat view held by CAM and the Board of eTechnology VCT
plc. Consequently the high preponderance of cash and gilts has shielded the
Technology portfolio from the worst of the decline in stock markets, though the
small element that remains in equities declined broadly in line with the three
indices quoted above.
The last twelve months have been a difficult and volatile period for equities in
general. Markets recovered sharply after the sell-off following 11 September
2001. This was sustained beyond March 2002 but was followed by a very sharp
decline between May and August of last year as it became apparent to investors
that the much mooted second half recovery was not going to materialise. The
volatile downtrend continued during the summer until both the FTSE and NASDAQ
indices reached new lows in October during the aftermath of the Bali bombing.
There was a further rally in the run up to Christmas, but the new year ushered
in a renewed bout of serious weakness as the escalating situation in Iraq in
combination with ongoing economic concerns caused a major sell-off. The FTSE
index reached a new low in March just before the commencement of the invasion of
Iraq, NASDAQ was also weak but did not breach its October low. After the year
end, there was a strong rally in the wake of the swift victory by coalition
forces.
Since the sale of the technology Unit Trust holdings over a year ago, the equity
element of the portfolio is now small, consisting of about a dozen individual
small equity investments. These have been monitored throughout the year, and
some small adjustments were made, largely for technical reasons. CAM and the
Board of eTechnology considered the possibility of increasing exposure to
technology shares again as the market fell further, but in the event concluded
that the outlook was still too uncertain and decided not to do so. Throughout
the year a number of sales were made from eTechnology's fixed interest
investments in order to fund VCT qualifying investments. At this stage in
eTechnology's development the priority is now very much monitoring qualifying
investments and ensuring that there is sufficient income to operate the VCT.
Although it is unlikely that any major further cash calls will be needed from
the non-qualifying portfolio, short of a compelling improvement in technology
industry fundamentals it is unlikely that exposure to shares will be
significantly increased in the near term.
Future Outlook
In the absence of new revolutionary technology, the prospects for technology
shares are strongly correlated to that of the economy. The macro-economic data
from the UK and United States since 31 March has been very mixed, provoking both
alarm and optimism. The equity markets have rallied strongly since the year
end, largely out of relief over the rapid conclusion of the Iraqi conflict.
This may indeed act as a positive economic catalyst as falling oil prices and
improved sentiment act as a spur to business investment and consumer spending,
but if equities are to continue their rally there needs to be more evidence of
an improvement in fundamentals. At the moment the signals are still mixed, both
from the economy and individual companies, tech and non tech alike. CAM will
continue to manage actively the remaining individual equity investments but
remains cautious in its general outlook.
Venture Capital Investments
The venture capital investment portfolio at 31 March 2003 comprised 13 active
holdings, with an aggregate value of #4.0 million (cost #5.7 million.) The
investments held or completed during the year were as follows:-
Jacobs Rimell (cost #850,000) - a provider of service creation, delivery and
management software for next generation networking service providers.
Co-investors are Advent International Fidelity Ventures and Digital Networks.
BioFocus (cost #127,200) - a company providing integrated chemistry services to
pharmaceutical and biotechnology companies. Listed on AIM.
Networks by Wireless (formerly Wireless Lans Holdings) (cost #700,000) - a
company providing installation and maintenance of wireless networks, offering
wireless networking solutions to businesses and local government agencies. This
was a co-investment with a syndicate of private investors who together invested
a further #2 million.
Boxmind (cost #150,000) - an early stage internet company, providing internet
and multimedia technology, and electronic publishing to the university sector.
Co-investors are Scottish Value Asset Management, Eurovestech Plc and private
investors.
Heritage Image Partnership ("HIP") (cost #500,000) - originally an online image
library selling directly to business customers specialising in images drawn from
unique collections of leading heritage institutions. Co-investors include
Foresight VCT, MTI Partnerships and BNY. HIP entered into an agreement with
Image Select International Ltd ("Image") on 11 December 2002 licensing its
technology for a maximum sum of #275,000. On 10 February 2003 the shareholders
of HIP agreed to exchange their shares for shares in Sarantel equivalent to the
cash held and the value attributable to the Image agreement with HIP. The
transaction with Sarantel was to be on the same terms as the first round
Sarantel investment (see page 8).
OMG (cost #175,000) - an AIM listed company with advanced technology to promote
automatic digital capture of 3D motion. Applications include the medical,
entertainment and property sectors.
Burgundy Global (cost #750,000) - a land transportation and management software
services business operating in the international travel market - specifically
chauffeur driven cars, taxis and mini-coaches. Co-investors included Pi
Capital, Fortknox Ventures AG, and a number of private investors.
Deltex (cost #200,000) - a company that develops, assembles and markets a
non-invasive cardiac function monitor and therapy guidance device. Listed on
AIM.
CableNet (cost #344,828) - a leading provider of supply chain synchronisation
software and services to the global cable manufacturing industry. Co-investors
were Amadeus Capital Partners, Veritas Venture Partners, and Kiwi II. The
co-investors sold their interest to management on 12 February 2003 and the
Company converted its shareholding to ordinary stock on similar terms on 17 June
2003.
Pilat Media (cost #300,000) - a company providing software that promotes
efficient management of programme content and television channel administration
from content acquisition to transmission. Listed on AIM.
Avidex (cost #500,000) - a biotechnology company specialising in T-cell receptor
research and development. Co-investors include Questor, Advent, Oxford
Technology and Sitka Healthcare VCTs. The syndicate invested approximately #20
million.
Vectura (cost #500,000) - a proprietary pharmaceutical and drug delivery
company. Co-investors include Isis, Merlin, West LB and Sitka Healthcare VCT.
The syndicate invested #10 million.
Sarantel (cost #600,000) - a company developing antenna technology for the GSM/
GPS mobile telephony markets. Co-investors include MTI Partnerships, Foresight
VCT and TriVest VCT.
Three follow-on venture capital investments have been made since the Company's
year end:
Jacobs Rimell (#94,000 at cost) - follow on investment alongside existing
investors, Advent, Fidelity and Digital Networks, as part of a #1.5 million
further staged funding round completed subject to certain conditions in March.
Since that date the company's trading has suffered significantly and as a result
a provision against original cost has been made.
Burgundy Global (#500,000 at cost) - follow on investment entered into in July
with completion subject to certain conditions. The Company led a maximum
investment of #1.5 million alongside Pi Capital in order to fund expansion.
Sarantel (#125,000 at valuation) - follow on investment alongside MTI
Partnerships, Foresight VCT, TriVest VCT and other investors as a result of
Heritage Image Partnerships being acquired by Sarantel in a share exchange.
