Interim Results
October 27 2003 - 11:29AM
UK Regulatory
SVM OFEX FUND PLC
Results for the six months to 30 September 2003
KEY POINTS
* Net Asset Value decreased by 10.3% over the period under review. Net asset
value per ordinary share is 49.9p.
* Good business progress being made by a number of companies, contrasting
with a lack of share price performance.
* New investor interest in smaller companies has returned to more senior
markets but this has not as yet extended to the OFEX market.
* Some 18% of portfolio now listed on AIM. Further listings likely given an
increasingly positive investment environment.
- Ends -
For further information, please contact:
David Stevenson SVM Asset Management 0131 226 6699
Roland Cross Broadgate 020 7726 6111
.
SVM OFEX FUND PLC
Chairman's Statement
Unaudited results for the six months to 30 September 2003
"In the period under review, the Fund's net asset value decreased by 10.3% from
55.6 pence to 49.9 pence. Whilst investor interest in smaller companies has
returned to more senior markets, it has not as yet extended to OFEX. As a
consequence, the Fund's relative performance for the period was disappointing.
The recent pattern across much of the portfolio has been one of good business
progress by companies, contrasting with a lack of share price performance.
Several companies within the portfolio reported solid growth in their
businesses during the period. Four of these are now profitable, whilst nine
others are achieving substantial turnover gains and could reach profitability
in the near term. Together, these two groupings generate an annualised turnover
base of some �65 million, and represent 60% of the portfolio. Further
confirmation of the increasing maturity of these companies comes from the fact
that two of them received bid approaches during the period. This follows the
takeover of portfolio company Squaresum, in December of last year. Whilst the
recent approach for motor vehicle finance provider Britannia has since been
rejected by the company, the shares are now substantially higher than the
original bid. In the other case, involving healthcare property developer Ashley
House, discussions are continuing.
The Fund's performance was impacted by provisions totalling �275,000 made
against the carrying value of its six unquoted holdings. Most of this writedown
reflected the refinancing of three of the companies during the period at
reduced valuations. The total unquoted exposure within the Fund is now 10%.
Elsewhere in the portfolio, business progress was converted into share price
gains for only about half of the Fund's core holdings. Strong gains were
achieved by business grants consultant j4b and print services provider
Printing.com, but marketing group Chemistry Communications, smoke alarm
manufacturer Sprue Aegis and degradable packaging manufacturer Symphony
Plastics, all suffered declines. This was in spite of announcing like-for-like
turnover growth rates ranging between 55% and 85%. We believe such a
performance pattern is more a consequence of low trading volumes on the OFEX
market, as institutional investors remain absent.
The Fund's recent performance has been poor, and it is particularly frustrating
that the stockmarket's renewed appetite for smaller, growth companies does not
yet extend to those on OFEX. The Managers continue to believe that the business
progress being achieved by several portfolio companies will be translated into
share price gains. Some 18% of the portfolio is now listed on AIM, with the
likelihood that further promotions can be achieved in an increasingly positive
investment environment. The Fund is well placed to benefit from these trends."
Peter Dicks
Chairman
24 October 2003
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Summarised Unaudited Statement of Total Return
6 months to 30 September 6 months to 30 September
2003 2002
Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000
Losses on sale of - (103) (103) - - -
investments
Movement in - (154) (154) - (748) (748)
unrealised
depreciation
-------- -------- -------- -------- -------- --------
Losses on - (257) (257) - (748) (748)
investments
Income 2 - 2 8 - 8
Investment - (12) (12) - (18) (18)
management fees
Other expenses (46) - (46) (36) - (36)
-------- -------- -------- -------- -------- --------
Transfer from (44) (269) (313) (28) (766) (794)
reserves
-------- -------- -------- -------- -------- --------
Return per ordinary (0.81p) (4.93p) (5.74p) (0.52p) (14.03p) (14.55p)
Share
.
Unaudited Balance Sheet As at As at
30 September 30 September
2003 2002
�'000 �'000
Investments 2,649 3,598
Net current assets 76 238
--------- ---------
Ordinary shareholders funds 2,725 3,836
--------- ---------
Net asset value per ordinary share 49.91p 70.26p
.
Summarised Unaudited Cash Flow 6 months to 6 months to
Statement
30 September 30 September
2003 2002
�'000 �'000
Net cash flow from operating (48) (63)
activities
Capital expenditure and financial (214) (375)
investment
Servicing of finance (1) -
-------- --------
Decrease in cash (263) (438)
-------- --------
.
Notes
1. The results reflect the adoption in the accounts of the Statement of
Recommended Practice (SORP) issued by the Association of Investment Trust
Companies.
2. Returns per Ordinary Share are based on 5,460,000 shares in issue during the
period (30 September 2002 - same). The number of shares in issue at 30
September 2003 was 5,460,000. (30 September 2002- same).
3. The above figures do not constitute full accounts in terms of Section 240 of
the Companies Act 1985. The accounts for the year to 31 March 2003, which were
unqualified, have been lodged with the Registrar of Companies. The interim
report will be mailed to shareholders in early November 2003. Copies will be
available for inspection at 7 Castle Street, Edinburgh, the registered office
of the Company.
ENDS
END