The portfolio continues to develop although in venture capital terms many of the
investee companies are still at an early stage in their development. The Board
would normally expect the Company to hold an investment for between three and
seven years.
A number of the companies in the portfolio are continuing to make satisfactory
progress. Pilat Media Global won a significant contract with a major digital
broadcaster and increased its revenues. Burgundy Global has shown good revenue
growth over the last twelve months and is anticipating satisfactory profits in
the current year. Networks by Wireless delivered significant revenue growth in
the last financial year and achieved its first year of profitability. Deltex
Medical has shown sales growth. Avidex continues to develop its cutting edge
scientific programmes with encouraging results. Vectura has increased revenues
and the product development and drug delivery platforms continue to make
progress.
Valuation Policy
Unlisted investments are valued in accordance with the accounting policy set out
on page 24, which follows the guidelines laid down by the British Venture
Capital Association. As well as requiring appropriate provision where an
investment is under-performing significantly, the guidelines stipulate that no
investment should be revalued upwards within twelve months of its acquisition
unless a significant transaction occurs involving an independent third party at
arms-length which places a materially different value on the investment.
VCT Qualifying Status
The Company's progress towards meeting the Inland Revenue's condition of VCT
approval is carefully monitored by CAM and the directors. The Directors have
also retained PricewaterhouseCoopers to advise them in this matter. One of the
principal requirements is that by the end of the Company's third accounting
period, as at 31 March 2003, not less than 70% of the value of the Company's
investments should comprise qualifying holdings. The Board is confident that
the required level of qualifying investments was achieved and that this remains
the case.
The Investment Process
Until 30 June 2002 CAM used the services of HLB AV Audit plc who had provided
services in sourcing, appraising and executing the venture capital investments,
together with administration services for eTechnology VCT plc. Until that date
Graham Woolfman was a Director of HLB AV Audit plc and head of the team
undertaking these activities. He joined CAM on 1 September 2002 and has
remained closely involved with the investment process throughout the year, and
is a director of eTechnology VCT plc. The other members of the Board - Michael
Teacher, David Svendsen and Neil Metcalfe - also provide significant input to
the investment process on a part-time basis, and therefore usually have
considerable familiarity with an investment proposal by the time it comes to the
Board for discussion and decision. 'Due diligence', investigation and
investment appraisal are therefore undertaken by a combination of Board members
and CAM personnel, often in conjunction with co-investors whom the Company
actively seeks in most transactions. Depending on the nature of a transaction,
the process can take between a few weeks and a number of months.
Post Investment Monitoring
Within an investment agreement, eTechnology would usually have the right to
appoint a director to the board, or alternatively have board attendance rights
or monitoring information. If appropriate, one of eTechnology's directors will
become a non-executive director on the board of an investee company, or
alternatively a suitable external non-executive director may be brought in.
eTechnology seeks to work closely with co-investment partners in the monitoring
of investments, and in contributing to the strategic development of investee
companies.
Investment Portfolio at 31 March 2003
Balance Sheet
Cost Valuation % of
fund
Profit /
(Loss)
Qualifying Holding # # #
Investments
AIM
Biofocus plc 43,862 127,200 35,747 0.46 (91,453)
OMG plc 233,333 175,000 25,667 0.33 (149,333)
Pilat Media 1,500,000 300,000 243,750 3.17 (56,250)
Global plc
Deltex Medical 800,000 200,000 60,000 0.78 (140,000)
plc
Unlisted
Jacobs Rimell 203,136 850,000 425,000 5.52 (425,000)
Ltd
Burgundy Global 147,058 750,000 750,000 9.75 -
Ltd
Networks by 700,000 700,000 700,000 9.10 -
Wireless
iDesk plc 126,582 500,000 - - (500,000)
Boxmind Ltd 816 150,000 - - (150,000)
Heritage Image 36,262 500,000 170,000 2.21 (330,000)
Partnership Ltd
CableNet 1,785,714 344,828 - - (344,828)
International
Ltd
Avidex Limited 1,251 500,000 500,000 6.50 -
Vectura Limited 25,974 500,000 500,000 6.50 -
Sarantel 1,818,182 600,000 600,000 7.80 -
Limited
Qualifying 6,197,028 4,010,164 52.12 (2,186,864)
Investments Sub
Total
Non-Qualifying
Investments
Listed
AEA Technology 25,000 106,617 32,125 0.42 (74,492)
Antigenics 4,455 35,437 23,357 0.30 (12,080)
Colt Telecom 147,000 50,279 49,061 0.64 (1,218)
Group
Kewill Systems 65,000 113,837 17,875 0.23 (95,962)
Medical 115,000 85,681 20,988 0.28 (64,693)
Solutions
M L 55,000 89,394 7,700 0.10 (81,694)
Laboratories
Profile 55,000 89,485 16,225 0.21 (73,260)
Therapeutics
Samsung 1,048 89,794 74,895 0.98 (14,899)
Electronics Gdr
Shire 13,000 88,856 50,082 0.65 (38,774)
Pharmaceuticals
Skyepharma 59,999 32,578 29,250 0.38 (3,328)
Taiwan 53,900 97,255 41,461 0.54 (55,794)
Semiconductor
Yeoman Group 25,000 103,265 11,875 0.15 (91,390)
Listed -Non 982,478 374,894 4.88 (607,584)
Qualifying
Subtotal
Fixed Interest
Stock
Treasury 10% Stk 1,620,000 1,660,961 1,665,846 21.65 4,885
2003
Fixed Interest 1,660,961 1,665,846 21.65 4,885
Sub Total
Non Qualifying 2,643,439 2,040,740 26.53 (602,699)
Investment Sub
Total
TOTAL INVESTMENT 8,840,467 6,050,904 78.65 (2,789,563)
PORTFOLIO
Net Current 1,642,669 1,642,669 21.35 -
Assets, including
Cash
Total per Balance 10,483,136 7,693,573 100 (2,789,563)
Sheet
Notes:
1. Balance sheet values were calculated using mid-market prices at 31 March
2003 in respect of listed investments and shares traded on AIM. Unlisted
investments were valued at cost, less provision for diminution in value. In
respect of iDesk plc, the provision has been considered as giving rise to a
realised loss in the year ended 31 March 2003.
2. Shares are non-qualifying if they have been acquired in the market
rather than as a result of a new issue. The non-qualifying investments are
listed on the main list of the London Stock Exchange, AIM or a recognised
overseas stock exchange.
3. Qualifying investments carry full voting rights.
4. Out of the total cash balance of #1,709,000, cash of #1,684,000 was held
in a non-interest bearing reserve at Barclays Bank plc. These funds were
principally reserved for qualifying investments earmarked for completion and to
meet certain working capital requirements of the Company.
Ten Largest Investments
Disclosed below are the Company's 10 largest investments as at 31 March 2003,
split between qualifying and non-qualifying.
Qualifying Investments
Jacobs Rimell Ltd
First Investment September 2000
Equity Held 4.2% undiluted
Valuation #425,000 at valuation
A company that has developed provisioning software for use by next generation
network service providers eg. Broadband and interactive TV companies.
Draft audited accounts have been prepared for the year ended 31 December 2002.
Turnover for the year was #5,686,316 with a resultant retained loss after tax of
#6,440,254. The net liabilities at that date were #(719,224).
Burgundy Global Ltd
First Investment December 2000
Equity Held 3.6% undiluted
Valuation #750,000 at cost
A land transportation and management software services business operating in the
international travel market - specifically chauffeur driven cars, taxis and mini
coaches
Audited accounts have been prepared for the year ended 31 December 2002.
Turnover for the period was #9,194,000 with a retained loss for the period of
#1,168,000. The net assets at that date were #4,440,000.
Networks by Wireless (formerly Wireless Lans Holdings) Ltd
First Investment September 2000
Equity Held 13.2% undiluted
Valuation #700,000 at cost
A company providing the installation and maintenance of wireless networks to
businesses and local government agencies.
Audited accounts have been prepared for the year ended 31 January 2003. Turnover
for the period was #3,707,188 with a resultant profit of #261,456. The net
assets at that date were #651,003.
Sarantel Limited
First Investment February 2003
Equity Held 9.4% undiluted
Valuation #600,000 at cost
A company developing antenna technology for the GSM/GPS mobile telephony
markets.
Audited accounts have been prepared for the year ended 30 September 2002.
Turnover for the period was #106,000 with a resultant loss of #2,621,417. The
net assets at that date were #3,027,023.
Avidex Limited
First Investment August 2002
Equity Held 0.44% undiluted ordinary shares/2.31% preference
shares
Valuation #500,000 at cost
A biotechnology company specialising in T-cell receptor research and
development. Audited accounts have been prepared for the year ended 31 March
2002. Turnover for the period was #Nil with a resultant loss of #6,000,000.
The net assets at that date were #4.5m.
Vectura Limited
First Investment November 2002
Equity Held 0.2% undiluted ordinary shares/preference shares
Valuation #500,000 at cost
A proprietary pharmaceutical and drug delivery company.
Audited accounts have been prepared for the year ended 31 March 2002. Turnover
for the period was #3,175,000 with a resultant loss of #2,675,000. Net assets
at that date were #12.8m.
Pilat Media Global Plc
First Investment February 2002
Equity Held 3.46% undiluted
Cost #300,000
Valuation #243,750 Mid-market price
A company providing software that promotes efficient management of programme
content and television channel administration from content acquisition to
transmission. Demerged from parent company Pilat Technologies Ltd and
subsequently listed on AIM.
Audited accounts have been prepared for the year ended 31 December 2002.
Turnover for the year was #7,346,969 with a resultant profit of #37,417. Net
assets at that date were #4,241,123.
Heritage Image Partnership Ltd
First Investment March 2001
Equity Held 13.36% undiluted
Cost #500,000
Valuation #170,000
An online image library originally providing access to previously non-digitised
heritage images. In the light of difficulties in building its image library,
together with difficulties in the marketplace, the company entered into an
agreement with Image Select International Ltd on 11 December 2002 to exploit its
assets.
Accounts have been prepared for the year ended 31 December 2002. Turnover for
the year was #58,556 with a retained loss after tax of #241,196. Net assets at
that date were #1,015,781.
Non Qualifying Investments (listed)
Cost Mid Market Value
# #
Treasury 10% STK 2003 1,660,961 1,665,846
Samsung Electronics Gdr 89,794 74,895
Directors' Report
The Directors present their report and audited financial statements for the year
ended 31 March 2003.
Activities and status
The principal activity of the Company during the period was the making of
long-term equity and loan investments, mainly in unlisted companies. The
Company is an investment company as defined by Section 266 of the Companies Act
1985. It has been listed on the London Stock Exchange since 30 June 2000 and has
been granted provisional approval by the Inland Revenue as a Venture Capital
Trust. The Chairman's Statement on page 3 includes a review of developments
during the year and of future prospects.
The directors have managed the affairs of the Company with the intention that it
qualifies for approval of the Inland Revenue as a Venture Capital Trust for the
purposes of Section 842AA of the Income and Corporation Taxes Act 1988, and they
have no reason to believe that approval will not be confirmed for the year ended
31 March 2003. The Directors consider that the Company was not at any time up
to the date of this report a close company within the meaning of Section 414 of
the Income and Corporation Taxes Act 1988.
The Directors are required by the Articles of Association to put an Ordinary
Resolution to the members at the Annual General Meeting in 2007 that the Company
should continue to operate as a Venture Capital Trust for a further three years,
and, if the Company has not been liquidated, reorganised or reconstructed, a
similar resolution is to be put to the members at each third Annual General
Meeting thereafter. If any such resolution is not passed, the Directors shall
convene an Extraordinary General Meeting within nine months to consider
proposals for the reorganisation or winding-up of the Company.
Results and dividend
The results for the year are dealt with fully in the financial statements on
pages 21 to 30. Net assets attributable to shareholders at the end of the
period were #7.69m. The Directors do not recommend the payment of any dividend.
Directors
The Directors of the Company during the year and their interests in the issued
Ordinary Shares of 5p of the Company at 31 March 2002 and 2003 are as follows:
As at 31 March 2003 As at 31 March 2002
Number of Shares Number of Shares
Michael Teacher 30,000 30,000
David Svendsen 25,000 25,000
Neil Metcalfe 10,000 10,000
Graham Woolfman 10,000 10,000
All of the Directors' share interests, amounting to 0.55% of the shares in
issue, were held beneficially. None of the Directors has options to subscribe
for any further shares or debentures in the Company. There were no changes in
the Directors' interests between 31 March 2003 and the date of this report.
Directors' and officers' liability insurance
As permitted by Section 310(3) of the Companies Act 1985, the Company has
maintained insurance cover on behalf of the Directors and secretary indemnifying
them against certain liabilities that may be incurred by them in relation to the
Company.
Management
CAM has acted as investment adviser and manager to the Company since April 2000.
The principal terms of the Company's management agreement with CAM are set out
in Note 2 to the financial statements. The Company has no employees.
Creditor payment policy
The Company does not follow any formal code or standard for dealing specifically
with the payment of creditors. The Company's payment policy is to agree terms
of payment before business is transacted and to settle accounts in accordance
with those terms. There were no amounts owing to trade creditors at 31 March
2003.
Substantial shareholdings
So far as the Directors are aware, there were no individual shareholdings
representing 3% or more of the Company's issued share capital at the date of
this report.
Annual General Meeting
Resolutions will be proposed as special business at the Annual General Meeting
to:
* renew the authority of the Directors, within limits, to allot equity
shares otherwise than pro rata to existing shareholders, and
* renew the authority of the Directors to make market purchases of the
Company's shares for cancellation.
It is the intention of the Directors to seek to renew these authorities at each
subsequent Annual General Meeting. Whilst the Directors have no present
intention of allotting any shares under the first above authority, they seek
shareholder consent for it now, as in previous years, in order to avoid the
necessity of convening during the year an Extraordinary General Meeting to
obtain such consent should it be required, in particular for a special share
issue other than pro rata to existing shareholders.
Such a share allotment would be limited to 5% of the nominal value of the
current share capital in issue, as recommended by the Association of British
Insurers.
Auditors
Grant Thornton were appointed auditors on 6 June 2003 to fill a casual vacancy
in accordance with section 388(1) of the Companies Act 1985. Special notice
pursuant to section 388(3) having been given, a resolution to re-appoint Grant
Thornton as auditors and to authorise the Directors to fix their remuneration
will be proposed at the forthcoming Annual General Meeting.
Statement of Directors' responsibilities
Company law in the United Kingdom requires the Directors to prepare financial
statements for each financial year which give a true and fair view of the state
of affairs of the Company and of the profit and loss of the Company for that
period. In preparing those financial statements, the Directors are required to:
* select suitable accounting policies and apply them consistently;
* make judgments and estimates that are reasonable and prudent;
* state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the accounts; and
* prepare the financial statements on a going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for ensuring that proper accounting records are
kept, which disclose with reasonable accuracy at any time the financial position
of the Company, enabling them to ensure that the financial statements comply
with the Companies Act.
They are also responsible for the Company's system of internal financial
control, safeguarding the assets of the Company and for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
Corporate Governance
The Directors support the relevant principles of the Combined Code, being the
principles of good governance and the code of best practice formulated by the
Committee on Corporate Governance. As a Venture Capital Trust with no executive
directors, the Company is not required to give the disclosures in relation to
directors' remuneration and details of compliance with the Combined Code
provisions in that respect as otherwise required by the Stock Exchange Listing
Rules 12.43A(a), (b) and (c).
The Board
The Company has a Board of four directors, all of whom are non-executive. Three
of the Directors are independent of the Company's investment manager. The
non-executive Chairman, Michael Teacher, has a casting vote, and is the senior
independent non-executive Director. Two of the Directors are offering
themselves for re-election at this year's AGM, in accordance with the Combined
Code. Biographical details of all Board members are shown on page 4.
The full Board meets formally at least four times a year, and on other occasions
as required to review the results of the Company and consider any appropriate
recommendations by the investment manager. The Board also meets frequently to
make investment decisions. The Board as a whole is responsible for the
procedure of agreeing to the appointment of its own members and of its
professional advisers. Other matters specifically reserved to the Board include
banking arrangements, related party transactions and review of investments made.
The Board receives detailed management accounting information on a quarterly
basis, including an investment management report. Any additional information is
supplied on request.
The Board has established procedures whereby directors, wishing to do so in the
furtherance of their duties, may take independent professional advice at the
Company's expense.
The Board has not appointed either a nominations or remuneration committee as
they consider the Board to be small. Appointments of new directors and changes
in remuneration will be referred to the full Board. Michael Teacher is the
Chairman.
Relations with Shareholders
This year's AGM will be held on 9 September 2003. The Notice of Annual General
Meeting is circulated within this Report more than 20 working days before the
AGM.
Shareholders have the opportunity to meet the Board at the AGM. Separate
resolutions are proposed at the AGM on each separate issue. Proxy votes are
counted. In order to comply with the Combined Code, proxy votes will be
announced at the AGM, following each vote on a show of hands, except in the
event of a poll being called.
In addition to the formal business of the AGM, the Board is available to answer
any questions a shareholder may have. The Board is also happy to respond to any
written queries made by shareholders during the course of the year.
Going Concern
The Directors are of the opinion that, at the time of approving the financial
statements, the Company has adequate resources to continue in operational
existence for the foreseeable future. For this reason, they continue to adopt
the going concern basis in preparing the financial statements.
Internal Control
The Board has established an ongoing process for identifying, evaluating and
managing those risks faced by the Company which are considered to be
significant. The Board is responsible for the Company's system of internal
control and for reviewing its effectiveness. However, such a system is
designed to manage rather than eliminate the risks of failure to achieve the
Company's business objectives and can only provide reasonable and not absolute
assurance against material misstatement or loss. The effectiveness of the
system of internal control has been reviewed by the Board in accordance with the
Internal Control Guidance for Directors on the Combined Code.
The Board undertakes an ongoing review of the Company's business risks. This
includes reviewing the system of internal control and risk management over the
operations and culture of the Company, and to deal with areas of improvement
which come to the Board's attention.
Statement of Compliance
The Listing Rules require the Board to report on compliance with the Combined
Code provisions throughout the accounting period. Save for the limited
exceptions outlined below, the Company has complied throughout the accounting
period ended 31 March 2003 with the provisions set out in Section 1 of the
Combined Code.
The exceptions to the Combined Code were as follows:
a) Non-executive directors' contracts after the first year are on three
months' rolling notice, whereas the Cadbury recommendation is for fixed term
renewable contracts. In the Directors' opinion this does not make a substantive
difference to the circumstances of the Company since all directors are required
to submit themselves for re-election at least once in every three years.
(A.6.1.)
b) There is as yet no formal procedure for the appointment of
non-executive directors. The existing four Directors were each appointed at the
time of the original share issue and the directors would not expect any change
in Board composition for the foreseeable future. Should a change be
necessitated, the Board would expect to implement formal procedures as
appropriate. (A.5.1.)
c) There is no separate audit committee. Audit matters are dealt with by
the full Board. The Directors consider this appropriate, as they are all
non-executives. (D.3.1.)
d) The Company does not conduct a formal review as to whether there is a
need for an internal audit function. The Directors do not consider that
internal audit would be an appropriate control for a venture capital trust of
this size. (D.2.2.)
By order of the Board
M A Lassman
SECRETARY
8 July 2003
Directors' Remuneration Report
The Company presents the Directors' Remuneration Report for the year ended 31
March 2003.
Remuneration committee
There is no separate remuneration committee and the Board performs the duties of
a remuneration committee assisted by the Company Secretary.
The Company has no employees other than its directors, all of whom are
non-executive.
Performance graph
The following graph compares the change in the Company's share price with that
of the FTSE Investment Companies sector over the period from the launch of the
Company to 31 March 2003.
No element of the current directors' remuneration is performance related. The
Company has not granted any share options or long-term performance incentives to
any of the Directors.
Directors' remuneration (audited)
2003 2002
# #
G J Woolfman 11,750 11,750
D E Svendsen 11,750 11,750
M J Teacher 11,750 11,750
N M Metcalfe 11,750 11,750
------- -------
47,000 47,000
------- -------
None of the Directors received any non-cash benefits or pension entitlements
during the year (2002: Nil). Indirect benefits through investee companies are
set out in Note 16 to the Accounts.
In addition to the above fees, each director, except Graham Woolfman, is
entitled to receive 6% of performance fees based on certain excess profits as
defined, and 6% of a termination performance fee as defined. There is no
entitlement to any performance fees for the year (2002: Nil).
Remuneration policy
The Board consists solely of four non-executive Directors. Graham Woolfman
represents the Investment Manager and the remaining three Directors are
independent.
A comparison of the Directors' remuneration with other venture capital trusts of
similar size is provided. This comparison, together with consideration of any
alteration in non-executive directors' responsibilities, is used to review
whether any change in remuneration is necessary.
The Board's policy is that the remuneration of non-executive directors should be
sufficient to reflect the duties and responsibilities of the Directors and the
amount of time committed to the Company's affairs.
Compensation for loss of office
No director would be entitled to more than his contractual notice period.
Retirement of directors
The Directors are subject to retirement by rotation in accordance with the
Company's Articles of Association.
Appointment of directors
None of the Directors has a service contract with the Company. All of the
Directors have letters of appointment, which are not for specific terms, and are
all subject to 3 months notice.
By order of the Board
M A Lassman
SECRETARY
8 July 2003
Report of the Independent Auditors to the Members of eTechnology VCT plc
We have audited the financial statements of eTechnology VCT plc for the year
ended
31 March 2003 which comprise the statement of total return, the balance sheet,
the cash flow statement, the principal accounting policies and notes 1 to 16.
These financial statements have been prepared under the accounting policies set
out therein. We have also audited the information in the directors'
remuneration report that is described as having been audited.
This report is made solely to the company's members, as a body, in accordance
with Section 235 of the Companies Act 1985. Our audit work has been undertaken
so that we might state to the company's members those matters we are required to
state to them in an auditors' report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company's members as a body, for our audit work,
for this report, or for the opinions we have formed.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The directors' responsibilities for preparing the annual report, the directors'
remuneration report and the financial statements in accordance with United
Kingdom law and accounting standards are set out in the statement of directors'
responsibilities.
Our responsibility is to audit the financial statements and the part of the
directors' remuneration report to be audited in accordance with relevant legal
and regulatory requirements and United Kingdom auditing standards.
We report to you our opinion as to whether the financial statements give a true
and fair view and whether the financial statements and the part of the
directors' remuneration report to be audited have been properly prepared in
accordance with the Companies Act 1985. We also report to you if, in our
opinion, the directors' report is not consistent with the financial statements,
if the company has not kept proper accounting records, if we have not received
all the information and explanations we require for our audit, or if information
specified by law regarding directors' remuneration and transactions with the
company is not disclosed.
We review whether the corporate governance statement reflects the company's
compliance with the seven provisions of the Combined Code specified for our
review by the Listing Rules of the Financial Services Authority, and we report
if it does not. We are not required to consider whether the board's statements
on internal control cover all risks and controls, or form an opinion on the
effectiveness of the company's corporate governance procedures or its risk and
control procedures.
We read other information contained in the annual report, and consider whether
it is consistent with the audited financial statements. This other information
comprises only the chairman's statement, the investment manager's report, the
investment portfolio report, the ten largest investments, the directors'
report, the unaudited part of the directors' remuneration report, and the
corporate governance statement. We consider the implications for our report if
we become aware of any apparent misstatements or material inconsistencies with
the financial statements. Our responsibilities do not extend to any other
information.
BASIS OF OPINION
We conducted our audit in accordance with United Kingdom auditing standards
issued by the Auditing Practices Board. An audit includes examination, on a
test basis, of evidence relevant to the amounts and disclosures in the financial
statements and the part of the directors' remuneration report to be audited. It
also includes an assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
and the part of the directors' remuneration report to be audited are free from
material misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion, we also evaluated the overall adequacy of the
presentation of information in the financial statements and the part of the
directors' remuneration report to be audited.
OPINION
In our opinion:
(S) the financial statements give a true and fair view of the state of affairs
of the company at 31 March 2003 and of the revenue return, capital return and
total return of the company for the year then ended; and
(S) the financial statements and the part of the directors' remuneration
report to be audited have been properly prepared in accordance with the
Companies Act 1985.
GRANT THORNTON
REGISTERED AUDITORS
CHARTERED ACCOUNTANTS
OXFORD
8 July 2003
Statement of Total Return (incorporating the Revenue Account)
For the year ended 31 March 2003
Year ended 31 March 2003 Year ended 31 March 2002
Notes Revenue Capital Total Revenue Capital Total
#000 #000 #000 #000 #000 #000
Gains / (losses) on
investments
- Realised 6 (19) (19) (18) (18)
- Unrealised 6 (1,427) (1,427) (1,214) (1,214)
Income 1 208 208 208 208
Investment 2 (97) (64) (161) (160) (40) (200)
management fee
Other expenses 3 (71) (48) (119) (96) (24) (120)
------- ------- ------- ------- ------- ------
Return on ordinary
activities before
taxation
40 (1,558) (1,518) (48) (1,296) (1,344)
------- ------- ------- ------- ------- -----
Tax on return on
ordinary
activities
4 - - - - - -
------- ------- ------- ------- ------- -----
Return attributable
to equity
shareholders
40 (1,558) (1,518) (48) (1,296) (1,344)
------- ------- ------- ------- ------- -------
Transfer to 10 40 (1,558) (1,518) (48) (1,296) 1,344)
reserves ------- ------- ------- ------- ------- ------
Return per ordinary
share (basic &
diluted)
5 0.29p (11.45)p (11.16)p (0.4)p (9.5)p (9.9)p
* The revenue column of this statement is the profit and loss account of the
Company
* All revenue and capital items in the above statement derive from
continuing operations
The accounting policies and notes form an integral part of these financial
statements.
Balance Sheet
As at 31 March 2003
Notes 2003 2002
#000 #000
Fixed assets
Investments 6 6,051 8,914
-------- --------
Current assets
Debtors 7 50 84
Cash at bank 1,709 309
-------- --------
1,759 393
Creditors (amounts falling due within one year) 8 (117) (96)
Net current assets 1,642 297
-------- --------
Net assets 7,693 9,211
-------- --------
Capital and reserves
Called-up share capital 9 680 680
Share premium 10 12,115 12,115
Capital reserve - realised 10 (2,801) (1,915)
Capital reserve - unrealised 10 (2,289) (1,617)
Revenue reserve 10 (12) (52)
-------- --------
Total shareholders' funds 7,693 9,211
-------- --------
Net asset value per ordinary share 11 56.54p 67.69p
The financial statements on pages 21 to 30 were approved by the directors on 8
July 2003 and are signed on their behalf by:
Michael Teacher Graham Woolfman
Chairman Director
The accounting policies and notes form an integral part of these financial
statements.
Cash Flow Statement
For the year ended 31 March 2003
Year Ended Year Ended
31 March 2003 31 March 2002
#000 #000 #000 #000
Reconciliation of operating profit to net
cash inflow/(outflow) from operating
activities
Net return from ordinary activities before 40 (48)
tax
Amortisation of book cost 31 -
Decrease /(increase) in debtors 34 (21)
Increase in creditors 21 35
Management fees and other expenses charged (112) (64)
to capital ------- -------
Net cash inflow/(outflow) from operating 14 (98)
activities
Cash flow statement
Net cash inflow/(outflow) from operating 14 (98)
activities
Capital expenditure and financial
investments
Purchase of investments (2,079) (5,609)
Sale of investments 3,465 4,828
------- -------
Net cash inflow/(outflow) from financial 1,386 (781)
investment
------- -------
Increase/(decrease) in cash for the year 1,400 (879)
------- -------
Reconciliation of net cash flow to
movement in net funds
Increase/(decrease) in cash for the year 1,400 (879)
Net funds at 31 March 2002 309 1,188
------- -------
Net funds at 31 March 2003 1,709 309
------- -------
The accounting policies and notes form an integral part of these financial
statements.
Principal Accounting Policies
A summary of the principal accounting polices, all of which have been applied
consistently throughout the period, is set out below.
a. Basis of accounting
The financial statements have been prepared under the historical cost convention
as modified to include the revaluation of investments, and on the assumption
that approval as a venture capital trust is forthcoming. The financial
statements have been prepared in accordance with applicable accounting standards
and with the Statement of Recommended Practice 'Financial Statements of
Investment Trust Companies' (issued 1995).
b. Investments
Listed investments, and those quoted on the Alternative Investment Market, are
valued at middle market prices. In the event that the shares held by the Company
are subject to certain restrictions, or the holding is significant in relation
to the traded issued share capital of the relevant company, then the Directors
may apply a discount to the relevant middle market price.
Realised surpluses and deficits on the disposal of investments are taken to
capital reserve-realised and unrealised surpluses and deficits on the
revaluation of investments are taken to capital reserve-unrealised.
Investments in unlisted companies are valued in accordance with British Venture
Capital Association (BVCA) guidelines. The Directors' policy in valuing unlisted
investments is to carry them at cost except in the following circumstances:
* Where the company's performance against plan indicates a diminution in
the value of the investment
* Where a company is well established with a record of profitability, the
share may be valued by applying a suitable price earnings ratio to the company's
historic post-tax earnings. When applying such ratios, the Directors will take
into account comparable listed companies or sectors and will reflect the lack of
marketability
* Where a significant transaction occurs involving an independent third
party at arms-length who values the investment at a materially different value.
c. Income
Dividends receivable on equity securities are brought into account on the
ex-dividend date. Fixed returns on non-equity shares and on debt securities are
recognised on a time apportionment basis so as to reflect the effective yield.
d. Foreign Currency
Transactions in foreign currencies are translated at the exchange rate ruling at
the date of the transaction. Monetary assets and liabilities in foreign
currencies are translated at the rates of exchange ruling at the balance sheet
date. All exchange differences are dealt with in the profit and loss account
e. Expenses
All expenses are accounted for on an accruals basis. Expenses are charged 60%
to revenue and 40% to capital to reflect an appropriate allocation of resources,
taking into account the change in the investment portfolio. Previously, this
allocation was 80% to revenue and 20% to capital.
f. Going Concern
The financial statements have been prepared on the going concern basis.
Notes to the Financial Statements
For the year ended 31 March 2003
1. Investment Income
2003 2002
#000 #000
Dividends received 15 9
Interest on government stocks 188 175
Bank interest 5 24
------- -------
208 208
------- -------
2. Investment Management Fee
The Investment Manager to the Company is Cavendish Asset Management Limited.
CAM is entitled to receive an annual fee of up to 2.5% (net of VAT) of the net
assets of the Company payable quarterly in advance, on 30 June, 30 September, 31
December and 31 March in each year. The fee is charged 60% to revenue and 40% to
capital. The termination notice period of this contract is 6 months.
3. Other Expenses
2003 2002
#000 #000
Secretarial services 8 8
Directors' Remuneration 47 47
Auditors' Remuneration - Audit Services 8 12
Legal and Professional services 6 16
Other Expenses 50 37
------- -------
119 120
------- -------
4. Tax on Return on Ordinary Activities
No taxation arises for the year due to the availability of revenue losses
brought forward. No deferred tax asset has been recognised in relation to
excess management expenses carried forward estimated at #287,000 (2002:
#251,000) due to uncertainty as to their recoverability.
5. Return per Share
The revenue return per share is based on net return from ordinary activities
after tax of #40,000 and on 13,606,734 shares, being the weighted average number
of shares in issue during the year.
The capital return per share is based on net realised and unrealised losses for
the period of #1,558,000 and on 13,606,734 shares, being the weighted average
number of shares in issue during the year.
6. Investments
2003 2002
#000 #000
Investments listed on a recognised investment exchange 740 1,306
Unlisted stocks 3,645 2,615
UK fixed interest stocks 1,666 4,993
------- --------
6,051 8,914
------- --------
Movements in investments during the year are summarised as follows:
Listed Unlisted UK fixed Total
interest
#000 #000 #000 #000
Valuation at 31 March 2002 1,306 2,615 4,993 8,914
Purchases at cost 108 1,950 21 2,079
Disposals:
- proceeds (106) - (3,359) (3,465)
- realised gains/(losses) on (371) - 97 (274)
disposals
- previous unrealised (gains)/losses 363 - (108) 255
on disposals
Unrealised depreciation and
amortisation of book cost
(560) (920) 22 (1,458)
------- -------- ------- --------
Valuation at 31 March 2003 740 3,645 1,666 6,051
------- -------- ------- --------
Book cost at 31 March 2003 1,784 5,395 1,661 8,840
Unrealised gains/(losses) at 31 (1,044) (1,750) 5 (2,789)
March 2003 ------- -------- ------- --------
740 3,645 1,666 6,051
------- -------- ------- --------
The overall loss on investments for the period shown in the statement of total
return is analysed as follows:
2003 2002
#000 #000
Net realised losses on disposal (19) (18)
Increase in unrealised depreciation (1,427) (1,214)
--------- --------
(1,446) (1,232)
--------- --------
Details of the 10 largest investments are disclosed within the Investment
Manager's Report on pages 11 and 12.
Details of shareholdings in those companies where the Company's holding at 31
March 2003 represents (1) more than 10% of the allotted equity share capital of
any class, (2) more than 10% of the total allotted share capital, or (3) more
than 10% of the assets of the Company itself, are given below. All companies
named are incorporated in England and Wales.
Company Class of Number Proportion of Share
Share Held Capital Held
Networks by Wireless Ordinary 700,000 13.2%
Limited Shares
Heritage Image Partnership Ordinary 36,262 13.4%
Limited Shares
7. Debtors
2003 2002
#000 #000
Prepayments and accrued income 32 68
Income tax recoverable on unfranked investment income 18 16
-------- -------
50 84
-------- -------
8. Creditors (amounts falling due within one year)
2003 2002
#000 #000
Amounts accrued due to Investment Manager 36 48
Accruals and deferred income 81 48
-------- -------
117 96
-------- -------
9. Share Capital
2003 2002
#000 #000
Authorised:
16,000,000 ordinary shares of 5p each 800 800
------------ -------
Allotted, issued and fully paid
13,606,734 ordinary shares of 5p each 680 680
------------ -------
10. Reserves
Share Capital Capital reserve - Revenue
Premium reserve unrealised reserve
-
realised
#000 #000 #000 #000
At 31 March 2002 12,115 (1,915) (1,617) (52)
Realised loss on disposal (19) - -
of investments
-
Previous unrealised losses - (255) 255 -
realised in year
- disposals - (500) 500 -
- other
Apportioned capital - (112) - -
expenditure
Net decrease in unrealised - - (1,427) -
appreciation
Net return for the year - - - 40
------- ---------- ---------- -------
At 31 March 2003 12,115 (2,801) (2,289) (12)
------- ---------- ---------- -------
11. Net asset value per share
The calculation of net asset value per share as at 31 March 2003 is based on net
assets of #7,693,000 divided by the 13,606,734 ordinary shares in issue.
12. Reconciliation of movements in equity shareholders' funds
2003 2002
#000 #000
Return on ordinary activities after tax (1,518) (1,344)
---------- -------
Net movement in Shareholders' funds (1,518) (1,344)
Opening Shareholders' funds 9,211 10,555
---------- -------
Closing Shareholders' funds 7,693 9,211
---------- -------
13. Analysis of changes in net funds
At 1 April 2002 Cash flow in the year At 31 March 2003
#000 #000 #000
Cash at bank 309 1,400 1,709
----------- ------------- -----------
14. Analysis of Financial Assets and Liabilities
Objectives, policies and strategies
As a venture capital trust, the Company's objective is to provide shareholders
with an attractive income and capital return by investing its funds in a broad
spread of listed and unlisted UK companies which meet the relevant criteria for
venture capital trusts.
The Company's financial investments comprise:
* Shares in unlisted and listed companies.
* Cash, liquid resources and short-term debtors and creditors that arise
directly from the Company's operations.
The main risks arising from the Company's financial instruments are fluctuations
in market price for listed investments and fluctuations in valuations, including
the issue of going concern, for unlisted investments.
Market price risk
Market price risk arises mainly from uncertainty about future prices of
financial instruments used in the Company's business. It represents the
potential loss the Company might suffer through holding market positions by way
of price movements. These risks are monitored by the Investment Manager on a
regular basis and by the Board.
Liquidity risk
Many of the Company's investments are in listed securities, which can be sold to
meet funding commitments if necessary. Furthermore, at the Balance Sheet date
#1.7m was held in cash.
Interest Rate risk
The Company finances its operations through share capital raised and retained
profits including both realised and unrealised capital profits.
At the year end and throughout the year, the Company had no liabilities that
were subject to interest rate risk.
The Company has no committed borrowing facilities as at 31 March 2003.
The Company had a holding of 1,620,000 units of 10% 2003 Treasury Stock which
were stated at mid-market value at the balance sheet date.
Foreign Currency Risk
The functional currency of the Company is sterling. The Company does however
have some cash balances denominated in foreign currencies. The Company does not
hedge against the effects of movements in exchange rates. The risks are
monitored by the Investment Manager and the Board on a regular basis.
Fair Value of financial assets and financial liabilities
There is no material difference between the fair values of financial assets and
liabilities and their book value at the balance sheet date.
15. Post Balance Sheet Events
Since 31 March 2003, eTechnology VCT plc has made the following qualifying
investments:
#'000
Jacobs Rimell 94
Burgundy Global 500
Sarantel 120
------
714
------
The Company has contracted to invest in Burgundy Global subject to the
fulfilment of conditions attaching to completion.
The Company has contracted to invest further in Sarantel by way of exchange of
shares held in Heritage Image Partnership, subject to certain conditions and the
completion of formalities.
16. Related Party Transactions
The following directors hold shares and options in eTechnology VCT plc investee
companies as listed below:
Director Company Shares Options
Michael Teacher Networks by Wireless Ltd 200,000 662,500
Neil Metcalfe Networks by Wireless Ltd - 150,000
As described in the Investment Manager's report, CAM has used the services of
HLB AV Audit plc. Graham Woolfman is a director of eTechnology VCT plc, but
resigned as a director of HLB AV Audit plc on 28 June 2002.
During the year to 31 March 2003, HLB AV Audit plc received fees of #30,000 net
of VAT from CAM in respect of the above services.
Notice of Annual General Meeting
Notice is hereby given that the third Annual General Meeting of eTechnology VCT
plc is to be held on Tuesday 9 September 2003 at West World, West Gate, London
W5 1DT, commencing at 10.00 a.m., for the purposes detailed below.
Ordinary Business
To consider and, if thought fit, pass the following resolutions, which will be
proposed as Ordinary Resolutions:
1) To receive and adopt the Directors' Report and Accounts of the Company
for the year ended 31 March 2003, together with the report of the auditors
thereon.
2) To re-elect as Director Mr M Teacher, who retires under Article 117 of
the Articles of Association of the Company and, being eligible, offers himself
for re-election.
3) To re-elect as Director Mr G Woolfman, who retires under Article 117 of
the Articles of Association of the Company and, being eligible, offers himself
for re-election.
4) To appoint Grant Thornton to hold office as auditors of the Company
until the conclusion of the next Annual General Meeting at which accounts for
the Company are presented and to authorise the Directors to determine the
auditors' remuneration.
5) In accordance with the Companies Act 1985 S241A(3), to approve on an
advisory only basis the Directors' Remuneration Report contained in the Annual
Report.
Special Business
To consider and, if thought fit, pass the following resolutions, Resolution No 6
being an Ordinary Resolution and Resolutions No 7 and 8 being Special
Resolutions:
6) (1) That, in accordance with Section 80 of the Companies Act 1985, the
Directors be and are hereby generally and unconditionally authorised to exercise
all the powers of the Company to allot relevant securities of the Company to
such persons at such times and on generally upon such terms and conditions as
the Directors may determine and subject to the following provisions :
(a) this authority shall (unless previously revoked, varied or renewed) be
for a period expiring on the later of fifteen months from the date hereof and
the conclusion of the Annual General Meeting of the Company next following the
passing of this Resolution;
(b) this authority shall be limited to the allotment of relevant securities up
to an aggregate nominal value of #120,000.
(2) For the purpose of sub-paragraph 6(1) above:
(a) the said authority shall allow and enable the Company to
make an offer or agreement at any time prior to the expiry of that authority
which would or might require relevant securities to be allotted after such
expiry and the Directors may allot relevant securities in pursuance of such an
offer or such agreement notwithstanding the expiry of such power; and
(b) words or expressions defined in or for the purpose of
Part IV of the Companies Act 1985 shall bear the same meaning herein.
(3) The authority conferred by sub-paragraph 6(1) above shall be in
substitution for all previous authorities conferred upon the Directors to allot
relevant securities.
7) (1) That, in accordance with Section 95 of the Companies Act 1985 ("the
Act"), the Directors be and are hereby given power to allot equity securities,
as defined in Section 94(4) of the Act, for cash pursuant to the general
authority conferred upon the Directors by Resolution 6 above as if sub-section
(1) of Section 89 of the Act did not apply to any such allotment, provided that
the power hereby granted:
(a) shall be limited to:
(i) the allotment of equity securities in connection with or pursuant to
an offer by way of rights to the holders of ordinary shares in the capital of
the Company and other persons entitled to participate therein for cash in
proportion (as nearly as may be) to the holdings of ordinary shares of such
holders (or, as appropriate, to the numbers of ordinary shares which such other
persons are for these purposes deemed to hold), subject only to such exclusions
or other arrangements as the Directors may consider necessary or expedient to
deal with fractional entitlements or legal or practical problems under the laws
of, or the requirements of, any recognised regulatory body in any territory;
(ii) the allotment (other than pursuant to sub-paragraph (a)(i) of this
proviso) of equity securities up to an aggregate nominal amount equal to five
per cent of the aggregate nominal value of the ordinary shares in the Company
then in issue;
(b) shall (unless previously revoked, varied or renewed) expire at the
later of fifteen months from the date hereof and the conclusion of the Annual
General Meeting of the Company next following the passing of this Resolution.
(2) The said power shall allow and enable the Company to make an offer or
agreement before the expiry of that power which would or might require equity
securities to be allotted after such expiry, and the Directors may allot equity
securities in pursuance of such an offer or such agreement notwithstanding the
expiry of such power.
(3) Words and expressions defined in or for the purposes of Part IV of the
Companies Act 1985 shall bear the same meaning herein.
8) That the Company be and is hereby unconditionally authorised, as
permitted by Section 162 of the Companies Act 1985, to make market purchases
(within the meaning of Section 163(3) of that Act) of Ordinary Shares of 5p
each in the capital of the Company ('Ordinary Shares') provided that:
(i) the maximum number of Ordinary Shares hereby authorised to be purchased
shall be 500,000;
(ii) the minimum price to be paid for an Ordinary Share is 5p exclusive of
all expenses;
(iii) the maximum price that may be paid for an Ordinary Share is an amount,
exclusive of all expenses, equal to 105 per cent of the average of the middle
market quotations for the Ordinary Shares as derived from the Daily Official
list of the London Stock Exchange for each of the ten business days immediately
preceding the day on which the Ordinary Share is contracted to be purchased;
(iv) the authority hereby conferred shall expire on the later of fifteen months
from the date hereof and the next Annual General Meeting of the Company except
to the extent that the same may have been renewed or extended prior to that
date;
(v) the Company may however, whilst this authority continues to run, validly
make a contract to purchase Ordinary Shares under the authority hereby conferred
which will or may be completed after its expiry, and any such completion will
accordingly be valid.
By order of the Board
Registered Office:
M A Lassman 19 Cavendish Square
Secretary London W1A 2AW
8 July 2003
Notes:
(i) A Member entitled to attend and vote at the Meeting convened by this
Notice is entitled to appoint one or more proxies to attend and, on a poll, to
vote in his or her stead. A proxy need not be a member of the Company. The
appointment of a proxy will not preclude a member from being present at the
Meeting and voting in person if he or she should subsequently decide to do so.
(ii) To be valid, forms of proxy must be lodged with the Company's
registrars at:
Northern Registrars Limited
Northern House
Woodsome Park
Fenay Bridge
Huddersfield HD8 OLA
not later than 48 hours before the time appointed for the holding of
the Meeting.
(iii) The following documents will be available for inspection at the
Company's Registered Office at 19 Cavendish Square London W1A 2AW during normal
business hours on any weekday (public holidays excepted) from the date of this
Notice until the date of the Annual General Meeting and at the Annual General
Meeting, for 15 minutes prior to and during the Meeting:
(a) the register of Directors' interests in the ordinary shares of the
Company kept in accordance with Section 325 of the Companies Act 1985;
(b) copies of the service contracts and letter of appointment of all
Directors of the Company; and
(c) a copy of the Memorandum and Articles of Association of the Company.
This information is provided by RNS
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